SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ASTORIA FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Certificate)
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Payment of Filing Fee (Check the appropriate box):
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[LETTERHEAD OF ASTORIA FINANCIAL CORPORATION]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 15, 2002
The Annual Meeting of Shareholders of Astoria Financial Corporation will be
held on Wednesday, May 15, 2002, 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 five directors for terms of three years each;
2. The ratification of the appointment of independent auditors; and
3 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 22, 2002, 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, Secretary and
General Counsel
Dated: April 15, 2002
ASTORIA FINANCIAL CORPORATION
One Astoria Federal Plaza
Lake Success, New York 11042-1085
___________________________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 15, 2002
___________________________________
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
15, 2002, and at any adjournments or postponements 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 22, 2002, or
the Record Date, are entitled to vote at the Annual Meeting. The 2001 Annual
Report on Form 10-K, which includes the consolidated financial statements of AFC
for the fiscal year ended December 31, 2001, 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 15,
2002.
Voting and Quorum Requirements
As of the Record Date, there were 90,073,751 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 and any other matter that may properly come before the
Annual Meeting require 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, will be counted as
present and entitled to vote and will have the effect of a vote against
ratification. 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 and FOR the ratification
of the appointment of the independent auditors. 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.
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
1
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 trustee of such plan is 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 8,190,883 (1) 9.09
c/o Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042
Citigroup Inc. 5,687,287 (2) 6.31
339 Park Avenue
New York, New York 10043
and
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
______________________
(1) This plan is an employee stock ownership plan under the Employee
Retirement Income Security Act of 1974, as amended, or ERISA. 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 the Association ESOP
are held in trust by CIGNA Bank & Trust Company, FSB, or CIGNA, as
trustee, with U.S. Trust Company, National Association acting as
investment manager. The number of shares indicated in the chart above
represents the total shares held by the trust as of December 31, 2001
according to a Schedule 13G filed on or about February 13, 2002. As of
December 31, 2001, CIGNA held 8,190,883 shares of AFC Common Stock as
trustee of the Association ESOP, 2,826,865 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 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 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. In certain circumstances, ERISA may confer upon
the Plan Trustee (or upon an investment manager to whose direction the
Plan Trustee is subject) the power and duty to control the voting and
tendering of Common Stock allocated to the accounts of participating
employees and beneficiaries who fail to exercise their voting and/or
tender rights as well as the voting and tendering of unallocated Common
Stock.
(2) According to a joint filing on Schedule 13G filed as of January 22,
2002, Citigroup, Inc. claims shared voting and dispositive power with
respect to 5,687,287 shares of AFC Common Stock, while Salomon Smith
Barney Holdings Inc. claims shared voting power and dispositive power
with respect to 5,596,398 shares of AFC Common Stock, in each case, as
of December 31, 2001. Both Citigroup, Inc. and Salomon
2
Smith Barney Holdings Inc. are reporting as parent holding companies or
control persons where the aggregate amount held directly by the parent or
control person, and directly and indirectly by their subsidiaries or
affiliates that are not persons specified in 27 CFR `240.13d-1(b)(1)(ii)(A)
through (I), does not exceed one percent of the securities of the subject
class. The filing identifies the subsidiary which directly holds the
securities reported as Smith Barney Fund Management LLC, an investment
advisor registered under Section 203 of the Investment Advisors Act of 1940
or under the laws of any state.
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 George L.
Engelke, Jr., Robert J. Conway,Peter C. Haeffner, Jr., Ralph F. Palleschi and
Leo J. Waters. 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 2005. 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.
Name Age (1) Positions Held with AFC (2) Director Since Term Expires
---- ------- --------------------------- -------------- ------------
George L. Engelke, Jr. 63 Director, Chairman of the Board, President, 1993 2002
and Chief Executive Officer and Nominee
Gerard C. Keegan 55 Director, Vice Chairman and Chief 1997 2003
Administrative Officer
Andrew M. Burger 67 Director 1993 2003
John J. Conefry, Jr. 57 Director and Vice Chairman 1998 2004
Denis J. Connors 60 Director 1993 2003
Robert J. Conway 66 Director and Nominee 1998 2002
Thomas J. Donahue 61 Director 1993 2003
Peter C. Haeffner, Jr. 63 Director and Nominee 1997 2002
Ralph F. Palleschi 55 Director and Nominee 1996 2002
Lawrence W. Peters 72 Director 1998 2004
Thomas V. Powderly 64 Director 1995 2004
Leo J. Waters 67 Director and Nominee 1998 2002
Donald D. Wenk 71 Director 1998 2003
_________________________________________
(1) As of the Record Date.
(2) All directors of AFC also serve as directors of the Association.
3
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 57 Executive Vice President
Alan P. Eggleston 48 Executive Vice President, Secretary and General Counsel
Arnold K. Greenberg 61 Executive Vice President and Assistant Secretary
Monte N. Redman 51 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 and Chairman of the Community Preservation Corporation and
as a director of 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 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. He is responsible for the retail banking, information
services, marketing and small business lending areas of the Association. 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, The Long Island Savings Bank FSB, or
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. From December 30, 2000 until September 30, 2001, he 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
4
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. He 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. He is Managing
Director and Principal of Real Estate Trade Advisors LLC, a real estate finance
and advisory company. From December 1998 to June 2001, he served as 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. 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 is
also President and Chief Operating Officer of W. P. Stewart Asset Management
(NA), Inc. From 1993 to 1997, he served 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. He is a director of the National Center for
Disability Services and Chairman of the Board of Trustees of the Variety Child
Learning Center.
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. He served Fidelity in a variety of capacities.
From 1986 to 1990, he served as Executive Vice President. In 1990, he was
appointed President and Chief Operating
5
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, an attorney, 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 the retail banking operations, human resources and
facilities areas 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.
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.
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,
2001, 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. The function of the Compensation
Committee is to review the performance and compensation of the officers
6
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 2001.
The Nominating Committee currently consists of Messrs. Conefry, Peters
and Powderly. 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 2001.
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, 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 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 2001. 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, may be made
only 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 the 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.
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 during 2001 continued 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. On December 30, 2000, Mr. Conefry 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 Agreement, or the Consulting Agreement,
entered into as of April 2, 1998. The Consulting Agreement provided for the
payment of a retainer to Mr. Conefry equal to $400,000 per annum and was
terminated on 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
7
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. 1,947,469 (4) 2.14
Gerard C. Keegan 299,653 (5)
Andrew M. Burger 160,630
John J. Conefry, Jr. 79,808 (6)
Denis J. Connors 229,086 (7)
Robert J. Conway 150,344
Thomas J. Donahue 213,932 (8)
Peter C. Haeffner, Jr. 36,096 (9)
Ralph F. Palleschi 38,000
Lawrence W. Peters 54,886
Thomas V. Powderly 92,000 (10)
Leo J. Waters 30,160 (11)
Donald D. Wenk 161,872
Arnold K. Greenberg 976,408 (12) 1.08
Monte N. Redman 489,233 (13)
Thomas W. Drennan 328,931 (14)
All directors, Board Nominees and executive
officers as a group (17 persons) 5,014,624 (15) 5.43
_____________________________________
(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 (774,200 shares), Mr. Keegan (197,000 shares), Mr.
Burger (120,628 shares), Mr. Conefry (16,000 shares), Mr. Connors (124,628
shares), Mr. Conway (97,174 shares), Mr. Donahue (104,628 shares), Mr.
Haeffner (24,000 shares), Mr. Palleschi (32,000 shares), Mr. Peters (29,212
shares), Mr. Powderly (4,000 shares), Mr. Waters (28,768 shares), Mr. Wenk
(107,822 shares), Mr. Greenberg (85,000 shares), Mr. Redman (306,126
shares), Mr. Drennan (103,000 shares), and all directors, Board Nominees
and executive officers as a group (2,294,098 shares).
(3) Except as otherwise indicated, the percent of class beneficially owned does
not exceed one percent (1.00%).
(4) Included are 516,633 shares of AFC Common Stock as to which Mr. Engelke has
shared voting and investment power, 20,363 shares of AFC Common Stock as to
which he has shared voting and no investment power, and 18,388 shares of
AFC Common Stock as to which he has shared voting and sole investment
power.
(5) Included are 27,318 shares of AFC Common Stock as to which Mr. Keegan has
shared voting and investment power and 8,833 shares of AFC Common Stock as
to which he has shared voting and no investment power.
(6) Included are 1,160 shares of AFC Common Stock as to which Mr. Conefry has
shared voting and no investment power.
(7) Included are 46,000 shares of AFC Common Stock as to which Mr. Connors has
shared voting and investment power.
(8) Included are 109,300 shares of AFC Common Stock as to which Mr. Donahue has
shared voting and investment power.
(9) Included are 600 shares of AFC Common Stock as to which Mr. Haeffner has
shared voting and investment power.
(10) Included are 87,592 shares of AFC Common Stock as to which Mr. Powderly has
shared voting and investment power.
(11) Included are 570 shares of AFC Common Stock as to which Mr. Waters has
shared voting and investment power.
(12) Included are 513,068 shares of AFC Common Stock as to which Mr. Greenberg
has shared voting and investment power, 20,363 shares of AFC Common Stock
as to which he has shared voting and no investment power, and 30,057 shares
of AFC Common Stock as to which he has shared voting and sole investment
power.
(13) Included are 1,538 shares of AFC Common Stock as to which Mr. Redman has
shared voting and investment power and 20,363 shares of AFC Common Stock as
to which he has shared voting and no investment power.
(14) Included are 166,246 shares of AFC Common Stock as to which Mr. Drennan has
shared voting and investment power, 20,363 shares of AFC Common Stock as to
which he has shared voting and no investment power, and 21,762 shares of
AFC Common Stock as to which he has shared voting and sole investment
power.
(15) Included are 1,018,535 shares of AFC Common Stock as to which directors,
Board Nominees and executive officers, as a group, have shared voting and
investment power, 107,567 shares of AFC Common Stock as to which they have
shared voting and no investment power, and 74,147 shares of AFC Common
Stock as to which they have shared voting and sole investment power.
Director Compensation
8
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.
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 AFC 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 8,000 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 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. 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 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
9
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 of the 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
2001 was reviewed by the Compensation Committee of AFC in December 2000 and
January 2001 and was ratified and approved by the Board.
The Compensation Committee of AFC met on three (3) occasions during fiscal
2001. 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 2000 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 2001. The Committee met in connection with AFC's declaration
of a 100% common stock dividend distributed on December 3, 2001 to common
shareholders of record as of the close of business on November 15, 2001, or the
Stock Dividend. The purpose of the meeting was, among other things to adjust
options previously granted pursuant to the Incentive Option Plan, the 1996
Officer Option Plan and the 1999 Officer Option Plan so as to prevent dilution
of the rights and benefits of the option holders in accordance the terms of the
applicable option plans and the agreements pursuant to which such options were
granted. Such options were adjusted to double the number of shares of AFC Common
Stock with respect to which the option was applicable and halving the exercise
price with respect to such shares. 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 2002.
Executive Compensation Philosophy. The primary objective of the executive
compensation program of AFC 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
10
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 Internal Revenue Code of 1986, as amended, or 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 15, 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 when required 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, 2001.
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
executive compensation program. Base salary is set at a level to provide a
reasonably competitive level of base 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 2001 were set at levels that were
competitive, the Compensation Committee reviewed a number of sources of
information, including the SNL Executive Compensation Review 2000, Thrift
Institutions, the SNL Executive Compensation Review 2000, Commercial Banks and a
study by William M. Mercer, Inc. commissioned by AFC and the Association in 1998
in connection with the LIB Acquisition. 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 2000
approved, and the Board ratified, total 2001 base salary compensation of
$2,800,000 for the six (6) executive officers who remained throughout 2001,
compared to $2,590,000 paid to such officers for 2000. The Chief Executive
Officer received a salary increase to $875,000 per annum. The remaining five (5)
executive officers received increases for 2001 averaging 8.15%, ranging from a
high of 10.91% to a low of 6.67%. 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
challenging, yet prudently attainable.
The Executive Incentive Plan for 2001 provided for a target incentive equal
to sixty-five percent (65%) of base salary for the Chief Executive Officer and
forty percent (40%) of base salary in the case of each of the other executive
officers.
The performance measurement utilized for 2001 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%)
11
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 2001, the Compensation Committee, pursuant to the terms of
the Executive Incentive Plan, certified that AFC's financial performance
resulted in awards of two hundred percent (200%) 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 8 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 16 through 18 for
further information regarding options with respect 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 Trust 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 the "Summary Compensation Table"
on page 15 and the table on page 8 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 2000 to review the performance of the executive officers during
2000, to establish recommended compensation levels for such officers for 2001
and to commence discussions regarding appropriate goals and participation levels
with respect to such officers' participation in the Executive Incentive Plan.
At the December 2000 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 officers, including the Chief Executive
Officer, to take effect January 1, 2001. As part of that determination, the
Compensation Committee utilized relative information provided in the SNL
Executive Compensation Review 2000, Thrift Institutions, the SNL Executive
Compensation Review 2000, Commercial Banks and a study by William M. Mercer,
Inc. commissioned by AFC and the Association in 1998 in connection with the LIB
Acquisition. The Compensation Committee recommended, and the Board approved,
that the compensation of the Chief Executive Officer be increased from $810,000
per annum in 2000 to $875,000 per annum in 2001. This increase reflected not
only the increased cost of living, but also the overall performance of both Mr.
Engelke and AFC.
Compensation Committee of AFC
12
Denis J. Connors, Chairman Ralph F. Palleschi
Andrew M. Burger Donald D. Wenk
Thomas J. Donahue
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 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, 1997, 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, at the University of Chicago 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 Standard & Poor's 500 Stock Index and the Standard & Poor's Bank 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.
13
Comparison of Cumulative Total Return of
AFC Common Stock and Market, Peer Group and Other Indices (1)
[GRAPH]
AFC Common Nasdaq (U.S.) Nasdaq Financial S&P 500 Stock S&P Bank
---------- ------------- ---------------- ------------- --------
Stock Index Stock Index Index Index
----- ----- ----------- ----- -----
Dec. 31, 1996 $ 100.000 $ 100.000 $ 100.000 $ 100.000 $ 100.000
Dec. 31, 1997 153.008 122.477 152.927 133.370 143.940
Dec. 31, 1998 127.732 172.681 148.572 171.440 153.370
Dec. 31, 1999 87.164 320.894 147.582 207.520 133.890
Dec. 31, 2000 160.637 193.013 159.398 188.620 157.300
Dec. 31, 2001 160.062 153.153 175.343 166.220 158.190
_____________________
(1) Assumes $100 invested at the close of business on December 31, 1996 and all
dividends reinvested through the end of AFC's fiscal year ended December
31, 2001.
Summary Compensation Table
The following table shows, for the fiscal years ended December 31, 2001,
2000 and 1999, 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
14
31, 2000 who received salary and bonuses in excess of $100,000 for the 2001
fiscal year and any additional individual who would have been listed among the
next four highest paid executive officers of AFC and the Association, but for
the fact that he was not an executive officer as of December 31, 2001.
Annual Compensation Long Term Compensation
--------------------- -------------------------------
Awards Payouts
---------------------- -------
Other Securities All
Annual Restricted Underlying Other
Compen- Stock Options/ LTIP Compen-
Name and Salary Bonus sation Awards SARs Payouts sation
Principal Positions Year ($) ($)(1) ($) ($)(2) (#)(2) ($) ($)(3)
- ------------------- ---- ------- ------ ------- -------- -------- ------- -------
George L. Engelke, Jr. 2001 875,000 1,137,500 --- --- 250,000 --- 27,819
Chairman, President, 2000 810,000 368,550 --- --- 280,000 --- 35,195
CEO and Director 1999 750,000 828,750 --- --- 226,000 --- 33,398
Monte N. Redman 2001 450,000 360,000 --- --- 88,000 --- 27,819
Executive Vice 2000 410,000 114,800 --- --- 100,000 --- 35,195
President and Chief 1999 375,000 255,000 --- --- 80,000 --- 33,398
Financial Officer
Gerard C. Keegan 2001 400,000 320,000 --- --- 72,000 --- 27,819
Vice Chairman, 2000 375,000 105,000 --- --- 80,000 --- 35,195
Chief Administrative 1999 350,000 238,000 --- --- 56,000 --- 27,523
Officer and Director
Thomas W. Drennan 2001 400,000 320,000 --- --- 71,000 --- 27,819
Executive Vice 2000 375,000 105,000 --- --- 80,000 --- 35,195
President 1999 350,000 238,000 --- 60,000 --- 33,398
Arnold K. Greenberg 2001 370,000 296,000 --- --- 67,000 --- 27,819
Executive Vice 2000 345,000 96,600 --- --- 70,000 --- 35,195
President 1999 320,000 217,600 --- 56,000 --- 33,398
________________________
(1) Consists of payments pursuant to the Executive Incentive Plan. This plan is
a Short-term Incentive Plan. See "Executive Compensation - Report of the
Compensation Committee on Executive Compensation" on pages 10 through 13
above.
(2) Options with limited stock appreciation rights, or LSARs, attached were
granted to the Named Executives during 2001, 2000 and 1999. No freestanding
stock appreciation rights, or SARs, have been granted to the Named
Executives. Securities Underlying Options/SARs have been adjusted to
reflect the two for one stock split distributed in the form of a stock
dividend on December 3, 2001. See "Executive Compensation - Incentive
Option Plans" on pages 16 through and 18.
(3) Represents the fair market value of AFC Common Stock and cash which was
allocated under the Association ESOP to the account of the Named Executive
for the year ended December 31, 2001, 2000 and 1999, respectively, based
upon the closing price per share of AFC Common Stock of $26.46, $27.1565,
and $15.219 as quoted on The Nasdaq Stock Market on December 31, 2001,
December 29, 2000 and December 31, 1999, respectively.
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, 2002, 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
15
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 re-elect 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.
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 2001 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 2001, 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, except as follows. On December 3, 2001, AFC issued the
Stock Dividend. In order to prevent dilution of the rights and benefits of
current holders of AFC options and pursuant to the terms of the option plans and
agreements pursuant to which such options were granted all outstanding AFC
options as of December 3, 2001 were adjusted to double the number of shares of
AFC Common Stock with respect to which the option was applicable and halving the
exercise price with respect to such shares.
16
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. 250,000 23.98% $ 25.25 12/18/2011 $ 3,969,897 $ 10,060,499
Monte N. Redman 88,000 8.44% $ 25.25 12/18/2011 $ 1,397,404 $ 3,541,296
Gerard C. Keegan 72,000 6.91% $ 25.25 12/18/2011 $ 1,143,330 $ 2,897,424
Thomas W. Drennan 71,000 6.81% $ 25.25 12/18/2011 $ 1,127,451 $ 2,857,182
Arnold K. Greenberg 67,000 6.43% $ 25.25 12/18/2011 $ 1,063,932 $ 2,696,214
_______________________________
(1) Each Named Executive who received an option grant received an option to
purchase 3,960 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, 2005. See "Executive Compensation -
Employment Agreements" on pages 15 and 16. 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 2001 and the number of shares
of AFC Common Stock represented by outstanding stock options held by the Named
Executives as of December 31, 2001. 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 $26.46 as quoted on The Nasdaq Stock Market on December 31,
2001.
17
Fiscal Year End Option/SAR Values
Number of Value of
Securities Underlying Unexercised
Unexercised in-the-Money
Options/SARS Options/SARs
at Fiscal Year- at Fiscal Year-
End (#) End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized (1) Unexercisable (2) Unexercisable (2) (3)
- --------------------- -------------- ------------------ ----------------- ---------------------
George L. Engelke, Jr. 0 $ 0 974,200/756,000 $15,205,607/$3,359,135
Monte N. Redman 40,000 $ 966,800 310,564/268,000 $ 4,194,461/$1,189,905
Gerard C. Keegan 75,000 $ 1,718,531 222,000/208,000 $ 3,087,650/$ 861,680
Thomas W. Drennan 145,564 $ 3,412,020 103,000/211,000 $ 357,780/$ 906,560
Arnold K. Greenberg 0 0 85,000/193,000 $ 326,350/$ 839,468
___________________________
(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) Whether an option is exercisable or unexercisable is determined as of
the Record Date.
(3) Represents the fair market value per share of AFC Common Stock at
fiscal year end based upon the closing price of $26.46, as quoted on
The Nasdaq Stock Market on December 31, 2001, 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 $26.46.
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 ($130,841 for 2001, 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 2001). 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 2001, 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.
18
Pension and Excess Plans
Creditable Years of Service at Age 65 (1)
----------------------------------------------------------------------------------
Remuneration (2) 15 20 25 30 35(3)
- ------------ -------- -------- -------- -------- --------
$ 125,000 $ 26,700 $ 35,500 $ 44,400 $ 53,300 $ 53,300
150,000 32,700 43,500 54,400 65,300 65,300
175,000 38,700 51,500 64,400 77,300 77,300
200,000 44,700 59,500 74,400 89,300 89,300
225,000 50,700 67,500 84,400 101,300 101,300
250,000 56,700 75,500 94,400 113,300 113,300
300,000 68,700 91,500 114,400 137,300 137,300
400,000 92,700 123,500 154,400 185,300 185,300
450,000 104,700 139,500 174,400 209,300 209,300
500,000 116,700 155,500 194,400 233,300 233,300
750,000 176,700 235,500 294,400 353,300 353,300
1,050,000 248,700 331,500 414,400 497,300 497,300
Pension, Excess and Supplemental Plans
Creditable Years of Service at Age 65 (1)
----------------------------------------------------------------------------------
Remuneration (2) 15 20 25 30 35(3)
- ------------ -------- -------- -------- -------- --------
$ 125,000 $ 31,300 $ 41,700 $ 52,200 $ 62,600 $ 62,600
150,000 38,800 51,700 64,700 77,600 77,600
175,000 46,300 61,700 77,200 92,600 92,600
200,000 53,800 71,700 89,700 107,600 107,600
225,000 61,300 81,700 102,200 122,600 122,600
250,000 68,800 91,700 114,700 137,600 137,600
300,000 83,800 111,700 139,700 167,600 167,600
400,000 113,800 151,700 189,700 227,600 227,600
450,000 128,800 171,700 214,700 257,600 257,600
500,000 143,800 191,700 239,700 287,600 287,600
750,000 218,800 291,700 364,700 437,600 437,600
1,050,000 308,800 411,700 514,700 617,600 617,600
___________________________
(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, 2001, had the following
credited service (i.e., benefit service): George L. Engelke, Jr., 30 years 6
months; Monte N. Redman, 24 years 7 months; Gerard C. Keegan, 30 years 9 months;
Thomas W. Drennan, 15 years 6 months; and Arnold K. Greenberg, 26 years 7
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.
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. 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
19
and duties of the Audit Committee and the reporting of Audit Committee
activities and recommendations. The management of AFC is primarily responsible
for the system of internal controls and financial reporting processes of AFC.
The independent auditors are responsible to express an opinion on the
consolidated financial statements of AFC based on an audit conducted in
accordance with generally accepted accounting standards. Pursuant to the Charter
of the Audit Committee, the Audit Committee is responsible to assist the Board
in monitoring and overseeing the system of internal controls and these
processes.
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 20, 2002, 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 2001, 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 20, 2002, 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, 2001.
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, 2001 were KPMG LLP. Based the recommendation of its
Audit Committee and after reviewing the qualifications of KPMG LLP and the
thoroughness and quality of the work it has performed in the past for AFC and
assuring itself that KPMG LLP is independent from AFC, its officers and
directors and does not provide to AFC non-audit services to a degree that its
independence may be impaired, the Board has reappointed KPMG LLP as independent
auditors, or principal accountant, for AFC and the Association for the year
ending December 31, 2002, 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, 2001:
20
KPMG LLP Fees Billed for the Fiscal Year ended December 31, 2001
Financial Information
Systems Design and
Audit Fees(1) Implementation Fees (2) All Other Fees(3)
------------- ----------------------- -----------------
$ 375,500 $0 $ 128,800
_________________________
(1) Audit Fees reflect aggregate fees billed or estimated to be 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, 2001.
(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, 2001 which are not included under the captions "Audit Fees" or
"Financial Information Systems Design and Implementation Fees."
Of the items included under the caption "All Other Fees" above, $39,000
relates to audits of AFC's and the Association's employee benefit plans as
required by federal law, $28,000 relates to tax review and assistance, $12,500
related to the audit of the Association's mortgage banking subsidiary and
$13,500 relates to other required agreed upon procedures letters. In addition,
$35,000 relates to the Association's annual due diligence review conducted in
connection with its purchase of bank owned life insurance.
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, 2001" 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.
Additional Information
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires AFC's directors and executive
officers, among others, to file reports of ownership and changes in ownership of
their equity securities of AFC with the Securities and Exchange Commission and
to furnish AFC with copies of all such reports.
Based solely upon a review of the copies of these Form 3 and 5 reports
and amendments thereto received by AFC, AFC believes that all applicable filing
requirements were complied with for 2001, and AFC does not know of any such
persons who may have failed to file any required form or to report any required
transaction on a timely basis, except for Mr. Leo J. Waters, a director of AFC,
who did not, in one instance, report a required transaction on a timely basis by
failing to report, as a result of a clerical error on the part of AFC's staff,
the sale of 30,000 shares of AFC Common Stock on February 1, 2001, which
transaction was subsequently reported by amendment on or about March 7, 2002.
Cost of Proxy Solicitation
The cost of solicitation of proxies by AFC, which is expected to be less
than $90,000, 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 by mail, GSC or a number of officers and
employees of AFC and the Association may solicit proxies in person, by mail
21
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 2003, 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, 2002. 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 pages 6 and 7 above. 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.
22
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, 2001, 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, Secretary and
General Counsel
Lake Success, New York
April 15, 2002
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.
23
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 15, 2002 AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned shareholder of Astoria Financial Corporation hereby
authorizes and appoints John M. Graham Jr., 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 15, 2002 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.)
[X] Please mark
your votes
like this
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE
"FOR" ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
COMMON SHARES
1. The election of nominees 01 George L. Engelke, Jr., 02 Robert J. Conway,
03 Peter C. Haeffner, Jr., 04 Ralph F. Palleschi and 05 Leo J. Waters
as directors for terms of three years each.
FOR WITHHOLD
[_] [_]
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 as independent auditors of
Astoria Financial Corporation for the fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
[_] [_] [_]
Proposal Nos. 1 and 2 listed above in this revocable proxy were proposed by
Astoria Financial Corporation. Other than Proposal Nos. 1 and 2, 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 AND FOR
PROPOSAL NO. 2.
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 15, 2002 for the Annual Meeting and a
2001 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: ______________
- --------------------- -------------------------
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 CIGNA Bank & Trust Company,
FSB, 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 22, 2002, at the Annual Meeting of Shareholders of Astoria
Financial Corporation to be held on May 15, 2002 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 15, 2002, 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 15, 2002 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 15, 2002 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 Confidential Voting Instruction will
be kept confidential from all directors, officers and employees of Astoria
Financial Corporation or Astoria Federal Savings and Loan Association.
[X] Please mark
your votes
like this
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE
"FOR"ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
ESOP SHARES
1. The election of nominees 01 George L. Engelke, Jr., 02 Robert J. Conway,
03 Peter C. Haeffner, Jr., 04 Ralph F. Palleschi and 05 Leo J. Waters as
directors for terms of three years each.
FOR WITHHOLD
[_] [_]
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 as independent auditors of
Astoria Financial Corporation for the fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
[_] [_] [_]
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.
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 15, 2002 for the Annual Meeting
and a 2001 Annual Report on Form 10-K of Astoria Financial Corporation.
Please sign and date below and return promptly in the enclosed postage-paid
envelope.
___________________________________ Date: _____________________
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 22, 2002, at the Annual
Meeting of Shareholders of Astoria Financial Corporation to be held on May 15,
2002 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 15, 2002, 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 15,
2002.
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 15, 2002.
(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 Confidential Voting Instruction will
be kept confidential from all directors, officers and employees of Astoria
Financial Corporation or Astoria Federal Savings and Loan Association.
[X] Please mark
your votes
like this
THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE
"FOR" ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
401K Plan Shares
1. The election of nominees 01 George L. Engelke, Jr., 02 Robert J. Conway,
03 Peter C. Haeffner, Jr., 04 Ralph F. Palleschi and 05 Leo J. Waters as
directors for terms of three years each.
FOR WITHHOLD
[_] [_]
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 as independent auditors of
Astoria Financial Corporation for the fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
[_] [_] [_}
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.
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 15, 2002 for the Annual Meeting and a 2001 Annual Report on Form
10-K of Astoria Financial Corporation.
Please sign and date below and return promptly in the enclosed postage-paid
envelope.
__________________________________________ Date: __________________
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
[LOGO OF ASTORIA FEDERAL SAVINGS] (516) 327-3000
April 15, 2002
To: All Astoria Federal Savings and Loan Association Employee Stock Ownership
Plan (the "ESOP") Participants
Re: Annual Meeting of Shareholders to be held on May 15, 2002
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Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 15, 2002, enclosed please find the following
documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 15, 2002, including a Notice of Annual
Meeting of Shareholders,
c) 2001 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 (CIGNA Bank & Trust Company, FSB) 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 22, 2002
by CIGNA Bank & Trust Company, FSB, as trustee.
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
CIGNA Bank & Trust Company, FSB 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 8, 2002.
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 2002 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
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Investor Services LLC. To direct the voting of Shares within the ESOP, the
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Confidential Voting Instruction card must be received by Mellon Investor
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Services LLC no later than May 8, 2002.
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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
By: /s/ Steven G. Miss
-------------------------
Steven G. Miss
[LOGO OF ASTORIA FEDERAL SAVINGS] One Astoria Federal Plaza
Lake Success, NY 11042-1085
(516) 327-3000
April 15, 2002
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 15, 2002
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 15, 2002, enclosed please find the following
documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 15, 2002, including a Notice of Annual
Meeting of Shareholders,
c) 2001 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 (CIGNA Bank &
Trust Company, FSB) to vote the shares of Astoria Financial Corporation Common
Stock (the "Shares") held by the 401K Plan as of March 22, 2002, 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 8, 2002, 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 2002 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
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it to Mellon Investor Services LLC. To direct the voting of your Shares, your
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instruction card must be received by Mellon Investor Services LLC no later than
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May 8, 2002.
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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
By: /s/ Steven G. Miss
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Plan Administrator