SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 Under Rule
[_] Confidential, For Use of the 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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[_] 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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4) Date Filed:
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September 23, 2002
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 23, 2002, at the Fairfield Executive Inn, located at
216-234 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
2002 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,
/s/ Joseph L. LaMonica
-----------------------
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 23, 2002
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of PennFed Financial Services, Inc. (the "Company") will be held at
the Fairfield Executive Inn, located at 216-234 Route 46 East, Fairfield, New
Jersey, at 10:00 a.m., local time, on Wednesday, October 23, 2002.
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,
2003;
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 6, 2002 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
/s/ William C. Anderson
------------------------
William C. Anderson
Chairman of the Board
West Orange, New Jersey
September 23, 2002
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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 23, 2002
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 Fairfield Executive Inn,
located at 216-234 Route 46 East, Fairfield, New Jersey, on Wednesday, October
23, 2002, 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 23, 2002. 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, 2003.
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 6, 2002
will be entitled to one vote for each share then held. As of that date, the
Company had 7,321,678 shares of common stock issued and outstanding. The
following table sets forth, as of September 6, 2002, 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. 875,763(1) 11.96%
Employee Stock Ownership Plan
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
The Trust Company of New Jersey 629,391(2) 8.60%
35 Journal Square
Jersey City, New Jersey 07036
Tontine Partners, L.P. 595,700(3) 8.14%
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
Tontine Overseas Associates, L.L.C.
Jeffrey L. Gendell
200 Park Avenue
Suite 3900
New York, New York 10166
Dimensional Fund Advisors 556,900(4) 7.61%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
John Hancock Financial Services, Inc. 370,500(5) 5.06%
John Hancock Life Insurance Company and
John Hancock Subsidiaries LLC
P.O. Box 111
Boston, Massachusetts 02117
and
The Berkeley Financial Group and
John Hancock Advisors, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
William C. Anderson 407,381(6) 5.36%
Chairman of the Board of Directors
Joseph L. LaMonica 527,485(7) 6.87%
President and Chief
Executive Officer
Patrick D. McTernan 196,069(7) 2.64%
Senior Executive Vice President,
General Counsel and Secretary
Jeffrey J. Carfora 80,416(7) 1.09%
Senior Executive Vice President and
Chief Operating Officer
2
Shares Percent
Beneficially of
Beneficial Owner Owned Class
---------------- ----- -----
Claire M. Chadwick 24,027(7) 0.33%
Executive Vice President and
Chief Financial Officer
Barbara A. Flannery 78,482(7) 1.07%
Executive Vice President and
Retail Banking Group Executive of the Bank
Directors and executive officers 1,694,607(8) 20.32%
of the Company and the Bank
as a group (10 persons)
footnotes follow
______________
(1) The amount reported represents shares held by the PennFed Financial
Services, Inc. Employee Stock Ownership Plan (the "ESOP"), 627,048 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 The Trust Company of New Jersey ("Trust Co.") in an
amendment to a Schedule 13G filed with the Securities and Exchange
Commission (the "SEC") on February 14, 2002. Trust Co. reported sole voting
and dispositive powers over 628,391 shares and shared voting and
dispositive powers over 1,000 shares.
(3) 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 in an amendment to a
Schedule 13G filed with the SEC on January 31, 2002. TM is general partner
of TF and TP and Mr. Gendell serves as the managing member of TM and TO.
With respect to the 595,700 shares listed, TP reported shared voting and
dispositive powers over 80,840 shares, TF reported shared voting and
dispositive powers over 432,500 shares, TM reported shared voting and
dispositive powers over 513,340 shares, TO reported shared voting and
dispositive powers over 82,360 shares and Mr. Gendell reported shared
voting and dispositive powers over all 595,700 shares.
(4) As reported by Dimensional Fund Advisors ("Dimensional") in an amendment to
a Schedule 13G filed with the SEC on February 12, 2002. Dimensional
reported sole voting and dispositive powers over all shares listed.
(5) As reported by John Hancock Financial Services, Inc.("JHFS"), JHFS's
wholly-owned subsidiary, John Hancock Life Insurance Company ("JHLIC"),
JHLIC's wholly-owned subsidiary, John Hancock Subsidiaries, LLC ("JHS"),
JHS's wholly-owned subsidiary, The Berkeley Financial Group ("TBFG"), and
TBFG's wholly-owned subsidiary, John Hancock Advisers, Inc., ("JHA") in an
amendment to a Schedule 13G filed with the SEC on February 4, 2002. JHFS,
JHLIC, JHS, and TBFG reported indirect beneficial ownership of these
shares. JHA reported sole voting and dispositive powers as to all of such
shares.
(6) Includes 275,550 shares which Mr. Anderson has the right to acquire
pursuant to stock options that are currently exercisable.
(7) 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 352,721, 111,784, 47,834, 12,000 and 46,634 shares which Mr.
LaMonica, Mr. McTernan, Mr. Carfora, Ms. Chadwick and Ms. Flannery,
respectively, have the right to acquire pursuant to stock options that are
currently exercisable.
(8) 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 1,016,723 shares which directors and executive officers as a
group have the right to acquire pursuant to stock options that are
currently exercisable, and excludes 13,660 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 the Company's 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 6,
2002, 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
Patrick D. McTernan 50 Director, Senior 1989 2005 196,069 2.64%
Executive Vice
President, General
Counsel and Secretary
Marvin D. Schoonover 52 Director 1990 2005 76,824 1.04%
DIRECTORS CONTINUING IN OFFICE
Joseph L. LaMonica 52 Director, President and 1987 2003 527,485 6.87%
Chief Executive Officer
Mario Teixeira, Jr. 66 Director 1971 2003 173,716(3) 2.36%
William C. Anderson 54 Chairman of the Board 1979 2004 407,381 5.36%
Amadeu L. Carvalho 73 Director 1990 2004 114,607 1.55%
(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 directors' families, by certain related entities or 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 111,784,
39,600, 352,721, 53,000, 275,550 and 67,600 shares which Messrs. McTernan,
Schoonover, LaMonica, Teixeira, Anderson and Carvalho, respectively, have
the right to acquire pursuant to stock options that are currently
exercisable. With respect to Messrs. LaMonica and McTernan, amounts also
include 20,733 shares which have been allocated to each of their respective
accounts under the ESOP.
(3) Amount excludes 13,660 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.
Patrick D. McTernan--Mr. McTernan has been General Counsel and
Secretary of the Company since its incorporation. He joined Penn Federal in 1989
as Senior Vice President and General Counsel, was promoted to Executive Vice
President and General Counsel in 1992 and was named Senior Executive Vice
President in 1999.
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.
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 and serves as a director
to many charitable and philanthropic organizations.
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.
William C. Anderson--Mr. Anderson has been Chairman of the Board of the
Company since its incorporation in March 1994 and Chairman of the Board of Penn
Federal since 1988. 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.
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, 2002, the Board of Directors met 14 times. During fiscal 2002, 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 met two times during fiscal 2002.
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 and the members of the Audit Committee consult regularly with the
Company's independent auditors. The Audit Committee met two times in fiscal
2002. For additional information on the Company's Audit Committee, see "Audit
Committee Matters" below.
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 2002 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, 2002. During fiscal 2002, 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
five times during fiscal 2002.
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 2002.
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,
2002.
6
Audit Committee Matters
Audit Committee Report. The Audit Committee of the Company's Board of
Directors has issued the following report with respect to the audited financial
statements of the Company for the fiscal year ended June 30, 2002:
o The Audit Committee has reviewed and discussed with the Company's
management the Company's fiscal 2002 audited financial statements;
o The Audit Committee has discussed with the Company's independent
auditors (Deloitte & Touche LLP) the matters required to be
discussed by Statement on Auditing Standards No. 61;
o The Audit Committee has received the written disclosures and
letter from the independent auditors required by Independence
Standards Board No. 1 (which relates to the auditors' independence
from the Company) and has discussed with the auditors their
independence from the Company; and
o Based on the review and discussions referred to in the three items
above, the Audit Committee recommended to the Board of Directors
that the fiscal 2002 audited financial statements be included in
the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2002.
Submitted by the Audit Committee of the Company's Board of Directors:
William C. Anderson
Amadeu L. Carvalho
Mario Teixeira, Jr.
Independence of Members and Audit Committee Charter. Each of Messrs.
Anderson, Carvalho and Teixeira is "independent" under the definition of
independence contained in the National Association of Securities Dealers'
current listing standards for the Nasdaq Stock Market. The Company has adopted a
written charter for the audit committee. A copy of the charter was attached as
Appendix A to the Company's 2001 annual meeting proxy statement, which was filed
with the SEC on September 24, 2001.
Director Compensation
Each director of the Company is also a director of the Bank. For fiscal
2002, each non-employee director, other than the Chairman of the Board, was paid
a retainer of $33,000 for service on the Bank's Board of Directors and a
retainer of $2,000 for service on the Company's Board of Directors. For the
Chairman, these amounts were $69,000 and $6,000, respectively. During fiscal
2002, each non-employee director other than the Chairman also received a fee of
$500 for each meeting of the Bank's Board attended and $350 for each meeting of
the Company's Board attended. For the Chairman, these fees were $750 and $350,
respectively. In addition, during fiscal 2002, each non-employee director
received $400 for each Company Board committee meeting attended ($500 for the
chairman of each committee) and $5,000 for the payment of an annual life
insurance premium ($10,000 for the Chairman of the Board). Each director who is
employed by the Company (Messrs. LaMonica and McTernan) was paid a fee of $350
for each meeting of the Company's Board attended during fiscal 2002.
7
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 2002 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, 2002 $425,000 $125,000 --- --- $ 113,429
President and Chief 2001 366,894 --- --- --- 86,407
Executive Officer 2000 349,378 --- --- --- 60,182
Patrick D. McTernan, 2002 $205,000 $ 65,000 --- --- $ 94,340
Senior Executive Vice 2001 204,339 --- --- --- 73,240
President, General Counsel and 2000 194,250 --- --- 3,084 49,106
Secretary
Jeffrey J. Carfora, 2002 $171,250 $ 65,000 -- --- $ 75,867
Senior Executive Vice President 2001 126,846 --- --- --- 47,645
and Chief Operating Officer 2000 120,000 --- --- 3,084 31,868
Claire M. Chadwick, 2002 $106,298 $ 25,000 --- --- $ 53,156
Executive Vice President 2001 95,067 --- --- --- 35,152
and Chief Financial Officer 2000 92,500 --- --- 5,000 24,853
Barbara A. Flannery, 2002 $133,269 $ 22,500 --- --- $ 63,817
Executive Vice President 2001 126,846 --- --- --- 48,040
and Retail Banking Group 2000 120,000 --- --- 3,084 31,798
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 2002, 2001 and 2000, as follows: Mr. LaMonica
- 2002: $2,263, $25,328, $3,144 and $69,251; 2001: $2,263, $21,773,
$2,625 and $59,746; and 2000: $2,165, $18,358, $2,650 and $37,009; Mr.
McTernan - 2002: $810, $11,643, $3,064 and $69,251; 2001: $810,
$9,987, $2,697 and $59,746; and 2000: $1,188, $8,409, $2,500 and
$37,009; Mr. Carfora - 2002: $430, $0, $3,825 and $68,412; 2001: $372,
$0, $2,537 and $44,736; and 2000: $502, $0, $2,492 and $28,874; Ms.
Chadwick - 2002; $295, $0, $2,426 and $48,235; 2001: $274, $0, $1,901
and $32,977; and 2000: $231, $0, $1,850 and $22,772; and Ms. Flannery
- 2002: $612, $0, $2,224 and $60,981; 2001: $558, $0, $1,903 and
$45,579; and 2000: $502, $0, $1,869 and $29,427. For Messrs. LaMonica
and McTernan, amounts for 2002 also include: (i) the value of stock of
insurance company on whole-life insurance policy received in
connection with the insurance company's demutualization and initial
public offering of $7,743 for Mr. LaMonica and $3,872 for Mr.
McTernan; and (ii) fees for attending meetings of the Company's Board
of Directors totaling $4,900 for each of Messrs. LaMonica and McTernan
and meetings of the Executive Committee of the Company's Board of
Directors totaling $800 for each of Messrs. LaMonica and McTernan. For
Mr. Carfora and Ms. Chadwick, amounts for 2002 also include fees for
attending meetings of the Company's Board of Directors totaling $2,800
and $2,000, respectively, as well as fees for meetings of the
Executive Committee of the Company's Board of Directors totaling $400
and $200, respectively.
8
The following table sets forth certain information concerning stock
option exercises during the last fiscal year and the number and value of stock
options held by the Named Officers as of June 30, 2002. No stock options were
granted to the Named Officers in fiscal 2002.
- --------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Options at FY-End (#) FY-End ($)(1)
on --------------------------------------------------------------
Exercise Value
Name (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------------
Joseph L. LaMonica 10,386 $183,189 (2) 356,064 --- $6,871,100 ---
Patrick D. McTernan 10,000 $159,750 (2) 111,784 --- $2,209,749 ---
Jeffrey J. Carfora --- --- 47,834 --- $ 868,719 ---
Claire M. Chadwick 500 $ 7,413 (2) 12,500 --- $ 153,688 ---
Barbara A. Flannery 1,000 $ 20,843 (2) 46,634 --- $ 841,539 ---
- --------------------------------------------------------------------------------------------------------------------------
(1) 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, 2002
($27.90). An option is in-the-money if the exercise price of the option is
less than the market value of the common stock.
(2) Represents the difference between the market value of the shares acquired
upon exercise at the time of exercise (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).
Employment Agreements
On November 28, 2000, the Company entered into new employment
agreements with Mr. LaMonica, Mr. McTernan, Mr. Carfora and Ms. Flannery,
replacing the existing employment agreements between Penn Federal and these
officers. Each new agreement is for a five-year term and provides for extensions
of one year, in addition to the then-remaining term under the agreement, on each
November 28, as long as (1) the Company has not notified the officer at least 90
days in advance that the term will not be extended further and (2) the officer
has not received an unsatisfactory performance review by the Board of Directors
of the Company or the Bank. Each agreement provides for an annual base salary
not less than the officer's current salary, discretionary and performance-based
bonuses and participation in benefit plans and the receipt of fringe benefits to
the same extent as the other executive officers of the Company and the Bank.
Each agreement provides that if the officer's employment is involuntarily
terminated, then during the lesser period (referred to below as the "applicable
payout period") of the remaining term of the agreement or three years after the
date of termination, he or she will be entitled to receive (1) on a monthly
basis, 1/12th of his or her annual salary and 1/12th of the average annual
amount of cash bonus and cash incentive compensation for the two full fiscal
years preceding the date of termination, subject to reduction by the amount of
any cash income earned from providing personal services during the applicable
payout period; (2) substantially the same life and disability insurance coverage
and health and dental benefits as he or she would have received if he or she had
remained employed, subject to reduction to the extent the officer receives
equivalent or better benefits from another employer; and (3) if the involuntary
termination occurs within the six months preceding, at the time of, or within 24
months after a change in control of the Company, an amount in cash equal to 299%
of the officer's "base amount" (as defined in Section 280G of the Internal
Revenue Code), less the acceleration and lapse value of stock options held by
the officer that are taken into account under Section 280G of the Internal
Revenue Code. The term "involuntary termination" is defined as termination of
the officer's employment by the Company or the Bank (other than for cause, or
due to death, disability or specified violations of law) without the officer's
consent or by the officer following a material reduction of or interference with
his or her duties, responsibilities or benefits without his or her consent.
9
Based on current compensation levels, if the employment of Mr.
LaMonica, Mr. McTernan, Mr. Carfora and Ms. Flannery had been involuntary
terminated as of June 30, 2002, under circumstances entitling them to severance
pay described in items (1) and (3) above, they would have been entitled to
receive monthly cash payments of approximately $40,625, $19,792, $16,979 and
$12,043, respectively, for three years after termination, and lump sum cash
payments of approximately $1,586,343, $830,457, $465,625 and $417,497,
respectively. Each agreement provides that to the extent the officer receives
any amounts or benefits that will constitute "excess parachute payments" under
Section 280G of the Internal Revenue Code and subject him or her to excise tax
under Section 4999 of the Internal Revenue Code, he or she will be paid an
additional amount that will offset the effect of any such excise tax. Each
agreement also provides that to the extent the officer's total compensation for
any calendar year exceeds the greater of $1,000,000 or the maximum amount of
compensation deductible by the Company under Section 162(m) of the Internal
Revenue Code (the greater of these two amounts referred to below as the "maximum
allowable amount"), the excess amount must be deferred, with interest at 8% per
annum compounded annually, to a calendar year in which the amount to be paid to
the officer in that year (including deferred amounts and interest) does not
exceed the maximum allowable amount.
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 or business purposes. All loans by
the Bank to its senior officers and directors are subject to regulations of the
Office of Thrift Supervision 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 Bank's Board of Directors, which acts
as the Compensation Committee for the Company and the Bank, has furnished the
following report on executive compensation:
The 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 executives of the
Company and the Bank with those of the Company's stockholders. In determining
compensation levels, plans and adjustments, the Committee takes into account,
among other things, 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, 2002, 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 2002 was increased by $57,000 from his
base salary for fiscal year 2001 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 2002 attributable to the performance of Mr.
LaMonica.
10
Effective July 1, 2001, the Company implemented a cash bonus program
tied to percentage growth in earnings per share. The plan has two principal
components, each providing for bonuses if the Company's earnings per share
growth exceeds a minimum threshold. The first component provides for
pre-determined bonus amounts payable quarterly to the Company's Chief Executive
Officer, Chief Operating Officer and General Counsel, depending on the quarterly
increase, if any, in earnings per share on an annualized basis. The second
component provides for bonus amounts payable annually to other personnel in the
discretion of senior management. For fiscal 2002, the Company's earnings per
share growth on an annualized basis exceeded the highest threshold for all four
quarters, entitling Mr. LaMonica, the Company's Chief Executive Officer, Mr.
McTernan, the Company's General Counsel, and Mr. Carfora, the Company's Chief
Operating Officer, to the maximum bonus amounts payable to them under the plan
of $125,000, $65,000 and $65,000, respectively. Ms. Chadwick and Ms. Flannery
were awarded discretionary bonuses under the plan for fiscal 2002 of $25,000 and
$22,500, respectively.
The Bank and the Company have also 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 Company's and 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 in 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 Company's and 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 2002 or in future years
by reason of compensation paid in fiscal 2002. 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). In this regard, each of the employment
agreements entered into with the Named Officers in November 2000 provides for
mandatory deferral of compensation that would otherwise be non-deductible by
virtue of the limitations of Section 162(m). See "Employment Agreements."
The foregoing report is furnished by the Compensation Committee of the
Board of Directors:
Amadeu L. Carvalho, Chairman Mario Teixeira, Jr.
11
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, 1997
through June 30, 2002.
PennFed Financial Services, Inc.
[PERFORMANCE GRAPH APPEARS HERE]
Period Ending
- --------------------------------------------------------------------------------------------------
Index 6/30/97 6/30/98 6/30/99 6/30/00 6/30/01 6/30/02
- --------------------------------------------------------------------------------------------------
PennFed Financial Services, Inc. 100.00 122.62 117.87 106.91 176.65 215.53
NASDAQ - Total US 100.00 131.63 189.11 279.59 151.56 103.34
SNL $1B-$5B Thrift Index 100.00 146.21 125.75 102.38 174.63 247.38
12
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 2003 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.
For the fiscal year ended June 30, 2002, Deloitte & Touche LLP provided
various audit and non-audit services to the Company. Set forth below are the
aggregate fees billed for these services:
(a) Audit Fees: Aggregate fees billed for professional services
rendered for the audit of the Company's fiscal 2002 annual
financial statements and review of financial statements included
in the Company's Quarterly Reports on Form 10-Q for fiscal 2002:
$177,150.
(b) Financial Information Systems Design and Implementation Fees: $0.
(c) All other fees: $43,750.
The Audit Committee of the Company's Board of Directors has considered
whether the provision of services covered by item (c) above is compatible with
maintaining the independence of Deloitte & Touche LLP.
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, 2003.
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 26, 2003 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 24,
2003. If, however, the date of the next annual meeting is before October 3, 2003
or after December 22, 2003, 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 2002, except for
the failure to timely file a Form 3, Initial Statement of Beneficial Ownership
of Securities, by Claire M. Chadwick, Executive Vice President and Chief
Financial
13
Officer, and Maria F. Magurno, Executive Vice President - Residential Lending
Group Executive, and the failure by Ms. Chadwick to timely file a Form 4,
Statement of Changes in Beneficial Ownership, to report one transaction.
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
/s/ William C. Anderson
------------------------
William C. Anderson
Chairman of the Board
West Orange, New Jersey
September 23, 2002
14
[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
PENNFED FINANCIAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 23, 2002
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 23, 2002 at the Fairfield Executive Inn,
located at 216-234 Route 46 East, Fairfield, New Jersey, at 10:00 a.m.,
local time, and at any and all adjournments or postponements thereof, as
follows:
I. The election of the following
directors for three-year terms:
[ ] For [ ] Withhold [ ] For All Except
PATRICK D. McTERNAN MARVIN D. SCHOONOVER
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, 2003.
[ ] 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.
Please be sure to sign and date Date
this Proxy in the box below.
Stockholder sign above Co-holder (if any)
sign above
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, 2002.
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
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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