DEF 14A of Triumph Financial, Inc.

Filed Mar 14, 2024 · FY20230001193125-24-067404

Open on EDGAR

PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS
Introduction
Introduction Upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has nominated each of the directors noted below (whom we refer to as the “nominees”) to stand for election for a one (1) year term expiring at the 2025 annual meeting of stockholders or until their respective successors have been elected and qualified. Each director nominee must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees.
Introduction
| Name | Position | | Carlos M. Sepulveda, Jr. | Director and Chairman of the Board | | Aaron P. Graft | Director, Vice Chairman and Chief Executive Officer | | Charles A. Anderson | Director | | Harrison B. Barnes | Director | | Debra A. Bradford | Director | | Richard L. Davis | Director | | Davis Deadman | Director | | Laura K. Easley | Director | | Maribess L. Miller | Director | | Michael P. Rafferty | Director | | C. Todd Sparks | Director |
Introduction
All of the nominees listed above have consented to being named in this proxy statement and to serve if elected. However, if any nominee becomes unable to serve, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board may reduce the number of directors to be elected at the Annual Meeting.
Introduction
| | The Board of Directors unanimously recommends a vote FOR the election of each of the nominees. |
Introduction
| | 2024 Proxy Statement 5 |
Information Concerning the Nominees and Directors
Information Concerning the Nominees and Directors Biographical information for each director and nominee appears below. The information is based entirely upon information provided by the respective directors and nominees.
Information Concerning the Nominees and Directors
| | | Director Since | | | Committee Membership | | | | | Name | Age | | Position | Independent | AC | CC | NCG | RCC | | Charles A. Anderson | 63 | 2010 | Director | ✓ | | C | ✓ | | | Harrison B. Barnes | 31 | 2021 | Director | ✓ | | ✓ | | | | Debra A. Bradford | 65 | 2020 | Director | ✓ | ✓ | | | ✓ | | Richard L. Davis | 70 | 2010 | Director | ✓ | | ✓ | ✓ | | | Davis Deadman | 60 | 2023 | Director | | | | | ✓ | | Laura K. Easley | 59 | 2020 | Director | ✓ | | | ✓ | C | | Aaron P. Graft | 46 | 2010 | Director, Vice Chairman, Chief Executive Officer & President | | | | | | | Maribess L. Miller | 71 | 2014 | Director | ✓ | ✓ | | C | | | Michael P. Rafferty | 69 | 2014 | Director | ✓ | C | | | ✓ | | Carlos M. Sepulveda, Jr. | 66 | 2010 | Director & Chairman | ✓ | | ✓ | | | | C. Todd Sparks | 56 | 2010 | Director | ✓ | ✓ | | | |
Information Concerning the Nominees and Directors
| C | Committee Chair |
Information Concerning the Nominees and Directors
| ✓ | Member |
Information Concerning the Nominees and Directors
| AC | Audit Committee |
Information Concerning the Nominees and Directors
| CC | Compensation Committee |
Information Concerning the Nominees and Directors
| NCG | Nominating and Corporate Governance Committee |
Information Concerning the Nominees and Directors
| RCC | Risk and Compliance Committee |
Information Concerning the Nominees and Directors
We believe our Board represents a broad mix of tenure, gender, ethnic, and cultural diversity with robust independence. Our Nominating and Corporate Governance Committee evaluates candidates for future directorships in light of these foregoing characteristics. In particular, the Board and the Nominating and Corporate Governance Committee believes it is appropriate to evaluate director diversity holistically by considering gender, ethnicity, as well as a range of other characteristics that inform diverse perspectives on our Board. Our Board does not manage to specific percentages or quotas for a particular type of diversity. In 2023, Davis Deadman was nominated and elected as director of the Company as part of the consolidation of the directorships of the Company and its subsidiary bank board. Director Deadman was nominated and elected to serve on the Company’s Board due to his prior experience with the Company as well as its subsidiary bank, and, in particular, due to his unique credit expertise and oversight thereto for the enterprise. Upon the election of Director Deadman in 2023, the Nominating and Corporate Governance Committee decided to not recommend any further changes to the composition of the Board (other than the election of Director Deadman and the corresponding increase in the size of the Board) as it believed the Board’s overall diversity (including the re-nomination of each incumbent director, which retained all existing diverse viewpoints on the Board notwithstanding any incremental reductions in percentage representation resulting from the increase in Board size) reflected then and continues to reflect now a commitment to diverse attributes and viewpoints on the Board. The Committee and the Board has determined such composition remains appropriate in 2024 and has noted that diversity will remain a key consideration when filling any future Board vacancy.
Information Concerning the Nominees and Directors
| Director Tenure | Diversity | Independence | | | | |
Information Concerning the Nominees and Directors
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Directors Standing for Election at the 2024 Annual Meeting
Directors Standing for Election at the 2024 Annual Meeting
Directors Standing for Election at the 2024 Annual Meeting
| | Carlos M. Sepulveda, Jr. Retired President and Chief Executive Officer Interstate Batteries, Inc. Carlos M. Sepulveda, Jr. has served as Chairman of our Board of Directors since 2010. He also serves as Chairman of TBK Bank, SSB. Since March 2014, Mr. Sepulveda has served on the Board of | Chairman of the Board Independent Director Director Since 2010 Age 66 Board Committees: • Compensation Key Qualifications and Expertise: • Senior Leadership Experience • Financial Experience • Diversity Other Current Public Boards: • Cinemark Holdings, Inc. | | Directors of Savoya, a chauffeured ground transportation service provider. In 2007, he joined the Board of Directors of Cinemark Holdings, Inc. (NYSE: CNK) where he has been Lead Director since 2016 and Chairman since 2022. In addition, he serves as a member of the Audit Committee and Compensation Committee of Cinemark Holdings, Inc. From 2013 to January 2017, Mr. Sepulveda served on the Board of Matador Resources Company (NYSE:MTDR), as Director, Chairman of the Audit Committee, Chairman of the Financial Committee, and a member of both the Nominations Committee and Executive Committee. Mr. Sepulveda joined Interstate Battery System International, Inc. in 1990, and served as its President and Chief Executive Officer from 2004 until 2013, and continues to serve on its Board of Directors as he has since 1995. Prior to joining Interstate Battery, Mr. Sepulveda was a partner at KPMG with more than 10 years of audit experience, including a concentration in financial services companies and banks. Mr. Sepulveda received a Bachelor of Business Administration with highest honors from the University of Texas at Austin. He is a certified public accountant (CPA) and is a member of the American Institute of CPAs and Texas Society of CPAs. | | | | | Aaron P. Graft Founder, Vice Chairman and Chief Executive Officer of the Company Aaron P. Graft is the Founder, Vice Chairman and Chief Executive Officer of the Company. He also serves as the Vice Chairman and Chief Executive Officer of TBK Bank, SSB and is the Chairman of | Director Director Since 2010 Age 46 Key Qualifications and Expertise: • Banking Experience • Senior Leadership Experience • Transportation and Payments Experience | | Triumph Financial Services LLC and Vice Chairman of Triumph Insurance Group, Inc. Mr. Graft also serves as a Director and as Vice Chairman of The Bank of the West of Thomas, Oklahoma. Prior to establishing Triumph Financial, Inc., Mr. Graft served as the Founder and President of Triumph Land and Capital Management, LLC, where he oversaw the management of several multi-family and commercial real estate projects in receivership and led the acquisition of multiple pools of distressed debt secured by multi-family projects. Prior to Triumph, Mr. Graft worked for Fulbright & Jaworski, LLP (now Norton Rose Fulbright LLP) where he focused on distressed loan workouts. Mr. Graft received a Bachelor of Arts, cum laude, and a Juris Doctorate, cum laude, from Baylor University. He is a member of Young Presidents’ Organization. In 2017, Mr. Graft received the EY Entrepreneur Of The Year® Award in the Business & Financial Services category in the Southwest Region and the Baylor University 2017 Young Alumnus of the Year. In 2014, he was recognized by the Dallas Business Journal with the “40 Under 40” award. | | |
Directors Standing for Election at the 2024 Annual Meeting
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Directors Standing for Election at the 2024 Annual Meeting
| | Charles A. Anderson Co-Founder Bandera Ventures, Ltd. Charles A. Anderson cofounded Bandera Ventures, Ltd., a firm focused on industrial development and acquisitions, distressed office acquisitions and long-term lease opportunities. Prior to | Independent Director Director Since 2010 Age 63 Board Committees: • Compensation (Chair) • Nominating Corporate Governance Key Qualifications and Expertise: • Senior Leadership Experience Other Current Public Boards: • Highwoods Properties, Inc. | | that, Mr. Anderson was associated with the Trammell Crow Company where he served as Senior Executive Director, responsible for the Development and Investment Group for the Western half of the United States. Since 2014, Mr. Anderson has served on the Board of Directors and as a member of the Investment Committee of Highwoods Properties, Inc. (NYSE:HIW), a publicly traded real estate investment trust. He earned his Bachelor of Business Administration and Master of Business Administration from Southern Methodist University, where he graduated summa cum laude. | | | | | Harrison B. Barnes Professional Athlete National Basketball Association Harrison B. Barnes, through his family office, is a community bank supporter and investor. He previously served on the Board of Directors of First National Bank (Ames, IA), the largest bank | Independent Director Director Since 2021 Age 31 Board Committees: • Compensation Key Qualifications and Expertise: • Banking Experience • Diversity | | subsidiary of Ames National Corporation (NASDAQ: ATLO). Mr. Barnes has been a professional athlete since 2012, representing the United States in the 2016 Olympics. He was voted to, and currently serves on the board of directors of USA Basketball, as Treasurer and Executive Committee member of the National Basketball Players Association, and as one of two inaugural Player Representatives on the board of directors of the NBA Foundation. Since 2012, Mr. Barnes has overseen all functions of his family’s business affairs, including analysis of representation and business proposals, venture capital transactions, and investments in publicly traded companies. Mr. Barnes’ community projects includes When We All Vote (Ambassador), Boys & Girls Club of Oakland (Board of Trustees), Learn Fresh (Champion and Advisor for NBA Math Hoops program), and Harrison Barnes Reading Academy (Founder, promoting literacy skills). | | | | | Debra A. Bradford President and Chief Financial Officer First American Payment Systems Debra A. Bradford is President and Chief Financial Officer of First American Payment Systems, an industry leader and global solutions provider in merchant account services. Ms. Bradford joined First | Independent Director Director Since 2020 Age 65 Board Committees: • Audit • Risk and Compliance Key Qualifications and Expertise: • Financial Experience • Senior Leadership Experience • Diversity • Transportation and Payments Experience Other Current Public Boards: • Intermex International Money Express, Inc. | | American Payment Systems by Deluxe in 2001 and has served as President and Chief Financial Officer since 2008. Prior to the acquisition of First American by Deluxe Corporation, she also served on the Board of Directors and Audit Committee of First American. Prior to joining First American, Ms. Bradford served as Senior Vice President and Chief Financial Officer of ACE Cash Express, Inc., a financial services retailer, and in various roles, including Chief Operating Officer, with IPS Card Solutions (formerly NTS, Inc.), a division of Frist Data Corporation. Ms. Bradford serves on the Board of Directors and on both the compensation and nominating and governance committees of Intermex International Money Express, Inc. (NASDAQ: IMXI). Ms. Bradford graduated from the University of Texas in Austin. She is a Certified Public Accountant and a member of the Texas Society of Certified Public Accountants. | | |
Directors Standing for Election at the 2024 Annual Meeting
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Directors Standing for Election at the 2024 Annual Meeting
| | Richard L. Davis Retired Founder DAVACO, Inc. Richard L. Davis is the Founder of Dallas-based DAVACO, Inc., a leading provider of retail, restaurant and hospitality service solutions. In 2000 and 2006, Mr. Davis was a finalist for the Ernst & | Independent Director Director Since 2010 Age 70 Board Committees: • Compensation • Nominating Corporate Governance Key Qualifications and Expertise: • Senior Leadership Experience | | Young Entrepreneur of the Year award. In 2006, Mr. Davis was inducted into the Retail Construction Hall of Fame. Mr. Davis currently serves on The Salvation Army’s Dallas/ Fort Worth Metroplex Advisory Board and The Foundation Board of Baylor Scott & White. | | | | | Davis Deadman Retired Chief Executive Officer and President NexBank Capital, Inc. Davis Deadman has served on the board of the North Texas Certified Development Corporation, an SBA chartered entity focused on providing debt capital to the small business community in Texas. From | Director Since 2023 Age 60 Board Committees: • Risk and Compliance Key Qualifications and Expertise: • Banking Experience • Financial Experience • Senior Leadership Experience | | 2004 to 2010, he served on multiple boards, including the bank and the holding company within the NexBank Capital, Inc. platform. From 2004 to 2010, Mr. Deadman served as Chief Executive Officer and President of NexBank, a financial services organization that included a broker-dealer and an investment banking and corporate advisory firm. From 1998 to 2009, Mr. Deadman served as a Senior Portfolio Manager and, ultimately, as a partner with Highland Capital Management L.P. In this role, he managed a team of investment professionals responsible for a several billion-dollar portfolio of credit investments. Before 1998, he served as an investment officer at Mutual Benefit Life, managing a $200 million commercial real estate-backed loan portfolio. Mr. Deadman served in various roles with the Company and TBK Bank, SSB from 2011-2022, including as TBK Bank’s Chief Lending Officer from 2011 to 2014. Such service in an employment capacity terminated in 2022. Mr. Deadman received a Bachelor of Business Administration from Texas A&M University and a Master of Business Administration in Finance, Cum Laude, from Southern Methodist University – Cox School of Business. He is a Chartered Financial Analyst (CFA) Charter holder. | | | | | Laura K. Easley Retired Chief Operating Officer Transportation Insight Laura K. Easley was the Chief Operating Officer of Transportation Insight, a leading enterprise solutions provider in the logistics and transportation industry, from 2012 until her retirement in 2019. She | Independent Director Director Since 2020 Age 59 Board Committees: • Nominating Corporate Governance • Risk and Compliance (Chair) Key Qualifications and Expertise: • Senior Leadership Experience • Diversity • Transportation and Payments Experience | | served in various other capacities at Transportation Insight from 2005 to 2019, including Chief Business Development Officer and Chief Solutions Officer. Prior to Transportation Insight, Ms. Easley served in various capacities with Menlo Worldwide, The Complete Logistics Company and ABF Freight Systems. Ms. Easley received a Bachelor of Science Degree in Industrial Engineering and Management from Oklahoma State University. She served on the Board of Directors for the OSU Cowboy Academy of Industrial Engineering and Management. | | |
Directors Standing for Election at the 2024 Annual Meeting
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Directors Standing for Election at the 2024 Annual Meeting
| | Maribess L. Miller Retired Partner PricewaterhouseCoopers LLP Maribess L. Miller was a member of the public accounting firm PricewaterhouseCoopers LLP from 1975 until 2009, including serving as the North Texas Market Managing Partner from 2001 | Independent Director Director Since 2014 Age 71 Board Committees: • Nominating Corporate Governance (Chair) • Audit Key Qualifications and Expertise: • Financial Experience • Senior Leadership Experience • Diversity Other Current Public Boards: • DR Horton, Inc. | | until 2009; as Southwest Region Consumer, Industrial Products and Services Leader from 1998 until 2001; and as Managing Partner of the firm’s U.S. Healthcare Audit Practice from 1995-1998. Ms. Miller joined the board of DR Horton, Inc. (NYSE: DHI) in November, 2019 and serves as chair of the Audit Committee and member of the Compensation Committee. Ms. Miller served as a member of the Board of Directors and Chair of the Audit Committee and member of the Compensation Committee for Zix Corporation (NASDAQ:ZIXI) from 2010-2021. Ms. Miller is also a member of the Board of Directors and Chair of the Audit Committee for Midmark Corp., a privately-held medical supply company. She was on the Texas State Board of Public Accountancy from 2009-2015, past Board Chair for the Texas Health Institute and is past Chair of the Board of the North Texas Chapter of the National Association of Corporate Directors. She graduated cum laude with a Bachelor’s degree in Accounting from Texas Christian University. Ms. Miller is a retired certified public accountant. | | | | | Michael P. Rafferty Retired Partner, Ernst & Young LLP Michael P. Rafferty was a member of the public accounting firm Ernst & Young LLP from 1975 until his retirement in 2013, was admitted as Partner of the Firm in 1988, and served as the Audit | Independent Director Director Since 2014 Age 69 Board Committees: • Audit (Chair) • Risk and Compliance Key Qualifications and Expertise: • Financial Experience • Senior Leadership Experience • Banking Experience | | Practice Leader for the Southwest Region from 2004 to 2013. During his career with Ernst & Young, he primarily served clients in the financial services and healthcare industries. Mr. Rafferty graduated with a Bachelor of Science degree in Accounting from the University of New Orleans. Mr. Rafferty is a certified public accountant and is licensed in Texas. Mr. Rafferty also served as a member of the Board of Directors, as Chair of the Audit Committee and as a member of the Compliance and Ethics Committee of MoneyGram International, Inc. (NASDAQ:MGI), from March 2016 through October 2023. | | | | | C. Todd Sparks Vice President and Chief Financial Officer Discovery Operating Inc. C. Todd Sparks has served on the Board of Directors of the Triumph Financial, Inc. (NASDAQ: TFIN) and TBK Bank, SSB since their inception in 2010. He serves as Vice President and Chief | Independent Director Director Since 2010 Age 56 Board Committees: • Audit Key Qualifications and Expertise: • Banking Experience • Financial Experience • Senior Leadership Experience | | Financial Officer of Discovery Operating Inc., an oil and gas exploration and production company located in Midland, Texas. He is also currently serving on the Board of Directors of Midland Classical Academy. Mr. Sparks has formerly served on the Board of Directors for FirstCapital Bank of Texas, High Sky Children’s Ranch and Young Life Midland. Mr. Sparks has been an active investor, both inside and outside of oil and gas, for the last 30 years. He has actively participated in many areas of interest including real estate, banking, oil and gas service companies and a variety of start-ups during his career. Mr. Sparks received a Bachelor of Business Administration degree from Baylor University in 1989 and a Master of Business Administration degree from Texas A&M University in 1992. | | |
Directors Standing for Election at the 2024 Annual Meeting
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Board Committees
| • | makes recommendations to the Board of Directors regarding the compensation of directors of the Company; |
Compensation Design Principles and Governance Best Practices
| WHAT WE DO | WHAT WE DON’T DO | | » Align pay and performance » Design incentive programs to mitigate undue risks » Include caps on all incentives » Maintain a clawback policy for incentive compensation » Require ownership through Stock Ownership Guidelines » Include “Double Trigger” change in control provisions in NEO employment agreements and equity award agreements » Retain an independent compensation consultant » Annually conduct a competitive benchmarking analysis of executive compensation | » No tax gross-ups related to change in control » No hedging of Company securities by Executive Officers or Directors » No excessive perquisites » No stock option repricing without stockholder approval |
Executive Compensation Objectives and Policies
| Compensation Principles | How we achieve these principles | | Market Competitive | » Competitive base pay ranges are designed to target market competitive ranges with flexibility to recognize individual performance, experience and contribution. » Total compensation is targeted to market competitive ranges for achieving median performance. Actual total compensation varies as appropriate to reflect individual and Company performance. » Market is defined using a combination of published industry survey sources (representing similar size and scope) and proxy peer groups of both (i) publicly-traded banks similar in size and asset types and (ii) fintech peers in industries that align with the Company’s growing presence as a payments network for the transportation industry, which are reviewed annually. | | Performance-Based | » Annual cash incentive opportunities under our Annual Incentive Program (“AIP”) tied to performance under financial metrics that align with key strategic objectives including overall financial returns (Invoice Price Adjusted Earnings Per Share), progress on key strategic and segment-level initiatives, including (i) Banking Segment Pre-Tax Net Income, (ii) Payments Segment Q4 EBITDA Margin %, and (iii) Factoring Segment invoice ageing goals, as well as execution for each executive on individual performance objectives. » Equity compensation awards to our NEO’s under our long-term incentive program (“LTIP”) consisting of 50% performance-based restricted stock units based on the Company’s relative and absolute total stockholder return against two peer groups (one banking and fintech), 25% time vested restricted stock units and 25% time vested stock options. | | Culture of Ownership | » Stock ownership guidelines encourage significant ownership by directors and executive officers. | | Long-Term Focus | » Long-term equity compensation and vesting requirements align rewards with time horizon of potential risk. |
Executive Compensation Objectives and Policies
| Compensation Component | Purpose/Objective | | Base Salary | » Provides a competitive level of fixed income based on role; targets market median. | | Annual Incentive Program | » Motivates and rewards executives for performance of key objectives in support of our overall strategic plan; » Includes both enterprise level financial goals and goals tied to performance in each of the Company’s business segments; and » Rewards vary based on performance (higher performance will result in above market median pay; lower performance will result in below market median pay). | | Equity Awards/ Long-Term Incentive Program | » Aligns executive interests with stockholders through equity based compensation; » Rewards long-term stockholder value creation; and » Multiple year vesting encourages retention. | | Other Benefits | » Provides a base level of competitive benefits consistent with similarly situated executive talent. | | Employment Agreements | » Provides employment security to key executives; and » Focuses executives on transactions in best interest of stockholders, regardless of impact such transactions may have on the executive’s employment. |
Role of Compensation Committee Management and the Compensation Consultant
Role of Compensation Committee Management and the Compensation Consultant
Role of the Compensation Committee
Role of the Compensation Committee The Compensation Committee is responsible for discharging the Board’s duties in executive compensation matters and for administering the Company’s annual incentive and equity-based plans. This includes oversight of the total compensation programs of the Company’s CEO and other executive officers, including our NEOs. The Compensation Committee reviews all compensation components and performance for the Company’s Chief Executive Officer and other executive officers, including base salary, annual short-term incentives, long-term incentives (equity), benefits and other perquisites. In addition to reviewing competitive market values, the Compensation Committee examines the total compensation mix, pay-for-performance relationship and alignment with our compensation philosophy. The Committee also reviews the employment agreements for our NEOs. As the Committee makes decisions regarding the Chief Executive Officer and other executive officers’ compensation, input and data from management and outside advisors are provided for external reference and perspective. While the Chief Executive Officer makes recommendations on other executive officers’ compensation, the Committee is ultimately responsible for approving compensation for all executive officers. The Committee meets regularly in executive session without management.
Role of the Compensation Consultant
Role of the Compensation Consultant The Compensation Committee has the sole authority to retain and dismiss its own outside compensation consultants and any other advisors it deems necessary. In 2023, the Compensation Committee engaged Meridian Compensation Partners LLC (“Meridian”) as its outside compensation consultant. The role of a compensation consultant is to assist the Compensation Committee in analyzing executive compensation packages and to provide the Compensation Committee with information regarding market compensation levels, general compensation trends and best practices. The consultant also provides advice regarding the competitiveness of specific pay decisions and actions for our NEOs, as well as the appropriateness of the design of the Company’s executive compensation programs. Meridian also advised the Compensation Committee on the implementation of the Company’s annual incentive program and
Role of the Compensation Consultant
| 26 2024 Proxy Statement | |
Role of the Compensation Consultant
long-term incentive program for 2023. Meridian attended meetings of the Compensation Committee, including executive sessions, upon invitation. Meridian did not provide any other services to the Company. The Compensation Committee has assessed the independence of Meridian pursuant to the rules of the SEC and concluded that Meridian’s work for the Compensation Committee did not raise any conflicts of interest.
Peer Group and Competitive Benchmarking
Peer Group and Competitive Benchmarking The Committee made its determinations as to the compensation for its NEOs in 2023, including base salary level and annual and long-term incentive targets as a percentage of base salary, by analyzing the Company’s practices in comparison to approved banking and fintech peer groups. The Committee believes that the use of the two peer groups best represents both the Company’s banking operations as well as its growing transportation payments platform. The Committee did not set a specific weighting for the use of either group but reviewed both data sets against the responsibility of the applicable executive.
Banking Peer Group
Banking Peer Group In identifying and constructing a competitive banking peer group, the Committee, based on recommendations from Meridian, took into consideration asset size as the primary selection criteria. In order to reflect our unique business model, the peer group was further filtered to include companies with the highest percentage of Commercial and Industrial (“C&I”) loans to arrive at a reasonable size (i.e. 20 banks). This compensation peer group consisted of banks with assets between $5.1 billion and $13.7 billion as of the date of adoption of the peer group by the Company in 2022, compared to $6.1 billion for the Company at such time.
Banking Peer Group
| Banking Peer Group | | | 1st Source Corporation | Veritex Holdings, Inc. | | Enterprise Financial Services Corp | Preferred Bank | | Live Oak Bancshares, Inc. | National Bank Holdings Corporation | | First Financial Corporation | Stock Yards Bancorp, Inc. | | Lakeland Financial Corporation | CrossFirst Bankshares, Inc. | | Old Second Bancorp, Inc | Mercantile Bank Corporation | | Heritage Commerce Corp | Peoples Bancorp Inc. | | QCR Holdings, Inc. | First Financial Bankshares, Inc. | | BancFirst Corporation | Byline Bancorp, Inc. | | Origin Bancorp, Inc. | Brookline Bancorp, Inc. |
Banking Peer Group
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FinTech Peer Group
FinTech Peer Group The Compensation Committee also requested that Meridian prepare a peer group of fintech companies. This fintech peer group is intended to provide further context regarding the Company’s compensation decisions and to be evaluated together with the banking peer group, given the Company’s growing technology presence in transportation payments. The fintech peer group consisted of fintech companies with revenues between $29 million and $590 million.
FinTech Peer Group
| FinTech Peer Group | | | Repay Holdings Corporation | International Money Express, Inc. | | Q2 Holdings, Inc. | Cass Information Systems, Inc. | | Flywire Corporation | PaySign, Inc. | | EVERTEC, Inc. | Mogo Inc. | | Usio, Inc. | Cantaloupe, Inc. | | i3 Verticals, Inc. | Priority Technology Holdings, Inc. | | Coupa Software Incorporated | EVO Payments, Inc. | | Paya Holdings, Inc, | |
FinTech Peer Group
In general, the Committee’s review of the practices of its peer groups on a consolidated basis suggested that a greater focus on equity-based compensation (both in amount and as a percentage of overall compensation) may be appropriate for the Company compared to its banking peers in order to remain competitive with market practice for the Company’s fintech peers.
Base Salary
Base Salary The Compensation Committee annually reviews each NEO’s base salary. In determining whether to adjust an NEO’s base salary, the Compensation Committee considers the following factors: competitive peer group and industry survey benchmark data, individual performance and the Company’s prospects for future growth and performance. The table below shows our NEOs base salaries for fiscal years 2022 and 2023 and the year over year percentage change in salaries.
Annual Incentive Program
Annual Incentive Program Under the AIP, the Company pays cash incentive payments to our NEOs based on achieved performance against pre-determined annual performance goals. Our AIP is designed to motivate and reward our NEO’s for achieving these performance goals, which are linked to our annual business plan. NEOs 2023 Target Bonus. Target bonuses are established by the Compensation Committee considering competitive market data, individual performance and internal equity with other executives. For the 2023 AIP, the Compensation Committee approved the following target bonuses (expressed as a percentage of base salary) for our NEOs: 60% for Mr. Graft and Mr. Schreyer and 40% for each of Mr. Voss, Ms. Forman-Barenblit and Ms. Lehmann. Each NEO was eligible to receive an actual bonus payout of between 0% and 150% of his or her respective target bonus, with the applicable percentage based on achievement of pre-established performance goals. In addition, at its discretion, the Compensation Committee may increase or decrease such calculated annual incentive payout by up to 30% for any NEO based on Company performance as well as individual or other relevant factors. 2023 Performance Measures, Weighting and Goals. For 2023, the Compensation Committee approved AIP goals related to the following five measures:
Annual Incentive Program
| • | Invoice Price Adjusted Earnings Per Share; |
Annual Incentive Program
| • | Banking Segment Pre-Tax Net Income; |
Annual Incentive Program
| • | Payments Segment Q4 2023 EBITDA Margin Percentage; |
Annual Incentive Program
| • | Factoring Segment Invoice Ageing; and |
Annual Incentive Program
| • | Individual Performance Assessments by Executive. |
Annual Incentive Program
Each goal was assigned a 20% weighting. These measures were updated from 2022 to identify a key performance measure in each of the Company’s operating segments as well as an enterprise level measure. The selected performance measures were directly linked to our 2023 business plan and were deemed to be most reflective of our annual performance against strategic objectives, as more fully described below. Earnings Per Share (“EPS”) was used as the Company’s overall enterprise objective, as the Compensation Committee believes this measure to be a key indicator of overall performance. In making the determination to use an Invoice Price Adjusted EPS calculation (as described in greater detail in the footnotes to the table below) the Compensation Committee sought to reduce the impact on EPS resulting from changes in actual average transportation invoice price (up or down) compared to the assumed price used in determining the performance target for this metric when calculating performance against the goal.
Annual Incentive Program
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Annual Incentive Program
Transportation invoice prices are highly correlated to the profitability of both our Factoring and Payments segments, and are generally driven by macroeconomic forces outside the control of management. The Compensation Committee determined to partially (as opposed to fully) adjust for the impact of transportation invoice prices in calculating Invoice Price Adjusted EPS in order to incentivize management to appropriately adjust its strategies over the course of the year to take into account a changing economic environment. Banking Segment Pre-Tax Net Income was viewed by the Compensation Committee as the objective most reflective of the Banking Segment’s contribution to the overall strategic objectives of the Company, as such indicator would be positively impacted by success in key areas such as: (i) controlling core deposit attrition and maintaining a low overall cost of funds, (ii) managing the Company’s loan portfolio to generate revenue to support the enterprise and its investment in key strategic initiatives such as TriumphPay out of retained earnings, (iii) limiting non-interest expense growth and (iv) maintaining loan losses and specific reserves at acceptable levels. In making the determination to add a potential downward adjustment to the calculation of Banking Segment Pre-Tax Net Income (as described in greater detail in the footnotes to the table below), the Compensation Committee took into account the importance of maintaining credit quality in allowing the Company to achieve its strategic objectives and sought to place additional emphasis on this item. In determining to use Payments Segment Q4 EBITDA Margin Percentage as the AIP objective for the Payments Segment, the Compensation Committee viewed such measure as the most important metric by which to gauge success of the segment, noting that establishing a path to EBITDA profitability was a long-term objective of the Company that had been communicated to and was being tracked by the Company’s investors. The Compensation Committee determined that using fourth quarter EBITDA margin percentage was the most appropriate measure of success against this objective as such measure would demonstrate the point in time improvement in such measure against a EBITDA Margin Percentage of (114)% for the fourth quarter of 2022. For the Factoring Segment, invoice ageing improvement was deemed to be a key area of operational focus, as the collection and posting of invoices in a timely manner impacts the Company’s cash flow, overall customer satisfaction, and requires all operational areas across the segment to be functioning in an integrated and efficient manner. The 45 day target for collection and posting of an invoice was selected as this would indicate completion of such items within 15 days of the due date for a 30 day payment term invoice. Personal performance priorities judge each executive and the executive team against achievement of objectives tied to departmental and Company growth and strategic vision, and would take into account feedback from the CEO (as to NEOs other than the CEO) and the Compensation Committee (as to the CEO and the other NEOs) as part of the annual review process for the executive team. Performance goals for each measure were set at threshold, target and stretch levels, which correspond to a range of potential payouts (50% of target bonus for threshold performance, 100% of target bonus for target performance and 150% of target bonus for stretch performance for each metric). Awards are interpolated in between these levels to provide for incremental rewards.
Annual Incentive Program
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Annual Incentive Program
The table below shows that for 2023 the Company performed below threshold for the Invoice Price Adjusted EPS objective, just above target for the Banking Segment Pre-Tax Net Income objective, and above stretch for the Payments Segment Q4 EBITDA Margin Percentage and Factoring Segment Invoice Ageing objectives. In addition, each NEO was determined to have achieved his or her personal performance goal at 123% of target.
Annual Incentive Program
| Performance Measure | Weighting | Threshold | Target | Stretch | Actual | Earned % | | Invoice Price Adjusted Earnings Per Share (1) | 20% | $1.99 | $2.85 | $3.70 | $1.82 | —% | | Banking Segment Pre-Tax Net Income (2) | 20% | $110.0 | $135.0 | $160.0 | $136.2 | 102% | | Triumph Pay Q4 2023 EBITDA Margin % | 20% | (60)% | (50)% | (40)% | —% | 150% | | Triumph Factoring Segment Invoice Ageing | 20% | 91% | 93% | 95% | 98.5% | 150% | | Individual and Business Unit Objectives | 20% | 50% | 100% | 150% | 123% | 123% | | Weighted Percentage of Target Bonus Earned | | | | | | 105% |
Annual Incentive Program
| (1) Earnings Per Share (“EPS”) targets above were calculated assuming an average transportation invoice price for the year of $1,955. Invoice Price Adjusted EPS is calculated by increasing or decreasing GAAP EPS by 75% of the amount actual average transportation invoices for the year impacted GAAP EPS compared to such baseline. For 2023, the actual average transportation invoice price was $1,810 as compared to $1,955. Such difference was calculated to impact GAAP EPS by ($0.27) per share, with 75% of such amount, or $0.21 per share, added back to GAAP EPS to calculate the Invoice Price Adjusted EPS of $1.82. |
Annual Incentive Program
| (2) In billions. Banking Segment Pre-Tax Net Income is subject to a possible credit quality adjustment to place additional emphasis on maintaining excellent credit quality. If (a) banking segment net charge-offs plus the net increase in banking segment specific reserves remain below 75bps of banking segment average loan balances and (b) banking segment non-performing loans (NPLs) increase in 2023 compared to 2022 by less than 1% of banking segment average loans, banking segment pre-tax net income will not be adjusted to determine the Banking Segment objective payout. Otherwise, banking segment pre-tax profit will be reduced by 25% before determining the payout. For 2023, the banking segment experienced 0.24% in charge offs plus specific reserves as a percentage of banking segment average loans, and an increase of 0.74% of banking segment NPLs to average loans. As such, Banking Segment Pre-Tax Net Income was not adjusted. |
Annual Incentive Program
The Company’s performance below the threshold target for the Invoice Price Adjusted EPS objective was driven primarily by the impact of macroeconomic environment, as the ongoing freight recession was longer and more acute than anticipated at the beginning of 2023, which impacted not only average transportation invoice prices, but also utilization levels and volumes in the Factoring Segment as clients continued to leave the market. Such environment also impacted revenues and volume levels in the Payments Segment. This was offset by continued growth in new clients and revenue in the Payments Segment, but such growth was lower than would have been experienced in a better freight environment. In addition, the elevated interest rate environment continued to place stress on borrowers, resulting in elevated credit costs compared to 2022. Such impacts outweighed the incremental earnings generated in the Banking Segment from higher yields resulting from the elevated interest rate environment. Management was able to moderate the economic impacts described above by reducing non-interest expense growth compared to 2022, while still continuing to make progress on its strategic initiatives (in particular continued growth at TriumphPay). Non-interest expense grew 3.7% from 2022 to 2023, compared to 18.5% from 2021 to 2022. However, the overall effects of the foregoing resulted in GAAP EPS of $1.61 per share ($1.82 per share after the invoice price adjustment), which was below the threshold measure for the objective. Notwithstanding the macroeconomic and freight headwinds impacting overall EPS, the Company executed on key segment level objections tied to its strategic plan, which resulted in performance at or above target for its segment level objectives. Performance at 102% of target for the Banking Segment Pre-Tax Net Income objective was the result of management’s success in moderating growth in total costs of funds and core deposit attrition in the elevated interest rate environment. The impact of this moderated cost of funds growth, together with the benefit in loan yields resulting from higher interest rates on floating rate loans, helped drive a 21.2% increase in net interest income for the segment in 2023 compared to 2022.
Annual Incentive Program
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Annual Incentive Program
This growth was offset in part by increased credit costs compared to 2022 as the Company’s borrowers continued to experience stress from the elevated interest rate environment and freight recession. Overall, however, credit costs remained controlled and within the credit adjustment thresholds approved by the Compensation Committee as part of the segment objective. A key goal for the Company as part of its long-term strategic plan as communicated to investors has been to achieve EBITDA positive results for its Payments Segment by the end of 2024. For 2023, the Company sought to make meaningful progress toward this objective, with a target goal of improving its EBITDA margin from (114%) in the fourth quarter of 2022 to (50%) in the fourth quarter of 2023. Despite the headwinds caused by the falling freight market, the Company was able achieve positive EBITDA in the fourth quarter of 2023, one year ahead of its stated objective. These results were achieved by adding new clients onto the TriumphPay network, finding new sources of revenue from existing client relationships, and realizing the benefit of the rising interest environment as it grew the deposit balances associated with the payments received from network payors pending their release. Such achievement exceeded the stretch target for this goal and represented a significant accomplishment for the Company. The Company exceeded the stretch target for its Factoring Segment Invoice Ageing objective, as it successfully improved internal processes related to the collection and posting of invoices. The percentage of transportation invoices collected and posted within 45 days was 98.5% for the year ended December 31, 2023. As previously noted, the Company believes these improvements position its factoring segment well to take advantage of a rebound in the freight market and increases in average invoice prices. In determining performance for each executive at 123% of the target payout for performance against individual priorities, the Compensation Committee considered, among other items (i) its review of the performance of each NEO for the year, (ii) the Company’s overall success in delivering successful financial results and furthering key strategic initiatives over the year despite economic challenges as discussed above, and (iii) each NEO’s progress in furtherance of individual development goals. The following table shows, for each of our NEOs, the target incentive payment under our AIP and the total calculated payout under the AIP for the Company’s 2023 fiscal year. Payouts were based exclusively on the level of achievement of pre-established Company performance goals and personal performance targets, as described above, and the Compensation Committee did not exercise its discretionary authority to adjust such amounts as provided for in the Company’s AIP.
Annual Incentive Program
| Executive | 2023 Incentive Target | 2023 Incentive Actual | % of Target Incentive | | Aaron P. Graft | $435,000 | $456,750 | 105% | | W. Bradley Voss | $160,000 | $168,000 | 105% | | Edward J. Schreyer | $300,000 | $315,000 | 105% | | Melissa Forman-Barenblit | $160,000 | $168,000 | 105% | | Gail Lehmann | $160,000 | $168,000 | 105% |
Long-Term Incentive Program
Long-Term Incentive Program Each year, the Company grants equity awards to our NEOs under our LTIP. The purpose of these grants is to align our NEOs with stockholder interests, reward our NEOs for long-term stockholder value creation and encourage retention of our NEOs. In addition, these equity grants align with our pay for performance philosophy as 50% of the equity awards issued under our LTIP are performance based restricted stock units. In addition, the value of all equity grants are directly linked to our share performance (and, in the case of stock option grants, have no value unless the share price appreciates after the grant date).
Long-Term Incentive Program
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Long-Term Incentive Program
Target equity awards for each individual are established by the Compensation Committee considering competitive market data, individual performance and internal equity with other executives. For 2023, the Compensation Committee approved the following annual targets (expressed as a percentage of base salary) of equity awards under our LTIP granted to our NEOs: 220% for Mr. Graft, 160% for Mr. Schreyer, 100% for Mr. Voss and Ms. Forman-Barenblit, and 75% for Ms. Lehmann. In addition, at its discretion, the Compensation Committee may increase or decrease by up to 30% an NEO’s target LTIP award based Company performance, individual performance or other relevant factors. For 2023, each NEO’s LTIP award was approved at target. Other than Mr. Schreyer (as discussed below) each NEO’s LTIP award was issued 50% as performance based restricted stock units based on the Company’s relative and absolute total stockholder return (“TSR”) as more fully described below, 25% time-vested restricted stock units, and 25% nonqualified stock options. Prior to Mr. Schreyer’s promotion to Chief Operating Officer of the Company in 2022, Mr. Schreyer had been receiving equity awards consisting entirely of time-vested restricted stock awards. In connection with Mr. Schreyer’s promotion to Chief Operating Officer in 2022, the Company began transitioning Mr. Schreyer to the Company’s standard LTIP award structure over a two year period. In 2023, 50% of Mr. Schreyer’s LTIP award was issued pursuant to the Company’s standard award structure as described above, with the other 50% issued as time vested restricted stock units. In 2024 the Company anticipates issuing 100% of Mr. Schreyer’s award pursuant to the standard award structure. The targeted grant value of each award type for each of our NEOs under our LTIP is as follows:
Long-Term Incentive Program
| | Performance Shares | Restricted Stock Units | Options | Total LTIP | | Named Executive Officer | Target Grant Value | Target Grant Value | Target Grant Value | Target Grant Value | | Aaron P. Graft | $797,500 | $398,750 | $398,750 | $1,595,000 | | W. Bradley Voss | $200,000 | $100,000 | $100,000 | $400,000 | | Edward J. Schreyer | $200,000 | $400,000 | $200,000 | $800,000 | | Melissa Forman-Barenblit | $200,000 | $100,000 | $100,000 | $400,000 | | Gail Lehmann | $150,000 | $75,000 | $75,000 | $300,000 |
Long-Term Incentive Program
The performance based restricted stock unit awards provide for delivery of Common Stock to participants based on the Company’s relative and absolute TSR compared to two reference groups. In 2023, half of such restricted stock unit awards were issued based on TSR compared to a reference group of publicly traded banks with assets between $2.5 and $30 billion and half of such restricted stock unit awards were issued based on TSR compared to the Russell 3000 Data Processing and Outsourced Services index. Each of the awards first evaluates relative TSR over a three year performance period. Between 50% and 175% of the target number of shares subject to the award shall vest based on relative TSR as follows (with linear interpolation between the 25th and 75th percentiles and between the 75th and 90th percentiles, as applicable):
Long-Term Incentive Program
| Relative TSR Percentile | Applicable Relative TSR Vesting Percentage | | Below 25th percentile | 0% | | 25th percentile | 50% | | 50th percentile | 100% | | 75th percentile | 150% | | 90th percentile or above | 175% |
Long-Term Incentive Program
| | 2024 Proxy Statement 33 |
Long-Term Incentive Program
Following determination of the applicable relative TSR vesting percentage, the vested shares shall be subject to adjustment pursuant to a modifier based on absolute TSR over the same three year performance period. For absolute TSR at or below 30%, no modifier shall be applied and 100% of the vested shares based on the applicable relative TSR vesting percentage shall be earned and delivered. If the Company’s common stock achieves absolute TSR of 100% or more, 200% of the vested shares based on the applicable relative TSR vesting percentage shall be earned and delivered (with linear interpolation between absolute TSR of 30% and 100%). As a result, the total shares that may be issued pursuant to our performance based restricted stock unit awards range from 0% to 350% of the target number of shares. In the event that the Company has negative absolute TSR during the performance period, the total number of shares that shall be earned and delivered pursuant to the award is capped at 100% of the target number of shares regardless of the Company’s relative TSR percentile. In addition, if the value of the total number of shares that would be earned and delivered pursuant to the award (computed as the product of the number of the vested shares multiplied by the closing price of the Company’s common stock on the Nasdaq Global Select Market on the applicable vesting date) exceeds 8 times the grate date value of the target number of shares for the award (computed as the product of the target number of shares multiplied by the closing price of the Company’s common stock on the Nasdaq Global Select Market on the grant date) the number of shares to be actually earned and delivered pursuant to the award will be capped at a number of shares that has a value as of the vesting date (computed as set forth above) equal to 8 times the grant date value of the target number of shares (computed as set forth above). The Compensation Committee made the determination to include the absolute TSR modifier in its performance based restricted stock unit awards as part of a plan to attract and retain key strategic talent across the organization (including, but not limited to, its executive officers and NEOs). In connection therewith, it considered the continued separation between the compensation practices of its fintech peers (which typically offer larger total equity compensation opportunities) and its banking peers, as well as the possibility of significant stock price appreciation during the performance period given opportunities in Company’s strategic plan, and its desire to further align management and investors in executing such plan. The caps on total shares that may be delivered pursuant to the awards were deemed by the Compensation Committee to be appropriate in order to limit the total expense of the awards to the Company and to further align payouts on such awards to the returns experienced by investors. In the event of termination of employment under certain circumstances, a prorated portion of the award for the period of service of the participant during the performance period would be earned and shares issued following the completion of the performance period and determination of the Company’s relative and absolute TSR. The time vested restricted stock units and stock option grants each vest one-fourth on each of the first four anniversaries of the grant date, generally subject to the NEO’s continued employment through each such anniversary. Stock options are granted with an exercise price equal to the closing stock price of our Common Stock on the NASDAQ Global Select Market as of the date of grant. Further detail regarding the treatment of such outstanding equity awards upon termination of employment of our NEO’s in various circumstances is described in this Proxy Statement in the table included in “Executive Compensation – Potential Payments as a Result of Termination or Change in Control (CIC).”
Achievement of May 1, 2020 PSU Awards
Achievement of May 1, 2020 PSU Awards As previously disclosed in the proxy statement for the Company’s 2021 Annual Stockholders Meeting, on May 1, 2020, the Company issued to its NEOs performance based restricted stock unit awards (the “2020 TSR PSUs”). The 2020 TSR PSUs provide for delivery of Common Stock to participants ranging
Achievement of May 1, 2020 PSU Awards
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Achievement of May 1, 2020 PSU Awards
between 0% and 175% of the target 2020 TSR PSUs based on the Company’s relative TSR compared to a reference group of publicly traded banks with assets between $2.5 and $30 billion over a three year performance period. On April 30, 2023, the three year performance period for the 2020 TSR PSUs ended with the Company achieving a relative TSR in the 95th percentile of the applicable peer group, which resulted in an applicable vesting percentage of 175% of the target 2020 TSR PSUs granted. The vesting of such awards resulted the delivery of shares of Common Stock to our NEOs as follows: 11,530 shares to Mr. Graft and 6,209 shares to Ms. Lehmann. Mr. Voss, Mr. Schreyer and Ms. Forman-Barenblit did not receive the 2020 TSR PSU award.
Employment Agreements
Employment Agreements We have entered into substantially identical employment agreements with each of our NEOs. The employment agreements are for one (1) year terms which terminate on December 31 of each year, subject to automatic renewal for successive one (1) year terms unless either party delivers 60 days’ prior written notice of non-renewal (and, in the event that a change in control occurs during the then-current term, such term shall be extended to end no earlier than the second anniversary of the change in control). Each employment agreement provides for an annual base salary, which may be increased or decreased during the term, and specifies that the executive is eligible to participate in the annual and long-term incentive programs maintained by the Company to the same extent as other executives of the Company. Either the Company or the executive may terminate the executive’s employment prior to the expiration of the then-current term in accordance with the terms and conditions of the employment agreement, and if such termination of employment is by the Company without “cause” (as defined in the agreement) or by the executive for “good reason” (as defined in the agreement) (a “qualifying termination”), then the executive shall be entitled to receive, subject to execution and non-revocation of a release of claims in favor of the Company, cash severance in the amount of 1.5 times base salary for Mr. Graft and 1.0 times base salary for each of Mr. Voss, Mr. Schreyer, Ms. Forman-Barenblit and Ms. Lehmann, as well as, in each case, healthcare coverage continuation for a period of 18 months for Mr. Graft and Ms. Lehmann and 12 months for Mr. Voss, Mr. Schreyer and Ms. Forman-Barenblit. However, if the qualifying termination occurs within 24 months following a change in control, then the cash severance amount is increased to a multiple of base salary plus the trailing 3-year average bonus (3.0 times for Mr. Graft and 2.0 times for each of Mr. Voss, Mr. Schreyer, Ms. Forman-Barenblit and Ms. Lehmann) and the healthcare coverage continuation period is increased to 36 months for Mr. Graft and 24 months for Mr. Voss, Mr. Schreyer, Ms. Forman-Barenblit and Ms. Lehmann. The employment agreements contain a better net after-tax cutback provision in respect of the excise tax imposed under Sections 280G and 4999 of the tax code, pursuant to which the executive’s change in control-related payments and benefits will be reduced to the extent necessary to prevent any portion of such payments and benefits from becoming subject to the excise tax, but only if, by reason of that reduction, the net after-tax benefit received by the executive exceeds the net after-tax benefit that the executive would receive if no reduction was made.
Employment Agreements
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Employment Agreements
The employment agreements also contain certain restrictive covenants, including a perpetual confidentiality covenant, and non-compete, employee, client, and investor non-solicit, and business non-interference covenants that apply during employment and for the one (1) year period immediately following termination of employment for any reason.
2023 Summary Compensation Table
2023 Summary Compensation Table The following summary compensation table provides information regarding the compensation of our NEOs for our fiscal years ended December 31, 2023, 2022 and 2021.
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (2) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | | AARON P. GRAFT | 2023 | 720,831 | — | 1,614,661 | 398,740 | 456,750 | 69,653 | 3,260,635 | | Director, Vice Chairman, | 2022 | 691,654 | — | 1,198,915 | 349,985 | 478,538 | 54,566 | 2,773,658 | | CEO & President | 2021 | 650,000 | — | 939,477 | 292,475 | 514,020 | 48,197 | 2,444,169 | | W. BRADLEY VOSS | 2023 | 395,832 | — | 404,911 | 99,994 | 168,000 | 18,300 | 1,087,037 | | Executive Vice President, | 2022 | 370,825 | 263,225 | 240,735 | 70,312 | 170,905 | 17,778 | 1,133,780 | | CFO | 2021 | 286,000 | 295,383 | 101,925 | — | — | 11,600 | 694,908 | | EDWARD J. SCHREYER | 2023 | 500,000 | — | 804,917 | 99,994 | 315,000 | 13,200 | 1,733,111 | | Executive Vice President, | 2022 | 500,000 | — | 749,952 | — | 341,820 | 12,200 | 1,603,972 | | COO | | | | | | | | | | MELISSA FORMAN-BARENBLIT | 2023 | 395,833 | — | 404,911 | 99,994 | 168,000 | 13,200 | 1,081,938 | | EVP, TBK Bank, SSB | | | | | | | | | | President - TriumphPay | | | | | | | | | | GAIL LEHMANN | 2023 | 400,001 | — | 303,631 | 74,995 | 168,000 | 20,766 | 967,393 | | Executive Vice President, | 2022 | 393,334 | — | 256,910 | 74,974 | 182,304 | 20,278 | 927,800 | | & Secretary | 2021 | 358,334 | — | 216,747 | 67,486 | 189,792 | 18,982 | 851,341 |
2023 Summary Compensation Table
| (1) Reflects actual base compensation paid during the applicable fiscal year. |
2023 Summary Compensation Table
| (2) Reflects the full grant date value of performance shares, restricted stock, restricted stock units or stock option awards granted to each of our NEOs computed in accordance with ASC 718. Generally, the full grant date fair value is the amount we will expense in our financial statements over an award’s vesting period as further described in Note 20 to our Annual Report on Form 10-K for the Fiscal Year ended December 31, 2023, filed with the SEC on February 13, 2024. The grant value of performance share awards are based on a Monte Carlo valuation of $74.34 per target share for the bank peer group award (i.e. the award tied to the reference group of publicly traded banks with assets between $2.5 and $30 billion) and $81.95 per target share for the fintech peer group award (i.e. the award tied to the Russell 3000 Data Processing and Outsourced Services index) as of the May 1, 2023 grant date. The grant value of restricted stock unit awards are based on a fair market value of $51.25 per share of our common stock as of the May 1, 2023 grant date, which was the closing price of our common stock on the NASDAQ Global Select Market as of such date. The grant value of option awards are based on a Black-Scholes valuation of $25.20 per option share for grants made on May 1, 2023, with an exercise price of $51.25, which was the closing price of our common stock on the NASDAQ Global Select Market as of such date. Assuming the highest level of performance under the performance share awards shown in the “Stock Awards” column above, the total value of such performance share awards using a fair market value of $51.25 per share of our common stock on the May 1, 2023 grant date would have been $2,791,075 for Mr. Graft, $699,921 for Mr. Voss, Mr. Schreyer, and Ms. Forman-Barenblit, and $524,851 for Ms. Lehmann. |
2023 Summary Compensation Table
| (3) Includes the amounts set forth below under “2022 All Other Compensation Table” paid to or on behalf of the NEOs during the applicable fiscal year. |
2023 Summary Compensation Table
The following table shows all amounts included in the “All Other Compensation” column for each NEO in 2023:
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table
| | Grant Date (b) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(i) | All Other Option Awards: Number of Securities Underlying Options (#)(j) | Exercise or Base Price of Option Awards ($/sh)(k) | Grant Date Fair Value of Stock and Option Awards (l) (2) | | Name | | Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | Threshold (#)(f) | Target (#)(g) | Maximum (#)(h) | | | | | | Aaron P. Graft | | | | | | | | | | | | | | 5/1/2023 | | | | | | | 7,780 | | | $398,725 | | | 5/1/2023 | | | | | | | | 15,823 | $51.25 | $398,740 | | | 5/1/2023 | | | | — | 15,560 | 54,460 | | | | $1,215,936 | | | | $152,250 | $435,000 | $848,250 | | | | | | | | | W. Bradley Voss | | | | | | | | | | | | | | 5/1/2023 | | | | | | | 1,951 | | | $99,989 | | | 5/1/2023 | | | | | | | | 3,968 | $51.25 | $99,994 | | | 5/1/2023 | | | | — | 3,902 | 13,656 | | | | $304,922 | | | | $56,000 | $160,000 | $312,000 | | | | | | | | | Edward J. Schreyer | | | | | | | | | | | | | | 5/1/2023 | | | | | | | 9,756 | | | $499,995 | | | 5/1/2023 | | | | | | | | 3,968 | $51.25 | $99,994 | | | 5/1/2023 | | | | — | 3,902 | 13,656 | | | | $304,922 | | | | $105,000 | $300,000 | $585,000 | | | | | | | | | Melissa Forman-Barenblit | | | | | | | | | | | | | | 5/1/2023 | | | | | | | 1,951 | | | $99,989 | | | 5/1/2023 | | | | | | | | 3,968 | $51.25 | $99,994 | | | 5/1/2023 | | | | — | 3,902 | 13,656 | | | | $304,922 | | | | $56,000 | $160,000 | $312,000 | | | | | | | | | Gail Lehmann | | | | | | | | | | | | | | 5/1/2023 | | | | | | | 1,463 | | | $74,979 | | | 5/1/2023 | | | | | | | | 2,976 | $51.25 | $74,995 | | | 5/1/2023 | | | | — | 2,926 | 10,240 | | | | $228,652 | | | | $56,000 | $160,000 | $312,000 | | | | | | | |
2023 Grants of Plan-Based Awards Table
| (1) The amounts reported in these columns represent the possible range of payments under the AIP incentive compensation program. For information about the amounts actually earned by each named executive officer under the AIP incentive compensation program, see “Executive Compensation Tables—2023 Summary Compensation Table.” Amounts are considered earned in fiscal year 2023 although they were not paid until 2024. |
2023 Grants of Plan-Based Awards Table
| (2) Reflects the full grant date value of performance shares, restricted stock, restricted stock unit or stock option awards granted to each of our NEO’s computed in accordance with ASC 718. Generally, the full grant date fair value is the amount we will expense in our financial statements over an award’s vesting period as further described in Note 20 to our Annual Report on Form 10-K for the Fiscal Year ended December 31, 2023, filed with the SEC on February 13, 2024. The grant value of performance share awards are based on a Monte Carlo valuation of $74.34 per target share as of the May 1, 2023 grant date for our bank peer group TSR awards (50% of total award), and $81.95 per target share as of the May 1, 2023 grant date for our fintech peer group TSR awards (50% of total award). The grant value of restricted stock unit awards are based on a fair market value of $51.25 per share of our common stock as of the May 1, 2023 grant date, which was the closing price of our common stock on the NASDAQ Global Select Market as of such date. The grant value of option awards are based on a Black-Scholes valuation of $25.20 per option share for grants made on May 1, 2023, with an exercise price of $51.25, which was the closing price of our common stock on the NASDAQ Global Select Market as of such date. |
2023 Grants of Plan-Based Awards Table
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Outstanding Equity Awards at Fiscal Year-End for 2023
Outstanding Equity Awards at Fiscal Year-End for 2023 The following table sets forth all unexercised stock options, and unvested restricted stock and restricted stock units awarded to our NEOs by the Company that were outstanding as of December 31, 2023.
Outstanding Equity Awards at Fiscal Year-End for 2023
| | Option Awards | | | | | Performance Unit Awards | | Stock Awards | | | Name (a) (13) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(d) | Option Exercise Price ($)(e) | Option Expiration Date(f) | Number of Shares or Units of Stock That Have Not Vested (#)(g) | Market Value of Shares or Units of Stock That Have Not Vested ($)(h) (2) | Number of Shares or Units of Stock That Have Not Vested (#)(g) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(h) (2) | | Aaron P. Graft | 11,883 | — | — | $25.80 | 4/1/2027 | — | — | — | — | | | 9,739 | — | — | $38.75 | 5/1/2028 | — | — | — | — | | | 7,103 | — | — | $31.00 | 5/1/2029 | — | — | — | — | | | 7,325 | 2,442 | — | $26.25 | 5/1/2030 | — | — | — | — | | | 4,134 | 4,135 | — | $88.63 | 5/1/2031 | — | — | — | — | | | 2,721 | 8,165 | — | $69.44 | 5/1/2032 | — | — | — | — | | | — | 15,823 | — | $51.25 | 5/1/2033 | — | — | — | — | | | — | — | — | — | — | 11,550(3) | $926,079 | — | — | | | — | — | — | — | — | 17,640(4) | $1,414,376 | — | — | | | — | — | — | — | — | 54,460(5) | $4,366,602 | — | — | | | — | — | — | — | — | — | — | 824 | $66,068 | | | — | — | — | — | — | — | — | 1,650 | $132,297 | | | — | — | — | — | — | — | — | 3,780 | $303,080 | | | — | — | — | — | — | — | — | 7,780 | $623,800 | | W. Bradley Voss | 427 | — | — | $15.87 | 4/1/2026 | — | — | — | — | | | 435 | — | — | $25.80 | 4/1/2027 | — | — | — | — | | | 625 | — | — | $38.75 | 5/1/2028 | — | — | — | — | | | 546 | 1,641 | — | $69.44 | 5/1/2032 | — | — | — | — | | | — | 3,968 | — | $51.25 | 5/1/2033 | — | — | — | — | | | — | — | — | — | — | 3,542(4) | $283,998 | — | — | | | — | — | — | — | — | 13,658(5) | $1,095,098 | — | — | | | — | — | — | — | — | — | — | 168 | $13,470 | | | — | — | — | — | — | — | — | 575 | $46,104 | | | — | — | — | — | — | — | — | 759 | $60,857 | | | — | — | — | — | — | | | 1,951 | $156,431 | | Edward J. Schreyer | — | 3,968 | — | $51.25 | 5/1/2033 | — | — | — | — | | | — | — | — | — | — | 13,658(5) | $1,095,098 | — | — | | | — | — | — | — | — | — | — | 33,077 | $2,652,114 | | | — | — | — | — | — | — | — | 8,100 | $649,458 | | | — | — | — | — | — | — | — | 9,756 | $782,236 | | Melissa Forman-Barenblit | 546 | 1,641 | — | $69.44 | 5/1/2032 | — | — | — | — | | | — | 3,968 | — | $51.25 | 5/1/2033 | — | — | — | — | | | — | — | — | — | — | 3,542(4) | $283,998 | — | — | | | — | — | — | — | — | 13,658(5) | $1,095,098 | — | — | | | — | — | — | — | — | — | — | 1,533 | $122,916 | | | — | — | — | — | — | — | — | 759 | $60,857 | | | — | — | — | — | — | — | — | 1,951 | $156,431 |
Outstanding Equity Awards at Fiscal Year-End for 2023
| | 2024 Proxy Statement 41 |
Outstanding Equity Awards at Fiscal Year-End for 2023
| | Option Awards | | | | | Performance Unit Awards | | Stock Awards | | | Name (a) (13) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(d) | Option Exercise Price ($)(e) | Option Expiration Date(f) | Number of Shares or Units of Stock That Have Not Vested (#)(g) | Market Value of Shares or Units of Stock That Have Not Vested ($)(h) (2) | Number of Shares or Units of Stock That Have Not Vested (#)(g) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(h) (2) | | Gail Lehmann | 4,382 | — | — | $25.80 | 4/1/2027 | — | — | — | — | | | 1,820 | — | — | $38.75 | 5/1/2028 | — | — | — | — | | | 2,966 | — | — | $31.00 | 5/1/2029 | — | — | — | — | | | 3,944 | 1,315 | — | $26.25 | 5/1/2030 | — | — | — | — | | | 954 | 954 | — | $88.63 | 5/1/2031 | — | — | — | — | | | 583 | 1,749 | — | $69.44 | 5/1/2032 | — | — | — | — | | | — | 2,976 | — | $51.25 | 5/1/2033 | — | — | — | — | | | — | — | — | — | — | 2,665(3) | $213,680 | — | — | | | — | — | — | — | — | 3,780(4) | $303,080 | — | — | | | — | — | — | — | — | 10,242(5) | $821,204 | — | — | | | — | — | — | — | — | — | — | 444 | $35,600 | | | — | — | — | — | — | — | — | 381 | $30,549 | | | — | — | — | — | — | — | — | 810 | $64,946 | | | — | — | — | — | — | — | — | 1,463 | $117,303 |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (1) Unless separately noted, stock options restricted stock and restricted stock unit awards vest at the rate of 25% per year from the date of award. Unvested or un-exercisable portions of awards reflect the unvested portion of awards issued between 2020 and 2023. Vesting of all such awards may be accelerated upon termination of employment for death or disability, or upon a qualifying termination of employment following a change of control (as defined in our 2014 Omnibus Incentive Plan). |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (2) The market values for the outstanding stock awards presented as of December 31, 2023, are based on the closing price of our Common Stock of $80.18 per share on December 31, 2023. |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (3) Performance based restricted stock unit awards shown in row represent total stock return performance shares granted in 2021 as part of the Company’s LTIP program. Shares represented and market value of such awards assume payout at maximum. A prorated portion of such award may vest upon death, disability, qualifying termination (after the first anniversary of the grant date) or retirement (after the first anniversary of the grant date) during the performance period, and would be earned and shares issued following completion of the performance period and determination of the Company’s relative TSR. In addition, in the event of a change of control during the performance period, a portion of the award may be earned (and the resulting shares issued unless replaced with a time vested replacement award) based on relative TSR through the change in control. Vesting of any time vested replacement award may be accelerated in the event of a qualifying termination following such change in control (as defined in our 2014 Omnibus Incentive Plan). |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (4) Performance based restricted stock unit awards shown in row represent total stock return performance shares granted in 2022 as part of the Company’s LTIP program. Shares represented and market value of such awards assume payout at maximum. A prorated portion of such award may vest upon death, disability qualifying termination (after the first anniversary of the grant date) or retirement (after the first anniversary of the grant date) during the performance period, and would be earned and shares issued following completion of the performance period and determination of the Company’s relative TSR. In addition, in the event of a change of control during the performance period, a portion of the award may be earned (and the resulting shares issued unless replaced with a time vested replacement award) based on relative TSR through the change in control. Vesting of any time vested replacement award may be accelerated in the event of a qualifying termination following such change in control (as defined in our 2014 Omnibus Incentive Plan). |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (5) Performance based restricted stock unit awards shown in row represent total stock return performance shares granted in 2023 as part of the Company’s LTIP program. Shares represented and market value of such awards assume payout at maximum. A prorated portion of such award may vest upon death, disability qualifying termination (after the first anniversary of the grant date) or retirement (after the first anniversary of the grant date) during the performance period, and would be earned and shares issued following completion of the performance period and determination of the Company’s relative and absolute TSR. In addition, in the event of a change of control during the performance period, a portion of the award may be earned (and the resulting shares issued unless replaced with a time vested replacement award) based on relative and absolute TSR through the change in control. Vesting of any time vested replacement award may be accelerated in the event of a qualifying termination following such change in control (as defined in our 2014 Omnibus Incentive Plan). |
Outstanding Equity Awards at Fiscal Year-End for 2023
| 42 2024 Proxy Statement | |
Outstanding Equity Awards at Fiscal Year-End for 2023
The following information sets forth the stock awards vested and stock options exercised by the NEO’s during the fiscal year ended December 31, 2023.
Outstanding Equity Awards at Fiscal Year-End for 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise | Value Realized Upon Exercise ($) | Number of Shares Acquired on Vesting | Value Realized on Vesting ($) | | Aaron P. Graft | — | $— | 44,833 | $2,682,966(1) | | W. Bradley Voss | — | $— | 16,847 | $973,487(2) | | Edward J. Schreyer | — | $— | 19,239 | $985,999(3) | | Melissa Forman-Barenblit | — | $— | 12,553 | $670,861(4) | | Gail Lehmann | — | $— | 25,102 | $1,515,808(5) |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (1) Consists of 29,820 performance based restricted stock units (cumulative EPS) that vested and settled with a closing market price of $64.17 on February 16, 2023, 11,530 performance based restricted stock units (relative TSR) that vested and settled with a closing market price of $51.25 on May 1, 2023, and 3,483 restricted stock awards and units that vested upon the lapse of restrictions with a closing market price of $51.25 on the May 1, 2023 vesting date. |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (2) Consists of 8,520 performance based restricted stock units (cumulative EPS) that vested and settled with a closing market price of $64.17 on February 16, 2023, 4,742 performance based restricted stock units (relative TSR) that vested and settled with a closing market price of $51.25 on May 1, 2023, and 3,585 restricted stock awards and units that vested upon the lapse of restrictions with a closing market price of $51.25 on the May 1, 2023 vesting date. |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (3) Consists of 19,239 restricted stock awards and units that vested upon the lapse of restrictions with a closing market price of $51.25 on the May 1, 2023 vesting date. |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (4) Consists of 2,130 performance based restricted stock units (cumulative EPS) that vested and settled with a closing market price of $64.17 on February 16, 2023 and 10,423 restricted stock awards and units that vested upon the lapse of restrictions with a closing market price of $51.25 on the May 1, 2023 vesting date. |
Outstanding Equity Awards at Fiscal Year-End for 2023
| (5) Consists of 17,750 performance based restricted stock units (cumulative EPS) that vested and settled with a closing market price of $64.17 on February 16, 2023, 6,209 performance based restricted stock units (relative TSR) that vested and settled with a closing market price of $51.25 on May 1, 2023, and 1,143 restricted stock awards and units that vested upon the lapse of restrictions with a closing market price of $51.25 on the May 1, 2023 vesting date. |
Potential Payments as a Result of Termination or Change in Control (CIC)
Potential Payments as a Result of Termination or Change in Control (CIC) The table below describes the value of compensation and benefits payable to each NEO upon termination that would exceed the compensation or benefits generally available to salaried employees in each termination scenario. Benefits and payments are calculated assuming a December 31, 2023, employment termination date.
Potential Payments as a Result of Termination or Change in Control (CIC)
| Name/Termination Scenario (5) | | Severance ($) | Stock Awards ($) (3) | Stock Options ($) (4) | Welfare Benefits ($) | Total | | Aaron P. Graft | | | | | | | | | Voluntary Resignation | — | — | — | — | — | | | Termination for Cause | — | — | — | — | — | | Qualifying Termination (no change in control) (1) | | $1,087,500 | $1,608,901 | — | $37,675 | $2,734,076 | | Qualifying Termination—Change in Control (1) | | $2,175,000 | $7,832,302 | $2,500,419 | $75,350 | $12,583,071 | | | Death | — | $3,706,273 | $2,500,419 | — | $6,206,692 | | | Disability | — | $3,706,273 | $2,500,419 | — | $6,206,692 | | | Retirement (2) | — | — | — | — | — | | W. Bradley Voss | | | | | | | | | Voluntary Resignation | — | — | — | — | — | | | Termination for Cause | — | — | — | — | — | | Qualifying Termination (no change in control) (1) | | $400,000 | $157,805 | — | $19,865 | $577,670 | | Qualifying Termination—Change in Control (1) | | $800,000 | $1,655,878 | $215,292 | $39,730 | $2,710,900 | | | Death | — | $678,449 | $215,292 | — | $893,741 | | | Disability | — | $678,449 | $215,292 | — | $893,741 | | | Retirement (2) | — | — | — | — | — | | Edward J. Schreyer | | | | | | | | | Voluntary Resignation | — | — | — | — | — | | | Termination for Cause | — | — | — | — | — | | Qualifying Termination (no change in control) (1) | | $500,000 | — | — | $25,117 | $525,117 | | Qualifying Termination—Change in Control (1) | | $1,000,000 | $5,178,826 | $114,794 | $50,233 | $6,343,853 | | | Death | — | $4,327,589 | $114,794 | — | $4,442,383 | | | Disability | — | $4,327,589 | $114,794 | — | $4,442,383 | | | Retirement (2) | — | — | — | — | $— | | Melissa Forman-Barenblit | | | | | | | | | Voluntary Resignation | — | — | — | — | — | | | Termination for Cause | — | — | — | — | — | | Qualifying Termination (no change in control) (1) | | $400,000 | $157,805 | — | $25,117 | $582,922 | | Qualifying Termination—Change in Control (1) | | $800,000 | $1,719,220 | $138,283 | $50,233 | $2,707,736 | | | Death | — | $741,791 | $138,283 | — | $880,074 | | | Disability | — | $741,791 | $138,283 | — | $880,074 | | | Retirement (2) | — | — | — | — | — | | Gail Lehman | | | | | | | | | Voluntary Resignation | — | — | — | — | — | | | Termination for Cause | — | — | — | — | — | | Qualifying Termination (no change in control) (1) | | $400,000 | $358,321 | — | $13,644 | $771,965 | | Qualifying Termination—Change in Control (1) | | $800,000 | $1,586,302 | $854,323 | $18,192 | $3,258,817 | | | Death | — | $789,524 | $854,323 | — | $1,643,847 | | | Disability | — | $789,524 | $854,323 | — | $1,643,847 | | | Retirement (2) | — | $606,719 | $854,323 | — | $1,461,042 |
Potential Payments as a Result of Termination or Change in Control (CIC)
| (1) A “Qualifying Termination” is a termination of employment by the Company other than for Cause, or a termination of employment by the executive for Good Reason, in each case as such terms are defined in the employment agreement for the applicable named executive officer. A termination of employment is considered a termination in connection with a Change in Control if such termination occurs within 24 months after a Change in Control (as such term is defined in the employment agreement for the applicable NEO). |
Potential Payments as a Result of Termination or Change in Control (CIC)
| (2) Retirement is defined as termination (other than for cause) after reaching age 65 or after reaching age 62 and completing at least five (5) years of employment. As of December 31, 2023, Ms. Lehmann is the only named executive eligible to retire in accordance with the Company’s policy and the terms of its equity incentive compensation and benefit plans. |
Potential Payments as a Result of Termination or Change in Control (CIC)
| 44 2024 Proxy Statement | |
Potential Payments as a Result of Termination or Change in Control (CIC)
| (3) Unvested restricted stock or restricted stock unit awards vest in full upon a Qualifying Termination within 24 months of a change in control, death or disability. Our restricted stock or restricted stock unit awards permit continued vesting of unvested equity awards upon retirement assuming conditions are met as specified within the applicable award agreement. A prorated portion of unvested TSR performance awards may vest upon death, disability, Qualifying Termination or retirement during the performance period, and would be earned and shares issued following completion of the performance period and determination of the Company’s relative TSR. Unvested TSR performance awards may be earned upon a change in control based on the Company’s relative TSR immediately prior to the change in control (and the resulting shares issued unless replaced with a time vested replacement award) based on TSR through the change in control. Upon a Qualifying Termination within 24 months of a change in control, the time vested replacement award would vest in full. The calculations above assume the Company earns payout at stretch levels (modified by any applicable proration) for all outstanding TSR performance awards. Value of all stock awards were calculated assuming the closing price of our common stock on December 31, 2023 of $80.18 per share. |
Potential Payments as a Result of Termination or Change in Control (CIC)
| (4) Unvested stock options vest in full upon a Qualifying Termination within 24 months of a change in control, death or disability. Our option awards permit continued vesting of unvested equity awards upon retirement assuming conditions are met as specified within the applicable award agreement. For stock option awards, the value was calculated as the difference between the closing price of the Company stock on December 31, 2023 and the option exercise price. |
Potential Payments as a Result of Termination or Change in Control (CIC)
| | 2024 Proxy Statement 45 |
Pay Versus Performance
Pay Versus Performance The following provides information regarding compensation actually paid to the Company’s Chief Executive Officer and our other NEOs along with the cumulative total shareholder return of the Company and a peer group index, the Company’s net income and fully-diluted earnings per share, which is the most important financial performance measure (that is not otherwise disclosed in the table) used by the Company to link compensation actually paid to the Company’s NEOs, for 2023, to Company performance. Compensation actually paid, as determined under SEC requirements, does not reflect the actual amount of compensation earned by or paid to our executive officers during a covered year.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment (3) Based On: | | | | | | Year | Summary Compensation Table Total for CEO (1) | Compensation Actually Paid to CEO | Average Summary Compensation Table total for Other NEOs ($) | Average Compensation Actually Paid to Other NEOs (2) ($) | Cumulative TSR (Company) ($) | Cumulative TSR (Peer Group) ($) | Measurement Period | Net Income ($ in thousands) | Fully- Diluted Earnings Per Share ($) | | 2023 | $3,260,635 | $6,465,372 | $1,217,370 | $2,215,890 | $210.89 | $95.12 | 4 years | $41,081 | $1.61 | | 2022 | $2,773,658 | $(3,002,778) | $1,335,632 | $(1,976,371) | $128.54 | $101.92 | 3 years | $102,311 | $3.96 | | 2021 | $2,444,169 | $8,422,937 | $742,621 | $3,220,220 | $313.20 | $124.84 | 2 years | $112,974 | $4.35 | | 2020 | $1,448,058 | $2,167,082 | $710,422 | $1,056,740 | $127.70 | $89.37 | 1 year | $64,024 | $2.53 |
Pay Versus Performance
| (1) Aaron P. Graft served as our President and Chief Executive Officer for each of the years presented in the table. Compensation actually paid to Mr. Graft for each the years presented in the table, as calculated in accordance with SEC regulations, was as follows: |
Pay Versus Performance
| | 2023 ($) | 2022 ($) | 2021 ($) | 2020 ($) | | Total compensation in Summary Compensation Table | $3,260,635 | $2,773,658 | $2,444,169 | $1,448,058 | | Minus: aggregate change in pension value | $— | $— | $— | — | | Minus: stock awards reported in Summary Compensation Table | $(2,013,401) | $(1,548,900) | $(1,231,952) | $(370,115) | | Plus: fair value* at fiscal year-end of unvested stock awards granted during covered fiscal year | $3,590,486 | $731,351 | $1,716,562 | $908,136 | | Plus/Minus: change in fair value* at fiscal year-end of unvested stock awards granted in any prior fiscal year | $1,439,482 | $(2,833,766) | $5,280,948 | $203,729 | | Plus/Minus: change in fair value at vesting date of stock awards granted in any prior fiscal year | $188,170 | $(2,125,121) | $213,210 | $(22,726) | | Minus: stock awards forfeited during covered fiscal year | — | — | $— | $— | | Compensation actually paid | $6,465,372 | $(3,002,778) | $8,422,937 | $2,167,082 |
Pay Versus Performance
| * The equity awards included above include restricted stock awards, restricted stock unit awards, performance based restricted stock unit awards and non-qualified stock option awards granted from 2018 through 2023. The amounts are based on the fair value of the equity awards as of the applicable year end or vesting date as required by SEC rules. Measurement date equity fair values are calculated with assumptions derived on a basis consistent with those used for grant date fair value purposes. Restricted stock or restricted stock unit awards are valued based on the closing price of our common stock on the relevant measurement date. Performance restricted stock units are valued based on a Monte Carlo simulation as of the relevant measurement date consistent with ASC 718. Stock options are valued based on a Black-Scholes valuation as of the relevant measurement date consistent with ASC 718. |
Pay Versus Performance
| 46 2024 Proxy Statement | |
Pay Versus Performance
| (2) The other NEOs for each of the years presented in the table were as follows: for 2023, W. Bradley Voss, Edward J. Schreyer, Melissa Forman-Barenblit and Gail Lehmann; for 2022, W. Bradley Voss, Edward J. Schreyer, Gail Lehmann, Todd Ritterbusch and Geoffrey P. Brenner; for 2021: W. Bradley Voss, Gail Lehmann, Adam D. Nelson, Todd Ritterbusch and R. Bryce Fowler; for 2020: W. Bradley Voss, Gail Lehmann, Adam D. Nelson and Todd Ritterbusch. Compensation actually paid to such other NEOs for each the years presented in the table, as calculated in accordance with SEC regulations, was as follows: |
Pay Versus Performance
| | 2023 ($) | 2022 ($) | 2021 ($) | 2020 ($) | | Total compensation in Summary Compensation Table | $1,217,370 | $1,335,632 | $742,621 | $710,422 | | Minus: aggregate change in pension value | $— | $— | $— | — | | Minus: stock awards reported in Summary Compensation Table | $(573,337) | $(507,859) | $(216,783) | $(185,346) | | Plus: fair value* at fiscal year-end of unvested stock awards granted during covered fiscal year | $1,000,546 | $195,655 | $325,645 | $454,772 | | Plus/Minus: change in fair value* at fiscal year-end of unvested stock awards granted in any prior fiscal year | $528,707 | $(1,657,082) | $2,284,988 | $88,231 | | Plus/Minus: change in fair value at vesting date of stock awards granted in any prior fiscal year | $42,604 | $(954,373) | $83,749 | $(11,339) | | Minus: stock awards forfeited during covered fiscal year | $— | $(388,344) | $— | $— | | Compensation actually paid | $2,215,890 | $(1,976,371) | $3,220,220 | $1,056,740 |
Pay Versus Performance
| * See Note 1 above for information on the remeasurement of fair value of stock awards at fiscal year-end and vesting dates. |
Pay Versus Performance
| (3) Cumulative total shareholder return (TSR) assumes an initial investment of $100 as of the market close on December 31, 2019 in our common stock and in the common stock of companies within our peer group. TSR for our common stock was 27.70% in 2020, 145.27% in 2021, (58.96)% in 2022, 64.07% in 2023, for a cumulative four-year TSR of 210.89%. A $100 investment in our common stock on December 31, 2019 would be valued at $210.89 as of December 31, 2023, which outperformed our peers. The peer group used for this purpose is the Nasdaq Bank Index. |
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of the SEC’s Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO. The CEO to median employee pay ratio included in this disclosure is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported below should not be used as a basis for comparison between companies. We identified the median employee from a list of all employees (full-time and part-time) employed as of December 31, 2023. We determined the median employee based on each employee’s annual cash earnings (consisting of salaries, bonuses and commissions), and annualizing earnings for employees who were not employed for a full year in 2023. After determining the median employee, we calculated the CEO’s and the median employee’s 2023 total compensation in the same manner as the CEO’s compensation provided in the summary compensation table. Based on the foregoing, the CEO’s 2023 annual total compensation is $3,260,635 and the median annual total compensation of all employees (except for the CEO) is $67,833, resulting in a CEO pay ratio of approximately 48.1 to 1.
CEO Pay Ratio
| | 2024 Proxy Statement 49 |
DIRECTOR COMPENSATION FOR FISCAL 2023
DIRECTOR COMPENSATION FOR FISCAL 2023
2023 Director Compensation
2023 Director Compensation In connection with their service on our Board of Directors in 2023, we compensated our non-employee directors through a combination of stock awards and cash retainers related to their service or chairmanship on the board and each board committee. In addition, those of our directors who also served on the board or board committees of TBK Bank, SSB or its subsidiaries also received compensation for such service through a combination of stock awards and cash retainers. Director fees are approved by our Nominating and Corporate Governance Committee after a review process including consideration of competitive peer group benchmarking data provided by our independent consultant. Our director fees for 2023 are outlined in the table below.
2023 Director Compensation
| | CHAIR ($) | | MEMBER ($) | | | Triumph Financial, Inc. Board and Committees | CASH | STOCK | CASH | STOCK | | Board | $50,000 | $90,000(1) | $35,000 | $70,000(1) | | Audit Committee | $37,500 | — | $12,500 | — | | Compensation Committee | $12,000 | — | $3,000 | — | | Nominating & Corporate Governance Committee | $12,000 | — | $3,000 | — | | Risk and Compliance Committee | $30,000 | — | $10,000 | — | | TBK Bank, SSB Board and Committees | | | | | | Board | $15,000 | | $10,000 | | | ALCO Committee | $7,500 | — | $5,000 | — | | CRA | 6,000 | — | $3,000 | — | | Executive Loan Committee | $50,000 | — | $15,000 | — | | Triumph Financial Services LLC Board | $7,500 | $15,000(1) | $7,500 | $15,000(1) | | Triumph Insurance Group, Inc. Board | $2,500 | $5,000(1) | $2,500 | $5,000(1) |
2023 Director Compensation
| (1) Target award value issued one half on February 1, 2023 and one half on July 1, 2023. |
2023 Director Compensation
All stock awards were fully vested on the date of grant. All cash retainers (with the exception of cash fees for Triumph Financial Services/Triumph Insurance Group, which are paid in a single lump sum) are paid quarterly (i.e. one-fourth of the total annual retainer is paid to each director during each of our fiscal quarters).
2023 Director Compensation
| 50 2024 Proxy Statement | |
2023 Director Compensation
The following table sets forth compensation paid, earned or awarded during 2023 to each of our directors. The table also includes compensation earned by each director that is attributable to such director’s service on the Board of Directors or Committees of TBK Bank, SSB or its subsidiaries, as applicable.
2023 Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | All Other Compensation ($) (2) | Total Compensation ($) | | Charles A. Anderson | 50,000 | 69,901 | 13,000 | 132,901 | | Harrison B. Barnes | 38,000 | 69,901 | 13,000 | 120,901 | | Debra A. Bradford | 57,500 | 69,901 | 15,000 | 142,401 | | Richard L. Davis | 41,000 | 69,901 | 10,000 | 120,901 | | Davis Deadman | 45,000 | 69,901 | 74,618 | 189,519 | | Laura K. Easley | 68,000 | 89,719 | 20,000 | 177,719 | | Aaron P. Graft | — | — | — | — | | Maribess L. Miller | 59,500 | 69,901 | 10,000 | 139,401 | | Michael P. Rafferty | 82,500 | 69,901 | 15,000 | 167,401 | | Carlos M. Sepulveda, Jr. | 53,000 | 109,777 | 40,000 | 202,777 | | C. Todd Sparks | 47,500 | 69,901 | 32,500 | 149,901 |
2023 Director Compensation
| (1) The grant date fair value of each award is based on the number of shares granted and the NASDAQ closing price of our common stock on the date of grant. |
2023 Director Compensation
| (2) Reflects cash retainers received for service on the boards of directors and board committees of TBK Bank, SSB and its subsidiaries plus medical wellness reimbursements of $3,000 to Mr. Anderson and $3,618 to Mr. Deadman. |
2023 Director Compensation
| | 2024 Proxy Statement 51 |

DEF 14A of Triumph Financial, Inc.

PROPOSAL 1: ELECTION OF DIRECTORS

Introduction

Introduction

Introduction

Introduction

Introduction

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Information Concerning the Nominees and Directors

Directors Standing for Election at the 2024 Annual Meeting

Directors Standing for Election at the 2024 Annual Meeting

Directors Standing for Election at the 2024 Annual Meeting

Directors Standing for Election at the 2024 Annual Meeting

Directors Standing for Election at the 2024 Annual Meeting

Directors Standing for Election at the 2024 Annual Meeting

Directors Standing for Election at the 2024 Annual Meeting

Directors Standing for Election at the 2024 Annual Meeting

Directors Standing for Election at the 2024 Annual Meeting

Board Committees

Compensation Design Principles and Governance Best Practices

Executive Compensation Objectives and Policies

Executive Compensation Objectives and Policies

Role of Compensation Committee Management and the Compensation Consultant

Role of the Compensation Committee

Role of the Compensation Consultant

Role of the Compensation Consultant

Role of the Compensation Consultant

Peer Group and Competitive Benchmarking

Banking Peer Group

Banking Peer Group

Banking Peer Group

FinTech Peer Group

FinTech Peer Group

FinTech Peer Group

Base Salary

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Annual Incentive Program

Long-Term Incentive Program

Long-Term Incentive Program

Long-Term Incentive Program

Long-Term Incentive Program

Long-Term Incentive Program

Long-Term Incentive Program

Long-Term Incentive Program

Long-Term Incentive Program

Achievement of May 1, 2020 PSU Awards

Achievement of May 1, 2020 PSU Awards

Achievement of May 1, 2020 PSU Awards

Employment Agreements

Employment Agreements

Employment Agreements

2023 Summary Compensation Table

2023 Summary Compensation Table

2023 Summary Compensation Table

2023 Summary Compensation Table