Proxy Statement & Notice of Annual

Meeting of Shareholders

10:00 a.m. June 3, 2020

 

 

 

 

 

April 24, 2020

Fellow Shareholders:

You are cordially invited to attend the Annual Meeting of Shareholders of New York Community Bancorp, Inc., the holding company for New York Community Bank. The safety of our stockholders is important to us, and given the current guidance by public health officials surrounding COVID-19 and group gatherings, the Annual Meeting will be a “virtual meeting” conducted exclusively via live webcast on Wednesday, June 3, 2020, at 10:00 a.m. Eastern Daylight Time. You will be able to attend the Annual Meeting, vote, and submit questions by visiting www.virtualshareholdermeeting.com/NYCB2020.

The attached Notice and Proxy Statement describe the formal business to be transacted at the Annual Meeting. Directors and officers of New York Community Bancorp, Inc., as well as representatives of KPMG LLP, the Company’s independent registered public accounting firm, will be present to respond to any questions you may have.

On April 24, 2020, under rules established by the Securities and Exchange Commission, we sent the majority of those shareholders who are eligible to vote at the Annual Meeting a notice that explains how to access their proxy materials and our 2019 Annual Report online, rather than receive them in traditional printed form. The notice also explains the simple steps our eligible shareholders can follow in order to vote their shares online. If you are among the shareholders who received the notice explaining this process and would prefer to receive your proxy materials in the traditional hard copy format, the notice also explains how to arrange to have the printed materials sent to you in the mail. If you are among those who received their proxy materials in printed form, rather than the notice, you may still access these materials and vote your shares online by going to the following website: www.proxyvote.com and following the prompts.

To cast your vote, please sign, date, and return the enclosed proxy card promptly, or vote online or by telephone as instructed on the proxy card. As the holders of a majority of the common stock entitled to vote must be represented, either in person or by proxy, to constitute a quorum at the meeting, we would appreciate your timely response.

In light of on-going developments related to coronavirus (COVID-19) and after careful consideration, the Board of Directors determined to hold a virtual annual meeting in order to facilitate shareholder attendance and participation by enabling shareholders to participate from any location and at no cost. We believe this is the right choice for the Company at this time, as it enables engagement with our shareholders, regardless of size, resources, or physical location while safeguarding the health of our shareholders, Board, management, and other partners. We are committed to ensuring that shareholders will be afforded the same rights and opportunities to participate in the annual meeting as they would at an in-person meeting.

On behalf of the Board of Directors, officers, and employees of New York Community Bancorp, Inc. we thank you for your continued interest and support.

Sincerely,

 

 

		Dominick Ciampa		Joseph R. Ficalora
		Chairman of the Board		President and Chief Executive Officer

		MEETING NOTICE

 

NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS

OF NEW YORK COMMUNITY BANCORP, INC.

 

DATE AND TIME:		Wednesday, June 3, 2020 at 10:00 a.m., Eastern Daylight Time
PLACE:		The 2020 Annual Meeting of Shareholders of New York Community Bancorp, Inc. (the “Company”) will be a virtual meeting conducted exclusively via live webcast at www.virtualshareholdermeeting.com/NYCB2020
ITEMS OF BUSINESS:		1)  The election of four directors to three-year terms;
		2)  The ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2020;
		3)  Approval, on a non-binding advisory basis, of New York Community Bancorp, Inc.’s Named Executive Officer compensation;
		4)  A proposal to amend the Amended and Restated Certificate of Incorporation and Bylaws of the Company in order to eliminate the supermajority voting requirements;
		5)  Approval of the New York Community Bancorp, Inc. 2020 Omnibus Incentive Plan;
		6)  To consider a shareholder proposal requesting Board action to eliminate the classified Board by amending the Amended and Restated Certificate of Incorporation of the Company as described in the accompanying Proxy Statement, if properly presented at the meeting;
		7)  To consider a shareholder proposal regarding director age and term limits as described in the accompanying Proxy Statement, if properly presented at the meeting; and
		8)  Such other matters as may properly come before the meeting or any adjournments thereof, including whether or not to adjourn the meeting.
WHO CAN VOTE:		You are entitled to vote if you were a shareholder of record at the close of business on Tuesday, April 7, 2020.
VOTING:		We urge you to participate in the meeting, either by attending and voting in person or by voting as promptly as possible by telephone, through the Internet, or by mailing your completed proxy card (or voting instruction form, if you hold your shares through a broker, bank, or other nominee). Each share is entitled to one vote on each matter to be voted upon at the annual meeting. Your vote is important and we urge you to exercise your right to cast it.
MEETING ADMISSION:		To be admitted to the meeting at www.virtualshareholdermeeting.com/NYCB2020, you must enter the control number found on the proxy card, voting instruction form, or notice you received. You may vote during the Annual Meeting by following the instructions available on the meeting website during the meeting.
2019 ANNUAL REPORT:		A copy of our 2019 Annual Report to Shareholders, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, accompanies this Notice and Proxy Statement.
DATE OF DISTRIBUTION:		This Notice, the Proxy Statement, and the proxy card are first being made available or mailed to shareholders on or about April 24, 2020.

 

By Order of the Board of Directors,

R. Patrick Quinn

Executive Vice President,

Chief Corporate Governance Officer, and Corporate Secretary Westbury, New York

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 3, 2020

The Company’s Notice of Annual Meeting, Proxy Statement, and 2019 Annual Report to Shareholders are available, free of charge, at www.proxyvote.com.

		PROXY SUMMARY

 

PROXY STATEMENT SUMMARY

This summary highlights selected information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider, and you should read the entire proxy statement carefully before voting. For more complete information regarding our 2019 performance, please review our 2019 Annual Report on Form 10-K, which accompanies this document.

VOTING MATTERS:

 

Voting Matters:				Recommendation of the Board:
Proposal 1		The election of four directors to three-year terms.		FOR ALL
Proposal 2		Ratification of the appointment of KPMG, LLP as our independent registered public accounting firm for 2020.		FOR
Proposal 3		Approval, on a non-binding advisory basis, of New York Community Bancorp, Inc.’s Named Executive Officer compensation.		FOR
Proposal 4		A proposal to amend the Amended and Restated Certificate of Incorporation and Bylaws of the Company to eliminate the supermajority voting requirements.		FOR
Proposal 5		Approval of the New York Community Bancorp, Inc. 2020 Omnibus Incentive Program.		FOR
Proposal 6		A shareholder proposal requesting Board action to eliminate the classified Board by amending the Amended and Restated Certificate of Incorporation, as described in the accompanying Proxy Statement, if properly presented at the meeting.		AGAINST
Proposal 7		A shareholder proposal requesting Director Age and Term Limits as described in the accompanying Proxy Statement, if properly presented at the meeting.		AGAINST

HIGHLIGHTS:

 

Company Profile:
New York Community Bancorp, Inc. is the largest thrift holding company in the nation and one of the leading thrift depositories in most of the markets we serve. Our roots go back to 1859, when we were chartered by the State of New York in Queens, a borough of New York City. Since then, we have grown from a single branch in Flushing to 238 branch offices in five states.   Based in Westbury, NY, New York Community Bancorp, Inc. is a leading producer of multi-family loans on non-luxury, rent-regulated apartment buildings in New York City, and the parent of New York Community Bank. At December 31, 2019, the Company reported assets of $53.6 billion, loans of $41.7 billion, deposits of $31.7 billion, and shareholders’ equity of $6.7 billion.
•  We originate multi-family loans on non-luxury apartment buildings in New York City that are subject to rent regulation and feature below-market rents.
•  We underwrite our loans in accordance with conservative credit standards in order to maintain a high level of asset quality.
•  We grow through accretive acquisitions of other financial institutions, branches, and/or deposits.
•  We originate asset-based loans, dealer floor-plan loans, and equipment loans and leases through the Community Bank’s specialty finance subsidiary, NYCB Specialty Finance LLC.
•  We are a low-cost provider, resulting in our having an efficient operation.

 

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		PROXY SUMMARY

 

Performance Highlights:

•  In 2019, our Company reported net income available to common shareholders of $362.2 million, or diluted earnings per common share of $0.77. This represents a return on average tangible assets of 0.80% and a return on average tangible common equity of 9.70%.

•  We paid our shareholders an annual dividend of $0.68 per common share, which translates into total cash dividends of $317.4 million for our common shareholders. As of the record date for the Annual Meeting, this reflected a 7.4% dividend yield on our stock.

•  During 2019, we executed on our strategy to grow our loan portfolio, reinvest our cash position into higher yielding assets, and significantly reduce our operating expenses.

•  Over the course of our public life, we have produced multi-family loans totaling $90 billion, including $6.0 billion in 2019.

•  Likewise, we have produced commercial real estate loans totaling $21.5 billion, including $1.2 billion in 2019 alone.

•  From 1993 through the end of 2019, we recorded a mere 104 basis points of losses (cumulative charge-offs as a percent of average loans), in contrast to an industry average of 2,345 basis points during the same time.

•  From 1993 through 2019, our average efficiency ratio was 39.9%, in contrast to the 60.54% industry average (as reported by S&P Global Market Intelligence).

•  Over the course of our public life, we have expanded our balance sheet by $35.3 billion through 10 mergers and acquisitions, involving seven in-market competitors and two out-of-market banks.

•  Reflecting our profitability – and our capital position – we have distributed $6.1 billion of quarterly cash dividends over the past 103 quarters and repurchased more than $1.2 billion of our shares.

 

Executive Compensation Highlights:

The following provides an overview of executive compensation:

•  The Compensation Committee reviewed the base salaries of our named executive officers in March 2019 and March 2020 and did not make any adjustments. The Committee determined that the current base salary levels were competitive and provided an appropriate benchmark for establishing award opportunities under the Company’s incentive programs.

•  Our executive incentive compensation program is designed to encourage our executives to deliver superior financial results and strong shareholder returns, both on an annual basis and over the long-term.

Fiscal year 2019 was the first year in which the Compensation Committee fully implemented the revised executive incentive compensation program developed in 2018. The Committee’s careful consideration of material concerns raised by shareholders and proxy advisory groups about the prior program resulted in a complete revision of the Company’s short- and long-term incentive plans to improve the alignment of these plans with similar plans in place at peer institutions and with industry best practices.

The 2019 program was consistent with the revised program developed by the Compensation Committee in 2018 and included the following:

•  A short term cash incentive plan that measured Company performance based on one absolute metric (budgeted pre-tax operating earnings) with a 50% weighting and two metrics (efficiency ratio and return on average tangible assets) weighted 25% each that consider Company results relative to a designated peer group. As reflected in the Executive Compensation Table on page 41, the new program resulted in a payout of 106.44% of target paid in 2020. The payout reflected an adjustment authorized by the plan based on the Company’s relative one-year total shareholder return ranking at the 90th percentile of the peer group.

•  A long-term equity incentive plan with two components: (i) an award of time-based vested restricted stock and (ii) a three-year (2019-2021) performance-based equity award with payouts based on the Company’s performance with respect to two metrics (earnings per share growth and return on average tangible common equity) relative to an industry index group.

•  For a detailed discussion of our 2019 executive compensation program, see Compensation Discussion and Analysis in this Proxy Statement.

 

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		PROXY SUMMARY

 

Governance Highlights:

We are committed to maintaining the highest standards of corporate governance. Strong corporate governance practices help us achieve our performance goals and maintain the trust and confidence of our shareholders and other constituents. Highlights of our governance standards and policies include:

•  Our Board of Directors is comprised of individuals possessing a well-rounded variety of skills, knowledge, experience and perspectives and who have unique experience and perspectives on our business.

•  82% of our Board members satisfy New York Stock Exchange independence standards, and each of the Compensation, Audit, and Nominating and Corporate Governance Committees are comprised wholly of independent directors.

•  Our Board Chairman and our Presiding Director are independent directors, and our Presiding Director has significant governance responsibilities.

•  Our By-laws provide for “proxy access,” allowing eligible shareholders to include their own nominees for director in the Company’s proxy materials.

•  Our Board and Board Committees perform annual self-evaluations and adopt action plans to implement changes when deemed necessary or appropriate.

•  Our Board Risk Assessment Committee, which meets the requirements for U.S. Bank Holding Companies under the Dodd-Frank Act’s Enhanced Prudential Standards, meets at least on a monthly basis and oversees a robust and exacting enterprise risk management program.

 

 

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		INFORMATION ABOUT OUR ANNUAL MEETING AND SOLICITATION OF PROXIES

 

INFORMATION ABOUT OUR ANNUAL MEETING AND SOLICITATION OF PROXIES

Why am I being provided this proxy statement?

This proxy statement summarizes information you need to know in order to vote at the 2020 Annual Meeting of Shareholders. The 2020 Annual Meeting of Shareholders of New York Community Bancorp, Inc. (the “Company”) will be a virtual meeting conducted exclusively via live webcast at www.virtualshareholdermeeting.com/NYCB2020 on June 3, 2020 at 10:00 a.m., Eastern Daylight Time (the “Annual Meeting”). This proxy statement is being sent to you because the Board of Directors (the “Board of Directors” or “Board”) of the Company is soliciting your proxy to vote your shares of common stock of the Company (the “Common Stock”) at the Annual Meeting. On or about April 24, 2020, the proxy statement and proxy materials, or a notice advising how to access these documents online, will be sent to shareholders of record as of April 7, 2020. The 2019 Annual Report to Shareholders, which includes the Annual Report on Form 10-K featuring the Company’s consolidated financial statements for the fiscal year ended December 31, 2019 accompanies this proxy statement.

What is a proxy?

A proxy is your designation of another person to vote stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. One or more of the Company’s directors will serve as the designated proxy to cast the votes submitted by the Company’s shareholders at the Annual Meeting.

What is a proxy statement?

It is a document that the Company is required to give you, or provide you with access to, in accordance with regulations of the Securities and Exchange Commission (the “SEC”), when asking you to designate proxies to vote your shares of the Common Stock at a meeting of shareholders. The proxy statement includes information regarding the matters to be acted upon at the meeting and certain other information required by regulations of the SEC and the rules of the New York Stock Exchange (the “NYSE”).

On what matters are the shareholders of record voting?

The shareholders of record will vote on the following proposals:

Proposal 1: Election of Directors. In Proposal 1, four director nominees have been recommended for election to the Board of Directors by the Nominating and Corporate Governance Committee of the Board. Directors are elected by a majority of the votes cast, meaning that the number of votes cast “FOR” a nominee must exceed the number of votes cast “AGAINST” that nominee, with broker non-votes and abstentions not counted as a vote cast either “FOR” or “AGAINST” that nominee. Shares not voted will have no impact on the election of directors. A properly executed proxy marked “FOR ALL” of the four nominees for director will be voted for each of the nominees, unless you mark the proxy card, or select the corresponding option in the electronic form, “WITHHOLD ALL” or “FOR ALL EXCEPT.” Marking the proxy card, or selecting the corresponding option in the electronic form, “WITHHOLD ALL” will withhold your vote as to all nominees for director. Marking the proxy card, or selecting the corresponding option in the electronic form, “FOR ALL EXCEPT” will direct that your shares be voted for all nominees except that your shares will be withheld as to any nominees you may specify.

Proposal 2: Ratification of Auditors. The affirmative vote of a majority of votes cast at the Annual Meeting is required to approve Proposal 2, a proposal to ratify the reappointment of KPMG LLP as the Company’s independent registered public accounting firm for 2020. In connection with such proposal, shares as to which the “ABSTAIN” box has been selected on the proxy card, or selected in the corresponding option in the electronic form, and shares underlying broker non-votes or in excess of the Limit (as described below) will not be counted as votes cast, and will have no effect on the vote on the matter presented.

Proposal 3: Approval, on a non-binding advisory basis, of the Company’s Named Executive Officer Compensation. As to the advisory approval of the 2019 Named Executive Officer compensation, the proxy card being provided by the Board of Directors enables a shareholder to check the appropriate box on the card, or select the corresponding option in the electronic form, to (i) vote “FOR” the proposal, (ii) vote “AGAINST” the proposal, or (iii) “ABSTAIN” from voting on the proposal. To approve Proposal 3, the affirmative vote of a majority of the votes cast at the Annual Meeting is required. In connection with such proposal, shares as to which the “ABSTAIN” box has been selected on the proxy card, or selected in the corresponding option in the electronic form, and shares underlying broker non-votes or in excess of the Limit (as described below) will not be counted as votes cast, and will have no effect on the vote on the matter presented. Your vote on Proposal 3 is an advisory vote, which means that the Company and the Board of Directors are not required to take any action based on the outcome of the vote.

 

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		INFORMATION ABOUT OUR ANNUAL MEETING AND SOLICITATION OF PROXIES

 

Proposal 4: Eliminate the current supermajority voting requirements by approving amendments to the Amended and Restated Certificate of Incorporation and Bylaws of the Company. To be approved, at least 80 percent of the shares outstanding as of the record date must vote in favor of Proposal 4, a proposal to eliminate the charter document supermajority voting requirements for certain matters to be replaced by a majority of votes cast, or entitled to be cast, voting requirement, as applicable, on matters to be brought before the Company’s shareholders. In connection with such proposal, shares as to which the “ABSTAIN” box has been selected on the proxy card or corresponding option in the electronic form and shares underlying broker non-votes or in excess of the Limit (as described below) will count as a vote against the proposal.

Proposal 5: Approval of the New York Community Bancorp, Inc. 2020 Omnibus Incentive Plan. As to the approval of the New York Community Bancorp, Inc. 2020 Omnibus Incentive Plan, the Board of Directors is enabling a shareholder to check the appropriate box on the proxy card or corresponding option in the electronic form to (i) vote “FOR” the proposal, (ii) vote “AGAINST” the proposal, or (iii) “ABSTAIN” from voting on the proposal. To approve Proposal 5, a majority of the votes cast at the Annual Meeting is required. In connection with such proposal, shares as to which the “ABSTAIN” box has been selected and shares underlying broker non-votes or in excess of the Limit (as described below) will not be counted as votes cast, and will have no effect on the vote on the matter presented.

Proposal 6: A shareholder proposal, as described herein, if properly presented at the meeting, requesting Board action to eliminate the classified Board of Directors.

Proposal 7: A shareholder proposal, as described herein, if properly presented at the meeting, regarding director age and term limits.

The affirmative vote of a majority of votes cast at the Annual Meeting is required to approve each of Proposals 6 and 7. In connection with each such proposal, shares as to which the “ABSTAIN” box has been selected on the proxy card or corresponding option in the electronic form and shares underlying broker non-votes or in excess of the Limit (as described below) will not be counted as votes cast, and will have no effect on the vote on the matter presented.

As discussed below, under NYSE Rules, if your broker holds shares in your name and delivers this proxy statement to you, the broker is not entitled to vote your shares on any non-routine proposal (Proposals 1 and 3 through 7) without your specific instructions.

Who may vote and what constitutes a quorum at the meeting?

The close of business on April 7, 2020 has been fixed by the Board of Directors as the record date (the “Record Date”) for the determination of shareholders of record entitled to receive notice of, and to vote at, the Annual Meeting and at any adjournments thereof.    

In order to conduct the Annual Meeting, shareholders of record of at least a majority of the total number of shares of Common Stock entitled to vote (after subtracting any shares in excess of the Limit pursuant to the Company’s Certificate of Incorporation) must be present in person or by proxy. This is called a quorum. Shareholders who deliver valid proxies or vote in person at the meeting will be considered part of the quorum. Once a share is represented for any purpose at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjourned meeting. Abstentions will be counted as being present and entitled to vote for purposes of determining a quorum. Broker “non-votes” are counted as being present and entitled to vote for purposes of determining a quorum only for routine matters. In the event that there are not sufficient shares present for a quorum, or votes to approve or ratify any management proposal at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit the further solicitation of proxies.

How many votes do I have?

The securities that may be voted at the Annual Meeting consist of shares of Common Stock, with each share entitling its owner to one vote on all matters to be voted on at the Annual Meeting, except as described below. There is no cumulative voting for the election of directors (in a cumulative voting system, each shareholder would be entitled to one vote per share multiplied by the number of directors to be elected). The total number of shares of Common Stock outstanding and entitled to vote as of the Record Date was 463,958,344.

 

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		INFORMATION ABOUT OUR ANNUAL MEETING AND SOLICITATION OF PROXIES

 

How do I vote?

A shareholder may vote online during the Annual Meeting by visiting www.virtualshareholdermeeting.com/NYCB2020 and completing a ballot while the polls are open. You will need the control number printed on your proxy card, voting instruction form, or notice. A shareholder may also vote in advance of the Annual Meeting by using a proxy to authorize a proxy to vote on his or her behalf. There are three ways to use a proxy:

 

		Mail: If you received your proxy materials by mail, you may vote by completing, signing, and dating the enclosed proxy card and returning it in the enclosed postage-paid envelope. You are urged to indicate your votes in the spaces provided on the proxy card.
		Internet: You may access the proxy materials on the Internet at www.proxyvote.com and follow the instructions on the proxy card or on the Notice of Internet Availability.
		Telephone: You may call toll free at 1-800-690-6903 and follow the instructions on the proxy card or on the Notice of Internet Availability.

The Internet and telephone voting procedures are designed to authenticate shareholders’ identities and allow shareholders to provide their voting instructions and confirm that the instructions have been properly recorded. Specific instructions for shareholders of record who wish to vote their proxies over the Internet or by telephone are set forth on the proxy card for the Annual Meeting.

The Company encourages shareholders to take advantage of the options to vote using the Internet or by telephone. Voting in this manner will result in cost savings for the Company.

Please be aware that if you vote over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible. The Internet and telephone voting facilities for eligible shareholders of record will close at 11:59 p.m., Eastern Daylight Time, on June 2, 2020.

Your vote as a shareholder is important. Please vote as soon as possible to ensure that your vote is recorded.

How are the proxy materials delivered?

The Company is again reducing its costs by taking advantage of SEC rules that allow companies to furnish proxy materials to shareholders primarily through the Internet. Accordingly, the Company is sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to shareholders who (i) own shares directly in the Company (“shareholders of record”) and not through a broker, bank, or intermediary directly to their mailing address unless they have directed the Company to provide the materials in a different manner or (ii) hold shares of Common Stock through the Company’s stock-based benefit plans. See Benefit Plan Voting below. Shareholders whose shares are held for them by brokerage firms, banks, or other intermediaries (“beneficial owners”) will have the proxy materials or the Notice forwarded to them by the intermediary that holds their shares. The Notice provides instructions on how to access and review all of the important information contained in the Company’s proxy statement and 2019 Annual Report to Shareholders, as well as how to cast your vote, over the Internet.

Shareholders who receive the Notice and who would still like to receive a printed copy of the Company’s proxy materials, including the 2019 Annual Report to Shareholders, can find instructions for requesting these materials included in the Notice. The Company plans to mail the Notice to shareholders on April 24, 2020.

What is a broker non-vote?

If you hold your shares in “street name” (i.e., through a broker, bank, or other nominee), it is critical that you cast your vote if you want it to count in the election of directors. SEC regulations currently prohibit brokers or nominees to vote your uninstructed shares in the election of directors on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote in the election of directors, with respect to the proposal to approve, on a non-binding advisory basis, the Company’s named executive officer compensation, with respect to the Company’s 2020 Omnibus Incentive Plan, or with respect to any of the shareholder proposals, if properly presented, no votes will be cast on your behalf with respect to these matters. These uncast “votes” are referred to as broker non-votes. Your bank or broker will, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of the Company’s independent registered public accounting firm (Proposal 2).

 

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		INFORMATION ABOUT OUR ANNUAL MEETING AND SOLICITATION OF PROXIES

 

What effect do broker non-votes and abstentions have?

A broker or other nominee may generally vote your shares without instruction on routine matters, but not on non-routine matters. A broker “non-vote” occurs when your broker submits a proxy for your shares, but does not indicate a vote for a particular “non-routine” proposal (such as Proposals 1 and 3 through 7) because your broker does not have your authority to vote on that proposal and has not received specific voting instructions from you. Broker non-votes are not counted as votes for or against the proposal in question or as abstentions, nor are they counted to determine the number of votes present for a non-routine proposal. However, when a proposal requires the affirmative vote of a percentage of the Company’s outstanding shares entitled to vote in order to be approved (such as Proposal 4), a broker non-vote will have the same effect as a vote against the proposal.

If you abstain from voting on Proposals 1 and 3 through 7, your vote will be counted as present for determining whether a quorum exists but will not be treated as cast for or against that matter.

What if I sign and date my proxy but do not provide voting instructions?

Proxies solicited by the Board of Directors of the Company will be voted in accordance with the directions given therein. If you are a shareholder of record and do not provide voting directions, signed and dated proxy cards will be voted as follows:

 

•

FOR the election of each of the nominees for director named in this proxy statement;

 

•

FOR the ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company;

 

•

FOR approval of the Named Executive Officer compensation;

 

•

FOR the approval of amendments to the Amended and Restated Certificate of Incorporation and Bylaws of the Company eliminating the supermajority voting requirements to be replaced with a majority of the votes cast, or entitled to be cast, voting requirement, as applicable;

 

•

FOR the approval of the New York Community Bancorp, Inc. 2020 Omnibus Incentive Plan;

 

•

AGAINST approval of a shareholder proposal, if properly presented; and

 

•

AGAINST approval of a shareholder proposal, if properly presented.

Other than the matters listed on the attached Notice of 2020 Annual Meeting of Shareholders, the Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. However, execution of a proxy or voting online or by telephone confers on the designated proxy holder discretionary authority to vote the shares represented by the proxy in accordance with his or her best judgment on such other business, if any, which may properly come before the Annual Meeting or any adjournments thereof, including whether or not to adjourn the meeting.

May I revoke my proxy?

A proxy may be revoked at any time prior to its exercise by filing a written notice of revocation with the Corporate Secretary of the Company, by delivering to the Company a duly executed proxy bearing a later date, by voting online or by telephone on a later date, or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not itself constitute revocation of your proxy.

Who pays the costs of soliciting proxies?

The cost of the solicitation of proxies on behalf of management will be borne by the Company. In addition to the solicitation of proxies by mail, Equinti (US) Services LLC, a proxy solicitation firm, will assist the Company in soliciting proxies for the Annual Meeting and will be paid a fee of $7,000 plus out-of-pocket expenses. Proxies also may be solicited, personally or by telephone, by directors, officers, and other employees of the Company and its subsidiary, New York Community Bank (the “Community Bank” or the “Bank”), without receipt of additional compensation.

The Company also will request that persons, firms, and corporations holding shares in their names, or in the names of their nominees that are beneficially owned by others, send proxy materials to, and obtain proxies from, such beneficial owners. The Company will reimburse such holders for their reasonable expenses in doing so.

If your Company shares are held in street name, your broker, bank, or other nominee will provide you with instructions that must be followed in order to have your shares voted. Your broker or bank may allow you to deliver your voting instructions via the Internet or by telephone. Please see the instruction form that was provided by your broker or bank with this proxy statement. If you wish to change your voting instructions after you have returned your voting instruction form, you will need to contact your broker or bank in order to do so.

 

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		INFORMATION ABOUT OUR ANNUAL MEETING AND SOLICITATION OF PROXIES

 

What is the admission policy for the Annual Meeting?

Attendance at the Annual Meeting is limited to:

(1) shareholders of record of Common Stock;

(2) beneficial holders of Common Stock; and

(3) authorized representatives of entities who are beneficial holders of Common Stock.

You will be able to attend the meeting online, vote your shares electronically, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/NYCB2020. To participate in the virtual meeting, you will need the 16-digit control number included on your Notice, proxy card or voting instruction form. The meeting webcast will begin promptly at 10:00 a.m., Eastern Daylight Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 9:00 a.m., Eastern Daylight Time, and you should allow ample time for the check-in procedures. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting login page. Technical support will be available beginning at 9:30 a.m. Eastern Daylight Time on June 3, 2020 and will remain available until the meeting has ended.

What is the Limit on voting securities?

As provided in the Company’s Certificate of Incorporation, holders of Common Stock who beneficially own in excess of 10% of the outstanding shares of Common Stock (the “Limit”) are not entitled to any vote with respect to the shares held in excess of the Limit. A person or entity is deemed to beneficially own shares owned by an affiliate of, as well as by, persons acting in concert with such person or entity. The Company’s Certificate of Incorporation authorizes the Board of Directors (i) to make all determinations necessary to implement and apply the Limit, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own stock in excess of the Limit supply information to the Company to enable the Board of Directors to implement and apply the Limit.

Based solely on information in reports filed with the SEC, certain persons or entities are known by management to be the beneficial owners of more than 5% of the outstanding shares of Common Stock as of the Record Date and in some cases have indicated beneficial ownership of up to 10% of the Common Stock outstanding as of that date. If such owners were to increase their holdings above 10% or if other shareholders were to acquire beneficial ownership of shares in excess of that amount, they would not be entitled to any vote with respect to the shares held in excess of 10%.

Proxies solicited hereby will be tabulated by inspectors of election designated by the Board of Directors. The inspectors of election will not be employed by, or be directors of, the Company or any of its affiliates.

 

BENEFIT PLAN VOTING

Active employee-participants in the Company benefit plans who hold Common Stock will receive an e-mail that contains a link to this proxy statement, along with procedures to follow in order to vote the shares of Common Stock credited to each participant’s account under the Company benefit plans and the shares of Common Stock (if any) held independent of the Company benefit plans. Retired and inactive employee-participants will receive their proxy materials via U.S. mail. Benefit plan voting instructions will be delivered to the trustee for the Company benefit plans and the shares will be voted as directed by participants. Shares for which no voting instructions are provided or are not timely received by the Company will be voted by the trustee for the Company’s tax-qualified plans holding Common Stock in the same proportion as the voting instructions the trustee receives from other participants or, in the case of the Company’s equity incentive plans, as directed by the Company. Benefit plan voting instructions must be received by 11:59 p.m., Eastern Daylight Time, on May 28, 2020.

 

Page 5

		INFORMATION ABOUT OUR ANNUAL MEETING AND SOLICITATION OF PROXIES

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information as to those persons or entities known by management to be beneficial owners of more than 5% of the outstanding shares of Common Stock on April 7, 2020. Other than those persons or entities listed below, the Company is not aware of any person or entity or group that beneficially owned more than 5% of the Common Stock as of that date.

 

Name and Address of Beneficial Owner				Amount and Nature of Beneficial Ownership							Percent of Class
BlackRock, Inc. 55 East 52nd Street New York, NY 10055						52,891,672	(1)						11.3	%
Barrow Hanley Mewhinney & Strauss, LLC 2200 Ross Avenue, 31st Floor Dallas, Texas 75201						49,929,144	(2)						10.68	%
The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355						43,292,845	(3)						9.26	%

 

(1)	Based solely on information filed in a Schedule 13G/A with the SEC on February 10, 2020.

(2)	Based solely on information filed in a Schedule 13G with the SEC on March 10, 2020.

(3)	Based solely on information filed in a Schedule 13G/A with the SEC on February 12, 2020.

 

Page 6

		SHAREHOLDER OUTREACH AND RECENT INITIATIVES

 

SHAREHOLDER OUTREACH AND RECENT INITIATIVES

Our management and Board value direct and transparent engagement with our shareholders and regularly seek opportunities to obtain feedback in connection with our governance, management compensation, and strategies. We embrace engagement as an important tenet of good governance and we value the views of our shareholders and other stakeholders. We believe that positive dialogue builds informed relationships that promote transparency and accountability, allowing us to respond more fully to the interests of our shareholders as they adjust to evolving governance and compensation norms in our competitive industry.

Our shareholder outreach program consists of regular management dialogue with the investor community (the “Management Outreach Program”) and formal outreach by our independent Board members to institutional shareholders (the “Board Outreach Program”).

As part of our Management Outreach Program, our CEO, Chief Financial Officer, and other senior members of management conduct regular investor communications, including conferences, non-deal road shows and individual and group conference calls with portfolio managers and industry analysts. Each quarter’s earnings press release is thoroughly reviewed in open investor conference calls with broad participation and significant Q&A by the analyst community. Our senior management regularly makes themselves available for such communications across the United States and in Europe, focusing on elements of our strategic plans, consolidated business results and capital structure, and other topics of interest to shareholders. We believe that management can strengthen its ability to lead the Company by constructively discussing our business and strategy in such settings.

As part of the Management Outreach Program, our CEO and Chief Financial Officer met with shareholders at 13 investment conferences and held 26 investor meetings in person or by teleconference during the last 12 months. In total, management met with 273 shareholders or prospective shareholders from 120 discrete institutions.

Additionally, as part of the Board Outreach Program, our Presiding Director, a member of the Board’s Compensation Committee, Audit Committee Chairman, and other independent members of the Board participate in meetings with shareholders. For several years, the Company has conducted formal shareholder outreach in this manner in order to allow our Board members to hear directly from investors regarding their perspectives on our business. During such calls the Board members solicit feedback from institutional investors that is taken into account by the Board in making strategic and other corporate governance and compensation decisions.

The Board encourages participation from our shareholders in its outreach program. Participation levels vary from year-to-year. For this year’s Board Outreach Program, which began in early 2020, we contacted our 25 largest stockholders, who represented approximately 66.13% of our then-outstanding shares. Of those contacted, investors representing over 23% of the then-outstanding shares made themselves available to speak with us, including 3 of our 10 largest shareholders. The 3 largest shareholders included two of the top 3 shareholders listed on page 6.

Not all investors we spoke with expressed the same views about each topic discussed during our calls, but we listened carefully to each and gave each equal weight.

The feedback we received was generally supportive, and the conversations included in-depth discussion about various compensation and corporate governance issues, including with respect to shareholder opinions about the benefits and drawbacks of our incentive compensation program, board composition, risk oversight, and other governance matters. On the whole, we also learned that, although some consistent themes exist, our shareholders have varying views on compensation and governance topics, and much effort was made to balance the differing and sometimes contrasting viewpoints. On the whole, we also learned that, although some consistent themes exist, our shareholders have varying views on compensation and governance topics, and much effort was made to balance the differing and sometimes contrasting viewpoints. Shareholders have generally been consistent in their view that the Company should provide greater detail on the scope of its shareholder outreach efforts and describe the specific nature of shareholder concerns. Accordingly, beginning in 2019 we have included greater specifics on the scope of our shareholder outreach efforts and on the feedback we received, including with respect to shareholder views regarding our compensation programs (see Engaging with Our Shareholders in the Compensation Discussion and Analysis section of this proxy statement beginning on page 22).

Shareholders were generally consistent in their view that the Company should provide greater detail on the scope of its shareholder outreach efforts and describe the specific nature of shareholder concerns. Accordingly, we are including in this year’s proxy statement greater specifics on the scope of our shareholder outreach efforts and on the feedback we received, including with respect to shareholder concerns that triggered the adverse say-on-pay advisory vote in 2018.

 

Page 7

		SHAREHOLDER OUTREACH AND RECENT INITIATIVES

 

The Board was particularly disappointed in the vote against our 2018 say-on-pay resolution. While many of our institutional shareholders, who control significant blocks of the ownership interests in our company, defer their decision-making to one or another of the world’s largest proxy advisory services, many of the investors with whom we have met and conferred with have said that while they do review the recommendations of proxy advisory services on say-on-pay votes as part of their voting determination process, they do not always vote consistent with such recommendations. The information we received from our investors, which covered compensation program design, shareholder voting processes, corporate governance, and disclosure matters, was shared with the Compensation Committee and the full Board. In response, the Board in 2018 undertook to refresh the Compensation Committee and restructure our executive compensation plans to their current form, as described below and in our Compensation Discussion and Analysis beginning on page 22. Shareholder feedback has been an essential element of the Committee’s evaluation of revisions to the program. While many of the outreach sessions ranged beyond executive pay to topics including the Company’s business and strategy, common themes relating to executive pay did emerge from these discussions.

In 2020, although management held many meetings and direct conversations with investors, various circumstances, including those relating to the emergence of the COVID-19 pandemic, led many of our institutional investors to decline our requests to conduct outreach discussions with their governance teams.

The following lists certain corporate governance themes addressed in our outreach discussions during the last two annual shareholder meeting cycles:

 

What we heard				Our Response
The Board members should have a deep and thorough understanding of the Company’s business model and operations.		✓		The Board members each have significant knowledge and experience in our principal business areas, including our core real estate and real estate finance businesses. Our Board members maintain active oversight of the Company’s operations, meeting on a weekly basis to review lending activity in our core multi-family, commercial residential real estate, and other lending businesses and meeting on a monthly basis to review the full scope of operational, governance, credit, risk management, and other matters important to our condition and performance.
Shareholders who have a meaningful interest in voicing proposals in the best interests of the Company should have the opportunity to have their proposals published in the Company’s proxy statement.		✓		The Company Bylaws include “proxy access” provisions allowing eligible shareholders (those owning at least 3% of the Company’s Common Stock) to include their own nominees for director in the Company’s proxy materials.
The Company should maintain a robust and comprehensive risk management program, incorporating rigorous oversight by the Board of Directors.		✓		Our Board has maintained an active Risk Assessment Committee that meets each month and oversees a broad-based risk management program led by an experienced Chief Risk Officer and in accordance with requirements for exacting standards for U.S. Bank Holding Companies under the Dodd-Frank Act.
Some shareholders favor declassification of the Board of Directors, while others favor a Board whose members are elected in multiple classes over three years.		✓		Proposal 6 reflects a shareholder proposal to eliminate the classified Board by amending the Amended and Restated Certificate of Incorporation of the Company. Based in part upon feedback from our investors, the Board believes that the declassification proposal is not in the best interests of the Company (see The Board’s Statement in Opposition to Proposal 6 beginning on page 78).
The Board of Directors should seek to refresh its members from time to time so that its composition reflects an appropriate mix of individuals by tenure, skills, expertise, experience, age, and gender in connection with current and future Company business needs.		✓		The Board maintains a policy to consider a mix of individuals by tenure, skills, expertise, experience, age, gender, race, and ethnicity in connection with current and future Company business needs.
The Board should be composed of individuals who bring a variety of relevant skills and experience to their position.		✓		Our Board of Directors is comprised of individuals possessing a well-rounded variety of skills, knowledge, experience and perspectives and who have unique perspectives on our business, all of which are listed in enhanced proxy statement disclosures, including Board skills, recruitment and related matters. (Additional disclosure regarding our Directors’ skill sets and how they align with our corporate strategy appears on page 50 of this proxy statement).
The Company should plan for succession in senior management positions.		✓		Formal succession plans are maintained for the Chief Executive Officer and other Named Executive Officers as well as for certain other senior Company officers, and the NEO plans are reviewed at least annually by the Board of Directors.

 

Page 8

		SHAREHOLDER OUTREACH AND RECENT INITIATIVES

 

Additional disclosure regarding the relationship between our NEO compensation programs and long-term value creation appears on page 30 of this proxy statement. Stockholders are urged to read the Compensation Discussion & Analysis section and other information in this Proxy Statement to better understand how the Company’s executive compensation program engages and aligns with the Company’s performance.

Results of Election of Directors at 2019 Annual Meeting – At our 2019 annual meeting of shareholders, Michael J. Levine, Ronald A. Rosenfeld, Lawrence J. Savarese, and John M. Tsimbinos were re-elected to the term of the Board that expires at the 2022 annual meeting of shareholders. All received the affirmative vote of more than 90% of the votes cast for their re-election.

We value shareholder input and we encourage you to share your opinions with us. You can do so by writing to us at the address on page 85 of this proxy statement. You can also provide feedback on our executive compensation program by contacting us through our Investor Relations Department (please visit our website www.myNYCB.com) or through the other contacts identified on page 19 of this proxy statement.

Community Support – Service to our customers and the community is an important part of the New York Community Bank culture. We support the communities we serve through lending, investments, services, and charitable giving, including through New York Community Bank Foundation and Richmond County Savings Foundation, with the following notable highlights:

 

✓

Annually, the Bank and the Foundations contribute more than $3 million through grants, employee giving, sponsorships, pro bono, and in-kind donations.

 

✓

New York Community Bank employees volunteered 2000 hours for community organizations in 2019.

 

✓

More than 100 Bank employees have leadership roles within community organizations.

 

✓

Employees participated in more than 700 community events in 2019.

 

✓

The Foundations have awarded more than $92 million in grants to more than 5,800 community organizations since 2000, including $14.6 million for health and human services, $12.7 million for education, $15.8 million for civic and community organizations, and $15.4 million for arts and culture.

 

✓

The Community Bank’s corporate philanthropy program contributes nearly $1.0 million annually to community organizations.

The Community Bank provides multi-family lending to borrowers with collateral properties in low and moderate income areas of the communities we serve. The Community Bank’s multi-family lending in low and moderate income areas represents 53% of total loans and 48% of total loan amount.

The Community Bank also provides lending for borrowers in the low and moderate income areas of the communities we serve, including financing for 51% of the number of loans and 46% of loan amounts that were in the low and moderate areas of New York where we committed to continuing our leadership role in the New York City multi-family housing market including by lending in low and moderate income areas.

Additionally, we support communities impacted by disasters through corporate donations to relief organizations. We also provide our employees with paid time off to volunteer with community organizations and encourage our employees to lead philanthropic initiatives that matter to them. In response to the COVID-19 pandemic, the Community Bank has demonstrated that the health, safety, and financial well-being of our customers and to the communities we serve remains a top priority. Some notable actions that the Community Bank has taken to assist its customers include: temporarily waiving certain fees including ATM, overdraft fees, and, on a case-by-case basis, early Certificate of Deposit withdrawal fees; addressing customer requests for loan modifications; providing customers with access to certain Small Business Administration Pandemic related lending programs; and targeting investments to select New York City not-for-profit companies that address small business lending needs.

 

Page 9

		CORPORATE GOVERNANCE

 

CORPORATE GOVERNANCE PHILOSOPHY

Our Board, as stewards of shareholder interests, is committed to maximizing long-term shareholder value creation and to maintaining sound corporate governance principles consistent with current rules and practices. Under the leadership of the Nominating and Corporate Governance Committee, we have concentrated significant efforts and resources on ensuring that our overall corporate governance practices serve the best interests of the Company and its shareholders, focusing on the changing needs for financial institution boards in the current regulatory environment; we have taken into consideration the governance policies and practices of our peers; and we have also developed an active shareholder outreach program to better understand the views and concerns of our large shareholders. In recent years, the Board has adopted various corporate governance policies and practices to address such views and concerns.

We have a Risk Assessment Committee comprised of independent directors to assist the Board in overseeing and reviewing information regarding our enterprise risk management program, risk exposure, and risk governance policies and practices. See page 18 for a description of the committee.

Certain governance policies and practices in effect during 2019 are listed in the chart below.

 

Board and Governance Information				2019
Size of Board				11
Number of Independent Directors				9
Staggered Election of Directors				Yes
Majority Voting for Directors				Yes
Proxy Access for Shareholders				Yes
Separation of the Chairman of the Board and Chief Executive Officer Positions				Yes
Independent Presiding Director				Yes
Code of Business Conduct and Ethics				Yes
Annual Board & Committee Evaluations				Yes
Risk Assessment Committee				Yes
Executive Compensation				Yes
Claw Back Provision				Yes
Board Member and Executive Ownership of Shares				Yes
Anti-Pledging and Hedging				Yes
No Poison Pill				Yes

The Board-adopted Corporate Governance Guidelines are available on the corporate governance pages of the Investor Relations portion of our Company’s website, www.myNYCB.com, and also are available in print to any shareholder who requests a copy. These guidelines address, among other matters, the qualifications and responsibilities of directors; functions of the Board and Board committees; director compensation, training, and performance evaluations; and management performance evaluations and succession.

We will continue to actively monitor, and consider additional changes to, our corporate governance practices in the future.

 

DIRECTOR INDEPENDENCE

The Board has determined that the nine of our eleven directors are “independent” within the meaning of the rules of the New York Stock Exchange including: Dominick Ciampa, Hanif “Wally” Dahya, Leslie D. Dunn, Michael J. Levine, James J. O’Donovan, Lawrence Rosano, Jr., Ronald A. Rosenfeld, Lawrence J. Savarese, and John M. Tsimbinos. Additionally, the Board has determined that each of the members of the Audit, Nominating and Corporate Governance, and Compensation Committees are independent in accordance with the listing standards of the NYSE and, in the case of the members of the Audit Committee, the rules of the SEC. In determining the independence of its members, the Board broadly considers all facts and circumstances it deems to be relevant and does not limit such review to a specific set of categorical independence standards. Such determinations are made not merely from the standpoint of the director, but also from that of persons or organizations with whom or which the director has an affiliation. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships, among others.

In arriving at its conclusions with respect to the directors named above, the Board determined that the directors had no material relationships (as such term is defined under the listing standards of the NYSE) with the Company either directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company. Directors Levine and Rosano

 

Page 10

		CORPORATE GOVERNANCE

 

are principals in, or have ownership interests in, organizations that maintain lending relationships with the Community Bank. These directors have fully disclosed such relationships to the Board, and the Board has determined that the subject loans do not involve more than normal risk of collectability or present other unfavorable features, and were made on substantially the same terms (including interest rates and collateral requirements) as those prevailing at the same time for comparable transactions with unaffiliated persons. All loans to the two directors are fully performing in accordance with their terms. Accordingly, the lending relationships maintained by the Community Bank with Messrs. Levine and Rosano would not be inconsistent with a determination that they are independent directors of the Company.

Further, Directors Levine and Rosano possess significant knowledge of, and each is a principal in companies that actively participate in, the New York metropolitan area real estate market, where the Community Bank currently conducts significant portions of its lending business. The Board has determined that it is in the best interests of the Community Bank and the Company not to exclude such potential borrowers from conducting business with the Community Bank in accordance with the arms-length terms described above, and under circumstances that are no more favorable than those available to the Community Bank’s other borrowers.

 

BOARD LEADERSHIP STRUCTURE

The Company relies on a three-part leadership structure, with Mr. Ciampa serving as Chairman of the Board of Directors, Mr. Levine serving as Presiding Director, and Mr. Ficalora serving as President and Chief Executive Officer. The Board considers this structure an effective one for enabling the Chairman, Presiding Director, and CEO to share knowledge and responsibilities, for preserving Board independence, and for carrying out other important governance principles. Generally, the structure is intended to promote synergies among the three leadership positions, with the Chairman overseeing the functioning of the Board and its stewardship of the Company, the Presiding Director assisting the Chairman and overseeing certain Board stewardship and other governance functions, including by leading the independent members of the Board, and the President and Chief Executive Officer serving as senior managing officer of the Company, overseeing day-to-day operations and carrying out its strategic goals and objectives.

The Chairman of the Board is an independent director. The Company does not have a formal policy with respect to the separation or combination of the offices of Chairman of the Board and CEO. Rather, the Board has the discretion to combine or separate these roles as it deems appropriate from time to time, which provides the Board with the necessary flexibility to adjust to changed circumstances. The Board has determined that separating the roles of Chairman and President and CEO allows the CEO to devote the requisite significant time to, and focus on, managing our business and maintaining our financial strength.

The Company’s independent Presiding Director functions as a Lead Director, but the Board prefers the term Presiding Director to emphasize that all directors share equally in their responsibilities as members of the Board. The Presiding Director presides at all Board meetings and executive sessions at which the Chairman is not present and is responsible for coordinating the annual self-evaluations of the members of the Board. Additionally, the Presiding Director is available for consultation and communication with shareholders as part of the Board’s shareholder outreach program and performs such other functions as the Board directs. The Presiding Director is appointed annually by, and from among, the independent directors.

Committee Chairs – All Committee chairpersons are independent and are appointed annually by the Board. They approve agendas and materials for their respective committee meetings and serve as the liaisons between committee members and the Board and between committee members and senior management.

 

Page 11

		CORPORATE GOVERNANCE

 

BOARD’S ROLE IN RISK OVERSIGHT

Our Board devotes significant attention to the oversight of risks inherent in our banking business, including information security risk, credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, and reputational risk. Management of risk is important to the success of our operations and business strategies.

The Board reviews the key risks associated with the Company’s strategic plan annually and regularly throughout the year as part of its consideration of the strategic direction of the Company as well as reviewing the output of the Company’s risk management process each year and reviewing risks associated with specific business units and corporate functions.

While the Board of Directors as a whole is responsible for risk management oversight, management is responsible for the day-to-day management of the risks faced by the Company. As part of our risk oversight processes, our Chief Risk Officer reports to the Risk Assessment Committee; the Chairman of the Board’s Risk Assessment Committee meets regularly with management to discuss strategies and the risks facing the Company; and senior members of management attend Board meetings and are available to address questions or concerns raised by the Board on risk management and other matters.

In carrying out its responsibilities in this area, the Board has delegated important duties to its committees. The Risk Assessment Committee has responsibility to oversee the functioning of the Company’s enterprise risk management program and to ensure that risk is appropriately identified, measured, mitigated, monitored, and reported within approved governance structures. Among its duties, the Risk Assessment Committee reviews with management Company policies regarding risk assessment and management of risks that may be material to the Company, the Company’s system of disclosure controls and system of internal controls over financial reporting, the Company’s governance structure and processes, related person transactions, certain compliance issues and Board and committee structures, and the Company’s compliance with legal and regulatory requirements. The Chairman of the Risk Assessment Committee is independent and has the requisite risk experience required under the Dodd Frank Act’s Enhanced Prudential Standards for large banks.

The Risk Assessment Committee also is actively involved in oversight of the Company’s cybersecurity risks. Information security breaches and other cybersecurity events can lead to significant financial losses and reputational harm to a breached company, and information security, including cybersecurity, is a high priority for our Company. Accordingly, we continue to develop policies and utilize technology to protect our information and that of our customers from cyberattacks or other corruption or loss. Our Chief Information Security Officer is responsible for developing, implementing, and maintaining an effective information security program, which includes, but is not limited to, the performance of risk assessments for the purpose of identifying and documenting risks and mitigating controls. The information security program is subject to independent testing and relies upon the Federal Financial Institutions Examination Council’s Cybersecurity Assessment framework to gauge the program’s maturity level, New York State Department of Financial Services information security regulations, and other evolving standards. The Board, directly and through the Risk Assessment Committee, actively oversees management’s efforts to maintain and enhance our cybersecurity practices, reviewing and approving information security policies and programs, including those relating to cybersecurity, security risk assessment, security strategies, disaster recovery, business continuity, and incident response plans. The CISO conducts training and awareness programs for the Board to ensure that the Board remains aware and informed of information security incidents and response plans.

The Audit Committee also serves a key role in managing our risk, mainly through its oversight of the external and internal audit function, which assesses and tests the adequacy of internal controls and the financial reporting process. The Audit Committee oversees risks related to the Company’s financial statements, the financial reporting process, other financial matters, certain compliance issues, and accounting and legal matters.

Finally, the Compensation Committee has responsibility for overseeing certain risks in the Company’s incentive compensation practices and has authority to conduct annual reviews of such compensation arrangements and practices to ensure that they do not encourage inappropriate risk-taking. The Compensation Committee also oversees succession planning for possible successors to the positions of Chief Executive Officer and Chief Operating Officer and planning for other key senior management positions. The Compensation Committee has concluded that the Company’s the compensation arrangements do not encourage inappropriate risks.

In performing these risk oversight functions, the Risk Assessment, Audit, and Compensation Committees of the Board each have full access to management in the Enterprise Risk Management and Internal Audit areas and in other first and second line functions within the Company, as well as the ability to engage advisors, and each committee reports back to the full Board and works with all members of the Board to fulfill risk oversight objectives.

The entire Board reviews and approves, on an annual basis, all significant policies that address risk within our consolidated organization, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, and reputational risk. The Board monitors risk through reports received on a monthly or more frequent basis from management.

 

Page 12

		CORPORATE GOVERNANCE

 

OTHER GOVERNANCE PRACTICES

Majority Voting in Director Elections – Our Certificate of Incorporation requires that nominees for Director in uncontested elections receive a majority of the votes cast in respect of their election as directors. If an election is uncontested, each of our director nominees has agreed to tender his or her irrevocable contingent resignation if he or she is not elected by a majority of votes cast by shareholders. The Board’s Nominating and Corporate Governance Committee will promptly consider the director’s resignation and recommend to the Board whether to accept or reject the resignation. Our Board will act on the Nominating and Corporate Governance Committee’s recommendation within ninety days of the applicable shareholder meeting and will then publically disclose its decision.

Shareholder Rights Plan – We do not have a shareholder rights plan and are not currently considering adopting one.

Corporate Governance Guidelines – Our Corporate Governance Guidelines formalize certain of the Community Bank’s and the Board of Directors’ existing governance policies and practices with respect to board membership; leadership; roles, procedures and practices; committees; and executive officer evaluations, compensation and succession and also address the new governance policies discussed below. These Corporate Governance Guidelines are available on the Company’s website (www.myNYCB.com) under Investor Relations.

Board Self-Evaluations – The Board of Directors annually assesses its effectiveness, the operations of its committees, and the contributions of director nominees. The independent Presiding Director coordinates the evaluation of the Board as a whole and its committees, as well as individual evaluations of those directors who are being considered for possible re-nomination to the Board.

Proxy Access – Our amended and restated Bylaws permit a shareholder, or a group of up to 20 shareholders, that owns three percent or more of the Company’s common stock continuously for at least three years, to nominate and include in the Company’s proxy materials candidates for election as directors. Such shareholder(s) or group(s) of shareholders may nominate up to the greater of two individuals or 20% of the Board, provided that the shareholder(s) and the nominee(s) satisfy the eligibility, notice, and other requirements specified in the Bylaws.

Code of Business Conduct and Ethics – The Company maintains a Code of Professional Conduct, applicable to all Company and Community Bank employees, which sets forth requirements relating to ethical conduct, conflicts of interest, and compliance with the law. The Code of Professional Conduct requires that the Community Bank’s employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in the Company’s and the Community Bank’s best interests. The CEO, Chief Operating Officer, and Chief Financial Officer are bound by the Code of Professional Conduct. In addition, the Board of Directors has adopted a Code of Business Conduct and Ethics for the CEO, Chief Operating Officer, and Chief Financial Officer of the Company. Copies of both Codes, which also apply to the directors of the Company, are available, free of charge, on the corporate governance pages of the Investor Relations portion of our website, www.myNYCB.com, and are available in print to any shareholder who requests a copy.

Stock Ownership Policy – The Company maintains a Stock Ownership Policy which is intended to align the interests of senior executives and non-executive directors of the Company with the interests of the Company’s shareholders, and to support sound risk management by requiring each of them to attain and maintain a target level of stock ownership. The target level of stock ownership in the Company that each must attain and maintain shall differ depending on the applicable officer’s or director’s category and is expressed, for the year being measured, as a multiple of annual base salary for executives and as a multiple of annual retainer for non-executive directors. For the CEO, the multiple is six times base salary, for senior executives (including the NEOs), the multiple is four times base salary, and for the non-executive directors, the multiple is five times the annual retainer exclusive of any compensation for committee fees, meeting fees, and leadership roles.

Executive Sessions of the Board – In 2019, the Board met 12 times in executive session with the CEO and COO present and, in keeping with the Company’s Corporate Governance Guidelines, met two times in executive session with no members of management present.

Board Diversity and Tenure – The Nominating and Corporate Governance Committee has a commitment to diversity, and is guided by the Company’s diversity philosophy in its review and consideration of potential director nominees. In this regard, the Board and the Committee view diversity holistically. As set forth in the Company’s Corporate Governance Guidelines, the Board and the Committee consider:

 

Ø

Whether the individual meets the requirements for independence;

 

Page 13

		CORPORATE GOVERNANCE

 

Ø

The individual’s general understanding of the various disciplines relevant to the success of a large publicly-traded company in today’s global business environment;

Ø

The individual’s understanding of the Company’s business and markets;

Ø

The individual’s professional expertise and experience;

Ø

The individual’s educational and professional background; and

Ø

Other characteristics of the individual that promote diversity of views and experiences, including diversity with respect to gender, age, race and ethnicity.

The Nominating and Corporate Governance Committee has not established any specific minimum qualification standards for nominees to the Board and evaluates each individual in the context of the Board as a whole, with the objective of recommending a group of directors who will best enhance the Company’s success and represent shareholder interests through the exercise of sound judgment and the application of its diversity of experience. In determining whether to recommend a director for re-election, the Committee also considers the director’s past attendance at meetings and participation in, and contributions, to the activities of the Board. In addition, the Committee considers whether the Board has specific needs for certain skills or attributes at a given time (for example, financial or chief executive officer experience). Other criteria for Board membership are set forth in the Company’s Corporate Governance Guidelines and Nominating and Corporate Governance Committee Charter, copies of which are available, free of charge, on the corporate governance pages of the Investor Relations portion of our website, www.myNYCB.com, and are available in print to any shareholder who requests a copy.

Long-tenured directors can offer significant benefits in the governance of the Company due to the deep knowledge of our business and functioning they acquire through years of service. They provide continuity and stability at the highest governance level, as well as historical perspectives that are indispensable in determining the Company’s strategic vision. Long-tenured directors maintain significant institutional knowledge and offer stability. In addition, due to their historical knowledge of the Company, long-tenured directors can be particularly well suited to exercise Board-level influence and to provide an effective challenge mechanism when required. Over the course of time, in addition to their stature, long-tenured directors develop important working relationships with other Board members and management, resulting in effective collaboration in carrying out the Company’s objectives and management oversight. Our Board believes that director tenure, like other governance policies and structures, should be tailored to the Company’s unique governance needs and challenges.

Our Bylaws provide that, unless otherwise determined by a majority of the disinterested members of the Board, no person may be elected, appointed, or nominated as a director after December 31 of the year in which such person attains the age of 80. Based upon, among other things, the significant experience, knowledge, and value they offer the Board, the Board has previously and unanimously determined to exempt certain members from this retirement age requirement.

 

Page 14

		CORPORATE GOVERNANCE

 

BOARD COMMITTEES

The Board conducts its business through periodic meetings and through the activities of its committees. In 2019, the Board held 12 regular monthly meetings and various standing committees of the Board met another 34 times, for an aggregate of 46 meetings. All incumbent directors of the Company attended at least 75% of the aggregate number of meetings of the Board and committees on which such directors served during fiscal year 2019. Board members are expected to make reasonable efforts to attend all Board meetings and all meetings of the Board committees on which they serve. Absences are excused only for good cause.

 

 

The Board has four standing committees as follows: (i) Audit Committee, (ii) Compensation Committee, (iii) Nominating and Corporate Governance Committee, and (iv) Risk Assessment Committee. Each committee has a written charter adopted by the committee and ratified by the Board. As required by NYSE Rules, charters for the Audit, Compensation, and Nominating and Corporate Governance Committees can be found on the Investor Relations portion of the Company’s website at www.myNYCB.com, and are available in hardcopy to any shareholder who requests them. Each member of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee has been determined by the Board to be independent for purposes of the NYSE corporate governance listing standards and within the meaning of regulations of the SEC.

 

Page 15

		CORPORATE GOVERNANCE

 

The following table presents the membership of our Board members on the various Board committees as of April 7, 2020:

 

Director

Dominick Ciampa†

Hanif “Wally” M. Dahya#

Leslie D. Dunn

Michael J. Levine*@

James J. O’Donovan

Lawrence Rosano, Jr.

Ronald A. Rosenfeld

Lawrence J. Savarese*#

John M. Tsimbinos

Joseph R. Ficalora

Robert Wann

Meetings Held in 2019

13

7

2

12

52

51

 

(1)	All Company Board Committees are replicated at the Community Bank level. Additionally, the Community Bank Board maintains a Mortgage and Real Estate Committee and Commercial Credit Committee.

 

 

Chairman of the Committee         Member of the Committee

†	Chairman of the Board of Directors

*	Designated as Audit Committee Financial Expert

@	Designated independent Presiding Director

#	Designated as Risk Committee Expert

A description of the nature and purpose of each of the Board committees follows.

The Board Committees act under written charters adopted by the Board of Directors which include detailed lists of the respective Committees’ functions. Copies of the charters for the Audit, Compensation, Nominating and Corporate Governance, and Risk Assessment Committees are available, free of charge, on the corporate governance pages within the Investor Relations portion of our website at www.myNYCB.com, and are available in print to any shareholder who requests a copy.

 

Page 16

		CORPORATE GOVERNANCE

 

Audit Committee
Members: Lawrence J. Savarese (Chair) Hanif M. Dahya Leslie D. Dunn Michael J. Levine Ronald A. Rosenfeld   The Board of Directors has determined that Messrs. Savarese and Levine are “audit committee financial experts” under the rules of the SEC.   Meetings held in 2019: 13		The purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities, including with respect to review and, as applicable, approval of (1) the integrity of the Company’s financial statements; (2) the Company’s compliance with applicable legal and regulatory requirements; (3) the independent registered public accounting firm’s qualifications and independence; (4) the performance of the Company’s internal audit function and independent auditors; (5) the system of internal controls relating to financial reporting, accounting, legal compliance, and ethics established by management and the Board; and (6) the Company’s internal and external auditing processes.   This Committee meets with the Company’s and the Community Bank’s internal auditors to review the performance of the internal audit function.   A detailed list of the Committee’s functions is included in its written charter adopted by the Board of Directors, a copy of which is available free of charge on the corporate governance pages within the Investor Relations portion of our website at www.myNYCB.com, and is available in print to any shareholder who requests a copy.

 

Compensation Committee
Members: John M. Tsimbinos (Chair) Leslie D. Dunn Lawrence Rosano, Jr.   Meetings held in 2019: 7		This committee meets to establish compensation for the executive officers and to review the Company’s incentive compensation programs when necessary. (See Compensation Discussion and Analysis beginning on page 22 for further information on the Company’s processes and procedures for the consideration and determination of executive and director compensation.)   Consistent with SEC disclosure requirements, the Compensation Committee has assessed the Company’s compensation programs and has concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.   At the Committee’s direction, management of the Company maintains an Incentive Compensation and Performance Management Committee responsible for overseeing and monitoring non-executive incentive compensation objectives, performance management, and incentive compensation plans. The Committee, which consists of various senior officers, including the Chief Operating Officer and the Chief Risk Officer, has assessed the Company’s non-executive incentive compensation plans to determine if the programs’ provisions and operations create undesired or unintentional risk of a material nature. This risk assessment process includes a review of plan policies and practices; an analysis to identify risks and risk controls related to the plans; and determinations as to the sufficiency of risk identification, the balance of potential risk to potential reward, risk controls, and the consistency of the programs and their risks with regard to the Company’s strategies. Compensation agreements are subject to risk reviews by first and second lines of defense: an attorney designed by the Chief Operating Officer performs a first line review, which is followed by the Chief Risk Officer’s second line review. Reporting by the Incentive Compensation and Performance Management Committee to the Compensation Committee occurs at least annually.   Although the Compensation Committee reviews all compensation programs, it focuses on the programs with variability of payout, the ability of a participant to directly affect payout, and the controls on participant action and payout.   In response to the results of the 2018 shareholder advisory vote on executive compensation, the Compensation Committee was restructured and took several steps to revise the executive compensation program resulting in overwhelming support in the 2019 shareholder advisory vote on executive compensation.   Based on the foregoing, we believe that our executive compensation policies and practices do not create inappropriate or unintended significant risk to the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage significant risks; are compatible with effective internal controls and our risk management practices; and are supported by the oversight and administration of the Compensation Committee.

 

Page 17

		CORPORATE GOVERNANCE

 

Nominating and Corporate Governance Committee
Members: Michael J. Levine (Chair) Dominick Ciampa Hanif M. Dahya James J. O’Donovan Leslie D. Dunn Lawrence Rosano, Jr. Ronald A. Rosenfeld Lawrence J. Savarese John M. Tsimbinos   Meetings held in 2019: 2		The Committee considers and recommends the nominees for director to stand for election at the Company’s Annual Meeting of Shareholders.   The Nominating and Governance Committee is responsible for recommending to the Board the qualifications for Board membership, identifying, assessing, and recommending qualified director candidates for the Board’s consideration, assisting the Board in organizing itself to discharge its duties and responsibilities, and providing oversight of the Company’s corporate governance practices and policies, including an effective process for shareholders to communicate with the Board. The Committee is composed entirely of independent directors as defined by the NYSE Corporate Governance Standards and operates under a written charter. The Nominating and Corporate Governance Committee’s charter is available on the corporate governance pages within the Investor Relations portion of the Company’s website at www.myNYCB.com and is available in print upon request.   The Committee’s role in, and process for, identifying and evaluating prospective director nominees is described herein and above in Board Diversity and Tenure. See also Procedures for Shareholders to Recommend Directors. In addition, the Committee makes recommendations to the Board concerning director independence, Board committee assignments, committee chairman positions, Audit Committee “financial experts,” the financial literacy of Audit Committee members, and Risk Assessment Committee “risk management experts.”

 

Risk Assessment Committee
Members: Michael J. Levine (Chair) Lawrence Rosano, Jr. (Vice Chair) Dominick Ciampa Hanif M. Dahya Leslie D. Dunn James J. O’Donovan Ronald A. Rosenfeld Lawrence J. Savarese   The Board of Directors has determined that Messrs. Dahya and Savarese are “risk management experts” under the enhanced prudential standards of the Dodd-Frank Act.   Meetings held in 2019: 12		The Risk Assessment Committee has been appointed by the Company’s Board of Directors to assist the Board in fulfilling its responsibilities with respect to oversight of the Company’s risk management program, including as it relates to the risk appetite of the Company and the policies and procedures used to manage various risks, including credit, market, interest rate, liquidity, legal/compliance, regulatory, strategic, operational, reputational, and certain other risks.   The Risk Assessment Committee’s role is one of oversight, recognizing that management is responsible for designing, implementing, and maintaining an effective risk management program. The Company’s departmental managers are the first line of defense for managing risk in the areas for which they are responsible. As a second line of defense, the Company’s Chief Risk Officer provides overall leadership for the Company’s enterprise risk management framework, including risk identification, risk measurement, risk monitoring, risk mitigation, risk reporting, and model risk.   At each regularly scheduled meeting of the Risk Assessment Committee, the Committee receives a monthly report from the Chief Risk Officer with respect to the Company’s approach to the management of major risks, including the implementation of the enterprise risk management program and risk mitigation efforts. The Chief Risk Officer is responsible for an integrated effort to identify, assess, and monitor risks (including through risk measurement, risk monitoring, risk mitigation, and risk reporting) that may affect the Company’s ability to execute on its corporate strategy, perform in accordance with approved risks limits and warning levels, and fulfill its business objectives. The Risk Assessment Committee enhances the Board’s oversight of risk management.   The Risk Assessment Committee responsibilities include oversight of the Company’s capital and stress testing program as required under the applicable rules and regulations of the Dodd-Frank Act and oversight of the Company’s exposure to cyber risk as an integral aspect of the Company’s overall risk management strategies.

In addition to the above described committees of the Company Board, the Community Bank Board maintains committees with important oversight responsibilities for the Community Bank’s lending functions: the Mortgage and Real Estate Committee and the Commercial Credit Committee of the Community Bank Board serve important governance functions in the lending businesses of the Company. The multi-family, commercial real estate, commercial and industrial, and other non-residential loans we originate all are made in accordance with loan underwriting policies and procedures approved by the respective Committees, which maintain active oversight of management’s loan origination, servicing, and collections processes. Committee members, who have significant experience in real estate businesses as well as real estate and other lending, apply their knowledge and expertise in key policy and risk-management decisions relating to these core business areas.

 

Page 18

		CORPORATE GOVERNANCE

 

Mortgage and Real Estate Committee – The Mortgage and Real Estate Committee is a committee of the Community Bank Board of Directors and was appointed by that Board to oversee the Community Bank’s credit management policies and procedures. The authority of the Committee includes, among other things, oversight regarding the administration and implementation of loan policies, review of the risks associated with loans approved by management, and the delegation of credit authority. Each member has expertise in relevant areas of commercial and residential real estate; lending and lending risk; and the business of financial institutions.

The members of the Mortgage and Real Estate Committee are Messrs. O’Donovan (Chair), Ciampa, Ficalora, Levine, Rosano, and Tsimbinos. The Mortgage and Real Estate Committee met 52 times in 2019.

Commercial Credit Committee – The Commercial Credit Committee is a committee of the Community Bank Board of Directors and was appointed by that Board in September 2018 to oversee the Community Bank’s credit management policies and procedures, and the lending activities of the Bank’s specialty finance company subsidiary, which originates asset-based loans, dealer floor-plan loans, and equipment loans and leases. The authority of the Committee includes, among other things, oversight regarding the administration and implementation of commercial and industrial loan policies, review of the risks associated with such loans approved by management, and the delegation of credit authority. Each member has expertise in relevant areas of commercial and industrial lending, lending risk, and the business of financial institutions.

The members of the Commercial Credit Committee are Messrs. Dahya (Chair), Ciampa, Ficalora, Levine, O’Donovan, Rosano, Savarese, and Tsimbinos. The Commercial Credit Committee of the Community Bank Board met 51 times in 2019.

 

DIRECTOR ATTENDANCE AT ANNUAL MEETINGS

The Board of Directors expects all directors to attend the Annual Meeting of Shareholders. All of the then-serving Board members attended the Annual Meeting of Shareholders held on June 4, 2019.

 

COMMUNICATION WITH THE BOARD OF DIRECTORS

Shareholders and other parties interested in communicating directly with the Company by directing correspondence to any of the individuals listed below. Letters addressed to the Presiding Director will be opened by the Company’s Corporate Secretary, who will review them and forward a summary of such correspondence to the Presiding Director and, if applicable, the Board. If the Corporate Secretary determines that an item of correspondence relates to the functions of the Board or its committees, or otherwise requires their attention, he will direct the item itself to the Presiding Director or other Board members. Directors may at any time review a log of all correspondence received by the Company that is addressed to the Presiding Director as provided above, and request copies of any correspondence.

How to contact us:

 

Chief Governance Officer		New York Community Bancorp, Inc. 615 Merrick Avenue, Westbury, NY 11590 Attention: Chief Governance Officer
Investor Relations		New York Community Bancorp, Inc. 615 Merrick Avenue, Westbury, NY 11590 Attention: Investor Relations Investors@myNYCB.com
Board of Directors		New York Community Bancorp, Inc. c/o Office of the Corporate Secretary 615 Merrick Avenue, Westbury, NY 11590
Presiding Director		New York Community Bancorp, Inc. c/o Office of the Corporate Secretary 615 Merrick Avenue, Westbury, NY 11590 Attention: Michael J. Levine, Presiding Director
Audit Committee of the Board of Directors		New York Community Bancorp, Inc. c/o Office of the Corporate Secretary 615 Merrick Avenue, Westbury, NY 11590 Attention: Lawrence J. Savarese, Audit Committee Chairman

 

Page 19

		CORPORATE GOVERNANCE

 

PROCEDURES FOR SHAREHOLDERS TO RECOMMEND DIRECTORS

It is the policy of the Nominating and Corporate Governance Committee to consider director candidates who appear to be qualified to serve on the Board and who are recommended by shareholders. The Nominating and Corporate Governance Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and if the Nominating and Corporate Governance Committee does not perceive a need to increase the size of the Board. To avoid the unnecessary use of its resources, the Nominating and Corporate Governance Committee will consider only those director candidates recommended in accordance with the procedures set forth below. To submit a recommendation of a director candidate to the Nominating and Corporate Governance Committee, a shareholder should submit the following information in writing, addressed to the Chairman of the Nominating and Corporate Governance Committee, care of the Corporate Secretary, at the main office of the Company:

 

a.

the name of the person recommended as a director candidate;

 

b.

all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended;

 

c.

the written consent of the person being recommended as a director candidate to being named in the proxy statement as a nominee and to serving as a director if elected;

 

d.

the name and address of the shareholder making the recommendation, as they appear on the Company’s books; provided, however, that if the shareholder is not a registered holder of Common Stock, the shareholder should submit his or her name and address along with a current written statement from the record holder of the shares that reflects ownership of the Common Stock;

 

e.

a statement disclosing whether such shareholder is acting with, or on behalf of, any other person and, if applicable, the identity of such person; and

 

f.

such other information as the Company may require in accordance with its established nomination procedures then in effect.

In order for a director candidate to be considered for nomination at the Company’s Annual Meeting of Shareholders, the recommendation must be received at the principal executive office of the Company not less than 90 days prior to the date of the meeting; provided, however, that in the event that less than 100 days’ notice or prior disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.

Under the proxy access provisions of our Bylaws, eligible shareholders and/or shareholder groups were permitted to include shareholder-nominated director candidates in our proxy materials for the 2020 annual meeting of shareholders. No such proposals were received. For details about the process to include shareholder-nominated director candidates in our proxy materials, please see Additional Information – Proxy Access Nominations and refer to Article I, Sections 6, 7, and 8 of our Amended and Restated Bylaws. A copy of the Amended and Restated Bylaws of the Company are available, free of charge, in print to any shareholder who requests a copy.

 

Page 20

		BENEFICIAL OWNERSHIP

 

INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS, AND EXECUTIVE OFFICERS

The following table sets forth, as of April 7, 2020, the names of the nominees, continuing directors, and executive officers of the Company, their ages and, as applicable, the year in which he or she became a director and the year in which his or her term (or in the case of the nominees, their proposed terms) as director of the Company expire. The table also sets forth the amount and percentage of Common Stock beneficially owned by each director, by each named executive officer (as defined on page 22), and by all directors and executive officers as a group as of April 7, 2020.

 

Name		Age					Director Since					Shares of Common Stock Beneficially Owned (1) (2)					Percent of Class
Nominees (Whose Terms Would Expire in 2023):
Dominick Ciampa				86					1995					511,821	(3,4)				0.110	%
Leslie D. Dunn				74					2015					25,604	(3)(4)				0.006	%
Lawrence Rosano, Jr.				67					2014					31,104	(3,4)				0.007	%
Robert Wann				65					2008					2,416,794	(3,5)				0.521	%
Directors Whose Terms Expire in 2021
Hanif “Wally” Dahya				64					2007					169,009	(3,4)				0.036	%
Joseph R. Ficalora				73					1989	(7)				7,103,211	(3,4,5)				1.531	%
James J. O’Donovan				77					2003					1,360,814	(3,4,5)				0.293	%
Directors Whose Terms Expire in 2022:
Michael J. Levine				75					2004					328,369	(3,4)				0.071	%
Ronald A. Rosenfeld				80					2012					106,270	(3,4)				0.023	%
Lawrence J. Savarese				63					2013					110,684	(3,4)				0.024	%
John M. Tsimbinos				82					2003					1,210,841	(3,4)				0.261	%
Named Executive Officers Who Are Not Directors:
Thomas R. Cangemi				51					—					1,240,0422	(3,4,5,6)				0.267	%
James J. Carpenter				59					—					669,651	(3,4)				0.144	%
John J. Pinto				49					—					529,263	(3,5)				0.114	%
All directors and executive officers as a group (14 persons)														15,813,477					3.408	%

 

(1)

Includes the following shares of common stock held directly: Mr. Ciampa: 10,008; Mr. Ficalora: 3,847,627; Mr. Levine: 3,000; Mr. O’Donovan: 721,846; Mr. Rosano: 17,800; Mr. Savarese: 66,675; Mr. Tsimbinos: 983,527; Mr. Wann: 1,422,356; Mr. Cangemi: 939,625; Mr. Carpenter: 512,789; and Mr. Pinto: 382,184.

(2)

Each person effectively exercises sole (or shares with spouse or other immediate family member) voting or dispositive power as to shares reported herein (except as noted). Figures include all of the shares held directly and indirectly by directors and the Company’s executive officers, as well as the shares underlying stock awards that have been granted to, and are currently exercisable or exercisable within 60 days by, such directors and executive officers under the Company’s various stock-based benefit plans.

(3)

Includes the following shares of unvested restricted stock awards: Mr. Ciampa – 56,914; Mr. Dahya – 34,509; Ms. Dunn – 12,204; Mr. Ficalora – 356,994; Mr. Levine – 34,509; Mr. O’Donovan – 33,509; Mr. Rosano – 10,804; Mr. Rosenfeld – 10,804; Mr. Savarese – 34,509; Mr. Tsimbinos – 14,205; Mr. Wann – 173,753; Mr. Cangemi – 107,581; Mr. Carpenter – 80,616; and Mr. Pinto – 72,301.

(4)

Includes the following shares that are owned by spouses of the named nominees, continuing directors, and executive officers or are held in individual retirement accounts, trust accounts, custodian accounts, or foundation accounts for which the directors and the executive officers are deemed beneficial owners: Mr. Ciampa – 444,899; Mr. Dahya – 134,500; Ms. Dunn – 13,400; Mr. Ficalora – 300,863; Mr. Levine – 293,860; Mr. O’Donovan – 5,318; Mr. Rosano – 2,500; Mr. Rosenfeld – 95,466; Mr. Savarese – 9,500; Mr. Tsimbinos – 213,109; Mr. Cangemi – 60,335; and Mr. Carpenter – 76,246.

(5)

Includes the following shares allocated under the NYCB Employee Stock Ownership Plan (“ESOP”) (and in the case of Messrs. Ficalora, Cangemi and Pinto, acquired for their ESOP accounts pursuant to dividend reinvestments): Mr. Ficalora – 698,024; Mr. O’Donovan – 190,049; Mr. Wann – 402,849; Mr. Cangemi – 40,710; and Mr. Pinto – 42,939. Also includes 1,175,347; 348,000; and 293,285 shares allocated under the Community Bank’s Supplemental Benefits Plan (and acquired for their Supplemental Employee Retirement Plan (the “SERP”) accounts pursuant to dividend reinvestment) to the accounts of Messrs. Ficalora, O’Donovan and Wann, respectively. Further includes shares held by the trustee of the New York Community Bancorp, Inc. Employee Savings Plan (“401(k)”) for the accounts of the following officers: Mr. Ficalora – 724,356; Mr. Wann – 124,551; Mr. O’Donovan – 62,092; Mr. Cangemi – 91,791; and Mr. Pinto – 31,307; which include shares acquired in Messrs. Ficalora’s, Cangemi’s, and Pinto’s accounts pursuant to dividend reinvestment. The Community Bank Supplemental Benefit Plan, SERP, and Employee Savings Plan are more particularly described in the Compensation Discussion and Analysis section of this proxy statement beginning on page 22.

(6)

Mr. Cangemi has pledged 515,729 shares of Common Stock pursuant to margin account arrangements. The margin balances outstanding, if any, pursuant to such arrangements may vary from time to time. All pledge obligations entered into before the adoption of the new policy on pledging stock are grandfathered for the duration of the pledge commitment. See page 40 for a summary of our policy on hedging and pledging of Common Stock.

(7)	Includes years of service as a trustee or director of the Community Bank.

 

Page 21

		EXECUTIVE COMPENSATION

 

EXECUTIVE COMPENSATION AND RELATED INFORMATION

I. COMPENSATION DISCUSSION AND ANALYSIS

A. INTRODUCTION

We are pleased to provide our shareholders with an overview and analysis of the compensation programs in which the following executive officers (our “named executive officers” or “NEOs”) participated during 2019 and the process we use to make specific compensation decisions for our NEOs:

 

•

Joseph R. Ficalora, President and Chief Executive Officer

 

•

Robert Wann, Senior Executive Vice President and Chief Operating Officer

 

•

Thomas R. Cangemi, Senior Executive Vice President and Chief Financial Officer

 

•

James J. Carpenter, Senior Executive Vice President and Chief Lending Officer

 

•

John J. Pinto, Executive Vice President and Chief Accounting Officer

Ø Scope of the Compensation Discussion and Analysis

The Compensation Discussion and Analysis provides shareholders with important information regarding the context and details of our executive compensation program, including the following:

 

✓

a discussion of our 2019 say-on-pay advisory vote and our shareholder engagement process during 2019 and early 2020;

 

✓

an overview of the Company’s business environment in 2019;

 

✓

a description of each element of our executive compensation program and the purpose it serves;

 

✓

a review of the process by which the Compensation Committee makes compensation decisions, including an overview of the timeline, the parties involved, risk considerations and tax considerations; and

 

✓

a discussion of the Compensation Committee’s 2019 incentive compensation decisions and the key factors that influenced those decisions.

Ø Our 2019 Say-on-Pay Advisory Vote

We are pleased that over 92% of the votes cast on our say-on-pay advisory vote at the 2019 Annual Meeting were in favor of our executive compensation program. The positive 2019 vote reflected shareholder’s approval of the significant changes we made in response to an adverse 2018 say-on-pay vote. We believe that the 2019 vote reflected strong shareholder support for the decisive action and program changes that the Board and Compensation Committee took to address specific shareholder concerns and restore shareholder confidence in our executive compensation program. The Committee has continued to work diligently to ensure that our executive incentive compensation program is consistent with our philosophy, market best practices and the feedback we receive from our shareholders. The Committee will continue to monitor the results of the 2020 say-on-pay vote to ensure continued support for our incentive pay program among our shareholders.

Ø Engaging With Our Shareholders

Shareholder engagement is a continuous and year-round process for the Board and executive management. Our dialogue with shareholders is a critical element in the evaluation of our executive compensation program and corporate governance practices. We take the shareholder engagement process seriously, and take action based on the feedback that we receive. We recognize that accountability to our shareholders is the cornerstone of sound corporate governance and essential to the attainment of our business objectives.

Building on prior year outreach efforts and information we learned, our shareholder outreach process began in early 2020. In support of the Compensation Committee’s ongoing efforts to understand shareholder concerns relating to executive compensation, Committee members, joined by other key Board members and key management personnel in the areas of investor relations, legal and human resources, made contact with the representatives of shareholders representing over 23% of our outstanding shares, including our two largest institutional shareholders. We anticipate that, following the mailing of this Proxy Statement, additional shareholder outreach meetings will be held. During the same period, our CEO and CFO met with shareholders at 13 investment conferences and held 26 investor meetings in person or by teleconference. In total, management met with 273 shareholders or prospective shareholders from 120 discrete institutions.

 

Page 22

		EXECUTIVE COMPENSATION

 

Our discussions provided the Committee with confirmation that shareholders considered the revision of our executive compensation program a reversal of the past practices that attracted criticism from both shareholders and proxy advisory firms. Our favorable 2019 say-on-pay vote and our engagement with shareholders in 2019 and 2020 provided strong support for the Committee’s decision to maintain the revised plans in 2020. Although our shareholder outreach sessions also touched on topics related to the Company’s business and strategy, common themes relating to executive pay emerged from these discussions:

 

✓

Shareholders commented favorably on the Company’s changes to its executive incentive compensation programs that aligned with market and best practices. Specifically, shareholders appreciated the elimination of certain features of the prior program, such as the exclusive use of relative metrics, the averaging of percentile rankings for relative performance results, and the use of a backward-looking performance period that contributed to a misalignment of pay and performance.

 

✓

Shareholders encouraged the Committee to continue to monitor peer programs and industry best practices and adjust the program as necessary to ensure consistency with these benchmarks. After fully implementing the plans for the first time in 2019, the Committee maintained the revised plans in 2020 in the same format after discussions with the Committee’s independent consultant confirmed that the plans were still consistent with a mainstream approach to incentive plan design. The Committee will continue to monitor the plans in light of market trends and emerging best practice.

 

✓

Shareholders commented favorably on the transition to a program that incorporated a transparent and formulaic structure that substantially eliminated the need for the Committee to intervene to achieve an appropriate alignment of pay and performance. Shareholders noted that, by relying on weighted metrics and increased performance thresholds, the new program was more aligned with their pay-performance alignment goals.

 

✓

Shareholders commented favorably on the use of metrics in the long-term incentive plan (the “LTIP”) that were significant to investors who take a long-term view of their investment in our stock.

 

✓

Shareholders commented favorably on the transition to the use of a 3-year, forward looking performance period for the LTIP.

 

✓

Shareholders commented favorably on the use of weighted metrics in the short-term incentive plan (the “STIP”) and the elimination of the “averaging of the percentile ranks” feature of the prior plan that tended to mask the effect of poor performance with respect to a particular metric. Shareholders also favored the use of an absolute metric (pre-tax operating earnings) tied to the Company’s budget at a 50% weighting.

 

✓

Shareholders commented favorably on the adjustment of the target performance for relative metrics in both the STIP and LTIP to the 55th percentile and the increase in the threshold performance level to the 35th percentile.

 

✓

Shareholders advised the Committee to review the Company’s designated peer group to ensure consistency with the Company’s size and business model. Based on this guidance, the Committee revised the peer group to exclude three institutions (Fifth Third Bancorp, Citizens Financial Group, and Northern Trust Corp.) that had been singled out by shareholders as possibly not suitable candidates for inclusion in the peer group. Shareholders also suggested that the disclosure reflect in more detail the reasons why certain companies were selected for inclusion in the peer group or excluded (which we address under Benchmarking and Peer Group Analysis beginning on page 29).

 

✓

Shareholders encouraged the Committee to monitor the positioning of NEO pay levels relative to similarly situated executives at peer institutions. The Committee continued to hold NEO base salaries flat and will continue to review the positioning of overall NEO compensation relative to peers as the Committee evaluates the impact of full implementation of the revised NEO incentive compensation plans.

 

✓

Shareholders also recommended that the disclosure regarding the Company’s business strategies and business advantages be expanded to provide more detail on their implementation.

 

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		EXECUTIVE COMPENSATION

 

Ø 2019 Company Performance

We believe shareholders should continue to benefit from the fundamental soundness of our business model as reflected in the following factors:

 

•

We are among the largest bank holding companies with total assets of $53.6 billion in assets, $41.7 billion in loans ($31.2 billion in multi-family loans) and total deposits of $31.7 billion.

 

•

Our asset quality in any credit cycle has consistently outperformed our peers with very few non-performing loans resulting in actual losses.

 

•

We maintain a strong capital position.

 

•

We successfully implemented broad cost-cutting initiatives in 2018 and 2019 and maintain an efficiency ratio that places us in the top ranks among of our peers.

 

•

Our loan mix has remained consistent, and we have maintained our status as a market leader in multi-family lending to non-luxury, rent regulated properties.

 

•

Our approach to credit underwriting is conservative in all respects, and our experienced Board members are actively involved in the evaluation and approval of loans.

 

•

Our multi-family portfolio is well insulated from recent changes in New York rent regulations laws. Our loan-to-value ratio on these properties remains low and our lending policy focuses on current, rather than projected, cash flows.

 

•

We have successfully extended our lending activity into specialty finance, which has experienced significant year-over-year growth since we started this business at the end of 2013.

In 2019 and continuing into 2020, we emphasized the continuation of our core business strategies, focusing on the factors that we can control to create future earnings growth:

 

•

We resumed asset growth immediately after the passage of legislation that raised the Dodd-Frank asset threshold for a “systemically important financial institution” (“SIFI”) from $50 to $250 billion, and we continue to benefit from the new rules as we continue to reduce the significant compliance costs we were incurring to prepare for meeting SIFI requirements.

 

•

We believe that the Company will benefit from significant repricing opportunities for loans, deposits and wholesale borrowings.

 

•

We are maintaining a focus on expense containment, and we expect our efficiency ratio will continue to improve through operating leverage.

We remain committed to a strategy that allows us to grow through accretive transactions and enhance long-term shareholder value.

 

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		EXECUTIVE COMPENSATION

 

Ø Selected 2019 Financial Benchmarks

 

$53.6 Billion

$31.7 Billion

$362 Million

35%

Assets

Deposits

Net Income Available to Common Shareholders

Speciality Finance Loan Growth

$0.77

0.80%

9.70%

49.08%

EPS (Fully Diluted)

ROATA

ROATCE

Efficiency Ratio

$41.7 Billion

-6.5%

11.22%

0.15%

Loans Held for Investment

Decline in Non-Interest Expense

Tier 1 Risk-Based Capital

Non-Performing Loans/Total Loans

Ø 2019 Executive Compensation Highlights

In 2019, the NEOs received awards under both the revised STIP and LTIP. The Compensation Committee had authorized significant revisions to both the STIP and the LTIP in the latter part of 2018. While payouts for the 2018 performance year were made under the new STIP, the Committee deferred implementation of the new LTIP to 2019 (i.e., no equity grants were made in 2018). The delay reflected the consensus view of the Committee and management that deferring implementation of the new LTIP to 2019 was in the best interests of the Company and its shareholders. As a result, the first grant under the new LTIP was made in 2019. The 2019 LTIP awards resulted in a significant increase in year-over-year total direct compensation (base salary + cash incentives + equity incentives) for our CEO and our other NEOs. However, shareholders should consider this increase with reference to the fact that our CEO and other NEOs did not receive any equity-based compensation in 2018 and, as described more fully below, the largest share of the LTIP award (75%) is purely performance-based and actual awards, if any, will not be determined until after the close of the 2019-2021 performance period.

The Committee continues to believe that the new incentive programs addressed the material concerns that we heard from our investors while continuing to meet the basic objectives of our compensation philosophy. Moreover, the Committee believes that the new program provides a sound basis for rewarding our senior management team and effectively aligns pay and performance without relying on the Committee’s exercise of negative discretion to reach appropriate results.

Below is a summary of the 2019 pay decisions:

 

✓

No Change to Base Salaries

The Compensation Committee reviewed the base salaries of our CEO and the other NEOs in March 2019 and did not authorize any adjustments. The Committee determined that current base salaries were consistent with the objectives of our compensation philosophy and were appropriately positioned relative to peers and as a driver of award opportunities under the executive incentive pay program. Our CEO’s base pay has not changed since 2015 and the other NEOs have not received base pay increases since 2016.

 

✓

STIP Awards Slightly Above Target

Our NEOs received awards under the revised STIP at 106.44% of the target level. This award reflected the Company’s performance under the new program design taking into account the weighted value of the three applicable metrics: (i) actual performance relative to the Company’s budgeted pre-tax operating earnings (50% weighting), (ii) return on average tangible assets (“ROATA”) relative to the Company’s designated peer group (25% weighting), and (iii) efficiency ratio relative to the Company’s designated peer group (25% weighting). The Company exceeded the target level for budgeted pre-tax operating earnings (102.31% of target) and the Company’s efficiency ratio was at the 90^th percentile of the peer group. For the 2019 measurement period, the Company’s ROATA fell below the threshold level relative to the peer group and, therefore, this metric did not contribute to the total award. In response to shareholder

 

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		EXECUTIVE COMPENSATION

 

feedback, the program also incorporated a modifier based on relative total shareholder return (“TSR”). The modifier triggers a 20% reduction in awards if the Company’s 1-year TSR falls below the 35^th percentile of the peer group and a 20% increase in awards if the Company’s 1-year TSR falls above the 75^th percentile of the peer group. Before taking the TSR adjustment into account, the award determined by reference to the three weighted metrics was at 88.7% of target. The Company’s 2019 TSR was at the 90^th percentile of the peer group, resulting in an upward 20% adjustment of the award to 106.44% of target. For a detailed discussion of award determinations under the 2019 STIP, see Overview of our Incentive Compensation Program below and the Executive Compensation Tables – Summary Compensation Table and the related tables that provide specific information on awards.

 

✓

Revised LTIP Was Implemented in 2019 (75% Performance-Based Shares / 25% Restricted Stock)

As a result of the deferred implementation of the LTIP, the NEOs did not receive equity-based awards in 2018. In 2019, the revised LTIP was implemented and the NEOs received awards under each of the two components of the program: (i) an time-based vested restricted stock award (“RSA”) with a value equal to 25% of each NEO’s total LTIP opportunity at target and (ii) an award of performance-based restricted stock units (“PBRSUs”) with a value equal to 75% of each NEO’s total LTIP opportunity at target. The number of units at target was determined on the grant date (April 29, 2019) based on closing price of the Common Stock ($11.42) and will vest in early 2022 based on the Company’s results over three-year performance period (2019 – 2021).

The Committee selected two metrics – relative average return on tangible common equity (“ROATCE”) and relative earnings per share (“EPS”) growth – for the 2019-2021 performance period. The Company’s performance with respect to these metrics will be evaluated at the end of the three-year performance period on a percentile ranking basis relative to an industry index consisting of 31 banks with assets between $25 billion—$250 billion selected from the KBW Regional Bank Index and the KBW Banking Index. Each performance metric has an equal weighting and the result for each metric contributes separately to the determination of the actual award, if any, at the end of the performance period.

The Committee also granted dividend equivalent unit awards in tandem with the PBRSUs but specified that dividend equivalents would only be paid when actual awards are determined after the end of the performance period and then only to the extent the related PBRSUs are earned.

For a detailed discussion of award determinations under the 2019 LTIP, see Overview of our Incentive Compensation Program below and the Executive Compensation Tables – Summary Compensation Table and the related tables that provide specific information on awards.

B. THE BUSINESS CONTEXT AND GOVERNANCE FRAMEWORK FOR OUR COMPENSATION DECISIONS

Ø Our Business Model and Approach to Driving Shareholder Value

We have historically built value for shareholders by executing on a unique business model that has provided consistently superior results over the long-term. The strength of our business model has enabled us to weather periods of economic downturn with greater success than our peers and to benefit from periods of economic expansion. The performance metrics we use to drive our incentive compensation programs encourage behavior that supports our business model.

 

✓

Building shareholder value – We have built long-term value for our shareholders with our growth through acquisition strategy and by maintaining the strength of our core business over decades. The total return on an investment in our stock since December 31, 1999 is 4,281%. Our business model has been enhanced by a history of accretive transactions that reflect the capacity of our management team to identify sound acquisition candidates and our capacity to achieve a successful integration of each transaction.

 

✓

Maintaining leadership in our core business niche – We have been a leader in the New York City multi-family lending market for more than 40 years. Our expertise in lending to borrowers in the non-luxury building/rent-regulated segment in the New York Metro area is unmatched in the industry. Nearly 78% of our loans are in the New York market and, in 2019, we maintained an average loan to value of 53.17% on loans we made to owners of rent-regulated properties in the New York market.

 

✓

Maintaining exceptional asset quality – Through conservative underwriting and operating standards, we have maintained exceptionally strong asset quality to ensure that our core sources of income will remain healthy through the long term. Even during challenging credit cycles, our asset quality measures remains exceptionally strong and better than those of our peers. Since our 1993 initial public offering, our cumulative loan losses stand at 104 basis points as compared to the banks in the broader SNL Bank and Thrift Index at 2,345 basis points. The trend in 2019 was consistent with our past performance.

 

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		EXECUTIVE COMPENSATION

 

✓

Holding the line on expenses – We consistently rank in the top tier of bank holding companies based on efficiency. Our management team has moved aggressively to reduce expenses over the last two years. After achieving significant expense cuts in 2018 ($95 million), management was able to reduce expenses by an additional $35 million in 2019.

 

✓

Growing our business in a competitive market – We have successfully extended our expertise in the multi-family space into commercial real estate lending while sustaining our history of minimal to no net charge-offs. Our specialty finance lending has experienced a compound annual growth rate of 34% since 2014 when we expanded the Company’s lending mix to include this asset class. Our net charge-offs on specialty finance loans have remained at $0 since we entered the business.

 

✓

Maintaining our capital strength – Recognizing the importance of capital strength to our regulators and investors, our efforts to ensure low credit losses have enabled us to maintain strong earnings and capital. By all measures, our capital position compares favorably to our peers and to the banks included in the broader SNL Bank and Thrift Index

 

✓

Managing risk to preserve the value of our business. We operate our business within the limits of our risk appetite and support the mitigation of risk by creating a business environment that focuses on the maintenance of effective controls and sound governance. A measure of the success of our efforts to manage risk is reflected in our highly favorable asset quality metrics.

 

Ø	Our Compensation Philosophy

Our approach to executive compensation is reflected in five guiding principles:

 

Ø

Support our strategic objectives and drive the creation of shareholder value through the attainment of positive business results.

 

Ø

Place a significant portion of each executive’s total compensation at risk based on the Company’s short- and long-term performance on an absolute basis and relative to our peers.

 

Ø

Be competitive in the market for executive talent and provide a means for the Company to attract and retain key executives.

 

Ø

Align the interests of our executives with our shareholders by providing our executives with a meaningful equity stake in the Company.

 

Ø

Not provide incentives for our executives to take unnecessary or excessive risks that could compromise the value of our business.

 

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		EXECUTIVE COMPENSATION

 

Ø	The Governance Framework for Our Executive Compensation Program

All decisions on executive compensation are made within the context of a strong governance framework that helps ensure that the outcome is consistent with our compensation philosophy, the creation of shareholder value, and the safety and soundness of our banking operations. To that end, we use the following principles to guide the development and implementation of our executive compensation program:

 

Ø

We make all key executive compensation decisions and all decisions affecting our NEOs through a committee of independent directors, and the committee seeks advice from an independent compensation consultant on key executive compensation matters.

 

Ø

We engage in shareholder outreach at the Board and management levels to help us evaluate our governance structure and executive compensation program.

 

Ø

We require a strong ownership commitment from our officers and directors. Our executives hold a significant equity interest in the Company, reflecting levels greatly in excess of our stock ownership guidelines.

 

Ø

We have a “clawback” policy that allows us to recapture amounts paid on the basis of financial results in the event that such results are found to be materially misstated.

 

Ø

We do not allow our executives to hedge or pledge Company stock. (One pledge obligation that was in effect prior to our adoption of a formal no hedging/no pledging policy in April 2016 was grandfathered from this prohibition.)

 

Ø

We do not allow “single trigger” payouts under our employment and change-in-control agreements.

 

Ø

We have eliminated a legacy commitment to provide our NEOs with tax reimbursement payments covering income they realize upon the vesting of restricted stock awards. This Committee ended this practice with respect to the vesting of awards granted for performance periods beginning after 2014. In prior years, the Company provided tax reimbursement payments to the NEOs to encourage their retention of all stock granted under the Company’s long-term incentive programs. Beginning with the 2015 performance period, the Company discontinued this practice prospectively with respect to all newly granted equity awards. The final reimbursement payment was made in March 2020 following the vesting of the last installment of an award granted in March 2015 for the 2014 performance period.

 

Ø

We do not allow stock option repricing without shareholder approval.

C. OUR EXECUTIVE COMPENSATION DECISION MAKING PROCESS

Ø Key Participants

 

☐	The Compensation Committee

Our Compensation Committee, all the members of which all of which are independent directors under NYSE listing standards, makes decisions on the compensation of our key executives, including our NEOs. This responsibility is discharged within the framework of a formal committee charter, which delegates a wide range of strategic and administrative issues to the Committee. Key among the Committee’s tasks is the development of, and monitoring of adherence to, the Company’s executive compensation philosophy. In addition, the Committee is responsible for ensuring that our plans and programs comply with all regulatory directives, including consideration of the risk profile of our compensation programs to ensure that such programs do not encourage unnecessary risk taking by participants. Finally, the Committee is charged with the annual administration of our executive incentive programs, including the development of plan design, the selection of performance metrics, the designation of specific performance goals and award opportunities, and the certification of performance results. See Board Committees-The Compensation Committee for a detailed discussion of the Committee’s responsibilities and membership. The Committee’s charter is posted on the corporate governance pages within the Investor Relations portion of our website at www.myNYCB.com.

The Committee met seven times in 2019, each time including discussions in executive session without management present.

 

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		EXECUTIVE COMPENSATION

 

The Committee reviews the compensation of each NEO annually to evaluate whether the executive’s pay level is consistent with our compensation philosophy, risk profile, and the performance of both the Company and the individual, and whether market practices dictate an adjustment in the form or level of the executive’s compensation. As part of this annual review, the Committee considers the executive’s individual contributions to the financial success of the Company, management of subordinates, contribution to safety and soundness objectives, and their long-term potential as a senior executive.

The Committee does not delegate any substantive responsibilities related to the determination of compensation for our NEOs, and the Committee members exercise their independent judgment when they make executive compensation decisions.

 

☐

Our CEO

Although the Compensation Committee makes independent determinations on all matters related to compensation of the NEOs, the CEO provides the Committee with his evaluation of the NEOs’ performance and makes recommendations regarding base salary and incentive compensation awards. However, the Committee has absolute discretion to accept, reject, or modify the CEO’s recommendations. Our CEO plays no role in, and is not present during, discussions regarding his own compensation or final decisions of the Committee regarding compensation of the other NEOs.

 

☐	The Independent Compensation Consultant

The Compensation Committee has retained Meridian Compensation Partners LLC (“Meridian”) as an independent compensation consultant. Meridian works with the Committee to review our executive compensation program and assess our program relative to our performance and the market. Meridian attends Committee meetings as requested and participates in general discussions regarding executive compensation matters. While the Committee considers input from Meridian, the Committee’s decisions are a reflection of many factors and considerations. Management works with Meridian at the direction of the Committee to develop materials and analyses that are critical to the Committee’s evaluations and determinations. Such materials include competitive market assessments of NEO compensation and guidance on regulatory and legal developments. Meridian also helps the Committee to identify an appropriate peer group and annually provides the Committee with comparative financial information for the peer group to establish and approve award levels under the Company’s incentive compensation program.

Meridian coordinates with the Chair of the Committee and participates with members of the Committee in executive session (without management personnel present) to discuss compensation matters. Meridian does not provide other services to the Company and has no direct or indirect business relationships with the Company or its affiliates. The Compensation Committee has considered Meridian’s independence for the 2019 fiscal year and whether its work raised conflicts of interest under the NYSE listing standards. Considering these factors, the Committee determined that the work performed by Meridian did not create any conflict of interest and that Meridian is independent of the Company’s management.

Ø Benchmarking and Peer Group Analysis

A critical element of our compensation philosophy, and a key reference point for compensation decisions for our executives, is the analysis of our executive compensation structure and financial performance relative to a peer group of similarly sized, publicly traded financial institutions. We seek to ensure proper alignment between our performance and compensation relative to our peers, and to attract and retain top talent, by providing competitive and appropriate compensation. To monitor our programs and decisions, we periodically benchmark our performance against that of our peers to assess the reasonableness of our compensation, ensure proper pay-for-performance alignment, and to establish total compensation opportunities for our named executive officers. Our peer group is selected with the assistance of our independent compensation consultant based on objective criteria. We consider a variety of factors such as their business footprint, business mix, how they compare to the Company in terms of asset size, revenue, market capitalization, and their status as a competitor for customers, executive talent, and investment capital. We believe the 20 banks included in the 2019 peer group all reflect the Committee’s consideration of these factors. As a general matter, the three most significant characteristics that determined the selection of our 2019 peer group were asset size, business mix, and market capitalization. In addition to meeting the foregoing criteria, certain peer banks, including BankUnited, M&T Bank Corp., Peoples United Financial, Inc., Popular, Inc., Signature Bank, Sterling Bancorp, Inc. and Valley National Bancorp, are direct competitors in our markets and, therefore, were deemed essential to the peer group.

The peer group is reviewed annually and changes periodically as a result of the Company’s growth, industry consolidation, and changes in a peer company’s business focus or condition. The 2019 peer group had a median asset size of approximately $39.4 billion, positioning the Company at the 69th percentile. Two companies were added to the 2019 peer group – Valley National Bancorp and Wintrust Financial Corporation. These additions reflected several considerations, including the growth of these companies into the asset range of the Company’s peer group criteria. In

 

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		EXECUTIVE COMPENSATION

 

direct response to feedback expressed during our shareholder engagement process, three companies that were included in the 2018 peer group – Citizens Financial Group, Inc., Fifth Third Bancorp, and Northern Trust Corporation – were excluded from the 2019 peer group on the basis of their larger size relative to the Company and, in the case of Northern Trust, differences in business model. Several other banks that match up well with the Company in asset size, such as SVB Financial Group and CIT group, Inc., were excluded from the peer group due to significant differences in their business model. In addition, nine banks in the asset range from $20-30 billion were excluded based on their smaller size relative to the Company. The Committee will continue to assess the universe of banks to evaluate possible candidates for inclusion in the peer group.

The 2019 peer group included the following 20 financial institutions:

 

Associated Banc-Corp Bank United BOK Financial Corp. Comerica Incorporated Cullen/Frost Bankers, Inc. First Citizens Bancshares, Inc. First Horizon National Corporation F.N.B. Corporation Huntington Bancshares Inc. KeyCorp		M&T Bank Corp. Peoples United Financial, Inc. Popular, Inc. Regions Financial Corporation Signature Bank Sterling Bancorp Synovus Financial Corp. Valley National Bancorp Wintrust Financial Corporation Zions Bancorporation

Ø Executive Performance Assessments

Our NEOs receive annual individual performance assessments following a process established by the Compensation Committee. Our CEO provides the Committee with an assessment of the other NEOs, and the Committee, in turn, provides our CEO with an assessment of his performance and considers the CEO’s evaluation of his direct reports. While the scope of the assessment may vary from year to year, the focus of the Committee’s review is on whether the executive is meeting the functional responsibilities of the position, oversight of regulatory compliance, progress toward strategic objectives, leadership and management of external relationships.

D. ELEMENTS OF COMPENSATION

Ø Introduction

Our NEOs participate in a competitive compensation program that emphasizes pay for performance and the creation of shareholder value. The elements of our program, the specific objectives for each element, and a summary of how we implemented each element in 2019 are summarized in the table below:

 

Compensation Element				Objective		Implementation
Base Salary		✓		Provides each executive with fixed compensation that reflects the executive’s position and responsibilities, market dynamics and our overall pay structure.		Base salary is subject to review in March of each year based on the Compensation Committee’s assessment of the executive’s individual performance during the prior year, a review of peer group practices and consideration of the impact of base salary levels on incentive compensation opportunities.
Short-Term Incentives		✓		Provide a cash-based, market-competitive annual award opportunity linked to financial measures that are important to our business model.		The 2019 STIP was linked to three weighted financial metrics with the greatest weight (50%) tied to meeting a specific Company earnings goal. The other metrics measured the Company’s performance relative to our peer group. Awards were subject to adjustment in limited circumstances based on the Company’s relative 2019 TSR. See 2019 Executive Compensation Decisions below for additional information on the structure of, and results under, the 2019 STIP.

 

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		EXECUTIVE COMPENSATION

 

Compensation Element				Objective		Implementation
Long-Term Incentives		✓   ✓		Provide an incentive for our executives to create shareholder value over the long term through equity awards. Align the interests of our executives with shareholders by awarding equity in the Company.		The 2019 LTIP included two components: (i) a grant of time-based vested restricted stock with a value equal to 25% of each NEO’s target award opportunity under the LTIP and (ii) a grant of PBRSUs equal to 75% of the target award opportunity to be earned over the 2019-2021 performance period. For the PBRSU grant, the Committee established two metrics – 3-year EPS growth and 3-year ROATCE – to evaluate the Company’s performance relative to an industry index. See 2019 Executive Compensation Decisions below for additional information on the structure of, and results under, the 2019 LTIP.
Retirement Benefits		✓		Provide tax-qualified benefit plans on the same terms as our rank-and-file employees to provide our executives with additional income after retirement.		Our current retirement program consists of our ESOP, which is funded with an annual Company contribution determined on a uniform basis for all employees as a percentage of eligible compensation and our 401(k) plan, which includes a “safe harbor” employer match. Our supplemental retirement benefit “excess” plan has been frozen since 1999.
Perquisites		✓		Limit perquisites so they represent a minor portion of the overall annual compensation of our NEOs.		Perquisites are limited and are provided only to the extent that such items that help each executive fulfill the requirements of his position.
Employment Agreements		✓ ✓     ✓		Help to ensure the continued availability of our NEOs in key positions. Establish market-competitive terms and conditions for the continuing employment of our NEOs, including severance benefits that reflect prevailing practices among our peers. Assist with an orderly transition of management if a change in control of the Company were to occur.		Our current NEO employment agreements have been in place without amendment since 2006. The agreements contain “double trigger” change-in-control protection (i.e., a severance obligation is triggered only by a change in control followed by the executive’s termination in specified circumstances). (See Other Executive Benefits below for additional details on the terms of these agreements). Although our legacy agreements indemnify our executives for liabilities related to the “golden parachute” excise taxes, the Compensation Committee has determined that any new agreements will not contain such indemnification.

Ø Target Pay Mix

On an annual basis, the Compensation Committee establishes a target pay mix for each NEO that is intended to ensure that the largest part of each NEO’s annual compensation is at risk and depends on the level of attainment of specific performance objectives. In 2019, over three-quarters of our CEO’s compensation, at the target level, was directly linked to the performance of the Company. The following charts classify the sources of NEO compensation in 2019 based on the target pay mix established by the Committee:

 

                    

 

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		EXECUTIVE COMPENSATION

 

Ø 2019 Executive Compensation Decisions

☐ Base Salary

The Compensation Committee reviewed the base salaries of our CEO and the other NEOs in March 2019 and did not authorize any adjustments. The Committee determined that current base salaries were consistent with the objectives of our compensation philosophy and were appropriately positioned relative to peers and as a driver of award opportunities under the executive incentive pay program. Our CEO’s base pay has not changed since 2015 and the other NEOs have not received base pay increases since 2016. The Committee again reviewed base salaries in early 2020 but did not authorize any changes.

Ø 2019 Executive Incentive Compensation Program

Our 2019 executive incentive compensation program was maintained under applicable provisions of our 2012 Stock Incentive Plan, which was approved by shareholders in 2012. If shareholders approve Proposal 5, relating to the 2020 Omnibus Incentive Plan, our executive incentive compensation program will continue under the new plan.

In 2019, our executive incentive compensation program had two components that incorporated the revisions adopted by the Compensation Committee in 2018: (i) a short-term performance-based award opportunity that was paid in cash based on 2019 performance and (ii) a long-term performance-based award opportunity consisting of an award of PBRSUs (75% of the total award at target) that are earned over a forward-looking performance period (2019-2021) and a grant of time-based RSAs (25% of the total award at target) that vests over three years.

Ø 2019 STIP

The following provides a summary of the key provisions of our 2019 STIP:

 

✓

Covered the 2019 calendar year and provided a cash award based on performance goals set by the Compensation Committee at the beginning of the year and communicated to the NEOs.

 

✓

Target cash incentive opportunities were defined as a percentage of 2019 base salary. For our CEO, the target opportunity was set at 125% of 2019 base salary. Target opportunities were based on peer/market practice. Additional details on award opportunities are provided in the section below.

 

✓

Award determinations were based on the Company’s performance relative to three weighted metrics. A description of each metric and reasons why the Committee selected the metric is set forth in the table below. Each metric had a separate weighting and the result for each metric contributed separately to the actual award, if any.

 

✓

Fifty percent of the total award was linked to the Company’s internal projection for 2019 pre-tax operating earnings. The target performance level for this metric reflected the value included in the 2019 budget approved by the Board of Directors. Pre-tax operating earnings was subject to adjustment for extraordinary items, accounting and tax law changes, discontinued operations, acquisition expenses, balance sheet restructuring charges and/or similar non-recurring or special items.

 

✓

The other two metrics (ROATA and efficiency ratio) were each weighted at 25% of the total award opportunity and measured the Company’s performance relative to the compensation peer group, as noted above. The Committee believed that the two relative metrics in the STIP were significant measures of the Company’s performance and that evaluating these metrics on a relative basis would provide an objective assessment of Company performance in the context of changing business conditions that affect the peer group generally. Additionally, the Committee considered the separate weighting of the metrics and the use of a TSR modifier as a means to provide a balanced assessment of Company performance.

 

✓

For the two relative metrics (ROATA and efficiency ratio), target performance was set at the 55th percentile of the compensation peer group to ensure that the target payout required the Company to exceed median performance at target. The threshold payout required the Company to exceed the 35th percentile of the peer group. The Committee believed that the increased threshold level set a more appropriate performance objective in the context of a relative metric. Stretch performance at or above the 75th percentile would position our Company in the top quartile relative to peers and support the maximum payout.

 

✓

After the aggregate award, if any, was determined by reference to the Company performance relative to the three financial metrics, a 1-year total shareholder return (“TSR”) modifier was applied to adjust the award downward (by 20%) if Company TSR was below the 35th percentile of peer group TSR and upward (by 20%) if

 

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		EXECUTIVE COMPENSATION

 

the Company’s 1-year TSR was above the 75th percentile of peer group TSR. The plan does not provide for an adjustment if 1-year Company TSR was negative, regardless of peer results. This provision was added based on shareholder feedback and a desire to recognize how our performance is perceived by shareholders.

Ø 2019 STIP Performance Metrics

The following table identifies the financial metrics established by the Committee for 2019 under the STIP, provides our rationale for the use of each metric in the context of our strategic plan and shows how we apply it in the context of the new STIP. Please see Appendix A for a reconciliation of non-GAAP measures presented below.

 

Performance Metric		How We Define and Apply It		Why We Use It
Pre-Tax Operating Earnings		Net income before the effect of income taxes and any after-tax items, including minority interest and any extraordinary items. Pre-tax operating earnings is subject to adjustment for extraordinary items, accounting and tax law changes, discontinued operations, acquisition expenses, balance sheet restructuring charges and/or similar non-recurring or special items. This metric is an absolute metric based on the company’s budget target and has a 50% weight in determining the actual award.		Provides direct insight into the financial health of the Company by measuring the revenue and expenses associated with the company’s primary business activities.
Return on Average Tangible Assets		Net income as a percentage of average tangible assets. This metric is measured by reference to the Company’s percentile ranking in the designated peer group and has a 25% weight in determining the actual award.		Shows the profitability of our assets by measuring how effectively management is deploying our assets to generate a positive return.
Efficiency Ratio		Non-interest expense before foreclosed property expense, amortization of intangibles and goodwill impairments as a percentage of net interest income and non-interest income, excluding gains from securities sales and non-recurring items. This metric is measured by reference to the Company’s percentile ranking in the designated peer group and has a 25% weight in determining the actual award.		Shows how effectively we manage our expenses and use our resources to create revenue. We believe efficient use of our resources, particularly given our acquisition strategy, is a significant competitive advantage.
1-Year Total Shareholder Return (“TSR”)		Represents the total return on share of the Company’s common stock over the calendar year, including price appreciation and the reinvestment of dividends (at the closing price of the common stock on the ex-dividend date). The STIP applies a 1-year TSR as a modifier to adjust awards to reflect the common stock’s weak or exceptional performance relative to the designated peer group, thereby, including annual shareholder return as an element of the award determination in specified circumstances.		Provides a measure of how the market valued our stock during the year relative to the stock of other companies in the financial sector.

Ø 2019 STIP Award Opportunities, Performance Results and Award Determinations

The following table show the award opportunities established by the Compensation Committee for our CEO and the other NEOs under the 2019 STIP. Actual awards were determined by reference to the specific award opportunities assigned to each NEO and weighted results with respect to each designated performance metric as detailed in the following tables. By way of example, if the Company had achieved maximum results with respect to all three metrics, our CEO would have received a payout at 187.5% of 2019 base salary (150% of target), subject to adjustment for the 1-year TSR modifier.

 

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		EXECUTIVE COMPENSATION

 

2019 Short-Term Incentive Plan Award Opportunities (as % of 2019 Base Salary)
Executive		Threshold		Target		Maximum
Mr. Ficalora		62.5%		125%		187.5%
Mr. Wann		45		90		135
Mr. Cangemi		35		70		105
Mr. Carpenter		35		70		105
Mr. Pinto		35		70		105

The following table shows the Company’s actual 2019 results with respect to the three weighted performance measures under the revised short-term incentive plan. With respect to pre-tax operating earnings, the Company’s performance measured slightly above target at 102.39%. As authorized under the STIP and approved by the Committee, the Company’s actual performance, as reported in the table below, incorporated a net adjustment to pre-tax operating earnings of approximately $7.6 million, or less than 1.5% of reported pre-tax operating earnings, to reflect the effect of certain unusual items. The largest adjustment, $6.5 million, related to severance and salary accruals paid in arrears during 2019. With respect to the two relative metrics measured against the Company’s designated peer group – ROATA and efficiency ratio – only the efficiency ratio metric contributed to the NEOs’ payout as illustrated in the table below. Taking into account the results with respect to the three weighted metrics, the payout was calculated at 88.7% of target. However, the 1-Year TSR modifier was triggered as the Company’s relative one-year TSR was at 90^th percentile of the peer group, resulting in a 20% upward adjustment to the award determined by reference to the three weighted metrics. After applying the TSR modifier, the final payout, as a percent of target, was 106.44%.

 

Performance Measure						Performance Goals												Actual Performance				Payout as % of Target Award Opportunity
		Weight				Threshold				Target				Maximum
Pre-tax Operating Earnings			50	%		$	475,501,717			$	528,335,241			$	581,168,765			$	530,863,031				102.39	%
Relative ROATA			25	%			35th percentile				55th percentile				75th percentile				0 percentile				0
Relative Efficiency Ratio			25	%			35th percentile				55th percentile				75th percentile				90th percentile				150
Payout Range			100	%			50	%			100	%			150	%			—				88.7	%
1-Yr. TSR Modifier			+/-20	%			<35th percentile 20	%			35th-75th percentile No Change				>75th percentile +20	%			90th percentile				120	%
Total Payout:			100	%			50	%			100	%			150	%			—				106.44	%

The following table shows actual calculated awards under the 2019 STIP based on performance relative to the designated metrics and taking into account the effect of the TSR modifier. At the Compensation Committee’s March 17, 2020 meeting, the Committee reviewed and confirmed the awards without adjustment. The Committee noted that the management team executed the Company’s business strategy in a difficult operating environment to meet the budget target for pre-tax operating earnings. Further, the Committee cited the 2019 efficiency ratio as evidence of the success of the Company’s multi-year cost cutting initiative, which allowed the Company to maintain a top ranking (second) relative to peer institutions. Although results with respect to ROATA were disappointing, the Committee believed that the STIP functioned appropriately to ensure that this metric did not contribute to the NEOs’ payout. Finally, the Committee concluded that an adjustment to the payout was appropriate in light of the Company’s superior 1-year TSR of 35.38%, which ranked third among the 20 peer institutions. Overall, the Committee believed that the 2019 STIP functioned as intended to create an appropriate alignment of pay and financial performance and that the STIP results were also confirmed by the strong individual performance of each NEO.

 

Executive		Base Salary					Target										Maximum  Awards (106.44% of Target)
							% of Base
Mr. Ficalora				$1,400,000					125	%				$1,750,000					$1,863,000
Mr. Wann				1,100,000					90					990,000					1,054,000
Mr. Cangemi				850,000					70					595,000					633,000
Mr. Carpenter				775,000					70					543,000					577,000
Mr. Pinto				575,000					70					403,000					428,000

 

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☐ 2019 LTIP Awards

As noted earlier, the Company’s revised equity-based, long-term incentive plan was implemented for the first time in 2019 after a one-year hiatus from providing the NEOs with equity awards. The following provides an overview of the key features of the 2019 LTIP and provides insight into factors considered by the Committee in developing the plan design:

The 2019 LTIP grant consisted of two distinct components:

 

✓

25% of the target LTIP award consisted of time-based RSAs vesting ratably over three years. The Committee determined that the inclusion of a relatively modest time-based vested component in the new plan is consistent with the desire to base the significant majority of LTIP on future performance and serve as best practice. In addition, the use of time-based restricted stock supports our goal for executives to receive a portion of their pay in equity while also providing a retention incentive. Consistent with the Company’s long-standing practice for all employees who are awarded RSAs, dividends paid on the restricted shares are paid at the same time dividends are paid to other shareholders.

 

✓

75% of the target LTIP award consisted of a grant of performance-based restricted stock units (“PBRSUs”) where the actual award earned will be determined based on the Company’s performance with respect to two weighted metrics over the 2019-2021 performance period relative to an objectively designated index of financial institutions (see below). The award, if any, will be determined by the Committee in early 2022 after consideration of the Company’s performance with respect to the designated metrics relative to the performance of banks included in the index group. All awards will be settled in fully vested shares of Company common stock.    The Committee awarded dividend equivalent rights in tandem with the PBRSUs but no dividend equivalent payments will be made prior to the date that the Committee determines the level at which the PBRSUs have been earned and only to the extent of the dividends that would have accrued over the performance period with respect to the shares underlying the earned PBRSUs. The Committee selected two metrics – relative ROATCE and relative EPS growth – for the 2019-2021 performance period. The Company’s performance with respect to these metrics will be evaluated at the end of the three-year performance period on a percentile ranking basis relative to an industry index consisting of 31 banks with assets between $25 billion-$250 billion selected from the KBW Regional Bank Index and the KBW Banking Index. Each performance metric has an equal weighting and the result for each metric contributes separately to the determination of the actual award at the end of the performance period, if any. The LTIP specifies that, if at the end of the performance period, a bank included in the index is not a public company or is acquired, the bank will be removed from the index for the entire performance period and the percentile results will be calculated accordingly.

 

✓

For the 2019 LTIP, award opportunities were determined by reference to the 2019 base salary of each NEO. For our CEO, the 2019 target opportunity was set at 200% of 2019 base salary and allocated as described above between a grant of time-based restricted stock (25% of the target opportunity value) and the grant of PBRSUs (75% of the target opportunity value).

 

✓

The Committee set target performance for the PBRSU grants at the 55th percentile of the industry index to ensure that a target level payout requires the Company to outperform the median of the Index. The Committee set the threshold level at the 35th percentile to ensure that no payouts would be made for sustained weak performance. The Committee believed that these increased levels established more appropriate performance targets in the context of a relative metric that is measured over a multi-year period.

☐ Award Opportunities under the 2019 LTIP

The following table provides detail on the total 2019 LTIP award opportunities for each NEO. As noted above, the total award opportunity at target was allocated to time-based RSAs granted (25% of the target opportunity) and PBRSUs (75% of the target opportunity).

 

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		EXECUTIVE COMPENSATION

 

2019 Long-Term Incentive Plan Award Opportunities (as % of 2019 Base Salary)
Executive		Threshold		Target		Maximum
Mr. Ficalora		100%		200%		300%
Mr. Wann		62.5		125		187.5
Mr. Cangemi		50		100		150
Mr. Carpenter		50		100		150
Mr. Pinto		50		100		150

 

Ø	Time-Based Vested RSAs Under the 2019 LTIP

The following table provides detail on the time-based vested RSAs made to the NEOs under the 2019 LTIP on April 29, 2019. The awards were based on the dollar value of 25% of each NEO’s total target opportunity under the 2019 LTIP and the number of shares awarded was determined by reference to the $11.42 per share closing price of the Company’s common stock on the grant date. All awards vest ratably over three years.

 

Executive		2019 Time-Based Vested     Restricted Stock Awards      (# shares)
Mr. Ficalora				61,296
Mr. Wann				30,101
Mr. Cangemi				18,608
Mr. Carpenter				16,965
Mr. Pinto				12,588

Ø 2019 PBRSU Performance Metrics

The following table identifies the financial metrics established by the Committee with respect to the award of PBRSUs for the 2019-2021 performance period under the LTIP, provides our rationale for the use of each metric in the context of our strategic plan and shows how we apply it to determine actual awards. Please see Appendix A for a reconciliation of non-GAAP measures presented below.

 

Performance Metric		How We Define and Apply It		Why We Use It
3-Year Earnings Per Share Growth (relative to index group)		Measured as the compound 3-year annual growth rate of the Company’s earnings per share. The Company’s result is evaluated by reference to the Company’s percentile ranking in the designated index group of financial institutions and has a 50% weight in determining the actual award.		Provides a clear measure of profitability over time and relative to other companies in the sector.
3-Year Return on Average Tangible Common Equity (relative to index group)		Net income available to common shares adjusted for amortization of intangibles and good will impairment as a percentage of average tangible common equity. This metric is measured by reference to the Company’s percentile ranking in the designated index group of financial institutions and has a 50% weight in determining the actual award.		Provides a measure of the return on our shareholders’ investment over time and demonstrates our financial health relative to other companies in the sector.

 

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		EXECUTIVE COMPENSATION

 

Ø 2019 PBRSU Performance Metric Goals

The following table provides detail on the goals established by the Committee for the 2019 PBRSU awards with respect to the two designated performance metrics for the 2019-2021 performance period and the weighting assigned to each metric.

 

Performance Metrics		Weight				Performance Goals
						Threshold				Target				Maximum
3-Year Relative EPS Growth			50	%			35th percentile				55th percentile				75th percentile
3-Year Return on Average Tangible Common Equity			50	%			35th percentile				55th percentile				75th percentile
Payout Range (% Target)			100	%			50	%			100	%			150	%

Ø 2019 PBRSU Award Opportunities

The following table provides detail on the award opportunities established by the Committee for the NEOs with respect to their 2019 PBRSU awards. The target award opportunities are based on 75% of each NEOs’ total target award opportunity under the 2019 LTIP. As noted, 25% of the total target award opportunity was provided to the NEO in the form of a time-based vested restricted stock award as detailed in the table above. Actual awards will be determined after the end of the 2019-2021 performance period based on the Company’s performance relative to the designated index of banks.

 

2019 PBRSU Award Opportunities (as % of 2019 Base Salary)
Executive		Threshold (50% of Target)		Target		Maximum (150% of Target)
Mr. Ficalora		75%		150%		225%
Mr. Wann		47%		94%		141%
Mr. Cangemi		38%		75%		113%
Mr. Carpenter		38%		75%		113%
Mr. Pinto		38%		75%		113%

Ø 2019 PBRSU Awards

The following table provides detail on the PBRSUs awarded to each NEO at target under the 2019 LTIP. Each NEO received PBRSUs at the target level (which represents 75% of the total 2019 LTIP target opportunity as described above). The PBRSUs shown in the table are not guaranteed and will vest based solely on our performance results over the 2019-2021 performance period in accordance with the performance goals described in the preceding table.

 

Executive		2019 PBRSU Awards at  Target     (# shares)
Mr. Ficalora		183,888
Mr. Wann		90,302
Mr. Cangemi		55,823
Mr. Carpenter		50,898
Mr. Pinto		37,763

As noted above, each award was granted in tandem with dividend equivalent rights. In addition, consistent with the provisions of the 2012 Plan, the Committee determined that, in the event of a change in control of the Company (as defined in the 2012 Plan), the PBRSUs would deemed earned at the greater of target or an amount determined by reference to actual performance through the latest date prior to the change in control where peer financial information is available. It should be noted that under the Company’s new 2020 Omnibus Incentive Plan, for which the Company is seeking shareholder approval at this Annual Meeting, future PBRSU awards will only vest awards following a change in control upon the holder’s subsequent involuntary or constructive (i.e., a termination by the executive for good reason as defined in the 2020 Plan) termination of employment within two years of the change in control unless the successor to the Company as a result of the change in control declines to assume the awards or replace them with similar awards.

 

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