Director Biographical Information
The principal occupation during the past five years of each director and nominee for director of the Company is set forth below. All such persons have held their present positions for five years unless otherwise stated. The biographies of each of the nominees and continuing members of the Board of Directors below contain information regarding the person’s business experience and the experiences, qualifications, attributes or skills that caused the Nominating Committee and the Board of Directors to determine that the person should serve as a director. Each existing director is also a director of the Bank.
All of the nominees and directors continuing in office are or were long-time residents of the communities served by the Company and many of such individuals have operated, or currently operate, businesses located in such communities. As a result, each nominee and director continuing in office has significant knowledge of the businesses that operate in the Company’s market area, an understanding of the general real estate market, values and trends in such communities and an understanding of the overall demographics of such communities.
Gregg J. Wagner.
Effective June 6, 2011, Mr. Wagner was appointed to the Board of Directors of the Company and the Bank’s board of directors. He became President and Chief Executive Officer of the Company and the Bank, effective May 23, 2011. He is a Certified Public Accountant with 29 years of community banking experience. From 2008 through 2010, Mr. Wagner was President and Chief Executive Officer of Allegiance Bank of North America, located in Bala Cynwyd, Pennsylvania. From 2007 through 2008, Mr. Wagner was Chief Financial Officer at Royal Bank of America, Narberth, Pennsylvania. From 1994 through 2006, Mr. Wagner was employed as an executive officer of Harleysville National Corporation and served as President and Chief Executive Officer from 2005 through 2006. The Board of Directors believes that Mr. Wagner’s far-ranging depth of experience in the banking industry, as well as his strong financial analysis and organizational skills, make him an excellent candidate as a Director, as well as in his current leadership positions as President and Chief Executive Officer of the Company and the Bank. Mr. Wagner’s extensive knowledge of the industry provides the Company and the Bank with invaluable insight and guidance into the business and regulatory requirements of today’s banking environment.
Daniel O. Reich.
Mr. Reich is Chairman of Reich Paper, Inc., an importer and marketer of proprietary paper brands for graphic arts applications. Mr. Reich’s specific experience and qualifications that led to the Board of Directors’ conclusion that he should serve as a director include his experience as a business owner as well as his knowledge of and relationships with participants in the local business markets, which allow him to bring a unique perspective to the Board of Directors.
Rebecca Northey.
Ms. Northey is a partner at the law firm of Menaker & Herrmann LLP, New York, New York, a position she has held since April 1, 2010, where her practice concentrates in the fields of employment law and commercial and civil rights litigation. She was Of Counsel to Menaker & Herrmann LLP from 2007 through March 31, 2010. Prior to that, she was a partner in the law firm of Mussman & Northey from 1996 through 2006. The Board of Directors values Ms. Northey’s legal training, depth of experience in employment related matters and knowledge of corporate governance issues, which make her an invaluable member of the Board of Directors.
Angelo J. Di Lorenzo.
Mr. Di Lorenzo retired as an executive officer from the Bank and the Company, effective January 2, 2009. Mr. Di Lorenzo served as Chief Executive Officer of the Bank from 1972 to January 2, 2009. Mr. Di Lorenzo has served as a director since 1976. Mr. Di Lorenzo possesses a far-ranging depth of experience in the financial services industry. His extensive knowledge of the industry and strong leadership skills provide the Company and the Bank with invaluable insight and guidance into the business and regulatory requirements of today’s banking environment.
Arthur R. Williams.
Mr. Williams is a Certified Public Accountant and has served as a partner of the certified public accounting practice of A&A Williams LLP, Shelter Island, New York since 1993. Mr. Williams is a member of the Company’s audit committee and is designated as an “audit committee financial expert,” as that term is defined by SEC regulations. The Board of Directors values Mr. Williams’ strong background in accounting, which assists the Company in its oversight of financial reporting and disclosure issues.
Mark Hughes.
Mr. Hughes was appointed on May 9, 2011 to the boards of directors of the Company, the Bank and Brooklyn MHC. Mr. Hughes is a private investor and has thirty years of extensive banking and financial experience. Mr. Hughes has been an advisory, non-voting director of the Bank since January 2011. Prior to October 2007, Mr. Hughes was Head of High Yield Research at Royal Bank of Canada Capital Markets. Mr. Hughes’ keen knowledge of the investment markets and focused experience in the banking and financial sectors allow him to bring a unique and valuable perspective to the Board of Directors.
Richard A. Kielty
.
Mr. Kielty is currently on the Board of Directors and previously served as an employee of the Bank since 1970, and became President and Chief Operating Officer effective January 1, 2008. Prior to that, he served as Chief Financial Officer since 2002. Effective January 2, 2009, Mr. Kielty became President and Chief Executive Officer, serving until his resignation in May 2011. We believe that Mr. Kielty’s extensive experience with the Bank and knowledge of its operations bring invaluable insight and guidance.
Current Executive Officers Who Are Not Directors
Below is a listing of the names of the Company’s current executive officers who are not directors of the Company.
Michael A. Trinidad.
Mr. Trinidad, age 54, was hired in April 2009 as the Vice President and Controller and became Vice President and Chief Financial Officer in March 2010 and became Senior Vice President and Chief Financial Officer in May 2011.
Joanne Gallo.
Ms. Gallo age 60, became Vice President and Chief Credit Officer in November 2010 and became Senior Vice President and Chief Credit Officer in May 2011.
Board Independence
As of the date of this Proxy Statement and throughout the fiscal year ended September 30, 2010, the Board of Directors has determined that, except for Messrs. Wagner, Di Lorenzo and Kielty, each member of the Board of Directors and each current director nominee was an “independent director” within the meaning of the NASDAQ corporate governance listing standards. Mr. Wagner is not considered independent because he is an executive officer of the Company and Messrs. Kielty and Di Lorenzo are not considered independent because they were executive officers of the Company. Mr. Di Lorenzo will continue to serve as a member of the Company’s Nominating Committee pursuant to the “controlled company” exception to the independence requirements under the NASDAQ corporate governance standards.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that is applicable to all directors, officers and employees of the Company and the Bank, including the principal executive officer, principal financial officer, principal accounting officer or controller, and all persons performing similar functions. The Code of Business Conduct and Ethics is posted on the Company’s website at
www.brooklynbank.com
. Amendments to and waivers from the Code of Business Conduct and Ethics will also be disclosed on the Company’s website at
www.brooklynbank.com
.
Our Board of Directors is chaired by Daniel O. Reich, who is a non-executive director.
We believe this structure ensures a greater role for the independent directors in the oversight of the Company and the Bank, and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of the Board of Directors.
The Board of Directors is actively involved in the oversight of risks that could affect the Company. This oversight is conducted primarily through committees of the Board of Directors, but the full Board of Directors has retained responsibility for general oversight of risks. The Board of Directors satisfies this responsibility through full reports by each committee chair regarding such committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within the Company. Risks relating to the direct operations of the Bank are further overseen by the board of directors of the Bank, which consists of the same individuals who serve on the Board of Directors of the Company. The board of directors of the Bank also has additional committees that conduct risk oversight and they typically meet jointly with the committees of the Board of Directors. All committees are responsible for the establishment of policies that guide management and staff in the day-to-day operation of the Company and the Bank, such as lending, risk management, asset/liability management,
investment
management and others.
Meetings and Committees of the Board of Directors
General
.
The business of the Company is conducted at regular and special meetings of the full Board of Directors and its standing committees. The standing committees include, but are not limited to, the Executive Committee, the Nominating Committee, the Audit Committee and Compensation Committee. During the fiscal year ended September 30, 2010, the Board of Directors held 18 meetings.
During the fiscal year ended September 30, 2010, each incumbent director participated in at least 75% of all Board of Directors’ meetings and at least 75% of all meetings of committees on which they served. The Board of Directors does not have a formal policy regarding attendance at annual shareholders’ meetings. However, informally, the Company strongly encourages its directors to attend by introducing them at all annual meetings. At the annual meeting of shareholders held on February 16, 2010, all directors were in attendance.
Executive sessions of independent directors are held on a regularly scheduled basis.
Executive Committee.
During the 2010 fiscal year, the Executive Committee consisted of directors Richard A. Kielty, John C. Gallin, Daniel O. Reich and Angelo J. Di Lorenzo. John C. Gallin retired from his position on this committee when he retired as a director after the end of the 2010 fiscal year. Gregg J. Wagner was also appointed to the Executive Committee after the end of the 2010 fiscal year. The Executive Committee is authorized to act with the same authority as the Board of Directors of the Company between meetings of the Board of Directors. The Executive Committee met once during the fiscal year ended September 30, 2010.
Nominating Committee
.
During the 2010 fiscal year, the Nominating Committee consisted of directors Angelo J. Di Lorenzo, Daniel O. Reich and John C. Gallin. The Company also appointed Rebecca Northey to this Committee after the end of the 2010 fiscal year. John C. Gallin retired from this position when he retired as a director after the end of the 2010 fiscal year. Throughout the fiscal year ended September 30, 2010, and as of the date of this Proxy Statement, Mr. Reich was considered to be “independent” as defined in the NASDAQ corporate governance listing standards. Mr. Gallin was also independent under applicable NASDAQ standards during fiscal 2010 and through his retirement date. As of the date of this Proxy Statement, Ms. Northey was independent under the NASDAQ corporate governance standards. Mr. Di Lorenzo serves as a member of the Company’s Nominating Committee pursuant to the “controlled company” exception to the independence requirements under the NASDAQ corporate governance standards. The Nominating Committee met twice during the fiscal year ended September 30, 2010. The Board of Directors has adopted a written charter for the Nominating Committee which is available on the Company’s website at
www.brooklynbank.com
. The functions of the Nominating Committee include the following:
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to lead the search for individuals qualified to become members of the Board of Directors and to select director nominees to be presented for shareholder approval;
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to review and monitor compliance with the requirements for board independence;
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to review the committee structure and make recommendations to the Board of Directors regarding committee membership;
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to develop and recommend to the Board of Directors for its approval a set of corporate governance guidelines; and
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to develop and recommend to the Board of Directors for its approval a self-evaluation process for the Board of Directors and its committees.
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The Nominating Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service. Current members of the Board of Directors with skills and experience that are relevant to the Company’s business and who are willing to continue in service are first considered for re-nomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining a new perspective. If any member of the Board of Directors does not wish to continue in service, or if the Nominating Committee or the Board of Directors decides not to re-nominate a member for re-election, or if the size of the Board of Directors is increased, the Nominating Committee would solicit suggestions for director candidates from all members of the Board of Directors. In addition, the Nominating Committee may engage a third party to assist in the identification of director nominees. The Nominating Committee would seek to identify a candidate who at a minimum satisfies the following criteria:
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has the highest personal and professional ethics and integrity and whose values are compatible with those of the Company;
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has had experiences and achievements that have given him or her the ability to exercise good business judgment;
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is willing to devote the necessary time to the work of the Board of Directors and its committees, which includes being available for board and committee meetings;
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is familiar with the communities in which the Company operates and/or is actively engaged in community activities;
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is involved in other activities or interests that do not create a conflict with his or her responsibilities to the Company and its shareholders; and
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has the capacity and desire to represent the balanced, best interests of the shareholders of the Company as a group, and not primarily a special interest group or constituency.
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Finally, the Nominating Committee will take into account whether a candidate satisfies the criteria for “independence” under the NASDAQ corporate governance listing standards, and if a nominee is sought for service on the Audit Committee, the financial and accounting expertise of a candidate, including whether the individual qualifies as an Audit Committee financial expert.
The Nominating Committee does not have a formal policy or specific guidelines regarding diversity among members of the Board of Directors, and generally views and values diversity from the perspective of professional and life experiences, as well as geographic location, representative of the markets in which we do business. The Nominating Committee recognizes that diversity in professional and life experiences may include consideration of gender, race, or national origin, in identifying individuals who possess the qualifications that the Nominating Committee believes are important to be represented on the Board of Directors.
Procedures for the Recommendation by Shareholders of Director Nominees
.
The Nominating Committee has adopted procedures for the submission of recommendations for candidates by shareholders. If a determination is made that an additional candidate is needed for the Board of Directors, the Nominating Committee will consider recommended candidates submitted by the Company’s shareholders. Shareholders can submit qualified names of candidates for director by writing to our Corporate Secretary at 81 Court Street, Brooklyn, New York 11201. To be considered timely, the Corporate Secretary must receive a submission not less than 90 days prior to the date of the mailing date of the Proxy Statement relating to the preceding year’s annual meeting. The submission must include the following information:
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the name and address of the shareholder as they appear on the Company’s books, and number of shares of the Company’s common stock that are owned beneficially by such shareholder (if the shareholder is not a holder of record, appropriate evidence of the shareholder’s ownership will be required);
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the name, address and contact information for the candidate as well as a statement of the candidate’s business and educational experience;
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a statement detailing any relationship between the candidate and any customer, supplier or competitor of the Company;
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detailed information about any relationship between the proposing shareholder and the Company; and
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a written consent that the candidate is willing to be considered and willing to serve as a director if nominated and elected.
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Submissions that are received and that meet the criteria outlined above are forwarded to the Chairman of the Nominating Committee for further review and consideration. A nomination submitted by a shareholder for presentation by the shareholder at an annual meeting of shareholders must comply with the procedural and informational requirements described in this Proxy Statement under the heading “Shareholder Proposals.”
Shareholder Communications with the Board of Directors
.
A shareholder of the Company who wishes to communicate with the Board of Directors or with any individual director may write to the Corporate Secretary at 81 Court Street, Brooklyn, New York 11201, Attention: Board Administration. The letter should indicate that the author is a shareholder and if shares are not held of record, should include appropriate evidence of stock ownership. Depending on the subject matter, management will:
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forward the communication to the director or directors to whom it is addressed;
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attempt to handle the inquiry directly, for example, where it is a request for information about the Company or a stock-related matter; or
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not forward the communication if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.
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At each meeting of the Board of Directors, management will present a summary of all communications received since the last meeting that were not forwarded and make those communications available to the directors.
The Audit Committee
.
The Company has a separately-designated standing Audit Committee. During the 2010 fiscal year, the Audit Committee consisted of Arthur R. Williams, Daniel O. Reich and John C. Gallin, who served on the Audit Committee until his retirement after the end of the 2010 fiscal year. The Company appointed Rebecca Northey to this Committee after the end of the 2010 fiscal year. Throughout the fiscal year ended September 30, 2010, and as of the date of this Proxy Statement, each member of the Audit Committee as of such date was considered to be “independent,” as defined in the NASDAQ corporate governance listing standards and under SEC Rule 10A-3. The Board of Directors has determined that Director Williams qualifies as an “Audit Committee financial expert” as that term is defined by the rules and regulations of the SEC.
The duties and responsibilities of the Audit Committee include, among other things:
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retaining, overseeing and evaluating a firm of independent certified public auditors to audit the Company’s annual financial statements;
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in consultation with the independent auditors and the internal auditor, reviewing the integrity of the Company’s financial reporting processes, both internal and external;
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approving the scope of the audit in advance;
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reviewing the financial statements and the audit report with management and the independent auditors;
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considering whether the provision by the external auditors of services not related to the annual audit and quarterly reviews is consistent with maintaining the auditor’s independence;
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reviewing earnings and financial releases and quarterly reports filed with the SEC;
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consulting with the internal audit company and reviewing management’s administration of the system of internal accounting controls;
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approving all engagements for audit and non-audit services by the independent auditors; and
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reviewing the adequacy of the audit committee charter.
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The Audit Committee met nineteen (19) times during the fiscal year ended September 30, 2010. The Audit Committee reports to the Board of Directors on its activities and findings. The Board of Directors has adopted a written charter for the Audit Committee which is available on the Company’s website at
www.brooklynbank.com
.
Audit Committee Report.
The following Audit Committee Report is provided in accordance with the rules and regulations of the SEC. Pursuant to such rules and regulations, this report shall not be deemed “soliciting material,” filed with the SEC, subject to Regulation 14A or 14C of the SEC, or subject to the liabilities of Section 18 of the Securities and Exchange Act of 1934, as amended.
The Audit Committee has prepared the following report for inclusion in this Proxy Statement:
As part of its ongoing activities, the Audit Committee has:
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Reviewed and discussed with management the Company’s audited consolidated financial statements for the fiscal year ended September 30, 2010;
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Discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees
, as amended; and
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Received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees
, and has discussed with the independent auditors their independence.
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Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2010.
In addition, the Audit Committee approved the appointment of Crowe Horwath as the Company’s independent auditors for the fiscal year ending September 30, 2011, subject to the ratification of the appointment by the shareholders.
This report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
This report has been provided by the Audit Committee:
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Arthur R. Williams
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Rebecca Northey
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Daniel O. Reich
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Transactions with Certain Related Persons
Federal law and regulations generally require that all loans or extensions of credit to executive officers and directors must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the general public and must not involve more than the normal risk of repayment or present other unfavorable features. However, applicable regulations permit executive officers and directors to receive the same terms through loan programs that are widely available to other employees, as long as the director or executive officer is not given preferential treatment compared to the other participating employees. The Bank makes loans to its directors, officers and employees on the same rates and terms it offers to the general public.
Section 402 of the Sarbanes-Oxley Act of 2002 generally prohibits an issuer from: (1) extending or maintaining credit; (2) arranging for the extension of credit; or (3) renewing an extension of credit in the form of a personal loan for an officer or director. There are several exceptions to this general prohibition, one of which is applicable to the Bank. Sarbanes-Oxley does not apply to loans made by a depository institution that is insured by the FDIC and is subject to the insider lending restrictions of the Federal Reserve Act. All loans to the Company’s directors and officers are made in conformity with the Federal Reserve Act and Regulation O. The aggregate amounts of our loans to our officers and directors and their related entities was $85,236 and $94,400 at September 30, 2009 and September 30, 2010, respectively. These loans were performing according to their original terms at September 30, 2009 and September 30, 2010, respectively.
Brooklyn MHC is the majority owner and mutual holding company of the Company, which was formed pursuant to the reorganization of the Bank into a mutual holding company structure on April 5, 2005. At June 30, 2011, there were 12,882,607 total shares of Company common stock outstanding, 71.86% of which were owned by Brooklyn MHC.
Executive Compensation
Compensation Committee.
The Compensation Committee is currently composed entirely of independent directors and was throughout the fiscal year ended September 30, 2010. During the 2010 fiscal year, the Compensation Committee consisted of Directors Daniel O. Reich, Arthur R. Williams and John C. Gallin, who subsequently retired after the end of fiscal 2010. The Company also appointed Rebecca Northey to this Committee after the end of the 2010 fiscal year. The Compensation Committee is authorized to establish the Company’s compensation policies and reviews compensation matters. The Compensation Committee met eleven (11) times during the fiscal year ended September 30, 2010. The Board of Directors has adopted a written charter for the Compensation Committee, which is available on the Company’s website at
www.brooklynbank.com
.
Overall Compensation
Our compensation program is intended to enable the Company and the Bank to attract, develop and retain talented executive officers capable of maximizing the Company’s performance for the benefit of shareholders. The Compensation Committee has adopted a compensation strategy that seeks to provide competitive, performance-based compensation that is aligned with the financial and stock performance of the Company. The compensation program has three key elements of total direct compensation: base salary, annual incentive compensation and long-term incentives. Another element of the compensation program is benefits.
The Compensation Committee is responsible for establishing and overseeing the compensation programs for the Company’s and the Bank’s executive officers, annually reviewing and approving the compensation of the Chief Executive Officer and reviewing and approving the Chief Executive Officer’s recommendations regarding the compensation of the other executive officers. Otherwise, the executive officers generally do not play a role in setting executive compensation.
Except for the former Chief Executive Officer, Richard A. Kielty, who would present information regarding the other executive officers to the Compensation Committee for their consideration, the executive officers of the Company did not play a role in determining executive compensation during the fiscal year ended September 30, 2010. Neither Mr. Kielty, nor Mr. Wagner, has been present while the Compensation Committee deliberated on their respective compensation packages. The Company did not utilize any compensation consultants in setting executive or director compensation during the fiscal year ended September 30, 2010.
Summary Compensation Table.
The following table sets forth for the fiscal years ended September 30, 2010 and 2009, certain information as to the total remuneration paid by the Bank to its former Principal Executive Officer and its two other most highly compensated executive officers of the Bank who received salary and bonus in excess of $100,000.
Summary Compensation Table as of September 30, 2010
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Name and Principal
Position
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Year
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Salary
($)
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Bonus
($)
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Stock
Awards
($)
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Option
Awards
($)
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Nonqualified
Deferred
Compensation
Earnings ($)
(3)
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All Other
Compensation
($)
(4)
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Total
($)
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Richard A. Kielty,
Former President and Chief
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2010
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260,467
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10,000
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—
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—
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236,323
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149,805
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656,596
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Executive Officer
(1)
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2009
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241,535
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35,200
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—
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—
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219,938
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83,717
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580,390
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Marc Leno, Former Senior Vice President
and Chief
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2010
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205,800
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8,266
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—
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—
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—
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60,567
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274,633
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Lending Officer
(2)
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2009
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193,685
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30,800
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—
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—
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—
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111,041
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335,526
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Michael A. Trinidad, Senior Vice President and Chief
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2010
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136,654
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3,283
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—
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—
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—
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4,060
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|
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143,997
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Financial Officer
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2009
|
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48,231
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—
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—
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—
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—
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—
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48,231
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(1)
|
Mr. Kielty
resigned as President and Chief Executive Officer of the Company, the Bank, and Brooklyn MHC, effective May 23, 2011. Mr. Kielty served as President and Chief Operating Officer during the fiscal year ended September 30, 2008 and a portion of the fiscal year ended September 30, 2009. Mr. Kielty became President and Chief Executive Officer on January 2, 2009.
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(2)
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Mr. Leno resigned as the Bank’s Executive Vice President and Chief Lending Officer as of March 15, 2011.
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(3)
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2009 compensation includes a $219,938 increase in value of Mr. Kielty’s Supplemental Executive Retirement Plan Agreement, and 2010 compensation includes $236,323 increase in value of his Supplemental Executive Retirement Plan Agreement.
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(4)
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All other compensation includes the following:
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Reimbursement
for Unused
Sick
Leave ($)
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Brooklyn
Federal
Bancorp,
Inc.
Board Fees
($)
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Automobile
Allowance/
Other
($)
|
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Restricted
Stock
Dividends
|
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Richard A. Kielty
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2010
|
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5,769
|
|
|
|
—
|
|
|
|
7,440
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|
|
|
1,665
|
|
|
|
20,434
|
|
|
|
—
|
|
|
|
4,321
|
|
|
—
|
|
|
|
110,175
|
|
|
|
149,805
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|
|
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|
2009
|
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|
5,077
|
|
|
|
—
|
|
|
|
7,185
|
|
|
|
8,981
|
|
|
|
20,088
|
|
|
|
—
|
|
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|
5,581
|
|
|
|
—
|
|
|
|
36,805
|
|
|
|
83,717
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc Leno
|
|
2010
|
|
|
4,798
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,733,
|
|
|
|
20,434
|
|
|
|
21,164
|
|
|
|
5,470
|
|
|
|
6,968
|
|
|
|
—
|
|
|
|
60,567
|
|
|
|
|
2009
|
|
|
4,442
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,271
|
|
|
|
20,088
|
|
|
|
62,941
|
|
|
|
6,627
|
|
|
|
7,672
|
|
|
|
—
|
|
|
|
111,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Trinidad
|
|
2010
|
|
|
—
|
|
|
|
—
|
|
|
|
4,060
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,060
|
|
|
|
|
2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding Equity Awards at Year End
.
The following table sets forth information with respect to our outstanding equity awards as of September 30, 2010 for our named executive officers.
|
|
|
|
|
|
|
|
Outstanding Equity Awards at Fiscal Year End
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
|
|
Number of
securities
underlying
exercisable
options
(
#
)
|
|
|
Number of
securities
underlying
unexercisable
options (
#
)
(1)
|
|
|
Option
exercise price
($)
|
|
|
Option
expiration
date
|
|
|
Number of
shares or
units
of stock
that
have not
vested ($)
(2)
|
|
|
Market
value of
shares or
units of
stock that
have
not vested
($)
|
|
|
Richard A. Kielty,
Former President and
|
|
1/6/2007
|
|
|
80,000
|
|
|
|
—
|
|
|
|
13.30
|
|
|
1/16/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
Chief Executive
Officer
|
|
8/21/2007
|
|
|
12,000
|
|
|
|
—
|
|
|
|
13.74
|
|
|
8/21/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc Leno, Former Senior
|
|
1/16/2007
|
|
|
65,000
|
|
|
|
27,857
|
|
|
|
13.30
|
|
|
1/16/2017
|
|
|
|
5,600
|
|
|
|
10,080
|
(3)
|
|
Vice President and
|
|
6/19/2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
800
|
|
|
|
440
|
(3)
|
|
Chief Lending Officer
|
|
8/21/2007
|
|
|
11,000
|
|
|
|
6,286
|
|
|
|
13.74
|
|
|
8/21/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Trinidad,
Senior Vice President
|
|
N/A
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock options vest ratably on each of the first seven anniversaries of grant.
|
|
(2)
|
Restricted stock awards vest ratably on each of the first five anniversaries of grant.
|
|
(3)
|
Represents market value based on the closing market price of the Company’s common stock of $1.80 on September 30, 2010.
|
Options Exercised and Stock Vested
.
The following table sets forth information with respect to option exercises and common stock awards that have vested during the year ended September 30, 2010.
|
|
|
|
Option Exercises and Stock Vested for the Fiscal Year
|
|
|
|
|
|
Option awards
|
|
|
|
Stock awards
|
|
|
Name
|
|
|
Number of shares
acquired
on exercise (#)
|
|
|
|
Value realized on
exercise ($)
|
|
|
|
Number of shares
acquired
on vesting (#)
|
|
|
|
Value realized on
vesting ($)
(1)
|
|
|
Richard A. Kielty, Former President and Chief Executive Officer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc Leno, Former Senior Vice President
|
|
|
—
|
|
|
|
—
|
|
|
|
5,200
|
|
|
|
46,176
|
(2)
|
|
and Chief Lending Officer
|
|
|
—
|
|
|
|
—
|
|
|
|
400
|
|
|
|
1,816
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Trinidad, Senior Vice President and
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The value realized on vesting represents the market value on the day the stock is vested.
|
|
(2)
|
The market value on the day of vesting was $8.88.
|
|
(3)
|
The market value on the day of vesting was $4.54.
|
Benefit Plans and Arrangements
Mr. Wagner joined the Company and the Bank on May 23, 2011 pursuant to an offer letter executed by Mr. Wagner on April 20, 2011. The terms of his employment provide for an initial base salary of $25,000 per month, with a monthly housing allowance of up to $5,000 and an automobile allowance. In addition, pending approval of the applicable regulatory authorities, Mr. Wagner is entitled to severance equal to six months of base salary in the event of an involuntary termination for any reason other than termination for cause.
However, the Company is prohibited, under section 18(k) of the Federal Deposit Insurance Act (“Section 18(k)”) and its implementing regulation, 12 C.F.R. Part 359, from making any severance or indemnification payments to its employees without obtaining regulatory approval prior to making such payments. To the extent that our agreements, plans or other arrangements described herein provide for severance or indemnification payments, we may be prohibited from making such payments by Section 18(k) and 12 C.F.R. Part 359.
The Company and the Bank currently do not have an employment agreement with Mr. Trinidad.
The following is a summary of compensation plans in place as of September 30, 2010, which should be read in conjunction with the information provided in the Summary Compensation Table above.
Employment Agreements
.
The Bank entered into similar employment agreements with Messrs. Kielty and Leno. As noted above, Mr. Kielty resigned as President and Chief Executive Officer of the Company, the Bank, and Brooklyn MHC, effective May 23, 2011. Mr. Leno resigned as the Bank’s Executive Vice President and Chief Lending Officer as of March 15, 2011. The employment agreement with Mr. Kielty was initially dated as of April 1, 2005, and the employment agreement with Mr. Leno was initially dated as of February 1, 2006. Each of the employment agreements were amended and restated effective as of January 1, 2008, in order to conform each agreement to changes in the tax laws under Section 409A of the Code and the regulations issued thereunder. The Company is a signatory to each of the agreements for the sole purpose of guaranteeing payments thereunder. The agreement with Mr. Kielty had a term of three years and the agreement with Mr. Leno had a term of two years. On January 1 of each year, the employment agreements would renew for an additional year so that the remaining term will be three years for Mr. Kielty and two years for Mr. Leno, unless notice of nonrenewal was provided to the executives prior to such anniversary date. Under the agreements, the base salaries for Messrs. Kielty and Leno were $268,275 and $212,474, respectively, assuming termination of employment on September 30, 2010. In addition to the base salary, each agreement provided for, among other things, participation in bonus programs and other employee pension benefit and fringe benefit plans applicable to executive employees. Each executive’s employment was terminable 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 executive’s termination or resignation may entitle the executive to payments of severance benefits following termination of employment. To the extent any such payment would be prohibited by Section 18(K) and 12 C.F.R. Part 359 or to the extent that any governmental approval of any payment would not be received, the Company would not be required to make such payment. In the event the executive’s employment was terminated for reasons other than for cause, disability or retirement, or if executive was involuntarily terminated in connection with or following a change in control, or in the event the executive resigned 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, (ii) a material change in the nature or scope of the executive’s authority, (iii) the liquidation or dissolution of the Bank or the Company that would affect the status of the executive, (iv) a reduction in the executive’s annual compensation, or a relocation of the executive’s principal place of employment by more than 25 miles, or (v) a material breach of the employment agreement by the Bank, then the executive would be entitled to a severance payment under the agreement equal to three times for Mr. Kielty and two times for Mr. Leno the sum of the executive’s base salary and the highest rate of bonus awarded to the executive during the prior three years, payable in a lump sum. In addition, the executive would be entitled, at no expense to the executive, to the continuation of substantially comparable life, and non-taxable medical, dental and disability coverage for 36 months for Mr. Kielty and 24 months for Mr. Leno following the date of termination. The executive would also receive a lump sum cash payment equal to the present value (discounted at 6%) of contributions that would have been made on his behalf under the Bank’s 401(k) plan, money purchase plan and employee stock ownership plan as if the executive had continued working for the 36-month period for Mr. Kielty and 24-month period for Mr. Leno following his termination of employment. In the event that their employment terminated for a reason entitling them to severance payments other than a change in control, Messrs. Kielty and Leno would receive severance payments of approximately $1,033,301 and $585,493, respectively, pursuant to their employment agreements assuming a termination as of September 30, 2010. To the extent any such payment would be prohibited by Section 18(K) and 12 C.F.R. Part 359 or to the extent that any governmental approval of any such payment would not be received, the Company would not be required to make such payment. In the event payments to the executives would result in an “excess parachute payment” as defined in Section 280G of the Code, payments under the employment agreements with the Bank would be reduced in order to avoid this result. Accordingly, assuming termination of employment on September 30, 2010, in the event that the severance payment provisions of the employment agreements are triggered following a change in control, Mr. Kielty’s severance payment would have been reduced to $831,366 and the payment to Mr. Leno would not constitute an “excess parachute payment.” Certain severance payments and other benefits to Messrs. Kielty and Leno may be delayed for up to six months following their “separation from service” with the Bank in the event the executive is determined to be a “specified employee” as defined in Code Section 409A.
Under each employment agreement, if the executive became “disabled,” as defined for purposes of Code Section 409A, the Bank would have continued to pay the executive’s salary for the longer of one year, or the remaining term of the agreement, reduced by payments to the executive under any applicable disability program. In the event of executive’s death, his estate or beneficiaries would have been be paid executive’s base salary for one year from executive’s death, and would have received continued medical, dental, family and other benefits for one year. Upon retirement at age 65 or such later date determined by the Board of Directors, executive would receive only those benefits to which he is entitled under any retirement plan of the Bank to which he is a party.
Upon termination of the executive’s employment other than in connection with a change in control, the executive is subject to an agreement not to compete with the Bank for a period of one year following termination of employment within 25 miles of any existing branch of the Bank or any subsidiary of the Company, or within 25 miles of any office for which the Bank, or a subsidiary has filed an application for regulatory approval to establish an office, or to solicit employees or customers of the Bank during the same period.
Neither Mr. Kielty nor Mr. Leno received any severance payments or other benefits upon resignation under their employment agreements, although Mr. Kielty reserved all rights to seek benefits under applicable provisions contained in his employment agreement. Their employment agreements terminated upon their resignation.
Money Purchase Pension Plan
.
On November 1, 1984, the Bank established the tax-qualified Brooklyn Federal Savings Bank Money Purchase Pension Plan for the benefit of its employees who are at least 21 years of age, and who have two years of employment with the Bank in which the employee has completed at least 1,000 hours of service. Participants are 100% vested in their accounts upon entering the plan. The Bank will make contributions each year under the plan in an amount equal to 5.4% of each participant’s total taxable compensation, up to a maximum limit of $245,000 (as indexed), plus 5.4% of such compensation in excess of 80% of the Social Security Taxable Wage Base plus $1.00. Amounts contributed to the plan are not taxable to participants until such amounts are withdrawn from the plan. Participants will be entitled to receive a benefit under the plan if they have an account balance in the plan upon termination of employment due to normal or early retirement, death, disability or other separation from service. Participants who are married when benefits begin will generally receive payments in the form of a joint and 50% survivor’s annuity, and unmarried participants will generally receive benefits in the form of a life annuity, unless an alternative form of payment is elected by the participant. In the event a participant dies while employed by the Bank, 100% of the participant’s account balance will be used to provide such participant’s beneficiary with a death benefit. For a married participant, the participant’s spouse will be the beneficiary of at least 50% of the death benefit, unless the participant’s spouse consents in writing to an alternative beneficiary designation. Benefits upon a participant’s death are generally paid in the form of an annuity, unless an alternative distribution form is timely selected by the participant. The plan was frozen on October 31, 2009, such that no further contributions were made after that date. The Money Purchase Plan was merged into the 401(k) plan.
Split Dollar Death Benefits
.
In November 1994, the Bank adopted a collateral assignment split dollar agreement with Mr. Kielty. As noted above, Mr. Kielty resigned as President and Chief Executive Officer of the Company, the Bank, and Brooklyn MHC, effective May 23, 2011. Under the Split Dollar Agreements, Mr. Kielty owned the life insurance policy on his life and the Bank paid the premiums with an assignment by Mr. Kielty to the Bank of the policy proceeds payable at death sufficient to repay all of the premium payments that the Bank made on behalf of Mr. Kielty. At September 30, 2010, the aggregate net premiums paid by the Bank for the policies of Mr. Kielty were $495,154. However, Mr. Kielty surrendered his split dollar policy after tending his resignation.
The Sarbanes-Oxley Act of 2002 generally prohibits a direct or indirect extension of credit from a publicly traded company or its subsidiary to any of its directors or executive officers, but it contains a specific exemption from such prohibition for loans made by a financial institution to its executive officers and directors that are in compliance with federal banking regulations. The Sarbanes-Oxley Act provides that an extension of credit maintained on the date of enactment of the Sarbanes-Oxley Act will be “grandfathered” and will not be subject to Section 402, so long as there is no material modification to any term of any such extension of credit. The prior payment of premiums by the Bank may be considered a loan for purposes of the Sarbanes-Oxley Act. However, the split dollar agreements did not permit the Bank to unilaterally discontinue the payment of premiums on the policies. On the basis of these facts, the Company believes that to the extent that the split dollar arrangement may be considered a loan, the arrangement is grandfathered under the Sarbanes-Oxley Act and is not prohibited.
Supplemental Executive Retirement Plan
.
In April 1999, the Bank established a non-qualified supplemental executive retirement plan for Mr. Kielty. As noted above, Mr. Kielty resigned as President and Chief Executive Officer of the Company, the Bank, and Brooklyn MHC, effective May 23, 2011. The 1999 plan was amended and restated in 2005 in order to conform the plan with changes in the tax laws and for certain other purposes, and was subsequently amended and restated effective as of December 1, 2007, in order to conform to changes in the tax laws under Code Section 409A and the regulations issued thereunder. The 2007 supplemental executive retirement plan provides Mr. Kielty with a supplemental retirement benefit following his retirement on or after age 65 equal to (a) 60% times the highest of his average annual compensation in any consecutive 36-month period during the 10 years prior to retirement, reduced by (b) the sum of (i) the annuitized value of his benefits under the Brooklyn Federal Savings Bank Money Purchase Pension Plan payable as a single life annuity with 240 payments guaranteed; (ii) the annuitized value of his benefit commencing at normal retirement, attributable to Bank contributions to the Brooklyn Federal Savings Bank 401(k) Plan payable as a single life annuity with 240 payments guaranteed; and (iii) the annuitized value of one-half of his annual Social Security retirement benefit commencing at normal retirement. Benefits under the supplemental executive retirement plan commence on the first day of the month following retirement from the Bank or the first day of the seventh month following termination of employment if required under the tax laws, and shall be payable for the longer of Mr. Kielty’s life or 240 months. Alternatively, Mr. Kielty may elect to receive his benefit in a single lump sum payment or in installment payments over a period of up to 10 years. Mr. Kielty’s plan provides for a reduced benefit in the event he becomes disabled or a change in control occurs prior to his 65th birthday. If Mr. Kielty terminated employment prior to normal retirement for a reason other than death, disability or a change in control, he would be entitled to the accrued benefit under the supplemental executive retirement plan as reflected on the financial statements of the Bank, annuitized and paid in installments over a 20-year period, or in a lump sum payment or in installments over a period of up to 10 years if elected by Mr. Kielty in compliance with the tax laws. Upon his resignation, Mr. Kielty became entitled to $926,282.33 The supplemental executive retirement plan for Mr. Kielty 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 the Bank, and are subject to the claims of the Bank’s creditors. During the year ended September 30, 2010, the expense of the supplemental executive retirement plan to the Bank was approximately $236,323.
Employee Stock Ownership Plan and Trust
.
The Bank sponsors the Brooklyn Federal Savings Bank Employee Stock Ownership Plan for the benefit of its employees. Employees who are at least 21 years old with at least two years of service during which the employee has completed at least 1,000 hours of service with the Bank are eligible to participate. As part of the Bank’s 2005 reorganization and stock offering, the employee stock ownership plan trust borrowed funds from the Company and used those funds to purchase a number of shares equal to 8% of the common stock sold in the offering (317,400 shares). Collateral for the loan is the common stock purchased by the employee stock ownership plan. The loan will be repaid principally from the Bank’s discretionary contributions to the employee stock ownership plan over a period of up to 20 years. The loan documents provide that the loan may be repaid over a shorter period, without penalty for prepayments. Shares purchased by the employee stock ownership plan will be held in a suspense account for allocation among participants as the loan is repaid.
Contributions to the employee stock ownership plan and shares released from the suspense account in an amount proportional to the repayment of the employee stock ownership plan loan will be allocated among employee stock ownership plan participants on the basis of compensation in the year of allocation. Participants will be 100% vested in benefits under the plan upon completion of two years of credited service, with credit given to participants for years of credited service with the Bank’s mutual predecessor. A participant’s interest in his account under the plan will also fully vest in the event of termination of service due to a participant’s early or normal retirement, death, disability, or upon a change in control (as defined in the plan). Vested benefits will be payable in the form of common stock and/or cash. The Bank’s contributions to the employee stock ownership plan are discretionary, subject to the loan terms and tax law limits. Therefore, benefits payable under the employee stock ownership plan cannot be estimated. Pursuant to SOP 93-6, we are required to record compensation expense each year in an amount equal to the fair market value of the shares released or committed to be released from the suspense account. In the event of a change in control, the employee stock ownership plan will terminate and participants will become fully vested in their account balances.
401(k) Plan
.
The Bank also sponsors the Brooklyn Federal Savings 401(k) Savings Plan, which provides for participant elective deferrals up to the limits set under the Code. Participants are fully vested at all times in their elective deferrals. The 401(k) plan does not provide for a Company matching contribution. Effective October 31, 2009, the Bank’s Money Purchase Pension Plan was frozen and its assets were transferred into the 401(k) Plan.
Stock-Based Incentive Plan
.
The Company has adopted the Brooklyn Federal Bancorp, Inc. 2006 Stock-Based Incentive Plan (the “Incentive Plan”), to provide officers, employees and directors of the Company, and the Bank with additional incentives to promote the growth and performance of the Company. Shareholders approved the Incentive Plan on April 11, 2006. Under this plan, individuals may receive awards of common stock and grants of options to purchase common stock. The Compensation Committee of the Board of Directors believes that stock ownership provides a significant incentive in building shareholder value by further aligning the interests of officers and employees with shareholders. The importance of this component of compensation increases as the Company’s common stock appreciates in value. In addition, stock option grants and stock awards vest over seven and five years, respectively, thereby providing an additional retention incentive.
The Incentive Plan authorizes the issuance of up to 907,235 shares of Company common stock pursuant to grants of incentive and non-statutory stock options, stock appreciation rights, and restricted stock awards. No more than 259,210 shares may be issued as restricted stock awards, and no more than 648,025 shares may be issued pursuant to the exercise of stock options; provided, however, that subject to regulatory approval, and without increasing the number of shares available for award under the Incentive Plan (907,235), the maximum number of shares of the Company’s common stock that may be awarded as restricted stock awards may be increased by up to 100,000 shares in the event shares that underlie or are subject to awards for stock options become available for future awards as a result of forfeiture, cancellation or any other reason pursuant to Section 5(c) of the Incentive Plan.
Employees and outside directors of the Company or its subsidiaries are eligible to receive awards under the Incentive Plan.
Awards may be granted in a combination of incentive and non-statutory stock options, stock appreciation rights or restricted stock awards as follows.
(i)
Stock Options.
A stock option gives the recipient or “optionee” 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 on the date the stock option is granted. Fair market value for purposes of the Incentive Plan means the final sales price of the Company’s common stock as reported on the NASDAQ Stock Market on the date the option is granted, or if the Company’s common stock was not traded on such date, then on the day prior to such date or on the next preceding day on which the Company’s common stock was traded, and without regard to after-hours trading activity. However, if the Company’s common stock is not reported on the NASDAQ Stock Market (or over-the-counter market), fair market value will mean the average sale price of all shares of Company common stock sold during the 30-day period immediately preceding the date on which such stock option was granted, and if no shares of stock have been sold within such 30-day period, the average sale price of the last three sales of Company common stock sold during the 90-day period immediately preceding the date on which such stock option was granted. The Compensation Committee will determine the fair market value if it cannot be determined in the manner described above. Stock options are either “incentive” stock options or “non-qualified” stock options. Incentive stock options have certain tax advantages and must comply with the requirements of Section 422 of the Code. Only employees are eligible to receive incentive stock options. Shares of common stock purchased upon the exercise of a stock option must be paid for in full at the time of exercise (i) either in cash or with stock of the Company which was owned by the participant for at least six months prior to delivery, or (ii) by reduction in the number of shares deliverable pursuant to the stock option, or (iii) subject to a “cashless exercise” through a third party. Cash may be paid in lieu of any fractional shares under the Incentive Plan and generally no fewer than 100 shares may be purchased on exercise of an award unless the total number of shares available for purchase or exercise pursuant to an award is less than 100 shares. Stock options are subject to vesting conditions and restrictions as determined by the Compensation Committee.
(ii)
Stock Appreciation Rights.
Stock appreciation rights give the recipient the right to receive a payment in Company common stock of an amount equal to the excess of the fair market value of a specified number of shares of Company common stock on the date of the exercise of the stock appreciation rights over the fair market value of the common stock on the date of grant of the stock appreciation right, as set forth in the recipient’s award agreement. Stock appreciation rights will not be granted unless (i) the stock appreciation right is settled solely in Company common stock; and (ii) there is no further ability to defer the income received on the exercise of the stock appreciation right.
(iii)
Stock Awards.
Stock awards under the Incentive Plan will be granted only in whole shares of common stock. Stock awards will be subject to conditions established by the Compensation Committee which are set forth in the award agreement. Any stock award granted under the Incentive Plan will be subject to vesting as determined by the Compensation Committee. Awards will be evidenced by agreements approved by the Compensation Committee, which set forth the terms and conditions of each award.
Generally, all awards, except non-statutory stock options, granted under the Incentive Plan will be non-transferable except by will or in accordance with the laws of intestate succession. Stock awards may be transferable pursuant to a qualified domestic relations order. At the Compensation Committee’s sole discretion, non-statutory stock options may be transferred for valid estate planning purposes that are permitted by the Code and the Exchange Act. During the life of the participant, awards can only be exercised by him or her. The Compensation Committee may permit a participant to designate a beneficiary to exercise or receive any rights that may exist under the Incentive Plan upon the participant’s death. Upon the occurrence of an event constituting a change in control of the Company as defined in the Incentive Plan, all stock options will become fully vested, and all stock awards then outstanding will vest free of restrictions.
Director Compensation for the 2010 Fiscal Year
Director Fees
.
The Bank pays each non-employee director a monthly fee of $2,625, a board attendance fee of $590.00 for each board meeting attended and a committee attendance fee of $780.00 for each committee meeting attended. The Company pays a quarterly fee of $5,620.00 to each non-employee director. The Bank subsidiary, BFS REIT, Inc., pays non-employee and employee directors a monthly board attendance fee of $660.00. The Bank subsidiary, Thrift Investors Service Corp., pays each of two non-employee directors an annual meeting attendance fee of $150.00. The consolidated Company paid fees in cash totaling $530,890 to directors for the fiscal year ended September 30, 2010.
The following table sets forth information regarding compensation earned by the non-employee directors of the Company during the last fiscal year.
|
Name
|
|
Fees
earned
or paid in
cash ($)
|
|
|
Option
Awards
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
|
John A. Loconsolo
(1)
|
|
|
91,166
|
|
|
|
—
|
|
|
|
—
|
|
|
|
91,166
|
|
|
Daniel O. Reich
|
|
|
107,172
|
|
|
|
—
|
|
|
|
—
|
|
|
|
107,172
|
|
|
John C. Gallin
(2)
|
|
|
91,502
|
|
|
|
—
|
|
|
|
—
|
|
|
|
91,502
|
|
|
Arthur R. Williams
|
|
|
87,768
|
|
|
|
—
|
|
|
|
—
|
|
|
|
87,768
|
|
|
Angelo J. Di Lorenzo
|
|
|
98,972
|
|
|
|
—
|
|
|
|
—
|
|
|
|
98,972
|
|
|
Rebecca Northey
|
|
|
26,367
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26,367
|
|
|
(1)
|
Mr. Loconsolo resigned as a member of the boards of directors of the Company, the Bank and Brooklyn MHC on April 7, 2011.
|
|
(2)
|
Mr. Gallin retired as a member of the boards of directors of the Company and the Bank effective February 15, 2011.
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED IN THIS PROXY STATEMENT.
|
|
|
PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
|
The Audit Committee of the Board of Directors has approved the engagement of Crowe Horwath to be the Company’s independent registered public accounting firm for the 2011 fiscal year, subject to the ratification of the engagement by the Company’s shareholders. Shareholder ratification of the selection of Crowe Horwath is required by the Company’s Bylaws. At the Annual Meeting, shareholders will consider and vote on the ratification of the engagement of Crowe Horwath for the Company’s fiscal year ending September 30, 2011. A representative of Crowe Horwath is expected to attend the Annual Meeting to respond to appropriate questions and to make a statement, if they desire to do so. ParenteBeard LLC (“ParenteBeard”) was the Company’s independent registered public accounting firm for the fiscal year ended September 30, 2010.
Changes in Accountants
On January 6, 2010, the Company informed ParenteBeard LLC that it had been dismissed as the Company’s independent registered public accounting firm, effective immediately after the filing of the Company’s Annual Report on Form 10-K. Also on January 7, 2010, Grant Thornton LLP (“Grant Thorton”) was engaged as the Company’s independent registered public accounting firm. The dismissal of ParenteBeard as the Company’s independent registered public accounting firm and the engagement of Grant Thornton as the new independent registered public accounting firm were both approved by the Audit Committee of the Board of Directors. On October 1, 2009, ParenteBeard was engaged by the Company as its independent registered accounting firm after the combination of ParenteBeard with the Company’s prior independent registered accounting firm, Beard Miller Company LLP (“Beard Miller”).
From October 1, 2009 through January 6, 2010, there were no disagreements with ParenteBeard on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of ParenteBeard, would have caused it to make reference to such disagreement in its reports. In addition, there were no “reportable events” as such term is described in Item 304(a)(1)(iv) of Regulation S−K.
Prior to engaging ParenteBeard on October 1, 2009, the Company did not consult with ParenteBeard regarding the application of accounting principles to a specific completed or contemplated transaction or regarding the type of audit opinions that might be rendered by ParenteBeard on the Company’s financial statements, and ParenteBeard did not provide any written or oral advice that was an important factor considered by the Company in reaching a decision as to any such accounting, auditing or financial reporting issue.
For the fiscal year ended September 30, 2009, there were no disagreements with Beard Miller on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Beard Miller, would have caused it to make reference to such disagreement in its reports. In addition, there were no “reportable events” as such term is described in Item 304(a)(1)(iv) of Regulation S−K.
On January 7, 2010, Grant Thorton was engaged as the Company’s independent registered public accounting firm. Prior to engaging Grant Thorton, the Company did not consult with Grant Thorton regarding the application of accounting principles to a specific completed or contemplated transaction or regarding the type of audit opinions that might be rendered by Grant Thorton on the Company’s financial statements, and Grant Thorton did not provide any written or oral advice that was an important factor considered by the Company in reaching a decision as to any such accounting, auditing or financial reporting issue.
On December 20, 2010, Grant Thorton informed the Company of its resignation as the Company’s independent registered public accounting firm effective as of December 20, 2010. Grant Thorton was engaged by the Company after the Company filed its Annual Report on Form 10-K for the fiscal year ended September 30, 2009. Grant Thorton resigned prior to completing an audit of the Company’s financial statements for the fiscal year ended September 30, 2010, and did not issue any audit reports on the consolidated financial statements of the Company during the time it was engaged as the Company’s independent registered public accounting firm. Accordingly, there were no reports issued by Grant Thorton during the past two years that contained an adverse opinion or disclaimer of opinion, or that were qualified or modified as to uncertainty, audit scope or accounting principles. From the date Grant Thorton was engaged through December 20, 2010, the date of resignation, there were no disagreements with Grant Thorton on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Grant Thorton would have caused it to make reference to such disagreement in connection with its report.
During the period of Grant Thorton’s engagement there was one reportable event as described in Item 304(a)(1)(v) of Regulation S-K. As a result of its review of interim financial statements for the period ended March 31, 2010, Grant Thorton reported one material weakness in the Company’s internal control over financial reporting for its allowance for loan and lease losses.
Management also concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2010. Management’s conclusion was primarily related to the methodologies the Company used to assess the adequacy of the allowance for loan losses and concluded such methodologies relied too heavily on subjective factors, and did not adequately take into account directional trends. Management concluded that this was a material weakness in the Company’s internal control over financial reporting. Disclosure of this material weakness was included in Item 4T on the Company’s Form 10-Q for the quarterly period ended March 31, 2010.
From December 21, 2010 through February 3, 2011, the Company considered prospective independent registered public accounting firms and selected an appropriate firm for engagement with the Company. On February 4, 2011, the Company engaged Crowe Horwath as the Company’s independent registered public accounting firm. Prior to engaging Crowe Horwath, the Company did not consult with Crowe Horwath regarding the application of accounting principles to a specific completed or contemplated transaction or regarding the type of audit opinions that might be rendered by Crowe Horwath on the Company’s financial statements, and Crowe Horwath did not provide any written or oral advice that was an important factor considered by the Company in reaching a decision as to any such accounting, auditing or financial reporting issue.
Principal Accountant Fees and Services
Audit Fees.
The aggregate fees billed to the Company by Grant Thornton and ParenteBeard for professional services rendered for the audit of the Company’s annual financial statements, review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q and services that were provided by Grant Thornton and ParenteBeard in connection with statutory and regulatory filings and engagements were $160,760 and $109,000, respectively for the fiscal year ended September 30, 2009. The aggregate fees billed to the Company by Crowe Horwath for the fiscal year ended September 30, 2010 were $327,877.
Audit Related Fees.
There were no fees billed to the Company by Crowe Horwath, Grant Thornton and ParenteBeard in fiscal 2010 or fiscal 2009 for assurance and related services reasonably related to the performance of the audit of and review of the financial statements that are not already reported in “Audit Fees” above.
Tax Fees.
No fees were billed to the Company by Crowe Horwath, Grant Thornton or ParenteBeard during the fiscal years ended September 30, 2010 and 2009 for federal, state and city tax compliance services.
All Other Fees.
No other fees were billed to the Company by Crowe Horwath, Grant Thornton or ParenteBeard during the fiscal years ended September 30, 2010 and 2009. The full Audit Committee pre-approves all audit and non-audit services to be performed by the independent registered public accounting firm and the related fees.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditor
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the Company’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to a particular service or category of services and is generally subject to a specific budget. The Audit Committee has delegated pre-approval authority to its Chairman when expedition of services is necessary. The independent registered public accounting firm and management are required to periodically report to the full Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.
In order to ratify the selection of Crowe Horwath as the independent registered public accounting firm for the 2011 fiscal year, the proposal must receive at least a majority of the votes cast in person or by proxy, not including broker non-votes or proxies marked abstain, in favor of such ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“
FOR
”
THE RATIFICATION OF CROWE HORWATH AS THE COMPANY
’
S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2011 FISCAL YEAR.
In order to be eligible for inclusion in the proxy materials for next year’s Annual Meeting of Shareholders, any shareholder proposal to take action at such meeting must be received at the Company’s executive office, 81 Court Street, Brooklyn, New York 11201, no later than September 24, 2011. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Exchange Act.
The Board of Directors is not aware of any business to come before the Annual Meeting other than the matters described above in this Proxy Statement. However, if any matters should properly come before the Annual Meeting, it is intended that holders of the proxies will act as directed by a majority of the Board of Directors, except for matters related to the conduct of the Annual Meeting, as to which they shall act in accordance with their best judgment. The Board of Directors intends to exercise its discretionary authority to the fullest extent permitted under the Exchange Act.
|
|
|
ADVANCE NOTICE OF BUSINESS TO BE BROUGHT BEFORE AN ANNUAL MEETING
|
The Bylaws of the Company provide an advance notice procedure for certain business to be brought before an annual meeting. In order for a shareholder to properly bring business before an annual meeting, the shareholder must give written notice to the Corporate Secretary not less than five days prior to the date of the annual meeting. No other proposal shall be acted upon at the annual meeting. A shareholder may make any other proposal at the annual meeting and the same may be discussed and considered, but unless stated in writing and filed with the Corporate Secretary at least five days prior to the annual meeting, the proposal will be laid over for action at an adjourned, special or annual meeting taking place 30 days or more thereafter.
The date on which the next Annual Meeting of Shareholders is expected to be held is February 21, 2012. Accordingly, advance written notice of business to be brought before the 2012 Annual Meeting of Shareholders must be made in writing and delivered to the Corporate Secretary of the Company no later than February 16, 2012.
The cost of solicitation of proxies will be borne by the Company. The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of common stock. In addition to solicitations by mail, directors, officers and regular employees of the Company may solicit proxies personally or by telephone or other electronic means without additional compensation.
|
|
|
WHERE YOU CAN FIND MORE INFORMATION
|
The Company’s 2010 Annual Report to Shareholders will be mailed to all shareholders of record as of the record date. Any shareholder who does not receive a copy of such Annual Report may obtain a copy by writing the Company. Such Annual Report is not to be treated as a part of the proxy solicitation material nor as having been incorporated herein by reference.
The Company is subject to the informational requirements of the Exchange Act and files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information filed by the Company with the SEC at its public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The Company’s filings are also available to the public from commercial document retrieval services and at the web site maintained by the SEC at
http://www.sec.gov
. In addition, the Company maintains a website at
www.brooklynbank.com
, where you can request the Company’s annual report to shareholders and the Company’s quarterly reports
for recent quarters. Copies of any of these documents are also available upon request by contacting Corporate Secretary, Brooklyn Federal Bancorp, Inc., 81 Court Street, Brooklyn, New York 11201, or call (718) 855-8500.
A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010, WILL BE FURNISHED WITHOUT CHARGE TO SHAREHOLDERS AS OF THE RECORD DATE UPON WRITTEN OR TELEPHONIC REQUEST TO CORPORATE SECRETARY, BROOKLYN FEDERAL BANCORP, INC., 81 COURT STREET, BROOKLYN, NEW YORK 11201, OR CALL (718) 855-8500.
|
|
|
BY ORDER OF THE BOARD OF
DIRECTORS
|
|
|
|
|
|
|
|
|
|
Kim Albaranes
|
|
|
|
|
Corporate Secretary
|
|
Brooklyn, New York
August 22, 2011
21