DEF 14A of BCB Bancorp Inc
Filed Mar 15, 2024 · FY20230001193125-24-068567
Director Nominees of the Board of Directors
Director Nominees of the Board of Directors Based on the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has unanimously nominated each of Thomas Coughlin, Vincent DiDomenico, Jr., Joseph Lyga, and Michael Shriner for election to the class of directors of the Company with terms expiring in 2027, except for Mr. Coughlin whose term will expire in 2025. Each director nominee currently serves as a director of BCB Bank, the Company’s wholly owned subsidiary (the “Bank”), and each has consented to being named in this Proxy Statement and to serve, if elected. Each of the directors elected at the Annual Meeting will hold office until the 2027 annual meeting of shareholders and until their successors are duly elected and qualified, except that Mr. Coughlin will hold office until the 2025, and until their successor is duly elected and qualified. If any of the nominees become unable to accept their nomination or election, the persons named in the proxy may vote for a substitute nominee selected by the Board of Directors. Our management, however, has no present reason to believe that any nominee will be unable to serve as a director, if elected.
Director Nominees of the Board of Directors
| | The Board of Directors recommends a vote “FOR” each director nominee |
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
BOARD OF DIRECTORS AND DIRECTOR NOMINEES The following table sets forth certain information with respect to our continuing directors and our director nominees as of the date of this Proxy Statement:
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
| Name | Age | Position with the Company | First Year as Director | Term will Expire (1) | | Robert Ballance | 64 | Director | 2000 | 2026 | | Ryan Blake | 33 | COO, Corporate Secretary, & Director | 2023 | 2026 | | Judith Q. Bielan | 59 | Director | 2000 | 2025 | | James E. Collins | 74 | Director | 2003 | 2025 | | Thomas Coughlin | 63 | Director | 2002 | 2024 | | Vincent DiDomenico, Jr. | 58 | Director | 2018 | 2024 | | Mark D. Hogan | 58 | Chairman of the Board | 2000 | 2025 | | Joseph Lyga | 64 | Director | 2000 | 2024 | | John Pulomena | 68 | Director | 2018 | 2025 | | James Rizzo | 64 | Director | 2015 | 2026 | | Spencer B. Robbins | 71 | Director | 2011 | 2024 | | Michael Shriner | 59 | President, CEO, & Director of the Bank | 2024 | 2027 |
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
| (1) Directors’ terms of office are scheduled to expire at the annual meeting of shareholders to be held in the year indicated, assuming election at the Annual Meeting. |
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
Our directors and director nominees collectively possess the expertise, leadership skills, and diversity of experiences and backgrounds to oversee the execution of the Company’s growth strategy and protect long-term stockholder value, which qualifications are summarized below. More detailed information about each director and director nominee can be found under their respective biography.
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
| Area of Expertise | Thomas Coughlin | Vincent DiDomenico, Jr. | Joseph Lyga | Michael Shriner | | Accounting/Finance | X | X | | X | | Lending | X | X | | X | | Governance | | | X | | | Technology/Cybersecurity | | | X | |
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
The following matrix summarizes certain demographic characteristics of the board of directors, including having two “diverse” directors as defined in the board diversity rules adopted by Nasdaq.
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
| Board Diversity Matrix * | # Female | # Male | | Gender Identity | 1 | 11 | | Demographic Background | | | | African American or Black | -- | -- | | Alaskan Native or American Indian | -- | -- | | Asian | -- | -- | | Hispanic or Latinx | -- | -- | | Native Hawaiian or Pacific Islander | -- | -- | | White | 1 | 11 | | Two or More Races or Ethnicities | -- | -- | | LGBTQ+ | -- | 1 |
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
* Based on 12 Total Number of Directors Directors Robert Ballance has been a director of the Company since its founding in 2000. Prior to his retirement, Mr. Ballance served as a Battalion Chief with the Bayonne Fire Department. Mr. Ballance is the owner of a floor covering business located in Bayonne, New Jersey. Mr. Ballance is a member of various clubs and civic organizations throughout the communities the Company serves. With his lengthy experience as a businessman, community leader, civil servant, and as former director of the Bayonne Federal Credit Union, the Board of Directors believes Mr. Ballance brings valuable support and insight as both a director of the Bank and the Company. Judith Q. Bielan, Esq. is an attorney who has practiced law in New Jersey for over 30 years. In 1993, Ms. Bielan founded the law firm currently known as Bielan, Miklos & Makrogiannis, P.C. which handles all aspects of real estate, family law, contract disputes, and estate matters. Ms. Bielan brings to the Board of Directors experience in the areas of real estate, marketing, budgeting, public relations, and collections. She currently serves on the NJ State Bar Association Legislative Committee. In the past, Ms. Bielan has been court-appointed to serve as a Commissioner on the Hudson County Condemnation Board, and has served on the Hudson County Fee Arbitration Committee, Due Diligence, Family Law, and Early Settlement Panel Committees. In 2010 she was President of the Hudson County Bar Association. In 2005 she received the Hudson County Family Lawyer of the Year Award. Throughout her career, Ms. Bielan volunteered as a Trustee on the Board of “Women Rising,” coached boys’ and girls’ basketball at the Bayonne PAL, and taught Adult Education classes at Bayonne High School. In 2014, she was inducted into the Bayonne PAL Hall of Fame. From 2001-2010 she served on the Board of Holy Family Academy. She holds degrees from Montclair State College (now University) and Seton Hall University School of Law. Ms. Bielan currently serves as Chair of the company’s Nominating and Corporate Governance Committee. Ryan Blake serves as Executive Vice President, Chief Operating Officer, Corporate Secretary, and Director of the Company and the Bank. Mr. Blake has been with the company since 2008 and has served in his current role since 2021. Prior to then, Mr. Blake served as the Company’s Vice President and Controller. Mr. Blake currently serves as a trustee on the board of the Bayonne Public Library, has served as a commissioner on the Zoning Board of the City of Bayonne, as Vice President for a chapter of Rotary International, and is a former director of the New Jersey Pride Chamber of Commerce. Mr. Blake is a graduate of the ABA Stonier Graduate School of Banking at the Wharton School at the University of Pennsylvania, holds Bachelor’s degrees in both Finance and in Economics from Kean University, and has earned a Master’s degree in Business Administration from Rutgers University. James E. Collins has worked in the banking industry since 1972, and currently serves as a board member for the Bank and the Company. Mr. Collins was VP/Senior Lending Officer and Community Reinvestment Officer of the Bank when it opened in 2000. Prior to that, Mr. Collins was Senior Lender at First Savings and Loan Association, where he worked for 28 years. Mr. Collins retired from the Bank in 2010. Currently, he serves as Chairman of the Bank’s Loan Committee. In addition to chairing the Bank’s Loan Committee, Mr. Collins brings experience to the board that covers all phases of the lending process, as well as valuable experiences with CRA, regulatory reviews, appraisal functions, and compliance in the lending area. Through Mr. Collins’ experience and knowledge of the markets in which the Company operates, he provides referrals to management for new business, advice, and suggestions to both management and the board. He has also served as Past President of Ireland’s 32 and as citywide Director for the Bayonne C.Y.O. sports programs. He has served as a Trustee and Treasurer for the Bayonne Education Foundation and was a member of the Directorate at Marist High School in Bayonne. Currently, he is a member of the Dorchester County Certified Emergency Response Team. Mr. Collins was educated at O.L.S.S. grammar school, Marist High School, and received a B.S from St. Peter’s College. Mr. Collins also attended graduate school at the National School of Banking and was a Certified Real Estate Appraiser and member of the Review Appraiser Society. Thomas M. Coughlin was the President and Chief Executive Officer of the Bank and the Company from their formation until December 31, 2023. Mr. Coughlin has been in the banking industry for over 38 years. He formerly served as Vice President of Chatham Savings Bank and before that as Controller and Corporate Secretary of First Savings Bank of New Jersey. Believing that Bayonne was underserved by community banks, Mr. Coughlin, along with the support of local investors founded Bayonne Community Bank in 2000. After ten years of success, Coughlin, the vigor behind the growth and success of the Bank led the way for expansion with the integrations of Pamrapo Savings Bank, Allegiance Savings, and Indus American Bank. Mr. Coughlin earned a Bachelor of Science degree from Saint Peter’s University, Jersey City and received his CPA designation in 1982. Mr. Coughlin is also the recipient of numerous awards and accolades from various organizations throughout New Jersey and New York in recognition of his service and dedication to the communities he serves. Vincent DiDomenico, Jr. is the Founder and Managing Member of Delta Equity Management, L.L.C. et al developers of Commercial Real Estate in the New Jersey & New York Metropolitan Area. His real estate companies own and manage institutional-grade commercial real estate assets. Mr. DiDomenico has been a Director of the Bank and the Company since May 2017, where he serves on the Loan, Compensation (Chairman), and Law Committees. He also served on the Board of Trustees, as well serving as a past two-term (2003-2005 & 2009-2011) Vice President and a past two-term (2006-2008 & 2011-2013) President, of the New Jersey Self Storage Association (NJSSA). Mr. DiDomenico is also a former Board of Trustee Member of St. Peter’s Preparatory School and a former Board of Trustee Member of Far Hills Country Day School. Prior to founding his current companies, Mr. Di Domenico was distinguished as a Deming Scholar from the Gabelli School of Business at Fordham University where he earned an MBA in Finance and Statistics, with a concentration in International Business Studies. He also currently serves on the Capital Campaign Committee at The Delbarton School and has served as Co-Chairman of the Far Hills Country Day School Capital Campaign Committee as well as the Board of Governors for the Archdiocese of Newark, C.Y.O. & Young Adult Ministries. He is a graduate of St. Peter’s Preparatory School (1984) and graduate of Villanova School of Business where he received a B.S. degree in Finance (1988). Mark D. Hogan, C.P.A. is actively serving as Chairman of the Board of the Company, a position he has held since 2003. He has been a Director of the Company since its inception. Prior to beginning his service for the Company, Mr. Hogan first founded, built, and recently retired from, two (2) successful businesses: Hogan and Associates, LLC, a CPA practice which he had operated for almost three (3) decades; and Hogan Financial Advisors, Inc., a wealth management practice which he had operated for over twenty-five (25) years.
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
Mr. Hogan, who maintains his active CPA license, is currently managing his family’s real estate portfolio. Mr. Hogan’s Community Involvement includes service on the Board of Trustees of three organizations, namely: St Peter’s Preparatory School, where he also served as Chairman of the Finance Committee; Count Basie Center for the Arts, where he also served on the Executive Committee and as Chairman of the Finance Committee; and St. Ann’s Home for the Aged Corp. Mr. Hogan has humbly received innumerable awards for his Community Involvement. Because of Mr. Hogan’s extensive professional experience, his achievements and his aforesaid license and designations, he is deemed well-qualified to actively serve as Chairman of the Company’s Board of Directors. Mr. Hogan graduated with a B.S. in Finance from Pace University in New York City. Joseph Lyga has served as an Independent Director of the Company since its founding in 2000. Mr. Lyga has been a self-employed contractor and consultant in computer technology, security, network and systems design for the last 39 years. Mr. Lyga attended Jersey City State College and continued his education at the Chubb Institute for Technology. Studying computer programming, as a computer technician, and in computer network design. Mr. Lyga has obtained several certifications in the computer science field, such as those in cybersecurity, Network+, Security+, IT security, Cisco, and most recently obtained a certificate in Cybersecurity from Harvard University in Managing Risk. Mr. Lyga’s dedicated service and his extensive business background in Information Technology provide the Board of Directors with desired insights into the field of information technology. Mr. Lyga is also a member of several clubs and civic organizations. John Pulomena has been the County Administrator of Middlesex County, New Jersey, for the past 13 years. As County Administrator for Middlesex County, considered the second largest county in the state, Mr. Pulomena is responsible for the development and management of a $500 million annual budget, supported by a workforce of over 2,000 employees. In this capacity, Mr. Pulomena is responsible for developing the strategic plans for sustained economic growth, critical investments in the county’s infrastructure, and enhancing the quality of life for its 825,000 residents through key programs and services. Mr. Pulomena was employed by AT&T for over 22 years, including five years at AT&T Bell Laboratories in software development and 17 years at AT&T corporate in various roles including marketing & sales, government affairs, as Financial Controller, and as Director of the Customer Network Operation Centers. Mr. Pulomena was a Middlesex County Freeholder for 10 years, Council President for the Borough of South Plainfield for nine years, and Chairman of the Middlesex County Planning Board for five years. Mr. Pulomena is a graduate of the City University of New York, where he received a B.S. degree in Computer Science with a minor in Mathematics. Mr. Pulomena currently serves as Chairman of the Company’s Audit Committee. James G. Rizzo has been a director of the Company since 2015. He currently serves as business liaison to the Board of Directors and has helped lead the Company’s expansion efforts throughout Bergen County, with four branches opening over the last six years. Mr. Rizzo serves as Chairman of the Company’s Investment and Capital Markets committees. In his role as Chairman of the Investment Committee, Mr. Rizzo has been active in overseeing the Company’s investment securities portfolio and its impact on asset liability management. As Chairman of the Capital Markets committee, Mr. Rizzo has been instrumental in the Company’s most recent common and preferred equity offerings. After having spent more than thirty years in a career focused on the high-yield bond markets, Mr. Rizzo is currently in the real estate management business. His career began at Drexel Burnham and included being designated as a Managing Director in positions held at firms such as Guggenheim Partners, Citicorp, and Fleet Bank. Mr. Rizzo’s most recent position was as a Managing Director at Dahlman Rose and Company, from which he retired. Mr. Rizzo is a graduate of St. Peter’s University, where he earned a B.S. in Business Administration. He currently serves on the University’s Board of Regents, and on the Advisory Board of the University’s Business School. He is also a graduate of St. Peter’s Preparatory school, and is involved in planning the future of Saint Peter’s Preparatory School as a former member of the Board of Trustees. Mr. Rizzo is an active member of the Rutherford Planning Board and the Rutherford Economic Development Committee. He is also a Trustee of the Rutherford Public Library, as well as the Rutherford Library Foundation. Additionally, Mr. Rizzo serves on the Board of St. Dominic’s Academy in Jersey City, N.J. Spencer B. Robbins is the Managing Director of the Law firm of Robbins & Robbins, Esqs. Located in Woodbridge, New Jersey for the past 42 years. The firm is full-service law office, with an emphasis in litigation. Mr. Robbins was a founding member of Allegiance Community Bank where he served as Chairman of the Board of Directors until it merged with the Bank in 2011. Mr. Robbins presently serves as the Presiding Judge of Sayreville Municipal court and has served as the Chief Judge of Woodbridge and South Plainfield municipal courts. Mr. Robbins is involved with numerous clients in the real estate development process and is active in other business development for the Bank. Mr. Robbins also serves on many committees of the Bank and is Chairman of the Bank’s Legal Committee. Michael A. Shriner serves as the President and Chief Executive Officer of the Bank and the Company. Mr. Shriner also serves as a Director on the board of the Bank. Mr. Shriner, a 35-year veteran of banking, was formerly President and Chief Executive Officer of Millington, New Jersey-based MSB Financial Corp. and Millington Bank prior to being acquired by Kearny Bank. Under his leadership, he converted Millington Bank from a mutual holding company structure to a fully public institution through a Second Step Conversion. Mr. Shriner joined Millington Bank in 1987 and held various commercial and corporate banking positions, including that of Chief Operating Officer and Board Member prior to his promotion to President and Chief Executive Officer in 2012. Most recently, he held the role of Market President for Kearny Bank, where he transitioned legacy Millington Bank customers to Kearny Bank following the merger acquisition. Mr. Shriner holds an Associate of Arts Degree in Business Administration from the University of New Hampshire and is a Graduate of The National School of Banking, Fairfield University.
BOARD OF DIRECTORS AND DIRECTOR NOMINEES
| CORPORATE GOVERNANCE |
Process for Selection of Director Nominee Candidates
Process for Selection of Director Nominee Candidates The Nominating and Corporate Governance Committee believes that the minimum qualifications for serving as a director of the Company are that a candidate demonstrate, by significant accomplishments in his or her field, an ability to make a meaningful contribution to the Board of Directors’ oversight of the business and affairs of the Company and have a record and reputation for honest and ethical conduct in his or her professional and personal activities. In addition, the Nominating and Corporate Governance Committee considers the following characteristics in reviewing director candidates:
Process for Selection of Director Nominee Candidates
| ∎ | integrity and character; |
Process for Selection of Director Nominee Candidates
| ∎ | sound and independent judgment; |
Process for Selection of Director Nominee Candidates
| ∎ | breadth of experience; |
Process for Selection of Director Nominee Candidates
| ∎ | business acumen; |
Process for Selection of Director Nominee Candidates
| ∎ | leadership skills; |
Process for Selection of Director Nominee Candidates
| ∎ | banking or other financial services expertise; |
Process for Selection of Director Nominee Candidates
| ∎ | familiarity with issues affecting businesses in diverse industries; and |
Process for Selection of Director Nominee Candidates
| ∎ | diversity of backgrounds and experience. |
Process for Selection of Director Nominee Candidates
In addition to these requirements, the Nominating and Corporate Governance Committee will also evaluate, in the context of the Board’s needs, whether the nominee’s skills are complementary to the existing Board members’ skills, and assess any material relationships with the Company or third parties that might adversely impact independence and objectivity, as well as such other criteria as the Nominating and Corporate Governance Committee determines to be relevant at the time. Except as described above, the Board and the Nominating and Corporate Governance Committee do not maintain a formal diversity policy; however, diversity is one of many factors considered in the nomination of our directors. The Nominating and Corporate Governance Committee, Committee Chairperson and/or our Chairman of the Board interview director nominee candidates that meet the criteria, and the Nominating and Corporate Governance Committee selects candidates that best suit the Board’s needs. We may from time to time hire an independent search firm to help identify and facilitate the screening and interview process of director candidates. Shareholders may recommend qualified persons for consideration by the Nominating and Corporate Governance Committee. Shareholders making a recommendation must submit the same information as that required to be included by us in our Proxy Statement with respect to nominees of the Board of Directors. The shareholder recommendation should be submitted in writing, addressed to the Company at 595 Avenue C, Bayonne, NJ 07002 Attn: Corporate Secretary. The Nominating and Corporate Governance Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder. The Nominating and Corporate Governance Committee will also review the performance as a director of any person already serving on the Board of Directors of the Company in determining whether to recommend that the Director be re-nominated.
Human Capital Management
| NON-EMPLOYEE DIRECTOR COMPENSATION |
Hedging and Pledging Prohibition
| NON-EMPLOYEE DIRECTOR COMPENSATION FOR FISCAL YEAR 2023 |
Hedging and Pledging Prohibition
| Name | Fees Earned Paid in Cash | Stock Awards (1)(2) | Total | | Robert Ballance | $52,600 | $53,970 | $106,570 | | Judith Q. Bielan | $54,200 | $53,970 | $108,170 | | James E. Collins | $56,800 | $53,970 | $110,770 | | Vincent DiDomenico, Jr. | $53,200 | $53,970 | $107,170 | | Mark D. Hogan (3) | $135,500 | $53,970 | $206,052 | | Joseph Lyga | $59,300 | $53,970 | $113,270 | | John Pulomena | $52,800 | $53,970 | $106,770 | | James Rizzo | $53,200 | $53,970 | $107,170 | | Spencer B. Robbins | $54,500 | $53,970 | $108,470 |
Summary of 2023 Compensation Actions
| • | Single trigger cash severance provision. With Mr. Coughlin’s retirement on December 31, 2023, the Company no longer provides any agreements that provide severance upon a change in control, without requiring an employment termination. All employment agreements for our Named Executive Officers contain a “double trigger,” requiring a change in control and a qualified termination in order to receive severance benefits. |
Summary of 2023 Compensation Actions
| o | The Compensation Committee approved an Annual Incentive Plan (“AIP”), which provides annual cash incentive awards for our Named Executive Officers to motivate and reward the achievement of key short-term objectives. The AIP is based on Company’s achievement of pre-defined financial targets for the applicable year and a qualitative assessment of individual performance. For 2023, Adjusted Earnings Per Share (Adjusted “EPS”) was chosen as the financial performance metric and was weighted at 80% of the total award. The individual assessment was weighted at 20% of the total award. |
Summary of 2023 Compensation Actions
| o | The Compensation Committee intends to implement a Long-term Incentive Plan (LTIP), in which Named Executive Officers will participate. Given the macro-economic environment in 2023, implementation was delayed, and the Compensation Committee will consider implementation for 2024. The LTIP will award 50% of Named Executive Officer’s award value in the form of performance-based restricted stock units (PRSUs). Vesting is contingent on Return on Average Assets (“ROAA”) and Return on Average Equity (“ROAE”), which are measured on a relative basis to a peer group at the end of a three-year performance period. The remaining 50% of the NEO’s award value will be in the form of time-based restricted stock awards (RSAs). Any dividends or dividend equivalents will be deferred until vesting. |
Compensation Policies and Practices
| ◾ | Use an annual incentive program with defined metrics and a formulaic approach, with flexibility for the Committee to use discretion where prudent; |
Compensation Policies and Practices
| ◾ | Engage an independent compensation consultant; |
Compensation Policies and Practices
| ◾ | Benchmark compensation to remain competitive and employ market-based practices; |
Compensation Policies and Practices
| ◾ | Use a double trigger change in control provision so that severance benefits are only paid upon termination event following a change in control; |
Compensation Policies and Practices
| ◾ | Adopt administration procedures to ensure equity awards comply with legal, regulatory, and accounting requirements; |
Compensation Policies and Practices
| ◾ | Require shareholder approval in the repricing of underwater stock options; |
Compensation Policies and Practices
| ◾ | Do not provide excise or tax gross-ups in our employment or change in control agreements; |
Compensation Philosophy and Objectives
| 1. | Aligning with Shareholder Interest – As a public company, we use equity compensation as an integral component of our compensation program to develop a culture of ownership among our key personnel and to align their individual financial interest with the interests of our shareholders. |
Factors Considered in Determining Pay Programs and Making Pay Decisions
Factors Considered in Determining Pay Programs and Making Pay Decisions The Committee is responsible for compensation decisions for our Named Executive Officers and reports all actions to the Corporation’s Board. Benchmarking Compensation In 2023, the Compensation Committee engaged Meridian, its independent compensation consultant, to assess the competitiveness and effectiveness of our executive compensation program. Meridian provided an analysis of base salary, short-term incentive, long-term incentive and total compensation practices of similarly sized banks within of region. This data was used by the Committee to establish compensation for 2023. The compensation consultant considered individual compensation elements, as well as the total compensation package, and assessed the relationship of pay to performance. In performing this analysis, Meridian used a peer group of banking institutions, which was reviewed and approved by the Committee. The peer group included institutions with an asset size ranging from $1.6 billion to $7.2 billion. All banks were based in the Northeast and Mid-Atlantic region. The peer group used in the report presented for consideration of 2023 compensation decisions consisted of the following financial institutions:
Factors Considered in Determining Pay Programs and Making Pay Decisions
A peer group analysis is limited to those positions for which compensation information is disclosed publicly. Therefore, the compensation consultant also relied on published compensation surveys to supplement peer group information, including the McLagan Regional & Community Banking Survey. Similar asset and regional scope comparisons were used for the benchmarking analysis.
2023 Compensation Elements and Decisions
(1) Mr. Coughlin retired as of December 31, 2023. (2) Mr. Chaudhry began his tenure with the Company on September 26, 2022. (3) Mr. Emerson resigned his position with the Company on March 6, 2024. Annual Incentive Plan (“AIP”) In response to our Say-on-Pay outcome, the Compensation Committee, with the assistance of Meridian and input from senior management, developed the AIP, in which the Named Executive Officers and other members of the senior management team participate. The Plan is based on a balanced scorecard which includes Company Performance Goals, and a qualitative assessment of Individual Goals. The Company Performance Goal and weighting for 2023 was Adjusted EPS with a total award weighting of 75%. The Individual Goals qualitative assessment was weighted 25% of the total award. Each goal is measured separately and not contingent on achieving performance on the other. Awards are calculated as follows: Each Company Performance Goal is assigned three performance levels, which earn the following payouts based on the level of actual achievement: Threshold (50% of the target incentive), Target (100% of target incentive) and Stretch (150% of the target incentive). Amounts below threshold earn a $0 payout. In no event may a participant earn more than 150%. Straight-line interpolation is used between performance levels to reward incremental achievement of Company Performance Goals. The incentive opportunities for the Named Executive Officers were the following as a percentage of base salary: 50% Mr. Coughlin and 50% Messrs. Blake, Chaudhry and Emerson. Given the macroeconomic conditions in 2023, including rapidly rising interest rates, deposit outflows to the largest financial institutions and a decrease in commercial and residential lending, the Company’s Adjusted EPS was impacted and were below threshold. The Compensation Committee conducted a qualitative assessment of the Named Executive Officers’ performance. Mr. Coughlin provided recommendations regarding individual performance for the Named Executive Officers other than himself. The Committee used this information along with their own experiences to determine and independently assess CEO performance. Award payouts under the AIP were as follows:
2023 Compensation Elements and Decisions
| Executive | Base Salary ($) | Payout at Target ($)(1) | Payout at Target (%) | Actual Payout Earned ($) | % of Base Salary | | Thomas Coughlin | $585,000 | $292,500 | 50% | -- | -- | | Ryan Blake | $400,000 | $200,000 | 50% | -- | -- | | Jawad Chaudhry | $350,000 | $175,000 | 50% | $70,000 | 20% | | Kenneth Emerson | $250,000 | $125,000 | 50% | -- | -- | | David Garcia | $305,000 | -- | -- | -- | -- |
2023 Compensation Elements and Decisions
| (1) Mr. Garcia is not included in the Company’s short-term incentive plan, but is included here as he is a named executive officer. |
Accounting and Tax Considerations
Accounting and Tax Considerations Deductibility of Executive Compensation Tax Deductibility Under Section 162(m) of the Code. Generally, Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), disallows a federal income tax deduction for public corporations of remuneration in excess of $1 million paid for any fiscal year to “covered employees” of the company. The Board and the Compensation Committee believe that stockholder interests are best served if they retain maximum flexibility to design executive compensation programs that meet stated business objectives. For that reason, while our Board and Compensation Committee consider the potential effects of Section 162(m) of the Code on the compensation paid to our named executive officers, in light of the constraints imposed by Section 162(m) and our desire to maintain flexibility in compensation decisions, the Board and the Compensation Committee do not necessarily limit compensation to amounts deductible under Section 162(m). Taxation of “Parachute” Payments Sections 280G and 4999 of the Internal Revenue Code provide that certain individuals who hold significant equity interests in the Company and certain executive officers and other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the Company that exceed certain prescribed limits, and that we (or our successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any of the named executive officers, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Internal Revenue Code, and we have not agreed, and are not otherwise obligated, to provide any executive officer with such a “gross-up” or other reimbursement. Accounting for Stock-Based Compensation The Company follows Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”), for our stock-based compensation awards. ASC 718 requires companies to measure the compensation expense for all share-based payment awards made to employees based on the grant date fair value of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards.
Compensation Committee
| SUMMARY COMPENSATION TABLE |
Compensation Committee
| Name Principal Position | Year | Salary ($) | Bonus ($) (1) | Restricted Stock Awards ($) (2) | Option Awards ($) (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (4) | All Other Compensation (5) ($) | Total | | Thomas Coughlin | 2023 | 585,000 | -- | -- | -- | 350,000 | 49,444 | 984,444 | | President & CEO | 2022 | 585,000 | 300,000 | 354,170 | -- | 328,000 | 48,146 | 1,615,316 | | | 2021 | 585,000 | - (6) | 30,936 | 12,000 | 597,112 | 45,948 | 1,270,996 | | Ryan Blake | 2023 | 400,000 | -- | 298,731 | -- | -- | 46,630 | 745,361 | | Executive Vice President & COO | 2022 | 400,000 | 125,000 | 342,190 | -- | -- | 35,027 | 902,217 | | | 2021 | 250,000 | 60,000 | -- | 6,458 | -- | 6,477 | 322,935 | | Jawad Chaudhry | 2023 | 350,000 | 70,000 | -- | -- | -- | 4,177 | 424,177 | | Executive Vice President & CFO | 2022 | 70,000 | 100,000 | -- | -- | -- | -- | 170,000 | | Thomas Keating, Former CFO | 2021 | 258,000 | 100,000 | -- | -- | -- | 12,358 | 370,358 | | Kenneth Emerson | 2023 | 250,000 | -- | -- | -- | -- | 21,153 | 271,153 | | Executive Vice President & CSRO | 2022 | 250,000 | 125,000 | -- | -- | -- | 19,637 | 394,637 | | | 2021 | 230,000 | 100,000 | -- | -- | -- | 14,396 | 344,396 | | David Garcia | 2023 | 305,000 | 30,000 | -- | -- | -- | 6,500 | 341,500 | | Executive Vice President & CLO | 2022 | 265,000 | 200,000 | -- | -- | -- | 1,460 | 466,460 | | | 2021 | 265,000 | -- | -- | -- | -- | 502 | 265,502 |
Employment Agreements
| GRANTS OF PLAN-BASED AWARDS TABLE FOR FISCAL YEAR 2023 |
Employment Agreements
| OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2023 |
Employment Agreements
| OPTIONS EXERCISED AND STOCK VESTED DURING FISCAL YEAR 2023 |
Employment Agreements
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
Employment Agreements
| 2023 CEO PAY RATIO |
Methodology
| ∎ | As of December 31, 2023, our global workforce used for determining the pay ratio was estimated to be 312 employees in the U.S and none internationally. This population consisted of our full-time, part-time, and temporary employees employed with us as of the determination date. |
Methodology
| PAY VERSUS PERFORMANCE |
CEO Pay Ratio
CEO Pay Ratio
Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and non-PEO NEOs and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay Versus Performance
| Year | Summary Compensation Table Total for Thomas M. Couglin¹ ($) | Compensation Actually Paid to Thomas M. Coughlin 1,2,3 ($) | Average Summary Compensation Table Total for Non-PEO NEOs 1 ($) | Average Compensation Actually Paid to Non-PEO NEOs 1,2,3 ($) | Value of Initial Fixed $100 Investment Based on: 4 TSR ($) | Net Income ($ Millions) | | 2023 | 984,444 | 984,439 | 445,548 | 941,315 | 132 | 29,483 | | 2022 | 1,615,316 | 1,814,638 | 483,328 | 1,027,771 | 176 | 45,579 | | 2021 | 1,270,996 | 1,574,757 | 325,798 | 666,660 | 146 | 34,240 |
Pay Versus Performance
| 1. | Thomas M. Coughlin was our PEO for each year presented. The individuals comprising the non-PEO NEOs for each fiscal year are listed below. |
Pay Versus Performance
| 2021 | 2022 | 2023 | | Ryan Blake, COO | Ryan Blake, COO | Ryan Blake, COO | | Kenneth Emerson CSRO | Kenneth Emerson, CSRO | Kenneth Emerson, CSRO | | Thomas Keating, CFO | Jawad Chaudhry, CFO | Jawad Chaudhry, CFO | | David Garcia, CLO | David Garcia, CLO | David Garcia, CLO |
Pay Versus Performance
2. The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total. 3. Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns of our 2023 Summary Compensation Table on page 51.
Pay Versus Performance
| | Summary Compensation Table Total for Thomas M. Coughlin ($) | Exclusion of Stock Awards and Option Awards for Thomas M. Coughlin ($) | Inclusion of Equity Values for Thomas M. Coughlin ($) | Compensation Actually Paid to Thomas M. Coughlin ($) | | 2023 | 984,444 | - | (5) | 984,439 | | 2022 | 1,615,316 | (354,170) | 553,492 | 1,814,638 | | 2021 | 1,270,996 | (42,936) | 346,697 | 1,574,757 |
Pay Versus Performance
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Stock Awards and Option Awards for Non- PEO NEOs ($) | Average Inclusion of Equity Values for Non- PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 445,548 | (37,341) | 533,109 | 941,315 | | 2022 | 483,328 | (42,774) | 587,216 | 1,027,771 | | 2021 | 325,798 | (807) | 341,670 | 666,660 |