WASHINGTON,
(Amendment (Amendment No. ______)
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Fee paid previously with preliminary | |||
Dear Shareholder:
You are cordially invited to attend the Annual4, 2022
The notice of Annual Meeting and proxy statement appearing on the following pages describe the formal business to be transacted at the meeting. Directors and officers of the Company, as well as a representative of KPMG LLP, the Company’s independent registered public accounting firm, will be present at the virtual meeting to respond to appropriate questions of shareholders.
It is important that your shares are represented at this meeting, whether or not you attend the virtual meeting and regardless of the number of shares you own. To make sure your shares are represented, we urge you to vote online or by telephone, or to complete and mail the enclosed proxy card. If you attend the virtual meeting, you may vote online at the virtual meeting even if you have previously voted online or by telephone or if you have mailed a proxy card.
We look forward to seeing you at the meeting.
19-01 Route 208 North
Fair Lawn, New Jersey 07410
NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS
Thursday, May 20, 2021
10:00 a.m., Eastern Time
Virtual Meeting Access:
In light of the coronavirus, or COVID-19, outbreak, for the safety of all of our people, including our shareholders, and taking into account recent federal, state and local guidance that has been issued, we have determined that the 2021 Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. If you plan to participate in the virtual meeting, please see “Information about the Annual Meeting.” Shareholderslive webcast. You will be able to attend and participate in the Special Meeting online, vote examineyour shares electronically by entering the shareholders list,control number on your proxy card, and submit your questions (for a portionduring the meeting by visiting: www.virtualshareholdermeeting.com/
You will need to have the multi-digit Control Number provided in your proxy materials to access the virtual meeting.
As always, we encourage you to submit your proxy prior to the annual meeting.
Items of Business:
Other Business:
As of the date of this notice, the Board of Directors knows of no other matters that may be brought before shareholders at the Annual Meeting.
Company, and have been in continuous service with the Company as advisory directors since their retirements
YOUR VOTE IS IMPORTANT.
April 9, 2021
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December 31, 2020, areis available online at http://ir.columbiabankonline.com.
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• Visit the website listed on your proxy card or notice of internet availability of |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting
Unless you previously elected to receive paper copies of our proxy materials we are sending our shareholdersto vote
enclosed envelope
BY MAIL.This Proxy Statement and our Annual Report areis available to shareholders online at http://ir.columbiabankonline.com.
| | | | | Board Recommendation | | |
| | PROPOSAL 1 — | | | FOR | | |
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| | PROPOSAL 2 — Ratification of the | | | FOR | | |
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| | PROPOSAL 3 — | |||||
| FOR | | |
Director Nominees (page 14)
The following table provides summary information about each director nominee:
Name |
Age(1) |
Independent | Director Since | Committee Memberships(2) |
Noel R. Holland | 70 | Yes | 1995 | A, COM, NOM, R |
Lucy Sorrentini | 57 | Yes | 2020 | COM, R, NOM |
Robert Van Dyk | 68 | Yes | 1994 | COM, R |
(1) As of December 31, 2020.
(2) A = Audit Committee; COM = Compensation Committee; NOM = Nominating/Corporate Governance Committee; R = Risk Committee
Compensation Matters — Executive Summary (page 16)
The Compensation Discussion and Analysis (“CD&A”) provides information about our executive compensation philosophy and objectives and the process governing our named executive officers’ 2020 total compensation. The Company's compensation disclosures in this Proxy Statement include the following named executive officers: the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the three highest paid other executive officers.
We assess executive officer performance by analyzing specific, achieved Company financial goals and individual performance metrics and goals. The Company's executive compensation program balances short and long-term Company performance with shareholder value creation. In addition, the compensation program provides incentives needed to attract, reward, motivate and retain key executives who are critical to executing the Company's strategy for long-term success.
We align executive compensation to the success of the Company and the interests of our shareholders through short term and long term incentive plans, where payments under such plans are tied to performance metrics as detailed in our CD&A. In 2019, the Company adopted a shareholder approved equity incentive plan. In 2020, payments were made to our executive officers under the long term cash incentive plan for the 2017 – 2019 performance period and the 2018 – 2020 performance period. The Company did not make any new cash or equity awards in 2020 to our named executive officers under our long term incentive plans.
Details of our executive compensation philosophy, objectives, process and decisions can be found under the CD&A section of this Proxy Statement.
Corporate Governance (page 7)
The Company is committed to maintaining strong governance practices, and the Board regularly reviews its governance procedures to ensure compliance with laws, rules and regulations. Our website at http://ir.columbiabankonline.com includes important information about our policies and Board committee charters, including the Company’s Code of Ethics and Business Conduct and certain Company U.S. Securities and Exchange Commission (“SEC”) filings and press releases. Examples of our corporate governance practices are set forth in the “Corporate Governance” section of this Proxy Statement.
Information About the AnnualSpecial Meeting and Voting(page 4)
(page 3)
the Record Date.
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Further, as discussed herein, ratification will also require the affirmative vote of a majority of the shares voted by Eligible Shareholders, who are all shareholders of the Company on the Record Date other than (i) Columbia Bank MHC, (ii) the Defendants, as defined herein, and (iii) family members of the Defendants residing in the same household as a Defendant, and (iv) entities controlled by one or more Defendants. The aggregate number of shares held by Eligible Shareholders as of the Record Date is 35,815,826.
Voting by Proxy
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting
Unless
It is anticipated that the Notice will be mailed to shareholders on or before April 9, 2021.
at (833) 501-4813.
Participants in the Bank’s ESOP and 401(k) Plan
CORPORATE GOVERNANCE
General
April 2, 2022.
Code of Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business Conduct that appliesnon-employee directors (other than to all of its directors, officers and employees, including its principalone named executive officer principal financial officer(“
Board Leadership Structure
Our Board of Directors has determinedCompany. The Company’s 2020 proxy statement disclosed that the separationCompany granted to each non-employee director 34,038 shares of restricted stock and options to purchase 83,294 shares of common stock, in each case vesting ratability over five years. The 2020 proxy statement disclosed that the officesrestricted stock and options granted to the non-employee Directors had a grant date fair value of Chairman$884,993. The 2020 proxy statement also disclosed that the Company granted to Mr. Kemly 134,134 shares of time-vested restricted stock vesting ratability over five years, options to purchase 656,471 shares of common stock vesting ratability over five years, and 134,135 shares of performance-vested restricted stock that would vest at the Boardend of three years if certain performance targets were met. The restricted stock and Presidentoptions granted to Mr. Kemly had a grant date fair value of $6,974,998, which in part replaced existing long-term incentive compensation as explained below. The restricted stock and Chief Executive Officer enhances Board independenceoptions described above for the non-employee directors and oversight. Moreover,Mr. Kemly are referred to as the separation of the positions of Chairman of the Board“2019 Equity Awards.” The 2020 proxy statement further disclosed that Raymond G. Hallock and President and Chief Executive Officer enables the President and Chief Executive Officer to focus on his responsibilities of running Columbia Financial and Columbia Bank and expanding and strengthening our franchise while enabling the Chairman of the Board to leadHenry Kuiken were retiring from the Board of Directors in its fundamental role of providing advice to and independent oversight of management. Consistent with this determination, Noel R. Holland, who is independent under the listing requirementseffective as of the Nasdaq Stock Market, Inc. serves2020 Annual Meeting, but would continue to remain in service with the Company as Chairmanadvisory directors. Under the terms of the Board and Thomas J. Kemly serves2019 Equity Incentive Plan, their respective equity awards continue to vest as President and Chief Executive Officer.
Board Oversight of Management
Our Board of Directors believes that effective risk management and control processes are critical to our safety and soundness, our ability to predict and manage the challenges that we face and, ultimately, our long-term corporate success. Our Board of Directors, both directly and through its committees, is responsible for overseeing our risk management processes,long as they remain in service with each of the committees of our Board of Directors assuming a different and important role in overseeing the management of the risks the Company faces. The Risk Committee, which is comprised of the entire Board of Directors, oversees the identification and management of the various risks we face including, among
other things, financial, credit, collateral, consumer compliance, operational, Bank Secrecy Act, fraud, cyber security, vendor and insurable risks.
The Audit Committee of the Board of Directors is responsible for overseeing risks associated with financial matters (particularly financial reporting, accounting practices and policies, disclosure controls and procedures and internal control over financial reporting). The Compensation Committee of the Board of Directors has primary responsibility for risks and exposures associated with our compensation policies, plans and practices, regarding both executive compensation and the Company’s compensation structure. In particular, our Compensation Committee, in conjunction with our President and Chief Executive Officer and other members of our management, as appropriate, reviews our incentive compensation arrangements to ensure these programs are consistent with applicable laws and regulations, including safety and soundness requirements, and do not encourage imprudent or excessive risk-taking by our employees. The Compensation Committee is also responsible for oversight of our policies and strategies relating to human capital management. The Nominating/Corporate Governance Committee of the Board of Directors oversees risks associated with the independence of our Board of Directors and potential conflicts of interest and also is responsible for review and oversight of our environmental, social and governance policies and activities.
Our senior management is responsible for implementing our risk management processes by assessing and managing the risks we face, including strategic, operational, regulatory, investment and execution risks, onadvisory directors. As a day-to-day basis, and reporting to our Board of Directors regarding our risk management processes. Our senior management is also responsible for creating and recommending to our Board of Directors for approval appropriate risk appetite metrics reflecting the aggregate levels and types of risk we are willing to accept in connection with the operation of our business and pursuit of our business objectives.
The role of our Board of Directors in our risk oversight is consistent with our leadership structure, with our President and Chief Executive Officer and the other members of senior management having responsibility for assessing and managing our risk exposure, and our Board of Directors and its committees providing oversight in connection with those efforts. We believe this division of risk management responsibilities presents a consistent, systemic and effective approach for identifying, managing and mitigating risks throughout our operations.
Meetings and Committees of the Board of Directors
The Company conducts business through meetings of its Board of Directors and its committees. The Company’s Board of Directors held nine regular meetings and seven special meetings during the fiscal year ended December 31, 2020. No director attended fewer than 75% of the total meetingsresult of the Company’s Boardmandatory director retirement age, Defendant Frank Czerwinski is expected to retire as a director of Directorsthe Company at the Company’s 2022 Annual Meeting and committees on which suchit is anticipated that he will serve as an advisory director served.
for the Company following his retirement. Consistent with the terms of the 2019 Equity Incentive Plan, his equity awards will continue to vest as long as he remains in service with the Company as a member of the advisory board.
The followingnon-employee director 2019 Equity Awards is a description of each of the Company’s Board committees:
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The following table identifies our standing committees and their members as of the Record Date. All members of each committee are independent in accordance with the listing standards of the Nasdaq Stock Market, Inc., except for Thomas J. Kemly.
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* Denotes Chairperson
Nominating/Corporate Governance Committee Procedures for Shareholder Director Nominations
The Nominating/Corporate Governance Committee has adopted a set of criteria that it considers when it selects individuals to be nominated for election to the Board of Directors.
Minimum Qualifications. First, a candidate must meet the eligibility requirements set forth in the Company’s Bylaws, which include an age limitation. A candidate also must meet any qualification requirements set forth in any Board or committee governing documents.
The Nominating/Corporate Governance Committee will consider the following criteria in selecting nominees: contributions to the range of talent, skill and expertise appropriate for the Board; financial, regulatory and business experience; knowledge of the banking and financial services industries; familiarity with the operations of public companies and ability to read and understand financial statements; familiarity with the Company’s market area and participation in and ties to local businesses and local civic, charitable and religious organizations; personal and professional integrity, honesty and reputation; ability to represent the best interests of the Company and its shareholders ofbecause those awards appropriately rewarded our highly-qualified non-employee directors, who we believe were and are critical to our long-term success, for services rendered and to be rendered to us during the period that the awards were and are subject to vesting. Notwithstanding the claims in the Pascal Action, we believe that the 2019 Equity Awards were reasonable and appropriate when made and continue to be such, were in line with market practice for institutions similar in size to the Company, motivated and compensated our non-employee directors for services as non-employee directors, and aligned the interests of our non-employee directors with those of our shareholders. The Board of Directors believes that ratifying the 2019 Equity Awards made to the non-employee directors is in the best interests of the Bank;Company and its shareholders.
In addition, prior to nominating an existing director for re-election to the Board of Directors, the Nominating/Corporate Governance Committee will consider and review an existing director’s Board and committee attendance and performance; length of Board service; experience, skills and contributions that the existing director brings to the Board; and independence.
Director Nomination Process. The process that the Nominating/Corporate Governance Committee follows when it identifies and evaluates individuals to be nominated for election to the Board of Directors iscommunity events as follows:
For purposes of identifying nominees for the Board of Directors, the Nominating/Corporate Governance Committee relies on personal contactsrepresentatives of the committee members and other members of the Board of Directors,Company. Mr. Hallock served as well as its knowledge of members of the communities served by the Bank. The Nominating/Corporate Governance Committee also will consider director candidates recommended by shareholders in accordance with the policy and procedures set forth below. The Nominating/Corporate Governance Committee has not previously used an independent search firm to identify nominees.
In evaluating potential nominees, Nominating/Corporate Governance Committee determines whether the candidate is eligible and qualified for service on the Board of Directors by evaluating the candidate under the selection criteria set forth above. In addition, the Nominating/Corporate Governance Committee will conduct a check of the individual’s background and interview the candidate to further assess the qualities of the prospective nominee and the contributions he or she would make to the Board.
Consideration of Recommendation by Shareholders. To submit a recommendation of a director candidate to the Nominating/Corporate Governance Committee, a shareholder must submit the following information in writing, addressed to the Chairman of the Nominating/Corporate Governance Committee, care of the Corporate Secretary, at the main office of the Company:
In order for a director candidate to be considered for nomination by the Board of Directors at the Company’s Annual Meeting of shareholders, the recommendation must be received by the Nominating/Corporate Governance Committee at least 120 calendar days prior to the date the Company’s proxy statement was released to shareholders in connection with the previous year’s Annual Meeting, advanced by one year.
Attendance at the Annual Meeting
The Board of Directors encourages directors to attend the Annual Meeting of shareholders. All of the Company’s directors attended the Company’s 2021 Annual Meeting of shareholders.
Diversity and Inclusion Policy
The Company’s Board of Directors has adopted a Diversity and Inclusion Policy Statement as a reflection of the Company’s belief that diversity and inclusion are both a competitive advantage and a core tenet of the future success of the Company and its affiliates. The Company believes that a diverse Board of Directors and workforce increases its creativity and innovation, promotes higher quality decisions, enhances economic growth, and represents the shareholders and customers it serves. The Company is committed to ensuring that it is diverse across all levels of the organization and that its policies, practices, and actions promote inclusion and continue to strengthen the Company’s ability to attract, develop and retain the best talent, while accelerating business growth, increasing shareholder value and supporting its local communities. The Company recognizes that diversity and inclusion will only be achieved by its continued compliance with applicable laws, and the commitment and accountability at the most senior levels of the organization. Our Board of Directors, executive management and leadership teams are committed to working together to implement a comprehensive strategy to support, promote, and accelerate diversity and inclusion across the Company with a focus on achieving sustained results, value and impact.
The Company’s Board of Directors consists of nine members, all of whom are independent under the current listing standards of the Nasdaq Stock Market, Inc. except for Thomas J. Kemly, who is the President and Chief Executive Officer of the Company andfor ten years, ending in December 2011, served on the Bank. In determining the independenceBoards of its directors, the Board considered transactions, relationships or arrangements betweenDirectors for the Company and its subsidiary for 21 years and, prior to becoming President and Chief Executive Officer of the Company, had served the Company and its subsidiary in various senior level positions since 1978. In addition, during Mr. Hallock’s tenure with the Bank and its directors that are not required to be disclosedhe was active with the New Jersey Bankers Association, including service in this proxy statement undervarious executive officer positions with the heading “Transactions with Related Persons.” The Board is divided into three classes with approximately three-year staggered terms, with approximately one-thirdassociation, culminating in serving as Chairman of the directors elected each year.
At the Annual Meeting, shareholders will be asked to elect three directors to serveorganization for a termone year period. Mr. Kuiken and his family own one of three years to expire at the 2024 Annual Meetinglargest building supply companies in northern New Jersey and Mr. Kuiken thus has relationships with, and insight into the business needs of many of the Company’s current and potential customers. Prior to his retirement, Mr. Kuiken had served on the Boards of Directors of the Company and its subsidiary for more than 30 years. Management of the Company values that advice of Messrs. Hallock and Kuiken and believes that the input of the advisory board provides significant benefits to the Company. Messrs. Hallock and Kuiken each receive annual cash compensation of $2,000 for their service as members of the advisory board and are reimbursed for their travel expenses to attend advisory board meetings.
The awards appropriately rewarded our highly-qualified non-employee directors, each of whom were in active service as directors of the Company at the time of the awards, and who we believe were and are critical to our long-term success. The awards were made in 2019 for services rendered and to be rendered to the Company and its subsidiary by such individuals during the period of time in which the awards were and are subject to vesting, all of which was and is consistent with the terms of the 2019 Equity Incentive Plan. Notwithstanding the claims in the Pascal Action, we believe that the 2019 Equity Awards were reasonable and appropriate when made and continue to be such, were in line with market practice for institutions similar in size to the Company, were and are consistent with the terms of the 2019 Equity Incentive Plan, motivated and compensated our non-employee directors for services as non-employee directors, and aligned the interests of our non-employee directors with those of our shareholders. The Board of Directors believes that ratifying the 2019 Equity Awards made to the non-employee directors who are retired but currently serving the Company as advisory directors is in the best interests of the Company and its shareholders.
Information regarding2019 Equity Awards to the former non-employee directors, who were incumbent directors at the time of the awards, who subsequently retired from the board of directors of the Company but who continue to remain in service with the Company through their service as advisory directors.
NomineesCompany and its shareholders because those awards appropriately rewarded Mr. Kemly, who we believe has been and is critical to the Company’s long-term success, for Electionservices rendered and to be rendered to the Company during the period that the awards were and are subject to vesting. Notwithstanding the claims in the Pascal Action, we believe that the 2019 Equity Awards granted to Mr. Kemly were reasonable and appropriate when granted and continue to be such, in line with market practice for institutions similar in size to the Company, motivated and compensated Mr. Kemly for services as Directors
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Directors Continuingbelieves that ratifying Mr. Kemly’s 2019 Equity Awards is in Office
the best interests of the Company and its shareholders. We are asking shareholders to ratify Mr. Kemly’s 2019 Equity Awards. If our shareholders do ratify the 2019 Equity Awards to Mr. Kemly, those awards will remain outstanding and will not be subject to legal challenge by any past, current or future shareholder of the Company. If the shareholders do not ratify Mr. Kemly’s 2019 Equity Awards, those awards will be cancelled, including those awards that have already vested. If the ratification is not successful, the Compensation Committee will consider whether issuance of replacement awards to Mr. Kemly is appropriate, and in making that determination will consider, among other things, the results of the shareholder vote. We believe that failure to ratify the 2019 Equity Awards granted to Mr. Kemly may have an adverse effect on Mr. Kemly’s motivation and our ability to retain Mr. Kemly as President and Chief Executive of the Company, although Mr. Kemly has not threatened to resign. The Board of Directors recommends a vote FOR the ratification of the 2019 Equity Awards to Mr. Kemly. | |
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COMPENSATION DISCUSSION AND ANALYSIS
Name | | | Title | |
Thomas J. Kemly | | | President and Chief Executive Officer | |
Dennis E. Gibney | | | Executive Vice President and Chief Financial Officer | |
E. Thomas Allen, Jr. | | | Senior Executive Vice President and Chief Operating Officer | |
John Klimowich | | | Executive Vice President and Chief Risk Officer | |
Allyson Schlesinger | | | Executive Vice President, Head of Consumer Banking | |
Oliver E. Lewis, Jr. | | | Executive Vice President, Head of Commercial Banking | |
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Executive Summary
2020
On
19
Executive Compensation Philosophy
| OBJECTIVE | | | | COMPENSATION DESIGN CRITERIA | | | |
| | Accountability for Business Performance | | | • Tie compensation in large part to the Company’s financial and operating performance, so that executives are held accountable for the performance of the business for which they are responsible and for achieving the goals stated in the Company’s | | | |
| | Accountability for Long-Term Equity Performance | | | • Include meaningful incentives to create long-term shareholder value while not promoting excessive risk taking. | | | |
| | Competition | | | • Reflect the competitive marketplace so we can attract, retain, and motivate talented executives throughout the volatility of business cycles. | | |
2020
| | Compensation Element | | | | Link to Business and Talent Strategies | | | 2021 Actions | | | |
| | Base Salary (Page | | | • Competitive base salaries help attract and retain executive talent. • Amounts reflect each executive’s experience, performance and contribution to the Company. | | | • Base salaries are subject to annual review in December of each year based on the Compensation Committee’s assessment of the executive’s individual performance during the year, a review of peer group practices for similar positions and consideration of base salary in relation to incentive compensation opportunities. | | | ||
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Short-Term Incentives
| | | • Focus executives on achieving annual financial results that are key indicators of annual financial and operational performance. • Each NEO has an individual scorecard that sets forth his or her annual performance goals. • 2021 goals were based on financial measures important to our business strategy. | | | • Design of the PAIP (as defined herein) remained consistent with the prior year; while individual scorecards changed as is consistent with past | ||||||
practice. • In February | | | ||||||||||
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Long-Term Equity Incentive Compensation (Page | | | • Rewards financial results over a period of years that correlate to long-term shareholder value. • Encourages retention of our executive team through the use of multi-year vesting. • Aligns the compensation interests of our executives with the financial interests of our shareholders. • Encourages growth in our stock price. | | • Previously granted equity awards for all NEOs consisted of a combination of performance-based restricted stock, time-based restricted stock, and time-based stock options. | |||||||
| No equity awards were made to NEOs during | | |
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Important Corporate Governance Policies
| | WHAT WE DO | | | | WHAT WE DON’T DO | | |
| | Use independent compensation consultants ✓
Have stock ownership guidelines ✓
Use competitive benchmarking for NEO compensation and non-employee director compensation ✓ Grant equity that vests over multiple years ✓
Have short and long term incentive plans based on performance ✓
Limit perquisites to NEOs ✓
Recoupment of incentive compensation through clawback policy | | | | X No tax gross ups X No pledging of our stock X No hedging X No unapproved trading plans X No dividends on unvested/unearned equity X No excessive risk creation X No repricing of stock options X No “single trigger” change in control severance under employment agreements | | |
In 2020,
The Compensation Committee reviewed and accepted the self-evaluation (including relevant quantitative and qualitative accomplishments) of Mr. Kemly for the 2020 calendar year and provided feedback to Mr. Kemly. The Compensation Committee used this evaluation in making compensation decisions concerning Mr. Kemly and approved a base salary increase for Mr. Kemly as recommended by the Chair of the Compensation Committee for the 20202021 calendar year.
In 2020, the
that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage significant risks; that are compatible with effective internal controls and our risk management practices; and that are supported by the oversight and administration of the Compensation Committee with regard to executive compensation programs.
The Compensation Committee reviewed and accepted the recommendations of GK Partners concerning the selection and composition of the executive and Board compensation comparatorfactors in reviewing its peer group based on the Compensation Committee’s review of a detailed analysis of 12 directly relevant financial and operational metrics pertaining to the appropriate selection of the peer companies. These factors included:group: total assets, net income, ROE, ROAA, EPS, market capitalization, non-interest income, efficiency ratio, loan to asset ratio, loan to deposit ratio, number of full time employees, and net income per employee. The peer group includedFor purposes of reviewing and approving 2021 executive compensation, in 2020 the Compensation Committee selected publicly traded financial institutions with assets between approximately $5.4$5.2 billion and $13.8$17.6 billion as of December 31, 20182019 from the Northeast and Mid-Atlantic regions. The median asset size of the peer group was $7.9$8.8 billion, placing the Company at slightly below the 50th percentile in asset size, with asset size at year end 20182020 of $6.6$8.2 billion. The peer group approved by the Compensation Committee consisted ofin December 2020 for setting executive compensation for 2021 included the following financial institutions:
| Atlantic Union Bankshares Corp. | | | Independent Bank Group | |
| Berkshire Hills Bancorp, Inc. | | Kearny Financial Corp. | ||
| Brookline Bancorp, Inc. | | Lakeland Bancorp, Inc. | ||
| Community Bank System, Inc. | | Meridian Bancorp, Inc. | ||
| ConnectOne Bancorp, Inc. | | NBT Bancorp, Inc. | ||
| Customers Bancorp, Inc. | | OceanFirst Financial Corp. | ||
| Dime Community Bancshares, Inc. | | Peapack-Gladstone Financial Corp. | | |
| Eagle Bancorp, Inc. | | | Provident Financial Services, Inc. | |
Flushing Financial, Inc. | | Sandy Spring Bancorp, Inc. | |||
Independent Bank Corp. | |||||
| WSFS Financial Corp. |
In March 2020, GK Partners conducted a review of the Company’s 2019 compensation peer group, taking into account 2019 year-end financial data for comparator companies consisting of the same twelve factors discussed above, the completion of the Company’s acquisition of Roselle Bank and the Company’s internal asset growth. Based on such review, GK Partners recommended changes to the peer group to better reflect the companies that would be more relevant from size and business model perspectives. The Compensation Committee determined that the recommended adjustments to the peer group for 2020 were appropriate and approved the 2020 peer group for the Company. The following sets forth the additions and deletions to the prior year’s peer group that were made in approving the 2020 peer group:
Taking into account the changes noted above, the 2020 peer group included publicly traded banks and thrifts with assets between approximately $5.2 billion and $17.6 billion as of December 2019, primarily from the Northeast and Mid-Atlantic regions. The median asset size of the adjusted peer group was $8.8 billion, placing the Company slightly below the 50th percentile in asset size.
Employment Agreements with our NEOs
24.
| | COMPENSATION ELEMENT | | | | PURPOSE | | |
| | Base Salary | | | • Provide financial predictability and stability through fixed compensation; | |||
• Provide a salary that is market competitive; | ||||||||
• Promote the retention of executives; and | ||||||||
• Provide fixed compensation that reflects the scope, scale and complexity of the executive’s role. | | | ||||||
| | Short-Term Incentives | | | • Align management and shareholder interests; | |||
• Provide appropriate incentives to achieve our annual operating plan; | ||||||||
• Provide market competitive cash compensation when targeted performance objectives are met; | ||||||||
• Provide appropriate incentives to exceed targeted results; and | ||||||||
• Pay meaningful incremental cash awards when results exceed target and pay below market cash awards when results are below target. | | | ||||||
| | Long-Term Equity Incentives | �� | | • Align management and long-term shareholder interests; | |||
• Balance the short-term nature of other compensation elements with long-term retention of executive talent; | ||||||||
• Focus our executives on the achievement of long-term strategies and results; | ||||||||
• Create and | ||||||||
• Support the growth and operational profitability of the Company. | | | ||||||
| | Employment Agreements | | | • Enable us to attract and retain talented executives; | |||
• Protect Company interests through appropriate post-employment restrictive covenants, including non-competition and non-solicitation; | ||||||||
• Ensure management is able to analyze any potential change in control transaction objectively; and | ||||||||
• Provide for continuity of management in the event of a change in control. |
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Non-Qualified Retirement and
| | | • Provide supplemental retirement benefits to certain executives who are disallowed benefits under the Company’s qualified benefit plans due to IRS limits. | | |
| | COMPENSATION ELEMENT | | | | PURPOSE | | |
| | Other Benefits | | | • Provide participation in the same benefits programs as our other employees, including our ESOP; | |||
• Provide participation in an ESOP SERP for supplemental retirement benefits; and | ||||||||
• Limit | | |
NEOs | 2019 Base Pay(1) $ | 2020 Base Pay(1) $ | % Change | |||
Thomas J. Kemly | 775,000 | 795,000 | 2.6 | |||
Dennis Gibney | 392,000 | 402,000 | 2.6 | |||
E. Thomas Allen | 450,000 | 460,000 | 2.2 | |||
John Klimowich | 330,000 | 350,000 | 6.1 | |||
Allyson Schlesinger | 365,000 | 365,000 | — |
NEOs | | | 2020 Base Pay(1) $ | | | 2021 Base Pay(1) $ | | | % Change | | |||||||||
Thomas J. Kemly | | | | | 795,000 | | | | | | 818,900 | | | | | | 3.01 | | |
Dennis Gibney | | | | | 402,000 | | | | | | 412,000 | | | | | | 2.49 | | |
E. Thomas Allen | | | | | 460,000 | | | | | | 472,000 | | | | | | 2.61 | | |
John Klimowich | | | | | 350,000 | | | | | | 370,000 | | | | | | 5.71 | | |
Allyson Schlesinger | | | | | 365,000 | | | | | | 380,000 | | | | | | 4.11 | | |
Oliver E. Lewis, Jr. | | | | | — | | | | | | 350,000 | | | | | | — | | |
The Compensation Committee reviewed our 2020 Business Plan approved by our Board and the key performance measures for our business and information related to our peer group provided by GK Partners and, based on such review, in February 2021, the Compensation Committee, decided to focus the bonus metrics for 2020 on three factors: net income, efficiency ratio, and non-performing assets to total assets, in addition to individual performance goals for eligible executives other than Mr. Kemly and Mr. Allen. Additionally, the 2020 PAIP performance metrics were designed to allow for payouts to be determined within the range of a threshold to a maximum, with maximum targets
reflecting stretch goals that aligned with our 2020 Business Plan. The 2020 PAIP payout was capped at 125% of target as the Compensation Committee believed this cap was market competitive for short-term incentives. Actual payouts were based on the level of achievement of the performance metrics subject to the Compensation Committee’s ability to exercise discretion to make such adjustments for extraordinary one-time items as the Compensation Committee deems appropriate to fairly reflect the Company’s performance for the year. Further details on each of these components of the 2020 PAIP are described below.
When designing the 20202021 PAIP and when considering whether we reached the target performance metricmetrics for a payout under the 20202021 PAIP are achieved, the Compensation Committee had the discretion to take into account categories of significant, unplanned and unusual items that would be excluded from the performance metrics, whether the resulting impact was positive or negative, because they distort our operating performance. This
The performance measure for the 20202021 PAIP included the same corporate goals for each NEO and specific individual goals depending on the individual roles and responsibilities of each NEO, with each NEO’s individual scorecard, other than with respect to Mr. Kemly and Mr. Allen, setting forth the weightings assigned to each performance measure.
2020 Performance Measures* | Threshold (Dollars in Millions) | Target Parameter (Dollars in Millions ) | Stretch Parameter (Dollars in Millions) | 2020 Actual (Dollars in Millions) |
Net Income of Columbia Bank | $52.80 | $57.30 | $61.80 | $58.00 |
Efficiency Ratio of Columbia Bank | 62.80% | 59.80% | 56.80% | 57.90% |
Non-Performing Assets to Total Assets | 0.50% | 0.25% | 0.10% | 0.09% |
| | 2021 Performance Measures(1) | | | | Threshold Parameter (Dollars in Millions) | | | | Target Parameter (Dollars in Millions ) | | | | Stretch Parameter (Dollars in Millions) | | | | 2021 Actual Performance (Dollars in Millions) | | | ||||||||||||
| | Core Net Income of Columbia Bank | | | | | $ | 61.2 | | | | | | $ | 72.6 | | | | | | $ | 82.8 | | | | | | $ | 94.9 | | | |
| | Efficiency Ratio of Columbia Bank | | | | | | 60.90% | | | | | | | 57.90% | | | | | | | 54.90% | | | | | | | 53.90% | | | |
| | Non-Performing Assets to Total Assets | | | | | | 0.50% | | | | | | | 0.25% | | | | | | | 0.10% | | | | | | | 0.04% | | | |
2020 Performance Measures* | Mr. Kemly | Mr. Gibney | Mr. Allen | Mr. Klimowich | Ms. Schlesinger |
Net Income of Columbia Bank | 35.0% | 25.0% | 35.0% | 25.0% | 25.0% |
Efficiency Ratio of Columbia Bank | 35.0% | 25.0% | 35.0% | 25.0% | 25.0% |
Non-Performing Assets to Total Assets | 30.0% | 20.0% | 30.0% | 20.0% | 20.0% |
Other* | 30.0% | 30.0% | 30.0% | ||
Total | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| | 2021 Performance Measures* | | | | Mr. Kemly | | | | Mr. Gibney | | | | Mr. Allen | | | | Mr. Klimowich | | | | Ms. Schlesinger | | | | Mr. Lewis | | | ||||||||||||||||||
| | Net Income of Columbia Bank | | | | | | 35.0% | | | | | | | 25.0% | | | | | | | 35.0% | | | | | | | 25.0% | | | | | | | 25.0% | | | | | | | 25.0% | | | |
| | Efficiency Ratio of Columbia Bank | | | | | | 35.0% | | | | | | | 25.0% | | | | | | | 35.0% | | | | | | | 25.0% | | | | | | | 25.0% | | | | | | | 25.0% | | | |
| | Non-Performing Assets to Total Assets | | | | | | 30.0% | | | | | | | 20.0% | | | | | | | 30.0% | | | | | | | 20.0% | | | | | | | 20.0% | | | | | | | 20.0% | | | |
| | Other(1) | | | | | | 0.0% | | | | | | | 30.0% | | | | | | | 0.0% | | | | | | | 30.0% | | | | | | | 30.0% | | | | | | | 30.0% | | | |
| | Total | | | | | | 100.0% | | | | | | | 100.0% | | | | | | | 100.0% | | | | | | | 100.0% | | | | | | | 100.0% | | | | | | | 100.0% | | | |
Given the unprecedented challenges to the Company’s business, employees and customers created by the pandemic and in March 2020, the Company’s leadership quickly shifted priorities to address employee safety and customer response, including the additional workload in connection with the Paycheck Protection Program. above.
Company’s financial performance resulted in payouts generally ranging between 109.97%113.0% and 119.81%134.89% of each NEO’s target 20202021 PAIP opportunity, as is set forth below.
NEO | Target Opportunity ($) | Payout as a Percent of | |||
Thomas J. Kemly | 525,018 | 114.46 | |||
Dennis Gibney | 245,059 | 109.97 | |||
E. Thomas Allen | 280,416 | 114.46 | |||
John Klimowich | 177,800 | 109.97 | |||
Allyson Schlesinger | 185,420 | 119.81 |
NEO | | | Target Opportunity ($) | | | Payout as a Percent of Target Opportunity (%)(1) | | ||||||
Thomas J. Kemly | | | | | 612,128 | | | | | | 125 | | |
Dennis Gibney | | | | | 284,280 | | | | | | 117.5 | | |
E. Thomas Allen | | | | | 352,820 | | | | | | 125 | | |
John Klimowich | | | | | 212,750 | | | | | | 113 | | |
Allyson Schlesinger | | | | | 218,500 | | | | | | 134.9 | | |
Oliver E. Lewis, Jr. | | | | | 201,250 | | | | | | 130.5 | | |
Cash Incentive Plan. We maintain a long-term cash incentive plan - the Long-Term Incentive Plan (“Cash LTIP”) - that is focused on ensuring alignment and commitment to achieving long-term financial results for Columbia Bank. Our NEOs participate in the Cash LTIP. Prior to 2019, LTIP awards were granted annually using a three-year performance period. A participant is eligible to earn a target LTIP cash award for a performance period with the amount of such awards based on a percentage of the participant’s base salary. The participant is eligible to earn a percentage of the target award for a performance period based on achievement of one or more performance measures established by the Compensation Committee of the Board for that performance period. Once the Compensation Committee determines achievement of the performance goals for a performance period, two-thirds of the earned amount will be paid in cash within two and a half months following completion of the performance period and one-third of the earned amount will be paid in cash one year later subject to continued employment of the participant during that year. For 2019 and 2020, no new awards were made under the Cash LTIP.
In connection with the implementation of the 2019 Equity Plan, the Compensation Committee determined that one-half of the incentive opportunity under the 2018-2020 Cash LTIP (“2018 Cash LTIP”), would be replaced by equity awards granted to the NEOs in 2019 and that the remaining one-half of the incentive opportunity under the 2018 Cash LTIP would be paid at 50% of target at the end of the performance period. The payments to the NEOs under the 2018 Cash LTIP were as follows:
NEO | Target Opportunity (%) | Target ($) | 2018 Cash LTIP Paid at 50% of Target Opportunity ($) | |||
Thomas J. Kemly | 45% | 342,000 | 171,000 | |||
Dennis Gibney | 30% | 116,100 | 58,050 | |||
E. Thomas Allen | 40% | 179,000 | 89,500 | |||
John Klimowich | 30% | 92,250 | 46,125 | |||
Allyson Schlesinger | 30% | 69,173 | 34,587 |
In addition, in 2020 the NEOs received the final one-third payment due to them for achievement of awards under the Cash LTIP 2017 – 2019 performance period. No further cash payments are due to the NEOs under the 2017 Cash LTIP or the 2018 Cash LTIP. The actual dollar amounts earned by our NEOs in fiscal year 2020 for prior performance periods under the Cash LTIPs are disclosed in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below.
Incentives
Company and its subsidiaries. The Company may grant options, stock appreciations rights, restricted stock, restricted units, unrestricted stock awards, cash based awards, performance awards, and dividend equivalent rights. The total number of shares of the Company'sCompany’s common stock reserved for issuance under the plan are 7,949,996.
2021 vest over a three year period at a rate of 33 1/3% per year.
| | | | | Stock Awards (Number of Shares) | | | Grant Date Fair Value of Stock Awards ($)(1) | | | Option Awards (Number of Options) | | | Grant Date Fair Value of Option Awards ($)(1) | | | ||||||||||||
| | Oliver E. Lewis, Jr. | | | | | 23,516 | | | | | $ | 419,996 | | | | | | 57,026 | | | | | | 279,998 | | | |
34.
The Company’s Share Ownership and Retention Policy that sets forth stock ownership guidelines that are robust and reflect current corporate governance trends. We require our executive officers and non-employee directors to own or acquire shares of Company stock having a fair market value equal to the following amounts:
Title | | | Amount | |
President and Chief Executive Officer | | | 5x base salary | |
Senior Executive Vice Presidents | | | 3x base salary | |
Executive Vice Presidents | | | 3x base salary | |
Non-Employee Directors | | | 3x annual fees and retainers for service on the Board | |
Each of these individuals must fulfill their ownership requirement within five years of becoming subject to the Share Ownership and Retention Policy, and individuals are further required to fulfill 25% and 50% of their ownership requirement within two and three years, respectively, of becoming subject to the Share Ownership and Retention Policy. In the event of a participant receiving a raise in his or her base salary or annual retainer, leading to an increase in the ownership requirement, the participant will be provided additional one year from the time of the increase to achieve the required incremental increase in his or her ownership of shares. For purposes of determining ownership, the following shall be taken into account in computing ownership:account: (i) shares owned directly by the individual or his or her immediate family members residing in the same household, or shares held through a trust for the benefit of the individual or the individual’s dependent family members residing in the same household; (ii) shares owned through a qualified employee benefit plan, including the 401(k) Plan, or through the ESOP; (iii) share equivalents held in a non-qualified, deferred compensation arrangements; and (iv) 100% of restricted stock, or restricted stock units, the vesting of which is contingent on time or performance.
in this area to design a compensation program that serves the long-term interests of the Company but which may not qualify for tax deductibility under Section 162(m) of the Internal Revenue Code.
March 22, 2021
Name | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) |
Thomas J. | |||||||||
Kemly President | 2020 | 825,577 | — | — | — | 890,236 | 1,751,023 | 151,035 | 3,617,871 |
and Chief | 2019 | 775,000 | — | 4,184,996 | 2,790,002 | 849,735 | 2,350,329 | 181,941 | 11,132,003 |
Executive Officer | 2018 | 745,000 | — | — | — | 894,855 | — | 41,632 | 1,681,487 |
Dennis E. Gibney | |||||||||
Executive Vice | 2020 | 417,462 | — | — | — | 367,829 | 170,419 | 56,133 | 1,011,843 |
President | 2019 | 392,000 | 50,000 | 1,530,001 | 1,020,000 | 294,386 | 153,627 | 63,976 | 3,503,990 |
and Chief Financial Officer | 2018 | 382,000 | — | — | — | 326,138 | — | 9,840 | 717,978 |
E. Thomas Allen, Jr. | |||||||||
Senior Executive Vice | 2020 | 477,693 | — | — | — | 472,714 | 685,719 | 82,868 | 1,718,994 |
President and Chief | 2019 | 450,000 | — | 1,800,006 | 1,200,000 | 440,107 | 974,481 | 97,269 | 4,961,863 |
Operating Officer | 2018 | 445,000 | — | — | — | 440,155 | — | 25,676 | 910,831 |
John Klimowich Executive Vice President and Chief Risk Officer | 2020 2019 | 363,462 330,000 | — — | — 1,199,999 | — 799,999 | 272,602 255,760 | 757,071 869,887 | 47,683 50,500 | 1,440,818 3,506,145 |
Allyson Schlesinger Executive Vice President, Head of Consumer Banking | 2020 2019 | 379,039 365,000 | — 50,000 | — 990,008 | — 660,000 | 256,743 162,100 | 107,402 84,048 | 57,314 69,884 | 800,498 2,381,040 |
Name | | | Year | | | Salary ($)(1) | | | Bonus ($)(2) | | | Stock Awards ($)(3) | | | Option Awards ($)(4) | | | Non-Equity Incentive Plan Compensation ($)(5) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | | | All Other Compensation ($)(7) | | | Total ($)(7) | | |||||||||||||||||||||||||||
Thomas J. Kemly | | | | | 2021 | | | | | | 818,900 | | | | | | — | | | | | | — | | | | | | — | | | | | | 765,160 | | | | | | 366,796 | | | | | | 39,263 | | | | | | 1,990,119 | | |
President and Chief Executive Officer | | | | | 2020 | | | | | | 825,577 | | | | | | — | | | | | | — | | | | | | — | | | | | | 890,236 | | | | | | 1,751,023 | | | | | | 151,035 | | | | | | 3,617,871 | | |
| | | 2019 | | | | | | 775,000 | | | | | | — | | | | | | 4,184,996 | | | | | | 2,790,002 | | | | | | 849,735 | | | | | | 2,350,329 | | | | | | 181,941 | | | | | | 11,132,003 | | | ||
Dennis E. Gibney | | | | | 2021 | | | | | | 412,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 334,029 | | | | | | 56,107 | | | | | | 9,803 | | | | | | 811,939 | | |
Executive Vice President and Chief Financial Officer | | | | | 2020 | | | | | | 417,462 | | | | | | — | | | | | | — | | | | | | — | | | | | | 367,829 | | | | | | 170,419 | | | | | | 56,133 | | | | | | 1,011,843 | | |
| | | 2019 | | | | | | 392,000 | | | | | | 50,000 | | | | | | 1,530,001 | | | | | | 1,020,000 | | | | | | 294,386 | | | | | | 153,627 | | | | | | 63,976 | | | | | | 3,503,990 | | | ||
E. Thomas Allen, Jr. | | | | | 2021 | | | | | | 472,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 441,025 | | | | | | 175,097 | | | | | | 19,780 | | | | | | 1,107,902 | | |
Senior Executive Vice President and Chief Operating Officer | | | | | 2020 | | | | | | 477,693 | | | | | | — | | | | | | — | | | | | | — | | | | | | 472,714 | | | | | | 685,719 | | | | | | 82,868 | | | | | | 1,718,994 | | |
| | | 2019 | | | | | | 450,000 | | | | | | — | | | | | | 1,800,006 | | | | | | 1,200,000 | | | | | | 440,107 | | | | | | 974,481 | | | | | | 97,269 | | | | | | 4,961,863 | | | ||
John Klimowich | | | | | 2021 | | | | | | 370,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 240,408 | | | | | | 238,927 | | | | | | 10,132 | | | | | | 859,467 | | |
Executive Vice President and Chief Risk Officer | | | | | 2020 | | | | | | 363,462 | | | | | | — | | | | | | — | | | | | | — | | | | | | 272,602 | | | | | | 757,071 | | | | | | 47,683 | | | | | | 1,440,818 | | |
| | | 2019 | | | | | | 330,000 | | | | | | — | | | | | | 1,999,998 | | | | | | 799,999 | | | | | | 255,760 | | | | | | 869,887 | | | | | | 50,500 | | | | | | 3,176,145 | | | ||
Allyson Schlesinger | | | | | 2021 | | | | | | 380,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 294,737 | | | | | | 73,000 | | | | | | 24,511 | | | | | | 772,248 | | |
Executive Vice President, Head of Consumer Banking | | | | | 2020 | | | | | | 379,039 | | | | | | — | | | | | | — | | | | | | — | | | | | | 256,743 | | | | | | 107,402 | | | | | | 57,314 | | | | | | 800,498 | | |
| | | 2019 | | | | | | 365,000 | | | | | | 50,000 | | | | | | 990,008 | | | | | | 660,000 | | | | | | 162,100 | | | | | | 84,048 | | | | | | 69,884 | | | | | | 2,381,040 | | | ||
Oliver E. Lewis, Jr. | | | | | 2021 | | | | | | 350,000 | | | | | | — | | | | | | 419,996 | | | | | | 279,998 | | | | | | 262,719 | | | | | | — | | | | | | 23,725 | | | | | | 1,336,438 | | |
Executive Vice President, Head of Commercial Banking | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Columbia Bank Performance Achievement Incentive Plan(a) | Columbia Bank Long-Term Incentive Cash Plan(b) | |||||
Mr. Kemly | $600,944 | $289,292 | ||||
Mr. Gibney | 269,492 | 98,337 | ||||
Mr. Allen | 320,964 | 151,750 | ||||
Mr. Klimowich | 195,527 | 77,075 | ||||
Ms. Schlesinger | 222,156 | 34,587 |
Mr. Kemly | Mr. Gibney | Mr. Allen | Mr. Klimowich | Ms. Schlesinger | ||||||||||||||
Company contribution to ESOP and ESOP SERP(a) | $102,376 | $46,513 | $56,307 | $37,807 | $33,205 | |||||||||||||
Company matching contributions to 401(k) plan and SIM(b) | 8,550 | 8,550 | 8,550 | 8,550 | 8,550 | |||||||||||||
Executive term life insurance premiums(c) | 3,377 | 350 | 1,452 | 606 | — | |||||||||||||
Car allowances(d) | 18,652 | — | 15,839 | — | 14,839 | |||||||||||||
Mobile phone allowances(e) | 720 | 720 | 720 | 720 | 720 | |||||||||||||
Club dues(f) | 17,360 | — | — | — | — |
| | | Columbia Bank Performance Achievement Incentive Plan(a) | | |||
Mr. Kemly | | | | $ | 765,160 | | |
Mr. Gibney | | | | | 334,029 | | |
Mr. Allen | | | | | 441,025 | | |
Mr. Klimowich | | | | | 240,408 | | |
Ms. Schlesinger | | | | | 294,737 | | |
Mr. Lewis | | | | | 262,719 | | |
| | | Mr. Kemly | | | Mr. Gibney | | | Mr. Allen | | | Mr. Klimowich | | | Ms. Schlesinger | | | Mr. Lewis | | ||||||||||||||||||
Company contribution to ESOP and ESOP SERP(a) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Company matching contributions to 401(k) plan and SIM(b) | | | | | 8,700 | | | | | | 8,700 | | | | | | 8,700 | | | | | | 8,700 | | | | | | 8,700 | | | | | | 11,263 | | |
Executive term life insurance premiums(c) | | | | | 3,333 | | | | | | 383 | | | | | | 1,669 | | | | | | 712 | | | | | | — | | | | | | — | | |
Car allowances(d) | | | | | 8,441 | | | | | | — | | | | | | 8,691 | | | | | | — | | | | | | 15,091 | | | | | | 11,742 | | |
Mobile phone allowances(e) | | | | | 720 | | | | | | 720 | | | | | | 720 | | | | | | 720 | | | | | | 720 | | | | | | 720 | | |
Club dues(f) | | | | | 18,069 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name | | | Grant Date | | | Estimated Future Payments Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock (#)(1)(3) | | | All Other Option Awards; Number of Securities Underlying Options | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Options Awards ($)(2)(3) | | |||||||||||||||||||||||||||||||||||||||||||||
| Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | ||||||||||||||||||||||||||||||||||||||||||||||||||
Oliver E. Lewis, Jr. | | | | | 03/22/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 23,516 | | | | | | — | | | | | | — | | | | | | 419,996 | | |
| | | | | 03/22/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 57,026 | | | | | $ | 17.86 | | | | | | 279,998 | | |
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Stock Options Exercisable (1) | Number of Securities Underlying Unexercised Options Unexercisable (1) | Option Exercise Price | Option Expiration Date | Number of Shares of Restricted Stock Not Vested (2) | Market Value of Shares or Units of Restricted Stock Not Vested (3) | Number of Performance Shares Not Vested (4) | Market Value of Unvested Performance Shares (5) | ||||||||||||||||||||||||
Thomas J. Kemly | 07/23/2019 | 131,294 | 525,177 | $15.60 | 07/23/2029 | — | $ — | — | $ — | ||||||||||||||||||||||||
07/23/2019 | — | — | — | — | 107,308 | 1,669,712 | 134,135 | 2,087,141 | |||||||||||||||||||||||||
Dennis E. Gibney | 07/23/2019 | 48,000 | 192,000 | $15.60 | 07/23/2029 | — | — | — | — | ||||||||||||||||||||||||
07/23/2019 | — | — | — | — | 39,232 | 610,450 | 49,038 | 763,031 | |||||||||||||||||||||||||
E. Thomas Allen, Jr. | 07/23/2019 | 56,470 | 225,883 | $15.60 | 07/23/2029 | — | — | — | |||||||||||||||||||||||||
07/23/2019 | — | — | — | — | 46,155 | 718,172 | 57,692 | 897,688 | |||||||||||||||||||||||||
John Klimowich | 07/23/2019 | 37,647 | 150,588 | $15.60 | 07/23/2029 | — | — | — | — | ||||||||||||||||||||||||
07/23/2019 | — | — | — | — | 30,769 | 478,766 | 38,462 | 598,469 | |||||||||||||||||||||||||
Allyson Schlesinger | 07/23/2019 | 31,059 | 124,235 | $15.60 | 07/23/2029 | — | — | — | — | ||||||||||||||||||||||||
07/23/2019 | — | — | — | — | 25,385 | 394,991 | 31,731 | 493,734 |
| | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||||||||||||||||||||
Name | | | Grant Date | | | Number of Securities Underlying Unexercised Stock Options Exercisable(1) | | | Number of Securities Underlying Unexercised Options Unexercisable(1)(4) | | | Option Exercise Price | | | Option Expiration Date | | | Number of Shares of Restricted Stock Not Vested(2)(4) | | | Market Value of Shares or Units of Restricted Stock Not Vested(3) | | | Number of Unearned Performance Shares | | | Market Value of Unearned Performance Shares | | |||||||||||||||||||||||||||
Thomas J. Kemly | | | | | 07/23/2019 | | | | | | 262,588 | | | | | | 393,883 | | | | | $ | 15.60 | | | | | | 07/23/2029 | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
| | | | | 07/23/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 214,616 | | | | | | 4,476,890 | | | | | | — | | | | | | — | | |
Dennis E. Gibney | | | | | 07/23/2019 | | | | | | 96,000 | | | | | | 144,000 | | | | | $ | 15.60 | | | | | | 07/23/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 07/23/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 78,462 | | | | | | 1,636,718 | | | | | | — | | | | | | — | | |
E. Thomas Allen, Jr. | | | | | 07/23/2019 | | | | | | 112,941 | | | | | | 169,412 | | | | | $ | 15.60 | | | | | | 07/23/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 07/23/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 92,308 | | | | | | 1,925,545 | | | | | | — | | | | | | — | | |
John Klimowich | | | | | 07/23/2019 | | | | | | 75,294 | | | | | | 112,941 | | | | | $ | 15.60 | | | | | | 07/23/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 07/23/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 61,539 | | | | | | 1,283,703 | | | | | | — | | | | | | — | | |
Allyson Schlesinger | | | | | 07/23/2019 | | | | | | 62,117 | | | | | | 93,177 | | | | | $ | 15.60 | | | | | | 07/23/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 07/23/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 50,770 | | | | | | 1,059,063 | | | | | | — | | | | | | — | | |
Oliver E. Lewis, Jr. | | | | | 12/16/2019 | | | | | | 7,058 | | | | | | 10,589 | | | | | $ | 17.00 | | | | | | 07/23/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 12/16/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,718 | | | | | | 119,278 | | | | | | — | | | | | | — | | |
| | | | | 03/22/2021 | | | | | | — | | | | | | 57,026 | | | | | $ | 17.86 | | | | | | 03/22/2031 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 03/22/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 23,516 | | | | | | 490,544 | | | | | | — | | | | | | — | | |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting (1) ($) | ||||||||||||
Thomas J. Kemly | — | — | 26,826 | 353,567 | ||||||||||||
Dennis E. Gibney | — | — | 9,807 | 129,256 | ||||||||||||
E. Thomas Allen | — | — | 11,538 | 152,071 | ||||||||||||
John Klimowich | — | — | 7,692 | 101,381 | ||||||||||||
Allyson Schlesinger | — | — | 6,346 | 83,640 |
| | | Option Awards | | | Stock Awards | | ||||||||||||||||||
Name | | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting(1) ($) | | ||||||||||||
Thomas J. Kemly | | | | | — | | | | | | — | | | | | | 26,827 | | | | | $ | 471,350 | | |
Dennis E. Gibney | | | | | — | | | | | | — | | | | | | 9,808 | | | | | | 172,327 | | |
E. Thomas Allen | | | | | — | | | | | | — | | | | | | 11,539 | | | | | | 202,740 | | |
John Klimowich | | | | | — | | | | | | — | | | | | | 7,692 | | | | | | 135,148 | | |
Allyson Schlesinger | | | | | — | | | | | | — | | | | | | 6,346 | | | | | | 111,499 | | |
Oliver E. Lewis, Jr. | | | | | — | | | | | | — | | | | | | 715 | | | | | | 12,563 | | |
Name | | | Plan Name | | | Number of Years of Credited Service | | | Present Value of Accumulated Benefit(1) | | ||||||
Thomas J. Kemly | | | Columbia Bank Retirement Plan | | | | | 40.67 | | | | | | 4,327,332 | | |
| | | Columbia Bank Retirement Income Maintenance Plan | | | | | 40.67 | | | | | | 7,725,765 | | |
Dennis E. Gibney | | | Columbia Bank Retirement Plan | | | | | 7.50 | | | | | | 406,744 | | |
| | | Columbia Bank Retirement Income Maintenance Plan | | | | | 7.50 | | | | | | 168,932 | | |
E. Thomas Allen, Jr. | | | Columbia Bank Retirement Plan | | | | | 27.25 | | | | | | 2,971,349 | | |
| | | Columbia Bank Retirement Income Maintenance Plan | | | | | 27.25 | | | | | | 1,877,664 | | |
John Klimowich | | | Columbia Bank Retirement Plan | | | | | 36.17 | | | | | | 3,280,266 | | |
| | | Columbia Bank Retirement Income Maintenance Plan | | | | | 36.17 | | | | | | 511,867 | | |
Allyson Schlesinger | | | Columbia Bank Retirement Plan | | | | | 3.25 | | | | | | 212,059 | | |
| | | Columbia Bank Retirement Income Maintenance Plan | | | | | 3.25 | | | | | | 56,721 | | |
Oliver E. Lewis, Jr. | | | Columbia Bank Retirement Plan | | | | | — | | | | | | — | | |
| | | Columbia Bank Retirement Income Maintenance Plan | | | | | — | | | | | | — | | |
Name | Plan Name | Number of Years of Credited Service | Present Value of Accumulated Benefit(1) | |||||||
Thomas J. Kemly | Columbia Bank Retirement Plan | 39.67 | $ | 4,243,031 | ||||||
Columbia Bank Retirement Income Maintenance Plan | 39.67 | 7,348,883 | ||||||||
Dennis E. Gibney | Columbia Bank Retirement Plan | 6.50 | 368,638 | |||||||
Columbia Bank Retirement Income Maintenance Plan | 6.50 | 146,786 | ||||||||
E. Thomas Allen, Jr. | Columbia Bank Retirement Plan | 26.25 | 2,871,991 | |||||||
Columbia Bank Retirement Income Maintenance Plan | 26.25 | 1,764,970 | ||||||||
John Klimowich | Columbia Bank Retirement Plan | 35.17 | 3,225,100 | |||||||
Columbia Bank Retirement Income Maintenance Plan | 35.17 | 296,207 | ||||||||
Allyson Schlesinger | Columbia Bank Retirement Plan | 2.25 | 156,749 | |||||||
Columbia Bank Retirement Income Maintenance Plan | 2.25 | 39,031 |
The
to providing benefits that would otherwise be lost as a result of eligibility requirements or the Internal Revenue Code limitations on tax-qualified plans, the ESOP SERP also provides a supplemental benefit upon a change of control prior to the scheduled repayment of the tax-qualified employee stock ownership plan loan. Under the terms of the ESOP SERP, each NEO is eligible to receive a cash payment in the event of a change in control equal to the dollar value of the stock benefit the NEO would have received under the tax-qualified employee stock ownership plan and ESOP SERP had the executives remained employed throughout the term of the loan, less the shares of common stock allocated under the tax-qualified employee stock ownership plan and ESOP SERP on the NEO’s behalf. The supplemental change in control benefits under the ESOP SERP are nonforfeitable and distributable upon termination of employment for any reason.
Name | | | Plan | | | Executive Contributions in Last Fiscal Year | | | Company Contributions in Last Fiscal Year(1) | | | Aggregate Earnings in Last Fiscal Year(2) | | | Aggregate Balance at Last Fiscal Year End(3) | | ||||||||||||
Thomas J. Kemly | | | Columbia Bank Savings Income Maintenance Plan | | | | | 95,099 | | | | | | 2,086 | | | | | | — | | | | | | 1,436,130 | | |
| | | ESOP Supplemental Executive Retirement Plan | | | | | — | | | | | | | | | | | | — | | | | | | 346,208 | | |
Dennis E. Gibney | | | Columbia Bank Savings Income Maintenance Plan | | | | | 26,969 | | | | | | — | | | | | | — | | | | | | 242,787 | | |
| | | ESOP Supplemental Executive Retirement Plan | | | | | — | | | | | | | | | | | | — | | | | | | 112,225 | | |
E. Thomas Allen, Jr. | | | Columbia Bank Savings Income Maintenance Plan | | | | | 56,473 | | | | | | — | | | | | | — | | | | | | 154,653 | | |
| | | ESOP Supplemental Executive Retirement Plan | | | | | — | | | | | | | | | | | | — | | | | | | 152,407 | | |
John Klimowich | | | Columbia Bank Savings Income Maintenance Plan | | | | | 14,104 | | | | | | — | | | | | | — | | | | | | 68,676 | | |
| | | ESOP Supplemental Executive Retirement Plan | | | | | — | | | | | | | | | | | | — | | | | | | 69,683 | | |
Allyson Schlesinger | | | Columbia Bank Savings Income Maintenance Plan | | | | | 22,913 | | | | | | — | | | | | | — | | | | | | 35,818 | | |
| | | ESOP Supplemental Executive Retirement Plan | | | | | — | | | | | | | | | | | | — | | | | | | 47,618 | | |
Oliver E. Lewis, Jr. | | | Columbia Bank Savings Income Maintenance Plan | | | | | — | | | | | | — | | | | | | — | | | | | | 15,997 | | |
| | | ESOP Supplemental Executive Retirement Plan | | | | | — | | | | | | | | | | | | — | | | | | | — | | |
Name | Plan | Executive Contributions in Last Fiscal Year | Company Contributions in Last Fiscal Year | Aggregate Earnings in Last Fiscal Year (1) | Aggregate |
Thomas J. Kemly | Columbia Bank Savings Income Maintenance Plan | $99,573 | $ 2,129 | — | $1,032,759 |
ESOP Supplemental Executive Retirement Plan | — | 84,972 | — | 173,283 | |
Dennis E. Gibney | Columbia Bank Savings Income Maintenance Plan | 23,987 | — | — | 188,875 |
ESOP Supplemental Executive Retirement Plan | — | 29,109 | — | 54,612 | |
E. Thomas Allen, Jr. | Columbia Bank Savings Income Maintenance Plan | 18,172 | — | — | 77,118 |
ESOP Supplemental Executive Retirement Plan | — | 38,903 | — | 74,783 | |
John Klimowich | Columbia Bank Savings Income Maintenance Plan | 11,741 | — | — | 38,629 |
ESOP Supplemental Executive Retirement Plan | — | 20,403 | — | 31,583 | |
Allyson Schlesinger | Columbia Bank Savings Income Maintenance Plan | 5,348 | — | — | 5,893 |
ESOP Supplemental Executive Retirement Plan | — | 15,801 | — | 19,723 |
24 months, in the case of Messrs. Gibney, Allen, and Klimowich and 12 months in the case of Ms. Schlesinger and Mr. Lewis or such lesser period as may be required under COBRA.
The supplemental change in control benefits credited to NEO accounts under the ESOP SERP are nonforfeitable and will be distributed upon termination of employment for any reason. Payments under the ESOP SERP are not categorized as parachute payments and, therefore, do not count towards a participating executive’s limitation under Section 280G of the Internal Revenue Code.
33 above.
Thomas J. Kemly | Dennis E. Gibney | E. Thomas Allen, Jr. | John Klimowich | Allyson Schlesinger | |
Death: | |||||
Employment Agreements(1) | $1,320,018 | $ 647,059 | $ 740,416 | $ 527,800 | $ 550,420 |
Executive Life Insurance | 1,325,000 | 603,000 | 690,000 | 525,000 | 547,500 |
Performance Achievement Incentive Plan(2) | 600,944 | 269,492 | 320,964 | 195,527 | 222,156 |
Cash LTIP(3) | 289,292 | 98,337 | 151,750 | 77,075 | 34,327 |
Equity Awards(4) | 1,669,712 | 610,434 | 718,156 | 478,766 | 394,991 |
Total | $5,204,966 | $2,228,322 | $2,621,286 | $1,804,168 | $1,749,394 |
Disability: | |||||
Employment Agreements(5) | $1,320,018 | $ 647,059 | $ 740,416 | $ 527,800 | $ 550,420 |
Performance Achievement Incentive Plan(2) | 600,944 | 269,492 | 320,964 | 195,527 | 222,156 |
Cash LTIP(3) | 289,292 | 98,337 | 151,750 | 77,075 | 34,327 |
Equity Awards(4) | 1,669,712 | 610,434 | 718,156 | 478,766 | 394,991 |
Total | $3,879,966 | $1,625,322 | $1,931,286 | $1,279,168 | $1,201,894 |
Retirement: | |||||
Employment Agreements | $ — | $ — | $ — | $ — | $ — |
Performance Achievement Incentive Plan(2) | 600,944 | 269,492 | 320,964 | 195,527 | 222,156 |
Cash LTIP(3) | 289,292 | 98,337 | 151,750 | 77,075 | 34,327 |
Equity Awards | — | — | — | — | — |
Total | $890,236 | $367,829 | $472,714 | $272,602 | $ 256,483 |
Involuntary Termination by Company without Cause or Resignation by Executive for Good Reason Prior to Change in Control: | |||||
Employment Agreements(6) | $4,627,274 | $1,629,886 | $1,847,424 | $1,317,403 | $ 772,576 |
Cash LTIP | — | — | — | — | — |
Equity Awards | — | — | — | — | — |
Total | $4,627,274 | $1,629,886 | $1,847,424 | $1,317,403 | $ 772,576 |
|
Thomas J. Kemly | Dennis E. Gibney | E. Thomas Allen, Jr. | John Klimowich | Allyson Schlesinger | |
Involuntary Termination by Company without Cause or Resignation by Executive for Good Reason Upon or After Change in Control: | |||||
Employment Agreements(7) | $4,693,550 | $2,343,221 | $2,633,468 | $1,911,479 | $1,322,996 |
Cash LTIP | — | — | — | — | — |
Equity Awards(8)(11) | 3,756,838 | 1,373,466 | 1,615,844 | 1,077,219 | 888,709 |
ESOP SERP(9) | 1,649,495 | 660,455 | 830,453 | 480,669 | 335,335 |
Potential Forfeiture (Best Net After Tax)(10) | — | — | — | — | (524,374) |
Total | $10,099,882 | $4,377,141 | $5,079,765 | $3,469,367 | $2,022,667 |
| | | Thomas J. Kemly | | | Dennis E. Gibney | | | E. Thomas Allen, Jr. | | | John Klimowich | | | Allyson Schlesinger | | | Oliver E. Lewis, Jr. | | ||||||||||||||||||
Death: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Employment Agreements(1) | | | | $ | 1,431,028 | | | | | $ | 696,280 | | | | | $ | 824,820 | | | | | $ | 582,750 | | | | | $ | 598,500 | | | | | $ | 551,250 | | |
Executive Life Insurance | | | | $ | 1,228,500 | | | | | $ | 618,000 | | | | | $ | 708,500 | | | | | $ | 555,500 | | | | | $ | — | | | | | $ | — | | |
Performance Achievement Incentive Plan(2) | | | | $ | 765,160 | | | | | $ | 334,029 | | | | | $ | 441,025 | | | | | $ | 240,408 | | | | | $ | 294,737 | | | | | $ | 262,719 | | |
Equity Awards(3) | | | | $ | 2,024,163 | | | | | $ | 740,025 | | | | | $ | 870,611 | | | | | $ | 580,421 | | | | | $ | 478,862 | | | | | $ | 382,372 | | |
Total | | | | $ | 5,448,851 | | | | | $ | 2,388,334 | | | | | $ | 2,844,956 | | | | | $ | 1,959,079 | | | | | $ | 1,372,099 | | | | | $ | 1,196,341 | | |
Disability: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Employment Agreements(4) | | | | $ | 1,431,028 | | | | | $ | 696,280 | | | | | $ | 824,820 | | | | | $ | 582,750 | | | | | $ | 598,500 | | | | | $ | 551,250 | | |
Performance Achievement Incentive Plan(2) | | | | $ | 765,160 | | | | | $ | 334,029 | | | | | $ | 441,025 | | | | | $ | 240,408 | | | | | $ | 294,737 | | | | | $ | 262,719 | | |
Equity Awards(3) | | | | $ | 2,024,163 | | | | | $ | 740,025 | | | | | $ | 870,611 | | | | | $ | 580,421 | | | | | $ | 478,862 | | | | | $ | 382,372 | | |
Total | | | | $ | 4,220,351 | | | | | $ | 1,770,334 | | | | | $ | 2,136,456 | | | | | $ | 1,403,579 | | | | | $ | 1,372,099 | | | | | $ | 1,196,341 | | |
Retirement: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Employment Agreements | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Performance Achievement Incentive Plan(2) | | | | $ | 765,160 | | | | | $ | 334,029 | | | | | $ | 441,025 | | | | | $ | 240,408 | | | | | $ | 294,737 | | | | | $ | 262,719 | | |
| | | Thomas J. Kemly | | | Dennis E. Gibney | | | E. Thomas Allen, Jr. | | | John Klimowich | | | Allyson Schlesinger | | | Oliver E. Lewis, Jr. | | ||||||||||||||||||
Equity Awards | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Total | | | | $ | 765,160 | | | | | $ | 334,029 | | | | | $ | 441,025 | | | | | $ | 240,408 | | | | | $ | 294,737 | | | | | $ | 262,719 | | |
Involuntary Termination by Company without Cause or Resignation by Executive for Good Reason Prior to Change in Control: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Employment Agreements(5) | | | | $ | 5,136,589 | | | | | $ | 1,803,764 | | | | | $ | 2,145,425 | | | | | $ | 1,483,084 | | | | | $ | 893,237 | | | | | $ | 862,694 | | |
Equity Awards | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Total | | | | $ | 5,136,589 | | | | | $ | 1,803,764 | | | | | $ | 2,145,425 | | | | | $ | 1,483,084 | | | | | $ | 893,237 | | | | | $ | 862,694 | | |
Involuntary Termination by Company without Cause or Resignation by Executive for Good Reason Upon or After Change in Control: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Employment Agreements(6) | | | | $ | 5,214,934 | | | | | $ | 2,577,220 | | | | | $ | 3,025,005 | | | | | $ | 2,143,009 | | | | | $ | 1,491,737 | | | | | $ | 1,462,668 | | |
Equity Awards(7)(10) | | | | $ | 6,548,714 | | | | | $ | 2,394,157 | | | | | $ | 2,816,652 | | | | | $ | 1,877,773 | | | | | $ | 1,549,173 | | | | | $ | 821,773 | | |
ESOP SERP(8) | | | | $ | 2,200,806 | | | | | $ | 874,882 | | | | | $ | 1,102,784 | | | | | $ | 633,858 | | | | | $ | 441,970 | | | | | $ | 161,351 | | |
Potential Forfeiture (Best Net After Tax)(9) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | (175,739) | | | | | $ | (411,897) | | |
Total | | | | $ | 13,964,454 | | | | | $ | 5,846,259 | | | | | $ | 6,944,441 | | | | | $ | 4,654,641 | | | | | $ | 3,307,141 | | | | | $ | 2,033,896 | | |
Financial.
The following table sets forth the annual No equity awards that were granted in 2020made to ourthe Company’s non-employee directors who were elected as directors of the Company at the 2020 Annual Meeting of Shareholders. The stock awards and options vest over a three year period at a rate of 33 1/3% per year.
Stock Awards (Number of Shares) | Grant Date Fair Value of Stock Awards ($) | Option Awards (Number of Options) | Grant Date Fair Option Awards ($) | |
James M. Kuiken | 3,316 | 50,005 | — | — |
Lucy Sorrentini | 3,316 | 50,005 | — | — |
Paul Van Ostenbridge | 3,316 | 50,005 | — | — |
2020in 2021.
| | Name(1)(2) | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Nonqualified Deferred Compensation Earnings ($)(3) | | | All Other Compensation ($)(4) | | | Total ($) | | | ||||||||||||||||||
| | Frank Czerwinski | | | | | 113,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,778 | | | | | | 114,778 | | | |
| | Noel R. Holland | | | | | 165,735 | | | | | | — | | | | | | — | | | | | | 24,765 | | | | | | 3,830 | | | | | | 194,330 | | | |
| | James M. Kuiken | | | | | 105,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 105,500 | | | |
| | Michael Massood, Jr. | | | | | 113,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,043 | | | | | | 127,043 | | | |
| | Elizabeth E. Randall | | | | | 55,250 | | | | | | — | | | | | | — | | | | | | 55,250 | | | | | | 1,243 | | | | | | 111,743 | | | |
| | Lucy Sorrentini | | | | | 55,042 | | | | | | — | | | | | | — | | | | | | 55,042 | | | | | | 30,012 | | | | | | 140,096 | | | |
| | Daria Stacy-Walls Torres(5) | | | | | 6,950 | | | | | | — | | | | | | — | | | | | | 42,550 | | | | | | — | | | | | | 49,500 | | | |
| | Robert Van Dyk | | | | | 109,200 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 109,200 | | | |
| | Paul Van Ostenbridge | | | | | 109,200 | | | | | | — | | | | | | — | | | | | | — | | | | | | 142 | | | | | | 109,342 | | | |
Name (1)(2) | Fees Earned ($) | Stock ($)(3) | Option ($) | Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) |
Frank Czerwinski | 107,800 | — | — | — | 1,640 | 109,440 |
Raymond G. Hallock(6) | 43,333 | — | — | — | 1,000 | 44,333 |
Noel R. Holland | 160,515 | — | — | 23,985 | 5,519 | 190,019 |
Henry Kuiken(6) | 39,950 | — | — | — | 2,920 | 42,870 |
James M. Kuiken(7) | 56,540 | 50,005 | — | — | 8,140 | 114,685 |
Michael Masood, Jr. | 105,200 | — | — | — | 14,933 | 120,133 |
Elizabeth E. Randall | 106,600 | — | — | — | 848 | 107,448 |
Lucy Sorrentini(7) | 56,450 | 50,005 | — | — | — | 106,455 |
Robert Van Dyk | 100,300 | — | — | — | — | 100,300 |
Paul Van Ostenbridge | 100,617 | 50,005 | — | — | — | 150,622 |
As of December 31, 2021, each director other than Ms. Sorrentini, Mr. (3) Represents director fees deferred under the Stock-Based Deferral Plan. (4) Includes imputed income for bank owned life insurance for Mr. Czerwinski, Mr. Holland, Mr. Massood, Ms. Randall and Mr. Van Ostenbridge and |
PROPOSAL 2 — Ratification of Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has appointed KPMG LLP to be the Company’s independent registered public accounting firm for the 2021 fiscal year, subject to ratification by shareholders. A representative of KPMG LLP is expected to be present at the Annual Meeting to respond to appropriate questions from shareholders and will have the opportunity to make a statement should he or she desire to do so.
If the ratification of the appointment of the independent registered public accounting firm is not approved by a majority of the votes cast at the Annual Meeting, the Audit Committee will consider other independent registered public accounting firms. In addition, if the ratification of the independent registered public accounting firm is approved by shareholders at the Annual Meeting, the Audit Committee may also consider other independent registered public accounting firms in the future if it determines that such consideration is in the best interests of the Company and its shareholders.
The Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm.
Audit and Non-Audit Fees
The following table sets forth the fees billed to the Company for the years ending December 31, 2020 and December 31, 2019 for services provided by KPMG LLP.
2020 | 2019 | |
Audit Fees(1) | $905,000 | $965,000 |
Audit-Related Fees | $107,000 | $287,000 |
Tax Fees(2) | — | $92,900 |
All Other Fees | — | — |
Pre-Approval of Services by the Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. In accordance with its charter, the Audit Committee approves, in advance, all audit and permissible non-audit services to be performed by the independent registered public accounting firm. Such approval process ensures that the independent registered public accounting firm does not provide any non-audit services to the Company that are prohibited by law or regulation.
In addition, the Audit Committee has established a policy regarding pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. Requests for services by the independent registered public accounting firm for compliance with the auditor services policy must be specific as to the particular services to be provided. The request may be made with respect to either specific services or a type of service for predictable or recurring services.
Any proposed specific engagement may be presented to the Audit Committee for consideration at its next regular meeting or, if earlier consideration is required, to the Audit Committee or one or more of its members. The member or members to whom such authority is delegated shall report any specific approval of services at the next regular meeting of the Audit Committee. The Audit Committee will regularly review summary reports detailing all services being provided to the Company by its independent registered public accounting firm.
During the year ended December 31, 2020, all services were approved, in advance, by the Audit Committee in compliance with these procedures.
Audit Committee Report
The Company’s management is responsible for the Company’s internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and issuing an opinion on the conformity of those financial statements with generally accepted accounting principles. The Audit Committee oversees the Company’s internal controls over financial reporting on behalf of the Board of Directors.
In this context, the Audit Committee has metMr. Massood, Mr. Holland and held discussions with management and the independent registered public accounting firm. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm all communications required by generally accepted accounting standards.
In addition, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board and has discussed with the independent registered public accounting firm the accounting firm’s independence from the Company and its management. In concluding that the accounting firm is independent, the Audit Committee considered, among other factors, whether the non-audit services provided by the independent registered public accounting firm were compatible with their independence.
The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for their audit. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of the Company’s internal control over financial reporting, and the overall quality of the Company’s financial reporting process.
In performing all of these functions, the Audit Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting firm who, in its report, expresses an opinion on the conformity of the Company’s financial statements to generally accepted accounting principles. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee’s considerations and discussions with management and the independent registered public accounting firm do not assure that the Company’s financial statements are presented in accordance with generally accepted accounting principles, that the audit of the Company’s consolidated financial statements has been carried out in accordance with the standards of the Public Company Accounting Oversight Board or that the Company’s independent registered public accounting firm is in fact “independent.”
In relying on the reviews and discussions referred to above, the Audit Committee recommendedMs. Sorrentini.
Audit Committee of the Board of Directors
Michael Massood, Jr. (Chair)
Noel R. Holland
James M. Kuiken
Paul Van Ostenbridge
STOCK OWNERSHIP Number of Shares Owned Percent of Common Stock Outstanding Columbia Bank MHC 19-01 Route 208 North Fair Lawn, New Jersey 07410PROPOSAL 3 — Advisory Vote on Executive CompensationAs required by federal securities laws, we are providing our shareholders with the opportunity to cast an advisory vote regarding the compensation of our named executive officers as disclosed in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives the Company’s shareholders the opportunity to endorse or not endorse the Company’s executive pay program and policies through the following resolution:“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and related narrative discussion contained in the 2021 proxy statement, is hereby approved.”This advisory vote on the compensation of our named executive officers is not binding on us, our Board or the Compensation Committee. However, our Board and the Compensation Committee will consider the outcome of this advisory vote when making future compensation decisions for our named executive officers.The Board of Directors recommends that shareholders vote FOR the approval of the compensation paid to the Company’s named executive officers.Name and Address
(1)67,339,203 61.8% (1)Based on 109,051,417 shares of Company common stock outstanding and entitled to vote as of the Record Date. Name and Address
Shares Owned
Common Stock Outstanding(1)
19-01 Route 208 North
Fair Lawn, New Jersey 07410 69,930,210 65.5%
| | Name | | | Number of Shares Owned(1) | | | Number of Shares That May Be Acquired Within 60 Days By Exercising Options | | | ||||||
| | Directors: | | | | | | | | | | | | | | |
| | Noel R. Holland | | | | | 92,800 | | | | | | 33,317 | | | |
| | Frank Czerwinski(2) | | | | | 89,038 | | | | | | 33,317 | | | |
| | Thomas J. Kemly(3) | | | | | 469,972 | | | | | | 262,588 | | | |
| | James M. Kuiken | | | | | 4,816 | | | | | | — | | | |
| | Michael Massood, Jr. | | | | | 87,998 | | | | | | 33,317 | | | |
| | Elizabeth E. Randall | | | | | 88,582 | | | | | | 33,317 | | | |
| | Lucy Sorrentini | | | | | 6,861 | | | | | | — | | | |
| | Robert Van Dyk(4) | | | | | 131,038 | | | | | | 33,317 | | | |
| | Paul Van Ostenbridge | | | | | 9,141 | | | | | | — | | | |
| | Daria Stacy-Walls Torres | | | | | 2,631 | | | | | | — | | | |
| | Executive Officers Who Are Not Directors: | | | | | | | | | | | | | | |
| | E. Thomas Allen, Jr. | | | | | 185,930 | | | | | | 112,941 | | | |
| | Damodaram Bashyam | | | | | 41,219 | | | | | | 36,601 | | | |
| | Dennis E. Gibney(5) | | | | | 188,762 | | | | | | 96,000 | | | |
| | W Justin Jennings | | | | | — | | | | | | — | | | |
| | Geri M. Kelly | | | | | 130,403 | | | | | | 60,235 | | | |
| | John Klimowich | | | | | 110,750 | | | | | | 75,294 | | | |
| | Mark S. Krukar | | | | | 112,640 | | | | | | 56,470 | | | |
| | Oliver E. Lewis, Jr. | | | | | 33,316 | | | | | | 7,058 | | | |
| | Brian W. Murphy(6) | | | | | 67,686 | | | | | | 31,058 | | | |
| | Allyson Schlesinger | | | | | 83,826 | | | | | | 62,117 | | | |
| | All Directors, Director Nominees and Executive Officers as a Group (20 persons) | | | | | 1,937,409 | | | | | | 966,947 | | | |
Name | Number of Shares Owned (1) | Number of Shares That May Be Acquired Within 60 Days By Exercising Options |
Directors: | ||
Noel R. Holland | 91,989 | 16,658 |
Frank Czerwinski (2) | 89,038 | 16,658 |
Thomas J. Kemly (3) | 477,441 | 131,294 |
James M. Kuiken | 4,816 | — |
Michael Massood, Jr. | 87,998 | 16,658 |
Elizabeth E. Randall | 86,208 | 16,658 |
Lucy Sorrentini | 4,385 | — |
Robert Van Dyk (4) | 131,038 | 16,658 |
Paul Van Ostenbridge | 9,141 | — |
Executive Officers Who Are Not Directors: | ||
E. Thomas Allen, Jr. | 187,457 | 56,470 |
Damodaram Bashyam | 40,897 | 18,300 |
Dennis E. Gibney (5) | 186,868 | 48,000 |
Geri M. Kelly | 128,693 | 30,117 |
John Klimowich | 108,858 | 37,647 |
Mark S. Krukar | 110,293 | 28,235 |
Oliver E. Lewis, Jr. | 32,732 | 3,529 |
Brian W. Murphy (6) | 68,065 | 15,529 |
Allyson Schlesinger | 80,800 | 31,058 |
All Directors, Director Nominees and Executive Officers as a Group (18 persons) | 1,926,717 | 483,469 |
Columbia (ESOP) | Columbia Bank Supplemental Executive Retirement Plan (SERP) | Columbia Savings and Investment (401(k) Plan) | Columbia Bank Savings Income Maintenance Plan | Columbia Bank Stock Based Deferral Plan | Columbia Financial, Inc. 2019 Equity Incentive Plan (a) | |
Noel R. Holland | — | — | — | — | 7,951 | 27,231 |
Frank Czerwinski | — | — | — | — | — | 27,231 |
Thomas J. Kemly | 3,330 | 11,135 | 40,926 | 41,572 | 43,396 | 241,443 |
James M. Kuiken | — | — | — | — | — | 3,316 |
Michael Massood, Jr. | — | — | — | — | — | 27,231 |
Elizabeth E. Randall | — | — | — | — | 884 | 27,231 |
Robert Van Dyk | — | — | — | — | — | 27,231 |
Paul Van Ostenbridge | — | — | — | — | — | 3,316 |
Lucy Sorrentini | — | — | — | — | 769 | 3,316 |
E. Thomas Allen, Jr. | 3,330 | 4,806 | 31,000 | 1,352 | 5,584 | 103,847 |
Damodaram Bashyam | — | — | — | — | — | 33,353 |
Dennis E. Gibney | 3,330 | 3,509 | — | — | 1,953 | 88,270 |
Geri M. Kelly | 3,330 | 1,735 | 25,050 | 1,058 | 8,003 | 55,385 |
John Klimowich | 3,330 | 2,028 | 17,143 | 2,984 | 2,126 | 69,231 |
Mark S. Krukar | 3,330 | 1,916 | 24,957 | 4,847 | 7,551 | 51,293 |
Oliver E. Lewis, Jr. | 2,256 | — | — | — | 37 | 29,949 |
Brian W. Murphy | 3,330 | 789 | 30,000 | 325 | 1,785 | 28,558 |
Allyson Schlesinger | 2,394 | 1,267 | — | 1,542 | 4,829 | 57,116 |
| | | | | Columbia Bank Employee Stock Ownership Plan (ESOP) | | | Columbia Bank Supplemental Executive Retirement Plan (SERP) | | | Columbia Bank Savings and Investment Plan (401(k) Plan) | | | Columbia Bank Savings Income Maintenance Plan | | | Columbia Bank Stock Based Deferral Plan | | | Columbia Financial, Inc. 2019 Equity Incentive Plan(1) | | | ||||||||||||||||||
| | Noel R. Holland | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,762 | | | | | | 20,423 | | | |
| | Frank Czerwinski(2) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,423 | | | |
| | Thomas J. Kemly(3) | | | | | 3,354 | | | | | | 16,595 | | | | | | 40,926 | | | | | | 41,572 | | | | | | 47,068 | | | | | | 214,616 | | | |
| | James M. Kuiken | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,211 | | | |
| | Michael Massood, Jr. | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,423 | | | |
| | Elizabeth E. Randall | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,258 | | | | | | 20,423 | | | |
| | Lucy Sorrentini | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,245 | | | | | | 2,211 | | | |
| | Daria Stacy-Walls Torres | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,631 | | | | | | — | | | |
| | Robert Van Dyk(4) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,423 | | | |
| | Paul Van Ostenbridge | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,211 | | | |
| | E. Thomas Allen, Jr. | | | | | 3,354 | | | | | | 7,306 | | | | | | 31,000 | | | | | | 1,352 | | | | | | 5,584 | | | | | | 92,308 | | | |
| | Damodaram Bashyam | | | | | 1,120 | | | | | | 503 | | | | | | — | | | | | | — | | | | | | — | | | | | | 29,647 | | | |
| | Dennis E. Gibney(5) | | | | | 3,354 | | | | | | 5,378 | | | | | | — | | | | | | — | | | | | | 1,953 | | | | | | 78,462 | | | |
| | Geri M. Kelly | | | | | 3,354 | | | | | | 2,760 | | | | | | 25,050 | | | | | | 1,003 | | | | | | 8,719 | | | | | | 49,231 | | | |
| | John Klimowich | | | | | 3,354 | | | | | | 3,339 | | | | | | 17,143 | | | | | | 2,836 | | | | | | 2,831 | | | | | | 61,539 | | | |
| | Mark S. Krukar | | | | | 3,354 | | | | | | 2,962 | | | | | | 25,364 | | | | | | 4,761 | | | | | | 8,507 | | | | | | 46,154 | | | |
| | Oliver E. Lewis, Jr. | | | | | 2,256 | | | | | | — | | | | | | — | | | | | | — | | | | | | 872 | | | | | | 29,234 | | | |
| | Brian W. Murphy(6) | | | | | 3,354 | | | | | | 1,184 | | | | | | 30,000 | | | | | | 246 | | | | | | 2,180 | | | | | | 25,385 | | | |
| | Allyson Schlesinger | | | | | 2,418 | | | | | | 2,282 | | | | | | — | | | | | | 1,717 | | | | | | 6,641 | | | | | | 50,770 | | | |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
Based solely on its review of the copies of the reports it has received and written representations provided to the Company from the individuals required to file the reports, the Company believes that each of its executive officers and directors has complied with applicable reporting requirements for transactions in Columbia Financial common stock during the year ended December 31, 2020.
2022. Includes 100 shares held by Mr. Murphy’s daughter.
Title | | | Amount | | |
| President and Chief Executive Officer | | | 5x base salary | |
| Senior Executive Vice Presidents | | | 3x base salary | |
| Executive Vice Presidents | | | 3x base salary | |
| Non-Employee Directors | | | 3x annual fees and retainers for service on the Board of Directors | |
Policies and Procedures for Approval of Related Person Transactions
We maintain a Policy and Procedures Governing Related Person Transactions, which is a written policy and set of procedures for the review and approval or ratification of transactions involving related persons. Under the policy, related persons consist of directors, director nominees, executive officers, persons or entities known to us to be the beneficial owner of more than five percent of any outstanding class of the voting securities of the Company, or immediate family members or certain affiliated entities of any of the foregoing persons.
Transactions covered by the policy consist of any financial transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, in which:
This policy excludes:
Related person transactions will be approved or ratified by the Audit Committee. In determining whether to approve or ratify a related person transaction, the Audit Committee will consider all relevant factors, including:
A member of the Audit Committee who has an interest in the transaction will abstain from voting on approval of the transaction, but may, if so requested by the chair of the Audit Committee, participate in some or all of the discussion.
Transactions with Related Persons
The Sarbanes-Oxley Act of 2002 generally prohibits loans by Columbia Financial to its executive officers and directors. However, the Sarbanes-Oxley Act contains a specific exemption from such prohibition for loans by Columbia Bank to its executive officers and directors in compliance with federal banking regulations. Federal regulations require that all loans or extensions of credit to executive officers and directors of insured financial institutions must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and must not involve more than the normal risk of repayment or present other unfavorable features. Columbia Bank is therefore prohibited from making any new loans or extensions of credit to executive officers and directors at different rates or terms than those offered to the general public. Notwithstanding this rule, federal regulations permit a financial institution to make loans to executive officers and directors at reduced interest rates if the loan is made under a benefit program generally available to all other
employees and does not give preference to any executive officer or director over any other employee. Columbia Bank currently offers such a program to its executive officers and directors.
Pursuant to Columbia Financial’s Audit Committee Charter, the audit committee periodically reviews, no less frequently than quarterly, a summary of Columbia Financial’s transactions with directors and executive officers of Columbia Financial and with firms that employ directors, as well as any other related person transactions, to recommend to the disinterested members of the Board of Directors that the transactions are fair, reasonable and within our policy and should be ratified and approved. Also, in accordance with banking regulations and its policy, the Board of Directors reviews all loans made to a director or executive officer in an amount that, when aggregated with the amount of all other loans to such person and his or her related interests, exceed the greater of $25,000 or 5% of Columbia Financial’s capital and surplus (up to a maximum of $500,000) and such loan must be approved in advance by a majority of the disinterested members of the Board of Directors. Additionally, pursuant to Columbia Financial’s Code of Ethics and Business Conduct, all executive officers and directors of Columbia Financial must disclose any existing or potential conflicts of interest to the President and Chief Executive Officer of Columbia Financial. Such potential conflicts of interest include, but are not limited to: (1) Columbia Financial conducting business with or competing against an organization in which a family member of an executive officer or director has an ownership or employment interest; and (2) the ownership of more than 1% of the outstanding securities or capital value of a business or where such investment represents more than 5% of the total assets of the executive officer or director and/or family members.
The aggregate amount of loans by Columbia Bank to its executive officers and directors and their affiliates was $1.6 million at December 31, 2020. As of that date, these loans were performing according to their original terms.
Shareholder Proposals and Nominations
Notice and AccessibilityCosts of Proxy Materials
In connection with the Annual Meeting, to save significant printing and mailing expenses, the Company is furnishing its proxy statement and annual report via the Internet according to the SEC rules for “Notice and Access.” On April 9, 2021, the Company mailed the Notice to all shareholders, who had not previously elected to receive their proxy materials by mail or electronically, containing instructions on how to access this proxy statement and our annual report and how to vote online. Upon receipt of the Notice, shareholders may choose to request a printed copy of proxy materials at no charge, and this preference will be maintained for future mailings.
To further reduce costs, if you and others who share your address own your shares in “street name,” your broker or other holder of record may be sending only one annual report and proxy statement to your address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, if a shareholder residing at such an address wishes to receive a separate annual report or proxy statement in the future, he or she should contact the broker or other holder of record. If you own your shares in “street name” and are receiving multiple copies of our annual report and proxy statement, you can request householding by contacting your broker or other holder of record.
Miscellaneous
Solicitation
A copy of the Company’s Form 10-K for the year ended December 31, 2020 as filed with the Securities and Exchange Commission, will be furnished without charge to all persons who were shareholders as of the close of business on the Record Date upon written request to Mayra L. Rinaldi, Corporate Secretary, Columbia Financial, Inc. 19-01 Route 208 North, Fair Lawn, New Jersey 07410.
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE VERIFIED STOCKHOLDER DERIVATIVE AND CLASS ACTION COMPLAINT On behalf of Nominal Defendant Columbia Financial, Inc. (“Columbia Financial” or the “Company”), Plaintiff Fredric D. Pascal (“Plaintiff”) asserts claims for breach of fiduciary duty and unjust enrichment against members of the FREDRIC D. PASCAL, derivatively on behalf of COLUMBIA FINANCIAL, INC., and individually on behalf of himself and all other similarly situated stockholders of COLUMBIA FINANCIAL, INC., Plaintiff, vs. FRANK CZERWINSKI, RAYMOND G. HALLOCK, NOEL R. HOLLAND, THOMAS J. KEMLY HENRY KUIKEN, , MICHAEL MASSOOD JR., ELIZABETH E. RANDALL, AND ROBERT VAN DYK, Defendants, -and- COLUMBIA FINANCIAL, INC., a Delaware Corporation, Nominal Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) C.A. No. _________________ PUBLIC VERSION May 20, 2020 EFiled: May 20 2020 03:29PM EDT Transaction ID 65648590 Case No. 2020-0320-SG |
2 Company’s board of directors (the “Board”).1 On behalf of himself and all other similarly situated stockholders of Columbia Financial, Plaintiff also asserts a claim against members of the Board for breaching their fiduciary duty of candor. NATURE AND SUMMARY OF THE ACTION 1. This is a stockholder derivative and class action brought to hold Columbia Financial’s directors accountable for abusing their positions and breaching their fiduciary duties by (i) awarding themselves over $13,000,000 of stock, and (ii) misleading stockholders when seeking their approval of the Company’s new 2019 Equity Incentive Plan (the “Incentive Plan”) that the directors specifically designed and intended to use for their own self-dealing purposes. 2. During most of 2019, Columbia Financial’s Board comprised eight directors (collectively, the “Directors”): (a) non-employee directors Frank Czerwinski (“Czerwinski”), Raymond G. Hallock (“Hallock”), Noel R. Holland (“Holland”), Henry Kuiken (“Kuiken”), Michael Massood Jr. (“Massood”), 1 Plaintiff’s allegations are made upon personal knowledge as to himself and his own acts, and upon information and belief as to all other matters, based upon the investigation conducted by and through his attorneys, which included a review of documents Plaintiff obtained from the Company in connection with a March 19, 2020 books and records demand under 8 Del. C. § 220, documents filed with the U.S. Securities and Exchange Commission (the “SEC”), various media and analyst reports. The documents were produced subject to a non-disclosure agreement, which required Plaintiff to maintain the confidentiality of the documents. As such, the Verified Complaint has been filed under seal. |
3 Elizabeth E. Randall (“Randall”), Robert Van Dyk (“Dyk”), and (b) Thomas J. Kemly (“Kemly”), Chief Executive Officer and President.2 3. On April 19, 2018, Columbia Financial completed its partial conversion from a mutual bank holding company to a stock company and became a publicly- traded entity. A market practice has developed in which the directors of banks that have completed a so-called mutual-to-stock conversion issue special equity awards to themselves. In order to avoid certain federal regulations that would otherwise apply to equity awards issued within a year of the bank’s conversion, these awards usually are made a little more than a year after the conversion has been completed. Typically, the awards are modestly sized. For example, in a sample of 72 companies that completed mutual-to-stock conversions over a ten-year period, the median and average awards were $87,884 and $210,343, respectively, for non-employee directors, and $512,320 and $1,213,189, respectively, for the bank’s chief executive officer (“CEO”). Of the eight companies that, like Columbia Financial, completed partial conversions between 2015 and 2018, the average award was $170,481 for non-employee directors and $1,154,164 for the CEO. 2 Jack R. Salvetti (“Salvetti”) resigned from the Board in January 2019 (before the challenged awards were granted), and Paul Van Ostenbridge (“Ostenbridge”) joined the Board on November 26, 2019 (after the challenged awards were granted). |
4 4. In a gross and calculated overreach, the Directors awarded themselves special equity awards following the Company’s partial conversion in amounts that are patently excessive and unjustified. Specifically, on July 23, 2019, the Directors granted themselves in excess of $13 million of awards under the Incentive Plan – $884,993 for each of the seven non-employee directors and $6.97 million for Kemly (the “Conversion Grants”), as displayed in the following chart: Name Restricted Stock Stock Options Total Czerwinski $530,993 $354,000 $884,993 Hallock $530,993 $354,000 $884,993 Holland $530,993 $354,000 $884,993 Kemly $4,184,996 $2,790,002 $6,974,998 Kuiken $530,993 $354,000 $884,993 Massood $530,993 $354,000 $884,993 Randall $530,993 $354,000 $884,993 Van Dyk $530,993 $354,000 $884,993 Total $13,169,949 5. As described in detail below, the Conversion Grants were (a) the culmination of a “10-step” internal process that was substantially complete, but not disclosed, when the Directors sought approval of the Incentive Plan; (b) based on an Incentive Plan that was, unbeknownst to stockholders who were never told, specifically designed to be large enough to accommodate the grants; (c) based on a cherry-picked set of purported “peer companies” that had been deliberately designed to favor outlier companies that had made the largest conversion grants; and (d) the |
5 byproduct of professional advice from a compensation consultant who expressly disclaimed the peer selection process that the Directors used. PARTIES 6. Plaintiff Fredric D. Pascal owns 500 shares of Columbia Financial common stock, which he purchased in the Company’s April 2018 Minority Stock Offering (defined below) and has held continuously since. 7. Nominal Defendant Columbia Financial is a Delaware corporation with its principal place of business in Fair Lawn, New Jersey. 8. Defendant Czerwinski has served on the Board since 1994. 9. Defendant Hallock has served on the Board since 1999. He previously served as Columbia Bank’s President and Chief Executive Officer from January 2002 until his retirement in December 2011. Hallock will retire from the Board following the 2020 Annual Meeting of Stockholders on May 22, 2020 (the “2020 Annual Meeting”), but he will continue to serve as an advisory director following retirement. 10. Defendant Holland has served on the Board since 2005. 11. Defendant Kemly has served as Company’s President and Chief Executive Officer since 2011 and as a Board member since 2006. |
6 12. Defendant Kuiken has served on the Board since 1987. Kuiken will retire from the Board following the 2020 Annual Meeting, but he will continue to serve as an advisory director following retirement. 13. Defendant Massood has served on the Board since 2003. 14. Defendant Randall has served on the Board since 2003. 15. Defendant Van Dyk has served on the Board since 1994. FURTHER SUBSTANTIVE ALLEGATIONS Columbia Financial’s MHC Conversion 16. Founded in 1927 and headquartered in Fair Lawn, New Jersey, Columbia Bank is a federally chartered savings bank which operates 64 full-service banking offices in New Jersey. 17. In 1997, Columbia Bank reorganized into a mutual holding company structure. This reorganization led to the formation of Columbia Financial, MHC (the “MHC”) and Columbia Financial (i.e., the Company). Columbia Financial became the holding company of Columbia Bank, and the MHC became the federally chartered mutual holding company of Columbia Financial with ownership of all of Columbia Financial’s common stock. 18. Many mutual banks eventually convert into a stock form of ownership. In a “standard conversion,” the bank fully converts into a stock company that becomes wholly-owned by public stockholders. In an “MHC conversion,” a bank |
7 partially converts to stock form by offering its depositors a minority percentage of the total shares outstanding, with the mutual holding company maintaining majority ownership. After an MHC conversion, the bank can complete its transformation to a fully public stock form of ownership via a “second-step conversion.” 19. On April 19, 2018, the Company completed its MHC or partial conversion (the “Conversion”) by conducting a minority stock offering through which it issued 49,832,345 shares of common stock to the Columbia Bank Employee Stock Ownership Plan (“ESOP”) and to depositors of the Bank who subscribed to the offering (the “Minority Stock Offering”). A total of 3,476,675 shares were issued to the Columbia Bank Foundation, Columbia Bank’s charitable foundation, and the MHC retained ownership of the remaining 62,580,155 shares. On April 20, 2018, following completion of the Conversion, Columbia Financial’s common stock began trading on the Nasdaq Global Select Market under the ticker symbol “CLBK.” Defendants’ 2018 and 2019 Cash Compensation 20. The Board fixes the annual compensation of the Company’s non- employee directors based on recommendations from the Compensation Committee. As stated in its Charter, the Compensation Committee “shall review annually and make recommendations to the Board of Directors regarding non-employee Director compensation.” The Compensation Committee is responsible for determining the compensation of the Company’s named executive officers, including the CEO. |
8 21. During the 2018 and 2019 fiscal years, the Compensation Committee members were Holland (the Chair), Czerwinski, Kuiken, and Van Dyk. 22. In the Company’s 2018 fiscal year, the non-employee directors received (i) a cash retainer of $67,800 (except the Chairman of the Board, who received a $134,500 cash retainer); (ii) a $1,300 fee for each Board meeting attended (with the Chairman of the Board receiving $1,500 for each meeting attended); and (iii) payments to cover health insurance and life insurance premiums. Finally, the Company paid a $7,500 cash retainer to the Chairman of the Audit Committee and a $5,000 cash retainer to each member of the Nominating/Corporate Governance Committee. 23. On April 22, 2019, the Company filed a Schedule 14A Definitive Proxy Statement with the SEC (the “2019 Proxy”) in connection with its 2019 Annual Meeting of Stockholders (the “2019 Annual Meeting”). As disclosed in the 2019 Proxy and as set forth in the following chart, pursuant to the non-employee director compensation program, during the 2018 fiscal year Columbia Financial’s non- employee directors paid themselves total compensation worth $122,160 on average per director: |
9 Director Total Czerwinski $111,859 Hallock $106,926 Holland $191,866 Kuiken $108,855 Massood $133,771 Randall $106,006 Salvetti $97,700 Van Dyk $120,293 Average $122,160 24. As also disclosed in the 2019 Proxy, for the 2018 fiscal year, Kemly’s compensation package comprised (i) a base salary of $745,000, (ii) the opportunity to receive a cash bonus under two separate executive bonus programs, the Performance Annual Incentive Plan (the “PAIP”) and the Long-Term Cash Incentive Plan (the “LTIP”), and (iii) perquisites valued at $41,632. 25. Under the PAIP, executives have the opportunity to be paid an annual cash bonus that is set at a percentage of the executive’s base salary and is based on the achievement of annual performance goals. Under the LTIP, executives have the opportunity to receive a cash bonus based on the achievement of performance goals over a three-year period. During 2018, Kemly received $530,184 under the PAIP and $364,721 under the LTIP. Accordingly, for the 2018 fiscal year, Kemly received a total compensation package valued at $1,681,487. |
10 26. According to the 2019 Proxy, in 2018, the Compensation Committee retained the services of GK Partners, Inc. (“GK”), a compensation consulting firm run by Greg Keshishian (“Keshishian”). GK was retained to, among other things, “perform a competitive assessment of the Company’s executive and director compensation programs.” In July 2018, GK presented its report, titled “Senior Management and Non-Employee Directors 2018 Compensation Review” to the Compensation Committee (the “2018 Compensation Report”). 27. In its review, GK analyzed the non-employee director and executive compensation packages of 19 peer banks that were selected based on asset size, profitability, rates of return, market capitalization, location and lines of business (the “2018 Peers”). According to the 2018 Compensation Report, the 2018 Peers paid their non-employee directors an average compensation package of $118,615. The median was $106,053, and the amounts ranged from $94,222 at the 25th percentile to $131,547 at the 75th percentile. Only one of the 19 companies topped $200,000, with Flushing Financial Corp. (“Flushing Financial”) paying its non-employee directors an average of $227,040. At $122,160, Columbia Financial’s non-employee director compensation package was slightly above the average and the median. 28. According to the 2018 Compensation Report, the average compensation paid to CEOs in the 2018 Peer group was $2.27 million and the |
11 median was $1.66 million. Thus, with total compensation of $1.68 million, Kemly was a tick above the median. 29. As disclosed in Columbia Financial’s Schedule 14A Definitive Proxy Statement filed with the SEC on April 10, 2020 (the “2020 Proxy”), the Board used the 2018 Compensation Report “for purposes of determining 2019 compensation” for both the Company’s non-employee directors and executive officers. In so doing, the Board determined not to make any changes to the non-employee director compensation program for 2019. As disclosed in the 2020 Proxy, the non-employee director compensation program for 2019 was kept exactly the same, resulting in the following payments to the Company’s non-employee directors (not including the Conversion Grants): Director3 Total Czerwinski $126,252 Hallock $130,868 Holland $208,462 Kuiken $123,293 Massood $140,338 Randall $112,573 Van Dyk $133,293 Average $139,297 3 Salvitti, who resigned in January 2019, and Ostenbridge, who joined the Board on November 26, 2019, are excluded. |
12 30. With respect to the CEO, the Compensation Committee increased Kemly’s salary from $745,000 to $775,000. Thus, for 2019, Kemly received a $775,000 base salary, cash payments of $486,996 under the PAIP (based on a maximum opportunity to receive as much as $629,688) and $362,739 under the LTIP, and perquisites valued at $181,941. In total, Kemly received $1,806,676 in compensation (not counting the Conversion Grant). 31. GK conducted another review of the Company’s non-employee director and executive compensation program in June 2019. This time, GK used an updated set of 20 peer banks (the “2019 Peers”) and prepared a report titled “Senior Management and Non-Employee Directors 2019 Compensation Review” (the “2019 Compensation Report”). The 2019 Compensation Report showed that the 2019 Peers paid their non-employee directors $122,761 on average. The median was $105,784, and the amounts ranged from $96,142 at the 25th percentile to $117,045 at the 75 th percentile. Only two companies, Flushing Financial (at $225,065) and Eagle Bancorp Inc. (at $319,792) topped $200,000. At an average of $139,297, Columbia Financial’s non-employee directors found themselves slightly above the 75th percentile. 32. The 2019 Compensation Report showed that the companies in the 2019 Peer group paid their CEOs an average bonus of just over $2 million and a median |
13 award of $1.97 million. Counting the portion of the PAIP that Kemly failed to earn, he was right at the median. The Board Creates the Incentive Plan and Approves the Conversion Grants 33. As noted above, a practice has developed in which the insiders of banks that undergo mutual-to-stock conversions issue special equity awards to themselves following the conversion. These awards typically are issued a little more than a year after the conversion so as to avoid the regulations imposed by the Board of Governors of the Federal Reserve System (the “FRB”) regarding stock-based incentive compensation plans adopted within the first year following a conversion. 34. In the prospectus filed in connection with the Minority Stock Offering, the Company indicated that it intended to adopt an equity incentive plan following the Conversion, but did not indicate or provide any information about the large Conversion Grants the Directors had planned. 35. In Proposal 2 of the 2019 Proxy (“Proposal 2”), the Board sought stockholder approval of the Incentive Plan, which included a reserve of 7,949,996 shares of Columbia Financial common stock for equity awards to the Company’s 651 employees, officers, and non-employee directors. 36. On June 6, 2019, the Company’s stockholders approved the Incentive Plan (albeit, as described below, based on the Directors’ false and misleading disclosures). |
14 37. On July 23, 2019, the Directors approved their Conversion Grants. Specifically, each non-employee director received an award of 34,038 shares of time-based restricted stock (valued at $530,993 using the $15.60 per share closing price of the Company’s common stock on the date of grant) and 83,294 stock options (valued by the Company at $354,000 using the Black-Scholes option pricing model). The restricted stock awards and options vest ratably over a five-year period. The awards continue to vest following a director’s retirement from the Board, so long as he or she continues to serve as an advisory director. 38. Kemly, the lone executive on the Board, received a Conversion Grant comprised of 134,134 shares of time-based restricted stock (valued at $2,092,490 using the $15.60 per share closing price), an award of performance-based restricted stock pursuant to which Kemly could receive up to 134,135 shares of common stock based on the achievement of performance goals over a three-year period (valued by the Company at $2,092,506), and 656,471 stock options (valued by the Company at $2,790,002 using the Black-Scholes option pricing model). Kemly’s time-based restricted stock awards and options vest ratably over a five-year period. 39. In total, the Directors granted themselves over $13 million of equity awards, a grand total of 1,746,064 shares, roughly 22% of the total shares reserved under the Incentive Plan. As shown in the following chart, each non-employee director received $884,993 worth of awards, while Kemly received $6,974,998: |
15 Name Restricted Stock Stock Options Total Czerwinski $530,993 $354,000 $884,993 Hallock $530,993 $354,000 $884,993 Holland $530,993 $354,000 $884,993 Kemly $4,184,996 $2,790,002 $6,974,998 Kuiken $530,993 $354,000 $884,993 Massood $530,993 $354,000 $884,993 Randall $530,993 $354,000 $884,993 Van Dyk $530,993 $354,000 $884,993 Total $13,169,949 40. On April 10, 2020, the Company filed its 2020 Proxy in connection with its 2020 Annual Meeting. According to the 2020 Proxy, mutual holding companies that undertake conversions typically issue “larger” equity awards to executives and directors than the typical annual equity awards at other public financial institutions. As further described in the 2020 Proxy, the Compensation Committee, with the help of its special consultant, McLagan, developed a special “peer group” of 15 converted banks that the Directors used to determine the Conversion Grants (the “Conversion Peer Group”). 41. The Conversion Peer Group comprised the following companies, displayed below along with the type of conversion undertaken and the date the conversion was completed: |
16 Name Type Date Beneficial Bancorp, Inc. ("Beneficial") Second-Step 1/13/2015 Blue Hills Bancorp, Inc. ("Blue Hills") Standard 7/22/2014 Clifton Bancorp, Inc. ("Clifton") Second-Step 4/2/2014 Entegra Financial Corp. ("Entegra") Standard 10/1/2014 First Connecticut Bancorp, Inc. ("First Cnct") Standard 6/30/2011 First Northwest Bancorp ("First Northwest") Standard 1/30/2015 Franklin Financial Corporation ("Franklin") Standard 4/28/2011 HarborOne Bancorp, Inc. ("HarborOne") MHC 6/30/2016 Home Trust Bancshares, Inc. ("Home Trust") Standard 7/11/2012 Investors Bancorp, Inc. ("Investors Bancorp") Second-Step 5/8/2014 Kearny Financial Corp. ("Kearny") Second-Step 5/9/2015 Meridian Bancorp, Inc. ("Meridian") Second-Step 7/29/2014 Northfield Bancorp, Inc. ("Northfield") Second-Step 1/25/2013 Oritani Financial Corp. ("Oritani") Second-Step 6/24/2010 Provident Bancorp, Inc. ("Provident") MHC 7/16/2015 42. The following two charts show the grant date fair value of the awards received by the non-employee directors and CEOs at the companies in the Conversion Peer Group shortly following their respective conversions: |
17 Name NEDs4 Name CEO Investors Bancorp $2,159,400 Investors Bancorp $16,699,999 Oritani $1,746,106 Oritani $7,435,698 Beneficial $929,253 Beneficial $6,787,740 Kearny $928,184 Kearny $5,439,680 First Cnct $760,332 HarborOne $4,419,639 Northfield $687,150 Blue Hills $3,943,200 HarborOne $530,752 Northfield $3,599,150 Blue Hills $513,347 Meridian $3,573,750 Clifton $488,991 First Cnct $3,234,691 Home Trust $381,089 Clifton $2,389,338 Franklin $340,420 Home Trust $2,151,243 Meridian $285,900 Franklin $1,702,100 First Northwest $215,900 Provident $1,362,476 Provident $145,995 First Northwest $952,500 Entegra $135,779 Entegra $786,720 43. With respect to directors, the Conversion Peer Group ranges from Entegra, whose non-employee directors received an average award of $135,779, to Investors Bancorp, whose non-employee directors received an average award of $2,159,400. The median company, Blue Hills, awarded its non-employee directors $513,347. With respect to CEOs, the dataset ranges from the $786,720 received by the CEO of Entegra to the $16,699,999 received by the CEO of Investors Bancorp, with the median award represented by Meridian, whose CEO received $3,573,750. 4 Chart shows the average award per director. |
18 44. Despite the fact that the Directors carefully chose these “peers,” the $884,993 equity award received by Columbia Financial’s non-employee directors was 72.4% more than the median, while Kemly’s $6,974,998 award was 95.17% more than the median. The Conversion Grants appear strangely outsized, then, based on the median of the Directors’ preferred peer group. However, because the Company’s non-employee directors rank 5th, and Kemly 4th, among the Conversion Peer Group, the Directors sought to create the appearance that their Conversion Grants were within at least some range of reasonableness merely based on the fact that awards at a handful of other banks were even larger. As explained below, this tactic falls apart when it becomes apparent that the Conversion Peer Group is comprised largely of outliers. The Directors Cherry-Picked the Conversion Peer Group 45. As an initial matter, despite the representation in the 2020 Proxy that converted mutual holding companies grant “larger” equity awards than the typical public bank, the reality is that, for the vast majority of converted banks, these special grants are not that large after all. For example, in Laidlaw v. Beneficial Bancorp, Inc., (Cir. Ct. Balt.e City, Md. 2018) (the “Beneficial Action”), a stockholder derivative action challenging the conversion awards granted by Beneficial (one of the companies in the Conversion Peer Group), the Amended Complaint included a list of 72 companies that had recently undergone a mutual-to-stock conversion. |
19 Among these 72 companies, the median award for non-employee directors was just $87,884 and the average award was $210,343. Forty of these 72 companies (55.55%) awarded their non-employee directors an average grant of less than $100,000, and an additional 19 (26.39%) awarded between $100,000 and $300,000 per director. Only nine of the 72 companies (including Clifton, Blue Hills, Northfield, First Cnct, Oritani, and Investors Bancorp, all selected by the Directors to join their Conversion Peer Group) awarded over $488,000, with just two (Oritani and Investors Bancorp) over $850,000. (Kearny and HarborOne, which had not yet made awards, would soon join the top of this list, and were also included in the Conversion Peer Group.) 46. Similarly, with respect to CEO awards, the median was just $512,320 and the average was $1,213,189. Exactly half (36) of the 72 companies awarded less than $500,000 to the CEO, 15 awarded between $500,001 and $1,000,000, and another ten awarded between $1,000,001 and $2,000,000. Only 11 companies awarded their CEO more than $2 million (including HomeTrust, Clifton, First Cnct, Meridian, Northfield, Blue Hills, Oritani, and Investors Bancorp, all Conversion Peer Group companies), with just two (Oritani and Investors Bancorp) over $5 million. 47. As another comparator, McLagan advised the Compensation Committee to favor companies that had, like Columbia Financial, undergone an MHC, i.e., a partial conversion, and to favor more recent conversions over older |
20 ones. The following two charts show the grant date fair value of the post-conversion awards to non-employee directors and CEOs at all nine companies that underwent an MHC conversion between January 1, 2015 and late 20185: Name6 N E D s 7 Name CEO Columbia Financial $884,993 Columbia Financial $6,974,998 HarborOne $530,752 HarborOne $4,419,639 PDL $411,038 PDL $2,055,363 Provident $145,995 Provident $1,362,476 Community $130,473 FFBW $617,403 FFBW $82,255 Community $544,580 Cincinnati Bancorp $29,518 Cincinnati Bancorp $111,636 SSB $23,738 SSB $109,611 Seneca $10,080 Seneca $12,600 48. Looking at this more representative sample, the extent to which Columbia Financial’s Directors chose to enrich themselves becomes much more apparent: the average award issued to non-employee directors at these other companies was $170,481 and for the CEOs the average award was $1,154,164. 5 See https://www.spglobal.com/marketintelligence/en/news-insights/latest-news- headlines/46746373. 6 The names of the following banks are abbreviated in the chart: SSB Bancorp, Inc. (“SSB”), Seneca Financial Corp. (“Seneca”), FFBW, Inc. (“FFBW”), PDL Community Bancorp (“PDL”), and Community First Bancshares, Inc. (“Community”). 7 Chart shows the average award per director. |
21 49. Thus, the Conversion Peer Group was not the representative sample of the “larger” equity awards granted by all converted banks that it purported to be. Instead, the Conversion Peer Group was a carefully-constructed assembly of the Directors’ now fellow outliers who collectively represent a fringe slice of a market practice that otherwise predominantly involves modestly sized post-conversion equity awards. 50. As described further below, having been advised at the outset to select a peer group “carefully,” the Compensation Committee (with the Board’s approval) focused on the largest conversion awards issued at other banks, casting off other more representative companies whose directors had awarded themselves comparatively much less. 51. In other words, the Directors chose to pay themselves unfair awards that they knew were well above prevailing market practice, and to place themselves in the notorious company of other directors who likewise took advantage of their stockholders. As discussed below, the Directors were always intent on giving themselves outsized awards and they never changed course after embarking on a “10-step” process that began in October 2018. 52. On October 23, 2018, the Compensation Committee held a meeting, which Kemly joined (the “October Meeting”). Chris Gattuso of Kilpatrick Townsend (“KT”), the Company’s legal counsel, and Keshishian of GK Partners |
22 were also present. At this meeting, Gattuso made a presentation to the Compensation Committee which focused on the “Next Steps” necessary to accomplish the Conversion Grants (the “KT October 2018 Presentation”). The “Next Steps” comprised ten “Action Items,” which were carefully planned out with specific timelines. 53. First, the Board would hold an “education session” in November 2018. Second, in the first quarter of 2019, the Compensation Committee would meet and, with the help of a compensation consultant, authorize the preparation of terms and conditions for a new equity incentive plan (i.e., the Incentive Plan). In steps three through five outside counsel would prepare the initial term sheet for the Incentive Plan’s terms and conditions, followed by the Compensation Committee and the Board, respectively, approving those terms and conditions (scheduled for late March/early April). In step six, the Incentive Plan would be presented to the Company’s stockholders at the 2019 Annual Meeting, and following approval, an S- 8 would be filed with the SEC registering the shares reserved under the Incentive Plan (step seven). In step eight, the Compensation Committee would “meet to determine specific awards under Plan in consultation with its compensation consultant (this may involve one or more meetings of the Committee).” In step nine, the Compensation Committee would “make[] recommendations to the full Board as to equity awards for named executives and non-employee directors.” And finally, |
23 in step ten, the Board would “review[] Committee recommendations and following approval of the Board of such recommendations, awards are made to executives and non-employee directors.” 54. In November 2018, the Board held an “education session” in which a representative of KT made a presentation (the “KT November 2018 Presentation”), which included the 10 “Next Steps” that needed to be accomplished. The Board was specifically cautioned at this time that “following several court decisions, there is now a more onerous rule applied to board decisions on compensation matters,” namely, the “entire fairness” standard, and that there would be “difficulty” in getting a case dismissed under this standard. Accordingly, the Board would need to, among other things, pay “careful consideration of the peer group selected” before granting equity awards. 55. On December 17, 2018, the Compensation Committee convened its next meeting, which Kemly, Gattuso, and Keshishian joined (the “December Meeting”). At this time, the Compensation Committee interviewed McLagan to serve as the Compensation Committee’s special consultant for the Conversion Grant process. As described in the minutes of the December Meeting, Bryan Lemke (“Lemke”) of McLagan “introduce[d] his proposal to serve as a special committee in connection with the” Conversion Grant. If engaged, Lemke explained how McLagan “could assist in designing the [P]lan, and developing potential strategies |
24 for distributing equity awards to executives, directors, and other key officers.” As part of the engagement, McLagan would assist the Compensation Committee in developing a “peer group” of other recently converted organizations that had made post-conversion equity grants. 56. At the December Meeting, Lemke distributed a presentation titled “Conversion Peer Group,” dated December 14, 2018 (the “McLagan December 2018 Presentation”). The presentation identified 26 “Potential Peers,” including all 15 companies that eventually made the Conversion Peer Group, and was highlighted by the inclusion of conspicuous and ill-foreboding outliers such as Investors Bancorp, Oritani, Beneficial, and Kearny. The 26 “Potential Peers” included three companies that underwent MHC conversions, eight companies that underwent standard conversions, and another 15 companies that underwent second-step conversions. 57. At the conclusion of the December Meeting, the Compensation Committee agreed to retain McLagan. In a special Board meeting held that same day, the Board was apprised of McLagan’s retention. An official retainer letter was signed on December 21, 2018. 58. Of the 26 “Potential Peers,” McLagan advised the Compensation Committee to select between 18 and 23 of them for a final peer group (i.e., to remove anywhere between three and eight of the companies). The Compensation Committee |
25 ultimately removed 11 of the peers, and approved the remaining 15 at a meeting held on January 23, 2019 (the “January Meeting”). 59. With respect to the 11 companies removed from the working list, the following two charts show the value of the awards granted to the non-employee directors and CEOs at those companies following their respective conversions: Name NEDs8 Name CEO Territorial Bancorp $849,384 Territorial Bancorp $4,244,953 Waterstone Financial $715,000 Waterstone Financial $3,673,500 Charter Financial $266,469 Charter Financial $1,756,462 Northwest Bancshares $225,960 Rockville Financial $1,405,128 Rockville Financial $124,130 Northwest Bancshares $838,000 OmniAmerican Banc. $115,870 Capitol Federal Fin. $769,778 Viewpoint Financial $96,968 Viewpoint Financial $732,652 Capitol Federal Fin. $87,556 OmniAmerican Banc. $722,238 Fox Chase Bancorp $69,308 SI Financial $579,250 SI Financial $33,000 Fox Chase Bancorp $255,520 Cincinnati Bancorp $29,518 Cincinnati Bancorp $111,636 60. The Compensation Committee’s selection process is cherry-picking at its finest. First, out of the 26 companies, the Compensation Committee removed the companies with the seven lowest conversion awards to non-employee directors. These same seven removed companies also represented seven of the eight lowest awards granted to the CEO. By removing the lowest-paying companies, the Compensation Committee substantially raised the median and average awards of the 8 Chart shows the average award per director. |
26 final peer group. The removal of Capital Federal is perhaps the most striking example of the results-oriented selection process. Capital Federal was the second largest of the 26 “Potential Peers” at the time of its conversion, but the Compensation Committee was sure to exclude it on account of the modest size of its conversion awards ($87,556 for non-employee directors and $769,778 for the CEO). 61. Second, the Compensation Committee manufactured reasons to keep in the highest-paid peers. For example, McLagan recommended “more recent conversions” and “larger institutions at the time of their conversion.” Of the 11 removed peers, eight had conversions more recently than Oritani and three were larger than Oritani at the time of their conversion. But Oritani ($1,746,106 for its non-employee directors and $7.44 million for its CEO) and Northfield ($687,150 for its non-employee directors and $3.6 million for its CEO) were both kept in purportedly “due to their New Jersey location.” 62. Third, the inclusion of second-step conversions (Investors Bancorp, Oritani, Beneficial, Kearny, Northfield, Clifton, and Meridian) is highly questionable at best. Each of these companies had, years earlier, undergone an MHC conversion and received equity awards following that process. The Compensation Committee could have either used those awards as a comparator or not used those companies at all. Indeed, at the January Meeting, McLagan advised the Compensation Committee that preference should be “given to MHC conversions” |
27 over second-step conversions. And in fact, as described further below, McLagan’s initial proposed grant ranges utilized only MHC and standard conversions, only to be “refined” later following “additional conversations” with the Compensation Committee and the Board. In at least one presentation, McLagan even noted that “the Second Step peers likely granted equity following their MHC conversion as well.” But of course, leaving out second-step conversions was not an attractive option for the Directors, as these conversions included the four largest awards given in recent memory (Investors Bancorp, Oritani, Beneficial, and Kearny). 63. And fourth, with respect to two of the companies in the Conversion Peer Group, Beneficial, and Investors Bancorp, the directors agreed to rescind substantial portions of their conversion grants after being sued for breach of fiduciary duty. Remarkably, the Directors were aware of this when they included the Beneficial and Investors Bancorp awards in their Conversion Peer Group on an unadjusted basis. 64. In the Beneficial Action, each of the non-employee directors forfeited $300,000 of equity awards (with one non-employee director forfeiting $370,000), while each of the non-employee directors of Investors Bancorp forfeited $900,000 of equity awards, with the CEO forfeiting his entire award. Not only did the Compensation Committee include these companies as peers, but it also used the value of pre-forfeiture awards despite McLagan specifically informing them that it |
28 was “important to note that directors at Beneficial and Investors forfeited a portion of their awards as a result of shareholder litigation.” 65. In addition to the 26 “Potential Peers,” the McLagan December 2018 Presentation also included five additional companies (the “Additional Peers”) that had recently undergone an MHC conversion: SSB, Seneca, FFBW, PDL, and Community. These companies were recent MHC conversions, the preferred type of company to be included in the Conversion Peer Group. As of December 2018, these five companies had “not yet disclosed post-conversion awards due in part to the recent close of their conversions.” The following two charts show the value of the conversion awards ultimately made at these companies: Name NEDs Name CEO PDL $411,038 PDL $2,055,363 Community $130,473 FFBW $617,403 FFBW $82,255 Community $544,580 SSB $23,738 SSB $109,611 Seneca $10,080 Seneca $12,600 66. Following the Board’s approval of the Conversion Peer Group on January 23, 2019, exactly six months would pass before the Conversion Grant was made. By then, three of these companies (PDL, FFBW, and Community) had already made and disclosed (either in a proxy or in Form 4 filings) their respective conversion awards. The data was therefore readily available to the Directors. As |
29 shown above, these companies issued very modest awards (with even PDL issuing relatively modest awards compared to the Conversion Grant). But inclusion of this data set would ruin the Defendants’ perfectly-constructed sample of outliers. And so, none of the Additional Peers were added to the Conversion Peer Group. 67. Indeed, likely recognizing that the Conversion Peer Group was improperly constructed, McLagan conspicuously sought to distance itself from the Directors’ decisions. Following the selection of the Conversion Peer Group, McLagan’s presentations (described further below) opened with the following disclaimer: Peer data is provided as context, but it should not dictate grant strategy. Alignment with peer conversion grant practices is not a matter of market compensation competitiveness. In addition, while large grants have been common following conversions in the past, they stand out compared to general market equity grant practices and are increasingly scrutinized. (the “Disclaimer”). The Board Designs the Incentive Plan to Accommodate the Conversion Grants 68. After approving the Conversion Peer Group, the Compensation Committee moved to Step 2: designing the Incentive Plan, including the size of the share reserve. On March 5, 2019, the Compensation Committee convened a meeting, which Kemly, Lemke, and Gattuso joined (the “March 5 Compensation Committee Meeting”). As described in the minutes of the March 5 Compensation |
30 Committee Meeting, to aid the Compensation Committee in deciding how many shares to reserve in the Incentive Plan Lemke was asked to “provide[] the [Compensation] Committee with initial broad, estimated equity grant ranges in order to determine the size of the share pool authorization for the equity plan, based on equity plans adopted by recently converted institutions.” This is a remarkably backwards approach. While directors typically conform awards to an equity plan, here the Directors were working the other way around – designing the Incentive Plan to ensure that it could accommodate their anticipated Conversion Grants. 69. In response to this request, at the March 5 Compensation Committee Meeting, Lemke provided a presentation, dated March 1, 2019, titled “Post- Conversion Equity Grants – Potential Range Estimates” (the “McLagan March 1 Presentation”). According to this presentation, McLagan was still “currently conducting market research” based on the Conversion Peer Group that had recently been approved, but had been asked to “provide initial broad, estimated equity grant ranges in order to frame expectations for the planning process.” Based on “preliminary research” that focused on MHC and standard conversions, McLagan estimated a grant range of $350,000 to $750,000 for non-employee directors and $6 million for the CEO. As described in the minutes of the March 5 Compensation Committee Meeting, Lemke stated that these numbers were “solely to assist the Committee in designing the plan and that recommendations on proposed grant |
31 ranges will be refined and presented at a later date and the estimate provided could very well change based upon a number of factors.” As further stated in the McLagan March 1 Presentation, McLagan would “deliver formal grant recommendations following a review of market information, qualitative factors, and additional conversations with Columbia Bank.” 70. Also at the March 5 Compensation Committee Meeting, Gattuso made a presentation highlighting the “standard terms and conditions” of the proposed equity plan, which included a discussion titled “Proposed Equity Incentive Plan: Discussion of Terms and Conditions” (the “KT March 5 Presentation”). Following a discussion of the “standard terms and conditions,” the Compensation Committee “agreed to authorize the preparation of a draft term sheet for the proposed plan for consideration by the [Compensation] Committee at its next meeting,” (the “Term Sheet”) with various “open items” (including the aggregate share reserve) to be filled in later. 71. In addition to determining the aggregate share reserve under the Incentive Plan, the KT March 5 Presentation indicated that the “open items” included the “Treatment of Non-Employee Director Award[s].” 72. In December 2017, the Delaware Supreme Court held in In re Investors Bancorp, Inc. S'holder Litig., 177 A.3d 1208 (Del. 2017) that director self- compensation decisions are subject to entire fairness review (as opposed to the |
32 director-friendly business judgment rule standard) unless (a) stockholders specifically approve the compensation in question or (b) the compensation resulted from the operation of a self-executing stockholder-approved plan (one in which the directors have no discretion over their compensation) (the “Investors Bancorp Decision”). Prior to the Investors Bancorp Decision, directors could receive business judgment rule protection for their awards if the awards were issued under an equity incentive plan with “meaningful limits” on the size of awards. At the March 5 Compensation Committee Meeting, KT advised that the Compensation Committee would need to decide what type of director limit to put in the Incentive Plan. 73. On March 25, 2019, the Compensation Committee convened a meeting, which Kemly, Lemke, Gattuso, and Keshishian also joined (the “March 25 Compensation Committee Meeting”). At this meeting, Lemke made a presentation, dated March 22, 2019, titled “Post-Conversion Equity Grants – Market Practice Summary & Analysis” (the “McLagan March 22 Presentation”). KT also presented the draft Term Sheet outlining the Incentive Plan’s terms and conditions, subject to the remaining “open items,” including the aggregate share reserve, where the Compensation Committee was considering two numbers: 7,949,997 and 7,463,262. 74. As explained in the Overview of its March 22 Presentation, McLagan had “conducted market research based on an approved peer group” and compiled |
33 “both summary data as well as detailed peer-by-peer views of conversion grants.” McLagan’s March 22 Presentation included the Disclaimer followed by a table, titled “Grant Date Fair Value – Total Equity,” which laid out the grant date fair value of the conversion awards at each Conversion Peer Group. 75. As described in the minutes of the March 25 Compensation Committee Meeting, Lemke “presented the [Compensation] Committee with a report that contained summary data as well as detailed peer-by-peer review of conversion grants in an effort to have an understanding of past market practices surrounding actual award values, number of shares, percentage of approved pool granted, and other quantitative market-based parameters.” The report “detailed a full summary of market information along with an analysis of relevant peers’ grant methodologies.” 76. With this information in hand, the Compensation Committee was able to finish designing the Incentive Plan (i.e. Step 2). As further stated in the minutes of the March 25 Compensation Committee Meeting, “this presentation was for purposes of allowing the Committee to address the open issues on design of the plan…” Following the March 25 Compensation Committee Meeting and a further Compensation Committee meeting on April 2, 2019 (the “April 2 Compensation Committee Meeting”), all of the “open items” were resolved. Among other things, the Compensation Committee determined to use the 7,949,997 aggregate share reserve (later reduced by a share to 7,949,996) and include a $1.2 million annual |
34 limit on the amount of cash and equity that could be awarded to a non-employee director. 77. At the conclusion of the April 2 Compensation Committee Meeting, the Committee approved the Term Sheet as modified (completing Step 3), and agreed to recommend the Term Sheet to the Board for approval (completing Step 4). The Compensation Committee “further approved and directed [KT] to prepare the draft of the [Plan], consistent with the approved Term Sheet.” 78. Following the April 2 Compensation Committee Meeting, the Board convened a meeting with Lemke, Gattuso, and Keshishian also in attendance (the “April 2 Board Meeting”). As described in the minutes, the purpose of the April 2 Board Meeting was to serve as an “education session for the Board to understand the terms and elements of the proposed plan and be ready to consider the adoption of the [Incentive Plan] at the April 16, 2019 meeting.” Gattuso reviewed, among other things, the “standard terms and conditions of the proposed plan,” and “presented the Board with an overview of the plan process to date and the various meetings held by the Compensation Committee in reviewing and developing the peer group and the terms of the proposed [Incentive Plan].” 79. At the same meeting, Lemke presented a report, dated April 1, 2019, titled “Post-Conversion Equity Grants – Pool Modeling and Market Data Summary” and prefaced with the Disclaimer (the “April 1 McLagan Presentation”). The April |
35 1 McLagan Presentation included, among other things, a list of the Conversion Peer Group and a summary of the value of the awards issued by those peers in connection with their respective conversions. 80. As further described in the minutes of the April 2 Board Meeting, Lemke reviewed with the Board, among other things, “the peer gr oup that was approved by the Compensation Committee…and [the] value of awards made by the peer group companies following their conversion transactions.” 81. On April 16, the Board adopted resolutions approving the Incentive Plan and its presentation to stockholders for approval at the 2019 Annual Meeting (Step 5 was completed). The Board Procures Stockholder Approval of the Incentive Plan . . . Based on a False and Misleading Proxy 82. On April 22, 2019, the Company filed its 2019 Proxy, which sought stockholder approval of the Incentive Plan in Proposal 2. 83. As stated in Proposal 2, prior to the MHC Conversion, the Company was unable to issue equity-based compensation because all of the Company’s common stock was held by the MHC. As of April 16, 2019, the Company had 651 employees (including executive officers) and non-employee directors. 84. As discussed above, in the first quarter of 2019 the Compensation Committee specifically designed the terms of the Incentive Plan to accommodate the |
36 large awards the Directors contemplated for themselves, having even asked McLagan to provide them with potential grant ranges so that plan capacity would not be an issue. Moreover, by the time the Board adopted the Incentive Plan on April 16, 2019, the Directors had finished their market research and reviewed “detailed peer-by-peer views of conversion grants.” 85. But the 2019 Proxy told stockholders exactly nothing about the anticipated Conversion Grants and the Board’s substantially advanced process of issuing those awards, instead leading stockholders to believe that the Incentive Plan had been designed as a routine equity compensation plan for the Company’s over 650 employees and directors. This could not have been further from the truth. 86. Indeed, on June 7, 2019, one day after the Incentive Plan was approved by stockholders, the Compensation Committee Chairman specifically noted that “given the detailed materials that have been reviewed by the [Compensation] Committee to date and the discussions held in past meetings,” the Directors were ready to formulate grant recommendations. 87. In asking stockholders to approve the vehicle that the Directors would use to engage in a $13 million self-dealing transaction, the Board indicated that the shares reserved under the Incentive Plan would be used for a variety of vaguely beneficial purposes, including to ensure the Company’s “continued future success,” which “depends in part on [its] ability to attract, motivate and retain the talented and |
37 highly qualified employees and non-employee directors necessary for [the Company’s] continued growth and success.” 88. The 2019 Proxy further stated that the Company’s “ability to offer equity-based compensation” was “an important step in [the Company’s] ability to compete for talent within [its] marketplace.” Most of the Company’s competitors offer equity-based compensation to their employees and non-employee directors, the 2019 Proxy noted, and if the Incentive Plan was not approved, the Company would be “at a significant disadvantage as compared to [its] competitors to attract and retain [its] executives as well as directors,” which “could affect [the Company’s] ability to achieve [its] business plan growth and goals.” 89. The 2019 Proxy further stated that the ability to issue equity-based compensation would enable the Company’s “employees, officers and non-employee directors…upon whose judgment, initiative and efforts Columbia Financial has depended and continues to largely depend for the successful conduct of its business, to acquire an ownership stake in Columbia Financial, thereby stimulating their efforts on behalf of Columbia Financial and strengthening their desire to remain with Columbia Financial.” 90. In this way, the Incentive Plan would help “foster[] a pay-for- performance culture” because equity-based compensation would “motivate[] employees to create stockholder value because the value employees realize from |
38 equity-based compensation is based on Columbia Financial’s stock price performance.” Equity-based compensation would also “align[] the compensation interests of [the Company’s] employees with the investment interests of [the Company’s] stockholders and promote[] a focus on long-term value creation because Columbia Financial’s equity-based compensation awards can be subject to vesting and/or performance criteria.” On the other hand, if the Incentive Plan was not approved, the 2019 Proxy warned that the Company would “have to rely entirely on the cash component of its employee compensation program to attract new employees and to retain [its] existing employees, which may not necessarily align employee compensation interests with the investment interests of Columbia Financial stockholders as well as the alignment achieved by equity-based awards.” 91. As described in detail above, however, the Incentive Plan had another purpose, one that was paramount to the Directors and yet not disclosed to stockholders: namely, to fund the upcoming Conversion Grants. Indeed, the Directors had previously identified stockholder approval of the Incentive Plan as Step 6 in a 10 Step process that would culminate with the Conversion Grants, and the Directors specifically designed the Incentive Plan to accommodate the Conversion Grants. None of this was disclosed, however. 92. Instead, as detailed above, the Board touted the Incentive Plan’s abstract beneficial purposes (such as its importance in attracting, motivating, and |
39 retaining employees, in saving cash, and in promoting a pay-for-performance culture). Certainly, in determining whether to vote in favor or against the Incentive Plan, stockholders would find it important to know that the shares – indeed over 20% of them, as it turned out – were earmarked for the Conversion Grants, which was a specifically intended use for the Incentive Plan and the type of transaction that the Compensation Committee’s own advisor described as one that “stand[s] out compared to general market equity grant practices” and that is “increasingly scrutinized.” 93. As described above, many of the Incentive Plan’s most important features (including the aggregate share reserve of 7,949,996 and the $1.2 million annual limit on director compensation) were specifically designed with the Conversion Grants in mind. In Proposal 2, however, the 2019 Proxy disclosed only that the Board had considered a “number of factors” in selecting 7,949,996 as the aggregate share reserve, but made no mention whatsoever of the upcoming Conversion Grants. And instead of disclosing that the $1.2 million annual director limit was intended to accommodate the contemplated “large” conversion grants, the 2019 Proxy described this provision as somehow an “equity compensation plan best practice[].” 94. By the time the 2019 Proxy was filed, the Compensation Committee had selected the Conversion Peer Group and examined the value of the awards that |
40 each of those companies issued following their respective conversions. As described below, these facts were not disclosed until the 2020 Proxy, nine months after the Conversion Grants were made. But stockholders would have found these facts much more useful had they been prese nted in the relevant decision-making context, namely whether to approve the Incentive Plan. 95. Given the advanced stage of the Conversion Grant process, it was highly misleading for the Board to conceal all of its detailed planning and timelines and hide behind the disclosure that “the benefits and amounts that will be received or allocated under the 2019 Equity Plan are not determinable at this time.” 96. The 2019 Proxy’s lack of disclosure is all the more egregious given the Board’s disclosure of other very specific anticipated uses of the Incentive Plan’s shares. As disclosed in Proposal 2, “[i]f the 2019 Equity Plan is approved, it is anticipated that one-half of the cash awards granted to executives for the 2018 – 2021 performance period under Columbia Financial’s existing [LTIP] will be replaced with equity awards and that all of the [LTIP] cash awards granted for the 2019 – 2022 performance period will be replaced with equity awards.” In fact, at the April 2 Compensation Committee Meeting, the Compensation Committee was informed that this anticipated use would be included in the 2019 Proxy. Disclosure of the anticipated Conversion Grants apparently was not deemed important. |
41 97. Likewise, the 2019 Proxy disclosed that in “connection with the hiring of our Executive Vice President, Head of Consumer Banking, Columbia Financial agreed that, in the event the Company received stockholder approval of the [Plan], the executive would receive $125,000 of Full Value Awards as part of her compensation package with Columbia Financial.” Yet, again, nothing about the roughly $13 million in anticipated Conversion Grants was disclosed. 98. The Conversion Grant process continued to develop after the 2019 Proxy was filed but before the 2019 Annual Meeting. No update was provided to stockholders. 99. Specifically, on May 20, 2019, still 17 days before the 2019 Annual Meeting, the Compensation Committee convened a meeting (the “May 20 Compensation Committee Meeting”). All four Compensation Committee members attended, as did Kemly, Lemke, Gattuso, and Keshishian. At the May 20 Compensation Committee Meeting, Lemke presented a report, dated May 17, 2019, titled “Post-Conversion Equity Grants – Preliminary Straw Models” (the “May McLagan Presentation”). According to the minutes of the May 20 Compensation Committee Meeting, the purpose of the meeting and the May McLagan Presentation was to facilitate discussion of “initial proposed grant strategies for executives and directors,” focused on “award structure, rather than award values.” At the meeting, the non-employee directors discussed awarding themselves a “‘larger’ conversion |
42 grant in 2019” that would be comprised of restricted stock (60% weight) and stock options (40% weight). With respect to awards for executives, including Kemly, the Compensation Committee discussed an allocation of 60% restricted stock (½ of which is time-vested, ½ of which is performance-vested) and 40% stock options. 100. At the May 20 Compensation Committee Meeting, a “Tentative Meeting Schedule” (the “Meeting Schedule”) was also passed around that specifically mapped out the remaining process, including the dates and times of seven meetings that would begin the day after the 2019 Annual Meeting. As disclosed in the Meeting Schedule, on June 7, 2019, the Compensation Committee planned to meet to discuss the equity grant to Kemly. The Compensation Committee scheduled meetings for June 24-25 to discuss awards to non-employee directors and others. Another Compensation Committee meeting was scheduled for July 9 to discuss any potential adjustments followed by a presentation to the full Board on July 9. This was to be followed by a final review of the Compensation Committee scheduled for July 22, and approval by the Board scheduled for July 23, 2019. 101. On May 28, 2019, nine days before the 2019 Annual Meeting, the Board convened a special meeting, where Holland reported to the Board that the Compensation Committee had met on May 20th to “review preliminary information on how the [Incentive Plan] would be implemented, if approved.” |
43 102. Despite these developments, the 2019 Proxy was never updated to include material information regarding the upcoming Conversion Grants. 103. Putting aside this failure to update stockholders prior to the 2019 Annual Meeting, based on their extensive planning and preparation, the Directors knew they would be ready to issue the Conversion Grants as soon as stockholders approved the Incentive Plan. Indeed, at the June 7, 2019 meeting held one day after the Incentive Plan was approved and described further below, Holland noted that the “significant time spent in reviewing and discussing the materials provided by the compensation consultants over these past few months” had positioned the Directors to make the “large grants” purportedly made by other “recently converted institutions.” 104. On June 6, 2019, the Company’s stockholders voted to approve the Incentive Plan based on the false and misleading 2019 Proxy. 105. Because the vote to approve the Incentive Plan was uninformed and based on a false and misleading 2019 Proxy, the vote should be deemed ineffective and the Incentive Plan, and all awards granted thereunder, should be invalidated. As Planned, the Directors Issue Their Outsized Conversion Grants 106. Following the Incentive Plan’s approval, the Directors engaged in another series of meetings culminating in the formal approval of the Conversion Grants. Most of these meetings appear to have been held on a pro forma basis to |
44 create the appearance of distance between stockholder approval of the Incentive Plan and the Conversion Grants. Indeed, as described above, the post-Annual Meeting schedule had been set well in advance and came with instructions for ensuring the appearance of deliberation. In reality, with the peer data driving their decision- making process having been prepared and reviewed during the prior months, the Directors were focused merely on further papering the record. 107. On June 7, 2019, the Compensation Committee convened a meeting, attended by Lemke and Gattuso to discuss Kemly’s Conversion Grant (the “June 7 Compensation Committee Meeting”). As described in the minutes, this meeting began with an “update” from Chairman Holland who “discussed . . . that there has been significant time spent in reviewing and discussing the materials provided by the compensation consultants over these past few months as to the various types of awards under the Plan, the manner in which peer group institutions made awards under plans adopted following a conversion transaction (including the methodology and vesting periods) and the practices of such recently converted institutions to make large grants shortly after the adoption of equity plans by such institutions in the Company’s peer group following a conversion transaction, which awards tend to be reflective of both past and future services (emphasis added).” 108. Accordingly, Holland “noted that given the detailed materials that have been reviewed by the [Compensation] Committee to date and the discussions held |
45 in past meetings, he would like to be in a position following Lemke’s presentation for the [Compensation] Committee to formulate its initial recommendation on the equity awards for the CEO today.” 109. Holland also reminded the Compensation Committee that the discussion would be centered around the assumption that 60% of Kemly’s equity award would be in the form of restricted stock (half with time-vesting and half with- performance vesting). 110. As Holland effectively acknowledged, the substantive analysis and discussions regarding the Conversion Grants had occurred several months earlier, and thus just one day after the 2019 Annual Meeting the Compensation Committee was ready to determine Kemly’s award. 111. After Holland spoke, Lemke presented a report, dated June 7, 2019, titled “Potential CEO Awards” (the “June 7 McLagan Presentation”), which referenced “potential CEO grant amounts” that ranged from $5.44 million to $7.79 million. Thus, consistent with prior discussions, a “large grant” was a given, and the only thing left to decide was just how large Kemly’s award would be. 112. After reviewing and discussing the “peer group data,” the Compensation Committee “preliminarily determined that a multiple of 9x [Kemly’s $775,000] salary,” or $6,975,000, “would be reasonable and appropriate for the CEO |
46 award.” This multiple was less than the “median total CEO grant as a multiple of salary within the second step peer group,” which was purportedly 10.05%. 113. More specifically, the following chart (based on data included in the McLagan March 22 Presentation) shows the award that each CEO in the second step peer group received as a multiple of their salary at the time: Name Salary Value of Award Multiple of Salary Investors Bancorp $1,000,000 $16,699,999 16.70 Oritani $592,088 $7,435,698 12.56 Kearny $450,000 $5,439,680 12.09 Beneficial $675,154 $6,787,740 10.05 (median) Northfield $676,000 $3,599,150 5.32 Meridian $675,000 $3,573,750 5.29 Clifton $650,000 $2,389,338 3.68 114. This further evidences the extent to which the Compensation Committee was cherry-picking its peer group. As an initial matter, using a multiple of salary to measure a “reasonable” conversion grant is illogical and arbitrary at best. For example, earlier that year, Kemly received a $30,000 salary raise; without that raise, a conversion award based on a 9x salary multiple would automatically be $270,000 less. At the same time, had the peer CEOs received higher salaries, which would lower their salary multiples, Kemly presumably would “deserve” a smaller award. Using salary multiples was simply a convenient way for the Board to manufacture a comparison that put Kemly’s award below the median. In other |
47 words, it was a contrived means for the Directors to show they were being “reasonable.” 115. But the true purpose of further narrowing the Conversion Peer Group to these particular companies, and focusing on the median award, is obvious. In so doing, only four companies had become relevant to how much Kemly would be paid: Investors Bancorp, Oritani, Beneficial, and Kearny – the four extreme outliers in a true sample size comprised of dozens and dozens of modest conversion awards awarded in the past decade. 116. In order to further prolong the process for the sake of appearances, at the conclusion of the June 7 Compensation Committee Meeting, the Compensation Committee determined to “make its final decision on the CEO multiple following its meeting with Mr. Keshishian to review the CEO’s overall compensation again, in light of the Committee’s preliminary determination.” 117. On June 24, 2019, the Compensation Committee convened a meeting, which Lemke, Gattuso, and Keshishian joined (the “June 24 Compensation Committee Meeting”), and discussed the awards for the non-employee directors. 118. At the June 24 Compensation Committee Meeting, Lemke presented a report, dated June 21, 2019, titled “Potential Director Awards” (the “June 21 McLagan Presentation”), which referenced “potential total director grant amounts per director.” The range started at $536,785 and ended at $1,288,358. In other |
48 words, consistent with prior discussions and as was the case with Kemly in the prior meeting, it was clear the non-employee directors’ awards were going to be large and the only question was just how large they would be. 119. The Compensation Committee reached a “preliminary recommendation” of awarding directors “equity equal to approximately 9 times cash compensation, which would result in a grant value of approximately $966,000.” This 9x multiple was purportedly less than “the peer group median [of] 10.35x cash compensation.” But as with Kemly, this multiplier exercise was a contrivance specifically designed to place the non-employee directors on the same list – but “below” the median – of outliers who had paid themselves outsized awards. 120. Holland asked that the Compensation Committee “think about this preliminary recommendation, taking into account the purposes of the [Plan] and recent shareholder litigation involving non-employee director compensation and that the discussion would be continued tomorrow.” 121. As described in the minutes of the June 24 Compensation Committee Meeting: The [Compensation] Committee discussed that one of the purposes of the Plan is to enable the Company to retain and reward the best available persons for positions of substantial responsibility and to recognize significant contributions made by such individuals to the Company’s success and that in considering larger grants to non- employee directors, the contributions made by the Board, who all have served more than 15 years on the Board of Directors of the Company, |
49 is a factor as is the desire to continue to have such individuals to continue to contribute in the future, particularly as the Company is in its early stages of being a public company. 122. Of course, that the Conversion Grant purportedly satisfied one of the Incentive Plan’s “purposes” is backwards – the Directors crafted that Incentive Plan with the Conversion Grants in mind. In any event, during the eight months since their process began, there is no evidence in any of the meeting minutes that the Directors ever discussed their “significant contributions” or the Company’s “purported desire to have such individuals continue to contribute in the future.” The Directors were engaged merely in a window dressing exercise at this point. 123. On June 24, 2019, the Board convened a special meeting, where Holland reported that the Compensation Committee had decided on a “potential award amount” for the CEO and that it “was still in process of considering awards for Directors and would continue the discussion at its next meeting.” 124. On June 25, 2019, the Compensation Committee convened a meeting, which Lemke, Gattuso, and Keshishian attended, and effectively engaged in a repeat discussion of its meeting the day before (the “June 25 Compensation Committee Meeting”). After Holland noted, again, that “litigation is a possibility,” Gattuso “reminded the [Compensation] Committee that one of the purposes of the [Plan] is to enable Columbia to reward eligible participants who have provided important contributions to the Company and the Bank and to recognize significant |
50 contributions made by such individuals to the Company’s success, which is designed to recognize both past and future service.” 125. After “further discussion,” the Compensation Committee determined to “recommend a grant award to non-employee directors that would be equal to 8.25x average director compensation, totaling approximately $885,000.” 126. On July 9, 2019, at 8:30 a.m., the Compensation Committee convened a meeting, which Lemke, Gattuso, and Keshishian attended (the “July 9 Compensation Committee Meeting”), and Keshishian presented the 2019 Compensation Review that was referenced at the June 7 Compensation Committee Meeting. After this presentation, no changes to Kemly’s $6,975,000 award recommendation were made. 127. On July 9, 2019, at 12:45 p.m., the Board convened a special meeting, attended by Lemke, Gattuso, and Keshishian (the “July 9 Board Meeting”). At the July 9 Board Meeting, Holland informed the Board that the Compensation Committee was “recommending to the Board” that Kemly be granted an award valued at $6,975,000 and that the Compensation Committee would “meet one more time to finalize its recommendation and the Board will be asked to vote on the final recommendation at its July 23rd Board meeting.” 128. With respect to the awards to the non-employee directors, Holland “advised the Board that after significant discussion and review of peer group |
51 practices, overall director compensation and the status of litigation involving non- employee director compensation, the Committee has preliminarily determined to recommend that equity awards” valued at $885,000 be granted to each of the non- employee directors. 129. On July 22, 2019, the Compensation Committee convened another meeting (the “July 22 Compensation Committee Meeting”), and after more “discussion,” officially approved the Conversion Grants, as well as the underlying award agreements (the “Award Agreements”), and recommended that the Board do the same. On July 23, 2019, the Board met and adopted resolutions approving the Conversion Grants. The Board’s Disclosure of the Conversion Grants Is Misleading 130. The Board did not immediately disclose the details of the Conversion Grants, waiting instead nearly nine months to do so, when disclosure was required by SEC rules and could therefore no longer be avoided. 131. On April 10, 2020, the Company filed its 2020 Proxy in connection with the 2020 Annual Meeting. In the 2020 Proxy, SEC rules required the Company to disclose the executive compensation and non-employee director compensation decisions made by the Board during the Company’s 2019 fiscal year. Among other things, SEC rules required the Company to disclose tables showing the grant date fair value of the awards received by named executive officers and non-employee |
52 directors during the fiscal 2019 year. As a result, the extremely large amounts of compensation the Directors approved for themselves would became apparent and the Directors accordingly sought to rationalize their decision. 132. According to the 2020 Proxy, “equity awards made following a [mutual-to-stock conversion] are larger than typical annual equity grants by other public financial institutions,” and McLagan “assisted the Compensation Committee in developing a comparative peer group for reference in designing the [Plan] and for making equity awards under that plan.” As further explained in the 2020 Proxy, McLagan “examined the grant practices of other converted institutions to assist the Committee in establishing parameters regarding competitive practices, regulatory considerations and shareholder responses.” McLagan also “developed a list of institutions that converted since 2009 that included mutual holding company conversions, regardless of asset size, and second-step conversions and standard conversions with assets greater than $900 million.” This list was “presented to the Compensation Committee along with McLagan’s recommendation of 15 converted institutions to form the peer group, and after review and discussion the [Compensation] Committee approved the recommended peer group.” The 2020 Proxy then listed the 15 companies that formed the Conversion Peer Group. 133. As an initial matter, this lengthy and detailed disclosure is perhaps most notable for where it did not appear: in the 2019 Proxy. Everything described in the |
53 above paragraph had already happened by the time the 2019 Proxy was filed. If this information was important to know after the fact, it was even more important for stockholders to know before they voted on the Incentive Plan. But of course, these disclosures were not made in the 2019 Proxy because had stockholders known about the upcoming Conversion Grants, they may have expressed their displeasure and rejected the Incentive Plan. 134. In terms of the Directors’ attempt to rationalize their indulgence, in describing the Conversion Grants, the 2020 Proxy states that the “Compensation Committee intends the 2019 equity awards to cover a multi-year period, as reflected through the multi-year vesting periods of the grants.” This representation is false. 135. In fact, the Compensation Committee considered, but refused, to designate the Conversion Grants as multi-year awards. At the June 24 Compensation Committee Meeting, Chairman Holland “asked the [Compensation] Committee to consider whether [the Conversion Grants] could represent the total awarded over the next 3-5 years to non-employee directors.” At the June 24 Compensation Committee Meeting, the Compensation Committee concluded only that the Conversion Grants “could represent the total awarded to the director over the next 3-5 years.” Neither the resolutions adopted by the Compensation Committee or the Board, nor the Awards Agreements, designate the Conversion Grants as multi-year awards. That the Board would misleadingly characterize the |
54 Conversion Grants as a “multi-year” award in the 2020 Proxy is dishonest and further evidence of the Directors’ wrongdoing. 136. Moreover, even if the Conversion Grants were “multi-year” awards, they remain excessive and unfair. As described above, in the 2019 Compensation Review, GK found that the Company’s 20 peer banks paid their non-employee directors an average of $122,761 per director, with only two companies even topping $200,000. The Board’s average annual non-employee director compensation was $122,160 in 2018 and $139,297 in 2019, which the Board determined to be fair. If the “multi-year” awards are spread over five years, this would add an additional $177,000 in compensation for each non-employee director in each year from 2019- 2023. Thus, instead of a one-time unfair award of $885,000, the non-employee directors would instead receive five consecutive unfair annual compensation packages of approximately $300,000 per year. 137. In describing the rationale for the Conversion Grants, the 2020 Proxy stated: In determining the amount of restricted stock and option awards non- employee directors would receive, the Compensation Committee considered the Board of Directors’ role in setting the strategic direction for the Company and its role in completing the Company’s initial public stock offering in 2018. The Compensation Committee also considered the directors’ past contributions, their industry knowledge, their financial expertise and the role they would play in the Company’s future. The Compensation Committee also reviewed survey data regarding awards made to directors of the peer group companies |
55 following a conversion transaction…, bank regulatory guidelines for equity awards to non-employee directors following an initial public offering by a company in the mutual holding company structure, and the Company’s stock ownership requirement for non-employee directors. With respect to the award to Kemly, the 2020 Proxy stated: In 2019, we made awards under the 2019 Equity Incentive Plan to each of our NEOs taking into account a number of factors, including individual and corporate performance, tenure with the organization and future potential to impact our organization. In addition, we considered the fact that our executive team had never previously had the ability to participate in organizational value growth through equity ownership, as well as our shareholders’ expectations of significant equity ownership for executives. We also considered common industry practice for both the prevalence and magnitude of equity awards following a conversion transaction, with reference to the post-conversion peer group discussed above on page 29. 138. As described above, these explanations are unsupported by the actual record of the Board’s deliberations. Indeed, many of these factors were not discussed at all. Others were discussed at the end of the process, long after the decisions were made, an afterthought at best. Again, these dishonest disclosures highlight that the Board was aware that the size of their Conversion Grants could not legitimately be justified. The “survey data” is the one specific consideration that the Board did pay significant attention to, and as shown above, it illustrates only that the Directors were well aware that they were giving themselves outsized awards. |
56 DEMAND FUTILITY ALLEGATIONS 139. Plaintiff realleges each allegation contained above as if set forth herein. 140. Plaintiff brings this action derivatively on behalf of Columbia Financial to redress injuries suffered, and to be suffered, by the Company as a direct and proximate result of the Defendants’ misconduct. Columbia Financial is named as a nominal defendant solely in a derivative capacity. 141. Plaintiff has owned Columbia Financial stock continuously throughout the course of wrongful conduct and continues to hold Columbia Financial Stock. 142. Plaintiff will adequately and fairly represent the interests of Columbia Financial in enforcing and prosecuting its rights and has retained counsel with substantial experience in stockholder derivative litigation. 143. At the time of this filing there are nine directors on the Board: Czerwinski, Hallock, Holland, Kemly, Kuiken, Massood, Randall, Van Dyk, and Van Ostenbridge (the “Current Board”). Each member of the Current Board other than Van Ostenbridge (who joined the Board in November 2019) has been named as a defendant in this action. 144. Plaintiff did not make a demand on the Current Board prior to instituting this action because such a demand would be futile. 145. Each of Czerwinski, Hallock, Holland, Kemly, Kuiken, Massood, Randall, and Van Dyk, and therefore a majority of the Current Board, received |
57 Conversion Grants. Each of Czerwinski, Hallock, Holland, Kemly, Kuiken, Massood, Randall, and Van Dyk thus have a strong financial incentive to refuse to authorize any corrective action that would involve the rescission, cancellation, or disgorgement of the Conversion Grants. Accordingly, because each of Czerwinski, Hallock, Holland, Kemly, Kuiken, Massood, Randall, and Van Dyk are interested in the Conversion Grants, none of them would be able impartially to consider a demand. Demand is therefore excused. 146. Kemly’s portion of the Conversion Grants (or any recipient’s portion for that matter) cannot be separated for demand futility purposes. As described above, the Conversion Grants were, among other things, awarded under the same tainted process, based on the same set of faulty peers, approved at the same meeting, and effectively one transaction. Accordingly, no individual recipient of a portion of the Conversion Grants (e.g., Holland) will be able impartially to consider a demand seeking the rescission of another individual recipient’s portion of the Conversion Grants (e.g., Kemly), as any good faith attempt to do so would require them to question the fairness of their own portion of the same transaction. CLASS ACTION ALLEGATIONS 147. Pursuant to Rule 23 of the Rules of the Court of Chancery of the State of Delaware, Plaintiff brings this action on his own behalf and as a class action on behalf of those who held Columbia Financial stock at the close of business on April |
58 12, 2019, which was the record date for stockholders entitled to vote at the 2019 Annual Meeting, and who continue to hold shares through the present (the “Class”). The Defendants are excluded from the Class, as are the Defendants’ affiliates, immediate families, legal representatives, heirs, successors or assigns, and any entity in which the Defendants have or had a controlling interest. 148. The action is properly maintainable as a class action. 149. The Class is so numerous that joinder of all members is impracticable. The Company had 115,889,175 outstanding shares of common stock as of April 12, 2019. While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through discovery, upon information and belief, there are thousands of members in the Class. 150. Questions of law and fact are common to the Class, including the following: (i) whether the 2019 Proxy contained materially false and misleading statements, or omitted information necessary to render those statements not misleading; (ii) whether Plaintiff and other members of the Class have been or will be harmed by the wrongs complained of herein; and (iii) whether Plaintiff and the Class are entitled to injunctive relief as a result of Defendants’ wrongful conduct. |
59 151. Plaintiff is committed to prosecuting this action and has retained counsel experienced in litigation of this nature. Plaintiff’s claims are typical of the claims of other members of the Class and Plaintiff has the same interests as other members of the Class. Columbia Financial stockholders were forced to cast an uninformed vote as a result of the materially false and misleading 2019 Proxy. Accordingly, Plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. 152. The prosecution of separate actions by individuals members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class that would establish incompatible standards of conduct for Defendants, or adjudications with respect to individual members of the Class that would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair their ability to protect their interests. 153. Defendants have acted, and refused to act, on grounds that apply generally to the Class, and have caused injury to the Class, such that final injunctive or declaratory relief is appropriate on behalf of the Class as a whole. 154. The questions of law and fact common to the members of the Class predominate over any questions affecting only its individual members, such that a |
60 class action is superior to any other available method for fairly and efficiently adjudicating the controversy. COUNT I Breach of Fiduciary Duty (Derivative Claim Against the Defendants) 155. Plaintiff re-alleges each allegation contained above as if set forth herein. 156. As directors of the Company, each Defendant owed fiduciary duties to the Company and its stockholders. 157. The Conversion Grants, a conflicted transaction approved by self- interested Defendants, are subject to entire fairness review. Each Defendant breached his/her fiduciary duty of loyalty by granting and accepting the Conversion Grants in amounts that were excessive and unfair to the Company. Each Defendant breached his/her fiduciary duty of loyalty by failing to candidly and completely disclose material information concerning the Conversion Grants. Each Defendant is jointly and severally liable for the injury caused to the Company by the excessive and unfair Conversion Grants. 158. As a result of Defendants’ actions, the Company has been and will be damaged. 159. Plaintiff, on behalf of the Company, has no adequate remedy at law. |
61 COUNT II Unjust Enrichment (Derivative Claim Against the Defendants) 160. Plaintiff re-alleges each allegation contained above as if set forth herein. 161. Each Defendant received excessive and unfair financial benefits as a result of the Conversion Grants. 162. It would be unconscionable and against fundamental principles of justice and equity for Defendants to retain the benefits of the excessive and unfair Conversion Grants. 163. Plaintiff, on behalf of the Company, has no adequate remedy at law. COUNT IIII Breach of Fiduciary Duty (Individual and Class Claim against the Defendants) 164. Plaintiff re-alleges the allegations in paragraphs 1-138 and 147-154 contained above as if set forth herein. 165. The Defendants owe fiduciary duties to the Company’s stockholders, including the duty to speak truthfully when seeking stockholder action. 166. The Defendants breached their fiduciary duty by causing the Company to issue the 2019 Proxy, which the Defendants knew omitted material information and contained false and misleading representations in connection with the stockholders’ vote on the Incentive Plan. |
62 167. As a result, the vote on the Incentive Plan was not fully informed. The Incentive Plan, therefore, should be declared invalid and cancelled. 168. Plaintiff and the Class are being, and will continue to be, harmed. 169. Plaintiff and the Class have no adequate remedy at law. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests entry of an order as follows: A. Declaring this action to be a properly maintained class action and derivative action and certifying Plaintiff as the Class representative and his counsel as Class counsel; B. Rescinding, cancelling, and/or ordering disgorgement of the Conversion Grants, including all shares of Columbia Financial common stock issued thereunder; C. Declaring that Defendants breached their fiduciary duty to the Company’s stockholders; D. Declaring the stockholder vote on the Incentive Plan at the 2019 Annual Meeting ineffective; E. Invalidating the Incentive Plan and rescinding all awards and shares issued thereunder; F. Awarding damages (including without limitation compensatory and rescissory damages), against all Defendants in favor of the Company as a result of |
63 Defendants’ breaches of fiduciary duties, plus pre-judgment and post-judgment interest; G. Awarding Plaintiff the costs and disbursements of this action, including reasonable allowance of fees and costs for Plaintiff’s attorneys, experts, and accountants; and H. Granting Plaintiff such other and further relief as the Court may deem just and proper. Of Counsel: Steven J. Purcell Douglas E. Julie Robert H. Lefkowitz Kaitlyn T. Devenyns PURCELL JULIE & LEFKOWTIZ LLP 708 Third Avenue, Sixth Floor New York, New York 10017 212-725-1000 Dated: April 30, 2020 SMITH, KATZENSTEIN & JENKINS LLP /s/ Neal C. Belgam David A. Jenkins (No. 932) Neal C. Belgam (No. 2721) 1000 West Street, Suite 1501 Wilmington, Delaware 19801 (302) 652-8400 ncb@skjlaw.com Attorneys for Plaintiff FREDRIC D. PASCAL, derivatively on behalf of COLUMBIA FINANCIAL, INC., and individually on behalf of himself and all other similarly situated stockholders of COLUMBIA FINANCIAL, INC. |
C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS P.O.BOX 1342
BRENTWOOD, NY 11717
SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 19, 2021April 3, 2022 for shares held directly and by 11:59 p.m. Eastern Time on May 17, 2021April 2, 2022 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/CLBK2021
CLBK2022SM You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTEinstructions.VOTE BY PHONE - 1-800-690-6903
Use1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 19, 2021April 3, 2022 for shares held directly and by 11:59 p.m. Eastern Time on May 17, 2021April 2, 2022 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions.
VOTEinstructions.VOTE BY MAIL
Mark,MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D48818-P55269 KEEP THIS PORTION FOR YOUR RECORDS
THISRECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
COLUMBIA FINANCIAL, INC. For Withhold For All To withhold authority The BoardofDirectors recommends you vote FORproposals1,2 and 3.ForAgainst Abstain1.The ratification of the 2019 Equity Awards made to vote for any individual
Thecurrent non-employee Directors under the Columbia Financial, Inc. 2019 Equity Incentive Plan. 2.The ratification of the 2019 Equity Awards made to former non-employee Directors under the Columbia Financial, Inc. 2019 Equity Incentive Plan, who were incumbent directors at the time the awards were made, who are currently retired from the Board of Directors recommends you vote FOR All All Except nominee(s), mark "For All Except" and write the
number(s) of the nominee(s) onCompany, and have been in continuous service with the line below.
the following:
1. ElectionCompany as advisory directors since their retirements. 000000R1.0.0.241 _ 0000531355 3. Theratification of Directors
Nominees:
1) Noel R. Holland
2) Lucy Sorrentini
3) Robert Van Dyk
The Board of Directors recommends you vote FOR proposals 22019 Equity Awards made to Thomas J. Kemly, President and 3.For Against Abstain
2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2021.
3. To approve, on an advisory (non-binding) basis, the compensation of the Company's named executive officers.
NOTE: Chief Executive Officer, under000theColumbia Financial, Inc. 2019 Equity Incentive Plan.NOTE: To transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting.
Pleasemeeting.Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
officer.Signature [PLEASE SIGN WITHIN BOX] Date Signature [PLEASE SIG
The Notice and Proxy Statement and Annual Report areis available at www.proxyvote.com.
D48819-P55269
COLUMBIAwww.proxyvote.comCOLUMBIA FINANCIAL, INC.
AnnualINC.Special Meeting of Shareholders
May 20, 2021ShareholdersApril 4, 2022 10:00 AM
ThisAMThis proxy is solicited by the Board of Directors
TheDirectorsThe shareholder(s) hereby appoint(s) Mayra L. Rinaldi and Dennis E. Gibney, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of COLUMBIA FINANCIAL, INC. that the shareholder(s) is/are entitled to vote at the AnnualSpecial Meeting of Shareholders to be held at 10:00 AM, local time on May 20, 2021,April 4, 2022, exclusively via live webcast at www.virtualshareholdermeeting.com/CLBK2021,CLBK2022SM, and any adjournment or postponement thereof.
Thisthereof.This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations.
Continuedrecommendations.R1.0.0.242 _ 0000531355Continued and to be signed on reverse side