2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 308 EXECUTIVE COMPENSATION B. THE BUSINESS CONTEXT AND GOVERNANCE FRAMEWORK FOR OUR COMPENSATION DECISIONS ➣ Our Unique Business Model and Approach to Driving Shareholder Value We have historically built value for shareholders by executing on a unique business model that has provided consistently superior financial results over the long-term. The strength of our business model has enabled us to weather periods of economic downturn with greater success than our peers and to benefit from periods of economic expansion. The performance metrics we use to drive our incentive compensation programs encourage behavior that supports our business model. ‰ Building shareholder value – We have built long-term value for our shareholders with our growth through acquisition strategy and by maintaining the strength of our core business over decades . ‰ Maintaining leadership in our core business niche – We have been a leader in the New York City multi- family lending market for more than 40 years. ‰ Maintaining exceptional asset quality – Through conservative underwriting and operating standards, we have maintained exceptionally strong asset quality to ensure that our core sources of income will remain healthy through the long term. Even during challenging credit cycles, our asset quality measures remains exceptionally strong and better than those of our peers. ‰ Holding the line on expenses – We consistently rank in the top tier of bank holding companies based on efficiency. ‰ Growing deposits in a competitive market – We grow deposits with successful retail, institutional, and municipal deposit campaigns. In addition to diversifying our sources of funds, the increase in deposits enabled us to reduce our wholesale borrowings. ‰ Maintaining our capital strength – Recognizing the importance of capital strength to our regulators and investors, our efforts to ensure low credit losses have enabled us to maintain strong earnings and capital. ➣ Our Compensation Strategy Our approach to executive compensation is based on four simple strategic objectives: Strategic Objective How our Programs Support our Strategy We must be competitive in the marketplace for talent ✓ Our programs are designed to be competitive in the marketplace as we seek to retain top talent for our executive ranks. ✓ We offer our executives a balanced mix of compensation with opportunities to earn significant cash and equity incentive compensation. Pay must reflect performance and support our strategic goals ✓ Our incentive compensation program supports key elements of our strategic plan by focusing on performance metrics tied to our business strategies. ✓ A significant portion of our NEO compensation is at risk since our executives receive the majority of their pay from variable compensation. The interests of our executives must be aligned with the interests of our long-term shareholders ✓ A significant portion of executive pay is provided in the form of equity, and equity is only awarded on the basis of performance. ✓ We vest equity over an extended period of continued employment. ✓ Our stock ownership guidelines encourage our executives to retain a significant equity interest in the Company. The holdings of our NEOs significantly exceed our ownership guidelines. Incentive compensation programs must discourage excessive risk taking ✓ Our compensation programs are designed to ensure that we do not incentivize our executives to take unnecessary or excessive risks that could undermine the value of the Company. ✓ Our review of the risk profile of our compensation program is an annual and ongoing task for management and the Compensation Committee. Page 23 NEW YORK COMMUNITY BANCORP, INC.