UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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.          )

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Definitive Proxy Statement
[  ]
Definitive Additional Materials
[  ]
Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.

HUDSON CITY BANCORP, INC.


(Name of Registrant as Specified In Its Charter)




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

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(HUDSON CITY BANCORP, INC. LOGO)
 
March 20, 2008
 
Dear Stockholder:
 
You are cordially invited to attend the 2008 Annual Meeting of Stockholders of Hudson City Bancorp, Inc., which will be held on April 22, 2008 at 9:30 a.m., Eastern Time, at the Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New Jersey 07656.
 
The attached Notice of the 2008 Annual Meeting of Stockholders and Proxy Statement describe the business to be transacted at the annual meeting. Directors and officers of Hudson City Bancorp, as well as a representative of KPMG LLP, the accounting firm appointed by the Audit Committee of the Board of Directors to be Hudson City Bancorp’s independent registered public accounting firm for the fiscal year ending December 31, 2008, will be present at the annual meeting to respond to appropriate questions.
 
The Board of Directors of Hudson City Bancorp has determined that an affirmative vote on each matter to be considered at the annual meeting is in the best interests of Hudson City Bancorp and its stockholders and recommends a vote “FOR” each of these matters.
 
Please complete, sign and return the enclosed proxy card promptly, or if you prefer, vote by using the telephone or Internet, whether or not you plan to attend the annual meeting. Your vote is important regardless of the number of shares you own. Voting by proxy will not prevent you from voting in person at the annual meeting, but will assure that your vote is counted if you are unable to attend. If you are a stockholder whose shares are not registered in your own name, you will need additional documentation from your record holder to attend and to vote personally at the annual meeting. Examples of such documentation include a broker’s statement, letter or other document confirming your ownership of shares of Hudson City Bancorp common stock.
 
On behalf of the Board of Directors and the employees of Hudson City Bancorp, we thank you for your continued support and hope to see you at the annual meeting.
 
Sincerely yours,
 
-S- RONALD E. HERMANCE, JR.
Ronald E. Hermance, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer


 

 
Hudson City Bancorp, Inc.
West 80 Century Road
Paramus, New Jersey 07652
(201) 967-1900
 
NOTICE OF THE 2008 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 22, 2008
 
NOTICE IS HEREBY GIVEN that the 2008 Annual Meeting of Stockholders of Hudson City Bancorp, Inc. will be held at the Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New Jersey 07656, on April 22, 2008 at 9:30 a.m., Eastern Time, to consider and vote upon the following matters:
 
(1) The election of three directors for terms of three years each.
 
(2) The ratification of the appointment of KPMG LLP as Hudson City Bancorp’s independent registered public accounting firm for the fiscal year ending December 31, 2008.
 
Stockholders also may be asked to vote upon such other business as may properly come before the annual meeting, and any adjournment or postponement thereof. Please note that we are not aware of any such business.
 
The Board of Directors has fixed March 3, 2008 as the record date for the determination of stockholders entitled to notice of and to vote at the annual meeting and any adjournment or postponement thereof. Only stockholders of record at the close of business on that date will be entitled to notice of and to vote at the annual meeting and any adjournment or postponement thereof. A list of such stockholders will be available for inspection at the branch office of Hudson City Savings Bank located at West 80 Century Road, Paramus, New Jersey for 10 days prior to the annual meeting. The list will also be available at the annual meeting.
 
By Order of the Board of Directors
 
  -S- VERONICA OLSZEWSKI
Veronica Olszewski
Senior Vice President, Treasurer
and Corporate Secretary
 
Paramus, New Jersey
March 20, 2008
 
 
 
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE BOARD OF DIRECTORS URGES YOU TO SUBMIT YOUR PROXY CARD AS SOON AS POSSIBLE. YOU MAY SUBMIT YOUR PROXY CARD BY COMPLETING, SIGNING, DATING AND RETURNING YOUR PROXY CARD IN THE ENCLOSED ENVELOPE OR, IF YOU PREFER, VOTE BY USING THE TELEPHONE OR INTERNET. RETURNING THE PROXY CARD WILL NOT PREVENT YOU FROM VOTING IN PERSON IF YOU ATTEND THE ANNUAL MEETING.
 


 

 
TABLE OF CONTENTS
 
         
    Page
 
GENERAL INFORMATION
    1  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    4  
PROPOSAL 1 ELECTION OF DIRECTORS
    8  
CERTAIN TRANSACTIONS WITH MEMBERS OF OUR BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
    12  
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
    13  
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    14  
AUDIT COMMITTEE APPROVAL
    14  
AUDIT COMMITTEE REPORT
    15  
CORPORATE GOVERNANCE
    17  
INDEPENDENCE OF DIRECTORS
    17  
LEAD INDEPENDENT DIRECTOR
    17  
CONTINUING CORPORATE GOVERNANCE EFFORTS
    17  
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
    18  
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
    18  
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
    20  
COMPENSATION COMMITTEE REPORT
    20  
COMPENSATION DISCUSSION AND ANALYSIS
    21  
OTHER MATTERS
    56  
ADDITIONAL INFORMATION
    56  


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HUDSON CITY BANCORP, INC.
 
PROXY STATEMENT FOR THE
2008 ANNUAL MEETING OF STOCKHOLDERS
 
To Be Held on April 22, 2008
 
 
General
 
This proxy statement, accompanying proxy card and the annual report to stockholders are being furnished to the stockholders of Hudson City Bancorp, Inc. in connection with the solicitation of proxies by the Board of Directors of Hudson City Bancorp for use at our Annual Meeting of Stockholders. The Annual Meeting of Stockholders will be held on April 22, 2008 at the Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New Jersey 07656 at 9:30 a.m., Eastern Time. This proxy statement, together with the enclosed proxy card, is first being mailed to stockholders on or about March 20, 2008.
 
Hudson City Bancorp, a Delaware corporation, operates as a savings and loan holding company for its wholly owned subsidiary, Hudson City Savings Bank. As used in this proxy statement, “we,” “us,” “our” and “the Company” refer to Hudson City Bancorp or Hudson City Bancorp and its consolidated subsidiaries, depending on the context. The term “annual meeting,” as used in this proxy statement, includes any adjournment or postponement of such meeting.
 
Who Can Vote
 
The Board of Directors has fixed the close of business on March 3, 2008 as the record date for the determination of stockholders entitled to notice of and to vote at the annual meeting. Accordingly, only holders of record of shares of Hudson City Bancorp common stock, par value $0.01 per share, at the close of business on such date will be entitled to vote at the annual meeting. On March 3, 2008, there were 518,847,895 shares of common stock outstanding. The presence, in person or by proxy, of the holders of at least a majority of the total number of outstanding shares of common stock entitled to vote at the annual meeting is necessary to constitute a quorum at the meeting.
 
How Many Votes You Have
 
Each holder of shares of common stock outstanding on March 3, 2008 will be entitled to one vote for each share held of record (other than excess shares, as defined below) at the annual meeting. As provided in Hudson City Bancorp’s certificate of incorporation, record holders of common stock who beneficially own in excess of 10% of the issued and outstanding shares of common stock are record holders of excess shares which shall be entitled to one-hundredth of one vote per share for each excess share. A person or entity is deemed to beneficially own shares owned by an affiliate or associate as well as by persons acting in concert with such person or entity. Hudson City Bancorp’s certificate of incorporation authorizes the Board of Directors to interpret and apply the provisions of the certificate of incorporation governing excess shares, and to determine on the basis of information known to them after reasonable inquiry all facts necessary to ascertain compliance with the certificate of incorporation, including, without limitation, (1) the number of shares of common stock beneficially owned by any person or purported owner, (2) whether a person or purported owner is an affiliate or associate of, or is acting in concert with, any other person or purported owner and (3) whether a person or purported owner has an agreement, arrangement or understanding with any person or purported owner as to the voting or disposition of any shares of common stock.


 

 
How To Vote
 
You may vote your shares:
 
  (1)   By Internet .   Vote at the Internet address shown on your proxy card. The Internet voting system is available 24 hours a day until 11:59 p.m., Eastern Time, on Monday, April 21, 2008. Once you are into the Internet voting system, you can record and confirm (or change) your voting instructions.
 
  (2)   By telephone .   Use the toll free telephone number shown on your proxy card. The telephone voting system is available 24 hours a day in the United States until 11:59 p.m., Eastern Time, on Monday, April 21, 2008. Once you are into the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions.
 
  (3)   By mail .   Mark and sign the enclosed proxy card and return it in the enclosed postage-paid envelope. All properly executed proxies received by Hudson City Bancorp will be voted in accordance with the instructions marked on the proxy card. If you return an executed proxy card without marking your instructions, your executed proxy will be voted “FOR” the proposals identified in the preceding Notice of 2008 Annual Meeting of Stockholders. Returning a proxy card will not prevent you from voting in person if you attend the annual meeting.
 
Alternatively, you may attend the annual meeting and vote in person. If you are a stockholder whose shares are not registered in your own name, you will need an assignment of voting rights or a proxy from your stockholder of record to vote personally at the annual meeting.
 
Vote Required
 
Proposal 1.   Directors are elected by a plurality of the votes cast in person or by proxy at the annual meeting. The holders of common stock may not vote their shares cumulatively for the election of directors. Shares held by a broker who submits a proxy card but fails to cast a vote on this proposal and shares for which a proxy card is not returned will have no effect on the outcome of the vote on this Proposal 1 because only a plurality of votes cast is required to elect a director.
 
Proposal 2.   In order for the stockholders to approve Proposal 2, we must obtain the affirmative vote of the holders of a majority of the shares of our common stock represented in person or by proxy at the annual meeting and entitled to vote on the proposal. Under the voting standard for Proposal 2, shares as to which the “ABSTAIN” box has been selected on the proxy card will count as shares represented and entitled to vote and will be treated as votes “AGAINST” the proposal. Shares held by a broker who submits a proxy card but fails to cast a vote on this proposal and shares for which a proxy card is not returned will be treated as shares that are not represented and will have no effect on the outcome of the vote.
 
Our Board of Directors recommends that you promptly sign, date and mark the enclosed proxy card(s) in favor of proposals 1 and 2 and return the card(s) in the enclosed self-addressed, postage-prepaid envelope or, if you prefer, vote by using the telephone or Internet. Proxy cards must be received prior to the commencement of the annual meeting. Returning the proxy card will not prevent you from voting in person if you attend the annual meeting. Your vote is very important.


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Revocability of Proxies
 
You may revoke your grant of a proxy at any time before it is voted by:
 
  •  filing a written revocation of the proxy with our secretary;
 
  •  submitting a signed proxy card bearing a later date; or
 
  •  attending and voting in person at the annual meeting, but you also must file a written revocation with the secretary of the annual meeting prior to the voting.
 
If you voted using the Internet, you can change your vote at the Internet address shown on your proxy card. The Internet voting system is available 24 hours a day until 11:59 p.m., Eastern Time, on Monday, April 21, 2008.
 
If you voted by telephone, you can change your vote by using the toll free telephone number shown on your proxy card. The telephone voting system is available 24 hours a day in the United States until 11:59 p.m., Eastern Time, on Monday, April 21, 2008.
 
We are soliciting proxies only for the annual meeting. If you grant us a proxy to vote your shares, the proxy will only be exercised at the annual meeting.
 
Solicitation of Proxies
 
Our officers, members of our Board of Directors and our employees may solicit proxies on our behalf by telephone or through other forms of communication but none of these persons will receive any compensation for their solicitation activities in addition to their regular compensation. We will request persons, firms and corporations holding shares in their names or in the name of their nominees, which are beneficially owned by others, to send proxy materials to and obtain proxies from such beneficial owners, and will reimburse such holders for reasonable expenses incurred in connection therewith. We will bear all costs of solicitation.
 
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on April 22, 2008
 
The proxy statement and annual report are available on Hudson City Bancorp’s website at www.hcbk.com.


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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
 
Principal Stockholders
 
The following table sets forth, as of February 29, 2008, certain information as to Hudson City Bancorp common stock beneficially owned by persons owning in excess of 5% of the outstanding shares of our common stock. We know of no person, except as listed below, who beneficially owned more than 5% of the outstanding shares of our common stock as of February 29, 2008. Except as otherwise indicated, the information provided in the following table was obtained from filings with the Securities and Exchange Commission and with Hudson City Bancorp pursuant to the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act. Addresses provided are those listed in the filings as the address of the person authorized to receive notices and communications. For purposes of the table below and the table set forth under “Security Ownership of Management,” in accordance with Rule 13d-3 under the Exchange Act, a person is deemed to be the beneficial owner of any shares of common stock (1) over which he has or shares, directly or indirectly, voting or investment power, or (2) of which he has the right to acquire beneficial ownership at any time within 60 days after February 29, 2008. As used herein, “voting power” is the power to vote or direct the voting of shares and “investment power” includes the power to dispose or direct the disposition of shares. Except as otherwise indicated, each stockholder shown in the table has sole voting and investment power with respect to the shares of common stock indicated.
 
                 
    Amount and Nature of
       
Name and Address of Beneficial Owner
  Beneficial Ownership     Percent(1)  
 
Employee Stock Ownership Plan Trust
of Hudson City Savings Bank
West 80 Century Road,
Paramus, New Jersey 07652(2)
    42,445,255       8.18 %
Human Resources Committee of Hudson
City Savings Bank
West 80 Century Road,
Paramus, New Jersey 07652(3)
    46,744,426       9.01  
Capital Research Global Investors
333 South Hope Street,
Los Angeles, CA 90071(4)
    43,645,000       8.41  
Franklin Mutual Advisers, LLC
101 John F. Kennedy Parkway,
Short Hills, NJ 07078(5)
    28,380,012       5.47  
 
 
(1) Based on the 518,847,895 total outstanding shares of Hudson City Bancorp as of February 29, 2008.
 
(2) Based on the Schedule 13G/A filed with the Securities and Exchange Commission on January 29, 2008. The Human Resources Committee, a Plan fiduciary, shares voting and investment power with Plan participants.
 
(3) Based on the Schedule 13G/A filed with the Securities and Exchange Commission on January 30, 2008. The Human Resources Committee has sole voting and investment power over 699,733 shares in the Hudson City Savings Bank Retirement Plan for Employees and shares voting and investment power over the remaining 46,044,693 shares, which number of shares includes the 42,445,255 shares also indicated as beneficially owned by the Employee Stock Ownership Plan Trust of Hudson City Savings Bank.
 
 
(Notes continued on following page)


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(4) Based on the Schedule 13G filed with the Securities and Exchange Commission on February 12, 2008. Capital Research Global Investors is deemed to be the beneficial owner of 43,645,000 shares of common stock as a result of its acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940.
 
(5) Based on the Schedule 13G filed with the Securities and Exchange Commission on January 30, 2008. Franklin Mutual Advisers, LLC is deemed to be the beneficial owner of 28,380,012 shares of common stock as a result of its acting as investment adviser to one or more open-end investment companies or other managed accounts.
 
Directors and Executive Officers
 
The following table sets forth information about the shares of common stock beneficially owned by each director of Hudson City Bancorp, by each named executive officer of Hudson City Bancorp identified in the Summary Compensation Table included elsewhere herein, and all directors and executive officers of Hudson City Bancorp or Hudson City Bancorp’s wholly owned subsidiary, Hudson City Savings, as a group as of February 29, 2008. Except as otherwise indicated, each person and each group shown in the table has sole voting and investment power with respect to the shares of common stock indicated.
                     
        Amount and Nature
    Percent of
 
    Position with
  of Beneficial Ownership
    Common Stock
 
Name
 
the Company
  (1)(2)(3)(4)     Outstanding (5)  
 
Ronald E. Hermance, Jr. 
  Director, Chairman, President and Chief Executive Officer     6,347,741 (6)     1.21 %
Denis J. Salamone
  Director, Senior Executive Vice President and Chief Operating Officer     2,188,936 (7)     *  
Michael W. Azzara
  Director     435,518       *  
William G. Bardel
  Director     369,379 (8)     *  
Scott A. Belair
  Director     345,825       *  
Victoria H. Bruni
  Director     421,333       *  
William J. Cosgrove
  Director     351,960 (9)     *  
Donald O. Quest, M.D. 
  Director     688,775 (10)     *  
Joseph G. Sponholz
  Director     653,342 (11)     *  
James C. Kranz
  Chief Financial Officer, Executive Vice President and Investment Officer of Hudson City Savings     658,260 (12)     *  
Ronald J. Butkovich
  Senior Vice President of Hudson City Savings     526,179 (13)     *  
Thomas E. Laird
  Executive Vice President     822,658 (14)     *  
John M. Tassillo
  Executive Vice President (through June 8, 2007)     786,244 (15)     *  
All directors and executive officers as a group (17 persons)
        52,387,781 (16)     9.96  
 
 
Less than one percent
 
(Notes on following page)


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(1) The figures shown include the following shares that have been allocated as of December 31, 2007 to individual accounts of participants in the Hudson City Bancorp, Inc. Employee Stock Ownership Plan (referred to as the ESOP): Mr. Hermance, 60,537 shares; Mr. Salamone, 35,643 shares; Mr. Kranz, 60,537 shares, Mr. Butkovich, 20,009 shares; Mr. Laird 57,592 shares; Mr. Tassillo -0- shares; and all directors and executive officers as a group, 417,505 shares. Such persons have voting power (subject to the legal duties of the ESOP Trustee) but no investment power, except in limited circumstances, as to such shares. The figures shown for each of the executive officers named in the table do not include 35,600,831 shares held in trust pursuant to the ESOP that have not been allocated as of December 31, 2007 to any individual’s account and as to which each of the executive officers named in the table shares voting power with other ESOP participants. The figure shown for all directors and executive officers as a group includes such 35,600,831 shares as to which the members of Hudson City Bancorp’s Compensation Committee (as of January 1, 2008, consisting of Messrs. Azzara, Belair and Quest) may be deemed to have sole investment power, except in limited circumstances, thereby causing each such committee member to be deemed a beneficial owner of such shares. Each of the members of the Compensation Committee disclaims beneficial ownership of such shares and, accordingly, such shares are not attributed to the members of the Compensation Committee individually. See “Compensation of Directors and Executive Officers — Compensation Plans — Post-Employment Compensation — Employee Stock Ownership Plan.”
 
(2) The figures shown include the following shares held as of February 29, 2008 in individual accounts of participants in the Profit Incentive Bonus Plan of Hudson City Savings Bank: Mr. Hermance, 359,150 shares; Mr. Salamone, 11,666 shares; Mr. Kranz, 98,881 shares; Mr. Butkovich, 5,873 shares; Mr. Laird 171,244 shares; Mr. Tassillo -0- shares; and all directors and executive officers as a group, 805,068. Such persons have sole voting power and sole investment power as to such shares. See “Compensation of Directors and Executive Officers — Compensation Plans — Post-Employment Compensation — Profit Incentive Bonus Plan.”
 
(3) The figures shown include unvested shares held in a custodial account pursuant to the RRP that have been awarded to individuals as follows: Mr. Hermance, 57,708 shares; Mr. Salamone, 28,854 shares; Mr. Kranz, 9,618 shares; Mr. Butkovich, -0- shares; Mr. Laird 9,618 shares; Mr. Tassillo 19,236 shares; and all directors and executive officers as a group, 179,858 shares. Such persons have sole voting power but no investment power, except in limited circumstances, as to such shares.
 
(4) The figures shown include the following shares which may be acquired upon the exercise of stock options that are, or will become, exercisable within 60 days of February 29, 2008: Mr. Hermance, 3,058,565 shares; Mr. Salamone, 1,013,093 shares; Mr. Kranz, 269,300 shares; Mr. Butkovich, 256,480 shares; Mr. Laird 110,553 shares; Mr. Tassillo 429,269 shares; Mr. Azzara, 279,720 shares; Mr. Bardel, 256,480 shares; Mr. Belair, 178,240 shares; Ms. Bruni, 130,150 shares; Mr. Cosgrove 50,000 shares; Dr. Quest, 181,446 shares; Mr. Sponholz, 434,720 shares; and all directors and executive officers as a group, 7,395,592 shares.
 
(5) Based on the 518,847,895 total outstanding shares as of February 29, 2008 plus the 7,395,592 shares which such person or group of persons has the right to acquire within 60 days after February 29, 2008.
 
(6) Includes 2,214,963 shares as to which Mr. Hermance may be deemed to share voting and investment power and 2,110,454 shares held in a brokerage account with margin provisions.
 
(7) Includes 172,453 shares as to which Mr. Salamone may be deemed to share voting and investment power and 954,458 shares held in a brokerage account with margin provisions.
 
(8) Includes 112,889 shares held in a brokerage account with margin provisions.
 
(9) Includes 160,300 shares as to which Mr. Cosgrove may be deemed to share voting and investment power. These shares are held in a brokerage account with margin provisions.
 
(10) Includes 186,934 shares as to which Dr. Quest may be deemed to share voting and investment power.
 
(11) Includes 6,412 shares as to which Mr. Sponholz may be deemed to share voting and investment power.
 
(12) Includes 60,537 shares as to which Mr. Kranz may be deemed to share voting power.
 
(Notes continued on following page)


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(13) Includes 20,009 shares as to which Mr. Butkovich may be deemed to share voting and investment power and 243,817 shares held in a brokerage account with margin provisions.
 
(14) Includes 530,332 shares as to which Mr. Laird may be deemed to share voting and investment power and 472,740 shares held in a brokerage account with margin provisions.
 
(15) Mr. Tassillo served as Executive Vice President of Hudson City Bancorp through June 8, 2007, the effective date of his resignation from that position, after having served Hudson City Bancorp since its incorporation in 1999 and Hudson City Savings since 1969. Since his resignation from that position, Mr. Tassilo has served as Special Assistant to the Chief Executive Officer. Includes 118,193 shares as to which Mr. Tassillo may be deemed to share voting and investment power.
 
(16) Includes 4,672,675 shares held in a brokerage account with margin provisions by all directors and executive officers as a group.


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General
 
The certificate of incorporation and Bylaws of Hudson City Bancorp provide for the election of directors by the stockholders. For this purpose, the Board of Directors of Hudson City Bancorp is divided into three classes, each class to be as nearly equal in number as possible. The terms of office of the members of one class expire, and a successor class is to be elected, at each Annual Meeting of Stockholders. There are currently nine directors of Hudson City Bancorp.
 
The terms of three directors expire at the annual meeting. Each of the incumbent directors with terms expiring at the annual meeting, Ronald E. Hermance, Jr., William G. Bardel and Scott A. Belair, have been nominated by the Board of Directors, upon recommendation by the Nominating and Governance Committee, to be re-elected at the annual meeting for three-year terms expiring at the Annual Meeting of Stockholders to be held in 2011, or when their successors are otherwise duly elected and qualified. Each nominee has consented to being named in this proxy statement and to serve if elected. Pursuant to the Bylaws of Hudson City Bancorp, the Board of Directors has fixed the size of the Board of Directors at nine members.
 
Assuming the re-election of Messrs. Hermance, Bardel and Belair, at the conclusion of the annual meeting, our Board of Directors will consist of nine members divided into three equal classes, and our Chief Executive Officer and Chief Operating Officer will be the only members who are not “independent” under the listing requirements of the NASDAQ Global Market. See “Corporate Governance.”
 
The terms of the remaining two classes of directors expire at the Annual Meetings of Stockholders to be held in 2009 and 2010, respectively, or when their successors are otherwise duly elected and qualified. In the event that any nominee for election as a director at the annual meeting is unable or declines to serve, which the Board of Directors has no reason to expect, the persons named in the proxy card will vote with respect to a substitute nominee designated by the present Board of Directors.


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Who Our Directors Are
 
The table on the following page states certain information with respect to each nominee for election as a director and each director whose term does not expire at the annual meeting (including time spent on the Board of Directors or Board of Managers of Hudson City Savings prior to the incorporation of Hudson City Bancorp on March 4, 1999). There are no arrangements or understandings between Hudson City Bancorp and any director or nominee pursuant to which such person was elected or nominated to be a director of Hudson City Bancorp. For information with respect to security ownership of directors, see “Security Ownership of Certain Beneficial Owners and Management — Security Ownership of Management.”
 
                             
                Term
     
Name
  Age(1)     Director Since     Expires    
Positions Held
 
Nominees
                           
Ronald E. Hermance, Jr. 
    60       1988       2008     Director, Chairman, President and Chief Executive Officer
William G. Bardel
    68       2003       2008     Director
Scott A. Belair
    60       2004       2008     Director
                             
Continuing Directors
                           
Denis J. Salamone
    55       2001       2009     Director, Senior Executive Vice President and Chief Operating Officer
Michael W. Azzara
    61       2002       2009     Director
Victoria H. Bruni
    66       1996       2009     Director
William J. Cosgrove
    75       1995       2010     Director
Donald O. Quest, M.D. 
    68       1983       2010     Director
Joseph G. Sponholz
    64       2002       2010     Director
 
 
(1) As of May 1, 2008.
 
Directors
 
The business experience of each of our directors is as follows:
 
Nominees for Election as Director
 
Ronald E. Hermance, Jr. has been President and Chief Executive Officer of Hudson City Bancorp and Hudson City Savings since January 1, 2002 and Chairman of the Board since January 1, 2005. Prior to assuming such positions, Mr. Hermance had served as President and Chief Operating Officer of Hudson City Bancorp since its incorporation in 1999 and of Hudson City Savings since January 1997. Mr. Hermance previously was Senior Executive Vice President and Chief Operating Officer from the time he joined Hudson City Savings in 1988. He was elected to the Board of Managers of Hudson City Savings in 1988. Prior to joining Hudson City Savings, Mr. Hermance was Chief Financial Officer of Southold Savings Bank on Long Island, New York. In addition to his most recent service, Mr. Hermance served in various lending capacities in both a commercial bank and a thrift institution. In 2004, Mr. Hermance was elected to the board of directors of the Federal Home Loan Bank of New York.
 
William G. Bardel was the Associate Headmaster and Chief Financial Officer of the Lawrenceville School, a preparatory high school in Lawrenceville, New Jersey, from 1994 until 2006. Previously, from 1988 to 1994, he served as head of the Government Advisory Group of Lehman Brothers in London,


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England, which provided financial market guidance to developing nations in Africa, Asia, Eastern Europe, South America and the Middle East. Mr. Bardel currently serves as the audit committee financial expert.
 
Scott A. Belair is a co-founder of Urban Outfitters, Inc., a NASDAQ-listed retailer and wholesaler operating under the brand names Urban Outfitters, Anthropologie and Free People, and has served on its Board of Directors since 1970. Previously, Mr. Belair, a CPA, was a Principal at Morgan Stanley and Vice President and Chief Financial Officer of the international offices and subsidiaries at Goldman Sachs. In addition, Mr. Belair has been Principal at The ZAC Group, performing financial advisory services, since 1989.
 
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE NOMINEES FOR ELECTION AS DIRECTORS.
 
Continuing Directors
 
Denis J. Salamone has served as Senior Executive Vice President of Hudson City Bancorp and Hudson City Savings since October 2001 and succeeded Mr. Hermance as Chief Operating Officer on January 1, 2002. He was elected to the Board of Directors in October 2001. Prior to joining Hudson City, Mr. Salamone had a twenty-six year career with the independent accounting firm of PricewaterhouseCoopers LLP, where he had been a partner for sixteen years. Immediately prior to joining Hudson City Bancorp, Mr. Salamone was the Global Financial Services leader for Audit and Business Advisory Services, and a member of the PricewaterhouseCoopers eighteen member board of partners.
 
Michael W. Azzara has been a part-time Senior Consultant with the executive search and consulting firm of Foley Proctor Yoskowitz since October 2003. He is the retired President and Chief Executive Officer of Valley Health System, a regional health care provider comprised of The Valley Hospital in Ridgewood, New Jersey, Valley Home and Community Health Care and the Healthnet Medical Group, a position he held from 1997 to his retirement in 2003. Prior to assuming such position, Mr. Azzara served as President and Chief Executive Officer of The Valley Hospital. Mr. Azzara serves on the Advisory Board to the Dean of the School of Arts and Sciences, Rutgers University. He also served on the Board of Directors of Ridgewood Savings Bank until its purchase by another community bank. A graduate of Rutgers University, he has received a Masters degree from Cornell Graduate School of Business and Public Administration.
 
Victoria H. Bruni served as Vice President for Administration and Finance at Ramapo College of New Jersey, a public four year liberal arts college, from June 1993 until July 2006. She was responsible for financial planning and reporting, budgets, public financings, accounting operations, and purchasing, as well as administrative functions such as human resources and capital facilities planning, construction and maintenance. From 1964 to 1993 she served in various positions at New Jersey Bell Telephone Co./Bell Atlantic, including Assistant Comptroller, Treasurer, Assistant Secretary and Attorney. A graduate of Smith College, she received her J.D. with honors from Seton Hall University School of Law.
 
William J. Cosgrove served at Citibank, N.A. from 1963 to 1991 when he retired as Senior Banker, Senior Credit Officer. From 1993 to 2004, he served as Executive Vice President at Citadel Group Representatives, Inc. From 1991 to 2005, he served as a Trustee and later as Lead Trustee of the John Hancock Funds, and since 1991 has served as an adjunct Professor at the Lubin Graduate School of Business of Pace University.
 
Donald O. Quest, M.D. has been a neurological surgeon since 1976, a professor at Columbia University since 1989, Assistant Dean for Student Affairs at Columbia University, and an attending physician at Valley Hospital and Columbia-Presbyterian Medical Center since 1978. He is a member of the Neurosurgical Associates of New York and New Jersey. Dr. Quest has been President of the American Association of Neurological Surgeons, the American Academy of Neurological Surgeons, the Congress


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of Neurological Surgeons, the Chairman of the American Board of Neurological Surgery and the Chairman of the Residency Review Committee for Neurological Surgery.
 
Joseph G. Sponholz is a retired Vice Chairman of Chase Manhattan Bank, a position he held from 1997 to his retirement in 2000. Prior to assuming the position of Vice Chairman, Mr. Sponholz had served as Chief Administrative Officer of Chase Manhattan Bank. Serving as a member of Chase’s Executive Committee, Mr. Sponholz spearheaded the company’s Internet efforts as leader of Chase.com. Prior to its merger with Chase, he served as Chief Financial Officer and Chief Technology Officer at Chemical Bank. He is recognized as an industry leader in the areas of business strategy, technology and financial management. A graduate of Fordham University, Mr. Sponholz holds an MBA in Finance from New York University. Mr. Sponholz currently serves as our lead independent director
 
Executive Officers
 
In addition to Messrs. Hermance and Salamone, Hudson City Bancorp and Hudson City Savings have the following executive officers:
 
Ronald J. Butkovich, age 58, has been Senior Vice President of Hudson City Savings Bank and Hudson City Bancorp since April 2004. He is responsible for the development of the Long Island Region. Mr. Butkovich joined Hudson City Savings in 2004. He formerly served as Operations/ Retail Banking Officer of Southold Savings Bank on Long Island, New York for 16 years until 1988 and the Director of Real Estate, Branch Development, and Construction for North Fork Bank for 16 years until April 2004. Mr. Butkovich holds an undergraduate degree from Albany State University and is a graduate of the National School of Savings Banking and the Executive Development Program at Fairfield University. Mr. Butkovich has served on various industry, community, and civic associations including treasurer of the Southold Fire Department since 1978.
 
V. Barry Corridon, age 59, has been Senior Vice President of Mortgage Servicing of Hudson City Savings since January 2000 and Senior Vice President of Hudson City Bancorp since January 2004. He previously served as First Vice President of Mortgage Servicing of Hudson City Savings from 1995 to 2000 and as a Vice President from 1982 to 1995. He is responsible for the administration of our mortgage portfolio, supervision of new loan set-up, post-closing, payoffs, mortgage accounting, collections and foreclosures. Mr. Corridon was President of the Mortgage Bankers Association of New Jersey in 1995. He is the past President of the Mortgage Bankers Association’s Educational Foundation. Mr. Corridon also serves on the board of WOODLEA/ PATH Advisory Council of Children’s Aid and Family Services. He earned his undergraduate degree at Fairleigh Dickinson University and is also a graduate of the Graduate School of Savings Banking at Brown University and the Executive Development Program at Fairfield University. He joined Hudson City Savings in 1970.
 
James A. Klarer, age 55, joined Hudson City Savings in 1976. He has served as Senior Vice President of Hudson City Savings and Hudson City Bancorp since January 2005. He previously served as First Vice President of Hudson City Bancorp in 2004 and of Hudson City Savings from 2002 to 2004, and as a Vice President of Hudson City Savings from 1992 to 2002. Mr. Klarer has also served as Secretary of HudCiti Service Corp. since January 1993. He is responsible for real estate development, branch expansion, insurance, purchasing and general services. Mr. Klarer has been an active member of the Institute of Real Estate Management (IREM) since 1999. He is a graduate of William Paterson College.
 
James C. Kranz, age 59, has been Executive Vice President and Chief Financial Officer of Hudson City Savings since September 2007. He previously served as Senior Vice President and Chief Financial Officer of Hudson City Savings from January to December 2007 and Senior Vice President and Investment Officer of Hudson City Savings since January 2000 and Senior Vice President of Hudson City Bancorp from January 2004 to 2006. He maintains oversight of the entire accounting and finance functions as well as primary execution responsibility for investments and borrowings. Mr. Kranz joined


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Hudson City Savings in 1983. Mr. Kranz is a member of the New Jersey Bond Club and serves on the Asset and Liability Management Committee of the New Jersey League of Community and Savings Bankers. Mr. Kranz has an undergraduate degree and a MBA from Lehigh University. He is a graduate of the Graduate School of Savings Banking at Brown University.
 
Thomas E. Laird, age 55, joined Hudson City Savings in 1974. He has served as Executive Vice President and Chief Lending Officer since September 2007. He previously served as Senior Vice President and Chief Lending Officer from January 2002 to September 2007, Senior Vice President of Hudson City Bancorp since January 2004 and Senior Vice President and Mortgage Officer from January 2000 to 2002. Prior to that, he served as First Vice President and Mortgage Officer from 1991 to 2000. His primary areas of responsibility are mortgage and consumer lending and loan production. Mr. Laird holds an undergraduate degree from St. Peter’s College and is a graduate of the National School of Banking at Fairfield University. Mr. Laird was actively involved from 1989 to 1999 on the Wanaque Board of Education, having served for two terms as Board President. He has also been active in the New Jersey League of Community and Savings Bankers and presently is a board member of the Dover Housing Development Corporation. He is a former member of the Board of Governors of the Mortgage Bankers Association of New Jersey.
 
Michael B. Lee, age 58, has served as Senior Vice President of Hudson City Savings since January 2000 and as Senior Vice President of Hudson City Bancorp since January 2004. He previously served as First Vice President of Hudson City Savings from 1989 to 2000, and as Secretary from 1989 to 2003. He is responsible for branch administration, training and customer retirement programs. He has an undergraduate degree in management from St. Peter’s College and a Masters Degree from New Jersey Institute of Technology. He has also graduated from the National School of Finance and Management at Fairfield University. Mr. Lee is a Past President of the Bergen Chapter of the American Institute of Banking and has served on several committees of the New Jersey League of Community and Savings Bankers. Mr. Lee joined Hudson City Savings in 1971.
 
Veronica A. Olszewski, age 48, has served as Senior Vice President, Treasurer and Corporate Secretary of Hudson City Bancorp and Hudson City Savings since June 2007. She previously served as Senior Vice President and Corporate Secretary of Hudson City Bancorp and Hudson City Savings from January 2004 to June 2007, Senior Vice President from January 2002 to December 2003, First Vice President from January 2000 to December 2001 and Vice President and Assistant Auditor from March 1997 to December 1999. Ms. Olszewski joined Hudson City Savings in 1980. She is responsible for the functions of Corporate Secretary, special projects and strategic planning. Ms. Olszewski is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants, New Jersey Society of CPAs and the American Society of Corporate Secretaries. She is a graduate of Jersey City State College.
 
Certain Transactions with Members of Our Board of Directors and Executive Officers
 
Transactions with related persons, including directors, executive officers and their immediate family members, have the potential to create actual or perceived conflicts of interest between Hudson City Bancorp and such persons. Transactions with related persons generally are categorized as either loans that we may make in the ordinary course of business as a financial institution or all other related person transactions.
 
We do not currently make loans or extend credit to directors or executive officers. We have made residential mortgage loans to one of our executive officers prior to promotion to executive officer status and to members of the immediate families of certain of our officers and directors. Such loans were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable features.


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All other related person transactions are generally treated as potential violations of our Code of Ethics for which a waiver must otherwise be obtained if they are found to create a conflict of interest. Under both our Code of Ethics and our Audit Committee Charter, the Audit Committee is charged with reviewing and approving all related person transactions, including any loans to directors, executive officers or their immediate family members, for potential conflicts of interest.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Exchange Act requires Hudson City Bancorp’s executive officers and directors, and persons who own more than 10% of Hudson City Bancorp common stock to file with the Securities and Exchange Commission reports of ownership and changes of ownership. Officers, directors and greater than 10% stockholders are required by Securities and Exchange Commission regulation to furnish Hudson City Bancorp with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons, Hudson City Bancorp believes that, with the exception of one Form 5 filed on behalf of Mr. Hermance and one Form 4 filed for each of Ms. Olszewski and Messrs. Butkovich, Corridon, Lee and Tassillo, all filing requirements applicable to its executive officers, directors and greater than 10% beneficial owners were complied with. The Form 5 filed on behalf of Mr. Hermance reflected a bona fide gift to a charitable foundation in November 2006 that was inadvertently not previously reported and an acquisition of 2,416 shares in October 2007 that was inadvertently not previously reported. A Form 4 filed on behalf of each of Ms. Olszewski and Messrs. Butkovich, Corridon and Lee reflected a transaction inadvertently not reported in April 2005, whereby the issuer withheld shares from vesting stock awards to satisfy payroll tax withholding obligations of the reporting person. A Form 4 filed on behalf of Mr. Tassillo reflected a disposition of 35,219 shares in December 2006 that was inadvertently not previously reported.


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RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
­ ­
 
General
 
The Audit Committee of the Board of Directors has appointed the firm of KPMG LLP to act as Hudson City Bancorp’s independent registered public accounting firm for the fiscal year ending December 31, 2008, subject to ratification of such appointment by our stockholders. A representative of KPMG LLP is expected to be present at the annual meeting and will be given an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions. No determination has been made as to what action the Board of Directors would take if the stockholders do not ratify the appointment.
 
Audit Fees
 
For the fiscal year ended December 31, 2007, KPMG LLP billed Hudson City Bancorp an aggregate of $913,835 for professional services rendered for the audits of the Company’s financial statements for such period and internal control over financial reporting as of December 31, 2007, and the reviews of the financial statements included in Hudson City Bancorp’s Quarterly Reports on Form 10-Q during such period. Such fees were $930,000 for the fiscal year ended December 31, 2006.
 
Audit-Related Fees
 
For the fiscal year ended December 31, 2007, KPMG LLP billed Hudson City Bancorp an aggregate of $120,000 for services that are reasonably related to the audit or review of the Company’s financial statements and not described above under the caption “Audit Fees.” The services comprising these fees were employee benefit plan audits. Audit-related fees were $80,000 for the fiscal year ended December 31, 2006.
 
Tax Fees
 
For the fiscal year ended December 31, 2007, KPMG LLP billed Hudson City Bancorp an aggregate of $117,100 for professional services rendered for federal and state tax compliance and advice. Tax fees were $82,400 for the fiscal year ended December 31, 2006.
 
All Other Fees
 
KPMG did not perform other services for Hudson City Bancorp for the fiscal years ended December 31, 2007 and 2006.
 
Audit Committee Approval
 
Acting under its charter, the Audit Committee annually appoints the independent registered public accounting firm, in its sole discretion, and reviews the scope of the audit services to be performed for the year with the independent registered public accounting firm, the principal accounting officer and the senior internal auditing executive and pre-approves all such audit services. In addition, the Audit Committee pre-approves the retention of the independent registered public accounting firm for all non-audit services and the fees to be paid for such services. In accordance with such policies, the Audit Committee pre-approved 100% of the services described above under “Audit-Related Fees,” “Tax Fees” and “All Other Fees.”


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Audit Committee Report
 
Under the guidance of a written charter adopted by the Board of Directors, the Audit Committee is primarily responsible for:
 
  •  Monitoring the integrity of Hudson City Bancorp’s financial reporting process and systems of internal controls regarding finance, accounting, legal compliance and public disclosure of financial information;
 
  •  Monitoring the independence and performance of Hudson City Bancorp’s independent registered public accounting firm and internal auditing department; and
 
  •  Maintaining free and open communication between the Audit Committee, the independent registered public accounting firm, management, the internal auditing department, and the Board of Directors.
 
In fulfilling its responsibilities, the Audit Committee, among other things:
 
  •  Reviews with management and the independent registered public accounting firm Hudson City Bancorp’s audited financial statements and other financial disclosures to be included in its Annual Report on Form 10-K and the quarterly financial statements and other financial disclosures to be included in Quarterly Reports on Form 10-Q, in each case prior to the filing of such reports with the Securities and Exchange Commission;
 
  •  Supervises the relationship between Hudson City Bancorp and its independent registered public accounting firm, including making decisions with respect to their appointment or removal, evaluating their performance, reviewing the scope of their audit services and approving the compensation for such services, approving any non-audit services and the fees for such services, and evaluating the independence of the independent registered public accounting firm; and
 
  •  Working with management, the independent registered public accounting firm, and the internal auditors of Hudson City Bancorp, evaluates the integrity of Hudson City Bancorp’s financial reporting processes and controls.
 
In accordance with the Audit Committee Charter, the Audit Committee has reviewed and discussed the audited financial statements of Hudson City Bancorp for the fiscal year ended December 31, 2007, with Hudson City Bancorp’s management. The Audit Committee has discussed with KPMG LLP Hudson City Bancorp’s audited financial statements for the fiscal year ended December 31, 2007, including the following matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees):
 
  •  The independent registered public accounting firm’s responsibility under Generally Accepted Auditing Standards adopted in the United States;
 
  •  Any significant accounting policies either newly adopted or modified;
 
  •  Any significant management judgments and estimates included in the underlying financial statements;
 
  •  Any significant audit adjustments proposed in their examination;
 
  •  Any other information in documents containing the audited financial statements;
 
  •  Any disagreements with management;
 
  •  Any major issues discussed with management and other independent audit and accounting firms;
 
  •  Any major issues discussed with management prior to retention as independent registered public accounting firm;


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  •  Any difficulties encountered in performing the examination; and
 
  •  Quality of accounting principles.
 
The Audit Committee has also received the written disclosures and the letter from KPMG LLP required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees) and the Audit Committee has discussed the independence of KPMG LLP with that firm. Based on the review and discussions with Hudson City Bancorp’s auditors and management as noted above, the Audit Committee recommended to the Board of Directors that the financial statements for the fiscal year ended December 31, 2007 be included in Hudson City Bancorp’s Annual Report on Form 10-K for filing with the Securities and Exchange Commission.
 
Audit Committee of Hudson City Bancorp, Inc.
 
William G. Bardel, Chair
 
William J. Cosgrove , Member
 
Victoria H. Bruni, Member
 
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” APPROVAL OF THE RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.


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CORPORATE GOVERNANCE
 
Hudson City Bancorp aspires to the highest standards of ethical conduct. In that spirit, we are committed to being a leader in corporate governance reform. In addition to our ongoing compliance with the Sarbanes-Oxley Act of 2002, the rules of the NASDAQ Global Market and Delaware law, Hudson City Bancorp continues to strive to follow high standards of corporate governance.
 
Independence of Directors
 
A majority of the Board of Directors and each member of the Compensation, Nominating and Governance and Audit Committees are independent, as affirmatively determined by the Board consistent with the criteria established by the NASDAQ Global Market and as required by Hudson City Bancorp’s Bylaws. In addition to explicitly requiring compliance with applicable exchange independence requirements and in order to further ensure the independence of our directors, Hudson City Bancorp’s Bylaws prohibit directors from serving on the board of directors of an insured depository institution, bank holding company, financial holding company or thrift holding company other than Hudson City Bancorp and its affiliated entities and the Federal Home Loan Bank of New York. This prohibition prevents directors from simultaneously serving as a director of another financial institution that may have a business relationship with Hudson City Bancorp.
 
The Board has conducted an annual review of director independence for all current nominees for election as directors and all continuing directors. During this review, the Board considered transactions and relationships during the prior year between each director or any member of his or her immediate family and Hudson City Bancorp and its subsidiaries, affiliates and equity investors, including those reported under “Certain Transactions with Members of our Board of Directors and Executive Officers” below. The Board also examined transactions and relationships between directors or their affiliates and members of the senior management or their affiliates. The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.
 
As a result of this review, the Board affirmatively determined that of the nominees, William G. Bardel, Scott A. Belair and the following continuing directors, meet Hudson City Bancorp’s standard of independence: Michael W. Azzara, Victoria H. Bruni, William J. Cosgrove, Donald O. Quest, M.D. and Joseph G. Sponholz. The remaining directors were not determined to be independent for the following reasons: Ronald E. Hermance, Jr. and Denis J. Salamone are currently executive officers of Hudson City Bancorp.
 
Lead Independent Director
 
The Board of Directors has created the position of lead independent director, whose primary responsibility is to preside over periodic executive sessions of the independent members of the Board of Directors. The lead independent director also prepares the agenda for meetings of the independent directors, serves as a liaison between the independent directors and management and outside advisors, and makes periodic reports to the Board of Directors regarding the actions and recommendations of the independent directors. The independent members of the Board of Directors have designated Joseph G. Sponholz to serve in this position for 2008.
 
Continuing Corporate Governance Efforts
 
We will continue our effort to be a leader in corporate governance. Hudson City Bancorp’s Bylaws, among others things, define who may be considered an “independent” director, establish a mandatory retirement age for all directors, require the independent directors to meet periodically in executive session, and require that the responsibilities of the committees of the Board of Directors conform with the requirements of the Sarbanes-Oxley Act and related rules and regulations. In addition, Hudson City


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Bancorp has Corporate Governance Guidelines and a Code of Ethics, both of which are available on our website at www.hcbk.com. Further actions to enhance our corporate governance mechanisms will be taken as required by law and the exchanges upon which our shares are listed, or as otherwise deemed necessary or appropriate by the Board of Directors, with a continuing focus on high standards of corporate governance.
 
Stockholder Communications with the Board
 
Stockholders of Hudson City Bancorp may contact the Board of Directors, either individually or as a group, by writing to the Board of Directors, c/o Corporate Secretary, Hudson City Bancorp, Inc., West 80 Century Road, Paramus, New Jersey 07652. The Corporate Secretary will forward a copy of all written communications to each member of the Board of Directors.
 
Meetings of the Board of Directors and its Committees
 
During 2007, Hudson City Bancorp’s Board of Directors held eight meetings. The independent members of the Board of Directors met in executive session four times during 2007. No current director attended fewer than 75% of (a) the total number of Board meetings held in 2007 during the period for which such director has been a director and (b) the total number of committee meetings held in 2007 during the period which such director was a committee member. While we do not have a specific policy regarding attendance at the annual meeting, all nominees and continuing directors are expected to attend. All of the incumbent directors attended last year’s annual meeting.
 
The Board of Directors of Hudson City Bancorp maintains the following three independent standing committees:
 
The Nominating and Governance Committee consists of Mr. Azzara, Mr. Bardel, Mr. Belair, Ms. Bruni, Mr. Cosgrove and Dr. Quest, with Mr. Belair serving as Chairman. All members of the Nominating and Governance Committee have been determined by the Board to be independent of Hudson City Bancorp and meet the definition of independence in Rule 4200 (a)(15) of the NASDAQ Global Market’s listing standards. The Nominating and Governance Committee acts under a written charter adopted by Hudson City Bancorp’s Board of Directors, a copy of which is available on Hudson City Bancorp’s website at www.hcbk.com. This committee is responsible for developing and implementing policies and practices relating to corporate governance, including developing and monitoring implementation of Hudson City Bancorp’s Corporate Governance Guidelines. In addition, the Nominating and Governance Committee is responsible for developing criteria for the selection and evaluation of directors and recommends to the Board of Directors candidates for election as directors and senior management.
 
The Nominating and Governance Committee employs a variety of methods for identifying and evaluating nominees for director. The Nominating and Governance Committee will review the performance of Hudson City Bancorp’s current Board members to determine if they should stand for reelection. If a determination is made that a current Board member will not be recommended by the Nominating and Governance Committee for reelection, due to no longer satisfying the minimum qualifications, retirement or otherwise, the Nominating and Governance Committee will conduct a search for individuals qualified to become members of Hudson City Bancorp’s Board of Directors, unless the Board of Directors decides to reduce the size of the Board. The Nominating and Governance Committee will also evaluate director nominations by stockholders that are submitted in accordance with the procedural and informational requirements set forth in Hudson City Bancorp’s Bylaws and described herein under “Notice of Business to be Conducted at Annual Meeting.”
 
Hudson City Bancorp’s Corporate Governance Guidelines contain criteria considered by the Nominating and Governance Committee in evaluating nominees for a position on its Board. All nominees, including incumbent directors, board nominees and stockholder nominees, are evaluated in the same


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manner. Generally, the Nominating and Governance Committee believes that directors should possess the highest personal and professional ethics and integrity and should have broad experience in positions with a high degree of responsibility, corporate board experience and the ability to commit adequate time and effort to serve as a director. Other criteria that will be considered include expertise currently desired on the Board of Directors, geography, finance or financial service industry experience, ethical standards and involvement in the community. The Nominating and Governance Committee also evaluates potential nominees to determine if they meet Hudson City Bancorp’s standard of independence (to ensure that at least a majority of the directors will, at all times, be independent).
 
Directors of Hudson City Bancorp may not serve on the board of more than three other public companies and may not serve on the board of another unaffiliated insured depository institution, bank holding company, financial holding company or thrift holding company, other than the Federal Home Loan Bank of New York, while serving as a director of Hudson City Bancorp. The Nominating and Governance Committee met three times during 2007.
 
The Audit Committee consists of Mr. Bardel, Ms. Bruni and Mr. Cosgrove, each of whom have been determined by the Board to be independent of Hudson City Bancorp and meet the definition of independence in Rule 4200 (a)(15) of the NASDAQ Global Market’s listing standards. Mr. Bardel serves as Chairman of the Audit Committee and Hudson City Bancorp’s Board of Directors has determined that Mr. Bardel is an “audit committee financial expert,” as defined by the rules and regulations of the Securities and Exchange Commission.
 
The Audit Committee acts under a written charter adopted by Hudson City Bancorp’s Board of Directors, a copy of which is available on Hudson City Bancorp’s website at www.hcbk.com. The Audit Committee is primarily responsible for: monitoring the integrity of Hudson City Bancorp’s financial reporting process and systems of internal controls regarding finance, accounting, legal compliance and public disclosure of financial information; monitoring the independence and performance of Hudson City Bancorp’s independent registered public accounting firm and internal auditing department; and maintaining free and open communication between the Audit Committee, the independent registered public accounting firm, management, the internal auditing department, and the Board of Directors. The Audit Committee met six times during 2007.
 
The Compensation Committee consists of the following members: Mr. Azzara (Chair), Mr. Belair and Dr. Quest. None of the members is or previously was one of our officers or employees, or had a relationship with us requiring disclosure in this proxy statement under the caption “Transactions with Related Persons.” The Compensation Committee has a written charter that has been approved by the Board of Directors, a copy of which is available on Hudson City Bancorp’s website at www.hcbk.com. The Compensation Committee met 10 times during 2007.
 
Our Bylaws require that the Board of Directors, or a board committee to which decision-making authority has been delegated, set executive officer compensation. As a NASDAQ Global Market listed company, we must observe governance standards that require independent directors or a committee of independent directors to set executive officer compensation. Consistent with these requirements, our Board of Directors has established a Compensation Committee all of whose members meet the definition of independence in Rule 4200(a)(15) of the NASDAQ Global Market’s listing standards. The board has delegated authority to the Compensation Committee to:
 
  •  grant incentive compensation under our shareholder-approved Executive Officer Annual Incentive Plan;
 
  •  grant equity compensation under our shareholder-approved 2006 Stock Incentive Plan;
 
  •  set the terms and conditions of those grants and to administer those plans;
 
  •  administer, but not to make further equity compensation grants under, our shareholder-approved 2000 Stock Option Plan and 2000 Restricted Stock Plan, and


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  •  determine or recommend, subject to ratification by the Board of Directors or its independent members, compensation policy and other elements of executive officer compensation.
 
The Compensation Committee meets in executive session and with its advisors and invited management present. It considers the expectations of the Chief Executive Officer and the Chief Operating Officer with respect to their own compensation, and their recommendations with respect to the compensation of directors and more junior executive officers. It also considers empirical data and the recommendations of advisors. Executive officer compensation matters are presented for discussion at periodic executive sessions of the independent directors and at meetings of the full Board of Directors.
 
The Compensation Committee may delegate any or all of its powers and responsibilities only to subcommittees of its membership. During 2007, the Committee did not delegate its powers or responsibilities.
 
During 2007, the Compensation Committee continued to work with Frederic W. Cook & Co., Inc., a nationally recognized compensation consulting firm, to assist it in carrying out its duties, including but not limited to conducting a competitive review of our named executive officer compensation levels and practices. The consultant performs no other services for us. The Compensation Committee communicates directly with, and receives written work product directly from, its consultant. It determines the compensation of its consultant and meets with the consultant both in executive session and with invited executive officers present. The Compensation Committee relies on consultants for survey data, for assistance in understanding market practices and trends and for recommended compensation strategies. The Compensation Committee has relied on Hudson City’s outside legal counsel for advice as to its obligations under applicable corporate, securities, tax and employment laws, for assistance in interpreting its obligations under compensation plans and agreements, and for drafting plans and agreements to document business decisions. The Compensation Committee has the right to select other legal counsel.
 
Compensation Committee Interlocks and Insider Participation
 
During 2007, the following directors served as members of the Compensation Committee: Michael W. Azzara (Chair), William G. Bardel, Scott A. Belair and Victoria H. Bruni. Of these members, none of them was, during 2007, one of our officers or employees; none of them had formerly been one of our officers; and none of them had any relationship requiring disclosure by us in this proxy statement under the caption “Transactions with Related Persons.”
 
None of our executive officers served as a director or member of the compensation committee (or equivalent body) of another entity where any of our directors or any member of our Compensation Committee served as an executive officer or director.
 
Compensation Committee Report
 
The Compensation Committee has reviewed the Compensation Discussion and Analysis included in this proxy statement and has discussed it with management. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
 
Compensation Committee of Hudson City Bancorp, Inc.
 
Michael W. Azzara, Chair
 
Scott A. Belair, Member
 
Donald O. Quest, Member


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COMPENSATION DISCUSSION AND ANALYSIS
 
Private Securities Litigation Reform Act Safe Harbor Statement
 
This Compensation Discussion and Analysis contains certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 which may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “consider” “should,” “plan,” “estimate,” “predict,” “continue,” “probable” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to estimates with respect to the financial condition, results of operations and business of Hudson City Bancorp, Inc. These factors include, but are not limited to:
 
  •  the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control;
 
  •  there may be increases in competitive pressure among the financial institutions or from non-financial institutions;
 
  •  changes in the interest rate environment may reduce interest margins or affect the value of our investments;
 
  •  changes in deposit flows, loan demand or real estate values may adversely affect our business;
 
  •  changes in accounting principles, policies or guidelines may cause our financial condition to be perceived differently;
 
  •  general economic conditions, either nationally or locally in some or all of the areas in which we do business, or conditions in the securities markets or the banking industry may be less favorable than we currently anticipate;
 
  •  legislative or regulatory changes may adversely affect our business;
 
  •  applicable technological changes may be more difficult or expensive than we anticipate;
 
  •  success or consummation of new business initiatives may be more difficult or expensive than we anticipate;
 
  •  litigation or matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than we anticipate;
 
  •  the risks associated with continued diversification of assets and adverse changes to credit quality;
 
  •  difficulties associated with achieving expected future financial results;
 
  •  the risk of an economic slowdown that would adversely affect credit quality and loan originations; and
 
  •  changes in prevailing compensation practices.
 
Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. As such, forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this filing. We do not intend to update any of the forward-looking statements after the date of the Proxy Statement that includes this Compensation Discussion and Analysis or to conform these statements to actual events.


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Introduction
 
This section of the proxy statement (1) describes our decision- and policy-making process for executive compensation, (2) discusses the background and objectives of our compensation programs for executive officers and (3) sets forth the material elements of the compensation of the following individuals, whom we refer to as our “named executive officers”:
 
     
Name
 
Title
 
Ronald E. Hermance, Jr. 
  Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)
Denis J. Salamone
  Senior Executive Vice President and Chief Operating Officer
James C. Kranz   Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Ronald J. Butkovich
  Senior Vice President
Thomas E. Laird
  Executive Vice President
John M. Tassillo
  Executive Vice President (through June 8, 2007)
 
Descriptions of compensation plans, programs and individual arrangements referred to in the Compensation Discussion and Analysis (other than broad-based plans that are open to substantially all salaried employees) that are governed by written documents are qualified in their entirety by reference to the full text of their governing documents. We have filed these documents as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2007 and incorporate them here by this reference.
 
Objectives
 
The creation of long-term value for our shareholders is highly dependent on the development and execution of business strategy by our executive officers. Our executive officer compensation program seeks to:
 
  •  attract and retain executive officers with the skills, experience and vision to create and execute a strategy for the prudent and efficient deployment of invested capital and retained earnings in a manner that will create superior long-term, cumulative returns to our shareholders through dividends and stock price appreciation,
 
  •  motivate behavior in furtherance of these goals and
 
  •  reward favorable results.
 
The factors that influence the design of our executive compensation program include the following:
 
  •  We operate in a highly regulated industry. We value industry-specific experience and a track record of effective interaction with our primary regulators.
 
  •  The success of our product offerings depends on the behavior of customers in the local communities that we serve, as well as on local, regional and national interest rates, employment levels and real estate markets, and on other economic factors that influence the performance of our loan and investment portfolios. We value executives with sufficient tenure in our markets to have experienced the behavior of our customers, products and investments in various phases of the economic cycle.
 
  •  We are a community-based institution focused primarily on organic expansion of our core business. We value commitment to shared objectives and individual contribution to their achievement.


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  •  Strategic initiatives that enhance long-term shareholder value may not always improve short-term operating results or shareholder returns. We value decision-making that focuses on long-term results with sensitivity to short-term effects.
 
  •  We operate in interest rate and credit markets that are in a state of flux. We value flexible decision-making that respects our business plan but adapts quickly to change.
 
  •  External recruitment of executives can have substantial monetary costs, unpredictable outcomes, and a disruptive effect on corporate culture. We value the retention of performing incumbent executives and the internal development of their successors where possible, turning to external recruitment where retention and management development programs do not meet our needs.
 
  •  Our principal operating subsidiary is a federally-chartered savings bank, and compensation paid for service as an executive officer of the savings bank must take into account certain specific considerations enumerated in regulations issued by the Office of Thrift Supervision of the United States Treasury Department (the “OTS”).
 
The executive compensation program includes several components designed, in combination, to address these factors. Our executive officer compensation program was in a state of transition during 2006 and 2007 as we adapted it to our new organizational structure and business plan resulting from our stock offering completed in June 2005. We expect that the components of our executive compensation program and their relative significance may change further from year to year as circumstances change.
 
Key Elements of the Compensation Package
 
In General.   Our executive compensation program consists of three key elements: base salary to provide a reasonable level of predictable income; annual cash incentives to motivate our executives to meet or exceed annual performance objectives derived from our business plan; and long-term incentives to retain talented executives and provide an incentive to maximize shareholder return in the long term. We also provide fringe benefits and perquisites, and retirement and other termination benefits, to reduce outside distractions. Performance-based compensation opportunities make up a significant portion of each named executive officer’s total annual compensation opportunities. Long-term incentive, with values derived from stock price appreciation, make up a majority of the performance-based compensation opportunities.


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Use of Discretion.   The Compensation Committee exercises substantial discretion in setting pay levels and determining the elements of compensation, and their relative weight in the compensation packages of our named executive officers. The following table summarizes the most significant elements of our named executive officers’ compensation packages and the basis on which each has been determined:
 
         
Element
 
Basis of Determination
 
Selected Contributing Factors
 
Base Salary
  Compensation Committee discretion  
Informed but not dictated by peer group practices

Tenure in office

Individual long-term performance

Local cost of living factors
         
Annual Cash Incentive
 
Participation and incentive opportunities are at Compensation Committee discretion

Actual awards derived by formula applied to achievement of pre-established performance goals, then adjusted up or down based on subjective review of performance
 
Informed but not dictated by peer group practices

Pre-established strategic and operating objectives derived from business plan and personal influence over same

Individual performance
         
Stock Incentives
  Compensation Committee discretion  
Informed but not dictated by peer group practices

Strategic and operating objectives that support earnings growth, dividend policy and share price appreciation consistent with long term strategic plan
         
Retirement Benefits
 
Qualified plans — formula applicable to all participating employees

Non-qualified plans — participation at Compensation Committee’s discretion; benefits are formula-based for all participants
 
N/A

Informed but not dictated by peer group practices
         
Fringe Benefits
  Group insurance and other broad-based benefits — formula applicable to all participating employees
Other — Compensation Committee discretion
 
N/A

Informed but not dictated by peer group practices

Internal custom and practice
         
Termination Benefits
  Compensation Committee discretion  
Informed but not dictated by peer group practices

Benefit demands of external management recruits
         
Total Pay Package
and Pay Mix
  Compensation Committee discretion  
Informed but not dictated by peer group practices

Tenure in office

Individual performance

Linkage between pay element and business goal

Relative importance of business goal supported by pay element

Individual ability to influence achievement of business goal


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Base Salary.   Base salaries are reviewed annually. They do not vary substantially and directly with annual performance. Instead, they reflect market factors, experience and tenure in office, job content and sustained job performance over an extended period, and general cost of living. In 2007, our named executive officers’ base salaries were set above the median of an indicated range of salaries for their position derived from an independent compensation consultant’s report. These decisions reflect a combination of the individual’s experience and tenure in office, sustained performance, and in the cases of Messrs. Kranz and Laird, promotion to the position of Executive Vice President. In 2007, base salary increases for our named executive officers were as follows:
                         
                Resulting Annual
 
Name
  % Increase     $ Increase     Base Salary Rate
 
Ronald E. Hermance, Jr. 
    12.5 %   $ 150,000     $ 1,350,000  
Denis J. Salamone
    13.8       100,000       825,000  
James C. Kranz
    14.3       50,200       400,200  
Ronald J. Butkovich
    8.0       22,960       310,000  
Thomas E. Laird
    26.4       73,000       350,000  
John M. Tassillo
    7.0       30,000       460,000  
 
Cash Incentives.   Our Executive Annual Incentive Plan provides performance-based annual incentives to motivate named executive officers to execute specific financial and non-financial elements of our business plan, and to reward individual conduct that supports shared corporate goals. In years prior to 2006, we based annual incentives mainly on whether the company met predetermined pre-tax income targets. In 2007, we continued a transition begun in 2006 to an incentive program that incorporates individual performance objectives for each named executive officer. We now base incentive payments on subjective evaluation of performance in addition to the achievement of shared corporate financial goals.
 
Our business plan includes the following elements:
 
  •  the use of retained earnings and capital raised in our 2005 stock offering by measured expansion of our franchise primarily through de novo branch openings in selected markets,
 
  •  balance sheet growth, dividend payments and stock repurchases, in light of prevailing business conditions and opportunities, and
 
  •  expense discipline and the preservation of and growth in annual net income.
 
For 2007, each of our named executive officers had the opportunity to earn an incentive payment once the Company’s annual income before taxes and extraordinary items equaled or exceeded a threshold level of $324.833 million. In the cases of Messrs. Hermance, Salamone and Tassillo, we set a maximum incentive payment for each in early 2007 and the actual payment was based on a subjective, retrospective review of corporate and individual performance indicators. In the case of Messrs. Kranz, Butkovich and Laird, we established threshold, target and superior payment levels that each executive could earn based on the Compensation Committee’s subject review of our annual income before taxes and extraordinary items and individual performance relative to pre-established performance factors. The Compensation Committee set threshold, target and superior payment levels to create a linkage between the executive’s incentive payment and the Compensation Committee’s assessment of his performance. In light of the subjective nature of the individual performance factors, the Compensation Committee did not attach quantitative performance measures to the payment levels. This approach enabled us to control the portion of our net income before taxes and extraordinary items expended for cash incentives. It focused management on the income effects of increases in overhead expense associated with expansion of the branch network, balance sheet growth and other strategic and operating decisions. It also afforded management flexibility to adapt to business conditions as they emerged during the year and afforded the Compensation Committee the ability to reward or discipline management for its actions based on a retrospective review of the business context in which action was taken.


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The following table sets forth the individual performance factors which the Compensation Committee used to evaluate the performance of each of the named executive officers in 2007.
 
     
Name
  Individual Performance Factors
 
Ronald E. Hermance, Jr. 
  Effective deployment of new capital
    Efficiency ratio
    Development of compelling vision and long-term strategy
    Development of investor relationships
    Development of key managers and succession planning
Denis J. Salamone
  Achievement of goals by direct reports in all operations
    Expense control
    Assistance in development of vision and long-term strategy
    Assistance in development of investor relationships
    Development of key managers and succession planning
James C. Kranz
  Use of wholesale funding sources to achieve balance sheet and revenue growth
    Progress in maintaining a balanced growth in the adjustable rate/fixed rate net increase in our mortgage/mortgage backed security function
    Oversight of the transition of the accounting and finance function, preparation of a new organizational chart outlining responsibilities
    Enhancement of Hudson City Savings’ interest rate risk management and income forecasting model and contribution to investing and borrowing
Ronald J. Butkovich
  Expansion of the Eastern Long Island Division through de novo branches by: analysis and review of potential sites, obtaining building permits, direction of lease and fee property negotiations and oversight of construction
    Development of Hudson Ctiy Savings’ brand name, deposit base, management and staff on Eastern Long Island
    Promotion and development of the mortgage and consumer loan areas
    Management, direction and oversight of the entire Long Island Division
Thomas E. Laird
  Increased mortgage lending in Sound Federal market through broker acquisition or strategic partnership
    Strategy review of commercial real estate lending business
    Growth of mortgage broker program throughout network
John M. Tassillo
  Internal control procedures projects
    Transition of information technology management
 
For 2007, the named executive officers’ target and maximum award opportunities, and actual incentives awarded as a percentage of maximum, were:
 
                         
                Actual Award
 
    Target Award
    Maximum Award
    as a % of
 
Name
  Opportunity ($)     Opportunity ($)     Maximum  
Ronald E. Hermance, Jr. 
        $ 2,040,000       100 %
Denis J. Salamone
          1,015,000       84  
James C. Kranz
    140,080       280,160       62  
Ronald J. Butkovich
    114,816       229,632       61  
Thomas E. Laird
    110,800       221,600       68  
John M. Tassillo
          516,000       78  
 
Final award decisions reflected our actual income before taxes and extraordinary items of $481.743 million, a record level which the Compensation Committee regarded as a superior achievement, and the Compensation Committee’s subjective assessment of the individual performance factors described above, and, in the case of executives other than the Chief Executive Officer, the Chief Executive Officer’s subjective assessment of their individual performance.


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Mr. Hermance’s incentive payout for 2007 reflects the Compensation Committee’s assessment of his success in directing the Company to record earnings on record mortgage volume with continued deposit growth and sustained operating efficiency in a year when many other mortgage lenders and depository institutions were posting substantial credit losses and declining new business. The Compensation Committee attributed these results to Mr. Hermance’s core vision for the Company and discipline in adhering to a business model focused on high operating efficiency, conservative credit underwriting, traditional mortgage products, favorable pricing and measured, organic growth. The Compensation Committee also took into account favorable market performance of the Company’s common stock in comparison to the stocks of other publicly-traded mortgage lenders and the linkage between this performance and Mr. Hermance’s success in differentiating the Company’s business model from the business models of other mortgage lenders in the eyes of analysts and investors through effective investor relations efforts.
 
Mr. Salamone’s incentive payment for 2007 reflects his success in assuming certain investor relations responsibilities previously borne exclusively by Mr. Hermance, allowing Mr. Hermance to spend more time on other functions, and in transitioning the Chief Financial Officer function to Mr. Kranz, deepening the Company’s senior management team as part of the evolving management development and succession plan. It also reflects Mr. Salamone’s contributions, through oversight of his direct reports, to our continuing superior operating efficiency and continuing, disciplined growth in our core business.
 
Mr. Kranz’ incentive payment for 2007 reflects an assessment of his success in transitioning to his new position as Chief Financial Officer, assuming from Mr. Salamone primary responsibility for supervision of accounting and finance, oversight of financial reporting and internal controls and contributions to balance sheet management.
 
Mr. Laird’s incentive payment for 2007 reflects his achievement of significant growth in our mortgage volume, achieved through internal originations and an expanded broker network, despite declining volume in the mortgage markets generally. His incentive payment also reflects his adherence to the conservative internal underwriting standards that are critical to differentiating us from our competitors in the investment markets and maintaining our high operating efficiency. The Compensation Committee also took into account his role in evaluating the commercial lending operation assumed in the Sound Federal acquisition.
 
Mr. Butkovich’s incentive payout for 2007 reflects his continuing success in building what is, in effect, a de novo banking franchise on Long Island. During 2007, Mr. Butkovich successfully identified and opened new bank branch locations that have achieved high rates of deposit growth, and has recruited experienced, service-oriented branch managers to build customer relationships and brand loyalty. He actively participated in community events to raise Hudson City Savings’ profile and build brand recognition.
 
Mr. Tassillo’s incentive payment for 2007 reflects his contribution to the development of our technology infrastructure and the refinement of our internal control processes, as well as the successful transition of his executive officer responsibilities to others.
 
Equity Compensation.   In 2007, we continued a transition begun in 2006 to a performance-based equity compensation program from a more traditional service-based approach.
 
Prior to 2006, it had been our practice to consider stock option and restricted stock grants at the time of hire or promotion for newly hired or promoted executive officers and annually in connection with our annual executive officer compensation review for incumbent executive officers. We used equity awards as a retention tool and as an incentive for executive officers to make strategic and operating decisions that, over time, result in stock price appreciation. Awards vested ratably over a vesting period, contingent only on continued service through the vesting date or the occurrence of certain acceleration events such as death, disability, retirement and change in control. We valued awards based on the grant-


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date fair market value of our common stock (in the case of restricted stock awards) and the grant-date value of stock options based on a recognized option valuation methodology. We amortized the grant-date value over the award’s vesting period and included each year’s amortization amount as part of that year’s compensation package in evaluating the overall compensation package. It has not been our practice to reduce compensation or retirement benefits in subsequent years based on stock price performance that causes previously granted equity awards to increase in value, or to grant additional compensation or retirement benefits where stock price performance has impaired the value of previous awards, because such practices could weaken the intended linkage between equity compensation and mid- to long-term shareholder return.
 
In 2006, we implemented, with shareholder approval, the 2006 Stock Incentive Plan, our first equity compensation plan since 2000. During 2007, we made our second awards under the 2006 Stock Incentive Plan. We granted and priced these awards on the third trading day after our release of annual financial results for 2007. All awards took the form of stock option grants, rather than a mix of stock options and restricted stock, tying the value of the awards directly to stock price appreciation. While stock options granted in 2006 were a mix of retention awards with service-based vesting and performance awards with a combination of service- and performance-based vesting, the stock options granted to our named executive officers, other than Mr. Tassillo, are all performance-based stock options.
 
Mr. Tassillo received only retention stock options because performance-based stock options have multi-year performance conditions that are not consistent with his arrangements to continue working for the Company beyond his normal retirement date. Retention stock options for Mr. Tassillo vest 100% on the first anniversary of the grant date and are scaled to provide a one-year rather than multi-year retention incentive, reflecting the nature of his arrangement to continue working past his normal retirement date. In contrast to grants prior to 2006 and in order to strengthen the retention aspect of retention stock options, vesting of retention stock options does not accelerate on retirement, and acceleration in cases of death or disability is limited to those options scheduled to vest within six months of the termination date. Vesting accelerates in the event of a change of control only if the executive is discharged without cause or resigns with good reason before the option’s regularly scheduled vesting date.
 
Performance stock options granted in 2007 have been structured to reward option holders for stock price appreciation that is achieved through sustained earnings and increased return on equity. All performance stock options will vest 100% on January 26, 2010, if certain performance measurements are satisfied. The specified performance measures are (1) as to one-half of the number of options granted to each recipient, a target level of aggregate diluted earnings per share measured over any four consecutive calendar quarters during calendar years 2007, 2008 and 2009, and (2) as to the balance of the number of options, a target level for return on average equity which must be attained or exceeded for at least one calendar quarter during 2007, 2008 or 2009. Performance stock options have the same acceleration features as retention stock options. We have tied vesting of performance stock options to targets for earnings per share and return on equity in order to encourage conduct that produces stock price appreciation. We expect to achieve these performance targets. If we do not, performance stock options are subject to forfeiture at the discretion of the Compensation Committee, and the Company will recover prior expense accruals relating to all forfeited grants. See the notes to unexercised unearned options in the Outstanding Equity Awards at Fiscal Year-End Table —  2007 below for additional detail on the vesting conditions attached to performance stock option grants.
 
Our current policy is to consider stock option grants to incumbent executive officers in the first quarter of each year, giving consideration to any episodic grants we may award to promoted or newly hired executives. We seek to price our performance stock option grants shortly after the release of quarterly or annual financial results or at other times when we would permit our directors and executives to purchase or sell our common stock on the open market under our securities trading policy.


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Other Elements of the Executive Compensation Package
 
Our 2007 compensation program for our named executive officers includes the following additional elements:
 
Retirement Benefits.   In addition to base salary, annual cash incentives and long-term equity incentives, our named executive officers are eligible to participate in the same broad-based, tax-qualified retirement and savings plans as other employees with similar dates of hire. They are also eligible to participate in certain non-qualified supplemental executive retirement plans because applicable tax rules do not permit them to receive benefits under our broad-based, tax-qualified plans at the same percentage of salary as other employees. The supplemental executive retirement plans generally provide benefits that, when added to the benefits available under our qualified plans, are equivalent, as a percentage of salary, to the benefits provided to other employees. We provide these benefits in lieu of additional current cash or equity compensation to assure that our named executive officers have a source of retirement income that is available at the time of retirement without regard to the performance of their personal savings and investment portfolios and because these programs enjoy more favorable corporate and/or personal income tax treatment under the federal tax laws than current compensation.
 
We also use the supplemental plans to provide additional pension benefits to executives who are recruited from other employers in mid-career by granting additional years of service credits for periods of employment with a prior employer. It has been our practice to grant additional years of service credit only at the time of hire and as part of the employment negotiation. Messrs. Hermance, Salamone and Butkovich received negotiated prior service credits as part of their hiring packages in their respective years of hire.
 
Under our supplemental employee stock ownership plan, Messrs. Hermance and Salamone also participate in an additional benefit designed to duplicate the benefits each would earn under our leveraged employee stock ownership plan if the plan were to repay all acquisition debt incurred by the plan to purchase common stock for future allocation on or before their respective retirement dates. The plan will award this benefit only in the event of early or normal retirement while our employee stock ownership plan has unpaid acquisition debt. We designed the benefit to approximate an additional employee stock ownership plan benefit that would be provided if, prior to the executive’s retirement, we should experience a change in control that would result in a mandatory prepayment of our tax-qualified employee stock ownership plan’s acquisition debt and an accelerated allocation of any remaining common stock that had secured the acquisition debt. We provide this benefit primarily so that the change in control feature of our employee stock ownership plan does not serve as a financial disincentive to retirement. In addition, in the event of a change in control, we expect that the payment of this benefit to a retirement-eligible executive would reduce the cost of change-in-control benefits otherwise payable to him.
 
Benefits under our broad-based and executive-level retirement programs are tied to base salary. Cash incentives, restricted stock, option-related compensation and other items of compensation do not increase or reduce benefit levels.
 
Perquisites and Other Benefits.   We also provide certain perquisites and benefits to our named executive officers. We provide the use of a company automobile to Messrs. Hermance, Salamone, Tassillo and Butkovich. We pay membership dues in private clubs for Messrs. Hermance and Salamone. We cover travel and entertainment expenses for the wives of all named executive officers to accompany them on certain business travel, both as a convenience and because we believe our business benefits from the travel and entertainment activities which they facilitate. We provide these benefits in kind, but the Compensation Committee takes the cost of these items into account in setting other elements of compensation.


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Each of our named executive officers is also eligible, under our charitable matching contribution program, to direct us to make charitable gifts in limited dollar amounts to the tax-exempt organizations of their choice. We offer this program to encourage philanthropy among our named executives and to capture any benefit to our corporate reputation that may result from our named executives’ philanthropic activity.
 
Employment Agreements and Change in Control Agreements.   Consistent with the practices of other financial institutions of similar size and asset and business mix, we have entered into employment or change of control severance agreements with each of our named executive officers. We have found it necessary to offer these arrangements as part of the recruitment packages for newly hired executives. We have offered them to incumbent executives in order to make our package of employment and change in control protections comparable to those available at other employers. If we did not follow market practice in this regard, we believe we would compromise our relationship with our executives and would have to offer increased annual compensation packages, at increased recurring annual cost, in order to attract and retain the executive talent we require.
 
In 2007, our Compensation Committee engaged its independent compensation consultant to review the substantive terms of our employment agreements and change in control agreements and our practices in offering these agreements to various levels of officers. The Compensation Committee also reviewed the estimated costs of settling these contracts in the event of termination of employment in the context of a change in control and in the absence of a change in control. It considered these costs in the aggregate as a percentage of our market capitalization. It also reviewed historical data concerning the published contract settlement costs, as a percentage of reported transaction value, for executive contracts in place at selected financial institutions that have experienced change in control transactions. Based on this information, the Compensation Committee concluded that the substantive terms of our employment agreements and change in control agreements are in line with prevailing industry practices. The Compensation Committee also concluded that the projected costs of such agreements are reasonable in light of our size and the published market data reviewed.
 
The employment agreements with Messrs. Hermance, Salamone and Tassillo help us protect our franchise in two ways. First, each agreement restricts the named executive’s ability to work for competitors in our markets for a specified period following a voluntary resignation without good reason or a discharge with cause. Second, each agreement prohibits solicitation of or disturbance of our relations with customers or employees by the named executive for a specified period following termination for any reason. We have chosen to secure these restrictions through employment agreements rather than by attaching them to equity compensation grants or other items of compensation so that they remain in effect indefinitely and are not tied to a decision to continue or discontinue, or to the value of, a particular item of compensation. In return for these restrictions, these agreements provide the executives a termination benefit equal in value to three years’ compensation and benefits (excluding stock options, restricted stock or other equity compensation) in the event of termination under certain circumstances. These circumstances include discharge without cause or resignation following certain triggering events, including a diminution in title, position, duties or authority, failure to pay or a reduction in compensation, involuntary relocation or other material breach of contract. In addition, for a limited period of time following a change in control, Messrs. Hermance, Salamone and Tassillo may each choose to resign for any reason or no reason and collect the same termination benefits that would be available if their resignation had followed a specified triggering event. We provide these benefits as a retention incentive for these named executives to remain in their positions through the conclusion of a change in control transaction that will be in place regardless of the existence or value, from time to time, of other items of compensation with retention features. We have provided this resignation window following a change in control to reduce the extent to which personal issues might serve to distract these executives from corporate matters during the negotiation and execution of a change in control transaction. Our employment agreements provide benefits only in the event of an actual termination of employment;


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payments are not due in the event of a change of control following which the executive retains his position beyond the expiration of the resignation window. We discontinued renewals of Mr. Tassillo’s employment agreement upon his resignation as an executive officer; Mr. Tassillo’s employment agreement will expire on June 4, 2010.
 
The change-in-control agreements in effect with our other named executive officers restrict their right to solicit or disturb our relations with our customers or employees following termination of employment for any reason following a change in control. We choose to secure these restrictions through change in control agreements rather than by attaching them to equity compensation grants or other items of compensation so that they remain in effect indefinitely and are not tied to a decision to continue or discontinue, or to the value of, a particular item of compensation. These agreements provide a termination benefit equal in value to two years’ compensation and benefits (excluding stock options, restricted stock or other equity compensation) in the event of discharge without cause or resignation following certain triggering events. These triggering events include a diminution in title, position, duties or authority, failure to pay or a reduction in compensation, involuntary relocation or other material breach of contract. We provide these benefits as a retention incentive for these named executives to remain in their positions through the conclusion of a change in control transaction that will be in place regardless of the existence or value, from time to time, of other items of compensation with retention features. As is the case with our employment agreements, change in control agreements do not provide payments unless the officer experiences a termination of employment.
 
Material Policies and Procedures
 
Benchmarking and Survey Data
 
The Compensation Committee requests and reviews survey data for information relating to compensation practices at other financial institutions of similar asset and business mix as well as general compensation trends in the private sector. For 2007, the Compensation Committee considered survey data for the following companies: Associated Banc-Corp; Astoria Financial Corp.; Comerica, Inc.; Commerce Bancorp, Inc. (New Jersey); Downey Financial Corp.; First Horizon National Corp.; Huntington Bancshares, Inc.; IndyMac Bancorp, Inc.; M & T Bank Corp.; New York Community Bancorp, Inc.; Sovereign Bancorp, Inc.; and Zions Bancorporation. M & T Bank Corp. and New York Community Bancorp, Inc. were added to this group in 2007 to replace Compass Bancshares, Inc. and Mercantile Bankshares, Inc., which were removed because they had been acquired. The committee, in consultation with its compensation consultant, selected these companies based on their asset size, market capitalization, headcount and business focus on deposit-taking and residential mortgage lending. The Compensation Committee does not seek to set compensation levels at prescribed percentile rankings within a peer group. It does use survey data to determine on a historical basis the degree of correlation between the base salary, annual incentive and equity compensation provided by us (expressed as a percentile ranking relative to our peers) and our percentile ranking among the same peer group for performance measures that include, but are not limited to, return on average assets, return on average equity, asset growth, total shareholder return, efficiency ratio and net income growth.
 
Impact of Accounting and Tax Treatment
 
Section 162(m).   Section 162(m) of the Internal Revenue Code of 1986 (the “Internal Revenue Code”) imposes a $1 million annual limit per executive officer, on our federal tax deduction for certain types of compensation paid to some of the named executive officers. It has been the Compensation Committee’s practice to structure the compensation and benefit programs offered to the named executive officers with a view to maximizing the tax deductibility for the Company of amounts paid. However, in structuring compensation programs and making compensation decisions, the Compensation Committee considers a variety of factors, including the materiality of the payments and tax deductions involved, the need for flexibility to address unforeseen circumstances and the need to attract and retain qualified


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management. After considering these factors, the Compensation Committee may decide to authorize payments all or part of which would be nondeductible for federal tax purposes. We anticipate that certain restricted stock awards may be non-deductible, in whole or in part, as a result of section 162(m).
 
Sections 4999 and 280G.   Section 4999 of the Internal Revenue Code imposes a 20% excise tax on certain “excess parachute payments” made to “disqualified individuals.” Under section 280G of the Internal Revenue Code, such excess parachute payments are also nondeductible to Hudson City. If payments that are contingent on a change of control to a disqualified individual (which terms include the named executive officers) exceed three times the individual’s “base amount,” they constitute “excess parachute payments” to the extent they exceed one times the individual’s base amount.
 
We have entered into employment agreements with each of Messrs. Hermance, Salamone and Tassillo, pursuant to which we will make an indemnification payment to the executive officer so that, after payment of the initial excise tax and all additional income and excise taxes imposed on the indemnification payment, the executive officer would retain approximately the same net after-tax amounts under the employment agreement that he would have retained if there was no excise tax. We have done this so that, in general, whether or not we have experienced a change in control will not affect the net after-tax value to these individuals of termination benefits under their employment agreements. Messrs. Butkovich, Laird and Kranz are not entitled to such payments under their change in control agreements. Neither Hudson City Savings, nor Hudson City Bancorp, is permitted to claim a federal income tax deduction for the portion of the change of control payment that constitutes an “excess parachute payment,” or the indemnification payment.
 
Accounting Considerations.   The Compensation Committee is informed of the financial statement implications of the elements of the executive officer compensation program. However, a compensation element’s contribution to the objectives of our executive officer compensation program and its projected economic cost, which may or may not be reflected on our financial statements, are the primary drivers of executive officer compensation decisions.
 
Personal Income Tax Considerations.   Federal and state income tax laws do not apply uniformly to all items of compensation, with the result that certain items of compensation are more valuable, on a net after-tax basis, to our named executives, or less costly, on a net after-tax basis, to us. We take the federal and state personal income tax treatment of various items of compensation into account to the extent consistent with the corporate goals and objectives of our executive compensation program.
 
Stock Ownership Policy
 
In February of 2005, we set stock ownership targets for our directors and officers with a title of Executive Vice President or higher. The purpose of these guidelines is to promote director and officer stock ownership that will cause our directors and officers to share, with other stockholders, a financial interest in the performance of our stock. Pursuant to these stock ownership targets, we expect each outside director to own an amount of our common stock equal to ten times the annual cash retainer for such director’s service. In addition, we expect each officer to own an amount of our common stock equal to three times the senior executive officer’s base salary. The board has authorized the Nominating and Governance Committee to adopt stock ownership guidelines for our other officers as it deems necessary or appropriate. Current stock ownership by our directors and named executive officers meets or exceeds the target levels.
 
Role of CEO in Determining the Compensation of Other Named Executive Officers
 
We believe that compensation policy is an important tool that should be available to the Chief Executive Officer in setting and executing corporate strategy. Our Compensation Committee, alone or in consultation with the other independent members of our Board of Directors, determines the compensation of each executive officer but considers the views of the Chief Executive Officer and Chief Operating Officer in setting the compensation of the more junior executive officers.


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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
 
Executive Officer Compensation
 
The following table provides information about the compensation of our named executive officers for fiscal years 2006 through 2007.
 
SUMMARY COMPENSATION TABLE
 
                                                                         
(A)   (B)     (C)     (D)     (E)     (F)     (G)     (H)     (I)     (J)  
                                        Change in
             
                                        Pension Value
             
                                        and
             
                                        Nonqualified
             
                                  Non-Equity
    Deferred
             
                      Stock
    Option
    Incentive Plan
    Compensation
    All Other
       
Name and
        Salary(1)
    Bonus(1)
    Awards(2)
    Awards(3)
    Compensation(4)
    Earnings(5)
    Compensation(6)
    Total
 
Principal Position
  Year     ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
Ronald E.
Hermance, Jr. 
    2007     $ 1,240,385           $ 235,200     $ 3,622,964     $ 2,040,000     $ 688,599     $ 623,768     $ 8,450,916  
Chairman of the Board, President & Chief Executive Officer     2006       1,108,654             211,829       1,415,464       1,500,000     $ 533,165       560,423       5,329,535  
                                                                         
Denis J. Salamone
    2007       751,923             117,600       1,306,482       850,000       468,563       369,219       3,863,787  
Senior Executive Vice President and Chief Operating Officer, Director     2006       670,192             217,465       563,982       725,000       207,357       353,317       2,737,313  
                                                                         
James C. Kranz
    2007       363,515     $ 18,183       39,200       290,843       175,000       260,404       157,879       1,305,024  
Executive Vice President and Chief Financial Officer     2006       285,769       14,298       34,107       142,343       140,000       216,646       126,953       960,116  
                                                                         
Ronald J. Butkovich
    2007       293,222       14,662       165,647       359,383       140,000       128,646       137,186       1,238,746  
Senior Vice President     2006       272,385       13,621       662,600       210,883       135,000       63,066       142,087       1,499,642  
                                                                         
Thomas E. Laird
    2007       296,654       14,833       39,200       290,843       150,000       204,232       126,846       1,122,608  
Senior Vice President     2006       247,769       11,119       34,107       142,343       125,000       92,629       109,570       762,537  
                                                                         
John M. Tassillo
    2007       438,077             78,400       545,799       400,000       48,349       15,644       1,526,269  
Executive Vice President (through June 8, 2007)     2006       408,077             88,443       292,564       360,000       51,540       195,946       1,396,570  
 
 
(1) The figures shown for salary and bonus represent amounts earned for the fiscal year, whether or not actually paid during such year, whether or not deferred pursuant to non-incentive deferred compensation plans; whether or not in exchange for awards of restricted stock, stock options or other forms of non-cash compensation. In the case of Mr. Hermance, salary earned during the fiscal year in excess of $1 million has been deferred, placed in a deferred compensation account and converted into 17,908 share-equivalent units, which are adjusted to reflect dividends and positive or negative share price performance for Hudson City Bancorp common stock. Amounts reported in column (D) reflect participation in a broad-based, non-incentive bonus program that has been discontinued for executive officers beginning in 2008.
 
(2) Represents the compensation cost recognized for the fiscal year in connection with restricted stock of Hudson City Bancorp granted to the named executive officer, regardless of the year of grant and calculated in accordance with FAS 123R for financial statement purposes. For more information concerning the assumptions used for these calculations, please refer to note 10(c) to the audited financial statements included in the 2007 Annual Report on Form 10-K This amount does not reflect the value of dividends paid on unvested restricted stock, which is included in the Summary Compensation Table under the caption “All Other Compensation.”
 
(Notes continued on following page)


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(3) Represents the compensation cost recognized for the fiscal year for options to purchase shares of Hudson City Bancorp common stock outstanding to the named executive officer, regardless of the year of grant and calculated in accordance with FAS 123R for financial statement purposes. For more information concerning the assumptions used for these calculations, please refer to note 10(d) to the audited financial statements included in the 2007 Annual Report on Form 10-K and footnote 5 to the Grant of Plan-Based Awards Table — FYE 2007 set forth elsewhere in this Proxy Statement. Of the total compensation cost recognized for options granted in fiscal 2007, the following amounts were recognized for performance stock options and non-performance stock options respectively: Mr. Hermance $2,407,500 and $1,215,464; Mr. Salamone $722,250 and $584,232; Mr. Kranz $144,450 and $146,393; Mr. Butkovich $144,450 and $214,933; Mr. Laird $144,450 and $146,393; and Mr. Tassillo $-0- and $545,799. Of the total compensation cost recognized for options granted in fiscal 2006, the following amounts were recognized for performance stock options and non-performance stock options respectively: Mr. Hermance $660,000 and $755,464; Mr. Salamone $198,000 and $365,982; Mr. Kranz $39,600 and $102,743; Mr. Butkovich $39,600 and $171,283; Mr. Laird $39,600 and $102,743; and Mr. Tassillo $-0- and $292,564. Non-performance options include retention options issued under the 2006 Stock Incentive Plan and stock options with service-based vesting provisions that were granted prior to 2006.
 
(4) Represents amounts earned for services rendered during the fiscal year under our Executive Officer Annual Incentive Plan, whether or not actually paid during such fiscal year.
 
(5) Includes for each named executive officer (a) the increase (if any) for the fiscal year in the present value of the individual’s accrued benefit (whether not vested) under each tax-qualified and non-qualified actuarial or defined benefit plan calculated by comparing the present value of each individual’s accrued benefit under each such plan in accordance with Statement of Financial Accounting Standards 87 (“FAS 87”) as of the plan’s measurement date in such fiscal year to the present value of the individual’s accrued benefit as of the plan’s measurement date in the prior fiscal year plus (b) the amount of interest accrued on defined contribution deferred compensation balances at a rate in excess of 120% of the applicable federal long-term rate under section 1274(d) of the Internal Revenue Code and dividends or dividend equivalents on balances denominated in Hudson City Bancorp common stock in excess of the dividends paid to shareholders generally during the fiscal year. The amounts of such excess interest and dividends for 2007 are as follows: Mr. Hermance $-0- and $-0-; Mr. Salamone $-0- and $-0-; Mr. Kranz $-0- and $-0-; Mr. Butkovich $-0- and $-0-; Mr. Laird $-0- and -0-; and Mr. Tassillo $-0- and $-0-. The amounts of such excess interest and dividends for 2006 are as follows: Mr. Hermance $-0- and $-0-; Mr. Salamone $-0- and $-0-; Mr. Kranz $-0- and $-0-; Mr. Butkovich $-0- and $-0-; Mr. Laird $-0- and -0-; and Mr. Tassillo $-0- and $-0-. The following individuals experienced year-to-year declines in the actuarial value of their accrued benefits under defined benefit or actuarial plans that are not reflected in the reported figures: in 2007: Mr. Hermance $-0-, Mr. Salamone $-0-, Mr. Kranz $-0-, Mr. Butkovich $-0-, Mr. Laird $-0-, and Mr. Tassillo $-0-; in 2006: Mr. Hermance $-0-, Mr. Salamone $-0-, Mr. Kranz $-0-, Mr. Butkovich $-0-, Mr. Laird $-0-; and Mr. Tassillo $-0-.
 
(6) The named executive officers participate in certain group life, health and disability insurance and medical reimbursement plans, not disclosed in the Summary Compensation Table, that are generally available to salaried employees and do not discriminate in scope, terms and operation. The figure shown for each named executive officer for 2007 includes our direct out-of-pocket cost (reduced, in the case of the figures shown for company cars, by the amount that we would otherwise have paid in cash reimbursements during the year for business use of a personal car), for the following items:
 
(Notes continued on following page)
 


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    Mr. Hermance     Mr. Salamone     Mr. Kranz     Mr. Butkovich     Mr. Laird     Mr. Tassillo  
 
Employer contributions to qualified and non-qualified deferred compensation plans (including 401(k) plans and ESOP)
  $ 514,005     $ 311,591     $ 150,699     $ 121,513     $ 122,931        
Life insurance premiums (excluding nondiscriminatory group term life insurance)
                                   
Amount paid or accrued under termination of employment or change of control arrangements
                                   
Tax gross-up or reimbursement payments
                                   
Accelerated benefits due to change in control under defined benefit or actuarial plans
                                   
Employer contribution to designated charity under charitable contribution matching program
    50,000       30,000       3,750                    
Dividends paid on unvested restricted stock
    20,583       10,291       3,430       5,130       3,430     $ 6,861  
Company car
    31,460       9,420             10,543             8,690  
Club dues
    7,522       7,522                          
Executive medical program
    199                         90       94  
Travel expense for spouse to accompany on business travel
          395                   395        
Amounts paid under a plan in connection with termination
                                   
 
Salary and bonus (Columns (C) and (D)) as a percentage of total compensation (Column (J)) in 2007 ranged from approximately 14.69% for Mr. Hermance to 29.26% for Mr. Kranz. These percentages are significantly influenced by the inclusion of restricted stock and stock option awards in the Summary Compensation Table at times and in amounts tied to the recognition of compensation expense for such awards under generally accepted accounting principles. Total cash compensation (Columns (C), (D) and (G)) as a percentage of total compensation (Column (J)) ranged from approximately 36.17% for Mr. Butkovich to 54.91% for Mr. Tassillo. Total performance-based compensation (Columns (E) (F) and (G)) as a percentage of total compensation (Column (J)) ranged from approximately 38.68% for Mr. Kranz to approximately 69.77% for Mr. Hermance.
 
Employment Agreements
 
Hudson City Bancorp and Hudson City Savings have each entered into employment agreements dated as of June 7, 2005 with Messrs. Hermance, Salamone and Tassillo to secure their services as officers. These employment agreements amend and restate prior agreements among Hudson City Bancorp, Hudson City Savings and each of Messrs. Hermance, Salamone and Tassillo. Other than as noted in this summary or any other discussion of the employment agreements in this annual proxy statement, the terms and conditions of the employment agreements between the executives and Hudson City Bancorp are substantially similar in all material respects to the terms and conditions of the employment agreements between the executives and Hudson City Savings.
 
The employment agreements between Hudson City Bancorp and each of Messrs. Hermance, Salamone and Tassillo have rolling three-year terms, until the executive or Hudson City Bancorp gives notice of non-extension, at which time the terms are fixed for three years. The employment agreements between Hudson City Savings and each of Messrs. Hermance, Salamone and Tassillo have an initial three-year term, subject to annual extensions based on a review by the Board of Directors of Hudson

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City Savings of the executive’s performance. The executives’ current annual salary rates payable pursuant to these agreements are $1,350,000 for Mr. Hermance, $825,000 for Mr. Salamone and $460,000 for Mr. Tassillo. The agreements also provide for discretionary cash bonuses, participation on generally applicable terms and conditions in compensation and fringe benefit plans and customary corporate indemnification and errors and omissions insurance coverage throughout the employment term and for six years after termination. The employment agreements with Hudson City Bancorp also provide for the use of an automobile owned or leased by Hudson City Bancorp and reimbursement for memberships in mutually agreed upon clubs and organizations. See “Executive Officer Compensation — Termination and Change of Control Benefits” for a description of the severance provisions contained in the employment agreements. In connection with his resignation as an executive officer, we have discontinued extensions of Mr. Tassillo’s agreements as of June 4, 2007.
 
Compensation Plans
 
Incentive Plans
 
Executive Officer Annual Incentive Plan.   Officers at and above the level of Senior Vice President are eligible to earn cash incentives each year under the Executive Officer Annual Incentive Plan upon achievement of pre-determined corporate and individual performance goals. We intend bonuses payable under the Executive Officer Annual Incentive Plan to constitute qualified performance-based compensation under section 162(m) of the Internal Revenue Code.
 
In order to be eligible for incentive payments under the Executive Officer Annual Incentive Plan for a given year, participants must (with certain exceptions for death, disability, retirement or a change in control) be employed on the last day of the plan year. The amount of the incentive payable to each participant is either a fixed dollar amount or a percentage of his or her annual rate of base salary. The committee administering the plan determines the incentive payments after the end of the year based on the achievement of pre-established corporate performance goals and a subjective review of individual performance in the context of pre-established subjective performance factors. Generally no incentives are payable if corporate and individual performance are below minimum thresholds. We generally pay incentives under the Executive Officer Annual Incentive Plan on or before March 15 of the year following the plan year in which they are earned, following determination of the level of achievement of corporate and individual performance goals. In the event that a deferred compensation plan for officers is in effect, participants may elect to defer payment of their bonus until a later date.
 
The Compensation Committee of our Board of Directors has been appointed to be the administrative committee of the Executive Officer Annual Incentive Plan at all times during that plan’s existence.
 
Annual Bonus Plan.   Each of our named executive officers other than Messrs. Hermance, Salamone and Tassillo participated in our annual bonus program for 2007. This program covers substantially all of our salaried employees. This program has been discontinued for executive officers beginning in 2008.
 
2000 Stock Option Plan and 2000 Restricted Stock Plan.   Our Board of Directors adopted the 2000 Stock Option Plan and 2000 Restricted Stock Plan in 1999 and our shareholders approved the plans in 2000. We have not made any awards under these plans since 2005 and will not make any more in the future. Awards made to our named executive officers under these plans after 2000 and prior to 2006 vest in 20% increments over a five year period beginning at the date of grant and continued to vest during 2007. The vesting of all awards made under these plans accelerates upon the named executive officer’s death, disability or retirement or in the event of a change in control. The Compensation Committee of our Board of Directors has been appointed to be the administrative committee of the 2000 Stock Option Plan and 2000 Restricted Stock Plan at all times during those plans’ existence.


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2006 Stock Incentive Plan.   Our Board of Directors adopted the 2006 Stock Incentive Plan in 2006. Our shareholders approved the plan in same year. Subject to the terms of the 2006 Stock Incentive Plan, employees, directors and officers of Hudson City Bancorp and Hudson City Savings and any other subsidiary are eligible to participate. Hudson City Bancorp reserved 30,000,000 shares of common stock for issuance under the 2006 Stock Incentive Plan.
 
The committee administering the 2006 Stock Incentive Plan may, in its discretion, grant any or all of nine types of equity-linked awards to eligible individuals: stock options, stock appreciation rights, restricted stock (both time-based and performance-based), performance shares, performance units, deferred stock, phantom stock and other stock-based awards. The administrative committee will, in its discretion, determine the type of awards made and establish other terms and conditions applicable to the award. The Compensation Committee of our Board of Directors has been appointed to be the administrative committee of the 2006 Stock Incentive Plan at all times during that plan’s existence.


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The following table sets forth information regarding plan-based awards granted to the named executive officers of Hudson City Bancorp during the last fiscal year.
 
GRANTS OF PLAN-BASED AWARDS TABLE — 2007
 
                                                                                 
                                        (j)
                   
                                  (g)
    All Other
          Closing Sale
    (l)
 
                                  Estimated
    Option
    (k)
    Price of
    Grant
 
                                  Future Payouts
    Awards:
    Exercise
    Hudson City
    Date Fair
 
                (c)     (d)     (e)     Under
    Number of
    or Base
    Common
    Value of
 
          Compensation
    Estimated Future Payouts Under
    Equity Incentive
    Securities
    Price of
    Stock on the
    Stock and
 
    (b)
    Committee
    Non-Equity Incentive Plan Awards(1)     Plan Awards(2)     Underlying
    Option
    Grant
    Option
 
(a)
  Grant
    Decision
    Threshold
    Target
    Maximum
    Target
    Options
    Awards
    Date
    Awards
 
Name
  Date     Date(4)     ($)     ($)     ($)     (#)     (#)(3)     ($/Sh)     ($/Sh)     ($)(5)  
 
Ronald E. Hermance, Jr. 
    1/22/2007                 $ 2,040,000                                      
      1/26/2007       1/22/2007                         1,125,000           $ 13.78     $ 13.78     $ 3,262,500  
Denis J. Salamone
    1/22/2007                   1,015,000                                      
      1/26/2007       1/22/2007                         337,500             13.78       13.78       978,750  
James C. Kranz
    1/22/2007           $ 112,064       140,080     $ 280,160                                
      1/26/2007       1/22/2007                         67,500             13.78       13.78       195,750  
Ronald J. Butkovich
    1/22/2007             91,853       114,816       229,632                                
      1/26/2007       1/22/2007                         67,500             13.78       13.78       195,750  
Thomas E. Laird
    1/22/2007             88,640       110,800       221,600                                
      1/26/2007       1/22/2007                         67,500             13.78       13.78       195,750  
John M. Tassillo
    1/22/2007                   516,000                                      
      1/26/2007       1/22/2007                               135,000       13.78       13.78       283,500  
 
(Notes on following page)

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(1) Represents targets set under our Executive Annual Incentive Plan. For Messrs. Hermance, Salamone and Tassillo, represents the maximum amount payable as an incentive upon achievement of a threshold level of income before taxes and extraordinary items of $324.833 million and is subject to downward but not upward adjustment in the discretion of the Compensation Committee. For Messrs. Kranz, Butkovich and Laird, represents the amounts payable at threshold, target and superior levels of achievement of income before taxes and extraordinary items and relative to the Compensation Committee’s subjective assessment of individual performance relative to individual performance goals.
 
(2) The reported awards are performance stock options granted under the 2006 Stock Incentive Plan. The stock options vest on January 26, 2010 provided that the named executive officer continues in service through such date, and provided that specified performance measures have been satisfied. The specified performance measures are target levels for aggregate diluted earnings per share sustained over any four successive quarters in the years 2007, 2008 and 2009, and return on average equity attained for any of the years 2007, 2008 and 2009. These targets are subject to mandatory adjustment in the event of an unforeseen or extraordinary circumstance such that the event does not materially adversely affect the rights of option holders. Option recipients generally forfeit performance options in the event the option recipient terminates service before the vesting date or in the event the option holder or the company fails to satisfy one or more of the performance measures. In the event of termination of service due to death or disability (as defined in the 2006 Stock Incentive Plan) within six months prior to a vesting date, the options scheduled to vest on that vesting date will vest on the date of termination. In the event of a change in control (as defined in the 2006 Stock Incentive Plan) followed by a discharge without cause or a resignation with good reason, all unvested options will vest on the date of termination. The options expire on the tenth anniversary of the grant date or, if earlier, immediately upon termination of service for cause (as defined in the 2006 Stock Incentive Plan), one year after termination due to death, disability (as defined in the 2006 Stock Incentive Plan) or retirement (as defined in the 2006 Stock Incentive Plan), and three months after voluntary or involuntary termination for any other reason.
 
(3) The reported awards are retention stock options granted under the 2006 Stock Incentive Plan. Retention options granted to Mr. Tassillo will vest and become exercisable 100% on the first anniversary of the grant date. Option recipients generally forfeit retention options in the event the option recipient terminates service before such date. In the event of termination of service due to death or disability (as defined in the 2006 Stock Incentive Plan) within six months prior to a vesting date, the options scheduled to vest on that vesting date will vest on the date of termination. In the event of a change in control (as defined in the 2006 Stock Incentive Plan) followed by a discharge without cause or a resignation with good reason, all unvested options will vest on the date of termination. The options expire on the tenth anniversary of the grant date or, if earlier, immediately upon termination of service for cause (as defined in the 2006 Stock Incentive Plan), one year after termination due to death, disability (as defined in the 2006 Stock Incentive Plan) or retirement (as defined in the 2006 Stock Incentive Plan), and three months after voluntary or involuntary termination for any other reason.
 
(4) We issued our earnings press release for the quarter ended December 31, 2007 prior to the market opening on January 23, 2008. The Compensation Committee decided to defer the pricing, and thus the grant date, of options until the third trading day after the issuance of our earnings press release in keeping with our general policy not to grant stock options during periods when our securities trading policy does not permit market purchases or sales of our common stock by our executive officers.
 
(5) We determined the grant-date fair value of these stock options using the Black-Scholes method and the following assumptions:
                 
    Retention Stock Options
       
    Vesting in 1 Year     Performance Stock Options  
 
Expected Term (Mos.)
    42       66  
Expected Volatility
    16.72 %     19.50 %
Risk Free Rate of Return
    4.90       4.87  
Expected Dividend Yield
    2.32       2.32  


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Stock Awards and Stock Option Grants Outstanding
 
The following tables set forth information regarding stock awards, stock options and similar equity compensation outstanding at December 31, 2007, whether granted in 2007 or earlier, including awards that have been transferred other than for value.
 
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE — 2007
 
                                                                         
    Option Awards     Stock Awards  
                                              Equity Incentive
    Equity Incentive
 
                                              Plan Awards:
    Plan Awards:
 
                                              Number of
    Market or
 
    Number of
    Number of
                      Number of
    Market Value
    Unearned Shares,
    Payout Value
 
    Securities
    Securities
    Equity Incentive
                Shares or
    of Shares or
    Units or
    of Unearned
 
    Underlying
    Underlying
    Plan Awards:
    Options
          Units of Stock
    Units of Stock
    Other Rights
    Shares, Units or
 
    Unexercised
    Unexercised
    Number of Securities
    Exercise
    Option
    That Have
    That Have
    of Stock That
    Other Rights That
 
    Options (#)
    Options (#)
    Underlying Unexercised
    Price(8)
    Expiration
    Not Vested
    Not Vested
    Have Not Vested
    Have Not Vested
 
Name
  (Exercisable)     (Unexercisable)     Unearned Options (#)     ($)     Date     (#)     ($)(1)     (#)     ($)(1)  
 
Ronald E. Hermance, Jr. 
    2,262,046                 $ 2.16       1/12/10       57,708 (7)   $ 866,774              
      411,801                   3.40       9/12/11                          
      256,479       384,720 (2)           12.22       2/18/14                          
            1,000,000 (3)     1,250,000 (5)     12.76       7/20/16                          
                      1,125,000 (6)     13.78       1/25/17                          
Denis J. Salamone
    820,736                   3.59       10/28/11       28,854 (7)     433,387              
      128,238       192,361 (2)           12.22       2/18/14                          
            750,000 (3)     375,000 (5)     12.76       7/20/16                          
                  337,500 (6)     13.78       1/25/17                          
James C. Kranz
    192,359                   2.16       1/12/10       9,618 (7)     144,462              
      51,294       76,945 (2)           12.22       2/18/14                          
            150,000 (3)     75,000 (5)     12.76       7/20/16                          
                  67,500 (6)     13.78       1/25/17                          
Ronald J. Butkovich
    192,360       128,240 (2)           10.33       4/14/14                          
            150,000 (3)     75,000 (5)     12.76       7/20/16                          
                  67,500 (6)     13.78       1/25/17                          
Thomas E. Laird
    49,968                   2.16       1/12/10       9,618 (7)     144,462              
      34,938       76,945 (2)           12.22       2/18/14                          
            150,000 (3)     75,000 (5)     12.76       7/20/16                          
                  67,500 (6)     13.78       1/25/17                          
John M. Tassillo
    8,304                   4.20       1/9/12       19,236 (7)     288,925              
      96,180       144,269 (2)           12.22       2/18/14                          
      150,000                   12.76       7/20/16                          
            135,000 (4)           13.78       1/25/17                          
 
(Notes on following page)


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(1) We calculate market value on the basis of $15.02 per share, which is the closing sales price for our common stock on the NASDAQ Global Market on December 31, 2007.
 
(2) For Messrs. Hermance, Salamone, Tassillo, Laird and Kranz, these stock options vest in equal annual installments on January 13 in 2008, 2009 and 2010. For Mr. Butkovich, these stock options vest in equal annual installments on January 13 in 2008 and 2009.
 
(3) For Mr. Hermance, these stock options vest on July 21, 2009. For Messrs. Salamone, Kranz, Butkovich and Laird, these stock options vest 60% on July 21, 2009 and the remaining 40% vest on July 21, 2011.
 
(4) These stock options vest on January 26, 2008.
 
(5) These stock options vest on December 31, 2008, provided that Hudson City must attain minimum target levels for its efficiency ratio and non-performing asset ratio, averaged over the period of 10 quarters ending December 31, 2008. These targets are subject to mandatory adjustment in the event of an unforeseen or extraordinary circumstance (including increases in non-performing assets that do not result in actual losses) such that the event does not materially adversely affect the rights of option holders. We consider attainment of these target levels to be probable.
 
(6) These stock options vest on January 26, 2010, provided that Hudson City must attain minimum target levels for its aggregate diluted earnings per share sustained over any four successive quarters in the years 2007, 2008 and 2009, and return on average equity attained for any of the years 2007, 2008 and 2009, of $0.80 and 9% respectively. These targets are subject to mandatory adjustment in the event of an unforeseen or extraordinary circumstance such that the event does not materially adversely affect the rights of option holders. We consider attainment of these target levels to be probable.
 
(7) These shares of restricted stock will vest in equal installments on April 20 in 2008, 2009 and 2010.
 
(Notes continued on following page)


41


 

(8) All stock options have a ten-year term and have an exercise price equal to the closing sales price for our common stock on the NASDAQ Global Market on the date of grant (or, where no sales occurred on the date of grant, the closing sales price on the closest prior date on which sales occurred). The exercise prices for all options with expiration dates prior to 2016 include adjustments made to the original grant-date exercise price to reflect subsequent stock splits. The option grant dates and split-adjusted closing sales price for our common stock on the various options grants are as follows:
 
                                                 
                            NASDAQ
       
    Number of
    Number of
                Global
       
    Securities
    Securities
    Equity Incentive
          Market
       
    Underlying
    Underlying
    Plan Award:
          Closing Sales
       
    Unexercised
    Unexercised
    Number of Securities
          Price on
       
    Options (#)
    Options (#)
    Underlying Unexercised
    Option
    Option Award
       
Name
  (Exercisable)     (Unexercisable)     Unearned Options (#)     Award Date     Date ($)        
 
Ronald E. Hermance, Jr. 
    2,262,046                   1/13/00     $ 2.16          
      411,801                   9/13/01       3.40          
      256,479       384,720             2/19/04       12.22          
            1,000,000       1,250,000       7/21/06       12.76          
                  1,125,000       1/26/07       13.78          
Denis J. Salamone
    820,736                   10/29/01       3.59          
      128,238       192,361             2/19/04       12.22          
            750,000       375,000       7/21/06       12.76          
                  337,500       1/26/07       13.78          
James C. Kranz
    192,359                   1/13/00       2.16          
      51,294       76,945             2/19/04       12.22          
            150,000       75,000       7/21/06       12.76          
                  67,500       1/26/07       13.78          
Ronald J. Butkovich
    192,360       128,240             4/15/04       10.33          
            150,000       75,000       7/21/06       12.76          
                  67,500       1/26/07       13.78          
Thomas E. Laird
    49,968                   1/13/00       2.16          
      34,938       76,945             2/19/04       12.22          
            150,000       75,000       7/21/06       12.76          
                  67,500       1/26/07       13.78          
John M. Tassillo
    8,304                   1/10/02       4.20          
      96,180       144,269             2/19/04       12.22          
      150,000                   7/21/06       12.76          
            135,000             1/26/07       13.78          


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The following table sets forth the stock awards that vested and the option awards that were exercised for the named executive officers during the last fiscal year.
 
OPTION EXERCISES AND STOCK VESTED TABLE — 2007
 
                                 
    Option Awards     Stock Awards  
    Number of Shares
    Value
    Number of Shares
    Value
 
    Acquired on
    Realized on
    Acquired on
    Realized on
 
Name
  Exercise (#)     Exercise ($)(1)     Vesting (#)     Vesting ($)(1)  
 
Ronald E. Hermance, Jr. 
                19,236     $ 256,801  
Denis J. Salamone
                9,618       128,400  
James C. Kranz
                3,206       42,800  
Ronald J. Butkovich
                64,120       856,002  
Thomas E. Laird
    8,178     $ 491       3,206       42,800  
John M. Tassillo
    23,756       224,732       6,412       85,600  
 
(1) These figures include the amount realized during the fiscal year upon exercise of vested stock options by the named individual and the vesting of restricted stock, based on the closing sales price for a share of our common stock on the NASDAQ Global Market on the exercise date or vesting date, as applicable. Option holders may not transfer unexercised stock options or unvested restricted stock for value.
 
Post-Employment Compensation
 
Pension Benefits
 
The Employees’ Retirement Plan of Hudson City Savings Bank is a tax-qualified plan that covers substantially all salaried employees hired before August 1, 2005 who have attained age 21 and have at least one year of service. Its purpose is to take advantage of favorable tax rules to provide substantially all eligible employees with a stable and predictable source of retirement income that does not require the individual employee to bear either investment or mortality risk. The Hudson City Savings Bank Benefit Maintenance Plan covers selected executive officers and covered Messrs. Hermance, Salamone, Kranz, Butkovich, Laird and Tassillo as of December 31, 2007.
 
The Benefit Maintenance Plan provides for the payment of certain benefits that would otherwise be payable under the Employees’ Retirement Plan, but for certain limitations imposed by the Internal Revenue Code. Tax laws impose a limit (up to $218,000 for individuals retiring in 2007) on the average final compensation that we may count in computing benefits under the Employees’ Retirement Plan, and on the annual benefits ($180,000 in 2007) that we may pay. The Employees’ Retirement Plan may also pay benefits accrued as of January 1, 1994 based on tax law limits then in effect. For Messrs. Hermance, Salamone, Kranz, Butkovich, Laird and Tassillo, benefits based on average final compensation in excess of tax limits are payable under the Benefit Maintenance Plan.
 
Under the Employees’ Retirement Plan, upon attaining age 65, participants receive an annual retirement benefit commencing at retirement equal to two percent of their average compensation (which includes salary, but not bonus, overtime or other special pay) for the highest three consecutive years out of the final ten years of employment, multiplied by their years of service, up to a maximum of 30 years of service. The Benefit Maintenance Plan provides that participants, upon attaining age 65, will receive an annual retirement benefit equal to two percent of their average compensation (which includes salary, but not bonus, overtime or other special pay) for the highest three consecutive years out of the final ten years of employment, multiplied by their years of service, up to a maximum of 30 years of service,


43


 

minus the amount of their accrued benefit under the Employee’s Retirement Plan. Under both the Employees’ Retirement Plan and the Benefit Maintenance Plan, participants have the option of choosing an actuarially equivalent alternative form of benefit, which would affect the amount of the retirement benefit payable each year.
 
Both the Employees’ Retirement Plan and the Benefit Maintenance Plan also provide for payment of a reduced early retirement benefit to participants who retire either after age 60 with at least five years of service or after 30 years of service. Messrs. Hermance and Laird are currently eligible for early retirement benefits. The plans calculate early retirement benefits under the same formula as normal retirement benefits, but base them on compensation and credited service as of the date of termination of employment, and reduce benefits by 5 / 12 of 1% for each of the first 120 months that payment commencement precedes the normal retirement date. A participant who has completed at least 30 years of service and wants to begin payment before age 55 is entitled to the actuarial equivalent to the benefit payable at age 55.
 
We may, as part of our hiring negotiations with a new employee, agree to grant credit for service with the newly hired employee’s immediate prior employer.
 
The following table sets forth information regarding pension benefits accrued by the named executive officers during the last fiscal year.
 
PENSION BENEFITS TABLE — 2007
 
                                 
          Number of
             
          Years of
          Payments
 
          Credited
    Present Value of
    During
 
          Service
    Accumulated
    Last Fiscal
 
Name
 
Plan Name
    (#)(1)(2)     Benefit ($)(2)     Year ($)  
 
Ronald E. Hermance, Jr. 
    Retirement Plan for Employees       19.58     $ 678,804        
      Benefit Maintenance Plan       19.58       2,754,077        
Denis J. Salamone
    Retirement Plan for Employees       5.17       128,104        
      Benefit Maintenance Plan       19.75       1,380,057        
James C. Kranz
    Retirement Plan for Employees       23.33       766,721        
      Benefit Maintenance Plan       23.33       294,477        
Ronald J. Butkovich
    Retirement Plan for Employees       2.67       80,285        
      Benefit Maintenance Plan       17.67       585,596        
Thomas E. Laird
    Retirement Plan for Employees       30       758,414        
      Benefit Maintenance Plan       30       129,461        
John M. Tassillo
    Retirement Plan for Employees       30       1,050,683        
      Benefit Maintenance Plan       30       924,710        
 
(1) As part of their initial employment negotiations, the following individuals were granted the following years of service credit under the Benefit Maintenance Plan for prior employment with other employers: Mr. Hermance -0- years; Mr. Salamone 14.58 years; Mr. Kranz -0- years; Mr. Butkovich 15 years; Mr. Laird -0- years; and Mr. Tassillo -0- years. Mr. Hermance was granted 1.33 years of service credit under the Benefit Maintenance Plan and Retirement Plan for Employees.
 
(2) We determined the figures shown as of the plan’s measurement date during 2007 under FAS 87 for purposes of Hudson City Bancorp’s audited financial statements. For the mortality, discount rate and other assumptions used for this purpose, please refer to note 10(a) to the audited financial statements included in the 2007 Annual Report on Form 10-K.


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Deferred Compensation
 
Profit Incentive Bonus Plan.   The Profit Incentive Bonus Plan of Hudson City Savings Bank is a tax-qualified defined contribution plan for substantially all salaried employees who have attained age 21 and have at least one year of service. Hudson City Savings may make discretionary contributions to this plan as determined by the Board of Directors. The Profit Incentive Bonus Plan has an individual account for each participant’s contributions and allows each participant to direct the investment of his or her account. One permitted investment is common stock of Hudson City Bancorp. Participants direct the voting of shares purchased for their plan accounts.
 
Benefits under the Profit Incentive Bonus Plan are generally payable upon termination of employment or retirement (including early retirement). No employer contributions were made to this plan for 2007.
 
Employee Stock Ownership Plan.   The Employee Stock Ownership Plan of Hudson City Savings Bank is a tax-qualified plan that covers substantially all salaried employees who have at least one year of service and have attained age 21. In 1999, Hudson City Bancorp lent the plan enough money to purchase 27,879,376 of the shares of Hudson City Bancorp common stock (adjusted for stock splits) issued to investors other than Hudson City, MHC (or 3.76% of the total number of shares issued in our 1999 reorganization). The plan has purchased all 27,879,376 shares. In connection with the second-step conversion and stock offering completed on June 7, 2005, Hudson City Bancorp lent the plan enough money to purchase an additional 15,719,223 of the shares of Hudson City Bancorp common stock (or 4% of the total number of shares issued in our second-step conversion and stock offering). The plan has purchased all 15,719,223 shares. As a condition to the extension of the 2005 loan, Hudson City Bancorp and the trustee of the plan renegotiated the terms (including the interest rate and maturity) of the 1999 loan. Although contributions to this plan are discretionary, Hudson City Savings intends to contribute enough money each year to make the required principal and interest payments on the loans from Hudson City Bancorp. Any additional contributions are discretionary. Both the 1999 loan (as extended) and the 2005 loan mature on December 31, 2044. Each loan calls for level annual payments of principal and interest. The plan has pledged the shares it purchased as collateral for the loan and holds them in a suspense account. The plan released 962,185 of the pledged shares during 2007. We expect the plan will release 962,185 of the shares annually in the years 2008 through 2044, and release the remaining shares in 2044. The plan will allocate the shares released each year among the accounts of participants in proportion to their base salary for the year. For example, if a participant’s base salary for a year represents 1% of the total base salaries of all participants for the year, the plan would allocate to that participant 1% of the shares released for the year. Participants direct the voting of shares allocated to their accounts. The trustee of the plan will usually vote the shares in the suspense account in a way that mirrors the votes which participants cast for shares in their individual accounts.
 
Benefit Maintenance Plan.   The Benefit Maintenance Plan of Hudson City Savings Bank is a non-qualified plan that permits selected individuals to defer amounts that would otherwise be deferred under the Profit Incentive Bonus Plan, but for certain limitations imposed by the Internal Revenue Code. This aspect of the plan was frozen as of December 31, 2004 and no additional amounts may be deferred thereunder. As of December 31, 2007, Messrs. Hermance, Salamone, Tassillo, and Kranz had balances under this aspect of the plan. This aspect of the plan credits account balances with interest at the end of each calendar quarter at the highest rate of interest credited on certificates of deposit issued by Hudson City Savings during the calendar quarter. During 2007, the plan credited balances using interest rates of 5.45% during the first calendar quarter, 5.26% during the second calendar quarter, 5.23% during the third calendar quarter and 5.23% during the fourth calendar quarter. This aspect of the plan allows for distribution of accounts in a single lump sum (unless the participant elects to receive annual installments over a period not to exceed 15 years) as soon as administratively practicable on or after the first day of the calendar quarter coinciding with or next following (i) the participant’s termination of employment, (ii) the participant’s attainment of a designated age not earlier


45


 

than age 59-1/2 and not later than age 70-1/2, (iii) the earlier of (i) and (ii), or (iv) the later of (i) and (ii), as elected by the participant, with (i) being the default if no election is made.
 
The Benefit Maintenance Plan also provides a “supplemental benefit” and a “restoration benefit” to certain executives with respect to their participation in the qualified Employee Stock Ownership Plan. The supplemental benefit consists of a payment representing shares that we cannot allocate under the Employee Stock Ownership Plan due to the legal limitations imposed on tax-qualified plans. See “Executive Officer Compensation — Post-Employment Compensation — Employee Stock Ownership Plan” for a discussion of the Employee Stock Ownership Plan of Hudson City Savings Bank, including the share allocation formula thereunder. The plan pays out this benefit in a single lump sum as soon as practicable following the last day of the year of termination of service (or in such other form as elected within 30 days after becoming eligible for the supplemental benefit) in an amount determined by multiplying the number of shares payable under the supplemental benefit by the closing price of Hudson City Bancorp’s common stock as reported on the NASDAQ Global Market. The restoration benefit consists of a payment representing shares that the Employee Stock Ownership Plan and supplemental benefit of this plan would have allocated to a participant who retires before the repayment in full of the Employee Stock Ownership Plan’s loans if his employment had continued through the full term of the loans. The ESOP Restoration Plan pays out such benefit in a single lump sum as soon as practicable following the last day of the calendar year of termination of service (or in such other form as elected within 30 days after becoming eligible for such benefit). The plan determines the amount of the benefit by multiplying the number of shares payable under the restoration benefit by the average closing price of Hudson City Bancorp’s common stock reported on the NASDAQ Global Market at the end of each quarter during the 12 quarters immediately preceding termination of service.
 
The following table sets forth information regarding nonqualified deferred compensation our named executive officers earned during the last fiscal year under the Benefit Maintenance Plan.
 
NONQUALIFIED DEFERRED COMPENSATION TABLE — BENEFIT MAINTENANCE
PLAN — 2007
 
                                         
    Executive
    Registrant
    Aggregate
    Aggregate
    Aggregate
 
    Contributions in
    Contributions in
    Earnings in
    Withdrawals/
    Balance at
 
    Last FY
    Last FY
    Last FY
    Distributions
    Last FYE
 
Name
  ($)(1)     ($)(2)     ($)(3)     ($)     ($)  
 
Ronald E. Hermance, Jr. 
        $ 415,584     $ 152,731     $ 151,603     $ 2,381,127  
Denis J. Salamone
          213,170       71,617       70,518       905,115  
James C. Kranz
          52,278       15,376       15,183       125,365  
Ronald J. Butkovich
          23,093       6,442       6,432       41,479  
Thomas E. Laird
          24,511       6,577       6,573       32,488  
John M. Tassillo
                59,941       6,261,545       46,389  
 
 
(1) The Summary Compensation Table includes executive contributions under the captions “Salary” and “Non-Equity Incentive Plan Compensation,” as applicable.
 
(2) The Summary Compensation Table includes registrant contributions under the caption “All Other Compensation” in the Summary Compensation Table.
 
(3) The Summary Compensation Table does not include reported earnings, as they did not accrue at above-market or preferential rates.
 
Other Deferred Compensation Program.   We maintain a non-qualified deferred compensation plan pursuant to which our named executive officers may elect to defer all or any portion of their base salary, bonus or cash incentive under the Executive Annual Incentive Plan. Executives may elect to invest


46


 

deferred amounts in phantom units of our common stock or in an interest-bearing phantom account that the plan credits with interest on a quarterly basis based on the highest rate of interest Hudson City Savings paid to depositors during the quarter. The plan will pay deferred amounts, adjusted for earnings and/or losses, following termination of employment or at specified dates that the named executive officer has selected prior to the deferral.
 
The following table sets forth information regarding nonqualified deferred compensation our named executive officers earned during the last fiscal year under the other non-qualified defined contribution plan.
 
NONQUALIFIED DEFERRED COMPENSATION TABLE — OFFICERS’ DEFERRED
COMPENSATION PLAN — 2007
 
                                         
    Executive
    Registrant
    Aggregate
    Aggregate
    Aggregate
 
    Contributions in
    Contributions in
    Earnings in
    Withdrawals/
    Balance at
 
    Last FY
    Last FY
    Last FY
    Distributions
    Last FYE
 
Name
  ($)(1)     ($)(2)     ($)(3)     ($)     ($)  
 
Ronald E. Hermance, Jr. 
  $ 237,500           $ 10,933           $ 625,223  
Denis J. Salamone
                             
James C. Kranz
                             
Ronald J. Butkovich
    14,000             1,901             38,329  
Thomas E. Laird
                             
John M. Tassillo
                45,013             909,994  
 
 
(1) The Summary Compensation Table includes executive contributions under the captions “Salary” and “Non-Equity Incentive Plan Compensation,” as applicable.
 
(2) The Summary Compensation Table includes registrant contributions under the caption “All Other Compensation” in the Summary Compensation Table.
 
(3) The Summary Compensation Table does not include reported earnings, as they did not accrue at above-market or preferential rates.
 
Termination and Change in Control Benefits
 
Hudson City provides additional benefits, not included in the previous tables, to the named executive officers in the event of retirement, termination of employment in certain circumstances, or a change in control. Employment or change in control agreements set forth these termination and change in control benefits for each of the named executive officers.
 
Employment Agreements.   Pursuant to the terms of the employment agreements with each of Messrs. Hermance, Salamone and Tassillo, in the event that Hudson City Savings or Hudson City Bancorp discharges the executive without cause, Hudson City will provide the executive with the following severance benefits:
 
  •  continued group life, health, dental, accident and long-term disability insurance benefits for the remaining employment term;
 
  •  a lump sum payment equal to the estimated present value of the executive’s base salary and bonus for the remaining employment term at the highest annual salary rate paid during the three-year period prior to the date of termination;
 
  •  a lump sum supplemental pension makeup payment under the qualified and nonqualified defined benefit and defined contribution pension plans (including the employee stock ownership plan) computed as if the executive had continued employment for the remaining employment term; and


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  •  at the election of Hudson City Bancorp or Hudson City Savings, a lump sum payment in an amount equal to the spread of any options held by the executive or the value of any restricted stock held by the executive in exchange for such options or restricted stock, computed in each case as if the executive was fully vested at the time of payment.
 
The same severance benefits are payable if any of the executives resigns under any of the following circumstances:
 
  •  during the term within 90 days following a loss of title, office or membership on the board of directors; material reduction in duties, functions or responsibilities which is not cured within 30 days following notice;
 
  •  involuntary relocation of the executive’s principal place of employment to a location that is not the principal executive office of Hudson City Savings or that is over 25 miles in distance from Hudson City Savings’ principal office in Paramus, New Jersey and over 25 miles from the executive’s principal residence;
 
  •  reduction in base salary; change in the terms and conditions of any compensation or benefit program that alone, or in conjunction with other changes, has a material adverse effect on the aggregate value of the executive’s total compensation package (other than as a result of certain across-the-board reductions) which is not cured within 30 days following notice; or
 
  •  other material breach of any material term of the agreement by Hudson City Bancorp or Hudson City Savings which is not cured within 30 days following notice.
 
In addition, the employment agreements provide that, for 60 days after a change of control, each executive may resign for any reason or no reason and collect severance benefits as if he had resigned for good reason. In the event of such a resignation, severance benefits are calculated based on a remaining term of three years. Under applicable OTS regulations, Hudson City cannot experience, or enter into an agreement leading to, a change of control for at least three years following the second-step conversion and stock offering completed on June 7, 2005.
 
If Hudson City Bancorp or Hudson City Savings experiences a change in ownership, a change in effective ownership or control or a change in the ownership of a substantial portion of its assets as contemplated by section 280G of the Internal Revenue Code, a portion of any severance payments under the employment agreements might constitute an “excess parachute payment” under current federal tax laws. Federal tax laws impose a 20% excise tax, payable by the executive, on excess parachute payments. Under the employment agreements with Hudson City Bancorp, Hudson City Bancorp would reimburse the executive for the amount of this excise tax and would make an additional indemnification payment so that, after payment of the initial excise tax and all additional income and excise taxes imposed on the indemnification payment, the executive would retain approximately the same net after-tax amounts under the employment agreement that he would have retained if there was no 20% excise tax. The effect of this provision is that Hudson City Bancorp, rather than the executive, bears the financial cost of the excise tax. Neither Hudson City Savings nor Hudson City Bancorp could claim a federal income tax deduction for an excess parachute payment, excise tax reimbursement payment or gross-up payment.
 
In the event that any of the executives performs services for both Hudson City Savings and Hudson City Bancorp, the employment agreements apportion liability for the payment of severance benefits between the two entities in the same manner in which the entities apportion compensation. Notwithstanding the foregoing, Hudson City Bancorp is jointly and severally liable with Hudson City Savings for all obligations of Hudson City Savings under the employment agreement with Hudson City Savings.
 
The agreements allow Hudson City Savings or Hudson City Bancorp to condition payment of severance benefits on the executive’s resignation from all positions as an officer, director or committee member of Hudson City Savings, Hudson City Bancorp or any of its or their subsidiaries or affiliates.


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Change in Control Agreements.   Hudson City Bancorp and Hudson City Savings have jointly entered into two-year change in control agreements with Messrs. Kranz, Butkovich and Laird (as well as each of the other four executive officers). The term of these agreements is perpetual until the later of (a) one year after Hudson City Savings gives notice of non-extension and (b) two years following the most recent change of control or pending change of control that occurs within one year following notice of non-extension.
 
Generally, Hudson City Savings may terminate the employment of any officer covered by these agreements, with or without cause, at any time prior to a pending change of control without obligation for severance benefits. However, if Hudson City Bancorp or Hudson City Savings signs a merger or other business combination agreement, or if a third party makes a tender offer or initiates a proxy contest, Hudson City Savings cannot terminate an officer’s employment without cause without liability for severance benefits. The severance payments and benefits generally include:
 
  •  continued group life, health, dental, accident and long-term disability insurance benefits for two years;
 
  •  a lump sum payment equal to the estimated present value of the executive’s salary and bonus for two years at the highest annual salary rate paid during the three-year period immediately prior to the date of termination;
 
  •  a lump sum payment equal to the estimated present value of the executive’s long-term incentive compensation payments for two years;
 
  •  a lump sum supplemental pension makeup payment under the qualified and non-qualified defined benefit and defined contribution pension plans (including the employee stock ownership plan) computed as if the executive had continued employment for an additional two years; and
 
  •  at the election of Hudson City Savings, a lump sum payment in an amount equal to the spread of any options held by the executive or the value of any restricted stock held by the executive in exchange for such options or restricted shares, computed in each case as if the executive was fully vested at the time of payment.
 
Hudson City Savings must pay the same severance benefits if the officer resigns after a change of control under any of the following circumstances:
 
  •  loss of title, office or membership on the Board of Directors;
 
  •  material reduction in duties, functions or responsibilities which is not cured within 30 days following notice;
 
  •  involuntary relocation of his or her principal place of employment to a location that is not the principal executive office of Hudson City Savings or that is over 25 miles from Hudson City Savings’ principal office on the day before the change of control and over 25 miles from the officer’s principal residence;
 
  •  reduction in base salary; change in the terms and conditions of any compensation or benefit program that alone, or with other changes, has a material adverse effect on the aggregate value of his total compensation package (other than as a result of certain across-the-board reductions) which is not cured within 30 days following notice; or
 
  •  other material breach of any material term of the agreement which is not cured within 30 days following notice.
 
If Hudson City Savings or Hudson City Bancorp experiences a change in ownership, a change in effective ownership or control or a change in the ownership of a substantial portion of its assets as contemplated by section 280G of the Internal Revenue Code, a portion of any severance payments under the change in control agreements might constitute an “excess parachute payment” under current federal


49


 

tax laws. Any excess parachute payment would be subject to a federal excise tax payable by the officer and would be non-deductible by Hudson City Savings and Hudson City Bancorp for federal income tax purposes. The change in control agreements do not provide a tax indemnity.
 
The change in control agreements allow Hudson City Savings or Hudson City Bancorp to condition payment of severance benefits on the executive’s resignation from all positions as an officer, director or committee member of Hudson City Savings or any of its subsidiaries or affiliates. The agreements also allow Hudson City to condition payments on a release of claims against Hudson City Savings and its officers, directors, shareholders, subsidiaries and affiliates from liability for compensation or damages in connection with the executive’s employment and termination of employment except liability for severance benefits. Hudson City Bancorp guarantees all amounts payable under the change in control agreements.
 
The following table sets forth estimates of the amounts that would be payable to each of our executive officers in the event of their termination of employment on December 31, 2007 under designated circumstances. The table does not include amounts payable under broad-based termination benefits programs that are generally applicable to all salaried employees or vested, accrued benefits under qualified and non-qualified defined benefit or actuarial pension plans or qualified or non-qualified deferred compensation plans that are disclosed elsewhere in this proxy statement. See “Executive Officer Compensation — Post-Employment Compensation”. The estimates shown are highly dependent on a variety of factors, including but not limited to: the date of termination, the closing sales price of our common stock on such date, interest rates, federal, state and local tax rates and compensation history. Actual payments due could vary substantially from the estimates shown. In general, we consider each termination scenario listed below to be exclusive of all other scenarios and do not expect that any of our executive officers would be eligible to collect the benefits shown under more than one termination scenario.


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    Mr. Hermance     Mr. Salamone     Mr. Kranz     Mr. Butkovich     Mr. Laird     Mr. Tassillo  
 
Retirement
                                               
Retiree Health/Life Insurance(1)
                                $ 37,000  
Stock Option Vesting
                                  269,3048  
Restricted Stock vesting
                                  288,925  
Early Retirement
                                               
Early Retirement Subsidy(2)
  $ 302,901                       $ 1,002,124        
Retiree Health/Life Insurance(1)
    143,000                         79,000        
Stock Option Vesting
    718,144                         143,623        
Restricted Stock Vesting
    866,744                         144,463        
ESOP Restoration Benefit(11)
    15,576,386                                
Disability
                                               
Salary Continuation(3)
    675,000     $ 412,500     $ 200,000     $ 155,000       138,500       215,000  
Disability Retirement Subsidy(2)
    1,530,166       1,923,592       595,561       516,608       1,089,355        
Stock Option Vesting
    718,144       359,072       215,435       300,723       143,623       269,304  
Restricted Stock Vesting
    866,744       433,387       144,462       889,986       144,463       288,925  
ESOP Restoration Benefit(11)
    15,576,386                                
Death
                                               
Stock Option Vesting(4)
    718,144       359,072       215,435       300,723       143,623       269,304  
Restricted Stock Vesting(5)
    866,744       433,387       144,462       889,986       96,358       288,925  
ESOP Restoration Benefit(11)
    15,576,386                                
Discharge w/o Cause or Resignation w/Good Reason — no Change in Control                                                
Stock Option Vesting(4)
    718,144       3,320,972                         269,304  
Restricted Stock Vesting(5)
    866,744       433,387                         288,925  
Lump Sum Cash Payment(6)
    10,428,205       6,941,553                         2,576,622  
Other in-kind benefits(7)
    48,254       43,852                         39,000  
ESOP Restoration Benefit(11)
    15,576,386                                
Discharge w/o Cause or Resignation w/Good Reason — related to Change in Control                                                
Stock Option Vesting(4)
    7,198,144       3,320,972       807,635       850,876       736,823       269,304  
Restricted Stock Vesting(5)
    866,744       433,387       144,462       889,986       144,463       288,925  
Lump Sum Cash Payment(6)
    10,428,205       5,929,677       2,042,965       1,628,881       1,057,340       2,576,622  
Other in-kind benefits(7)
    48,254       43,040       28,221       26,848       28,030       39,0002  
SERP Subsidy(8)
    1,452,418       1,985,266       811,648       582,650       260,337        
ESOP Restoration Plan Benefit(9)
    6,895,613       2,580,849       354,413       120,238       94,184        
280G Tax Indemnification Payment(10)
    5,078,872       4,365,535                          
Change in Control — No Termination of Employment
                                               
Stock Option Vesting(4)
    718,144       359,072       215,435       300,723       143,623       269,304  
Restricted Stock Vesting(5)
    866,744       433,387       144,462       889,986             288,9258  
SERP Subsidy(8)
    1,452,418       1,985,266       811,648       582,650       260,337        
ESOP Restoration Plan Benefit(9)
    6,895,613       2,580,849       354,413       120,238       94,184        
280G Tax Indemnification Payment(10)
          1,677,669                          
 
(Notes on following page)


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(1) Individuals are entitled to post-retirement medical benefits upon normal or early retirement after attainment of ten years of continuous service. Individuals are responsible for 5% of the coverage cost for each year that the year in which they retire precedes the year in which they would attain age 65, at which point they are provided at no cost to the participant. At December 31, 2007, only Messrs. Hermance, Laird and Tassillo were eligible for retiree insurance benefits, because only they were eligible for normal or early retirement. The reported figure reflects the estimated present value of the future premium cost of such benefits for the named individual, calculated on the basis of the assumptions used by Hudson City Bancorp in measuring its liability for such benefits for financial statement purposes under Statement of Financial Account Standards No. 106 (“FAS 106”). For more information concerning the assumptions used for these calculations, please refer to note 10(a) to the audited financial statements included in the 2007 Annual Report on Form 10-K.
 
(2) Participants are entitled to a reduced early retirement allowance under the Employees’ Retirement Plan and Benefit Maintenance Plan upon termination of employment after age 60 with at least five years of credited service or at least 30 years of credited service regardless of age. The plans calculate the early retirement benefit under the same formula as the normal retirement benefit, but base the early retirement benefit on compensation and credited service as of the date of termination of employment, and reduce the benefit by 5/12 of 1% for each of the first 120 months that payment commencement precedes the normal retirement date. A participant who has completed at least 30 years of service and wants to begin payment before age 55 is entitled to the actuarial equivalent to the benefit payable at age 55.
 
The Employees’ Retirement Plan and Benefit Maintenance Plan entitle participants to a disability retirement allowance upon the requisite certification of disability with at least ten years of credited service (at least five of which are with Hudson City Savings). The plans calculate the disability retirement benefit under the same formula as the normal retirement benefit, but do not reduce the benefit for early receipt. Payment of the disability retirement allowance will commence at least 30, but no later than 90, days after the retirement committee has approved an executive’s application. The figure shown reflects the present value of a reduced pension payable to the named individual commencing on July 1, 2008 (the end of an assumed 6-month salary continuation period) and continuing until age 65 with no mortality assumption and a discount rate of 4.53% per annum.
 
(3) The employment agreements in effect for Messrs. Hermance, Salamone and Tassillo provide for salary continuation payments following termination due to disability for the remaining contract term or until group long-term disability benefits begin. The change in control agreements in effect for Messrs. Kranz, Butkovich and Laird provide for salary continuation payments following termination due to disability following a change of control or pending change of control. The figures shown assume payment of full salary for 180 days, equal to the waiting period for benefits under our group long-term disability program, without discount for present value.
 
(4) All stock options granted under our 2000 Stock Option Plan provide for full vesting upon death, disability, retirement, or change in control. Stock options granted under our 2006 Stock Incentive Plan provide for full vesting upon death or disability of those options scheduled to vest within 6 months following death as well as full vesting in the event of discharge without cause or resignation with good reason following a change in control. The figures shown reflect the in-the-money value of those stock options that would accelerate, calculated based on the positive difference between the option exercise price and $15.02, which is the closing sales price for a share of our common stock on December 31, 2007.
 
(5) All of the shares of restricted stock granted under our 2000 Recognition and Retention Plan provide for full vesting upon death, disability, retirement or change in control. The figures shown reflect the value of those restricted stock awards that would accelerate, calculated based on a per share value of $15.02, which is the closing sales price for a share of our common stock on December 31, 2007.
 
(6) The employment agreements in effect for Messrs. Hermance, Salamone and Tassillo provide for a lump sum cash payment equal to the present value of the salary payments, estimated cash incentives (based on the prior three-years’ cash incentives, as a percentage of salary), and additional qualified and non-
 
(Notes continued on following page)


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qualified defined benefit and defined contribution plan benefits that would be earned during the remaining contract term. The figures shown for Messrs. Hermance, Salamone and Tassillo reflect an assumed remaining contract term of three, three and two and one-half years, respectively. The change in control agreements in effect for Messrs. Butkovich, Laird and Kranz provide for a lump sum cash payment equal to the present value of the salary payments, estimated cash incentives (based on the prior three-years’ cash incentives, as a percentage of salary), and additional qualified and non-qualified defined benefit and defined contribution plan benefits that would be earned during the two-year period following certain terminations of employment. All figures assume a discount rate of 4.97%.
 
(7) The employment agreements in effect for Messrs. Hermance, Salamone and Tassillo and the change in control agreements in effect for Messrs. Butkovich, Laird and Kranz provide for continued health, life and other insurance benefits for the remaining contract term, with an offset for benefits provided by a subsequent employer. The change in control agreements in effect for Messrs. Butkovich, Laird and Kranz provide for continued health, life and other insurance benefits for the two-year period following certain terminations of employment, with an offset for benefits provided by a subsequent employer. The figures shown represent the present value of continued insurance benefits for a fixed period of three years (for the employment contracts) and two years (for the change in control agreements) and assume no offset for benefits provided by a subsequent employer, calculated on the basis a discount rate of 4.97%.
 
(8) In the event of termination of employment following a change in control, our Benefit Maintenance Plan provides for supplemental pension benefits beginning immediately without reduction for early payment. The figures shown represent the present value of an un-reduced pension under our qualified and non-qualified defied benefit plans payable beginning January 1, 2008 and ending at the later of age 65 or normal current age. For the mortality, discount rate and other assumptions used for this purpose, please refer to note 10(a) to the audited financial statements included in the 2007 Annual Report on Form 10-K.
 
(9) In the event of a change in control, our tax-qualified Employee Stock Ownership Plan would sell the shares of our common stock held in a suspense account for future allocation to employees. The plan would then apply a portion of the proceeds from this sale to repay the outstanding balance on the loan used to purchase the unallocated shares. The plan would then distribute the remaining unallocated shares (or the proceeds from their sale) on a pro-rata basis among the accounts of plan participants. We estimate this distribution to be approximately $43.55 per allocated share, based on 6,844,422 allocated and undistributed shares, 35,600,831 unallocated shares, an outstanding loan balance of $236.629 million and stock price of $15.02 per share, which is the closing sales price for a share on the NASDAQ Global Market on December 31, 2007. The ESOP Restoration Plan would apply a corresponding earnings credit to accumulated share equivalents provided under that plan. The figures shown represent an estimated earnings credit of $43.55 per share equivalent credited to each of the named individuals other than Mr. Tassillo. Pursuant to a negotiated arrangement, Mr. Tassillo no longer participates in this benefit.
 
(10) The employment agreements in effect for Messrs. Hermance, Salamone and Tassillo provide that Hudson City Bancorp will indemnify them, on a net after-tax basis, against the effects of a 20% federal excise tax on “excess parachute payments.” Excess parachute payments are payments that are contingent on a change in control, where the aggregate value of such payments equals or exceeds three times the individual’s average five-year W-2 earnings for the period of five consecutive calendar years ending prior to the date of the change in control. The figure shown reflects an estimate of the indemnification payment that would be due to each named individual.
 
(11) This amount is payable only if retirement precedes the occurrence of a change in control.


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Director Compensation
 
Cash Compensation.   Non-employee directors received the following cash compensation for service on the Boards of Directors of Hudson City Bancorp, Inc. and Hudson City Savings Bank and the respective Board committees during 2007:
 
         
Non-Employee Board Member Compensation
       
Annual Retainer
  $ 50,000  
Meeting Fee
    1,000  
Lead Independent Director Compensation
       
Additional Annual Retainer
    35,000  
Non-Employee Committee Member Compensation
       
Meeting Fee
    1,000  
Committee Chair Additional Annual Retainers
       
Audit Committee
    15,000  
Compensation Committee
    10,000  
Nominating & Governance Committee
    5,000  
 
The lead independent director does not receive meeting fees for attending committee meetings or attending or presiding at executive sessions of the independent directors.
 
Stock Options.   On July 18, 2006, the Compensation Committee authorized the grant to each non-employee director of a non-qualified stock option to purchase 50,000 shares of our common Stock pursuant to the 2006 Stock Incentive Plan. Hudson City granted the options on July 21, 2006, the third trading day after the release of the Company’s financial results for the quarter ended June 30, 2006, to each individual who was a non-employee director on such date. The options have an exercise price per share of $12.76, equal to the closing sales price of our common stock on the NASDAQ Global Market on such date. The options will vest and become exercisable on the first anniversary of the grant date. A non-employee director will generally forfeit these options in the event that he or she terminates service before such date. In the event of termination of service due to death or disability (as defined in the 2006 Stock Incentive Plan) within six months prior to the first anniversary of the grant date, the options will vest on the date of termination. In the event of a change in control (as defined in the 2006 Stock Incentive Plan) before the first anniversary of the grant date, the options will vest on the date of the change in control. The options expire on the tenth anniversary of the grant date or, if earlier, immediately upon termination of service for cause (as defined in the 2006 Stock Incentive Plan), one year after termination due to death, disability (as defined in the 2006 Stock Incentive Plan) or retirement (as defined in the 2006 Stock Incentive Plan), and three months after voluntary or involuntary termination for any other reason.
 
On April 27, 2007, the Compensation Committee granted to each non-employee director an option to purchase 50,000 shares of our common Stock at an exercise price of $13.35 per share. These options have a ten-year term and vest on April 27, 2008. The option term is subject to earlier expiration and vesting is subject to acceleration in the same manner described above for the July 21, 2006 grants.
 
Outside Directors Consultation Plan.   The Outside Directors Consultation Plan provides continued compensation following termination of service as a director to eligible outside directors who agree to serve as consultants to Hudson City Savings. A director is eligible to participate if he or she became a director before January 1, 2005 and retires after attaining age 65 and completing 10 years of service as an outside director. The monthly consulting fee is equal to the sum of (a)  5 / 12 of 1% of the annual board retainer fee in effect at the date of termination of service plus (b) 5% of the fee for attendance at a meeting of the board of directors in effect at the date of termination of service as a director, multiplied


54


 

by the number of full years of service as an outside director, to a maximum of 20 years of service. A director’s consulting arrangement will continue for 120 months or until an earlier date when the director withdraws from the performance of consulting services. If a change of control of Hudson City Bancorp or Hudson City Savings occurs, this plan will settle all of its obligations by lump sum payment to all participants and will then terminate. In computing these obligations, each eligible non-employee director is presumed to have attained age 65 and completed 20 years of service. This plan has been suspended for individuals who become non-employee directors after December 31, 2004.
 
Charitable Matching Contribution Program.   Each of our directors is also eligible, under our charitable matching contribution program, to direct us to make charitable gifts in limited dollar amounts to the tax-exempt organizations of their choice. We offer this program to encourage philanthropy among our directors and to capture any benefit to our corporate reputation that may result from our directors’ philanthropic activity.
 
The following table sets forth information regarding compensation earned by the non-employee directors of Hudson City Bancorp, Inc. during the last fiscal year.
 
                                                 
                      Change in
             
                      Pension Value
             
                      and Nonqualified
             
    Fees Earned or
    Stock
    Option
    Deferred
    All Other
       
    Paid in Cash
    Awards
    Awards
    Compensation
    Compensation
    Total
 
Name
  ($)(1)     ($)(2)     ($)(3)     Earnings(4)     ($)(5)     ($)  
 
Michael W. Azzara
  $ 82,000           $ 129,250           $ 17,600     $ 228,850  
William G. Bardel
    84,000             129,250             30,000       243,250  
Scott A. Belair
    81,000             129,250             30,000       240,250  
Victoria H. Bruni
    72,000             129,250             5,500       206,750  
William J. Cosgrove
    83,000             129,250             29,425       241,675  
Donald O. Quest, M.D. 
    97,000             129,250             30,000       256,250  
Joseph G. Sponholz
    68,000             129,250             30,000       227,250  
 
 
(1) Includes retainer payments, meeting fees, and committee and/or chairmanship fees earned during the fiscal year, whether the director received payment of such fees or elected to defer them.
 
(2) Represents the compensation cost recognized for the fiscal year in connection with restricted stock of Hudson City Bancorp granted to the director regardless of the year in which granted, calculated in accordance with FAS 123R for financial statement purposes. For more information concerning the assumptions used for these calculations, please refer to note 10(c) to the audited financial statements, included in the 2007 Annual Report on Form 10-K This amount does not reflect the value of dividends paid on unvested restricted stock.
 
(3) Represents the compensation cost recognized for the fiscal year for options to purchase shares of Hudson City Bancorp common stock outstanding to the director, regardless of the year in which granted, calculated in accordance with FAS 123R for financial statement purposes. We made these calculations using the Black-Scholes method and the assumptions set forth for retention stock options vesting in one year in footnote 5 to the Grants of Plan-Based Awards Table — FYE 2007, set forth elsewhere in this Proxy Statement. The grant date fair value of the option awards to directors in 2007 was $2.10 per share. The total number of options outstanding to each non-employee director at December 31, 2007 was: Mr. Azzara, 329,720; Mr. Bardel, 306,480; Mr. Belair, 228,240; Ms. Bruni, 180,150; Mr. Cosgrove, 100,000; Dr. Quest, 243,960; and Mr. Sponholz, 484,720.
 
(4) Does not include the value of compensation that may become payable under the Outside Directors Consultation Plan following termination of service as a director, as these amounts are only payable in consideration for a written agreement to provide post-termination consulting services. Certain directors participate in a voluntary deferred compensation plan under which they may invest deferred amounts in phantom
 
 
(Notes continued on following page)


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shares of our common stock or in a phantom account to which we credit interest quarterly based on the highest rate of interest paid to depositors by Hudson City Savings for the quarter. Neither of these investment options produces above-market earnings reportable in this table. This plan has been suspended for individuals who become non-employee directors after December 31, 2004.
 
(5) The figure for each named individual represents the amount of cash contributions made by Hudson City Bancorp during the fiscal year to charities that the named individual designates pursuant to Hudson City Bancorp’s charitable contribution matching program.
 
OTHER MATTERS
 
As of the date of this proxy statement, the Board of Directors of Hudson City Bancorp does not know of any other matters to be brought before the stockholders at the annual meeting. If, however, any other matters not known are properly brought before the meeting, the persons named in the accompanying proxy card will vote the shares represented by all properly executed proxies on such matters in such manner as shall be determined by a majority of the Board of Directors.
 
ADDITIONAL INFORMATION
 
Notice of Business to Be Conducted at Annual Meeting
 
The Bylaws of Hudson City Bancorp provide for an advance notice procedure for a stockholder to properly bring business before an annual meeting or to nominate any person for election to our Board of Directors. The stockholder must be a stockholder of record and have given timely notice thereof in writing to our Secretary. To be timely, a stockholder’s notice must be delivered to or received by the Secretary not later than the following dates: (i) with respect to an Annual Meeting of Stockholders, ninety (90) days in advance of the anniversary of the previous year’s annual meeting if the current year’s meeting is to be held within thirty (30) days prior to, on the anniversary date of, or after the anniversary of the previous year’s annual meeting; and (ii) with respect to an Annual Meeting of Stockholders held at a time other than within the time periods set forth in the immediately preceding clause (i), the close of business on the tenth (10th) day following the date on which notice of such meeting is first given to stockholders. Notice shall be deemed to first be given to stockholders when disclosure of such date of the meeting of stockholders is first made in a press release reported to Dow Jones News Services, Associated Press or comparable national news service, or in a document publicly filed by Hudson City Bancorp with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. A stockholder’s notice to the Secretary shall set forth such information as required by the Bylaws of Hudson City Bancorp. Nothing in this paragraph shall be deemed to require Hudson City Bancorp to include in its proxy statement and proxy card relating to an annual meeting any stockholder proposal or nomination which does not meet all of the requirements for inclusion established by the Securities and Exchange Commission in effect at the time such proposal or nomination is received. See “Date For Submission of Stockholder Proposals.”
 
Date for Submission of Stockholder Proposals
 
Any stockholder proposal intended for inclusion in our proxy statement and proxy card relating to our 2009 Annual Meeting of Stockholders must be received by us by November 19, 2008, pursuant to the proxy solicitation regulations of the Securities and Exchange Commission. Nothing in this paragraph shall be deemed to require Hudson City Bancorp to include in its proxy statement and proxy card for such meeting any stockholder proposal which does not meet the requirements of the Securities and Exchange Commission in effect at the time. Any such proposal will be subject to 17 C.F.R. sec.240.14a-8 of the rules and regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.


56


 

 
Annual Report to Stockholders
 
A copy of the 2007 Annual Report to Stockholders, including the consolidated financial statements prepared in conformity with U.S. generally accepted accounting principles, for the fiscal year ended December 31, 2007 accompanies this proxy statement. The consolidated financial statements have been audited by KPMG LLP, whose report appears in the 2007 Annual Report. The 2007 Annual Report to Stockholders includes a copy of Hudson City Bancorp’s Annual Report on Form 10-K (without exhibits) filed with the Securities and Exchange Commission. Stockholders may obtain, free of charge, an additional copy of the Annual Report on Form 10-K by writing to Susan K. Munhall, Hudson City Bancorp, Inc., West 80 Century Road, Paramus, New Jersey 07652 or by calling (201) 967-8290. The Annual Report on Form 10-K is also available on Hudson City Bancorp’s website at www.hcbk.com and on the Securities and Exchange Commission’s website at www.sec.gov .
 
By Order of the Board of Directors,
 
VERONICA OLSZEWSKI SIG
Veronica Olszewski
Senior Vice President, Treasurer
and Corporate Secretary
 
Paramus, New Jersey
March 20, 2008
 
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING
PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED OR, IF YOU PREFER,
VOTE BY USING THE TELEPHONE OR INTERNET.


57


 

REVOCABLE PROXY
HUDSON CITY BANCORP, INC.
This Proxy is solicited on behalf of the Board of Directors of
Hudson City Bancorp, Inc.
for the Annual Meeting of Stockholders to be held on Tuesday, April 22, 2008
     The undersigned stockholder of Hudson City Bancorp, Inc. hereby appoints William J. Cosgrove, Donald O. Quest, M.D. and Joseph G. Sponholz, or any of them, with full powers of substitution, to attend and act as proxy for the undersigned and to vote all shares of common stock of Hudson City Bancorp, Inc., which the undersigned may be entitled to vote at the annual meeting of stockholders to be held at the Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New Jersey 07656, on Tuesday, April 22, 2008 at 9:30 a.m., Eastern Time, and at any adjournment or postponement thereof.
      THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF YOU DO NOT GIVE US ANY DIRECTION, THIS PROXY WILL BE VOTED FOR THE PROPOSALS IN ITEMS 1 AND 2.
      PLEASE PROMPTLY COMPLETE, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR USE THE INTERNET OR TELEPHONE INSTRUCTIONS ON THE REVERSE SIDE.
(Continued on Reverse Side)

     
Address Change/Comments (Mark the corresponding box on the reverse side)
 
 
   
 
   
 
   
 
5 Detach here from proxy voting card. 5

 


 

         
 
  Mark Here
for Address
Change or
Comments
  o
    PLEASE SEE REVERSE SIDE

             
        FOR   WITHHOLD
        all nominees   for all nominees
        (Except as otherwise indicated)    
1.
  Election of three Directors for terms of three years each.   o   o
Nominees:
01 Ronald E. Hermance, Jr.
02 William G. Bardel
03 Scott A. Belair
Instruction: TO WITHHOLD AUTHORITY to vote for any individual nominee, write that nominee’s name in the space provided:
 
                 
 
      FOR   AGAINST   ABSTAIN
2.
  Ratification of the appointment of KPMG LLP as the Company’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2008.   o   o   o
 
          I will attend the annual
meeting
   
(Please mark box if you plan to attend the annual meeting.) ( Important : If your shares are not registered in your name, you will need additional documentation to attend the annual meeting.)   o    
The proxies are authorized to vote upon such other business as may properly come before the annual meeting and any adjournment or postponement thereof in such manner as shall be determined by a majority of the Board of Directors.
The undersigned hereby acknowledges receipt of the Notice of the 2008 Annual Meeting of Stockholders and the Proxy Statement, dated March 20, 2008, for the annual meeting.


(CROP MARK)
                 
Signature(s) x       Dated:       , 2008
                 
Please sign exactly as your name appears on this proxy. Joint Owners should each sign personally. If signing as an attorney, executor, administrator, trustee or guardian, please include your full title. Corporate or partnership proxies should be signed by an authorized officer.
 
5 FOLD AND DETACH HERE 5
 
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 EST on April 21, 2008.
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 cards.
                             
                             
 
INTERNET
http://www.proxyvoting.com/hcbk
          TELEPHONE
1-866-540-5760
          MAIL  
 
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
    OR     Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.     OR     Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.  
                             
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.

 

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