DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
NORTHFIELD BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
|
|
þ
|
No fee required.
|
|
o
|
Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
|
|
|
|
|
(1)
|
Title of each class of securities to which transaction applies:
|
|
|
|
|
(2)
|
Aggregate number of securities to which transaction applies:
|
|
|
|
|
(3)
|
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
|
|
|
|
|
(4)
|
Proposed maximum aggregate value of transaction:
|
|
|
|
|
o
|
Fee paid previously with preliminary materials.
|
|
|
o |
Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
|
|
|
|
(1)
|
Amount Previously Paid:
|
|
|
|
|
(2)
|
Form, Schedule or Registration Statement No.:
|
TABLE OF CONTENTS
November 12, 2008
Dear Fellow Stockholder:
We cordially invite you to attend a Special Meeting of Stockholders of Northfield Bancorp,
Inc., the parent company of Northfield Bank. The Special Meeting will be held at the Woodbridge
Hotel & Conference Center, located at 515 Route 1 South & Gill Lane, Iselin, New Jersey 08830, at
4:00 p.m., local time, on December 17, 2008.
The enclosed Notice of Special Meeting and Proxy Statement describe the formal business to be
transacted. The business to be conducted at the Special Meeting is the approval of our 2008 Equity
Incentive Plan.
Our Board of Directors has determined that the approval of the 2008 Equity Incentive Plan is
in the best interests of Northfield Bancorp, Inc. and its stockholders. For the reasons set forth
in the Proxy Statement, the Board of Directors unanimously recommends a vote FOR the approval of
the 2008 Equity Incentive Plan.
On behalf of the Board of Directors, please take a moment now to complete, sign, date, and
return the proxy card in the postage-paid envelope provided. Voting in advance of the Special
Meeting will not prevent you from voting in person, but will assure that your vote is counted if
you are unable to attend the Special Meeting.
|
|
|
|
|
Sincerely, |
|
|
|
|
|
|
|
|
John W. Alexander |
|
|
Chairman of the Board, |
|
|
President and Chief Executive Officer |
NORTHFIELD BANCORP, INC.
1410 St. Georges Avenue
Avenel, New Jersey 07001
(732) 499-7200
NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
To Be Held On December 17, 2008
Notice is hereby given that a Special Meeting of Stockholders of Northfield Bancorp, Inc. will
be held at the Woodbridge Hotel & Conference Center, located at 515 Route 1 South & Gill Lane,
Iselin, New Jersey 08830, at 4:00 p.m., local time, on December 17, 2008.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon the approval of the Northfield
Bancorp, Inc. 2008 Equity Incentive Plan and such other matters as may properly come before the
Meeting, or any adjournments thereof. The Board of Directors is not aware of any other business to
come before the Meeting.
Any action may be taken on the foregoing proposal at the Meeting on the date specified above,
or on any date or dates to which the Meeting may be adjourned. Stockholders of record at the close
of business on October 27, 2008, are the stockholders entitled to vote at the Meeting, and any
adjournments thereof.
EVEN IF YOU PLAN TO ATTEND THE MEETING, YOU MAY CHOOSE TO VOTE YOUR SHARES BY SIGNING, DATING,
AND RETURNING THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY
PROXY THAT YOU GIVE MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED. YOU MAY REVOKE A PROXY BY
FILING, WITH THE SECRETARY OF NORTHFIELD BANCORP, INC., A WRITTEN REVOCATION, OR A DULY EXECUTED
PROXY BEARING A LATER DATE. IF YOU ATTEND THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE
PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER, IF YOUR SHARES ARE NOT REGISTERED
IN YOUR NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM THE RECORD HOLDER TO VOTE PERSONALLY AT
THE MEETING.
|
|
|
|
|
By Order of the Board of Directors |
|
|
|
|
|
Madeline G. Frank |
|
|
Senior Vice President, Corporate Secretary |
Avenel, New Jersey
November 12, 2008
A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES. |
Proxy Statement
NORTHFIELD BANCORP, INC.
1410 St. Georges Avenue
Avenel, New Jersey 07001
(732) 499-7200
SPECIAL MEETING OF STOCKHOLDERS
December 17, 2008
This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of
the Board of Directors of Northfield Bancorp, Inc. to be used at the Special Meeting of
Stockholders of Northfield Bancorp, Inc. (the Company), which will be held at the Woodbridge
Hotel & Conference Center, located at 515 Route 1 South & Gill Lane, Iselin, New Jersey 08830, at
4:00 p.m., local time, on December 17, 2008, and all adjournments of the Special Meeting. The
accompanying Notice of Special Meeting of Stockholders and this Proxy Statement are first being
mailed to stockholders on or about November 12, 2008.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited hereby retain the right to revoke them
in the manner described below. Unless so revoked, the shares represented by such proxies will be
voted at the Special Meeting and all adjournments thereof. Proxies solicited on behalf of our
Board of Directors will be voted in accordance with the directions given thereon. You may vote by
signing and returning your Proxy Card to Northfield Bancorp, Inc. Proxies we receive that are
signed, but contain no instructions for voting, will be voted FOR the proposals set forth in this
Proxy Statement for consideration at the Special Meeting.
Proxies may be revoked by sending written notice of revocation to the Corporate Secretary of
Northfield Bancorp, Inc., Madeline G. Frank, at the address shown above, or by returning a duly
executed proxy bearing a later date by mail as described on your Proxy Card. The presence at the
special meeting of any stockholder who had given a proxy shall not revoke such proxy unless the
stockholder delivers his or her ballot in person at the special meeting or delivers a written
revocation to the Secretary prior to the voting of such proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of our shares of common stock, par value $0.01 per share, as of the close of
business on October 27, 2008, are entitled to one vote for each share then held. As of October 27,
2008, there were 44,803,061 shares of common stock issued and outstanding. The presence in person
or by proxy of a majority of the outstanding shares of common stock entitled to vote is necessary
to constitute a quorum at the special meeting. Abstentions and broker non-votes will be counted
for purposes of determining that a quorum is present.
As to the approval of the Northfield Bancorp, Inc. 2008 Equity Incentive Plan, by checking the
appropriate box, a stockholder may: (i) vote FOR the approval; (ii) vote AGAINST the approval; or
(iii) ABSTAIN from voting on such approval. Approval of the 2008 Equity Incentive Plan requires
the affirmative vote of: (i) a majority of the shares represented at the meeting and entitled to
be voted at the meeting, and (ii) a majority of the votes cast at the meeting, in person or by
proxy, by stockholders other than our mutual holding company, Northfield Bancorp, MHC. For
purposes of the vote required in clause (i) above, abstentions will be treated as represented at
the meeting and entitled to be voted at the meeting, and will have the same effect as a vote
against approval of the plan. For purposes of the vote required in clause (ii) above, abstentions
and broker non-votes are not considered votes cast.
The following table contains certain information regarding the beneficial ownership of the
shares of our common stock as of October 27, 2008 (unless otherwise noted), by: (a) our named
executive officers (as disclosed in our proxy statement for our 2008 annual meeting of
stockholders); (b) our directors; (c) each other person (and such persons address) who is known by
us to be the beneficial owner of more than 5% of our outstanding shares of common stock (based on
information filed with the Securities and Exchange Commission); and (d) our executive officers and
directors as a group. The persons named in the table, except as otherwise described in the notes
below,
1
have sole voting power and sole investment power with respect to all shares of our common
stock set forth opposite their respective names.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of Common |
|
|
Name and Address of Beneficial Owner |
|
Stock Beneficially Owned (1) |
|
Percent of Class |
Northfield Bancorp, MHC, 1731 Victory Boulevard |
|
|
24,641,684 |
|
|
|
55.00 |
% |
Staten Island, New York 10314 |
|
|
|
|
|
|
|
|
John W. Alexander |
|
|
118,336 |
(2) |
|
|
* |
|
Stanley A. Applebaum |
|
|
32,500 |
(3) |
|
|
* |
|
John R. Bowen |
|
|
15,495 |
(4) |
|
|
* |
|
Annette Catino |
|
|
41,871 |
(5) |
|
|
* |
|
Gil Chapman |
|
|
20,000 |
(6) |
|
|
* |
|
John P. Connors, Jr. |
|
|
15,535 |
(7) |
|
|
* |
|
John J. DePierro |
|
|
9,392 |
(8) |
|
|
* |
|
Susan Lamberti |
|
|
30,000 |
(9) |
|
|
* |
|
Albert J. Regen |
|
|
50,261 |
(10) |
|
|
* |
|
Patrick E. Scura, Jr. |
|
|
32,500 |
|
|
|
* |
|
Kenneth J. Doherty |
|
|
50,419 |
(11) |
|
|
* |
|
Madeline G. Frank |
|
|
28,664 |
(12) |
|
|
* |
|
Steven M. Klein |
|
|
37,431 |
(13) |
|
|
* |
|
Michael J. Widmer |
|
|
37,991 |
(14) |
|
|
* |
|
Northfield Bancorp, MHC, and all
directors and executive officers of
Northfield Bancorp, Inc.
and Northfield Bank as a group (14 directors
and executive officers) (15) |
|
|
25,162,079 |
|
|
|
56.16 |
% |
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a person is deemed
to be the beneficial owner for purposes of this table, of any shares of common stock if he has
shared voting or investment power with respect to such security, or has a right to acquire
beneficial ownership at any time within 60 days from the date as of which beneficial ownership
is being determined. As used herein, voting power is the power to vote or direct the voting
of shares and investment power is the power to dispose or direct the disposition of shares,
and includes all shares held directly as well as by spouses and minor children, in trust and
other indirect ownership, over which shares the named individuals effectively exercise sole or
shared voting or investment power. |
|
(2) |
|
Includes 9,130 shares held jointly with Mr. Alexanders spouse, 18,625 shares held in Mr.
Alexanders IRA accounts, 63,445 shares held by Mr. Alexanders spouse, 10,000 shares held in
Northfield Banks 401(k) Plan, and 2,135.578 shares allocated to Mr. Alexander under
Northfield Banks ESOP. |
|
(3) |
|
Includes 10,000 shares held in Mr. Applebaums IRA account, 15,000 shares held jointly with
Mr. Applebaums spouse, and 7,500 shares held by Mr. Applebaums spouse. |
|
(4) |
|
Includes 5,667 shares held in Mr. Bowens IRA account, 3,673 shares held by Mr. Bowens
spouse, and 6,155 shares held in Northfield Bancorp Inc.s 401(k) Plan. |
|
(5) |
|
Includes 34,771 shares held jointly with Ms. Catinos spouse, 7,000 shares held in Ms.
Catinos IRA account, and 100 shares held in Ms. Catinos SEP account. |
|
(6) |
|
All shares held jointly with Mr. Chapmans spouse. |
|
(7) |
|
Includes 13,197 shares held in Mr. Connors IRA accounts, 1,738 shares held jointly with Mr.
Connors spouse, and 600 shares held by Mr. Connors spouse. |
|
(8) |
|
Includes 5,392 shares held jointly with Mr. DePierros spouse.
|
|
(9) |
|
All shares held jointly with Ms. Lambertis spouse. |
|
(10) |
|
Includes 12,200 shares held jointly with Mr. Regens spouse and 14,682 shares held by Mr.
Regens spouse. |
|
(11) |
|
Includes 18,366 shares held jointly with Mr. Dohertys spouse, 1,549 shares held as custodian
for Mr. Dohertys child, 3,368 shares held by Mr. Dohertys spouse, 25,000 shares held in
Northfield Banks 401(k) Plan, and 2,135.578 shares allocated to Mr. Doherty under Northfield
Banks ESOP. |
|
(12) |
|
Includes 2,050 shares held by Ms. Franks child, 15,000 shares held in Northfield Banks
401(k) Plan, and 1,613.547 shares allocated to Ms. Frank under Northfield Banks ESOP. |
|
(13) |
|
Includes 25,000 shares held in Northfield Banks 401(k) Plan and 2,135.578 shares allocated
to Mr. Klein under Northfield Banks ESOP. |
|
(14) |
|
Includes 10,000 shares held jointly with Mr. Widmers spouse, 6,700 shares held by Mr.
Widmers spouse, 4,203 shares held in Mr. Widmers IRA account, 15,000 shares held in
Northfield Banks 401(k) Plan, and 2,088.118 shares allocated to Mr. Widmer under Northfield
Banks ESOP. |
|
(15) |
|
Includes shares of common stock held by Northfield Bancorp, MHC, of which our directors are
also trustees. Excluding shares of common stock held by Northfield Bancorp, MHC, directors
and executive officers beneficially owned 520,395 shares of common stock, or 1.16% of the
outstanding shares. |
DIRECTOR COMPENSATION
On an annual basis, director compensation is reviewed by the Compensation Committee, in
consultation with the Nominating and Corporate Governance Committee. The Compensation Committee
considers, among other things, the size and complexity of the Company, as well as the
responsibilities, marketplace availability of necessary skill sets, and the time commitment
necessary for the Board, its committees, and its committee chairs, to adequately
2
discharge their oversight role and responsibilities. The Compensation Committee utilizes
available survey data and the assistance of a third-party compensation consultant, regarding
director compensation at other comparable financial institutions as part of this process.
In 2007, the Compensation Committee utilized a third-party compensation consultant to assist
the Committee in its evaluation of the components and competitiveness of the Companys director
compensation. Based upon this evaluation, the Committee concluded that the components and level of
director compensation for 2007 were competitive and no change to 2007 director compensation was
deemed necessary. The Compensation Committee also recommended no change to cash compensation for
2008. Directors who are also employees of the Company receive no additional compensation for
service as a director.
The following table sets forth the Director and committee fee structure for the Board and its
standing committees (all of which were due and payable in cash) for the year ended December 31,
2007. Attendance fees, and one-fourth of any annual retainer, are paid on a quarterly basis, in
arrears, unless a director elects to have such fees or a portion thereof, deferred under our
non-qualified deferred compensation plan, described below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominating and |
|
|
|
|
|
|
Board |
|
Corporate |
|
Compensation |
|
Audit |
|
|
of Directors |
|
Governance |
|
Committee |
|
Committee |
Annual Retainer |
|
$ |
30,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Retainer-Chair |
|
|
|
|
|
$ |
3,000 |
|
|
$ |
4,000 |
|
|
$ |
6,000 |
|
|
Per Meeting
Attendance Fee |
|
$ |
1,250 |
|
|
$ |
850 |
|
|
$ |
850 |
|
|
$ |
1,250 |
|
All other committees of the Board receive, in cash, an $850 per meeting attendance fee and an
annual committee chair retainer of $3,000. Commencing in 2008, we established an annual retainer
for our lead director, John J. DePierro, of $3,000.
The following table sets forth for the year ended December 31, 2007, certain information as to
the total remuneration we paid our directors. Mr. Alexander does not receive separate compensation
for his service as a director. The Non-equity incentive plan compensation, Stock awards,
Option awards, Change in pension value and nonqualified deferred compensation earnings and All
other compensation columns have been omitted from the table because no director earned any
compensation during the year ended December 31, 2007, of a type required to be disclosed in those
columns.
|
|
|
|
|
|
|
|
|
Director Compensation Table For the Year Ended December 31, 2007 |
|
|
Fees earned or paid in |
|
|
Name |
|
cash ($) |
|
Total ($) |
Stanley A. Applebaum (1) |
|
|
59,750 |
|
|
|
59,750 |
|
John R. Bowen |
|
|
65,400 |
|
|
|
65,400 |
|
Annette Catino |
|
|
81,150 |
|
|
|
81,150 |
|
Gil Chapman |
|
|
74,350 |
|
|
|
74,350 |
|
John P. Connors, Jr. (1) |
|
|
59,350 |
|
|
|
59,350 |
|
John J. DePierro |
|
|
74,150 |
|
|
|
74,150 |
|
Susan Lamberti |
|
|
66,300 |
|
|
|
66,300 |
|
Albert J. Regen |
|
|
61,900 |
|
|
|
61,900 |
|
Patrick E. Scura, Jr. |
|
|
82,250 |
|
|
|
82,250 |
|
|
|
|
(1) |
|
During 2007, Messrs. Applebaum and Connors provided legal services to or
for the benefit of Northfield Bank. See Transactions With Certain Related Persons
for a discussion of fees received for legal services provided in 2007. |
3
EXECUTIVE COMPENSATION
Compensation Committee Report
The Compensation Committee has reviewed and discussed the section entitled Compensation
Discussion and Analysis included in this proxy statement with management. Based on this review
and discussion, the Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in our Proxy Statement. The members of the
Compensation Committee are: Annette Catino, who serves as Chairman; Gil Chapman; John J. DePierro;
and Patrick E. Scura.
Compensation Discussion and Analysis
This discussion and analysis addresses compensation for 2007 for our named executive officers:
John W. Alexander, Chairman, President and Chief Executive Officer; Steven M. Klein, Executive Vice
President and Chief Financial Officer; Kenneth J. Doherty, Executive Vice President and Chief
Lending Officer; Michael J. Widmer, Executive Vice President of Operations; and Madeline G. Frank,
Senior Vice President and Corporate Secretary. These five executives are referred to in this
discussion as the Named Executive Officers.
Role of the Compensation Committee. The Compensation Committee of the Board of Directors is
responsible for overseeing and making recommendations to the full Board of Directors with respect
to the compensation of the Named Executive Officers, including the Chief Executive Officer. As
part of these duties, the Committee administers the Companys cash incentive compensation plan and
conducts an annual performance review of the Chief Executive Officer and, in consultation with the
Chief Executive Officer, reviews the performance of the other Named Executive Officers. The Board
of Directors has ultimate authority to ratify the compensation of all Named Executive Officers,
including the Chief Executive Officer.
The Compensation Committee also reviews, oversees, and approves the management and
implementation of Northfield Banks employee benefit plans. The Committee has a formal charter
that describes the Committees scope of authority and its duties.
The Compensation Committee consists of four Directors, all of whom are independent as
set forth in the listing requirements for Nasdaq securities. The Nominating and Corporate
Governance Committee of the Board of Directors evaluates the independence of Committee members at
least annually, using the standards contained in Rule 4200. This evaluation, and the determination
that each member of the Committee is independent, was most recently made in March 2008.
Role of Executives in Committee Activities. The executive officers who serve as a resource to
the Compensation Committee are the Chief Executive Officer, the Chief Financial Officer, and the
Director of Human Resources. Executives provide the Compensation Committee with input regarding
Northfield Banks employee compensation philosophy, processes, and decisions for employees other
than Named Executive Officers. This communication assists in the design and alignment of incentive
programs throughout the Company. In addition to providing factual information such as company-wide
performance on relevant measures, these executives articulate managements views on current
compensation programs and processes, recommend relevant performance measures to be used for future
evaluations, and otherwise supply information to assist the Compensation Committee. The Chief
Executive Officer also provides information about individual performance assessments for the other
Named Executive Officers, and expresses to the Compensation Committee his views on the appropriate
levels of compensation for the other Named Executive Officers for the ensuing year. At the request
of the Compensation Committee, the Chief Financial Officer communicates directly with third-party
consultants, providing third-party consultants with Company-specific data and information, and
assisting in the evaluation of the estimated financial impact regarding any proposed changes to the
various components of compensation.
Executives participate in Committee activities purely in an informational and advisory
capacity and have no vote in the Committees decision-making process. The Chief Executive Officer
and Chief Financial Officer do not attend those portions of Compensation Committee meetings during
which their performance is evaluated or their compensation is being determined. No executive
officer other than the Chief Executive Officer attends those
4
portions of Compensation Committee meetings during which the performance of the other Named
Executive Officers is evaluated or their compensation is being determined. In addition, the
Compensation Committee meets in executive session as appropriate.
Use of Consultants. The Compensation Committee periodically engages independent
compensation consultants to assist it in the compensation process for Named Executive Officers.
The consultants are retained by and report directly to the Compensation Committee. The
Compensation Committee places no restrictions on consultants within the scope of contracted
services and such consultants are not engaged by management for any purpose. The consultants
provide expertise and information about competitive trends in the employment marketplace, including
established and emerging compensation practices at other companies. The consultants also provide
proxy statement and survey data, and assist in assembling relevant comparison groups for various
purposes and establishing benchmarks for base salary and cash incentives from the comparison group
proxy statement and survey data. The Committee engaged the firm of Mercer Human Resource
Consulting LLC to serve as its independent compensation consultant in 2006 to assist the Committee
in determining the Named Executive Officers salary and cash incentive targets for 2007.
In the second quarter of 2007, in consideration of the Companys announced initial public
offering, the Compensation Committee reassessed the Companys consulting requirements, and
interviewed independent third-party compensation consultant candidates. Based upon the Committees
evaluation of, among other things, the candidates experience with public companies, especially
initial public offerings of holding companies that were mutually owned, available consultant
resources, and Company time requirements, the Compensation Committee engaged the firm of Pearl
Meyer & Partners to evaluate the Companys compensation program for Named Executive Officers,
including 2007 base salary and cash incentive compensation previously established by the
Compensation Committee. The Compensation Committee also engages the firm of Luse Gorman Pomerenk &
Schick, P.C., primarily to provide legal consultation and assistance related to developing legal
documents, including proxy-related materials, executive employment contracts and benefit plan
documents.
Compensation Objectives and Philosophy. The overall objectives of the Companys
compensation program are to retain, motivate, and reward employees and officers (including the
Named Executive Officers) for performance, and to provide competitive compensation to attract
talent to the Company. The methods used to achieve these goals for Named Executive Officers are
strongly influenced by the compensation and employment practices of our competitors within the
financial services industry, and elsewhere in the marketplace, for executive talent. Other
considerations include each Named Executive Officers individual performance in achieving both
financial and non-financial corporate goals.
Our compensation program is designed to reward the Named Executive Officers based on their
level of assigned management responsibilities, individual experience and performance levels, and
knowledge of our Company. The creation of long-term value is highly dependent on the development
and effective execution of our business strategy by our executive officers.
Factors that influence the design of our executive compensation program include consideration
that:
|
|
|
we operate in a highly regulated industry. We value industry-specific experience
that promotes a safe and sound operation of Northfield Bank; |
|
|
|
|
we value executives with sufficient experience in our markets relating to the
behavior of our customers, products, and investments in various phases of the economic
cycle; |
|
|
|
|
we operate in interest rate and credit markets that are often volatile. We value
disciplined decision-making that respects our business plan but adapts quickly to
change; and |
|
|
|
|
we value the retention and development of performing incumbent executives.
Recruitment of executives can have substantial monetary costs, unpredictable outcomes,
and a disruptive effect on our operations. |
5
Our current compensation program for our Named Executive Officers includes two key components.
The first component is base salary, which is designed to provide a reasonable level of predictable
income commensurate with market standards of the position held. The second component is annual
cash incentives, which are shorter-term in nature and are designed to motivate our executives to
meet or exceed annual performance goals that are detailed in our cash incentive plan and focused on
the strategic objectives of the Company. The Compensation Committee also reviews benefits and
perquisites provided to the Named Executive Officers to ensure that such benefits and perquisites
are competitive and appropriate for the role and responsibilities of the Named Executive Officers.
Prior to the completion of the Companys stock offering in November 2007, the Company was
mutually owned and subject to certain limitations on the components of compensation. The Company
did not have available equity compensation and the components of cash compensation were restricted
by Northfield Banks state banking regulator. Prior to Northfield Bank converting to a
federally-chartered savings bank in November 2007, cash incentive compensation was limited to 25%
of base salary for bank employees who also served on the Board of Directors. The Companys Chief
Executive Officer was subject to this limitation. The Compensation Committee sought to align the
cash incentive award plan for Named Executive Officers and worked within this limitation for all
other Named Executive Officers in 2007.
Assembling the Components of 2007 Compensation. The Compensation Committee analyzes the level
and relative mix of each of the principal components (base salary and annual cash incentives) of
the compensation program for Named Executive Officers. The Chief Executive Officer also makes
recommendations to the Committee relating to compensation to be paid to the Named Executive
Officers other than himself. Based on this analysis, the Compensation Committee approves, and the
full Board of Directors ratifies, each Named Executive Officers compensation.
The Compensation Committee seeks to create what it believes is an appropriate mix of base
salary and short-term annual cash incentives in delivering the Named Executive Officers total cash
compensation. These components are evaluated in relation to benchmark data derived from
information reported in publicly-available proxy statements and from market survey data.
Base salary is designed to provide a reasonable level of predictable income commensurate with
market standards of the position held adjusted for specific job responsibilities assigned,
individual experience, and demonstrated performance. Named Executive Officers are eligible for
periodic adjustments in their base salary as a result of individual performance, updated market
analysis or significant changes in their duties and responsibilities. The Compensation Committee
annually reviews and approves any base salary changes for Named Executive Officers, including our
Chief Executive Officer.
In the fourth quarter of 2006, the Compensation Committee evaluated the total cash
compensation of our Chief Executive Officer and other Named Executive Officers. The Compensation
Committee reviewed peer proxy and survey data provided by Mercer Human Resource Consulting LLC and
formulated a recommendation for the base salary for each Named Executive Officers compensation in
relation to that information. For 2007, the total cash compensation for the Named Executive
Officers was targeted using approximately the 65th percentile of the peer proxy and
survey data. This target was established based on the recent financial performance of Northfield
Bank, each Named Executive Officers estimated value in the marketplace, and the Committees view
of each Named Executive Officers critical role in the future success of the Company. Deviations
from the 65th percentile target are reflective of an executives experience and specific
responsibilities in our organization. No adjustments were made from the 65th percentile
total cash compensation targets for Mr. Alexander, Mr. Klein, Mr. Doherty, and Ms. Frank. Mr.
Widmers total targeted cash compensation was increased by approximately 15% from the
65th percentile target in consideration of his role and responsibilities in the Company.
6
In the second quarter of 2006, the Compensation Committee selected the following companies for
use in benchmarking Mr. Alexanders (and the other Named Executive Officers) 2007 compensation
package:
|
|
|
Capital Crossing Bank
|
|
Provident New York Bancorp |
Center Bancorp, Inc.
|
|
State Bancorp, Inc. |
Century Bancorp, Inc.
|
|
Sterling Financial Corporation |
Dime Community Bancshares, Inc.
|
|
Suffolk Bancorp |
Flushing Financial Corporation
|
|
The First of Long Island Corporation |
Intervest Bancshares Corporation
|
|
TrustCo Bank Corp NY |
OceanFirst Financial Corp, Inc.
|
|
Westfield Financial, Inc. |
PennFed Financial Services, Inc. |
|
|
The companies in this group are all in the financial services industry. They were selected
primarily on the basis of asset size, geography, and product and service offerings. Compensation
information for companies included in the proxy peer group was obtained by Mercer Human Resource
Consulting LLC by reviewing publicly available proxy statements and other relevant filings made
with securities regulatory authorities.
Based upon the peer proxy and survey data, the Compensation Committee targeted 2007 total cash
compensation for Mr. Alexander, Mr. Klein, Mr. Doherty, Mr. Widmer and Ms. Frank at $900,000,
$360,000, $336,000, $264,000, and $204,000, respectively. The Compensation Committee then
evaluated the mix of total cash compensation between base salary and incentive compensation. As a
mutual organization competing against public companies for executive talent, and working within the
25% maximum limitation established on incentive cash compensation as a percentage of base salary,
the Compensation Committee placed greater focus on base salary to motivate and retain executive
talent. For 2007, the Compensation Committee set the cash incentive compensation target at 20% of
base salary for each Named Executive Officer.
Based upon the 20% incentive cash compensation target, the Compensation Committee established
the 2007 base salaries of Mr. Alexander, Mr. Klein, Mr. Doherty, Mr. Widmer, and Ms. Frank at
$750,000, $300,000, $280,000, $220,000, and $170,000, respectively. The 2007 base salaries
represented a percentage increase of 11%, 45%, 32%, 25%, and 9%, respectively, from the 2006 base
salary levels. The percentage increases in 2007 base salaries were primarily a function of the
Companys adjustment to current market cash compensation levels based upon peer proxy and survey
data, and the limitation of the percentage of total cash compensation that could be in the form of
incentive compensation.
The process of assembling target total cash compensation packages for the Named Executive
Officers is forward-looking in nature. The at-risk annual incentive cash award component is based
on the expectation that target levels of performance will be achieved over the following year.
Actual performance over the applicable measurement period may exceed or fall short of the targets
resulting in the Named Executive Officer receiving an annual incentive cash award that is above or
below the initial targeted level. Annual incentive cash awards granted in prior years are not
taken into account by the Compensation Committee in the process of setting incentive compensation
targets for the current year. The Committee believes that doing so would be inconsistent with the
underlying reasons for the use of at-risk compensation. If current-year awards were increased to
make up for below-target performance in prior years or decreased to account for above-target
performance in prior years, the Committee would be diluting or eliminating the link between
performance and reward.
The Compensation Committee considers, but does not give undue weight to, the tax treatment of
each component of compensation. Under Section 162(m) of the Internal Revenue Code, annual
compensation paid to a Named Executive Officer is not deductible if it exceeds $1 million unless it
qualifies as performance-based compensation as defined in the Internal Revenue Code and related
tax regulations. Base salary is not a form of performance-based compensation. Many fringe
benefits and perquisites also do not qualify as performance-based compensation. Annual incentive
cash awards may qualify as a form of performance-based compensation under the income tax
regulations. In 2007 and for prior years, as a mutual organization, we have not been subject to
tax deduction limitations under Section 162(m).
7
In the second quarter of 2007, in connection with the adoption of the Companys stock issuance
plan, the Compensation Committee engaged Pearl Meyer & Partners to assist it in evaluating its
executive compensation program. Based upon this evaluation, which included a review of updated
peer proxy and survey data provided by Pearl Meyer & Partners, the Compensation Committee
recommended to the Board of Directors that our current compensation program and related base salary
compensation levels remain unchanged for all Named Executive Officers until equity benefit plans,
other than the Employee Stock Ownership Plan, are evaluated.
The Compensation Committee also reviewed the 2007 cash incentive compensation targets
previously established in 2006, and reduced the targeted cash incentive award from 20% of base
salary to 10% of base salary, for each Named Executive Officer. The target was reduced based upon
current proxy and survey data, the Compensation Committees objective of managing total cash
compensation, and the recognition of potential future equity awards. Of the total targeted 10%
cash incentive award, 70% (i.e., 7% of base salary) was a base award which would be earned based
upon the achievement of a Company-wide performance measure. In consideration of the Companys
stock offering and the effort and time necessary to effectively deploy the Companys capital, the
Compensation Committee established the achievement of at least 90% of budgeted net income, as
approved by the Board of Directors, as the Company-wide performance measure for determining payment
of the base award.
For purposes of the individual awards, each Named Executive Officer, including the Chief
Executive Officer, was also evaluated on several individual performance measures set by the
Compensation Committee that relate to the strategic business objectives of the Company. The degree
to which a Named Executive Officer satisfied these individualized measures was taken into account
in determining the amount to be paid out to that executive as an individual award. The remaining
30% of the total targeted 10% cash award (i.e., 3% of base salary) was established as an
individual award target for 2007 for each Named Executive Officer.
For purposes of the individual awards, the primary goals for Mr. Alexander and the other
Named Executive Officers were: successful removal of the regulatory agreement entered into with the
Federal Deposit Insurance Corporation and the New York State Banking Department; successful
completion of the stock issuance plan; and formalization of a strategic business plan. The degree
to which Mr. Alexander and the other Named Executive Officers satisfied these individualized
measures was taken into account in determining the amount to be paid out as their individual
award.
After the conclusion of the year, actual performance was evaluated against the Company-wide
performance measure. The results of that comparison were used to calculate the amount of base
award earned. The Chief Executive Officer may suggest that the Committee consider adjustments to
reported earnings that are designed to eliminate the effects of extraordinary or unusual events.
Some events for which these kinds of adjustments are made do recur from time to time, but are
nevertheless considered to be extraneous to the conduct of normal day-to-day banking business.
In February 2008, the Compensation Committee evaluated achievement of the base award
criteria of net income of at least 90% of budgeted net income, as approved by the Board of
Directors. The Compensation Committee eliminated the effect of the initial public offering on the
reported financial results and certain income tax items, primarily related to the completion of a
tax audit by the state of New York. Based on the Companys 2007 performance, the specified
performance target measure was achieved and the Compensation Committee determined that the base
award was earned by Mr. Alexander and the other Named Executive Officers.
Mr. Alexanders attainment of his individual goals and the other Named Executive Officers
attainment of their individual goals was evaluated by the Compensation Committee in its annual
evaluation of each Named Executive Officers performance, and in February 2008, the Compensation
Committee concluded that Mr. Alexander and the other Named Executive Officers had substantially
achieved each of their individual performance goals and determined that the full individual award
was earned by Mr. Alexander and each of the other Named Executive Officers.
All Compensation Committee actions taken with respect to Mr. Alexanders and the other Named
Executive Officers compensation are reviewed and ratified by the full Board of Directors. The
Committees recommendations regarding Mr. Alexanders and each of the other Named Executive
Officers 2007 base salary
8
were approved by the full Board of Directors in December 2006. The Committees approval of
the annual incentive cash awards for Mr. Alexander and each of the other Named Executive Officers
was ratified by the full Board of Directors in February 2008.
We also provide to our Named Executive Officers certain broad-based benefits available to all
qualifying employees of the Company, as well as fringe benefits and perquisites, and restoration
and other termination benefits, not generally available to all qualifying employees of the Company.
The following summarizes the significant broad-based benefits in which the Named Executive
Officers were eligible to participate in 2007:
|
|
|
a defined contribution 401(k) retirement plan and discretionary profit-sharing plan; |
|
|
|
|
an employee stock ownership plan; |
|
|
|
|
medical coverage (all employees share between 20% to 30% of the cost, depending on
their elections); |
|
|
|
|
pre-tax health and dependent care spending accounts; and |
|
|
|
|
group life insurance coverage (death benefit capped at $750,000, with the value of
the death benefit over $50,000 being reported as taxable income to all employees). |
Upon completion of the initial public offering on November 7, 2007, the Northfield Bank
Employee Stock Ownership Plan (the ESOP) was established effective January 1, 2007. The ESOP
allocates a certain number of shares of the Companys common stock on an annual basis which are
allocated among plan participants on the basis of eligible compensation in the year of allocation,
subject to Internal Revenue Code limitations. All eligible employees, including Named Executive
Officers, participate in the plan and received an allocation of common stock for 2007.
As a newly public company, we are not permitted by our primary federal regulator (the Office
of Thrift Supervision) to implement any other stock compensation plans earlier than six-months
after completion of our initial public offering.
In addition to the broad-based benefits described above, the specifically Named Executive
Officers received the following fringe benefits and perquisites in 2007:
|
|
|
all Named Executive Officers may participate in a non-qualified deferred
compensation plan. The plan provides restoration benefits capped under Northfield
Banks broad-based benefits due to Internal Revenue Service salary limitations or
limitations due to participation requirements under tax-qualified plans. The plan also
permits elective salary and cash incentive award deferrals; |
|
|
|
|
Messrs. Klein, Doherty, and Widmer received a monthly automobile allowance of $660; |
|
|
|
|
all Named Executive Officers pay for and are provided with reimbursement for
long-term disability insurance coverage; |
|
|
|
|
Messrs. Alexander, Klein, Doherty, and Widmer are reimbursed for appropriate spousal
expenses for attendance at business events; and |
|
|
|
|
Messrs. Alexander, Klein, Doherty, and Widmer are provided a cellular phone
allowance of $60 per month for business usage. |
The Company incurs the expense of one country club membership and related expenses for Mr.
Alexander. Mr. Alexander reimburses Northfield Bank for personal expenses pertaining to club
usage. In lieu of a monthly
9
automobile allowance, Mr. Alexander receives use of an automobile
(including all operating expenses) leased by Northfield Bank for business and personal use.
Personal use of the automobile is reported as taxable income to Mr. Alexander. In addition,
Northfield Bank pays an annual premium on a whole-life insurance policy for the benefit of Mr.
Alexander.
The Compensation Committee reviews the other components of executive compensation (broad-based
benefits and executive perquisites) on an annual basis. Changes to the level or types of
broad-based benefits within these categories, including considerations relating to the addition or
elimination of benefits and plan design changes, are made by the Compensation Committee on an
aggregate basis with respect to the group of employees entitled to those benefits, and not
necessarily with reference to a particular Named Executive Officers compensation. Decisions about
these components of compensation are made without reference to the Named Executive Officers salary
and annual cash incentives, as they involve issues of more general application and often include
consideration of trends in the industry or in the employment marketplace.
In addition to the components of executive compensation described above, Messrs. Alexander,
Klein Doherty, and Widmer are each parties to employment agreements with Northfield Bank. See
Employment Agreements for a description of these agreements and Potential Payments to Named
Executive Officers for information about potential payments to these individuals upon termination
of their employment with Northfield Bank.
The executive employment agreements are designed to give the Company the ability to retain the
services of the designated executives while reducing, to the extent possible, unnecessary
disruptions to Northfield Banks operations. In addition, the Compensation Committee believes that
the employment agreements better align the interests of the executive with those of our
stockholders. The Compensation Committee believes that these agreements allow executives to more
objectively evaluate opportunities for stockholders without causing undue personal financial
conflicts.
The Compensation Committee reviewed prevailing market practices, consulted with its
independent compensation consultant on the competitiveness and reasonableness of the terms of the
agreements, and negotiated the agreements with the assistance of outside counsel. The Compensation
Committee believes such agreements are common and necessary to retain executive talent.
The agreements are for a three-year period, are reviewed for renewal annually by the
Compensation Committee of the Board of Directors, and provide for salary and incentive cash
compensation payments, as well as additional post-employment benefits, primarily health benefits,
under certain conditions, as defined in the employment agreements. See Employment Agreements for
further discussion.
Exceptions to Usual Procedures. The Compensation Committee may recommend to the full Board
of Directors that they approve the payment of special cash compensation to one or more Named
Executive Officers in addition to payments approved during the normal annual compensation-setting
cycle. The Committee may make such a recommendation if it believes it would be appropriate to
reward one or more Named Executive Officers in recognition of contributions to a particular
project, or in response to competitive and other factors that were not addressed during the normal
annual compensation-setting cycle. The Compensation Committee did not make any such recommendation
related to our Named Executive Officers for 2007.
The Committee will make off-cycle compensation decisions and recommendations whenever a
current employee is promoted to executive officer status, or an executive officer is hired. The
Committee may depart from the compensation guidelines it would normally follow for executives in
the case of outside hires.
Committee Actions During 2007 Affecting 2008 Compensation. In the second quarter of 2007, the
Compensation Committee made a determination that our Named Executive Officers base salaries will
remain unchanged in 2008, based upon their current role and responsibilities, until equity benefit
plans (other than the ESOP) are evaluated. The Compensation Committee made this determination
based upon consideration of currently available proxy and survey data provided by Pearl Meyers & Partners and the opportunity to review
our current compensation components to better align the interests of management with those of
stockholders, given the elements
10
of compensation that may be available in the future. In addition,
in consideration of Northfield Banks conversion to a federal savings bank, and the elimination of
the state banking regulatory limitation of cash incentive compensation for our Chief Executive
Officer, the Compensation Committee reduced Mr. Alexanders base salary to its 2006 level of
$676,000. Mr. Alexander agreed to this revision and his employment agreement was modified
accordingly in January 2008. In December of 2007, the Compensation Committee approved a 2008 cash
incentive compensation plan, with a similar structure to our 2007 cash incentive compensation plan.
The plan contains similar terms and conditions as our prior year plan with a base award that can
be earned based upon the Company achieving at least 90% of Board approved budgeted net income
before income taxes, and individual awards that are based on the achievement of goals aligned
with the Companys strategic objectives.
Compensation Tables
Summary Compensation Table. The following table sets forth for the years ended December 31,
2007, and 2006, certain information as to the total remuneration we paid to Mr. Alexander, who
serves as Chairman of the Board, President and Chief Executive Officer, Mr. Klein, who serves as
Executive Vice President and Chief Financial Officer, and the three most highly compensated
executive officers of Northfield Bancorp, Inc. or Northfield Bank other than Messrs. Alexander and
Klein. The Stock awards, Option awards, and Change in pension value and nonqualified deferred
compensation earnings columns have been omitted from the Summary Compensation Table because no
listed individual earned any compensation during the years ended December 31, 2007 or 2006 of a
type required to be disclosed in those columns.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Compensation Table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
incentive plan |
|
All other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation |
|
compensation |
|
|
Name and principal position |
|
Year |
|
Salary ($) |
|
Bonus ($) |
|
($) |
|
($)(1) |
|
Total ($) |
John W. Alexander, |
|
|
2007 |
|
|
|
750,000 |
|
|
|
|
|
|
|
75,000 |
|
|
|
165,896 |
|
|
|
990,896 |
|
Chairman of the Board, |
|
|
2006 |
|
|
|
676,000 |
|
|
|
|
|
|
|
169,000 |
|
|
|
120,212 |
|
|
|
965,212 |
|
President and Chief
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven M. Klein, Executive |
|
|
2007 |
|
|
|
300,000 |
|
|
|
|
|
|
|
30,000 |
|
|
|
54,620 |
|
|
|
384,620 |
|
Vice President and Chief |
|
|
2006 |
|
|
|
206,700 |
|
|
|
20,670 |
|
|
|
72,345 |
|
|
|
28,388 |
|
|
|
328,103 |
|
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth J. Doherty, |
|
|
2007 |
|
|
|
280,000 |
|
|
|
|
|
|
|
28,000 |
|
|
|
52,276 |
|
|
|
360,276 |
|
Executive Vice President |
|
|
2006 |
|
|
|
212,000 |
|
|
|
|
|
|
|
69,960 |
|
|
|
29,550 |
|
|
|
311,510 |
|
and Chief Lending Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Widmer, |
|
|
2007 |
|
|
|
220,000 |
|
|
|
|
|
|
|
22,000 |
|
|
|
43,642 |
|
|
|
285,642 |
|
Executive Vice President, |
|
|
2006 |
|
|
|
176,200 |
|
|
|
100,000 |
(2) |
|
|
137,670 |
(2) |
|
|
27,749 |
|
|
|
441,619 |
|
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Madeline G. Frank, Senior |
|
|
2007 |
|
|
|
170,000 |
|
|
|
|
|
|
|
17,000 |
|
|
|
27,824 |
|
|
|
214,824 |
|
Vice President and |
|
|
2006 |
|
|
|
156,000 |
|
|
|
|
|
|
|
39,000 |
|
|
|
16,181 |
|
|
|
211,181 |
|
Corporate Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(footnotes begin on following page)
11
|
|
|
(1) |
|
The individuals listed in this table participate in certain medical and dental coverage
plans, not disclosed in the Summary Compensation Table, that are generally available to
salaried employees and do not discriminate in scope, terms and operation. The amount shown
for each individual for the year ended December 31, 2007 includes our direct out-of-pocket
costs (reduced for Mr. Alexander, in the case of the figures shown for automobiles, by the
amount that we would otherwise have paid in cash reimbursements during the year for business
use) for the following items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Alexander |
|
|
Mr. Klein |
|
|
Mr. Doherty |
|
|
Mr. Widmer |
|
|
Ms. Frank |
|
Employer contributions
to qualified and
non-qualified deferred
compensation plans
(including 401(k), ESOP
and non-qualified
deferred compensation
plans) |
|
$ |
106,965 |
|
|
$ |
42,117 |
|
|
$ |
39,655 |
|
|
$ |
32,770 |
|
|
$ |
25,305 |
|
Life insurance premiums |
|
|
38,900 |
|
|
|
1,786 |
|
|
|
2,748 |
|
|
|
1,522 |
|
|
|
2,022 |
|
Long-term disability |
|
|
2,419 |
|
|
|
968 |
|
|
|
903 |
|
|
|
710 |
|
|
|
497 |
|
Automobile |
|
|
5,932 |
|
|
|
7,920 |
|
|
|
7,920 |
|
|
|
7,920 |
|
|
|
|
|
Club dues |
|
|
9,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Travel expense for
spouse to accompany on
business travel |
|
|
1,335 |
|
|
|
1,109 |
|
|
|
330 |
|
|
|
|
|
|
|
|
|
Cell phone reimbursement |
|
|
720 |
|
|
|
720 |
|
|
|
720 |
|
|
|
720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
165,896 |
|
|
$ |
54,620 |
|
|
$ |
52,276 |
|
|
$ |
43,642 |
|
|
$ |
27,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Mr. Widmer and Northfield Bank entered into an employment agreement on December 31, 2002 in
connection with Northfield Bancorp, Inc.s acquisition of Liberty Bancorp, Inc. and Liberty
Bank. The agreement expired on December 31, 2006. The agreement provided for a fixed bonus
of $100,000 for the year ended December 31, 2006 and a performance bonus of $76,000 for the
year ended December 31, 2006, if the return on average assets of the acquired assets of
Liberty Bancorp, Inc., as defined in the agreement, was equal to or exceeded 0.50% in 2006.
The performance target was reviewed by the Chief Executive Officer in January 2007 and it was
determined that the performance target was achieved. Payment of $176,000 was made in
January 2007. Bonus payments made to Mr. Widmer under his 2002 employment agreement did not
affect his ability to earn either a base award or individual award under our 2006 cash
incentive plan. |
Plan-Based Awards. As further discussed in Compensation Discussion and AnalysisAssembling
the Components of 2007 Compensation, the Company maintained a plan-based cash incentive award
program for its Named Executive Officers for the year ended December 31, 2007. The Company
currently has no plan-based equity incentive award programs and therefore Outstanding Equity
Awards at Fiscal Year-End and Option Exercises and Stock Vested tables are not presented.
The following table sets forth for the year ended December 31, 2007 certain information as to
grants of plan-based cash awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grants Of Plan-Based Awards For The Year Ended December 31, 2007 |
|
|
|
|
|
|
Estimated future payouts under non-equity incentive |
|
|
|
|
|
|
plan awards |
Name |
|
Grant date |
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
John W. Alexander |
|
|
9/20/07 |
|
|
|
|
|
|
|
75,000 |
|
|
|
75,000 |
|
|
Steven M. Klein |
|
|
9/20/07 |
|
|
|
|
|
|
|
30,000 |
|
|
|
30,000 |
|
|
Kenneth J. Doherty |
|
|
9/20/07 |
|
|
|
|
|
|
|
28,000 |
|
|
|
28,000 |
|
|
Michael J. Widmer |
|
|
9/20/07 |
|
|
|
|
|
|
|
22,000 |
|
|
|
22,000 |
|
|
Madeline G. Frank |
|
|
9/20/07 |
|
|
|
|
|
|
|
17,000 |
|
|
|
17,000 |
|
12
Nonqualified Deferred Compensation. The following table sets forth certain information with
respect to our nonqualified deferred compensation plans at and for the year ended December 31,
2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified Deferred Compensation At And For The Year Ended December 31, 2007 |
|
|
Executive |
|
Registrant |
|
|
|
|
|
|
|
|
contributions in |
|
contributions in |
|
Aggregate |
|
Aggregate |
|
Aggregate balance |
|
|
last fiscal year ($) |
|
last fiscal year ($) |
|
earnings in last |
|
withdrawals/ |
|
at last fiscal year |
Name |
|
(1) |
|
(1) |
|
fiscal year ($) (2) |
|
distributions ($) |
|
end ($) (3) |
John W. Alexander |
|
|
150,000 |
|
|
|
72,911 |
|
|
|
201,251 |
|
|
|
|
|
|
|
1,543,569 |
|
|
Steven M. Klein |
|
|
34,500 |
|
|
|
12,913 |
|
|
|
6,188 |
|
|
|
|
|
|
|
106,863 |
|
|
Kenneth J. Doherty |
|
|
26,000 |
|
|
|
6,325 |
|
|
|
17,741 |
|
|
|
|
|
|
|
145,884 |
|
|
Michael J. Widmer |
|
|
|
|
|
|
339 |
|
|
|
6,359 |
|
|
|
|
|
|
|
55,768 |
|
|
Madeline G. Frank |
|
|
5,950 |
|
|
|
|
|
|
|
2,276 |
|
|
|
|
|
|
|
70,854 |
|
|
|
|
(1) |
|
Contributions included in the Executive contributions in last fiscal year and the
Registrant contributions in last fiscal year columns are included as compensation for the
listed individuals in the Summary Compensation Table. |
|
(2) |
|
Amounts included in the Aggregate earnings in last fiscal year are not included as
compensation for the listed individuals in the Summary Compensation Table as such earnings are
not preferential or above market. |
|
(3) |
|
Amounts included in the Aggregate balance at last fiscal year end previously were reported
as compensation for the listed individuals except to the extent that such balances reflect
earnings that were not preferential or above market. |
Northfield Bank maintains a non-qualified deferred compensation plan to provide for the
elective deferral of non-employee director fees by members of the participating Board of Directors,
and the elective deferral of compensation and/or performance-based compensation payable to eligible
employees of Northfield Bancorp, MHC and Northfield Bank. A designated amount of director fees,
compensation and/or performance based compensation may be deferred until one of the specified
events in the plan occurs, which permits all or part of the monies so deferred, together with
earnings, to be distributed to participants or their beneficiaries. In addition, the plan provides
eligible employees of Northfield Bank with supplemental retirement income from Northfield Bank when
such amounts are not payable under the benefit and/or contribution formulas of the Retirement Plan
of Northfield Bank in RSGroup Trust Company trust (the Retirement Plan) and/or the Northfield
Bank 401(k) Savings Plan in RSGroup Trust Company trust (the 401(k) Savings Plan), due to
reductions and other limitations imposed under the Internal Revenue Code.
Members of the Board of Trustees of Northfield Bancorp, MHC, the Boards of Directors of
Northfield Bancorp, Inc. or Northfield Bank, and certain employees are eligible to participate in
the plan. Eligible trustees, directors or employees become participants upon agreeing in a written
enrollment agreement to defer any portion of their trustee fees, director fees, compensation,
and/or performance-based compensation. Each participant may request that his or her deferred
compensation account be adjusted for gains and losses as if invested in any of the investment
options deemed available by Northfield Bancorp, MHC or Northfield Bank, in their sole discretion,
or alternatively, in any combination of then-available investment options. A participant may
request a change to his or her investment allocation deemed available under the plan up to two
times per year. In the event any participant fails to direct the investment of his or her deferred
compensation account, or to the extent the employer chooses not to honor the participants request,
the deferred compensation account will be deemed to bear interest at the rate prevailing for
30-year United States Treasury Bonds.
With respect to amounts of deferred trustee or director fees, deferred compensation or
performance-based compensation, distributions will be made under the plan in the event of the
participants retirement, death, termination due to disability, separation from service prior to
the participants retirement date, upon the establishment of an unforeseeable emergency, upon a
change in control, or upon the attainment of a specific date of distribution, in a single lump sum
or in up to 15 annual installment payments, as designated by the participant in his or her
enrollment agreement. In the case of an unforeseeable emergency, the amounts distributed will not
exceed the amounts necessary to satisfy the emergency plus an amount necessary to pay any taxes
owed on the distribution. In the event the participant fails to designate a payment schedule on
his enrollment agreement or if the entire balance credited to the participants account is less
than $10,000, payment will be made in a single lump sum. In the event a
13
participant dies before receiving the full amount of his benefit, the remaining amounts will
be paid to the participants designated beneficiary according to the participants form of election
or, if no designated beneficiary at the time of the participants death, to the participants
estate in a single lump sum. Distributions to certain specified employees on account of their
separation from service may be delayed for six months if necessary to comply with Internal Revenue
Code Section 409A.
The non-qualified deferred compensation plan also provides an additional supplemental
retirement income benefit that augments the benefits paid to one former employee under the defined
benefit plan of Northfield Bank that was previously terminated. The former employees
beneficiaries are receiving benefits under this portion of the plan. No present employee and no
individual listed in the Summary Compensation Table have an accrued benefit under this portion of
the non-qualified deferred compensation plan.
In addition, the non-qualified deferred compensation plan provides for benefits which
supplement those paid under the 401(k) Savings Plan in the event of normal, early or postponed
retirement, death or termination of service. Such benefits will be equal to the sum of: (i) the
maximum amount of employer matching contributions provided to a participant each calendar year,
assuming a participants maximum contributions, reduced by the amount of employer matching
contributions made for the participant under the 401(k) Savings Plan for such year, adjusted by
gains and losses; (ii) commencing January 1, 2000, the amount of employer matching contributions
not credited to a participants 401(k) Savings Plan account as a result of an employer error,
adjusted by gains and losses, if any; and (iii) the maximum amount of discretionary employer
contributions that would be provided to a participant under the 401(k) Savings Plan, assuming an
allocation without taking into account the limitations imposed by the Internal Revenue Code,
reduced by the amount of discretionary employer contributions actually made to a participant under
the 401(k) Savings Plan for each such year, adjusted by gains and losses, if any. Benefits will be
equal to the value of all amounts credited to the participants deferral credit account, and will
be payable in accordance with the participants enrollment agreement for deferral of compensation.
In the event of a participants death, a single lump sum survivors benefit will be paid to the
participants designated beneficiary, provided, however, if the beneficiary is the participants
surviving spouse, such benefit may be paid in an alternative form if elected by the participant.
The non-qualified deferred compensation plan is considered an unfunded plan for tax and
Employee Retirement Income Security Act purposes. All obligations owing under the plan are payable
from the general assets of Northfield Bank and Northfield Bancorp, MHC, and are subject to the
claims of Northfield Banks or Northfield Bancorp, MHCs creditors.
Short- and Long-Term Disability
Named Executive Officers and certain other members of senior management at Northfield Bank
will be paid their full salary for the duration of any period of short-term disability, up to 26
weeks. Senior management receives this benefit in lieu of the ability to bank paid time off for
future use, which is only available to employees of Northfield Bank who are not senior management.
With respect to long-term disability, senior management employees are required to purchase
long-term disability coverage and Northfield Bank provides such persons a bonus payment in
recognition of their payment of such coverage. The amount of the bonus is in the sole discretion
of Northfield Bank.
Life Insurance Coverage
Employees of Northfield Bank receive life insurance coverage of up to three times salary, if
hired before January 1, 2003, and up to two times salary, if hired on or after January 1, 2003.
Such life insurance coverage is generally capped at $500,000. However, in the case of senior
management, such life insurance coverage is capped at $750,000.
401(k) Savings Plan
Northfield Bank maintains the 401(k) Savings Plan, which is a tax-qualified defined
contribution plan with a salary deferral feature under Section 401(k) of the Internal Revenue Code.
Salaried employees, who have
14
completed at least one year of eligibility service, as defined in the plan, are eligible to
participate in the plan. Employees who are paid on an hourly basis, employees who are paid
exclusively on a commission basis, leased employees or employees covered by a collective bargaining
agreement are not eligible to participate in the 401(k) Savings Plan. Eligible employees may
contribute from 2% to 15% of their base salary to the 401(k) Savings Plan on a pre-tax basis each
year, subject to the limitations of the Internal Revenue Code (for 2007, the limit was $15,500,
exclusive of any catch-up contributions). Employees who have been making before-tax contributions
for less than 36 months will receive an employer matching contribution equal to 25% of their
before-tax contributions, up to the first 6% of their base salary contributed. Employees who have
participated for 36 or more months will receive an employer matching contribution equal to 50% of
their contribution, up to the first 6% of their base salary contributed. In addition, we may make
discretionary employer contributions on behalf of eligible employees.
Prior to July 1, 2007, the employer matching contribution for employees with less than 36
months of participation was 50% of their before-tax contributions, up to the first 6% of their base
salary contributed. For those who have participated for 36 or more months the employer matching
contribution was equal to 100% of their contribution, up to the first 6% of their base salary
contributed.
In connection with the adoption of the Companys stock issuance plan, the 401(k) Savings Plan
was amended to permit employees to acquire stock of Northfield Bancorp, Inc. with their account
balances.
Employee Stock Ownership Plan and Trust
We implemented an ESOP in connection with our initial stock offering. As part of the stock
offering, the ESOP trust borrowed funds from Northfield Bancorp, Inc. and used those funds to
purchase 1,756,279 shares of common stock of Northfield Bancorp, Inc. The collateral for the loan
is the common stock purchased by the ESOP. The loan will be repaid principally from discretionary
contributions made by Northfield Bank to the ESOP over a period of up to 30 years. The loan
documents provide that the loan may be repaid over a shorter period, without penalty for
prepayments. The interest rate on the loan equals the prime interest rate as of closing of the
stock offering, and adjusts annually at the beginning of each calendar year. Shares purchased by
the ESOP are held in a suspense account for allocation among participants as the loan is repaid.
Shares released from the suspense account are allocated among ESOP participants on the basis
of compensation in the year of allocation, subject to Internal Revenue Code limitations. Benefits
under the plan vest at the rate of 20% per year of credited service beginning in the second year of
credited service so that a participant with six years of credited service will become fully vested.
Credit is given for vesting purposes to participants for years of service with Northfield Bank
prior to the adoption of the plan. Credit is also given to those employees who were employed at
Liberty Bank at the time of its acquisition by Northfield Bank for their years of service at
Liberty Bank. A participants interest in his account under the plan fully vests in the event of
termination of service due to a participants normal retirement, death, disability, or upon a
change in control (as defined in the plan). Vested benefits will be payable generally in the form
of common stock, or to the extent participants accounts contain cash, benefits will be paid in
cash. Northfield Banks contributions to the ESOP are discretionary, subject to the loan terms and
tax law limits. Therefore, benefits payable under the employee stock ownership plan cannot be
estimated. We are required to record compensation expense each year in an amount equal to the fair
market value of the shares released from the suspense account. In the event of a change in
control, the ESOP will terminate.
Supplemental Employee Stock Ownership Plan
In connection with our initial stock offering, Northfield Bank established the Northfield Bank
Supplemental Employee Stock Ownership Plan (the Supplemental ESOP). The Supplemental ESOP is a
benefit restoration plan that provides additional cash benefits at retirement or other termination
of employment (or upon a change in control) to participants who are key employees, who are approved
by the Compensation Committee and whose benefits under the tax-qualified ESOP, described above, are
limited by tax law limitations applicable to tax-qualified plans. Messrs. Alexander, Klein, and
Doherty are the current participants in this plan. The Supplemental ESOP credits each participant
who also participates in the tax-qualified ESOP with an annual amount equal to the sum of the
difference (expressed in dollars) between (a) the number of shares of common stock of Northfield
Bancorp, Inc. that would have been allocated to the participants account in the employee stock
ownership plan, but
15
for the tax law limitations, plus earnings thereon, and (b) the actual number of shares
allocated to the participants account in the employee stock ownership plan plus earnings thereon.
In each case, the number of shares will be multiplied by the fair market value of the shares on the
allocation date to determine the annual allocation amount. Each participant is permitted to make
investment recommendations for the annual amount credited to his or her account among a broadly
diversified group of mutual funds selected for investment by a committee appointed by Northfield
Banks Board of Directors to administer the Supplemental ESOP. Northfield Bank has established a
rabbi trust to hold assets attributable to the Supplemental ESOP to informally fund its benefit
obligation. Northfield Bank, at its discretion, may account for the Supplemental ESOP solely as
bookkeeping entries. Whether or not a rabbi trust is established, the participants account value
is based on the value of the investments in which the participant invests, or is deemed to invest,
his account. Benefits distributed to participants from the Supplemental ESOP will be payable, in
cash, in a lump sum upon the death of the participant, the participants separation from service or
disability (as those terms are defined in the Supplemental ESOP), or upon the occurrence of a
change in control (as that term is defined in the Supplemental ESOP) of Northfield Bank or
Northfield Bancorp, Inc.
Pension Benefits
None of the individuals listed in the Summary Compensation Table had accumulated pension
benefits either at or during the year ended December 31, 2007.
Employment Agreements
Northfield Bank has entered into substantially similar employment agreements with each of
Messrs. Alexander, Klein, Doherty, and Widmer. The employment agreements with Messrs. Alexander
and Widmer are dated as of January 3, 2008. The original employment agreements with Messrs. Klein
and Doherty are dated as of July 1, 2006, and have been subsequently renewed in accordance with the
terms of the agreements. Northfield Bancorp, Inc. (formerly Northfield Holdings Corp.) is a
signatory to each of the agreements for the sole purpose of guaranteeing payments thereunder. Each
of these agreements has an initial term of three years. Each year, on the anniversary date of
these agreements, the employment agreements renew for an additional year so that the remaining term
will be three years unless notice of nonrenewal is provided to the executive prior to such
anniversary date. The Compensation Committee of the Board of Directors conducts an annual
performance evaluation of each executive for purposes of determining whether to renew the
employment agreement. The Compensation Committee also evaluates the terms and conditions of the
agreements prior to renewal, in consultation with an independent third party compensation
consultant, to determine that such terms and conditions are competitive with the market for the
designated positions.
Base salaries for Messrs. Alexander, Klein, Doherty, and Widmer on December 31, 2007 were
$750,000, $300,000, $280,000, and $220,000, respectively. In addition to the base salary, each
agreement provides for, among other things, participation in cash incentive programs and other
employee retirement benefit and fringe benefit plans applicable to executive employees. Northfield
Bank also will pay or reimburse each executive for all reasonable business expenses incurred by the
executive in the performance of his obligations. In addition, Northfield Bank will provide Mr.
Alexander with a life insurance policy, pay or reimburse Mr. Alexander for the annual dues
associated with his membership in a country club, and pay directly or reimburse Mr. Alexander for
the expense of leasing an automobile and reasonable expenses associated with the use of such
automobile. Each employment agreement may be terminated for cause at any time, in which event the
executive would have no right to receive compensation or other benefits under the employment
agreement for any period after termination.
Certain events resulting in the executives termination or resignation entitle the executive
to payments of severance benefits following termination of employment. In the event the
executives employment is terminated for reasons other than just cause (as defined below),
disability (as defined below), or death, or in the event the executive resigns during the term of
the agreement following:
|
(i) |
|
the failure to elect or reelect or to appoint or reappoint the executive to his
executive position, and in the case of Mr. Alexander, the failure to nominate or
re-nominate him as a director of Northfield Bank or Northfield Bancorp, Inc.; |
16
|
(ii) |
|
a material change in the nature or scope of the executives authority that
would cause the executives position to become one of lesser importance; |
|
|
(iii) |
|
a relocation of the executives principal place of employment by more than 30
miles from designated areas; |
|
|
(iv) |
|
a material reduction in the benefits and perquisites of executive, other than a
reduction in pay or benefits of all Northfield Bank employees; |
|
|
(v) |
|
the liquidation or dissolution of Northfield Bank or Northfield Bancorp, Inc.
that would affect the status of the executive; or |
|
|
(vi) |
|
a material breach of the employment agreement by Northfield Bank. |
In the event any of the items above occur, the executive would be entitled to a severance
payment equal to the sum of:
|
(a) |
|
the executives earned but unpaid salary as of the date of his termination of
employment; |
|
|
(b) |
|
the benefits to which he is entitled as a former employee under the employee
benefit plans maintained by Northfield Bank or Northfield Bancorp, Inc.; |
|
|
(c) |
|
the remaining payments the executive would have earned if he had continued his
employment with Northfield Bank for 36 months following his termination and had earned
a bonus and/or incentive award in each year equal to the average bonus and/or incentive
award earned over the three calendar years preceding the year in which the executives
employment is terminated; and |
|
|
(d) |
|
the annual contributions or payments that would have been made on the
executives behalf to any employee benefit plans as if the executive had continued his
employment with Northfield Bank for 36 months following his termination of employment,
based on contributions or payments made (on an annualized basis) on his date of
termination. |
In the event the executive resigns in connection with or following a change in control (as
defined below), severance benefits would be similar to those described above, except for the
calculation of the bonus or incentive award which would be based on the highest annual bonus and/or
incentive award earned by him in any of the three calendar years preceding the year in which the
termination occurs. Payments will be made in a lump sum within 30 days after the date of
termination, or, in the event Section 409A of the Internal Revenue Code applies, no later than the
first day of the seventh month following the date of termination. In addition, the executive and
his family would be entitled, at no expense to the executive, to the continuation of life, medical,
dental and disability coverage for 36 months following the date of termination.
Notwithstanding the foregoing, in the event payments to the executive would result in an
excess parachute payment as defined in Section 280G of the Internal Revenue Code, payments under
the employment agreements would be reduced in order to avoid such a result.
In the event Mr. Alexander becomes disabled, his obligation to perform services under the
employment agreement will terminate and he will receive the benefits provided under any disability
program sponsored by Northfield Bancorp, Inc. or Northfield Bank. To the extent disability
benefits for Mr. Alexander are less than his base salary on the effective date of his termination
of employment, and less than 66 2/3% of his base salary after the first year following termination,
he will receive a supplemental disability benefit equal to the difference between the benefits
provided under any disability program sponsored by Northfield Bancorp, Inc. or Northfield Bank and
his base salary for one year following the date of termination, and 66 2/3% of his base salary
after the first year following termination, until the earliest to occur of his death, recovery of
disability or the date he attains age 65. If disability payments to Mr. Alexander are not taxable
to him for federal income tax purposes, such amounts shall be tax adjusted assuming a combined
federal, state and city tax rate of 38%, for purposes of determining the reduction
17
in payments under the agreement, to reflect the tax-free nature of the disability payments.
In addition, Mr. Alexander and his dependents will continue to be covered, at no cost to them,
under all benefit plans, including retirement plans, life insurance plans and non-taxable medical
and dental plans in which they participated prior to the occurrence of his disability, until the
earliest of his recovery from disability or attaining age 65.
The employment agreements for Messrs. Klein, Doherty, and Widmer provide that in the event of
the executives disability, the executives obligation to perform services under the employment
agreement will terminate, and the executive will continue to receive his then current base salary
for one year. Such payment will be reduced by the amount of any short- or long-term disability
benefits payable under any disability program sponsored by Northfield Bancorp, Inc. or Northfield
Bank. If disability payments to Messrs. Klein, Doherty, or Widmer are not subject to federal
income tax, then amounts payable to the executives under the employment agreements shall be tax
adjusted in a manner similar to payments to Mr. Alexander. In addition, the executive and his
dependents will continue to be provided with certain medical, dental and other health benefits on
the same terms as those provided prior to the executives termination for a period of one year.
In the event of the executives death, the executives estate or beneficiaries will be paid
the executives base salary for one year and will receive continued medical, dental, and other
health benefits for one year on the same terms as those provided prior to the executives death.
Upon retirement at age 65 or such later date determined by the Board of Directors, the executive
will receive only those benefits to which he is entitled under any retirement plan of Northfield
Bank to which he is a party.
Upon termination of the executives employment other than in connection with a change in
control or for cause, the executive agrees not to compete with Northfield Bank for a period of two
years in any city, town or county in which the executives normal business office is located and
Northfield Bank has an office or has filed an application for regulatory approval to establish an
office.
Under each employment agreement Change in control means a change in control of a nature
that:
|
(i) |
|
would be required to be reported in response to Item 5.01 of the current report
on Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
Exchange Act); or |
|
|
(ii) |
|
a change in control shall be deemed to have occurred at such times as: |
|
(a) |
|
any person (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than Northfield Bancorp, MHC, is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Northfield Bancorp, Inc. representing 25% or
more of the combined voting power of Northfield Bancorp, Inc.s outstanding
securities except for any securities purchased by Northfield Banks ESOP or
ESOP trust; or |
|
|
(b) |
|
individuals who constitute the Board of Directors of Northfield
Bancorp, Inc. (the Incumbent Board) cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to such date whose election was approved by a vote of at least a
majority of the directors shall be, for purposes of this clause (b), considered
as though he were a member of the Incumbent Board; or |
|
|
(c) |
|
a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of Northfield Bank or Northfield Bancorp, Inc. or
similar transaction in which Northfield Bank or Northfield Bancorp, Inc. is not
the surviving institution occurs; or |
|
|
(d) |
|
a proxy statement is distributed soliciting proxies from
stockholders of Northfield Bancorp, Inc., by someone other than the current
management of Northfield Bancorp, Inc., seeking stockholder approval of a plan
of reorganization, merger or consolidation of Northfield Bancorp, Inc. or
similar transaction with one or more corporations or financial institutions,
and as a result of such proxy solicitation, a plan of reorganization, merger, |
18
|
|
|
consolidation or similar transaction involving Northfield Bancorp, Inc. is
approved by the requisite vote of Northfield Bancorp, Inc.s stockholders;
or |
|
|
(e) |
|
a tender offer is made for 25% or more of the voting securities
of Northfield Bancorp, Inc. and the stockholders owning beneficially, or of
record, 25% or more of the outstanding securities of Northfield Bancorp, Inc.
have tendered or offered to sell their shares pursuant to such tender offer and
such tendered shares have been accepted by the tender offeror. |
A change in control shall not be deemed to have occurred in the event that:
|
(i) |
|
Northfield Bancorp, Inc. sells less than 50% of its outstanding common stock in
one or more stock offerings; or |
|
|
(ii) |
|
Northfield Bancorp, Inc. or Northfield Bancorp, MHC converts to stock form by
reorganizing into the stock holding company structure. |
The following definitions apply to Mr. Alexanders and Mr. Widmers employment agreements:
Termination for just cause shall mean:
|
(i) |
|
termination because of the executives personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit; |
|
|
(ii) |
|
material breach of Northfield Banks Code of Ethics, material violation
of the Sarbanes-Oxley Act requirements for officers of public companies that in the
reasonable opinion of the Chief Executive Officer of Northfield Bank or the Board
will likely cause substantial financial harm or substantial injury to the reputation
of Northfield Bank; |
|
|
(iii) |
|
willfully engaging in actions that in the reasonable opinion of the
Chief Executive Officer of Northfield Bank or the Board will likely cause
substantial financial harm or substantial injury to the business reputation of
Northfield Bank; |
|
|
(iv) |
|
intentional failure to perform stated duties; |
|
|
(v) |
|
willful violation of any law, rule or regulation (other than routine
traffic violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of the contract. |
Disability shall be deemed to have occurred if:
|
(i) |
|
the executive is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that can be expected to
result in death, or last for a continuous period of not less than 12 months; |
|
|
(ii) |
|
by reason of any medically determinable physical or mental impairment that can
be expected to result in death, or last for a continuous period of not less than 12
months, the executive is receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of Northfield
Bank; or |
|
|
(iii) |
|
the executive is determined to be totally disabled by the Social Security Administration. |
19
The following definitions apply to Mr. Kleins and Mr. Dohertys employment agreements:
Termination for just cause shall mean termination because of:
|
(i) |
|
the executives being convicted of a felony or any lesser criminal offense
involving moral turpitude; |
|
|
(ii) |
|
the willful commission by the executive of a criminal or other act that, in the
judgment of the board of directors, would likely cause substantial economic damage to
Northfield Bancorp, Inc. or Northfield Bank or substantial injury to the business
reputation of Northfield Bancorp, Inc. or Northfield Bank; |
|
|
(iii) |
|
the commission by the executive of any act of fraud in the performance of his
duties on behalf of Northfield Bancorp, Inc. or Northfield Bank or a material violation
of Northfield Bancorp Inc.s or Northfield Banks code of ethics; |
|
|
(iv) |
|
the continuing willful failure of the executive to perform his duties to
Northfield Bancorp, Inc. or Northfield Bank (other than any such failure resulting from
the executives incapacity due to physical or mental illness) after written notice
thereof has been given to the executive by the board of directors (specifying the
particulars thereof in reasonable detail) and the executive has been given a reasonable
opportunity to be heard and cure such failure; or |
|
|
(v) |
|
an order of a federal or state regulatory agency or a court of competent
jurisdiction requiring the termination of the executives employment by Northfield
Bancorp, Inc. or Northfield Bank. |
Termination due to disability means termination of the executives employment due to a
physical or mental infirmity that impairs the executives ability to substantially perform his
duties under the agreement and that results in executives becoming eligible for long-term
disability benefits under a long-term disability plan of Northfield Bancorp, Inc. or Northfield
Bank (or, if Northfield Bancorp, Inc. or Northfield Bank has no such plan in effect, that impairs
the executives ability to substantially perform his duties under the agreement for a period of 180
consecutive days).
20
Potential Payments to Named Executive Officers
The following table sets forth estimates of the amounts that would be payable to the listed
individuals in the event of their termination of employment on December 31, 2007, under designated
circumstances. The table does not include vested or accrued benefits under qualified and
non-qualified benefit plans or qualified or non-qualified deferred compensation plans that are
disclosed elsewhere in this proxy statement. The estimates shown are highly dependent on a variety
of factors, including but not limited to the date of termination, interest rates, federal, state,
and local tax rates, and compensation history. Actual payments due could vary substantially from
the estimates shown. We consider each termination scenario listed below to be exclusive of all
other scenarios and do not expect that any of our executive officers would be eligible to collect
the benefits shown under more than one termination scenario. If an executive officer is terminated
for just cause as defined in the employment agreement, the Company has no contractual payment or
other obligations under the employment agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. |
|
|
Mr. |
|
|
Mr. |
|
|
Mr. |
|
|
|
Alexander |
|
|
Klein |
|
|
Doherty |
|
|
Widmer |
|
Disability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary continuation (1) |
|
$ |
1,681,908 |
|
|
$ |
150,419 |
|
|
$ |
140,096 |
|
|
$ |
109,128 |
|
Medical, dental and other health
benefits (2) |
|
|
165,614 |
|
|
|
12,046 |
|
|
|
12,046 |
|
|
|
12,046 |
|
Life insurance (3) |
|
|
156,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,004,461 |
|
|
$ |
162,465 |
|
|
$ |
152,142 |
|
|
$ |
121,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary (lump-sum payment) (4) |
|
$ |
750,000 |
|
|
$ |
300,000 |
|
|
$ |
280,000 |
|
|
$ |
220,000 |
|
Medical, dental and other health
benefits (4) |
|
|
12,046 |
|
|
|
12,046 |
|
|
|
12,046 |
|
|
|
12,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
762,046 |
|
|
$ |
312,046 |
|
|
$ |
292,046 |
|
|
$ |
232,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discharge Without Cause or Resignation With
Good Reason no Change in Control
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary (lump sum) |
|
$ |
2,250,000 |
|
|
$ |
900,000 |
|
|
$ |
840,000 |
|
|
$ |
660,000 |
|
Bonus (lump sum) |
|
|
482,750 |
|
|
|
213,591 |
|
|
|
167,705 |
|
|
|
141,970 |
|
Retirement contributions (lump sum) |
|
|
276,387 |
|
|
|
43,549 |
|
|
|
103,185 |
|
|
|
87,579 |
|
Medical, dental and other health benefits
(6) |
|
|
55,241 |
|
|
|
55,241 |
|
|
|
55,241 |
|
|
|
55,241 |
|
Life insurance contributions (7) |
|
|
112,500 |
|
|
|
5,546 |
|
|
|
8,533 |
|
|
|
4,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
3,176,878 |
|
|
$ |
1,217,927 |
|
|
$ |
1,174,664 |
|
|
$ |
949,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discharge Without Cause or Resignation With
Good Reason Change in Control Related
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary (lump sum) |
|
$ |
2,250,000 |
|
|
$ |
900,000 |
|
|
$ |
840,000 |
|
|
$ |
660,000 |
|
Bonus (lump sum) |
|
|
507,000 |
|
|
|
279,045 |
|
|
|
209,880 |
|
|
|
185,010 |
|
Retirement contributions (lump sum) |
|
|
276,387 |
|
|
|
43,549 |
|
|
|
103,185 |
|
|
|
87,579 |
|
Medical, dental and other health benefits |
|
|
55,241 |
|
|
|
55,241 |
|
|
|
55,241 |
|
|
|
55,241 |
|
Life insurance contributions |
|
|
112,500 |
|
|
|
5,546 |
|
|
|
8,533 |
|
|
|
4,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
3,201,128 |
|
|
$ |
1,283,381 |
|
|
$ |
1,216,839 |
|
|
$ |
992,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In the case of disability, Mr. Alexanders contract provides for supplemental salary
continuation until the earlier of: recovery from such disability, attaining age 65, or death.
The reported figure above assumes salary continuation until Mr. Alexander attains the age of
65. Mr. Klein, Mr. Doherty and Mr. Widmer receive salary continuation benefits for one-year
following |
21
|
|
|
|
|
such disability. The supplemental salary continuation contract benefit provides the executive
with his base salary in the first year following disability, reduced by any assumed short-term
or long-term disability insurance benefits provided under separate insurance plans we maintain.
Mr. Alexanders contract provides for second-year benefits and benefits for every year
thereafter, equal to 66 2/3% of his base salary. Such amounts due under the contracts are
reduced by any assumed short-term or long-term disability insurance benefits provided under
separate insurance plans on a tax-equivalent basis (assuming a 38% tax rate), if such short-term
or long-term disability benefits are excludable for federal income tax purposes. Supplemental
salary continuation benefits have been discounted at an annual compounding rate of 4.50% for Mr.
Alexander. The figures presented for Mr. Klein, Mr. Doherty, and Mr. Widmer are presented
without discount. |
|
(2) |
|
Mr. Alexanders contract provides for medical, dental, and other health benefits to him and
his family, at no cost to him, until Mr. Alexander recovers from such disability, or Mr.
Alexander attains the age of 65. Mr. Kleins, Mr. Dohertys, and Mr. Widmers contracts
provide for one year of medical, dental, and other health benefits on the same terms,
including cost sharing by the executive, as provided to the executive prior to his disability.
The reported figure for Mr. Alexander reflects the estimated present value of the future
premium cost of such benefits, calculated utilizing substantially the same health care cost
increase assumptions we use in measuring our liability for such benefits for financial
statement purposes under Statement of Financial Accounting Standards No. 106, Employers
Accounting for Postretirement Benefits Other Than Pensions (SFAS 106). For purposes of
this presentation, the estimated future costs were discounted at a 4.50% annual compounding
rate. The figures presented for Mr. Klein, Mr. Doherty and Mr. Widmer are presented without
discount. |
|
(3) |
|
Mr. Alexanders contract provides for life insurance continuation benefits. Mr. Alexander
receives an annual reimbursement for a whole-life policy premium through 2011 in the amount of
$35,660. In addition, the contract provides for the continuation of group life insurance for
Mr. Alexander until the earlier of: recovering from such disability or Mr. Alexander attaining
the age of 65. The reported figure in the table assumes that group term life insurance
benefits will continue until Mr. Alexander attains the age of 65, with an assumed annual cost
increase of 4% and a present value discount rate of 4.50% annual compounding rate. The
agreement in effect for Mr. Alexander provides for salary continuation at his base salary for
the first year after such disability and 66 2/3% of his base salary after the first year. Such
payments continue until Mr. Alexanders death, recovery from such disability, or the date he
attains age 65. The figures shown assume any amounts owed to Mr. Alexander will be reduced by
applicable short-term and long-term disability payments received from insurance carriers
without discount for present value. Mr. Klein, Mr. Doherty and Mr. Widmer are provided a
salary continuation for the first year after such disability. The figures shown assume any
amounts owed will be reduced by applicable short-term and long-term disability payments
received from insurance carriers without discount for present value. |
|
(4) |
|
Each of the agreements provides for a lump-sum death benefit equal to one-year of base salary
for each executive. The contracts also provide for the continuation of medical, dental, and
other health benefits to the executives family for a period of one-year at the same terms and
cost to the executive immediately prior to his death. |
|
(5) |
|
Each of the agreements provides for the lump-sum payment of: three times base salary; three
times the average annual bonus/and or incentive award for three years prior to the year of
termination; and the retirement contributions or payments that we would have made on the
executives behalf, as if the executive had continued his employment for a 36-month period,
based on contributions or payments made (on an annualized basis) at the date of termination. |
|
(6) |
|
Each agreement provides for medical, dental, and other health benefits to the executive and
his family, at no cost to the executive for a period of 36 months from the date of
termination. The reported figures reflect the estimated present value of the future premium
cost of such benefits, calculated utilizing substantially the same health care cost increase
assumptions we used in measuring our liability for such benefits for financial statement
purposes under SFAS 106. For purposes of this presentation, the estimated future costs were
discounted at a 4.50% annual compounding rate. |
|
(7) |
|
Each agreement provides for life insurance benefits to the executive and his family, at no
cost to the executive for a period of 36 months from the date of termination. Mr. Alexander
receives an annual reimbursement of $35,660 for a whole-life insurance policy. Mr. Alexander,
Mr. Klein, Mr. Doherty, and Mr. Widmer also participate in our group life insurance plan. The
reported figures in the table assume that the reimbursement to Mr. Alexander for his
whole-life insurance policy will continue for a period of three years. The reported figures
also include the estimated costs of group term life insurance benefits for Mr. Alexander, Mr.
Klein, Mr. Doherty, and Mr. Widmer for a three year period with an assumed annual cost
increase of 4% and a present value discount rate of 4.50% compounded annually. |
|
(8) |
|
Under each of the agreements, amounts payable under a change in control are identical to
those payable for Discharge Without Cause or Resignation With Good Reason no Change in
Control except that: (i) payments pertaining to bonus and/or incentive awards are based upon
the highest annual bonus and/or incentive award earned in any of the three years preceding the
year in which the termination occurs; and (ii) each of the agreements limits the total
payments to an executive to an amount that is one dollar less than three times the executives
base amount as defined in Section 280G of the Internal Revenue Code. The amounts presented
in the table have not been reduced to reflect any cut-back required to avoid an excess
parachute payment under Section 280G of the Internal Revenue Code. |
22
PROPOSAL APPROVAL OF THE
NORTHFIELD BANCORP, INC. 2008 EQUITY INCENTIVE PLAN
The Board of Directors has adopted, subject to stockholder approval, the Northfield Bancorp,
Inc. 2008 Equity Incentive Plan (the Equity Incentive Plan) to provide additional incentives for
our officers, employees and directors to promote our growth and performance and to further align
their interests with those of our stockholders. Most of the companies that we compete with for
officers, employees and directors are public companies that offer equity compensation as part of
their overall compensation programs. By approving the Equity Incentive Plan, our stockholders will
give us the flexibility we need to continue to attract, motivate and retain highly qualified
officers, employees and directors by offering a competitive compensation program that is linked to
the performance of our common stock.
The Equity Incentive Plan complies with the regulations of the Office of Thrift Supervision.
However, the Office of Thrift Supervision has not endorsed or approved the Equity Incentive Plan in
any way.
The following is a summary of the material features of the Equity Incentive Plan, which is
qualified in its entirety by reference to the provisions of the Equity Incentive Plan, attached
hereto as Appendix A.
General
Subject to permitted adjustments for certain corporate transactions, the Equity Incentive Plan
authorizes the issuance or delivery to participants of up to 3,073,488 shares of Northfield
Bancorp, Inc. common stock pursuant to grants of restricted stock awards, restricted stock units,
incentive stock options, non-qualified stock options and stock appreciation rights. Any of such
shares may be issued pursuant to stock options (all of which may be incentive stock options), and
up to 878,139 shares may be issued pursuant to restricted stock awards or restricted stock units,
provided that stock used to fund stock options greater than 2,195,349 shares of Northfield Bancorp,
Inc. common stock (which would reduce the number of shares that may be issued pursuant to
restricted stock awards or restricted stock units) must be obtained through stock repurchases.
The Equity Incentive Plan will be administered by the members of our Compensation Committee
(the Committee) who are Disinterested Board Members, as defined in the Equity Incentive Plan.
The Committee has power within the limitations set forth in the Equity Incentive Plan to make all
decisions and determinations regarding the selection of participants and the granting of awards;
establishing the terms and conditions relating to each award; adopting rules, regulations and
guidelines for carrying out the Equity Incentive Plans purposes; and interpreting and otherwise
construing the Equity Incentive Plan. The board of directors (or those members of the board of
directors who are independent directors under the corporate governance statutes or rules of any
national securities exchange on which we list our securities) may, in its discretion, take any
action and exercise any power, privilege or discretion conferred on the Committee under the Equity
Incentive Plan as if done or exercised by the Committee. Notwithstanding anything to the contrary,
all awards made by the Committee and any performance criteria established by the Committee with
respect to an award shall be subject to the ratification by the board of directors. The Equity
Incentive Plan also permits the Committee to delegate to one or more persons, including directors
who do not qualify as Disinterested Board Members, the power to: (i) designate officers and
employees who will receive awards; and (ii) determine the number of awards to be received by them,
provided that such delegation is not prohibited by applicable law or the rules of the stock
exchange on which our common stock is traded. Awards intended to be performance-based under
Section 162(m) of the Internal Revenue Code must be granted by the Committee in order to be exempt
from the $1.0 million limit on deductible compensation for tax purposes.
The Committee may grant an award under the Equity Incentive Plan as an alternative to or
replacement of an existing award under the Equity Incentive Plan or any other plan of Northfield
Bancorp, Inc. or our subsidiaries, or as the form of payment for grants or rights earned or due
under any other plan or arrangement of Northfield Bancorp, Inc. or our subsidiaries, including the
plan of any entity acquired by Northfield Bancorp, Inc. or our subsidiaries.
23
Eligibility
Officers, employees and directors of Northfield Bancorp, Inc. or its subsidiaries are eligible
to receive awards under the Equity Incentive Plan, except that non-employees may not be granted
incentive stock options.
Types of Awards
The Committee may determine the type and terms and conditions of awards under the Equity
Incentive Plan, which shall be set forth in an award agreement delivered to each participant. Each
award shall be subject to conditions established by the Committee that are set forth in the
recipients award agreement, and shall be subject to vesting conditions and restrictions as
determined by the Committee; provided, however, that the award agreements shall specify that no
awards shall vest more rapidly than 20% per year over a five-year period with the first installment
vesting one year from the date of grant, subject to acceleration upon the occurrence of specific
events or in the discretion of the Committee. Awards may be granted in a combination of incentive
and non-qualified stock options, stock appreciation rights, restricted stock awards or restricted
stock units, as follows:
Stock Options. A stock option is the right to purchase shares of common stock at a specified
price for a specified period of time. The exercise price may not be less than the fair market
value of a share of our common stock on the date the stock option is granted. Fair market value
for purposes of the Equity Incentive Plan means (i) the final sales price of our common stock as
reported on the NASDAQ Global Select Market (or other exchange on which our shares are listed or
traded) on the date in question, or if our common stock was not traded on such date, then on the
last preceding date on which any reported sale of our common stock occurred, and without regard to
after-hours trading activity, or (ii) if shares of our common stock are not listed on such
exchange, fair market value shall mean the closing bid quotation with respect to a share of our
common stock on such date as of the close of the market in New York City and without regard to
after-hours trading activity. The Committee will determine the fair market value of the common
stock, in accordance with Section 422 of the Internal Revenue Code and the applicable requirements
of Section 409A of the Internal Revenue Code, if it cannot be determined in the manner described
above. Further, the Committee may not grant a stock option with a term that is longer than 10
years.
Stock options are either incentive stock options or non-qualified stock options.
Incentive stock options have certain tax advantages that are not available to non-qualified stock
options, and must comply with the requirements of Section 422 of the Internal Revenue Code. Only
officers and employees are eligible to receive incentive stock options. Outside directors may only
receive non-qualified stock options under the Equity Incentive Plan. Shares of common stock
purchased upon the exercise of a stock option must be paid for at the time of exercise either (i)
by personal, certified or cashiers check, (ii) by tendering stock of Northfield Bancorp, Inc. owned
by the participant in satisfaction of the exercise price, (iii) by a cashless exercise through a
third party, or (iv) by a combination of the foregoing. The total number of shares that may be
acquired upon the exercise of a stock option will be rounded down to the nearest whole share.
Stock Appreciation Rights. A stock appreciation right is the right to receive a payment of
shares of our common stock in an amount equal to the excess of the fair market value of a share of
our common stock on the date of exercise of the stock appreciation right over the fair market value
of the common stock on the date of grant of the stock appreciation right. The total number of
shares that may be acquired upon the exercise of a stock appreciation right will be rounded down to
the nearest whole share. Stock appreciation rights may be granted in tandem with the grant of
stock options, and are exercisable on the same conditions as the related stock option that is
granted simultaneously. The exercise of a tandem stock appreciation right cancels the related
stock option and the exercise of the related stock option cancels the tandem stock appreciation
right.
Restricted Stock. A restricted stock award is a grant of shares of our common stock to a
participant for no consideration or such minimum consideration as may be required by applicable
law. Restricted stock awards may be granted only in whole shares of common stock. Prior to their
vesting, unless otherwise determined by the Committee, the recipient of a restricted stock award
may exercise any voting rights with respect to common stock subject to an award and receive any
dividends and distributions with respect to the common stock.
24
Restricted Stock Units. Restricted stock units may be denominated in whole shares of common
stock and are similar to restricted stock awards except that no shares of common stock are actually
issued to the award recipient at the time of grant of a restricted stock unit. Restricted stock
units granted under the Equity Incentive Plan may be settled in cash, shares of our common stock,
or a combination thereof, and are subject to vesting conditions and other restrictions set forth in
the Equity Incentive Plan or the award agreement. Participants have no voting rights with respect
to any restricted stock units granted under the Equity Incentive Plan.
Prohibition Against Repricing of Options or Stock Appreciation Rights. The Equity Incentive
Plan provides that neither the Committee nor the Board of Directors is authorized to make any
adjustment or amendment that reduces or would have the effect of reducing the exercise price of a
stock option or a stock appreciation right previously granted.
Limitation on Awards Under the Equity Incentive Plan
The Equity Incentive Plan includes the following limitations:
|
|
|
the maximum number of shares of stock, in the aggregate, that may be issued or
delivered to any one employee participant pursuant to the exercise of stock options or
stock appreciation rights is 768,372 shares (25% of all shares of stock available for
stock option and stock appreciation rights awards under the Equity Incentive Plan), all
of which may be issued during any calendar year; |
|
|
|
|
the maximum number of shares of stock, in the aggregate, that may be issued or
delivered to any one employee participant pursuant to restricted stock awards and
restricted stock units is 219,534 shares (25% of all shares of stock available for
restricted stock awards and restricted stock units under the Equity Incentive Plan),
all of which may be issued during any calendar year; |
|
|
|
|
the maximum number of shares of stock that may be issued or delivered to any one
individual non-employee director pursuant to the exercise of stock options and stock
appreciation rights, in the aggregate, shall be 5% of all shares of stock available for
stock option and stock appreciation rights awards under the Equity Incentive Plan, and
the maximum number of shares that may be issued or delivered to any one individual
non-employee director pursuant to restricted stock awards and restricted stock units,
in the aggregate, shall be 5% of all shares of stock available for restricted stock
awards and restricted stock units under the Equity Incentive Plan; and |
|
|
|
|
The maximum number of shares of stock that may be issued or delivered to all
non-employee directors, in the aggregate, pursuant to the exercise of stock options and
stock appreciation rights shall be 30% of all shares of stock available for stock
option and stock appreciation rights awards under the Equity Incentive Plan, and the
maximum number of shares that may be issued or delivered to all non-employee directors
in the aggregate pursuant to restricted stock awards and restricted stock units shall
be 30% of all shares of stock available for restricted stock awards and restricted
stock units under the Equity Incentive Plan. |
To the extent any shares of stock covered by an award (including restricted stock awards and
restricted stock units) under the Equity Incentive Plan are not delivered to a participant or
beneficiary because the award is forfeited or canceled or because a stock option or stock
appreciation right is not exercised, then such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of stock available for delivery under the
Plan.
In the event of a corporate transaction involving the stock of Northfield Bancorp, Inc.
(including, without limitation, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or
exchange of shares), the foregoing share limitations and all outstanding awards will automatically
be adjusted proportionally and uniformly to reflect such event to the extent that the adjustment
will not affect the awards status as performance-based compensation under Section 162(m) of the
Internal Revenue Code, if applicable; provided, however, that the Committee may adjust awards to
preserve the benefits or potential benefits of the awards, including the prevention of automatic
adjustments if appropriate.
25
Performance Features
General. A federal income tax deduction for Northfield Bancorp, Inc. will generally be
unavailable for annual compensation in excess of $1.0 million paid to its chief executive officer
or three other most highly compensated officers (other than its chief financial officer). However,
amounts that constitute performance-based compensation (as that term is used in Section 162(m) of
the Internal Revenue Code) are not counted toward the $1.0 million limit. The Equity Incentive
Plan is designed so that stock options and stock appreciation rights will be considered
performance-based compensation. The Committee may designate whether any restricted stock awards or
restricted stock units granted to any participant are intended to be performance-based
compensation. Any restricted stock awards or restricted stock units designated as performance-based
compensation will be conditioned on the achievement of one or more performance measures, to the
extent required by Section 162(m) of the Internal Revenue Code.
Performance Measures. The performance measures that may be used for such awards will be based
on any one or more of the following performance measures, as selected by the Committee: basic
earnings per share; basic cash earnings per share; diluted earnings per share; diluted cash
earnings per share; net income or net income before taxes; cash earnings; net interest income;
non-interest income; general and administrative expense to average assets ratio; cash general and
administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; return on
average assets; cash return on average assets; return on average stockholders equity; cash return
on average stockholders equity; return on average tangible stockholders equity; cash return on
average tangible stockholders equity; core earnings; operating income; operating efficiency ratio;
net interest rate margin or net interest rate spread; growth in assets, loans, or deposits; loan
production volume; non-performing loans; cash flow; strategic business objectives consisting of one
or more objectives based upon meeting specified cost targets, business expansion goals, and goals
relating to acquisitions or divestitures, or goals relating to capital raising and capital
management; or any combination of the foregoing. Performance measures may be based on the
performance of Northfield Bancorp, Inc. as a whole or of any one or more subsidiaries or business
units of Northfield Bancorp, Inc. or a subsidiary, may be measured relative to a peer group, an
index or a business plan and may be considered as absolute measures or changes in measures. The
Committee may adjust performance measures after they have been set, but only to the extent the
Committee exercises negative discretion as permitted under applicable law for purposes of an
exception to Section 162(m) of the Internal Revenue Code. In establishing the performance measures,
the Committee may provide for the inclusion or exclusion of certain items. Additionally, the grant
of an award intended to be performance-based compensation and the establishment of any
performance-based measures shall be made during the period required by Section 162(m) of the
Internal Revenue Code.
Vesting of Awards
Generally, no awards may vest at a rate exceeding 20% per year, with the first installment
vesting one year after the date of grant. If the vesting of an award under the Equity Incentive
Plan is conditioned on the completion of a specified period of service with Northfield Bancorp,
Inc. or its subsidiaries, without the achievement of performance measures or objectives, then the
required period of service for full vesting shall be determined by the Committee and evidenced in
an award agreement. Vesting may be accelerated in the event of death, disability, retirement (with
respect to employees only, and as defined in the Equity Incentive Plan), upon involuntary
termination of employment or service following a change in control or at the discretion of the
Committee. In the discretion of the Committee, vesting of an award may be accelerated in the event
of a second step-conversion of Northfield Bancorp, MHC to stock form.
Change in Control
Unless otherwise stated in an award agreement, upon the occurrence of an involuntary
termination of employment, including a resignation for good reason, following a change in control
of Northfield Bancorp, Inc., all outstanding options and stock appreciation rights then held by a
participant will become fully exercisable and all restricted stock awards and restricted stock
units shall be fully earned and vested. For the purposes of the Equity Incentive Plan, a change in
control occurs when: (a) any person is or becomes the beneficial owner, directly or indirectly, of
our securities representing 25% or more of the combined voting power of our then-outstanding voting
26
securities; (b) the Incumbent Directors (as defined in the Equity Incentive Plan) cease, for
any reason, to constitute a majority of the Whole Board (as defined in the Equity Incentive Plan);
or (c) a plan of reorganization, merger, consolidation or similar transaction involving one or more
other corporations or entities and Northfield Bancorp, Inc. or Northfield Bank is consummated,
other than a plan of reorganization, merger, consolidation or similar transaction that is defined
in the Equity Incentive Plan as an Excluded Transaction, or our stockholders approve a plan of
complete liquidation, or a sale, liquidation or other disposition of all or substantially all of
the assets of Northfield Bancorp, Inc. or Northfield Bank is consummated; or (d) a tender offer is
made for 25% or more of our outstanding voting securities and the stockholders owning beneficially
or of record 25% or more of our outstanding voting securities have tendered or offered to sell
their shares pursuant to such tender offer and such tendered shares have been accepted by the
tender offeror; or (e) a Potential Change in Control (as defined in the Equity Incentive Plan)
occurs, and the Board of Directors determines, pursuant to the vote of a majority of the Whole
Board, with at least two-thirds of the Incumbent Directors then in office voting in favor of such
determination, to deem the Potential Change in Control to be a change in control for purposes of
the Equity Incentive Plan. Notwithstanding the foregoing, a change in control will not be deemed
to occur as a result of or in connection with a second-step conversion of Northfield Bancorp, MHC
to stock form, unless otherwise provided in an award agreement.
In the event of a change in control, any performance measure attached to an award under the
Equity Incentive Plan shall be deemed satisfied as of the date of the change in control.
Forfeiture
The Committee may specify in an award agreement that rights and benefits with respect to an
award may be subject to reduction, cancellation, forfeiture or recoupment upon termination of
employment for cause; termination of services with us or an affiliate or subsidiary; any material
violation of one or more of our policies; breach of noncompetition, confidentiality or other
restrictive covenants that apply to the employee or director; or any other conduct that is
detrimental to our business or reputation, or that of our affiliates or subsidiaries.
If we are required to prepare an accounting restatement due to our material noncompliance, as
a result of misconduct, with any financial reporting requirement under the federal securities laws,
any participant who is subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act
of 2002 shall reimburse us the amount of any payment in settlement of an award earned or accrued
during the twelve-month period following the first public issuance or filing with the United States
Securities and Exchange Commission (whichever just occurred) of the financial document embodying
such financial reporting requirement. In addition, in the event of an accounting restatement, the
Committee, in its sole and exclusive discretion, may require that any participant reimburse us for
all or any part of the amount of any payment in settlement of any award granted hereunder.
Amendment and Termination
The Board of Directors may, at any time, amend or terminate the Equity Incentive Plan or any
award granted under the Equity Incentive Plan. However, except as provided in the Equity Incentive
Plan, no amendment or termination may adversely impair the rights of an outstanding award without
the participants (or affected beneficiarys) written consent. The Board of Directors may not
amend the provision of the Equity Incentive Plan related to repricing, materially increase the
original number of securities that may be issued under the Equity Incentive Plan (other than as
provided in the Equity Incentive Plan), materially increase the benefits accruing to a participant,
or materially modify the requirements for participation in the Equity Incentive Plan, without
approval of stockholders. Notwithstanding the foregoing, the Board may, without stockholder
approval, amend the Equity Incentive Plan at any time, retroactively or otherwise, to ensure that
the Equity Incentive Plan complies with current or future law and the Board of Directors may
unilaterally amend the Equity Incentive Plan and any outstanding award, without participant
consent, in order to maintain an exemption from, or to comply with, Section 409A of the Code, and
its applicable regulations and guidance.
Duration of Plan
The Equity Incentive Plan will become effective upon approval by the stockholders at this
special meeting. The Equity Incentive Plan will remain in effect as long as any awards under it
are outstanding; however, no awards
27
may be granted under the Equity Incentive Plan on or after the 10-year anniversary of the
effective date of the Equity Incentive Plan. At any time, the Board of Directors may terminate the
Equity Incentive Plan. However, any termination of the Equity Incentive Plan will not affect
outstanding awards.
Federal Income Tax Considerations
The following is a summary of the federal income tax consequences that may arise in
conjunction with participation in the Equity Incentive Plan.
Non-Qualified Stock Options. The grant of a non-qualified stock option will not result in
taxable income to the participant. Except as described below, the participant will realize ordinary
income at the time of exercise in an amount equal to the excess of the fair market value of the
shares acquired over the exercise price for those shares, and we will be entitled to a
corresponding deduction for tax purposes. Gains or losses realized by the participant upon
disposition of such shares will be treated as capital gains and losses, with the basis in such
shares equal to the fair market value of the shares at the time of exercise.
Incentive Stock Options. The grant of an incentive stock option will not result in taxable
income to the participant. The exercise of an incentive stock option will not result in taxable
income to the participant provided the participant was, without a break in service, an employee of
Northfield Bancorp, Inc. or a subsidiary during the period beginning on the date of the grant of
the option and ending on the date three months prior to the date of exercise (one year prior to the
date of exercise if the participant is disabled, as that term is defined in the Internal Revenue
Code).
The excess of the fair market value of the shares at the time of the exercise of an incentive
stock option over the exercise price is an adjustment that is included in the calculation of the
participants alternative minimum taxable income for the tax year in which the incentive stock
option is exercised. For purposes of determining the participants alternative minimum tax
liability for the year of disposition of the shares acquired pursuant to the incentive stock option
exercise, the participant will have a basis in those shares equal to the fair market value of the
shares at the time of exercise.
If the participant does not sell or otherwise dispose of the shares within two years from the
date of the grant of the incentive stock option or within one year after the exercise of such stock
option, then, upon disposition of such shares, any amount realized in excess of the exercise price
will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount
realized is less than the exercise price.
If the foregoing holding period requirements are not met, the participant will generally
recognize ordinary income at the time of the disposition of the shares in an amount equal to the
lesser of (i) the excess of the fair market value of the shares on the date of exercise over the
exercise price, or (ii) the excess, if any, of the amount realized upon disposition of the shares
over the exercise price, and we will be entitled to a corresponding deduction. If the amount
realized exceeds the value of the shares on the date of exercise, any additional amount will be a
capital gain. If the amount realized at the time of disposition is less than the exercise price,
the participant will recognize no income, and a capital loss will be recognized equal to the excess
of the exercise price over the amount realized upon the disposition of the shares.
Stock Appreciation Rights. The grant of a stock appreciation right will not result in taxable
income to the participant. Upon exercise of a stock appreciation right, the fair market value of
shares received will be taxable to the participant as ordinary income and we will be entitled to a
corresponding tax deduction. Gains and losses realized by the participant upon disposition of any
such shares will be treated as capital gains and losses, with the basis in such shares equal to the
fair market value of the shares at the time of exercise.
Restricted Stock. A participant who has been granted a restricted stock award will not realize
taxable income at the time of grant, provided that that the stock subject to the award is not
delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that
constitute a substantial risk of forfeiture for federal income tax purposes. Upon the later of
delivery or vesting of shares subject to an award, the holder will realize ordinary income in an
amount equal to the then fair market value of those shares and we will be entitled to a
corresponding
28
deduction for tax purposes. Gains or losses realized by the participant upon disposition of
such shares will be treated as capital gains and losses, with the basis in such shares equal to the
fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder
during the restriction period, if so provided, will also be compensation income to the participant
and we will be entitled to a corresponding deduction for tax purposes. A participant who makes an
election under Section 83(b) of the Internal Revenue Code will include the full fair market value
of the restricted stock award subject to such election in taxable income in the year of grant at
the grant date fair market value.
Restricted Stock Units. A participant who has been granted a restricted stock unit will not
realize taxable income at the time of grant and will not be entitled to make an election under
Section 83(b) of the Internal Revenue Code since no stock is actually transferred to the recipient
on the date of grant. At the time a restricted stock unit vests, assuming the award is distributed
at that time, the recipient will recognize ordinary income in an amount equal to the fair market
value of the common stock or the amount of cash received. If the restricted stock unit is not
distributed at the time it vests, no income will be recognized at that time and taxation will be
deferred until the value of the restricted stock unit is distributed. At the time the recipient
recognizes taxable income on a restricted stock unit, we will be entitled to a corresponding tax
deduction in the same amount recognized by the award recipient
Withholding of Taxes. We may withhold amounts from participants to satisfy withholding tax
requirements. Except as otherwise provided by the Committee, participants may have shares withheld
from awards to satisfy the minimum tax withholding requirements.
Change in Control. Any acceleration of the vesting or payment of awards under the Equity
Incentive Plan in the event of a change in control or termination of service following a change in
control may cause part or all of the consideration involved to be treated as an excess parachute
payment under the Internal Revenue Code, which may subject the participant to a 20% excise tax and
preclude deduction by Northfield Bancorp, Inc.
Deduction Limits. Section 162(m) of the Internal Revenue Code generally limits our ability to
deduct for tax purposes compensation in excess of $1.0 million per year for our chief executive
officer and the three other most highly compensated executives (excluding the chief financial
officer) named in the summary compensation table (covered employees), unless the compensation is
qualified performance-based consideration. Qualified performance-based compensation is not
subject to this limit and is fully deductible by Northfield Bancorp, Inc. Qualified
performance-based compensation is compensation that is subject to a number of requirements such as
stockholder approval of possible performance goals, and objective quantification of those goals in
advance. Restricted stock awards and other awards that are not subject to performance goals would
be subject to this deduction limit if income recognized on the awards plus other compensation of
the executive that is subject to the limit exceeds $1.0 million. Stock options and stock
appreciation rights available for award under the Equity Incentive Plan will be considered
qualified performance-based compensation even if such awards vest solely due to the passage of
time during the performance of services. Accordingly, if an award is not exempt from Section
162(m), income recognized on such award by a covered employee will be subject to the $1.0 million
deduction limit on compensation.
In the case of awards granted to a covered employee that are not qualified performance-based
consideration and are distributed after the covered employees retirement or other termination of
employment, the $1.0 million deduction limit will not apply and the award will be fully deductible.
Performance awards may provide for accelerated vesting upon death, disability, or a change in
control and still be considered exempt from the $1.0 million deduction limit. The Equity Incentive
Plan is designed so that stock options, stock appreciation rights and performance-based restricted
stock awards and restricted stock units that are subject to performance goals may qualify as
qualified performance-based compensation that is not subject to the $1.0 million deduction limit.
We expect that the Committee will take these deduction limits into account in setting the size and
the terms and conditions of awards. However, the Committee may decide to grant awards that result
in executive compensation that exceeds the deduction limit.
Tax Advice. The preceding discussion is based on federal tax laws and regulations presently
in effect, which are subject to change, and the discussion does not purport to be a complete
description of the federal income
29
tax aspects of the Equity Incentive Plan. A participant may also be subject to state and
local taxes in connection with the grant of awards under the Equity Incentive Plan.
Accounting Treatment
Under Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, we are
required to recognize compensation expense in our financial statements over the requisite service
period or performance period based on the grant date fair value of stock options and other
equity-based compensation (such as restricted stock awards, restricted stock units and stock
appreciation rights).
Awards to be Granted
The Board of Directors adopted the Equity Incentive Plan, and the Compensation Committee
intends to meet after stockholder approval to determine the specific terms of the awards, including
the allocation of awards to officers, employees and non-employee directors. At the present time,
no specific determination has been made as to the grant or allocation of awards. It is the intent
of the Board of Directors to fund all restricted stock awards and restricted stock units granted
under the Equity Incentive Plan through repurchases of common stock, subject to market and
regulatory conditions.
Required Vote and Recommendation of the Board
In order to approve the Equity Incentive Plan, the proposal must receive the affirmative vote
of: (i) a majority of the shares represented at the meeting and entitled to be voted at the
meeting, and (ii) a majority of the votes cast at the meeting, in person or by proxy, by
stockholders other than our mutual holding company, Northfield Bancorp, MHC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
2008 EQUITY INCENTIVE PLAN.
OTHER INFORMATION
Proxy Solicitation Costs
The cost of solicitation of proxies will be borne by Northfield Bancorp, Inc. We 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 shares of common stock. In
addition to solicitations by mail, our directors, officers, and regular employees may solicit
proxies personally, by telegraph, telephone, or other forms of communication without additional
compensation. We have retained Laurel Hill Advisory Group, LLC to assist us in the solicitation of
proxies, and will pay fees estimated to be approximately $15,000. In addition, our arrangement
with Laurel Hill includes provisions obligating us to indemnify it for certain liabilities that
could arise in connection with its solicitation of proxies on our behalf.
Other Matters
The Board of Directors is not aware of any business to come before the Special Meeting other
than the matters described above in the Proxy Statement. However, if any matters should properly
come before the special meeting, it is intended that the holders of the proxies will act in
accordance with their best judgment.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in our proxy materials for our 2009 Annual Meeting of
Stockholders, any stockholder proposal to take action at such meeting must be received at our
executive office, 1410 St. Georges Avenue, Avenel, New Jersey 07001, no later than December 23,
2008. Any such proposals shall be subject to the requirements of the proxy rules adopted under the
Securities Exchange Act of 1934.
30
ADVANCED NOTICE OF BUSINESS TO BE CONDUCTED AT AN
ANNUAL MEETING OF STOCKHOLDERS
Under our Bylaws, a stockholder must follow certain procedures to nominate persons for
election as directors or to introduce an item of business at a meeting of stockholders. These
procedures provide, generally, that stockholders desiring to make nominations for directors, or to
bring a proper subject of business before the meeting, must do so by a written notice timely
received (generally not later than 30 days in advance of such meeting, subject to certain
exceptions) by the Corporate Secretary of Northfield Bancorp, Inc.
Nothing in this proxy statement shall be deemed to require us to include in our proxy
statement and proxy relating to an annual meeting any stockholder proposal that does not meet all
of the requirements for inclusion established by the Securities and Exchange Commission in effect
at the time such proposal is received.
The 2009 annual meeting of stockholders is expected to be held May 27, 2009. Accordingly,
advance written notice for certain business, or nominations to the Board of Directors, to be
brought before the next annual meeting must be given to us by April 27, 2009. If notice is
received after April 27, 2009, it will be considered untimely, and we will not be required to
present the matter at the stockholders meeting.
|
|
|
|
|
BY ORDER OF THE BOARD OF DIRECTORS |
|
|
|
|
|
Madeline G. Frank |
|
|
Senior Vice President, Corporate Secretary |
Avenel, New Jersey
November 12, 2008
31
APPENDIX A
NORTHFIELD BANCORP, INC.
2008 EQUITY INCENTIVE PLAN
ARTICLE 1 GENERAL
Section 1.1 Purpose, Effective Date and Term. The purpose of this Northfield Bancorp,
Inc. 2008 Equity Incentive Plan (the Plan) is to promote the long-term financial success of
Northfield Bancorp, Inc., a Federal corporation (the Company), and its Subsidiaries, including
Northfield Bank (the Bank), by providing a means to attract, retain and reward individuals who
contribute to such success and to further align their interests with those of the Companys
stockholders. The Effective Date of the Plan is December 17, 2008, the expected date of the
approval of the Plan by the Companys stockholders. The Plan shall remain in effect as long as any
Awards are outstanding; provided, however, that no Awards may be granted under the Plan after the
ten-year anniversary of the Effective Date.
Section 1.2 Administration. The Plan shall be administered by a committee of the
Companys Board of Directors (the Committee), in accordance with Section 5.1.
Section 1.3 Participation. Each Employee or Director of the Company or any Subsidiary
of the Company who is granted an Award in accordance with the terms of the Plan shall be a
Participant in the Plan. Awards shall be limited to Employees and Directors of the Company or
any Subsidiary.
Section 1.4 Definitions. Capitalized terms used in this Plan are defined in Article 8
and elsewhere in this Plan.
ARTICLE 2 AWARDS
Section 2.1 General. Any Award under the Plan may be granted singularly, in
combination with another Award (or Awards), or in tandem whereby the exercise or vesting of one
Award held by a Participant cancels another Award held by the Participant. Each Award under the
Plan shall be subject to the terms and conditions of the Plan and such additional terms,
conditions, limitations and restrictions as the Committee shall provide with respect to such Award
and as evidenced in the Award Agreement. Subject to the provisions of Section 2.8, an Award may be
granted as an alternative to or replacement of an existing Award under the Plan or any other plan
of the Company or any Subsidiary or as the form of payment for grants or rights earned or due under
any other compensation plan or arrangement of the Company or its Subsidiaries, including without
limitation the plan of any entity acquired by the Company or any Subsidiary. The types of Awards
that may be granted under the Plan include:
(a) Stock Options. A Stock Option means a grant under Section 2.2 that represents the right
to purchase shares of Stock at an Exercise Price established by the Committee. Any Stock Option
may be either an Incentive Stock Option (an ISO) that is intended to satisfy the requirements
applicable to an Incentive Stock Option described in Code Section 422(b), or a Non-Qualified
Stock Option (a Non-Qualified Option) that is not intended to be an ISO; provided, however, that
no ISOs may be granted: (i) after the ten-year anniversary of the Effective Date; or (ii) to a
non-Employee. Unless otherwise specifically provided by its terms, any Stock Option granted to an
Employee under this Plan shall be an ISO. Any ISO granted under this Plan that does not qualify as
an ISO for any reason (whether at the time of grant or as the result of a subsequent event) shall
be deemed to be a Non-Qualified Option. In addition, any ISO granted under this Plan may be
unilaterally modified by the Committee to disqualify such Stock Option from ISO treatment such that
it shall become a Non-Qualified Option; provided, however, that any such modification shall be
ineffective if it causes the Award to be subject to Code Section 409A (unless, as modified, the
Award complies with Code Section 409A).
(b) Stock Appreciation Rights. A stock appreciation right (a SAR) means a grant under
Section 2.2, which represents the right to receive in shares of Stock an amount equal to or based
upon the excess of: (i) the Fair Market Value of a share of Stock at the time of exercise; over
(ii) the Exercise Price established by the Committee in accordance with Section 2.2.
A1
(c) Restricted Stock. Restricted Stock means a grant of shares of Stock under Section 2.3 for
no consideration or such minimum consideration as may be required by applicable law, either alone
or in addition to other Awards granted under the Plan, subject to a vesting schedule or the
satisfaction of market conditions or performance conditions.
(d) Restricted Stock Units. A Restricted Stock Unit means a grant under Section 2.4
denominated in shares of Stock that is similar to Restricted Stock except no shares of Stock are
actually awarded on the date of grant of a Restricted Stock Unit. A Restricted Stock Unit is
subject to a vesting schedule or the satisfaction of market conditions or performance conditions
and may be settled, in the sole discretion of the Committee, in shares of Stock, cash, or a
combination of cash and shares of Stock based on the Fair Market Value of a specified number of
shares of Stock.
Section 2.2 Stock Options and SARs.
(a) Grant of Stock Options and SARs. Each Stock Option or SAR shall be evidenced by an Award
Agreement that shall: (i) specify the number of Stock Options or SARs covered by the Award; (ii)
specify the date of grant of the Stock Option or SAR; (iii) specify the vesting period or
conditions to vesting; and (iv) contain such other terms and conditions not inconsistent with the
Plan, including the effect of termination of a Participants employment or Service with the Company
as the Committee may, in its discretion, prescribe.
(b) Terms and Conditions. A Stock Option or SAR shall be exercisable in accordance with such
terms and conditions and during such periods as may be established by the Committee. In no event,
however, shall a Stock Option or SAR expire later than ten (10) years after the date of its grant
(or five (5) years with respect to ISOs granted to an Employee who is a 10% Stockholder). The
Exercise Price of each Stock Option and SAR shall not be less than 100% of the Fair Market Value
of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock);
provided, however, that the Exercise Price of an ISO shall not be less than 110% of Fair Market
Value of a share of Stock on the date of grant if granted to a 10% Stockholder; provided further,
that the Exercise Price may be higher or lower in the case of Stock Options or SARs granted or
exchanged in replacement of existing Awards held by an Employee or Director of, or service provider
to, an acquired entity. The payment of the Exercise Price of a Stock Option shall be by cash or,
subject to limitations imposed by applicable law, by such other means as the Committee may from
time to time permit, including: (i) by tendering, either actually or constructively by
attestation, shares of Stock valued at Fair Market Value as of the day of exercise; (ii) by
irrevocably authorizing a third party, acceptable to the Committee, to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the
Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise; (iii) by personal, certified or cashiers check; (iv) by
other property deemed acceptable by the Committee; or (v) by any combination thereof. The total
number of shares that may be acquired upon the exercise of a Stock Option shall be rounded down to
the nearest whole share.
Section 2.3 Restricted Stock.
(a) Grant of Restricted Stock. Each Restricted Stock Award shall be evidenced by an Award
Agreement that shall: (i) specify the number of shares of Stock covered by the Restricted Stock
Award; (ii) specify the date of grant of the Restricted Stock Award; (iii) specify the vesting
period; and (iv) contain such other terms and conditions not inconsistent with the Plan, including
the effect of termination of a Participants employment or Service with the Company, as the
Committee may, in its discretion, prescribe. All Restricted Stock Awards shall be in the form of
issued and outstanding shares of Stock that shall be either: (x) registered in the name of the
Participant and held by the Company, together with a stock power executed by the Participant in
favor of the Company, pending the vesting or forfeiture of the Restricted Stock; or (y) registered
in the name of, and delivered to, the Participant. In any event, the certificates evidencing the
Restricted Stock Award shall at all times prior to the applicable vesting date bear the following
legend:
The Stock evidenced hereby is subject to the terms of an Award Agreement with
Northfield Bancorp, Inc. dated [Date], made pursuant to the terms of the Northfield
Bancorp, Inc. 2008 Equity Incentive Plan, copies of which are on file at the
executive offices of Northfield Bancorp, Inc., and may not be sold, encumbered,
hypothecated or otherwise transferred except in accordance with the terms of such
Plan and Award Agreement,
A2
or such other restrictive legend as the Committee, in its discretion, may specify. Notwithstanding
the foregoing, the Company may in its sole discretion issue Restricted Stock in any other approved
format (e.g., electronically) in order to facilitate the paperless transfer of such Awards. In the
event Restricted Stock is not issued in certificate form, the Company and the transfer agent shall
maintain appropriate bookkeeping entries that evidence Participants ownership of such Awards.
Restricted Stock that is not issued in certificate form shall be subject to the same terms and
conditions of the Plan as certificated shares, including the restrictions on transferability and
the provision of a stock power executed by the Participant in favor of the Company, until the
satisfaction of the conditions to which the Restricted Stock Award is subject.
(b) Terms and Conditions. Each Restricted Stock Award shall be subject to the following terms
and conditions:
(i) Dividends. Unless the Committee determines otherwise with respect to any
Restricted Stock Award and specifies such determination in the relevant Award Agreement, any
dividends or distributions declared and paid with respect to shares of Stock subject to the
Restricted Stock Award, other than a stock dividend consisting of shares of Stock, shall be
immediately distributed to the Participant. If the Committee determines to delay the
distribution of dividends to a Participant until the vesting of an Award of Restricted
Stock, the Committee shall cause the dividend (and any earnings thereon) to be distributed
to the Participant no later than two and one-half months following the date on which the
Restricted Stock vests.
(ii) Voting Rights. Unless the Committee determines otherwise with respect to any
Restricted Stock Award and specifies such determination in the relevant Award Agreement,
voting rights appurtenant to the shares of Restricted Stock shall be exercised by the
Participant in his or her discretion.
(iii) Tender Offers and Merger Elections. Each Participant to whom a Restricted Stock
Award is granted shall have the right to respond, or to direct the response, with respect to
the related shares of Restricted Stock, to any tender offer, exchange offer, cash/stock
merger consideration election or other offer made to, or elections made by, the holders of
shares of Stock. Such a direction for any such shares of Restricted Stock shall be given by
proxy or ballot (if the Participant is the beneficial owner of the shares of Restricted
Stock for voting purposes) or by completing and filing, with the inspector of elections, the
trustee or such other person who shall be independent of the Company as the Committee shall
designate in the direction (if the Participant is not such a beneficial owner), a written
direction in the form and manner prescribed by the Committee. If no such direction is
given, then the shares of Restricted Stock shall not be tendered.
Section 2.4 Restricted Stock Units.
(a) Grant of Restricted Stock Units. Each Restricted Stock Unit Award shall be evidenced by
an Award Agreement that shall: (i) specify the number of Restricted Stock Units covered by the
Award; (ii) specify the date of grant of the Restricted Stock Units; (iii) specify the vesting
period or market conditions or performance conditions that must be satisfied in order to vest in
the Award; and (iv) contain such other terms and conditions not inconsistent with the Plan,
including the effect of termination of a Participants employment or Service with the Company, as
the Committee may, in its discretion, prescribe.
(b) Terms and Conditions. Each Restricted Stock Unit Award shall be subject to the following terms and conditions:
(i) Terms of Award. A Restricted Stock Unit shall be similar to Restricted Stock
except that no shares of Stock are actually awarded to the recipient on the date of grant.
Each Restricted Stock Unit Award shall be evidenced by an Award Agreement that shall specify
the Restriction Period (defined below), the number of Restricted Stock Units granted, and
such other provisions, including the effect of termination of a Participants employment or
Service with the Company, as the Committee shall determine. The Committee shall impose such
other conditions and/or restrictions on any Restricted Stock Unit Award
A3
granted pursuant to the Plan as it may deem advisable. A Restricted Stock Unit Award
may be settled in the sole discretion of the Committee, in cash, shares of Stock, or a
combination of both.
(ii) Dividend Equivalents. Subject to the restrictions, limitations and conditions
described in the Plan and/or the Award Agreement, dividend equivalents shall be payable with
respect to Restricted Stock Units. Such dividend equivalents will be fully vested and paid
to a recipient of Restricted Stock Units at the same time that cash dividends are otherwise
paid to owners of the Companys Stock.
(iii) No Voting Rights. A Participant shall have no voting rights with respect to any
Restricted Stock Units granted hereunder.
Section 2.5 Performance-Based Compensation. Any Award under the Plan that is intended
to be performance-based compensation within the meaning of Code Section 162(m) shall be
conditioned on the achievement of one or more objective performance measures, to the extent
required by Code Section 162(m), as may be determined by the Committee. The grant of any Award and
the establishment of performance measures that are intended to be performance-based compensation
shall be made during the period required under Code Section 162(m) and shall comply with all
applicable requirements of Code Section 162(m).
(a) Performance Measures. Such performance measures may be based on any one or more of the
following:
(i) basic earnings per share;
(ii) basic cash earnings per share;
(iii) diluted earnings per share;
(iv) diluted cash earnings per share;
(v) net income or net income before taxes;
(vi) cash earnings;
(vii) net interest income;
(viii) non-interest income;
(ix) general and administrative expense to average assets ratio;
(x) cash general and administrative expense to average assets ratio;
(xi) efficiency ratio;
(xii) cash efficiency ratio;
(xiii) return on average assets;
(xiv) cash return on average assets;
(xv) return on average stockholders equity;
(xvi) cash return on average stockholders equity;
(xvii) return on average tangible stockholders equity;
A4
(xviii) cash return on average tangible stockholders equity;
(xix) core earnings;
(xx) operating income;
(xxi) operating efficiency ratio;
(xxii) net interest rate margin or net interest rate spread;
(xxiii) growth in assets, loans, or deposits;
(xxiv) loan production volume;
(xxv) non-performing loans;
(xxvi) cash flow;
(xxvii) strategic business objectives, consisting of one or more objectives based upon
meeting specified cost targets, business expansion goals, and goals relating to acquisitions
or divestitures, or goals relating to capital raising and capital management; or
(xxviii) any combination of the foregoing.
Performance measures may be based on the performance of the Company as a whole or on any one
or more Subsidiaries or business units of the Company or a Subsidiary, may be measured relative to
a peer group, an index or a business plan and may be considered as absolute measures or changes in
measures. In establishing any performance measures, the Committee may provide for the exclusion of
the effects of the following items, to the extent identified in the audited financial statements of
the Company, including footnotes, or in the Managements Discussion and Analysis section of the
Companys annual report or in the Compensation Discussion and Analysis Section, if any, of the
Companys annual proxy statement: (i) extraordinary, unusual, and/or nonrecurring items of gain or
loss; (ii) gains or losses on the disposition of a business; (iii) changes in tax or accounting
principles, regulations or laws; or (iv) mergers or acquisitions. To the extent not specifically
excluded, such effects shall be included in any applicable performance measure.
(b) Adjustments. Pursuant to this Section 2.5, in certain circumstances the Committee may
adjust performance measures; provided, however, no adjustment may be made with respect to an Award
that is intended to be performance-based compensation within the meaning of Code Section 162(m),
except to the extent the Committee exercises such negative discretion as is permitted under
applicable law for purposes of an exception under Code Section 162(m). If the Committee determines
that a change in the business, operations, corporate structure or capital structure of the Company
or the manner in which the Company or its Subsidiaries conducts its business or other events or
circumstances render current performance measures to be unsuitable, the Committee may modify such
performance measures, in whole or in part, as the Committee deems appropriate. If a Participant is
promoted, demoted or transferred to a different business unit during a performance period, the
Committee may determine that the selected performance measures or applicable performance period are
no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust,
change or eliminate the performance measures or change the applicable performance period; or (ii)
cause to be made a cash payment to the Participant in an amount determined by the Committee.
Section 2.6 Vesting of Awards. Subject to the following, no Awards under the Plan
shall be granted with a vesting rate exceeding twenty percent (20%) per year, with the first
installment vesting one year after the date of grant. If the right to become vested in an Award
under the Plan (including the right to exercise a Stock Option or SAR) is conditioned on the
completion of a specified period of Service with the Company or its Subsidiaries, without
achievement of performance measures or other performance objectives being required as a condition
of vesting, and without it being granted in lieu of, or in exchange for, other compensation, then
the required period of
A5
Service for full vesting shall be determined by the Committee and evidenced in the Award
Agreement (subject to acceleration of vesting, to the extent permitted by the Committee, including
in the event of the Participants death, Disability, Retirement (with respect to Employees only),
or Involuntary Termination of Employment following a Change in Control). Unless otherwise provided
by the Committee, Service as a director emeritus or advisory director shall constitute Service for
purposes of vesting.
Section 2.7 Deferred Compensation. If any Award would be considered deferred
compensation as defined under Code Section 409A (Deferred Compensation), the Committee reserves
the absolute right (including the right to delegate such right) to unilaterally amend the Plan or
the Award Agreement, without the consent of the Participant, to maintain exemption from, or to
comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement
pursuant to this Section 2.7 shall maintain, to the extent practicable, the original intent of the
applicable provision without violating Code Section 409A. A Participants acceptance of any Award
under the Plan constitutes acknowledgement and consent to such rights of the Committee, without
further consideration or action. Any discretionary authority retained by the Committee pursuant to
the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award which
is determined to constitute Deferred Compensation, if such discretionary authority would contravene
Code Section 409A.
Section 2.8 Prohibition Against Option Repricing. Except for adjustments pursuant to
Section 3.4, and reductions of the Exercise Price approved by the Companys stockholders, neither
the Committee nor the Board shall have the right or authority to make any adjustment or amendment
that reduces or would have the effect of reducing the Exercise Price of a Stock Option or SAR
previously granted under the Plan, whether through amendment, cancellation (including cancellation
in exchange for a cash payment in excess of the Stock Options in-the-money value) or replacement
grants, or other means.
Section 2.9. Effect of Termination of Service on Awards. The Committee shall
establish the effect of a Termination of Service on the continuation of rights and benefits
available under an Award or the Plan and, in so doing, may make distinctions based upon, among
other things, the cause of Termination of Service and type of Award. Unless otherwise provided in
an Award Agreement or as set forth in an employment agreement entered into by and between the
Company and/or the Bank and an Employee, the following provisions shall apply to each Award granted
under this Plan:
(a) Upon a Participants Termination of Service for any reason other than Disability,
Retirement, death or termination for Cause, Stock Options and SARs shall be exercisable only as to
those shares that were immediately exercisable by such Participant at the date of termination, and
Stock Options and SARs may be exercised only for a period of three months following termination and
any Restricted Stock and Restricted Stock Units that have not vested as of the date of Termination
of Service shall expire and be forfeited.
(b) In the event of a Termination of Service for Cause, all Stock Options and SARs granted to
a Participant that have not been exercised and all Restricted Stock and Restricted Stock Units
granted to a Participant that have not vested shall expire and be forfeited.
(c) Upon Termination of Service for reason of Disability or death, and with respect to
Employees only, upon Retirement, all Stock Options and SARs shall be exercisable as to all shares
subject to an outstanding Award, whether or not then exercisable, and all Restricted Stock and
Restricted Stock Units shall vest as to all shares subject to an outstanding Award, whether or not
otherwise immediately vested, at the date of Termination of Service; provided, however, Restricted
Stock or Restricted Stock Units that are intended to qualify as performance-based compensation
within the meaning of Code Section 162(m) will not vest on Retirement unless the Award Agreement so
specifies. Stock Options and SARs, including vested Stock Options and SARs held by a Director who
has a Termination of Service due to Retirement, may be exercised for a period of one year following
Termination of Service due to Retirement, death or Disability; provided, however, that no Stock
Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more
than one year following Termination of Service due to Disability and provided, further, in order to
obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the
optionees death must have occurred while employed or within three (3) months of Termination of
Service.
A6
(d) Notwithstanding anything herein to the contrary, no Stock Option or SAR shall be
exercisable beyond the last day of the original term of such Stock Option or SAR.
(e) Notwithstanding the provisions of this Section 2.9, the effect of a Change in Control on
the vesting/exercisability of Stock Options, SARs, Restricted Stock and Restricted Stock Units is
as set forth in Article 4.
ARTICLE 3 SHARES SUBJECT TO PLAN
Section 3.1 Available Shares. The shares of Stock with respect to which Awards may be
made under the Plan shall be shares currently authorized but unissued, currently held or, to the
extent permitted by applicable law, subsequently acquired by the Company as treasury shares,
including shares purchased in the open market or in private transactions.
Section 3.2 Share Limitations.
(a) Share Reserve. Subject to the following provisions of this Section 3.2, the maximum
number of shares of Stock that may be delivered to Participants and their beneficiaries under the
Plan shall be equal to Three Million Seventy-Three Thousand and Four Hundred and Eighty-Eight
(3,073,488) shares of Stock. All of such shares of Stock may be delivered pursuant to options (all
of which may be granted as ISOs), and up to a maximum of Eight Hundred Seventy Eight Thousand One
Hundred and Thirty Nine (878,139) shares of Stock may be issued pursuant to Restricted Stock
Awards, provided that shares of Stock used to fund options greater than Two Million One Hundred
Ninety-Five Thousand Three Hundred Forty-Nine (2,195,349) shares of Stock must be obtained through
stock repurchases. The aggregate number of shares available for grant under this Plan and the
number of shares of Stock subject to outstanding awards shall be subject to adjustment as provided
in Section 3.4.
(b) Computation of Shares Available. For purposes of this Section 3.2 and in connection with
the granting of a Stock Option or SAR (other than a tandem SAR), or Restricted Stock or Restricted
Stock Units, the number of shares of Stock available for the granting of additional Stock Options,
SARs, Restricted Stock and Restricted Stock Units shall be reduced by the number of shares of Stock
in respect of which the Stock Option, SAR, Restricted Stock or Restricted Stock Unit is granted or
denominated. To the extent any shares of Stock covered by an Award (including Restricted Stock
and/or Restricted Stock Units) under the Plan are not delivered to a Participant or beneficiary for
any reason, including because the Award is forfeited or canceled or because a Stock Option or SAR
is not exercised, then such shares shall not be deemed to have been delivered for purposes of
determining the maximum number of shares of Stock available for delivery under the Plan. To the
extent (i) a Stock Option is exercised by using an actual or constructive exchange of shares of
Stock to pay the Exercise Price, (ii) shares of Stock are withheld to satisfy withholding taxes
upon exercise or vesting of an Award granted hereunder, or (iii) SARs are settled in shares of
Stock upon exercise, the number of shares of Stock available shall be reduced by the gross number
of Stock Options or SARs exercised rather than by the net number of shares of Stock issued.
Section 3.3 Limitations on Grants to Individuals.
(a) Options and SARs. The maximum number of shares of Stock, in the aggregate, that may be
covered by Stock Option and/or SAR Awards granted to any one Employee pursuant to Section 3.2 shall
not exceed Seven Hundred Sixty-Eight Thousand Three Hundred Seventy-Two (768,372) (twenty-five
percent (25%) of all shares of stock that are available for award as Stock Options and/or SARs
under Section 3.2). All such Awards may be granted during any one calendar year. For purposes of
this Section 3.3(a), if a Stock Option is granted in tandem with an SAR, such that the exercise of
the Stock Option or SAR with respect to a share of Stock cancels the tandem SAR or Stock Option,
respectively, with respect to such share, the tandem Stock Option and SAR with respect to each
share of Stock shall be counted as covering but one share of Stock for purposes of applying the
limitations of this Section 3.3.
(b) Restricted Stock and Restricted Stock Units. The maximum number of shares of Stock, in
the aggregate, that may be covered by Restricted Stock and/or Restricted Stock Unit Awards granted
to any one
A7
Employee pursuant to Section 3.2 shall not exceed Two Hundred Nineteen Thousand Five Hundred
Thirty-Four (219,534) (twenty-five percent (25%) of all shares of stock that are available for
award as Restricted Stock and/or Restricted Stock Units under Section 3.2). All such Awards may be
granted during any one calendar year.
(c) Director Awards. The maximum number of shares of Stock, in the aggregate, that may be
covered by Stock Option and/or SAR Awards granted to any one individual non-Employee Director
pursuant to Section 3.2 shall not exceed five percent (5%) of all shares of Stock that are
available for award as Stock Options and/or SARs under Section 3.2. The maximum number of shares
of Stock, in the aggregate, that may be covered by Restricted Stock and/or Restricted Stock Unit
Awards granted to any one individual non-Employee Director pursuant to Section 3.2 shall not exceed
five percent (5%) of all shares of Stock that are available for award under Section 3.2 as
Restricted Stock and/or Restricted Stock Units. In addition, the maximum number of shares of Stock
that may be covered by Stock Option and/or SAR Awards granted to all non-Employee Directors, in the
aggregate, pursuant to Section 3.2 shall not exceed thirty percent (30%) of all shares of Stock
that are available for award as Stock Options and/or SARs under Section 3.2, and the maximum number
of shares of Stock that may be covered by Restricted Stock or Restricted Stock Unit Awards granted
to all non-Employee Directors, in the aggregate, pursuant to Section 3.2 shall not exceed thirty
percent (30%) of all shares of Stock that are available for award as Restricted Stock and/or
Restricted Stock Units under Section 3.2.
Section 3.4 Corporate Transactions.
(a) General. In the event any recapitalization, forward or reverse stock split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or exchange of shares of
Stock or other securities, stock dividend or other special and nonrecurring dividend or
distribution (whether in the form of cash, securities or other property), liquidation, dissolution,
or other similar corporate transaction or event, affects the shares of Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants
under the Plan and/or under any Award granted under the Plan, then the Committee shall, in an
equitable manner, adjust any or all of (i) the number and kind of securities deemed to be available
thereafter for grants of Stock Options, SARs, Restricted Stock and Restricted Stock Units in the
aggregate to all Participants and individually to any one Participant, (ii) the number and kind of
securities that may be delivered or deliverable in respect of outstanding Stock Options, SARs,
Restricted Stock and Restricted Stock Units, and (iii) the Exercise Price of Stock Options and
SARs. In addition, the Committee is authorized to make adjustments in the terms and conditions of,
and the criteria included in, Stock Options, SARs, Restricted Stock and Restricted Stock Units
(including, without limitation, cancellation of Stock Options, SARs, Restricted Stock and
Restricted Stock Units in exchange for the in-the-money value, if any, of the vested portion
thereof, or substitution or exchange of Stock Options, SARs, Restricted Stock or Restricted Stock
Units using stock of a successor or other entity) in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence) affecting the Company
or any parent or Subsidiary or the financial statements of the Company or any parent or Subsidiary,
or in response to changes in applicable laws, regulations, or accounting principles. Unless
otherwise determined by the Committee, any such adjustment to an Award intended to qualify as
performance-based compensation shall conform to the requirements of Code Section 162(m) and the
regulations thereunder then in effect.
(b) Merger in which Company is Not Surviving Entity. In the event of any merger,
consolidation, or other business reorganization (including, but not limited to, a Change in
Control) in which the Company is not the surviving entity, unless otherwise determined by the
Committee at any time at or after grant and prior to the consummation of such merger, consolidation
or other business reorganization, any Stock Options or SARs granted under the Plan which remain
outstanding shall be converted into Stock Options to purchase or SARs to acquire voting common
equity securities of the business entity which survives such merger, consolidation or other
business reorganization having substantially the same terms and conditions as the outstanding Stock
Options or SARs under this Plan and reflecting the same economic benefit (as measured by the
difference between the aggregate Exercise Price and the value exchanged for outstanding shares of
Stock in such merger, consolidation or other business reorganization), all as determined by the
Committee prior to the consummation of such merger; provided, however, that the Committee may, at
any time prior to the consummation of such merger, consolidation or other business reorganization,
direct that all, but not less than all, outstanding Stock Options and SARs be canceled as of the
effective date of such merger, consolidation or other business reorganization in exchange for a
cash payment per share of Stock equal to the excess (if any) of the value exchanged for an
outstanding share of Stock in such merger, consolidation or other business reorganization over the
Exercise Price of the Stock Option or SAR being canceled.
A8
Section 3.5 Delivery of Shares. Delivery of shares of Stock or other amounts under
the Plan shall be subject to the following:
(a) Compliance with Applicable Laws. Notwithstanding any other provision of the Plan, the
Company shall have no obligation to deliver any shares of Stock or make any other distribution of
benefits under the Plan unless such delivery or distribution complies with all applicable laws
(including, the requirements of the Securities Act), and the applicable requirements of any
securities exchange or similar entity.
(b) Certificates. To the extent that the Plan provides for the issuance of shares of Stock,
the issuance may be effected on a non-certificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange.
ARTICLE 4 CHANGE IN CONTROL
Section 4.1 Consequence of a Change in Control. Subject to the provisions of Section
3.4 (relating to the adjustment of shares), and except as otherwise provided in the Plan or as
determined by the Committee and set forth in the terms of any Award Agreement or as set forth in an
employment agreement entered into by and between the Company and/or the Bank and an Employee:
(a) At the time of an Involuntary Termination of Employment (as defined in Section 8.1) (or,
as to a Director, Termination of Service as a Director) following a Change in Control, all Stock
Options and SARs then held by the Participant shall become fully exercisable (subject to the
expiration provisions otherwise applicable to the Stock Option or SAR).
(b) At the time of an Involuntary Termination of Employment (as defined in Section 8.1) (or,
as to a Director, Termination of Service as a Director) following a Change in Control, all Awards
of Restricted Stock described in Section 2.1(c) and Restricted Stock Units described in Section
2.1(d) shall be fully earned and vested immediately. Notwithstanding the above, any Awards the
vesting of which are based on satisfaction of performance-based conditions will be vested as
specified in subsection (c) hereof.
(c) In the event of a Change in Control, any performance measure attached to an Award under
the Plan shall be deemed satisfied as of the date of the Change in Control.
Section 4.2 Definition of Change in Control. For purposes of the Plan, unless
otherwise provided in an Award Agreement, a Change in Control shall be deemed to have occurred
upon the earliest to occur of the following:
(a) any person, as such term is used in Sections 13(d) and 14(d) of the Exchange Act (a
Person), is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing twenty five percent (25%) or more
of the combined voting power of the Companys then outstanding Voting Securities, provided that,
notwithstanding the foregoing and for all purposes of this Plan: (a) the term Person shall not
include (1) the MHC, the Company or any of its Subsidiaries, (2) an employee benefit plan of the
Company or any of its Subsidiaries (including the Plan), and any trustee or other fiduciary holding
securities under any such plan (but only with respect to securities held under any such plan), or
(3) a corporation or other entity owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of Stock of the Company; (b) no Person
shall be deemed the beneficial owner of any securities acquired by such Person in an Excluded
Transaction; and (c) no Director or officer of the Company or any direct or indirect Subsidiary of
the Company (or any affiliate of any such Director or officer) shall, by reason of any or all of
such Directors or officers acting in their capacities as such, be deemed to beneficially own any
securities beneficially owned by any other such Director or officer (or any affiliate thereof); or
(b) the Incumbent Directors cease, for any reason, to constitute a majority of the Whole
Board; or
(c) a plan of reorganization, merger, consolidation or similar transaction involving the
Company and one or more other corporations or entities is consummated, other than a plan of
reorganization, merger,
A9
consolidation or similar transaction that is an Excluded Transaction, or the stockholders of the
Company approve a plan of complete liquidation of the Company, or a sale, liquidation or other
disposition of all or substantially all of the assets of the Company or any bank Subsidiary of the
Company is consummated; or
(d) a tender offer is made for 25% or more of the outstanding Voting Securities of the Company
and the stockholders owning beneficially or of record 25% or more of the outstanding Voting
Securities of the Company have tendered or offered to sell their shares pursuant to such tender
offer and such tendered shares have been accepted by the tender offeror; or
(e) a Potential Change in Control occurs, and the Board determines, pursuant to the vote of a
majority of the Whole Board, with at least two-thirds (2/3) of the Incumbent Directors then in
office voting in favor of such determination, to deem the Potential Change in Control to be a
Change in Control for the purposes of this Plan.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because
any Person (the Subject Person) acquired beneficial ownership of more than the permitted amount
of the then outstanding common stock or Voting Securities as a result of the acquisition of Stock
or Voting Securities by the Company, which by reducing the number of shares of Stock or Voting
Securities then outstanding, increases the proportional number of shares beneficially owned by the
Subject Person; provided, however, that if a Change in Control would occur (but for the operation
of this sentence) as a result of the acquisition of Stock or Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes the beneficial owner of any
additional Stock or Voting Securities which increases the percentage of the then outstanding Stock
or Voting Securities beneficially owned by the Subject Person, then a Change in Control shall
occur. In addition, and notwithstanding the foregoing, a Change in Control shall not be deemed to
occur as a result of or in connection with a second-step conversion of the MHC to stock form,
unless otherwise provided in the Award Agreement. In the event that an Award constitutes Deferred
Compensation, and the settlement of, or distribution of benefits under, such Award is to be
triggered solely by a Change in Control, then with respect to such Award, a Change in Control shall
be defined as required under Code Section 409A, as in effect at the time of such transaction.
ARTICLE 5 COMMITTEE
Section 5.1 Administration. The Plan shall be administered by the members of the
Compensation Committee of the Company who are Disinterested Board Members. If the Committee
consists of fewer than three Disinterested Board Members, then the Board shall appoint to the
Committee such additional Disinterested Board Members as shall be necessary to provide for a
Committee consisting of at least three Disinterested Board Members. Any members of the Committee
who do not qualify as Disinterested Board Members shall abstain from participating in any
discussion to make or administer Awards that are made to Participants who at the time of
consideration for such Award: (i) are persons subject to the short-swing profit rules of Section 16
of the Exchange Act, or (ii) are reasonably anticipated to be Covered Employees during the term of
the Award. The Board (or those members of the Board who are independent directors under the
corporate governance statutes or rules of any national securities exchange on which the Company
lists its securities) may, in its discretion, take any action and exercise any power, privilege or
discretion conferred on the Committee under the Plan with the same force and effect under the Plan
as if done or exercised by the Committee. Notwithstanding anything to the contrary herein, all
Awards made by the Committee and any performance criteria established by the Committee with respect
to an Award, shall be subject to the ratification of the Board.
Section 5.2 Powers of Committee. Subject to Section 5.1, the administration of the
Plan by the Committee shall be subject to the following:
(a) the Committee will have the authority and discretion to select from among the Companys
and its Subsidiaries Employees and Directors those persons who shall receive Awards, to determine
the time or times of receipt, to determine the types of Awards and the number of shares covered by
the Awards, to establish the terms, conditions, performance criteria, restrictions (including
without limitation, provisions relating to non-competition, non-solicitation and confidentiality),
and other provisions of such Awards (subject to the restrictions imposed by Article 6) to cancel or
suspend Awards and to reduce, eliminate or accelerate any restrictions or vesting requirements
applicable to an Award at any time after the grant of the Award (including accelerating awards in
the event of a second-step conversion of the MHC to stock form).
A10
(b) The Committee will have the authority and discretion to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, and to make all other
determinations that may be necessary or advisable for the administration of the Plan.
(c) The Committee will have the authority to define terms not otherwise defined herein.
(d) Any interpretation of the Plan by the Committee and any decision made by it under the Plan
is final and binding on all persons.
(e) In controlling and managing the operation and administration of the Plan, the Committee
shall take action in a manner that conforms to the charter and bylaws of the Company and applicable
corporate law.
Section 5.3 Delegation by Committee. Except to the extent prohibited by applicable
law, the applicable rules of a stock exchange or the Plan, or as necessary to comply with the
exemptive provisions of Rule 16b-3 promulgated under the Exchange Act or Code Section 162(m), the
Committee may allocate all or any portion of its responsibilities and powers to any one or more of
its members and may delegate all or any part of its responsibilities and powers to any person or
persons selected by it, including: (a) delegating to a committee of one or more members of the
Board who are not outside directors within the meaning of Code Section 162(m), the authority to
grant Awards under the Plan to eligible persons who are not persons with respect to whom the
Company wishes to comply with Code Section 162(m); and/or (b) delegating to a committee of one or
more members of the Board who are not non-employee directors, within the meaning of Rule 16b-3,
the authority to grant Awards under the Plan to eligible persons who are not then subject to
Section 16 of the Exchange Act. The acts of such delegates shall be treated hereunder as acts of
the Committee and such delegates shall report regularly to the Committee regarding the delegated
duties and responsibilities and any Awards so granted. Any such allocation or delegation may be
revoked by the Committee at any time.
Section 5.4 Information to be Furnished to Committee. As may be permitted by
applicable law, the Company and its Subsidiaries shall furnish the Committee with such data and
information as it determines may be required for it to discharge its duties. The records of the
Company and its Subsidiaries as to a Participants employment, termination of employment, leave of
absence, reemployment and compensation shall be conclusive on all persons unless determined by the
Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence, data or information
as the Committee considers desirable to carry out the terms of the Plan.
Section 5.5 Committee Action. The Committee shall hold such meetings, and may make
such administrative rules and regulations, as it may deem proper. A majority of the members of the
Committee shall constitute a quorum, and the action of a majority of the members of the Committee
present at a meeting at which a quorum is present, as well as actions taken pursuant to the
unanimous written consent of all of the members of the Committee without holding a meeting, shall
be deemed to be actions of the Committee. Subject to Section 5.1, all actions of the Committee
shall be final and conclusive and shall be binding upon the Company, Participants and all other
interested parties. Any person dealing with the Committee shall be fully protected in relying upon
any written notice, instruction, direction or other communication signed by a member of the
Committee or by a representative of the Committee authorized to sign the same in its behalf.
ARTICLE 6 AMENDMENT AND TERMINATION
Section 6.1 General. The Board may, as permitted by law, at any time, amend or
terminate the Plan, and may amend any Award Agreement, provided that no amendment or termination
(except as provided in Section 2.7, Section 3.4 and Section 6.2) may cause the Award to violate
Code Section 409A, or, in the absence of written consent to the change by the affected Participant
(or, if the Participant is not then living, the affected beneficiary), adversely impair the rights
of any Participant or beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; provided, however, that, no amendment may (a) materially
increase the benefits accruing to Participants under the Plan, (b) materially increase the
aggregate number of securities which may be issued under the Plan, other than pursuant to Section
3.4, or (c) materially modify the requirements for participation in the Plan, unless the amendment
under (a), (b) or (c) above is approved by the Companys stockholders.
A11
Section 6.2 Amendment to Conform to Law and Accounting Changes. Notwithstanding any
provision in this Plan or any Award Agreement to the contrary, the Committee may amend the Plan or
any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable
for the purpose of (i) conforming the Plan or the Award Agreement to any present or future law
relating to plans of this or similar nature (including, but not limited to, Code Section 409A), or
(ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation
thereof issued by the Securities and Exchange Commission or Financial Accounting Standards Board
subsequent to the adoption of the Plan or the making of the Award affected thereby, which, in the
sole discretion of the Committee, may materially and adversely affect the financial condition or
results of operations of the Company. By accepting an Award under this Plan, each Participant
agrees and consents to any amendment made pursuant to this Section 6.2 or Section 2.7 to any Award
granted under the Plan without further consideration or action.
ARTICLE 7 GENERAL TERMS
Section 7.1 No Implied Rights.
(a) No Rights to Specific Assets. Neither a Participant nor any other person shall by reason
of participation in the Plan acquire any right in or title to any assets, funds or property of the
Company or any Subsidiary whatsoever, including any specific funds, assets, or other property which
the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual right to the shares of Stock or
amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or
any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of
the Company or any Subsidiary shall be sufficient to pay any benefits to any person.
(b) No Contractual Right to Employment or Future Awards. The Plan does not constitute a
contract of employment, and selection as a Participant will not give any participating Employee the
right to be retained in the employ of the Company or any Subsidiary or any right or claim to any
benefit under the Plan, unless such right or claim has specifically accrued under the terms of the
Plan. No individual shall have the right to be selected to receive an Award under the Plan, or,
having been so selected, to receive a future Award under the Plan.
(c) No Rights as a Stockholder. Except as otherwise provided in the Plan, no Award under the
Plan shall confer upon the holder thereof any rights as a stockholder of the Company prior to the
date on which the individual fulfills all conditions for receipt of such rights.
Section 7.2 Transferability. Except as otherwise so provided by the Committee, ISOs
under the Plan are not transferable except (i) as designated by the Participant by will or by the
laws of descent and distribution, (ii) to a trust established by the Participant, if under Code
Section 671 and applicable state law, the Participant is considered the sole beneficial owner of
the Stock Option while held in trust, or (iii) between spouses incident to a divorce or pursuant to
a domestic relations order, provided, however, in the case of a transfer within the meaning of this
Section 7.2(iii), the Stock Option shall not qualify as an ISO as of the day of such transfer. The
Committee shall have the discretion to permit the transfer of Stock Options (other than ISOs) and
SARs (other than SARs granted in tandem with ISOs) under the plan; provided, however, that such
transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships
established for the primary benefit of such family members or to charitable organizations, and;
provided, further, that such transfers are not made for consideration to the Participant.
Awards of Restricted Stock shall not be transferable prior to the time that such Awards vest
in the Participant. Restricted Stock Units shall not be transferable prior to the time such Awards
are both vested and distributed to the Participant.
Section 7.3 Designation of Beneficiaries. A Participant hereunder may file with the
Company a written designation of a beneficiary or beneficiaries under this Plan and may from time
to time revoke or amend any such designation (Beneficiary Designation). Any designation of
beneficiary under this Plan shall be controlling over any other disposition, testamentary or
otherwise (unless such disposition is pursuant to a domestic relations order); provided, however,
that if the Committee is in doubt as to the entitlement of any such beneficiary to any Award, the
Committee may determine to recognize only the legal representative of the Participant, in which
case the Company, the Committee and the members thereof shall not be under any further liability to
anyone.
A12
Section 7.4 Non-Exclusivity. Neither the adoption of this Plan by the Board nor the
submission of the Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or the Committee to adopt such other incentive
arrangements as either may deem desirable, including, without limitation, the granting of
Restricted Stock, Restricted Stock Units, SARs or Stock Options otherwise than under the Plan or an
arrangement that is or is not intended to qualify under Code Section 162(m), and such arrangements
may be either generally applicable or applicable only in specific cases.
Section 7.5 Award Agreement. Each Award granted under the Plan shall be evidenced by
an Award Agreement signed by the Participant. A copy of the Award Agreement, in any medium chosen
by the Committee, shall be provided (or made available electronically) to the Participant.
Section 7.6 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person entitled to benefits
under the Plan, and any permitted modification or revocation thereof, shall be filed with the
Company at such times, in such form, and subject to such restrictions and limitations, not
inconsistent with the terms of the Plan, as the Committee shall require.
Section 7.7 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information upon which the person is acting considers
pertinent and reliable, and signed, made or presented by the proper party or parties.
Section 7.8 Tax Withholding. Where a Participant is entitled to receive shares of
Stock upon the vesting or exercise of an Award, the Company shall have the right to require such
Participant to pay to the Company the amount of any tax that the Company is required to withhold
with respect to such vesting or exercise, or, in lieu thereof, to retain, or to sell without
notice, a sufficient number of shares of Stock to cover the minimum amount required to be withheld.
To the extent determined by the Committee and specified in an Award Agreement, a Participant shall
have the right to direct the Company to satisfy the minimum required federal, state and local tax
withholding by: (i) with respect to a Stock Option or SAR settled in stock, reducing the number of
shares of Stock subject to the Stock Option or SAR (without issuance of such shares of Stock to the
Stock Option holder) by a number equal to the quotient of (a) the total minimum amount of required
tax withholding divided by (b) the excess of the Fair Market Value of a share of Stock on the
exercise date over the Exercise Price per share of Stock; (ii) with respect to Restricted Stock,
withholding a number of shares (based on the Fair Market Value on the vesting date) otherwise
vesting that would satisfy the minimum amount of required tax withholding; and (iii) with respect
to a Restricted Stock Unit, withholding from the amount of cash or shares of Stock distributed, an
amount sufficient to satisfy the minimum amount of required tax withholding. Provided there are no
adverse accounting consequences to the Company (a requirement to have liability classification of
an award under SFAS 123(R) is an adverse consequence), a Participant who is not required to have
taxes withheld may require the Company to withhold in accordance with the preceding sentence as if
the Award were subject to minimum tax withholding requirements.
Section 7.9 Action by Company or Subsidiary. Any action required or permitted to be
taken by the Company or any Subsidiary shall be by resolution of its board of directors, or by
action of one or more members of the Board (including a committee of the Board) who are duly
authorized to act for the Board, or (except to the extent prohibited by applicable law or
applicable rules of any stock exchange) by a duly authorized officer of the Company or such
Subsidiary.
Section 7.10 Successors. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company, whether the existence of
such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise,
of all or substantially all of the business, stock, and/or assets of the Company.
Section 7.11 Indemnification. To the fullest extent permitted by law and the
Companys governing documents, each person who is or shall have been a member of the Committee, or
of the Board, or an officer of the Company to whom authority was delegated in accordance with
Section 5.3, or an Employee of the Company, shall be indemnified and held harmless by the Company
against and from any loss (including amounts paid in settlement), cost, liability or expense
(including reasonable attorneys fees) that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or proceeding to which he or she
may be a
A13
party or in which he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in settlement thereof, with
the Companys approval, or paid by him or her in satisfaction of any judgment in any such action,
suit, or proceeding against him or her, provided he or she shall give the Company an opportunity,
at its own expense, to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or
her own willful misconduct or except as expressly provided by statute or regulation. The foregoing
right of indemnification shall not be exclusive of any other rights of indemnification to which
such persons may be entitled under the Companys charter or bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them harmless.
Section 7.12 No Fractional Shares. Unless otherwise permitted by the Committee, no
fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash or other property shall be issued or paid in lieu of
fractional shares or whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
Section 7.13 Governing Law. The Plan, all Awards granted hereunder, and all actions
taken in connection herewith shall be governed by and construed in accordance with the laws of the
State of New Jersey without reference to principles of conflict of laws, except as superseded by
applicable federal law. The federal and state courts located in Middlesex County, New Jersey,
shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the
terms of the Plan. By accepting any award under this Plan, each Participant and any other person
claiming any rights under the Plan agrees to submit himself and any legal action that the
Participant brings under the Plan, to the sole jurisdiction of such courts for the adjudication and
resolution of any such disputes.
Section 7.14 Benefits Under Other Plans. Except as otherwise provided by the
Committee or as set forth in a Qualified Retirement Plan, Awards to a Participant (including the
grant and the receipt of benefits) under the Plan shall be disregarded for purposes of determining
the Participants benefits under, or contributions to, any Qualified Retirement Plan, non-qualified
plan and any other benefit plans maintained by the Participants employer. The term Qualified
Retirement Plan means any plan of the Company or a Subsidiary that is intended to be qualified
under Code Section 401(a).
Section 7.15 Validity. If any provision of this Plan is determined to be illegal or
invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof,
but this Plan shall be construed and enforced as if such illegal or invalid provision has never
been included herein.
Section 7.16 Notice. Unless otherwise provided in an Award Agreement, all written
notices and all other written communications to the Company provided for in the Plan or in any
Award Agreement, shall be delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid (provided that international mail shall be sent via overnight or
two-day delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its
principal executive office. Such notices, demands, claims and other communications shall be deemed
given:
(a) in the case of delivery by overnight service with guaranteed next day delivery, the next
day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S.
mail; or
(c) in the case of facsimile or email, the date upon which the transmitting party received
confirmation of receipt; provided, however, that in no event shall any such communications be
deemed to be given later than the date they are actually received, provided they are actually
received.
In the event a communication is not received, it shall only be deemed received upon the showing of
an original of the applicable receipt, registration or confirmation from the applicable delivery
service. Communications that are to be delivered by U.S. mail or by overnight service to the
Company shall be directed to the attention of the Companys Chief Operating Officer and to the
Corporate Secretary.
A14
Section 7.17 Forfeiture Events.
(a) The Committee may specify in an Award Agreement that the Participants rights, payments,
and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or
recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events include, but are not limited to,
termination of employment for cause, termination of the Participants provisions of Services to the
Company or any Subsidiary, violation of material Company or Subsidiary policies, breach of
noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant,
or other conduct of the Participant that is detrimental to the business or reputation of the
Company or any Subsidiary.
(b) If the Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial reporting requirement
under the federal securities laws, any Participant who is subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002 shall reimburse the Company the amount of any payment
in settlement of an Award earned or accrued during the twelve (12) month period following the first
public issuance or filing with the SEC (whichever first occurred) of the financial document
embodying such financial reporting requirement.
In addition, in the event of an accounting restatement, the Committee, in its sole and
exclusive discretion, may require that any Participant reimburse the Company for all or any part of
the amount of any payment in settlement of any Award granted hereunder.
ARTICLE 8 DEFINED TERMS; CONSTRUCTION
Section 8.1 In addition to the other definitions contained herein, unless otherwise
specifically provided in an Award Agreement, the following definitions shall apply:
(a) 10% Stockholder means an individual who, at the time of grant, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of stock of the
Company.
(b) Award means any Stock Option, SAR, Restricted Stock and Restricted Stock Unit or any or
all of them, or any other right or interest relating to stock or cash, granted to a Participant
under the Plan.
(c) Award Agreement means the document (in whatever medium prescribed by the Committee)
which evidences the terms and conditions of an Award under the Plan. Such document is referred to
as an agreement, regardless of whether a Participants signature is required.
(d) Board means the Board of Directors of the Company.
(e) If the Participant is subject to a written employment agreement (or other similar written
agreement) with the Company or a Subsidiary that provides a definition of termination for Cause,
then, for purposes of this Plan, the term Cause shall have meaning set forth in such agreement.
In the absence of such a definition, Cause means (i) the conviction of the Participant of a
felony or of any lesser criminal offense involving moral turpitude; (ii) the willful commission by
the Participant of a criminal or other act that, in the judgment of the Board, will likely cause
substantial economic damage to the Company or any Subsidiary or substantial injury to the business
reputation of the Company or any Subsidiary; (iii) the commission by the Participant of an act of
fraud in the performance of his duties on behalf of the Company or any Subsidiary; (iv) the
continuing willful failure of the Participant to perform his duties to the Company or any
Subsidiary (other than any such failure resulting from the Participants incapacity due to physical
or mental illness) after written notice thereof; or (v) an order of a federal or state regulatory
agency or a court of competent jurisdiction requiring the termination of the Participants Service
with the Company.
(f) Change in Control has the meaning ascribed to it in Section 4.2.
A15
(g) Code means the Internal Revenue Code of 1986, as amended, and any rules, regulations and
guidance promulgated thereunder, as modified from time to time.
(h) Code Section 409A means the provisions of Section 409A of the Code and any rules,
regulations and guidance promulgated thereunder, as modified from time to time.
(i) Committee means the Committee acting under Article 5.
(j) Covered Employee has the meaning given the term in Code Section 162(m), and shall also
include any other Employee who may become a Covered Employee before an Award vests, as the
Committee may determine in its sole discretion.
(k) Director means a member of the Board of Directors of the Company or a Subsidiary.
(l) If the Participant is subject to a written employment agreement (or other similar written
agreement) with the Company or a Subsidiary that provides a definition of Disability or
Disabled, then, for purposes of this Plan, the terms Disability or Disabled shall have
meaning set forth in such agreement. In the absence of such a definition, Disability shall be
defined in accordance with the Banks long-term disability plan. To the extent that an Award
hereunder is subject to Code Section 409A, Disability or Disabled shall mean that a
Participant: (i) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by
reason of any medically determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three (3) months under an
accident and health plan covering the Companys Employees. Except to the extent prohibited under
Code Section 409A, if applicable, the Committee shall have discretion to determine if a termination
due to Disability has occurred.
(m) Disinterested Board Member means a member of the Board who: (a) is not a current
Employee of the Company or a Subsidiary; (b) is not a former employee of the Company who receives
compensation for prior Services (other than benefits under a tax-qualified retirement plan) during
the taxable year; (c) has not been an officer of the Company; (d) does not receive remuneration
from the Company or a Subsidiary, either directly or indirectly, in any capacity other than as a
Director except in an amount for which disclosure would not be required pursuant to Item 404 of SEC
Regulation S-K in accordance with the proxy solicitation rules of the SEC, as amended or any
successor provision thereto; and (e) does not possess an interest in any other transaction, and is
not engaged in a business relationship for which disclosure would be required pursuant to Item
404(a) of SEC Regulation S-K under the proxy solicitation rules of the SEC, as amended or any
successor provision thereto. The term Disinterested Board Member shall be interpreted in such
manner as shall be necessary to conform to the requirements of section 162(m) of the Code, Rule
16b-3 promulgated under the Exchange Act and the corporate governance standards imposed on
compensation committees under the listing requirements imposed by any national securities exchange
on which the Company lists or seeks to list its securities.
(n) Employee means any person employed by the Company or any Subsidiary. Directors who are
also employed by the Company or a Subsidiary shall be considered Employees under the Plan.
(o) Exchange Act means the Securities Exchange Act of 1934, as amended from time to time.
(p) Excluded Transaction means (I) a plan of reorganization, merger, consolidation or
similar transaction that would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving corporation or any parent thereof) at least 50%
of the combined voting power of the Voting Securities of the entity surviving the plan of
reorganization, merger, consolidation or similar transaction (or the parent of such surviving
entity) immediately after such plan of reorganization, merger, consolidation or similar
transaction; and (II) a second-step conversion of the MHC.
A16
(q) Exercise Price means the price established with respect to a Stock Option or SAR
pursuant to Section 2.2.
(r) Fair Market Value means, with respect to a share of Stock on a specified date:
(I) the final reported sales price on the date in question (or if there is no reported
sale on such date, on the last preceding date on which any reported sale occurred) as
reported in the principal consolidated reporting system with respect to securities listed or
admitted to trading on the principal United States securities exchange on which the shares
of Stock are listed or admitted to trading, as of the close of the market in New York City
and without regard to after-hours trading activity; or
(II) if the shares of Stock are not listed or admitted to trading on any such
exchange, the closing bid quotation with respect to a share of Stock on such date, as of the
close of the market in New York City and without regard to after-hours trading activity, or,
if no such quotation is provided, on another similar system, selected by the Committee, then
in use; or
(III) if (I) and (II) are not applicable, the Fair Market Value of a share of Stock as
the Committee may determine in good faith and in accordance with Code Section 422 and the
applicable requirements of Code Section 409A and the regulations promulgated thereunder.
For purposes of the exercise of a Stock Option, Fair Market Value on such date shall be the
date a notice of exercise is received by the Company, or if not a day on which the market is
open, the next day that it is open.
(s) A termination of employment by an Employee Participant shall be deemed a termination of
employment for Good Reason as a result of the Participants resignation from the employ of the
Company or any Subsidiary upon the occurrence of any of the following events following a Change in
Control: (a) the failure of the Company or Subsidiary to appoint or re-appoint or elect or re-elect
the Employee Participant to the position(s) with the Company or Subsidiary held immediately prior
to the Change in Control; (b) a material change in the functions, duties or responsibilities of the
Employee Participant compared to those functions, duties or responsibilities in effect immediately
prior to the Change in Control; (c) any reduction of the rate of the Employee Participants base
salary in effect immediately prior to the Change in Control; (d) any failure (other than due to
reasonable administrative error that is cured promptly upon notice) to pay any portion of the
Employee Participants compensation as and when due; (e) any change in the terms and conditions of
any compensation or benefit program in which the Employee Participant participated immediately
prior to the Change in Control which, either individually or together with other changes, has a
material adverse effect on the aggregate value of his total compensation package; or (f) a change
in the Employee Participants principal place of employment, without his consent, to a place that
is at least thirty (30) miles further away from the Employee Participants principal residence
prior to the Change in Control.
(t) Immediate Family Member means with respect to any Participant: (a) any of the
Participants children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses,
former spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-law, sons-in-law,
daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption;
(b) any natural person sharing the Participants household (other than as a tenant or employee,
directly or indirectly, of the Participant); (c) a trust in which any combination of the
Participant and persons described in section (a) and (b) above own more than fifty percent (50%) of
the beneficial interests; (d) a foundation in which any combination of the Participant and persons
described in sections (a) and (b) above control management of the assets; or (e) any other
corporation, partnership, limited liability company or other entity in which any combination of the
Participant and persons described in sections (a) and (b) above control more than fifty percent
(50%) of the voting interests.
(u) Incumbent Directors means:
(I) the individuals who, on the date hereof, constitute the Board; and
(II) any new Director whose appointment or election by the Board or nomination for
election by the Companys stockholders was approved or recommended: (a) by the vote of at
least two-thirds (2/3)
A17
of the Whole Board, with at least two-thirds of the Incumbent Directors then in office
voting in favor of such approval or recommendation; or (b) by a Nominating Committee of the
Board whose members were appointed by the vote of at least two-thirds (2/3) of the Whole
Board, with at least two-thirds of the Incumbent Directors then in office voting in favor of
such appointments
(v) Involuntary Termination of Employment means the Termination of Service by the Company or
Subsidiary (other than a termination for Cause) or termination of employment by a Participant
Employee for Good Reason.
(w) ISO has the meaning ascribed to it in Section 2.1(a).
(x) MHC means Northfield Bancorp, MHC.
(y) Non-Qualified Option means the right to purchase shares of Stock that is either (i)
granted to a Participant who is not an Employee, or (ii) granted to an Employee and either is not
designated by the Committee to be an ISO or does not satisfy the requirements of Section 422 of the
Code.
(z) Participant means any individual who has received, and currently holds, an outstanding
Award under the Plan.
(aa) Potential Change in Control means:
(I) the public announcement by any Person of an intention to take or to consider taking
actions which, if consummated, would constitute a Change in Control; or
(II) one or more transactions, events or occurrences that result in a change in control
of the Company or any Subsidiary within the meaning of the Home Owners Loan Act, as
amended, and the applicable rules and regulations promulgated thereunder, as in effect at
the time of the Change in Control; or
(III) a proxy statement soliciting proxies from stockholders of the Company is filed or
distributed, seeking stockholder approval of a plan of reorganization, merger, consolidation
or similar transaction involving the Company and one or more other entities, but only if
such plan of reorganization, merger, consolidation or similar transaction has not been
approved by the vote of at least two-thirds (2/3) of the Whole Board, with at least
two-thirds (2/3) of the Incumbent Directors then in office voting in favor of such plan of
reorganization, merger, consolidation or similar transaction.
(bb) Restricted Stock has the meaning ascribed to it in Section 2.3.
(cc) Restricted Stock Unit has the meaning ascribed in Section 2.4.
(dd) Retirement means, unless otherwise specified in an Award Agreement, retirement from
employment as an Employee on or after the attainment of age 65 with fifteen (15) years of service
to the Company or any of its Subsidiaries, provided, however, that unless otherwise specified in an
Award Agreement, an Employee who is also a Director shall not be deemed to have terminated due to
Retirement until both Service as an Employee and Service as a Director has ceased. Years of
employment as an Employee and Service as a Director shall be aggregated for the purposes of this
definition for any years of employment as an Employee or Service as a Director that did not occur
simultaneously. A non-Employee Director will be deemed to have terminated due to Retirement under
the provisions of this Plan only if the non-Employee Director has terminated Service on the
Board(s) of Directors of the Company and any Subsidiary or affiliate in accordance with applicable
Company policy, following the provision of written notice to such Board(s) of Directors of the
non-Employee Directors intention to retire. A non-Employee Director who terminates Service as a
Director but who continues to serve as a director emeritus or advisory director shall not be deemed
to have retired or otherwise terminated due to Retirement until both Service as a Director and
Service as a director emeritus or advisory director has terminated.
A18
(ee) SAR has the meaning ascribed to it in Section 2.1(b).
(ff) SEC means the United States Securities and Exchange Commission.
(gg) Securities Act means the Securities Act of 1933, as amended from time to time.
(hh) Service means service as an Employee, service provider, or non-employee Director of the
Company or a Subsidiary, as the case may be, and shall include service as a director emeritus or
advisory director.
(ii) Stock means the common stock of the Company, $0.01 par value per share.
(jj) Stock Option means an ISO or a Non-Qualified Option.
(kk) Subsidiary means any corporation, affiliate, bank or other entity which would be a
subsidiary corporation with respect to the Company as defined in Code Section 424(f) and, other
than with respect to an ISO, shall also mean any partnership or joint venture in which the Company
and/or other Subsidiary owns more than fifty percent (50%) of the capital or profits interests.
(ll) Termination of Service means the first day occurring on or after a grant date on which
the Participant ceases to be an Employee or Director of, or service provider to, the Company or any
Subsidiary, regardless of the reason for such cessation, subject to the following:
(I) The Participants cessation as an Employee or service provider shall not be deemed
to occur by reason of the transfer of the Participant between the Company and a Subsidiary
or between two Subsidiaries.
(II) The Participants cessation as an Employee or service provider shall not be deemed
to occur by reason of the Participants being on a bona fide leave of absence from the
Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the
Participants Services, provided such leave of absence does not exceed six months, or if
longer, so long as the Employee retains a right to reemployment with the Company or
Subsidiary under an applicable statute or by contract. For these purposes, a leave of
absence constitutes a bona fide leave of absence only if there is a reasonable expectation
that the Employee will return to perform Services for the Company or Subsidiary. If the
period of leave exceeds six months and the Employee does not retain a right to reemployment
under an applicable statute or by contract, the employment relationship is deemed to
terminate on the first day immediately following such six month period. For purposes of
this sub-section (ll), to the extent applicable, an Employees leave of absence shall be
interpreted by the Committee in a manner consistent with Treasury Regulation Section
1.409A-1(h)(1).
(III) If, as a result of a sale or other transaction, the Subsidiary for whom
Participant is employed (or to whom the Participant is providing Services) ceases to be a
Subsidiary, and the Participant is not, following the transaction, an Employee of the
Company or an entity that is then a Subsidiary, then the occurrence of such transaction
shall be treated as the Participants Termination of Service caused by the Participant being
discharged by the entity for whom the Participant is employed or to whom the Participant is
providing Services.
(IV) A service provider whose Services to the Company or a Subsidiary are governed by a
written agreement with the service provider will cease to be a service provider at the time
the term of such written agreement ends (without renewal); and a service provider whose
Services to the Company or a Subsidiary are not governed by a written agreement with the
service provider will cease to be a service provider on the date that is ninety (90) days
after the date the service provider last provides Services requested by the Company or any
Subsidiary (as determined by the Committee).
(V) Except to the extent Section 409A of the Code may be applicable to an Award, and
subject to the foregoing paragraphs of this sub-section (ll), the Committee shall have
discretion to
A19
determine if a Termination of Service has occurred and the date on which it occurred.
In the event that any Award under the Plan constitutes Deferred Compensation (as defined in
Section 2.7 hereof), the term Termination of Service shall be interpreted by the Committee
in a manner consistent with the definition of Separation from Service as defined under
Code Section 409A and under Treasury Regulation Section 1.409A-1(h)(ii). For purposes of
this Plan, a Separation from Service shall have occurred if the Bank and Participant
reasonably anticipate that no further Services will be performed by the Participant after
the date of the Termination of Service (whether as an employee or as an independent
contractor) or the level of further Services performed will be less than 50% of the average
level of bona fide Services in the 36 months immediately preceding the Termination of
Service. If a Participant is a Specified Employee, as defined in Code Section 409A and
any payment to be made hereunder shall be determined to be subject to Code Section 409A,
then if required by Code Section 409A, such payment or a portion of such payment (to the
minimum extent possible) shall be delayed and shall be paid on the first day of the seventh
month following Participants Separation from Service.
(VI) With respect to a Participant who is a director, cessation as a Director will not
be deemed to have occurred if the Participant continues as a director emeritus or advisory
director.
(mm) Voting Securities means any securities which ordinarily possess the power to vote in
the election of directors without the happening of any pre-condition or contingency.
(nn) Whole Board means the total number of Directors that the Company would have if there
were no vacancies on the Board at the time the relevant action or matter is presented to the Board
for approval.
Section 8.2 In this Plan, unless otherwise stated or the context otherwise requires, the
following uses apply:
(a) actions permitted under this Plan may be taken at any time and from time to time in the
actors reasonable discretion;
(b) references to a statute shall refer to the statute and any successor statute, and to all
regulations promulgated under or implementing the statute or its successor, as in effect at the
relevant time;
(c) in computing periods from a specified date to a later specified date, the words from and
commencing on (and the like) mean from and including, and the words to, until and ending
on (and the like) mean to, but excluding;
(d) references to a governmental or quasi-governmental agency, authority or instrumentality
shall also refer to a regulatory body that succeeds to the functions of the agency, authority or
instrumentality;
(e) indications of time of day mean New Jersey time;
(f) including means including, but not limited to;
(g) all references to sections, schedules and exhibits are to sections, schedules and exhibits
in or to this Plan unless otherwise specified;
(h) all words used in this Plan will be construed to be of such gender or number as the
circumstances and context require;
(i) the captions and headings of articles, sections, schedules and exhibits appearing in or
attached to this Plan have been inserted solely for convenience of reference and shall not be
considered a part of this Plan nor shall any of them affect the meaning or interpretation of this
Plan or any of its provisions;
A20
(j) any reference to a document or set of documents in this Plan, and the rights and
obligations of the parties under any such documents, shall mean such document or documents as
amended from time to time, and any and all modifications, extensions, renewals, substitutions or
replacements thereof; and
(k) all accounting terms not specifically defined herein shall be construed in accordance with
GAAP.
* * * * *
A21
REVOCABLE PROXY
NORTHFIELD BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
December 17, 2008
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints the full Board of Directors, with full powers of substitution,
to act as attorneys and proxies for the undersigned to vote all shares of common stock of
Northfield Bancorp, Inc. which the undersigned is entitled to vote at the Special Meeting of
Stockholders to be held at the Woodbridge Hotel & Conference Center, located at 515 Route 1 South &
Gill Lane, Iselin, New Jersey 08830 at 4:00 p.m. (local time) on December 17, 2008. The official
proxy committee is authorized to cast all votes to which the undersigned is entitled as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
1.
|
|
The approval of the Northfield Bancorp,
Inc. 2008 Equity Incentive Plan.
|
|
o
|
|
o
|
|
o |
The Board of Directors recommends a vote FOR the listed proposal.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE PROPOSAL STATED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL MEETING,
THIS PROXY WILL BE VOTED BY THE ABOVE-NAMED PROXIES AT THE DIRECTION OF A MAJORITY OF THE BOARD OF
DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE SPECIAL MEETING.
|
|
|
|
|
Dated: , 2008
|
|
o
|
|
Please Check Box if You Plan
to Attend the Special Meeting |
Stockholder sign above
Should the signatory be present and elect to vote at the special meeting or at any adjournment
thereof and after notification to the Secretary of Northfield Bancorp, Inc. at the special meeting
of the stockholders decision to terminate this proxy, then the power of said attorneys and proxies
shall be deemed terminated and of no further force and effect. This proxy may also be revoked by
sending written notice to the Secretary of Northfield Bancorp, Inc. at the address set forth on the
Notice of Special Meeting of Stockholders, or by the filing of a later proxy prior to a vote being
taken on a particular proposal at the special meeting.
The signatory acknowledges receipt from Northfield Bancorp, Inc. prior to the execution of
this proxy of notice of the special meeting and a proxy statement dated November 12, 2008.
Please sign exactly as your name appears on this card. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title. Only one signature is required if
shares are held jointly.
Please act promptly
Sign, date & mail your proxy card today