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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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
STERLING BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
STERLING BANCORP
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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[STERLING BANCORP LOGO] 430 PARK AVENUE / NEW YORK, N.Y. 10022-3505
LOUIS J. CAPPELLI
CHAIRMAN
& CHIEF EXECUTIVE
OFFICER
March 13, 2001
Dear Shareholder:
Sterling's Annual Meeting of Shareholders will be held on Thursday, April 19,
2001, at 10:00 A.M., at The Harmonie Club, The Gallery Room, 4th Floor, 4 East
60th Street, New York, N.Y., and you are invited to attend.
The Company's record performance in 2000 marked the fifth consecutive year that
earnings reached an all time high. Earnings per share, on a diluted basis, grew
16% to $1.74 with net income at a record $16.6 million, driven by growth of
gross revenues of 23%. Total assets increased to $1.3 billion, with asset
quality in the highest quartile of our peer group. Sterling's return on average
assets in 2000 was 1.4% and its return on average tangible equity rose to 19.2%.
In November 2000, your Board of Directors approved a 10% stock dividend and an
increased quarterly cash dividend of $0.16, up from $0.14 per share. These
actions resulted in an increase of 26% in the effective annual dividend rate and
reaffirms Sterling's long-standing commitment that shareholders benefit from our
success on an ongoing basis.
It is important that your shares be represented at the Annual Meeting whether or
not you are personally able to attend. Proxy material for the meeting
accompanies this letter. You may vote your shares by using a toll free telephone
number or on the Internet (see the instructions on the accompanying proxy card)
or, you may sign, date and mail the proxy card in the postage paid envelope
provided.
Thank you for your continued interest and support.
Sincerely,
/s/ Louis Cappelli
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[STERLING BANCORP LOGO]
STERLING BANCORP
430 PARK AVENUE, NEW YORK, NY 10022-3505
NOTICE OF ANNUAL MEETING
APRIL 19, 2001
The Annual Meeting of Shareholders of Sterling Bancorp will be held on
Thursday, April 19, 2001, at 10:00 o'clock A.M., New York City time, at The
Harmonie Club, The Gallery Room, 4th Floor, 4 East 60th Street, New York, New
York, to consider and act upon the following matters:
1. Election of 10 directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected.
2. Approval of Stock Incentive Plan Amendment, as described in the
accompanying Proxy Statement.
3. Approval of Key Executive Incentive Bonus Plan, as described in
the accompanying Proxy Statement.
4. Such other matters as may properly come before the meeting or any
adjournment thereof.
The close of business on March 2, 2001 has been fixed as the record date
for the meeting. Only shareholders of record at that time are entitled to notice
of and to vote at the Annual Meeting.
IMPORTANT
WE URGE THAT YOU SIGN, DATE AND SEND IN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE, OR TO VOTE VIA THE TOLL FREE TELEPHONE NUMBER OR VIA THE INTERNET
AS INSTRUCTED ON THE PROXY CARD, WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING. SENDING IN YOUR PROXY OR VOTING BY TELEPHONE OR ON THE INTERNET WILL
NOT PREVENT YOU FROM VOTING YOUR SHARES PERSONALLY AT THE MEETING, SINCE YOU MAY
REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors
JERROLD GILBERT
General Counsel
March 13, 2001
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[STERLING BANCORP LOGO]
STERLING BANCORP
430 Park Avenue
New York, N.Y. 10022-3505
------------------
PROXY STATEMENT
------------------
MARCH 13, 2001
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sterling Bancorp ("Company") with respect
to the Annual Meeting of Shareholders of the Company to be held on April 19,
2001. Any proxy given by a shareholder may be revoked at any time before it is
voted by giving appropriate notice to the General Counsel of the Company or by
delivering a later dated proxy or by a vote by the shareholder in person at the
Annual Meeting. Proxies in the accompanying form which are properly executed by
shareholders and duly returned to the Company and not revoked will be voted for
all nominees listed under "Election of Directors," for the amendment of the
Company's Stock Incentive Plan, for the approval of the Key Executive Incentive
Bonus Plan and on other matters in accordance with the Board of Directors'
recommendations, unless the shareholder directs otherwise. This proxy statement
and the accompanying form of proxy are being mailed to shareholders on or about
March 19, 2001.
The outstanding shares of the Company at the close of business on March 2,
2001 entitled to vote at the Annual Meeting consisted of 9,111,462 Common
Shares, $1 par value ("Common Shares"), and 238,997 Preferred Shares ("Preferred
Shares"), of which 1,119 are Series B ($5 par value) and 237,878 are Series D
($5 par value). All outstanding Common Shares and Preferred Shares vote together
and not as separate classes.
The Common Shares and the Preferred Shares are entitled to one vote for
each share on all matters to be considered at the meeting and the holders of a
majority of such shares, present in person or represented by proxy, constitute a
quorum for the transaction of business at the Annual Meeting of Shareholders.
Only shareholders of record at the close of business on March 2, 2001 are
entitled to vote at the Annual Meeting.
ELECTION OF DIRECTORS
Ten directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting of Shareholders to be held on April 19, 2001, to
serve until the next Annual Meeting and until their respective successors have
been elected. It is intended that, unless authority to vote for any nominee or
all nominees is withheld by the shareholder, a properly executed and returned
proxy will be voted in favor of the election as directors of the nominees named
below. All nominees are members of the present Board of Directors, having been
elected at the 2000 Annual Meeting of Shareholders. There is no family
relationship between any of the nominees or executive officers. In the event
that any of the nominees shall not be a candidate, the persons designated as
proxies are authorized to substitute one or more nominees, although there is no
reason to anticipate that this will occur.
Assuming the presence of a quorum, directors are elected by a plurality of
the votes cast. Abstentions and broker non-votes (arising from the absence of
discretionary authority on the part of a broker-dealer to vote shares held in
street name for a customer) will have no effect on the election of directors.
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The information set forth below has been furnished by the nominees:
YEAR
NAME, PRINCIPAL OCCUPATION FOR LAST FIVE YEARS, ELECTED A
BUSINESS EXPERIENCE, DIRECTORSHIP OF THE COMPANY DIRECTOR
AND OF STERLING NATIONAL BANK ("BANK"), OF THE
A SUBSIDIARY OF THE COMPANY, AND OTHER INFORMATION AGE COMPANY
-------------------------------------------------- --- ---------
Robert Abrams 62 1999
Member, Stroock & Stroock & Lavan, LLP; former Attorney
General of the State of New York; former Bronx Borough
President
Joseph M. Adamko* 68 1992
Former Managing Director, Manufacturers Hanover Trust Co.
(now J.P. Morgan Chase); Vice Chairman of the Company and
of the Bank
Lillian Berkman* 78 1989
President and Chief Executive Officer, General Alarm
Corporation
Louis J. Cappelli * 70 1971
Chairman of the Board and Chief Executive Officer of the
Company; Chairman of the Board of the Bank
Walter Feldesman* 83 1975
Counsel, Baer Marks & Upham
Allan F. Hershfield 69 1994
President, Resources for the 21st Century; former
President, Fashion Institute of Technology
Henry J. Humphreys 72 1994
Counselor-Permanent Observer, Mission of the Sovereign
Military Order of Malta to the United Nations; former
Chancellor and Chief Operating Officer, American
Association of the Sovereign Military Order of Malta
John C. Millman* 58 1988
President of the Company; President and Chief Executive
Officer of the Bank
Maxwell M. Rabb 90 1989
Counsel, Kramer, Levin, Naftalis & Frankel; former United
States Ambassador to Italy
Eugene T. Rossides 73 1989
Senior Counsel, Clifford Chance Rogers & Wells LLP; former
Assistant Secretary, United States Treasury Department
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* Member of Executive Committee.
Each nominee is a director of the Bank.
The following nominees hold directorships in public companies: Mr. Adamko,
Tommy Hilfiger Corporation; Mr. Rabb, DSSI, Inc.
Reference is made to "Security Ownership of Directors and Executive
Officers and Certain Beneficial Owners" on page 10 for information as to the
nominees' holdings of the Company's equity securities.
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EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth information concerning the compensation for
the Company's last three completed fiscal years with respect to its chief
executive officer and the four other most highly compensated executive officers
who served as such at December 31, 2000.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL -----------------------------
COMPENSATION RESTRICTED SECURITIES ALL OTHER
--------------------- STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) OPTIONS(#)(2) SATION($)(3)
--------------------------- ---- ---------- -------- ------------- ------------- ------------
Louis J. Cappelli 2000 524,321 750,000 988,281 68,750 75,268
Chairman of the Board and 1999 465,086 550,000 105,000 61,984
Chief Executive Officer, 1998 433,030 385,000 100,000 80,349
Sterling Bancorp
Chairman of the Board,
Sterling National Bank
John C. Millman 2000 336,190 315,000 474,375 33,000 36,695
President, 1999 304,980 270,000 52,500 21,636
Sterling Bancorp 1998 285,324 190,000 50,000 25,987
President and Chief Executive
Officer,
Sterling National Bank
Jerrold Gilbert 2000 148,500 25,000 16,500 7,702
Executive Vice President and 1999 142,500 15,000 15,750 5,864
General Counsel 1998 137,500 15,000 15,000 7,839
Sterling Bancorp and
Sterling National Bank
John W. Tietjen 2000 172,500 50,000 22,000 7,586
Executive Vice President, 1999 155,000 37,500 21,000 5,864
Treasurer and Chief Financial 1998 140,000 35,000 15,000 7,425
Officer,
Sterling Bancorp
Executive Vice President
Sterling National Bank
John A. Aloisio 2000 190,000 50,000 22,000 8,378
Senior Vice President, 1999 175,000 35,000 21,000 5,864
Sterling Bancorp 1998 165,000 25,000 15,000 7,587
Executive Vice President,
Sterling National Bank
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(1) Effective February 11, 2000, Messrs. Cappelli & Millman, respectively, were
granted 62,500 and 30,000 Common Shares which Common Shares were subject to
restrictions and as to which dividends are payable. Such restrictions lapsed
immediately as to 25% of the shares, and lapse as to an additional 25% of
the shares subject to the award on the first through third anniversaries of
the award. As of December 31, 2000, after adjustment to reflect a ten
percent stock dividend in 2000, Messrs. Cappelli and Millman, respectively,
owned 51,562 and 24,750 common shares, subject to restriction valued at
$1,127,919 and $541,406.
(2) Effective February 11, 2000, options covering 62,500, 30,000, 15,000,
20,000, and 20,000 Common Shares were granted to Messrs. Cappelli, Millman,
Gilbert, Tietjen, and Aloisio, respectively. In November 2000, the Board of
Directors increased the number of Common Shares underlying all previously
granted options and correspondingly decreased the applicable option exercise
price to reflect a ten percent stock dividend declared on November 16, 2000
and paid by the Company on December 11, 2000. Accordingly, at year end the
number of Common Shares underlying options granted in 2000 was 68,750 for
Mr. Cappelli, 33,000 for Mr. Millman, 16,500 for Mr. Gilbert, and 22,000
each for Messrs. Tietjen and Aloisio.
(3) Represents for each executive the term life insurance premiums paid by the
Company on his behalf, and as to Mr. Cappelli, includes premiums paid by the
Company for split-dollar life insurance policies insuring the joint lives of
him and his spouse. This insuring of joint lives reduces the premiums paid
for the coverage. Premiums paid by the Company will be refunded to the
Company on termination of the split-dollar policies. The imputed income with
respect to the premium for the term life insurance provided under the
split-dollar policies and included in the figure for 2000 was $2,076. The
value of the benefits to Mr. Cappelli of the remainder of the premiums paid
by the Company on the split-dollar policies and included in the figure for
2000 was $17,547. This does not include any amount with respect to the
split-dollar policies entered into in connection with Mr. Cappelli's
participation in the Company's Mutual Benefit Exchange Program (see
"Retirement Plans" below). As to Messrs. Millman, Gilbert, Tietjen and
Aloisio, includes the value of benefits of the premiums paid by the Company
on split-dollar policies insuring the life of each executive officer, in the
amount of $6,720, $1,211, $864 and $1,649, respectively. Also represents for
each executive, his allocable share of the Company's Employee Stock
Ownership Plan ("ESOP") compensation expense, and as to Messrs. Cappelli and
Millman, $45,954 and $23,187, respectively, accruing to them for 2000 under
the Company's supplemental pension benefit plan (see "Retirement Plans"
below) as compensation for Internal Revenue Code limitations on allocations
to their ESOP accounts.
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Employment Contracts. The Company has agreements with Messrs. Cappelli and
Millman which currently provide for terms extending until December 31, 2005 and
December 31, 2003, respectively, and contain change of control provisions
entitling each of them to a lump-sum cash payment in an amount equal to three
times his average annual compensation during the Company's three fiscal years
preceding the date of termination and the continuation of health and similar
benefits for a period of 36 months following termination if he is terminated
within two years of a change in control. Messrs. Cappelli and Millman each also
have thirteen months after a change of control to terminate employment for any
reason and receive the severance benefits. These agreements were entered into
upon the recommendation of the Board's Compensation Committee in 1993, and
approved by the Board of Directors, and were amended in 2001. The Company also
has change of control agreements with other executive officers, including
Messrs. Gilbert, Tietjen, and Aloisio, providing for guaranteed severance
payments equal to two times the annual compensation of the officer and
continuation of health and similar benefits for the applicable period if the
officer is terminated within two years of a change of control. All change of
control agreements provide for cash payments in amounts necessary to insure that
the payments made thereunder are not subject to reduction due to the imposition
of excise taxes payable under I.R.S. Code Section 4999 or any similar tax.
Retirement Plans. In November 1984, (1) the Sterling Bancorp/Sterling
National Bank Employees' Retirement Plan ("New Plan"), a defined benefit plan
which covers all of their respective eligible employees, was adopted and (2) the
separate defined benefit plans ("Old Plans") previously maintained by Sterling
National Bank and Standard Financial Corporation (since merged into the Company)
were terminated, vesting the benefits of the participants in the Old Plans for
all years of credited service. The New Plan gives credit for credited service
under the Old Plans but provides, in substance, for a participant's vested
benefits under the Old Plans to be offset against the benefits to be provided
the participant under the New Plan. Accordingly, the retirement benefits to be
provided a continuing employee can be determined simply by reference to the
provisions of the New Plan.
An employee becomes eligible for participation in the New Plan upon the
attainment of age 21 and the completion of one year of service. All
contributions required of the New Plan are made by the employers and no employee
contributions are required or permitted.
The Internal Revenue Code imposes limitations on the retirement benefits
payable to more highly compensated employees. The Company has a Supplemental
Executive Retirement Plan for designated employees ("Supplemental Plan"), which
provides for supplemental retirement payments to such persons in amounts equal
to the difference between retirement benefits such persons actually receive
under the Company's plans and the amount which would have been received were
such Internal Revenue Code limitations not in effect.
The following table sets forth the estimated annual retirement benefits
under the above plans, on a life annuity and guaranteed 10 year certain basis,
payable to persons in specified remuneration and years of service
classifications, not subject to any offset amount.
PENSION PLAN TABLE
HIGHEST
CONSECUTIVE
FIVE YEAR ESTIMATED ANNUAL RETIREMENT BENEFIT AT AGE 65 FOR
AVERAGE REPRESENTATIVE YEARS OF CREDITED SERVICE
COMPENSATION --------------------------------------------------------------------------------------------
IN LAST 10 15 20 25 30 35 40 45 50
10 YEARS -------- -------- -------- -------- -------- -------- -------- -------- --------
$ 100,000............ $ 14,760 $ 22,140 $ 29,520 $ 36,900 $ 44,280 $ 51,660 $ 59,040 $ 66,420 $ 73,800
200,000............ 29,760 44,640 59,520 74,400 89,280 104,160 119,040 133,920 148,800
300,000............ 44,760 67,140 89,520 111,900 134,280 156,660 179,040 201,420 223,800
400,000............ 59,760 89,640 119,520 149,400 179,280 209,160 239,040 268,920 298,800
500,000............ 74,760 112,140 149,520 186,900 224,280 261,660 299,040 336,420 373,800
600,000............ 89,760 134,640 179,520 224,400 269,280 314,160 359,040 403,920 448,800
700,000............ 104,760 157,140 209,520 261,900 314,280 366,660 419,040 471,420 523,800
800,000............ 119,760 179,640 239,520 299,400 359,280 419,160 479,040 538,920 598,800
900,000............ 134,760 202,140 269,520 336,900 404,280 471,660 539,040 606,420 673,800
1,000,000........... 149,760 224,640 299,520 374,400 449,280 524,160 599,040 673,920 748,800
1,100,000........... 164,760 247,140 329,520 411,900 494,280 576,660 659,040 741,420 823,800
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Annual benefits are calculated on the highest consecutive five-year average
compensation during the ten years preceding retirement as provided in the New
Plan.
The pensions computed under the New Plan are equal to the sum of:
(1) 1% of the average compensation up to $4,800, multiplied by the
number of years of credited service, plus
(2) 1 1/2% of the average compensation in excess of $4,800, multiplied
by the number of years of credited service.
Average compensation under the New Plan includes salary compensation but
not other types of compensation; bonus compensation for designated senior
management executives is included under the Supplemental Plan as currently in
effect.
The current number of years of service credited to Messrs. Cappelli,
Millman, Gilbert, Tietjen and Aloisio are 49, 24, 26, 11 and 10, respectively.
In 2000, Mr. Cappelli elected to participate in the Company's Mutual
Benefit Exchange Program (the "Program"), pursuant to which he relinquished his
right to receive an annual retirement benefit at age 65 of $236,516 under the
Supplemental Plan (this amount represents a portion of his then accrued benefit
under the defined benefit portion of the Supplemental Plan) in exchange for the
Company's payment of premiums under additional split-dollar life insurance
policies. Pursuant to calculations prepared for the Company by actuaries, the
present value of the cost of these policies to the Company will not exceed the
present value of the Supplemental Plan benefits relinquished by Mr. Cappelli
under the Program.
OTHER PLANS
The following tables set forth information as to options granted to each of
the executive officers named in the Summary Compensation Table on page 3 in the
last fiscal year and as to options held at December 31, 2000 by such executive
officers. The options granted to Mr. Cappelli and Mr. Millman, as well as 9,521
options granted to Mr. Aloisio and 6,282 options granted to Mr. Tietjen in 2000,
are nonqualified stock options. The remainder of the options are intended to be
incentive stock options.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE OR PRESENT
THE OPTION EMPLOYEES BASE PRICE EXPIRATION VALUE
NAME GRANTED(1) IN 2000(2) ($/SH)(3) DATE ($)(4)
---- ---------- ------------- ------------ ---------- ----------
Louis J. Cappelli....................... 68,750 23.19 14.38 2/11/10 281,188
John C. Millman......................... 33,000 11.13 14.38 2/11/10 134,970
Jerrold Gilbert......................... 16,500 5.57 14.38 2/11/10 51,645
John W. Tietjen......................... 22,000 7.42 14.38 2/11/10 74,890
John A. Aloisio......................... 22,000 7.42 14.38 2/11/10 78,000
- ---------------
(1) The number of Common Shares underlying options granted reflects an
adjustment to each option in connection with a ten percent stock dividend
paid by the Company on December 11, 2000. Options granted will vest in
accordance with the following schedule: 68,750 options in 2001 for Mr.
Cappelli; 33,000 options in 2001 for Mr. Millman; 5,809 options in 2007,
6,956 options in 2008 and 3,735 options in 2009 for Mr. Gilbert; 6,282
options in 2001, 1,805 options in 2007, 6,956 options in 2008, and 6,957 in
2009 for Mr. Tietjen; and 9,521 options in 2001, 5,523 options in 2008, and
6,956 options in 2009 for Mr. Aloisio (all subject to acceleration under
certain circumstances, including a change of control).
(2) Although the number of securities underlying total options granted, before
adjustment for a ten percent dividend, was 272,500, options granted for
3,000 shares were forfeited during 2000.
(3) In order to permit option holders to retain their potential proportionate
interest in the Company following payment by the Company on December 11,
2000, of a ten percent stock dividend, the number of
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Common Shares underlying options previously granted under the Company's
Stock Incentive Plan was increased by ten percent and the exercise price of
all such options was decreased by 9.09 percent. This adjustment was required
to ensure that the value of the options was neither increased nor decreased
on account of the stock dividend.
(4) In accordance with the rules of the Securities and Exchange Commission, the
Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement of the
stock price. The following assumptions were made for purposes of calculating
the grant date present value: an expected option term of eight years for
nonqualified options and four years for qualified options; expected
volatility of 25%; dividend yield of 3.11%; and risk-free rate of return of
6.14%. The real value of the options in this table depends upon the actual
changes in the market price of Common Shares during the applicable period,
and the time at which such options are exercised.
FISCAL YEAR-END OPTION VALUES
NUMBER OF COMMON SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS HELD AT AT FISCAL YEAR END
FISCAL YEAR END -----------------------------
SHARES ACQUIRED VALUE ----------------------------- VESTED NON-VESTED
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
---- --------------- ----------- ----------- --------------- ----------- ---------------
Louis J. Cappelli.......... -- -- 300,302 126,496 $2,452,534 $1,163,892
John C. Millman............ -- -- 166,727 56,848 1,428,389 522,338
Jerrold Gilbert............ -- -- 34,333 48,002 351,366 367,859
John W. Tietjen............ -- -- 30,150 57,107 282,064 447,980
John A. Aloisio............ -- -- 40,108 59,277 414,275 461,336
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PERFORMANCE GRAPH
The following graph sets forth a comparison of the percentage change in the
cumulative total shareholder return on the Company's Common Shares compared to
the cumulative total return on the Standard & Poor's 500 Index (the "S&P 500
Index"), and the Keefe, Bruyette & Woods 50 Index ("KBW 50 Index"). The stock
price performance shown on the graph below is not necessarily indicative of
future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG STERLING BANCORP, THE S&P 500 INDEX AND THE KBW 50 INDEX
[LINE GRAPH]
- ---------------------------------------------------------------------------------------------
BASE
PERIOD
COMPANY/INDEX NAME 12/95 12/96 12/97 12/98 12/99 12/00
- ---------------------------------------------------------------------------------------------
STERLING BANCORP $100.00 $121.04 $200.70 $194.18 $146.90 $228.42
- ---------------------------------------------------------------------------------------------
S&P 500 100.00 122.96 163.98 210.84 255.22 231.98
- ---------------------------------------------------------------------------------------------
KBW 50 100.00 141.46 206.80 223.91 216.14 259.50
- ---------------------------------------------------------------------------------------------
- ---------------
* $100 invested on 12/31/95 in Stock or Index.
Including reinvestment of dividends.
Fiscal year ending December 31.
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MEETINGS AND ATTENDANCE OF DIRECTORS; CERTAIN COMMITTEES; FEES
During the year ended December 31, 2000, the Board of Directors of the
Company held five regularly scheduled meetings. In addition, various committees
of the Board met at regular meetings. No director attended fewer than 75% of the
meetings he or she was required to attend. The Company has standing audit and
compensation committees and does not have a nominating committee or a committee
performing similar functions.
The members of the audit committee ("Audit Committee") are Messrs.
Feldesman (chair), Adamko, Humphreys and Rossides. The Audit Committee held four
meetings during the year ended December 31, 2000.
The members of the compensation committee ("Compensation Committee") are
Mrs. Berkman (chair), Mr. Feldesman and Mr. Hershfield. None of the members of
the Compensation Committee has ever been an officer or employee of the Company
or any of the Company's subsidiaries. The Compensation Committee makes
recommendations to the Board concerning executive officer compensation,
including the relationship between compensation and performance and the measures
of performance to be considered, and concerning the compensation and other key
terms of employment agreements. (See "Compensation Committee Report" attached as
Exhibit A to this Proxy Statement.) The Compensation Committee held one meeting
during the year ended December 31, 2000.
Directors who are not salaried officers receive fees for attendance at
Board and committee meetings. Each eligible director receives $1,250 for
attending each Board meeting, $750 for attending each committee meeting, a $500
supplemental payment in December of each year and an annual option for 4,620*
Common Shares on the last day the Company's Common Shares are traded in June.
Additionally, in 2000, non-employee directors were granted options for 2,200*
shares on the last day a trade was reported in June, 2000, and on the last day a
trade is reported in each July from July 2001 through July 2004. The options are
nonqualified stock options exercisable in four equal installments, commencing on
the first anniversary of the date of grant and expiring on the fifth anniversary
of such date; provided, however, that they become immediately exercisable in the
event of a change in control of the Company. The exercise price is equal to 100%
of the fair market value of the Common Shares on the date of grant. Upon
termination of the services of a director who is not also a salaried officer,
all options then exercisable may be exercised for a period of three months,
except that if termination is by reason of death, the legal representative of
such deceased director has six months to exercise all options regardless of
whether the decedent could have exercised them. Expenses of directors incurred
in traveling to Board and committee meetings are reimbursed by the Company. The
Chair of the Audit Committee receives an annual stipend of $7,500 for service in
such capacity in lieu of Audit Committee meeting fees. Mr. Adamko, Vice Chairman
of the Company and the Bank, receives a monthly fee of $3,750, but does not
receive fees for attendance at Board and committee meetings.
FEES TO AUDITORS
AUDIT FEES
The aggregate fees billed by KPMG, LLP for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2000 and for the reviews of the financial statements included
in the Company's Quarterly Reports on Form 10-Q for that fiscal year were
$229,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were paid to KPMG, LLP by the Company for professional services
rendered for information technology services relating to financial information
systems design or implementation for the fiscal year ended December 31, 2000.
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* Inclusive of adjustment for stock dividends declared on Common Shares.
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ALL OTHER FEES
The aggregate fees billed by KPMG, LLP for services rendered to the
Company, other than the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees", for the fiscal
year ended December 31, 2000 were $309,400. These other fees were primarily for
tax services and audits of benefit plans.
The Audit Committee has considered whether KPMG, LLP's provision of
non-audit services is compatible with maintaining the auditor's independence.
AUDIT COMMITTEE REPORT
The role of the Audit Committee is to assist the Board in its oversight of
the Company's financial reporting process. The Board of Directors has determined
that all members of the Committee are "independent," as required by applicable
listing standards of The New York Stock Exchange. The Committee operates
pursuant to a Charter that was adopted by the Board on May 18, 2000, a copy of
which is attached to this Proxy Statement as Appendix A. As set forth in the
Charter, management of the Company is responsible for the preparation,
presentation and integrity of the Company's financial statements, the Company's
accounting and financial reporting principles, and internal controls designed to
assure compliance with accounting standards and applicable laws and regulations.
The independent auditors are responsible for auditing the Company's financial
statements and expressing an opinion as to their conformity with generally
accepted accounting principles.
In the performance of its oversight function, the Committee has considered
and discussed the audited financial statements with management and the
independent auditors. The Committee has also discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees, as currently modified or
supplemented. Finally, the Committee has received the written disclosures and
the letter from the independent auditors required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, as
currently modified or supplemented, and has discussed with the independent
auditor the auditor's independence from the Company and its management.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not employed by the Company for
accounting, financial management or internal control. Members of the Committee
rely without independent verification on the information provided to them and on
the representations made by management and the independent accountants.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles and policies, or internal control and procedures,
designed to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations and discussions
referred to above do not assure that the audit of the Company's financial
statements has been carried out in accordance with generally accepted auditing
standards or that the financial statements are presented in accordance with
generally accepted accounting principles.
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Committee
referred to above and in the Charter, the Committee is recommending to the
Board's Executive Committee that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000 to
be filed with the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
Walter Feldesman, Chair Joseph M. Adamko Henry J. Humphreys Eugene T.
Rossides
Dated March 8, 2001
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TRANSACTIONS WITH THE COMPANY AND OTHER MATTERS
From time to time, officers and directors of the Company and their family
members or associates have purchased or may purchase short-term notes of the
Company and certificates of deposit from the Bank on the same terms available to
other persons. The Bank also makes loans from time to time to related interests
of directors. Such loans are made in the ordinary course of business, on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and do not
involve more than the normal risk of collectability or present other unfavorable
features. Messrs. Feldesman and Rossides each are counsel to law firms that the
Company retained during its last fiscal year.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth, as of February 28, 2001, holdings of the
Company's Common Shares and Preferred Shares by each present director and each
of the executive officers named in the Summary Compensation Table on page 3 and
by all directors and executive officers as a group. The Common Shares are traded
on The New York Stock Exchange and the closing price on March 2, 2001 was $21.70
per share.
% OF OUTSTANDING
COMMON % OF OUTSTANDING SERIES D SERIES D
NAME SHARES(1) COMMON SHARES PREFERRED SHARES(1) PREFERRED SHARES
---- --------- ---------------- ------------------- ----------------
Robert Abrams......................... 1,269 +
Joseph M. Adamko...................... 8,853 +
Lillian Berkman....................... 37,074 .41
Louis J. Cappelli..................... 610,042 6.44 2,517 1.06
Walter Feldesman...................... 13,281 .15
Allan F. Hershfield................... 10,221 .11
Henry J. Humphreys.................... 10,047 .11
John C. Millman....................... 305,239 3.28 2,435 1.02
Maxwell M. Rabb....................... 10,624 .12
Eugene T. Rossides.................... 6,134 +
Jerrold Gilbert....................... 83,986 .92 2,231 .94
John W. Tietjen....................... 51,134 .56 2,174 .91
John A. Aloisio....................... 60,531 .66 2,277 .96
All directors and executive officers
as a group (13 in group)............ 1,208,435 12.26 11,634 4.89
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+ Less than .1 of 1%
(1) Each director and officer has sole voting and investment power with
respect to the securities indicated above to be owned by him, except that in the
case of Messrs. Cappelli, Millman, Gilbert, Tietjen and Aloisio, shares shown as
owned include 53,633; 4,796; 19,963; 91; and 2 Common Shares, respectively, held
in profit sharing plans as to which they have power to direct the vote, and the
Preferred Shares, set forth above, held by the Company's Employee Stock
Ownership Trust upon which they are currently entitled to direct the vote. The
shares shown as owned include as to each of Mr. Rossides and Mr. Rabb, 5,196
Common Shares; as to Mr. Hershfield, 7,396 Common Shares; as to Mr. Abrams,
1,154 Common Shares; as to Ms. Berkman, 3,464 Common Shares; as to each of
Messrs. Adamko, Feldesman and Humphreys, 7,506 Common Shares; as to Messrs.
Cappelli, Millman, Gilbert, Tietjen and Aloisio and all directors and executive
officers as a group, 378,677; 207,178; 38,999; 41,098; 54,294; and 765,170
Common Shares, respectively, covered by outstanding stock options exercisable
within 60 days and, as to Messrs. Cappelli and Millman, include 34,546 and
16,582 Common Shares, respectively, granted under the Company's Stock Incentive
Plan as to which they do not have sole investment power. In addition, the shares
shown as owned by Mr. Cappelli include 343 Common Shares owned by his wife, the
shares shown as owned by Mr. Millman include 577 shares owned by his wife and
141 shares owned by his wife as custodian, and the shares owned by Mr. Aloisio
include 550 shares owned by his son and 92 shares owned by his wife, beneficial
ownership of which each of them disclaims.
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The following table sets forth the persons or groups known to the Company
to be the beneficial owner of more than five percent of the outstanding Common
Shares based upon information provided by them to the Company as of March 9,
2001.
NUMBER AND
NATURE OF
COMMON SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE OF
NAME AND ADDRESS OWNED CLASS
---------------- ------------- -------------
FMR Corp.,
Edward C. Johnson 3d, and Abigail P. Johnson,
Fidelity Management & Research Company...................... 871,415(1) 9.59
82 Devonshire Street
Boston, Massachusetts 02109
Louis J. Cappelli........................................... 610,042(2) 6.44
430 Park Avenue
New York, New York 10022
Dimensional Fund Advisors Inc. ............................. 572,470(3) 6.30
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Sterling National Bank...................................... 515,530(4) 5.67
430 Park Avenue
New York, New York 10022
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(1) The number and nature of the Common Shares beneficially owned are set
forth in a statement on Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2001 by FMR Corp., Fidelity Management & Research
Company, Edward C. Johnson 3d, and Abigail P. Johnson. According to said
schedule, Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp. and an investment adviser, is the beneficial owner of
812,911 of the Common Shares set forth in the above table as a result of acting
as investment adviser to various investment companies ("Fidelity Funds").
Fidelity states that one Fidelity Fund, Fidelity Low-Priced Stock Fund, owns
731,951 of the Common Shares owned by Fidelity. Edward C. Johnson 3d, FMR Corp.
(through its control of Fidelity), and the Fidelity Funds each have sole
dispositive power with respect to 812,911 Common Shares, but do not have the
sole power to vote or direct the voting of the Common Shares. 58,504 Common
Shares set forth in the above table are beneficially owned by Fidelity
Management Trust Company, a wholly-owned subsidiary of FMR Corp., as a result of
serving as investment manager of certain institutional accounts. Edward C.
Johnson 3d and FMR Corp. (through its control of Fidelity) each has sole
dispositive power and sole power to vote, or direct the voting of, 58,504 Common
Shares. Strategic Advisers, Inc., a wholly owned subsidiary of FMR Corp.,
provides investment services to individuals. It does not have sole power to vote
or direct the voting of 58,504 Common Shares, and has sole dispositive power
over such securities. As such FMR Corp.'s beneficial ownership may include
shares beneficially held through Strategic Advisers, Inc. Through their
ownership of voting common stock and the execution of a shareholders' agreement
with respect to FMR Corp., Edward C. Johnson 3d, Abigail P. Johnson, and other
members of the Johnson family may be deemed to form a controlling group with
respect to FMR Corp. and thus each is deemed to have beneficial ownership of
812,911 Common Shares.
(2) See Footnote 1, page 10 for number and nature of the Common Shares.
(3) The number and nature of the Common Shares beneficially owned are set
forth in a statement on Schedule 13G filed with the Securities and Exchange
Commission on February 2, 2001 by Dimensional Fund Advisors Inc.
("Dimensional"). According to said schedule, Dimensional is an investment
advisor, furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingled group trusts. (These
investment companies and investment vehicles are the "Portfolios"). In its role
as investment advisor and
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investment manager, Dimensional states that it possesses both voting and
investment power over the Common Shares set forth in the above table that are
owned by the Portfolios and that all such are owned by the Portfolios, and
Dimensional disclaims beneficial ownership of such securities. Further,
Dimensional has advised the Company that no one of these advisory clients, to
the knowledge of Dimensional, owns more than 5% of the class.
(4) The number and nature of the Common Shares beneficially owned are set
forth in a statement on Schedule 13G filed with the Securities and Exchange
Commission on February 13, 2001 by Sterling National Bank ("Sterling").
According to said schedule, Sterling has sole voting and dispositive power with
respect to 393,412 Common Shares in its capacity as trustee of various
retirement, profit sharing, and 401(k) plans for its employees and employees of
the Company. Sterling has shared voting and dispositive power with respect to
122,118 Common Shares in its capacity as co-trustee of certain trusts.
Sterling Bancorp and Subsidiaries Employee Stock Ownership Trust (whose
address is 430 Park Ave., New York, NY 10022, Attn: Trust Dept.), established
pursuant to the Sterling Bancorp and Subsidiaries Employee Stock Ownership Plan
("ESOP"), owns all outstanding shares of Series D Preferred Stock, each share of
which is convertible into 1.1561 Common Shares. The Series D Preferred Stock
carries one vote per share, and votes along with the Common Shares as a single
class. Participants vote shares allocated to their respective ESOP accounts, and
receive passed through voting rights with respect to unallocated shares based on
relative ESOP account balances. Any Shares with respect to which voting
instructions are not received are to be voted by the ESOP Committee.
Except as set forth above, the Company does not know of any person that
owns more than 5% of any class of the Company's voting securities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that all required filings have been made under Section
16(a) of the Securities Exchange Act of 1934 by the Company's directors and
executive officers. In making this statement, the Company has relied on copies
of the reporting forms received by it or on the written representations from
certain reporting persons that no Forms 5 were required to be filed under the
applicable rules of the Securities and Exchange Commission.
APPROVAL OF STOCK INCENTIVE PLAN AMENDMENT
In April 1992, shareholders approved adoption of the Company's Stock
Incentive Plan (the "Plan"), which authorized the grant of awards in the form of
incentive stock options, non-qualified stock options, stock appreciation rights,
restricted stock or a combination of these. There are currently 2,043,720 shares
covered by the Plan. Awards covering an aggregate of 1,964,590 shares have been
made. After giving effect to such awards, only 79,130 shares remain available
under the Plan.
The Compensation Committee and the Company's Stock Plans Committee have
advised the Board of Directors that in view of the Compensation Committee's
policy for greater utilization of stock-based compensation, they recommended
that the number of shares available under the Plan be increased by 400,000
shares (see "Compensation Committee Report" attached as Exhibit A to this Proxy
Statement). The Board of Directors has approved and recommends to the
shareholders an amendment to the Plan which would increase the aggregate number
of shares subject to it by 400,000. The text of the amendment is attached as
Exhibit B to this Proxy Statement. No grants will be made under the Plan
pursuant to the proposed amendment unless the shareholders approve the amendment
at the 2001 Annual Meeting.
Approval of the amendment requires the affirmative vote of a majority of
the votes cast on the proposal, provided that the total votes so cast represent
over 50% of the votes entitled to be cast at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT,
AND IT IS INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED.
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ADMINISTRATION
Authority to administer the Plan was delegated by the Board to a Stock
Plans Committee which consists of at least three Non-Employee Directors, none of
whom is to be eligible to participate in awards (other than automatic awards to
Non-Employee Directors). The current members of the Stock Plans Committee are
Mr. Feldesman, chair, Mrs. Berkman and Mr. Hershfield. In addition to
Non-Employee Directors, all officers and key employees of the Company and its
subsidiaries who are in positions which enable them to make significant
contributions to long-term performance and profitability of the Company are
eligible to receive awards. Approximately 140 employees of the Company and its
subsidiaries are eligible to participate in the Plan.
TYPE OF AWARDS
Awards granted pursuant to the Plan may take the form of Incentive Stock
Options ("ISOs"), within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), Non-Qualified Stock Options ("NQSOs"), Stock
Appreciation Rights ("SARs"), Restricted Stock or a combination of these forms
of awards.
Incentive Stock Options. The exercise price of an ISO may not be less than
100% of the fair market value of the Company's Shares on the date of grant. If
the aggregate market value (determined on the date of grant) of all shares
subject to ISOs that first become exercisable by an individual optionee in a
single calendar year exceeds $100,000, the excess is to be treated as NQSOs. An
optionee may exercise an ISO during the option period at such time, and in such
amounts (subject to a 100 share minimum), as he desires and may pay the exercise
price in cash, Sterling Bancorp Common Shares or in such other consideration as
the Committee may determine. All ISOs granted under the Plan have a term of ten
years and vest on a cumulative basis at a rate of twenty-five (25%) each year,
beginning one year after the date of grant, unless the Committee determines
otherwise; provided that, unless the Committee determines otherwise in an
optionee's written award agreement, all ISOs granted to an optionee will become
exercisable upon the termination of the optionee's employment by the Company
without "cause," or upon a "change in control" of the Company (as each such term
is defined in the Plan). In the event of termination of an optionee's
employment, other than by the Company for cause, or in the event of death or
disability, any unexercised portion of the ISO which is exercisable at the time
of termination will terminate three months following such termination unless the
expiration date of the ISO occurs sooner. If such termination of employment is
by reason of death or disability, the portion of the ISO which is exercisable at
the time of termination may be exercised for a period of 12 months after such
termination, unless the expiration date of the ISO occurs sooner. In the event
the Company terminates an optionee's employment for cause, any unexercised
portion of the ISO will terminate immediately upon termination of employment.
Additional restrictions apply to ISOs granted to a 10 percent stockholder (as
defined in Section 422 of the Code).
Non-Qualified Stock Options. All Non-Qualified Stock Options granted under
the Plan may be for such (i) number of shares, (ii) exercise price and (iii)
term as the Committee, in its sole discretion, may determine. All NQSOs granted
under the Plan are exercisable beginning six months after the date of grant
unless the Committee determines otherwise; provided that, unless the Committee
determines otherwise in an optionee's written award agreement, all NQSOs granted
to an optionee will become exercisable upon the termination of the optionee's
employment by the Company without cause, or upon a change in control of the
Company. The terms of the Plan regarding exercisability of NQSOs following
termination of employment are identical to those applicable to ISOs.
Stock Appreciation Rights. Pursuant to the terms of the Plan SARs are
granted only (i) in conjunction with the granting of options, (ii) in an amount
not in excess of the number of Shares granted in the related option and (iii) on
terms providing that the exercise of an option for a given number of shares
terminates the related SAR for that number of shares (so that the total number
of shares for which an option and the related SAR may be exercised cannot exceed
the number of shares granted in the option). SARs provide the participant with
an amount equal to the difference between the fair market value of the Shares on
the date the SAR is exercised and the exercise price of the option; such amount
is to be paid, in the discretion of the Committee, either in cash or in shares
(valued at their fair market value on the date of exercise) or a
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combination thereof. Each SAR is subject to the same conditions on termination
of employment as the related option.
Restricted Stock. A recipient of Restricted Stock may be entitled to
receive Shares of the Company at no out-of-pocket cost or to purchase Shares of
the Company at a price determined by the Committee which is expected to be below
the fair market value of the Shares. The time period of the restrictions and
rate of lapse of such restrictions will be determined by the Committee in its
sole discretion; provided that, unless the Committee determines otherwise in a
grantee's written award agreement, all such restrictions shall lapse upon the
termination of the grantee's employment by the Company without cause, or upon a
change in control of the Company.
Shares. The number of shares available is subject to adjustment in order
to prevent dilution. To the extent that options expire or are cancelled without
having been exercised or Restricted Stock is forfeited, the shares involved
shall become available for future grants or rewards.
NON-EMPLOYEE DIRECTOR GRANTS
Under the Plan each Non-Employee Director will automatically be granted an
NQSO on the last day the Company's Common Shares are traded in June. The June
NQSO provides for grants to each Non-Employee Director of 2,000 shares in each
of 1998 and 1999 and 4,000 shares in each of 2000, 2001 and 2002, exercisable in
four equal installments commencing on the first anniversary of the date of
grant -- and to expire on the fifth anniversary of such date, and is to provide
for a purchase price equal to 100% of the fair market value of the Common Shares
on the date of grant; provided that an NQSO shall be immediately exercisable in
the event of a change in control of the Company. Additionally, under the Plan
each Non-Employee Director will automatically be granted an NQSO on the last day
the Company's Common Shares are traded in June 2000, and the last day they are
traded in each July from 2001 through 2004. This NQSO is to be for 2000 shares
in each of 2000, 2001, 2002, 2003 and 2004, upon substantially the same terms
and conditions as the June grants. Upon termination of the services of a
Non-Employee Director, all options then exercisable may be exercised during a
period of three months, except that if termination is by reason of death, the
legal representative of the deceased Non-Employee Director has six months to
exercise all options regardless of whether the decedent could have then
exercised them.
AMENDMENT
The Plan may be amended, terminated or modified by the Board at any time,
except that the Board may not, without approval by a vote of the shareholders of
the Company (subject, however, to changes resulting from stock dividends, stock
splits or similar changes in the Company's capitalization), increase the maximum
number of shares for which options and awards may be granted under the Plan or
change the persons eligible to participate in the Plan. No such termination,
modification or amendment may affect the rights of a participant under an
outstanding option or the grantee of an award.
MARKET VALUE OF STOCK
On March 2, 2001, the market value of one of the Company's Common Shares
was $21.70.
FEDERAL INCOME TAX CONSEQUENCES
In general, except as described below with respect to Restricted Stock, no
taxable income will be recognized by the participant, and no deduction will be
allowed to the Company, upon the grant of any option, SAR or shares of
Restricted Stock under the Plan.
Non-Qualified Stock Options. In general, upon exercise of an NQSO, an
optionee will recognize ordinary income in the year in which the option is
exercised in an amount equal to the difference between the fair market value of
the shares on the date of exercise and the exercise price; the amount so
recognized as income will be deductible by the Company.
Upon any subsequent sale of the shares, the optionee's basis in the shares
for determining gain or loss will be the sum of the exercise price and any
income recognized upon exercise. Any gain or loss recognized to the
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optionee upon the sale or other disposition of any of these shares will be a
capital gain or loss, either long-term or short-term, depending upon the holding
period of the shares.
Incentive Stock Options. No taxable income will be recognized by the
optionee upon the exercise of an ISO, but the difference between the fair market
value of the shares on the date of exercise and the exercise price is an item of
tax preference, subject to the possible application of the alternative minimum
tax. If the shares purchased on the exercise of an ISO are held for a period of
at least two years from the date of the grant of the option and one year from
the date the option is exercised, any gain recognized on a subsequent sale of
such shares will constitute long-term capital gain rather than ordinary income,
and the Company will not be entitled to any deduction with respect to the
option.
However, if the optionee disposes of such shares within one year from the
date of exercise or two years from the date of the grant of the option, the
excess of the lesser of the fair market value of the shares at the time of
exercise and the amount realized by the optionee on such disposition over the
exercise price will be taxed as ordinary income, and the Company will be
entitled to a corresponding deduction. Any further gain or any loss recognized
on such a disposition generally will be a capital gain or loss, either long-term
or short-term, depending on the holding period of the shares.
Stock Appreciation Rights. Upon exercise of an SAR the amount of cash
received (or the value of any shares received) must be treated as ordinary
income by the employee. Under such circumstances, the Company will be entitled
to a corresponding tax deduction in the same amount which the employee is
required to treat as income.
Restricted Stock. The award of Restricted Stock to an employee does not
result in taxable income to the employee at the time of grant. Generally, the
employee will recognize ordinary income when the restrictions against transfer
of the stock lapse in an amount equal to the value of the stock at that time.
Alternatively, the employee can elect under Section 83(b) of the Code (a
"Section 83(b) Election") to include the value of the Restricted Stock at the
time of the grant, less any amount paid for it, in his income for the year in
which he received the Restricted Stock. The employee must file this election
with the Internal Revenue Service within 30 days after the Restricted Stock is
transferred to him. If the employee makes this election, subsequent changes in
the value of the stock will not result in ordinary income or loss to him.
However, if the stock is later forfeited, the employee will not be entitled to
any deduction with respect to the amount he earlier included as ordinary income.
The Company will be entitled to an income tax deduction in the year in which the
employee recognized ordinary income with respect to the Restricted Stock in an
amount equal to the income recognized by the employee. Any dividends paid on the
Restricted Stock will be taxed as dividend income.
If no Section 83(b) Election is made, (i) no income will be recognized by
the employee (and the Company will not be entitled to a deduction) with respect
to the Restricted Stock until the date the restrictions lapse, (ii) any
dividends paid on the Restricted Stock until the restrictions lapse will be
taxed to the employee as compensation income (and the Company will be entitled
to a deduction) and (iii) the employee will recognize ordinary income at the
time the restrictions lapse in an amount equal to the fair market value of the
Restricted Stock at that time, less the amount paid, if any, and the Company
will be entitled to a corresponding deduction. Upon a subsequent disposition of
the Restricted Stock by the employee, any gain or loss realized above or below
the value previously taken into income by the employee will be long-term or
short-term capital gain or loss, depending on the holding period of the Shares
following the date the restrictions lapse or the Section 83(b) Election was
made, as applicable.
WITHHOLDING OF TAXES
Effective February 17, 2000, the Plan was amended by the Board of
Directors, pursuant to its authority under section 15 of the Plan, to provide
that income tax withholding obligations connected with an award under the Plan,
may be satisfied through the surrender of the Common Stock of the Company owned
by the Plan's participants, or through the withholding of Common Stock otherwise
issuable upon the exercise or vesting of an award.
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NEW PLAN BENEFITS
As awards under the Plan are made in the discretion of the Stock Plans
Committee (other than in respect of the Non-Employee Director stock options
described above), it is not currently possible to ascertain the awards which
will be made in the future to officers and directors.
APPROVAL OF THE STERLING BANCORP KEY EXECUTIVE INCENTIVE BONUS PLAN
GENERAL
The Board of Directors of the Company, through the Executive Committee
thereof (the "Executive Committee"), has adopted, and in this proposal is
requesting shareholder approval of the material terms of the Sterling Bancorp
Key Executive Incentive Bonus Plan (the "Bonus Plan"). The purpose of the Bonus
Plan is to ensure that bonus payments made to certain key executive employees of
the Company will be tax deductible to the Company.
If compensation paid to the chief executive officer of a public company or
any of its other four most highly compensated executive officers (together, the
"Named Executive Officers") is "performance-based" in accordance with certain
conditions specified under Section 162(m) of the Code and the Treasury
Regulations promulgated thereunder, the public company may obtain federal income
tax deductions for compensation of more than $1 million paid in any year to any
Named Executive Officers to the extent of the performance-based compensation.
One of those conditions requires the Company to obtain shareholder approval of
the material terms of the performance goals pursuant to which the
performance-based compensation will be paid. The Executive Committee is
recommending that the shareholders approve the material terms of the Bonus Plan
as described below. Subject to such approval, and if the applicable performance
goals are satisfied, this proposal would enable the Company to pay
performance-based compensation to Named Executive Officers of the Company and to
obtain federal income tax deductions for such payments, without regard to the
limitations of Section 162(m) of the Code.
SUMMARY OF THE BONUS PLAN
The following description of the Bonus Plan is only a summary of certain
provisions thereof and is qualified in its entirety by reference to its full
text, a copy of which is filed with the Securities and Exchange Commission as an
exhibit to this Proxy Statement.
PURPOSE
The purpose of the Bonus Plan is to establish a program of incentive
compensation for designated executive officers and key employees of the Company
and its subsidiaries and divisions that is directly related to the performance
results of the Company and such individuals. The Bonus Plan provides for annual
incentives ("Bonus Awards") to be awarded to eligible employees, as described
below.
ADMINISTRATION
The Bonus Plan is administered by a committee (the "Committee") that is
selected by the Board of Directors of the Company (the "Board") and is composed
of two or more members of the Board, each of whom is required to be an "outside
director" (within the meaning of Section 162(m)). The Executive Committee has
designated the Compensation Committee of the Board to act as the Committee. The
Committee has all the authority that may be necessary or helpful to enable it to
discharge its responsibilities with respect to the Bonus Plan, including
authority to determine eligibility for participation, establish the maximum
award which may be earned by each Participant (which may be expressed in terms
of dollar amount, percentage of salary or any other measurement), establish
goals for each Participant, calculate and determine each Participant's level of
attainment of such goals, and calculate the Bonus Award for each Participant
based upon such level of attainment. Except as otherwise specifically limited in
the Bonus Plan, the Committee has full power and authority to construe,
interpret, and administer the Plan.
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Effective Date: The Bonus Plan is effective as of March 8, 2001, subject
to approval of the shareholders, as requested herein.
ELIGIBILITY
The Bonus Plan provides that the Committee shall designate for each
"Performance Period" (which is the period during which performance is measured
to determine the level of attainment of an award) which executive officers and
key employees of the Company and its subsidiaries, if any, will be eligible for
awards. The Performance Period is the fiscal year of the Company, which is
currently the calendar year.
BONUS AWARDS AND PERFORMANCE GOALS
The Committee will establish for each Performance Period maximum award
(and, if the Committee so determines, a target and/or threshold award) and goals
relating to the Company, subsidiary, divisional, departmental and/or functional
performance for each Participant (the "Performance Goals") and communicate such
Performance Goals to each Participant prior to or during the applicable
Performance Period. Participants will earn Bonus Awards based only upon the
attainment of the applicable Performance Goals during the applicable Performance
Period, as and to the extent established by the Committee.
The Performance Goals for Named Executive Officers will be based on
attainment of specific levels of performance of the Company (or of a subsidiary,
division, department or function thereof) with reference to one or more of the
following criteria:
(i) average total loans;
(ii) average deposits and customer repurchase agreements;
(iii) net income;
(iv) return on average assets; or
(v) return on average equity.
As soon as practicable following the end of the applicable Performance
Period, the Committee will certify the attainment of the Performance Goals and
will calculate the Bonus Award, if any, payable to each Participant. Bonus
Awards will be paid in a lump sum cash payment as soon as practicable following
the determination of the amount thereof by the Committee. The Committee retains
the right to reduce any Bonus Award, in its discretion.
The maximum amount payable to a Participant who is a Named Executive
Officer in respect of an annual Bonus Award which is intended to qualify for the
performance-based compensation exception to Section 162(m) of the Code is $2.0
million.
AMENDMENT TO PLAN
The Committee may amend, suspend or terminate the Bonus Plan at any time;
provided that no amendment may be made without the approval of the Company's
shareholders if the effect of such amendment would be to cause outstanding or
pending Bonus Awards that are intended to qualify for the performance-based
compensation exception to Section 162(m) of the Code to cease to qualify for
such exception.
NEW PLAN BENEFITS
Because amounts payable under the Bonus Plan are based on satisfaction of
certain performance goals in each applicable Performance Period, it cannot be
determined at this time what amounts, if any, will be received by any
Participants with respect to the 2001 fiscal year under the Bonus Plan.
REQUIRED VOTE
The Treasury Regulations promulgated under Section 162(m) of the Code
require the affirmative vote of a majority of the votes cast on the issue at the
Meeting to approve the Bonus Plan.
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THE BOARD OF DIRECTORS, ACTING THROUGH THE EXECUTIVE COMMITTEE, RECOMMENDS A
VOTE FOR APPROVAL OF THE STERLING BANCORP KEY EXECUTIVE INCENTIVE BONUS PLAN,
AND IT IS INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED.
GENERAL
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of KPMG, LLP, which firm audited the financial statements
for the Company's fiscal year ending December 31, 2000 are expected to be
present at the Annual Meeting of Shareholders. They will have the opportunity to
make a statement if they desire to do so and are expected to be available to
respond to appropriate questions.
2002 ANNUAL MEETING
Any shareholder who may desire to submit under the Securities and Exchange
Commission's shareholder proposal rule (Rule 14a-8) a proposal for inclusion in
the Company's proxy and proxy statement for the 2002 Annual Meeting of
Shareholders currently scheduled to be held on April 18, 2002, must present such
proposal in writing to the Company at 430 Park Avenue, New York, New York
10022-3505, Attention: Jerrold Gilbert, General Counsel, not later than the
close of business on November 18, 2001. Under the Company's Bylaws, any
shareholder who desires to submit a proposal outside of the process provided by
the Securities and Exchange Commission's shareholder proposal rule (Rule 14a-8)
or desires to nominate a director at the 2002 Annual Meeting of Shareholders
must provide timely notice thereof in the manner and form required by the
Company's Bylaws by February 18, 2002 (but not before January 18, 2002). If the
date of the 2002 Annual Meeting should change, such deadline would also change.
OTHER
Management knows of no other business to be presented to the Annual Meeting
of Shareholders, but if any other matters are properly presented to the meeting
or any adjournments thereof, the persons named in the proxies will vote upon
them in accordance with their best judgment.
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies by personal interview, telephone or telegram. The
Company reimburses brokerage houses, custodians, nominees and fiduciaries for
their expenses in forwarding proxies and proxy material to their principals. The
Company has retained Morrow & Co., Inc. to assist in the solicitation of
proxies, which firm will, by agreement, receive compensation of $3,500, plus
expenses, for these services.
The Annual Report to Shareholders (which is not a part of the proxy
soliciting material) for the fiscal year ended December 31, 2000 accompanies
this Notice and Proxy Statement.
THE COMPANY FILES WITH THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. A COPY OF THE REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
2000, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
FURNISHED, WITHOUT CHARGE, TO ANY SHAREHOLDER SENDING A WRITTEN REQUEST THEREFOR
TO JOHN W. TIETJEN, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
STERLING BANCORP, 430 PARK AVENUE, NEW YORK, NY 10022-3505.
STERLING BANCORP
Dated: March 13, 2001
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APPENDIX A
AUDIT COMMITTEE CHARTER
STERLING BANCORP
I. Composition of the Audit Committee: The Audit Committee shall be
appointed by the Board of Directors and shall be comprised of at least
three directors, each of whom shall meet the independence, experience
and other requirements of The New York Stock Exchange, Inc., as such
requirements are interpreted by the Board of Directors in its business
judgment.
II. Purposes of the Audit Committee: The purposes of the Audit Committee
are to assist the Board of Directors:
1. in its oversight of the Company's accounting and financial
reporting principles and policies and internal audit controls and
procedures;
2. in its oversight of the Company's financial statements and the
independent audit thereof;
3. in selecting, evaluating and, where deemed appropriate, replacing
the outside auditors; and
4. in evaluating the independence of the outside auditors and the
internal auditing department.
5. to provide a channel of communication among the outside auditors,
Management, the internal auditing department and the Board of Directors.
The Management of the Company is responsible for the preparation,
presentation and integrity of the Company's financial statements. Management and
the internal auditing department are responsible for maintaining appropriate
accounting and financial reporting principles and policies and internal controls
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The outside auditors are responsible for
planning and carrying out a proper audit and reviews, including reviews of the
Company's quarterly financial statements prior to the filing of each quarterly
report on Form 10-Q, and other procedures. The function of the Audit Committee
is oversight. In fulfilling their responsibilities hereunder, it is recognized
that members of the Audit Committee are not employees of the Company and are
not, and do not represent themselves to be, accountants or auditors by
profession or experts in the fields of accounting or auditing. While the Audit
Committee, or its members, have the authority, it is not the duty or
responsibility of the Audit Committee or its members to conduct "field work" or
other types of auditing or accounting reviews or procedures, and each member of
the Audit Committee shall be entitled to rely on (i) the integrity of those
persons and organizations within and outside the Company from which they receive
information and (ii) the accuracy of the financial and other information
provided to the Audit Committee by such persons or organizations absent actual
knowledge to the contrary (which shall be promptly reported to the Board of
Directors).
The outside auditors for the Company are ultimately accountable to the
Board of Directors (as assisted by the Audit Committee). The outside auditors
shall submit to the Company annually a formal written statement delineating all
relationships between the outside auditors and the Company ("Statement as to
Independence"), addressing at least the matters set forth in Independence
Standards Board No. 1. The Board of Directors, with the assistance of the Audit
Committee and of Management, where appropriate, has the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the outside
auditors.
III. Meetings of the Audit Committee: The Audit Committee shall meet
periodically, as required, to fulfill its duties under this Charter, including
meetings to discuss with Management the annual audited financial statements and
quarterly financial statements. In addition, the Audit Committee shall meet
separately at least annually with Management, the internal Chief Auditor and the
outside auditors to discuss any matters that the Audit Committee or any of these
persons or firms believe should be discussed privately. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or outside auditors to attend a meeting of the Audit Committee or to meet with
any members of, or consultants to, the Audit Committee. Members of the Audit
Committee may participate in a meeting of the
23
Audit Committee by means of conference call or similar communications equipment
by means of which all persons participating in the meeting can hear each other.
IV. Duties and Powers of the Audit Committee: To carry out its purposes,
the Audit Committee shall have the following duties and powers:
1. with respect to the outside auditors,
(i) to provide advice to the Board of Directors in selecting,
evaluating or replacing outside auditors;
(ii) to review the fees charged by the outside auditors for audit
and non-audit services;
(iii) to ensure that the outside auditors prepare and deliver
annually a Statement as to Independence (it being understood that the
outside auditors are responsible for the accuracy and completeness of
this Statement), to discuss with the outside auditors any relationships
or services disclosed in this Statement that may impact the objectively
and independence of the Company's outside auditors and to recommend that
the Board of Directors take appropriate action in response to this
Statement to satisfy itself of the outside auditors' independence;
(iv) to instruct the outside auditors that the outside auditors are
ultimately accountable to the Board of Directors and Audit Committee;
and
(v) Review the outside auditors' audit plan -- discuss scope,
staffing, locations, reliance upon Management, and internal audit and
general audit approach.
2. with respect to the internal auditing department,
(i) to review the budget, plan, changes in plan, activities and
qualifications of the internal auditing department, as needed;
(ii) to review the appointment of the Chief Auditor of the internal
auditing department, and
(iii) to advise the Chief Auditor of the internal auditing
department to provide to the Audit Committee summaries of and, as
appropriate, the significant reports to Management prepared by the
internal auditing department and Management's responses thereto;
3. with respect to financial reporting principles and policies and
internal audit controls and procedures,
(i) to advise Management, the internal auditing department and the
outside auditors that they are expected to provide to the Audit
Committee a timely analysis of significant financial reporting issues
and practices;
(ii) to consider any reports or communications (and Management's
and/or the internal audit department's responses thereto) submitted to
the Audit Committee by the outside auditors required by or referred to
in SAS 61 (as codified by AU Section 380), as may be modified or
supplemented, including reports and communications related to:
- deficiencies noted in the audit in the design of operation of internal
controls;
- consideration of fraud in a financial statement audit;
- detection of illegal acts;
- the outside auditor's responsibility under generally accepted auditing
standards;
- significant accounting policies;
- Management judgments and accounting estimates;
- adjustments arising from the audit;
- the responsibility of the outside auditors for other information in
documents containing audited financial statements;
2
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- disagreements with Management;
- consultation by Management with other accountants;
- major issues discussed with Management prior to retention of the
outside auditors;
- difficulties encountered with Management in performing the audit;
- the outside auditor's judgments about the quality of the entity's
accounting principles; and
- reviews of interim financial information conducted by the outside
auditors;
(iii) to meet with Management, the Chief Auditor of the internal
auditing department and/or the outside auditors:
- to discuss the scope of the annual audit;
- to discuss the audited financial statements;
- to discuss any significant matters arising from any audit or report or
communication referred to in items 2(ii) or 3(ii) above, whether
raised by Management, the internal auditing department or the outside
auditors, relating to the Company's financial statements;
- to review the form of opinion the outside auditors propose to render
to the Board of Directors and shareholders;
- to discuss significant changes to the Company's auditing and
accounting principles, policies, controls, procedures and practices
proposed or contemplated by the outside auditors, the internal
auditing department or Management; and
- to inquire about significant risks and exposures, if any, and the
steps taken to monitor and minimize such risks;
(iv) to obtain from the outside auditors assurance that the audit
was conducted in a manner consistent with Section 10A of the Securities
Exchange Act of 1934, as amended, which sets forth certain procedures to
be followed in any audit of financial statements required under the
Securities Exchange Act of 1934; and
(v) to discuss with the Company's General Counsel any significant
legal matters that may have a material effect on the financial
statements, the Company's compliance policies, including material
notices to or inquiries received from governmental agencies; and
4. with respect to reporting and recommendations,
(i) to prepare any report, including any recommendation of the
Audit Committee, required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement;
(ii) to review this Charter at least annually and recommend any
changes to the full Board of Directors; and
(iii) to report to the full Board of Directors on a regular basis
and to make such recommendations with respect to the above and other
matters as the Audit Committee may deem necessary or appropriate.
V. Resources and Authority of the Audit Committee: The Audit Committee
shall have the resources and authority appropriate to discharge its
responsibilities, including the authority to engage outside auditors for special
audits, reviews and other procedures and to retain special counsel and other
experts or consultants.
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EXHIBIT A
COMPENSATION COMMITTEE REPORT
The policy of the Company -- adopted by the Board of Directors in 1993 on
the recommendation of our Committee is:
"Company policy should be to make a meaningful part of the
compensation of executive officers be based on performance. While the
relative importance of performance measures may vary from year to year in
line with corporate business plans and the Committee's judgment, the
measures would include, amongst other criteria, earnings, return on assets,
return on equity, loan and deposit growth."
With respect to the Company's Chairman and President, their employment
agreements, as mandated by our Committee, provide for annual performance bonuses
to be based on performance elements set by the Committee together with its
evaluation of relevant qualitative factors. Such factors include growth of
consolidated earnings, improvement of return on assets and return on equity, and
growth of loans, and deposits and customer repurchase agreements. Performance
was to represent meaningful growth over the appropriate base period. Given the
Company's 2000 performance, total cash bonus amounts of $750,000 and $315,000,
respectively, were determined for Messrs. Cappelli and Millman.
We further believe that the advances made by the Company since we
recommended that performance-based compensation be emphasized and that there
should be greater utilization of stock-based compensation demonstrate the
soundness of this compensation philosophy and in this connection we recommend to
the Board an increase of 400,000 in the shares available under the Company's
Stock Incentive Plan, which increase the Board would recommend to the
shareholders for approval at the upcoming annual meeting.
After considering the Company's achievements in both interest and
non-interest income resulting in higher earnings, concentration on higher margin
business activities, asset and capital growth, and increased awareness in the
financial markets and after evaluating the contributions made by Messrs.
Cappelli and Millman and the responsibilities undertaken by them, our Committee
determined that the annual base salaries under the Company's employment
agreements with them should be increased by $50,000 and $25,000, respectively,
effective January 1, 2001, and the terms of these agreements extended to
December 31, 2005 and December 31, 2003, respectively.
Other than as noted below, the Compensation Committee currently intends for
compensation paid to the Company's executive officers to be tax deductible to
the Company pursuant to Section 162(m) of the Internal Revenue Code. Section
162(m) provides that compensation paid to executive officers in excess of
$1,000,000 cannot be deducted by the Company for federal income tax purposes
unless, in general, the compensation is performance-based, is established by an
independent committee of Directors, is objective and the plan or agreement
providing for compensation has been approved in advance by the shareholders. The
Compensation Committee reserves the right to pay compensation which does not
satisfy the arbitrary and inflexible conditions of Section 162(m) if, in the
judgment of the Compensation Committee, the benefits to the Company of the
payment of such compensation outweighs the costs to the Company of failure to
satisfy these conditions.
Dated: February 14, 2001
LILLIAN BERKMAN, CHAIR WALTER FELDESMAN ALLAN F. HERSHFIELD
A-1
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EXHIBIT B
STERLING BANCORP STOCK INCENTIVE PLAN AMENDMENT
A. INTRODUCTION -- Sterling Bancorp (the "Company") desires to amend the
Sterling Bancorp Stock Incentive Plan, as amended to date (the "Plan"), to
increase the maximum aggregate number of shares subject to the Plan by 400,000.
B. EFFECTIVENESS -- This amendment shall become effective if it shall be
approved by the vote of a majority of the outstanding voting shares entitled to
notice of and to vote at the 2001 Annual Meeting of Shareholders. In the event
of any conflict between the provisions of this amendment and of the Plan as
originally adopted, the provisions of this amendment shall control.
C. SHARES SUBJECT TO THE PLAN -- The first sentence of Section 3 of the
Plan, as amended, is amended to further increase the number set forth therein by
400,000.
B-1
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EXHIBIT C
STERLING BANCORP
KEY EXECUTIVE INCENTIVE BONUS PLAN
I. Purpose
The purpose of the Plan is to establish a program of incentive
compensation for designated officers and/or key executive employees of the
Company and its subsidiaries and divisions that is directly related to the
performance results of the Company and such employees. The Plan provides annual
incentives, contingent upon continued employment and meeting certain corporate
goals, to certain key executives who make substantial contributions to the
Company.
II. Definitions
"Board" means the Board of Directors of the Company or the Executive
Committee thereof.
"Bonus Award" means the award, as determined by the Committee, to be
granted to a Participant based on that Participant's level of attainment of his
or her goals established in accordance with Articles IV and V.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means either (i) the Board or (ii) a committee selected by the
Board to administer the Plan and composed of not less than two directors, each
of whom is an "outside director" (within the meaning of Section 162(m) of the
Code). If at any time such a Committee has not been so designated, the
Compensation Committee of the Board shall constitute the Committee or if there
shall be no Compensation Committee of the Board, the Board shall constitute the
Committee.
"Company" means Sterling Bancorp and each of its subsidiaries.
"Designated Beneficiary" means the beneficiary or beneficiaries designated
in accordance with Article XIII hereof to receive the amount, if any, payable
under the Plan upon the Participant's death.
"162(m) Bonus Award" means a Bonus Award which is intended to qualify for
the performance-based compensation exception to Section 162(m) of the Code, as
further described in Article VII.
"Participant" means any officer or key executive designated by the
Committee to participate in the Plan.
"Performance Criteria" means objective performance criteria established by
the Committee with respect to 162(m) Bonus Awards. Performance Criteria shall be
measured in terms of one or more of the following objectives, described as such
objectives relate to
28
2
Company-wide objectives or of the subsidiary, division, department or function
with the Company or subsidiary in which the Participant is employed:
(i) average total loans;
(ii) average deposits and customer repurchase agreements;
(iii) net income;
(iv) return on average assets; or
(v) return on average equity.
Each grant of a 162(m) Bonus Award shall specify the Performance Criteria to be
achieved, a minimum acceptable level of achievement below which no payment or
award will be made, and a formula for determining the amount of any payment or
award to be made if performance is at or above the minimum acceptable level but
falls short of full achievement of the specified Performance Criteria.
If the Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in which it
conducts its business, or other events or circumstances render the Performance
Criteria to be unsuitable, the Committee may modify such Performance Criteria or
the related minimum acceptable level of achievement, in whole or in part, as the
Committee deems appropriate and equitable; provided, however, that no such
modification shall be made if the effect would be to cause a 162(m) Bonus Award
to fail to qualify for the performance-based compensation exception to Section
162(m) of the Code. In addition, at the time performance goals are established
as to a 162(m) Bonus Award, the Committee is authorized to determine the manner
in which the Performance Criteria related thereto will be calculated or measured
to take into account certain factors over which the Participant has no control
or limited control including changes in industry margins, general economic
conditions, interest rate movements and changes in accounting principles.
"Performance Period" means the period during which performance is measured
to determine the level of attainment of a Bonus Award, which shall be the fiscal
year of the Company.
"Plan" means the Sterling Bancorp Key Executive Incentive Bonus Plan.
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3
III. Eligibility
Participants in the Plan shall be selected by the Committee for each
Performance Period from those officers and key executives of the Company and its
subsidiaries whose efforts contribute materially to the success of the Company.
No employee shall be a Participant unless he or she is selected by the
Committee, in its sole discretion. No employee shall at any time have the right
to be selected as a Participant nor, having been selected as a Participant for
one Performance Period, to be selected as a Participant in any other Performance
Period.
IV. Administration
The Committee, in its sole discretion, will determine eligibility for
participation, establish the maximum award which may be earned by each
Participant (which may be expressed in terms of dollar amount, percentage of
salary or any other measurement), establish goals for each Participant (which
may be objective or subjective, and based on individual, Company, subsidiary
and/or division performance), calculate and determine each Participant's level
of attainment of such goals, and calculate the Bonus Award for each Participant
based upon such level of attainment.
Except as otherwise herein expressly provided, full power and authority to
construe, interpret, and administer the Plan shall be vested in the Committee,
including the power to amend or terminate the Plan as further described in
Article XVI. The Committee may at any time adopt such rules, regulations,
policies, or practices as, in its sole discretion, it shall determine to be
necessary or appropriate for the administration of, or the performance of its
respective responsibilities under, the Plan. The Committee may at any time
amend, modify, suspend, or terminate such rules, regulations, policies, or
practices.
V. Bonus Awards
The Committee, based upon information to be supplied by management of the
Company and, where determined as necessary by the Board, the ratification of the
Board, will establish for each Performance Period a maximum award (and, if the
Committee deems appropriate, a threshold and target award) and goals relating to
Company, subsidiary, divisional, departmental and/or functional performance for
each Participant and communicate such award levels and goals to each Participant
prior to or during the Performance Period for which such award may be made.
Bonus Awards will be earned by each Participant based upon the level of
attainment of his or her goals during the applicable Performance Period;
provided that the Committee may reduce the amount of any Bonus Award in its sole
and absolute discretion. As soon as practicable after the end of the applicable
Performance Period, the Committee shall determine the level of attainment of the
goals for each Participant and the Bonus Award to be made to each Participant.
VI. Payment of Bonus Awards
Bonus Awards earned during any Performance Period shall be paid as soon as
practicable following the end of such Performance Period and the determination
of the amount
30
4
thereof shall be made by the Committee. Payment of Bonus Awards shall be made in
the form of cash. Bonus Award amounts earned but not yet paid will not accrue
interest.
VII. 162(m) Bonus Awards
Unless determined otherwise by the Committee, each Bonus Award, awarded
under the Plan shall be a 162(m) Bonus Award and will be subject to the
following requirements, notwithstanding any other provision of the Plan to the
contrary:
1. No 162(m) Bonus Award may be paid unless and until the shareholders
of the Company have approved the Plan in a manner which complies
with the shareholder approval requirements of Section 162(m) of the
Code.
2. A 162(m) Bonus Award may be made only by a Committee which is
comprised solely of not less than two directors, each of whom is an
"outside director" (within the meaning of Section 162(m) of the
Code).
3. The performance goals to which a 162(m) Bonus Award is subject must
be based solely on Performance Criteria. Such performance goals, and
the maximum, target and/or threshold (as applicable) Bonus Amount
payable upon attainment thereof, must be established by the
Committee within the time limits required in order for the 162(m)
Bonus Award to qualify for the performance-based compensation
exception to Section 162(m) of the Code.
4. No 162(m) Bonus Award may be paid until the Committee has certified
the level of attainment of the applicable Performance Criteria.
5. The maximum amount of a 162(m) Bonus Award is $2.0 million to a
single Participant.
VIII. Termination of Employment
A Participant shall be eligible to receive payment of his or her Bonus
Award earned during a Performance Period, so long as the Participant is employed
on the last day of such Performance Period, notwithstanding any subsequent
termination of employment prior to the actual payment of the Bonus Award. In the
event of a Participant's death prior to the payment of a Bonus Award which has
been earned, such payment shall be made to the Participant's Designated
Beneficiary or, if there is none living, to the estate of the Participant.
IX. Reorganization or Discontinuance
The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from merger, consolidation or
other reorganization of the Company, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Company. The Company will make appropriate provision for the preservation of
Participants' rights under the Plan in any agreement or plan which it may enter
into or adopt to effect any such merger, consolidation, reorganization or
transfer of assets.
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If the business conducted by the Company shall be discontinued, any
previously earned and unpaid Bonus Awards under the Plan shall become
immediately payable to the Participants then entitled thereto.
X. Non-Alienation of Benefits
A Participant may not assign, sell, encumber, transfer or otherwise
dispose of any rights or interests under the Plan except by will or the laws of
descent and distribution. Any attempted disposition in contravention of the
preceding sentence shall be null and void.
XI. No Claim or Right to Plan Participation
No employee or other person shall have any claim or right to be selected
as a Participant under the Plan. Neither the Plan nor any action taken pursuant
to the Plan shall be construed as giving any employee any right to be retained
in the employ of the Company.
XII. Taxes
The Company shall deduct from all amounts paid under the Plan all federal,
state, local and other taxes required by law to be withheld with respect to such
payments.
XIII. Designation and Change of Beneficiary
Each Participant may indicate upon notice to him or her by the Committee
of his or her right to receive a Bonus Award a designation of one or more
persons as the Designated Beneficiary who shall be entitled to receive the
amount, if any, payable under the Plan upon the death of the Participant. Such
designation shall be in writing to the Committee. A Participant may, from time
to time, revoke or change his or her Designated Beneficiary without the consent
of any prior Designated Beneficiary by filing a written designation with the
Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of a date prior to
such receipt.
XIV. Payments to Persons Other Than the Participant
If the Committee shall find that any person to whom any amount is payable
under the Plan is unable to care for his or her affairs because of incapacity,
illness or accident, or is a minor, or has died, then any payment due to such
person or his or her estate (unless a prior claim therefor has been made by a
duly appointed legal representative) may, if the Committee so directs, be paid
to his or her spouse, a child, a relative, an institution maintaining or having
custody of such person, or any other person deemed by the Committee, in its sole
discretion, to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Company therefor.
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6
XV. No Liability of Committee Members
No member of the Committee shall be personally liable by reason of any
contract or other instrument related to the Plan executed by such member or on
his or her behalf in his or her capacity as a member of the Committee, nor for
any mistake of judgment made in good faith, and the Company shall indemnify and
hold harmless each employee, officer, or director of the Company to whom any
duty or power relating to the administration or interpretation of the Plan may
be allocated or delegated, against any cost or expense (including legal fees,
disbursements and other related charges) or liability (including any sum paid in
settlement of a claim with the approval of the Board) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or bad faith.
XVI. Termination or Amendment of the Bonus Plan
The Committee may amend, suspend or terminate the Bonus Plan at any time;
provided that no amendment may be made without the approval of the Company's
shareholders if the effect of such amendment would be to cause outstanding or
pending 162(m) Bonus Awards to cease to qualify for the performance-based
compensation exception to Section 162(m) of the Code.
XVII. Unfunded Plan
Participants shall have no right, title, or interest whatsoever in or to
any investments which the Company may make to aid it in meeting its obligations
under the Plan. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant, Beneficiary,
legal representative or any other person. To the extent that any person acquires
a right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts except as expressly
set forth in the Plan.
The Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.
XVIII. Governing Law
The terms of the Plan and all rights thereunder shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
33
7
XIX. Effective Date
The effective date of the Plan is March 8, 2001.
As Adopted by the Executive Committee of the Board of Directors of Sterling
Bancorp at a Meeting Held on March 8, 2001.
By: /s/ Jerrold Gilbert
----------------------------------------------
Executive Vice President and Corporate Counsel
34
STERLING BANCORP
430 PARK AVENUE, NEW YORK, NY 10022-3505
[STERLING BANCORP LOGO]
Subsidiaries
STERLING NATIONAL BANK
STERLING FACTORS CORPORATION
STERLING NATIONAL MORTGAGE COMPANY, INC.
STERLING NATIONAL SERVICING, INC.
STERLING FINANCIAL SERVICES COMPANY, INC.
STERLING BANKING CORPORATION
STERLING HOLDING COMPANY OF VIRGINIA, INC.
STERLING REAL ESTATE HOLDING COMPANY INC.
35
STERLING BANCORP
430 PARK AVENUE, NEW YORK, NY 10022-3505
[STERLING BANCORP LOGO]
36
PROXY
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
STERLING BANCORP
ANNUAL MEETING OF SHAREHOLDERS, THURSDAY APRIL 19, 2001
The undersigned appoints Louis J. Cappelli, John C. Millman and Lillian
Berkman, or any one of them, attorneys and proxies with power of substitution,
to vote all of the Common Shares and Preferred Shares of Sterling Bancorp
standing in the name of the undersigned at the Annual Meeting of Shareholders on
Thursday, April 19, 2001, and all adjournments thereof, herby revoking any proxy
heretofore given.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
37
Please mark
your votes [X]
like this
PROXY
-----
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR FOR WITHHOLD
All Nominees For All Nominees
[ ] [ ]
1. ELECTION OF DIRECTORS
01 Robert Abrams, 02 Joseph M. Adamko, 03 Lillian
Berkman, 04 Louis J. Cappelli, 05 Walter Feldesman,
06 Allan F. Hershfield, 07 Henry J. Humphreys,
08 John C. Millman, 09 Maxwell M. Rabb,
10 Eugene T. Rossides.
To withhold authority to vote for any individual
nominee(s) write that nominee's name in the space
provided.
- -------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
2. Proposal to approve the Stock Incentive FOR AGAINST ABSTAIN
Plan Amendment [ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
3. Proposal to approve Sterling Bancorp Key
Executive Incentive Bonus Plan [ ] [ ] [ ]
4. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR ALL NOMINEES" IN
ITEM 1. "FOR" APPROVAL OF THE STOCK INCENTIVE PLAN AMENDMENT, AND "FOR"
APPROVAL OF THE STERLING BANCORP KEY EXECUTIVE INCENTIVE BONUS PLAN.
Signature Signature Date
------------------ ------------------ --------------
Please mark, date, and sign as your name appears above and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by duly authorized officer. If shares are
held jointly, each shareholder named should sign.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE AND READ THE REVERSE SIDE -
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY
CARD.
INTERNET
http://www.proxyvoting.com/STL
Use the Internet to vote your
proxy. Have your proxy card in
hand when you access the web
site. You will be prompted to enter
your control number, located in the
box below, to create and submit an
electronic ballot.
OR
TELEPHONE
1-800-840-1208
Use any touch-tone telephone to
vote your proxy. Have your proxy
card in hand when you call. You will
be prompted to enter your control
number, located in the box below,
and then follow the directions given.
OR
MAIL
Mark, sign and date your proxy card
and return it in the enclosed
postage-paid envelope.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE, YOU DO NOT NEED TO MAIL
BACK YOUR PROXY CARD.