DEF 14A of Norwood Financial Corp
Filed Mar 15, 2024 · FY20230001193125-24-068650
PROPOSAL I—ELECTION OF DIRECTORS
PROPOSAL I—ELECTION OF DIRECTORS The Board of Directors currently consists of eleven (11) members, each of whom also serves as a director of our principal subsidiary, Wayne Bank (the “Bank”). Our Articles of Incorporation provide that the Board of Directors must be divided into three classes as nearly equal in number as possible. At each annual meeting of stockholders, each of the successors of the directors whose terms expire at the meeting will be elected to serve for a term of three years expiring at the third annual meeting of stockholders following the annual meeting of stockholders at which the successor director was elected. James O. Donnelly, Lewis J. Critelli and Meg L. Hungerford (collectively, the “Nominees”) have been nominated by the Board of Directors for terms of three years each. The Nominees currently serve as directors of the Company and have consented to serve, if elected. The persons named as proxies in the Board of Directors’ form of proxy intend to vote for the election of the Nominees, unless the proxy is marked to indicate that such authorization is expressly withheld. Should any of the Nominees withdraw or be unable to serve (which the Board of Directors does not expect) or should any other vacancy occur in the Board of Directors, it is the intention of the persons named in the Board of Directors’ form of proxy to vote for the election of such person as may be recommended to the Board of Directors by the Nominating Committee of the Board. If there is no substitute nominee, the size of the Board of Directors may be reduced. The following table sets forth the names, ages, positions with the Company, terms and length of board service, number of shares owned and percentage ownership of the Common Stock for: (i) each of the persons nominated for election as directors of the Company at the Annual Meeting; (ii) each other director of the Company who will continue to serve as director after the Annual Meeting; and (iii) each executive officer who is not a director. Beneficial ownership of the directors and executive officers of the Company as a group is also set forth below.
PROPOSAL I—ELECTION OF DIRECTORS
| Name and Position(s) with Company | Age(1) | Year First Elected or Appointed(2) | Current Term Expires | Common Stock Beneficially Owned as of Record Date(3)(4) | Percent of Class | | BOARD NOMINEES FOR TERMS TO EXPIRE IN 2027 | | | | | | | James O. Donnelly President and Chief Executive Officer | 56 | 2022 | 2024 | 4,093 | * | | Lewis J. Critelli Chairman of the Board and Director | 64 | 2009 | 2024 | 65,668 | * | | Meg L. Hungerford Director | 47 | 2017 | 2024 | 5,360 | * | | DIRECTORS CONTINUING IN OFFICE | | | | | | | Dr. Andrew A. Forte Director and Vice Chairman of the Board | 65 | 2007 | 2025 | 23,124 | * | | Ralph A. Matergia Director | 74 | 2004 | 2025 | 21,738(5) | * | | Susan Campfield Director | 66 | 2006 | 2025 | 5,181 | * | | Alexandra K. Nolan Director | 66 | 2020 | 2025 | 271,263(5) | 3.3% | | Joseph W. Adams Director | 61 | 2015 | 2026 | 52,392(5) | * | | Kevin M. Lamont Director | 65 | 2011 | 2026 | 134,420(5) | 1.6% | | Dr. Kenneth A. Phillips Director | 73 | 1988 | 2026 | 14,871 | * | | Jeffrey S. Gifford Director | 68 | 2020 | 2026 | 137,110(5) | 1.7% | | Name and Position(s) with Company | Age(1) | Year First Elected or Appointed(2) | Current Term Expires | Common Stock Beneficially Owned as of Record Date(3)(4) | Percent of Class | | EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS | | | | | | | William S. Lance Executive Vice President, Chief Financial Officer and Secretary | 64 | Na | Na | 10.292 | * | | John F. Carmody Executive Vice President and Chief Credit Officer | 54 | Na | Na | 18,570 | * | | Vincent G. O’Bell Executive Vice President and Chief Lending Officer | 62 | Na | Na | 7,798 | * | | All directors, nominees and executive officers as a group (14 persons) | | | | 771,880 | 9.3% |
PROPOSAL I—ELECTION OF DIRECTORS
| * Less than 1% of the Common Stock outstanding. |
PROPOSAL I—ELECTION OF DIRECTORS
| (1) As of December 31, 2023. |
PROPOSAL I—ELECTION OF DIRECTORS
| (2) Refers to the year the individual first became a director of the Company or the Bank. |
PROPOSAL I—ELECTION OF DIRECTORS
| (3) Unless otherwise noted, the directors, executive officers and group named in the table have sole or shared voting power or investment power with respect to the shares listed in the table. The share amounts include shares of Common Stock that the following persons may acquire through the exercise of stock options within 60 days of the Record Date: Joseph W. Adams – 1,300; Susan Campfield – 1,300; Dr. Andrew A. Forte – 1,300; Meg L. Hungerford – 1,300; Kevin M. Lamont – 1,000; Ralph A. Matergia – 1,300; Dr. Kenneth A. Phillips – 1,300; and Vincent G. O’Bell – 6,750. |
PROPOSAL I—ELECTION OF DIRECTORS
| (4) Excludes shares of restricted stock awarded under the Company’s 2014 Equity Incentive Plan that have not yet vested. |
PROPOSAL I—ELECTION OF DIRECTORS
| (5) Excludes 84,557 shares of Common Stock held under the Wayne Bank Employee Stock Ownership Plan (“ESOP”) for which such individuals serve as the ESOP trustees. Such shares are voted by the ESOP trustees in a manner proportionate to the voting directions of the allocated shares received by the ESOP participants, subject to the fiduciary duty of the trustees. Beneficial ownership is disclaimed with respect to such ESOP shares held in a fiduciary capacity. |
Biographical Information
Biographical Information The biographies of each of the nominees and continuing directors below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Nominating Committee and the Board to determine that the person should serve as a director for the Company.
Nominees for Director
Nominees for Director James O. Donnelly became President and Chief Executive Officer of the Company on May 9, 2022. On May 10, 2022, Mr. Donnelly was appointed to the Board of Directors of the Company. Mr. Donnelly joined the Company with over 30 years of banking experience, most recently with Bangor Savings Bank where he served as its Executive Vice President and Chief Commercial Officer. Mr. Donnelly brings to the chief executive officer role substantial experience and leadership skills in the areas of commercial lending, retail and mortgage banking, credit, financial management, wealth management and franchise growth through acquisition and market expansion. Mr. Donnelly has a long and distinguished history of community service, including in the areas of healthcare, higher education and the United Way. Lewis J. Critelli was appointed as Chairman of the Board of Directors of the Company and the Bank on April 26, 2022. Mr. Critelli retired as President and Chief Executive Officer of the Company and the Bank on May 9, 2022, after a long and distinguished banking career of over forty years. He joined the Bank in 1995 as Chief Financial Officer and had served as President and CEO for both the Company and the Bank since 2010. Under his leadership, the Company had three successful acquisitions and expanded into new markets in Pennsylvania and Upstate New York. Meg L. Hungerford serves as the School Business Manager for the Walton, New York, Central School District. Ms. Hungerford also serves as Board President of Headwaters Emergency Medical Services, Inc., a non-profit emergency services organization. Previously she has served as the Director of Finance for the City of Oneonta, New York from 2009 to 2019. She also currently serves as a Director for NYMIR – the New York Municipal Insurance Reciprocal. Ms. Hungerford served on the board of directors and audit committee of Delaware Bancshares, Inc. and its wholly owned subsidiary, The National Bank of Delaware County, from 2010 until their acquisition by the Company in July 2016. Her public service and involvement in her community for over 26 years provides knowledge of the local economy and business opportunities and make her a valuable contributor to the Board. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE ABOVE NOMINEES.
Continuing Directors
Continuing Directors Dr. Andrew A. Forte is the President of Forte, Inc., a family-owned corporation which operates the Stroudsmoor Country Inn, a hospitality and banquet facility in Stroudsburg, Pennsylvania. He has a Doctoral Degree in management from the Lubin School of Business, Pace University. He is a Certified Public Accountant, who practiced public accountancy with KPMG as an Audit Manager through June 1985. His financial and accounting background brings valuable expertise to the Board and his participation in our local community for over 40 years brings knowledge of the local economy and business opportunities for the Bank. Ralph A. Matergia is a founding partner of the law firm of Matergia and Dunn in Stroudsburg, Pennsylvania with which he has practiced for over 49 years. Previously, he had served as Solicitor for the Monroe County Treasurer for over 30 years. He also served as the Solicitor for the Borough of Stroudsburg from 1979 to 2016. His participation in our local community for over 48 years brings knowledge of the local economy and business opportunities for the Bank. Susan Campfield is the President and Chief Executive Officer of Gumble Brothers, Inc., a building material supplier located in Paupack, Pennsylvania. She works with various contractors and builders and has an extensive knowledge of the local construction market. Her participation in our local community for over 33 years brings knowledge of the local economy and business opportunities for the Bank. Alexandra K. Nolan was appointed to the Board of Directors upon the completion of the Company’s acquisition of UpState New York Bancorp, Inc. on July 7, 2020. Prior to the merger, she served as a director on the Board of UpState New York Bancorp, Inc. and USNY Bank since 2010, and was Vice Chairwomen since 2016. Ms. Nolan previously served as Editorial Finance Manager of Time Warner’s LIFE Magazine. She has also previously served as the director of Branch Analysis and Planning for Shearson/Lehman Brothers and as an analyst with the Government Affairs Office of American Express Company. Her participation in her local community for over 33 years brings knowledge of the local economy and business opportunities for the Bank. Joseph W. Adams served as a member of the Pennsylvania House of Representatives from November, 2022 until February, 2024. Previously, he had served the prior six years as a Wayne County Commissioner. He retired as Superintendent of Schools for the Western Wayne School District on February 1, 2018. Previously, he served as Senior Executive Vice President for Wealth Management at the Dime Bank, Honesdale, Pennsylvania, with which he had been employed in various officer positions since 2003. Mr. Adams has also previously served as the Business Manager of the Wallenpaupack Area School District for 13 years. A fifth-generation resident of Wayne County, his strong local ties, business experience, financial background and his participation in our local community for over 38 years, brings knowledge and business opportunities to the Bank. Kevin M. Lamont was appointed to the Board of Directors upon the completion of the Company’s acquisition of North Penn Bancorp, Inc. on May 31, 2011. Prior to the merger, he served as the Chairman of the Board of North Penn Bancorp, Inc. and North Penn Bank. He is also President of Lamont Development Company, Inc. Mr. Lamont developed, owned and operated two major assisted living communities in Northeast Pennsylvania. Mr. Lamont has been a licensed Nursing Home Administrator in Pennsylvania since 1980 and has extensive experience in all aspects of business management and finance. His participation in our local community for over 44 years brings knowledge of the local economy and business opportunities for the Bank. Dr. Kenneth A. Phillips is a retired optometrist. Dr. Phillips has in-depth knowledge of the Bank’s market area and is active in various community activities. His participation in our local community for over 49 years brings knowledge of the local economy and business opportunities for the Bank. Jeffrey S. Gifford was appointed to the Board of Directors upon the completion of the Company’s acquisition of UpState New York Bancorp, Inc. on July 7, 2020. Prior to the merger, he served as the Chairman of the Board of UpState New York Bancorp, Inc. since 2016 and Chairman of the Board of USNY Bank since 2015. Mr. Gifford is the Chairman and Chief Executive Officer of The Birkett Mills, a manufacturer of buckwheat and wheat products for wholesale and retail customers, with mills located in Penn Yan and King Ferry, New York. Mr. Gifford previously served as the Chief Executive Officer of Crooked Lake Management, Inc., which is the holding company for Carey’s Lumber & Building Supply and Carey’s True Value, both located in Penn Yan, New York, from 1991 to 2016. He has also previously served as President and Chairman of the Genesee Reserve Supply company in Rochester, New York, as well as Chairman of the Yates County Industrial Development Agency. His strong local ties, business experience, financial background and his participation in his local community for over 33 years, brings knowledge and business opportunities to the Bank.
EXECUTIVE COMPENSATION
| Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Awards(1) | Nonqualified Deferred Compensation Earnings | All Other Compensation (2) | Total | | James O. Donnelly (3) | 2023 | $478,125 | $115,000 | $191,188 | $— | $— | $32,122 | $816,435 | | President and | 2022 | $261,538 | $119,000 | $160,955 | $— | $— | $18,822 | $560,315 | | Chief Executive Officer | | | | | | | | | | William S. Lance | 2023 | $300,400 | $81,533 | $44,490 | $— | $— | $41,462 | $467,885 | | Executive Vice President, | 2022 | $280,000 | $108,800 | $50,295 | $— | $— | $39,848 | $478,943 | | Chief Financial Officer and Secretary | | | | | | | | | | Vincent G. O’Bell Chief Lending Officer | 2023 | $230,000 | $49,200 | $44,490 | $— | $— | $31,112 | $354,802 |
Pay vs Performance Table
Pay vs Performance Table
Pay vs Performance Table
| Year | PEO | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based on Total Shareholder Return( (7) | Net Income | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | 2023 | James O. Donnelly(1) | $816,435 | $633,359(3)(5) | $414,108 | $374,382(4)(6) | $138.40(8) | $16,759,106 | | 2022 | James O. Donnelly(1) | $560,315 | $424,005 | $426,979 | $400,990 | $138.65 | $29,232,618 | | | Lewis J. Critelli(2) | $729,153 | $672,067 | $426,979 | $400,990 | $138.65 | $29,232,618 | | 2021 | Lewis J. Critelli | $739,538 | $746,266 | $386,514 | $351,463 | $104.37 | $24,915,512 |
Pay vs Performance Table
| (1) Mr. Donnelly commenced employment as President and Chief Executive Officer as of May 9, 2022, our current PEO. |
Pay vs Performance Table
| (2) Mr. Critelli retired as President and Chief Executive Officer, our former PEO, as of May 9, 2022. |
Pay vs Performance Table
| (3) For Mr. Donnelly, Actual Compensation paid to the PEO in 2023 [column (d)] is less than the Summary Compensation Table (“SCT”) Total [column (c)] as reported for the corresponding year in the “Total” column of the SCT resulting from adjustments in equity award values. See Footnote 5. |
Pay vs Performance Table
| (4) For the Non-PEO NEOs, Average Compensation Actually Paid in 2023 [column (f)] is less than the Average SCT Total [column (e)] as reported for the corresponding year in the “Total” column of the SCT resulting from adjustments in equity award values. See Footnote 10. The Non-PEO NEOs for 2023 were: William S. Lance and Vincent G. O’Bell. |
Pay vs Performance Table
| (5) Equity Award Adjustments for the PEO (Mr. Donnelly): The following table sets forth the adjustments made during each year to the SCT “Total Compensation” column in the Pay vs Performance Table to arrive at compensation “actually paid” to our PEO (Mr. Donnelly) during the year presented: |
Pay vs Performance Table
| Adjustments to Determine Compensation “Actually Paid” for the PEO (Mr. Donnelly) | 2023 | | Deduction for Amounts Reported under the ‘Stock Awards’ Column in the SCT | $(191,188) | | Deduction for Amounts Reported under the ‘Option Awards’ Columns in the SCT | — | | Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year end | $21,015 | | Increase for Fair Value of Awards Granted during year that Vest during year | — | | Increase/deduction for Change in Fair Value from Prior Year-end to current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | (1,537) | | Increase/deduction for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | (17,746) | | Deduction of Fair Value of Awards Granted Prior to year that were forfeited during year | — | | Increase based upon Incremental Fair Value of Awards Modified during year | — | | Increase based on Dividends or Other Earnings Paid during the year prior to Vesting Date of Award | $6,380 | | Total Adjustments | $(183,076) |
Pay vs Performance Table
| (6) Equity Award Adjustments for the Average Non-PEO NEO Compensation Actually Paid: The following table sets forth the adjustments made during each year to the SCT “Total Compensation” column in the Pay vs Performance Table to arrive at average compensation “actually paid” to our Non-PEO NEOs during each of the years presented: |
Pay vs Performance Table
| Adjustments to Determine Average Compensation “Actually Paid” for the Non-PEO NEOs | 2023 | | Deduction for Amounts Reported under the ‘Stock Awards’ Column in the SCT | $(44,490) | | Deduction for Amounts Reported under the ‘Option Awards’ Columns in the SCT | — | | Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year end | $4,875 | | Increase for Fair Value of Awards Granted during year that Vest during year | — | | Increase/deduction for Change in Fair Value from Prior Year-end to current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | $(1,312) | | Increase/deduction for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | $(2,801) | | Deduction of Fair Value of Awards Granted Prior to year that were forfeited during year | — | | Increase based upon Incremental Fair Value of Awards Modified during year | — | | Increase based on Dividends or Other Earnings Paid during the year prior to Vesting Date of Award | $4,002 | | Total Adjustments | $(39,726) |
Pay vs Performance Table
| (7) Cumulative total shareholder return (TSR) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
Pay vs Performance Table
| (8) Cumulative total shareholder return (TSR) for the period December 31, 2020 through December 31, 2023 is 38.40%. An investment of $100.00 as of December 31, 2020 would have a value of $138.40 as of December 31, 2023. |
Pay vs Performance Table
The Compensation Committee of the Board of Directors of the Company does not have a policy or practice of evaluating cumulative total shareholder return as part of its determination of compensation decisions for the named executive officers. The Compensation Committee reviews various compensation surveys and other market data to ensure the competitiveness of its executive compensation. The Compensation Committee annually establishes a cash incentive bonus pool based on a percentage of pre-tax earnings. Specific bonus amounts are awarded to each NEO based on attainment of pre-determined performance targets as determined by the Compensation Committee. Such cash bonuses will have a relationship with the Company’s net income based upon the annual bonus pool funding percentage of pre-tax earnings, however, net income is not the measurement criteria in establishing the bonus pool. As detailed in the Pay vs Performance Table, Net Income decreased by approximately 32.7% or $8,156,000 from 2021 to 2023, while the Average Compensation Actually Paid to the Non-PEO NEOs increased by approximately 6.5%. The Average Compensation Paid for the position of PEO for the three years 2021 through 2023, including Compensation Actually Paid to Mr. Critelli, former PEO, and Mr. Donnelly, our current PEO, was $825,232. Mr. Donnelly’s Compensation Actually Paid for 2023 is 23.2% lower than the Average Compensation Paid for the PEO for the three years 2021 through 2023.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Set forth below is a table providing information concerning the compensation of the Company’s directors who are not NEOs for the fiscal year ended December 31, 2023.
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash | Stock Awards (1) | Option Awards(1) | All Other Compensation(2) | Total | | Dr. Andrew A. Forte | $75,750 | $20,762 | $— | $88 | $96,600 | | Joseph W. Adams | 78,750 | 20,762 | — | 107 | 99,619 | | Susan Campfield | 75,000 | 20,762 | — | 75 | 95,837 | | Meg L. Hungerford | 75,000 | 20,762 | — | 2,755 | 98,517 | | Kevin M. Lamont | 78,750 | 20,762 | — | 104 | 99,616 | | Ralph A. Matergia | 80,250 | 20,762 | — | 53 | 101,065 | | Kenneth A. Phillips | 74,250 | 20,762 | — | 53 | 95,065 | | Jeffrey S. Gifford | 77,250 | 20,762 | — | 75 | 98,087 | | Alexandra K. Nolan | 77,250 | 20,762 | — | 75 | 98,087 | | Lewis J. Critelli | 93,750 | 20,762 | — | — | 114,512 |
DIRECTOR COMPENSATION
| (1) Based on the aggregate grant date for value of the award computed in accordance with FASB ASC Topic 718. For assumptions used, see Note 12 of Notes to Consolidated Financial Statements in the Annual Report on Form 10-K. The grant-date fair value of restricted stock awards was equal to the fair market value of the Company common stock underlying the award on the date of grant. As of December 31, 2023, directors who are not NEOs held the following number of stock option awards and unvested restricted stock awards. Share amounts have been restated for the 50% stock dividend declared August 8, 2017. |
DIRECTOR COMPENSATION
| Name | Stock Option Awards | Restricted Stock Awards | | Dr. Andrew A. Forte | 1,300 | 1,800 | | Joseph W. Adams | 1,300 | 1,800 | | Susan Campfield | 1,300 | 1,800 | | Meg L. Hungerford | 1,300 | 1,800 | | Kevin M. Lamont | 1,000 | 1,800 | | Ralph A. Matergia | 1,300 | 1.800 | | Kenneth A. Phillips | 1,300 | 1,800 | | Jeffrey S. Gifford | — | 1,660 | | Alexandra K. Nolan | — | 1,660 | | Lewis J. Critelli | — | 6,360 |
DIRECTOR COMPENSATION
| (2) Consists of the value of life insurance premiums paid by the Company for the benefit of the director. For Ms. Hungerford, also includes long-term care policy premium of $2,648 paid in 2023. |
DIRECTOR COMPENSATION
Directors who are not full-time employees receive a fee of $750 for each meeting of the Company’s board of directors attended. Each director of the Company is also a director of Wayne Bank and receives fees accordingly. James O. Donnelly, President and Chief Executive Officer, does not receive board or committee fees for his participation thereon. Each non-employee member of Wayne Bank’s board of directors receives a retainer of $5,250 per month. Mr. Critelli receives an additional monthly retainer of $1,250 for his service as Chairman. In addition, fees are paid for various committee meetings as follows: Trust Committee ($750); Audit Committee ($750); Compensation Committee ($750); and Loan Committee ($750). For the fiscal year ended December 31, 2023, fees paid to all directors totaled approximately $786,000. The Company pays for life insurance coverage up to $50,000 for each non-employee director. Pursuant to the 2014 Equity Incentive Plan, 700 shares of restricted stock were awarded to each Outside Director on December 12, 2023. The restricted stock awards vest and become non-forfeitable in five equal installments beginning one year from the date of grant during periods of continued service as an Outside Director or director emeritus. Restricted stock awards will vest immediately upon a change in control of the Company. Upon the death or disability of the director, the award will be deemed earned and non-forfeitable as if the director had attained the next applicable vesting event. Any portion of stock awards that remain unearned would be forfeited. Directors are entitled to receive all dividends paid on shares underlying restricted stock awards.