DEF 14A of Univest Financial Corp
Filed Mar 15, 2024 · FY20230000102212-24-000013
ELECTION OF DIRECTORS AND ALTERNATE DIRECTOR
ELECTION OF DIRECTORS AND ALTERNATE DIRECTOR The person named in the accompanying proxy card intends to vote to elect as Directors and Alternate Director, as applicable, the nominees listed below, unless authority to vote for Directors is withheld in the proxy card. The Corporation's Bylaws (the "Bylaws") authorize the Board to fix the number of Directors to be elected. The Corporation's Board is presently comprised of eleven directors elected for terms of three years, approximately one-third of whom stand for election each year and one alternate director who stands for election each year. The leadership of our Board is comprised of: (i) our Chairman (who also serves as our President and Chief Executive Officer ("CEO")), (ii) our Lead Independent Director, Joseph P. Beebe, and (iii) our committee chairs. Following the Annual Meeting, our Board of Directors will consist of ten members, as William S. Aichele, our former Chairman, will be retiring at the end of his current three-year term as a Director, which expires at the 2024 Annual Meeting. Upon the retirement of Mr. Aichele, the Board intends to decrease the size of the Board from eleven to ten members in accordance with the Corporation's Bylaws. The Board has established the number of Class I Directors at three, each of which will be elected for a three-year term expiring in 2027 and one Alternate Director to be elected for a one-year term expiring in 2025. The Nominating and Governance Committee has recommended the slate of nominees listed below for election. All nominees have indicated that they are willing to serve as Directors, but if any of them should decline or be unable to serve, the person named in the proxy card will vote for the election of such other person or persons as may be designated by the Board, unless the Board reduces the number of Directors in accordance with the Bylaws. The biographies of each of the nominees and continuing members of the Board of Directors are set forth below. The biographies contain information regarding the person’s business experience and certain other experiences, qualifications, attributes or skills. The nominees and continuing members of the Board of Directors have a diversity of experience and a wide variety of backgrounds, skills and qualifications that strengthen their ability to provide oversight. As described in the following biographies, the majority of directors also have specific experience in environmental, social and governance ("ESG") issues and oversight. All nominees are currently Directors or Alternate Directors and dates indicating the first year that an individual became a Director refer to the initial year as a Director or Alternate Director of the Corporation or the Bank.
Class I Directors (each continuing for a three-year term expiring at the 2027 Annual Meeting of Shareholders)
Class I Directors (each continuing for a three-year term expiring at the 2027 Annual Meeting of Shareholders)
Class II Directors (each continuing for a three-year term expiring at the 2025 Annual Meeting of Shareholders)
Class II Directors (each continuing for a three-year term expiring at the 2025 Annual Meeting of Shareholders)
Michael L. Turner
Michael L. Turner Michael L. Turner has been a partner in the law firm of Marshall, Dennehey, Warner, Coleman & Goggin since 2007, and currently serves on the firm’s Diversity, Equity and Inclusion Committee. Mr. Turner was a founder of Valley Green Bank and served on its board of directors from 2005 until its acquisition by the Corporation in 2015. Mr. Turner was a founder and member of the Philadelphia law firm of Kelly, Jasons, McGuire & Spinelli from 1989 to 2007, serving as managing partner for five years. Mr. Turner specializes in the preparation and trial of complex personal injury, product liability and criminal cases. Before entering into private practice, Mr. Turner was an Assistant District Attorney for the City of Philadelphia from 1981 to 1986. Mr. Turner is a member of the Pennsylvania Bar. Mr. Turner provides general legal knowledge and extensive knowledge of the Southeast Pennsylvania business community.
Class III Directors (to be elected for a three-year term expiring at the 2026 Annual Meeting of Shareholders)
Class III Directors (to be elected for a three-year term expiring at the 2026 Annual Meeting of Shareholders)
Executive Compensation Components
| | What we do: | | What we don't do: | | ✓ | Align short and long-term incentive plan targets with business goals and shareholder interests | ✓ | Provide excise tax gross-up payments | | ✓ | Conduct an annual say on pay advisory vote | ✓ | Reward executives for taking excessive, inappropriate or unnecessary risks | | ✓ | Retain an independent compensation consultant to advise our Compensation Committee | ✓ | Allow repricing or backdating of equity awards | | ✓ | Use performance metrics that compare our performance to external benchmarks | ✓ | Spring-load equity awards | | ✓ | Maintain an insider trading policy | ✓ | Provide multi-year guaranteed salary increases or guaranteed bonuses | | ✓ | Maintain a clawback policy that applies to NEOs | ✓ | Award incentives for below-threshold performance | | ✓ | Maintain a stock ownership policy for executive officers | ✓ | Pay dividends on unearned or unvested equity awards | | ✓ | Reevaluate and update the composition of our peer group regularly | ✓ | Have single trigger vesting on our equity-based compensation awards and in our change in control agreements |
EXECUTIVE COMPENSATION AT A GLANCE
| | Target Compensation | | | | | | | | | | | | Long-Term Incentive Plan | | | | | | | Executive | Salary ($) | Annual Incentive Plan ($) | Service-Based Restricted Stock ($) | Performance-Based Restricted Stock ($) | Total Long-Term Incentive Plan ($) | Direct Compensation ($) | Total Variable ($) | Total At-Risk ($) | | Jeffrey M. Schweitzer | 806,000 | 483,600 | 157,192 | 366,731 | 523,923 | 1,813,523 | 1,007,523 | 850,331 | | Brian J. Richardson | 430,000 | 172,000 | 58,070 | 135,447 | 193,517 | 795,517 | 365,517 | 307,447 | | Michael S. Keim | 520,000 | 208,000 | 85,836 | 200,184 | 286,020 | 1,014,020 | 494,020 | 408,184 | | Megan D. Santana | 365,000 | 146,000 | 49,337 | 114,946 | 164,283 | 675,283 | 310,283 | 260,946 | | Patrick C. McCormick | 400,000 | 140,000 | 36,499 | 85,139 | 121,638 | 661,638 | 261,638 | 225,139 | | | Target Pay Mix | | | | | | | | | Executive | Salary (%) | Annual Incentive Plan (%) | Service-Based Restricted Stock (%) | Performance-Based Restricted Stock (%) | | | | Total At-Risk (%) | | Jeffrey M. Schweitzer | 44.4 | 26.7 | 8.7 | 20.2 | | | | 46.9 | | Brian J. Richardson | 54.1 | 21.6 | 7.3 | 17.0 | | | | 38.6 | | Michael S. Keim | 51.3 | 20.5 | 8.5 | 19.7 | | | | 40.2 | | Megan D. Santana | 54.1 | 21.6 | 7.3 | 17.0 | | | | 38.6 | | Patrick C. McCormick | 60.5 | 21.2 | 5.5 | 12.9 | | | | 34.1 |
EXECUTIVE COMPENSATION AT A GLANCE
Salaries: 2023 salary increases for the Named Executive Officers, other than Mr. McCormick, became effective as of January 1, 2023, and ranged from 4.0% to 4.9%. Mr. McCormick's salary increased 3.0% effective January 1, 2023, and was subsequently increased 15.1% effective December 1, 2023 in connection with his promotion to Chief Commercial Banking Officer. 2023 At-Risk Payout Results: •Annual Incentive was paid at 51.8% of target •Long-term Incentive for the 2021-2023 performance period resulted in equity awards vesting at 120.5% of target
COMPENSATION CONSULTANT AND PEER GROUP
COMPENSATION CONSULTANT AND PEER GROUP The Compensation Committee considers the decision-making responsibilities, experience, work performance, achievement of key goals, and team-building skills of each position as the most important factors in its annual reviews. To help quantify these measures, the Compensation Committee has enlisted the assistance of an independent compensation consultant. The Compensation Committee engaged McLagan, a part of the Human Capital Solutions practice of Aon plc, to assist it in reviewing its executive compensation program for 2023. McLagan is an independent compensation consulting firm that reports directly to the Compensation Committee. The analysis provided by McLagan for 2023 includes, but is not limited to, an assessment of the Univest executive compensation program compared to its peers, development of total cash compensation opportunities (base salary and cash incentives) and a review of the Corporation's short- and long-term incentive arrangements (cash and equity). The analysis provides the Compensation Committee with a broad array of information from which to assess the effectiveness of our compensation programs and serves as a foundation for future compensation decisions. The Compensation Committee considered the independence of McLagan in light of SEC rules and NASDAQ listing standards. The Compensation Committee requested and received a report from McLagan addressing the independence of McLagan, including the following factors: (i) other services provided to us by McLagan; (ii) fees paid by us as a percentage of Aon's total revenue; (iii) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the consultants and members of the Compensation Committee; (v) any Corporation stock owned by the consultants; and (vi) any business or personal relationships between our Named Executive Officers and the consultants. The Compensation Committee discussed these considerations as well as other considerations and concluded that the work performed by McLagan involved in the engagements did not raise any conflict of interest. In determining compensation for our Named Executive Officers, the Compensation Committee uses market information from a peer group. For 2023, McLagan was engaged to assist the Compensation Committee in identifying a peer group of comparable financial institutions and then provide the market information for that peer group. The Corporation's 2023 peer group was developed based on a balanced assessment across a range of criteria, including total revenue, asset size, business model, and geographic location. The resulting 2023 peer group consisted of the following 21 financial institutions:
COMPENSATION CONSULTANT AND PEER GROUP
| 1st Source Corp. | Park National Corp. | | Berkshire Hills Bancorp, Inc. | Peapack-Gladstone Financial Corp. | | Community Trust Bancorp, Inc. | Peoples Bancorp, Inc. | | Financial Institutions, Inc. | QCR Holdings, Inc. | | First Busey Corp. | S&T Bancorp, Inc. | | First Commonwealth Financial | Sandy Spring Bancorp, Inc. | | First Mid Bancshares, Inc. | Stock Yards Bancorp, Inc. | | German American Bancorp, Inc. | Tompkins Financial Corporation | | Lakeland Financial Corp. | Washington Trust Bancorp, Inc. | | Midland States Bancorp, Inc. | WSFS Financial Corp. | | NBT Bancorp, Inc. | |
ANNUAL INCENTIVES
ANNUAL INCENTIVES The Corporation maintains a non-equity annual incentive plan to encourage the Named Executive Officers to achieve annual financial objectives and to reward them upon such achievement. The weighted financial measures and related targets for the plan are set in the preceding fiscal year by the Compensation Committee. The annual incentive program for Messrs. Schweitzer, Richardson, Keim and McCormick and Ms. Santana consists of cash bonuses based 80% on meeting annual Corporation performance goals (pre-tax pre-provision income ("PTPP"), PTPP return on equity, efficiency ratio, non-performing assets to total assets and net charge-offs/average loans and leases) and 20% on individual performance to reinforce the critical focus of our Named Executive Officers on certain annual objectives that have significant impact on our long-term performance strategy. The Compensation Committee selected these metrics as they link compensation to corporate performance with an emphasis on the overall profitability and credit quality of the Corporation. The payout under the Annual Incentive Compensation Plan occurs during March following the performance year. The Annual Incentive Compensation Plan provided for payouts based on actual results compared to target as detailed in the table below. The first three columns of the table provide the annual incentive payout target range by the Named Executive Officer, as a percentage of base salary, based on performance as compared to target. The fourth column of the table provides the annual incentive payout for each of the Named Executive Officers at 100% of their target. The fifth and sixth columns of the table provide the actual incentive award paid for 2023 as a percentage of base salary and actual dollar amount. The 2023 payout was interpolated based on actual results compared to threshold, target and optimum.
ANNUAL INCENTIVES
| Executive | Threshold (Paid at 40% of Target) | Target Achieve 100% of Target | Optimum (Paid at 150% of Target ) | Target Award ($) | Actual Award (%) of Base Salary | Actual Award ($) | | Jeffrey M. Schweitzer | 24.0% | 60.0% | 90.0% | 483,600 | 31.1% | 250,572 | | Brian J. Richardson | 16.0% | 40.0% | 60.0% | 172,000 | 20.7% | 89,120 | | Michael S. Keim | 16.0% | 40.0% | 60.0% | 208,000 | 20.7% | 107,773 | | Megan D. Santana | 16.0% | 40.0% | 60.0% | 146,000 | 20.7% | 75,648 | | Patrick C. McCormick | 14.0% | 35.0% | 52.5% | 140,000 | 18.1% | 63,812 |
ANNUAL INCENTIVES
Before the start of 2023, the Committee set target performance for the financial goals at levels it considered challenging with a reasonable likelihood of being achieved and that represented strong levels of performance based on the Corporation's business outlook, estimated general economic conditions, and our budget for 2023, which was approved by the Board in December 2022. Optimum levels were established at levels so that such amount would be earned only if the Corporation's actual performance significantly exceeded forecasted performance. The Corporation's financial targets set by the Compensation Committee for 2023 along with the actual results for the Annual Incentive Compensation component of executive compensation were as follows:
ANNUAL INCENTIVES
| Performance Metric | Goal Weight (1) | Threshold | Target (Plan) | Optimum | Actual | Achievement (% of Target) | Weighted Corporate Performance Award (% of Target) | | PTPP (2) | 25.0% | $102,028 | $127,535 | $153,042 | $102,359 | 40.8% | 12.7% | | PTPP Return on Average Equity (2) | 15.0% | 12.82% | 16.03% | 19.24% | 12.70% | —% | —% | | Efficiency Ratio (2) | 15.0% | 63.2% | 60.7% | 58.2% | 65.1% | —% | —% | | Relative NPAs to Total Assets (3) | 15.0% | 0.64% | 0.39% | 0.14% | 0.51% | 70.2% | 13.2% | | Relative Net Charge-offs/Average Loans and Leases (4) | 10.0% | 0.14% | 0.09% | 0.05% | 0.08% | 110.9% | 13.9% | | Total Corporate Performance | 80.0% | | | | | | 39.8% |
ANNUAL INCENTIVES
(1) Represents percentage of individual's total target incentive compensation award. (2) Adjusted to exclude the income statement impact of restructuring charges and the impact of the industry-wide FDIC assessment rate change, which was effective on January 1, 2023. These adjustments were approved by the Compensation Committee as they were not considered when the original Target (Plan) was established in December 2022. (3) Performance for the NPAs to Total Assets metric is measured relative to a peer group of Mid-Atlantic banks with total assets between $2 billion and $10 billion. The Target (Plan) performance level shown in the table above reflects the median of the peer group, while Threshold and Optimum are set equal to 25 basis points above and below this Target (Plan) level, respectively. Peer group and the Corporation's data are measured as of September 30, 2023. (4) Performance for the Net Charge-offs/Average Loans and Leases metric is measured relative to a peer group of Mid-Atlantic banks with total assets between $2 billion and $10 billion. The Target (Plan) performance level shown in the table above reflects the average of the peer group, while Threshold and Optimum are set equal to 50% below and above this Target (Plan) level, respectively. Peer group and the Corporation's data are measured for the twelve-month period ended September 30, 2023. The individual performance component is recommended by the Chief Executive Officer or the Compensation Committee, as applicable. When considering the recommendations, the Compensation Committee considers the individual's contribution to achievement of strategic initiatives critical to the Corporation's performance for the applicable fiscal year and beyond. For 2023, the Compensation Committee determined the individual performance component for Messrs. Schweitzer, Richardson, Keim and McCormick and Ms. Santana should be paid out at Target. As a result of corporate performance (paid out at 39.8% of the original payout target) and the individual performance component, an aggregate cash bonus was paid to each Named Executive Officers at 51.8% of the targeted payout level for 2023.
LONG-TERM INCENTIVES
LONG-TERM INCENTIVES
Stock-Based Compensation
Stock-Based Compensation The long-term incentive program consists of service-based restricted stock awards and units and performance-based restricted stock awards and units that vest based on the Corporation's performance compared to its selected peers and internally developed earnings per share targets. The purpose of the program is to align management's interests with those of our shareholders, promote employee retention and also to ensure management's focus on the long-term stability and performance of the Corporation. On April 26, 2023, the 2023 Equity Incentive Plan (the "Plan") was approved by shareholders at the Corporation's annual meeting. This Plan replaced the Amended and Restated Univest 2013 Long-Term Incentive Plan, which expired in April 2023. The purpose of the plan is to enable employees and non-employee Directors of the Corporation to: (i) own shares of stock in the Corporation; (ii) participate in the shareholder value which has been created; and (iii) have a mutuality of interest with other shareholders. The plan also enables the Corporation to attract, retain and motivate key employees. At the time of an award grant, the Compensation Committee will determine the type of award to be made and the specific conditions upon which an award will be granted (i.e. term, vesting, performance criteria, etc.) consistent with the terms of the plan.
2023 Equity Grants
2023 Equity Grants Long-term incentive compensation consists of a combination of performance-based restricted stock units and service-based restricted stock units; 70% of the targeted fair value of the awards is performance-based restricted stock units and 30% of the targeted fair value is service-based restricted stock units. This split reflects an emphasis on long-term performance-based metrics that drive shareholder value. Performance-based restricted stock units were granted on March 15, 2023 based on the Target level of performance as detailed below. The performance-based restricted stock units will vest on March 15, 2026, provided certain performance metrics are met that when the Corporation's performance is compared to (i) the S&P United States SmallCap Banks (Industry Group) Index ("Select Peer Group") with respect to three-year average PTPP-NCO ROAA and (ii) the three-year PTPP-NCO target as set in the Corporation's strategic plan. No vesting will occur if the three-year average PTPP-NCO ROAA is less than 50 basis points, adjusted for one-time non-recurring gains and losses (e.g., acquisition, integration and restructuring charges, branch closure costs, BOLI gains, etc.). The Compensation Committee selected these metrics as they link compensation to corporate performance with an emphasis of the overall profitability and credit quality of the Corporation. Service-based restricted stock units were granted on March 15, 2023 and vest in three equal annual installments beginning on the first anniversary of the date of the grant. The following table shows the vesting of performance-based awards with more shares vesting if performance exceeds the target level of performance and fewer shares vesting if performance is short of the target level of performance. The target level of performance is defined as ranking in the 50th percentile of PTPP-NCO ROAA performance compared to its Select Peer Group and achieving a targeted cumulative 2023 to 2025 PTPP-NCO adjusted for one-time non-recurring gains and losses (e.g. acquisition, integration and restructuring charges, branch closure costs, BOLI gains, etc.) both weighted at 50%. The targeted performance level for PTPP-NCO is aligned with the Corporation's targeted strategic and operating plan for the three-year performance period.
2023 Equity Grants
| Amount of Shares Vesting | 50% of Target (Threshold) | Target | 150% of Target (Optimum) | | PTPP-NCO ROAA | 35th Percentile | 50th Percentile | 75th Percentile | | PTPP-NCO | 80% of Target | Target | 120% of Target |
2023 Equity Grants
On March 15, 2023, the Compensation Committee approved the following grants of performance-based restricted stock units to the Named Executive Officers:
2023 Equity Grants
| | Number of Units | | | Grant Date Fair Value ($) (a) | | | | Executive | Threshold | Target | Optimum | Threshold | Target | Optimum | | Jeffrey M. Schweitzer | 7,370 | 14,740 | 22,110 | 183,366 | 366,731 | 550,097 | | Brian J. Richardson | 2,722 | 5,444 | 8,166 | 67,723 | 135,447 | 203,170 | | Michael S. Keim | 4,023 | 8,046 | 12,069 | 100,092 | 200,184 | 300,277 | | Megan D. Santana | 2,310 | 4,620 | 6,930 | 57,473 | 114,946 | 172,418 | | Patrick C. McCormick | 1,711 | 3,422 | 5,133 | 42,570 | 85,139 | 127,709 |
2023 Equity Grants
(a) Based on the closing price of the Common Stock of $24.88 on the date of grant. The granting of service-based restricted stock units is at the discretion of the Compensation Committee and is not contingent on the achievement of annual targets described under "Annual Incentives." On March 15, 2023, the Compensation Committee approved the granting of service-based restricted stock units to Messrs. Schweitzer, Richardson, Keim, McCormick and Ms. Santana.
2023 Equity Grants
| Executive | Service-Based Restricted Stock Units Granted (a) | Grant Date Fair Value ($) (b) | | Jeffrey M. Schweitzer | 6,318 | 157,192 | | Brian J. Richardson | 2,334 | 58,070 | | Michael S. Keim | 3,450 | 85,836 | | Megan D. Santana | 1,983 | 49,337 | | Patrick C. McCormick | 1,467 | 36,499 |
2023 Equity Grants
(a) The restricted stock units vest in three equal annual installments beginning on the first anniversary of the date of grant. (b) Based on the closing price of the Common Stock of $24.88 on the date of grant.
Vesting of 2021 Performance-Based Restricted Stock Units
Vesting of 2021 Performance-Based Restricted Stock Units During 2021, the Corporation granted its Named Executive Officers performance-based restricted stock units as detailed in the following chart.
Vesting of 2021 Performance-Based Restricted Stock Units
| Executive | # of Target Units Granted | | Jeffrey M. Schweitzer | 10,344 | | Brian J. Richardson | 3,102 | | Michael S. Keim | 5,788 | | Megan D. Santana | 2,844 | | Patrick C. McCormick (1) | — |
Vesting of 2021 Performance-Based Restricted Stock Units
(1) Mr. McCormick was not an employee of the Corporation at the time of this grant. The 2021 performance-based restricted stock units will vest on March 15, 2024 based on the Corporation's performance compared to (i) the Select Peer Group with respect to the three-year average PTPP-NCO ROAA and (ii) an internally- determined cumulative PTPP-NCO target for the three years ended December 31, 2023, as determined at the date of the grant which was approved by the Compensation Committee. Each criteria is equally weighted at 50% of the vesting.
Vesting of 2021 Performance-Based Restricted Stock Units
| Amount of Shares Vesting | 50% of Target (Threshold) | Target | 150% of Target (Optimum) | | PTPP-NCO ROAA | 35th Percentile | 50th Percentile | 75th Percentile | | Three Year Cumulative PTPP-NCO | $188,402 | $235,503 | $282,604 |
Vesting of 2021 Performance-Based Restricted Stock Units
Actual results for the three-year PTPP-NCO ROAA analysis were adjusted for certain non-recurring items such as BOLI death benefit claims, restructuring charges, and incremental expense related to the FDIC assessment rate change in 2023. The PTPP-NCO ROAA, as adjusted, for the three-year period ended December 31, 2023 was 1.56%, which ranked 128th of 238 Peer Banks (that had reported results as of February 9, 2024), or at the 46.4 percentile, which is below the 50th percentile target. This provided for a vest rate of 88.0% of shares for the PTPP-NCO ROAA test. Actual results for the three-year cumulative PTPP-NCO analysis were adjusted for certain non-recurring items such as Paycheck Protection Program loans, BOLI death benefit claims, restructuring charges, and incremental expense related to the FDIC assessment rate change in 2023. PTPP-NCO, as adjusted, for the three years ended December 31, 2023 was $288,064 which was above target and provided for a vest rate of 152.9% of shares for the PTPP-NCO test. Based on the above analysis, the vest rate for the 2021 performance-based restricted stock was 120.5% and each Executive will receive 120.5% of the target shares identified in the above table.
Dividends on Unvested Equity Awards
Dividends on Unvested Equity Awards Named Executive Officers and non-employee directors have no ownership rights or rights to dividends on unvested equity awards. Dividend equivalents for unvested restricted stock units are accrued by the Corporation over the vesting period and paid out in cash when the underlying shares are issued based on the number of restricted stock units that have vested.
Change In Control Agreements
Change In Control Agreements The Corporation has entered into change in control agreements (the "Agreements") with certain executive officers, including all the Named Executive Officers. The terms of the Agreements end on December 31 of the respective year, with automatic one-year renewals thereafter absent notice of non-renewal from any party. In the event a Named Executive Officer's employment is terminated during the term of the Agreement, during the period from nine months prior to or one year after a "change in control," either by the Corporation for a reason other than "cause" (as defined in the Agreement) or by the Executive after the occurrence of certain specified events constituting "good reason" described below, the Corporation will pay the applicable Executive a lump-sum cash payment equal to the sum of (i) two times their highest annual base salary in effect at the time of termination of employment for the current and two preceding calendar years and (ii) two times their average cash bonus paid within the current and two calendar years preceding termination of employment. In addition, the applicable Executive Officer will receive continuation of medical insurance benefits for two years or a cash payment equal to the cost to obtain such benefits. The specified events constituting "good reason" permitting an Executive to terminate employment following a change in control and receive payments and benefits under the Agreement include: (i) material diminution in the Executive's authority, duties or other terms and conditions of employment; (ii) reassignment to a location greater than 25 miles from the Executive's office on the date of the change in control (unless closer to the Executive's residence); (iii) material diminution in the Executive's base salary; (iv) failure to provide the Executive with employee benefits (retirement or pension, life insurance, medical, health and accident insurance, and similar plans) applicable at the time of the change in control; or (v) a material breach of the Agreement. The Agreements contain non-competition and non-solicitation covenants that apply for six months in the event the Executive voluntarily terminates employment during the term of the Agreement (other than a voluntary termination for Good Reason following a Change in Control). Upon the payment of benefits under the Agreements, the non-competition and non-solicitation covenants apply for a period mutually to be agreed to by the parties, which will be no less than six months nor exceed two years. In the event payments and benefits provided to the Executive become subject to Sections 280G and 4999 of the Internal Revenue Code, and after considering the value of the non-competition and non-solicitation covenants, the payments will be reduced if the reduction would leave the executive financially better off on an after-tax basis than if the executive received the entire payment and was obligated to pay the excise tax under Section 4999 of the Internal Revenue Code.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following Summary Compensation Table is mandated by SEC rules, contains a mix of earned and target pay, and several items that are driven by accounting and actuarial assumptions. Earned amounts shown under stock awards are determined at grant date fair values, which may be worth more or less when vested. The following table sets forth for the fiscal years ended December 31, 2023, 2022 and 2021, the compensation for the Corporation's and its subsidiaries' principal executive officer, principal financial officer and three next most highly compensated executive officers earned. This table should be read in conjunction with the "Compensation Discussion and Analysis" section of this document and the information that follows the table. These five individuals are referred to throughout this Proxy as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(a) | Non-Equity Incentive Plan Compensation ($) (b) | Change in Pension Value ($) (c) | All Other Compensation ($) (d) | Total ($) | | Jeffrey M. Schweitzer, | 2023 | 806,000 | 523,923 | 250,572 | 23,480 | 26,247 | 1,630,222 | | President and Chief Executive Officer of the Corporation and Chief Executive Officer of the Bank | 2022 | 775,000 | 465,042 | 576,506 | — | 25,551 | 1,842,099 | | | 2021 | 700,000 | 419,991 | 483,301 | 19,129 | 26,257 | 1,648,678 | | Brian J. Richardson, | 2023 | 430,000 | 193,517 | 89,120 | — | 16,823 | 729,460 | | Senior Executive Vice President and Chief Financial Officer of the Corporation and the Bank | 2022 | 410,000 | 184,493 | 205,411 | — | 15,801 | 815,705 | | | 2021 | 360,000 | 126,014 | 158,171 | — | 16,314 | 660,499 | | Michael S. Keim, | 2023 | 520,000 | 286,020 | 107,773 | 22,061 | 23,847 | 959,701 | | Senior Executive Vice President and Chief Operating Officer of the Corporation, President of the Bank | 2022 | 500,000 | 250,025 | 270,501 | 17,818 | 23,151 | 1,061,495 | | | 2021 | 470,000 | 235,005 | 236,002 | 16,123 | 24,234 | 981,364 | | Megan D. Santana, | 2023 | 365,000 | 164,283 | 75,648 | — | 16,479 | 621,410 | | Senior Executive Vice President, General Counsel and Chief Risk Officer of the Corporation and the Bank | 2022 | 350,000 | 157,553 | 175,351 | — | 15,701 | 698,605 | | | 2021 | 330,000 | 115,527 | 144,990 | — | 16,563 | 607,080 | | Patrick C. McCormick, | 2023 | 351,875 | 121,638 | 63,812 | — | 21,288 | 558,613 | | Senior Executive Vice President and Chief Commercial Banking Officer of the Bank | 2022 | 253,125 | 239,850 | 147,952 | — | 8,155 | 649,082 |
SUMMARY COMPENSATION TABLE
(a) The amounts for 2023, 2022 and 2021 reflect the aggregate grant date fair value for restricted stock units granted, computed in accordance with ASC 718 and are based on the Corporation's stock price as of the date of grant, which was $24.88, $28.21 and $28.42 for 2023, 2022 and 2021, respectively. The amounts were calculated assuming that the performance conditions were satisfied at the target level. (b) Awards represent annual cash incentive awards paid in the first quarter of 2024 under our Annual Incentive Compensation Plan based on 2023 performance achievement. For a description of how the amount was determined, see "Compensation Discussion and Analysis - Annual Incentives." (c) The pension value for Mr. Schweitzer decreased $5,617 for 2022. (d) Includes Deferred Salary Savings Plan (401(k)) company matching contributions, imputed income on split-dollar life insurance benefit, long-term disability insurance, expense allowances and personal tax preparation services. Includes an expense allowance for Mr. Schweitzer and Mr. Keim of $14,400 and $12,000, respectively, in 2023. The Corporation did not pay for personal tax preparation services in 2023 for Mr. Richardson or Ms. Santana.
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS
| Name | Grant Date | Estimated Possible Future Payouts Under Non-Equity Incentive Plan Awards (a) | | Estimated Future Payouts Under Equity Incentive Plan Awards (b) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (c) | Grant Date Fair Value of Stock Awards ($) (d) | | | | Threshold ($) | Target ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Jeffrey M. Schweitzer | | | | | | | | | | Annual Incentive Compensation | | 193,440 | 483,600 | | | | | | | | 3/15/2023 | | | 7,370 | 14,740 | 22,110 | | 366,731 | | | 3/15/2023 | | | | | | 6,318 | 157,192 | | Brian J. Richardson | | | | | | | | | | Annual Incentive Compensation | | 68,800 | 172,000 | | | | | | | | 3/15/2023 | | | 2,722 | 5,444 | 8,166 | | 135,447 | | | 3/15/2023 | | | | | | 2,334 | 58,070 | | Michael S. Keim | | | | | | | | | | Annual Incentive Compensation | | 83,200 | 208,000 | | | | | | | | 3/15/2023 | | | 4,023 | 8,046 | 12,069 | | 200,184 | | | 3/15/2023 | | | | | | 3,450 | 85,836 | | Megan D. Santana | | | | | | | | | | Annual Incentive Compensation | | 58,400 | 146,000 | | | | | | | | 3/15/2023 | | | 2,310 | 4,620 | 6,930 | | 114,946 | | | 3/15/2023 | | | | | | 1,983 | 49,337 | | Patrick C. McCormick | | | | | | | | | | Annual Incentive Compensation | | 49,238 | 123,095 | | | | | | | | 3/15/2023 | | | 1,711 | 3,422 | 5,133 | | 85,139 | | | 3/15/2023 | | | | | | 1,467 | 36,499 |
GRANTS OF PLAN-BASED AWARDS
(a)These columns illustrate the possible payouts for each Named Executive Officer under the Annual Incentive Compensation Plan. See "Summary Compensation" and "Compensation Discussion and Analysis - Annual Incentives" of the document for the actual payouts made in 2023. There is no maximum for non-equity incentive plan awards. (b)The number of 2023 performance-based restricted stock units actually received and the vesting of those units will depend on the satisfaction of certain performance criteria over the next three years. Dividends are not paid on the service-based or performance-based restricted stock units until vest date based on the number of units that actually vest. The unvested units granted are not eligible for voting. See "Compensation Discussion and Analysis - Long-Term Incentives - 2023 Equity Grants" for further discussion. (c)The 2023 service-based restricted stock units vest in three equal annual installments beginning on the first anniversary of the date of grant. (d)Reflects the aggregate grant date fair value for performance-based restricted stock units and service-based restricted stock units granted on March 15, 2023, utilizing $24.88 per share, which equals the Corporation's stock price on the date of the grant and, for the performance-based restricted stock units granted on March 15, 2023, assuming performance conditions are satisfied at the target level.
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2023
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2023
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2023
| Name | Option Awards (a) | | | | Stock Awards | | | | | | | Option Award Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Option Exercise Price ($) | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock that have not Vested (#) | Market Value of Shares or Units of Stock that have not Vested ($) (b) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested ($) (b) | | Jeffrey M. Schweitzer (a) | 1/31/2014 | 955 | 18.78 | 1/31/2024 | 3/15/2021 (c) | — | — | 12,459 | 274,472 | | | 1/31/2015 | 9,000 | 18.52 | 1/31/2025 | 3/15/2021 (d) | 1,478 | 32,560 | — | — | | | 1/31/2016 | 13,622 | 19.68 | 1/31/2026 | 3/15/2022 (c) | — | — | 11,538 | 254,182 | | | 1/31/2017 | 12,277 | 28.15 | 1/31/2027 | 3/15/2022 (d) | 3,298 | 72,655 | — | — | | | 3/15/2018 | 13,933 | 28.50 | 3/15/2028 | 3/15/2023 (c) | — | — | 14,740 | 324,722 | | | | | | | 3/15/2023 (d) | 6,318 | 139,186 | — | — | | Brian J. Richardson | 1/31/2017 | 1,500 | 28.15 | 1/31/2027 | 3/15/2021 (c) | — | — | 3,736 | 82,304 | | | 3/15/2018 | 2,090 | 28.50 | 3/15/2028 | 3/15/2021 (d) | 444 | 9,781 | — | — | | | | | | | 3/15/2022 (c) | — | — | 4,578 | 100,853 | | | | | | | 3/15/2022 (d) | 1,308 | 28,815 | — | — | | | | | | | 3/15/2023 (c) | — | — | 5,444 | 119,931 | | | | | | | 3/15/2023 (d) | 2,334 | 51,418 | — | — | | Michael S. Keim (a) | 1/31/2015 | 2,000 | 18.52 | 1/31/2025 | 3/15/2021 (c) | — | — | 6,972 | 153,593 | | | 1/31/2016 | 7,430 | 19.68 | 1/31/2026 | 3/15/2021 (d) | 827 | 18,219 | — | — | | | 1/31/2017 | 6,696 | 28.15 | 1/31/2027 | 3/15/2022 (c) | — | — | 6,202 | 136,630 | | | 3/15/2018 | 7,245 | 28.50 | 3/15/2028 | 3/15/2022 (d) | 1,774 | 39,081 | — | — | | | | | | | 3/15/2023 (c) | — | — | 8,046 | 177,253 | | | | | | | 3/15/2023 (d) | 3,450 | 76,004 | — | — | | Megan D. Santana | 1/31/2017 | 2,522 | 28.15 | 1/31/2027 | 3/15/2021 (c) | — | — | 3,425 | 75,453 | | | 3/15/2018 | 2,787 | 28.50 | 3/15/2028 | 3/15/2021 (d) | 407 | 8,966 | — | — | | | | | | | 3/15/2022 (c) | — | — | 3,908 | 86,093 | | | | | | | 3/15/2022 (d) | 1,118 | 24,630 | — | — | | | | | | | 3/15/2023 (c) | — | — | 4,620 | 101,779 | | | | | | | 3/15/2023 (d) | 1,983 | 43,685 | — | — | | Patrick C. McCormick | | | | | 4/04/2022 (d) | 6,000 | 132,180 | — | — | | | | | | | 3/15/2023 (c) | — | — | 3,422 | 75,387 | | | | | | | 3/15/2023 (d) | 1,467 | 32,318 | — | — |
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2023
(a)Includes both non-qualified and incentive stock options. (b)Based on $22.03, the closing price of Univest's Common Stock on December 31, 2023. (c)Performance-based restricted stock units ("PBRSU"). (d)Service-based restricted stock units ("SBRSU").
STOCK OPTIONS EXERCISED AND STOCK VESTING TABLE
STOCK OPTIONS EXERCISED AND STOCK VESTING TABLE The following table shows information as of December 31, 2023, for the Named Executive Officers concerning the vesting of restricted stock awards during 2023. No stock options were exercised by the Named Executive Officers in 2023.
STOCK OPTIONS EXERCISED AND STOCK VESTING TABLE
| Name | Stock Awards (a) | | | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (b) | | Jeffrey M. Schweitzer | 19,453 | 483,991 | | Brian J. Richardson | 6,332 | 157,540 | | Michael S. Keim | 11,645 | 289,728 | | Megan D. Santana | 5,809 | 144,528 | | Patrick C. McCormick | 3,000 | 74,640 |
STOCK OPTIONS EXERCISED AND STOCK VESTING TABLE
(a) The amounts shown under Stock Awards include the portion of prior year restricted stock units that vested during 2023. (b) "Value Realized on Vesting" is based on the closing price of Univest Common Stock on the date of vesting.
PENSION BENEFITS TABLE
PENSION BENEFITS TABLE The Pension Plan is a cash balance pension plan. Benefits under the Pension Plan accrue by crediting participants annually with an amount equal to a percentage of earnings in that year based on years of credited service as defined in the Plan. These benefits are expressed in the form of a hypothetical account balance. Employees hired on or after December 8, 2009 are not eligible to participate in the Pension Plan. As a tax-qualified cash balance pension plan, employer contributions to the Pension Plan are required: no contributions to the Pension Plan are required or permitted by the participants. The normal retirement date under the Pension Plan is the first day of the month coincident with or next following the date on which the participant's 65th birthday occurs and he/she has completed five years of credited service. Prior to December 31, 2009, the normal annual retirement benefit amount accrued was 1.5% of average earnings for each year of credited service up to 20 years plus 0.5% of average earnings for each year of credited service in excess of 20 years up to 35 years, plus 0.25% of average earnings in excess of the average Social Security wage base for each year of credited service up to 35 years. As a cash balance pension plan (after December 31, 2009), benefits under the Pension Plan are credited to participant's accounts based on the following formula:
PENSION BENEFITS TABLE
| Years of Service | Annual Benefit Credited | | 0 - 10 | 3% of salary | | 11- 20 | 5% of salary | | 21 + | 7% of salary |
PENSION BENEFITS TABLE
Additionally, annually the employees' accounts are credited with a guaranteed return of the ten-year Treasury note rate plus 1%, but in no event less than 2% nor more than market rate of return. For employees over the age of 55 and with more than 20 years of service on December 31, 2009, the annual retirement benefit is guaranteed to be the higher of the benefit attributable to the formula under the defined benefit portion of the Pension Plan that was in effect prior to December 31, 2009, or the cash balance component of the plan. Each participant who has at least ten years of service and who has attained age 55 may elect to retire early within the ten-year period immediately prior to his/her normal retirement age. A participant's early retirement benefit is the greater of (i) the actuarial equivalent of the accrued benefit if the benefit is distributed in a form other than a non-decreasing life annuity payable for a period not less than the life of the participant or (ii) the accrued benefit reduced from the early retirement date by 1/15th per year for the first five years and 1/30th per year for each of the next five years. A participant's early retirement benefit with respect to benefits accrued prior to the cash balance plan conversion effective December 31, 2009 is the participant's accrued benefit payable at the participant's normal retirement date, reduced by 6% per year for the first five years and 4% per year thereafter to age 55; however, if the participant has attained age 62 at the early retirement date and the sum of the participant's age plus years of service equals or exceeds 85, the participant will receive the normal retirement benefit. A vested participant who dies before the annuity starting date and who has a surviving spouse will have the death benefit paid to the surviving spouse in the form of a pre-retirement survivor annuity and may have the death benefit distributed to his/her beneficiaries within five years after death.
PENSION BENEFITS TABLE
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) (a) | Payments During Last Fiscal Year ($) | | Jeffrey M. Schweitzer | Univest Financial Corporation Retirement Plan | 16.25 | 217,659 | — | | Brian J. Richardson (b) | Univest Financial Corporation Retirement Plan | N/A | N/A | N/A | | Michael S. Keim | Univest Financial Corporation Retirement Plan | 15.00 | 129,901 | — | | Megan D. Santana (b) | Univest Financial Corporation Retirement Plan | N/A | N/A | N/A | | Patrick C. McCormick (b) | Univest Financial Corporation Retirement Plan | N/A | N/A | N/A |
PENSION BENEFITS TABLE
(a) Assumptions used in calculating the present value of the accumulated benefit are set forth in Note 13 to the Financial Statements included in Univest's Form 10-K for the year ended December 31, 2023. (b) Messrs. Richardson and McCormick and Ms. Santana were hired after December 8, 2009, at which date the defined benefit pension plan was closed to new employees and the plan was converted to a cash-balance plan.
CHIEF EXECUTIVE OFFICER - PAY RATIO DISCLOSURE
CHIEF EXECUTIVE OFFICER - PAY RATIO DISCLOSURE As required by applicable SEC rules, we are providing the following information: In an effort to maintain comparability in the reported CEO Pay Ratio Disclosure, for 2023, Univest re-identified the median employee. We completed the following steps to identify the median employee and to determine the annual total compensation of our median employee and CEO: 1.We identified our employee population as of December 31, 2023, including all full-time, part-time, temporary, and seasonal employees employed on that date. This date was selected because it aligned with our calendar year- end and allowed us to identify employees in a reasonably efficient manner. 2.To find the median employee (other than our CEO), we used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for 2023. In making this determination, we did not make adjustments for employees who were employed on December 31, 2023 but did not work for us the entire year. No full-time equivalent adjustments were made for part-time employees. 3.We identified our median employee using this compensation measure and methodology, which was consistently applied to all our employees included in the calculation. 4.After identifying the median employee, we added together all of the elements of such employee's compensation for 2023 in accordance with SEC requirements, resulting in annual total compensation of $72,717. 5.As reported in the Total column of our 2023 Summary Compensation Table, the annual total compensation for 2023 of Jeffrey M. Schweitzer, our Chairman, President and CEO, was $1,630,222. Based on this information, the ratio for 2023 of the annual total compensation of our Chairman, President and CEO to the annual total compensation of our median employee is 22 to 1.
PAY VERSUS PERFORMANCE DISCLOSURE
PAY VERSUS PERFORMANCE DISCLOSURE In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer ("PEO") and Non-PEO Named Executive Officers (referred to in this disclosure as the "NEOs") and Corporation performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
PAY VERSUS PERFORMANCE DISCLOSURE
| Year (a) | Summary Compensation Table Total for PEO1 (b) ($) | Compensation Actually Paid to PEO1,2,3 (c) ($) | Average Summary Compensation Table Total for Non-PEO NEOs1 (d) ($) | Average Summary Compensation Actually Paid to Non-PEO NEOs1,2,3 (e) ($) | Value of Initial Fixed $100 Investment based on:4 | | Net Income ($ Millions) | Adjusted PTPP5 ($ Millions) | | | | | | | TSR (f) ($) | Peer Group TSR (g) ($) | | | | 2023 | 1,630,222 | 1,443,163 | 717,296 | 652,769 | 94.26 | 95.12 | 71.1 | 102.36 | | 2022 | 1,842,099 | 1,743,997 | 806,222 | 770,875 | 107.19 | 101.92 | 78.1 | 107.82 | | 2021 | 1,648,678 | 2,090,595 | 691,258 | 837,966 | 119.04 | 124.84 | 91.8 | 87.45 | | 2020 | 1,712,450 | 1,259,956 | 735,255 | 566,847 | 79.57 | 89.37 | 46.9 | 89.99 |
PAY VERSUS PERFORMANCE DISCLOSURE
1.Jeffrey M. Schweitzer was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below.
PAY VERSUS PERFORMANCE DISCLOSURE
| 2020 - 2021 | 2022 - 2023 | | Brian J. Richardson | Brian J. Richardson | | Michael S. Keim | Michael S. Keim | | Megan D. Santana | Megan D. Santana | | Duane J. Brobst | Patrick C. McCormick |
PAY VERSUS PERFORMANCE DISCLOSURE
2. The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Corporation’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. 3. Compensation Actually Paid for 2023 reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the totals from the Stock Awards column set forth in the Summary Compensation Table. Amounts in the Exclusion of Change in Pension Value column reflect the amounts attributable to the Change in Pension Value reported in the Summary Compensation Table. The reduction to the PEO's pension value for 2022 reported in the footnote to the Summary Compensation Table is not included in this calculation. Amounts in the Inclusion of Pension Service Cost are based on the service cost for services rendered during the listed year.
PAY VERSUS PERFORMANCE DISCLOSURE
| Year | Summary Compensation Table Total for Jeffrey M. Schweitzer ($) | Exclusion of Change in Pension Value for Jeffrey M. Schweitzer ($) | Exclusion of Stock Awards for Jeffrey M. Schweitzer ($) | Inclusion of Pension Service Cost for Jeffrey M. Schweitzer ($) | Inclusion of Equity Awards for Jeffrey M. Schweitzer ($) | Compensation Actually Paid to Jeffrey M. Schweitzer ($) | | 2023 | 1,630,222 | (23,480) | (523,923) | 14,757 | 345,587 | 1,443,163 |
PAY VERSUS PERFORMANCE DISCLOSURE
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Change in Pension Value for Non-PEO NEOs ($) | Average Exclusion of Stock Awards for Non-PEO NEOs ($) | Average Inclusion of Pension Service Cost for Non-PEO NEOs ($) | Average Inclusion of Equity Awards for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 717,296 | (5,515) | (191,365) | 2,797 | 129,556 | 652,769 |
PAY VERSUS PERFORMANCE DISCLOSURE
The amounts in the Inclusion of Equity Values for 2023 in the tables above are derived from the amounts set forth in the following tables:
PAY VERSUS PERFORMANCE DISCLOSURE
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Jeffrey M. Schweitzer ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Jeffrey M. Schweitzer ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Jeffrey M. Schweitzer ($) | Total - Inclusion of Equity Values for Jeffrey M. Schweitzer ($) | | 2023 | 477,174 | (118,585) | (13,002) | 345,587 |
PAY VERSUS PERFORMANCE DISCLOSURE
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2023 | 174,289 | (39,983) | (4,750) | 129,556 |
PAY VERSUS PERFORMANCE DISCLOSURE
4. The Peer Group TSR set forth in this table utilizes the NASDAQ Bank Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Corporation and in the NASDAQ Bank Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. 5. We determined adjusted pre-tax pre-provision income ("Adjusted PTPP") to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2023. Adjusted PTPP is a non-GAAP measure, and is defined as pre-tax income plus provision for credit losses, restructuring charges and incremental expense related to the FDIC assessment rate change. This performance measure may not have been the most important financial performance measure for years 2022, 2021 and 2020 and we may determine a different financial performance measure to be the most important financial performance measure in future years. Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Corporation’s cumulative TSR over the four most recently completed fiscal years, and the NASDAQ Bank Index TSR over the same period. Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the four most recently completed fiscal years. Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Adjusted PTPP The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Adjusted Pre-Tax Pre-Provision Income during the four most recently completed fiscal years. Adjusted PTPP is a non-GAAP measure and is defined above under footnote 5 to the Pay-Versus-Performance Table. Tabular List of Most Important Financial Performance Measures The following table presents the financial performance measures that the Corporation considers to have been the most important in linking Compensation Actually Paid to our PEO and Non-PEO NEOs for 2023 to Company performance. The measures in this table are not ranked.
PAY VERSUS PERFORMANCE DISCLOSURE
| Pre-Tax Pre-Provision Income (PTPP) | | Pre-Tax Pre-Provision Return on Average Equity | | Efficiency Ratio | | Net Charge-Offs / Average Loans and Leases vs. Peer Group | | NPAs to Total Assets vs. Peer Group | | Pre-Tax Pre-Provision NCO ROAA vs. Peer Group | | 3-Year Cumulative Earnings Per Share Performance |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The following table shows compensation received by non-employee Directors for the year ended December 31, 2023:
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Restricted Stock Units ($) (a) (b) | Total ($) | | William S. Aichele | 112,500 | 35,023 | 147,523 | | Roger H. Ballou(c) | 45,142 | 35,023 | 80,165 | | Joseph P. Beebe | 69,984 | 35,023 | 105,007 | | Todd S. Benning | 56,100 | 35,023 | 91,123 | | Martin P. Connor(d) | 39,600 | 35,023 | 74,623 | | Suzanne Keenan | 58,900 | 35,023 | 93,923 | | Glenn E. Moyer(c) | 40,200 | 35,023 | 75,223 | | Natalye Paquin | 49,900 | 35,023 | 84,923 | | Thomas M. Petro | 68,882 | 35,023 | 103,905 | | Michael L. Turner | 65,150 | 35,023 | 100,173 | | Robert C. Wonderling | 44,400 | 35,023 | 79,423 | | Charles H. Zimmerman | 68,350 | 35,023 | 103,373 |
DIRECTOR COMPENSATION
(a) Each director has 2,452 restricted stock units outstanding that have not vested as of December 31, 2023, except Mr. Connor who has 1,290 restricted stock units outstanding that have not vested as of December 31, 2023. (b) The amount reflects aggregate grant date fair value for service-based restricted stock units granted during 2023 and is based on the Corporation's stock price of $27.15 as of the date of grant on January 31, 2023. (c) Roger H. Ballou and Glenn E. Moyer retired as directors as of April 26, 2023 and April 1, 2023, respectively. (d) Martin P. Connor was appointed as an Alternate Director on September 28, 2022, and as a Director on July 26, 2023.
Director Fees
| Compensation Element (1) (2) | Director Compensation | | Board of Director Fees | $38,400 annual cash retainer | | | Restricted stock units issued annually equivalent to $35,000 based on the Corporation's stock price as of the date of grant on January 31, 2023 | | Committee Chair Additional Retainer | $8,500 Audit Committee | | | $8,500 Enterprise-Wide Risk Management Committee | | | $8,500 Nominating and Governance Committee | | | $8,500 Compensation Committee | | | $4,500 Independent Directors Committee | | | $4,500 Community Reinvestment Act Committee | | | $4,500 Trust Committee | | Committee Retainer | $11,000 Executive Committee | | | $5,000 Audit Committee | | | $5,000 Compensation Committee | | | $3,000 Nominating and Governance Committee | | | $4,000 Enterprise-Wide Risk Management Committee | | | $3,000 Community Reinvestment Act Committee | | | $3,000 Trust Committee |
Proposal 1 - Election of Directors
Proposal 1 - Election of Directors The election of three Class I Directors, each for a three-year term expiring in 2027 or until their successors are elected and qualified. The nominees for Class I Director are: Suzanne Keenan Thomas M. Petro Charles H. Zimmerman The election of one Alternate Director, for a one-year term expiring in 2025 and until her successor is elected and qualified. The nominee for Alternate Director is: Anne Vazquez The Board of Directors recommends a vote "FOR" each of the listed nominees.