UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Astoria Financial Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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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
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[LETTERHEAD OF ASTORIA FINANCIAL CORPORATION]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 16,200l
The Annual Meeting of Shareholders of Astoria Financial Corporation will be
held on Wednesday, May 16,2001, at 9:30 a.m., Eastern time, at the New Hyde Park
Inn, 214 Jericho Turnpike, New Hyde Park, New York 11040. The meeting will be
held to consider and act upon the following matters:
1. The election of three directors for terms of three years each;
2. The ratification of the appointment of independent auditors;
3. If properly presented, a shareholder proposal opposed by your Board of
Directors; and
4. Such other matters as may properly come before the Annual Meeting or
any adjournment or postponement thereof.
Holders of record of Astoria Financial Corporation common stock, as of the
close of business on March 23, 2001, are entitled to notice of and to vote at
the Annual Meeting and any adjournment or postponement thereof. A list of
shareholders entitled to vote at the Annual Meeting will be available at the
meeting, and at Astoria Financial Corporation, One Astoria Federal Plaza, Lake
Success, New York 11042 and at Astoria Federal Savings and Loan Association,
Mortgage Center, 2000 Marcus Avenue, New Hyde Park, New York 11042 for a period
of ten days prior to the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND PROMPTLY RETURN
THE ENCLOSED WHITE PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE AS SOON AS
POSSIBLE.
By Order of the Board of Directors,
/s/ Alan P. Eggleston
Alan P. Eggleston
Executive Vice President, General Counsel
& Secretary
Dated: April 16,200l
ASTORIA FINANCIAL CORPORATION
One Astoria Federal Plaza
Lake Success, New York 11042-1085
________________________________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 16,200l
________________________________________
General Information
This Proxy Statement and the accompanying white proxy card are being
furnished to holders of Astoria Financial Corporation, or AFC, common stock in
connection with the solicitation of proxies by the Board of Directors of AFC, or
the Board, for use at the AFC Annual Meeting of Shareholders to be held on May
16, 2001, and at any adjournment or postponement thereof, or the Annual Meeting.
The Annual Meeting will be held at 9:30 a.m., Eastern time, at the New Hyde Park
Inn, 214 Jericho Turnpike, New Hyde Park, New York 11040. Only holders of record
of AFC's issued and outstanding common stock, par value $0.01 per share, or AFC
Common Stock, as of the close of business on March 23,2001, or the Record Date,
are entitled to vote at the Annual Meeting. The 2000 Annual Report on Form 10-K,
which includes the consolidated financial statements of AFC for the fiscal year
ended December 31, 2000, or the Consolidated Financial Statements, accompanies
this Proxy Statement and the white proxy card which are first being mailed or
given to shareholders of record on or about April 16, 2001.
Voting and Quorum Requirements
As of the Record Date, there were 48,938,073 shares of AFC Common Stock
issued and outstanding and entitled to vote at the Annual Meeting. Each share of
AFC Common Stock outstanding on the Record Date entitles the holder thereof to
one vote on each matter to properly come before the Annual Meeting, except as
described below. The presence, either in person or by proxy, of the holders of a
majority of all of the shares of AFC Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the Annual Meeting.
The election of directors shall be by a plurality of votes cast by the
holders of AFC Common Stock present, in person or by proxy, and entitled to vote
thereon. Holders of AFC Common Stock may not vote their shares cumulatively with
respect to the election of directors. The ratification of the appointment of
independent auditors, the adoption of the shareholder proposal which is opposed
by the Board, and any other matters as may properly come before the Annual
Meeting each requires the affirmative vote of a majority of the votes cast by
the holders of AFC Common Stock present, in person or by proxy, and entitled to
vote thereon.
Shares of AFC Common Stock as to which the "ABSTAIN' box has been selected
on the white proxy card, with respect to the ratification of the appointment of
KPMG LLP as independent auditors for AFC and with respect to the shareholder
proposal, will be counted as present and entitled to vote and will have the
effect of a vote against the proposal so indicated. In contrast, shares of AFC
Common Stock underlying broker non-votes and shares for which a proxy card is
not returned will not be counted as present and entitled to vote and will have
no effect on the vote on each matter presented.
Every properly executed white proxy card that is received timely by AFC
will be voted in accordance with the instructions contained therein unless
otherwise revoked. Properly executed unmarked white proxy cards will be voted
FOR the election of the Board's nominees as directors, FOR the ratification of
the appointment of independent auditors, and AGAINST the shareholder proposal.
If you are a shareholder whose shares are not registered in your own name, you
will need an assignment of voting rights from the shareholder of record to vote
personally at the Annual Meeting.
1
Pursuant to the Certificate of Incorporation of AFC, no record shareholder
of AFC Common Stock which is beneficially owned, directly or indirectly, by a
shareholder who as of the Record Date beneficially owns more than ten percent
(10%) of AFC Common Stock outstanding on such date will be entitled or permitted
to vote any shares of AFC Common Stock in excess of ten percent ( 10%) of AFC
Common Stock outstanding as of the Record Date. For purposes of this limitation,
neither the Astoria Federal Savings and Loan Association, or the Association,
Employee Stock Ownership Plan, or the ESOP, nor the trustees of such plan are
considered the beneficial owner of the AFC Common Stock held by the Association
ESOP.
Participants in the Association ESOP and the Association Incentive Savings
Plan have the right to direct the voting of AFC Common Stock held in their Plan
accounts, but do not have the right to vote those shares personally at the
Annual Meeting. Such participants should refer to the voting instructions
provided by the Plan fiduciaries for information on how to direct the voting of
these shares.
Revocation of Proxies
Any shareholder who executes a proxy has the right to revoke it at any time
before it is voted. A proxy may be revoked by delivering to the Secretary of
AFC, at its principal office, either a written revocation or a proxy, duly
executed, bearing a later date, or by attending the Annual Meeting and voting in
person.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information, as of the Record Date,
with respect to the beneficial ownership of AFC Common Stock by each person or
group of persons, as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended, or the Exchange Act, known to AFC to be the beneficial
owner of more than five percent (5%) of AFC voting stock. For purposes of the
Annual Meeting, the AFC Common Stock is the only AFC voting stock outstanding.
Name & Address Amount and Nature of Percent of
Of Beneficial Owner Beneficial Ownership Class
------------------- -------------------- ----------
Association ESOP 4,271,196(1) 8.73
c/o Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042
Citigroup Inc. 3,005,360(2) 6.14
339 Park Avenue
New york, New York 10043
and
Solomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
State Street Bank and Trust Company, acting in various 2,860,088(3) 5.84
fiduciary capacities
225 Franklin Street
Boston, Massachusetts 02110
_______________________________________
(1) This plan, which is an employee stock ownership plan under the Employee
Retirement Income Security Act of 1974, as amended, or ERISA, is the result
of the merger of The Long Island Savings Bank FSB, or LISB. Employee Stock
Ownership Plan with and into the Association ESOP. The Association ESOP
provides for individual accounts for the accrued benefits of participating
employees of AFC and its subsidiaries and their beneficiaries and is
administered by a committee comprised of four officers of the Association.
The assets of Association ESOP are held in two separate trusts by two
separate trustees: CG Trust Company, or CIGNA, and State Street Bank and
Trust Company, or State Street, each individually a Trustee. The number of
shares indicated in the chart above represents the total shares held by the
trusts as of December 31, 2000 according to a Schedule 13G filed as of
February 13, 2001. As of December 31, 2000, State Street held 2,292,133
shares
2
of AFC Common Stock as Trustee of the Association ESOP, 1,105,586 shares of
which had been allocated to the accounts of individual participants and
their beneficiaries. See Note 3 below. As of such date, CIGNA held
1,979,063 shares of AFC Common Stock as Trustee of the Association ESOP,
335,042 shares of which had been allocated to the accounts of individual
participants and their beneficiaries. For voting purposes, each participant
as a "named fiduciary" will be eligible to direct the respective Trustee
how to vote at the Annual Meeting as to the number of shares of AFC Common
Stock which have been allocated to his or her account under the Association
ESOP. The remaining unallocated shares and any allocated shares with
respect to which no voting instructions have been received, will be voted
by the respective Trustee at the Annual Meeting in the same manner and
proportion as the allocated shares, with respect to which voting
instructions have been received, so long as such vote is in accordance with
the provisions of ERISA. As a result, the Association ESOP claims no voting
power with respect to the shares of AFC Common Stock held by the
Association ESOP. The Association ESOP claims sole dispositive power as to
2,830,568 shares of AFC Common Stock and shared dispositive power as to
1,440,628 shares of AFC Common Stock.
(2) According to a joint filing on Schedule 13G filed as of February 16, 2001,
Citigroup, Inc. claims shared voting and dispositive power with respect to
3,005,360 shares of AFC Common Stock, while Salomon Smith Barney Holdings
Inc. claims shared voting power and shared dispositive power with respect
to 2,940,105 shares of AFC Common Stock, in each case, as of December 31,
2000. Citigroup, Inc. is the sole shareholder of Salomon Smith Barney
Holdings Inc. Both Citigroup, Inc. and Salomon Smith Barney Holdings Inc.
are reporting as parent holding companies or control persons on behalf of
subsidiaries which individually are qualified to file Schedule 13G and
whose individual percentage of beneficial ownership did not exceed 5%.
(3) According to a filing on Schedule 13G filed as of February 9, 2001, State
Street holds in the aggregate 2,860,088 shares of AFC Common Stock, as to
which State Street has sole voting power as to 2,827,688 shares of AFC
Common Stock, shared voting power as to 300 shares of AFC Common Stock,
sole dispositive power as to 565,355 shares of AFC Common Stock and shared
dispositive power as to 2,294,733 shares of AFC Common Stock as of December
31, 2000. State Street is a Trustee of the Association ESOP. As of
December 31, 2000, State Street held 2,292,133 shares of AFC Common Stock
for the benefit of the participants of the Association ESOP. See Note 1
above.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board consists of thirteen (13) directors divided into three classes:
two of five directors each and one of three directors. Upon election by the
shareholders, the directors of each class serve for a term of three years, with
the directors of one class elected each year.
In all cases, directors serve until their respective successors are duly
elected and qualified. Pursuant to the Bylaws of AFC, no person is eligible for
election or appointment as a director who is seventy-five (75) years of age or
older, and no person shall continue to serve as a director after the regular
Board meeting immediately preceding such director's seventy-fifth (75th)
birthday.
The directors whose terms expire at the Annual Meeting are John J. Conefry,
Jr., Lawrence W. Peters and Thomas V. Powderly. Each of these directors
(individually, a "Board Nominee" and, collectively, the "Board Nominees") has
been nominated by the Board to stand for reelection, and, if elected, to serve
for a term expiring at the annual meeting of shareholders of AFC to be held in
2004. Each Board Nominee has consented to being named in this Proxy Statement
and to serve as a director of AFC if elected.
If any Board Nominee should refuse or be unable to serve, the proxies will
be voted for such person as shall be designated by the Board to replace such
nominee. The Board presently has no knowledge that any of the Board Nominees
will refuse or be unable to serve.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE BOARD NOMINEES
---------------------------
FOR ELECTION AS DIRECTORS OF AFC FOR TERMS OF THREE YEARS EACH.
Board Nominees, Directors and Executive Officers
The following table sets forth certain information regarding the Board
Nominees for election and members of the Board.
3
Name Age (1) Positions Held with AFC (2) Director Since Term Expires
---- ------- --------------------------- -------------- ------------
George L. Engelke, Jr. 62 Director, Chairman of the Board, President, 1993 2002
and Chief Executive Officer
Gerard C. Keegan 54 Director, Vice Chairman and Chief 1997 2003
Administrative Officer
Andrew M. Burger 66 Director 1993 2003
John J. Conefry, Jr. 56 Director, Vice Chairman and Nominee 1998 2001
Denis J. Connors 59 Director 1993 2003
Robert J. Conway 65 Director 1998 2002
Thomas J. Donahue 60 Director 1993 2003
Peter C. Haeffner, Jr. 62 Director 1997 2002
Ralph F. Palleschi 54 Director 1996 2002
Lawrence W. Peters 71 Director and Nominee 1998 2001
Thomas V. Powderly 63 Director and Nominee 1995 2001
Leo J. Waters 66 Director 1998 2002
Donald D. Wenk 70 Director 1998 2003
_____________________________________
(1) As of the Record Date.
(2) All directors of AFC also serve as directors of the Association.
The following table sets forth certain information regarding the non-
director executive officers of AFC.
Name Age (1) Positions Held With AFC
---- ------- -----------------------
Thomas W. Drennan 56 Executive Vice President
Alan P. Eggleston 47 Executive Vice President, General Counsel and Secretary
Arnold K. Greenberg 60 Executive Vice President and Assistant Secretary
Monte N. Redman 50 Executive Vice President and Chief Financial Officer
_____________________________________
(1) As of the Record Date.
All executive officers of AFC are elected annually and serve until their
respective successors have been chosen, subject to their removal as officers at
any time by the affirmative vote of a majority of the authorized number of
directors then constituting the Board. See "Executive Compensation - Employment
Agreements."
Biographical Information
The following is a brief description of the business experience of the
directors, Board Nominees and executive officers for at least the past five
years and their respective directorships, if any, with other public companies
that are subject to the reporting requirements of the Exchange Act.
Directors and Board Nominees
George L. Engelke, Jr. has been President, Chief Executive Officer and a
director of AFC since its formation in 1993. He has served as Chairman of the
Board and Chairman of the Board of Directors of the Association since April
1997. A certified public accountant, he joined the Association in 1971 as Vice
President and Treasurer. He was named Executive Vice President and Treasurer in
1974, Chief Operating Officer in 1986 and President and Chief Executive Officer
in 1989. He has served as a director of the Association since 1983. Mr. Engelke
serves as a director of the Community Preservation Corporation and the Advisory
Board of Neighborhood Housing Services of New York City, Inc. He is a director
of the Federal Home Loan Bank of New York and a member of the Thrift
Institutions Advisory Panel to the Federal Reserve Bank of New York. He is a
member of the Board of Trustees of Long Island
4
University. He is a past Chairman and currently a director of the Community
Bankers Association of New York State and a member of the Government Affairs
Steering Committee, the Government Affairs Council and a former director of
America's Community Bankers. Mr. Engelke previously served as a member of the
Financial Accounting Standards Advisory Council.
Gerard C. Keegan has been Vice Chairman, Chief Administrative Officer and a
director of AFC and the Association since September 30, 1997, when he joined AFC
following the acquisition of The Greater New York Savings Bank, or The Greater,
and its merger with and into the Association, referred to as The Greater
Acquisition. Prior to joining AFC, Mr. Keegan served from 1991 to 1997 as
Chairman, President and Chief Executive Officer of The Greater. From 1988 to
1991, he served as President and Chief Operating Officer of The Greater. He
served as a director of The Greater from 1988 to 1997. He is a member of the
Board of Trustees of St. Francis College.
Andrew M. Burger has been a director of AFC since its formation in 1993 and
is the former President of Atlantic Iron Works, Inc. He has served as a director
of the Association since 1975.
John J. Conefry, Jr. has served as Vice Chairman and a director of AFC
since September 30, 1998 when he joined AFC following the acquisition of Long
Island Bancorp, Inc., or LIB, and the merger of LIB with and into AFC and the
merger of LIB's wholly owned subsidiary, LISB, with and into the Association,
referred to as the LIB Acquisition. He served as an executive officer of AFC
from September 30, 1998 to December 29,2000. Since December 30, 2000, he has
served as Chairman of AFC's Litigation Advisory Committee which was established
in connection with the action entitled The Long Island Savings Bank FSB v. The
---------------------------------------
United States pending before the United States Court of Federal Claims. See
- -------------
"Transactions with Certain Related Persons" below. Prior to joining AFC, Mr.
Conefry served as Chief Executive Officer of LISB from 1993 and of LIB from 1994
through the consummation of the LIB Acquisition. He was named President of LIB
and LISB in 1996. Mr. Conefry served as a director of LISB from 1980 and of LIB
from 1993. He was named Vice Chairman of LISB in 1993. He served as Chairman of
the Board of Directors of LIB and of LISB from 1994. Prior to joining LISB in
1993, Mr. Conefry was employed by Merrill Lynch, Pierce, Fenner & Smith, Inc.,
where he served as a Senior Vice President from 1981 to 1993. Prior to that, he
was a partner in the public accounting firm of Deloitte Haskins & Sells, the
predecessor of Deloitte & Touche LLP. Mr. Conefry also serves on a number of
boards of not-for-profit organizations. He serves as Chairman of the Board of
Trustees of Hofstra University.
Denis J. Connors has been a director of AFC since its formation in 1993 and
is the former Chairman and Chief Executive Officer of Curran & Connors, Inc., a
designer and publisher of annual reports. He has served as a director of the
Association since 1990.
Robert J. Conway has been a director of AFC since September 30, 1998,
following completion of the LIB Acquisition. Prior to the LIB Acquisition, he
served as a director of LIB since 1993. He became a director of LISB in 1983.
Mr. Conway was employed by AMF Bowling, Inc. for 29 years. His last position
with AMF Bowling, Inc. was Corporate Vice President and Group Executive of the
Worldwide Bowling Products Group. He has worked as a professional equities
trader.
Thomas J. Donahue, a certified public accountant, has been a director of
AFC since its formation in 1993 and retired as a partner of Peat, Marwick,
Mitchell & Co., the predecessor of KPMG LLP, in 1986. Following his retirement
and prior to becoming a director of the Association, Mr. Donahue served as
president and a director of other savings institutions from 1987 to 1990. He has
served as a director of the Association since 1990.
Peter C. Haeffner, Jr. has been a director of AFC and the Association since
September 30, 1997 following The Greater Acquisition and is Senior Director,
Financial Services Group, of Cushman & Wakefield, Inc., a real estate firm. Mr.
Haeffner served as Senior Managing Director, Financial Services Group, Corporate
Advisory and Finance Division of Cushman & Wakefield, Inc. from December 1997 to
December 1998 and as its Eastern Regional Director, Financial Services Group
from May 1994 to December 1997. Previously, Mr. Haeffner was President and
Managing Director of Sonnenblick-Goldman Company, a real estate firm. for eight
years. Mr. Haeffner also serves as a director of Stewart Title Insurance Company
of New York and of World Mae Association LLC, a global mortgage banking
5
firm. Mr. Haeffner served as a director of The Greater from 1992 to 1997.
Ralph F. Palleschi, a certified public accountant, has been a director of
AFC and the Association since 1996. In 1983, he co-founded First Long Island
Investors, Inc., a registered investment advisor pursuant to the Investment
Advisors Act of 1940, as amended, and a registered broker/dealer with the
National Association of Securities Dealers, Inc. He continues to serve as a
director and is President and Chief Operating Officer of such company. He has
also served from 1993 to 1997 as Chief Operating Officer of the New York
Islanders hockey team. From 1977 to 1983, he served as Vice President - Finance
and Chief Financial Officer of Entenmann's Inc., a publicly traded food products
company. From 1968 to 1977, he was employed by Peat, Marwick, Mitchell & Co.,
the predecessor of KPMG LLP.
Lawrence W. Peters has been a director of AFC and the Association since
September 30, 1998, following the completion of the LIB Acquisition. Prior to
the LIB Acquisition, he served as a director of LIB since 1993. He joined LISB
in 1989 as a Senior Executive Vice President and Chief Lending Officer. Mr.
Peters retired from his management position with LISB in 1995 and rejoined LIB
and LISB as President and Chief Operating Officer in 1997. Prior to initially
joining LISB, Mr. Peters was employed by The Dime Savings Bank of New York,
F.S.B. as Vice Chairman and a director, and was in charge of all lending
functions.
Thomas V. Powderly has been a director of AFC and the Association since
January 31, 1995, following the acquisition of Fidelity New York, F.S.B., or
Fidelity, by the Association, referred to as the Fidelity Acquisition. He served
Fidelity in a variety of capacities prior to the Fidelity Acquisition. From 1986
to 1990, he served as Executive Vice President. In 1990, he was appointed
President and Chief Operating Officer and in 1992 was named Chief Executive
Officer. He was named Chairman of the Board of Directors of Fidelity in 1993.
From 1993 until January, 1995, he served as Chairman and Chief Executive
Officer. Prior to 1986, Mr. Powderly held positions with Edward S. Gordon, Inc.,
a commercial real estate brokerage and management firm, and with several thrift
institutions.
Leo J. Waters has been a director of AFC and the Association since
September 30, 1998, following completion of the LIB Acquisition. Prior to the
LIB Acquisition, he served as a director of LIB since 1993. He became a director
of LISB in 1990. Mr. Waters is the President of a private investment consulting
firm.
Donald D. Wenk has been a director of AFC and the Association since
September 30, 1998, following completion of the LIB Acquisition. Prior to the
LIB Acquisition, he served as a director of LIB since 1993. He became a director
of LISB in 1974. From 1992 until 1994, Mr. Wenk served as Chairman of the Board
of Directors of LISB. From 1994 until 1996, Mr. Wenk served as Chairman of the
Executive Committee of the Boards of Directors of LIB and LISB. He is the
Chairman of the Board of Directors of American Casting & Manufacturing
Corporation.
Executive Officers Who Are Not Directors
Thomas W. Drennan, a certified public accountant, has served as Executive
Vice President of AFC since December 1997 and as Senior Vice President from its
formation in 1993 to 1997. He is the senior lending officer of the Association.
He joined the Association in 1986 as Senior Vice President, Mortgage Services.
Alan P. Eggleston has served as Executive Vice President and General
Counsel of AFC since December 1997 and as Secretary since March 2001. He served
as Senior Vice President and General Counsel of AFC from 1996 to 1997. He joined
the Association in 1993 as Vice President and General Counsel. In 1994, he was
named Vice President and General Counsel of AFC. In 1995, he became First Vice
President and General Counsel of AFC and the Association. He is responsible for
the legal, auditing and security areas of the Association. Prior to joining the
Association, he served as an executive officer and counsel to several thrift
institutions.
Arnold K. Greenberg has served as Executive Vice President of AFC since
December 1997, and as Senior Vice President from its formation in 1993 to 1997.
He is responsible for retail operations, human resources and facilities of the
Association. He joined the Association in 1975 as Vice President and was
appointed Senior Vice President in 1979 and Executive Vice President in 1997. In
1986, Mr. Greenberg became Senior Vice President, Administration and Operations,
and in January of 1993, Senior Vice President, Consumer Services.
6
Monte N. Redman has served as Executive Vice President and Chief Financial
Officer of AFC since December 1997. He served as Senior Vice President,
Treasurer and Chief Financial Officer of AFC from its formation in 1993 to 1997.
He joined the Association in 1977. In 1979, he was named Assistant Controller,
and, in 1982, Assistant Vice President. Mr. Redman became Vice President,
Investment Officer in 1985, in 1989 was appointed Senior Vice President,
Treasurer and Chief Financial Officer and, in 1997 was appointed Executive Vice
President and Chief Financial Officer. He also serves as member of the Board of
Directors of the National Tourette Syndrome Association.
There is no family relationship between any director, any Board Nominee,
any officer or any significant employee of AFC, except that Mr. Conefry's spouse
is the niece of the sister-in-law of Mr. Conway.
Section 16(a) Beneficial Ownership Reporting Compliance
AFC recently became aware that Peter C. Haeffner, Jr., a director of AFC,
inadvertently failed to report the purchase in April 1999 of 100 shares of AFC
Common Stock by his spouse. Pursuant to Rule (S)240.16a-6 of the Securities and
Exchange Commission, or SEC, this transaction was required to be reported by Mr.
Haeffner on Form 5 on or prior to February 14, 2000. An amended Form 5 has been
filed. AFC believes that, other than Mr. Haeffner's report, all filing
requirements under Section 16a of the Exchange Act applicable to its directors,
executive officers and holders of more than ten percent (10%) of AFC Common
Stock outstanding were complied with in 2000.
Committees and Meetings of the Board
The Board meets on a monthly basis and may have additional special meetings
upon the request of the Chairman, President and Chief Executive Officer or any
three (3) members of the Board. During the fiscal year ended December 31, 2000,
the Board met twelve (12) times. No director attended less than seventy five
percent (75%) of the total number of meetings held by the Board and its
committees on which such director served. The Board has established three (3)
standing committees.
The Compensation Committee consists of Mr. Connors, as Chairman, and
Messrs. Burger, Donahue, Palleschi and Wenk. Mr. Engelke serves ex officio as a
non-voting member of the Compensation Committee. The function of the
Compensation Committee is to review the performance and compensation of the
officers of AFC, make recommendations to the Board with respect thereto and
administer the Astoria Financial Corporation 1993 Incentive Stock Option Plan,
or the Incentive Option Plan, the 1996 Stock Option Plan for Officers and
Employees of Astoria Financial Corporation, or the 1996 Officer Option Plan, the
1999 Stock Option Plan for Officers and Employees of Astoria Financial
Corporation, or the 1999 Officer Option Plan, including the granting of options
pursuant thereto, the 1996 Stock Option Plan for Outside Directors of Astoria
Financial Corporation, or the 1996 Directors Option Plan, and the 1999 Stock
Option Plan for Outside Directors of Astoria Financial Corporation or the 1999
Directors Option Plan. This committee meets as needed and met three (3) times
during 2000.
The Nominating Committee currently consists of Messrs. Burger, Connors,
Donahue, Keegan and Wenk. The purpose of this committee is to recommend to the
Board nominees for election to the Board with respect to those directorships
which become vacant or whose terms expire at the next annual meeting of
shareholders, to review any nominations for election to the Board made by any
shareholder of AFC and to determine compliance with the provisions of the Bylaws
of AFC applicable thereto. See "Additional Information - `Shareholders
Proposals' and `Notice of Business to be Conducted at an Annual Meeting'." The
committee meets as needed and met one (1) time during 2000.
The Audit Committee consists of Mr. Donahue, as Chairman, and Messrs.
Burger, Connors, Haeffner, Palleschi and Waters. The function of the Audit
Committee is to carry out the duties and responsibilities set forth in the
Charter of the Audit Committee, a copy of which is attached as Appendix A to
this Proxy Statement, including but not limited to, reviewing (i) the scope and
results of the audits and reviews performed by the internal and the independent
auditors of AFC, (ii) the internal controls and accounting systems and policies
of AFC, (iii) the basis for certain reports to the Association's regulatory
authorities, and (iv) reports of examination of AFC and the Association
7
issued by the Office of Thrift Supervision or other regulatory authorities. This
committee meets, at a minimum, on a quarterly basis, and met four (4) times
during 2000. See "Audit Committee - Report of the Audit Committee" below.
Transactions with Certain Related Persons
It is the policy of AFC and the Association that all transactions,
including loans, between AFC or the Association and its directors, executive
officers, members of their families, holders of ten percent (10%) or more of the
shares of any class of its common stock, and affiliates thereof, will be made in
the ordinary course of AFC's and the Association's business and contain terms no
less favorable to AFC or the Association than could have been obtained in arms-
length negotiations with unaffiliated persons and will be approved by a majority
of independent outside directors of AFC or the Association, respectively, not
having any interest in the transaction or, as allowed by law, are benefits
provided generally to all full time employees of the Association on a
nondiscriminatory basis and such benefits have been similarly approved by the
Board. Loans may not involve more than the normal risk of collection or present
other unfavorable features. All loans outstanding to the directors, Board
Nominees or executive officers of AFC or members of their immediate families
were made in conformity with the Association's policy in this regard and have
not been disclosed as non-accrual, past due, restructured or potential problem
loans.
During 2000, AFC and the Association merged the LISB ESOP with and into the
Association ESOP and restructured the indebtedness with AFC, which the
Association ESOP trust and the LISB ESOP trust had incurred for the purpose of
acquiring the shares of AFC Common Stock held by such trusts at the time the
ESOPs were established. This transaction is referred to as the ESOP Restructure.
The ESOP Restructure was designed to stabilize the benefits and costs associated
with providing ESOP benefits, maintain the tax qualified status of the LISB ESOP
and better align the interests of the Association's employees with that of AFC's
shareholders.
Pursuant to the ESOP Restructure, two separate loans extended by AFC, one
with an outstanding balance of $18,614,833 and a maturity date of December 31,
2005 that was secured by a collateral pledge of 1,186,547 shares of AFC Common
Stock and one with an outstanding balance of $20,978,881 and a maturity date of
April 14, 2009 that was secured by a collateral pledge of 1,635,232 shares of
AFC Common Stock, were renegotiated effective as of January 1, 2000. Each
renegotiated loan has a maturity date of December 31, 2029 and provides, in
general for level annual payments of principal and interest designed to fully
amortize the outstanding principal amount as of the maturity date. To secure the
ESOP trustees' agreement to the ESOP Restructure, the Association and AFC agreed
to make additional cash contributions to the ESOP of $l,000,000 for calendar
year 2000 and $1,200,000 for calendar years 2001 through 2009, to pass through
to ESOP participants a negotiated portion of the dividends on shares held as
collateral security that would otherwise be used to make loan payments, to make
certain prepayments on the loans (until paid in full) if necessary to assure
that annual loan payments would result in a release from the collateral pledge
for allocation to ESOP participants of shares with a minimum fair market value
equal to 14% of the compensation base of ESOP participants; and to limit the use
of the proceeds of sale of collateral to repay the outstanding loans.
The Association ESOP was also amended as part of the ESOP Restructure to
provide that in the event of a change of control of AFC or the Association, as
defined in the Association ESOP, the Association ESOP would be terminated, all
participants would become fully vested in their accounts and the remaining loans
would either be repaid or forgiven such that all remaining shares securing the
indebtedness, less those which, prior to 2010, would be liquidated to repay the
indebtedness, would be released and allocated to then active participants'
accounts based on their relative account balances.
Effective December 29, 2000, AFC entered into an agreement, or the
Settlement Agreement, with John J. Conefry, Jr. pursuant to which Mr. Conefry
resigned as an executive officer of AFC and his rights pursuant to his
employment agreement with AFC were settled. Pursuant to the Settlement
Agreement, AFC paid to Mr. Conefry an aggregate amount equal to $5.8 million and
will continue to provide him with life and health insurance coverage on the same
basis as if he had remained an employee of AFC for a period of three years. Mr.
Conefry remains a director of AFC and the Association and, on December 30, 2000,
assumed the role of Chairman of AFC's Litigation Advisory Committee, established
in connection with the action entitled The Long Island Savings Bank FSB v. The
---------------------------------------
United States pending before the United States Court of Federal Claims, pursuant
- -------------
to a Litigation Advisory Committee Consulting
8
Agreement, or the Consulting Agreement, entered into as of April 2, 1998. The
Consulting Agreement provides for the payment of a retainer to Mr. Conefry equal
to $400,000 per annum and may be terminated at the option of AFC effective no
earlier than September 30, 2001.
For a discussion of the compensation received by directors, Board Nominees
and executive officers, see "Director Compensation" and "Executive
Compensation."
Security Ownership of Management
The following table sets forth certain information concerning the interests
in AFC Common Stock as of the Record Date of each director or Board Nominee of
AFC, each executive officer of AFC named in the Summary Compensation Table and
all directors and executive officers of AFC as a group. For purposes of the
Annual Meeting, AFC Common Stock is the only AFC voting stock outstanding.
Amount and Nature
Name of Beneficial Owner of Beneficial Ownership (1)(2) Percent of Class (3)
------------------------ ----------------------------- --------------------
George L. Engelke, Jr. 983,570 (4) 1.99
Gerard C. Keegan 153,487 (5)
Andrew M. Burger 98,315
John J. Conefry, Jr. 45,578 (6)
Denis J. Connors 112,543 (7)
Robert J. Conway 80,672
Thomas J. Donahue 120,966 (8)
Peter C. Haeffner, Jr. 18,048 (9)
Ralph F. Palleschi 17,000
Lawrence W. Peters 45,838
Thomas V. Powderly 53,000 (10)
Leo J. Waters 44,503 (11)
Donald D. Wenk 107,086 (12)
Arnold K. Greenberg 462,642 (13)
Monte N. Redman 244,721 (14)
Thomas W. Drennan 227,492 (15)
All directors, Board Nominees and executive
officers as a group (17 persons) 2,663,204 (16) 5.30
_____________
(1) Except as otherwise indicated, each person listed has sole voting and
investment power with respect to the shares of AFC Common Stock indicated.
(2) Included are shares of AFC Common Stock which could be acquired within 60
days of the Record Date pursuant to options to acquire AFC Common Stock as
follows: Mr. Engelke (401,100 shares), Mr. Keegan (91,000 shares), Mr.
Burger (78,314 shares), Mr. Conefry (6,000 shares), Mr. Connors (65,314
shares), Mr. Conway (63,087 shares), Mr. Donahue (85,314 shares), Mr.
Haeffner (12,000 shares), Mr. Palleschi (14,000 shares), Mr. Peters (33,001
shares), Mr. Powderly (6,000 shares), Mr. Waters (28,807 shares), Mr. Wenk
(71,911 shares), Mr. Greenberg (22,500 shares), Mr. Redman (140,282
shares), Mr. Drennan (100,282 shares), and all directors, Board Nominees
and executive officers as a group (1,279,486 shares).
(3) Except as otherwise indicated, the percent of class beneficially owned does
not exceed one percent (1.00%).
(4) Included are 253,889 shares of AFC Common Stock as to which Mr. Engelke has
shared voting and investment power, 9,656 shares of AFC Common Stock as to
which he has shared voting and no investment power, and 8,983 shares of AFC
Common Stock as to which he has shared voting and sole investment power.
(5) Included are 25,389 shares of AFC Common Stock as to which Mr. Keegan has
shared voting and investment power and 3,891 shares of AFC Common Stock as
to which he has shared voting and no investment power.
(6) Included are 580 shares of AFC Common Stock as to which Mr. Conefry has
shared voting and no investment power.
(7) Included are 23,000 shares of AFC Common Stock as to which Mr. Connors has
shared voting and investment power.
(8) Included are 35,650 shares of AFC Common Stock as to which Mr. Donahue has
shared voting and investment power.
(9) Included are 300 shares of AFC Common Stock as to which Mr. Haeffner has
shared voting and investment power.
(10) Included are 6,784 shares of AFC Common Stock as to which Mr. Powderly has
shared voting and investment power.
(11) Included are 285 shares of AFC Common Stock as to which Mr. Waters has
shared voting and investment power.
(12) Included are 1,150 shares of AFC Common Stock as to which Mr. Wenk has
shared voting and investment power.
(13) Included are 252,101 shares of AFC Common Stock as to which Mr. Greenberg
has shared voting and investment power, 9,656 shares of AFC
9
Common Stock as to which he has shared voting and no investment power,
and 14,465 shares of AFC Common Stock as to which he has shared voting
and sole investment power.
(14) Included are 956 shares of AFC Common Stock as to which Mr. Redman has
shared voting and investment power, 9,656 shares of AFC Common Stock as
to which he has shared voting and no investment power, and 10,180 shares
of AFC Common Stock as to which he has shared voting and sole investment
power.
(15) Included are 55,418 shares of AFC Common Stock as to which Mr. Drennan
has shared voting and investment power, 9,656 shares of AFC Common Stock
as to which he has shared voting and no investment power, and 10,632
shares of AFC Common Stock as to which he has shared voting and sole
investment power.
(16) Included are 423,566 shares of AFC Common Stock as to which directors,
Board Nominees and executive officers, as a group, have shared voting
and investment power, 50,629 shares of AFC Common Stock as to which they
have shared voting and no investment power, and 45,969 shares of AFC
Common Stock as to which they have shared voting and sole investment
power.
Director Compensation
Directors' and Other Fee Arrangements
All non-employee directors of AFC receive an annual retainer of $20,000.
No additional fees for attendance at Board or committee meetings are paid. All
members of the Board also serve as directors of the Association. All non-
employee directors of the Association receive an annual retainer of $40,000. No
additional fees for attendance at Association Board of Directors or committee
meetings are paid. During 2000, these fees which had not been adjusted since
1993 were $15,000 and $30,000 per annum, respectively.
Directors' Option Plans
AFC maintains the AFC 1993 Stock Option Plan for Outside Directors, or
the 1993 Directors Option Plan, and the 1996 Directors Option Plan, pursuant to
which options were previously granted to directors, but which have remained
frozen by the Board since 1996 and 1999, respectively. AFC also maintains the
1999 Directors Option Plan pursuant to which non-employee directors of APC and
the Association are granted options on terms previously approved by the
shareholders of AFC.
Pursuant to the 1999 Directors Option Plan, each person who first
becomes a non-employee director of AFC or the Association after May 19, 1999 is
granted, on the 15th day of the month following the month in which he or she
becomes a non-employee director, an option to purchase 4,000 shares of AFC
Common Stock at an exercise price per share equal to the closing bid quotation
for AFC Common Stock on The Nasdaq Stock Market on the date of grant. In
addition, on January 15th of each succeeding year, each person who is then a
non-employee director receives a grant of an option to purchase an additional
2,000 shares of AFC Common Stock at an exercise price per share equal to the
closing bid quotation for AFC Common Stock on The Nasdaq Stock Market on the
date of grant. All options granted pursuant to the 1999 Directors Option Plan
vest and become exercisable upon grant.
All options granted under the 1993 Directors Option Plan, the 1996
Directors Option Plan or the 1999 Directors Option Plan expire upon the earlier
of 10 years following the date of grant or one year following the date the
director ceases to be a director for any reason other than removal for cause, in
which case the director's options immediately terminate.
Directors' Retirement Plan
This plan provides retirement benefits for directors with at least 10
years of service, who are not and have not been employees of AFC, the
Association or any of their predecessors in interest. The benefit is a life
annuity payable beginning in the month following termination of service as a
director or attainment of age 65, whichever is later. The annual benefit amount
is equal to 100% of the annualized aggregate rate of fees paid for service as a
non-employee director of AFC or the Association for the last month of service
prior to retirement, reduced by 5% for each year that the director's years of
service is less than 20 years. In the event of a change of control of AFC or the
Association, each director may require the Association or its successor to pay
either (1) a lump sum payment, within 30 days following the change of control or
upon the director ceasing to serve as a director, whichever is later, equal to
the actuarially determined present value of the future benefits payable to the
director or (2) an amount into a grantor trust adequate to fund the benefits as
they become otherwise due. Pursuant to the terms of the plan, the LIB
Acquisition constituted
10
a change of control of AFC. In March 1999. AFC and the Association amended this
plan to provide that no director who first joins the Board or the Board of
Directors of the Association after March 1, 1999 will be eligible to participate
in the plan.
Directors Deferred Compensation Plan
Pursuant to this plan, outside directors of either AFC or the
Association may elect to defer receipt of all or any part of their directors'
fees. Deferred fees are carried on the books of AFC as an unfunded obligation
and are credited with interest quarterly at a rate equal to the average of AFC's
consolidated cost of funds and yield on investments for the preceding quarter,
unless the cost of funds exceeds the yield on investments, in which case the
rate is based upon the preceding quarter's consolidated yield on investments. In
the event of a change of control of AFC or the Association, each participating
director may elect that his fees, with accrued interest, be placed in a grantor
trust established for the benefit of the director, applied to the purchase of an
insurance company annuity contract, or be paid directly by AFC or its successor.
Directors' Death Benefit
This plan provides that if a non-employee director dies while in service
as a director of AFC or the Association, the decedent's designated beneficiary
will receive from AFC a payment equal to the decedent's aggregate directors'
fees for the last month of service as a director of AFC and the Association
annualized. If a director leaves the service of AFC and the Association for any
reason other than death, all rights to any benefit under this plan cease.
Executive Compensation
The Report of the Compensation Committee on Executive Compensation and
the Stock Performance Chart shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or the Securities Act, or
the Exchange Act, except to the extent that AFC specifically incorporates this
information by reference, and otherwise shall not be deemed "soliciting
materials" filed with the SEC or subject to Regulations 14A or 14C of the SEC or
subject to the liabilities of Section 18 of the Exchange Act.
Report ofthe Compensation Committee on Executive Compensation
Under rules established by the SEC, AFC is required to provide certain
data and information regarding the compensation and benefits provided to AFC's
Chief Executive Officer and certain other executives of AFC. The disclosure
requirements for the Chief Executive Officer and such other executives include
the use of tables and a report explaining the rationale and considerations that
led to fundamental compensation decisions affecting those individuals. In
fulfillment of this requirement, the Compensation Committee of AFC, at the
direction of the Board, has prepared the following report for inclusion in this
Proxy Statement.
General. The compensation of the executive officers of AFC for fiscal
year 2000 was reviewed by the Compensation Committee of AFC in December 1999 and
January 2000 and was ratified and approved by the Board.
The Compensation Committee of AFC met on three (3) occasions during
fiscal 2000. It met to review corporate performance against established target
awards, performance goals and corporate performance measures to determine the
awards to be made to the executive officers pursuant to the Astoria Financial
Corporation Executive Officer Incentive Plan, or the Executive Incentive Plan,
for 1999 and to establish target awards, performance goals and corporate
performance measures to be utilized with respect to the executive officers
pursuant to the Executive Incentive Plan for 2000. The Committee also met and
granted stock options under the 1999 Officer Option Plan to, among others,
executive officers, reviewed the performance of the executive officers and
established compensation levels for the executive officers of AFC for fiscal
year 2001.
Executive Compensation Philosophy. The primary objective of the
executive compensation program of AFC
11
and the Association is to attract and retain highly skilled and motivated
executive officers who will manage AFC in a manner to promote prudent growth and
profitability and advance the interests of its shareholders. The compensation
program is designed to provide levels of compensation which are competitive and
reflective of the organization's performance in achieving its goals and
objectives, both financial and non-financial, as determined in its business
plan. The program aligns the interests of the executives with those of the
shareholders of AFC by providing a proprietary interest in AFC, the value of
which can be significantly enhanced by the appreciation of AFC Common Stock. The
program also seeks to adequately provide for the needs of the executives upon
retirement based upon the length of service provided to AFC and the Association
and the appreciation of AFC Common Stock.
In structuring its executive compensation program, AFC considers the
before and after tax financial impact the program will have on AFC and the
Association. Section 162(m) of the Code places a limitation of $1 million on the
deductibility by AFC of certain elements of compensation earned by each of the
executives named in the "Summary Compensation Table" on page 16, referred to
individually as a Named Executive or collectively as the Named Executives, who
were employed by AFC or the Association at year end. This limitation does not
apply to all institutions within AFC's industry or to all companies from which
it would recruit executive personnel. AFC has generally submitted compensation
and benefit plans to its shareholders for approval in order to maintain the
deductibility of payments made to the Named Executives. As a result of the
approval of such plans and based upon the level and composition of the
compensation of its executive officers, the limitations contained in Section
162(m) of the Code did not impact the financial condition or results of
operations of AFC for the year ended December 31, 2000.
The executive compensation program of AFC consists of four (4) elements:
base salary, short-term incentive compensation, long-term incentive compensation
and retirement benefits. The following is a discussion of each of these
components.
Base Salary. Salary levels are designed to be competitive with cash
compensation levels paid to similar executives at banking and thrift
institutions of similar size and standing, giving due consideration to the
marketplace in which AFC and the Association operate. Base salary is considered
in conjunction with the short-term incentive compensation component of the
esecutive compensation program. Base salary is set at a level to provide a
reasonably competitive level ofbase compensation even if AFC, due to factors
outside of the control of the executives, fails to meet its minimum threshold
targets such that no awards are made under the short-term incentive component of
the compensation program.
To determine whether or not base salary and short-term incentive
compensation, discussed below, for 2000 were set at levels that were
competitive, the Compensation Committee reviewed a number of sources of
information, including the SNL Executive Compensation Review 1999, Thrift
Institutions, and the SNL Executive Compensation Review 1999, Commercial Banks.
Particular emphasis was placed on those institutions that were of similar asset
size and standing to that of AFC.
As a result of their analysis, the Compensation Committee in December
1999 approved, and the Board ratified, total 2000 base salary compensation for
the then eight (8) executive officers of $3,520,000, compared to $3,315,000
paid to such officers for 1999. The Chief Executive Officer received a salary
increase to $810,000 per annum. The remaining seven (7) executive officers
received increases for 2000 averaging 5.65%, ranging from a high of 10.00% to a
low of 0.0%. All such increases reflected contributions to the goals and
objectives of AFC and the increased cost of living within the market from which
AFC draws its workforce.
Short-term Incentive Compensation. Short-term incentive compensation
consists of awards paid pursuant to the Executive Incentive Plan. The Board and
Compensation Committee of AFC recognize that the operation of AFC is
substantially affected by the environment in which it operates. It is expected
that its executives will maintain systems in place to monitor that environment
and will take steps to foresee and manage the various risks that such
environment presents. The Board and the Compensation Committee also believe
that, to be effective, the attainment of targets established under the short-
term incentive component of the compensation program should be both attainable,
yet challenging.
12
The Executive Incentive Plan for 2000 provided for a target incentive
equal to sixty-five percent (65%) of base salary for the Chief Executive
Officer, sixty and seventeen one-hundredths percent (60.17%) of base salary for
Mr. Conefry and forty percent (40%) of base salary in the case of each of the
other executive officers. Mr. Conefry did not receive an award under the
Executive Incentive Plan for 2000.
The performance measurement utilized for 2000 was the diluted earnings
per share of AFC Common Stock. A series of achievement levels was established,
with each level assigned a percentage award from zero percent (0%) up to two
hundred percent (200%). The zero percent (0%) award represented performance
below a reasonable threshold level of achievement. The Compensation Committee of
AFC, which administers the plan, has discretion under the Executive Incentive
Plan to reduce an award, but not to increase it.
For fiscal year 2000, the Compensation Committee, pursuant to the terms
of the Executive Incentive Plan, certified that AFC's financial performance
resulted in awards of seventy percent (70%) of the applicable target incentive.
Long-term Incentive Compensation. The long-term incentive compensation
portion of AFC's and the Association's compensation program consists of the
Incentive Option Plan, the 1996 Officer Option Plan and the 1999 Officer Option
Plan. These plans are designed to provide incentives for long-term positive
performance of the executive and other officers and to align their financial
interests with those of AFC shareholders by providing the opportunity to
participate in AFC Common Stock price appreciation, if any, which may occur
after the date of grant of stock options pursuant to such Plans.
See the table on page 9 related to the beneficial ownership of AFC
Common Stock by the directors, Board Nominees and executive officers of AFC and
"Executive Compensation - Incentive Option Plans" on pages 18 and 19 for further
information regarding options related to the Named Executives.
Retirement Benefits. Retirement benefits are designed to provide for an
adequate level of income to each executive officer following his or her
retirement from AFC and the Association based upon length of service and to
support the goals and objectives of the rest of the compensation program. The
retirement benefits are provided through the Association ESOP, the Association
Incentive Savings Plan, the Association Employees' Pension Plan, or the Pension
Plan, the Association Excess Benefit Plan, or the Excess Plan, and the
Association Supplemental Benefit Plan, or the Supplemental Plan. See "Executive
Compensation - Pension Plans" for a description of the Pension Plan, the Excess
Plan and the Supplemental Plan which are all defined benefit pension plans.
The Association maintains the Association ESOP and ESOP Trusts for the
benefit of the salaried employees of AFC and the Association. The Association
ESOP provides for the allocation of shares of AFC Common Stock and other
contributions, if any, based on payments by the Association of restructured
loans made by AFC to the Association ESOP. See "Transactions with Certain
Related Persons" on pages 8 and 9 above for a discussion of the ESOP
Restructure. See the "Summary Compensation Table" on page 16 and the table on
page 9 related to the beneficial ownership of AFC Common Stock by the directors,
Board Nominees and executive officers of AFC for further information regarding
the ownership of AFC Common Stock by the Named Executives.
Compensation of the Chief Executive Officer. The Compensation Committee
met in December 1999 to review the performance of the executive officers during
1999, to establish recommended compensation levels for such officers for 2000
and to commence discussions regarding appropriate goals and participation levels
with respect to such officers' participation in the Executive Incentive Plan.
At the December 1999 meeting, the projected financial performance of AFC
and the accomplishment of financial and non-financial goals and objectives of
AFC and the Association, as set forth in the prior year business plan, were
reviewed as was the performance of the executive officers of AFC. Mr. Engelke
provided to the Compensation Committee his insights as to both his own
performance and that of the other executive officers.
The Compensation Committee, based upon these discussions, determined the
level of salary for the executive
13
officers, including the Chief Executive Officer, to take effect January 1, 2000.
As part of that determination, the Compensation Committee utilized relative
information provided in the SNL Executive Compensation Review 1999, Thrift
Institutions and the SNL Executive Compensation Review 1999, Commercial Banks.
The Compensation Committee recommended, and the Board approved, that the
compensation of the Chief Executive Officer be increased from $750,000 per annum
in 1999 to $810,000 per annum in 2000. This increase reflected no only the
increased cost of living, but also the overall performance of both Mr. Engelke
and AFC.
Compensation Committee of AFC
Denis J. Connors, Chairman Ralph F. Palleschi
Andrew M. Burger Donald D. Wenk
Thomas J. Donahue George L. Engelke, Jr. (ex officio)
Compensation Committee Interlocks and Insider Participation.
Recommendations to the Compensation Committee of AFC with respect to
both executive officers' and non-executive officers' salaries are presented by
Mr. Engelke. Mr. Engelke also provides insight to the Compensation Committee
regarding his performance and that of the other officers of AFC, both executive
and non-executive, and provides other recommendations regarding executive
officer compensation. Mr. Engelke is an ex officio member of the Compensation
Committee and does not participate in the Committee's deliberations or approval
of compensation issues relating to himself. There are no interlocking
relationships requiring disclosure in this Proxy Statement between any executive
officers of AFC, members of the Compensation Committee of AFC and any other
entity.
Stock Performance Chart.
The following graph shows a comparison of cumulative total shareholder
return on AFC Common Stock for its last five fiscal years commencing on January
1, 1995, with the cumulative total returns of both a broad market index, the
Nasdaq (U.S.) Index produced by the Center for Research in Security Prices, or
CRSP, and a peer group index, the Nasdaq Financial Stock Index, which is also
produced by CRSP. In addition, for comparison purposes, total shareholder
returns have been included for the same period for both the SNL Thrift Index and
the SNL $5B+ Thrift Asset-Size Index. The peer group index set forth in the
graph below consists of a different set of institutions than that considered by
the Compensation Committee or the Board in determining the compensation of the
executive officers.
14
Comparison of Cumulative Total Return of
AFC Common Stock and Market, Peer Group and Other Indices (1)
[GRAPH]
---------------------------------------------
Legend
_______ AFC Common Stock
. . . . Nasdaq (U.S.) Index
....... Nasdaq Financial Stock Index
___..__ SNL Thrift Index
___ ___ SNL $5B+ Thrift Asset-Size Index
---------------------------------------------
AFC Common Nasdaq (U.S.) Nasdaq Financial SNL Thrift SNL $5B+ Thrift
---------- ------------- ---------------- ---------- ---------------
Stock Index Stock Index Index Asset-Size Index
----- ----- ----------- ------ ----------------
Jan. 1, 1996 $100.000 $100.000 $100.000 $100.000 $100.000
Dec. 31, 1996 164.062 123.036 128.362 130.300 134.260
Dec. 31, 1997 251.028 150.693 196.308 221.710 227.470
Dec. 31, 1998 209.560 212.509 190.728 195.000 199.630
Dec. 31, 1999 143.003 394.921 189.458 159.290 153.310
Dec. 31, 2000 263.548 237.618 207.029 254.350 273.770
_______________________________
(1) Assumes $100 invested on January 1, 1996 and all dividends reinvested
through the end of AFC's fiscal year ended December 31, 2000.
15
Summary Compensation Table
The following table shows, for the fiscal years ended December 31, 2000,
1999 and 1998, the cash compensation paid by AFC and the Association, as well as
certain other compensation paid or accrued for those years, to the Chief
Executive Officer, the next four highest paid executive officers of AFC and the
Association as of December 31, 2000 who received salary and bonuses in excess of
$100,000 for the 2000 fiscal year and any additional individual who would have
been listed among the next four highest paid executive officers of AFC and the
Association but for the fact that he was not an executive officer as of December
31, 2000.
Annual Compensation Long Term Compensation
--------------------- ------------------------
Awards Payouts
------------------------ ---------
Other Securities All
Annual Restricted Underlying Other
Compen- Stock Options/ Compen-
Name and Salary Bonus sation Awards SARs LTIP sation
Principal Positions Year ($) ($)(2) ($) ($)(3) (#)(5) Payouts ($)(6)
- ------------------- ---- ------- ------ ------ ---------- ---------- ------- ---------
George L. Engelke, Jr. 2000 810,000 368,550 -- -- 140,000 -- 35,195
Chairman, President, 1999 750,000 828,750 -- -- 113,000 -- 33,398
CEO and Director 1998 684,231 245,230 -- -- 86,000 -- 60,614
Monte N. Redman 2000 410,000 114,800 -- -- 50,000 -- 35,195
Executive Vice 1999 375,000 255,000 -- -- 40,000 -- 33,398
President and Chief 1998 320,000 86,640 -- -- 35,000 -- 60,614
Financial Officer
Gerard C. Keegan 2000 375,000 105,000 -- -- 40,000 -- 35,195
Vice Chairman , 1999 350,000 238,000 -- -- 28,000 -- 27,523
Chief Administrative 1998 350,000 94,765 -- -- 20,000 -- 54,173
Officer and Director
Thomas W. Drennan 2000 375,000 105,000 -- -- 40,000 -- 35,195
Executive Vice 1999 350,000 238,000 -- -- 30,000 -- 33,398
President 1998 310,000 83,935 -- -- 24,000 -- 60,614
Arnold K. Greenberg 2000 345,000 96,600 -- -- 35,000 -- 35,195
Executive Vice 1999 320,000 217,600 -- -- 28,000 -- 33,398
President 1998 300,000 81,225 -- -- 20,000 -- 60,614
John J. Conefry, Jr. (1) 2000 700,000 0 -- -- 0 -- 5,847,700
Vice Chairman 1999 700,000 663,000 -- -- 90,400 -- 23,986
and Director 1998 175,000 49,046 -- 421,250 (4) 444,294 (4) -- 9,689
________________________________
(1) Amounts indicated reflect amounts paid for 1998, 1999 and 2000 by AFC
and do not include amounts paid to Mr. Conefry by LIB or LISB prior to
the LIB Acquisition.
(2) For 1998, consists of payments pursuant to the Astoria Financial
Corporation and Astoria Federal Savings and Loan Association Annual
Incentive Plan for Select Executives and, for 1999 and 2000, consists
of payments pursuant to the Executive Incentive Plan. These plans are
short-term incentive plans. See "Executive Compensation - Report of
the Compensation Committee on Executive Compensation."
(3) Represents the value, based upon the closing price of AFC Common Stock
as quoted on The Nasdaq Stock Market on the date of the award, of
awards of 10,000 shares of AFC Common Stock made to Mr. Conefry
pursuant to the Association Recognition and Retention Plan for
Officers and Employees on September 30, 1998. As to the award
reflected in the table, the remaining unvested portion vested and was
distributed on January 10, 2000.
(4) Restricted stock and options, excluding options to acquire 68,800
shares of AFC Common Stock, were awarded or granted in connection with
the LIB Acquisition. Options granted in connection with the LIB
Acquisition reflect the grant of an option to acquire 25,000 shares of
AFC Common Stock granted upon consummation of the LIB Acquisition and
the grant of options the effect of which was to convert outstanding
16
options to acquire the common stock of LIB into options to acquire AFC
Common Stock.
(5) Options with limited stock appreciation rights, or LSARs, attached were
granted to the Named Executives during 2000, 1999 and 1998, except for Mr.
Conefry who received grants of option with LSARs attached from AFC only
during 1999 and 1998. No freestanding stock appreciation rights, or SARs,
have been granted to the Named Executives. See "Executive Compensation -
Incentive Option Plans" on pages 18 and 19.
(6) Represents the fair market value of AFC Common Stock and cash which was
allocated under the Association ESOP and the LISB ESOP to the account of
the Named Executive for the year ended December 31, 2000, 1999 and 1998,
respectively, except for Mr. Conefry who received allocations under the
Association ESOP and LISB ESOP only during 1999 and 1998, based upon the
closing price per share of AFC Common Stock of $54.313, $30.438 and $45.75
as quoted on The Nasdaq Stock Market on December 29, 2000 and December 31,
1999 and 1998, respectively. The amount shown for Mr. Conefry for 2000
reflects the sums paid to Mr. Conefry pursuant to the Settlement Agreement.
See "Transactions with Certain Related Persons" on pages 8 and 9 above.
Employment Agreements
AFC and the Association have entered into employment agreements with each
of the executive officers. The employment agreements each provide for a three-
year term. The Association's employment agreements each run from the first day
of January. Prior to January 1st each year, the Board of Directors of the
Association may extend the employment agreements with the Association for an
additional year such that the remaining terms shall be 3 years. Prior to January
1, 2001, such employment agreements were so extended. The agreements with AFC
automatically extend daily, so as to maintain their original term, unless
written notice of non-renewal is given by the Board. No such notice has been
given to any current executive officer.
The employment agreements provide for minimum salaries and the executives'
participation in retirement plans, group life, medical and disability insurance
plans and any other employee benefit programs. The employment agreements also
provide that AFC and the Association will maintain, for the benefit of the
executives, directors' and officers' liability insurance and will indemnify the
executives on prescribed terms for claims and related costs and liabilities
arising from the services provided pursuant to the employment agreements for a
period of six years beyond the termination of such agreements.
The employment agreements provide for termination of each of the
executives' employment at any time by AFC or the Association with or without
cause. Each executive would be entitled to a severance payment in the event the
executive's employment terminates (1) due to AFC's or the Association's
respective (A) failure to reflect the executive to his current office, and in
Messrs. Engelke's and Keegan's employment agreements, to the Board; (B) failure
by whatever cause to vest in the executive the functions, duties or
responsibilities prescribed for the executive in such agreement; (C) material
breach of the employment agreements or reduction of the executive's base salary
or other change to the terms and conditions of the executive's compensation and
benefits which either individually or in the aggregate, as to such executive,
has a material adverse effect on the aggregate value of the total compensation
package provided to such executive; or (D) relocation of the executive's
principal place of employment outside of Nassau or Queens Counties of New York;
or (2) for reasons other than (A) for cause; (B) voluntary resignation, except
as a result of the actions specified under clause (1) above or following a
change of control, as defined in the agreements; (C) following the executive's
attainment of mandatory retirement age for executive officers (currently 70
years of age); (D) death; (E) long term disability; or (F) expiration of the
term of the employment agreement.
The severance payment to which an executive would be entitled includes: (1)
continued life, medical and disability insurance benefits for the remainder of
the contract term; (2) a lump sum payment equal to the salary, potential
incentive compensation, present value of pension benefits, and the profit-
sharing and ESOP benefits the executive would have earned during the remainder
of the contract term; (3) accelerated vesting of all outstanding options and
restricted stock awards; and (4) a cash settlement, at the election of AFC or
the Association, of all outstanding options and restricted stock awards.
For any taxable year in which an executive would be liable for the payment
of excise taxes under Section 4999 of the Code with respect to any compensation
paid by AFC or any of its affiliated companies, AFC will pay to or on behalf of
the executive, an amount, in addition to the severance payment, sufficient to
maintain the after-tax severance benefit as though the excise tax specified in
Section 4999 of the Code did not apply.
17
Incentive Option Plans
The following table sets forth all grants of options (and LSARs) under the
1999 Officer Option Plan to the Named Executives during 2000 and contains
certain information about the potential value of these options based upon
certain assumptions as to the appreciation of AFC Common Stock over the life of
the option. During 2000, no options or SARs were granted pursuant to either the
Incentive Option Plan or the 1996 Officer Option Plan, nor did AFC adjust or
amend the exercise price of any stock options or SARs previously awarded to any
of the Named Executives.
Option/SAR Grants in Last Fiscal Year
Potential
Realizable Value at
Assumed Annual
Rates of Stock
Price
Appreciation
Individual Grants for Option Term (3)
--------------------------------------------------------- --------------------------------
% of Total
Options/
Securities SARs
Underlying Granted to Exercise
Options/ Employees or Base
SARs in Fiscal Price Per Expiration
Granted (1) Year Share (2) Date 5% 10%
--------------------------------------------------------- --------------------------------
George L. Engelke, Jr. 140,000 24.60% $49.6875 12/19/2010 $ 4,374,748 $11,086,471
Monte N. Redman 50,000 8.78% $49.6875 12/19/2010 $ 1,562,410 $ 3,959,454
Gerard C. Keegan 40,000 7.03% $49.6875 12/19/2010 $ 1,249,928 $ 3,167,563
Thomas W. Drennan 40,000 7.03% $49.6875 12/19/2010 $ 1,249,928 $ 3,167,563
Arnold K. Greenberg 35,000 6.15% $49.6875 12/19/2010 $ 1,093,687 $ 2,771,618
John J. Conefry, Jr. 0 0.00% N.A. N.A. $ 0 $ 0
___________________
(1) Each Named Executive who received an option grant received an option to
purchase 2,012 shares of AFC Common Stock which are intended to qualify as
an incentive stock option. The remainder are non-qualified stock options.
All options granted to the Named Executives have a ten year term and vest
on January 10, 2004. See "Executive Compensation - Employment Agreements"
on page 17. All such options also vest and become immediately exercisable
upon death, disability, retirement or in the event of a change in control
or threatened change in control, as defined in the 1999 Officer Option
Plan. All such options were granted in tandem with LSARs which provide
that, in the event of a change in control, during the period commencing on
the change in control and ending at the latter of six (6) months following
such date or thirty (30) days following the earliest date on which the
Named Executive may exercise the LSAR without subjecting himself to
liability under Section 16 of the Exchange Act, the Named Executive may, in
lieu of exercising the option, surrender the option and receive a payment
in cash, on a per share basis, equal to the difference between the exercise
price per share and the greater of (1) the highest price paid per share of
AFC Common Stock by any person who initiated or sought to effect the change
in control during the one-year period ending on the date of the change in
control or (2) the average of the fair market value per share as defined In
the 1999 Officer Option Plan over the last ten trading days preceding the
date of exercise of the LSAR.
(2) The exercise price may be paid in whole or in part in cash or through the
surrender of previously held shares of AFC Common Stock.
(3) The amounts stated assume the specified annual rates of appreciation only.
Actual experience is dependent on the future performance of AFC Common
Stock and overall stock market conditions. There can be no assurance that
the amounts reflected in this table will be achieved.
The following table provides certain information with respect to options
exercised by the Named Executives during 2000 and the number of shares of AFC
Common Stock represented by outstanding stock options held by the Named
Executives as of December 31, 2000. Also reported are the values for "in-the-
money" options, which represent the positive spread between the exercise price
of any outstanding stock options and the closing price per share of AFC Common
Stock of $54.313 as quoted on The Nasdaq Stock Market on December 29, 2000.
18
Fiscal Year End Option/SAR Values
Number of Value of
Securities Underlying Unexercised
Unexercised in-the-Money
Options/SARS Options/SARs
at Fiscal Year- at Fiscal Year-
End (#) End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized (1) Unexercisable Unexercisable(2)
- --------------------- --------------- ------------------ ------------- ----------------
George L. Engelke, Jr 0 $ 0 401,100 / 339,000 $15,046,804 / $4,204,607
Monte N. Redman 0 $ 0 140,282 / 125,000 $ 4,898,884 / $1,532,562
Gerard C. Keegan 0 $ 0 128,500 / 88,000 $ 4,974,281 / $1,054,294
Thomas W. Drennan 0 $ 0 100,282 / 94,000 $ 3,226,364 / $1,140,172
Arnold K. Greenberg 0 $ 0 22,500 / 83,000 $ 183,130 / $1,031,166
John J. Conefry, Jr. 190,417 $6,037,428 218,700 / 0 $ 4,015,348 / $ 0
_____________________
(1) Represents the fair market value per share of AFC Common Stock as quoted on
The Nasdaq Stock Market on the day the option was exercised minus the
exercise price per share of the option exercised times the number of shares
of AFC Common Stock as to which the option was exercised.
(2) Represents the fair market value per share of AFC Common Stock at fiscal
year end based upon the closing price of $54.313, as quoted on The Nasdaq
Stock Market on December 29, 2000, minus the exercise price per share of
the options outstanding times the number of shares of AFC Common Stock as
to which the option relates. Excluded are options with an exercise price in
excess of $554.313.
Pension Plans
The Employees' Pension Plan is a non-contributory defined benefit pension
plan for the benefit of eligible employees. The Excess Plan is a non-qualified
plan that provides benefits that would have been provided under the Employees'
Pension Plan but for the maximum annual benefit limitation in Section 415 of the
Code ($126,173 for 2000, payable in the form of a ten-year certain and
continuous annuity at age 65) and the maximum annual compensation limitation in
Section 401(a)(17) of the Code ($170,000 for 2000). The Supplemental Plan is a
non-qualified plan under which selected participants in the Employees' Pension
Plan receive the retirement benefits that would have been provided under the
Employees' Pension Plan had the benefit formula in effect immediately prior to
January 1, 1989 remained in effect.
The following tables set forth the estimated annual benefits payable under
the defined benefit pension plans described above upon retirement at age 65 in
calendar year 2000, expressed in the form of a ten-year certain and continuous
annuity, for the highest five-year average annual base wage (referred to in the
table as remuneration) and years of service classifications specified.
19
Pension and Excess Plans
Creditable Years of Service at Age 65 (1)
----------------------------------------------------------------------------------------
Remuneration (2) 15 20 25 30 35(3)
- ------------ -------- -------- -------- -------- --------
$ 125,000 $ 26,800 $ 35,800 $ 44,700 $ 53,600 $ 53,600
150,000 32,800 43.800 54,700 65,600 65,600
175.000 38,800 51,800 64.700 77,600 77,600
200,000 44,800 59.800 74,700 89,600 89,600
225,000 50,800 67,800 84,700 101,600 101,600
250,000 56,800 75,800 94,700 113,600 113,600
300,000 68,800 91,800 114,700 137,600 137,600
400,000 92,800 123,800 154,700 185,600 185,600
450,000 104,800 139,800 174,700 209,600 209,600
500,000 116,800 155,800 194,700 233,600 233,600
750,000 176,800 235,800 294,700 353,600 353,600
1,000,000 236,800 315,800 394,700 473,600 473,600
Pension, Excess and Supplemental Plans
Creditable Years of Service at Age 65 (1)
----------------------------------------------------------------------------------------
Remuneration (2) 15 20 25 30 35(3)
- ------------ -------- -------- -------- -------- --------
$ 125,000 $ 31,700 $ 42,300 $ 52,800 $ 63,400 $ 63,400
150,000 39,200 52,300 65,300 78,400 78,400
175,000 46,700 62,300 77,800 93,400 93,400
200,000 54,200 72,300 90,300 108,400 108,400
225,000 61,700 82,300 102,800 123,400 123,400
250,000 69,200 92,300 115,300 138,400 138,400
300,000 84,200 112,300 140,300 168,400 168,400
400,000 114,200 152,300 190,300 228,400 228,400
450,000 129,200 172,300 215,300 258,400 258,400
500,000 144.200 192.300 240.300 288,400 288,400
750,000 219.200 292.300 365.300 438.400 438,400
1,000,000 294,200 392.300 490.300 588,400 588,400
(1) The benefits listed in the retirement benefits tables are not subject to
any Social Security or other offset amounts.
(2) Remuneration under the Employees' Pension Plan, the Excess Plan and the
Supplemental Plan is calculated based upon the amount shown in the column
of the "Summary Compensation Table" entitled "Salary" and does not include
amounts shown in the column entitled "Bonus." The Employees' Pension Plan
is a qualified plan and is subject to the compensation limit, described
above, contained in Section 401(a)(17) of the Code for calculating the
participant's benefit.
(3) Benefits do not accrue for service in excess of 30 years.
The Named Executives, as of December 31, 2000, had the following credited
service (i.e., benefit service): George L. Engelke, Jr., 29 years 6 months;
Monte N. Redman, 23 years 7 months; Gerard C. Keegan, 29 years 9 months; Thomas
W. Drennan, 14 years 6 months; Arnold K. Greenberg, 25 years 7 months; and John
J. Conefry, Jr., 7 years 4 months.
Audit Committee
The information set forth in this section, including but not limited to the
Report of the Audit Committee shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act or the Exchange Act, except to the extent
that AFC specifically incorporates this information by reference, and otherwise
shall not be deemed "soliciting materials" filed with the SEC or subject to
Regulations 14A or 14C of the SEC or subject to the liabilities of Section 18
of the Exchange Act..
20
It has been and continues to be the practice of the Board to maintain an
Audit Committee of the Board. The Board has adopted a written Charter of the
Audit Committee, a copy of which is attached as Appendix A to this Proxy
Statement and is incorporated by reference into this Section. The Charter
specifies the purpose of the Audit Committee, the appointment and composition of
its members, procedural matters with respect to its meetings, the
responsibilities and duties of the Audit Committee and the reporting of Audit
Committee activities and recommendations. AFC Common Stock is listed on The
Nasdaq Stock Market. The Board has determined that the members of the Audit
Committee are independent, as independence is defined in Rule 4200(a)(15) of
the National Association of Securities Dealers' listing standards, as
applicable.
Report of the Audit Committee
Under rules established by the SEC, AFC is required to provide certain data
and information regarding the activities of its Audit Committee. In fulfillment
of this requirement, the Audit Committee of AFC, at the direction of the Board,
has prepared the following report for inclusion in this Proxy Statement.
At its meeting held on March 21, 2001, the Audit Committee reviewed the
Consolidated Financial Statements and discussed such statements with the
management of AFC. At such meeting and at other meetings held during 2000, the
Audit Committee discussed with its independent auditor, KPMG LLP, the matters
required to be discussed by Statement on Auditing Standards No. 61, or SAS 61,
"Communication with Auditing Committees." The matters required to be discussed
pursuant to SAS 61 include, but are not limited to, significant accounting
policies, management judgments and accounting estimates, audit adjustments, if
any, disagreements with management, if any, difficulties encountered with
management in performing the audit, if any, and fees from management advisory
services, if any.
The Audit Committee has received and reviewed the written disclosures and
letter from KPMG LLP required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. The Audit Committee has
discussed with KPMG LLP the independence of KPMG LLP.
Based upon the review and discussion referred to in this Report, the Audit
Committee, at its meeting held on March 21, 2001, recommended to the Board that
the Consolidated Financial Statements be included in the Annual Report on Form
10-K of AFC for the year ended December 31, 2000.
Audit Committee of AFC
Thomas J. Donahue, Chairman Peter C. Haeffner, Jr.
Andrew M. Burger Ralph F. Palleschi
Denis J. Connors Leo J. Waters
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
AFC's independent auditors, or principal accountant, for the fiscal year
ended December 31, 2000 were KPMG LLP. The Board has reappointed KPMG LLP as
independent auditors, or principal accountant, for AFC and the Association for
the year ending December 31, 2001, subject to ratification of such
appointment by the holders of the voting stock of AFC. Representatives of KPMG
LLP will be present at the Annual Meeting. They will be given an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions from shareholders present at the Annual Meeting.
The following chart reflects fees billed or fees estimated to be billed for
professional or other services rendered by KPMG LLP for AFC's fiscal year ended
December 31, 2000:
21
KPMG LLP Fees Billed for the Fiscal Year ended December 31, 2000
Financial Information
Systems Design and
Audit Fees (1) Implementation Fees All Other Fees (3)
- -------------- ------------------- ------------------
$ 360,200 $0 $371,000
_________________
(1) Audit Fees reflect aggregate fees billed for professional services rendered
for the audit of AFC's Consolidated Financial Statements and the reviews
of the financial statements included in AFC's Quarterly Reports on
Form 10-Q during AFC's fiscal year ended December 31,2000.
(2) Financial Information Systems Design and Implementation Fees reflect
aggregate fees for professional services rendered for directly or
indirectly operating, or supervising the operation of AFC's information
system or managing AFC's local area network, or designing or implementing a
hardware or software system that aggregates source data underlying the
financial statements or generates information that is significant to AFC's
financial statements taken as a whole.
(3) All other Fees reflect aggregate fees billed or estimated to be billed for
services rendered by KPMG LLP for the fiscal year ended December 31, 2000
which are not included under the captions "Audit Fees" or "Financial
Information Systems Design and Implementation Fees."
The Audit Committee, as part of its review of the disclosures and letter
from KPMG LLP required by Independence Standards Board Standard No. 1,
considered whether the provision of the services rendered, the fees for which
are reflected in the chart above entitled "KPMG LLP Fees Billed for the Fiscal
Year ended December 31, 2000" under the captions entitled "Financial Information
Systems Design and Implementation Fees" and "All Other Fees", were and found
them to be compatible with maintaining the independence of KPMG LLP.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE
---------------------
APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS OF AFC.
PROPOSAL NO. 3
SHAREHOLDER PROPOSAL
AFC has been notified that Jewelcor Management, Inc., 100 North Wilkes-
Barre Boulevard, Wilkes-Barre, PA 18702, which is the record owner of 100 shares
of common stock and the beneficial owner of an additional 13,900 shares, intends
to present the shareholder proposal set forth below for consideration at the
Annual Meeting.
The Board of AFC disclaims any responsibility for the content of this
shareholder proposal. The shareholder proposal is included in this Proxy
Statement in accordance with the rules of the SEC and interpretive guidance
received from the staff of the SEC regarding the test of the proposal and is not
endorsed by the Board. The proposal recommends the Board take action to remove
from AFC's certificate of incorporation and bylaws provisions that the Board
believes are necessary to promote stability in AFC's corporate governance and to
protect AFC and its shareholders from hostile takeover abuses. FOR THE REASONS
STATED UNDER "RESPONSE BY YOUR BOARD," THE BOARD BELIEVES THAT APPROVAL OF THE
SHAREHOLDER PROPOSAL IS NOT IN THE BEST INTEREST OF AFC OR ITS SHAREHOLDERS AND
RECOMMENDS A VOTE "AGAINST" THE PROPOSAL.
Response by Your Board of Directors
The Board has carefully considered the merits of the proposal in the context of
its fiduciary duty.
The Board has a fiduciary duty to act in the best interests of all of the
shareholders, to continually evaluate the means of enhancing shareholder value
and to oppose unfair takeover attempts. The purpose and effect of the provisions
requested to be removed from our certificate of incorporation and bylaws is to
provide the Board with the negotiating leverage necessary to fulfill its
fiduciary duty to assure that if a takeover occurred, it would be at a price and
upon terms that reflect the long term value of AFC. These provisions provide the
Board with the adequate time and flexibility necessary to negotiate the highest
possible bid from a potential acquirer and develop alternatives which
22
may better maximize shareholder value and ensure that all shareholders are
treated fairly and equally. The removal of such provisions would subject AFC's
shareholders to a variety of abusive tactics for which adequate protection
otherwise would not exist.
The Board is obligated to act in the best interests of all of the
shareholders. Moreover, the interests of the Board, management and employees are
also closely aligned with those of the shareholders. The Board and the executive
officers of AFC as a group beneficially own approximately 5.3% of AFC's common
stock. In addition, the Association ESOP owns approximately 8.7% of AFC's common
stock.
Our corporate governance provisions are designed to assist management in the
orderly operation of AFC.
The proponent states that all of the provisions which it requests be
removed or amended are antitakeover defenses which place restrictions on the
ability of the shareholders to effectuate a proposed takeover of AFC. The Board
agrees with the proponent that many of these provisions may present an obstacle
to any person who seeks to acquire control of AFC without negotiating with the
Board, but disagrees with the characterization of these provisions as
antitakeover defenses. The Board believes that while these provisions may have
an antitakeover effect, their primary purpose is to protect all shareholders'
interests whether in a takeover context or with respect to general corporate
governance. The provisions are designed to require a potential acquirer to seek
approval from the Board before initiating a takeover of AFC, thus allowing the
Board to prevent undesirable coercive takeovers from occurring. The provisions
are not intended to discourage persons from proposing a merger or other
transaction at prices reflective of the full value of AFC, but are designed to
assist management in the orderly operation of AFC and to ensure that the Board
is given the opportunity to negotiate for the best terms in a sale or merger.
An unsolicited non-negotiated proposal to acquire AFC could seriously
disrupt the business and management of AFC and cause it great expense. The Board
believes it is in the best interests of AFC and its shareholders to encourage
potential acquirers to negotiate directly with the Board and management and that
these provisions encourage such negotiations. The Board believes that it is in
the best position to determine the full value of AFC and to negotiate on behalf
of all shareholders. These provisions provide the Board with the necessary time
and flexibility to evaluate the terms and price of a potential takeover proposal
and/or to consider alternatives thereto. In effect, removal of certain of these
provisions potentially could remove the Board's ability to decide if and when a
sale of AFC would be optimal and to negotiate price and terms that reflect the
long term value of AFC. Furthermore, removal of certain of these provisions
would make AFC susceptible to a "two-tiered" hostile takeover bid (as discussed
in more detail below), which the Board believes would not be in the
shareholders' best interest.
Many of the provisions in question previously have been disclosed to our
shareholders.
The merits of each of these provisions were carefully considered by the
Board when they were originally adopted and again when the shareholder proposal
was received. In addition, AFC's shareholders were given the opportunity to
review a summary of these provisions in connection with the acquisitions by AFC
of The Greater New York Savings Bank and Long Island Bancorp, Inc. The Joint
Proxy Statement-Prospectus distributed to AFC's shareholders in connection with
the solicitation of votes for each of the acquisitions included a discussion of
those provisions in the certificate of incorporation and bylaws that might be
considered to have an antitakeover effect. The Board also notes that all of
these provisions are permissible under Delaware law and are very common for
Delaware corporations such as AFC.
The proposal may misstate or mischaracterize the provisions of the certificate
of incorporation and bylaws.
AFC believes that portions of the proposal misstate or mischaracterize the
provisions of the certificate of incorporation and bylaws sought to be removed.
The Board cautions shareholders to read the proposal as one shareholder's
interpretation and not as an accurate portrayal of the facts. Set forth below
are a few sections of the proposal that the Board believes are inaccurate.
In Section 1(d) of the proposal, the proponent recommends that AFC
eliminate the staggering of the Board
23
into three classes. The reason for a staggered Board is to provide for an
orderly transition of Board members and promote stability and consistency in
experience. Election of directors by classes is a common practice that has been
adopted by many companies. In the opinion of the Board, this provision
facilitates continuity and stability of leadership and policy by assuring that
experienced individuals familiar with AFC and its business will be on the Board
at all times. Such continuity is essential to developing and executing a long-
term strategic plan. Individual directors can be replaced and shareholders are
able to nominate and vote for directors of their own choosing. The ability to
replace the entire board is an extreme measure which the Board believes is
harmful, particularly in a takeover context. The repeal of the staggered board,
which could permit the election of an entirely new Board beholden to a
particular shareholder group, could result in such group acquiring effective
control of AFC without payment of a control premium to the other shareholders.
In Section 1(f) of the proposal, the proponent recommends that AFC repeal
the provision of the certificate of incorporation which requires the affirmative
vote of at least 80% of the voting shares to approve a business combination that
has not been approved by the Board or that does not meet the specific price
criteria as set forth in such provision. This provision is usually referred to
as a "fair price provision" and offers shareholders protection from "two-tiered"
tender offers by requiring any acquirer to pay the same price to all
shareholders in a merger or acquisition. Some tender offers may be made at a
price substantially above current market prices, but may be for less than all of
the outstanding shares of a target company. Under this form of tender offer,
shareholders who do not tender their shares in the first offer or tier may get
frozen out if AFC is taken over and thereby forced to accept a lower price in
the second tier offering. Without this provision in AFC's certificate of
incorporation, shareholders would be forced to decide between liquidating their
investment at a time that may be disadvantageous or retaining their investment
as part of a minority group of shareholders and receive a lower price in a
second tier offering or "squeeze out" merger.
The proposal is also vague and indefinite because the repeal of the various
provisions referenced in the proposal will not necessarily result in the removal
of the "antitakeover" defenses. For example, the repeal of Article Fifth (D)
referred to in Section 1(d) of the proposal will not result in shareholders
being empowered to call special meetings. Under Delaware General Corporation Law
("DGCL"), shareholders cannot call special meetings unless it is expressly
provided for in AFC's certificate of incorporation.
Additional action will be required to amend our corporate governance documents.
Based upon the terms of the proposal, its adoption will not by itself
remove such provisions from AFC's certificate of incorporation and bylaws. The
proposal does not request a vote on amending AFC's certificate of incorporation
and bylaws, as would be required by provisions of the DGCL and our certificate
of incorporation, but simply requests a vote to make a recommendation to our
Board to remove such provisions. As such, the proposal is subject to a simple
majority vote, as described elsewhere herein. If the proposal is approved by the
requisite vote, additional Board action and a shareholder vote will be required
to amend our certificate of incorporation. In accordance with the requirements
of our certificate of incorporation, amendments of certain of these provisions
by the shareholders will require the favorable vote of at least 80% of our
outstanding shares.
THE BOARD HAS CAREFULLY CONSIDERED THE SUBSTANCE OF THE PROPOSAL BY
CONSIDERING THE MERITS OF WHETHER TO AMEND THE CERTIFICATE OF INCORPORATION AND
BYLAWS AS REQUESTED BY THE PROPONENT AND HAS DETERMINED THAT IT IS IN THE BEST
INTEREST OF THE SHAREHOLDERS TO RETAIN SUCH PROVISIONS AND UNANIMOUSLY
RECOMMENDS A VOTE "AGAINST" PROPOSAL III.
---------------------------
Unless marked to the contrary, the shares represented by the enclosed proxy
card will be voted "AGAINST" the shareholder proposal.
Text of the Shareholder Proposal
Resolved, it is recommended that the Board of Directors of Astoria
Financial Corporation (the "Company") take the steps necessary to implement the
following actions to remove the "anti-takeover" defenses from the Company's
24
Certificate of Incorporation and Bylaws, unless precluded by state or federal
law:
1. Repeal the following Articles of the Company's Certificate of
Incorporation:
a. Repeal Article Fourth (C) which prohibits a shareholder from
-------------------------
voting the shares the shareholder owns in excess of 10% of the
then-outstanding shares of the Company's Common Stock.
b. Repeal Article Fifth (C) which prohibits shareholders from acting
------------------------
by written consent.
c. Repeal Article Fifth (D) which prohibits shareholders from
------------------------
calling a special meeting.
d. Repeal Article Sixth (A) which segregates the Board of Directors
------------------------
into separate classes with staggered terms of office.
e. Repeal Article Sixth (D) which requires the affirmative vote of
------------------------
at least 80% of shares entitled to vote in an election of
directors ("Voting Shares") in order for shareholders to remove
directors from office, even when good cause exists.
f. Repeal Article Eighth which requires the affirmative vote of at
---------------------
least 80% of the Voting Shares to approve a business combination
that has not been approved by the Board of Directors or that does
not meet the specific price criteria as set forth in Article
Eighth.
2. Repeal the following Sections and Article of the Company's Bylaws:
a. Repeal Article I Section 2 which prohibits shareholders from
--------------------------
calling a special meeting.
b. Repeal Article I Section 9 which prohibits shareholders from
--------------------------
acting by written consent.
C. Repeal Article VIII which prohibits changes by shareholders to
-------------------
certain provisions of the Company's Bylaws without the
affirmative vote of at least 80% of the Voting Shares.
3. Amend Article I Section 6 (b) of the Company's Bylaws to remove all
language that restricts shareholders from calling a special meeting or
from conducting business at a special meeting.
4. Amend Article 11 Section 1 of the Company's Bylaws to remove all
language regarding the segregation of the Board of Directors into
separate classes.
Shareholder's Supporting Statement
The Certificate of Incorporation and Bylaws of the Company contain certain
"antitakeover" provisions that may present an insurmountable obstacle for a
suitor of the Company who is not approved by the Board of Directors but who
seeks to acquire the Company at a stock price above current market prices.
Moreover, these provisions restrict the stockholders' ability to alter the
composition of the Board, to call special meetings and to alter the Company's
Certificate of Incorporation and Bylaws.
Additional Information
Cost of Proxy Solicitation
The cost of solicitation of proxies by AFC, which is expected to be less
than $80,000, will be borne by AFC. Georgeson Shareholder Communications Inc.,
or GSC, has been retained to assist in the solicitation of proxies under a
contract providing for payment of a fee of $7.000 plus reimbursement for its
expenses. In addition to solicitations
25
by mail, GSC or a number of officers and employees of AFC and the Association
may solicit proxies in person, by mail or by telephone, but none of these
persons will receive any compensation for their solicitation activities in
addition to their regular compensation. Arrangements will also be made with
brokerage houses and other custodians, nominees, and fiduciaries for forwarding
solicitation material to the beneficial owners of AFC Common Stock held of
record by such fiduciaries, and AFC will reimburse them for their reasonable
expenses in accordance with the rules of the SEC and The Nasdaq Stock Market.
Shareholder Proposals
To be considered for inclusion in AFC's proxy statement and form of proxy
relating to the annual meeting of shareholders to be held in 2002, a shareholder
proposal, including a recommendation of a director nominee, must be received by
the Secretary of AFC at the address set forth on the first page of this Proxy
Statement not later than December 17, 2001. Any shareholder proposal will be
subject to Rule (S) 240.14a-8 promulgated by the SEC under the Exchange Act.
Notice of Business to be Conducted at an Annual Meeting
The Bylaws of AFC provide an advance notice procedure for a shareholder to
properly bring business before an annual meeting or to nominate any person for
election to the Board. The shareholder must give written advance notice to the
Secretary of AFC not less than ninety (90) days before the date originally fixed
for such meeting; provided, however, that in the event that less than one
hundred (100) days notice or prior public disclosure of the date of the meeting
is given or made to shareholders, notice by the shareholder, to be timely, must
be received not later than the close of business on the tenth (10th) day
following the date on which AFC's notice to shareholders of the annual meeting
date was mailed or such public disclosure was made. The advance notice by
shareholders must include the shareholder's name and address, as they appear on
AFC's record of shareholders, the class and number of shares of AFC's capital
stock that are beneficially owned by such shareholder, a brief description of
the proposed business or the names of the person(s) the shareholder proposes to
nominate, and, as to business which the shareholder seeks to bring before an
annual meeting, the reason for conducting such business at the annual meeting
and any material interest of such shareholder in the proposed business. In the
case of nominations for election to the Board, certain information regarding the
nominee must also be provided. Such nominations and related information would be
reviewed by the Nominating Committee of the Board as described in "Committees
and Meetings of the Board" on page 7. Nothing in this paragraph shall be deemed
to require AFC to include in its proxy statement and proxy relating to an annual
meeting any shareholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is received
or any shareholder nomination.
Other Matters Which May Properly Come Before the Meeting
The Board knows of no business which will be presented for consideration at
the Annual Meeting other than as stated in the Notice of Annual Meeting of
Shareholders. If, however, other matters are properly brought before the Annual
Meeting, the dates by which shareholder proposals and notices of business to be
conducted at an Annual Meeting having been previously disclosed, it is the
intention of the persons named in the accompanying proxy to vote the shares
represented thereby on such matters as directed by the Board.
26
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are present at the Annual
Meeting and wish to vote your shares in person, your proxy may be revoked by
voting at the Annual Meeting.
An additional copy of AFC's Annual Report on Form 10-K (without exhibits)
for the year ended December 31, 2000, as filed with the SEC, will be furnished
without charge to any shareholder upon written request to Astoria Financial
Corporation, Investor Relations Department, One Astoria Federal Plaza, Lake
Success, New York 11042-1085.
By order of the Board,
/s/ Alan P. Eggleston
Alan P. Eggleston
Executive Vice President, General Counsel
and Secretary
Lake Success, New York
April 16, 2001
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
27
Appendix A
ASTORIA FINANCIAL CORPORATION
AND
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARDS OF DIRECTORS
I. PURPOSE
The objective of the Audit Committee ("Committee") is to assist the full
Boards of Directors in fulfilling their fiduciary responsibilities. It is the
policy of Astoria Financial Corporation ("Corporation") and Astoria Federal
Savings and Loan Association ("Association") to maintain an Audit Committee of
their Boards of Directors. Management, subject to regular Board approved policy,
is responsible for policy development and implementation and the design and
maintenance of the operating system and internal controls, including amendments
thereto. The Committee, in its oversight role, reviews with management, internal
audit services and the independent auditors that adequate controls exist and
identified material weaknesses are effectively eliminated. The Committee's
oversight of the internal control structure involves reviewing internal control
evaluations performed by management, internal audit services, independent
auditors and regulatory examiners and the methods employed to make such
evaluations. The Committee's primary concerns relate to those controls designed
to assure that assets are safeguarded and transactions are authorized and
properly recorded. Such controls permit the preparation of sound financial
reports.
The Committee shall utilize resources as needed to investigate any issues
they deem important and have an open and unrestricted communication channel with
all entity personnel, including internal and external accountants and its own
independent outside counsel, which counsel may be engaged by the Committee and
will be paid for by the Corporation or the Association.
II. APPOINTMENT AND COMPOSITION
The Committee shall be comprised of a minimum of four members, each of whom
shall be independent nonexecutive directors, and free from any relationship
that, in the opinion of the Boards, would interfere with the exercise of his or
her independent judgement as a member of the Committee. One member of the
Committee shall be designated by the Boards of Directors as Chair who shall
preside over meetings of the Committee. All members of the Committee shall have
a working familiarity with basic finance and accounting or related financial
management expertise and at least two members shall have past employment
experience in finance or accounting, requisite professional certification in
accounting, or any other comparable experience or background which results in
the individual's financial sophistication, including being or having been a
chief executive officer, chief financial officer or other senior officer with
financial oversight responsibilities. Members of the Committee, including its
Chair, are elected by the Boards of Directors at their annual organization
meetings and serve one year terms or until their successors are elected and
qualified.
III. MEETINGS
The Committee shall meet as and when deemed appropriate by the Chair of the
Committee, however, not less than four times annually. Three members of the
Committee shall constitute a quorum for the transaction of business. The
Committee may at any time adjourn to an Executive Session at which only members
of the Committee and invited guests may be present.
Iv. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Committee shall:
A-1
1. Review the annual audited financial statements prior to filing or
distribution. This review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices, and judgements. The Committee shall review any significant
reports or other financial information submitted to any government body, or
the public, including any certification, report, opinion, or review
rendered by the independent auditors.
2. Consider the independent auditors' judgements about the quality and
appropriateness of the Corporation's and Association's accounting
principles as applied in their financial reporting.
3. Discuss with the independent auditors the matters required to be discussed
by SAS 61 (Codification of Statements on auditing standards, AU (S) 380),
as may be modified or supplemented. Significant matters identified during
the interim review shall be discussed with the independent auditors prior
to the filing of the Quarterly Report on Form 10-Q or as soon thereafter as
practical. The Chair of the Committee may represent the entire Committee
for purposes of this review.
4. In consultation with management, the independent auditors and internal
audit services, consider the integrity of the Corporation's and
Association's financial reporting process and controls.
5. Have a clear understanding with management and the independent auditors
that the independent auditors are ultimately accountable to the Boards of
Directors and the Committee, as representatives of the Corporation's and
Association's shareholders. The Committee shall have the ultimate authority
and responsibility to evaluate and where appropriate, recommend to the
Board of Directors, the replacement of the independent auditors. On an
annual basis, the Committee shall review the formal written statement from
the independent auditors delineating all relationships between the
independent auditor and the Corporation and Association, consistent with
Independent Standards Board Statement No. 1 ensuring the independence of
the independent auditors.
6. Review the independent auditors' audit plan. This review shall include the
scope, staffing, reliance upon management and internal audit services and
general audit approach.
7. Review examination reports received from various banking supervisory
authorities and management's replies.
8. On at least an annual basis, review with the Corporation's and
Association's counsel any legal matters that could have a significant
impact on the financial statements, the Corporation's and Association's
compliance with applicable laws and regulations, and inquiries received
from regulators or governmental agencies.
9. Oversee the internal audit services function, including approving audit
plans and scope, ascertaining the quality and independence of the internal
audit services staff and reviewing significant findings and
recommendations.
10. Review and update the Audit Committee Charter periodically, at least
annually, as conditions dictate. The Charter shall be submitted to the
Boards of Directors for approval and published at least every three years
in accordance with SEC regulations.
V. REPORTING OF COMMITTEE ACTIVITIES AND RECOMMENDATIONS
The Committee will maintain minutes and other relevant records of their
meetings which will document its activities and recommendations. Said
documentation will be compiled by the Director of Internal Audit Services who
shall act as Secretary to the Committee.
A-2
ASTORIA FINANCIAL CORPORATION
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF ASTORIA FINANCIAL CORPORATION FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2001 AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned shareholder of Astoria Financial Corporation hereby authorizes
and appoints John M. Graham III, William M. Thomas, Jr. or either of them proxy
of the undersigned, with full power of substitution, to attend and act as proxy
for the undersigned and to vote as designated below all shares of common stock
of Astoria Financial Corporation which the undersigned may be entitled to vote
at the Annual Meeting of Shareholders of Astoria Financial Corporation, to be
held on May 16, 2001 at 9:30 a.m., Eastern time, at the New Hyde Park Inn, 214
Jericho Turnpike, New Hyde Park, New York, 11040, and at any adjournment or
postponement thereof.
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed postage-paid envelope.)
Please mark
your votes
like this [X]
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE "FOR"
ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
1. The election of nominees John J. Conefry, Jr., FOR WITHHOLD
Lawrence W. Peters and Thomas V. Powderly as [_] [_]
directors for terms of three years each.
To withhold authority to vote FOR any
particular nominee, line or strike out
that nominee's name and then check the
appropriate box as to the remaining
nominees.
FOR AGAINST ABSTAIN
2. The ratification of the appointment of [_] [_] [_]
KPMG LLP as independent auditors of
Astoria Financial Corporation for the
fiscal year ending December 31, 2001.
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE
"AGAINST" PROPOSAL NO. 3.
FOR AGAINST ABSTAIN
3. A shareholder proposal more fully [_] [_] [_]
described in the Proxy Statement dated
April 16, 2001.
Proposal Nos. 1 and 2 listed above in this revocable proxy were proposed by
Astoria Financial Corporation. Other than Proposals Nos. 1, 2 and 3, Astoria
Financial Corporation is not currently aware of any other business that may come
before the Annual Meeting. The persons named as proxies herein will vote the
shares represented hereby as directed by the Board of Directors of Astoria
Financial Corporation upon such other business as may properly come before the
Annual Meeting, and any adjournment or postponement thereof, including, without
limitation, a motion to postpone or adjourn the Annual Meeting.
THIS PROXY IS REVOCABLE. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL NO. 1, FOR
PROPOSAL NO. 2 AND AGAINST PROPOSAL NO. 3.
The undersigned hereby acknowledges receipt, prior to the execution of this
proxy, of a Notice of Annual Meeting of Shareholders of Astoria Financial
Corporation, a Proxy Statement dated April 16, 2001 for the Annual Meeting and a
2000 Annual Report on Form 10-K of Astoria Financial Corporation.
Please sign and date below and return promptly in the enclosed postage-paid
envelope.
X X Date: , 2001
------------------------------ -------------------------- ------
Please sign name exactly as it appears hereon. If shares are registered in more
than one name, all should sign, but if one signs, it binds the others. When
signing as attorney, executor, administrator, trustee or guardian, please give
your full title as such. If a corporation, please sign in full corporate name
by an authorized officer. If a partnership, please sign in partnership name by
an authorized person.
ASTORIA FINANCIAL CORPORATION
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY THE EMPLOYEE STOCK OWNERSHIP PLAN COMMITTEE,
AS PLAN ADMINISTRATOR, FOR THE ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN
As a named fiduciary, the undersigned participant, former participant or
beneficiary of a deceased former participant in the Astoria Federal Savings and
Loan Association Employee Stock Ownership Plan (the "ESOP") hereby provides the
voting instructions hereinafter specified to CG Trust Company, a trustee of the
ESOP (the "Trustee"), which instructions shall be taken into account by the
Trustee in voting, in person, by limited or general power of attorney or by
proxy, the shares and fractional shares of common stock of Astoria Financial
Corporation that are held by the Trustee, in its capacity as Trustee, as of
March 23, 2001, at the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 16, 2001 at 9:30 a.m., Eastern time, at the New
Hyde Park Inn, 214 Jericho Turnpike, New Hyde Park, New York, 11040, and at any
adjournment or postponement thereof.
As to the proposals listed below which are more particularly described in the
Proxy Statement dated April 16, 2001, the Trustee will vote the common stock of
Astoria Financial Corporation held by the ESOP Trust to reflect the voting
instructions on this Confidential Voting Instruction, in the manner described in
the accompanying letter dated April 16, 2001 from the ESOP Committee.
If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, for purposes of providing voting instructions, such shares
shall be treated as described in the letter dated April 16, 2001 from the ESOP
Committee.
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed postage-paid envelope.)
The directions, if any, given in this Please mark
Confidential Voting Instruction will be your votes
kept confidential from all directors, like this [X]
officers and employees of Astoria
Financial Corporation or Astoria Federal
Savings and Loan Association.
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE
"FOR" ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
1. The election of nominees John J. Conefry, Jr., FOR WITHHOLD
Lawrence W. Peters and Thomas V. Powderly [_] [_]
as directors for terms of three years each.
To withhold authority to vote FOR any particular
nominee, line or strike out that nominee's name
and then check the appropriate box as to the remaining
nominees.
2. The ratification of the appointment of FOR AGAINST ABSTAIN
KPMG LLP as independent auditors of [_] [_] [_]
Astoria Financial Corporation for the
fiscal year ending December 31, 2001.
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE
"AGAINST" PROPOSAL NO. 3.
3. A shareholder proposal more fully FOR AGAINST ABSTAIN
described in the Proxy Statement [_] [_] [_]
dated April 16, 2001.
In its discretion, the Trustee is authorized to vote upon such other business as
may come before the Annual Meeting and any adjournment or adjournments thereof
or to cause such matters to be voted upon in the discretion of the individuals
named in any proxies executed by the Trustee.
Only Proposal Nos. 1 and 2 listed above in this Confidential Voting Instruction
were proposed by Astoria Financial Corporation.
The undersigned hereby instructs the Trustee to vote in accordance with the
voting instruction indicated above and hereby acknowledges receipt, prior to the
execution of this Confidential Voting Instruction, of a Notice of Annual Meeting
of Shareholders, a Proxy Statement dated April 16, 2001 for the Annual Meeting
and a 2000 Annual Report on Form 10-K of Astoria Financial Corporation.
Please sign and date below and return promptly in the enclosed postage-paid
envelope.
X Date: , 2001
---------------------------------------------------------- --------
Signature of participant, former participant or designated beneficiary of
deceased former participant.
Please sign name exactly as it appears herein. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as
such.
ASTORIA FINANCIAL CORPORATION
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY THE EMPLOYEE STOCK OWNERSHIP PLAN COMMITTEE,
AS PLAN ADMINISTRATOR, FOR THE ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN
As a named fiduciary, the undersigned participant, former participant or
beneficiary of a deceased former participant in the Astoria Federal Savings and
Loan Association Employee Stock Ownership Plan (the "ESOP") hereby provides the
voting instructions hereinafter specified to State Street Bank & Trust Company,
a trustee of the ESOP (the "Trustee"), which instructions shall be taken into
account by the Trustee in voting, in person, by limited or general power of
attorney or by proxy, the shares and fractional shares of common stock of
Astoria Financial Corporation that are held by the Trustee, in its capacity as
Trustee, as of March 23, 2001, at the Annual Meeting of Shareholders of Astoria
Financial Corporation to be held on May 16, 2001 at 9:30 a.m., Eastern time, at
the New Hyde Park Inn, 214 Jericho Turnpike, New Hyde Park, New York, 11040, and
at any adjournment or postponement thereof.
As to the proposals listed below which are more particularly described in the
Proxy Statement dated April 16, 2001, the Trustee will vote the common stock of
Astoria Financial Corporation held by the ESOP Trust to reflect the voting
instructions on this Confidential Voting Instruction, in the manner described in
the accompanying letter dated April 16, 2001 from the ESOP Committee.
If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, for purposes of providing voting instructions, such shares
shall be treated as described in the letter dated April 16, 2001 from the ESOP
Committee.
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed postage-paid envelope.)
The directions, if any, given in this Please mark
Confidential Voting Instruction will be your votes
kept confidential from all directors, like this [X]
officers and employees of Astoria
Financial Corporation or
Astoria Federal Savings and Loan Association.
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE "FOR"
ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
1. The election of nominees John J. Conefry, Jr., FOR WITHHOLD
Lawrence W. Peters and Thomas V. Powderly [_] [_]
as directors for terms of three years each.
To withhold authority to vote FOR any particular
nominee, line or strike out that nominee's name
and then check the appropriate box as to the
remaining nominees.
2. The ratification of the appointment of KPMG LLP FOR AGAINST ABSTAIN
as independent auditors of Astoria Financial [_] [_] [_]
Corporation for the fiscal year ending
December 31, 2001.
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE
"AGAINST" PROPOSAL NO. 3.
3. A shareholder proposal more fully described in FOR AGAINST ABSTAIN
the Proxy Statement dated April 16, 2001. [_] [_] [_]
In its discretion, the Trustee is authorized to vote upon such other business as
may come before the Annual Meeting and any adjournment or adjournments thereof
or to cause such matters to be voted upon in the discretion of the individuals
named in any proxies executed by the Trustee.
Only Proposal Nos. 1 and 2 listed above in this Confidential Voting Instruction
were proposed by Astoria Financial Corporation.
The undersigned hereby instructs the Trustee to vote in accordance with the
voting instruction indicated above and hereby acknowledges receipt, prior to the
execution of this Confidential Voting Instruction, of a Notice of Annual Meeting
of Shareholders, a Proxy Statement dated April 16, 2001 for the Annual Meeting
and a 2000 Annual Report on Form 10-K of Astoria Financial Corporation.
Please sign and date below and return promptly in the enclosed postage-paid
envelope.
X Date: , 2001
- -------------------------------------------------------------- -----
Signature of participant, former participant or designated beneficiary of
deceased former participant.
Please sign name exactly as it appears herein. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as
such.
ASTORIA FINANCIAL CORPORATION
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION,
AS PLAN ADMINISTRATOR, FOR THE ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION INCENTIVE SAVINGS PLAN
The undersigned participant, former participant or beneficiary of a deceased
former participant in the Astoria Federal Savings and Loan Association Incentive
Savings Plan (the "401K Plan") as a named fiduciary hereby provides the voting
instructions hereinafter specified to Mellon Investor Services LLC, as the
designee of Astoria Federal Savings and Loan Association, as Plan Administrator
(the "Plan Administrator"), which instructions shall be taken into account in
directing the trustee of the 401K Plan (the "Trustee") to vote in person, by
limited or general power of attorney or by proxy the shares and fractional
shares of common stock of Astoria Financial Corporation that are held by the
Trustee, in its capacity as Trustee, as of March 23, 2001, at the Annual Meeting
of Shareholders of Astoria Financial Corporation to be held on May 16, 2001 at
9:30 a.m., Eastern time, at the New Hyde Park Inn, 214 Jericho Turnpike, New
Hyde Park, New York, 11040, and at any adjournment or postponement thereof.
As to the proposals listed below which are more particularly described in the
Proxy Statement dated April 16, 2001, the Plan Administrator of the 401K Plan,
will give voting directions to the Trustee. Such directions will reflect the
voting instructions on this Confidential Voting Instruction, in the manner
described in the accompanying letter from the Plan Administrator dated April 16,
2001.
If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, for purposes of providing voting instructions, such shares
shall be treated as described in the letter from the Plan Administrator dated
April 16, 2001.
(Continued on reverse side. Please complete, sign and date on the
reverse side and promptly return in the enclosed postage-paid envelope.)
The directions, if any, given in this Please mark
Confidential Voting Instruction will be your votes
kept confidential from all directors, like this [X]
officers and employees of Astoria
Financial Corporation or Astoria Federal
Savings and Loan Association.
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE "FOR"
ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
1. The election of nominees John J. Conefry, Jr., FOR WITHHOLD
Lawrence W. Peters and Thomas V. Powderly as [_] [_]
directors for terms of three years each.
To withhold authority to vote FOR any particular
nominee, line or strike out that nominee's name
and then check the appropriate box as to the
remaining nominees.
2. The ratification of the appointment of KPMG LLP FOR AGAINST ABSTAIN
as independent auditors of Astoria Financial [_] [_] [_]
Corporation for the fiscal year
ending December 31, 2001.
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE
"AGAINST" PROPOSAL NO. 3.
3. A shareholder proposal more fully described in FOR AGAINST ABSTAIN
the Proxy Statement dated April 16, 2001. [_] [_] [_]
In its discretion, the Trustee is authorized to vote upon such other business as
may come before the Annual Meeting and any adjournment or postponement thereof
or to cause such matters to be voted upon in the discretion of the individuals
named in any proxies executed by the Trustee.
Only Proposal Nos. 1 and 2 listed above in this Confidential Voting Instruction
were proposed by Astoria Financial Corporation.
The undersigned hereby instructs the Plan Administrator to direct the Trustee to
vote in accordance with the voting instruction indicated above and hereby
acknowledges receipt, prior to execution of this Confidential Voting
Instruction, of a Notice of Annual Meeting of Shareholders, a Proxy Statement
dated April 16, 2001 for the Annual Meeting and a 2000 Annual Report on Form
10-K of Astoria Financial Corporation.
Please sign and date below and return promptly in the enclosed postage-paid
envelope.
X Date: , 2001
------------------------------------------------------------- -----
Signature of participant, former participant or designated beneficiary of
deceased former participant.
Please sign name exactly as it appears herein. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as
such.
One Astoria Federal Plaza
Lake Success, NY 11042-1085
(516) 327-3000
[LOGO OF
ASTORIA FEDERAL SAVINGS]
April 16, 2001
To: All Astoria Federal Savings and Loan Association Employee Stock Ownership
Plan (the "ESOP") Participants with a portion of their ESOP account
balance held by State Street Bank and Trust Company
Re: Annual Meeting of Shareholders to be held on May 16, 2001
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria
Financial Corporation to be held on May 16, 2001, enclosed please find the
following documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 16, 2001, including a Notice of Annual
Meeting of Shareholders,
c) 2000 Annual Report on Form 10-K, and
d) a postage-paid return envelope addressed to Mellon Investor Services
LLC, Proxy Tabulation Department (Mellon Investor Services LLC is
the Confidential Voting Instruction tabulator for the ESOP).
As a participant, and a "named fiduciary," in the ESOP, you have the
right to direct the ESOP Trustee (State Street Bank and Trust Company in this
case) how to vote at the Annual Meeting the shares of Astoria Financial
Corporation Common Stock ("Shares") allocated to your account in the ESOP and
held as of March 23, 2001 by State Street Bank and Trust Company, as trustee.
You probably also have additional shares held in the ESOP for your benefit by CG
- --------------------------------------------------------------------------------
Trust Company. If so, you will receive a separate set of material similar to
- ----------------------------------------------------------------------------
these with respect to those shares. It is important for your views to be fully
- ------------------------------------------------------------------------------
represented that you complete and return both sets of material as instructed.
- -----------------------------------------------------------------------------
As a "named fiduciary," you are the party who is identified in the voting
section of the ESOP Trust as responsible for directing the Trustee how to vote
your allocated ESOP Shares. The number of Shares in your ESOP account held by
State Street Bank and Trust Company is shown on the enclosed Confidential Voting
Instruction card. Please mark the appropriate boxes on the card, sign, date and
return it in the enclosed postage-paid return envelope. If you sign, date and
return your card, but do not check the box for a particular proposal, the
Trustee will vote your shares according to the recommendation of the Board of
Directors for that particular proposal. For your ESOP voting instruction to be
counted by the Trustee, Mellon Investor Services LLC, must receive your
Confidential Voting Instruction card no later than May 9, 2001.
The ESOP Trust states that the Trustee will generally vote unallocated
Shares and allocated Shares for which it receives no written instructions in the
same manner and proportion as the allocated Shares for which voting instructions
have been received. The Trustee's vote must be in accordance with its fiduciary
duties and in a manner determined by the Trustee to be prudent and solely in the
interest of ESOP participants and beneficiaries.
Unanticipated Proposals
It is possible, although very unlikely, that proposals other than those
specified on the Confidential Voting Instruction card will be presented for
shareholder action at the 2001 Annual Meeting of Shareholders. If this should
happen, the ESOP Trustee will be instructed to vote upon such matters in the
ESOP Trustee's discretion or to cause such matters to be voted upon in the
discretion of the individuals named in any proxies executed by the ESOP
Trustee.
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the Trustee.
You should then seal the card in the enclosed envelope and return it to Mellon
- ------------------------------------------------------------------------------
Investor Services LLC. To direct the voting of Shares within the ESOP, the
- --------------------------------------------------------------------------
Confidential Voting Instruction card must be received by Mellon Investor
- ------------------------------------------------------------------------
Services LLC no later than May 9, 2001.
- ---------------------------------------
Please note that the instruction of individual participants are to be
kept confidential by Mellon Investor Services LLC and the Trustee, who have been
instructed not to disclose them to anyone at Astoria Federal Savings and Loan
Association or Astoria Financial Corporation.
This memorandum is subject in its entirety to the information set forth
in the enclosed Proxy Statement, which you are encouraged to read and study
thoroughly.
Very truly yours,
The ESOP Committee
/s/ James J. Horvath
By: ------------------------
James J. Horvath
One Astoria Federal Plaza
Lake Success, NY 11042-1085
(516) 327-3000
[LOGO OF
ASTORIA FEDERAL SAVINGS]
April 16, 2001
To: All Astoria Federal Savings and Loan Association Employee Stock Ownership
Plan (the "ESOP") Participants with a portion of their ESOP account balance
held by CG Trust Company (CIGNA)
Re: Annual Meeting of Shareholders to be held on May 16, 2001
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 16, 2001, enclosed please find the following
documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 16, 2001, including a Notice of Annual
Meeting of Shareholders,
c) 2000 Annual Report on Form 10-K, and
d) a postage-paid return envelope addressed to Mellon Investor Services
LLC, Proxy Tabulation Department (Mellon Investor Services LLC is the
Confidential Voting Instruction tabulator for the ESOP).
As a participant, and a "named fiduciary," in the ESOP, you have the right
to direct the ESOP Trustee (CG Trust Company in this case) how to vote at the
Annual Meeting the shares of Astoria Financial Corporation Common Stock
("Shares") allocated to your account in the ESOP and held as of March 23, 2001
by CG Trust Company, as trustee. You probably also have additional shares held
---------------------------------------------
in the ESOP for your benefit by State Street Bank and Trust Company. If so, you
- --------------------------------------------------------------------------------
will receive a separate set of material similar to these with respect to those
- ------------------------------------------------------------------------------
shares. It is important for your views to be fully represented that you complete
- --------------------------------------------------------------------------------
and return both sets of material as instructed.
- -----------------------------------------------
As a "named fiduciary," you are the party who is identified in the voting
section of the ESOP Trust as responsible for directing the Trustee how to vote
your allocated ESOP Shares. The number of Shares in your ESOP account held by CG
Trust Company is shown on the enclosed Confidential Voting Instruction card.
Please mark the appropriate boxes on the card, sign, date and return it in the
enclosed postage-paid return envelope. If you sign, date and return your card,
but do not check the box for a particular proposal, the Trustee will vote your
shares according to the recommendation of the Board of Directors for that
particular proposal. For your ESOP voting instruction to be counted by the
Trustee, Mellon Investor Services LLC, must receive your Confidential Voting
Instruction card no later than May 9, 2001.
The ESOP Trust states that the Trustee will generally vote unallocated
Shares and allocated Shares for which it receives no written instructions in the
same manner and proportion as the allocated Shares for which voting instructions
have been received. The Trustee's vote must be in accordance with its fiduciary
duties and in a manner determined by the Trustee to be prudent and solely in the
interest of ESOP participants and beneficiaries.
Unanticipated Proposals
It is possible, although very unlikely, that proposals other than those
specified on the Confidential Voting Instruction card will be presented for
shareholder action at the 2001 Annual Meeting of Shareholders. If this should
happen, the ESOP Trustee will be instructed to vote upon such matters in the
ESOP Trustee's discretion or to cause such matters to be voted upon in the
discretion of the individuals named in any proxies executed by the ESOP Trustee.
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the Trustee.
You should then seal the card in the enclosed envelope and return it to Mellon
- ------------------------------------------------------------------------------
Investor Services LLC. To direct the voting of Shares within the ESOP, the
- --------------------------------------------------------------------------
Confidential Voting Instruction card must be received by Mellon Investor
- ------------------------------------------------------------------------
Services LLC no later than May 9, 2001.
- ---------------------------------------
Please note that the instruction of individual participants are to be kept
confidential by Mellon Investor Services LLC and the Trustee, who have been
instructed not to disclose them to anyone at Astoria Federal Savings and Loan
Association or Astoria Financial Corporation.
This memorandum is subject in its entirety to the information set forth in
the enclosed Proxy Statement, which you are encouraged to read and study
thoroughly.
Very truly yours,
The ESOP Committee
/s/ James J. Horvath
By: -------------------------
James J. Horvath
One Astoria Federal Plaza
Lake Success, NY 11042-1085
(516) 327-3000
[LOGO OF
ASTORIA FEDERAL SAVINGS]
April 16, 2001
To: All Astoria Federal Savings and Loan Association Incentive Savings Plan
("401K Plan") Participants with a portion of their account balance invested
in the Employer Stock Fund
Re: Annual Meeting of Shareholders to be held on May 16, 2001
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 16, 2001, enclosed please find the following
documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 16, 2001, including a Notice of Annual
Meeting of Shareholders,
c) 2000 Annual Report on Form 10-K, and
d) a postage-paid return envelope addressed to Mellon Investor Services
LLC, Proxy Tabulation Department (Mellon Investor Services LLC is the
Confidential Voting Instruction tabulator for the 401K Plan).
As a participant in the 401K Plan with all or a portion of your account
balance invested in the Employer Stock Fund and as a "named fiduciary," you have
the right to participate in directing how the Plan Administrator (Astoria
Federal Savings and Loan Association) instructs the 401K Trustee (CG Trust
Company) to vote the shares of Astoria Financial Corporation Common Stock (the
"Shares") held by the 401K Plan as of March 23, 2001, the meeting record date
(provided that you had all or a portion of your account invested in the Employer
Stock Fund as of the most recent valuation date on or before the meeting record
date). In general, the 401K Trustee will be directed to vote the Shares held in
the Employer Stock Fund "FOR" and "AGAINST" as to each proposal listed on the
Confidential Voting Instruction card in the same proportions as instructions to
cast votes "FOR" and "AGAINST" each proposal are given by those individuals
with the right to give directions. Each individual's instructions are weighted
according to the value of the participant's interest in the Employer Stock Fund
as of the most recent valuation available prior to the record date. If you do
not file a Confidential Voting Instruction card on or before May 9, 2001, or if
you ABSTAIN, your directions will not count.
Unanticipated Proposals
It is possible, although very unlikely, that proposals other than those
specified on the
Confidential Voting Instruction card will be presented for shareholder action at
the 2001 Annual Meeting of Shareholders. If this should happen, the 401K Trustee
will be instructed to vote upon such matters in the 401K Trustee's discretion,
or to cause such matters to be voted upon in the discretion of the individuals
named in any proxies executed by the 401K Trustee.
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the Plan
Administrator. You should then seal the card in the enclosed envelope and return
-----------------------------------------------------------------
it to Mellon Investor Services LLC. To direct the voting of your Shares, your
- -----------------------------------------------------------------------------
instruction card must be received by Mellon Investor Services LLC no later than
- -------------------------------------------------------------------------------
May 9, 2001.
- ------------
Please note that the instructions of individual participants are to be kept
confidential by Mellon Investor Services LLC and the 401K Trustee, who have been
instructed not to disclose them to anyone at Astoria Federal Savings and Loan
Association or Astoria Financial Corporation.
This memorandum is subject in its entirety to the information set forth in
the enclosed Proxy Statement, which you are encouraged to read and study
thoroughly.
Very truly yours,
Astoria Federal Savings and Loan Association
/s/ James J. Horvath
By: --------------------------------------
Plan Administrator