UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
PennFed Financial Services, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
________________________________________________________________________________
September 25, 2000
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of PennFed Financial
Services, Inc., we cordially invite you to attend the Annual Meeting of
Stockholders of the Company. The Meeting will be held at 10:00 a.m., local time,
on Wednesday, October 25, 2000, at the Radisson Hotel, located at 690 Route 46
East, Fairfield, New Jersey.
An important aspect of the annual meeting process is the annual stockholder
vote on corporate business items. I urge you to exercise your rights as a
stockholder to vote and participate in this process. Stockholders are being
asked to consider and vote upon (i) the election of two directors of the Company
and (ii) the ratification of the appointment of the Company's auditors. In
addition, the Meeting will include management's report to you on the Company's
2000 financial and operating performance.
We encourage you to attend the Meeting in person. Whether or not you plan
to attend, however, please read the enclosed proxy statement and then complete,
sign and date the enclosed proxy and return it in the accompanying postpaid
return envelope as promptly as possible. This will save the Company additional
expense in soliciting proxies and will ensure that your shares are represented
at the Meeting.
Your Board of Directors and management are committed to the continued
success of PennFed Financial Services, Inc., and the enhancement of your
investment. As President, I want to express my appreciation for your confidence
and support.
Very truly yours,
Joseph L. LaMonica
President and Chief
Executive Officer
PENNFED FINANCIAL SERVICES, INC.
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
(973) 669-7366
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 25, 2000
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of PennFed Financial Services, Inc. (the "Company") will be held at
the Radisson Hotel, located at 690 Route 46 East, Fairfield, New Jersey, at
10:00 a.m., local time, on Wednesday, October 25, 2000.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of Deloitte & Touche LLP as
auditors for the Company for the fiscal year ending June 30,
2001;
and such other matters as may properly come before the Meeting, or any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
September 8, 2000 are the stockholders entitled to vote at the Meeting and any
adjournments or postponements thereof. A complete list of stockholders entitled
to vote at the Meeting will be available for stockholders at the offices of the
Company during the ten days prior to the Meeting, as well as at the Meeting.
You are requested to complete and sign the enclosed Proxy Card which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you attend and vote at the
Meeting in person.
By Order of the Board of Directors
William C. Anderson
Chairman of the Board
West Orange, New Jersey
September 25, 2000
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
PENNFED FINANCIAL SERVICES, INC.
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
(973) 669-7366
ANNUAL MEETING OF STOCKHOLDERS
October 25, 2000
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of PennFed Financial Services, Inc. (the
"Company") of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting") which will be held at the Radisson Hotel, located at 690
Route 46 East, Fairfield, New Jersey, on Wednesday, October 25, 2000, at 10:00
a.m., local time, and all adjournments or postponements of the Meeting. The
accompanying Notice of Annual Meeting and form of proxy and this Proxy Statement
are first being mailed to stockholders on or about September 25, 2000. Certain
of the information provided in this Proxy Statement relates to Penn Federal
Savings Bank ("Penn Federal" or the "Bank"), a wholly owned subsidiary of the
Company.
At the Meeting, stockholders of the Company are being asked to consider and
vote upon (i) the election of two directors of the Company and (ii) the
ratification of the appointment of Deloitte & Touche LLP as the Company's
auditors for the fiscal year ending June 30, 2001.
Vote Required and Proxy Information
All shares of the Company's common stock represented at the Meeting by
properly executed proxies received prior to or at the Meeting and not revoked,
will be voted at the Meeting in accordance with the instructions thereon. If no
instructions are indicated, properly executed proxies will be voted for the
nominees named in this Proxy Statement and for the ratification of the
appointment of Deloitte & Touche LLP. The Company does not know of any matters,
other than as described in the Notice of Annual Meeting of Stockholders, that
are to come before the Meeting. If any other matters are properly presented at
the Meeting for action, the Board of Directors, as proxy for the stockholder,
will have the discretion to vote on such matters in accordance with its best
judgment.
Directors will be elected by a plurality of the votes cast. The
ratification of the appointment of Deloitte & Touche LLP as the Company's
auditors requires the affirmative vote of a majority of the votes cast on the
matter. In the election of directors, stockholders may either vote "FOR" both
nominees for election or withhold their votes from either nominee or both
nominees for election. Votes that are withheld and shares held by a broker, as
nominee, that are not voted (so-called "broker non-votes") in the election of
directors will not be included in determining the number of votes cast. For the
proposal to ratify the appointment of the independent auditors, stockholders may
vote "FOR," "AGAINST" or "ABSTAIN" with respect to this proposal. Proxies marked
to abstain will have the same effect as votes against the proposal, and broker
non-votes will have no effect on the proposal. The holders of at least one-third
of the outstanding shares of the common stock, present in person or represented
by proxy, will constitute a quorum for purposes of the Meeting. Proxies marked
to abstain and broker non-votes will be counted for purposes of determining a
quorum.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Patrick D.
McTernan, Secretary, PennFed Financial Services, Inc., 622 Eagle Rock Avenue,
West Orange, New Jersey 07052-2989.
1
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on September 8, 2000
will be entitled to one vote for each share then held. As of that date, the
Company had 8,122,313 shares of common stock issued and outstanding. The
following table sets forth, as of September 8, 2000, information regarding share
ownership of: (i) those persons or entities known by management to beneficially
own more than five percent of the common stock; (ii) each of the executive
officers of the Company and the Bank who do not beneficially own more than five
percent of the common stock but who are named in the "Summary Compensation
Table" below; and (iii) all directors and executive officers of the Company and
the Bank as a group. For information regarding the beneficial ownership of
common stock by directors of the Company, see "Proposal I. Election of
Directors--General."
Shares Percent
Beneficially of
Beneficial Owner Owned Class
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PennFed Financial Services, Inc. 919,053(1) 11.32%
Employee Stock Ownership Plan
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
Tontine Partners, L.P.
Tontine Financial Partners, L.P. 800,600(2) 9.86%
Tontine Management, L.L.C.
Tontine Overseas Associates, L.L.C.
Jeffrey L. Gendell
200 Park Avenue
Suite 3900
New York, New York 10166
John Hancock Mutual Life Insurance Company and
John Hancock Subsidiaries, Inc. 611,000(3) 7.52%
P.O. Box 111
Boston, Massachusetts 02117
and
The Berkeley Financial Group and
John Hancock Advisors, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Dimensional Fund Advisors 516,300(4) 6.36%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
William C. Anderson 445,061(5) 5.28%
Chairman of the Board of Directors
Joseph L. LaMonica 522,417(6) 6.15%
President and Chief
Executive Officer
Patrick D. McTernan 221,001(6) 2.67%
Senior Executive Vice President,
General Counsel and Secretary
Lucy T. Tinker 237,651(6) 2.87%
Senior Executive Vice President
and Chief Operating Officer
Jeffrey J. Carfora 75,913(6) 0.93%
Executive Vice President and
Chief Financial Officer
2
Shares Percent
Beneficially of
Beneficial Owner Owned Class
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Barbara A. Flannery 74,321(6) 0.91%
Executive Vice President and
Retail Banking Group Executive of the Bank
Directors and executive officers 1,961,730(7) 20.85%
of the Company and the Bank
as a group (10 persons)
footnotes follow
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(1) The amount reported represents shares held by the PennFed Financial
Services, Inc. Employee Stock Ownership Plan (the "ESOP"), 454,957 of which
have been allocated to accounts of participants. First Bankers Trust
Company, Quincy, Illinois, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to the accounts of participants. Pursuant to the terms of the ESOP,
participants in the ESOP have the right to direct the voting of shares
allocated to participant accounts. Unallocated shares are voted by the
trustee in the same proportion that the allocated shares are voted pursuant
to participant instructions.
(2) As reported by Tontine Partners, L.P. ("TP"), Tontine Financial Partners,
L.P. ("TF"), Tontine Management, L.L.C. ("TM"), Tontine Overseas
Associates, L.L.C. ("TO") and Jeffrey L. Gendell on a Schedule 13G filed
with the Securities and Exchange Commission (the "SEC") on March 8, 2000.
TM is general partner of TF and TP and Mr. Gendell serves as the managing
member of TM and TO. With respect to the 800,600 shares listed, TP reported
shared voting and dispositive powers over 28,500 shares, TF reported shared
voting and dispositive powers over 424,600 shares, TM reported shared
voting and dispositive powers over 453,100 shares, TO reported shared
voting and dispositive powers over 347,500 shares and Mr. Gendell reported
shared voting and dispositive powers over all 800,600 shares.
(3) As reported by John Hancock Mutual Life Insurance Company ("JHMLIC"),
JHMLIC's wholly-owned subsidiary, John Hancock Subsidiaries, Inc. ("JHSI"),
JHSI's wholly-owned subsidiary, The Berkeley Financial Group ("TBFG"), and
TBFG's wholly-owned subsidiary, John Hancock Advisers, Inc., ("JHA") in
Amendment No. 4 to a Schedule 13G filed with the SEC on January 20, 1999.
JHMLIC, JHSI, and TBFG reported indirect beneficial ownership of these
shares. JHA reported sole voting and dispositive powers as to all of such
shares.
(4) As reported by Dimensional Fund Advisors ("Dimensional") in a Schedule 13G
filed with the SEC on February 3, 2000. Dimensional reported sole voting
and dispositive powers over all shares listed.
(5) Includes 313,230 shares which Mr. Anderson has the right to acquire
pursuant to stock options that are currently exercisable.
(6) Includes shares held directly, shares allocated to the accounts of the
officers under the ESOP, as well as shares held jointly with family
members, in retirement accounts, in a fiduciary capacity, by certain
members of the officers' families, by trusts of which the officer is a
trustee or substantial beneficiary, with respect to which the officer may
be deemed to have sole or shared voting and/or dispositive powers. Also
includes 367,750, 141,784, 164,434, 47,834 and 47,834 shares which Mr.
LaMonica, Mr. McTernan, Ms. Tinker, Mr. Carfora and Ms. Flannery,
respectively, have the right to acquire pursuant to stock options that are
currently exercisable.
(7) This amount includes shares held directly, shares allocated to the accounts
of executive officers under the ESOP, as well as shares held jointly with
family members, in retirement accounts, in a fiduciary capacity, by certain
of the group members' families, by certain related entities or by trusts of
which the group member is a trustee or substantial beneficiary, with
respect to which shares the group member may be deemed to have sole or
shared voting and/or dispositive powers. This amount also includes an
aggregate of 1,286,066 shares which directors and executive officers as a
group have the right to acquire pursuant to stock options that are
currently exercisable, and excludes 12,160 shares of which Mario Teixeira,
Jr., a director of the Company, disclaims beneficial ownership.
3
PROPOSAL I. ELECTION OF DIRECTORS
General
The Company's Board of Directors consists of six members, each of whom is
also a director of the Bank. Each of the current directors of the Company has
served in such capacity since its incorporation in March 1994. The Board is
divided into three classes, each of which contains one-third of the Board.
One-third of the directors are elected annually. Directors of the Company are
generally elected to serve for three-year terms or until their respective
successors are elected and qualified.
The following table sets forth certain information, as of September 8,
2000, regarding the composition of the Company's Board of Directors, including
each director's term of office. The Board of Directors acting as the nominating
committee has recommended and approved the nominees identified in the following
table. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to a nominee)
will be voted at the Meeting FOR the election of the nominees identified below.
If a nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute nominee as the Board of
Directors may recommend. At this time, the Board of Directors knows of no reason
why either nominee may be unable to serve, if elected. Except as disclosed in
this Proxy Statement, there are no arrangements or understandings between the
nominee and any other person pursuant to which the nominee was selected.
Shares of
Common Stock Percent
Position(s) Held Director Term to Beneficially of
Name Age in the Company Since(1) Expire Owned(2) Class
- ------------------------------- ----- ---------------- -------- -------- --------- ------
NOMINEES
Joseph L. LaMonica 50 Director, President and 1987 2003 522,417 6.15%
Chief Executive Officer
Mario Teixeira, Jr. 64 Director 1971 2003 174,936(3) 2.14%
DIRECTORS CONTINUING IN OFFICE
William C. Anderson 52 Chairman of the Board 1979 2001 445,061 5.28%
Amadeu L. Carvalho 71 Director 1990 2001 113,362 1.38%
Patrick D. McTernan 48 Director, Senior 1989 2002 221,001 2.67%
Executive Vice
President, General
Counsel and Secretary
Marvin D. Schoonover 50 Director 1990 2002 90,653 1.11%
(1) Includes service as a director of the Bank prior to the formation of the
Company.
(2) Amounts include shares held directly, as well as shares held jointly with
family members, in retirement accounts, in a fiduciary capacity, by certain
members of the director's family, held by certain related entities or held
by trusts of which the director is a trustee or substantial beneficiary,
with respect to which shares the respective director may be deemed to have
sole or shared voting and/or dispositive powers. Amounts also include
367,750, 71,000, 313,230, 67,600, 141,874 and 59,600 shares which Messrs.
LaMonica, Teixeira, Anderson, Carvalho, McTernan and Schoonover,
respectively, have the right to acquire pursuant to stock options that are
currently exercisable. With respect to Messrs. LaMonica and McTernan,
amounts also include 15,665 shares which have been allocated to each of
their respective accounts under the ESOP.
(3) Amount excludes 12,160 shares of which Mr. Teixeira disclaims beneficial
ownership.
4
The principal occupation of each director of the Company and each of the
nominees for director is set forth below. All directors and nominees have held
their present principal occupation for at least five years unless otherwise
indicated.
Joseph L. LaMonica--Mr. LaMonica has been President and Chief Executive
Officer of the Company since its incorporation in March 1994, and of Penn
Federal since 1988. Mr. LaMonica has served Penn Federal in various capacities
since joining the Bank in 1980. He also is a member of the Board of Directors of
the Saint James Foundation, a philanthropic organization, and serves in an
advisory capacity to the Ironbound Ambulance Squad.
Mario Teixeira, Jr.--Mr. Teixeira has been a licensed funeral director
since 1961. He is owner and President of the Buyus Funeral Home in Newark and
owns the Bernauer Funeral Home and the Rucki Funeral Home, both located in
Newark, as well as the Shaw-Buyus Home for Services, located in Kearny, New
Jersey. In addition, Mr. Teixeira is a partner in BRSB Preneed Association, a
partnership specializing in funeral services.
William C. Anderson--Mr. Anderson has been Chairman of the Board of the
Company since its incorporation in March 1994. Mr. Anderson is also the Chairman
of the Board and President of John Young Company, Inc., a real estate agency
located in Caldwell, New Jersey.
Amadeu L. Carvalho--Mr. Carvalho, retired Controller of the Singer Company,
currently is in private accounting practice in Elizabeth, New Jersey. His
practice includes tax services and business and strategic planning for small and
medium size companies.
Patrick D. McTernan--Mr. McTernan has been Executive Vice President,
General Counsel and Secretary of the Company since its incorporation. He joined
Penn Federal in 1989 as Senior Vice President and General Counsel and was
promoted to Executive Vice President and General Counsel in 1992. He was named
Senior Executive Vice President in 1999. He also serves as corporate Secretary.
Prior to his employment with the Bank, he was a partner in the law firm of Adams
and McTernan located in South Orange, New Jersey. He is currently a member of
the Legal Committee of the New Jersey Savings League.
Marvin D. Schoonover--Mr. Schoonover is a Senior Account Executive with the
EMAR Group, Inc., an insurance agency located in Livingston, New Jersey, and is
responsible for the marketing, sales and servicing of commercial property and
casualty insurance. Mr. Schoonover first joined the EMAR Group, Inc. in 1980.
Mr. Schoonover also is a licensed real estate salesperson.
Meetings and Committees of the Board of Directors
Meetings and Committees of the Company. Meetings of the Company's Board of
Directors are generally held on a monthly basis. For the fiscal year ended June
30, 2000, the Board of Directors met 16 times. During fiscal 2000, no incumbent
director of the Company attended fewer than 75% of the aggregate of the total
number of Board meetings and the total number of meetings held by the committees
of the Board of Directors on which he served. The Board of Directors of the
Company has standing Executive and Audit Committees.
The Executive Committee is comprised of all members of the Board. The
Executive Committee meets on an as needed basis and exercises the power of the
Board of Directors between Board meetings, to the extent permitted by Delaware
law. This Committee did not meet during fiscal 2000.
The Audit Committee is comprised of Chairman Anderson (Chairman) and
Directors Carvalho and Teixeira. The Audit Committee reviews audit reports and
related matters to ensure compliance with regulatory and internal policies and
procedures. The Audit Committee met three times in fiscal 2000.
The entire Board of Directors acts as a nominating committee for selecting
nominees for election as directors. While the Board of Directors of the Company
will consider nominees recommended by stockholders, the Board has not actively
solicited such nominations. The Board of Directors met one time in fiscal 2000
in its capacity as a nominating committee.
5
Pursuant to the Company's bylaws, nominations for directors by stockholders
must be made in writing and delivered to the Secretary of the Company at least
60 days prior to the meeting date. If, however, less than 70 days' notice of the
date of the meeting is first given or made to stockholders by public notice or
mail, nominations must be received by the Company not later than the close of
business on the tenth day following the earlier of the day on which notice of
the date of the meeting was mailed or public announcement of the date of the
meeting was first made. In addition to meeting the applicable deadline,
nominations must be accompanied by certain information specified in the
Company's bylaws.
Meetings and Committees of the Bank. The Bank's Board of Directors
generally meets twice per month and may have additional special meetings upon
the written request of the Chairman of the Board, the President or at least
three directors. The Bank's Board of Directors met 24 times during the fiscal
year ended June 30, 2000. During fiscal 2000, no incumbent director of the Bank
attended fewer than 75% of the aggregate of the total number of Board meetings
and the total number of meetings held by the committees of the Board of
Directors on which he served. The Bank has standing Audit, Human Resources and
Compensation Committees, as well as other committees which meet periodically.
Set forth below is a description of certain committees of the Bank.
The Audit Committee is responsible for the oversight of the Bank's Internal
Audit Department and for the review of the Bank's annual audit report prepared
by the Bank's independent auditors. Only non-employee directors may serve on the
Audit Committee. The current members of the committee are Chairman Anderson
(Chairman) and Directors Carvalho and Teixeira. The Audit Committee met four
times during fiscal 2000.
The Bank's Human Resources Committee is responsible for the review and
approval of the numerous personnel policies of the Bank. This Committee
addresses, among other things, the Bank's benefit programs and plans and
affirmative action plan. The current members of the Human Resources Committee
are Directors Teixeira (Chairman), Schoonover and LaMonica. The Committee met
one time during fiscal 2000.
The Bank's Compensation Committee, which acts as the compensation committee
of the Company and the Bank, determines salary ranges and incentive
compensation. This Committee is also responsible for administering the Stock
Option and Incentive Plan and Management Recognition Plan (the "MRP"). The
current members of the Compensation Committee are Directors Carvalho (Chairman)
and Teixeira. This Committee met one time during the fiscal year ended June 30,
2000.
Director Compensation
The Company's directors are not paid fees for their service in such
capacity. Non-employee directors of the Bank were each paid a fee of $33,000 for
fiscal 2000 except for the Chairman who received $69,000. Each non- employee
director also received $400 for attendance at each meeting of the Board's
standing committees and $5,000 for the payment of an annual life insurance
premium. Chairman Anderson was awarded on July 27, 1999 an option to purchase
15,000 shares of Common Stock at an exercise price of $16.8125, with 20% of the
option vesting immediately, an additional 20% vesting on July 27, 2000, and the
remaining 60% vesting in equal increments on July 27, 2001, 2002 and 2003,
respectively. For information regarding stock options granted in the last fiscal
year to Director McTernan, see the table below captioned "Option Grants in Last
Fiscal Year."
6
Executive Compensation
The following table sets forth information regarding compensation paid to
the Company's Chief Executive Officer and to the four highest earning executive
officers of the Company and the Bank, each of whom earned a salary and bonus for
fiscal 2000 in excess of $100,000 (the "Named Officers").
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SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
----------------------------
Annual Compensation Awards
- -------------------------------------------------------------------------- ----------------------------
Restricted Securities
Stock Underlying All Other
Salary Bonus Award(s) Options Compensation
Name and Principal Position Year ($) ($) ($) (#) ($)(1)
- -------------------------------- ---------- ---------- ---------------- ------------ ----------- -----------------
Joseph L. LaMonica, 2000 $349,378 $ --- --- --- $60,182
President and Chief 1999 328,922 --- --- --- 62,260
Executive Officer 1998 290,004 --- --- 100,000(2) 62,391
Patrick D. McTernan, 2000 $194,250 $ --- --- 3,084(3) $49,106
Senior Executive Vice President, 1999 190,977 --- --- --- 52,540
General Counsel and Secretary 1998 183,762 --- --- 24,000(2) 54,143
Lucy T. Tinker, 2000 $194,250 $ --- --- 2,584(3) $56,127
Senior Executive Vice President 1999 190,977 --- --- --- 59,103
Chief Operating Officer 1998 185,000 --- --- 25,000(2) 60,424
Jeffrey J. Carfora, 2000 $120,000 $ --- --- 3,084(3) $31,868
Executive Vice President and 1999 116,461 --- --- --- 40,952
Chief Financial Officer 1998 110,000 --- --- 15,000(2) 43,529
Barbara A. Flannery 2000 $120,000 $ --- --- 3,084(3) $31,798
Executive Vice President 1999 116,461 --- --- --- 40,398
and Retail Banking Group 1998 110,000 --- --- 15,000(2) 43,540
Executive of the Bank
(1) Includes imputed income under the group term life insurance plan, income
attributable under whole-life insurance policy, employer contributions to
Penn Federal's 401(k) Plan and ESOP allocations, respectively, for fiscal
2000, 1999, and 1998 as follows: Mr. LaMonica - 2000: $2,165, $18,358,
$2,650, and $37,009; 1999: $2,854, $15,109, $2,800 and $41,497; and 1998:
$2,854, $12,014, $2,496 and $45,027; Mr. McTernan - 2000:$1,188, $8,409,
$2,500, and $37,009; 1999: $1,566, $6,915, $2,562 and $41,497; and 1998:
$1,581, $5,495, $2,040 and $45,027; Ms. Tinker - 2000: $3,575, $14,030,
$1,513 and $37,009; 1999: $4,545, $11,629, $1,432 and $41,497; and 1998:
$4,545, $9,326, $1,526 and $45,027; Mr. Carfora - 2000: $502, $0, $2,492,
and $28,874; 1999: $571, $0, $2,329 and $38,052; and 1998: $370, $0, $1,883
and $41,276; and Ms. Flannery - 2000: $502, $0, $1,869, and $29,427; 1999:
$573, $0, $1,747 and $38,078; and 1998: $552, $0, $1,650 and $41,338.
(2) Adjusted for the two-for-one stock split in the form of a 100% stock
dividend paid on the Company's common stock on February 10, 1998 (the
"Stock Split").
(3) For information regarding this award, see the table below captioned "Option
Grants in Last Fiscal Year."
7
The following table sets forth certain information concerning stock options
granted to the Named Officers in fiscal 2000. No stock appreciation rights were
granted to the Named Officers during fiscal 2000.
- ----------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term(2)
- ----------------------------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options Exercise
Options Granted to or Base
Granted Employees Price Expiration
Name (#)(1) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ------------------------ -------------- ---------------- ------------- ------------- -------------- ------------
Joseph L. LaMonica --- --- $ --- --- $ --- $ ---
- ------------------------ -------------- ---------------- ------------- ------------- -------------- ------------
Patrick D. McTernan 3,084 4.15 $16.8125 07/27/09 $ 32,608 $ 82,635
- ------------------------ -------------- ---------------- ------------- ------------- -------------- ------------
Lucy T. Tinker 2,584 3.48 $16.8125 07/27/09 $ 27,321 $ 69,238
- ------------------------ -------------- ---------------- ------------- ------------- -------------- ------------
Jeffrey J. Carfora 3,084 4.15 $16.8125 07/27/09 $ 32,608 $ 82,635
- ------------------------ -------------- ---------------- ------------- ------------- -------------- ------------
Barbara A. Flannery 3,084 4.15 $16.8125 07/27/09 $ 32,608 $ 82,635
- ----------------------------------------------------------------------------------------------------------------------
(1) Option vested immediately upon grant.
(2) Each option has a term of ten years, commencing on July 27, 1999 and
expiring on July 27, 2009.
The following table sets forth certain information concerning stock option
exercises during the last fiscal year and the number and value of stock options
held by the Named Officers as of June 30, 2000.
- -----------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- -----------------------------------------------------------------------------------------------------------------------
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options
on Value Options at FY-End (#)(1) FY-End ($)(2)
Exercise Realized ------------------------------------------------------------
Name (#)(1) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- -------- -------- ----------- ------------- ----------- -------------
Joseph L. LaMonica --- --- 367,750 --- $ 2,376,281 ---
Patrick D. McTernan 10,000 $77,500 (3) 141,784 --- $ 1,017,963 ---
Lucy T. Tinker --- --- 164,434 --- $ 1,214,544 ---
Jeffrey J. Carfora --- --- 47,834 --- $ 264,031 ---
Barbara A. Flannery --- --- 47,834 --- $ 264,031 ---
- -----------------------------------------------------------------------------------------------------------------------
(1) Adjusted for the Stock Split.
(2) Represents the aggregate market value (market price of the common stock
less the exercise price) of the in-the-money options based on the closing
price of the common stock on the Nasdaq National Market on June 30, 2000
($14.125). An option is in-the-money if the exercise price of the option is
less than the market value of the common stock.
(3) Represents the difference between the market value of the shares acquired
upon exercise at the time of exercise ($13.00 per share, the average of the
high and low per share prices of the common stock on the Nasdaq National
Market on the date of exercise) and the exercise price ($5.25 per share).
8
Employment Agreements
On July 14, 1994, the Bank entered into employment agreements with Messrs.
LaMonica and McTernan and Ms. Tinker, and on July 14, 1998, the Bank entered
into employment agreements with Mr. Carfora and Ms. Flannery. Each employment
agreement provides for an annual base salary in an amount not less than the
employee's salary as of the time the agreement was executed and an initial term
of three years. Each agreement provides for extensions of one year, in addition
to the then-remaining term under the agreement, on each anniversary of the
effective date of the agreement (i.e., each July 14), subject to a formal
performance evaluation performed by disinterested members of the Board of
Directors of the Bank. Each agreement provides for termination upon the
employee's death, for cause or in certain events specified by the regulations of
the Office of Thrift Supervision ("OTS"). Each employment agreement also is
terminable by the employee upon 90 days' notice to the Bank.
Each employment agreement provides for payment to the employee of the
greater of his or her salary for the remainder of the term of the agreement, or
299% of the employee's base compensation, in the event there is a "change in
control" of the Bank where employment terminates voluntarily or involuntarily in
connection with the change in control or within 12 months thereafter. This
termination payment is subject to reduction by the amount of all other
compensation to the employee deemed for purposes of the Internal Revenue Code of
1986 to be contingent on a "change in control," and may not exceed three times
the employee's average annual compensation over the most recent five year period
or be non-deductible by the Bank for federal income tax purposes. For purposes
of the employment agreements, a "change in control" is defined as any event
which would require the filing of an application for acquisition of control or
notice of change in control pursuant to 12 C.F.R. ss.ss. 574.3 or 574.4. Such
events are generally triggered prior to the acquisition of control of 10% of the
Company's common stock. Each agreement also guarantees participation in an
equitable manner in employee benefits applicable to executive personnel.
Based on his or her current salary, if Mr. LaMonica, Mr. McTernan, Ms.
Tinker, Mr. Carfora and Ms. Flannery had been terminated as of June 30, 2000,
under circumstances entitling him or her to severance pay as described above, he
or she would have been entitled to receive a lump sum cash payment of
approximately $1,483,725, $781,666, $778,715, $332,871 and $315,631,
respectively.
Certain Transactions
The Bank has followed a policy of granting loans to eligible directors,
officers, employees and members of their immediate families for the financing of
their personal residences and for consumer purposes. All loans by the Bank to
its senior officers and directors are subject to OTS regulations restricting
loans and other transactions with affiliated persons of the Bank. Under
applicable law, all loans or extensions of credit to executive officers and
directors must be made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
the general public and must not involve more than the normal risk of repayment
or present other unfavorable features. In this regard, all outstanding loans to
the Bank's directors and senior officers have been made in the ordinary course
of business and on the same terms, including collateral and interest rates, as
those prevailing at the time for comparable transactions and did not involve
more than the normal risk of collectibility.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Company's Board of Directors has
furnished the following report on executive compensation:
Penn Fed's Compensation Committee has responsibility for reviewing the
compensation policies and plans for the Company and its affiliates. The policies
and plans established are designed to enhance both short-term and long- term
operational performance of the Bank and to build stockholder value through
anticipated appreciation in the Company's common stock price.
One of the Committee's primary objectives is to develop and maintain
compensation plans which allow the Company to attract and retain quality
executives at competitive compensation levels and which enhance stockholder
value by aligning closely the financial interests of the Company's executives
with those of its stockholders. In determining compensation levels, plans and
adjustments, the Committee takes into account, among other things,
9
compensation reviews made by third parties each year. These studies primarily
compare the compensation of the Bank's officers to officers of other local
financial institutions.
With respect to Mr. LaMonica's base salary for the fiscal year ended June
30, 2000, the Committee took into account a comparison of salaries of chief
executive officers of local financial institutions and financial institutions
comparable in size to the Bank. Likewise, each executive officer's base salary
was determined utilizing financial institution compensation surveys. Mr.
LaMonica's base salary for fiscal year 2000 was increased by $20,000 from his
base salary for fiscal year 1999 because the Committee determined that Mr.
LaMonica was undercompensated when compared to chief executive officers of other
institutions with the same asset size as the Bank and because of the Company's
numerous achievements during fiscal 1999 attributable to the performance of Mr.
LaMonica.
The Bank and the Company have included stock option and restricted stock
awards as key elements in their total compensation package. Equity based
compensation provides a long-term alignment of interests and results achieved
for stockholders with the compensation rewards provided to executive officers by
providing those executives and others on whom the continued success of the
Company most depends with a proprietary interest in the Company. In fiscal 1995,
the Stock Option and Incentive Plan and the MRP were adopted, providing for the
grant of several types of equity-based awards, including stock option and
restricted stock awards. These plans were ratified by the Company's stockholders
in fiscal 1995, and an amendment to the Stock Option and Incentive Plan
increasing the number of shares available for issuance under the Stock Option
and Incentive Plan was approved by the Company's stockholders in fiscal 1998.
All of the Bank's executive officers have received awards pursuant to these
plans.
Through the compensation programs described above, a significant portion of
the Company's executive compensation is linked to corporate performance. The
Committee will continue to review all elements of compensation to ensure that
the compensation objectives and plans meet the Company's business objectives and
philosophy of linking executive compensation to stockholder interests of
corporate performance as discussed above.
In 1993, Congress amended the Internal Revenue Code of 1986 to add Section
162(m) to limit the corporate deduction for compensation paid to a corporation's
five most highly compensated officers to $1.0 million per executive per year,
with certain exemptions. The Committee carefully reviewed the impact of this
legislation on the cost of the Bank's current executive compensation plans.
Under the legislation and regulations adopted thereunder, it is not expected
that any portion of the Company's employee compensation will be non-deductible
in fiscal 2000 or in future years by reason of compensation paid in fiscal 2000.
The Committee intends to review the Company's executive compensation policies on
an ongoing basis, and propose appropriate modifications, if the Committee deems
them necessary, to these executive compensation plans with a view toward
implementing the Company's compensation policies in a manner that avoids or
minimizes any disallowance of tax deductions under Section 162(m).
The foregoing report is furnished by the Compensation Committee of the
Board of Directors:
Amadeu L. Carvalho, Chairman Mario Teixeira, Jr.
10
Stock Performance Presentation
The line graph below compares the cumulative total stockholder return on
the common stock to the cumulative total return of a broad index (all Nasdaq
U.S. Stocks) and a savings and loan industry index for the period June 30, 1995
through June 30, 2000.
PennFed Financial Services, Inc.
[PERFORMANCE GRAPH APPEARS HERE]
Index 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
- --------------------------------------------------------------------------------------------------
PennFed Financial Services, Inc. 100.00 122.76 217.79 267.07 256.72 232.84
NASDAQ - Total US* 100.00 128.39 156.14 205.58 296.03 437.27
SNL $1B-$5B Thrift Index 100.00 127.59 206.71 202.23 259.94 211.63
*Data Provided by CRSP
11
PROPOSAL II. RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Company's arrangement for Deloitte &
Touche LLP to be its auditors for the 2001 fiscal year, subject to the
ratification of the appointment by the Company's stockholders. A representative
of Deloitte & Touche LLP is expected to attend the Meeting to respond to
appropriate questions and will have an opportunity to make a statement if he or
she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 2001.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's next annual
meeting must be received by its Secretary at the administrative office of the
Company, located at 622 Eagle Rock Avenue, West Orange, New Jersey 07052-2989,
no later than May 28, 2001 to be eligible for inclusion in the Company's proxy
statement and form of proxy relating to the next annual meeting. Any such
proposal will be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended, and as with any stockholder
proposal (regardless of whether included in the Company's proxy materials), the
Company's certificate of incorporation and bylaws and Delaware law.
To be considered for presentation at the next annual meeting, but not for
inclusion in the Company's proxy statement and form of proxy for that meeting,
proposals must be received by the Company no later than August 26, 2001. If,
however, the date of the next annual meeting is before October 5, 2001 or after
December 24, 2001, proposals must instead be received by the Company by the
later of the 60th day before the date of the next annual meeting or the tenth
day following the day on which notice of the date of the next annual meeting is
mailed or public announcement of the date of the next annual meeting is first
made. If a stockholder proposal that is received by the Company after the
applicable deadline for presentation at the next annual meeting is raised at the
next annual meeting, the holders of the proxies for that meeting will have the
discretion to vote on the proposal in accordance with their best judgment and
discretion, without any discussion of the proposal in the Company's proxy
statement for the next annual meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons owning more than 10% of a registered class of the
Company's equity securities, to file periodic reports of ownership and changes
in ownership with the SEC and to provide the Company with copies of such
reports. Based solely upon information provided to the Company by the directors
and officers subject to Section 16(a), all Section 16(a) filing requirements
applicable to these persons were complied with during fiscal 2000.
12
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that the Board of Directors, as proxy for the stockholder, will act in
accordance with its best judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Company's common stock. In addition to
solicitation by mail, directors, officers and regular employees of the Company
and/or the Bank may solicit proxies personally or by telephone without
additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
William C. Anderson
Chairman of Board
West Orange, New Jersey
September 25, 2000
13
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
PENNFED FINANCIAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 25, 2000
The undersigned hereby appoints the Board of Directors of PennFed Financial
Services, Inc. (the "Company"), and its survivor, with full power of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held on Wednesday,
October 25, 2000 at the Radisson Hotel, located at 690 Route 46 East, Fairfield,
New Jersey, at 10:00 a.m., local time, and at any and all adjournments or
postponements thereof, as follows:
Please be sure to sign and date Date ______________________________________
this Proxy in the box below.
________________________________________________________________________________
Stockholder sign above Co-holder (if any) sign above
I. The election of the following directors for three-year terms:
For Withhold For All Except
[_] [_] [_]
JOSEPH L. LAMONICA MARIO TEIXEIRA, JR.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
________________________________________________________________________________
II. The ratification of the appointment of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending June 30, 2001.
For Against Abstain
[_] [_] [_]
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
The Board of Directors recommends a vote"FOR" the election of the nominees
named herein and"FOR" the ratification of the appointment of Deloitte & Touche
LLP.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE NOMINEES NAMED HEREIN AND FOR THE RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP. IF ANY OTHER BUSINESS IS PRESENTED
AT THE MEETING, THIS PROXY WILL BE VOTED AS DIRECTED BY THE BOARD OF DIRECTORS
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
= Detach above card, sign, date and mail in postage-paid envelope provided. =
PENNFED FINANCIAL SERVICES, INC.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This Proxy may be revoked at any time before it is voted by: (i) filing
with the Secretary of the Company at or before the Meeting a written notice of
revocation bearing a later date than this Proxy; (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Secretary
of the Company at or before the Meeting; or (iii) attending the Meeting and
voting in person (although attendance at the Meeting will not in and of itself
constitute revocation of this Proxy). If this Proxy is properly revoked as
described above, then the power of such attorneys and proxies shall be deemed
terminated and of no further force and effect.
The above signor(s) acknowledge(s) receipt from the Company, prior to the
execution of this Proxy, of a Notice of the Meeting, a Proxy Statement and the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000.
Please sign exactly as your name appears above on this card. When signing
as attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL
THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
- --------------------------------------------------------------------------------