SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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THE FIRST OF LONG ISLAND CORPORATION
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THE FIRST OF LONG ISLAND CORPORATION
10 GLEN HEAD ROAD
GLEN HEAD, NEW YORK 11545
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 20, 2004
----------------------------------------
March 15, 2004
To the Stockholders of
The First of Long Island Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of THE
FIRST OF LONG ISLAND CORPORATION will be held at the AMERICAN LEGION HALL, 190
GLEN HEAD ROAD, GLEN HEAD, NEW YORK, on Tuesday, April 20, 2004, at 3:30 P.M.
local time for the following purposes:
(1) To elect Directors.
(2) To transact any other business as may properly come before the
meeting.
Only stockholders of record at the close of business on February 24, 2004
are entitled to notice of and to vote at such meeting or any adjournment
thereof.
By Order of the Board of Directors
Joseph G. Perri
Senior Vice President and Secretary
IMPORTANT -- PLEASE MAIL YOUR PROXY PROMPTLY.
IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE MEETING, YOU ARE URGED
TO SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
THE FIRST OF LONG ISLAND CORPORATION
10 Glen Head Road
Glen Head, New York 11545
(516) 671-4900
-----------------
PROXY STATEMENT
-----------------
ANNUAL MEETING OF STOCKHOLDERS
The accompanying proxy is being solicited by the Board of Directors of The
First of Long Island Corporation (the "Corporation" or the "Company") for use at
the Annual Meeting of Stockholders to be held at 3:30 P.M. local time at the
American Legion Hall, 190 Glen Head Road, Glen Head, New York on April 20, 2004.
The approximate date on which proxy statements and forms of proxy are first
being sent or given to stockholders is March 15, 2004.
Proxies in the accompanying form that are properly executed and duly
returned to the Corporation will be voted at the meeting. Each proxy granted may
be revoked at any time prior to its exercise either by written notice filed with
the secretary of the meeting or by oral notice given during the meeting by the
stockholder to the presiding officer of the meeting. The presence in person or
by proxy of the holders of a majority of the shares entitled to vote at any
annual meeting constitutes a quorum for the transaction of business. In the
absence of a quorum, any meeting may be adjourned to a subsequent date, provided
notice of such meeting is mailed to each stockholder entitled to vote at least
five (5) days before the adjourned meeting.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The only class of voting securities of the Corporation is its Common
Stock, $.10 par value ("Common Stock"), each share of which entitles the holder
thereof to one vote except in the election of directors, where votes may be
cumulated as described herein. Only stockholders of record at the close of
business on February 24, 2004 are entitled to notice of and to vote at the
meeting.
As of January 31, 2004, there were issued 4,086,409 shares of the Common
Stock, all of which were outstanding and entitled to vote. To the best knowledge
of the Corporation, the only persons owning beneficially more than five percent
(5%) of the Common Stock of the Corporation as of January 31, 2004 are
identified in the table below.
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
----------- ------------------- -------------------- --------
Common Sidney Canarick 380,587 shares (1) 9.31%
Stock 25 Glen Street
($.10 par value) Glen Cove, N.Y. 11542
Common Paul T. Canarick 380,587 shares (1) 9.31%
Stock 25 Glen Street
($.10 par value) Glen Cove, N.Y. 11542
Common Zachary Levy 357,927 shares 8.76%
Stock 9 Maxine Avenue
($.10 par value) Plainview, N.Y. 11803
1
(1) Including 236,970 shares in the names of Sidney Canarick and Jean C.
Canarick, his wife, Mr. Paul T. Canarick's parents, as Trustees under a
Trust Agreement dated May 27, 1992; 134,347 shares in the name of Jean C.
Canarick, Sidney Canarick's wife; and 9,270 shares in the name of Paul T.
Canarick. Pursuant to applicable rules, Sidney Canarick and Paul T.
Canarick are both deemed to be beneficial owners of the foregoing shares.
Furnished below is information with respect to the beneficial ownership of
the Corporation's Common Stock as of January 31, 2004 by all directors and
nominees, by the executive officers of the Corporation named in the "Summary
Compensation Table", and by directors and executive officers of the Corporation
as a group.
Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
---------------- ------------------------ -------------------- ----------
Common Stock Allen E. Busching 1,500 .04%
($.10 par value) Paul T. Canarick 380,587 (1) 9.31%
Alexander L. Cover 200 .00%
Beverly Ann Gehlmeyer 35,770 (2) .88%
Howard Thomas Hogan, Jr. 56,245 (3) 1.38%
J. William Johnson 65,339 (4) 1.60%
J. Douglas Maxwell, Jr. 14,362 (5) .35%
John R. Miller III 3,012 .07%
Walter C. Teagle III 23,623 (6) .58%
Michael N. Vittorio 1,492 .04%
Arthur J. Lupinacci, Jr. 28,467 (7) .70%
Donald L. Manfredonia 24,317 (8) .59%
Joseph G. Perri 18,592 (9) .45%
Directors and Executive
Officers as a group 687,544 (10) 16.82%
(1) Including 236,970 shares in the names of Sidney Canarick and Jean C.
Canarick, Mr. Paul T. Canarick's parents, as trustees under a Trust
Agreement dated May 27, 1992 and 134,347 shares in the name of Jean C.
Canarick, Mr. Paul T. Canarick's mother.
(2) Including 652 shares in the name of Robert Val Gehlmeyer, Mrs. Gehlmeyer's
husband, and 7,924 shares in the name of Gehlmeyer & Gehlmeyer, P.C.
Retirement Trust.
(3) Including 10,371 shares in the name of Mr. Hogan as Trustee for the
benefit of his children, Howard, Kathryn, and Margaret Hogan, 694 shares
in the name of Mr. Hogan as Trustee for the Hogan Family Trust, and 5,839
shares, 5,088 shares, and 5,074 shares in the names of Mr. Hogan's
children, Howard, Kathryn, and Margaret, respectively.
(4) Including 2,022 shares in the name of Gail G. Johnson, Mr. Johnson's wife;
4,618 shares held in Mr. Johnson's individual retirement account; and
5,494 shares which are not presently owned, but which are deemed
beneficially owned under Securities and Exchange Commission Rule
13d-3(d)(1) because they could be acquired by the exercise of stock
options.
(5) Including 8,437 shares held in Mr. Maxwell's retirement account.
(6) Including 337 shares in the name of Janet D. Teagle, Mr. Teagle's wife,
and 1,012 shares each (totaling 3,036 shares) held for the benefit of W.
Clark Teagle IV, Clifton D. Teagle and Janet W. Teagle, Mr. Teagle's
children.
(7) Including 3,249 shares which are not presently owned, but which are deemed
beneficially owned under Securities and Exchange Commission Rule
13d-3(d)(1) because they could be acquired by the exercise of stock
options.
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(8) Including 11,067 shares which are not presently owned, but which are
deemed beneficially owned under Securities and Exchange Commission Rule
13d-3(d)(1) because they could be acquired by the exercise of stock
options.
(9) Including 750 shares held in Mr. Perri's individual retirement account and
12,875 shares which are not presently owned, but which are deemed
beneficially owned under Securities and Exchange Commission Rule
13d-3(d)(1) because they could be acquired by the exercise of stock
options.
(10) Including 52,593 shares which are not presently owned, but which are
deemed beneficially owned under Securities and Exchange Commission Rule
13d-3(d)(1) because they could be acquired by the exercise of stock
options.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation presently consists of ten
members classified into two classes, Class I with five members and Class II with
five members, with each director to serve a two-year term. Only one class of
directors is elected at each annual meeting of stockholders. The following table
sets forth the present composition of the Board.
Expiration
Name Class of Term
------------------------ ----- ----------
Allen E. Busching II 2004
Paul T. Canarick II 2004
Alexander L. Cover II 2004
Beverly Ann Gehlmeyer II 2004
Howard Thomas Hogan, Jr. I 2005
J. William Johnson II 2004
J. Douglas Maxwell, Jr. I 2005
John R. Miller III I 2005
Walter C. Teagle III I 2005
Michael N. Vittorio I 2005
For the election of directors, each share is entitled to as many votes as
there are directors to be elected, and such votes may be cumulated and voted for
one nominee or divided equally among as many different nominees as is desired.
If authority to vote for any nominee or nominees is withheld on any proxy, the
votes will then be spread equally among the remaining nominees. If there is no
designation on any proxy as to how the shares represented should be voted, the
proxy will be voted for the election of all nominated directors. To be elected,
each director must receive a majority vote of the number of shares entitled to
vote and represented at the meeting.
At a meeting of the Board of Directors held on June 17, 2003, Mr. Cover
was elected in accordance with the Corporation's By-Laws to serve as a Class II
director until the 2004 Annual Meeting. The nominees for election at this
meeting will be the Class II directors. It is intended that shares represented
by properly executed proxies will be voted at the meeting in accordance with the
marking indicated thereon and, in the absence of contrary indication, for the
election of Mr. Cover and the re-election of Mrs. Gehlmeyer and Messrs.
Busching, Canarick and Johnson, each to hold office until the 2006 Annual
Meeting of Stockholders or until his or her successor is elected and qualified.
If at the time of the 2004 Annual Meeting any of the nominees named above is
unavailable or chooses not to serve as a director (an event which management
does not now anticipate), the proxies will be voted for the election as director
of such other person or persons as the Board of Directors may designate.
The Board of Directors recommends a vote FOR all named nominees.
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Information about the nominees and directors continuing in office follows.
The year set forth for each director is the year in which the person named
became a director of the Bank and the Corporation, with the exception of Mrs.
Gehlmeyer and Messrs. Hogan, Johnson, and Miller who became directors of the
Corporation upon its formation in 1984.
Principal Occupations for Last Director
Name 5 Years and Other Directorships Since
------------------------------ ------------------------------- --------
Allen E. Busching Principal, 1999
(Age 72) B&B Capital
(Consulting and Private Investment);
(formerly: Managing Director,
Unitech p.l.c., Reading, England;
Chairman of the Board, President, and
Chief Executive Officer, Lambda
Electronics, Inc. (formerly Veeco Instruments));
Trustee, North Shore-Long Island Jewish
Health Systems, Inc.
Paul T. Canarick President and Principal, 1992
(Age 47) Paul Todd, Inc.
(Construction Company)
Alexander L. Cover Business Consultant, Private Practice 2003
(Age 60) (formerly: Partner, Ernst & Young, LLP)
Beverly Ann Gehlmeyer Tax Manager and Principal, 1978
(Age 72) Gehlmeyer & Gehlmeyer, P.C.
(Certified Public Accounting Firm)
Howard Thomas Hogan, Jr., Esq. Hogan & Hogan 1978
(Age 59) (Attorney, Private Practice)
J. William Johnson Chairman of the Board, 1979
(Age 63) The First of Long Island Corporation and
The First National Bank of Long Island;
Director, Independent Bankers Association
of New York State
Director, Independent Community Bankers
of America
J. Douglas Maxwell, Jr. Chairman, Chief Financial Officer and Director, 1987
(Age 62) NIRx Medical Technologies L.L.C.
(Medical Technology);
(formerly Chairman of the Board and Chief
Executive Officer, Swissray Empower, Inc.,
a Medical Imaging Distributor);
Director, Slater Development Corp. and
Police Relief Association of Nassau County
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Principal Occupations for Last Director
Name 5 Years and Other Directorships Since
------------------------------ ------------------------------- --------
John R. Miller III Chairman and Chief Executive Officer, 1982
(Age 63) Equal Opportunity Publications, Inc.
(Publishing);
Director, The Middleby Corporation and
Middleby Marshall, Inc.
Walter C. Teagle III President 1996
(Age 54) Teagle Management, Inc.
(Private Investment Firm)
(formerly Executive Vice President and Director,
Lexent, Inc., Infrastructure Service Provider);
Director, Teagle Management, Inc. and Teagle
Foundation, Inc.;
President and Director, Police Relief Association
of Nassau County, Inc.
Michael N. Vittorio President and Chief Executive Officer, 2003
(Age 51) The First of Long Island Corporation and
The First National Bank of Long Island;
(formerly J.P. Morgan Chase, most recently
as Senior Vice President)
MEETINGS OF THE BOARD OF DIRECTORS
All of the members of the Board of Directors of the Corporation also serve
on the Board of Directors of the Bank. The Board of Directors of the Corporation
held twelve regular meetings and one special meeting during 2003. With respect
to meetings of the Corporation, each director attended at least 75% of the
aggregate number of Board meetings and meetings of the committees on which such
director served. The Board of Directors of the Bank currently holds 12 regular
meetings a year and such special meetings as deemed advisable to review
significant matters.
BOARD COMMITTEES AND MEETINGS
The Board of Directors of the Corporation has three standing committees:
the Nominating Committee, the Audit Committee, and the Compensation and Stock
Option Committee. The Board of Directors of the Bank has seven standing
committees: the Audit Committee, the Investment Management Division Audit
Committee, the Compensation Committee, the Compliance and Community Reinvestment
Act Committee, the Board Investment Management Division Committee, the Loan
Committee, and the Pension Plan Committee.
Nominating Committee
All the members of the Corporation's Nominating Committee are independent
as independence for directors is defined in Nasdaq Rule 4200(a)(15). The
Nominating Committee is responsible for recommending the nomination of
individuals to the Board of Directors of the Corporation. The members of the
Nominating Committee are Beverly Ann Gehlmeyer, Paul T. Canarick, and John R.
Miller III. The Committee met twice during 2003.
5
The activities of the nominating committee are governed by a formal
written charter. A current copy of the charter, although not available on the
Corporation's website, is included as Appendix A to this proxy statement.
The nominating committee believes that certain minimum qualifications must
be met by a nominating committee-recommended nominee for a position on the board
of directors. Specifically, the nominee should understand that the principal
duty of a director is to represent the stockholders of the Corporation. The
nominee should also possess the highest level of professional and personal
ethics and values, be free of any material conflict of interest with respect to
board service, have broad experience at the policy-making level, have the
ability to provide insight and practical wisdom based on experience and
expertise, be independent as defined in Nasdaq Rule 4200(a)(15), be able to
understand and relate to the culture of the Corporation, have sufficient time to
properly discharge the duties associated with serving as a director, and have
experience and knowledge that will enhance or maintain a diversity of business
background among board members.
In addition, the nominating committee believes that certain specific
qualities or skills are necessary for one or more of the Corporation's directors
to possess. These include, among others, experience with publicly held
companies, an understanding and background in corporate management, experience
in delegation of duties, accounting experience, financial experience, legal
experience, marketing experience, and background and experience necessary to
qualify as an "audit committee financial expert" as defined by the Securities
and Exchange Commission for purposes of the Sarbanes-Oxley Act of 2002. It is
also deemed desirable for directors to live or work in a geographic area where
the Corporation's bank subsidiary has branches or is expected to have branches.
The nominating committee generally relies on recommendations made by
directors and executive officers of the Corporation to identify nominees for
director. Any stockholder may make nominations with respect to the election of
directors in accordance with the provisions of the Corporation's bylaws
establishing the information and notice requirements for such nominations. The
Corporation has not received a stockholder nominee for election as a director in
more than twenty years. The nominating committee does not consider director
nominees recommended by stockholders because the board of directors believes
that such consideration is not an efficient or effective means of identifying
qualified individuals. In addition, the board of directors has had a long
history of being able to attract and maintain a membership with the variety of
skills necessary to properly oversee the affairs of the Corporation.
In addition to interviews, the nominating committee evaluates potential
nominees by reviewing resumes, checking business and/or personal references, and
performing background checks as deemed appropriate. The Corporation does not pay
a fee to any third party or parties to identify or evaluate or assist in
identifying or evaluating potential nominees.
With the exception of Alexander L. Cover, all of the nominees approved by
the nominating committee for inclusion on the Corporation's proxy card for the
annual meeting of stockholders to be held April 20, 2004 are directors standing
for reelection. Alexander L. Cover was initially recommended by the
Corporation's Chairman.
Audit Committees
The Corporation and the Bank each have a separately-designated standing
audit committee. Both committees consist of the same five directors. The members
include Walter C. Teagle III, Allen E.
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Busching, Alexander L. Cover, Beverly Ann Gehlmeyer, and John R. Miller III.
During 2003, the Corporation's Audit Committee held six meetings and the Bank's
Audit Committee held seven meetings.
The Corporation's Board of Directors has adopted a formal written charter
for the Audit Committees. A current copy of the charter is included as Appendix
B to this proxy statement.
The Board has determined that all members of the audit committees are
independent as independence for audit committee members is defined in Nasdaq
Rules 4200(a)(15) and 4350(d)(2). The Board of Directors has also determined
that Alexander L. Cover is an audit committee financial expert as that term is
defined in paragraph (h)(2) of Item 401 of Regulation S-K of the Securities and
Exchange Commission and is independent as that term is used in Item 7(d)(3)(iv)
of Schedule 14A under the Exchange Act.
The Corporation's Audit Committee: (1) reviews and discusses with
management the Corporation's audited consolidated financial statements; (2)
meets with the Corporation's independent auditors and reviews with them the
results of their annual audit of the Corporation's consolidated financial
statements, including any recommendations the auditors may have with respect to
internal controls or other business matters; and (3) reviews the results of
examinations of the Corporation performed by regulatory authorities. The Audit
Committee's Report is included in a separate section of this proxy statement.
The Bank's Audit Committee: (1) reviews the plan, scope and results of
internal audits performed by both the Bank's in-house audit staff and
independent external firms; (2) reviews the results of examinations performed by
regulatory authorities; and (3) is responsible for insuring that the Bank
fulfills the annual audit and management reporting requirements of Section 112
of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA").
With respect to audits of the Bank's Investment Management Division, the
Investment Management Division Audit Committee meets with the auditors and
reviews with them the nature, extent and results of their audit effort. The
members of the Investment Management Division Audit Committee are Walter C.
Teagle III, Alexander L. Cover, Beverly Ann Gehlmeyer, and John R. Miller III.
During 2003, the Committee held two meetings.
Compensation Committees
The Corporation has a Compensation and Stock Option Committee (the
"Corporation's Committee") and the Bank has a Compensation Committee
(collectively referred to as the "Compensation Committees"). The Compensation
Committees consist of the same three independent directors. The members include
J. Douglas Maxwell, Jr., Allen E. Busching, and Beverly Ann Gehlmeyer. The
Committees are responsible for determining an appropriate level of compensation
for each executive officer. They also consider and recommend to the Boards of
Directors of the Corporation and the Bank salary policy, management succession,
compensation of officers, incentive compensation, and employee benefits. The
Corporation's Committee is also responsible for administering the Corporation's
1996 Stock Option and Appreciation Rights Plan (the "1996 Plan"). Administration
of the 1996 Plan includes the selection of optionees and the determination of
the timing, duration, amount and type of each award. Members of the
Corporation's Committee as well as all other non-employee directors of the
Corporation are eligible for stock option grants under the 1996 Plan. Stock
option grants to non-employee directors are approved by the full Board. Each of
the Committees met six times during 2003. The report of the Compensation
Committees with respect to compensation for executive officers is included in a
later section of this proxy statement.
7
Other Committees of the Bank
The Compliance and Community Reinvestment Act Committee is responsible for
reviewing the Bank's performance of its obligations under the various laws and
regulations affecting consumers, including the Federal Community Reinvestment
Act. The members of the Committee are John R. Miller III, Walter C. Teagle III,
and Michael N. Vittorio. The Committee met four times during 2003, and each
meeting was attended by one or more officers of the Bank whose duties relate to
compliance with such laws and regulations.
The Board Investment Management Division Committee is responsible for
reviewing the activities of the Investment Management Division including the
handling of fiduciary relationships, investment management activities, and
compliance. The members of the Committee are J. Douglas Maxwell, Jr., Allen E.
Busching, Michael N. Vittorio, and J. William Johnson. During 2003, the
Committee held four meetings.
The Loan Committee consists of members who, except for Mr. Johnson and Mr.
Vittorio, are not officers of the Bank. Two members of the Loan Committee meet
with the officers of the Bank to review and approve substantial loans and the
entire committee meets on a quarterly basis to review the overall portfolio. The
members of the Loan Committee are Beverly Ann Gehlmeyer, Allen E. Busching, Paul
T. Canarick, J. William Johnson, J. Douglas Maxwell, Jr., Walter C. Teagle III,
and Michael N. Vittorio. The Committee held forty meetings in 2003.
The Pension Plan Committee has the authority to take such action with
respect to the Bank's Pension Plan as may be necessary or advisable between
regular meetings of the Bank's Board of Directors. The members of the Pension
Plan Committee are J. Douglas Maxwell Jr., Allen E. Busching, and Beverly Ann
Gehlmeyer. The Committee did not meet in 2003.
COMPENSATION OF DIRECTORS
Cash Compensation
Directors are paid for their services as directors of the Corporation and
the Bank. Directors of the Corporation are paid a quarterly retainer of $1,150.
Directors of the Bank are paid $1,100 for each regularly scheduled monthly Board
meeting, provided they attend at least ten of the twelve meetings. If a director
attends less than ten meetings, the director is paid $1,100 for each meeting
attended. In addition, directors of the Corporation and the Bank are generally
paid $500 for each special Board meeting and $100 for each telephone Board
meeting.
The Chairperson of the Corporation's Nominating Committee receives an
annual retainer of $1,000, and other committee members receive annual retainers
of $500. The Audit Committee of the Corporation and the Audit Committee of the
Bank consist of the same five directors. The Compensation and Stock Option
Committee of the Corporation and the Compensation Committee of the Bank consist
of the same three directors. Although these directors receive no fees from the
Corporation for their Audit or Compensation Committee service, they do receive
fees from the Bank for such service.
The Chairmen of the Bank's Compliance and Board Investment Management
Division Committees are each paid an annual retainer of $2,000, and other
members of these committees are paid annual retainers of $1,000. The Chairman of
the Bank's Compensation Committee is paid an annual retainer of $3,500, and
other committee members are paid annual retainers of $1,500. The Chairperson of
the Bank's Loan Committee receives an annual retainer of $2,000, and other
committee members receive annual retainers of
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$500. In addition, the Chairperson and all other members of the Bank's Loan
Committee receive $250 per meeting. Four of the five members of the Bank's Audit
Committee are also members of the Bank's Investment Management Division Audit
Committee. The Chairman is paid an annual retainer of $3,500 and the other three
members are paid an annual retainer of $2,000 for service on the two committees.
The remaining member of the Bank's Audit Committee is paid an annual retainer of
$1,800. Neither the Chairman nor the other members of the Bank's Pension Plan
Committee receive fees for their services. Neither Mr. Johnson nor Mr. Vittorio
receives director fees or committee fees from the Corporation or the Bank.
Stock Based Compensation
The Corporation's 1996 Stock Option and Appreciation Rights Plan, as
amended, allows for the granting of stock options to non-employee directors of
the Corporation. In January 2003, each non-employee director received a stock
option grant based on the Corporation's earnings performance for the 2002 year
and the board and committee fees that the director received for such year. The
options, which are exercisable in whole or in part during the period beginning
three years from the date of grant and ending ten years from the date of grant,
were granted at an exercise price of $33.11 which was the fair market value of
one share of the Corporation's stock on the date of grant. The number of options
granted to each non-employee director in January 2003 is as follows: Mr.
Busching - 857; Mr. Canarick - 808; Mr. Hogan - 748; Mr. Teagle - 785; Ms.
Gehlmeyer - 930; Mr. Miller - 800; and Mr. Maxwell - 939.
MANAGEMENT
The following tables contain information about the executive officers of
the Corporation and the Bank.
Executive Officers Term of Officer
of the Corporation Age Present Capacity Office Since
------------------ --- ---------------- ------- -------
J. William Johnson 63 Chairman of the Board 3 yrs. 1984
Michael N. Vittorio 51 President and 1.5 yrs. 2002
Chief Executive Officer
Arthur J. Lupinacci, Jr. 63 Executive Vice President 1.5 yrs. 1985
and Chief Administrative
Officer
Mark D. Curtis 49 Senior Vice President 1 yr. 1997
and Treasurer
Brian J. Keeney 55 Senior Vice President 1 yr. 2000
Richard Kick 46 Senior Vice President 1 yr. 1991
Donald L. Manfredonia 52 Senior Vice President 1.5 yrs. 1987
Joseph G. Perri 52 Senior Vice President 1.5 yrs. 1990
and Secretary
9
Executive Officers Term of Officer
of the Bank Age Present Capacity Office Since
----------------------- --- ---------------- ------- -------
J. William Johnson 63 Chairman of the Board 1 yr. 1979
Michael N. Vittorio 51 President and 1 yr. 2002
Chief Executive Officer
Arthur J. Lupinacci, Jr. 63 Executive Vice President 1 yr. 1985
and Chief Administrative
Officer
Donald L. Manfredonia 52 Executive Vice President 1 yr. 1982
Joseph G. Perri 52 Executive Vice President 1 yr. 1990
Mark D. Curtis 49 Senior Vice President, 1 yr. 1997
Chief Financial Officer
and Cashier
Brian J. Keeney 55 Senior Vice President 1 yr. 2000
Richard Kick 46 Senior Vice President 1 yr. 1991
Mr. Vittorio joined the Corporation and the Bank on July 15, 2002 as
Executive Vice President. On February 18, 2003, he was elected to the Board of
Directors of both entities and, effective March 1, 2003, became President of
both. He was appointed Chief Executive Officer of both entities effective
September 1, 2003. From 1989 through June 2002, Mr. Vittorio was employed at
J.P. Morgan Chase, most recently as Senior Vice President responsible for
managing Chase Insurance Agency's Insurance Brokerage and Advisory Service
Business. Previously he served in various capacities at J.P. Morgan Chase
including Senior Lending Officer for Small Business Financial Services, Middle
Market Regional Manager, and Division Executive in the Small Business/Commercial
Division.
Mr. Keeney joined the Corporation and the Bank in March 2000. From
September 1998 to March 2000, Mr. Keeney was President and Chief Executive
Officer of The Rockefeller Trust Company. From December 1996 to September 1998,
he was Chairman of the Board, President & Chief Executive Officer of Fidelity
Management Trust Company of New York and from January 1992 to November 1996, he
was Senior Vice President and Chief Operating Officer of U.S. Trust Company of
New Jersey. Previously, he held various positions with U.S. Trust Company of New
York, Irving Trust Company, and The Chase Manhattan Bank, N.A.
10
COMPENSATION COMMITTEES' REPORT
The Corporation's executive compensation program is administered by the
Compensation and Stock Option Committee of the Corporation's Board of Directors
and the Compensation Committee of the Bank's Board of Directors (the
"Compensation Committees"). The Compensation Committees consist of the same
three independent directors, who are not employed by the Bank or the
Corporation.
Compensation for executive officers primarily consists of base salary,
incentive bonuses paid under the Bank's Incentive Compensation Plan, and stock
options and appreciation rights awarded under the Corporation's Stock Option and
Appreciation Rights Plan. The payment or awarding of compensation is approved by
the Compensation Committees. Following approval by the Compensation Committees,
the full Boards of Directors of the Corporation and the Bank approve the salary
package for all executive officers and review the proposed payment of incentive
compensation and granting of stock options.
The Compensation Committees adhere to the practice that compensation for
executive officers, including the Chief Executive Officer, be directly and
materially linked to Corporation performance, individual performance, and to
what is paid to individuals in similar positions within the industry. As such,
(1) salaries are related to the Corporation in light of overall Corporation
performance; (2) incentive compensation, an objective means of rewarding
personal and overall Corporation performance, is paid pursuant to the Incentive
Compensation Plan based on the achievement of objective personal goals and the
Corporation's performance with respect to profitability and financial strength;
and (3) base salary and incentive compensation for executive officers is
compared to the amounts of such compensation paid to individuals with reasonably
similar responsibilities employed by banks that are similar in size and scope to
the Corporation. Comparison of executive officer compensation to that of other
banks aids in determining whether the compensation paid by the Corporation is
competitive and appropriate, and thereby helps the Corporation to attract and
retain qualified personnel. In addition, from time to time the Corporation
retains outside consultants to determine the appropriateness of executive
officer compensation.
J. Douglas Maxwell, Jr.
Allen E. Busching
Beverly Ann Gehlmeyer
11
COMPENSATION OF EXECUTIVE OFFICERS
Furnished below is information with respect to the aggregate compensation
paid or accrued during the fiscal year ended December 31, 2003 to the Chief
Executive Officer and to each of the additional four most highly compensated
executive officers of the Bank who received compensation of more than $100,000
for services rendered to the Corporation or the Bank. This information is
provided pursuant to the Securities and Exchange Commission executive
compensation disclosure rules for proxy statements. All of the listed officers
are also officers of the Corporation but received salaries only from the Bank;
no compensation for their employment, other than Stock Options or Stock
Appreciation Rights ("SARs"), was received from the Corporation. A description
of the Incentive Compensation Plan under which the bonuses were paid follows.
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long -Term Compensation
----------------------------------- --------------------------------
Awards Payouts
--------------------------------
Other Restricted All Other
Compen- Stock Options/ Compen-
Name and Principal Salary Bonus sation (1) Award(s) SARs LTIP sation (3)
Position Year ($) ($) ($) ($) # (2) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
-------------------------------------------------------------------------------------------------------------------------
J. William Johnson 2003 $320,294 $113,384 $ 96,241 None 6,085 None $31,389
Chairman of the Board 2002 $370,000 $177,970 $ 66,702 None 7,254 None $47,330
and Director 2001 $357,000 $129,950 $182,990 None 10,969 None $47,294
Michael N. Vittorio 2003 $270,577 $ 95,784 -- None 1,898 None $15,118
President, Chief Executive 2002 $115,385 $128,320 -- None 9,000 None $ 508
Officer and Director
Arthur J. Lupinacci, Jr. 2003 $231,000 $ 79,325 $ 11,084 None 3,667 None $22,638
Executive Vice President 2002 $223,000 $ 93,450 $ 2,160 None 4,369 None $29,079
and Chief Administrative 2001 $215,000 $ 69,660 $ 36,668 None 6,473 None $29,228
Officer
Donald L. Manfredonia 2003 $190,000 $ 72,295 -- None 2,894 None $16,560
Senior Vice President 2002 $176,000 $ 60,720 -- None 3,433 None $21,046
2001 $169,000 $ 54,760 -- None 5,241 None $19,202
Joseph G. Perri 2003 $175,000 $ 63,525 -- None 2,771 None $15,256
Senior Vice President 2002 $168,500 $ 64,200 -- None 3,292 None $20,151
and Secretary 2001 $162,000 $ 50,285 -- None 3,501 None $18,407
-------------------------------------------------------------------------------------------------------------------------
12
(1) The other compensation reported in column (e) for Messrs. Johnson and
Lupinacci represents payments for income taxes pursuant to the Bank's
Supplemental Executive Retirement Plan explained in the next section
entitled "Compensation According to Plans."
(2) Where applicable, adjusted for 3-for-2 stock split paid July 2002.
(3) All other compensation for 2003 (column (i) of the "Summary Compensation
Table") includes the following amounts either paid for or contributed on
behalf of the named executive officers. The 401(k) and profit sharing
contributions shown in the table include amounts paid under the Bank's
Profit Sharing and Supplemental Executive Retirement ("SERP") Plans.
--------------------------------------------------------------------------------
Life 401(k) Profit
Insurance Matching Sharing
Name Premiums Contributions Contributions Total
--------------------------------------------------------------------------------
J. William Johnson .......... $ 6,534 $ 6,406 $18,449 $31,389
Michael N. Vittorio ......... $ 2,598 $ 1,000 $11,520 $15,118
Arthur J. Lupinacci, Jr ..... $ 4,712 $ 4,620 $13,306 $22,638
Donald L. Manfredonia ....... $ 1,824 $ 3,798 $10,938 $16,560
Joseph G. Perri ............. $ 1,680 $ 3,499 $10,077 $15,256
--------------------------------------------------------------------------------
COMPENSATION PURSUANT TO PLANS
Pension Plan
The Bank is a participant in the New York State Bankers Retirement System
Pension Plan ("Plan") and maintains the SERP described below. Set forth in the
table that follows are total estimated annual benefits payable under the Plan
and SERP upon retirement based on various levels of compensation and years of
service.
--------------------------------------------------------------------------------------------
Years of Creditable Service
Average Annual --------------------------------------------------------------------------
Compensation 10 15 20 25 30 35
--------------------------------------------------------------------------------------------
$100,000 $ 15,456 $ 23,184 $ 30,912 $ 38,640 $ 46,368 $ 54,096
--------------------------------------------------------------------------------------------
$125,000 $ 19,831 $ 29,747 $ 39,662 $ 49,578 $ 59,493 $ 69,409
--------------------------------------------------------------------------------------------
$150,000 $ 24,206 $ 36,309 $ 48,412 $ 60,515 $ 72,618 $ 84,721
--------------------------------------------------------------------------------------------
$175,000 $ 28,581 $ 42,872 $ 57,162 $ 71,453 $ 85,743 $ 100,034
--------------------------------------------------------------------------------------------
$200,000 $ 32,956 $ 49,434 $ 65,912 $ 82,390 $ 98,868 $ 115,346
--------------------------------------------------------------------------------------------
$225,000 $ 37,331 $ 55,997 $ 74,662 $ 93,328 $ 111,993 $ 130,659
--------------------------------------------------------------------------------------------
$250,000 $ 41,706 $ 62,559 $ 83,412 $ 104,265 $ 125,118 $ 145,971
--------------------------------------------------------------------------------------------
$300,000 $ 50,456 $ 75,684 $ 100,912 $ 126,140 $ 151,368 $ 176,596
--------------------------------------------------------------------------------------------
$400,000 $ 67,956 $ 101,934 $ 135,912 $ 169,890 $ 203,868 $ 237,846
--------------------------------------------------------------------------------------------
$500,000 $ 85,456 $ 128,184 $ 170,912 $ 213,640 $ 256,368 $ 299,096
--------------------------------------------------------------------------------------------
$600,000 $ 102,956 $ 154,434 $ 205,912 $ 257,390 $ 308,868 $ 360,346
--------------------------------------------------------------------------------------------
The Plan covers employees who are over the age of 21 years and have been
employed for over one year. The normal retirement age is 65 and early retirement
with reduced benefits is available at age 55. However, an unreduced benefit is
available at age 62 or above to a participant with at least 10 years of service
whose employment terminates after age 55 and who begins receiving benefits after
attaining age 62.
13
Upon retirement, each participant with a spouse is paid a benefit in the form of
a joint and survivor annuity. Participants without a spouse are paid a benefit
in the form of a single life annuity guaranteed for sixty (60) months. All
participants, whether with or without a spouse, may elect optional forms of
benefit payments. For all participants, the annuity benefit is computed by (i)
multiplying the participant's final average compensation (the average of the
participant's Annual Earnings, as defined, during the five highest consecutive
years of employment) by the product of 1.75 percent and the participant's
credited years of service (to a maximum of 35 years), (ii) adding 1.25 percent
of average compensation multiplied by the participant's credited years of
service in excess of 35 years (up to five such years), and (iii) subtracting the
product of .49 percent of the participant's final three year average
compensation (limited to covered compensation) and the participant's credited
years of service (to a maximum of 35 years). The .49 percent represents the
minimum Social Security offset to the pension benefit.
The Bank makes annual payments to a trust fund, computed on an actuarial
basis, to fund these benefits. Contributions of $1,407,929 and $365,202 were
made for the plan years ending September 30, 2003 and 2002, respectively,
representing the maximum tax deductible contribution in each of these years.
Employees also make contributions of 2 percent of their compensation. An
employee becomes fully vested after 5 years of service with the Bank and 4 years
of participation in the Plan. No vesting occurs during that 5-year period.
The compensation covered by the Plan includes: (1) salary and bonus as set
forth in the "Summary Compensation Table"; (2) value realized from the exercise
of stock appreciation rights; and (3) generally all other taxable compensation
except that resulting from the Bank's contributions to the SERP or reimbursement
for taxes on SERP earnings and amounts realized after April 15, 1998 from the
exercise of nonqualified stock options and disqualified incentive stock options.
Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended,
limit the annual benefits which may be paid from a tax-qualified retirement
plan. For SERP Plan participants, any benefits which may be above the limits
under these sections would be payable under the SERP.
The credited years of service, for purposes of calculating benefits, for
the executive officers of the Bank named in the Summary Compensation Table and
all executive officers of the Bank as a group are as follows: Mr. Johnson - 23
years; Mr. Vittorio - less than 1 year; Mr. Lupinacci - 17 years; Mr.
Manfredonia - 20 years; Mr. Perri - 12 years; and all executive officers as a
group - 93 years.
Supplemental Executive Retirement Plan
On August 3, 1995, the Corporation adopted The First National Bank of Long
Island Supplemental Executive Retirement Plan ("SERP"). The SERP provides
benefits that would have been provided under the Pension Plan and Profit Sharing
Plan, in the absence of Internal Revenue Code limitations for qualified plans.
The benefits are provided for employees designated by the Compensation Committee
of the Board of Directors.
Supplemental retirement program and profit sharing plan contributions
under the SERP are made to a "secular trust" for the benefit of the
participants. Amounts contributed to the secular trust are not subject to the
claims of creditors of the Bank. Accordingly, the contributions are taxable to
each participant and deductible by the Bank when made. Supplemental retirement
plan contributions for each participant are made in an amount estimated to be
sufficient to fund future benefits after withholding taxes on the contribution
amount. Trust income is also taxable to each participant. The Bank pays each
participant an amount that, after taxes on this amount are withheld, will be
sufficient for the participant to pay taxes on the trust income.
14
Profit Sharing Plan
The Bank has a combined profit sharing/401(k) plan (the "Profit Sharing
Plan"). Employees are eligible to participate provided they are at least 21
years of age and have completed one year of service in which they worked 1,000
hours if full-time and 700 hours if part-time. Participants may elect to
contribute, on a tax-deferred basis, up to 25% of gross compensation, as
defined, subject to the limitations of Section 401(k) of the Internal Revenue
Code. The Bank may, at its sole discretion, make "Additional 401(k)
Contributions" to each participant's account based on the amount of the
participant's tax deferred contributions and make "Profit Sharing Contributions"
to each participant's account equal to a percentage of the participant's
compensation, as defined. Forfeitures are allocated among participants in
proportion to their annual compensation. Participants are fully vested in their
elective contributions and, after five years of participation in the Profit
Sharing Plan, are fully vested (20% vesting per year) in the Additional 401(k)
and Profit Sharing Contributions made by the Bank. Also, a participant becomes
fully vested in Additional 401(k) and Profit Sharing Contributions upon death or
disability. The Additional 401(k) and Profit Sharing Contributions for 2003 were
$148,852 and $492,364, respectively. The Profit Sharing Contributions
represented approximately 3.2% of the Bank's 2003 pre-tax profits.
Participants in the Profit Sharing Plan will receive benefits generally
upon attainment of age 65. However, the Profit Sharing Plan contains provisions
allowing pre-termination withdrawals and loans under certain circumstances. The
amount of a participant's Normal Retirement Benefit will depend upon the
accumulation of contributions and forfeitures and the investment performance of
the Plan. The amount allocated in 2003 under the Profit Sharing Plan and related
SERP to the account of the Chief Executive Officer and to each of the additional
four most highly compensated executive officers of the Bank who received
compensation of more than $100,000 for services to the Corporation or the Bank
in 2003 is set forth in footnote (3) to the "Summary Compensation Table."
Retirement Plan For Directors
On June 18, 1991, the Board of Directors of the Bank adopted The First
National Bank of Long Island Retirement Plan for Directors (the "Retirement
Plan"). Effective December 31, 2000, the Retirement Plan was terminated. Upon
termination, the benefits earned by directors for services rendered through
December 31, 2000 were frozen and the ability of directors to earn additional
benefits under the Retirement Plan was discontinued. Upon retirement after
attaining the age of sixty (60) years, each of the current directors will
receive a credit (the "Credit Percentage") of ten percent (10%) multiplied by
the number of years of service on the Board through December 31, 2000, to a
maximum of one hundred percent (100%). The annual benefit (the "Annual Benefit")
under the Retirement Plan is equal to the monthly Board of Directors attendance
fee in effect as of December 31, 2000, multiplied by twelve (12) and then
multiplied by the Credit Percentage. The Annual Benefit is payable for a period
of seven (7) years from the date of retirement (the "Payment Period"), in
quarterly installments. In the event of the death of a director or a retired
director, the surviving spouse of such director shall be entitled to receive an
annual payment equal to seventy-five percent (75%) of the Annual Benefit,
calculated as set forth above, and payable over the remainder of the applicable
Payment Period.
15
Incentive Compensation Plan
The executive officers of the Bank are eligible for compensation under the
Bank's Incentive Compensation Plan (the "Plan") described in the Board
Compensation Committee Report herein. Incentive compensation paid in 2003 to the
Chief Executive Officer and to each of the additional four most highly
compensated executive officers of the Bank who received compensation of more
than $100,000 for services to the Corporation or the Bank in 2003 is set forth
in the "Summary Compensation Table" under the heading "Bonus".
Equity Compensation Plans
The Corporation's equity compensation plans consist solely of a 1986 Stock
Option and Appreciation Rights Plan (the "1986 Plan") and a 1996 Stock Option
and Appreciation Rights Plan (the "1996 Plan"). Detail descriptions of these
plans follow.
The 1986 Plan was adopted by the Board of Directors in January 1986 and
approved by the stockholders in April 1986 as a Stock option plan and
subsequently was amended to include provisions for the granting of Stock
Appreciation Rights ("SARs"), which amendment was adopted by the Board of
Directors in May 1988 and approved by the stockholders in April 1989. At
December 31, 2003, there were still options outstanding under the 1986 Plan
which were granted prior to the Plan's expiration on January 21, 1996.
In January 1996, the Board of Directors unanimously adopted the 1996 Plan
as a successor to the 1986 Plan. The Corporation's stockholders approved the
1996 Plan in April 1996. An amendment to the 1996 Plan that allows for the
granting of stock options to non-employee directors and limits the number of
stock options and stock appreciation rights that can be granted to any one
person in any one fiscal year to 25,000 was approved by the Board of Directors
in February 2001 and subsequently approved by the stockholders in April 2001.
Except for this amendment, the terms of the 1996 Plan are substantially
identical to the terms of the 1986 Plan.
Under the 1996 Plan, options to purchase up to 540,000 shares of common
stock were made available for grant to key employees and, as amended,
non-employee directors of the Corporation and its subsidiaries through January
15, 2006. Each option granted under the 1996 Plan is granted at an exercise
price equal to the fair market value of one share of the Corporation's stock on
the date of grant. Options granted on or before December 31, 2000 are
exercisable in whole or in part commencing six months from the date of grant and
ending ten years after the date of grant. Options granted after December 31,
2000 are exercisable in whole or in part commencing three years from the date of
grant and ending ten years after the date of grant. The date on which options
first become exercisable is subject to acceleration in the event of a change in
control, retirement, death, disability, and certain other limited circumstances.
Each option granted to an employee under the 1996 Plan may be granted with
or without a SAR attached. The 1996 Plan also provides for the granting of
stand-alone SARs to employees. Non-employee directors are not eligible for SAR
grants, whether stand alone or attached to options. An employee who is granted
an option with a SAR attached may elect to exercise either the option or the
SAR, at which point the related SAR or option shall be deemed to have been
cancelled. If a SAR is exercised, the participant is entitled to a payment equal
to the amount by which the fair market value of the shares of the Common Stock
allocable to the SAR on the exercise date exceeds the fair market value of such
shares on the date of grant. Payment to a holder who exercises a SAR is made in
cash. Unexercised options which expire or
16
terminate are again available for grant, but options cancelled because an
attached SAR was exercised are not again available for grant.
Options may be granted under the 1996 Plan as incentive stock options
("ISOs") qualified under Section 422 of the Internal Revenue Code or as
non-qualified stock options ("NQSOs"). Options and SARs have a maximum duration
of 10 years. The total fair market value of stock, determined as of the date of
grant of the option, for which ISOs are first exercisable by a holder in any
year is limited to $100,000. A holder may elect to exercise options or SARs in
any order without regard to the date on which the options or SARs were granted.
Options and SARs are not transferable, except upon death, by (i) will,
(ii) the laws of descent and distribution, or (iii) beneficiary designation. The
purchase price for the Common Stock must be paid in full in either common stock
of the Corporation and/or cash when an option is exercised. Generally, options
and SARs are exercisable only during the holder's continued employment or
service as a director with the Corporation or the Bank. However, in accordance
with the terms of the 1996 Plan and/or administrative guidelines adopted by the
Compensation and Stock Option Committee, there are additional limited periods
following termination of employment or service as a director during which
options or SARs may be exercised in the event employment or service is
terminated as a result of resignation, death, disability, retirement, or a
change in control of the Corporation.
Subject to the provisions of applicable law and the terms of the 1996
Plan, the designation of those officers who will be granted options and/or SARs,
as well as the terms of the options and SARs granted, is solely within the
discretion of the Compensation and Stock Option Committee which administers the
1996 Plan. Stock option grants to non-employee directors are approved by the
full Board of Directors. No consideration is received by the Corporation or the
Bank for the granting of options or SARs.
Information as of December 31, 2003 regarding the number of shares of
common stock to be issued upon the exercise of outstanding stock options, the
weighted average exercise price of outstanding stock options, and the number of
stock options remaining available for future issuance is set forth below.
----------------------------------------------------------------------------------------------------
Number of securities
remaining available for
Number of securities future issuance
to be issued Weighted-average under equity
upon exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
Plan category warrants and rights warrants and rights reflected in column (a))
(a) (b) (c)
----------------------------------------------------------------------------------------------------
Equity compensation
plans approved by
security holders......... 253,646 $25.73 278,152
Equity compensation
plans not approved
by security holders...... -- -- --
----------------------------------------------------------------------------------------------------
Total.................... 253,646 $25.73 278,152
----------------------------------------------------------------------------------------------------
17
During 2003, options to purchase 62,010 shares were granted under the 1996
Plan at a per share exercise price of $33.11. The following table shows, as to
the executive officers named in the "Summary Compensation Table", information
for 2003 with respect to the options granted.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
----------------------------------------------------------------------------------------------------------
Individual Grants
----------------------------------------------------------------------------------------------------------
Percent of Potential Realizable
Total Value at Assumed
Options/ Annual Rates of
SARs Stock Price
Options/ Granted to Appreciation
SARs Employees Exercise or For Option Term
Granted in Fiscal Base Price Expiration ----------------------
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
(a) (b) (c) (d) (e) (f) (g)
----------------------------------------------------------------------------------------------------------
J. William Johnson......... 6,085 9.81% $33.11 1/20/13 $ 126,684 $ 321,030
Michael N. Vittorio........ 1,898 3.06% $33.11 1/20/13 $ 39,515 $ 100,134
Arthur J. Lupinacci, Jr.... 3,667 5.91% $33.11 1/20/13 $ 76,344 $ 193,462
Donald L. Manfredonia...... 2,894 4.67% $33.11 1/20/13 $ 60,250 $ 152,681
Joseph G. Perri............ 2,771 4.47% $33.11 1/20/13 $ 57,690 $ 146,191
----------------------------------------------------------------------------------------------------------
The following table sets forth the aggregated options/SARs exercised in
the last fiscal year and the aggregated number and value of unexercised options
and SARs at December 31, 2003 for each of the executive officers named in the
"Summary Compensation Table."
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
---------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at Fiscal Year- at Fiscal Year-
Shares Value End (#) End ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
---------------------------------------------------------------------------------------------------
J. William Johnson .......... 13,866 $253,607 0 / 24,308 $0 / $383,667
Michael N. Vittorio.......... -- -- 0 / 10,898 $0 / $145,671
Arthur J. Lupinacci, Jr...... 21,975 $501,272 0 / 14,509 $0 / $228,783
Donald L. Manfredonia........ 4,750 $144,802 9,200 / 11,568 $212,789 / $182,574
Joseph G. Perri.............. 4,724 $133,547 10,724 / 9,564 $270,424 / $148,813
---------------------------------------------------------------------------------------------------
There were no long-term incentive plan awards granted in the last fiscal
year.
18
PERFORMANCE GRAPH
The following graph compares the Corporation's total stockholder return
over a 5-year measurement period with (i) the NASDAQ Market Index, and (ii) the
National Commercial Banks Index*.
[THE FOLLOWING MATERIAL WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL]
1/1/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------------------------------------------------------------
The First of Long Island 100.00 67.31 90.13 92.26 132.95 159.16
National Commercial Banks 100.00 84.98 98.36 99.52 91.11 124.15
NASDAQ Market Index 100.00 176.37 110.86 88.37 61.64 92.68
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
THE FIRST OF LONG ISLAND CORPORATION,
NATIONAL COMMERCIAL BANKS INDEX, AND NASDAQ MARKET INDEX
Assumes $100 Invested on January 1, 1999
Assumes Dividend Reinvested
Fiscal Year Ended December 31, 2003
* The National Commercial Banks Index consists of nationally chartered
commercial banks and certain other financial institutions which, on the
basis of Standard Industrial Classification (S.I.C.) codes developed by
the U.S. Office of Management and Budget, have been included in the same
industry group as the Corporation.
EMPLOYMENT CONTRACTS
Messrs. Johnson, Vittorio, Lupinacci, Manfredonia, and Perri have
employment contracts with the Corporation pursuant to which Mr. Johnson is
employed in the position of Chairman of the Board of the Corporation and the
Bank, Mr. Vittorio is employed as President and Chief Executive Officer of the
19
Corporation and the Bank, Mr. Lupinacci is employed as Executive Vice President
of the Corporation and the Bank, and Messrs. Manfredonia and Perri are each
employed in the position of Executive Vice President of the Bank. In addition,
each of these officers is also employed in such other positions of the
Corporation or the Bank as may be determined by the Board of Directors of the
Corporation or the Bank. Mr. Johnson's contract has a term of three years
effective January 1, 2004, Messrs. Vittorio and Lupinacci each have a contract
with a term of eighteen months effective July 1, 2003, and Messrs. Manfredonia
and Perri each have a contract with a term of eighteen months effective January
1, 2004. The term of each of these contracts is automatically extended at the
expiration of each year for an additional period of one year, thus resulting in
a new three-year term for Mr. Johnson and new eighteen-month terms for Messrs.
Vittorio, Lupinacci, Manfredonia, and Perri. The contracts currently provide for
base annual salaries of $191,500, $300,000, $239,000, $197,000, and $181,500 for
Messrs. Johnson, Vittorio, Lupinacci, Manfredonia, and Perri, respectively, to
be paid by the Corporation or the Bank. The base annual salaries for Messrs.
Johnson and Vittorio include services as a director of the Corporation and the
Bank.
Under these contracts, Messrs. Johnson, Vittorio, Lupinacci, Manfredonia,
and Perri are entitled to severance compensation. Generally upon an involuntary
termination of employment or upon a resignation of employment following a change
in control, Messrs. Johnson and Lupinacci are entitled to receive single sum
payments equal to three (3) times and one and one-half (1.5) times,
respectively, the base annual salaries under their contracts, together with
continued family medical and dental insurance coverage. Upon an involuntary
termination of employment, Mr. Vittorio is entitled to receive a single sum
"Termination Payment" of up to one and one-half (1.5) times the base annual
salary under his contract, and upon a resignation of employment for Good Reason,
as defined, within twenty-four months following a change of control, he is
entitled to receive single sum "Termination Payment" equal to (2) times the base
annual salary under his contract. In addition, upon a resignation of employment
for any reason during the period beginning on the thirty-first day and ending on
the sixtieth day following a change of control, Mr. Vittorio is entitled to
receive a single sum payment equal to 133 1/3% of the base annual salary under
his contract. Mr. Vittorio is also entitled to continued family medical and
dental insurance coverage after termination. Upon an involuntary termination of
employment or a resignation of employment for Good Reason, as defined, within
twenty-four months following a change of control, Mr. Manfredonia is entitled to
receive a single sum "Termination Payment" equal to one and one-half (1.5) times
the base annual salary under his contract and Mr. Perri is entitled to receive a
single sum "Termination Payment" equal to one and one-quarter (1.25) times the
base annual salary under his contract. In addition, upon a resignation of
employment for any reason during the period beginning on the thirty-first day
and ending on the sixtieth day following a change of control, Mr. Manfredonia
and Mr. Perri are each entitled to receive a single sum payment equal to 66 2/3%
of the Termination Payment under their contracts. Mr. Manfredonia and Mr. Perri
are entitled to continued family medical and dental insurance coverage.
SEVERANCE AGREEMENTS
Messrs. Curtis, Kick, and Keeney have severance agreements with the
Corporation. Each such agreement has a term of one year effective January 1,
2004. The term of each agreement is automatically renewed for an additional
one-year term, unless the Board of Directors of the Corporation chooses not to
renew and notifies the officer at least thirty days prior to the end of a term.
Each officer's agreement entitles him to a "Termination Payment" and continued
family medical and dental insurance coverage for a period of twelve months in
the event that the officer's employment is terminated within twenty-four months
following a change of control or, under certain circumstances, following the
acquisition of more than 20% of the voting shares of the Corporation by any
entity, person, or group. The Termination Payment and continued medical and
dental insurance coverage also apply if the officer resigns for Good Reason, as
20
defined, within twenty-four months following a change of control. Each officer's
Termination Payment is equal to 125% of his then current annual base salary.
Alternatively, each officer's agreement entitles him to a payment in the amount
of 66 2/3% of the Termination Payment and continued family medical and dental
insurance coverage in the event that the officer resigns for any reason during
the period beginning on the thirty-first day and ending on the sixtieth day
following a change of control.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In 1992, the Bank, as tenant, entered into a lease with Howard Thomas
Hogan, Jr., a director of the Corporation and the Bank, covering premises in a
building located in Locust Valley, New York, used as a branch office. The lease,
which had an initial term of ten years and one month ending on October 30, 2002,
was modified and extended through October 31, 2007. The Bank may, on ninety (90)
days written notice, elect to extend the lease for an additional five (5) year
period. The lease provides for annual base rent of $30,184 for the year ending
October 31, 2004. In addition to base rent, the Bank is responsible for its
proportionate share of the real estate taxes on the building in which the leased
premises are located. The Corporation believes that the foregoing is comparable
to the rent that would be charged by an unrelated third party.
The Bank has had, and expects to have in the future, banking transactions
in the ordinary course of its business with directors, officers, principal
stockholders of the Corporation and their associates. Such transactions,
including borrowings and loan commitments, were made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
others, and in the opinion of management do not involve more than a normal risk
of collectibility, nor do they present other unfavorable features.
Certain directors are officers, directors, partners, or stockholders of
companies or partnerships which, or associates of which, may have been customers
of the Bank in the ordinary course of business during 2003 and up to the present
time. Additional transactions of this type may occur in the future. All such
transactions were effected on substantially the same terms as comparable
transactions with other persons.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
With the exception of Alexander L. Cover, each of the Corporation's
directors and executive officers was granted stock options on January 21, 2003.
The Form 4 filing for each officer and director to report the option grant was
inadvertently filed late on February 13, 2004. The Sarbanes-Oxley Act changed
the rules for reporting changes in beneficial ownership. Previously, stock
option grants could be reported on Form 5 within 45 days after the close of the
Corporation's fiscal year. Joseph G. Perri, Senior Vice President and Secretary
of the Corporation, exercised incentive stock options to purchase 2,362 shares
of the Corporation's common stock for $9.03 per share on January 16, 2003. The
Form 4 filing to report the option exercise was inadvertently filed four days
late.
INDEPENDENT AUDITORS
The consolidated financial statements for the year ended December 31, 2003
were examined by Crowe Chizek and Company LLC ("Crowe Chizek"). It is
anticipated that the Audit Committee of the Board of Directors will reappoint
Crowe Chizek as the Corporation's independent auditors for 2004. A
representative of Crowe Chizek will be present at the Annual Meeting of
Stockholders and will have the opportunity to make a statement and respond to
appropriate questions from stockholders.
21
Audit Fees
Crowe Chizek was appointed to serve as the Corporation's independent
auditors on October 21, 2003. Grant Thornton LLP ("Grant Thornton") served as
independent auditors from June 27, 2002 through October 20, 2003. Arthur
Andersen LLP ("Arthur Andersen") previously served as independent auditors.
Crowe Chizek's fees for audit services for the 2003 year were $81,500.
Grant Thornton's fees for audit services for the 2002 year were $86,500. Audit
services include the following: (1) professional services rendered for the audit
of the Corporation's annual consolidated financial statements; (2) reviews of
the consolidated financial statements included in the Corporation's quarterly
Form 10-Q; (3) a reading of the Corporation's annual report on Form 10-K; and
(4) rendering an opinion on management's assertion about the effectiveness of
the Bank's internal control over financial reporting. With respect to the
reviews of the consolidated financial statements included in the Corporation's
Form 10-Q, Grant Thornton performed the review for the quarters ended March 31,
2003 and June 30, 2003 for a total fee of $6,000, and Crowe Chizek performed the
review for the third quarter of 2003. In addition, Arthur Andersen performed the
review for the quarter ended March 31, 2002 for a fee of $5,000 and Grant
Thornton performed the reviews for the remaining quarters in 2002.
Audit Related Fees
Audit related fees, as described in Item 9(e)(2) of Schedule 14A of the
Securities and Exchange Commission's Proxy Rules, are fees billed to the
Corporation by its independent auditors for assurance and related services that
are reasonably related to the performance of the audit or review of the
Corporation's consolidated financial statements and are not audit fees as
described in the previous paragraph. In neither of the last two fiscal years was
the Corporation billed by its independent auditors for audit related fees.
Tax Fees
In the 2003 fiscal year, Grant Thornton billed the Corporation $12,000 for
the preparation of its 2002 income tax returns. In the 2002 fiscal year, Grant
Thornton billed the Corporation $7,000 for the preparation of most of its tax
returns for the 2001 fiscal year. In addition, in 2002 Arthur Andersen billed
the Corporation $10,000 for preparing the 2001 tax returns for the Bank's REIT
(real estate investment trust) subsidiary, providing advice regarding the Bank's
REIT and investment subsidiaries and analyzing the tax consequences of bank
owned life insurance.
All Other Fees
In neither of the last two fiscal years was the Corporation billed by its
independent auditors for any fees other than those described above under the
captions "Audit Fees" and "Tax Fees."
Engagement of Independent Auditors To Perform Audit Services and Non-Audit
Services
On an annual basis, and in accordance with the terms of a written
engagement letter, the Audit Committee engages the Corporation's independent
auditors to perform audit services as previously defined.
In addition, from time to time the Audit Committee may engage the
Corporation's independent auditors to perform non-audit services such as
preparation of the Corporation's income tax returns, providing tax advice, and
implementation of tax planning strategies. The Audit Committee may pre-approve
specific types of non-audit services provided that the cost of such services
does not exceed a predetermined dollar amount and the Audit Committee is
informed of each service. The Audit Committee will not engage the independent
auditors to perform any non-audit service or pre-approve any non-audit service
that could impair, in fact or appearance, the independence of the independent
auditors. In addition, the Audit Committee will not pre-approve any non-audit
22
service if such pre-approval constitutes delegation to management of the Audit
Committee's responsibilities under the Securities Exchange Act of 1934.
Prohibited non-audit services include those in which the independent auditors
would be auditing their own work, functioning as a part of management or as an
employee, acting as an advocate of the Corporation, or promoting of the
Corporation's stock or financial interests. Other prohibited non-audit services
include bookkeeping or other services related to the accounting records or
financial statements of the Corporation; financial information systems design
and implementation; appraisal or valuation services, fairness opinions,
contribution-in-kind reports; actuarial services; internal audit outsourcing
services; performing management or human resources functions; acting as a
broker/dealer for the Corporation, investment adviser or investment banker;
legal services; and, expert services unrelated to the audit.
Changes In Independent Auditors
On June 27, 2002, based on a recommendation by the Audit Committee of the
Board of Directors (the "Audit Committee"), the Board of Directors of the
Company approved the dismissal of the Company's independent auditors, Arthur
Andersen LLP, and the engagement of Grant Thornton LLP as its new independent
auditors. The dismissal of Arthur Andersen LLP and the engagement of Grant
Thornton LLP was previously reported by the Corporation on July 2, 2002 on Form
8-K. No reports by Arthur Andersen LLP within the two years prior to their
dismissal contained an adverse opinion or a disclaimer of opinion, or were
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company's two most recent fiscal years and all subsequent interim
periods preceding the dismissal and up to the date of dismissal, there were no
disagreements between the Company and Arthur Andersen LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure and there were no reportable events with respect to Arthur
Andersen LLP as that term is described in Item 304 of Regulations S-K.
On October 21, 2003, the Audit Committee dismissed the Company's
independent auditors, Grant Thornton LLP, and engaged Crowe Chizek and Company
LLC as its new independent auditors. The dismissal of Grant Thornton LLP and the
engagement of Crowe Chizek and Company LLC was previously reported by the
Corporation on October 28, 2003 on Form 8-K. Grant Thornton's report for the
fiscal year ended December 31, 2002, which was the only report issued by them,
did not contain an adverse opinion or a disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company's 2002 fiscal year and all interim periods preceding the
dismissal and to the date of dismissal, there were no disagreements between the
Company and Grant Thornton LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure and
there were no reportable events with respect to Grant Thornton LLP as that term
is described in Item 304 of Regulation S-K.
23
AUDIT COMMITTEE REPORT
We have reviewed the Corporation's audited consolidated financial
statements as of and for the year ended December 31, 2003 and have discussed
such financial statements with management and Crowe Chizek and Company LLC, the
Corporation's independent auditors.
We have discussed with the independent auditors the matters required to be
discussed by Statement of Auditing Standards No. 61 "Communication with Audit
Committees", as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have reviewed the written disclosures and letter from the independent
auditors required by Independence Standard No. 1, "Independence Discussions with
Audit Committees", as amended, by the Independence Standard Board, and have
discussed with the auditors the auditors' independence.
Based on the review and discussions referred to above, we recommended to
the Board of Directors that the consolidated financial statements referred to
above be included in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 2003.
Walter C. Teagle III
Allen E. Busching
Alexander L. Cover
Beverly Ann Gehlmeyer
John R. Miller III
The preceding report and the Audit Committee charter shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 (the "1933
Act") or the Securities Act of 1934 (the "1934 Act"), except to the extent the
Corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under the 1933 Act or the 1934 Act.
24
OTHER MATTERS
The Board of Directors of the Corporation does not know of any matters for
action by stockholders at the annual meeting other than the matters described in
the notice. However, the enclosed Proxy will confer discretionary authority with
respect to matters which are not known to the Board of Directors at the time of
the printing hereof and which may properly come before the meeting. It is the
intention of the persons named in the Proxy to vote such Proxy with respect to
such matters in accordance with their best judgment.
The entire expense of preparing, assembling and mailing the enclosed
material will be borne by the Corporation. In addition to using the mails,
directors, officers and employees of The First National Bank of Long Island (the
"Bank"), a wholly-owned subsidiary of the Corporation, acting on behalf of the
Corporation, and without extra compensation, may solicit proxies in person, by
telephone or by facsimile.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be submitted at the 2005 Annual
Meeting of Stockholders must be received by the Chairman of the Board or the
President no later than November 15, 2004 in order to be included in the proxy
statement and form of proxy for such meeting. In addition, if the Corporation is
not notified of a stockholder proposal by January 29, 2005, then the proxies
held by management of the Corporation may provide the discretion to vote against
such stockholder proposal, even though such proposal is not included in the
proxy statement and form of proxy.
SECURITY HOLDER COMMUNICATIONS TO THE BOARD OF DIRECTORS
The Corporation's Board of Directors does not have a formal process for
security holders to send communications to the board of directors. The board
believes that a formal process is unnecessary because the Corporation is
relatively small and both the Chairman of the Board and the President and Chief
Executive Officer, who is also a director, are easily accessible by telephone
and mail.
BOARD MEMBER ATTENDANCE AT ANNUAL MEETINGS
The Board of Directors strongly encourages each of its members to attend
the Annual Meeting of Stockholders. In this regard, the Board of Directors sets
the date for the Annual Meeting of Stockholders to coincide with the April
meeting of the Board of Directors. All directors attended the prior year's
Annual Meeting of Stockholders, which was held on April 15, 2003.
ANNUAL REPORTS TO STOCKHOLDERS
Consolidated financial statements for the Corporation and the Bank are
included in the Corporation's 2003 Annual Report to Stockholders, which was
mailed with this Proxy Statement. In addition, copies of the 2003 Annual Report
or the annual report on Form 10-K as filed with the Securities and Exchange
Commission for 2003 will be sent to any stockholder upon written request without
charge. Such request should be directed to Mark D. Curtis, Senior Vice President
and Treasurer, at the Corporation's principal office, 10 Glen Head Road, Glen
Head, New York, 11545. The consolidated financial statements contained in the
Corporation's 2003 Annual Report are not part of this Proxy Statement.
By Order of the Board of Directors
Joseph G. Perri
March 15, 2004 Senior Vice President and Secretary
25
APPENDIX A
THE FIRST OF LONG ISLAND CORPORATION
NOMINATING COMMITTEE CHARTER
I. PURPOSE
The Nominating Committee is appointed by the Board of Directors ("Board")
to:
o Assist the Board by identifying individuals qualified to become
Board members; and
o Recommend to the Board the director nominees to be proposed for
election at the annual meeting of shareholders.
II. COMPOSITION
The Nominating Committee will be comprised of at least three directors,
each of whom will be independent in accordance with the definition for
director independence set forth in Nasdaq Rule 4200.
The members of the Nominating Committee will be elected by the Board at
the annual organization meeting of the Board and will serve until the next
annual organization meeting or until their successors are duly elected and
qualified.
III. MEETINGS
The Nominating Committee will meet as often as appropriate to fulfill its
duties and responsibilities. Minutes of the meetings will be approved by
the Nominating Committee and maintained.
IV. DUTIES AND RESPONSIBILITIES
To fulfill its duties and responsibilities, the Nominating Committee will:
o Establish guidelines for nomination to the Board;
o Identify and evaluate nominees for director in accordance with the
criteria set forth in Section V of this charter. Recommend nominees
to the Board. In identifying candidates for membership on the Board,
the Nominating Committee will take into account all factors it
considers appropriate, which may include experience,
accomplishments, education, skills, business acumen and the highest
personal and professional integrity;
o Review and recommend to the Board, candidates to fill vacancies on
the Board that occur between annual meetings of the shareholders;
o Recommend to the Board the class of directors on which a nominee
will serve;
A-1
o Maintain records of who recommended each nominee approved by the
Nominating Committee for inclusion on the proxy (other than nominees
who are executive officers or who are directors standing for
re-election);
o Review the adequacy of this Charter at least annually and recommend
to the Board any modifications or changes for approval by the Board.
V. CRITERIA FOR NOMINATION TO THE BOARD
To consider the following factors in recommending to the Board potential
new Board members, or the continued service of existing members:
o Whether the candidate understands that his/her principal duty is to
represent the shareholders of the Corporation;
o The candidate's professional and personal ethics and values;
o Whether the candidate has no material conflict of interest with
their service on the Board;
o The candidate's broad experience at the policy-making level;
o The candidate's ability to provide insights and practical wisdom
based on their experience and expertise;
o The candidate's independence;
o The candidate's ability to understand and relate to the culture of
the Corporation;
o Whether the candidate, by virtue of particular experience relevant
to the Corporation's current or future business, will add specific
value as a Board member;
o Whether the candidate has experience with publicly held companies;
o Whether the candidate has an understanding and background in
corporate management with experience in delegation of duties;
o Whether the candidate has accounting, financial, legal or marketing
experience;
o Whether the candidate's experience and knowledge will enhance or
maintain a diversity of background as depicted in these criteria;
o Whether the candidate can devote sufficient time to effectively
carry out their duties;
A-2
o Whether the candidate would be considered an audit committee
"financial expert" as defined by the Securities and Exchange
Commission for purposes of the Sarbanes-Oxley Act of 2002;
o Any factors related to the ability and willingness of a candidate to
serve, or an existing candidate to continue his/her service;
o Although not mandatory, the candidate is expected to live and/or
work in territories where the Corporation has branches or is
expected to have branches.
The Nominating Committee will identify potential candidates. Qualified
candidates for membership on the Board will be considered without regard
to race, color, religion, sex, ancestry, national origin or disability.
The Board will review the qualifications and backgrounds of the Directors,
as well as the overall composition of the Board, and recommend the slate
of Directors to be nominated for election at the annual meeting of
stockholders.
The Board will not consider shareholder nominations of director
candidates, because the Board believes that this is not an efficient or
effective means of identifying qualified individuals. In addition, the
Board has a long history of being able to attract and maintain a
membership with the variety of skills necessary to properly oversee the
affairs of the Corporation.
VI. RESOURCES AND AUTHORITY OF THE NOMINATING COMMITTEE
The Nominating Committee has the authority to retain outside counsel, as
it deems appropriate, in the conduct of its duties and responsibilities
under this Charter.
A-3
APPENDIX B
THE FIRST OF LONG ISLAND CORPORATION (THE "CORPORATION")
THE FIRST NATIONAL BANK OF LONG ISLAND (THE "BANK")
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors ("Board") in fulfilling its oversight responsibilities by
reviewing: the financial reports and other financial information provided
by the Corporation to any governmental body or the public; the
Corporation's system of internal controls regarding finance, accounting,
legal compliance and ethics that management and the Board have
established; and the Corporation's auditing, accounting and financial
reporting processes generally. Consistent with this function, the Audit
Committee will encourage continuous improvement of, and will foster
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system.
Review and evaluate the audit efforts of the Corporation's
independent auditors and internal auditing department.
Provide an open avenue of communication among the independent
auditors, financial and senior management, the internal auditing
department and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of at least three directors as
determined by the Board, each of whom shall be "independent" under the
rules of the Nasdaq Stock Market, Inc. and the Sarbanes-Oxley Act of 2002,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee.
All members of the Audit Committee shall be able to read and understand
fundamental financial statements, including a balance sheet, income
statement, and cash flow statement.
The Audit Committee shall have at least one member who is a "financial
expert", as defined by the Securities and Exchange Commission for purposes
of the Sarbanes-Oxley Act of 2002.
The members of the Audit Committee shall be elected by the Board at the
annual organization meeting of the Board and shall serve until the next
annual organization meeting or until their successors shall be duly
elected and qualified.
B-1
III. MEETINGS
The Audit Committee for the Corporation and the Bank shall meet at least
four times annually, or more frequently as circumstances dictate. As part
of its job to foster open communication, the Audit Committee should meet
at least annually with management, the Chief Auditor, the independent
auditors and corporate legal counsel in separate executive sessions to
discuss any matters that the Audit Committee or each of these groups
believe should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
Documents/Reports Review
1. Review with the Chief Auditor the process used in establishing the
annual internal audit plan.
2. Review and evaluate the scope, risk assessment and nature of the
internal auditors' plan and any subsequent changes.
3. Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit
plan, with explanations for any deviations from the original plan.
4. Review this Charter at least annually and update as conditions
dictate. Submit the Charter to the Board of Directors for approval
and have the Charter published at least every three years in the
Corporation's proxy statement.
5. Review with financial management of the Corporation and the
independent auditors the Form 10-Qs and the Form 10-Ks prior to
their filings. The Chair of the Committee may represent the entire
Audit Committee for purposes of this.
6. Discuss with management the Corporation's earnings press releases.
The Chair of the Committee may represent the entire Audit Committee
for this purpose.
7. Review the Corporation's annual audited financial statements,
related disclosures, including the Management's Discussion and
Analysis portion of the Corporation's filings, and discuss with the
independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communicating with Audit
Committees), including (a) the quality as well as acceptability of
the accounting principles applied in the financial statements, and
(b) new or changed accounting policies, significant estimates,
judgments, uncertainties or unusual transactions; and accounting
policies relating to significant financial statement items.
8. Prepare a report to be included in the Corporation's proxy statement
for each annual meeting that discusses whether the Audit Committee
has reviewed the financial statements with management and discussed
Statement on Auditing Standards No. 61 (Communicating with Audit
Committees)
B-2
and Independence Standards Board Standard No. 1 (Auditor
Independence) with the independent auditors, and if it has
recommended to the Board of Directors that the audited financial
statements be included in the Form 10-K.
Independent Auditors
9. Recognizing that the independent auditors are ultimately accountable
to the Audit Committee and the Board of Directors, select the
independent auditors, considering their independence and
effectiveness. The Audit Committee has the sole authority to retain
and dismiss the independent auditors of the Corporation, including
sole authority to approve all engagement fees and terms and all
non-audit services to be provided by the independent auditors. The
Audit Committee must pre-approve all non-audit services to be
provided by the independent auditors.
10. Review with the independent auditors the plan and scope of the
proposed annual external audit and quarterly reviews for the current
year, including the procedures to be utilized.
11. Review with the independent auditors and management, the results of
the annual external audit of the Corporation, significant findings
thereof, and any other matters required to be communicated by the
independent auditors under generally accepted auditing standards,
including, if applicable, the independent auditors' summary of any
significant accounting, auditing and internal control issues, along
with recommendations and management's corrective action plans, if
applicable (management letter).
12. Review at least annually the overall professional services,
independence and qualifications of the independent auditors,
including the periodic receipt from the independent auditors of a
written communication delineating any and all relationships between
the Corporation and such auditors (including any significant fees
for any anticipated non-audit services), most importantly, those
required by Independence Standards Board Standard No. 1,
Independence Discussion with Audit Committees.
13. Provide sufficient opportunity for the internal auditors and
independent auditors to meet with the members of the Audit Committee
without members of management present. Among the items to be
discussed in these meetings are the independent auditors' evaluation
of the Corporation's financial, accounting and auditing personnel
and the cooperation that the independent auditors received during
the audit.
Financial Reporting Processes
14. Review the integrity of the Corporation's financial reporting
processes, both internal and external with the independent auditors
and the internal auditors.
15. Review management's analysis of any significant accounting issues,
changes, estimates, judgments or unusual items relating to the
financial statements and the selection, application and effects of
critical accounting policies applied by the Corporation.
B-3
16. Consider and approve, if appropriate, major changes to the
Corporation's auditing procedures and accounting principles and
practice as suggested by the independent auditors, management or the
internal auditing department.
17. Discuss with management the Corporation's major financial risk
exposures and the steps management has taken to monitor and control
such exposures.
18. Approve all related party transactions, as defined by applicable
NASD Rules, to which the Corporation is a party.
Control Processes
19. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent auditors and the
internal auditors regarding any significant judgments made in
management's preparation of the financial statements and the view of
each as to appropriateness of such judgments.
20. Review the disclosures made by the Corporation's Chief Executive
Officer and Chief Financial Officer regarding compliance with their
certification requirements under the Sarbanes-Oxley Act of 2002 and
the rules promulgated thereunder, including the Corporation's
internal controls for financial reporting and disclosure controls
and procedures.
21. Following completion of the annual audit, review separately with
each of management, the independent auditors and the internal
auditing department any significant difficulties encountered during
the course of the audit, including any restrictions on the scope of
work or access to required information.
22. Review any significant disagreement among management and the
independent auditors or the internal auditing department in
connection with the preparation of the financial statements.
23. Review with the independent auditors, the internal auditing
department and management the extent to which changes or
improvements in financial or accounting practices, as approved by
the Audit Committee, have been implemented.
Compliance and Other Oversight Responsibilities
24. Establish procedures for (i) the receipt, retention and treatment of
complaints received by the Corporation regarding accounting,
internal accounting controls, or auditing matters and (ii) the
confidential, anonymous submissions by employees of concerns
regarding questionable accounting or auditing matters.
25. Review management reports issued by the Corporation in accordance
with FDICIA and the corresponding independent auditor's attestation
and agreed-upon procedures reports. Additionally, review
Management's Report on Internal Control in accordance with Section
404 of the Sarbanes-Oxley Act of 2002.
B-4
26. Perform any other activities consistent with this Charter, the
Corporation's By-laws, and governing law, as the Audit Committee or
the Board of Directors deems necessary or appropriate.
27. Shall have the authority and access to the resources and funding
necessary to discharge its responsibilities, including, without
limitation, the authority, as it deems appropriate in its sole
discretion, to engage outside auditors for special audits, reviews
and other procedures and to retain special counsel and other experts
and consultants.
B-5
REVOCABLE PROXY
THE FIRST OF LONG ISLAND CORPORATION
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 20, 2004
KNOW ALL PERSONS BY THESE PRESENTS that I, the undersigned, being a
stockholder of THE FIRST OF LONG ISLAND CORPORATION, GLEN HEAD, NEW YORK, do
hereby constitute and appoint STEPHEN P. LYON AND JOHN H. TREIBER or either one
of them (with full power to act alone), my true and lawful attorney(s), with
full power of substitution, to attend the Annual Meeting of Stockholders of said
Corporation, to be held at the AMERICAN LEGION HALL, 190 GLEN HEAD ROAD, GLEN
HEAD, NEW YORK, on Tuesday, April 20, 2004, at 3:30 P.M. local time, or any and
all adjournments thereof, and to vote all stock owned by me or standing in my
name, place and stead on the proposals of the Board of Directors specified in
the Notice of Meeting dated March 15, 2004, with all powers I would possess if I
were personally present, hereby ratifying and confirming all that my said Proxy
or Proxies may do, in my name, place and stead, as follows:
With- For All
For hold Except
1. Election of Directors |_| |_| |_|
To elect five (5) Directors, each
for a term of two (2) years (except
as marked to the contrary below)
ALLEN E. BUSCHING PAUL T. CANARICK
ALEXANDER L. COVER BEVERLY ANN GEHLMEYER
J. WILLIAM JOHNSON
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"For All Except" and write the name(s) of any such nominee(s) in the space
provided below.
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2. Other Matters: If any other business is presented at said meeting, this
Proxy shall be voted in accordance with the best judgement of the Proxies.
IF NO DESIGNATIONS ARE MADE IN THE BOXES PROVIDED ABOVE AS TO THE ELECTION
OF DIRECTORS, THIS PROXY WILL BE VOTED "FOR" SUCH ELECTION.
The shares represented by a properly executed Proxy will be voted as
directed.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT MAY BE
REVOKED PRIOR TO ITS EXERCISE.
ALL JOINT OWNERS MUST SIGN INDIVIDUALLY. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN OR CUSTODIAN, PLEASE GIVE FULL TITLE.
IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN.
Please be sure to sign and date this Proxy in the box below.
Date
------------------------
------------------------------ --------------------------------
Stockholder sign above Co-holder (if any) sign above
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Detach above card, sign, date and mail in postage paid envelope provided.
THE FIRST OF LONG ISLAND CORPORATION
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY