SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
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[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
STERLING BANCORP
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(Name of Registrant as Specified in Its Charter)
STERLING BANCORP
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(Name of Person(s) Filing Proxy Statement)
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[X] No fee required.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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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:
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[STERLING BANCORP LOGO] 650 FIFTH AVENUE / NEW YORK, N.Y. 10019-6108
LOUIS J. CAPPELLI
CHAIRMAN
& CHIEF EXECUTIVE
OFFICER
March 11, 2004
Dear Shareholder:
Sterling's Annual Meeting of Shareholders will be held on Thursday, April 15,
2004, at 10:00 A.M., at The University Club, One West 54th Street, New York,
N.Y., 10019, and you are invited to attend.
The Company's record performance in 2003 marked the eighth consecutive year that
earnings reached an all time high. Net income increased 11.1%, to a record $24.2
million, and earnings per share, on a diluted basis, was $1.53. Total assets
increased to $1.8 billion. Sterling's return on average assets in 2003 was 1.52%
and return on average tangible equity was 21.4%. In 2003, your Board of
Directors approved cash dividends of $0.19 for each quarter, and in August 2003,
approved a 5 for 4 share split, in the form of a 25% share dividend. These
actions resulted in an effective increase in the annual dividend rate of 25%,
and reaffirms Sterling's longstanding commitment that the Company's success be
shared with its shareholders on an ongoing basis.
It is important that your shares be represented at the Annual Meeting whether or
not you are personally able to attend. Proxy material for the meeting
accompanies this letter. You may vote your shares by using a toll free telephone
number or on the Internet (see the instructions on the accompanying proxy card)
or you may sign, date and mail the proxy card in the postage paid envelope
provided.
Thank you for your continued interest and support.
Sincerely,
/s/ Louis Cappelli
[STERLING BANCORP LOGO]
STERLING BANCORP
650 FIFTH AVENUE, NEW YORK, NY 10019-6108
NOTICE OF ANNUAL MEETING
APRIL 15, 2004
The Annual Meeting of Shareholders of Sterling Bancorp will be held on
Thursday, April 15, 2004, at 10:00 o'clock A.M., New York City time, at The
University Club, One West 54th Street, New York, New York 10019, to consider and
act upon the following matters:
1. Election of 9 directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected.
2. Amendment of the Certificate of Incorporation of Sterling Bancorp
to (a) increase the number of authorized common shares of Sterling Bancorp
to 50,000,000 shares from 20,000,000 shares and (b) delete Section Three of
Article Fifth of the Certificate of Incorporation.
3. Such other matters as may properly come before the meeting or any
adjournment thereof.
The close of business on February 26, 2004 has been fixed as the record
date for the meeting. Only shareholders of record at that time are entitled to
notice of, and to vote, at the Annual Meeting.
IMPORTANT
WE URGE THAT YOU SIGN, DATE AND SEND IN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE, OR TO VOTE VIA THE TOLL FREE TELEPHONE NUMBER OR VIA THE INTERNET
AS INSTRUCTED ON THE PROXY CARD, WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING. SENDING IN YOUR PROXY OR VOTING BY TELEPHONE OR ON THE INTERNET WILL
NOT PREVENT YOU FROM VOTING YOUR SHARES PERSONALLY AT THE MEETING, SINCE YOU MAY
REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors
MONICA LERCHER
Corporate Secretary
March 11, 2004
[STERLING BANCORP LOGO]
STERLING BANCORP
650 Fifth Avenue
New York, N.Y. 10019-6108
------------------
PROXY STATEMENT
------------------
MARCH 11, 2004
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sterling Bancorp ("Company") with respect
to the Annual Meeting of Shareholders of the Company to be held on April 15,
2004. Any proxy given by a shareholder may be revoked at any time before it is
voted by giving appropriate notice to the Corporate Secretary of the Company or
by delivering a later dated proxy or by a vote by the shareholder in person at
the Annual Meeting. Proxies in the accompanying form which are properly executed
by shareholders and duly returned to the Company and not revoked will be voted
for all nominees listed under "Election of Directors", for the amendment to the
Company's Certificate of Incorporation and on other matters in accordance with
the Board of Directors' recommendations, unless the shareholder directs
otherwise. This proxy statement and the accompanying form of proxy are being
mailed to shareholders on or about March 15, 2004.
The outstanding shares of the Company at the close of business on, February
26, 2003 entitled to vote at the Annual Meeting consisted of 15,424,093 Common
Shares, $1 par value ("Common Shares").
The Common Shares are entitled to one vote for each share on all matters to
be considered at the meeting and the holders of a majority of such shares,
present in person or represented by proxy, constitute a quorum for the
transaction of business at the Annual Meeting of Shareholders. Only shareholders
of record at the close of business on February 26, 2004 are entitled to vote at
the Annual Meeting.
1 -- ELECTION OF DIRECTORS
Nine directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting of Shareholders to be held on April 15, 2004, to
serve until the next Annual Meeting and until their respective successors have
been elected. It is intended that, unless authority to vote for any nominee or
all nominees is withheld by the shareholder, a properly executed and returned
proxy will be voted in favor of the election as directors of the nominees named
below. All nominees are members of the present Board of Directors, having been
elected at the 2003 Annual Meeting of Shareholders. There is no family
relationship between any of the nominees or executive officers. In the event
that any of the nominees shall not be a candidate, the persons designated as
proxies are authorized to substitute one or more nominees, although there is no
reason to anticipate that this will occur.
Assuming the presence of a quorum, directors are elected by a plurality of
the votes cast. Abstentions and broker non-votes (arising from the absence of
discretionary authority on the part of a broker-dealer to vote shares held in
street name for a customer) will have no effect on the election of directors.
The information set forth below has been furnished by the nominees:
YEAR
NAME, PRINCIPAL OCCUPATION FOR LAST FIVE YEARS, ELECTED A
BUSINESS EXPERIENCE, DIRECTORSHIP OF THE COMPANY DIRECTOR
AND OF STERLING NATIONAL BANK ("BANK"), OF THE
A SUBSIDIARY OF THE COMPANY, AND OTHER INFORMATION AGE COMPANY
-------------------------------------------------- --- ---------
Robert Abrams 65 1999
Member, Stroock & Stroock & Lavan, LLP; former Attorney
General of the State of New York; former Bronx Borough
President
Joseph M. Adamko* 71 1992
Former Managing Director, Manufacturers Hanover Trust Co.
(now J.P. Morgan Chase & Co.)
Louis J. Cappelli* 73 1971
Chairman of the Board and Chief Executive Officer of the
Company; Chairman of the Board of the Bank
Walter Feldesman* 86 1975
Counsel, Brown Raysman Millstein Felder & Steiner, LLP
Fernando Ferrer 53 2002**
President, Drum Major Institute for Public Policy, former
Bronx Borough President
Allan F. Hershfield 72 1994
President, Resources for the 21st Century; former
President, Fashion Institute of Technology
Henry J. Humphreys 75 1994
Counselor-Permanent Observer, Mission of the Sovereign
Military Order of Malta to the United Nations; former
Chancellor and Chief Operating Officer, American
Association of the Sovereign Military Order of Malta
John C. Millman* 61 1988
President of the Company; President and Chief Executive
Officer of the Bank
Eugene T. Rossides* 76 1989
Senior Counsel, Clifford Chance LLP; former Assistant
Secretary, United States Treasury Department
---------------
* Member of Executive Committee.
** Appointed at regular meeting of the Board of Director of Company held on
November 21, 2002.
Each nominee is currently a director of the Bank.
Reference is made to "Security Ownership of Directors and Executive
Officers and Certain Beneficial Owners" on page 13 for information as to the
nominees' holdings of the Company's equity securities.
2
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth information concerning the compensation for
the Company's last three completed fiscal years with respect to its chief
executive officer and the four other most highly compensated executive officers
who served as such at December 31, 2003.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL ----------------------------
COMPENSATION RESTRICTED SECURITIES ALL OTHER
-------------------- SHARE UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) OPTIONS(#)(2) SATION($)(3)
--------------------------- ---- --------- -------- ------------ ------------- ------------
Louis J. Cappelli 2003 672,113 825,000 170,268
Chairman of the Board and 2002 651,929 825,000 1,378,000 37,500 119,498
Chief Executive Officer, 2001 591,961 825,000 113,362
Sterling Bancorp
Chairman of the Board,
Sterling National Bank
John C. Millman 2003 416,136 350,000 74,237
President, 2002 403,639 350,000 275,600 30,000 80,815
Sterling Bancorp 2001 372,364 350,000 49,779
President and Chief Executive
Officer,
Sterling National Bank
John W. Tietjen 2003 215,000 82,000 21,144
Executive Vice President, 2002 207,500 100,000 30,000 14,323
Treasurer and Chief Financial 2001 190,000 60,000 13,343
Officer,
Sterling Bancorp
Executive Vice President Sterling
National Bank
John A. Aloisio 2003 227,500 77,000 18,429
Senior Vice President, 2002 220,000 65,000 22,500 15,696
Sterling Bancorp 2001 205,000 55,000 14,848
Executive Vice President,
Sterling National Bank
Howard Applebaum 2003 175,500 77,000 13,796
Senior Vice President, 2002 169,500 65,000 15,000 10,770
Sterling Bancorp 2001 154,400 40,000 9,158
Executive Vice President,
Sterling National Bank
---------------
(1) Effective February 6, 2002, Messrs. Cappelli and Millman were granted 50,000
and 10,000 Common Shares, respectively, which Common Shares are subject to
restriction and as to which dividends are payable. Such restrictions lapse
as to 25% of the Common Shares on the first through fourth anniversary of
the effective date of the grant. As of December 31, 2003, after adjustment
to reflect the five for four share split in the form of a twenty five
percent share dividend in 2003, Messrs. Cappelli and Millman, respectively,
owned 56,250 and 11,250 Common Shares, subject to restriction valued at
$1,603,125 and $320,625.
(2) In August 2003, the Board of Directors increased the number of Common Shares
underlying all previously granted options and correspondingly decreased the
applicable option exercise price to reflect a five for four share split in
the form of a twenty five percent share dividend declared on August 21, 2003
and paid on September 10, 2003.
(3) Represents for each executive, the term life insurance premiums paid by the
Company on his behalf, and as to Mr. Cappelli, includes premiums paid by the
Company for split-dollar life insurance policies insuring the joint lives of
him and his spouse. This insuring of joint lives reduces the premiums paid
for the coverage. Premiums paid by the Company will be refunded to the
Company on termination of the split-dollar policies. The imputed income with
respect to the premium for the term life insurance provided under the
split-dollar policies and included in the figure for 2003 was $4,116. The
value of the benefits to Mr. Cappelli of the remainder of the premiums paid
by the Company on the split-dollar policies and included in the figure for
2003 was $37,822. This does not include any amount with respect to the
split-dollar policies entered into in connection with Mr. Cappelli's
participation in the Company's Mutual Benefit Exchange Program (see
"Retirement Plans" below). As to Messrs. Millman, Tietjen, Aloisio and
Applebaum, includes the value of benefits of the premiums paid by the
Company on split-dollar policies insuring the life of each executive
officer, in the amount of $13,907, $1,151, $2,167 and $372, respectively.
Also represents for each executive, his allocable share of the Company's
Employee Share Ownership Plan ("ESOP") compensation expense, and as to
Messrs. Cappelli, Millman, Tietjen, Aloisio and Applebaum, $114,734,
$48,873, $8,729, $5,004 and $2,190, respectively, accruing to them for 2003
under the Company's supplemental pension benefit plan (see "Retirement
Plans" below) as compensation for Internal Revenue Code limitations on
allocations to their ESOP accounts. These numbers have been adjusted to
reflect the increased number of Common Shares issuable upon conversion of
the Series D Preferred Shares as a result of the share dividend and the
share split referred to in Footnote 2 above.
Employment Contracts. The Company has agreements with Messrs. Cappelli and
Millman which currently provide for terms extending until December 31, 2008 and
December 31, 2006, respectively, and contain change of control provisions
entitling each of them to a lump-sum cash payment in an amount equal to
3
three times his average annual compensation during the Company's three fiscal
years preceding the date of termination and the continuation of health and
similar benefits for a period of 36 months following termination if he is
terminated within two years of a change in control. Messrs. Cappelli and Millman
each also have thirteen months after a change of control to terminate employment
for any reason and receive the severance benefits. These agreements were entered
into upon the recommendation of the Board's Compensation Committee in 1993, and
approved by the Board of Directors, were amended and restated in 2002 and were
further amended in February 2003 and February 2004. The Company also has change
of control agreements with other executive officers, including Messrs. Tietjen,
Aloisio and Applebaum, providing for guaranteed severance payments equal to two
times the annual compensation of the officer and continuation of health and
similar benefits for the applicable period if the officer is terminated within
two years of a change of control. All change of control agreements provide for
cash payments in amounts necessary to ensure that the payments made thereunder
are not subject to reduction due to the imposition of excise taxes payable under
Internal Revenue Service Code Section 4999 or any similar tax.
Retirement Plans. In November 1984, (1) the Sterling Bancorp/Sterling
National Bank Employees' Retirement Plan ("New Plan"), a defined benefit plan
which covers all of their respective eligible employees, was adopted and (2) the
separate defined benefit plans ("Old Plans") previously maintained by Sterling
National Bank and Standard Financial Corporation (since merged into the Company)
were terminated, vesting the benefits of the participants in the Old Plans for
all years of credited service. The New Plan gives credit for credited service
under the Old Plans but provides, in substance, for a participant's vested
benefits under the Old Plans to be offset against the benefits to be provided
the participant under the New Plan. Accordingly, the retirement benefits to be
provided to a continuing employee can be determined simply by reference to the
provisions of the New Plan.
An employee becomes eligible for participation in the New Plan upon the
attainment of age 21 and the completion of one year of service. All
contributions required of the New Plan are made by the employers and no employee
contributions are required or permitted.
The Internal Revenue Code imposes limitations on the retirement benefits
payable to more highly compensated employees. The Company has a Supplemental
Executive Retirement Plan for designated employees ("Supplemental Plan"), which
provides for supplemental retirement payments to such persons in amounts equal
to the difference between retirement benefits such persons actually receive
under the Company's plans and the amount which would have been received were
such Internal Revenue Code limitations not in effect.
The following table sets forth the estimated annual retirement benefits
under the above plans, on a life annuity and guaranteed ten year certain basis,
payable to persons in specified remuneration and years of service
classifications, not subject to any offset amount.
PENSION PLAN TABLE
HIGHEST
CONSECUTIVE
FIVE YEAR
AVERAGE ESTIMATED ANNUAL RETIREMENT BENEFIT AT AGE 65 FOR
COMPENSATION REPRESENTATIVE YEARS OF CREDITED SERVICE
IN LAST ------------------------------------------------------------------------------------------------
10 YEARS 10 15 20 25 30 35 40 45 50
------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
1$00,000.... $ 14,760 $ 22,140 $ 29,520 $ 36,900 $ 44,280 $ 51,660 $ 59,040 $ 66,420 $ 73,800
200,000.... 29,760 44,640 59,520 74,400 89,280 104,160 119,040 133,920 148,800
300,000.... 44,760 67,140 89,520 111,900 134,280 156,660 179,040 201,420 223,800
400,000.... 59,760 89,640 119,520 149,400 179,280 209,160 239,040 268,920 298,800
500,000.... 74,760 112,140 149,520 186,900 224,280 261,660 299,040 336,420 373,800
600,000.... 89,760 134,640 179,520 224,400 269,280 314,160 359,040 403,920 448,800
700,000.... 104,760 157,140 209,520 261,900 314,280 366,660 419,040 471,420 523,800
800,000.... 119,760 179,640 239,520 299,400 359,280 419,160 479,040 538,920 598,800
900,000.... 134,760 202,140 269,520 336,900 404,280 471,660 539,040 606,420 673,800
1,000,000.. 149,760 224,640 299,520 374,400 449,280 524,160 599,040 673,920 748,800
1,100,000.. 164,760 247,140 329,520 411,900 494,280 576,660 659,040 741,420 823,800
4
Annual benefits are calculated on the highest consecutive five-year average
compensation during the ten years preceding retirement as provided in the New
Plan.
The pensions computed under the New Plan are equal to the sum of:
(1) 1.2% of the average compensation up to $8,000, multiplied by the
number of years of credited service, plus
(2) 1.5% of the average compensation in excess of $8,000, multiplied
by the number of years of credited service.
Average compensation under the New Plan includes salary compensation but
not other types of compensation; bonus compensation for designated senior
management executives is included under the Supplemental Plan as currently in
effect.
The current number of years of service credited to Messrs. Cappelli,
Millman, Tietjen, Aloisio and Applebaum are 52, 27, 14, 13 and 12, respectively.
The annual benefits shown in the above table are payable at age 65 and are
based on average compensation and credited service at age 65. Participants that
remain employed beyond age 65 are credited with accruals for years of service
after such age. Such participants may elect to receive benefits as early as age
65 while working. Absent this election, the accrued benefit at age 65 (along
with any accruals earned subsequent) are actuarially adjusted to reflect the
delayed receipt of the benefit.
In 2000, Mr. Cappelli elected to participate in the Company's Mutual
Benefit Exchange Program (the "Program"), pursuant to which he relinquished his
right to receive an annual retirement benefit at his then age (69 years, 6
months) of $236,516 under the Supplemental Plan (this amount represents a
portion of his then accrued benefit under the defined benefit portion of the
Supplemental Plan) in exchange for the Company's payment of premiums under
additional split-dollar life insurance policies. Pursuant to calculations
prepared for the Company by actuaries, the present value of the cost of these
policies to the Company will not exceed the present value of the Supplemental
Plan benefits relinquished by Mr. Cappelli under the Program.
Options
The following table sets forth information as to options held at December
31, 2003 by each of the executive officers named in the Summary Compensation
Table. No new options were granted to the executive officers during the fiscal
year ended December 31, 2003.
In order to permit option holders to retain their potential proportionate
interest in the Company following a five for four share split in the form of a
twenty five percent share dividend payable on September 10, 2003 the number of
Common Shares underlying options previously granted under the Company's Share
Incentive Plan was increased by twenty five percent and the exercise price of
all such options was decreased by twenty percent. This adjustment was required
to ensure that the value of the options was neither increased nor decreased on
account of the share dividend.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF COMMON
SHARES UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED OPTIONS
------------------------- -----------------------------
SHARES ACQUIRED VALUE NON- NON-
NAME ON EXERCISE REALIZED EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
---- --------------- -------- ----------- ----------- ------------- -------------
Louis J. Cappelli..... -- -- 547,964 47,659 $8,721,432 $ 942,376
John C. Millman....... 12,292 $210,939 190,574 32,475 $2,961,387 $ 347,528
John W. Tietjen....... 2,862 $ 46,922 65,898 71,070 $ 977,793 $1,190,204
John A. Aloisio....... -- -- 65,485 69,941 $1,048,401 $1,158,739
Howard M. Applebaum... 9,527 $154,650 47,634 9,559 $ 809,349 $ 95,132
5
BOARD COMPENSATION REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's policies applicable to the executive officers
are described in the following report.
COMPENSATION COMMITTEE REPORT
The policy of the Company, adopted by the Board of Directors in 1993 on the
recommendation of our Committee, is:
"Company policy should be to make a meaningful part of the
compensation of executive officers be based on performance. While the
relative importance of performance measures may vary from year to year in
line with corporate business plans and the Committee's judgment, the
measures would include, amongst other criteria, earnings, return on assets,
return on equity, loan and deposit growth."
With respect to the Company's Chairman and President, their employment
agreements, as mandated by our Committee, provide for annual performance bonuses
to be based on quantitative (financial) performance elements set by the
Committee together with its evaluation of relevant qualitative (non-financial)
performance measures. Such factors include growth of consolidated earnings,
improvement of return on assets and return on equity, and growth of loans, and
deposits and customer repurchase agreements. Performance was to represent
meaningful growth over the appropriate base period. Given the Company's 2003
performance, total cash bonus amounts of $825,000 and $350,000, respectively,
were determined for Messrs. Cappelli and Millman pursuant to the application of
objective formulae containing the above criteria implemented in March 2001,
under the Company's Key Executive Bonus Plan.
After considering the Company's achievements in both interest and
non-interest income resulting in higher earnings, diversification of business
activities, asset and capital growth, and increased awareness in the financial
markets and after evaluating the contributions made by Messrs. Cappelli and
Millman and the responsibilities undertaken by them, our Committee determined
that the terms of their Employment Agreements be extended to December 31, 2008
and December 31, 2006, respectively.
The Compensation Committee currently intends for compensation paid to the
Company's executive officers to be tax deductible to the Company pursuant to
Section 162(m) of the Internal Revenue Code. Section 162(m) provides that
compensation paid to executive officers in excess of $1,000,000 cannot be
deducted by the Company for federal income tax purposes unless, in general, the
compensation is performance-based, is established by an independent committee of
Directors, is objective and the plan or agreement providing for compensation has
been approved in advance by the shareholders. The Compensation Committee
reserves the right to pay compensation which does not satisfy the arbitrary and
inflexible conditions of Section 162(m) if, in the judgment of the Compensation
Committee, the benefits to the Company of the payment of such compensation
outweighs the costs to the Company of failure to satisfy these conditions.
Dated: February 18, 2004
WALTER FELDESMAN, CHAIR HENRY HUMPHREYS ALLAN F. HERSHFIELD
6
PERFORMANCE GRAPH
The following graph sets forth a comparison of the percentage change in the
cumulative total shareholder return on the Company's Common Shares compared to
the cumulative total return on the Standard & Poor's 500 Stock Index (the "S&P
500 Index"), and the Keefe, Bruyette & Woods 50 Index ("KBW 50 Index"). The
share price performance shown on the graph below is not necessarily indicative
of future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG STERLING BANCORP, THE S&P 500 INDEX
AND THE KBW 50 INDEX
[COMPARISON LINE GRAPH]
--------------------------------------------------------------------------------
12/98 12/99 12/00 12/01 12/02 12/03
--------------------------------------------------------------------------------
STERLING BANCORP 100.00 75.65 117.63 177.13 196.44 273.59
S & P 500 100.00 121.04 110.02 96.95 75.52 97.18
KBW 50 100.00 96.23 115.51 110.74 102.95 138.01
---------------
* $100 invested on 12/31/1998 in Stock or Index. Including reinvestment of
dividends.
Fiscal year ending December 31.
7
MEETINGS AND ATTENDANCE OF DIRECTORS; CERTAIN COMMITTEES; CORPORATE GOVERNANCE
PRACTICES; FEES
During the year ended December 31, 2003, the Board of Directors of the
Company held five regularly scheduled meetings. In addition, various committees
of the Board met at regular meetings. No director attended fewer than 75% of the
meetings he was required to attend.
The Company has standing Audit, Compensation and Corporate Governance and
Nominating Committees, as well as an Executive Committee.
Audit Committee: The members of the audit committee ("Audit Committee")
are Messrs. Adamko (chair), Feldesman, Humphreys and Rossides. The Audit
Committee held six meetings during the year ended December 31, 2003. In carrying
out its responsibilities the Audit Committee engaged independent accountants,
established hiring policies for former employees of the independent accountants
and established certain complaint procedures for both employees and
shareholders. The Board has determined that each of the members of the Audit
Committee is "independent" as that term is defined in the applicable New York
Stock Exchange ("NYSE") listing standards and regulations of the Securities and
Exchange Commission ("SEC") and all members are financially literate as required
by the applicable NYSE listing standards. In addition the Board has determined
that at least one member of the Audit Committee has the financial expertise
required by the applicable NYSE listing standards and is an "Audit Committee
Financial Expert" as defined by applicable standards of the SEC. The Board has
designated the Audit Committee chairman, Mr. Adamko, as an Audit Committee
Financial Expert.
Compensation Committee: The members of the compensation committee
("Compensation Committee") are Mr. Feldesman (chair), Mr. Humphreys and Mr.
Hershfield. The Board of Directors has determined that all members of the
Compensation Committee are "independent" as that term is defined by the
applicable NYSE listing standards.. The Compensation Committee reports to the
Board on issues concerning executive officer compensation, including the
relationship between compensation and performance and the measures of
performance to be considered, and concerning the compensation and other key
terms of employment agreements. (See "Compensation Committee Report" on page 6
of this Proxy Statement.) The Compensation Committee held two meetings during
the year ended December 31, 2003.
Corporate Governance and Nominating Committee: The members of the
corporate governance and nominating committee ("Corporate Governance and
Nominating Committee") are Messrs. Rossides (chair), Humphreys and Hershfield.
The Board has determined that all of the members of the Corporate Governance and
Nominating Committee are "independent" as the term is defined by the applicable
NYSE listing standards. The Corporate Governance and Nominating Committee
evaluates the following criteria, as set forth in the Company's Corporate
Governance Guidelines, in making recommendations to the Board of Directors for
director nominees:
- Personal qualities and characteristics, accomplishments and reputation in
the business community;
- Current knowledge and contacts in the communities in which the Company
does business and in the Company's industry or other industries relevant to the
Company's business;
- Ability and willingness to commit adequate time to Board and committee
matters;
- The fit of the individual's skills and personality with those of other
directors and potential directors in building a board that is effective,
collegial and responsive to the needs of the Company; and
- Diversity of viewpoints, background experience and other demographics.
The Committee will evaluate nominees for director, submitted by
shareholders pursuant to the procedure outlined in this Proxy under the heading
"2005 Annual Meeting" using the above mentioned criteria.
The Corporate Governance and Nominating Committee held one meeting in the
year ended December 31, 2003.
Executive Committee: The members of the executive committee ("Executive
Committee") are Messrs. Cappelli (chair), Millman, Adamko, Feldesman and
Rossides. The Executive Committee has the authority to act on most matters that
the full Board of Directors could have acted on during intervals between
8
Board meetings. During the fiscal year ended December 31, 2003, the Executive
Committee did not meet, since there was no need for such meetings.
CORPORATE GOVERNANCE PROCEDURE
The Board of Directors has long been committed to sound and effective
corporate governance practices. Set forth below is a discussion of recent
developments in the Company's corporate governance policies and procedures.
Recent Developments. The Company's management has closely reviewed,
internally and with the Board of Directors, the provisions of the Sarbanes-Oxley
Act of 2002, the related rules of the SEC and the recently revised NYSE
corporate governance listing standards regarding corporate governance policies
and procedures. As a result of this review process, the Board of Directors made
certain revisions to the charter setting forth the powers and responsibilities
of the Audit Committee to reflect changes to the legal and NYSE requirements
that apply to the Audit Committee. (A copy of the revised Audit Committee
charter is attached as Annex A to this proxy statement.) This review process
also led to adoption of charters of the Compensation Committee and the Corporate
Governance and Nominating Committee. (Copies of the charters are attached as
Annexes B and C, respectively to this proxy statement.) The Board continues to
monitor guidance from the SEC, the NYSE and other relevant agencies regarding
corporate governance procedures and policies and will continue to assess these
charters to ensure full compliance with the applicable requirements.
Director Independence. A majority of the members of the Board have
historically been independent, and key committees are comprised solely of
independent directors in accordance with applicable SEC and NYSE rule
requirements. The Board has determined that a majority of the current directors
are independent as that term is defined by applicable SEC and NYSE rules. These
independent directors are:
Robert Abrams
Joseph M. Adamko
Walter Feldesman
Fernando Ferrer
Allan F. Hershfield
Henry J. Humphreys
Eugene T. Rossides
Code of Ethics. In November 2003, the Board adopted a code of ethics for
the Company's Board of Directors, officers and employees in order to promote
honest and ethical conduct and compliance with the laws and governmental rules
and regulations to which the Company is subject. All directors, officers and
employees of the Company are expected to be familiar with the code of ethics and
to adhere to its principles and procedures.
Corporate Governance and Nominating Committee. The Board formed the
Corporate Governance and Nominating Committee (formerly known as the Nominating
Committee) on February 20, 2003, to consider and recommend candidates for Board
vacancies, actively recruit qualified candidates, review Board performance
annually, monitor changes in applicable standards and developments in the
corporate governance field generally, establish criteria for Board performance
evaluations, and review and report to the Board of matters on corporate
governance.
Corporate Governance Guidelines. The Board adopted a comprehensive set of
Corporate Governance Guidelines on November 21, 2003. These guidelines address a
number of important governance issues including director independence, criteria
for Board membership, dealings of the Board in executive session, expectations
regarding attendance and participation in meetings, authority of the Board and
committees to engage outside independent advisors as they deem appropriate,
succession planning for the Chief Executive Officer and annual Board evaluation.
(A copy of these guidelines is attached as Annex D to this proxy statement.)
Procedures for Communications to the Board of Directors, Audit Committee
and Non-Management Directors. The Board has adopted procedures for the Company's
shareholders and other interested parties to communicate regarding (i)
accounting, internal accounting controls or auditing matters to the Board's
Audit
9
Committee and (ii) other matters to the non-management directors of the Board
entitled, "Method for Interested Persons to Communicate with Non-management
Directors and Audit Committee Procedures for Treatment of Complaints Regarding
Accounting, Internal Accounting Controls or Auditing Matters". Communications
should be made, pursuant to such procedures, to the Company's Director of Human
Resources at 145 East 40th Street, New York, NY 10016 or by e-mail to
HRdir.corpgov@sterlingbancorp.com. (A copy of these procedures is attached as
Annex E to this proxy statement.) The Company also adopted a separate procedure
for employees to confidentially communicate concerns regarding questionable
accounting and audit matters on an anonymous basis.
Copies of the Company's current corporate governance documents, including
the Company's Corporate Governance Guidelines, Code of Ethics, Method for
Interested Persons to Communicate with Non-management Directors as well as the
current charters of the Audit, Corporate Governance and Nominating and
Compensation Committees are also available on the investor relations section of
the Company's website at www.sterlingbancorp.com/ir/investor.cfm. Requests by
shareholders for printed versions of these documents should be made to the
attention of the Corporate Secretary of the Company.
DIRECTOR FEES
Directors who are not salaried officers receive fees for attendance at
Board and committee meetings. Each eligible director receives $1,250 for
attending each Board meeting, $750 for attending each committee meeting, and a
$500 supplemental payment in December of each year. In 2000, non-employee
directors were granted options for 3630* shares on the last day a trade was
reported in June, 2000, and on the last day a trade is reported in each July
from July 2001 through July 2004. Additionally, pursuant to the adoption of an
automatic grant of options in 2002, non-employee directors are to be granted
options for 3750* Common Shares on the last day a trade is reported in June, for
each of the years 2003 through 2006. The options are nonqualified share options
exercisable in four equal installments, commencing on the first anniversary of
the date of grant and expiring on the fifth anniversary of such date; provided,
however, that they become immediately exercisable in the event of a change in
control of the Company. The exercise price is equal to 100% of the fair market
value of the Common Shares on the date of grant. Upon termination of the
services of a director who is not also a salaried officer, all options then
exercisable may be exercised for a period of three months, except that if
termination is by reason of death, the legal representative of such deceased
director has six months to exercise all options regardless of whether the
decedent could have exercised them. Expenses of directors incurred in traveling
to Board and committee meetings are reimbursed by the Company. The Chair of the
Audit Committee receives an annual stipend of $7,500 for service in such
capacity in lieu of Audit Committee meeting fees.
AUDIT FEES
The aggregate fees billed by KPMG LLP for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2003 and for the reviews of the financial statements included
in the Company's Quarterly Reports on Form 10-Q for that fiscal year were
$320,000.
---------------
* Inclusive of adjustment for share dividends declared on Common Shares.
10
The following table shows information about fees billed to the Company by
KPMG.
PERCENTAGE OF 2003
FEES PAID BY SERVICES APPROVED
THE COMPANY 2003 BY AUDIT COMMITTEE 2002
------------ ---------------- ------------------ -------------------
($ IN THOUSANDS) ($ IN THOUSANDS(D))
Audit fees.................................. 320 100 315
Audit-related fees(a)....................... 41 100 39
Financial Information and Implementation
fees(b)................................... 0 N/A 0
Tax fees(c)................................. 181 100 278
All other fees.............................. 12 0 22
---------------
(a) Audit-related fees are fees in respect of internal control reviews,
attest services not required by statute or regulation, due diligence and
employee benefit plan audits.
(b) Financial Information System Design and Implementation fees are in
respect of professional services rendered for information system design or
implementation.
(c) Tax fees are fees in respect of tax return preparation, consultation on
tax matters, tax advice relating to transactions and other tax planning and
advice.
(d) Prior year numbers have been conformed to current year presentation.
The Audit Committee has considered whether KPMG LLP's provision of
non-audit services is compatible with maintaining the auditor's independence.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
In accordance with the Company's Audit Committee Charter, the Audit
Committee pre-approves all audit and non-audit services before the independent
auditors are engaged by the Company to render such services.
AUDIT COMMITTEE REPORT
The role of the Audit Committee is to assist the Board in its oversight of
the Company's financial reporting process. The Board of Directors has determined
that all members of the Committee are "independent," as required by applicable
listing standards of The New York Stock Exchange. The Committee operates
pursuant to a Charter that was originally adopted by the Board on May 18, 2000,
amended on November 15, 2001, and further amended and restated on November 21,
2003. As set forth in the Charter, management of the Company is responsible for
the preparation, presentation and integrity of the Company's financial
statements, the Company's accounting and financial reporting principles, and
internal controls designed to assure compliance with accounting standards and
applicable laws and regulations. The independent auditors are responsible for
auditing the Company's financial statements and expressing an opinion as to
their conformity with generally accepted accounting principles.
In the performance of its oversight function, the Committee has considered
and discussed the audited financial statements with management and the
independent auditors. The Committee has also discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees, as currently modified or
supplemented. The Committee has received the written disclosures and the letter
from the independent auditors required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees, as currently modified or
supplemented, and has discussed with the independent auditor the auditor's
independence from the Company and its management. All non-audit services
performed by the independent auditors must be specifically pre-approved by the
Audit Committee.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not employed by the Company for
accounting, financial management or internal control. Members of the Committee
rely without independent verification on the information provided to them and on
the representations made by management and the independent accountants.
Accordingly, the Audit Commit-
11
tee's oversight does not provide an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles and policies, or internal control and procedures, designed to assure
compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee's considerations and discussions referred to
above do not assure that the audit of the Company's financial statements has
been carried out in accordance with generally accepted auditing standards or
that the financial statements are presented in accordance with generally
accepted accounting principles.
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Committee
referred to above and in the Charter, the Committee is recommending to the Board
of Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003 to be filed with
the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
Joseph M. Adamko, Chair Walter Feldesman Henry J. Humphreys Eugene T.
Rossides
Dated February 19, 2004
TRANSACTIONS WITH THE COMPANY AND OTHER MATTERS
From time to time, officers and directors of the Company and their family
members or associates have purchased or may purchase short-term notes of the
Company and certificates of deposit from the Bank on the same terms available to
other persons. The Bank and its mortgage subsidiary also makes loans from time
to time to related interests of directors and executive officers. Such loans are
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectability or present other unfavorable features. Mr.
Feldesman is counsel to a law firm that performed services for the Company
during its last fiscal year. The Board of Directors has determined that fees
paid to such law firm (less than $60,000) were below the threshold for
materiality and that such payment did not compromise Mr. Feldesman's
independence.
12
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth, as of February 20, 2004, holdings of the
Company's Common Shares by each present director and each of the executive
officers named in the Summary Compensation Table on page 3 and by all directors
and executive officers as a group. The Common Shares are traded on The New York
Stock Exchange and the closing price on February 26, 2004 was $29.70 per share.
NUMBER AND
NATURE OF
COMMON
SHARES
BENEFICIALLY % OF OUTSTANDING
NAME OWNED(2) COMMON SHARES
---- ------------ ----------------
Robert Abrams............................................... 24,687 .16
Joseph M. Adamko............................................ 35,488 .23
Louis J. Cappelli........................................... 1,076,194 6.73
Walter Feldesman............................................ 44,051 .29
Fernando Ferrer............................................. 125 *
Allan F. Hershfield......................................... 34,034 .22
Henry J. Humphreys.......................................... 36,339 .24
John C. Millman............................................. 462,998 2.97
Eugene T. Rossides.......................................... 27,473 .18
John W. Tietjen............................................. 111,753 .72
John A. Aloisio............................................. 115,499 .75
Howard Applebaum............................................ 65,951 .43
--------- -----
All directors and executive officers as a group (12 in
group).................................................... 2,034,592 12.32
---------------
* Less than .1 of 1%
(1) For purposes of this table "beneficial ownership" is determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, pursuant
to which a person or group of persons is deemed to have "beneficial ownership"
of any Common Shares that such person or group has the right to acquire within
60 days after February 20, 2004. For purposes of computing the percentage of
outstanding Common Shares held by each person or group of persons named above,
any shares that such person or group has the right to acquire within 60 days
after February 20, 2004 are deemed outstanding but are not deemed to be
outstanding for purposes of computing the percentage ownership of any other
person or group.
(2) Each director and officer has sole voting and investment power with
respect to the securities indicated above to be owned by him, except that in the
case of Messrs. Millman, Tietjen, and Aloisio, shares shown as owned include
9,044; 172; and 5 Common Shares, respectively, held in profit sharing plans as
to which they have power to direct the vote. The shares shown as owned include
as to Messrs. Abrams, Adamko, Feldesman and Hershfield, 24,499 Common Shares; as
to Mr. Humphreys 23,339 Common Shares; as to Mr. Rossides, 16,877 Common Shares;
as to Messrs. Cappelli, Millman, Tietjen, Aloisio and Applebaum and all
directors and executive officers as a group, 563,841; 197,394 75,050; 74,592;
43,548; and 1,092,637 Common Shares, respectively, covered by outstanding share
options exercisable within 60 days and, as to Messrs. Cappelli and Millman,
include 37,500 and 7,500 Common Shares, respectively, granted under the
Company's Share Incentive Plan as to which they do not have sole investment
power. The shares also include 5,461, 5,934, 5,435, 5,633, and 5,034 Common
Shares, respectively, allocable to Messrs. Cappelli, Millman, Tietjen, Aloisio
and Applebaum held by the Company's Employee Share Ownership Trust, upon which
they are currently entitled to direct the vote (such Common Shares resulted from
the conversion of the Company's Series D Preferred Shares).
In addition, the shares shown as owned by Mr. Adamko include 3835 shares
owned by his wife, the shares shown as owned by Mr. Cappelli include 565 Common
Shares owned by his wife, the shares shown as owned by Mr. Millman include 232
shares owned by his wife and 950 shares owned by his wife's IRA, and the shares
shown as owned by Mr. Aloisio include 151 shares owned by his wife, beneficial
ownership of which each of them disclaims.
13
The following table sets forth the persons or groups known to the Company
to be the beneficial owner of more than five percent of the outstanding Common
Shares based upon information provided by them to the Company as of February 20,
2004.
NUMBER AND
NATURE OF
COMMON SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE OF
NAME AND ADDRESS OWNED (1) CLASS
---------------- ------------- -------------
FMR Corp.,
Edward C. Johnson 3d, and Abigail P. Johnson,
Fidelity Management & Research Company...................... 1,327,460(2) 8.61
82 Devonshire Street
Boston, Massachusetts 02109
Louis J. Cappelli........................................... 1,076,194(3) 6.73
650 Fifth Avenue
New York, New York 10019
Certain Barclays Bank related entities...................... 915,500(4) 5.94
45 Fremont Street
San Francisco, California 94105
David L. Babson & Company Inc. ............................. 849,042(5) 5.50
One Memorial Drive
Cambridge, Massachusetts 02142-1300
---------------
(1) See Footnote 1, page 13, for definition of "beneficial ownership."
(2) The number and nature of the Common Shares beneficially owned are set
forth in a statement on Schedule 13G filed with the Securities and Exchange
Commission on February 17, 2004 by FMR Corp., Edward C. Johnson 3d, and Abigail
P. Johnson. According to said schedule, Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp. and an investment adviser,
is the beneficial owner of 1,327,460 of the Common Shares set forth in the above
table as a result of acting as investment adviser to various investment
companies ("Fidelity Funds"). Fidelity states that one Fidelity Fund, Fidelity
Low Priced Stock Fund, owns 1,327,460 of the Common Shares owned by Fidelity.
Edward C. Johnson 3d, Chairman of FMR Corp., FMR Corp. (through its control of
Fidelity), and the Fidelity Funds each has sole dispositive power with respect
to 1,327,460 Common Shares, but do not have the sole power to vote or direct the
voting of the Common Shares owned directly by the Fidelity Funds, which power
resides with the Funds' Board of Trustees. Fidelity carries out the voting of
the shares under written guidelines established by the Funds' Board of Trustees.
Through their ownership of voting common shares of FMR Corp. and the execution
of a shareholders' voting agreement with respect to FMR Corp., Edward C. Johnson
3d, Abigail P. Johnson, and other members of the Johnson family may be deemed to
form a controlling group with respect to FMR Corp.
(3) See Footnote 2, page 13 for number and nature of the Common Shares.
(4) The number and nature of the Common Shares beneficially owned are set
forth in a statement on Schedule 13G filed with the Securities and Exchange
Commission dated February 13, 2004 by certain Barclays Bank related entities.
According to such schedule the reporting entities are Banks. Barclays Global
Investors, NA has the sole voting power and sole dispositive power for 706,182
shares of Common Stock, Barclays Global Fund Advisors has the sole voting and
sole dispositive power for 125,710 shares of Common Stock, Barclays Bank PLC has
the sole voting and sole dispositive power for 4,100 shares of Common Stock and
together have the power to vote or to direct the vote and the power to dispose
or to direct the disposition of 835,992 shares. The shares are reported to be
held in trust accounts for the economic benefit of the beneficiaries of those
accounts.
(5) The number and nature of the Common Shares beneficially owned are set
forth in a statement on Schedule 13G filed with the Securities and Exchange
Commission on February 12, 2004 by David L. Babson & Company Inc. ("Babson").
According to the Schedule, Babson, which is an investment advisor,
14
states that the shares of Common Stock are owned by various of its investment
advisory clients. Moreover, according to the Schedule, Babson has sole voting
power for 843,442 shares of Common Stock, shared voting power for 5,600 shares
of Common Stock and sole dispositive power for 849,042 shares of Common Stock.
Except as set forth above, the Company does not know of any person that
owns more than 5% of any class of the Company's voting securities.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on the review of the Forms 3, 4 and 5 furnished to the Company
and certain representations made to the Company, the Company believes that there
were no filing deficiencies under Section 16(a) by its directors, executive
officers and 10 percent holders, except for one late report filed by Joseph M.
Adamko, a director, reporting the sale of 121 shares of stock in 2003, which
late filing was due to a broker error.
2 -- PROPOSAL TO AMEND STERLING BANCORP'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES
The Sterling Bancorp Board of Directors has unanimously approved and
declared advisable, and recommends to the Sterling Bancorp shareholders an
amendment to the Amended and Restated Certificate of Incorporation of Sterling
Bancorp to (a) increase the number of Common Shares authorized for issuance from
20,000,000 to 50,000,000 shares and (b) delete Section Three of Article Fifth of
the Certificate of Incorporation. The Sterling Bancorp Board of Directors
believes that this proposal is in the best interests of Sterling Bancorp and its
shareholders and recommends a vote "FOR" the proposed amendment.
Currently, ARTICLE FOURTH, paragraph (1) of the Amended and Restated
Certificate of Incorporation states:
ARTICLE FOURTH: (1) The aggregate number of shares which the Corporation
shall have authority to issue is 20,644,389 divided into 644,389 shares which
are designated Preferred Shares and have a par value of $5.00 each, and
20,000,000 shares which are designated Common Shares and have a par value of
$1.00 each. Of the 644,389 shares which were designated Preferred Shares, 4,389
have heretofore been designated as Convertible Preferred Shares Series B, par
value $5.00 per share.
The proposed amendment would:
(A) revise ARTICLE FOURTH, paragraph (1) of the Amended and Restated
Certificate of Incorporation to state:
ARTICLE FOURTH: (1) The aggregate number of shares which the Corporation
shall have authority to issue is 50,644,389 divided into 644,389 Preferred
Shares of the par value of $5.00 per share, and 50,000,000 Common Shares of the
par value of $1.00 per share.
(B) delete Section Three of Article Fifth relating to Convertible Preferred
Shares, Series B, all of which have been retired and cancelled.
VOTE REQUIRED
Approval of the proposal requires the affirmative vote of a majority of
holders of Common Shares outstanding and entitled to vote at the annual
shareholders meeting. Abstentions and broker non-votes (arising
15
from the absence of discretionary authority on the part of a broker dealer to
vote shares held in street name for the customer) will have no effect on the
approval of the proposal.
PURPOSE AND EFFECT OF THE AMENDMENT
As of February 26, 2004, Sterling Bancorp had 15,424,093 outstanding Common
Shares, 1,314,895 Common Shares held in Treasury, and 2,390,047 Common Shares
reserved for issuance to directors and employees under various compensation and
benefits plans, with the remaining 870,965 Common Shares being authorized,
unissued, and unreserved shares available for other corporate purposes. There
were no Preferred Shares outstanding as of the record date.
The Board of Directors considered the proposed increase in the number of
authorized shares desirable to give the Board the necessary flexibility to issue
Common Shares in connection with share dividends, share splits, mergers,
acquisitions, financing corporate activities, employee benefits and for other
general corporate purposes. Without an increase in the number of authorized
shares, the number of available shares for issuance may be insufficient to
consummate one or more of the above transactions or purposes. Sterling Bancorp
currently does not have any plans to issue or reserve additional Common Shares,
Increasing the number of Common Shares that Sterling Bancorp is authorized
to issue would give Sterling Bancorp additional flexibility with respect to
future share splits and share dividends. On four occasions, Sterling Bancorp has
paid a share dividend and on one occasion Sterling Bancorp has effected a share
split in the form of a share dividend. The last such action was a share split,
in the form of a 25% share dividend payable on September 10, 2003.
Approving an increase in the number of authorized shares at this time would
enable Sterling Bancorp to take advantage of market conditions and favorable
opportunities at the time they occur, without the expenses and delay incidental
to obtaining shareholder approval of an amendment to the Amended and Restated
Certificate of Incorporation increasing the number of authorized shares, except
as may be required by applicable law for a particular issuance. As a result, the
Board is proposing an amendment to the Amended and Restated Certificate of
Incorporation to increase the number of authorized Common Shares from 20,000,000
to 50,000,000, which would increase the authorized, unissued, and unreserved
Common Shares available for issuance from 870,965 to 30,870,965 shares.
Authorized unissued and unreserved Common Shares may be issued from time to time
for any proper purpose without further action of the shareholders, except as may
be required by the Amended and Restated Certificate of Incorporation, applicable
law, or the listing requirements for the NYSE, on which the Common Shares are
listed.
Each Common Share authorized for issuance would have the same rights and is
identical in all respects with each other Common Share. The newly authorized
Common Shares will not affect the rights, such as voting and liquidation rights
of the existing Common Shares currently outstanding. Under the Amended and
Restated Certificate of Incorporation, Sterling Bancorp's shareholders do not
have pre-emptive rights. Therefore, should the Board of Directors elect to issue
additional Common Shares, existing shareholders would not have any preferential
rights to purchase those shares and such issuance could have a dilutive effect
on earnings per share, book value per share, and the voting power and
shareholdings of current shareholders, depending on the particular circumstances
in which the additional Common Shares are issued. The Board of Directors does
not intend to issue any additional Common Shares except on terms that it deems
to be in the best interests of Sterling Bancorp and its shareholders. Sterling
Bancorp has no plans to issue newly authorized Common Shares.
The ability of the Board of Directors to issue additional Common Shares
without shareholder approval may be deemed to have an anti-takeover effect
because the Board of Directors could issue unissued and unreserved Common Shares
in circumstances that may have the effect of deterring takeover bids by making a
potential acquisition more expensive, or otherwise thwarting or complicating
efforts of a third party to attempt to gain control of the Company. Newly
authorized Common Shares, when issued, would have attached to them one right
issued pursuant to the Shareholder Protection Rights Agreement, dated as May 21,
1998, between Sterling Bancorp and its rights agent, referred to as the Rights
Agreement. Each right entitles the holder to purchase one one-hundredth of a
share of Sterling Bancorp's participating Preferred Shares at an exercise price
of $100, subject to adjustment, upon the occurrence of certain specified events
as described in
16
the Rights Agreement. Authorized unissued and unreserved shares of Preferred
Shares may be issued from time to time for any proper purpose without further
action of the shareholders, except as may be required by the Amended and
Restated Certificate of Incorporation, applicable law, or the listing
requirements of the NYSE.
In addition to increasing the number of authorized common shares the
amendment would also delete Section Three of Article Fifth, relating to
Convertible Preferred Shares, Series B, all of which have been retired and
converted. To similar effect and purpose, on February 26, 2004 the Company,
acting pursuant to the amending authority given to the Board by the Business
Corporation Law of New York amended its Certificate of Incorporation to delete
Section Four of Article Fifth, relating to the designation of Preferred Shares,
Series C, none of which have ever been issued, and by deleting Section Five of
Article Fifth, relating to the designation of ESOP convertible Preferred Shares,
Series D, all of which were retired in February 2004 upon their conversion into
Common Shares pursuant to the Company's ESOP Plan.
If the proposed amendment is adopted, it will become effective upon filing
of a Certificate of Amendment to Sterling Bancorp's Amended and Restated
Certificate of Incorporation with the Secretary of State of New York. However,
if Sterling Bancorp's shareholders approve the proposed amendment, the Board
retains discretion under New York law not to implement the proposed amendment.
If the Board were to exercise such discretion, the number of authorized shares
would remain at current levels.
GENERAL
2005 ANNUAL MEETING
Any shareholder who may desire to submit under the Securities and Exchange
Commission's shareholder proposal rule (Rule 14a-8) a proposal for inclusion in
the Company's proxy and proxy statement for the 2005 Annual Meeting of
Shareholders currently scheduled to be held on April 21, 2005, must present such
proposal in writing to the Company at 650 Fifth Avenue, New York, New York
10019-6108, Attention: Monica Lercher, Corporate Secretary, not later than the
close of business on November 14, 2004. Under the Company's Bylaws, any
shareholder who desires to submit a proposal outside of the process provided by
the Securities and Exchange Commission's shareholder proposal rule (Rule 14a-8)
or desires to nominate a director at the 2005 Annual Meeting of Shareholders
must provide timely notice thereof in the manner and form required by the
Company's Bylaws by February 21, 2005 (but not before January 21, 2005). If the
date of the 2005 Annual Meeting should change, such deadline would also change.
OTHER
Management knows of no other business to be presented to the Annual Meeting
of Shareholders, but if any other matters are properly presented to the meeting
or any adjournments thereof, the persons named in the proxies will vote upon
them in accordance with their best judgment.
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies by personal interview, telephone or telegram. The
Company reimburses brokerage houses, custodians, nominees and fiduciaries for
their expenses in forwarding proxies and proxy material to their principals. The
Company has retained Morrow & Co., Inc. to assist in the solicitation of
proxies, which firm will, by agreement, receive compensation of $3,500, plus
expenses, for these services.
The Annual Report to Shareholders (which is not a part of the proxy
soliciting material) for the fiscal year ended December 31, 2003 accompanies
this Notice and Proxy Statement.
THE COMPANY FILES WITH THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. A COPY OF THE REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
2003, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
FURNISHED, WITHOUT CHARGE, TO ANY SHAREHOLDER SENDING A WRITTEN REQUEST THEREFOR
TO JOHN W. TIETJEN, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
STERLING BANCORP, 650 FIFTH AVENUE, NEW YORK, NY 10019-6108.
STERLING BANCORP
Dated: March 11, 2004
17
ANNEX A
STERLING BANCORP
AUDIT COMMITTEE CHARTER
I. Purpose of the Audit Committee: The purpose of the Audit Committee
(the "Committee") of the Board of Directors (the "Board) of Sterling Bancorp
(the "Company") is to:
1. assist Board oversight of (i) the integrity of the Company's
financial statements, (ii) the Company's compliance with legal and
regulatory requirements, (iii) the independent auditors' qualifications and
independence, and (iv) the performance of the independent auditors and the
Company's internal audit function; and
2. prepare the report required to be prepared by the Audit Committee
pursuant to the rules of the Securities and Exchange Commission ("SEC") for
inclusion in the Company's annual proxy statement to shareholders.
The function of the Committee is oversight. The management of the Company
is responsible for the preparation, presentation and integrity of the Company's
financial statements. Management and the internal auditing department are
responsible for maintaining appropriate accounting and financial reporting
principles and policies and internal controls and procedures that provide for
compliance with accounting standards and applicable laws and regulations. The
independent auditors are responsible for planning and carrying out a proper
audit of the Company's annual financial statements and Form 10-K, reviews of the
Company's quarterly financial statements prior to the filing of each quarterly
report on Form 10-Q, and other procedures. In fulfilling their responsibilities
hereunder, it is recognized that members of the Committee are not full-time
employees of the Company and are not, and do not represent themselves to be,
performing the functions of auditors or accountants. As such, it is not the duty
or responsibility of the Committee or its members to conduct "field work" or
other types of auditing or accounting reviews or procedures or to set auditor
independence standards.
The independent auditors shall submit to the Committee annually a formal
written statement (the "Auditors' Statement") describing: (i) the auditors'
internal quality-control procedures; (ii) any material issues raised by the most
recent internal quality-control review or peer review of the auditors, or by any
inquiry or investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried out by
the auditors, and any steps taken to deal with any such issues; and (iii) (to
assess the auditors' independence) all relationships between the independent
auditors and the Company, including each non-audit service provided to the
Company and the matters set forth in Independence Standards Board Standard No.
1.
The independent auditors shall submit to the Committee annually a formal
written statement of the fees billed to the Company in each of the last two
fiscal years for each of the following categories of services rendered by the
independent auditors: (i) the audit of the Company's annual financial statements
and the reviews of the financial statements included in the Company's Quarterly
Reports on Form 10-Q and services that are normally provided by the independent
auditors in connection with statutory and regulatory filings or engagements;
(ii) assurance and related services not included in clause (i) that are
reasonably related to the performance of the audit or review of the Company's
financial statements, in the aggregate and by each service; (iii) tax
compliance, tax advice and tax planning services, in the aggregate and by each
service; and (iv) all other products and services rendered by the independent
auditors, in the aggregate and by each service.
II. Committee Membership: The Committee shall be comprised of at least
three directors, each of whom the Board has determined has no material
relationship with the Company and each of whom is otherwise "independent" under
the rules of the New York Stock Exchange, Inc., and the Sarbanes-Oxley Act of
2002 and rules promulgated thereunder. The Board shall determine that each
Committee member is "financially literate," and that at least one member of the
Committee has "accounting or related financial management expertise," as such
qualifications are interpreted by the Board of Directors in its business
judgment, and whether any member is an "audit committee financial expert," as
defined by the SEC. The SEC rules require disclosure of whether the Company has
an audit committee financial expert serving on its audit committee in its annual
report in accordance with applicable regulations. If the Board has determined
that a member of the Committee is an audit committee financial expert, it may
presume that such member has accounting or related financial management
expertise.
No director may serve as a member of the Committee if such director serves
on the audit committee of more than two other public companies unless the Board
of Directors determines that such simultaneous service would not impair the
ability of such director to effectively serve on the Committee, and discloses
this determination in the Company's annual proxy statement. No member of the
Committee may receive, directly or indirectly, any consulting, advisory or other
compensatory fee from the Company other than (i) director's fees, which may be
received in cash, share options or other in-kind consideration ordinarily
available to directors; (ii) a pension or other deferred compensation for prior
service that is not contingent on future service; and (iii) any other regular
benefits that other directors receive.
Members shall be appointed by the Board, and shall serve at the pleasure of
the Board and for such term or terms as the Board may determine. Members shall
have such knowledge, ability and experience as the Board considers appropriate
for the effective discharge of the Audit Committee's duties and
responsibilities.
III. Committee Structure and Operations: The Board shall designate one
member of the Committee as its chairperson. In the event of a tie vote on any
issue, the chairperson's vote shall decide the issue. The Committee shall meet
periodically, as required to discuss with management the annual audited
financial statements and quarterly financial statements, as applicable. The
Committee shall meet separately with management, the chief auditor of the
internal auditing department and the independent auditors to discuss any matters
that the Committee or any of these persons or firms believe should be discussed
privately. The Committee may request any officer or employee of the Company or
the Company's outside counsel or independent auditors to attend a meeting of the
Committee or to meet with any members of, or consultants to, the Committee.
Members of the Committee may participate in a meeting of the Committee by
conference call or similar communications equipment by means of which all
persons participating in the meeting can hear each other.
IV. Duties and Powers of the Committee: To carry out its purposes, the
Committee shall have the following duties and powers:
1. with respect to the independent auditors,
(i) to be directly responsible for the appointment, retention,
compensation and oversight of the work of the independent auditors
(including the resolution of disagreements between management and
independent auditors regarding financial reporting) who shall report
directly to the Committee;
(ii) to be directly responsible for the appointment, retention,
compensation and oversight of the work of any public accounting firm,
other than the independent auditors, engaged to perform audit, review or
attestation services for the Company, which firm shall report directly
to the Committee.
(iii) to pre-approve, or to adopt appropriate procedures to
pre-approve, all audit and non-audit services to be provided by the
independent auditors;
(iv) to ensure that the independent auditors prepare and deliver
annually an Auditors' Statement (it being understood that the
independent auditors are responsible for the accuracy and completeness
of this Statement), and to discuss with the independent auditors any
relationships or services disclosed in this Statement that may impact
the quality of audit services or the objectivity and independence of the
Company's independent auditors;
(v) to obtain from the independent auditors in connection with any
audit a timely report relating to the Company's annual audited financial
statements describing all critical accounting policies and practices
used, all alternative treatments of financial information within
generally accepted accounting principles that have been discussed with
management, ramifications of the use
2
of such alternative disclosures and treatments, and the treatment
preferred by the independent auditors, and any material written
communications between the independent auditors and management, such as
any "management" letter or schedule of unadjusted differences;
(vi) to review and evaluate the qualifications, performance and
independence of the lead partner of the independent auditors assigned to
the Company's account;
(vii) to discuss with management the timing and process for
implementing the rotation of the lead audit partner assigned to
Company's account, the concurring partner and any other active audit
engagement team partner and consider whether there should be a regular
rotation of the audit firm itself;
(viii) to take into account the opinions of management and the
Company's internal auditors in assessing the independent auditors'
qualifications, performance and independence; and
(ix) to instruct the independent auditors that the independent
auditors are ultimately accountable to the Board and the Committee, as
representatives of the shareholders;
2. with respect to the internal auditing department,
(i) to review the appointment and any replacements of the chief
auditor of the internal auditing department; and
(ii) to advise the chief auditor of the internal auditing
department that he or she is expected to provide to the Committee
summaries of and, as appropriate, complete copies of the significant
reports to management prepared by the internal auditing department and
management's responses thereto;
3. with respect to financial reporting principles and policies and
internal audit controls and procedures,
(i) to advise management, the internal auditing department and the
independent auditors that they are expected to provide to the Committee
a timely analysis of significant financial reporting issues and
practices;
(ii) to consider any reports or communications (and management's
and/or the internal audit department's responses thereto) submitted to
the Committee by the independent auditors required by or referred to in
SAS 61 (as codified by AU Section 380), as it may be modified or
supplemented, including reports and communications related to:
- deficiencies noted in the audit in the design or operation of
internal controls;
- consideration of fraud in a financial statement audit;
- detection of illegal acts;
- the independent auditors' responsibility under generally accepted
auditing standards;
- any restrictions on audit scope;
- significant accounting policies;
- significant issues discussed with the national office of the
independent auditors respecting auditing or accounting issues
presented by the engagement;
- management judgments and accounting estimates;
- any accounting adjustments arising from the audit that were noted
or proposed by the auditors but were passed (as immaterial or
otherwise);
- the responsibility of the independent auditors for other
information in documents containing audited financial statements;
- disagreements with management;
3
- consultation by management with other accountants;
- major issues discussed with management prior to retention of the
independent auditors;
- difficulties encountered with management in performing the audit;
- the independent auditors' judgments about the quality of the
entity's accounting principles;
- reviews of interim financial information conducted by the
independent auditors; and
- the responsibilities, budget and staffing of the Company's
internal audit function;
(iii) to meet with management, the independent auditors and the
chief auditor of the internal auditing department:
- to discuss the scope of the annual audit;
- to discuss the annual audited financial statements and quarterly
financial statements, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations";
- to discuss any significant matters arising from any audit,
including any audit problems or difficulties, whether raised by
management, the internal auditing department or the independent
auditors, relating to the Company's financial statements;
- to discuss any difficulties the independent auditors encountered
in the course of the audit, including any restrictions on their
activities or access to requested information and any significant
disagreements with management;
- to discuss any "management" or "internal control" letter issued,
or proposed to be issued, by the independent auditors to the
Company;
- to review the form of opinion the independent auditors propose to
render to the Board of Directors and shareholders; and
- to discuss, as appropriate: (a) any major issues regarding
accounting principles and financial statement presentations,
including any significant changes in the Company's selection or
application of accounting principles, and major issues as to the
adequacy of the Company's internal controls and any special audit
steps adopted in light of material control deficiencies; (b)
analyses prepared by management and/or the independent auditors
setting forth significant financial reporting issues and judgments
made in connection with the preparation of the financial
statements, including analyses of the effects of alternative GAAP
methods on the financial statements; and (c) the effect of
regulatory and accounting initiatives, as well as off-balance
sheet structures, on the financial statements of the Company;
(iv) to inquire of the Company's chief executive officer and chief
financial officer as to the existence of any significant deficiencies in
the design or operation of internal controls that could adversely affect
the Company's ability to record, process, summarize and report financial
data, any material weaknesses in internal controls, and any fraud,
whether or not material, that involves management or other employees who
have a significant role in the Company's internal controls;
(v) to discuss guidelines and policies governing the process by
which senior management of the Company and the relevant departments of
the Company assess and manage the Company's exposure to risk, and to
discuss the Company's major financial risk exposures and the steps
management has taken to monitor and control such exposures;
(vi) to obtain from the independent auditors assurance that the
audit was conducted in a manner consistent with Section 10A of the
Securities Exchange Act of 1934, as amended, which sets forth certain
procedures to be followed in any audit of financial statements required
under the Securities Exchange Act of 1934;
4
(vii) to discuss with appropriate Company personnel any
significant legal, compliance or regulatory matters that may have a
material effect on the financial statements or the Company's business,
or compliance policies, including material notices to or inquiries
received from governmental agencies;
(viii) to discuss and review the type and presentation of
information to be included in earnings press releases;
(ix) to discuss the types of financial information and earnings
guidance provided, and the types of presentations made, to analysts and
rating agencies;
(x) to establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and for the
confidential, anonymous submission by Company employees of concerns
regarding questionable accounting or auditing matters;
(xi) to consider any reports submitted to it concerning material
violations of applicable securities laws, material breaches of fiduciary
duty or similar material violations of any law by the Company or by any
director, officer, employee, or agent of the Company and determine what
action or response is necessary or appropriate;
(xii) to interpret and apply the Sterling Bancorp Code of Business
Conduct and Ethics to specific situations in which questions are
presented to it and to take all action it considers appropriate to
investigate any violations reported to it; and
(xiii) to establish hiring policies for employees or former
employees of the independent auditors;
4. with respect to reporting and recommendations,
(i) to prepare any report or other disclosures, including any
recommendation of the Committee, required by the rules of the SEC to be
included in the Company's annual proxy statement;
(ii) to review this Charter at least annually and recommend any
changes to the full Board of Directors;
(iii) to report its activities to the full Board of Directors on a
regular basis and to make such recommendations with respect to the above
and other matters as the Committee may deem necessary or appropriate;
and
(iv) to prepare and review with the Board an annual performance
evaluation of the Committee, which evaluation shall compare the
performance of the Committee with the requirements of this Charter. The
performance evaluation by the Committee shall be conducted in such
manner as the Committee deems appropriate. The report to the Board may
take the form of an oral report by the chairperson of the Committee or
any other member of the Committee designated by the Committee to make
this report.
V. Delegation to Subcommittee. The Committee may, in its discretion,
delegate all or a portion of its duties and responsibilities to a subcommittee
of the Committee. The Committee may, in its discretion, delegate to one or more
of its members the authority to pre-approve any audit or non-audit services to
be performed by the independent auditors, provided that any such approvals are
presented to the Committee at its next scheduled meeting.
VI. Resources and Authority of the Committee: The Committee shall have
the resources and authority appropriate to discharge its duties and
responsibilities, including the authority to select, retain, terminate, and
approve the fees and other retention terms of special or independent counsel,
accountants or other experts and advisors, as it deems necessary or appropriate,
without seeking approval of the Board or management.
5
ANNEX B
STERLING BANCORP
COMPENSATION COMMITTEE CHARTER
Purpose of Committee
The purpose of the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") of Sterling Bancorp (the "Company") is to evaluate the
performance and determine the compensation of the Company's Chief Executive
Officer ("CEO") and President, to make recommendations to the Board with respect
to the Company's compensation philosophy and programs and to produce an annual
report on executive compensation for inclusion in the Company's proxy statement,
in accordance with the rules and regulations of the Securities and Exchange
Commission (the "SEC").
Committee Membership
The Committee shall consist solely of three or more members of the Board,
each of whom the Board has determined has no material relationship with the
Company and each of whom is otherwise "independent" under the rules of the New
York Stock Exchange, Inc.
Members shall be appointed by the Board, and shall serve at the pleasure of
the Board and for such term or terms as the Board may determine.
Committee Structure and Operations
The Board shall designate one member of the Committee as its chairperson.
In the event of a tie vote on any issue, the chairperson's vote shall decide the
issue. The Committee shall meet periodically, but at least once a year at a time
and place determined by the Committee chairperson. Any further meetings or
actions to be taken by unanimous written consent, shall occur, when deemed
necessary or desirable by the Committee or its chairperson.
The Committee may invite such members of management to its meetings, as it
may deem desirable or appropriate, consistent with the maintenance of the
confidentiality of compensation discussions. The CEO and/or President should not
attend any meeting where the CEO's and/or President's performance or
compensation are discussed, unless specifically invited by the Committee.
Committee Duties and Responsibilities
The following are the duties and responsibilities of the Committee:
1. Make recommendations to the Board regarding the Company's general
compensation philosophy with respect to the CEO and the President, and
oversee the development and implementation of compensation programs.
2. Establish, review and approve corporate goals and objectives
relevant to the compensation of the CEO and the President, evaluate the
performance of the CEO and the President in light of those goals and
objectives, and have the authority either as a Committee or together with
the other independent directors (as directed by the Board) to determine the
CEO's and the President's compensation level based on this evaluation. In
determining the long-term incentive component of CEO and the President
compensation, the Committee shall consider, among other factors, the
Company's performance and relative shareholder return, the value of similar
incentive awards to CEOs and Presidents at comparable companies, and the
awards given to the CEO and the President in past years.
3. Approve any new equity compensation plan or any material change to
an existing plan where shareholder approval has not been obtained, make
recommendations to the Board with respect to compensation programs
applicable to senior management of the Company, the Company's incentive
compensation plans and equity-based plans, oversee the activities of the
individuals and committees
responsible for administering these plans, and discharge any
responsibilities imposed on the Committee by any of these plans.
4. In consultation with management, oversee regulatory compliance
with respect to compensation matters, including overseeing the Company's
policies on structuring compensation programs to preserve tax
deductibility, and, as and when required, establishing performance goals
and certifying that performance goals have been attained for purposes of
Section 162(m) of the Internal Revenue Code.
5. Review and approve any compensation programs applicable to, and
severance or similar termination payments proposed to be made to, any
current or former CEO or President of the Company.
6. Prepare and issue the evaluations and reports required under
"Committee Reports" below.
7. Any other duties or responsibilities expressly delegated to the
Committee by the Board from time to time relating to the Company's
compensation programs.
Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a portion of its
duties and responsibilities to a subcommittee of the Committee. In particular,
the Committee may delegate the approval of certain transactions to a
subcommittee consisting solely of members of the Committee who are (i)
"Non-Employee Directors" for the purposes of Rule 16b-3 under the Securities
Exchange Act of 1934, as in effect from time to time, and (ii) "outside
directors" for the purposes of Section 162(m) of the Internal Revenue Code, as
in effect from time to time.
Committee Reports
The Committee shall produce the following reports and provide them to the
Board:
1. An annual Report of the Compensation Committee on Executive
Compensation for inclusion in the Company's annual proxy statement in
accordance with applicable SEC rules and regulations.
2. An annual performance evaluation of the Committee, which
evaluation must compare the performance of the Committee with the
requirements of this charter. The performance evaluation should also
recommend to the Board any improvements to this charter deemed necessary or
desirable by the Committee. The performance evaluation by the Committee
shall be conducted in such manner as the Committee deems appropriate. The
report to the Board may take the form of an oral report by the chairperson
of the Committee or any other member of the Committee designated by the
Committee to make this report.
3. A summary of the actions taken at each Committee meeting, which
shall be presented to the Board at a subsequent Board meeting.
Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to
discharge its duties and responsibilities, as it deems appropriate, without
seeking approval of the Board or management.
2
ANNEX C
STERLING BANCORP
CORPORATE GOVERNANCE AND
NOMINATING COMMITTEE CHARTER
Purpose of Committee
The purpose of the Corporate Governance and Nominating Committee (the
"Committee") of the Board of Directors (the "Board") of Sterling Bancorp (the
"Company") is to identify and recommend individuals to the Board for nomination
as members of the Board and to develop and recommend to the Board a set of
corporate governance principles applicable to the Company. The Committee shall
report to the Board not less than once a year.
Committee Membership
The Committee shall consist solely of three or more members of the Board,
each of whom the Board has determined has no material relationship with the
Company and each of whom is otherwise "independent" under the rules of the New
York Stock Exchange, Inc.
The members of the Committee shall be appointed by the Board and shall
serve at the pleasure of the Board and for such term or terms as the Board may
determine.
Committee Structure and Operations
The Board shall designate one member of the Committee as its chairperson.
In the event of a tie vote on any issue, the chairperson's vote shall decide the
issue. The Committee shall meet periodically and not less than once a year at a
time and place determined by the Committee chairperson, with any further
meetings to occur, or actions to be taken by unanimous written consent, when
deemed necessary or desirable by the Committee or its chairperson.
Committee Duties and Responsibilities
The following are the duties and responsibilities of the Committee:
1. Make recommendations to the Board from time to time as to changes
that the Committee believes to be desirable to the size of the Board.
2. Identify individuals believed to be qualified to become Board
members, and to recommend to the Board the nominees to stand for election
as directors at the annual meeting of shareholders or, if applicable, at a
special meeting of shareholders. In the case of a vacancy in the office of
a director (including a vacancy created by an increase in the size of the
Board), the Committee shall recommend to the Board an individual to fill
such vacancy either through appointment by the Board or through election by
shareholders. In nominating candidates, the Committee shall take into
consideration such factors as it deems appropriate, consistent with
criteria approved by the Board, which is set forth in the Company's
Corporate Governance Guidelines. These factors may include judgment, skill,
diversity, experience with businesses and other organizations of comparable
size, the interplay of the candidate's experience with the experience of
other Board members, and the extent to which the candidate would be a
desirable addition to the Board.
3. Establish procedures for the Committee to exercise oversight of
the evaluation of the Board and management.
4. Develop and recommend to the Board a set of corporate governance
principles applicable to the Company, and to review those principles at
least once a year.
5. Prepare and issue the evaluation required under "Performance
Evaluation" below.
6. As required, assist management in the preparation of the
disclosure in the Company's annual proxy statement regarding the operations
of the Committee.
7. Any other duties or responsibilities expressly delegated to the
Committee by the Board, from time to time, relating to the nomination of
Board members.
Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a portion of its
duties and responsibilities to a subcommittee of the Committee.
Performance Evaluation
The Committee shall produce and provide to the Board an annual performance
evaluation of the Committee, which evaluation shall compare the performance of
the Committee with the requirements of this charter. The performance evaluation
shall also recommend to the Board any improvements to the Committee's charter
deemed necessary or desirable by the Committee. The performance evaluation by
the Committee shall be conducted in such manner as the Committee deems
appropriate. The report to the Board may take the form of an oral report by the
chairperson of the Committee or any other member of the Committee designated by
the Committee to make this report.
Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to
discharge its duties and responsibilities, including the authority to select,
retain, terminate, and approve the fees and other retention terms of outside
advisors, as it deems appropriate.
2
ANNEX D
STERLING BANCORP
CORPORATE GOVERNANCE GUIDELINES
I. INTRODUCTION
The Board of Directors of Sterling Bancorp (the "Company"), acting on the
recommendation of its Corporate Governance and Nominating Committee, has
developed and adopted a set of corporate governance principles (the
"Guidelines") to promote the functioning of the Board and its committees and to
set forth a common set of expectations as to how the Board should perform its
functions. These Guidelines are designed with the Company's current business
operations, ownership, capital structure, and economic conditions in mind and
will continue to evolve with changing circumstances.
II. BOARD COMPOSITION
The composition of the Board should balance the following goals:
The size of the Board should facilitate substantive discussions of the
whole Board in which each director can participate meaningfully;
The composition of the Board should encompass a broad range of skills,
expertise, industry knowledge, diversity of opinion and contacts relevant
to the Company's business;
A majority of the Board shall consist of directors whom the Board has
determined have no material relationship with the Company and who are
otherwise "independent" under the rules of the New York Stock Exchange,
Inc.
III. SELECTION OF CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
The Board selects its Chairman and the Company's Chief Executive Officer
("CEO"). It is the policy of the Company that the positions of Chairman and CEO
be held by the same person, except in unusual circumstances.
IV. SELECTION OF DIRECTORS
Nominations. The Company's Corporate Governance and Nominating Committee
is responsible for recommending to the Board a slate of directors or one or more
nominees to fill vacancies occurring between annual meetings of shareholders.
The Board is responsible for selecting the nominees for election to the
Company's Board of Directors at the annual shareholder's meeting, and for making
appointments to fill vacancies, which may occur on the Board between annual
shareholder meetings.
Criteria. The Board should, based on the recommendation of the Corporate
Governance and Nominating Committee, select nominees for the position of
director considering the following criteria:
Personal qualities and characteristics, accomplishments and reputation
in the business community;
Current knowledge and contacts in the communities in which the Company
does business and in the Company's industry or other industries relevant to
the Company's business;
Ability and willingness to commit adequate time to Board and committee
matters;
The fit of the individual's skills and personality with those of other
directors and potential directors in building a Board that is effective,
collegial and responsive to the needs of the Company; and
Diversity of viewpoints, background, experience and other
demographics.
Invitation. The invitation to join the Board should be extended by the
Board itself via the Chairman of the Board and CEO of the Company.
Orientation and Continuing Education. Management, working with the Board,
will provide an orientation process for new directors, including background
material on the Company, its business plan and its risk profile, and meetings
with senior management. Periodically, management should prepare additional
educational sessions for directors on matters relevant to the Company, its
business plan and risk profile.
V. ELECTION TERM
The Board does not believe that arbitrary term limits are appropriate.
VI. RETIREMENT OF DIRECTORS
The Board does not believe it should establish a mandatory retirement age.
VII. BOARD MEETINGS
The Board currently plans at least four meetings each year, with further
meetings to occur (or action to be taken by unanimous consent) at the discretion
of the Board. The meetings will usually consist of committee meetings and the
Board meeting.
The agenda for each Board meeting will be set by the Chairman and prepared
by the Corporate Secretary or other designated officer. Management will seek to
provide to all directors an agenda and appropriate materials in advance of
meetings, although the Board recognizes that this will not always be consistent
with the timing of transactions and the operations of the business and that in
certain cases it may not be possible.
Materials presented to the Board or its committees should provide the
desired information needed for the directors to make an informed judgment.
VIII. EXECUTIVE SESSIONS
To ensure free and open discussion and communication among the
non-management directors of the Board, the non-management directors will meet in
executive sessions periodically, with no members of management present. The
non-management directors shall designate the director who will preside at the
executive sessions.
IX. THE COMMITTEES OF THE BOARD
The Company shall have at least the committees required by the rules of the
New York Stock Exchange, Inc., which committees are the Audit Committee, the
Compensation Committee and the Corporate Governance and Nominating Committee.
Each of these three committees must have a written charter satisfying the rules
of the New York Stock Exchange, Inc.
All directors, whether members of a committee or not, are invited to make
suggestions to a committee chair for additions to the agenda of his or her
committee or to request that an item from a committee agenda be considered by
the Board. Each committee chair will give a periodic report of his or her
committee's activities to the Board.
Each of the Corporate Governance and Nominating Committee, the Audit
Committee and the Compensation Committee shall be composed of at least three
directors whom the Board has determined have no material relationship with the
Company and who are otherwise "independent" under the rules of the New York
Stock Exchange, Inc. A director may serve on more than one committee for which
he or she qualifies.
X. MANAGEMENT SUCCESSION
At least annually, the Board shall review and concur in a succession plan,
developed by management, addressing the policies and principles for selecting a
successor to the CEO, both in an emergency situation and in the ordinary course
of business. The succession plan should include an assessment of the experience,
performance, skills and planned career paths for possible successors to the CEO.
2
XI. EXECUTIVE COMPENSATION
The Board, acting through or with the Compensation Committee, evaluates and
approves the proposals for overall compensation policies applicable to each of
the CEO and the President, evaluates the performance of each of the CEO and the
President and the Company against the Company's goals and objectives, and
approves the compensation level of each of the CEO and the President.
XII. BOARD COMPENSATION
The Board should review at least once every three years the components and
amount of Board compensation in relation to other similarly situated companies.
Board compensation should be consistent with market practices but should not be
set at a level that would call into question the Board's objectivity.
XIII. EXPECTATIONS OF DIRECTORS
The business and affairs of the Company shall be managed by or under the
direction of the Board in accordance with New York law. In performing their
duties, the primary responsibility of the directors is to exercise their
business judgment in the best interests of the Company. The Board has developed
a number of specific expectations of directors to promote the discharge of this
responsibility and the efficient conduct of the Board's business.
1. Commitment and Attendance. All independent and management directors
should make every effort to attend meetings of the Board and meetings of
committees of which they are members.
2. Participation in Meetings. Each director should be sufficiently
familiar with the business of the Company, including its financial statements
and capital structure, and the risks and competition it faces, to facilitate
active and effective participation in the deliberations of the Board and of each
committee on which he or she serves. Upon request, management will make
appropriate personnel available to answer any questions a director may have
about any aspect of the Company's business. Directors should also review the
materials provided by management and advisors in advance of the meetings of the
Board and its committees and should arrive prepared to discuss the issues
presented.
3. Loyalty and Ethics. In their roles as directors, all directors owe a
duty of loyalty to the Company. This duty of loyalty mandates that the best
interests of the Company take precedence over any interests possessed by a
director.
The Company has adopted a Code of Business Conduct and Ethics, including a
compliance program to enforce the Code. Certain portions of the Code deal with
activities of directors, particularly with respect to transactions in the
securities of the Company, potential conflicts of interest, the taking of
corporate opportunities for personal use, and competing with the Company.
Directors should be familiar with the Code's provisions in these areas and
should consult with the Company's counsel in the event of any issues.
4. Other Directorships. The Company values the experience directors bring
from other boards on which they serve, but recognizes that those boards may also
present demands on a director's time and availability and may present conflicts
or legal issues. Directors should advise the Chair of the Corporate Governance
and Nominating Committee and the CEO before accepting membership on other boards
of directors or other significant commitments involving affiliation with other
businesses or governmental units.
5. Contact with Management. All directors are invited to contact the CEO
at any time to discuss any aspect of the Company's business. Directors also have
complete access to other members of management. The Board expects that there
will be frequent opportunities for directors to meet with the CEO and other
members of management in Board and committee meetings and in other formal or
informal settings.
Further, the Board encourages management to, from time to time, bring
managers into Board meetings who: (a) can provide additional insight into the
items being discussed because of personal involvement and substantial knowledge
in those areas, and/or (b) are managers with future potential that the senior
management believes should be given exposure to the Board.
3
6. Contact with Other Constituencies. It is important that the Company
speak to employees and outside constituencies with a single voice, and that
management serve as the primary spokesperson.
7. Confidentiality. The proceedings and deliberations of the Board and
its committees are confidential. Each director shall maintain the
confidentiality of information received in connection with his or her service as
a director.
XIV. EVALUATING BOARD PERFORMANCE
The Board, acting through the Corporate Governance and Nominating
Committee, should conduct a self-evaluation at least annually to determine
whether it is functioning effectively. The Corporate Governance and Nominating
Committee should periodically consider the mix of skills and experience that
directors bring to the Board to assess whether the Board has the necessary tools
to perform its oversight function effectively.
Each of the Audit Committee, the Compensation Committee and the Corporate
Governance and Nominating Committee should conduct a self-evaluation at least
annually and report the results to the Board. Each committee's evaluation must
compare the performance of the committee with the requirements of its written
charter. The Board should evaluate at least annually each of its other
committees to determine whether they are functioning effectively.
XV. RELIANCE ON MANAGEMENT AND OUTSIDE ADVICE
In performing its functions, the Board is entitled to rely on the advice,
reports and opinions of management, counsel, accountants, auditors and other
expert advisors. The Board shall have the authority to retain and approve the
fees and retention terms of its outside advisors.
4
ANNEX E
STERLING BANCORP
METHOD FOR INTERESTED PARTIES TO COMMUNICATE WITH NON-MANAGEMENT DIRECTORS
AND AUDIT COMMITTEE PROCEDURES FOR TREATMENT OF COMPLAINTS REGARDING
ACCOUNTING, INTERNAL ACCOUNTING CONTROLS OR AUDITING MATTERS
Sterling Bancorp (with its subsidiaries, the "Company") has adopted the
following procedures for interested parties to communicate with the
non-management directors of Sterling Bancorp (the "Non-management Directors")
and for the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or auditing matters.
All communications with the Non-management Directors ("Communications") and
all complaints regarding accounting, internal accounting controls or auditing
matters ("Complaints") may be submitted to the Director of Human Resources (the
"HR Director") at Sterling Bancorp, 145 East 40th Street, New York, New York
10016 or by e-mail to HRdir.corpgov@sterlingbancorp.com. The HR Director will
review such Communications and Complaints and may investigate any matters
brought to his or her attention, making appropriate use of internal staff and
external professionals, as needed. The HR Director will then deliver all such
Communications and Complaints, along with any summary of the matter and the
results of any investigation of such matter, to Sterling Bancorp's Chief
Financial Officer (the "CFO") for distribution to the Non-management Directors
or to the Audit Committee of the Board of Directors of Sterling Bancorp (the
"Audit Committee"), as determined by the CFO in accordance with the following
paragraph. If the HR Director determines that any such Communication or
Complaint involves a conflict of interest with regard to the CFO, the HR
Director shall instead deliver all documents related to such Communication or
Complaint directly to Sterling Bancorp's President, unless the HR Director
determines that such Communication or Complaint involves a conflict of interest
with regard to the President, in which case the HR Director shall instead
deliver all documents related to such Communication or Complaint directly to
Sterling Bancorp's Chief Executive Officer (the "CEO"), unless the HR Director
determines that such Communication or Complaint involves a conflict of interest
with regard to the CEO, in which case the HR Director shall instead distribute
all documents related to such Communication or Complaint directly to the
Non-management Directors or to the members of the Audit Committee, as determined
in accordance with the following paragraph.
The CFO, the President, the CEO or the HR Director, as the case may be,
shall distribute any and all documents relating to (i) Communications received
by him or her to each of the Non-management Directors at or prior to the next
executive session of Non-management Directors and (ii) Complaints received by
him or her to each of the members of the Audit Committee at or prior to the next
meeting of the Audit Committee. If it is unclear to the CFO, the President, the
CEO or the HR Director whether a Communication involves a complaint regarding
accounting, internal accounting controls or auditing matters or if it involves
both such a complaint and other matters, the CFO, the President, the CEO or the
HR Director, as the case may be, shall distribute all documents relating to such
Communication to the members of the Audit Committee and all other Non-management
Directors, with a note to that effect, at or prior to the earlier of the next
executive session of Non-management Directors or the next meeting of the Audit
Committee.
The HR Director will maintain a log of each Communication or Complaint
received, the date such Communication or Complaint was distributed to the
Non-management Directors or the Audit Committee, as the case may be, any summary
of the matter and the results of any investigation of such matter.
The Non-management Directors or the members of the Audit Committee, as the
case may be, will determine whether any action or response is necessary or
appropriate in respect of a Communication or Complaint. If so, they will take or
direct such action, as they deem appropriate. The determinations of Non-
management Directors and the Audit Committee in respect of each Communication or
Complaint and any further action taken will be recorded in the log maintained by
the HR Director.
All Communications and Complaints received by the HR Director, along with
any summary of the matter and the results of any investigation of such matter,
will be placed in confidential files, which will be
available to the Non-management Directors and the Audit Committee on request and
will be retained for seven years.
Procedures for the confidential, anonymous submission by employees of the
Company of concerns regarding questionable accounting or auditing matters are
set forth in a separate document.
2
STERLING BANCORP
650 FIFTH AVENUE, NEW YORK, NY 10019-6108
[STERLING BANCORP LOGO]
PROXY
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
STERLING BANCORP
ANNUAL MEETING OF SHAREHOLDERS, THURSDAY, APRIL 15, 2004
The undersigned appoints Louis J. Cappelli, Allan F. Hershfield and Henry
J. Humphreys, or any one of them, attorneys and proxies with power of
substitution, to vote all of the Common Shares and Preferred Shares of Sterling
Bancorp standing in the name of the undersigned at the Annual Meeting of
Shareholders on Thursday, April 15, 2004, and all adjournments thereof, hereby
revoking any proxy heretofore given.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
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Address Change/Comments (Mark the corresponding box on the reverse side)
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-- FOLD AND DETACH HERE --
Mark Here [ ]
for Address
Change or
Comments
SEE REVERSE SIDE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR WITHHOLD 3. In their discretion the Proxies are authorized
FOR All Nominees For All Nominees to vote to upon such other business as may
1. ELECTION OF DIRECTORS [ ] [ ] properly come before the meeting.
01 Robert Abrams, 02 Joseph M. Adamko,
03 Louis J. Cappelli, 04 Walter Feldesman
05 Fernando Ferrer, 06 Allan F. Hershfield,
07 Henry J. Humphreys, 08 John C. Millman,
09 Eugene T. Rossides.
To withhold authority to vote for any
individual nominee(s) write that nominee's name
in the space provided.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
2. Approval of the Amendment to the Company's THIS PROXY WILL BE VOTED AS DIRECTED BY THE
Certificate of Incorporation to increase the SHAREHOLDER IN THE MANNER DIRECTED HEREIN. IF
number of authorized Common Shares, $1 par THIS CARD CONTAINS NO SPECIFIC VOTING
value, from 20,000,000 to 50,000,000; [ ] [ ] INSTRUCTIONS, SHARES WILL BE VOTED IN ACCORDANCE
and delete Section Three of Article Fifth WITH THE RECOMMENDATION OF THE BOARD OF
of the Company's Certificate of Incorporation. DIRECTORS.
Signature Signature Date
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Please mark, date, and sign as your name appears above and return in the enclosed envelope. If acting as executor, administrator,
trustee, guardian, etc., you should so indicate when signing. If the signer is a corporation, please sign the full corporate name,
by duly authorized officer. If shares are held jointly, each shareholder named should sign.
-- FOLD AND DETACH HERE --
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time
the business day prior to annual meeting day.
Your internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
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Internet Telephone Mail
http://www.eproxy.com/stl 1-800-435-6710
Use the Internet to vote your Use any touch-tone telephone to Mark, sign and date
proxy. Have your proxy card in OR vote your proxy. Have your proxy OR your proxy card
hand when you access the web card in hand when you call. and
site. return it in the
enclosed postage-paid
envelope.
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If you vote your proxy by internet or by telephone,
you do NOT need to mail back your proxy card.