DEF 14A
SCHEDULE 14-A
INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary Proxy
Statement
þ Definitive Proxy
Statement
o Definitive Additional
Materials
o Soliciting Material
Pursuant to
§240.14a-11(c)
or
§240.14a-12
Investors Bancorp, Inc.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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$125 per Exchange Act
Rules 0-11(c)(1)(ii),
14a-6(i)(1),
or
14a-6(j)(2).
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$500 per each party to the controversy pursuant to Exchange
Act
Rule14a-6(i)(3).
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11:
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4)
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Proposed maximum aggregate value of transaction:
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o Check box if any part
of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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Investors
Bancorp, Inc.
September 13, 2006
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Investors Bancorp, Inc. Our Annual Meeting will
be held at The Murray Hill Inn, 535 Central Avenue, New
Providence, New Jersey 07974, on October 24, 2006 at
9:00 a.m. local time.
The enclosed Notice of Annual Meeting of Stockholders and Proxy
Statement describe the formal business to be transacted at the
Annual Meeting, which includes a report on the operations of the
Company. Directors and officers of the Company will be present
to answer any questions that you and other stockholders may
have. Also enclosed for your review is our Annual Report on
Form 10-K,
which contains detailed information concerning the activities
and operating performance of the Company.
The business to be conducted at the Annual Meeting consists of
the election of three directors, the approval of the 2006 Equity
Incentive Plan and the ratification of the appointment of KPMG
LLP as independent registered public accountants for the year
ending June 30, 2007. The Board of Directors unanimously
recommends a vote “FOR” the election of the director
nominees, “FOR” the approval of the 2006 Equity
Incentive Plan and “FOR” the ratification of the
appointment of KPMG LLP as independent registered public
accountants for the year ending June 30, 2007.
On behalf of the Board, please indicate your vote by using the
enclosed proxy card or by voting by telephone or Internet, even
if you currently plan to attend the Annual Meeting. This will
not prevent you from voting in person, but will assure that your
vote is counted. Your vote is important.
Sincerely,
Robert M. Cashill
President and Chief Executive Officer
Investors
Bancorp, Inc.
101 JFK Parkway
Short Hills New Jersey 07078
(973) 924-5100
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On October 24,
2006
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Stockholders of the Company will be held at The Murray Hill Inn,
535 Central Avenue, New Providence, New Jersey 07974, on
October 24, 2006 at 9:00 a.m. local time.
A proxy statement and proxy card for the Annual Meeting are
enclosed. The Annual Meeting is for the purpose of considering
and acting upon:
1. the election of three directors;
2. the approval of the Investors Bancorp, Inc. 2006 Equity
Incentive Plan; and
3. the ratification of the appointment of KPMG LLP as
independent registered public accountants for the year ending
June 30, 2007; and
such other matters as may properly come before the Annual
Meeting, or any adjournments thereof. The Board is not aware of
any other such business.
Any action may be taken on the foregoing proposals at the Annual
Meeting, including all adjournments thereof. Stockholders of
record at the close of business on September 1, 2006 are
the stockholders entitled to vote at the Annual Meeting. A list
of stockholders entitled to vote will be available at 101 JFK
Parkway, Short Hills, New Jersey 07078 for a period of ten days
prior to the Annual Meeting and will also be available for
inspection at the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND
VOTED AT THE ANNUAL MEETING. STOCKHOLDERS WHOSE SHARES ARE
HELD IN REGISTERED FORM HAVE A CHOICE OF VOTING BY PROXY
CARD, TELEPHONE OR THE INTERNET, AS DESCRIBED ON YOUR PROXY
CARD. STOCKHOLDERS WHOSE SHARES ARE HELD IN THE NAME OF A
BROKER, BANK OR OTHER HOLDER OF RECORD MUST VOTE IN THE MANNER
DIRECTED BY THE NOMINEE. CHECK YOUR PROXY CARD OR THE
INFORMATION FORWARDED BY YOUR BROKER, BANK OR OTHER HOLDER OF
RECORD TO SEE WHICH OPTIONS ARE AVAILABLE TO YOU. ANY
STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY WITHDRAW HIS OR
HER PROXY AND VOTE PERSONALLY ON ANY MATTER PROPERLY BROUGHT
BEFORE THE ANNUAL MEETING.
Patricia E. Brown
Corporate Secretary
Short Hills, New Jersey
September 13, 2006
TABLE OF
CONTENTS
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A-1
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B-1
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ii
INVESTORS
BANCORP, INC.
PROXY
STATEMENT FOR THE
2006
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on October 24,
2006
GENERAL
INFORMATION
This Proxy Statement and accompanying Proxy Card and the Annual
Report to Stockholders are being furnished to the stockholders
of Investors Bancorp, Inc. (“Investors Bancorp” or the
“Company”) in connection with the solicitation of
proxies by the Board of Directors of Investors Bancorp for use
at the 2006 Annual Meeting of Stockholders. The Annual Meeting
will be held on October 24, 2006, at 9:00 a.m., local
time, at The Murray Hill Inn, 535 Central Avenue, New
Providence, New Jersey. The term “Annual Meeting,” as
used in this Proxy Statement, includes any adjournment or
postponement of such meeting.
This Proxy Statement is dated September 13, 2006 and is
first being mailed to stockholders on or about
September 20, 2006.
The
2006 Annual Meeting of Stockholders
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Date, Time and Place |
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The Annual Meeting of Stockholders will be held on
October 24, 2006, 9:00 a.m., local time, at The Murray
Hill Inn, 535 Central Avenue, New Providence, New Jersey. |
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Record Date |
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September 1, 2006. |
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Shares Entitled to Vote |
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116,275,688 shares of Investors Bancorp common stock were
outstanding on the Record Date and are entitled to vote at the
Annual Meeting. |
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Purpose of the Annual Meeting |
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To consider and vote on the election of three directors, the
approval of the Investors Bancorp, Inc. 2006 Equity Incentive
Plan, and the ratification of the appointment of KPMG LLP as
independent registered public accountants for the year ending
June 30, 2007. |
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Vote Required |
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Directors are elected by a plurality of votes cast, without
regard to either broker non-votes or proxies as to which
authority to vote for the nominees being proposed is withheld.
The approval of the 2006 Equity Incentive Plan is determined by
a majority of the votes cast, without regard to the broker
non-votes and proxies marked “ABSTAIN.” The
ratification of the appointment of KPMG LLP as independent
registered public accountants is determined by a majority of the
votes cast, without regard to broker non-votes or proxies marked
“ABSTAIN.” All such votes will include the vote of
Investors Bancorp, MHC (the “Mutual Holding Company”),
which owns 54.27% of the outstanding shares of common stock. |
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Your Board of Directors Recommends A Vote in Favor of The
Proposals |
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Your Board of Directors unanimously recommends that stockholders
vote “FOR” the election each nominee listed in
this Proxy Statement, “FOR” the approval of the
2006 Equity Incentive Plan and “FOR” the
ratification of the appointment of KPMG LLP as independent
registered public accountants for the year ending June 30,
2007. |
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Investors Bancorp |
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Investors Bancorp, a Delaware corporation, is the bank holding
company for Investors Saving Bank, an FDIC insured, New Jersey
chartered savings bank that operates 46 full-service banking
offices in northern and central New Jersey. At June 30,
2006, Investors Bancorp had $5.50 billion in total assets.
Our principal executive offices are located at 101 JFK Parkway,
Short Hills, New Jersey 07078, and our telephone
number is
(973) 924-5100. |
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Investors Bancorp completed its initial public stock offering on
October 11, 2005, selling 51,627,094 shares, or 44.40%
of its outstanding common stock, including 4,254,072 shares
purchased by Investors Savings Bank Employee Stock Ownership
Plan. Additionally, the Company contributed $5,163,000 in cash
and issued 1,548,813 shares of its common stock, or 1.33%
of its outstanding shares, to the Investors Savings Bank
Charitable Foundation. Net proceeds from the initial offering
were $509.7 million. Investors Bancorp contributed
$255.0 million of the net proceeds to Investors Savings
Bank. Investors Bancorp, MHC, a New Jersey chartered mutual
holding company, holds 63,099,781 shares, or 54.27%, of the
Company’s issued and outstanding shares of common stock. |
Who
Can Vote
The Board of Directors has fixed September 1, 2006 as the
record date for determining the stockholders entitled to receive
notice of and to vote at the Annual Meeting. Accordingly, only
holders of record of shares of Investors Bancorp common stock,
par value $0.01 per share, at the close of business on such
date will be entitled to vote at the Annual Meeting. On
September 1, 2006, 116,275,688 shares of Investors
Bancorp common stock were outstanding and held by approximately
6,138 holders of record. The presence, in person or by properly
executed proxy, of the holders of a majority of the outstanding
shares of Investors Bancorp common stock is necessary to
constitute a quorum at the Annual Meeting. The presence by proxy
of the Mutual Holding Company’s shares of common stock will
assure a quorum is present at the Annual Meeting.
How
Many Votes You Have
Each holder of shares of Investors Bancorp common stock
outstanding on September 1, 2006 will be entitled to one
vote for each share held of record. However, Investors
Bancorp’s certificate of incorporation provides that
stockholders of record who beneficially own in excess of 10% of
the then outstanding shares of common stock of Investors Bancorp
(other than the Mutual Holding Company) are not entitled to any
vote with respect to the shares held in excess of that 10%
limit. A person or entity is deemed to beneficially own shares
that are owned by an affiliate, as well as by any person acting
in concert with such person or entity.
Matters
to Be Considered
The purpose of the Annual Meeting is to vote on the election of
three directors, to approve the 2006 Stock Equity Plan and to
ratify the appointment of KPMG LLP as our independent registered
public accountants for the year ending June 30, 2007.
You may be asked to vote upon other matters that may properly be
submitted to a vote at the Annual Meeting. You also may be asked
to vote on a proposal to adjourn or postpone the Annual Meeting.
Investors Bancorp could use any adjournment or postponement for
the purpose, among others, of allowing additional time to
solicit proxies.
How to
Vote
You may vote your shares by completing and signing the enclosed
Proxy Card and returning it in the enclosed postage-paid
envelope or by attending the Annual Meeting. Alternatively, you
may choose to vote
2
your shares using the Internet or telephone voting options
explained on your Proxy Card. You should complete and return the
Proxy Card accompanying this document, or vote using the
Internet or telephone voting options, in order to ensure that
your vote is counted at the Annual Meeting, or at any
adjournment or postponement of the Annual Meeting, regardless of
whether you plan to attend. If you return an executed Proxy
Card without marking your instructions, your executed Proxy Card
will be voted “FOR” the election of the three director
nominees named in this Proxy Statement, “FOR” the
Investors Bancorp. Inc. 2006 Stock Equity Plan and
“FOR” the ratification of the appointment of KPMG LLP
as our independent registered public accountants for the year
ending June 30, 2007.
If you are a stockholder whose shares are not registered in your
own name, you will need appropriate documentation from the
stockholder of record to vote in person at the Annual Meeting.
Examples of such documentation include a broker’s statement
or letter or other documentation that will confirm your
ownership of shares of Investors Bancorp common stock. If you
want to vote your shares of Investors Bancorp common stock that
are held in street name in person at the Annual Meeting, you
will need a written proxy in your name from the broker, bank or
other nominee who holds your shares.
The Board of Directors is currently unaware of any other matters
that may be presented for consideration at the Annual Meeting.
If other matters properly come before the Annual Meeting, or at
any adjournment or postponement of the Annual Meeting, shares
represented by properly submitted proxies will be voted, or not
voted, by the persons named as proxies on the Proxy Card in
their best judgment.
Participants
in Investors Bancorp Benefit Plans
If you are a participant in the Investors Savings Bank Employee
Stock Ownership Plan or another benefit plan through which you
own shares of Investors Bancorp common stock, you will have
received with this Proxy Statement voting instruction forms with
respect to shares you may vote under the plans. Although the
trustee or administrator votes all shares held by the plan, each
participant may direct the trustee or administrator how to vote
the shares of Investors Bancorp common stock allocated to his or
her plan account. If you own shares through any of these plans
and do not vote, the respective plan trustees or administrators
will vote the shares in accordance with the terms of the
respective plans.
Vote
Required
The presence, in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Investors
Bancorp common stock is necessary to constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes will be counted
solely for the purpose of determining whether a quorum is
present. A proxy submitted by a broker that is not voted is
sometimes referred to as a broker non-vote.
Directors are elected by a plurality of votes cast, without
regard to either broker non-votes or proxies as to which
authority to vote for the nominees being proposed is
“Withheld.” The approval of the 2006 Stock Equity Plan
is determined by the affirmative vote of a majority of the
shares cast, without regard to the broker non-votes and proxies
marked “ABSTAIN.” The ratification of the appointment
of KPMG LLP as independent registered public accountants is
determined by a majority of the votes cast, without regard to
broker non-votes or proxies marked “ABSTAIN.”
The Mutual Holding Company intends to vote in favor of the
director nominees, in favor of the 2006 Stock Equity Plan and in
favor of the ratification of the appointment of KPMG LLP as
independent registered public accountants for the year ending
June 30, 2007.
Revocability
of Proxies
You may revoke your proxy at any time before the vote is taken
at the Annual Meeting. You may revoke your proxy by:
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submitting written notice of revocation to the Corporate
Secretary of Investors Bancorp prior to the voting of such proxy;
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submitting a properly executed proxy bearing a later date;
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using the Internet or telephone voting options explained on the
Proxy Card; or
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voting in person at the Annual Meeting; however, simply
attending the Annual Meeting without voting will not revoke an
earlier proxy.
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Written notices of revocation and other communications regarding
the revocation of your proxy should be addressed to:
Investors Bancorp, Inc.
101 JFK Parkway
Short Hills, New Jersey 07078
Attention: Patricia E. Brown
Corporate
Secretary
If your shares are held in street name, your broker votes your
shares and you should follow your broker’s instructions
regarding the revocation of proxies.
Solicitation
of Proxies
Investors Bancorp will bear the entire cost of soliciting
proxies from you. In addition to the solicitation of proxies by
mail, Investors Bancorp will request that banks, brokers and
other holders of record send proxies and proxy material to the
beneficial owners of Investors Bancorp common stock and secure
their voting instructions. Investors Bancorp will reimburse such
holders of record for their reasonable expenses in taking those
actions. Investors Bancorp has also made arrangements with
Georgeson Shareholder Communications, Inc. to assist in
soliciting proxies and has agreed to pay them a fee of $8,500
plus reasonable expenses for these services. If necessary,
Investors Bancorp may also use several of its regular employees,
who will not be specially compensated, to solicit proxies from
stockholders, personally or by telephone, facsimile or letter.
Recommendation
of the Board of Directors
Your Board of Directors unanimously recommends that you vote
“FOR” each of the nominees for director listed in this
Proxy Statement, “FOR” the Investors Bancorp, Inc.
2006 Equity Incentive Plan and “FOR” the ratification
of the appointment of KPMG LLP as independent registered public
accountants for the year ending June 30, 2007.
Security
Ownership of Certain Beneficial Owners and
Management
Persons and groups who beneficially own in excess of five
percent of the issued and outstanding shares of the
Company’s common stock are required to file certain reports
with the Securities and Exchange Commission (the
“SEC”). The following table sets forth, as of
September 1, 2006, certain information regarding persons
who beneficially owned more than five percent of the
Company’s issued and outstanding shares of Common Stock:
Principal
Stockholder
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Number of Shares
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Name and Address of
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Owned and Nature of
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Percent of Shares of
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Beneficial Owners
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Beneficial Ownership
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Common Stock Outstanding(1)
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Investors Bancorp, MHC
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63,099,781
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(2)
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54.27
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%(2)
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101 JFK Parkway
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Short Hills, New Jersey 07078
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(1) |
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Based on 116,275,688 shares of Investors Bancorp common
stock outstanding on September 1, 2006. |
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(2) |
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Based on a Schedule 13G filed by Investors Bancorp, MHC
with the SEC on October 11, 2006. The Board of Directors of
Investors Bancorp, MHC consists of those persons who serve on
the Board of Directors of Investors Bancorp, Inc. |
4
Management
The following table sets forth information about the shares of
Investors Bancorp common stock owned by each nominee for
election as director, each incumbent director, each named
executive officer identified in the summary compensation table
included elsewhere in this Proxy Statement, and all nominees,
incumbent directors and executive officers as a group, as of
September 1, 2006.
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Shares Owned
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Position(s) Held in
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Directly and
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Names
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the Company
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Indirectly(1)
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Percent of Class
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NOMINEES
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Patrick J. Grant
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Chairman
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51,000
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*
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John A. Kirkpatrick
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Director
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40,000
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*
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Joseph H. Shepard III
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Director
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60,000
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*
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DIRECTORS CONTINUING IN OFFICE
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Doreen R. Byrnes
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Director,
Executive Vice President
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10,200
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*
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Rose Sigler
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Director
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25,000
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Stephen J. Szabatin
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Director
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50,000
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Robert M. Cashill
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Director, President and
Chief Executive Officer
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50,000
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*
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Brian D. Dittenhafer
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Director
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24,643
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*
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Vincent D. Manahan III
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Director
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50,000
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*
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NAMED EXECUTIVES OFFICERS WHO ARE
NOT DIRECTORS
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Kevin Cummings
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Executive Vice President and
Chief Operating Officer
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32,750
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Domenick A. Cama
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Executive Vice President and
Chief Financial Officer
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27,773
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Richard S. Spengler
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Senior Vice President
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29,193
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All directors and executive
officers as a group
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(17 persons)(2)
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516,358
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Less than 1% |
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Unless otherwise indicated, each person effectively exercises
sole, or shared with spouse, voting and dispositive power as to
the shares reported. With respect to Mr. Kirkpatrick, his
ownership includes 10,000 shares held in trust as to which
Mr. Kirkpatrick does not exercise voting power, but as to
which shares he has a beneficial interest. |
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Includes 12,494 shares of common stock allocated to the
accounts of executive officers under the Investors Savings Bank
Employee Stock Ownership Plan (“ESOP”) and excludes
the remaining 4,241,578 shares of common stock owned by the
ESOP, which are unallocated and held for the future benefit of
all employee participants. Under the terms of the ESOP, shares
of common stock allocated to the account of employees are voted
in accordance with the instructions of the respective employees.
Unallocated shares are voted by the ESOP Trustee in the same
proportion as the vote obtained from participants on allocated
shares. |
Stock
Ownership and Retention Policy
The Board believes Directors and Executive Officers (defined as
the Chief Executive Officer and Executive Vice Presidents)
should have a financial investment in the Company. Each Director
and Executive Officer is expected to own at least $100,000 in
common stock value (excluding stock options), except for the
Chief Executive Officer, who is expected to own at least
$500,000 in common stock value, within four years
5
of being elected to the Board or as an officer. The ownership
guidelines for Directors and Executive Officers are as follows:
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|
|
|
|
|
|
|
|
|
|
Value of Common Stock
|
|
|
•
|
|
|
Chief Executive Officer
|
|
$
|
500,000
|
|
|
•
|
|
|
Directors
|
|
$
|
100,000
|
|
|
•
|
|
|
Executive Vice Presidents
|
|
$
|
100,000
|
|
Section 16(a)
Beneficial Ownership Reporting Compliance
The Common Stock is registered with the SEC pursuant to
Section 12(b) of the Securities Exchange Act of 1934 (the
“Exchange Act”). The officers and directors of the
Company and beneficial owners of greater than 10% of the Common
Stock are required to file reports on Forms 3, 4 and 5 with
the SEC disclosing beneficial ownership and changes in
beneficial ownership of the Common Stock. SEC rules require
disclosure in the Company’s Proxy Statement or Annual
Report on
Form 10-K
of the failure of an officer, director or 10% beneficial owner
of the Common Stock to file a Form 3, 4, or 5 on a
timely basis. Based on the Company’s review of ownership
reports, no officer or director failed to file ownership reports
on a timely basis for the year ended June 30, 2006.
PROPOSAL I —
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine
(9) members and is divided into three classes, with one
class of directors elected each year. Three directors will be
elected at the Annual Meeting to serve for a three-year period
and until their respective successors have been elected and
shall qualify.
The Board has nominated Patrick J. Grant, John A. Kirkpatrick
and Joseph A. Shepard III for election as directors, each
of whom has agreed to serve if so elected. Please refer to the
sections entitled “Directors and Executive Officers”
and “Security Ownership of Certain Beneficial Owners and
Management” for additional information regarding the
nominees.
It is intended that the proxies solicited on behalf of the Board
(other than proxies in which the vote is withheld as to the
nominees) will be voted at the Annual Meeting FOR the election
of the nominees. If the nominees are unable to serve, the shares
represented by all such proxies will be voted for the election
of such substitute as the Board may recommend. At this time, the
Board knows of no reason why the nominees would be unable to
serve, if elected. Except as indicated herein, there are no
arrangements or understandings between the nominees and any
other person pursuant to which such nominees were selected.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE
NOMINEES LISTED IN THIS PROXY STATEMENT
Directors
and Executive Officers
Following is the business experience for each of the
Company’s directors and executive officers.
Nominees
for Director
Patrick J. Grant, age 71, was elected to the Board
of Directors of Investors Savings Bank in 1988 and has served as
Chairman since July 1997. Mr. Grant served as Chairman and
President of Investors Savings Bank from July 1997 until he
retired from the position of President in April 2000.
Previously, he served as President from April 1990 to June 1997
and as Executive Vice President and Chief Operating Officer from
September 1988 to April 1990. Prior to joining Investors Savings
Bank, Mr. Grant had a
30-year
career with the accounting firm of KPMG LLP where he had been a
partner in charge of the firm’s thrift practice in
New Jersey for eight years. Mr. Grant is Trustee
Emeritus of the Independent College Fund of New Jersey.
John A. Kirkpatrick, age 73, was first elected to
the Board of Directors of Investors Savings Bank in 1992. He is
a retired Managing Partner of KPMG LLP, a position he held from
1977 to 1990 in the New
6
Jersey practice, and previously in South Bend, Indiana from 1973
to 1977. Mr. Kirkpatrick joined KPMG LLP in 1959 and served
as a Member of the Board of Directors from 1984 to 1990, a
member of the SEC Reviewing Partners Committee from 1969 to
1977, Chairman of the Pension Committee from 1987 to 1991 and a
member of the Management Committee from 1990 until he retired in
1992.
Joseph H. Shepard III, age 72, was first
elected to the Board of Directors of Investors Savings Bank in
1988. He is retired, having served as Senior Vice President of
Bollinger Insurance, Short Hills, New Jersey from July 1995 to
June 1997. Previously, Mr. Shepard was President of
Shepard, Caulfield & McCue Insurance Agency from 1965
to 1995. Mr. Shepard is an active investor in commercial
real estate.
Continuing
Directors
Term
to Expire 2007
Doreen R. Byrnes, age 57, has been employed by
Investors Savings Bank since August 1979, and has served as
Executive Vice President-Human Resources since December 2001.
Ms. Byrnes previously was Senior Vice President-Human
Resources since 1980. She was elected to the Board of Directors
of Investors Savings Bank in January 2002. Ms. Byrnes also
has served on the Executive Board of The Patriot’s Path
Council, Boy Scouts of America since 2004.
Rose Sigler, age 71, is retired, having served as
Senior Vice President of CRA Compliance and Community Relations
of Investors Savings Bank from 1996 until her retirement in
1999. In November 1999, she was elected to the Board of
Directors of Investors Savings Bank. Previously, she served in
various positions from the time she joined Investors Savings
Bank in 1971. She served as a member of the Advisory Board of
The Salvation Army of Greater Essex County from 1996 to 2004 and
as a member of the Board of Directors of the American Institute
of Banking/New Jersey Chapter from 1998 to 2003.
Stephen J. Szabatin, age 69, was first elected to
the Board of Directors of Investors Savings Bank in 1994. He is
retired, having been employed by The New Jersey Department of
Banking as the Deputy Commissioner-Division of Regulatory
Affairs from 1993 to 1994, Deputy Commissioner-Division of
Supervision from 1989 to 1993, and in various other capacities
from 1966 to 1994.
Terms
to Expire 2008
Robert M. Cashill, age 64, has been President and
Chief Executive Officer of Investors Savings Bank since December
2002. Prior to assuming such position, Mr. Cashill had
served as Executive Vice President since January 2000. He was
elected to the Board of Directors of Investors Savings Bank in
February 1998. Prior to joining Investors Savings Bank,
Mr. Cashill was employed as Vice President Institutional
Sales by Salomon Smith Barney from 1977 to 1998, and at
Hornblower, Weeks, Hemphill, Noyes from 1966 to 1977.
Brian D. Dittenhafer, age 64, was first elected to
the Board of Directors of Investors Savings Bank in 1997. He is
retired, having previously served as President and Chief
Executive Officer of the Federal Home Loan Bank of New York
from 1985 to 1992. Mr. Dittenhafer joined the Federal Home
Loan Bank of New York in 1976 where he also served as
Vice President and Chief Economist, Chief Financial Officer and
Executive Vice President. Previously, he was employed as a
Business Economist at the Federal Reserve Bank of Atlanta from
1971 to 1976. From 1992 to 1995, Mr. Dittenhafer served as
President and Chief Financial Officer of Collective Federal
Savings Bank. From 1995 to the present Mr. Dittenhafer has
been Chairman of MBD Management Company.
Vincent D. Manahan III, age 68, was first
elected to the Board of Directors of Investors Savings Bank in
2002. He is an attorney, and has been a solo practitioner since
January 1, 2006. Previously, Mr. Manahan was a partner
in the law firm of Herrigel Bolan & Manahan LLP since
1969. He is a member of the New Jersey Bar Association, The
Banking Law Section of the New Jersey Bar Association and the
Essex County Bar Association. Mr. Manahan was a special
counsel to the U.S. Department of Justice 9/11 Victims
Compensation Fund. He is a graduate of Georgetown University and
Cornell Law School and received a Master of Laws degree from New
York University.
7
Executive
Officers of the Bank Who Are Not Also Directors
Domenick A. Cama, age 50, has served as Executive
Vice President and Chief Financial Officer of Investors Savings
Bank since January 2006. He served as Senior Vice President and
Chief Financial Officer of Investors Savings Bank from April
2003 to January 2006. Prior to joining Investors Savings Bank,
Mr. Cama was employed for 13 years by the Federal Home
Loan Bank of New York where he served as Vice President and
Director of Sales.
Kevin Cummings, age 51, has served as Executive Vice
President and Chief Operating Officer of Investors Savings Bank
since July 2003. Prior to joining Investors Savings Bank,
Mr. Cummings had a
26-year
career with the independent accounting firm of KPMG LLP, where
he had been partner for 14 years. Immediately prior to
joining Investors Savings Bank, Mr. Cummings was an audit
partner in the Financial Services practice in the New York
office, and lead partner on a major commercial banking client.
Mr. Cummings also worked in the New Jersey community bank
practice for over 20 years.
Diane C. Kraemer, age 48, has served as Senior Vice
President-Retail Administration of Investors Savings Bank since
January 2005. She served as First Vice President from 1989 to
2004. Ms. Kraemer joined Investors Savings Bank in 1977 and
served as Second Vice President from 1985 to 1988.
Ms. Kraemer is responsible for retail branch administration.
Susan B. Olson, age 52, has served as Senior Vice
President-Accounting of Investors Savings Bank since December
2001 and Treasurer of Investors Savings Bank since 1994. She
served as First Vice President/Treasurer from 1998 to 2001.
Ms. Olson is responsible for accounting operations.
Ms. Olson joined Investors Savings Bank in July 1991 when
East Jersey Savings Bank was acquired by Investors Savings Bank,
and was employed by East Jersey from 1988 until completion of
the merger.
Charles L. Lynch, age 61, has served as Senior Vice
President-Residential Lending since 2001 and Chief Lending
Officer of Investors Savings Bank since 1999. Mr. Lynch
joined Investors Savings Bank in 1972 and served as First Vice
President of Lending Origination from 1977 to 2001.
Mr. Lynch is responsible for the origination and
underwriting of the Bank’s residential loan portfolio, and
acts as liaison to ISB Mortgage Company and correspondent
lenders. Mr. Lynch serves on the Board of Directors of
Thrift Institutions Community Investment Corp of New Jersey.
Debra A. Richardson, age 49, has served as Senior
Vice President-Lending Administration of Investors Savings Bank
since December 2001. She previously served as First Vice
President of Mortgage Servicing of Investors Savings Bank from
April 1996 to 2001 and as Second Vice President from 1992 to
1996. Ms. Richardson is responsible for the administration
of our mortgage portfolio, serviced loans, collections and
foreclosures. Ms. Richardson joined Investors Savings Bank
in July 1991 when East Jersey Savings Bank was acquired by
Investors Savings Bank, and was employed by East Jersey from
1976 until the completion of the merger.
Richard S. Spengler, age 44, has served as Senior
Vice President-Commercial Real Estate Lending of Investors
Savings Bank since September 2004. He is responsible for the
administration of that department as well as the development,
origination, underwriting, and closings of commercial real
estate loans. Mr. Spengler is also responsible for the
administration of the commercial real estate construction loan
portfolio. Prior to joining Investors Savings Bank,
Mr. Spengler had a
21-year
career with First Savings Bank, Woodbridge, New Jersey
where he had last been Executive Vice President and Chief
Lending Officer from 1999 to 2004.
Thomas F. Splaine, Jr., age 41, has served as
Senior Vice President-Director of Financial Reporting for
Investors Savings Bank since January 2006. He served as First
Vice President-Director for Financial Reporting for Investors
Savings Bank since December 2004. Prior to joining Investors
Savings Bank, Mr. Splaine was employed by Hewlett-Packard
Financial Services, Murray Hill, New Jersey as Director of
Financial Reporting from 2002 to 2004.
8
Corporate
Governance
Investors Bancorp is committed to maintaining sound corporate
governance principles and the highest standards of ethical
conduct and is in compliance with applicable corporate
governance laws and regulations.
Board
Independence
The Board has determined that, except as to Mr. Cashill and
Ms. Byrnes, each member of the Board is an
“independent director” within the meaning of the
Nasdaq corporate governance listing standards and the
Company’s corporate governance policies. Mr. Cashill
and Ms. Byrnes are not considered independent as each is an
executive officer of the Company.
Board
Meetings and Committees
The Board of Directors of Investors Bancorp met eight times
during the fiscal year ended June 30, 2006. The Board of
Directors of Investors Savings Bank met sixteen times during
fiscal 2006. No director attended fewer than 75% in the
aggregate of the total number of Board meetings held and the
total number of committee meetings on which he or she served
during fiscal 2006, including Board and committee meetings of
Investor Savings Bank. Executive sessions of the independent
directors are regularly scheduled. Although not required,
attendance of Board members at the Annual Meeting of
Stockholders is encouraged.
The Company and Investor Savings Bank have three standing Board
committees: Nominating and Corporate Governance Committee; Audit
Committee; and Compensation and Benefits Committee.
Nominating and Corporate Governance
Committee. The Nominating and Corporate
Governance Committee is responsible for recommending the
following to the Board: director nominees, director committee
structure and membership, and corporate governance guidelines.
The Nominating and Corporate Governance Committee is also
responsible for the determination of director independence as
defined by NASDAQ corporate governance listing standards. Each
member of the Nominating and Corporate Governance Committee is
considered “independent” as defined in the NASDAQ
corporate governance listing standards. The Board has adopted a
written charter for the Nominating and Corporate Governance
Committee, which is available on the Company’s website at
www.isbnj.com. The Nominating and Corporate Governance
Committee currently consists of Directors Dittenhafer (Chair),
Sigler and Szabatin.
Audit Committee. The Audit Committee is
responsible for overseeing the financial reporting, internal
control and internal and external audit processes. This
responsibility includes reviewing reports filed with the SEC,
the internal audit function, the audit plan and performance of
the internal auditor, as well as appointing, overseeing and
evaluating the independent registered public accountants. Each
member of the Audit Committee is considered
“independent” as defined in the NASDAQ corporate
governance listing standards and under SEC
Rule 10A-3.
The Board believes that Mr. Kirkpatrick qualifies as an
“audit committee financial expert” as that term is
used in the rules and regulations of the SEC. The Board has
adopted a written charter for the Audit Committee, which is
available on the Company’s website at www.isbnj.com and is
attached to this proxy statement as Appendix A. The report
of the Audit Committee is included elsewhere in this proxy
statement. The Audit Committee currently consists of Directors
Kirkpatrick (Chair), Dittenhafer, Shepard, Sigler and Szabatin.
Compensation and Benefits Committee. The
Compensation and Benefits Committee is responsible for
recommending to the Board the compensation of the Chief
Executive Officer and executive management, reviewing and
administering overall compensation policy, reviewing performance
measures and goals, administering stock-based compensation
plans, approving benefit programs, establishing compensation of
directors and other matters of personnel policy and practice.
Each member of the Compensation and Benefits Committee is
considered “independent” as defined in the NASDAQ
corporate governance listing standards. The Board has adopted a
written charter for the Compensation and Benefits Committee,
which is available at the Company’s website at
www.isbnj.com. The report of the Compensation and
Benefits Committee is included elsewhere in this proxy
statement. The Compensation and Benefits Committee currently
consists of Directors Shepard (Chair), Dittenhafer, Kirkpatrick,
Manahan, Sigler and Szabatin.
9
Committee
Membership
The following chart provides information about Board committee
membership and the number of meetings that each committee held
in fiscal 2006.
|
|
|
|
|
|
|
|
|
Nominating and
|
|
|
|
|
|
|
Corporate Governance
|
|
Audit
|
|
Compensation and
|
Names
|
|
Committee
|
|
Committee
|
|
Benefits Committee
|
|
Director(1)
|
|
|
|
|
|
|
Brian D. Dittenhafer
|
|
X
|
|
X
|
|
|
John A. Kirkpatrick
|
|
X
|
|
X
|
|
X
|
Vincent D. Manahan III
|
|
|
|
|
|
|
Joseph H. Shepard III
|
|
X
|
|
X
|
|
X
|
Rose Sigler
|
|
|
|
X
|
|
X
|
Stephen J. Szabatin
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
Number of meetings in fiscal
2006
|
|
1
|
|
8
|
|
5
|
|
|
|
(1) |
|
Robert M. Cashill and Doreen R. Byrnes are officers of the
Company and therefore are not members of the Board Committees
listed. Although invited to attend committee meetings, the
Chairman of the Board, Patrick J. Grant, is not a member of any
committee and does not receive fees for attendance at committee
meetings. |
Director
Fees
Each of the individuals who serve as a director of Investors
Bancorp also serves as a director of Investors Savings Bank. The
non-employee directors of Investors Bancorp and Investors
Savings Bank are compensated separately for service on each
entity’s board. Each non-employee director of Investors
Bancorp is paid a monthly retainer of $2,000 ($4,000 per
month for the Chairman), and $1,500 for each committee meeting
attended ($2,500 for the Audit Committee). The Chairman of the
Audit Committee and the Chairman of the Compensation and
Benefits Committee are paid an annual retainer of $8,500. Each
non-employee director of Investors Savings Bank is paid a
monthly retainer of $4,000 ($8,000 per month for the
Chairman), $2,100 for each Board meeting attended
($4,200 per meeting for the Chairman) and $1,500 for each
committee meeting attended.
The following table sets forth the total fees received by the
non-management directors during fiscal year 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investors
|
|
|
Savings
|
|
|
|
|
|
Board
|
|
|
Committee
|
|
|
Total
|
|
|
|
|
|
|
Bancorp
|
|
|
Bank
|
|
|
Total
|
|
|
Meeting
|
|
|
Meeting
|
|
|
Meeting
|
|
|
Total Cash
|
|
Names
|
|
Retainer
|
|
|
Retainer
|
|
|
Retainer
|
|
|
Fees
|
|
|
Fees
|
|
|
Fees
|
|
|
Compensation
|
|
|
Brian D. Dittenhafer
|
|
$
|
16,000
|
|
|
$
|
48,000
|
|
|
$
|
64,000
|
|
|
$
|
33,500
|
|
|
$
|
26,500
|
|
|
$
|
60,000
|
|
|
$
|
124,000
|
|
Patrick J. Grant
|
|
|
32,000
|
|
|
|
96,000
|
|
|
|
128,000
|
|
|
|
67,000
|
|
|
|
—
|
|
|
|
67,000
|
|
|
|
195,000
|
|
John A. Kirkpatrick
|
|
|
24,500
|
|
|
|
48,000
|
|
|
|
72,500
|
|
|
|
31,400
|
|
|
|
20,500
|
|
|
|
51,900
|
|
|
|
124,400
|
|
Vincent D. Manahan III
|
|
|
16,000
|
|
|
|
48,000
|
|
|
|
64,000
|
|
|
|
33,500
|
|
|
|
4,000
|
|
|
|
37,500
|
|
|
|
101,500
|
|
Joseph H. Shepard III
|
|
|
16,000
|
|
|
|
48,000
|
|
|
|
64,000
|
|
|
|
33,500
|
|
|
|
26,500
|
|
|
|
60,000
|
|
|
|
124,000
|
|
Rose Sigler
|
|
|
16,000
|
|
|
|
48,000
|
|
|
|
64,000
|
|
|
|
33,500
|
|
|
|
22,000
|
|
|
|
55,500
|
|
|
|
119,500
|
|
Stephen J. Szabatin
|
|
|
16,000
|
|
|
|
48,000
|
|
|
|
64,000
|
|
|
|
33,500
|
|
|
|
25,000
|
|
|
|
58,500
|
|
|
|
122,500
|
|
Code of
Ethics and Business Conduct
The Board has adopted a code of ethics and business conduct for
employees, including the principal executive officer, principal
financial officer, principal accounting officer and all persons
performing similar functions, and a code of ethics and business
conduct for directors. These codes are designed to deter
wrongdoing and to promote honest and ethical conduct, the
avoidance of conflicts of interest, full and accurate
10
disclosure and compliance with all applicable laws, rules and
regulations. Both of these documents are available on the
Company’s website at www.isbnj.com. Amendments to
and waivers from the codes of ethics and business conduct will
be disclosed on the Company’s website.
Board
Nominations
The Nominating and Corporate Governance Committee identifies
nominees by evaluating the current members of the Board willing
to continue in service. Current members of the Board with skills
and experience that are relevant to the Company’s business
and who are willing to continue in service are first considered
for re-nomination, balancing the value of continuity of service
by existing members of the Board with that of obtaining a new
perspective. If any member of the Board does not wish to
continue in service, or if the Nominating and Corporate
Governance Committee or the Board decides not to re-nominate a
member for re-election, or if the size of the Board is
increased, the Nominating and Corporate Governance Committee
would solicit suggestions for director candidates from all Board
members and may consider candidates submitted by stockholders.
In addition, the Nominating and Corporate Governance Committee
is authorized by its charter, subject to prior approval from the
Board, to engage a third party to assist in the identification
of director nominees. The Nominating and Corporate Governance
Committee would seek to identify a candidate who at a minimum
satisfies the following criteria:
|
|
|
|
•
|
has the highest personal and professional ethics and integrity
and whose values are compatible with those of the Company;
|
|
|
•
|
has experiences and achievements that have given him/her the
ability to exercise and develop good business judgment;
|
|
|
•
|
is willing to devote the necessary time to the work of the Board
and its committees, which includes being available for Board and
committee meetings;
|
|
|
•
|
is familiar with the communities in which the Company operates
and/or is
actively engaged in community activities;
|
|
|
•
|
is involved in other activities or interests that do not create
a conflict with
his/her
responsibilities to the Company and its stockholders; and
|
|
|
•
|
has the capacity and desire to represent the balanced, best
interests of the stockholders of the Company as a group, and not
primarily a special interest group or constituency.
|
The Nominating and Corporate Governance Committee will also take
into account whether a candidate satisfies the criteria for
“independence” as defined in the NASDAQ Corporate
Governance Listing Standards, and, if a candidate with financial
and accounting expertise is sought for service on the Audit
Committee, whether the individual qualifies as an Audit
Committee financial expert.
Procedures
for the Consideration of Board Candidates Submitted by
Stockholders
The Nominating and Corporate Governance Committee has adopted
procedures for the consideration of Board candidates submitted
by stockholders. Stockholders can submit the names of candidates
for director by writing to the Chair of the Nominating and
Corporate Governance Committee, at Investors Bancorp, Inc.,
101 JFK Parkway, Short Hills New Jersey 07078. The
submission must include the following information:
|
|
|
|
•
|
a statement that the writer is a stockholder and is proposing a
candidate for consideration by the Nominating and Corporate
Governance Committee;
|
|
|
•
|
the qualifications of the candidate and why this candidate is
being proposed;
|
|
|
•
|
the name and address of the nominating stockholder as
he/she
appears on the Company’s books, and number of shares of the
Company’s common stock that are owned beneficially by such
stockholder (if the stockholder is not a holder of record,
appropriate evidence of the stockholder’s ownership will be
required);
|
11
|
|
|
|
•
|
the name, address and contact information for the nominated
candidate, and the number of shares of common stock of the
Company that are owned by the candidate (if the candidate is not
a holder of record, appropriate evidence of the
stockholder’s ownership should be provided);
|
|
|
•
|
a statement of the candidate’s business and educational
experience;
|
|
|
•
|
such other information regarding the candidate as would be
required to be included in the proxy statement pursuant to SEC
Regulation 14A;
|
|
|
•
|
a statement detailing any relationship between the candidate and
the Company and between the candidate and any customer, supplier
or competitor of the Company;
|
|
|
•
|
detailed information about any relationship or understanding
between the proposing stockholder and the candidate; and
|
|
|
•
|
a statement that the candidate is willing to be considered and
willing to serve as a director if nominated and elected.
|
A nomination submitted by a stockholder for presentation by the
stockholder at an Annual Meeting of stockholders must comply
with the procedural and informational requirements described in
“Advance Notice Of Business To Be Conducted at an Annual
Meeting.” The Company received no submission for Board
nominees for this Annual Meeting.
Stockholder
Communications with the Board
A stockholder of the Company who wants to communicate with the
Board or with any individual director can write to the Chair of
the Nominating and Corporate Governance Committee at Investors
Bancorp, Inc., 101 JFK Parkway, Short Hills, New Jersey 07078.
The letter should indicate that the author is a stockholder and
if shares are not held of record, should include appropriate
evidence of stock ownership. Depending on the subject matter,
the Chair will:
|
|
|
|
•
|
Forward the communication to the director(s) to whom it is
addressed;
|
|
|
•
|
Handle the inquiry directly, for example where it is a request
for information about the Company or it is a stock-related
matter; or
|
|
|
•
|
Not forward the communication if it is primarily commercial in
nature, relates to an improper or irrelevant topic, or is unduly
hostile, threatening, illegal or otherwise inappropriate.
|
At each Board meeting, the Chair of the Nominating and Corporate
Governance Committee shall present a summary of all
communications received since the last meeting and make those
communications available to the directors upon request.
Transactions
with Certain Related Persons
Federal law and regulation generally require that all loans or
extensions of credit to executive officers and directors must be
made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more
than the normal risk of repayment or present other unfavorable
features. However, applicable regulations permit executive
officers and directors to receive the same terms through loan
programs that are widely available to other employees, as long
as the director or executive officer is not given preferential
treatment compared to the other participating employees.
Investors Savings Bank makes loans to its directors, officers
and employees on the same rates and terms it offers to the
general public.
Section 402 of the Sarbanes-Oxley Act of 2002 generally
prohibits an issuer from: (1) extending or maintaining
credit; (2) arranging for the extension of credit; or
(3) renewing an extension of credit in the form of a
personal loan for an officer or director. There are several
exceptions to this general prohibition, one of which is
applicable to Investors Savings Bank. Sarbanes-Oxley does not
apply to loans made by a depository institution that is insured
by the FDIC and is subject to the insider lending restrictions
of the Federal Reserve
12
Act. All loans to the Company’s directors and officers are
made in conformity with the Federal Reserve Act and
Regulation O.
During the fiscal year ended June 30, 2006, Director
Manahan was a partner of a law firm that received fees of
$778,711 for services rendered on behalf of Investors Savings
Bank, including fees paid by borrowers in connection with loan
closings. Effective January 1, 2006, Director Manahan is a
solo legal practitioner and is not affiliated with that law
firm. Neither Investors Savings Bank nor Investors Bancorp paid
or caused to be paid any legal fees to Director Manahan from
January 1, 2006 through June 30, 2006.
THE AUDIT
COMMITTEE REPORT
Management has the primary responsibility for the Company’s
internal controls and financial reporting process. The
independent registered public accountants are responsible for
performing an independent audit of the Company’s
consolidated financial statements in accordance with the
standards of the Public Company Accounting Oversight Board and
issuing an opinion thereon. The Audit Committee’s
responsibility is to monitor and oversee these processes. As
part of its ongoing activities, the Audit Committee has:
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reviewed and discussed with management and the independent
registered public accountants the Company’s audited
consolidated financial statements for the year ended
June 30, 2006;
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•
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met with the Company’s CEO, CFO, internal auditors and the
independent registered public accountants, both together and in
separate executive sessions, to discuss the scope and the
results of the audits and the overall quality of the
Company’s financial reporting and internal controls;
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•
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discussed with the independent registered public accountants the
matters required to be discussed by Statement on Auditing
Standards No. 61, Communications with Audit
Committees, as amended;
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received the written disclosures from the independent registered
public accountants required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees, and discussed with the independent registered
public accountants its independence from the Company; and
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pre-approved all audit, audit related and other services to be
provided by the independent registered public accountants.
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Based on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited consolidated
financial statements be included in the Company’s Annual
Report on
Form 10-K
for the year ended June 30, 2006 and be filed with the SEC.
In addition, the Audit Committee appointed KPMG as the
Company’s independent registered public accountants for the
year ending June 30, 2007, subject to the ratification of
this appointment by the stockholders.
The Audit
Committee
John A. Kirkpatrick (Chair)
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Brian D. Dittenhafer
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Rose Sigler
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Joseph H. Shepard III
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Stephen J. Szabatin
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THE
COMPENSATION COMMITTEE REPORT
Overview. The Compensation and Benefits
Committee is composed entirely of outside non-employee directors
whose primary responsibility is the determination of CEO and
Board of Directors compensation. Additionally, the Committee
reviews and approves executive compensation and provides
oversight for all other Company compensation and benefit plans.
The Compensation and Benefits Committee engaged a compensation
consulting firm to conduct an independent review of the total
compensation of the executive group. For fiscal year 2006,
compensation levels were compared to a peer group of banks and
thrifts with assets between $1.9 billion and
$20.1 billion. The review determined that base salaries and
annual incentives were generally comparable to these similarly
situated banking and financial services companies.
13
Compensation Philosophy. The
Committee’s philosophy is to provide competitive
compensation opportunities that attract, motivate and retain
executive talent capable of maximizing Company performance for
the benefit of its stockholders; and, to align the interest of
the Company’s executives with those of our stockholders.
The executive compensation program is currently composed of two
components with a relationship to each other that reflects the
nature and maturity of the Company’s business as well as
its overall objectives. The two primary components are base
salary and annual incentive. A third component, long-term
incentives, will be added assuming approval by stockholders of
the Investors Bancorp, Inc. 2006 Equity Incentive Plan.
The committee relies on peer group compensation data to provide
information related to the compensation practices at other
financial institutions of similar asset and business mix as well
as overall compensation trends. It utilizes this survey data and
the executive’s position, experience and overall
contribution to the Company as a guide in determining an
executive’s compensation.
Compensation Components. — Base
Salaries. Base salary and changes to base
salary reflect a variety of factors, including the results of
the independent review of the competitiveness of the total
compensation program, the individual’s performance and
contribution to the long-term goals of Investors Savings Bank,
recent operating results, strategic performance targets and
other relevant factors.
Annual Incentive. Payouts under the
Company’s annual incentive compensation program are based
on the achievement of annual performance objectives, including
Investors Savings Bank’s financial performance compared to
budgeted projections and certain individual goals. Individual
payouts are a function of Investors Savings Bank’s
financial performance and the performance of the individual
executive. The Compensation and Benefits Committee believes that
this funding formula provides a direct link between financial
performance and actual compensation.
In addition, the Compensation and Benefits Committee believes
that long-term incentives, specifically stock options and stock
awards, should be a key element in the executive compensation
program. These incentives strongly align the rewards provided to
executives with the value created for stockholders through stock
price appreciation. The Investors Bancorp, Inc. 2006 Equity
Incentive Plan is being submitted for stockholder approval for
such purposes.
CEO Compensation. In evaluating
Mr. Cashill’s compensation, the Compensation and
Benefits Committee considered the terms of the employment
agreement between Mr. Cashill and the Company, which
requires a minimum base salary that can be increased but not
decreased. Mr. Cashill’s fiscal 2006 base salary was
increased from $920,000 to $1,000,000 effective January 1,
2006. He was also provided with a cash bonus of $69,000. The
Compensation and Benefits Committee determined the base salary
increase and the bonus based on its evaluation of
Mr. Cashill’s contribution to the Company’s
performance and other factors, including a study of peer group
institutions and the successful completion of the initial public
offering. The Compensation and Benefits Committee took these
actions to recognize his accomplishments in successfully
building an institution and management team and his ability to
lead and strategically position the future direction of the
Company.
The
Compensation and Benefits Committee
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Joseph H. Shepard III
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John A. Kirkpatrick
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Rose Sigler
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14
Executive
Officer Compensation
Summary Compensation Table. The
following table sets forth, for the year ended June 30,
2006, certain information as to the total remuneration paid by
Investors Savings Bank to its Chief Executive Officer as well as
to the four most highly compensated executive officers of
Investors Savings Bank, other than the Chief Executive Officer,
who received total salary and bonus in excess of $100,000. Each
of the individuals listed in the table below is referred to as a
Named Executive Officer.
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All Other
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Fiscal
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Total
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Salary
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Compensation
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Name and Principal Position
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Year
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Compensation
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($)(1)
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Bonus ($)
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($)(2)(3)
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Robert M. Cashill
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2006
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1,061,072
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960,000
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69,000
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32,072
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President and Chief Executive
Officer
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Kevin Cummings
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2006
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669,772
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604,000
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43,000
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22,772
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Executive Vice President and
Chief Operating Officer
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Doreen R. Byrnes
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2006
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513,872
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457,000
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33,000
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23,872
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Executive Vice
President — Human Resources
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Domenick A. Cama
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2006
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379,772
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338,000
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22,500
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19,272
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Executive Vice President and
Chief Financial Officer
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Richard S. Spengler
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2006
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220,600
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205,000
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14,000
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1,600
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Senior Vice President
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(1) |
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Pursuant to SEC disclosure rules, summary compensation
information is excluded for fiscal years 2004 and 2005, since
Investors Bancorp was not a public company during any part of
those fiscal years. |
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(2) |
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Investors Savings Bank provides certain of its executive
officers with non-cash benefits and perquisites. Management
believes that the aggregate value of these benefits for fiscal
2006 did not, in the case of the Named Executive Officers,
exceed $50,000 or 10% of the aggregate salary and annual bonus
reported for them in the Summary Compensation Table. |
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(3) |
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With respect to Messrs. Cashill, Cummings, Cama and
Ms. Byrnes, includes $17,372 relating to the market value,
as of the December 31, 2005 allocation date, of
1,575 shares of common stock allocated under the ESOP to
the account of the named executive officer. Also includes
payments associated with Investors Savings Bank’s life
insurance plan and the long term care program. |
Benefit
Plans and Arrangements
Employment Agreements. Investors
Bancorp entered into employment agreements with each of
Messrs. Cashill, Cummings, Ms. Byrnes, and
Mr. Cama. Each of these agreements has an initial term of
three years. Unless notice of non-renewal is provided, the
agreements renew annually. The agreements provide for the
payment of a base salary, which will be reviewed at least
annually, and which may be increased, but not decreased. Under
the agreements, the current base salaries for
Messrs. Cashill, Cummings, Ms. Byrnes and
Mr. Cama are $1,000,000, $633,000, $470,000 and $375,000,
respectively. In addition to the base salary, each agreement
provides for, among other things, participation in bonus
programs and other employee pension benefit and fringe benefit
plans applicable to executive employees, use of an automobile
and reimbursement of expenses associated with the use of such
automobile. The executive’s employment may be terminated
for just cause at any time, in which event the executive would
have no right to receive compensation or other benefits for any
period after termination.
Each of the executives is entitled to severance payments and
benefits in the event of his or her termination of employment
under specified circumstances. In the event the executive’s
employment is terminated for reasons other than for just cause,
disability or retirement, or in the event the executive resigns
during the term of the agreement following (1) the failure
to elect or reelect or to appoint or reappoint the
15
executive to his executive position, (2) a material change
in the executive’s functions, duties, or responsibilities,
which change would cause the executive’s position to become
one of lesser responsibility, importance or scope, (3) the
liquidation or dissolution of Investors Bancorp or Investors
Savings Bank, (4) a change in control of Investors Bancorp
or (5) a breach of the employment agreement by Investors
Bancorp, the executive would be entitled to a severance payment
equal to three times the sum of the executive’s base salary
and the highest rate of bonus awarded to the executive during
the prior three years, payable in a lump sum. In addition, the
executive would be entitled to the continuation of life,
medical, dental and disability coverage for 36 months after
termination of the agreement. The executive would also receive a
lump sum payment of the excess, if any, of the present value of
the benefits he would be entitled to under the defined benefit
pension plan if he had continued working for Investors Bancorp
for 36 months over the present value of the benefits to
which he is actually entitled as of the date of termination. If
the employment of the executives had been terminated without
cause as of June 30, 2006, the cash severance payment would
have been approximately $3,776,000, $2,237,000, $1,781,000 and
$1,421,000, in the case of Messrs. Cashill, Cummings, or
Ms. Byrnes or Mr. Cama, respectively.
Upon termination of the executive’s employment other than
in connection with a change in control, the executive agrees not
to compete with Investors Bancorp, for one year following
termination of employment, within 25 miles of any existing
branch of Investors Savings Bank or 25 miles of any office
for which Investors Savings Bank or a subsidiary has filed an
application for regulatory approval. Should the executive become
disabled, Investors Bancorp would continue to pay the executive
his base salary for the longer of the remaining term of the
agreement or one year, provided that any amount paid to the
executive pursuant to any disability insurance would reduce the
compensation he would receive. In the event the executive dies
while employed by Investors Bancorp, the executive’s estate
will be paid the executive’s base salary for one year and
the executive’s family will be entitled to continuation of
medical and dental benefits for one year after the
executive’s death. Upon termination of the employment
agreement upon retirement (as defined therein), the executive
would only be entitled to benefits under any retirement plan of
Investors Bancorp and other plans to which the executive is a
party.
The employment agreements also provide for indemnification
against any excise taxes which may be owed by the executive for
any payments made in connection with a change in control that
would constitute “excess parachute payments” under
Section 280G of the Internal Revenue Code. The
indemnification payment would be the amount necessary to ensure
that the amount of such payments and the value of such benefits
received by the executive equals the amount of such payments and
the value of such benefits the executive would have received in
the absence of such excise tax, including any federal, state and
local taxes on Investors Bancorp’s payment to the executive
attributable to such taxes.
Investors Bancorp has also entered into an employment agreement
with Richard Spengler and six other senior officers, and each of
these agreements will have a two-year term. Unless notice of
non-renewal is provided, the agreements renew annually. Base
salaries will be reviewed at least annually, and may be
increased, but not decreased. In addition to the base salary,
each agreement provides for, among other things, participation
in bonus programs and other employee pension benefit and fringe
benefit plans applicable to officers. The officer’s
employment may be terminated for just cause at any time, in
which event the officer would have no right to receive
compensation or other benefits for any period after termination.
In the event the officer’s employment is terminated for
reasons other than for just cause, disability or retirement, or
in the event the officer resigns during the term of the
agreement for any of the same reasons as specified under the
three-year employment agreements referenced above, the officer
would be entitled to a severance payment equal to 1.5 times his
highest rate of base salary and the highest rate of bonus
awarded to the officer during the prior two years, payable in a
lump sum. In addition, the officer would be entitled, at
Investors Bancorp’s sole expense, to the continuation of
life, medical, dental and disability coverage for 18 months
after termination of the agreement. The officer would also
receive a lump sum payment of the excess, if any, of the present
value of the benefits he or she would be entitled to under the
defined benefit pension plan if he or she had continued working
for Investors Bancorp for 18 months over the present value
of the benefits to which he or she is actually entitled as of
the date of termination. The officer would be entitled to no
additional benefits under the employment agreement upon
retirement at age 65. The two-year employment agreements
also
16
contain non-compete provisions that are applicable following
termination of employment, other than termination following a
change in control, and contain substantially the same provisions
regarding termination of employment due to retirement,
disability or death as are contained in the three-year
employment agreements discussed above. In the event payments to
the officer include an “excess parachute payment” as
defined in the Internal Revenue Code, payments would be reduced
in order to avoid this result.
In 2002, ISB Mortgage Company, LLC restated the employment
agreements with its two executive officers. These agreements
provide for one-year terms and are renewable automatically
unless terminated pursuant to the terms of the agreements. Under
the agreements, the initial base salary for each of the
executives is $70,000 per year. In addition to the base
salary, the agreements provide for, among other things,
participation in incentive compensation, bonus, and fringe
benefit programs, including a $1,000 monthly automobile
allowance, and reimbursement of reasonable expenses. In the
event of termination of the employment agreement by ISB Mortgage
Company, LLC, the employee will be entitled to all accrued but
unpaid salary, incentive compensation and bonus. In the event
the employee is terminated for good cause or in the event of
voluntary termination by the employee, the employee will receive
his accrued but unpaid salary.
Change-in-Control
Agreements. Investors Bancorp entered into
change-in-control
agreements with its officers at the level of first vice
president or higher who are not entering into employment
agreements, which would provide certain benefits in the event of
a termination of employment following a change in control of
Investors Bancorp or Investors Savings Bank. Each of the
change-in-control
agreements provides for a term of two years. Commencing on each
anniversary date, the agreements will be renewed for an
additional year so that the remaining term will be two years,
subject to termination by the Board of Directors or notice of
non-renewal. The
change-in-control
agreements enable Investors Bancorp to offer to designated
officers certain protections against termination without just
cause in the event of a change in control (as defined in the
agreements).
Following a change in control of Investors Bancorp or Investors
Savings Bank, an officer is entitled under the agreement to a
payment if the officer’s employment is terminated during
the term of such agreement, other than for just cause, or if the
officer voluntarily terminates employment during the term of
such agreement as a result of a demotion, loss of title, office
or significant authority (in each case, other than as a result
of the fact that either Investors Savings Bank or Investors
Bancorp is merged into another entity in connection with a
change in control and will not operate as a stand-alone,
independent entity), reduction in his annual compensation or
benefits, or relocation of his or her principal place of
employment by more than 30 miles from its location
immediately prior to the change in control. In the event an
officer who is a party to a
change-in-control
agreement is entitled to receive payments pursuant to the
change-in-control
agreement, he will receive a cash payment equal to 1.5 times his
or her highest rate of base salary and the highest rate of bonus
awarded to the officer during the prior two years, payable in a
lump sum. In addition to the cash payment, each covered officer
is entitled to receive life, medical, and dental coverage for a
period of 18 months from the date of termination.
Notwithstanding any provision to the contrary in the
change-in-control
agreement, payments are limited so that they will not constitute
an excess parachute payment under Section 280G of the
Internal Revenue Code.
Director Retirement Plan. Investors
Savings Bank maintains a director retirement plan. Any director
who is not an active employee of Investors Savings Bank upon
retirement from board service, has provided at least ten years
of “cumulative service” (service on the board and, if
applicable, as an employee or counsel), retires at age 65
or later, or as a result of disability, is eligible to
participate in the plan. An eligible director with at least
15 years of cumulative service will be entitled to an
annual retirement benefit equal to the sum of 60% of the annual
retainer and 13 times the regular board meeting fee in effect
for the calendar year preceding the director’s year of
retirement. A director with at least ten years of cumulative
service but less than 15 years will be entitled to 40% of
the sum of the annual retainer and 13 times the regular meeting
fee in effect for the calendar year preceding the
director’s year of retirement, plus a pro-rated percentage
of 20% of the sum of the annual retainer and 13 times the
regular board meeting fee in effect for the calendar year
preceding the director’s year of retirement. In connection
with the stock offering, the retirement plan was amended to
include the annual retainer and board fees, if any, paid by
Investors Bancorp in determining a director’s retirement
benefit. Directors who retired on or prior to March 1, 1997
are entitled to different retirement
17
benefits. For the year ended June 30, 2006, an expense of
approximately $697,000 was recorded with respect to this plan.
In the event of a change in control, directors who have not yet
attained ten years of service will be deemed to have ten years
of service in order to qualify for a benefit under the director
retirement plan. In the event a director dies prior to
retirement, the director’s beneficiary will be entitled to
benefit payments in the form of a joint and survivor benefit
payable at 100% of the amount paid to the director. Retirement
benefits may be paid, at the director’s election, either in
monthly payments until the eligible director’s death, or as
a joint and survivor form of benefit payable for the lifetime of
the eligible director and, upon the eligible director’s
death, at 50% of the benefit amount, to the director’s
beneficiary, or a joint and survivor form of benefit payable for
the lifetime of the director and, upon the director’s
death, at 100% of the amount, to the director’s beneficiary
during the beneficiary’s lifetime. In order to receive
retirement benefits under the plan, the director must remain a
director emeritus in good standing after retirement and must not
engage in any business enterprise which competes with Investors
Savings Bank nor disclose any confidential information relative
to the business of Investors Savings Bank.
Defined Benefit Pension Plan. Investors
Savings Bank participates in the Pentegra Defined Benefit Plan
for Financial Institutions, formerly known as the Financial
Institutions Retirement Fund, which is a qualified, tax-exempt
defined benefit plan (the “Retirement Plan”). All
employees age 21 or older who have completed one year of
employment with Investors Savings Bank are eligible for
participation in the Retirement Plan; however, only employees
who have been credited with 1,000 or more hours of service with
Investors Savings Bank are eligible to accrue benefits under the
Retirement Plan. Investors Savings Bank annually contributes an
amount to the plan necessary to satisfy the minimum funding
requirements established under the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”).
The regular form of retirement benefit is a straight life
annuity (if single) and a joint and survivor annuity (if
married). However, various alternative forms of joint and
survivor annuities may be selected instead. Benefits payable
upon death may be paid in a lump sum, installments, or in the
form of a life annuity. Effective January 1, 2006, the
retirement benefit formula under the Retirement Plan was
modified to provide for a nonintegrated unit accrual formula
with an annual accrual rate of 1.25% of the participant’s
high 5-year
average salary with a
30-year
salary cap. A participant’s average annual compensation is
the average annual compensation over the 5 consecutive calendar
years out of the last 10 calendar years in which the
participant’s compensation was the greatest, or over all
calendar years if less than 5. The modification to the benefit
accrual formula constitutes a significant reduction in the rate
of future benefit accruals. Benefits accrued up to the
modification date are protected with frozen add-ons. If a
participant dies while in active service and after having become
fully vested, a qualified 100% survivor benefit will be payable
to the participant’s beneficiary. Upon termination of
employment due to disability, the participant will be entitled
to a disability retirement benefit at age 65.
18
The following table indicates the annual retirement benefit that
would be payable under the plan upon retirement at age 65
in calendar year 2006, expressed in the form of a single life
annuity for the final average salary and benefit service
classification specified below:
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Final Average
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Years of Benefit Service and Benefit Payable at Retirement
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Annual Compensation
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5
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10
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20
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30
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40
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$10,000
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$
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600
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$
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1,300
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$
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2,500
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$
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3,800
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$
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3,800
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$30,000
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$
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1,900
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$
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3,800
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$
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7,500
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$
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11,300
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$
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11,300
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$60,000
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$
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3,800
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$
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7,500
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$
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15,000
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$
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22,500
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$
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22,500
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$90,000
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$
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5,600
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$
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11,300
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$
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22,500
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$
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33,800
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$
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33,800
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$120,000
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$
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7,500
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$
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15,000
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$
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30,000
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$
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45,000
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$
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45,000
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$150,000
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$
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9,400
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$
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18,800
|
|
|
$
|
37,500
|
|
|
$
|
56,300
|
|
|
$
|
56,300
|
|
$160,000
|
|
$
|
10,000
|
|
|
$
|
20,000
|
|
|
$
|
40,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
$170,000
|
|
$
|
10,600
|
|
|
$
|
21,300
|
|
|
$
|
42,500
|
|
|
$
|
63,800
|
|
|
$
|
63,800
|
|
$200,000
|
|
$
|
12,500
|
|
|
$
|
25,000
|
|
|
$
|
50,000
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
$220,000 and above(1)
|
|
$
|
13,800
|
|
|
$
|
27,500
|
|
|
$
|
55,000
|
|
|
$
|
82,500
|
|
|
$
|
82,500
|
|
|
|
|
(1) |
|
Reflects the maximum benefit payable under the Defined Benefit
Pension Plan due to tax law limitations. |
Prior to January 1, 2006, the benefit formula under the
plan provided that upon termination of employment at or after
age 65 with at least 120 months of employment, a
participant was entitled to a normal retirement annual benefit
equal to 60% of the participant’s high
5-year
average salary. If the participant retired at or after
age 65 but before completion of 120 months of
employment, his annual retirement benefit would have been equal
to the normal retirement annual benefit multiplied by the ratio
that the participant’s actual months of employment bears to
120 months. If the participant terminated employment on or
after attaining age 55 with 25 years of vested
service, his accrued benefit would not have been reduced. Upon
termination of employment on or after attaining age 55 with
10 years of service, the participant’s accrued benefit
payable at age 65 would have been reduced by 2% for each
year prior to age 65. A reduced benefit would have been
payable to participants who terminate employment prior to
attaining age 55, or after attaining age 55 with less
than 10 years of vesting service. Under the prior formula,
a participant could defer payment of his benefits, in which case
his annual retirement benefit payable at age 65 would have
been increased by 0.8% for each month of deferment after
age 65.
The following table indicates the annual retirement benefit that
would be payable under the plan upon retirement at age 65
in calendar year 2005, based on the plan in effect prior to the
2006 amendments, expressed in the form of a single life annuity
for the final average salary and benefit service classification
specified below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final Average
|
|
Years of Benefit Service and Benefit Payable at Retirement
|
|
Annual Compensation
|
|
5
|
|
|
10
|
|
|
20
|
|
|
30
|
|
|
40
|
|
|
$10,000
|
|
$
|
3,000
|
|
|
$
|
6,000
|
|
|
$
|
6,000
|
|
|
$
|
6,000
|
|
|
$
|
6,000
|
|
$30,000
|
|
$
|
9,000
|
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
$60,000
|
|
$
|
18,000
|
|
|
$
|
36,000
|
|
|
$
|
36,000
|
|
|
$
|
36,000
|
|
|
$
|
36,000
|
|
$90,000
|
|
$
|
27,000
|
|
|
$
|
54,000
|
|
|
$
|
54,000
|
|
|
$
|
54,000
|
|
|
$
|
54,000
|
|
$120,000
|
|
$
|
36,000
|
|
|
$
|
72,000
|
|
|
$
|
72,000
|
|
|
$
|
72,000
|
|
|
$
|
72,000
|
|
$150,000
|
|
$
|
45,000
|
|
|
$
|
90,000
|
|
|
$
|
90,000
|
|
|
$
|
90,000
|
|
|
$
|
90,000
|
|
$160,000
|
|
$
|
48,000
|
|
|
$
|
96,000
|
|
|
$
|
96,000
|
|
|
$
|
96,000
|
|
|
$
|
96,000
|
|
$170,000
|
|
$
|
51,000
|
|
|
$
|
102,000
|
|
|
$
|
102,000
|
|
|
$
|
102,000
|
|
|
$
|
102,000
|
|
$200,000
|
|
$
|
60,000
|
|
|
$
|
120,000
|
|
|
$
|
120,000
|
|
|
$
|
120,000
|
|
|
$
|
120,000
|
|
$210,000 and above(1)
|
|
$
|
63,000
|
|
|
$
|
126,000
|
|
|
$
|
126,000
|
|
|
$
|
126,000
|
|
|
$
|
126,000
|
|
|
|
|
(1) |
|
Reflects the maximum benefit payable under the Defined Benefit
Pension Plan due to tax law limitations. |
19
At December 31, 2005, Messrs. Cashill, Cummings and
Cama, and Ms. Byrnes had 6, 2, 15, and
27 years of credited service, respectively, under the plan.
An employee who was a participant in the plan prior to the
change in the benefit formula will have his or her accrued
benefit under the new formula increased by a “frozen
add-on” that is equal to the current accrued benefit on the
effective date of the change in the benefit formula minus the
amended accrued benefit, calculated as of that same date. For
example, if an employee’s annual accrued benefit at
January 1, 2006 under the old benefit formula is $7,687 and
under the new formula would be $4,804 on January 1, 2006,
the employees “frozen add-on” would be the difference
between these two amounts, or $2,883.
Supplemental ESOP and Retirement
Plan. Investors Savings Bank maintains the
Supplemental ESOP and Retirement Plan (the “Plan”).
The Plan is intended to compensate executives participating in
the Investors Savings Bank Retirement Plan (the “Retirement
Plan”) and the Investors Savings Bank Employee Stock
Ownership Plan (the “ESOP”) whose contributions or
benefits are limited by Sections 415 or 401(a)(17) of the
Internal Revenue Code of 1986, as amended (the
“Code”). As of June 30, 2006,
Messrs. Cashill, Cummings, and Cama and Ms. Byrnes
were participating in the Plan. The Plan provides benefits
attributable to participation in the Retirement Plan equal to
the excess, if any, of the vested accrued benefit to which the
executive would be entitled under the Retirement Plan,
determined without regard to the limitation of Sections 415
or 401(a)(17) of the Code, over the vested accrued benefit to
which the executive is entitled under the Retirement Plan (the
“Supplemental Retirement Plan Benefit”). The Plan also
provides benefits attributable to participation in the ESOP
equal to the difference between the allocation of shares of
stock the executive would have received under the ESOP without
regard to the tax law limitations, and the number of shares of
stock that are actually allocated as a result of the tax law
limits (the “Supplemental ESOP Benefit”). The
Supplemental ESOP Benefit under the Plan will be credited in
phantom shares of stock. Each year, the dollar amount of
earnings on the phantom shares deemed allocated to each
participant’s account will be converted into phantom shares
and credited to each participant’s account. Distributions
of Supplemental ESOP Benefits under the Plan will be made in
cash.
The executive’s vested interest in the Supplemental
Retirement Plan Benefit and in the Supplemental ESOP Benefit
under the Plan will be the same as such executive’s vested
percentage under the Retirement Plan and under the ESOP,
respectively. Supplemental Retirement Plan Benefits under the
Plan will be payable upon early or normal retirement (as defined
in the Retirement Plan) or other termination of employment of
the participant in the form elected by the participant, subject
to the requirements of Section 409A of the Code.
Supplemental ESOP Benefits under the Plan will be payable upon
the executive’s “separation from service” (as
defined under Section 409A of the Code), disability or
death, subject to the requirements of Section 409A of the
Code.
Executive Supplemental Retirement Wage Replacement
Plan. Investors Savings Bank maintains an
Executive Supplemental Retirement Wage Replacement Plan
(“Wage Replacement Plan”) that is designed to provide
Messrs. Cashill, Cummings, and Cama, and Ms. Byrnes
with annual income in the form of a single life annuity
generally equal to 60% of such executive’s highest average
annual base salary and bonus (over a consecutive
36-month
period within the last 120 consecutive calendar months of
employment) reduced by the sum of the benefits provided under
the existing tax-qualified defined benefit pension plan and the
annuitized value of his or her benefits payable from the defined
benefit pension portion of the Supplemental ESOP and Retirement
Plan sponsored by Investors Savings Bank. Upon termination of
employment at or after the normal retirement age
(age 65) with at least 120 months of employment,
a participant is entitled to a normal retirement annual benefit
equal to 60% of the participant’s high three-year average
salary. If the participant retires before completion of
120 months of employment, his or her annual retirement
benefit at the normal retirement age will be equal to the normal
retirement annual benefit multiplied by the ratio that the
participant’s actual months of employment bears to
120 months. For example, if a covered executive retires
after 84 months of employment when his or her highest
average 36 month annual base salary and bonus is
20
$500,000, and elects to receive his or her retirement benefit at
age 65, his or her retirement benefit would be determined
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Year Average
Salary
|
|
|
|
Ratio
|
|
|
|
Calculated Retirement Benefit
|
|
|
|
|
|
60%
|
|
×
|
|
$500,000
|
|
×
|
|
84/120
|
|
=
|
|
$210,000
|
The $210,000 retirement benefit calculated under the Wage
Replacement Plan would be reduced by the sum of the annuitized
value of the benefits provided under the tax-qualified defined
benefit pension plan and the annuitized value of the benefit
payable to the participant under the defined benefit pension
portion of the Supplemental ESOP and Retirement Plan.
Upon termination of employment on or after attaining
age 55, the participant’s accrued benefit payable as
an early retirement benefit will be equal to the benefit at the
normal retirement age, reduced by 2% for each year prior to
age 65; however, if the participant terminates employment
on or after attaining age 55 with 25 years of vesting
service, his or her accrued benefit will not be reduced. In the
event of termination of a participant’s employment
coincident with or within three years following a change in
control, the participant will be entitled to a benefit
calculated as an early retirement benefit or a normal retirement
benefit, as applicable. For these purposes, a participant with
less than 120 months of employment will be entitled to a
benefit calculated as if the participant had 120 months of
employment and, a participant who has not yet attained
age 55 will be deemed to have attained age 55.
A participant may defer payment of his or her benefits, in which
case his or her annual retirement benefit payable at age 65
will be increased by 0.8% for each month of deferment after
age 65. If a participant dies while in active service, a
survivor benefit, calculated as if the participant had lived
until his normal retirement date, will be payable to the
participant’s beneficiary. Upon termination of employment
due to disability, the participant will be entitled to a
disability retirement benefit at age 65.
For the year ended June 30, 2006, the Bank recorded an
expense of approximately $2,270,000 with respect to the
supplemental retirement plans.
Deferred Directors Fee Plans. Since
1988, Investors Savings Bank has maintained a deferred directors
fee plan, pursuant to which each director of Investors Savings
Bank has the right to defer the payment of all or any part of
his or her board or committee fees. Compensation deferred under
the plan and interest (at the rate equal to one and one-half
percent below the prime rate) thereon are payable upon a
director’s death, disability, resignation or removal from
office. Such payment is made in a lump sum, unless the director
has elected payment in monthly installments over a period of up
to ten years. In the event of a change in control, the Board of
Directors or an acquiror may, in its sole discretion, terminate
the plan and pay the undisbursed portion of benefits under the
plan in a lump sum within 12 months of the change in
control. As of the year ended June 30, 2006, one director
is making deferrals in the deferred director fee plan.
Long Term Care Program. Investors
Savings Bank sponsors a long-term care program for all of its
executive officers, directors, senior vice presidents and their
spouses. Executive and senior officers become eligible to
participate in the long-term care program upon attainment of
their eligible position, and directors become eligible to
participate after one year of service either on the Board of
Directors, through past employment or as counsel prior to
becoming a director. Coverage under the long-term care program
is issued for the life of the participant and each individual
policy is owned by the covered person. Investors Savings Bank
pays all premiums under the long term care program but will stop
paying premiums in the event of the participant’s
(i) termination for cause, (ii) resignation from the
Board of Directors prior to attaining normal retirement age
(except for health reasons), (iii) relocation outside of
the country, or (iv) death. Spousal coverage will be
terminated upon (i) a participant’s termination or
resignation prior to normal retirement age (except for health
reasons), (ii) divorce from the participant, (iii) the
participant no longer qualifying for coverage, (iv) the
spouse’s permanent relocation outside of the country, or
(v) death. Participants who cannot be insured through an
insurance company under the long-term care program will be
self-insured by Investors Savings Bank. For the year ended
June 30, 2006, the Bank recorded an expense of
approximately $229,000 with respect to this plan.
21
PERFORMANCE
COMPARISON
Stock
Performance Graph
Set forth below is a stock performance graph comparing
(a) the cumulative total return on the Company’s
Common Stock for the period beginning October 12, 2005, the
date that Investors Bancorp began trading as a public company as
reported by the Nasdaq Global Select Market (at a closing price
of $10.02 per share on such date), through June 30,
2006, (b) the cumulative total return on stocks included in
the Nasdaq Composite Index over such period, (c) the
cumulative total return of publicly traded thrifts over such
period, and, (d) the cumulative total return of all
publicly traded banks and thrifts over such period. Cumulative
return assumes the reinvestment of dividends, and is expressed
in dollars based on an assumed investment of $100.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ending
|
|
|
|
Index
|
|
10/12/05
|
|
12/31/05
|
|
03/31/06
|
|
06/30/06
|
|
Investors Bancorp
|
|
|
100.00
|
|
|
|
110.08
|
|
|
|
139.12
|
|
|
|
135.23
|
|
SNL Bank and Thrift Index
|
|
|
100.00
|
|
|
|
110.59
|
|
|
|
114.03
|
|
|
|
116.36
|
|
SNL Thrift Index
|
|
|
100.00
|
|
|
|
112.84
|
|
|
|
116.78
|
|
|
|
121.62
|
|
NASDAQ Composite
|
|
|
100.00
|
|
|
|
108.48
|
|
|
|
115.40
|
|
|
|
107.31
|
|
22
PROPOSAL II —
APPROVAL OF THE INVESTORS BANCORP, INC.
The Board of Directors has adopted, subject to stockholder
approval, the Investors Bancorp, Inc. 2006 Stock-Based Equity
Plan (the “Equity Plan”), to provide officers,
employees and directors of the Company and Investors Savings
Bank with additional incentives to promote the growth and
performance of the Company. The following is a summary of the
material features of the Equity Plan, which is qualified in its
entirety by reference to the provisions of the Equity Plan,
attached hereto as Appendix B.
General
The Equity Plan will remain in effect for a period of ten years
following adoption by stockholders. Subject to permitted
adjustments for certain corporate transactions, the Equity Plan
authorizes the issuance of up to 7,976,511 shares of
Company common stock pursuant to grants of incentive and
non-statutory stock options, stock appreciation rights, and
restricted stock awards. No more than 3,418,504 shares may
be issued as restricted stock awards.
The Equity Plan will be administered by the members of the
Compensation and Benefits Committee (the “Committee”)
who are not current or former employees or officers of the
Company and do not receive remuneration from the Company in any
capacity other than as a director, except for compensation in an
amount for which disclosure would not be required under SEC
disclosure rules. The Committee has full and exclusive power
within the limitations set forth in the Equity Plan to make all
decisions and determinations regarding the selection of
participants and the granting of awards; establishing the terms
and conditions relating to each award; adopting rules,
regulations and guidelines for carrying out the Equity
Plan’s purposes; and interpreting and otherwise construing
the Equity Plan. The Equity Plan also permits the Board of
Directors or the Committee to delegate to one or more officers
of the Company the Committee’s power to (i) designate
officers and employees who will receive awards, and
(ii) determine the number of awards to be received by them.
Eligibility
Employees and outside directors of, and service providers to,
the Company or its subsidiaries are eligible to receive awards
under the Equity Plan, except that non-employees may not be
granted incentive stock options.
Types of
Awards
The Committee may determine the type and terms and conditions of
awards under the Equity Plan. Awards may be granted in a
combination of incentive and non-statutory stock options, stock
appreciation rights or restricted stock awards, as follows.
Stock Options. A stock option gives the
recipient or “optionee” the right to purchase shares
of common stock at a specified price for a specified period of
time. The exercise price may not be less than the fair market
value on the date the stock option is granted. Fair market value
for purposes of the Equity Plan means the final sales price of
Company’s common stock as reported on the Nasdaq Global
Select Market on the date the option is granted, or if the
Company’s common stock was not traded on such date, then on
the day prior to such date or on the next preceding day on which
the Company’s common stock was traded, and without regard
to
after-hours
trading activity. The Committee will determine the fair market
value, in accordance with Section 422 of the Internal
Revenue Code, if it cannot be determined in the manner described
above.
Stock options are either “incentive” stock options or
“non-qualified” stock options. Incentive stock options
have certain tax advantages and must comply with the
requirements of Section 422 of the Internal Revenue Code.
Only employees are eligible to receive incentive stock options.
Shares of common stock purchased upon the exercise of a stock
option must be paid for in full at the time of exercise
(i) either in cash or with stock of the Company which was
owned by the participant for at least six months prior to
delivery, or (ii) by reduction in the number of shares
deliverable pursuant to the stock option, or (iii) subject
to a “cashless
23
exercise” through a third party. Cash may be paid in lieu
of any fractional shares under the Equity Plan. Stock options
are subject to vesting conditions and restrictions as determined
by the Committee.
Stock Appreciation Rights. Stock
appreciation rights give the recipient the right to receive a
payment in cash, Company common stock, or a combination thereof,
of an amount equal to the excess of the fair market value of a
specified number of shares of Company common stock on the date
of the exercise of the stock appreciation rights over the fair
market value of the common stock on the date of grant of the
stock appreciation right, as set forth in the recipient’s
award agreement.
Stock Awards. Stock awards under the
Equity Plan will be granted only in whole shares of common
stock. Stock awards will be subject to conditions established by
the Committee which are set forth in the award agreement. Any
stock award granted under the Equity Plan will be subject to
vesting as determined by the Committee. Awards will be evidenced
by agreements approved by the Committee, which set forth the
terms and conditions of each award.
Prohibition Against Option
Repricing. The Plan provides that neither the
Committee nor the Board is authorized to make any adjustment or
amendment that reduces or would have the effect of reducing the
exercise price of a stock option or stock appreciation right
previously granted.
Generally, all awards, except non-statutory stock options,
granted under the Equity Plan will be nontransferable except by
will or in accordance with the laws of intestate succession.
Stock awards may be transferable pursuant to a qualified
domestic relations order. At the Committee’s sole
discretion, non-statutory stock options may be transferred for
valid estate planning purposes that are permitted by the Code
and the Exchange Act. During the life of the participant, awards
can only be exercised by him or her. The Committee may permit a
participant to designate a beneficiary to exercise or receive
any rights that may exist under the Equity Plan upon the
participant’s death.
Limitation
on Awards Under The Equity Plan
The following limits apply to awards under the Equity Plan:
|
|
|
|
•
|
the maximum number of shares of stock that may be covered by
options or stock appreciation rights that are intended to be
“performance-based compensation” under a grant to any
one participant in any one calendar year is
1,700,000 shares;
|
|
|
•
|
the maximum number of shares of stock that may be stock awards
that are intended to be “performance-based
compensation” which are granted to any one participant
during any calendar year is 800,000 shares;
|
|
|
•
|
the maximum amount of cash incentive awards or cash settled
stock awards that are intended to be “performance-based
compensation” payable to any one participant with respect
to any calendar year shall equal $2,000,000; and
|
|
|
•
|
the maximum number of shares of stock that may be covered by
stock options or stock appreciation rights granted to any one
non-employee director is five percent of the shares to be
granted in the aggregate as stock options or stock appreciation
rights under the plan, and the maximum number of stock awards
that may be granted to any one non-employee director is five
percent of the shares to be granted in the aggregate as stock
awards under the plan. In addition, the maximum number of shares
of stock that may be covered by all stock options and stock
appreciation rights granted to all non-employee directors as a
group is thirty percent of the shares in the aggregate to be
covered by stock options or stock appreciation rights granted
under the plan, and the maximum number of stock awards that may
be granted to all non-employee directors as a group is thirty
percent of the stock awards in the aggregate to be granted under
the plan.
|
The Committee may use shares of stock available under the Equity
Plan as the form of payment for compensation, grants or rights
earned or due under any other compensation plans or arrangements
of the Company or a subsidiary, including the plans and
arrangements of the Company or a subsidiary assumed in business
combinations.
24
In the event of a corporate transaction involving the stock of
the Company (including, without limitation, any stock dividend,
stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), the foregoing shares
limitations and all outstanding awards will automatically be
adjusted proportionally and uniformly to reflect such event to
the extent that the adjustment will not affect the award’s
status as “performance-based compensation” under
Section 162(m) of the Internal Revenue Code, if applicable;
provided, however, that the Committee may adjust awards to
preserve the benefits or potential benefits of the awards,
including the prevention of automatic adjustments if appropriate.
Performance
Features
Section 162(m) of the Internal Revenue
Code. A U.S. income tax deduction for
the Company will generally be unavailable for annual
compensation in excess of one million dollars ($1,000,000) paid
to any of its five most highly compensated officers. However,
amounts that constitute “performance-based
compensation” are not counted toward the $1 million
limit. The Equity Plan is designed so that stock options will be
considered performance based compensation. The Committee may
designate whether any stock appreciation rights, stock awards or
cash incentive awards being granted to any participant are
intended to be “performance-based compensation” as
that term is used in section 162(m) of the Internal Revenue
Code. Any such awards designated as intended to be
“performance-based compensation” will be conditioned
on the achievement of one or more performance measures, to the
extent required by section 162(m) of the Internal Revenue
Code.
Performance Measures. The performance
measures that may be used for such awards will be based on any
one or more of the following performance measures, as selected
by the Committee: earnings, financial return ratios, capital,
increase in revenue, operating or net cash flows, cash flow
return on investment, total stockholder return, market share,
net operating income, operating income or net income, debt load
reduction, expense management, economic value added, stock
price, assets, asset quality level, charge offs, loan reserves,
non-performing assets, loans, deposits, growth of loans,
deposits or assets, liquidity, interest sensitivity gap levels,
regulatory compliance or safety and soundness, improvement of
financial rating, administrative expenses, achievement of
balance sheet or income statement objectives and strategic
business objectives, consisting of one or more objectives based
on meeting specific targets, such as business expansion goals
and goals relating to acquisitions or divestitures. Performance
measures may be based on the performance of the Company as a
whole or of any one or more subsidiaries or business units of
the Company or a subsidiary and may be measured relative to a
peer group, an index or a business plan. The terms of any award
may provide that partial achievement of performance criteria may
result in partial payment or vesting of the award. The Committee
may adjust performance measures after they have been set, but
only to the extent the Committee exercises negative discretion
as permitted under applicable law for purposes of an exception
to section 162(m) of the Internal Revenue Code. In
establishing the performance measures, the Committee may provide
for the inclusion or exclusion of certain items. Additionally,
the grant of an award intended to be “performance-based
compensation” and the establishment of any performance
based measures shall be made during the period required by
section 162(m) of the Internal Revenue Code.
Vesting
of Awards
If the right to become vested in an award under the Equity Plan
is conditioned on the completion of a specified period of
service with the Company or its subsidiaries, without the
achievement of performance measures or objectives, then unless
otherwise determined by the Committee and evidenced in an award
agreement, the required period of service for full vesting shall
not be less than three years for an employee, and not less than
one year for a director, subject in either case to acceleration
in the event of death, disability, retirement, involuntary
termination of employment of service following a change in
control, or other enumerated events (which could include, for
example, the completion of a second step conversion of the
mutual holding company).
25
Change in
Control
Unless otherwise stated in an award agreement, upon the
occurrence of an involuntary termination of employment following
a Change in Control of the Company, all outstanding options and
stock appreciation rights then held by a participant will become
fully exercisable and all stock awards or cash incentive awards
shall be fully earned and vested (subject to limitations on
performance-based awards). For the purposes of the Equity Plan,
a Change in Control occurs when: (a) any person, as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, is or becomes the beneficial owner (as
defined in
Rule 13d-3
under the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company’s then
outstanding voting securities; (b) the Incumbent Directors
cease, for any reason, to constitute a majority of the Whole
Board; or (c) a plan of reorganization, merger,
consolidation or similar transaction involving the Company and
one or more other corporations or entities is consummated, other
than a plan of reorganization, merger, consolidation or similar
transaction that is defined as an Excluded Transaction, or the
stockholders of the Company approve a plan of complete
liquidation of the Company, or a sale, liquidation or other
disposition of all or substantially all of the assets of the
Company or the Bank is consummated; or (d) a tender offer
is made for 25% or more of the outstanding voting securities of
the Company and the stockholders owning beneficially or of
record 25% or more of the outstanding voting securities of the
Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted
by the tender offeror; or (e) a Potential Change in Control
occurs, and the Board of Directors determines, pursuant to the
vote of a majority of the Whole Board, with at least two-thirds
of the Incumbent Directors then in office voting in favor of
such determination, to deem the Potential Change in Control to
be a Change in Control for the purposes of the Equity Plan.
The term Whole Board means the total number of directors that
the Company would have if there were no vacancies on the Board
of Directors at the time the relevant action or matter is
presented for approval. The term Excluded Transaction means
(i) a plan of reorganization, merger, consolidation or
similar transaction that would result in the voting securities
of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving corporation or
any parent thereof) at least 50% of the combined voting power of
the voting securities of the entity surviving the plan of
reorganization, merger, consolidation or similar transaction (or
the parent of such surviving entity) immediately after such plan
of reorganization, merger, consolidation or similar transaction;
and (ii) a second step conversion of Investors Bancorp,
MHC. The term Incumbent Directors means the individuals who, on
the date of the adoption of the Equity Plan, constitute the
Board of Directors; and any new director whose appointment or
election by the Board or nomination for election by the
Company’s stockholders was approved or recommended: by the
vote of at least two-thirds of the Whole Board, with at least
two-thirds of the Incumbent Directors then in office voting in
favor of such approval or recommendation; or by a nominating
committee of the Board of Directors whose members were appointed
by the vote of at least two-thirds of the Whole Board, with at
least two-thirds of the Incumbent Directors then in office
voting in favor of such appointments. The term Potential Change
in Control means the public announcement by any person of an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control; or one or
more transactions, events or occurrences that result in a change
in control of the Bank or the Company within the meaning of the
Bank Holding Company Act, as amended, and the applicable rules
and regulations promulgated thereunder, as in effect at the time
of the change in control; or a proxy statement soliciting
proxies from stockholders of the Company is filed or distributed
seeking stockholder approval of a plan of reorganization,
merger, consolidation or similar transaction involving the
Company and one or more other entities, but only if such plan of
reorganization, merger, consolidation or similar transaction has
not been approved by the vote of at least two-thirds of the
Whole Board, with at least two-thirds of the Incumbent Directors
then in office voting in favor of such plan of reorganization,
merger, consolidation or similar transaction.
In the event of a Change in Control, any performance measure
attached to an award under the Equity Plan shall be deemed
satisfied as of the date of the Change in Control.
26
Amendment
and Termination
The Board of Directors may, at any time, amend or terminate the
Equity Plan or any award granted under the Equity Plan, provided
that, other than as provided in the Equity Plan, no amendment or
termination may adversely impair the rights of an outstanding
award without the participant’s (or affected
beneficiary’s) written consent. The Board of Directors may
not amend the provision of the Equity Plan related to repricing,
materially increase the original number of securities which may
be issued under the Equity Plan (other than as provided in the
Equity Plan), materially increase the benefits accruing to a
participant, or materially modify the requirements for
participation in the Equity Plan without approval of
stockholders. Notwithstanding the foregoing, the Board may amend
the Equity Plan at any time, retroactively or otherwise, to
insure that the Equity Plan complies with current or future law
without stockholder approval, and the Board of Directors may
unilaterally amend the Equity Plan and any outstanding award,
without participant consent, in order to maintain an exemption
from, or to comply with, Section 409A of the Internal
Revenue Code, and its applicable regulations and guidance.
United
States Income Tax Considerations
The following is a summary of the U.S. federal income tax
consequences that may arise in conjunction with participation in
the Equity Plan.
Non-Qualified Stock Options. The grant
of a non-qualified option will not result in taxable income to
the participant. Except as described below, the participant will
realize ordinary income at the time of exercise in an amount
equal to the excess of the fair market value of the shares
acquired over the exercise price for those shares and the
Company will be entitled to a corresponding deduction. Gains or
losses realized by the participant upon disposition of such
shares will be treated as capital gains and losses, with the
basis in such shares equal to the fair market value of the
shares at the time of exercise.
Incentive Stock Options. The grant of
an incentive stock option will not result in taxable income to
the participant. The exercise of an incentive stock option will
not result in taxable income to the participant provided that
the participant was, without a break in service, an employee of
the Company or a subsidiary during the period beginning on the
date of the grant of the option and ending on the date three
months prior to the date of exercise (one year prior to the date
of exercise if the participant is disabled, as that term is
defined in the Internal Revenue Code).
The excess of the fair market value of the shares at the time of
the exercise of an incentive stock option over the exercise
price is an adjustment that is included in the calculation of
the participant’s alternative minimum taxable income for
the tax year in which the incentive stock option is exercised.
For purposes of determining the participant’s alternative
minimum tax liability for the year of disposition of the shares
acquired pursuant to the incentive stock option exercise, the
participant will have a basis in those shares equal to the fair
market value of the shares at the time of exercise.
If the participant does not sell or otherwise dispose of the
shares within two years from the date of the grant of the
incentive stock option or within one year after the exercise of
such stock, then, upon disposition of such shares, any amount
realized in excess of the exercise price will be taxed as
capital gain. A capital loss will be recognized to the extent
that the amount realized is less than the exercise price.
If the foregoing holding period requirements are not met, the
participant will generally realize ordinary income at the time
of the disposition of the shares, in an amount equal to the
lesser of (i) the excess of the fair market value of the
shares on the date of exercise over the exercise price, or
(ii) the excess, if any, of the amount realized upon
disposition of the shares over the exercise price, and the
Company will be entitled to a corresponding deduction. If the
amount realized exceeds the value of the shares on the date of
exercise, any additional amount will be capital gain. If the
amount realized is less than the exercise price, the participant
will recognize no income, and a capital loss will be recognized
equal to the excess of the exercise price over the amount
realized upon the disposition of the shares.
Stock Appreciation Rights. The grant of
a stock appreciation right will not result in taxable income to
the participant. Upon exercise of a stock appreciation right,
the cash received or the fair market value of shares
27
received will be taxable to the participant as ordinary income
and the Company will be entitled to a corresponding deduction.
Gains and losses realized by the participant upon disposition of
any such shares will be treated as capital gains and losses,
with the basis in such shares equal to the fair market value of
the shares at the time of exercise.
Stock Awards. A participant who has
been granted a stock award will not realize taxable income at
the time of grant, provided that that the stock subject to the
award is not delivered at the time of grant, or if the stock is
delivered, it is subject to restrictions that constitute a
“substantial risk of forfeiture” for U.S. income
tax purposes. Upon the later of delivery or vesting of shares
subject to an award, the holder will realize ordinary income in
an amount equal to the then fair market value of those shares
and the Company will be entitled to a corresponding deduction.
Gains or losses realized by the participant upon disposition of
such shares will be treated as capital gains and losses, with
the basis in such shares equal to the fair market value of the
shares at the time of delivery or vesting. Dividends paid to the
holder during the restriction period, if so provided, will also
be compensation income to the participant and the Company will
be entitled to a corresponding deduction.
Withholding of Taxes. The Company may
withhold amounts from participants to satisfy withholding tax
requirements. Except as otherwise provided by the Committee,
participants may have shares withheld from awards or may tender
previously owned shares to the Company to satisfy tax
withholding requirements.
Change in Control. Any acceleration of
the vesting or payment of awards under the Equity Plan in the
event of a Change in Control may cause part or all of the
consideration involved to be treated as an “excess
parachute payment” under the Internal Revenue Code, which
may subject the participant to a 20% excise tax and preclude
deduction by the Company.
Tax Advice. The preceding discussion is
based on U.S. tax laws and regulations presently in effect,
which are subject to change, and the discussion does not purport
to be a complete description of the U.S. income tax aspects
of the Equity Plan. A participant may also be subject to state
and local taxes in connection with the grant of awards under the
Equity Plan. The Company suggests that participants consult with
their individual tax advisors to determine the applicability of
the tax rules to the awards granted to them in their personal
circumstances.
Other
Information
The number and types of awards to be made pursuant to the Equity
Plan are subject to the discretion of the Committee and have not
been determined at this time.
Required
Vote and Recommendation of the Board
In order to approve the 2006 Stock-Based Equity Plan, the
proposal must receive the affirmative vote of the majority of
the shares cast, including shares of common stock owned by
Investors Bancorp, MHC, without regard to broker non-votes or
proxies marked abstain. Because Investors Bancorp, MHC intends
to vote in favor of the approval of the 2006 Stock-Based Equity
Plan, stockholder approval is assured.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
APPROVAL OF THE
INVESTORS BANCORP, INC. 2006 STOCK-BASED EQUITY PLAN
PROPOSAL III —
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
The Company’s independent registered public accountants for
the year ended June 30, 2006 were KPMG LLP
(“KPMG”). The Audit Committee of the Board has
approved the engagement of KPMG to be the Company’s
independent registered public accountants for the year ending
June 30, 2007, subject to the ratification of the
appointment by the Company’s stockholders at the Annual
Meeting. Representatives of KPMG are expected to attend the
Annual Meeting, will have an opportunity to make a statement if
they so desire, and will be available to respond to appropriate
questions.
28
Stockholder ratification of the selection of KPMG is not
required by the Company’s Bylaws or otherwise. However, the
Board is submitting the selection of the independent registered
public accountants to the stockholders for ratification as a
matter of good corporate practice. If the stockholders fail to
ratify the selection of KPMG, the Audit Committee will
reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee may, at its
discretion, direct the appointment of a different independent
registered public accounting firm at any time during the year if
it determines that such change is in the best interests of the
Company and its stockholders.
Fees Paid
to KPMG
Set forth below is certain information concerning aggregate fees
for professional services rendered by KPMG during fiscal years
2006 and 2005:
Audit Fees. The aggregate fees billed
to the Company by KPMG for professional services rendered for
the audit of the Company’s annual consolidated financial
statements, review of the consolidated financial statements
included in the Company’s quarterly reports on
Form 10-Q
and services that are normally provided by KPMG in connection
with statutory and regulatory filings and engagements were
$390,000 and $200,000 during fiscal 2006 and 2005, respectively.
Audit Related Fees. The aggregate fees
billed to the Company by KPMG for assurance and related services
rendered that are reasonably related to the performance of the
audit of and review of the consolidated financial statements and
that are not already reported in “Audit Fees” above,
were $0 and $504,000 during fiscal 2006 and 2005, respectively.
These services were primarily related to the filing of Investors
Bancorp’s Registration Statement on
Form S-1
in connection with the initial public offering.
Tax Fees. The aggregate fees billed to
the Company by KPMG for professional services rendered for tax
compliance were $97,100 and $66,300 during fiscal 2006 and 2005,
respectively.
All Other Fees. There were no
“Other Fees” for fiscal 2006 and 2005.
Policy on
Audit Committee Pre-Approval of Audit and Non-Audit Services of
Independent Registered Public Accountants
The Audit Committee’s policy is to pre-approve all audit
and non-audit services provided by the independent registered
public accountants. These services may include audit services,
audit-related services, tax services and other services.
Pre-approval is provided for up to one year and any pre-approval
is detailed as to particular service or category of services and
is subject to a specific budget. The Audit Committee has
delegated pre-approval authority to its Chair when necessary,
with subsequent reporting to the Audit Committee. The
independent registered public accountants and management are
required to report to the Audit Committee quarterly regarding
the extent of services provided by the independent registered
public accountants in accordance with this pre-approval policy,
and the fees for the services performed to date.
Required
Vote and Recommendation of the Board
In order to ratify the appointment of KPMG as independent
registered public accountants for fiscal 2007, the proposal must
receive the affirmative vote of at least a majority of the votes
cast at the Annual Meeting, either in person or by proxy.
THE BOARD RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF THE APPOINTMENT OF KPMG AS INDEPENDENT
REGISTERED
PUBLIC ACCOUNTANTS
STOCKHOLDER
PROPOSALS FOR THE 2007 ANNUAL MEETING
In order to be eligible for inclusion in the proxy materials for
next year’s Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the
Company’s
29
Executive Office, 101 JFK Parkway, Short Hills New Jersey 07078,
no later than May 16, 2007. Any such proposals shall be
subject to the requirements of the proxy rules adopted under the
Exchange Act.
Advance
Notice of Business to be Conducted at an Annual
Meeting
The bylaws of Investors Bancorp provide an advance notice
procedure for certain business, or nominations to the Board of
Directors, to be brought before an annual meeting of
stockholders. In order for a stockholder to properly bring
business before an annual meeting, or to propose a nominee to
the Board of Directors, the stockholder must give written notice
to the Secretary of Investors Bancorp not less than 90 days
prior to the date of Investors Bancorp’s proxy materials
for the preceding year’s annual meeting; provided, however,
that if the date of the annual meeting is advanced more than
30 days prior to or delayed by more than 30 days after
the anniversary of the preceding year’s annual meeting,
notice by the stockholder to be timely must be so delivered not
later than the close of business on the tenth day following the
day on which public announcement of the date of such annual
meeting is first made. As to the first annual meeting of
stockholders, to be timely notice must be provided no later than
the close of business on the tenth day following the day on
which public announcement of the date of the meeting is first
made. The notice must include the stockholder’s name,
record address, and number of shares owned, describe briefly the
proposed business, the reasons for bringing the business before
the annual meeting, and any material interest of the stockholder
in the proposed business. In the case of nominations to the
Board of Directors, certain information regarding the nominee
must be provided. Nothing in this paragraph shall be deemed to
require Investors Bancorp to include in its proxy statement and
proxy relating to an annual meeting any stockholder proposal
that does not meet all of the requirements for inclusion
established by the Securities and Exchange Commission in effect
at the time such proposal is received.
Accordingly, advance written notice for certain business or
nominations to the Board to be brought before that meeting must
be given to the Company by June 15, 2007. If notice is
received after June 15, 2007, it will be considered
untimely, and the Company will not be required to present the
matter at the meeting.
OTHER
MATTERS
The Board is not aware of any business to come before the Annual
Meeting other than the matters described above in this proxy
statement. However, if any matters should properly come before
the Annual Meeting, it is intended that holders of the proxies
will act in accordance with their best judgment.
The Audit Committee Report, the Report of the Compensation and
Benefits Committee and the stock performance graph included in
this proxy statement shall not be deemed incorporated by
reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates
this information by reference. The Audit Committee Report shall
not otherwise be deemed filed under such Acts.
An additional copy of the Company’s annual report on
Form 10-K
for the year ended June 30, 2006, will be furnished without
charge upon written or telephonic request to Domenick A. Cama,
Executive Vice President and Chief Financial Officer, 101 JFK
Parkway, Short Hills, New Jersey, 07078 or call
(973) 924-5100.
Patricia E. Brown
Corporate Secretary
Short Hills, New Jersey
September 13, 2006
30
APPENDIX A
INVESTORS
BANCORP, INC.
CHARTER
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of Investors Bancorp, Inc. (Investors
Bancorp) is established by the Board of Directors for the
primary purpose of assisting the Board in:
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overseeing the integrity of Investors Bancorp’s financial
statements,
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overseeing Investors Bancorp’s compliance with legal and
regulatory requirements,
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overseeing the independent auditor’s qualifications and
independence,
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overseeing the performance of Investors Bancorp’s internal
audit function and independent auditor, and
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overseeing Investors Bancorp’s system of disclosure
controls and system of internal controls regarding finance,
accounting, and legal compliance.
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Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence
to, Investors Bancorp’s policies, procedures and practices
at all levels. The Audit Committee should also provide an open
avenue of communication among the independent auditors,
financial and senior management, the internal auditing function,
and the Board of Directors.
The Audit Committee has the authority to obtain advice and
assistance from outside legal, accounting, or other advisors as
deemed appropriate to perform its duties and responsibilities.
Additionally, the Audit Committee has the authority to obtain,
at Investors Bancorp’s expense, appropriate continuing
education relevant to the performance of its duties.
Investors Bancorp shall provide appropriate funding, as
determined by the Audit Committee, for compensation to the
independent auditor and to any advisers that the Audit Committee
chooses to engage.
The Audit Committee will primarily fulfill its responsibilities
by carrying out the activities enumerated in Section III of
this Charter. The Audit Committee will report regularly to the
Board of Directors regarding the execution of its duties and
responsibilities.
The Audit Committee, and each member of the Committee in his or
her capacity as such, shall be entitled to rely, in good faith,
on information, opinions, reports or statements, or other
information prepared or presented to them by (i) officers
and other employees of Investors Bancorp or any affiliate,
including Investors Savings Bank, whom such member believes to
be reliable and competent in the matters presented, and
(ii) counsel, public accountants or other persons as to
matters which the member believes to be within the professional
competence of such person.
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II.
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Composition
and Meetings
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The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be
independent directors (as defined by all applicable rules and
regulations, including the listing standards of the Nasdaq), and
free from any relationship (including disallowed compensatory
arrangements) that, in the opinion of the Board, would interfere
with the exercise of his or her independent judgment as a member
of the Committee. All members of the Committee shall be able to
read and understand fundamental financial statements, including
a company’s balance sheet, income statement, and cash flow
statement, and one person shall have past employment experience
in finance or accounting, requisite professional certification
in accounting, or other comparable experience. The board shall
determine whether at least one member of the Committee qualifies
as an “audit committee financial expert” in compliance
with the criteria established by the SEC and other relevant
regulations. The existence of such member, including his or her
name, shall be disclosed in periodic filings as required by the
SEC.
A-1
The members of the Committee shall be appointed by the Board and
shall serve until their successors shall be duly appointed and
qualified. Unless a Chair is appointed by the full Board, the
members of the Committee may designate a Chair by majority vote
of the full Committee membership.
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. A meeting may be called by
the Chairperson of the Audit Committee or by majority of the
members of the Committee. A majority of the members of the Audit
Committee present in person or by means of a conference
telephone or other communication equipment by means of which all
persons participating in the meeting can hear each other shall
constitute a quorum. A majority vote of the Audit Committee
members present at a meeting, if a quorum is present, shall
constitute an act of the Audit Committee.
Each regularly scheduled meeting shall conclude with an
executive session of the Committee absent members of management
and on such terms and conditions as the Committee may elect. As
part of its job to foster open communication, the Committee
should meet periodically with management, the director of the
internal auditing function and the independent auditors in
separate executive sessions to discuss any matters that the
Committee or each of these groups believes should be discussed
privately. In addition, the Committee should meet quarterly with
the independent auditors and management (including the director
of internal audit) to discuss the annual audited financial
statements or quarterly financial statements, including
Investors Bancorp’s disclosure under
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
The Committee shall create written minutes of its meetings.
Following approval by the Audit Committee, the minutes shall be
reported to the Board of Directors and shall be maintained with
the books and records of the Audit Committee.
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III.
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Responsibilities
and Duties
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To fulfill its responsibilities and duties the Audit Committee
shall:
Documents/Reports/Accounting
Information Review
1. Review this Charter periodically, at least annually, and
recommend to the Board of Directors any necessary amendments as
conditions dictate. In addition, the Audit Committee shall
annually review the Audit Committee’s own performance and
present its evaluation to the Board.
2. Review and discuss with management Investors
Bancorp’s annual financial statements, quarterly financial
statements, and all internal controls reports (or summaries
thereof). Review other relevant reports or financial information
submitted by Investors Bancorp to any governmental body, or the
public, including management certifications as required by the
Sarbanes-Oxley Act of 2002 (Sections 302 and 906) and
relevant reports rendered by the independent auditors (or
summaries thereof).
3. Recommend to the Board whether the financial statements
should be included in the Annual Report on
Form 10-K.
Review with financial management and the independent auditors
the
Form 10-Q
prior to its filing (or prior to the release of earnings).
4. Review earnings press releases with management,
including review of “pro-forma” or
“adjusted” non-GAAP information.
5. Discuss with management financial information and
earnings guidance provided to analysts and rating agencies. Such
discussions may be on general terms (i.e., discussion of the
types of information to be disclosed and the type of
presentation to be made).
6. Review the regular internal reports (or summaries
thereof) to management prepared by the internal auditing
department and management’s response.
A-2
Independent
Auditors
7. Appoint, compensate, and oversee the work performed by
the independent auditor for the purpose of preparing or issuing
an audit report or related work. Review the performance of the
independent auditor and remove the independent auditors if
circumstances warrant. The independent auditor shall report
directly to the Audit Committee and the Audit Committee shall
oversee the resolution of disagreements between management and
the independent auditor in the event that they arise. Consider
whether the auditor’s performance of permissible nonaudit
services is compatible with the auditor’s independence.
8. Review with the independent auditor the matters required
to be discussed by Statement on Auditing Standards
(“SAS”) No. 61 relating to the conduct of the
audit, including any problems or difficulties and
management’s response, review the independent
auditor’s attestation and report on management’s
internal control report, and hold timely discussions with the
independent auditor regarding the following:
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all critical accounting policies and practices;
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all alternative treatments of financial information within
generally accepted accounting principles that have been
discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment
preferred by the independent auditor;
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other material written communications between the independent
auditor and management including, but not limited to, the
management letter and schedule of unadjusted differences;
and
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an analysis of the auditor’s judgment as to the quality of
Investors Bancorp’s accounting principles, setting forth
significant reporting issues and judgments made in connection
with the preparation of the financial statements.
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9. At least annually, obtain and review a report by the
independent auditor describing:
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the firm’s internal quality control procedures;
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any material issues raised by the most recent internal
quality-control review, peer review, or by any inquiry or
investigation by governmental or professional authorities,
within the preceding five years, respecting one or more
independent audits carried out by the firm, and any steps taken
to deal with any such issues; and
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the auditor’s independence, and all relationships between
the independent auditor and Investors Bancorp.
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10. Review and pre-approve both audit and nonaudit services
to be provided by the independent auditor (other than with
respect to de minimis exceptions permitted under
Section 10A of the Securities Exchange Act of 1934). This
duty may be delegated to one or more designated members of the
Audit Committee with any such preapproval reported to the Audit
Committee at its next regularly scheduled meeting. The committee
may also adopt policies and procedures for the pre-approval of
audit and permissible nonaudit services. Approval of nonaudit
services shall be disclosed to investors in periodic reports
required by Section 13(a) of the Securities Exchange Act of
1934.
11. Set clear hiring policies, compliant with governing
laws or regulations, for employees or former employees of the
independent auditor.
Financial
Reporting Processes and Accounting Policies
12. In consultation with the independent auditor and the
internal auditors, review the integrity of Investors
Bancorp’s financial reporting processes (both internal and
external), and the internal control structure (including
disclosure controls).
13. Review with management major issues regarding
accounting principles and financial statement presentations,
including any significant changes in Investors Bancorp’s
selection or application of accounting principles, and major
issues as to the adequacy of Investors Bancorp’s internal
controls and any special audit steps adopted in light of
material control deficiencies.
A-3
14. Review analyses prepared by management (and the
independent auditor as noted in item 8 above) setting forth
significant financial reporting issues and judgments made in
connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on
the financial statements.
15. Review with management the effect of regulatory and
accounting initiatives, as well as off-balance sheet structures,
on the financial statements of Investors Bancorp.
16. Review and approve all related-party transactions.
17. Establish and maintain procedures for the receipt,
retention, and treatment of complaints regarding accounting,
internal accounting, or auditing matters.
18. Establish and maintain procedures for the confidential,
anonymous submission by employees of Investors Bancorp or any
affiliate, including Investors Savings Bank, regarding
questionable accounting or auditing matters.
Internal
Audit
19. Review and advise on the selection and removal of the
internal audit director.
20. Review activities, organizational structure, and
qualifications of the internal audit function.
21. Review reports prepared by the internal audit
department and all responses provided by management for high
risk areas and for areas receiving less than generally
satisfactory audit ratings.
22. Annually, review and recommend changes (if any) to the
internal audit charter.
23. Periodically review with the internal audit director
any significant difficulties, disagreements with management, or
scope restrictions encountered in the course of the
function’s work.
24. Periodically review with the independent auditor, the
budget, staffing, and responsibilities of the internal audit
function.
Legal
Compliance, and Risk Management
25. Review, with Investors Bancorp’s counsel, legal
compliance matters including corporate securities trading
policies.
26. Review, with Investors Bancorp’s counsel, any
legal matter that could have a significant impact on Investors
Bancorp’s financial statements.
27. Discuss policies with respect to risk assessment and
risk management. Such discussions should include Investors
Bancorp’s major financial and accounting risk exposures and
the steps management has undertaken to control them.
Other
Responsibilities
28. Review with the independent auditor, the internal
auditing department and management, the extent to which changes
or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. This
review should be conducted at an appropriate time subsequent to
implementation of changes or improvements, as decided by the
Committee.
29. Prepare the report that the SEC requires to be included
in Investors Bancorp’s annual proxy statement.
30. Annually, perform a self-assessment relative to the
Audit Committee’s purpose, duties and responsibilities
outlined herein.
31. Perform any other activities consistent with this
Charter, Investors Bancorp’s bylaws and governing law, as
the Committee or the Board deems necessary or appropriate.
A-4
APPENDIX B
INVESTORS
BANCORP, INC.
2006
EQUITY INCENTIVE PLAN
ARTICLE 1 —
GENERAL
Section 1.1 Purpose, Effective Date and
Term. The purpose of this Investors Bancorp,
Inc. 2006 Equity Incentive Plan (the “Plan”) is
to promote the long-term financial success of Investors Bancorp,
Inc., a Delaware corporation (the “Company”),
and its Subsidiaries by providing a means to attract, retain and
reward individuals who can and do contribute to such success and
to further align their interests with those of the
Company’s stockholders. The “Effective
Date” of the Plan is October 24, 2006, the
expected date of the approval of the Plan by the Company’s
stockholders. The Plan shall remain in effect as long as any
awards under it are outstanding; provided, however, that
no awards may be granted under the Plan after the ten-year
anniversary of the Effective Date.
Section 1.2 Administration. The
Plan shall be administered by a committee of the Company’s
Board of Directors (the “Committee”), in accordance
with Section 5.1.
Section 1.3 Participation. Each
Employee or Director of, or service provider to, the Company or
any Subsidiary of the Company who is granted an award in
accordance with the terms of the Plan shall be a
“Participant” in the Plan. Awards under the
Plan shall be limited to Employees and Directors of, and service
providers to, the Company or any Subsidiary; provided,
however, that an award (other than an award of an incentive
stock option) may be granted to an individual prior to the date
on which he or she first performs services as an Employee or a
Director, provided that such award does not become vested prior
to the date such individual commences such services.
Section 1.4 Definitions. Capitalized
terms in the Plan shall be defined as set forth in the Plan
(including the definition provisions of Article 8).
ARTICLE 2 —
AWARDS
Section 2.1 General. Any
award under the Plan may be granted singularly, in combination
with another award (or awards), or in tandem whereby the
exercise or vesting of one award held by a Participant cancels
another award held by the Participant. Each award under the Plan
shall be subject to the terms and conditions of the Plan and
such additional terms, conditions, limitations and restrictions
as the Committee shall provide with respect to such award and as
evidenced in the Award Agreement. Subject to the provisions of
Section 2.7, an award may be granted as an
alternative to or replacement of an existing award under the
Plan or any other plan of the Company or any Subsidiary or as
the form of payment for grants or rights earned or due under any
other compensation plan or arrangement of the Company or its
Subsidiaries, including without limitation the plan of any
entity acquired by the Company or any Subsidiary. The types of
awards that may be granted under the Plan include:
(a) Stock Options. A stock option
represents the right to purchase shares of Stock at an Exercise
Price established by the Committee. Any stock option may be
either an incentive stock option (an “ISO”)
that is intended to satisfy the requirements applicable to an
“incentive stock option” described in Code
Section 422(b), or a non-qualified option that is not
intended to be an ISO, provided, however, that no ISOs
may be: (i) granted after the ten-year anniversary of the
Effective Date; or (ii) granted to a non-Employee. Unless
otherwise specifically provided by its terms, any stock option
granted under the Plan shall be a non-qualified option. Any ISO
granted under this Plan that does not qualify as an ISO for any
reason shall be deemed to be a non-qualified option. In
addition, any ISO granted under this Plan may be unilaterally
modified by the Committee to disqualify such option from ISO
treatment such that it shall become a non-qualified option.
B-1
(b) Stock Appreciation Rights. A
stock appreciation right (an “SAR”) is a right
to receive, in cash, shares of Stock or a combination of both
(as shall be reflected in the Award Agreement), an amount equal
to or based upon the excess of: (i) the Fair Market Value
of a share of Stock at the time of exercise; over (ii) an
Exercise Price established by the Committee.
(c) Restricted Stock Awards. A
Restricted Stock Award is a grant of shares of Stock, subject to
a vesting schedule or the satisfaction of market conditions or
performance conditions.
Section 2.2 Exercise of Stock Options and
SARs. A stock option or SAR shall be
exercisable in accordance with such terms and conditions and
during such periods as may be established by the Committee. In
no event, however, shall a stock option or SAR expire later than
ten (10) years after the date of its grant. The
“Exercise Price” of each stock option and SAR
shall not be less than 100% of the Fair Market Value of a share
of Stock on the date of grant (or, if greater, the par value of
a share of Stock); provided, however, that the Exercise
Price of an ISO shall not be less than 110% of Fair Market Value
of a share of Stock on the date of grant if granted to a 10%
Stockholder; further, provided, that the Exercise Price
may be higher or lower in the case of options or SARs granted in
replacement of existing awards held by an Employee, Director or
service provider of an acquired entity. The payment of the
Exercise Price of an option shall be by cash or, subject to
limitations imposed by applicable law, by such other means as
the Committee may from time to time permit, including:
(a) by tendering, either actually or by attestation, shares
of Stock valued at Fair Market Value as of the day of exercise;
(b) by irrevocably authorizing a third party, acceptable to
the Committee, to sell shares of Stock (or a sufficient portion
of the shares) acquired upon exercise of the option and to remit
to the Company a sufficient portion of the sale proceeds to pay
the entire Exercise Price and any tax withholding resulting from
such exercise; (c) by personal, certified or cashiers’
check; (d) by other property deemed acceptable by the
Committee; or (e) by any combination thereof.
Section 2.3. Restricted Stock
Awards.
(a) General. Each Restricted Stock
Award shall be evidenced by an Award Agreement, which shall:
(a) specify the number of shares of Stock covered by the
Restricted Stock Award; (b) specify the date of grant of
the Restricted Stock Award; (c) specify the vesting period,
and (d) contain such other terms and conditions not
inconsistent with the Plan as the Committee may, in its
discretion, prescribe. All Restricted Stock Awards shall be in
the form of issued and outstanding shares of Stock that shall be
either: (x) registered in the name of the Participant and
held by the Committee, together with a stock power executed by
the Participant in favor of the Committee, pending the vesting
or forfeiture of the Restricted Stock Award; or
(y) registered in the name of, and delivered to, the
Participant. In any event, the certificates evidencing the
Restricted Stock Award shall at all times prior to the
applicable vesting date bear the following legend:
The Common Stock evidenced hereby is subject to the terms of an
Award Agreement between Investors Bancorp, Inc. and [Name of
Participant] dated [Date], made pursuant to the terms of the
Investors Bancorp, Inc. 2006 Stock Incentive Plan, copies of
which are on file at the executive offices of Investors Bancorp,
Inc., and may not be sold, encumbered, hypothecated or otherwise
transferred except in accordance with the terms of such Plan and
Agreement.
or such other restrictive legend as the Committee, in its
discretion, may specify. Notwithstanding the foregoing, the
Company may in its sole discretion issue Restricted Stock Awards
in any other approved format (e.g. electronically) in
order to facilitate the paperless transfer of such Awards. In
the event Restricted Stock Awards are not issued in certificate
form, the Company and the transfer agent shall maintain
appropriate bookkeeping entries that evidence Participants’
ownership of such Awards. Restricted Stock Awards that are not
issued in certificate form shall be subject to the same terms
and conditions of this Plan as certificated shares, including
the restrictions on transferability, until the satisfaction of
the conditions to which the Restricted Stock Award is subject.
(b) Dividends. Unless the
Committee determines otherwise with respect to any Restricted
Stock Award and specifies such determination in the relevant
Award Agreement, any dividends or distributions declared and
paid with respect to shares of Stock subject to the Restricted
Stock Award, other than a stock dividend
B-2
consisting of shares of Stock, but otherwise whether or not in
cash, shall be immediately distributed to the Participant.
(c) Voting Rights. Unless the
Committee determines otherwise with respect to any Restricted
Stock Award and specifies such determination in the relevant
Award Agreement, voting rights appurtenant to the shares of
Stock subject to the Restricted Stock Award shall be exercised
by the Participant in his or her discretion.
(d) Tender Offers. Each
Participant to whom a Restricted Stock Award is outstanding
shall have the right to respond, or to direct the response, with
respect to the related shares of Stock, to any tender offer,
exchange offer or other offer made to the holders of shares of
Stock. Such a direction for any such shares of Stock shall be
given by proxy or ballot (if the Participant is the beneficial
owner of the shares of Stock for voting purposes) or by
completing and filing, with the inspector of elections, the
trustee or such other person who shall be independent of the
Company as the Committee shall designate in the
direction (if the Participant is not such a beneficial
owner), a written direction in the form and manner prescribed by
the Committee. If no such direction is given, then the shares of
Stock shall not be tendered.
Section 2.4 Performance-Based
Compensation. Any award under the Plan which
is intended to be “performance-based compensation”
within the meaning of Code Section 162(m) shall be
conditioned on the achievement of one or more objective
performance measures, to the extent required by Code
Section 162(m), as may be determined by the Committee. The
grant of any award and the establishment of performance measures
that are intended to be performance-based compensation shall be
made during the period required under Code Section 162(m).
(a) Performance Measures. Such
performance measures may be based on any one or more of the
following: earnings (e.g., earnings before interest and
taxes, earnings before interest, taxes, depreciation and
amortization; or earnings per share); financial return ratios
(e.g., return on investment, return on invested capital,
return on equity or return on assets); capital; increase in
revenue, operating or net cash flows; cash flow return on
investment; total stockholder return; market share; net
operating income, operating income or net income; debt load
reduction; expense management; economic value added; stock
price; assets, asset quality level, charge offs, loan reserves,
non-performing assets, loans, deposits, growth of loans,
deposits or assets; liquidity; interest sensitivity gap levels;
regulatory compliance or safety and soundness; improvement of
financial rating; achievement of balance sheet or income
statement objectives and strategic business objectives,
consisting of one or more objectives, such as meeting specific
cost, revenue or other targets, business expansion goals and
goals relating to acquisitions or divestitures. Performance
measures may be based on the performance of the Company as a
whole or of any one or more Subsidiaries or business units of
the Company or a Subsidiary and may be measured relative to a
peer group, an index or a business plan. In establishing any
performance measures, the Committee may provide for the
exclusion of the effects of the following items, to the extent
identified in the audited financial statements of the Company,
including footnotes, or in the Management’s Discussion and
Analysis section of the Company’s annual report:
(i) extraordinary, unusual,
and/or
nonrecurring items of gain or loss; (ii) gains or losses on
the disposition of a business; (iii) changes in tax or
accounting principles, regulations or laws; or (iv) mergers
or acquisitions. To the extent not specifically excluded, such
effects shall be included in any applicable performance measure.
(b) Partial Achievement. The terms
of any award may provide that partial achievement of the
performance measures may result in a payment or vesting based
upon the degree of achievement. In addition, partial achievement
of performance measures shall apply toward a Participant’s
individual limitations as set forth in Section 3.3.
(c) Adjustments. Pursuant to this
Section 2.4, in certain circumstances the Committee
may adjust performance measures; provided, however, no
adjustment may be made with respect to an award that is intended
to be performance-based compensation, except to the extent the
Committee exercises such negative discretion as is permitted
under applicable law for purposes of an exception under Code
Section 162(m). If the Committee determines that a change
in the business, operations, corporate structure or capital
structure of the Company or the manner in which the Company or
its Subsidiaries conducts its business or other events or
circumstances render current performance measures to be
unsuitable, the Committee may modify such
B-3
performance measures, in whole or in part, as the Committee
deems appropriate. If a Participant is promoted, demoted or
transferred to a different business unit during a performance
period, the Committee may determine that the selected
performance measures or applicable performance period are no
longer appropriate, in which case, the Committee, in its sole
discretion, may: (i) adjust, change or eliminate the
performance measures or change the applicable performance
period; or (ii) cause to be made a cash payment to the
Participant in an amount determined by the Committee.
Section 2.5 Vesting of
Awards. If the right to become vested in an
award under the Plan (including the right to exercise an option)
is conditioned on the completion of a specified period of
service with the Company or its Subsidiaries, without
achievement of performance measures or other performance
objectives (whether or not related to the performance measures)
being required as a condition of vesting, and without it being
granted in lieu of, or in exchange for, other compensation,
then, unless otherwise determined by the Committee and evidenced
in the Award Agreement, the required period of service for full
vesting shall not be less than three (3) years (subject to
acceleration of vesting, to the extent permitted by the
Committee including in the event of the Participant’s
death, Disability, Retirement, or Involuntary Termination of
Employment following a Change in Control); provided,
however, that unless otherwise determined by the Committee
and evidenced in the Award Agreement, the required period of
service for full vesting with respect to an award granted to
Directors shall not be less than one (1) year (subject to
acceleration in such similar events as applied to Employee
Participants, and providing that service as a Director Emeritus
shall constitute service for purposes of vesting).
Section 2.6 Deferred
Compensation. If any award would be
considered “deferred compensation” as defined under
Code Section 409A (“Deferred
Compensation”), the Committee reserves the absolute
right (including the right to delegate such right) to
unilaterally amend the Plan or the Award Agreement, without the
consent of the Participant, to maintain exemption from, or to
comply with, Code Section 409A. Any amendment by the
Committee to the Plan or an Award Agreement pursuant to this
Section 2.6 shall maintain, to the extent
practicable, the original intent of the applicable provision
without violating Code Section 409A. A Participant’s
acceptance of any award under the Plan constitutes
acknowledgement and consent to such rights of the Committee,
without further consideration or action. Any discretionary
authority retained by the Committee pursuant to the terms of
this Plan or pursuant to an Award Agreement shall not be
applicable to an award which is determined to constitute
Deferred Compensation, if such discretionary authority would
contravene Code Section 409A.
Section 2.7 Prohibition Against Option
Repricing. Except for adjustments pursuant to
Section 3.4, and reductions of the Exercise Price
approved by the Company’s stockholders, neither the
Committee nor the Board shall have the right or authority to
make any adjustment or amendment that reduces or would have the
effect of reducing the Exercise Price of a stock option or SAR
previously granted under the Plan, whether through amendment,
cancellation (including cancellation in exchange for a cash
payment in excess of the option’s
in-the-money
value) or replacement grants, or other means.
Section 2.8. Effect of termination of
Service on awards. The Committee shall
establish the effect of a Termination of Service on the
continuation of rights and benefits available under an Award or
this Plan and, in so doing, may make distinctions based upon,
among other things, the cause of Termination of Service and type
of Award. Unless the Committee shall specifically state
otherwise at the time an Award is granted, all Awards to an
Employee, Director or service provider shall vest immediately
upon such individual’s death, Disability or Retirement.
Unless otherwise provided in an Award Agreement, the following
provisions shall apply to each award granted under this Plan:
(a) Upon the Termination of Service for any reason
other than Disability, Retirement, death or Termination for
Cause, options and SARs shall be exercisable only as to those
shares that were immediately exercisable by such Participant at
the date of termination, and options and SARs may be exercised
only for a period of three months following termination, and any
shares of Restricted Stock that have not vested as of the date
of termination shall expire and be forfeited
(b) In the event of a Termination of Service for
Cause, all options, SARs and Restricted Stock Awards granted to
a Participant under the Plan not exercised or vested shall
expire and be forfeited.
B-4
(c) Upon the Termination of Service for reason of
Disability, Retirement or death, all options and SARs shall be
exercisable as to all shares subject to an outstanding award
whether or not then exercisable, and all Restricted Stock Awards
shall vest as to all shares subject to an outstanding award,
whether or not otherwise immediately vested, at the date of
Termination of Service, and options and SARs may be exercised
for a period of one year following Termination of Service.
Provided, however, that no option shall be eligible for
treatment as an incentive option in the event such option is
exercised more than one year following termination of employment
due to death or Disability and provided further, in order to
obtain Incentive option treatment for options exercised by heirs
or devisees of an optionee, the optionee’s death must have
occurred while employed or within three (3) months of
termination of employment.
(d) The effect of a Change in Control on the
vesting/exercisability of options, SARs and Restricted Stock
Awards is as set forth in Article 4 hereof.
ARTICLE 3 —
SHARES SUBJECT TO PLAN
Section 3.1 Available
Shares. The shares of Stock with respect to
which awards may be made under the Plan shall be shares
currently authorized but unissued, currently held or, to the
extent permitted by applicable law, subsequently acquired by the
Company as treasury shares, including shares purchased in the
open market or in private transactions.
Section 3.2 Share Limitations.
(a) Share Reserve. Subject to the
following provisions of this Section 3.2, the
maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be
equal to seven million nine hundred seventy-six thousand five
hundred eleven (7,976,511) shares of Stock. The maximum number
of shares of Stock that may be delivered pursuant to options and
SARs (all of which may be granted as ISOs) is seven million nine
hundred seventy-six thousand five hundred eleven (7,976,511)
shares of Stock. The maximum number of shares of Stock that may
be issued in conjunction with Restricted Stock Awards shall be
three million four hundred eighteen thousand five hundred four
(3,418,504) shares of Stock. The aggregate number of shares
available for grant under this Plan and the number of shares of
Stock subject to outstanding awards shall be subject to
adjustment as provided in Section 3.4.
(b) Computation of Shares Available
. For purposes of this Section 3.2
and in connection with the granting of an option or SAR (other
than a tandem SAR), a Restricted Stock Award, or other
stock-based Award, the number of shares of Stock available for
the granting of additional options, SARs and Restricted Stock
Awards shall be reduced by the number of shares of Stock in
respect of which the option, SAR or Restricted Stock Award is
granted or denominated. To the extent any shares of Stock
covered by an award (including stock awards) under the Plan are
forfeited or are not delivered to a Participant or beneficiary
for any reason, including because the award is forfeited or
canceled, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan. To the extent an
option is exercised by using an actual or constructive exchange
of shares of Stock to pay the Exercise Price, the number of
shares of Stock available shall be reduced by the gross number
of options exercised rather than by the net number of shares of
Stock issued.
Section 3.3 Limitations on Grants to
Individuals.
(a) Options and SARs. The maximum
number of shares of Stock that may be subject to options or SARs
granted to any one Participant during any calendar year and are
intended to be “performance-based compensation” (as
that term is used for purposes of Code Section 162(m)) and
then only to the extent that such limitation is required by Code
Section 162(m), shall be one million seven hundred thousand
(1,700,000). For purposes of this Section 3.3(a), if
an option is in tandem with an SAR, such that the exercise of
the option or SAR with respect to a share of Stock cancels the
tandem SAR or option right, respectively, with respect to such
share, the tandem option and SAR rights with respect to each
share of Stock shall be counted as covering but one share of
Stock for purposes of applying the limitations of this
Section 3.3.
B-5
(b) Stock Awards. The maximum
number of shares of Stock that may be subject to Restricted
Stock Awards described under Section 2.1(c) which
are granted to any one Participant during any calendar year and
are intended to be “performance-based compensation”
(as that term is used for purposes of Code Section 162(m))
and then only to the extent that such limitation is required by
Code Section 162(m), shall be eight hundred thousand
(800,000).
(c) SARs Settled in Cash. The
maximum annual dollar amount that may be payable to a
Participant pursuant to cash settled SAR described under
Section 2.1(b) which are granted to any one
Participant during any calendar year and are intended to be
performance-based compensation (as that term is used for
purposes of Code Section 162(m)) and then only to the
extent that such limitation is required by Code
Section 162(m), shall be two million dollars ($2,000,000).
(d) Director Awards. The maximum
number of shares of Stock that may be covered by awards granted
to any one individual non-Employee Director pursuant to
Section 2.1(a) and Section 2.1(b)
(relating to options and SARs) shall be five percent of all
shares of Stock to be granted pursuant to
Section 2.1(a) and Section 2.1(b)
(relating to options and SARs) and the maximum number of
shares that may be covered by awards granted to any one
individual non-Employee Director pursuant to
Section 2.1(c) (relating to Restricted Stock Awards)
shall be five percent of all shares of Stock to be granted
pursuant to Section 2.1(c) (relating to Restricted
Stock Awards). In addition, the maximum number of shares of
stock that may be covered by awards granted to all non-Employee
Directors, in aggregate, pursuant to Section 2.1(a)
and Section 2.1(b) (relating to options and
SARs) shall be thirty percent of all shares of Stock to be
granted pursuant to Section 2.1(a) and
Section 2.1(b) (relating to options and SARs) and
under Section 2.1(c) (relating to Restricted Stock
Awards) shall be thirty percent of all shares of Stock to be
granted pursuant to Section 2.1(c) (relating to
Restricted Stock Awards). The foregoing limitations shall not
apply to cash-based Director fees that a non-Employee Director
elects to receive in the form of shares of Stock or with respect
to enticement awards made to new Directors.
(e) Partial
Performance. Notwithstanding the preceding
provisions of this Section 3.3, if in respect of any
performance period or restriction period, the Committee grants
to a Participant awards having an aggregate number of shares
less than the maximum number of shares that could awarded to
such Participant based on the degree to which the relevant
performance measures were attained, the excess of such maximum
number of shares over the number of shares actually subject to
awards granted to such Participant shall be carried forward and
shall increase the number of shares that may be awarded to such
Participant in respect of the next performance period in respect
of which the Committee grants to such Participant an award
intended to qualify as “performance-based
compensation” (as that term is used for purposes of Code
Section 162(m)), subject to adjustment pursuant to
Section 3.4 hereof.
Section 3.4 Corporate Transactions.
(a) General. In the event any
recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or
exchange of shares of Stock or other securities, stock dividend
or other special and nonrecurring dividend or distribution
(whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction
or event, affects the shares of Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan
and/or under
any award granted under the Plan, then the Committee shall, in
such manner as it deems equitable, adjust any or all of
(i) the number and kind of securities deemed to be
available thereafter for grants of options, SARs and Restricted
Stock Awards in the aggregate to all Participants and
individually to any one Participant, (ii) the number and
kind of securities that may be delivered or deliverable in
respect of outstanding options, SARs and Restricted Stock
Awards, and (iii) the Exercise Price of options and SARs.
In addition, the Committee is authorized to make adjustments in
the terms and conditions of, and the criteria included in,
options, SARs or Restricted Stock Awards (including, without
limitation, cancellation of options, SARs and Restricted Stock
Awards in exchange for the
in-the-money
value, if any, of the vested portion thereof, or substitution of
options, SARs or Restricted Stock Awards using stock of a
successor or other entity) in recognition of unusual or
nonrecurring events (including, without limitation, events
described in the preceding sentence) affecting the Company or
any Parent or Subsidiary or the financial statements of the
B-6
Company or any Parent or Subsidiary, or in response to changes
in applicable laws, regulations, or account principles. Unless
otherwise determined by the Committee, any such adjustment to an
option, SAR or Restricted Stock Award intended to qualify as
“performance-based compensation” shall conform to the
requirements of section 162(m) of the Code and the
regulations thereunder then in effect.
(b) Merger in which Company is Not Surviving
Entity. In the event of any merger,
consolidation, or other business reorganization (including, but
not limited to, a Change in Control) in which the Company is not
the surviving entity, unless otherwise determined by the
Committee at any time at or after grant and prior to the
consummation of such merger, consolidation or other business
reorganization, any options or SARs granted under the Plan which
remain outstanding shall be converted into options to purchase
voting common equity securities of the business entity which
survives such merger, consolidation or other business
reorganization or stock appreciation rights having substantially
the same terms and conditions as the outstanding options under
this Plan and reflecting the same economic benefit (as measured
by the difference between the aggregate Exercise Price and the
value exchanged for outstanding shares of Stock in such merger,
consolidation or other business reorganization), all as
determined by the Committee prior to the consummation of such
merger, provided, however, that the Committee may, at any time
prior to the consummation of such merger, consolidation or other
business reorganization, direct that all, but not less than all,
outstanding options and SARs be canceled as of the effective
date of such merger, consolidation or other business
reorganization in exchange for a cash payment per share of Stock
equal to the excess (if any) of the value exchanged for an
outstanding share of Stock in such merger, consolidation or
other business reorganization over the Exercise Price of the
option or SAR being canceled.
Section 3.5 Delivery of
Shares. Delivery of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) Compliance with Applicable
Laws. Notwithstanding any other provision of the
Plan, the Company shall have no obligation to deliver any shares
of Stock or make any other distribution of benefits under the
Plan unless such delivery or distribution complies with all
applicable laws (including, the requirements of the Securities
Act), and the applicable requirements of any securities exchange
or similar entity.
(b) Certificates. To the extent
that the Plan provides for the issuance of shares of Stock, the
issuance may be affected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable rules
of any stock exchange.
ARTICLE 4 —
CHANGE IN CONTROL
Section 4.1 Consequence of a Change in
Control. Subject to the provisions of
Section 3.4 (relating to the adjustment of shares),
and except as otherwise provided in the Plan or as determined by
the Committee and set forth in the in terms of any Award
Agreement:
(a) At the time of an Involuntary Termination of
Employment (as defined in Section 8.1 hereof) (or as
to a Director, Termination of Service as a Director) following a
Change in Control, all options and SARs then held by the
Participant shall become fully exercisable (subject to the
expiration provisions otherwise applicable to the option or SAR).
(b) At the time of an Involuntary Termination of
Employment (as defined in Section 8.1 hereof) (or as
to a Director, Termination of Service as a Director) following a
Change in Control, all Restricted Stock Awards described in
Section 2.1(c) shall be fully earned and vested
immediately.
(c) In the event of a Change in Control, any
performance measure attached to an award under the Plan shall be
deemed satisfied as of the date of the Change in Control.
B-7
Section 4.2 Definition of Change in
Control. For purposes of the Plan, unless
otherwise provided in an Award Agreement, a “Change in
Control” shall be deemed to have occurred upon the
earliest to occur of the following:
(a) any “person,” as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (a
“Person”), is or becomes the “beneficial
owner” (as defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing twenty five percent (25%) or more of
the combined voting power of the Company’s then outstanding
Voting Securities, provided that, notwithstanding the foregoing
and for all purposes of this Plan: (a) the term
“Person” shall not include (1) the MHC, the
Company or any of its Subsidiaries, (2) an employee benefit
plan of the Company or any of its Subsidiaries (including the
Plan), and any trustee or other fiduciary holding securities
under any such plan, or (3) a corporation or other entity
owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership
of Stock of the Company; (b) no Person shall be deemed the
beneficial owner of any securities acquired by such Person in an
Excluded Transaction; and (c) no Director or officer of the
Company or any direct or indirect Subsidiary of the Company (or
any affiliate of any such Director or officer) shall, by reason
of any or all of such Directors or officers acting in their
capacities as such, be deemed to beneficially own any securities
beneficially owned by any other such Director or officer (or any
affiliate thereof); or
(b) the Incumbent Directors cease, for any reason,
to constitute a majority of the Whole Board; or
(c) a plan of reorganization, merger, consolidation
or similar transaction involving the Company and one or more
other corporations or entities is consummated, other than a plan
of reorganization, merger, consolidation or similar transaction
that is an Excluded Transaction, or the stockholders of the
Company approve a plan of complete liquidation of the Company,
or a sale, liquidation or other disposition of all or
substantially all of the assets of the Company or any bank
Subsidiary of the Company is consummated; or
(d) a tender offer is made for 25% or more of the
outstanding Voting Securities of the Company and the
stockholders owning beneficially or of record 25% or more of the
outstanding Voting Securities of the Company have tendered or
offered to sell their shares pursuant to such tender offer and
such tendered shares have been accepted by the tender
offeror; or
(e) a Potential Change in Control occurs, and
the Board determines, pursuant to the vote of at majority of the
Whole Board, with at least two-thirds (2/3) of the Incumbent
Directors then in office voting in favor of such determination,
to deem the Potential Change in Control to be a Change in
Control for the purposes of this Plan.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the “Subject
Person”) acquired beneficial ownership of more than the
permitted amount of the then outstanding common stock or Voting
Securities as a result of the acquisition of Stock or Voting
Securities by the Company, which by reducing the number of
shares of Stock or Voting Securities then outstanding, increases
the proportional number of shares beneficially owned by the
Subject Person; provided, however, that if a Change in
Control would occur (but for the operation of this sentence) as
a result of the acquisition of Stock or Voting Securities by the
Company, and after such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of any additional
Stock or Voting Securities which increases the percentage of the
then outstanding Stock or Voting Securities Beneficially Owned
by the Subject Person, then a Change in Control shall occur. In
addition, and notwithstanding the foregoing, a Change in Control
shall not be deemed to occur as a result of or in connection
with a second step conversion of the MHC. In the event that an
award constitutes Deferred Compensation, and the settlement of,
or distribution of benefits under, such award is to be triggered
solely by a Change in Control, then with respect to such award a
Change in Control shall be defined as required under Code
Section 409A, as in effect at the time of such transaction.
ARTICLE 5 —
COMMITTEE
Section 5.1 Administration. The
Plan shall be administered by the members of the Compensation
Committee of Investors Bancorp, Inc. who are Disinterested Board
Members. If the Committee consists of
B-8
fewer than two Disinterested Board Members, then the Board shall
appoint to the Committee such additional Disinterested Board
Members as shall be necessary to provide for a Committee
consisting of at least two Disinterested Board Members. The
Board (or those members of the Board who are “independent
directors” under the corporate governance statutes of any
national securities exchange on which the Company lists its
securities) may, in its discretion, take any action and exercise
any power, privilege or discretion conferred on the Committee
under the Plan with the same force and effect under the Plan as
if done or exercised by the Committee.
Section 5.2 Powers of
Committee. The Committee’s
administration of the Plan shall be subject to the following:
(a) Subject to the provisions of the Plan, the
Committee will have the authority and discretion to select from
among the Company’s and its Subsidiaries’ Employees,
Directors and service providers those persons who shall receive
awards, to determine the time or times of receipt, to determine
the types of awards and the number of shares covered by the
awards, to establish the terms, conditions, performance
criteria, restrictions (including without limitation, provisions
relating to non-competition, non-solicitation and
confidentiality), and other provisions of such awards (subject
to the restrictions imposed by Article 6) to cancel
or suspend awards and to reduce, eliminate or accelerate any
restrictions or vesting requirements applicable to an award at
any time after the grant of the award.
(b) The Committee will have the authority and
discretion to interpret the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, and to
make all other determinations that may be necessary or advisable
for the administration of the Plan.
(c) The Committee will have the authority to define
terms not otherwise defined herein.
(d) Any interpretation of the Plan by the Committee
and any decision made by it under the Plan is final and binding
on all persons.
(e) In controlling and managing the operation and
administration of the Plan, the Committee shall take action in a
manner that conforms to the certificate of incorporation and
bylaws of the Company and applicable state corporate law.
Section 5.3 Delegation by
Committee. Except to the extent prohibited by
applicable law, the applicable rules of a stock exchange or the
Plan, or as necessary to comply with the exemptive provisions of
Rule 16b-3
promulgated under the Exchange Act or Code Section 162(m),
the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members
and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it, including:
(a) delegating to a committee of one or more members of the
Board who are not “outside directors” within the
meaning of Code Section 162(m), the authority to grant
awards under the Plan to eligible persons who are either:
(i) not then “covered employees,” within the
meaning of Code Section 162(m) and are not expected to be
“covered employees” at the time of recognition of
income resulting from such award; or (ii) not persons with
respect to whom the Company wishes to comply with Code
Section 162(m);
and/or
(b) delegating to a committee of one or more members of the
Board who are not “non-employee directors,” within the
meaning of
Rule 16b-3,
the authority to grant awards under the Plan to eligible persons
who are not then subject to Section 16 of the Exchange Act.
The acts of such delegates shall be treated hereunder as acts of
the Committee and such delegates shall report regularly to the
Committee regarding the delegated duties and responsibilities
and any awards so granted. Any such allocation or delegation may
be revoked by the Committee at any time.
Section 5.4 Information to be Furnished to
Committee. As may be permitted by applicable
law, the Company and its Subsidiaries shall furnish the
Committee with such data and information as it determines may be
required for it to discharge its duties. The records of the
Company and its Subsidiaries as to a Participant’s
employment, termination of employment, leave of absence,
reemployment and compensation shall be conclusive on all persons
unless determined by the Committee to be manifestly incorrect.
Subject to applicable law, Participants and other persons
entitled to benefits under the Plan must furnish the Committee
such evidence, data or information as the Committee considers
desirable to carry out the terms of the Plan.
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Section 5.5 Committee
Action. The Committee shall hold such
meetings, and may make such administrative rules and
regulations, as it may deem proper. A majority of the members of
the Committee shall constitute a quorum, and the action of a
majority of the members of the Committee present at a meeting at
which a quorum is present, as well as actions taken pursuant to
the unanimous written consent of all of the members of the
Committee without holding a meeting, shall be deemed to be
actions of the Committee. All actions of the Committee shall be
final and conclusive and shall be binding upon the Company,
Participants and all other interested parties. Any person
dealing with the Committee shall be fully protected in relying
upon any written notice, instruction, direction or other
communication signed by a member of the Committee or by a
representative of the Committee authorized to sign the same in
its behalf.
ARTICLE 6 —
AMENDMENT AND TERMINATION
Section 6.1 General. The
Board may, as permitted by law, at any time, amend or terminate
the Plan, and may amend any Award Agreement, provided that no
amendment or termination (except as provided in
Section 2.6, Section 3.4 and
Section 6.2) may, in the absence of written consent
to the change by the affected Participant (or, if the
Participant is not then living, the affected beneficiary),
adversely impair the rights of any Participant or beneficiary
under any award granted which was granted under the Plan prior
to the date such amendment is adopted by the Board; provided,
however, that, no amendment may (a) materially increase
the benefits accruing to Participants under the Plan;
(b) materially increase the aggregate number of securities
which may be issued under the Plan, other than pursuant to
Section 3.4, or (c) materially modify the
requirements for participation in the Plan, unless the amendment
under (a), (b) or (c) above is approved by the
Company’s stockholders.
Section 6.2 Amendment to Conform to Law
and Accounting Changes. Notwithstanding any
provision in this Plan or any Award Agreement to the contrary,
the Committee may amend the Plan or an Award Agreement, to take
affect retroactively or otherwise, as deemed necessary or
advisable for the purpose of (i) conforming the Plan or the
Award Agreement to any present or future law relating to plans
of this or similar nature (including, but not limited to, Code
Section 409A), or (ii) avoiding an accounting
treatment resulting from an accounting pronouncement or
interpretation thereof issued by the Securities Exchange
Commission or Financial Accounting Standards Board subsequent to
the adoption of the Plan or the making of the award affected
thereby, which in the sole discretion of the Committee, may
materially and adversely affect the financial condition or
results of operations of the Company. By accepting an award
under this Plan, each Participant agrees and consents to any
amendment made pursuant to this Section 6.2 or
Section 2.6 to any award granted under this Plan
without further consideration or action.
ARTICLE 7 —
GENERAL TERMS
Section 7.1 No Implied Rights.
(a) No Rights to Specific
Assets. Neither a Participant nor any other
person shall by reason of participation in the Plan acquire any
right in or title to any assets, funds or property of the
Company or any Subsidiary whatsoever, including any specific
funds, assets, or other property which the Company or any
Subsidiary, in its sole discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall
have only a contractual right to the shares of Stock or amounts,
if any, payable or distributable under the Plan, unsecured by
any assets of the Company or any Subsidiary, and nothing
contained in the Plan shall constitute a guarantee that the
assets of the Company or any Subsidiary shall be sufficient to
pay any benefits to any person.
(b) No Contractual Right to Employment or Future
Awards. The Plan does not constitute a contract
of employment, and selection as a Participant will not give any
participating Employee the right to be retained in the employ of
the Company or any Subsidiary or any right or claim to any
benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan. No individual
shall have the right to be selected to receive an award under
this Plan, or, having been so selected, to receive a future
award under this Plan.
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(c) No Rights as a
Stockholder. Except as otherwise provided in the
Plan, no award under the Plan shall confer upon the holder
thereof any rights as a stockholder of the Company prior to the
date on which the individual fulfills all conditions for receipt
of such rights.
Section 7.2 Transferability. Except
as otherwise so provided by the Committee, awards under the Plan
are not transferable except as designated by the Participant by
will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order, as defined in the Code or
Title I of the Employee Retirement Income Security Act of
1974, as amended. The Committee shall have the discretion to
permit the transfer of awards under the plan; provided,
however, that such transfers shall be limited to Immediate
Family Members of Participants, trusts and partnerships
established for the primary benefit of such family members or to
charitable organizations, and; provided, further, that
such transfers are not made for consideration to the Participant.
Section 7.3 Designation of
Beneficiaries. A Participant hereunder may
file with the Company a written designation of a beneficiary or
beneficiaries under this Plan and may from time to time revoke
or amend any such designation (“Beneficiary
Designation”). Any designation of beneficiary under
this Plan shall be controlling over any other disposition,
testamentary or otherwise; provided, however, that if the
Committee is in doubt as to the entitlement of any such
beneficiary to any award, the Committee may determine to
recognize only the legal representative of the Participant in
which case the Company, the Committee and the members thereof
shall not be under any further liability to anyone.
Section 7.4 Non-Exclusivity. Neither
the adoption of this Plan by the Board nor the submission of the
Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board
or the Committee to adopt such other incentive arrangements as
either may deem desirable, including, without limitation, the
granting of restricted stock or stock options otherwise than
under the Plan or an arrangement that is or is not intended to
qualify under Code Section 162(m), and such arrangements
may be either generally applicable or applicable only in
specific cases.
Section 7.5 Award
Agreement. Each award granted under the Plan
shall be evidenced by an Award Agreement. A copy of the Award
Agreement, in any medium chosen by the Committee, shall be
provided (or made available electronically) to the Participant,
and the Committee may but need not require that the Participant
sign a copy of the Award Agreement.
Section 7.6 Form and Time of
Elections. Unless otherwise specified herein,
each election required or permitted to be made by any
Participant or other person entitled to benefits under the Plan,
and any permitted modification, or revocation thereof, shall be
filed with the Company at such times, in such form, and subject
to such restrictions and limitations, not inconsistent with the
terms of the Plan, as the Committee shall require.
Section 7.7 Evidence. Evidence
required of anyone under the Plan may be by certificate,
affidavit, document or other information which the person acting
on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
Section 7.8 Tax
Withholding. Where a Participant is entitled
to receive cash or shares of Stock upon the vesting or exercise
of an Award, the Company shall have the right to require such
Participant to pay to the Company the amount of any tax which
the Company is required to withhold with respect to such vesting
or exercise, or, in lieu thereof, to retain, or to sell without
notice, a sufficient number of shares of Stock to cover the
minimum amount required to be withheld. To the extent determined
by the Committee and specified in an Award Agreement, a
Participant shall have the right to direct the Company to
satisfy the minimum required federal, state and local tax
withholding by, (i) with respect to an option or SAR
settled in stock, reducing the number of shares of Stock subject
to the option or SAR (without issuance of such shares of Stock
to the option holder) by a number equal to the quotient of
(a) the total minimum amount of required tax withholding
divided by (b) the excess of the Fair Market Value of a
share of Stock on the exercise date over the Exercise Price per
share of Stock; (ii) with respect to Restricted Stock
Award, withholding a number of shares (based on the Fair Market
Value on the vesting date) otherwise vesting; or (iii) with
respect to an SAR settled in cash, withholding an amount of
cash. Provided there are no adverse accounting consequences to
the Company (a requirement to have liability classification of
an award under FASB 123(R) is an adverse consequence), a
Participant who is
B-11
not required to have taxes withheld may require the Company to
withhold in accordance with the preceding sentence as if the
award were subject to minimum tax withholding requirements.
Section 7.9 Action by Company or
Subsidiary. Any action required or permitted
to be taken by the Company or any Subsidiary shall be by
resolution of its board of directors, or by action of one or
more members of the Board (including a committee of the Board)
who are duly authorized to act for the Board, or (except to the
extent prohibited by applicable law or applicable rules of any
stock exchange) by a duly authorized officer of the Company or
such Subsidiary.
Section 7.10 Successors. All
obligations of the Company under this Plan shall be binding upon
and inure to the benefit of any successor to the Company,
whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation or otherwise,
of all or substantially all of the business, stock,
and/or
assets of the Company.
Section 7.11 Indemnification. To
the fullest extent permitted by law and the Company’s
certificate of incorporation, each person who is or shall have
been a member of the Committee, or of the Board, or an officer
of the Company to whom authority was delegated in accordance
with Section 5.3, or an Employee of the Company
shall be indemnified and held harmless by the Company against
and from any loss (including amounts paid in settlement), cost,
liability or expense (including reasonable attorneys’ fees)
that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid
by him or her in settlement thereof, with the Company’s
approval, or paid by him or her in satisfaction of any judgment
in any such action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf,
unless such loss, cost, liability, or expense is a result of his
or her own willful misconduct or except as expressly provided by
statute. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such
persons may be entitled under the Company’s charter or
bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.
Section 7.12 No Fractional
Shares. Unless otherwise permitted by the
Committee, no fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any award. The Committee shall
determine whether cash, or other property shall be issued or
paid in lieu of fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise
eliminated.
Section 7.13 Governing
Law. The Plan, all awards granted hereunder,
and all actions taken in connection herewith shall be governed
by and construed in accordance with the laws of the State of
Delaware without reference to principles of conflict of laws,
except as superseded by applicable federal law. The federal and
state courts located in Essex County, New Jersey, or the
Chancery Court of the State of Delaware, shall have exclusive
jurisdiction over any claim, action, complaint or lawsuit
brought under the terms of the Plan. By accepting any award
under this Plan, each Participant, and any other person claiming
any rights under the Plan, agrees to submit himself, and any
such legal action as he shall bring under the Plan, to the sole
jurisdiction of such courts for the adjudication and resolution
of any such disputes.
Section 7.14 Benefits Under Other
Plans. Except as otherwise provided by the
Committee, awards to a Participant (including the grant and the
receipt of benefits) under the Plan shall be disregarded for
purposes of determining the Participant’s benefits under,
or contributions to, any Qualified Retirement Plan,
non-qualified plan and any other benefit plans maintained by the
Participant’s employer. The term “Qualified
Retirement Plan” means any plan of the company or a
Subsidiary that is intended to be qualified under Code
Section 401(a).
Section 7.15 Validity. If
any provision of this Plan is determined to be illegal or
invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be
construed and enforced as if such illegal or invalid provision
has never been included herein.
B-12
Section 7.16 Notice. Unless
otherwise provided in an Award Agreement, all written notices
and all other written communications to the Company provided for
in the Plan, any Award Agreement, shall be delivered personally
or sent by registered or certified mail, return receipt
requested, postage prepaid (provided that international mail
shall be sent via overnight or two-day delivery), or sent by
facsimile or prepaid overnight courier to the Company at its
principal executive office. Such notices, demands, claims and
other communications shall be deemed given:
(a) in the case of delivery by overnight service
with guaranteed next day delivery, the next day or the day
designated for delivery;
(b) in the case of certified or registered
U.S. mail, five (5) days after deposit in the
U.S. mail; or
(c) in the case of facsimile, the date upon which
the transmitting party received confirmation of receipt by
facsimile, telephone or otherwise;
provided, however, that in no event shall any such
communications be deemed to be given later than the date they
are actually received, provided they are actually received. In
the event a communication is not received, it shall only be
deemed received upon the showing of an original of the
applicable receipt, registration or confirmation from the
applicable delivery service provider. Communications that are to
be delivered by the U.S. mail or by overnight service to
the Company shall be directed to the attention of the
Company’s Chief Operating Officer and to the Corporate
Secretary.
ARTICLE 8 —
DEFINED TERMS; CONSTRUCTION
Section 8.1 In addition to the other
definitions contained herein, unless otherwise specifically
provided in an Award Agreement, the following definitions shall
apply:
(a) “10% Stockholder” means an individual
who, at the time of grant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of the Company.
(b) “Award Agreement” means the document
(in whatever medium prescribed by the Committee) which evidences
the terms and conditions of an award under the Plan. Such
document is referred to as an agreement regardless of whether
Participant signature is required.
(c) “Board” means the Board of Directors
of the Company.
(d) If the Participant is subject to a written
employment agreement (or other similar written agreement) with
the Company or a Subsidiary that provides a definition of
termination for “cause,” then, for purposes of this
Plan, the term “Cause” shall have meaning set
forth in such agreement. In the absence of such a definition,
“Cause” means (i) the conviction of the
Participant of a felony or of any lesser criminal offense
involving moral turpitude; (ii) the willful commission by
the Participant of a criminal or other act that, in the judgment
of the Board will likely cause substantial economic damage to
the Company or any Subsidiary or substantial injury to the
business reputation of the Company or any Subsidiary;
(iii) the commission by the Participant of an act of fraud
in the performance of his duties on behalf of the Company or any
Subsidiary; (iv) the continuing willful failure of the
Participant to perform his duties to the Company or any
Subsidiary (other than any such failure resulting from the
Participant’s incapacity due to physical or mental illness)
after written notice thereof; or (v) an order of a federal
or state regulatory agency or a court of competent jurisdiction
requiring the termination of the Participant’s Service with
the Company.
(e) “Change in Control” has the meaning
ascribed to it in Section 4.2.
(f) “Code” means the Internal Revenue Code
of 1986, as amended, and any rules, regulations and guidance
promulgated thereunder, as modified from time to time.
(g) “Code Section 409A” means the
provisions of Section 409A of the Code and any rules,
regulations and guidance promulgated thereunder.
(h) “Committee” means the Committee acting
under Article 5.
B-13
(i) “Director” means a member of the Board
of Directors of the Company or a Subsidiary.
(j) “Disinterested Board Member” means a
member of the Board who: (a) is not a current Employee of
the Company or a Subsidiary, (b) is not a former employee
of the Company who receives compensation for prior services
(other than benefits under a tax-qualified retirement plan)
during the taxable year, (c) has not been an officer of the
Company, (d) does not receive remuneration from the Company
or a Subsidiary, either directly or indirectly, in any capacity
other than as a Director except in an amount for which
disclosure would not be required pursuant to Item 404 of
SEC
Regulation S-K
in accordance with the proxy solicitation rules of the SEC, as
amended or any successor provision thereto and (e) does not
possess an interest in any other transaction, and is not engaged
in a business relationship, for which disclosure would be
required pursuant to Item 404 of SEC
Regulation S-K
under the proxy solicitation rules of the SEC, as amended or any
successor provision thereto. The term Disinterested Board Member
shall be interpreted in such manner as shall be necessary to
conform to the requirements of section 162(m) of the Code,
Rule 16b-3
promulgated under the Exchange Act and the corporate governance
standards imposed on compensation committees under the listing
requirements imposed by any national securities exchange on
which the Company lists or seeks to list its securities.
(k) If the Participant is subject to a written
employment agreement (or other similar written agreement) with
the Company or a Subsidiary that provides a definition of
“Disability” or “Disabled,” then, for
purposes of this Plan, the terms “Disability”
or “Disabled” shall have meaning set forth in
such agreement. In the absence of such a definition,
“Disability” or “Disabled”
means that a Participant: (i) is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous
period of not less than twelve (12) months; or
(ii) is, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than
twelve (12) months, receiving income replacement benefits
for a period of not less than three (3) months under an
accident and health plan covering the Company’s Employees.
(l) “Employee” means any person employed
by the Company or any Subsidiary. Directors who are also
employed by the Company or a Subsidiary shall be considered
Employees under the Plan.
(m) “Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time.
(n) “Excluded Transaction” means
(I) a plan of reorganization, merger, consolidation or
similar transaction that would result in the Voting Securities
of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving corporation or
any parent thereof) at least 50% of the combined voting power of
the Voting Securities of the entity surviving the plan of
reorganization, merger, consolidation or similar transaction (or
the parent of such surviving entity) immediately after such plan
of reorganization, merger, consolidation or similar transaction;
and (II) a second step conversion of the MHC.
(o) “Exercise Price” means the price
established with respect to an option or SAR pursuant to
Section 2.2.
(p) “Fair Market Value” means, with
respect to a share of Stock on a specified date:
(I) the final reported sales price on the date in
question (or if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) as
reported in the principal consolidated reporting system with
respect to securities listed or admitted to trading on the
principal United States securities exchange on which the shares
of Stock are listed or admitted to trading, as of the close of
the market in New York City and without regard to
after-hours
trading activity; or
(II) if the shares of Stock are not listed or
admitted to trading on any such exchange, the closing bid
quotation with respect to a share of Stock on such date, as of
the close of the market in New York City and without regard to
after-hours
trading activity, on the National Association of Securities
Dealers Automated Quotations System, or, if no such quotation is
provided, on another similar system, selected by the Committee,
then in use; or
B-14
(III) if (I) and (II) are not applicable,
the Fair Market Value of a share of Stock as the Committee may
determine in good faith and in accordance with Code
Section 422.
(q) A termination of employment by an Employee
Participant shall be deemed a termination of employment for
“Good Reason” as a result of the
Participant’s resignation from the employ of the Company or
any Subsidiary upon the occurrence of any of the following
events: (a) the failure of the Company or Subsidiary to
appoint or re-appoint or elect or re-elect the Employee
Participant to the position(s) with the Company or Subsidiary
held immediately prior to the Change in Control; (b) a
material change in the functions, duties or responsibilities of
the Employee Participant compared to those functions, duties or
responsibilities in effect immediately prior to a Change in
Control; (c) any reduction of the rate of the Employee
Participant’s base salary in effect immediately prior to
the Change in Control, (d) any failure (other than due to
reasonable administrative error that is cured promptly upon
notice) to pay any portion of the Employee Participant’s
compensation as and when due; (e) any change in the terms
and conditions of any compensation or benefit program in which
the Employee Participant participated immediately prior to the
Change in Control which, either individually or together with
other changes, has a material adverse effect on the aggregate
value of his total compensation package; or (f) a change in
the Employee Participant’s principal place of employment,
without his consent, to a place that is both more than
twenty-five (25) miles away from the Employee
Participant’s principal residence and more than fifteen
(15) miles away from the location of the Employee
Participant’s principal executive office prior to the
Change in Control.
(r) “Incumbent Directors” means:
(I) the individuals who, on the date hereof,
constitute the Board; and
(II) any new Director whose appointment or election
by the Board or nomination for election by the Company’s
stockholders was approved or recommended: (a) by the vote
of at least two-thirds (2/3) of the Whole Board, with at least
two-thirds of the Incumbent Directors then in office voting in
favor of such approval or recommendation; or (b) by a
Nominating Committee of the Board whose members were appointed
by the vote of at least two-thirds (2/3) of the Whole Board,
with at least two-thirds of the Incumbent Directors then in
office voting in favor of such appointments
(s) “Involuntary Termination of
Employment” means the Termination of Service by the
Company or Subsidiary other than a termination for Cause, or
termination of employment by a Participant Employee for Good
Reason.
(t) “ISO” has the meaning ascribed to it
in Section 2.1(a).
(u) “MHC” means Investors Bancorp, MHC.
(v) “Participant” means any individual who
has received, and currently holds, an outstanding award under
the Plan.
(w) “Potential Change in Control” means:
(I) the public announcement by any Person of an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control; or
(II) one or more transactions, events or occurrences
that result in a change in control of the Company or any
Subsidiary within the meaning of the Bank Holding Company Act of
1956, as amended, and the applicable rules and regulations
promulgated thereunder, as in effect at the time of the Change
in Control; or
(III) a proxy statement soliciting proxies from
stockholders of the Company is filed or distributed seeking
stockholder approval of a plan of reorganization, merger,
consolidation or similar transaction involving the Company and
one or more other entities, but only if such plan of
reorganization, merger, consolidation or similar transaction has
not been approved by the vote of at least two-thirds
(2/3)
of the Whole Board, with at least two-thirds
(2/3)
of the Incumbent Directors then in office voting in favor of
such plan of reorganization, merger, consolidation or similar
transaction.
B-15
(x) “Retirement” means retirement from
employment as an Employee or Service as a Director on or after
the occurrence of any of the following:
(I) the attainment of age 75 by an Employee or
Director;
(II) the attainment of age 62 by an Employee or
Director and the completion of 15 years of continuous
employment or Service as an Employee or Director; or
(III) the completion of 25 years of continuous
employment or Service as an Employee
and/or
Director.
Years of employment as an Employee or Service as a Director
shall be aggregated for the purposes of this definition for any
years of employment as an Employee or Service as a Director that
did not occur simultaneously.
(y) “SAR” has the meaning ascribed to it
in Section 2.1(b).
(z) “SEC” means the Securities and
Exchange Commission.
(aa) “Securities Act” means the Securities
Act of 1933, as amended from time to time.
(bb) “Service” means service as an
Employee, consultant or non-employee Director of the Company or
a Subsidiary, as the case may be, and shall include service as a
director emeritus.
(cc) “Stock” means the common stock of the
Company, $0.01 par value per share.
(dd) “Subsidiary” means any corporation,
affiliate, bank or other entity which would be a subsidiary
corporation with respect to the Company as defined in Code
Section 424(f) and, other than with respect to an ISO,
shall also mean any partnership or joint venture in which the
Company
and/or other
Subsidiary owns more than fifty percent (50%) of the capital or
profits interests.
(ee) “Termination of Service” means the
first day occurring on or after a grant date on which the
Participant ceases to be an Employee or Director of, or service
provider to, the Company or any Subsidiary, regardless of the
reason for such cessation, subject to the following:
(I) The Participant’s cessation as an Employee
or service provider shall not be deemed to occur by reason of
the transfer of the Participant between the Company and a
Subsidiary or between two Subsidiaries.
(II) The Participant’s cessation as an Employee
or service provider shall not be deemed to occur by reason of
the Participant’s being on a leave of absence from the
Company or a Subsidiary approved by the Company or Subsidiary
otherwise receiving the Participant’s services.
(III) If, as a result of a sale or other
transaction, the Subsidiary for whom Participant is employed (or
to whom the Participant is providing services) ceases to be a
Subsidiary, and the Participant is not, following the
transaction, an Employee of or service provider to the Company
or an entity that is then a Subsidiary, then the occurrence of
such transaction shall be treated as the Participant’s
Termination of Service caused by the Participant being
discharged by the entity for whom the Participant is employed or
to whom the Participant is providing services.
(IV) A service provider whose services to the
Company or a Subsidiary are governed by a written agreement with
the service provider will cease to be a service provider at the
time the term of such written agreement ends (without renewal);
and a service provider whose services to the Company or a
Subsidiary are not governed by a written agreement with the
service provider will cease to be a service provider on the date
that is ninety (90) days after the date the service
provider last provides services requested by the Company or any
Subsidiary (as determined by the Committee).
(V) Notwithstanding the forgoing, in the event that
any award under the Plan constitutes Deferred Compensation, the
term Termination of Service shall be interpreted by the
Committee in a
B-16
manner consistent with the definition of “Separation from
Service” as defined under Code Section 409A.
(ff) “Voting Securities” means any
securities which ordinarily possess the power to vote in the
election of directors without the happening of any pre-condition
or contingency.
(gg) “Whole Board” means the total number
of Directors that the Company would have if there were no
vacancies on the Board at the time the relevant action or matter
is presented to the Board for approval.
(hh) “Immediate Family Member” means with
respect to any Participant: (a) any of the
Participant’s children, stepchildren, grandchildren,
parents, stepparents, grandparents, spouses, former spouses,
siblings, nieces, nephews,
mothers-in-law,
fathers-in-law,
sons-in-law,
daughters-in-law,
brothers-in-law
or
sisters-in-law,
including relationships created by adoption; (b) any
natural person sharing the Participant’s household (other
than as a tenant or employee, directly or indirectly, of the
Participant); (c) a trust in which any combination of the
Participant and persons described in section (a) and
(b) above own more than fifty percent (50%) of the
beneficial interests; (d) a foundation in which any
combination of the Participant and persons described in sections
(a) and (b) above control management of the assets; or
(e) any other corporation, partnership, limited liability
company or other entity in which any combination of the
Participant and persons described in sections (a) and
(b) above control more than fifty percent (50%) of the
voting interests.
Section 8.2 In this Plan, unless
otherwise stated or the context otherwise requires, the
following uses apply:
(a) actions permitted under this Plan may be taken
at any time and from time to time in the actor’s reasonable
discretion;
(b) references to a statute shall refer to the
statute and any successor statute, and to all regulations
promulgated under or implementing the statute or its successor,
as in effect at the relevant time;
(c) in computing periods from a specified date to a
later specified date, the words “from” and
“commencing on” (and the like) mean “from and
including,” and the words “to,” “until”
and “ending on” (and the like) mean “to, but
excluding”;
(d) references to a governmental or
quasi-governmental agency, authority or instrumentality shall
also refer to a regulatory body that succeeds to the functions
of the agency, authority or instrumentality;
(e) indications of time of day mean New Jersey time;
(f) “including” means “including, but
not limited to”;
(g) all references to sections, schedules and
exhibits are to sections, schedules and exhibits in or to this
Plan unless otherwise specified;
(h) all words used in this Plan will be construed to
be of such gender or number as the circumstances and context
require;
(i) the captions and headings of articles, sections,
schedules and exhibits appearing in or attached to this Plan
have been inserted solely for convenience of reference and shall
not be considered a part of this Plan nor shall any of them
affect the meaning or interpretation of this Plan or any of its
provisions;
(j) any reference to a document or set of documents
in this Plan, and the rights and obligations of the parties
under any such documents, shall mean such document or documents
as amended from time to time, and any and all modifications,
extensions, renewals, substitutions or replacements
thereof; and
(k) all accounting terms not specifically defined
herein shall be construed in accordance with GAAP.
B-17
REVOCABLE PROXY
Investors Bancorp, Inc.
ANNUAL MEETING OF STOCKHOLDERS
Date: October 24, 2006
Time: 9:00 a.m.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints the official proxy committee consisting of the Board of
Directors (other than the nominees for directors set forth below) with full powers of substitution to act as attorneys and proxies
for the undersigned to vote all shares of common stock of the Company that the undersigned is
entitled to vote at the Annual Meeting of Stockholders (“Annual Meeting”) to be held at The
Murray Hill Inn, 535 Central Avenue, New Providence, New Jersey 07974 on October 24, 2006, at
9:00 a.m., local time. The official proxy committee is authorized to cast all votes to which the
undersigned is entitled as follows:
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, AN EXECUTED
PROXY WILL BE VOTED “FOR” PROPOSALS 1, 2 AND 3. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH ANNUAL
MEETING, THIS PROXY WILL BE VOTED AS DIRECTED BY A MAJORITY OF THE PROXY COMMITTEE. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
ANNUAL MEETING.
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS INSTRUCTION CARD PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR PROVIDE YOUR INSTRUCTIONS TO VOTE VIA THE
INTERNET OR BY TELEPHONE.
(Continued, and to be marked, dated and signed, on the other side)
ò FOLD AND DETACH HERE ò
INVESTORS BANCORP, INC. — OCTOBER 24, 2006 9:00 A.M.
YOUR VOTE IS IMPORTANT!
Proxy Materials are available on-line at:
https://www.isbnj.com
You can vote in one of three ways:
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Call toll free 1-866-849-9666 on a Touch-Tone Phone. There is NO CHARGE to you for this
call. |
or
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Via the Internet at https://www.proxyvotenow.com/isbc and follow the instructions. |
or
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Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
PLEASE SEE REVERSE SIDE FOR VOTING INSTRUCTIONS
Revocable Proxy
Investors Bancorp, Inc.
Annual Meeting of Stockholders
OCTOBER 24, 2006
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Withhold |
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For All |
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For |
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The election as directors of all nominees listed
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Nominees: |
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(01) Patrick J. Grant |
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(02) John A. Kirkpatrick |
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(03) Joseph H. Shepard III |
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INSTRUCTION: To withhold authority to vote for any
nominee(s), mark “For All Except” and write that nominee(s’)
name(s) or number(s) in the space provided below.
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Please be sure to date and sign
this proxy card in the box below.
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Sign above
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Please mark as
indicated in this
example
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For |
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The approval of the Investors Bancorp, Inc. 2006
Equity Incentive Plan.
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The ratification of the appointment of KPMG LLP as
the Company’s independent registered public
accountants for the year ending June 30, 2007.
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The Board of Directors recommends a vote “FOR” Proposal
1, Proposal 2 and Proposal 3.
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Check Box if You Plan to Attend Annual Meeting |
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Mark here for address change and note change |
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Should the undersigned be present and elect to vote at
the Annual Meeting or at any adjournment thereof and after
notification to the Secretary of the Company at the Annual
Meeting of the stockholder’s decision to terminate this
proxy, then the power of said attorneys and proxies shall
be deemed terminated and of no further force and effect.
This proxy may also be revoked by sending written notice to
the Secretary of the Company at the address set forth on
the Notice of Annual Meeting of Stockholders, or by the
filing of a later dated proxy prior to a vote being taken
on a particular proposal at the Annual Meeting.
The undersigned acknowledges receipt from the Company
prior to the execution of this proxy of notice of the
Annual Meeting, a proxy statement dated September 13, 2006,
and audited financial statements.
Please sign exactly as your name appears on this card.
When signing as attorney, executor, administrator, trustee
or guardian, please give your full title.
* * * IF YOU WISH TO PROVIDE YOUR INSTRUCTIONS TO VOTE BY TELEPHONE OR INTERNET, PLEASE READ THE INSTRUCTIONS BELOW * * *
ñ FOLD
AND DETACH HERE IF YOU ARE VOTING BY MAIL ñ
PROXY VOTING INSTRUCTIONS
Stockholders of record have three ways to vote:
1. By Mail; or
2. By Telephone (using a Touch-Tone Phone); or
3. By Internet.
A telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as
if you marked, signed, dated and returned this proxy. Please note telephone and Internet votes must
be cast prior to 3:00 a.m., October 24, 2006. It is not necessary to return this proxy if you vote
by telephone or Internet.
Vote by Telephone
Call Toll-Free on a Touch-Tone Phone anytime prior to
3:00 a.m., October 24, 2006.
1-866-849-9666
Vote by Internet
anytime prior to
3:00 a.m., October 24, 2006 go to
https://www.proxyvotenow.com/isbc
Please note that the last vote received, whether by telephone, Internet or by mail, will be the vote counted.
ON-LINE PROXY MATERIALS: https://www.isbnj.com
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PLEASE MARK VOTES
AS IN THIS EXAMPLE
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REVOCABLE PROXY
INVESTORS BANCORP, INC.
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ANNUAL MEETING OF STOCKHOLDERS
October 24, 2006
The undersigned hereby appoints the official proxy
committee consisting of the Board of Directors (other than the
nominees for directors set forth below) with full powers of
substitution to act as attorneys and proxies for the
undersigned to vote all shares of common stock of the Company
that the undersigned is entitled to vote at the Annual Meeting
of Stockholders (“Annual Meeting”) to be held at The Murray
Hill Inn, 535 Central Avenue, New Providence, New Jersey 07974
on October 24, 2006, at 9:00 a.m., local time. The official
proxy committee is authorized to cast all votes to which the
undersigned is entitled as follows:
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Please be sure to sign and date
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this Proxy in the box below.
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Stockholder sign above Co-holder (if any) sign above
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With-
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For All |
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For
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hold
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Except |
1.
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The election as directors of all nominees
listed below, each to serve for a three-
year term(except as marked to the contrary
below):
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Nominees:
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(01) Patrick J. Grant
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(02) John A. Kirkpatrick |
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(03) Joseph H. Shepard III |
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INSTRUCTION: To withhold authority to vote for any
individual nominee, mark “For All Except” and write that
nominee’s name in the space provided below.
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For
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Against
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Abstain |
2.
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The approval of the Investors Bancorp, Inc. 2006
Equity Incentive Plan.
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3.
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The ratification of the appointment of KPMG
LLP as the Company’s independent registered
public accountants for the year ending June 30, 2007.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, AN EXECUTED PROXY WILL BE
VOTED “FOR” PROPOSALS 1, 2 AND 3. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED
AS DIRECTED BY A MAJORITY OF THE PROXY COMMITTEE. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
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PLEASE
CHECK BOX IF YOU PLAN TO ATTEND
THE
MEETING.
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 |
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Detach above card, sign, date and mail in postage paid envelope provided. 
INVESTORS BANCORP, INC.
Should the above signed be present and elect to vote at the Annual Meeting or at any
adjournment thereof and after notification to the Secretary of the Company at the Annual Meeting of
the stockholder’s decision to terminate this proxy, then the power of said attorneys and proxies
shall be deemed terminated and of no further force and effect. This proxy may also be revoked by
sending written notice to the Secretary of the Company at the address set forth on the Notice of
Annual Meeting of Stockholders, or by the filing of a later dated proxy prior to a vote being taken
on a particular proposal at the Annual Meeting.
The above signed acknowledges receipt from the Company prior to the execution of this proxy of
notice of the Annual Meeting, a proxy statement dated September 13, 2006, and audited financial
statements.
Please sign exactly as your name appears on this card. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title.
PLEASE ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND
RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.