UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.)
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OceanFirst Financial Corp.
(Name of Registrant as Specified In Its Charter)
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OceanFirst Financial Corp. | ||||
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OCEANFIRST FINANCIAL CORP.
975 HOOPER AVENUE
TOMS RIVER, NEW JERSEY 08754-2009
(732) 240-4500
April 3, 2009March 30, 2012
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of OceanFirst Financial Corp. (the “Company”“Company”), the holding company offor OceanFirst Bank. The Annual Meeting will be held on Thursday, May 7, 2009,10, 2012, at 10:00 a.m., Eastern time, at the Crystal Point Yacht Club, 3900 River Road, at the intersection of State Highway 70, Point Pleasant, New Jersey, 08742.
The Notice of Annual Meeting and the proxy statement appearing on the following pages describe the formal business to be transacted at the Annual Meeting. DirectorsThe Company’s directors and officers, of the Company, as well as a representative of KPMG LLP, the Company’s independent registered public accounting firm, will be present at the Annual Meeting to respond to appropriate questions of the Company’s stockholders.questions.
It is important that your shares are represented this year whether or not you are personally able to attend the meeting. Your cooperation is appreciated since a majority of the common stock must be represented, either in person or by proxy, to constitute a quorum for the conduct of business. You may still vote your shares by proxy by signing and returning the enclosed proxy card promptly.
On behalf of the Board of Directors and all of the employees of the Company and OceanFirst Bank, we thank you for your continued interest and support.
Sincerely yours, |
John R. Garbarino |
Chairman |
OCEANFIRST FINANCIAL CORP.
975 HOOPER AVENUE
TOMS RIVER, NEW JERSEY 08754-2009
NOTICE OF 20092012 ANNUAL MEETING OF STOCKHOLDERS
TIME AND DATE | 10:00 a.m. on Thursday, May | |||
PLACE | The Crystal Point Yacht Club, 3900 River Road, at the intersection of State Highway 70, Point Pleasant, New Jersey. | |||
ITEMS OF BUSINESS | (1) | The election of three directors of the Company; | ||
(2) | An advisory vote on executive compensation as disclosed in these materials; | |||
(3) | The ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, | |||
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(4) | Such other matters as may properly come before the Annual Meeting or any adjournments thereof. The Board of Directors is not aware of any other business to come before the annual meeting. | |||
RECORD DATE | In order to vote, you must have been a stockholder at the close of business on March | |||
PROXY VOTING | It is important that your shares be represented and voted at the meeting. You can vote your shares by completing and returning the enclosed proxy card or voting instruction | |||
Corporate Secretary |
NOTE: Whether or not you plan to attend the Annual Meeting, please vote by marking, signing, dating and promptly returning the enclosed proxy card in the enclosed envelope.
OCEANFIRST FINANCIAL CORP.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 200910, 2012
This proxy statement is being furnished to stockholders of OceanFirst Financial Corp. (the “Company”“Company”), the holding company of OceanFirst Bank (the “Bank”“Bank”), in connection with the solicitation by the Board of Directors of proxies to be used at the Annual Meeting of Stockholders to be held on Thursday, May 7, 200910, 2012, at 10:00 a.m. Eastern time, at the Crystal Point Yacht Club, 3900 River Road, at the intersection of State Highway 70, Point Pleasant, New Jersey, 08742 and at any adjournment or postponement of the Annual Meeting. The Annual Report of Stockholders, including the consolidated financial statements of the Company and its subsidiaries for the fiscal year ended December 31, 2008,2011, accompanies this proxy statement. This proxy statement which is first being mailed to record holders on or about April 3, 2009.March 30, 2012.
Voting and Proxy ProcedureVOTING AND PROXY PROCEDURE
Who Can Vote at the Annual Meeting
You are entitled to vote your shares of the Company’s common stock only if the records of the Company show that you held your shares as of the close of business on March 10, 2009.15, 2012. As of the close of business on that date, a total of 12,364,57318,588,581 shares of OceanFirst Financial Corp.the Company’s common stock were outstanding and entitled to vote. Each share of common stock has one vote. As provided in Article Fourth of the Company’s Certificate of Incorporation, record holders of common stock who beneficially own in excess of 10% of the outstanding shares of common stock are not entitled to any vote in respect of the shares held in excess of this limit. A person or entity is deemed to beneficially own shares owned by an affiliate of, as well as by persons acting in concert with, such person or entity. The Company’s Certificate of Incorporation authorizes the Board of Directors (i) to make all determinations necessary to implement and apply the limit, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own stock in excess of the limit supply information to the Company to enable the Board of Directors to implement and apply the limit.
Attending the Annual Meeting
If you are a beneficial owner of OceanFirst Financial Corp.the Company’s common stock held by a broker, bank or other nominee (i.e., in “street name”), you will need proof of ownership to be admitted to the Annual Meeting. A recent brokerage statement or letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of OceanFirst Financial Corp. common stock held in street name in person at the meeting, you must obtain a written proxy in your name from the broker, bank or other nominee who is the record holder of your shares.
Quorum and Vote requiredRequired
The Annual Meeting will be held only if there is a quorum. A majority of the outstanding shares of common stockshares entitled to vote and represented at the Annual Meeting constitutes a quorum. If you return valid proxy instructions or attend the meeting in person, your shares will be counted for purposes of determining whether there is a quorum, even if you abstain from voting. Broker non-votes also will be counted for purposes of determining the existence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not receivedreceive voting instructions from the beneficial owner.owner and casts an “uninstructed” vote.
In voting on Proposal 1, the election of directors, you may vote in favor of all nominees, withhold votes as to all nominees or withhold votes as to specific nominees. There is no cumulative voting for the election of directors. Directors must beare elected by a plurality of the votes cast at the Annual Meeting. This means that the nominees receiving the greatest number of votes will be elected. Broker non-votes may not be counted as votes cast in the election of directors. Votes that are withheld and broker non-votes will have no effect on the outcome of the election.
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In voting to ratifyon Proposal 2, the advisory vote on executive compensation, and Proposal 3, ratification of the appointment of KPMG LLP as the independent registered public accounting firm, you may vote in favor of the proposal,each of those proposals, against the proposaleach of those proposals or abstain from voting. To be approved, this matter requiresthese matters require the affirmative vote of a majority of the votes cast at the Annual Meeting. Broker non-votes and abstentions will not be counted as votes cast and will have no effect on the voting.
In voting, forwhile abstentions will have the advisory proposal regarding the compensation of the Senior Executive Officers, you maysame effect as a vote in favor of the proposal, against the proposal or abstain from voting. To be approved, this matter requires the affirmative vote of a majority of the votes cast at the Annual Meeting. Broker non-votes and abstentions will not be counted as votes cast and will have no effect on the voting.proposals.
Voting by Proxy; Revocation of ProxyProxy; Board Recommendations
This proxy statement is being sent to you by the Company’s Board of Directors of the Company for the purpose of requesting that you allow your shares of Company common stock to be represented at the Annual Meeting by the persons named in the enclosed proxy card. All shares of Company common stock represented at the Annual Meeting by properly executed and dated proxies will be voted in accordance with the instructions indicated on the proxy card. If you sign, date and return a proxy card without giving voting instructions, your shares will be voted as recommended by the Company’s Board of Directors.The Board of Directors recommends a vote “FOR”the following votes:
“FOR” each of the nominees for director, “FOR”director;
“FOR” the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in these materials; and
“FOR” ratification of KPMG LLP as the Company’s independent registered public accounting firm and “FOR” the advisory proposal regarding the compensation of the Senior Executive Officers.firm.
If any matters not described in this proxy statement are properly presented at the Annual Meeting, the persons named in the proxy card will use their own judgment to determine how to vote your shares. This includes a motion to adjourn or postpone the Annual Meeting in order to
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solicit additional proxies. If the Annual Meeting is adjourned or postponed, your Company common stock may be voted by the persons named in the proxy card on the new meeting dates as well, unless you have revoked your proxy. The Company does not know of any other matters to be presented at the Annual Meeting.
You may revoke your proxy at any time before the vote is taken at the Annual Meeting. To revoke your proxy you must either advise the Corporate Secretary of the Company in writing before your common stock has been voted at the Annual Meeting, deliver a later dated and signed proxy card, or attend the Annual Meeting and vote your shares in person. Attendance at the Annual Meeting will not in itself constitute revocation of your proxy.
If your Company common stock is held in “street name,” you will receive instructions from your broker, bank or other nominee that you must follow in order to have your shares voted. Your broker, bank or other nominee may allow you to deliver your voting instructions via the telephone or the Internet. Please see the instruction form provided by your broker, bank or other nominee, that accompanies this proxy statement.
Participants in OceanFirst Financial Corp.’s and OceanFirst Bank’s Benefit Plans
If you participateParticipants in the OceanFirst Bank Employee Stock Ownership Plan or the OceanFirst Bank Matching Contribution Employee Stock Ownership Plan (collectively the “ESOP”“ESOP”), or the OceanFirst Bank Retirement Plan, (the “401(k) Plan”“401(k) Plan”), you will receive a voting instruction form for each plan that reflects all shares youthey may vote under the particular plan. Under the terms of the ESOP, the trustee votes all shares held by the ESOP, but each ESOP participant in the ESOP may direct the trustee how to vote the shares of the Company common stock allocated to his or her account. The ESOP trustee, subject to the exercise of its fiduciary duties, will vote all unallocated shares of Company common stock held by the ESOP and allocated shares of Company common stock for which no voting instructions are received in the same proportion as shares for which it has received timely voting instructions. Under the terms of the 401(k) Plan, a participant is entitled to direct the trustee how to vote the shares of Company common stock in the plan credited to his or her account. The trustee will vote all shares for which no directions are given or for which timely instructions were not received in the same proportion as shares for which such trustee received timely voting instructions. The deadline for returning your voting instructions to each plan’s trustee is May 5, 2009.4, 2012.
If you have any questions about voting, please contact the Company’s proxy solicitor, Georgeson Inc.IF YOU HAVE ANY QUESTIONS ABOUT VOTING, PLEASE CONTACT THE COMPANY’S PROXY SOLICITOR, GEORGESON INC., by calling toll free at 866-206-4955.BY CALLING TOLL FREE AT (866) 821-2614.
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CORPORATE GOVERNANCE
General
The Company periodically reviews its corporate governance policies and procedures to ensure that the Company meets the highest standards of ethical conduct, reports results with accuracy and transparency, and maintains full compliance with the laws, rules and regulations that govern the Company’s operations. As part of this periodic corporate governance review, the Board of Directors reviews and adopts best corporate governance policies and practices for the Company.
Corporate Governance Policies and Procedures
The Company has adopted a corporate governance policyCorporate Governance Policy to govern certain activities, including:
(1) | the duties and responsibilities of the Board of Directors and each director; |
(2) | the composition and operation of the Board of Directors; |
(3) | the establishment and operation of Board committees; |
(4) | convening executive sessions of independent directors; |
(5) | succession planning; |
(6) | the Board of Directors’ interaction with management; and |
(7) | the evaluation of the performance of the Board of Directors, its committees and of the Chief Executive Officer. |
In accordance with the Corporate Governance Policy, at least a majority of the directors on the Board must be “independent directors” as defined in the listing requirements of the Nasdaq Stock Market.
Board Leadership Structure. The Board is led by the Chairman of the Board, John R. Garbarino. Mr. Garbarino also serves as the Chief Executive Officer of the Company. The Board believes that, because of Mr. Garbarino’s leadership and experience, having combined roles of Chairman and CEO provides an efficient and effective leadership model for the Company by fostering clear accountability, effective decision-making, and alignment on corporate strategy. In 2010, the Company separated the position of President from Chief Executive Officer in part to provide Mr. Garbarino with a greater ability to focus on Board leadership and management oversight. To assure effective independent oversight, the Board has adopted a number of governance practices, including:
• | the establishment of an independent lead director (the “Lead Director”); |
executive sessions of the independent directors at least twice per year to discuss, among other matters, the performance of the CEO, management succession planning and such other matters as the independent directors deem appropriate;
the opportunity at each regularly scheduled Board meeting to enter into executive session if desired by the independent directors;
the independence of seven of eight of the Board members;
• | stock ownership guidelines for directors and those executive officers named in the Summary Compensation Table below (the “NEOs”); |
annual performance evaluation of the Chairman and CEO by the independent directors; and
the Company’s Board Committees are comprised entirely of independent members.
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The Company’s Corporate Governance Policy provides that the Chairman of the Corporate Governance/Nominating Committee, currently Mr. John E. Walsh, shall also serve as the Lead Director. The Corporate Governance Policy provides that the duties of the Lead Director include assisting the Board in assuring compliance with and implementation of the Company’s Corporate Governance Policy, coordinating the agenda for and moderating sessions of the Board’s independent directors, and acting as principal liaison on certain issues between the independent and inside directors, including the Chairman of the Board, as applicable.
While the Board believes that the current leadership structure is best suited for the Company, it recognizes that other leadership models in the future might be appropriate, depending on the circumstances. Accordingly, the Board periodically reviews its leadership structure.
Stock Ownership Guidelines.Effective February 21, 2007, upon the recommendation of the Corporate Governance/Nominating Committee, the Board adopted the stock ownership guidelines (“Guidelines”(the “Guidelines”) for non-employee directors and those executive officers named in the proxy statement (“proxy officers”).NEOs. The Guidelines were adopted to better align the interests of the non-employee directors and those executive officers named in the proxy statementNEOs with those of the Company’s stockholders. The Guidelines provide that each non-employee director must own shares of the Company’s common stock equal inwith a market value toof at least three times the value of the combined annual director retainers received from the Company and the Bank. Current directors are expected to attain the minimum ownership within three years of adoption of the Guidelines. Newly elected directors must meet the Guidelines within three years of first being elected and qualified. For purposes of the Guidelines, the following shares count towards meeting the ownership requirements: 1)(1) shares beneficially owned by the director and by immediate family members sharing the same household; 2)(2) vested and unvested restricted stock awards; 3)(3) shares acquired upon the exercise of stock options; and 4)(4) shares held in trust where the director or an immediate family member is the beneficiary. Until the Guidelines are met, all retainers will be paid in Company stock, and a director must retain the net shares delivered upon the vesting of restricted share awards or the exercise of stock options. Once achieved, the ownership guidelines must continue to be met during the period the director serves on the Board.
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Similarly, the Guidelines require the Chief Executive Officer to own Company stock with a market value equal toof at least five times his annual base salary. The other proxy officersNEOs must own Company stock with a market value equal toof at least three times their annual base salary. Each officer must meet the share ownership requirements within the later of five years.years of the Guidelines’ adoption or the officer having become an NEO. Shares that count towards the Guidelines’ requirement include those shares listed under the directors share ownership requirements with the addition of shares held in the officer’s ESOP and 401(k) account and the value of vested and unvested stock options, where such value is calculated as the cumulative expense recognized by the Company on its financial statements.
Board Role in the Oversight of Risk
Under the Company’s Corporate Governance Policy, the business and affairs of the Company are managed by the officers under the direction of the Board. The Board is charged with providing oversight of the Company’s risk management processes. The Audit Committee is primarily responsible for overseeing the risk management function at the Company on behalf of the Board. In carrying out its responsibilities, the Audit Committee works closely with the Company’s Chief Risk Officer and other officers of the Company involved in risk management. The Audit Committee meets at least quarterly with executive management, the Chief Risk Officer, the internal auditor and the independent registered public accounting firm and receives a comprehensive report on risk management, including management’s assessment of risk exposures (including risks related to liquidity, credit, operations and regulatory compliance, among others), and the processes in place to monitor and control such exposures. The Audit Committee also receives updates between meetings, as may be necessary, from the Chief Risk Officer, the Chief Executive Officer, the President, the Chief Financial Officer and other members of management relating to risk oversight matters. The Audit Committee provides a report to the full Board on at least a quarterly basis. In addition, each quarter, the Audit Committee will discuss with management and the independent registered public accountant their review of the Company’s financial statements and significant findings based upon the independent registered public accounting firm’s review. The Company’s Chief Risk Officer performs a risk-based assessment of each of the Bank’s products, services, operations and regulatory requirements to determine the overall risk to the Bank. The Chief Risk Officer’s compliance report, including the latest risk-based assessment, is provided annually to the Board. In addition, the Human Resources/Compensation Committee (the “Compensation Committee”) reviews with the Chief Risk Officer the Company’s compensation plans for all employees, including the CEO and other NEOs, to ensure that these plans do not encourage taking unnecessary and excessive risks that would threaten the value of the Company.
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Code of Ethics and Standards of Personal Conduct
The Company and Bank have adopted a Code of Ethics and Standards of Personal Conduct that is designed to ensure that all directors, executive officers and employees of the Company and Bank, meet the highest standards of ethical conduct. The Code of Ethics and Standards of Personal Conduct requires that all directors, executive officers and employees avoid conflicts of interest, protect confidential information and customer privacy, comply with all laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in the Company’s best interest. Under the terms of the Code of Ethics and Standards of Personal Conduct, all directors, executive officers and employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code.
As a mechanism to encourage compliance with the Code of Ethics and Standards of Personal Conduct, the Company and Bank established procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters. These procedures ensure that individuals may submit concerns regarding questionable accounting or auditing matters in a confidential and anonymous manner. The Code of Ethics and Standards of Personal Conduct also prohibits the Company from retaliating against any director, executive officer or employee who reports actual or apparent violations of the Code.
Meetings of the Board of Directors
The Board of Directors of the Company and the Bank conduct business through meetings and the activities of the Boards and their committees. Board members are encouraged to attend all Board and Committee meetings. Their attendance and performance are among the criteria considered for re-nomination to the Board of Directors. During the fiscal year ended December 31, 2008,2011, the Company’s Board of Directors held 911 meetings. TheAll of the Directors of the Company attended allat least 75% of the Board meetings and the committee meetings held on which such Directors served during the fiscal year ended December 31, 2008.2011. The Board of Directors of the Company maintains an Audit Committee, a Human Resources/Compensation Committee and a Corporate Governance/Nominating Committee.
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Committees of the Board of Directors
The following table identifies the standing committees and their members as of December 31, 2008.2011.
Director | Audit Committee | Corporate Governance/ Nominating Committee | Human Resources/ Compensation Committee | ||||||
Joseph J. Burke | X | * | X | ||||||
Angelo Catania | X | ||||||||
John W. Chadwick | |||||||||
Carl Feltz, Jr. | X | X | |||||||
Donald E. McLaughlin | X | ||||||||
Diane F. Rhine | X | * | |||||||
John E. Walsh | X | * | X | ||||||
Number of Meetings in 2008 | 5 | 3 | 4 |
Director | Audit Committee | Corporate Governance/ Nominating Committee | Human Resources/ Compensation Committee | |||||||||
Joseph J. Burke | X | * | X | |||||||||
Angelo Catania | X | X | ||||||||||
John W. Chadwick | X | |||||||||||
Donald E. McLaughlin | X | |||||||||||
Diane F. Rhine | X | * | ||||||||||
Mark G. Solow | ||||||||||||
John E. Walsh | X | * | X | |||||||||
Number of Meetings in 2011 | — | — | — |
* | Chairperson |
Audit Committee. The Board of Directors has a separately-designated standing Audit Committee for the Company and Bank established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended.amended (the “Exchange Act”). The Audit Committee acts under a written Charter adopted by the Board of Directors. The Charter is available on the Company’s website (www.oceanfirst.com). Each member of the Audit Committee is “independent” in accordance with the listing standards of the Nasdaq Stock Market (“Nasdaq”Nasdaq”). The Audit Committee meets periodically with the independent registered public accounting firm and management to review accounting, auditing, internal control structure and financial reporting matters. The Board has determined
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that Joseph J. Burke, the Audit Committee Chairman, Angelo Catania and Donald E. McLaughlin are “audit committee financial experts” under the Rules of the Securities and Exchange Commission.Commission (the “Commission”). The report of the Audit Committee required by the Rules of the Securities and Exchange Commission is included in this proxy statement. See“Proposal 2-Ratification3 – Ratification of Independent Registered Public Accounting Firm -– Report of Audit Committee.”
Corporate Governance/Nominating Committee. The Corporate Governance/Nominating Committee of the Company takes a leadership role in shaping governance policies and practices, including recommending to the Board of Directors the corporate governance guidelines applicable to the Company and monitoring compliance with these policies and guidelines. In addition, the Corporate Governance/Nominating Committee is responsible for identifying individuals qualified to become Board members and recommending to the Board the director nominees for election at the next annual meeting of stockholders. The Committee also recommends to the Board director candidates for each committee for appointment by the Board. Each member of the Corporate Governance/Nominating Committee is independent in accordance with theNasdaq listing standards of the Nasdaq.standards. The chairman of the Corporate Governance/Nominating Committee functions as lead independent director.Lead Director.
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The Corporate Governance/Nominating Committee acts under a written Charter and the Corporate Governance Policy adopted by the Board of Directors. The Charter and the Policy areis available on the Company’s website (www.oceanfirst.com). The procedures of the Corporate Governance/Nominating Committee required to be disclosed by the Commission rules of the Securities and Exchange Commission are included in this proxy statement. See“Corporate Governance/Nominating Committee Procedures.”
Human Resources/Compensation Committee. The Human Resources/Compensation Committee of the Company and the Bank (the “Compensation Committee”) meets to establish compensation for the executive officers and to review the incentive compensation program when necessary. The Compensation Committee acts under a written Charter adopted by the Board of Directors. The CharterDirectors, which is available on the Company’s website (www.oceanfirst.com). The Compensation Committee reviews and reassesses the adequacy of its Charter on an annual basis.
The Compensation Committee is also responsible for establishing certain guidelines and limits for compensation and benefit programs for other salaried officers and employees of the Company and the Bank. Each member of the Compensation Committee is independent in accordance with the Nasdaq listing standards of the Nasdaq.standards. The report of the Compensation Committee required by the Rules of the Securities and Exchange Commission rules is included in this proxy statement. See ““Executive Compensation—Compensation – Compensation Committee Report on Executive Compensation.”
STOCK OWNERSHIP
The following table provides information as of March 10, 200915, 2012 with respect to the persons known by the Company to be the beneficial owners of more than 5% of its outstanding stock. A person is considered to beneficially own any shares of common stock over which he or she has, directly or indirectly, sole or shared voting or investment power.
Name and Address Of Beneficial Owner | Number of Shares Owned | Percent of Common Stock Outstanding | ||||
OceanFirst Bank, Employee Stock Ownership Plan (“ESOP”) and Matching Contribution ESOP 975 Hooper Avenue Toms River, New Jersey 08754-2009 | 1,941,012 | (1) | 15.70 | % | ||
OceanFirst Foundation 1415 Hooper Avenue – Suite 304 Toms River, New Jersey 08753 | 1,419,593 | (2) | 11.48 | % | ||
John R. Garbarino 975 Hooper Avenue Toms River, New Jersey 08754-2009 | 863,627 | (3) | 6.78 | % |
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Name and Address Of Beneficial Owner | Number of Shares Owned | Percent of Common Stock Outstanding | ||||||
OceanFirst Bank, Employee Stock Ownership Plan (“ESOP”) and Matching Contribution ESOP 975 Hooper Avenue Toms River, New Jersey 08754-2009 | 1,899,645 | (1) | 10.22 | % | ||||
OceanFirst Foundation 1415 Hooper Avenue – Suite 304 Toms River, New Jersey 08753 | 1,308,593 | (2) | 7.04 | % | ||||
Wellington Management Company, LLP 280 Congress Street Boston, Massachusetts 02210 | 1,258,162 | (3) | 6.77 | % | ||||
Prudential Financial, Inc. 751 Broad Street Newark, New Jersey 07102-3777 | 1,053,451 | (4) | 5.67 | % | ||||
BlackRock Inc. 40 East 52nd Street New York, New York 10022 | 1,047,357 | (5) | 5.63 | % |
(1) | Under the terms of the ESOP and the Matching Contribution ESOP, the Trustee will vote all allocated shares held in the ESOP and the Matching Contribution ESOP in accordance with the instructions of the participants. As of March |
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respectively, and |
(2) | All shares of Common Stock held by the Foundation must be voted in the same ratio as all other shares of the Company’s Common Stock on all proposals considered by stockholders of the Company. |
(3) |
(4) | Based on SEC Form 13G Amendment No. 1 filed by Prudential Financial, Inc. (“Prudential”) on February 14, 2012. Prudential is the indirect owner of 100% of the equity interests of Jennison Associates LLC (“Jennison”), which filed a separate SEC Form 13G Amendment No. 1 on February 10, 2012 for 1,020,051 shares. Prudential’s and Jennison’s filings state that Prudential may be deemed to be the beneficial owner of shares reported by Jennison. |
(5) | Based on SEC Form 13G Amendment No. 1 filed by BlackRock Inc. on February 13, 2012. |
The following table provides information as of March 10, 2009,15, 2012, about the shares of the Company common stock that may be considered to be beneficially owned by each director, nominee for director and the Senior Executive Officerssenior executive officers listed in the table under “Executive Compensation -– Summary Compensation Table,” and by all such directors and executive officers of the Company as a group. A person may be considered to beneficially own any shares of common stock over which he or she has, directly or indirectly, sole or shared voting or investment power. Unless otherwise indicated, each of the named individuals has sole voting power and sole investment power with respect to the shares shown.
Name | Number of Shares Owned (excluding options)(1) | Number of Shares That May Be Acquired Within 60 Days by Exercising Options | Total Number of Shares Beneficially Owned | Percent of Common Stock Outstanding (2) | |||||
Directors | |||||||||
Joseph J. Burke (9) | 9,773 | 3,173 | 12,946 | .10 | % | ||||
Angelo Catania (9) | 6,442 | 3,173 | 9,615 | .08 | % | ||||
John W. Chadwick (8)(9) | 10,466 | 22,173 | 32,639 | .26 | % | ||||
Carl Feltz, Jr. (9) | 95,422 | 22,173 | 117,595 | .95 | % | ||||
John R. Garbarino (3)(4)(10) | 481,533 | 382,094 | 863,627 | 6.78 | % | ||||
Donald E. McLaughlin (5)(9) | 64,502 | 22,173 | 86,675 | .70 | % | ||||
Diane F. Rhine (6)(9) | 46,607 | 22,173 | 68,780 | .56 | % | ||||
John E. Walsh (9) | 16,589 | 62,433 | 79,022 | .64 | % | ||||
Senior Executive Officers who are not also Directors | |||||||||
Michael J. Fitzpatrick (3)(11) | 143,629 | 141,137 | 284,766 | 2.28 | % | ||||
Vito R. Nardelli (3)(11) | 14,337 | 61,999 | 76,336 | .61 | % | ||||
John K. Kelly (3)(7)(12) | 106,361 | 46,544 | 152,905 | 1.23 | % | ||||
Joseph J. Lebel, III (3)(13) | 3,243 | 9,218 | 12,461 | .10 | % | ||||
All directors and senior executive officers as a group (12 persons) | 998,904 | 798,463 | 1,797,367 | 13.65 | % |
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Name | Number of Shares Owned (excluding options)(1) | Number of Shares That May Be Acquired Within 60 Days by Exercising Options | Total Number of Shares Beneficially Owned | Percent of Common Stock Outstanding (2) | ||||||||||||
Directors | ||||||||||||||||
Joseph J. Burke (3) | 12,855 | 10,582 | 23,437 | 0.13 | % | |||||||||||
Angelo Catania (3) | 14,464 | 10,582 | 25,046 | 0.13 | % | |||||||||||
John W. Chadwick (3)(4) | 12,548 | 20,582 | 33,130 | 0.18 | % | |||||||||||
John R. Garbarino (5)(6)(7) | 549,464 | 415,738 | 965,202 | 5.08 | % | |||||||||||
Donald E. McLaughlin (3)(8) | 43,764 | 20,582 | 64,346 | 0.35 | % | |||||||||||
Diane F. Rhine (3)(9) | 44,644 | 20,582 | 65,226 | 0.35 | % | |||||||||||
Mark G. Solow (3) | 11,681 | — | 11,681 | 0.06 | % | |||||||||||
John E. Walsh (3) | 19,420 | 20,582 | 40,002 | 0.21 | % | |||||||||||
Named Executive Officers who are not also Directors | ||||||||||||||||
Vito R. Nardelli (5)(10) | 52,215 | 117,564 | 169,779 | 0.91 | % | |||||||||||
Michael J. Fitzpatrick (5)(11) | 172,884 | 150,952 | 323,836 | 1.73 | % | |||||||||||
Joseph J. Lebel, III (5)(12) | 17,285 | 26,165 | 43,450 | 0.23 | % | |||||||||||
Joseph R. Iantosca (5)(13) | 21,470 | 45,086 | 66,556 | 0.36 | % | |||||||||||
All directors and named executive officers as a group (12 persons) | 972,694 | 858,997 | 1,831,691 | 9.42 | % |
(1) | Each person effectively exercises sole (or shared with spouse or other immediate family members) voting power as to shares reported as of the Record Date. |
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(2) | Percentages with respect to each person or group of persons have been calculated on the basis of |
(3) | Includes |
(4) | Includes 2,400 shares held by Mr. Chadwick as Trustee. |
(5) | Includes 64,041, 10,090, 66,476, 4,406 and 8,290 shares held in trust pursuant to the ESOP and |
Includes 14,445 shares owned by Mr. Garbarino’s wife and 11,788 shares held by Mr. Garbarino and his wife as co-Trustees. |
Includes |
(8) | Includes 5,123 shares owned by Mr. McLaughlin’s wife. |
Includes 700 shares for which Ms. Rhine acts as custodian. |
Includes |
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(11) | Includes 5,053 unvested shares. Mr. Fitzpatrick was awarded |
(12) | Includes 1,700 unvested shares. Mr. Lebel was awarded 335 |
(13) | Includes 1,842 unvested shares. Mr. Iantosca was awarded 335 restricted shares in February 2008, 355 |
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PROPOSALS TO BE VOTED ON AT THE MEETING
ProposalPROPOSAL 1. Election of DirectorsELECTION OF DIRECTORS
The Company’s Board of Directors currently consists of eight directors. All of the directors are independent under the current Nasdaq listing standards, of Nasdaq, except for John R. Garbarino, Chairman President and Chief Executive Officer of the Company and the Bank. The Board is divided into three classes with three-year staggered terms, with approximately one-third of the directors elected each year. Each of the members of the Board also serves as a director of the Bank. The Board of Directors’ nominees for election this year, to serve for a three year term orand until their respective successors have been elected and qualified are Ms. Diane F. Rhine and Messrs. John W. Chadwick and Carl Feltz, Jr. and Ms. Diane F. Rhine allMark G. Solow, each of whom areis currently directorsa director of the Company and the Bank. The experience and qualifications of each director are set forth under “Nominees for Election of Director.”
It is intended that the proxies solicited by the Board of Directors will be voted for the election of the nominees named above. If any nominee is unable to serve, the persons named in the proxy card will vote your shares and approve the election of any substitute proposed by the Board of Directors. Alternatively, the Board of Directors may adopt a resolution to reduce the size of the Board. At this time, the Board of Directors knows of no reason why any nominee might be unable to serve.
The Board of Directors recommends a vote “FOR” the election of Ms. Diane F. Rhine and Messrs. John W. Chadwick and Carl Feltz, Jr. and Ms. Diane F. Rhine.Mark G. Solow.
Information With Respect to Nominees, Continuing Directors and Certain Executive Officers
Information regarding the Board of Directors’ nominees for election at the Annual Meeting, as well as information regarding the continuing directors and the senior executive officers listed in the table under “Executive“Executive Compensation -– Summary Compensation Table”Table” who are not directors (also referred to herein as “Senior Executive Officers”), is provided below. Unless otherwise stated, each individual has held his or her current occupationposition for the last five years. The age indicated for each individual is as of December 31, 2008.2011. The indicated period of service as a director includes service as a director of OceanFirst Bank.
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Nominees for Election of Director
The biographies of each of the nominees and continuing directors below contains information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Corporate Governance/Nominating Committee and the Board to determine that the person should serve as a director for the Company. The Board of Directors has determined that the Board as a whole must have the right diversity and mix of characteristics and skills for the optimal functioning of the Board in its oversight of the Company. The Company considers the following requirements for each of its members of the Board:
1)Personal characteristics: Integrity and accountability; informed judgment; financial literacy; mature confidence; and high performance standards.
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2)Core competencies: Accounting and finance; business judgment; management; crisis response; industry knowledge; regional markets; leadership; and strategy/vision.
3)Director commitment: Time and effort; awareness and ongoing education; board attendance; other board commitments; stock ownership; changes in professional responsibilities; and length of service.
4)Team and company considerations: Balancing director contributions; diversity of skills; and Company financial condition.
The following directors have been nominated by the Corporate Governance/Nominating Committee for election to the Board with terms to expire in 2015:
John W. Chadwick retired as the General Manager of Point Bay Fuel, a petroleum products distributor in late 2006. In his capacity as General Manager, Mr. Chadwick was responsible for the oversight of all aspects of the company’s operation, including its sixty-nine full-time employees which serviced approximately 15,000 accounts. Mr. Chadwick was responsible for all environmental issues, permits, advertising, insurance issues, public relations, consumer credit situations, contracting and buying of petroleum products and personnel decisions. Mr. Chadwick’s experience brings to the Board significant expertise in management, consumer affairs and leadership. Point Bay Fuel is not an affiliate of the Company. Mr. Chadwick has been a member of the Board of Directors since 2002. He is 67 years of age.
Carl Feltz, Jr. is a registered architect and is a principal in the firm of Feltz & Frizzell Architects, LLC. Feltz & Frizzell Architects, LLC is not an affiliate of the Company. Mr. Feltz has been a member of the Board of Directors since 1990. He is 70 years of age.
Diane F. Rhine ishas owned and operated her own real estate company since 1979. From October 2000 through November 2009, Ms. Rhine was a partner in Citta Rhine LLC, aLLC. As of November 16, 2009, Ms. Rhine is President and sole owner of Citta & Cobb Inc. DBA as Rhine & Associates Inc. Ms. Rhine’s more than 30 years’ experience in residential real estate company. Cittabrokerage in Ocean County, New Jersey, brings to the Board management expertise and an extensive knowledge of the local real estate markets in which the Company conducts its business. Rhine LLC& Associates Inc. is not an affiliate of the Company. Ms. Rhine has served on the Board of Directors since 1997. She is 5962 years of age.
Mark G. Solow is a senior advisor to Crystal Ridge Partners, LLC and York Street Capital, firms which make equity investments in public and private companies. Mr. Solow served on the board of directors of Central Jersey Bank, N.A. and its holding company from their inceptions through 2010. Prior to his retirement in 2005, Mr. Solow was a co-founder and a Managing Partner of GarMark Advisors, LLC, the manager of private investment funds that invest in middle market companies. Prior to the formation of GarMark Advisors, LLC in 1997, Mr. Solow was a Senior Executive Vice President at Chemical Banking Corporation (a predecessor institution to JPMorgan Chase) and a member of its twelve-person management committee. During his career at Chemical Banking Corporation, he served in several capacities, including head of global investment banking, and corporate and multinational banking in North America, Western Europe and Asia. In addition, he was Senior Credit Officer for the United States, Canada, Western Europe and Asia. Mr. Solow brings to the Board broad experience with capital markets, investment banking, management and leadership, as well as detailed knowledge of commercial and community banking. Mr. Solow has served on the Board of Directors since November 14, 2011. Mr. Solow is 63 years of age.
Directors Continuing in Office
The following directors have terms ending in 2010:2013:
Donald E. McLaughlin is a Certified Public Accountant, retired. Inretired CPA. Prior to his retirement in 2005, he retired from Donald E. McLaughlin, CPA, P.C. Mr. McLaughlin was employed as a CPA for 35 years. As a CPA, Mr. McLaughlin worked on audits of corporations, both public and privately owned. Mr. McLaughlin has prepared financial statements and tax returns, analyzed financial statements and results of operations and advised clients on methods to better improve performance. He has also been employed as a controller at a company with annual sales of $40 million. Through his extensive experience as a CPA, Mr. McLaughlin provides significant expertise to the Board on public accounting and financial matters. Mr. McLaughlin has served on the Board of Directors since 1985. He is 6164 years of age.
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John E. Walsh is a licensed professional engineer and has been employed with T&M Associates as Regional Client Manager since 2010, and was made Vice President in 2011. T&M Associates is a privately owned engineering, planning and environmental consulting company. Before then, he was Executive Vice President and interim Chief Operating Officer at CMX currentlyEngineering, Inc., a privately owned engineering company. At CMX, Mr. Walsh was responsible for all operational aspects of the business, including operational profitability and oversight of 380 professional engineers and technical staff. Mr. Walsh’s experience with T&M and CMX provides the Board with management and leadership skills, as the NJ Region Operations Manager.well as extensive knowledge of business and marketing plans, annual budgets, personnel/resource management, sales initiatives, financial reporting and client management. Prior to that timejoining CMX Engineering, he was President of Bay Pointe Engineering Associates, Inc. NeitherNone of T&M Associates, CMX norEngineering or Bay Pointe Engineering Associates, Inc. is an affiliate of the Company. Mr. Walsh has served on the Board of Directors since 2000. He is 5558 years of age.
The following directors have terms ending in 2011:2014:
Joseph J. Burke is a retired Certified Public Accountant.Accountant (“CPA”) with over 30 years of experience specializing in the audits of banking institutions. He is a retired audit partner with KPMG LLP. This experience brings to the Board significant expertise in financial, accounting and auditing matters. KPMG LLP is not an affiliate of the Company. Mr. Burke has been a member of the Board since January 19, 2005. He is 6165 years of age.
Angelo Catania is the managing memberChief Executive Officer and Managing Member of HomeStar Services LLC, an air conditioning, heating, plumbing and plumbing serviceselectrical service company, where he has been employed since February 2005. Prior to that time, he was President and Chief Operating Officer of Petro, Inc., one of the largest home heating oil and services companies in the United States. As President and COO of Petro, Mr. Catania was responsible for the oversight of approximately 2,800 employees that serviced over 535,000 residential and commercial accounts. Mr. Catania has also served as the corporate controller of a publicly-owned home heating oil delivery and service company, where he was responsible for accounting systems, bank relations, benefits, information technology and acquisitions. Mr. Catania’s experience as a senior officer of a large corporation brings to the Board significant management expertise and leadership skills, particularly as they relate to the use of technology to improve efficiency and customer service. Neither HomeStar Services LLC nor Petro, Inc. is an affiliate of the Company. He has been a member of the Board since January 18, 2006. He is 5962 years of age.
John R. Garbarino has served as Chairman President and Chief Executive Officer of the Company since 1996.1995, and was President from 1995 to 2010. He has served in various capacities for the Bank since 1971, and has been a member of the Bank’s senior management since 1979. In 1985 he was elected President and Chief Executive Officer of the Bank.Bank, serving as President until 2010. He has been a member of the Bank’s Board of Directors since 1984, and was appointed Chairman of the Board in 1989. Mr. Garbarino brings extensive experience in banking and executive management to the Board. Mr. Garbarino’s experience and vision has resulted in OceanFirst Bank becoming the largest and oldest community-based financial institution headquartered in Ocean County, New Jersey. His past involvement in leadership positions with the Federal Home Loan Bank of New York, the New Jersey Savings League, America’s Community Bankers, as well as numerous other community and business organizations during his 40 year career in banking provide insight to the Board on the factors that impact both the Company and its communities. Moreover, Mr. Garbarino’s leadership and intimate knowledge of the Company’s business and operations provide the Board with Company-specific experience and expertise. He is 5962 years of age.
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Senior Executive Officers Who Are Not Also Directors
Vito R. Nardelli has been President of the Company and the Bank since 2010 and Chief Operating Officer of the Bank since September 2005. He has been employed with the Bank since June 1, 2004. Mr. Nardelli has been employed in the banking industry for over 30 years. He most recently served as Director of Retail Banking for The Trust Company of New Jersey and, until 2003, as Division President of the Dime Savings Bank of New Jersey. He held various executive level positions at Marine Midland Bank and Wachovia (formerly First Union). Between 1991 and 1994, Mr. Nardelli served as Executive Director of the New Jersey Economic Development Authority. Mr. Nardelli began his banking career with Chase Manhattan Bank, N.A. as Vice President and Department Head – Letter of Credit Division. His broad experience has ranged in the areas of investment banking, international products/global collections and corporate and municipal finance. He is 62 years of age.
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Michael J. Fitzpatrick has been Executive Vice President and Chief Financial Officer of the Company since 1995. He has also been Executive Vice President and Chief Financial Officer of the Bank since 1992. Mr. Fitzpatrick has been employed byjoining the Bank sincein 1992. He is 53 years of age.
Vito R. Nardelli has been Executive Vice President, Chief Operating Officer of the Bank since September 2005. He has been employed with the Bank since June 1, 2004. Prior to that date he was employed in the banking industry for approximately 30 years, most recently as Director of Retail Banking for The Trust Company of New Jersey and, until 2003, as Division President of the Dime Savings Bank of New Jersey. He is 5956 years of age.
Joseph J. Lebel IIIhas been First Senior Vice President, Chief Lending Officer of the Bank since May 2007. Before then,When he first joined the Bank in April 2006, he was Senior Vice President of the Bank, since he joined the Bank in April 2006.charge of Commercial Lending. Before then, he was employed with Wachovia Bank N.A. for approximately 22 years, most recently as Senior Vice President. He is 4649 years of age.
John K. KellyJoseph R. Iantosca has been First Senior Vice President, and General CounselChief Administrative Officer of the Bank since May 2008 and before2007. Before then, he was Senior Vice President, and General CounselChief Administrative Officer of the Bank since 1990. HeFebruary 2004, when he joined the Bank. Before then, he was employed with BISYS Banking Solutions for seven years, most recently as National Vice President, Conversions and General CounselImplementations. He is 52 years of the Bank from 1988 until 1990. Mr. Kelly age.
Steven J. Tsimbinoshas been First Senior Vice President, General Counsel and Corporate Secretary of the Company since May 2008 and before then was Senior Vice President and Corporate Secretary of the Company since 1995. He has been Corporate Secretary of the Bank since 2002. Mr. Kelly has been employed bySeptember 2010. Prior to joining OceanFirst, he was General Counsel of Copper River Management, L.P., the Bankinvestment manager to a family of hedge funds, since 1988.May 2006, and prior to that a partner with Lowenstein Sandler PC, where he practiced corporate and securities law. He is 5942 years of age.
PROPOSAL 2. ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Company’s executive compensation program is intended to attract, motivate, reward and retain the senior management talent required to achieve its corporate objectives and increase stockholder value. The Company believes that its compensation policies and procedures are competitive, are focused on pay-for-performance principles and are strongly aligned with the long-term interests of its stockholders. The Company also believes that the Company and its stockholders benefit from responsive corporate governance policies and constructive and consistent dialogue. The proposal described below, commonly known as a “Say on Pay” proposal, gives each stockholder the opportunity to endorse or not endorse the compensation for the NEOs by voting to approve or not approve such compensation as described in this proxy statement.
The Company’s stockholders are being asked to approve the compensation of the Company’s NEOs as described in this proxy statement, namely, under “Compensation Discussion and Analysis” and the included tabular and narrative disclosure.
The Board of Directors urges stockholders to endorse the compensation program for the Company’s executive officers by voting FOR Proposal 2. RatificationAs discussed in the Compensation Discussion and Analysis, the Compensation Committee believes that the compensation of Appointmentthe named executive officers described herein is reasonable and appropriate, and is justified by the performance of the Company in an extremely difficult operating environment.
In deciding how to vote on this proposal, the Board urges you to consider the following factors, many of which are more fully discussed in the Compensation Discussion and Analysis (which stockholders are encouraged to read):
The Compensation Committee has designed compensation packages for the Company’s senior executives to be competitive with the compensation offered by those peers with whom it competes for management talent.
The Company was profitable in 2011, having announced record net income for the second consecutive year and annual earnings per share growth for the year in a difficult operating environment.
This Company’s compensation practices have not and do not include the abusive and short-term practices that have been prevalent at some large financial institutions.
The Company’s compensation program does not encourage excessive and unnecessary risks that would threaten the value of the Company.
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The Company’s compensation program is the result of a carefully reasoned, balanced approach, that considers the short-term and long-term interests of stockholders and safe and sound banking practices.
Please note that your vote is advisory and will not be binding upon the Board, may not be construed as overruling a decision by the Board or create or imply any additional fiduciary duty by the Board. The Compensation Committee may take into account the outcome of the vote when considering future executive compensation arrangements.
The Board of Directors recommends that you vote “FOR” the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in this proxy statement, the accompanying compensation tables, and the related narrative disclosure.
of the Independent Registered Public Accounting FirmPROPOSAL 3. RATIFICATION OF APPOINTMENT
OceanFirst Financial Corp.’sOF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Company’s independent registered public accounting firm for the fiscal year ended December 31, 20082011 was KPMG LLP. Acting on the recommendation of the Audit Committee, the Board of Directors reappointed KPMG LLP to continue as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2009,2012, subject to ratification of such appointment by the stockholders. If stockholders do not ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm, the Audit Committee may consider other independent registered public accounting firms.
Representatives of KPMG LLP will be present at the Annual Meeting. They will be given an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from stockholders present at the Annual Meeting.
The Board of Directors recommends that you vote “FOR” Proposal 3, the ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company.
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Audit Fees
The following table sets forth the fees billed to the Company for the fiscal years ended December 31, 20082011 and December 31, 20072010 by KPMG LLP:
2008 | 2007 | 2011 | 2010 | |||||||||||
Audit fees | $ | 418,000 | $ | 572,000 | $ | 385,000 | $ | 427,500 | ||||||
Audit related fees (1) | 55,000 | 54,000 | 63,000 | 64,000 | ||||||||||
Tax related fees (2) | 186,757 | 111,420 | 79,325 | 66,045 | ||||||||||
Other fees | — | — | — | — | ||||||||||
|
| |||||||||||||
$ | 659,757 | $ | 737,420 | $ | 527,325 | $ | 557,545 | |||||||
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(1) | Audit-related fees are excluded from “Audit Fees” because the services were not required for reporting on the Company’s consolidated financial statements. Such fees are principally related to audits of financial statements of employee benefit plans, and audit procedures relating to the U.S. Department of Housing and Urban Development (HUD) reporting requirements. |
(2) | Consists of tax filing and tax related compliance and other advisory services. |
The Audit Committee believes that the provision of non-audit services by KPMG LLP is compatible with maintaining KPMG LLP’s independence.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. In accordance with its Charter, the Audit Committee approves, in advance, all audit and permissible non-audit services to be performed by the independent registered public accounting firm. Such approval process ensures that the independent registered public accounting firm does not provide any non-audit services to the Company that are prohibited by law or regulation.
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During the year ended December 31, 2008,2011, 100% of the audit related fees, tax related fees and other fees set forth above were approved by the Audit Committee.
Report of the Audit Committee
The Company’s management is responsible for the Company’s internal controls and financial reporting process. The Director of Internal Audit reports directly to the Audit Committee. The Director of Internal Audit conducted a risk assessment of the organization and submitted and implemented an internal audit plan for 2008.2011.
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The independent registered public accounting firm is responsible for performing an independent audit of the Company’s financial statements and issuing an opinion on the conformity of these financial statements with generally accepted accounting principles. The Audit Committee oversees the Company’s internal controls and financial reporting process on behalf of the Board of Directors.
The Audit Committee reviewed and discussed the annual financial statements with management and the Company’s independent registered public accounting firm. As part of this process, management represented to the Audit Committee that the financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee also received and reviewed written disclosures and a letter from the independent registered public accounting firm regarding their independence as required under applicable standards for independent registered public accounting firms of public companies. The Audit Committee discussed with the independent registered public accounting firm the contents of such materials, their independence and additional matters required under Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements.
In addition, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the Independence Standards Board Standard No. 1 (Independence Discussions With Audit Committees), as adopted by the Public Company Accounting Oversight Board in Rule 3600T, and has discussed with the independent registered public accounting firm, the independent registered public accounting firm’s independence from the Company and its management. In concluding that the independent registered public accounting firm was independent, the Audit Committee considered, among other factors, whether the non-audit services provided by the independent registered public accounting firm were compatible with the independent registered public accounting firm’s independence.
The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for their audit. The Audit Committee meetsmet with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
In performing all of these functions, the Audit Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting firm who, in their report, express an opinion on the conformity of the Company’s financial statements to generally accepted accounting principles. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions with management and the independent
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registered public accounting firm do not assure that the Company’s financial statements are presented in accordance with generally accepted accounting principles, that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the Company’s independent registered public accounting firm is in fact “independent.”
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Based on such review and discussions, 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, 20082011 for filing with the Securities and Exchange Commission. The Audit Committee also has approved, subject to stockholder ratification, the selection of the Company’s independent registered public accounting firm.
The Audit Committee
Joseph J. Burke, CPA, Retired, Chairman
Donald E. McLaughlin, CPA, Retired
Angelo Catania
Proposal 3. Advisory Vote on Compensation of Senior Executive Officers
The Company’s executive compensation program is intended to attract, motivate, reward and retain the senior management talent required to achieve its corporate objectives and increase shareholder value. The Company believes that its compensation policies and procedures are competitive, are focused on pay-for-performance principles and are strongly aligned with the long-term interests of its shareholders. The Company also believes that the Company and its shareholders benefit from responsive corporate governance policies and constructive and consistent dialogue. The proposal described below, commonly known as a “Say on Pay” proposal, gives you as a shareholder the opportunity to endorse or not endorse the compensation for the Senior Executive Officers by voting to approve or not approve such compensation as described in this proxy statement.
On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act of 2009 (“ARRA”) into law. ARRA requires, among other things, every participant in the Capital Purchase Program (“CPP”) to permit a non-binding shareholder vote to approve the compensation of the participant’s executives. The Company voluntarily elected to participate in the CPP as established by the Emergency Economic Stabilization Act of 2008 (“EESA”). On January 16, 2009, the Company issued to the U.S. Department of the Treasury 38,263 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A and a Warrant for 380,263 shares of Company common stock, in exchange for gross proceeds of $38.3 million. A complete description of the Company’s participation in the CPP is included in the Annual Report on Form 10-K. As a participant in the CPP, the Company’s shareholders are being asked to approve the compensation of the Company’s Senior Executive Officers as described under “Compensation Discussion and Analysis” and the tabular disclosure regarding senior executive officer compensation (together with the accompanying narrative disclosure) in this proxy statement.
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The Board of Directors urges shareholders to endorse the compensation program for the Company’s executive officers by voting FOR Proposal 3. As discussed in the Compensation Discussion and Analysis contained in this proxy statement, the Human Resources/Compensation Committee of the Board of Directors believes that the Senior Executive Officer compensation for 2008 is reasonable and appropriate, is justified by the performance of the Company in an extremely difficult operating environment and is the result of a carefully considered, largely formulaic approach.
In deciding how to vote on this proposal, the Board urges you to consider the following factors, many of which are more fully discussed in the Compensation Discussion and Analysis:
The Human Resources/Compensation Committee has designed the compensation packages for the Company’s senior executives to be competitive with the compensation offered by those peers with whom it competes for management talent.
The Company was profitable in every quarter in 2008.
There is no history at this Company of any of the abusive compensation practices evidenced at some large financial institutions that have received so much recent negative publicity.
The Company’s compensation program does not encourage excessive and unnecessary risks that would threaten the value of the Company, as certified by the Human Resources/Compensation Committee.
Under ARRA, your vote is advisory and will not be binding upon the Board, may not be construed as overruling a decision by the Board or create or imply any additional fiduciary duty by the Board. The Human Resources/Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. This Proposal 3 does not restrict or limit the ability of shareholders to make proposals related to executive compensation for inclusion in future proxies.
The Board of Directors recommends that you vote “FOR” the non-binding approval of the Compensation of the Senior Executive Officers as determined by the Human Resources/Compensation Committee of the Board of Directors.
COMPENSATION DISCUSSION AND ANALYSIS
Overview
This section provides (i) a descriptiondescribes the objectives, design and rationale of the structure and function of the Human Resources/Compensation Committee of the Board of Directors, (ii) a description of the objectives of theCompany’s compensation program for the Senior Executive Officer (“SEO”) positions, (iii) a discussion of the design of the SEO compensation programits NEOs, and (iv) a discussion ofdiscusses each material element of the SEOCompany’s NEO compensation program, how compensation is determined, and the rationale for choosing to make the payments listedrecent developments in the tables following this section.Company’s compensation program.
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Objectives of
OceanFirst’s vision and mission is to produce value for its stockholders by providing outstanding service and responsiveness to the Compensation Programs
The Company hasmarkets and customers it serves. To achieve that goal, the followingCompany’s objectives for theits executive officer compensation program:program are to:
Attract, retaintarget and reward highly qualified and productive executives by providing overall compensationindividual behaviors that promote the Company’s performance in a way that is competitiveconsistent with other institutions with whom the Company competes for executive talent;its strategic plan and encourages prudent decision-making, effective risk management and safe and sound practices;
Motivatecreate balanced incentives that do not encourage NEOs to expose the Company to inappropriate risks by providing excessive compensation that could lead to material loss;
motivate each individual to perform to the best of their ability, in order to achieve targeted goals for the Company and the individual;his or her ability;
Improve Company performance, balance and avoid any unnecessary risk-takingalign management’s interests with fundamental conceptsthose of safety and soundness;stockholders;
Establish compensation levels that provide the greatest potential rewards for positionsreward individuals of greatest responsibility and achievement within a framework that is internally equitable;
provide a competitive overall compensation package so that the Company may attract, retain and reward highly qualified, motivated and productive executives; and
Promote the long-term increase in the valuebe mindful of the Company by providing a portion of compensation in the form of Company common stockeconomic environment and stock options that vest over a period of years.control costs.
Impact of Recent Legislation and Regulation Affecting ExecutiveHow Compensation Is Determined
Financial institutions such as the Company, that voluntarily elected to participate in the CPP are subject to various restrictions on executive compensation and corporate governance, as established by EESA, the regulations of the Department of the Treasury and the recently enacted ARRA. Under these laws and regulations, during the time that the Department of the Treasury holds an interest in the Company:
The Company’s Human Resources/Compensation Committee must annually review with the Chief Risk Officer the compensation arrangements of SEOs to ensure that such arrangements do not encourage the SEOs to take unnecessary and excessive risks and to discuss and review the relationship between risk management policies and SEO incentive compensation. The Compensation Committee must certify that it has completed the reviews of the SEO compensation and provide such certification in the proxy statement of the Company. The certification of the Human Resources/Compensation Committee of the Company is included in this Compensation Discussion and Analysis.
Bonuses, retention awards and incentive compensation paid to the SEOs and any of the next 20 most highly compensated employees are subject to recovery or “clawback” if the payments were based on materially inaccurate financial statements or any other materially inaccurate information.
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No “golden parachute payments” may be paid to the SEOs and any of the next five most highly compensated employees. The term “golden parachute” means any severance payment resulting from termination of employment, except for services performed or benefits accrued. Whether or not the limitation would actually affect an executive officer will depend on several factors, including whether the Company is still a participant in the CPP at the time of the executive’s departure.
The Company may not take income tax deductions for compensation payments to SEOs in excess of $500,000.
The Company cannot pay to, or accrue for the benefit of, the five most highly compensated employees any bonus, retention award or incentive compensation, except for the payment of long-term restricted stock that has a value that is not greater than 1/3 of the SEO’s total annual compensation and does not fully vest during the period in which the Treasury Department holds its stock. This restriction does not apply to any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009.
The Company may not pay any compensation that would encourage an employee to manipulate the Company’s reported earnings in order to enhance his or her compensation or that would encourage an SEO to take unnecessary or excessive risks.
The Company’s Human Resources/Compensation Committee must meet at least semi-annually to discuss and evaluate employee compensation plans in light of any proposed risk to the Company from such plans.
The Company’s proxy statement must permit a separate non-binding, shareholder vote to approve the compensation of executives. The Company’s “Say on Pay” proposal is included in this Proxy Statement as Proposal 3.
The ARRA directs the U.S. Treasury Department to issue regulations implementing the above described restrictions on compensation. Such regulations when adopted may affect the Company’s future compensation arrangements.
As part of the analysis and decision-making relating to the Company’s participation in the CPP, the Human Resources/Compensation Committee and the Board of Directors were apprised of the restrictions and limitations on executive compensation that would be imposed on the Company’s executive compensation program.
Except as expressly mentioned otherwise, the following discussion does not address the effect, if any, compliance with the ARRA may have on the Company’s executive compensation programs.
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Compensation Corporate Governance
Human Resources/Compensation Committee
The Human Resources/Compensation Committee is responsible for establishing compensation for the SEOsCEO, the other NEOs and for establishingthe other officers subject to the reporting requirements of Section 16 under the Exchange Act (including the NEOs, the “Section 16 Officers”), as well as establishes certain guidelines and limits for compensation and benefits programs for other salaried officers and employees of the Company and the Bank. The Human Resources/Compensation Committee annually reviews and evaluates recommendations made by management regarding compensation, including base salary, bonuses and annual bonus recommendations madeequity grants for SEOs by the CEO along with the rationale for such recommendations.Section 16 Officers. The Human Resources/Compensation Committee also recommends to the Board for approvalthen determines the compensation for the CEO and SEOs. The CEO does not participate inSection 16 Officers and reports its determination to the Human Resources/Compensation Committee’s decision as to his compensation package.Board. In establishing compensation levels, the Human Resources/Compensation Committee considers the Company’s overall objectives and performance, reports of compensation consultants, peer group comparisons, andmarket data for other institutions, individual performance. The Human Resources/Compensation Committee is composed entirelyexecutive performance, the relative level of independent non-employee directors. The members of the Human Resources/Compensation Committee for fiscal 2008 were Diane F. Rhine (Chairperson), John E. Walsh and Carl Feltz, Jr.
Human Resources/Compensation Committee Charter
The Human Resources/Compensation Committee’s Charter reflects the Human Resources/Compensation Committee’s responsibilities described above. The Charter is periodically reviewed by the Human Resources/Compensation Committee and the Board of Directors. The Charter was most recently revised in February 2009 to clarify the Human Resources/Compensation Committee’s responsibilities regarding compliance with the CPP and the regulations related thereto issued by the U.S. Department of the Treasury. A copy of the current Charter is available on the Company’s website (www.oceanfirst.com).
Compensation Consultant/Role of Management
The Human Resources/Compensation Committee has authority under its Charter to engage the services of independent third party experts to assist in reviewing and determining executive officer compensation. Pursuant to this authority, in December 2006 the Human Resources/Compensation Committee engaged Mercer Consulting, a nationally recognized consulting firm specializing in compensation and employee benefits, to provide an independent review of the executive officer and director compensation and benefits. The objectives of the independent review were to (i) assess the competitiveness of the Company’s total compensation program foramong executive officers and non-employee directors;regulatory requirements. The Compensation Committee also meets with the Chief Risk Officer to review any potential and (ii) review performance based cash and stock compensation practices among peer banks. The consultant compared base salary, benefits, annual incentive and long term incentive compensation for each executive officer to a peer group of banking institutions having similar characteristics to the Company. Mercer’s 2006 Executive Compensation Survey report indicated thatactual risks created by the Company’s total cash compensation benefitsprogram, and long-term stock based incentives were competitiveto analyze the controls in place and within market practice. The report was used as a reference point for setting the 2007 and 2008 compensation.risk mitigation mechanisms.
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In late May 2008, the Human Resources/Compensation Committee engaged Watson Wyatt Worldwide (“Watson Wyatt”) to perform a similar study to be used for setting 2009 and 2010 compensation. Watson Wyatt developed a peer group which approximates the Company’s operations, locale and size, which was used as a benchmark for pay and performance; reviewed the current level of executive compensation against peers; assessed the Company’s performance against peers and studied current director compensation levels against peers. The peer group selected by Watson Wyatt included:
Alliance Financial Corp. (NY)
Center Bancorp, Inc. (NJ)
Dime Community Bancshares (NJ)
Flushing Financial Corp. (NY)
Hudson Valley Holding Corp. (NY)
Kearny Financial Corp. (NJ)
Lakeland Bancorp, Inc. (NJ)
Peapack-Gladstone Financial Corp. (NJ)
Provident New York Bancorp (NY)
Rockville Financial Inc. (NY)
Smithtown Bancorp, Inc. (NY)
State Bancorp (NY)
Sterling Bancorp. (NY)
Suffolk Bancorp (NY)
Trustco Bank Corp (NY)
Based on its review, Watson Wyatt found that the Company’s executive compensation closely tracks the median of the peers in both total cash and total direct compensation. The report will be used as a reference point for establishing 2009 and 2010 compensation.
Executive management and outside advisors arefrom time-to-time may be invited to Human Resources/ Compensation Committee meetings to provide their views on compensation matters. The CEO participates in the process of determining senior officer compensation for the other Section 16 Officers by making recommendations to the Human Resources/Compensation Committee as requested by the Human Resources/Compensation Committee regarding base salary adjustments, and awards under incentive plan awards and equity plan awards. Mr. Garbarinoplans. The CEO does not participate in decisions relatingthe Compensation Committee’s decision as to his compensation.own compensation package. See “Corporate Governance – Committees of the Board of Directors” for further information regarding the Compensation Committee.
Human Resources/Role of Compensation Consultant
The Compensation Committee Activitiesretained Frederic W. Cook & Co., Inc. (“FWC”) in 2008 and Early 2009
early 2011 as its independent compensation consultant. FWC replaced Towers Watson, which had been the Committee’s advisor since 2008. The Human Resources/Compensation Committee met 4 times duringconsiders advice and recommendations received from FWC in making compensation decisions. FWC is independent of the fiscal year ended December 31, 2008. Among other actions taken in 2008,Bank’s management, reports directly to the Human Resources/ Compensation Committee, and has no economic relationship with the Company other than its role as advisor to the Compensation Committee.
Compensation Study
For 2011, FWC conducted a study for the Compensation Committee for use in making compensation decisions for 2011 and beyond. FWC reviewed the current peer group for appropriateness and identified changes for 2011. The Compensation Committee has historically relied on a peer group to assess relative performance for its annual incentive plans and make compensation decisions. The study proposed removing one institution from the peer group due to acquisition and identified an institution that the Compensation Committee could add as a replacement. The Compensation Committee approved that change at their March 2011 meeting. The peer group established for the 2011 study consisted of the following:
Alliance Financial Corp. (NY) – NASDAQ: ALNC
Center Bancorp, Inc. (NJ) – NASDAQ: CNBC
Dime Community Bancshares (NJ) – NASDAQ: DCOM
First of Long Island Corp (NY) – NASDAQ: FLIC
Flushing Financial Corp. (NY) – NASDAQ: FFIC
Hudson Valley Holding Corp. (NY) – NASDAQ: HUVL
Kearny Financial Corp. (NJ) – NASDAQ: KRNY
Lakeland Bancorp, Inc. (NJ) – NASDAQ: LBAI
Peapack-Gladstone Financial Corp. (NJ) – NASDAQ: PGC
Provident New York Bancorp (NY) – NASDAQ: PBNY
Rockville Financial Inc. (CT) – NASDAQ: RCKB
State Bancorp, Inc. (NY) – NASDAQ: STBC
Sterling Bancorp. (NY) – NASDAQ: STL
Suffolk Bancorp (NY) – NASDAQ: SUBK
Trustco Bank Officers’Corp (NY) – NASDAQ: TRST
FWC conducted a review of the Bank’s current level of director and executive compensation incentive goalsrelative to its peers and incentiveprovided the Compensation Committee with its report at their June 2011 meeting. The executive compensation results found a strong alignment between performance and recommendedexecutive compensation at OceanFirst. OceanFirst was at or above the awardsmedian of stock optionsits peers on two of the five key metrics and awards of restricted stockat or above the 75th percentile on the remaining three. The metrics in the study were total interest and other income growth, earnings per share growth, return on assets, return on equity and total shareholder return. Overall, the base salaries were near the median when compared to the Bank Officers, SEOspeer group while the target bonuses were at or above the 75th percentile. On average, target total compensation was positioned between the median and non-employee directors for considerationthe 75th percentile. The 2011 study was taken into account by the Board.Compensation Committee to set and establish director and executive compensation for 2011. The Compensation Committee made no changes to the director retainers or fees for 2011.
Consideration of Last Year’s Advisory Stockholder Votes on Executive Compensation
At the 2011 Annual Meeting of Stockholders, approximately 94% of the shares voting on the Company’s first non-binding advisory vote on executive compensation (commonly known as “say on pay”) were cast in favor of the compensation of the Company’s executive officers, as described in the 2011 Proxy Statement. The Board and the
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Compensation Committee appreciate and value the views of stockholders. In considering the results of this advisory vote on executive compensation, the Committee concluded that the compensation paid to executive officers and the Company’s overall pay practices enjoy strong stockholder support.
In March 2009,making compensation decisions for the Human Resources/Compensationremainder of 2011 and to date in 2012, the Board and the Committee metconsidered, among other factors, this strong stockholder support and the Company’s overall satisfaction with the Chief Risk Officer as required by Treasury Department regulations. As partcurrent compensation mix and levels, and have not made significant changes to the mix or level of its review, the Human Resources/Compensation Committee received a presentation regarding risks to which the Company is subject, including strategic, liquidity, interest rate, operational, credit quality, regulatory and other risks. The Human Resources/Compensation Committee also received an analysis of the controls in place, as wellcompensation. Going forward, future advisory votes on executive compensation will serve as an analysisadditional tool to guide the Board and the Committee in their assessment of the Company’s executive compensation program. Based on this review,
Also at the Human Resources/Compensation Committee concluded that2011 Annual Meeting of Stockholders, the Company’s stockholders expressed a preference that advisory votes on executive compensation program does not encourageoccur once every year. Consistent with this preference, the Company’s SEOsBoard determined to take excessive or unnecessary risks that threaten the value of the franchise. The Human Resources/Compensation Committee will conduct a similar reviewimplement an annual advisory vote on a semi-annual basis as required by the ARRA.executive compensation.
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Compensation Program Design and Rationale
Cash CompensationCompensation.
Current cash compensation consists of base salary and a performance-based cash bonus under a cash incentive plan. In addition to the annual Incentive Compensation Plan. performance-based compensation, the Company may from time to time make discretionary cash bonus payments to rectify inequities or recognize outstanding performance. No such discretionary bonuses were made to Section 16 Officers during fiscal 2011.
Base Salary.The base salary levels for the SEOsSection 16 Officers are intended to be competitive with the practices of comparable financial institutions at appropriate levels to motivate individuals to discharge the responsibilities of their position. The Human Resources/Compensation Committee adjusts the SEO base salary annually. In making these adjustments, the Human Resources/Compensation Committee takes into account individual and Company performance; the total current and potential compensationpositions, while being mindful of a given officer; the levels of compensation paid by institutions that compete with OceanFirst for executive talent; and the relative level of compensation in comparison to other executive officers.managing costs. Messrs. Garbarino, Nardelli and Fitzpatrick have employment agreements with OceanFirstthe Company and the Bank and receive base salaries under those agreements, subject to annual review and adjustments. The Human Resources/ Compensation Committee makes salary decisions in an annual review for the SEOs with input from the CEO. Mr. Garbarino does not participate in decisions relating to his compensation.review.
Impact of Performance on Cash CompensationPerformance-Based Bonuses.
Under the 2008 Incentive Compensation Plan, aA significant portion of each executiveSection 16 officer’s annual cash compensation is contingent on the performance of the Company, the Bank and the individual.individual under a cash incentive compensation plan. Under the Incentive Compensation Plan, a variable bonus pool is establishedincentive compensation plan, performance-based bonuses are paid, generally annually, based on the Company’s level of achievement of pre-established financial performance objectives. Ordinarily, bonuses to SEOs are awarded based on the total amount of the bonus pool andobjectives, as well as individual performance assessment scores and achievement of individual performance goals. Results of this program during 2008 are discussed below under “Cash Incentive Awards.”
During the annual budget process, Management recommended and the Board approved the deferral of all officers and SEOs annual performance evaluations and salary increases. Management made this recommendation based upon their analysis of the current and projected economic conditions. The officers and SEOs annual performance evaluations and any salary increases were deferred until July 2009. The current officers and SEOs salaries will remain in effect until that time.
While officers and SEOs salary reviews were deferred until July 2009,performance. This mechanism allows the Company for purposes ofto target and reward individual behaviors that promote the 2009 compensation budget, projected salary increases atCompany’s performance in a 3% level for all eligible individuals. This percentageway that is down from the previous year of 4%, based on marketconsistent with its strategic plan and economic conditions remaining depressed. This effort will assist in reducing the compensation expenses of the Bank.encourages prudent decision-making, effective risk management and safe and sound practices.
In addition to the performance-based compensation paid under the IncentiveEquity Compensation Plan,Plan.During 2011, the Company may from time to time make discretionary cash bonus payments to rectify inequities or recognize outstanding performance.
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Equity Compensation Plan
During fiscal 2008, the Company used the 2000 Stock Option Plangranted stock options and 2006 Stock Incentive Plan (the “Stock Plans”)restricted stock awards to attract, retain and motivate non-employee directors and employees by providing for or increasing their economic interests in the success of the Company. Equity grants under the Stock Plans complement total compensation packages as well as enable the Company to align director and executive management interests as shareholdersstockholders of the Company.
Mix of Compensation Elements; Risk Mitigation. The Stock PlansCommittee believes that it maintains the appropriate balance of base salary and incentive compensation to motivate executives and reward accomplishments. Performance-based incentive bonus awards play an important role in the executive compensation program, but their use is balanced to provide stability and to avoid encouraging strategies and risk-taking that might not align with the long term best interests of the Company and its stockholders, as further described below. The Company utilizes performance-based bonuses with bonus targets ranging from 25% to 50% of base salary for its Section 16 Officers.
The Company is mindful of regulatory sound compensation practices that are designed to cause banking institutions to structure compensation programs in a way that does not provide incentives for executives to take imprudent or excessive risks. The Company’s compensation program for Section 16 Officers is designed to mitigate risk by (1) providing non-performance-based salaries, retirement and fringe benefits that are competitive in the market, permit executives to pay living expenses and provide stability without reliance on incentives; (2) incorporating cash incentives to reward performance in accordance with predefined goals and objectives; (3) including long-term incentives in the form of restricted stock awards ofand stock options to maintain focus on long-term shareholder value; and restricted stock. Awards under(4) considering prior period results, the Stock Plans are described under“Elementsexposure to risk, and actual risk outcomes in determining current and future compensation. To further mitigate risk resulting from performance-based compensation, the Committee considers, and uses when appropriate, metrics and performance goals that incorporate risk management, “clawbacks” to recover payments, and performance periods longer than one year. The use of Compensation – Equity Incentive Awards.”
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equity-based long term compensation, in combination with executive stock ownership requirements, reflects the Company’s compensation program’s goals of aligning the interests of executives and stockholders, thereby reducing the exposure to imprudent or excessive risk taking. 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.
Elements of Compensation
OverviewOverview.
The SEO To achieve the Company’s objectives for its NEO compensation program, consists ofthe program includes the following elements: (1) base salary; (2) a performance-based annual cash bonus under the annual Incentive Compensation Plan;a cash incentive compensation plan; (3) retirement benefits under the Employee Stock Ownership Plan and 401(k) Plan and welfare benefits under the group benefit programs; (4) supplemental retirement benefits for select SEOs under the Supplemental Executive Retirement Plan; (5) Company-paid automobile benefit for selected SEOs; (6) awards of stock options and restricted shares of Company common stock under the equity compensation plans; (4) welfare benefits under the group benefit programs; (5) retirement benefits under the ESOP and 401(k) Plan and supplemental retirement benefits for select NEOs under the Supplemental Executive Retirement Plan (“SERP”); (6) Company-paid automobile benefit for selected NEOs; (7) eligibility for payments and benefits in the event of certain employment terminations and/or in the event of a change in control of the Company; and (8) nonqualified deferred compensation under the Deferred Compensation Plan for Executives. The following describes the elements of compensation and provides information on thecertain decisions regarding 20082011 compensation.
Base Salary.After the Compensation Committee’s consideration of various factors, including prevailing market conditions, current and anticipated Company performance, the performance and responsibilities of individual executives, current pay levels and the FWC report, the Company:
reduced Mr. Garbarino’s base salary for 2011 to $490,500, effective January 2011; and
increased the base salaries of the other NEOs by 2.5% to 3% during 2011.
Cash Incentive AwardsAwards.
The Company determined cash incentive awards for 20082011 in accordance with guidelines established by the Human Resources/Compensation Committee. The SEOAnnual cash bonuses for the Section 16 Officers are determined under the annual Incentive Compensation Bonus isincentive plan and contingent on the performance of the Company, the Bank and the individual. The Incentive Compensation Plan comparesindividual, by comparing actual Company performance against targets that are approved by the Human Resources/Compensation Committee at the beginning of each year.2011. The targets are weighted between individual objectives and the Company’s success in achieving its financial goals. Targeted bonus levels for NEOs in 2008 range2011 ranged from 25% to 50% of base salary. Ordinarily, based on performance and achievement of goals, actual bonus under the Plan may range from 50% of targeted bonus levels for threshold performance to 150% for superior performance. Generally, the higher the level of responsibility of the officer or employee in the Company, the greater the percentage of base salary that may be awarded under the Planplan for achievement of performance goals. Ordinarily, if incentive compensation is paid out under the plan, actual bonus payments may range from 50% of targeted bonus levels for threshold performance to 150% for superior performance.
For 2008, the Company performance metric was2011, incentive payments were based on return on equity,earnings per share, efficiency ratio feeand total shareholder return, utilizing the following matrix:
Category | Weight | Threshold 50% | Target 100% | Superior 150% | ||||||||||||
Earnings Per Share (EPS) | 50 | % | $ | .91 | $ | 1.17 | $ | 1.28 | ||||||||
Efficiency Ratio | 25 | % | 60.50 | % | 57.40 | % | 55.80 | % | ||||||||
Total Shareholder Return Against Peers (TSR) | 25 | % | | 50th Percentile (8th of 16) | | | 62.5 Percentile (10th of 16) | | | 75th Percentile (12th of 16) | | |||||
100 | % |
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For purposes of the matrix, Earnings Per Share (EPS) and Efficiency Ratio are the amounts set forth in the Company’s financial statements, as adjusted for certain non-recurring items that are approved by the Board of Directors. Total Shareholder Return Against Peers (TSR) is based on the Company’s stock and dividend performance measured against the group of fifteen similar financial institutions utilized by FWC in its study. See “Compensation Study.” The Company must attain net income of at least $2,122,000 and internal audit scores. Payoutsmeet the threshold level in at least one category in order to pay any bonus based on the Company’s performance. For 2011, the Company’s EPS was $1.14, Efficiency Ratio was 56.86%, and TSR was 75th Percentile. Based on the weighting of the various Metrics set forth above, the Bank’s performance funded at 113.8% of Target. Actual payouts were subject to adjustment for each NEO’s performance. Cash incentive awards paid to the NEOs for 2011 are presented under the Plan totaled $206,561, $103,309, $77,554, $54,176 and $33,947 for Messrs. Garbarino, Nardelli, Fitzpatrick, Lebel and Kelly, respectively. If required by ARRA,“Non-Equity Incentive Compensation Plan” column in the Company may make payments of such amounts in shares of restricted stock. See“Impact of Recent Legislation and Regulation Affecting Executive Compensation.”Summary Compensation Table below.
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Equity Incentive AwardsAwards.
The Board, at the recommendation of the Human Resources/Compensation Committee, approved the grant of stock options and restricted stock awards to the SEOs under the 2006 Stock Incentive Plan and the 2000 Stock Option Plan at a scheduled meeting on February 20, 2008.Company’s stock incentive plans. The award levels and vesting schedule were determined based on various factors, including prevailing market conditions, performance and responsibilities of individual executives, andcurrent pay levels, the amount of awards previously granted.granted and the FWC report. Awards of options under the plan were structured to avoid limitations on the Company’s compensation cost deduction duein 2011 to the $1 million deduction limit under Section 162(m) of the Internal Revenue Code. While the Company remains a participant in the CPP, the Company cannot deduct for tax purposes any compensation paid to certain executive officers in excess of $500,000. Awards in 2008 to the Senior ExecutiveNEOs are presented under the “Option Award” and “Stock Award” columnscolumn of the Summary Compensation Table and the Grants of Plan-Based Awards Table.
BenefitsBenefits.
All SEOsNEOs participate in the benefit plans generally available to the employees, including medical, life and disability insurance, the 401(k) Plan and the Employee Stock Ownership Plan.ESOP. The Company also maintains a Supplemental Executive Retirement PlanSERPs covering selected eligible SEOs. This plan isMessrs. Garbarino, Nardelli and Fitzpatrick. These SERPs are intended to promote continued service of covered executives by providing a supplement to the executive’s other qualified retirement benefits.plan benefits, which are limited by law. The benefit is based on final cashthe average of the highest compensation during any four consecutive calendar years and length of service with the Company. In 2010, Mr. Garbarino agreed to make a portion of his SERP payment contingent upon the attainment of certain Company performance targets. These amounts would be paid under that Plan to maximize their tax deductibility.
PerquisitesPerquisites.
The Company provided perquisites to selected SEOsNEOs in the form of Company-paid automobile benefits and golf club dues. The NEOs are subject to the Company’s Travel and Entertainment Policy, which governs travel, dining and entertainment expenses for all employees.
Deferred CompensationCompensation.
The Bank provides the SEOsNEOs with an opportunity to elect to defer current compensation under the Deferred Compensation Plan for Executives (“(the “Deferral Plan”Plan”). The Deferral Plan permits eligible executives selected by the Bank’s Board to elect to defer receipt of up to 100% of base salary and annual bonus pursuant to the terms of the Deferral Plan.
Employment AgreementsAgreements.
TheEach of the Bank and the Company have entered into separate employment agreements with Messrs. Garbarino, Nardelli and Fitzpatrick (individually, the “Executive”“Executive”). The employment agreements are intended to ensure that the Bank and the Company will be able to maintain a stable and competent management base. The continued success of the Bank and the Company depends to a significant degree on the skills and competence of Messrs. Garbarino, Nardelli and Fitzpatrick.
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The employment agreements provide for a three-year term for the Executives.each Executive. The Bank employment agreement provides that upon each fiscal year-end, the Board of the Bank, annually, may extend the agreement for an additional year so that the remaining term shall be three years, unless written notice of non-renewal is given by the Board of the Bank after conducting a performance evaluation of the Executive. The term ofIn 2011, the Company and each executive amended the respective Company employment agreement is extended on ato change from daily basis unless written notice of non-renewal is given byextensions to annual renewals so that the Board ofBank’s and the Company.Company’s employment agreements follow the same renewal procedure. In addition to the base salary, the agreements provide for, among other things, participation in stock benefit plans and other fringe benefits applicable to executive personnel.
The agreements provide for termination, at any time, by the Bank or the Company for cause as defined in the agreements. In the event the Bank or the Company chooses to terminate the Executive’s employment for reasons other than for cause, or in the event of the Executive’s resignation from the Bank and the Company upon: (1) failure to re-elect the Executive to his current offices; (2) a material change in the Executive’s functions, duties or responsibilities; (3) material change in the Executive’s principal place of employment; (4) material reduction in the
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Executive’s salary; or (5) a material breach of the agreement by the Bank or the Company, or the Executive, or in the event of Executive’s subsequent death, his beneficiary, beneficiaries or estate, as the case may be, would be entitled to receive an amount equal to the remaining base salary payments due to the Executive and the contributions that would have been made on the Executive’s behalf to any employee benefit plans of the Bank or the Company during the remaining term of the agreement. The Bank and the Company would also continue to pay for the Executive’s life, health and disability coverage for the remaining term of the employment agreement.
Under the agreements, if voluntary or involuntary termination follows a change in control of the Bank or the Company (as defined in the employment agreement), the Executive or, in the event of the Executive’s death, his beneficiary, would be entitled to a severance payment equal to the greater of: (1) the payments due for the remaining term of the agreement; or (2) three times the average of the five preceding taxable years’ compensation. Such average compensation includes not only base salary, but also commissions, bonuses, contributions on behalf of the Executive to any pension or profit sharing plan, insurance payments, directors’ or committee fees and fringe benefits paid or to be paid to the Executive during the preceding five taxable years. The Bank and the Company would also continue the Executive’s life, health, and disability coverage for thirty-six months. Although both the Company and the Bank agreements provide for a severance payment in the event of a termination by the Company or the Bank, or in the event of a termination following a change in control, the Executive would only be entitled to receive a severance payment under one agreement.
Payments to the Executive under the Bank’s agreement will be guaranteed by the Company in the event that payments or benefits are not paid by the Bank. Payment under the Company’s agreement would be made by the Company. All reasonable costs and legal fees paid or incurred by the Executive pursuant to any dispute or question of interpretation relating to the agreements shall be paid by the Bank or Company, respectively, if the Executive is successful on the merits pursuant to a legal judgment, arbitration or settlement. The employment agreements also provide that the Bank and Company shall indemnify the Executive to the fullest extent allowable under federal and Delaware law, respectively.
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Change in Control AgreementsAgreements.
For similar reasons as with the employment agreements, the Bank and the Company entered into change in control agreements (“CIC Agreements”Agreements”) with Messrs. KellyLebel and Lebel (the “Executive”Iantosca (individually, the “Executive”). TheEach CIC Agreement provides for a two-year term. Commencing onThe Bank CIC Agreement provides that the dateBoard of the executionBank may, annually, extend the CIC Agreement for an additional year so that the remaining term shall be two years, unless written notice of non-renewal is given by the Board of the Bank after conducting a performance evaluation of the Executive. In 2011, the Company and each executive amended the respective Company CIC Agreement to change from daily extensions to annual renewals so that the Bank’s and the Company’s CIC Agreement,Agreements follow the term is extended for one day each day until such time as the Board of Directors of the Company or the Executive elects by written notice not to extend the term, at which time thesame renewal procedure. The CIC Agreement will end on the second anniversary of the date of notice. The Company’s CIC Agreement providesAgreements provide that in the event voluntary or involuntary termination follows a change in control of the Bank or the Company (as defined in the agreement), the Executive would be entitled to a severance payment equal to two (2) times the Executive’s average annual compensation for the five years preceding termination. Annual compensation includes Base Salary, commissions, bonuses, contributions on behalf of the Executive to any pension and profit sharing plan, severance payments and fringe benefits paid or to be paid the Executive during such years. Additionally, in the event the Executive has been employed less than five years at the time of termination in connection with a change in control, the Executive’s annual compensation shall be annualized for any partial taxable year of employment or service as if the Executive was employed or served for the full taxable year. The Bank’s CIC Agreement is similar to that of the Company. The Bank CIC Agreement provides that, upon each anniversary of the date of the execution of the Agreement, the Board of the Bank may extend the CIC Agreement for an additional year so that the remaining term shall be two years, unless written notice of non-renewal is given by the Board of the Bank after conducting a performance evaluation of the Executive. However, any payments to the Executive under the Bank’s CIC Agreement would be subtracted from any amount due simultaneously under the Company’s CIC Agreement. The Company and the Bank would also continue and pay for the Executive’s life, health and disability coverage for thirty-six (36) full calendar months following termination.
Payments to the Executive under the Bank’s CIC Agreement are guaranteed by the Company in the event that payments or benefits are not paid by the Bank.
Payments under the employment agreements and change in controlCIC agreements in the event of a change in control may constitute some portion of an excess parachute payment under section 280G of the Code for executive officers, resulting in the imposition of an excise tax on the recipient and denial of the deduction for such excess amounts to the Company and the Bank.
The Senior Executive Officers each granted a waiver acknowledging possible modifications to the Executive’s compensation and benefits, including those benefits under the employment agreements and the change in control agreements, in order to comply with the restrictions on compensation discussed above under“Impact of Recent Legislation and Regulation Affecting Executive Compensation.” The Human Resources/Compensation Committee will review the effect of compliance with the ARRA limitations on the Company’s competitive positioning and ability to retain and motivate its high-performing executives and employees. Appropriate changes may become critical to the Company’s ability to maintain its competitive position.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain summary information regarding the compensation paid or accrued by the Company during the fiscal year ended December 31, 20082011 to or for the account of the CEO, Chief Financial Officer, and the other three (3) most highly compensated executive officers of the Company:
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Name and Principal Position | Year | Salary ($) | Stock Awards ($)1 | Option Awards ($)2 | Non-Equity Incentive Plan Compensation ($)3 | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)4 | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||
John R. Garbarino, | 2011 | 492,596 | — | 283,500 | 279,095 | — | 273,603 | (5) | 1,328,794 | |||||||||||||||||||||||
Chief Executive Officer of the Company and the Bank | | 2010 2009 | | | 545,000 537,500 | | | 54,500 310,000 | | | 163,428 — | | | 366,240 116,400 | | | — — | | | 473,418 443,277 | | | 1,602,584 1,407,177 | | ||||||||
Vito R. Nardelli, | 2011 | 333,300 | 35,466 | 106,313 | 187,770 | — | 109,050 | (6) | 771,899 | |||||||||||||||||||||||
President and Chief Operating Officer of the Company and the Bank | | 2010 2009 | | | 312,693 289,900 | | | 18,150 120,000 | | | 54,479 — | | | 178,416 57,666 | | | — 177 | | | 105,523 98,796 | | | 669,261 566,449 | | ||||||||
Michael J. Fitzpatrick, | 2011 | 260,075 | 31,527 | 94,500 | 126,591 | — | 101,763 | (7) | 614,456 | |||||||||||||||||||||||
Executive Vice President and Chief Financial Officer of the Company and the Bank | | 2010 2009 | | | 253,750 243,150 | | | 18,150 104,000 | | | 54,479 — | | | 136,079 42,716 | | | 610 5,234 | | | 96,938 95,964 | | | 560,006 491,064 | | ||||||||
Joseph J. Lebel III, | 2011 | 218,160 | 10,638 | 31,894 | 83,575 | — | 20,466 | (8) | 364,733 | |||||||||||||||||||||||
First Senior Vice President and Chief Lending Officer of the Bank | | 2010 2009 | | | 213,000 202,100 | | | 6,050 52,000 | | | 18,163 — | | | 102,816 35,881 | | | — — | | | 22,247 21,482 | | | 362,276 311,463 | | ||||||||
Joseph R. Iantosca, | 2011 | 199,485 | 10,638 | 31,894 | 85,749 | — | 23,539 | (9) | 351,305 | |||||||||||||||||||||||
First Senior Vice President and Chief Administrative Officer of the Bank | | 2010 2009 | | | 195,060 189,805 | | | 6,117 4,359 | | | 18,361 13,042 | | | 84,010 41,427 | | | — — | | | 23,426 22,573 | | | 326,974 271,206 | |
(1) | Reflects the value of restricted stock awards granted to the executive officers |
26
(2) | Reflects the value of stock option awards granted to the executive officers |
(3) | Reflects payments made for each respective year under the |
(4) | Reflects |
21
(5) | Includes (a) the market value of |
27
(6) | Includes (a) the market value of |
(7) | Includes (a) the market value of |
(8) | Includes (a) the market value of |
(9) | Includes (a) the market value of |
Grants of Plan-Based Awards
The following table sets forth certain information regarding stock options, and restricted stock awards and non-equity incentive plan awards to the executive officers of the Company during the Company’s fiscal year ended December 31, 2008.2011.
Estimated Potential Payouts Under Non-Equity Incentive Plan Awards1 | All Other Stock Awards: Number of Shares of Stock or Units (#)2 | All Other Awards: Number of Securities Underlying Options (#)3 | Exercise or Base Price of Option Awards ($/Sh) 4 | Grant Date Fair Value of Stock & Option Awards ($)5 | ||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date1 | Estimated Potential Payouts Under Non-Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)3 | All Other Awards: Number of Securities Underlying Options (#)4 | Exercise or Base Price of Option Awards ($/Sh)5 | Closing Market Price of Shares on the Date of Grant ($/Sh) | Grant Date Fair Value of Stock and Option Awards6 | Grant Date | Threshold ($) | Target ($) | Maximum ($) | |||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||||||||||||||||||||||||
John R. Garbarino | 2/20/08 | 66,250 | 265,000 | 596,250 | 3,000 | 63,788 | 16.81 | 16.81 | 201,608 | 2/18/2011 | 61,312 | 245,250 | 367,850 | 0 | 90,000 | 13.87 | 283,500 | |||||||||||||||||||||||||||||||||
Vito R. Nardelli | 2/18/2011 | 41,250 | 165,000 | 247,500 | 2,557 | 33,750 | 13.87 | 106,313 | ||||||||||||||||||||||||||||||||||||||||||
Michael J. Fitzpatrick | 2/20/08 | 23,630 | 94,520 | 212,670 | 1,000 | 21,263 | 16.81 | 16.81 | 67,203 | 2/18/2011 | 25,750 | 103,000 | 154,500 | 2,273 | 30,000 | 13.87 | 94,500 | |||||||||||||||||||||||||||||||||
Vito R. Nardelli | 2/20/08 | 31,478 | 125,910 | 283,298 | 1,000 | 21,263 | 16.81 | 16.81 | 67,203 | |||||||||||||||||||||||||||||||||||||||||
Joseph J. Lebel III | 2/20/08 | 19,420 | 77,680 | 174,780 | 335 | 7,088 | 16.81 | 16.81 | 22,430 | 2/18/2011 | 21,600 | 86,400 | 129,600 | 767 | 10,125 | 13.87 | 31,894 | |||||||||||||||||||||||||||||||||
John K. Kelly | 2/20/08 | 12,169 | 48,675 | 109,519 | 335 | 7,088 | 16.81 | 16.81 | 22,430 | |||||||||||||||||||||||||||||||||||||||||
Joseph R. Iantosca | 2/18/2011 | 17,282 | 69,129 | 103,693 | 767 | 10,125 | 13.87 | 31,894 |
(1) |
28
Amounts shown represent the range of potential payouts for fiscal |
22
Refers to awards of restricted shares of Company common stock under the Company’s 2006 Stock Incentive |
Refers to awards of stock options under the |
Grant date fair |
29
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information regarding stock option and stock awards to the executive officers of the Company during the Company’s Fiscalfiscal year ended December 31, 2008:2011:
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||
Name | 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 ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Others Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Others Rights That Have Not Vested (#) | 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 ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Others Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Others Rights That Have Not Vested ($) | ||||||||||||||||||||||||||||||||||||
John R. Garbarino | 120,000 90,000 90,000 3,430 3,806 25,200 12,150 — | 37,800 48,600 63,788 | — | 17.88 23.44 22.525 23.07 20.795 23.475 22.17 16.81 | 2/20/12 5/30/13 5/28/14 1/19/15 4/20/15 2/15/16 2/21/17 2/20/18 | 2,794 3,127 3,000 | 46,380 51,908 49,800 | — | — | 120,000 | — | — | 17.880 | 2/20/12 | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Michael J. Fitzpatrick | 45,000 33,000 30,000 1,320 1,464 12,000 4,050 — | 18,000 16,200 21,263 | — | 17.88 23.44 22.525 23.07 20.795 23.475 22.17 16.81 | 2/20/12 5/30/13 5/28/14 1/19/15 4/20/15 2/15/16 2/21/17 2/20/18 | 1,042 1,000 | 17,297 16,600 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
90,000 | — | — | 23.440 | 5/30/13 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
90,000 | — | — | 22.525 | 5/28/14 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
3,430 | — | — | 23.070 | 1/19/15 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
3,806 | — | — | 20.795 | 4/20/15 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
63,000 | — | — | 23.475 | 2/15/16 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
48,600 | 12,150 | — | 22.170 | 2/21/17 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
38,274 | 25,514 | — | 16.810 | 2/20/18 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
17,861 | 71,444 | — | 10.000 | 2/17/20 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | 90,000 | — | 13.870 | 2/18/21 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 781 | 10,208 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 1,200 | 15,684 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 4,360 | 56,985 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Vito R. Nardelli | 30,000 780 866 4,050 — | 18,000 16,200 21,263 | — | 22.38 23.07 20.795 23.475 22.17 16.81 | 6/01/14 1/19/15 4/20/15 2/15/16 2/21/17 2/20/18 | 1,042 1,000 | 17,297 16,600 | — | — | 30,000 | — | — | 22.380 | 6/01/14 | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Joseph J. Lebel III | 4,000 900 — | 6,000 3,600 7,088 | — | 22.74 20.25 16.81 | 4/28/16 3/02/17 2/20/18 | 335 | 5,561 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
John K. Kelly | 15,000 10,000 10,000 676 751 1,350 — | 6,000 5,400 7,088 | — | 17.88 23.44 22.525 23.07 20.795 23.475 22.17 16.81 | 2/20/12 5/30/13 5/28/14 1/19/15 4/20/15 2/15/16 2/21/17 2/20/18 | 347 335 | 5,760 5,561 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
780 | — | — | 23.070 | 1/19/15 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
866 | — | — | 20.795 | 4/20/15 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
30,000 | — | — | 23.475 | 2/15/16 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
16,200 | 4,050 | — | 22.170 | 2/21/17 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
12,759 | 8,504 | — | 16.810 | 2/20/18 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
5,954 | 23,816 | — | 10.000 | 2/17/20 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | 33,750 | — | 13.870 | 2/18/21 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 259 | 3,385 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 400 | 5,228 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 1,452 | 18,978 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 2,557 | 33,420 | — | — |
(Table continues and footnotes on following pages)
23
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | 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 or Units of Stock That Have Not Vested (2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Others Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Others Rights That Have Not Vested ($) | |||||||||||||||||||||||||||
Michael J. Fitzpatrick | 45,000 | — | — | 17.880 | 2/20/12 | — | — | — | — | |||||||||||||||||||||||||||
33,000 | — | — | 23.440 | 5/30/13 | — | — | — | — | ||||||||||||||||||||||||||||
30,000 | — | — | 22.525 | 5/28/14 | — | — | — | — | ||||||||||||||||||||||||||||
1,320 | — | — | 23.070 | 1/19/15 | — | — | — | — | ||||||||||||||||||||||||||||
1,464 | — | — | 20.795 | 4/20/15 | — | — | — | — | ||||||||||||||||||||||||||||
30,000 | — | — | 23.475 | 2/15/16 | — | — | — | — | ||||||||||||||||||||||||||||
16,200 | 4,050 | — | 22.170 | 2/21/17 | — | — | — | — | ||||||||||||||||||||||||||||
12,759 | 8,504 | — | 16.810 | 2/20/18 | — | — | — | — | ||||||||||||||||||||||||||||
5,954 | 23,816 | — | 10.000 | 2/17/20 | — | — | — | — | ||||||||||||||||||||||||||||
— | 30,000 | — | 13.870 | 2/18/21 | — | — | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 259 | 3,385 | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 400 | 5,228 | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 1,452 | 18,978 | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 2,273 | 29,708 | — | — | ||||||||||||||||||||||||||||
Joseph J. Lebel III | 10,000 | — | — | 22.740 | 4/28/16 | — | — | — | — | |||||||||||||||||||||||||||
3,600 | 900 | — | 20.250 | 3/02/17 | — | — | — | — | ||||||||||||||||||||||||||||
4,253 | 2,834 | — | 16.810 | 2/20/18 | — | — | — | — | ||||||||||||||||||||||||||||
1,985 | 7,940 | — | 10.000 | 2/17/20 | — | — | — | — | ||||||||||||||||||||||||||||
— | 10,125 | — | 13.870 | 2/18/21 | — | — | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 134 | 1,751 | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 484 | 6,326 | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 767 | 10,025 | — | — | ||||||||||||||||||||||||||||
Joseph Iantosca | 1,250 | — | — | 25.165 | 2/16/14 | — | — | — | — | |||||||||||||||||||||||||||
10,000 | — | — | 22.525 | 5/28/14 | — | — | — | — | ||||||||||||||||||||||||||||
554 | — | — | 23.070 | 1/19/15 | — | — | — | — | ||||||||||||||||||||||||||||
615 | — | — | 20.795 | 4/20/15 | — | — | — | — | ||||||||||||||||||||||||||||
10,000 | — | — | 23.475 | 2/15/16 | — | — | — | — | ||||||||||||||||||||||||||||
5,400 | 1,350 | — | 20.250 | 3/2/17 | — | — | — | — | ||||||||||||||||||||||||||||
4,254 | 2,836 | — | 16.810 | 2/20/18 | — | — | — | — | ||||||||||||||||||||||||||||
2,836 | 4,252 | — | 12.280 | 2/18/19 | — | — | — | — | ||||||||||||||||||||||||||||
1,985 | 7,940 | — | 10.110 | 2/11/20 | — | — | — | — | ||||||||||||||||||||||||||||
— | 10,125 | — | 13.870 | 2/18/21 | — | — | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 84 | 1,098 | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 134 | 1,751 | — | — | ||||||||||||||||||||||||||||
— | — | — | — | �� | — | 213 | 2,784 | — | — | |||||||||||||||||||||||||||
— | — | — | — | — | 484 | 6,326 | — | — | ||||||||||||||||||||||||||||
— | — | — | — | — | 767 | 10,025 | — | — |
(1) | Options vest as to 20% of the shares subject to the grant on each anniversary of the grant date, subject to the executive’s continued service on the relevant vesting dates. With respect to Mr. Garbarino’s stock options that have not vested, the options for 12,150 shares vest on February 21, 2012; the options for 25,514 shares vest in |
30
equal installments on February 20, 2012 and February 20, 2013; the options for 71,444 shares vest in equal installments on February 17, 2012, February 17, 2013, February 17, 2014, and February 17, 2015; and the options for 90,000 shares vest in equal installments on February 18, 2012, February 18, 2013, February 18, 2014, February 18, 2015 and February 18, 2016. |
With respect to Mr. Nardelli’s stock options that have not vested, the options for 4,050 shares vest on February 21, 2012; the options for 8,504 shares vest in equal installments on February 20, 2012 and February 20, 2013; the options for 23,816 shares vest in equal installments on February 17, 2012, February 17, 2013, February 17, 2014, and February 17, 2015; and the options for 33,750 shares vest in equal installments on February 18, 2012, February 18, 2013, February 18, 2014, February 18, 2015 and February 18, 2016.
With respect to Mr. Fitzpatrick’s stock options that have not vested, the options for 4,050 shares vest on February 21, 2012; the options for 8,504 shares vest in equal installments on February 20, 2012 and February 20, 2013; the options for 23,816 shares vest in equal installments on February 17, 2012, February 17, 2013, February 17, 2014, and February 17, 2015; and the options for 30,000 shares vest in equal installments on February 18, 2012, February 18, 2013, February 18, 2014, February 18, 2015 and February 18, 2016.
With respect to Mr. Lebel’s stock options that have not vested, the options for 900 shares vest on March 2, 2012; the options for 2,834 shares vest in equal installments on February 20, 2012 and February 20, 2013; the options for 7,940 shares vest in equal installments on February 17, 2012, February 17, 2013, February 17, 2014, and February 17, 2015; and the options for 10,125 shares vest in equal installments on February 18, 2012, February 18, 2013, February 18, 2014, February 18, 2015 and February 18, 2016.
With respect to Mr. Iantosca’s stock options that have not vested, the options for 1,350 shares vest on March 2, 2012; the options for 2,836 shares vest in equal installments on February 20, 2012 and February 20, 2013; the options for 4,252 shares vest in equal installments on February 18, 2012, February 18, 2013 and February 18, 2014; the options for 7,940 shares vest in equal installments on February 11, 2012, February 11, 2013, February 11, 2014, and February 11, 2015; and the options for 10,125 shares vest in equal installments on February 18, 2012, February 18, 2013, February 18, 2014, February 18, 2015 and February 18, 2016.
(2) | With respect to Mr. Garbarino’s shares that have not vested, the 781 shares vest on February 21, 2012; the 1,200 shares vest in equal installments on March 1, 2012 and March 1, 2013; and the 4,360 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, and March 1, 2015. |
With respect to Mr. Nardelli’s shares that have not vested, the 259 shares vest on February 21, 2012; the 400 shares vest in equal installments on March 1, 2012 and March 1, 2013; the 1,452 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, and March 1, 2015; and the 2,557 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, March 1, 2015 and March 1, 2016.
With respect to Mr. Fitzpatrick’s shares that have not vested, the 259 shares vest on February 21, 2012; the 400 shares vest in equal installments on March 1, 2012 and March 1, 2013; the 1,452 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, and March 1, 2015; and the 2,273 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, March 1, 2015 and March 1, 2016.
With respect to Mr. Lebel’s shares that have not vested, the 134 shares vest in equal installments on March 1, 2012 and March 1, 2013; the 484 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, and March 1, 2015; and the 767 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, March 1, 2015 and March 1, 2016.
With respect to Mr. Iantosca’s shares that have not vested, the 84 shares vest on March 1, 2012; the 134 shares vest in equal installments on March 1, 2012 and March 1, 2013; the 213 shares vest in equal installments on March 1, 2012, March 1, 2013 and March 1, 2014; the 484 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, and March 1, 2015; and the 767 shares vest in equal installments on March 1, 2012, March 1, 2013, March 1, 2014, March 1, 2015 and March 1, 2016.
(3) | Market Value computed as of close of business on December |
25
Option Exercises and Stock Vested
The following table sets forth certain information regarding exercises of options or vesting of restricted shares during the Company’s fiscal year ended December 31, 2008.2011:
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 | |||||
John R. Garbarino | — | — | 1,714 | $ | 27,543 | ||||
Michael J. Fitzpatrick | — | — | 261 | 4,213 | |||||
Vito R. Nardelli | — | — | 261 | 4,213 | |||||
Joseph J. Lebel III | — | — | — | — | |||||
John K. Kelly | — | — | 87 | 1,404 |
Option awards | Stock awards | |||||||||||||||
Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($) | ||||||||||||
John R. Garbarino | — | — | 28,062 | 388,239 | ||||||||||||
Vito R. Nardelli | — | — | 10,190 | 141,005 | ||||||||||||
Michael J. Fitzpatrick | — | — | 9,043 | 125,130 | ||||||||||||
Joseph J. Lebel III | — | — | 4,034 | 55,825 | ||||||||||||
Joseph R. Iantosca | — | — | 344 | 4,751 |
Nonqualified Deferred Compensation
Supplemental Executive Retirement Plan
The Bank maintains a non-qualified Supplemental Executive Retirement Plan (“SERP”(the “SERP”) to provide eligible executive officers with additional retirement benefits. The benefits provided under the SERP make up the difference between an amount up to 70% of final basethe average of the highest compensation during any four consecutive calendar years and the benefits provided from the Bank’s 401(k) Retirement Plan plus the benefits which would have been provided from the Bank’s Retirement Plan (Pension Plan) which was frozen in 1996 and terminated in 1998. In addition, the SERP provides a benefit equal to the benefits lost from the ESOP due to the application of limitations imposed by the Code, as amended, on compensation and maximum benefits under the ESOP. The Bank established an irrevocable trust in connection with the SERP. This trust is funded with contributions from the Bank for the purpose of providing the benefits promised under the terms of the SERP. The assets of the trust are beneficially owned by the SERP participants, who recognize income as contributions are made to the trust. Earnings on the trust’s assets are taxable to the participants. On December 20, 2010, the Bank and Mr. Garbarino entered into an amendment to his SERP Agreement to make a portion of the payments due to Mr. Garbarino contingent upon performance against metrics established by the Compensation Committee to improve the tax deductibility to the Bank of his compensation.
Nonqualified Deferred Compensation Plan for Executives
SEOsNEOs may participate in the Deferred Compensation Plan for Executives (“Deferral Plan”).Plan. This plan allows eligible officers selected by the Bank’s Board to defer receipt of up to 100% of base salary and annual bonus pursuant to the terms of the plan.Deferral Plan. The participating executive’s deferral is credited to a bookkeeping account and increased on the last day of each month by interest earned at the rate equal to the Stable Fund Rate for the 401(k) Plan plus 250 basis points.
31
The following table sets forth certain information regarding nonqualified deferred compensation benefits to SEOsNEOs of the Company during the Company’s fiscal year ended December 31, 2008:2011:
Name | Plan | Executive contributions in last FY ($) | Registrant contributions in last FY ($) | Aggregate earnings in last FY ($) | Aggregate withdrawals/ distributions ($) | Aggregate balance at last FYE ($) | |||||||||||||||||||
John R. Garbarino | SERP Deferral Plan |
|
| — — | | 226,112 — | — — | | — — | — — | |||||||||||||||
Vito R. Nardelli | SERP Deferral Plan | — — | 77,025 — | — — | — — | — — |
| ||||||||||||||||||
Michael J. Fitzpatrick | SERP Deferral Plan |
|
|
| — — |
| |||||||||||||||||||
|
| — | | —
| | — — | |
| 384,450 | ||||||||||||||||
Joseph J. Lebel III | SERP Deferral Plan |
| — — | | — — | | — — | | — — | — — | |||||||||||||||
| SERP Deferral Plan | —
| — | | —
| | —
| | —
| — — |
(1) | Represents |
Excludes SERP account balances. |
Potential Payments Upon Termination or Change in Control
The following describes the provisions of contracts, agreements or plans (other than plans available generally to salaried employees that do not discriminate in favor of executive officers) which provide for payments to executive officers at, following or in connection with termination of employment or a change in control of the Company.
Employment Agreements —– Involuntary or Constructive TerminationTermination.
The employment agreement of Messrs. Garbarino, Nardelli and Fitzpatrick provide for certain severance payments in the event employment is terminated by the Company or the Bank without cause or the executive terminates employment under the circumstances described above under “Employment Agreements.” The severance payment provided under the employment agreements would be equal to (i) the amount of remaining payments the executive would receive if he had continued employment during the remaining term of the agreement at the executive’s base salary as of the date of termination and (ii) an amount equal to the annual contributions that would have been made on executive’s behalf to any employee benefit plans of the Company or the Bank during the remaining term of the agreement based on contributions made as of the date of termination. In addition, the executive would receive continued life, medical, dental and disability coverage for the remaining term of the agreement. Payments, other than continued welfare benefits, would be made on a lump sum basis. Payments and benefits would be provided by either the Company or the Bank.
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Employment Agreements —– Involuntary or Constructive Termination Following Change in ControlControl.
The employment agreements for Messrs. Garbarino, Nardelli and Fitzpatrick provide for certain payments if the officer’s employment is terminated by the Company or the Bank following a “change in control” due to (i) the executive’s dismissal, other than for cause, or (ii) the executive’s voluntary resignation following any failure to reelect the Executive to his current offices, a material change in the Executive’s functions, duties or responsibilities, a material change in the Executive’s principal place of employment, material reduction in the Executive’s salary, or material breach of the employment agreement unless such termination is due to death or for cause, as defined in the agreement.
A “change in control” means a change in control of the Company or the Bank involving (a) an event reportable on form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934;Act; (b) a Change in Control within the meaning of the Home Owners’ Loan Act of 1933, the Federal Deposit Insurance Act or Office of Thrift Supervision regulations; (c) a person becoming beneficial owner, directly or indirectly, of 20% the outstanding securities of the Company or the Bank; (d) a change in majority control of the Board of Directors of the Company, other than a
27
change approved by the incumbent board; (e) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Company or the Bank in which either entity is not the survivor; (f) a distribution soliciting proxies for shareholderstockholder approval of a plan of reorganization, merger or consolidation of the Company or the Bank as a result of which the outstanding shares of the class of securities then subject to the plan would be exchanged for or converted into cash or property or securities not issued by either entity; or (g) a tender offer is made for 20% or more of the voting securities of the Company or the Bank.
If the change in control benefit is triggered, the officer is entitled to a benefit equal to the greater of (A) three times the executive’s average annual compensation paid in the preceding five taxable years or (B) the payments due for the remaining term of the agreement. In addition, the executive would become entitled to continued life, medical, dental and disability coverage for 36 months following the change in control. In the event payments and benefits under employment agreements, together with other payments and benefits he may receive, would constitute an excess parachute payment under Section 280G of the Internal Revenue Code, the employment agreements provide that the executive would be entitled to the greater of (i) the total net-after tax benefit or (ii) the net-after tax benefit after reduction of the aggregate parachute to an amount $1.00 less than the executive’s “base amount,” which is three times the executive’s average taxable compensation for the five tax years ending with the tax year prior to the change in control. Payments, other than continued welfare benefits, would be made on a lump sum basis. Benefits would be provided by the Company or the Bank.
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Change in Control Agreements —– Involuntary or Constructive Termination Following Change in ControlControl.
The change in control agreementsCIC Agreements with Messrs. Lebel and KellyIantosca provide for certain payments if the officer’s employment is terminated by the Company or the Bank following a “change in control” due to (i) the executive’s dismissal other than for cause or (ii) the executive’s voluntary resignation following any failure to re-elect the Executive to his current offices, a material change in the Executive’s functions, duties or responsibilities, a material change in the Executive’s principal place of employment, a material change in the Executive’s salary, or a material breach of the change of controlCIC Agreement by the Company or the Bank, unless such termination is due to death or for cause, as defined in the agreement.
A “change in control” means a change in controlFor purposes of the CompanyCIC Agreements, the definition of “Change in Control” is the same as described above under “Employment Agreements – Involuntary or the Bank involving (a) an event reportable on Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934; (b)Constructive Termination Following a Change inof Control within the meaning of the Home Owners’ Loan Act of 1933, the Federal Deposit Insurance Act or Office of Thrift Supervision regulations; (c) a person becoming beneficial owner, directly or indirectly of 20% the outstanding securities of the Company or the Bank; (d) a change in majority control of the Board of Directors of the Company, other than a change approved by the incumbent board; (e) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Company or the Bank in which either entity is not the survivor; (f) a distribution soliciting proxies for a shareholder approval of a plan of reorganization, merger or consolidation of the Company or the Bank as a result of which the outstanding shares of the class of securities then subject to the plan would be exchanged for or converted into cash or property or securities not issued by either entity; or (g) a tender offer is made for 20% or more of the voting securities of the Company or the Bank..”
If the change in control benefit is triggered, the officer is entitled to a benefit equal to two times the executive’s average annual compensation paid in the most recent five taxable years. In addition, the executive would become entitled to continued life, medical, dental and disability coverage for 36 months following the change in control. In the event payments and benefits under the change in control agreements,CIC Agreements, together with other payments and benefits he may receive, would constitute an excess parachute payment under Section 280G of the Internal Revenue Code, the change in control agreementsCIC Agreements provide that payments under the agreements will be reduced to an amount $1.00 less than the executive’s “base amount,” which is three times the executive’s average taxable compensation for the five tax years ending with the tax year prior to the change in control. Payments, other than continued welfare benefits, would be made on a lump sum basis. Benefits would be provided by the Company or the Bank.
Equity Incentive Plan —– Change in Control GrantGrant.
In the event of a change in control, each of the 2006 Stock IncentivePlan and the 2011 Stock Plan provides that each option award under the plan will become fully exercisable and remain exercisable for the duration of theirits term and all restricted stock awards will become fully vested. In addition, theeach such plan provides that all stock awards available for grant under the plan will be automatically granted to employees and outside directors in proportion to the grants of awards previously made under the 2011 Stock Plan, the 2006 Stock Incentive Plan and the 2000 Stock Option Plan. In the event of a Change in Control, the 2000 Stock Option Plan provides that each option award under the Plan will
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become fully exercisable and remain exercisable for the duration of its term. In addition, the Plan provides that all options available for grant under the Plan will be automatically granted to current employees and outside directors in proportion to grants of options previously granted under the 2000 Stock Option Plan and the Amended and Restated 1997 Incentive Plan at a weighted average exercise price of all options granted under such Plans. Under both Plans,these plans, “Change in Control” has the same meaning as described above under “Employment Agreements Involuntary or Constructive Termination Following a Change in Control.”
Supplemental Executive Retirement Plan —– Involuntary or Constructive TerminationTermination.
In the event of a “change in control” participants in the Supplemental Executive Retirement Plan are entitled to a lump sum contribution equal to the supplemental retirement income benefit contribution required for the year in which the change in control occurs plus the present value of the total supplemental retirement income benefit contributions which would have been required for the three years following the year in which the change in control occurs.
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Summary of Potential Payments Upon Termination or Change in ControlControl.
The following tables summarize potential payments to each executive officer listed on the summary compensation table assuming a triggering termination of employment occurred on December 31, 2008, the last business day of the 2008 fiscal year.2011. The tables do not reflect benefits under plans that do not discriminate in favor of executive officers and are available generally to all salaried employees.
The amounts shown in the following tables in scenarios involving involuntary termination of employment reflect the maximum amount that could be payable without violating the prohibitions on the payment of golden parachute payments under CPP. Where an amount has been limited, the amount of the payment that would have been made in the absence of the CPP limitations is set forth in [brackets] immediately below the amount which was reduced.
The following tables do not reflect the limitation on payments upon departure from the Company for any reason which may be imposed by the ARRA.
John R. Garbarino
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control.(7) | Death | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||||||||||||||
Cash Compensation | $ | 3,431,118 | (1) | — | $ | 2,812,982 | — | $ | 2,029,702 | (2) | — | $ | 3,309,485 | — | ||||||||||||||||||
Value of Continued Health and Welfare Benefits | $ | 69,567 | (2) | — | $ | 69,567 | (2) | — | 67,363 | (3) | — | 78,228 | (3) | — | ||||||||||||||||||
Acceleration of Stock and Option Awards | — | $ | 148,089 | (3) | — | $ | 148,089 | (3) | — | $ | 302,220 | (4) | — | $ | 302,220 | (4) | ||||||||||||||||
Automatic Option Grant | — | — | (4) | — | — | |||||||||||||||||||||||||||
Automatic Stock Grant | — | $ | 1,663,635 | (5) | — | — | — | 4,421,869 | (5) | — | — | |||||||||||||||||||||
SERP Contribution | — | $ | 1,166,645 | (6) | — | $ | 2,812,983 | (8) | — | 1,533,112 | (6) | — | 1,597,357 | (7) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total | $ | 3,500,685 | $ | 2,978,369 | $ | 2,882,549 | $ | 2,961,072 | $ | 2,097,065 | $ | 6,257,201 | $ | 3,387,713 | $ | 1,899,577 |
(1) | Executive would also receive benefits set forth under “Change in Control.” |
(2) | Represents estimated lump sum payments and benefits due for the remaining |
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Approximate lump sum value of continued life, medical, dental and disability coverage for |
Represents the value of accelerated vesting of |
(5) | Represents the value of an automatic change in control award of |
(6) | Represents the value of the lump sum change in control SERP contribution equal to the present value of the contributions that would be required for the three years following the change in control. |
(7) |
Represents the lump sum value of the remaining SERP contributions that would be required following the death of the executive. |
Michael J. FitzpatrickVito R. Nardelli
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control.(7) | Death | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||||||||||||||
Cash Compensation | $ | 1,198,723 | (1) | — | $ | 1,021,054 | — | $ | 1,645,130 | (2) | — | $ | 1,414,412 | — | ||||||||||||||||||
Value of Continued Health and Welfare Benefits | $ | 60,822 | (2) | — | $ | 60,822 | (2) | — | 72,293 | (3) | — | 83,954 | (3) | — | ||||||||||||||||||
Acceleration of Stock and Option Awards | — | $ | 33,897 | (3) | — | $ | 33,897 | (3) | — | $ | 134,147 | (4) | — | $ | 134,147 | (4) | ||||||||||||||||
Automatic Option Grant | — | — | (4) | — | — | |||||||||||||||||||||||||||
Automatic Stock Grant | — | $ | 663,734 | (5) | — | — | — | 1,137,404 | (5) | — | — | |||||||||||||||||||||
SERP Contribution | — | $ | 195,173 | (6) | — | $ | 1,265,633 | (8) | — | 262,783 | (6) | — | 273,865 | (7) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total | $ | 1,259,545 | $ | 892,804 | $ | 1,081,876 | $ | 1,299,530 | $ | 1,717,423 | $ | 1,534,334 | $ | 1,498,366 | $ | 408,012 |
(1) | Executive would also receive benefits set forth under “Change in Control.” |
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(2) | Represents estimated lump sum payments and benefits due for the remaining |
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Approximate lump sum value of continued life, medical, dental and disability coverage for |
Represents the value of accelerated vesting of |
(5) | Represents the value of an automatic change in control award of |
(6) | Represents the value of the lump sum change in control SERP contribution equal to the present value of the contributions that would be required for the three years following the change in control. |
(7) |
Represents the lump sum value of the remaining SERP contributions that would be required following the death of the executive. |
Vito R. NardelliMichael J. Fitzpatrick
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control.(7) | Death | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||||||||||||||
Cash Compensation | $ | 695,664 | (1) | — | $ | 695,664 | — | $ | 1,338,294 | (2) | — | $ | 1,175,311 | — | ||||||||||||||||||
$ | [1,427,340 | ](1) | — | $ | [1,220,252 | ](1) | — | |||||||||||||||||||||||||
Value of Continued Health and Welfare Benefits | $ | 70,925 | (2) | — | $ | 70,925 | (2) | — | 63,923 | (3) | — | 74,233 | (3) | — | ||||||||||||||||||
Acceleration of Stock and Option Awards | — | $ | 33,897 | (3) | — | $ | 33,897 | (3) | — | $ | 130,435 | (4) | — | $ | 130,435 | (4) | ||||||||||||||||
Automatic Option Grant | — | — | (4) | — | — | |||||||||||||||||||||||||||
Automatic Stock Grant | — | $ | 379,127 | (5) | — | — | — | 1,635,606 | (5) | — | — | |||||||||||||||||||||
SERP Contribution | — | $ | 129,240 | (6) | — | $ | 317,646 | (8) | — | 255,941 | (6) | — | 1,062,270 | (7) | ||||||||||||||||||
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|
|
| |||||||||||||||||||||||||||||
Total | $ | 766,589 | $ | 542,264 | $ | 766,589 | $ | 351,543 | $ | 1,402,217 | $ | 2,021,982 | $ | 1,249,544 | $ | 1,192,705 | ||||||||||||||||
$ | [1,498,265 | ](1) | $ | [1,291,177 | ](1) |
(1) | Executive would also receive benefits set forth under “Change in Control.” |
(2) | Represents estimated lump sum payments and benefits due for the remaining |
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Approximate lump sum value of continued life, medical, dental and disability coverage for |
Represents the value of accelerated vesting of |
(5) | Represents the value of an automatic change in control award of |
(6) | Represents the value of the lump sum change in control SERP contribution equal to the present value of the contributions that would be required for the three years following the change in |
Joseph J. Lebel III
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control.(5) | Death | ||||||||||
Cash Compensation | — | — | $ | 321,666 | — | |||||||||
Value of Continued Health and Welfare Benefits | — | — | $ | 59,205 | (6) | — | ||||||||
Acceleration of Stock and Option Awards | — | $ | 5,561 | (1) | — | $ | 5,561 | (1) | ||||||
Automatic Option Grant | — | — | (2) | — | — | |||||||||
Automatic Stock Grant | — | $ | 78,767 | (3) | — | — | ||||||||
SERP Contribution | — | — | (4) | — | — | (7) | ||||||||
Total | — | $ | 84,328 | $ | 375,871 | $ | 5,561 |
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(7) | Represents the lump sum value of the remaining SERP contributions that would be required following the death of the executive. |
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John K. KellyJoseph J. Lebel III
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control.(6) | Death | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||||||||||||
Cash Compensation | — | — | $ | 522,080 | — | — | — | $ | 556,019 | — | ||||||||||||||||||||
Value of Continued Health and Welfare Benefits | — | — | $ | 60,458 | (4) | — | — | — | 72,101 | (2) | — | |||||||||||||||||||
Acceleration of Stock and Option Awards | — | $ | 11,321 | (1) | — | $ | 11,321 | (1) | — | $ | 42,478 | (3) | — | $ | 42,478 | (3) | ||||||||||||||
Automatic Option Grant | — | — | (2) | — | — | |||||||||||||||||||||||||
Automatic Stock Grant | — | $ | 219,552 | (3) | — | — | — | 333,612 | (4) | — | — | |||||||||||||||||||
SERP Contribution | — | $ | 130,987 | (5) | — | $ | 309,845 | (7) | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||
Total | — | $ | 361,860 | $ | 582,538 | $ | 321,166 | — | $ | 376,090 | $ | 628,120 | $ | 42,478 |
(1) |
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(2) |
Approximate lump sum value of continued life, medical, dental and disability coverage for 36 months following termination. |
Represents the value of |
(4) | Represents the value of an automatic change in control award of 155 shares of Company common stock under the 2006 Stock Plan and 25,370 shares of Company common stock under the 2011 Stock Plan based on the number of shares remaining in those plans as of December 31, 2011. |
Joseph R. Iantosca
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||
Cash Compensation | — | — | $ | 520,951 | — | |||||||||||
Value of Continued Health and Welfare Benefits | — | — | 72,240 | (2) | — | |||||||||||
Acceleration of Stock and Option Awards | — | $ | 48,856 | (3) | — | $ | 48,856 | (3) | ||||||||
Automatic Stock Grant | — | 405,549 | (4) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | — | $ | 454,405 | $ | 593,191 | $ | 48,856 |
Executive would also receive benefits set forth under “Change in Control.” |
Approximate lump sum value of continued life, medical, dental and disability coverage for 36 months following termination. |
(3) | Represents the value of accelerated vesting of 1,683 shares of restricted Company stock and stock options covering 26,503 shares of Company stock. Stock options that become vested due to a change in control or death are valued based on their option spread (i.e, the |
(4) | Represents the value of an automatic change in control award of 182 shares of Company common stock under the 2006 Stock Plan and 30,847 shares of Company common stock under the 2011 Stock Plan based on the number of shares remaining in those plans as of December 31, 2011. |
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DIRECTOR COMPENSATION
The following table sets forth certain information regarding compensation earned by or paid to the Directors during the Company’s fiscal year ended December 31, 2008:2011:
Name | Fees Earned or Paid in Cash ($)1 | Stock Awards ($)2 | Option Awards ($)3 | Nonqualified Deferred Compensation Earnings ($)4 | All Other Compensation ($)5 | Total ($) | Fees Earned or Paid in Cash ($)1 | Stock Awards ($)2 | Option Awards ($)3 | Nonqualified Deferred Compensation Earnings ($)4 | All Other Compensation ($)5 | Total ($) | ||||||||||||||||||||||||
Joseph J. Burke | 59,600 | 4,548 | 5,828 | — | 11,987 | 81,963 | 67,200 | 11,041 | 11,025 | — | 14,512 | 103,778 | ||||||||||||||||||||||||
Angelo Catania | 47,600 | 4,548 | 5,828 | — | 9,062 | 67,038 | 60,800 | 11,041 | 11,025 | — | 10,970 | 93,835 | ||||||||||||||||||||||||
John W. Chadwick | 44,400 | 4,548 | 5,828 | — | 7,809 | 62,585 | 60,000 | 11,041 | 11,025 | — | 9,146 | 91,212 | ||||||||||||||||||||||||
Carl Feltz, Jr. | 49,200 | 4,548 | 5,828 | — | 9,062 | 68,638 | ||||||||||||||||||||||||||||||
Carl Feltz, Jr.6 | 11,550 | 11,041 | 11,025 | — | 4,072 | 37,687 | ||||||||||||||||||||||||||||||
Donald E. McLaughlin | 45,200 | 4,548 | 5,828 | — | 9,062 | 64,638 | 58,400 | 11,041 | 11,025 | — | 10,970 | 91,435 | ||||||||||||||||||||||||
Diane F. Rhine | 55,800 | 4,548 | 5,828 | 4,611 | 9,062 | 79,849 | 65,000 | 11,041 | 11,025 | — | 10,970 | 98,036 | ||||||||||||||||||||||||
Mark G. Solow6 | 5,375 | 13,020 | — | — | — | 18,395 | ||||||||||||||||||||||||||||||
John E. Walsh | 58,800 | 4,548 | 5,828 | 8,182 | — | 77,358 | 67,200 | 11,041 | 11,025 | — | — | 89,266 |
(1) | Aggregate dollar amount of all fees earned or paid in cash for services as a director, including annual retainer fees, committee and/or chairmanship fees, and meeting fees. |
(2) | For awards of stock, the amounts presented above reflect |
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(3) | For awards of stock options, the amounts |
(4) | Reflects above-market or preferential earnings on non-tax-qualified deferred compensation. |
(5) | Company paid medical benefits. |
(6) | Mr. Feltz served as a director until he passed away in April 2011. Mr. Solow was appointed as his replacement in November 2011. |
Cash and Stock Retainers and Meeting Fees for Non-Employee DirectorsDirectors.
The following tables set forth the applicable retainers and fees that will beare paid to non-employee directors for their service on the Board of Directors of the Bank and the Board of Directors of the Company. Until a Director attains the stock ownership levels required under the Company’s stock ownership guidelinesGuidelines for directors, the Company and Bank retainers will beare paid in the form of Company stock.
Directors of OceanFirst Bank: | ||||||||
Annual Retainer | $ | 15,000 | (paid in quarterly installments) | $ | 15,000 | (paid in quarterly installments) | ||
Fee per Board Meeting (Regular or Special) | $ | 1,000 | $ | 1,000 | ||||
Fee per Committee Meeting | $ | 800 | $ | 800 | ||||
Directors of OceanFirst Financial Corp.: | ||||||||
Annual Retainer | $ | 10,000 | (paid in quarterly installments) | $ | 20,000 | (paid in quarterly installments) | ||
Additional Annual Cash Retainer for the Chairperson of each of the Audit and Corporate Governance/Nominating Committees | $ | 8,000 | ||||||
The Human Resources/Compensation Committees | $ | 5,000 | ||||||
Additional Annual Cash Retainer for the Chairperson of: | ||||||||
each of the Audit Committee and the Corporate Governance/Nominating Committee: | $ | 8,000 | ||||||
the Compensation Committee: | $ | 5,000 |
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Deferred Compensation Plan for DirectorsDirectors.
The Bank maintains a deferred compensation plan for the benefit of outside directors. The plan is a non-qualified arrangement which offers participating directors the opportunity to defer compensation through a reduction in fees in lieu of a promise of future benefits. Such benefits are payable commencing at an age mutually agreed upon by the Bank and the participating director (the “Benefit Age”“Benefit Age”). The benefits equal the account balance of the director annuitized over a period of time mutually agreed upon by the Bank and the director, and then reannuitized at the beginning of each calendar year thereafter. Lump sum payouts are also available upon eligibility for distribution of benefits or in the event of the death of the director. The account balance equals deferrals and interest. Currently, the plan credits interest on deferrals at a rate equal to the sum of (i) the “Stable Fund” investment option in the Bank’s qualified 401(k) plan plus (ii) 250 basis points. Early distribution of benefits may occur under certain circumstances which include change in control, financial hardship, termination for cause, disability or termination of the plan by authorization of the Board of Directors.
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HUMAN RESOURCES/COMPENSATION COMMITTEE CERTIFICATION
The following certification is provided pursuant to the Interim Final Rule of the U.S. Department of the Treasury, 31 C.F.R. Part 31:
The Human Resources/Compensation Committee of OceanFirst Financial Corp., hereby certifies that the Human Resources/Compensation Committee has reviewed with the Chief Risk Officer of OceanFirst Bank, the Senior Executive Officer (“SEO”) incentive compensation arrangements and has made reasonable efforts to ensure that such arrangements do not encourage SEOs to take unnecessary and excessive risks that threaten the value of the financial institution.
The Human Resources/Compensation Committee
Diane F. Rhine, Chairperson
Carl Feltz, Jr.
John E. Walsh
HUMAN RESOURCES/COMPENSATION COMMITTEE REPORT
The Human Resources/Compensation Committee acts pursuant to the Human Resources/Compensation Committee Charter, a copy of which is available at the Company’s website (www.oceanfirst.com). The Human Resources/Compensation Committee reviews and reassesses the adequacy of the Human Resources/Compensation Committee Charter on an annual basis. The following is the report of the Human Resources/Compensation Committee with respect to the Company’s Compensation Discussion and Analysis for the fiscal year ended December 31, 2008:2011:
The Human Resources/Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management of the Company. Based on the review and discussions, the Human Resources/Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 20082011 and the Company’s proxy statement for the annual meeting of stockholders to be held on May 7, 2009.10, 2012.
The Human Resources/Compensation Committee
Diane F. Rhine, Chairperson
Carl Feltz, Jr.Angelo Catania
John E. Walsh
The above report of the Human Resources/Compensation Committee does not constitute “soliciting material” and should not be deemed to be “filed” with the Securities and Exchange Commission or incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Securities Exchange Act, of 1934, except to the extent that the Company specifically incorporates this report by reference in any of those filings.
HUMAN RESOURCES/COMPENSATION COMMITTEE INTERLOCKS
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Human Resources/Compensation Committee Interlocks and Insider ParticipationAND INSIDER PARTICIPATION
No person serving as a member of the Human Resources/Compensation Committee, Diane F. Rhine, Carl Feltz Jr.,Angelo Catania or John E. Walsh, during the past fiscal year, is or was a current or former officer or employee of OceanFirst Financial Corp.the Company or OceanFirstthe Bank or engaged in certain transactions with OceanFirst Financial Corp.the Company or OceanFirstthe Bank that are required to be disclosed by Securities and Exchange Commission regulations. See “Transactions With Management—Management – Other Transactions.” Additionally, there are no compensation committee “interlocks,” which generally means that no executive officer of OceanFirst Financial Corp.the Company or OceanFirstthe Bank served as a director or member of the compensation committee of another entity, one of whose executive officers serves as a Director or member of the Human Resources/Compensation Committee.
Section 16(a) Beneficial Ownership Reporting ComplianceSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires OceanFirst’sthe Company’s executive officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC.Commission. Executive officers, directors and greater than 10% stockholders are required by Securities and Exchange Commission regulation to furnish the Company with copies of all Section 16(a) forms they file.
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Based solely on a review of copies of such reports it has received and written representations provided to the Company from the individuals required to file the reports, the Company believes that each of the Company’s executive officers and directors, and greater than 10% beneficial owners have complied with all applicable reporting requirements for transactions in OceanFirst Common Stockthe Company’s common stock during the fiscal year ended December 31, 2008.2011.
Transactions with ManagementTRANSACTIONS WITH MANAGEMENT
Loans and Extensions of Credit.Credit
The Sarbanes-Oxley Act of 2002 generally prohibits loans by the Company to its executive officers and directors. However, the Sarbanes-Oxley Act contains a specific exemption from such prohibition for loans by OceanFirst Bank to its executive officers and directors as long as it is in compliance with federal banking regulations. The Bank’s policies require that all transactions between the Bank and its executive officers, directors, holders of 10% or more of the shares of any class of its common stock, and affiliates thereof, contain terms no less favorable to the Bank than could have been obtained by it in arm’s length negotiations with unaffiliated persons and must be prior approved by a majority of independent outside directors of the Bank not having any interest in the transaction. All loans made by the Bank to its executive officers and directors were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with other persons, and did not involve more than the normal risk of collectibility or present other unfavorable features.
Notwithstanding the above, the Bank offers to executive officers residential loans secured by their primary residence on terms not available to the public but available to all other full-time employees, as permitted under federal banking regulations. The Bank has a policy of providing mortgage, home equity and auto loans to officers and employees who have completed one year of service, at a rate that is 1% below the Bank’s prevailing rate for the specific type of loan. The following chart reflects loans outstanding to executive officers and immediate family members sharing the same household as the executive officer, which were made at the discounted interest rate and which exceed $120,000 in the period presented. The information is presented as of December 31, 2011:
OCEANFIRST BANK CREDIT EXTENSIONS TO INSIDERS
AS OF DECEMBER 31, 2011
NAME | POSITION | LOAN TYPE | LARGEST AMOUNT OF PRINCIPAL OUTSTANDING IN 2011 | PRINCIPAL OUTSTANDING AS OF DECEMBER 31, 2011 | PRINCIPAL PAID IN 2011 | INTEREST PAID IN 2011 | CURRENT RATE | |||||||||||||||||
Joseph R. Iantosca | First Senior Vice President, Chief Administrative Officer of the Bank | First Mortgage | $ | 550,297 | $ | 533,254 | $ | 17,042 | $ | 12,220 | 2.0 | % |
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Other Transactions.On April 20, 2006, the Board of Directors placed a moratorium on any transactions between the Company and Bank and any director, their family members or affiliated entities. No such transactions took place in 2008.2011.
Corporate Governance/Nominating Committee ProceduresCORPORATE GOVERNANCE/NOMINATING COMMITTEE PROCEDURES
General
It is the policy of the Company’s Corporate Governance/Nominating Committee of the Board of Directors of the Company to consider director candidates recommended by shareholdersstockholders who appear to be qualified to serve on the Company’s Board of Directors. The Corporate Governance/Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and the Corporate Governance/Nominating Committee does not perceive a need to increase the size of the Board of Directors. In order to avoid the unnecessary use of the Corporate Governance/Nominating Committee’s resources, the Corporate Governance/Nominating Committee will consider only those director candidates recommended in accordance with the procedures set forth below:below.
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Procedures to be Followed by Stockholders
To submit a recommendation of a director candidate to the Corporate Governance/Nominating Committee, a shareholderstockholder should submit the following information in writing, addressed to the Chairman of the Corporate Governance/Nominating Committee, care of the Corporate Secretary, at the main office of the Company:
(1) | The name of the person recommended as a director candidate; |
(2) | All information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the |
(3) | The written consent of the person being recommended as a director candidate to being named in the proxy statement as a nominee and to serving as a director if elected; |
(4) | As to the |
(5) | A statement disclosing whether such |
In order for a director candidate to be considered for nomination at the Company’s annual meeting of shareholders,stockholders, the recommendation must be received by the Corporate Governance/Nominating Committee at least 120 calendar days prior to the date the Company’s proxy statement was released to shareholdersstockholders in connection with the previous year’s annual meeting, advanced by one year.
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Criteria for Director Nominees
The Corporate Governance/Nominating Committee has adopted a set of criteria that it considers when it selects individuals to be nominated for election to the Board of Directors. The same criteria are used for persons nominated by the Committee or by a stockholder. First a candidate must meet the eligibility requirements set forth in the Company’s bylaws, which include an age limitation. A candidate also must meet any qualification requirements set forth in any Board or committee governing documents.
The Corporate Governance/Nominating Committee will consider the following criteria in selecting nominees: financial, regulatory and business experience; familiarity with and participation in the local community; integrity, honesty and reputation; dedication to the Company and its stockholders; independence; and any other factors the Corporate Governance/Nominating Committee deems relevant, including age, diversity of skills, size of the Board of Directors and regulatory disclosure obligations.
The Corporate Governance/Nominating Committee may weigh the foregoing criteria differently in different situations, depending on the composition of the Board of Directors at the time.time, and whether a director is expected to retire in the near future. While no single nominee may possess all of the skills needed to be a director, the Committee seeks to maintain a diversity of skills among the board members necessary for the optimal functioning of the Board in its oversight of the Company. The Committee will strive to maintain at least one director who meets the definition of “audit committee financial expert” under the Securities and Exchange Commission’s regulations.
In addition, prior to nominating an existing director for re-election to the Board of Directors, the Corporate Governance/Nominating Committee will consider and review an existing director’s Board and committee attendance and performance; length of Board service; experience, skills and contributions that the existing director brings to the Board; and independence.
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Process for Identifying and Evaluating Nominees
Pursuant to the Corporate Governance/Nominating Committee Charter as approved by the Board, the Corporate Governance/Nominating Committee is charged with the central role in the process relating to director nominations, including identifying, interviewing and selecting individuals who may be nominated for election to the Board of Directors. The process the committee follows when it identifies and evaluates individuals to be nominated for election to the Board of Directors is as follows:
Identification.For purposes of identifying nominees for the Board of Directors, the Corporate Governance/Nominating Committee relies on personal contacts of the committee and other members of the Board of Directors as well as its knowledge of members of the Company’s local communities. The Corporate Governance/Nominating Committee will also consider director candidates recommended by shareholdersstockholders in accordance with the policy and procedures set forth above. The Corporate Governance/Nominating Committee has not received any recommended nominees from the Company’s shareholdersstockholders to be considered for election at this annual meeting. The Corporate Governance/Nominating Committee has not previously used norand does not currently usesuse an independent search firm to identify or evaluate potential director nominees.
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Evaluation.In evaluating potential clients,director candidates, the Corporate Governance/Nominating Committee determines whether the candidate is eligible and qualified for service on the Board of Directors by evaluating the candidate under the selection criteria set forth above. In addition, the Corporate Governance/Nominating Committee will conduct a check of the individual’s background and interview the candidate.
Additional InformationADDITIONAL INFORMATION
Stockholder Proposals
In order to be eligible for inclusion in the Corporation’s proxy materials for next year’s Annual Meeting of Stockholders, any stockholder proposal to take action at such meeting must be received at the Corporation’s main office at 975 Hooper Avenue, Toms River, New Jersey, 08754, no later than December 8, 2009.3, 2012. If next year’s Annual Meeting is held on a date more than 30 calendar days from May 7, 2010,10, 2013, a stockholder proposal must be received by a reasonable time before the Company begins to print and mail its proxy solicitation for such Annual Meeting. Any stockholder proposals will be subject to the requirements of the proxy rules adopted by the Securities and Exchange Commission.
Stockholder Nominations
The Company’s Bylaws provide that in order for a stockholder to make nominations for the election of directors or proposals for business to be brought before the Annual Meeting, a stockholder must deliver notice of such nominations and/or proposals to the Corporate Secretary not less than 90 days before the date of the Annual Meeting; provided that if less than 100 days’ notice or prior public disclosure of the date of the Annual Meeting is given to stockholders, such notice must be delivered not later than the close of the tenth day following the day on which notice of the date of the Annual Meeting was mailed to stockholders or prior public disclosure of the meeting date was made. Stockholders must comply with the Company’s procedures to be followed by stockholders to submit a recommendation of a director candidate. See “Corporate“Corporate Governance/Nominating Committee Procedures.Procedures.” A copy of the full text of the Bylaw provisions discussed above may be obtained by writing the Corporate Secretary at 975 Hooper Avenue, Toms River, New Jersey 08754-2009.
ShareholderStockholder Communications
The Company encourages stockholder communications to the Board of Directors and/or individual directors. Communications regarding financial or accounting policies may be made to the Chairman of the Audit Committee, Joseph J. Burke, CPA at the Company’s address. Other communications to the Board of Directors may be made to the Chairman of the Corporate Governance/Nominating Committee, John E. Walsh at the Company’s address. Communications to individual directors may be made to such director at the Company’s address.
In addition, the Board of Directors encourages directors to attend the annual meeting of shareholders.stockholders. All directors then appointed attended the annual meeting of shareholdersstockholders held on May 9, 2008.5, 2011.
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MiscellaneousMISCELLANEOUS
The Company will pay the cost of this proxy solicitation. The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of the Company common stock. In addition to soliciting proxies by mail, directors, officers and regular employees of the Company may solicit proxies personally or by telephone without receiving additional compensation. The Company will pay Georgeson Inc., a proxy solicitation firm, a fee of $6,500$6,000 plus expenses to assist the Company in soliciting proxies.
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The Company’s Annual Report to Stockholders has been mailed to persons who were stockholders as of the close of business on March 10, 2009.15, 2012. Any stockholder who has not received a copy of the Annual Report may obtain a copy by writing to the Corporate Secretary of the Company. The Annual Report is not to be treated as part of the proxy solicitation material or as having been incorporated in this proxy statement by reference.
Important Notice Regarding the Availability of Proxy Materials for the
ShareholdersStockholders Meeting to Be Held on May 7, 200910, 2012
The proxy statement and annual report to shareholdersstockholders are available on the Company’s website (www.oceanfirst.com).
A copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008,2011, as filed with the Securities and Exchange Commission may be accessed through the Company’s website (www.oceanfirst.com). A copy of the Form 10-K (without exhibits) will be furnished without charge to persons who were stockholders as of the close of business on March 10, 200915, 2012 upon written request to Jill Apito Hewitt, Senior Vice President and Investor Relations Officer, OceanFirst Financial Corp., 975 Hooper Avenue, Toms River, New Jersey 08754.
If you and others who share your address own your shares in street name, your broker or other holder of record may be sending only one annual report and proxy statement to your address. This practice, known as “householding,” is designed to reduce the printing and postage costs. However, if a shareholderstockholder residing at such an address wishes to receive a separate annual report or proxy statement in the future, he or she should contact the broker or other holder of record. If you own your shares in street name and are receiving multiple copies of the annual report and proxy statement, you can request householding by contacting your broker or other holder of record.
Whether or not you plan to attend the annual meeting, please vote by marking, signing, dating and promptly returning the enclosed proxy card in the enclosed envelope. If you plan on attending and need directions to the meeting place, please contact Jill Apito Hewitt, Senior Vice President and Investor Relations Officer, OceanFirst Financial Corp., 975 Hooper Avenue, Toms River, New Jersey 08754.
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By Order of the Board of Directors
John K. Kelly
Steven J. Tsimbinos
Corporate Secretary
Toms River, New Jersey
April 3, 2009March 30, 2012
You are cordially invited to attend the Annual Meeting of Stockholders in person. Whether or not you plan to attend the Annual Meeting, you are requested to sign, date and promptly return the accompanying proxy card in the enclosed postage-paid envelope.
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ANNUAL MEETING OF SHAREHOLDERSSTOCKHOLDERS OF
OCEANFIRST FINANCIAL CORP.
May 7, 200910, 2012
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available atwww.oceanfirst.com. www.oceanfirst.com.
Please sign, date sign and mail
your proxy card in the
envelope provided as soon
as possible.
i Please detach along perforated line and mail in the envelope provided.i
¢ | 20303300000000001000 5 | 051012 |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES AS DIRECTORS SPECIFIED UNDER PROPOSAL 1, “FOR” PROPOSAL 2 AND “FOR” PROPOSAL 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES AS DIRECTORS SPECIFIED IN PROPOSAL 1 | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 2 AND 3. | |||||||||||||||||||||
1. Election of | FOR | AGAINST | ABSTAIN | |||||||||||||||||||
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Advisory vote on the compensation of our named executive officers. | ¨ | ¨ | ¨ | |||||||||||||||
¨ ¨ | WITHHOLD AUTHORITY FOR ALL EXCEPT (See instructions below) | ¡ Diane F. Rhine ¡ Mark G. Solow | 3. | The ratification of the appointment of KPMG LLP as independent registered public accounting firm of the Company for the fiscal year ending December 31, |
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The undersigned acknowledges receipt from the Company prior to the execution of this proxy of a Notice of Annual Meeting, an Annual Report to Stockholders and a Proxy Statement dated | ||||||||||||||||||||||
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. |
To withhold authority to vote for any individual nominee(s), mark“FOR ALL | ||||||||||||||||||||
I plan to attend the Meeting. | ¨ | |||||||||||||||||||
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | ¨ |
Signature of Stockholder | ||||||||||||||||||||||||
| Date: | Signature of
| Date: |
¢ | Note: | Please sign exactly as your name or names appear on this | ¢ |
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OCEANFIRST FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERSSTOCKHOLDERS
May 7, 200910, 2012
10:00 a.m.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints the Proxy Committee of the Board of OceanFirst Financial Corp. (the “Company”), each with full power of substitution to act as attorneys and proxies for the undersigned and to vote all shares of Common Stock of the Company which the undersigned is entitled to vote only at the Annual Meeting of Shareholders,Stockholders, to be held at The Crystal Point Yacht Club, 3900 River Road, at the intersection of State Highway 70, Point Pleasant, New Jersey on May 7, 2009,10, 2012, at 10:00 a.m. and at any and all adjournments thereof.
This proxy is revocable and will be voted as directed, but if no instructions are specified, this proxy will be voted “FOR” each of the nominees as directors specified under Proposal 1 and “FOR” ProposalProposals 2 and “FOR” Proposal 3. If any other business is presented at the meeting, this proxy will be voted by those namedthe Proxy Committee in this proxy in theirits best judgment. At the present time, the Board of Directors knows of no other business to be presented at the Meeting.
(Continued and to be signed on the reverse side)
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