Proxy Statement (Form DEF 14A)
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only
(as permitted by Rule
14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules
14a-6(i)(1)
and 0-11
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Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
At the meeting, you will be asked to consider and vote on the following proposals:
| 1. |
to elect three Company directors for a term of three years each; |
| 2. |
to approve an amendment to the Company's articles of incorporation to declassify the Company's Board of Directors; |
| 3. |
to approve, in an advisory (non-binding)vote, the Company's named executive officer compensation disclosed in the Proxy Statement; |
| 4. |
to approve, in an advisory (non-binding)vote, whether to hold the vote of the approval of the Company's named executive officer compensation every one, two or three years; and |
| 5. |
to ratify the appointment of |
You will find information regarding these matters in the Proxy Statement.
You may vote your shares through the Internet, by telephone, by regular mail (if you request a paper copy), or in person at the Annual Meeting. On or about
Your vote is important.Please take time to vote now so that your shares are represented at the meeting, whether or not you plan to attend and participate in the Annual Meeting. We appreciate your continued support.
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Sincerely, |
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President and Chief Executive Officer |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
The Annual Meeting of Shareholders of
At the meeting, you will be asked to consider and vote on the following proposals:
| 1. |
to elect three Company directors for a term of three years each; |
| 2. |
to approve an amendment to the Company's articles of incorporation to declassify the Company's Board of Directors; |
| 3. |
to approve, in an advisory (non-binding)vote, the Company's named executive officer compensation disclosed in the Proxy Statement; |
| 4. |
to approve, in an advisory (non-binding)vote, whether to hold the vote of the approval of the Company's named executive officer compensation every one, two or three years; and |
| 5. |
to ratify the appointment of |
Only shareholders of record at the close of business on
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By Order of the Board of Directors, |
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Corporate Secretary |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: A complete set of proxy materials relating to the Annual Meeting, including the Company's Proxy Statement and Annual Report on Form 10-Kfor the year ended
On or about
If your shares of the Company's common stock are held by a broker or other custodian, then that organization is considered the shareholder of record and the shares are considered held in "street name." The Company provided its proxy materials to the shareholder of record for distribution to you along with your voting instructions. As the beneficial owner of the shares, you have the right to direct the shareholder of record how to vote your shares. Check the information forwarded to you by the shareholder of record to see which voting methods are available to you. As a beneficial owner, you must register in advance to attend the Annual Meeting virtually on the Internet. Additional instructions are included in the Proxy Statement.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
General
The accompanying proxy is solicited by the Board of Directors (the "Board") of
In this Proxy Statement, we refer to
Business Items of the Annual Meeting
At the Annual Meeting, you will be asked to vote on the following proposals:
| 1. |
to elect three Company directors for a term of three years each; |
| 2. |
to approve an amendment to the Company's articles of incorporation to declassify the Company's Board of Directors; |
| 3. |
to approve, in an advisory (non-binding)vote, the Company's named executive officer compensation disclosed in this Proxy Statement; |
| 4. |
to approve, in an advisory (non-binding)vote, whether to hold the vote of the approval of the Company's named executive officer compensation every one, two or three years; and |
| 5. |
to ratify the appointment of |
Shareholders will also be asked to vote on any other matters which may properly come before the Annual Meeting. Management knows of no other business to be brought before the meeting. However, if other matters do properly come before the Annual Meeting, the persons named as proxies possess discretionary authority to vote in accordance with their best judgment with respect to such other matters.
Recommendation of the Board of Directors
The Board recommends that you vote "FOR"the election of the director nominees named in this Proxy Statement, "FOR"approval of the amendment to the Company's articles of incorporation to declassify the Company's Board of Directors, "FOR" approval of the compensation of the Company's named executive officers disclosed in this Proxy Statement (an advisory, non-binding"say on pay" vote), "FOR"a frequency of every three years as to when to hold the vote to approve the Company's named executive officer compensation (an advisory, non-binding"say on pay frequency" vote), and "FOR"ratification of the appointment of
Record Date and Voting Rights of Shareholders
Only shareholders of record of the Company's common stock at the close of business on
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Quorum
The presence in person or by proxy of holders of a majority of the outstanding shares of the Company's common stock entitled to vote at the Annual Meeting will constitute a quorum for the transaction of business. Abstentions (and, with respect to the election of directors, votes withheld) will be included in determining the number of shares present at the Annual Meeting for the purpose of determining the presence of a quorum. If a shareholder holds shares in "street name" through a broker or other custodian, those shares will not be counted for purposes of determining the presence of a quorum unless the broker or other custodian has voted on at least one of the proposals at the Annual Meeting.
Vote Required
With respect to Proposal 1, the nominees for election who receive the greatest number of affirmative votes cast, whether during the Annual Meeting or by proxy, even if less than a majority, will be elected directors. If you (1) fail to submit a proxy or vote during the Annual Meeting, (2) mark "Withhold" on your proxy for any nominee, or (3) fail to instruct your broker or other custodian how to vote with respect to Proposal 1, it will have no effect on the outcome of that proposal.
With respect to Proposal 2, approval of the amendment to the Company's articles of incorporation to declassify the Company's Board of Directors requires the affirmative vote of at least 80% of the outstanding shares of the Company's common stock. If you (1) fail to submit a proxy or vote during the Annual Meeting, (2) mark "Abstain" for Proposal 2, or (3) fail to instruct your broker or other custodian how to vote with respect to Proposal 2, it will have the same effect as a vote "Against" the proposal.
With respect to Proposal 3, approval, in an advisory (non-binding)vote, of the Company's named executive officer compensation requires that the votes cast for such proposal exceed the votes cast against such proposal. If you (1) fail to submit a proxy or vote during the Annual Meeting or (2) mark "Abstain" for Proposal 3, it will have no effect on the outcome of that proposal.
With respect to Proposal 4, an advisory (non-binding)vote on the frequency as to when to hold the vote to approve the Company's named executive officer compensation, the frequency choice receiving the greatest number of votes - one year, two years or three years - will be the frequency that shareholders will be deemed to have approved. If you (1) fail to submit a proxy or vote during the Annual Meeting or (2) mark "Abstain" for Proposal 4, it will have no effect on the outcome of that proposal.
With respect to Proposal 5, ratification of the appointment of
Voting Shares Held in Accounts with Brokerage Firms and Similar Organizations
If your shares are held in an account with a broker or other custodian, then your shares are held in "street name." The firm that holds your shares, or its nominee, is considered the registered shareholder for purposes of voting at the Annual Meeting, and you are considered the beneficial owner. As a beneficial owner, you have the right to direct the firm how to vote the shares held for you, and you must follow the instructions of that firm in order to vote your shares or to change a previously submitted voting instruction. If the firm does not receive instructions from you on how to vote your shares on a "non-routine"matter (as described below), that firm does not have the authority to vote on that matter with respect to your shares. Check the information forwarded to you by the firm to see which voting methods are available to you. If you plan to vote in person at the Annual Meeting, you should contact the organization in which your shares are held to obtain a legal proxy or broker's proxy card and bring it to the meeting as proof of your authority to vote the shares. If your shares are held through a broker or other custodian and you wish to revoke your proxy or change your vote, you should contact that organization.
Voting on Routine and Non-RoutineMatters
If you own shares that are held in street name, and you do not provide the firm that holds the shares with specific voting instructions, then, under applicable rules, the firm that holds the shares may generally vote on "routine" matters but cannot vote on "non-routine"matters. If the firm that holds such shares does not receive instructions from you on how to vote your shares on a non-routinematter, that firm will inform the inspector of election of the Annual Meeting that it does not have the authority to vote on the matter with respect to the shares. This is generally referred to as a "broker non-vote."
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Proposal 1 (election of directors), Proposal 2 (amendment to articles of incorporation to declassify the Board), Proposal 3 (say on pay vote), and Proposal 4 (say on pay frequency vote) in this Proxy Statement are matters that are considered non-routineunder applicable rules. A broker or other custodian cannot vote without instructions on a non-routinematter, and therefore broker non-votesmay exist in connection with such proposals. Proposal 5 (ratification of independent registered public accounting firm) is considered a routine matter. A broker or other custodian generally may vote on routine matters, and therefore we expect no broker non-votesin connection with Proposal 5.
Revocation and Voting of Proxies
Execution or submission of a proxy will not affect a registered shareholder's right to attend the Annual Meeting and vote in person during the meeting. Any registered shareholder who has executed or submitted a proxy may revoke it by attending the Annual Meeting and voting in person during the meeting. A registered shareholder may also revoke his or her proxy at any time before it is exercised by filing a written notice with the Corporate Secretary of the Company or by submitting a proxy bearing a later date. Proxies will extend to, and will be voted during, any adjourned session of the Annual Meeting.
If your shares are held in street name, please follow the instructions delivered with the notice from your broker or other custodian or contact them for instructions on how to change or revoke your vote.
How Shares will be Voted
Shares represented by proxies will be voted at the Annual Meeting as follows:
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Properly Completed Proxies- Shares represented by a properly completed proxy that contains voting instructions will be voted in accordance with the voting instructions specified in the proxy. |
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Proxies Without Voting Instructions- Shares represented by proxies that are properly signed and dated or submitted via the Internet but which do not contain voting instructions will be voted in accordance with the Board's recommendations set forth above. |
| • |
Abstentions- We will count a properly executed or submitted proxy indicating "Abstain" for purposes of determining whether there is a quorum present at the Annual Meeting, but the shares represented by that proxy will not be voted at the Annual Meeting. |
| • |
Broker Non-votes - Your broker or other custodian may not vote your shares for you with respect to Proposals 1, 2, 3, and 4 unless you provide instructions to your broker or other custodian on how to vote them. You should follow the directions provided by your broker or other custodian regarding how to instruct your broker or other custodian to vote your shares. If you do not do this, your broker or other custodian may not vote your shares with respect to Proposals 1, 2, 3, and 4 (i.e., a broker non-vote). |
A properly submitted proxy indicating "withhold" with respect to the election of one or more directors will count toward a quorum but will not be voted with respect to the director or directors indicated.
Costs of Solicitation
The cost of solicitation of proxies will be borne by the Company. Solicitation is being made by mail, and if necessary, may be made in person, by telephone, email or other electronic means, or by special letter by directors, officers and regular employees of the Company, acting without extra compensation. In addition, the Company has engaged
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PROPOSAL 1 - ELECTION OF DIRECTORS
The number of directors constituting the Board is currently set at 13. The Board is divided into three classes (I, II and III), with directors to be apportioned as evenly as possible among the classes and serving staggered three-year terms.
In
The term of office for the Class II directors will expire at the Annual Meeting. The Class II director nominees are
All other directors will continue in office following the Annual Meeting and their terms will expire in either 2026 (Class III) or 2027 (Class I). Provided that the Company's shareholders approve the proposal to amend the articles of incorporation to declassify the Board, the entire Board will be elected annually beginning with the 2028 annual meeting of shareholders.
The election of each nominee for director requires the affirmative vote of the holders of a plurality of the shares of common stock cast in the election of directors. The persons named in the proxy will vote for the election of the nominees named below unless authority is withheld. If, for any reason, the persons named as nominees should become unavailable to serve, an event that management does not anticipate, proxies will be voted for such other persons as the Board may designate. Each nominee has consented to being named in this Proxy Statement and has agreed to serve, if elected. There are no current arrangements between any nominee and any other person pursuant to which a nominee was selected. No family relationships exist among any of the directors or between any of the directors and executive officers of the Company.
The following biographical information discloses each director's and nominee's age and business experience, including the specific skills or attributes that qualify each director or nominee for service on the Board, and the year that each individual was first elected to the Board.
The Board recommends the nominees, as set forth below, for election. The Board recommends that shareholders vote "FOR" each of the nominees.
Nominees for Election as Directors
For Terms Expiring in 2028 (Class II)
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in the PwC Banking practice in the
Incumbent Directors
Terms Expiring in 2027 (Class I)
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served on the Board of Directors of
Terms Expiring in 2026 (Class III)
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the intersection of Fintech and Community Banking. Prior to joining Castle Creek,
Retiring Directors
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
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by
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
General
The business and affairs of the Company are managed under the direction of the Board in accordance with the Virginia Stock Corporation Act and the Company's Articles of Incorporation and Bylaws. Members of the Board are kept informed of the Company's business through discussions with the Chairman of the Board, the President and Chief Executive Officer, and other officers, by reviewing materials provided to them and by participating in meetings of the Board and its committees.
Each director of the Company also serves as a director of the Bank. Our directors are actively involved in the Company's strategic planning process.
Board Leadership
The Board considers its structure and leadership annually. To date, we have chosen not to combine the positions of President and Chief Executive Officer and Chairman. The Chair of the Board is a non-managementdirector, and the Chair and Vice Chair are elected annually.
Board Independence
The Board in its business judgment has determined that 12 of its 13 current members are "independent" as that term is defined by
Board Members Serving on Other Publicly Traded Company Boards of Directors
Board and Committee Meeting Attendance
Each director is expected to devote sufficient time, energy and attention to ensure diligent performance of the director's duties, including attendance at meetings of the Board and its committees. In 2024, there were 15 meetings of the Company's Board of Directors and 12 meetings of the Bank's Board of Directors. Each director then serving attended greater than 75% of the aggregate number of meetings of the Company's Board of Directors and meetings of committees of which the director was a member in 2024.
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Executive Sessions
The Board generally holds executive sessions of non-employeedirectors at each Board meeting. At least one executive session each year is held for the purpose of formally evaluating the President and Chief Executive Officer. Any independent director can request that an executive session be scheduled.
Board Involvement in Risk Oversight
The Board oversees risk to be reasonably certain that the Company's risk management policies, procedures, and practices are consistent with corporate strategy and functioning appropriately. The Board performs risk oversight in several ways, including through the Enterprise Risk Management Committee. The Enterprise Risk Management Committee is responsible for providing fiduciary oversight to achieve the Company's enterprise risk management vision and mission with regards to the Company's risk management program. The Committee exercises general oversight of executive management's responsibilities to assess and manage the Company's strategic risk, reputational risk, credit risk, market risk (includes liquidity and interest rate risk), price risk, operational risk (includes information technology risk), and compliance risk. The Board establishes standards for risk management by approving policies that address and mitigate the Company's most material risks. These include policies addressing credit risk, interest rate risk, capital risk, liquidity risk, and cybersecurity risk, as well as Bank Secrecy Act/Anti-Money-Laundering compliance. The Board also monitors, reviews, and reacts to risk through various reports presented by management, internal and external auditors, legal counsel and regulatory examiners.
Committees of the Board
The Board has, among others, a standing Audit Committee, a Compensation Committee and a Governance Committee.
Audit Committee. The current members of the Audit Committee are
The Audit Committee has adopted a charter that provides guidance to the Committee, the entire Board and the Company regarding the Committee's purposes, goals, responsibilities, functions and its evaluation. A copy of the charter is available on the Company's website at www.mybrb.bankunder "Investor Relations." The Audit Committee provides independent and objective oversight of the integrity of the Company's financial statements, the accounting functions and internal controls of the Company and its subsidiaries and affiliates (as applicable), compliance with legal and regulatory requirements, the Company's independent registered auditors' qualifications and independence, and the performance of the Company's independent registered auditors, and the Company's internal audit function. The Audit Committee and the Board have the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the independent accountants and internal auditors. The Committee also reviews and advises the Board with respect to the Bank's risk management policies, and tax policies. The Audit Committee met 14 times during the year ended
Compensation Committee. The current members of the Compensation Committee are
The Compensation Committee has adopted a charter that provides guidance to the Committee, the entire Board and the Company regarding the administration of the compensation programs and policies of the Company. A copy of the charter is available on the Company's website at www.mybrb.bankunder "Investor Relations." The Compensation Committee provides assistance to the Board in fulfilling its responsibility to shareholders, potential shareholders, and the investment community to ensure that the Company's officers, key executives, and Board members are compensated in accordance with the Company's total compensation objectives and executive compensation philosophy and strategy. The Committee recommends and approves the compensation policies, strategies, and pay levels necessary to support organizational objectives. The Compensation Committee met eight times during the year ended
Governance Committee. The current members of the Governance Committee are Messrs.
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The Governance Committee has adopted a charter that provides guidance to the Committee, the entire Board and the Company regarding the process for identifying and recommending directors to the Board. A copy of the charter is available on the Company's website atwww.mybrb.bankunder "Investor Relations." The Governance Committee provides assistance to the Board in fulfilling its responsibility to shareholders, potential shareholders, regulators, and the investment community to ensure that the Board practices create a governance environment conducive to value creation and risk management. Among other things, the Governance Committee is responsible for (i) selecting and recommending to the Board nominees for election at annual meetings of shareholders, (ii) selecting and recommending to the Board nominees to fill Board vacancies, and (iii) reviewing and recommending to the full
In identifying potential nominees, the Governance Committee takes into account such factors as it deems appropriate, including the current composition of the Board to ensure diversity among its members. Diversity includes the range of talents, experiences, and skills that would best complement those that are already represented on the Board, the balance of management and independent directors, and the need for specialized expertise. Among other things, directors of the Company should possess the following qualifications, qualities, skills or expertise:
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the highest ethics, integrity and values; |
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outstanding personal and professional reputations; |
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professional experience and personal expertise that help the Board create shareholder wealth and represent the interests of shareholders; |
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knowledge of issues affecting the Company; |
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the ability to exercise independent business judgment; |
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freedom from conflicts of interest; |
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demonstrated leadership skills; and |
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the willingness and ability to devote the time necessary to perform the duties and responsibilities of a director. |
The Governance Committee considers candidates for Board membership suggested by its members, by management, and by shareholders of the Company. Candidates suggested by shareholders are considered on the same basis as candidates suggested by Committee members and management.
Compensation Committee Interlocks and Insider Participation
None of the members of the Company's Compensation Committee is or has been an officer or employee of the Company or any of its subsidiaries. In addition, none of the Company's executive officers serves or has served as a member of the board of directors, compensation committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of the Company's directors or on its Compensation Committee.
Corporate Governance Guidelines
The Company's Corporate Governance Guidelines supplement the Company's articles of incorporation and bylaws, the charters of the Board's committees and the laws and regulations to which the Company is subject to provide the foundation for the Company's governance. The guidelines cover, among other matters, the roles of the Board and management, the Board's critical functions, and director responsibilities and qualifications. A copy of the Corporate Governance Guidelines is available on the Company's website at www.mybrb.bankunder "Investor Relations."
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Board Skills and Diversity Matrix
The following matrix summarizes areas of skills and experience that our Board considers important to maintain effective oversight of the Company. The matrix shows the skills, demographics, tenure, and other attributes that are assessed in connection with Board nominations. Although the matrix is not required, the Board voted to approve its inclusion in this Proxy Statement. Each director also contributes other important skills, experience, and personal attributes to the Board that are not reflected within the table below.
| Beale | Bost | Cozart | Crowther | Jones | McMullan | Montano | Patterson | Reynolds | Scavuzzo | Spilman | Stokes | Woodruff | ||||||||||||||||||||||||||||||||
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Professional Skills and Experience |
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X | X | X | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||
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Corporate Governance /Ethics |
X | X | X | X | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||
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Cybersecurity |
X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||
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Executive Experience |
X | X | X | X | X | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||
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Information Technology |
X | X | X | X | ||||||||||||||||||||||||||||||||||||||||
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Law |
X | |||||||||||||||||||||||||||||||||||||||||||
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Mergers and Acquisitions |
X | X | X | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||
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Private Equity |
X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||
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Risk Management |
X | X | X | X | X | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||
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Strategic Planning/ Oversight |
X | X | X | X | X | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||
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Demographics |
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Gender Identity |
M | M | F | F | M | M | M | M | M | M | M | M | F | |||||||||||||||||||||||||||||||
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X | X | ||||||||||||||||||||||||||||||||||||||||||
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Hispanic |
X | |||||||||||||||||||||||||||||||||||||||||||
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White/Caucasian |
X | X | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||
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Board Tenure and Independence |
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Years |
2 | 19 | 2 | 14 | 2 | 1 | 1 | 23 | 6 | 1 | 6 | 13 | 6 | |||||||||||||||||||||||||||||||
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Independence |
X | X | X | X | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||
Code of Ethics
The Company has adopted a Code of Ethics and Conflict of Interest Policy that applies to directors, executive officers and employees of the Company and the Bank. A copy of the code is available on the Company's website at www.mybrb.bankunder "Investor Relations."
Communications with Directors
Any director may be contacted by writing to the named director, c/o
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OWNERSHIP OF COMPANY COMMON STOCK
Security Ownership of Directors, Executive Officers and Certain Beneficial Owners
The following table sets forth information as of
| Shares of Common Stock Beneficially Owned (1) |
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Number | Percentage | ||||||
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Directors and Named Executive Officers: |
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626,477 | (2)(3) | * | |||||
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187,322 | (2)(3) | * | |||||
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56,846 | (2) | * | |||||
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46,495 | * | ||||||
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20,734 | (3) | * | |||||
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229,234 | (2)(4)(5) | * | |||||
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12,495 | * | ||||||
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1,000 | * | ||||||
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618,490 | (6) | * | |||||
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341,442 | (2)(3)(4) | * | |||||
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32,712 | * | ||||||
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- | * | ||||||
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143,216 | (2)(4) | * | |||||
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118,869 | (2) | * | |||||
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141,566 | (2)(3) | * | |||||
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All of the Company's directors and executive officers as a group (19 individuals) |
2,706,479 | (7) | 3.08 | % | ||||
| Shares of Common Stock Beneficially Owned (1) |
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Number | Percentage | ||||||
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5% Shareholders: |
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29,998,257 | (8) | 30.68 | % | ||||
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17,285,078 | (9) | 18.48 | % | ||||
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6,668,706 | (10) | 7.40 | % | ||||
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6,412,787 | (11) | 7.14 | % | ||||
| * |
Represents less than 1% of the applicable class of capital stock. |
| (1) |
Based on 87,785,224 shares of the Company's common stock outstanding as of |
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| (2) |
Includes shares of unvested restricted stock, as follows: |
| (3) |
Includes shares held by affiliated corporations, spouses, other close relatives and dependent children, or as custodians or trustees, as follows: |
| (4) |
Includes shares that may be acquired pursuant to currently exercisable stock options as follows: |
| (5) |
Includes shares allocated to the participant's account in one of the Company's Employee Stock Ownership Plans and 401(k) Plan, as follows: |
| (6) |
Includes a warrant that is currently exercisable to purchase 216,836 shares of common stock. |
| (7) |
Includes 4,897 shares allocated to accounts in one of the Company's Employee Stock Ownership Plans and 401(k) Plan, 501,192 shares of unvested restricted stock, and 11,683 shares that may be acquired pursuant to currently exercisable stock options. |
| (8) |
Based on information set forth in a Schedule 13D/A filed with the |
| (9) |
Based, in part, on information set forth in a Schedule 13D filed with the |
| (10) |
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| (11) |
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Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and any persons who beneficially own more than 10% of the Company's common stock, to file reports of ownership and changes in ownership with the
A Form 3 for each of Messrs. McMullan, Montano, Roberts, and Scavuzzo, and
Securities Hedging
The Company does not have any practices or policies regarding the ability of employees or directors to engage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company's common stock (including prepaid variable forward contracts, short sales, equity swaps, puts, collars, exchange funds, or similar transactions).
Insider Trading Policy
The Company has adopted an insider trading policy that governs the purchase, sale, and/or other transactions of the Company's securities by its directors, officers, and employees. In addition, with regard to the Company's trading in its own securities, it is the Company's policy to comply with the federal securities laws and the applicable exchange listing requirements.
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EXECUTIVE COMPENSATION
Overview
This section explains the Company's executive compensation program for its named executive officers listed below. This section also describes the process of the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") for making pay decisions, as well as its rationale for specific decisions related to the year ended
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Positions |
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| President and Chief Executive Officer of the Company; Chief Executive Officer of the Bank | ||
| Executive Vice President and Chief Financial Officer of the Company and the Bank; President of the Bank | ||
| Chief Operations and Technology Officer of the Bank |
Shareholder Say on Pay Vote
As of
As part of this transition, shareholders will have their first opportunity to cast a non-bindingadvisory vote to approve the Company's named executive officer compensation at the Annual Meeting. While this vote is advisory, the Compensation Committee values shareholder feedback and will consider the results when making future executive compensation decisions.
Following the vote at the Annual Meeting and depending on the outcome of Proposal 4 (regarding the frequency of future say on pay votes), the Company's next say on pay vote is expected to occur at the 2028 annual meeting of shareholders.
Principles and Objectives of the Company's Compensation Program
The Company's executive compensation program is designed to attract and retain highly skilled and motivated executive officers who will manage the Company in a manner to promote its growth and profitability and advance the interests of its shareholders. Additional objectives of the Company's executive compensation program include the following:
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to align executive pay with shareholders' interests; |
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to recognize individual initiative and achievements; and |
| • |
to deter excessive risk taking. |
The Company's executive compensation program includes the following key elements:
|
Pay Element |
How It's Paid |
Purpose |
||
| Base Salary | Cash (Fixed) | Provide a competitive base salary rate relative to similar positions in the market and enable the Company to attract and retain critical executive talent. | ||
| Annual Incentives | Cash (Variable) | Reward executives for delivering on annual financial and strategic objectives that contribute to the creation of shareholder value. | ||
| Long-Term Incentives | Equity (Variable) | Provide incentives for executives to execute on longer-term financial goals that drive the creation of shareholder value and support the Company's leadership retention objectives. |
14
Compensation Practices and Policies
The Company also believes the following practices and policies within the Company's program promote sound compensation governance and are in the best interests of its shareholders and executives:
|
What We Do |
What We Don't Do |
|||||
| ✓ | Emphasize variable pay over fixed pay, with a portion tied to individual and Company performance | × | No golden parachute tax gross-ups.The Company doesn't allow for tax gross-upsunder employment agreements or other severance plans | |||
| ✓ | Maintain a clawback policy | × | No repricing or exchange of underwater options without shareholder approval | |||
| ✓ | Emphasize long-term performance - equity award programs vest over a multi-year period. | × | No option or stock appreciation rights granted below fair market value | |||
| ✓ | Provide for "double-trigger" equity award vesting and severance benefits upon a change in control | × | No supplemental executive retirement plans | |||
| ✓ | Use an independent compensation consultant | × | No significant perquisites | |||
| × | No multi-year compensation guarantees - the Company's employment agreements and compensation plans do not generally provide for any multi-year compensation. | |||||
Compensation Benchmarking and Decisions
The Company's executive compensation programs are administered by or under the direction of the Compensation Committee. The Compensation Committee approves compensation policies, strategies and pay levels necessary to support organizational objectives and makes recommendations to the
In determining the compensation of its executive officers, the Compensation Committee evaluates total overall compensation, as well as the mix of salary, cash incentives and bonuses, equity compensation, retirement benefits and other benefits, using a number of factors including the following:
| • |
the Company's financial, operating, and competitive performance measured by attainment of strategic objectives and operating results on a standalone basis and compared to peer companies; |
| • |
the duties, responsibilities, and performance of each executive officer of the Company, including the achievement of identified goals for the year as they pertain to the areas of the Company's operations for which the executive is personally responsible and accountable; |
| • |
historical cash and other compensation levels; and |
| • |
comparative industry market data to assess compensation competitiveness. |
The role of the Company's Chief Executive Officer in determining executive compensation is limited to input in the performance evaluation of the other named executive officers of the Company. The Company's Chief Executive Officer has no input in the determination of his own compensation, which is determined by the independent members of the Board after receiving a recommendation by the Compensation Committee. Likewise, the other named executive officers have no role in the determination of their own compensation.
Role of Compensation Consultant
During 2023 and continuing into 2024, the Compensation Committee retained the services of
Pearl Meyer reports directly to the Compensation Committee and does not provide any additional services to management or the Board. The Compensation Committee has analyzed whether the work of Pearl Meyer as the compensation consultant raised any conflict of interest, considering relevant factors in accordance with
15
Executive Compensation Program
To support the Company's philosophy and achieve its objectives, the Compensation Committee analyzes each of the following elements of compensation against comparative market data, and generally seeks to position each element around the market median, while differentiating individual compensation based on experience, role, position, individual performance, and other factors.
Base Salary
Effective
|
|
2023 Base Salary |
2024 Base Salary |
||||||
|
|
$ | 547,000 | $ | 697,500 | ||||
|
|
$ | 378,000 | $ | 385,560 | ||||
|
|
$ | 345,000 | $ | 365,726 | ||||
Short-Term Incentive Compensation
The Company maintains an annual cash incentive program for its executive officers. For the most recently completed fiscal year, the Compensation Committee exercised its discretion in determining short-term incentive awards, recognizing each named executive officer's leadership in navigating a period of transformation. During 2024, the Company took significant steps to strengthen its financial position and align its strategy with long-term objectives. The named executive officers played a critical role in repositioning the balance sheet, enhancing capital levels, and driving key initiatives to stabilize operations. The Compensation Committee assessed how each named executive officer contributed to these efforts, focusing on leadership in addressing challenges, maintaining stability, and advancing strategic priorities in determining awards for 2024 performance. These awards are reported under the "Bonus" column of the Summary Compensation Table.
Long-Term Incentive Compensation
The Company has a long-term equity incentive program designed to provide incentives for the Company's executive officers to execute on longer-term financial goals that drive the creation of shareholder value and support the Company's leadership retention objectives. The Company's long-term incentive program and current equity incentive plan are each administered by the Compensation Committee, which has the power to identify which participants will be granted awards, and determines the terms and conditions applicable to the awards. In general, named executive officers participating in the program will have a target award opportunity based on competitive market practice and denominated as a percentage of base salary.
In recent years, the Compensation Committee has granted long-term equity awards to the Company's executive officers using a mix of 50% performance-based restricted stock awards and 50% time-based restricted stock awards. However, for 2024, the Compensation Committee granted 100% time-based restricted stock awards due to the challenges of setting meaningful long-term performance goals during a period of business uncertainty. This approach provided stability to the organization by ensuring continued executive engagement while the Company navigated evolving market conditions. The 2024 awards vest evenly on the first, second and third anniversaries of the grant date, provided that the executive officer remains employed with the Company through the applicable vesting date.
For 2025, with greater clarity into the Company's long-term financial objectives and improved ability to set meaningful performance goals, the Compensation Committee has determined to grant long-term equity awards using 100% performance-based awards. Beginning with the 2025 grants, all equity awards will be in the form of performance-based restricted stock, with vesting tied to Core Retuon Average Assets (Core ROAA) over three one-yearperformance measurement periods.
16
Summary Compensation Table
The following table sets forth certain information regarding the compensation paid to or earned by the named executive officers of the Company for the years presented.
|
Principal Position |
Year | Salary | Bonus (1) | Stock Awards (2) |
Non-Equity Incentive Plan Compensation (3) |
All Other Compensation (4) |
Total | |||||||||||||||||||||
|
|
2024 | $ | 697,500 | $ | 279,000 | $ | 418,500 | $ | - | $ | 23,683 | $ | 1,418,683 | |||||||||||||||
|
President and Chief Executive Officer |
2023 | $ | 354,498 | $ | 195,866 | $ | 410,242 | $ | - | $ | 20,673 | $ | 981,279 | |||||||||||||||
|
|
2024 | $ | 385,560 | $ | 115,000 | $ | 154,225 | $ | - | $ | 30,856 | $ | 685,641 | |||||||||||||||
|
Executive Vice President and Chief Financial Officer |
2023 | $ | 378,000 | $ | - | $ | 165,371 | $ | 75,000 | $ | 21,080 | $ | 639,451 | |||||||||||||||
|
|
2024 | $ | 365,726 | $ | 115,000 | $ | 128,004 | $ | - | $ | 44,257 | $ | 652,987 | |||||||||||||||
|
Chief Operations and Technology Officer |
||||||||||||||||||||||||||||
| (1) |
Consists of a discretionary performance cash bonus. |
| (2) |
The amounts represent the grant date fair value of the awards calculated in accordance with the |
| (3) |
The amount represents a cash payment under the Company's 2023 annual cash incentive program that provided for awards based on the performance of the Company in certain key areas. |
| (4) |
The amounts represent the Company's contributions to the 401(k) plan, and employee health and wellness plans. |
| (5) |
|
| (6) |
|
17
Outstanding Equity Awards
The following table provides certain information on the value of unexercised stock options and unvested restricted stock previously awarded to the Company's named executive officers and outstanding as of
Outstanding Equity Awards at Fiscal Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||
|
|
Grant Date |
Number of Securities Underlying Unexercised Options Exercisable (1) |
Option Exercise Price |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested |
Market Value of Shares or Units of Stock That Have Not Vested (2) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (2) |
||||||||||||||||||||||
|
|
170,122 | (3) | $ | 547,793 | - | - | ||||||||||||||||||||||||
| 18,542 | (4) | $ | 59,705 | 27,813 | (5) | $ | 89,558 | |||||||||||||||||||||||
|
|
62,693 | (3) | $ | 201,872 | - | - | ||||||||||||||||||||||||
| 4,984 | (3) | $ | 16,049 | 11,211 | (5) | $ | 36,099 | |||||||||||||||||||||||
| 1,373 | (3) | $ | 4,421 | 4,119 | (5) | $ | 13,263 | |||||||||||||||||||||||
| 3,750
3,750 |
$
$ |
13.15
10.80 |
||||||||||||||||||||||||||||
|
|
52,034 | (3) | $ | 167,550 | ||||||||||||||||||||||||||
| 6,667 | (3) | $ | 21,468 | |||||||||||||||||||||||||||
| (1) |
All stock options are exercisable and were assumed in connection with the Company's acquisition of Bay Banks on |
| (2) |
The market value of unearned shares that have not vested is based on the closing sales price of the Company's common stock on |
| (3) |
The time-based restricted stock awards vest evenly on the first, second and third anniversaries of the grant date, provided that the executive has remained continuously employed with the Company through the applicable vesting date. |
| (4) |
The time-based restricted stock award vests at the end of the third anniversary of the grant date, provided that the executive has remained continuously employed with the Company through the applicable vesting date. |
| (5) |
The performance-based restricted stock awards vest at the end of a three-year performance period and are contingent on the Company's actual retuon average assets performance at the end of the performance period and the executives remaining continuously employed with the Company through the end of the performance period. |
18
Stock Incentive Plan
The Company maintains the
The Compensation Committee administers the 2023 Plan, identifies which participants will be granted awards, and determines the terms and conditions applicable to the awards. To date, the Compensation Committee has only granted restricted stock awards under the 2023 Plan. The value of the stock awarded is based on the fair market value of the Company's common stock at the time of the grant. The Company recognizes compensation expense equal to the value of such awards over the applicable vesting period. The 2023 Plan prohibits the payment of dividends or similar distributions on awards, whether subject to time-based or performance-based vesting, unless and until the vesting requirements have been met, and prohibits share recycling.
The 2023 Plan was initially adopted by the Board on
Under the 2023 Plan, of the 4,850,000 shares authorized, 4,079,810 shares were available for granting purposes as of
Employment and Change in Control Agreements
Securing the continued service of key executives is essential to the successful future of the Company. Employment agreements and change in control agreements can assist the Company by attracting and retaining key executives. Below is a description of the current agreements that the Company has with its named executive officers.
The Company's use of employment agreements is limited to only a select number of the Company's executive officers. The Company currently has agreements with the President and Chief Executive Officer of the Company and Chief Executive Officer of the Bank (
The Company's obligation to pay any severance under each of the employment agreements is conditioned on the execution by the named executive officer of a general release and waiver of any and all claims with respect to their employment with the Company.
The terms of these agreements were negotiated and determined with consideration of the best interests of the Company and its shareholders. In attracting and securing a talented team of executive officers, the Company believes it has positioned the organization to successfully execute its growth strategy and vision.
Employment Agreement with
The 2025 Beale Agreement provides for a two-yearemployment term that will expire on
19
Pursuant to the 2025 Beale Agreement, in the event
The 2025 Beale Agreement contains restrictive covenants relating to the protection of confidential information, non-disclosure,non-competitionand non-solicitation.The non-competitionand non-solicitationcovenants generally continue for a period of 12 months following the termination of
Employment Agreement with
The 2025 Gavant Agreement provides for a two-yearemployment term that will expire on
The 2025 Gavant Agreement provides for benefits in the event her employment is terminated by the Company without "cause" or by her for "good reason" (as those terms are defined in the agreement). In such cases, she will be entitled to receive (i) her then-current base salary for the greater of the remainder of the term of her agreement or 12 months, and (ii) a welfare continuance benefit. The agreement provides for alternative benefits in the event
The 2025 Gavant Agreement contains restrictive covenants relating to the protection of confidential information, non-disclosure,non-competitionand non-solicitation.The non-competitionand non-solicitationcovenants generally continue for a period of 12 months following the termination of
Employment Agreement with
20
employment term that will expire on
period unless either party gives written notice of nonrenewal at least 90 days before the end of the then-current term. Pursuant to the agreement,
position with no cutback exceeds his
position with a cutback.
and
The
and
covenants generally continue for a period of 12 months following the termination of
covenant is operative only if the Company agrees to continue to pay his base salary during such
period.
The Company has a clawback policy that requires mandatory reimbursement of excess incentive compensation from any current or former executive officer if the Company's financial statements are restated due to material noncompliance with financial reporting requirements under the securities laws. The amount to be recovered will be the excess of incentive compensation paid to the executive based on the erroneous data over the incentive compensation that would have been paid to the executive had it been based on the restated results. Recoupment would cover any excess compensation received during the three completed fiscal years immediately preceding the date of which the Company is required to prepare the accounting restatement. The Company's clawback policy was adopted in 2023 to comply with the requirements of the
The named executive officers are eligible to participate in the same benefit plans designed for all the Company's full-time employees, including health, dental, vision, disability, basic group life insurance coverage and a 401(k) retirement benefit. The Company also has a limited number of perquisites offered to certain named executive officers, including use of a company-owned vehicle or an automobile allowance.
. In accordance with rules adopted by the
|
Year
|
Summary
Compensation Table Total for (1)
$
|
Summary
Compensation Table Total for (2)
$
|
Compensation
Actually Paid to (1)
$
|
Compensation
Actually Paid to (2)
$
|
Average
Summary Compensation Table Total for Non-CEO
NEOs $
|
Average
Compensation Actually Paid to Non-CEO
NEOs $
|
Value of
Initial Fixed Investment Based on Shareholder Retu (5)
$
|
Net
Income (in
millions) $
|
||||||||||||||||||||||||
|
2024
|
1,418,683
|
N/A
|
1,551,499
|
N/A
|
669,314
|
(4)
|
713,263
|
(4)
|
26.36
|
-15.4
|
||||||||||||||||||||||
|
2023
|
981,279
|
374,639
|
627,219
|
233,200
|
555,882
|
(3)
|
435,183
|
(3)
|
24.81
|
-51.8
|
||||||||||||||||||||||
| (1) |
|
| (2) |
|
| (3) |
The
Non-CEO
NEOs included for 2023 are: |
| (4) |
The
Non-CEO
NEOs included for 2024 are: |
| (5) |
Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company's share price at the end and the beginning of the measurement period by the Company's share price at the beginning of the measurement period.
|
To calculate the amounts in the "Compensation Actually Paid" columns with respect to the Company's CEO and
NEOs in the table above according to
|
2024
|
2023
|
|||||||||||||||||||
|
|
Average Non-CEO
NEOs |
|
|
Average Non-CEO
NEOs |
||||||||||||||||
|
Total Compensation from Summary Compensation Table
|
$
|
1,418,683
|
$
|
669,314
|
$
|
981,279
|
$
|
374,639
|
$
|
555,882
|
||||||||||
|
Adjustments for Equity Awards
|
||||||||||||||||||||
|
Adjustment for grant date values in the Summary Compensation Table
|
$
|
(418,500
|
)
|
$
|
(141,115
|
)
|
$
|
(410,242
|
)
|
$
|
-
|
$
|
(120,879
|
)
|
||||||
|
Year-end
fair value of unvested awards granted in the current year |
$
|
547,793
|
$
|
184,710
|
$
|
56,182
|
$
|
-
|
$
|
24,401
|
||||||||||
|
Year-over-year difference of
year-end
fair values for unvested awards granted in prior years |
$
|
3,523
|
$
|
1,238
|
$
|
-
|
$
|
-
|
$
|
(19,298
|
)
|
|||||||||
|
Fair values at vest data for awards granted and vested in current year
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
Difference in fair values between prior
year-end
fair values and vest date fair values for awards granted in prior years |
$
|
-
|
$
|
(884
|
)
|
$
|
-
|
$
|
(47,239
|
)
|
$
|
(4,923
|
)
|
|||||||
|
Forfeitures during current year equal to prior
year-end
fair value |
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(94,200
|
)
|
$
|
-
|
|||||||||
|
Dividends of dividend equivalents not other included in total compensation
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
|
Total Adjustments for Equity Awards
|
$
|
132,816
|
$
|
43,949
|
$
|
(354,060
|
)
|
$
|
(141,439
|
)
|
$
|
(120,699
|
)
|
|||||||
|
Compensation Actually Paid (as calculated)
|
$
|
1,551,499
|
$
|
713,263
|
$
|
627,219
|
$
|
233,200
|
$
|
435,183
|
||||||||||
NEOs compensation on a CAP basis relative to the Company's cumulative TSR for the fiscal years 2023 and 2024:
NEOs compensation on a CAP basis relative to the Company's Net Income for the fiscal years 2023 and 2024:
Director Compensation
The following table shows the compensation earned by each of the non-employeedirectors of the Company's Board during 2024.
|
|
Fees Earned or Paid in Cash ($) |
Stock Awards ($)(1)(2) |
Total ($) | |||||||||
|
|
$ | 55,216 | $ | 22,488 | $ | 77,704 | ||||||
|
|
58,985 | - | 58,985 | |||||||||
|
|
55,945 | - | 55,945 | |||||||||
|
|
35,292 | - | 35,292 | |||||||||
|
|
39,171 | - | 39,171 | |||||||||
|
|
25,375 | - | 25,375 | |||||||||
|
|
23,517 | - | 23,517 | |||||||||
|
|
42,390 | - | 42,390 | |||||||||
|
|
56,700 | - | 56,700 | |||||||||
|
|
43,833 | - | 43,833 | |||||||||
|
|
47,183 | - | 47,183 | |||||||||
|
|
37,116 | 21,904 | 59,020 | |||||||||
|
|
57,959 | - | 57,959 | |||||||||
|
|
44,767 | - | 44,767 | |||||||||
|
|
49,876 | 29,167 | 79,043 | |||||||||
|
|
41,485 | 20,300 | 61,785 | |||||||||
|
|
41,964 | 22,167 | 64,131 | |||||||||
| (1) |
The amounts represent the grant date fair value of the awards calculated in accordance with the |
| (2) |
Restricted stock awarded in 2024, as follows: |
| (3) |
Messrs. Dean, Dees, Farmar, Holzwarth, and Janney retired from the Board on |
| (4) |
Messrs. McMullan and Montano joined the Board in |
| (5) |
|
In 2024, non-employeedirectors of the Company received a
Compensation Committee Interlocks and Insider Participation. None of the members of the Company's compensation committee will be or will have been an officer or employee of the Company or any of its subsidiaries. In addition, none of the Company's executive officers serves or has served as a member of the board of directors, compensation committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of the Company's directors or on its Compensation Committee.
24
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Some of the directors and officers of the Company are at present, as in the past, customers of the Company, and the Company has had, and expects to have in the future, banking relationships in the ordinary course of its business with directors, officers, principal shareholders, and their associates, on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to the Company. These transactions do not involve more than the normal risk of collectability or present other unfavorable features.
The Company has not adopted a formal policy that covers the review and approval of related person transactions by the Board. The Board, however, does review all such transactions that are proposed to it for approval. During such a review, the Board will consider, among other things, the related person's relationship to the Company, the facts and circumstances of the proposed transaction, the aggregate dollar amount of the transaction, the related person's relationship to the transaction, and any other material information. The Company's Governance Committee also has the responsibility to review significant conflicts of interest involving directors or executive officers.
Private Placements
On
On
On
On
On
25
On
Pursuant to the securities purchase agreement entered into by the Company on
26
PROPOSAL 2 - APPROVAL OF AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO DECLASSIFY THE COMPANY'S BOARD OF DIRECTORS
Background
Article VI of the Company's articles of incorporation, as amended, currently divides the Board of Directors into three classes. Each class is elected for a three-year term, with the terms staggered so that approximately one-thirdof directors, plus any newly appointed directors, stands for election each year. There are currently five Class II directors, whose term expires at the Annual Meeting; four Class III directors, whose term expires at the 2026 annual meeting of shareholders; and four Class I directors, whose term expires at the 2027 annual meeting of shareholders.
Until recently, the Company's various Boards of Directors believed that a classified board structure served the best interests of the Company and its shareholders. Among other considerations, classified boards generally can provide for company and board continuity and stability, promote director independence that is less subject to management or outside influence, and inhibit coercive takeover tactics and special interest groups focused on short-term gain from taking rapid control of a company without giving its board the opportunity to negotiate the payment of an appropriate premium.
While the Board continues to believe these are important considerations, the Board also understands that the corporate governance best practices in recent years have moved away from classified boards in favor of electing all directors annually. As part of its ongoing responsibilities to monitor current developments in corporate governance and review and recommend changes to the Company's governing documents, the Governance Committee evaluated the classified board structure in early 2022 and considered, among other things, that an annual election of all directors would provide shareholders with greater opportunity to register their views at each annual meeting on the performance of the entire Board over the prior year. After carefully weighing these considerations, the Governance Committee and the Board concluded that the annual election of all directors would both enhance the Company's corporate governance practices and be an effective way to maintain and enhance the accountability of the Board. Accordingly, in
In early 2025, the Governance Committee again reviewed and evaluated the classified board structure. For the same reasons the Governance Committee believed in 2022 that a non-classifiedboard of directors was in the best interests of the Company and its shareholders, it again recommended to the Board that directors be elected on an annual basis. In
The Proposal
On
If the proposed amendment is approved by shareholders, the annual election of all directors would be phased in over a three-year period, commencing at the 2026 annual meeting of shareholders. Declassification would not result in the curtailment of any director's term of office. Rather, all current directors, including the directors elected at the Annual Meeting to serve for three-year terms expiring at the 2028 annual meeting, would complete their present three-year terms. Directors whose terms expire at the 2026 and 2027 annual meetings of shareholders would be nominated for election for one-yearterms. Beginning with the 2028 annual meeting, all director nominees would be nominated for election for one-yearterms.
If this proposal does not receive the required number of votes in favor, Article VI of the Company's articles of incorporation will not be amended, and all directors will continue to serve three-year terms.
27
Shareholder Vote Required
Approval of the amendment to the Company's articles of incorporation to declassify the Board of Directors requires the affirmative vote of at least 80% of the outstanding shares of the Company's common stock. Failures to vote, abstentions, and broker non-votes willnot count as votes cast on the proposal, and, accordingly, will have the same effect as votes against the proposed amendment.
The Board recommends that shareholders vote "FOR" approval of this proposal to amend the Company's articles of incorporation to declassify the Board of Directors.
28
PROPOSAL 3 - ADVISORY (NON-BINDING)VOTE TO APPROVE
NAMED EXECUTIVE OFFICER COMPENSATION
Shareholders of the Company are being given the opportunity to vote on an advisory (non-binding)resolution to approve the compensation of the named executive officers pursuant to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and rules of the
"RESOLVED, that the Company's shareholders approve, on an advisory basis, the compensation of the Company's named executive officers as disclosed in the Executive Compensation section of this Proxy Statement."
The Board believes that the Company's compensation policies and procedures are strongly aligned with the long-term interests of its shareholders. Because your vote is advisory, it will not be binding upon the Board. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
The Board recommends that shareholders vote "FOR" approval of this resolution to approve the compensation of the Company's named executive officers.
29
PROPOSAL 4 - ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
In addition to providing shareholders with the opportunity to cast an advisory vote on executive compensation, the Company is also providing shareholders with an advisory vote on whether the advisory vote on executive compensation should be held every year, every two years or every three years. This is commonly known as a "say on pay frequency" proposal.
The Board believes that conducting an advisory vote on executive compensation every three years is the most appropriate policy for the Company.
This vote is an advisory (non-binding)vote only. Shareholders can choose one of four options for this proposal: every year, every two years, every three years, or abstain.
Because your vote is advisory, it will not be binding upon the Board. The Board values the opinions expressed by shareholders in their votes on this proposal and will consider the outcome of this vote when determining the frequency of future advisory votes on executive compensation. The Company anticipates that the next "say on pay frequency" proposal will occur at the 2028 annual meeting of shareholders.
The Board recommends that shareholders vote for the option of "every three years" for future advisory votes on executive compensation.
30
PROPOSAL 5 - RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has appointed
Representatives of
Although shareholder ratification is not required by the Company's Bylaws or otherwise, the Board, as a matter of good corporate governance, is requesting that shareholders ratify the selection of
The Board unanimously recommends that you vote "FOR" the approval of the ratification of the appointment of
FEES OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following tables present aggregate fees paid or to be paid by the Company and the Bank for professional services rendered by
| Fiscal 2023 | Fiscal 2024 | |||||||
|
Audit Fees |
$ | 420,000 | $ | 417,100 | ||||
|
Audit-related Fees |
353,223 | 237,637 | ||||||
|
Tax Fees |
56,460 | 47,110 | ||||||
|
Total Fees |
$ | 829,683 | $ | 701,847 | ||||
The Audit Committee pre-approvesall audit, audit-related and tax services on an annual basis, and, in addition, authorizes individual engagements as needed.
REPORT OF THE AUDIT COMMITTEE
While management has the primary responsibility for the quality and integrity of the Company's financial statements and reporting processes, the Audit Committee provides oversight and assistance to management in fulfilling this responsibility. In its oversight responsibilities, the Committee reviewed and discussed with management, legal counsel, and the independent registered public accounting firm the audited financial statements included in the Company's Annual Report on Form 10-Kfor the year ended
In addition, the Audit Committee obtained from the Company's independent registered public accounting firm the written disclosure and the letter required by the
31
The Audit Committee also provided oversight of the internal audit functions of the Company, including the independence and authority of its reporting obligation, the proposed audit plan for the coming year, and the adequacy of management response to internal audit findings and recommendations.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-Kfor the year ended
| Audit Committee | ||
OTHER MATTERS
Management knows of no other business to be brought before the Annual Meeting. Should any other business properly be presented for action at the meeting, the shares represented by the enclosed proxy shall be voted by the persons named therein in accordance with their best judgment and in the best interests of the Company.
SHAREHOLDER NOMINATIONS AND PROPOSALS
For a shareholder to nominate a candidate for director at the Company's 2026 annual meeting of shareholders, notice of nomination must be received by the Corporate Secretary of the Company not less than 60 days and not more than 90 days prior to
In addition to satisfying the notice and other requirements of the Company's bylaws with respect to the nomination of director candidates, shareholders who intend to solicit proxies in support of director nominees, other than the Company's nominees, must also comply with the requirements of Rule 14a-19under the Exchange Act relating to universal proxies.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-Kfor the year ended
32
APPENDIX A
ARTICLE VI
STAGGEREDTERMS FOR DIRECTORS
The Board of Directors of the corporation shall be divided into three classes, a first class, second class and third class with one third of the Directors being in each class. Each class of Directors shall be elected for three year terms.
Until the 2026 annual meeting of shareholders, the Board of Directors of the Corporation shall be divided into three classes, a first class, second class and third class, as nearly as equal in number as possible. Beginning with the 2026 annual meeting of shareholders, each director nominee of the Corporation shall be elected to hold office for a term expiring at the next succeeding annual meeting of shareholders and until such director's successor shall have been elected and qualified or until such director's earlier death, resignation or removal; provided, however, no terms in effect prior to the 2026 annual meeting shall be shortened. Accordingly, (i)at the 2026 annual meeting of shareholders, the director nominees standing for election to fill directorships held by directors whose terms expire at that meeting shall be elected to hold office for a term expiring at the 2027 annual meeting of shareholders, (ii)at the 2027 annual meeting of shareholders, the director nominees standing for election to fill directorships held by directors whose terms expire at that meeting shall be elected to hold office for a term expiring at the 2028 annual meeting of shareholders and (iii)at the 2028 annual meeting of shareholders and each annual meeting of shareholders thereafter, all director nominees shall be elected to hold office for a term expiring at the next succeeding annual meeting of shareholders.
A-1
C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE SACKPACK 000000000.000000 ext 000000000.000000 ext Your vote matters - here's how to vote! MR A SAMPLE You may vote online or by phone instead of mailing this card. DESIGNATION (IF ANY) ADD 1 Votes submitted electronically must be ADD 2 000001 ADD 3
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