| · | provide an avenue of communication among the aggregate compensation and benefits payable to Ms. Wright for all services rendered to Carver and any of its subsidiaries, including Carver Federal, and toindependent auditors, management, the extent that payments under Carver’s employment agreement and Carver Federal’s employment agreement are duplicative, payments due under Carver’s employment agreement would be offset by amounts actually paid by Carver Federal for services rendered to it. Both employment agreements provide for an initial term of three years beginning June 1, 1999 and, pursuant to the terms of the employment agreements, each year thereafter have been extended an additional year following a review by the Compensation Committeeinternal auditing function and the Board of Carver and Carver Federal of Ms. Wright’s performance.The employment agreements with the President and CEO provided for an initial annual base salary of $235,000 which is reviewed annually by the Board. The Compensation Committee increased Ms. Wright’s salary to $319,300, effective September 2006. Under the agreements, as of June 1, 1999, Ms. Wright received a restricted stock award of 7,500 shares of Common Stock, the grant of an option to purchase 30,000 shares of Common Stock and, effective June 1, 2000, the grant of an option to purchase an additional 30,000 shares of Common Stock, all of which have vested or are exercisable as of the date of this proxy statement. In addition, the employment agreements provide for an annual incentive payment based on the achievement of certain performance goals, future grant of stock awards, a supplemental retirement benefit, additional life insurance protection and participation in the various employee benefit plans maintained by Carver and Carver Federal from time to time. The agreements also provide customary corporate indemnification and errors and omissions insurance coverage throughout the term of the agreements and for six years thereafter.
Carver Federal or Carver may terminate Ms. Wright’s employment at any time for cause as defined in the employment agreements. In the event that Carver or Carver Federal terminates Ms. Wright’s employment for reasons other than for cause, she would be entitled to a severance benefit equal in value to the cash compensation, retirement and other fringe benefits she would have earned had she remained employed for the remaining term of the agreements. The same severance benefits would be available if Ms. Wright resigns during the term of the employment agreements following a loss of title, office or membership on the Board; a material reduction in her duties, functions or responsibilities; involuntary relocation of her principal place of employment by over 30 miles from its location as of June 1, 1999; other material breaches of contract by Carver or Carver Federal that are not cured within 30 days; or, in certain circumstances, a change in control. In the event of a change in control, the remaining term of Ms. Wright’s agreement with Carver at any point in time will be three years unless written notice of non-renewal is given by the Board or Ms. Wright.
A portion of the severance benefits payable to Ms. Wright under her employment agreements in the event of a change in control might constitute “excess parachute payments” under current federal tax laws. Federal tax laws impose a 20% excise tax, payable by the executive, on excess parachute payments. In the event that any amounts paid to Ms. Wright following a change of control would constitute “excess parachute payments,” Ms. Wright’s employment agreement with Carver provides that she will be indemnified for any excise taxes imposed due to such excess parachute payments, and any additional income and employment taxes imposed as a result of such indemnification of excise taxes. Any excess parachute payments and indemnification amounts paid will not be deductible compensation expenses for Carver or Carver Federal.
Letter Agreements. Carver Federal entered into letter employment agreements with Mr. Gray and Mr. Bason (each an “Executive”). Generally, each letter employment agreement (each, a “Letter Agreement”) provides for “at-will” employment and compensation in the form of base salary, annual discretionary bonus, stock options, restricted stock and, in certain instances, a one-time payment. Under the Letter Agreement, Mr. Gray received stock options to purchase 5,060 shares of common stock, such options vested in three equal annual installments such that the first installment vested at the end of the first year of employment. Mr. Gray was granted 1,013 shares of restricted stock, which vested in three equal installments with the first vesting date occurring at the end of his first year of employment..
Change in Control Arrangements
During fiscal 2004, Carver Federal entered into certain change-in-control agreements. Carver Federal entered into an amendment to Mr. Gray’s Letter Agreement, effective as of May 11, 2004. The amendment applies only if Mr. Gray’s employment is terminated following a change in control which occurs during the employment term. The employment term was from May 11, 2004 through May 11, 2006, and the Compensation Committee voted to recommend that the Board extend the term for a one year period. Carver Federal may terminate Mr. Gray’s employment at any time for cause as defined in his Letter Agreement, as amended. In the event that Carver Federal terminated Mr. Gray’s employment for reasons other than cause, he would be entitled to a change in control benefit equal to (i) continued medical, life, and disability benefits for two years, (ii) a lump sum payment equal to two years’ salary and (iii) an amount equal to two times his highest incentive compensation award. The same severance benefits would be available if Mr. Gray resigns during the term of his Letter Agreement following a loss of title; a material reduction in his duties, functions or responsibilities; involuntary relocation of his principal place of employment so that his commuting distance is more than 50 miles from his address; or other material breaches of contract by Carver Federal that are not cured within 30 days. If any amounts paid to Mr. Gray following a change in control would constitute an “excess parachute payment” under federal tax law, and if the amount by which such parachute payments would have to be reduced to avoid the imposition of the excise tax is less than or equal to the amount of the excise tax without the reduction then the amount payable will be reduced so that there is no excise tax. If payments are reduced, Mr. Gray may choose which payments and benefits will be reduced. If the amount of the parachute payments which would need to be reduced to avoid the excise tax are greater than the amount of the excise tax, then the full amount would be paid. Carver has agreed to make any payments which may not be made by Carver Federal due to specified regulatory restrictions.
Benefit Plans
Pension Plan. The Bank maintains the Carver Federal Savings Bank Retirement Income Plan, a noncontributory, tax-qualified defined benefit plan (the “Pension Plan”). The Pension Plan was amended such that future benefit accrual ceased as of December 31, 2000. Since that date no new participants were eligible to enter into the Pension Plan, and participants as of such date have not been credited with additional years of service or increased compensation.
The following table sets forth the estimated annual benefits that would be payable under the Pension Plan in the form of a single life annuity before reduction for the social security amount upon retirement at the normal retirement date. The amounts are expressed at various levels of compensation and years of service.
| | | Years of Credited Service | | Final Earnings(1) | | 15 | | 20 | | 25 | | 30 | | 35 | $100,000 | | $ 50,000 | | $ 50,000 | | $ 50,000 | | $ 50,000 | | $ 50,000 | 150,000 | | 75,000 | | 75,000 | | 75,000 | | 75,000 | | 75,000 | 200,000(2) | | 100,000 | | 100,000 | | 100,000 | | 100,000 | | 100,000 | 250,000(2) | | 125,000 | | 125,000 | | 125,000 | | 125,000 | | 125,000 | 300,000(2) | | 150,000 | | 150,000 | | 150,000 | | 150,000 | | 150,000 | 350,000(2) | | 175,000 | | 175,000 | | 175,000 | | 175,000 | | 175,000 | 400,000(2) | | 200,000 | | 200,000 | | 200,000 | | 200,000 | | 200,000 |
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(1) Final earnings equal the average of the participant’s highest three consecutive calendar years of taxable compensation during the last 10 full calendar years of employment prior to termination, or the average of the participant’s annual compensation over his or her total service, if less.
(2) Under Section 401(a)(17) of the Code, a participant’s compensation in excess of $200,000 (as adjusted to reflect cost-of- living increases) is disregarded for purposes of determining final earnings. The amounts shown in the table include the supplemental retirement benefits payable to Ms. Wright under her employment agreement to compensate for the limitation on includible compensation.
Participants become 100% vested after five years of service or upon death or termination of the Pension Plan, regardless of the participant’s years of service. As of December 31, 2000, of the Named Executive Officers, only Ms. Wright was a participant in the Pension Plan. For purposes of determining benefits under the Pension Plan, Ms. Wright’s final earnings (as defined) counted under the Pension Plan were $244,813, and her credited service was 1 year and 7 months.
Securities Authorized for Issuance Under Equity Compensation Plans
Equity Compensation Plan Information | Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | | | (a) | | (b) | | (c) | | | | | | | | | Equity compensation plans approved by security holders | | 236,346 | | $12.99 | | 0 | | | | | | | | | Equity compensation plans not approved by security holders | | — | | — | | — | | | | ______________ | | ______________ | | ______________ | Total | | 236,346 | | $12.99 | | 0 |
These awards are under the Option Plan. These plans do not provide for repricing of stock options, which is the cancellation of shares in consideration of the exchange for other stock options to be issued at a lower price, and Carver has not acted to reprice stock options.
Management Recognition Plan. The MRP provides for automatic grants of restricted stock to certain employees as of the date that the MRP became effective (June 1995). In addition, the MRP provides for additional discretionary grants of restricted stock to those employees selected by the committee established to administer the MRP, currently the Compensation Committee. Awards generally vest in three to five equal annual installments commencing on the first anniversary date of the award, provided the recipient is still an employee of Carver or Carver Federal on such date. Awards will become 100% vested upon termination of service due to death or disability or upon a change of control. On November 9, 2004, the Compensation Committee approved management’s recommendation to use a five-year performance-accelerated vesting schedule with ROA as the performance measure. Ten percent of the awarded shares vest in each of the first four years and the remainder in the fifth year. The vesting period can be accelerated in years three and four if the Bank meets or exceeds the three-year average ROA for its peer group. Shares awarded on or after June 9, 2005 vest under the new vesting schedule. When shares become vested and are distributed, the recipients will receive an amount equal to any accrued dividends with respect thereto. In each of fiscal 2006, 2005 and 2004, the Compensation Committee awarded 22,213, 8,700 and 11,069 shares of restricted stock, respectively. As of June 30, 2006, there are 18,207 shares available for future grants pursuant to the MRP. If Proposal Three is approved by the shareholders the MRP will be frozen and no new awards will be issued.
Incentive Compensation Plan. The Incentive Compensation Plan (“ICP”) had provided for grants of cash bonuses, restricted stock and stock options to employees selected by the Compensation Committee. The amounts of such awards are automatic and non-discretionary based upon a formula determined by Carver’s performance in comparison to a peer group of thrifts. Awards of restricted stock and stock options generally vest in five equal annual installments commencing on the first anniversary date of the award, provided the recipient is still an employee of Carver or Carver Federal on such date. Awards will become 100% vested upon termination of service due to death or disability or upon a change of control. When shares become vested and are distributed, the recipients will receive an amount equal to any accrued dividends with respect thereto. If Proposal Three is approved by the shareholders, the ICP will be frozen.
Option Plan. The 1995 Stock Option Plan terminated on September 12, 2005. The 1995 Option Plan provided for automatic option grants to certain employees as of the date that the Option Plan became effective (June 1995). In addition, the Option Plan provided for additional discretionary option grants to those employees selected by the committee established to administer the Option Plan, currently the Compensation Committee, with an exercise price equal to the fair market value of a share of Common Stock on the date of the grant. Options granted under the Option Plan generally vest in three to five equal annual installments commencing on the first anniversary of the date of the grant, provided the recipient is still an employee of Carver or Carver Federal on such date. On November 9, 2004, the Compensation Committee approved management’s recommendation to use a five-year performance-accelerated vesting schedule with ROA as the performance measure. Ten percent of the option grants vest in each of the first four years and the remainder in the fifth year. The vesting period can be accelerated in years three and four if the Bank meets or exceeds the three-year average ROA for its peer group. Options granted on or after June 9, 2005 vest under the new vesting schedule. Upon death, disability or a change of control, all options previously granted automatically become exercisable.
The following table provides certain information with respect to the options and SARs granted to Named Executive Officers during fiscal 2006.
Option/SAR Grants in Last Fiscal Year | | | Individual Grants | | | | | Name | Number of Securities Underlying Option/SARS Granted (#)(1) | Percent of Total Options/ SARS Granted To Employees In Fiscal Year (2) | Exercise of Base Price ($/SH) | Expiration Date | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term | 5% ($) | 10% ($) | | Deborah C. Wright | 13,581 | 37.14% | $17.13 | 6/9/15 | 146,308 | 370,772 | | William Gray | 2,551 | 6.97% | $17.13 | 6/9/15 | 27,482 | 69,644 | | David Hargraves | 1,285 | 3.51% | $17.13 | 6/9/15 | 13,843 | 35,082 | | James Bason | 913 | 2.49% | $17.13 | 6/9/15 | 9,836 | 24,926 | | Margaret Roberts | 881 | 2.40% | $17.13 | 6/9/15 | 9,491 | 24,052 |
(1) | Options were granted on June 9, 2005 to Ms. Wright, Mr. Gray, Mr. Hargraves, Mr. Bason and Ms. Roberts. Ten percent of the awarded shares vest in each of the first four years and the remainder in the fifth year. The vesting period can be accelerated in years three and four if the Bank meets or exceeds the three-year average ROA for its peer group. None of the options were granted in tandem with any stock appreciation rights.Directors. |
(2) | The total of stock options granted to employees in fiscal 2006 was 36,562. |
The following table provides certain information with respect to the number of shares of Common Stock acquired through the exercise of, or represented by, outstanding stock options held by the Named Executive Officers on March 31, 2006. Also reported is the value for any “in-the-money” options, which represent the positive spread between the exercise price of any such existing stock options and the fiscal year-end price of Common Stock which was $17.06 per share.
Fiscal Year End Option/SAR Values
| Name
| Shares
Acquired on
Exercise
(#)
| Value
Realized on
Exercise
($)
| Number of Securities
Underlying Unexercised
Options/SARS at Fiscal
Year-End
(#)
Exercisable/Unexercisable
| Value of Unexercised
In-The-Money
Options/SARS at Fiscal
Year-End
$ (1)
Exercisable/Unexercisable
| Deborah C. Wright | − | − | 151,358/17,223 | 913,450/0 | David Hargraves | − | − | 629/2,156 | 0/0 | William Gray | − | − | 10,999/3,463 | 40,522/0 | James Bason | − | − | 3,624/1,239 | 12,555/0 | Margaret Roberts | − | − | 6,763/1,210 | 28,502/0 |
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(1)The value of “in-the-money” options represents the difference between the fair market value of the Common Stock of $17.06 per share, based on the closing price reported by the American Stock Exchange as of March 31, 2006, and the applicable exercise price per share of the options.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
General
The Finance and Audit Committee of the Board of Directors of Carver has appointed the firm of KPMG LLP as independent auditors for Carver for the fiscal year ending March 31, 2007 and the Board of Directors has determined that it would be desirable to request that stockholders ratify such appointment. Representatives of KPMG LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
The appointment of KPMG LLP is being submitted for ratification at the Annual Meeting with a view towards soliciting stockholders opinions, which the Finance and Audit Committee will take into consideration in future deliberations. Stockholder approval is not required for the appointment of KPMG LLP since the Finance and Audit Committee of the Board of Directors has direct responsibility for selecting auditors.
Auditor Fee Information
KPMG’s fees billed for fiscal 2006 and the fiscal year ended March 31, 2005 were as follows:
$ in thousands | 2006 | | 2005 | | Audit fees (a) | $235.0 | | $285.5 | | Tax fees (b) | 1.6 | | 71.0 | | Total | $236.6 | | $356.5 |
______________
(a) | Fees billed for services associated with the annual audit, reviews of the Company’s quarterly reports on Form 10-Q, review activities related to internal control reporting and accounting consultations.
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(b) | Fees billed for professional tax services and the preparation of income tax returns. |
Pre-Approval Policy for Services by Independent Auditors
During fiscal 2006, the Finance and Audit Committee of Carver’s Board of Directors pre-approved the engagement of KPMG LLP to provide non-audit services and considered whether, and determined that, the provision of such other services by KPMG LLP is compatible with maintaining KPMG LLP’s independence.
In June 2004 the Finance and Audit Committee established a policy to pre-approve all audit and permissible non-audit services provided by KPMG LLP consistent with applicable SEC rules. Under the policy, prior to the engagement of the independent auditors for the next year’s audit, management submits an aggregate of services expected to be rendered during that year for each of the four categories of services described above to the Finance and Audit Committee for approval. Prior to engagement, the Finance and Audit Committee pre-approves these services by category of service. The fees are budgeted and the Finance and Audit Committee will receive periodic reports from management on actual fees versus the budget by category of service. During the year, circumstances may arise when it may become necessary to engage the independent auditors for additional services not contemplated in the pre-approval. In those instances, the Finance and Audit Committee requires specific pre-approval before engaging the independent auditor.
The Finance and Audit Committee has delegated pre-approval authority, subject to certain limits, to the chairman of the committee. The chairman is required to report, for informational purposes, any pre-approval decisions to the Finance and Audit Committee at its next regularly scheduled meeting.
Report of the Finance and Audit Committee of the Board of Directors
This report is furnished by the Carver Finance and Audit Committee of the Board of Directors as required by the rules of the SEC under the Exchange Act.The report of the Finance and Audit Committee shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (“Securities Act”), or the Exchange Act, except to the extent that Carver specifically incorporates this information by reference, and shall not otherwise be deemed to be filed under the Securities Act or the Exchange Act.
The Board of Directors has adopted a written charter that sets forth the Finance and Audit Committee’s duties and responsibilities and reflects applicable American Stock Exchange rules and SEC regulations.
All members of the Finance and Audit Committee have been determined to be independent as defined in the American Stock Exchange’s listing standards. The Board of Directors has determined that Edward B. Ruggiero qualifies as an “audit committee financial expert.” The Finance and Audit Committee received the required written disclosures and letter from KPMG LLP, Carver’s independent accountants, required by Independence Standards Board Standard No. 1, as amended or supplemented, and has discussed with KPMG LLP its independence. The Finance and Audit Committee reviewed and discussed with the Company’s management and KPMG LLP the audited financial statements of the Company contained in the Company’s fiscal 2006 annual report on Form 10-K. The Finance and Audit Committee has also discussed with KPMG LLP the matters required to be discussed pursuant to the Codified Statements on Auditing Standards (SAS 61), as amended or supplemented.
Throughout the year, the Finance and Audit Committee had full access to management and the independent and internal auditors for the Company. The Finance and Audit Committee consulted with advisors regarding the Sarbanes-Oxley Act of 2002, the American Stock Exchange’s corporate governance listing standards and the corporate governance environment in general and considered any additional requirements of the Finance and Audit Committee as well as additional procedures or matters the Finance and Audit Committee should consider. During fiscal 2006, the Finance and Audit Committee approved the retention of the Company’s independent accounting firm, KPMG LLP, and received the Board’s ratification of this decision. The Finance and Audit Committee acts only in an oversight capacity and necessarily relies on the assurances and work of the Company’s management and independent auditors who expressed an opinion on the Company’s annual financial statements.
Based on its review and discussions described in the immediately preceding paragraph, the Finance and Audit Committee recommended to the Board of Directors that the audited financial statements included in the Company’s fiscal 2006 annual report on Form 10-K be included in that report.
Finance and Audit Committee of Carver Bancorp, Inc.
David L. Hinds (Chairman)
Carol Baldwin Moody
Pazel G. Jackson, Jr.
Edward B. Ruggiero
Other specific duties and responsibilities include reviewing Carver’s disclosure controls and procedures, internal controls, Carver’s periodic filings with the SEC and earnings releases; producing the required audit committee annual report for inclusion in Carver’s proxy statement; and overseeing complaints concerning financial matters. The report of the Finance and Audit Committee is contained on page 16. The Finance and Audit Committee met fourteen times during fiscal 2007, including meetings to review the Company’s annual and quarterly financial results prior to their public issuance.
The Board of Directors Recommends a Vote FORAsset/Liability and Interest Rate Risk Committee. The Asset/Liability and Interest Rate Risk Committee consists of Directors Pazel G. Jackson, Jr. (Chairman), Dr. Samuel J. Daniel, David L. Hinds, Robert Holland, Jr. and Deborah C. Wright. The Asset/Liability and Interest Rate Risk Committee monitors activities related to asset/liability management and interest rate risk, including the approval or ratification of mortgage loans and the establishment of guidelines related to risk, purchase or sale of loans and investments, and management of interest rate, credit and liquidity risk against objectives and risk limitations set forth in Carver Federal’s policies. The committee met ten times during fiscal 2007.
the Ratification of the Appointment of
KPMG LLP as Independent Auditors For Carver.
Please Mark Your Votes on the Enclosed Proxy Card and
Return it in the Enclosed Postage-Prepaid Envelope
or Vote by Internet or Telephone.
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Compensation Committee Report The Compensation Committee has reviewed the Compensation Discussion and Analysis included in this proxy statement and has discussed it with management. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement. The following report has been furnished by members of the Compensation Committee: Carol Baldwin Moody (Chairperson)
Compensation Discussion and Analysis
Compensation of all executive officers of the Company, including the chief executive officer, is determined by the Compensation Committee of the Company's Board of Directors (the “Committee” or the “Compensation Committee”). The following discussion focuses on the Committee’s compensation philosophy and practices, particularly as it relates to Named Executive Officers for fiscal 2007 and provides important context for the more detailed disclosure tables and specific compensation amounts provided elsewhere in the proxy statement. Compensation Philosophy The Company’s success depends on hiring and retaining highly qualified individuals, as each executive has the potential to influence its short and long-term performance. Therefore, the Committee places considerable effort on the design and administration of the Company’s compensation program. Carver’s competitive position is a critical element in the recruitment and retention of executives and all employees. As a small community bank in New York City, the world's financial capital, competitive pressures on the ability to attract and retain talent are significant. Most executives and staff are recruited to Carver from money center banks and other larger financial institutions. The Committee believes that executive compensation should be aligned with long-term stockholder value and therefore determined primarily by Company performance. As such, the Company’s compensation program is heavily weighted toward performance pay, whereby a significant portion of an executive’s total compensation is “at risk.” As such, executive compensation can and should vary significantly, up or down, based on the Company’s performance relative to strategic goals and industry peers. To foster teamwork in building long-term performance and shareholder value, executive pay reflects a mix of Bank, department and individual performance. In this regard, the Committee recognizes that Carver’s current performance continues to reflect the substantial investment required to turn the Company around from a period of poor performance as well as investments required to propel growth in an extremely competitive environment. Benchmarking of Compensation The Compensation Committee has benchmarked the compensation of executive officers and directors for fiscal 2007 utilizing publicly disclosed information from a peer group of publicly traded banks, predominantly in the Northeast region. The peer group, as shown below and approved by the Compensation Committee, after reviewing with its compensation consultant, reflects banks of similar asset size and geographic location, two factors that influence executive compensation at banks. The peer group is reviewed and updated each year as appropriate as the comparability of banks may change depending on acquisitions and the business focus of the Company or peer institutions. The peer group for the Company’s fiscal 2007 review includes banks that range from $600 million to $1.3 billion in assets, with a median of $875 million in assets. In addition to the proxy peer group, the Committee considered additional sources of compensation data provided by its compensation consultants, as described below.
PROPOSAL THREEPeer Group | | | | | | | Abington Community Bancorp | | | | Alliance Financial Corp | | | | BCSB Bancorp, Inc | | | | Center Bancorp, Inc | | | | Federal Trust Corp | | | | First of Long Island Corp (The) | | | | New Hampshire Thrift Bancshares, Inc | | | | Peapack-Gladstone Financial Corp | | | | Severn Bancorp, Inc. | | | | SI Financial Group Inc. | | | | Sound Federal Bancorp, Inc. | | | | Synergy Financial Group, Inc. | | | | TF Financial Corp | | | | United Financial Bancorp | | | | Westfield Financial Inc. | | | | Willow Grove Bancorp, Inc. | | |
Compensation-Related Governance and Role of the Committee Role of the Compensation Committee The Compensation Committee is responsible for discharging the Board of Director’s responsibilities in executive compensation matters and for establishing policies that govern employee incentive compensation and equity/long-term incentive compensation plans. The Committee reviews all elements of the Company’s CEO and other executive officers’ compensation including base salary, annual incentive, long-term incentives/equity, and benefits. Three members of the Board serve on the Committee, each of whom is independent. The Committee meets throughout the year with six meetings held during fiscal 2007 (May 8, 2006, June 2, 2006, July 6, 2006, September 27, 2006, November 20, 2006 and March 12, 2007). The Chairman of the Committee reports on Committee actions at meetings of the Board. The Committee reviews CEO performance and makes decisions regarding the CEO’s compensation in consultation with non-management members of the Board of Directors. Input and data from the Senior Vice President and Chief Human Resources Officer and other management as well as outside consultants and advisors are provided as requested by the Committee. Decisions regarding other executives are made by the Compensation Committee considering recommendations from the CEO and with input from the Senior Vice President and Human Resources Officer and an outside compensation consultant. Decisions by the Compensation Committee with respect to compensation of the CEO are ratified by the full Board of Directors. The Committee has the authority and resources to obtain advice and assistance from internal or external legal, human resources, accounting or other experts, advisors, or consultants, as it deems desirable or appropriate. Details on the Committee’s role are more fully described in its charter, which has been approved by the Board of Directors. The charter can be viewed on the Company’s website at www.carverbank.com. Interaction with the Compensation Consultant The Bank utilizes the services of outside advisors and consultants throughout the year as they relate to executive compensation. The Committee utilizes the services of its consultant to conduct periodic comprehensive total compensation studies as well as ongoing updates on market and best practices. This information was requested and utilized as needed to support the Committee’s decisions and review processes. During fiscal 2007, the Committee relied on the services of Towers Perrin to conduct competitive reviews and provide advice and counsel related to executive compensation issues. The Committee had direct access to these advisors. Towers Perrin conducted several in depth studies for the Committee during the year and attended two of the six meetings (in person or by phone). At the end of the fiscal year, the Compensation Committee engaged the services of compensation consulting firm Pearl Meyer & Partners to assist in reviewing its compensation philosophy and programs going forward for fiscal 2008. The Committee retains the right to hire, fire and seek the services of consulting and advisory firms. Role of Executives in Committee Deliberations The Compensation Committee occasionally requests one or more members of senior management to be present at Committee meetings where executive compensation and Company or individual performance are discussed and evaluated. Executives are free to provide insight, suggestions or recommendations regarding executive compensation. However, only independent Compensation Committee members are allowed to vote on decisions regarding executive compensation. The Compensation Committee meets with the CEO to discuss her own performance and compensation package, but ultimately decisions regarding her compensation are made solely based upon the Committee’s deliberations with input from the compensation consultant, as requested. Decisions regarding other executives are made by the Compensation Committee considering recommendations from the CEO, as well as input from the compensation consultant as requested. Total Compensation Program Components Carver’s total compensation program consists of four main components: Base Salary, Annual Incentives, Long-term Incentives, and Executive Benefits/Perquisites. The following section summarizes the role of each component, how decisions are made and the resulting fiscal 2007 decisions as they relate to the Named Executive Officers. Base Salary The purpose of base salary is to provide competitive base compensation that recognizes the executives’ role, responsibilities, experience, performance and past and potential contribution to the Company. The Company targets salaries at the 50th percentile of the peer group; however judgment is exercised in determining each executive’s situation relative to market and other relevant information. In practice, the Bank has provided salary increases at approximately 3% annually for the last three years, with limited exceptions to reflect factors including added responsibilities for an executive or marketplace changes in compensation for a particular position. Short-Term Incentives The Company’s Performance-Driven Incentive Plan (“the Incentive Plan”) was developed in 2004 with the assistance of Towers Perrin. The purpose of the annual incentive plan is to motivate and reward corporate, department and individual performance. Performance goals are set annually and reviewed by the Board and payouts are based on achievement of the predefined goals. The Compensation Committee has determined that the primary goal and driver of incentive pay awards is achievement of forecasted Net Income based on the fiscal year Business Plan prepared by management and approved by the Board. Actual results may be adjusted as appropriate and determined by the Compensation Committee. If the Company does not achieve a minimum of 80% of target Net Income, the incentive pool is not funded and executives do not receive any annual cash incentives for that fiscal year. Each fiscal year, a funding schedule is developed that translates incentive payouts relative to the fiscal year-end Net Income. The Compensation Committee may change these goals from year to year. The incentive pool at target performance is defined to provide competitive incentives for the positions and to reflect our desired compensation philosophy to target median rewards for meeting goals. Once the 80% threshold net income is achieved, the corporate incentive pool funds at a reduced 50% of target. At maximum/stretch performance, the corporate pool funds at 150% of target. This provides a payout relationship that rewards high performance and reduces payouts for not meeting goals. Potential payouts and incentive pool funding are modeled each year relative to possible net income performance to ensure the pay-for-performance relationship is appropriate. Corporate performance, as measured by net income, drives between 40% - 75% of the executives’ incentive awards depending on his/her role. The remaining percentage consists of other specific department/strategic goals that reflect critical measures for the upcoming year. The CEO and CFO incentives are comprised of 75% corporate performance and 25% department/strategic goals. Annual incentives for additional executives range from 40% - 50% corporate performance and 50% - 60% department performance. The department/strategic goals for the management team in fiscal 2007 included, but were not limited to the following measures: | § | Completion of the acquisition and integration of Community Capital Bank |
| § | Organic loan and deposit growth |
| § | Increased fee income or other items leading to improved return on equity |
| § | Improved efficiency ratio |
In addition to these corporate and divisional goals, the Plan includes an individual modifier that allows incentive awards to be modified (up or down) to reflect overall individual performance and contributions. The incentive award can be increased 30% above target for exceptional performance or reduced to 0% for poor performance. For fiscal 2007, Carver’s annual target incentive ratios for the Named Executive Officers were as follows: APPROVAL OF THE 2006 STOCKExecutive
| Target Incentive Ratio INCENTIVE PLAN(as percentage of
salary) | Potential Range upside potential) | | CEO - Deborah Wright | 50% | 0% - 65% | | CFO – Roy Swan | 30% | 0% - 39% | | James Bason | 25% | 0% - 32.5% | | Margaret Roberts | 20% | 0% - 26% | | Frank Deaton | 20% | 0% - 26% |
For fiscal 2007, the Company used the net income formula to determine achievement of fiscal year goals and the annual incentive pool. The Committee adjusted the net income under GAAP by two factors: the elimination of restructuring costs associated with the Community Capital Bank acquisition as well as the costs associated with restructuring of the Company’s balance sheet to mitigate net interest margin compression. The Committee agreed that these actions were one-time events designed to increase long-term stockholder value and have in fact begun to generate anticipated returns. After adjusting for these factors, results exceeded the target Net Income goal by 19%, which would have resulted in a payout of 147.5% of target. However, in recognition of the need to improve the Company’s financial performance, the Committee exercised its negative discretion and approved a lower total Company incentive pool of $719,000 or 110% of target. In addition to the annual incentive awards, the Company provided “special recognition” awards to certain officers and other employees who participated in successful strategic initiatives of the Bank. The “special recognition” award payouts are included in the $719,000 incentive pool mentioned above. Of the Named Executive Officers, Ms. Wright and Mr. Swan each received $10,000, Mr. Bason received $7,500 and Ms. Roberts received $5,000. Rewards primarily reflect additional contributions related to the successful effort to win a $59 million award of New Markets Tax Credits, which has generated significant financial benefit to Carver, and the successful integration of Community Capital Bank. The Committee determined and approved the final incentive awards for the Named Executive Officers as indicated below. Executive | Target Incentive Ratio | Actual Payout (% of base salary) | Actual Payout ($) | | CEO - Deborah Wright | 50% | 54.3% | $173,496 | | CFO – Roy Swan | 30% | 33.6% | $76,226 | | James Bason | 25% | 27.5% | $44,021 | | Margaret Roberts | 20% | 14.2% | $19,665 | | Frank Deaton | 20% | n/a | n/a |
Annual incentives are not fixed compensation, must be re-earned each year and are at-risk based on actual performance. The Compensation Committee reviews the Incentive Plan each year and resets the specific goals and targets for executives to align with business needs and desired compensation philosophy. As a result of the Bank’s growth and resulting organizational changes, the Incentive Plan will be updated in fiscal 2008 to continue to align with the strategic plan and performance-based compensation philosophy. Long-Term Incentive Compensation The Bank believes strongly in the importance of aligning executive incentives with the long-term performance of the Bank and interests of stockholders. In September 2006, Carver stockholders approved the 2006 Stock Incentive Plan (“2006 Plan”) to replace the 1995 Stock Option Plan that expired in September 2005. The purpose of the 2006 Plan is to promote Carver’s growth and profitability, to provide certain officers, employees and non-employee directors of the Company with an incentive to achieve corporate objectives, to attract and retain individuals of outstanding competence and to provide such individuals with an equity interest in the Company. Historically, long-term incentives have been made in the form of stock options and restricted stock. However, due to the size of the Company, limited trading and low volatility of Carver’s stock, and our desire to manage shareholder dilution carefully, the Committee has diligently taken steps to adjust our programs to remain within industry practice. The Committee’s goal is to retain our dilution within the levels of industry peers, which was capped at 2.79% for 2006. First, the Committee suspended the practice of providing Board compensation in the form of stock and stock options. Second, the Company restructured its long-term incentive plan and payout ratios to include cash in addition to equity. Actual long-term payouts were modified to utilize a significant cash component, in lieu of stock or stock options. Third, the Employee Stock Ownership Plan was suspended. These steps decreased the burn rate to 2.32% in fiscal 2006 and 2.04% in fiscal 2007. The Committee will continue to review and adjust, if needed, the effectiveness of its strategy each fiscal year, to achieve a burn rate consistent with industry peers. The revised long-term incentive plan components and payout ratios for fiscal 2007 for the Named Executive Officers follow: Executive | Target Award | Stock Options | Restricted Stock | Cash | | CEO - Deborah Wright | 100% | 30% | 20% | 50% | | CFO – Roy Swan | 30% | 30% | 20% | 50% | | James Bason | 25% | 30% | 0% | 70% | | Margaret Roberts | 20% | 0% | 0% | 100% | | Frank Deaton | 20% | 0% | 0% | 100% |
At the end of each fiscal year, actual awards are determined using net income as the performance measure determining the total award as a percentage of targets. Similar to the annual incentive plan, if net income does not achieve threshold performance, or 80% of goal, no equity awards are granted in that year. Once the payout is determined, the award is allocated according to the table above. Regardless of the type of award (stock options, restricted stock, or cash), the awards vest over a five year period, 20% each year on the anniversary of the grant, with accelerated vesting in years three and four if the Company meets or exceeds the peer group three-year average ROE. The Committee determined and approved the final long-term incentive awards as indicated below. Executive | Target Incentive | Actual Payout (% of base salary) | Actual Payout ($) | | CEO - Deborah Wright | 100% | 109% | $346,992 | | CFO – Roy Swan | 30% | 33.6% | $76,226 | | James Bason | 25% | 27.5% | $44,021 | | Margaret Roberts | 20% | 14.2% | $19,665 | | Frank Deaton | n/a | n/a | n/a |
The Compensation Committee reviews the Long-Term Incentive Compensation Plan each year and establishes specific goals and targets for executives to align with business needs and desired compensation philosophy. The Committee has selected Return On Equity as the metric that will be utilized beginning in fiscal 2008 to further align management objectives with the Committee’s compensation philosophy.
Compensation of Executive Officers and Directors
Executive Officer Compensation
SUMMARY COMPENSATION TABLE at FISCAL YEAR-END 2007
The following table presents compensation information regarding the Company’s Chief Executive Officer, Chief Financial Officer and each of the three other most highly compensated executive officers who served in such capacities on March 31, 2007 (collectively, the “Named Executive Officers”).
Name and Principal Position (a) | Year ended 3/31 (b) | Salary (c) | Bonus (d) | Stock Awards (7) (e) | Options Awards (7) (f) | Non-Equity Incentive Plan Compensation (8) (g) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (h) | All Other Compensation (i) | Total (j) | Deborah C. Wright(1) Chairman and Chief Executive Officer | 2007 | $315,694 | $10,000(1) | $37,742(1) | $50,491(1) | $346,992 | $1,005 | $26,847(1) | $788,771 | Roy Swan(2) Executive Vice President and Chief Financial Officer | 2007 | $224,597 | $10,000(2) | $20,536(2) | $14,620(2) | $114,339 | --- | $28,710(2) | $412,802 | William Gray(3) Former Senior Vice President and Chief Financial Officer | 2007 | $152,194 | $29,000(3) | $15,781(3) | $8,598(3) | --- | --- | $32,717(3) | $238,290 | James Bason, Jr.(4) Senior Vice President And Chief Lending Officer | 2007 | $154,009 | $ 7,500(4) | $9,915(4) | $3,074(4) | $ 74,836(4) | --- | $15,184(4) | $264,518 | Margaret D. Roberts(5) Senior Vice President And Chief Human Resources Officer | 2007 | $137,533 | $ 5,000(5) | $7,913(5) | $3,019(5) | $ 39,330(5) | --- | $18,575(5) | $211,370 | Frank Deaton(6) Former Senior Vice President of Operations | 2007 | $141,004 | --- | $7,672(6) | $2,814(6) | --- | --- | $19, 122(6) | $170,612 |
(1) Ms. Wright: $10,000 bonus is a one-time discretionary cash bonus awarded for efforts related to the successful integration of Community Capital Bank and the successful bid for a New Markets Tax Credit; other compensation includes $8,800 401k match; $4,400 profit sharing; 807.243 ESOP shares valued at $16.68 per share ($13,464.81) on 3/31/2007. The amount in Column (g) is subject to annual negative discretion. 50% of the amount is an annual cash award based on the company meeting its annual net income goal and Ms. Wright meeting certain objectives determined at the beginning of the fiscal year. The other 50% of the amount in Column (g) is a Long-term Incentive cash award which vests over a 5-year period at 20% each year but vesting can be accelerated in year 3 or 4 if the Company meets or exceeds the three-year average ROE of its peer group. (2) Mr. Swan: $10,000 bonus is a one-time discretionary cash bonus awarded for efforts related to the successful integration of Community Capital Bank and the successful bid for a New Markets Tax Credit; other compensation includes: $11,249.65 401k match; $3,996 profit sharing; 807.243 ESOP shares valued at $16.68 per share ($13,464.81) on 3/31/2007. The amount in Column (g) is subject to annual negative discretion. 67% of the amount in Column (g) is an annual cash award based on the company meeting its annual net income goal and Mr. Swan meeting certain objectives determined at the beginning of the fiscal year. The other 33% of the amount in Column (g) is a Long-term Incentive cash award which vests over a 5-year period at 20% each year but vesting can be accelerated in year 3 or 4 if the Company meets or exceeds the three-year average ROE of its peer group. (3) Mr. Gray: $29,000 is a post-termination cash bonus prorated for the length of time worked in the fiscal year. Other compensation includes $10,570 post termination consulting services; $4,928 401k match; $4,241 profit sharing; 778.033 ESOP shares valued at $16.68 per share ($12,977.59) on 3/31/2007. On November 17, 2006, Mr. Gray resigned as Chief Financial Officer and on December 31, 2006, resigned as Senior Vice President. Mr. Swan replaced Mr. Gray as Chief Financial Officer. (4) Mr. Bason: $7,500 bonus is one-time discretionary cash bonus awarded for efforts related to the successful integration of Community Capital Bank and the successful bid for a New Markets Tax Credit; other compensation includes: $3,852.77 profit sharing; 679.302 ESOP shares valued at $16.68 per shares ($11,330.75) on 3/31/2007. The amount in Column (g) is subject to annual negative discretion. 59% of the amount is an annual cash award based on the company meeting its annual net income goal and Mr. Bason meeting certain objectives determined at the beginning of the fiscal year. The other 41% of the amount in Column (g) is a Long-term Incentive cash award which vests over a 5-year period at 20% each year but vesting can be accelerated in year 3 or 4 if the Company meets or exceeds the three-year average ROE of its peer group. (5) Ms. Roberts: $5,000 bonus is one-time discretionary cash bonus awarded for efforts related to the successful integration of Community Capital Bank; other compensation includes: $5,501 401k match; $3,418.88 profit sharing; 578.853 ESOP shares valued at $16.68 per shares ($9,655.27) on 3/31/2007. The amount in Column (g) is subject to annual negative discretion. 50% of the amount is an annual cash award based on the company meeting its annual net income goal and Ms. Roberts meeting certain objectives determined at the beginning of the fiscal year. The other 50% of the amount in Column (g) is a Long-term Incentive cash award which vests over a 5-year period at 20% each year but vesting can be accelerated in year 3 or 4 if the Company meets or exceeds the three-year average ROE of its peer group. (6) Mr. Deaton: other compensation includes: $5,960 401k match; $3,378 profit sharing; 586.579 ESOP shares valued at $16.68 per shares ($9,784.13) on 3/31/2007. On April 13, 2007, Mr. Deaton resigned as Senior Vice President of Operations. (7) The amounts in columns (e) and (f) reflect the dollar amount recognized for financial statement purposes for the fiscal year ended March 31, 2007 in accordance with SFAS 123(R) and may include amounts from awards granted in and prior to the fiscal year. Assumptions used in the calculation of these amounts are included in the footnotes to the Company's audited financial statements for the fiscal year ended March 31, 2007 in the Company's Annual Report on Form 10-k filed with the Securities and Exchange Commission. (8) The amounts in column (g) reflect awards granted under the Company's formula driven compensation structure which awards an annual bonus and long-term equity if the Company meets at least 80% of its fiscal year budgeted net income goal. In an effort to reduce shareholder dilution, long-term cash awards were substituted for long-term equity awards in the fiscal year. Long-term cash awards vest at 20% each year for five years and vesting may be accelerated in year 3 and 4 if the Company meets or exceeds an external performance measure, currently the three-year average return on equity of the Company's peer group. The Company's compensation structure was developed based on recommendations and models presented by Towers Perrin, a nationally-recognized consulting firm. The plan includes three integrated parts: (1) a grading structure based on the employee's corporate level; (2) an annual cash bonus target and a long-term incentive target based on a recommended performance measure, currently Net Income; and (3) an individual performance modifier based on a manager's assessment of an individual’s performance. At fiscal year-end, a model is used to calculate bonuses as a percentage of base pay for bonus-eligible employees and takes into account the employee's grade level, corporate performance (net income goals), departmental performance against goals, and individual performance. Departmental and individual performance goals are defined and communicated to managers and employees during the budget and performance appraisal processes which occur at the beginning of each fiscal year. Long-term incentives are provided to executive officers in the form of restricted stock, stock options or cash. Awards were granted under the plan in effect at the time of the award and vest over a three-year period or a five-year performance accelerated period pursuant to the respective plan. In 2006, the shareholders approved an omnibus stock incentive plan. Awards granted under the 2006 Stock Incentive Plan vest over a five-year performance accelerated period.
Benefits and Perquisites The Bank’s executive officers participate in benefit plans available to all employees including the Carver Federal Savings Bank 401(k) Savings Plan. The Company does not currently offer additional perquisites in excess of $10,000 per year. Benefits Plans Pension Plan. The Bank maintains the Carver Federal Savings Bank Retirement Income Plan, a noncontributory, tax-qualified defined benefit plan (The “Pension Plan”). The Pension Plan was amended such that future benefit accruals ceased as of December 31, 2000. Since that date, no new participants were eligible to enter into the Pension Plan and participants as of such date have not been credited with additional years of service or increased compensation. The following table sets forth information regarding pension benefits accrued by the Named Executive Officers during the last fiscal year.
PENSION BENFITS at FISCAL YEAR-END 2007 | Name | Plan Name | Number of years credited service (#) | Present Value of Accumulated Benefit ($) | Payments during last fiscal year ($) | | (a) | (b) | (c) | (d) | (e) | Deborah C. Wright | Carver Federal Savings Bank Retirement Income Plan | 1 | 26,672(1) | --- | | Roy Swan | --- | --- | --- | --- | | William Gray | --- | --- | --- | --- | | James Bason, Jr. | --- | --- | --- | --- | | Margaret D. Roberts | --- | --- | --- | --- | | Frank Deaton | --- | --- | --- | --- |
(1)Annual benefit of $4,928 frozen when pension plan was frozen 12/31/2000; PV=$26,672 as of 3/31/2007. Active employees with greater than one year of service on December 31, 2000 are eligible to receive a benefit under the Plan should the Plan be terminated. The amount of the benefit will be calculated based on age and years of service and pay at the time the Plan was frozen. Employees with more than five years of service on December 31, 2000 who reach retirement age before the Plan is terminated are eligible for a benefit calculated based on the Plan’s definitions of earnings and eligibility. Ms. Wright is the only Named Executive Officer in the Plan.
401(k) Savings Plan. Carver maintains a 401(k) Savings Plan (“401(k) Plan”) with a profit sharing feature for all eligible employees of the Bank. The Bank matches contributions to the 401(k) Plan equal to 100% of pre-tax contributions made by each employee up to a maximum of 4% of their pay, subject to IRS limitations. All such matching contributions are fully vested and non-forfeitable at all times regardless of the years of service with the Bank. To be eligible for the matching contribution, the employee must be 21 years of age and have completed at least one year of service. Under the profit-sharing feature, the Company has the discretion to make a contribution. If the Bank achieves a minimum of 70% of its fiscal year net income goal, the Compensation Committee may authorize an annual non-elective contribution to the 401(k) Plan on behalf of each eligible employee up to 2% of the employee’s annual pay, subject to IRS limitations. This non-elective contribution may be made regardless of whether the employee contributes to the 401(k) Plan. Non-elective Bank contributions, if awarded, vest 20% each year for the first five years of employment and are fully vested thereafter. To be eligible for the non-elective Carver contribution, the employee must be 21 years of age, have completed at least one year of service and be employed on of the last day of the plan year, currently December 31 or have terminated employment for death, disability or retirement.
Employee Stock Ownership Plan. Effective upon conversion to a publicly traded company, an Employee Stock ownership Plan (“ESOP”) was established for all eligible employees. The ESOP used proceeds from a term loan obtained from a third-party institution to purchase shares of Carver’s common stock in the initial public offering to pledge as collateral for the loan. In June 2004, the loan was paid off and the Bank continued to make discretionary contributions to the ESOP by purchasing shares in the open market. This was in accordance with Carver's common stock repurchase program where shares are held in a suspense account for future allocation among the participants based on compensation, as described by the Plan, in the year of allocation. Because the 401(k) Plan allows employees to purchase and hold Carver stock in the 401(k) Plan and most employees close out their ESOP accounts upon leaving the Bank, management recommended curtailing the ESOP. In May 2006, the Compensation Committee approved management’s decision and voted to cease discretionary contributions after the 2006 allocation is made and no new participants are eligible to enter the ESOP as of December 31, 2006.
The following table sets forth information regarding grants of plan-based awards granted by the Named Executive Officers of Carver during the last fiscal year.
GRANTS OF PLAN-BASED AWARDS at FISCAL YEAR-END 2007 Name | Grant Date | Estimated future payouts Under Non-equity incentive Plan awards (1) | Estimated future payouts under Equity incentive plan awards(2) | All Other Stock | All other Option Awards: | Exercise Or base Price of | Grant Date Fair | | | | Awards: | Number | Option | Value | | | | Number | of | awards | of | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Of Shares Of stock Or units (#)(3) | Securities Under- Lying Options (#) | Exercise ($/Sh) | Stock and Option Awards | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | Deborah C. Wright | | | | | | | | | | | | | Annual cash | | $ 79,823 | $159,647 | $239,470 | | | | | | | | | LTIP cash | | $ 79,823 | $159,647 | $239,470 | | | | | | | | | Stock | 11/20/06 | | | | 2,871 | 5,743 | 8,614 | 5,513 | | | $90,965 | | options | 11/20/06 | | | | 5,325 | 10,649 | 15,974 | | 11,742 | $16.50 | $60,642 | Roy Swan | | | | | | | | | | | | | Annual cash | | $ 33,992 | $ 67,983 | $101,975 | | | | | | | | | LTIP cash | | $ 16,996 | $ 33,992 | $ 50,987 | | | | | | | | | Stock | 11/20/06 | | | | 611 | 1,223 | 1,834 | 1,280 | | | $21,120 | | options | 11/20/06 | | | | 1,134 | 2,267 | 3,401 | | 2,727 | $16.50 | $14,084 | William Gray(4) | | | | | | | | | | | | | Annual cash | | $ 25,924 | $ 51,849 | $ 77,773 | | | | | | | | | LTIP cash | | $ 12,062 | $ 25,924 | $ 38,887 | | | | | | | | | Stock | 11/20/06 | | | | 466 | 933 | 1,399 | | | | | | options | 11/20/06 | | | | 865 | 1,729 | 2,594 | | | | | James Bason, Jr. | | | | | | | | | | | | | Annual cash | | $ 20,010 | $ 40,019 | $ 60, 029 | | | | | | | | | LTIP cash | | $ 14,007 | $ 28,013 | $ 42,020 | | | | | | | | | Stock | 11/20/06 | | | | 360 | 720 | 1,080 | 690 | | | $11,385 | | options | | | | | | | | | | | | Margaret D. Roberts | | | | | | | | | | | | | Annual cash | | $ 13,868 | $ 27,737 | $ 41,605 | | | | | | | | | LTIP cash | | $ 13,868 | $27,737 | $ 41,605 | | | | | | | | | Stock | | | | | | | | | | | | | options | | | | | | | | | | | | Frank Deaton(5) | | | | | | | | | | | | | Annual cash | | $ 14,264 | $ 28,529 | $ 42,793 | | | | | | | | | LTIP cash | | $ 14,264 | $ 28,529 | $ 42,793 | | | | | | | | | Stock | | | | | | | | | | | | | options | | | | | | | | | | | |
(1) The threshold amounts reflect the minimum payment level under our incentive compensation plans which is 50% of the target amount. The maximum amount is 150% of the target amount. These amounts are based on the individual’s earned salary and position at the end of the fiscal year.
(2) The equity threshold amounts reflect the same minimums and maximums discussed in footnote (1). The stock award thresholds are based on calculated cash value pursuant to our incentive compensation plan divided by the share price on 3/31/07. the option award thresholds are based on the calculated cash value pursuant to our incentive compensation plan, a fiscal year Black-Scholes value of 35.95% and the share price on 3/31/07. To reduce dilution and maintain a 3-year average burn-rate in line with industry practices, equity awards are limited to the CEO, CFO and business heads. (3) The amounts reflect the number of shares of stock and options granted in the fiscal year to each Named Executive officer pursuant to our Stock Incentive Plan. (4) Mr. Gray forfeited rights to equity grants during the fiscal year and was ineligible for non-equity incentive plan awards upon his resignation. (5) Mr. Deaton was ineligible for non-equity incentive plan awards upon his resignation before the awards were approved by the Compensation Committee. The following table sets forth information regarding stock awards, stock options and similar equity compensation outstanding at March 31, 2007, whether granted during fiscal 2007 or earlier, including awards that have been transferred other than for value. OUTSTANDING EQUITY AWARDS at FISCAL YEAR-END 2007 | Option Awards | Stock Awards | Name | Date of Option Grant | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(1) | Equity incentive plan awards; number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards; market or payout value of unearned shares, units or other rights that have not vested ($) | | (a) | | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | Deborah C. Wright | 06/01/99 | 30,000 | | | 8.125 | 05/29/09 | 11,234 | $187,416 | | | | | 06/01/00 | 30,000 | | | 8.210 | 05/30/10 | | | | | | | 08/22/01 | 30,000 | | | 9.930 | 08/20/11 | | | | | | | 06/12/02 | 30,000 | | | 12.060 | 06/9/12 | | | | | | | 06/24/03 | 20,000 | | | 16.410 | 06/21/13 | | | | | | | 06/24/04 | 15,000 | | 4,950 | 19.630 | 06/22/14 | | | | | | | 06/09/05 | 13,581 | | 12,223 | 17.130 | 06/07/15 | | | | | | | 11/20/06 | | | 11,742 | 16.500 | 11/17/16 | | | | | | | | | | | | | | | | | | Roy Swan | 06/09/05 | 725 | | 6,525 | 17.130 | 06/07/15 | 3,697 | $61,666 | | | | | 11/20/06 | | | 2,727 | 16.500 | 11/17/16 | | | | | | | | | | | | | | | | | | William Gray | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | James Bason, Jr. | 02/05/03 | 2,700 | | | 12.410 | 02/02/13 | 2,011 | $33,543 | | | | | 06/24/04 | 837 | | 413 | 19.630 | 06/22/14 | | | | | | | 06/09/05 | 91 | | 822 | 17.130 | 06/07/15 | | | | | | | | | | | | | | | | | | Margaret D. Roberts | 08/22/01 | 2,000 | | | 9.93 | 08/20/11 | 1,119 | $18,665 | | | | | 06/12/02 | 2,700 | | | 12.060 | 06/09/12 | | | | | | | 06/24/03 | 1,142 | | | 16.410 | 06/21/13 | | | | | | | 06/24/04 | 837 | | 413 | 19.630 | 06/22/14 | | | | | | | 06/09/05 | 88 | | 793 | 17.130 | 06/07/15 | | | | | | | | | | | | | | | | | | Frank Deaton | 06/12/02 | 2,475 | | | 12.060 | 06/09/12 | | | 1,102 | $18,381 | | | 06/24/03 | 1,065 | | | 16.410 | 06/21/13 | | | | | | | 06/24/04 | 737 | 363 | | 19.630 | 06/22/14 | | | | | | | 06/09/05 | 87 | 779 | | 17.130 | 06/07/15 | | | | |
(1)Unvested shares value is based on Carver’s stock price at close of business on 3/31/07 of $16.68.
Grant dates and vesting schedule for unvested shares are shown below for each named Executive Officer. | Deborah C. Wright | Grant Date | Shares Granted | Unvested | Vesting Dates | | Vesting Schedule | | | 06/24/04 | 2,500 | 834 | 06/24/07 | | | | | | 1/3 each year | | | | 06/09/05 | 5,432 | 4,889 | 06/09/07 | 06/09/08 | 06/09/09 | 06/09/10 | | | 10% yrs 1-4; 60% yr 5 | | | 11/20/06 | 5,513 | 5,513 | 06/14/07 | 06/14/08 | 06/14/09 | 06/14/10 | 06/14/11 | | 20% per year | | | | | Total Unvested | 11,236 | | | | | | | | |
| Roy Swan | 05/26/05 | 3,625 | 2,417 | 05/25/07 | 05/25/08 | | | | | 1/3 each year | | | | 11/20/06 | 1,280 | 1,280 | 06/14/07 | 06/14/08 | 06/14/09 | 06/14/10 | 06/14/11 | | 20% per year | | | | | Total Unvested | 3,697 | | | | | | | | |
| James Bason, Jr. | 06/24/04 | 500 | 334 | 06/24/07 | | | | | | 1/3 each year | |
The following table sets forth the stock awards that vested and the option grants that were exercised for the Named Executive Officers during the last fiscal year.
OPTION EXERCISE AND STOCK VESTED at FISCAL YEAR-END 2007 | | Option Awards | Stock Awards (1) | Name | Number of shares acquired on exercise (#) | Value realized upon exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($) | | (a) | (b) | (c) | (d) | (e) | Deborah C. Wright(2) | --- | --- | 2,210(2) | $37,742 | Roy Swan(3) | --- | --- | 1,208(3) | $20,536 | William Gray(4) | 5,511 | $35,000 | 919(4) | $15,781 | James Bason, Jr.(5) | --- | --- | 610(5) | $ 9,915 | Margaret D. Roberts(6) | --- | --- | 463(6) | $ 7,913 | Frank Deaton(7) | --- | --- | 449(7) | $ 7,672 |
(1)All vested shares are time based. Price is based on average of the high and low stock price on the vesting date.
(2)Deborah Wright No options exercised in the fiscal year | Stock Awards | Grant Date | Vested Shares | Vesting Date Price | | | | 06/24/03 | 834 | $17.25 | $14,387 | | | 06/24/04 | 833 | $17.25 | $14,369 | | | 06/09/05 | 543 | $16.55 | $ 8,987 | | | Total | 2,210 | | $37,742 |
(3)Roy Swan No options exercised in the fiscal year | Stock Awards | Grant Date | Vested Shares | Vesting Date Price | | | | 05/26/05 | 1208 | $17.00 | $20,536 |
(4)William Gray 5,511 options exercised 3/29/07 @16.40 | | | $90,380 | | | 01/11/02 | 2,530 | $9.87 | $24,971 | | | 01/11/02 | 2,530 | $9.87 | $24,971 | | | 06/12/02 | 451 | $12.06 | $5,438 | | | Total | 5,511 | | $55,380 | | | | | Gains on exercise | $35,000 |
| Stock Awards | Grant Date | Vested Shares | Vesting Date Price | | | | 06/24/03 | 484 | $17.25 | $8,349 | | | 06/24/04 | 333 | $17.25 | $5,744 | | | 06/09/05 | 102 | $16.55 | $1,688 | | | Total | 919 | | $15,781 |
(5)James Bason, Jr. No options exercised in the fiscal year | Stock Awards | Grant Date | Vested Shares | Vesting Date Price | | | | 02/05/03 | 334 | $15.66 | $5,230 | | | 06/24/04 | 167 | $17.25 | $2,881 | | | 06/09/05 | 109 | $16.55 | $1,804 | | | Total | 610 | | $9,915 |
(6)Margaret D. Roberts No options exercised in the fiscal year | Stock Awards | Grant Date | Vested Shares | Vesting Date Price | | | | 06/24/03 | 191 | $17.25 | $3,295 | | | 06/24/04 | 167 | $17.25 | $2,881 | | | 06/09/05 | 105 | $16.55 | $1,738 | | | Total | 463 | | $7,913 |
(7)Frank Deaton No options exercised in the fiscal year | Stock Awards | Grant Date | Vested Shares | Vesting Date Price | | | | 06/24/03 | 178 | 17.25 | $3,071 | | | 06/24/04 | 167 | 17.25 | $2,881 | | | 06/09/05 | 104 | 16.55 | $1,721 | | | Total | 449 | | $7,672 |
The following table sets forth information regarding nonqualified deferred compensation earned by our Named Executive Officers during the last fiscal year under nonqualified defined contribution plans.
NONQUALIFIED DEFERRED COMPENSATION PLANS at FISCAL YEAR-END 2007(1) Name | Carver Bancorp, Inc.Executive
Proposed 2006 Stock Incentive Plancontributions
Draft Shareholder Proposal for Inclusion in 2006 Proxy Statementlast FY
($)
| Proposal - Approval of the Carver Bancorp, Inc. 2006 Stock Incentive PlanRegistrant
contributions in last FY ($) | GeneralAggregate
earnings in last FY ($) | Our Board of Directors has adopted the Carver Bancorp, Inc. 2006 Stock Incentive Plan (the “Plan”Aggregate
withdrawals/ distributions ($), subject to approval by our shareholders. We have provided below a summary of our reasons for adopting the Plan and seeking the approval of our shareholders. The following summary is qualified in its entirety by the full text of the plan document. The plan document is attached hereto as Appendix A and is incorporated by reference into this proposal. | Why We Are Asking for Shareholder ApprovalAggregate
balance at last FYE ($) Our 1995 Stock Option Plan expired by its terms in 2005. We are no longer able to grant stock options and stock appreciation rights under the 1995 Plan. We are asking our shareholders to approve the Plan so that we will be able to continue to grant stock-based compensation to our directors and officers. The Plan would permit the grant of stock options, stock appreciation rights and restricted stock. Most of the companies with which we compete for directors and management-level employees are public companies that offer stock awards as part of their director and officer compensation packages. By approving this Plan, our shareholders will give us the flexibility we need to continue offering a competitive compensation package that is linked to our stock price performance to attract and retain highly qualified directors and officers. Upon approval of the Plan we will freeze the MRP and ICP and no further shares will be granted thereunder.
As an American Stock Exchange listed company, we are required to seek the approval of our shareholders before implementing an equity compensation plan such as the Plan. Shareholder approval will also enhance our ability to deduct the expense of certain awards for federal income tax purposes.
If We Do Not Receive Shareholder Approval We Will Not Implement the Plan
| | (a) | (b) | (c) | (d) | (e) | (f) | | Deborah C. Wright | --- | --- | --- | --- | --- | | Roy Swan | --- | --- | --- | --- | --- | | William Gray | --- | --- | --- | --- | --- | | James Bason, Jr. | --- | --- | --- | --- | --- | | Margaret D. Roberts | --- | --- | --- | --- | --- | | Frank Deaton | --- | --- | --- | --- | --- |
Employment and Other Agreements with Executive Officers If we do not receive the approval of the shareholders, the Plan will not be implemented and the existing MRP will continue in effect. In this event, we expect that our Board of Directors will consider substituting other forms of compensation to assure that our compensation packages for officers and directors are competitive with those of other publicly traded financial services companies.
Purpose of the 2006 Stock Incentive Plan
The purpose of the Plan is to promote our growth and profitability, to provide certain officers, employees and non-employee directors of our company and our affiliates with an incentive to achieve corporate objectives, to attract and retain individuals of outstanding competence and to provide such individuals with an equity interest in our company.
Description of the 2006 Stock Incentive Plan
Administration. Initially, the Plan will be administered by a committee appointed by our Board of Directors consisting of the members of our Board of Directors. The Committee will consist of not less than two non-employee members of the Board of Directors who are “disinterested board members” under federal tax and securities laws. The Committee has broad discretionary powers.
Stock Subject to the 2006 Stock Incentive Plan. We will reserve and keep available such number of shares as may be required to meet the needs of the Plan. A maximum of 300,000 shares of our common stock may be issued under the Plan and of that, a maximum of 150,000 shares of restricted stock may be awarded. As of July 24, 2006, the aggregate fair market value of the shares to be reserved under this Plan was $5,286,000, based on the closing sales price per share of our common stock of $17.62 on the American Stock Exchange. Each stock option that is exercised or deemed to have been exercised will be counted against this limit, even if the vesting or exercise does not result in the issuance of shares. For example, shares that are withheld to satisfy tax withholding obligations will count against the limit in the same manner as other vested awards or exercised stock options. Awards that fail to vest and vested stock options that expire without being exercised will not count against the limit.
To further satisfy our shareholders as to our grant practices and assuming approval of the Plan, for fiscal years 2007- 2009, we will not grant equity awards in excess of an annual average run rate of 2.79%. This rate is calculated as the number of shares granted in each fiscal year by the Compensation Committee pursuant to the Company’s equity plans and reported in the Company’s periodic reports filed with the SEC divided by the fiscal year end shares outstanding. For this purpose, shares granted will include stock options, stock-settled SARs, and restricted stock and will not include any award that by its terms must be settled in cash or grants assumed in connection with any future acquisitions. For purposes of calculating the number of equity awards granted for this annual average run rate, awards of restricted stock will be treated as the equivalent of 4 option shares, and the number of shares of the Company’s common stock will be the amount outstanding at the end of each of the three fiscal years.
Eligibility. The Committee selects the people who may participate in the Plan. Any officer, employee or non-employee director of the Company, the Carver Federal Savings Bank (the “Bank”), or any other affiliate, may be selected to participate. As of July 31, 2006, there wereapproximately 120 employees and 8 non-employee directors eligible to be selected for participation. Under the Plan, there are no automatic grants of stock options, SARs or restricted stock to non-employee directors and instead the Plan provides the Committee with discretion as to the amount of stock options, SARs and restricted stock to provide to a non-employee director.
Terms and Conditions of Awards. The Committee may, in its discretion, grant any or all of three types of equity-linked awards to eligible individuals: stock options, stock appreciation rights and restricted stock. The Committee will, in its discretion, determine the type of awards made and establish other terms and conditions applicable to the award. In setting terms and conditions, it must observe the following restrictions:
· | It may not grant more than 30,000 restricted stock awards and 45,000 stock options to any one individual in any one calendar year. |
As of June 1, 1999, both Carver Bancorp, Inc. and Carver Federal Savings Bank (collectively “Carver”) entered into employment agreements to secure the services of Deborah C. Wright as President and CEO. The employment agreements are intended to set forth the aggregate compensation and benefits payable to Ms. Wright for all services rendered to Carver and any of its subsidiaries. Both employment agreements provided for an initial term of three years beginning June 1, 1999 and, pursuant to the terms of the employment agreements, each year thereafter have been extended an additional year following a review by the Compensation Committee and the Board of Directors of Ms. Wright's performance.
In addition, the employment agreements provide for an annual incentive payment based on the achievement of certain performance goals, future grant of stock awards, a supplemental retirement benefit, additional life insurance protection and participation in the various employee benefit plans maintained by Carver from time to time. The agreements also provide customary corporate indemnification and errors and omissions insurance coverage throughout the term of the agreements and for six years thereafter.
Carver may terminate Ms. Wright's employment at any time for cause as defined in the employment agreements. In the event that Carver terminates Ms. Wright's employment for reasons other than for cause, she would be entitled to a severance benefit equal in value to the cash compensation, retirement and other fringe benefits she would have earned had she remained employed for the remaining term of the agreements. The same severance benefits would be available if Ms. Wright resigns during the term of the employment agreements following a loss of title, office or membership on the Board; a material reduction in her duties, functions or responsibilities; involuntary relocation of her principal place of employment by over 30 miles from its location as of June 1, 1999; other material breaches of contract by Carver that are not cured within 30 days; or, in certain circumstances, a change in control. In the event of a · | It may not grant awards with an effective date that is before September 12, 2006 or the date that we receive shareholder approval for the Plan, whichever is later. |
Stock Options. The Committee sets the terms and conditions of the stock options that it grants. In setting terms and conditions, it must observe the following restrictions:
· | It may not grant a stock option with a purchase price that is less than the fair market value of a share of our common stock on the date it grants the stock option. |
change in control, the remaining term of Ms. Wright's agreement with Carver at any point in time will be three years unless written notice of non-renewal is given by the Board or Ms. Wright. · | It may not grant a stock option with a term that is longer than 10 years. |
The Committee may grant incentive stock options to officers and employees that qualify for special federal income tax treatment or non-qualified stock options that do not qualify for special federal income tax treatment. The Committee may only grant non-qualified stock options to non-employee directors. Incentive stock options are subject to certain additional restrictions under the Code and the Plan. Unless otherwise designated by the Committee, vested options granted under the Plan will be exercisable for a period of ten years after the date of grant or for a shorter period ending three months after the option holder’s termination of employment due to discharge without cause, one year after termination of employment due to Disability (as defined in the Plan), or two years after termination due to death (except for ISOs) or immediately upon termination for “Just Cause” (as defined in the Plan).
Upon the exercise of an option, the exercise price must be paid in full. Payment may be made in cash, shares of our common stock already owned by the option holder or through participation in a “cashless exercise” procedure involving a broker. Vested options may be transferred prior to exercise only on death of the option holder.
Restricted Stock. As a general rule, shares of our common stock that are subject to a restricted stock award are held by the Committee for the benefit of the award recipient until vested and, when vested, are transferred to the award recipient. Unless the Committee determines otherwise with respect to any restricted stock award, before the shares subject to a restricted stock award are vested and transferred to the award recipient, the Committee will exercise any voting rights in its discretion, the recipient will direct the response of any tender, exchange or other offer and the Committee will accumulate any dividends or distributions for distribution at the same time and terms as the underlying shares. In the alternative, the Committee may authorize the immediate distribution of the restricted shares to the award recipient in the form of a stock certificate bearing a legend containing the applicable vesting restrictions.
Stock Appreciation Rights. A stock appreciation right affords the holder the right to receive, upon exercise, a payment in cash or shares of our common stock equal to the positive difference between the exercise price assigned to the right and the fair market value of a share of our common stock on the exercise date. The Committee sets the terms and conditions of the stock appreciation rights that it grants. In setting terms and conditions, it must observe the following restrictions:
· | It may not grant a stock appreciation right with an exercise price that is less than the fair market value of a share of our common stock on the date it grants the stock appreciation right. |
A portion of the severance benefits payable to Ms. Wright under her employment agreements in the event of a change in control might constitute "excess parachute payments" under current federal tax laws. Federal tax laws impose a 20% excise tax, payable by the executive, on excess parachute payments. In the event that any amounts paid to Ms. Wright following a change of control would constitute "excess parachute payments," Ms. Wright's employment agreement with Carver provides that she will be indemnified for any excise taxes imposed due to such excess parachute payments, and any additional income and employment taxes imposed as a result of such indemnification of excise taxes. Any excess parachute payments and indemnification amounts paid will not be deductible compensation expenses for Carver or Carver Federal. · | It may not grant a stock appreciation right with a term that is longer than 10 years. |
The Committee may grant either tandem or stand-alone stock appreciation rights. Tandem stock appreciation rights are granted in tandem with and are exercisable on the same terms and conditions as a related stock option that is granted simultaneously. The exercise of a tandem stock appreciation right cancels the related option and the exercise of a related stock option cancels the tandem stock appreciation right. Unless otherwise designated by the Committee, stock appreciation rights granted under the 2006 Stock Incentive Plan will be stand-alone stock appreciation rights and will be exercisable for a period of ten years after the date of grant (or for a shorter period ending upon the holder’s termination of employment for any reason).
Vesting of Awards.Unless otherwise specified by the Committee, stock options, stock appreciation rights and restricted stock awards, will vest at the rate of 20% per year beginning on the first anniversary of the grant date. Unless otherwise specified by the Committee, in the event of termination of employment due to death or Disability (as defined in the Plan) the vesting of such awards will be accelerated. Any of the foregoing awards that are not vested on the date that a recipient terminates employment will be cancelled without consideration (other than a refund of the lesser of the amount (if any) paid when the award was made and the fair market value of the unvested shares on the date of forfeiture) on the date the recipient terminates employment.
Change in Control. Unless otherwise specified by the Committee, at the effective date of a Change in Control (as defined in the Plan) or a Pending Change in Control (as defined in the Plan), all outstanding stock options, stock appreciation rights and restricted stock awards vest and become exercisable (if applicable) on the date of a Change in Control or a Pending Change in Control.
Mergers and Reorganizations. The number of shares available under the Plan, the maximum limits on awards available for grants to individual employees and directors, and any outstanding awards will be adjusted to reflect any merger, consolidation or business reorganization in which the Company is the surviving entity, and to reflect any stock split, stock dividend, spin-off or other event where the Committee determines an adjustment is appropriate in order to prevent the enlargement or dilution of an award recipient’s rights. If a merger, consolidation or other business reorganization occurs and the Company is not the surviving entity, unless otherwise determined by the Committee, outstanding options and stock appreciation rights may be exchanged for options or stock appreciation rights linked to the equity of the surviving entity that are designed to neither increase nor diminish the rights of the holders of the outstanding options or stock appreciations rights or may be settled for a monetary payment when the merger, consolidation or reorganization occurs. If a merger, consolidation or other business reorganization occurs and the Company is not the surviving entity, unless otherwise determined by the Committee, outstanding restricted stock awards, that are denominated and/or payable in, and/or value by reference to shares, of our common stock, will be exchanged for the same consideration received by shareholders generally in the transaction, with such consideration subject to the same terms and conditions of the award.
Conditions of Effectiveness. The Plan will become effective upon its approval by our shareholders and will continue in effect for ten years from the date of such effective date unless terminated sooner.
Termination or Amendment. Our Board of Directors has the authority to amend the Plan at any time or to terminate the Plan in whole or in part at any time by giving written notice to the Committee; however, all awards that have been granted under the Plan and are outstanding on the date of such suspension or termination of the Plan will remain outstanding and exercisable for the period and terms and conditions set forth in the agreements between the Committee and the recipients.
To the extent required to comply with the Code and as a American Stock Exchange listed company, we are required to seek shareholder approval for amendments to the Plan that are deemed material under the American Stock Exchange listing rules.
Stock Option and Stock Appreciation Right Repricing. The Committee, the independent directors and our Board of Directors are prohibited from making any adjustment or amendment to an outstanding stock option or stock appreciation right that reduces or has the effect of reducing its exercise price.
Federal Income Tax Consequences
The following discussion is intended to be a summary and is not a comprehensive description of the federal tax laws, regulations and policies affecting awards that may be granted under the Plan. Any descriptions of the provisions of any law, regulation or policy are qualified in their entirety by reference to the particular law, regulation or policy. Any change in applicable law or regulation or in the policies of various taxing authorities may have a significant effect on this summary. The Plan is not a qualified plan under Section 401(a) of the Internal Revenue Code.
Stock Options. Incentive stock options will not give rise to federal income tax consequences when they are granted. If they are exercised during employment or within three months after termination of employment (one year in cases of termination due to death or disability), the exercise will not create federal income tax consequences either. When the shares acquired on exercise of an incentive stock option are sold, the seller must pay federal income taxes on the amount by which the sales price exceeds the purchase price. This amount will be taxed at capital gains rates if the sale occurs at least two years after the option was granted and at least one year after the option was exercised. Otherwise, it is taxed as ordinary income. The amount by which the fair market value of the shares acquired on exercise exceeds the option exercise price will be an item of adjustment in the year of exercise for purposes of determining the option holder’s liability, if any, for alternative minimum tax.
Incentive stock options that are exercised more than one year after termination of employment due to death or disability or three months after termination of employment for other reasons are treated as non-qualified stock options. Non-qualified stock options will not create federal income tax consequences when they are granted. When they are exercised, federal income taxes at ordinary income tax rates must be paid on the amount by which the fair market value of the shares acquired by exercising the option exceeds the exercise price. When an option holder sells shares acquired by exercising a non-qualified stock option, he or she must pay federal income taxes on the amount by which the sales price exceeds the purchase price plus the amount included in ordinary income at option exercise. This amount will be taxed at capital gains rates, which will vary depending upon the time that has elapsed since the exercise of the option. A cash payment, if directed by the Committee on a merger or other reorganization under the Plan’s change of control provisions, is taxed as if it were the exercise of a non-qualified stock option followed immediately by a resale of the stock acquired by exercising the option.
When a non-qualified stock option is exercised, we may be allowed a federal income tax deduction for the same amount that the option holder includes in his or her ordinary income. When an incentive stock option is exercised, there is no tax deduction unless the shares acquired are resold sooner than two years after the option was granted or one year after the option was exercised. A cash payment if directed by the Committee on a merger or other reorganization under the Plan’s change of control provisions is deductible as if it were the exercise of a non-qualified stock option.
Stock Appreciation Rights. Stock appreciation rights do not have federal income tax consequences for recipients or for us when they are granted. When a stock appreciation right is exercised, the amount paid in settlement is included in the recipient’s gross income for federal income tax purposes, and we may be entitled to claim a federal tax deduction for a like amount.
Restricted Stock Awards. Restricted stock awards granted under the Plan do not result in federal income tax consequences to either us or the award recipient when they are made. Once the award is vested and the shares subject to the award are distributed, the award recipient will generally be required to include in ordinary income, for the taxable year in which the vesting date occurs, an amount equal to the fair market value of the shares on the vesting date. We will generally be allowed to claim a deduction for compensation expense in a like amount. If dividends are paid on unvested shares held under the Plan, such dividend amounts will also be included in the ordinary income of the recipient. We will be allowed to claim a deduction for compensation expense for this amount as well. In certain cases, a recipient of a restricted stock award may elect to include the value of the shares subject to a restricted stock award in income for federal income tax purposes when the award is made instead of when it vests.
Deduction Limits. Section 162(m) of the Code limits our deductions for compensation in excess of $1,000,000 per year for our chief executive officer and the four other most highly paid executives named in the summary compensation table in our proxy statement. Restricted stock awards may be subject to this deduction limitation if the amount of the restricted stock awards plus other compensation of the executive that is subject to the limit exceeds $1,000,000. We expect that the Committee will take these deduction limits into account in setting the size, terms and conditions of awards. However, the Committee may decide to grant awards that exceed the deduction limit.
The preceding statements are intended to summarize the general principles of current federal income tax law applicable to awards that may be granted under the Plan. State and local tax consequences may also be significant.
New Plan Benefits. Awards under the Plan are discretionary and the Committee has not yet determined the amounts of benefits, to whom awards will be made and the terms and conditions of such awards. As a result, no information is provided concerning the benefits to be delivered under the Plan to any individual or group of individuals.
Letter Agreements. Carver entered into letter employment agreements with Mr. Swan, Mr. Bason and Ms. Roberts. Generally, each letter employment agreement provides for "at-will" employment and compensation in the form of base salary and benefits continuation based on length of service and in certain instances, a one-time payment.
Change in Control Arrangements. Pursuant to their letter agreements, in the event of a change in control, Mr. Bason and Ms. Roberts will receive 39 weeks of base salary and benefits continuation. During fiscal 2007, Carver amended Mr. Swan’s letter agreement to include a change-in-control agreement effective as of March 12, 2007. The amendment applies only if Mr. Swan's employment is terminated following a change in control that occurs during the employment term. The employment term is from March 12, 2007 through March 12, 2009. Carver may terminate Mr. Swan's employment at any time for cause as defined in his Letter Agreement, as amended. In the event that Carver terminates Mr. Swan's employment for reasons other than disability, retirement or cause, he would be entitled to a change in control benefit equal to (i) continued medical, life, and disability benefits for two years, (ii) a lump sum payment equal to two years' salary and (iii) an amount equal to two times his highest incentive compensation award paid during any full fiscal year during the term of the agreement.
The same severance benefits would be available if Mr. Swan resigns during the term of his Letter Agreement following: a loss of title, a material reduction in his duties, functions or responsibilities, involuntary relocation of his principal place of employment so that his commuting distance is more than 30 miles from his address, or other material breaches of contract by Carver that are not cured within 30 days. If any amounts paid to Mr. Swan following a change in control would constitute an "excess parachute payment" under federal tax law, the payments will be reduced to avoid the imposition of the excise tax. If payments are reduced, Mr. Swan may choose which payments and benefits will be reduced. The Board of Directors Recommends a Vote FOR
the Approval of the 2006 Stock Incentive Plan.
Please Mark Your Votes on the Enclosed Proxy Card and
Return it in the Enclosed Postage-Prepaid Envelope
or Vote by Internet or Telephone.
|
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ADDITIONAL INFORMATION
Date for Submission of Stockholder Proposals
POTENTIAL PAYMENT UPON TERMINATION OR CHANGE IN CONTROL at FISCAL YEAR-END 2007
The tables below reflect the amount of compensation to each of our Named Executive Officers in the event of termination of such executive’s employment under such executive’s employment agreement or employment letter. The amount of compensation payable to each Named Executive Officer upon voluntary termination, early retirement, involuntary not-for-cause termination, termination following a Change in control and in the event of disability or death of the executive is shown below. With the exception of Mr. Gray, who resigned on December 31, 2006, the amounts shown assume that such termination was effective as of March 31, 2007, and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the Named Executive Officers upon their termination. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company. | | | Involuntary Not For Cause or by Executive with good Reason | For Cause or by Executive without Good Reason | Disability | Retirement | Death | Change in Control | Deborah C. Wright, Chairman and Chief Executive Officer | | | | | | Cash Wages(1) | | 691,802 | | 518,851 | | | 957,879 | Incentive(2) | | 478,940 | | | | | 478,940 | Health, Welfare, Perquisites and Other Personal Benefits(3) | 43,100 | | 28,600 | | | 54,100 | Retirement Plans(4) | | 39,900 | | | | | 39.900 | Long term Incentive Plan(5) | | 682,322 | | | | | 682,322 | | Total | | 1,936,063 | | 547,451 | | | 2,213,141 | | | | | | | | | | Roy Swan, Executive Vice President and Chief Financial Officer | | | | | | Cash Wages(1) | | 17,432 | | 135,966 | | | 453,220 | Incentive(2) | | | | | | | 135,966 | Health, Welfare, Perquisites and Other Personal Benefits(3) | 15,600 | | | | | 40,900 | Retirement Plans(4) | | | | | | | 34,929 | Long term Incentive Plan(5) | | | | | | | 99,889 | | Total | | 33,032 | | 135,966 | | | 764,904 | | | | | | | | | | William Gray, Former Senior Vice President and chief Financial Officer(6) | | | | | | Cash Wages(1) | | | | | | | | Incentive(2) | | | | | | | | Health, Welfare, Perquisites and Other Personal Benefits(3) | | | | | | | Retirement Plans(4) | | | | | | | | Long term Incentive Plan(5) | | | | | | | | | Total | | | | | | | | | | | | | | | | | James Bason, Jr., Senior Vice President and Chief Lending Officer | | | | | | Cash Wages(1) | | 12,314 | | 96,046 | | | 120,057 | Incentive(2) | | | | | | | | Health, Welfare, Perquisites and Other Personal Benefits(3) | 15,600 | | | | | 24,400 | Retirement Plans(4) | | | | | | | 15,531 | Long term Incentive Plan(5) | | | | | | | 64,226 | | Total | | 27,914 | | 96,046 | | | 224,215 | | | | | | | | | | Margaret D. Roberts, Senior Vice President and Chief Human Resources Officer | | | | | | Cash Wages(1) | | 10,668 | | 83,210 | | | 104,013 | Incentive(2) | | | | | | | | | Health, Welfare, Perquisites and Other Personal Benefits | 15,600 | | | | | 24,400 | Retirement Plans(4) | | | | | | | 2,774 | Long term Incentive Plan(5) | | | | | | | 19,665 | | Total | | 26,268 | | 83,210 | | | 150,852 | | | | | | | | | | Frank Deaton, Former Senior Vice President of Operations(7) | | | | | | |
(1)For Messrs. Swan and Bason and Ms. Roberts cash wages reflect the value of severance payments in accordance with CIC letter agreements or pursuant to the company’s Severance Pay Plan if other than CIC. For Ms. Wright, cash payments reflect the terms of her contract.
(2)Incentive reflects payments at target awards paid as directed by the terms of the CIC agreement or current incentive compensation plan. (3)Health, Welfare and Other Personal Benefits reflects the cost of the Company continuing medical dental, vision and life insurance benefits per the CIC agreement or severance pay plan. (4)Retirement Benefits reflect the 401k Plan matching and profit sharing contributions and acceleration of vesting of unvested profit sharing contributions and Employee Stock Option Plan grants. Ms. Wright and Ms. Roberts are fully vested in both plans. (5)Long term Incentive Plan payments reflects the value of accelerated vesting of unvested cash, shares and options. (6)On November 17, 2006, Mr. Gray resigned voluntarily as Chief Financial Officer and on December 31, 2006, resigned as Senior Vice President. Therefore, Mr. Gray was not eligible for potential payments at fiscal year-end. (7)On April 13, 2007, Mr. Deaton resigned voluntarily as Senior Vice President of Operations and was not eligible for any post-termination payments. Impact of Accounting and Tax on the Form of Compensation The Compensation Committee and the Company consider the accounting and tax (individual and corporate) consequences of the compensation plans prior to making changes to the plans. The Compensation Committee has considered the impact of the Statement of Financial Accounting Standard No. 123, or SFAS No. 123, as issued by the FASB in 2004, on the Company’s use of equity incentives as a key retention tool. As part of its role, the Compensation Committee also reviews and considers sections of the Internal Revenue Code (“IRC”), including but not limited to, Golden Parachutes Under IRC Section 280(g) and the deductibility of executive compensation under Section 162(m) which limits deduction of compensation paid to Named Executive Officers to $1,000,000 unless the compensation is “performance-based”. This applies to base salary, all cash incentive plans and equity grants other than stock options. During fiscal 2007, no employee received taxable compensation in excess of $1,000,000 and therefore, deductibility of compensation was not limited by these sections of the IRC. Option Granting Practices The timing of our equity compensation grants has historically been and continues to be determined upon appointment to the Board, upon hire, or in conjunction with incentive grants after our fiscal year end and approved by the Compensation Committee. In fiscal 2007, grants were communicated to executives on June 14, 2006 but were not granted until after shareholder approval of the 2006 Stock Incentive Plan and further consultation with outside compensation consultants. The grants were awarded on November 20, 2006. The grants vest over a five-year period at 20% each year with the first 20% vesting on June 14, 2007 and subsequent vesting on anniversaries of that date, with accelerated vesting in years three and four if the Company meets or exceeds the peer group three-year average ROE. Ownership Guidelines The Company regularly reviews the ownership levels of its directors and officers and has not established minimum stock ownership guidelines as the Company’s directors and the Named Executive Officers collectively own a significant amount of Company Stock. Conclusion The Compensation Committee retains the discretion to decrease all forms of incentive payouts based on significant individual or Company performance shortfalls. Likewise, the Committee retains the discretion to increase payouts and/or consider special awards for significant achievements, including but not limited to superior asset management, investment or strategic accomplishment and/or consummation of beneficial acquisitions. Overall, the level and mix of compensation that is finally decided upon is considered within the context of both the objective data from our competitive assessment of compensation and performance, as well as discussion of the subjective factors as outlined above. The Compensation Committee believes that each of the compensation packages is within the competitive range of practices when compared to the objective comparative data and reasonable given Company and individual performance. Director Compensation The chairman of the Board of Directors is currently the Chief Executive Officer and does not receive any additional compensation for serving as the Board chairman. The Company’s outside directors are paid an annual cash retainer and a per meeting fee to serve as a director of both Carver Bancorp, Inc. and Carver Federal Savings Bank. The chairman of the Audit Committee receives an annual retainer of $2,500. The chairs of the remaining committees receive an annual retainer of $1,500. All committee members including the chairs receive $475 per committee meeting attended, $600 per Board meeting attended, and $100 per Executive Committee meeting attended. Upon shareholder approval of new directors, the Compensation Committee may approve a grant of 1,000 shares of unrestricted stock and 1,000 stock options which vest pursuant to the Company’s 5-year performance accelerated vesting schedule. The following table sets forth information regarding compensation earned by the non-employee directors of Carver during the last fiscal year.
DIRECTOR COMPENSATION at FISCAL YEAR-END 2007
| Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Change in pension value and nonqualified deferred compensation earnings | All other compensation ($) | Total ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | Carol Baldwin Moody | $24,775 | --- | $386 | --- | --- | --- | $25,161 | | Dr. Samuel Daniel | $20,150 | $16,500(1) | $772(1) | --- | --- | --- | $37,422 | | David L. Hinds | $31,175 | --- | --- | --- | --- | --- | $31,175 | | Robert Holland, Jr. | $24,175 | --- | --- | --- | --- | --- | $24,175 | | Pazel G. Jackson, Jr. | $33,325 | --- | --- | --- | --- | --- | $33,325 | | Edward B. Ruggiero | $24,775 | --- | $386 | --- | --- | --- | $25,161 | | Robert Tarter | $18,250 | $16,500(2) | $772(2) | --- | --- | --- | $35,522 | | Strauss Zelnick | $20,225 | --- | --- | --- | --- | --- | $20,225 |
(1)Dr. Daniel received 1,000 restricted shares and 1,000 options under our Stock Incentive Plan upon joining the Board; the options vest pursuant to the plan’s 5-year performance accelerated vesting schedule. Grant date is 11/20/2006. (2)Mr. Tarter received 1,000 restricted shares and 1,000 options under our Stock Incentive Plan upon joining the board; The options vest pursuant to the plan’s 5-year performance accelerated vesting schedule. Grant date is 11/20/2006.
ADDITIONAL INFORMATION
Date for Submission of Stockholder Proposals In accordance with SEC rules and Carver’s Bylaws, any stockholder wishing to have a proposal considered for inclusion in Carver’s proxy statement and proxy card relating to the annual meeting of stockholders for the fiscal year ending March 31, 2008 must, in addition to other applicable requirements, set forth such proposal in writing and file it with the Secretary of Carver either: (1) on or before April 7, 2008, if Carver’s next annual meeting of stockholders is within 30 days of the anniversary date of the Annual Meeting; or (2) a reasonable time before Carver begins to print and mail its proxy materials, if the date of next fiscal year’s annual meeting is changed by more than 30 days from the date of the Annual Meeting. Notice of Business to be Conducted at Annual Meeting The Bylaws of Carver provide an advance notice procedure for a stockholder to properly bring business before an annual meeting or to nominate any person for election to Carver’s Board of Directors. The stockholder must be a stockholder of record and have given timely notice thereof in writing to the Secretary of Carver. To be timely, a stockholder’s notice must be delivered to or received by the Secretary not later than the following dates: (1) with respect to an annual meeting of stockholders, 60 days in advance of such meeting, if such meeting is to be held on a day which is within 30 days preceding the anniversary of the previous fiscal year’s annual meeting, or 90 days in advance of such meeting if such meeting is to be held on or after the anniversary of the previous fiscal year’s annual meeting; and (2) with respect to an annual meeting of stockholders held at a time other than within the time periods set forth in the immediately preceding clause, the close of business on the 10th day following the date on which notice of such meeting is first given to stockholders. Notice shall be deemed to be first given to stockholders when disclosure of such date of the meeting of stockholders is first made in a press release reported to Dow Jones News Services, Associated Press or comparable national news service, or in a document publicly filed by Carver with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act. A stockholder’s notice to the Secretary of Carver shall set forth such information as required by the Bylaws of Carver. Nothing in this paragraph shall be deemed to require Carver to include in its proxy statement and proxy card relating to an annual meeting any stockholder proposal or nomination that does not meet all of the requirements for inclusion established by the SEC in effect at the time such proposal or nomination is received. See “Date for Submission of Stockholder Proposals.” Other Matters As of the date of this proxy statement, the Board of Directors does not know of any other matters to be brought before the stockholders at the Annual Meeting. If, however, any other matters not now known are properly brought before the Annual Meeting, the persons named in the accompanying proxy card will vote the shares represented by all properly executed proxies on such matters using their best judgment. Annual Report to Stockholders A copy of the Annual Report to Stockholders for the fiscal year ended March 31, 2007 (“2007 Annual Report”), containing financial statements as of March 31, 2007 and March 31, 2006 and for each of the years in the three-year period ended March 31, 2007 prepared in conformity with generally accepted accounting principles, accompanies this proxy statement. The consolidated financial statements have been audited by KPMG LLP whose report thereon is included in the 2007 Annual Report. The 2007 Annual Report includes a copy of Carver’s annual report on Form 10-K for fiscal 2007 filed with the SEC. Stockholders may obtain, free of charge, a copy of such annual report (excluding exhibits) by writing to Sheila Kennedy, Vice President and Secretary, Carver Bancorp, Inc., 75 West 125th Street, New York, New York 10027, or by telephoning (212) 360-8826. The annual report on Form 10-K for fiscal 2007 must, in addition to other applicable requirements, set forth such proposal in writing and file it with the Secretary of Carver either: (1) on or before April 2, 2007, if Carver’s next annual meeting of stockholders is within 30 days of the anniversary date of the Annual Meeting; or (2) a reasonable time before Carver begins to print and mail its proxy materials, if the date of next fiscal year’s annual meeting is changed by more than 30 days from the date of the Annual Meeting. Notice of Business to be Conducted at Annual Meeting
The Bylaws of Carver provide an advance notice procedure for a stockholder to properly bring business before an annual meeting or to nominate any person for election to Carver’s Board of Directors. The stockholder must be a stockholder of record and have given timely notice thereof in writing to the Secretary of Carver. To be timely, a stockholder’s notice must be delivered to or received by the Secretary not later than the following dates: (1) with respect to an annual meeting of stockholders, 60 days in advance of such meeting, if such meeting is to be held on a day which is within 30 days preceding the anniversary of the previous fiscal year’s annual meeting, or 90 days in advance of such meeting if such meeting is to be held on or after the anniversary of the previous fiscal year’s annual meeting; and (2) with respect to an annual meeting of stockholders held at a time other than within the time periods set forth in the immediately preceding clause, the close of business on the 10th day following the date on which notice of such meeting is first given to stockholders. Notice shall be deemed to be first given to stockholders when disclosure of such date of the meeting of stockholders is first made in a press release reported to Dow Jones News Services, Associated Press or comparable national news service, or in a document publicly filed by Carver with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act. A stockholder’s notice to the Secretary of Carver shall set forth such information as required by the Bylaws of Carver. Nothing in this paragraph shall be deemed to require Carver to include in its proxy statement and proxy card relating to an annual meeting any stockholder proposal or nomination that does not meet all of the requirements for inclusion established by the SEC in effect at the time such proposal or nomination is received. See “Date for Submission of Stockholder Proposals.”
Other Matters
As of the date of this proxy statement, the Board of Directors does not know of any other matters to be brought before the stockholders at the Annual Meeting. If, however, any other matters not now known are properly brought before the Annual Meeting, the persons named in the accompanying proxy card will vote the shares represented by all properly executed proxies on such matters using their best judgment.
Annual Report to Stockholders
A copy of the Annual Report to Stockholders for the fiscal year ended March 31, 2006 (“2006 Annual Report”), containing financial statements as of March 31, 2006 and March 31, 2005 and for each of the years in the three-year period ended March 31, 2006 prepared in conformity with generally accepted accounting principles, accompanies this proxy statement. The consolidated financial statements have been audited by KPMG LLP whose report thereon is included in the 2006 Annual Report.
The 2006 Annual Report includes a copy of Carver’s annual report on Form 10-K for fiscal 2006 filed with the SEC. Stockholders may obtain, free of charge, a copy of such annual report (excluding exhibits) by writing to Evan Jalazo, Vice President and Controller, Carver Bancorp, Inc., 75 West 125th Street, New York, New York 10027, or by telephoning (718) 230-2900. The annual report on Form 10-K for fiscal 2006 is also available on Carver’s website at www.carverbank.com and on the SEC website at www.sec.gov.
| By Order of the Board of Directors, | | | | /s/ Sheila Kennedy | | | | Sheila Kennedy | | Vice President and Secretary |
New York, New York, July 30, 2007
To Assure That Your Shares Are Represented at the Annual Meeting, Please Sign, Date, and Promptly Return the Accompanying Proxy Card in the Enclosed Postage-Paid Envelope or Use Internet or Telephone Voting as Described in the Proxy Statement. Roy Swan
Senior Vice President,
Chief of Staff and Secretary
New York, New York, July 31, 2006
To Assure That Your Shares Are Represented at the Annual Meeting,
Please Sign, Date, and Promptly Return the Accompanying
Proxy Card in the Enclosed Postage-Paid Envelope or Use Internet or
Telephone Voting as Described in the Proxy Statement.
CARVER BANCORP, INC. 2006 STOCK INCENTIVE PLAN75 WEST 125TH
ARTICLE I
PURPOSE
Section 1.1General Purpose of the Plan.
The purpose of thePlan is to promote the growth and profitability of Carver Bancorp, Inc. by providing certain directors, officers and employees of Carver Bancorp, Inc. and its Affiliates with an incentive to achieve corporate objectives and by attracting and retaining individuals of outstanding competence through a participation interest in the performance of Common Stock of Carver Bancorp, Inc.
ARTICLE II
DEFINITIONS
The following definitions shall apply for the purposes of this Plan, unless a different meaning is plainly indicated by the context:
Section 2.1Affiliatesmeans any “parent corporation” or “subsidiary corporation” of the Company, as such terms are defined in Section 424(e) and (f), respectively, of the Code.
Section 2.2Award means any Restricted Stock Award, granted to an Eligible Individual under the Plan.
Section 2.3Award Noticemeans, with respect to a Restricted Stock Award, a written instrument evidencing the Award and establishing the terms and conditions thereof.
Section 2.4Bankmeans Carver Federal Savings Bank, a federally chartered savings institution, and any successor thereto.
Section 2.5Beneficiarymeans the Person designated by an Eligible Individual to receive any Shares or other consideration with respect to an Award made to such Eligible Individual that becomes distributable, or to have the right to exercise any Options or Stock Appreciation Rights granted to such Eligible Individual that are exercisable following the Eligible Individual’s death.
Section 2.6Board means the Board of Directors of the Company.
Section 2.7Change in Control means any of the following events:
(a) approval by the stockholders of the Company of a transaction that would result in the reorganization, merger or consolidation of the Company with one or more other persons, other than a transaction following which:
(i)at least 51% of the equity ownership interests of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of the outstanding equity ownership interests in the Company; and
(ii)at least 51% of the securities entitled to vote generally in the election of directors of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of the securities entitled to vote generally in the election of directors of the Company;
(b)the acquisition of all or substantially all of the assets of the Company or beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the outstanding securities of the Company entitled to vote generally in the election of directors by any person or by any persons acting in concert, or approval by the stockholders of the Company of any transaction which would result in such an acquisition;
(c) a complete liquidation or dissolution of the Company, or approval by the stockholders of the Company of a plan for such liquidation or dissolution;
(d)the occurrence of any event if, immediately following such event, at least 50% of the members of the Board do not belong to any of the following groups:
(i)individuals who were members of the Board on the effective date of this Plan; or
(ii)individuals who first became members of the Board after the Effective Date either:
(A)upon election to serve as a member of the Board by affirmative vote of three-quarters of the members of the Board, or of a nominating committee thereof, in office at the time of such first election; or
(B)upon election by the stockholders of the Company to serve as a member of the Board, but only if nominated for election by affirmative vote of three-quarters of the members of the Board, or of a nominating committee thereof, in office at the time of such first nomination;
provided, however, that any such new member’s election or nomination did not result from an actual or threatened election contest (within the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents (within the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) other than by or on behalf of the Board of Directors of the Company;
(e)any event which would be described in Section 2.7(a), (b), (c) or (d) if the term “Bank” were substituted with the term “Company” and the term “Board of Directors of the Bank” were substituted for the term “Board” therein.
In no event, however, shall a Change of Control be deemed to have occurred as a result of any acquisition of securities or assets of the Company, the Bank, or a subsidiary of either of them, or by any employee benefit plan maintained by any of them. For purposes of this Section 2.7, the term “person” shall have the meaning assigned to it under Sections 13(d)(3) or 14(d)(2) of the Exchange Act.
Section 2.8Code means the Internal Revenue Code of 1986 (including the corresponding provisions of any succeeding law).
Section 2.9Committee means the Committee described in Section 4.1.
Section 2.10Companymeans Carver Bancorp, Inc., a corporation organized and existing under the laws of the State of Delaware, and any successor thereto.
Section 2.11Covered Employee means, for any taxable year of the Company, a person who is, or who the Committee determines is reasonably likely to be, a “covered employee” (within the meaning of Section 162(m) of the Code).
Section 2.12Disability means a physical or mental condition, which in the sole and absolute discretion of the Committee, is reasonably expected to be of indefinite duration and to substantially prevent a Participant from fulfilling his or her duties or responsibilities to the Company or an Affiliate.
Section 2.13Disinterested Board Member means a member of the Board who: (a) is not a current employee of the Company or a subsidiary, (b) is not a former employee of the Company who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, (c) has not been an officer of the Company, (d) does not receive remuneration from the Company or a subsidiary, either directly or indirectly, in any capacity other than as a director except in an amount for which disclosure would not be required pursuant to Item 404 of the proxy solicitation rules of the Securities and Exchange Commission as amended or any successor provision thereto and (e) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Item 404 of the proxy solicitation rules of the Securities and Exchange Commission as amended or any successor provision thereto. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of Section 162(m) of the Code, Rule 16b-3 promulgated under the Exchange Act and the corporate governance standards imposed on compensation committees under the listing requirements imposed by any national securities exchange on which the Company lists or seeks to list its securities.
Section 2.14Effective Date means September 12, 2006.
Section 2.15Eligible Employee means any employee of the Company, or of an Affiliate or Subsidiary, whom the Committee may determine to be a key officer or employee and select to receive an Award or a grant of an Option or Stock Appreciation Right pursuant to the Plan.
Section 2.16Eligible Individual means: (a) any Eligible Employee; and (b) any non-employee director of the Company or an Affiliate or Subsidiary.
Section 2.17Employer means the Company, the Bank and any successor thereto and, with the prior approval of the Board, and subject to such terms and conditions as may be imposed by the Board, any other savings bank, savings and loan association, bank, corporation, financial institution or other business organization or institution. With respect to any Eligible Individual, the Employer shall mean the entity which employs such person or upon whose board of directors such person serves.
Section 2.18Exchange Act means the Securities Exchange Act of 1934, as amended.
Section 2.19Exercise Period means the period during which an Option or Stock Appreciation Right may be exercised.
Section 2.20Exercise Price means the price per Share at which Shares subject to an Option may be purchased upon exercise of the Option and on the basis of which the cash payment or Shares due upon exercise of a Stock Appreciation Right is computed.
Section 2.21Fair Market Value means, with respect to a Share on a specified date:
(a)if the Share is listed on a national securities exchange (including the NASDAQ National Market System) on the date in question, the average of the highest and lowest selling price on such exchange on such date or if there were no sales on such date, then the mean between the bid and asked price on such date.
(b)if the Share is not listed or admitted to trading on any such exchange, the mean between the bid and asked price on such date, or, if there is no bid and asked price on such date, then on the next prior business day on which there was a bid and asked price; or
(c)if Sections 2.21(a) and (b) are not applicable, the fair market value of a Share as the Committee may determine.
Section 2.22Incentive Stock Option means a right to purchase Shares that is granted to an Eligible Employee pursuant to Section 5.1, that is designated by the Committee to be an Incentive Stock Option and that is intended to satisfy the requirements of Section 422 of the Code.
Section 2.23Non-Qualified Stock Optionmeans a right to purchase Shares that is either (a) granted to an Eligible Individual who is not an Eligible Employee or (b) granted to an Eligible Employee and either (i) is not designated by the Committee to be an Incentive Stock Option, or (ii) does not satisfy the requirements of Section 422 of the Code.
Section 2.24Option means either an Incentive Stock Option or a Non-Qualified Stock Option.
Section 2.25Option Agreement means a written instrument evidencing an Option granted under the Plan.
Section 2.26Option Holder means, at any relevant time with respect to an Option, the person having the right to exercise the Option.
Section 2.27Parent means any entity, whether or not incorporated, in an unbroken chain of entities ending with the Company where each entity other than the first entity in the unbroken chain owns stock or other equity interests in one of the other entities in the unbroken chain possessing fifty percent (50%) or more of the combined voting power of all of the other entity’s outstanding stock or other interests that vote generally in the election of the other entity’s directors or other governing body.
Section 2.28Pending Change of Controlmeans (a) stockholder approval of a plan, agreement or transaction, the implementation, performance or consummation of which would constitute a Change in Control; (b) the commencement of a tender offer or exchange offer for outstanding securities of the Company or Bank which, if successfully completed, would constitute a Change in Control; or (c) the distribution of a proxy statement seeking proxies or consents in opposition to management in connection with an election contest which, if successful, would result in a Change in Control.
Section 2.29Permitted Transferee means, with respect to any Recipient of an Option, the Beneficiary to whom an Option has been transferred in accordance with Section 5.8.
Section 2.30Person means an individual, a corporation, a partnership, a limited liability company, an association, a joint-stock company, a trust, an estate, an unincorporated organization and any other business organization or institution.
Section 2.31Plan means the Carver Bancorp, Inc. 2006 Stock Incentive Plan, as amended from time to time.
Section 2.32Recipient means the person to whom an Option or Stock Appreciation Right is granted or an Award is made.
Section 2.33Restricted Stock Awardmeans a Restricted Stock Award granted pursuant to section 7.1.
Section 2.34SAR Agreement means a written instrument evidencing a Stock Appreciation Right granted under the Plan.
Section 2.35Service means, unless the Committee provides otherwise in an Option Agreement, SAR Agreement or Award Notice, service in any capacity as a common-law employee, consultant or non-employee director to the Company or a Parent or Subsidiary.
Section 2.36Share means a share of Common Stock, par value $.01 per share, of Carver Bancorp, Inc.
Section 2.37Stock Appreciation Right means the right upon exercise to receive, in cash or Shares, the amount equal to the excess (if any) of (a) the Fair Market Value of a Share on the date of exercise over (b) the Exercise Price.
Section 2.38Vesting Date means the date on which an Option, Stock Appreciation Right, or Shares acquired upon exercise of an Option or Stock Appreciation Right cease to be forfeitable upon termination of the Recipient’s Service.
ARTICLE III
AVAILABLE SHARES
Section 3.1Shares Available under the Plan.
Subject to Section 9.3, the total number of shares authorized under the Plan is 300,000. No more than 150,000 Shares may be made the subject of Awards granted under the Plan. No more than 300,000 Shares may be made the subject of Incentive Stock Options granted under the Plan.
Section 3.2Individual Limit.
Subject to Section 9.3, the maximum aggregate number of Shares that may be the subject of Options and Stock Appreciation Rights granted to an Eligible Individual in any calendar year shall be 45,000. Subject to Section 9.3, the maximum number of Shares that may be the subject of an Award granted to an Eligible Individual in any calendar year shall be 30,000.
Section 3.3Computation of Shares Available.
For purposes of Section 3.1: (a) in connection with the granting of an Restricted Stock Award, Option or Stock Appreciation Right (other than a tandem Stock Appreciation Right) the number of Shares available for the granting of additional Awards, Options and Stock Appreciation Rights shall be reduced by the number of Shares in respect of which the Award, Option or Stock Appreciation Right is granted or denominated. Shares withheld to pay withholding taxes shall reduce the number of Shares available to the same extent as if a payment of cash or Shares had been made directly to the Recipient. To the extent an Option or Stock Appreciation Right is exercised by using an actual or constructive exchange of Shares to pay the Exercise Price, the number of Shares available shall be reduced by the gross number of Options or Stock Appreciation Rights exercised rather than by the net number of Shares issued. If any Award, Option or Stock Appreciation Right should expire, become unexercisable, or be forfeited for any reason without having been exercised, the Shares shall, unless the Plan shall have been terminated, be available for additional grants under the Plan.
ARTICLE IV
ADMINISTRATION
Section 4.1Committee.
(a)Subject to Section 4.1(b), the Plan shall be administered by the members of a Committee of Carver Bancorp, Inc., which shall consist of not less than two (2) members of the Board who are Disinterested Board Members. If the Committee consists of fewer than two Disinterested Board Members, then the Board shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two (2) Disinterested Board Members.
(b)No member of the Committee or the Board shall participate in any action taken by such body under the Plan if he or she is personally affected thereby, unless all members of the Committee or Board, as applicable, are similarly affected.
Section 4.2Committee Action.
The Committee shall hold such meetings, and may make such administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. All actions of the Committee shall be final and conclusive and shall be binding upon the Company and all other interested parties.
Section 4.3Committee Responsibilities.
Subject to the terms and conditions of the Plan and such limitations as may be imposed by the Board, the Committee shall be responsible for the overall management and administration of the Plan and shall have the sole authority as shall be necessary or appropriate in order to carry out its responsibilities, including, without limitation, the authority:
(a)to grant Awards, Options and Stock Appreciation Rights;
(b)to interpret and construe the Plan, and to determine all questions that may arise under the Plan as to eligibility for participation in the Plan, the number of Shares subject to the Awards, Stock Appreciation Rights or Options, if any, to be granted, and the terms and conditions thereof;
(c)to amend or modify the terms of any outstanding Award, Option or Stock Appreciation Right or accelerate or defer the Vesting Date or Earliest Exercise Date thereof with the consent of the Recipient or Beneficiary, as applicable, in the case of a deferral of such date;
(d)to adopt rules and regulations and to prescribe forms for the operation and administration of the Plan;
(e)to determine the form and content of the Awards, Option and Stock Appreciation Right to be issued in the form of the Award Notice, Option Agreement and SAR Agreement, respectively; and
(f)to take any other action not inconsistent with the provisions of the Plan that it may deem necessary or appropriate.
All decisions, determinations and other actions of the Committee made or taken in accordance with the terms of the Plan shall be final and conclusive and binding upon all parties having an interest therein.
ARTICLE V
STOCK OPTIONS
Section 5.1Grant of Options.
(a)Subject to the limitations of the Plan, the Committee may, in its discretion, grant to an Eligible Individual an Option to purchase Shares. An Option for an Eligible Employee must be designated as either an Incentive Stock Option or a Non-Qualified Stock Option and, if not designated as either, shall be a Non-Qualified Stock Option. An Option for an Eligible Individual who is not an Eligible Employee shall be a Non-Qualified Stock Option.
(b)Any Option granted under this Section 5.1 shall be evidenced by an Option Agreement which shall:
(i)specify the number of Shares covered by the Option, determined in accordance with Section 5.2;
(ii)specify the Exercise Price, determined in accordance with Section 5.3, for the Shares subject to the Option;
(iii)specify the Earliest Exercise Date and the Exercise Period, determined in accordance with Section 5.4;
(iv)specify the Vesting Date, determined in accordance with Section 5.5;
(v)set forth specifically or incorporate by reference the applicable provisions of the Plan; and
(vi)contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe with respect to an Option granted to an Eligible Individual.
Section 5.2Size of Option.
Subject to Article III and such limitations as the Board may from time to time impose, the number of Shares as to which an Eligible Individual may be granted Options shall be determined by the Committee, in its discretion.
Section 5.3Exercise Price.
The price per Share at which an Option may be exercised shall be determined by the Committee, in its discretion, provided, however, that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Option is granted.
Section 5.4Exercise Period.
(a)The Exercise Period during which an Option may be exercised shall commence on the Option’s Vesting Date. It shall expire on the date specified in the Option Agreement (and in any event no later than the tenth anniversary of the date of grant) or, if no date is specified, on the earliest of:
(i)the date and time when the Recipient service is terminated for “Just Cause”;
(ii)the last day of the three-month period that begins on the date and time when the Recipient’s terminates Service due to voluntary resignation that is not in anticipation of a termination for “Just Cause”;
(iii)the last day of the one-year period that begins on the date and time when the Recipient terminates Service due to the Recipient’s Disability;
(iv)the last day of the two-year period that begins on the date and time when the Recipient terminates Service due to the Recipient’s death;
(v)the last day of the ten-year period commencing on the date on which the Option was granted.
A Recipient’s termination of Service prior to the Earliest Exercise Date of an Option shall, unless otherwise provided in the Option Agreement, result in the Option being canceled without consideration at the close of business on the last day of Service. An Option that remains unexercised at the close of business on the last day of the Exercise Period (including but not limited to an Option whose Earliest Exercise Date has not occurred) shall be canceled without consideration at the close of business on the last day of the Exercise Period.
“Just Cause” for purposes hereof shall have the meaning set forth in any unexpired employment or severance agreement between the Recipient and the Company or Affiliates or, in the absence of any such agreement, shall mean termination because of the Recipient’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease and desist order.
Section 5.5Vesting Date.
(a)The Vesting Date for each Option granted under the Plan shall be the date determined by the Committee and specified in the Option Agreement or, if no provision for vesting is made in the Option Agreement, the Vesting Date shall be the first anniversary of the date of grant, as to 20% of the Shares subject to the Option as of the date of grant; the second anniversary of the date of grant, as to an additional 20% of the Shares subject to the Option as of the date of grant; the third anniversary of the date of grant, as to an additional 20% of the Shares subject to the Option as of the date of grant; the fourth anniversary of the date of grant, as to an additional 20% of the Shares subject to the Option as of the date of grant; the fifth anniversary of the date of grant, as to any remaining balance of the Shares subject to the Option as of the date of grant; and
(b)Unless otherwise determined by the Committee and specified in the Option Agreement:
(i)all unvested shares subject to an Option will be forfeited at the date and time when the Recipient service is terminated for “Just Cause”;
(ii)if the Recipient of an Option terminates Service prior to the Vesting Date on account of death or Disability, any unvested Shares shall become vested on the date of termination of Service; and
(iii)if a Change in Control or Pending Change of Control occurs prior to the Vesting Date of an Option that is outstanding on the date of the Change in Control or Pending Change in Control, the Vesting Date shall be accelerated to the date of the Change in Control or Pending Change in Control.
(c)Failure of a Recipient to remain in continuous Service during the period beginning on the date an Option is granted and ending on its Vesting Date shall result in a cancellation of the unvested portion of the Option without consideration at the earliest date and time at which the Recipient is not in continuous Service.
Section 5.6Additional Restrictions on Incentive Stock Options.
An Option granted to an Eligible Employee designated by the Committee to be an Incentive Stock Option shall be subject to the following provisions:
(a)If, for any calendar year, the sum of (i) plus (ii) exceeds $100,000, where (i) equals the Fair Market Value (determined as of the date of the grant) of Shares subject to an Option intended to be an Incentive Stock Option which first become available for purchase during such calendar year, and (ii) equals the Fair Market Value (determined as of the date of grant) of Shares subject to any other options intended to be Incentive Stock Options and previously granted to the same Eligible Employee which first become exercisable in such calendar year, then that number of Shares optioned which causes the sum of (i) and (ii) to exceed $100,000 shall be deemed to be Shares optioned pursuant to a Non-Qualified Stock Option or Non-Qualified Stock Options, with the same terms as the Option or Options intended to be an Incentive Stock Option;
(b)The Exercise Price of an Incentive Stock Option granted to an Eligible Employee who, at the time the Option is granted, owns Shares comprising more than 10% of the total combined voting power of all classes of stock of the Company shall not be less than 110% of the Fair Market Value of a Share, and if an Option designated as an Incentive Stock Option shall be granted at an Exercise Price that does not satisfy this requirement, the designated Exercise Price shall be observed and the Option shall be treated as a Non-Qualified Stock Option;
(c)The Exercise Period of an Incentive Stock Option granted to an Eligible Employee who, at the time the Option is granted, owns Shares comprising more than 10% of the total combined voting power of all classes of stock of the Company, shall expire no later than the fifth anniversary of the date on which the Option was granted, and if an Option designated as an Incentive Stock Option shall be granted for an Exercise Period that does not satisfy this requirement, the designated Exercise Period shall be observed and the Option shall be treated as a Non-Qualified Stock Option; and
(d)An Incentive Stock Option that is exercised during its designated Exercise Period but more than:
(i)three (3) months after the termination of employment with the Company and all of its Parents and Subsidiaries (other than on account of disability within the meaning of Section 22(e)(3) of the Code or death of the Eligible Employee to whom it was granted); or
(ii)one (1) year after such individual’s termination of employment with the Company, a Parent or a Subsidiary due to disability (within the meaning of Section 22(e)(3) of the Code) or death;
may be exercised in accordance with the terms of the Option but shall at the time of exercise be treated as a Non-Qualified Stock Option.
Section 5.7Method of Exercise.
(a)Subject to the limitations of the Plan and the Option Agreement, an Option Holder may, at any time after the Earliest Exercise Date and during the Exercise Period, exercise his or her right to purchase all or any part of the Shares to which the Option relates; provided, however, that the minimum number of Shares which may be purchased at any time shall be 100, or, if less, the total number of Shares relating to the Option which remain unpurchased. An Option Holder shall exercise an Option to purchase Shares by:
(i)giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his intent to exercise the Option;
(ii)delivering to the Committee full payment, consistent with Section 5.7(b), for the Shares as to which the Option is to be exercised; and
(iii)satisfying such other conditions as may be prescribed in the Option Agreement.
(b)The Exercise Price of Shares to be purchased upon exercise of any Option shall be paid in full:
(i)in cash (by certified or bank check or such other instrument as the Company may accept);
(ii)if and to the extent permitted by the Committee, in the form of Shares already owned by the Option Holder and having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid;
(iii)in the form of other property or in such other manner as permitted by the Committee; or
(iv)by a combination thereof.
If permitted by the Committee, payment for any Shares to be purchased upon exercise of an Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price and applicable tax withholding amounts (if any), in which event the Shares acquired shall be delivered to the broker promptly following receipt of payment. To the extent permitted under applicable law, the Company may establish conditional procedures with designated broker-dealers to facilitate the foregoing.
(c)When the requirements of Section 5.7(a) and (b) have been satisfied, the Committee shall take such action as is necessary to cause the issuance of a stock certificate evidencing the Option Holder’s ownership of such Shares. The Person exercising the Option shall have no right to vote or to receive dividends, nor have any other rights with respect to the Shares, prior to the date as of which such Shares are transferred to such Person on the stock transfer records of the Company, and no adjustments shall be made for any dividends or other rights for which the record date is prior to the date as of which such transfer is effected, except as may be required under Section 9.3.
Section 5.8Limitations on Options.
(a)An Option by its terms shall not be transferable by any Option Holder, except that any Option Holder may transfer vested Options remaining unexercised at his death to a Beneficiary or by will or by the laws of descent and distribution.
(b)The Company’s obligation to deliver Shares with respect to an Option shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Option Holder to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange on which Shares may then be listed, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
(c)An Option Holder may designate a Beneficiary to receive any Options that may be exercised after his death. Such designation (and any change or revocation of such designation) shall be made in writing in the form and manner prescribed by the Committee. In the event that the designated Beneficiary dies prior to the Option Holder, or in the event that no Beneficiary has been designated, any Options that may be exercised following the Option Holder’s death shall be transferred to the executor or administrator of the Option Holder’s estate, or if no such executor or administrator is appointed within such time as the Committee, in its sole discretion, shall deem reasonable, to such one or more of the spouse and descendants and blood relatives of such deceased person as the Committee may select. If the Option Holder and his Beneficiary shall die in circumstances that cause the Committee, in its discretion, to be uncertain which shall have been the first to die, the Option Holder shall be deemed to have survived the beneficiary.
Section 5.9Prohibition Against Option Repricing.
Except as provided in Section 9.3, neither the Committee nor the Board shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of an Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Option's in-the-money value) or replacement grants, or other means.
ARTICLE VI
STOCK APPRECIATION RIGHTS
Section 6.1Grant of Stock Appreciation Rights.
(a)Subject to the limitations of the Plan, the Committee may, in its discretion, grant to an Eligible Individual a Stock Appreciation Right. A Stock Appreciation Right must be designated as either a tandem Stock Appreciation Right or a stand-alone Stock Appreciation Right and, if not so designated, shall be deemed to be a stand-alone Stock Appreciation Right. A tandem Stock Appreciation Right may only be granted at the same time as the Option to which it relates.
(b)Any Stock Appreciation Right granted under this Section 6.1 shall be evidenced by a SAR Agreement which shall:
(i)in the case of a tandem Stock Appreciation Right, relate to the same number of Shares; be settled in cash or in Shares; have the same Exercise Price, Exercise Period, Vesting Date and other terms and conditions as the Option to which it relates and provide that the exercise of the related Option shall be deemed to cancel the Stock Appreciation Right for a like number of Shares and that the exercise of the Stock Appreciation Right shall be deemed to cancel the related Option for a like number of Shares;
(ii)in the case of a stand-alone Stock Appreciation Right:
(A)specify the number of Shares covered by the Stock Appreciation Right, determined in accordance with Section 6.2;
(B)specify the Exercise Price, determined in accordance with Section 6.3;
(C)specify the Earliest Exercise Date and the Exercise Period, determined in accordance with Section 6.4;
(D)specify the Vesting Date, determined in accordance with Section 6.5;
(E)specify whether the Stock Appreciation will be settled in cash or in Shares;
(F)set forth specifically or incorporate by reference the applicable provisions of the Plan; and
(G)contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe with respect to a Stock Appreciation Right granted to an Eligible Individual.
Section 6.2Size of Stock Appreciation Right.
Subject to Article III and such limitations as the Board may from time to time impose, the number of Shares as to which an Eligible Individual may be granted stand-alone Stock Appreciation Rights shall be determined by the Committee in its discretion; provided, however, that a tandem Stock Appreciation Right shall be granted for a number of Shares no greater than the number of Shares subject to the related Option.
Section 6.3Exercise Price.
The price per Share at which a stand-alone Stock Appreciation Right may be exercised shall be determined by the Committee, in its discretion, provided, however, that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Stock Appreciation Right is granted.
Section 6.4Exercise Period.
The Exercise Period during which a stand-alone Stock Appreciation Right may be exercised shall commence on the Vesting Date and shall expire on the date specified in the SAR Agreement (and in any event no later than the tenth anniversary of the date of grant) or, if no date is specified, on the earliest of:
(i)the date and time when the Recipient service is terminated for “Just Cause”;
(ii)the last day of the three-month period that begins on the date and time when the Recipient’s terminates Service due to voluntary resignation that is not in anticipation of a termination for “Just Cause”;
(iii)the last day of the one-year period that begins on the date and time when the Recipient terminates Service due to the Recipient’s Disability;
(iv)the last day of the two-year period that begins on the date and time when the Recipient terminates Service due to the Recipient’s death;
(v)the last day of the ten-year period commencing on the date on which the Option was granted.
A Recipient’s termination of Service prior to the Vesting Date of a Stock Appreciation Right shall, unless otherwise provided in the SAR Agreement, result in the Stock Appreciation Right being canceled without consideration at the close of business on the last day of Service. Any election by a Recipient to exercise a Stock Appreciation Right shall be subject to the Company’s insider trading policies. This condition shall be deemed to be satisfied when the specified financial data is first made publicly available. In no event, however, may a Stock Appreciation Right be exercised within the six-month period following the date of its grant.
Section 6.5Vesting Date.
(a)The Vesting Date for each stand-alone Stock Appreciation Right granted under the Plan shall be the date determined by the Committee and specified in the SAR Agreement or, if no provision for vesting is made in the SAR Agreement, the Vesting Date shall be the first anniversary of the date of grant, as to 20% of the Shares subject to the Stock Appreciation Right as of the date of grant; the second anniversary of the date of grant, as to an additional 20% of the Shares subject to the Stock Appreciation Right as of the date of grant; the third anniversary of the date of grant, as to an additional 20% of the Shares subject to the Stock Appreciation Right as of the date of grant; the fourth anniversary of the date of grant, as to an additional 20% of the Shares subject to the Stock Appreciation Right as of the date of grant; the fifth anniversary of the date of grant, as to any remaining balance of the Shares subject to the Stock Appreciation Right as of the date of grant; and the date of termination of Service, in the event of the Recipient’s death or Disability, or upon the effective date of a Change in Control or Pending Change in Control occurring during the Recipient’s continuing Service.
(b)Unless otherwise determined by the Committee and specified in the Agreement for a Stock Appreciation Right:
(i)all unvested shares subject to a Stock Appreciation Right will be forfeited at the date and time when the Recipient service is terminated for “Just Cause”;
(ii)if the Recipient of a Stock Appreciation Right terminates Service prior to the Vesting Date on account of death or Disability, any unvested Shares shall become vested on the date of termination of Service; and
(iii)if a Change in Control or Pending Change in Control occurs prior to the Vesting Date of a Stock Appreciation Right that is outstanding on the date of the Change in Control or Pending Change in Control, the Vesting Date shall be accelerated to the date of the Change in Control or Pending Change in Control.
(c)Failure of a Recipient to remain in continuous Service during the period beginning on the date a Stock Appreciation Right is granted and ending on the Stock Appreciation Right’s Vesting Date shall result in a cancellation of the Stock Appreciation Right without consideration at the earliest date and time at which the Recipient is not in continuous Service.
Section 6.6Method of Exercise.
(a)Subject to the limitations of the Plan and the SAR Agreement, a Recipient may, at any time after the Vesting Date and during the Exercise Period, exercise his or her Stock Appreciation Right as to all or any part of the Shares to which the Stock Appreciation Right relates; provided, however, that the minimum number of Shares as to which a Stock Appreciation Right may be exercised shall be 100, or, if less, the total number of Shares relating to the Stock Appreciation Right which remain unexercised. A Recipient shall exercise a Stock Appreciation Right by:
(i)giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his intent to exercise the Stock Appreciation Right; and
(ii)satisfying such other conditions as may be prescribed in the SAR Agreement. Any stand-alone Stock Appreciation Rights that are vested and remain unexercised at the expiration date of the relevant Exercise Period shall be deemed automatically exercised on such date and the Recipient shall receive the excess (if any) of the Fair Market Value of a Share on the expiration date over the Exercise Price per Share without the requirement of notice or any other action on the part of the Recipient.
(b)When the requirements of Section 6.6(a) have been satisfied, the Committee shall take such action as is necessary to cause the remittance to the Recipient (or, in the event of his death, his Beneficiary) of a payment in an amount per Share equal to the excess (if any) of (i) the Fair Market Value of a Share on the date of exercise over (ii) the Exercise Price per Share, or, if applicable Shares with an aggregate Fair Market Value of a like amount.
(c)With respect to Stock Appreciation Rights settled in Shares, when the requirements of Section 6.6(a) and (b) have been satisfied, the Committee shall take such action as is necessary to cause the issuance of a stock certificate evidencing the Recipient’s ownership of such Shares. The Recipient shall have no right to vote or to receive dividends, nor have any other rights with respect to the Shares, prior to the date as of which such Shares are transferred to such Person on the stock transfer records of the Company, and no adjustments shall be made for any dividends or other rights for which the record date is prior to the date as of which such transfer is effected, except as may be required under Section 15.3.
Section 6.7Beneficiaries.
(a)A Stock Appreciation Right by its terms shall not be transferable by any holder of a Stock Appreciation Right, except that any holder of a Stock Appreciation Right may transfer vested Stock Appreciation Rights remaining unexercised at his death to a Beneficiary or by will or by the laws of descent and distribution.
(b)The Company’s obligation to deliver Shares with respect to a Stock Appreciation Right shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the holder of a Stock Appreciation Right to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange on which Shares may then be listed, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
(c)The Recipient of a stand-alone Stock Appreciation Right may designate a Beneficiary to receive any payment in respect of vested outstanding stand-alone Stock Appreciation Rights that may be made after his death. Such designation (and any change or revocation of such designation) shall be made in writing in the form and manner prescribed by the Committee. In the event that the designated Beneficiary dies prior to the Recipient, or in the event that no Beneficiary has been designated, the executor or administrator of the Recipient’s estate, or if no such executor or administrator is appointed within such time as the Committee, in its sole discretion, shall deem reasonable, such one or more of the spouse and descendants and blood relatives of such deceased person as the Committee may select, shall be deemed the Beneficiary. If the Recipient and his Beneficiary shall die in circumstances that cause the Committee, in its discretion, to be uncertain which shall have been the first to die, the Recipient shall be deemed to have survived the beneficiary.
Section 6.8Prohibition Against Stock Appreciation Right Repricing.
Except as provided in Section 9.3, neither the Committee nor the Board shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a Stock Appreciation Right previously granted under the Plan, whether through amendment, cancellation or replacement grants, or other means.
ARTICLE VII
RESTRICTED STOCK AWARDS
Section 7.1Grant of Restricted Stock Awards.
(a)Each Restricted Stock Award shall be evidenced by an Award Notice issued by the Committee to the Eligible Individual, which notice shall:
(i)specify the number of Shares covered by the Restricted Stock Award;
(ii)specify the amount (if any) which the Recipient shall be required to pay to the Company in consideration for the issuance of such Shares (which shall in no event be less than the minimum amount required for such Shares to be validly issued, fully paid and non-assessable under applicable law);
(iii)specify the date of grant of the Restricted Stock Award; and
(iv)specify the Vesting Date for the Restricted Stock Award;
and contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.
(b)All Restricted Stock Awards shall be in the form of issued and outstanding Shares that shall be either:
(i)registered in the name of the Committee or other trustee or custodian for the benefit of the Recipient and held by the Committee pending the vesting or forfeiture of the Restricted Stock Award;
(ii)registered in the name of Recipient and held by the Committee, together with a stock power executed by the Recipient in favor of the Committee, pending the vesting or forfeiture of the Restricted Stock Award; or
(iii)registered in the name of and delivered to the Recipient.
In any event, the certificates evidencing the Shares shall at all times prior to the applicable Vesting date bear the following legend:
The Common Stock evidenced hereby is subject to the terms of Award Notice between Carver Bancorp, Inc. and [Name of Recipient] dated [Date] made pursuant to the terms of the Carver Bancorp, Inc. 2006 Stock Incentive Plan, copies of which are on file at the executive offices of Carver Bancorp, Inc., and may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with the terms of such Plan and Agreement.
or such other restrictive legend as the Committee, in its discretion, may specify.
(c)An Award by its terms shall not be transferable by the Eligible Individual other than by will or by the laws of descent and distribution, and the Shares granted pursuant to such Award shall be distributable, during the lifetime of the Recipient, only to the Recipient.
Section 7.2Vesting Date.
(a)The Vesting Date for each Restricted Stock Award shall be determined by the Committee and specified in the Award Notice and, if no date is specified in the Award Notice, shall be the first anniversary of the date of grant as to 20% of the Shares; the second anniversary of the date of grant as to an additional 20% of the Shares; the third anniversary of the date of grant as to an additional 20% of the Shares; the fourth anniversary of the date of grant as to an additional 20% of the Shares; and the fifth anniversary of the date of grant as to the remaining balance of the Shares.
(b)Unless otherwise determined by the Committee and specified in the Award Notice for a Restricted Stock Award:
(i)shares subject to a Restricted Stock Award will be forfeited at the date and time when the Recipient service is terminated other than on account of death or Disability;
(ii)if the Recipient of a Restricted Stock Award terminates Service prior to the Vesting Date on account of death or Disability, any unvested Shares shall become vested on the date of termination of Service; and
(iii)if a Change in Control or Pending Change in Control occurs prior to the Vesting Date of a Restricted Stock Award that is outstanding on the date of the Change in Control or Pending Change in Control, the Vesting Date shall be accelerated to the date of the Change in Control or Pending Change in Control.
(c)Failure of a Recipient to remain in continuous Service during the period beginning on the date a Restricted Stock Award is granted and ending on the Stock Appreciation Right’s Vesting Date shall result in a cancellation of the Restricted Stock Award without consideration at the earliest date and time at which the Recipient is not in continuous Service.
Section 7.3Dividend Rights.
Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant Award Notice, any dividends or distributions declared and paid with respect to Shares subject to the Restricted Stock Award, whether or not in cash, shall be immediately distributed to the Recipient.
Section 7.4Voting Rights.
Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant Award Notice, voting rights appurtenant to the Shares subject to the Restricted Stock Award shall be voted in a manner directed by the Board.
Section 7.5Tender Offers.
Each Recipient to whom a Restricted Stock Award is outstanding shall have the right to respond, or to direct the response, with respect to the related Shares, to any tender offer, exchange offer or other offer made to the holders of Shares. Such a direction for any such Shares shall be given by proxy or ballot (if the Recipient is the beneficial owner of the Shares for voting purposes) or by completing and filing, with the inspector of elections, the Trustee or such other person who shall be independent of the Company as the Committee shall designate in the direction (if the Recipient is not such a beneficial owner), a written direction in the form and manner prescribed by the Committee. If no such direction is given, then the Shares shall not be tendered.
Section 7.6Designation of Beneficiary.
An Eligible Individual who has received a Restricted Stock Award may designate a Beneficiary to receive any unvested Shares that become vested on the date of his death. Such designation (and any change or revocation of such designation) shall be made in writing in the form and manner prescribed by the Committee. In the event that the Beneficiary designated by an Eligible Individual dies prior to the Eligible Individual, or in the event that no Beneficiary has been designated, any vested Shares that become available for distribution on the Eligible Individual’s death shall be paid to the executor or administrator of the Eligible Individual’s estate, or if no such executor or administrator is appointed within such time as the Committee, in its sole discretion, shall deem reasonable, to such one or more of the spouse and descendants and blood relatives of such deceased person as the Committee may select. If the Eligible Individual who has received a Restricted Stock Award and his Beneficiary shall die in circumstances that cause the Committee, in its discretion, to be uncertain which shall have been the first to die, the Eligible Individual shall be deemed to have survived the Beneficiary.
Section 7.7Manner of Distribution of Awards.
The Company’s obligation to deliver Shares with respect to a Restricted Stock Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Eligible Individual or Beneficiary to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange on which Shares may then be listed, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
Section 7.8Taxes.
The Company or the Committee shall have the right to require any person entitled to receive Shares pursuant to a Restricted Stock Award to pay the amount of any tax which is required to be withheld with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the amount required to be withheld.
ARTICLE VIII
SPECIAL TAX PROVISIONS
Section 8.1Tax Withholding Rights.
The Company shall have the right to deduct from all amounts paid by the Company in cash with respect to an Option, Stock Appreciation Right or Award under the Plan any taxes required by law to be withheld with respect to such Option, Stock Appreciation Right or Award. Where any Person is entitled to receive Shares, the Company shall have the right to require such Person to pay to the Company the amount of any tax which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the minimum amount required to be withheld. To the extent determined by the Committee and specified in an Option Agreement, an Option Holder shall have the right to direct the Company to satisfy the minimum required federal, state and local tax withholding by reducing the number of Shares subject to the Option (without issuance of such Shares to the Option Holder) by a number equal to the quotient of (a) the total minimum amount of required tax withholding divided by (b) the excess of the Fair Market Value of a Share on the Exercise Date over the Exercise Price per Share.
Section 8.2Code Section 83(b) Elections.
If and to the extent permitted by the Committee and specified in an Option Agreement for a Non-Qualified Stock Option or an Award Notice for a Restricted Stock Award, a Recipient may be permitted or required to make an election under section 83(b) of the Code to include the compensation related thereto in income for federal income tax purposes at the time of issuance of the Shares to such Recipient instead of at a subsequent Vesting Date. In such event, the Shares issued prior to their Vesting Date shall be issued in certificated form only, and the certificates therefor shall bear the legend set forth in Section 7.1(b) or such other restrictive legend as the Committee, in its discretion, may specify. In the event of the Recipient’s termination of Service prior to the relevant Vesting Date or forfeiture of the Shares for any other reason, the Recipient shall be required to return all forfeited Shares to the Company without consideration therefor (other than a refund to the Recipient or his estate of an amount equal to the lesser of the amount paid by the Recipient for the Shares upon their issuance or the Fair Market Value of the Shares on the date of forfeiture).
ARTICLE IX
AMENDMENT AND TERMINATION
Section 9.1Termination.
The Board may suspend or terminate the Plan in whole or in part at any time prior to the tenth anniversary of the Effective Date by giving written notice of such suspension or termination to the Committee. Unless sooner terminated, the Plan shall terminate automatically on September 11, 2016. In the event of any suspension or termination of the Plan, all Options, Stock Appreciation Rights and Awards theretofore granted under the Plan that are outstanding on the date of such suspension or termination of the Plan shall remain outstanding and exercisable for the period and on the terms and conditions set forth in the Option Agreements, SAR Agreements and Award Notices evidencing such Options, Stock Appreciation Rights and Awards.
Section 9.2Amendment.
The Board may amend or revise the Plan in whole or in part at any time; provided, however, that, to the extent required to comply with Section 162(m) of the Code or the corporate governance standards imposed under the listing requirements imposed by any national securities exchange on which the Company lists or seeks to list Shares, no such amendment or revision shall be effective if it amends a material term of the Plan unless approved by the holders of a majority of the votes cast on a proposal to approve such amendment or revision; provided further, however, Sections 5.9 and 6.8 may not be amended to lessen the prohibitions contained therein at any time without shareholder approval.
Section 9.3Adjustments in the Event of Business Reorganization.
(a)In the event any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or exchange of Shares or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Recipients under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of securities deemed to be available thereafter for grants of Options, Stock Appreciation Rights and Awards in the aggregate to all Eligible Individuals and individually to any one Eligible Individual, (ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Options, Stock Appreciation Rights or Awards and (iii) the Exercise Price of Options and Stock Appreciation Rights. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in Awards, Options or Stock Appreciation Rights (including, without limitation, cancellation of Awards, Options Stock Appreciation Rights in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution of Awards, Options or Stock Appreciation Rights using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any Parent or Subsidiary or the financial statements of the Company or any Parent or Subsidiary, or in response to changes in applicable laws, regulations, or account principles. Unless otherwise determined by the Committee, any such adjustment to an Option or Stock Appreciation Right granted to a Recipient who is a Covered Employee shall conform to the requirements of section 162(m) of the Code and the regulations thereunder then in effect.
(b)In the event of any merger, consolidation, or other business reorganization (including, but not limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise determined by the Committee at any time at or after grant and prior to the consummation of such merger, consolidation or other business reorganization, any Options or Stock Appreciation Rights granted under the Plan which remain outstanding shall be converted into options to purchase voting common equity securities of the business entity which survives such merger, consolidation or other business reorganization or stock appreciation rights having substantially the same terms and conditions as the outstanding Options under this Plan and reflecting the same economic benefit (as measured by the difference between the aggregate exercise price and the value exchanged for outstanding Shares in such merger, consolidation or other business reorganization), all as determined by the Committee prior to the consummation of such merger; provided, however, that the Committee may, at any time prior to the consummation of such merger, consolidation or other business reorganization, direct that all, but not less than all, outstanding Options and Stock Appreciation Rights be canceled as of the effective date of such merger, consolidation or other business reorganization in exchange for a cash payment per Share equal to the excess (if any) of the value exchanged for an outstanding Share in such merger, consolidation or other business reorganization over the Exercise Price of the Option or Stock Appreciation Right being canceled.
ARTICLE X
MISCELLANEOUS
Section 10.1Status as an Employee Benefit Plan.
This Plan is not intended to satisfy the requirements for qualification under Section 401(a) of the Code or to satisfy the definitional requirements for an “employee benefit plan” under section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. It is intended to be a non-qualified incentive compensation program that is exempt from the regulatory requirements of the Employee Retirement Income Security Act of 1974, as amended. The Plan shall be construed and administered so as to effectuate this intent.
Section 10.2No Right to Continued Employment.
Neither the establishment of the Plan nor any provisions of the Plan nor any action of the Board or the Committee with respect to the Plan shall be held or construed to confer upon any Eligible Individual any right to a continuation of his or her position as a director or employee of the Company. The Employers reserve the right to remove any participating member of the Board or dismiss any Eligible Employee or otherwise deal with any Eligible Individual to the same extent as though the Plan had not been adopted.
Section 10.3Construction of Language.
Whenever appropriate in the Plan, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to an Article or section number shall refer to an Article or section of this Plan unless otherwise indicated.
Section 10.4Governing Law.
The Plan shall be construed, administered and enforced according to the laws of the State of New York without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The federal and state courts located in the County of New York shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Stock Appreciation Right or Option granted under this Plan, the Eligible Individual, and any other person claiming any rights under the Plan, agrees to submit himself, and any such legal action as he shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 10.5Headings.
The headings of Articles and sections are included solely for convenience of reference. If there is any conflict between such headings and the text of the Plan, the text shall control.
Section 10.6Non-Alienation of Benefits.
The right to receive a benefit under the Plan shall not be subject in any manner to anticipation, alienation or assignment, nor shall such right be liable for or subject to debts, contracts, liabilities, engagements or torts.
Section 10.7Notices.
Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:
(a) If to the Committee:
Carver Bancorp, Inc.
75 West 125th Street
New York, New York 10027
Attention: Treasurer
(b) If to a Recipient, Beneficiary or Option Holder, to the Recipient’s, Beneficiary’s or Option Holder’s address as shown in the Employer’s records.
Section 10.8Approval of Shareholders.
The Plan shall be subject to approval by the Company’s shareholders within twelve (12) months before or after the Effective Date. Any Option, Stock Appreciation Right or Award granted prior to the date such approval is obtained shall be granted contingent on such approval and shall be void ab initio in the event such approval is not obtained.
Section 10.9Compliance with Section 409A of the Code.
To the extent that the Plan and/or any Options, Awards or Stock Appreciation Rights granted or awarded under the Plan are construed to be non-qualified deferred compensation plans described in Section 409A of the Code, the Plan and any Option Agreements, SAR Agreements and Award Notices as applicable, shall be operated, administered and construed so as to comply with the requirements of section 409A. The Plan and any Option Agreements, SAR Agreements and Award Notices shall be subject to amendment, with or without advance notice to Recipients, Option Holders and other interested parties, and on a prospective or retroactive basis, including, but not limited to, amendment in a manner that adversely affects the rights of Recipients, Option Holders and other interested parties, to the extent necessary to effect compliance with Section 409A of the Code.
Section 10.10Conditions Upon Issuance of Shares
The inability of the Company or the Bank to obtain approval from any regulatory body or authority deemed by the Company of the Bank’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder shall relieve the Company or the Bank of any liability in respect of the non-issuance or sale of such Shares. As a condition to the exercise of an Award, Option or Stock Appreciation Right, the Company or Bank may require the person exercising the Award, Option or Stock Appreciation Right to make such representations and warranties as may be necessary to assure the availability of an exemption from the registration requirements of federal or state securities law.
CARVER BANCORP, INC.
75 WEST 125THSTREET
NEW YORK, NEW YORK 10027
| | REVOCABLE PROXY
|
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CARVER BANCORP, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERSNEW YORK, NEW YORK 10027
| | TO BE HELD ON SEPTEMBER 12, 2006REVOCABLE PROXY
The undersigned stockholder of Carver Bancorp, Inc. hereby appoints Margaret D. Roberts and Roy Swan or either one of them, with full powers of substitution, to represent and to vote as proxy, as designated, all shares of the common stock of Carver Bancorp, Inc. held of record by the undersigned on July 25, 2006 at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held at 10:00 a.m. on September 12, 2006 or at any adjournment or postponement thereof. The undersigned hereby revokes all prior proxies.
This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. IF PROPERLY SIGNED, BUT NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES LISTED IN ITEM 1 AND “FOR” THE PROPOSALS IN ITEMS 2 AND 3.
|
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CARVER BANCORP, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 18, 2007 The undersigned stockholder of Carver Bancorp, Inc. hereby appoints Margaret D. Roberts and Roy Swan or either one of them, with full powers of substitution, to represent and to vote as proxy, as designated, all shares of the common stock of Carver Bancorp, Inc. held of record by the undersigned on July 31, 2007 at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held at 10:00 a.m. on September 18, 2007 or at any adjournment or postponement thereof. The undersigned hereby revokes all prior proxies. This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. IF PROPERLY SIGNED, BUT NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES LISTED IN ITEM 1 AND “FOR” THE PROPOSAL IN ITEM 2. PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE OR VOTE BY TELEPHONE OR INTERNET USING THE INSTRUCTIONS GIVEN ON THE REVERSE SIDE OF THIS PROXY. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------5TO VOTE BY MAIL, PLEASE DETACH HERE5 ^ | Please mark vote as indicated in this example | X |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES IN ITEM 1 AND “FOR” THE PROPOSAL IN ITEM 2.
| 1. | Election of Directors to a Three Year Term. | FOR all Nominees | WITHHOLD for all Nominees | | | | | | | | Nominees: | 01) David L. Hinds 02) Pazel G. Jackson, Jr. 03) Deborah C. Wright | o | o | | | |
| INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE BY MAIL, PLEASE DETACH HERE ^FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE’S NAME IN THE SPACE PROVIDED. | FOR | | AGAINST | | ABSTAIN | | If any other matters properly come before the Annual Meeting, including, among other things, a motion to adjourn or postpone the Annual Meeting to another time and/or place for the purpose of soliciting additional proxies or otherwise, the persons named in the Proxy will vote on such matters using their best judgment. As of the date of the Proxy Statement for the Annual Meeting, management of the Company is not aware of any such business. I WILL ATTEND THE ANNUAL MEETING The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and the Proxy Statement for the Annual Meeting. | | | | o | | o | | o | | | | | 2. | Ratification of the appointment of KPMG LLP as independent auditors for the fiscal year ending March 31, 2008. | ¬ | | | | | |
| Title | | | | | | Date:___________________________________, 2007 | | Please sign exactly as your name appears on this proxy. Joint Owners should each sign personally. If signing as attorney, executor, administrator, trustee or guardian, please include your full title. Corporate or partnership proxies should be signed by an authorized officer. |
5TO VOTE BY MAIL, PLEASE DETACH HERE5
(
| | Please mark vote as indicated in this exampleVOTE BY TELEPHONE OR INTERNETQUICK ««« EASY ««« IMMEDIATE | : |
Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. VOTE BY PHONE: Call Toll Free On a Touch-Telephone 1-800-730-7859. There is NO CHARGE to you for this call. XOPTION A: To vote as the Board of Directors recommends on ALL proposals; Press 1. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES IN ITEM 1 AND “FOR” THE PROPOSALS IN ITEMS 2 AND 3.OPTION B:
| 1. | Election of Directors to a Three Year Term. | FOR all Nominees | WITHHOLD for all Nominees | | 3. | To approve the adoption of the 2006 Stock Incentive Plan | FOR | AGAINST | ABSTAIN | | | Nominees: | 01) Dr. Samuel J. Daniel 02) Robert Holland, Jr. 03) Robert R. Tarter | [_] | [_] | [_] | [_] | [_] |
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE’S NAME IN THE
SPACE PROVIDED.
| FOR
| | AGAINST
| | ABSTAIN
| | If any other matters properly come before the Annual Meeting, including, among other things, a motion to adjourn or postpone the Annual Meeting to another time and/or place for the purpose of soliciting additional proxies or otherwise, the persons named in the Proxy will vote on such matters using their best judgment. As of the date of the Proxy Statement for the Annual Meeting, management of the Company is not aware of any such business.
| 2. | Ratification of the appointment of KPMG LLP as independent
auditors for the fiscal year ending March 31, 2007.
| [_] [_] [_]
| | I WILL ATTEND THE ANNUAL MEETING | [_]
| | The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and the Proxy Statement for the Annual Meeting.
| | Signature | | Title | | Date:___________________________________, 2006
| | Please sign exactly as your name appears on this proxy. Joint Owners should each sign personally. If signing as attorney, executor, administrator, trustee or guardian, please include your full title. Corporate or partnership proxies should be signed by an authorized officer. |
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
^ TO VOTE BY MAIL, PLEASE DETACH HERE ^
(
| VOTE BY TELEPHONE OR INTERNET
QUICK ««« EASY ««« IMMEDIATE
| :
|
Your telephone or Internet vote authorizes the named proxiesIf you choose to vote your shares in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: Call Toll Free On a Touch-Telephone 1-800-730-7859. There is NO CHARGE to you for this call.
OPTION A: To vote as the Board of Directors recommends on ALL proposals; Press 1.on each proposal separately, press 0. You will hear these instructions:
|
| Item 1: To vote FOR all nominees, press 1; To WITHHOLD from all nominees, press 9; To WITHHOLD from an individual nominee, press 0. Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0. VOTE BY INTERNET: THE WEB ADDRESS IS www.proxyvoting.com/carv IF YOU VOTE BY PHONE OR INTERNET—DO NOT MAIL THE PROXY CARD. THANK YOU FOR VOTING. OPTION B: If you choose to vote on each proposal separately, press 0. You will hear these instructions:
|
| Item 1: To vote FOR all nominees, press 1; To WITHHOLD from all nominees, press 9; To WITHHOLD from an individual nominee, press 0.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Item 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
VOTE BY INTERNET: THE WEB ADDRESS IS www.proxyvoting.com/cny
IF YOU VOTE BY PHONE OR INTERNET— DO NOT MAIL THE PROXY CARD.
THANK YOU FOR VOTING.
CARVER FEDERAL SAVINGS BANK
August 8, 2006
Dear Plan Account Holder:
The Carver Federal Savings Bank (“Bank”) 401(k) Savings Plan (“401(k) Plan”) has a related trust (“Employer Stock Fund Trust”) which holds common stock (“Common Stock”) of Carver Bancorp, Inc. (“Company”). HSBC Bank USA, N.A., as the directed trustee of the 401(k) Plan Employer Stock Fund Trust (“Employer Stock Fund Trustee”), is therefore a shareholder of the Company and may vote on matters presented for shareholder action at the Company’s Annual Meeting of Stockholders scheduled to be held on September 12, 2006 (“Annual Meeting”).
The Employer Stock Fund Trust provides that in casting its votes at the Annual Meeting, the Employer Stock Fund Trustee is to follow directions given by the 401(k) Plan Committee (“Committee”). The committee in turn follows instructions provided by participants, former participants and beneficiaries of deceased former participants (“Participants”) with respect to the Common Stock attributable to their accounts in the Employer Stock Fund as of July 25, 2006.
The records for the 401(k) Plan indicate that you are among the Participants who may give voting instructions. You may give your instructions by completing and signing the enclosed Confidential Voting Instruction (“Voting Instruction”) and returning it in the envelope provided to IVS Associates, Inc. (“IVS”). The Voting Instruction lets you give instructions for each matter expected to be presented for shareholder action at the Annual Meeting. The Committee expects IVS to tabulate the instructions given on a confidential basis and to provide the Committee with only the final results of the tabulation. The final results will be used by the Committee in directing the Employer Stock Fund Trustee.
The voting of the Common Stock held by the 401(k) Plan Trust is subject to legal requirements under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Committee, in consultation with its legal advisors, considers these requirements in establishing voting instruction procedures and directing the Employer Stock Fund Trustee. The remainder of this letter describes the voting procedures which the Committee expects to follow for the Annual Meeting.
How your voting instruction counts depends on whether it was anticipated that the matter being voted upon would be presented for shareholder action at the Annual Meeting; whether you had an interest in the Employer Stock Fund Trust on the proper date; and how large your interest was, as follows:
ANTICIPATED PROPOSALS
In general, the Employer Stock Fund Trustee will vote the number of shares of Common Stock (if any) held by the Employer Stock Fund Trust and attributable as of July 25, 2006 to your individual account under the 401(k) Plan according to the instructions specified on the Voting Instruction. In general, if you do not file the Voting Instruction by September 2, 2006, the number of shares attributable to your account will be voted FOR or AGAINST each proposal identified on the Voting Instruction in the same proportions as instructions to cast votes FOR or AGAINST such proposal are given with respect to shares attributable to the accounts of Participants who do file Voting Instructions. In addition, if you do not file the Voting Instruction by September 2, 2006, or if you ABSTAIN as to a proposal, your instructions will not count in voting any Common Stock attributable to Participants’ accounts for which no voting instructions have been received. Each individual’s instructions for such purposes are weighted according to the number of shares of Common Stock attributable to all individuals’ accounts for which instructions to vote FOR or AGAINST have been received. Notwithstanding the foregoing, the Committee may be required to instruct the Employer Stock Fund Trustee to vote the Common Stock for which no instructions have been received in a different manner, if it determines such a vote to be in the best interests of Participants, in accordance with the legal requirements of ERISA.UNANTICIPATED PROPOSALS
It is possible, although very unlikely, that proposals other than those specified on the Voting Instruction will be presented for shareholder action at the Annual Meeting. If this should happen, the Employer Stock Fund Trustee will be instructed to vote upon such matters in its discretion, or to cause such matters to be voted upon in the discretion of the individuals named in any proxies executed by it.
Your interest in the Employer Stock Fund Trust offers you the opportunity to participate, as do the Company’s shareholders, in decisions that affect the future of the Company and the Bank, and we encourage you to take advantage of it. To help you decide how to complete the Voting Instruction, enclosed is a copy of the Proxy Statement and Annual Report that is being furnished to all holders of Common Stock in connection with the Annual Meeting. Please complete, sign and return your Voting Instruction today. Your instructions are important regardless of the size of your interest in the Common Stock held by the 401(k) Plan.
If you have questions regarding the terms of the 401(k) Plan or the Voting Instruction, please call the Human Resources Department of the Bank at (718) 230-2900.
Sincerely,
401(k) PLAN COMMITTEE OF
CARVER FEDERAL SAVINGS BANK Enclosures
August 14, 2007
Dear Plan Account Holder: The Carver Federal Savings Bank (“Bank”) 401(k) Savings Plan (“401(k) Plan”) has a related trust (“Employer Stock Fund Trust”) which holds common stock (“Common Stock”) of Carver Bancorp, Inc. (“Company”). HSBC Bank USA, N.A., as the directed trustee of the 401(k) Plan Employer Stock Fund Trust (“Employer Stock Fund Trustee”), is therefore a shareholder of the Company and may vote on matters presented for shareholder action at the Company’s Annual Meeting of Stockholders scheduled to be held on September 18, 2007 (“Annual Meeting”). The Employer Stock Fund Trust provides that in casting its votes at the Annual Meeting, the Employer Stock Fund Trustee is to follow directions given by the 401(k) Plan Committee (“Committee”). The committee in turn follows instructions provided by participants, former participants and beneficiaries of deceased former participants (“Participants”) with respect to the Common Stock attributable to their accounts in the Employer Stock Fund as of July 31, 2007. The records for the 401(k) Plan indicate that you are among the Participants who may give voting instructions. You may give your instructions by completing and signing the enclosed Confidential Voting Instruction (“Voting Instruction”) and returning it in the envelope provided to IVS Associates, Inc. (“IVS”). The Voting Instruction lets you give instructions for each matter expected to be presented for shareholder action at the Annual Meeting. The Committee expects IVS to tabulate the instructions given on a confidential basis and to provide the Committee with only the final results of the tabulation. The final results will be used by the Committee in directing the Employer Stock Fund Trustee. The voting of the Common Stock held by the 401(k) Plan Trust is subject to legal requirements under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Committee, in consultation with its legal advisors, considers these requirements in establishing voting instruction procedures and directing the Employer Stock Fund Trustee. The remainder of this letter describes the voting procedures which the Committee expects to follow for the Annual Meeting. How your voting instruction counts depends on whether it was anticipated that the matter being voted upon would be presented for shareholder action at the Annual Meeting; whether you had an interest in the Employer Stock Fund Trust on the proper date; and how large your interest was, as follows: ANTICIPATED PROPOSALS In general, the Employer Stock Fund Trustee will vote the number of shares of Common Stock (if any) held by the Employer Stock Fund Trust and attributable as of July 31, 2007 to your individual account under the 401(k) Plan according to the instructions specified on the Voting Instruction. In general, if you do not file the Voting Instruction by September 8, 2007, the number of shares attributable to your account will be voted FOR or AGAINST each proposal identified on the Voting Instruction in the same proportions as instructions to cast votes FOR or AGAINST such proposal are given with respect to shares attributable to the accounts of Participants who do file Voting Instructions. In addition, if you do not file the Voting Instruction by September 8, 2007, or if you ABSTAIN as to a proposal, your instructions will not count in voting any Common Stock attributable to Participants’ accounts for which no voting instructions have been received. Each individual’s instructions for such purposes are weighted according to the number of shares of Common Stock attributable to all individuals’ accounts for which instructions to vote FOR or AGAINST have been received. Notwithstanding the foregoing, the Committee may be required to instruct the Employer Stock Fund Trustee to vote the Common Stock for which no instructions have been received in a different manner, if it determines such a vote to be in the best interests of Participants, in accordance with the legal requirements of ERISA. UNANTICIPATED PROPOSALS It is possible, although very unlikely, that proposals other than those specified on the Voting Instruction will be presented for shareholder action at the Annual Meeting. If this should happen, the Employer Stock Fund Trustee will be instructed to vote upon such matters in its discretion, or to cause such matters to be voted upon in the discretion of the individuals named in any proxies executed by it. Your interest in the Employer Stock Fund Trust offers you the opportunity to participate, as do the Company’s shareholders, in decisions that affect the future of the Company and the Bank, and we encourage you to take advantage of it. To help you decide how to complete the Voting Instruction, enclosed is a copy of the Proxy Statement and Annual Report that is being furnished to all holders of Common Stock in connection with the Annual Meeting. Please complete, sign and return your Voting Instruction today. Your instructions are important regardless of the size of your interest in the Common Stock held by the 401(k) Plan. If you have questions regarding the terms of the 401(k) Plan or the Voting Instruction, please call the Human Resources Department of the Bank at (718) 230-2900. | Sincerely, | | 401(k) PLAN COMMITTEE OF CARVER FEDERAL SAVINGS BANK | | Enclosures | |
CARVER BANCORP, INC. CONFIDENTIAL VOTING INSTRUCTION This Instruction is solicited by the 401(k) Plan Committee of Carver Bancorp, Inc. as named fiduciary for the Carver Federal Savings Bank 401(k) Savings Plan (“401(k) Plan”) for the Annual Meeting of Stockholders of Carver Bancorp, Inc. to be held on September 12, 2006.18, 2007. The undersigned participant, former participant or beneficiary of a deceased former participant in the 401(k) Plan (the “Instructor”) hereby provides the voting instructions hereinafter specified to HSBC Bank USA, N.A., as the trustee of the 401(k) Plan Employer Stock Fund Trust (“401(k) Plan Trustee”), which instructions will be taken into account by the 401(k) Plan Trustee in voting, in person, by limited or general power of attorney, or by proxy, the shares and fractional shares of common stock (the “Shares”) of Carver Bancorp, Inc. (“Carver”) which are held “by the 401(k) Plan Trustee, in its capacity as 401(k) Plan Trustee, as of July 25, 200531, 2007 (the “Record Date”) at the September 12, 200618, 2007 Meeting of Stockholders of Carver (the “Annual Meeting”) to be held at the Soundstage of The Apollo Theater, 253 West 125th Street, New York, New York at 10:00 a.m., or at any adjournment or postponement thereof. As to the proposals listed below, which are more particularly described in the Proxy Statement dated July 25, 2006,30, 2007, the 401(k) Plan Trustee will vote the common stock of Carver Bancorp, Inc. held by the 40l(k) Plan Trust to reflect the voting instructions on this Confidential Voting Instruction, in the manner described in the accompanying letter from the Committee dated August 8, 2006.July 30, 2007. As to other matters which may properly come before the Annual Meeting, the 401(k) Plan Trustee will vote upon such matters in its discretion, or cause such matters to be voted upon in the discretion of the individuals named in any proxies executed by it. The instruction set forth below will be taken into account as described above in directing the 401(k) Plan Trustee how to vote the Shares of Carver held by it as of the Record Date, in its capacity as Trustee, provided this instruction is filed with IVS Associates, Inc. by September 2, 2006.8, 2007. PLEASE, MARK YOUR INSTRUCTIONS ON THIS VOTING INSTRUC-TION,INSTRUCTION, SIGN AND DATE IT AND RETURN IT IN THE ENCLOSED ENVELOPE. IF THIS VOTING INSTRUCTION IS SIGNED BUT NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM 1 FOR THE PROPOSAL IN ITEM 2 AND FOR THE PROPOSAL IN ITEM 3.2.
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL NOMINEES” IN ITEM 1 AND “FOR” THE PROPOSALSPROPOSAL IN ITEMS 2 AND 3.ITEM 2. 1. | Election for Directors to a Three Year Term. |
1. Election for Directors to a Three Year Term; and Nominees: Dr. Samuel J. Daniel, Robert Holland,David L. Hinds, Pazel G. Jackson, Jr., Robert R. Tarter.Deborah C. Wright. INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE’S NAME IN THE SPACE PROVIDED. FOR all Nominees [_] | o | | WITHHOLD for all nominees [_] | o | |
2. | Ratification of the appointment of KPMG LLP as the independent auditors for the fiscal year ending March 31, 2007; and | | | | |
2. Ratification of the appointment of KPMG LLP as the independent auditors for the fiscal year ending March 31, 2008; and
3. | The adoption of the Carver Bancorp, Inc. 2006 Stock Incentive Plan. |
FOR [_] AGAINST [_] ABSTAIN [_]*
If any other matters properly come before the Annual Meeting including, among other things, a motion to adjourn or postpone the Annual Meeting to another time and/or place for the purpose of soliciting additional proxies or otherwise, the 401(k) Trustee will vote on such matters in such a manner as shall be determined by a majority of the Board of Directors. As of the date of the Proxy Statement for the Annual Meeting, management of the Company is not aware of any such other such business. The undersigned hereby instructs the 401(k) Plan Trustee to vote in accordance with the voting instructions indicated above and hereby acknowledges receipt of the letter from the Committee dated August 8, 2006July 31, 2007 a Notice of Annual Meeting of Stockholders of Carver Bancorp., Inc., a Proxy Statement for the Annual Meeting, and an Annual Report for the fiscal year ended March 31, 2006.2007. | | | | | Signature | | | | Title | | Title
| | Dated: ___________________, 20062007 |
Please date and sign exactly as your name appears on this instruction and return in the enclosed envelope. If acting as attorney, executor, administrator, trustee, guardian or otherwise, please so indicate when signing. If the signer is a corporation, please sign the full corporate name, by a duly authorized officer. If shares are held jointly, each shareholder named should sign. * For purposes of directing the voting of Shares for which no instructions are received, abstentions will be disregarded.
CARVER BANCORP, INC. August 8, 200614, 2007
Dear Plan Account Holder: The Carver Bancorp, Inc. (“Company”) Employee Stock Ownership Plan (“ESOP”) has a related trust (“ESOP Trust”) which holds common stock (“Common Stock”) of the Company. GreatBanc Trust Company, as the trustee of the ESOP Trust (“ESOP Trustee”), is therefore a shareholder of the Company and may vote on matters presented for shareholder action at the Company’s Annual Meeting of Stockholders scheduled to be held on September 12, 200618, 2007 (“Annual Meeting”). The ESOP Trust provides that in casting votes at the Annual Meeting, the ESOP Trustee is to follow the instructions given by participants, former participants and beneficiaries of deceased former participants (collectively, “Participants”) with respect to the Common Stock allocated to their accounts in the ESOP as of July 25, 2006.31, 2007. The records for the ESOP indicate that you are among the Participants who may give voting instructions. You may give your instructions by completing and signing the enclosed Confidential Voting Instruction (“Voting Instruction”) and returning it in the envelope provided to IVS Associates, Inc. (“IVS”). The Voting Instruction lets you give instructions for each matter expected to be presented for shareholder action at the Annual Meeting. The ESOP Trustee expects IVS to tabulate the instructions given on a confidential basis and to provide the ESOP Trustee with only the final results of the tabulation. The voting of the Common Stock held by the ESOP Trust is subject to legal requirements under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The ESOP Trustee, in consultation with its legal advisors, considers these requirements in establishing voting instruction procedures and voting the Common Stock allocated to Participants’ accounts. The remainder of this letter describes the voting procedures with the Employee Stock Ownership Plan Committee (“Committee”) expects to follow for the Annual Meeting. How your voting instructions count depends on whether it was anticipated that the matter being voted upon would be presented for shareholder action at the Annual Meeting; whether you had an interest in the ESOP Trust on the proper date; and how large your interest was, as follows: ANTICIPATED PROPOSALS (a)ALLOCATED COMMON STOCK. In general, the ESOP Trustee will vote the number of shares of Common Stock, if any, held by the ESOP Trust and allocated as of July 25, 200631, 2007 to your individual account under the ESOP according to the instructions specified on the Voting Instruction. In general, if you do not file the Voting Instruction by September 2, 2006,8, 2007, the ESOP Trustee will vote the number of shares allocated to your account FOR or AGAINST each proposal identified on the Voting Instruction in the same proportions as instructions to cast votes FOR or AGAINST such proposal are given with respect to shares allocated to the accounts of Participants who do file Voting Instructions. (b)UNALLOCATED COMMON STOCK. The ESOP Trust holds certain shares of Common Stock that are not allocated to any individual’s account. In general, the ESOP Trustee will vote the Common Stock not allocated to any individual’s account by casting votes FOR or AGAINST each proposal identified on the Voting Instruction, in the same proportions as instructions to cast votes FOR or AGAINST such proposal are given with respect to allocated Common Stock. If you do not file the Voting Instruction by September 2, 2006,8, 2007, or if you ABSTAIN as to a proposal, your instructions will not count in voting any allocated Common Stock for which no voting instructions have been received from Participants or the unallocated Common Stock. Each individual’s instructions for such purposes are weighted according to the number of shares of Common Stock allocated to all individuals’ accounts for which instructions to vote FOR or AGAINST have been received. However, the ESOP Trustee may be required to vote the allocated Common Stock for which no instructions have been received and the unallocated Common Stock held by the ESOP Trust in a different manner, if it determines such a vote to be in the best interests of Participants, in accordance with the legal requirements of ERISA. UNANTICIPATED PROPOSALS It is possible, although very unlikely, that proposals other than those specified on the Voting Instruction will be presented for shareholder action at the Annual Meeting. If this should happen, the ESOP Trustees will vote upon such matters in their discretion, or cause such matters to be voted upon in the discretion of the individuals named in any proxies executed by them. Your interest in the ESOP Trust offers you the opportunity to participate, as do the Company shareholders, in decisions that affect the future of the Company and Carver Federal Savings Bank (“Bank”) and we encourage you to take advantage of it. To help you decide how to complete the Voting Instruction, enclosed is a copy of the Proxy Statement and Annual Report that is being furnished to all holders of Common Stock in connection with the Annual Meeting. Please complete, sign and return your Voting Instruction today. Your instructions are important regardless of the size of your interest in the ESOP Trust. If you have questions regarding the terms of the ESOP or the Voting Instruction, please call the Human Resources Department of the Bank at (718) 230-2900. | Sincerely,
CARVER BANCORP, INC. EMPLOYEE STOCK OWNERSHIP PLAN COMMITTEE | | Enclosures
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CONFIDENTIAL VOTING INSTRUCTION
This Confidential Voting Instruction is solicited by the Employee Stock Ownership Plan Committee of Carver Bancorp, Inc. as named fiduciary for the Carver Bancorp, Inc. Employee Stock Ownership Plan (“ESOP”) for the Annual Meeting of Stockholders of Carver Bancorp, Inc. to be held on September 18, 2007. The undersigned participant, former participant or beneficiary of a deceased former participant in the ESOP (the “Instructor”) hereby provides the voting instructions hereinafter specified to GreatBanc Trust Company, as the successor trustee of the ESOP (“ESOP Trustee”), which instructions will be taken into account by the ESOP Trustee in voting in person, by limited or general power of attorney, or by proxy, the shares and fractional shares of common stock (the “Shares”) of Carver Bancorp, Inc. (“Carver”) which are held by the ESOP Trustee, in its capacity as ESOP Trustee, as of July 31, 2007 (the “Record Date”) at the September 12, 2007 Meeting of Stockholders of Carver (the “Annual Meeting”) to be held at the Soundstage of The Apollo Theater, 253 West 125th Street, New York, New York at 10:00 a.m. or at any adjournment or postponement thereof. As to the proposals listed below, which are more particularly described in the Proxy Statement dated July 30, 2007 the ESOP Trustee will vote the common stock of Carver Bancorp, Inc. held by the ESOP Trust to reflect the voting instructions on this Confidential Voting Instruction, in the manner described in the accompanying letter from the Committee dated July 30, 2007. As to other matters which may properly come before the Annual Meeting, the ESOP Trustee will vote upon such matters in its discretion, or cause such matters to be voted upon in the discretion of the individuals named in any proxies executed by it. The instruction set forth below will be taken into account as described above in directing the ESOP Trustee how to vote the Shares of Carver held by it as of the Record Date, in its capacity as Trustee, provided this instruction is filed with IVS Associates, Inc. by September 8, 2007. PLEASE MARK YOUR INSTRUCTIONS ON THIS VOTING INSTRUCTION, SIGN AND DATE AND RETURN IT IN THE ENCLOSED ENVELOPE. IF THIS VOTING INSTRUCTION IS SIGNED BY NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM 1 AND FOR THE PROPOSAL IN ITEM 2. This Confidential Voting Instruction is solicited by the Employee Stock Ownership Plan Committee of Carver Bancorp, Inc. as named fiduciary for the Carver Bancorp, Inc. Employee Stock Ownership Plan (“ESOP”) for the Annual Meeting of Stockholders of Carver Bancorp, Inc. to be held on September 12, 2006.
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL NOMINEES” IN ITEM 1 AND “FOR” THE PROPOSAL IN ITEM. 1. Election for Directors to a Three Year Term; and Nominees: David L. Hinds, Pazel G. Jackson, Jr., Deborah C. Wright. INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE’S NAME IN THE SPACE PROVIDED. The undersigned participant, former participant or beneficiary of a deceased former participant in the ESOP (the “Instructor”) hereby provides the voting instructions hereinafter specified to GreatBanc Trust Company, as the successor trustee of the ESOP (“ESOP Trustee”), which instructions will be taken into account by the ESOP Trustee in voting in person, by limited or general power of attorney, or by proxy, the shares and fractional shares of common stock (the “Shares”) of Carver Bancorp, Inc. (“Carver”) which are held by the ESOP Trustee, in its capacity as ESOP Trustee, as of July 25, 2006 (the “Record Date”) at the September 12, 2006 Meeting of Stockholders of Carver (the “Annual Meeting”) to be held at The Apollo Theater, 253 West 125th Street, New York, New York at 10:00 a.m. or at any adjournment or postponement thereof.
As to the proposals listed below, which are more particularly described in the Proxy Statement dated July 31, 2006 the ESOP Trustee will vote the common stock of Carver Bancorp, Inc. held by the ESOP Trust to reflect the voting instructions on this Confidential Voting Instruction, in the manner described in the accompanying letter from the Committee dated August 8, 2006.
As to other matters which may properly come before the Annual Meeting, the ESOP Trustee will vote upon such matters in its discretion, or cause such matters to be voted upon in the discretion of the individuals named in any proxies executed by it.
The instruction set forth below will be taken into account as described above in directing the ESOP Trustee how to vote the Shares of Carver held by it as of the Record Date, in its capacity as Trustee, provided this instruction is filed with IVS Associates, Inc. by September 2, 2006.
PLEASE MARK YOUR INSTRUCTIONS ON THIS VOTING INSTRUCTION, SIGN AND DATE AND RETURN IT IN THE ENCLOSED ENVELOPE.
IF THIS VOTING INSTRUCTION IS SIGNED BUT NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM 1, FOR THE PROPOSAL IN ITEM 2 AND FOR THE PROPOSAL IN ITEM 3.all Nominees| o | | WITHHOLD for all nominees | o | | | Participant |
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL NOMINEES” IN ITEM 1 AND “FOR” THE PROPOSALS IN ITEMS 2 AND 3.
1. | Election for Directors to a Three Year Term.
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Nominees: Dr. Samuel J. Daniel, Robert Holland, Jr., Robert R. Tarter.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE’S NAME IN THE SPACE PROVIDED.
FOR all Nominees [_] | WITHHOLD for all nominees [_] | |
| 2. | Ratification of the appointment of KPMG LLP as the independent auditors for the fiscal year ending March 31, 2007; and |
FOR [_] AGAINST [_] ABSTAIN [_]*
3. | The adoption of the Carver Bancorp, Inc. 2006 Stock Incentive Plan. |
FOR [_] AGAINST [_] ABSTAIN [_]*
If any other matters properly come before the Annual Meeting including, among other things, a motion to adjourn or postpone the Annual Meeting to another time and/or place for the purpose of soliciting additional proxies or otherwise, the ESOP Trustee will vote on such matters in such a manner as shall be determined by a majority of the Board of Directors. As of the date of the Proxy Statement for the Annual Meeting, management of the Company is not aware of any such other business.
The undersigned hereby instructs the ESOP Trustee to vote in accordance with the voting instructions indicated above and hereby acknowledges receipt of the letter from the Committee dated August 8, 2006, a Notice of Annual Meeting of Stockholders of Carver Bancorp., Inc., a Proxy Statement for the Annual Meeting, and an Annual Report for the fiscal year endedending March 31, 2006.2008.
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If any other matters properly come before the Annual Meeting including, among other things, a motion to adjourn or postpone the Annual Meeting to another time and/or place for the purpose of soliciting additional proxies or otherwise, the ESOP Trustee will vote on such matters in such a manner as shall be determined by a majority of the Board of Directors. As of the date of the Proxy Statement for the Annual Meeting, management of the Company is not aware of any such other such business. The undersigned hereby instructs the ESOP Trustee to vote in accordance with the voting instructions indicated above and hereby acknowledges receipt of the letter from the Committee dated July 31, 2007, a Notice of Annual Meeting of Stockholders of Carver Bancorp., Inc., a Proxy Statement for the Annual Meeting, and an Annual Report for the fiscal year ended March 31, 2007. | | | Signature | | | Title | | | Dated: ___________________, 2007 | | | | | Title | | | | Dated: ___________________, 2006 | | | |
Please date and sign exactly as your name appears on this instruction and return in the enclosed envelope. If acting as an attorney, executor, administrator, trustee, guardian or otherwise, please so indicate when signing. If the signer is a corporation, please sign the full corporate name, by a duly authorized officer. If shares are held jointly, each shareholder named should sign. * For purposes of directing the voting of Shares for which no instructions are received, abstentions will be disregarded.
* For purposes of directing the voting of Shares for which no instructions are received, abstentions will be disregarded.
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