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:
<Table>
[ ] 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))
</Table>
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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] 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:
------------------------------------------------------------------------
[STERLING BANCORP LOGO] 650 FIFTH AVENUE / NEW YORK, N.Y. 10019-6108
LOUIS J. CAPPELLI
CHAIRMAN
& CHIEF EXECUTIVE
OFFICER
March 9, 2002
Dear Shareholder:
Sterling's Annual Meeting of Shareholders will be held on Thursday, April 18,
2002, at 10:00 A.M., at The University Club, One West 54th Street, New York,
N.Y., 10019 and you are invited to attend.
The Company's record performance in 2001 marked the sixth consecutive year that
earnings reached an all time high. Net income increased 17%, to a record $19.4
million, while earnings per share, on a diluted basis, was $1.80. Total assets
increased to $1.5 billion, with asset quality in the highest quartile of our
peer group. Sterling's return on average assets in 2001 was 1.53% and its return
on average tangible equity was 18.86%. In November, 2001, your Board of
Directors approved a 10% stock dividend and an increased quarterly cash dividend
of $0.18, up from $0.16 per share. These actions resulted in an increase of 24%
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
[STERLING BANCORP LOGO]
STERLING BANCORP
650 FIFTH AVENUE, NEW YORK, NY 10019-6108
NOTICE OF ANNUAL MEETING
APRIL 18, 2002
The Annual Meeting of Shareholders of Sterling Bancorp will be held on
Thursday, April 18, 2002, at 10:00 o'clock A.M., New York City time, at The
University Club, One West 54th Street, New York, New York, 10019, to consider
and act upon the following matters:
1. Election of 8 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. Such other matters as may properly come before the meeting or any
adjournment thereof.
The close of business on March 4, 2002 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 9, 2002
[STERLING BANCORP LOGO]
STERLING BANCORP
650 Fifth Avenue
New York, N.Y. 10019-6108
------------------
PROXY STATEMENT
------------------
MARCH 9, 2002
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 18,
2002. 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" and for the amendment of the
Company's Stock Incentive 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 18, 2002.
The outstanding shares of the Company at the close of business on March 4,
2002 entitled to vote at the Annual Meeting consisted of 10,162,467 Common
Shares, $1 par value ("Common Shares"), and 234,606 Series D, Preferred Shares
("Preferred Shares"). 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 4, 2002 are
entitled to vote at the Annual Meeting.
ELECTION OF DIRECTORS
Eight directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting of Shareholders to be held on April 18, 2002, 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 2001 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.
The information set forth below has been furnished by the nominees:
<Table>
<Caption>
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 63 1999
Member, Stroock & Stroock & Lavan, LLP; former Attorney
General of the State of New York; former Bronx Borough
President
Joseph M. Adamko* 69 1992
Former Managing Director, Manufacturers Hanover Trust Co.
(now J.P. Morgan Chase); Vice Chairman of the Company and
of the Bank
Louis J. Cappelli* 71 1971
Chairman of the Board and Chief Executive Officer of the
Company; Chairman of the Board of the Bank
Walter Feldesman* 84 1975
Counsel, Brown Raysman Millstein Felder & Steiner, LLP
Allan F. Hershfield 70 1994
President, Resources for the 21st Century; former
President, Fashion Institute of Technology
Henry J. Humphreys 73 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* 59 1988
President of the Company; President and Chief Executive
Officer of the Bank
Eugene T. Rossides 74 1989
Senior Counsel, Clifford Chance Rogers & Wells LLP; former
Assistant Secretary, United States Treasury Department
</Table>
- ---------------
* Member of Executive Committee.
Each nominee is a director of the Bank.
Mr. Adamko, a nominee for director is also a director of Tommy Hilfiger
Corporation.
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.
2
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, 2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM COMPENSATION
ANNUAL ----------------------------
COMPENSATION RESTRICTED SECURITIES ALL OTHER
-------------------- STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) OPTIONS(#) SATION($)(2)
--------------------------- ---- --------- -------- ------------- ------------ ------------
Louis J. Cappelli 2001 591,961 825,000 93,122
Chairman of the Board and 2000 524,321 750,000 988,281 68,750 75,268
Chief Executive Officer, 1999 465,086 550,000 105,000 61,984
Sterling Bancorp
Chairman of the Board,
Sterling National Bank
John C. Millman 2001 372,364 350,000 37,912
President, 2000 336,190 315,000 474,375 33,000 36,695
Sterling Bancorp 1999 304,980 270,000 52,500 21,636
President and Chief Executive Officer,
Sterling National Bank
Jerrold Gilbert 2001 156,000 35,000 8,336
Executive Vice President and 2000 148,500 25,000 16,500 7,702
General Counsel 1999 142,500 15,000 15,750 5,864
Sterling Bancorp and
Sterling National Bank
John W. Tietjen 2001 190,000 60,000 10,239
Executive Vice President, 2000 172,500 50,000 22,000 7,586
Treasurer and Chief Financial Officer, 1999 155,000 37,500 21,000 5,864
Sterling Bancorp
Executive Vice President
Sterling National Bank
John A. Aloisio 2001 205,000 55,000 10,462
Senior Vice President, 2000 190,000 50,000 22,000 8,378
Sterling Bancorp 1999 175,000 35,000 21,000 5,864
Executive Vice President,
Sterling National Bank
</Table>
- ---------------
(1) Effective February 11, 2000, Messrs. Cappelli and 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, lapsed as to 25% of
the shares on February 11, 2001, and lapse as to an additional 25% of the
shares subject to the award on each of the second and third anniversaries of
the award. As of December 31, 2001, after adjustment to reflect a ten
percent stock dividend in 2001, Messrs. Cappelli and Millman, respectively,
owned 37,812 and 18,150 Common Shares, subject to restriction valued at
$1,104,110 and $529,980.
(2) 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 2001 was $2,797. 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
2001 was $25,595. 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 $6,706, $1,204, $895 and $1,643, 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,
Millman, Tietjen and Aloisio, $54,649, $24,020, $2,230 and $1,698,
respectively, accruing to them for 2001 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.
3
Employment Contracts. The Company has agreements with Messrs. Cappelli and
Millman which currently provide for terms extending until December 31, 2006 and
December 31, 2004, 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, were amended in 2001 and were further
amended in February 2002. 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 Internal Revenue
Service 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.
4
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
<Table>
<Caption>
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
</Table>
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 50, 25, 27, 12 and 11, 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.
Options
The following table sets forth information as to options held at December
31, 2001 by each of the executive officers named in the Summary Compensation
Table. No new options were granted to the executive officers during the fiscal
year ended December 31, 2001.
In order to permit option holders to retain their potential proportionate
interest in the Company following payment by the Company on December 10, 2001,
of a ten percent stock dividend, the number of 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.
5
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 2.56%; and
risk-free rate of return of 5.15%. 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.
AGGREGATE FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
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.......... 44,467 825,797 372,068 52,943 $5,156,226 $864,987
John C. Millman............ 53,762 879,568 174,130 18,040 2,384,566 294,739
Jerrold Gilbert............ 42,896 47,670 715,390 673,927
John W. Tietjen............ 8,250 123,313 36,926 50,804 558,106 720,229
John A. Aloisio............ 9,657 129,536 50,030 49,634 795,966 692,850
</Table>
BOARD COMPENSATION REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's policies applicable to the executive officers
are described in the report attached as Exhibit A hereto.
6
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
[COMPARISON LINE GRAPH]
<Table>
<Caption>
- --------------------------------------------------------------------------------
12/96 12/97 12/98 12/99 12/00 12/01
- --------------------------------------------------------------------------------
STERLING BANCORP 100.00 165.81 160.42 121.36 188.71 284.14
S & P 500 100.00 133.36 171.47 207.56 188.66 166.24
KBW 50 100.00 146.19 158.29 152.80 183.45 175.89
</Table>
- ---------------
* $100 invested on 12/31/1996 in Stock or Index.
Including reinvestment of dividends.
Fiscal year ending December 31.
7
MEETINGS AND ATTENDANCE OF DIRECTORS; CERTAIN COMMITTEES; FEES
During the year ended December 31, 2001, the Board of Directors of the
Company held five regularly scheduled meetings and one special meeting. In
addition, various committees of the Board met at regular meetings. No director
attended fewer than 75% of the meetings he 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 five
meetings during the year ended December 31, 2001.
The members of the compensation committee ("Compensation Committee") are
Mr. Feldesman (acting chair), Mr. Abrams 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, 2001.
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 5,082*
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 2,420*
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, 2001 and for the reviews of the financial statements included
in the Company's Quarterly Reports on Form 10-Q for that fiscal year were
$241,000.
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, 2001.
- ---------------
* Inclusive of adjustment for stock dividends declared on Common Shares.
8
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, 2001 were $253,720. Fees for other non-audit services
were for tax purposes and operations reviews.
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 originally adopted by the Board on May 18, 2000,
and amended on November 15, 2001, 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. 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
of Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2001 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 February 21, 2002
9
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. Mr. Feldesman is counsel to a law firm that the Company retained
during its last fiscal year and Mr. Abrams is a partner in a law firm 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 21, 2002, 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 4, 2002 was $30.78
per share.
<Table>
<Caption>
NUMBER AND
NUMBER AND NATURE OF
NATURE OF SERIES D
COMMON PREFERRED
SHARES SHARES % OF OUTSTANDING
BENEFICIALLY % OF OUTSTANDING BENEFICIALLY SERIES D
NAME OWNED(1) COMMON SHARES OWNED(1) PREFERRED SHARES
---- ------------ ---------------- ------------ ----------------
Robert Abrams.............................. 4,541 +
Joseph M. Adamko........................... 13,248 .13
Louis J. Cappelli.......................... 717,618 7.09 2,749 1.17
Walter Feldesman........................... 19,659 .19
Allan F. Hershfield........................ 14,029 .14
Henry J. Humphreys......................... 16,102 .16
John C. Millman............................ 333,631 3.29 2,667 1.14
Eugene T. Rossides......................... 11,797 .12
Jerrold Gilbert............................ 121,046 1.20 2,463 1.05
John W. Tietjen............................ 57,966 .57 2,406 1.03
John A. Aloisio............................ 70,635 .70 2,509 1.07
All directors and executive officers as a
group (11 in group)...................... 1,380,272 13.63 12,794 5.46
</Table>
- ---------------
+ 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 63,159; 5,648; 23,508; 107; and 3 Common Shares, respectively,
held in profit sharing plans as to which they have power to direct the vote
only, 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 Mr. Abrams, 4,415 Common Shares; as to
each of Messrs. Feldesman, Hershfield and Humphreys, 8,225 Common Shares; as to
each of Messrs. Adamko and Rossides, 10,766 Common Shares; as to Messrs.
Cappelli, Millman, Gilbert, Tietjen and Aloisio and all directors and executive
officers as a group, 382,653; 182,325; 48,028; 42,058; 55,162; and 763,389
Common Shares, respectively, covered by outstanding stock options exercisable
within 60 days and, as to Messrs. Cappelli and Millman, include 68,906 and
19,075 Common Shares, respectively, granted under the Company's Stock Incentive
Plan as to which they do not have sole investment power. The shares shown as
owned by Mr. Cappelli include 377 Common Shares owned by his wife, the shares
shown as owned by Mr. Millman include 634 shares owned by his wife and 155
shares owned by his wife as custodian, the shares shown as owned by Mr. Gilbert
include 3,312 shares owned by his wife and 154 shares owned as
10
custodian, beneficial ownership of the latter of which he disclaims and the
shares owned by Mr. Aloisio include 206 shares owned by his son and 101 shares
owned by his wife, beneficial ownership of which he disclaims.
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 February 21,
2002.
<Table>
<Caption>
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...................... 1,023,414(1) 10.11
82 Devonshire Street
Boston, Massachusetts 02109
Louis J. Cappelli........................................... 717,618(2) 7.09
650 Fifth Avenue
New York, New York 10019
Dimensional Fund Advisors Inc. ............................. 615,215(3) 6.07
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</Table>
- ---------------
(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, 2002 by FMR Corp., 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 355,640 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 355,640 of the Common Shares owned by Fidelity.
Edward C. Johnson 3d, Chairman of FMR Corp., FMR Corp. (through its control of
Fidelity), and the Fidelity Funds each has sole dispositive power with respect
to 355,640 Common Shares, but do not have the sole power to vote or direct the
voting of the Common Shares owned directly by the Fidelity Funds, which power
resides with the Funds' Board of Trustees. Fidelity carries out the voting of
the shares under written guidelines established by the Funds' Board of Trustees.
63,774 Common Shares set forth in the above table are beneficially owned by
Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp. and a
bank as defined in Section 3(a)(6) of the Exchange Act, as a result of its
serving as investment manager of certain institutional accounts. Edward C.
Johnson 3d and FMR Corp. (through its control of Fidelity Management Trust
Company) each has sole dispositive power and sole power to vote, or direct the
voting of, 63,774 Common Shares. Through their ownership of voting common stock
of FMR Corp. and the execution of a shareholders' voting 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.
(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 January 30, 2002 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 commingled group trusts and separate accounts. (These investment
companies, trusts and accounts are the "Funds"). In its role as investment
advisor or manager, Dimensional states that it possesses both voting and/or
investment power over the Common Shares set forth in the above table that are
owned by the Funds and that all such are owned by the Funds, and Dimensional
11
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.
Sterling Bancorp and Subsidiaries Employee Stock Ownership Trust (whose
address is 622 Third Avenue, New York, NY 10016, 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 1.2723 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 2,571,428 shares
covered by the Plan. Awards covering an aggregate of 2,064,454 shares have been
made. After giving effect to such awards, only 506,974 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 2002 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.
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, Mr. Abrams 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 295 employees of the Company and its subsidiaries are
eligible to participate in the Plan.
12
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 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.
13
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 of Directors
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 4, 2002, the market value of one of the Company's Common Shares
was $30.78.
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 (other than as set forth below), 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 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.
14
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
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.
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.
GENERAL
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of KPMG, LLP, which firm audited the financial statements
for the Company's fiscal year ending December 31, 2001, 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.
15
2003 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 2003 Annual Meeting of
Shareholders currently scheduled to be held on April 17, 2003, must present such
proposal in writing to the Company at 650 Fifth Avenue, New York, New York
10019-6108, Attention: Jerrold Gilbert, General Counsel, not later than the
close of business on November 18, 2002. 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 2003 Annual Meeting of Shareholders
must provide timely notice thereof in the manner and form required by the
Company's Bylaws by February 18, 2003 (but not before January 18, 2003). If the
date of the 2003 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, 2001 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,
2001, 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, 650 FIFTH AVENUE, NEW YORK, NY 10019-6108.
STERLING BANCORP
Dated: March 9, 2002
16
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.
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 of the Company's annual financial
statements, 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, (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), and (iii) representations made by management as to any
information technology, internal audit and other non-audit services provided by
the auditors to the Company.
The outside auditors for the Company are ultimately accountable to the
Board of Directors (as assisted by the Audit Committee). 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.
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 outside auditors shall submit to the Company annually a formal written
statement of the fees billed for each of the following categories of services
rendered by the outside auditors: (i) the audit of the Company's annual
financial statements for the most recent fiscal year and the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for that fiscal year; (ii) information technology consulting services for the
most recent fiscal year, in the aggregate and by each service (and separately
identifying fees for such services relating to financial information system
design and implementation; and (iii) all other services rendered by the outside
auditors for the most recent fiscal year, in the aggregate and by each service.
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 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 and provide advice to the Board of Directors
regarding 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 objectivity
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) if applicable, to consider whether the outside auditors'
provision of (a) information technology consulting services relating to
financial information systems design and implementation and (b) other
non-audit services to the Company is compatible with maintaining the
independence of the outside auditors; and
(v) to instruct the outside auditors that the outside auditors are
ultimately accountable to the Board of Directors and Audit Committee.
2. with respect to the internal auditing department,
(i) to review the appointment and replacement of the Chief Auditor
of the internal auditing department; and
(ii) to advise the Chief Auditor of the internal auditing
department that he or she is expected 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 or operation of internal
controls;
- consideration of fraud in a financial statement audit;
2
- detection of illegal acts;
- the outside auditors' 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;
- 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 auditors' 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 and 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 or other disclosures, 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
3
(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.
4
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 2001 performance, total cash bonus amounts of $825,000 and $350,000,
respectively, were determined for Messrs. Cappelli and Millman pursuant to the
application of objective formulae containing the above criteria implemented in
March 2001, under the Company's Key Executive Bonus Plan.
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, 2002, and the terms of these agreements extended to
December 31, 2006 and December 31, 2004, respectively.
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 15, 2002
WALTER FELDESMAN, ACTING CHAIR ROBERT ABRAMS ALLAN F.
HERSHFIELD
A-1
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 2002 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
STERLING BANCORP
650 FIFTH AVENUE, NEW YORK, NY 10019-6108
[STERLING BANCORP LOGO]
PROXY THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
STERLING BANCORP
ANNUAL MEETING OF SHAREHOLDERS, THURSDAY APRIL 18, 2002
The undersigned appoints Louis J. Cappelli, John C. Millman and Henry J.
Humphreys, 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 18, 2002, and all adjournments thereof, hereby 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 -
PLEASE MARK
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR WITHHOLD
FOR All Nominees For All Nominees
1. ELECTION OF DIRECTORS / / / /
01 Robert Abrams, 02 Joseph M. Adamko,
03 Louis J. Cappelli, 04 Walter Feldesman,
05 Allan F. Hershfield, 06 Henry J. Humphreys,
07 John C. Millman, 08 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
FOR AGAINST ABSTAIN
2. Proposal to approve the Stock / / / / / /
Incentive Plan Amendment
3. 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 AND "FOR"
APPROVAL OF THE STOCK INCENTIVE PLAN
AMENDMENT.
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 -
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 4PM EASTERN TIME
THE BUSINESS DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE 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.eproxy.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
1-800-435-6710
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.