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
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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 26, 2016
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of OceanFirst Financial Corp. (the “Company”), the holding company for OceanFirst Bank. The Annual Meeting will be held on Thursday, June 2, 2016, at 10:00 a.m., Eastern time, at Jack Baker’s Lobster Shanty, 81-83 Channel Drive, Point Pleasant Beach, New Jersey 08742.
This past year has been a very busy time at OceanFirst Financial Corp. (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”). On June 30, 2017, we announced the acquisition of Sun Bancorp, Inc. (“Sun”), the holding company for Sun National Bank, which was completed on January 31, 2018. We are pleased to welcome the former Sun shareholders to the Company.
The Board of Directors, management and employees remain committed to enhancing corporate governance, as well as enhancing shareholder returns. On January 24, 2018, the Company announced the appointment of John K. Lloyd to its Board of Directors. In conjunction with the Sun merger, Anthony R. Coscia and Grace C. Torres were added to the Board of Directors of the Company and the Bank. The Company believes the addition of these directors will offer enhanced insights, ideas, and experience to assist in the oversight and governance of the Board as a whole and the committees on which they will serve. These changes, and other governance matters, including Proposal 3 to declassify the Board of Directors, are described in the proxy statement appearing on the following pages.
I, along with my fellow Board of Directors members, cordially invite you to attend the Company’s Annual Meeting of Stockholders. The Annual Meeting will be held on Thursday, May 31, 2018, at 6:00 p.m., Eastern time, at the Company’s Administrative Offices, 110 West Front Street, Red Bank, New Jersey 07701. 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. The Company’s directors and officers, 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.
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 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 shares are represented this year whether or not you are personally able to attend the meeting. Your cooperation is appreciated because a majority of the common stock must be represented, either in person or by proxy, to constitute a quorum for the conduct of business and because Proposal 3, declassification of the Board of Directors, requires 80% of the stockholders eligible to vote to cast their ballots in favor in order for this recommendation to be approved. You may 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 the Bank, we thank you for your
continued interest and support.
Sincerely yours,
Christopher D. Maher Chairman, President and Chief Executive Officer April 26, 2018 |
Oceanfirst Financial Corp. 110 West Front Street Red Bank, New Jersey 07701 |
Notice of 2018 Annual Meeting of Stockholders |
OCEANFIRST FINANCIAL CORP.Thursday, May 31, 2018
975 HOOPER AVENUE6:00 p.m.
TOMS RIVER, NEW JERSEY 08754-2009OceanFirst Bank Administrative Offices, 110 West Front Street, Red Bank, New Jersey 07701
NOTICE
ITEMS OF 2016 ANNUAL MEETING OF STOCKHOLDERSBUSINESS
(1) | The election of | ||
(2) |
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(3) | Approval of an amendment to the Company’s Certificate of Incorporation to declassify the Company’s Board of Directors; | ||
(4) | Approval of an amendment to the Company’s Certificate of Incorporation to increase the number of shares of authorized common stock; | ||
(5) | 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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(6) | 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 April 11, 2016.
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
JUNE 2, 2016
This proxy statement is being furnished to stockholders of OceanFirst Financial Corp. (the “Company”), the holding company of OceanFirst Bank (the “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, June 2, 2016, at 10:00 a.m. Eastern time, at Jack Baker’s Lobster Shanty, 81-83 Channel Drive, Point Pleasant Beach, 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, 2015, accompanies this proxy statement. This proxy statement is first being mailed to record holders on or about April 26, 2016.
VOTING 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 April 11, 2016. As of10, 2018.
PROXY VOTING
It is important that your shares be represented and voted at the close of business on that date, a total of 17,358,005 shares of the Company’s common stock were outstanding and entitled to vote. Each share of common stock has one vote. As provided in the Fourth Article 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 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 tomeeting. You can vote your shares 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.
Quorumby completing and Vote Required
The Annual Meeting will be held only if there is a quorum. A majority of the outstanding common shares 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 receive voting instructions from the beneficial 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 a specific nominee. There is no cumulative voting for the election of directors. Directors are 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 on Proposal 2, the vote on the performance goals of the Company’s 2011 Cash Incentive Compensation Plan (the “Cash Incentive Plan”), Proposal 3, the advisory vote on executive compensation, and Proposal 4, ratification of the appointment of KPMG LLP as the independent registered public accounting firm, you may vote in favor of each of those proposals, against each of those proposals or abstain from voting. To be approved, these matters require the affirmative vote of a majority of the votes cast at the Annual Meeting. Broker non-votes will not be counted as votes cast and will have no effect on the voting, while abstentions will have the same effect as a vote against the proposals.
Voting by Proxy; Revocation of Proxy; Board Recommendations
This proxy statement is being sent to you by the Company’s Board of Directors 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 inreturning the enclosed proxy card or voting instruction card. All shares of Company common stock represented at the Annual Meeting by properly executed and dated proxies will be voted in accordance with theVoting instructions indicatedare printed on the proxy card. If you sign, date and return ayour 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 the following votes:
If any matters not described in this proxy statement are properly presented at the Annual Meeting, the persons named included in the accompanying proxy card will use their own judgment to determine how to vote your shares. This includesstatement. You can revoke a motion to adjourn or postpone the Annual Meeting in order to 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 takenprior to its exercise at the Annual Meeting. To revoke your proxy you must either advisemeeting by following the Corporate Secretary ofinstructions in 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
Participants in the OceanFirst Bank Employee Stock Ownership Plan (the “ESOP”), or the OceanFirst Bank Retirement Plan (the “401(k) Plan”), will receive a voting instruction form for each plan that reflects all shares they 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 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 voting instructions to each plan’s trustee is May 27, 2016.
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IF YOU HAVE ANY QUESTIONS ABOUT VOTING, PLEASE CONTACT THE COMPANY’S PROXY SOLICITOR, GEORGESON LLC, BY CALLING TOLL FREE AT (866) 296-5716.
CORPORATE GOVERNANCESteven J. Tsimbinos
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 Policy to govern certain activities, including:Secretary
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 4
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 5
OCEANFIRST FINANCIAL CORP.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 31, 2018
In accordance with the Corporate Governance Policy, at least a majority of the directors on the Board mustProposals to be “independent directors” as defined in the listing requirements of the Nasdaq Stock Market (“Nasdaq”).
Board Leadership Structure. The Board is led by the Chairman of the Board, John R. Garbarino. Mr. Garbarino also served as the CEO of the Company until January 1, 2015, when Christopher D. Maher succeeded him as CEO. The Board believes that, for the present time, separating the Chairman position from the CEO position provides an effective leadership model for the Company, with a separation of execution of business strategy from governance, clear accountability and enhanced oversight, while maintaining effective decision-making and alignmentVoted on corporate strategy. To assure effective independent oversight, the Board has adopted a number of governance practices, including:
Board Recommendation | Page Reference | ||||
Proposal 1 – Election of Directors | The Board of Directors recommends the | 13 | |||
Proposal 2 – Advisory Vote on Executive Compensation | The Board of Directors recommends the vote“FOR”the approval, on anadvisory basis, of the compensation of the Company’s named executive officers as disclosed in these materials. | 46 | |||
Proposal 3 – Approval of the amendment to theCompany’s Certificate of Incorporation to declassify theCompany’s Board of Directors | The Board of Directors recommends the vote“FOR”the amendment tothe Company’s Certificate of Incorporation to declassify the Board. | 47 | |||
Proposal 4 – Approval of an amendment to the Company’sCertificate of Incorporation to increase the number ofauthorized common stock | The Board of Directors recommends the vote“FOR”the amendmentto the Company’s Certificate of Incorporation to increase the number ofshares of authorized common stock. | 49 | |||
Proposal 5 – Ratification of the appointment of KPMG LLPas the independent | The Board of Directors recommends the vote“ | 51 |
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The Company’s Corporate Governance Policy provides that the Chairman of the Leadership 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. The Board, upon the recommendation of the Leadership Committee, has adopted stock ownership guidelines (the “Guidelines”) for non-employee directors and the NEOs. The Guidelines were adopted to better align the interests of the non-employee directors and the NEOs with those of the Company’s stockholders. The Guidelines provide that each non-employee director shall own shares of the Company’s common stock with a market value of at least three times the value of the combined annual director retainers received from the Company and the Bank. Newly elected directors shall 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) shares beneficially owned by the director and by immediate family members sharing the same household; (2) vested and unvested restricted stock awards; (3) shares acquired upon the exercise of stock options; and (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 shall continue to be met during the period the director serves on the Board.
Similarly, the Guidelines provide that the CEO shall own Company stock with a market value of at least five times his annual base salary. To comply with the Guidelines, each other NEO shall own Company stock with a market value of at least three times his annual base salary. Each NEO shall meet the share ownership requirements within five years of 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. Until the Guidelines are met, an NEO shall retain all of the net vested restricted stock and net shares delivered after exercising stock options. Net shares refers to the shares that remain after shares are sold or netted to pay the exercise price of options and any withholding taxes.
Hedging/Pledging Policy. The Board has adopted a policy that provides that any hedging or pledging of the Company’s common stock by a Board member or senior executive officer requires the prior approval of the Company’s General Counsel.
Board Role in the Oversight of Risk/ Risk Committee
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. In January 2013, the Board created the Joint Risk Committee of the Company and the Bank (the “Risk Committee”) and delegated to it primary responsibility for overseeing the risk management function at the Company on behalf of the Board. In carrying out its responsibilities, the Risk Committee works closely with the Company’s Chief Risk Officer (“CRO”) and other officers of the Company involved in risk management. The Risk Committee meets at least quarterly with executive management and the CRO, and receives comprehensive reports and dashboards on enterprise 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 CRO performs a risk assessment of each of the Bank’s products, services, operations and regulatory requirements to determine the overall risk to the Bank, and reports his findings to the Risk Committee. The Risk Committee may receive updates between meetings, as may be necessary, from the CRO, the CEO, the Chief Financial Officer (“CFO”) and other members of management relating to risk oversight matters. The Risk Committee provides a report to the full Board on at least a quarterly basis. In addition, each quarter, the Audit
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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, and any material issues are relayed to the Risk Committee. On an annual basis, the Bank’s Compliance Officer provides a report to the Board regarding the Bank’s compliance with existing regulations, as well as future regulations that may impact the Bank. Also, at least annually, the Compensation Committee reviews with the CRO 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. In addition, the Compensation Committee from time to time may enact metrics under the Cash Incentive Plan to encourage risk mitigation and safe and sound banking.
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, 2015, the Company’s Board of Directors held nine meetings. All of the Directors of the Company attended at least 75% of the Board meetings and the meetings of committees held on which such Directors served during the fiscal year ended December 31, 2015.
Committees of the Board of Directors
The Board of Directors of the Company maintains the Audit Committee, the Compensation Committee, the Leadership Committee, and the Risk Committee. The following is a description of each of the Company’s Board committees.
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 (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 Nasdaq listing standards and the heightened independence standards applicable to audit committees. 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 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 (the “Commission”). The Audit Committee met five times in 2015. The report of the Audit Committee required by the Rules of the Commission is included in this proxy statement. See“Proposal 4–Ratification of Independent Registered Public Accounting Firm – Report of Audit Committee.”
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Human Resources/Compensation Committee. The Compensation Committee of the Company and the Bank meets to establish compensation for the executive officers and to review the Company’s incentive compensation program when necessary. The Compensation Committee acts under a written Charter adopted by the Board of Directors, 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 Nasdaq listing standards regarding compensation committee requirements. The Compensation Committee met four times in 2015. The report of the Compensation Committee required by the Commission rules is included in this proxy statement. See “Executive Compensation—Compensation Committee Report on Executive Compensation.”
Leadership Committee. The Leadership Committee of the Company, formerly named the Corporate Governance/Nominating Committee, 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 Leadership Committee serves as the Company’s nominating committee and 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 Leadership Committee is independent in accordance with Nasdaq listing standards. The chairman of the Leadership Committee functions as Lead Director. The Leadership Committee met five times in 2015.
The Leadership Committee acts under a written Charter and the Corporate Governance Policy adopted by the Board of Directors. The Charter is available on the Company’s website (www.oceanfirst.com). The procedures of the Leadership Committee required to be disclosed by the Commission rules are included in this proxy statement. See“Leadership Committee Procedures as to Director Nominees.”
Risk Committee. The Risk Committee of the Company and the Bank was created in January 2013 to assist the Board in enterprise risk management functions. The Risk Committee acts under a written Charter adopted by the Board of Directors. The Charter is available on the Company’s website (www.oceanfirst.com) and is reviewed on an annual basis by the Risk Committee. The Risk Committee met four times in 2015. See “Board Role in the Oversight of Risk/Risk Committee.”
The following table identifies the standing committees and their members as of December 31, 2015.
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STOCK OWNERSHIP
The following table provides information as of April 11, 2016 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”) 975 Hooper Avenue Toms River, New Jersey 08754-2009 | 1,583,869 | (1) | 9.2 | % | ||||
OceanFirst Foundation 1415 Hooper Avenue – Suite 304 Toms River, New Jersey 08753 | 1,101,593 | (2) | 6.4 | % | ||||
Wellington Management Company, LLP 280 Congress Street Boston, Massachusetts 02210 | 1,350,095 | (3) | 7.8 | % | ||||
BlackRock Inc. 40 East 52nd Street New York, New York 10022 | 1,028,099 | (4) | 5.9 | % | ||||
John R. Garbarino 975 Hooper Avenue Toms River, New Jersey 08754 | 1,032,685 | (5) | 5.8 | % |
The following table provides information as of April 11, 2016, about the shares of the Company common stock that may be considered to be beneficially owned by each director, nominee for director and each NEO and by all such directors and NEOs 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.
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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) | 19,038 | 18,686 | 37,724 | * | ||||||||||||
Angelo Catania (3) | 20,968 | 18,686 | 39,654 | * | ||||||||||||
Jack M. Farris (4) | 3,440 | — | 3,440 | * | ||||||||||||
John R. Garbarino (4)(5) | 576,842 | 455,843 | 1,032,845 | 5.8 | % | |||||||||||
Christopher D. Maher (6)(7) | 35,135 | 47,886 | 83,021 | * | ||||||||||||
Donald E. McLaughlin (3)(8) | 42,123 | 18,686 | 60,809 | * | ||||||||||||
Diane F. Rhine (3) | 44,612 | 18,686 | 63,298 | * | ||||||||||||
Mark G. Solow (3) | 17,864 | 4,900 | 22,764 | * | ||||||||||||
John E. Walsh (3) | 26,272 | 18,686 | 44,958 | * | ||||||||||||
Named Executive Officers who are not also Directors | ||||||||||||||||
Michael J. Fitzpatrick (7)(9) | 189,852 | 152,283 | 342,135 | 2.0 | % | |||||||||||
Joseph J. Lebel, III (7)(10) | 31,093 | 76,738 | 107,831 | * | ||||||||||||
Joseph R. Iantosca (7)(10) | 38,394 | 76,076 | 114,470 | * | ||||||||||||
Steven J. Tsimbinos (7)(11) | 23,005 | 42,600 | 65,605 | * | ||||||||||||
All directors and NEOs as a group (13 persons) | 1,068,638 | 949,756 | 2,018,394 | 11.1 | % |
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Each director and executive officer maintains a mailing address at 975 Hooper Avenue, Toms River, New Jersey 08753. None of the above directors or executive officers have pledged any shares of the Company.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company’s Board of Directors currently consists of nine directors. All of the directors are independent under current Nasdaq listing standards, except for John R. Garbarino, Chairman of the Company and the Bank, and Christopher D. Maher, President and CEO of the Company and the Bank. Mr. Garbarino was CEO of the Company and the Bank until January 1, 2015. The Board is divided into three classes with three-year staggered terms, with 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 and until their respective successors have been elected and qualified, are Messrs. Maher, McLaughlin and Walsh, each of whom is currently a 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 Messrs. Maher, McLaughlin and Walsh.
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, the senior executive officers listed in the table under “Executive Compensation – Summary Compensation Table,” and the Company’s other senior executive officers, is provided below. Unless otherwise stated, each individual has held his or her current position for the last five years. The age indicated for each individual is as of December 31, 2015. The indicated period of service as a director includes service as a director of OceanFirst Bank.
Nominees for Election of Director
The biography 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 Leadership 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 complementary 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:
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1)Experience: Current and past work and Board experience; knowledge of the banking industry and financial services companies; familiarity with the operations of public companies; and business and management experience and acumen.
2)Personal characteristics: Ability to work collaboratively with management and as a member of the Board; ability to think strategically and develop a strategic vision or central idea for the Company; familiarity with and participation in the local businesses and the communities served by the Bank; integrity, accountability and independence.
3)Director commitment: Time and effort; awareness and ongoing education; attendance at Board and committee meetings and other Company functions; 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 financial condition.
Nominees for Director
Name | Age | Director Since | Independent | Committees | ||||
Michael D. Devlin | 67 | 2016 | Finance and Risk | |||||
Jack M. Farris | 59 | 2015 | Human Resources/Compensation and Risk | |||||
Diane F. Rhine | 68 | 1997 | Human Resources/Compensation (Chair) | |||||
Mark G. Solow | 69 | 2011 | Human Resources/Compensation |
Corporate Governance Highlights
Comprehensive annual self-assessment of the Board, Committee, andindividual director performance by the Leadership Committee | Board refreshment – Three new directors added: John K. Lloyd,appointed in January 2018, and Anthony R. Coscia and Grace C.Torres, former Sun directors | ||
Declassification of the Board of Directors | Reorganization of risk management with the hiring of Grace Vallacchias Chief Risk Officer | ||
Adoption of a Director Skills Matrix | Appointment of Joseph Kyrillos, New Jersey state Senator, ret., asChairman of an Advisory Board | ||
Amendment to the Bylaws to remove age and geographic restrictions | Expansion of Information Security with the hiring of a Chief InformationOfficer and a Chief Information Security Officer | ||
Increased usage of performance-based grants for executive officers | Regular shareholder outreach by senior management | ||
Creation of Complaint Hotline |
Executive Compensation Overview
• | Salaries for Named Executive Officers Held Constant for 2017 |
• | Increased Use of Performance-Based Stock Awards |
• | Strong Stockholder Support of Compensation Program |
• | Engagement of Independent Compensation Consultant during 2017 |
• | Elimination of Automatic Issuance of New Stock Awards upon Change in Control |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 6
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 Highlights
The Company has taken several actions to improve its internal governance since the mailing of its last proxy statement. These actions include:
• | Self-Assessment.The Leadership Committee, with the assistance of an independent consultant, performed a comprehensive annual self-assessment to assess the performance of the Board, the Company’s committees, and each director. The results of that assessment lead to the taking of certain other actions listed below, including the proposed declassification of the Board, adoption of a skills matrix, additional Board refreshment, and the amendments to the Bylaws listed below. |
• | Declassification of the Board of Directors.The Board has determined that, to increase director accountability to stockholders and the Board, each director should be elected annually. Accordingly the Board is proposing for stockholder approval an amendment to its Certificate of Incorporation to declassify the Board. |
• | Adoption of a Director Skills Matrix.The Board has adopted a skills matrix of those qualifications it believes are important to Board performance and assessed each Director’s qualifications against that matrix. See“Proposal 1 – Election of Directors – Director Experience.” |
• | Amendment to the Bylaws to Remove Age and Geographic Restrictions. The Company’s Bylaws contained a requirement that a director maintain a residence in New Jersey and prohibited any person from standing for reelection after his or her 72ndbirthday. The Board has determined to remove those provisions from the Bylaws to ensure a wider pool of qualified director candidates . The Board believes that, with increased accountability, such provisions are no longer appropriate. |
• | Board Refreshment.The Board of Directors has added three new directors: John K. Lloyd, who was appointed to the Board in January 2018, and Anthony R. Coscia and Grace C. Torres, who joined the Board as a result of the Company’s acquisition of Sun Bancorp, Inc. (“Sun”). The Company believes that these new directors will provide additional insights, ideas, skills and experience, assist the Company with its expansion into new markets, and provide additional oversight and governance, both to the Board as a whole and the committees on which they will serve. Also, the appointment of additional directors will provide stability and succession opportunities at the Board and Committee levels. |
• | Compensation Practices.As further described in the Compensation Discussion and Analysis, the Company has increased its use of performance-based stock grants. |
• | Expansion of Risk Management. The Company has reorganized its risk management function, with the hiring of Grace Vallacchi as Chief Risk Officer (“CRO”). Ms. Vallacchi was previously the Associate Deputy Comptroller in the Northeastern District of the Office of the Comptroller of the Currency. In that position, she had direct oversight of seven Assistant Deputy Controllers with over 180 national bank examiners responsible for supervising 120 community banks and thrifts. Ms. Vallacchi was an incremental hire rather than a replacement; the previous CRO was refocused to be Chief Enterprise Risk Officer reporting to Ms. Vallacchi along with the Bank’s Chief Credit Officer. The Bank believes this reorganization will bolster its Risk Management function and is appropriate given the Company’s growth. |
• | Expansion of Information and Information Security Governance. The Company has hired a Chief Information Officer and a Chief Information Security Officer. Both of them are highly experienced and are expected to contribute to the Company’s information and cybersecurity practices. |
• | Advisory Board. The Company has appointed Joseph Kyrillos, New Jersey state Senator, ret., as Chairman of an Advisory Board to assist with business development in all of the markets served by the Company. The Company has dissolved its southern region advisory Board. |
• | Shareholder Outreach.The Company’s Chairman and President/ Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and other members of senior management regularly attend investor meetings, arranged by industry analysts, other financial service firms, and the investors themselves. At those meetings, stockholders are invited to and often discuss with management corporate governance as well as the Company’s business and strategy. |
• | Complaint Hotline.As part of the procedures used to encourage compliance with its Code of Ethics and Standards of Personal Conduct, in March 2018 the Company instituted a Complaint Hotline, which allows parties to anonymously submit concerns regarding internal controls, fraud, and ethical violations, among others. |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 7
Corporate Governance Policies and Procedures
The Company has adopted a Corporate 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 CEO |
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 (“Nasdaq”).
Board Leadership Structure
The Board is led by the Chairman of the Board, Christopher D. Maher, who also serves as President and CEO of the Company and the Bank. Mr. Maher succeeded John R. Garbarino, who had served as Chairman of the Board until January 1, 2017. Mr. Garbarino also served as the CEO of the Company until January 1, 2015, when Mr. Maher succeeded him as CEO. The Board believes that combining the Chairman and CEO positions, together with the appointment of an independent lead director, is the appropriate Board leadership structure for the Company at this time. The Company has historically been led by a combined Chairman and CEO and the Board believes that the CEO is most knowledgeable about its business and corporate strategy and is in the best position to lead the Board of Directors, especially in relation to its oversight of corporate strategy formation and execution. In addition, having a combined Chairman and CEO provides a complete alignment on corporate strategy and vision. 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 every regularly scheduled Board meeting, during which the independent directors may discuss the performance of the CEO/Chairman, management succession planning, and other appropriate matters; |
• | the independence of fourteen of fifteen 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 CEO by the Human Resources/Compensation Committee (the “Compensation Committee”); and |
• | the Company’s Board Audit, Compensation, Finance, Risk and Leadership Committees are comprised entirely of independent members. |
The Company’s Corporate Governance Policy provides that the Chair of the Leadership Committee, currently 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.
Board Role in the Oversight of Risk/Risk Committee
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. In January 2013, the Board created the Joint Risk Committee of the Company and the Bank (the “Risk Committee”) and delegated it primary responsibility for overseeing the risk management function at the Company on behalf of the Board. In addition, the Compensation Committee and the Company and Bank’s senior management are tasked with oversight of the Company’s risk management process. The duties of each of the Risk Committee, the Compensation Committee, and senior management with respect to such oversight are summarized in the following chart.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 8
Board of Directors The Board is charged with providing oversight of the Company’s risk management processes. | |
Risk Committee | Compensation Committee |
• The primary responsibility is overseeing the risk management function at the Company on behalf of the Board. • Meets at least quarterly with executive management and the CRO, and receives comprehensive reports and dashboards on enterprise 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 Committee may receive updates between meetings, as may be necessary, from the CRO, the CEO, the CFO and other members of management relating to risk oversight matters. • 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, and any material issues are relayed to the Risk Committee. | • At least annually, the Compensation Committee reviews with the CRO 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. • The Committee from time to time may enact metrics under the Cash Incentive Plan to encourage risk mitigation and safe and sound banking. |
Senior Management On an annual basis, the Bank’s Compliance Officer provides a report to the Board regarding the Bank’s compliance with existing regulations, as well as future regulations that may impact the Bank. The CRO performs a risk assessment of each of the Bank’s products, services, operations and regulatory requirements to determine the overall risk to the Bank, and reports these findings to the Risk Committee. |
Committees of the Board of Directors
The Board of Directors of the Company maintains the Audit Committee, the Compensation Committee, the Leadership Committee, the Risk Committee, and the Finance Committee. The following is a description of each of the Company’s Board committees.
Audit Committee | Meetings during 2017: 5 |
Joseph J. Burke* (Chair) Angelo Catania* Donald E. McLaughlin* Grace C. Torres** Samuel R. Young | 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 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 (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 Nasdaq listing standards and the heightened independence standards applicable to audit committees. See“Proposal 5–Ratification of Independent Registered Public Accounting Firm – Report of Audit Committee.” |
* | “Audit committee financial experts” under the Rules of the Securities and Exchange Commission (the “Commission”). |
** | In 2018, Grace C. Torres was appointed to the Audit Committee. |
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Human Resources/Compensation Committee | Meetings during 2017: 3 |
Diane F. Rhine (Chair) Jack M. Farris John K. Lloyd* Dorothy F. McCrosson Mark G. Solow | The Compensation Committee of the Company and the Bank meets to establish compensation for the executive officers and to review the Company’s incentive compensation program when necessary. 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 Nasdaq listing standards regarding compensation committee requirements. The Compensation Committee acts under a written Charter adopted by the Board of Directors, 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. See“Executive Compensation—Compensation Committee Report on Executive Compensation.” |
* | In 2018, John K. Lloyd was appointed to the Human Resources/Compensation Committee. |
Leadership Committee | Meetings during 2017: 5 |
John E. Walsh (Chair) Joseph J. Burke Angelo Catania John K. Lloyd* Dorothy F. McCrosson | The Leadership Committee of the Company and the Bank, formerly named the Corporate Governance/ Nominating Committee, 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 Leadership Committee serves as the Company’s nominating committee and 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. The Chair of the Leadership Committee functions as Lead Director. The Leadership Committee acts under a written Charter and the Corporate Governance Policy adopted by the Board of Directors. The Charter is available on the Company’s website (www.oceanfirst.com). The procedures of the Leadership Committee required to be disclosed by the Commission rules are included in this proxy statement. See“Leadership Committee Procedures as to Director Nominees.” |
* | In 2018, John K. Lloyd was appointed to the Leadership Committee. |
Risk Committee | Meetings during 2017: 4 |
Donald E. McLaughlin (Chair) Steven E. Brady Michael D. Devlin* Jack M. Farris | The Risk Committee of the Company and the Bank was created in January 2013 to assist the Board in enterprise risk management functions. The Risk Committee acts under a written Charter adopted by the Board of Directors. The Charter is available on the Company’s website and is reviewed on an annual basis by the Risk Committee. See“Board Role in the Oversight of Risk/Risk Committee.” |
* | In 2018, Michael D. Devlin was appointed to the Risk Committee, replacing Mark G. Solow. |
Finance Committee | Meetings during 2017: 4 |
Angelo Catania (Chair) Michael D. Devlin Grace C. Torres* John E. Walsh Samuel R. Young | The Finance Committee of the Company and the Bank was created in January 2017 to assist the Board in fulfilling its oversight responsibilities of the financial management of the Company and developing the Company’s strategic and annual business plan and budget. The Chair and at least one other director of the Finance Committee will be independent in accordance with Nasdaq listing standards. The Finance Committee acts under a written Charter adopted by the Board of Directors. The charter is available on the Company’s website and is renewed on an annual basis by the Finance Committee. |
* | In 2018, Grace C. Torres was appointed to the Finance Committee. |
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The following table identifies the standing committees and their members as of December 31, 2017.
Director | Audit Committee | Leadership Committee | Human Resources/ Compensation Committee | Risk Committee | Finance Committee | ||||||
Steven E. Brady | |||||||||||
Joseph J. Burke | |||||||||||
Angelo Catania | |||||||||||
Michael D. Devlin | |||||||||||
Jack M. Farris | |||||||||||
Dorothy F. McCrosson | |||||||||||
Donald E. McLaughlin | |||||||||||
Diane F. Rhine | |||||||||||
Mark G. Solow | |||||||||||
John E. Walsh | |||||||||||
Samuel R. Young |
Chairperson
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, 2017, the Company’s Board of Directors held eleven meetings. All of the Directors of the Company attended at least 75% of the Board meetings and the meetings of committees held on which such Directors served during the fiscal year ended December 31, 2017.
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STOCKHOLDER-RECOMMENDED DIRECTOR NOMINATIONS
It is the policy of the Company’s Leadership Committee to consider director candidates recommended by stockholders who appear to be qualified to serve on the Company’s Board of Directors. The Leadership Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and the Leadership Committee does not perceive a need to increase the size of the Board of Directors. In order to avoid the unnecessary use of the Leadership Committee’s resources, the Leadership Committee will consider only those director candidates recommended in accordance with the procedures set forth below.
Procedures to be Followed by Stockholders
To submit a recommendation of a director candidate to the Leadership Committee, a stockholder should submit the following information in writing, addressed to the Chair of the Leadership 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 Exchange Act, as amended; |
(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 stockholder making the recommendation, the name and address, as they appear on the Company’s books, of such stockholder; provided, however, that if the stockholder is not a registered holder of the Company’s common stock, the stockholder should submit his or her name and address along with a current written statement from the broker holding the securities that reflects ownership of the Company’s common stock; and |
(5) | A statement disclosing whether such stockholder is acting with or on behalf of any other person and, if applicable, the identity of such person. |
In order for a director candidate to be considered for nomination at the Company’s Annual Meeting of stockholders, the recommendation must be received by the Leadership Committee at least 120 calendar days prior to the date the Company’s proxy statement was released to stockholders in connection with the previous year’s Annual Meeting, advanced by one year.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 12
Proposal 1 | Election of Directors |
The Company’s Board of Directors currently consists of fifteen directors. All of the directors are independent under current Nasdaq listing standards, with the exception of Christopher D. Maher, President and CEO of the Company and the Bank. The Board is divided into three classes with three-year staggered terms, with 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 and until their respective successors have been elected and qualified, are Messrs. Devlin, Farris, and Solow, and Ms. Rhine, each of whom is currently a director of the Company and the Bank. However, if Proposal 3 is approved, each of these directors, together with the directors with a term of office extending until the 2020 Annual Meeting of Stockholders, intends to submit a resignation and be immediately reappointed back to the Board for a term ending at the 2019 Annual Meeting of Stockholders, as described underProposal 3.“Approval and Adoption of an Amendment to the Company’s Certificate of Incorporation to Declassify the Board of Directors”, other than Donald E. McLaughlin, who has notified the Company that, at the 2018 Annual Meeting, he will retire from the Board to spend more time with his family and on personal business. The experience and qualifications of each director are set forth under“Nominees for Election of Director.”
Ms. McCrosson has decided not to stand for re-election. Her term will expire at the Annual Meeting and, along with Mr. McLaughlin’s retirement, the Board will be reduced to thirteen members at that time. The Company is grateful for Ms. McCrosson’s and Mr. McLaughlin’s contributions to the success of the Company and wishes them continued prosperity in their future endeavors.
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 Messrs. Devlin, Farris, and Solow and Ms. Rhine.
Criteria for Director Nominees
The Leadership 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. A candidate must meet any qualification requirements set forth in any Board or committee governing documents.
The Leadership 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 Leadership Committee deems relevant, including experience, diversity of skills, size of the Board of Directors and regulatory disclosure obligations. |
The Leadership Committee may weigh the foregoing criteria differently in different situations, depending on the composition of the Board of Directors at the 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 Leadership 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 Leadership Committee will strive to maintain at least one director who meets the definition of “audit committee financial expert” under the Commission’s regulations.
In addition, prior to nominating an existing director for re-election to the Board of Directors, the Leadership Committee will consider and review an existing director’s Board performance and attendance at Board and Committee meetings and other Company functions; length of Board service; experience, skills and contributions that the existing director brings to the Board; and independence.
Process for Identifying and Evaluating Nominees
Pursuant to the Leadership Committee Charter as approved by the Board, the Leadership 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:
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 13
Identification
For purposes of identifying nominees for the Board of Directors, the Leadership 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 Leadership Committee will also consider director candidates recommended by stockholders in accordance with the policy and procedures set forth above. The Leadership Committee has not received any recommended nominees from the Company’s stockholders to be considered for election at this Annual Meeting. The Leadership Committee has in the past used, and may in the future use, an independent search firm to assist in identifying candidates to fill a vacancy on the Board of Directors, but does not use a search firm to identify or evaluate potential director nominees in the ordinary course.
Evaluation
The Leadership Committee, in evaluating potential director candidates, conducts a check of the individual’s background, interviews the candidate, and 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.
Nominees for Election of Director
The biography 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 Leadership 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 complementary 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) | Experience:Current and past work and Board experience; knowledge of the banking industry and financial services companies; familiarity with the operations of public companies; and business and management experience and acumen. |
2) | Personal characteristics: Ability to work collaboratively with management and as a member of the Board; ability to think strategically and develop a strategic vision or central idea for the Company; familiarity with and participation in the local businesses and the communities served by the Bank; integrity, accountability and independence. |
3) | Director commitment: Time and effort; awareness and ongoing education; attendance at Board and committee meetings and other Company functions; 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 financial condition. |
The Board adopted the skills matrix that represents certain of the skills that the Board identified as particularly valuable to the effective oversight of the Company and execution of its business. The following matrix shows those skills and the number of directors having each skill, highlighting the diversity of skills on the Board.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 14
Unless otherwise stated, each individual has held his or her current position for the last five years. The age indicated for each individual is as of December 31, 2017. The indicated period of service as a director includes service as a director of OceanFirst Bank. The following directors have been nominated by the Leadership Committee for election to the Board with terms to expire in 2019:2021, subject to the approval of Proposal 3, in which case each intends to submit a resignation and be reappointed back to the Board for a term ending at the 2019 annual meeting of stockholders:
MICHAEL D. DEVLIN
Age 67
Director since 2016
Committees: Finance and Risk
ChristopherMichael D. MaherDevlin has served as President and CEO ofa Director since May 2016 when the Company acquired Cape Bancorp, Inc. and theCape Bank, of which Mr. Devlin was a Director since January 1, 2015. He joined the Company31, 2008, and the Bank on March 25, 2013 as President and Chief OperatingExecutive Officer since January 27, 2009. Mr. Devlin currently serves as a member of the Board of Directors of Marquette National Corporation, a bank holding company based in Chicago, Illinois.
Mr. Devlin brings extensive banking and was appointedmanagement expertise to the Board of Directors, on February 19, 2014. Priorparticularly as to joining the Company, Mr. Mahersouthern markets and communities served as President and CEO of Patriot National Bancorp and Patriot National Bank since 2010. Before then, he was employed by The Dime Savings Bank of Williamsburgh and its holding company, Dime Community Bancshares, Inc., since 2005, where he was in charge of retail banking and was appointed as Executive Vice President and Chief Retail Officer in 2009.the Company. He is 4967 years of age.
Donald E. McLaughlin is a retired Certified Public Accountant (“CPA”). Prior to his retirement in 2005 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
JACK M. FARRIS
Age 59
Director since 1985. He is 68 years of age.2015
John E. WalshCommittees: is a licensed professional engineerHuman Resources/Compensation and has been employed with T&M Associates since 2010, where he currently serves as Senior Vice President and the Practice Leader for its Municipal Engineering Business Practice. T&M Associates is a privately owned engineering, planning and environmental consulting company. Before then, he served in various management capacities with CMX Engineering, Inc., a privately owned engineering company, from 2001 to 2010. 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 well as extensive knowledge of business and marketing plans, annual budgets, personnel/resource management, sales initiatives, financial reporting and client management. Prior to joining CMX Engineering, he was President of Bay Pointe Engineering Associates, Inc., from 1987 to 2001. None of T&M Associates, CMX Engineering 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 62 years of age.
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Directors Continuing in Office
The following directors have terms ending in 2017:
Joseph J. Burke is a retired CPA with over 30 years of experience specializing in the audits of banking institutions and their holding companies. He is a retired audit partner with KPMG LLP. During his career, Mr. Burke was involved with numerous merger and acquisition transactions. Mr. Burke’s 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 2005. He is 68 years of age.
Angelo Catania was the CEO and Managing Member of HomeStar Services LLC, an air conditioning, heating, plumbing and electrical service company until its sale and his retirement in 2015. Prior to joining HomeStar in February 2005, 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 2006. He is 66 years of age.
John R. Garbarino has served as Chairman of the Company since 1995, and was CEO from 1995 to 2015 and 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 CEO of the Bank, serving as President until 2010 and CEO until 2015. In addition, he served as President of the Company and the Bank on an interim basis from September 2012 to March 25, 2013, when Mr. Maher joined the Company and the Bank. 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 43 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 66 years of age.
The following directors have terms ending in 2018:
Jack M. Farrisis the Vice President and Deputy General Counsel, Information Technology, Information Security, Global Clearance and ComplianceInfoSec & Cybersecurity for Verizon Communications, Inc., one of the world’s leading wireline, wireless and business communications companies, where he has been employed since 1991. Mr. Farris has servedwas appointed to this position in his present position since 2011early 2017 and prior to that had served in a variety of legal and management functions, with responsibilityproviding legal support for systems and technology procurement, global operations security, finance operations, regulatory compliance and transactional matters, in addition toas well as information technology and security.information security matters. In addition to his undergraduate and law degree,degrees, Mr. Farris holds a Master of Science in computer engineering.
Mr. Farris’sFarris’ experience as a senior officermanager of a large corporation and his expertise in information technology and information security bringbrings to the Board extensive knowledge and capability relating to communications, information technology, and cybersecurity, as well as relating to ligation,significant experience in litigation, transactional matters and regulatory compliance. Mr. Farris has served on the Board of Directors since March 18, 2015. He is 5759 years of age.
DIANE F. RHINE
Age 68
Director since 1997
Committees: Human Resources/Compensation (Chair)
Diane F. Rhine is a licensed real estate broker-sales representative with Childers Sotheby’s International Realty where she has been employed since July 1, 2014. Before then, Ms. Rhine owned and operated her own real estate company beginning in 1979. From October 2000 through November 2009, Ms. Rhine was a partner in Citta Rhine LLC. After that until July 2014, she was the President and sole owner of Citta & Cobb Inc. Realtors DBA as Rhine & Associates, Inc. beginning in 1979. In her long career as a Realtor Ms. Rhine served two terms as President of the Ocean County Board of Realtors, chairing both the Risk and Grievance committees and served as President of the New Jersey Shore Multiple Listing service. Her community involvement in numerous organizations included serving as President of the United Way of Ocean County as well as chairing both the Finance and Fund Distribution committees. Ms. Rhine has been an active participant in fund raising activities for the Girl Scouts of the Jersey Shore, the Ocean County YMCA and the Ocean County College Foundation.
Ms. Rhine’s more than 3539 years of experience in residential real estate brokerage 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. Childers Sotheby’s International Realty is not an affiliate of the Company. Ms. Rhine has served on the Board of Directors since 1997. She is 6668 years of age.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 15
MARK G. SOLOW
Age 69
Director since 2011
Committees: Human Resources/Compensation
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Mark G. Solow is an advisor to Crystal Ridge Partners, LLC, and Alston Capital Partners, firms which makemakes 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 Chemical Banking Corporation 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. He is 6769 years of age.
Directors Whose Terms are Expiring
On January 24, 2018,Dorothy F. McCrosson, Esq., a member of the Board of Directors of the Company and the Bank, notified the Company that, in order to devote more time to her law practice, personal business and family, she will not stand for reelection at the Company’s 2018 Annual Meeting of Stockholders. Ms. McCrosson joined the Board in December 2016, following the acquisition of Ocean Shore Holding Company (“Ocean Shore”), where she served as a Director since 2011. The Company is grateful for Ms. McCrosson’s contributions to the Company’s success.
Directors Continuing in Office
The following directors have terms ending in 2019:
ANTHONY R. COSCIA
Age 58
Director since 2018
Anthony R. Coscia was the Chairman of the Boards of Sun Bancorp, Inc. and Sun National Bank since December 2016. Mr. Coscia served as a Director of Sun Bancorp, Inc. since 2010 and Sun National Bank since 2011 and was a member of the ALCO Committee and Chair of the Executive Committee. Sun Bancorp, Inc. and Sun National Bank were acquired by the Company in January 2018, at which time Mr. Coscia joined the Company’s Board. Mr. Coscia is admitted to the state bars of New Jersey and New York and is a Partner of Windels Marx Lane & Mittendorf, LLP, having been with the firm for over 30 years. Mr. Coscia’s legal practice focuses on corporate, commercial, and real estate matters, with a concentration on the financial elements of these transactions. Mr. Coscia serves as Chairman of the Board of Directors of the National Railroad Passenger Corporation (Amtrak), having been appointed to the Board of Amtrak by President Obama in 2010. Mr. Coscia is Chairman of Suez North America, Inc., the U.S. subsidiary of Suez Environment SAS. Mr. Coscia previously served as Chairman of the Port Authority of New York for over eight years, stepping down in 2011. Mr. Coscia is a graduate of Georgetown University School of Foreign Service and received his law degree from Rutgers University School of Law.
Mr. Coscia serves as trustee of Georgetown University and the New Jersey Community Development Corporation and is a member of the New Jersey Performing Arts Center Council of Trustees, the Partnership for New York City, The Economic Club of New York and the Regional Plan Association. In 2007, Mr. Coscia was awarded an honorary doctorate of humane letters from the New Jersey Institute of Technology. Mr. Coscia’s extensive background and reputation as a well-respected business leader actively involved in both the private and government sectors brings significant management and leadership skills to the Board. He is 58 years of age.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 16
CHRISTOPHER D. MAHER
Age 51
Director since 2014
Christopher D. Maherhas served as Chairman of the Company and the Bank since January 1, 2017 and as President and CEO of the Company and the Bank since January 1, 2015. He joined the Company and the Bank on March 25, 2013 as President and Chief Operating Officer and was appointed to the Board of Directors on February 19, 2014. Prior to joining the Company, Mr. Maher served as President and CEO of Patriot National Bancorp and Patriot National Bank since 2010.
Mr. Maher is active in the non-profit community, serving as the Chairman on the Board of Trustees of Helen Keller Services for the Blind, as a Trustee of Monmouth University, and as a Director of Hackensack Meridian Home Care Services, Inc. and Hackensack Meridian Nursing & Rehabilitation. He is also active within the banking industry, serving on the Federal Reserve Bank of Philadelphia’s Community Depository Institutions Advisory Counsel and as a member of the Board of the New Jersey Bankers Association. He is 51 years of age.
DONALD E. MCLAUGHLIN
Age 70
Director since 1985
Donald E. McLaughlin is a retired Certified Public Accountant (“CPA”). Prior to his retirement in 2005 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 70 years of age.
On March 28, 2018, Mr. McLaughlin notified the Company that, in order to spend more time with his family and on personal business, he will retire from the Board at the end of the 2018 Annual Meeting. The Company is grateful for Mr. McLaughlin’s contributions to the Company, including his role in the creation of the Risk Committee.
JOHN E. WALSH
Age 64
Director since 2000
John E. Walsh is a licensed professional engineer and has been employed with T&M Associates since 2010, where he currently serves as Senior Vice President. T&M Associates is a privately owned engineering, planning and environmental consulting company. Before then, he served in various management capacities with CMX Engineering, Inc., a privately owned engineering company, from 2001 to 2010. 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. Prior to joining CMX Engineering, he was President of Bay Pointe Engineering Associates, Inc., from 1987 to 2001.
Mr. Walsh’s experience with T&M and CMX provides the Board with management and leadership skills, as well as extensive knowledge of business and marketing plans, annual budgets, personnel/resource management, sales initiatives, financial reporting and client management. Mr. Walsh has served on the Board of Directors since 2000. He is 64 years of age.
SAMUEL R. YOUNG
Age 58
Director since 2016
Samuel R. Young is the owner, President and Chief Executive Officer of Tilton Fitness Management, which develops, owns and operates commercial and hospital-affiliated, medically integrated health and fitness centers, including eight centers in southern and central New Jersey. Mr. Young also recently retired as a Captain/Unit Commanding Officer in the United States Navy Reserve. Mr. Young was selected as the Greater Atlantic City chamber of Commerce 2008 Businessman of the Year. Mr. Young recently chaired the Atlantic City Chamber of Commerce Board of Directors and currently serves as Chairman of the Board of Directors of the Boys and Girls Club of Atlantic City. Mr. Young was a director of Ocean Shore and Ocean City Home Bank (“OCHB”) since 2004 until their acquisition by the Company in December 2016, at which time Mr. Young joined the Board.
As the owner of a well-known health and fitness club in one of the Bank’s local market areas, Mr. Young has extensive business and management experience, including finance and accounting experience. Mr. Young’s involvement in a variety of local and civic organizations has further strengthened his ties to the local community. Mr. Young is 58 years of age.
The following directors have terms ending in 2020, subject to the approval of Proposal 3, in which case each intends to submit a resignation and be appointed back to the Board for a term ending at the 2019 Annual Meeting of Stockholders:
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 17
STEVEN E. BRADY
Age 64
Director since 2016
Steven E. Brady was the President, Chief Executive Officer and a Director of OCHB since 1991 and the President and a Director of Ocean Shore since its formation in 1998. OCHB and Ocean Shore were acquired by the Company in December 2016, at which time Mr. Brady joined the Company’s Board and became Vice Chairman of the Southern Region.
Mr. Brady’s extensive experience in the local banking industry and involvement in southern New Jersey communities affords the Board valuable insight regarding the business and operation of the Company and the Bank. Mr. Brady has gained extensive leadership experience and knowledge of the banking industry over the course of his career, including through his involvement as a former member of the Philadelphia Federal Reserve Advisory Board. Mr. Brady provides the Board with knowledge and experience regarding the management and operations of community banks. He is 64 years of age.
JOSEPH J. BURKE
Age 70
Director since 2005
Joseph J. Burke is a retired CPA with over 30 years of experience specializing in the audits of banking institutions. He is a retired audit partner with KPMG LLP.
Mr. Burke’s experience brings to the Board significant expertise in financial, accounting, and auditing matters. Mr. Burke has been a member of the Board since 2005. Mr. Burke is 70 years of age.
ANGELO CATANIA
Age 68
Director since 2006
Angelo Catania was the CEO and Managing Member of HomeStar Services LLC, an air conditioning, heating, plumbing and electrical service company until its sale and his retirement in 2015. Prior to joining HomeStar in February 2005, he was President and Chief Operating Officer (“COO”) 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 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. Mr. Catania has been a member of the Board since 2006. Mr. Catania is 68 years of age.
JOHN K. LLOYD
Age 71
Director since 2018
John K. Lloyd is the Co-CEO of Hackensack Meridian Health, the largest most comprehensive and integrated health network in New Jersey, which includes 16 hospitals, 33,000 team members and more than 6,000 physicians, and over 165 ambulatory facilities throughout the state, with total revenues of $5.5 billion. Prior to his current position, Mr. Lloyd served as president of Meridian Health, a $2.1 billion, New Jersey-based health network of seven hospitals, one academic medical center, Jersey Shore University Medical Center, and 120 ambulatory facilities in Monmouth and Ocean Counties. Mr. Lloyd graduated from Princeton University and proudly served his country in the United States Marine Corps before attaining a Masters of Business Administration in Health Administration at Temple University. Mr. Lloyd has been recognized nationally and regionally with various awards including the Medical Executive Award from the Academy of Medicine of New Jersey and the Distinguished Business Leader Award from Monmouth University. He also received the Icon Award by NJBiz, the Maurice Pollack Award for Community Service from Monmouth University, and was recently honored with the Lifetime Achievement Award by the American College of Healthcare Executives in New Jersey.
Mr. Lloyd has significant expertise in the healthcare industry, prior service on publically-traded boards, and excellent leadership skills developed over his 35 years as a CEO. He is 71 years of age.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 18
GRACE C. TORRES
Age 59
Director since 2018
Grace C. Torres has been a Trustee of Prudential Retail Mutual Funds, a retail mutual funds complex of more than 80 mutual funds, since 2014. Prior to that, Ms. Torres was Chief Financial Officer, Treasurer and Principal Financial Officer of Prudential Mutual Funds and Senior Vice President of Prudential Investments LLC from 1994 through 2014. Ms. Torres also previously served as Vice President, Mutual Funds Administration at Bankers Trust and as a Senior Manager, Audit Practice with Ernst & Young. Ms. Torres is a CPA in the State of New York and received a BS in Accounting and Management from New York University. Ms. Torres served as a Director of Sun Bancorp, Inc. and Sun National Bank since 2015, serving on the Audit, Nominating & Corporate Governance and Risk Committees and Chair of the ALCO Committee, until their acquisition by the Company in January 2018, at which time Ms. Torres joined the Board.
Ms. Torres brings to the Board additional financial reporting and audit experience, particularly with respect to large complex financial services organizations. Ms. Torres has been recognized as one the Top 50 business executives by Hispanic Business magazine and LATINA Style Magazine and brings in-depth experience and expertise regarding the financial industry. She is 59 years of age.
No director of the Company is also currently a director of a company having a class of securities registered under Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.1940, other than Grace Torres’s service noted above.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 19
The following table provides information as of April 10, 2018 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 | |||
WL Ross & Co. LLC 1166 Avenue of the Americas New York, NY 10036 | 2,596,216 | 5.4% | (1) | ||
BlackRock Inc. 55 East 52ndStreet New York, New York 10055 | 2,117,115 | 6.5% | (2) | ||
Wellington Management Group 280 Congress Street Boston, Massachusetts 02210 | 1,662,370 | 5.1% | (3) |
(1) | Based solely on SEC Schedule 13G filed on February 16, 2018, which reflects 48,106,109 outstanding shares subsequent to the closing of the Sun acquisition. |
(2) | Based solely on SEC Schedule 13G Amendment No. 7 filed on January 29, 2018, which reflects 32,444,444 outstanding shares eligible to vote prior to the closing of the Sun acquisition. |
(3) | Based solely on SEC Schedule 13G Amendment No. 8 filed on February 8, 2018, which reflects 32,444,444 outstanding shares eligible to vote prior to the closing of the Sun acquisition. |
The following table provides information as of April 10, 2018, about the shares of the Company common stock that may be considered to be beneficially owned by each director, nominee for director and each NEO and by all such directors and NEOs 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 | |||||||||
Steven E. Brady(3)(4) | 87,504 | 71,900 | 159,404 | * | |||||
Joseph J. Burke(5) | 22,176 | 16,173 | 38,349 | * | |||||
Angelo Catania(5) | 24,457 | 16,173 | 40,630 | * | |||||
Anthony R. Coscia(6) | 38,308 | — | 38,308 | * | |||||
Michael Devlin(3)(7) | 203,159 | 86,709 | 289,868 | * | |||||
Jack M. Farris(8) | 5,570 | — | 5,570 | * | |||||
John K. Lloyd(6) | 1,595 | — | 1,595 | * | |||||
Christopher D. Maher(9)(10)(11) | 94,224 | 112,736 | 206,960 | * | |||||
Dorothy McCrosson(3) | 9,810 | 8,580 | 18,390 | * | |||||
Donald E. McLaughlin(5)(12) | 42,723 | 16,173 | 58,896 | * | |||||
Diane F. Rhine(5) | 38,509 | 16,173 | 54,682 | * | |||||
Mark G. Solow(5) | 19,994 | 7,000 | 26,994 | * | |||||
Grace C. Torres(6) | 4,997 | — | 4,997 | * | |||||
John E. Walsh(5) | 29,787 | 16,173 | 45,960 | * | |||||
Samuel Young(3)(13) | 21,331 | 16,434 | 37,765 | * | |||||
Named Executive Officers who are not also Directors | |||||||||
Michael J. Fitzpatrick(10)(11)(14) | 217,497 | 160,270 | 377,767 | * | |||||
Joseph J. Lebel, III(10)(11)(15)(16) | 64,030 | 81,750 | 145,780 | * | |||||
Joseph R. Iantosca(10)(11)(15) | 70,637 | 102,000 | 172,637 | * | |||||
Steven J. Tsimbinos(10)(11)(17) | 49,181 | 73,125 | 122,306 | * | |||||
All directors and Executive Officers as a group (21 persons) | 1,069,737 | 802,369 | 1,872,106 | 3.8 | % |
* | Less than 1%. |
(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. |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 20
(2) | Percentages with respect to each person or group of persons have been calculated on the basis of 47,963,172 shares of the Company’s Common Stock, the number of shares of Company Common Stock outstanding and entitled to vote as of April 10, 2018, plus the number of shares of Company Common Stock which such person or group of persons has the right to acquire within 60 days of April 10, 2018 by the exercise of stock options. |
(3) | Includes 1,923 unvested shares. Each of Directors Brady, Devlin, and McCrosson was awarded 1,035 restricted shares in March 2017 and 1,095 restricted shares in January 2018. Each such award vests at a rate of 20% per year commencing on March 1 of the year following the grant. |
(4) | Includes 6,374 shares held in an individual retirement account. |
(5) | Includes 4,083 unvested shares. Each of Directors Burke, Catania, McLaughlin, Rhine, Solow and Walsh was awarded 1,880 restricted shares in March 2014, 1,850 restricted shares in March 2015, 1,740 restricted shares in March 2016, 1,035 restricted shares in March 2017, and 1,095 restricted shares in January 2018. Each such award vests at a rate of 20% per year commencing on March 1 of the year following the grant. |
(6) | Includes 1,095 unvested restricted shares awarded in February 2018, which vests at a rate of 20% per year commencing on March 1 of the year following the grant. |
(7) | Includes 22,037 shares held by Mr. Devlin’s spouse, 2,868 shares held by Mr. Devlin’s daughters, and 51,311 shares held in an individual retirement account. |
(8) | Includes 3,707 unvested shares. Mr. Farris was awarded 1,850 restricted shares in March 2015, 1,740 restricted shares in March 2016, 1,035 restricted shares in March 2017, and 1,095 restricted shares in January 2018. Each such award vests at a rate of 20% per year commencing on March 1 of the year following the grant. |
(9) | Includes 23,949 unvested shares. Mr. Maher was awarded 5,165 restricted shares in March 2015, 5,060 restricted shares in March 2016, 4,740 restricted shares in March 2017, and 15,055 restricted shares in January 2018. Such awards vest at a rate of 20% per year commencing on March 1 of the year following the grant. |
(10) | Includes the following performance-based restricted shares that were awarded in January 2018: Mr. Maher: 22,809, Mr. Fitzpatrick: 8,577; Mr. Lebel: 17,154; Mr. Iantosca: 17,154; and Mr. Tsimbinos: 14,235. One third of such shares vest on each of March 1, 2019, 2020, and 2021 at approximately 60% or approximately 80% to 100% depending on the attainment of defined performance criteria for each of the calendar years 2018, 2019, and 2020, or are forfeited if the threshold performance is not met. |
(11) | Includes the following shares that have been allocated and are held in trust pursuant to the ESOP as of April 10, 2018: Mr. Maher: 1,699; Mr. Fitzpatrick: 81,698; Mr. Lebel: 8,105; Mr. Iantosca: 12,604; and Mr. Tsimbinos: 2,673. Such persons have sole voting power, but no investment power, except in limited circumstances, as to such shares. |
(12) | Includes 5,376 shares owned by Mr. McLaughlin’s spouse. |
(13) | Includes 5,068 shares held as Deferred Compensation. |
(14) | Includes 7,251 unvested shares. Mr. Fitzpatrick was awarded 1,760 restricted shares in March 2014, 1,540 restricted shares in March 2015, 1,145 restricted shares in March 2016, 1,455 restricted shares in March 2017, and 4,626 restricted shares in January 2018. Each such award vests at a rate of 20% per year commencing on March 1 of the year following the grant, with the exception of the January 2018 award, which vests in three equal installments beginning on March 1, 2019. |
(15) | Includes 13,899 unvested shares for each of Mr. Lebel and Mr. Iantosca. Each of Mr. Lebel and Mr. Iantosca was awarded 1,910 restricted shares in March 2014, 2,055 restricted shares in March 2015, 1,910 restricted shares in March 2016, 2,905 restricted shares in March 2017, and 9,225 restricted shares in January 2018. Each such award vests at a rate of 20% per year commencing on March 1 of the year following the grant. |
(16) | Includes 679 shares held by Mr. Lebel’s spouse. |
(17) | Includes 16,069 unvested shares. Mr. Tsimbinos was awarded 1,030 restricted shares in March 2014, 7,575 restricted shares in March 2015, 5,345 restricted shares in March 2016, 2,420 restricted shares in March 2017, and 7,690 restricted shares in January 2018. Each such award vests at a rate of 20% per year commencing on March 1 of the year following the grant. |
Each director and executive officer maintains a mailing address at 975 Hooper Avenue, Toms River, New Jersey 08753. None of the above directors or executive officers have pledged any shares of the Company.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 21
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the 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 Commission. Executive officers, directors and greater than 10% stockholders are required by Commission regulation to furnish the Company with copies of all Section 16(a) forms they file.
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 the Company’s common stock during the fiscal year ended December 31, 2017, except for Steven E. Brady, who experienced late filings for transactions between his direct and indirect holdings on January 27, March 2, September 1, and September 7, 2017.
Senior Executive Officers Who Are Not Also Directors
MICHAEL J. FITZPATRICK
Age 62
Michael J. Fitzpatrick has been Executive Vice President and CFO of the Company since 1995. He has also been Executive Vice President and CFO of the Bank since joining the Bank in 1992. He is 6062 years of age.
JOSEPH R. IANTOSCA
Age 57
Joseph R. Iantosca has been Executive Vice President and Chief Administrative Officer of the Bank since May 2013. Before then, he was First Senior Vice President and Chief Administrative Officer of the Bank since May 2007 and Senior Vice President and Chief Administrative Officer since February 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 Implementations. He is 5557 years of age.
JOSEPH J. LEBEL III
Age 55
Joseph J. Lebel IIIhas been was appointed Executive Vice President and Chief Banking Officer of the Bank in January 2017, having served as Executive Vice President and Chief Lending Officer of the Bank since May 2013. Before then, he was First Senior Vice President and Chief Lending Officer since May 2007. When he first joined the Bank in April 2006, he was Senior Vice President of the Bank, in 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 5355 years of age.
Craig C. Spengemanhas been Executive Vice President and Director of the Wealth Management division of the Bank since January 2014. Before joining OceanFirst, he was President of PGB Trust and Investments, a division of the Peapack-Gladstone Bank (“PGB”), and Executive Vice President and a Director of PGB and its holding company, since 2002. Mr. Spengeman was with PGB for over 29 years and has over 36 years of experience in the Trust and Investment industry. He is 60 years of age.
STEVEN J. TSIMBINOS
Age 48
Steven J. Tsimbinos has been First Seniorwas appointed Executive Vice President, General Counsel and Corporate Secretary of the Company and the Bank in June 2016, having previously served in those roles as First Senior Vice President since September 2010. Prior to joining OceanFirst, he was General Counsel of Copper River Management, L.P., the investment manager to a family of hedge funds, since May 2006, and prior to that a partner with Lowenstein Sandler PC, where he practiced corporate and securities law. He is 4648 years of age.
PROPOSAL 2. APPROVAL OF PERFORMANCE GOALS OF CASH INCENTIVE PLAN
Reason for Seeking Stockholder ApprovalOCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 22
GRACE VALLACCHI
The 2011 Cash Incentive Compensation Plan (the “Cash Incentive Plan”) is a bonus plan that was approved by the Company’s stockholders at the 2011 Annual Meeting. The Cash Incentive Plan was designed to provide certain executive officers and other designated employees with incentive compensation based upon the achievement of pre-established performance goals. Under Section 162(m), compensation paid to “Covered Employees”, within the meaning of Section 162(m), in excess of $1 million in a taxable year is not generally deductible. However, compensation that qualifies as “performance-based” under Section 162(m) does not count against the $1 million limitation.
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One of the requirements of “performance-based” compensation for purposes of Section 162(m) is that the material terms of the performance goals under which compensation may be paid be disclosed toGrace Vallacchi was appointed Executive Vice President and approved by the Company’s stockholders. In addition, Section 162(m) provides that if the Company retains the authority to change the targets under a performance goal, then the Company must disclose the material terms of the performance goals to stockholders for re-approval every five years. In order to ensure that certain awards granted under the Cash Incentive Plan continue to qualify as tax-deductible performance-based compensation under Section 162(m), the Company is seeking stockholder approval of the performance goals under the Cash Incentive Plan. The performance goals have been reviewed by the Compensation Committee and the Board of Directors, and an additional performance goal has been proposed for approval stockholders. This new performance goal, listed as (xx) below, reads as follows:
(xx) enterprise risk metrics, consisting of one or more goals related to cybersecurity, interest rate risk, liquidity risk and regulatory compliance;
The Board and the Compensation Committee added the new performance goal to have the ability to add risk metrics as goals under the Cash Incentive Plan and to be able to promote risk mitigation and safe and sound banking practices. The complete list of performance goals are set forth below under “Summary of the Cash Incentive Plan”.
The Board of Directors believes that it is in the best interestsCRO of the Company and its stockholdersthe Bank in September 2017. Prior to enablejoining OceanFirst, Ms. Vallacchi was Associate Deputy Comptroller in the Company to continue to implement compensation arrangements that qualify as tax-deductible performance-based compensation. If the Company’s stockholders do not approve this proposal, then bonuses may continue to be awarded in accordance with the general termsNortheastern District of the Cash Incentive Plan, or otherwise, in which case, the only impact on the Company would be that some or allOffice of the value of certain awards that are based on the achievement of one or more performance goals may no longer be deductible by the Company under the Internal Revenue Code as a resultComptroller of the limitations imposed under Section 162(m).
The following summary describes the material provisions of the Cash Incentive Plan, including the performance goals. The summary does not purportCurrency (“OCC”) since February 2016. Prior to be complete and is qualified in its entirety by the full text of the Cash Incentive Plan, which has been amended and restated to include the new performance goal and is attached asAppendix A to this Proxy Statement. Other than the new performance goal, no changes are being proposed to the Cash Incentive Plan; the remainder of the performance goals for which approval is requested are in the same form as adopted by stockholdersthat position, she was Assistant Deputy Comptroller at the 2011 Annual Meeting.OCC since October 2012, and a National Bank Examiner since 2007. She is 54 years of age.
Summary of the Cash Incentive Plan
ANGELA K. HO
Age 34
Administration.Angela K. Ho The Cash Incentive Plan is administered by a committee of the Board of Directors which is comprised of at least two outside directors. Unless otherwise determined by the Board of Directors, the Compensation Committee will be the committee to administer the Cash Incentive Plan. Its duties include designating participants and individual award opportunities, and designating and administering performance metrics and other award terms and conditions. The Compensation Committee has substantial discretion to make all other determinations related to bonus opportunities under the Cash Incentive Plan.
Participants. All employeeswas appointed Chief Accounting Officer of the Company in March 2017 and its subsidiaries (including employees who are also Directors) to whomhad served as the Compensation Committee grants eligibility are eligible to participate in the Cash Incentive Plan. It is anticipated that all employees, other than residential loan officers, will participate in the plan. It is estimated that there will be approximately 390 participants.
Performance Goals and Awards. The performance goals are limited to one or moreChief Accounting Officer of the following Company or subsidiary financial performance measures:Bank since September 2016. Prior to joining OceanFirst, Ms. Ho served as the controller of Northfield Bank since 2012 and had significant accounting responsibilities at Signature Bank and KPMG. She is 34 years of age.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 23
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Performance goals indicated with an asterisk may be established on the basis of either reported earnings or cash earnings. Under the Cash Incentive Plan, any performance goal may be based on the Company’s performance on an absolute basis as compared to a goal set for the Company, the Company’s performance in a designated peer group, or a combination of both.
For each specific performance goal, a predetermined bonus amount can be earned by the participant upon achievement of the goal. Performance goals may relate to a fiscal year or to a longer period. Performance goals must be established while the performance relative to the target remains substantially uncertain within the meaning of Section 162(m). For an annual performance period, the performance goals must be established by the ninetieth day of the year.
Payment of Awards. All awards that are earned shall be paid at such time and in such amounts (not in excess of the maximum established for each person) as determined by the Compensation Committee and will be paid in cash. In general, awards will be paid within two and one-half months after the end of the calendar year in which they are earned.
Maximum Payout. Under the Cash Incentive Plan, the maximum payment opportunity under the Cash Incentive Plan to the Chief Executive Officer or any other Covered Employee for any calendar year may not exceed $1.5 million.
Adjustments. If the performance criteria for any performance period has been affected by special factors (including material changes in accounting policies or practices, material acquisitions or dispositions of property, or other unusual items) that in the Compensation Committee’s judgment should or should not be taken into account, the Compensation Committee may adjust such criteria and make payments accordingly under the Cash Incentive Plan; provided, however, that no such adjustment shall cause an award to a Covered Employee to fail to be “qualified performance-based compensation”. In addition, the Compensation Committee may, in the exercise of their discretion, reduce or eliminate the amount of an award to a participant prior to its payment.
Term of the Cash Incentive Plan. The Cash Incentive Plan was effective as of the 2011 Annual Meeting. The Cash Incentive Plan has an indefinite term; however, the performance goals must be reapproved by stockholders every five years, which is why approval of the performance goals is being requested.
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Amendment of the Cash Incentive Plan. The Board of Directors, may at any time terminate, in whole or in part, or amend the Cash Incentive Plan, provided that, except as otherwise provided in the plan, no amendment or termination shall adversely affect the rights of any participant under any awards previously granted to or deferred by the participant. In the event of a termination of the Plan, the Compensation Committee may in its sole discretion direct any remaining payments to participants in a lump sum or installments as the Compensation Committee shall prescribe with respect to each participant. Any material amendment to the Plan (including, but not limited to, a change in the class of individuals eligible to participate, the maximum annual award, or the authorized performance measures) must be approved by the Company’s stockholders if required by and in accordance with section 162(m) of the Code.
Forfeiture; Clawbacks. Awards under the Cash Incentive Plan to NEOs and other employees may, in the Compensation Committee’s discretion, include clawback provisions for certain events, such as breach of restrictive covenants or restatement of financial results on the basis of which cash incentives were paid.
Section 409A Compliance. The Cash Incentive Plan is intended to be exempt from the provisions of Section 409A of the Code regarding deferred compensation.
ERISA Compliance. The Cash Incentive Plan is not subject to any of the requirements of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
Unless marked to the contrary, the shares represented by the enclosed proxy card, if executed and returned, will be voted “FOR” the approval of the performance goals of the Cash Incentive Plan.
The Board of Directors recommends that you vote “FOR” this Proposal 2, approval of the performance goals of the 2011 Cash Incentive Compensation Plan.
PROPOSAL 3. 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 3. As discussed in the Compensation Discussion and Analysis, the Compensation Committee believes that the compensation of the NEOs described herein is reasonable and appropriate, and is justified by the performance of the Company.
In deciding how to vote on this proposal, the Board urges you to consider the following factors, some of which are more fully discussed in the Compensation Discussion and Analysis (which stockholders are encouraged to read):
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Please note that your vote is advisory and will not be binding upon the Board, and may not be construed as overruling a decision by the Board or creating or implying 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” Proposal 3, 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.
PROPOSAL 4. RATIFICATION OF APPOINTMENT
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Company’s independent registered public accounting firm for the fiscal year ended December 31, 2015 was KPMG LLP. The Audit Committee reappointed KPMG LLP to continue as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2016, 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, but is not required to, consider other independent registered public accounting firms.
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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 4, the ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company.
Audit Fees
The following table sets forth the fees billed to the Company for the fiscal years ended December 31, 2015 and December 31, 2014 by KPMG LLP:
2015 | 2014 | |||||||
Audit fees | $ | 500,000 | $ | 480,000 | ||||
Audit related fees (1) | 132,000 | 62,000 | ||||||
Tax related fees (2) | 79,500 | 75,264 | ||||||
Other fees | — | — | ||||||
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$ | 711,500 | $ | 617,264 | |||||
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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. The Audit Committee believes that the provision of non-audit services by KPMG LLP is compatible with maintaining KPMG LLP’s independence.
During the year ended December 31, 2015, 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 submitted and implemented an internal audit plan for 2015.
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
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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 met 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 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.”
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, 2015 for filing with the 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, Chair
Donald E. McLaughlin, CPA, Retired
Angelo Catania
COMPENSATION DISCUSSION AND ANALYSIS
This section describes the objectives, design and rationale of the Company’s compensation program for its NEOs, and discusses each material element of the Company’s NEO compensation program, how compensation is determined, and recent developments in the Company’s compensation program.
For 2015,2017, the Company’s NEOs included:were:
Name | Title | |
Christopher D. Maher | Chairman, President and CEO of the Company and the Bank | |
Michael J. Fitzpatrick | Executive Vice President and CFO of the Company and the Bank | |
Joseph J. Lebel III | Executive Vice President and Chief Banking Officer of the Bank | |
Joseph R. Iantosca | Executive Vice President and Chief Administrative Officer of the Bank | |
Steven J. Tsimbinos | Executive Vice President, General Counsel and Corporate Secretary of the Company and the Bank |
Summary
182017 Business Highlights
The Company completed another successful year in 2017. On June 30, 2017, the Company announced the acquisition of Sun, which closed on January 31, 2018. Based on the $26.45 per share closing price of the Bank;
• | Earnings Growth.Net income for the year ended December 31, 2017 was $42.5 million, or $1.28 per diluted share, as compared to net income of $23.0 million, or $0.98 per diluted share, for the prior year. Net income for the year ended December 31, 2017 includes merger related expenses, branch consolidation expenses, the acceleration of stock award expense due to the retirement of a director, and additional income tax expense from the revaluation of deferred tax assets related to the recently enacted Tax Cuts and Jobs Act (“Tax Reform”) . These items decreased net income, net of tax benefit, for the year ended December 31, 2017 by $13.7 million. Net income for the year ended December 31, 2016 included merger related expenses of $11.8 million, net of tax benefit. These items reduced diluted earnings per share by $0.42 and $0.50, respectively, for the years ended December 31, 2017 and 2016. |
• | Balance Sheet Growth. |
– | Total assets increased by $249.1 million to $5.4 billion at December 31, 2017, from $5.2 billion at December 31, 2016. Loans receivable, net, increased by $162.3 million, to $4.0 billion at December 31, 2017, from $3.8 billion at December 31, 2016, with $123.1 million of the growth relating to commercial lending. | |
– | Deposits increased by $155.0 million, to $4.3 billion at December 31, 2017, from $4.2 billion at December 31, 2016. The average cost of deposits increased only four basis points over the prior year to 0.29%.The loan-to-deposit ratio at December 31, 2017 was 91.3%, as compared to 90.8% at December 31, 2016. Stockholders’ equity increased to $601.9 million at December 31, 2017, as compared to $571.9 million at December 31, 2016. The Company remains well-capitalized with a tangible common equity ratio of 8.42% at December 31, 2017. |
• | Dividends.During 2017, the Company maintained its quarterly dividend at $0.15 per share. Cash dividends on common stock declared and paid during the year ended December 31, 2017 were $19.3 million, as compared to $12.6 million for the prior year. The increase in dividends was a result of the additional shares issued in the Company’s acquisitions. |
• | Stock Performance.For 2017, the Company’s common stock price decreased by 12.6% and its total stockholder return (assuming dividend reinvestment) was negative 10.6% as compared to total shareholder return of 65.9% for the past three years and 119.5% for the past five years. The following graph shows a comparison of total stockholder return on the Company’s common stock, based on the market price of the Company’s common stock with the cumulative total return of companies in the Nasdaq Composite Index and the SNL Thrift Index for the period December 31, 2012 through December 31, 2017. The graph may not be indicative of possible future performance of the Company’s common stock. Cumulative return assumes the reinvestment of dividends and is expressed in dollars based on an initial investment of $100. |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 24
Period Ending | |||||||||||
Index | 12/31/12 | 12/31/13 | 12/31/14 | 12/31/15 | 12/31/16 | 12/31/17 | |||||
OceanFirst Financial Corp. | 100.00 | 128.42 | 132.33 | 159.31 | 245.78 | 219.54 | |||||
Nasdaq Composite | 100.00 | 140.12 | 160.78 | 171.97 | 187.22 | 242.71 | |||||
SNL Thrift | 100.00 | 128.33 | 138.02 | 155.20 | 190.11 | 188.72 |
Executive Compensation Program Highlights
Our executive compensation program contains the following components and Corporate Secretaryfeatures that are designed to align the interests of the Companyour NEOs and the Bank.stockholders.
• | Balanced Executive Compensation Program Elements. We use a mix of compensation elements to motivate our executives, incentivize Company performance and reward accomplishments, while promoting safe and sound banking practices. Our Compensation Committee implements a robust risk assessment framework to monitor our executive compensation programs for excessive risk to the Company. |
• | No “Single Trigger” Change in Control Benefits. We maintain “double-trigger” change in control clauses in our employment and change in control agreements, and the executives are only entitled to a severance payment if terminated without cause or an executive terminates employment for good reason subsequent to a change in control. In addition, awards under the 2011 Stock Incentive Plan issued after its amendment in June 2017, including those granted in 2018, will not automatically vest upon a change in control. In addition, the Company amended the 2011 Stock Incentive Plan in June 2017 to eliminate the automatic issuance of new stock awards upon a change in control. |
• | No Excise Tax Gross-Ups. We do not provide for gross-up payments for excise taxes our executives may incur in connection with a change in control. |
• | Equity Compensation Best Practices: Our 2011 Stock Incentive Plan, as amended June 2017, contains certain restrictions that reflect sound corporate governance principles, including the following: |
– | Dividends on performance-based stock awards and dividend equivalents on performance-based stock unit awards are paid only to the extent the underlying awards vest; | |
– | Shares that are used to pay the stock option exercise price or tax withholding on an option or Stock Appreciation Right (“SAR”) cannot be used for future grants under the amended 2011 Stock Incentive Plan; |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 25
– | Except in connection with a change in control or other significant corporate transaction, the repricing of stock options or SARs without stockholder approval is prohibited; and | |
– | At least 95% of the shares subject to awards require a vesting period of at least one year. |
• | Use of an Independent Compensation Consultant. In 2017, the Compensation Committee directly engaged an independent compensation consultant to review the competitiveness and effectiveness of our executive compensation program. |
• | Performance-Based Stock Awards. In January 2018, the Company implemented a performance-based stock plan for NEOs and select senior management executives as a compliment to the Company’s standard time-based restricted shares and options plan. This performance-based plan is valued at approximately 50% of the executive’s total grant and provides an opportunity for the executive to vest in shares in equal amounts over three years but only when a specific performance metric has been attained or exceeded. Tiered performance goals for the metric are aligned with corresponding tiered vesting values and have been set at Threshold, Target and Superior using financial data from the 2018 strategic plan as approved by the Board. Performance below the Threshold goal in any given year results in that year’s grant allocation being forfeited. Performance above the Superior goal is capped at the Superior value. The Company determined that splitting a significant portion of key senior executive’s grants into a performance-based grant that vests only when a specific target is met will further focus senior management’s efforts on attaining Company-specific goals that will drive performance and benefit all shareholders. The performance-based plan reflects market practice and provides senior management with an easily understood set of three years goals that have been approved by the Board and that provide the opportunity for delivering meaningful value for the Company and the executive if accomplished. |
• | Executive Officer Stock Ownership Requirements.We require all of our executive officers to hold substantial amounts of our common stock. Our CEO is expected to own stock with a market value of at least five times his annual base salary. Each other NEO is expected to own stock with a market value of at least three times his annual base salary. Until these guidelines are met, an NEO is required to retain all of the net vested restricted stock and net shares delivered after exercising stock options. See“Stock Ownership Guidelines.” |
• | Incentive Clawback Policy. We have a compensation recovery or “clawback” policy that allows our Board to recoup performance-based compensation from our executives in certain circumstances. |
• | Policy Limiting Hedging or Pledging our Stock. Unless approved in advance by our Board in limited circumstances, our Insider Trading Policy prohibits our directors, executive officers and certain key employees from engaging in hedging transactions involving our common stock or pledging our common stock. |
Objectives of Compensation Program
The Company’s mission is to build value for its stockholders as a growth oriented community-focused financial services organization. To accomplish its mission, it strives to provide outstanding service and responsiveness to the markets and customers it serves, and the Company’s executive officer compensation program has stated objectives to:
• | provide a comprehensive compensation package that is competitive within the marketplace so that the Company may attract, reward and retain highly qualified, motivated, productive and responsible senior executives; |
• | align NEO’s interests with those of stockholders by incentivizing and rewarding individual behaviors that improve the Company’s performance in a manner that is consistent with its business and strategic plans while encouraging prudent decision-making and safe and sound banking practices; |
• | create balanced incentives that do not encourage NEOs to expose the Company to inappropriate risks by providing excessive compensation that could lead to material loss; |
• | reward NEOs who assume the greatest responsibility and consistently produce positive strategic results within the parameters of sound business and risk management; |
• | motivate each individual to perform to the best of his or her ability; and |
• | recognize the Company’s cost structure and the economic environment. |
The NEOs are one of the Company’s greatest assets, as their leadership and example to all employees drive the Company’s success and customer-centered excellence.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 26
Compensation Program Design and Rationale
To attract qualified executives as NEOs and to incentivize, reward and retain NEOs who meet the Company’s performance expectations, the Company used the following major elements in its 2017 total compensation for executives:
Compensation Element | Fixed/Performance Based | Short-Term/ Long-Term | ||
Description and Purpose | Link to Performance | |||
Base Salary | Helps attract and retain executives through the periodic payments of market-competitive base pay. | Based on individual performance and responsibilities, prevailing market conditions, current and anticipated Company performance, and current pay levels. | Fixed | Short-term |
Cash Incentives | Encourage achievement of financial performance metrics and individual goals that create near-term stockholder value and are consistent with the Company’s business and strategic plans, prudent decision-making, and risk management that reflects safe and sound business practices. | Quantitatively ties compensation directly to factors that are deemed important by the Company. | Performance-based | Short-term |
Equity Compensation Plan | The Company grants stock options and restricted stock awards to attract, retain and motivate employees by providing for or increasing their economic interests in the long-term success of the Company. Equity grants under the Company’s stock incentive plans complement total compensation packages and enable the Company to align employee interests with those of the stockholders of the Company. | Value realization depends on stock performance over time. | Fixed and/or performance based. | Long-term – generally vesting over five years |
Supplemental Executive Retirement Plan (“SERP”) | Provided to certain NEOs to assure income security into retirement while incentivizing retention. | — | Fixed | Long-term |
Other Compensation | Select, non-core benefits comparable to those offered by competitors, such as health and welfare benefits on the same basis as other employees and certain perquisites. | — | Fixed | Short and long- term |
Mix of Compensation Elements; Risk Mitigation
The Committee believes that it maintains the appropriate balance of compensation elements to motivate executives and reward accomplishments. Performance-based incentive 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 and safe and sound banking practices;practices.
The Company is mindful of sound regulatory 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 NEOs is designed to mitigate risk by:
• | providing non-performance-based salaries, retirement and benefits that are competitive in the market and permit executives to pay living expenses and provide stability without reliance on incentives; |
• | incorporating cash incentives to reward annual performance in accordance with the Company’s predefined annual and strategic goals and objectives; |
• | including long-term incentives in the form of time-vested and performance-based restricted stock awards and/or stock options to focus on building long-term stockholder value; and |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 27
To further mitigate risk resulting from performance-based compensation, the Committee considers, and uses when appropriate, metrics and performance goals that do not encourage NEOsincorporate risk management, “clawbacks” to exposerecover prior payments, and performance periods longer than one year. The use of 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 balance the need to inappropriate risks by providing excessive compensationaccept risk exposure in the successful operation of its business with the need to identify, monitor and prudently manage that could lead to material loss;
The following chart illustrates the greatest responsibilitymix of the Company’s compensation for 2017 for its CEO, as specified on theSummary Compensation Table.
Consideration of Last Year’s Advisory Stockholder Votes on Executive Compensation
At the 2017 Annual Meeting of Stockholders, approximately 97% of the shares voting on the Company’s 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 2017 Proxy Statement. The Board and consistently produce positive strategic results within the parametersCompensation Committee appreciate and value the views of sound businessour stockholders. In making compensation decisions for the remainder of 2017 and risk management;
How Compensation Isis Determined
The Compensation Committee reviews compensation for the CEO, the other NEOs and the other officers subject to the reporting requirements of Section 16 under the Exchange Act (including the NEOs, the “Section 16 Officers”), and establishes certain guidelines and limits for compensation and benefits programs for other employees of the Company and the Bank. The Compensation Committee annually reviews and evaluates recommendations made by managementthe CEO regarding compensation, including base salary, bonuses and equity grants for the Section 16 Officers.Officers, other than the CEO. The Compensation Committee then determines the compensation for the CEO and Section 16 Officers and reports its determination to the Board. In establishing compensation levels, the Compensation Committee considers the Company’s overall strategic objectives, annual performance goals, the report of the compensation consultant regarding peer group comparisons, market data for other institutions, individual executive performance, the relative level of compensation among executive officers and regulatory requirements. The Compensation Committee also has the CRO perform a risk assessment to review any actual and potential risks created by the Company’s compensation program, as well as analyze the Company’s controls and risk mitigation mechanisms.
Executive management and outside advisors from time-to-time may be invited to Compensation Committee meetings to provide their views on compensation matters. The CEO participates in the process of determining compensation for the other Section 16 OfficersNEOs by making recommendations regarding base salary adjustments and awards under incentive and equity plans. The CEO does not participate in the Compensation Committee’s decision as to his own compensation package. See “Corporate Governance – Committees of the Board of Directors” for further information regarding the Compensation Committee.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 28
Role of Compensation Consultant
The Compensation Committee first retained Mosteller & Associates (“MA”) in 2012 and again retained MA as its independent compensation consultant for 2015.2017. The Compensation Committee considers competitive market data, advice and recommendations received from MA in making compensation decisions. MA and its representatives are independent of the Bank’s management, report directly to the Compensation Committee, and
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have no economic relationship with the Company other than MA’s role as advisor to the Compensation Committee. On July 10, 2015,November 14, 2017, the Compensation Committee reviewed information provided by MA regarding theirits independence. Based on this information and additional review, the Compensation Committee concluded that the work performed by MA does not raise any conflicts of interest.
Compensation Study
The Compensation Committee has historically relied on a peer group to assess relative performance for its annual incentive plans and uses this information as a factor when making compensation decisions. MA conducted a peer group study for the Compensation Committee for use in making compensation decisions for 2015.2017. MA reviewed the prior peer group for appropriateness and recommended changes for 2015.2017. The study proposed eliminating two institutions frominitial peer group, chosen in January for 2017, consisted of 15 peer group banks and reflected moderate adjustments to the 2016 peer group to reflect the prior year’s peer group due togrowth in asset size of the mergerBank. Subsequently, with the announcement of peer institutions – Provident New York Bancorp and Sterling Bancorp. Based upon the study provided by MA,acquisition of Sun in June 2017, the Compensation Committee, approvedin consultation with MA, expanded the recommendation at its January 26, 2015 meetingpeer group to 23 banks to reflect the Bank’s increased size, geographic span and established a 13complexity. The 23 bank peer group for the 20152017 compensation review consistingconsisted of the following:
Arrow Financial Corporation (NY) – NASDAQ: AROW
Bryn Mawr Banc Corp. (PA) – NASDAQ: BMTC
Dime Community Bancshares (NJ) – NASDAQ: DCOM
Financial Institutions, Inc. (NY) – NASDAQ: FISI
First of Long Island Corp. (NY) – NASDAQ: FLIC
Flushing Financial Corp. (NY) – NASDAQ: FFIC
Lakeland Bancorp, Inc. (NJ) – NASDAQ: LBAI
Northfield Bancorp, Inc. (NJ) – NASDAQ: NFBK
Oritani Financial Corp. (NJ) – NASDAQ: ORIT
Peapack-Gladstone Financial Corp. (NJ) – NASDAQ: PGC
Suffolk Bancorp (NY) – NASDAQ: SUBK
Univest Corp. of Pennsylvania (PA) – NASDAQ: UVSP
WSFS Financial Corp. – (Delaware)
Berkshire Hills Bancorp, Inc. (MA) – NASDAQ: BHLB | Northwest Bancshares, Inc. (NJ) – NASDAQ: NWBI | |
Bryn Mawr Bank Corp. (PA) – NASDAQ: BMTC | Oritani Financial Corp. (NJ) – NASDAQ: ORIT | |
Community Bank System , Inc. (NY) – NASDAQ: CBU | Peapack-Gladstone Financial Corp. (NJ) – NASDAQ: PGC | |
Customers Bancorp. , Inc. (PA) – NASDAQ: CUBI | Provident Financial Services, Inc. (NJ) – NASDAQ: PFS | |
Dime Community Bancshares, Inc. (NJ) – NASDAQ: DCOM | Sandy Spring Bancorp, Inc. (MD) – NASDAQ: SASR | |
Eagle Bancorp, Inc. (MD) – NASDAQ: EGBN | S&T Bancorp, Inc. (PA) – NASDAQ: STBA | |
First Commonwealth Financial Corp. (PA) – NASDAQ: FCF | Tompkins Financial Corp. (NY) – NASDAQ: TMP | |
Flushing Financial Corp. (NY) – NASDAQ: FFIC | TowneBank (VA) – NASDAQ: TOWN | |
Independent Bank Corp. (MA) – NASDAQ: INDB | Univest Corp. of Pennsylvania (PA) – NASDAQ: UVSP | |
Lakeland Bancorp, Inc. (NJ) – NASDAQ: LBAI | WesBanco , Inc. (WV) – NASDAQ: WSBC | |
NBT Bancorp , Inc. (NY) – NASDAQ: NBTB | WSFS Financial Corp. – ( DE ) – NASDAQ: WSFS | |
Northfield Bancorp, Inc. (NJ) – NASDAQ: NFBK |
MA conducted a review ofreviewed the Bank’s current level of director and executive compensation relative to its peers and provided the Compensation Committee with its report at its July 10, 2015November 14, 2017 meeting. The executive compensation results found aA strong alignment existed between performance and executive compensation at OceanFirst. The financial performance indicators in the review were as follows: (1) asset size, where the Company was $2.356 billion as compared to a peer group average of $3.172
• | asset size, where the Company was $7.3 billion as compared to a peer group average of $6.8 billion, ranking the Company tenth in the peer group for the year |
• | return on assets, where the Company ranked twenty-second in the peer group for 2016 performance |
• | return on equity, where the Company ranked sixteenth compared to the 23 bank peer group average for 2016 |
In reviewing the report, the Compensation Committee considered that the Company’s performance indicators were adversely impacted during 2017 by merger-related expenses, branch consolidation expenses, stock award acceleration, and Tax Reform. See“Executive Summary–2017 Business Highlights–Earnings Growth.” Excluding those factors, the Company’s performance for both ROA and ROE would have both reflected performance in the upper tier of the peer group forat 1.06 and 9.52, respectively. For 2017, the year and ninth onCompensation Committee benchmarked compensation at the three-year average basis; (2) return on assets, where the Company ranked twelfth in50thpercentile of the peer group for 2014 performance and eleventh in the peer group for three year average return on assets; and (3) return on equity, where the Company ranked eighth compared to the peer group average for 2014 and eighth as compared to the peer group’s average for the three year period.group. Overall, the base salaries were just14% below the 50th percentile when compared to the23 bank peer group average while the target bonuses trended slightly above the 25th percentile. On average, totalpeer group average. Total compensation, including equity awards, was positioned slightly abovebelow the 25th percentilepeer group averaging 79% of the comparative peer group.group average with individual ranges from 72% to 93% of the peer group average. The 20152017 study was taken into account by the Compensation Committee to set and establish executive compensation. Of the respective peer group average for CEO compensation, Mr. Maher’s base salary was 87% of the peer group average, and review directortarget bonus was 98% of the peer group average, and total compensation for the remainder of 2015. The Board maintained the Board annual retainers(including equity awards) and all Board Committee meeting fees at their existing levels, but in July 2015, increased the fee for Bank Board meetings to $2,000 per meeting.See “Director Compensation – Cash and Stock Retainers and Meeting Fees for Non-Employee Directors.”
Consideration of Last Year’s Advisory Stockholder Votes on Executive Compensation
At the 2015 Annual Meeting of Stockholders, approximately 81% of the shares voting on the Company’s non-binding advisory vote on executiveother compensation (commonly known as “say on pay”) were cast in favor of the compensation of the Company’s executive officers, as described in the 2015 Proxy Statement. The Board and the 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 have strong stockholder support.
20OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 29
In making compensation decisions for the remainder of 2015 and to date in 2016, the Board and the Committee have considered, among other factors, the stockholders’ support and the Board’s overall satisfaction with the current compensation structure, and have not made significant changes to the mix or level of compensation. Advisory votes on executive compensation will continue to serve as an additional tool to guide the Board and the Committee in their assessment of the Company’s executive compensation program.
Compensation Program Design and Rationale
Cash Compensation.Current cash compensation consists of base salary, performance-based cash bonuses under a cash incentive plan and from time-to-time in limited circumstances, discretionary cash bonuses:
Equity Compensation Plan.The Company grants stock options and/or restricted stock awards to attract, retain and motivate employees by providing for or increasing their economic interests in the successElements of the Company. Equity grants under the Company’s stock incentive plans complement total compensation packages and enable the Company to align employee interests with those of the stockholders of the Company.Compensation
Mix of Compensation Elements; Risk Mitigation. The Committee believes that it maintains the appropriate balance of compensation elements to motivate executives and reward accomplishments. Performance-based incentive 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 and safe and sound banking practices.
The Company is mindful of sound regulatory 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 NEOs 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 the Company’s predefined annual and strategic goals and objectives; (3) including long-term incentives in the form of restricted stock awards and/or stock options to maintain focus on long-term shareholder value; and (4) considering prior period results, the exposure 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 prior payments, and performance periods longer than one year. The use of 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 the balance between the need to accept risk exposure in the successful operation of its business and the need to identify and prudently manage that risk.
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Elements of Compensation
Overview. To achieve the Company’s objectives for its NEO compensation program, the program includes the following elements: (1) base salary; (2) a performance-based annual cash bonus under a cash incentive compensation plan; (3) 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 certain NEOs under the Supplemental Executive Retirement Plans (“SERPs”); (6) Company-paid automobile benefit and perquisites for certain 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 certain decisions regarding 20152017 compensation.
Base Salary.
The base salary levels for the NEOs are intended to be competitive with those of comparable positions at peer financial institutions at levels appropriate to attract, retain, motivate and reward individuals to discharge their responsibilities, while being mindful of managing costs, particularly “fixed” costs. After the Compensation Committee’s consideration of various factors, including the growth of the Company, the MA report, prevailing market conditions, current and anticipated Company performance, the performance and responsibilities of individual executives, and current pay levels, and, as applicable, the MA report,Company made no increases to NEO base salaries during 2017. The salaries remained at the Company:amounts set in July 2016 and are as follows:
Name | 2016 Salary | 2017 Salary | Change | |||||
Christopher D. Maher | $ | 650,000 | $ | 650,000 | 0.0% | |||
Michael J. Fitzpatrick | $ | 300,000 | $ | 300,000 | 0.0% | |||
Joseph J. Lebel III | $ | 300,000 | $ | 300,000 | 0.0% | |||
Joseph R. Iantosca | $ | 285,000 | $ | 285,000 | 0.0% | |||
Steven J. Tsimbinos | $ | 250,000 | $ | 250,000 | 0.0% |
Cash Incentive Awards
A significant portion of 2015 from $425,000 to $550,000 per annum, in recognition of Mr. Maher’s assumptioneach NEO’s annual cash compensation is contingent on the performance of the PresidentCompany, the Bank and CEO role; and
Cash Incentive Awards.individual under a cash incentive compensation plan. Annual non-discretionary cash bonuses for the NEOs are determined under the annual cash incentive plan and are contingent on the performance of the Company, the Bank and the individual, by comparing actual Company performance against targets that are approved by the Compensation Committee at the beginning of 2015. The targets are weighted between individual objectives and the Company’s success in achieving its financial goals. In 2015, the targeted2017. For 2017, Mr. Maher’s bonus level for the CEOtarget was approximately 64% of base salary and for the other NEOs the targeted bonus levels ranged from 35% to 50% of base salary. Generally, the higher the level of responsibility of the officer in the Company, the greater the percentage of base salary that may be awardedset as a cash bonus under the plan for achievementcomponent of performance goals.his employment contract. Ordinarily, if cash 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 2015,2017, incentive payments were based on net incomeCore Net Income and efficiency ratioCore Efficiency Ratio utilizing the following matrix:
Category | Weight | Threshold 50% | Target 100% | Superior 150% | Weight | Threshold 50% | Target 100% | Superior 150% | |||||||||||||||||||
Core Net Income | 60 | % | $ | 19,876,000 | $ | 22,084,000 | $ | 24,292,000 | 60% | $ 49,545,900 | $ 55,051,000 | $ 60,556,100 | |||||||||||||||
Core Efficiency Ratio | 40 | % | 65.2 | % | 62.5 | % | 59.8 | % | 40% | 58.20% | 55.80% | 53.40% | |||||||||||||||
100 | % |
For purposes of the matrix, the Core Net Income and Core Efficiency Ratio values were derived from the Company’s 20152017 Business Plan as proposed by senior management and approved by the Board in late 2014.December 2016. The net resultresults for 2015 was2017 were Core Net Income at $21,644,000$56,015,000 (above Target) and the Core Efficiency Ratio at 63.2%57.07% (slightly below Target), resulting in performance above Threshold and below or at Target in each case.overall funding of 94.7% of Target. Funding is then adjusted for individual performance. “Core” measures exclude non-recurring items such as merger related expenses.expenses, branch consolidation expenses and additional income tax expense from the revaluation of deferred tax assets due to Tax Reform . The incentives are determined based upon the Company’s success in achieving its financial goals, as adjusted for individual performance. Despite the funding level of 94.7% for the NEOs, management recommended to the Committee that the funding level for the NEOs be reduced to 90.0% to align with the funding level of the VP and Above officer category who were measured on a slightly different set of 2017 plan metrics. However, adjustment was made for individual performance reflecting the exceeding of individual goals due to the integration of the Cape Bank and Ocean City Home Bank mergers, as well as the simultaneous due diligence, negotiations, and substantial completion of the Sun merger. The following table provides a summary of the incentive payments to the Company’s NEOs for 2017:
Name | Target Bonus | Percent of Salary | Actual Bonus | ||||||
Christopher D. Maher | $ | 550,000 | 84.6% | $ | 742,500 | ||||
Michael J. Fitzpatrick | $ | 175,000 | 58.3% | $ | 225,000 | ||||
Joseph J. Lebel III | $ | 200,000 | 66.7% | $ | 250,000 | ||||
Joseph R. Iantosca | $ | 175,000 | 61.4% | $ | 200,000 | ||||
Steven J. Tsimbinos | $ | 125,000 | 50.0% | $ | 175,000 |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 30
Discretionary Bonus Payments
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Discretionary Bonus Payments.The Company did not make any discretionary bonus payments to the NEOs for 2015,2017, and limits the use of discretionary bonus payments to extraordinary circumstances to rectify inequities or recognize outstanding performance.
Equity Incentive Awards.Awards
The Compensation Committee approved the grants of stock options and restricted stock awards under the Company’s stock incentive plans. The grants vest over five years, with the exception of the 2017 grant to Mr. Fitzpatrick whose awards vest over three years. The award levels and vesting schedules were determined based on various factors, including prevailing market conditions, performance and responsibilities of individual executives, current pay levels, the amount of awards previously granted and the MA report for 2014.2017. Awards in 20152017 to the NEOs are presented in“Executive Compensation”under the“Stock OptionsOptions”” and“Stock AwardsAwards”” columns of theSummary Compensation Table and the Grants of Plan-Based Awards Table. Of the awards to Messrs. Maher, Fitzpatrick, IantoscaTable, and Lebel,can be illustrated as follows:
To align NEOs’ interests with stockholders, approximately 75% (determined by dollar value) of the awards during 2017 were granted in options and 25% in time vested restricted stock. Of the award to Mr. Tsimbinos, approximately 75% (determined by dollar value) was granted in time vested restricted stock and 25% in stock options. The Compensation Committee believes that the grants made in 20152017 appropriately balance the goal of creating an incentive to increase shareholderstockholder value with the goal of risk mitigation and promoting sound banking practices. See“Compensation Program Design and Rationale – Mix of Compensation Elements; Risk Mitigation.Mitigation.”
Benefits.
Benefits
All NEOs participate in the benefit plans generally available to the employees, including medical, life and disability insurance, the 401(k) Plan and the ESOP.Company’s Employee Stock Ownership Plan (“ESOP”). The Company also maintains SERPs covering Messrs. Maher and Fitzpatrick. These SERPs are intended to promote continued service of covered executives by providing a supplement to the executive’s other qualified retirement plan benefits, which are limited by law. In the case of Mr. Fitzpatrick, the benefit is based on the average of the highest compensation during any four consecutive calendar years and length of service with the Company, and in the case of Mr. Maher, an agreed upon schedule of annual contributions. The Company did not make any significant changes to the benefits offered to its NEOs in 2017. See“Executive Compensation– Nonqualified Deferred Compensation – Supplemental Executive Retirement Plan.”
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement Perquisites.31
Perquisites
The Company provided perquisites to certain NEOs in the form of Company-paid automobile benefits and, for certain NEOs, country club dues.dues and provision of a comprehensive executive physical. The NEOs are subject to the Company’s Travel and Entertainment Policy, which governs travel, dining and entertainment expenses for all employees. Perquisites are included in the footnotes and narratives to theSummary Compensation TablewithinExecutive Compensation.
Deferred Compensation.Compensation
The Bank provides certain NEOs with an opportunity to elect to defer current compensation under the Deferred Compensation Plan for Executives (the “Deferral 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. The Company did not make any significant changes to the deferral program for its NEOs.
Employment Agreements. EachAgreements
The continued success of the BankCompany depends to a significant degree on the skills and competence of its NEOs. As part of its compensation program, the Company have entered into separateaffords its NEOs eligibility for payments and benefits in the event of certain employment agreements with Messrs. Maher and Fitzpatrick andterminations and/or in the Bank has entered into employment agreements with Messrs. Iantosca and Lebel, which are guaranteed byevent of a change in control of the Company (each such person individually, the “Executive”).Company. 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 successemployment agreements also include restrictive covenants (non-competition, non-solicitation, and confidentiality) to protect the Company’s business interest in the event that an executive leaves employment with the Company. The employment agreements are described later in the proxy under “Executive Compensation – Employment Agreements.”
The Board, upon the recommendation of the BankLeadership Committee, has adopted stock ownership guidelines (the “Guidelines”) for non-employee directors and the NEOs. The Guidelines were adopted to better align the interests of the non-employee directors and the NEOs with those of the Company’s stockholders. The Guidelines provide that the CEO shall own Company dependsstock with a market value of at least five times his annual base salary. To comply with the Guidelines, each other NEO shall own Company stock with a market value of at least three times his annual base salary. Each NEO shall meet the share ownership requirements within five years of the officer having become an NEO. Shares that count towards the Guidelines’ requirement include those shares listed under the officer’s 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. Until the Guidelines are met, an NEO shall retain all of the net vested restricted stock and net shares delivered after exercising stock options. Net shares refers to the shares that remain after shares are sold or netted to pay the exercise price of options and any withholding taxes.
The Company believes that the interests of its directors and senior executive officers should be aligned with stockholders. To assure this alignment, the Company has adopted an anti-hedging/pledging policy which states that its directors and senior executive officers, defined as any officer that is required to file reports under Section 16 of the Exchange Act, may not, without the approval of the Board: (1) directly or indirectly engage in hedging or monetization transactions, through transactions in the Company’s securities or through financial instruments designed for that purpose or achieving that effect, including equity swaps, puts, calls, collars, forwards, exchange funds and prepaid variable forwards, or (2) pledging or hypothecating the Company’s securities as collateral for a loan, including through the use of a traditional margin account with a securities broker. Any request to engage in a hedging or pledging transaction must be submitted to the General Counsel, with a description of the transaction(s) and the reasons for the transaction(s), at least two weeks prior to the anticipated transaction.
The General Counsel will review the circumstances and reasons for this request and determine whether there is a valid reason to approve the transaction. Since the adoption of this policy, there have been no requests for hedging or pledging transactions.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 32
The following table sets forth certain summary information regarding the compensation paid or accrued by the Company during the fiscal years ended December 31, 2017, 2016 and 2015 to or for the account of the CEO, CFO, and the other three most highly compensated executive officers of the Company (the “NEOs”):
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||
Christopher D. Maher, | 2017 | 650,000 | 137,507 | 412,508 | 742,500 | 82,675 | 2,025,190 | ||||||
Chairman, President and CEO of the | 2016 | 598,462 | 87,437 | 262,574 | 540,000 | 88,843 | 1,577,316 | ||||||
Company and the Bank | 2015 | 566,346 | 89,716 | 265,715 | 311,850 | 76,866 | 1,310,493 | ||||||
Michael J. Fitzpatrick, | 2017 | 300,000 | 42,210 | 126,450 | 225,000 | 170,404 | 864,064 | ||||||
Executive Vice President and | 2016 | 287,116 | 19,786 | 59,400 | 225,000 | 160,971 | 752,273 | ||||||
CFO of the Company and the Bank | 2015 | 285,577 | 26,750 | 80,325 | 98,010 | 145,145 | 635,807 | ||||||
Joseph J. Lebel III, | 2017 | 300,000 | 84,274 | 252,900 | 250,000 | 26,011 | 913,185 | ||||||
Executive Vice President and | 2016 | 287,116 | 33,005 | 99,000 | 250,000 | 28,096 | 697,217 | ||||||
Chief Banking Officer of the Bank | 2015 | 284,808 | 35,695 | 107,100 | 122,513 | 27,995 | 578,111 | ||||||
Joseph R. Iantosca, | 2017 | 285,000 | 84,274 | 252,900 | 200,000 | 32,541 | 854,715 | ||||||
Executive Vice President and | 2016 | 279,846 | 33,005 | 99,000 | 217,000 | 40,153 | 669,004 | ||||||
Chief Administrative Officer of the Bank | 2015 | 284,808 | 35,695 | 107,100 | 110,261 | 34,023 | 571,887 | ||||||
Steven J. Tsimbinos, | 2017 | 250,000 | 70,204 | 210,750 | 175,000 | 29,869 | 735,823 | ||||||
Executive Vice President, General Counsel and | 2016 | 248,568 | 92,362 | 39,600 | 125,000 | 38,880 | 544,410 | ||||||
Corporate Secretary of the Company and the Bank | 2015 | 252,798 | 131,578 | 46,856 | 95,000 | 30,540 | 556,772 |
(1) | Reflects the value of restricted stock and stock option awards granted to the executive officers based on the grant date fair value of the awards. See note 12 to Company’s audited consolidated financial statements for the year ended December 31, 2017, filed with the Company’s Form 10-K for assumptions made in the valuation. |
(2) | Reflects payments made for each respective year under the annual incentive compensation plan. |
(3) | All other compensation was comprised of the following elements for 2017: |
Christopher D. Maher | Michael J. Fitzpatrick | Joseph J. Lebel III | Joseph R. Iantosca | Steven J. Tsimbinos | |||||||||||
Employee Stock Ownership Plan Allocation | $ | 7,616 | $ | 7,616 | $ | 7,616 | $ | 7,616 | $ | 7,052 | |||||
401(k) Plan Contribution (Company match) | 9,275 | 9,275 | 9,275 | 9,275 | 5,000 | ||||||||||
SERP Allocation | 33,171 | 126,717 | — | — | — | ||||||||||
Life Insurance Premiums | 1,932 | 4,357 | 2,838 | 2,683 | 810 | ||||||||||
Company-provided Automobile Benefit | 18,518 | 16,167 | 6,282 | 12,967 | 11,800 | ||||||||||
Company-paid Club Dues | 11,793 | — | — | — | 5,207 | ||||||||||
Company-paid Executive Physical | — | 4,495 | — | — | — | ||||||||||
Change in Nonqualified Deferred Compensation Earnings | 370 | 1,777 | — | — | — | ||||||||||
TOTAL | $ | 82,675 | $ | 170,404 | $ | 26,011 | $ | 32,541 | $ | 29,869 |
CEO Pay Ratio
Christopher D. Maher, Chairman, President and CEO, had fiscal 2017 total compensation of $2,025,190, as reflected in the 2017 Summary Compensation Table included in this proxy statement. The Company calculated the median annual compensation for all OceanFirst Bank employees, excluding the CEO, was $71,337 for 2017. As a result, Mr. Maher’s 2017 annual compensation was approximately 28 times that of the median annual compensation for all employees.
In order to estimate the CEO pay ratio, the Company used its employee population as of December 31, 2017. The Company calculated median employee compensation aggregating the total of base salary, overtime, annual bonus and annualized benefit costs for all employees. For employees hired during the year, their compensation was annualized to reflect a full year of wages. Employees benefit costs were annualized based upon their enrollment status as of December 31, 2017. The Company did
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 33
not include independent contractors in its determination. Once the median employee compensation value was identified, the total annual compensation for the CEO was calculated using the same methodology used to calculate Total Annual Compensation for the NEOs as set forth in the 2017 Summary Compensation Table contained in this proxy statement. The CEO pay ratio was then calculated by dividing the CEO total annual compensation by the median employee compensation.
The SEC’s rules requiring pay ratio disclosure allow companies to exercise a significant degreeamount of flexibility in making a determination as to who is the median employee and does not mandate that each public company use the same method. In addition, the Company’s compensation philosophy supports fair pay based on a person’s role in the skillsCompany, a subjective determination of the market value of that person’s job and competencethat person’s performance in that position. As a result, the annual total compensation of the Company’s median employee is unique to the CEO pay ratio calculation and is not an indicator of the annual total compensation of each Executive.of its employees nor is comparable to the annual total compensation of employees at other companies. Similarly, the Company would not expect that the ratio of the annual total compensation of its CEO to the median employee to be a number that can be compared to the ratio determined by other companies in any meaningful way.
Messrs. Maher and Fitzpatrick have
Employment Agreements
The Company has entered into separate employment agreements with Messrs. Maher, Fitzpatrick, Lebel, Iantosca, and Tsimbinos (each such person, the “Executive”).
The employment agreements have terms expiring on July 31, 2018. Messrs. Iantosca and Lebel have employment agreements with terms expiring on July 31, 2017.2020. Each employment agreement provides that the agreement shall be extended each August 1 for an additional period,year, unless prior written notice of non-renewal is given to the Executive after conducting athe Executive’s performance evaluation of the Executive.evaluation. In addition to the base salary, the agreements provide for, among other things, participation in cash incentive and stock benefit plans and other fringe benefits applicable to executive personnel. The employment agreements also provide that the compensation awarded under the agreements is subject to reduction or “clawback” under certain circumstances.
The agreements provide for termination, at any time by the Bank or the Company, for cause as defined in the agreements or without cause. 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 qualifying resignation from the Bank and if applicable 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 Executive’s salary; or (5) a material breach of the agreement by the Bank or the
23
Company, 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 greater of (x) the remaining base salary payments duethe Executive would have earned until the expiration of the term of the employment agreement or (y) the Executive’s base salary for one year plus the greater of (i) the cash incentive payment paid to the Executive andfor the contributions that would have been made onprior fiscal year or (ii) the Executive’s behalf to any employee benefit plans oftarget cash incentive compensation for the Bank or the Company during the remaining term of the agreement, or with respect to Messrs. Maher, Iantosca and Lebel, if greater, one year’s base salary at the time of termination.current fiscal year. In the event of such a qualifying termination, 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 or with respect18 months, whichever is less. Resignation would qualify for the above severance benefits upon: (1) a change in the Executive’s authority, duties or responsibilities which represents a material adverse change from those in effect immediately prior to Messrs. Maher, Iantosca and Lebel,such change; (2) a material decrease in the Executive’s annual salary, target cash compensation (unless target cash compensation was materially decreased for all NEOs as listed in the Company’s most recent proxy statement), or elimination or reduction of any material benefit that the Company otherwise provides to its executives of similar rank (except those changes to any benefit or benefit program implemented for all Company employees who participate in such benefits or programs or that may be required by law) without his prior written agreement, (3) relocation of Executive’s principal place of employment to a location that increases the Executive’s commute from his primary residence by more than 30 miles one year ifway; or (4) a material breach of the remaining term is less than one year.agreement by the Company.
Under the agreements, if a qualifying resignation or involuntary termination (other than for cause) follows a change in control (as defined in the employment agreements) of the Bank or the Company, the Executive or, in the event of the Executive’s death, his beneficiary, would be entitled to a severance payment (the “Change in Control Payment”) equal to the greater of: (1) the payments due for the remaining termsum of the agreement; or (2) with respect to Messrs. Maher and Fitzpatrick, three times, or with respect to Messrs. Iantosca and Lebel, two times, the average of the five preceding taxable years’ compensation (or lesser number of years if the Executive has been with the Company for less than five years). Such average compensation includes not only(x) Executive’s base salary but also commissions, bonuses, contributions on behalfand (y) the greater of (i) the Executive to any pension or profit sharing plan, insurance payments, directors’ or committee fees and fringe benefits paid or to becash incentive payment paid to the Executive duringfor the preceding five taxable years.prior fiscal year or (ii) the target cash incentive compensation for the current fiscal year. The Bank and the CompanyExecutive would also continuebe entitled to continued health and welfare benefits as described above. If the Bank is adequately capitalized at the time of the change in control, the Change in Control Payment will be multiplied by a factor of three,provided, however, that the total value of the Change in Control Payment (including any insurance benefits provided) shall not exceed three times the sum of (x) the Executive’s life, health,salary and disability coverage(y) the greater of (i) the cash incentive payment paid to the Executive for 36 months. However, ifthe prior fiscal year or the (ii) Target Cash Compensation for the current fiscal year. If the amount of such termination benefits are deemed to be parachute payments as defined in section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), such termination benefits will be reduced to an amount $1.00 less than the amount that triggers such excise tax, but only if such reduced amount is greater than the aggregate amount of the termination benefits unreduced less the amount of the excise tax and any applicable state and federal taxes. With respect to Messrs. Maher and Fitzpatrick, although both
In event of the Company andExecutive’s subsequent death while he is receiving the Bank agreements provide for aabove severance payment inpayments (whether or not it 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 agreementcontrol), such payments will be guaranteed bymade to his beneficiaries or estate. Each Executive is subject to certain confidentiality provisions, as well as certain non-competition and non-solicitation provisions during the Company interm of the eventagreement and for one year post termination. The employment agreements provide for the arbitration of disputes between the parties and 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 agreementsprevailing party 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.awarded attorneys’ fees. 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.
Change in Control Agreements. The Bank and the Company entered into change in control agreements (“CIC Agreements”) with Mr. Tsimbinos (the “Executive”). The CIC Agreements provide for a two-year term. The CIC Agreements provide that the Boards of the Company and the Bank may, annually, extend the CIC Agreements for an additional period unless written notice of non-renewal is given after conducting a performance evaluation of the Executive. The CIC Agreements will expire on July 31, 2017. The CIC Agreements provide that in the event voluntary or involuntary termination follows a change in control (as defined in the agreements) of the Bank or the Company, the Executive would be entitled to a severance payment equal to two times the Executive’s average annual compensation for the five years preceding termination (or lesser number of years if the Executive has been with the Company for less than five years). 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. 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 36 full calendar months following termination. However, if the amount of such termination benefits are deemed to be parachute payments as defined in section 280G of the Code, such termination benefits will be reduced to an amount $1.00 less than the amount that triggers such excise tax, but only if such reduced amount is greater than the aggregate amount of the termination benefits unreduced less the amount of the excise tax and any applicable state and federal taxes.
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.
24OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 34
Payments under the employment agreements and CIC 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. See“Executive Compensation—Potential Payments Upon Termination or Change in Control.”
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 years ended December 31, 2015, 2014 and 2013 to or for the account of the CEO, CFO, and the other three most highly compensated executive officers of the Company:
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25
Christopher D. Maher | Michael J. Fitzpatrick | Joseph J. Lebel III | Joseph R. Iantosca | Steven J. Tsimbinos | ||||||||||||||||
Employee Stock Ownership Plan Allocation | $ | 10,003 | $ | 10,003 | $ | 10,003 | $ | 10,003 | $ | 9,543 | ||||||||||
401(k) Plan Contribution (company match) | 9,275 | 9,275 | 9,275 | 9,275 | 5,056 | |||||||||||||||
SERP Allocation | 29,429 | 106,315 | — | — | — | |||||||||||||||
Life Insurance Premiums | 1,203 | 4,113 | 1,429 | 2,671 | 816 | |||||||||||||||
Long-term Disability Premiums | 1,358 | 1,799 | 1,220 | 1,324 | 1,129 | |||||||||||||||
Company-provided Automobile Benefit | 14,728 | 12,154 | 6,068 | 10,750 | 11,520 | |||||||||||||||
Company-paid Club Dues | 10,870 | — | — | — | 2,476 | |||||||||||||||
Change in Nonqualified Deferred Compensation Earnings | — | 1,486 | — | — | — | |||||||||||||||
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Total | $ | 76,866 | $ | 145,145 | $ | 27,995 | $ | 34,023 | $ | 30,540 |
For a description of the employment agreements entered into with Messrs. Maher, Fitzpatrick, Lebel and Iantosca, see“Compensation Discussion and Analysis – Elements of Compensation – Employment Agreements.”
The following table sets forth certain information regarding stock options, restricted stock awards and non-equity incentive plan awards to the NEOs during the Company’s fiscal year ended December 31, 2015.2017.
Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | All Other Stock Awards: Number of Shares of Stock or Units (#)2 | All Other Option 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 | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of | All Other Option Awards: Number of Securities | Exercise or Base Price of Option | Grant Date Fair Value of Stock | |||||||||||||||||||||||||||||||||||||
Name | Threshold ($) | Target ($) | Maximum ($) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Stock or Units (#)(2) | Underlying Options (#)(3) | Awards ($/Sh)(4) | & Option Awards ($)(5) | ||||||||||||||||||||||||||||||||||||
Christopher D. Maher | 3/18/15 | 87,500 | 350,000 | 525,000 | 5,165 | 74,430 | 17.37 | 355,431 | 3/15/17 | 275,000 | 550,000 | 825,000 | 4,740 | 73,400 | 29.01 | 550,015 | |||||||||||||||||||||||||||||||
Michael J. Fitzpatrick | 3/18/15 | 27,500 | 110,000 | 165,000 | 1,540 | 22,500 | 17.37 | 107,075 | 3/15/17 | 87,500 | 175,000 | 262,500 | 1,455 | 22,500 | 29.01 | 168,660 | |||||||||||||||||||||||||||||||
Joseph J. Lebel III | 3/18/15 | 34,325 | 137,500 | 206,250 | 2,055 | 30,000 | 17.37 | 142,795 | 3/15/17 | 100,000 | 200,000 | 300,000 | 2,905 | 45,000 | 29.01 | 337,174 | |||||||||||||||||||||||||||||||
Joseph R. Iantosca | 3/18/15 | 34,325 | 137,500 | 206,250 | 2,055 | 30,000 | 17.37 | 142,795 | 3/15/17 | 87,500 | 175,000 | 262,500 | 2,905 | 45,000 | 29.01 | 337,174 | |||||||||||||||||||||||||||||||
Steven J. Tsimbinos | 3/18/15 | 21,000 | 84,000 | 126,000 | 7,575 | 13,125 | 17.37 | 178,434 | 3/15/17 | 62,500 | 125,000 | 187,500 | 2,420 | 37,500 | 29.01 | 280,954 |
(1) | Amounts shown represent the range of potential payouts for fiscal |
(2) | Refers to awards of restricted shares of Company common stock under the |
(3) | Refers to awards of stock options under the 2011 Stock Incentive Plan. Options vest over five years in equal annual installments from date of |
(4) | Closing price of the underlying shares of Company common stock on the date of grant. |
(5) | Reflects the value of restricted stock awards and stock options granted to the executive officers based on the grant date fair value of the awards. See note |
26
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information regarding stock options and stock awards held by the named executive officersNEOs of the Company at December 31, 2015:2017:
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(Table continues and footnotes on following pages)
27OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 35
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Option Awards | Stock Awards | ||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | 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) | ||||||
Joseph J. Lebel III | 9,000 | 2,250 | 14.62 | 2/15/23 | — | — | |||||
9,000 | 2,250 | 14.55 | 6/17/23 | — | — | ||||||
14,625 | 9,750 | 17.75 | 3/19/24 | — | — | ||||||
12,000 | 18,000 | 17.37 | 3/18/25 | — | — | ||||||
7,500 | 30,000 | 17.28 | 3/16/26 | — | — | ||||||
— | 45,000 | 29.01 | 3/15/27 | — | — | ||||||
— | — | — | — | 305 | 8,006 | ||||||
— | — | — | — | 764 | 20,055 | ||||||
— | — | — | — | 1,233 | 32,366 | ||||||
— | — | — | — | 1,528 | 40,110 | ||||||
— | — | — | — | 2,905 | 76,256 | ||||||
Joseph Iantosca | 10,125 | — | 13.87 | 2/18/21 | — | — | |||||
10,125 | — | 13.83 | 2/15/22 | — | — | ||||||
9,000 | 2,250 | 14.62 | 2/15/23 | — | — | ||||||
9,000 | 2,250 | 14.55 | 6/17/23 | — | — | ||||||
14,625 | 9,750 | 17.75 | 3/19/24 | — | — | ||||||
12,000 | 18,000 | 17.37 | 3/18/25 | — | — | ||||||
7,500 | 30,000 | 17.28 | 3/16/26 | — | — | ||||||
— | 45,000 | 29.01 | 3/15/27 | — | — | ||||||
— | — | — | — | 305 | 8,006 | ||||||
— | — | — | — | 764 | 20,055 | ||||||
— | — | — | — | 1,233 | 32,366 | ||||||
— | — | — | — | 1,528 | 40,110 | ||||||
— | — | — | — | 2,905 | 76,256 | ||||||
Steven J. Tsimbinos | 9,750 | — | 11.32 | 9/07/20 | — | — | |||||
10,125 | — | 13.87 | 2/18/21 | — | — | ||||||
10,125 | — | 13.83 | 2/15/22 | — | — | ||||||
9,000 | 2,250 | 14.62 | 2/15/23 | — | — | ||||||
7,875 | 5,250 | 17.75 | 3/19/24 | — | — | ||||||
5,250 | 7,875 | 17.37 | 3/18/25 | — | — | ||||||
3,000 | 12,000 | 17.28 | 3/26/26 | — | — | ||||||
— | 37,500 | 29.01 | 3/15/27 | — | — | ||||||
— | — | — | — | 153 | 4,016 | ||||||
— | — | — | — | 412 | 10,815 | ||||||
— | — | — | — | 4,545 | 119,306 | ||||||
— | — | — | — | 4,276 | 112,245 | ||||||
2,420 | 63,525 |
(1) | Options vest as to 20% of the shares subject to the grant on or about each anniversary of the grant date, subject to the executive’s continued service on the relevant vesting |
With respect to Mr. Fitzpatrick’s stock options that have not vested, the options for 4,500 shares vest on February 15, 2018; the options for 9,000 shares vest in equal installments on March 1 of 2018 and 2019; the options for 13,500 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the options of 18,000 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the options of 22,500 shares vest in equal installments on March 1 of 2018, 2019, and 2020. | |
With respect to Mr. Lebel’s stock options that have not vested, the options for 2,250 shares (expiring February 15, 2023) vest on February 15, 2018; the options for 2,250 shares (expiring June 17, 2023) vest on June 17, 2018; the options for 9,750 shares vest in equal installments on March 1 of 2018 and 2019; the options for 18,000 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the options for 30,000 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the options for 45,000 shares vest in equal installments on March 1 of 2018, 2019, 2020, 2021 and 2022. | |
With respect to Mr. Iantosca’s stock options that have not vested, the options for 2,250 shares (expiring February 15, 2023) vest on February 15, 2018; the options for 2,250 shares (expiring June 17, 2023) vest on June 17, 2018; the options for 9,750 shares vest in equal installments on March 1 of 2018 and 2019; the options for 18,000 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the options for 30,000 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the options for 45,000 shares vest in equal installments on March 1 of 2018, 2019, 2020, 2021 and 2022. | |
With respect to Mr. Tsimbinos’ stock options that have not vested, the options for 2,250 shares vest on February 15, 2018; the options for 5,250 shares vest in equal installments on March 1 of 2018 and 2019; the options for 7,875 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the options for 12,000 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the option for 37,500 shares vest in equal installment on March 1 of 2018, 2019, 2020, 2021 and 2022. |
With respect to Mr. Fitzpatrick’s stock options that have not vested, the options for 6,000 shares vest on February 18 of 2016; the options for 12,000 shares vest in equal installments on February 15 of 2016 and 2017; the options for 13,500 shares vest in equal installments on February 15 of 2016, 2017 and 2018; the options for 18,000 shares vest in equal installments on March 1 of 2016, 2017, 2018 and 2019; and the options for 22,500 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.
With respect to Mr. Lebel’s stock options that have not vested, the options for 2,025 shares vest on February 18 of 2016; the options for 4,050 shares vest in equal installments on February 15 of 2016 and 2017; the options for 6,750 shares (expiring February 15, 2023) vest in equal installments on February 15 of 2016, 2017 and 2018; the options for 6,750 shares (expiring June 17, 2023) vest in equal installments on June 17 of 2016, 2017 and 2018; the options for 19,500 shares vest in equal installments on March 1 of 2016, 2017, 2018 and 2019; and the options for 30,000 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.
With respect to Mr. Iantosca’s stock options that have not vested, the options for 2,025 shares vest on February 18 of 2016; the options for 4,050 shares vest in equal installments on February 15 of 2016 and 2017; the options for 6,750 shares (expiring February 15, 2023) vest in equal installments on February 15 of 2016, 2017 and 2018; the options for 6,750 shares (expiring June 17, 2023) vest in equal installments on June 17 of 2016, 2017 and 2018; the options for 19,500 shares vest in equal installments on March 1 of 2016, 2017, 2018 and 2019; and the options for 30,000 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.
28
With respect to Mr. Tsimbinos’s stock options that have not vested, the options for 2,025 shares vest on February 18 of 2016; the options for 4,050 shares vest in equal installments on February 15 of 2016 and 2017; the options for 6,750 shares vest in equal installments on February 15 of 2016, 2017 and 2018; the options for 10,500 shares vest in equal installments on March 1 of 2016, 2017,OCEANFIRST FINANCIAL CORP. - 2018 and 2019; and the options for 13,125 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.Proxy Statement 36
(2) | The restricted stock vests as to 20% of the shares subject to the award on March 1 of the year following the grant date, subject to the executive’s continued service on the relevant vesting |
With respect to Mr. Maher’s shares that have not vested, the 2,738 shares vest in equal installments on March 1 of 2016, 2017 and 2018; and the 5,165 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.
With respect to Mr. Fitzpatrick’s shares that have not vested, the 454 shares vest on March 1 of 2016; the 777 shares vest in equal installments on March 1 of 2016 and 2017; the 917 shares vest in equal installments on March 1 of 2016, 2017 and 2018; the 1,408 shares vest in equal installments on March 1 of 2016, 2017, 2018 and 2019; and the 1,540 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.
With respect to Mr. Lebel’s shares that have not vested, the 153 shares vest on March 1 of 2016; the 262 shares vest in equal installments on March 1 of 2016 and 2017; the 914 shares vest in equal installments on March 1 of 2016, 2017 and 2018; the 1,528 shares vest in equal installments on March 1 of 2016, 2017, 2018 and 2019; and the 2,055 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.
With respect to Mr. Iantosca’s shares that have not vested, the 153 shares vest on March 1 of 2016; the 262 shares vest in equal installments on March 1 of 2016 and 2017; the 914 shares vest in equal installments on March 1 of 2016, 2017 and 2018; the 1,528 shares vest in equal installments on March 1 of 2016, 2017, 2018 and 2019; and the 2,055 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.
With respect to Mr. Tsimbinos’s shares that have not vested, the 153 shares vest on March 1 of 2016; the 263 shares vest in equal installments on March 1 of 2016 and 2017; the 459 shares vest in equal installments on March 1 of 2016, 2017 and 2018; the 824 shares vest in equal installments on March 1 of 2016, 2017, 2018 and 2019; and the 7,575 shares vest in equal installments on March 1 of 2016, 2017, 2018, 2019 and 2020.
With respect to Mr. Maher’s shares that have not vested, the 912 shares vest on March 1, 2018; the 3,099 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the 4,048 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the 4,740 shares vest in equal installments on March 1 of 2018, 2019, 2020, 2021 and 2022. | |
With respect to Mr. Fitzpatrick’s shares that have not vested, the 305 shares vest on March 1, 2018; the 704 shares vest in equal installments on March 1 of 2018 and 2019; the 924 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the 916 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the 1,455 shares vest in equal installments on March 1 of 2018, 2019, and 2020. | |
With respect to Mr. Lebel’s shares that have not vested, the 305 shares vest on March 1, 2018; the 764 shares vest in equal installments on March 1 of 2018 and 2019; the 1,233 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the 1,528 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the 2,905 shares vest in equal installments on March 1 of 2018, 2019, 2020, 2021 and 2022. | |
With respect to Mr. Iantosca’s shares that have not vested, the 305 shares vest on March 1, 2018; the 764 shares vest in equal installments on March 1 of 2018 and 2019; the 1,233 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the 1,528 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the 2,905 shares vest in equal installments on March 1 of 2018, 2019, 2020, 2021 and 2022. | |
With respect to Mr. Tsimbinos’ shares that have not vested, the 153 shares vest on March 1, 2018; the 412 shares vest in equal installments on March 1 of 2018 and 2019; the 4,545 shares vest in equal installments on March 1 of 2018, 2019 and 2020; the 4,276 shares vest in equal installments on March 1 of 2018, 2019, 2020 and 2021; and the 2,420 shares vest in equal installments on March 1 2018, 2019, 2020, 2021 and 2022. | |
(3) | Market Value computed using the closing price of the Company’s common stock on December |
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, 2015:2017:
Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | |||||||||||||||
Christopher D. Maher | — | — | 914 | 14,935 | 52,386 | 620,387 | 2,959 | 89,599 | |||||||||||||||
Michael J. Fitzpatrick | — | — | 1,865 | 30,474 | 21,263 | 218,584 | 1,581 | 47,873 | |||||||||||||||
Joseph J. Lebel III | — | — | 1,094 | 17,876 | 41,763 | 546,194 | 1,610 | 48,751 | |||||||||||||||
Joseph R. Iantosca | — | — | 1,094 | 17,876 | 17,013 | 297,488 | 1,610 | 48,751 | |||||||||||||||
Steven J. Tsimbinos | — | — | 752 | 12,383 | — | — | 3,072 | 93,020 |
(1) | Computed using the closing price of the Company’s common stock on the applicable exercise/vesting date. |
Nonqualified Deferred Compensation
29
Nonqualified Deferred Compensation
Supplemental Executive Retirement Plans
The Bank maintains non-qualified SERPs to provide eligible executive officersMessrs. Maher and Fitzpatrick with additional retirement benefits. As part of Mr. Maher’s SERP arrangement, the Bank established in 2014 an account for the benefit of his retirement and commenced the funding of that SERP by an annual Company contribution. Such account will be paid in full upon the termination of his employment due to his retirement after age 65, resignation for Good Reason (as defined), termination without Cause (as defined) or his death. If Mr. Maher’s employment terminates for a reason other than those detailed in the preceding sentence, Mr. Maher shall be paid the balance of the account, less contributions for the preceding five years and less any earnings on those forfeited contributions. For Mr. Fitzpatrick, the benefits provided under his SERP make up the difference between an amount up to 70% of the 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 for Mr. Fitzpatrick. The 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 participant, who recognizes as income contributions that are made to the trust. Earnings on the trust’s assets are taxable to the participant.
As part of Mr. Maher’s SERP arrangement, the Bank established in 2014 an account for the benefit of his retirement and commenced the funding of that SERP by an annual Company contribution. Such account will be paid in full upon the termination of his employment due to his retirement after age 65, resignation for Good Reason (as defined), termination without Cause (as defined) or his death. If Mr. Maher’s employment terminates for a reason other than those detailed in the preceding sentence, Mr. Maher shall be paid the balance of the account, less contributions for the preceding five years and less any earnings on those forfeited contributions.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 37
Nonqualified Deferred Compensation Plan for Executives
Certain NEOs may participate in the Deferral Plan.
This Deferral Plan allowspreviously allowed 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. The participatingPlan currently maintains balances from prior deferrals but is currently not accepting new contributions. Participating executive’s deferral isprior deferrals were credited to a bookkeeping account and are 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.
The following table sets forth certain information regarding nonqualified deferred compensation benefits to NEOs of the Company during the Company’s fiscal year ended December 31, 2015:2017:
Name | Plan Name | Executive contributions in last FY ($) | Registrant contributions in last FY ($) | Aggregate earnings in last FY ($) | Aggregate withdrawals/ distributions ($) | Aggregate balance at last FYE ($) | Plan Name | Executive contributions in last FY ($) | Registrant contributions in last FY ($) | Aggregate earnings in last FY ($) | Aggregate withdrawals/ distributions ($) | Aggregate balance at last FYE ($) | ||||||||||||||||||||||
Christopher D. Maher | SERP Deferral Plan |
| — — |
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| 29,429 — | (1)
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| 2,032 — |
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| — — |
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| 60,081 — |
| SERP | — | 33,171 | (1) | 4,733 | — | 132,653 | |||||||||||
Deferral Plan | — | — | — | — | — | |||||||||||||||||||||||||||||
Michael J. Fitzpatrick | SERP Deferral Plan |
| — — |
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| 106,316 — | (2)
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| — 15,073 |
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| — — |
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| — 438,877 | (3) | SERP | — | 126,717 | (2) | — | — | — | |||||||||||
Deferral Plan | — | — | 17,147 | — | 472,767 | (3) | ||||||||||||||||||||||||||||
Joseph J. Lebel III | SERP Deferral Plan |
| — — |
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| — — |
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| — — |
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| — — |
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| — — |
| SERP | — | — | — | — | — | ||||||||||||
Deferral Plan | — | — | — | — | — | |||||||||||||||||||||||||||||
Joseph R. Iantosca | SERP Deferral Plan |
| — — |
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| — — |
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| — — |
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| — — |
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| — — |
| SERP | — | — | — | — | — | ||||||||||||
Deferral Plan | — | — | — | — | — | |||||||||||||||||||||||||||||
Steven J. Tsimbinos | SERP Deferral Plan |
| — — |
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| — — |
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| — — |
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| — — |
|
| — — |
| SERP | — | — | — | — | — | ||||||||||||
Deferral Plan | — | — | — | — | — |
(1) | Represents annual SERP contribution. The contributions are credited to a bookkeeping account and reflected as a liability on the Company’s financial statements. Contributions and related earnings are taxed to the participant in the year they are distributed. |
(2) | Represents annual SERP contribution. The contributions are held in trust for the irrevocable benefit of the SERP participant. Contributions are taxed to the participant in the year they are added to the trust. SERP account balances are treated as participant assets, rather than Company assets, and are not reflected on the Company’s financial statements. |
(3) | Excludes SERP account balance. |
30OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 38
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
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 Termination.Termination
The employment agreements of Messrs. Maher, Fitzpatrick, Lebel, Iantosca and IantoscaTsimbinos provide for certain severance payments in the event employment is terminated by the Company or the Bank without cause or the executive terminates employmentExecutive’s qualifying voluntary resignation under the circumstances described above under“Compensation Discussion and Analysis – Elements of Compensation – Employment Agreements.”agreements. The severance payment provided under the employment agreements would be equal to (i) the amountgreater of (x) the remaining base salary payments the executive would receive if he had continued employment duringhave earned until the remainingexpiration of the term of the employment agreement ator (y) the executive’s base salary asfor one year plus the greater of (i) the date of termination and (ii) an amount equalcash incentive payment paid to the annual contributions that would have been made on executive’s behalf to any employee benefit plansExecutive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year. In the event of such a qualifying termination, the Company orwould also continue to pay for the Bank during the remaining term of the agreement based on contributions made as of the date of termination, or in the case of Messrs. Maher, Lebel and Iantosca, if greater, one year’s base salary at the time of termination. In addition, the executive would receive continuedExecutive’s life, medical, dentalhealth and disability coverage for the remaining term of the employment agreement or in the case of Messrs. Maher, Lebel and Iantosca, one year, if longer. 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, but not both.18 months, whichever is less.
Employment Agreements — Involuntary or Constructive Termination Following Change in Control.Control
The employment agreements for Messrs. Maher, Fitzpatrick, Lebel, and Iantosca 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 Exchange 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 the Comptroller of the Currency 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 stockholder 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 a lesser number of years if the executive has been with the Company for less than five 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 the officer may receive, would constitute an excess parachute payment under section 280G of the Code, the employment agreements do not provide for “tax gross-ups.” Rather, they 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 payment 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. Payments under the employment agreements and CIC agreements described below 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. Benefits would be provided by the Company or the Bank, but not both.
31
Change in Control Agreements — Involuntary or Constructive Termination Following Change in Control.The CIC Agreements with Mr. Tsimbinos 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 qualifying voluntary resignation following any failure to re-electunder 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 CIC Agreement by the Company or the Bank, unless such termination is due to death or for cause, as defined in the agreement.
For purposes of the CIC Agreements, the definition of “Change in Control” is the same as described above under “Employment Agreements – Involuntary or Constructive Termination Following a Change of Control.”
If the change in control benefit is triggered, the officer is entitled to a benefitagreements. Such payment would be equal to two times the executive’s average annual compensation paid in the most recent five taxable years (or a lesser numbersum of years if the executive has been with the Company for less than five years). In addition, the executive would become entitled to continued life, medical, dental(x) Executive’s base salary and disability coverage for 36 months following the change in control. In the event payments and benefits under the CIC Agreements, together with other payments and benefits he may receive, would constitute an excess parachute payment under section 280G of the Code, the CIC Agreements do not provide for “tax gross-ups.” Rather, they provide that the executive would be entitled to(y) the greater of (i) the total net-after tax benefitcash incentive payment paid to the Executive for the prior fiscal year or (ii) the net-after tax benefit after reductiontarget cash incentive compensation for the current fiscal year. The Executive would also be entitled to continued health and welfare benefits as described above. If the Bank is adequately capitalized at the time of the aggregatechange in control, the Change in Control Payment will be multiplied by a factor of three,provided, however, that the total value of the Change in Control Payment (including any insurance benefits provided) shall not exceed three times the sum of (x) the Executive’s salary and (y) the greater of (i) the cash incentive payment paid to the Executive for the prior fiscal year or the (ii) target cash incentive compensation for the current fiscal year. If the amount of such termination benefits are deemed to be parachute payments as defined in section 280G of the Internal Revenue Code of 1986, as amended, such termination benefits will be reduced to an amount $1.00 less than the executive’s “base amount” which that triggers such excise tax, but only if such reduced amount is three timesgreater than 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, but not both.
Equity Incentive Plan — Change in Control Grant.In the event of a change in control, eachaggregate amount of the 2006 Stock Plantermination benefits unreduced less the amount of the excise tax and the 2011 Stock Plan provides that each option award under the plan will become fully exercisableany applicable state and remain exercisable for the duration of its term and all restricted stock awards will become fully vested. In addition, each such plan provides that all stock 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 Plan and the Company’s 2000 Stock Option Plan. Under these plans, “Change in Control” has substantially the same meaning as described above under “Employment Agreements Involuntary or Constructive Termination Following a Change in Control.”federal taxes.
Supplemental Executive Retirement Plan — Involuntary or Constructive Termination.Termination
In the event of a “change in control,” Mr. Fitzpatrick is 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. In the event of a “change in control,” Mr. Maher is entitled to a lump sum contribution equal to the sum of: (a) the account balance as of the date of the change in control, (b) the amount required to be credited to the account for year in which such change in control occurs (unless already made); and (c) the present value (computed using a discount rate equal to 4% per annum) of the amounts that would have been required to be credited to the account for the three years following the year in which such change in control occurs.
Summary of Potential Payments Upon Termination or Change in Control.Control
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, 2015.2017. 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.
32OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 39
Christopher D. Maher
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||
Cash Compensation | $ | 2,314,295 | (2) | — | $ | 2,314,295 | — | |||||||||
Value of Continued Health and Welfare Benefits | 77,239 | (3) | — | 89,806 | (3) | — | ||||||||||
Acceleration of Stock and Option Awards | — | $ | 539,733 | (4) | — | $ | 539,733 | (4) | ||||||||
Automatic Stock Grant | — | 725,006 | (5) | — | — | |||||||||||
SERP Contribution | — | 153,748 | (6) | — | 31,244 | (7) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 2,391,534 | $ | 1,418,487 | $ | 2,404,101 | $ | 570,977 |
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||
Cash Compensation | $ | 1,679,167 | (2) | — | $ | 3,551,670 | (3) | — | ||||||||
Value of Continued Health and Welfare Benefits | 48,330 | (4) | — | 48,330 | (4) | — | ||||||||||
Acceleration of Stock and Option Awards | — | $ | 1,702,964 | (5) | — | $ | 1,702,964 | (5) | ||||||||
SERP Contribution | 167,870 | (6) | 277,987 | (6) | — | 167,870 | (6) | |||||||||
TOTAL | $ | 1,895,367 | $ | 1,980,951 | $ | 3,600,000 | $ | 1,870,834 |
(1) | Executive would also receive benefits set forth under “Change in Control.” |
(2) | Represents |
(3) | Represents an amount equal to three times the sum of (x) the executive’s base salary and (y) the greater of (i) the cash incentive payment paid to the executive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year; provided, however, if the cash compensation or any of the other benefits in connection with the change in control would be deemed to be parachute payments as defined in section 280G of the Internal Revenue Code of 1986, as amended, and therefore subject the executive to an excise tax under section 4999 of the Internal Revenue Code of 1986, as amended, then such cash compensation will be reduced to an amount $1.00 less than the maximum amount of cash compensation that can paid without triggering such excise tax if reducing the amount of cash compensation would increase the total amount of termination benefits the executive would receive, after all taxes. |
(4) | Approximate lump sum value of continued life, medical, dental and disability coverage for remaining term of the employment agreement, |
Represents the value of accelerated vesting of | |
(6) | Mr. Maher’s SERP account balance was $132,653 as of December 31, 2017. In the event of his involuntary termination, constructive separation or death on that date, Mr. Maher (or his beneficiary in the event of his death) would be entitled to receive his account balance plus the scheduled contribution for 2017, $35,217. In the event of a change in control of the Company on that date, Mr. Maher would be entitled to receive the sum of: (i) his account balance; (ii) the scheduled contribution for 2017; and (iii) the present value of the scheduled contributions for the three years beginning after that date, discounted at the rate of 4%. |
Michael J. Fitzpatrick
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||
Cash Compensation | $ | 775,000 | (2) | — | $ | 1,527,332 | (3) | — | ||||||||
Value of Continued Health and Welfare Benefits | 47,668 | (4) | — | 47,668 | (4) | — | ||||||||||
Acceleration of Stock and Option Awards | — | $ | 523,176 | (5) | — | $ | 523,176 | (5) | ||||||||
SERP Contribution | — | 414,063 | (6) | — | 448,612 | (7) | ||||||||||
TOTAL | $ | 822,668 | $ | 937,239 | $ | 1,575,000 | $ | 971,788 |
(1) | Executive would also receive benefits set forth under “Change in Control.” |
(2) | Represents an amount equal to the greater of (x) the remaining base salary payments the executive would have earned until the expiration of the term of the employment agreement or (y) the executive’s base salary for one year plus the greater of (i) the cash incentive payment paid to the executive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year. |
(3) | Represents an amount equal to three times the sum of (x) the executive’s base salary and (y) the greater of (i) the cash incentive payment paid to the executive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year; provided, however, if the cash compensation or any of the other benefits in connection with the change in control would be deemed to be parachute payments as defined in section 280G of the Internal Revenue Code of 1986, as amended, and therefore subject the executive to an excise tax under section 4999 of the Internal Revenue Code of 1986, as amended, then such cash compensation will be reduced to an amount $1.00 less than the maximum amount of cash compensation that can paid without triggering such excise tax if reducing the amount of cash compensation would increase the total amount of termination benefits the executive would receive, after all taxes. |
(4) | Approximate lump sum value of continued life, medical, dental and disability coverage for remaining term of the employment agreement, or 18 months if less. |
(5) | Represents the value of accelerated vesting of 4,304 shares of restricted Company stock and stock options covering 67,500 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 difference between the fair market value of a share of common stock at the time of the change in control or death and the exercise price). |
(6) | Represents the present value of the SERP contributions that would be required for the three years following the change in control, discounted at the rate of 4%. |
(7) | Represents the sum of the remaining SERP contributions that would be required following the death of the executive. |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 40
Joseph J. Lebel III
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||
Cash Compensation | $ | 775,000 | (2) | — | $ | 1,602,016 | (3) | — | ||||||||
Value of Continued Health and Welfare Benefits | 47,984 | (4) | — | 47,984 | (4) | — | ||||||||||
Acceleration of Stock and Option Awards | — | $ | 741,059 | (5) | — | $ | 741,059 | (5) | ||||||||
TOTAL | $ | 822,984 | $ | 741,059 | $ | 1,650,000 | $ | 741,059 |
(1) | Executive would also receive benefits set forth under “Change in Control.” |
(2) | Represents an amount equal to the greater of (x) the remaining base salary payments the executive would have earned until the expiration of the term of the employment agreement or (y) the executive’s base salary for one year plus the greater of (i) the cash incentive payment paid to the executive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year. |
(3) | Represents an amount equal to three times the sum of (x) the executive’s base salary and (y) the greater of (i) the cash incentive payment paid to the executive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year; provided, however, if the cash compensation or any of the other benefits in connection with the change in control would be deemed to be parachute payments as defined in section 280G of the Internal Revenue Code of 1986, as amended, and therefore subject the executive to an excise tax under section 4999 of the Internal Revenue Code of 1986, as amended, then such cash compensation will be reduced to an amount $1.00 less than the maximum amount of cash compensation that can paid without triggering such excise tax if reducing the amount of cash compensation would increase the total amount of termination benefits the executive would receive, after all taxes. |
(4) | Approximate lump sum value of continued life, medical, dental and disability coverage for remaining term of the employment agreement, or 18 months if less. |
(5) | Represents the value of accelerated vesting of 6,735 shares of restricted Company stock and stock options covering 107,250 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 difference between the fair market value of a share of common stock at the time of the change in control or death and the exercise price). |
33
Michael J. Fitzpatrick
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||
Cash Compensation | $ | 1,013,412 | (2) | — | $ | 1,439,302 | — | |||||||||
Value of Continued Health and Welfare Benefits | 76,333 | (3) | — | 88,645 | (3) | — | ||||||||||
Acceleration of Stock and Option Awards | — | $ | 387,406 | (4) | — | $ | 387,406 | (4) | ||||||||
Automatic Stock Grant | — | 1,090,313 | (5) | — | — | |||||||||||
SERP Contribution | — | 348,875 | (6) | — | 795,608 | (7) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 1,089,745 | $ | 1,826,594 | $ | 1,527,947 | $ | 1,183,014 |
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||
Cash Compensation | $ | 736,250 | (2) | — | $ | 1,458,088 | (3) | — | ||||||||
Value of Continued Health and Welfare Benefits | 47,912 | (4) | — | 47,912 | (4) | — | ||||||||||
Acceleration of Stock and Option Awards | — | $ | 741,059 | (5) | — | $ | 741,059 | (5) | ||||||||
TOTAL | $ | 784,162 | $ | 741,059 | $ | 1,506,000 | $ | 741,059 |
(1) | Executive would also receive benefits set forth under “Change in Control.” |
(2) | Represents |
(3) | Represents an amount equal to three times the sum of (x) the executive’s base salary and (y) the greater of (i) the cash incentive payment paid to the executive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year; provided, however, if the cash compensation or any of the other benefits in connection with the change in control would be deemed to be parachute payments as defined in section 280G of the Internal Revenue Code of 1986, as amended, and therefore subject the executive to an excise tax under section 4999 of the Internal Revenue Code of 1986, as amended, then such cash compensation will be reduced to an amount $1.00 less than the maximum amount of cash compensation that can paid without triggering such excise tax if reducing the amount of cash compensation would increase the total amount of termination benefits the executive would receive, after all taxes. |
(4) | Approximate lump sum value of continued life, medical, dental and disability coverage for remaining term of the employment agreement, |
Represents the value of accelerated vesting of |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 41
JosephSteven J. Lebel IIITsimbinos
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||||||||||||||
Cash Compensation | $ | 629,396 | — | $ | 663,647 | — | 645,833 | (2) | — | $ | 1,077,248 | (3) | — | |||||||||||||||||||
Value of Continued Health and Welfare Benefits | 76,333 | — | 88,958 | (2) | — | 47,752 | (4) | — | 47,752 | (4) | — | |||||||||||||||||||||
Acceleration of Stock and Option Awards | — | $ | 333,783 | (3) | — | $ | 333,783 | (3) | — | $ | 558,270 | (5) | — | $ | 558,270 | (5) | ||||||||||||||||
Automatic Stock Grant | — | 582,532 | (4) | — | — | |||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total | $ | 705,729 | $ | 916,315 | $ | 752,605 | $ | 333,783 | ||||||||||||||||||||||||
TOTAL | 693,585 | $ | 558,270 | $ | 1,125,000 | $ | 558,270 |
(1) | Executive would also receive benefits set forth under “Change in Control.” |
(2) | Represents an amount equal to the greater of (x) the remaining base salary payments the executive would have earned until the expiration of the term of the employment agreement or (y) the executive’s base salary for one year plus the greater of (i) the cash incentive payment paid to the executive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year. |
(3) | Represents an amount equal to three times the sum of (x) the executive’s base salary and (y) the greater of (i) the cash incentive payment paid to the executive for the prior fiscal year or (ii) the target cash compensation for the current fiscal year; provided, however, if the cash compensation or any of the other benefits in connection with the change in control would be deemed to be parachute payments as defined in section 280G of the Internal Revenue Code of 1986, as amended, and therefore subject the executive to an excise tax under section 4999 of the Internal Revenue Code of 1986, as amended, then such cash compensation will be reduced to an amount $1.00 less than the maximum amount of cash compensation that can paid without triggering such excise tax if reducing the amount of cash compensation would increase the total amount of termination benefits the executive would receive, after all taxes. |
(4) | Approximate lump sum value of continued life, medical, dental and disability coverage for remaining term of the employment agreement, |
Represents the value of accelerated vesting of |
34
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 | $ | 609,997 | — | $ | 622,995 | — | ||||||||||
Value of Continued Health and Welfare Benefits | 76,603 | — | 88,094 | (2) | — | |||||||||||
Acceleration of Stock and Option Awards | — | $ | 333,783 | (3) | — | $ | 333,783 | (3) | ||||||||
Automatic Stock Grant | — | 607,490 | (4) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 686,600 | $ | 941,273 | $ | 711,089 | $ | 333,783 |
Steven J. Tsimbinos
Payments and Benefits | Involuntary or Constructive Termination | Change in Control | Involuntary or Constructive Termination following a Change in Control(1) | Death | ||||||||||||
Cash Compensation | — | — | $ | 514,604 | — | |||||||||||
Value of Continued Health and Welfare Benefits | — | — | 88,094 | (2) | — | |||||||||||
Acceleration of Stock and Option Awards | — | $ | 318,716 | (3) | — | $ | 318,716 | (3) | ||||||||
Automatic Stock Grant | — | 335,663 | (4) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | — | $ | 654,379 | $ | 602,698 | $ | 318,716 |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 42
35
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, 2015:2017:
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 ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||||||||||||||
Steven E. Brady | 67,600 | 30,025 | — | — | 68,664 | 166,289 | ||||||||||||||||||||||||||||||||||||||||||
Joseph J. Burke | 80,000 | 32,135 | — | — | 17,250 | 129,385 | 79,600 | 30,025 | — | — | 14,378 | 124,003 | ||||||||||||||||||||||||||||||||||||
Angelo Catania | 70,500 | 32,135 | — | — | 12,449 | 115,084 | 79,200 | 30,025 | — | — | 14,378 | 123,603 | ||||||||||||||||||||||||||||||||||||
John W. Chadwick6 | 16,100 | — | — | — | 13,237 | 29,337 | ||||||||||||||||||||||||||||||||||||||||||
Jack M. Farris6 | 50,300 | 32,135 | — | — | — | 82,435 | ||||||||||||||||||||||||||||||||||||||||||
Michael D. Devlin | 65,600 | 30,025 | — | — | 6,883 | 102,508 | ||||||||||||||||||||||||||||||||||||||||||
Jack M. Farris | 67,600 | 30,025 | — | — | — | 97,625 | ||||||||||||||||||||||||||||||||||||||||||
John R. Garbarino | 138,400 | 32,135 | — | — | 29,129 | 199,664 | 29,600 | 30,025 | — | — | 14,378 | 74,003 | ||||||||||||||||||||||||||||||||||||
Dorothy F. McCrosson | 70,800 | 30,025 | — | — | 655 | 101,480 | ||||||||||||||||||||||||||||||||||||||||||
Donald E. McLaughlin | 79,200 | 32,135 | — | — | 12,449 | 123,784 | 77,200 | 30,025 | — | — | 14,378 | 121,603 | ||||||||||||||||||||||||||||||||||||
Diane F. Rhine | 77,600 | 32,135 | — | — | 13,229 | 122,964 | 75,600 | 30,025 | — | — | 14,378 | 120,003 | ||||||||||||||||||||||||||||||||||||
Mark G. Solow | 67,300 | 32,135 | — | — | 13,229 | 112,664 | 66,800 | 30,025 | — | — | 14,378 | 111,203 | ||||||||||||||||||||||||||||||||||||
John E. Walsh | 80,000 | 32,135 | — | — | — | 112,135 | 77,200 | 30,025 | — | 37,356 | — | 144,581 | ||||||||||||||||||||||||||||||||||||
Samuel R. Young | 67,600 | 30,025 | — | — | — | 97,625 |
(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 the full grant date fair value. Each Director, received an award of |
(3) | For awards of stock options, the amounts are based on the grant date fair value. No grant of options was made to the Directors in |
(4) | Reflects above-market or preferential earnings on non-tax-qualified deferred compensation. |
(5) | Reflects Company paid medical benefits and in |
(6) | Mr. |
Cash and Stock Retainers and Meeting Fees for Non-Employee Directors.Directors
The following tables set forth the applicable retainers and fees effective July 2015 thatfor 2017. Payments are paid annually to non-employee Directorsdirectors for their service on the Board of Directors of the Bank and the Board of Directors of the Company. If a Directordirector is not in compliance with the stock ownership levels required under the Guidelines for Directors, the Company and Bank retainers are paid in the form of Company stock.
Directors of OceanFirst Bank: | ||||||
Annual Retainer | $ | 20,000 | (paid in quarterly installments) | |||
Fee per Board Meeting (Regular or Special) | $ | 2,000 | ||||
Fee per Committee Meeting | $ | 800 | ||||
Directors of OceanFirst Financial Corp.: | ||||||
Annual Retainer | $ | 20,000 | (paid in quarterly installments) | |||
Additional Annual Cash Retainer for the Chairperson of: | ||||||
Board of Directors: | $ | 76,000 | ||||
each of the Audit Committee, the Corporate Governance/Nominating Committee, the Compensation Committee and the Risk Committee: | $ | 8,000 |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 43
In 2018, the Board changed its compensation structure to eliminate meeting fees and increase retainers as follows:
Annual Bank Retainer | Annual Company Retainer | Company Equity Grant | Travel Expense Cap(1) | |||||||||||||
Regular Director | $ | 35,000 | $ | 40,000 | $ | 30,000 | $ | 4,000 | ||||||||
Committee Chair(2) | $ | 5,000 | $ | 5,000 | N/A | N/A | ||||||||||
Lead Director | $ | 10,000 | $ | 10,000 | N/A | N/A |
(1) | Travel expenses reimbursed under Bank’s Travel Policy, with one night hotel accommodation in connection with Board Meeting considered eligible | ||
If the Committee is a joint Committee of | |||
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Separation and Consulting Agreement — Mr. Brady
36As part of the Ocean Shore transaction, the Company entered into a separation and consulting agreement with Mr. Brady, which provides for a consulting term of 18 months following the November 30, 2016 closing of the transaction and a consulting fee of $4,167 per month. During the consulting period, Mr. Brady provided services and advice regarding the integration of Ocean Shore and OceanFirst, as well as transition planning in his role as Vice Chairman of the Company’s Southern Region. The Company and Mr. Brady agreed in 2018 to terminate such agreement and the Company has paid Mr. Brady the amounts due him in accordance with the agreement.
Deferred Compensation Plan for Directors.Directors
The Bank maintains balances for prior year deferrals in a deferred compensation plan for the benefit of non-employee Directors. The Company is currently not accepting new contributions into this plan. The plan is a non-qualified arrangement which offers participatingthat previously offered 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”). 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 reannuitizedre-annuitized 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) planPlan 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.
Stock Ownership Guidelines
The Board maintains stock ownership Guidelines for non-employee directors similar to those for the NEOs. The Guidelines provide that each non-employee director shall own shares of the Company’s common stock with a market value of at least three times the value of the annual retainer received from the Company. Previously, each non-employee director was required to own shares equal to three times the value of the annual retainers of both the Bank and the Company. However, due to the changes in Board compensation for 2018 noted above, the current annual Company retainer is equal to the combined Bank and Company retainers in 2017, resulting in no change to the required market value of shares to be owned. Newly elected directors shall 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) shares beneficially owned by the director and by immediate family members sharing the same household; (2) vested and unvested restricted stock awards; (3) shares acquired upon the exercise of stock options; and (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 shall continue to be met during the period the director serves on the Board.
Hedging/Pledging Policy
As described in the Compensation Discussion & Analysis, the Company’s anti-hedging/pledging policy also applies to the Board of Directors. See “Compensation Discussion & Analysis– Hedging/Pledging Policy” for further information regarding this policy.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 44
The following is the report of the Compensation Committee with respect to the Company’s Compensation Discussion and Analysis for the fiscal year ended December 31, 2015:2017:
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management of the Company. Based on the review and discussions, the 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, 20152017 and the Company’s proxy statement for the annual meetingAnnual Meeting of stockholdersStockholders to be held on June 2, 2016.May 31, 2018.
The Human Resources/Compensation Committee
Diane F. Rhine, Chair
Jack M. Farris
John K. Lloyd
Dorothy F. McCrosson
Mark G. Solow
Jack M. Farris
The above report of the Compensation Committee does not constitute “soliciting material” and should not be deemed to be “filed” with the Commission or incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates this report by reference in any of those filings.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No person serving as a member of the Compensation Committee, Diane F. Rhine, Mark G. Solow or Jack M. Farris, during the past fiscal year, is or was a current or former officer or employee of the Company or the Bank or engaged in certain transactions with the Company or the Bank that are required to be disclosed by Commission regulations. See “Transactions With Management—Other TransactionsTransactions..” Additionally, there are no compensation committee “interlocks,” which generally means that no executive officer of the Company or the 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 Compensation Committee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 45
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 Exchange Act requiresCompany’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. As discussed in the Compensation Discussion and Analysis, the Compensation Committee believes that the compensation of the NEOs described herein is reasonable and appropriate, and is justified by the performance of the Company.
In deciding how to vote on this proposal, the Board urges you to consider the following factors, some 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’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. |
• | 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, and may not be construed as overruling a decision by the Board or creating or implying 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 majority of outstanding shares of Common Stock entitled to vote at the Annual Meeting is required for stockholders to approve, on an advisory basis, the compensation of the Company’s named executive officers.
The Board of Directors recommends that you vote “FOR” Proposal 2, 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.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 46
Proposal 3 | Approval and Adoption of an Amendment to the Company’s Certificate of Incorporation to Declassify The Board of Directors |
The Company’s Certificate of Incorporation currently divides the Board of Directors into three classes, with the members of each class serving for staggered three-year terms. As a result, only one class of directors stands for election at each of the Company’s Annual Meetings of Stockholders , such that stockholders vote on and personselect approximately one-third of the Board each year. Under Delaware law, directors under a classified board structure may be removed by stockholders only for cause. At this Annual Meeting, the Company’s stockholders are being asked to approve and adopt a proposal to amend the Certificate of Incorporation to declassify the Board. If Proposal 3 is approved, and once the Certificate of Amendment is effective, in order to make the declassification of the Board of Directors effective at the 2019 Annual Meeting of Stockholders, each member of our Board of Directors whose term does not expire at the end of the 2019 Annual Meeting will resign and be re-appointed to a term that will expire at the 2019 Annual Meeting of Stockholders, other than Mr. McLaughlin who own more than 10%will retire.
All directors will then stand for election to a one-year term at the 2019 Annual Meeting of Stockholders.
The Leadership Committee considered and then recommended to the Board the proposed amendment to the Company’s Certificate of Incorporation to declassify the Board and corresponding changes. The Board accepted this recommendation, determined that the proposed amendment was advisable, and unanimously approved and adopted, at a meeting held on March 28, 2018, the amendment, subject to stockholder approval at the Annual Meeting.
If stockholders approve and adopt the amendment, it will become effective upon the filing of a registeredCertificate of Amendment to the Company’s Certificate of Incorporation with the Delaware Secretary of State’s office. The Company intends to file the amendment shortly after the Annual Meeting.
Text of the Proposed Amendment
Paragraph (A) of ARTICLE SIXTH of the Certificate of Incorporation would be deleted in its entirety and replaced with new Paragraph (A),
Article Sixth
(A) | The number of Directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adapted by a majority of the Whole Board. |
Reasons for the Proposed Amendment
The Leadership Committee and the Board periodically consider the Company’s corporate governance practices and structures. As part of that process, the Board considers corporate trends, peer practices, the views of the Company’s institutional stockholders and the guidelines of proxy advisory firms. As such, the Leadership Committee and the Board have, from time to time, reviewed the classified board structure, most recently earlier this year.
After careful consideration, and upon the recommendation of the Leadership Committee, the Board determined at its meeting held in March 28, 2018, subject to stockholder approval, to declassify the Board immediately, commencing at this Annual Meeting.
The Board recognizes that a classified structure may offer several advantages, such as promoting Board continuity and stability, encouraging its directors to take a long-term perspective and reducing the Company’s vulnerability to coercive takeover tactics. The Board also recognizes, however, that a classified structure may appear to reduce directors’ accountability to stockholders, since such a structure does not enable stockholders to express a view on each director’s performance by means of an annual vote. The Board also believes that implementing annual elections for all directors would support the Company’s ongoing and renewed efforts to adopt “best practices” in corporate governance, having noted that many U.S. public companies have eliminated their classified board structures in recent years.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 47
Effect of the Proposed Amendment
If the proposed amendment to the Certificate of Incorporation to declassify the Board is approved and adopted by the stockholders, the Certificate of Incorporation will be amended as set forth above.
Specifically, if the amendment is approved and adopted, all of the directors whose term does not expire at the 2019 Annual Meeting will resign and be re-appointed to a term that will expire at the 2019 Annual Meeting of Stockholders, other than Mr. McLaughlin who will retire. All directors will then stand for election to a one-year term at the 2019 Annual Meeting of Stockholders, regardless of the class in which they currently serve. In all cases, each director will serve until his or her successor is elected and qualified or until his or her death, retirement, resignation or removal.
No amendments to the Company’s Bylaws are expected to be required in connection with the amendment of the Certificate of Incorporation to declassify the Board.
Impact if the Amendment is not Adopted
If the proposed amendment to the Certificate of Incorporation to declassify the Board is not approved and adopted by the stockholders, the Certificate of Incorporation will not be amended as set forth above and the Board of Directors will continue to be classified with directors serving staggered terms. In this event, the nominees standing for election at this Annual Meeting would be placed in classes and elected for the terms described under Proposal 1 – Election of Directors. Thereafter, directors would continue to serve in classes for staggered three-year terms. No director, other than Mr. McLaughlin, will resign following the 2018 Annual Meeting.
The affirmative vote of at least 80 percent of outstanding shares of Common Stock entitled to vote at the Annual Meeting is required for stockholders to approve and adopt the proposed amendment to the Certificate of Incorporation.
The Board of Directors unanimously recommends that stockholders vote“FOR” Proposal 3, approval and adoption of the amendment to the Company’s Certificate of Incorporation to declassify the Board of Directors.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 48
Proposal4 | Approval and Adoption of an Amendment to the Company’s Certificate of Incorporation to Increase the Number of Authorized Shares of Common Stock From 55,000,000 to 150,000,000 |
The Company’s Certificate of Incorporation currently authorizes 5,000,000 shares of preferred stock and 55,000,000 shares of Common Stock, par value $0.01 per share. At the 2018 Annual Meeting, the Company’s stockholders are being asked to approve and adopt a proposal to amend the Certificate of Incorporation to increase by 95,000,000 the number of shares of Common Stock that the Company is authorized to issue, from 55,000,000 to 150,000,000 shares. The stockholders are not being asked to make any changes to the Company’s authorized shares of preferred stock.
The Board of Directors considered the proposed amendment and at a meeting held on March 28, 2018. The Board determined that the proposed amendment was advisable and unanimously approved and adopted the amendment, subject to stockholder approval at this Annual Meeting.
If stockholders approve and adopt the amendment, it will become effective upon the filing of a Certificate of Amendment to the Certificate of Incorporation with the Delaware Secretary of State’s office. The Company intends to file the amendment shortly after the Annual Meeting.
Text of the Proposed Amendment
Paragraph (A)(2) of ARTICLE FOURTH of the Certificate of Incorporation would be amended and restated in its entirety to read as follows:
2. | One Hundred Fifty million (150,000,000) shares of Common Stock par value, one cent ($.01) per share (the “Common Stock”). |
Reasons for the Proposed Amendment
The Company’s Certificate of Incorporation currently authorizes up to 55,000,000 shares of Common Stock, and approximately 48.1 million shares are presently issued and outstanding. An additional 4.1 million shares of Common Stock may become outstanding by virtue of existing or future equity awards under the Company’s various equity compensation plans. In the past few years, the Company has grown significantly through acquisitions, including the acquisitions of Colonial American Bank, Cape Bancorp, Inc., Ocean Shore Holding Co., and Sun Bancorp, Inc. In connection with these acquisitions, the Company has issued approximately 30.3 million shares of Common Stock. As a result, there are only 2.8 million shares available for future issuance for any purposes, including additional future acquisitions, raising capital, or any other permitted purposes. As of the date of this Proxy Statement, the Company has no current plans to issue additional shares, other than pursuant to previously approved equity plans.
The Board of Directors believes it is in the best interests of the Company and its stockholders to increase the number of authorized shares of Common Stock to provide the Company with flexibility to consider and plan for future general corporate needs, including, but not limited to, capital raising, financing transactions, potential merger and acquisition transactions, employee stock or benefit plan needs, stock splits, stock dividends or other general corporate purposes. These opportunities can arise quickly. The additional authorized shares of Common Stock would enable the Company to pursue strategic, financial, merger and acquisition or capital opportunities as they may be presented and to take timely advantage of market conditions as they may arise, without the delay and expense associated with calling and convening a special meeting of stockholders to authorize additional shares.
Although the Company has no plan, commitment or agreement as of the date of this Proxy Statement to issue additional shares of Common Stock resulting from the proposed increase in authorized shares, the Company regularly looks at and considers the desirability of issuing Common Stock in financing or merger and acquisition transactions.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 49
Effect of the Proposed Amendment
If the proposed amendment to the Certificate of Incorporation is approved and adopted by the stockholders, approximately 95,000,000 million shares of Common Stock would then be authorized and available for future issuance. The additional authorized shares would be available for issuance from time-to-time by the Board for any proper general corporate purpose, including those described above, without further stockholder approval, other than as may be required by Delaware law or the rules of the NASDAQ Stock Market.
The additional shares of Common Stock for which the Company is seeking stockholder approval would be part of the existing class of the Company’s equity securities,Common Stock and, if and when issued, would have the same rights and privileges as, and be identical in all respects (including voting, dividend, distribution and liquidation rights) to, file reportsshares of ownershipCommon Stock currently outstanding. The proposed additional authorized shares of Common Stock will not affect any of the rights of the shares of Common Stock currently outstanding. Under Delaware law and changes in ownership with the Commission. Executive officers, directors and greater than 10% stockholders are required by Commission regulation to furnish the Company with copiesCertificate of all Section 16(a) forms they file.
37
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 eachIncorporation, holders of the Company’s executive officers and directors, and greater than 10% beneficial owners have complied with all applicable reporting requirements for transactionsCommon Stock are not entitled to preemptive rights to purchase shares of Common Stock that the Company may issue in the future.
The ability of the Board of Directors to issue additional shares of Common Stock may, under certain circumstances, be deemed to have an anti-takeover effect. The Company could use the additional authorized shares of Common Stock to make it more difficult or to discourage efforts to obtain control of the Company. However, the amendment to the Certificate of Incorporation is not being proposed in order to prevent a change-in-control, nor is the amendment in response to any attempt, or contemplated attempt, to acquire control of the Company or to gain representation on the Board. As is true for shares presently authorized but not issued, future issuances of the additional shares of Common Stock contemplated by the proposed amendment also could have a dilutive effect on earnings per share, book value per share, voting power and percentage ownership interest of current stockholders.
The Board of Directors intends to use the additional shares of Common Stock only for purposes and on terms that it deems to be in the best interests of the Company and its stockholders.
Impact if the Amendment is not Adopted
If the proposed amendment to the Certificate of Incorporation is not approved and adopted by the stockholders and the Company is unable to increase the number of authorized shares of Common Stock, the Company will be limited in the number of shares of Common Stock available for issuance to a total of 55,000,000 shares issued and outstanding. This could impact the Company’s common stock duringability in the future to issue Common Stock for capital raising, financing transactions, merger and acquisition transactions and other corporate purposes as the Company may not have a sufficient number of shares of Common Stock available to issue for these needs.
The Board of Directors unanimously approved and adopted the amendment to the Certificate of Incorporation to increase the number of authorized shares of Common Stock. Accordingly, the majority of outstanding shares of Common Stock entitled to vote at the Annual Meeting is required for stockholders to approve and adopt the proposed amendment to the Certificate of Incorporation.
The Board of Directors unanimously recommends that stockholders vote“FOR” Proposal 4, approval and adoption of the amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 55,000,000 to 150,000,000 shares.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 50
Proposal 5 | Ratification of Appointment of the Independent Registered Public Accounting Firm |
The Company’s independent registered public accounting firm for the fiscal year ended December 31, 2015.2017 was KPMG LLP. The Audit Committee reappointed KPMG LLP to continue as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2018, 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, but is not required to, 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 following table sets forth the fees billed to the Company for the fiscal years ended December 31, 2017 and December 31, 2016 by KPMG LLP:
2017 | 2016 | ||
Audit fees | $ 710,000 | $ 1,060,000 | |
Audit related fees(1) | 100,000 | 270,000 | |
Tax related fees(2) | 81,317 | 81,333 | |
Other fees | — | — | |
$ 891,317 | $ 1,411,333 |
(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, acquisitions, 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. |
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. The Audit Committee believes that the provision of non-audit services by KPMG LLP is compatible with maintaining KPMG LLP’s independence.
During the year ended December 31, 2017, 100% of the audit related fees, tax related fees and other fees set forth above were approved by the Audit Committee.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 51
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 submitted and implemented an internal audit plan for 2017.
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 met 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 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.”
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, 2017 for filing with the 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, Chair
Donald E. McLaughlin, CPA, Retired
Angelo Catania
Samuel R. Young
Grace C. Torres
The majority of outstanding shares of Common Stock entitled to vote at the Annual Meeting is required for stockholders to ratify the selection of the Company’s independent registered public accounting firm.
The Board of Directors recommends that you vote“FOR” Proposal 5, the ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 52
Loans and Extensions of 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 a bank to its executive officers and directors as long as they are made 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 the entire Board of Directors of the Bank, with any person having any interest in the transaction abstaining. 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 collectability or present other unfavorable features.
Notwithstanding the above, the Bank offers to executive officers certain loans 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, 2015:2017:
OCEANFIRST BANK CREDIT EXTENSIONS TO INSIDERS AS OF DECEMBER 31, 2015 |
| |||||||||||||||||||||||
NAME | POSITION | LOAN TYPE | LARGEST AMOUNT OF PRINCIPAL OUTSTANDING IN 2015 | PRINCIPAL OUTSTANDING AS OF DECEMBER 31, 2015 | PRINCIPAL PAID IN 2015 | INTEREST PAID IN 2015 | CURRENT RATE | |||||||||||||||||
Joseph R. Iantosca | Executive Vice President, Chief Administrative Officer of the Bank | First Mortgage | $ | 477,644 | $ | 458,478 | $ | 19,166 | $ | 9,081 | 2 | % |
OCEANFIRST BANK CREDIT EXTENSIONS TO INSIDERS AS OF DECEMBER 31, 2017
Name | Position | Loan Type | Largest Amount of Principal Outstanding In 2017 | Principal Outstanding As of December 31, 2017 | Principal Paid In 2017 | Interest Paid In 2017 | Current Rate | ||||
Joseph R. Iantosca | Executive Vice President, Chief Administrative Officer of the Bank | First Mortgage | $439,295 | $420,376 | $18,919 | $10,752 | 2.75% | ||||
Joseph J. Lebel III | Executive Vice President, Chief Banking Officer of the Bank | First Mortgage | $750,000 | $345,806 | $404,194 | $5,014 | 2.25% |
The Board of Directors has placed a moratorium on any other transactions between the Company and Bank and any director, their family members or affiliated entities. NoOther than routine banking transactions in the ordinary course of business, no such transactions took place in 2014.2017, with the exception of Ms. McCrosson’s law firm, which continued its representation on matters acquired from Ocean City Home Bank prior to it being acquired by the Bank. Such representation was approved by the Board and fees paid were on an arm’s length basis and amounted to approximately $44,000. Mr. Coscia, who joined the Board on January 31, 2018, is a partner of Windels Marx Line & Mittendorf LLP, which from time to time has represented the Company. The Company expects to continue to use Windels Marx Lane & Mittendorf; such representation will be on an arm’s length basis and approved by the Board of Directors.
LEADERSHIP COMMITTEE PROCEDURES AS TO DIRECTOR NOMINATIONS
GeneralOCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 53
It
This proxy statement is being furnished to stockholders of the policyCompany and the 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 31, 2018, at 6:00 p.m., Eastern time, at OceanFirst Bank Administrative Offices, 110 West Front Street, Red Bank, New Jersey 07701, 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, 2017, accompanies this proxy statement. This proxy statement is first being mailed to record holders on or about April 26, 2018.
Who Can Vote at the Annual Meeting
You are entitled to vote your shares of the Company’s Leadership Committeecommon stock only if the records of the Company show that you held your shares as of the close of business on April 10, 2018. As of the close of business on that date, a total of 47,963,172 shares of the Company’s common stock were outstanding and entitled to consider director candidates recommendedvote. Each share of common stock has one vote. As provided in the Fourth Article 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 stockholdersan 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 appearis 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.
If you are a beneficial owner of 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 qualifiedadmitted to servethe 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 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.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 54
The Annual Meeting will be held only if there is a quorum. A majority of the outstanding common shares 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 receive voting instructions from the beneficial owner and casts an “uninstructed” vote.
Proposal | Voting Choices and Board Recommendation | Voting Standard | ||
Proposal 1 – Election of Directors | • vote in favor of all nominees, • withhold votes as to all nominees or • withhold votes as to a specific nominee. The Board of Directors recommends the votes“FOR”each of the nominees for director. | Plurality of the votes cast at the Annual Meeting. This means that the nominees receiving the greatest number of votes will be elected. There is no cumulative voting for the election of directors. | ||
Proposal 2 – Advisory Vote on Executive Compensation | • vote in favor, • vote against or • abstain from voting. The Board of Directors recommends the vote“FOR”the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in these materials. | Majority of the votes cast | ||
Proposal 3 – approval of the amendment to the Company’s Certificate of Incorporation to declassify the Company’s Board of Directors | • vote in favor, • vote against or • abstain from voting. The Board of Directors recommends the vote“FOR”the amendment to the Company’s Certificate of Incorporation to declassify the Board. | 80% of the outstanding shares entitled to vote | ||
Proposal 4 – approval of an amendment to the Company’s Certificate of Incorporation to increase the number of authorized common stock | • vote in favor, • vote against or • abstain from voting. The Board of Directors recommends the vote “FOR” the amendment to the Company’s Certificate of Incorporation to increase the number of shares of authorized common stock. | Majority of the outstanding shares entitled to vote | ||
Proposal 5 – ratification of the appointment of KPMG LLP as the independent registered public accounting firm | • vote in favor, • vote against or • abstain from voting. The Board of Directors recommends the vote“FOR”ratification of KPMG LLP as the Company’s independent registered public accounting firm. | Majority of the votes cast |
Effect of Broker Non-Votes and Abstentions | |
Proposal 1 – Election of Directors | • Broker non-votes may not be counted as votes cast • Withheld votes will have no effect on the outcome of the election |
Proposal 2 – Advisory Vote on Executive Compensation | • Broker non-votes will not be counted as votes cast and will have no effect on voting of the proposal • Abstentions will have the same effect as a vote against the proposal |
Proposal 3 – approval of the amendment to the Company’s Certificate of Incorporation to declassify the Company’s Board of Directors | •Broker non-votes and abstentions will have the effect as a vote against the proposal |
Proposal 4 – approval of an amendment to the Company’s Certificate of Incorporation to increase the number of authorized common stock | • Broker non-votes and abstentions will have the effect as a vote against the proposal |
Proposal 5 – ratification of the appointment of KPMG LLP as the independent registered public accounting firm | • Broker non-votes will not be counted as votes cast and will have no effect on voting of the proposal • Abstentions will have the same effect as a vote against the proposal |
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 55
Voting by Proxy; Revocation of Proxy; Board Recommendations
This proxy statement is being sent to you by the Company’s Board of Directors. The Corporate Leadership Committee may choose notDirectors for the purpose of requesting that you allow your shares of Company common stock to consider an unsolicited recommendation if no vacancy exists onbe represented at the BoardAnnual Meeting by the persons named in the enclosed proxy card. All shares of DirectorsCompany common stock represented at the Annual Meeting by properly executed and the Leadership Committee does not perceive a need to increase the size of the Board of Directors. In order to avoid the unnecessary use of the Leadership Committee’s resources, the Leadership Committeedated proxies will consider only those director candidates recommendedbe voted in accordance with the procedures set forth below.
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ProceduresIf 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 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 Followed by Stockholderspresented at the Annual Meeting.
You may revoke your proxy at any time before the vote is taken at the Annual Meeting. To submit a recommendation of a director candidate to the Leadership Committee, a stockholder should submit the following information in writing, addressed to the Chairman of the Leadership Committee, care ofrevoke your proxy you must either advise the Corporate Secretary of the Company in writing before your common stock has been voted at the main office ofAnnual Meeting, deliver a later dated and signed proxy card, or attend the Company:
In order for a director candidate to be considered for nominationAnnual Meeting and vote your shares in person. Attendance at the Company’s annual meetingAnnual Meeting will not in itself constitute revocation of stockholders, the recommendation must be received by the Leadership Committee at least 120 calendar days prior to the date the Company’s proxy statement was released to stockholders in connection with the previous year’s annual meeting, advanced by one year.
Criteria for Director Nominees
The Leadership 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 and a requirement that the candidate maintain a residence in New Jersey. A candidate also must meet any qualification requirements set forth in any Board or committee governing documents.
The Leadership 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 Leadership Committee deems relevant, including age, diversity of skills, size of the Board of Directors and regulatory disclosure obligations.
The Leadership Committee may weigh the foregoing criteria differently in different situations, depending on the composition of the Board of Directors at the 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 Commission’s regulations.
In addition, prior to nominating an existing director for re-election to the Board of Directors, the Leadership Committee will consider and review an existing director’s Board performance and attendance at Board and Committee meetings and other Company functions; length of Board service; experience, skills and contributions that the existing director brings to the Board; and independence.
Process for Identifying and Evaluating Nominees
Pursuant to the Leadership Committee Charter as approved by the Board, the Leadership 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:
39If 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.
Identification.Participants in OceanFirst Financial Corp.’s and OceanFirst Bank’s Benefit PlansFor purposes of identifying nominees
Participants in the OceanFirst Bank Employee Stock Ownership Plan (the “ESOP”), the OceanFirst Bank Retirement Plan (the “401(k) Plan”), or the Sun Bank Retirement Plan (the “Sun 401(k) Plan”) will receive a voting instruction form for each plan that reflects all shares they may vote under the Board of Directors,particular plan. Under the Leadership Committee relies on personal contactsterms of the committee and other membersESOP, the trustee votes all shares held by the ESOP, but each ESOP participant may direct the trustee how to vote the shares of the BoardCompany common stock allocated to his or her account. The ESOP trustee, subject to the exercise of Directorsits 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 well as its knowledge of membersshares for which it has received timely voting instructions. Underthe terms of the Company’s local communities.401(k) Plan and Sun 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 Leadership Committeetrustee will also consider director candidates recommended by stockholders in accordance with the policy and procedures set forth above. The Leadership Committee hasvote all shares for which no directions are given or for which timely instructions were not received any recommended nominees from the Company’s stockholders to be considered for election at this annual meeting. The Leadership Committee has used an independent search firm to assist in identifying candidates to fill the vacancy created by the retirement of Director Chadwick in 2015, and may from time to time, but does not use a search firm to identify or evaluate potential director nominees in the ordinary course.sameproportion as shares for which such trustee received timely voting instructions. The deadline for returning voting instructions to each plan’s trustee is May 23, 2018.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING, PLEASE CONTACT THE COMPANY’S PROXY SOLICITOR, GEORGESON LLC, BY CALLING TOLL FREE AT (866) 296-5716.
Evaluation.In evaluating potential director candidates, the Leadership 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 Leadership Committee will conduct a check of the individual’s background and interview the candidate.
ADDITIONAL INFORMATION
In order to be eligible for inclusion in the Corporation’sCompany’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 officeCompany’s administrative offices at 975 Hooper Avenue, Toms River,110 West Front Street, Red Bank, New Jersey 08754,07701, no later than December 27, 2016.2018. If next year’s Annual Meeting is held on a date more than 30 calendar days from June 2, 2017,May 31, 2019, a stockholder proposal must be received by a reasonable time before the Company begins to print and mail its proxy solicitation material for such Annual Meeting. Any stockholder proposals will be subject to the requirements of the proxy rules adopted by the Commission.
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
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 56
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“Leadership Committee Procedures as to Director NominationsNominations.”.” 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,110 West Front Street, Red Bank, New Jersey 08754-2009.07701.
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 ChairmanChair 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 ChairmanChair of the Leadership 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 Stockholders. All directors then appointed attended the Annual Meeting of Stockholders held on May 6, 2015.June 2, 2017.
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 $6,000$8,500 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 April 11, 2016.10, 2018. 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
Stockholders Meeting to Be Held on June 2, 2016May 31, 2018
The proxy statement and Annual Report to Stockholders 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, 2015,2017, 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 April 11, 201610, 2018 upon written request to Jill Apito Hewitt, Senior Vice President and Investor Relations Officer, OceanFirst Financial Corp., 975 Hooper Avenue, Toms River,110 West Front Street, Red Bank, New Jersey 08754.07701.
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 stockholder 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,110 West Front Street, Red Bank, New Jersey 08754.07701.
By Order of the Board of Directors
Steven J. Tsimbinos
Corporate Secretary
Toms River,Red Bank, New Jersey
April 26, 20162018
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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APPENDIX A
OCEANFIRST FINANCIAL CORP.
AMENDED AND RESTATED
2011 CASH INCENTIVE COMPENSATION PLAN
The purpose of this Amended and Restated OceanFirst Financial Corp. 2011 Cash Incentive Compensation Plan (the “Plan”) is to provide incentives for certain employees of OceanFirst Financial Corp. and its subsidiaries. The Plan is part of an overall compensation program that ties the achievement of annual strategic and operating goals with compensation.
For the purposes of the Plan, the following terms shall have the meanings indicated:
“Award” means the payment of an award by the Committee to a Participant pursuant to Section 4.
“Applicable Period” means, with respect to any Performance Period, a period commencing on or before the first day of such Performance Period and ending no later than the earlier of (i) the 90th day of such Performance Period or (ii) the date on which 25% of such Performance Period has been completed. Any action required under the Plan to be taken within the period specified in the previous sentence may be taken at a later date with respect to Participants who are not Covered Officers and with respect to Covered Officers if permitted by Code section 162(m).
“Board” means the Board of Directors of the Company.
“Committee” means the Committee designated pursuant to Section 3. Unless otherwise determined by the Board, the Human Resources/Compensation Committee designated by the Board shall be the Committee under the Plan.
“Code” means the Internal Revenue Code of 1986, as amended from time to time and the rules promulgated thereunder or any successor provision thereto as in effect from time to time.
“Company” means OceanFirst Financial Corp., a Delaware corporation.
“Covered Officer” means at any date (i) any individual who, with respect to the previous taxable year of the Company, was a “covered employee” of the Company within the meaning of Code section 162(m), as hereinafter defined; provided, however, that the term “Covered Officer” shall not include any such individual who is designated by the Committee, in its discretion, at the time of any Award or at any subsequent time, as reasonably expected not to be such a “covered employee” with respect to the current taxable year of the Company and (ii) any individual who is designated by the Committee, in its discretion, at the time of any Award or at any subsequent time, as reasonably expected to be such a “covered employee” with respect to the current taxable year of the Company or with respect to the taxable year of the Company in which any applicable Award will be paid.
“Individual Award Opportunity” means the performance-based award opportunity for a Participant for a given Performance Period as specified by the Committee within the Applicable Period, which may be expressed in dollars or on a formula basis that is consistent with the provisions of this Plan.
“Participant” means an employee of the Company or any subsidiary thereof selected by the Committee in accordance with Section 4(a) who receives an Individual Award Opportunity.
“Performance Period” means any fiscal year, or other performance period designated by the Committee over which any performance goals specified by the Committee are to be measured for the purpose of determining a Participant’s right to the payment of an Award.
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(a)Committee. Subject to the authority and powers of the Board in relation to the Plan as hereinafter provided, the Plan shall be administered by a Committee designated by the Board consisting of two or more members of the Board each of whom is an “outside director” within the meaning of Code section 162(m). The Committee shall have authority to oversee and interpret the Plan, including without limitation to (i) designate performance metrics and other terms and conditions of Awards, as well as rules and regulations for carrying out the Plan, (ii) designate Participants and bonus pool award opportunities; and (iii) approve the calculation of bonus amounts earned for any Performance Period.
(b)Committee Determinations. All determinations by the Committee shall be made by the affirmative vote of a majority of its members, but any determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. All decisions by the Committee pursuant to the provisions of the Plan and all orders or resolutions of the Board pursuant thereto shall be final, conclusive and binding on all persons, including the Participants, the Company and its subsidiaries, and stockholders.
(a)Eligible Employees. Subject to the provisions of the Plan, within the Applicable Period, the Committee may identify employees of the Company or any of its subsidiaries who will be eligible to earn Awards under the Plan with respect to such year and determine the amount of the Individual Award Opportunities and the conditions under which they may be earned.
(b)Payment of Awards. Awards under the Plan shall be paid in cash, subject to applicable withholding taxes during the calendar year first beginning after the end of the Performance Period.
The Committee may require that a Participant must still be employed as of the end of the Performance Period and/or the date on which the bonus is paid, in order to be eligible for an award for such Performance Period and the Committee may adopt such forfeiture, proration or other rules as it deems appropriate, in its sole discretion, regarding the impact on an Award of a Participant’s termination of employment.
(c)Award Opportunities. During the Applicable Period, the Committee shall establish the Individual Award Opportunities for such Performance Period, which shall be based on achievement of stated target performance goals, and may be stated in dollars or on a formula basis.
(d)Awards to Covered Officers.
For any given Performance Period, the Committee shall, within the Applicable Period, set one or more objective performance goals for each Participant and/or each group of Participants and/or each bonus pool (if applicable). The performance goals shall be limited to one or more of the following Company, subsidiary, operating unit or division financial performance measures:
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Each goal may be expressed on an absolute and/or relative basis, may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company and/or the past or current performance of other companies.
(a)Adjustments. If the performance criteria for any Performance Period shall have been affected by special factors (including material changes in accounting policies or practices, material acquisitions or dispositions of property, or other unusual items) that in the Committee’s judgment should or should not be taken into account, in whole or in part, in the equitable administration of the Plan, the Committee may, for any purpose of the Plan, adjust such criteria and make payments accordingly under the Plan; provided, however, that no such adjustment shall cause an Award to a Covered Officer to fail to be “qualified performance-based compensation” within the meaning of Code section 162(m) and Treasury Regulation Section 1.162-27(e).
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(b)Negative Discretion. In addition, the Committee (or in the case of Participants other than Covered Officers, its designees) may, in the exercise of their discretion, reduce or eliminate the amount of an Award to a Participant prior to payment thereof.
(c)Effective Date. The Plan shall be effective as of January 1, 2011, subject to approval by the shareholders of the Company during 2011.
(d)No Assignment. No portion of any Award under the Plan may be assigned or transferred otherwise than by will or by the laws of descent and distribution prior to the payment thereof.
(e)Tax Requirements. All payments made pursuant to the Plan shall be subject to withholding in respect of income and other taxes required by law to be withheld, in accordance with procedures to be established by the Committee.
(f)No Additional Participant Rights. The selection of an individual for participation in the Plan shall not give such Participant any right to be retained in the employ of the Company or any of its subsidiaries, and the right of the Company or any such subsidiary to dismiss or discharge any such Participant, or to terminate any arrangement pursuant to which any such Participant provides services to the Company is specifically reserved. The benefits provided for Participants under the Plan shall be in addition to, and shall in no way preclude, other forms of compensation to or in respect of such Participants.
(g)Liability. The Board and the Committee shall be entitled to rely on the advice of counsel and other experts, including the independent accountants for the Company. No member of the Board or of the Committee or any officers of the Company or its subsidiaries shall be liable for any act or failure to act under the Plan, except in circumstances involving bad faith on the part of such member or officer.
(h)Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any subsidiary or affiliate of the Company from adopting or continuing in effect other compensation arrangements, which arrangements may be either generally applicable or applicable only in specific cases.
(i)Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of New Jersey.
The Board may at any time terminate, in whole or in part, or from time to time amend the Plan. In the event of such termination, in whole or in part, of the Plan, the Committee may in its sole discretion direct the payment to Participants of any Awards not theretofore paid out prior to the respective dates upon which payments would otherwise be made hereunder to such Participants, in a lump sum or installments as the Committee shall prescribe with respect to each such Participant. The Board may at any time and from time to time delegate to the Committee any or all of its authority under this Section 7. Any amendment to the Plan that would affect any Covered Officer shall be approved by the Company’s stockholders if required by and in accordance with Section 162(m).
Any material terms of the performance goals described in Section 5 shall be disclosed to and re-approved by shareholders no later than the first shareholder meeting that occurs in the fifth year following the year in which shareholders previously approved the performance goals.
(a)Code Section 409A. The Company acknowledges that the payments promised to the Participants under this Plan must either comply with the requirements of Code section 409A and the regulations thereunder or qualify for an exception from compliance. To that end, the Company asserts that the each payment described in Section 4(b) of this Plan is intended to be a payment upon a specified time or fixed schedule pursuant to Code section 409A(a)(2)(A)(iv). In the case of a payment promised under this Plan that is not exempt from Code section 409A, and that is to be paid upon a “separation from service” (within the meaning of Treasury Regulation 1.409A-1(h)) to a Participant who is a “specified employee” within the meaning of Code section 409A at the time of such separation from service, such payment shall not be made prior to, and shall, if necessary, be deferred (with interest at the
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annual rate of 6%, compounded monthly from the date of separation from service to the date of actual payment) to and paid on the first day of the seventh month to begin after the separation from service and, if the Participant is a specified employee (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of his separation from service, the first day of the seventh month following the Participants separation from service. Furthermore, this Plan shall be construed and administered in such manner as shall be necessary to effect compliance with Section 409A. In any event, the Company makes no representations or warranty and will have no liability to any Participant or any other person, if any provisions or payments under this Plan are determined to constitute deferred compensation subject to Code section 409A but not to satisfy the conditions of that section.
(b)Code Section 162(m). It is the intention of the Company that all payments made under the Plan to Covered Officers shall fall within the “performance-based compensation” exception contained in Code section 162(m). Thus, unless the Board of Directors of the Company expressly determines otherwise, if any Plan provision is found not to be in compliance with such exception, that provision shall be deemed to be amended so that the provision does comply to the extent permitted by law, and in every event, the Plan shall be construed in favor of its meeting the “performance-based compensation” exception contained in Code section 162(m). Any amounts payable hereunder that would not be deductible on account of the limitations of Code section 162(m) shall be paid in the next following year in which the Company reasonably anticipates that the deduction of such payment would not be barred by the application of Code section 162(m).
The Committee may, in its sole discretion, specify in an applicable Award Agreement that any amounts paid with respect to an applicable Award shall be subject to forfeiture or clawback, including without limitation, in the event of (i) a Participant’s breach of any non-competition, non-solicitation, confidentiality or other restrictive covenants with respect to the Company or any of its Affiliates; or (ii) a financial restatement that reduces the amount payable with respect to the Award had the results been properly reported.
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ANNUAL MEETING OF STOCKHOLDERS OF
OCEANFIRST FINANCIAL CORP.
June 2, 2016
GO GREEN
e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy
material, statements and other eligible documents online, while reducing costs, clutter and
paper waste. Enroll today via www.amstock.com to enjoy online access.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available at www.oceanfirst.com
in the SEC documents section of the Investor Relations tab.
Please complete, sign, date 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
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x.
OCEANFIRST FINANCIAL CORP. - 2018 Proxy Statement 57
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OCEANFIRST FINANCIAL CORP.
ANNUAL MEETING OF STOCKHOLDERS
June 2, 2016
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 Stockholders, to be held at Jack Baker’s Lobster Shanty, 81-83 Channel Drive, Point Pleasant Beach,
110 West Front Street
Red Bank, New Jersey on June 2, 2016, at 10:00 a.m. and at any and all adjournments thereof.07701
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” Proposals 2, 3 and 4. If any other business is presented at the meeting, this proxy will be voted by the Proxy Committee in its 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)(732) 240-4500
1.1 | 14475 |
www.oceanfirst.com
NASDAQ: OCFC