UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(RULE 14a-101)

 

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934

 

Filed by the Registrant x

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to §240.14a-12

 

STERLING BANCORP

(Name of Registrant as Specified In Its Charter)

 

STERLING BANCORP

(Name of Person(s) Filing Proxy Statement)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                     650 FIFTH AVENUE, NEW YORK, N.Y. 10019-6108

 

LOUIS J. CAPPELLI

 

CHAIRMAN

 & CHIEF EXECUTIVE OFFICER

 

April 4, 2008

 

Dear Shareholder:

 

 

Sterling’s Annual Meeting of Shareholders will be held on Thursday, May 1, 2008, at 10:45 A.M. Eastern Time, at The Fox Hollow, 7725 Jericho Turnpike, Woodbury, New York 11797, for the election of directors, ratification of the appointment of independent registered public accounting firm, and transaction of any other business as may come before the meeting. You are invited to attend this Annual Meeting.

 

It is important that your shares be represented at the Annual Meeting whether or not you are personally able to attend. Proxy material for the meeting accompanies this letter. You may vote your shares by using a toll free telephone number or on the Internet (see the instructions on the accompanying proxy card) or you may sign, date, and mail the proxy card in the postage paid envelope provided.

 

 

Thank you for your continued interest and support.

 

Sincerely,

 

STERLING BANCORP

650 Fifth Avenue, New York, N.Y. 10019-6108

 

NOTICE OF ANNUAL MEETING

 

MAY 1, 2008

 

The Annual Meeting of Shareholders of Sterling Bancorp will be held on Thursday, May 1, 2008, at 10:45 A.M. Eastern Time, at The Fox Hollow, 7725 Jericho Turnpike, Woodbury, New York 11797, to consider and act upon the following matters:

 

1. Election of nine (9) directors to serve until the next Annual Meeting of Shareholders and until their successors are elected.

 

2. Ratification of the appointment by the Audit Committee of the Board of Directors of KPMG LLP as the Company’s independent registered public accounting firm for fiscal year 2008.

 

3. Such other matters as may properly come before the meeting or any adjournment thereof.

 

The close of business on March 20, 2008 has been fixed as the record date for the meeting. Only shareholders of record at that time are entitled to notice of, and to vote at, the Annual Meeting.

 

IMPORTANT

 

We urge you to sign, date, and send in the enclosed proxy at your earliest convenience, or to vote via the toll free telephone number or via the Internet as instructed on the proxy card, whether or not you expect to be present at the meeting. Sending in your proxy or voting by telephone or on the Internet will not prevent you from voting your shares personally at the meeting, since you may revoke your proxy at any time before it is voted.

 

By Order of the Board of Directors

 

  Dale C. Fredston

  Corporate Secretary

April 4, 2008

 

STERLING BANCORP

650 Fifth Avenue,

New York, N.Y. 10019-6108

 

PROXY STATEMENT

 

April 4, 2008

 

 

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Sterling Bancorp (the “Company”) with respect to the Annual Meeting of Shareholders of the Company to be held on May 1, 2008. Any proxy given by a shareholder may be revoked at any time before it is voted by giving appropriate notice to the Corporate Secretary of the Company or by delivering a later dated proxy or by a vote by the shareholder in person at the Annual Meeting. Proxies in the accompanying form which are properly executed by shareholders and duly returned to the Company and not revoked will be voted for all nominees listed under “Election of Directors” and for ratification of the appointment of KPMG LLP as the Company’s independent registered public accountants for fiscal year 2008, unless the shareholder directs otherwise, and will be voted on any other matters in accordance with the Board of Directors’ recommendations. This proxy statement and the accompanying form of proxy are being mailed to shareholders on or about April 4, 2008.

 

The outstanding shares of the Company at the close of business on March 20, 2008 entitled to vote at the Annual Meeting consisted of 17,988,970 common shares, $1 par value (the “Common Shares”).

 

The Common Shares are entitled to one vote for each share on all matters to be considered at the meeting and the holders of a majority of such shares, present in person or represented by proxy, constitute a quorum for the transaction of business at the Annual Meeting of Shareholders. Only shareholders of record at the close of business on March 20, 2008 are entitled to vote at the Annual Meeting.

 

1 – ELECTION OF DIRECTORS

 

Nine directors, constituting the entire Board of Directors, are to be elected at the Annual Meeting of Shareholders to be held on May 1, 2008, to serve until the next Annual Meeting and until their respective successors have been elected. It is intended that, unless authority to vote for any nominee or all nominees is withheld by the shareholder, a properly executed and returned proxy will be voted in favor of the election as directors of the nominees named below. All nominees are members of the present Board of Directors, and were elected at the 2007 Annual Meeting of Shareholders. There is no family relationship between any of the nominees or executive officers. In the event that any of the nominees shall not be a candidate, the persons designated as proxies are authorized to substitute one or more nominees, although there is no reason to anticipate that this will occur.

 

Assuming the presence of a quorum, directors are elected by a plurality of the votes cast. Abstentions and broker non-votes (arising from the absence of discretionary authority on the part of a broker-dealer to vote shares held in street name for a customer) will have no effect on the election of directors.

The information set forth below has been furnished by the nominees:

 

 

 

 

Each nominee is currently a director of the Bank.

 

Walter Feldesman, Esq., has served the Company as a director since 1975. After more than 33 years of dedicated service, he will not stand for re-election at the 2008 Annual Meeting. Mr. Feldesman has been Senior Counsel to Thelen Reid Brown Raysman & Steiner LLP since 2002. At the recommendation of the Corporate Governance and Nominating Committee, the Board of Directors has elected Mr. Feldesman as Honorary Director, to serve at the pleasure of the Board of Directors beginning at the end of his term at the 2008 Annual Meeting of Shareholders.

 

Accordingly, the Board of Directors has determined that the number of Directors to be elected at the Annual Meeting shall be nine.

 

Reference is made to “Security Ownership of Directors and Executive Officers and Certain Beneficial Owners” on page 24 for information as to the nominees’ holdings of the Company’s equity securities.

 

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

Overview

 

The Company’s Compensation Committee (the “Committee”) establishes and implements the Company’s compensation program for the named executive officers. The Committee also monitors how the Company follows that program, and how the program fits the Company’s compensation philosophy. Throughout this proxy statement, the individuals included in the Summary Compensation Table on page 8, are referred to as the “named executive officers”.

 

Compensation Philosophy and Objectives

 

The Company believes that the most effective executive compensation program rewards the achievement of annual, long-term, and strategic goals. The Company believes that appropriate compensation should align the executives’ interests with those of the stockholders by rewarding performance, with the ultimate objective of improving stockholder value. To that end, the Committee believes executive compensation packages for named executive officers should include both cash compensation primarily designed to reward performance as measured against established goals and stock-based compensation that promotes an ownership mentality among key executives. The Committee evaluates compensation to ensure that the Company maintains its ability to attract and retain highly qualified and effective employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives.

 

The Committee believes that the most important factors in measuring the performance of its executive officers are improvement in the Company’s net income, return on average equity, and growth in average loans, deposits, and customer repurchase agreements. The focus of the Company’s strategic plan is on the growth of net income, average loans, deposits, and customer repurchase agreements. It is the Committee’s view that, in order to generate net income improvement, the Company should achieve growth in average loans and in deposits and customer repurchase agreements, among other initiatives. Growth in average loans is intended generally to produce improvement in interest income. Growth in average deposits and customer repurchase agreements, depending upon the mix of deposits and customer repurchase agreements, is intended generally to impact interest expense in a lesser amount than the improvement in interest income. The Committee endeavors to set targets relating to these factors that are weighted in their importance to the Company and that are attainable but challenging to achieve.

 

At the core of the Company’s compensation philosophy is the guiding belief that compensation should be directly linked to performance. This philosophy has guided many compensation-related decisions.

 

 

The Compensation Setting Process

 

The Committee makes all compensation decisions for the Chief Executive Officer and the President, Messrs. Cappelli and Millman, and approves recommendations regarding equity awards to all other officers of the Company. The Chief Executive Officer and the President make recommendations regarding the non-equity compensation of other named executive officers, which are subject to the Committee’s review and approval.

 

In the first quarter of each fiscal year, the Committee meets in executive session to evaluate the performance of the Chief Executive Officer and the President for the prior year, to determine their bonuses payable under the Key Executive Incentive Bonus Plan (“Incentive Plan”) based on, among other things, financial results for the prior fiscal year, to establish their Incentive Plan performance objectives for the current fiscal year, to set their base salaries for the next calendar year, to review the term of their employment agreements, and to consider and approve

any equity grants awarded to them. As part of establishing individual and corporate performance objectives for the year, the Committee engages in a dialogue with the Chief Executive Officer concerning strategic objectives and performance targets, reviews the appropriateness of the financial measures used in incentive plans, and considers the degree of difficulty in achieving specific performance targets.

 

Together with the performance objectives, the Committee establishes targeted incentive bonus levels (i.e., maximum achievable compensation) for each of the Chief Executive Officer and the President. In making this determination, the Committee is guided by the compensation philosophy described above. The Committee also considers historical compensation levels, competitive pay practices at the companies in the Company’s peer group, and the relative compensation levels among the Company’s named executive officers. The Committee may also consider industry conditions, corporate performance versus the peer group of companies, and the overall effectiveness of the compensation program in achieving desired performance levels.

 

Compensation decisions are generally made in the first quarter of the fiscal year, although the compensation planning process neither begins nor ends with any particular Committee meeting. Compensation decisions are designed to promote the Company’s fundamental business objectives and strategy. Business and strategic planning, evaluation of management performance, and consideration of changes in the business environment are year-round processes.

 

The Company’s management plays a significant role in the compensation setting process for the named executive officers other than that of the Chief Executive Officer and the President. The most significant aspects of management’s role in the compensation setting process are evaluating employee performance of the named executive officers, other than that of the Chief Executive Officer and the President, and recommending business performance goals and objectives, salary levels, bonuses, and option awards.

 

The Chief Executive Officer and the Chief Financial Officer work with the Committee chair in establishing the agenda for Committee meetings. At the request of the Committee, management also prepares meeting information for each Committee meeting. The Chief Executive Officer also participates in Committee meetings at the Committee’s request.

 

Committee Advisors

 

The Committee has the authority to hire and terminate any independent compensation consultants or advisors and approve their compensation. These consultants and advisors are engaged on behalf of the Committee and paid by the Company.

 

In 2008, the Committee engaged Total Compensation Solutions, LLC (“TCS”) to design a comparison group of companies based on asset size, geography, and similarity of business model. TCS is a consulting firm with expertise in executive compensation and benefits specializing in, among other areas, financial institutions including banks and thrifts. The company that had provided similar services to the Company in 2007 no longer provides such services. TCS will not do any compensation work for the Company except as authorized by the Committee. The Committee directed the Chief Financial Officer to coordinate with TCS and to provide any requested information to enable TCS to report to the Committee with the requested peer group compensation data. TCS provided a research report to the Committee regarding compensation at those companies.

 

Benchmarking

 

The Company and the Committee do not believe that it is appropriate to establish compensation levels solely based on benchmarking. The Company and the Committee do believe that reviewing other companies’ pay practices helps make sure that the Company pays reasonably and competitively.

 

The Committee reviews compensation levels for the Chief Executive Officer against compensation levels at the companies in the peer group identified by TCS. The current peer group includes financial institutions located near a major metropolitan area in the Northeastern states with total assets between $1.0 and $6.0 billion and/or having a similar business model to the Company’s.

Compensation should be Reasonable and Responsible

 

It is essential that the Company’s overall compensation levels be sufficiently competitive to attract and retain talented executives and motivate those executives to achieve superior results. At the same time, the Company and the Committee believe that compensation should be set at responsible levels. The Company’s executive compensation programs are intended to be consistent with the Company’s constant focus on controlling costs.

 

Performance-Based Incentive Compensation

 

The Incentive Plan is designed to provide incentive compensation for designated key executives of the Company that is directly related to the performance of the Company and of such employees. The Incentive Plan was first adopted by the Board of Directors in 2001 and approved by shareholders at the 2001 Annual Meeting of Shareholders, and was re-approved by the Company’s stockholders at the 2006 Annual Meeting of Shareholders.

 

The purpose of the Incentive Plan is to ensure that bonus payments made to certain key executive employees will be tax deductible to the Company under the Internal Revenue Code (the “Code”). Section 162(m) of the Code generally does not allow publicly held companies to obtain tax deductions for compensation of more than $1 million paid in any year to certain executive officers unless such payments are “performance-based” in accordance with the conditions specified under Section 162(m) and the related Treasury Regulations. The Committee, however, reserves the right to pay discretionary bonuses to named executive officers that are not deductible under Section 162(m) of the Code. The maximum bonus award payable to any single named executive officer participating in the Incentive Plan that is intended to qualify for the “performance-based” compensation exception to Section 162(m) of the Code is $2.0 million.

 

Incentive Awards and Performance Goals for Chief Executive Officer and the President.  Under the terms of the Incentive Plan, the Committee has the authority to establish performance goals each year based on certain objective performance criteria set forth in the Incentive Plan. The Committee will establish for each performance period a maximum award and goals relating to the Company, subsidiary, divisional, departmental, and/or functional performance for each participant (the “Performance Goals”) within the time frame permitted under Section 162(m) of the Code (the first 90 days of the Company’s fiscal year) and communicate such Performance Goals to each participant. Participants will earn bonus awards based only upon the attainment of the applicable Performance Goals during the applicable performance period.

 

The Performance Goals for Messrs. Cappelli and Millman are based on attainment of specific levels of performance of the Company with reference to one or more of the following criteria:

 

 

For each fiscal year, the Committee establishes Performance Goals for each criterion identified above based upon the Company’s average performance over the immediately preceding five years. To establish each Performance Goal, the average for each Performance Goal over the immediately preceding five years is multiplied by a target growth percentage determined by the Committee based upon the Company’s strategic plan for the year. The Committee then allocates performance points for each Performance Goal based upon the Committee’s determination of the relative importance of each Performance Goal. The allocation of performance points to each Performance Goal can change from year to year. The Committee also establishes a maximum bonus for each participant for the applicable year.

 

Incentive Awards and Performance Goals for Other Named Executive Officers.  For named executive officers other than the Chairman and the President, the Company uses a bonus system that evaluates the officer’s performance. The amount of the bonus award is based in part on the Company’s financial performance for the year relative to past performance. The Chairman and the President recommend bonus awards for the other named executive officers to the Committee for approval.

Determination of Performance Levels and Award Amounts.  As soon as practicable following the end of each fiscal year, the Committee evaluates the attainment of the Performance Goals, based upon information supplied by management of the Company, and calculates the bonus award, if any, payable to each participant. If any one of the Performance Goals for the year is attained, a bonus up to the maximum established at the beginning of the year may be paid. In determining the actual amount of bonus paid the Committee also evaluates at its discretion such other criteria as corporate responsibilities, overall management and achievement, including the initiation and implementation of successful business strategies, leadership, formation of an effective management team, personal qualities, and other factors. Bonus awards are paid in a lump sum cash payment as soon as practicable after the Committee determines the awards.

 

If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances, render the performance criteria to be unsuitable, the Committee may modify such performance criteria or the related minimum acceptable level of achievement, as the Committee deems appropriate or equitable. No such modification shall be made if the effect would be to cause a bonus award to fail to qualify as “performance-based” compensation under Section 162(m) of the Code. The Committee also retains the right in its discretion to reduce any bonus award and to pay bonuses not covered by the Incentive Plan.

 

Equity Compensation

 

The Company’s stockholders approved the Stock Incentive Plan (“SIP”) at the 1992 Annual Meeting of Shareholders, with amendments approved by shareholders at the various Annual Meetings of Shareholders between 1995 and 2002. The SIP is intended to strengthen the Company’s ability to attract and retain directors and employees of high competence and to increase the identity of interest of such directors and employees with those of the Company’s shareholders. Under the SIP, the Committee may grant awards in the form of Incentive Stock Options (“ISOs”), within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), Non-Qualified Stock Options (“NQSOs”), Stock Appreciation Rights, Restricted Stock, or a combination of these forms of awards.

 

On March 15, 2007, the Board of Directors granted non-qualified stock options under the SIP to certain officers at $17.99 per share, the closing price on March 15, 2007. Messrs. Applebaum and Robinson were the only named executive officers who were granted such options. The options become vested and exercisable five years after the date of grant. No other awards were made under the SIP in 2007. The exercise price for all options granted is based on the closing price on the date of the grant. The Committee generally considers stock option awards in the annual compensation review process. In making recommendations of stock awards, the Committee considers the impact of the expense of such awards on the Company.

 

Retirement Plans

 

Qualified Plan.  The Sterling Bancorp/Sterling National Bank Employees’ Retirement Plan (the “qualified plan”) is a defined benefit plan that covers eligible employees of Sterling Bancorp and Sterling National Bank and certain of its subsidiaries, who were hired prior to January 1, 2006. The qualified plan gives credit for credited service under terminated predecessor plans but provides, in substance, for a participant’s vested benefits under such plans to be offset against the benefits to be provided to the participant under the qualified plan. Accordingly, the retirement benefits for a continuing employee can be determined simply by reference to the provisions of the qualified plan. An employee becomes eligible for participation in the qualified plan upon the attainment of age 21 and the completion of one year of service. All contributions required by the qualified plan are made by the employers and no employee contributions are required or permitted.

 

Supplemental Plan.  The Internal Revenue Code imposes compensation and benefit limits on the retirement benefits payable to highly compensated employees under a qualified plan. The Company has a Supplemental Executive Retirement Plan for designated employees (the “SERP”), which provides for supplemental retirement payments to such persons in amounts equal to the difference between retirement benefits such persons actually receive under the qualified plan and the amount such individuals would have received if such Internal Revenue Code limitations were not in effect.

Employment Contracts and Change in Control Agreements

 

The Company has agreements with Messrs. Cappelli and Millman providing for employment terms extending until December 31, 2012 and December 31, 2010, respectively. In addition to providing an annual base salary, a discretionary annual bonus as determined by the Committee, and allowing participation in the health and benefit plans available to other executives of the Company, these agreements contain severance provisions and change in control provisions. These agreements were entered into upon the recommendation of the Board’s Committee in 1993, and approved by the Board of Directors. They were amended and restated in 2002 and were further amended, solely to extend the term by one additional year, in February 2003, February 2004, March 2005, March 2006, March 2007, and March 2008.

 

The Company has change in control severance agreements with certain other officers, including Messrs. Tietjen and Applebaum, providing for severance payments if the officer is terminated by the Company without cause or by the executive for good reason (which includes notice by the executive of termination within 30 days of the first anniversary of a change in control) within two years following a change in control. The Company has change in control severance and retention agreements with certain other officers, including Mr. Robinson. Upon the commencement of a transaction that could result in a change in control, Mr. Robinson agrees that he will not voluntarily leave the employ of the Company, other than for good reason, until such change in control occurs or such action is terminated or abandoned.

 

The employment and the change in control agreements provide for the payment of severance in the event of certain terminations and/or in connection with a change in control. A change in control means such events as the acquisition of more than 20% of the outstanding common shares of the Company unless directly from the Company, a reorganization, merger or consolidation of the Company, or the sale or disposition of all or substantially all of the assets of the Company. To retain the executive officers and ensure that executive officers can act in the best interests of the Company without distraction due to their personal employment situation, the Committee determined that certain severance payments were appropriate in the event of a change in control.

 

These severance arrangements are discussed in detail in “Potential Payments upon Termination or Change in Control,” beginning on page 13 of this proxy statement.

 

Perquisites and Other Personal Benefits

 

The Company provides the named executive officers with benefits that the Company and the Committee believe are reasonable and consistent with its overall compensation program. The Company and the Committee believe that these benefits are beneficial to the Company in attracting and retaining qualified executives.

 

Tax and Accounting Implications

 

In determining executive compensation, the Committee takes into consideration the deductibility of executive compensation under Section 162(m) of the Code that provides that the Company may not deduct compensation of more than $1,000,000 that is paid to certain individuals. The Company believes that the compensation paid to the named executive officers for 2007 was fully deductible for federal income tax purposes.

 

SUMMARY COMPENSATION TABLE

 

 

 

2007 Executive Compensation Components

 

For the fiscal year ended December 31, 2007, the principal components of compensation for named executive officers were:

 

 

In the Summary Compensation Table above, the performance-based incentive compensation for the Chief Executive Officer and the President awarded under the Incentive Plan is shown as Non-Equity Plan Compensation. The other named executive officers were awarded bonuses set forth in the Table.

 

No equity compensation was awarded to the named executive officers or any other employees during fiscal year 2007 except as described above under Equity Compensation.

 

Base Salary

 

The Company provides named executive officers and other employees with base salary to compensate them for services rendered during the fiscal year. During its review of base salaries for executives, the Committee primarily considers:

 

 

Salary levels are considered annually as part of the Company’s performance review process as well as upon a promotion or other change in job responsibility. Merit-based increases to salaries of the Chief Executive Officer and the President are based on the Committee’s assessment of the individual’s performance. In fiscal year 2007, the Committee did not award salary increases to the Chief Executive Officer or the President. Their salaries increased only in accordance with the terms of their employment agreements by the cost of living adjustments based on the increase in the 2007 Consumer Price Index for the geographic region, which increased their salaries by 3.3150% in 2007. For the other named executive officers, the Chief Executive Officer and the President recommend salary increases based upon the performance review process for approval by the Committee. On the recommendation of the Chief Executive Officer and the President, salary increases for fiscal year 2007 of $10,000, $50,000, and $10,000 were approved by the Committee for Messrs. Tietjen, Applebaum, and Robinson, respectively.

 

Employment Agreements

 

Messrs. Cappelli and Millman are compensated in accordance with their respective employment agreements as described in the Compensation Discussion and Analysis. For additional information regarding the terms of these agreements, please see “Potential Payments upon Termination or Change in Control” beginning on page 13 of this proxy statement.

 

GRANTS OF PLAN-BASED AWARDS FOR FISCAL YEAR 2007

 

 

 

 

For 2007, Messrs. Cappelli and Millman were eligible for awards under the Incentive Plan. The Committee established Performance Goals based upon targets that it estimated to be attainable but challenging to achieve, compared to the five-year average performance for each goal from 2002 to 2006. The Committee allocated performance points giving greatest weight to growth of total average loans, net income, and return on average equity. The Committee gave lesser weight to growth of average deposits and customer repurchase agreements, and the least weight to growth of return on average assets.

 

The Committee determined that certain of the Performance Goals established for 2007 had been attained. The Committee also recognized that the Company had achieved record growth in gross revenue, loans, and deposits in 2007, as well as significant achievements in expense control. In addition, in 2007 the Company benefited from the acquisition of Sterling Resource Funding Corp. and the disposition of the business of Sterling Financial Services, transactions which were completed in the prior year. The Committee believes that these were significant accomplishments by the Company’s leadership in the strategic realignment of the Company’s business, particularly in the uncertain economic and interest rate environment that impacted all financial institutions in 2007.

 

Under the Incentive Plan, if any one or more of the Performance Goals established in March 2007 by the Committee was attained for 2007, the Committee could award a bonus for 2007 of not more than $1,500,000 to Mr. Cappelli and not more than $750,000 to Mr. Millman. Since one or more of the 2007 Performance Goals was attained, the actual amount of bonus awarded by the Committee to Mr. Cappelli and Mr. Millman under the Plan may be any amount determined by the Committee, based on any criteria determined by the Committee, subject to the maximum dollar amounts noted above.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END FOR FISCAL YEAR 2007

 

 

 

 

OPTION EXERCISES AND STOCK VESTED FOR FISCAL YEAR 2007

 

 

PENSION BENEFITS FOR FISCAL YEAR 2007

 

 

 

 

Material Terms of Pension Benefits

 

The Company maintains a qualified and a non-qualified retirement plan for certain employees. Employees of the Bank are covered under a 401(k) savings plan, with an employer match for employees hired after January 1, 2006. The named executive officers are also in the 401(k) plan, but do not receive the match.

 

The Sterling Bancorp/Sterling National Bank Employees’ Retirement Plan (“the qualified plan”) is funded by a trust and covers substantially all regular employees of the Bank hired prior to January 1, 2006. Eligible employees who have attained age 21 become members of the qualified plan on the January 1st or July 1st following one year of employment. Service for purposes of vesting and eligibility (“Vesting Service”) begins at date of employment. Service for purposes of the amount of the retirement benefit (“Credited Service”) begins at date of membership. Employees are fully vested in their accrued retirement benefit once they earn five years of Vesting Service. Employees do not contribute to the qualified plan and Company contributions are determined on an actuarial basis.

 

Under the qualified plan, normal retirement is age 65. Benefits under the qualified plan are calculated under a defined formula based on years of Credited Service and final average compensation. An employee’s final average compensation is based upon the employee’s average annual earnings (excluding bonuses, commissions, and other special pay) during the 60 consecutive months out of the 120 consecutive months before retirement in which such earnings were the highest. The normal form of payment is a life annuity with 120 monthly payments guaranteed or a 50% joint and survivor annuity depending on the employee’s marital status when payments begin. Benefits accrued as of December 31, 1984 were assumed by the John Hancock Insurance Company in a termination/re-establishment of the qualified plan. All benefits provided under the qualified plan are net of any benefit accrued as of December 31, 1984.

 

The annual normal retirement benefit is equal to the sum of (a) and (b) below multiplied by years of Credited Service and reduced by (c):

 

a. 1.2% of final average compensation

 

b. 0.3% of final average compensation in excess of $8,000

 

c. The accrued benefit under the prior plan as of December 31, 1984

 

Retirement prior to age 65 is permitted (“Early Retirement”) if the employee has attained age 50 with 20 years of Vesting Service when his employment ends. If the employee was a member of the prior plan on December 31, 1984, Early Retirement eligibility is age 55 with 10 years of Vesting Service. Early Retirement Benefits are based on the same formula as normal retirement, except that if payments begin prior to age 65, the benefit is reduced actuarially to reflect the longer period of time for which payments are expected to be made.

 

Various optional forms of payment are available upon retirement including a single life annuity, 10-year certain and life annuity, and 50%, 75%, and 100% joint & survivor annuities. All optional forms are calculated as the actuarial equivalent of the normal form of payment.

 

To the extent benefits payable under the qualified plan are limited by Section 415(b) of the Internal Revenue Code, the amount that cannot be paid from the qualified plan is paid from the Sterling Supplemental Pension Benefit Plan (the “SERP”). The SERP also pays benefits that cannot be paid from the qualified plan due to Section 401(a)(17) limitations for members of the select management group only. The eligibility, service and commencement provisions of the SERP mirror those of the qualified plan. Benefits under the SERP are based on the same formula as the qualified plan, except that for purposes of the final average compensation calculation, bonuses are considered pensionable pay. Optional forms of payment under the SERP are the same as the qualified plan, except that a lump sum is also available.

 

Potential Payments upon Termination or Change in Control

 

In accordance with the agreements described above under “Employment Contracts” and “Change in Control Agreements”, payments will be due to the named executive officers upon certain termination or change in control events. The amount due to each named executive officer varies depending upon the terms of his contract, his tenure and compensation history with the Company, and the type of triggering event.

Upon termination due to death or disability, Messrs. Cappelli and Millman, are each entitled to his monthly base salary for 6 months following the date of termination in the case of death, and 50% of his base salary for 6 months in the case of termination due to disability. If Messrs. Cappelli or Millman is terminated by the Company without cause or resigns for good reason, they are each entitled to (i) receive severance payments with a present value equal to his base salary through the end of his employment term described above, to be paid in accordance with the Company’s regular payroll practices, (ii) a pro rata bonus for the year of termination (based on the highest annual bonus earned in the preceding three fiscal years), (iii) the continuation of health and other welfare benefits until the contract expiration date, and (iv) the full amount due under any profit-sharing or similar plan calculated as if the executive was terminated on the last day of the calendar year. If Messrs. Cappelli or Millman is terminated without cause or resigns for good reason within two years following a change in control, or resigns for any reason within 13 months following a change in control, he is entitled to, among other things, a cash payment in an amount equal to the severance payments described in clauses (i), (ii), and (iv) of the preceding sentence, the continuation of benefits described in clause (iii) of the preceding sentence, and a cash payment equal to three times the executive’s highest annual bonus earned during the three fiscal years preceding the date of termination. In addition, the executive will be entitled to the present value of the benefits he would have been entitled to under the Company’s retirement and supplemental retirement plans, as well as continuation of his life and health insurance plans, for the remaining term of his employment agreement. Upon such termination after a change in control, the severance payment described in clause (i) above will be paid to Messrs. Cappelli and Millman in a lump sum in an amount equal to the base salary that would have been payable to him for the longer of the remaining term of his employment agreement or 36 months.

 

If terminated by the Company without cause or by the executive for a good reason (which includes notice of termination within 30 days before the first anniversary of a change in control) within two years following a change in control, Messrs. Tietjen and Applebaum are entitled to lump sum payments equal to two times the annual base salary of the executive, a pro rata bonus for the year in which the termination occurred, two times the highest annual bonus earned by the executive during the three fiscal years preceding termination, and the present value of the benefits the executive would have been entitled to under the Company’s retirement and supplemental retirement benefit plans if his employment had continued for two years. In addition, the executive will be entitled to continuation of his medical, insurance, and other welfare benefits for two years after termination. These agreements can be cancelled by the Company upon three years notice but continue for two years after a change in control that occurs during the term of the agreement.

 

If within one year following a change in control Mr. Robinson’s employment is terminated, the Company will pay Mr. Robinson a cash severance amount equal to his highest annual base salary during the 12-month period immediately prior to termination. If Mr. Robinson remains employed for one year after a change in control, the Company will pay him a retention bonus equal to his highest annual base salary during the period commencing one year prior to a change in control and ending on the date of payment of the retention bonus.

 

In the event that any compensation payments made to, or benefits provided to, Messrs. Cappelli, Millman, Tietjen, and Applebaum in connection with a change in control would be subjected to the excise tax imposed by Section 4999 of the Internal Revenue Code (“IRC Section 4999”), the Company will provide a “gross up” payment in an amount such that, after withholding for or payment of all federal, state, and local income, and excise taxes, and any penalties and interest on the gross up payment, the remaining amount is equal to the IRC Section 4999 excise tax on the compensation payments; provided, however, that if Messrs. Tietjen and Applebaum would not be subject to the excise tax if their payments and benefits were reduced by up to 5%, their payments and benefits will be so reduced and they will receive no gross up.

 

Upon the termination of each named executive officer’s employment, he will be entitled to his qualified and non-qualified (if applicable) pension benefits, as described above in the Pension Benefit Table. In addition to those benefits, the discussion below describes the estimated amount of severance benefits and the value of continued benefits that would have been payable to each of the named executive officers if employment had been terminated by the Company without cause or by him for good reason (a “Good Reason Event”) or in connection with a change in control under the circumstances described above (a “CIC Event”) on December 31, 2007.

 

Upon a Good Reason Event, Mr. Cappelli would receive severance pay with a present value of $2,816,878, $825,000 as the value of his pro rata bonus for the year of termination, $26,209 as the estimated value of group life

and group medical coverage, and $192,884 representing the value of the continuation of his club memberships and automobile benefits, for a total of $3,860,971. Upon a CIC Event, he would receive a total of $7,355,204, consisting of severance pay of $3,081,080, a severance bonus of $2,475,000, $716,678 as a severance payment attributable to the crediting of additional years of service under the qualified plan and SERP, $825,000 as the value of his pro rata bonus for the year of termination, $26,209 as the estimated value of group life and group medical coverage, $38,353 representing life insurance premiums on split dollar life insurance policies held on his behalf that will continue to be paid by the Company, and $192,884 representing the value of the continuation of his club memberships and automobile benefits.

 

Upon a Good Reason Event, Mr. Millman would receive severance pay with a present value of $911,303, $350,000 as the value of his pro rata bonus for the year of termination, $16,661 as the estimated value of group life and group medical coverage, and $48,898 representing the value of the continuation of his club membership and automobile benefits, for a total of $1,326,862. Upon a CIC Event, he would receive a total of $3,489,441, consisting of severance pay of $1,430,727, $1,050,000 as a severance bonus, $334,178 as a severance payment attributable to the crediting of additional years of service under the qualified plan and SERP, $350,000 as the value of his pro rata bonus for the year of termination, $24,446 as the estimated value of group life and group medical coverage, $228,347 representing life insurance premiums on split dollar life insurance policies held on his behalf that will continue to be paid by the Company, and $71,743 representing the value of the continuation of his club membership and automobile benefits.

 

Upon a CIC Event, Mr. Tietjen would receive a total of $951,603, consisting of severance pay of $499,000, a severance bonus of $164,000, $82,000 as the value of pro rata bonus for the year of termination, $8,337 as the estimated value of group life and group medical coverage, $39,098 as the present value of unreduced early retirement under the SERP, $116,436 as a severance payment attributable to the crediting of additional years of service under the qualified plan and SERP, and $42,732 representing life insurance premiums on split dollar life insurance policies held on his behalf that will continue to be paid by the Company.

 

Upon a CIC Event, Mr. Applebaum would receive a total of $1,829,279, consisting of severance pay of $580,000, a severance bonus of $200,000, $100,000 as the value of his pro rata bonus for the year of termination, $15,171 as the estimated value of group life and group medical coverage, $230,240 as the present value of unreduced early retirement under the SERP, $50,237 as a severance payment attributable to the crediting of additional years of service under the qualified plan and SERP, $107,348 representing life insurance premiums on split dollar life insurance policies held on his behalf that will continue to be paid by the Company, and $546,283 representing the amount payable as an excise tax gross up (excise tax calculated in accordance with IRC Section 4999).

 

Upon a CIC Event, Mr. Robinson would receive severance pay with a present value of $254,496.

The Compensation Committee

 

Committee Members and Independence.  Walter Feldesman (chair), Allan F. Hershfield, and Henry L. Humphreys are the members of the Committee. Each member of the Committee qualifies as an independent director under New York Stock Exchange listing standards and the Company’s Corporate Governance Guidelines.

 

Role of Committee.  The Committee operates under a written charter adopted by the Board of Directors. A copy of the charter is available at www.sterlingbancorp.com under Investor Relations — Governance — Corporate Governance Nominating Charter. The fundamental responsibilities of the Committee are:

 

 

Committee Meetings.  The Committee meets as often as necessary to perform its duties and responsibilities. The Committee held two meetings during fiscal 2007 and has held three meetings so far during fiscal 2008. The Committee typically meets with the Chief Executive Officer and, where appropriate, with the Chief Financial Officer and with outside advisors. The Committee regularly meets in executive session without management.

 

The Committee receives and reviews materials in advance of each meeting. These materials include information that management believes will be helpful to the Committee as well as materials that it has specifically requested. Depending on the agenda for the particular meeting, these materials may include:

 

 

Compensation Committee Interlocks and Insider Participation

 

None of the current members of the Compensation Committee, Messrs. Feldesman, Humphreys, and Hershfield, is, or has been, an officer or employee of the Company, and each has been determined by the Board to be independent under the rules of the Securities and Exchange Commission and the New York Stock Exchange. See “Corporate Governance Practices — Director Independence”.

 

COMPENSATION COMMITTEE REPORT

 

The Committee has reviewed and discussed the Compensation Discussion and Analysis with the Company’s management and, based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

Dated: March 10, 2008

 

Meetings and Attendance of Directors; Certain Committees; Corporate Governance Practices; Fees

 

During the year ended December 31, 2007, the Board of Directors of the Company held five regularly scheduled meetings. In addition, various committees of the Board met at regular meetings. No director attended fewer than 75% of the meetings he was required to attend.

 

The Company has standing Audit, Compensation, Corporate Governance and Nominating, Executive, and Retirement Committees.

 

Audit Committee.  The members of the audit committee (the “Audit Committee”) are Messrs. Adamko (chair), Feldesman, Humphreys, and Rossides. The Audit Committee held four meetings during the year ended December 31, 2007. In carrying out its responsibilities, the Audit Committee engaged KPMG as the Company’s independent registered public accounting firm. The Board has determined that each of the members of the Audit Committee is “independent” as that term is defined in the applicable New York Stock Exchange (the “NYSE”) listing standards and regulations of the Securities and Exchange Commission (the “SEC”) and all members are financially literate as required by the applicable NYSE listing standards. In addition, the Board has determined that at least one member of the Audit Committee has the financial expertise required by the applicable NYSE listing standards and is an “Audit Committee Financial Expert” as defined by applicable standards of the SEC. The Board has designated the Audit Committee chairman, Mr. Adamko, as an Audit Committee Financial Expert.

 

Compensation Committee.  The members of the compensation committee (the “Compensation Committee”) are Messrs. Feldesman (chair), Humphreys, and Hershfield. The Board of Directors has determined that all members of the Compensation Committee are “independent” as that term is defined by the applicable NYSE listing standards. The Compensation Committee reports to the Board on issues concerning executive officer compensation, including the relationship between compensation and performance and the measures of performance to be considered, and concerning the compensation and other key terms of employment agreements. (See “Compensation Discussion and Analysis” beginning on page 3 of this Proxy Statement.) The Compensation Committee held two meetings during the year ended December 31, 2007.

 

Corporate Governance and Nominating Committee.  The members of the corporate governance and nominating committee (the “Corporate Governance and Nominating Committee”) are Messrs. Rossides (chair), Abrams, and Humphreys. The Board has determined that all of the members of the Corporate Governance and Nominating Committee are “independent” as the term is defined by the applicable NYSE listing standards. The Corporate Governance and Nominating Committee evaluates the following criteria, as set forth in the Company’s Corporate Governance Guidelines, in making recommendations to the Board of Directors for director nominees:

 

 

The Corporate Governance and Nominating Committee recommended, and the Board of Directors approved, fixing the number of directors at nine as of the 2008 Annual Meeting. The Committee will evaluate, using the above mentioned criteria, nominees for director submitted by shareholders pursuant to the procedure outlined under “2009 Annual Meeting” on page 27 of this Proxy Statement.

 

The Corporate Governance and Nominating Committee held two meetings during the year ended December 31, 2007.

Retirement Committee.  The members of the retirement committee (the “Retirement Committee”) are Messrs. Cappelli (chair), Millman, Hershfield, Tietjen, and Ms. Mindy Stern (Senior Vice President, Human Resources Director). The Retirement Committee is an administrative committee that meets periodically to review applications submitted by plan members for distribution under the Company’s Retirement Plan and any amendments to the Retirement Plan. The Retirement Committee also serves as the Fiduciary for the Company’s 401(k) Plan. The Retirement Committee held three meetings during the year ended December 31, 2007.

 

Executive Committee.  The members of the executive committee (the “Executive Committee”) are Messrs. Cappelli (chair), Millman, Adamko, Feldesman, Humphreys, and Rossides. The Executive Committee has the authority to act on most matters that the full Board of Directors could have acted on during intervals between Board meetings. During the year ended December 31, 2007, the Executive Committee held one meeting.

 

All of the Directors on the slate were in attendance at the 2007 Meeting of Shareholders. There is no corporate policy concerning Board Members’ attendance at Annual Shareholder Meetings.

 

Corporate Governance Practices

 

The Board of Directors has long been committed to sound and effective corporate governance practices.

 

The Company’s management has closely reviewed, internally and with the Board of Directors, the provisions of the Sarbanes-Oxley Act of 2002, the related SEC rules, and the NYSE corporate governance listing standards regarding corporate governance policies and procedures. As a result of this review process, the Board of Directors determined that it was not necessary to modify the charters of the Audit Committee, Corporate Governance and Nominating Committee, or the Compensation Committee charter to add references to its role in reviewing the Compensation Discussion and Analysis in accordance with new SEC rules. The Board of Directors continues to monitor guidance from the SEC, the NYSE, and other relevant agencies regarding corporate governance procedures and policies and will continue to assess these charters to ensure full compliance with the applicable requirements.

 

Director Independence.  A majority of the members of the Board of Directors have historically been independent and key committees are comprised solely of independent directors in accordance with applicable SEC and NYSE rule requirements. The Board of Directors has determined that a majority of the current directors are “independent” as that term is defined by applicable SEC and NYSE rules. These independent directors are:

 

Robert Abrams

Joseph M. Adamko

Walter Feldesman

Fernando Ferrer

Allan F. Hershfield

Henry J. Humphreys

Robert W. Lazar

Eugene T. Rossides

 

Code of Ethics.  In November 2003, the Board of Directors adopted a Code of Ethics for the Company’s Board of Directors, officers, and employees in order to promote honest and ethical conduct and compliance with the laws and governmental rules and regulations to which the Company is subject. All directors, officers, and employees of the Company are expected to be familiar with the Code of Ethics and to adhere to its principles and procedures.

 

Corporate Governance Guidelines.  The Board of Directors adopted a comprehensive set of Corporate Governance Guidelines on November 21, 2003. These guidelines address a number of important governance issues including director independence, criteria for Board membership, dealings of the Board in executive session, expectations regarding attendance and participation in meetings, authority of the Board of Directors and committees to engage outside independent advisors as they deem appropriate, succession planning for the Chief Executive Officer, and annual Board evaluation. The non-management directors designate the director who will preside at the executive sessions. The Corporate Governance and Nominating Committee will consider nominations submitted by shareholders in accordance with the procedures set forth in the Company’s Bylaws, as described under 2009 Annual Meeting on page 27. Such nominations will be evaluated in accordance with criteria for director selection described in the guidelines.

Transactions with Related Persons.  The Board of Directors has approved a “Related Person Transaction Policy” that covers any transactions in which (i) the Company or a subsidiary is a participant, (ii) the aggregate amount involved exceeds $120,000, and (iii) any “Related Person” has a direct or indirect material interest. A “Related Person” is any director or executive officer of Company, any nominee for director, any shareholder owning an excess of 5% of the total equity of Company, and an “immediate family member” of any such person.

 

In deciding whether to approve or ratify any Related Person Transaction, the Board of Directors, a committee thereof, or a designated director, are to consider the following factors, to the extent relevant to the transaction:

 

 

All transactions subject to the Related Person Transaction Policy must be approved or ratified by the Board of Directors. If the transaction involves a Related Person who is a director or an immediate family member of a director, such director may not participate in the deliberations or vote respecting such approval or ratification, provided, however, that such director may be counted in determining the presence of a quorum at a meeting of the Board of Directors that considers such transaction. In the discretion of the Board of Directors, the consideration of such transaction may be delegated to a committee of the Board of Directors. In the event management determines it is impractical or undesirable to wait until a Board of Directors or committee meeting to approve a Related Person Transaction, the chair of the committee may review and approve the transaction in accordance with the criteria set forth herein.

 

Procedures for Communications to the Board of Directors, Audit Committee, and Non-Management Directors.  The Board of Directors has adopted procedures for the Company’s shareholders and other interested parties to communicate regarding (i) accounting, internal accounting controls, or auditing matters to the Board’s Audit Committee and (ii) other matters to the non-management directors of the Board of Directors entitled “Method for Interested Persons to Communicate with Non-Management Directors and Audit Committee Procedures for Treatment of Complaints Regarding Accounting, Internal Accounting Controls, or Auditing Matters”. Communications should be made, pursuant to such procedures, to the Company’s Director of Human Resources at 145 East 40th Street, New York, New York 10016, or by e-mail to HRdir.corpgov@sterlingbancorp.com. The Company also adopted a separate procedure for employees to confidentially communicate concerns regarding questionable accounting and auditing matters on an anonymous basis.

 

Copies of the Company’s current corporate governance documents, including the Company’s Corporate Governance Guidelines, Code of Ethics, Method for Interested Persons to Communicate with Non-Management Directors, as well as the current charters of the Audit, Corporate Governance and Nominating, and Compensation Committees are available on the Investor Relations section of the Company’s website at www.sterlingbancorp.com/ir/investor.cfm — Governance. Requests by shareholders for printed versions of these documents should be made to the attention of the Corporate Secretary of the Company.

Director Fees and Options

 

Directors who are not salaried officers receive fees for attending Board of Directors and committee meetings. Each eligible director received $1,475 for each board meeting attended and $950 for each committee meeting attended. Effective November 15, 2007, the Board of Directors approved increases to the stipends paid to non-employee directors as a result of an analysis of fees paid to directors of banks of similar size based on the recommendation of the Corporate Governance and Nominating Committee. Prior to October 1, 2007, each eligible director received an annual stipend of $500 payable in December of each year; after October 2007, each eligible director received an annual stipend of $5,000 payable quarterly in arrears. Directors are paid $475 for attendance via telephone. Expenses of directors incurred in traveling to Board of Directors and committee meetings are reimbursed by the Company. The chair of the Audit Committee receives an annual stipend of $5,000 for services, and the chairs of the Compensation Committee and Corporate Governance and Nominating Committee also receive an annual stipend of $2,000 for services.

 

Pursuant to the adoption of an automatic grant of options in 2002, non-employee directors were granted options for 4,725 Common Shares (after adjustment for share splits and share dividends) on the last day a trade is reported in June for each of the years 2003 through 2006. The last grant was made on June 30, 2006. The options are nonqualified share options exercisable in four equal installments, commencing on the first anniversary of the date of grant and expiring on the fifth anniversary of such date; provided, however, that they become immediately exercisable in the event of a change in control of the Company. The exercise price is equal to 100% of the fair market value of the Common Shares on the date of grant. Upon termination of the services of a director who is not also a salaried officer, all options then exercisable may be exercised for a period of three months, except that if termination is by reason of death, the legal representative of such deceased director has six months to exercise all options regardless of whether the decedent could have exercised them.

 

DIRECTOR COMPENSATION FOR FISCAL YEAR 2007

 

 

 

Audit Fees

 

The following shows information about fees billed to the Company by KPMG LLP (“KPMG”).

 

 

 

 

The Audit Committee has considered whether KPMG’s provision of non-audit services is compatible with maintaining the auditor’s independence.

 

KPMG has been selected as the Company’s auditors for fiscal year 2008. The Company’s shareholders, at the Annual Meeting, will vote on the ratification of the selection of KPMG as the Company’s independent registered public accounting firm for 2008.

 

Pre-Approval of Audit and Non-Audit Services

 

In accordance with the Company’s Audit Committee charter, the Audit Committee pre-approves all audit and non-audit services before the independent registered public accounting firm is engaged by the Company to render such services.

 

AUDIT COMMITTEE REPORT

 

The Committee operates pursuant to a charter that was originally adopted by the Board of Directors on May 18, 2000, as amended on November 15, 2001, and further amended and restated on November 21, 2003, and again on March 15, 2005. The role of the Audit Committee, as set forth in its charter, is to assist the Board of Directors in its oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications and independence, and (iv) the performance of the independent auditors and the Company’s internal audit function and to prepare this report. The Board of Directors, in its business judgment, has determined that all members of the Committee are “independent”, as required by applicable listing standards of The New York Stock Exchange and the Federal securities laws and the rules and regulations promulgated thereunder.

 

The charter is available on the Company’s website at www.sterlingbancorp.com/ir/AuditCommitteeCharter.Pdf. As set forth in the charter, management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, and the effectiveness of internal control over financial reporting. Management is responsible for maintaining the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements, expressing an opinion as to their conformity with generally accepted accounting principles, and annually auditing management’s assessment of the effectiveness of internal control over financial reporting in accordance with PCAOB Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.

In the performance of its oversight function, the Committee has considered and discussed the audited financial statements with management and the independent registered public accounting firm. The Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as adopted by the PCAOB and currently in effect. The Committee has received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as adopted by the PCAOB and currently in effect, and has discussed with the independent registered public accounting firm the firm’s independence from the Company and its management in accordance with the applicable rules and regulations of the SEC and PCAOB implementing the auditor independence requirements prescribed by the Sarbanes-Oxley Act of 2002. Any non-audit services performed by the independent registered public accounting firm has been specifically pre-approved by the Audit Committee.

 

The members of the Audit Committee are not professionally engaged in the practice of auditing or accounting and are not employed by the Company for accounting, financial management, internal control, or to set auditor independence standards. Members of the Committee rely without independent verification on the information provided to them and on the representations made by management and the independent registered public accounting firm. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate (i) accounting and financial reporting principles and policies designed to assure compliance with accounting standards and applicable standards and applicable laws and regulations or (ii) internal control over financial reporting. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards of the PCAOB, that the financial statements are presented in accordance with generally accepted accounting principles, or that the Company’s independent registered public accounting firm is in fact “independent”.

 

The Audit Committee’s meetings include, whenever appropriate, executive sessions with the Company’s independent registered public accounting firm and with the Company’s internal auditors, in each case without the presence of the Company’s management.

 

Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Committee referred to above and in the charter, the Committee is recommending to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 to be filed with the Securities and Exchange Commission.

 

Dated: March 12, 2008

 

 

Transactions with the Company and Other Matters

 

From time to time, officers and directors of the Company and their family members or associates have purchased, or may purchase, short-term notes of the Company and certificates of deposit from the Bank on the same terms available to other persons. The Bank and its mortgage subsidiary also make loans from time to time to related interests of directors and executive officers. Such loans are 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 other persons and do not involve more than the normal risk of collectability or present other unfavorable features.

Security Ownership of Directors and Executive Officers and Certain Beneficial Owners

 

The following table sets forth, as of March 20, 2008, holdings of the Company’s Common Shares by each present director and each of the executive officers named in the Summary Compensation Table on page 8 and by all directors and executive officers as a group. The Common Shares are traded on The New York Stock Exchange and the closing price on March 20, 2008 was $17.38 per share.

 

 

 

 

In addition, the shares shown as owned by Mr. Adamko include 2,832 Common Shares owned by his wife, the shares shown as owned by Mr. Cappelli include 711 Common Shares owned by his wife, and the shares shown as owned by Mr. Millman include 329 Common Shares owned by his wife and 1,197 Common Shares owned by his wife’s Individual Retirement Account, beneficial ownership of which each of them disclaims.

The following table sets forth the persons or groups known to the Company to be the beneficial owner of more than five percent of the outstanding Common Shares based upon information provided by them to the Company as of March 20, 2008.

 

 

 

 

Except as set forth above, the Company does not know of any person that owns more than 5% of any class of the Company’s voting securities.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Based solely on the review of the Forms 3, 4, and 5 furnished to the Company and certain representations made to the Company, the Company believes that there were two filing deficiencies in 2007 under Section 16(a) of the Securities Exchange Act of 1934 by its directors, executive officers, and 10 percent holders. Transactions involving Joseph M. Adamko, director and Robert W. Lazar, director, were inadvertently reported late on Form 4.

 

2 — PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

 

The Audit Committee of the Board of Directors has appointed KPMG LLP to serve as the Company’s independent registered public accounting firm for the fiscal year 2008 and the Board of Directors recommends that shareholders ratify such appointment at the Annual Meeting.

 

Action by the shareholders is not required by law in the appointment of an independent registered public accounting firm, but their appointment is submitted by the Audit Committee of the Board of Directors in order to give the shareholders a voice in the designation of auditors. If the resolution ratifying the appointment of KPMG LLP as the Company’s independent registered public accounting firm is rejected by the shareholders, then the Audit Committee may reconsider its choice of independent registered public accounting firms. Even if the resolution is approved, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders. Proxies in the form solicited hereby that are returned to the Company will be voted in favor of the resolution unless otherwise instructed by the shareholder.

 

Representatives of KPMG LLP are expected to attend the Annual Meeting, to have an opportunity to make a statement, if they desire to do so, and to be available to respond to appropriate questions.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU MARK YOUR PROXY FOR THE RATIFICATION OF
THE APPOINTMENT OF AN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

 

GENERAL

 

2009 Annual Meeting

 

Any shareholder who may desire to submit under the Securities and Exchange Commission’s shareholder proposal rule (Rule 14a-8) a proposal for inclusion in the Company’s proxy and proxy statement for the 2009 Annual Meeting of Shareholders currently scheduled to be held on April 30, 2009, must present such proposal in writing to the Company at 650 Fifth Avenue, New York, New York 10019-6108, Attention: Dale C. Fredston, Corporate Secretary, no later than the close of business on December 9, 2008. Under the Company’s Bylaws, any shareholder who desires to submit a proposal outside of the process provided by the Securities and Exchange Commission’s shareholder proposal rule (Rule 14a-8) or desires to nominate a director at the 2009 Annual Meeting of Shareholders must provide timely notice thereof in the manner and form required by the Company’s Bylaws by March 3, 2009 (but not before February 4, 2009). If the date of the 2009 Annual Meeting should change, such deadlines would also change.

 

Other

 

Management knows of no other business to be presented to the Annual Meeting of Shareholders, but if any other matters are properly presented to the meeting or any adjournments thereof, the persons named in the proxies will vote upon them in accordance with the Board of Directors’ recommendations.

 

The cost of the solicitation of proxies will be borne by the Company. In addition to solicitation by mail, directors, officers, and employees of the Company may solicit proxies by personal interview, telephone, or electronic mail. The Company reimburses brokerage houses, custodians, nominees, and fiduciaries for their expenses in forwarding proxies and proxy material to their principals. The Company has retained Morrow & Co., Inc. to assist in the solicitation of proxies, which firm will, by agreement, receive compensation of $3,500, plus expenses, for these services.

 

The Annual Report to Shareholders (which is not a part of the proxy soliciting material) for the fiscal year ended December 31, 2007 accompanies this Notice and Proxy Statement.

 

The Company files with the Securities and Exchange Commission an annual report on Form 10-K. A copy of the report for the fiscal year ended December 31, 2007, including the financial statements and schedules thereto, will be furnished, without charge, to any shareholder sending a written request therefore to John W. Tietjen, Executive Vice President and Chief Financial Officer, Sterling Bancorp, 650 Fifth Avenue, New York, New York 10019-6108.

 

Sterling Bancorp

 

Dated: April 4, 2008

 

NOTICE OF INTERNET AVAILABILITY

 

Electronic Access to Proxy Statement and Annual Report

 

This proxy statement and our 2007 annual report may be viewed at www.sterlingbancorp.com/proxy08 and www.sterlingbancorp.com/ar07, respectively. If you are a shareowner of record, you can elect to access future annual reports and proxy statements electronically by marking the appropriate box on your proxy form or by following the instructions provided if you vote by Internet or by telephone. If you choose this option, your choice will remain in effect until you notify us by mail that you wish to resume mail delivery of these documents. If you hold your Sterling Bancorp stock (STL) through a bank, broker or another holder of record, refer to the information provided by that entity for instructions on how to elect this option.

 

 

STERLING BANCORP

 

650 Fifth Avenue, New York, NY 10019-6108