Item
10. Directors, Executive Officers and Corporate Governanc
e
.
Directors
The
following table provides certain information about the Company’s current
directors. All directors serve until their respective successors are
duly elected at the next Annual Meeting of Stockholders.
|
Name
|
|
Age
|
|
|
|
|
|
Anthony
M. Bruno, Jr., Chairman
|
|
53
|
|
M.A.
Bramante
|
|
75
|
|
William
T. Ferguson
|
|
65
|
|
Angelo
J. Genova
|
|
54
|
|
Robert
C. Soldoveri
|
|
54
|
|
Alfred
R. Urbano
|
|
61
|
|
Charles
J. Volpe
|
|
70
|
|
David
Waldman
|
|
68
|
Anthony
M. Bruno, Jr.
—
Chairman since April 2002 and CEO since September 2003. Director and
Vice
Chairman, 1995 until April 2002 when he became Chairman. Chairman of Executive
Committee and member of Insurance Committee. A founding Director of
the Company and Greater Community Bank in 1985 from which he resigned in 1987
to
form Bergen Commercial Bank. He became a Director of the Company
again in 1995. Chairman and Director of Bergen Commercial Bank from
1987 until the merger of the bank subsidiaries at the end of
2005. Chairman, President and CEO of Greater Community Bank since
September 2003, which positions changed to Chairman and CEO as a result of
the
merger of the bank subsidiaries at the end of 2005. Again became
Chairman, President and CEO of Greater Community Bank in July
2006. Director of Highland Capital Corp. and New Union Asset Holdings
Corp. Member of Anjo Realty, LLC (real estate investments). Member of
Rockham, Limited Partner of Motel Associates of Columbus, Partner of Hamilton
Park Associates, Member of North Carolina Properties, LLC, Member of Savannah
Crossing, LLC and Member of American Heritage Construction, LLC. Mr. Bruno
is a
Trustee for the St. Joseph’s Foundation Board of Trustees in Paterson, NJ and is
a Director of NJ Sports Productions. Former member of Bruno, DiBello & Co.
L.L.C./CPA. Mr. Bruno is a nephew of John L. Soldoveri, former Chairman Emeritus
of the Company, and a first cousin of Robert C. Soldoveri, a
Director.
M.A.
Bramante
— A founding
Director of both the Company and Greater Community Bank since 1985. Chairman
of
the Nominating and Corporate Governance Committee. Member of Audit Committee,
Executive Committee and Compensation Committee. Retired orthodontist; formerly
President of M.A. Bramante, DDS, P.A., 1960-1996.
William
T. Ferguson
— A founding
Director of
both the Company and Greater Community Bank since 1985. Retired from Ted Car,
Inc., an auto wholesaler, where he served as Vice President from 1977 to
2006. Mr. Ferguson also worked in sales with Home Depot from 2004 to
2007 and Sears Roebuck from 2002 to 2004.
Angelo
J. Genova
— Director
since 2006. Member of the Compensation Committee and Insurance
Committee. Attorney At Law, admitted to practice in State Courts in
New York, Pennsylvania and New Jersey, U.S. District Courts for the District
of
New Jersey, Southern New York and Eastern New York, U.S. Courts of Appeals
for
the Second and Third Circuits, and the United States Supreme
Court. Former Commissioner of the Port Authority of New York and New
Jersey. Attorney and Senior Partner of Genova, Burns & Vernoia,
Attorneys at Law.
Robert
C. Soldoveri
— Director
of the Company and Greater Community Bank since 2001. Member of the Executive
Committee. Member of Solan Management, LLC, a real estate property management
company, General Partner of Union Boulevard Realty, LLC, General Partner of
Portledge Realty and Owner of Whispering Pines. Trustee of the John
L. & Grace P. Soldoveri Foundation. Mr. Soldoveri is the son of
John L. Soldoveri, former Chairman Emeritus of the Company, and Mr. Bruno's
first cousin.
Alfred
R. Urbano
— Director of
the Company and Greater Community Bank from 1986 through mid-1997 and from
1998
to the present. Director of Highland Capital Corp. and New Union
Asset Holdings Corp. Member of Executive Committee, Compensation Committee,
Nominating and Corporate Governance Committee and Audit Committee. President,
Rubicon Realty Corp. (real estate investments) since 1980.
Charles
J. Volpe
— Director
since 1995. Director of Bergen Commercial Bank from 1987 through 2005. Director
of Greater Community Bank as a result of the merger of the bank subsidiaries
at
the end of December 2005. Director of New Union Asset Holdings Corp. Chairman
of
Audit Committee and Compensation Committee. Member of Executive Committee and
Nominating and Corporate Governance Committee. President of Hasbrouck Hotel
Corp. Managing Partner, Holiday Inn of Hasbrouck Heights, New
Jersey. Retired Chairman, J.P. Patti Company (roofing).
David
Waldman
— Director since
1999. Director of Rock Community Bank from 1999 through
2005. Director of Greater Community Bank as a result of the merger of
the bank subsidiaries at the end of December 2005. Attorney and
President of Waldman, Renda & Mc Kinney, P.A., General Partner of 1107
Goffle Road Realty, General Partner of Fieldcrest Mall Realty Associates LTD,
Sole Member of David Waldman–HAW, LLC, Managing Member of 574 Franklin Ave.
Realty Associates, LLC, Member of Fieldcrest Mall Management, LLC, President
of
Dajan Wald Enterprises, Inc. and Vice President and Secretary of 45 East Madison
Ave. Associates.
Corporate
Governance
General
Under
the
New Jersey Business Corporation Act and the Company’s Certificate of
Incorporation and Bylaws, the Company’s business, property and affairs are
managed under the direction of the Board of Directors. Members of the Board
are
kept informed about the Company’s business through discussions with the chairman
and officers, by reviewing materials provided to them and by participating
in
meetings of the Board and its committees. Each member of the Company’s Board of
Directors, with the exception of Mr. Genova, also serves as a director of the
Company’s subsidiary bank.
Code
of Ethics
The
Board
of Directors has adopted a Code of Ethics (“Code”) under the Sarbanes-Oxley Act
of 2002 and related SEC regulations governing the Company’s directors, principal
executive officer and principal financial officer or persons performing similar
functions. The Code is available on the Company’s Internet website at
www.greatercommunity.com
.
The Code provides fundamental principles to which executive officers and
directors are expected to adhere and advocate. These principles are designed
to
deter wrongdoing and to promote:
|
|
·
|
honest
and ethical conduct, including the ethical handling of actual or
apparent
conflicts of interest between personal and professional relationships;
|
|
|
·
|
full,
fair, accurate, timely and understandable disclosure in reports and
other
documents that the Company files with the SEC and other public
communications that the Company makes;
|
|
|
·
|
compliance
with applicable governmental laws, rules and regulations;
|
|
|
·
|
the
prompt internal reporting of violations of the Code of Ethics to
an
appropriate person or persons identified in the Code of Ethics; and
|
|
|
·
|
accountability
for adherence to the Code.
|
The
Company’s executive officers and directors have received copies of the Code of
Ethics and are required to become familiar with it and are informed that their
continued association with the Company depends upon their full compliance with
the Code. The Company intends to satisfy any disclosure requirements
under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a
provision of its Code of Ethics by posting the information on its internet
website at
www.greatercommunity.com
.
Director
Independence
The
Board
of Directors has determined that a majority of the directors and all members
of
the Board’s Nominating and Corporate Governance Committee and Compensation
Committee are “independent” for purposes of the rules of the National
Association of Securities Dealers (“NASD”) relating to corporate governance of
issuers such as the Company whose securities are listed on Nasdaq. The Board
has
also determined that all members of the Audit Committee are “independent” for
purposes of both the NASD rules and Section 10A(3)(b)(1) of the Securities
Exchange Act of 1934. Specifically, the Board determined that the following
directors are independent: Messrs. Bramante, Ferguson, Genova,
Urbano, and Waldman. The Board based its determinations primarily on a review
of
directors’ responses to questions about employment and transaction history,
affiliations and family and
other
relationships, as well as on discussions with directors. The Board concluded
that the following relationships are immaterial in making its determinations
of
independence:
|
|
·
|
Loans
made by a bank subsidiary of the Company to directors or their family
members or affiliates, including loans personally guaranteed by a
director, if such loans comply with applicable governmental regulations
on
insider loans and are not classified as substandard, doubtful or
loss by
the bank or any bank regulatory agency that supervises the bank
subsidiary.
|
|
|
·
|
Deposit,
securities brokerage and similar customer relationships that are
on usual
and customary market terms and conditions.
|
|
|
·
|
Purchases
of goods or services by the Company and its subsidiaries, from a
business
in which the director or member of his immediate family is a partner,
shareholder or director, if the annual aggregate purchases of goods
or
services from such director’s affiliated business in the current fiscal
year or any of the last three years did not exceed the greater of
$200,000
or 5% of the gross revenues of such business.
|
|
|
·
|
The
ownership of Company stock by a director, members of his family or
affiliated entities.
|
Meetings
The
Board
holds regular monthly meetings and may also hold special meetings. During 2007,
the full Board held 18 meetings and committees of the Board held 39 meetings.
Director Bramante was unable to attend 4 of the 12 regular meetings in 2007,
3
of which were for health reasons. No other director attended fewer than 75%
of
the total number of meetings held during fiscal year 2007 of the full Board
and
committees on which they served.
The
Board
has adopted a policy of holding regular executive sessions, which are attended
only by independent members of the Board. Two meetings of the
independent members of the Board were held in 2007.
The
Board
has adopted a policy that all directors shall attend the Annual Meeting of
Stockholders absent a compelling reason, such as illness, family or medical
emergencies, and other than incumbent directors whose terms of office as a
director will expire at the annual meeting and who are not nominated for
reelection to a further term of office.
Committees
of the Board of Directors
During
2007, the Board of Directors had 5 standing committees: the Executive Committee,
the Audit Committee, the Compensation Committee, the Nominating and Corporate
Governance Committee and the Insurance Committee. Except for the Executive
Committee, only independent directors serve on these committees.
Executive
Committee
. The Executive Committee is comprised of the Chairman and 4
additional members proposed by the Chairman and appointed by the Board. The
4
additional members on the date of this Report are M.A. Bramante, Robert C.
Soldoveri, Alfred R. Urbano and Charles J. Volpe. The Executive
Committee may exercise the powers of the full Board in the management of the
Company’s business and affairs, except for major actions such as Bylaw
amendments, unless otherwise provided by a resolution of a majority of the
Board. The Committee met 15 times in 2007.
Audit
Committee
. The Audit Committee is a separately designated standing
committee and is comprised of 3 members of the Board of Directors appointed
by
the Board upon the recommendation of the Nominating and Corporate Governance
Committee. Mr. Volpe serves as Chairman of the Audit Committee. The other
members are M.A. Bramante and Alfred R. Urbano. The Board of
Directors has determined that Mr. Urbano meets the SEC criteria for an “audit
committee financial expert” as well as independence and thus meets the NASD
requirement of financial sophistication for at least one member of the Audit
Committee.
A
copy of
the Audit Committee’s formal Charter is available on the Company’s internet
website at
www.greatercommunity.com
. The
Audit Committee reviews and assesses the adequacy of its Charter on an annual
basis. The Charter gives the Audit Committee the authority and responsibility
for the appointment, retention, compensation and oversight of the Company’s
independent auditor; reviewing with management and the independent auditor
the
Company’s interim and annual reports of financial condition and results of
operation; considering the appropriateness of the Company’s internal accounting,
auditing and internal control procedures; considering the independence of the
Company’s outside auditors; reviewing the risk management and internal
compliance functions; reviewing examination reports by bank regulatory agencies;
reviewing audit reports prepared by the Company’s internal audit function and
reviewing the response of management to those reports; and reviewing and
approving all related-party transactions other than loan
transactions.
The
Audit
Committee also administers procedures established by the Board for the
confidential submission by Company employees of concerns about questionable
accounting or auditing matters. Those procedures enable an employee to send
information and concerns on an anonymous basis to an independent company, which
then forwards the information to designated representatives of the Audit
Committee, who then in turn takes action deemed appropriate after discussion
with the other members of the Audit Committee. Those procedures have been
communicated to employees. The Company’s independent auditor and internal
audit
personnel
have unrestricted access to the Audit Committee. The Audit Committee reports
to
the Board about its actions on important matters coming before the Committee.
The Committee met formally 13 times in 2007.
Report
of the Audit Committee
The
following Report of the Audit Committee does not constitute soliciting material
and should not be deemed filed or incorporated by reference into any other
Company filing under the Securities Act of 1933 or the Securities Exchange
Act
of 1934, except to the extent the Company specifically incorporates this Report
by reference therein.
March
4,
2008
To
the
Board of Directors of Greater Community Bancorp:
The
Audit
Committee acts under a written charter adopted and approved by the Board of
Directors. The Audit Committee reviews the Company’s financial reporting process
on the Board’s behalf. Management has the primary responsibility for the
financial statements and the reporting process, including the system of internal
controls. Management has represented to us that the financial statements were
prepared in accordance with accounting principles generally accepted in the
United States of America (“USGAAP”). The Company’s independent auditor audits
the annual financial statements prepared by management, expresses an opinion
as
to whether those financial statements fairly present the Company’s financial
position, results of operation and cash flows in conformity with USGAAP, audits
management’s assessment of its maintenance of effective internal control over
financial reporting, expresses an opinion on management’s assessment as to
whether it is fairly stated and whether the Company maintained, in all material
respects, effective control over financial reporting, and discusses with us
any
issues it believes should be raised with us.
We
discussed with the Company’s independent auditor for 2007, McGladrey &
Pullen, LLP, the matters required to be discussed by Statement on Auditing
Standards No. 61,
Communication with Audit
Committees
. We have also received the written disclosures and the letter
from the independent auditor required by Independence Standard No. 1,
Independence Discussions
with Audit
Committees,
and have discussed with such auditor its independence from
the Company. We also confirmed that the independent auditor’s provision of
non-audit services is compatible with its independence from the
Company.
The
Audit
Committee discussed with management, the internal auditors and the independent
auditor the quality and adequacy of the Company’s internal controls and internal
audit functions, organization, responsibilities, budget and staffing. We also
reviewed with the internal auditors and the independent auditor their respective
audit plans, audit scope and risk assessments.
During
2007, the Audit Committee met 3 times to discuss the interim financial
information contained in the Company’s quarterly reports on SEC Form 10-Q with
the Company’s Chief Executive Officer, Chief Financial Officer and the
independent auditor prior to public release. We have also reviewed and discussed
with management and the independent auditor the Company’s audited financial
statements for fiscal year 2007.
Based
on
the reviews and discussions described above, we recommend to the Board of
Directors that the audited financial statements be included in the Company’s
Annual Report on Form 10-K for fiscal year 2007 for filing with the Securities
and Exchange Commission.
|
Charles
J. Volpe, Chairman
|
|
M.A.
Bramante
|
|
Alfred
R. Urbano
|
|
|
Compensation
Committee
—
The Compensation Committee is comprised of 4 members of the Board. Mr.
Volpe serves as Chairman and the other members are M.A. Bramante, Angelo J.
Genova and Alfred R. Urbano. The Compensation Committee is
responsible for evaluating the performance of the Company’s officers, including
the named executive officers, and recommending their compensation to the full
Board for final determination by the Board. In addition, the Compensation
Committee administers stock compensation plans that have been approved by the
shareholders and are currently in effect. The Compensation Committee does not
currently have a written charter but additional information regarding the role
and activities of the Compensation Committee may be found in the section below,
“Item 11. Executive Compensation
—
Compensation
Discussion and Analysis”. The Committee held 6 meetings in
2007.
Nominating
and
Corporate Governance Committee
—
The
Nominating
and Corporate Governance Committee is comprised of 3 members of the
Board. Dr. Bramante serves as Chairman and the other members are
Alfred R. Urbano and Charles J. Volpe. The Nominating and Corporate Governance
Committee is responsible for reviewing the qualifications of candidates for
election, including candidate recommendations made by stockholders, and
recommending nominees for election as directors to the Board for its final
determination. The Committee is also responsible for recommending to the Board
the members of Board committees for appointment by the full Board, reviewing
and
revising the Company’s Code of Ethics, reviewing adherence to the Company’s Code
of Ethics and the Nominating and Corporate Governance Committee Charter and
making
recommendations
to the Board regarding other corporate governance matters. The Nominating and
Corporate Governance Committee Charter is available on the Company’s internet
website at
www.greatercommunity.com
. The
Committee held 3 meetings in 2007.
Insurance
Committee
—
The Insurance Committee meets jointly with a similarly comprised
committee of Greater Community Bank’s Board. Angelo J. Genova serves
on the committee as a representative of the Company’s Board. The Insurance
Committee is responsible for reviewing the Company’s insurance policies and to
ensure that the Company is adequately covered. The Committee met
twice in 2007.
Stockholder
Communications with Directors
The
Board
has adopted a formal policy for stockholders to send communications to the
Board
or to individual Board members by addressing their communication to the
“Chairman of the Nominating and Corporate Governance Committee” at Greater
Community Bancorp, 55 Union Boulevard, Totowa, New Jersey 07512. The
letter should state that the author is a stockholder and if shares are not
held
of record should also include appropriate evidence of stock
ownership. The Chairman of the Nominating and Corporate Governance
Committee may disregard any communication that is a personal or similar
grievance, a shareholder proposal or related communication, an abusive or
inappropriate communication, or a communication not related to the duties or
responsibilities of the Board of Directors. All such communications
will be kept confidential to the extent possible. The Corporate
Secretary will maintain a log of shareholder communications for review by Board
members and the Committee Chairman will discuss such communications with the
Board Chairman or appropriate Board committee chairman.
Executive
Officers
The
following table provides certain information about the Company’s current
executive officers. Executive officers serve at the discretion of the
Board of Directors.
|
Name
|
|
Principal
Office(s)
|
|
Age
|
|
Year
First
Elected
to
Executive
Office
of
Company or
Subsidiary
|
|
|
|
|
|
|
|
|
|
Anthony
M. Bruno, Jr.
|
|
Chairman,
Director, President and Chief Executive Officer of the Company and
Greater
Community Bank
|
|
53
|
|
2003
|
|
Stephen
J. Mauger
|
|
Senior
Vice President, Treasurer and Chief Financial Officer of the Company
and
Greater Community Bank
|
|
58
|
|
2005
|
|
Mary
Smith
|
|
Director,
President and Chief Executive Officer of Highland Capital
Corp.
|
|
47
|
|
2003
|
|
Roger
Tully
|
|
Executive
Vice President, Risk and Operations Officer of the Company and Greater
Community Bank
|
|
58
|
|
2007
|
|
Patricia
Arnold
|
|
Executive
Vice President, Chief Lending Officer of Greater Community
Bank
|
|
49
|
|
2007
|
|
Karen
Casey
|
|
Executive
Vice President, Retail Banking, of Greater Community Bank
|
|
52
|
|
2004
|
Anthony
M. Bruno, Jr.
— See
“Directors”, above, for additional information.
Stephen
J. Mauger
— Mr.
Mauger joined Greater Community Services, Inc., a former nonbank subsidiary
of
the Company, in 2004 as Vice President, Risk Management and served in such
office until he was elected Senior Vice President, Treasurer and Chief Financial
Officer of the Company and Greater Community Bank in
2005. Previously, Mr. Mauger was Senior Vice President of The
Kafafian Group, Inc., a financial services consulting firm specializing in
profitability measurement and reporting. Mr. Mauger also served as
Senior Vice President with Summit Bancorp, a former New Jersey multi-bank
financial holding company, in a similar profitability measurement and reporting
role for four years. He also served as Senior Vice President and CFO
of United Jersey Bank, a former New Jersey commercial bank, for approximately
ten years.
Mary
Smith
—
Prior to joining
Highland Capital Corp. in 2003, Ms. Smith was formerly Vice President and
Business Unit Head of a $1.2 billion leasing division of CitiCapital (formerly
Copelco) where she served for fifteen years.
Roger
Tully
— Mr. Tully
joined Greater Community Bank in 2006 as Executive Vice President, Chief Lending
Officer and served in such office until he was elected Executive Vice President,
Risk and Operations Officer of the Company in 2007. Previously, Mr. Tully was
Chief Risk Officer at Bank Leumi USA, and he previously served in a senior
capacity at various other financial institutions in credit, compliance and
risk
management functions.
Patricia
Arnold
— Ms. Arnold
joined Greater Community Bank in February 2007 as Executive Vice President,
Chief Lending Officer. Ms. Arnold was the former Chief Lending
Officer for ten years at Interchange State Bank where she served for a total
of
twenty-four years.
Karen
Casey
— Ms. Casey
previously served as an executive for Allied Irish Bank for twenty-two
years. During her tenure, Ms. Casey was Senior Vice President and
Senior Business Head of Retail and Business Banking; Business Head
of Private Financial Services; and Chief Financial
Officer.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers, and persons who own more than ten percent of a
registered class of the Company’s equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock. Executive officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the company with copies of all Section
16(a) forms they file.
Based
solely on a review of SEC Forms 3, 4 and 5 and amendments thereto furnished
to
the Company during 2007 and with respect to 2007, Company records and other
information, the Company believes that no director or executive officer failed
to file their Forms on a timely basis.
Ite
m
11. Executive Compensation.
Compensation
Discussion and Analysis
The
Compensation Discussion and Analysis explains the compensation philosophy,
policies and practices of the Company with respect to its named executive
officers. This section focuses on the compensation provided to the
Company’s principal executive officer, principal financial officer and its other
three most highly compensated executives, who are collectively referred to
in
this section as the “named executive officers.”
Role
of the Compensation Committee
The
Compensation Committee approves, administers and interprets our executive
compensation and benefit policies, including our shareholder approved
stock-based compensation plans. The Compensation Committee is
comprised of Directors Volpe, Bramante, Genova and Urbano, and is chaired by
Mr.
Volpe. The Committee is appointed by the Board and consists entirely
of directors who are “non-employee directors” for purposes of Rule 16b-3 under
the Exchange Act and, except for Mr. Genova, are “outside directors” for
purposes of Section 162(m) of the Internal Revenue Code.
The
Compensation Committee reviews and makes recommendations to the Board to ensure
that our executive compensation and benefit programs are consistent with our
compensation philosophy and, subject to the approval of the Board, is
responsible for establishing the executive compensation packages offered to
our
named executive officers. Executives’ base salaries, annual bonus
levels and equity-based awards are set at what we believe are competitive
levels, as indicated by applicable survey data and benchmarked against companies
of similar employee and revenue size within the same industry and within the
local geographic area. Survey data and benchmarks are provided by
companies such as Economic Research Institute (“ERI”) based in Redmond,
Washington, as well as other pertinent sources and compensation consultants
as
necessary. Our executives’ base salaries are targeted at median
market rates. Executives’ base salaries may be between the median and
the seventy-fifth percentile of the indicated local market rate if an
executive’s depth of experience and individual performance warrants such. Local
market pay rates are reviewed and updated on an annual basis. Bonuses and other
awards are granted in accordance with Company’s and the individual’s
performance. Thus, executives have the opportunity to earn pay for
superior performance as measured against comparable organizations.
In
previous years, our executives’ compensation was compared to that of executives
holding similar positions for specific competitors within the local geographic
area. Due to the acquisition and mergers of several of these
competitors, comprehensive data was not readily available. Our current source,
ERI, utilizes compensation professionals who are expert in the compilation
of
relevant survey data.
The
Compensation Committee has taken the following steps to ensure our executive
compensation and benefit programs are consistent with our compensation
philosophy and corporate governance guidelines:
|
|
·
|
Maintained
a practice of reviewing the performance and determining the total
compensation earned, paid or awarded to our CEO independent of input
from
him;
|
|
|
·
|
Received
data from our advisors on compensation programs at comparable companies;
|
|
|
·
|
Reviewed
on an annual basis the performance of our other officers and other
key
employees with assistance from our CEO and determined proper total
compensation based on indicated market rates of comparable companies;
and
|
|
|
·
|
Maintained
a practice of holding executive sessions (without management present)
at
Committee meetings.
|
Executive
Compensation Overview and Philosophy
We
recognize the importance of maintaining sound principles and prudent practices
for the development and administration of our executive compensation and benefit
programs. Specifically, our executive compensation and benefit programs are
designed to advance the following core principles:
|
|
·
|
We
strive to compensate our executives at competitive levels to ensure
we
attract and retain key management employees throughout the Company
and its
subsidiaries.
|
|
|
·
|
We
provide our executives with the opportunity to earn pay for above-market
performance as measured in our discretion against similar sized companies
within the local geographic area in our industry. These include companies
such as 1
st
Constitution Bancorp, Community Partners Bancorp, Lakeland Bancorp,
Inc.,
Peapack Gladstone Financial Co., and Stewardship Financial Corp.
|
|
|
·
|
We
link our executives’ compensation, including cash bonuses, to Company and
individual performance.
|
We
believe that a disciplined focus on these core principles will benefit the
Company and our shareholders by ensuring that we can attract and retain highly
qualified executives who are committed to our long-term success.
Total
Compensation
We
intend
to continue our strategy of compensating our named executive officers at
competitive levels, with the opportunity to earn pay for above-market
performance, through programs that emphasize performance-based compensation
in
the form of cash and equity. To that end, total executive
compensation is structured to ensure that, due to the nature of our business,
there is an equal focus on our financial performance and shareholder
return. For 2007, the total compensation paid to the named executive
officers was at market levels of total compensation paid to executives holding
equivalent positions at comparable companies as indicated by relevant market
compensation data. We believe that this position was consistent with
our financial performance, the individual performance of each of our named
executive officers and shareholder return. We also believe that this
total compensation was reasonable in its totality. Further, in light
of our compensation philosophy, we believe that the total compensation package
for our executives should continue to consist of base salary, annual cash bonus
awards, equity-based compensation, and certain other benefits and perquisites,
as determined in the discretion of the Compensation Committee.
Elements
of Compensation for Fiscal Year 2007
Base
Salaries
The
Compensation Committee strives to establish competitive base salaries for our
named executive officers as measured against comparable
companies. When determining the amount of base salary for each
of our named executive officers, the Committee considers the salaries of
similarly situated personnel in comparable companies within the local geographic
area. When making adjustments in base salaries, the Committee
generally considers costs, corporate financial performance and return to
shareholders. In individual cases where appropriate, the Committee
may also consider non-financial performance measures, such as increases in
market share, increased responsibilities and improvements in customer
service. Base salaries of the named executive officers are reviewed
annually. In 2007, base salaries paid to Bruno, Mauger, Smith, Tully
and Arnold represented 75.1%, 82.7%,
67.4%, 80.3% and 84.8%, respectively, of the their total
compensation. Mr. Bruno’s base salary reflects his role as both Chief
Executive Officer and President; he assumed the position of President in
2006.
Cash
Bonuses
The
Compensation Committee considers discretionary awards of annual cash bonuses
to
our named executive officers. In years of strong financial
performance, our named executive officers can earn cash bonuses no greater
than
indicated market rates as reflected in relevant survey data for comparable
positions in comparable companies in the local geographic area. The award of
discretionary cash bonuses is intended to reinforce our corporate goals, promote
achievement of financial objectives and reward the performance of individual
officers in fulfilling their personal responsibilities.
For
2007,
the Compensation Committee determined cash bonuses following fiscal 2007
year-end based on the overall financial performance of the Company; provided,
however, that Ms. Smith's annual cash bonus is based on the financial
performance of HCC, as set forth in more detail below. The Committee
did not attach any weighting to any specific financial performance criteria,
but
rather exercised its discretion in setting bonuses based on overall
contributions to shareholder value. The Committee also
considered what level of cash bonuses is required to keep the named executive
officers' annual total cash compensation at
competitive
levels relative to our comparable companies and considered various other
factors, including the impact an executive can have on meeting performance
targets, previous performance, length of service to the Company, changes in
responsibilities during the year and the amount of cash bonuses paid by our
comparable companies, and other criteria determined in the discretion of the
Compensation Committee.
Pursuant
to the merger agreement with OFC, the aggregate of year-end cash bonuses for
fiscal 2007 was limited to $125,000. In 2007, cash bonuses earned by
Bruno, Mauger, Smith, Tully and Arnold represented 0.0%, 5.5%, 26.7%, 2.0%
and
2.5%, respectively, of their total compensation. Mr. Bruno declined receiving
a
cash bonus for 2007 to provide a greater allocation to other
employees. Ms. Smith’s cash bonus was awarded based on HCC’s pre-tax
profitability, consistent with her employment agreement.
Equity-Based
Compensation
Plans
Our
2006
Long-Term Stock Compensation Plan serves as the vehicle to provide long-term
equity-based compensation to our named executive officers. The 2006
Plan provides for the grant of equity-based awards, including nonqualified
stock
options and restricted stock awards. Because the 2006 Plan enables
our named executive officers to share in the long-term success of the Company,
we believe that such plan is consistent with our overall compensation
philosophy. The Compensation Committee determines the relative mix of our
equity-based awards by targeting the competitive levels of such awards as
measured against comparable local companies. In determining the
amounts of the awards, the Committee considers the executive’s total cash
compensation and determines what amount of equity-based compensation is required
to keep the executive’s total compensation at a competitive
level. The Committee may also consider other various factors,
including our stock price, historical equity awards to the executive officer,
the amount of equity awards granted by comparable local companies, and the
ratio
of our outstanding stock awards to the outstanding stock of the
Company.
In
2007,
Ms. Arnold received 11,106 shares of service-based restricted stock, which
vest
over four years ratably as follows: 10%, 20%, 30% and 40%. Ms. Arnold
was granted restricted stock in accordance with the negotiation and subsequent
arrangement with her to join Greater Community Bank. No other named executive
officer received restricted stock in 2007, and no stock options were granted
to
our named executive officers because we determined that prior equity-based
awards gave these officers a sufficient stake in the long-term success of the
Company.
Other
Benefits
We
maintain the following agreements and plans which provide, or may provide,
additional compensation and benefits to our named executive
officers.
1.
Employment Agreements
The
Company maintains an evergreen one-year employment agreement with Mr. Bruno
that
contains change of control provisions. The Bank also has an
employment agreement with Ms. Smith that covers her employment with respect
to
HCC.
The
Company and Greater Community Bank entered into an employment agreement with
Mr.
Bruno on March 2, 2005. The agreement provides for a term of one year
that continuously renews on a daily basis. The agreement reflects the Board
of
Directors desire to retain Mr. Bruno's services for a minimum of one year and
does not reflect an anticipated date of his departure from his current positions
and responsibilities. Mr. Bruno will be paid a minimum annual base
salary of $475,000 under the agreement, plus an annual evaluation whether to
award a bonus based on performance or other relevant
considerations. The employment agreement was amended in December 2006
to clarify that Mr. Bruno is eligible to receive equity awards under the 2006
Long-Term Compensation Plan and future equity award plans and to provide that
Mr. Bruno shall serve as the President of the Company and Greater Community
Bank, in addition to his positions of Chairman of the Board and
CEO.
Under
the
employment agreement, if the Company terminates Mr. Bruno's employment without
"just cause" or if Mr. Bruno resigns upon at least one year's notice, he would
be entitled to receive as a severance benefit a continuation of his then base
salary, as well as a continuation of other benefits, for a period of one year
after the termination of employment. Such severance benefits would
not be payable if Mr. Bruno competes with the Company or any bank subsidiary
of
the Company in the manner and within the geographical area described in the
agreement. In the event of certain terminations of employment within
twelve months after a "change of control" of the Company or Greater Community
Bank, as defined in the agreement, Mr. Bruno is generally entitled to receive
2.5 times his base annual compensation, less amounts paid after the change
of
control occurs, plus a continuation of other benefits for one
year. The Board of Directors has included such change of
control provisions in Mr. Bruno's contract because, in the event of a
transaction involving the change of control of the Company or Greater Community
Bank, Mr. Bruno would typically face a great deal of pressure, including
uncertainty concerning his future. Such arrangement should help
assure his full attention and cooperation in the negotiation process and the
transition process in the event a change in control is consummated.
Greater
Community Bank entered into an employment agreement with Ms. Smith on January
1,
2005, with respect to her position as President and Chief Executive Officer
of
HCC. The agreement provides for a term of three years expiring on
December 31, 2007, which term may be extended for one-year periods upon the
mutual agreement of Ms. Smith and the HCC Board of Directors. Under the terms
of
the agreement, Ms. Smith shall receive a minimum annual base salary $162,800,
subject to increase upon annual
reviews. Accordingly,
in an annual review of her salary, Ms. Smith’s base salary was increased to
$182,300 on February 3, 2007. An amendment to Ms Smith’s employment
agreement on August 7, 2007 acknowledges the salary increase and specifies
that
future increases to her earnings are anticipated to be generated by
performance-based bonuses and not by increases to base
salary. However, the Company may make future adjustments to Ms.
Smith’s base salary at its sole discretion. Ms. Smith is eligible under the
agreement for annual bonuses equal to 6.42% of the pre-tax profit of HCC (prior
to any extraordinary charges or disbursements). The agreement
contains standard non-competition and non-solicitation clauses that run for
the
term of the agreement and twelve months thereafter. In February, 2008, the
agreement was extended for a further one-year term.
Under
the
employment agreement, if HCC terminates Ms. Smith's employment during the term
of the agreement for any reason other than cause, Ms. Smith may elect to receive
either (i) twice her annual base salary at the time of her termination or (ii)
the sum of 6.42% of the total annual pre-tax profit of HCC (based upon HCC's
portfolio as it exists at the time of termination) for the next five
years. For purposes of the agreement, cause is defined as to include:
(i) Ms. Smith's willful failure to substantially perform her duties for HCC;
(ii) Ms. Smith's conviction of a felony or crime for fraud, embezzlement or
willful dishonesty relative to HCC; or (iii) Ms. Smith's willful violation
of
any HCC policy of which she has been given prior written notice and which
violation is demonstrably detrimental to the best interests of
HCC. If Ms. Smith voluntarily terminates her employment during the
term of the agreement (upon at least 180 days prior written notice), except
in
the event of a change of control, HCC may elect to pay Ms. Smith either (i)
the
amounts described above that would be payable in the event HCC terminated Ms.
Smith without cause, in which case the non-competition and non-solicitation
clauses of the employment agreement would continue for twelve months following
the termination, or (ii) no severance payments, in which case the
non-competition and non-solicitation clauses of the employment agreement would
not continue following the termination.
Under
Ms.
Smith's employment agreement, in the event Greater Community Bank transfers
its
controlling interest in HCC to any other person, or the controlling interest
in
Greater Community Bank is transferred to any other person, then Ms. Smith has
the exclusive option, to be exercised within 90 days of such transfer, to
terminate the employment agreement and receive, at Ms. Smith's option, either
(i) two times her annual salary at the time she exercises her option to
terminate employment or (ii) 6.42% of HCC's adjusted sales price (as determined
pursuant to the agreement). The Board of Directors has determined
that such change of control provisions in Ms. Smith's contract are appropriate
because, in the event of a transaction involving the change of control of
Greater Community Bank or HCC, Ms. Smith would typically face a great deal
of
pressure, including uncertainty concerning her future, and her continued
involvement during the process would facilitate the completion of the
transaction. Such arrangement should help assure her full attention
and cooperation in the transaction process.
The
Compensation Committee from time to time reviews the terms of Mr. Bruno's and
Ms. Smith's employment agreements, including the effect of the change of control
provisions on the executive with the potential effect of such payments on an
acquiror in a potential transaction. The Compensation Committee has
determined that the current provisions of these employment agreements, including
any potential change of control payments, are reasonable in light of recent
market forces.
2.
Change
in Control and Non-Compete Agreements
In
early
2007, the Company was in the initial phases of preparing change in control
agreements for certain executive officers. The activity was accelerated as
a
result of the Company entering into negotiations for a business combination
with
Oritani Financial Corp. The Company and Greater Community Bank entered into
change in control and non-compete agreements with Messrs. Mauger and Tully
and
Ms. Arnold in November, 2007. The agreements are intended to provide assurances
to and to encourage these executives to remain as employees of the Company
regardless of the possibility or actual occurrence of a change in control of
the
Company. Under the terms of the agreements, a payment would be made to the
executive officer in the event that his or her employment is terminated within
twelve months after a change in control, either involuntarily by the Company
or
voluntarily by the executive officer for “good reason”, such as the executive’s
assignment of duties or responsibilities being materially changed and
inconsistent with the executive’s position immediately prior to the change in
control; or that the executive’s base salary is materially
reduced. The payment that would be made to each executive officer in
such an event is as follows: Mr. Mauger would be paid an amount equal
to his base salary for one year less the amount of base salary, excluding any
bonuses, paid to him after the change of control occurs; Mr. Tully would be
paid
an amount equal to his salary for one year less the amount of base salary paid
to him after the change in control occurs; and Ms. Arnold would be paid an
amount equal to her base salary for two years, less the amount of base salary
paid to her after the change in control occurs. The agreements
specify that neither Mr. Mauger, Mr. Tully or Ms. Arnold can be employed by,
engage in or participate in the ownership or management or act as an advisor
for
a competing company within the local area for a period of one year following
their employment termination regardless of the reason that Mr. Mauger, Mr.
Tully
or Ms. Arnold’s employment might be terminated.
Mr.
Bruno
entered into a non-compete agreement with Oritani Financial Corp. and Oritani
Savings Bank on November 13, 2007. Upon the consummation of the merger of the
Company with and into Oritani Financial Corp., Mr. Bruno shall cease to be
an
employee of the Company. Under the agreement, Mr. Bruno may not
compete with Oritani Financial Corp. or Oritani Savings Bank for a period of
twelve months following Greater Community Bank’s merger with and into Oritani
Financial Corp. Specifically, Mr. Bruno has agreed to not engage or
participate in the ownership, management, operation or control of or act in
any
advisory or other capacity for any competing entity within Passaic, Bergen,
Hudson or Morris Counties in New Jersey. He may also not solicit
or
actively
divert or participate any business or any customer from Oritani Financial Corp
or Oritani Savings or assist any other person or organization in doing
so. In consideration of such agreement, Mr. Bruno shall be paid a
total amount of $425,000.04 in monthly installments of $35,416.67 during the
twelve-month non-compete period.
The
Compensation Committee periodically reviews the terms of the change in control
and non-compete agreements, and has determined that the current provisions
of
these agreements, including any potential change of control payments, are
reasonable under the circumstances and in light of recent market
forces.
3. Retention
Bonuses
As
reported in Item 12.(c) of this Report, the Company entered into an Agreement
and Plan of Merger with Oritani Financial Corp. on November 13,
2007. Under terms of the agreement, retention bonuses will be
provided to the Company’s key officers and valued employees after the change in
control to encourage such officers and employees to remain in the employ of
the
company for a defined period following the date the merger of the companies
occurs. The retention of key employees is viewed as integral to the
efficient transition of systems and operations and a successful merger of the
two companies. The retention bonuses will be paid in installments
over a specified period of time in which retention of the employee is deemed
as
essential. The merger agreement provides for two bonus pools. The
first, which is specifically allocated pursuant to the merger agreement,
constitutes $740,000. Payments pursuant to this bonus pool will be
made 50% at three months following the consummation of the merger and 50% at
nine months following consummation of the merger. At the time of this
Report, the following named executive officer had entered into an Executive
Retention Agreement to be awarded a bonus pursuant to this pool:
|
|
Name
|
Retention
Bonus
|
|
|
Roger
Tully
|
$50,000
|
The
second bonus pool constitutes $1,025,000 and may be allocated by Mr. Bruno
in
his discretion, subject to certain limitations. No individual may
receive more than $100,000 from this bonus pool. Payments pursuant to
this bonus pool will be made 25% at closing of the merger, 25% at three months
following closing, 25% at six months following closing, and 25% at nine months
following closing. If an employee is terminated, other than for
cause, all remaining payments will be accelerated. At the time of
this Report, the following named executive officers had entered into Executive
Retention Agreements to be awarded bonuses pursuant to this pool:
|
|
Name
|
Retention
Bonus
|
|
|
Stephen
J. Mauger
|
$100,000
|
|
|
Roger
Tully
|
$25,000
|
4.
Executive Supplemental Retirement Plan
We
maintain an Executive Supplemental Retirement Plan ("ESRP"), which is a
noncontributory, nonqualified benefit plan designed to provide key executives
with a supplemental retirement income benefit upon reaching the benefit age
of
65. The benefit is calculated by taking the difference between (i)
70% of their respective highest average three consecutive years of annual salary
at retirement and (ii) the benefits in fact provided from the respective
subsidiary bank’s funding of tax-qualified retirement plans (such as the 401 (k)
Plan).
The
aggregate annual pre-tax benefit of the ESRP was actuarially determined to
be
$265,410 and will be paid over a period of 10 to 15 years. The
Company intends to fund its obligations under the ESRP with the increase in
cash
surrender value of bank-owned life insurance policies it purchased on the lives
of the participants. For 2007, the Company contributed $280,000
to the retirement income trust fund for the ESRP and charged such amount against
operations. The Summary Compensation Table below includes fiscal 2007
contributions to the ESRP of $68,660 for Mr. Bruno.
5.
401(k)
Plan
We
maintain a 401(k) plan for substantially all of our employees, including our
named executive officers. Under the plan, we match 50% of employee
contributions for all participants with fewer than five years of employment,
not
to exceed 2% of their salary; 75% of employee contributions for all participants
with six through ten years of employment, not to exceed 3% of their salary;
and
100% of employee contributions for all participants with more than ten years
of
employment, not to exceed 4% of their salary. The Company, on a
discretionary basis, also made a profit sharing contribution to eligible
employees in 2007 equal to 4% of qualified wages, such that the sum did not
exceed the lower of the Company’s 2007 accrued profit sharing expense or the
Company’s 2007 pre-tax profit before deduction of profit sharing. For
2007, the Company made contributions to the Company’s match and profit sharing
accounts for the named executive officers in the following amounts: Mr. Bruno,
$19,896.; Mr. Mauger, $17,646; Ms. Smith, $15,749; Mr. Tully, $17,646; and
Ms.
Arnold, $7,267.
6.
Perquisites
In
2007,
we provided certain other perquisites to the named executive officers as
summarized below:
|
|
·
|
Car
Allowance — The Company provided the following car allowances, which
amounts were deemed for personal use: Mr. Bruno, $22,800; Mr.
Mauger, $10,800; and Mr. Tully, $6,000.
|
|
|
·
|
Company
Car — The Company provided Ms. Arnold with the use of a company car for
part of 2007 for which 9.9% was deemed for personal use and was valued
at
$707.
|
|
|
·
|
Country
Club Membership Fees and Dues — Ms. Arnold was a member of a country club
for part of 2007 for which the Company paid $389 in membership fees
and
dues.
|
|
|
·
|
Life
and Disability Insurance — The Company paid a life insurance premium
valued at $9,523 and a disability insurance premium valued at $14,581
for
Mr. Bruno.
|
|
|
·
|
Medical
Insurance and Vision Care — The Company paid a medical insurance premium
valued at $6,642 and a vision care benefit premium valued at $212
for Mr.
Tully.
|
|
|
·
|
Mobile
Phone — The Company paid cell phone charges for Mr. Bruno, Mr. Tully and
Ms. Arnold for which the amounts of $442, $590, and $137, respectively,
were deemed for personal use.
|
Compliance
with Tax Regulations Regarding Executive Compensation
Section
162(m) of the Internal Revenue Code, added by the Omnibus Budget Reconciliation
Act of 1993, generally disallows a tax deduction to public companies for
compensation over $1 million paid to the corporation’s chief executive officer
and the other named executive officers. Qualifying performance-based
compensation will not be subject to the deduction if certain requirements are
met. The Company’s executive compensation program, as currently constructed, is
not likely to generate significant nondeductible compensation in excess of
these
limits. The Compensation Committee will continue to review these tax
regulations as they apply to the Company’s executive compensation program. It is
the Compensation committee’s intent to preserve the deductibility of executive
compensation to the extent reasonably practicable and to the extent consistent
with its other compensation objectives.
Compensation
Committee Interlocks and Insider Participation
During
2007, the Board of Directors’ Compensation Committee was composed of Messrs.
Volpe, Bramante, Genova and Urbano. None of these persons has at any
time been an employee of the Company or its subsidiaries. There are
no relationships among the Company’s executive officers, members of the
Compensation Committee or entities whose executives serve on the Board that
require disclosure under SEC regulations.
Compensation
Committee Report
The
following Compensation Committee Report shall not be deemed to be “soliciting
material," and shall not be deemed filed or incorporated by reference into
any
other Company filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates this
Report by reference therein.
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with management. Based on that review and discussions, the
Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the Company’s Annual Report
on Form 10-K.
|
Charles
J. Volpe, Chairman
|
|
M.
A. Bramante
|
|
Angelo
J. Genova
|
|
Alfred
R. Urbano
|
|
|
Summary
Compensation Table
The
following table summarizes compensation awarded to, earned by, or paid to the
named executive officers, who were serving as executive officers as of December
31, 2007 for services rendered to the Company and it subsidiaries for the fiscal
periods indicated.
|
Name
and Principal Offices(s)
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
(a)
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
Anthony
M. Bruno, Jr.
President
and Chief Executive Officer of
the
Company and Greater Community
Bank
|
2007
2006
|
500,000
475,000
|
-
25,000
|
4,757
388
|
24,920
23,027
|
22,800
(b)
19,896
(c)
9,523 (d)
68,660
(e)
14,581
(f)
442 (k)
10,800
(b)
29,170
(c)
3,778 (d)
68,660
(e)
|
665,579
635,823
|
|
|
|
|
|
|
|
|
|
|
Stephen
J. Mauger
Senior
Vice President, Treasurer and
Chief
Financial Officer of the Company
and
Greater Community Bank
|
2007
2006
|
210,000
189,134
|
14,000
15,000
|
1,586
129
|
-
-
|
10,800
(b)
17,646
(c)
9,900 (b)
21,227
(c)
|
254,032
235,390
|
|
|
|
|
|
|
|
|
|
|
Mary
Smith
President
and Chief Executive Officer of
Highland
Capital Corp.
|
2007
2006
|
180,800
162,800
|
71,730
79,528
|
-
-
|
-
-
|
15,749
(c)
22,570
(c)
|
268,279
264,898
|
|
|
|
|
|
|
|
|
|
|
Roger
Tully
Executive
Vice President, Risk and
Operations
Officer of the Company and
Greater
Community Bank
|
2007
|
199,172
|
5,000
|
12,727
|
-
|
6,000 (b)
17,646
(c)
6,642 (g)
212 (h)
590 (k)
|
247,991
|
|
|
|
|
|
|
|
|
|
|
Patricia
Arnold
Executive
Vice President, Chief Lending
Officer
of Greater Community Bank
|
2007
|
168,462
|
5,000
|
16,668
|
-
|
7,267 (c)
389 (i)
707 (j)
137 (k)
|
198,630
|
|
|
(
a)
|
Amounts
computed in accordance with FAS123(R) which represents compensation
cost
for financial reporting purposes
|
|
|
(c)
|
401(k)
plan matching and profit sharing contributions
|
|
|
(e)
|
Executive
Supplemental Retirement Plan
|
|
|
(i)
|
Country
club membership dues and fees
|
|
|
(j)
|
Personal
use of company car
|
|
|
(k)
|
Personal
use of mobile phone
|
Option
and Restricted Stock Awards Issued During 2007
During
2007, the Company granted its named executive officers a total of 11,106
service-based restricted stock grants under the 2006 Long-Term Stock
Compensation Plan, as reflected in the following table. There were no
option awards granted to any named executive officer in 2007.
|
Grants
of Plan-Based
Awards
|
|
Name
|
Grant
Date
|
Fair
Value
Date
(1)
|
All
Other Stock
Awards: Number
of
Shares of Stock
or
Units
(2)
(#)
|
Grant
Date Fair
Value
of Stock
and
Option
Awards
(3)
($)
|
|
|
|
|
|
|
|
Patricia
Arnold
|
2/21/07
|
2/22/07
|
11,106
|
200,019
|
|
|
(1)
|
Restricted
stock awards are valued as of the close of the market on the business
day
following Compensation Committee action on the award.
|
|
|
(2)
|
See
“Compensation Discussion and Analysis – Elements of Compensation –
Equity-Based Compensation Plans” for a discussion of the terms of the
restricted stock.
|
|
|
(3)
|
Based
on a closing market price of $18.01 per share on February 22, 2007,
the
fair value date.
|
|
|
|
|
Aggregated
Option Exercises in Last Fiscal Year and Year–end Option Values
The
following table sets forth information with respect to the exercises of stock
options and stock awards during 2007 and unexercised options held by the named
executive officers on December 31, 2007.
Outstanding
Equity Awards at Fiscal Year-End
|
|
Option
Awards
|
Stock
Awards
|
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(1
)
(#)
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(2)
(#)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(3)
($)
|
|
Anthony
M. Bruno, Jr.
|
2,153
|
0
|
0
|
14.60
|
12/31/10
|
|
|
|
Anthony
M. Bruno, Jr.
|
2,154
|
0
|
0
|
14.60
|
12/31/11
|
|
|
|
Anthony
M. Bruno, Jr.
|
2,154
|
0
|
0
|
14.60
|
12/31/12
|
|
|
|
Anthony
M. Bruno, Jr.
|
2,154
|
0
|
0
|
14.60
|
12/31/13
|
|
|
|
Anthony
M. Bruno, Jr.
|
2,154
|
0
|
0
|
14.60
|
12/31/14
|
|
|
|
Anthony
M. Bruno, Jr.
|
|
|
|
|
|
2,700
|
44,145
|
|
Stephen
J. Mauger
|
539
|
0
|
0
|
14.60
|
12/31/12
|
|
|
|
Stephen
J. Mauger
|
1,077
|
0
|
0
|
14.60
|
12/31/13
|
|
|
|
Stephen
J. Mauger
|
1,077
|
0
|
0
|
14.60
|
12/31/14
|
|
|
|
Stephen
J. Mauger
|
|
|
|
|
|
900
|
14,715
|
|
Mary
Smith
|
1,238
|
0
|
0
|
14.96
|
12/31/10
|
|
|
|
Mary
Smith
|
1,238
|
0
|
0
|
14.96
|
12/31/11
|
|
|
|
Mary
Smith
|
1,238
|
0
|
0
|
14.96
|
12/31/12
|
|
|
|
Mary
Smith
|
1,239
|
0
|
0
|
14.96
|
12/31/13
|
|
|
|
Mary
Smith
|
1,239
|
0
|
0
|
14.96
|
12/31/14
|
|
|
|
Roger
Tully
|
2,562
|
0
|
0
|
14.75
|
12/31/11
|
|
|
|
Roger
Tully
|
0
|
2,562
|
0
|
14.75
|
12/31/12
|
|
|
|
Roger
Tully
|
0
|
2,563
|
0
|
14.75
|
12/31/13
|
|
|
Outstanding
Equity Awards at Fiscal Year-End (continued)
|
|
Option
Awards
|
Stock
Awards
|
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(1)
(#)
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(2
)
(#)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(3)
($)
|
|
Roger
Tully
|
0
|
2,563
|
0
|
14.75
|
12/31/14
|
|
|
|
Patricia
Arnold
|
|
|
|
|
|
11,106
|
181,583
|
(1)
Mr.
Tully’s
options vest as follows: 2,562 shares in 2008, 2,563 in 2009 and
2,563 shares in 2010.
(2)
Mr. Bruno’s
shares vest as follows: 600 shares in 2008, 900 shares in 2009 and
1,200 shares in 2010. Mr. Mauger’s shares vest as
follows: 200 shares in 2008, 400 shares in 2009 and 500 shares in
2010. Ms. Arnold’s shares vest as follows: 1,111 shares in
2008, 2,221 shares in 2009, 3,332 shares in 2010 and 4,442 shares in
2011.
(3)
Based on the closing market price of the Company’s stock of $16.35 per
share on December 31, 2007.
The
following table sets forth information with respect to option awards exercised
and stock awards vested for the year ended December 31, 2007 for the named
executive officers:
|
|
Option
Awards Exercised and Stock Awards Vested
|
|
|
|
Option
Awards
|
Stock
Awards
|
|
|
Name
|
Number
of
Shares
Acquired
on
Exercise
(#)
|
Value
Realized
on
Exercise
($)
|
Number
of
Shares
Acquired
on
Vesting
(#)
|
Value
Realized
on
Vesting
(1)
($)
|
|
|
|
|
|
|
|
|
|
Anthony
M. Bruno, Jr.
|
-
|
-
|
300
|
5,400
|
|
|
Stephen
J. Mauger
|
-
|
-
|
100
|
1,800
|
(1)
Based
on the closing
market price of the Company’s stock of $18.00 per share on December 19, 2007,
the vesting date.
Executive
Supplemental Retirement Plan
Mr.
Bruno
participates in the Executive Supplemental Retirement Plan (“ESRP”) which is a
noncontributory nonqualified benefit plan designed to provide key executives
with a supplemental retirement income benefit upon reaching the benefit age
of
65. The aggregate annual pre-tax benefit of the ESRP was actuarially
determined to be $111,989 and will be paid over a period of 15 years. The
Company intends to fund its obligations under the ESRP with the increase in
cash
surrender value of bank-owned life insurance policies it purchased on the lives
of the executives. The amount contributed on behalf of Mr. Bruno was
$68,660 for year ended December 31, 2007.
|
Pension
Benefits
|
|
Name
|
Plan
Name
|
Number
of Years
Credited
Service
(#)
|
Present
Value of
Accumulated
Benefit
($)
|
Payments
During
Last
Fiscal Year
($)
|
|
|
|
|
|
|
|
Anthony
M. Bruno, Jr.
|
Executive
Supplemental
Retirement
Plan
|
4
|
187,094
|
-
|
Potential
Change in Control and Other Post-employment Payments
The
Company has entered into employment and other agreements with certain executive
officers that provide for benefits to such executives in the event of a
termination of employment or a change in control. The potential
change in control and other post-employment payments to be made under these
agreements are discussed below. For a more complete discussion of the
other terms of these agreements, please see the section above entitled
"Compensation Discussion and Analysis—Employment Agreements."
Mr.
Bruno
A. Under
Mr. Bruno's employment agreement, if the Company terminates Mr. Bruno's
employment without "just cause," he would be entitled to receive as a severance
benefit an amount equal to one year's worth of his then current base salary,
to
be paid within ten days of termination, and will be able to participate for
one
year in the Company's benefit plans relating to (i) 401(k) benefits, (ii)
medical insurance, (iii) group term life insurance benefits, (iv) group
disability benefits, and (v) the Executive Supplemental Retirement
Plan. Such severance benefits would not be payable if Mr. Bruno
competes with the Company or any bank subsidiary of the Company in the manner
and within the geographical area described in the agreement. Mr.
Bruno's outstanding stock options or restricted stock would also immediately
vest upon this sort of termination. Consequently, in the event Mr.
Bruno had been terminated by the Company without "just cause" as of the end
of
fiscal year 2007, he would have been entitled to the following severance
payments and benefits:
|
|
·
|
$500,000
in base salary, to be paid within ten days of termination;
|
|
|
·
|
$19,896
in 401(k) benefits for one year following termination, assuming the
full
amount of Company matched payments and 4% in profit sharing payments,
consistent with past practice;
|
|
|
·
|
a
continuation of eligibility to participate in the medical insurance,
group
term life insurance benefits, and group disability benefits for one
year
following termination, with an estimated value of $17,106;
|
|
|
·
|
estimated
aggregate pre-tax payments pursuant to the Executive Supplemental
Retirement Plan of $1,679,835 to be paid in 15 annual installments
of
$111,989 beginning upon Mr. Bruno reaching age 65; and
|
|
|
·
|
immediate
lapse of restrictions on stock valued at $44,145 (based upon the
$16.35
closing market price of the Company's stock on December 31, 2007).
|
The
estimated total of payments in this termination scenario is
$2,260,982.
B. If
Mr. Bruno voluntarily resigns from employment upon at least twelve months
notice, the employment agreement provides that he shall continue to receive
his
then current compensation for a period of one year, to be paid in regular
amounts at least twice a month. The non-compete provisions of the agreement
would apply during this twelve-month period. Consequently, if Mr.
Bruno had resigned at the end of fiscal 2007 upon at least twelve month's
written notice, he would have been entitled to the following
benefits:
|
|
·
|
$500,000
in base salary, to be paid in installments at least twice a month
for the
one-year period following resignation; and
|
|
|
·
|
estimated
aggregate pre-tax payments pursuant to the Executive Supplemental
Retirement Plan of $489,180 to be paid in 15 annual installments
of
$32,612 beginning upon Mr. Bruno reaching age 65.
|
The
estimated total of payments in this termination scenario is
$989,180.
C. Notwithstanding
the above provisions, in the event that Mr. Bruno's employment is terminated
without Mr. Bruno's prior written consent and for a reason other than "just
cause," or voluntarily by Mr. Bruno, in connection with or within twelve months
after a "change in control" of the Company or Greater Community Bank, as defined
in the agreement, Mr. Bruno will be entitled to receive 2.5 times his then
current base annual compensation, less amounts paid after the change of control
occurs, to be paid in one lump sum within ten days following termination, and
will be able to participate for one year in the Company's benefit plans relating
to (i) 401(k) benefits, (ii) medical insurance, (iii) group term life insurance
benefits, (iv) group disability benefits, and (v) the Executive Supplemental
Retirement Plan. In no event will amounts payable in this scenario,
without considering payments under the ESRP, equal or exceed the difference
between (i) the product of 2.99 times Mr. Bruno's "base amount" as defined
in
section 280G(3) of the Internal Revenue Code and (ii) the sum of any other
parachute payments that Mr. Bruno receives on account of the change of
control. Mr. Bruno's outstanding stock options or restricted stock
would also immediately vest upon termination following a change in
control. Consequently, Mr. Bruno would have been entitled to the
following severance payments and benefits had his employment been terminated
at
the end of fiscal 2007 in connection with a change in control of Greater
Community Bank or the Company:
|
|
·
|
$1,250,000
(equal to 2.5 times Mr. Bruno's base salary of $500,000), to be paid
within ten days of termination;
|
|
|
·
|
$19,896
in 401(k) benefits for one year following termination, assuming the
full
amount of Company matched payments and 4% in profit sharing payments,
consistent with past practice;
|
|
|
·
|
a
continuation of medical insurance, group term life insurance benefits,
and
group disability benefits for one year following termination, with
an
estimated value of $17,106;
|
|
|
·
|
estimated
aggregate pre-tax payments pursuant to the Executive Supplemental
Retirement Plan of $1,679,835 to be paid in 15 annual installments
of
$111,989 beginning upon Mr. Bruno reaching age 65; and
|
|
|
·
|
immediate
lapse of restrictions on stock valued at $44,145 (based upon the
$16.35
closing market price of the Company's stock on December 31, 2007).
|
The
estimated total of payments in this termination scenario is
$3,010,982. Based on these estimates, the restrictions described
above regarding Section 280G(3) of the Internal Revenue Code would not limit
Mr.
Bruno’s severance benefits.
D. Under
Mr. Bruno’s non-compete agreement with Oritani Financial Corp., upon
consummation of the merger of the Company with and into Oritani Financial Corp.,
Mr. Bruno would be entitled to be paid a total amount of $425,000.04 in monthly
installments of $35,416.67 during the twelve month non-compete
period.
Mr.
Mauger
Under
Mr.
Mauger’s change in control agreement, if Mr. Mauger had been terminated at the
end of fiscal 2007 in connection with or following a change in control, he
would
have been entitled to the following payments and benefits:
|
|
·
|
$210,000
in base salary (equal to one times base salary of $210,000), to be
paid
within ten days of termination; and
|
|
|
·
|
immediate
lapse of restrictions on stock valued at $14,715 (based upon the
$16.35
closing market price of the Company's stock on December 31, 2007).
|
Ms.
Smith
A. Under
Ms. Smith's employment agreement, if HCC terminates Ms. Smith's employment
during the term of the agreement for any reason other than cause, Ms. Smith
may
elect to receive either (i) twice her annual base salary at the time of her
termination, payable upon termination, or (ii) the sum of 6.42% of the total
annual pre-tax profit of HCC (based upon HCC's portfolio as it exists at the
time of termination) for the next five years, payable by March 31 of each
subsequent year. The standard non-compete and non-solicitation
provisions of the employment agreement would continue for a period of twelve
months following termination. Consequently, if Ms. Smith had been
terminated by HCC for any reason other than cause at the end of fiscal 2007,
she
would have been entitled, at her choice, to one of the following
benefits:
|
|
·
|
$364,600
(equal to two times base salary of $182,300), to be paid upon termination;
or
|
|
|
·
|
$116,118
in aggregate annual payments, representing 6.42% of the total annual
pre-tax profit of HCC (based upon HCC's portfolio as it existed as
of
December 31, 2007, assumed to be $806,049), payable as follows: (i)
$51,748 by March 31, 2008; (ii) $36,602 by March 31, 2009; $21,457
by
March 31, 2010; and $6,311 by March 31, 2011.
|
If
Ms.
Smith voluntarily terminates her employment during the term of the agreement
(upon at least 180 days prior written notice), HCC may elect to pay Ms. Smith
either (i) one of the amounts described above, at HCC's choice, that would
be
payable in the event HCC terminated Ms. Smith without cause, in which case
the
non-competition and non-solicitation clauses of the employment agreement would
continue for twelve months following the termination, or (ii) no severance
payments, in which case the non-competition and non-solicitation clauses of
the
employment agreement would not continue following the termination.
B. Notwithstanding
the above provisions of Ms. Smith's employment agreement, in the event Greater
Community Bank transfers its controlling interest in HCC to any other person,
or
the controlling interest in Greater Community Bank is transferred to any other
person, then Ms. Smith has the exclusive option, to be exercised within 90
days
of such transfer, to terminate the employment agreement and receive, at Ms.
Smith's option, either (i) two times her annual salary at the time she exercises
her option to terminate employment or (ii) 6.42% of HCC's adjusted sales price
and as determined pursuant to the agreement, payable within 120 days after
the
sale. In the event Greater Community Bank and HCC are sold as a
combined entity, the determination of HCC's sales price is to be based on a
then
current market valuation of HCC. Consequently, if Ms. Smith had
terminated her employment with HCC at the end of fiscal 2007 in connection
with
or following a change in control, she would have been entitled, at her choice,
to one of the following benefits payable within 120 days after the
sale:
|
|
·
|
$364,600
(equal to two times base salary of $182,300); or
|
·
$15,639 (based on HCC's adjusted sales price and as determined pursuant to
the
agreement).
Mr.
Tully
Under
Mr.
Tully’s change in control agreement, if Mr. Tully had been terminated at the end
of fiscal 2007 in connection with or following a change in control, he would
have been entitled to the following payments and benefits:
|
|
·
|
$200,000
in base salary (equal to one times base salary of $200,000), to be
paid
within ten days of termination; and
|
|
|
·
|
immediate
vesting of stock options valued at $12,301 (based upon the $16.35
closing
market price of the Company's stock on December 31, 2007 and the
weighted
average exercise price of the stock options).
|
Ms.
Arnold
Under
Ms.
Arnold’s change in control agreement, if Ms. Arnold had been terminated at the
end of fiscal 2007 in connection with or following a change in control, she
would have been entitled to the following payments and benefits:
|
|
·
|
$400,000
in base salary (equal to two times base salary of $400,000), to be
paid
within ten days of termination; and
|
|
|
·
|
immediate
lapse of restrictions on stock valued at $181,583 (based upon the
$16.35
closing market price of the Company's stock on December 31, 2007).
|
Compensation
of Directors
The
Company compensates its nonemployee directors through a combination of cash
or
deferred fees and noncontributory nonqualified retirement plans. Nonemployee
directors are also compensated for attending meetings of the Board of certain
of
the Company’s subsidiaries of which they are directors and committee
members.
In
2007,
nonemployee directors were compensated for services rendered in that capacity
at
the rate of $750 per board meeting attended, $500 for each Audit Committee
meeting attended, $400 for each Executive Committee meeting attended and $200
for all other committee meetings attended. In addition, each nonemployee
director was paid an annual stipend of $5,000 at the beginning of the year.
Mr.Volpe was paid an additional stipend of $500 per month for serving as
Chairman of the Audit Committee. The Company compensated its nonemployee
directors a total of $140,600 for 2007 in those capacities. The Board
of Directors of the Company has not approved any fee increases for
2008.
In
2007,
nonemployee directors of GC Bank were compensated $600 for each meeting of
the
GC Bank Board attended, $300 for each Loan Committee meeting attended and $200
for all other committee meetings attended, as well as an annual stipend of
$2,000. GC Bank compensated its nonemployee directors a total of $337,705
(including deferred amounts and amounts to retired directors) in directors’ fees
during 2007 for acting in those capacities, of which $113,707 was earned by
GC
Bank directors who are also nonemployee directors of the Company.
Nonemployee
directors of HCC received a $500 per month fee for meetings
attended. Mr. Urbano was the only nonemployee director of the Company
who also served on the Board of HCC. Total fees paid in 2007 to Mr.
Urbano for his service on the HCC Board were $6,000.
Nonemployee
directors of New Union Asset Holdings Corp. (“NUAHC”), an indirect nonbank
subsidiary of GC Bank, received a $500 fee per meeting
attended. Messrs. Urbano and Volpe were the only nonemployee
directors of the Company who also served on the Board of NUAHC. Total
fees paid in 2007 to Messrs. Urbano and Volpe for their service on the NUAHC
Board were $1,000 each.
Director
Deferred Compensation Plan
The
Company‘s Director Deferred Compensation Plan (“DDCP”) is a nonqualified
deferred compensation benefit plan designed to provide participating directors
with the ability to defer a certain portion of their fees to be earned in the
future in the form of a deferred compensation benefit. A
participating director could defer payment of a specified amount up to 100%
of
his monthly board fees and/or stipend as a director of the Company and/or GC
Bank using fees actually earned in 1997 for a 5-year period commencing January
1999 and ending December 2003. Deferred amounts earn interest at the
rate of 10% per annum. At benefit eligibility date, the benefit under
the DDCP is payable in the form of a monthly annuity for 10 years. A majority
of
nonemployee directors of the Company that were eligible at the time are
participating in the DDCP. The nonemployee directors of the Company currently
participating in the DDCP are Dr. Bramante, Mr. Ferguson, and Mr.
Volpe.
Director
Retirement Plans
The
Company’s Director Emeritus Plan (“DEP”) is a noncontributory nonqualified
benefit plan designed to provide nonemployee directors with a certain amount
of
additional compensation (“Emeritus Benefit”) after retirement from active
service. The Emeritus Benefit is provided to those nonemployee
directors who, at retirement age, will have a minimum of 15 years of service,
of
which, at least five years occur after the plan implementation date in 1999.
Each participant’s Emeritus Benefit is 75% of his projected annual board fees
earned prior to his normal retirement date (the later of age 65 or five years
of
plan participation), using actual fees earned in 1997 plus assumed increases
in
such fees based upon annual compounding at the rate of 5%, subject to the
maximum amount
specified
in each participating director’s Joinder Agreement. Generally, the Emeritus
Benefit will not be paid unless the nonemployee director reaches retirement
age
and has officially retired from their respective Board(s); however, there are
certain circumstances where the plan does allow for full or partial benefit
payout.
The
aggregate annual Emeritus Benefit will be paid over a period of 10 years and
was
actuarially determined to be as follows: Dr. Bramante, $12,420; Mr.
Ferguson, $11,136; Mr. Urbano, $15,084; Mr. Volpe, $16,416. The
components of net periodic plan costs charged to operations for the DEP for
the
years ended December 31, 2007 and 2006 were $37,000 and $75,000,
respectively.
Mr.
Soldoveri participates in the Company’s optional Director Supplemental
Retirement Plan (“DSRP”). The DSRP is a noncontributory nonqualified benefit
plan designed to provide the director with a supplemental retirement income
benefit upon reaching the benefit age of 65. The annual pre-tax benefit of
the
DSRP was actuarially determined to be $23,160 and will be paid over a period
of
10 years. For the years ended December 31, 2007 and 2006, $8,000 and $7,000,
respectively, were contributed by the Company to the retirement income trust
fund.
Nonemployee
Director Compensation Table
The
following table summarizes compensation earned in 2007 by the Company’s
nonemployee directors. (Information about Anthony M. Bruno, Jr., who serves
as
an executive officer of the Company in addition to his director position, is
presented in the previous tables regarding executive compensation.) Meeting
fees
primarily consist of stipends and fees for attending meetings of the boards
of
directors of the Company, its bank subsidiary and their committees. No
nonemployee director received during fiscal 2007 any perquisites or other
personal benefits or property that exceeded $10,000 in value.
Director
Compensation
|
|
|
|
|
|
Change
in Pension Value and Nonqualified Deferred
Compensation
Earnings
|
|
|
Name
|
|
Fees
Earned
or
Paid
in
Cash
($)
|
|
|
Deferred
Compensation
(1)
($)
|
|
|
Deferred
Compensation
Plan
Accrued
(2)
($)
|
|
|
Change
in
Director
Emeritus
Plan
(3)
($)
|
|
|
Change
in
Director
Supplemental
Retirement
Plan
(4)
($)
|
|
|
Total
($)
|
|
|
M.
A. Bramante
|
|
|
29,900
|
|
|
|
13,338
|
|
|
|
5,564
|
|
|
|
2,995
|
|
|
|
-
|
|
|
|
51,797
|
|
|
William
T. Ferguson
|
|
|
23,200
|
|
|
|
-
|
|
|
|
9,237
|
|
|
|
12,856
|
|
|
|
-
|
|
|
|
45,293
|
|
|
Angelo
J. Genova
|
|
|
14,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,250
|
|
|
Robert
C. Soldoveri
|
|
|
43,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,187
|
|
|
|
48,187
|
|
|
Alfred
R. Urbano
|
|
|
44,300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,610
|
|
|
|
-
|
|
|
|
54,910
|
|
|
Charles
J. Volpe
|
|
|
52,750
|
|
|
|
18,369
|
|
|
|
7,964
|
|
|
|
-
|
|
|
|
-
|
|
|
|
79,083
|
|
|
David
Waldman
|
|
|
23,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,200
|
|
(1)
Fee amounts for which payment has been deferred under the Director Deferred
Compensation Plan.
(2)
Interest amount accrued.
(3)
Service and/or interest amount accrued during the year.
(4)
Year-to-year change in actuarial
present value of the accumulated benefit.