Activist investor Lawrence Seidman plans to urge shareholders to vote against a second benefit plan that would provide thebank's directors with additional options and restricted stock. Seidman believesthe directors have "over-compensated themselves" overthe last 10 years, according to an April 4 letter to the bank's president andCEO, Craig Montanaro.
Montanaro did not immediately respond to a request forcomment.
Kearny Financial began trading as a mutual holding companyin 2005, issuing 70% of shares to the mutual holding company and selling 30% tothe public. That same year, shareholders approved a stock compensation andincentive plan for directors and management. In the letter, Seidman explainedthat the options and restricted stock awards in that 2005 plan represent anunusually high percentage for a mutual holding company. He said that theFairfield, N.J.-based bank calculated the amount of options and RSA shares"as if it had issued 49% of its outstanding shares to the public,"but in reality, "only issued 30% of the outstanding shares to the public."
"Because of the use of the 49% calculation, each KRNYdirector received $468,235 in excess benefits ($205,239 in Options and $262,996in RSA shares)," Seidman wrote. "[A]nd Mr. Hopkins, a director andKRNY's then President and Chief Executive Officer (CEO), received approximately$2.4 million in excess benefits."
The activist investor went on to explain "the absurdityof the compensation package" by highlighting the total annual compensationfor the bank's board of directors and CEO between the years 2006 and 2015,comparing the compensation totals to the bank's net income performance.
In May 2015, Kearny Financial completed its , and therelated prospectus disclosed that the bank would seek shareholder approval fora second benefit plan. Seidman argued that directors who were in place beforethe second-stage conversion should not receive additional benefits in thesecond benefit plan.
"It is abundantly clear that the directors and Mr.Hopkins were rewarded handsomely for poor performance," he wrote, lateradding, "It is about time the directors stopped getting paid for'breathing and showing up' instead of performance and that those directors whowere responsible for this travesty should be held accountable to shareholders."
Seidman, through firm Veteri Place Corp., held 940,409 shares of KearnyFinancial at year-end 2015, representinga 1.01% stake in the bank.