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EXHIBIT 10.2      RICHMOND COUNTY FINANCIAL CORP. STOCK
                  COMPENSATION PLAN





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                         RICHMOND COUNTY FINANCIAL CORP.
                             STOCK COMPENSATION PLAN


1.    INTRODUCTION.
      ------------

      On March 27, 1998, the shareholders of Bayonne  Bancshares,  Inc. approved
the Bayonne Bancshares, Inc. 1998 Stock-Based Incentive Plan and the plan became
effective as of that date. On March 22,1999, Richmond County Financial Corp. and
its subsidiaries  acquired Bayonne  Bancshares,  Inc. and its  subsidiaries.  In
connection  with the  acquisition  and  pursuant to the terms of the Amended and
Restated Merger  Agreement by and between  Richmond  County  Financial Corp. and
Bayonne  Bancshares,  Inc. (the "Merger  Agreement"),  Richmond County Financial
Corp.  assumed  sponsorship  of the Bayonne  Bancshares,  Inc. 1998  Stock-Based
Incentive Plan and agreed to honor outstanding  grants previously made under the
plan.  On July 12, 1999,  the Board of Directors  of Richmond  County  Financial
Corp. amended and restated the plan as the Richmond County Financial Corp. Stock
Compensation  Plan (the  "Plan").  At a meeting of  shareholders  on October 28,
1999,  Richmond  County  Financial Corp.  asked its  shareholders to approve the
Plan, as amended and restated,  so that the stock awards and stock option awards
available under the Plan may be allocated to the Richmond County Financial Corp.
and Richmond County Savings Bank directors,  officers and employees, and so that
the  Plan's  terms  correspond  with the  terms  of a  similar  Richmond  County
Financial Corp. plan approved by Richmond County's shareholders in 1998.

2.    DEFINITIONS.
      -----------

      (a) "Affiliate" means any "subsidiary corporation" of the Holding Company,
as such term is defined in Section 424(f) of the Code.

      (b) "Award" means, individually or collectively, a grant under the Plan of
Non-Statutory Stock Options,  Incentive Stock Options,  Limited Rights and Stock
Awards.

      (c) "Award Agreement" means an agreement  evidencing and setting forth the
terms of an Award.

      (d) "Bank" means Richmond County Savings Bank,  successor to First Savings
Bank of New Jersey, SLA.

      (e)  "Board of  Directors"  means the board of  directors  of the  Holding
Company.

      (f) "Change in Control" of the Holding  Company or the Bank means an event
of a nature that:  (i) would be required to be reported in response to Item 1(a)
of the current report on Form 8-K, as in effect on the date hereof,  pursuant to
Section  12 or 15(d) of the  Exchange  Act;  or (ii)  results  in a  "change  in
control" of the Bank or the Holding  Company within the meaning of the Change in
Bank  Control  Act and the  Rules and  Regulations  promulgated  by the  Federal
Deposit Insurance  Corporation ("FDIC") at 12 C.F.R. ss. 303.4(a),  with respect
to the Bank, and the Rules and  Regulations  promulgated by the Office of Thrift
Supervision  ("OTS") (or its  predecessor  agency),  with respect to the Holding
Company; or (iii) without limitation such a Change in Control shall be deemed to
have  occurred at such time as (A) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange  Act) is or becomes the  "beneficial  owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of voting
securities of the Bank or the Holding  Company  representing  20% or more of the
Bank's  or the  Holding  Company's  outstanding  voting  securities  or right to
acquire such securities  except for any voting  securities of the bank purchased
by the  Holding  Company and any voting  securities  purchased  by any  employee
benefit plan of the Holding  Company or its  Affiliates,  or (B) individuals who
constitute  the Board of  Directors on the date hereof (the  "Incumbent  Board")
cease for any reason to  constitute at least a majority  thereof,  provided that
any person becoming a director  subsequent to the date hereof whose election was
approved by a vote of at least  three-quarters  of the directors  comprising the
Incumbent  Board,  or whose  nomination  for  election by the Holding  Company's
stockholders was approved by a



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Nominating  Committee  solely  composed  of members  which are  Incumbent  Board
members, shall be, for purposes of this clause (B), considered as though he were
a  member  of the  Incumbent  Board,  or (C) a plan of  reorganization,  merger,
consolidation,  sale of all or  substantially  all the assets of the Bank or the
Holding  Company or similar  transaction  occurs or is  effectuated in which the
Bank or Holding  Company is not the resulting  entity,  or (D) a proxy statement
has  been  distributed  soliciting  proxies  from  stockholders  of the  Holding
Company,  by someone other than the current  management of the Holding  Company,
seeking   stockholder   approval  of  a  plan  of   reorganization,   merger  or
consolidation of the Holding Company or Bank with one or more  corporations as a
result of which the  outstanding  shares of the class of securities then subject
to such plan or transaction are exchanged for or converted into cash or property
or  securities  not  issued  by  the  Bank  or  the  Holding  Company  shall  be
distributed,  or (E) a  tender  offer  is made  for  20% or  more of the  voting
securities of the Bank or Holding Company then outstanding.

      (g)   "Code" means the Internal Revenue Code of 1986, as amended.

      (h) "Committee" means the committee  designated by the Board of Directors,
pursuant to Section 3 of the Plan, to administer the Plan.

      (i) "Common  Stock"  means the Common  Stock of the Holding  Company,  par
value, $.01 per share.

      (j)   "Date of Grant" means the effective date of an Award.

      (k)  "Disability"  means any mental or physical  condition with respect to
which the Participant  qualifies for and receives benefits for under a long-term
disability  plan of the Holding  Company or an  Affiliate,  or in the absence of
such a long-term  disability  plan or coverage  under such a plan,  "Disability"
shall mean a physical or mental  condition  which, in the sole discretion of the
Committee,   is  reasonably  expected  to  be  of  indefinite  duration  and  to
substantially   prevents  the   Participant   from   fulfilling  his  duties  or
responsibilities to the Holding Company or an Affiliate.

      (l)  "Effective  Date" means March 27, 1998,  subject to Section 20 of the
Plan.

      (m)  "Employee"  means any person  employed by the  Holding  Company or an
Affiliate.  Directors  who are  employed by the Holding  Company or an Affiliate
shall be considered Employees under the Plan.

      (n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      (o) "Exercise Price" means the price at which a Participant may purchase a
share of Common Stock pursuant to an Option.

      (p) "Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:

            (i)   If the Common  Stock was traded on the date in question on The
                  Nasdaq  Stock Market then the Fair Market Value shall be equal
                  to the closing price reported for such date;

            (ii)  If the Common Stock was traded on a stock exchange on the date
                  in question,  then the Fair Market Value shall be equal to the
                  closing   price   reported   by   the   applicable   composite
                  transactions report for such date; and

            (iii) If neither of the foregoing provisions is applicable, then the
                  Fair Market Value shall be determined by the Committee in good
                  faith on such basis as it deems appropriate.



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      Whenever possible, the determination of Fair Market Value by the Committee
shall  be  based  on  the  prices  reported  in The  Wall  Street  Journal.  The
                                                --------------------------
Committee's  determination  of Fair Market Value shall be conclusive and binding
on all persons.

      (q) "Holding Company" means Richmond County Financial Corp.,  successor to
Bayonne Bancshares, Inc.

      (r)   "Incentive   Stock  Option"  means  a  stock  option  granted  to  a
Participant,  pursuant  to Section 8 of the Plan,  that is  intended to meet the
requirements of Section 422 of the Code.

      (s) "Limited  Right" means an Award granted to a  Participant  pursuant to
Section 9 of the Plan.

      (t)  "Non-Statutory  Stock  Option"  means a  stock  option  granted  to a
Participant  pursuant  to the terms of the Plan but which is not  intended to be
and is not  identified  as an Incentive  Stock Option or a stock option  granted
under the Plan which is intended to be and is identified  as an Incentive  Stock
Option but which does not meet the requirements of Section 422 of the Code.

      (u)  "Option"  means an  Incentive  Stock  Option or  Non-Statutory  Stock
Option.

      (v)  "Outside  Director"  means a member of the Boards of Directors of the
Holding  Company or an  Affiliate  who is not also an  Employee  of the  Holding
Company or an  Affiliate.  The term  "Outside  Director"  shall also include any
member of a divisional board of directors.

      (w)   "Participant" means any person who holds an outstanding Award.

      (x) "Performance  Award" means an Award granted to a Participant  pursuant
to Section 11 of the Plan.

      (y) "Plan" means Richmond County Financial Corp. Stock  Compensation  Plan
(formerly  known as the "Bayonne  Bancshares,  Inc. 1998  Stock-Based  Incentive
Plan").

      (z) "Retirement" means retirement from employment with the Holding Company
or an  Affiliate  in  accordance  with the  retirement  policies  of the Holding
Company or Affiliate, as applicable,  then in effect.  "Retirement" with respect
to an  Outside  Director  means the  termination  of  service  from the Board of
Directors of the Holding Company and any Affiliate  following  written notice to
the Board of Directors of such Outside Director's intention to retire.

      (aa) "Stock  Award" means an Award  granted to a  Participant  pursuant to
Section 10 of the Plan.

      (bb)  "Termination  for  Cause"  shall  mean,  in the  case of an  Outside
Director, removal from the Board of Directors (or divisional board of directors)
or, in the case of an Employee,  unless defined differently under any employment
agreement with the Holding  Company or an Affiliate,  termination of employment,
because of a material loss to the Holding Company or an Affiliate, as determined
by and in the sole discretion of the Board of Directors or its designee(s).

      (cc) "Trust" means a trust  established  in  connection  with this Plan to
hold Plan assets for the purposes set forth herein.

      (dd)  "Trustee"  means  any  person  or  entity  approved  by the Board of
Directors to hold any of the Trust assets.



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3.    ADMINISTRATION.
      --------------

      (a) The Committee  shall  administer the Plan. The Committee shall consist
of two or more  disinterested  directors  of the Holding  Company,  who shall be
appointed by the Board of Directors. A member of the Board of Directors shall be
deemed to be  "disinterested"  only if he satisfies (i) such requirements as the
Securities  and Exchange  Commission  may establish for  non-employee  directors
administering  plans intended to qualify for exemption  under Rule 16b-3 (or its
successor)  under the  Exchange Act and (ii) such  requirements  as the Internal
Revenue Service may establish for outside  directors acting under plans intended
to qualify for exemption  under Section  162(m)(4)(C)  of the Code. The Board of
Directors  may also  appoint  one or more  separate  committees  of the Board of
Directors,  each composed of one or more directors of the Holding  Company or an
Affiliate who need not be disinterested  and who may grant Awards and administer
the Plan with respect to Employees and Outside  Directors who are not considered
officers or directors of the Holding  Company  under  Section 16 of the Exchange
Act or for whom Awards are not  intended to satisfy  the  provisions  of Section
162(m) of the Code.

      (b) The Committee shall (i) select the Employees and Outside Directors who
are to receive Awards under the Plan, (ii) determine the type,  number,  vesting
requirements  and other features and conditions of such Awards,  (iii) interpret
the Plan and (iv) make all other  decisions  relating  to the  operation  of the
Plan.  The Committee may adopt such rules or guidelines as it deems  appropriate
to implement the Plan. The  Committee's  determinations  under the Plan shall be
final and binding on all persons.

      (c)  Each  Award  shall  be  evidenced  by  a  written  agreement  ("Award
Agreement") containing such provisions as may be approved by the Committee. Each
Award Agreement shall  constitute a binding contract between the Holding Company
or an Affiliate and the Participant,  and every Participant,  upon acceptance of
the Award  Agreement,  shall be bound by the terms and  restrictions of the Plan
and  the  Award  Agreement.  The  terms  of each  Award  Agreement  shall  be in
accordance  with the Plan, but each Award  Agreement may include such additional
provisions  and  restrictions  determined by the Committee,  in its  discretion,
provided that such additional  provisions and  restrictions are not inconsistent
with the terms of the Plan. In particular and at a minimum,  the Committee shall
set  forth  in each  Award  Agreement  (i) the type of  Award  granted  (ii) the
Exercise  Price of any Option,  (iii) the number of shares subject to the Award;
(iv)  the  expiration  date  of the  Award,  (v)  the  manner,  time,  and  rate
(cumulative  or  otherwise)  of exercise or vesting of such Award,  and (vi) the
restrictions, if any, placed upon such Award, or upon shares which may be issued
upon  exercise  of such Award.  The  Chairman  of the  Committee  and such other
directors  and  officers  as shall be  designated  by the  Committee  is  hereby
authorized to execute Award  Agreements on behalf of the Company or an Affiliate
and to cause them to be delivered to the recipients of Awards.

      (d) The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any   Award   Agreement.   The   Committee   may   rely  on  the   descriptions,
representations,  reports and estimates  provided to it by the management of the
Holding  Company or an Affiliate for  determinations  to be made pursuant to the
Plan,  including the  satisfaction  of any  conditions  of a Performance  Award.
However,  only the  Committee  or a portion of the  Committee  may  certify  the
attainment  of any  conditions of a  Performance  Award  intended to satisfy the
requirements of Section 162(m) of the Code.

4.    TYPES OF AWARDS AND RELATED RIGHTS.
      ----------------------------------

      The following Awards may be granted under the Plan:

      (a)   Non-Statutory Stock Options.
      (b)   Incentive Stock Options.
      (c)   Limited Rights.
      (d)   Stock Awards.


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5.    STOCK SUBJECT TO THE PLAN.
      -------------------------

      Subject to adjustment  as provided in Section 16 of the Plan,  the maximum
number of shares  reserved  for  Awards  under the Plan is  715,771.  Subject to
adjustment as provided in Section 16 of the Plan,  the maximum  number of shares
reserved   hereby  for  purchase   pursuant  to  the  exercise  of  Options  and
Option-related  Awards granted under the Plan is 511,264.  The maximum number of
the shares  reserved  for Stock  Awards is 204,506.  The shares of Common  Stock
issued under the Plan may be either authorized but unissued shares or authorized
shares  previously  issued and acquired or  reacquired by the Trust or the Bank,
respectively.  To the extent that Options and Stock Awards are granted under the
Plan, the shares  underlying  such Awards will be unavailable  for any other use
including  future  grants under the Plan except  that,  to the extent that Stock
Awards or Options  terminate,  expire, or are forfeited without having vested or
without  having been  exercised  (in the case of Limited  Rights,  exercised for
cash), new Awards may be made with respect to these shares.

6.    ELIGIBILITY.
      -----------

      Subject to the terms of the Plan,  all  Employees  and  Outside  Directors
shall be eligible to receive  Awards under the Plan. In addition,  the Committee
may grant  eligibility to consultants  and advisors of the Holding Company or an
Affiliate.

7.    NON-STATUTORY STOCK OPTIONS.
      ---------------------------

      The  Committee  may,  subject  to the  limitations  of this  Plan  and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant  Non-Statutory  Stock Options to eligible  individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:

      (a) Exercise  Price.  The Committee  shall determine the Exercise Price of
          ---------------
each Non-Statutory Stock Option.  However,  the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.

      (b) Terms of  Non-statutory  Stock Options.  The Committee shall determine
          --------------------------------------
the term during which a Participant may exercise a  Non-Statutory  Stock Option,
but in no event may a Participant  exercise a  Non-Statutory  Stock  Option,  in
whole or in part, more than ten (10) years from the Date of Grant. The Committee
shall also determine the date on which each  Non-Statutory  Stock Option, or any
part  thereof,   first  becomes  exercisable  and  any  terms  or  conditions  a
Participant must satisfy in order to exercise each  Non-Statutory  Stock Option.
The shares of Common Stock  underlying  each  Non-Statutory  Stock Option may be
purchased in whole or in part by the  Participant at any time during the term of
such Non-Statutory Stock Option, or any portion thereof, becomes exercisable.

      (c)  Non-Transferability.  Unless otherwise determined by the Committee in
           -------------------
accordance  with this Section  7(c), a  Participant  may not  transfer,  assign,
hypothecate,  or  dispose  of in any  manner,  other than by will or the laws of
intestate succession,  a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion,  permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole  determination,  for
valid estate  planning  purposes and such  transfer or  assignment  is permitted
under the Code and Rule 16b-3  under the  Exchange  Act.  For  purposes  of this
Section 7(c), a transfer for valid estate planning purposes includes, but is not
limited  to:  (a) a transfer  to a  revocable  intervivos  trust as to which the
Participant is both the settlor and trustee, (b) a transfer for no consideration
to: (i) any member of the Participant's  Immediate Family, (ii) any trust solely
for the  benefit of members of the  Participant's  Immediate  Family,  (iii) any
partnership  whose only  partners  are  members of the  Participant's  Immediate
Family,  and (iv) any limited  liability  corporation or corporate  entity whose
only members or equity owners are members of the Participant's  Immediate Family
or (c) a transfer to the Richmond  County  Savings  Foundation.  For purposes of
this Section 7(c),  "Immediate Family" includes,  but is not necessarily limited
to, a Participant's  parents,  grandparents,  spouse,  children,  grandchildren,
siblings (including


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half bothers and sisters),  and  individuals who are family members by adoption.
Nothing  contained  in this  Section  7(c) shall be  construed  to  require  the
Committee  to  give  its  approval  to  any  transfer  or   assignment   of  any
Non-Statutory  Stock  Option or portion  thereof,  and  approval  to transfer or
assign any Non-Statutory Stock Option or portion thereof does not mean that such
approval will be given with respect to any other  Non-Statutory  Stock Option or
portion thereof.  The transferee or assignee of any  Non-Statutory  Stock Option
shall  be  subject  to  all of the  terms  and  conditions  applicable  to  such
Non-Statutory  Stock Option  immediately prior to the transfer or assignment and
shall be  subject  to any other  conditions  proscribed  by the  Committee  with
respect to such Non-Statutory Stock Option.

      (d)  Termination  of Employment  or Service  (General).  Unless  otherwise
           -------------------------------------------------
determined by the Committee,  upon the termination of a Participant's employment
or other service for any reason other than  Retirement,  Disability or death, or
Termination for Cause,  the  Participant  may exercise only those  Non-Statutory
Stock Options that were  immediately  exercisable by the Participant at the date
of such termination and only for a period of three (3) months following the date
of such termination.

      (e) Termination of Employment or Service  (Retirement).  Unless  otherwise
          --------------------------------------------------
determined by the Committee,  in the event of a  Participant's  Retirement,  the
Participant  may  exercise  only those  Non-Statutory  Stock  Options  that were
immediately  exercisable  by the  Participant at the date of Retirement and only
for a period of one (1) year from the date of Retirement.

      (f)  Termination of Employment or Service  (Disability  or death).  Unless
           ------------------------------------------------------------
otherwise  determined by the  Committee,  in the event of the  termination  of a
Participant's  employment  or other  service  due to  Disability  or death,  all
Non-Statutory  Stock Options held by such Participant shall  immediately  become
exercisable and remain  exercisable for a period one (1) year following the date
of such termination.

      (g) Termination of Employment or Service  (Termination for Cause).  Unless
          -------------------------------------------------------------
otherwise  determined  by  the  Committee,  in  the  event  of  a  Participant's
Termination  for  Cause,  all rights  with  respect  to the  Participant's  Non-
Statutory Stock Options shall expire immediately upon the effective date of such
Termination for Cause.

      (h)  Acceleration  Upon a Change in  Control.  In the event of a Change in
           ---------------------------------------
Control, all Non-Statutory Stock Options held by a Participant as of the date of
the Change in Control  shall  immediately  become  exercisable  and shall remain
exercisable until the expiration of the term of the Non-Statutory Stock Options.

      (i)  Payment.  Payment  due  to  a  Participant  upon  the  exercise  of a
           -------
Non-Statutory Stock Option shall be made in the form of shares of Common Stock.

      (j) Maximum  Individual Award. No individual  Employee shall be granted an
          -------------------------
amount of Non-Statutory  Stock Options which exceeds 25% of all Options eligible
to be granted under the Plan within any 60-month period.

8.    INCENTIVE STOCK OPTIONS.
      -----------------------

      The  Committee  may,  subject  to the  limitations  of the  Plan  and  the
availability  of shares of Common Stock reserved for Options but unawarded under
this Plan,  grant  Incentive  Stock  Options to an Employee  upon such terms and
conditions  as it may  determine  to the extent  such terms and  conditions  are
consistent with the following provisions:

      (a) Exercise  Price.  The Committee  shall determine the Exercise Price of
          ---------------
each Incentive Stock Option.  However, the Exercise Price shall not be less than
100% of the  Fair  Market  Value  of the  Common  Stock  on the  Date of  Grant;
PROVIDED, HOWEVER, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning,  for purposes of Section 422 of the Code,
Common Stock  representing more than 10% of the total combined voting securities
of the Holding Company ("10% Owner"),  the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant.
 .

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      (b) Amounts of Incentive  Stock Options.  To the extent the aggregate Fair
          -----------------------------------
Market  Value of shares of Common Stock with  respect to which  Incentive  Stock
Options  that are  exercisable  for the first  time by an  Employee  during  any
calendar  year under the Plan and any other  stock  option  plan of the  Holding
Company  or an  Affiliate  exceeds  $100,000,  or such  higher  value  as may be
permitted  under  Section 422 of the Code,  such Options in excess of such limit
shall be treated as  Non-Statutory  Stock  Options.  Fair Market  Value shall be
determined  as of the Date of Grant with  respect to each such  Incentive  Stock
Option.

      (c) Terms of Incentive  Stock Options.  The Committee  shall determine the
          ---------------------------------
term during which a Participant may exercise an Incentive  Stock Option,  but in
no event may a Participant  exercise an Incentive  Stock Option,  in whole or in
part, more than ten (10) years from the Date of Grant;  PROVIDED,  HOWEVER, that
if at the time an Incentive  Stock Option is granted to an Employee who is a 10%
Owner,  the  Incentive  Stock  Option  granted  to such  Employee  shall  not be
exercisable  after the expiration of five (5) years from the Date of Grant.  The
Committee shall also determine the date on which each Incentive Stock Option, or
any part  thereof,  first  becomes  exercisable  and any terms or  conditions  a
Participant  must satisfy in order to exercise each Incentive Stock Option.  The
shares of Common Stock  underlying  each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such  Incentive  Stock Option
after such Option becomes exercisable.

      (d)  Non-Transferability.  No Incentive Stock Option shall be transferable
           -------------------
except  by will or the laws of  descent  and  distribution  and is  exercisable,
during his  lifetime,  only by the  Employee  to whom the  Committee  grants the
Incentive Stock Option.  The designation of a beneficiary  does not constitute a
transfer of an Incentive Stock Option.

      (e) Termination of Employment  (General).  Unless otherwise  determined by
          ------------------------------------
the  Committee,  upon the  termination  of a  Participant's  employment or other
service  for  any  reason  other  than  Retirement,   Disability  or  death,  or
Termination  for Cause,  the Participant may exercise only those Incentive Stock
Options that were immediately exercisable by the Participant at the date of such
termination and only for a period of three (3) months following the date of such
termination.

      (f) Termination of Employment (Retirement). Unless otherwise determined by
          --------------------------------------
the Committee, in the event of a Participant's  Retirement,  the Participant may
exercise only those Incentive Stock Options that were immediately exercisable by
the  Participant at the date of Retirement and only for a period of one (1) year
from the date of Retirement.  Any Option  originally  designated as an Incentive
Stock Option shall be treated as a Non-Statutory  Stock Option to the extent the
Participant  exercises such Option more than three (3) months following the Date
of the Participant's Retirement.

      (g)  Termination  of Employment  (Disability or Death).  Unless  otherwise
           -------------------------------------------------
determined by the Committee,  in the event of the termination of a Participant's
employment  or other service due to  Disability  or death,  all Incentive  Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period one (1) year following the date of such termination.

      (h) Termination of Employment  (Termination  for Cause).  Unless otherwise
          ---------------------------------------------------
determined  by the  Committee,  in the event of an  Employee's  Termination  for
Cause,  all rights under such  Employee's  Incentive  Stock Options shall expire
immediately upon the effective date of such Termination for Cause.

      (i)  Acceleration  Upon a Change in  Control.  In the event of a Change in
           ---------------------------------------
Control, all Incentive Stock Options held by a Participant as of the date of the
Change  in  Control  shall  immediately  become  exercisable  and  shall  remain
exercisable until the expiration of the term of the Incentive Stock Options. Any
Option originally  designated as an Incentive Stock Option shall be treated as a
Non-Statutory  Stock Option to the extent the Option does not otherwise  qualify
as an Incentive Stock Option pursuant to Section 422 of the Code.


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      (j)  Payment.  Payment  due  to a  Participant  upon  the  exercise  of an
           -------
Incentive Stock Option shall be made in the form of shares of Common Stock.

      (k) Maximum  Individual Award. No individual  Employee shall be granted an
          -------------------------
amount of Incentive  Stock Options which exceeds 25% of all Options  eligible to
be granted under the Plan within any 60 month period.

      (l)  Disqualifying  Dispositions.  Each Award Agreement with respect to an
           ---------------------------
Incentive  Stock Option shall require the Participant to notify the Committee of
any  disposition  of shares of Common Stock  issued  pursuant to the exercise of
such Option  under the  circumstances  described  in Section  421(b) of the Code
(relating  to  certain  disqualifying  dispositions),  within  10  days  of such
disposition.  As of the Effective Date of this Plan, a disqualifying disposition
means any  disposition  of the shares of Common  Stock within two years from the
date of the grant of the  Incentive  Stock Option to which such shares relate or
within  one year of the date such  shares  are  transferred  to the  Participant
pursuant to his exercise of the Incentive Stock Option.

9.     LIMITED RIGHTS.
       --------------

      Simultaneously  with the grant of any Option,  the  Committee  may grant a
Limited  Right with respect to all or some of the shares of Common Stock covered
by such Option, subject to the following terms and conditions:

      (a) Terms of Rights.  In no event shall a Limited Right be  exercisable in
          ---------------
whole or in part before the  expiration of six (6) months from the Date of Grant
of the Limited  Right.  A Limited Right may be exercised  only in the event of a
Change in Control.  The Limited Right may be exercised  only when the underlying
Option is eligible to be  exercised,  and only when the Fair Market Value of the
underlying  shares on the day of exercise is greater than the Exercise  Price of
the underlying  Option.  Upon exercise of a Limited Right, the underlying Option
shall  cease  to be  exercisable  and  shall be  terminated.  Upon  exercise  or
termination  of an Option,  any related  Limited  Rights  shall  terminate.  The
Limited Right is  transferable  only when the underlying  Option is transferable
and under the same conditions.

      (b) Payment.  Upon exercise of a Limited Right,  the holder shall promptly
          -------
receive from the Holding  Company or an Affiliate an amount of cash equal to the
difference  between the  Exercise  Price of the  underlying  Option and the Fair
Market Value of the Common Stock  subject to such Option on the date the Limited
Right is  exercised,  multiplied  by the number of shares with  respect to which
such Limited Right is being exercised.

10.    STOCK AWARDS.
       ------------

      The Committee may grants of Stock Awards, which shall consist of the grant
of some number of shares of Common Stock,  to a Participant  upon such terms and
conditions  as it may  determine  to the extent  such terms and  conditions  are
consistent with the following provisions:

      (a)  Grants of the Stock  Awards.  Stock  Awards may only be made in whole
           ---------------------------
shares of Common  Stock.  Stock Awards may only be granted from shares  reserved
under the Plan and  available  for award at the time the Stock  Award is made to
the Participant.

      (b) Terms of the Stock Awards.  The Committee shall determine the dates on
          -------------------------
which  Stock  Awards  granted  to a  Participant  shall  vest  and any  terms or
conditions  which must be  satisfied  prior to the vesting of any Stock Award or
portion  thereof.  Any such  terms or  conditions  shall  be  determined  by the
Committee as of the Date of Grant.

      (c)  Termination  of Employment  or Service  (General).  Unless  otherwise
           -------------------------------------------------
determined by the Committee,  upon the termination of a Participant's employment
or service for any reason other than Retirement, Disability or


                                        8

<page> 10



death, or Termination  for Cause,  any Stock Awards in which the Participant has
not become vested as of the date of such termination  shall be forfeited and any
rights the Participant had to such Stock Awards shall become null and void.

      (d) Termination of Employment or Service  (Retirement).  Unless  otherwise
          --------------------------------------------------
determined by the Committee,  in the event of a  Participant's  Retirement,  any
Stock Awards in which the  Participant  has not become  vested as of the date of
Retirement  shall  be  forfeited  and any  rights  the  Participant  had to such
unvested Stock Awards shall become null and void.

      (e)  Termination of Employment or Service  (Disability  or death).  Unless
           ------------------------------------------------------------
otherwise  determined by the  Committee,  in the event of a  termination  of the
Participant's  service due to Disability or death all unvested Stock Awards held
by such Participant shall immediately vest as of the date of such termination.

      (f) Termination of Employment or Service  (Termination for Cause).  Unless
          -------------------------------------------------------------
otherwise  determined  by the  Committee,  or in the event of the  Participant's
Termination for Cause,  all Stock Awards in which the Participant had not become
vested as of the effective date of such Termination for Cause shall be forfeited
and any rights such  Participant  had to such unvested Stock Awards shall become
null and void.

      (g)  Acceleration  Upon a Change in  Control.  In the event of a Change in
           ---------------------------------------
Control all unvested Stock Awards held by a Participant  shall  immediately vest
as of the date of the Change in Control.

      (h) Maximum  Individual Award. No individual  Employee shall be granted an
          -------------------------
amount of Stock Awards which  exceeds 25% of all Options  eligible to be granted
under the Plan within any 60 month period.

      (i)  Issuance  of  Certificates.   Unless  otherwise  held  in  Trust  and
           --------------------------
registered in the name of the Trustee, (i) reasonably promptly after the Date of
Grant with  respect to shares of Common  Stock  pursuant to a Stock  Award,  the
Holding Company shall cause to be issued a stock certificate,  registered in the
name of the  Participant to whom such Stock Award was granted,  evidencing  such
shares;  provided,  that  the  Holding  Company  shall  not  cause  such a stock
certificate  to be issued  unless it has received a stock power duly endorsed in
blank with respect to such shares.  Each such stock  certificate  shall bear the
following legend:

            "The  transferability  of this  certificate  and the shares of stock
            represented  hereby  are  subject  to the  restrictions,  terms  and
            conditions (including forfeiture provisions and restrictions against
            transfer)  contained in the Richmond County  Financial  Corp.  Stock
            Compensation  Plan and Award  Agreement  entered  into  between  the
            registered  owner of such shares and Richmond County Financial Corp.
            or its Affiliates. A copy of the Plan and Award Agreement is on file
            in  the  office  of  the  Corporate  Secretary  of  Richmond  County
            Financial  Corp.  1214 Castleton  Avenue,  Staten  Island,  New York
            10310.

Such legend shall not be removed until the  Participant  becomes  vested in such
shares pursuant to the terms of the Plan and Award  Agreement.  Each certificate
issued pursuant to this Section 10(h),  in connection with a Stock Award,  shall
be  held  by  the  Holding  Company  or its  Affiliates,  unless  the  Committee
determines otherwise.

      (j)  Non-Transferability.  Except to the extent permitted by the Code, the
rules  promulgated  under  Section  16(b) of the Exchange  Act or any  successor
statutes or rules:

            (i)   The  recipient  of a Stock  Award  shall not  sell,  transfer,
                  assign,  pledge,  or otherwise  encumber shares subject to the
                  Stock  Award until full  vesting of such shares has  occurred.
                  For purposes of this  section,  the  separation  of beneficial
                  ownership  and  legal  title  through  the  use of any  "swap"
                  transaction is deemed to be a prohibited encumbrance.


                                        9

<page> 11



            (ii)  Unless determined otherwise by the Committee and except in the
                  event of the  Participant's  death or  pursuant  to a domestic
                  relations  order, a Stock Award is not transferable and may be
                  earned in his lifetime only by the  Participant  to whom it is
                  granted.  Upon the death of a  Participant,  a Stock  Award is
                  transferable by will or the laws of descent and  distribution.
                  The  designation  of a  beneficiary  shall  not  constitute  a
                  transfer.

            (iii) If a recipient  of a Stock Award is subject to the  provisions
                  of  Section 16 of the  Exchange  Act,  shares of Common  Stock
                  subject  to such  Stock  Award may not,  without  the  written
                  consent of the  Committee  (which  consent may be given in the
                  Award Agreement),  be sold or otherwise disposed of within six
                  (6) months following the date of grant of the Stock Award.

      (k) Accrual of Dividends. To the extent Stock Awards are held in Trust and
          --------------------
registered  in  the  name  of the  Trustee,  whenever  shares  of  Common  Stock
underlying a Stock Award are distributed to a Participant or beneficiary thereof
under the Plan,  such  Participant  or  beneficiary  shall also be  entitled  to
receive,  with respect to each such share  distributed,  a payment  equal to any
cash  dividends  and the  number of shares  of Common  Stock  equal to any stock
dividends,  declared and paid with respect to a share of the Common Stock if the
record date for  determining  shareholders  entitled to receive  such  dividends
falls  between  the date the  relevant  Stock Award was granted and the date the
relevant  Stock  Award or  installment  thereof is issued.  There  shall also be
distributed  an  appropriate  amount of net earnings,  if any, of the Trust with
respect to any dividends paid out on the shares related to the Stock Award.

      (l) Voting of Stock  Awards.  After a Stock Award has been granted but for
          -----------------------
which the shares  covered by such Stock Award have not yet been  vested,  earned
and distributed to the Participant  pursuant to the Plan, the Participant  shall
be entitled  to vote or to direct the Trustee to vote,  as the case may be, such
shares of Common  Stock  which the Stock Award  covers  subject to the rules and
procedures  adopted by the Committee for this purpose and in a manner consistent
with the Trust agreement.

      (m) Payment.  Payment due to a Participant  upon the redemption of a Stock
          -------
Award shall be made in the form of shares of Common Stock.

11.   PERFORMANCE AWARDS.
      ------------------

      (a) The  Committee  may  determine  to  make  any  Award  under  the  Plan
contingent upon the satisfaction of any conditions related to the performance of
the Holding  Company,  an Affiliate of the Participant.  Each Performance  Award
shall be evidenced in the Award Agreement,  which shall set forth the applicable
conditions,  the maximum  amounts payable and such other terms and conditions as
are applicable to the  Performance  Award.  Unless  otherwise  determined by the
Committee,  each  Performance  Award shall be granted and administered to comply
with the requirements of Section 162(m) of the Code and subject to the following
provisions:

      (b) Any  Performance  Award shall be made not later than 90 days after the
start of the period for which the  Performance  Award  relates and shall be made
prior to the completion of 25% of such period. All determinations  regarding the
achievement of any  applicable  conditions  will be made by the  Committee.  The
Committee may not increase during a year the amount of a Performance  Award that
would otherwise be payable upon satisfaction of the conditions but may reduce or
eliminate the payments as provided for in the Award Agreement.

      (c)  Nothing  contained  in the Plan will be deemed in any way to limit or
restrict the Committee  from making any Award or payment to any person under any
other plan,  arrangement or understanding,  whether now existing or hereafter in
effect.


                                       10

<page> 12



      (d) A Participant who receives a Performance Award payable in Common Stock
shall have no rights as a shareholder until the Company Stock is issued pursuant
to the terms of the Award Agreement. The Common Stock may be issued without cash
consideration.

      (e) A  Participant's  interest  in a  Performance  Award  may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.

      (f) No Award or portion thereof that is subject to the satisfaction of any
condition  shall be  distributed  or considered to be earned or vested until the
Committee  certifies in writing that the  conditions to which the  distribution,
earning or vesting of such Award is subject have been achieved.

12.   DEFERRED PAYMENTS.
      -----------------

      The  Committee,  in its  discretion,  may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan, or
the Committee may determine to defer receipt by some or all Participants, of all
or part of any such  payment.  The  Committee  shall  determine  the  terms  and
conditions of any such deferral, including the period of deferral, the manner of
deferral,  and the method for measuring  appreciation on deferred  amounts until
their payout.

13.    METHOD OF EXERCISE OF OPTIONS.
       -----------------------------

      Subject to any applicable Award Agreement,  any Option may be exercised by
the  Participant in whole or in part at such time or times,  and the Participant
may make payment of the Exercise Price in such form or forms, including, without
limitation,  payment by delivery of cash,  Common  Stock or other  consideration
(including,  where  permitted by law and the  Committee,  Awards)  having a Fair
Market Value on the exercise date equal to the total Exercise  Price,  or by any
combination of cash, shares of Common Stock and other  consideration,  including
exercise  by  means  of  a  cashless  exercise  arrangement  with  a  qualifying
broker-dealer, as the Committee may specify in the applicable Award Agreement.

14.   RIGHTS OF PARTICIPANTS.
      ----------------------

      No Participant  shall have any rights as a shareholder with respect to any
shares of Common  Stock  covered by an Option  until the date of  issuance  of a
stock  certificate  for such Common Stock.  Nothing  contained  herein or in any
Award  Agreement  confers on any person any right to  continue  in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the  Holding  Company or an  Affiliate  to  terminate  a  Participant's
services.

15.   DESIGNATION OF BENEFICIARY.
      --------------------------

      A Participant  may, with the consent of the Committee,  designate a person
or persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by and
delivered to the Holding Company and may be revoked in writing. If a Participant
fails effectively to designate a beneficiary, then the Participant's estate will
be deemed to be the beneficiary.

16.   DILUTION AND OTHER ADJUSTMENTS.
      ------------------------------

      In the event of any change in the  outstanding  shares of Common  Stock by
reason of any stock dividend or split, recapitalization,  merger, consolidation,
spin-off,  reorganization,  combination or exchange of shares,  or other similar
corporate  change,  or other increase or decrease in such shares without receipt
or  payment  of  consideration  by  the  Holding  Company,  or in the  event  an
extraordinary capital distribution is made, the Committee may make such


                                       11

<page> 13



adjustments to previously  granted Awards, to prevent dilution,  diminution,  or
enlargement  of the  rights  of  the  Participant,  including  any or all of the
following:

      (a)   adjustments  in the  aggregate  number  or kind of  shares of Common
            Stock or other  securities that may underlie future Awards under the
            Plan;

      (b)   adjustments  in the  aggregate  number  or kind of  shares of Common
            Stock or other securities  underlying  Awards already made under the
            Plan;

      (c)   adjustments in the Exercise Price of  outstanding  Incentive  and/or
            Non-statutory  Stock Options, or any Limited Rights attached to such
            Options.

      No such adjustments may, however,  materially change the value of benefits
available to a Participant  under a previously  granted Award.  All Awards under
this Plan  shall be  binding  upon any  successors  or  assigns  of the  Holding
Company.

17.   TAX WITHHOLDING.
      ---------------

      (a)  Whenever  under this Plan,  cash or shares of Common  Stock are to be
delivered  upon  exercise or payment of an Award or any other event with respect
to rights and benefits hereunder,  the Committee shall be entitled to require as
a condition of delivery (i) that the Participant  remit an amount  sufficient to
satisfy all federal,  state,  and local  withholding  tax  requirements  related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any  combination  of the foregoing  PROVIDED,  HOWEVER,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan.

      (b) If any  disqualifying  disposition  described  in Section 8(l) is made
with respect to shares of Common Stock acquired under an Incentive  Stock Option
granted  pursuant to this Plan,  or any  transfer  described  in Section 7(c) is
made,  or any election  described in Section 16 is made,  then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its  Affiliates an amount  sufficient to satisfy all federal,  state,
and local withholding  taxes thereby  incurred;  provided that, in lieu of or in
addition to the foregoing,  the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation  otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 7(c), from any shares
of Common Stock due to the Participant under this Plan.

18.   NOTIFICATION UNDER SECTION 83(b).
      --------------------------------

      The  Committee  may,  on the Date of Grant or any later  date,  prohibit a
Participant  from making the election  described below. If the Committee has not
prohibited  such  Participant  from making such  election,  and the  Participant
shall, in connection with the exercise of any Option,  or the grant of any Stock
Award,  make the election  permitted  under Section 83(b) of the Code (i.e.,  an
election to include in such  Participant's  gross income in the year of transfer
the amounts  specified in Section  83(b) of the Code),  such  Participant  shall
notify the  Committee of such  election  within 10 days of filing  notice of the
election  with the  Internal  Revenue  Service,  in  addition  to any filing and
notification  required  pursuant to  regulations  issued under the  authority of
Section 83(b) of the Code.

19.   AMENDMENT OF THE PLAN AND AWARDS.
      --------------------------------

      (a) Except as provided in  paragraph  (c) of this Section 19, the Board of
Directors  may at any time,  and from time to time,  modify or amend the Plan in
any respect,  prospectively or retroactively;  provided however, that provisions
governing  grants of Incentive  Stock Options shall be submitted for shareholder
approval  to the extent  required  by such law,  regulation  or  interpretation.
Failure to ratify or approve amendments or modifications by

                                       12

<page> 14



shareholders   shall  be  effective  only  as  to  the  specific   amendment  or
modification  requiring such  ratification.  Other  provisions of this Plan will
remain in full force and effect. No such termination,  modification or amendment
may adversely  affect the rights of a  Participant  under an  outstanding  Award
without the written permission of such Participant.

      (b) Except as provided in paragraph  (c) of this Section 19, the Committee
may  amend  any  Award  Agreement,  prospectively  or  retroactively;  PROVIDED,
HOWEVER,  that no such  amendment  shall  adversely  affect  the  rights  of any
Participant  under an  outstanding  Award  without the  written  consent of such
Participant.

      (c) In no event shall the Board of  Directors  amend the Plan or shall the
Committee amend an Award Agreement in any manner that has the effect of:

            (i)  Allowing  any Option to be granted  with an exercise  below the
            Fair Market Value of the Common Stock on the Date of Grant.

            (ii) Allowing the exercise  price of any Option  previously  granted
            under the Plan to be reduced subsequent to the Date of Award.

20.   EFFECTIVE DATE OF PLAN.
      ----------------------

      The  Plan  was  originally  approved  by  the  Bayonne  Bancshares,   Inc.
shareholders  on March 27,  1998.  The Plan is being  amended to provide for the
assumption by the Holding  Company and shall become  effective  upon approval by
the Holding Company's  shareholders.  The failure to obtain shareholder approval
for such  purposes  will not effect the  validity  of any Awards  made under the
Plan.

21.   TERMINATION OF THE PLAN.
      -----------------------

      The right to grant Awards under the Plan will  terminate  upon the earlier
of: (i) March 27, 2008;  (ii) the issuance of a number of shares of Common Stock
pursuant to the exercise of Options or (iii) the distribution of Stock Awards is
equivalent to the maximum number of shares  reserved under the Plan as set forth
in  Section  5 hereof.  The  Board of  Directors  has the  right to  suspend  or
terminate the Plan at any time,  provided that no such action will,  without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.

22.   APPLICABLE LAW.
      --------------

      The Plan will be  administered in accordance with the laws of the State of
Delaware and applicable federal law.

                                       13