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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULEConfidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)Section 240.14a-11(c) or (S)Section 240.14a-12
OCEAN FINANCIAL CORPORATIONOcean Financial Corp.
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(Name of Registrant as Specified inIn Its Charter)
OCEAN FINANCIAL CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
OCEAN FINANCIAL CORP.
975 HOOPER AVENUE
TOMS RIVER, NEW JERSEY 08754-2009
----------------------------------(732)240-4500
March 19, 1999
Fellow Shareholders:
You are cordially invited to attend the 1999 annual meeting of shareholders
(the "Annual Meeting") of Ocean Financial Corp. (the "Company"), the holding
company for Ocean Federal Savings Bank (the "Bank"), Toms River, New Jersey,
which will be held on April 22, 1999 at 10:00 a.m. at the Crystal Point Yacht
Club, 3900 River Road, at the intersection of State Highway 70, Point Pleasant,
New Jersey.
The attached Notice of the Annual Meeting and the Proxy Statement describe
the business to be transacted at the Annual Meeting. Directors and officers of
the Company as well as a representative of KPMG LLP, the Company's independent
auditors, will be present at the Annual Meeting to respond to any questions that
our shareholders may have regarding the business to be transacted.
The Board of Directors of Ocean Financial Corp. has determined that the
matters to be considered at the Annual Meeting are in the best interests of the
Company and its shareholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT,
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES AS
DIRECTORS SPECIFIED UNDER PROPOSAL 1 AND "FOR" PROPOSAL 2, THE RATIFICATION OF
AUDITORS.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE REPRESENTED, EITHER
IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all of the employees of the Company
and the Bank, I thank you for your continued interest and support.
Sincerely yours,
John R. Garbarino
Chairman of the Board, President
and Chief Executive Officer
OCEAN FINANCIAL CORP.
975 Hooper Avenue
TOMS RIVER, NEW JERSEY 08754-2009
__________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 1998
----------------------------------22, 1999
__________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Annual
Meeting") of Ocean Financial Corp. (the "Company"), the holding company for
Ocean Federal Savings Bank (the "Bank"), will be held on April 23, 199822, 1999 at 10:00
a.m., at the Crystal Point Yacht Club, 3900 River Road, at the intersection of
State Highway 70, Point Pleasant, New Jersey.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of three directors to a three-year term of office.
2. The ratification of the Amended and Restated Ocean Financial Corp.
1997 Incentive Plan ("Plan").
3. The ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year ending December 31, 1998;1999;
and
4.3. Such other matters as may properly come before the meeting and at any
adjournments thereof, including whether or not to adjourn the meeting.
The Board of Directors has established March 2, 1998,1, 1999, as the record date
for the determination of shareholders entitled to receive notice of and to vote
at the Annual Meeting and at any adjournments thereof. Only record holders of
the common stock of the Company as of the close of business on such record date
will be entitled to vote at the Annual Meeting or any adjournments thereof. In
the event there are not sufficient votes for a quorum or to approve the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of shareholders entitled to vote at the Annual Meeting will be available at
Ocean Financial Corp., 975 Hooper Avenue, Toms River, New Jersey 08754-2009, for
a period of ten days prior to the Annual Meeting and will also be available at
the Annual Meeting itself.
By Order of the Board of Directors
/s/ John K. Kelly
-------------------
John K. Kelly
Corporate Secretary
Toms River, New Jersey
March 19, 19981999
OCEAN FINANCIAL CORP.
-----------------------_______________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
-----------------------22, 1999
_______________________
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to shareholders of Ocean Financial
Corp. (the "Company") in connection with the solicitation by the Board of
Directors (the "Board of Directors" or "Board") of proxies to be used at the
annual meeting of shareholders (the "Annual Meeting"), to be held on April 23,
1998,22,
1999, at 10:00 a.m., at the Crystal Point Yacht Club, 3900 River Road, at the
intersection of State Highway 70, Point Pleasant, New Jersey, and at any
adjournments thereof. The 19971998 Annual Report to Stockholders, including the
consolidated financial statements for the fiscal year ended December 31, 1997,1998,
accompanies this Proxy Statement, which is first being mailed to record holders
on or about March 19, 1998.1999.
Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the shares be represented by proxy or in
person at the Annual Meeting. Shareholders are requested to vote by completing
the enclosed proxy card and returning it signed and dated in the enclosed
postage-paid envelope. Shareholders are urged to indicate their vote in the
spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN.
WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY CARDS WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT "FOR" THE
RATIFICATION OF THE AMENDED AND RESTATED OCEAN FINANCIAL CORP. 1997 INCENTIVE
PLAN ("PLAN"), AND "FOR"
THE RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1998.1999.
Other than the matters listed on the attached Notice of Annual Meeting of
Shareholders, the Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. EXECUTION OF A PROXY,
HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY TO VOTE
THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF
ANY, THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND AT ANY ADJOURNMENTS
THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
shareholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies on behalf of management will be borne
by the Company. In additionaddtion to the solicitation of proxies by mail, Kissel-
Blake Inc.Kissel-Blake,
a Division of Shareholder Communications Corp., a proxy solicitation firm, will
assist the Company in soliciting proxies for the Annual Meeting and will be paid
a fee of $3,500,$4,000, plus out-of-
pocketout-of-pocket expenses. Proxies may also be solicited
personally or by telephone by directors, officers and other employees of the
Company and its subsidiary, Ocean Federal Savings Bank (the "Bank"), without
additional compensation therefor. The Company will also request persons, firms
and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy material to, and
obtain proxies from, such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual Meeting, except as
described below.
The close of business on March 2, 1998,1, 1999, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 7,767,06714,162,976 shares.
As provided in the Company's Certificate of Incorporation, for quorum
purposes, holders of Common Stock who beneficially own in excess of 10% of the
outstanding shares of Common Stock (the "Limit") are not entitled to any vote in
respect of the shares held in excess of the Limit and are not treated as
outstanding for voting purposes. A person or entity is deemed to beneficially
own shares owned by an affiliate of, as well as, by persons acting in concert
with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors (i) to make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit supply information to
the Company to enable the Board of Directors to implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the Board
of Directors enables a shareholder to vote "FOR" the election of the nominees
proposed by the Board, or to "WITHHOLD" authority to vote for one or more of the
nominees being proposed. Under Delaware law and the Company's Bylaws, directors
are elected by a plurality of votes cast, 2
without regard to either (i) broker
non-votes or (ii) proxies as to which authority to vote for one or more of the
nominees being proposed is withheld.
As to the proposed ratification of the Plan submitted for shareholder
action set forth in Proposal 2
the proxy card being provided by the Board of
Directors enables a shareholder to check the appropriate box on the proxy card
to (i) vote "FOR" the Proposal; (ii) vote "AGAINST" the Proposal; or (iii)
"ABSTAIN" from voting on such item. Under Delaware law, an affirmative vote at
the Annual Meeting at which a quorum is present of the holders of a majority of
the shares of Common Stock present in person or by proxy and entitled to vote on
the Proposal is required to constitute shareholder ratification of the Proposal.
Shares as to which the "ABSTAIN" box has been selected on the proxy card with
respect to the proposal will be counted as present and entitled to vote and have
the effect of a vote against the matter for which the "ABSTAIN" box has been
selected. In contrast, shares underlying broker non-votes are not counted as
presented and entitled to vote on the Proposal and have no effect on the vote on
the Proposal.
As to the ratification of KPMG Peat Marwick LLP as independent auditors of the Company
set forth in Proposal 2 and all other matters that may properly come before the
Annual Meeting, by checking the appropriate box, a shareholder may: (i) vote
"FOR" the item; (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" from voting on
such item. Under the Company's Bylaws, unless otherwise required by law, all
such matters shall be determined by a majority of the votes cast, without regard
to (a) broker non-votes, or (b) proxies marked "ABSTAIN" as to that matter.
Proxies solicited hereby are to be returned to the Company's transfer
agent, American Stock Transfer & Trust Company ("ASTT"). The Board of Directors
has designated ASTT to act as inspectorsinspector of election and tabulate the votes at
the Annual Meeting. ASTT is not otherwise employed by, or a director of, the
Company or any of its affiliates. After the final adjournment of the Annual
Meeting, the proxies will be returned to the Company for safekeeping.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed by
management to be beneficial owners of more than 5% of the Company's outstanding
shares of Common Stock on the Record Date or as disclosed in certain reports
received to date regarding such ownership filed by such persons with the Company
and with the Securities and Exchange Commission ("SEC"), in accordance with
Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended
("Exchange Act"). Other than those persons listed below, the Company is not
aware of any person, as such term is defined in the Exchange Act, that owns more
than 5% of the Company's Common Stock as of the Record Date.
3
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
- -------------------- ------------------------------------------ ----------------------------- ----------------------------------------- -------------- -------------
Common Stock Ocean Federal Savings Bank Employee 669,6661,751,498 (1) 8.44%12.37%
Stock Ownership Plan ("ESOP")
975 Hooper Avenue
Toms River, New Jersey 08754-2009
Common Stock Ocean Federal Foundation 624,0461,203,092 (2) 7.86%8.49%
975 Hooper Avenue
Toms River, New Jersey 08754-2009
Common Stock Newburger &Neuberger Berman 406,900LLC 772,700 (3) 5.13%5.46%
605 Third Avenue
New York, New York 10158
_____________________
(1) Shares of Common Stock were acquired by the ESOP in the Bank's conversion
from mutual to stock form of organization (the "Conversion"). The ESOPCompensation Committee (as defined herein) administers the ESOP. The
trustee for the ESOP must vote all allocated shares held in the ESOP in
accordance with the instructions of the participants. On March 19, 1998, 126,0341, 1999,
377,684 shares had been allocated under the ESOP and 543,6321,373,814 shares remain
unallocated. Under the ESOP, unallocated shares and allocated shares as to
which voting instructions are not given by participants are to be voted by
the ESOP Trustee in a manner calculated to most accurately reflect the
instructions received from participants regarding the allocated stock so
long as such vote is in accordance with the fiduciary provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(2) Ocean Federal Foundation (the "Foundation") was established and funded by
the Company in connection with the Bank's conversion from mutual to stock
form of organization (the "Conversion""Conversion,") with an amount of the Company's
Common Stock equal to 7.4% of the total amount of Common Stock issued in the
Conversion. The Foundation is a Delaware non-stock corporation and is
dedicated to charitable purposes within Ocean County, New Jersey and its
neighboring communities. The Foundation is governed by a board of directors
withcomprised of 18 members, nine of whom are civic or community leaders in the
Bank's local community who are not affiliated with the Company or the Bank,
or their officers, directors and employees. The remaining nine members of
the Foundation's board of directors are directors of the Company and the
Bank. Pursuant to the terms of the contribution of Common Stock, as
mandated by the Office of Thrift Supervision, all shares of Common Stock
held by the Foundation must be voted in the same ratio as all other shares
of the Company's Common Stock on all proposals considered by stockholders of
the Company.
(3) Based upon a representation to the CompanySEC Form 13G filed by the beneficial owners as of
the Record Date.Neuberger Berman LLC on February 9, 1999.
4
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL I. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of nine (9)
directors and is divided into three classes. Each of the nine members of the
Board of Directors also presently serves as a director of the Bank. Directors
are elected for staggered terms of three years each, with the term of office of
only one of the three classes of directors expiring each year. Directors serve
until their successors are elected and qualified.
The three nominees proposed for election at the Annual Meeting are MichaelThomas
F. Curtin, John R. Garbarino and Frederick E. Barrett, Donald E. McLaughlin and James T. Snyder. No person being nominated
as a director isSchlosser. Neither Mr. Curtin or
Mr. Schlosser are being proposed for election pursuant to any agreement or
understanding between any such personeither of them and the Company. The Bank and Company have
entered into an employment agreement with Mr. Garbarino, which agreement is more
fully detailed in the "Employment Agreements" Section of this Proxy Statement.
While the Company is not required to nominate Mr. Garbarino for election to the
Board of Directors, the terms of his Employment Agreement could be triggered in
the event he were not elected to the Board of Directors.
In the event that any such nominee is unable to serve or declines to serve
for any reason, it is intended that proxies will be voted for the election of
the balance of those nominees named and for such other persons as may be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR THE DIRECTORS IS WITHHELD, IT IS INTENDED
THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD WILL BE VOTED "FOR" THE
ELECTION OF ALL NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES
NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND CERTAIN EXECUTIVE
OFFICERS
The following table sets forth, as of the Record Date, the names of
nominees and continuing directors and the Named Executive Officers (as defined
below), their ages, a brief description of their recent business experience,
including present occupations and employment, the year in which each became a
director of the Bank and the year in which their terms (or, in the case of
nominees, their proposed terms) as director of the Company expire. This table
also sets forth the amount of Common Stock and the percent thereof beneficially
owned by each director and Named Executive Officer and all directors and Named
Executive Officers as a group as of the Record Date.
5
EXPIRATION AMOUNT AND OWNERSHIP
EXPIRATION NATURE OF OWNERSHIP AS A
NAME AND PRINCIPAL OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIAL A PERCENT OF
PRESENT
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNERSHIP(2) CLASS(9)(3) CLASS(4)
- ---------------------------------- ----------------------------------------------- -------- --------- ------------ ----------- ----------------- ------------------------------- ------------
NOMINEES
Michael E. Barrett 58 1989 2001 47,188 (6)(7) .59%
Executive Vice President of the Bank
Donald E. McLaughlin 50 1985 2001 23,089 (3)(4) .29%
President, Donald E. McLaughlin, CPA, P.C.
James T. Snyder 63 1991 2001 31,089 (3)(4) .39%
Retired, Former 50% owner of
Wallach's Inc., a New Jersey
retail company.
CONTINUING DIRECTORS
Thomas F. Curtin 6667 1991 1999 31,089 (3)(4) .39%2002 75,598(5)(6) .51%
Partner, The Foristall
Company, Inc., an investor
relations firm.
John R. Garbarino 4849 1984 1999 143,561 (6)(7) 1.81%2002 383,386(7)(8) 2.60%
Chairman of the Board
President and Chief Executive
Officer of the Company and the Bank
Frederick E. Schlosser 7577 1968 1999 29,839 (3)(4) .38%2002 73,098(5)(6) .50%
Retired, former Vice President
for Steinbach's department stores.
CONTINUING DIRECTORS
Carl Feltz, Jr.
Principal, Feltz Associates, 5960 1990 2000 22,789 (3)(4) .29%58,998(5)(6) .40%
Architects
Robert E. Knemoller 6869 1982 2000 25,939 (3)(4) .33%65,298(5)(6) .44%
Retired, former Executive
Officer of the Bank
Diane F. Rhine 4849 1997 2000 12,805 (4)(5) .16%39,005(5)(6) .26%
President/Owner of Citta &
Cobb, Inc., Realtors
Michael E. Barrett 59 1989 2001 114,657(7)(8) .78%
Executive Vice President of the Bank
Donald E. McLaughlin 51 1985 2001 59,598(5)(6) .40%
President, Donald E. McLaughlin,
CPA, P.C.
James T. Snyder 64 1991 2001 75,598(5)(6) .51%
Retired, Former 50% owner of
Wallach's Inc., a New Jersey
retail company.
6
EXPIRATION AMOUNT AND OWNERSHIP
EXPIRATION NATURE OF OWNERSHIP AS A
NAME AND PRINCIPAL OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIAL A PERCENT OF
PRESENT
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNERSHIP(2) CLASS(9)OWNERSHIP(3) CLASS(4)
- ---------------------------------- ----------------------------------------------- -------- --------- ------------ ----------- ----------------- ------------------------------- ------------
NAMED EXECUTIVE OFFICERS
(WHO ARE NOT ALSO DIRECTORS)
Karl E. Reinheimer 5051 -- -- 25,578 (6)(7) .32%84,312(7)(8) .57%
Executive Vice President and
Chief Operating Officer of
the Bank, formerly Vice President
of Summit Bank.
Michael J. Fitzpatrick 4243 -- -- 54,553 (6)(7) .69%143,268(7)(8) .97%
Executive Vice President and
Chief Financial Officer of the
Company and Bank.
John K. Kelly 4849 -- -- 36,604 (6)(7) .46%88,381(7)(8) .60%
Senior Vice President and
Corporate Secretary of the
Company. Senior Vice President
and General Counsel of the Bank.
All directors and executive officers
as a group (12 persons)............... -- -- -- 484,123 (8) 6.10%1,261,197(9) 8.54%
____________________________________________
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shared with spouse or other
immediate family members) voting power as to shares reported as of the
Record Date.
(3) For purposes of calculating the ownership as a percent of shares outstanding
as of the Record Date all presently exercisable options have been added to
the outstanding Common Stock.
(4) Shares have been adjusted for the two-for-one stock split effected in the
form of a 100% stock dividend paid on May 15, 1998.
(5) Includes 14,37917,254 unvested shares awarded to each outside director, other than Ms.
Rhine, under the
Ocean Financial Corp. Amended and Restated 1997 Incentive Plan (the
"Incentive Plan"). other than Ms. Rhine, whose unvested shares equal 4,314.
Awards to thesethe directors under the Incentive Plan began vesting at a rate of
20% per year commencing on February 4, 1998, except for Ms. Rhine whose
awards began vesting on February 19, 1998; provided, however, that 25% of
the third annual installment, and 50% of each of the fourth and fifth annual
installments for all directors will only vest if the performance criteria
to be
established annually by the Compensation Committee (as defined below) is satisfied. Each
participant has voting power as to the shares awarded.
(4)(6) Excludes 26,84240,264 options granted to each outside director under the Incentive
Plan which have not yet vested. Options granted pursuant to the Incentive
Plan became exercisable at a rate of 20% per year commencing on February 4,
1998, except for Ms. Rhine whose options became exercisable at a rate of 20%
per year commencing February 19, 1998. Includes 6,71026,840 options grantedvested to
each outside director under the Incentive Plan's vesting schedule, effective
February 4, 1998.
(5)but have
not yet been exercised.
(7) Includes 3,595 shares awarded to Ms. Rhine under the Incentive Plan, which
began vesting at a rate of 20% per year commencing on February 19, 1998;
provided, however, that 25% of the third annual installment,100,658, 32,212, 12,080, 32,212 and 50% of each
of the fourth and fifth annual installments will only vest if the
performance criteria to be established by the Compensation Committee is
satisfied. Ms. Rhine has voting power as to the shares awarded.
(6) Includes 83,881, 26,842, 10,066, 26,842 and 16,77620,132 shares awarded to
Messrs. Garbarino, Barrett, Reinheimer, Fitzpatrick, and Kelly,
respectively, under the Incentive Plan.Plan, which have not yet vested. Awards to
officers under the Incentive Plan began vesting at a rate of 20% per year
beginning on February 4, 1998; provided, however, that 25% of the third
annual installment, and 50% of each of the fourth and fifth annual
installments will only vest if the performance criteria to be established annually
by the Compensation Committee is satisfied. Each participant has voting
power as to the shares awarded.
(7)(8) Excludes 161,051, 33,552, 60,394, 60,394241,576, 50,328, 90,590, 90,590 and 20,13130,196 options granted to
Messrs. Garbarino, Barrett, Reinheimer, Fitzpatrick, and Kelly,
respectively, which have not yet vested. Options granted pursuant to the
Incentive Plan became exercisable at a rate of 20% per year commencing on
February 4, 1998. See "Executive Compensation - Incentive Plan." Includes
40,263, 8,388, 15,099, 15,099161,052, 33,552, 60,396, 60,396 and 5,03320,132 options vested to Messrs.
Garbarino, Barrett, Reinheimer, Fitzpatrick and Kelly, respectively, under
the Incentive Plan's vesting schedule, effective February 4, 1998.
(8)but have not yet been exercised.
(9) Includes a total of 254,276508,552 shares awarded under the Incentive Plan and
excludes 523,416785,128 options granted under the Incentive Plan which are not
currently exercisable.
(9) For purposes of calculating the ownership as a percent of shares outstanding
as of the Record Date all presently exercisable options have been added to
the outstanding Common Stock.
7
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company conducts its business through
meetings of the Board of Directors and through activities of itsthe Board's
committees. The Board of Directors of the Company generally meets on a
quarterlyregularly scheduled basis and
may have additional meetings as needed. During 1997,1998, the Board of Directors of
the Company which was formed on November 21, 1995, held tennine meetings. All Directorsdirectors attended at least 75% of meetings.
The Board of Directors of the Company maintains committees, the nature and
composition of which are described below:below.
AUDIT COMMITTEE. The Audit Committee of the Company and the Bank consists
of Messrs. McLaughlin, Knemoller and Schlosser. This committee generally meets
on a quarterly basis and is responsible for the review of the audit and loan
review reports and management actions regarding the implementation of audit
findings. The Bank's Internal Auditor and Loan Review Officer report to this
committee, and the committee also maintains a liaison with outside auditors and
reviews the adequacy of internal controls. The Audit Committee of the Company
and the Bank met fivefour times in 1997.1998.
NOMINATING COMMITTEE. The Company's Nominating Committee for the 19981999
Annual Meeting consists of Ms. Rhine and Messrs. Garbarino, SchlosserFeltz and Curtin.Knemoller. The
committee considers and recommends the nominees for director to stand for
election at the Company's annual meeting of shareholders. The Company's
Certificate of Incorporation and Bylaws provide for shareholder nominations of
directors. These provisions require such nominations to be made pursuant to
timely notice in writing to the Secretary of the Company. The shareholder's
notice of nomination must contain all information relating to the nominee which
is required to be disclosed by the Company's Bylaws and by the Exchange Act.
See "Additional Information - Notice of Business to be Conducted at an Annual
Meeting." The Nominating Committee met three timesone time in 1997.1998.
HUMAN RESOURCES/COMPENSATION COMMITTEE. The Human Resources/Compensation
Committee of the Company and the Bank (the "Compensation Committee") consists of
Messrs. Knemoller, Schlosser and Curtin.Curtin and Ms. Rhine. The Compensation Committee meets to
establish compensation for the executive officers and to review the incentive
compensation programs when necessary. The Compensation Committee is also
responsible for establishing certain guidelines and limits for compensation and
benefit programs for other salaried officers and employees of the Company and
the Bank. See "Executive Compensation - Compensation Committee Report on
Executive Compensation." The Compensation Committee of the Company and the Bank
met twothree times in 1997.1998.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Currently, all outside directors of the Bank and the
Company receive an annual retainer of $15,000 for service on the Bank's Board
and $5,000 for service on the Company's Board. All fees are paid to directors
quarterly. Outside directors of the Bank also receive a fee of $900 for each
regular board meeting attended and $300 for each committee meeting attended;
however, committee chairmen receive $500 per committee meeting attended. 8
The
Bank's directors are also provided with medical and dental insurance for which
they contribute part of the cost of coverage.
8
DEFERRED COMPENSATION PLAN FOR DIRECTORS. The Bank maintains a deferred
compensation plan for the benefit of outside directors. The plan is a non-
qualified arrangement which offers participating directors the opportunity to
defer compensation through a reduction in fees in lieu of a promise of future
benefits. Such benefits are payable commencing at an age mutually agreed upon by
the Bank and the participating director (the "Benefit Age"). The benefits equal
the account balance of the director annuitized over a period of time mutually
agreed upon by the Bank and the director, and then reannuitized at the beginning
of each calendar year thereafter. Lump sum payouts are also available upon
eligibility for distribution of benefits or in the event of the death of the
director. The account balance equals deferrals and interest. Currently, the plan
credits interest on deferrals at a rate equal to the sum of (i) the "Stable
Fund" investment option in the Bank's qualified 401(k) plan plus (ii) 200 basis
points. The plan offers a death benefit which may be funded through the proceeds
of Corporate Owned Life Insurance and is equal to the estimated benefit which
would have been payable if the director had participated in the plan for the
entire period up to the Benefit Age. Early distribution of benefits may occur
under certain circumstances which include change in control, financial hardship,
termination for cause or disability.
INCENTIVE PLAN. Under the Amended and Restated 1997 Incentive Plan (the
"Incentive Plan") maintained by the Company, which was originally adopted by the
Board and approved by stockholders on February 4, 1997 and has been subsequently
amended and restated, each director who is not an officer or employee of the
Company or Bank, other than Diane F. Rhine, who was not a director at the time
of the original grant, received non-statutory options to purchase 33,55267,104 shares
of common stock at an exercise price of $28.82,$14.41, which was the fair market value
of the shares on the date of grant (February 4, 1997) as defined under the
Incentive Plan and an award of 14,37928,758 shares of Common Stock. Ms. Rhine received
non-statutory options to purchase 33,55267,104 shares of Common Stock at an exercise
price of $30.00,$15.00, which was the fair market value on the date of grant (February
19, 1997) and an award of 3,5957,190 shares of Common Stock (collectively, the
"Directors' Awards"). The Incentive Plan was approved by shareholders on February 4, 1997. The Directors' Awards granted under the Incentive Plan
vest over a five year period, at a rate of 20% each year commencing one year
from the date of grant; provided, however, that 25% of the third annual
installment, and 50% of each of the fourth and fifth annual installments will
only vest if thecertain performance criteria to be established by the Compensation
Committee is satisfied.satisfied and independently verified. The performance criteria
established by the Compensation Committee for the third annual installment due
to vest in year 2000 requires that the Company's earnings per share (diluted)
for fiscal 1999 must increase by at least 15% over the earnings per share
(diluted) achieved by the Company for fiscal 1998. Failure to achieve this
performance criteria will result in 25% of the third annual installment not
vesting in the Year 2000. All Directors' Awards will immediately vest upon
death or disability. The Board of
Directors has amended the Plan to provide for acceleration of the vesting of
such awardsdisability or upon a change in control of the Company or the Bank (as defined in
the Incentive Plan)(See Proposal 3).control. All options granted under the
Incentive Plan expire in 10 years following the date of grant. When share awards
vest and are distributed, the recipients will also receive an amount equal to
accumulated cash and stock dividends (if any) with respect thereto, plus
earnings thereon.
EXECUTIVE COMPENSATION
The report of the Compensation Committee and the stock performance graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this 9
proxy statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
except as to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
9
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
Chief Executive Officer and other executive officers of the Company. The
disclosure requirements for the Chief Executive Officer and other executive
officers include the use of tables and a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting those
individuals. In fulfillment of this requirement the Human
Resources/Compensation Committee, (the "Compensation Committee" or "Committee"), at
the direction of the Board of Directors, has prepared the following report for
inclusion in this proxy statement.
Compensation Policies. The Compensation Committee is responsible for
administering the compensation and benefit program for the Company's and the
Bank's employees, including the executive officers. The Committee annually
reviews and evaluates base salary and annual bonus recommendations made for
executive officers by the Chief Executive Officer (other than for himself) along
with the rationale for such recommendations. The Committee also approves the
compensation for the President and Chief Executive Officer ("CEO"), who does not
participate in the Committee's decision as to his compensation package. In
establishing compensation levels, the Committee considers the Company's overall
objectives and performance, peer group comparisons and individual performance.
The Committee has adopted the following goals in establishing executive
compensation: (1) attracting, retaining and rewarding highly qualified and
productive persons; (2) relating compensation to both Company and individual
performance; (3) establishing compensation levels that are internally equitable
and externally competitive; and (4) providing motivation for the executive
officers to enhance shareholder value by linking to a substantial degree
compensation to the performance of the Company's Common Stock.
The Company's compensation program for executive officers consists of (1) a
base salary, (2) a performance-based annual bonus, and (3) periodic grants of
stock awards and stock options. In addition, executive officers may participate
in other benefit plans available to all employees, including the Employee Stock
Ownership Plan and the 401(K) Plan. To the extent that benefits under these
plans are limited by Internal Revenue Code restrictions, the Bank makes
the
Executiveexecutive officers whole through the Supplemental Executive Retirement Plan.
Base Salaries. Salary levels are intended to be consistent and competitive
with the practices of comparable financial institutions and to correlate with
each executive's level of responsibility. The Committee reviewed surveys of
compensation paid to executive officers performing similar duties for depository
institutions and their holding companies, with particular focus on the level of
compensation paid by comparable institutions in New Jersey and the Mid-Atlantic
region. The surveys primarily used by the Committee were the 19971998 SNL Executive
Compensation 10
ReviewReviews for both Commercial Banks and Thrift Institutions and the 1997 SNL Executive Compensation Review
for Commercial Banks.
Although theInstitutions.
The Compensation Committee's recommendationsbase salary determinations are discretionary and
no specific formula is used for decision making, salary increases aregenerally aimed
at reflecting the overall performance of the Company, and the performance of the
individual executive officer.officer, as well as their responsibilities and experience
and the Committee's view of competitive marketplace conditions.
10
Annual Incentive. Under the Performance AchievementAcheivement Award Program (the
"Award Program") a significant portion of each executive officer's annual cash
compensation is contingent on the financial performance of the Company, the Bank and the
Bank.individual. The programAward Program compares actualacutal performance against targetstargest which
are approved by the Compensation Committee at the beginning of each year. The
bonus targets are weighedweighted between individual objectives (which may be subjective in
nature) and the Company's success in achieving its aggressive
financial goals. The annual incentive program is based upon the relative
achievement of the predetermined Company-wide goals as determined on an annual
basis supplemented by individual goals (generally subjective in nature). The
weighting of the performance and individual goals depends on the position of the
executive. This program is discussed further below under "Chief Executive
Officer."
Long Term Incentive Compensation. On February 4, 1997, shareholders of the
Company approved the 1997 Incentive Plan under which executiveExecutive officers receivedreceive stock awards
and options.options under the Incentive Plan. Awards to executive officers under the
Incentive Plan vest at a rate of 20% per year; provided, however, that 25% of
the third annual installment, and 50% of each of the fourth and fifth annual
installments will only vest if thecertain performance criteria to be established by the
Committee is satisfied. The performance criteria established by the
Compensation Committee for the third annual installment due to vest in year 2000
requires that the Company's earnings per share (diluted) for fiscal 1999 must
increase by at least 15% over the earnings per share (diluted) achieved by the
Company for fiscal 1998. Failure to achieve this performance criteria will
result in 25% of the third annual installment not vesting in the Year 2000. The
specific grants and awards for executive officers are reflected in the "Summary
Compensation Table" and in the "Option Grants in Last Fiscal
Year" Table.. The Committee believes that stock ownership by executive
officers is a significant incentive in building stockholdershareholder value and aligning
the interests of employeesexecutives with those of stockholders.shareholders. Stock options and stock
awards under such plansthe Incentive Plan were allocated by the Committee based upon
regulatory practices and policies, the practices of other recently converted financial
institutions as verified by external surveys and based upon theeach executive officers'officer's level
of responsibility and contributions to the Company and the Bank. The Committee
takes into account the outstanding stock incentives when determining overall
compensation.
Chief Executive Officer. The Chief Executive Officer ("CEO") was evaluated
for the successful level of the Company's and the Bank's operational and
administrative changes during 19971998, taking into account both subjective
performance criteria and certain objective performance measures. Mr.
Garbarino's salary for 1997 of
$325,0001998 was unchanged from 1996.$340,000. Performance measures evaluated by the
Committee in determining the compensation of the Chief Executive OfficerCEO included the adoption and
execution of capital management strategies; the successful execution of the
Company's Business Plan; and the continued operation of the Bank in a safe and
sound manner. Mr. Garbarino's base salary generally remains at the median level
as compared to other institutions in the peer group survey.surveys relied upon by the
Committee.
Consistent with the Company's policy of linking compensation and
performance, Mr. Garbarino also participated in a formal annual incentive program
which was first adopted for the 11
Bank's officers in 1993.Annual Incentive Award
Program. Awards made to Mr. Garbarino under the IncentiveAward Program arein 1998 were
based upon
the relative achievement of a predetermined Company-wide goal fortargeted annual return on average equity, degree of
preparedness for the Year 2000 computer transition and were supplemented by the
achievement of certain individual goals (generally subjective in
nature) agreed todetermined by the Committee at the
beginning of eachthe year. These goals are structured with a target level
determined by the Committee, a threshold level which must be attained to fund
any award and a superior level that is above the target level and tied to a
maximum award opportunity. Mr. Garbarino's award is weighted so that 75% of the
award is determined by the Company-wide performance goalgoals and 25% of the award
is determined by individual goals. The total award earned by Mr. Garbarino for
fiscal year 19971998 of $103,441$117,000 represented 91%98% of his targeted award amount based
upon both actual Company performance measured against the aggressive goals established at
the start of the year as well as the Committee's evaluation of Mr. Garbarino's
individual goal attainment.
11
In addition, Mr. Garbarino has been granted 201,314402,628 options and awarded
83,881167,762 shares under the Company's 1997 Incentive Plan, which began vesting at a rate of 20%
per year on February 4, 1998. The awards were made consistent with the criteria
stated under "Long Term Incentive Compensation."
Although certain quantitative and qualitative factors were reviewed to
determine the Chief Executive Officer's compensation (as well as that of all
executive officers), no specific formula was utilized in the Committee's
decisions nor did the Committee establish a direct link between base salary
levels and the Company's performance.
The goal of the above referenced compensation policies, as implemented by
the Committee, is to be certain that all executives are compensated consistent
with the above guidelines. Compensation levels will be reviewed as frequently
as necessary to ensure this result.
THE COMPENSATION COMMITTEE
ROBERT E. KNEMOLLERTHOMAS F. CURTIN, CHAIRMAN
DIANE F. RHINE FREDERICK E. SCHLOSSER
THOMAS F. CURTIN
12
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of total
stockholder return on the Company's Common Stock, based on the market price of
the Common Stock with the cumulative total
return of companies on The Nasdaq Stock Market (U.S.) Index and the SNL Thrift
Index for the period beginning on July 3, 1996, the day the Company's Common
Stock began trading, through December 31, 1997.
CUMMULATIVE1998.
CUMULATIVE MONTHLY RETURN AMONG
OCEAN FINANCIAL CORP. COMMON STOCK,
ALL NASDAQ U.S. STOCKS AND SNL THRIFT INDEX
[STOCK PERFORMANCE GRAPH[GRAPH APPEARS HERE]
Summary
07/02/96 09/30/96 12/31/96 3/31/97 6/30/97 9/06/30/97 12/31/97 06/30/98 12/31/98
-------- -------- -------- ------- ------- --------------- -------- --------
Ocean Financial Corp. 100.00 119.37 127.50 138.40 177.35 179.60 189.50 196.86 173.56
All Nasdaq US Stocks 100.00 103.03 108.09 102.28 121.03 141.50 132.70 159.49 186.22
SNL Thrift Index 100.00 109.13 123.50 135.17 160.69 190.32 210.92 217.59 185.51
Notes:
A. The lines represent quarterly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the quarterly interval, based on the fiscal year end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 7/2/3/96.
13
SUMMARY COMPENSATION TABLE. The following table shows, for the years
ended December 31, 1998, 1997 1996, and 19951996, the cash compensation paid, as well as
certain other compensation paid or accrued for that year to the Chief Executive
Officer of the Company and the Bank and four other executive officers of the
Company and the Bank who earned and/or received salary and bonus in excess of
$100,000 in fiscal year 19971998 ("Named Executive Officers"). No other executive officerExecutive
Officer of the Company or the Bank earned and/or received salary and bonus in
excess of $100,000 in fiscal year 1997.1998.
LONG-TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION (1)
AWARDS PAYOUTS
------------------------------- --------------------- ------------------------------------------------------
OTHER
RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION
AWARDS OPTIONS PAYOUTS COMPENSATION
POSITIONS YEAR ($) (1) ($) (3) ($) (4)
($) (5) (#) (6) ($) (7) ($) (8)
- ------------------------------------------------------------------------------------------------ ------ -------- -------- -------- ------------ ---------- -------- --------- -------------------------
John R. Garbarino 1997 $325,000 $103,4411998 $340,000 $116,769 $ -- $2,453,519 201,314 $ -- $153,430
President and Chief Executive Officer 19961997 325,000 92,930103,441 -- -- -- -- 88,655
of the Company and the Bank.............. 1995 225,600 63,099Bank....................... 1996 325,000 92,930 -- -- -- 158,600 11,625
Michael E. Barrett 1997 $144,4001998 $148,500 $ 22,85220,140 $ -- $ 785,128 41,940 $ -- $ 75,472
Executive Vice President of the Bank.....Bank 1997 144,400 22,852 --
.................................................. 1996 144,400 26,838 -- -- -- -- 46,346
1995 138,200 24,108 -- -- -- 74,996 10,819
Michael J. Fitzpatrick
Executive Vice President and Chief 1997 $145,0001998 $151,000 $ 45,29349,425 $ -- $ 785,128 75,493 $ -- $ 73,337
Financial Officer of the Company and the 1997 145,000 45,293 --
Bank............................................. 1996 139,500 33,533 --
-- -- -- 42,454
Bank..................................... 1995 118,200 30,534 -- -- -- 63,200 6,750
Karl E. Reinheimer (2) 1998 $145,000 $ 28,619 $ --
Executive Vice President and Chief 1997 $140,000140,000 21,187 --
Operating Officer of the Bank..................... 1996 55,570 12,469 --
John K. Kelly
Senior Vice President and Corporate 1998 $126,000 $ 21,18720,740 $ --
$ 294,430 75,493Secretary of the Company and Senior Vice 1997 122,000 24,245 --
President and General Counsel of the Bank......... 1996 116,300 26,114 --
LONG-TERM COMPENSATION
AWARDS
-----------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL AWARDS OPTIONS COMPENSATION
POSITIONS YEAR ($) (5) (#) (6) (7) ($) (8)
- ---------------------------------------------------- ------ ------------ ----------- ------------
John R. Garbarino 1998 $ -- -- $121,336
President and Chief Executive Officer 1997 2,453,519 402,628 153,430
of the Company and the Bank....................... 1996 -- -- 88,655
Michael E. Barrett 1998 $ -- -- $ 63,866
Executive Vice President of the Bank.............. 1997 785,128 83,880 75,472
.................................................. 1996 -- -- 46,346
Michael J. Fitzpatrick
Executive Vice President and Chief 1998 $ -- -- $ 55,968
Financial Officer of the Company and the 1997 785,128 150,986 73,337
Bank............................................. 1996 -- -- 42,454
Karl E. Reinheimer (2) 1998 $ -- -- $ 54,965
Executive Vice President and Chief 1997 294,430 150,986 6,062
Operating Officer of the Bank............Bank..................... 1996 55,570 12,469 -- -- -- -- --
John K. Kelly
Senior Vice President and Corporate 1997 $122,000 $ 24,2451998 $ -- $ 490,698 25,164 $ -- $ 61,35247,654
Secretary of the Company and Senior 1996 116,300 26,114 -- -- -- -- 37,079
Vice 1997 490,698 50,328 61,352
President and General Counsel of 1995 105,700 22,042the Bank......... 1996 -- -- -- 45,948 5,812
the Bank.................................37,079
______________________________
(1) Under Annual Compensation, the column titled "Salary" includes amounts
deferred by the Named Executive Officer pursuant to the Bank's 401(k) Plan
and Deferred Compensation Plan.
(2) On July 15, 1996, the Bank employed Karl E. Reinheimer as Director of the
Commercial Loan Division. On October 16, 1996, Mr. Reinheimer was appointed
Executive Vice President and Chief Operating Officer of the Bank.
(3) ConsistsThis amount consists of bonuses paid pursuant to the Bank's Performance Achievement
AwardsAward Program,
which awards bonusesare based on the attainment of certain predetermined annual
performance goals. See "Compensation Committee Report on Executive
Compensation."
(4) For 1997,1998, there were no (a) perquisites over the lesser of $50,000 or 10% of
the individual's total salary and bonus for the year; (b) payments of above-
market preferential earnings on deferred compensation; (c) payments of
earnings with respect to long-term incentive plans prior to settlement or
maturation; (d) tax payment reimbursements; nor (e) preferential discounts
on stock.
(5) Pursuant to the Incentive Plan, stock awards of 83,881, 26,842, 26,842,
10,066167,762, 53,684, 53,684,
20,132 and 16,77633,552 were granted to Messrs. Garbarino, Barrett, Fitzpatrick,
Reinheimer and Kelly. The awards will vestcommenced vesting in five equal annual
installments commencing on February 4, 1998. When shares become vested and are
distributed, the recipients will also receive an amount equal to accumulated
cash and stock dividends (if any) with respect thereto plus earnings
thereon; provided, however, that 25% of the third annual installment, and
50% of each of the fourth and fifth annual installments will only vest if
the performance criteria established by the Compensation Committee is
satisfied. All awards vest immediately upon death, disability or change in
control. As of December 31, 1997,1998, the market value of the unvested awards
granted to Messrs. Garbarino, Barrett, Fitzpatrick, Reinheimer and Kelly was
$3,124,567, $999,865, $999,865, $374,959$2,231,241, $713,994, $713,994, $267,762, and $624,906,$446,248, respectively.
(6) For a discussion of options granted under the Incentive Plan which was
approved by stockholders on February 4, 1997, seePlan. See the
"Option Grants in Last
Fiscal Year"Year-End Option/SAR Values table.
(7) Represents the payoutShares have been adjusted for the first three-year performance period and fortwo-for-one stock split effected in the
first yearform of the second performance period under the Bank's Long-Term
Awards Program. This program was terminated as of December 31, 1995.a 100% stock dividend paid on May 15, 1998.
(8) Includes (a) $ 0, $2,184, $3,398 , $1,392$55,361, $55,269, $55,968, $53,603 and $1,992 contributed by the
Bank to the accounts of Messrs. Garbarino, Barrett, Fitzpatrick, Reinheimer
and Kelly, respectively, under the Bank's 401(k) Plan; (b) $71,296, $69,160,
$69,939, $3,231 and $59,360$47,654, representing
the value of shares allocated under the ESOP, as of December 31, 1997,1998, for
the benefit of Messrs. Garbarino, Barrett, Fitzpatrick, Reinheimer and
Kelly, respectively; and (c) $74,798(b) $59,002 for Mr. Garbarino representing the
contributions made under the Supplemental Executive Retirement Plan for the
excess amount due under the ESOP for the fiscal year ended December 31,
1997.1998.
14
EMPLOYMENT AGREEMENTS. The Bank and the Company have entered into
employment agreements with Messrs. Garbarino and Fitzpatrick (individually, the
"Executive"). These employment agreements are intended to ensure that the Bank
and the Company will be able to maintain a stable and competent management base.
The continued success of the Bank and the Company depends to a significant
degree on the skills and competence of Messrs. Garbarino and Fitzpatrick.
The employment agreements provide for a three-year term for both
Executives. The Bank employment agreement provides that, commencing on the
first anniversary date and continuing each anniversary date thereafter, the
Board of the Bank may extend the agreement for an additional year so that the
remaining term shall be three years, unless written notice of non-renewal is
given by the Board of the Bank after conducting a performance evaluation of the
Executive. The term of the Company employment agreement is extended on a daily
basis unless written notice of non-renewal is given by the Board of the Company.
In addition to the base salary, the agreements provide for, among other things,
participation in stock benefit plans and other fringe benefits applicable to
executive personnel.
The agreements provide for termination by the Bank or the Company for cause
as defined in the agreements at any time. In the event the Bank or the Company
chooses to terminate the Executive's employment for reasons other than for
cause, or in the event of the Executive's resignation from the Bank and the
Company upon: (i) failure to re-elect the Executive to his current offices;
(ii) a material change in the Executive's functions, duties or responsibilities;
(iii) a relocation of the Executive's principal place of employment by more than
25 miles; (iv) liquidation or dissolution of the Bank or the Company; or (v) a
breach of the agreement by the Bank or the Company, the Executive or, in the
event of Executive's subsequent death, his beneficiary, beneficiaries or estate,
as the case may be, would be entitled to receive an amount equal to the
remaining base salary payments due to the Executive and the contributions that
would have been made on the Executive's behalf to any employee benefit plans of
the Bank or the Company during the remaining term of the agreement. The Bank
and the Company would also continue and pay for the Executive's life, health and
disability coverage for the remaining term of the employment agreement.
Under the agreements, if voluntary or involuntary termination follows a
change in control of the Bank or the Company (as defined in the employment
agreement), the Executive or, in the event of the Executive's death, his
beneficiary, would be entitled to a severance payment equal to the greater of:
(i) the payments due for the remaining term of the agreement; or (ii) three
times the average of the five preceding taxable years' compensation. Such
average compensation includes not only base salary, but also commissions,
bonuses, contributions on behalf of the Executive to any pension or profit
sharing plan, insurance payments, directors or committee fees and fringe
benefits paid or to be paid to the Executive during the preceding five taxable
years. The Bank and the Company would also continue the Executive's life,
health, and disability coverage for thirty-six months. Notwithstanding that
both agreements provide for a severance payment in the event of a change in
control, the Executive would only be entitled to receive a severance payment
under one agreement. In the event of a change in control, based solely upon
three times 19971998 base salary and incentive bonus as reported in the Summary
Compensation
15
Table, Messrs. Garbarino and Fitzpatrick would receive approximately $1,285,323$1,370,307
and $570,879,$601,275, respectively, in severance payments, in addition to other cash and
noncash benefits.
15
Payments to the Executive under the Bank's agreement will be guaranteed by
the Company in the event that payments or benefits are not paid by the Bank.
Payment under the Company's agreement would be made by the Company. All
reasonable costs and legal fees paid or incurred by the Executive pursuant to
any dispute or question of interpretation relating to the agreements shall be
paid by the Bank or Company, respectively, if the Executive is successful on the
merits pursuant to a legal judgment, arbitration or settlement. The employment
agreements also provide that the Bank and Company shall indemnify the Executive
to the fullest extent allowable under federal and Delaware law, respectively.
CHANGE IN CONTROL AGREEMENTS. For similar reasons as with the Employment
Agreements,employment
agreements, the Bank and the Company entered into Changechange in Control Agreementscontrol agreements
("CIC Agreement") with Messrs. Barrett, Reinheimer and Kelly, (individually, the
"Executive"). Each CIC Agreement provides for a two-year term. Commencing on
the date of the execution of the Company's CIC Agreement, the term is extended
for one day each day until such time as the Board of Directors of the Company or
the Executive elects by written notice not to extend the term, at which time the
CIC Agreement will end on the second anniversary of the date of notice. The
Company's CIC Agreement provides that in the event voluntary or involuntary
termination follows a change in control of the Bank or the Company (as defined
in the agreement), the Executive would be entitled to a severance payment equal
to two (2) times the Executive's average annual compensation as defined in the
CIC Agreement, for the five years preceding termination. The Bank's CIC
Agreements areAgreement is similar to that of the Company; however, any payments to the
Executive under the Bank's CIC Agreement, would be subtracted from any amount
due simultaneously under the Company's CIC Agreement. The Company and the Bank
would also continue and pay for the Executive's life, health and disability
coverage for thirty-six (36) full calendar months following termination.
Payments to the Executive under the Bank's CIC Agreement are guaranteed by the
Company in the event that payments or benefits are not paid by the Bank. If a
change in control occurs, based solely upon two times 19971998 base salary and
incentive bonus as reported in the Summary Compensation Table, pursuant to the
CIC Agreements, Messrs. Barrett, Reinheimer and Kelly would receive
approximately $334,504, $322,374$337,280, $347,238 and $292,490,$293,480, respectively, in addition to
other cash and noncash benefits.
Payments under the employment agreements and change in control agreements
in the event of a change in control may constitute some portion of an excess
parachute payment under Section 280G of the Code for executive officers,
resulting in the imposition of an excise tax on the recipient and denial of the
deduction for such excess amounts to the Company and the Bank.
INCENTIVE PLAN. The Company maintains the Incentive Plan which was
approved by shareholders on February 4, 1997. The Incentive Plan provides discretionary awards and stock
options to officers and key employees as determined by a committeethe Compensation
Committee. No awards of non-employee directors. The following table lists all grants ofstock or stock options under the Incentive Planwere made to the Named Executive
Officers made on February 4,
1997 and contains certain information about the potential value of those options
based upon certain assumptions as to the appreciation of the Company's stock
over the life of the option.
16
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------------------------------- -----------------------
NUMBER OF POTENTIAL REALIZABLE
SECURITIES % OF TOTAL VALUE AT ASSUMED
UNDERLYING OPTION/SARS EXERCISE OR ANNUAL RATES OF
OPTIONS/ GRANTED TO BASE PRICE STOCK PRICE
SARS GRANTED EMPLOYEES IN PER EXPIRATION APPRECIATION FOR
NAME (2)(3)(4)(5) FISCAL YEAR SHARE DATE (6) OPTIONS (1)
- ----------------------- ----------------- ---------------- ------------- -------------- -----------------------
5% 10%
---------- -----------
John R. Garbarino 201,314 24.8% $28.82 02/04/07 $3,655,177 $9,224,972
Michael E. Barrett 41,940 5.2 28.82 02/04/07 761,488 1,921,850
Michael J. Fitzpatrick 75,493 9.3 28.82 02/04/07 1,370,697 3,459,376
Karl E. Reinheimer 75,493 9.3 28.82 02/04/07 1,370,697 3,459,376
John K. Kelly 25,164 3.1 28.82 02/04/07 456,893 1,153,111
_____________________________
(1) The amounts represent certain assumed rates of appreciation. Actual gains,
if any, on stock option exercises and Common Stock holdings are dependent on
the future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the amounts reflected in this
table will be realized.
(2) Options granted pursuant to the Incentive Plan are exercisable in equal
installments at an annual rate of 20% beginning February 4, 1998; provided
however, options will be immediately exercisable upon death, disability or
change in control (as defined in the Incentive Plan).
(3) The purchase price may be paid in cash or in Common Stock.
(4) Options include limited (SAR) rights pursuant to which the options may be
exercised in the event of a change in control of the Company. Upon exercise
of a limited right, the optionee would receive a cash payment equal to the
difference between the exercise price of the related option on the date of
the grant and the fair market value of the underlying shares of common stock
on the date the limited right is exercised.
(5) All options are intended to be Incentive Stock Options to the extent
permissible under Section 422 of the Code.
(6) The option term is ten years.
17during fiscal 1998.
16
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options and the values of
such options held by the Named Executive Officers as of December 31, 19971998
FISCAL YEAR-END OPTION/SAR VALUES
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTION/SARS AT
FISCAL YEAR END(#) FISCAL YEAR END($)
------------------------------------- -------------------------------------------------------------------------- ------------------------------
NAME EXERCISABLE/UNEXERCISABLE(1)(2) EXERCISABLE/UNEXERCISABLE(2)UNEXERCISABLE(3)
- --------------------------- ------------------------------------- -------------------------------------------------------------------------- ------------------------------
John R. Garbarino --/201,314 $--/80,526/322,102 $178,365/$1,697,077713,456
Michael E. Barrett --/41,940 --/353,55416,776/67,104 37,159/148,635
Michael J. Fitzpatrick --/75,493 --/636,40630,198/120,788 66,889/267,545
Karl E. Reinheimer --/75,493 --/636,40630,198/120,788 66,889/267,545
John K. Kelly --/25,164 --/212,13310,066/40,262 22,296/89,180
___________________________
(1) The options in this table have an exercise price of $28.82.$14.41.
(2) Shares and the exercise price have been adjusted for the two-for-one stock
split effected in the form of a 100% stock dividend paid on May 15, 1998.
(3) Based on the market value of the underlying Common Stock, $37.25,$16.625, at
December 31, 1997,1998, minus the exercise price.
RETIREMENT PLAN. The Bank maintains a defined benefit plan (the
"Retirement Plan") for salaried employees who have attained the age of 21 and
have completed one year of service. Benefits vest after a participant is
credited with five years of service. The Retirement Plan is designed to comply
with the requirements under Section 401(a) of the Code.
Compensation under the Retirement Plan includes all regular pay, overtime
and regular bonuses as set forth under "- Summary Compensation Table." The
benefits are not subject to any social security adjustment. About the time of
the conversion from mutual to stock form, the Board of Directors froze the
future accrual of benefits under the Retirement Plan in coordination with the
adoption or amendment of other qualified employee benefit plans. The benefit
amounts listed below were computed on a 10 year certain and continuous benefit
basis, which is the normal form under the plan. Participants of the Retirement
Plan, however, have the option of electing benefits to be paid on a single life
annuity basis.
18
The following table sets forth the estimated annual benefits payable upon
retirement at age 65 for the year ended December 31, 1997, expressed in the form
of a 10 year certain and continuous benefit, for the final average salary and
benefit service classifications specified.
OCEAN FEDERAL SAVINGS BANK EMPLOYEE PENSION PLAN
------------------------------------------------
FINAL AVERAGE YEARS OF SERVICE
COMPENSATION ----------------
15 20 25 30 35
- ------------------ ------- ------- ------- ------- -------
$ 50,000 $ 7,500 $10,000 $12,500 $15,000 $17,500
100,000 15,000 20,000 25,000 30,000 35,000
150,000 22,500 30,000 37,500 45,000 52,500
200,000 22,500 30,000 37,500 45,000 52,500
250,000 22,500 30,000 37,500 45,000 52,500
300,000 22,500 30,000 37,500 45,000 52,500
350,000 22,500 30,000 37,500 45,000 52,500
The approximate credited years of service, as of December 31, 1997, for the
named executive officers are as follows:
NAME SERVICE
---- -------
John R. Garbarino................................... 24
Michael E. Barrett.................................. 8
Michael J. Fitzpatrick.............................. 3
Karl E. Reinheimer.................................. 0
John K. Kelly....................................... 8
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank maintains a non-qualifiednon-
qualified Supplemental Executive Retirement Plan ("SERP") to provide a select
group of management and highly compensated employees with additional retirement
benefits. The benefits provided under the SERP make up the difference between
an amount up to 70% of final base compensation and the benefits provided from
Bank funding of
the Bank's tax qualified retirement plans401(k) Retirement Plan plus the benefits which would have been
provided from the Bank's Retirement (Pension) Plan which was frozen in 1996 and
401(k) Plan. The amounts
contributed for the pension plan and 401(k) plan are tied together.terminated in 1998. In addition, the SERP provides a benefit equal to the
benefits lost from the ESOP due to the application of limitations imposed by the
Code, as amended, on compensation and maximum benefits under the ESOP.
The Bank established an irrevocable trust in connection with the SERP.
This trust is funded with contributions from the Bank for the purpose of
providing the benefits promised under the terms of the SERP. The assets of the
trust are beneficially owned by the SERP participants, who recognize income as
contributions are made to the trust. Earnings on the trust's assets are taxable
to the participants. The amounts contributed in 19971998 under the SERP (exclusive
of the ESOP benefits) for Messrs. Garbarino, 19
Barrett, Fitzpatrick, Reinheimer
and Kelly were $59,930, $23,262, $13,921,
$10,993$113,577, $25,964, $19,946, $16,179 and $11,543,$13,878, respectively.
17
TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans made by the Bank to its directors and executive officers are made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and do not involve more
than the normal risk of collectibility or present other unfavorable features.
In January 1997, theThe Bank determined to offeroffers loans to executive officers on terms not available to the public
but available to all other full-time employees, in accordance with recently modifiedas permitted under federal
regulations. Under the Bank's existing policy, any loan to an executive officer
or director, must be approved, in advance, by a majority of the disinterested
members of the Board of Directors.
PROPOSAL 2. RATIFICATION OF THE AMENDED AND
RESTATED OCEAN FINANCIAL CORP. 1997 INCENTIVE PLAN
The Board of Directors of Ocean Financial Corp. adopted the Amended and
Restated 1997 Incentive Plan (the "Plan") on February 18, 1998 and is presenting
it for ratification by the Company's stockholders at the Annual Meeting. The
Plan amends and restates the Ocean Financial Corp. 1997 Incentive Plan
originally adopted by the Board and approved by stockholders on February 4,
1997. The Board of Directors determined that it was in the best interest of the
Company and the Bank to amend and restate the Plan to, among other things
eliminate a provision of the Plan that permitted the Board, in its discretion,
to change the exercise price of previously granted options without stockholder
approval, provide for the acceleration of the vesting of awards and stock
options following a change in control of the Company or Bank, eliminate certain
outdated regulatory requirements no longer necessary, and make certain technical
amendments. Due to the amendments that have been made to the Plan, the Company
is presenting the Plan to the stockholders for stockholder ratification.
At March 2, 1998, options covering 789,875 of the Company's Common Stock
had been granted and 48,932 shares (other than shares that might in the future
be returned to the Plan as a result of cancellation or expiration of options)
remained available to satisfy options granted in the future under the Plan.
The following is a summary of the Plan, which is qualified in its entirety
by the complete provisions of the Plan attached as Appendix A.
GENERAL
The Plan authorizes the granting of options to purchase Common Stock,
option-related awards and awards of Common Stock (collectively, "Awards").
Subject to certain adjustments to the Awards, as specified in Section 15 of the
Plan, to prevent dilution, diminution or enlargement of the rights of the
participant, the maximum number of shares currently available
20
for Awards under the Plan is 1,174,330 shares. The maximum number of shares
currently reserved for purchase pursuant to the exercise of options and option-
related Awards which may be granted under the Plan is 838,807 shares. The
maximum number of shares currently reserved for the award of shares of Common
Stock ("Stock Awards") is 335,523 shares. At March 2, 1998, 789,875 options had
been granted to participants and Stock Awards for 324,936 shares of stock had
been granted to participants pursuant to the Plan. All officers, other employees
and non-employee directors, including advisory directors of the Company and its
affiliates are eligible to receive Awards under the Plan. The Plan is
administered by a committee (the "Committee"). Authorized but unissued shares or
shares previously issued and reacquired by the Company may be used to satisfy
Awards under the Plan.
AWARDS
TYPES OF AWARDS. The Plan authorizes the grant of Awards in the form of:
(i) options to purchase the Company's Common Stock intended to qualify as
incentive stock options under Section 422 of the Code (options which afford tax
benefits to the recipients upon compliance with certain conditions and which do
not result in tax deductions to the Company), referred to as "Incentive Stock
Options" or "ISOs"; (ii) options that do not so qualify (options which do not
afford income tax benefits to recipients, but which may provide tax deductions
to the Company), referred to as "Non-statutory Stock Options" or "NSOs"; (iii)
limited rights which are exercisable only upon a change in control of the
Company (as defined in the Plan) ("Limited Rights"); and (iv) Stock Awards,
which provide a grant of Common Stock that may vest over time.
OPTIONS. The Committee has the discretion to award Incentive Stock Options
or Non-statutory Options to employees, while only Non-statutory Stock Options
may be awarded to non-employee directors. Pursuant to the Plan, the Committee
has the authority to determine the date or dates on which each stock option will
become exercisable. In order to qualify as Incentive Stock Options under
Section 422 of the Code, the exercise price must not be less than 100% of the
fair market value on the date of the grant. Incentive Stock Options granted to
any person who is the beneficial owner of more than 10% of the outstanding
voting stock may be exercised only for a period of five years from the date of
grant and the exercise price must be at least equal to 100% of the fair market
value of the underlying Common Stock on the date of the grant. The exercise
price may be paid in cash or in Common Stock at the discretion of the Committee.
See "Payout Alternatives" and "Alternative Option Payments."
TERMINATION OF EMPLOYMENT. Unless otherwise determined by the Committee,
upon termination of an employee's service for any reason other than death,
disability or termination for cause, the vested Incentive Stock Options and Non-
statutory Stock Options shall be exercisable for a period of three months
following termination. The Committee, in its discretion, may determine the time
frame in which options may be exercised and may redesignate Incentive Stock
Options as Non-statutory Stock Options. In the event of termination for cause,
all rights under any Stock Options granted shall expire immediately upon
termination. Notwithstanding the foregoing, the Plan now provides that in the
event of a change in control of the Company or the Bank, as well as the case of
death or disability, options will become fully vested and shall be exercisable
for up to one year thereafter; provided that options not exercised within three
months following a change in control shall be
21
redesignated as Non-statutory Stock Options.
LIMITED RIGHTS. Limited Rights are related to specific options granted and
become exercisable in the event of a change in control of the Bank or the
Company. Upon exercise, the optionee will be entitled to receive in lieu of
purchasing the stock underlying the option, a lump sum cash payment equal to the
difference between the exercise price of the related option and the fair market
value of the shares of Common Stock subject to the option on the date of
exercise of the right less any applicable tax withholding.
STOCK AWARDS. The Plan also authorizes the granting of Stock Awards to
employees and directors. The Committee has the authority to determine the dates
on which Stock Awards granted will vest. The Plan now provides that all Stock
Award grants immediately vest upon termination of employment following a change
in control of the Company or the Bank, as well as following death or disability.
Under the Plan the vesting of Stock Awards may also be made contingent upon the
attainment of certain performance goals by the Company, Bank or grantee, which
performance goals, if any, would be established by the Committee. An agreement
setting forth the terms of the Stock Awards ("Stock Award Agreement") shall set
forth the vesting period and performance goals that must be attained. The
performance goals may be set by the Committee on an individual basis, for all
Stock Awards made during a given period of time, or for all Stock Awards for
indefinite periods. A Stock Award may only be granted from the shares reserved
and available for grant under the Plan. No Stock Award that is subject to a
performance goal is to be distributed to the employee until the Committee
confirms that the underlying performance goal has been achieved.
Stock Awards are generally nontransferrable and nonassignable as provided
in the Plan. The Committee has the power, under the Plan, to permit transfers.
When plan shares are distributed in accordance with the Plan, the recipients
will also receive amounts equal to accumulated cash and stock dividends (if any)
with respect thereto plus earnings thereon minus any required tax withholding
amounts. Prior to vesting, recipients of Stock Awards may direct the voting of
shares of Common Stock granted to them and held in the trust. Shares of Common
Stock held by the Plan trust which have not been allocated or for which voting
has not been directed are voted by the trustee in the same proportion as the
awarded shares are voted in accordance with the directions given by all
recipients of Stock Awards.
TAX TREATMENT
STOCK OPTIONS. An optionee will generally not be deemed to have recognized
taxable income upon grant or exercise of any Incentive Option Plan, provided
that shares transferred in connection with the exercise are not disposed of by
the optionee for at least one year after the date the shares are transferred in
connection with the exercise of the option and two years after the date of grant
of the options. If the holding periods are satisfied, upon disposal of the
shares, the aggregate difference between the per share option exercise price and
the fair market value of the Common Stock is recognized as income taxable at
long term capital gains rates. No
22
compensation deduction may be taken by the Company as a result of the grant
or exercise of Incentive Stock Options, assuming those holding periods are met.
In the case of the exercise of a Non-statutory Stock Option, an optionee
will be deemed to have received ordinary income upon exercise of the stock
option in an amount equal to the aggregate amount by which the per share
exercise price is exceeded by the fair market value of the Common Stock. In the
event shares received through the exercise of an Incentive Stock Option are
disposed of prior to the satisfaction of the holding periods (a "disqualifying
disposition"), the exercise of the option will be treated as the exercise of a
Non-statutory Stock Option, except that the optionee will recognize the
ordinary income for the year in which the disqualifying disposition occurs.
The amount of any ordinary income deemed to have been received by an optionee
upon the exercise of a Non-statutory Stock Option or due to a disqualifying
disposition will be a deductible expense of the Company for tax purposes.
In the case of Limited Rights, the option holder would have to include the
amount paid to him upon exercise in his gross income for federal income tax
purposes in the year in which the payment is made and the Company would be
entitled to a deduction for federal income tax purposes of the amount paid.
STOCK AWARDS. When shares of Common Stock, as Stock Awards, are
distributed, the recipient is deemed to receive ordinary income equal to the
fair market value of such shares of the date of distribution plus any dividends
and earnings on such shares (provided such date is more than six months after
the date of grant) and the Company is permitted a commensurate compensation
expense deduction for income tax purposes.
PAYOUT ALTERNATIVES
The Committee has the sole discretion to determine what form of payment it
shall use in distributing payments for all Awards. If the Committee requests
any or all participants to make an election as to form of payment, it shall not
be considered bound by the election. Any shares of Common Stock tendered in
payment of an obligation arising under the Plan or applied to any tax
withholding amounts shall be valued at the fair market value of the Common
Stock. The Committee may use treasury stock, authorized but unissued stock or
may direct the market purchase of shares of Common Stock to satisfy its
obligations under the Plan.
ALTERNATE OPTION PAYMENTS
The Committee also has the sole discretion to determine the form of payment
for the exercise of an option. The Committee may indicate acceptable forms in
the Award Agreement covering such options or may reserve its decision to the
time of exercise. No option is to be considered exercised until payment in full
is accepted by the Committee. The Committee may permit the following forms of
payment for options: (a) in cash or by certified check; (b) through borrowed
funds, to the extent permitted by law; or (c) by tendering previously acquired
shares of Common Stock. Any shares of Common Stock tendered in payment of the
exercise price of an
23
option shall be valued at the Fair Market Value of the Common Stock on the date
prior to the date of exercise.
AMENDMENT
The Board of Directors may amend the Plan in any respect, at any time,
provided that no amendment may affect the rights of an Award holder without his
or her permission and provided that the exercise price of previously granted
options may not be changed or modified without stockholder approval, unless, as
specified in Section 15 of the Plan, the change or modification is made to
prevent dilution, diminution or enlargement of the rights of the Award holder.
ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or in the event a
capital distribution is made, the Company may make such adjustments to
previously granted Awards, to prevent dilution, diminution or enlargement of the
rights of the Award holder. All Awards under this Plan shall be binding upon
any successors or assigns of the Company.
NONTRANSFERABILITY
Unless determined otherwise by the Committee, no Award under the Plan shall
be transferable by the recipient other than by will or the laws of intestate
succession or pursuant to a qualified domestic relations order. With the
consent of the Committee, an employee or Outside Director may designate a person
or his or her estate as beneficiary of any award to which the recipient would
then be entitled, in the event of the death of the employee.
STOCKHOLDER VOTE
Stockholders are being requested to ratify all amendments to the Plan. If
stockholders fail to ratify Proposal 2, the Plan in the form attached hereto,
will remain in full force and effect at the discretion of the Company's Board.
The affirmative vote of a majority of the shares present at the Annual Meeting
and eligible to be cast on Proposal 2 is required to ratify the Plan as amended.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
AMENDED AND RESTATED OCEAN FINANCIAL CORP. 1997 INCENTIVE PLAN.
24
PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December
31, 19971998 were KPMG Peat Marwick LLP. The Company's Board of Directors has reappointed KPMG Peat Marwick
LLP to continue as independent auditors for the Bank and the Company for the
year ending December 31, 1998,1999, subject to ratification of such appointment by
the shareholders.
Representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting.
They will be given an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from shareholders
present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 19992000 Annual Meeting of Shareholders, a shareholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice of Annual Meeting of Shareholders not later than November
19, 1998.1999. Any such proposal will be subject to 17 C.F.R. (S) 240.14a-8 of the
Rules and Regulations under the Exchange Act.
18
NOTICE OF BUSINESS TO BE CONDUCTED AT A SPECIAL OR ANNUAL MEETING
The Bylaws of the Company set forth the procedures by which a
shareholder may properly bring business before a meeting of shareholders.
Pursuant to the Bylaws, only business brought by or at the direction of the
Board of Directors may be conducted at a special meeting. The Bylaws of the
Company provide an advance notice procedure for a shareholder to properly bring
business before an annual meeting. The shareholder must give written advance
notice to the Secretary of the Company not less than ninety (90) days before the
date originally fixed for such meeting; provided, however, that in the event
that less than one hundred (100) days notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be received not later than the close of business on the tenth day following
the date on which the Company's noticeCompany publicly disclosed to shareholders the date of the
annual meeting date was mailed or such public disclosure was made.meeting. The advance notice by shareholders must include the
shareholder's name and address, as they appear on the Company's record of
shareholders, a brief description of the proposed business, the reason for
conducting such business at the annual meeting, the
class and number of shares of the Company's capital stock that are beneficially
owned by such
25
business at the annual meeting, the class and number of shares
of the Company's capital stock that are beneficially owned by such shareholder
and any material interest of such shareholder in the proposed business. In the
case of nominations to the Board of Directors, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement or the proxy relating to any
annual meeting any shareholder proposal which does not meet all of the
requirements for inclusion established by the SEC in effect at the time such
proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented
for consideration at the Annual Meeting other than as stated in the Notice of
Annual Meeting of Shareholders. If, however, other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting. However, if you are a shareholder
whose shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
19
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997,1998, AS FILED WITH THE SEC WILL BE FURNISHED WITHOUT CHARGE TO
SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO SALLY DENNIS, OCEAN FINANCIAL
CORP., 975 HOOPER AVENUE, TOMS RIVER, NEW JERSEY 08754-2009.
By Order of the Board of Directors
/s/ John K. Kelly
-------------------
John K. Kelly
Corporate Secretary
Toms River, New Jersey
March 19, 19981999
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, YOU ARE REQUESTED TO SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
2620
- --------------------------------------------------------------------------------
8888
REVOCABLE PROXY
OCEAN FINANCIAL CORP.
ANNUAL MEETING OF STOCKHOLDERS
April 23, 199822, 1999
10:00 a.m.
------------------------------___________________________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints the Proxy Committee of the Board of Ocean
Financial Corp. (the "Company"), each with full power of substitution to act as
attorneys and proxies for the undersigned and to vote all shares of Common Stock
of the Company which the undersigned is entitled to vote only at the Annual
Meeting of Stockholders, to be held at the Crystal Point Yacht Club, 3900 River
Road at the Intersection of State Highway 70, Point Pleasant, New Jersey on
April 23, 1998,22, 1999, at 10:00 a.m. and at any and all adjournments thereof.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES
AS DIRECTORS SPECIFIED UNDER PROPOSAL 1 "FOR" PROPOSAL 2 AND "FOR" PROPOSAL 3.2. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
(Continued and to be signed on other side)(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
OCEAN FINANCIAL CORP.
APRIL 23, 1998
Please22, 1999
.Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X]Provided.
Please mark your
A [X] votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES AS DIRECTORS
SPECIFIED UNDER PROPOSAL 1 "FOR" PROPOSAL 2, THE RATIFICATION OF THE AMENDED
AND RESTATED INCENTIVE PLAN AND "FOR" PROPOSAL 3,2. THE CERTIFICATIONRATIFICATION OF
ACCOUNTANTS.
FOR
all Nominees VOTE WITHHELD FOR AGAINST ABSTAIN
1. Election of NOMINEES: Directors [_] [_] Michael E. Barrett
(except as Donald E. McLaughlin
marked to the contrary below) James T. Snyder
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME
ON THE SPACE PROVIDED
- ---------------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of the Amended and Restated
Ocean Financial Corp. 1997 Incentive Plan. [_] [_] [_]
3. The ratificationappointment
Directors [ ] [ ] Thomas F. Curtin of the appointment of KPMG
Peat Marwick LLP as independent auditorsAuditors [ ] [ ] [ ]
(except as John R. Garbarino of [_] [_] [_] the Company for the fiscal year
marked to the contrary below) Frederick E. Schlosser ending December 31 1998.1999.
INSTRUCTION: To withhold your vote for any
individual nominee, write that nominee's The undersigned acknowledges receipt from the Company prior
name on the space provided. to the execution of this proxy of a Notice of Annual Meeting
and of a Proxy Statement dated March 19, 1999.
__________________________________________ PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
YES NO
I plan to attend the Meeting. [ ] [ ]
The undersigned acknowledges receipt from the Company prior to the execution
of this proxy of a Notice of Annual Meeting and of a Proxy Statement dated March
19, 1998.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
Signature(s) _________________________________________ Dated ------------------------------------------------- -----------__________________
NOTE: Please sign exactly as your name appears on this card. When signing as
an
attorney, executor, administrator, trustee or guardian, please give your
full title. Iftitle if shares are held jointly, each holder may sign but only one
signature is required.