DEF 14A of Trustco Bank Corp N Y
Filed Apr 1, 2024 · FY20230001140361-24-016889
Compensation Philosophy and Practices
| • | Encourage and reward the achievement of our short-term and long-term financial and strategic objectives, |
Compensation Philosophy and Practices
| • | Align executive interests with the interests of our shareholders to encourage their focus on long-term return to shareholders and consideration of risk management, and |
Compensation Philosophy and Practices
| What We Do | | | ✔ | Tie a substantial portion of executive pay to corporate performance | | ✔ | Provide for more than one metric for vesting under our performance-based restricted stock unit awards (“PSUs”) | | ✔ | Establish separate metrics for our short-term and long-term incentive plan designs to evaluate performance | | ✔ | Use balanced performance metrics that consider both the Company’s absolute performance and its relative performance versus peers | | ✔ | Maintain a robust clawback policy that meets the requirements of Nasdaq Listing Rule 5608, the clawback policy covers all executive officer incentive-based awards granted based upon material financial statement restatement or material fraud or misconduct | | ✔ | Require stock ownership guidelines for executive officers and directors, stock options and unearned PSUs do not count toward satisfaction of the guidelines | | ✔ | Engage with shareholders to promote transparency, improve accountability, and provide investors with a meaningful voice relating to our corporate governance and executive compensation practices |
Compensation Philosophy and Practices
| What We Don’t Do | | | ✘ | We do not grant multi-year guaranteed incentive awards for executive officers | | ✘ | We no longer provide for “single-trigger” accelerated vesting of equity-based awards upon a change in control | | ✘ | We do not allow for excise tax “gross-ups” upon a change in control in employment agreements entered into since 2013 (five of seven executive officers of the Company do not have tax gross-ups in their employments agreements and the announced retirement of Mr. Salvador will reduce to one the number of legacy employment agreements with this feature) | | ✘ | We do not permit our executive officers and directors to hedge or pledge Company securities | | ✘ | We do not allow for discounting, reloading, or re-pricing of stock options without shareholder approval |
Proposal 1 - Election of Directors
Proposal 1 - Election of Directors Our board is not classified, and all of our directors serve one-year terms. The board of directors also has adopted a Director Resignation Policy to address the situation in which a nominee for the board receives more votes against their election than they receive in favor of their election. Under the Director Resignation Policy, by accepting a nomination to stand for election or re-election as a director of TrustCo, or an appointment as a TrustCo director to fill a vacancy or new directorship, each candidate, nominee, or appointee agrees that if, in an uncontested election, he or she receives more votes against his or her election than are received in favor of his or her election, the director must promptly tender a written offer of resignation. Upon receipt of the offer of resignation, TrustCo’s Nominating and Corporate Governance Committee must promptly consider the offer and recommend to the full board whether to accept the resignation or reject it. The board must act on the committee’s recommendation not later than the next regularly scheduled board meeting after receipt of the recommendation. TrustCo’s Amended and Restated Certificate of Incorporation (as amended to date, the “Certificate of Incorporation”) provides that TrustCo’s board of directors will consist of not less than five nor more than fifteen members, with, under TrustCo’s Bylaws, the total number of directors to be fixed by resolution of the board or the shareholders. Currently, the board of each of TrustCo and Trustco Bank is fixed at nine members. The first item to be acted upon at the Annual Meeting is the election or reelection of all directors to serve on the TrustCo board of directors, as described in the table above on page 2. The pages that follow set forth information regarding TrustCo’s nominees. Proxies will be voted in accordance with the specific instructions provided. Properly executed proxies that do not contain voting instructions will be voted “FOR” the election of TrustCo’s nominees. If any of our nominees becomes unavailable to serve, the shares represented by all valid proxies will be voted for the election of such other person as TrustCo’s board may recommend. TrustCo’s nominees have consented to being named in this proxy statement and to serving on the board if elected.
Proposal 1 - Election of Directors
| 8 | TrustCo Bank Corp NY 2024 Proxy Statement |
Proposal 1 - Election of Directors
Information on TrustCo’s Directors and Nominees Nominees for Election as TrustCo Director for a One-Year Term to Expire in 2025
Proposal 1 - Election of Directors
| Name and Principal Occupation (1) | | Steffani Cotugno, DO, Age 56, Director of TrustCo and Trustco Bank from 2023 to present. Physician, Community Care Physicians, a multispecialty healthcare group, from 1996 to present. School physician for the Shenendehowa Central School District from 1996 to present, the Niskayuna School District from 2015 to present, and the North Colonie School District from 2019 to present. Teaching preceptor at Albany Medical College from 1997 to present. Dr. Cotugno contributes her business experience gained from her role in her medical practice, as well as deep ties to the community that TrustCo serves in the Northeast. | | Brian C. Flynn, Age 73, Director of TrustCo and Trustco Bank from 2016 to present. Consultant and Certified Public Accountant (NY). Former partner of KPMG LLP (retired 2010) where he was employed for approximately 30 years. Mr. Flynn served in KPMG’s banking and finance practice area where his specialties included providing tax services to community banks, thrift institutions, and real estate developers/operators. Since his retirement in 2010, he has served as a technical tax consultant to a community bank trade group. Mr. Flynn brings to the board extensive tax, accounting, and financial reporting expertise in the financial services industry. Mr. Flynn has been designated an audit committee financial expert. | | Lisa M. Lucarelli, Age 60, Director of TrustCo and Trustco Bank from 2017 to present. Private investor. Owner of LMKD Properties, LLC, a property management firm, from 2003 to 2021. Ms. Lucarelli contributes her experience in the area of residential real estate, as an entrepreneur operating a successful business enterprise, and her skills for developing and evaluating business strategies. | | Thomas O. Maggs, Age 79, Director of TrustCo and Trustco Bank from 2005 to present, chair for 2015. President, Risk Strategies, Inc., an insurance agency, from 2018 to present. President, Maggs & Associates, The Business Insurance Brokers, Inc., an insurance broker, from 1987 to 2018. Mr. Maggs contributes his experience as an entrepreneur operating a successful business enterprise and his skills for developing and evaluating business strategies. | | Anthony J. Marinello, MD, PhD, Age 68, Director of TrustCo and Trustco Bank from 1995 to present, chair for 2013. Interim Chief Medical Officer, Emblem Health, a health insurance provider, March 2024 to present. Consultant, Emblem Health, August 2022 to March 2024. Physician, Chief Medical Officer, Capital District Physicians Health Plan, a health insurance provider, January 2020 to July 2022; Vice President, Primary Care Services of Capital District Physicians Health Plan from 2018 to 2019. Previously a physician in private practice. Dr. Marinello contributes his experience as an entrepreneur operating a successful medical practice, an officer of a health insurance company, and his skills for developing and evaluating business strategies. | | Robert J. McCormick (2), Age 60, Director of TrustCo and Trustco Bank from 2005 to present, chair from 2009 to 2010 and 2019 to present. President and Chief Executive Officer of TrustCo from 2004 to present, executive officer of TrustCo from 2001 to present and Chief Executive Officer of Trustco Bank from 2002 to present. Joined Trustco Bank in 1995. Mr. McCormick contributes his skills and knowledge obtained from being the chief executive officer of the Company and Trustco Bank. | | Curtis N. Powell, Age 70, Director of TrustCo and Trustco Bank from 2021 to present. Retired. Former Vice President for Human Resources and Environmental Health, Safety, and Risk Management at Rensselaer Polytechnic Institute, a private research university, in Troy, New York from 2000 to 2023. Member, board of directors, St. Peter’s Health Partners, Albany, New York, from 2011 to 2022. Mr. Powell contributes experience in human capital and risk management, as well as strategic planning, finance, and budgeting. | | Kimberly A. Russell, Age 55, Director of TrustCo and Trustco Bank from 2020 to present. President and Chief Operating Officer of Frank Adams Jewelers, Inc. from 2007 to present, a premier retailer and jewelry design firm located in Albany, New York. Ms. Russell began her career at Frank Adams Jewelers in 1991. Ms. Russell brings to the board valuable experience and background in the retail sector, branding, and image development. | | Frank B. Silverman, Age 52, Director TrustCo and Trustco Bank from 2020 to present. Managing member of Vision Development and Management, Inc., a real estate development firm, from 2005 to present. Owner of Silverman Consulting, a small business development firm, from 2005 to present. Executive Director, Martial Arts Industry Association from 2001 to present. Owner of Central Florida Championship Karate from 1991 to present. Mr. Silverman brings to the board experience as an entrepreneur and substantial roots in the Orlando real estate market and central Florida community. He adds depth and geographic diversity to the board’s existing expertise in real estate development, retail business enterprises, and Trustco Bank’s core business of residential mortgage lending. |
Proposal 1 - Election of Directors
| (1) Directors of TrustCo Bank Corp NY are also directors of Trustco Bank. No director of TrustCo serves on another public company board. |
Proposal 1 - Election of Directors
| (2) Mr. McCormick is the first cousin of Kevin M. Curley, Executive Vice President, TrustCo and Trustco Bank. |
Proposal 1 - Election of Directors
| TrustCo Bank Corp NY 2024 Proxy Statement | 9 |
Proposal 1 - Election of Directors
Resolution In light of the foregoing, TrustCo is asking shareholders to approve the following resolution at the Annual Meeting: RESOLVED that the following nominees be elected as directors to hold office for terms to expire at the 2025 Annual Meeting of shareholders or until his or her successor has been elected and qualified:
Proposal 1 - Election of Directors
| • | Steffani Cotugno, DO |
Proposal 1 - Election of Directors
| • | Brian C. Flynn, |
Proposal 1 - Election of Directors
| • | Lisa M. Lucarelli, |
Proposal 1 - Election of Directors
| • | Thomas O. Maggs, |
Proposal 1 - Election of Directors
| • | Anthony J. Marinello, MD, PhD, |
Proposal 1 - Election of Directors
| • | Robert J. McCormick, |
Proposal 1 - Election of Directors
| • | Curtis N. Powell, |
Proposal 1 - Election of Directors
| • | Kimberly A. Russell, and |
Proposal 1 - Election of Directors
| • | Frank B. Silverman |
Proposal 1 - Election of Directors
Vote Required and Recommendation The nominees for election to the TrustCo board must receive the affirmative vote of a majority of the votes cast by the holders of common stock represented at the Annual Meeting directly or by proxy, which means that the number of votes cast “for” a director’s election exceeds the number of votes cast “against.” Abstentions and shares not voted by brokers and other entities holding shares on behalf of beneficial owners are not treated as votes cast on the proposal and, therefore, will have no effect on this proposal. Dissenters’ rights are not available to shareholders who object to the proposal. If elected, a nominee would serve for one year until the 2025 Annual Meeting of Shareholders. Each director will hold office until his or her successor has been duly elected and qualified or until the director’s earlier resignation, removal, or death. If a director nominee fails to receive an affirmative majority of the votes cast, the board of directors will implement TrustCo’s Director Resignation Policy (if the nominee was an existing member of the board) and may take any appropriate actions within the board’s powers, such as decreasing the number of directors or filling a vacancy. THE TRUSTCO BOARD RECOMMENDS THAT TRUSTCO SHAREHOLDERS VOTE “FOR” THE ELECTION OF THE TRUSTCO DIRECTOR NOMINEES AS TRUSTCO DIRECTORS, WHICH IS ITEM 1 ON THE TRUSTCO PROXY CARD.
Proposal 1 - Election of Directors
| 10 | TrustCo Bank Corp NY 2024 Proxy Statement |
Proposal 1 - Election of Directors
Information on TrustCo Executive Officers
Proposal 1 - Election of Directors
| Name and Principal Occupation(1) | | Kevin M. Curley(2), Age 57, Executive Vice President, TrustCo and Trustco Bank from 2018 to present. Senior Vice President of TrustCo and Trustco Bank from 2011 to 2018. Executive Officer of TrustCo and Trustco Bank from 2017 to present. Joined Trustco Bank in 1990. | | Michael Hall, Age 58, General Counsel and Corporate Secretary of TrustCo and Trustco Bank from 2018 to present. Vice President and Counsel of TrustCo and Trustco Bank from 2015 to 2018. Assistant Secretary of TrustCo and Trustco Bank for 2016. Executive Officer and Secretary of TrustCo and Trustco Bank from 2017 to present. Attorney with McNamee, Lochner, Titus & William, P.C. from 1992 to 2015. Joined TrustCo and Trustco Bank in 2015. | | Robert M. Leonard, Age 61, Executive Vice President of TrustCo and Trustco Bank from 2013 to present. Senior Vice President of TrustCo and Trustco Bank from 2010 to 2013. Secretary of TrustCo and Trustco Bank from 2003 to 2006 and 2009 to 2016. Assistant Secretary of TrustCo and Trustco Bank from 2006 to 2009. Executive Officer of TrustCo and Trustco Bank from 2003 to present. Joined Trustco Bank in 1986. | | Michael M. Ozimek, Age 49, Executive Vice President and Chief Financial Officer, TrustCo and Trustco Bank from 2018 to present. Senior Vice President and Chief Financial Officer of TrustCo and Trustco Bank from 2014 to 2018. Executive Officer of TrustCo and Trustco Bank from 2014 to present. Joined TrustCo and Trustco Bank in 2002. | | Scot R. Salvador(3), Age 57, Executive Vice President of TrustCo and Trustco Bank from 2004 to present. Executive Officer of TrustCo and Trustco Bank from 2004 to present. Joined Trustco Bank in 1995. | | Eric W. Schreck(4), Age 57, Executive Vice President and Florida Regional President of Trustco Bank from 2021 to present. Senior Vice President and Florida Regional President of Trustco Bank from 2009 to 2020. Treasurer of TrustCo from 2010 to present. Executive Officer of TrustCo and Trustco Bank from 2010 to present. Joined Trustco Bank in 1989. |
Proposal 1 - Election of Directors
| (1) Executive Officers of TrustCo Bank Corp NY are also executive officers of Trustco Bank. |
Proposal 1 - Election of Directors
| (2) Mr. Curley is the first cousin of Robert J. McCormick, President and Chief Executive Officer and Director of TrustCo and Trustco Bank. |
Proposal 1 - Election of Directors
| (3) Mr. Salvador has announced his intention to retire from his position as an Executive Vice President of the Company and its subsidiaries, effective December 31, 2024. |
Proposal 1 - Election of Directors
| (4) Mr. Schreck intends to retire from his positions as an Executive Vice President and Treasurer of the Company and its subsidiaries, effective December 31, 2024. |
Proposal 1 - Election of Directors
Director Independence The listing standards of Nasdaq require that TrustCo have a majority of independent directors. Nasdaq’s listing standards provide that no director will qualify as “independent” for these purposes unless the board of directors affirmatively determines that the director has no relationship with TrustCo that would interfere with the exercise of the director’s independent judgment in carrying out the responsibilities of a director. Additionally, the listing standards set forth a list of relationships that would preclude a finding of independence. The board affirmatively determines the independence of each director and nominee for election as a director annually. In accordance with Nasdaq’s listing standards, a director will not be considered independent unless the board determines (i) that no relationship exists that would preclude a finding of independence under Nasdaq’s listing standards and (ii) that the director has no relationship with TrustCo (either directly or as a partner, stockholder or officer of an organization that has a relationship with TrustCo) that would interfere with the exercise of the director’s independent judgment in carrying out his or her responsibilities as a director. TrustCo maintains an Audit Committee, a Compensation Committee, a Board Compliance Committee, a Fiduciary Committee, a Nominating and Corporate Governance Committee, and a Risk Committee. The charter of each of the committees and our Corporate Governance Guidelines may be found on TrustCo’s website (www.trustcobank.com) under the “Investor Relations” tab (the information found on TrustCo’s website is not incorporated by reference in this proxy statement or any other report that TrustCo files or furnishes to the SEC). Members of the Audit, Compensation, and Nominating and Corporate Governance Committees must also meet applicable independence tests of Nasdaq and the SEC. Pursuant to the charters of the Fiduciary and Risk Committees, at least two and four members, respectively, of such committees must also qualify as independent under Nasdaq’s listing standards. The Board Compliance Committee does not require that its members be independent; provided, however, that at least two members of such committee are not (i) employees, former employees or controlling shareholders of TrustCo Bank or any of its affiliates or (ii) a family member of any such person.
Proposal 1 - Election of Directors
| TrustCo Bank Corp NY 2024 Proxy Statement | 11 |
Process for Identifying and Evaluating Nominees for Director
Process for Identifying and Evaluating Nominees for Director The process that has been and will be followed by the Nominating and Corporate Governance Committee to identify and evaluate director candidates will include requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates, and interviews of selected candidates by members of the Nominating and Corporate Governance Committee and the board. Additionally, the Nominating and Corporate Governance Committee is authorized under its charter to retain at the Company’s expense one or more search firms to identify candidates (and to approve such firms’ fees and other retention terms). After a potential candidate is identified, the committee investigates and assesses the qualifications, experience, and skills of the candidate. The investigation process may, but need not, include one or more meetings with the candidate by a member or members of the committee. From time to time, but at least once each year, the committee meets to evaluate the needs of the board and to discuss the candidates for nomination to the board. Such candidates may be presented to the shareholders for election or elected to fill vacancies. All nominees must be approved by the committee and by a majority of the independent members of the board.
Audit Committee Report
| • | Encourage and reward the achievement of our short-term and long-term financial and strategic objectives; |
Audit Committee Report
| • | Align executive interests with the interests of our shareholders to encourage their focus on long-term return to shareholders and consideration of risk management, and |
Audit Committee Report
| • | The Executive Officer Incentive Plan (“EOIP”), our annual incentive plan, is based on rigorous performance goals. In determining the performance metrics, goals, and weighting of the potential bonus opportunity for the 2023 performance year under the Trustco Bank EOIP, the Committee considered the following factors: |
Audit Committee Report
| ○ | Performance of the Company’s peer group; |
Audit Committee Report
| ○ | Long-term benefit to shareholders. |
Audit Committee Report
| (2) Equity awards are both the PSUs and RSUs received in 2023. The amount represents the shares granted times the grant date fair value ($27.09). The PSUs are reflected as paying out at target. The total amount of the awards reflected in the above charts are $999,995, $225,010, $0, $325,026, and $225,010 for Messrs. McCormick, Ozimek, Salvador, Leonard, and Curley, respectively. |
Audit Committee Report
| (3) The performance-based payment (in cash or stock) represents the amount received from the 2023 Executive Officer Incentive Plan. Mr. McCormick would receive $190,298 and Messrs. Ozimek, Salvador, Leonard, and Curley would each receive $64,716, $84,865, $84,865 and $61,716, respectively. |
Audit Committee Report
| Key Elements | Sub-Elements | | Annual Cash Compensation | Salary and Executive Officer Incentive Plan | | Long-Term Compensation | Time and Performance-Based Restricted Stock Units | | Benefits | 401(k) Plan, Supplemental Retirement Plan Payments, payments in lieu of Supplemental Retirement Plan Payments, and Other Benefits |
Long-Term Incentive Program
Long-Term Incentive Program The Company maintains a long-term incentive compensation program through the TrustCo Bank Corp NY Amended and Restated 2019 Equity Incentive Plan (the “2019 Equity Incentive Plan”), which was established to advance the interests of the Company and its shareholders by providing employees, including named executive officers, an opportunity to earn compensation tied to the value of our common stock. The 2019 Equity Incentive Plan permits the grant of a variety of equity-based awards, including stock options, restricted stock, and restricted stock units (both time-based and performance-based). The 2019 Equity Incentive Plan is administered by the Compensation Committee, which is authorized to determine participants, award levels and other terms and conditions of awards as stated in the plan, including vesting conditions which may be time- or performance-contingent. In making award determinations, the Compensation Committee considers each named executive officer position, its scope of influence, and its ability to drive the long-term financial performance of the Company. The Compensation Committee also may review awards granted to similarly situated officers at Peer Group companies. Awards are intended to encourage each named executive officer to develop a sense of ownership in the Company’s financial growth and the creation of shareholder value. The Compensation Committee grants equity awards in the fall, before the end of our fiscal year, at approximately the same time that it determines bonus compensation amounts and performance goals for the next fiscal year. In making the 2023 annual equity awards, the Compensation Committee awarded a specific present value of long-term compensation in the form of time-vested and performance-vested awards to each of the named executive officers based on their position and contributions to the Company. Consistent with the Company’s continued emphasis on performance-based compensation tied to specific corporate goals the Compensation Committee maintained its practice of weighting the awards more heavily towards performance-based awards and allocated 60% of each named executive officer’s award value to PSUs that vest based on financial metrics over the following three fiscal years (see below) and 40% of each named executive officer’s award value to RSUs. The Compensation Committee changed its practice of paying these awards on vesting in cash, electing instead, based upon shareholder input, to have the awards pay in shares of Company stock.
Long-Term Incentive Program
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Time-Based Restricted Stock Units
Time-Based Restricted Stock Units In November 2023, the Compensation Committee granted the following RSUs to each of the named executive officers:
Time-Based Restricted Stock Units
| Named Executive Officer | RSUs(1) | | Robert J. McCormick(2) | 14,128 | | Michael M. Ozimek | 3,322 | | Scot R. Salvador(3) | — | | Robert M. Leonard | 4,799 | | Kevin M. Curley | 3,322 |
Time-Based Restricted Stock Units
| (1) In 2023 the amount of this award was determined as a dollar amount. The number of units issued was based on that amount divided by the closing stock price ($27.09) on the day of issue (November 21, 2023). |
Time-Based Restricted Stock Units
| (2) Subsequent to the November 2022 grant of RSUs and PSUs to the named executive officers, it was discovered that the aggregate amount of such grants to the CEO was inadvertently less than the intended grant amount by $150,000. Accordingly, in March 2023, the CEO was awarded a supplemental grant of 1,577 RSUs (the “Supplemental RSUs”), calculated based on the same closing stock price on the originally intended date of grant, November 15, 2022, as well as additional PSUs (discussed below), with the vesting and other terms of such RSU award being the same as the RSUs granted in November 2022. The RSUs set forth herein reflect the aggregate of the Supplemental RSUs granted in March 2023 and Mr. McCormick’s annual grant of RSUs in November 2023. |
Time-Based Restricted Stock Units
| (3) Mr. Salvador did not receive any equity award grants in 2023 due to his announced retirement. |
Time-Based Restricted Stock Units
The periods of restriction applicable to the RSUs will lapse in three equal vesting periods in November of 2024, 2025, and 2026, respectively. The RSUs granted in November 2023 will settle in shares of TrustCo common stock if and when they vest. In addition, vesting of units and the lapse of the restrictions may accelerate upon certain events, including the death, disability, or retirement of an award holder. Upon a change in control of TrustCo, the RSUs will be settled in accordance with the provisions of the plan, which contains a “double-trigger” change in control acceleration provision. The definition of “change in control” is contained in the 2019 Equity Incentive Plan and is substantially the same as the definition contained in the senior executives’ employment agreements and the Performance Bonus Plan described below (and also substantially the definition set forth in the U.S. Treasury Department regulations under Section 409A of the Internal Revenue Code). The Compensation Committee believes that the definition of change in control is customary within the banking industry and that the circumstances under which change in control benefits would vest or become payable are reasonable. The following restricted unit awards from prior grants vested in 2023:
Time-Based Restricted Stock Units
| | Time-Based Restricted Stock Units Vesting in 2023 | | | | | | | Named Executive Officer | Number of 2020 Shares that Vested (#)(1) | Amount of Cash Received on Vesting ($)(1) | Number of 2021 Shares that Vested (#)(2) | Amount of Cash Received on Vesting ($)(2) | Number of 2022 Shares that Vested (#)(3) | Amount of Cash Received on Vesting ($)(3) | | Robert J. McCormick | 3,068 | $85,229 | 3,456 | $96,146 | 3,067 | $87,103 | | Michael M. Ozimek | 1,059 | $29,419 | 987 | $27,458 | 876 | $24,878 | | Scot R. Salvador | 1,059 | $29,419 | 987 | $27,458 | 876 | $24,878 | | Robert M. Leonard | 1,481 | $41,142 | 1,382 | $38,447 | 1,227 | $34,847 | | Kevin M. Curley | 1,059 | $29,419 | 987 | $27,458 | 876 | $24,878 |
Time-Based Restricted Stock Units
| (1) On November 17, 2023, one-third of the 2020 RSUs vested. |
Time-Based Restricted Stock Units
| (2) On November 16, 2023, one-third of the 2021 RSUs vested. |
Time-Based Restricted Stock Units
| (3) On November 15, 2023, one-third of the 2022 RSUs vested. For Mr. McCormick this included one-third of the supplemental grant that he received in March, 2023. |
Performance-Based Restricted Stock Units
Performance-Based Restricted Stock Units In November 2023, the Compensation Committee granted the following PSUs to each of the NEOs:
Performance-Based Restricted Stock Units
| Named Executive Officer | PSUs at Target(1) | | Robert J. McCormick(2) | 21,192 | | Michael M. Ozimek | 4,984 | | Scot R. Salvador | — | | Robert M. Leonard | 7,199 | | Kevin M. Curley | 4,984 |
Performance-Based Restricted Stock Units
| (1) In 2023 the amount of this award was determined as a dollar amount. The number of units granted was based on that amount divided by the closing stock price ($27.09) on the day of grant (November 21, 2023). |
Performance-Based Restricted Stock Units
| (2) Subsequent to the November 2022 grant of RSUs and PSUs to the named executive officers, it was discovered that the aggregate amount of such grants to the CEO was inadvertently less than the intended grant amount by $150,000. Accordingly, in |
Performance-Based Restricted Stock Units
| TrustCo Bank Corp NY 2024 Proxy Statement | 27 |
Performance-Based Restricted Stock Units
March 2023, the CEO was awarded a supplemental grant of 2,366 PSUs (the “Supplemental PSUs”), calculated based on the same closing stock price on the originally intended date of grant, November 15, 2022, as well as additional RSUs (discussed above), with the terms of such PSU award, including performance objectives and period, being the same as the PSUs granted in November 2022. Each PSU granted in November 2023 represents the right to receive upon settlement the number of shares of TrustCo common stock supported by the achieved performance. Achievement of the performance condition will be measured by the Company’s Return on Average Equity (“ROAE”), which is measured as the average of the Company’s ROAE for each of the three years within the Performance Period compared with the ROAE of members of the comparative group of peer companies identified by the Committee (the “Peer Group”) during the same period (calculated by determining the performance of the Peer Group in each year and then calculating the three-year average of each member of the Peer Group expressed as a percentile rank of the Company compared to the members of the Peer Group (“Percentile Rank”), subject to possible adjustment based upon the Company’s non-performing assets. The PSUs generally will vest at the end of a three-year performance period based on continued employment through the end of the performance period and the achievement of the corporate performance goals set forth at the time of grant. The three-year performance period for the 2023 awards runs from January 1, 2024 through December 31, 2026 (the “Performance Period”).
Performance-Based Restricted Stock Units
| Return on Average Equity for the Performance Period | | | Percentile Ranking | Factor | | At or above 75th percentile of the Peer Group | 150% | | 55th - 74th percentile of the Peer Group | 100% | | 25th - 54th percentile of the Peer Group | 25% | | Below 25th percentile of the Peer Group | 0% |
Performance-Based Restricted Stock Units
Additionally, if non-performing assets to total assets of the Company increases beyond 1.75% during one or more quarters of the Performance Period, the total amount of the award to be paid pursuant to these PSUs shall be reduced by one quarter. PSUs may vest prior to the end of the performance period upon the death or disability of a participant on a pro rata basis and will be settled at the end of the performance period based on the Company’s performance. In the event of a change in control of TrustCo, the named executive officer’s awards would settle as follows:
Performance-Based Restricted Stock Units
| • | Messrs. Ozimek, Leonard and Curley’s awards would settle on a pro rata basis based on target at the time of the change in control if their employment is terminated without cause (i) within 12 months prior to the change in control or (ii) within 24 months following the change in control. |
Performance-Based Restricted Stock Units
| • | Messrs. McCormick and Salvador’s awards would settle on a pro rata basis based on target at the time of the change in control if (i) the change in control occurs while they are employed by TrustCo or TrustCo Bank or (ii) they are terminated without cause within 12 months prior to the change in control. |
Performance-Based Restricted Stock Units
The payment of shares will be governed by the terms of the 2019 Equity Incentive Plan.
Achievement of 2020 PSUs
Achievement of 2020 PSUs In 2020, the named executive officers each received PSUs which had a three-year performance period that ended on December 31, 2023. Results between performance levels is paid out using straight-line interpolation to reward incremental performance:
Achievement of 2020 PSUs
| Named Executive Officer | Threshold | Target | Maximum | | Robert J. McCormick | 10,358 | 13,810 | 20,715 | | Michael M. Ozimek | 3,572 | 4,762 | 7,143 | | Scot R. Salvador | 3,572 | 4,762 | 7,143 | | Robert M. Leonard | 5,001 | 6,667 | 10,001 | | Kevin M. Curley | 3,572 | 4,762 | 7,143 |
Achievement of 2020 PSUs
Achievement of the performance-goals condition was measured as the Company’s return on average equity measured as the average of each of the three years against a comparative group of peer institutions for the Performance Period.
Achievement of 2020 PSUs
| Percentile Ranking | Factor | | Above 60th percentile of the Peer Group | 150% | | 50th - 59th percentile of the Peer Group | 100% | | 40th - 49th percentile of the Peer Group | 75% | | Below 40th percentile of the Peer Group | 0% |
Achievement of 2020 PSUs
In 2024, it was determined that the Return on Average Equity performance goal for the 2020 awards was above the 60th percentile. Accordingly, the awards were paid out at 150% target resulting in the following cash payouts:
Achievement of 2020 PSUs
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Achievement of 2020 PSUs
Messrs. McCormick, Ozimek, Salvador, Leonard, and Curley received cash payments of $643,201, $221,790, $221,790, $310,531 and $221,790 respectively, with respect to the 2020 PSUs, based on the $31.05 closing price per share of TrustCo common stock on December 29, 2023.
Performance Bonus Plan and Performance-Based Stock Appreciation Unit Awards
Performance Bonus Plan and Performance-Based Stock Appreciation Unit Awards The Company adopted the Performance Bonus Plan for its most senior executive officers in 1997, and it was amended and restated in 2008 to, among other matters, comply with Section 409A of the Internal Revenue Code. This plan provides cash compensation to Messrs. McCormick and Salvador in the event of a change in control of the Company based upon the appreciation in value of TrustCo’s common stock between the date of the award and the occurrence of a change in control. The units so awarded vest fifteen days prior to the scheduled closing date of a change in control, upon the occurrence of an unannounced change in control, or upon a participant’s termination of employment for reasons other than cause within one year prior to a change in control. Messrs. McCormick and Salvador were each awarded 104,940 units in 2004 at a price of $53.90 per unit and $65.75 per unit, respectively. In 2014, in connection with Mr. Leonard’s promotion to the senior executive management team, the Company granted Mr. Leonard an award of 60,000 performance-based stock appreciation units with a per-unit price of $34.75 under a separate agreement with him (the “PSAUs”). The PSAUs are similar to the awards granted to Messrs. McCormick and Salvador under the Performance Bonus Plan, however, the PSAUs pay out in cash solely upon a “double trigger” (i.e., both a change in control and termination of employment) and Mr. Leonard will not receive a tax gross-up to cover potential excise taxes under Section 4999 of the Internal Revenue Code. The PSAUs vest upon (i) a termination of Mr. Leonard’s employment without cause or for good reason within two years following a change in control of TrustCo or (ii) the occurrence of a change in control within 12 months following a termination of Mr. Leonard without cause or for good reason. Upon vesting, Mr. Leonard will be entitled to receive cash compensation based upon the appreciation in value of TrustCo’s common stock between the date of the award and the date of the occurrence of a change in control or Mr. Leonard’s termination (whichever value is greater). Although the Company is not actively seeking to be acquired, the Compensation Committee understands that regional banking institutions such as the Company are continually subject to acquisition by third parties. The Performance Bonus Plan and the PSAUs were designed to accomplish two objectives with respect to these senior executive officers. First, the plan is intended to reward the executive officers for a successful strategic acquisition that is in the best interest of our shareholders. Second, because it is unlikely that following any change in control, TrustCo’s senior executive officers would continue to have the same level of responsibility and compensation as they currently have with TrustCo and inasmuch as these senior executive officers may perceive significant risks in any such reduced responsibility and compensation resulting from any such acquisition, the Performance Bonus Plan and the PSAUs, along with the change in control benefits available under the senior executives’ employment agreements, are designed to encourage these highly qualified executives to remain with the Company through the consummation of such acquisition and to attract other executives as may be necessary. The Compensation Committee believes that the definition of change in control in the Performance Based Plan and the PSAUs (which is substantially the same as the definition contained in the senior executives’ employment agreements and is substantially the definition set forth in the U.S. Treasury Department regulations under Section 409A of the Internal Revenue Code) is customary within the banking industry and that the circumstances under which change in control payments would be made are reasonable. Messrs. Ozimek and Curley do not participate in the Performance Bonus Plan and have not been awarded PSAUs. Other Annual Benefits
Supplemental Retirement Plan
Messrs. Ozimek’s and Curley’s employment agreements upon their promotion to the senior executive management team in December 2018. For the 2023 plan year, the Company paid in January 2024 Messrs. McCormick, Ozimek, Salvador, Leonard, and Curley cash payments of $629,079, $406,863, $383,333, $411,255 and $418,588, respectively, in lieu of the SERP. All amounts currently accrued under the SERP will remain accrued until the separation of service of the executive. Of the Company’s named executive officers, only Messrs. McCormick and Salvador are participants in the SERP, which is frozen. In response to shareholder feedback, the Committee determined to terminate the benefit provided in lieu of the SERP to new executives, effective as of December 2023. The Committee is committed to seeking a suitable replacement benefit during 2024. Employment Agreements As discussed in more detail below, TrustCo and Trustco Bank entered into employment agreements in 2008 (which are substantially identical to each other) with Messrs. McCormick and Salvador that generally provide for their annual compensation and benefits and certain termination benefits in connection with a change in control. Specifically, these agreements provide for (i) a change in control/severance payment upon the earlier to occur of a change in control or a termination of the executive’s employment within one year prior to a change in control in an amount equal to 2.99 times his annual compensation in effect at the time of his termination or the change in control and (ii) the transfer of certain Company-provided perquisites to the executive upon a termination of the executive’s employment within two years following a change in control. In addition, the agreements provide for the reimbursement of certain post-termination medical expenses in the event of a termination of the executive’s employment (i) on account of death, disability, or retirement at any time during his employment, or (ii) for any reason (other than for cause) within two years following a change in control. Although these legacy agreements are structured to avoid the imposition of excise taxes under Section 4999 of the Internal Revenue Code, the agreements also provide for a tax gross-up payment, if necessary, to mitigate against any excise tax that might be imposed under Section 4999 and ensure that the executives receive the full intended change in control/severance payment, should any such excise tax be imposed. As noted above, these employment agreements, along with the Performance Bonus Plan, are intended to reward the Company’s most senior executive officers for a successful strategic acquisition of TrustCo and Trustco Bank that is in the best interest of our shareholders and encourage these senior executives to remain with the Company up to and through the consummation of such strategic acquisition in order to ensure a stable management team through the consummation of such transaction. In 2013, in connection with his promotion to the senior executive management team, TrustCo and Trustco Bank also entered into an employment agreement with Mr. Leonard, and in 2018, in connection with their promotion to the senior executive management team, TrustCo and Trustco Bank also entered into employment agreements with Mr. Ozimek and Mr. Curley. Mr. Leonard’s, Mr. Ozimek’s, and Mr. Curley’s employment agreements each provide for certain termination benefits in connection with a change in control. Specifically, they shall receive a change in control/severance payment in an amount equal to 2.99 times annual compensation in effect at the time of termination or the change in control and (ii) the transfer of certain Company-provided perquisites to the executive upon a termination of the executive’s employment within one year prior to or two years following a change in control. They each receive the same medical reimbursement benefits and perquisites provided to Messrs. McCormick, and Salvador upon the termination of his employment for death, disability, retirement, or for any reason (other than for cause) within two years following a change in control. While Mr. Leonard’s, Mr. Ozimek’s, and Mr. Curley’s agreements are also structured to avoid the imposition of excise taxes under Section 4999 of the Internal Revenue Code, they do not provide for a similar excise tax gross-up. Similar to the employment agreements for Messrs. McCormick and Salvador, Mr. Leonard’s, Mr. Ozimek’s, and Mr. Curley’s employment agreements are intended to encourage the executive to remain with the Company up to and through the consummation of a successful strategic acquisition of TrustCo and Trustco Bank in order to ensure a stable management team through the consummation of such transaction. Compensation Risk Management, Policies and Practices
Clawback Policy
| Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Non-equity Incentive Plan Compensation(2) | Change to Pension Value and Nonqualified Deferred Compensation Earnings(3) | All Other Compensation(4) | Total | | | | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Robert J. McCormick Chairman, President and Chief Executive Officer, TrustCo and Trustco Bank | 2023 | 1,057,212 | — | 999,995 | 190,298 | 30,234 | 783,196 | 3,060,935 | | | 2022 | 975,000 | — | 725,004 | 945,625 | — | 708,948 | 3,354,577 | | | 2021 | 975,000 | — | 875,026 | 555,750 | — | 778,554 | 3,184,330 | | Michael M. Ozimek Executive Vice President and Chief Financial Officer, TrustCo and Trustco Bank | 2023 | 431,442 | — | 225,010 | 64,716 | 2,603 | 491,906 | 1,215,677 | | | 2022 | 417,500 | — | 250,037 | 250,500 | — | 472,822 | 1,390,859 | | | 2021 | 410,000 | — | 250,026 | 166,050 | — | 501,327 | 1,327,403 | | Scot R. Salvador Executive Vice President Commercial Banking, TrustCo and Trustco Bank | 2023 | 565,769 | — | — | 84,865 | 22,748 | 472,209 | 1,145,591 | | | 2022 | 600,000 | — | 250,037 | 360,000 | — | 449,068 | 1,659,105 | | | 2021 | 600,000 | — | 250,026 | 243,000 | — | 483,720 | 1,576,746 | | Robert M. Leonard Executive Vice President Corporate Services and Risk, TrustCo and Trustco Bank | 2023 | 565,769 | — | 325,026 | 84,865 | 18,352 | 505,521 | 1,499,533 | | | 2022 | 600,000 | — | 350,006 | 360,000 | — | 492,185 | 1,802,191 | | | 2021 | 600,000 | — | 350,024 | 243,000 | — | 481,909 | 1,674,933 | | Kevin M. Curley Executive Vice President Retail Banking, TrustCo and Trustco Bank | 2023 | 411,442 | — | 225,010 | 61,716 | 19,828 | 523,208 | 1,241,204 | | | 2022 | 400,000 | — | 250,037 | 240,000 | — | 494,586 | 1,384,623 | | | 2021 | 375,000 | — | 250,026 | 151,875 | — | 502,867 | 1,279,768 |
Clawback Policy
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation(2) | Total | | | ($) | ($) | ($) | ($) | | Steffani Cotugno, DO | 22,000 | 20,020 | 0 | 42,020 | | Dennis A. DeGennaro(3) | 132,000 | 20,020 | 1,500 | 153,520 | | Brian C. Flynn | 132,000 | 20,020 | 1,500 | 153,520 | | Lisa M. Lucarelli | 132,000 | 20,020 | 1,500 | 153,520 | | Thomas O. Maggs | 132,000 | 20,020 | 1,500 | 153,520 | | Anthony J. Marinello, MD, PhD | 132,000 | 20,020 | 1,500 | 153,520 | | Curtis N. Powell | 132,000 | 20,020 | 1,500 | 153,520 | | Kimberly A. Russell | 132,000 | 20,020 | 1,500 | 153,520 | | Frank B. Silverman | 132,000 | 20,020 | 1,500 | 153,520 |
Clawback Policy
| | | | | | Value of initial fixed $100 investment based on: | | | | | Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers(3) | Average Compensation Actually Paid to non-PEO Named Executive Officers(4) | Total Shareholder Return(5) | Peer Group Total Shareholder Return(6) | Net Income (in millions)(7) | ROAA(8) | | 2023 | $3,060,935 | $2,670,974 | $1,275,501 | $1,128,333 | $86.00 | $101.16 | $58,646 | 0.97% | | 2022 | $3,354,577 | $3,780,453 | $1,559,192 | $1,719,234 | $98.11 | $98.38 | $75,234 | 1.22% | | 2021 | $3,184,330 | $3,402,912 | $1,464,713 | $1,612,100 | $83.44 | $118.61 | $61,519 | 1.01% | | 2020 | $3,157,062 | $2,752,130 | $1,595,503 | $1,451,187 | $80.26 | $87.24 | $52,452 | 0.94% |
Clawback Policy
| (2) The amounts reported in this column represent the amount of Compensation Actually Paid to Mr. McCormick, as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by, or paid to, Mr. McCormick during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. McCormick’s total compensation for each year to determine the Compensation Actually Paid: |
Clawback Policy
| (c) The amounts in this column represent the amounts reported in “Change in Pension and Nonqualified Deferred Compensation” column of the Summary Compensation Table for each applicable year. |
Clawback Policy
| (d) No adjustment for pension benefits is included in the table above. |
Clawback Policy
| (4) The amounts in this column represent the average amount of Compensation Actually Paid to the NEOs as a group (excluding Mr. McCormick), as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual average amount of compensation earned or paid to the NEOs as a group (excluding Mr. McCormick) during the applicable year. In accordance with the requirements of item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. McCormick) for each year to determine the average Compensation Actually Paid, using the same methodology described above in Footnote 2. |