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.
)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
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[X]
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-2.
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HUDSON CITY BANCORP, INC.
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement, if
other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ]
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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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 Bancorps 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 brokers 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,
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 Bancorps 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
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
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Page
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GENERAL INFORMATION
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1
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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4
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PROPOSAL 1 ELECTION OF DIRECTORS
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8
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CERTAIN TRANSACTIONS WITH MEMBERS OF OUR BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS
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12
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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13
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PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
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14
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AUDIT COMMITTEE APPROVAL
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14
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AUDIT COMMITTEE REPORT
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CORPORATE GOVERNANCE
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INDEPENDENCE OF DIRECTORS
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17
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LEAD INDEPENDENT DIRECTOR
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17
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CONTINUING CORPORATE GOVERNANCE EFFORTS
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17
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STOCKHOLDER COMMUNICATIONS WITH THE BOARD
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18
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MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
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18
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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20
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COMPENSATION COMMITTEE REPORT
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20
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COMPENSATION DISCUSSION AND ANALYSIS
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21
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OTHER MATTERS
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56
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ADDITIONAL INFORMATION
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56
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i
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 Bancorps
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 Bancorps 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:
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(1)
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By
Internet
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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.
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(2)
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By
telephone
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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.
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(3)
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By
mail
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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.
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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.
2
Revocability of
Proxies
You may revoke your grant of a proxy at any time before it is
voted by:
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filing a written revocation of the proxy with our secretary;
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submitting a signed proxy card bearing a later date; or
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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.
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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 Bancorps website at
www.hcbk.com.
3
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.
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Amount and Nature of
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Name and Address of Beneficial
Owner
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Beneficial Ownership
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Percent(1)
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Employee Stock Ownership Plan Trust
of Hudson City Savings Bank
West 80 Century Road,
Paramus, New Jersey 07652(2)
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42,445,255
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8.18
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%
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Human Resources Committee of Hudson
City Savings Bank
West 80 Century Road,
Paramus, New Jersey 07652(3)
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46,744,426
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9.01
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Capital Research Global Investors
333 South Hope Street,
Los Angeles, CA 90071(4)
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43,645,000
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8.41
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Franklin Mutual Advisers, LLC
101 John F. Kennedy Parkway,
Short Hills, NJ 07078(5)
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28,380,012
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5.47
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(1)
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Based on the 518,847,895 total
outstanding shares of Hudson City Bancorp as of
February 29, 2008.
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(2)
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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.
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(3)
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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.
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(Notes
continued on following page)
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(4)
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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.
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(5)
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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.
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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 Bancorps 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.
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Amount and Nature
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Percent of
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Position with
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of Beneficial Ownership
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Common Stock
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Name
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the Company
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(1)(2)(3)(4)
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Outstanding (5)
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Ronald E. Hermance, Jr.
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Director, Chairman, President and Chief Executive Officer
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6,347,741
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(6)
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1.21
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%
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Denis J. Salamone
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Director, Senior Executive Vice President and Chief Operating
Officer
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2,188,936
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(7)
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*
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Michael W. Azzara
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Director
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435,518
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*
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William G. Bardel
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Director
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369,379
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(8)
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*
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Scott A. Belair
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Director
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345,825
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*
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Victoria H. Bruni
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Director
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421,333
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*
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William J. Cosgrove
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Director
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351,960
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(9)
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*
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Donald O. Quest, M.D.
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Director
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688,775
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(10)
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*
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Joseph G. Sponholz
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Director
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653,342
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(11)
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*
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James C. Kranz
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Chief Financial Officer, Executive Vice President and Investment
Officer of Hudson City Savings
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658,260
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(12)
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*
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Ronald J. Butkovich
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Senior Vice President of Hudson City Savings
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526,179
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(13)
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*
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Thomas E. Laird
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Executive Vice President
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822,658
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(14)
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*
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John M. Tassillo
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Executive Vice President (through June 8, 2007)
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786,244
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(15)
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*
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All directors and executive officers as a group (17 persons)
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52,387,781
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(16)
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9.96
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(Notes on following
page)
5
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(1)
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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
individuals 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 Bancorps 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.
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(2)
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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.
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(3)
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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.
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(4)
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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.
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(5)
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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.
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(6)
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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.
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(7)
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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.
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(8)
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Includes 112,889 shares held
in a brokerage account with margin provisions.
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(9)
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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.
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(10)
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Includes 186,934 shares as to
which Dr. Quest may be deemed to share voting and
investment power.
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(11)
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Includes 6,412 shares as to
which Mr. Sponholz may be deemed to share voting and
investment power.
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(12)
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Includes 60,537 shares as to
which Mr. Kranz may be deemed to share voting power.
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(Notes continued on following
page)
6
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(13)
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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.
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(14)
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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.
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(15)
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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.
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(16)
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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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7
ELECTION
OF DIRECTORS
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.
8
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.
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Term
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Name
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Age(1)
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Director Since
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Expires
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Positions Held
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Nominees
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Ronald E. Hermance, Jr.
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60
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1988
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2008
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Director, Chairman, President and Chief Executive Officer
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William G. Bardel
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68
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2003
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2008
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Director
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Scott A. Belair
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60
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2004
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2008
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Director
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Continuing
Directors
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Denis J. Salamone
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55
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2001
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2009
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Director, Senior Executive Vice President and Chief Operating
Officer
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Michael W. Azzara
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61
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2002
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2009
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Director
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Victoria H. Bruni
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66
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1996
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2009
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Director
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William J. Cosgrove
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75
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1995
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2010
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Director
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Donald O. Quest, M.D.
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68
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1983
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2010
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Director
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Joseph G. Sponholz
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64
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2002
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2010
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Director
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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,
9
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
10
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 Chases
Executive Committee, Mr. Sponholz spearheaded the
companys 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 Associations Educational
Foundation. Mr. Corridon also serves on the board of
WOODLEA/ PATH Advisory Council of Childrens 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
11
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. Peters 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. Peters 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.
12
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
Bancorps 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.
13
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 Bancorps
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
Companys 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 Bancorps 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
Companys 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.
14
Audit Committee
Report
Under the guidance of a written charter adopted by the Board of
Directors, the Audit Committee is primarily responsible for:
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Monitoring the integrity of Hudson City Bancorps financial
reporting process and systems of internal controls regarding
finance, accounting, legal compliance and public disclosure of
financial information;
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Monitoring the independence and performance of Hudson City
Bancorps independent registered public accounting firm and
internal auditing department; and
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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.
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In fulfilling its responsibilities, the Audit Committee, among
other things:
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Reviews with management and the independent registered public
accounting firm Hudson City Bancorps 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;
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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
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Working with management, the independent registered public
accounting firm, and the internal auditors of Hudson City
Bancorp, evaluates the integrity of Hudson City Bancorps
financial reporting processes and controls.
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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 Bancorps
management. The Audit Committee has discussed with KPMG LLP
Hudson City Bancorps 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):
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The independent registered public accounting firms
responsibility under Generally Accepted Auditing Standards
adopted in the United States;
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Any significant accounting policies either newly adopted or
modified;
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Any significant management judgments and estimates included in
the underlying financial statements;
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Any significant audit adjustments proposed in their examination;
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Any other information in documents containing the audited
financial statements;
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Any disagreements with management;
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Any major issues discussed with management and other independent
audit and accounting firms;
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Any major issues discussed with management prior to retention as
independent registered public accounting firm;
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15
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Any difficulties encountered in performing the
examination; and
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Quality of accounting principles.
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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 Bancorps 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 Bancorps 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.
16
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 Bancorps 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 Bancorps 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 Bancorps
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 Bancorps 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
17
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 Bancorps 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 years 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 Markets listing standards. The Nominating
and Governance Committee acts under a written charter adopted by
Hudson City Bancorps Board of Directors, a copy of which
is available on Hudson City Bancorps 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 Bancorps 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 Bancorps 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 Bancorps 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 Bancorps Bylaws and
described herein under Notice of Business to be Conducted
at Annual Meeting.
Hudson City Bancorps 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
18
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 Bancorps
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 Markets listing standards.
Mr. Bardel serves as Chairman of the Audit Committee and
Hudson City Bancorps 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 Bancorps Board of Directors, a copy of which
is available on Hudson City Bancorps website at
www.hcbk.com.
The Audit Committee is primarily
responsible for: monitoring the integrity of Hudson City
Bancorps 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
Bancorps 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
Bancorps 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
Markets listing standards. The board has delegated
authority to the Compensation Committee to:
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grant incentive compensation under our shareholder-approved
Executive Officer Annual Incentive Plan;
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grant equity compensation under our shareholder-approved 2006
Stock Incentive Plan;
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set the terms and conditions of those grants and to administer
those plans;
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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.
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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
Citys 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
20
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:
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the timing and occurrence or non-occurrence of events may be
subject to circumstances beyond our control;
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there may be increases in competitive pressure among the
financial institutions or from non-financial institutions;
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changes in the interest rate environment may reduce interest
margins or affect the value of our investments;
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changes in deposit flows, loan demand or real estate values may
adversely affect our business;
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changes in accounting principles, policies or guidelines may
cause our financial condition to be perceived differently;
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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;
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legislative or regulatory changes may adversely affect our
business;
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applicable technological changes may be more difficult or
expensive than we anticipate;
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success or consummation of new business initiatives may be more
difficult or expensive than we anticipate;
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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;
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the risks associated with continued diversification of assets
and adverse changes to credit quality;
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difficulties associated with achieving expected future financial
results;
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the risk of an economic slowdown that would adversely affect
credit quality and loan originations; and
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changes in prevailing compensation practices.
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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.
21
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:
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Name
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Title
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Ronald E. Hermance, Jr.
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Chairman of the Board, President and Chief Executive Officer
(Principal Executive Officer)
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Denis J. Salamone
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Senior Executive Vice President and Chief Operating Officer
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James C. Kranz
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Executive Vice President and Chief Financial Officer (Principal
Financial Officer)
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Ronald J. Butkovich
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Senior Vice President
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Thomas E. Laird
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Executive Vice President
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John M. Tassillo
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Executive Vice President (through June 8, 2007)
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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:
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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,
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motivate behavior in furtherance of these goals and
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reward favorable results.
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The factors that influence the design of our executive
compensation program include the following:
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We operate in a highly regulated industry. We value
industry-specific experience and a track record of effective
interaction with our primary regulators.
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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.
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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.
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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.
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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.
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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).
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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 officers total
annual compensation opportunities. Long-term incentive, with
values derived from stock price appreciation, make up a majority
of the performance-based compensation opportunities.
23
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:
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Element
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Basis of Determination
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Selected Contributing Factors
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Base Salary
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Compensation Committee discretion
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Informed but not dictated by peer group practices
Tenure in office
Individual long-term performance
Local cost of living factors
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Annual Cash Incentive
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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
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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
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Stock Incentives
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Compensation Committee discretion
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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
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Retirement Benefits
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Qualified plans formula applicable to all participating employees
Non-qualified plans participation at Compensation Committees discretion; benefits are formula-based for all participants
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N/A
Informed but not dictated by peer group practices
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Fringe Benefits
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Group insurance and other broad-based benefits
formula applicable to all participating employees
Other Compensation Committee discretion
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N/A
Informed but not dictated by peer group practices
Internal custom and practice
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Termination Benefits
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Compensation Committee discretion
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Informed but not dictated by peer group practices
Benefit demands of external management recruits
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Total Pay Package
and Pay Mix
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Compensation Committee discretion
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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
consultants report. These decisions reflect a combination
of the individuals 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:
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Resulting Annual
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Name
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% Increase
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$ Increase
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Base Salary Rate
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Ronald E. Hermance, Jr.
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12.5
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%
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$
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150,000
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$
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1,350,000
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Denis J. Salamone
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13.8
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100,000
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825,000
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James C. Kranz
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14.3
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50,200
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400,200
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Ronald J. Butkovich
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8.0
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22,960
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310,000
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Thomas E. Laird
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26.4
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73,000
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350,000
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John M. Tassillo
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7.0
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30,000
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460,000
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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:
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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,
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balance sheet growth, dividend payments and stock repurchases,
in light of prevailing business conditions and opportunities, and
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expense discipline and the preservation of and growth in annual
net income.
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For 2007, each of our named executive officers had the
opportunity to earn an incentive payment once the Companys
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 Committees
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 executives incentive payment and the
Compensation Committees 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.
25
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 Committees subjective
assessment of the individual performance factors described
above, and, in the case of executives other than the Chief
Executive Officer, the Chief Executive Officers subjective
assessment of their individual performance.
26
Mr. Hermances incentive payout for 2007 reflects the
Compensation Committees 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. Hermances 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
Companys common stock in comparison to the stocks of other
publicly-traded mortgage lenders and the linkage between this
performance and Mr. Hermances success in
differentiating the Companys business model from the
business models of other mortgage lenders in the eyes of
analysts and investors through effective investor relations
efforts.
Mr. Salamones 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 Companys senior management
team as part of the evolving management development and
succession plan. It also reflects Mr. Salamones
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. Lairds 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. Butkovichs 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. Tassillos 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-
27
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 awards vesting
period and included each years amortization amount as part
of that years 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
options 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.
28
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
executives retirement, we should experience a change in
control that would result in a mandatory prepayment of our
tax-qualified employee stock ownership plans 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.
29
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 executives 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;
30
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. Tassillos employment
agreement upon his resignation as an executive officer;
Mr. Tassillos 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 Committees 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
31
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
individuals base amount, they constitute
excess parachute payments to the extent they exceed
one times the individuals 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 elements 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 directors service. In
addition, we expect each officer to own an amount of our common
stock equal to three times the senior executive officers
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.
32
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)
33
|
|
|
(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 individuals 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 individuals accrued benefit under
each such plan in accordance with Statement of Financial
Accounting Standards 87 (FAS 87) as of the
plans measurement date in such fiscal year to the present
value of the individuals accrued benefit as of the
plans 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)
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
35
City Savings of the executives 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. Tassillos 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
plans 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
officers 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.
36
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 plans existence.
37
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)
38
|
|
|
(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 Committees 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
|
|
39
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)
40
|
|
|
(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
|
|
|
|
|
|
42
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
Employees 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
employees 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 plans
measurement date during 2007 under FAS 87 for purposes of
Hudson City Bancorps 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.
|
44
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 participants 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 participants 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 participants
termination of employment, (ii) the participants
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 Bancorps 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 Plans 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 Bancorps 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
executives 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
|
47
|
|
|
|
|
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 executives 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
executives 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 executives 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
executives 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.
48
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 officers 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
executives 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
executives 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 officers
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 executives 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 executives 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.
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
51
|
|
|
(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 executives
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)
52
|
|
|
|
|
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 individuals 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.
|
53
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 Companys 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 directors
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)
55
|
|
|
|
|
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
Bancorps 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 stockholders 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 years annual meeting if the
current years meeting is to be held within thirty
(30) days prior to, on the anniversary date of, or after
the anniversary of the previous years 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
stockholders 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 Bancorps 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 Bancorps website at
www.hcbk.com
and on the Securities and Exchange
Commissions website at
www.sec.gov
.
By Order of the Board of Directors,
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)
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Address Change/Comments
(Mark the corresponding box on the reverse side)
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5
Detach here from proxy voting card.
5
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Mark Here
for Address
Change or
Comments
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o
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PLEASE SEE REVERSE SIDE
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FOR
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WITHHOLD
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all nominees
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for all nominees
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(Except as otherwise indicated)
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1.
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Election of three Directors for
terms of three years each.
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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 nominees name in the space provided:
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FOR
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AGAINST
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ABSTAIN
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2.
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Ratification of the
appointment of KPMG LLP as
the Companys Independent
Registered Public
Accounting Firm for the
fiscal year ending
December 31, 2008.
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o
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I will attend
the annual
meeting
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(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.)
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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.
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Signature(s) x
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Dated:
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, 2008
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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.
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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.
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INTERNET
http://www.proxyvoting.com/hcbk
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TELEPHONE
1-866-540-5760
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MAIL
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Use the Internet to vote your proxy.
Have your proxy card in hand when
you access the web site.
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OR
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Use any touch-tone telephone to vote
your proxy. Have your proxy card in
hand when you call.
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OR
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Mark, sign and date your proxy card
and return it in the enclosed postage-paid
envelope.
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If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
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