SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
AmBase 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)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) 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) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
2008
AMBASE CORPORATION
100 Putnam Green, 3rd Floor
Greenwich, CT 06830-6027
AMBASE CORPORATION
100 PUTNAM GREEN, 3RD FLOOR
GREENWICH, CT 06830-6027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2008
The 2008 Annual Meeting of Stockholders (the "Annual Meeting") of AmBase
Corporation (the "Company") will be held at the Hyatt Regency Hotel, 1800 East
Putnam Avenue, Greenwich, Connecticut, on Friday, May 16, 2008 at 9:00 a.m.,
Eastern Daylight Time, to consider and act upon the following matters:
1. The election of two directors to hold office for a three-year term
expiring in 2011;
2. The approval of the appointment of UHY LLP as the independent registered
public accounting firm of the Company for the year ending December 31, 2008;
3. The approval of an amendment to the AmBase Corporation 1993 Stock
Incentive Plan (the "1993 Plan") (a copy of which is attached as Exhibit A to
the Proxy Statement) to extend the termination date for the period during which
awards may be granted under the 1993 Plan, to May 28, 2018 from May 28, 2008;
and such other matters as may properly come before the Annual Meeting or
any adjournments thereof.
The Board of Directors has fixed the close of business on Wednesday, April
2, 2008 as the record date for determining stockholders entitled to notice of
and to vote at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, please sign, date and
return the enclosed proxy card in the prepaid envelope provided, as soon as
possible, so your shares can be voted at the meeting in accordance with your
instructions. Your vote is important no matter how many shares you own. If you
plan to attend the Annual Meeting and wish to vote your shares personally, you
may do so at any time before your proxy is voted. Your prompt cooperation is
greatly appreciated.
All stockholders are cordially invited to attend the Annual Meeting.
Admission to Annual Meeting
Attendance at the Annual Meeting is limited to shareholders of the Company
as of the April 2, 2008, record date. For safety and security reasons, video and
audio recording devices and other electronic devices will not be allowed in the
meeting.
If your shares are held in the name of your bank, brokerage firm or other
nominee, you must bring to the Annual Meeting an account statement or letter
from the nominee indicating that you beneficially owned the shares as of the
April 2, 2008, record date for voting. If you do not have proof of share
ownership, you will not be admitted to the Annual Meeting.
For registered shareholders, a copy of your proxy card can serve as
verification of stock ownership. Shareholders who do not present a copy of their
proxy card at the Annual Meeting, will be admitted only upon verification of
stock ownership, as indicated herein. If you do not have proof of share
ownership, you will not be admitted to the Annual Meeting.
In addition, all Annual Meeting attendees will be asked to present a valid
government-issued photo identification, such as a driver's license or passport,
as proof of identification before entering the Annual Meeting, and attendees may
be subject to security inspections.
By Order of the
Board of Directors
John P. Ferrara
Secretary
Greenwich, Connecticut
April 2, 2008
AMBASE CORPORATION
100 PUTNAM GREEN, 3RD FLOOR
GREENWICH, CT 06830-6027
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2008
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of AmBase Corporation (the "Company") of proxies to be
voted at the Annual Meeting of Stockholders of the Company (the "Annual
Meeting") to be held at the Hyatt Regency Hotel, 1800 East Putnam Avenue,
Greenwich, Connecticut, at 9:00 a.m., Eastern Daylight Time, on Friday, May 16,
2008, and at any adjournments thereof. This Proxy Statement and the accompanying
proxy are being mailed to stockholders commencing on or about April 2, 2008.
Shares represented by a duly executed proxy in the accompanying form
received by the Company prior to the Annual Meeting will be voted at the Annual
Meeting in accordance with instructions given by the stockholder in the proxy.
Any stockholder granting a proxy may revoke it at any time before it is
exercised by granting a proxy bearing a later date, by giving notice in writing
to the Secretary of the Company or by voting in person at the Annual Meeting.
At the Annual Meeting, the stockholders will be asked (i) to re-elect Mr.
Richard A. Bianco and Mr. Philip M. Halpern as directors of the Company to serve
three-year terms ending in 2011; (ii) to approve the appointment of UHY LLP as
the Company's independent registered public accounting firm for the year ending
December 31, 2008; and (iii) to approve an amendment to the 1993 Plan to extend
the termination date for the period during which awards may be granted under the
1993 Plan, to May 28, 2018 from May 28, 2008. The persons acting under the
accompanying proxy have been designated by the Board of Directors and, unless
contrary instructions are given, will vote the shares represented by the proxy
(i) for the election of the nominees for directors named above; (ii) for the
approval of the appointment of UHY LLP as the Company's independent registered
public accounting firm; and (iii) for the approval of an amendment to the 1993
Plan to extend the termination date for the period during which awards may be
granted under the 1993 Plan, to May 28, 2018 from May 28, 2008.
The close of business on Wednesday, April 2, 2008, has been fixed by the
Board of Directors as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. Only the holders of record of common stock of the Company, par value
$0.01 per share (the "Common Stock") at the close of business on April 2, 2008,
are entitled to vote on the matters presented at the Annual Meeting. Each share
of Common Stock entitles the holder to one vote on each matter presented at the
Annual Meeting. As of Wednesday, April 2, 2008, there were 43,669,564 shares of
Common Stock issued and outstanding. The holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting shall
constitute a quorum. If there is less than a quorum, a majority of those present
in person or by proxy may adjourn the Annual Meeting. A plurality vote of the
holders of the shares of Common Stock represented in person or by proxy and
voting at the Annual Meeting, a quorum being present, is required for the
election of directors. The affirmative vote of the holders of a majority of the
shares of Common Stock represented in person or by proxy and voting at the
Annual Meeting, a quorum being present, is necessary: (i) for the approval of
UHY LLP as the Company's independent registered public accounting firm; and (ii)
for the approval of an amendment to the 1993 Plan to extend the termination date
for the period during which awards may be granted under the 1993 Plan, to May
28, 2018 from May 28, 2008.
Abstentions, votes withheld and shares not voted, including broker
non-votes, are not included in determining the number of votes cast for the
approval of UHY LLP as the Company's independent registered public accounting
firm and for the approval of an amendment to the 1993 Plan to extend the
termination date. Abstentions, votes withheld and broker non-votes, are counted
for purposes of determining whether a quorum is present at the Annual Meeting.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
In accordance with the method of electing directors by class with terms
expiring in different years, as required by the Company's Restated Certificate
of Incorporation, two directors will be elected at the Company's 2008 Annual
Meeting of Stockholders to hold office until the Company's Annual Meeting of
Stockholders for the year 2011. The directors will serve until their successors
shall be elected and shall qualify.
The persons named below have been nominated for directorship. The nominees
are directors now in office, and have indicated a willingness to accept
re-election. It is intended that at the Annual Meeting the shares represented by
the accompanying proxy will be voted for the election of the nominees unless
contrary instructions are given. In the event that the nominees should become
unavailable for election as directors at the time the Annual Meeting is held,
shares represented by proxies in the accompanying form will be voted for the
election of substitute nominees selected by the Board of Directors, unless
contrary instructions are given or the Board by resolution shall have reduced
the number of directors. The Board is not aware of any circumstances likely to
render the nominees unavailable.
Information Concerning the Nominees for Election as Directors
The name, age, principal occupation, other business affiliations, and
certain other information concerning the nominees for election as directors of
the Company are set forth below.
Richard A. Bianco, 60. Mr. Bianco was elected a director of the Company in
January 1991, and has served as President and Chief Executive Officer of the
Company since May 1991. On January 26, 1993, Mr. Bianco was elected Chairman of
the Board of Directors of the Company. He served as Chairman, President and
Chief Executive Officer of Carteret Savings Bank, FA, then a subsidiary of the
Company, from May 1991 to December 1992. If elected, his term will expire in
2011.
Philip M. Halpern, 51. Mr. Halpern was elected a director of the Company in
January 2006. Mr. Halpern is currently the Managing Partner of the law firm,
Collier, Halpern, Newberg, Nolletti and Bock, LLP, and has been a partner at the
firm since 1985. Mr. Halpern received his undergraduate degree from Fordham
University and his law degree from Pace University School of Law. If elected,
his term will expire in 2011.
The Board of Directors recommends a vote FOR the election of the nominees
as directors.
Information Concerning Directors Continuing in Office
Certain information concerning the directors of the Company whose terms do
not expire in 2008 is set forth below.
Robert E. Long, 76. Mr. Long was elected a director of the Company in
October 1995. Mr. Long is currently the President of Ariba GLB Asset Management,
Inc., a registered investment advisor. He has been the Chairman of Emerald City
Radio Partners since 1997. From 1991 to 1995, Mr. Long was President and CEO of
Southern Starr Broadcasting Group, Inc. Prior to 1991, Mr. Long was President of
Potomac Asset Management, Inc., a registered investment company. Mr. Long is a
Chartered Financial Analyst and a graduate of George Washington University
School of Law. In addition to his service as a director of the Company, Mr. Long
serves as a director of Allied Capital Corporation, CSC Scientific, Inc., and
Advanced Solutions International, Inc. His term will expire in 2009.
Salvatore Trani, 67. Mr. Trani was elected a director of the Company in
January 2006. Mr. Trani has over 40 years of experience on Wall Street and
currently serves as an Executive Vice President at BGC Partners, L.P., a leading
inter-dealer brokerage firm which provides integrated voice and electronic
services to wholesale fixed income, interest rate, foreign exchange, and
derivatives markets worldwide. His term will expire in 2010.
Director Independence
The Company periodically reviews the independence of each director.
Pursuant to this review, the directors and officers of the Company, on an annual
basis, are required to complete and forward to the Corporate Secretary a
detailed questionnaire to determine if there are any transactions or
relationships between any of the directors and/or officers of the Company
(including immediate family and affiliates). If any transactions or
relationships exist, the Company then considers whether such transaction(s) or
relationship(s) are inconsistent with a determination that the director is
independent. Pursuant to this process, in February 2008, the Company conducted
its annual review of director independence and determined that no transactions
or relationships existed that would disqualify any of our directors, under
NASDAQ independence rules. Mr. Richard A. Bianco, who serves as the Chairman of
the Board of Directors, also serves as the Company's President and Chief
Executive Officer. Mr. Bianco does not serve as a member of the Company's
Accounting and Audit Committee or the Company's Personnel Committee. Based on a
review of the information provided by the directors and other information
reviewed, the Company has concluded that none of the Company's non-employee
directors have any relationship with the Company other than as a director or
shareholder of the Company. Based upon that finding, our Board of Directors
determined that Messrs. Halpern, Long and Trani are "independent," and they
qualify as outside directors within the meaning of Code Section 162(m) and as
non-employee directors within the meaning of Rule 16b-3.
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
Meetings and Attendance
During 2007, the Company's Board of Directors held four (4) meetings.
Matters were also addressed by unanimous written consent in accordance with
Delaware law. All directors attended at least 75% of the meetings of the Board
of Directors and the committees of the Board on which they served during 2007.
Committees of the Board
The Board of Directors currently has (i) an Accounting and Audit Committee
and (ii) a Personnel Committee.
The Accounting and Audit Committee met two (2) times during 2007. Matters
were also addressed by unanimous written consent in accordance with Delaware
law. The Accounting and Audit Committee consists of Mr. Long, Chairman, Mr.
Halpern and Mr. Trani, who are all independent directors of the Company. The
Board of Directors has determined that Mr. Long is an "audit committee financial
expert" as that term is defined in Item 401(h) of Regulation S-K promulgated by
the Securities and Exchange Commission (the "SEC").
The Accounting and Audit Committee is directly responsible for the
appointment, compensation and oversight of the audit and related work of the
Company's independent auditors. The Accounting and Audit Committee reviews the
degree of their independence; approves the scope of the audit engagement,
including the cost of the audit; approves any non-audit services rendered by the
auditors and the fees for these services; reviews with the auditors and
management the Company's policies and procedures with respect to internal
accounting and financial controls and, upon completion of an audit, the results
of the audit engagement; and reviews internal accounting and auditing procedures
with the Company's financial staff and the extent to which recommendations made
by the independent auditors have been implemented. The Accounting and Audit
Committee has adopted a charter, which has been approved by the Company's Board
of Directors. A copy of the Audit Committee Charter was included as an exhibit
to the Company's 2007 Proxy Statement.
The Personnel Committee held three (3) meetings in 2007. Matters were also
addressed by unanimous written consent in accordance with Delaware law. The
Personnel Committee consists of Mr. Halpern and Mr. Trani, Co-Chairpersons, and
Mr. Long, who are all independent directors of the Company.
The principal functions of the Personnel Committee, which is equivalent to
a compensation committee, are to consider and recommend nominees for the Board,
to oversee the performance and approve the remuneration of officers and senior
employees of the Company and its subsidiaries and to oversee and approve the
employee benefit and retirement plans of the Company and its subsidiaries. The
Personnel Committee is also responsible for reviewing and approving the goals
and objectives relevant to compensation of officers and senior employees,
evaluating the performance in light of those goals and objectives and
determining and approving the compensation levels based on this evaluation. The
Personnel Committee is responsible for setting and approving salary, bonus and
other employment terms for the Company's Chief Executive Officer. The Chief
Executive Officer recommends salary and bonus awards for other officers of the
Company, which are subject to the modification and/or approval by the Personnel
Committee. In connection therewith, the Personnel Committee approves and makes
recommendations with respect to bonus and incentive-based compensation plans and
equity based plans. The Personnel Committee will consider stockholder
recommendations for director, submitted in accordance with the Company's
By-Laws. The Personnel Committee does not currently have a written charter.
The Company's By-Laws require that in the event a stockholder wishes to
nominate a person for election as a director, advance notice must be given to
the Secretary of the Company not less than 120 days in advance of the date on
which the Company's proxy statement is released to stockholders in connection
with the previous year's annual meeting of stockholders, except that if no
annual meeting was held in the previous year or if the date of the annual
meeting has been changed by more than 30 calendar days from the date
contemplated at the time of the previous year's proxy statement, such a proposal
must be received by the Company a reasonable time before the solicitation is
made, together with the name and address of the stockholder and of the person to
be nominated; a representation that the stockholder is entitled to vote at the
meeting and intends to appear in person or by proxy to make the nomination; a
description of arrangements or understandings between the stockholder and others
pursuant to which the nomination is to be made; such other information regarding
the nominee as would be required in a proxy statement filed under the proxy
rules as set forth in the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"); and the consent of the nominee to serve as a
director if elected.
Communications with Directors
In order to provide the Company's security holders and other interested
parties with a direct and open line of communication to the Board of Directors,
the Board of Directors has adopted the following procedures for communications
to directors. The Company's security holders and other interested persons may
communicate with the Chairman of the Company's Accounting and Audit Committee,
either of the Co-Chairman of the Personnel Committee, or with the non-management
directors of the Company as a group, by mailing a letter addressed in care of
the Corporate Secretary, AmBase Corporation, 100 Putnam Green, 3rd Floor,
Greenwich, Connecticut 06830.
All communications received in accordance with these procedures will be
reviewed initially by the Company. The Company will relay all such
communications to the appropriate director or directors unless the Secretary
determines that the communication:
o does not relate to the business or affairs of the Company or the
functioning or constitution of the Board of Directors or any of its committees;
o relates to routine or insignificant matters that do not warrant the
attention of the Board of Directors;
o is an advertisement or other commercial solicitation or communication; o
is frivolous or offensive; or
o is otherwise not appropriate for delivery to directors.
The director or directors who receive any such communication will have
discretion to determine whether the subject matter of the communication should
be brought to the attention of the full Board of Directors or one or more of its
committees, and whether any response to the person sending the communication is
appropriate. Any such response will be made only in accordance with applicable
law and regulations relating to the disclosure of information.
The Secretary will retain copies of all communications received pursuant to
these procedures for a period of at least one year. The Personnel Committee of
the Board of Directors will review the effectiveness of these procedures from
time to time and, if appropriate, recommend changes.
Board Attendance at Annual Meetings
We have not established a formal policy regarding director attendance at
our annual meetings of shareholders, but our directors generally do attend the
annual meeting. The Chairman of the Board presides at the annual meeting of
shareholders, and the Board of Directors holds one of its regular meetings in
conjunction with the annual meeting of shareholders. Accordingly, unless one or
more members of the Board are unable to attend, all members of the Board are
expected to be present for the annual meeting. All of the four members of the
Board at the time of the Company's 2007 annual meeting of shareholders attended
that meeting.
Nomination of Directors
The Personnel Committee has adopted specifications applicable to members of
the Board of Directors, and nominees for the Board of Directors recommended by
the Personnel Committee must meet these specifications. The specifications
provide that a candidate for director should:
o have a reputation for industry, integrity, honesty, candor, fairness and
discretion;
o be knowledgeable in his or her chosen field of endeavor, which field
should have such relevance to our businesses as would contribute to the
Company's success;
o be knowledgeable, or willing and able to become so quickly, in the
critical aspects of our businesses and operations; and
o be experienced and skillful in communicating with and serving as a
competent overseer of, and trusted advisor and confidant to senior management,
of a publicly held corporation or other corporation.
In addition, nominees for the Board of Directors should contribute to the
mix of skills, core competencies and qualifications of the Board through
expertise in one or more of the following areas: accounting and finance, the
financial industry, international business, mergers and acquisitions,
leadership, business and management, strategic planning, government relations,
investor relations, executive leadership development, and executive
compensation. The Personnel Committee will consider nominees recommended by
stockholders for election at the 2009 Annual Meeting of Stockholders that are
submitted prior to December 2, 2008, to our Secretary at the Company's offices,
100 Putnam Green, 3rd Floor, Greenwich, Connecticut 06830. Any recommendation
must be in writing and must include a detailed description of the business
experience and other qualifications of the recommended nominee as well as the
signed consent of the nominee to serve if nominated and elected, so that the
candidate may be properly considered. All stockholder recommendations will be
reviewed in the same manner as other potential candidates for Board membership.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of the forms filed with the SEC and written
representations received by the Company pursuant to the requirements of Section
16(a) of the Securities Exchange Act, the Company believes that, during 2007,
there were only two transactions which were not timely reported. Mr. Trani did
not report two purchases during June 2007, of the Company's common stock,
aggregating 10,000 shares, within the two business day requirement. Mr. Trani's
purchases were ultimately reported on a Form 4, no later than seven (7) days of
the required deadline. Mr. Joseph R. Bianco did not initially file a Form 3 in
February 2007 to report stock option awards previously granted to him in 1998 to
2005. In March 2008, he filed his Form 3 reporting previous grants of 160,000 of
prior stock option awards. Mr. J. Bianco owns no other shares of AmBase Common
Stock other than his right to exercise the stock option awards previously
granted to him. To the Company's knowledge, there were no other transactions
with respect to the Company's equity securities which were not reported on a
timely basis to the SEC, no late reports nor other failure to file a required
form by any director, officer or 10% stockholder of the Company.
Certain Relationships and Related Party Transactions
Pursuant to the Company's Code of Business Conduct and Ethics ("Code of
Conduct"), all employees (including our Named Executive Officers) who have, or
whose immediate family members have, any direct or indirect financial or other
participation in any business that competes with, supplies goods or services to,
or is a customer of the Company or its subsidiaries, are required to disclose to
us and receive written approval prior to transacting such business. No such
relationships have been reported. Our employees are expected to make reasoned
and impartial decisions in the workplace. As a result, approval of a business
relationship would be denied if it is believed that the employee's interest in
such a relationship could influence decisions relative to the Company's
business, or have the potential to adversely affect the Company's business or
the objective performance of the employee's work. In addition, the Company's
Code of Conduct requires adherence to a number of other underlying principles
which are important to the Company. These items include, but are not limited to,
restrictions on disclosure of Company information, insider trading, and the
protection and use of Company assets.
In connection with the Company's annual review of Directors independence,
as described under "Director Independence" above, the Company reviews whether or
not there have been any related party transactions by a Director, including any
such transactions with the Company's directors and/or officers. If a transaction
was deemed to be a related party transaction, that transaction would be reviewed
by the Company's Board of Directors.
Corporate Governance
In addition to the various procedures followed by the Company's Board of
Directors, as described herein, the Company maintains a separate Audit Committee
and Personnel Committee. The Company believes the functions of its Board of
Directors and existing committees essentially perform the responsibilities of a
nominating and a corporate governance committee, and therefore, the Company does
not maintain these additional separate committees.
INDEPENDENT REGISTERED PUBLIC ACCOUNTANT MATTERS
Report of the Accounting and Audit Committee
As set forth in more detail in the Accounting and Audit Committee (the
"Audit Committee") charter (which was attached as an exhibit to the Company's
2007 Proxy Statement) the primary purpose of the Audit Committee is to assist
the Board of Directors in fulfilling its responsibility to oversee management's
conduct of the Company's financial reporting process, including the oversight of
the following:
o financial reports and other financial information provided by the Company
to any governmental or regulatory body, the public or other users thereof;
o the Company's internal accounting and financial controls over financial
reporting; and
o the annual independent audit of the Company's financial statements.
The Audit Committee reviewed the Company's audited financial statements and
met with both Company management and UHY LLP, the Company'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 accounting principles generally accepted in the United States of
America.
The Audit Committee has received from and discussed with UHY LLP the
written disclosure and the letter required by Independence Standards Board
Standard No. 1 "Independence Discussions with Audit Committees." These items
relate to that firm's independence from the Company. The Audit Committee also
discussed with UHY LLP any matters required to be discussed by PCAOB auditing
standards.
Based on these reviews and discussions, the Audit Committee recommended to
the Board of Directors that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2007.
Audit Committee: Robert E. Long, Chairman Philip M. Halpern Salvatore Trani
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee appointed UHY LLP ("UHY") as the Company's principal
accountants and independent registered public accounting firm, to audit the
consolidated financial statements of the Company for the year ended December 31,
2007. A representative of UHY will be present at the meeting and will have the
opportunity to make a statement if such representative desires to do so and will
be available to respond to appropriate questions.
Previous independent registered public accounting firm
On September 11, 2007, the Company dismissed PricewaterhouseCoopers, LLP as
its independent registered public accounting firm. The Company's Audit Committee
and the Board of Directors participated in and approved the decision to change
its independent registered public accounting firm. The reports of
PricewaterhouseCoopers, LLP on the financial statements for the fiscal years
ended December 31, 2005 and 2006 contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle. During the fiscal years ended December 31, 2005 and 2006
and through September 11, 2007, there were no disagreements with
PricewaterhouseCoopers, LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers, LLP
would have caused them to make reference thereto in their reports on the
financial statements for such years. During the fiscal years ended December 31,
2005 and 2006 and through September 11, 2007, there were no reportable events
(as defined in Item 304(a)(1)(v) of Regulation S-K).
The Company requested that PricewaterhouseCoopers, LLP furnish it with a
letter addressed to the Securities and Exchange Commission ("SEC") stating
whether or not it agreed with the above statements. A copy of such letter, dated
September 14, 2007, was filed as an exhibit to the Company's Current Report on
Form 8-K as filed with the SEC on September 14, 2007.
New independent registered public accounting firm.
The Company engaged UHY LLP as its new independent registered public
accounting firm as of September 11, 2007. During the fiscal years ended December
31, 2005 and 2006 and through September 11, 2007, the Company had not consulted
with UHY LLP regarding any of the matters described in Item 304(a)(2)(i) or Item
304(a)(2)(ii) of Regulation S-K.
Through April 2, 2008, UHY LLP had a continuing relationship with UHY
Advisors, Inc. (Advisors). Under this relationship UHY LLP leased auditing staff
who were full time, permanent employees of Advisors. UHY LLP partners provide
non-audit services through Advisors. UHY LLP has only a few full time employees.
Therefore, few, if any, of the audit services performed were provided by
permanent full time employees of UHY LLP. UHY LLP manages and supervises the
audit services and the audit staff and is exclusively responsible for the
opinion rendered in connection with its audit.
Audit Fees
Aggregate fees billed by UHY LLP for professional services rendered for the
audit of our annual consolidated financial statements included in the Annual
Report on Form 10-K and the review of interim consolidated financial statements
included in Quarterly Reports on Form 10-Q and the review and audit of the
application of new accounting pronouncements and SEC releases were $31,000 for
UHY LLP for the year ended December 31, 2007 and for PricewaterhouseCoopers LLP
were $30,000 for the year ended December 31, 2007 and $68,000 for the year ended
December 31, 2006.
Audit Related Fees
No audit related fees were paid to either UHY LLP or PricewaterhouseCoopers
LLP for assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and that are not
disclosed under "Audit Fees" for the years ended December 31, 2007 and 2006,
respectively.
Tax Fees and All Other Fees
No other fees relating to tax advisory or other services were paid to UHY
LLP or PricewaterhouseCoopers LLP for professional services rendered to the
Company for the years ended December 31, 2007 and 2006.
Audit Committee Pre-Approval Policy
Pursuant to its charter, the Audit Committee is responsible for selection,
approving compensation and overseeing the independence, qualifications and
performance of the Company's independent accountants. The Audit Committee has
adopted a pre-approval policy pursuant to which certain permissible audit and
non-audit services may be provided by the independent accountants. Pre-approval
is generally provided for up to one year, is detailed as to the particular
service or category of services and may be subject to a specific budget. The
Audit Committee may also pre-approve particular services on a case-by-case
basis. In assessing requests for services by the Company's independent
accountants, the Audit Committee considers whether such services are consistent
with the auditor's independence; whether the Company's independent accountants
are likely to provide the most effective and efficient service based upon their
familiarity with the Company; and whether the service could enhance our ability
to manage or control risk or improve audit quality.
There were no non audit-related tax or other services provided by UHY LLP
or PricewaterhouseCoopers LLP in fiscal year 2007.
EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
The following Compensation Discussion and Analysis ("CDA") describes the
material elements of compensation for the Company's officers identified in the
Summary Compensation Table ("Named Executive Officers"). As more fully described
above herein, the Personnel Committee consists of three independent directors of
the Company.
The Personnel Committee is responsible for establishing the Company's
compensation programs including benefit plans, retirement plans and the
Company's stock option program, including approving the granting of stock option
awards to the Company's officer and employees. The Personnel Committee annually
reviews and approves all compensation decisions relating to the Company's
officers, including Named Executive Officers.
The day-to-day design and administration of health, welfare and paid
time-off plans and policies applicable to salaried employees in general are
handled by the Company's management. The Personnel Committee is responsible for
certain plan design changes outside the day-to-day requirements necessary to
maintain these plans and policies.
The Personnel Committee has the ability to, and may from time to time
utilize the services of independent compensation consultants or other outside
advisors in reviewing the Company's compensation programs, as they deem
necessary.
Objectives of the Compensation Program
The Personnel Committee's overall objective in administering the Company's
compensation programs is to attract, motivate and retain qualified personnel,
reward corporate performance and recognize individual contributions on both a
short-term and long-term basis. The Personnel Committee seeks to align the
interests of these executives with those of the Company's stockholders by
encouraging stock ownership by executive officers to promote a proprietary
interest in the Company's success, and to provide incentives to achieve the
Company's goals. In furtherance of these objectives, the Company's executive
compensation policies are designed to focus the executive officers on the
Company's goals. The Personnel Committee determines salary, bonuses and equity
incentives based upon the performance of the individual executive officer and
the Company. Management compensation is intended to be set at levels that the
Personnel Committee believes fully reflects the challenges confronted by
management.
The Company strives to provide a combined, overall competitive salary and
benefits package, including annual cash bonus incentives, to retain qualified
personnel who are familiar with the Company's operations and critical to the
long-term success of the Company. The Company rewards personnel for
contributions to a variety of matters, including the pursuit of claims recovery,
compromised of actual and contingent liabilities, and attention to the
maintenance of a controlled level of expenditures. Cash bonus incentives are
utilized to reward above average corporate performance and recognize individual
initiative and achievement which provide immediate and/or long-term value to the
Company. Due to the nature of the Company's operations, focusing on the recovery
of assets, with an emphasis on the recovery of the Company's investment in
Carteret Savings Bank ("Carteret") through the Supervisory Goodwill litigation
and other proceedings, the Personnel Committee intends to continue its strategy
of compensation through programs that provide an incentive for performance and
for contributions to the Company's efforts to realize recoveries, achieve asset
appreciation, eliminate liabilities and control costs.
Elements of Compensation
The Company's total compensation program for its officers consists of
competitive market salaries, annual cash bonus awards, other benefits such as
health and other insurance programs, a retirement plan in the form of a 401(k)
Savings Plan, which is a qualified plan within the meaning of the Internal
Revenue Code of 1986, as amended (the "Code") and may include stock option
awards. The Company's Supplemental Retirement Plan (the "Supplemental Plan"), as
further discussed below, was terminated in May 2007, upon the previously agreed
to lump-sum benefit payment to the Company's President and Chief Executive
Officer.
Due to cost considerations, administrative requirements and as part of an
overall compensation philosophy, the Company seeks to maintain a minimal level
of benefit programs and other perquisites.
Section 162(m) of the Code, as amended, imposes a limitation on the
deduction for certain executive officers' compensation unless certain
requirements are met. In that regard, the Company maintains a Senior Management
Incentive Compensation Plan (the "1994 Plan"), which provides for an annual
bonus pool based on a percentage of an increase in the Company's total
stockholders equity and/or an increase in the Company's market value. Payments
pursuant to the 1994 Plan are intended to qualify as performance based
compensation, which is deductible under Section 162(m). The 1994 Plan is not the
exclusive plan under which the Executive Officers may receive cash or other
incentive compensation or bonuses. No bonuses were paid attributable to the 1994
Plan for 2007 and 2006.
The Company has paid in the past, and reserves the right to pay in the
future, compensation that is not deductible if it believes it is in the best
interests of the Company. The Personnel Committee considered the provisions of
Section 162(m) in setting compensation paid in 2007.
Base Annual Salary
Base annual salaries for Named Executive Officers (as defined below) are
determined initially by evaluating the responsibilities of the position, the
experience of the individual and the competition in the marketplace for
management talent, and also may include comparison with companies confronting
problems of the magnitude and complexity faced by the Company.
Base annual salaries are intended to be competitive with the overall market
place, commensurate with the qualifications and experience of the Named
Executive Officer. They are intended to provide the necessary incentive to
retain and motivate qualified personnel. Individuals are encouraged to add value
and provide benefit to the Company in all aspects of the Company's operations
currently and in the future.
Base annual salaries and salary adjustments are evaluated on a number of
factors. The most important factor is the executive's performance and
contribution to the Company, followed by the performance of the Company, any
increased responsibilities assumed by the executive and the competition in the
marketplace for similarly experienced executives.
The salaries of the Named Executive Officers are reviewed on an annual
basis typically at the end of each year and may also be adjusted from time to
time based on changes in responsibilities, changes in benefit programs or as a
result of other external and economic factors.
The base annual salary for Mr. Bianco of $625,000 per year remained
unchanged for 2007 and has been at the same level since January 1, 2001. See
below for a discussion of Mr. Bianco's employment agreement effective June 1,
2007 (the "2007 Employment Agreement"). The base annual salary of $157,500 for
Mr. Ferrara and $132,500 for Mr. J. Bianco remained the same in 2007 as compared
with 2006.
Annual Bonus Awards
The Personnel Committee approved cash bonuses for officers and employees
for 2007. Factors considered included performance of the executive, performance
of the Company, total compensation level, the Company's financial position and
other pertinent factors. This analysis was necessarily a subjective process
which utilized no specific weighting or formula with respect to the described
factors in determining cash bonuses.
Mr. Bianco was paid a bonus of $300,000 for 2007, which was a reduction
from the $625,000 received for 2006 and $625,000 received for 2005. Mr. Ferrara
was paid a bonus of $90,000 in 2007, a reduction from the $150,000 received for
2006 and from the $175,000 received for 2005. Mr. J. Bianco was paid a bonus of
$60,000 in 2007, a reduction from the $100,000 received for 2006 and from the
$135,000 received for 2005. Based on various considerations, including the
current status of the Company's proceedings and operations, the Personnel
Committee determined that the 2007 bonus awards, reflecting a reduction compared
with the 2006 bonus amounts were appropriate.
For 2007, the Personnel Committee considered the Named Executive Officers'
continuing, integral roles in the Company's Supervisory Goodwill case, (except
for Mr. Bianco after May 2007), and other pending proceedings (excluding the
Supervisory Goodwill litigation) which are significant to the Company.
Consideration was given to management's role in securing new insurance programs,
the transition to several new professional service firms and the adoption of new
regulatory reporting requirements. The Personnel Committee also recognized
management's role in the maintenance of a controlled level of expenditures and
continued cost reductions. Mr. Bianco was additionally recognized for his
management of the Company's investment returns and his role in pursuing several
potential acquisitions.
2007 Employment Agreement with the Company's President and Chief Executive
Officer
An employment agreement, as amended, is in effect between Mr. Bianco and
the Company, which provides for him to serve as Chairman, President and Chief
Executive Officer of the Company at an annual base salary of $625,000 through
May 31, 2012. The employment agreement also provides for additional benefits,
including his participation in various employment benefit plans and annual bonus
eligibility for work performed on non-Supervisory Goodwill activities.
A major objective and focus for the Company continues to be the recovery of
the value of the Company's investment in Carteret Savings Bank ("Carteret"),
through successful litigation efforts (the "CSB Recovery Litigation"). Due to a
number of reasons, including these summarized below, the Personnel Committee and
the Board of Directors of the Company believed Mr. Bianco's continued employment
beyond his previous contract end date of May 31, 2007, was essential to the
Company's pursuit of the CSB Recovery Litigation. In particular, Mr. Bianco has
been instrumental in managing the Company's overall litigation effort and in
developing and executing litigation strategies being pursued. In addition, as
the former President and Chief Executive Officer from May 1991 to December 1992,
and one of the individuals who led the recapitalization efforts during that time
frame, Mr. Bianco has intimate knowledge of Carteret, its operations and
financial position which will provide a basis for the CSB Recovery Litigation.
As part of Mr. Bianco's 2007 Employment Agreement, the Board of Directors
determined that it wished to eliminate the previous employment agreement
language which provided for a minimum annual bonus equal to annual base salary,
but wanted to continue annual bonus eligibility at the discretion of the
Personnel Committee. In addition, the Personnel Committee believed it was
important to replace future Supplemental Plan accruals and the portion of annual
cash bonuses paid on progress in the CSB Recovery Litigation effort with an
incentive arrangement, contingent solely upon the eventual success of the CSB
Recovery Litigation.
The Board of Directors and Personnel Committee considered the impact of
continuing Mr. Bianco's previous contract to May 31, 2012, the potential
increase to the Company's Supplemental Plan liability and Mr. Bianco's integral
involvement in the CSB Recovery Litigation effort. The Board of Directors and
Personnel Committee also considered the obstacles the Company faces in its
efforts and the probable extended length of time to obtain a recovery and;
therefore, believe, given the demands of the task, it was appropriate to provide
an incentive arrangement to Mr. Bianco.
The Personnel Committee reviewed the Supplemental Plan and the Company's
related liability, including the desirability of continuing to maintain and
administer the Supplemental Plan, the untying of Mr. Bianco's future employment
with the Company from the timing of his Supplemental Plan benefit payment(s),
the Company's overall financial position, and the desirability of continued
accruals under the Supplemental Plan after Mr. Bianco's previous employment
contract expired on May 31, 2007. In connection with this review, the Personnel
Committee considered various options, including whether or not to terminate
and/or curtail the Supplemental Plan.
Mr. Bianco was the only current employee of the Company who participated in
the Supplemental Plan and his Supplemental Plan benefit was fully vested. For
purposes of computing his accrued benefit under the Supplemental Plan, Mr.
Bianco had 16.08 years of credited service upon the expiration of his previous
employment contract on May 31, 2007. His accrual percentage under the
Supplemental Plan was 4%, in effect from the time of his initial employment with
the Company, and in accordance with the Supplemental Plan (prior to the
amendment described below), he had the entitlement to receive his Supplemental
Plan benefit in either a lump-sum or an annuity upon termination of his
employment with the Company.
As a result of the above considerations, during 2006, the Company entered
into a new employment agreement with Mr. Bianco to extend his employment with
the Company for an additional five (5) years beyond May 31, 2007, until May 31,
2012 (the "2007 Employment Agreement"). As part of the 2007 Employment Agreement
terms: (i) Mr. Bianco's annual rate of base salary will not increase from his
current rate of base salary (i.e. $625,000) during the first three years of the
2007 Employment Agreement (the amount of Mr. Bianco's base salary for the fourth
and fifth years of the 2007 Employment Agreement term to be determined by the
Personnel Committee, in its sole discretion, although in no event less than
$625,000 per annum); (ii) Mr. Bianco's service accruals under the Supplemental
Plan will cease as of May 31, 2007; (iii) Mr. Bianco's Final Average Earnings
(as defined in the Supplemental Plan) for Supplemental Plan benefit calculation
purposes, are capped as of December 31, 2004; and (iv) Mr. Bianco's annual bonus
opportunity will no longer be linked to recovery efforts in connection with the
Company's Supervisory Goodwill litigation. Instead, on or about May 31, 2007,
Mr. Bianco received a lump-sum payment of his Supplemental Plan benefit of
$16,676,115, which amount was calculated on the basis of a 5.75% discount rate,
a "RP-2000" projected to 2004 mortality table, and 16.08 years of credited
service, and the Company and Mr. Bianco have agreed to a long term incentive
bonus formula, at varying percentages ranging from 5% to 10%, or more, based
upon recoveries received by the Company for its investment in Carteret, through
litigation or otherwise (including the Company's Supervisory Goodwill
litigation).
In accordance with the Supplemental Plan amendment, the Supplemental Plan
automatically terminated immediately following the payment to Mr. Bianco of his
Supplemental Plan lump-sum benefit as of May 31, 2007.
The Board of Directors and Personnel Committee utilized the services of an
independent outside compensation consultant, Pearl Meyer & Partners, other
outside advisors and independent legal counsel in connection with the 2007
Employment Agreement and the amendment to the Supplemental Plan.
With the advice and consultation of outside advisors and given the
challenges faced by the Company in its efforts to obtain a CSB Litigation
Recovery, including the projected timeframe to achieve such a recovery, the
Personnel Committee believed the 2007 Employment Agreement with Mr. Bianco, and
the lump-sum Supplemental Plan benefit payment and its termination, provided the
necessary and appropriate incentives for the best interests of the Company and
its shareholders. See Employment Contracts, below for a further discussion of
Mr. Bianco's employment agreements.
Retirement/Pension Benefits
Supplemental Plan
As more fully described above, the Company previously sponsored an unfunded
non-tax qualified retirement plan which has been in effect since 1985, the
Supplemental Plan.
Mr. Bianco was the only individual who participated in the Supplemental
Plan and his Supplemental Plan benefits were fully vested effective with the
terms of his initial employment with the Company in 1991. No other employee or
officer of the Company was a participant under the Supplemental Plan. The
materials terms of the Supplemental Plan are described under Pension Benefits
below.
As noted above, as part of the 2007 Employment Agreement between the
Company and Mr. Bianco, in consideration for Mr. Bianco's agreement to extend
his employment with the Company for an additional five (5) years (beyond his
previous May 31, 2007 contract expiration date), with no further Supplemental
Plan accruals for the extension period, the Company has amended the Supplemental
Plan to provide for the payment to Mr. Bianco of his Supplemental Plan benefit
in a lump-sum on or about May 31, 2007 (the date of his Supplemental Plan
benefit entitlement had he not agreed to extend his employment with the Company
beyond May 31, 2007). The Company and Mr. Bianco further agreed that for
purposes of computing his Supplemental Plan benefit as of May 31, 2007, his
Final Average Earnings (as defined in the Supplemental Plan) would be capped as
of December 31, 2004, a 5.75% discount rate would be used and a "RP-2000"
projected to 2004 mortality table would be used, resulting in a Supplemental
Plan lump-sum benefit payment to Mr. Bianco of $16,676,115. The Company has
further amended the Supplemental Plan to automatically terminate following the
lump-sum payment of $16,676,115 to Mr. Bianco on or about May 31, 2007.
In accordance with an amendment to the Supplemental Plan, as previously
adopted in March 2006, the liability for the Supplemental Plan was fully
satisfied on May 31, 2007, by the lump-sum benefit payment of $16,676,115 to Mr.
Bianco and immediately thereafter, the Supplemental Plan automatically
terminated. The lump-sum Supplemental Plan benefit payment to Mr. Bianco was
paid from the Company's available financial resources. As of June 1, 2007, no
further Supplemental Plan expense will be recognized by the Company, which was
previously included as a component of compensation and benefits expense in the
Company's consolidated financial statements.
401(k) Savings Plan
Other than the Supplemental Plan, the only other retirement type plan
maintained by the Company is the Company's 401(k) Savings Plan (the "Savings
Plan"). Pursuant to the terms of the Savings Plan, employees can make
contributions which are 100% matched by the Company. The employee and the
employer matching contribution are subject to the maximum limitations as set
forth in the Internal Revenue Code of 1986, as amended.
During 2007, the Company's matching contributions to the Named Executive
Officers aggregated $56,500.
Stock Options
The Company maintains the 1993 Stock Incentive Plan, which authorizes the
grant of stock options. Although the Personnel Committee has not granted any
stock options since 2005 it believes it is appropriate to maintain the
availability of the 1993 Stock Incentive Plan for possible future use, if deemed
appropriate. The 1993 Stock Incentive Plan is currently scheduled to terminate
for the granting of new awards in May 2008; as a result, the Personnel Committee
has voted, subject to stockholder approval at the Company's May 16, 2008 Annual
Meeting of Stockholders, to extend the termination date thereof for an
additional ten (10) years to May 2018, with other appropriate amendments to keep
the 1993 Stock Incentive Plan up to date with current regulations, as included
herein as Proposal No. 3.
If awarded, stock option grants are generally awarded as incentive stock
options intended to qualify for favorable tax treatment under Federal tax law.
The exercise price of stock option grants is set at the fair market value of the
Company's common stock on the date of grant. Accordingly, stock option grants
would only have value if the market price of the common stock increases after
the date of grant. Stock option grants generally have a 10 year term and vest in
equal installments over a 2 year period. In determining the size of stock option
grants to officers, the Personnel Committee considers the individual's
contributions to the Company, Company performance and previously issued stock
options grants.
Stock option awards are granted to encourage stock ownership by the Named
Executive Officers, to provide further incentive to the achievement of the
Company's goals and to align the interests of the Named Executive Officers with
those of the Company's stockholders.
Practices Regarding the Grant of Stock Options Awards
If granted, the Personnel Committee makes grants of stock options or other
equity based awards to the Named Executive Officers or employees of the Company
generally at the beginning of each year. The Company does not have any program,
plan or practice to time grants of stock options or other equity based awards in
coordination with the release of material non-public information or otherwise.
All stock option awards made to the Company's Named Executive Officers, or
any of our other employees, are made pursuant to the Company's 1993 Stock
Incentive Plan with an exercise price equal to the fair market value of the
Company's common stock on the date of grant. Fair market value is determined
based upon the closing market price of a share of the Company's common stock on
the date of grant. The Company does not have any program, plan or practice of
awarding options and setting the exercise price based upon a stock price other
than on the fair market value on the date of grant. The Company does not have a
practice of determining the exercise price of options grants by using the lowest
prices of the Company's common stock in a period preceding, surrounding or
following the date of grant.
Other Benefits
The Company provides only a limited number of additional benefits and
perquisites. Such additional items, to the extent provided, are included as
Other Compensation in the Summary Compensation table presented herein. The
benefits and other perquisites are reasonably consistent with general
competitive market practices.
Items provided by the Company include, depending on the Named Executive
Officer, Company paid term life insurance at two times the individual's base
annual salary, Company paid long-term disability insurance with a monthly
benefit up to 60% of the individual's base monthly salary, supplemental medical
and dental coverage for costs not covered under the base health insurance plans,
and depending on the Named Executive Officer, reimbursement for income tax
services and Company provided transportation. Health and welfare plans are
provided through outside insurance carriers. Benefits generally available to all
full-time employees of the Company are not included herein.
The Company does not provide any other type of deferred compensation
programs nor does it provide or have outstanding loans with the Named Executive
Officers or any other employee of the Company.
Personnel Committee Report
The Personnel Committee believes that its compensation programs, mixing
equity and cash incentives, will continue to focus the efforts of the Company's
executive officers on long-term growth for the benefit of the Company and its
stockholders. The Personnel Committee has found all the components of Company's
officers' compensation to be fair, reasonable and appropriate.
The Personnel Committee has reviewed and discussed the Company's
Compensation Discussion and Analysis ("CDA") (included herein above), with the
Company's management and based on the review and discussions, the Personnel
Committee recommended to the Board of Directors that the CDA be included in the
Company's 2008 Proxy Statement.
Personnel Committee: Philip M. Halpern, Esq., Co-Chairperson
Salvatore Trani, Co-Chairperson
Robert E. Long, Member
The following table sets forth the total compensation earned by the Chief
Executive Officer and each other executive officer of the Company and its
subsidiaries (the "Named Executive Officers") for services rendered to the
Company during the last two fiscal years:
Summary Compensation Table - 2007 and 2006
Change In
Non-Equity Pension Value and
Name and Principal ($) ($) Incentive Non-qualified ($)(e)(f)
Position Year Salary ($)(a) ($) Stock Plan Deferred All Other ($)
Bonus Stock Option Compensation Compensation Compensation Total
Awards Earnings
Richard A. Bianco,2007 $625,000 $300,000 - - - $394,000 $94,178 $1,413,178
Chairman, President2006 $625,000 $625,000 - $80,201 - $1,687,000 $95,953 $3,113,154
and Chief Executive
Officer
John P. Ferrara,2007 $157,500 $90,000 - - - $58,499 $305,999
Vice President/ 2006 $157,500 $150,000 - $3,937 - - $40,282 $351,719
Chief Financial
Officer & Controller
Joseph R. Bianco,2007 $132,500 $60,000 - - - $35,698 $228,198
Treasurer 2006 $132,500 $100,000 - $3,937 - - $33,084 $269,521
(a) Amounts represent bonuses for the year indicated and paid in the following
year, consistent with past practice of the Company.
(b) The dollar value for Stock Option Awards in the table above represents the
compensation expense recognized by the Company for financial statement reporting
purposes for the fiscal year ended December 31, 2006. Such amounts were
determined in accordance with Statement of Financial Accounting Standards No.
123 (revised 2004), "Share-Based Payment" ("SFAS 123R") utilizing the
assumptions discussed in Note 8 to the Company's consolidated financial
statements for the fiscal year ended December 31, 2006, but disregarding the
estimate of forfeitures related to service-based vesting. The amounts shown for
2006 reflect the aggregate of the grant date fair value of stock option awards
previously granted and vesting in 2006. There was no stock option expense for
the stock options vesting in 2007, as such options vested at the beginning of
January 2007, and all expense related thereto had previously been recognized.
The values shown for stock options are theoretical. The value a Named Executive
Officer may actually realize will depend on the amount by which the Company's
common stock market value exceeds the exercise price of the stock option award
when the stock options are actually exercised.
(c) See the discussion in Employment Contracts below, for information relating
to the 2007 Employment Agreement between Mr. Bianco and the Company and the
amounts which could be payable to Mr. Bianco in the future in connection with a
recovery received by the Company for its investment in Carteret Savings Bank,
F.A.
(d)The dollar value indicated in "Change in Pension Value and Non-qualified
Deferred Compensation Earnings" in 2007 and 2006 represents the actuarial
increase in the named executive's Supplemental Pension Plan benefit, as accrued
on the Company's financial statements in accordance with generally accepted
accounting principles. As more fully described under Pension Benefits below, on
May 31, 2007, Mr. Bianco received a Supplemental Plan lump-sum benefit payment
of $16,676,115 in full satisfaction of the Company's Supplemental Plan
liability. Mr. Bianco's Supplemental Plan benefit had been accrued annually,
based on its actuarially determined value throughout his employment period,
beginning in May 1991. Upon payment of the Supplemental Plan lump-sum benefit,
the Supplemental Plan automatically terminated.
(e) All Other Compensation in the table above consists of the following:
2007
Mr. Bianco Mr. Ferrara Mr. J. Bianco
Company contributions to 401(k) savings plan $20,500 $15,500 $20,500
Supplemental life insurance premiums 13,347 1,574 1,968
Long-term disability insurance premiums 13,672 1,548 3,312
Supplemental medical and dental insurance 7,170 37,870 6,604
Reimbursement of income tax costs for
participation in life insurance plans 8,268 1,012 1,184
Reimbursement of income tax costs for
participation in long-term disability plans 8,468 995 2,130
Company provided automobile (f) 3,928 - -
Reimbursement for tax services 8,325 - -
Director's fees 10,500 - -
--------- --------- ---------
Total $94,178 $58,499 $35,698
========= ========= =========
(f) Amounts for personal use of a Company provided automobile for Mr.
Bianco, included in table above for other compensation, includes mileage, fuel,
maintenance, insurance and other miscellaneous fees.
Grants of Plan Based Awards During 2007
------------------------ ------------------ ---------------------------------------------------------------------
Name Grant Date Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a)
------------------------ ------------------ ---------------------------------------------------------------------
------------------------ ------------------ ---------------------- ---------------------- -----------------------
($) ($) ($)
Threshold Target Maximum
------------------------ ------------------ ---------------------- ---------------------- -----------------------
------------------------ ------------------ ---------------------- ---------------------- -----------------------
Richard A. Bianco June 1, 2007 (a) (a) (a)
------------------------ ------------------ ---------------------- ---------------------- -----------------------
(a) Pursuant to Mr. Bianco's 2007 Employment Agreement, Mr. Bianco is
eligible for a long-term incentive award payment calculated as a percentage of a
recovery amount received by the Company in connection with the Company's
Supervisory Goodwill Litigation. See "Employment Contracts" below for a further
discussion of the basis for the calculation of the potential payment(s) to Mr.
Bianco.
Other than the grant to Mr. Bianco noted above, no stock options, SARs, or
any other type of stock award grants were granted to the Named Executive
Officers during the year ended December 31, 2007.
No stock options, SARs, or any other type of stock award grants were
granted to the Named Executive Officers during the year ended December 31, 2006.
EMPLOYMENT CONTRACTS
An employment agreement, as amended, is in effect between Mr. Bianco and
the Company, effective June 1, 2007, (the "2007 Employment Agreement"). The
terms of the 2007 Employment Agreement provide for Mr. Bianco to serve as
Chairman, President and Chief Executive Officer of the Company from June 1, 2007
through May 31, 2012 (the "Employment Period"). Under the terms of the 2007
Employment Agreement, Mr. Bianco receives an annual base salary of $625,000 for
the first three (3) years and then is eligible for discretionary increases to
the amount of his base salary in the fourth and fifth years. The 2007 Employment
Agreement provides for discretionary annual bonuses (which may not take into
consideration his efforts to obtain a recovery for the Company of its investment
in Carteret Savings Bank, FA), employee benefit plans participation, and certain
long-term disability benefits; however, there are no Supplemental Plan benefit
accruals. (See Retirement/Pension Benefits above, for further information with
regard to the lump-sum payment of Mr. Bianco's Supplemental Plan benefits of
$16,676,115 on May 31, 2007.) The 2007 Employment Agreement provides a long-term
incentive arrangement for Mr. Bianco (the "Long-Term Incentive Award"), whereby,
should the Company receive a recovery of its investment in Carteret Savings
Bank, FA, through litigation or otherwise (including the Company's Supervisory
Goodwill litigation) (the "Recovery Amount"), Mr. Bianco will receive (with
certain exceptions), a lump-sum payment equal to a percentage of that recovery,
as follows:
Long-Term Incentive Award = 5% of the first $50,000,000 of Recovery Amount;
Plus
8% of Recovery Amount in excess of $50,000,000 but not greater than
$150,000,000;
Plus
10% of Recovery Amount in excess of $150,000,000 but not greater than
$250,000,000;
Plus
Discretionary amount (not less than 10%), to be determined by the Board, of
Recovery Amount in excess of $250,000,000.
Under the terms of the 2007 Employment Agreement, if no recovery has been
obtained by the Company by the expiration of the five-year term of the 2007
Employment Agreement, the Company and Mr. Bianco will enter into a consulting
arrangement pursuant to which, following his employment with the Company, he
will continue to provide services to the Company as an independent contractor,
solely for the purpose of assisting the Company in obtaining such a recovery.
The Long-Term Incentive Award to Mr. Bianco is to be paid in the future (i.e.,
whether during or after the Employment Period and/or the Consulting Period)
except if Mr. Bianco willfully refuses to cooperate in a reasonable fashion with
the Company and/or the Board in connection with the Company's efforts to obtain
a Recovery Amount, in which case he would forfeit his entitlement to receive a
Long-Term Incentive Award.
During the Employment Period, if Mr. Bianco voluntarily resigns or has his
employment with the Company terminated by the Company for cause (as set forth in
the 2007 Employment Agreement), Mr. Bianco will forfeit his entitlement to
receive the Long-Term Incentive Award. If Mr. Bianco becomes disabled (as set
forth in the 2007 Employment Agreement) or dies, Mr. Bianco or his estate, as
applicable, would be entitled to receive the Long-Term Incentive Award upon the
Company's receipt of the Recovery Amount, regardless of when the Recovery Amount
is received by the Company. If the Company terminates Mr. Bianco's employment
with the Company without cause, Mr. Bianco or his estate, as applicable would be
entitled to receive the Long-Term Incentive Award upon the Company's receipt of
the Recovery Amount, regardless of when the Recovery Amount is received by the
Company.
Mr. Bianco's employment under the 2007 Employment Agreement automatically
terminates if Mr. Bianco dies during the term of the Employment Period and can
be terminated by the Company at its option for cause (as set forth in the 2007
Employment Agreement) or Mr. Bianco's inability to engage in any substantial
gainful activity (as set forth in the 2007 Employment Agreement).
In the event the Company terminates Mr. Bianco's employment for any reason
other than those permitted pursuant to the 2007 Employment Agreement, Mr. Bianco
would be entitled to receive a lump-sum amount equal to the salary payments
provided for in the 2007 Employment Agreement for the remaining term thereof,
following the passage of a six (6) month period from the date of his
termination. As of December 31, 2007, the aggregate lump-sum amount of such
salary payments, pursuant to the 2007 Employment Agreement, would be
approximately $2,760,000.
Outstanding Equity Awards at December 31, 2007
The Company does not have any outstanding SARs or any other type of stock
award grants outstanding. The following table sets forth information concerning
the fiscal year-end value of unexercised options held by the Named Executive
Officers on December 31, 2007.
----------------------------------------------------------------- --------------------------------------------
(#)
Equity
Incentive ($)
# Plan Equity
Equity Awards Incentive
Incentive ($) of Plan
Plan (#) Market Unearned Awards:
Awards; Number Value of Shares, Market or
Number of Securities Number of of Shares Units or Payout Value
Underlying Unexercised Securities Shares or Units Other of Unearned
Options/SARs at December Underlying, $ or Units of Stock Rights Shares,
31, 2007 Unexercised Option Option of Stock that that Units or
Unearned Exercise Expiration that Have Not Have Not Other Rights
Options Price Date Have Not Vested Vested that Have
--------------------------- Vested Not Vested
# #
Exercisable Unexercisable
-------------------- ---------------------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
Richard A. Bianco 136,000 - - 1.09 1/02/2012 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
200,000 - - 0.64 1/06/2014 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
200,000 - - 0.81 1/03/2015 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
John P. Ferrara 5,000 - - 3.65 1/23/2008 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
10,000 - - 2.56 1/04/2009 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
10,000 - - 0.95 1/03/2010 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
10,000 - - 0.60 1/02/2011 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
100,000 - - 1.09 1/02/2012 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
20,000 - - 0.64 1/06/2014 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
20,000 - - 0.81 1/03/2015 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
Joseph R. Bianco 5,000 - - 3.65 1/23/2008 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
5,000 - - 2.56 1/04/2009 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
5,000 - - 0.95 1/03/2010 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
10,000 - - 0.60 1/02/2011 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
100,000 - - 1.09 1/02/2012 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
20,000 - - 0.64 1/06/2014 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
20,000 - - 0.81 1/03/2015 - - - -
-------------------- ------------- -------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------
-----------------------------------------------------------------------------------------------------------------------------------
No awards under the long-term incentive plan were made to the Named
Executive Officers in 2007, and there were no stock options previously awarded
to any of the Named Executive Officers that were repriced during 2007.
Option Exercises and Stock Vested Table During Fiscal 2007
None of the Named Executive Officers exercised stock options during 2007.
The Company does not have any SARs or other stock award grants outstanding.
Pension Benefits
The Company previously sponsored a non tax-qualified supplemental
retirement plan, initially adopted by the Company in 1985, and as amended and
restated (the "Supplemental Plan"), under which only one current executive
officer of the Company was the sole participant. The cost of the Supplemental
Plan was accrued but not funded. Benefits under the Supplemental Plan were based
on a varying percentage accruals (historically ranging from 2.5% to 4%,
determined on an individual basis by the Personnel Committee) of the
participant's average base salary and bonus (averaged over the three years of
credited service that produce the highest average) multiplied by the number of
years of the participant's credited service, up to 20 years, plus 1% of his or
her average base salary and bonus multiplied by his or her years of credited
service from 20 to 25 years, plus 0.5% of his or her average base salary and
bonus multiplied by his or her years of credited service in excess of 25 years.
Benefits generally vested after ten years of service although the Personnel
Committee could waive or reduce the ten-year service requirement for individual
participants. Benefits were generally payable in the form of a 10-year life and
certain annuity or upon the election of a vested participant whose employment
has terminated after ten years of service or after a change in control of the
Company, in the form of an actuarially equivalent lump-sum payment. Mr. Bianco
was the only current executive officer of the Company who participated in the
Supplemental Plan and his Supplemental Plan benefits were fully vested,
effective with the terms of his initial employment with the Company in 1991. Mr.
Bianco received no benefit under the AmBase Retirement Plan, a tax-qualified
retirement plan, which was terminated in 1993. No other employee or officer of
the Company was a participant under the Supplemental Plan. Other than the
Company's 401(K) Savings Plan, the Company maintains no other retirement or
deferred compensation type plans.
The Supplemental Plan benefits for Mr. Bianco as of December 31, 2007 are
as follows:
Number of $ $
Years of Present Value Payments
Credited of Accumulated During Last
Name Plan Name Service Benefit Fiscal Year
--------------------------------------------------------------------------------------------------
Richard A. Bianco AmBase Supplmental
Retirement Plan - - $16,676,115 (a)
================== ===============
(a) "Payments During Last Fiscal Year" of $16,676,115 to Mr. Bianco, as
more fully described below, represents the lump-sum benefit payment, in full
satisfaction of the Company's Supplemental Plan liability. Mr. Bianco's
Supplemental Plan benefit had been accrued annually, based on its actuarially
determined value throughout his employment period, beginning in May 1991. Upon
payment of the Supplemental Plan lump-sum benefit, the Supplemental Plan
automatically terminated.
For the purposes of computing accrued benefits under the Supplemental Plan,
Mr. Bianco had 16.08 years of credited service as of May 31, 2007 and 15.67
years of credited service as of December 31, 2006, his accrual percentage was 4%
in effect from the time of his initial employment with the Company.
In consideration for Mr. Bianco's agreement to extend his employment with
the Company for an additional five (5) years, (beyond his previous contract
expiration date of May 31, 2007), with no further Supplemental Plan accruals for
the extension period (pursuant to the 2007 Employment Agreement more fully
described herein below), the Company in March 2006, amended the Supplemental
Plan to provide for the payment to Mr. Bianco of his Supplemental Plan benefit
in a lump-sum on or about May 31, 2007 (the date of his Supplemental Plan
benefit entitlement had he not agreed to extend his employment with the Company
beyond May 31, 2007). The Company and Mr. Bianco further agreed that for
purposes of computing his Supplemental Plan benefit as of May 31, 2007, his
Final Average Earnings (as defined in the Supplemental Plan) would be capped as
of December 31, 2004, a 5.75% discount rate will be used and a "RP-2000"
projected to 2004 mortality table would be used, resulting in a Supplemental
Plan lump-sum benefit payment to Mr. Bianco of $16,676,115. In accordance with
the amendment to the Supplemental Plan described above, the liability for the
Supplemental Plan was fully satisfied on May 31, 2007, by the lump-sum benefit
payment of $16,676,115 (to Mr. Bianco, the Company's Chairman, President and
Chief Executive Officer), and immediately thereafter, the Supplemental Plan
automatically terminated. The lump-sum Supplemental Plan benefit payment to Mr.
Bianco was paid from the Company's available financial resources. As of June 1,
2007, no further Supplemental Plan expense will be recognized by the Company,
which was previously included as a component of compensation and benefits
expense in the Company's Consolidated Statement of Operations. See Employment
Contracts, above for a more complete description of Mr. Bianco's employment
agreements with the Company.
Nonqualified Deferred Compensation
The Company does not maintain any other type of nonqualified deferred
compensation plan.
Potential Payments Upon Termination or Change in Control
Other than Mr. Bianco, there are no employment agreements or employment
contracts with any other officer or employee of the Company. See Employment
Contracts above, for information concerning potential payments due to Mr. Bianco
upon termination, pursuant to the employment agreement(s) between Mr. Bianco and
the Company.
The Company does not have any severance or termination payment plans in
effect.
Generally, subject to the terms of the individual stock options agreements,
in the event the employment of an employee is terminated (other than by reason
of retirement or death) without cause, as defined, the employee may exercise the
vested and previously unexercised portion of their option agreement, as of such
date, at any time within (i) one year after the termination of the employee's
employment due to their "total and permanent disability", as defined, or (ii)
three months after the termination of the employee's employment for any other
reason, but, in either case, in no event after the expiration of the option
terms.
In the event that the employment of an employee terminates by reason of
retirement, option agreements generally shall be exercisable for a period of
three years after such retirement date. If an option is exercised after
cessation of employment for any reason, including retirement, it may only be
exercised to the extent of shares previously vested, as of such date, provided,
however, that the option may not be exercised after the expiration of the option
term.
Additionally, stock options may, in the sole discretion of the Personnel
Committee, become exercisable at any time prior to the expiration date of the
option award for the full number of awarded shares or any part thereof, (less
any options previously exercised under the option agreement) (i) after the
employee ceases to be an employee of the Company as a result of the sale or
other disposition by the Company of assets or property (including shares of any
subsidiary), or (ii) in the case of a change in control of the Company. As of
December 31, 2007, the intrinsic value of all outstanding options to the Named
Executive Officers was $0.
COMPENSATION OF DIRECTORS
Effective beginning January 1, 2007, each director of the Company,
including Mr. Bianco, who is the Company's Chairman, President and Chief
Executive Officer, are paid an annual fee of $9,000. In addition, each
Chairperson and/or Co-Chairperson of a Board committee is paid an additional fee
of $1,000 per year, and after four (4) Board and/or committee meetings, each
director is to be paid a $500 per meeting attendance fee. Pursuant to the
Company's By-Laws, directors may be compensated for additional services for the
Board of Directors or for any committee at the request of the Chairman of the
Board or the Chairman of any committee.
Directors Compensation Table - 2007
Details of amounts paid to the Company's directors in their capacities as
directors and/or board committee members for the year ending December 31, 2007
is as follows:
($)
Fees Earned ($)
Name and Position or Paid in Cash Totals (a) (b)
------------------------------------------------------------------------------------------------
Philip M. Halpern
Board Member
Co-Chair Personnel Committee
Member Audit Committee $11,500 $11,500
Robert E. Long
Board Member
Chairman Audit Committee
Member Personnel Committee $11,500 $11,500
Salvatore Trani
Board Member
Co-Chair Personnel Committee
Member Audit Committee $11,500 $11,500
(a) Amounts in the table above exclude amounts received by Mr. Bianco in
his capacity as the Chairman of the of the Board of Directors of the Company,
which are reflected in "All Other Compensation" in the Summary Compensation
table above.
(b) No other additional fees or any other type of compensation, including
equity and/or deferred compensation payments or awards were paid or granted to
any of the Company's outside directors in 2007.
Personnel Committee Interlocks and Insider Participation
The members of the Personnel Committee during 2007 were Philip M. Halpern,
Co-Chairperson, Salvatore Trani, Co-Chairperson, and Robert E. Long. No
executive officer serves, or in the past has served, as a member of the Board of
Directors or Personnel Committee of any entity that has any of its executive
officers serving as a member of the Company's Board of Directors or Personnel
Committee.
STOCK OWNERSHIP
Stock Ownership of Certain Beneficial Owners
The following information is set forth with respect to persons known by the
Company to be the beneficial owners of more than 5% of the outstanding Common
Stock, the Company's only class of voting securities, as of February 29, 2008,
except as set forth below.
Amount and Percentage
Name and Address of Nature of Beneficial of Common
Beneficial Owner Ownership Stock Owned
-----------------------------------------------------------------------------------------------------------
Richard A. Bianco 16,853,531 (a) 37.96%
Chairman, President and (direct)
Chief Executive Officer
AmBase Corporation
100 Putnam Green, 3rd Floor
Greenwich, CT 06830-6027
(a) Includes 536,000 shares that could be purchased by the exercise of
options as of February 29, 2008 or within 60 days thereafter, under the
Company's stock option plans.
Stock Ownership of Directors and Executive Officers
According to information furnished by each nominee, continuing director and
executive officer included in the Summary Compensation Table, the number of
shares of the Company's Common Stock beneficially owned by them as of February
29, 2008 was as follows:
---------------------------------------------------------------------------------------------------------------------
Amount Percentage
Name of Beneficial and Nature of of Common
Owner Beneficial Ownership(a)(c) Stock Owned
---------------------------------------------------------------------------------------------------------------------
Richard A. Bianco.................................... 16,853,531 (b) 37.96%
Joseph R. Bianco..................................... 160,000 (b) *
John P. Ferrara...................................... 271,029 (b) *
Philip M. Halpern.................................... -- --
Robert E. Long....................................... 25,000 *
Salvatore Trani...................................... 15,000 *
All Directors and Officers as a group,
(6 persons).......................................... 17,324,560 (b) 38.74%
* Represents less than 1% of Common Stock outstanding
(a) All of the named individuals have sole voting and investment power with
respect to such shares.
(b) Includes 536,000 shares for Mr. R. Bianco, 160,000 shares for Mr. J.
Bianco and 170,000 shares for Mr. Ferrara that could be purchased by the
exercise of stock options as of February 29, 2008, or within 60 days thereafter,
under the Company's stock option plans.
(c) There are no pledges of Company shares by any of the Company's
officers, employees or directors.
PROPOSAL NO. 2 - APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Based on the direction of the Audit Committee, the Board of Directors is
proposing that the stockholders approve the appointment of UHY LLP as the
independent registered public accounting firm for the Company for the year
ending December 31, 2008. The Company has been advised by UHY LLP that neither
that firm nor any of its partners had any direct financial interest or any
material indirect financial interest in the Company, or any of its subsidiaries,
except as independent certified public accountants. A representative of UHY LLP
is expected to be present at the Annual Meeting with the opportunity to make a
statement, if he or she desires to do so, and to respond to appropriate
questions from the stockholders.
The Board of Directors recommends a vote FOR approval of the appointment of
UHY LLP.
PROPOSAL NO. 3 - APPROVAL OF AMENDMENT TO AMBASE CORPORATION'S 1993 STOCK
INCENTIVE PLAN EXTENDING THE TERMINATION DATE TO MAY 28, 2018
The Company's stockholders originally approved the AmBase Corporation 1993
Stock Incentive Plan (the "1993 Plan") for a five (5) year period, expiring in
May 1998. At the Company's 1998 Annual Meeting of Stockholders, the 1993 Plan
was extended to May 28, 2008 by a majority vote of the outstanding shares of
Common Stock of the Company. The 1993 Plan will expire by its terms on May 28,
2008 unless it is extended by a majority vote of the outstanding shares of
Common Stock of the Company present or represented at the Annual Meeting of
Stockholders on May 16, 2008. An extension of the termination date for the
period during which awards may be granted under the 1993 Plan, to May 28, 2018
from May 28, 2008 was approved by the Board of Directors on March 27, 2008,
subject to the approval by a majority vote of the Company's stockholders at the
Company's Annual Meeting of Stockholders scheduled for May 16, 2008.
The Board of Directors has determined that an extension of the 1993 Plan is
desirable to promote the interests of the Company and its stockholders by
providing the Company's officers and employees with an equity incentive to serve
and to continue service with the Company.
The Company believes that stock incentive plans are an integral part of an
incentive program to attract and retain qualified individuals for service to the
Company and provide individuals with incentives to devote their best efforts to
the Company through ownership of the Company's stock, thus enhancing the value
of the Company for the benefit of stockholders.
The 1993 Plan is the only stock incentive plan the Company currently has
available from which awards may be granted. The 1993 Plan has an aggregate of
5,000,000 shares of AmBase Common Stock, par value $0.01 per share, reserved for
issuance, of which 866,000 stock option awards are outstanding as of January 31,
2008. Due to the fact that the Company has no other stock incentive Plan from
which awards may be granted, the Board of Directors has determined that an
extension of the 1993 Plan is the most effective and efficient manner to meet
the Company's goal of providing the Company's employees with incentives to
devote their best efforts to the Company through stock ownership and to continue
their service with the Company.
The primary features of the 1993 Plan are summarized below. This summary is
qualified in its entirety by reference to the specific provisions of the 1993
Plan, the full text of which is set forth as Exhibit A to the Proxy Statement.
Stock Options and Stock Appreciation Rights
Options may be granted by the Committee as incentive stock options ("ISOs")
intended to qualify for favorable tax treatment under Federal tax law or as
nonqualified stock options ("NQSOs"). Stock appreciation rights ("SARs") may be
granted with respect to any options granted under the 1993 Plan and may be
exercised only when the underlying option is exercisable. An SAR permits the
holder to surrender an option or any portion thereof and receive in exchange
shares of Common Stock, cash or a combination thereof, with an aggregate value
equal to the excess of the fair market value of one share of Common Stock over
the exercise price specified in such option multiplied by the number of shares
covered by such option or portion thereof which is to be exercised. The 1993
Plan requires that the exercise price of all options and SARs be equal to or
greater than the fair market value of the Company's Common Stock on the date of
grant of that option. The term of any ISO or related SAR cannot exceed ten years
from date of grant, and the term of any NQSO cannot exceed ten years and one
month from date of grant. Subject to the terms of the 1993 Plan and any
additional restrictions imposed at the time of grant, options and any related
SARs (other than Reload Options as hereinafter defined and any related SAR)
ordinarily will become exercisable commencing one year after the date of grant.
Subject to such rules as the Committee may impose, the exercise price of an
option may be paid in cash, in shares of the Company's Common Stock already
owned by the optionee, with a combination of cash and shares, by "pyramiding"
shares or effecting a "cashless exercise" if so approved by the Committee, or
with such other consideration as shall be approved by the Committee.
"Pyramiding" is a technique whereby an optionee requests the issuer to
automatically apply a portion of the shares received upon the exercise, in whole
or in part, of a stock option to satisfy the exercise price of additional stock
options, thus resulting in multiple simultaneous exercises of options by use of
shares as payment. A "cashless exercise" is a technique which allows the
optionee to exercise stock options without cash through the assistance of a
broker through either a simultaneous exercise and sale or a broker loan. Both
the "pyramiding" and "cashless exercise" techniques do not increase the
compensation that the option provides; the optionee receives the same economic
benefit as he or she would upon exercise of a stock appreciation right issued in
tandem with the option.
The Committee may provide at the time of grant that an employee shall be
granted an option (a "Reload Option") in the event such employee exercises all
or part of an option (an "Original Option") by surrendering already owned shares
of Common Stock in full or partial payment of the exercise price under such
Original Option, subject to the availability of shares of Common Stock under the
1993 Plan at the time of exercise. Each Reload Option shall cover a number of
shares of Common Stock equal to the number of shares of Common Stock surrendered
in payment of the exercise price, shall have an exercise price per share of
Common Stock equal to the fair market value of the Common Stock on the date of
grant of such Reload Option and shall expire on the stated expiration date of
the original Option. A Reload Option shall be generally exercisable at any time
and from and after the date of grant of such Reload Option (or, as the
Committee, in its sole discretion, shall determine at the time of grant, at such
time or times as shall be specified in the Reload Option). The first such Reload
Option may provide for the grant, when exercised, of one subsequent Reload
Option to the extent and upon such terms and conditions, as the Committee, in
its sole discretion, shall specify at or after the time of grant of such Reload
Option.
In the case of a Change in Control of the Company (as defined in the 1993
Plan), options granted pursuant to the 1993 Plan may become fully exercisable as
to all optioned shares from and after the date of such Change in Control in the
discretion of the Committee or as may otherwise be provided in the grantee's
option agreement. Death, retirement, resignation or absence for disability will
not result in the cancellation of any options.
Restricted Stock and Merit Awards to Employees
The Committee may grant shares of Common Stock to 1993 Plan participants in
such amounts, and subject to such restrictions ("Restricted Stock") and
additional terms and conditions, if any, as the Committee, in its sole
discretion, shall determine, consistent with the provisions of the 1993 Plan.
The Committee may also grant from time to time shares of Common Stock to
selected 1993 Plan participants free of restrictions ("Merit Awards") in such
amounts as the Committee in its sole discretion shall determine consistent with
the provisions of the 1993 Plan. As a condition to any award of Restricted Stock
or Merit Award, the Committee may require a participant to pay an amount equal
to, or in excess of, the par value of the shares of Restricted Stock or Common
Stock awarded to him or her.
Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered during a "Restricted Period", which in the case of grants
to employees shall not be less than one year from the date of grant. The
Restricted Period with respect to any outstanding shares of Restricted Stock
awarded to employees may be reduced by the Committee at any time, but in no
event shall the Restricted Period be less than one year. Except for such
restrictions, the employee as the owner of such stock shall have all of the
rights of a stockholder including, but not limited to, the right to vote such
stock and to receive dividends thereon as and when paid.
In the event that an employee's employment is terminated for any reason, an
employee's Restricted Stock will be forfeited; provided however, that the
Committee may limit such forfeiture in its sole discretion. At the end of the
Restricted Period all shares of Restricted Stock shall be transferred free and
clear of all restrictions to the employee. In the case of a Change in Control of
the Company (as defined in the 1993 Plan), an employee may receive his or her
Restricted Stock free and clear of all restrictions in the discretion of the
Committee or as may otherwise be provided pursuant to the employee's Restricted
Stock award.
Performance Share Awards
The Committee may make, in its sole discretion, and subject to such terms
and conditions as it may determine in accordance with the 1993 Plan, awards of
Common Stock which shall be earned on the basis of the Company's performance in
relation to established performance measures for a specific performance period
("Performance Shares"). Such measures may include, but shall not be limited to,
return on investment, earnings per share, return on stockholders' equity, or
return to stockholders. Performance Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered during the relevant performance
period.
Performance Shares may be paid in cash, shares of Common Stock or shares of
Restricted Stock in such portions as the Committee may determine. An employee
must be employed at the end of the performance period to receive payment of
Performance Shares; provided, however, in the event that an employee's
employment is terminated by reason of death, disability, retirement or other
reason approved by the Committee, the Committee may limit such forfeiture in its
sole discretion. In the case of a Change in Control of the Company (as defined
in the 1993 Plan), an employee may receive his or her Performance Shares in the
discretion of the Committee or as may otherwise be provided in the employee's
Performance Share Award.
Awards to Outside Directors and Others
The 1993 Plan limits the grant of Stock Options, SARs, Merit Awards,
Restricted Stock and Performance Share Awards to officers and employees of the
Company. Accordingly, awards may not be made under the 1993 Plan to directors or
independent consultants who are not also employees of the Company. The Company
reserves the right to provide benefits and awards to independent directors,
consultants and other individuals, including cash, equity incentives or other
forms of award, under arrangements independent of the 1993 Plan.
Plan Administration
The 1993 Plan will continue to be administered by the Personnel Committee.
The Board will continue to have the authority to amend the 1993 Plan as it deems
advisable; however no such amendment will, without authorization and approval of
stockholders: (i) increase the aggregate number of shares available for the
granting of awards under the 1993 Plan except in the event of any stock split,
reverse stock split, stock dividend, recapitalization, reorganization, merger,
consolidation, combination or exchange of shares, split-up, split-off, spin-off,
liquidation, or other similar corporate change; (ii) change the manner of
determining the minimum exercise prices other than to change the manner of
determining fair market value of the Common Stock; or (iii) extend the period
during which awards may be granted or exercised.
Subject to the terms of the 1993 Plan, the Committee will select the
individuals to whom options, SARs, Restricted Stock, Merit Awards and
Performance Share Awards will be granted, determining the number of shares
subject to each option award and SAR, prescribe the terms and conditions of each
option award and SAR granted under the 1993 Plan, and make any other
determination necessary or advisable for administration of the 1993 Plan.
Shares subject to options and related SARs which lapse without having been
exercised, or Performance Share Awards which are forfeited, become available for
new grants under the 1993 Plan. Any Restricted Stock which is forfeited shall
not be available again for such new grants. To the extent that SARs are
exercised and the corresponding option canceled, the shares subject to the
option will be charged against the maximum number of shares authorized under the
1993 Plan at the time such option was granted.
Federal Income Tax Consequences
The following brief description of awards under the 1993 Plan is based on
Federal tax laws currently in effect and does not purport to be a complete
description of such Federal tax consequences.
Options
There are no Federal tax consequences either to the optionee or to the
Company upon the grant of an ISO or a NQSO. On the exercise of an ISO, the
optionee will not recognize any income and the Company will not be entitled to a
deduction, although such exercise may give rise to alternative minimum tax
liability for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of grant or one
year of the date of exercise, the optionee will recognize ordinary income, and
the Company will be entitled to a deduction, equal to the excess of the fair
market value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). If the shares are disposed of after
the foregoing holding requirements are met, the Company will not be entitled to
any deduction, and the entire gain or loss for the optionee will be treated as a
capital gain or loss.
On exercise of a NQSO, the excess of the date-of-exercise fair market value
of the shares acquired over the option price will generally be taxable to the
optionee as ordinary income and deductible by the Company. The disposition of
shares acquired upon exercise of a NQSO will generally result in a capital gain
or loss for the optionee, but will have no tax consequences for the Company.
Stock Appreciation Rights
The amount of any cash (or the fair market value of any Common Stock)
received by the holder of an option upon the exercise of SARs under the 1993
Plan will be subject to ordinary income tax in the year of receipt and the
Company will be entitled to a deduction for such amount.
Restricted Stock Awards
An employee (the "Recipient") who has been awarded Restricted Stock will
not recognize taxable income at the time of the award unless he elects
otherwise. If the Recipient elects to be taxed at the time of the award, the
Company will be entitled to a corresponding deduction. At the time any
restrictions applicable to the Restricted Stock Award lapse, the Recipient will
recognize ordinary income and the Company will be entitled to a corresponding
deduction. The Recipient's income and the Company's deduction will be equal to
the excess of the fair market value of such stock at such time over the amount
paid therefore. Dividends paid to the Recipient on the Restricted Stock during
the Restricted Period will be ordinary compensation income to the Recipient and
deductible as such by the Company.
Merit Awards
A grant of Common Stock pursuant to a Merit Award will result in income for
the employee and a tax deduction for the Company, generally equal to the fair
market value of such shares less any amount paid for them.
Performance Share Awards
An employee who has been awarded Performance Shares will not recognize
taxable income, and the Company will not be entitled to a deduction at the time
of the award. At the time the employee is entitled to the Performance Shares,
the employee will recognize ordinary income equal to the sum of the cash and
fair market value of the shares of the Common Stock at such time, and the
Company will be entitled to a corresponding deduction. To the extent Performance
Shares are paid in shares of Restricted Stock, the Federal income tax
consequences described above applicable to Restricted Stock will apply.
Officers and Directors Subject to Section 16(b) Liability
Special rules may apply to officers subject to liability under Section
16(b) of the Securities Exchange Act of 1934 that may prevent the recognition of
income by such individuals and the corresponding deduction by the Company before
the date six months following the grant of an option or SAR or the receipt of
Restricted Stock, a Merit Award or shares pursuant to a Performance Share Award
(unless the employee receives the shares before that date and elects to be taxed
upon such receipt).
Limitations on Deductions
The Company's deductions may be limited (and employees receiving awards may
be subject to an excise tax) to the extent that benefits under the 1993 Plan
become payable as a result of a Change in Control of the Company. Moreover,
current legislation would deny the Company a deduction for compensation paid to
an officer in excess of $1 million in any year; however, this limitation would
not apply to payments that are performance-based, which requires an annual
analysis of grants under the 1993 Plan.
Approval of the Amendment extending the termination date of the 1993 Plan
to May 28, 2018 requires the affirmative vote of the holders of a majority of
the outstanding shares of the Common Stock, present or represented at the
meeting and voting together as one class. Abstentions and broker non-votes are
not counted as votes cast either for or against the proposal.
For the reasons stated herein, the Board of Directors recommends that the
stockholders vote FOR this proposal.
Delivery of Proxy Materials to Households
Only one copy of the Company's 2007 Annual Report and Proxy Statement for
the 2008 Annual Meeting of Stockholders will be delivered to an address where
two or more stockholders reside unless we have received contrary instructions
from a stockholder at the address. A separate Proxy Card will be delivered to
each stockholder at the shared address.
If you are a stockholder who lives at a shared address and you would like
additional copies of the 2007 Annual Report, this Proxy Statement or any future
annual reports or proxy statements, please contact American Stock Transfer and
Trust Company, 59 Maiden Lane, New York, New York 10038, Attention: Shareholder
Services, (800) 937-5449 or (718) 921-8200, extension 6820, and a copy will be
promptly mailed to you.
ADDITIONAL INFORMATION
The Annual Report of the Company on Form 10-K, covering the fiscal year
ended December 31, 2007, is being mailed with this Proxy Statement to each
stockholder entitled to vote at the Annual Meeting.
Any stockholder who wishes to submit a proposal for action to be included
in the Proxy Statement for the Company's 2009 Annual Meeting of Stockholders
must submit such proposal so that it is received by the Secretary of the Company
by December 4, 2008.
The accompanying proxy is solicited by and on behalf of the Company's Board
of Directors. The cost of such solicitation will be borne by the Company. In
addition to solicitation by mail, regular employees of the Company may, if
necessary to assure the presence of a quorum, solicit proxies in person, or by
telephone, facsimile or other electronic means. Arrangements have been made with
brokerage houses and other custodians, nominees and fiduciaries, for the
forwarding of solicitation material to the beneficial owners of Common Stock
held of record by such persons, and the Company will reimburse such entities for
reasonable out-of-pocket expenses incurred in connection therewith. The Company
has engaged American Stock Transfer & Trust Company to assist in the tabulation
of proxies.
If any matter not described in this Proxy Statement should properly come
before the Annual Meeting, the persons named in the accompanying proxy will vote
the shares represented by that proxy in accordance with their best judgment
unless a stockholder, by striking out the appropriate provision of the proxy,
chooses to withhold authority to vote on such matters.
As of the date this Proxy Statement was printed, the directors knew of no
other matters to be brought before the Annual Meeting.
Stockholder inquiries, including requests for the following: (i) change of
address; (ii) replacement of lost stock certificates; (iii) Common Stock name
registration changes; (iv) Quarterly Reports on Form 10-Q; (v) Annual Reports on
Form 10-K; (vi) proxy material; and (vii) information regarding stockholdings,
should be directed to:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
Attention: Stockholder Services
(800) 937-5449 or (718) 921-8200 Ext. 6820
Copies of Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and
Proxy Statements can also be obtained directly from the Company free of charge
by sending a request to the Company by mail as follows:
AmBase Corporation
100 Putnam Green 3rd Floor
Greenwich, CT 06830
Attn: Shareholder Services
In addition, the Company's public reports, including Quarterly Reports on
Form 10-Q, Annual Reports on Form 10-K and Proxy Statements, can be obtained
through the SEC's EDGAR Database over the World Wide Web at www.sec.gov.
Materials filed with the SEC may also be read or copied by visiting the SEC's
Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information
on the operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
AMBASE CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, MAY 16, 2008
This Proxy is solicited on Behalf of the Board of Directors
The undersigned revoking all prior proxies, hereby appoints Richard A.
Bianco and John P. Ferrara and each of them, with full power of substitution, as
proxies to represent and vote, as designated on the reverse, all shares of
Common Stock of AmBase Corporation (the "Company"), held or owned by the
undersigned on April 2, 2008, at the Annual Meeting of Stockholders of the
Company, to be held on Friday, May 16, 2008 at 9:00 a.m. Eastern Daylight Time,
at the Hyatt Regency Hotel, 1800 East Putnam Avenue, Old Greenwich, Connecticut
06870 and at any adjournment(s) or postponement(s) thereof, with all powers
which the undersigned would possess if personally present, and in their
discretion upon such other business as may properly come before the meeting or
any adjournment(s) or postponement(s) thereof.
This proxy is given with authority to vote FOR Proposals (1), (2), and (3)
unless a contrary choice is specified.
(Continued and to be Signed on Reverse Side)
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD IN
THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
(Please detach along perforated line and mail in the envelope provided)
The Board of Directors recommends a vote "FOR" the election of the nominees
as directors and "FOR" proposal 2 and proposal 3. Please sign, date and return
promptly in the enclosed envelope. Please mark your vote in blue or black ink as
shown here. X
Proposal (1) Election of Directors.
Nominees: Richard A. Bianco
Philip M. Halpern
/ / For all Nominees / / Withhold Authority for all Nominee(s)
/ / For all except (see INSTRUCTIONS below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark "For all except" and fill in the circle next to each nominee you wish to
withhold, as shown here:
Proposal 2 Approval of appointment of UHY LLP as the Company's
Independent Registered Public Accounting Firm for the calendar year 2008.
FOR / / AGAINST / / ABSTAIN / /
Proposal (3) Approval of an amendment to the AmBase Corporation 1993 Stock
Incentive Plan (the "1993 Plan") (a copy of which is attached as Exhibit A to
the Proxy Statement) to extend the termination date for the period during which
awards may be granted under the 1993 Plan, to May 28, 2018 from May 28, 2008.
FOR / / AGAINST / / ABSTAIN / /
THE PROXY WILL BE USED IN CONNECTION WITH THE PROPOSALS ABOVE AS SPECIFIED
BY YOU. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE USED IN ACCORDANCE WITH
THE DIRECTORS' RECOMMENDATIONS, FOR THESE PROPOSALS.
DISCRETIONARY AUTHORITY IS HEREBY GRANTED WITH RESPECT TO SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND THE PROXY STATEMENT FURNISHED THEREWITH.
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE
ENCLOSED ENVELOPE.
SIGNATURE OF STOCKHOLDER _ _ _ _ _ _ _ _ _ _ DATE _ _ _ _ _ _ _ _ _ _ _
SIGNATURE OF STOCKHOLDER _ _ _ _ _ _ _ _ _ _ DATE _ _ _ _ _ _ _ _ _ _ _
______________________________________________________________________________
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method. .
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.