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Section 1: DEF 14A (DEF 14A)

bdge_Current_Folio_Proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )

 

Filed by the Registrant  ☒

 

Filed by a Party other than the Registrant  ☐

 

Check the appropriate box:

 

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

 

 

Bridge Bancorp, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:


(2)

Aggregate number of securities to which transaction applies:


(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):


(4)

Proposed maximum aggregate value of transaction:


(5)

Total fee paid:


☐    Fee paid previously with preliminary materials.

☐    Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:


(2)

Form, Schedule or Registration Statement No.:


(3)

Filing Party:


(4)

Date Filed:


 

 

 


 

BRIDGE BANCORP, INC.

2200 Montauk Highway, P.O. Box 3005

Bridgehampton, NY 11932

April 1, 2019

 

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders (the “Annual Meeting”) of Bridge Bancorp, Inc. (the “Company”). Our Annual Meeting will be held at the offices of our subsidiary, BNB Bank, 2200 Montauk Highway, Bridgehampton, New York 11932, on Friday, May 3, 2019 at 11:00 a.m.

The enclosed Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted at the Annual Meeting. During the Annual Meeting we will also report on the operations of the Company. Directors and officers of the Company will be present to respond to questions that shareholders may have. Also enclosed for your review is our Annual Report, which contains detailed information concerning the operating activities and financial statements of the Company.

The business to be conducted at the Annual Meeting consists of the election of four Directors; an advisory (non-binding) vote on executive compensation; approval of the 2019 Equity Incentive Plan; and the ratification of the appointment of our Independent Registered Public Accounting Firm for the year ending December 31, 2019. The Board of Directors of the Company unanimously recommends a vote “FOR” the election of Directors, “FOR” the approval of executive compensation, “FOR” the approval of the 2019 Equity Incentive Plan, and “FOR” the ratification of the appointment of Crowe LLP as the Company’s Independent Registered Public Accounting Firm.

On behalf of the Board of Directors, we urge you to sign, date and return the enclosed proxy card, or cast your vote electronically, as soon as possible, 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 if you are unable to attend the Annual Meeting. Your vote is important, regardless of the number of shares that you own. Thank you for your continued investment in Bridge Bancorp, Inc.

 

 

Sincerely,

 

Kevin O'Connor

 

Kevin M. O’Connor

 

President and Chief Executive Officer

 

 

 


 

BRIDGE BANCORP, INC.

2200 Montauk Highway, P.O. Box 3005

Bridgehampton, NY 11932

NOTICE OF ANNUAL MEETING

TO BE HELD MAY 3, 2019

To the Shareholders of Bridge Bancorp, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Bridge Bancorp, Inc. will be held at BNB Bank, 2200 Montauk Highway, Bridgehampton, New York 11932, on Friday, May 3, 2019, at 11:00 a.m., for the purpose of considering and voting on the following matters:

1)

The election of four Directors to the Company’s Board of Directors, to hold office for a term of three years, and until their successors are elected and qualified;

2)

An advisory (non-binding) vote to approve our executive compensation as described in the proxy statement;

3)

The approval of the Bridge Bancorp, Inc. 2019 Equity Incentive Plan;

4)

The ratification of the appointment of Crowe LLP as the Independent Registered Public Accounting Firm for the Company for the year ending December 31, 2019; and

such other business as may properly come before the Annual Meeting or any adjournments thereof. Any action may be taken on the foregoing proposals at the Annual Meeting on the date specified above, including all adjournments of the Annual Meeting. Only those shareholders of record at the close of business on March 18, 2019 shall be entitled to notice of and to vote at the Annual Meeting.

The Board of Directors believes that the election of the director nominees, the advisory (non-binding) vote to approve executive compensation, the approval of the 2019 Equity Incentive Plan and the ratification of the appointment of Crowe LLP as the Company’s Independent Registered Public Accounting Firm, are in the best interests of the Company and its shareholders and unanimously recommends a vote FOR proposals 1, 2, 3 and 4.

EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, OR TO VOTE ELECTRONICALLY AS PROVIDED IN THE INSTRUCTIONS INCLUDED HEREWITH.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 3, 2019 - THIS PROXY STATEMENT AND OUR 2018 ANNUAL REPORT ON FORM 10‑K ARE EACH AVAILABLE AT http://www.edocumentview.com/BDGE.

By order of the Board of Directors

Howard H. Nolan

Senior Executive Vice President, Chief Operating Officer and Corporate Secretary

April 1, 2019

Bridgehampton, New York

 

 


 

BRIDGE BANCORP, INC.

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 3, 2019

SOLICITATION AND VOTING OF PROXIES

This Proxy Statement is being furnished to shareholders of Bridge Bancorp, Inc. in connection with the solicitation by the Board of Directors of proxies to be used at the Annual Meeting of Shareholders to be held at BNB Bank (the “Bank”), 2200 Montauk Highway, Bridgehampton, New York 11932, on May 3, 2019 at 11:00 a.m. or any adjournments thereof. The 2018 Annual Report to Shareholders, including the consolidated financial statements for the fiscal year ended December 31, 2018, accompanies this Proxy Statement.

Regardless of the number of shares of Common Stock owned, it is important that shareholders be represented by proxy or be present in person at the Annual Meeting. Shareholders are requested to vote by completing the enclosed proxy card and returning it signed and dated in the enclosed envelope, or to vote electronically. Shareholders should indicate their votes in the spaces provided on the proxy card. Proxies solicited by the Board of Directors of the Company will be voted in accordance with the directions given therein. Where no instructions are indicated, executed proxies will be voted FOR the election of the director nominees specified in this Proxy Statement; FOR the approval of executive compensation; FOR the approval of the 2019 Equity Incentive Plan; and FOR the ratification of Crowe LLP as the Company’s Independent Registered Public Accounting Firm for the year ending December 31, 2019.

The Board of Directors knows of no additional matters that will be presented for consideration at the Annual Meeting. Execution of a proxy, however, confers discretionary authority on the designated proxy holder to vote the shares in accordance with their best judgment on such other business, if any, which may properly come before the Annual Meeting or any adjournments thereof.

A proxy may be revoked at any time prior to its exercise by the filing of written revocation with the Secretary of the Company, by delivering to the Company a duly executed proxy bearing a later date, or by attending the Annual Meeting, filing a revocation with the Secretary and voting in person. However, if you are a shareholder whose shares are not registered in your own name, you will need appropriate documentation from your record holder to vote personally at the Annual Meeting.

The cost of solicitation of proxies in the form enclosed herewith will be borne by the Company. In addition to the solicitation of proxies by mail, proxies may also be solicited personally, by telephone or by facsimile, by Directors, officers and employees of the Company, without additional compensation therefore.

This Proxy Statement and the accompanying proxy card are first being mailed to shareholders on or about April 1,  2019.

VOTING SECURITIES

The securities which may be voted at the Annual Meeting consist of shares of Common Stock of the Company (the “Common Stock”), with each share entitling its owner to one vote on all matters to be voted on at the Annual Meeting. The close of business on March 18, 2019 has been fixed by the Board of Directors as the record date (“Record Date”) for the determination of shareholders entitled to notice of and to vote at this Annual Meeting or any adjournments thereof. The total number of shares of Common Stock outstanding on the Record Date was 19,848,101 shares. The presence, in person or by proxy, of at least a majority of the total number of issued and outstanding shares of Common Stock entitled to vote is necessary to constitute a quorum at this Annual Meeting. In the event there are not sufficient votes for a quorum, or to approve or ratify any matter being presented at the time of this Annual Meeting, the Annual Meeting may be adjourned in order to permit the further solicitation of proxies.

-  1  -


 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Persons and groups who beneficially own in excess of five percent of the Common Stock are required to file certain reports with the Company and the Securities and Exchange Commission (“SEC”) regarding such beneficial ownership. The following table sets forth, as of March 18, 2019, certain information as to the shares of Common Stock owned by persons who beneficially own more than five percent of the issued and outstanding shares of Common Stock. We know of no persons, except as listed below, who beneficially owned more than five percent of the outstanding shares of Common Stock as of March 18, 2019.

 

 

 

 

 

 

 

 

Number of Shares Owned

 

Percentage of

 

Name and Address

 

and Nature of Beneficial

 

Outstanding

 

of Beneficial Owner

    

Ownership

    

Shares

 

 

 

 

 

 

 

Basswood Capital Management L.L.C.

 

 

 

 

 

645 Madison Avenue, 10th Floor

 

2,785,905

(1)

14.0

%

New York, NY 10022

 

 

 

 

 

 

 

 

 

 

 

T. Rowe Price Associates, Inc.

 

 

 

 

 

100 E. Pratt Street

 

2,420,512

(2)

12.2

%

Baltimore, MD 21202

 

 

 

 

 

 

 

 

 

 

 

BlackRock, Inc.

 

 

 

 

 

55 East 52nd Street

 

1,061,917

(3)

5.4

%

New York, NY 10055

 

 

 

 

 


(1)

Represents the total shares of Common Stock collectively beneficially owned by Basswood Capital Management, L.L.C., Matthew Lindenbaum, Bennett Lindenbaum and certain other reporting persons.

(2)

Represents the total shares of Common Stock collectively beneficially owned by T. Rowe Price Associates, Inc. and certain other reporting persons as described in the Schedule 13G/A filed jointly on February 14, 2019 with the SEC.

(3)

Represents the total shares of Common Stock collectively beneficially owned by Blackrock, Inc. as described in the Schedule 13G/A filed February 4, 2019 with the SEC.

VOTING PROCEDURES AND METHOD OF COUNTING VOTES

As to the election of Directors, the proxy card being provided by the Board of Directors enables a shareholder to vote “FOR” the election of the nominees proposed by the Board of Directors, or to “WITHHOLD AUTHORITY” to vote for all or any of the nominees being proposed. 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.

As to the advisory vote for the approval of the compensation paid to our named executive officers (“NEOs”), the approval of the 2019 Equity Incentive Plan, and the ratification of Crowe LLP as our Independent Registered Public Accounting Firm, by checking the appropriate box, a shareholder may: (i) vote “FOR” the item; (ii) vote “AGAINST” the item; or (iii) “ABSTAIN” from voting on such item. The approval of these matters will be determined by a majority of the votes cast, without regard to broker non-votes, or proxies marked “ABSTAIN.”

Proxies solicited hereby will be returned to the Company, and will be tabulated by inspectors of election designated by the Board of Directors.

-  2  -


 

PROPOSAL I - ELECTION OF DIRECTORS

The Company’s Board of Directors currently consists of thirteen (13) members. The Board is divided into three classes as nearly equal in number as possible (Class A, B, and C). Each year one class of Directors is elected to serve for a three-year term and until their respective successors shall have been elected and qualified.

The Board of Directors has nominated Marcia Z. Hefter, Emanuel Arturi, Rudolph J. Santoro, and Daniel Rubin for election as Class B Directors, each for a term of office expiring in 2022, and until their successors are elected and qualified. Mr. Nolan’s term as a Director expires on May 3, 2019, at which time the number of directors constituting the Board will be reduced to twelve (12).  It is intended that the proxies solicited on behalf of the Board of Directors will be voted at the Annual Meeting for the election of each of these nominees (other than proxies in which the vote is withheld as to any nominee). If a nominee is unable to serve, the shares represented by all such proxies will be voted for the election of such substitute as the Board of Directors may recommend. At this time, the Board of Directors knows of no reason why a nominee would be unable to serve, if elected.

-  3  -


 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED IN THIS PROXY STATEMENT.

The following table sets forth certain information, as of March 18, 2019, regarding the Board of Directors and each NEO identified in the summary compensation table included elsewhere in this Proxy Statement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of

    

 

 

 

 

 

 

 

 

Common Stock of

 

 

 

 

 

 

 

 

 

the Company

 

 

 

 

 

 

 

Director of the Company

 

Beneficially

 

 

 

Name and Age

    

Position Held

    

Since

    

Owned(1)

    

Percent

 

Nominees for Director 

 

  

 

  

 

  

  

  

 

Class B (term to expire in 2022)

 

  

 

 

 

  

  

  

 

Marcia Z. Hefter
Age 75

 

Director, Chairperson of the Board

 

1989

 

91,046

  

*

 

Emanuel Arturi
Age 73

 

Director

 

2008

 

28,329

  

*

 

Rudolph J. Santoro
Age 74

 

Director

 

2009

 

23,076

  

*

 

Daniel Rubin
Age 70

 

Director

 

2015

 

85,784

(3)

*

 

 

 

 

 

 

 

 

 

 

 

Continuing Directors

 

 

 

 

 

 

 

 

 

Class A (term to expire in 2021)

 

 

 

 

 

 

 

 

 

Dennis A. Suskind
Age 76

 

Director, Vice Chairman of the Board

 

2002

 

67,683

  

*

 

Albert E. McCoy, Jr.
Age 55

 

Director

 

2008

 

141,516

  

*

 

Christian C. Yegen
Age 75

 

Director

 

2015

 

99,684

  

*

 

Matthew Lindenbaum
Age 56

 

Director

 

2018

 

2,179,651

(2)

11.0

 

 

 

  

 

 

 

  

  

  

 

Class C (term to expire in 2020)

 

  

 

 

 

  

  

  

 

Charles I. Massoud
Age 74

 

Director

 

2002

 

23,079

  

*

 

Raymond A. Nielsen
Age 68

 

Director

 

2013

 

10,726

  

*

 

Kevin M. O’Connor
Age 56

 

President and Chief Executive Officer, Director

 

2007

 

152,493

(5)

*

 

Thomas J. Tobin
Age 74

 

Director

 

1989

 

21,511

  

*

 

 

 

 

 

 

 

 

 

 

 

Executive Officers

 

 

 

 

 

 

 

 

 

who are not Directors

 

 

 

 

 

 

 

 

 

Howard H. Nolan (4)
Age 58

 

Senior Executive Vice President, Chief Operating Officer and Corporate Secretary, Director

 

2003

 

58,207

(4)

*

 

Kevin L. Santacroce
Age 50

 

Executive Vice President and Chief Lending Officer

 

 

 

35,153

(6)

*

 

John M. McCaffery
Age 54

 

Executive Vice President, Chief Financial Officer and Treasurer

 

 

 

26,668

(7)

*

 

James J. Manseau
Age 55

 

Executive Vice President and Chief Retail Banking Officer

 

 

 

38,443

(8)

*

 

 

 

 

 

 

 

 

 

 

 

All Directors, Director nominees and Executive Officers as a Group (16 persons)

 

  

 

 

 

3,083,049

(9)

15.5

%

 

 

 

 

 

 

 

 

 

 


*Represents less than 1%

(1)

Includes shares as to which a person (or his/her spouse) directly or indirectly has or shares voting power and/or investment power (which includes the power to dispose) and all shares which the person has a right to acquire within

-  4  -


 

60 days of the reporting date. See “Stock Ownership Guidelines” included in the Compensation Discussion and Analysis.

(2)

Represents the total shares of Common Stock collectively beneficially owned by Matthew Lindenbaum and Basswood Capital Management, LLC, with respect to which Mr. Lindenbaum serves as a Principal, Managing Member and Portfolio Manager. As described in the Schedule 13D/A filed on December 18, 2017 with the SEC with respect to the Company’s Common Stock, each of Basswood Capital Management, LLC, Matthew Lindenbaum and Bennett Lindenbaum may be deemed to be part of a “group” with such other reporting persons. As of March 18, 2019, the group collectively beneficially own 2,785,905 shares of the Company’s Common Stock.

(3)

Director Rubin had pledged 15,378 shares of common stock as additional collateral for a loan.

(4)

Mr. Nolan’s term as a director expires on May 3, 2019. Mr. Nolan’s stock ownership includes 9,299 shares of restricted stock subject to future vesting but as to which voting may currently be directed, and 2,607 shares that can be acquired through the exercise of vested stock options.

(5)

Includes 21,487 shares of restricted stock subject to future vesting but as to which voting may currently be directed, and 5,751 shares that can be acquired through the exercise of vested stock options.

(6)

Includes 8,744 shares of restricted stock subject to future vesting but as to which voting may currently be directed, and 2,530 shares that can be acquired through the exercise of vested stock options.

(7)

Includes 7,650 shares of restricted stock subject to future vesting but as to which voting may currently be directed, and 2,530 shares that can be acquired through the exercise of vested stock options.

(8)

Includes 8,265 shares of restricted stock subject to future vesting but as to which voting may currently be directed, and 2,377 shares that can be acquired through the exercise of vested stock options.

(9)

Includes 55,445 shares of restricted stock subject to future vesting but as to which voting may currently be directed, and 15,795 shares that can be acquired through the exercise of vested stock options.

The business experience of each of the Company’s directors, NEOs and persons nominated to be elected as directors, as well as the qualifications, attributes and skills that led the Board of Directors to conclude that each director should serve on the Board are as follows:

Directors

Marcia Z. Hefter

Ms. Hefter is senior counsel in the law firm Esseks, Hefter, Angel, Di Talia & Pasca, LLP located in Riverhead, New York. She is Chairperson of the Company’s Board of Directors and serves on the Compensation Committee. Ms. Hefter has been a Director of the Company since 1989 and a Director of the Bank since 1988. Ms. Hefter is a graduate of Boston University and New York University School of Law. Ms. Hefter’s background as a lawyer and long standing service as a Director provides the Board of Directors with a unique perspective and counsel in its oversight of the Company.

Dennis A. Suskind

Mr. Suskind is a retired General Partner of Goldman Sachs & Co. He is Vice Chairperson of the Company’s Board of Directors and serves on the Audit Committee as a financial expert and as Chairperson of the Risk Committee and Corporate Governance and Nominating Committee. He has been a Director of the Company since 2002. Mr. Suskind is also a Director of the Chicago Mercantile Exchange and serves as a member on its Audit, Compensation and Finance Committees and is Chairperson of its Risk Committee. Mr.  Suskind is also a board member of Navistar Corporation. His considerable experience in investment banking, capital markets and his service on the Board of Directors of another large publicly traded company are valuable to the Board of Directors in many ways, including its assessment of the Company’s sources and uses of capital.

Emanuel Arturi

Mr. Arturi is Executive Vice Chairman of Knowledgent Group Inc., a business and technology consulting company. Mr. Arturi previously was co-founder of BusinessEdge Solutions Inc., a national consulting firm specializing in financial services, communications and life science industries. He was appointed to the Company’s Board in January 2008 and is Chairperson of the Compensation Committee. He is a graduate of Montclair State University and Fairleigh Dickinson University. Mr. Arturi’s business and technology experience and familiarity with the communities served by the Company provide a broad business perspective to the Board of Directors.

-  5  -


 

Matthew Lindenbaum

Mr. Lindenbaum is Principal, Managing Member and Portfolio Manager of Basswood Capital Management, LLC. Mr. Lindenbaum previously served as Vice Chairman of Community National Bank (“CNB”) and was a director at CNB from 2005 to 2015. He has also served as a Director of Hudson Valley Holding Corp from 2014 to 2015. Mr. Lindenbaum is an experienced investor in community banks and his investor background and experience along with his service on the Board of Directors of other community banks are considered valuable attributes for service on the Board.

Charles I. Massoud

Mr. Massoud is President of Paumanok Vineyards located in Aquebogue, New York and President of Palmer Winery LTD. located in Riverhead, New York. Mr. Massoud serves as a member of the Audit Committee and Corporate Governance and Nominating Committee and has served as a Director of the Company since 2002. Mr. Massoud is a graduate of the Wharton School of the University of Pennsylvania and worked for IBM for nearly 20 years as a marketing executive. Mr. Massoud’s extensive knowledge of local markets, educational background, and business experience benefits the Board of Directors in its oversight of strategic planning and business development.

Albert E. McCoy, Jr.

Mr. McCoy is President of W. F. McCoy Petroleum Products Inc. and the McCoy Bus Company located in Bridgehampton, New York. Mr. McCoy is a member of the Compensation Committee and has served as a Director since April 2008. He is a graduate of George Washington University and a long standing shareholder of the Company. Mr. McCoy brings to the Board of Directors an extensive knowledge of local markets and the communities served by the Company which gives him unique insights into the Company’s lending challenges and opportunities.

Raymond A. Nielsen

Mr. Nielsen is a Director of CVD Equipment Corp. He previously served as the Director of Finance for the Beechwood Organization responsible for Project and Corporate Finance including Strategic Planning Initiatives. Mr. Nielsen is the former CEO of Reliance Federal Savings Bank, Herald National Bank, and a 45 year veteran of the banking industry. Mr. Nielsen is a member of the Compensation Committee and has served as a Director since November 2013. Mr. Nielsen also served as a director of North Fork Bancorporation and its subsidiary North Fork Bank for 6 years where he chaired the Compensation and Audit Committees and also served as lead independent director. Mr. Nielsen’s extensive banking and real estate development experience and knowledge of the communities served by the Company, provides a valuable resource to the Board of Directors.

Daniel Rubin

Mr. Rubin was a former member of the Board of Directors of Community National Bank (“CNB”) who was appointed to the Board in June 2015. Mr. Rubin is a founding Board Member of the former Community State Bank of Teaneck, New Jersey. His business experience includes a long tenure in the textile and fashion industry, as well as other entrepreneurial ventures. Mr. Rubin is a Board Member and past President of the United Jewish Appeal of Northern New Jersey and a former board member of Englewood Hospital and Medical Center in Englewood, New Jersey among other philanthropic affiliations. Mr. Rubin brings to the Board of Directors an extensive knowledge of the New York City and New Jersey real estate markets and the communities served by the Company which gives him unique insights into the Company’s lending challenges and opportunities.

Rudolph J. Santoro

Mr. Santoro is a retired Partner of Deloitte LLP, where he served as a National Industry Director of the Publishing and Media Industry. Mr. Santoro was appointed to the Board in June 2009 and serves as the Chairperson of the Audit Committee. Mr. Santoro is a graduate of Long Island University and is a Certified Public Accountant with approximately 38 years of public accounting experience. He also serves as Vice President of the Suffolk County Council of the Boy Scouts of America and as an Emeritus Board Member of Big Brother/Big Sisters of New York City. Mr. Santoro’s background in public accounting enhances the Board of Director’s oversight of financial reporting and disclosure issues.

-  6  -


 

Thomas J. Tobin

Mr. Tobin retired as President Emeritus and Special Advisor to the Board on March 2, 2010. Prior to January 1, 2008, Mr. Tobin was President and Chief Executive Officer, a position he held for 21 years. Mr. Tobin has served as a Director of the Company since 1989 and as a Director of the Bank since 1986. Mr. Tobin’s former position as President and Chief Executive Officer of the Company, extensive banking experience and knowledge of the communities served by the Company, provides a valuable resource to the Board of Directors.

Christian C. Yegen

Mr. Yegen was a former member of the Board of Directors of CNB who was appointed to the Board in June 2015. Mr. Yegen was also on the board of the former Community State Bank of Teaneck, New Jersey. His diverse business experience includes 16 years as the Chairman of Yegen Holdings Corp., which was eventually sold to an investor group. He holds an apartment portfolio of over 1,000 units, owned and managed in northeast New Jersey. He received his undergraduate degree from Brown University and is a graduate of New York University School of Law. Mr. Yegen brings to the Board of Directors an extensive knowledge of the New York City and New Jersey real estate markets and the communities served by the Company which gives him unique insights into the Company’s lending challenges and opportunities.

NEOs Who Are Directors

Kevin M. O’Connor

Mr. O’Connor is President and Chief Executive Officer of the Company. He joined the Company in October 2007 as President and Chief Executive Officer Designee and Director. On January 1, 2008, he became President and CEO. Prior to joining the Company, Mr. O’Connor served as Executive Vice President and Treasurer of North Fork Bancorporation, Inc. from 1997 through 2007. Mr. O’Connor is a graduate of Adelphi University. Mr. O’Connor’s background and extensive banking experience provides a valuable resource to the Board of Directors.

Howard H. Nolan

Mr. Nolan is Senior Executive Vice President, Chief Operating Officer and Corporate Secretary. He previously served as Chief Administrative & Financial Officer of the Company. Mr. Nolan is a Certified Public Accountant and joined the Board as a Director in 2003 and was appointed Chief Operating Officer in June 2006. Prior to 2006, Mr. Nolan was Vice President of Finance and Treasurer for Gentiva Health Services, Inc. and held various management positions at Long Island Savings Bank and was Senior Audit Manager at KPMG. Mr. Nolan is a graduate of Dowling College. Mr. Nolan’s background and extensive experience in operations, finance and accounting and knowledge of local markets provides a valuable resource to the Board of Directors. Mr. Nolan’s term as a Director expires on May 3, 2019.

NEOs Who Are Not Directors

Kevin L. Santacroce

Mr. Santacroce is Executive Vice President and Chief Lending Officer of the Company. Mr. Santacroce joined the Company in March 1997 as Assistant Cashier and Credit Administrator. In January 2004, Mr. Santacroce was promoted to Senior Vice President and Chief Lending Officer. Mr. Santacroce is a graduate of Bryant University.

John M. McCaffery

Mr. McCaffery is Executive Vice President, Chief Financial Officer and Treasurer. Mr. McCaffery joined the Company in 2012 as Senior Vice President and Treasurer, was promoted to Executive Vice President in 2014 and appointed Chief Financial Officer in 2016. Prior to his service at the Company, Mr. McCaffery was the Treasurer of State Bank of Long Island. Mr. McCaffery is a graduate of Hofstra University.

James J. Manseau

Mr. Manseau is Executive Vice President and Chief Retail Banking Officer of the Company. Mr. Manseau joined the Company as Senior Vice President and Chief Retail Banking Officer in March 2008. Prior to joining the Company, Mr. Manseau served as a Divisional Senior Vice President with North Fork Bancorporation, Inc. and Capital One. Mr. Manseau is a graduate of the State University of New York at Farmingdale.

-  7  -


 

DIRECTOR NOMINATIONS

The Board of Directors has established a Corporate Governance and Nominating Committee for the selection of Directors to be elected by the shareholders. Nominations of Directors to the Board are recommended by the Committee and determined by the full Board of Directors. The Board believes that it is appropriate to have the input of all Directors with respect to the candidates to be considered for election to the Board by the shareholders. In this regard, the Board believes that each individual director has a unique insight into the operations of the Company and the Bank, the communities in which we operate, and the needs of the Company with respect to Board membership.

The Board has determined that, except as to Messrs. O’Connor and Nolan, each member of the Board is an “independent director” within the meaning of the corporate governance listing standards of the Nasdaq Stock Market. Messrs. O’Connor and Nolan are not considered independent because they are employees of the Company. Mr. Nolan’s service as a director will expire as of the May 3, 2019 Annual Meeting of Shareholders. In reaching independence determinations of other Directors, the Board considered loans outstanding that were made on the same terms as available to others and as to the independence of Mr. Tobin, noted that the continuing compensation he receives from the Company for his prior employment as an executive officer, which employment ceased on March 2, 2010, is non-discretionary and not contingent on continuing service.

The Company’s Corporate Governance and Nominating Committee Charter outlines the nomination process and is available on the Company’s website, www.bnbbank.com. The Committee identifies nominees by first 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 gaining new perspectives. If any member of the Board does not wish to continue in service, or if the Committee decides not to re-nominate a member for re-election, or if the size of the Board is increased, the Committee would solicit suggestions for director candidates from all Board members. The Board 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 had experiences and achievements that have given him or 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 their responsibilities to the Company and its shareholders; and

·

Has the capacity and desire to represent the balanced, best interests of the shareholders of the Company as a group, and not primarily a special interest group or constituency.

While the Corporate Governance and Nominating Committee does not have a formal policy with respect to diversity on the Board of Directors, consideration is given to nominating persons with different perspectives and experience to enhance the deliberation and decision-making processes of the Board of Directors.

All nominees for director currently serve on the Board.

PROCEDURES FOR THE NOMINATION OF DIRECTORS BY SHAREHOLDERS

The Board has adopted procedures for the submission of director nominees by shareholders. If a determination is made that an additional candidate is needed for the Board of Directors, the Board will consider candidates submitted by a shareholder. Shareholders can submit the names of qualified candidates for Director by writing to our Corporate Secretary, Bridge Bancorp, Inc., 2200 Montauk Highway, P.O. Box 3005, Bridgehampton, New York 11932. The Corporate

-  8  -


 

Secretary must receive a submission not less than ninety (90) days prior to the date of the Company’s proxy materials for the preceding year’s annual meeting. The submission must include the following information:

·

The name and address of the shareholder as they appear on the Company’s books, and number of shares of Common Stock that are owned beneficially by such shareholder (if the shareholder is not a holder of record, appropriate evidence of the shareholder’s ownership will be required);

·

The name, address and contact information for the candidate, and the number of shares of Common Stock that are owned by the candidate (if the candidate is not a holder of record, appropriate evidence of shareholder 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;

·

A statement detailing any relationship between the candidate and any customer, supplier or competitor of the Company;

·

Detailed information about any relationship or understanding between the proposing shareholder 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 shareholder for presentation by the shareholder at an annual meeting of shareholders must comply with the procedural and informational requirements described in “Advance Notice of Business or Nominations to Be Brought Before an Annual Meeting.”

SHAREHOLDER COMMUNICATIONS WITH THE BOARD

A shareholder of the Company who wants to communicate with the Board of Directors or with any individual Director can write to the Corporate Secretary, Bridge Bancorp, Inc., 2200 Montauk Highway, P.O. Box 3005, Bridgehampton, New York 11932, Attention:  Board Administration.

The letter should indicate that the author is a shareholder and if shares are not held of record, should include appropriate evidence of stock ownership. Depending on the subject matter, the Corporate Secretary will:

·

Forward the communication to the Director or Directors to whom it is addressed;

·

Attempt to 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 Corporate Secretary shall present a summary of all communications received since the last meeting that were not forwarded and make those communications available to the Directors.

CODE OF ETHICS

The Board has adopted a Code of Ethics that is applicable to the officers, directors and employees of the Company, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics is available on the Company’s website, www.bnbbank.com. Amendments to and waivers from the Code of Ethics will also be disclosed on the Company’s website.

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BOARD MEETINGS AND COMMITTEES

The following three standing committees facilitate and assist the Board in executing its responsibilities:  the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee. The table below shows current membership for each of the standing Board committees.

 

 

 

 

 

 

Audit
Committee

    

Compensation
Committee

    

Corporate Governance and
Nominating Committee

 

Rudolph J. Santoro*

 

Emanuel Arturi*

 

Dennis A. Suskind*

 

Charles I. Massoud

 

Marcia Z. Hefter

 

Charles I. Massoud

 

Dennis A. Suskind

 

Albert E. McCoy, Jr.

 

Rudolph J. Santoro

 

Daniel Rubin

 

Raymond A. Nielsen

 

Raymond A. Nielsen

 

 

 

Matthew Lindenbaum

 

Matthew Lindenbaum

 


*  Committee Chairperson

 

The business of the Board of Directors of the Company and the Bank is conducted through meetings and activities of the Boards and their Committees. The Board of Directors of the Company and the Bank meets monthly, or more often as may be necessary. The Board of Directors of the Company and the Bank met eighteen times during 2018. 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 2018, including Board and Committee meetings of the Bank and the Company. Although it has no official policy, the Board strongly encourages each of its members to attend the Annual Meeting of Stockholders. All persons serving on the Board of Directors at the time of the Annual Meeting of Stockholders held on May 4, 2018 attended the meeting.

BOARD LEADERSHIP AND RISK OVERSIGHT

Board Leadership Structure

The Board historically has been chaired by an independent director, rather than the chief executive officer. The current chairperson is Ms. Marcia Hefter. The Board of Directors believes that the non-executive chair structure helps to distinguish the role of the chairperson, in managing the board, which in turn serves in an oversight capacity, from the responsibilities of the chief executive officer in managing the operations of the Company.

The Role of the Board in Risk Oversight

The entire Board of Directors is engaged in risk management oversight. The Risk and Audit Committees assists the Board of Directors in its oversight of the Company’s corporate-wide risk management and in identifying, measuring, monitoring, and managing risks, and as to the Audit Committee in particular, material financial risks. The Bank’s Enterprise Risk Committee receives regular reports from the Compensation, Credit, ALCO, Operational and Compliance Risk Committees of the Board. In addition, the Enterprise Risk Management Committee (“ERMC”), provides regular reports as to the actions taken by management to adequately address those risks.

THE AUDIT COMMITTEE

The Audit Committee consists of Directors Santoro (Chairperson), Massoud, Rubin and Suskind. 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 duties and responsibilities of the Audit Committee include, among other things:

·

Retaining, overseeing and evaluating the Independent Registered Public Accounting Firm to audit the annual consolidated financial statements of the Company;

·

Overseeing the Company’s financial reporting processes in consultation with the Independent Registered Public Accounting Firm and the internal audit function;

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·

Reviewing the annual audited consolidated financial statements, quarterly financial statements and the Independent Registered Public Accounting Firm’s report with management and the Independent Registered Public Accounting Firm and recommending inclusion of the annual audited consolidated financial statements in the Company’s annual report on Form 10‑K;

·

Maintaining direct lines of communication with the Board of Directors, management, internal audit staff and the Independent Registered Public Accounting Firm;

·

Overseeing the internal audit function and reviewing management’s administration of the system of internal accounting controls;

·

Approving all engagements for audit and non-audit services by the Independent Registered Public Accounting Firm; and

·

Reviewing the adequacy of the Audit Committee charter.

The Audit Committee met nine times during 2018. The Audit Committee reports to the Board on its activities and findings. The Board of Directors has determined that Rudolph Santoro and Dennis Suskind are “Audit Committee Financial Experts” as that term is used in the rules and regulations of the SEC.

AUDIT COMMITTEE REPORT

The Audit Committee operates under a written charter adopted by the Board of Directors. A copy of the charter of the Audit Committee is available on the Company’s website, www.bnbbank.com.

Management is responsible for the preparation of the Company’s consolidated financial statements and their assessment of the design and effectiveness of the Company’s internal control over financial reporting. The Independent Registered Public Accounting Firm is responsible for performing an independent audit of the Company’s consolidated financial statements and opining on the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing their reports thereon. As provided in its charter, the Audit Committee’s responsibilities include monitoring and overseeing these processes.

In discharging its responsibilities, the Audit Committee has:

·

Reviewed and discussed with management, and the Independent Registered Public Accounting Firm, the Company’s audited consolidated financial statements for the year ended December 31, 2018;

·

Reviewed and discussed with the Independent Registered Public Accounting Firm all matters required to be discussed under Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the PCAOB; and

·

Received the written disclosures and the letter from the Independent Registered Public Accounting Firm required by applicable requirements of the PCAOB regarding the Independent Registered Public Accounting Firm’s communications with the audit committee concerning independence, and has discussed with the Independent Registered Public Accounting Firm its independence from the Company.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018 and filed with the SEC. In addition, the Audit Committee selected Crowe LLP to be the Company’s Independent Registered Public Accounting Firm for the year ending December 31, 2019, subject to the ratification of this appointment by the shareholders.

This report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

-  11  -


 

The foregoing report has been furnished by Audit Committee members:

 

 

 

Rudolph J. Santoro, Chairperson

 

Charles I. Massoud

 

Daniel Rubin

 

Dennis A. Suskind

 

 

THE COMPENSATION COMMITTEE

The Compensation Committee met ten times in fiscal year 2018. The Compensation Committee consists of Directors Arturi (Chairperson), Hefter, McCoy Jr., Nielsen, and Lindenbaum. Each member is considered independent as defined in the NASDAQ® corporate governance listing standards. The Board has adopted a charter for the Compensation Committee, which is available on the Company’s website, www.bnbbank.com.

The Compensation Committee’s responsibilities include, among other duties, the responsibility to:

·

Establish, review, and modify from time to time as appropriate the overall compensation philosophy of the Company;

·

Review, evaluate and recommend Company objectives relevant to the CEO’s compensation; evaluate CEO performance relative to established goals; and review, evaluate and recommend to the full Board of Directors, the CEO’s compensation;

·

Review, evaluate and recommend goals relevant to the compensation of the Company’s other executive management personnel; and review such officers’ performance in light of these goals and determine (or recommend to the full Board of Directors for determination) such officers’ cash and equity compensation based on this evaluation;

·

Review, evaluate and recommend, in consultation with the corporate governance committee, the compensation to be paid to directors of the Company and of affiliates of the Company for their service on the Board;

·

Administer the Company’s stock benefit plans; and

·

Review and oversee incentive compensation arrangements of the Bank to ensure they are balanced relative to incentives and risk objectives.

Compensation recommendations for the President and Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”), Chief Lending Officer (“CLO”), Chief Retail Banking Officer (“CRO”) and Chief Financial Officer (“CFO”), collectively known as NEOs, are made by the Compensation Committee to the Board of Directors. Decisions regarding non-equity compensation for the other officers are made under the authority of the Company’s CEO. The Committee has engaged McLagan, an outside and independent national compensation consulting firm, to assist in the annual review of its incentive compensation arrangements for the NEOs and all other employee groups of the Bank. McLagan has not provided any other services for the Company.

At the request of the Committee, Compensation Committee meetings are regularly attended by the CEO, COO, and CFO. At each meeting, the Compensation Committee meets in executive session, which excludes executive management. The Compensation Committee’s Chairperson reports the Committee’s recommendations on executive compensation to the Board. Independent advisors and the Company’s finance department support the Compensation Committee in its duties and, along with the CEO, COO, and CFO, may be delegated authority to fulfill certain administrative duties regarding the compensation programs.

In addition, the Compensation Committee engaged McLagan to assist in the review of potential risks stemming from the Company’s compensation programs. McLagan conducted a comprehensive review and evaluation of incentive plans covering all employees of the Company. The review included an evaluation of the design features of each plan, the governance and oversight aspects of each plan, the mix of cash and equity incentives opportunities, the use of performance metrics, the performance periods and time horizon of each plan, the various termination provisions associated with the plans, and other dimensions of the plans deemed relevant for the risk review process. McLagan reviewed the results of its assessment with the Committee and with management. Based on the results of the independent assessment by McLagan

-  12  -


 

and the assessment of risks by the Committee, the Board has determined that the Company’s compensation policies, practices and programs do not promote excessive risk taking or pose risks that are reasonably likely to have a material adverse effect on Bridge Bancorp, Inc.

The Compensation Committee considered the independence of McLagan, in light of SEC rules and NASDAQ listing standards. The Committee requested and received a report from McLagan addressing the independence of McLagan and its consultants, including the following factors: (1) other services provided to us by McLagan; (2) fees paid by us as a percentage of Aon’s total revenue; (3) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (4) any business or personal relationships between the consultants and a member of the Committee; (5) any company stock owned by the consultants; and (6) any business or personal relationships between our executive officers and the consultants. The Committee discussed these considerations and concluded that the work performed by McLagan and its consultants involved in the engagements did not raise any conflict of interest and that McLagan has served as an independent compensation consultant.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee consists of Directors Arturi (Chairperson), Hefter, McCoy, Jr., Nielsen, and Lindenbaum. None of these directors was during 2018, or is formerly, an officer of the Company. During the year ended December 31, 2018, the Company had no “interlocking” relationships in which any executive officer of the Company is a member of the board of directors or compensation committee of another entity, one of whose executive officers is a member of the Company’s Board of Directors or Compensation Committee.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The primary goals of the Compensation Committee (“Committee”) for 2018 were consistent with its established philosophy of providing compensation arrangements for executive officers that are designed to attract and retain executives who can perform and manage the Company in the shareholders’ best interest. These compensation arrangements are designed to be aligned with the performance of the Company both on a short-term and long-term basis and are based on individual contributions and the Company’s performance.

Company Performance

Our Company has experienced significant growth in assets, deposits and earnings over the past five years while maintaining very favorable credit quality.

In 2018, the management team continued to grow our Company and take advantage of opportunities available in our marketplace. The Committee views the performance in 2018 after adjusting for several one-time items, as a continuation of performance at a very high level as shown below:

·

Performance: Reported returns on average assets and equity for 2018 were 0.87% and 8.66% respectively, and the Company’s net income was $39.2 million, compared to $20.5 million reported in 2017. The 2018 results include several one-time charges recorded during the year. The Company executed on two major initiatives; a second quarter 2018 balance sheet restructure and fourth quarter office relocation and consolidation. These initiatives resulted in total charges of $6.8 million, after tax. In addition, the Company recorded a $6.9 million after tax charge related to the fraudulent conduct of a business customer through their deposit accounts at the Bank. The Company’s adjusted returns on average assets and equity for 2018 excluding these charges, net of income taxes, were 1.18% and 11.69%, respectively.

·

Growth Strategy: The Company has continued its disciplined growth strategy delivering growth in both loans and deposits. During 2018, the Company experienced growth in loans of $173 million, or 6% and deposits increased $552 million, or 17%. At December 31, 2018, the Company had total assets of $4.7 billion, including $3.3 billion in loans, $3.9 billion in deposits and 39 branches from Montauk to Manhattan.

-  13  -


 

·

Credit Quality: The Company recognized net charge-offs of $2.1 million for 2018, compared to net charge-offs of $8.2 million for the full year 2017.  The charge-offs in 2018 resulted from the charge-off of one loan which was fully reserved for and partial charge-offs recognized on eleven taxi medallion loans attributable to payoff settlements accepted by the Bank. The charge-offs in 2017 resulted primarily from the charge-off of loans and specific reserves associated with two specific relationships. At December 31, 2018, the Company’s non-performing assets were $3.0 million, or 0.06% of total assets, compared to $7.0 million, or 0.16% of total assets, at December 31, 2017. Non-performing assets remain significantly better than peers.

·

Capital Management and Dividend Payments: The Company has attracted and retained access to the capital and debt markets, and generated capital through retained earnings, increasing stockholders’ equity $279 million since December 31, 2014. This capital was deployed to support the growth associated with the acquisition of CNB in June 2015, as well as organic growth. In 2018, the Company paid four quarterly dividends to shareholders totaling $0.92 per share. This continues the Company’s long term trend of uninterrupted dividends.

·

Long-Term Performance: From January 1, 2014 to December 31, 2018, the Company’s tangible book value has increased $3.46 per share, or 25%, and the Company’s assets have grown $2.8 billion, or 148%, from approximately $1.9 billion to $4.7 billion.

Key Compensation Decisions – Executive Summary

Increased Base Salaries – Based upon a review of compensation paid to executives in the proxy peer group and in light of Company and individual performance for 2018, the Committee and Board adjusted salaries for 2019 for the NEOs as follows:

 

 

 

 

 

 

 

 

 

 

 

    

2019

    

2018

    

% Increase

 

Kevin M. O’Connor

 

$

700,000

 

$

625,000

 

12%

 

Howard H. Nolan

 

$

365,000

 

$

350,000

 

4%

 

Kevin L. Santacroce

 

$

365,000

 

$

350,000

 

4%

 

John M. McCaffery

 

$

375,000

 

$

350,000

 

7%

 

James J. Manseau

 

$

330,000

 

$

330,000

 

-

 

 

Payments Under the Short Term Incentive Plan: The primary performance vehicle for the Bank is the Short Term Incentive Program (“STIP”). The STIP is based 80% on absolute measures and 20% on board discretion. The STIP establishes threshold, target and maximum performance criteria for each performance goal. The Company must achieve threshold performance level in order for a minimum payout to occur.  For 2018, the Board determined STIP was awarded at 62% achievement which is between threshold and target performance compared to 50% achievement in 2017.  No discretion was awarded by the Board in 2018. The Plan awards for 2018 were paid 80% in cash and 20% in restricted stock. Please see “Short Term Incentive Program” under the section “2018 Executive Compensation Components” for more details.

Long Term Incentive Plan: During 2018, in accordance with the Long Term Incentive Plan (“LTI Plan”), the Board granted long term stock awards including performance based awards. The awards are determined by the Committee and Board within a specified target range of between 30‑60% of salary. The LTI Plan includes 60% performance vested awards and 40% time vested awards. The performance based awards are in the form of 30% Performance Share Units (“PSUs”) and 30% premium priced stock options. The PSUs cliff vest after three years contingent upon the achievement of the Board established 3 year EPS goals, subject to adjustment up or down based upon the Company’s 3 year total shareholder return (“TSR”) relative to peer banks. The stock options reflect an exercise price at a 10% premium to the closing price at the date of grant. The time vested awards are in the form of restricted stock units (“RSUs”) and vest ratably over five years.  Please see “Long Term Stock Incentive Program” and “Realizable Compensation” under the section “2018 Executive Compensation Components” for more details.

Chief Executive Officer Compensation:

·

Base Salary – In order to align his compensation with CEOs in the peer group and based on his individual performance and the performance of the Company for 2018, Mr. O’Connor received an increase in base salary for 2019. The Board increased Mr. O’Connor’s 2019 base salary 12% to $700,000 from $625,000. Mr. O’Connor did not receive an increase in salary in 2018. 

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·

STIP Award – For 2018, Mr. O’Connor earned a STIP award of 42% of base salary. This reflects personal achievement of 75% resulting in a downward adjustment of 14%, associated with the fraud loss from his eligible amount of 56% based on the board determined performance achievement of 62%. This also represents 47% of the overall maximum payout opportunity of 90% of base salary. The STIP Award of $261,600 is paid 80% in cash, and 20% in restricted stock that was granted in February 2019 and vests ratably over three years.

·

LTI Plan – As noted above, the Board approved the grant of equity in 2018. Mr. O’Connor’s 2018 grant was based on a target amount of 60% of his salary. Under the LTI Plan, the awards are granted in the form of 30% PSUs, 30% premium priced stock options, and 40% in time vested RSUs. The PSUs cliff vest after three years and upon achievement of the performance goals, and the options vest ratably over three years, while time vested RSUs vest ratably over 5 years.

Other Named Executive Officer Compensation:

·

Base Salaries – As noted above, the Board increased base salaries between 0% and 7% for the other executives during 2019.

·

STIP Award – Each of the officers listed below were impacted by the Company’s 2018 performance. Each received a STIP award between the threshold and target level and equal to 62% of the overall maximum opportunity of 60% of base salary, except for Mr. Manseau whose personal achievement was 50% resulting in a downward adjustment to his award. In a similar fashion, all STIP Awards are paid 80% in cash and 20% in restricted stock that vest ratably over three years.

·

LTI Plan - The other executives also participated in the LTI Plan described above with grants of equity in 2018.

The Summary Compensation Table includes the cash portion of the STIP award earned in 2018, based on 2018 performance and paid in 2019, and restricted stock awards,  restricted stock units, performance share units and stock options granted on February 13, 2018 based on 2017 performance as presented below: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018 Cash

 

2018 Stock / RSU Awards

 

 

 

 

 

 

Total Stock

 

Total Stock

 

 

 

 

 

2018 Cash

 

Incentive %

 

STIP

 

Long Term

 

 

 

 

 

 

RSU / Options

 

RSU / Options

NEO

  

2018 Base Salary

  

Incentive

  

Salary

  

Shares

  

$

  

PSUs

  

$

  

RSUs

  

$

  

Stock Options

  

$

  

Awards #

  

Awards $

Kevin M. O’Connor

 

$

625,000

 

$

209,280

 

33.5

%

1,923

 

$

63,280

 

3,339

 

$

112,500

 

4,559

 

$

150,000

 

17,255

 

$

112,500

 

27,076

 

$

438,280

Howard H. Nolan

 

$

350,000

 

$

104,160

 

29.8

%

930

 

$

30,600

 

1,514

 

$

51,000

 

2,067

 

$

68,000

 

7,822

 

$

51,000

 

12,333

 

$

200,600

Kevin L. Santacroce

 

$

350,000

 

$

104,160

 

29.8

%

678

 

$

22,300

 

1,469

 

$

49,500

 

2,006

 

$

66,000

 

7,592

 

$

49,500

 

11,745

 

$

187,300

John M. McCaffery

 

$

350,000

 

$

104,160

 

29.8

%

903

 

$

29,700

 

1,469

 

$

49,500

 

2,006

 

$

66,000

 

7,592

 

$

49,500

 

11,970

 

$

194,700

James J. Manseau

 

$

330,000

 

$

49,104

 

14.9

%

848

 

$

27,900

 

1,380

 

$

46,500

 

1,884

 

$

62,000

 

7,132

 

$

46,500

 

11,244

 

$

182,900

 

Shareholder Vote

At our 2018 annual meeting, 95.6% of our shareholders approved our “say-on-pay” resolution as to the executive compensation disclosed in last year’s proxy statement. The Company considered the shareholder advisory vote from the most recent annual meeting to be a positive endorsement of its current pay practices and believes the vote result is evidence that its compensation policies and decisions have been in the best interests of shareholders. As a result, the Compensation Committee retained its overall approach to executive compensation. The Company will continue to monitor the level of support for each say-on-pay proposal in the future and will consider this alongside other factors as it makes future executive compensation decisions.

Overview of the Compensation Plan

The Committee has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The goal of the Committee is for the total compensation awarded to, earned by, and paid to our NEOs and “covered employees” to be fair, reasonable and competitive and to comply with the regulatory guidance on Sound Incentive Compensation Policies (“SICP”). Covered employees included senior executives as well as other employees who, either individually or as part of a group, have the ability to expose the Company or Bank to material amounts of risk.

-  15  -


 

Compensation Philosophy and Objectives

The compensation philosophy, established by the Committee, provides broad guidance on executive compensation and, more specifically, the compensation of the NEOs and other covered employees. The incentive compensation plans are designed to be consistent with safety and soundness standards and the regulatory guidance on SICP. The Plans include consideration of the following key principles:

(1)

Incentive compensation arrangements should provide employees with incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose the Company or Bank to imprudent risk;

(2)

These arrangements should be compatible with effective controls and risk management; and

(3)

These arrangements should be supported by strong corporate governance, including active and effective oversight by the Company’s Board of Directors.

The Committee engaged McLagan, as its independent compensation consultant to review the design of the Company’s compensation plans and associated policies and procedures in light of the compliance requirements of the SICP.

The compensation philosophy includes:

·

Aligning shareholder value with compensation;

·

Providing a direct and transparent link between our performance and pay for the NEOs;

·

Aligning the interests of the Company’s senior executive officers with that of the shareholders through performance based incentive plans;

·

Making wise use of the Company’s equity resources to ensure compatibility between management and shareholder interests; and

·

Awarding total compensation that is both reasonable and effective in attracting, motivating, and retaining key executives.

The compensation objectives of the Company and Bank, subject to experience and achieving plan performance, are to:

·

Pay base salaries to the Company’s senior executives at a level consistent with the Company’s performance related to the Company’s selected peer group (the market);

·

Provide total cash compensation (salary and cash incentive compensation) to the Company’s senior executives at a level consistent with performance related to market;

·

Provide total direct compensation (the sum of salary, cash incentives and equity incentives) at a level consistent with performance related to market, based on planned and cumulative performance;

·

Align senior management’s interest with that of shareholders by ensuring equity is a meaningful part of total incentive compensation; and

·

Comply with the SICP.

For NEOs, compensation comparisons are based on a peer group of banks, taking into consideration asset size, geographic location, and performance as well as internally developed goals. However, reasonable exceptions to this market comparison methodology are considered as appropriate by the Committee.

In addition, the Company’s compensation philosophy is to provide retirement benefits that are competitive with market practice. The Committee of the Board annually reviews the administration of the compensation plans.

We have considered the most recent shareholder say-on-pay advisory vote in determining compensation policies and decisions. In light of strong stockholder support, the Committee concluded that no material revisions were necessary to our executive officer 2018 compensation program. The Committee annually assesses the Company’s compensation program to ensure alignment with the strategic plan and overall risk profile.

-  16  -


 

Risk Assessment Process to Determine Covered Employees

Our management has reviewed all job positions to determine which positions have the ability to expose us to material risks. In determining whether an employee, or group of employees, may expose us to material risk, management considered the full range of inherent risks arising from or generated by, the employees’ activities, including Credit/Asset Quality, Asset Liability/Interest Rate Risk, Liquidity, Operational/Transactional, Compliance/Legal, Reputation and Strategic risks.

Risks are considered to be material if they are material to the Company or Bank, or a business line or operating unit of the Bank that is itself material to the Company or Bank.

Principle 1: Balanced Risk Taking Incentives

All covered employees’ incentive plans were evaluated to determine if the plans appropriately balance risk and financial results in a manner that does not encourage imprudent risks.

Principle 2: Compatibility with Effective Controls and Risk Management

The Bank’s risk management processes and internal controls reinforce and support the development and maintenance of balanced incentive compensation arrangements. These processes and controls include documentation to permit an audit of the effectiveness of the Bank’s process for establishing, modifying and monitoring incentive compensation arrangements.

Principle 3: Strong Corporate Governance

Our incentive compensation plans are supported by strong corporate governance, including active and effective oversight by the Committee and Board. In addition, the Committee reviews all incentive plans and has hired an independent compensation consultant, McLagan, to assess the incentive compensation arrangements for compliance with SICP. The Committee receives information and analysis from McLagan and management to allow the Committee and Board to assess whether the overall design and performance of the incentive compensation arrangements are consistent with the Company’s and Bank’s safety and soundness.

Role of CEO in Compensation Decisions

The CEO does not attend portions of the Committee and Board meetings during which his performance is being evaluated or his compensation is being determined. The CEO provides recommendations to the Committee and Board on the other NEOs compensation.  The Committee recommends, and the Board approves, all compensation decisions for the CEO as well as the other NEOs and approves recommendations regarding equity awards to certain officers of the Company. The NEOs annually review the performance and recommend compensation for senior management of the Company who are not NEOs.

Setting Executive Compensation

Based on the foregoing philosophy and objectives, the Committee has structured the Company’s annual and long-term incentive-based cash and equity compensation to motivate executives to achieve the business goals set by the Company and reward the executives for achieving such goals. In furtherance of this, McLagan’s annual review provides the Committee with relevant market data and alternatives to consider when making compensation decisions for the NEOs and on the recommendations being made by the Company’s management for other key executives. In making compensation decisions, the Committee compares each element of total compensation against a peer group of publicly-traded financial institutions that are comparable in asset size and performance (collectively, the “Compensation Peer Group”). When selecting the peer group, peer bank performance is taken into consideration. The key performance measures used in selecting the Company’s peer group are:

·

Asset Size

·

Geographic Location

·

Return on Average Equity (“ROAE”)

·

Non-Performing Assets as a Percentage of Total Assets

·

Loan Portfolio Focused on Commercial Lending

The Compensation Peer Group was reviewed by the Committee in 2017, and changes were made to replace previous peer banks that were acquired. Not all companies in the Compensation Peer Group reported data for each of our executive

-  17  -


 

positions. The twenty companies comprising the Compensation Peer Group used to set fiscal year 2018 pay levels and to assess relative total shareholder return for 2018 restricted stock unit grants for the NEOs follows:

 

 

 

Compensation Peer Group

 

 

Blue Hills Bancorp Inc.

 

Flushing Financial Corp.

Brookline Bancorp, Inc.

 

Hingham Institution for Savings

Century Bancorp

 

Lakeland Bancorp, Inc.

CNB Financial Corp.

 

Kearny Financial Corp.

ConnectOne Bancorp

 

Meridian Bancorp Inc.

Dime Community Bancshares

 

OceanFirst Financial Corp.

Eagle Bancorp

 

Oritani Financial Corp.

Enterprise Bancorp, Inc

 

Peapack-Gladstone Financial

First Connecticut Bancorp, Inc.

 

Sandy Spring Bancorp Inc.

First of Long Island Corporation

 

Univest Corporation of Pennsylvania

 

Market compensation comparisons were based primarily on information from the Compensation Peer Group. Market data was aged by an annualized factor of 3.0% to adjust for the historical nature of the data.

Each NEO’s current compensation was compared to the median of the applicable benchmark position within the Compensation Peer Group.  Overall base pay and the targeted level of total direct compensation was competitive with the market median (+/- 15% on average). A significant percentage of total compensation is allocated to incentives as a result of the philosophy mentioned above. The Committee’s recommendations on granting restricted stock awards are based on the evaluation of the Company’s performance in connection with year-end results, the individual’s accomplishments and the position held by the individual. The NEOs are parties to employment agreements which are described elsewhere in this Proxy statement.

2018 Executive Compensation Components

For fiscal year ended December 31, 2018, the principal components of compensation for NEOs were:

·

Base salary

·

Short term incentive program

·

Long term equity incentive compensation

·

Retirement and other benefits

·

Perquisites and other personal benefits

Base Salary

The Company provides NEOs and other employees with base salary to compensate them for services rendered during the fiscal year. Base salary ranges for NEOs are determined for each executive based on his or her position and responsibility by using market data. Base salary ranges are designed so that salary opportunities for a given position will generally reflect +/- 15% of the market 50th percentile. The annual salary of the NEOs is reviewed annually by the Committee and Board of Directors. Base salaries for the NEOs for 2018 and 2017 follows:

 

 

 

 

 

 

 

 

 

 

 

    

2018

    

2017

    

% Change

 

Kevin M. O’Connor

 

$

625,000

 

$

625,000

 

-

%

Howard H. Nolan

 

$

350,000

 

$

340,000

 

 3

%

Kevin L. Santacroce

 

$

350,000

 

$

330,000

 

 6

%

John M. McCaffery

 

$

350,000

 

$

330,000

 

 6

%

James J. Manseau

 

$

330,000

 

$

310,000

 

 6

%

 

The increases in 2018 base salaries addressed individual performance as well as the general shortfall to market and brought the NEOs into alignment with the base salaries of the proxy peers.

-  18  -


 

Short Term Incentive Program

Each NEO has an incentive opportunity defined by a target incentive and range that is based on their role and competitive market practice. Incentive targets/ranges are expressed as a percentage of base salary and determined based on competitive market practice for similar roles in similar organizations. The Board established the financial performance targets to be used in establishing awards under the STIP for fiscal 2018, as well as the percentage of base salary that can be earned by each category of officer based on the achievement of targets. The Plan is structured as follows:

 

 

 

 

 

    

Weighing %

 

Board Defined “Absolute” Goals

 

 

 

Profitability

 

 

 

Adjusted ROAE

 

15

%

Adjusted EPS

 

20

 

Adjusted Operating Expense to Average Assets

 

15

%

 

 

50

 

Growth

 

 

 

Deposits

 

20

%

 

 

 

 

Asset Quality

 

 

 

NPA to Assets

 

10

%

Total Absolute Goals

 

80

%

 

 

 

 

Board Discretion

 

20

%

Total

 

100

%

 

In 2018, the Board amended the STIP to remove goals relative to peers. The “absolute” goals are established by the Board and are measured based on the year ended December 31, 2018. The remaining 20% is determined at the discretion of the Board. The Company also maintains a STIP for all other employees based on absolute goals approved by the Committee and Board. The NEOs have agreed that their performance achievement will not exceed the performance achievement of the other employee STIP. The “adjusted” goals above are consistent with the adjusted measures presented in the Company’s earnings’ releases and exclude non recurring costs and income items, except the fraud loss. For each performance goal, the Board established three performance levels; Threshold, Target Performance and Maximum Performance.

 

-  19  -


 

Additionally, for each individual performance goal, up to 200% of the goal weighting can be achieved. However, the total STIP award is capped at the maximum % of base salary for each NEO.  In order to earn a minimum payout, the Company’s performance achievement must equal or exceed the threshold level. If none of the performance criteria are achieved, no short term incentive is earned under the Plan. However, the Committee may at its discretion, recommend to the Board awards it considers reasonable. For 2018, Bridge Bancorp’s performance achievement was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BDGE at 

 

% of Max 

 

BDGE

 

Absolute Measures

    

Weightings

    

Threshold

    

Target

    

Max

    

12/31/18

    

Achieved

    

Achievement

 

Profitability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted ROAE

 

15

%  

 

9.00

%  

 

10.00

%  

 

12.00

%  

 

10.15

%  

73

%  

11

%

Adjusted EPS

 

20

%

$

2.00

 

$

2.30

 

$

2.55

 

$

2.31

 

70

%

14

%

Adjusted Operating Expenses/Average Assets

 

15

%  

 

1.97

%  

 

1.90

%  

 

1.80

%  

 

1.95

%  

40

%  

 6

%

 

 

50

%  

 

  

 

 

  

 

 

  

 

 

  

 

  

 

31

%

Growth

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

  

 

  

 

Deposits

 

20

%  

 

10.00

%

 

12.00

%

 

16.00

 

 

13.30

%

90

%  

18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NPA to Assets

 

10

%  

 

0.40

%  

 

0.30

%  

 

0.20

%  

 

0.06

%  

130

%  

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quantitative measures

 

80

%  

 

  

 

 

  

 

 

  

 

 

  

 

  

 

62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Board Discretion

 

20

%  

 

  

 

 

  

 

 

  

 

 

  

 

  

 

 —

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Achievement

 

100

%  

 

  

 

 

  

 

 

  

 

 

  

 

  

 

62

%

 

The Company’s achievement reflects certain adjustments to reported results.  Adjusted ROAE and Adjusted EPS exclude the net securities losses associated with the balance sheet restructuring in the second quarter of 2018. The Adjusted Operating Expense to Average Assets excludes the net fraud loss reported in the third quarter of 2018. The Board awarded 0% of the discretionary component due to the net fraud loss resulting in 62% achievement and the following payout % of base salary for each NEO:

 

 

 

 

 

 

 

 

 

 

 

 

 

Payout Opportunity as a % of Base Salary

 

Actual Payout

 

NEO

    

Threshold %

    

Target %

    

Maximum %

    

% of Base Salary

 

 

 

 

 

 

 

 

 

 

 

Kevin M. O’Connor

 

30

%  

60

%  

90

%  

42

%

Howard H. Nolan

 

20

%  

40

%  

60

%  

37

%

Kevin L. Santacroce

 

20

%  

40

%  

60

%  

37

%

John M. McCaffery

 

20

%  

40

%  

60

%  

37

%

James J. Manseau

 

20

%  

40

%  

60

%  

19

%

 

As described in the proxy filed in 2018, the 2017 Plan had five performance goals; two relative measures vs. the compensation peer group: return on average equity, operating expense to average assets, and three absolute measures determined by the Board: core earnings per share, non-performing assets as a percentage of total assets, and net charge-offs to average assets. The Company achieved 50% of the maximum incentive opportunity in 2017 and these results determined the dollar value of the equity awards granted in 2018.

In order to further ensure that the Company’s compensation programs do not encourage undue and unnecessary risks and promote a long-term outlook among the NEOs, the Committee and Board determined that the amount earned under the STIP will be paid partially in cash and partially in restricted stock awards. For 2018, the STIP awards were paid out 80% cash and 20% restricted stock awards. For 2017, STIP awards were paid out 70% cash and 30% restricted stock awards. For 2018, each restricted stock award granted in 2019 vests ratably over three years. Dividends are paid on unvested

-  20  -


 

restricted stock awards. The incentive compensation earned by NEOs for the years ended December 31, 2018 and 2017, respectively, reflecting the impact of performance achievements is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incentive Compensation Earned for the Years Ended December 31, 

 

 

2018

 

2017

 

 

 

 

 

Restricted 

 

 

 

 

 

 

 

Restricted 

 

 

 

 

    

Cash

    

Stock

    

Total

    

Cash

    

Stock

    

Total

Kevin M. O'Connor

 

$

209,280

 

$

52,320

 

$

261,600

 

$

147,670

 

$

63,280

 

$

210,950

Howard H. Nolan

 

$

104,160

 

$

26,040

 

$

130,200

 

$

71,400

 

$

30,600

 

$

102,000

Kevin L. Santacroce

 

$

104,160

 

$

26,040

 

$

130,200

 

$

51,975

 

$

22,275

 

$

74,250

John M. McCaffery

 

$

104,160

 

$

26,040

 

$

130,200

 

$

69,300

 

$

29,700

 

$

99,000

James J. Manseau

 

$

49,104

 

$

12,276

 

$

61,380

 

$

65,100

 

$

27,900

 

$

93,000

 

The 2017 restricted stock awards noted in the table above are included in the 2018 Summary Compensation Table under the heading “Stock Awards.”

Long Term Stock Incentive Program

The 2012 Stock-Based Incentive Plan (“2012 Equity Incentive Plan”), which was approved by the Company’s stockholders at the 2012 Annual Meeting of Stockholders, gives the Board the latitude to provide incentives and rewards to employees and Directors who are largely responsible for the success and growth of Bridge Bancorp, Inc. and its affiliates, and to assist all such entities in attracting and retaining experienced and qualified Directors, executives and other key employees.

Stock options may be either incentive stock options, which bestow certain tax benefits on the optionee, or non‑qualified stock options, not qualifying for such benefits. All options have an exercise price that is not less than the market value of the Company’s Common Stock on the date of the grant. Historically, stock based awards under the Company’s plans have either been stock options or shares of restricted stock (which are shares of Common Stock that are forfeitable and are subject to restrictions on transfer prior to the vesting date).

The vesting of restricted stock depends upon the executives continuing to render services to the Company. Restricted stock awards carry dividend and voting rights from the date of grant. Restricted shares are forfeited if the award holder departs the Company before vesting. Options have no value unless the Company’s stock price rises over time, and the value of restricted shares over time also is directly proportionate to the market value of the Company’s stock. The Committee’s recommendations on granting options and restricted stock awards are based on the evaluation of the Company’s performance in connection with year end results, the individual’s accomplishments, the position held by the individual and the individual’s overall compensation compared to the Company’s compensation peer group.

In 2014, the Committee and Board re-designed the LTI Plan for the NEOs to include performance based awards. The awards are discretionarily determined by the Committee and Board within a specified target range of between 30‑60% of salary. The LTI Plan includes 60% performance based awards and 40% time vested awards.

For 2018, the performance based awards are in the form of 30% PSUs and 30% premium priced stock options. The PSUs cliff vest contingent upon the achievement of the Board established 3 year EPS goals, which are aligned with budget and the strategic plan. Threshold achievement is required to earn any PSUs. Performance achievement between threshold and target and target and maximum is interpolated based on actual performance. PSUs can be earned between 0% and 150% of the target value and are subject to an additional adjustment up or down 20% based upon the Company’s 3 year TSR relative to peer banks. The stock options reflect an exercise price at a 10% premium to the closing price at the date of grant and vest ratably over three years.  The time vested awards are in the form of RSUs and vest ratably over five years.

In 2017, the LTI Plan included 60% performance vested awards based on 3‑year relative TSR to the proxy peer group and 40% time vested awards. The performance based awards are subject to adjustment up or down based upon the Company’s 3 year TSR relative to peer banks with threshold achievement based on the 25th percentile, target achievement based on the 50th percentile and maximum achievement based on the 75th percentile. The awards cliff vest in five years and require an additional two year holding period before the RSUs are delivered in shares of common stock.

-  21  -


 

Dividends on unvested PSUs and RSUs accrue to the executive in the form of additional PSUs and RSUs and are subject to forfeiture prior to vesting. The Summary Compensation Table includes the February 2018 grant of 12,522 in time vested RSUs, 9,171 in PSUs and 47,393 in premium priced stock options in each case relating to 2017 performance.

Realizable Compensation

 

The Committee does not believe that the Summary Compensation Table values adequately measures NEO compensation for the purpose of assessing pay-for-performance alignment. The Summary Compensation Table utilizes accounting conventions to estimate values of equity awards at the time of grant. As might be expected, these estimated values can differ significantly from the actual value that is ultimately earned from these awards.

 

For this reason, the Committee also considers “realizable compensation” which plays an important role in helping the Committee assess our compensation program’s alignment with shareowners’ long-term interests. It captures the impact of the Company’s current share price performance on previously granted equity awards. By using this end-of-year stock price, realizable compensation directly correlates the executive’s benefit with the return our shareowners received from investing in our Common Stock over the same period. An illustration of this alignment over a three-year period from 2016 to 2018 is shown in the charts below for the CEO and in aggregate for the other Named Executive Officers, excluding our CEO:

 

 

Picture 1

 

(1)

Stock options are valued at the spread between the December 31, 2018 stock price of $25.49 and the option exercise price.

(2)

Performance Shares are valued at the December 31, 2018 stock price of $25.49, multiplied by the trending payout based on performance compared to peers on December 31, 2018.

(3)

Restricted stock is valued at the December 31, 2018 stock price of $25.49.

 

Also, unlike the Summary Compensation Table, realizable compensation excludes any change in the value of an executive’s pension benefits during the year. The change in pension value shown in the Summary Compensation Table does not represent actual payments to be received upon retirement. It merely reflects the change between the current and prior year’s actuarial estimate of pension benefits, based on actuarial assumptions and external economic factors such as fluctuating interest rates. These calculations do not necessarily correlate with the value of actual benefits received and the plan does not measure individual or Company performance as assessed by the Committee and is therefore, in the Committee’s view, irrelevant to the pay-for-performance assessment.

 

-  22  -


 

Realizable compensation also excludes other indirect compensation elements, such as Company contributions to the 401(k) Plan and our non-qualified deferred compensation plans, as well as auto fringe benefits. Since these elements are also not based on performance, the Committee does not consider them relevant to the assessment of the CEO’s pay relative to his performance.

 

Retirement and Other Benefits

The Bank maintains a 401(k) plan (the “401(k) Plan”) for the benefit of its employees. During 2018, the Bank matched 100% of the employee’s contributions up to 1% of pay plus 50% of the employee’s contributions that exceed 1% but are less than 6% of pay (a maximum company match of 3.5% of pay). All employees, including the NEOs, can defer a minimum of 1% and a maximum of 100% of their annual income as long as the deferred compensation does not exceed Internal Revenue Service (IRS) limits. In addition, employees at Tier 2 and Tier 3 (Tiers described below) may receive a discretionary profit sharing benefit.

The Bank maintains a non-contributory, tax-qualified defined benefit pension plan (the “Pension Plan”) for eligible employees. All employees hired before October 1, 2012 that are at least age 21 and have completed at least one year of service are eligible to participate in the Pension Plan. The Pension Plan provides for a benefit for each participant according to the Tier the employee belongs to as outlined below. Compensation used to determine benefits are all wages, tips, and other compensation as reported on form W‑2, such as any amounts which are treated as salary reduction contributions under a 401(k) plan, a cafeteria plan or a qualified flexible benefits plan. The Normal Benefit Form is a Single Life Pension with 60 payments guaranteed. There are a number of optional forms of benefit available to the participants, all of which are adjusted actuarially. Participants are eligible for early retirement upon attaining age 55. As required by law, the Pension Plan is covered by the insurance program of the Pension Benefit Guaranty Corporation.

Tier 1 – NEOs and Certain Employees Who Met Specified Age and Service Requirements

·

These employees’ benefits under the Pension Plan are 1.50% of the participant’s average annual compensation multiplied by creditable service (up to 35 years); plus 1.00% of the participant’s average annual compensation multiplied by creditable service (in excess of 35 years); minus 0.49% of the participant’s average annual compensation in excess of Covered Compensation multiplied by creditable service (up to 35 years). The employee’s average annual compensation is determined using the highest average compensation during five consecutive years of employment or all years of employment, if less than five.

Tier 2 – All Other Employees Hired before October 1, 2012

·

These employee’s benefits under the Pension Plan are their accrued benefits determined using the Tier 1 formula above, but frozen for increases in service and compensation as of December 31, 2012. In addition, these employees receive benefits under the Pension Plan using a cash balance formula for all plan years beginning after December 31, 2012. The “Pay credits” under the cash balance formula are 3.75% of annual compensation for employees with less than 15 years of service and 5% of annual compensation for employees with more than 15 years of service. The “interest credits” are determined by multiplying the employee’s hypothetical account balance as of the beginning of a plan year by the actual dollar-weighted rate of return on plan investments during that plan year.

Tier 3 – All Employees Hired on or after October 1, 2012

·

These employees are excluded from the Pension Plan.

The Bank has a Supplemental Executive Retirement Plan (the “SERP”), under which additional retirement benefits are accrued for the CEO and COO. Under the defined benefit component of the SERP, the amount of supplemental retirement benefits is based upon a benefit at normal retirement which approximates the differences between (i) the total retirement benefit the participant would have received under the Pension Plan without taking into account limitations on compensation and annual benefits; and (ii) the retirement benefit the participant is actually entitled to under the Pension Plan at normal retirement. Under the defined contribution component of the SERP, the amount of the supplemental retirement benefit is the difference between (i) the total matching contribution that would have been contributed by the Bank to the executive’s account under the 401(k) Plan based on the executive’s compensation, without taking into account limitations on compensation and annual benefits; and (ii) the maximum amount that could have been contributed to the executive’s account under the 401(k) Plan with respect to such compensation.

-  23  -


 

Perquisites and Other Personal Benefits

The Company provides NEOs with perquisites and other personal benefits that the Company and the Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain employees for key positions. The NEOs are provided use of company automobiles and participation in the plans and programs described above. Attributed costs of personal benefits described for the NEOs for the fiscal year ended December 31, 2018 are included in the “All Other Compensation” column of the “Summary Compensation Table.”

The Company and the Bank have entered into employment agreements with Messrs. O’Connor, Nolan, Santacroce, McCaffery and Manseau which are described under the heading “Employment Agreements.”

Tax Implications

Tax Deductibility of Executive Compensation

Under Section 162(m) of the Internal Revenue Code, companies are subject to limits on the deductibility of executive compensation. Deductible compensation is generally limited to $1 million per year for each executive officer listed in the summary compensation table.

The Tax Cuts and Jobs Act of 2017 (the “Tax Act”), enacted on December 22, 2017, significantly modified Section 162(m) of the Internal Revenue Code. The Tax Act eliminated the “qualified performance-based compensation” exception to the deductibility limitation under Section 162(m) for tax years commencing after December 31, 2017. The Tax Act provides “grandfathered” treatment for qualified performance-based compensation in excess of $1 million that meets the requirements of Section 162(m), is payable pursuant a written binding contract in effect as of November 2, 2017, and is not modified in any material respect. In addition, the Tax Act expands the definition of “covered employee” to include the principal financial officer as well as any employee who has been designated a covered employee for any fiscal year beginning after December 31, 2016.

Our restricted stock grants subject to performance vesting awarded during the fiscal years ending on and prior to December 31, 2017 are expected to continue to qualify as performance-based compensation that is exempt from the deductibility limitation under Section 162(m). A number of requirements must be met for particular compensation to qualify for tax deductibility, so there can be no assurance that the incentive compensation awarded will be fully deductible in all circumstances. Restricted stock grants made on and after January 1, 2018 will be subject to the tax deduction limitations under Section 162(m) of the Internal Revenue Code.

The Committee will consider the impact of the Tax Act on the design of the Company’s executive compensation programs going forward. However, in structuring compensation programs and making compensation decisions, the Committee considers a variety of factors, including the Company’s tax position, the materiality of the payments and tax deductions involved, and the objectives of the executive compensation programs and our compensation philosophy.

After considering these factors, the Committee may decide to authorize payments, all or part of which would be nondeductible for federal tax purposes.

Clawback Policy

In February 2009, the Committee adopted a clawback policy, to recover certain incentive payments paid to the Company’s NEOs if (1) the payments or awards were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, and (2) the amount of the incentive compensation, as calculated under the restated financial results, is less than the amount actually paid or awarded under the original financial results.

Stock Ownership Guidelines

The Board of Directors believes that it is in the best interest of the Company and its shareholders to align the financial interests of Company executives and directors with those of shareholders. In March 2011, Stock Ownership Guidelines

-  24  -


 

were implemented for NEOs and Directors of the Company that require the following minimum investment in Company common stock:

 

 

 

 

Directors:

    

$

100,000

NEOs:

 

 

One times (1.0x) annual base salary

 

Stock holdings are expected to be achieved within three (3) years of the implementation of the ownership guidelines or the starting date of the individual, whichever is later. Stock ownership for NEOs and Directors will be reviewed annually as part of the annual executive performance evaluation process and as part of the Board review. These guidelines will allow for extenuating circumstances and discretion in the evaluation process. The Compensation Committee shall be responsible for the periodic review of the policy. Any changes to the policy will require the approval of the Board of Directors. The Committee monitors Directors’ and executives’ ownership annually. At this time, all Directors and NEOs have achieved their target stock ownership.

Pledging Policy

Directors, officers and other employees are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan. An exception to this prohibition may be granted where a person wishes to pledge Company securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

 

 

THE COMPENSATION COMMITTEE

 

 

 

Emanuel Arturi, Chairperson

 

Marcia Z. Hefter

 

Albert E. McCoy, Jr.

 

Raymond A. Nielsen

 

Matthew Lindenbaum

 

 

-  25  -


 

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning compensation paid to the NEOs for the years ended December 31, 2018, 2017 and 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity

 

Nonqualified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incentive

 

Deferred

 

All

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plan

 

Compen-

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Stock

 

 

Stock

 

Compen-

 

sation

 

Compen

 

 

 

Name and Principal Position

    

Year

    

Salary (1)

    

Bonus

    

Awards (2)

 

 

Options (3)

sation (4)

    

Earnings (5)

    

-sation (6)

    

Total

Kevin M. O’Connor

 

2018

 

$

625,000

 

 —

 

$

325,780

 

$

112,500

 

$

209,280

 

$

138,798

 

$

48,737

 

$

1,460,095

President &

 

2017

 

$