DEF 14A of Southside Bancshares Inc
Filed Mar 27, 2024 · FY20230000705432-24-000057
Investment/Asset-Liability Committee (ALCO) of Southside Bank
| DIRECTOR COMPENSATION |
DIRECTOR COMPENSATION PROGRAM
DIRECTOR COMPENSATION PROGRAM The Board adopted a Director Compensation Program (the “Director Program”) for compensating non-employee directors, effective as of the 2020 Annual Meeting. The Director Program has been developed to compensate non-employee directors of the Company for their time, commitment and contributions to the Board, including each non-employee’s service on the board of the Bank. Under the Director Program, non-employee directors are paid an annual retainer of $101,000, which is payable in quarterly installments, for each year of his or her service on the Board (each, a “Service Year”). Each Service Year commences on the date of the Company’s Annual Meeting at which Board members are elected or appointed. Employee directors do not receive compensation for service on the Company's Board or the board of the Bank. In addition to the annual retainer, the following positions received an additional retainer for 2023 as follows:
DIRECTOR COMPENSATION PROGRAM
| Position | Additional Retainer | | Chairman | $48,500 | | Vice Chair | $23,500 | | Audit Committee Chair | $23,500 | | Compensation Committee Chair | $12,500 | | Risk Committee Chair | $12,500 | | IT, Digital Banking and Innovation Committee Chair | $7,500(1) | | Trust Committee Chair | $7,500(1) | | Corporate Governance and Nominating Committee Chair | $5,000 |
DIRECTOR COMPENSATION PROGRAM
(1) Additional retainer was effective in November 2023, and prorated for the remainder of 2023. Directors may elect to receive all or a specified portion of their annual retainer and any additional annual retainers in the form of restricted stock units (“RSUs”). The RSUs are granted on or about the first day of the Service Year and have a value on the grant date approximately equal to the amount of the annual cash retainer payment that he or she has elected to receive in the form of RSUs. The RSUs vest (become non-forfeitable) on the first anniversary of the grant date (or, if earlier, on the date of the Company’s Annual Meeting that occurs in the year immediately following the year of grant, in the event Grantee is not standing for re-election to the Board at such Annual Meeting) (with accelerated vesting on a pro rata basis in the event of death, disability or a change in control of the Company). Directors may elect to receive shares of common stock in settlement of their RSUs on the vesting date, or they may elect to defer the receipt of such shares and instead receive them on a specified anniversary of the grant date or upon termination of their service on the Board (subject, in each case, to earlier settlement upon a change in control of the Company). In November 2023, the Director Program was amended, effective as of the 2024 Annual Meeting, to provide that all non-employee directors will receive at least 40% of their annual retainer in the form of RSUs, with the balance payable in cash in quarterly installments. In addition, directors may elect to receive a larger percentage (up to 100%) of their annual retainer and additional retainers, as applicable, in the form of RSUs.
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION The table below summarizes the compensation earned by the Company's directors for the year ended December 31, 2023. Lee R. Gibson, the Company’s President and CEO, is not included in the table below, as he is an officer of the Company, and thus received no compensation for his service as a director during 2023. Mr. Gibson's compensation is shown in the Summary Compensation Table under Executive Compensation.
2023 DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) (1) | All Other Compensation ($) | Total ($) | | Lawrence Anderson, M.D. (2) | $101,925 | $— | $101,925 | | S. Elaine Anderson, CPA (3) | 113,500 | — | 113,500 | | Michael J. Bosworth (4) | 101,000 | — | 101,000 | | Herbert C. Buie | 101,000 | — | 101,000 | | Patricia A. Callan (5) | 113,500 | — | 113,500 | | Shannon Dacus (4) | 101,000 | — | 101,000 | | Alton L. Frailey (4) | 101,000 | — | 101,000 | | John R. (Bob) Garrett (4)(6) | 149,500 | — | 149,500 | | George H. (Trey) Henderson, III (4)(7) | 101,925 | — | 101,925 | | Melvin B. Lovelady, CPA(8) | 37,875 | — | 37,875 | | Tony K. Morgan, CPA (4)(9) | 124,500 | — | 124,500 | | John F. Sammons, Jr. | 101,000 | — | 101,000 | | H. J. Shands, III | 101,000 | — | 101,000 | | William Sheehy(10) | 37,875 | — | 37,875 | | Preston L. Smith (4)(11) | 106,000 | — | 106,000 | | Donald W. Thedford (12) | 124,500 | — | 124,500 |
2023 DIRECTOR COMPENSATION
(1)Amounts reflect fees earned by each non-employee director in 2023 and includes fees earned during 2023 in which directors elected to receive RSUs in lieu of cash. See table below. (2)Compensation includes an additional retainer of $7,500 for serving as IT, Digital Banking and Innovation Committee Chair. The additional retainer was effective in November 2023 and prorated for the year. (3)Compensation includes an additional retainer of $12,500 for serving as Risk Committee Chair. (4)Director elected to receive a portion of 2023 director fees in RSUs in lieu of cash. RSUs were granted on May 18, 2022 and May 17, 2023, based on the portion of fees elected to be received in RSUs for the applicable Service Year and the aggregate grant date fair market value, determined in accordance with FASB ASC Topic 718. The table below summarizes grants with fees forgone in 2023, or the portion of grant value earned, during the fiscal year 2023.
2023 DIRECTOR COMPENSATION
| | May 18, 2022 Grant | | | | May 17, 2023 Grant | | | | | Name | 2023 Fees Foregone ($) (a) | RSUs Granted (#) (b) | Total Fair Value of Grant ($) (c) | Settlement Date (d) | 2023 Fees Foregone ($) (a) | RSUs Granted (#) (b) | Total Fair Value of Grant ($) (c) | Settlement Date (d) | | Michael J. Bosworth | $28,428 | 1,949 | $75,738 | 5/18/2025 | $47,524 | 2,643 | $75,748 | 5/17/2025 | | Shannon Dacus | 13,259 | 909 | 35,324 | 5/18/2023 | 25,336 | 1,409 | 40,382 | 5/17/2024 | | Alton L. Frailey | 28,428 | 1,949 | 75,738 | 5/18/2027 | 47,524 | 2,643 | 75,748 | 5/17/2028 | | John R. (Bob) Garrett | 8,416 | 577 | 22,422 | 5/18/2023 | 14,061 | 782 | 22,412 | 5/17/2024 | | George H. (Trey) Henderson, III | 18,947 | 1,299 | 50,479 | 5/18/2023 | 31,683 | 1,762 | 50,499 | 5/17/2024 | | Tony K. Morgan, CPA | 23,352 | 1,601 | 62,215 | 5/18/2027 | 19,528 | 1,086 | 31,125 | 5/17/2028 | | Preston L. Smith | 19,880 | 1,363 | 52,966 | 5/18/2023 | 33,247 | 1,849 | 52,992 | 5/17/2024 |
2023 DIRECTOR COMPENSATION
(a)Amount included in the Fees Earned column in the 2023 Director Compensation Table, and reflects the portion of the annual cash retainer earned in 2023, which the director has elected to receive in RSUs and will be received in common shares on the settlement date. (b)Total RSUs granted for the Service Year based on the annual cash retainer or additional cash retainer the director elected to receive in RSUs and the grant date fair market value, determined in accordance with FASB ASC Topic 718. Since a Service Year runs from the date of the Company’s Annual Meeting to the next Annual Meeting, and RSUs are granted on or about the first day of a Service Year, a portion of the May 18, 2022 grant reflects payment for service in calendar year 2023, and a portion of the May 17, 2023 grant reflects payment for service in calendar year 2024. (c)Aggregate grant date fair market value, determined in accordance with FASB ASC Topic 718. (d)Settlement date elected by the director, in which shares of common stock will be received in settlement of the RSUs. (5)Compensation includes an additional retainer of $12,500 for serving as Compensation Committee Chair. (6)Compensation includes an additional retainer of $48,500 for serving as Chair of the Board. (7)Compensation includes an additional retainer of $7,500 for serving as Trust Committee Chairman. The additional retainer was effective in November 2023 and prorated for the year. (8)Mr. Lovelady passed away in February 2023, and received compensation through his term, which ended at the 2023 Annual Meeting. (9)Compensation includes an additional retainer of $23,500 for serving as Audit Committee Chair. (10)Mr. Sheehy retired from the Board, effective as of the 2023 Annual Meeting. (11)Compensation includes an additional retainer of $5,000 for serving as Corporate Governance and Nominating Committee Chair. (12)Compensation includes an additional retainer of $23,500 for serving as Vice Chair of the Board.
Compensation Philosophy and Objectives
Compensation Philosophy and Objectives The Committee believes the most effective executive compensation program is one that is designed to reward long-term and strategic performance and which aligns executives’ interests with those of the shareholders, with the ultimate objective of improving long-term shareholder value. The Committee evaluates both performance and compensation to ensure the Company maintains its ability to attract and retain superior officers in key positions and that compensation provided to key officers remains competitive relative to the compensation paid to similarly situated executives of our peer companies (as discussed below). To that end, the Committee believes executive compensation provided by the Company to its NEOs should include cash, stock-based compensation and other benefits that reward both Company and executive performance. Performance is evaluated in a number of ways. First and most importantly, the Committee evaluates the overall performance of the Company during the year and over a longer term, typically three years. Performance metrics evaluated include profitability, return on equity, ability to pay dividends to shareholders, overall asset quality, capital levels and earnings per share. The Company’s performance is measured against its peers utilizing outside independently produced peer group data. The Committee also takes into consideration the results of outside examinations and audits. The Committee evaluates individual performance of each NEO in their areas of responsibility and to the Company as a whole, taking into consideration the overall banking environment. Using this information as a guide, the Committee then works through its process of evaluating and setting compensation.
Setting Executive Compensation
Setting Executive Compensation Based on the compensation objectives noted above, the Committee has structured the NEOs’ annual compensation to be competitive and to motivate and reward the NEOs for their performance. The Committee utilizes a Compensation Peer Group for comparative purposes for compensation and performance-related benchmarks, as well as compensation structure. The Committee reviews the Compensation Peer Group annually to ensure continued appropriateness. In 2023, the Committee engaged Meridian Compensation Partners, LLC (“Meridian”) to serve as an independent outside consultant to the Company, reporting directly to the Committee. Meridian advised the Committee on potential peers based on asset size and location, including metropolitan areas, given Southside's operations in metropolitan areas in Texas. The 2023 Compensation Peer Group approved by the Committee was changed from the 2022 Compensation Peer Group by removing two companies: CBTX, Inc. due to acquisition and Live Oak Bankshares, Inc. due to non-standard compensation arrangements. In addition, in order to bring the peer median asset size closer to Southside's current size, four companies noted below, located in the Southeast or Southwest with asset sizes of $4.1 billion to $4.8 billion, were added to the peer group. The Compensation Peer Group consists of 18 companies ranging in assets from $4.1 billion to $17.5 billion, as of the time of the study, with a focus on metropolitan areas. The companies comprising the 2023 Compensation Peer Group are listed as follows:
Setting Executive Compensation
| 2023 Compensation Peer Group | | | Renasant Corporation (RNST) | Amerant Bancorp, Inc. (AMTB) | | Seacoast Banking Corporation of Florida (SBCF) | The First Bancshares, Inc. (FBMS) | | ServisFirst Bancshares, Inc. (SFBS) | City Holding Company (CHCO) | | FB Financial Corporation (FBK) | Triumph Bancorp, Inc. (TBK) | | First Financial Bankshares, Inc. (FFIN) | Business First Bancshares, Inc. (BFST) | | Veritex Holdings, Inc. (VBTX) | SmartFinancial, Inc. (SMBK)(1) | | Stellar Bancorp, Inc. (STEL) | HomeTrust Bancshares, Inc. (HTBI)(1) | | Origin Bancorp, Inc. (OBNK) | Capital City Bank Group, Inc. (CCBG)(1) | | National Bank Holdings Corporation (NBHC) | South Plains Financial, Inc. (SPFI)(1) |
Annual Incentive Program
Annual Incentive Program The Company's Annual Incentive Program (“AIP”) provides the Company's most senior executive officers with an opportunity to earn cash awards based on achievement of performance measures established by the Committee. We believe a significant amount of executive compensation should be contingent on Company performance. The AIP formalizes this philosophy for our top executives by providing a cash incentive for the attainment of profitable growth and stable financial operating conditions. Performance measures include quantitative performance goals and a qualitative scorecard. Performance measures are selected based on the role of the participant and their contributions to the Company. For the CEO, CFO, CLO and COO, performance measures selected were Earnings Per Share (“EPS”), Loan Growth, Return on Average Tangible Common Equity (“ROATCE”) and qualitative scorecard. Performance measures selected for the CCO were EPS, ROATCE, Non-Performing Assets (“NPAs”), and qualitative scorecard. Weightings are used to differentiate the relative importance or priority of the performance measures. Each participant is assigned a weighting for each performance measure by the Committee, with a total weighting of 100%. Each performance measure is weighted a minimum of 5%, with the total quantitative performance goals weighted 75%, and the qualitative scorecard weighted 25%. The payout for performance measures ranges from minimum threshold of 50%, target of 100% and maximum of 150%. Payout for performance between the minimum threshold, target and maximum is calculated on a straight line basis, and performance below the minimum threshold results in no payout. Each participant is assigned a target award by the Committee, calculated as a percentage of base salary for the program year, which represents 100% target payout of all performance measures. For 2023, the Committee evaluated the AIP and increased the weighting of the target payout for certain NEOs as follows:
Annual Incentive Program
| | AIP 2022 | AIP 2023 | | Name | Target as a % of Salary | Target as a % of Salary | | Lee R. Gibson | 45.0% | 50.0% | | Julie N. Shamburger | 37.5% | 42.5% | | Tim Alexander | 32.5% | 32.5% | | Brian K. McCabe | 32.5% | 37.5% | | T. L. Arnold, Jr. | 32.5% | 40.0% |
Annual Incentive Program
The qualitative scorecard represents 25% of total performance, the committee sets scorecard goals specific to each participant at the beginning of the program year. Such goals include developing new programs, succession coaching, developing talent and other strategic initiatives. See the 2023 Grants of Plan-Based Awards table below for Threshold, Target and Maximum amounts for the NEOs under the AIP. The following table presents the performance measures and performance goals for the NEOs determined by the committee, as well as the actual results and payout as a % of the target for 2023:
Annual Incentive Program
| Performance Measure | Threshold | Target | Maximum | 2023 | Actual Payout as a % of Weighted Target | | | 50% Payout | 100% Payout | 150% Payout | Results | | | EPS | $3.15 | $3.50 | $4.03 | $3.10(1) | —% | | Loan Growth | 7.00% | 9.00% | 11.00% | 9.09% | 102.3% | | NPAs as a % of Total Assets | 0.35% | 0.14% | 0.10% | 0.05% | 150.0% | | ROATCE | 17.32% | 19.24% | 22.13% | 17.60%(1) | 57.3% | | Qualitative Scorecard | | | | Above Target | 135%(2) 130%(3) |
Annual Incentive Program
(1) Net income was adjusted for net securities losses, net of tax, in the amount of $8.6 million for the purpose of this calculation. (2) Payout for Lee R. Gibson, Julie N. Shamburger, Tim Alexander and T. L. Arnold, Jr. was 135%. (3) Payout for Brian K. McCabe was 130%. The following table presents for each NEO weightings for performance measures, total payout as a percentage of base salary, and total payout for 2023:
Annual Incentive Program
| Performance Measure | Performance Measure Weighting | | | | | | | Gibson | Shamburger | Alexander | McCabe | Arnold | | EPS | 40% | 40% | 40% | 40% | 40% | | Loan Growth | 15% | 15% | 20% | 15% | N/A | | ROATCE | 20% | 20% | 15% | 20% | 15% | | NPAs as a % of Total Assets | N/A | N/A | N/A | N/A | 20% | | Scorecard | 25% | 25% | 25% | 25% | 25% | | Target Payout as a % of Base Salary | 50.0% | 42.5% | 32.5% | 37.5% | 40.0% | | Total Payout as a % of Target Payout | 60.5% | 60.5% | 62.8% | 59.3% | 72.3% | | Total Payout ($) | $245,092 | $119,139 | $113,264 | $79,716 | $108,371 |
Long-Term Equity Incentive Awards
Long-Term Equity Incentive Awards The Southside Bancshares, Inc. 2017 Incentive Plan (the “2017 Incentive Plan”) provides for the grant of equity awards to our employees, officers, directors and consultants. The primary purpose of the 2017 Incentive Plan is to promote Company success by linking the personal interests of our employees, officers, directors and consultants to those of our shareholders, and by providing participants with an incentive for outstanding performance. The 2017 Incentive Plan outlines the type of incentive awards to be granted under the plan. In 2021, the Committee engaged Meridian to assist in designing a new Long-Term Equity Incentive Program (the "Program"), which started in fiscal year 2022. The Program provides the framework for long-term equity awards consisting of 50% performance-based restricted stock units (“PSUs”) and 50% time-based restricted stock units ("RSUs"), issuable pursuant to the 2017 Incentive Plan. In 2023, the Committee granted PSUs and RSUs to the NEOs. The RSUs vest in equal annual installments over three years, subject to the grantee's continued employment on each vesting date. The PSUs cliff vest on the third anniversary of the grant date, subject to the grantee's continued employment on such date, and will be earned based on the Company's ROATCE relative to ROATCE of the KBW Nasdaq Regional Bank Index (NASDAQ: KRX) (the “Peer Group”), over a 3 year performance period, beginning January 1, 2023. Performance awards may be earned and vest between 0% and 150% of the target award, as outlined in the table below. See further information on the 2023 grants of the RSUs and PSUs in the 2023 Grants of Plan-Based Awards Table below.
Long-Term Equity Incentive Awards
| Company ROATCE Performance / Funding Scale | | | Company ROATCE Percentile Ranking Relative to ROATCE Peer Group | Percentage of Target Award Earned(1) | | Below 25% | —% | | 25% | 50% | | 40% | 80% | | 50% | 100% | | 60% | 120% | | 75% or greater | 150% |
Long-Term Equity Incentive Awards
(1) Payouts between performance levels will be determined based on straight line interpolation, and performance below the minimum threshold results in no share payout.
Severance
Severance The Company entered into Employee Agreements with Lee R. Gibson in October 2007, Julie N. Shamburger in June 2008, Brian K. McCabe in November 2008 and T. L. Arnold, Jr. in April 2014, each of which provide for severance payments and benefits in the event the NEO’s employment is terminated by the Company without “cause,” by the executive for “good reason,” or as a result of a “change in control” (as such terms are defined in the employment agreements). The Board determined providing severance protection to the NEOs is in the best interest of the Company because providing severance benefits is a necessary tool in the competitive marketplace to attract and retain the services of talented executives who are critical to the success of the Company. The severance and change in control termination amounts were negotiated based on the NEO's tenure, scope of responsibilities and other provisions in the agreement. For a further discussion of severance payments, please see the terms of the Employment Agreements in this proxy statement.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| Name Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) (3) | Change in Pension Value ($) (4) | All Other Compensation ($) (5) | Total ($) | | Lee R. Gibson, CPA – President, Chief Executive Officer and Director of the Company and Southside Bank | 2023 | $809,608 | $— | $283,353 | $245,092 | $769,701 | $26,963 | $2,134,717 | | | 2022 | 774,744 | — | 271,144 | 478,211 | — | 25,497 | 1,549,596 | | | 2021 | 736,450 | 500 | 125,187 | 377,799 | 172,927 | 29,838 | 1,442,701 | | Julie N. Shamburger, CPA – Chief Financial Officer of the Company and Southside Bank and advisory director of Southside Bank | 2023 | 463,000 | — | 124,992 | 119,139 | 247,828 | 27,983 | 982,942 | | | 2022 | 445,000 | — | 120,128 | 228,897 | — | 26,497 | 820,522 | | | 2021 | 425,000 | 500 | 55,247 | 181,688 | — | 23,981 | 686,416 | | Tim Alexander – Chief Lending Officer of the Company and Southside Bank and advisory director of Southside Bank | 2023 | 555,000 | — | 138,760 | 113,264 | 185,543 | 34,797 | 1,027,364 | | | 2022 | 538,000 | 100 | 134,486 | 239,836 | — | 94,321 | 1,006,743 | | | 2021 | 527,000 | 600 | 57,964 | 180,695 | 14,644 | 28,855 | 809,758 | | Brian K. McCabe – Chief Operations Officer of the Company and Southside Bank and advisory director of Southside Bank | 2023 | 358,500 | — | 89,603 | 79,716 | 190,656 | 32,647 | 751,122 | | | 2022 | 348,000 | — | 86,986 | 155,136 | — | 23,934 | 614,056 | | | 2021 | 340,000 | 600 | 37,418 | 122,655 | — | 23,290 | 523,963 | | T.L. Arnold, Jr. – Chief Credit Officer of the Company and Southside Bank and advisory director of Southside Bank | 2023 | 357,167 | — | 87,114 | 108,371 | — | 19,132 | 571,784 | | | 2022 | 335,000 | 100 | 83,730 | 145,711 | — | 18,169 | 582,710 | | | 2021 | 321,000 | 500 | 35,314 | 139,274 | — | 17,538 | 513,626 |
SUMMARY COMPENSATION TABLE
(1)Includes amounts deferred at the officer’s election pursuant to the Company’s 401(k) Plan. (2)Reflects the aggregate grant date fair value of RSUs and PSUs determined in accordance with FASB ASC Topic 718. Grant date fair value for RSUs is based on the fair market value of our common stock on the grant date. Grant date fair value for PSUs is based on the fair market value of our common stock on the grant date and the probable outcome of performance-based conditions at the time of grant. Assuming achievement of the PSU performance conditions at the highest level (rather than at target level), the aggregate grant date fair value of awards reflected in this column for 2023 would be higher by the following amounts: Mr. Gibson, $70,858; Ms. Shamburger, $31,268; Mr. Alexander, $34,690; Mr. McCabe, $22,401; and Mr. Arnold, $21,778. (3)Reflects amounts earned under the Annual Incentive Program. See the discussion above for more information regarding these performance-based cash bonuses. (4)The amounts reported in this column reflect the change in aggregate actuarial present value of the NEOs accumulated benefits under the Pension Plan and the Restoration Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. The changes in pension values for the NEOs in 2023 under the Pension Plan were as follows: Lee R. Gibson – $235,505; Julie N. Shamburger – $154,304; Tim Alexander – $77,535; and Brian K. McCabe – $154,777. The changes in pension value for the NEOs under the Restoration Plan were as follows: Lee R. Gibson – $534,196; Julie N. Shamburger – $93,524; Tim Alexander – $108,008; and Brian K. McCabe – $35,879. Mr. Arnold does not participate in the Pension Plan or the Restoration Plan. Descriptions of the Pension Plan and Restoration Plan follow the Pension Benefits Table in this proxy statement. (5)Amounts included in this column for 2023 are detailed in the All Other Compensation Table below.
SUMMARY COMPENSATION TABLE
| 2023 ALL OTHER COMPENSATION TABLE | | | | | | | | Gibson | Shamburger | Alexander | McCabe | Arnold | | Company Provided Automobile (a) | $— | $3,417 | $8,077 | $— | $— | | Club Dues (b) | 7,831 | 5,434 | 7,588 | 6,621 | — | | 401(k) Matching Contribution (c) | 13,200 | 13,200 | 13,200 | 13,200 | 13,200 | | ESOP Contribution (d) | 5,932 | 5,932 | 5,932 | 5,932 | 5,932 | | PTO Cash Out | — | — | — | 6,894 | — | | Total | $26,963 | $27,983 | $34,797 | $32,647 | $19,132 |
SUMMARY COMPENSATION TABLE
(a)Julie N. Shamburger and Tim Alexander had use of a Company provided automobile in 2023. The total incremental cost to the Company during 2023 includes fuel, maintenance and insurance costs. (b)The incremental cost of Company provided club dues to the NEOs. (c)All NEO's are 100% vested in our 401(k) Plan. (d)All NEO's are 100% vested in our ESOP.
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure The CEO pay ratio figures below are a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Exchange Act. We determined that as of December 31, 2023, our total number of active U.S. employees was 822. To determine our median employee pay, we chose gross compensation as our consistently applied compensation measure. We then annualized base salary for those employees who commenced work during 2023 and any employees who were on leave for a portion of 2023. For hourly employees, we used a reasonable estimate of hours worked to determine annual base pay. Using this methodology, we identified the median employee, and that person's total annual compensation was $52,615. The total annual compensation of our CEO was $2,134,717. Accordingly, the ratio of CEO pay to median employee pay was 41:1.
2023 GRANTS OF PLAN-BASED AWARDS
2023 GRANTS OF PLAN-BASED AWARDS The table below sets forth information regarding grants of plan-based awards to the NEOs for the fiscal year ended December 31, 2023:
2023 GRANTS OF PLAN-BASED AWARDS
| Name | Award Type | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | Grant Date Fair Value of Stock and Option Awards ($) (4) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Lee R. Gibson | AIP | — | $202,402 | $404,804 | $607,206 | — | — | — | — | $— | | | PSU | 2/2/2023 | — | — | — | 1,822 | 3,643 | 5,465 | — | 141,676 | | | RSU | 2/2/2023 | — | — | — | — | — | — | 3,643 | 141,676 | | Julie N. Shamburger | AIP | — | 98,388 | 196,775 | 295,163 | — | — | — | — | — | | | PSU | 2/2/2023 | — | — | — | 804 | 1,607 | 2,411 | — | 62,496 | | | RSU | 2/2/2023 | — | — | — | — | — | — | 1,607 | 62,496 | | Tim Alexander | AIP | — | 90,188 | 180,375 | 270,563 | — | — | — | — | — | | | PSU | 2/2/2023 | — | — | — | 892 | 1,784 | 2,676 | — | 69,380 | | | RSU | 2/2/2023 | — | — | — | — | — | — | 1,784 | 69,380 | | Brian K. McCabe | AIP | — | 67,219 | 134,438 | 201,656 | — | — | — | — | — | | | PSU | 2/2/2023 | — | — | — | 576 | 1,152 | 1,728 | — | 44,801 | | | RSU | 2/2/2023 | — | — | — | — | — | — | 1,152 | 44,801 | | T. L. Arnold, Jr. | AIP | — | 74,900 | 149,800 | 224,700 | — | — | — | — | — | | | PSU | 2/2/2023 | — | — | — | 560 | 1,120 | 1,680 | — | 43,557 | | | RSU | 2/2/2023 | — | — | — | — | — | — | 1,120 | 43,557 |
2023 GRANTS OF PLAN-BASED AWARDS
(1)Amounts reflect threshold, target and maximum payout levels for 2023 performance under the 2023 Annual Incentive Program. For more information regarding the 2023 Annual Incentive Program, see the discussion in “Compensation Discussion and Analysis.” (2)Amounts reflect threshold, target and maximum payout levels for PSUs granted in 2023, pursuant to the Company's 2017 Incentive Plan, which may be earned based on the Company’s level of achievement of performance goals related to ROATCE, and cliff vest on the third anniversary of the grant date, subject to the grantee's continued employment on such date, or earlier upon the death or disability of the grantee, or upon a change in control in which the successor company does not assume or otherwise equitably convert the awards. For more information regarding the PSUs and payout, see the discussion in “Compensation Discussion and Analysis.” (3)Reflects RSUs granted under the 2017 Incentive Plan. The RSUs vest annually in three equal installments beginning on the first anniversary of the grant date, subject to the grantee's continued employment on such date, or earlier upon the death or disability of the grantee, or upon a change in control in which the successor company does not assume or otherwise equitably convert the awards. (4)Reflects the aggregate grant date fair value of the award determined in accordance with FASB ASC Topic 718. Grant date fair value for RSUs is based on the fair market value of our common stock on the grant date. Grant date fair value for PSUs is based on the fair market value of our common stock on the grant date and the probable outcome of performance-based conditions at the time of grant, excluding the effect of estimated forfeitures.
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END The table below sets forth information regarding outstanding stock options and stock awards, which includes RSUs and PSUs, held by the NEOs as of December 31, 2023:
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| | | | Option Awards (1) | | | | Stock Awards (2) | | | | | Name | Grant Date | Vesting Period (Years) (3) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un-exercisable | 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 ($) (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | | Lee R. Gibson | 6/18/2015 | 3 | 18,997 | — | $26.49 | 6/18/2025 | — | $— | — | $— | | | 11/23/2016 | 3 | 16,304 | — | 37.28 | 11/23/2026 | — | — | — | — | | | 6/18/2018 | 3 | 24,095 | — | 34.50 | 6/18/2028 | — | — | — | — | | | 11/21/2019 | 3 | 28,178 | — | 34.83 | 11/21/2029 | — | — | — | — | | | 6/29/2021 | 3 | — | — | — | — | 1,205 | 37,741 | — | — | | | 2/3/2022 | 3 | — | — | — | — | 2,349 | 73,571 | — | — | | | 2/3/2022 | 3 | — | — | — | — | — | — | 5,283 | 165,464 | | | 2/2/2023 | 3 | — | — | — | — | 3,810 | 119,329 | — | — | | | 2/2/2023 | 3 | — | — | — | — | — | — | 5,715 | 178,994 | | Julie N. Shamburger | 6/18/2015 | 4 | 5,460 | — | 26.49 | 6/18/2025 | — | — | — | — | | | 11/23/2016 | 3 | 6,461 | — | 37.28 | 11/23/2026 | — | — | — | — | | | 6/18/2018 | 3 | 8,881 | — | 34.50 | 6/18/2028 | — | — | — | — | | | 11/21/2019 | 3 | 11,182 | — | 34.83 | 11/21/2029 | — | — | — | — | | | 6/29/2021 | 3 | — | — | — | — | 532 | 16,662 | — | — | | | 2/3/2022 | 3 | — | — | — | — | 1,041 | 32,604 | — | — | | | 2/3/2022 | 3 | — | — | — | — | — | — | 2,340 | 73,289 | | | 2/2/2023 | 3 | — | — | — | — | 1,681 | 52,649 | — | — | | | 2/2/2023 | 3 | — | — | — | — | — | — | 2,522 | 78,989 | | Tim Alexander | 6/18/2015 | 4 | 1,788 | — | 26.49 | 6/18/2025 | — | — | — | — | | | 11/23/2016 | 3 | 7,537 | — | 37.28 | 11/23/2026 | — | — | — | — | | | 6/18/2018 | 3 | 13,060 | — | 34.50 | 6/18/2028 | — | — | — | — | | | 11/21/2019 | 3 | 15,186 | — | 34.83 | 11/21/2029 | — | — | — | — | | | 6/29/2021 | 3 | — | — | — | — | 558 | 17,477 | — | — | | | 2/3/2022 | 3 | — | — | — | — | 1,165 | 36,488 | — | — | | | 2/3/2022 | 3 | — | — | — | — | — | — | 2,621 | 82,090 | | | 2/2/2023 | 3 | — | — | — | — | 1,866 | 58,443 | — | — | | | 2/2/2023 | 3 | — | — | — | — | — | — | 2,799 | 87,665 | | Brian K. McCabe | 11/23/2016 | 4 | 3,648 | — | 37.28 | 11/23/2026 | — | — | — | — | | | 6/18/2018 | 3 | 6,716 | — | 34.50 | 6/18/2028 | — | — | — | — | | | 11/21/2019 | 3 | 7,932 | — | 34.83 | 11/21/2029 | — | — | — | — | | | 6/29/2021 | 3 | — | — | — | — | 360 | 11,275 | — | — | | | 2/3/2022 | 3 | — | — | — | — | 754 | 23,615 | — | — | | | 2/3/2022 | 3 | — | — | — | — | — | — | 1,695 | 53,087 | | | 2/2/2023 | 3 | — | — | — | — | 1,205 | 37,741 | — | — | | | 2/2/2023 | 3 | — | — | — | — | — | — | 1,808 | 56,627 | | T.L. Arnold, Jr. | 1/8/2015 | 4 | 3,999 | — | 23.66 | 1/8/2025 | — | — | — | — | | | 6/18/2015 | 4 | 4,667 | — | 26.49 | 6/18/2025 | — | — | — | — | | | 11/23/2016 | 4 | 3,420 | — | 37.28 | 11/23/2026 | — | — | — | — | | | 6/18/2018 | 4 | 4,750 | — | 34.50 | 6/18/2028 | — | — | — | — | | | 11/21/2019 | 4 | 6,367 | — | 34.83 | 11/21/2029 | — | — | — | — | | | 6/29/2021 | 3 | — | — | — | — | 340 | 10,649 | — | — | | | 2/3/2022 | 3 | — | — | — | — | 725 | 22,707 | — | — | | | 2/3/2022 | 3 | — | — | — | — | — | — | 1,632 | 51,114 | | | 2/2/2023 | 3 | — | — | — | — | 1,171 | 36,676 | — | — | | | 2/2/2023 | 3 | — | — | — | — | — | — | 1,757 | 55,029 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
(1)Options were granted under the 2017 Incentive Plan and predecessor plans. All options granted are for 10-year terms with an exercise price equal to the fair market value (closing price) on the NASDAQ on the date of the grant, adjusted for stock dividends. (2)RSUs and PSUs were granted under the 2017 Incentive Plan and have been adjusted for dividend equivalents. Fractional shares have been rounded for presentation purposes. (3)Options and RSUs vest annually in equal installments over the years noted above, beginning on the first anniversary of the grant date, or earlier upon the death or disability of the grantee, or upon a change in control in which the successor company does not assume or otherwise equitably convert the awards. PSUs cliff vest on the third anniversary of the grant date, subject to the grantee's continued service on such date. (4)Reflects the value calculated by multiplying the number of shares underlying the RSUs and PSUs by $31.32 which was the closing price of our common stock on December 29 2023, the last business day of 2023. (5)PSUs may be earned based on the Company’s level of achievement of performance goals relating to ROATCE over a three-year performance period beginning January 1, 2022 and ending December 31, 2024 and January 1, 2023 and ending December 31, 2025, for PSUs granted February 3, 2022 and February 2, 2023, respectively. Amounts reported here reflect maximum levels of achievement of the performance goals.
2023 OPTION EXERCISES AND STOCK VESTED
2023 OPTION EXERCISES AND STOCK VESTED The following table shows the number of shares and the value realized upon exercise of stock options and vesting of stock awards for the year ended December 31, 2023 for each of the NEOs.
2023 OPTION EXERCISES AND STOCK VESTED
| | Stock Options | | Stock Awards (RSUs) | | | Name | Option Shares Acquired on Exercise (#) | Option Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) (2) | Value Realized on Vesting ($) (3) | | Lee R. Gibson | — | $— | 2,298 | $75,534 | | Julie N. Shamburger | — | — | 1,015 | 33,382 | | Tim Alexander | — | — | 1,101 | 36,448 | | Brian K. McCabe | — | — | 711 | 23,543 | | T. L. Arnold, Jr. | — | — | 994 | 31,361 | | | — | $— | 6,119 | $200,268 |
2023 OPTION EXERCISES AND STOCK VESTED
(1)Value realized represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the options. (2)Number of shares acquired does not include fractional shares, which were settled in cash. (3)Value realized represents the fair market value of the shares on the vesting date, including fractional shares, which were settled in cash.
2023 PENSION BENEFITS
2023 PENSION BENEFITS The table below shows the number of years of service credited to each NEO, the actuarial present value of each NEO's accumulated benefits (determined using interest rate and mortality table assumptions described below), and the amount of payments during 2023 to each of the NEOs, under each of the Pension Plan, Restoration Plan and Deferred Compensation Agreements as of December 31, 2023.
2023 PENSION BENEFITS
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | | Lee R. Gibson | Pension Plan | 36.417 | $2,472,909 | $— | | | Restoration Plan | 36.417 | 5,609,311 | — | | | Deferred Compensation Agreement | N/A | 310,982 | — | | Julie N. Shamburger | Pension Plan | 37.583 | 1,663,738 | — | | | Restoration Plan | 37.583 | 1,008,394 | — | | | Deferred Compensation Agreement | N/A | 238,985 | — | | Tim Alexander | Pension Plan | 15.500 | 810,524 | — | | | Restoration Plan | 15.500 | 1,129,075 | — | | | Deferred Compensation Agreement | N/A | 233,236 | — | | Brian K. McCabe | Pension Plan | 37.583 | 1,822,401 | — | | | Restoration Plan | 37.583 | 422,462 | — | | | Deferred Compensation Agreement | N/A | 211,516 | — | | T. L. Arnold, Jr. | (1) | — | — | — |
2023 PENSION BENEFITS
(1)Mr. Arnold does not participate in the Pension Plan or the Restoration Plan, nor does he have a Deferred Compensation Agreement with the Company.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The following discussion summarizes the compensation benefits payable to the NEOs in the event of a termination of their employment under various circumstances, assuming that the termination occurred on December 31, 2023.
EQUITY COMPENSATION PLAN INFORMATION
| PAY VERSUS PERFORMANCE |
EQUITY COMPENSATION PLAN INFORMATION
| Year | Summary Compensation Table Total for PEO ($)(1) | Compensation actually paid to PEO ($)(2) | Average Summary Compensation Table Total for other NEOs ($)(3) | Average Compensation Actually Paid to other NEOs ($)(2)(3) | Value of Initial Fixed $100 Investment Based on: | | Net Income ($ in Millions) | ROATCE %(6) | | | | | | | TSR(4) | Peer Group TSR(5) | | | | 2023 | $2,134,717 | $1,267,253 | $833,303 | $638,088 | $98.91 | $110.86 | $86.7 | 16.03% | | 2022 | 1,549,596 | 1,476,916 | 756,008 | 726,766 | 108.56 | 119.01 | 105.0 | 18.56% | | 2021 | 1,442,701 | 1,517,567 | 633,441 | 721,480 | 121.77 | 129.55 | 113.4 | 17.04% | | 2020 | 2,654,466 | 1,108,641 | 1,014,518 | 553,073 | 87.26 | 101.71 | 82.2 | 13.79% |
Relationship between Compensation Actually Paid and Performance
Relationship between Compensation Actually Paid and Performance The graphs below show the relationship of CAP for our PEO and other NEOs in 2020, 2021, 2022 and 2023, to total shareholder return, the Company's net income and the Company's ROATCE.
Relationship between Compensation Actually Paid and Performance
| PROPOSAL 2 - NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Relationship between Compensation Actually Paid and Performance
Pursuant to Section 14A of the Exchange Act, we are providing our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officers. At the 2023 Annual Meeting of Shareholders, approximately 95.6% of the shares represented at the meeting in person or by proxy and entitled to vote were voted in support of the Company’s compensation program. At the 2023 Annual Meeting, the Company’s shareholders selected, on a non-binding, advisory basis, an annual vote for the frequency at which the Company should include a Say-on-Pay vote in its proxy statement for shareholder consideration. In light of this result and other factors considered by the Board, the Board determined that the Company will hold Say-on-Pay votes every year until the next required non-binding, advisory vote on the frequency of such votes, which is to be held no later than the Company's 2029 Annual Meeting of Shareholders. Accordingly, the Board is providing shareholders with the opportunity to cast a non-binding advisory vote on the named executive officer compensation program at our 2024 Annual Meeting. This vote will not be binding on or overrule any decisions by the Board, and will not create or imply any additional fiduciary duty on the part of the Board. However, our Compensation Committee will take into account the outcome of the vote when considering future named executive officer compensation arrangements. As described in greater detail in our Compensation Discussion and Analysis above, we believe that our executive officer compensation program is structured in a manner that most effectively supports the Company and our business objectives. Our executive officer compensation program is designed to reward long-term and strategic performance, and is substantially tied to our key business objectives and the success of our shareholders. We monitor the various short-term and long-term aspects of our executive officer compensation program, including base salary, annual cash bonus and equity incentives, in comparison to similar programs and practices at comparable companies, so that we may ensure that our executive officer compensation program is within the competitive range of market practices. The Board invites our shareholders to review carefully the Compensation Discussion and Analysis and the tabular and other disclosures on compensation under Executive Compensation, and cast a vote to approve the Company’s executive compensation programs through the following resolution: “RESOLVED, that the shareholders approve the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion.” The Board recommends a vote FOR the non-binding advisory vote on the compensation of the Company's named executive officers.