def14a-90600_ssfn.htm
SCHEDULE
14A
(Rule
14a-101)
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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the Registrant ý
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a Party other than the Registrant ¨
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appropriate box:
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of the Commission Only (as permitted by Rule 14a-6(e)(2))
ý Definitive Proxy
Statement
¨ Definitive Additional
Materials
¨ Soliciting Material
Pursuant to Rule 14a-12
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STEWARDSHIP
FINANCIAL CORPORATION
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(Name
of Registrant as Specified in Its
Charter)
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(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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Total
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previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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Stewardship
Financial Corporation
630
Godwin Avenue
Midland
Park, New Jersey 07432-1405
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY
13, 2008
To
Our Shareholders:
The Annual Meeting of Shareholders of
Stewardship Financial Corporation (the “Corporation”) will be held at the
Christian Health Care Center, Wyckoff, New Jersey, (use the Mountain Avenue
entrance) on May 13, 2008, at 7:00 P.M. for the following purposes:
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1.
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To
elect the four (4) directors named in the attached Proxy Statement for
three year terms.
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2.
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To
ratify the appointment of Crowe Chizek and Company LLC as the
Corporation’s independent registered public accounting firm for the fiscal
year ending December 31, 2008.
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3.
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To
transact such other business as may properly come before the
meeting.
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Shareholders of record at the close of
business on March 25, 2008 are entitled to notice of, and to vote at, the Annual
Meeting. Whether or not you plan to attend the Annual Meeting, it is
requested that the enclosed proxy be executed and returned to our transfer
agent, Registrar and Transfer Company, 10 Commerce Drive, Cranford, NJ 07016, in
the envelope provided.
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By
Order of the Board of Directors
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/s/
Robert J. Turner
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Robert
J. Turner
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Corporate
Secretary
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April 10,
2008
Stewardship
Financial Corporation
630
Godwin Avenue
Midland
Park, New Jersey 07432-1405
______________________________
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
MAY
13, 2008
______________________________
This Proxy Statement is being furnished
to shareholders of Stewardship Financial Corporation (the “Corporation”) in
connection with the solicitation by the Board of Directors of the Corporation of
proxies to be used at the Annual Meeting of Shareholders and at any adjournment
of the meeting. You are cordially invited to attend the Annual
Meeting that will be held at the Christian Health Care Center, Wyckoff, New
Jersey, (use the Mountain Avenue entrance) on Tuesday, May 13, 2008 at 7:00
P.M. The Annual Report to shareholders, including consolidated
financial statements for the fiscal year ended December 31, 2007, and a proxy
card accompany this Proxy Statement. This Proxy Statement is first
being mailed to shareholders on or about April 10, 2008.
Voting
of Securities
The securities which may be voted at
the Annual Meeting consist of shares of common stock, no par value, of the
Corporation (“Common Stock”) with each share entitling its owner to one vote on
each matter properly brought before the Annual Meeting.
The close of business on March 25,
2008, has been fixed by the Board of Directors as the record date for the
determination of shareholders of record entitled to notice of, and to vote at,
the Annual Meeting or any adjournments thereof. The total number of
shares of Common Stock outstanding, net of treasury stock, on the record date
was 5,314,325 shares.
Regardless of the number of shares of
Common Stock you own, it is important that you vote by completing the enclosed
proxy card and returning it signed and dated in the enclosed postage paid
envelope. Proxies solicited by the Board of Directors of the
Corporation will be voted in accordance with the direction given
therein. Where no instructions are indicated, signed proxy cards will
be voted “FOR” the election of each of the nominees for director named in the
Proxy Statement and “FOR” the ratification of Crowe Chizek and Company LLC as
the Corporation’s independent registered public accounting firm for the fiscal
year ending December 31, 2008. Should any other matters be properly
presented at the Annual Meeting for consideration, such as consideration of a
motion to adjourn the meeting to another time, the
persons
named as proxies will have discretion to vote on those matters according to
their best judgment to the same extent as the person delivering the proxy would
be entitled to vote. Other than the matters set forth in the attached
Notice of Annual Meeting of Shareholders, the Board of Directors knows of no
additional matters that may be presented for consideration at the Annual
Meeting.
A proxy may be revoked at any time
prior to its exercise by sending a written notice of revocation to Registrar and
Transfer Company, 10 Commerce Drive, Cranford, NJ 07016. In addition,
a proxy filed prior to the Annual Meeting may be revoked by delivering to the
Corporation a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. If you are a shareholder whose
shares are not registered in your own name, you will need appropriate
documentation from your record holder to vote personally at the Annual
Meeting.
Quorum
The presence, in person or by proxy, of
the holders of at least a majority of the total number of shares of Common Stock
entitled to vote is necessary to constitute a quorum at the Annual
Meeting. In the event that there are not sufficient votes for a
quorum, or to approve or ratify any matter being presented at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to permit the
further solicitation of proxies.
Required
Vote
There is
no cumulative voting in the election of directors. Directors are
elected by a plurality of votes cast, without regard to either broker non-votes,
or proxies as to which authority to vote for one or more of the nominees is
withheld. Thus, a nominee for director may be elected even if the
nominee receives votes from holders of less than a majority of shares
represented at the meeting.
Cost
of Proxy Solicitation
The cost of solicitation of proxies on
behalf of the Board of Directors will be borne by the
Corporation. Directors, officers and other employees of the
Corporation may solicit proxies on behalf of the Corporation in person or by
telephone, e-mail, facsimile or other electronic means. These
directors, officers and employees will not receive additional compensation for
such services. The Corporation will reimburse the reasonable expenses
of brokerage firms and other custodians and nominees for sending proxy materials
to, and obtaining proxies from, beneficial owners.
PROPOSAL
1 -- ELECTION OF DIRECTORS
The Corporation’s Certificate of
Incorporation and its bylaws authorize a minimum of five and a maximum of
fifteen directors, but the exact number is fixed by resolution of the Board of
Directors. The Board has fixed the current number of directors at
eleven. The Board has been divided into three classes. One
class is elected each year to serve a term of three years. Directors
elected at this Annual Meeting will be elected to serve for a term of three
years through May 2011, or until their successors are duly elected and
qualified.
Each nominee has indicated to the
Corporation that he or she will serve if elected. The Corporation has
no reason to believe that any of the nominees will be unable to stand for
election. Unless authority to vote for any of the nominees is
withheld, it is intended that the shares represented by the enclosed proxy card,
if executed and returned, will be voted FOR the election of the nominees
proposed by the Board of Directors. If, for any reason, any of the
nominees becomes unavailable for election, the proxy solicited by the Board of
Directors will be voted for a substitute nominee selected by the Board of
Directors.
The Board of Directors recommends that
you vote “FOR” the election of the nominees named in this Proxy
Statement.
Directors
and Nominees for Director
The following sets forth the names of
our nominees for director and directors continuing to serve on our Board
following the Annual Meeting; their ages; a brief description of their recent
business experience, including present occupations; the year in which each
became a director of the Corporation and our wholly-owned subsidiary, Atlantic
Stewardship Bank (the “Bank”); and the names of any public companies for which
they serve on the board of directors.
Nominees
for Director for Terms Expiring in 2011
William C. Hanse, age 73, has
been a director of the Corporation since 1997. Mr. Hanse has been a
director of the Bank since 1985. Mr. Hanse was appointed Chairman of
the Board of both the Corporation and the Bank in November
2006. Since 1990, Mr. Hanse has been a partner of the law firm Hanse
& Hanse.
Margo Lane, age 57, has been a
director of the Corporation since 1997. Ms. Lane has been a director
of the Bank since 1994. From 2003 to 2007, Ms. Lane served as the
sales and marketing coordinator of PBI-Dansensor America Inc., a company that
sells and services equipment for industrial instrumentation and process
control. From 1976 to 2002, Ms. Lane served as the corporate
communications manager of Garden State Paper Company LLC, a newsprint
manufacturing company.
Arie Leegwater, age 74, has
been a director of the Corporation since 1997. Mr. Leegwater has been
a director of the Bank since 1985. Since 1988, Mr. Leegwater has been
the owner of Arie Leegwater Associates LLC, a general contracting
company. Since 2002, Arie Leegwater has been a partner in ARIEANJE
LLC, a company engaged in owning and renting real estate. Since 1993,
Mr. Leegwater has been an arbitrator with the American Arbitration
Association.
John L. Steen, age 70, has
been a director of the Corporation since 1997. Mr. Steen has been a
director of the Bank since 1985. Since 1972, Mr. Steen has been the
president of Steen Sales, Inc., a textile company. Since 1972, Mr.
Steen has been president of Dutch Valley Throwing Co., a textile
company.
Information
With Respect to the Directors With Terms Expiring in 2010
Harold Dyer, age 80, has been
a director of the Corporation since 1997. Mr. Dyer has been a
director of the Bank since 1985. From 1957 to 1981, Mr. Dyer was
president of White Laundry, Inc., a laundry service company. Mr. Dyer
is currently retired.
Abe Van Wingerden, age 71, has
been a director of the Corporation and the Bank since 2001. Mr. Van
Wingerden has been Vice Chairman of the Board for the Corporation and the Bank
since 2005. Since 1985, Mr. Van Wingerden has been the president of
Abe Van Wingerden Company, Inc. T/A Van Wingerden Farms, a retailer of garden
equipment and supplies.
Michael Westra, age 42, has
been a director of the Corporation and the Bank since 2005. Since
1991, Mr. Westra has been General Manager of Wayne Tile Company, an importer of
tile and stone, providing wholesale and retail sales.
Howard R. Yeaton, age 53, has
been a director of the Corporation and the Bank since 2005. Since
2003, Mr. Yeaton has been Managing Principal of Financial Consulting Strategies
LLC, a firm providing strategic financial advice and services to emerging
companies. Mr. Yeaton served as Vice President, Planning and
Financial Services, for Konica Photo USA, Inc. from 1985 through
2003.
Information
With Respect to the Directors With Terms Expiring in 2009
Robert J. Turner, age 68, has
been a director of the Corporation since 1997. Mr. Turner has been a
director of the Bank since 1985. Mr. Turner has been Secretary of the
Board for both the Corporation and the Bank since 2001. From 1966 to
2002, Mr. Turner was the president of The Turner Group, an insurance brokerage
company. Mr. Turner is currently retired.
William J. Vander Eems, age
58, has been a director of the Corporation since 1997. Mr. Vander
Eems has been a director of the Bank since 1991. Since 1973, Mr.
Vander Eems has been the president of William Van Der Eems, Inc., a general
contracting company.
Paul Van Ostenbridge, age 55,
has been a director of the Corporation since 1997 and has served as President
and Chief Executive Officer of the Corporation since 1997. Mr. Van
Ostenbridge has been a director of the Bank since 1985 and has served as its
president and chief executive officer since 1985.
PROPOSAL
2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit
Committee has appointed Crowe Chizek and Company LLC as its independent
registered public accounting firm for the Corporation for
2008. Although the appointment of auditors is not required to be
submitted to a vote of shareholders, the Board of Directors believes that it is
appropriate as a matter of policy to request the shareholders to ratify the
appointment. If the shareholders should not ratify the appointment,
the Audit Committee will investigate the reasons for the shareholders’ rejection
and the Board of Directors will reconsider the appointment. It is
expected that a representative of Crowe Chizek and Company LLC will be present
at the meeting to respond to appropriate questions and will be given the
opportunity to make a statement if he or she desires to do so.
The affirmative vote of the holders of
a majority of the shares of Common Stock of the Corporation present in person or
by proxy and entitled to vote at the Annual Meeting is required for the
ratification and approval of the appointment of the auditors.
The Board of Directors recommends a
vote “FOR” ratification of the appointment of Crowe Chizek and Company LLC as
the Corporation’s independent registered public accounting firm for the fiscal
year ending December 31, 2008.
CORPORATE
GOVERNANCE
Committees
of the Board of Directors
During 2007, the Board of Directors had
a standing Audit Committee, Nominating and Governance Committee and Compensation
Committee. The charters of the Audit Committee, Nominating and
Governance Committee and Compensation Committee, as approved by the Board of
Directors, can be found on our website at www.asbnow.com, in
the “Investor Relations” section of the website, under the subsection titled
“Governance Documents”.
Audit Committee
The Audit
Committee is appointed by the Board of Directors to assist the Board in
fulfilling its oversight responsibilities. The Board has adopted a
written charter setting out the functions of the Audit Committee. The
audit functions of the Audit Committee are to: (i) monitor the integrity of the
Corporation’s financial reporting process and systems of internal controls; (ii)
select, evaluate and provide oversight of the auditors to include the monitoring
of the independence and performance of the Corporation’s independent external
audit and internal audit functions; (iii) provide oversight of the annual audit
and quarterly reviews; and (iv) encourage the adherence to, and continuous
improvement of, the Corporation’s policies, procedures and practices at all
levels. The Audit Committee also reviews and evaluates the
recommendations of the independent certified public accountant, receives all
reports of examination of the Corporation and the Bank by regulatory agencies,
analyzes such regulatory reports, and informs the Board of the results of their
analysis of the regulatory reports. In addition, the Audit Committee
receives reports directly from the Corporation’s internal auditors and
recommends any action to be taken in connection therewith.
In 2007,
the audit committee consisted of Directors Yeaton (Chairman), Dyer, Steen and
Westra. The Board of Directors has determined that all four members
of the Audit Committee satisfy the independence and financial literacy
requirements of the NASDAQ Stock Exchange (“NASDAQ”) and that Directors Westra
and Yeaton, both of whom are independent, qualify as audit committee financial
experts as defined in the applicable Securities and Exchange Commission (“SEC”)
rules.
Nominating and
Governance Committee
The
Nominating and Governance Committee is appointed by the Board of Directors to
identify and recommend to the Board individuals qualified to serve as directors
of the Corporation and to advise the Board with respect to the Board composition
and nominating procedures. In 2007, the Nominating and Governance
Committee consisted of Directors Steen (Chairman), Hanse, Leegwater and Vander
Eems.
The
Nominating and Governance Committee has adopted a procedure to consider
recommendations for directorships submitted by shareholders holding at least 20%
of our outstanding shares for a period of at least four
years. Shareholders meeting these requirements, who wish the
Nominating Committee to consider their recommendations for nominees for the
position of director, should submit their recommendations in writing in care of
the Secretary of the Corporation, Robert J. Turner, Stewardship Financial
Corporation, 630 Godwin Avenue, Midland Park, New Jersey
07432. Recommendations by shareholders meeting the share ownership
requirements and that are made in accordance with these procedures will receive
the same consideration given to nominees of the Nominating and Governance
Committee.
In its assessment of each potential
candidate, the Nominating and Governance Committee will review the nominee’s
judgment, experience, independence, understanding of the Corporation’s or other
related industries and such other factors the Nominating and Governance
Committee determines are pertinent in light of the current needs of the
Board. The Nominating and Governance Committee will also take into
account the ability of a director to devote the time and effort necessary to
fulfill his or her responsibilities.
Nominees may be suggested by directors,
members of management, shareholders or, in some cases, by a third party
firm. The Corporation has not hired a third party firm to complete
this function. In identifying and considering candidates for
nomination to the Board of Directors, the Nominating and Governance Committee
considers, in addition to the requirements set out in the Nominating and
Governance Committee’s charter, quality of experience, the needs of the
Corporation and the range of talent and experience represented on the
Board. The current nominees for director were recommended for
nomination by independent directors of the Corporation.
Compensation
Committee
The
Compensation Committee is appointed by the Board of Directors to oversee the
Corporation’s and the Bank’s compensation and employee benefit plans and
practices, including its executive compensation plans and its
incentive-compensation and equity-based plans; and to produce a Committee report
on executive compensation as required by the SEC to be included in the
Corporation’s annual proxy statement. In 2007, the Compensation
Committee consisted of Directors Turner (Chairman), Lane, Vander Eems (replaced
Leegwater during 2007), and Van Wingerden.
Independence
of Directors
The Board of Directors has adopted
standards for director independence, which incorporate the definition of
“independent” contained in the NASDAQ Stock Market listing
rules. Based on the information furnished by the directors, the Board
has affirmatively determined that all of the directors, with the exception of
Director Van Ostenbridge (who is a full-time member of the Corporation, serving
as our President and Chief Executive Officer), currently meet the definition of
“independent”. All of the members of the Board’s
Audit
Committee,
Compensation Committee and Nominating and Governance Committee are independent
directors.
Board
and Committee Meetings
The Board of Directors meets on a
regularly scheduled basis each month to review significant developments,
financial, investment, and lending performance and to act on those matters that
require Board approval. It holds special meetings as circumstances
require. Independent directors hold executive session meetings on a
quarterly basis. The Board of Directors of the Corporation held 12
board meetings during 2007. In addition, the Board held 3 meetings to
provide for director development and supplemental discussions in areas such as
compliance, annual budgeting process and strategic planning. The
Audit Committee, Nominating and Governance Committee, and Compensation Committee
met eight, eight, and seven times, respectively, during 2007. All of
the directors of the Corporation attended at least 75% of the total number of
Board meetings held during 2007. In addition, each director who is a
member of a committee of the Board of Directors attended at least 75% of the
meetings for each committee of which he is a member. Each director of
the Corporation is also a director of the Bank. The committees of the
Corporation and the Bank generally appoint their respective members and chairman
for each fiscal year during a Board meeting held in the second quarter of that
year.
The
Corporation expects the Directors to attend the Annual Meeting of
Shareholders. The Directors who attended the 2007 Annual Meeting were
Dyer, Hanse, Lane, Leegwater, Steen, Turner, Vander Eems, Van Ostenbridge, Van
Wingerden, Westra, and Yeaton.
Communications
with the Board of Directors
Shareholders are invited to contact the
Directors by writing to the Secretary of the Corporation, Robert J. Turner, at
630 Godwin Avenue, Midland Park, New Jersey 07432. These
communications are not screened.
Compensation
of Directors
Cash
Compensation. Directors of the Corporation and the Bank, other
than full-time employees of the Corporation and the Bank, receive fees of $2,000
per Board meeting attended, with the exception of the chairman who receives
$3,000 per meeting attended. Directors of the Corporation and the
Bank, other than full-time employees of the Corporation and the Bank, also
receive a fee of $300 per committee meeting attended.
Stock-based
Compensation. The Corporation maintains the Stewardship
Financial Corporation 2001 Stock Option Plan for Non-Employee Directors (the
“2001 Non-Employee Plan”). The maximum number of shares of Common
Stock subject to stock options granted under the 2001 Non-Employee Plan is
168,852 as adjusted for stock dividends and splits. As of March 25,
2008, 132,267 options to purchase shares of Common Stock have been granted
under
the 2001
Non-Employee Plan, of which 123,825 options have been exercised. The
plan expires on May 9, 2011. No additional shares can be granted
under this plan.
On May 9,
2006, the shareholders approved the Stewardship Financial Corporation 2006 Stock
Option Plan for Non-Employee Directors (the “2006 Non-Employee
Plan”). The 2006 Non-Employee Plan allows for the exercise of options
to purchase shares of common stock to be issued to Non-Employee Directors of the
Corporation. The Plan reserved 66,150 shares of common stock for
issuance. Options are exercisable 20% each year for five
years. Options expire the earlier of the sixth anniversary of the
date of the grant or May 15, 2012. Options to purchase 5,512 shares
were granted on June 30, 2006 to each Non-Employee Director. As of March 25,
2008, 55,125 options to purchase shares of Common Stock have been granted under
the 2006 Non-Employee Plan, of which 3,308 shares have been
exercised. In accordance with the terms of the 2006 Non-Employee
Plan, these options were granted at 100% of the closing market price on the day
preceding the date of the grant.
Director
Compensation
The
following table sets forth the information regarding the compensation earned by
or awarded to each non-employee director who served on our Board of Directors
during 2007.
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Name
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Fees
Earned
or
Paid in
Cash
($) (a)
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Option
Awards ($)
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Harold
Dyer
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35,900
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5,036
(b)
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William
C. Hanse
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44,600
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5,036
(c)
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Margo
Lane
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28,100
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5,036
(d)
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Arie
Leegwater
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34,100
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5,036
(e)
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John
L. Steen
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30,800
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5,036
(f)
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Robert
J. Turner
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28,700
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5,036
(g)
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William
J. Vander Eems
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35,300
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5,036
(h)
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Abe
Van Wingerden
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32,000
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5,036
(i)
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Michael
Westra
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29,300
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5,036
(j)
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Howard
R. Yeaton
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27,800
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5,036
(k)
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(a)
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Fees
earned or paid in cash includes all fees paid for monthly board meetings,
special meetings and all committee fees paid or earned during
2007.
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(b)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Dyer was
5,512.
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(c)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Hanse was
4,410.
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(d)
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Aggregate
number of options outstanding at December 31, 2007 for Ms. Lane was
5,512.
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(e)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Leegwater was
5,512.
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(f)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Steen was
5,512.
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(g)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Turner was
5,512.
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(h)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Vander Eems was
5,512.
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(i)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Van Wingerden
was 4,410.
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(j)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Westra was
7,224.
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(k)
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Aggregate
number of options outstanding at December 31, 2007 for Mr. Yeaton was
8,326.
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Report
of the Compensation Committee
The
Role of the Compensation Committee
The
Compensation Committee of the Board is charged with the responsibility to
annually review the goals and objectives of the Corporation’s executive
compensation plans and to annually review and determine the compensation of the
Chief Executive Officer, all senior executive officers and all
directors. The Committee reviews at least annually the goals
and objectives of the Corporation’s general compensation plans and other
employee benefit plans including incentive compensation and equity-based
plans.
Executive
Compensation Policy
The
Corporation’s policy is to compensate its executives fairly and adequately for
the responsibility assumed by them for the success and direction of the Bank,
the effort expended in discharging that responsibility and the results achieved
directly or indirectly from each executive’s performance. “Fair and
adequate compensation” is established after careful review of: (i) the Bank’s
earnings; (ii) the Bank’s performance as compared to other companies of similar
size and market area; and (iii) a comparison of what the market demands for
compensation of similarly situated and experienced executives.
Total compensation takes into
consideration a mix of base salary, bonus, perquisites and stock
options. The particular mix is established in order to competitively
attract competent professionals, retain those professionals and reward
extraordinary achievement. The Board of Directors also considers net
income for the year and earnings per share of the Corporation and the Bank
before finalizing officer compensation increases for the coming
year.
Based upon its current levels of
compensation, the Bank is not affected by the provisions of the Internal Revenue
Code that limit the deductibility to a corporation of compensation in excess of
$1,000,000 paid to certain executive officers. Thus, the Bank has no
policy regarding that subject.
Base Salary. The Board of
Directors of the Bank, under recommendations from the Compensation Committee,
bears the responsibility for establishing base salary. Salary is
minimum compensation for any particular position and is not tied to any
performance formula or standard. However, that is not to say that
poor performance will not result in termination. Acceptable
performance is expected of all executive officers as a minimum
standard. To establish salary, the following criteria are used: (i)
position description; (ii) direct responsibility assumed; (iii) comparative
studies of peer group compensation (special weight is given to local factors as
opposed to national averages); (iv) earnings performance of the Bank resulting
in availability of funds; and (v) competitive level of salary to be maintained
to attract and retain qualified and experienced executives.
Annual Incentive
Compensation. The Compensation Committee recommended to the
Board and the Board of Directors approved the Atlantic Stewardship Bank
Executive Incentive Compensation Plan (“Executive Comp Plan”). In
effect since 1997, the Executive Comp Plan is designed to focus management on
the achievement of goals considered essential for success and achievement of
strategic objectives of the organization, promote success and enhance value of
the Corporation, and motivate, attract and retain top quality high performing
key executives. The Committee considers the annual
incentive paid under this program to be an integral part of the total
opportunity provided to executives.
Long-term Incentive
Compensation. Long-term incentive compensation consists of the
Stewardship Financial Corporation 1995 Stock Option Plan (the “Employee
Plan”). Recommendations for stock option awards are made by the
Compensation Committee, which then makes recommendations to the entire Board of
Directors for final action. The Compensation Committee meets to evaluate
meritorious performance of all officers and employees for consideration to
receive stock options.
The Compensation Committee makes awards
based upon the following criteria: (i) position of the officer or employee in
the Bank; (ii) the benefit that the Bank has derived as a result of the efforts
of the award candidate under consideration; and (iii) the Bank’s desire to
encourage long term employment of the award candidate.
The Committee did not award any stock
options during 2007. Although the Committee believes that stock
options and other equity-based incentive compensation are a valuable means to
align executive officers with shareholder interests and motivate management to
increase shareholder value in the long term, the Compensation Committee believes
the current distribution of stock options among executive officers is sufficient
to achieve these goals. The Corporation does not have any policy or
practice of coordinating stock option grants with the release of material
non-public information.
Profit Sharing Plan and 401(k)
Plan. The Corporation has a noncontributory profit sharing
plan which covers all eligible employees. Employees are considered
eligible if they have been employed for one full year and have worked 1,000
hours in the prior plan year. Balances vest 20% per year for five
years. Contributions are determined by the Corporation’s Board of
Directors based on the earnings performance of the
Corporation. Contributions are allocated to eligible employees based
on their salary level.
The Corporation also offers a 401(k)
plan which covers all eligible employees. Participants may elect to
contribute up to 15% of their salaries, not to exceed the applicable limitations
as per the Internal Revenue Code. The Corporation, on an annual
basis, may elect to match 50% of the participant’s first 5%
contribution.
Benefits, Perquisites and Other
Personal Benefits. The executive officers participate in
employee benefit programs available to other employees. Perquisites, such as
Bank automobiles and their related expenses and auxiliary insurance benefits,
which the Board of Directors of the Bank may approve from time to time, are
determined and awarded pursuant to evaluation under the same criteria used to
establish base salary.
|
|
Submitted
by:
|
|
|
|
|
|
Compensation
Committee
|
|
|
Robert
J. Turner, Chairperson
|
|
|
Margo
Lane
|
|
|
William
J. Vander Eems
|
|
|
Abe
Van Wingerden
|
SENIOR
EXECUTIVE OFFICERS
Our executive officers are as
follows:
|
Name
|
Age
|
Position
|
|
Paul
Van Ostenbridge
|
55
|
President
and Chief Executive Officer
|
|
Julie
E. Holland
|
48
|
Senior
Vice President and Treasurer
|
Officers are not appointed for fixed
terms. Biographical information for our current officers who are not
also directors follows.
Julie E. Holland, age 48, has
served as Senior Vice President and Treasurer of the Corporation since 2005 and
was Vice President and Treasurer of the Corporation from 1997 until
2005. Ms. Holland joined the Bank in 1994 and has been Senior
Vice President and Treasurer since 2005 and was Vice President and Treasurer of
the Bank from 1997 until 2005.
In addition, Timothy G. Madden served
as Senior Vice President of the Corporation from 2005 until his resignation on
March 26, 2008.
Executive
Compensation
Summary
Compensation Table
This table sets forth information
regarding the elements of the compensation we paid to our principal executive
officer and the two most highly compensated executive officers (collectively the
“NEOs”) for fiscal years 2007 and 2006.
|
Name
and Principal
Position
|
Year
|
Salary
($)
(a)
|
Non-
Equity
Incentive
Plan
Compen-
sation
($)
(b)
|
Nonqualified
Deferred
Compen-
sation
($)
(c)
|
All
Other
Compen-
sation
($)
|
Total
($)
|
|
Paul
Van Ostenbridge
President
and Chief
Executive
Officer
|
2007
2006
|
260,000
248,719
|
23,896
28,000
|
49,564
55,176
|
16,062(d)
12,753
|
349,522
344,648
|
|
Julie
E. Holland
Senior
Vice
President
and
Treasurer
|
2007
2006
|
110,000
103,860
|
6,802
8,750
|
21,012
22,193
|
4,638
(e)
4,000
|
142,452
138,803
|
|
Timothy
G. Madden
Senior
Vice
President
and Senior
Commercial
Loan
Officer
(g)
|
2007
2006
|
136,708
132,035
|
8,481
10,500
|
21,276
21,589
|
9,465
(f)
10,526
|
175,930
174,650
|
|
(a)
|
Salary
includes overtime and commissions, if
paid.
|
|
(b)
|
Includes
bonuses earned through the Executive Comp Plan and accrued during 2007,
which were paid in the first quarter of
2008.
|
|
(c)
|
Includes
amounts paid for 401(K) and profit sharing contributions and earnings on
profit sharing balances for the years
reported.
|
|
(d)
|
The
amounts disclosed for Mr. Van Ostenbridge for fiscal 2007 includes life
insurance and long term disability payments of $3,444, medical and vision
insurance contributions of $6,750 and the imputed value of the car
allowance of $5,868.
|
|
(e)
|
The
amounts disclosed for Ms. Holland for fiscal 2007 includes life insurance
and long term disability payments of $1,458 and medical insurance
contributions of $3,180.
|
|
(f)
|
The
amounts disclosed for Mr. Madden for fiscal 2007 includes life insurance
and long term disability payments of $2,715 and medical and vision
insurance contributions of $6,750.
|
|
(g)
|
On
March 26, 2008, Mr. Madden resigned his position with the Bank and the
Corporation.
|
Outstanding
Equity Awards at Fiscal Year-end
This table sets forth information as to
unexercised options that were held by the executive officers at December 31,
2007.
|
|
Option
Awards
|
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
|
Paul
Van Ostenbridge
President
and Chief Executive Officer
|
4,886
5,584
5,909
1,701
|
4.30
5.80
6.43
12.34
|
02-20-08
02-22-09
02-15-10
07-15-13
|
|
Julie
E. Holland
Senior
Vice President and Treasurer
|
2,443
1,396
1,477
850
|
4.30
5.80
6.43
12.34
|
02-20-08
02-22-09
02-15-10
07-15-13
|
|
Timothy
G. Madden
Senior
Vice President and Senior
Commercial
Loan Officer (a)
|
850
|
12.34
|
07-15-13
|
|
(a)
|
On
March 26, 2008, Mr. Madden resigned his position with the Bank and the
Corporation.
|
Option
Exercises and Stock Vested
During 2007, options in the amount of
40,461 were exercised at an exercise price of $3.79.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has made loans to its
directors and executive officers and, assuming continued compliance with
generally applicable credit standards, it expects to continue to make such
loans. These loans have all been made in the ordinary course of
banking business and, in compliance with Federal Reserve Bank Regulation O, were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons
and did not involve more than the normal risk of collectability or present other
unfavorable features.
During 2007, The Bank and its
residential and commercial mortgage customers paid $113,340 for legal services
to the law firm of Hanse and Hanse whose partner is Mr. Hanse, a director of the
Corporation.
STOCK
OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth
information concerning the beneficial ownership of the Corporation’s Common
Stock as of March 25, 2008, by (i) each person who is known by the Corporation
to own beneficially more than 5% of the issued and outstanding Common Stock,
(ii) each director and nominee for director of the Corporation, (iii) each
senior executive officer of the Corporation named in the Summary Compensation
Table and (iv) all directors and executive officers of the Corporation as a
group. Other than as set forth in this table, the Corporation is not
aware of any individual or group, which holds in excess of 5% of the outstanding
Common Stock. The percentage of beneficial ownership is based on
5,314,325, net of treasury stock, shares of Common Stock outstanding as of March
25, 2008.
|
Name of Beneficial
Owner (1)
|
Number
of Shares
Beneficially Owned
(2)
|
Percent
of
Class
|
|
Harold
Dyer (3)
|
42,411
|
*
|
|
William
C. Hanse (4)
|
125,662
|
2.36%
|
|
Margo
Lane (5)
|
53,241
|
1.00%
|
|
Arie
Leegwater (6)
|
58,531
|
1.10%
|
|
John
L. Steen (7)
|
109,553
|
2.06%
|
|
Robert
J. Turner (8)
|
143,923
|
2.71%
|
|
William
J. Vander Eems (9)
|
207,744
|
3.91%
|
|
Paul
Van Ostenbridge (10)
|
66,964
|
1.26%
|
|
Abe
Van Wingerden (11)
|
252,299
|
4.75%
|
|
Michael
Westra (12)
|
12,230
|
*
|
|
Howard
R. Yeaton (13)
|
10,765
|
*
|
|
Julie
E. Holland (14)
|
18,473
|
*
|
|
Timothy
G. Madden (15)
|
6,869
|
*
|
|
Directors
and Executive Officers of the Corporation
and
Bank as a group (13 persons)
|
1,108,665
|
20.70%
|
|
*
|
Indicates
less than 1% of the outstanding shares of the Corporation’s Common
Stock.
|
(1) Unless
noted, the address of each shareholder is c/o Stewardship Financial Corporation,
630 Godwin Avenue, Midland Park, New Jersey 07432-1405.
(2) Beneficially
owned shares include shares over which the named person exercises either sole or
shared voting power or sole or shared investment power. They also
include shares owned (i) by a spouse, minor children or by relatives sharing the
same home, (ii) by entities owned or controlled by the named person and (iii) if
the named person has the right to acquire such shares within 60 days by the
exercise of any right or option. Unless otherwise noted, all shares
are owned of record and beneficially by the named person, either directly or
through the Corporation’s Dividend Reinvestment Plan.
(3) Includes
2,205 shares issuable upon exercise of stock options exercisable within 60 days
of March 25, 2008.
(4) Includes
32,647 shares held jointly by Mr. Hanse and his spouse; 10,998 shares held by
Mr. Hanse’s spouse in her own name; and 1,102 shares issuable upon exercise of
stock options exercisable within 60 days of March 25, 2008. Mr. Hanse
disclaims beneficial ownership of the common stock held by his
spouse.
(5) Includes
12,604 shares held jointly by Mrs. Lane and her spouse; 862 shares held by Mrs.
Lane’s spouse as custodian for their children; and 2,205 shares issuable upon
exercise of stock options exercisable within 60 days of March 25,
2008. Mrs. Lane disclaims beneficial ownership of the common stock
held by her spouse.
(6) Includes
15,420 shares held jointly by Mr. Leegwater and his spouse; 24,116 shares held
by trusts of which Mr. Leegwater is the trustee; and 2,205 shares issuable upon
exercise of stock options exercisable within 60 days of March 25,
2008. Mr. Leegwater disclaims beneficial ownership of the common
stock owned by his spouse.
(7) Includes
2,205 shares issuable upon exercise of stock options exercisable within 60 days
of March 25, 2008.
(8) Includes
28,175 shares held jointly by Mr. Turner and his spouse; 3,656 shares held by
Mr. Turner’s spouse in her own name; and 2,205 shares issuable upon exercise of
stock options exercisable within 60 days of March 25, 2008. Mr.
Turner disclaims beneficial ownership of the common stock held by his
spouse.
(9) Includes
42,154 shares held by Mr. Vander Eem’s spouse in her own name; 16,779 shares
held by Mr. Vander Eems as custodian for his child; and 2,205 shares issuable
upon exercise of stock options exercisable within 60 days of March 25,
2008. Mr. Vander Eems disclaims beneficial ownership of the common
stock held by his spouse.
(10) Includes
797 shares held by Mr. Van Ostenbridge’s spouse in her name; 1,540 shares held
by Mr. Van Ostenbridge’s immediate family; and 13,194 shares issuable upon
exercise of stock options exercisable within 60 days of March 25,
2008. Mr. Van Ostenbridge disclaims beneficial ownership of the
common stock held by his spouse.
(11) Includes
198,915 shares held by Mr. Van Wingerden and his
spouse. Includes 1,102 shares issuable upon exercise of
stock options exercisable within 60 days of March 25, 2008. Mr. Van
Wingerden disclaims beneficial ownership of the common stock held by his
spouse.
(12) Includes
3,916 shares issuable upon exercise of stock options exercisable within 60 days
of March 25, 2008.
(13) Includes
350 shares held by Mr. Yeaton and his spouse. Includes 5,019 shares
issuable upon exercise of stock options exercisable within 60 days of March 25,
2008.
(14) Includes
3,723 shares issuable upon exercise of stock options exercisable within 60 days
of March 25, 2008.
(15) Includes
850 shares issuable upon exercise of stock options exercisable within 60 days of
March 25, 2008. On March 26, 2008, Mr. Madden resigned his position
with the Bank and the Corporation.
REPORT
OF THE AUDIT COMMITTEE
The role
of the Audit Committee is to assist the Board of Directors in its oversight of
the quality and integrity of the Corporation’s financial reporting
process. We meet with both the independent auditors and the internal
auditors, each of whom has unrestricted access to the committee. We
also meet with management periodically to consider the adequacy of the
Corporation’s internal controls and the objectivity of its financial
reporting. We discuss these matters with the independent auditors,
internal auditors and appropriate financial personnel of the
Corporation.
The directors who serve on the
committee are all “independent” for the purposes of Rule 4200(a)(15) of the
NASDAQ’s listing standards. That is, the Board of Directors has
determined that none of us has a relationship with the Corporation and the Bank
that may interfere with our independence from the Corporation and its
management.
Management has primary responsibility
for the Corporation’s financial statements and the overall reporting process,
including the Corporation’s system of internal controls. The
independent auditors audit the financial statements prepared by management,
express an opinion as to whether those financial statements fairly present the
financial position, results of operations, and cash flows of the Corporation in
conformity with generally accepted accounting principles and discuss with us any
issues they believe should be raised with us.
This year, we reviewed the
Corporation’s audited financial statements and met with both management and
Crowe Chizek and Company LLC, the Corporation’s independent registered public
accounting firm, to discuss those financial statements. Management
has represented to us
that the
financial statements were prepared in accordance with generally accepted
accounting principles.
We have received from and discussed
with Crowe Chizek and Company LLC the written disclosure and the letter required
by Independence Standards Boards No. 1 (Independence Discussions with Audit
Committees). These items relate to that firm’s independence from the
Corporation. We also discussed with Crowe Chizek and Company LLC any
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
Based on these reviews and discussions,
we recommended to the Board that the Corporation’s audited financial statements
be included in the Corporation’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2007.
|
|
Submitted
by:
|
|
|
|
|
|
Audit
Committee
|
|
|
|
|
|
Howard
R.Yeaton, CPA, Chairman
|
|
|
Harold
Dyer
|
|
|
John
L. Steen
|
|
|
Michael
Westra, CPA
|
INDEPENDENT
AUDITORS
The Audit Committee of the Board of
Directors of the Corporation and the Bank has recommended the engagement of
Crowe Chizek and Company LLC to act as the independent registered public
accounting firm for the Corporation and the Bank for the fiscal year ending
2008. Crowe Chizek and Company LLC has served as the independent
registered public accounting firm for the Corporation and the Bank for the
fiscal years ending 2006 and 2007.
Crowe
Chizek and Company LLC has advised the Corporation that one or more of its
representatives will be present at the Annual Meeting to make a statement if
they so desire and to respond to appropriate questions.
During
the Corporation’s two most recent fiscal years and the subsequent period through
March 17, 2008, neither the Corporation nor anyone acting on the Corporation’s
behalf consulted with Crowe regarding: (1) the application of accounting
principles to a specified transaction or the type of audit opinion that might be
rendered on SFC’s financial statements, or (2) any of the matters or events set
forth in Item 304(a)(2)(ii) of Regulation S-K.
Fees
Billed by the Independent Registered Public Accounting Firm During Fiscal Year
2007 and Fiscal Year 2006
Aggregate fees for the fiscal years
ending December 31, 2007 and December 31, 2006, billed by the Corporation’s
independent registered public accounting firm, Crowe Chizek and Company LLC
(“Crowe”) were as follows:
|
|
|
2007
|
|
|
2006
|
|
|
Audit
Fees
|
|
$ |
67,000 |
|
|
$ |
64,000 |
|
|
Audit
Related Fees
|
|
$ |
450 |
(a) |
|
$ |
5,010 |
(b) |
|
Tax
Fees
|
|
$ |
- |
|
|
$ |
- |
|
|
All
other Fees
|
|
$ |
- |
|
|
$ |
- |
|
(a) Audit
related fees were for additional work completed for review of a repurchase
agreement transaction completed by the Bank in 2007.
(b) Audit
related fees were for additional work completed for the review of the sale of
the credit card portfolio, completed in the fourth quarter of 2006 and for
review of deferred taxes and tax accruals.
Pre-Approval
of Audit and Permissible Non-Audit Services
The Audit Committee pre-approves all
audit and permissible non-audit services provided by the independent
auditors. These services may include audit services, audit-related
services, tax services and other services. The Audit Committee has
adopted a policy for the pre-approval of services provided by the independent
auditors. Under the policy, pre-approval is generally provided for up
to one year and any pre-approval is detailed as to the particular service or
category of services and is subject to a specific budget. In
addition, the Audit Committee may pre-approve particular services on a
case-by-case basis. For each proposed service, the independent
auditor is required to provide detailed back-up documentation at the time of
approval. All audit and permissible non-audit services provided by
Crowe Chizek and Company LLC to the Corporation for the fiscal years ended 2007
and 2006, respectively were approved by the Audit Committee.
COMPLIANCE
WITH SECTION 16(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities
Exchange Act of 1934 requires the Corporation’s officers and directors, and
persons who own more than 10% of a registered class of the Corporation’s equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater
than 10% shareholders are required by regulation of the Securities and Exchange
Commission to furnish the Corporation with copies of all Section 16(a) forms
they file.
Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons, the Corporation believes that, during the fiscal year ended
December 31, 2007, all filing requirements applicable to its officers, directors
and greater than 10% shareholders were timely met except for Abe Van Wingerden
(1 late Form 4 filing), Michael Westra (1 late Form 4 filing), and Howard R.
Yeaton (1 late Form 4 filing) The late filing for all three directors
were 1 day late to report stock purchases from the Directors Stock Purchase
Plan.
ANNUAL
REPORT ON FORM 10-K
The Corporation will furnish without
charge its annual report on Form 10-K upon receipt of your written request
therefore. Requests should be sent to the Secretary of the
Corporation at 630 Godwin Avenue, Midland Park, New Jersey 07432.
SHAREHOLDER
PROPOSALS
Shareholders
who wish to present proposals to be included in the Corporation’s 2009 proxy
materials must submit such proposals to the Secretary of the Corporation at 630
Godwin Avenue, Midland Park, New Jersey 07432 by December 11, 2008. For any
proposal that is not submitted for inclusion in next year’s proxy materials, but
is instead sought to be presented directly at the 2009 Annual Meeting, SEC rules
permit the Corporation to exercise discretionary voting authority to the extent
conferred by proxy if the Corporation: (1) receives notice of the
proposal before February 24, 2009 and advises shareholders in the 2009 proxy
statement of the nature of the proposal and how management intends to vote on
such matter or (2) does not receive notice of the proposal before February 24,
2009. Notices of intention to present proposals at the 2009 Annual
Meeting should be submitted to the Secretary of the Corporation at 630 Godwin
Avenue, Midland Park, New Jersey 07432.
OTHER
MATTERS
The Board
of Directors is not aware of any other matters which may come before the Annual
Meeting; however, in the event such other matters come before the meeting, it is
the intention of the persons named in the proxy to vote on any such matters in
accordance with the recommendation of the Board of Directors.
STEWARDSHIP
FINANCIAL CORPORATION
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD ON MAY 13, 2008
The undersigned hereby appoints Benard
Thomas, Thomas Dykhouse, and William Cook, and each of them, with full power of
substitution, as proxies for the undersigned to attend the annual meeting of
shareholders of Stewardship Financial Corporation (the “Corporation”), to be
held at the Christian Health Care Center, Mountain Avenue entrance, Wyckoff, New
Jersey 07481, on May 13, 2008, at 7:00 p.m., or any adjournment thereof, and to
vote the number of shares of Common Stock of the Corporation that the
undersigned would be entitled to vote, and with all the power the undersigned
would possess, if personally present, as follows:
1. To
elect the following nominees for election as directors:
|
|
William
C. Hanse
|
|
|
Margo
Lane
|
|
|
Arie
Leegwater
|
|
|
John
L. Steen
|
|
r WITHHOLD
AUTHORITY
|
|
(To
withhold authority to vote for an individual nominee, write the nominee’s
name on the line provided below)
____________________________
|
|
2.
|
To
ratify the appointment of Crowe Chizek and Company LLC as the
Corporation’s independent registered public accounting firm for the fiscal
year ending December 31, 2008.
|
The Proxies will vote as specified
herein or, if a choice is not specified, they will vote “FOR” the proposal set
forth above. In their discretion, the Proxies are authorized to vote
upon such other matters as may properly come before the meeting or any
adjournment thereof.
This Proxy is solicited by the Board of
Directors of the Corporation.
When shares are held by two or more
persons as joint tenants, both or all should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign
in partnership name by authorized person.
|
DATED: ________________
|
____________________________
____________________________
____________________________
____________________________
Signature
|