UNITED STATES
SCHEDULE 14A
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o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-16(e)(2))
☒ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
DIME COMMUNITY BANCSHARES, INC.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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April 14, 2017
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the "Annual Meeting"“Annual Meeting”) of Dime Community Bancshares, Inc. (the "Company"“Company”), which will be held on May 25, 201723, 2019 at 10:00 a.m. Eastern Time, at Giando on the Water, 400 Kent Avenue,New York Marriott at the Brooklyn Bridge, 333 Adams Street, Brooklyn, New York 11211.
The attached Notice of the Annual Meeting of Shareholders and Proxy Statement describe the business to be transacted at the Annual Meeting. The Directors and severalexecutive officers of the Company, as well as a representative of Crowe Horwath LLP, the accounting firm appointed by the Audit Committee of the Board of Directors to be the Company's independent auditorsregistered public accounting firm for the year ending December 31, 2017,2019, will be present at the Annual Meeting.
Fiscal year 2018 was a transformative year for the Company. The Company continued to effectively implement its strategy of building a relationship-driven, community commercial bank offering an array of products and services to its customers. The Company also reaffirmed its commitment to strong corporate governance and social responsibility by adhering to values of diversity and inclusion, community investment and involvement and high standards of ethics and compliance. We believe that this strategy and commitment will foster a higher performing institution.
The Company's Board of Directors has determined that an affirmative vote on each matter to be considered at the Annual Meeting is in the best interests of the Company and its shareholders and unanimously recommends a vote "FOR"“FOR” each of these matters.
On behalf of our Board of Directors and employees, we thank you for your continued support and hope to see you at the Annual Meeting.
Sincerely yours,
Vincent F. Palagiano | Kenneth J. Mahon | |
Chairman of the Board | President and Chief Executive Officer |
Dime Community Bancshares, Inc.
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Dime Community Bancshares, Inc. (the "Annual Meeting"“Annual Meeting”) will be held at Giando on the Water, 400 Kent Avenue,New York Marriott at the Brooklyn Bridge, 333 Adams Street, Brooklyn, New York 11211,11201, on Thursday, May 25, 201723, 2019 at 10:00 a.m. Eastern Time, to consider and vote upon the following:
1. | Election of |
2. | Ratification of the appointment of Crowe |
3. | Approval, by a non-binding advisory vote, of the compensation of the Company’s Named Executive Officers; and |
4. |
Transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. As of the date hereof, management is not aware of any other such business. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THESE ITEMS FOR THE REASONS DESCRIBED IN THE PROXY STATEMENT. | |
The Board of Directors has fixed March 29, 201726, 2019 as the record date for the Annual Meeting and any adjournment or postponement thereof. Only shareholders of record at the close of business on that date will be entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. A list of such shareholders will be available for inspection by any shareholder for any lawful purpose germane to the Annual Meeting at the Company's corporate headquarters at 300 Cadman Plaza West, 8th Floor, Brooklyn, NYNew York 11201 at any time during regular business hours for 10 days prior to the Annual Meeting.
By Order of the Board of Directors
Patricia M. Schaubeck
Secretary
Brooklyn, New York
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE BOARD OF DIRECTORS URGES YOU TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. RETURNING THE PROXY CARD WILL NOT PREVENT YOU FROM VOTING IN PERSON IF YOU ATTEND THE ANNUAL MEETING. | |
TABLE OF CONTENTS
DIME COMMUNITY BANCSHARES, INC.
To Be Held on May 25, 2017
General
This Proxy Statement and accompanying proxy card are being furnished to the shareholders of Dime Community Bancshares, Inc. (the "Company"“Company”, “Dime”, “we”, “our” or “us”) in connection with the solicitation of proxies by the Company's Board of Directors from holders of the shares of the Company's issued and outstanding common stock, par value $0.01 per share (the "Common Stock"“Common Stock”), for use at the Annual Meeting of Shareholders to be held on May 25, 201723, 2019 (the "Annual Meeting"“Annual Meeting”) at Giando on the Water, 400 Kent Avenue,New York Marriott at the Brooklyn Bridge, 333 Adams Street, Brooklyn, New York 1121111201, at 10:00 a.m. Eastern Time, and at any adjournment or postponement thereof. The Company is a Delaware corporation and operates as a unitary savings and loan holding company for Dime Community Bank (f/k/a The Dime Savings Bank of Williamsburgh) (the "Bank"). This Proxy Statement, together with the enclosed proxy card, is first being mailed to shareholders on or about April 14, 2017.
Record Date
The Company's Board of Directors has fixed the close of business on March 29, 201726, 2019 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting (the "Record Date"“Record Date”). Accordingly, only holdersshareholders of record of shares of Common Stock at the close of business on March 29, 201726, 2019 will be entitled to vote at the Annual Meeting. There were 37,569,34835,881,968 shares of Common Stock outstanding on the Record Date. The presence, in person or by proxy, of the holders of at least a majority of the total number of shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting
The notice of meeting, Proxy Statement, annual report and sample proxy card are available for review at www.materials.proxyvote.com/https://materials.proxyvote.com/253922. The notice of meeting, Proxy Statement and annual report are also available on the Company's website at www.dime.com.
Voting Rights
Each holder of Common Stock on the Record Date will be entitled to one vote at the Annual Meeting for each share of record held on the Record Date (other than Excess Shares, as defined below). You may vote your shares of Common Stock by marking and signing the enclosed Proxy Card and returning it in the enclosed postage-paid envelope, by telephone or internet by following the instructions stated on the Proxy Card or by attending the Annual Meeting and voting in person. All properly executed proxies received by the Company on or before 11:59 p.m. Eastern Time on May 22, 2019 will be voted in accordance with the instructions indicated thereon. If no instructions are given, executed proxies will be voted FOR the election of each of the four nominees for Director, FOR the ratification of the appointment of Crowe LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019 and FOR the approval of compensation of the Company’s Named Executive Officers.
As provided in the Company's Certificate of Incorporation, record holders (other than any compensation plan maintained by the Company and certain affiliates) of Common Stock who beneficially own in excess of 10% of the issued and outstanding shares of Common Stock (such shares in excess of 10% referred to herein as "Excess Shares"“Excess Shares”) shall be entitled to cast only one-hundredth of one vote per share for each Excess Share. A person or entity is deemed to beneficially own shares owned by an affiliate or associate as well as by persons acting in concert with such person or entity. The Company's Certificate of Incorporation authorizes a majority of the Board of Directors to interpret the provisions of the Certificate of Incorporation governing Excess Shares, and to determine, on the basis of information known to them after reasonable inquiry, all facts necessary to ascertain compliance with the Excess Shares provisions of the Certificate of Incorporation, including, without limitation, (i) the number of shares of
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Common Stock beneficially owned by any person or purported owner, (ii) whether a person or purported owner is an affiliate or associate of, or is acting in concert with, any other person or purported owner, and (iii) whether a person or purported owner has an agreement or understanding with any other person or purported owner as to the voting or disposition of any shares of Common Stock.
Management is not aware of any matters other than those set forth in the Notice of the Annual Meeting of Shareholders that may be brought before the Annual Meeting. If any other matters properly come before the Annual Meeting, the persons named in the accompanying proxy will vote the shares represented by all properly executed proxies on such matters in such manner as shall be determined by a majority of the Company's Board of Directors.
If you are a shareholder whose shares of Common Stock are not registered in your own name, you will need appropriate documentation from your shareholder of record to vote personally at the Annual Meeting.
Examples of such documentation include a broker's statement, letter or other document that will confirm your ownership of the Common Stock.Quorum and Vote Required
If you hold your shares in street name, it is critical that you cast your vote if you want it to count in the election of directors or with respect to the advisory proposal regarding the compensation of our Named Executive Officers (as defined herein). Current regulations restrict the ability of your bank or broker to vote your uninstructed shares in the election of directors and other matters on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote with respect to the election of directors or the advisory vote regarding the compensation of our Named Executive Officers, no votes will be cast on your behalf. These are referred to as broker non-votes. Your bank or broker does, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of our independent auditors.
The presence, in person or by proxy, of the holders of at least a majority of the total number of shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum. Abstentions and broker non-votes will be counted as present for the purpose of determining whether a quorum is present.
Directors are elected by a plurality of the votes cast in person or by proxy at the Annual Meeting.Meeting, without regard to broker non-votes. The holders of Common Stock may not vote their shares cumulatively for the election of Directors. With respect to the election of the threefour nominees for Director, shares as to which the "WITHHOLD AUTHORITY"“WITHHOLD” box has been selected for either all or some of the nominees will be counted as being present for the matter but not as voting "for"“for” the election of the respective nominee(s). Therefore, the proxy represented by these shares will have the same effect as voting against the respective nominee(s). In contrast, sharesAny Director nominee who does not receive more votes cast “for” than “withheld” his/her election shall immediately tender his/her resignation. The Corporate Governance and Nominating Committee shall promptly consider the resignation, possible responses (including, without limitation, actions to address the underlying broker non-votescauses of the vote), and make a recommendation to the Board for determination at its next regularly scheduled meeting. The Corporate Governance and Nominating Committee and Board may consider factors deemed relevant in deciding whether or not to accept the offer of resignation. The Director nominee at issue will not be counted as present and entitled toparticipate in the discussion, recommendation of vote and will have no effect onregarding the vote on Proposal 1.
Proposals 2 and 3 require the affirmative vote of the holders of a majority of the number of votes eligible to be cast by the holders of Common Stock represented, in person or by proxy, and entitled to vote at the Annual Meeting.Meeting, without regard to broker non-votes. Shares as to which the "ABSTAIN"“ABSTAIN” box has been selected on the Proxy Card with respect to Proposals 2 and 3 will be counted as present and entitled to vote and will have the effect of a vote against these proposals. In contrast, shares underlying broker non-votes will not be counted as present and entitled to vote and will have no effect on the vote on Proposals 2 and 3.
Although the advisory vote on the compensation of Named Executive Officers is non-binding as provided by law, the Company’s Board of Directors will review the results of the vote and consider them in making future determinations concerning executive compensation.
Revocability of Proxies
A proxy may be revoked at any time before it is voted by filing a written revocation of the proxy with the Company's Secretary at 300 Cadman Plaza West, 8th Floor, Brooklyn, New York 11201 or by submitting a duly executed proxy bearing a later date. A proxy also may be revoked by attending and voting at the Annual Meeting, but only if a written revocation is filed with the Corporate Secretary prior to the voting of such proxy.
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Solicitation of Proxies
The Company will bear the costs of soliciting proxies from its shareholders. In addition to the use of mail, proxies may be solicited by officers, Directors or employees of the Company or the Bank by telephone or other forms of communication. The Company will also request persons, firms and corporations holding shares in their names or in the names of their nominees, which are beneficially owned by others, to send proxy materials to, and obtain proxies from, such beneficial owners, and will reimburse such holders for reasonable expenses incurred in connection therewith. In addition, the Company has retained Broadridge Financial Solutions, Inc. to assist in the solicitation of proxies. The cost of such solicitation will be paid by the Company.
Interests of Directors and Management in Certain Proposals
Shareholders will be asked to cast a non-binding advisory vote on Proposal No. 3 regarding compensation to the Company's Named Executive Officers, and the results of such advisory vote may influence future compensation decisions. As a result, the Company's senior executives have personal interests in the outcome of this proposal that are different from the interests of the Company's other shareholders. The Board was aware of these interests and took them into account in recommending that the shareholders vote in favor of Proposal No. 3.
Director Attendance at Annual Meetings
The Company considers Board attendance at shareholder meetings a priority. It is the policy of the Company that Directors exercise their best efforts to attend every meeting. All eleven of the Company’sthen-serving Company Directors during the year ended December 31, 2015 attended the annual meeting of shareholders held in 2016.
Principal Shareholders of the Company
The following table sets forth certain information as to persons known to the Company to be the beneficial owner of in excess of 5% of the shares of Common Stock as of March 29, 2017.26, 2019. Management knows of no person, except as listed below, who beneficially owned more than 5% of the Common Stock as of March 29, 2017.26, 2019. Except for the column titled "Percent“Percent of Class,"” and as otherwise indicated, the information provided in the table was obtained from filings with the Securities and Exchange Commission (the "SEC"“SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”). Addresses provided are those listed in the filings as the address of the person authorized to receive notices and communications. For purposes of the table below and the table set forth under "Security“Security Ownership of Management,"” in accordance with Rule 13d‑313d-3 under the Exchange Act, a person is deemed to be the beneficial owner of any shares of Common Stock: (1) over which he or she has or shares, directly or indirectly, voting or investment power, and (2) of which he or she has the right to acquire beneficial ownership at any time within 60 days after March 29, 2017.26, 2019. As used herein, "voting power"“voting power” includes the power to vote, or direct the voting of, Common Stock and "investment power"“investment power” includes the power to dispose, or direct the disposition, of such shares. Unless otherwise noted, each beneficial owner has sole voting and sole investment power over the shares beneficially owned.
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||
Common Stock | Blackrock, Inc. 55 East 52nd Street New York, NY 10055 | 4,857,508 | (1) | 13.5 | % | ||
Common Stock | The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 | 3,328,078 | (2) | 9.3 | % | ||
Common Stock | Dimensional Fund Advisors LP 6300 Bee Cave Road Austin, TX 78746 | 3,143,716 | (3) | 8.8 | % | ||
Common Stock | The Dime Community Bank KSOP (the “KSOP”) 300 Cadman Plaza West, 8th Floor Brooklyn, NY 11201 | 2,206,203 | (4) | 6.2 | % |
Blackrock, Inc. |
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(2) | The Vanguard Group filed a Schedule 13G/A on February |
(3) | Dimensional Fund Advisors LP filed a Schedule |
(4) | The KSOP is a defined contribution retirement plan under ERISA. Principal Trust Company serves as trustee (the “KSOP Trustee”). The KSOP Trustee votes all shares of Common Stock which are allocated to Participant accounts in accordance with the voting instructions obtained from each Participant. Shares of Common Stock for which no voting instructions have been provided will be voted proportionately in accordance with instructions obtained from KSOP participants. |
The following table sets forth information as of the Record Date with respect to the shares of Common Stock beneficially owned by each of the Company's Directors and the principal executive officer, principal financial officer and three most highly compensated executive officers (other than the principal executive and principal financial officers)officer) of the Company or Bank (the "Named“Named Executive Officers"Officers” or “NEOs”) other than Daniel J. Harris who resigned from the Company effective January 6, 2017, and all of the Company's Directors and executive officers as a group. Except as otherwise indicated, each person and each group shown in the table has sole voting and investment power with respect to the shares of Common Stock indicated.
The Company's Anti HedgingAnti-Hedging and Pledging and Insider Trading Policies prohibit Directors and senior officers from pledging Common Stock as collateral for any loan.
Title of Class | Name of Beneficial Owner | Position | Amount and Nature of Beneficial Ownership(1)(2) | Percent of Class Outstanding | Vested Stock Options Included in Beneficial Ownership Total(3) | ||||||
Common | Vincent F. Palagiano | Director, Chairman of the Board | 899,759 | (4) | 2.5 | % | — | ||||
Common | Michael P. Devine | Director, Vice Chairman of the Board | 666,479 | 1.9 | 19,074 | ||||||
Common | Kenneth J. Mahon | Director, President and Chief Executive Officer (“CEO”) | 397,647 | (5) | 1.1 | 11,532 | |||||
Common | Rosemarie Chen | Director | 1,022 | * | — | ||||||
Common | Steven D. Cohn | Director | 72,327 | (6) | * | — | |||||
Common | Patrick E. Curtin | Director | 87,470 | (7) | * | — | |||||
Common | Robert C. Golden | Director | 42,084 | (8) | * | 2,444 | |||||
Common | Barbara G. Koster | Director(12) | — | * | — | ||||||
Common | Kathleen M. Nelson | Director | 26,879 | (9) | * | 2,444 | |||||
Common | Joseph J. Perry | Director | 67,905 | (10) | * | 8,333 | |||||
Common | Kevin Stein | Director | 6,220 | * | — | ||||||
Common | Omer S. J. Williams | Director | 57,754 | * | 17,202 | ||||||
Common | Stuart H. Lubow | Senior Executive Vice President and Chief Banking Officer | 19,190 | * | — | ||||||
Common | Robert S. Volino | Senior Executive Vice President and Chief Operating Officer | 73,538 | * | — | ||||||
Common | Conrad J. Gunther | Executive Vice President and Chief Lending Officer | 6,527 | (11) | * | — | |||||
Common | James L. Rizzo | Senior Vice President and Comptroller (Principal Financial Officer) | 27,700 | * | — | ||||||
All Directors and executive officers as a group (22 persons)(13) | 2,454,729 | 7.8 | % | 61,029 |
Title of Class | Name of Beneficial Owner | Position | Amount and Nature of Beneficial Ownership (1)(2)(3) | Percent of Class Outstanding | Vested Stock Options Included in Beneficial Ownership Total | Other Non- Beneficial Ownership (4) | ||||||||||||||
Common | Vincent F. Palagiano | Director, Chairman of the Board(16) | 766,803 | (5) | 2.0 | % | 112 | 354,760 | ||||||||||||
Common | Michael P. Devine | Director, Vice Chairman of the Board | 670,986 | (6) | 1.8 | 37,209 | 14,938 | |||||||||||||
Common | Kenneth J. Mahon | Director, President and Chief Executive Officer (“CEO”)(17) | 397,422 | (7) | 1.1 | 24,459 | 180,255 | |||||||||||||
Common | Anthony Bergamo | Director | 164,078 | (8) | * | 11,812 | — | |||||||||||||
Common | Steven D. Cohn | Director | 82,327 | (9) | * | 10,000 | — | |||||||||||||
Common | Patrick E. Curtin | Director | 87,046 | (10) | * | — | — | |||||||||||||
Common | Robert C. Golden | Director | 29,793 | (11) | * | 2,444 | — | |||||||||||||
Common | Kathleen M. Nelson | Director | 20,548 | (12) | * | 2,444 | — | |||||||||||||
Common | Joseph J. Perry | Director | 70,529 | (13) | * | 23,177 | — | |||||||||||||
Common | Omer S. J. Williams | Director | 59,422 | * | 27,202 | — | ||||||||||||||
Common | Michael Pucella | Executive Vice President ("EVP") and Chief Accounting Officer (“CAO”)(Principal Financial Officer) | 97,510 | (14) | * | — | 64,592 | |||||||||||||
Common | Timothy B. King | EVP and Chief Risk Officer (“CRIO”) | 196,669 | (15) | * | — | 65,113 | |||||||||||||
All Directors and executive officers as a group (19 persons) | 3,526,719 | 7.3 | % | 138,859 | 769,129 |
Less than one percent |
(1) | See |
(2) |
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(3) |
(4) | Includes 899,759 shares |
(5) | Includes 140,941 shares as |
(6) | Includes 72,327 shares as to which Mr. Cohn may be deemed to share voting and |
(7) | Includes 87,040 shares as to which Mr. Curtin may be deemed to share voting and investment power. |
(8) | Includes 39,640 shares as to which Mr. Golden may be deemed to share voting and investment power. |
(9) | Includes 24,435 shares as to which Ms. Nelson may be deemed to share voting and investment power. |
(10) | Includes 59,572 shares as to which Mr. Perry may be deemed to share voting and investment power. |
(11) | Includes 6,527 shares as to which Mr. Gunther may be deemed to share voting and investment power. |
(12) | Ms. Koster was elected as a |
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ELECTION OF DIRECTORS
General
The Company's Certificate of Incorporation and Bylaws provide for the election of Directors by the shareholders. For this purpose, the Company's Board of Directors isCompany currently has twelve directors, divided into three classes, with each class to be as nearly equal in number as possible. The terms of office of the members of one class expire, and a successor class is to be elected, at each annual meeting of shareholders. The Company currently has ten Directors.
Vincent F. Palagiano, Patrick E. Curtin, Kathleen M. Nelson and Omer S. J. Mahon, Steven D. Cohn, and Robert C. Golden,Williams, whose terms expire at the Annual Meeting, have been nominated by the Board on the recommendation of the Corporate Governance and Nominating Committee of the Board of Directors to be re-elected at the Annual Meeting for a term expiring at the annual meeting to be held in 2020,2022, or when their successors are otherwise duly elected and qualified.
Each nominee has consented to being named in this Proxy Statement and to serve, if elected. In the event that any nominee for election as a Director at the Annual Meeting is unable or declines to serve, which the Board of Directors has no reason to expect, the persons named in the proxy card will vote with respect to a substitute nominee designated by the Nominating Committee of the Board of Directors, unless the shareholder has elected to "withhold authority"“withhold authority” with respect to all nominees.
Information as to Nominees and Continuing Directors
In March 2017,February 2019, the Board determined that all of its current Directors with the exception of Messrs. Palagiano,Curtin, Devine, Mahon, and CurtinPalagiano were independent pursuant to its Policy Regarding Director Independence (the “Director Independence Policy”) and National Associationthe listing rules of Securities Dealers, Inc. Rule 5605(a)(2) ["Rule 5605(a)(2)"].the Nasdaq Stock Market. Mr. Mahon wasis not independent because he wasis an executive officer of the Company, Messrs. Devine and Palagiano and Devine wereare not independent because they were officers ofeach received compensation other than Board fees from the Company within the past fivethree years, and Mr. Curtin was deemedis not independent because he was, until recently,has a family member who is a member of a law firm that received payments from third parties for providing various legal services to the Company or its subsidiaries. See, "Transactions with Certain Related Persons."
The Director Independence Policy is available on the Company's website a
The NominatingCorporate Governance Committee has“has adopted general criteria for nomination to the Board which establish the minimum qualifications and experience to be examined in determining candidates for election. Pursuant to the general criteria, Directors should possess personal and professional ethics, integrity and values; be committed to representing the long-term interests of the Company’s shareholders and other constituencies; possess the ability to (a) exercise sound business judgment, (b) work with others as an effective group, and (c) commit adequate time to their responsibilities; be independent as defined in applicable law, the Director Independence Policy and the Company's Code of Business Ethics and be able to impartially represent the interests of the Company’s shareholders and other constituencies; possess experience and expertise relevant to the business of the Company; and possess such other knowledge, experience or skills as required or which may be useful considering the composition of the Board, the operating requirements of the Company and the long-term interests of the shareholders. The nomination guidelines promote Board diversity to respond to business needs and shareholder interests.
The following table sets forth certain information as of March 26, 2019 with respect to each nominee for election as a Director and each Director whose term does not expire at the Annual Meeting ("(“Continuing Director"Director”). There are no arrangements or understandings between the Company and any Director or nominee pursuant to which such person was selected as a Director or nominee. For information with respect to security ownership by Directors, see "Security“Security Ownership of Certain Beneficial Owners and Management – Security Ownership of Management."”
Age(1) | Director Since(2) | Term Expires | Position(s) Held with the Company and the Bank | |||||
Nominees | ||||||||
Kenneth J. Mahon | 66 | 2002 | 2017 | Director, President and CEO(3) | ||||
Steven D. Cohn | 68 | 1994 | 2017 | Director | ||||
Robert C. Golden | 70 | 2011 | 2017 | Director | ||||
Continuing Directors | ||||||||
Vincent F. Palagiano | 76 | 1978 | 2019 | Director, Chairman of the Board (3) | ||||
Michael P. Devine | 70 | 1980 | 2018 | Director, Vice Chairman of the Board | ||||
Anthony Bergamo | 70 | 1986 | 2018 | Director | ||||
Joseph J. Perry | 50 | 2005 | 2018 | Director | ||||
Patrick E. Curtin | 71 | 1986 | 2019 | Director | ||||
Kathleen M. Nelson | 71 | 2011 | 2019 | Director | ||||
Omer S. J. Williams | 76 | 2006 | 2019 | Director |
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NOMINEES FOR ELECTION AS DIRECTORS:
Patrick E. Curtin | |||
Age: 73 Director Since*: 1986 Term Expires: 2022 Committees: Risk | Experience: Prior to his retirement on December 31, 2015, Mr. Curtin served as a senior member in the law firm of Conway Farrell Curtin & Kelly, P.C. in New York, New York, and represented banks in loan closings, litigation and various other matters for over 36 years. Qualifications: Mr. Curtin’s legal knowledge, especially with respect to lending and banking matters, make him qualified to serve on the Board. | ||
Kathleen M. Nelson | |||
Age: 73 Director Since: 2011 Term Expires: 2022 Committees: Compensation and Human Resources Corporate Governance and Nominating Executive Risk | Experience: Ms. Nelson was elected Lead Director of the Boards of Directors of the Company and the Bank in January 2017. Ms. Nelson is an investment advisor to Bay Hollow Associates, a commercial real estate advisory firm that she co-founded in 2009, as well as a commercial real estate investment consultant to KMN Associates, LLC, a commercial real estate consulting firm she founded that provides consulting services to mixed-use and commercial retail real estate developers and owners. Ms. Nelson served in the mortgage and real estate division of TIAA-CREF from 1968 through 2004, retiring as the Managing Director and Group leader of the division. Ms. Nelson currently serves on the Board of Directors and Executive and Nominating & Corporate Governance (Chair) Committees of CBL & Associates Properties, Inc., a publicly traded Real Estate Investment Trust focused on shopping center properties, as well as on the Board of Directors and Audit, Compensation and Nominating and Corporate Governance (Chair) Committees of Apartment Investment and Management Co., a publicly traded owner and manager of rental apartments. Ms. Nelson is a member of the advisory boards of Castagna Realty Company, the Beverly Willis Architecture Foundation, the Anglo American Real Property Institute, and an unaffiliated Board member of the JP Morgan U.S. Real Estate Income and Growth Fund. Qualifications: Ms. Nelson’s extensive knowledge of local real estate markets and real estate financing make her qualified to be a Director. |
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Vincent F. Palagiano | |
Age: 78 Director Since*: 1978 Term Expires: 2022 Committees: Executive (Chair) | Experience: Mr. Palagianohas served as Chairman of the Board of the Company since its formation in 1995 and of the Bank since 1989. He served as CEO of both the Company and the Bank from January 1, 1989 to his retirement on December 31, 2016. Prior to Mr. Palagiano’s appointment as CEO, he served as President of both the Company and the Bank. Mr. Palagiano joined the Bank in 1970. In addition, Mr. Palagiano served on the Board of Directors of the Federal Home Loan Bank of New York from 2012 to 2016. Qualifications: Mr. Palagiano’s knowledge of the Company, the Company’s markets and the community bank industry, obtained from his lifelong career in the industry, make him qualified to serve on the Board. |
Omer S. J. Williams | |
Age: 78 Director Since: 2006 Term Expires: 2022 Committees: Compensation and Human Resources Corporate Governance and Nominating (Chair) Executive | Experience: Mr. Williams is an attorney, and was formerly Senior Counsel to the law firm of Alston & Bird LLP. He was previously Counsel to Denton’s (US) LLP and prior to that a partner at Thacher Proffitt & Wood LLP (“Thacher”), where he served as both Chairman of the firm's Executive Committee and Managing Partner of the firm from 1991 to 2003. Thacher's partners determined to dissolve the firm as of December 31, 2008, and Mr. Williams served as Chairman of Thacher's dissolution committee until dissolution was completed in 2012. Qualifications: Mr. Williams’ more than 50 years of experience in banking, corporate and financial institution law, including corporate structure, securities and mortgage finance issues make him qualified to serve on the Board. |
Includes service as a Director or Trustee with the Bank prior to the Company's incorporation on December 12, 1995. |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE | |
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CONTINUING DIRECTORS:
Steven D. Cohn | |||
Age: 70 Director Since*: 1994 Term Expires: 2020 Committees: Audit Corporate Governance and Nominating | Experience: Mr. Cohnhas served as a Director of the Company since its formation in 1995 and as a Trustee or Director of the Bank since 1994. Mr. Cohn is the managing partner in the law firm of Goldberg and Cohn LLP, in Brooklyn Heights, New York, and is a past President of the Brooklyn Bar Association and a delegate to the New York State Bar Association. Mr. Cohn is an adjunct professor at the Fashion Institute of Technology, teaching classes in business law and marketing research. Mr. Cohn serves on the Advisory Board of the North Brooklyn Development Group and is a member of the Jewish Community Relations Council of New York City. Qualifications: Mr. Cohn’s experience as an attorney and his knowledge and involvement in the Company’s market area make him qualified to serve on the Board. | ||
Robert C. Golden | |||
Age: 72 Director Since: 2011 Term Expires: 2020 Committees: Audit (Chair) Corporate Governance and Nominating Technology | Experience: Prior to retirement, Mr. Golden served as EVP of Corporate Operations and Systems at Prudential Financial, Inc. (previously Prudential Insurance Company of America) from 1997 to 2010, where he managed operations, technology infrastructure and communications and administrative services for all of Prudential Financial, Inc.'s subsidiaries. From 1976 through 1997, Mr. Golden served in several capacities at Prudential Securities, Inc., formerly a wholly-owned subsidiary of Prudential Insurance Company of America until majority ownership was sold in 2003, ending his tenure at Prudential Securities as Chief Administrative Officer in charge of operations, technology, systems infrastructure, communications, human resources, administrative services and real estate. Prior to retirement, Mr. Golden was a licensed member of the Financial Industry Regulatory Authority as a General Securities Representative, including the specialties of Financial and Operations Principal and Uniform Securities Agent State Law Examination. Mr. Golden currently serves as a Manager at Mutual of America Capital Management Corp., a money management firm. Qualifications: Mr. Golden’s technology and operations experience with a large financial services organization make him qualified to serve on the Board. |
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Barbara G. Koster | |
Age: 65 Director Since: 2018 Term Expires: 2020 Committees: Technology (Chair) | Experience: Ms. Koster is Senior Vice President, Global Chief Information Officer of Prudential Financial, responsible for information technology and cyber security at Prudential locations worldwide. She is a Trustee of St. Francis College in Brooklyn, New York and Liberty Science Center in Jersey City, New Jersey. Ms. Koster maintains affiliations with several non-profit organizations, including Junior Achievement and Research Board (International Think Tank). Qualifications: Ms. Koster’s technology expertise, particularly within the financial services industry, make her qualified to serve on the Board. |
Kenneth J. Mahon | |
Age: 68 Director Since: 1998 Term Expires: 2020 Committees: Executive | Experience: Mr. Mahonwas appointed President and CEO of both the Company and the Bank effective January 1, 2017. He joined the Bank in 1980, where he has been a director of the Bank since 1998, and a director of the Company since 2002. Mr. Mahon served as the Bank’s Senior Vice President and Comptroller, prior to being elevated to Executive Vice President and Chief Financial Officer of the Company and Bank in 1997. He has also served as Senior Executive Vice President and COO from February 2014 to January 2016, before being elevated to President. Mr. Mahon was elected to serve on the board of the Federal Home Loan Bank of New York beginning January 1, 2017. He also serves as a board member of Brooklyn Legal Services Corporation A, a non-profit which provides legal services for low income families in Brooklyn. Mr. Mahon is a member of the Financial Managers Society, the National Investor Relations Institute and the National Association of Corporate Directors. Qualifications: Mr. Mahon’s knowledge of the Company and the industry, obtained from his lifelong career in the industry, make him qualified to serve on the Board. |
Rosemarie Chen | |
Age: 52 Director Since: 2017 Term Expires: 2021 Committees: Compensation and Human Resources (Chair) Risk Technology | Experience: Ms. Chen is currently a Human Capital and Financial Services Leader at Willis Towers Watson, a global advisory, broking, and solutions company where she advises companies on strategic human capital issues along with leading initiatives relating to fintech since 2016. Prior to joining Willis Towers Watson, Ms. Chen was a Senior Manager with Deloitte Consulting from 2013 through 2016, and Head of U.S. Infrastructure Services and Support at McLagan Partners (Aon Hewitt) from 2003 through 2013. Qualifications: Ms. Chen’s more than 20 years of experience in finance, technology, and human capital management make her qualified to serve as a Director. |
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Michael P. Devine | |
Age: 72 Director Since*: 1980 Term Expires: 2021 Committees: Executive | Experience: Mr. Devine has served as a Director of the Company since its formation in 1995 and as a Trustee or Director of the Bank since 1980. Mr. Devine has served as Vice Chairman of the Boards of both the Company and Bank since February 2014. He served as President of the Company and Bank from January 1, 1997 to his retirement on December 31, 2015. Mr. Devine also served as COO of the Company from its inception in 1995 to February 2014, and of the Bank from 1989 to February 2014. Prior to joining the Bank in 1971, Mr. Devine served as a Senior Accountant with the firm of Peat Marwick Mitchell & Co. From September 2012 through December 2014, Mr. Devine served as Chairman of the Audit Committee and a member of the Board of Trustees of Long Island University and, from March 2009 to December 2018, he served as a director of Pentegra Retirement Trust. Qualifications: Mr. Devine’s in depth knowledge of the Company and the industry, obtained from his lifelong career in the industry, make him qualified to serve on the Board. |
Joseph J. Perry | |
Age: 52 Director Since: 2005 Term Expires: 2021 Committees: Audit Executive Risk (Chair) Technology | Experience: Mr. Perry is currently a partner at Marcum LLP, a public accounting and consulting firm headquartered in New York, New York, where he has served as the Tax and Business Services Leader since 2006 and is a member of the Firm’s Executive Committee. Prior to joining Marcum LLP, Mr. Perry was a tax partner at one of the leading “Big 5” accounting firms and provided services to several financial services companies throughout the New York metropolitan area. Mr. Perry is a member of the American Institute of Certified Public Accountants and the New York State Society of Public Accountants. Qualifications: Mr. Perry’s knowledge of the financial services industry and accounting and tax experience make him qualified to serve on the Board. |
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Kevin Stein | |
Age: 57 Director Since: 2017 Term Expires: 2021 Committees: Audit | Experience: Mr. Stein is currently the CEO of Resolution Analytica Corporation, a buyer of commercial judgments leveraging technology, data and analytics since 2017, when the company was founded. Mr. Stein was a Senior Managing Director of KCK USA, Inc., a private equity firm from 2016 through 2017, Managing Director of Financial Institutions Investment Banking with Barclays from 2011 through 2016, and Partner and Head of Depository Investment Banking at FBR & Co. from 2004 through 2011. From 1994 to 2004, Mr. Stein served as an executive of Greenpoint Financial Corporation, a $25 billion bank holding company, and prior thereto was an Associate Director of the Federal Deposit Insurance Corporation, Division of Resolutions. Since February 2019, Mr. Stein is a member of the Board of Directors of Ocwen Financial Corporation and, from 2017 to 2018, prior to its acquisition by Ocwen Financial Corporation, was a director of PHH Corporation. Mr. Stein is a director of Bedford Stuyvesant Restoration Corporation. Qualifications: Mr. Stein’s more than thirty years’ experience in finance and banking, and his banking regulatory knowledge, make him qualified to serve as a Director. |
* | Includes service as a Director or Trustee with the Bank prior to the Company's incorporation on December 12, 1995. |
Director compensation is established by the Board, based upon the recommendations of the Compensation and HRHuman Resources (the “Compensation and HR”) Committee. The Compensation and HR Committee utilizes a nationally recognized compensation consulting firm and, as necessary, outside legal counsel to assist in performing its duties. The compensation consultant is instructed to analyze the Company’s performance and Outside Director pay levels. A peer group of public banks and thrifts is used for comparison of both pay level and corporate performance. The Compensation and HR Committee uses this analysis to assist it in understanding market practices and trends and to develop and evaluate the effectiveness of recommended compensation for its non-employee Directors (“Outside Directors.Directors”). The Committee also considers the input of executive management with respect to the compensation of its Outside Directors.
Cash Compensation
. Fee arrangements in existence during the year ended December 31,$10,000 annual retainer fees paid in December to the Chairs of the Audit, Compensation and HR, and Risk Committees, provided such Chairs complied with the Company's Director Retainer Policy. |
2004 Stock Incentive Plan. The 2004 Stock Incentive Plan was initially adopted by the Company's Board of Directors and subsequently approved by its shareholders at their annual meeting held in 2004. Amendment Number One to the 2004 Stock
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Incentive Plan was adopted by the Company's Board of Directors in March 2008 and subsequently approved by its shareholders at their annual meeting held in 2008.2004. The 2004 Stock Incentive Plan reached its ten year anniversary in May 2014, and futureadditional awards are no longer permitted thereunder. On April 30, 2013, a grant of restricted stock award of 9,811 shares was made to Mr. Devine when he was employed as an officer of the Company. 25% of these awards vested on May 1, 2014, 2015 and 2016, respectively, with the remaining shares vesting on May 1, 2017.
2013 Equity and Incentive Plan.
The 2013 Equity and Incentive Plan was adopted by the Company’s Board of Directors and subsequently approved by the Company’s shareholdersDirector Stock Purchase Plan.
In 2013, the Company established the Dime Community Bancshares, Inc. Director Stock Purchase Plan (theDirectors' Retirement Plan
. The Company has adopted the Retirement Plan for Board Members of Dime Community Bancshares, Inc. (the13
The following table sets forth information regarding compensation earned by each Outside Director during the year ended December 31, 2016:2018:
2018 OUTSIDE DIRECTOR COMPENSATION | ||||||||||||||||||
Name | Fees Earned and Paid in Cash(1) | Fees Earned and Paid in Stock(2) | Stock Awards(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compensation(5) | Total | ||||||||||||
Rosemarie Chen | 70,000 | — | 50,000 | — | 1,129 | 121,129 | ||||||||||||
Steven D. Cohn | 72,000 | — | 50,000 | — | 1,423 | 123,423 | ||||||||||||
Patrick E. Curtin | 67,250 | — | 50,000 | — | 1,423 | 118,673 | ||||||||||||
Michael P. Devine | 55,500 | — | 50,000 | — | 3,065 | 108,565 | ||||||||||||
Robert C. Golden | 13,500 | 57,500 | 50,000 | — | 1,423 | 122,423 | ||||||||||||
Barbara G. Koster | 32,500 | — | — | — | 121 | 32,621 | ||||||||||||
Kathleen M. Nelson | 81,000 | — | 50,000 | — | 1,423 | 132,423 | ||||||||||||
Vincent F. Palagiano | 55,500 | — | 50,000 | — | 1,423 | 106,923 | ||||||||||||
Joseph J. Perry | 69,000 | 10,000 | 50,000 | — | 1,423 | 130,423 | ||||||||||||
Kevin Stein | 11,000 | 55,500 | 50,000 | — | 1,063 | 117,563 | ||||||||||||
Omer S. J. Williams | 82,500 | — | 50,000 | — | 1,423 | 133,923 |
2016 OUTSIDE DIRECTOR COMPENSATION | |||||||||||||||||||||||
Name | Fees Earned and Paid in Cash (1) | Fees Earned and Paid in Stock (2) | Stock Awards (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compensation(5) | Total | |||||||||||||||||
Anthony Bergamo | $ | 77,750 | $ | — | $ | 50,000 | $ | — | $ | 1,600 | $ | 129,350 | |||||||||||
George L. Clark, Jr.(6) | 75,500 | — | 50,000 | — | 1,600 | 127,100 | |||||||||||||||||
Steven D. Cohn | 67,500 | — | 50,000 | — | 1,600 | 119,100 | |||||||||||||||||
Patrick E. Curtin | 64,750 | — | 50,000 | — | 1,600 | 116,350 | |||||||||||||||||
Michael P. Devine | 55,500 | — | 50,000 | — | 409,219 | 514,719 | |||||||||||||||||
Robert C. Golden | 11,000 | 55,250 | 50,000 | — | 1,600 | 117,850 | |||||||||||||||||
Kathleen M. Nelson | 65,750 | — | 50,000 | — | 1,600 | 117,350 | |||||||||||||||||
Joseph J. Perry | 67,500 | 10,000 | 50,000 | — | 1,600 | 129,100 | |||||||||||||||||
Omer S. J. Williams | 77,250 | — | 50,000 | — | 1,600 | 128,850 |
(1) | Includes cash retainer payments and Lead Director and committee and/or chairperson fees earned during the year. |
(2) | For |
(3) | The amounts |
(4) | Includes for each individual the increase (if any) for the year in the present value of the individual's accrued benefit (whether or not vested) under each tax-qualified actuarial or defined benefit plan calculated by comparing the present value of each individual's accrued benefit under each such plan in accordance with Financial Accounting Standards Board |
(5) | With the exception of Mr. Devine and Ms. Koster, amount represents dividends paid on unvested restricted stock awards that were granted on April |
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Board Leadership Structure
Commencing January 1, 2017, the Company and Bank separated the roles of Chairman and CEO upon Mr. Palagiano’s retirement from the Company on December 31, 2016. While the Company does not mandate the separation of the Chairman and the CEO roles, the Company believes that the current separation of the roles, along with an independent Lead Director, is good governance policy and enhances Board independence and oversight. Mr. Palagiano servingserves as Chairman of the Board and Mr. Mahon servingserves as the CEO. In addition, the independent members of the Board annually elect an independent Lead Director. George L. ClarkKathleen M. Nelson was the Lead Director in 2016 until his retirement. Kathleen M. Nelson is currently the Lead Director.2018. Among other functions, the Lead Director presides at executive sessions of the outside and independent Directors and serves as a liaison between the Chairman of the Board and the independent Directors.
In the ordinary course of business, the Company faces various strategic, operating, compliance, reputational, technological and financial risks. Management is responsible for the day-to-day management of risk, while the Board, as a whole and through its standing Committees, is responsible for the oversight of risk management. In its risk oversight role, the Board has the responsibility of satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed. To help accomplish this objective, the Board has established aAudit and Risk Committee.Committees. The purpose of this committee, which meetsthese committees, each meeting at least on a quarterly basis,
The Company's full Board of Directors met ten times during the year ended December 31, 2016.2018. During 2016,2018, no incumbent DirectorsDirector attended fewer than 75% of the aggregate of: (1)(i) the total number of Board meetings conducted during the period for which shehe or heshe was a Director, and (ii) the total number of meetings conducted by all committees of the Board on which shehe or heshe served during the periods that he or she or he served.
Committees
The Company has four standing committees: Audit, Compensation and HR, Governance and Executive. In addition, the Company has a Risk Committee and a Technology Committee. Each of the Audit, Compensation and HR, Corporate Governance and Risk Committees:
In addition, the Audit, Compensation and HR and Corporate Governance Committees are comprised solely of independent directors.
The Company'stable below provides information about the current membership of these committees and the number of committee meetings held during 2018.
Director | Audit | Executive(1) | Compensation and HR (2) | Corporate Governance(3) | Risk(4) | Technology(5) |
Vincent F. Palagiano | C | |||||
Patrick E. Curtin | • | |||||
Kathleen M. Nelson | • | • | • | • | ||
Omer S. J. Williams | • | • | C | |||
Kenneth J. Mahon | • | |||||
Steven D. Cohn | • | • | ||||
Robert C. Golden | C | • | • | • | ||
Barbara G. Koster | C |
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Director | Audit | Executive(1) | Compensation and HR (2) | Corporate Governance(3) | Risk(4) | Technology(5) |
Rosemarie Chen | C | • | • | |||
Michael P. Devine | • | |||||
Joseph J. Perry | FE | • | C | • | ||
Kevin Stein | FE | |||||
TOTAL MEETINGS HELD IN 2018 | 5 | 1 | 5 | 4 | 4 | 4 |
C | Chair |
FE | Financial Expert |
(1) | Mr. Perry was appointed to the Executive Committee in January 2019. |
(2) | Ms. Chen was appointed Chair of the Compensation and HR Committee in February 2019. During 2018, Mr. Williams served as Chair of the Committee. |
(3) | Ms. Chen served on the Corporate Governance Committee in 2018. Mr. Golden was appointed to the Committee in January 2019. |
(4) | Ms. Chen was appointed to the Risk Committee in January 2019. |
(5) | Ms. Koster was appointed Chair of the Technology Committee in January 2019. During 2018, Mr. Perry served as Chair of the Committee. Mr. Williams served on the Committee in 2018. |
The Audit Committee. The Audit Committee is appointed by the Board of Directors of the Company to assist the Board in: (1) monitoring the integrity of the financial statements of the Company, (2) monitoring Company compliance with legal and regulatory requirements and internal controls, (3) monitoring the independence and performance of the Company’s internal and independent registered public accounting firm, and (4) maintaining an open means of communication among the independent registered public accounting firm, senior management, the internal auditors, and the Board. The Board of Directors has establisheddetermined that Messrs. Perry, and Stein qualify as Audit Committee financial experts as defined in Item 407(d)(5) of SEC Regulation S-K. The Audit Committee operates pursuant to a written charter, which may be viewed on the following committees:
The Compensation and HR Committee
The Compensation and HR Committee utilizes a nationally recognized compensation consulting firm, and, as necessary, outside legal counsel, to assist in performing its duties. The compensation consulting firm is instructed to analyze the Company’s performance and executive pay levels. A peer group of public banks and thrifts is used for comparison of both pay level and corporate performance. The Compensation and HR Committee uses this analysis to assist it in understanding market practices and trends and to develop and evaluate the effectiveness of recommended pay-for-performance compensation strategies. The consultant is additionally instructed to analyze and opine upon the risks associated with the Bank’s incentive compensation plans. The Compensation and HR Committee relies on legal counsel to advise on its obligations and rights under applicable corporate, securities and employment laws, to assist in interpreting the Company’s obligations under compensation plans and agreements, and to draft plans and agreements to document business decisions. The Compensation and HR Committee considers the expectations of executive management with respect to their own compensation, and their recommendations with respect to the compensation of Directors and more junior executive officers.
The Compensation and HR Committee operates pursuant to a charter, which is available on the Company's website
at www.dime.com, by clickingThe CompensationCorporate Governance Committee. The Corporate Governance Committee identifies, selects and HR Committee's charter requires that it meet annually and as requested by the Chairman ofrecommends to the Board, of Directors. The Compensation Committee met four times during the year ended December 31, 2016.
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The Nominating Committee met twice during 2016. TheCorporate Governance Committee met three times during 2016. In addition, the Governance and Nominating Committee met on February 23, 2017 to, among other matters, select the nominees for election as Directors at the Annual Meeting. In accordance with the Company's Bylaws, provided the Governance and Nominating Committee makes such nominations, no nominations for election as Director except those made by the Governance and Nominating Committee shall be voted upon at the Annual Meeting unless properly made by a shareholder in accordance with the procedures set forth under "2017 Annual Meeting Stockholder Proposals" in the proxy statement for the annual meeting held in May 2016.
The Executive Committee. The purpose of the Executive Committee is to exercise all the powers of the Board in the management of the business and affairs of the Company in the intervals between the meetings of the Board. The Executive Committee meets at the call of the Chairman, President or a majority of the members of the Executive Committee.
The Risk Committee
The Risk Committee charter requires that it meet at least four times annually or more frequently as circumstances dictate. Technology Committee. The Risk Committee met four times during the year ended December 31, 2016.
Governance and Social Highlights
The BudgetCompany is committed to strong corporate governance and Planning Committee met four times duringsocial responsibility. We believe that this commitment is essential to the year ended December 31, 2016.
GOVERNANCE AND SOCIAL HIGHLIGHTS 2018
Diversity and Inclusion | • | 3 out of 12 (25%) directors are women |
• | Establishment of Diversity and Inclusion Subcommittee of the Board | |
Board | • | Lead Independent Director |
• | Separation of Chair and CEO | |
• | Independent Corporate Governance and Nominating Committee | |
• | Director Resignation Policy | |
• | Annual Board Self Evaluation | |
Community Impact | • | Conducted 23 Financial Literacy, Small Business and Elder Financial Abuse Seminars |
• | Community Investments of $0.5 million in 2018 | |
• | Employee Matching Gift Program | |
• | Sponsored 3 Dime Employee Volunteer Days | |
• | Purchased $11.6 million of investments in mortgage-backed securities, where the underlying collateral is affordable housing properties | |
• | Origination of $44.3 million of Community Development loans | |
Environmental Initiatives | • | Utilization of cleaning companies that utilize green cleaning products |
• | Four newly opened Bank branches make use of energy efficient light-emitting diode (“LED”) lighting and HVAC systems | |
• | LED lighting to replace all existing lighting fixtures at Company offices | |
Business Conduct | • | Code of Business Ethics |
• | Business integrity hotline for anonymous reporting of violations of Code of Business Ethics | |
• | Corporate Governance Guidelines | |
Work Environment | • | Director and employee training on appropriate workplace conduct |
Privacy and Data Security | • | No sharing of data with third parties |
• | Robust data security environment policies and procedures |
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The following Report of the Company's Audit Committee is provided in accordance with the rules and regulations of the SEC.
Under rules promulgated by the SEC, the Company is required to provide certain information regarding the activities of its Audit Committee. In fulfillment of this requirement, the Audit Committee, at the discretion of the Board, has prepared the following report for inclusion in the Proxy Statement:
1. | The Audit Committee has reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 2018 with management; |
2. | The Audit Committee has discussed with the independent auditors the matters required to be discussed by PCAOB Auditing Standard No. 1301, Communications with Audit Committees; |
3. | The Audit Committee has received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communication with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant's independence; and |
4. | Based on the review and discussions referred to in paragraphs 1 through 3 above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for filing with the SEC. |
AUDIT COMMITTEE OF DIME COMMUNITY BANCSHARES, INC.
Robert C. Golden, Member
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The following individuals are executive officers of the Company and/or the Bank, holding the offices set forth opposite their names:
Name | Position Held | |
Kenneth J. Mahon | President and CEO | |
Stuart H. Lubow | Senior Executive Vice President (“SEVP”) | |
Roberto S. Volino | SEVP and | |
Michael J. Fegan | Executive Vice President (“EVP”) and Chief Technology Officer | |
Angela K. Finlay | EVP | |
Conrad J. Gunther | EVP and Chief Lending Officer | |
Michael A. Perez | EVP and Chief Retail Officer | |
Christopher J. | ||
EVP and Chief Risk Officer | ||
Avinash Reddy | EVP and | |
Patricia M. Schaubeck | EVP and General Counsel | |
Leslie S. Veluswamy | Senior Vice President (“SVP”) and Chief Accounting Officer(3) |
(1) |
(2) |
Mr. |
Ms. Veluswamy was appointed to this position on |
The executive officers are elected annually and hold office until their respective successors have been elected and qualified, or until death, resignation or removal by the Board of Directors. The Company and Bank have entered into Employment Agreements with Mr. Mahon (the “Employment Agreements”) which set forth the terms of his employment. Mr. Palagiano had Employment Agreements with the Company and Bank, which terminated upon his retirement on December 31, 2016. See "Executive Compensation – Agreements with Our Named Executive Officers upon Termination or Change in Control."
Biographical information of the executive officers who are not Directors of the Company or Bank is set forth below.
Stuart H. Lubow, age 59,
Roberto S. Volino
, ageMichael J. Fegan, age 50,
Angela K. Finlay, age 40,joined the Bank in October 2016 as EVPSVP and CRTO, responsible for sales, service, operations, distributionDirector of Human Resources of the Bank, and strategy for the Bank’s consumer and small business segments. Mr. Brown is a seasoned executive withhas over 20 years of financial services experience most recently as headleading Human Resources functions in small to Fortune Global 150 companies. In February 2018 she was promoted to EVP and Chief Human Resources Officer where she is responsible for the strategy and execution of the retail branch network at HSBC. Previous to that, he spent 17 years at Citibank as a Managing Director in positions of increasing responsibility including Headtalent initiatives of the Global Consumer Bank AML, FATCA, and Branch Controls Office as well as Market President for Citibank's New York City market.Bank. Prior to Citibank, Mr. Brownjoining Dime, Ms. Finlay was an Officerthe Director of Human Resource (Global Talent Management Group) for Mitsui & Co. (U.S.A.), Inc. where she was responsible for the strategy and execution of HR and Talent Management activities for the Americas region (North
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and South America). Prior to Mitsui, Ms. Finlay spent almost 10 years in the U.S. Navy for nearly eight years servingpublic accounting and consulting industry leading Human Resources functions, including an HR consulting business. In addition, she also spent time as a Naval Flight Officer in a Maritime Patrol Squadronan Adjunct Professor at Fairleigh Dickinson University teaching Human Resources courses. She currently holds various HR certifications, including SHRM-SCP, SPHR and at the Pentagon on the Navy Staff.
Conrad J. Gunther, age 70,
Michael A. Perez, age 58,51, joined the Bank in September 2016 as SVP and Director of Retail Banking. He was promoted to EVP and Chief Retail Officer in February 2018. In this role, he manages the operation, strategic direction, and leadership of the Bank’s retail banking division. Mr. Perez currently oversees initiatives on overall customer experience and business needs of retail banking clients. Prior to joining Dime, he was a Managing Director at Citibank where he was responsible for building and leading Citibank’s banking strategy in the U.S., and has over 3629 years of banking experience,experience. He serves on the Board of Trustees of St. John’s Preparatory High School and is the former Co-Chair of the New York City March of Dimes Executive Committee. He has been withserved as the Bank since 1983. Mr. King was promoted to TreasurerChair for the March of Babies Walk and volunteers for the Leukemia & Lymphoma Society.
Christopher Porzelt, age 52, joined the Bank in 1989,November 2017 and was appointed Executive Vice President and Chief Risk Officer of the BankBank. Mr. Porzelt has over 25 years of audit and financial services experience and joins the bank from EisnerAmper LLP, where he was Managing Director of the Consulting Services Group. In this role, Mr. Porzelt engaged with financial services companies to protect value and enhance outcomes and performance through practical and cost-effective solutions, including the coordination and utilization of people, processes and technology, as well as the translation of complex challenges and regulatory requirements into sound strategies. Prior to this, he was Managing Director and Global Head of American International Group’s Property Casualty Global Financial Controls Unit. Previously, Mr. Porzelt was an Audit Partner in 1993, Treasurerthe Financial Services Practice at both Deloitte and Arthur Andersen where he led audit and consulting engagements for a broad group of companies, ranging in size from de novos to Fortune 100 companies.
Avinash Reddy, age 34, is Executive Vice President and Chief Financial Officer of the Company at its inception in 1995, First Vice President of bothand the CompanyBank. Mr. Reddy is responsible for the Company’s strategic, financial, capital and Bank in 1997,liquidity planning and investor relations. From 2017 to January 2019, Mr. Reddy served as Senior Vice President, Head of bothCorporate Development and Treasurer. Prior to joining the Company, Mr. Reddy held several investment banking roles with firms including Evercore Partners, from 2011 to 2014, Barclays Capital, from 2008 to 2011 and Lehman Brothers, from 2005 to 2008.
Patricia M. Schaubeck, age 58, an attorney admitted to practice law in New York and New Jersey,joined the Company and the Bank in 1999March 2018 as EVP and EVP of bothGeneral Counsel, serving as the chief legal officer to the Company and the Bank. Prior to joining the Company, Ms. Schaubeck served as General Counsel to Sun Bancorp and to its wholly-owned subsidiary, Sun National Bank, in 2008. In 2002, Mr. KingNew Jersey from September 2014 to January 2018. Previously, Ms. Schaubeck served as General Counsel to Suffolk Bancorp and its wholly-owned subsidiary, Suffolk County National Bank, in New York from June 2012 through August 2014, and, prior thereto, she served as General Counsel to State Bancorp, Inc. and its wholly-owned subsidiary, State Bank of Long Island, in New York, from June 2007 through January 2012. Previously, Ms. Schaubeck was named theassociated with various New York City and Long Island, New York law firms where she represented financial institutions and real estate clients.
Leslie S. Veluswamy, age 34, is Senior Vice President and Chief InvestmentAccounting Officer of both the Company and Bank, overseeing the securities investment function of both entities. In March 2011, Mr. King was named the CRIO of both the Company and the Bank, in charge of oversight of all risk management functions of both entities.
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This compensation discussion and analysis (the “CD&A”) describes our performance-based executive compensation program and philosophy inexplains how the context of the 2016Compensation and Human Resource Committee (the “Compensation and HR Committee”) made its compensation decisions relatedfor our named executive officers (also referred to our NEOs that are alsoin this CD&A as “NEOs”) listed below.
Name | Title | |
Kenneth J. Mahon | President and | |
Stuart H. Lubow | Senior Executive Vice President and | |
Robert S. Volino | Senior Executive Vice President and Chief Operating Officer (“COO”) | |
James L. Rizzo | Senior Vice President and Comptroller (Principal Financial Officer) | |
Conrad J. | Executive Vice President and | |
CEO Mahon, and financial accomplishments.
The Company also added one new director, Ms. Barbara Koster, Chief Information Technology officer with Prudential.
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2018 Financial AccomplishmentsPerformance/Strategic Highlights
Reported book value per share and tangible book value per share (which consists of tangible equity (please refer to the Appendix within this Proxy for a discussion of the computation of tangible equity), divided by the number of shares outstanding) grew to $16.68 and $15.14, respectively, at December 31, 2018. Successfully completed conversion of the core technology platform in June 2018. Transition to our new core platform is a key building block progress towards becoming a successful community commercial bank. Exceptionally strong growth in non-interest bearing checking account balances. On a year-over-year basis, non-interest bearing checking deposit balances grew by 29%. Continued strong growth in the Business Banking loan portfolio, with commercial and industrial loan balances increasing to $230 million and direct-sourced (relationship) commercial real estate (“CRE”) loan balances increasing to $429 million at year-end. Continued expense discipline, with operating expenses to average assets (adjusted for non-recurring expenses) remaining well-controlled on a year-over-year basis. Newly formed Residential Lending group commenced accepting residential loan applications in June 2018. | |||
2018 Key Compensation Decisions
In light of the important achievements in 2018, the Compensation and HR Committee seeks to maintain a strong linkage between pay and corporate performance, both in absolute terms and in relation to a designated peer group. The Compensation and HR Committee usesset the same peer group both to form its determination of the competitiveness of itstotal compensation practices and to assess corporate performance. Please see “Executive Summary – Benchmarking and Peer Group” for further discussion of the peer group.
1-Year Period Ending December 31, 2016 | 3-Year Period Ending December 31, 2016 | |||||||||||||||
Performance Measure(1) | Absolute Performance | Percentile Rank(2) | Absolute Performance | Percentile Rank(2) | ||||||||||||
Performance Measures Linked to Compensation Awards | ||||||||||||||||
ROAE | 13.40 | % | Above 75th | 10.88 | % | Above 75th | ||||||||||
Non-interest expense as a percentage of average assets (3) | 1.51 | Above 75th | N/A | N/A | ||||||||||||
ROAA | 1.31 | Above 75th | 1.10 | Above 75th | ||||||||||||
Core ROA (3) | 0.83 | 25th to 50th | N/A | N/A | ||||||||||||
EPS (4) | $ | 1.97 | N/A | N/A | N/A | |||||||||||
TSR (5) | 18.80 | % | Below 25th | 31.73 | % | Below 25th | ||||||||||
Supplemental Measures Reviewed in Determining Compensation Awards(3) | ||||||||||||||||
Return on Average Risk Weighted Assets | 1.77 | % | Above 75th | |||||||||||||
Efficiency Ratio | 55.48 | 75th | ||||||||||||||
Non-performing assets to total assets | 0.09 | 100th | ||||||||||||||
Net charge-offs to average loans | 0.00 | Above 75th | ||||||||||||||
Tangible capital to tangible assets | 8.67 | 25th to 50th | ||||||||||||||
EPS Growth Rate | 60.16 | 75th | ||||||||||||||
Core EPS Growth Rate | 6.78 | 25th to 50th |
The Compensation and HR Committee, with the assistance of our independent compensation includingconsultant, routinely reviews our compensation practices to ensure they support our compensation philosophy, are risk appropriate, market competitive and align our executives with shareholder interests. To further these objectives we:
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At the Company’s 20162018 annual shareholder’s meeting, approximately 95.6%we received strong support for our executive compensation programs with 94.1% of the votes by shareholders were cast in favor of a non-binding resolution to approve NEO compensation. The Compensation and HR Committee regarded the results of this vote as supportivesupport of its approach to NEO compensation and, therefore, did not change its overall executive compensation policies or programs as a consequence of the shareholder vote. The Company continues to offer anseek annual say-on-pay vote.
The goals of the executive compensation program are to enable the Company to attract, develop and retain an executive team capable of maximizing the Company’s performance for the benefit of its shareholders. The Company’s executive compensation philosophy is, consistent with prudent banking business practices, to provide competitive target compensation opportunities with actual amounts earned commensurate with its financial performance and the generation of long-term value for shareholders through dividends and stock price appreciation. To accomplish these goals, the Company sets a base salary to provide a reasonable level of predictable base income and near- and long-term performance-based compensation to provide the NEOs with clear opportunities to increase the value of their compensation by positive contribution to stockholder interests. Pay opportunities are targeted at market median with opportunitiesthe ability to increase or decrease actual pay earned based on our performance. The pay elements are intended to balance an appropriate mix of risk and return. Annual incentive awards are designed to provide incentives to encourage efforts to attain near-term goals, which do not encourage excessive risk taking. Long-term performance-based incentive and time-vested restricted stock awards are structured to align the executive’s interests with those of the Company’s shareholders and serve to retain executives over the long term.
Company Name | City and State of Corporate Headquarters | Total Assets (1) | Market Capitalization(1) | ||||||
Astoria Financial Corp. | Lake Success, NY | $ | 14.56 | $ | 1.89 | ||||
Flushing Financial Corporation | Uniondale, NY | 6.06 | 0.84 | ||||||
Investors Bancorp Inc. | Short Hills, NJ | 23.17 | 4.32 | ||||||
Kearny Financial Corporation | Fairfield, NJ | 4.50 | 1.16 | ||||||
Northfield Bancorp, Inc. | Woodbridge, NJ | 3.85 | 0.97 | ||||||
OceanFirst Financial Corporation | Toms River, NJ | 5.17 | 0.97 | ||||||
Oritani Financial Corporation | Township of Washington, NJ | 3.67 | 0.72 | ||||||
Provident Financial Services Inc. | Iselin, NJ | 9.50 | 1.87 | ||||||
Sterling Bancorp | Montebello, NY | 14.18 | 3.17 | ||||||
Sun Bancorp Inc. | Mount Laurel, NJ | 2.26 | 0.49 | ||||||
TrustCo Bank Corporation | Glenville, NY | 4.87 | 0.84 | ||||||
Valley National Bancorp | Wayne, NJ | 22.86 | 3.07 | ||||||
Median | 5.62 | 1.07 | |||||||
Dime Community Bancshares, Inc. | Brooklyn, NY | 6.01 | 0.75 |
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Executive Compensation Program Components and 2018 Pay Decisions
Components of our NEO Compensation Program
The Company seeks to pay competitive base salaries by establishingthat provide a median payreasonable level approach.of recurring income to reflect each executive’s role. Executive base salary levels are generally reviewed on an annual basis in comparison to market benchmarking and adjusted as appropriate, with no guarantee of annual increases. Base salaries are targeted at market median with the ability to reflect performance, experience, contribution and unique roles. The Company desires to compensate executives fairly while being sensitive to managing fixed costs.
For 20162018 NEO base salaries, the Compensation and HR Committee considered prevailing market conditions, individual contributions, Company performance, and the input of a competitive compensation reviewmarket perspective conducted by a nationally recognized compensation consulting firm. The base salariessalary increase for 2016Mr. Rizzo was increased to reflect his expanded role as Principal Financial Officer. The salary increases for Messrs. Pucella, HarrisLubow, Volino, and KingGunther were increased to be in-line with peer competitors. Mr. Mahon’s salary was increasedcompetitors based on market data provided by 10.0%our independent compensation consultant.
Name | 2017 Salary | 2018 Salary | % Increase | ||||||
Kenneth J. Mahon | $ | 825,000 | $ | 825,000 | 0.0 | % | |||
Stuart H. Lubow | 450,000 | 475,000 | 5.6 | % | |||||
Robert S. Volino | 420,000 | 445,000 | 6.0 | % | |||||
James L. Rizzo | 250,430 | 262,952 | 5.0 | % | |||||
Conrad J. Gunther | 325,000 | 350,000 | 7.7 | % |
2018 Annual Incentive Plan (“AIP”)
Our 2018 Annual Incentive Plan, also referred to as he was promoted to President as part of a multi-year strategy to adjust his base pay in consideration of the increase in his position responsibilities. Mr. Palagiano’s salary remained unchanged in light of his pending retirement.
Name | 2015 Salary | 2016 Salary | % Increase | |||||||||
Vincent F. Palagiano | $ | 725,000 | $ | 725,000 | 0.0 | % | ||||||
Kenneth J. Mahon | 500,000 | 550,000 | 10.0 | |||||||||
Michael Pucella | 316,725 | 330,000 | 4.2 | |||||||||
Daniel J. Harris | 355,788 | 395,000 | 11.0 | |||||||||
Timothy B. King | 332,561 | 342,000 | 2.8 |
The following table sets forth the potential paymentsaward opportunities for each of our NEOs under the 2016 AIP.2018 AIP(1).
Name and Principal Positions | Salary | Threshold Payout ($) and % of Salary | Target Payout ($) and % of Salary | Stretch (0r Max) Payout ($) and % of Salary | ||||||||
Kenneth J. Mahon | $ | 825,000 | $ | 268,125 | $ | 536,250 | $ | 804,375 | ||||
President and CEO | 32.5 | % | 65.0 | % | 97.5 | % | ||||||
Stuart H. Lubow | 475,000 | $ | 106,875 | $ | 213,750 | $ | 320,625 | |||||
SEVP and CBO | 22.5 | % | 45.0 | % | 67.5 | % | ||||||
Robert S. Volino | 445,000 | $ | 100,125 | $ | 200,250 | $ | 300,375 | |||||
SEVP and COO | 22.5 | % | 45.0 | % | 67.5 | % | ||||||
Conrad J. Gunther | 350,000 | $ | 70,000 | $ | 140,000 | $ | 210,000 | |||||
EVP and CLO | 20.0 | % | 40.0 | % | 60.0 | % |
Name and Principal Positions(1) | Salary | Threshold ($) and % of Salary | Target ($) and % of Salary | Superior ($) and % of Salary | ||||||||||||
Vincent F. Palagiano | $ | 725,000 | $ | 181,250 | $ | 362,500 | $ | 543,750 | ||||||||
Chairman of the Board and CEO | 25.0 | % | 50.0 | % | 75.0 | % | ||||||||||
Kenneth J. Mahon | 550,000 | $ | 137,500 | $ | 275,000 | $ | 412,500 | |||||||||
President and COO | 25.0 | % | 50.0 | % | 75.0 | % | ||||||||||
Michael Pucella | 330,000 | $ | 57,750 | $ | 115,500 | $ | 173,250 | |||||||||
EVP and CAO | 17.5 | % | 35.0 | % | 52.5 | % | ||||||||||
Daniel J. Harris(2) | 395,000 | $ | 69,125 | $ | 138,250 | $ | 207,375 | |||||||||
EVP and CLO | 17.5 | % | 35.0 | % | 52.5 | % | ||||||||||
Timothy B. King | 342,000 | $ | 59,850 | $ | 119,700 | $ | 179,550 | |||||||||
EVP and CRIO | 17.5 | % | 35.0 | % | 52.5 | % |
(1) |
Mr. |
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Target representeddollars noted in the above chart represent the payout level for performance at 100%. Threshold performance results in athreshold, target, and stretch, with payout ofat threshold equal to 50% of the target opportunity and a superior performance results instretch equivalent to a payout of 150% of target. Performance below threshold results in no payout.
The award opportunities were then linked with performance goals were established by the Compensation and HR Committee early in 20162018 to assist the Company in meeting its growth and profitability objectives for the year, which were rooted in the formal capital plan reviewed and approved by the Board of Directors (the “Capital Plan’). The three significant corporate financial measures ("(“Corporate Measures"Measures”) were: Core ROA (weighted 25%Reported Pre-Tax Earnings (25%), non-interest expenseNon-Interest Expense (50%), and High Quality Deposits (25%). The Compensation and HR Committee also reserves the ability to average assets (weighted 25%)consider other qualitative measures of performance and Reported EPS (weighted 50%).
The Corporate Measures and resultsweighting for the participating NEOs were as follows:
Name and Principal Positions | Corporate Goals | Individual/Strategic Goals | ||||
Kenneth J. Mahon – President and CEO | 75 | % | 25 | % | ||
Stuart H. Lubow – SEVP and CBO | 50 | % | 50 | % | ||
Robert S. Volino – SEVP and COO | 50 | % | 50 | % | ||
Conrad J. Gunther – EVP and CLO | 25 | % | 75 | % |
For all of our NEOs who participated in the 2018 AIP, the performance criteria used for the 2018 AIP includes individual/strategic goals, although the weighting varies by role.
For Mr. Mahon, the 2018 AIP was based 75% on the Corporate goals as described above and 25% on individual/strategic goals. The Compensation and HR Committee’s review of Mr. Mahon’s leadership and guidance in order to accomplish the strategic plan goals for the year, as well as the attainment of the items summarized in the “2018 Financial Performance/Strategic Highlights”, determined that he satisfied 100% of his individual/strategic goals.
For Mr. Lubow, who has departmental responsibility for Business Banking, the 2018 AIP goals for 2016 wereaward was based 50% on the Corporate Goals and 50% on individual/strategic goals. In connection with the Compensation and HR Committee’s review of Mr. Lubow’s 2018 performance, the Compensation and HR Committee recognized his efforts in the continued buildout of Business Banking, which included strong growth of both the relationship-based loan portfolio and in non-interest bearing checking accounts. Additionally, Mr. Lubow oversaw the successful launch of the Company’s residential lending business. The Compensation and HR Committee awarded Mr. Lubow with 100% of his individual/strategic performance target under the 2018 AIP.
For Mr. Volino, the 2018 AIP was based 50% on the Corporate Goals and 50% on individual/strategic goals. As COO of the Company, Mr. Volino was charged with oversight of various projects that played a key role in the achievement of the Corporate Goals, such as follows:the core system conversion and firm-wide initiatives to improve efficiency. Mr. Volino also devoted significant time focusing on the retail business transformation and the shift to business accounts from consumer accounts. The Compensation and HR Committee considered these efforts and awarded Mr. Volino with 100% of his individual/strategic performance target under the 2018 AIP.
For Mr. Gunther, who has responsibility to oversee the Company’s lending business, the 2018 AIP was based 25% on Corporate Goals and 75% on individual/strategic goals. Mr. Gunther played a key role in the managing the growth of both the relationship-based loan portfolio and in non-interest bearing checking accounts. His oversight of the SBA loan business also helped the Bank to achieve “Preferred Lender” designation by the SBA, which will enable the Bank to make SBA lending approvals more rapidly in the future. The Compensation and HR Committee determined that Mr. Gunther satisfied 100% of his 2018 AIP individual/strategic goals.
Corporate Measures (1) | Weight | Threshold | Target | Superior | Result | Result as an Interpolated Percentage of the Target | Weighted Result | |||||||||||||||||||||
Reported EPS | 50 | % | $ | 0.92 | $ | 1.23 | $ | 1.54 | $ | 1.26 | 104.9 | % | 52.45 | % | ||||||||||||||
Core ROA | 25 | % | 0.73 | % | 0.97 | % | 1.21 | % | 0.83 | % | 71.1 | % | 17.78 | % | ||||||||||||||
Non-interest expense to average assets | 25 | % | 1.68 | % | 1.34 | % | 1.01 | % | 1.31 | % | 104.5 | % | 26.13 | % | ||||||||||||||
TOTAL | 96.34 | % |
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Results of the Corporate Measures relative to the pre-established objectives were used to determine preliminary payout levels at the end of 2016. as follows:
Corporate Measures | Weight | Threshold | Target | Stretch | Result | Result as an Interpolated Percentage of the Target | Weighted Result | ||||||||||||||
Pre-tax Earnings | 25 | % | $ | 53,600 | $ | 66,600 | $ | 83,700 | $ | 66,715 | 100.3 | % | 25.1 | % | |||||||
Non-interest expense | 25 | % | $ | 87,000 | $ | 86,100 | $ | 84,000 | $ | 86,890 | 56.1 | % | 14.0 | % | |||||||
High Quality Deposits(1) | 50 | % | $ | 548,159 | $ | 599,081 | $ | 718,897 | $ | 580,049 | 81.3 | % | 40.7 | % | |||||||
TOTAL | 79.8 | % |
(1) | High Quality Deposits defined as the sum of: Multifamily MMAs, Total Commercial Lending deposits, Business Banking MMAs, Total Branch Business deposits, and Branch Consumer Checking deposits. |
To balance incentives to achieve financial results against the need to discourage excessive risk-taking, the Compensation and HR Committee also considered Company performance on supplemental measures, including efficiency ratio, non-performing assets (in dollars and as a percentage of average total assets), net charge-offs (in dollars and as a percentage of average loans) and capital ratios, relative to historical and peer results. The Compensation and HR Committee may exercise positive or negative judgment to adjust the payout levels from the preliminary amounts based on its review of performance of supplemental or other relevant measures, but may not increase the payouts above the pre-established maximums.
Based upon the overall financial results, consideration of individual performance of the NEO’s individual goals, and the aforementioned supplemental measures,risk-based performance, the Compensation and HR Committee approved the following annual incentive payouts in considerationthe table below. All NEOs were determined by the Compensation and HR Committee to achieve 100% of their individual performance relative to their respective corporategoals. No negative risk adjustments were used. Based on the weight allocation between Company and individual target incentive opportunities:performance, the approved payouts were determined below.
Name | Target | Corporate Performance Achieved (79.8% of target) | Individual Performance (% of Target and $) | Total 2018 AIP Payment | Total Payment as a % of Target | ||||||||||
Kenneth J. Mahon | $ | 536,250 | $ | 320,817 | $ | 134,063 (100 | %) | $ | 454,880 | 84.8 | % | ||||
Stuart H. Lubow | 213,750 | 85,252 | 106,875 (100 | %) | 192,127 | 89.9 | % | ||||||||
Robert S. Volino | 200,250 | 79,868 | 100,125 (100 | %) | 179,993 | 89.9 | % | ||||||||
Conrad J. Gunther | 140,000 | 27,919 | 105,000 (100 | %) | 132,919 | 94.9 | % | ||||||||
Total for NEOs | 1,090,250 | $ | 513,856 | $ | 446,063 | $ | 959,919 |
Name | Target | Total Achieved | 2016 AIP Payment | Payment as a % of Target | ||||||||||||
Vincent F. Palagiano(1) | $ | 362,500 | $ | 349,240 | $ | 349,240 | 96.3 | % | ||||||||
Kenneth J. Mahon(1) | 275,000 | 264,941 | 264,941 | 96.3 | % | |||||||||||
Michael Pucella | 115,500 | 128,902 | 140,000 | 121.2 | % | |||||||||||
Daniel J. Harris | 138,250 | 100,000 | 100,000 | 72.3 | % | |||||||||||
Timothy B. King | 119,700 | 121,620 | 120,000 | 100.3 | % | |||||||||||
Total for NEOs | 1,010,950 | $ | 964,703 | $ | 974,181 | |||||||||||
% of Net Income | 1.3 | % |
2018 Long Term (Equity) Incentive (“LTI”) Program
The approved 2016 AIP payment for Mr. Pucella was increased by approximately $11,000 as a resultfoundation of the successful completion of the sale of the real estate and relocation of the corporate headquarters.
Below are the target LTI opportunities for the four NEOs participating in the 2018 Program.
Name | Target of Base Salary |
Kenneth J. Mahon, President and CEO | 60% |
Stuart Lubow, Senior EVP and CBO | 50% |
Robert S. Volino, Senior EVP and COO | 50% |
Conrad J. Gunther, EVP and CLO | 40% |
(1) | Mr. Rizzo did not participate in the 2018 LTI as he was not an executive officer, an eligibility requirement of the plan. |
The 2018 LTI were granted as 60% of performance sharesshare awards (“PSAs”) and reallocated40% as time-vested restricted stock awards (“RSAs”).
The PSAs were granted at target and vest based on 3-year (i.e. 2018 – 2020) ROAA percentile compared to a broad Bank Industry Index with an additional negative modifier if our Total Shareholder Return (“TSRs”) falls
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below the 30th percentile. The PSAs are performance based and will only vest based on performance related to our profitability and relative shareholder returns. The remaining 40% of the LTI mix for each of the NEOs other than Mr. Palagiano. Considering Mr. Palagiano’s already significant stock ownership, and pending retirement as CEO in 2016, the Committee provided his long-term incentives in the form of 100% performance-based cash. Our LTI is administered under our 2013 Equity and Incentive Plan.
The following table sets forth information on the target LTI award made to the NEOs for 2016. This includes Cash LTI awards, performance-based share awards (“PSA”), and time-vested restricted stock awards (“RSA”). The range of potential Cash LTI payouts under the 2016 LTI is based 100% on a pre-determined performance goalgoals for the relative 3-year TSR forPSAs. Once the performance period from January 1, 2016 through December 31, 2018. Once a defined threshold level of performance is achieved, payouts can vary from 50% of the target for a baselinethe threshold level of acceptable performance to a maximum payout of 150% of the target which is paid only for exceptionalstretch performance. Payouts will be interpolated between these points.
Measure | Weight | Threshold | Target | Stretch |
3-year Relative ROAA | 100% | 40th percentile | 60th percentile | 70th percentile |
Payout Range (% of Target) | — | 50% | 100% | 150% |
3-Year Relative TSR Negative Adjustment (-20%) | — | If TSR relative to the Industry Index is lower than the 30th percentile, the payout will be adjusted negatively by 20% |
The following table sets forth the achievement of two pre-determined performance goals: 3-year cumulative EPS and average annualized reported ROAE, for the performance period from January 1, 2016 through December 31, 2018 each weighted equally. During March 2016, the Compensation and HR Committee approved threshold, target and maximumLTI opportunities based on consultation with the independent compensation consulting firm for the Cash LTI and PSAs. Target performance for each component represents our budget performance, threshold payout level (50% of the target) represents a baseline level of acceptable performance to receive any award and maximum payout (150% of the target) represents exceptional performance. Performance in between these levels will be interpolated. Please refer to the Appendix within this Proxy for a discussion of the computation of Cumulative Core EPS.NEO:
Performance- based | Time-vested | |||||||||||
Name | PSA | Number of Shares of RSA (#) | Grant Date Fair Value of RSAs ($)(1) | Total Value | ||||||||
Kenneth J. Mahon | $ | 297,000 | 10,025 | $ | 198,000 | $ | 495,000 | |||||
Stuart H. Lubow | 142,500 | 4,810 | 95,000 | 237,500 | ||||||||
Robert S. Volino | 133,500 | 4,506 | 89,000 | 222,500 | ||||||||
Conrad J. Gunther | 84,000 | 2,835 | 56,000 | 140,000 |
Performance-based | Time-vested | ||||||||||||||
Name | Cash LTI | PSA | Number of Shares of RSA (#) | Grant Date Fair Value of RSAs ($)(1) | |||||||||||
Vincent F. Palagiano(2) | $ | 471,250 | - | - | - | ||||||||||
Kenneth J. Mahon | 82,500 | $ | 82,500 | 9,111 | $ | 165,000 | |||||||||
Michael Pucella | 32,175 | 32,175 | 3,553 | 64,350 | |||||||||||
Daniel J. Harris(3) | 49,375 | 49,375 | 5,453 | 98,750 | |||||||||||
Timothy B. King | 33,345 | 33,345 | 3,682 | 66,690 |
(1) | Calculated based upon a grant date fair value of |
The Compensation and HR Committee does not have discretion to increase the size of the payout or to award compensation if the goals are not met, but may exercise negative discretion considering the Company’s performance relative to peers and other relevant factors. PSA’s are awarded as shares of Common Stock in the first quarter of 20192021 if the NEO is employed on December 31, 2018.2020 and based on actual performance. If an NEO’s employment terminates prior to the end of a performance period due to death, disability or retirement, the Company'sCompany’s obligation will be prorated for performance as of the date of termination and paid at the end of the performance period unless the Compensation and HR Committee determines otherwise. The Compensation and HR Committee may provide for immediate payout in the case of death. In the event of a change of control, performance will be assessed through the change of control date and a prorated payment made as soon as possible after that date. If the actual performance results cannot be calculated, the target will be used.
Payout Under 2014 – 2016 - 2018 LTI Program.
Our LTI program in 2014 was2016 included both a cash component and an equity-based long-term incentive of 60% granted as performance share awards and 40% granted as time-vested restricted stock awards. The time-vested restricted stock awards vest 25% per year and will continue to vest through 2019.
Payouts under the performance-based cash and equity components that vest based arrangement that reflected definedon performance goals for the 3-yearover a 3 year period, endedJanuary 1, 2016 – December 31, 2016. Relative2018 are described below.
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The cash component was based on relative TSR reflected 50% ofcompared to the award, with specific absolute goals split 25% to reward cumulative earnings EPS and ROAE. Performance was assessedcompensation peer group selected in March 2017 and certified by the Compensation and HR Committee for payout in March 2017.2016. The established performance goals, actual achievement levels and LTI earned for the measurement period are shown in the following table:
Performance Goal | Weight | Threshold | Target | Maximum | Result | Achievement (% of Target) | ||||||||||||
TSR (percentile rank in peer group)(2) | 50 | % | 40th | 50th | 75th | 58th | 116.0 | % |
Performance Goal | Weight | Threshold | Target | Maximum | Result | Achievement (% of Target) | Weighted Achievement(1) | |||||||||||||||||||||
TSR (percentile rank in peer group) (2) | 50 | % | 40th | 50th | 74th | 8th | 0 | % | 0 | % | ||||||||||||||||||
Cumulative Core EPS (3) | 25 | % | $ | 2.78 | $ | 3.09 | $ | 3.40 | $ | 3.34 | 140.63 | % | 35.16 | % | ||||||||||||||
Average Annualized Reported ROAE | 25 | % | 6.73 | % | 7.92 | % | 9.10 | % | 9.22 | % | 150.00 | % | 37.50 | % | ||||||||||||||
TOTAL | 72.66 | % |
The peer group for this LTI component was developed, as of December 31, |
The PSAs consisted of two metrics, cumulative core EPS and ROAE, each split evenly. The performance period was January 1, 2016 to December 31, 2018. Actual performance was assessed in March 2019 and certified by the Compensation and HR Committee for payout in March 2019. The established performance goals, actual achievement levels and PSAs earned for the measurement period are shown in the following tables:
Performance Goal | Weight | Threshold | Target | Maximum | Result | Achievement (% of Target) | Weighted Achievement(1) | ||||||||||||||
Cumulative Core EPS(2) | 50 | % | $ | 3.89 | $ | 4.58 | $ | 5.27 | $ | 3.87 | 0 | % | 0 | % | |||||||
Cumulative ROAE(2) | 50 | % | 8.18 | % | 9.62 | % | 11.06 | % | 8.23 | % | 51.7 | % | 25.9 | % | |||||||
TOTAL | 25.9 | % |
(1) | The Weighted Achievement is calculated as the Achievement (% of Target) multiplied by the weighting of the respective performance goal in determining the payout amount. |
(2) | Please refer to the Appendix within this Proxy for a discussion of the computation of Cumulative Core |
The cash payments made under the 20142016 – 20162018 LTI Program were as follows:follows(1):
Cash Payments | Performance Shares | |||||||||||
Name | Achievement % | Payment Upon Settlement | Achievement % | Shares Vested Upon Settlement | ||||||||
Kenneth J. Mahon | 116.0 | $ | 95,700 | 25.9 | 1,230 | |||||||
Robert S. Volino | 116.0 | 41,760 | 25.9 | 537 |
Name | Weighted Achievement % | Payment Upon Settlement | ||||||
Vincent F. Palagiano | 72.7 | $ | 290,630 | |||||
Kenneth J. Mahon | 72.7 | 87,189 | ||||||
Michael Pucella | 72.7 | 38,508 | ||||||
Daniel J. Harris(1) | 72.7 | 46,864 | ||||||
Timothy B. King | 72.7 | 41,778 |
(1) |
Employment and HR Committee,Change in its effort to align the program with shareholder interests, weights TSR as 50% of the criteria in determining payouts of the long-term incentives for the NEOs. Despite the Company’s strong financial performance on an absolute basis and compared to its peer group, in recent periods, its TSR has lagged the same peer groups. Long-term incentive compensation reflected this circumstance, as recent payments to the NEOs have been limited and contain no payments relative to TSR.
During 2016,2018, the Bank and the Company maintained employment agreements with Mr. PalagianoMessrs. Mahon, Lubow and Mr. MahonGunther that protected both the Company and those individuals in the event of certain separation events. In 2019, the Company entered into Change in Control Employment Agreements (“Change in Control Agreements”) with Messrs. Lubow, Volino, Gunther and Rizzo. The Change in Control Agreements with Messrs. Lubow and Gunther replace their prior employment agreements. The Change in Control Agreements with Messrs. Volino and Rizzo replace their prior retention agreements. The employment agreement for Mr. Mahon generally protects Mr. Mahon in the event of certain terminations of employment within three years following a change in control. The Change in Control Agreements generally protect the covered individuals in the event of certain terminations of employment within two years following a change in control. The Compensation and HR Committee believes the terms of our employment agreements are in line with industry standards and are necessary to maintain a stable management team. See “Executive“Executive Compensation –- Agreements with Our Named Executive Officers Upon Termination of Service and Change in Control” for additional information on the agreements.
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Retention Agreements with Other NEOs
During 2016,2018, the Bank and the Company maintained Retention Agreements with Messrs. Pucella, HarrisVolino and King to secure the executives continued availability and attention to the Bank’s affairs, relieved of distractions arising from the possibility of a change of control. The Retention Agreement with Mr. Harris was terminated upon his resignation on January 6, 2017. TheRizzo. See “Executive Compensation and HR Committee believes the terms of our retention agreements are in line with industry standards and are necessary to maintain a stable management team. See “Executive Compensation –- Agreements with Our Named Executive Officers Upon Termination of Service and Change in Control”Control” for additional information on the agreements.
KSOP. The Bank maintainsKSOP allows eligible employees, including the 401(k) Plan, which is a tax-qualified defined contribution plan permitting salaried employeesNEOs, to supplement their retirement savings with elective deferral contributions that we match at least one year of servicespecified levels. The KSOP also provides for additional discretionary employer contributions, subject to make pre-tax salary deferrals under Section 401(k) of the Internal Revenue Code of 1986 (the “Code”(“Code”) contribution limits.
Benefit Maintenance Plan (“BMP”). Each participant receives a fully vested contribution of 3% of “covered compensation” as defined in the 401(k) Plan, up to applicable Internal Revenue Service (“IRS”) limits. The 3% contribution was required through 2006, after which it became discretionary.
The Compensation and HR Committee believes that perquisites should be limited in scope and have a business-related purpose. The Compensation and HR Committee periodically reviews perquisites to ensure alignment with the desired philosophy. TheThe Compensation and HR Committee approves specific perquisites or benefits for individuals based on the needs of the position.
In 2016,2018, perquisites for all of the NEOs included either an automobile allowance and tax preparation feesor the right to use a Company automobile, which are represented under “Executive“Executive Compensation –- Summary Compensation Table”Table” under Footnote 7.
Executive Compensation Process
Role of the Compensation and HR Committee Management and Consultants/Advisors
The Compensation and HR Committee consists of fourthree independent members of the Board. The Chairman of the Compensation and HR Committee presents a summary of each Committee meeting during the Board meetings. The Compensation and HR Committee met fourfive times during the year ended December 31, 2016.
The Compensation and HR Committee'sCommittee’s primary responsibilities include the following:
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The Compensation and HR Committee, with the assistance of management and theits independent compensation consultant, reviews its philosophy and executive compensation programs annually.
Role of Management
In order for the Compensation and HR Committee to make decisions regarding base salary, annual and long-term incentives, and other aspects of the Company’s benefit programs, members of Management and Human Resources (“HR”) are asked to provide input on Corporate objectives and individual performance goals. Input from members of Management and HR are considered to be suggestions and recommendations for the Compensation and HR Committee’s consideration. Management is not present during discussions of their own compensation.
Role of the Compensation Consultant and Advisors
The Compensation and HR Committee utilizes legal counsel, as necessary, and a nationally recognized compensation consulting firm, to assist in performing its duties. The Compensation and HR Committee relies on legal counsel to advise on its obligations and rights under applicable corporate, securities and employment laws, to assist in interpreting the Company’s obligations and rights under compensation plans and agreements, and to draft plans and agreements to document business decisions. Mercer (US) Inc.Meridian Compensation Partners LLC (“Mercer”Meridian”) served as independent advisor to the Compensation and HR Committee for benchmarking and decisions related to the 20162018 compensation program. At the end of 2016, the Compensation and HR Committee changed its compensation consulting firm to Meridian Compensation Partners LLC (“Meridian”) because it has broader banking industry experience, and also to obtain a more diverse perspective on executive compensation programs. The consulting firm is engaged to annually analyze the Company’s executive pay levels, by each of the four key elements cited and in total, and the Company’s performance.
The Compensation and HR Committee evaluated the independence of both the compensation consulting firms as well asfirm and legal counsel to assess whether their work raised conflicts of interest under NASDAQ listing standards and SEC rules. Based on this review, Mercer, Meridian and legal counsel were allboth determined to be independent and their work did not raise any conflicts of interest.
Benchmarking and Peer Group
In making executive compensation decisions, the Compensation and HR Committee seeks to maintain a strong linkage between pay and corporate performance, both in absolute terms and in relation to a designated peer group. The Compensation and HR Committee uses a peer group to review pay program competitiveness and to assess corporate performance. The members of our peer group are reviewed each year to determine relevance of the peer set.
The table below shows how the peer group was chosen and how it is used:
HOW THE PEER GROUP IS CHOSEN | |
The Company approximates the median total asset size of the peer group. | The Company approximates the median market capitalization of the peer group. |
The peer group members operate in the Company’s region. | The peer group has a similar overall business model to the Company. |
The Company engages a nationally recognized compensation consulting firm to evaluate and recommend an appropriate peer group. | |
HOW THE COMPENSATION AND HR COMMITTEE USES THE PEER GROUP | |
For input in developing base salary ranges, annual incentive targets and LTI award ranges. | To benchmark share ownership guidelines. |
To assess the competitiveness of total direct compensation awarded to executives. | To validate whether executive compensation programs are aligned with Company performance. |
As an input in designing compensation plans, benefits and perquisites. |
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The peer group utilized was comprised of the following companies in 2018:
Company Name | City and State of Corporate Headquarters | Total Assets(1) | ||
Bridge Bancorp, Inc. | Bridgehampton, NY | $ | 4.70 | |
ConnectOne Bancorp, Inc. | Englewood Cliffs, NJ | 5.46 | ||
Customers Bancorp, Inc. | Wyomissing, PA | 9.83 | ||
Eagle Bancorp, Inc. | Bethesda, MD | 8.39 | ||
First of Long Island Corporation | Glen Head, NY | 4.24 | ||
Flushing Financial Corporation | Uniondale, NY | 6.83 | ||
Investors Bancorp, Inc. | Short Hills, NJ | 26.23 | ||
Kearny Financial Corp. | Fairfield, NJ | 6.58 | ||
Lakeland Bancorp, Inc. | Oak Ridge, NJ | 5.81 | ||
Northfield Bancorp, Inc. | Woodbridge, NJ | 4.41 | ||
Northwest Bancshares, Inc. | Warren, PA | 9.61 | ||
OceanFirst Financial Corp. | Toms River, NJ | 7.52 | ||
Oritani Financial Corp. | Township of Washington, NJ | 4.17 | ||
Peapack Gladstone Financial Corporation | Gladstone, NJ | 4.62 | ||
Provident Financial Services, Inc. | Iselin, NJ | 9.73 | ||
Sandy Spring Bancorp, Inc. | Olney, MD | 8.24 | ||
TrustCo Bank Corp NY | Glenville, NY | 4.96 | ||
WSFS Financial Corporation | Wilmington, DE | 7.25 | ||
Median | 6.71 | |||
Dime Community Bancshares, Inc. | Brooklyn, NY | 6.40 |
(1) | As of December 31, 2018. Amount is in billions. |
In addition to the peer group, the Compensation and HR Committee considers market data from published industry surveys to supplement the proxy data and provide data for executives who are not NEOs.
Stock Ownership and Retention Requirement
- The Company has a policy that requiresName of NEO(1) | Stock Ownership Requirement (multiple) | Stock Ownership Requirement at Record Date (# of Shares) | Stock Ownership at Record Date (# of Shares) | Stock Ownership Value at Record Date(2) | ||||||||
Kenneth J. Mahon | 5x | 218,139 | 547,955 | $ | 10,361,829 | |||||||
Stuart H. Lubow(3) | 3x | 75,357 | 29,488 | 557,618 | ||||||||
Robert S. Volino | 3x | 70,598 | 85,157 | 1,610,319 | ||||||||
Conrad J. Gunther(4) | 2x | 37,017 | 8,540 | 161,491 |
Name of NEO(1) | Stock Ownership Requirement (# of Shares) | Stock Ownership Counted Toward Requirement (# of Shares) | ||||||
Vincent F. Palagiano(2) | 181,704 | 1,121,451 | ||||||
Kenneth J. Mahon | 206,767 | 528,412 | ||||||
Michael Pucella | 34,075 | 156,220 | ||||||
Timothy B. King | 35,314 | 255,686 |
(1) | Mr. |
(2) | The closing price of |
(3) | Mr. Lubow was hired in January 2017. |
(4) | Mr. Gunther was hired in December 2016. |
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The Company'sCompany’s policy further requires that each executive officer who is not in full compliance with the Company’s stock ownership guidelines must retain 100% of the net shares (after taxes and acquisition costs) acquired through stock option exercises and restricted stock vesting until he or she attains full compliance with the ownership guidelines.
Recoupment/Clawback Policy
- The Company has adopted a policy permitting it to seek recovery of certain performance-based compensation in the event of a financial restatement due to the Company’s material non-compliance with the financial reporting requirements of the federal securities laws. In the event of such a restatement, performance-based compensation paid during the prior three years will be reviewed to determine if the right to, or amount of,Restrictions on Hedging and Pledging
Section 162(m)
The Company has beenbelieved that it was generally in the CompensationCompany’s best interests to design compensation arrangements that were intended to satisfy the requirements for deductibility under Section 162(m). Accordingly, the Company took appropriate actions, to the extent feasible, that were designed and HR Committee’s practiceintended to structurepreserve the deductibility of annual incentive and long-term performance awards previously granted to its executive officers who are covered by Section 162(m). However, notwithstanding this general policy, the Company also believes there may be circumstances in which the Company’s interests are best served by maintaining flexibility in the way compensation is provided, whether or not compensation is fully deductible.
As a result of the new tax legislation, compensation paid in excess of $1 million to individuals who, following December 31, 2017, are subject to Section 162(m) is not expected to be deductible under Section 162(m) of the Code, unless the compensation qualifies for transitionary relief. Therefore, certain compensation paid under our AIP and benefit programs offered tocertain of our long-term equity awards originally designed with the NEOs with a view to maximizingintent that the tax deductibility of amounts paid. However,would qualify as “performance-based compensation” may not be deductible in structuring compensation programs and making compensation decisions,the future. Although the Compensation and HR Committee considers a varietywill continue to analyze the impact that Section 162(m) and the potential lack of factors, including the Company’s tax position, the materialitydeduction associated with amounts paid in excess of the payments and tax deductions involved, anddeduction limitation may have on the need for flexibility to address unforeseen circumstances. After considering these factors,Company, the Compensation and HR Committee continues to retain the flexibility to make decisions with respect to the Company’s compensation programs that are based on factors other than Section 162(m) and related tax consequences. This flexibility may decideinclude amending or modifying the design elements of our historical compensation programs to authorize payments all or part of which would be nondeductible for federal tax purposes. It is anticipated that any compensation for 2016 that is rendered non-deductible by this limit will not have a material effect. Payments made on account of a change of control under the employment and retention agreements described above might include non-deductible payments.
Sections 4999 and 280G
Pursuant to theirhis Employment Agreements or Retention Agreements,Agreement, the Company or Bank will reimburse Messrs.Mr. Mahon Pucella, and King, and previously would have reimbursed Messrs. Palagiano and Harris, for the amount of the excise tax, if any, and make an additional gross-up payment so that, after payment of the excise tax and all income
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and excise taxes imposed on the reimbursement and gross-up payments, Messrs. Palagiano,Mr. Mahon Pucella, Harris, and King each would retain approximately the same net after-tax amounts under the Employment Agreement or Retention Agreement that he would have retained if there was no excise tax. Neither the Bank nor the Company is permitted to claim a federal income tax deduction for the portion of the change of control payment that constitutes an excess parachute payment, the excise tax reimbursement payment or the gross-up payment.
Accounting Considerations
The Company’s compensation program is designed to mitigate risk by: (1) providing non-performance-based salaries, retirement and fringe benefits that permit executives to pay living expenses and plan for the future without reliance on incentives, (2) incorporating cash incentives to reward current successes, in relation to forecast performance derived from the Capital Plan, and (3) including long-term incentives in the form of RSAs,stock awards and performance-based shares, and cash, as well as maintaining stock ownership and retention requirements, to sustain focus on long-term shareholder value. The Compensation and HR Committee exercises substantial discretion in awarding annual incentives, including a retrospective assessment of management’s performance in light of prevailing business conditions, to discourage excessive focus on formulaic goals. This retrospective assessment includes, in addition to financial measures, consideration of indicators of business prudence such as credit quality and capital ratios. Management stock ownership and retention requirements and equity-based retirement benefits provided through the Company’s tax-qualified ESOPKSOP and related BMP assure that management retains a significant financial interest in the long-term performance of the Common Stock, and sensitivity to the potential long-term effects of short-term business strategies, throughout their tenure with the Company. The Company believes these features recognize a balance between the need to accept risk exposure in the successful operation of its business and the need to identify and prudently manage such risks.
In addition to assisting with the competitive review of executive compensation, a nationally recognized compensation consulting firm has been engaged to assist the Compensation and HR Committee in conducting a risk review of the Company’s incentive compensation programs. Based upon its review, the compensation consultant indicated its belief that the incentive plans place a proper balance of reinforcing performance while not encouraging inappropriate risk taking behavior.
The Compensation and HR Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management; and
Rosemarie Chen, Chair
There are no interlocks, as defined under the rules and regulations of the SEC, between the Company and the current members of the Compensation and HR Committee and corporations with respect to which they are affiliated, or otherwise.
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The following table provides information about the compensation paid for services rendered in all capacities by the NEOs for the year ending December 31, 2016. Included in 2016 “All Other Compensation” is
Equity Incentive Plan Stock Awards | Non-Equity Incentive Plan Compensation(4) | |||||||||||||||||||||||||||||
Name and Principal Positions | Year | Salary(1) | Performance- based Stock Awards(2) | Time- Vesting Restricted Stock Awards(3) | Annual Incentive Award | Long- Term Cash Incentive Award | Change in Pension Value and Nonqualified Deferred Compensation Earnings (5)(6) | All Other Compensation (7)(8) | Total | Total Excluding the Change in Pension Value and Nonqualified Deferred Compensation Earnings(6) | ||||||||||||||||||||
Kenneth J. Mahon President and CEO | 2018 | 825,000 | 297,000 | 198,000 | 454,880 | 95,700 | (3,421 | ) | 79,364 | 1,946,523 | 1,949,944 | |||||||||||||||||||
2017 | 825,000 | 396,000 | 264,000 | 376,984 | 124,925 | 117,991 | 99,921 | 2,204,821 | 2,086,830 | |||||||||||||||||||||
2016 | 550,000 | 82,500 | 165,000 | 264,941 | 87,189 | 36,929 | 581,767 | 1,768,326 | 1,731,397 | |||||||||||||||||||||
Stuart H. Lubow(9) SEVP and Chief Banking Officer | 2018 | 475,000 | 142,500 | 95,000 | 192,127 | — | — | 51,295 | 955,922 | 955,922 | ||||||||||||||||||||
2017 | 446,827 | — | 225,000 | 172,429 | — | — | 34,261 | 878,517 | 878,817 | |||||||||||||||||||||
Robert S. Volino(9) SEVP and COO | 2018 | 445,000 | 133,500 | 89,000 | 179,993 | 41,760 | — | 39,914 | 929,167 | 929,167 | ||||||||||||||||||||
2017 | 420,000 | 126,000 | 84,000 | 170,525 | 56,516 | — | 47,950 | 904,991 | 904,991 | |||||||||||||||||||||
James L. Rizzo(9) SVP and Comptroller | 2018 | 259,821 | — | — | 42,072 | — | (17,038 | ) | 24,265 | 309,129 | 326,158 | |||||||||||||||||||
2017 | 231,055 | — | — | 62,608 | — | 21,434 | 27,172 | 342,269 | 320,835 | |||||||||||||||||||||
Conrad J. Gunther(9) EVP and CLO | 2018 | 350,000 | 84,000 | 56,000 | 132,919 | — | — | 50,233 | 673,152 | 673,152 |
Equity Incentive Plan Awards | Non-Equity Incentive Plan Compensation(4) | ||||||||||||||||||||||||||||||||||||
Name and Principal Positions | Year | Salary(1) | Performance- based Stock Awards(2) | Time- Vesting Restricted Stock Awards(3) | Annual Incentive Award | Long- Term Cash Incentive Award | Change in Pension Value and Nonqualified Deferred Compensation Earnings (5)(6) | All Other Compensation (7)(8) | Total | Total Excluding the Change in Pension Value and Nonqualified Deferred Compensation Earnings(6) | |||||||||||||||||||||||||||
Vincent F. Palagiano, Chairman of the Board and CEO(9) | 2016 | $ | 725,000 | $ | — | $ | — | $ | 349,240 | $ | 714,380 | $ | 503,583 | $ | 672,467 | $ | 2,964,670 | $ | 2,461,087 | ||||||||||||||||||
2015 | 725,000 | — | — | 345,000 | 335,475 | 279,559 | 791,511 | 2,476,545 | 2,196,986 | ||||||||||||||||||||||||||||
2014 | 710,000 | — | — | 388,500 | 335,475 | 1,571,906 | 718,441 | 3,724,322 | 2,152,416 | ||||||||||||||||||||||||||||
Kenneth J. Mahon President and COO(10) | 2016 | 550,000 | 82,500 | 165,000 | 264,941 | 87,189 | 36,929 | 581,767 | 1,768,326 | 1,731,397 | |||||||||||||||||||||||||||
2015 | 500,000 | — | 125,000 | 219,000 | 70,200 | — | 404,016 | 1,318,216 | 1,318,216 | ||||||||||||||||||||||||||||
2014 | 450,400 | — | 120,000 | 238,500 | 70,200 | 271,459 | 382,520 | 1,533,079 | 1,261,620 | ||||||||||||||||||||||||||||
Michael Pucella EVP and CAO | 2016 | 330,000 | 32,175 | 64,350 | 140,000 | 38,508 | 25,157 | 480,577 | 1,110,767 | 1,085,610 | |||||||||||||||||||||||||||
2015 | 316,725 | — | 61,761 | 120,000 | 43,875 | — | 63,171 | 605,532 | 605,532 | ||||||||||||||||||||||||||||
2014 | 307,500 | — | 53,000 | 140,000 | 43,875 | 140,162 | 60,451 | 744,988 | 604,826 | ||||||||||||||||||||||||||||
Daniel J. Harris EVP and CLO(11) | 2016 | 395,000 | 49,375 | 98,750 | 100,000 | 46,864 | — | 127,769 | 817,758 | 817,758 | |||||||||||||||||||||||||||
2015 | 355,788 | — | 74,715 | 145,000 | 53,078 | — | 66,129 | 694,710 | 694,710 | ||||||||||||||||||||||||||||
2014 | 345,425 | — | 64,500 | 140,000 | 53,078 | — | 63,022 | 666,025 | 666,025 | ||||||||||||||||||||||||||||
Timothy B. King EVP and CRIO(12) | 2016 | 342,000 | 33,345 | 66,690 | 120,000 | 41,778 | 22,318 | 532,885 | 1,159,016 | 1,136,698 |
(1) | Salary represents amount earned for the fiscal year, whether or not actually paid during such year. |
(2) | The amounts reported are the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. Awards consist of performance-based stock awards which vest based on the achievement of certain performance criteria. The performance-based awards assume the probable outcome of performance conditions for the targeted potential value of the award. For valuation and discussion of the assumptions related to these awards, see Note 15 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K. Based on the fair value at grant date, the following are the maximum potential values of the performance shares for the |
(3) | The amounts reported are the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. Awards consist of restricted stock which vests ratably over four years. For valuation and discussion of the assumptions related to these awards, see Note |
(4) | Amount represents cash payments made to the NEO under the Cash LTI or the AIP in the respective year. Please refer to 2018. |
(5) | Includes for each NEO: (a) the increase (if any) for the fiscal year in the present value of the individual's accrued benefit (whether or not vested) under the Retirement Plan and BMP calculated by comparing the present value of each individual's accrued benefit under both such plans in accordance with FASB ASC Topic 715 |
(6) | The Company does not regard amounts reported for |
(7) | The NEOs participate in certain group life, health, and disability insurance, retirement and medical reimbursement plans not disclosed in the Summary Compensation Table that are generally available to salaried employees and do not discriminate in scope, terms and |
Name | Life Insurance Premiums | Automobile | KSOP Cash Contribution | BMP (a) | Other (b) | Total | ||||||||||||
Kenneth J. Mahon | $ | 15,081 | $ | 1,874 | $ | 8,250 | $ | 28,954 | $ | 16,955 | $ | 79,364 | ||||||
Stuart H. Lubow | 2,874 | 7,671 | 8,250 | 17,620 | 6,630 | 51,295 | ||||||||||||
Robert S. Volino | 499 | 1,230 | 7,725 | 15,404 | 6,805 | 39,914 | ||||||||||||
James L. Rizzo | 735 | 9,600 | 5,566 | — | 114 | 24,265 | ||||||||||||
Conrad J. Gunther | 20,189 | 12,000 | 8,250 | 5,940 | 3,854 | 50,233 |
Name | Life Insurance Premiums | Automobile | 401(k) Plan Employer Cash Contribution | ESOP Allocation (a) | BMP (b) | Other(c) | Total | |||||||||||||||||||||
Vincent F. Palagiano | $ | 85,061 | $ | 18,119 | $ | 7,950 | $ | 478,762 | $ | 81,235 | $ | 1,340 | $ | 672,467 | ||||||||||||||
Kenneth J. Mahon | 14,794 | 17,015 | 7,950 | 478,762 | 50,803 | 12,443 | 581,767 | |||||||||||||||||||||
Michael Pucella | 1,206 | 12,000 | 7,950 | 432,994 | 19,940 | 6,487 | 480,577 | |||||||||||||||||||||
Daniel J. Harris | 854 | 12,000 | 7,950 | 71,496 | 28,750 | 6,719 | 127,769 | |||||||||||||||||||||
Timothy B. King | 833 | 12,000 | 7,950 | 484,229 | 21,114 | 6,759 | 532,885 |
(a) | Amount represents BMP benefits earned during the year ended December 31, 2018 associated with the KSOP. |
(b) | Amount represents dividends paid on unvested restricted stock awards during 2018 for each NEO. |
(8) | 2016 amount for Mr. Mahon represents both the annual ESOP allocation as well as the final one-time allocation of surplus shares following the full prepayment of the outstanding ESOP loan balance. The value of the final ESOP allocation |
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), we are required to disclose the reasonable estimate of the ratio of the annual total compensation of our median employee, in terms of compensation, excluding Kenneth J. Mahon, our Chief Executive Officer, to the annual total compensation of Mr. Mahon, calculated in a manner consistent with the Dodd-Frank Act and Securities and Exchange Commission rules.
Our median employee for 2018 was determined using the annualized base W-2 earnings for the year ended December 31, 2018 for all employees who were actively employed on December 31, 2018. We annualized compensation for full-time and part-time permanent employees who were employed on December 31, 2018 but did not work for us the entire year. No full-time equivalent adjustments were made for part-time employees.
The total annual compensation of our median employee, using the same methodology we use to calculate the CEO’s total annual compensation, as reflected in the Summary Compensation Table compensation on the previous page, was is $62,818. The annual total compensation of Contents
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The following table sets forth information regarding plan-based awards granted to the NEOs during the last fiscal year.
Estimated Future Payouts Under Equity Incentive Plan Awards(1) | Time-vested Restricted Stock Awards | ||||||||||||||||||||
Executive | Type | Grant Date | Threshold (#) | Target (#) | Maximum (#) | Number of Shares | Grant Date Fair Value of Awards(2) | ||||||||||||||
Kenneth J. Mahon | PSA | 3/28/2018 | 8,005 | 16,010 | 24,016 | — | — | ||||||||||||||
RSA | 4/30/2018 | — | — | — | 10,025 | $ | 198,000 | ||||||||||||||
Stuart H. Lubow | PSA | 3/28/2018 | 3,840 | 7,681 | 11,522 | — | — | ||||||||||||||
RSA | 4/30/2018 | — | — | — | 4,810 | 95,000 | |||||||||||||||
Robert S. Volino | PSA | 3/28/2018 | 3,598 | 7,196 | 10,795 | — | — | ||||||||||||||
RSA | 4/30/2018 | — | — | — | 4,506 | 89,000 | |||||||||||||||
Conrad J. Gunther | PSA | 3/28/2018 | 2,264 | 4,528 | 6,792 | — | — | ||||||||||||||
RSA | 4/30/2018 | — | — | — | 2,835 | 56,000 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | Time-vested Restricted Stock Awards | ||||||||||||||||||||||||||||||||
Executive | Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Number of Shares | Grant Date Fair Value of Awards(3) | ||||||||||||||||||||||||
Vincent F. Palagiano(4) | Cash | 3/24/2016 | $ | 235,625 | $ | 471,250 | $ | 706,875 | - | - | - | - | - | |||||||||||||||||||||
Kenneth J. Mahon | Cash | 3/24/2016 | 41,250 | 82,500 | 123,750 | - | - | - | - | - | ||||||||||||||||||||||||
PSA | 3/24/2016 | - | - | - | 2,378 | 4,756 | 7,132 | - | - | |||||||||||||||||||||||||
RSA | 4/26/2016 | - | - | - | - | - | - | 9,111 | $ | 165,000 | ||||||||||||||||||||||||
Michael Pucella | Cash | 3/24/2016 | 16,088 | 32,175 | 48,263 | - | - | - | - | - | ||||||||||||||||||||||||
PSA | 3/24/2016 | - | - | - | 928 | 1,854 | 2,782 | - | - | |||||||||||||||||||||||||
RSA | 4/26/2016 | - | - | - | - | - | - | 3,553 | 64,350 | |||||||||||||||||||||||||
Daniel J. Harris(5) | Cash | 3/24/2016 | 24,688 | 49,375 | 74,063 | - | - | - | - | - | ||||||||||||||||||||||||
PSA | 3/24/2016 | - | - | - | 1,422 | 2,846 | 3,314 | - | - | |||||||||||||||||||||||||
RSA | 4/26/2016 | - | - | - | - | - | - | 5,453 | 98,750 | |||||||||||||||||||||||||
Timothy B. King | Cash | 3/24/2016 | 16,673 | 33,345 | 50,018 | - | - | - | - | - | ||||||||||||||||||||||||
PSA | 3/24/2016 | - | - | - | 960 | 1,922 | 2,882 | - | - | |||||||||||||||||||||||||
RSA | 4/26/2016 | - | - | - | - | - | - | 3,682 | 66,690 |
(1) |
The information in these columns reflects the range of possible awards for vesting of PSA. The awards will vest based on the achievement of |
The amounts in this column reflect the aggregate grant date fair value of the awards, |
2013 Equity and Incentive Plan.
The 2013 Equity and Incentive Plan was adopted by the Company’s Board of Directors and subsequently approved by the Company’s shareholders at their annual meeting held in 2013. The 2013 Equity and Incentive Plan provides the Company with the flexibility to make equity compensation available to Outside Directors, officers (including the CEO) and other employees of the Company or its36
Stock Awards | ||||||||||||||||||||||||||||||||||||
Option Awards | Restricted Stock | Performance Shares | ||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock That Have Not Vested (#)(1) | Market Value of Shares of Stock That Have Not Vested ($)(2) | Number of Shares of Stock That Have Not Vested (#)(4) | Market Value of Shares of Stock That Have Not Vested ($)(2) | ||||||||||||||||||||||||||
Vincent F. Palagiano | 5/1/2007 | 112 | - | - | $ | 13.74 | 5/1/2017 | - | - | - | - | |||||||||||||||||||||||||
Kenneth J. Mahon | 7/31/2008 | 11,706 | - | - | 16.73 | 7/31/2018 | - | - | - | - | ||||||||||||||||||||||||||
4/30/2010 | 3,044 | - | - | 12.75 | 4/30/2020 | - | - | - | - | |||||||||||||||||||||||||||
4/29/2011 | 9,709 | - | - | 15.46 | 4/29/2021 | - | - | - | - | |||||||||||||||||||||||||||
4/29/2013 | - | - | - | - | - | 1,640 | $ | 32,964 | - | - | ||||||||||||||||||||||||||
4/30/2014 | - | - | - | - | - | 3,682 | 74,008 | - | - | |||||||||||||||||||||||||||
4/30/2015 | - | - | - | - | - | 5,889 | 118,369 | - | - | |||||||||||||||||||||||||||
3/24/2016 | - | - | - | - | - | - | - | 4,756 | $ | 95,596 | ||||||||||||||||||||||||||
4/29/2016 | - | - | - | - | - | 9,111 | 183,131 | - | - | |||||||||||||||||||||||||||
Michael Pucella | 4/29/2013 | - | - | - | - | - | 1,025 | $ | 20,603 | - | - | |||||||||||||||||||||||||
4/30/2014 | - | - | - | - | - | 1,626 | 65,683 | - | - | |||||||||||||||||||||||||||
4/30/2015 | - | - | - | - | - | 2,910 | 58,491 | - | - | |||||||||||||||||||||||||||
3/24/2016 | - | - | - | - | - | - | - | 1,854 | 37,265 | |||||||||||||||||||||||||||
4/29/2016 | - | - | - | - | - | 3,553 | 71,415 | - | - | |||||||||||||||||||||||||||
Daniel J. Harris(3) | 4/29/2013 | - | - | - | - | - | 1,240 | $ | 24,924 | - | - | |||||||||||||||||||||||||
4/30/2014 | - | - | - | - | - | 1,979 | 39,778 | - | - | |||||||||||||||||||||||||||
4/30/2015 | - | - | - | - | - | 3,520 | 70,752 | - | - | |||||||||||||||||||||||||||
3/24/2016 | - | - | - | - | - | - | - | 2,846 | 57,205 | |||||||||||||||||||||||||||
4/29/2016 | - | - | - | - | - | 5,453 | 109,605 | - | - | |||||||||||||||||||||||||||
Timothy B. King | 4/29/2013 | - | - | - | - | - | 1,076 | 21,628 | - | - | ||||||||||||||||||||||||||
4/30/2014 | - | - | - | - | - | 1,764 | 35,456 | - | - | |||||||||||||||||||||||||||
4/30/2015 | - | - | - | - | - | 3,055 | 61,406 | - | - | |||||||||||||||||||||||||||
3/24/2016 | - | - | - | - | - | - | - | 1,922 | 38,632 | |||||||||||||||||||||||||||
4/29/2016 | - | - | - | - | - | 3,682 | 74,008 | - | - |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Restricted Stock | Performance Shares | |||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock That Have Not Vested (#)(1) | Market Value of Shares of Stock That Have Not Vested ($)(2) | Number of Shares of Stock That Have Not Vested (#)(3) | Market Value of Shares of Stock That Have Not Vested ($)(2) | ||||||||||||||||||||
Kenneth J. Mahon | 4/30/2010 | 3,044 | — | — | 12.75 | 4/30/2020 | — | — | — | — | ||||||||||||||||||||
4/29/2011 | 9,709 | — | — | 15.46 | 4/29/2021 | — | — | — | — | |||||||||||||||||||||
4/30/2015 | — | — | — | — | — | 1,963 | 33,332 | — | — | |||||||||||||||||||||
4/29/2016 | — | — | — | — | — | 4,556 | 77,361 | — | — | |||||||||||||||||||||
3/23/2017 | — | — | — | — | — | — | — | 20,050 | 340,449 | |||||||||||||||||||||
4/28/2017 | — | — | — | — | — | 10,180 | 172,856 | — | — | |||||||||||||||||||||
3/28/2018 | — | — | — | — | — | — | — | 16,010 | 271,850 | |||||||||||||||||||||
4/30/2018 | — | — | — | — | — | 10,025 | 170,225 | — | — | |||||||||||||||||||||
Robert S. Volino | 4/30/2015 | — | — | — | — | — | 888 | 15,078 | — | — | ||||||||||||||||||||
4/29/2016 | — | — | — | — | — | 1,988 | 33,756 | — | — | |||||||||||||||||||||
3/23/2017 | — | — | — | — | — | — | — | 6,380 | 108,332 | |||||||||||||||||||||
4/28/2017 | — | — | — | — | — | 3,239 | 54,998 | — | — | |||||||||||||||||||||
3/28/2018 | — | — | — | — | — | — | — | 7,196 | 122,188 | |||||||||||||||||||||
4/30/2018 | — | — | — | — | — | 4,506 | 76,512 | — | — | |||||||||||||||||||||
Stuart H. Lubow | 1/3/2017 | — | — | — | — | — | 8,232 | 139,779 | — | — | ||||||||||||||||||||
3/28/2018 | — | — | — | — | — | — | — | 7,681 | 130,423 | |||||||||||||||||||||
4/30/2018 | — | — | — | — | — | 4,810 | 81,674 | — | — | |||||||||||||||||||||
Conrad J. Gunther | 1/3/2017 | — | — | — | — | — | 4,756 | 80,757 | — | — | ||||||||||||||||||||
3/28/2018 | — | — | — | — | — | — | — | 4,528 | 76,885 | |||||||||||||||||||||
4/30/2018 | — | — | — | — | — | 2,835 | 48,138 | — | — |
(1) | Please refer to the sections titled |
(2) | Market value is calculated on the basis of |
These shares are subject to vesting based upon the achievement of specific goals. The amounts shown assume the target level of performance is achieved. The actual award, if any, will be determined as of |
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The following table sets forth the stock awards that vested for and the option awards that were exercised by, the NEOs during the last fiscal year:
Option Awards | Stock Awards | |||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||
Kenneth J. Mahon | 2,927 | 7,376 | 9,475 | $ | 187,131 | |||||||
Robert S. Volino | — | — | 4,188 | 82,713 | ||||||||
Stuart H. Lubow | — | — | 2,713 | 57,603 | ||||||||
James L. Rizzo | — | — | 813 | 16,057 | ||||||||
Conrad J. Gunther | — | — | 1,585 | 33,285 |
Option Awards | Stock Awards | ||||||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | |||||||||||
Vincent F. Palagiano | 149,888 | $ | 528,719 | — | — | ||||||||||
Kenneth J. Mahon | — | — | 7,132 | $ | 129,161 | ||||||||||
Michael Pucella | 20,164 | 79,543 | 3,863 | 69,959 | |||||||||||
Daniel J. Harris | 14,134 | 30,765 | 4,679 | 84,797 | |||||||||||
Timothy B. King | 5,453 | 16,850 | 4,084 | 73,961 |
(1) | All option exercise transactions |
(2) | Amount calculated on the basis of |
Retirement Plan
. The BankBMP.
The following table sets forth information regarding pension benefits accrued by the NEOs as of December 31, 2018 under our Retirement Plan and has been excluded from the table.BMP.
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year($)(2) | ||||||
Kenneth J. Mahon | Retirement Plan | 19.7 | $ | 1,017,679 | — | |||||
BMP (Defined Benefit Portion) | 19.7 | 285,861 | — | |||||||
James L. Rizzo | Retirement Plan | 13.4 | 178,107 | — |
Name | Plan Name | Number of Years Credited Service (#) (1) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year($)(2) | ||||||||||
Vincent F. Palagiano | Retirement Plan | 29.6 | $ | 2,067,564 | $ | 185,166 | ||||||||
BMP (Defined Benefit Portion) | 29.6 | 5,697,615 | — | |||||||||||
Kenneth J. Mahon | Retirement Plan | 19.7 | 925,409 | — | ||||||||||
BMP (Defined Benefit Portion) | 19.7 | 263,561 | — | |||||||||||
Michael Pucella | Retirement Plan | 18.9 | 586,530 | — | ||||||||||
BMP (Defined Benefit Portion) | 18.9 | — | — | |||||||||||
Timothy B. King | Retirement Plan | 16.5 | 444,686 | — | ||||||||||
BMP (Defined Benefit Portion) | 16.5 | — | — |
(1) | The figures shown are determined as of the plan's measurement date during |
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The following table shows the 20162018 activity for each of our NEOs, as well as their defined contribution account balances in our BMP. The defined benefit component of the BMP is discussed under “Pension Benefits – BMP” above. The defined contribution component noted in this table reflects the
Name | Company Contributions in Last Fiscal Year($)(1) | Aggregate Losses in Last Fiscal Year($)(2) | Aggregate Withdrawals/ Distributions($)(3) | Aggregate Balance at Last Fiscal Year End ($)(1) | ||||||||
Kenneth J. Mahon | $ | 28,954 | $ | (570,673 | ) | $ | 75,671 | $ | 4,620,673 | |||
Stuart H. Lubow | 17,620 | — | — | 17,620 | ||||||||
Robert S. Volino | 15,404 | (8,345 | ) | 860 | 70,832 | |||||||
Conrad J. Gunther | 5,940 | — | — | 5,940 |
Name | Executive Contributions in Last Fiscal Year ($) | Company Contributions in Last Fiscal Year($)(1) | Aggregate Earnings in Last Fiscal Year($)(2) | Aggregate Withdrawals/ Distributions($)(3) | Aggregate Balance at Last Fiscal Year End ($)(1) | ||||||||||||||
Vincent F. Palagiano | - | $ | 81,235 | $ | 875,067 | $ | 196,639 | $ | 11,549,403 | ||||||||||
Kenneth J. Mahon | - | 50,803 | 342,752 | 74,426 | 4,806,464 | ||||||||||||||
Michael Pucella | - | 19,940 | 112,145 | 27,266 | 1,200,967 | ||||||||||||||
Daniel J. Harris | - | 28,750 | 12,975 | 2,696 | 173,840 | ||||||||||||||
Timothy B. King | - | 21,114 | 111,664 | 27,147 | 1,202,114 |
(1) | Company contributions in the last fiscal year and aggregate balance at last fiscal year end both reflect compensation items recognized in |
(2) | Earnings did not accrue at above-market or preferential rates. These numbers are not reflected in the Summary Compensation Table. |
(3) | Amount represents pass through dividends on shares of Common Stock held in the |
The following table provides an estimate of the value of NEO terminationpotential post-termination and change of control benefits assumingunder the Employment Agreement with Mr. Mahon, the Change in Control Agreements with Messrs. Lubow, Volino, Gunther, and Rizzo, and certain other benefits and compensation arrangements. These estimates assume the termination of employment or a change in control occurred onas of December 31, 2016:2018. Tax-qualified benefits payable under the Pension Plan, the 401(k) Plan, ESOPKSOP and vested balances under our non-qualified deferred compensation plans are not included in this table. Our NEOs receive only earned and vested compensation and benefits as of their termination date upon voluntary termination of service. Mr. Harris voluntarily terminated hisMahon maintains separate employment agreements with the Bank on January 6, 2017 and therefore is not included inthe Company which have substantially similar terms and conditions. For purposes of the table below.
The payments to our NEOs are governed by various agreements and arrangements described in the footnotes to the table. The timing of the payments described below to the NEOs may also be subject to a delay in the event an NEO is considered a “Specified Employee” and defined under Section 409A of the Code which may delay payment.Code.
Kenneth J. Mahon | Stuart H. Lubow | Robert S. Volino | James L. Rizzo | Conrad J. Gunther | |||||||||||
Death | |||||||||||||||
Death Benefit(1) | $ | 2,475,000 | $ | — | $ | — | $ | — | $ | — | |||||
Restricted Stock Award(5) | 302,785 | 149,491 | 120,088 | — | 86,882 | ||||||||||
Performance-based Stock Award(6) | 208,829 | 15,790 | 70,767 | — | 9,308 | ||||||||||
Disability | |||||||||||||||
Disability Benefit(2) | 2,475,000 | — | — | — | — | ||||||||||
Restricted Stock Award(5) | 302,785 | 149,491 | 120,088 | — | 86,882 | ||||||||||
Performance-based Stock Award(6) | 208,829 | 15,790 | 70,767 | — | 9,308 | ||||||||||
Discharge without Cause or Resignation with Good Reason – No Change in Control | |||||||||||||||
Severance Pay(3) | 4,167,570 | — | — | — | — | ||||||||||
Health and Welfare Benefits(4) | 61,502 | — | — | — | — | ||||||||||
Vincent F. Palagiano(11) | Kenneth J. Mahon | Michael Pucella | Timothy B. King | |||||||||||||
Death | ||||||||||||||||
Death Benefit(1) | $ | 2,175,000 | $ | 1,650,000 | $ | - | $ | - | ||||||||
Restricted Stock Award(7) | - | 155,212 | 74,290 | 78,310 | ||||||||||||
Performance-based Stock Award(8) | - | 9,167 | 3,575 | 3,705 | ||||||||||||
Cash LTI Award(9) | 398,218 | 104,733 | 49,135 | 51,457 | ||||||||||||
Disability | ||||||||||||||||
Disability Benefit(2) | 2,175,000 | $ | 1,650,000 | - | - | |||||||||||
Restricted Stock Award(7) | - | 155,212 | 74,290 | 78,310 | ||||||||||||
Performance-based Stock Award(8) | - | 9,167 | 3,575 | 3,705 | ||||||||||||
Cash LTI Award(9) | 398,218 | 104,733 | 49,135 | 51,457 | ||||||||||||
Discharge without Cause or Resignation with Good Reason – No Change in Control | ||||||||||||||||
Severance Pay(3) | 1,988,218 | 1,508,303 | - | - | ||||||||||||
Cash Incentive Bonus(4) | 997,260 | 728,631 | - | - | ||||||||||||
Health and Welfare Benefits(5) | 55,957 | 55,957 | - | - | ||||||||||||
401(k) Payment(6) | 88,859 | 63,667 | - | - | ||||||||||||
Restricted Stock Award(7) | - | 155,212 | 74,290 | 78,310 | ||||||||||||
Performance-based Stock Award(8) | - | 9,167 | 3,575 | 3,705 | ||||||||||||
Cash LTI Award(9) | 398,218 | 104,733 | 49,135 | 51,457 | ||||||||||||
Discharge without Cause or Resignation with Good Reason – Change in Control Related | ||||||||||||||||
Severance Pay(3) | 2,108,479 | 1,599,536 | 984,301 | 1,021,767 | ||||||||||||
Cash Incentive Bonus(4) | 1,057,582 | 772,708 | 420,000 | 432,629 | ||||||||||||
Health and Welfare Benefits(5) | 55,957 | 55,957 | 76,153 | 91,659 | ||||||||||||
401(k) Payment(6) | 94,078 | 67,406 | 41,461 | 42,504 | ||||||||||||
Restricted Stock Award(7) | - | 408,472 | 183,191 | 192,498 | ||||||||||||
Performance-based Stock Award(8) | - | 27,500 | 10,725 | 11,115 | ||||||||||||
Cash LTI Award(9) | 398,218 | 104,733 | 49,135 | 51,457 | ||||||||||||
Tax Indemnification Payment10) | - | - | - | - | ||||||||||||
Change in Control – No Termination of Employment | ||||||||||||||||
Restricted Stock Award(7) | - | 155,212 | 74,290 | 78,310 | ||||||||||||
Performance-based Stock Award(8) | - | 9,167 | 3,575 | 3,705 | ||||||||||||
Cash LTI Award(9) | 398,218 | 104,733 | 49,135 | 51,457 | ||||||||||||
Tax Indemnification Payment10) | - | - | - | - |
39
Kenneth J. Mahon | Stuart H. Lubow | Robert S. Volino | James L. Rizzo | Conrad J. Gunther | |||||||||||
Discharge without Cause or Resignation with Good Reason – Change in Control Related | |||||||||||||||
Severance Pay(3) | 4,450,023 | 2,119,932 | 1,972,237 | 351,544 | 1,054,871 | ||||||||||
Health and Welfare Benefits(4) | 61,502 | — | — | — | — | ||||||||||
Restricted Stock Award(5) | 453,706 | 221,453 | 180,345 | — | 128,895 | ||||||||||
Performance-based Stock Award(6) | 208,829 | 15,790 | 70,767 | — | 9,308 | ||||||||||
Tax Indemnification Payment(7) | 2,363,277 | — | — | — | — |
(1) |
(2) | The disability benefits provided under Mr. Mahon’s employment agreement is the |
(3) | In the event of a termination without cause or a resignation with good reason |
In the event of a termination without cause or a resignation with good reason, |
All outstanding restricted stock awards granted |
In |
In |
2018. The Tax Indemnification Payment is triggered only in the context of Mr. |
40
aggregated with other payments and benefits made or provided in connection with the change in control, result in an excess parachute payments. The calculation takes into account all possible excess parachute payments triggered under Mr. Mahon’s Employment Agreement, as well as other plans or arrangements, including the accelerated vesting of restricted stock awards and other payments triggered solely by the occurrence of a change in control. Mr. Mahon has the only remaining legacy employment agreement that contains a Tax Indemnification Payment.
Federal laws related to transactions involving the Company or Bank and any Director, executive officer or their immediate family. The Company's Board of Directors monitors adherence to these policies on an annual basis.
The Bank has in the past madepreviously extended loans or extended credit to Regulation O Officers and also tocertain executive officers as well as certain persons related to Regulation O Officersexecutive officers and Directors. All such loans were: (i) made by the Bank in the ordinary course of business; (ii) made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and (iii) did not involve more than the normal risk of repayment or present or present other unfavorable features. Pursuant to its current written policy, effective April 2018, the Bank is prohibited from advancingpermitted to make loans to NEOs and Directors for their owner occupied primary residences at interest rates 0.25% below that offered to the Bank’s customers. All other loan terms are substantially the same as offered to the Bank’s customers. As of December 31, 2018, the Bank had no loans or loan commitments outstanding to its Directors and NEOs or Directors. Astheir related persons.
Our Code of the Record Date, the Bank owned one loan that was made to an executive officer other than the NEOs. This loan fully complied with Regulation O and the Bank’s policy regarding such loans, and, since inception, has not exceeded $120,000.
Section 16(a) of the Exchange Act requires the Company's executive officers and Directors, and persons who own more than 10% of the Common Stock, to file with the SEC reports of ownership and changes in ownership of Common Stock. Executive officers, Directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms that they file. Based solely on review of the copies of such forms received by the Company, or written representations from certain reporting persons, the Company believes that its executive officers, Directors and greater than 10% beneficial owners complied with all applicable filing requirements.requirements, except for Kenneth Mahon, who filed one late Form 4 reporting two acquisitions totaling 750 shares on one day, and Rosemarie Chen, who filed one late Form 4 reporting one acquisition of 50 shares on one day, due to administrative oversight on their part.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
General
The Audit Committee of the Board of Directors has appointed the firm of Crowe Horwath LLP to act as the Company's independent auditors (principal accountant)registered public accounting firm for the year ending December 31, 2017.2019. The Company is seeking a vote to ratify the appointment of Crowe LLP as the Company’s independent registered public accounting firm for 2019. A representative of Crowe Horwath LLP is expected to be present at the Annual Meeting, will be provided an opportunity to make a statement if he or she so desires, and is expected to be available to respond to appropriate questions. No determination has been made as to any action the Audit Committee would take if the shareholders do not ratify the appointment.
Audit Fees
The following table summarizes the aggregate fees either paid or contractually owed by the Company to Crowe Horwath LLP:
Year Ended December 31, | ||||||
2018 | 2017 | |||||
Audit Fees (a) | $ | 583,289 | $ | 558,379 | ||
Audit-Related Fees (b) | 83,500 | 105,750 | ||||
Tax Fees (c) | 150,513 | 105,869 | ||||
All Other Fees (d) | 238,147 | 114,576 | ||||
Total | $ | 1,055,449 | $ | 884,573 |
Year Ended December 31, | |||||||
2016 | 2015 | ||||||
Audit Fees (a) | $ | 511,500 | $ | 505,100 | |||
Audit-Related Fees (b) | 90,000 | 87,000 | |||||
Tax Fees (c) | 81,000 | 81,000 | |||||
All Other Fees | - | - | |||||
Total | $ | 682,500 | $ | 673,100 |
(a) | Fees for audit services in |
(b) | Fees for audit-related services in |
(c) |
i. | Federal, state and local income tax return assistance |
ii. | Sales and use, property and other tax return assistance |
iii. | Research & Development tax credit documentation and analysis for purposes of filing amended returns |
iv. | Requests for technical advice from taxing authorities |
(d) | Comfort letters for subordinated debt issuance, consents, permitted advisory services and other services which may include SEC matters. |
Pre-Approval Policy
The services performed by the independent auditor in 20162018 were pre-approved in accordance with the Audit Committee's pre-approval policy. Pursuant to the policy, the Audit Committee must pre-approve all audit and permitted non-audit services to be provided by the independent auditor, including the fees and terms thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE | |
42
The Company is seeking a non-binding advisory vote on the compensation of the Named Executive Officers as disclosed in this Proxy Statement.
As discussed in the Compensation Discussion and Analysis, the Company's executive compensation program has been designed to attract, retain and motivate the highest quality executive officers, directly link pay to the Company's performance, and build value for its shareholders. The Company's executive compensation philosophy is, with the benefit of objective input from an independent consultant, to provide competitive target compensation opportunities with actual amounts earned commensurate with financial performance and the generation of long-term value to shareholders. The Company believes that the compensation data in this Proxy Statement demonstrates the success of this philosophy.
This proposal, commonly known as a "Say-on-Pay"“Say-on-Pay” proposal, gives the Company's shareholders the opportunity to express their views on the compensation provided to the Named Executive Officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers.
Accordingly, the Board invites you to review carefully the Compensation Discussion and Analysis, as well as the tabular and other disclosures on compensation under the section titled "Compensation“Compensation Program Components"Components” and approve the following resolution:
RESOLVED, that the compensation paid to the Company's Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED. |
Under applicable law, the Say-on-Pay vote is advisory, and therefore not binding on the Company or its Board of Directors. The shareholders’ advisory vote will not overrule any decision made by the Board or any of its Committeescommittees or create or imply any additional fiduciary duty by the Company's Directors. The Company's Board of Directors and Compensation and HR Committee value the opinions of shareholders and will consider the voting results, along with relevant factors, in connection with their ongoing executive compensation activities.
THE BOARD OF DIRECTORS RECOMMENDS AN ADVISORY VOTE | |
SHAREHOLDER COMMUNICATIONS WITH THE BOARD
The Company's Board of Directors provides a process for shareholders to send communications to the Board. The Company's Policy Regarding Shareholder Communication with the Board is available on its website at www.dime.com by selecting "Investor“Investor Relations,"” then in the "Investor Menu"“Investor Menu”, select the drop down arrow next to “Corporate“Corporate Overview” then select "Governance Documents"“Governance Documents”.
OTHER MATTERS
As of the date of this Proxy Statement, the Company's Board of Directors is not aware of any other matters to be brought before the shareholders at the Annual Meeting. If, however, any other matters not known are properly broughtrought before the meeting, the persons named in the accompanying proxy will vote the shares represented by all properly executed proxies on such matters in such manner as shall be determined by a majority of the Board of Directors.
43
In order to be considered for inclusion in the Company's Proxy Statement and form of proxy for the annual meeting to be held in 2018,2020, all shareholder proposals, including, but not limited to, nominations for Director, must be submitted to the Secretary of the Company at its offices at 300 Cadman Plaza West, 8th Floor, Brooklyn, New York 11201 on or before December 15, 2017.14, 2019. Under the Company's Bylaws, shareholder nominations for Director and shareholder proposals not included in the Company's 20172019 Proxy Statement, in order to be considered for possible action by the shareholders at the annual meeting to be held in 2018,2020, must be delivered to or received by the Secretary of the Company, at the address set forth above: (i) sixty days in advance of such meeting if such meeting is to be held on a day which is within thirty days preceding the anniversary of the previous year's annual meeting, or ninety days in advance of such meeting if such meeting is to be held on or after the anniversary of the previous year's annual meeting; and (ii) with respect to an annual meeting held at a time other than within the time periods set forth in the immediately preceding clause (i), the close of business on the tenth day following the date on which notice of such meeting is first given to shareholders. Notice shall be deemed to be first given to shareholders when disclosure of such date of the meeting of shareholders is first made in a press release reported to Dow Jones News Services, the Associated Press or a comparable national news service, or in a document publicly filed by the Company with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act. A shareholder's notice to the Secretary shall set forth such information as required by, and otherwise comply with, the Company's Bylaws. Nothing in this paragraph shall be deemed to require the Company to include in its proxy statement and proxy card relating to an annual meeting any shareholder proposal or nomination which does not satisfy all of the requirements for inclusion established by the SEC in effect at the time such proposal or nomination is received.
The Board of Directors will review any shareholder proposals that are filed as required and determine whether such proposals satisfy applicable criteria for consideration at the annual meeting to be held in 2018.
Multiple Shareholders Sharing One Address
Only one copy of the Proxy Statement and Annual Report are being delivered to multiple shareholders sharing an address unless the Company has received contrary instructions from one or more of the shareholders. The Company will deliver promptly upon written or oral request separate copies of the Proxy Statement and Annual Report to a shareholder at a shared address to which a single copy of the Proxy Statement and Annual Report were delivered. Shareholders may notify the Company that they desire to receive a separate copy of the current or a future Proxy Statement and Annual Report by writing Dime Community Bancshares, Inc., 300 Cadman Plaza West, 8th Floor, Brooklyn, NY 11201, Attn: Investor Relations,Secretary, or by telephoning the Investor Relations DepartmentCompany’s Secretary at (718) 782-6200, ext. 5260.782-6200. By using either of these methods, shareholders sharing an address may additionally request delivery of a single copy of a Proxy Statement and Annual Report if they are receiving multiple copies.
Annual Report
A copy of the Annual Report to shareholders for the period ended December 31, 2016,2018, including the consolidated financial statements prepared in conformity with U.S. GAAP for the year ended December 31, 2016,2018, accompanies this Proxy Statement. The consolidated financial statements for the year ended December 31, 20162018 have been audited by Crowe Horwath LLP, whose report appears in the Annual Report. Shareholders may obtain, free of charge, a copy of the Annual Report on Form 10-K filed with the SEC (without exhibits) by writing to Anthony J. Rose, Director of Investor Relations,Secretary, Dime Community Bancshares, Inc., 300 Cadman Plaza West, 8th Floor, Brooklyn, New York 11201, or by calling (718) 782-6200, extension 5260, or by accessing the Company's corporateInvestor Relations website www.dime.com.http://investors.dime.com/inforequest.
By Order of the Board of Directors
Patricia M. Schaubeck
Secretary
Brooklyn, New York
April 12, 2019
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE POSTAGE‑PAIDPOSTAGE-PAID ENVELOPE PROVIDED.
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Defined terms
U.S. GAAP
Tangible Equity - Common equity less goodwill.
(Amount in thousands except share amounts) | Tangible Book Value at December 31, 2018 | ||
Total common equity | $ | 602,081 | |
Less: | |||
Goodwill | 55,638 | ||
Tangible common equity | $ | 546,443 |
Performance Measures
Use of Non-U.S. GAAP Performance Measures
For purposes of certifying the Company’s performance under its compensation plans, the Compensation Committee typically makes adjustments to the Company’s U.S. GAAP results to ensure that the participants are compensated for the Company’s core performance. These adjustments neither penalize nor reward for one-time charges, unusual gains, or similar non-core events. These disclosures should not be viewed as a substitute for operating results determined in accordance with U.S. GAAP, nor are they necessarily comparable to non-U.S. GAAP performance measures that may be presented by other companies.
Cumulative Core EPS ‑
Cumulative for the Three Years Ended December 31, 2018 | |||
EPS | $ | 4.73 | |
Gain on the sale of real estate | (1.16 | ) | |
Gain on the sale of assets (including real estate) | (0.11 | ) | |
Prepayment fee income above financial forecasted levels | (0.01 | ) | |
Prepayment of ESOP Share Acquisition Loan | 0.31 | ||
Loss from extinguishment of debt | 0.02 | ||
De-conversion costs | 0.03 | ||
Tax adjustments | 0.06 | ||
Core EPS | $ | 3.87 |
Cumulative for The Three Years Ended December 31, 2016 | ||||
EPS | $ | 4.44 | ||
Curtailment of postretirement plan benefits | (0.05 | ) | ||
Prepayment fee income above financial forecasted levels | (0.32 | ) | ||
Gain on the sale of equity mutual funds and real estate | (0.04 | ) | ||
Gain on the sale of real estate | (1.02 | ) | ||
Prepayment of ESOP Share Acquisition Loan | 0.31 | |||
Prepayment expense on borrowings | 0.02 | |||
Core EPS | $ | 3.34 |
Cumulative Return on Average Equity -A non-U.S. GAAP measure derived by adjusting reported net income by the after-tax effect for any significant unusual or non-recurring items, either favorable or unfavorable. A reconciliation of U.S. GAAP Net Income and Core Net Income for the Company for the year ended December 31, 2016 is presented as follows:
Year Ended December 31, 2016 | ||||
(Dollars in thousands) | ||||
Net Income | $ | 72,514 | ||
Gain on the sale of real estate | (37,483 | ) | ||
Prepayment of ESOP Share Acquisition Loan | 11,319 | |||
Core Net Income | $ | 46,350 |
(Amount in thousands) | Cumulative for the Three Years Ended December 31, 2018 | ||
Net Income | $ | 175,684 | |
Gain on the sale of real estate | (43,204 | ) | |
Prepayment of ESOP Share Acquisition Loan | 11,319 | ||
Tax adjustments | (1,458 | ) | |
Adjusted net Income | $ | 142,338 |
Total Shareholder Return ‑
A-1
|