DEF 14A of BV Financial, Inc.
Filed Apr 3, 2025 · FY20240000950170-25-050147
“FOR” each nominee for director; and
“FOR” each nominee for director; and • “FOR” the ratification of the appointment of Forvis Mazars, LLP to serve as the independent registered public accounting firm. If any matters not described in this proxy statement are properly presented at the annual meeting, the persons named in the proxy card will use their judgment as to how to vote your shares. This includes a motion to adjourn or postpone the annual meeting to solicit additional proxies. If the annual meeting is postponed or adjourned, your common stock may be voted by the persons named on the proxy card on the new meeting date as well, unless you have revoked your proxy. We do not know of any other matters to be presented at the annual meeting.
Considerations Respecting Director Nominees and Candidates
Considerations Respecting Director Nominees and Candidates Minimum Qualifications for Director Nominees. The Governance and Nominating Committee has adopted a set of criteria that it considers when it selects individuals to be nominated for election to the Board of Directors. A candidate must meet the eligibility requirements set forth in our Bylaws, which include an age limitation provision and a requirement that the candidate has not been subject to certain criminal or regulatory actions. A candidate also must meet any qualification requirements set forth in any Board of Directors or committee governing documents. If a candidate is deemed eligible for election to the Board of Directors, the Governance and Nominating Committee will then evaluate the following criteria in selecting nominees: • contributions to the range of talent, skill and expertise of the Board of Directors; • financial, regulatory and business experience, knowledge of the banking and financial service industries, familiarity with the operations of public companies and ability to read and understand financial statements; • familiarity with our market area and participation in and ties to local businesses and local civic, charitable and religious organizations; • personal and professional integrity, honesty and reputation; • the ability to represent the best interests of our stockholders and the best interests of BV Financial; • the ability to devote sufficient time and energy to the performance of his or her duties; • independence, as that term is defined under applicable Securities and Exchange Commission and stock exchange listing criteria; • gender and ethnic diversity; and • equity holdings. The Governance and Nominating Committee will also consider any other factors it deems relevant, including diversity, competition, size of the Board of Directors and regulatory disclosure obligations. When nominating an existing director for re-election to the Board of Directors, the Governance and Nominating Committee will consider and review an existing director’s attendance and performance at Board meetings and at meetings of committees on which he or she serves; length of Board service; the experience, skills and contributions that the existing director brings to the Board; and independence. Director Nomination Process. The process that the Governance and Nominating Committee follows to identify and evaluate individuals to be nominated for election to the Board of Directors is as follows: For purposes of identifying nominees for the Board of Directors, the Governance and Nominating Committee relies on personal contacts of the committee members and other members of the Board of Directors, as well as its knowledge of members of the communities BayVanguard Bank serves. The Board of Directors will also consider director candidates recommended by stockholders according to the policy and procedures set forth below. The Governance and Nominating Committee has not used an independent search firm to identify nominees. In evaluating potential nominees, the Governance and Nominating Committee determines whether the candidate is eligible and qualified for service on the Board of Directors by evaluating the candidate under the criteria set forth above. If such individual fulfills these criteria, the Governance and Nominating Committee will conduct a check of the individual’s background and interview the candidate to further assess the qualities of the prospective nominee and the contributions he or she would make to the Board. Consideration of Director Candidates Recommended by Stockholders. The Governance and Nominating Committee will consider director candidates recommended by stockholders who appear to be qualified to serve on our Board of Directors. However, the Governance and Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and the Governance and Nominating Committee does not perceive a need to increase the size of the Board of Directors. To avoid the unnecessary use of the Governance and Nominating Committee’s resources, the Governance and Nominating Committee will consider only those director candidates recommended in accordance with the procedures set forth below. Procedures to be Followed by Stockholders. To submit a recommendation of a director candidate to the Governance and Nominating Committee, a stockholder should submit the following information in writing, addressed to the Chairman of the Governance and Nominating Committee, care of the Corporate Secretary, at our main office: • A statement that the writer is a stockholder and is proposing a candidate for consideration by the Governance and Nominating Committee; • The name and address of the stockholder as they appear on our books, and of the beneficial owner, if any, on whose behalf the nomination is made; • The class or series and number of shares of our capital stock that are owned beneficially or of record by such stockholder and such beneficial owner; • A description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; • A representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the nominee named in the stockholder’s notice; • The name, age, personal and business address and the principal occupation of the candidate; • The candidate’s written consent to serve as a director; • A statement of the candidate’s business and educational experience and all other information relating to such person that would indicate such person’s qualification to serve on the Board of Directors; and • Such other information regarding the candidate or the stockholder as would be required to be included in our proxy statement pursuant to Regulation 14A of the Securities and Exchange Commission. For a director candidate to be considered for nomination at an annual meeting of stockholders, the Governance and Nominating Committee must receive the recommendation at least 120 calendar days before the date of our proxy statement for the previous year’s annual meeting, advanced by one year.
Directors’ Compensation
| Director Compensation Table for the Year Ended December 31, 2024 | | | | | | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Total ($) | | Gary T. Amereihn | 27,500 | 209,447 | 156,060 | 393,007 | | William Streett Baldwin | 19,900 | 209,447 | 156,060 | 385,407 | | P. David Bramble | 14,250 | 209,447 | 156,060 | 379,757 | | William B. Crompton, III | 24,400 | 209,447 | 156,060 | 389,907 | | Joseph S. Galli | 16,000 | 209,447 | 156,060 | 381,507 | | Brian K. McHale | 12,000 | 209,447 | 156,060 | 377,507 | | Joshua W. Posnick | 15,400 | 209,447 | 156,060 | 380,907 | | Machteld V. Thomas | 16,000 | 209,447 | 156,060 | 381,507 |
Item 1 — Election of Directors
Item 1 — Election of Directors BV Financial’s Board of Directors consists of ten members. The Board of Directors is divided into three classes with three-year staggered terms, with approximately one-third of the directors elected each year. The nominees for election at this year’s annual meeting are William Streett Baldwin, William B. Crompton, III, David M. Flair and Joshua W. Posnick. Each nominee currently serves as a director of BV Financial and BayVanguard Bank. The Board of Directors intends to vote the proxies solicited by it in favor of the election of the nominees named above. If the nominees are unable to serve, the persons named in the proxy card will vote your shares to approve the election of any substitute proposed by the Board of Directors. Alternatively, the Board of Directors may reduce the size of the Board of Directors. At this time, the Board of Directors knows of no reason why any of the nominees might be unable to serve. The Board of Directors unanimously recommends a vote “FOR” each of the nominees for director. Information regarding the Board of Directors’ nominees and the directors continuing in office is provided below. Unless otherwise stated, each individual has held his or her current occupation for the last five years. The indicated age for each individual is as of December 31, 2024. The indicated period for service as a director includes service as a director of BayVanguard Bank. There are no family relationships among the directors.
Director Nominees for Term Expiring in 2028
Director Nominees for Term Expiring in 2028 William Streett Baldwin. For over 35 years, Mr. Baldwin has been a director of Ellin & Tucker, Chartered, a business consulting and certified public accounting firm located in Baltimore, Maryland. Mr. Baldwin is a certified public accountant and is a member of the American Institution of Certified Public Accountants and the Maryland Association of Certified Public Accountants. Through his experience as a certified public accountant and his strong risk assessment, financial reporting and internal control expertise, as well as extensive knowledge of accounting and regulatory issues, Mr. Baldwin provides an understanding of public accounting and financial matters to the Board. Age 62. Director since 2012. William B. Crompton, III. Mr. Crompton served as a Director of Kopernik Bank from 2017 until its acquisition by BV Financial in 2019. Mr. Crompton retired from the Office of the Comptroller of the Currency in 2015. Mr. Crompton had held managerial positions in the Office of the Comptroller of the Currency, Office of Thrift Supervision and Federal Home Loan Bank System for over 30 years. With his background of directly working in and managing the examination and supervision of financial institutions at several bank regulatory agencies, Mr. Crompton provides the Board with extensive knowledge regarding regulatory matters and the financial and economic challenges confronting banks. Age 71. Director since 2019. David M. Flair. Mr. Flair became the Chief Executive Officer of BV Financial and BayVanguard in 2013 and was also named President of BV Financial and BayVanguard in 2014. Mr. Flair was hired as the Chief Financial Officer of BV Financial and BayVanguard in 2012 and served in that role until 2014. Mr. Flair served as the Chief Financial Officer of Advance Bank in Baltimore, Maryland, beginning in 2006 and was also appointed as a director and named the Acting Chief Executive Officer of Advance Bank before his departure in 2012. Mr. Flair is a certified public accountant and was a partner with Anderson Associates LLP and Beard Miller Company LLP for almost 20 years before joining Advance Bank. In addition to his wide range of management experience and leadership skills, Mr. Flair’s strong financial background and his knowledge and understanding of the financial, economic and regulatory environments make him a valuable asset to the Board. Age 61. Director since 2012. Joshua W. Posnick. Since 2022, Mr. Posnick has been Senior Managing Director of Capital Markets for Mill Creek Residential, a real estate development and management company, located in Washington, D.C. From 2018 until 2022, Mr. Posnick was Managing Director of Development in the Mid-Atlantic region for Mill Creek Residential. Mr. Posnick provides the Board with business management skills and knowledge regarding real estate and business matters in our market area. Age 39. Director since 2019.
Directors Continuing in Office with Terms Expiring in 2026
Directors Continuing in Office with Terms Expiring in 2026 Gary T. Amereihn.Mr. Amereihn retired from Kopernik Bank in 2019 as part of BayVanguard Bank’s acquisition of Kopernik Bank, having served as Kopernik Bank’s Chairman and Chief Financial Officer from 1992 to 2019. Mr. Amereihn serves as the Chairman of the Board of BV Financial and BayVanguard Bank. Mr. Amereihn’s past service as a chairman, chief executive officer and chief financial officer of a financial institution and his participation in the communities we serve brings an extensive knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for BayVanguard Bank. Age 70. Director since 2019. Brian K. McHale. Mr. McHale has been a Steamship Clerk with International Longshoremen’s Association Local 953 located in Baltimore, Maryland since 1972 and from 1990 until 2014 he was a state delegate to the Maryland General Assembly. Mr. McHale’s long-standing involvement in our local community brings knowledge of the local economy and business opportunities to BayVanguard Bank. His leadership skills and knowledge of the financial, economic and regulatory challenges we face make him well suited to serve on the Board. Age 70. Director since 1987. P. David Bramble. Mr. Bramble has been a managing partner at MCB Real Estate, LLC (“MCB”) since 2005 and has been working in real estate investment for over 20 years. He dedicates his time to sourcing and capitalizing transactions and overseeing project underwriting and execution. Prior to MCB, Mr. Bramble served as the director of commercial lending for a regionally-based full-service lending firm –Madison Funding – which he co-founded in 2000. Prior to that, Mr. Bramble worked for the law firm of Steptoe & Johnson LLP where he provided corporate and real estate advisory services. Mr. Bramble serves as the Chairman of the Board of Lendistry, a fintech enabled CDFI focused on providing small business capital to underserved communities nationwide. He serves on the investment committee and board of the Robert W. Deutsch Foundation, which invests in innovative people, projects, and ideas that improve the quality of life in Baltimore. He also serves on the boards of Johns Hopkins Bayview Hospital, Ronald McDonald House, UPENN Institute for Urban Research and the Baltimore Tree Trust. The Board believes that Mr. Bramble provides the Board with extensive knowledge regarding financial, economic and legal matters and knowledge of our market area due to his long-standing involvement in our local community. Age 47. Director since 2023.
Directors Continuing in Office with Terms Expiring in 2027
Directors Continuing in Office with Terms Expiring in 2027 Joseph S. Galli. For over 30 years, Mr. Galli has been an Executive Vice President of The Bernstein Companies, which is an owner, developer, investor and manager of commercial, residential, industrial and hotel properties in the Mid-Atlantic region of the United States. Within The Bernstein Companies, Mr. Galli is a managing director of Consortium Capital, which is a series of real estate equity funds that invest in commercial real estate throughout the Mid-Atlantic. Mr. Galli is also the Chairman of the Government Relations Committee for the Washington, D.C. chapter of Autism Speaks. Mr. Galli’s experience and long-standing involvement in our local community provides the Board with business management skills and knowledge regarding real estate and business matters in our market area. Age 61. Director since 2015. Timothy L. Prindle. Mr. Prindle was appoint as the Co-President and Chief Executive Officer and a member of the Board of Directors of Bay-Vanguard M.H.C., BV Financial and BayVanguard Bank in 2019. Previously he served as President and Chief Executive Officer of Kopernik Bank since 2012 before it was acquired by BayVanguard in 2019. Mr. Prindle began his career as a Bank Examiner at the Office of Thrift Supervision. In addition to his wide range of management experience and leadership skills, Mr. Prindle’s strong regulatory background and his knowledge and understanding of the financial, economic and regulatory environments make him a valuable asset to the Board. Age 39. Director since 2019. Machteld V. Thomas. Ms. Thomas retired from North Arundel Savings Bank in 2021 as part of BV Financial’s acquisition of North Arundel Savings Bank, having served as the President and Chief Executive Officer for 14 years before the acquisition. Ms. Thomas serves on the board of directors of Bello Machre, a nonprofit that offers care and support for children and adults with developmental disabilities. Ms. Thomas’ past service as a chief executive officer of a financial institution and her participation in the communities we serve brings an extensive knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for BayVanguard Bank. Age 70. Director since 2022.
Executive Officers Who Are Not Directors
Executive Officers Who Are Not Directors The following sets forth information regarding our executive officers who are not directors. Age information is as of December 31, 2024. Michael J. Dee. Mr. Dee was our Senior Vice President and Chief Financial Officer since 2014 before he was named our Executive Vice President and Chief Financial Officer in 2019. Age 64. Gregory J. Olinde. Mr. Olinde has been our Executive Vice President and Chief Credit Officer and Delmarva Market President since 2020. Mr. Olinde was Executive Vice President, Chief Credit Officer for 1880 Bank from 2013 to 2020, when 1880 was acquired by BayVanguard Bank. Age 57. Rose M. Searcy. Ms. Searcy has been with the Bank since 1992 and became our Executive Vice President, Human Resources in 2021. Age 51.
Summary Compensation Table
Summary Compensation Table The following table sets forth for the year ended December 31, 2024 and 2023 certain information as to the total compensation paid to our Co-President and Chief Executive Officers and our two other most highly compensated executive officers whose total compensation exceeded $100,000 for the year ended December 31, 2024. Each executive is referred to as a “named executive officer.”
Summary Compensation Table
| Summary Compensation Table | | | | | | | | | | Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Nonequity Incentive Plan Compensation ($) | All other Compensation ($)(3) | Total ($) | | David M. Flair, Co- | 2024 | 434,452 | — | 1,456,117 | 1,085,235 | 347,562 | 37,206 | 3,360,572 | | President and Chief | 2023 | 365,820 | 27,035 | 32,760 | | 318,864 | 21,303 | 765,782 | | Executive Officer | | | | | | | | | | Timothy L. Prindle, Co- | 2024 | 434,452 | — | 1,456,117 | 1,085,235 | 347,562 | 51,869 | 3,375,235 | | President and Chief | 2023 | 365,820 | 27,035 | 32,750 | | 318,864 | 36,781 | 781,250 | | Executive Officer | | | | | | | | | | Michael J. Dee, | 2024 | 247,738 | 4,764 | 445,800 | 221,500 | 99,095 | 51,643 | 1,070,540 | | Executive Vice President | 2023 | 235,941 | 24,537 | — | | 94,376 | 5,826 | 360,680 | | and Chief Financial Officer | | | | | | | | | | Gregory J. Olinde, | 2024 | 215,323 | 4,141 | — | 66,450 | 64,597 | 52,048 | 402,559 | | Executive Vice | 2023 | 209,051 | 4,020 | — | | 87,221 | 10,938 | 311,230 | | President and Chief | | | | | | | | | | Lending Officer | | | | | | | | |
Summary Compensation Table
(1) Reflects the aggregate grant date fair value for restricted stock awards granted during the fiscal year, computed in accordance with FASB ASC Topic 718. The amounts were calculated based on the Company’s stock price as of the grant date, which was $14.86 per share. Restricted stock awards vest in four approximately equal installments, with the first vesting occurring on the first anniversary of the grant date. (2) Reflects the aggregate grant date fair value for stock options granted during the fiscal year, computed in accordance with FASB ASC Topic 718 using Black-Scholes option pricing model to estimate the fair value of stock option awards. Stock option awards vest in four approximately equal installments, with the first vesting occurring on the first anniversary of the grant date. The actual realized value of the stock options, if any, will depend on the extent to which the market value of Company common stock exceeds the exercise price of the stock options on the exercise date. Accordingly, there is no assurance that the realized value will be at or near the estimated value disclosed in the table. (3) A break-down of the various elements of compensation in this column is set forth below: The table excludes perquisites that did not exceed $10,000 in the aggregate for each named executive officer.
Summary Compensation Table
| | All Other Compensation | | | | | | | Name | 401(k) Plan ($) | Insurance Premiums ($) | Medical Coverage ($) | ESOP Allocation ($) | Vehicle Allowance ($) | Total All Other Compensation ($) | | David M. Flair | 4,815 | 1,326 | — | 31,065 | — | 37,206 | | Timothy L. Prindle | 4,600 | 1,326 | 14,878 | 31,065 | — | 51,869 | | Michael J. Dee | 4,374 | 1,326 | 14,878 | 31,065 | — | 51,643 | | Gregory J. Olinde | 631 | 1,326 | 12,695 | 28,396 | 9,000 | 52,048 |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards(1) | | | | Stock Awards(1) | | | Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($)(2) | 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 ($) | | David M. Flair | 21,433 | — | 5.65 | 12/31/2027 | 6,062 | 104,388 | | | | 244,974 | 14.86 | 09/17/2034 | 97,989 | 1,687,371 | | Timothy L. Prindle | — | — | — | — | 4,510 | 77,662 | | | | 244,974 | 14.86 | 09/17/2034 | 97,989 | 1,687,371 | | Michael J. Dee | 18,370 | — | 5.65 | 12/31/2027 | — | — | | | | 50,000 | 14.86 | 09/17/2034 | 30,000 | 516,600 | | Gregory J. Olinde | — | 15,000 | 14.86 | 09/17/2034 | — | — |
Outstanding Equity Awards at Fiscal Year-End
(1) Based on the closing price of the Company’s stock on December 29, 2024, which was $17.22 per share. (2) Stock option awards vest 25% per year commencing on September 6, 2025, the first anniversary of the grant date. (3) Restricted stock awards vest 25% per year commencing on September 6, 2025, the first anniversary of the grant date. BV Financial, Inc. 2024 Equity Incentive Plan. BV Financial maintains the BV Financial, Inc. 2024 Equity Incentive Plan. As of December 31, 2024, there were 48,397 restricted stock awards and 100,982 stock options remaining available for future grants under the 2024 Equity Incentive Plan. BV Financial, Inc. 2021 Equity Incentive Plan. BV Financial also maintains the BV Financial, Inc. 2021 Equity Incentive Plan. Since the approval of the BV Financial, Inc. 2024 Equity Incentive Plan, no equity awards have been available for grant under the 2021 Equity Incentive Plan. However, as of December 31, 2024, 0 previously granted stock options and 15,654 previously granted unvested shares of restricted stock remain outstanding. BV Financial, Inc. 2017 Stock Option Plan. BV Financial also maintains the BV Financial, Inc. 2017 Stock Option Plan. Since the approval of the BV Financial, Inc. 2021 Equity Incentive Plan, no stock options have been available for grants under the 2017 Stock Option Plan. However, as of December 31, 2024, 54,117 previously granted stock options remain outstanding.
Agreements and Benefit Plans
Agreements and Benefit Plans Employment Agreements. BayVanguard Bank and BV Financial entered into employment agreements with Messrs. Flair and Prindle in 2018. The terms of the agreements automatically extend annually so that the remaining term remains three years, unless either BayVanguard Bank or the executive give written notice to the other party of non-renewal. If either party provides the other with notice of non-renewal, the term will become fixed and expire at the end of the then current term. Notwithstanding the foregoing, if BayVanguard Bank or BV Financial enters into a transaction that would constitute a change in control, as defined under the employment agreements, the term of the agreements would automatically extend so that they would expire no less than three years following the effective date of the change in control. The employment agreements specify the base salaries of Messrs. Flair and Prindle, which are currently $426,480. The Board of Directors of BayVanguard Bank may increase, but not decrease, the executives’ base salaries. Also, following a change in control, the Compensation Committee (or other appropriate committee) will review the executives’ base salaries and will increase the base salaries by a percentage that is not less than the average annual percentage increase in base salary received by each executive over the three years immediately preceding the year in which the change in control occurs. In addition to base salary, the agreements provide that each executive will participate in any bonus plan or arrangement of BayVanguard Bank or BV Financial in which senior management is eligible to participate. Each executive is also entitled to participate in all employee benefit plans, arrangements and perquisites offered to employees and officers of BayVanguard Bank and the reimbursement of reasonable travel and other business expenses incurred in the performance of his duties for BayVanguard Bank. BayVanguard Bank will also reimburse each executive for the business use of any automobile, provide or reimburse each executive with/for a cellular phone, and reimburse each executive for certain expenses incurred in connection with the executive’s attendance at an annual banking conference. BayVanguard Bank may terminate the executives’ employment, or the executives may resign from their employment, at any time with or without good reason. Under the employment agreements, if BayVanguard Bank terminates an executive’s employment without cause or the executive voluntary resigns for “good reason” (i.e., following a “qualifying termination event”), BayVanguard Bank will pay the executive a lump sum severance payment equal to three times the average taxable income for the five taxable years immediately preceding the year in which the termination of employment occurs. In addition, BayVanguard Bank will provide the executive with continued life insurance and non-taxable medical and dental insurance substantially comparable to the coverage provided by BayVanguard Bank immediately before the termination of employment under the same cost-sharing arrangements that apply for active employees of BayVanguard Bank as of the date of termination. The coverage will cease at the earlier of (1) the expiration of the term of the employment agreement or (2) the date on which the executive becomes a full-time employee with another employer. Under the employment agreements, upon a change in control of BayVanguard Bank or BV Financial, the executives would receive a payment equal to three times the sum of (1) the average taxable income for the five taxable years immediately preceding the year in which the change in control occurs, (2) the matching contributions made to the 401(k) Plan for the plan year immediately preceding the year in which the change in control occurs and (3) the contribution made on the executive’s behalf under the employee stock ownership plan for the plan year immediately preceding the year in which the change in control occurs. The payment will be made to the executive within ten days following the change in control. If the change in control payment provided under the employment agreements, together with any other payments or payments or benefits made to or provided to the executives, constitute “parachute payments” under Section 280G of the Code, the executive’s payments under the employment agreements will be cut-back to an amount so that there are not parachute payments, but only if the reduction provides a greater economic benefit to the executive than if the executive received all payments and paid any excise tax due under Section 4999 of the Code. The employment agreements terminate upon the executive’s death or disability. Upon the executive’s death, his beneficiary will receive the base salary the executive would have received through the end of the month in which the death occurred. In addition, for one year following his death, the executive’s dependents will receive continued non-taxable medical and dental coverage. The executive’s employment may also be terminated for “cause” (as defined in the employment agreements) at any time, in which case the executive will have no right to any payments or benefits, other than any vested benefits. Change in Control Agreement. BayVanguard Bank maintains a change in control agreement with Mr. Dee. The change in control agreement has a term of three years and the Board of Directors of BayVanguard Bank may extend the term of the agreement by one year every July 1, so that it remains three years, unless the executive gives notice of his desire that the term not be extended. If the executive’s employment involuntary terminates for reasons other than cause, or in the event of the executive’s resigns for “good reason” (as those terms are defined in the agreement), in either case within one year following a change in control, Mr. Dee will receive a severance payment, paid in a single lump sum, equal to three times his “base amount,” as that term is defined for purposes of Section 280G of the Code (i.e., three times the average of the taxable compensation for the five taxable years preceding the year in which the change in control occurs). In addition, BayVanguard Bank will provide the executive with continued life insurance and non-taxable medical and dental insurance substantially comparable to the coverage provided by BayVanguard Bank immediately before the termination of employment under the same cost-sharing arrangements that apply for active employees of BayVanguard Bank as of the date of termination. The coverage will cease after 36 months. If the coverage cannot be provided to the executive, he will receive a cash payment reasonably estimated to equal the value of the coverage. If the payments and benefits paid to or provided to the executive constitute an excess parachute payment for purposes of Section 280G of the Code, the payments or benefits will be reduced to an amount that does not create and excess parachute payment. Salary Continuation Plans. BayVanguard Bank sponsors a Salary Continuation Plan for each of Messrs. Flair and Prindle. Under the plans, if the executive separates from service before reaching his normal retirement age under the plan (age 68 for Mr. Flair and age 48 for Mr. Prindle), the executive will be entitled to an annual benefit of $100,000. The annual payments will commence on the first day of the second month following the separation from service and will continue for 15 years. If an executive separates from service before reaching his normal retirement age, he will receive a benefit equal to the accrued benefit (i.e., the amount accrued to reflect the liability of BayVanguard Bank under the plan). The benefit will be paid in installments commencing on the first day of the second month following the executive’s normal retirement age and continuing for 15 years.
Agreements and Benefit Plans
If an executive dies while in service and before reaching his normal retirement age, his beneficiary will receive the accrued benefit under the plan less the benefit described in any endorsement split dollar life insurance agreement between BayVanguard Bank and the executive. If the executive is not a party to a split dollar agreement, the accrued benefit will be paid to his beneficiary in a lump sum on the first day of the second month following the executive’s death. If the executive dies following a separation from service or while in service and after attaining his normal retirement age, his beneficiary will receive the present value of the normal retirement benefit less the benefit provided for in any endorsement split dollar life insurance agreement between BayVanguard Bank and the executive. If the executive is not a party to a split dollar agreement, the present value of the normal retirement benefit will be paid to his beneficiary in a lump sum on the first day of the second month following the executive’s death. If the executive dies after payments have commenced under the plan, his beneficiary will receive the present value of the remaining benefit payments less the benefit provided for in any endorsement split dollar life insurance agreement between BayVanguard Bank and the executive. If the executive is not a party to a split dollar agreement, the present value of the remaining benefit payments will be paid to his beneficiary in a lump sum on the first day of the second month following the executive’s death. If an executive involuntarily separates from service or separates from service for good reason, in either case, within two years following a change in control, the executive will receive the present value of the normal retirement benefit, payable in a lump sum on the first day of the second month following the separation from service. If the executive becomes disabled while in service and before his normal retirement age, he will receive the normal retirement benefit, as if he had attained his normal retirement age. The benefit will be paid commencing on the first day of the second month following his normal retirement age and will continue for 15 years. Executive Split Dollar Agreement. BayVanguard Bank has purchased life insurance policies covering certain officers, including Mr. Flair. Although the Bank owns these policies, the individuals have an interest in the policy proceeds paid at their death. BayVanguard Bank has entered into an Executive Split Dollar Agreement with Mr. Flair. Under the Split Dollar Agreement, upon Mr. Flair’s death, his beneficiaries will receive a death benefit in the amount of the lesser of (1) the present value of the benefit Mr. Flair would have received under as the normal retirement benefit under the Salary Continuation Plan (as if he had attained age 65 immediately before his death if he dies before age 65) or, if Mr. Flair is in pay status under the Salary Continuation Plan, the present value of the remaining payments that would be due under the Salary Continuation Plan or (2) the net death proceeds (i.e., the total death proceeds of the life insurance policy minus the cash surrender value). Each year, BayVanguard Bank imputes income to Mr. Flair to reflect the value of the life insurance coverage provided under the Split Dollar Agreement. The Split Dollar Agreement terminates upon the occurrence of (1) the surrender, lapse or other termination of the underlying life insurance policy, (2) cessation of BayVanguard Bank’s business, which is not continued by any successor, (3) written notice of termination of the agreement by either party to the agreement, (4) bankruptcy, receivership, or dissolution of BayVanguard Bank, or (5) distribution of the death benefits in accordance with the terms of the agreement.
Other Information Relating to Directors and Executive Officers
Other Information Relating to Directors and Executive Officers