DEF 14A of Finward Bancorp
Filed Mar 29, 2024 · FY20230001193125-24-081985
PROPOSAL 1 – ELECTION OF DIRECTORS
PROPOSAL 1 – ELECTION OF DIRECTORS The Board of Directors (the “Board”) currently consists of nine members. The By-Laws provide that the Board of Directors is to be divided into three classes, with each class containing directors as nearly equal in number as the then total number of directors constituting the entire Board permits. The members of each class are elected for a term of three years and until their successors are elected and qualified. One class of directors is elected annually. The term of the Class III directors expires at the Annual Meeting. The term of the Class I directors expires at the 2025 Annual Meeting, and the term of the Class II directors expires at the 2026 Annual Meeting. Kenneth V. Krupinski, a current Class III director, has elected not to stand for reelection, and will retire from the Board, upon the expiration of his current term, which expires at the Annual Meeting. Mr. Krupinski’s decision not to stand for reelection is not a result of any disagreement with us on any matter relating to our operations, policies, or practices. Effective upon the conclusion of the Annual Meeting, the Bancorp will have two vacant directorships resulting from Mr. Krupinski’s retirement and the previously disclosed resignation from the Board by former director Donald P. Fesko. The Board intends to appoint two directors to fill the Class II director vacancy resulting from Mr. Fesko’s resignation and the Class III director vacancy resulting from Mr. Krupinski’s retirement in accordance with the By-Laws to terms that will expire at the 2026 and 2027 annual meetings, respectively. The two nominees for director this year are Anthony M. Puntillo, D.D.S., M.S.D., and James L. Wieser, J.D., each of whom is a current director of the Bancorp. If the shareholders elect these nominees at the Annual Meeting, the terms of Mr. Puntillo and Mr. Wieser will expire in 2027. No director or nominee for director is related to any other director or executive officer of the Bancorp or nominee for director by blood, marriage, or adoption. Except as otherwise described above, there are no arrangements or understandings between any nominee and any other person pursuant to which the nominee was selected. At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the two nominees named in this proxy statement. On February 15, 2024, the Board named Joel Gorelick as the next Chairman of the Board of the Bancorp and the Bank. Mr. Gorelick succeeded Benjamin J. Bochnowski as Chairman. Pursuant to the Bancorp’s Corporate Governance Guidelines, directors are permitted to serve on the Board until they reach the age of 76, at which time they are required to retire from the Board effective as of the conclusion of the annual shareholders meeting following the date on which the director attains age 76. Directors James Wieser and Joel Gorelick both have attained the age of 76 prior to the date of the Annual Meeting and, under the Bancorp’s Corporate Governance Guidelines, would be required to retire from the Board effective as of the conclusion of the Annual Meeting. However, on January 29, 2024, the Nominating and Corporate Governance Committee approved the waiver of the retirement requirement for Director Wieser so that he may be nominated for director and, if elected at the Annual Meeting, continue to serve until the end of his term as a Class III Director, which term would expire at the Annual Meeting of Shareholders in 2027. In addition, on March 25, 2024, the Nominating and Corporate Governance Committee approved the waiver of the retirement requirement for Director Gorelick so that he may continue to serve until the end of his term as a Class I Director, which term would expire at the Annual Meeting of Shareholders in 2025. The following table provides information on the nominees for the position of director of the Bancorp and for each director continuing in office after the Annual Meeting, including the number and percent of shares of Common Stock beneficially owned as of the record date.
PROPOSAL 1 – ELECTION OF DIRECTORS
| Name | Age | Present Principal Occupation | Director Since | Shares Beneficially Owned on March 22, 2024 | Percent of Class(1) | | Nominees for Director | | | | | | | (Class III – Term expiring at annual meeting of shareholders in 2027) | | | | | | | Anthony M. Puntillo, D.D.S., M.S.D. | 57 | Orthodontist and Chief Executive Officer of Puntillo and Crane Orthodontics, PC | 2004 | 4,833(2) | * | | James L. Wieser, J.D. | 76 | Attorney with Wieser & Wyllie LLP, Schererville, Indiana | 1999 | 8,747(3) | * | | Directors Continuing in Office | | | | | | | (Class I – Term expiring at annual meeting of shareholders in 2025) | | | | | | | Joel Gorelick | 76 | Chairman of the Board; Retired; former President and Chief Operating Officer of the Bancorp, Charter Chairman Emeritus of the Lake County Economic Alliance, Inc., and Director and Chairman of the Audit Committee of the Indiana Economic Development Corporation | 2000 | 52,320(4) | 1.2% | | Amy W. Han, Ph.D. | 60 | Director for Clinical Affairs and Education of Indiana University School of Medicine – Northwest | 2008 | 7,728(5) | * | | Robert W. Youman | 61 | Investment Advisor and Managing Director with Horwitz & Associates | 2022 | 25,285(6) | * | | (Class II – Term expiring at annual meeting of shareholders in 2026) | | | | | | | Benjamin J. Bochnowski | 43 | President and Chief Executive Officer of the Bancorp | 2014 | 27,500(7) | * | | Danette Garza, J.D., M.B.A., C.P.A. | 69 | Attorney and Certified Public Accountant; Chief Executive Officer of Jack Gray Logistics Network, Inc., Gary, Indiana | 2013 | 6,592(8) | * | | Robert E. Johnson, III | 54 | President and Chief Executive Officer of Cimcor, Inc. | 2016 | 2,899(9) | * | | Directors Not Continuing in Office | | | | | | | Kenneth V. Krupinski | 76 | Retired Certified Public Accountant; past President of Swartz Retson & Co., P.C., Merrillville, Indiana | 2003 | 12,110(10) | * |
PROPOSAL 1 – ELECTION OF DIRECTORS
* Under 1% of outstanding shares.
PROPOSAL 1 – ELECTION OF DIRECTORS
| (1) For each individual disclosed in the table above, the figures in this column are based on 4,301,819 shares of Common Stock issued and outstanding as of March 22, 2024, plus the number of shares of Common Stock each such individual has the right to acquire on or within 60 days after March 22, 2024, computed in accordance with Rule 13d-3(d)(1) under the Exchange Act. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (2) Includes 3,378 shares held as trustee and 1,455 shares solely owned. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (3) Includes 7,577 shares held jointly with Mr. Wieser’s spouse, 750 shares held by Mr. Wieser in an agency capacity over which Mr. Wieser has voting and dispositive power, and 420 shares solely owned. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (4) Includes 533 shares held jointly with Mr. Gorelick’s spouse, 48,556 shares held in Mr. Gorelick’s individual retirement account, 917 shares held by Mr. Gorelick’s spouse in her individual retirement account, 1,460 shares owned as custodian for Mr. Gorelick’s children, and 854 shares solely owned. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (5) Includes 7,114 shares held jointly with Dr. Han’s spouse and 614 shares solely owned. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (6) Includes 22,594 shares held in Mr. Youman’s individual retirement account and 2,691 shares held as trustee. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (7) For further information regarding the beneficial ownership of these shares, see “Security Ownership by Certain Beneficial Owners and Management” above. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (8) Includes 600 shares held in Ms. Garza’s individual retirement account, 1,545 shares of restricted stock over which Ms. Garza has voting but not dispositive power, 3,200 shares held as trustee, and 1,247 shares solely owned. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (9) Includes 2,899 shares solely owned by Mr. Johnson. |
PROPOSAL 1 – ELECTION OF DIRECTORS
| (10) Includes 10,617 shares held jointly with Mr. Krupinski’s spouse, 1,000 shares held in Mr. Krupinski’s individual retirement account, and 493 shares solely owned. |
PROPOSAL 1 – ELECTION OF DIRECTORS
Each of the Bancorp’s directors and director nominees has particular experience, qualifications, attributes, and skills that qualify him or her to serve as a director of the Bancorp. These particular attributes are set forth below for each such director or director nominee.
Board Diversity
Board Diversity Listing Rule 5605(f) (the “Diverse Board Representation Rule”) of The NASDAQ Stock Market, LLC (“Nasdaq”) requires each Nasdaq-listed company, subject to certain exceptions, to have or explain why it does not have (1) at least one director who self-identifies as female, and (2) at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+. All Nasdaq-listed companies must have, or explain why they do not have, at least one diverse director. All companies listed on the Nasdaq Capital Market, such as the Bancorp, must have, or explain why they do not have, at least two diverse directors by August 6, 2026. In addition, Listing Rule 5606 (the “Board Diversity Disclosure Rule”) requires each Nasdaq-listed company, subject to certain exceptions, to provide statistical information about the company’s board of directors, in a uniform format, related to each director’s self-identified gender, race, and self-identification as LGBTQ+. Although we are not required to fully comply with the Diverse Board Representation Rule until 2026, we believe we presently meet the requirements of that rule based on the self-identified characteristics of the current members of our Board. In the matrix below, we have provided the statistical information required by the Board Diversity Disclosure Rule.
Board Diversity
| Board Diversity Matrix (as of March 29, 2024) | | | | | | Total Number of Directors | | | 9 | | | | Female | Male | Non-Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 2 | 7 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 0 | 1 | 0 | 0 | | Alaskan Native or Native American | 0 | 0 | 0 | 0 | | Asian | 1 | 0 | 0 | 0 | | Hispanic or Latinx | 1 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 0 | 6 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | | | 0 | | | Did Not Disclose Demographic Background | | | 0 | |
Nominees for Class III Directors – Term Expiring at the Annual Meeting of Shareholders in 2027
Nominees for Class III Directors – Term Expiring at the Annual Meeting of Shareholders in 2027
Nominees for Class III Directors – Term Expiring at the Annual Meeting of Shareholders in 2027
| | Anthony M. Puntillo, D.D.S., M.S.D., founded Puntillo and Crane Orthodontics, PC, a dental specialty practice with multiple locations in Northwest Indiana, in 1994. He is the co-owner and senior partner of the practice. He also serves as a Director of the American Board of Orthodontics, is a past President of the Great Lakes Association of Orthodontists, and is a member of various other orthodontics associations. He is professionally active in the Bank’s communities. His experience and profile assist the Bancorp and the Bank with their business lending strategies. Dr. Puntillo served as the Lead Independent Director for the Bancorp and the Bank from March 2022 to February 2024. Dr. Puntillo serves as the Vice-Chairman of the Board and the Executive Committee, and serves as Chair of the Nominating and Corporate Governance Committee. | | | James L. Wieser, J.D., is an attorney with over 50 years of experience. He concentrates his practice in the areas of real estate development and the representation of small businesses. This experience assists the Bancorp and the Bank in their real estate and small business lending. He has also served on several audit and risk management committees of not-for-profit organizations. Mr. Wieser serves as Chairman of the Compensation and Benefits Committee, and is also a member of the Executive Committee and Risk Management and Compliance Committee. |
Class I Directors – Term Expiring at the Annual Meeting of Shareholders in 2025
Class I Directors – Term Expiring at the Annual Meeting of Shareholders in 2025
Class I Directors – Term Expiring at the Annual Meeting of Shareholders in 2025
| | Joel Gorelick currently serves as the Chairman of the Board of Directors of the Bancorp and the Bank. Mr. Gorelick served as President and Chief Operating Officer of the Bancorp until January 2013 when he retired, and has over 50 years of banking experience including retail and commercial banking. He is a Director and Chairman of the Audit Committee of the Indiana Economic Development Corporation and a Charter Chairman Emeritus of the Lake County Economic Alliance, Inc. He has detailed knowledge of commercial lending facilities as well as the intricacies of daily banking operations. His expertise has been utilized as an instructor for educational seminars offered by the Indiana Bankers Association. He has a high profile within the community and is active in numerous community activities. This experience assists him in his role as Chairman of the Executive Committee, as a member of the Audit Committee, and as an invited guest to the various Board committees. | | | Amy W. Han, Ph.D., completed a Ph.D. in Psychology from the University of Notre Dame in 2003. Prior to graduate work, Dr. Han worked as a management consultant in the areas of human resource management and strategic management with Norrell Services and AT&T in Chicago. She currently serves as the Director for Clinical Affairs and Education at the Northwest campus of Indiana University School of Medicine. Dr. Han lends expertise to the Board in human resources management, organizational design, and strategic management areas. She brings leadership skills and the ability to help individuals achieve their goals to the Board of Directors. She is also very knowledgeable about the means and methods of providing good customer service to individuals in Northwest Indiana and greater Chicagoland. Additionally, Dr. Han has expertise in diversity, equity, and inclusion matters, creating IU’s first Scholarly Concentration in Urban Medicine, Health Disparities and Social Determinants of Health, directly impacting the | | community. Dr. Han also serves on several local boards. This experience assists her in her role as the Vice-Chair of Compensation and Benefits Committee and Vice-Chair of the Nominating and Corporate Governance Committee, and as a member of the Executive Committee. | |
Class I Directors – Term Expiring at the Annual Meeting of Shareholders in 2025
| | Robert W. Youman, CPA (Inactive), is an Investment Advisor and Managing Director of Horwitz & Associates, positions he has held since January 2016. He has worked in the securities industry for over thirty years focusing on serving community banks and their investors. Mr. Youman began his career with KPMG LLP where he specialized in audits of community banks. He served as a member of the board of directors of Royal Financial, Inc. and its wholly-owned Illinois state- chartered savings bank subsidiary, Royal Savings Bank, from 2017 to 2022. Mr. Youman lives in Illinois and is familiar with the financial services markets in the Chicagoland area. He also has extensive experience in the areas of community banking, finance, mergers and acquisitions, strategic planning, and wealth management. This experience assists him in his role as the Chairman of the Audit Committee and Vice-Chairman of the Risk | | Management and Compliance Committee, and as a member of the Nominating and Corporate Governance Committee. | |
Class II Directors – Term Expiring at the Annual Meeting of Shareholders in 2026
Class II Directors – Term Expiring at the Annual Meeting of Shareholders in 2026
Class II Directors – Term Expiring at the Annual Meeting of Shareholders in 2026
| | Benjamin J. Bochnowski currently serves as President and Chief Executive Officer of the Bancorp and Chief Executive Officer of Peoples Bank. Mr. Bochnowski joined the Bancorp in 2010, became Executive Vice President and Chief Operating Officer of the Bancorp in 2013, was promoted to President and Chief Operating Officer in 2015, and his current role in 2016. Additionally, he served as Chairman of Finward Bancorp in 2023, and is the current Chairman of the Indiana Bankers Association. He also serves on the Board of Directors of One Region, a non-profit business organization focused on population growth, and Allies for Community Business, a micro-lending fund focused on providing capital to low-income entrepreneurs in the Chicagoland region. Mr. Bochnowski serves as a member of the Executive Committee of the Board of Directors. |
Class II Directors – Term Expiring at the Annual Meeting of Shareholders in 2026
| | Danette Garza, J.D., M.B.A., C.P.A., served as Probate Commissioner for the Lake County Superior Court from 2013 to 2017. In 2015, she took ownership of Jack Gray Transport, Inc. and affiliates, a bulk and break bulk hauler and stevedore operation located in Gary, Indiana. In May 2023, petitions for involuntary bankruptcy were filed in the U.S. Bankruptcy Court for the Northern District of Indiana, Hammond Division, against Jack Gray Transport, Inc. and various affiliated entities in three separate actions under Chapter 11 of the United States Bankruptcy Code. The three bankruptcy cases were dismissed by the bankruptcy court, with prejudice, in June 2023. Thereafter, Ms. Garza completed the pending sale of her companies and retired from Jack Gray in December 2023. Ms. Garza is a certified public accountant as well as a licensed attorney specializing in corporate, estate planning, | | and elder law. She continues to practice at the firm of Austgen, Kuiper, Jasaitis, P.C. She brings to the Board financial expertise and strong business acumen. The Board draws on her professional strengths and civic involvement as resources to help with the Bancorp’s strategic direction and capitalize on strategic opportunities of the Bancorp. She serves as a member of the Risk Management Committee and Audit Committee. | |
Class II Directors – Term Expiring at the Annual Meeting of Shareholders in 2026
| | Robert E. Johnson, III, currently is the President and Chief Executive Officer of Cimcor, Inc., a position he has held since 1997. Cimcor, Inc. develops cutting edge cybersecurity software to enable companies to maintain IT system integrity, take immediate action to change, and meet compliance regulations. Prior to Cimcor, Mr. Johnson was the manager of business systems for Kvaerner Metals and Manager of Process Automation & Control for Davy McKee Corporation. Mr. Johnson was appointed Chairman of the board of directors for The Methodist Hospitals in 2020. He has been a member of The Methodist Hospitals board since 2009, and has previously served as the Chair of the Finance Committee and as Vice-Chairman of the board. Mr. Johnson is the former Chairman of the board of directors of the Legacy Foundation. He is a member of the Indiana District Export Council (IDEC), a non-profit operating under the auspices of the U.S. Department of Commerce that promotes and supports exporting as a | | way to strengthen Indiana companies, and is also Chairman of the board of One Region, a regional economic development organization. Mr. Johnson’s cyber security and information technology knowledge and record of community engagement and entrepreneurship add strong expertise and value to the Bancorp’s oversight responsibilities and community banking efforts. Mr. Johnson’s experience, as described above, assists in his role as the Chair of the Risk Management and Compliance Committee, and as a member of the Compensation and Benefits Committee and Executive Committee. | |
Class II Directors – Term Expiring at the Annual Meeting of Shareholders in 2026
The Board unanimously recommends that shareholders vote “FOR” the Class III Director nominees set forth above. Proxies solicited by the Board will be so voted, unless shareholders specify otherwise on their proxy cards.
Summary Compensation Table for 2023
Summary Compensation Table for 2023
Summary Compensation Table for 2023
| Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | | Benjamin J. Bochnowski | 2023 | $444,298 | – | $24,238 | $468,536 | | President and Chief Executive Officer and Chief Executive Officer of the Bank and Chairman | 2022 | $398,336 | $103,642 | $49,504 | $551,482 | | Robert T. Lowry | 2023 | $293,343 | – | $25,198 | $318,541 | | Executive Vice President, Chief Operating Officer | 2022 | $251,996 | $52,037 | $34,213 | $338,246 | | Todd M. Scheub | 2023 | $304,641 | – | $12,071 | $316,712 | | Executive Vice President, Chief Revenue Officer; President of Peoples Bank | 2022 | $271,000 | $93,453 | $34,372 | $398,825 | | Peymon S. Torabi(4) | 2023 | $252,580(5) | – | $9,759(6) | $262,339 | | Former Executive Vice President, Chief Financial Officer and Treasurer | 2022 | $216,993 | $42,013 | $28,146 | $287,152 | | Leane E. Cerven(7) | 2023 | $108,683 | $30,839 | $55,976 | $195,498 | | Former Executive Vice President, Chief Risk Officer, General Counsel and Secretary | 2022 | $226,847 | $47,241 | $32,282 | $306,370 |
Summary Compensation Table for 2023
| (1) Includes any amounts earned but deferred, including amounts deferred under the Bank’s 401(k) Plan. Executive officers of the Bancorp who serve as directors do not receive director fees. The amounts in this column also include cash earned in lieu of 2022 and 2023 vacation days on behalf of Messrs. Bochnowski, Lowry, Scheub, and Torabi, and Ms. Cerven, in the amounts of $45,962, $36,307, $25,456, $31,247, and $6,777, respectively. |
Summary Compensation Table for 2023
| (2) The amounts reflected in this column are the aggregate grant date fair market value of stock awards calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in footnote 13 to the Bancorp’s audited financial statements for the fiscal year ended December 31, 2023, included in the Bancorp’s Annual Report on Form 10-K for 2023, and in footnote 13 to the Bancorp’s audited financial statements for the fiscal year ended December 31, 2022, included in the Bancorp’s Annual Report on Form 10-K for 2022. The amount in this column for Ms. Cerven reflects the incremental fair value, calculated in accordance with FASB ASC Topic 718, associated with the Compensation and Benefits Committee’s modifications to outstanding awards held by Ms. Cerven in connection with her retirement. The modification value does not represent or reflect additional awards granted to Ms. Cerven. |
Summary Compensation Table for 2023
| (3) “All Other Compensation” includes, for the personal benefit of the officers, Split Dollar Plan Life Insurance benefits on their lives in the amounts of $118, $185, $124, $107, and $706 for 2023 for Messrs. Bochnowski, Lowry, Scheub, and Torabi, and Ms. Cerven, respectively. Such amount also includes dividends paid on restricted stock awards to Messrs. Bochnowski, Lowry, Scheub, and Torabi, and Ms. Cerven in the amounts of $4,886, $2,760, $4,004, $2,116, and $1,976 for 2023, respectively. Such amount also includes the following perquisites provided to the Named Executive Officers for 2023: B. Bochnowski – auto expenses ($15,872), phone expenses ($1,320), and long-term and short-term disability and life insurance premiums for standard bank benefits ($2,042); R. Lowry – auto expenses ($19,033), phone expenses ($1,320), and long-term and short-term disability and life insurance premiums for standard bank benefits ($1,900); T. Scheub – auto expenses ($4,721), phone expenses ($1,320), and long-term and short-term disability and life insurance premiums for standard bank benefits ($1,902); P. Torabi – auto expenses ($4,393), phone expenses ($1,320), and long-term and short-term disability and life insurance premiums for standard bank benefits ($1,824); and L. Cerven – auto expenses ($52,000), phone expenses ($508), and long-term and short-term disability and life insurance premiums for standard bank benefits ($786). |
Summary Compensation Table for 2023
| (4) On December 1, 2023, Mr. Torabi announced his intent to resign effective as of December 31, 2023 and entered into a transition agreement, general release and covenant not to sue on December 1, 2023 with Bancorp and the Bank (the “Transition Agreement”). The Transition Agreement provides for a lump sum severance payment, a cash payment for accrued but unused vacation and the right to purchase his company assigned vehicle for the Kelly Blue Book Value subject to Mr. Torabi’s continued compliance with the terms of the Transition Agreement. |
Summary Compensation Table for 2023
| (5) Includes $31,247 for accrued and unused vacation days paid to Mr. Torabi pursuant to the Transition Agreement. |
Summary Compensation Table for 2023
| (6) Includes a lump sum severance payment of $36,889 paid to Mr. Torabi pursuant to the Transition Agreement. |
Summary Compensation Table for 2023
| (7) Effective May 5, 2023, Ms. Cerven retired as Executive Vice President, Chief Risk Officer, General Counsel and Corporate Secretary of the Bancorp and the Bank. |
Outstanding Equity Awards at Fiscal 2023 Year-End
Outstanding Equity Awards at Fiscal 2023 Year-End The following table presents information on restricted stock held by the Named Executive Officers as of December 31, 2023:
Outstanding Equity Awards at Fiscal 2023 Year-End
| | Stock Awards | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Date of Full Vesting of Stock Awards | | Benjamin J. Bochnowski | 1,458 | 36,800 | 2/10/24 | | | 2,161 | 54,544 | 2/11/25 | | Robert T. Lowry | 935 | 23,599 | 2/10/24 | | | 1,085 | 27,385 | 2/11/25 | | Todd Scheub | 944 | 23,827 | 2/10/24 | | | 1,077 | 27,183 | 2/11/25 | | | 1,000 | 25,240 | 4/27/25 | | Peymon S. Torabi | 363 | 9,162 | 2/10/24 | | | 388 | 9,793 | 6/1/24 | | | 876 | 22,110 | 2/11/25 | | Leane E. Cerven | – | – | – |
Outstanding Equity Awards at Fiscal 2023 Year-End
| (1) Represents shares of time-vested restricted stock that have a three-year cliff-vesting schedule based on continued employment. |
Outstanding Equity Awards at Fiscal 2023 Year-End
| (2) The market value of these awards is determined by multiplying the number of shares by the closing market price of the Bancorp’s Common Stock on December 29, 2023 (the last trading day of 2023), which was $25.24 per share. |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control
Employment Agreement with Benjamin J. Bochnowski
Employment Agreement with Benjamin J. Bochnowski On August 1, 2017, the Bancorp and the Bank entered into an Employment Agreement with Benjamin J. Bochnowski, the President and Chief Executive Officer of the Bancorp and the Chief Executive Officer of the Bank, which was amended pursuant to a First Amendment to Employment Agreement dated July 27, 2018, a Second Amendment to Employment Agreement dated March 15, 2021, and a Third Amendment to Employment Agreement dated May 3, 2021 (as amended, the “Amended Employment Agreement”). Under the Amended Employment Agreement, Mr. Bochnowski will serve as the President and Chief Executive Officer of the Bancorp and the Chief Executive Officer of the Bank for a base salary of $310,500 per year, subject to increases awarded by the Board of Directors and possible decreases before a change of control of the Bancorp or the Bank based on operating results, or if the Bancorp or the Bank makes similar decreases in the base salaries of its other executive officers. The term of the Amended Employment Agreement is for one year, which will be automatically renewed for additional one-year periods unless written notice of non-renewal is delivered by either party at least 60 days prior to the end of the initial or renewal term. Pursuant to this provision, the Amended Employment Agreement was automatically renewed for an additional one-year period as of August 1, 2023. Mr. Bochnowski also is eligible to receive an annual cash performance bonus as may be set by the Board, he is eligible to participate in any equity-based incentive compensation plan or program approved by the Board from time to time, including the Bancorp’s 2015 Plan, and he is entitled to customary fringe benefits and vacation leave. During the term of the Amended Employment Agreement, the Bank will continue to pay the premiums on life insurance policies insuring Mr. Bochnowski providing for current benefits of approximately $700,000. The Amended Employment Agreement may be terminated by the Bank for “cause,” which is defined in the Amended Employment Agreement as (i) the failure of Mr. Bochnowski to perform his duties under the agreement (other than failure resulting from incapacity due to physical or mental illness), and the failure constitutes gross negligence or willful misconduct, after written demand from the Board; (ii) Mr. Bochnowski’s commission of an act of malfeasance, dishonesty, fraud, or breach of trust against the Bank or any of its affiliates, employees, customers, or vendors resulting or intended to result in his substantial gain or personal enrichment; or (iii) Mr. Bochnowski’s indictment, conviction, or plea of guilty or no contest to a felony or crime of moral turpitude. The Amended Employment Agreement also will immediately terminate upon Mr. Bochnowski’s death or if he becomes disabled (as defined in the agreement). In addition, the Bank may terminate the agreement without cause upon 30 days prior written notice. If the Amended Employment Agreement terminates because Mr. Bochnowski is discharged for cause, or because of his resignation without “good reason” (as defined below), or in the event of his disability, the Bank will pay Mr. Bochnowski (i) his unpaid base salary through the date of termination; (ii) any unpaid bonus, incentive compensation, deferred compensation, and other cash compensation accrued as of the date of termination; and (iii) any unused vacation, expense reimbursements, and other cash entitlements due to him as of the date of termination (collectively, the “Accrued Obligations”). Such payments will be made in a lump sum in cash within 30 days after the date of termination, except that any bonus, deferred compensation, or incentive compensation will be paid in accordance with the terms of the relevant plan as applicable to Mr. Bochnowski. If Mr. Bochnowski is discharged without cause or he resigns for “good reason,” or in the event of his death, then the Bank will pay Mr. Bochnowski, or his heirs or estate as the case may be, (i) the Accrued Obligations; (ii) a lump sum amount equal to 2 times his then-current base salary and most recent annual bonus; (iii) continuation for 18 months of welfare benefits and senior executive perquisites at least equal to those that would have been provided if he remained employed during that period; and (iv) the cost of outplacement services. The payment of the foregoing amounts are contingent upon Mr. Bochnowski timely executing an effective general release and waiver of all known and unknown claims in a form and substance acceptable to the Bancorp. For purposes of the Amended Employment Agreement, “good reason” is defined as any of the following, which has not been expressly consented to by Mr. Bochnowski in writing: (i) assignment of duties by the Board that are inconsistent with his position, authority, duties, or responsibilities as Chief Executive Officer of the Bank or President and Chief Executive Officer of the Bancorp, or any other action by the Bank which results in a substantial diminution of such position, authority, duties, or responsibilities; (ii) a reduction of 10% or more in his then current base salary, unless such reduction is required by law or regulation or is proportionate to a reduction in the base salary of all other executive officers of the Bank; (iii) any failure to re-nominate Mr. Bochnowski as a director of the Bancorp or the Bank, except in connection with or related to the termination of his employment or the expiration of the Amended Employment Agreement; or (iv) any substantial failure by the Bank to comply with any of the provisions of the Amended Employment Agreement; provided that, actions taken by the Board under clause (i) above by reason of Mr. Bochnowski’s inability to perform his responsibilities because of a physical or mental injury or disease will not be deemed “good reason;” provided, further, that, the expiration of the term of the Amended Employment Agreement, or the provision of a notice of non-renewal of the term by either party will not constitute “good reason.” The Amended Employment Agreement provides that if Mr. Bochnowski is discharged without cause or he resigns for good reason in connection with a “change of control” (as defined in the agreement) of the Bancorp or the Bank, Mr. Bochnowski will receive the payments as described above, except that the payment relating to his “most recent annual bonus” will be the most recent annual bonus received by Mr. Bochnowski prior to the change of control, and the benefits continuation provision of the agreement will be those benefits that were provided to Mr. Bochnowski immediately prior to the change of control; provided that, the foregoing provisions will not apply to the severance and benefits provisions above if the benefits Mr. Bochnowski would receive under those provisions would be greater without the application of the limitations described in this paragraph. During a period of one year following his termination of employment, Mr. Bochnowski may not solicit or induce any employees or customers of the Bank to leave the Bank. In addition, Mr. Bochnowski is subject to confidentiality provisions protecting the Bancorp’s and Bank’s confidential business information from unauthorized disclosure.
Employment Agreement with Benjamin J. Bochnowski
Mr. Bochnowski has agreed that during his employment and for a period of one year following his termination of employment, he will not directly for himself or for any third party, solicit, induce, recruit, or cause another person in the employ of the Bancorp or the Bank: (i) who has access to, or possesses, confidential information (as defined in the agreement), trade secrets, or other knowledge regarding the Bancorp or the Bank that could give a competitor of the Bancorp or the Bank an unfair advantage; (ii) who, within the one year period preceding Mr. Bochnowski’s separation from employment, has serviced or established goodwill with the Bancorp’s or the Bank’s customers or clients or acquired confidential information about those customers or clients; or (iii) who reported directly or indirectly to Mr. Bochnowski during his last year of employment, to terminate his/her employment for the purpose of joining, associating, or becoming employed with another person, business organization, or other entity that is in competition with any product or service provided by the Bancorp or the Bank, or any business or activity of the Bancorp or the Bank. Mr. Bochnowski has further agreed that during his employment and for a period of one year following his termination of employment, he will not directly for himself or for any third party, encourage or induce any customer of the Bancorp or the Bank to cease doing business with the Bancorp or the Bank.
Pay Versus Performance
Pay Versus Performance The following table presents information relating to total compensation reported and paid to the Bancorp’s principal executive officer, the average of total compensation reported and paid to the Bancorp’s other Named Executive Officers, the Bancorp’s total shareholder return (“TSR”), and the Bancorp’s net income for the year presented.
Pay Versus Performance
| Year | Summary Compensation Table Total for Principal Executive Officer (PEO) | Compensation Actually Paid to PEO(1) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers(2) | Average Compensation Actually Paid to Non-PEO Named Executive Officers(1)(2) | Value of Initial Fixed $100 Investment Based on Bancorp’s Total Shareholder Return (TSR) | Net Income | | 2023 | $468,536 | $427,264 | $273,273 | $251,770 | $72.62 | $8,380,000 | | 2022 | $551,482 | $502,837 | $332,648 | $305,999 | $81.60 | $15,080,000 | | 2021 | $649,568 | $687,697 | $356,673 | $379,922 | $127.08 | $14,963,000 |
Pay Versus Performance
| (1) The dollar amounts reported in these columns represent the amount of “compensation actually paid” to Mr. Benjamin J. Bochnowski and the average of the other Named Executive Officers as a group, as computed in accordance with Item 402(v) of Regulation S-K. Accordingly, these dollar amounts do not reflect the actual amount of compensation earned by or paid to the Named Executive Officers during the applicable year. To calculate compensation actually paid (“CAP”), the following amounts were deducted from and added to Summary Compensation Table (“SCT”) total compensation: |
Pay Versus Performance
PEO SCT Total to CAP Reconciliation:
Pay Versus Performance
| Year | Salary | Non-Equity Incentive Plan Compensation | All Other Compensation(i) | SCT Total | Deductions from SCT Total(ii) | Additions to SCT Total(iii) | CAP | | 2023 | $444,298 | – | $24,238 | $468,536 | – | ($41,272) | $427,264 | | 2022 | $398,336 | – | $49,504 | $551,482 | $103,642 | $54,997 | $502,837 | | 2021 | $386,734 | $145,103 | $58,682 | $649,568 | $59,049 | $97,178 | $687,697 |
Pay Versus Performance
Average Non-PEO NEOs SCT Total to CAP Reconciliation:
Pay Versus Performance
| Year | Salary | Non-Equity Incentive Plan Compensation | All Other Compensation(i) | SCT Total | Deductions from SCT Total(ii) | Additions to SCT Total(iii) | CAP | | 2023 | $239,812 | – | $25,751 | $273,273 | $7,710 | ($21,503) | $251,770 | | 2022 | $241,709 | – | $32,253 | $332,648 | $58,686 | $32,037 | $305,922 | | 2021 | $224,935 | $60,283 | $35,460 | $356,673 | $35,995 | $59,244 | $379,922 |
Pay Versus Performance
| (i) Reflects “All Other Compensation” reported in the SCT for each year shown. |
Pay Versus Performance
| (ii) Represents the grant date fair value of equity-based awards granted each year and the incremental fair value of any equity award that was modified during each year, if any. We did not report a change in pension value for any of the years reflected in this table; therefore, a deduction from SCT total related to pension value is not needed. |
Pay Versus Performance
| (iii) | Reflects the value of equity calculated in accordance with the SEC methodology set forth in Regulation S-K Item 402(v)(2)(iii)(C) and 402(v)(8) for determining CAP for each year shown. |
Pay Versus Performance
| (2) The non-principal executive officer NEOs reflected in the tables above represent the following individuals for each of the years shown: Peymon S. Torabi, Robert T. Lowry, Leane E. Cerven, and Todd M. Scheub. |
Compensation Actually Paid and Total Shareholder Return (TSR)
Compensation Actually Paid and Total Shareholder Return (TSR) While TSR is not a metric that is directly used in the Bancorp’s compensation programs at this time, the amount of compensation actually paid to Benjamin J. Bochnowski and the average amount of compensation actually paid to the other Named Executive Officers as a group are generally aligned with the Bancorp’s TSR over the three years presented in the table. This alignment exists primarily because (i) neither Benjamin J. Bochnowski nor the other Named Executive Officers earned non-equity incentive plan compensation in 2022 and 2023; and (ii) a significant portion of the total compensation earned by Benjamin J. Bochnowski and the other Named Executive Officers in 2022 and 2021 consisted of equity awards which have reduced in value. As further discussed in the section captioned “2023 Executive Annual Incentive Plan” above, for 2023, Mr. Bochnowski had a target long-term equity incentive opportunity equal to 25% of base salary, and all of the other Named Executive Officers had a target long-term equity incentive opportunity equal to 20% of base salary. For 2022, the Compensation and Benefits Committee set the target long-term equity incentive opportunity at 25% of base salary for Mr. Bochnowski and all of the other Named Executive Officers had a target long-term equity incentive opportunity equal to 20%. Grants under the Executive Incentive Plan become fully vested three years from the grant date of the award. However, the Bancorp did not achieve the performance goals established by the Compensation and Benefits Committee for 2022 under the Executive Incentive Plan, and therefore no cash bonus incentives were earned by or paid to Mr. Bochnowski or the other Named Executive Officers in 2023. No cash bonus incentives were paid to Mr. Bochnowski or the other Named Executive Officers in 2022 as well. Moreover, based on 2022 financial results, the Bancorp’s executive officers agreed not to receive any awards of restricted stock in 2023 under the Executive Incentive Plan. The combination of these factors contributed to the reduced amounts of compensation actually paid to Mr. Bochnowski and the other Named Executive Officers over the three year period presented in the table, which aligns with the reduction in the Bancorp’s TSR over this same period. In addition, as our stock price and TSR declined from December 31, 2022 to December 31, 2023, the value of the equity awards previously granted to our executive officers in prior years, and thus the compensation actually paid to them (as computed in accordance with Item 402(v) of Regulation S-K), also declined. In constructing the Bancorp’s executive compensation program, the Bancorp intends to continue to seek alignment of the interests of management with the long-term interests of the Bancorp’s shareholders.
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income The amount of compensation actually paid to Benjamin J. Bochnowski and the average amount of compensation actually paid to the other Named Executive Officers decreased from 2022 to 2023, while net income also decreased over the same period. This was primarily the result of (i) neither Benjamin J. Bochnowski nor the other Named Executive Officers earning non-equity incentive plan compensation in 2022 and 2023; and (ii) a decline in the Bancorp’s stock price from December 31, 2022 to December 31, 2023, as noted in “Compensation Actually Paid and Total Shareholder Return (TSR)” above. In addition, as further discussed in the section captioned “2023 Executive Annual Incentive Plan” above, for the cash bonus component of the Executive Incentive Plan, the plan uses a target bonus framework and provides for payouts at, above, or below target based on the Bancorp’s results of return on assets, earnings per share growth, and efficiency ratio. Although net income may be positively impacted by all three plan metrics, net income is not a metric that is directly used in the Bancorp’s compensation programs at this time. The Bancorp did not achieve the performance goals established by the Compensation and Benefits Committee for 2022 under the Executive Incentive Plan, and therefore no cash bonus incentives were earned by or paid to Mr. Bochnowski or the other Named Executive Officers in 2023. This contributed to the decline in compensation actually paid to Mr. Bochnowski and the other Named Executive Officers for 2023 (as computed in accordance with Item 402(v) of Regulation S-K), as both the equity compensation and non-equity compensation components of total compensation were sensitive to the decrease in stock price over the period presented in the table. The amount of compensation actually paid to Benjamin J. Bochnowski and the average amount of compensation actually paid to the other Named Executive Officers decreased from 2021 to 2022, while net income increased over the same period. This was primarily the result of the decline in the Bancorp’s stock price from December 31, 2021 to December 31, 2022, and, as noted in “Compensation Actually Paid and Total Shareholder Return (TSR)” above, a significant portion of the total compensation earned by Benjamin J. Bochnowski and the other Named Executive Officers consists of equity awards. In addition, for the cash bonus component of the Executive Incentive Plan, the plan uses a target bonus framework and provides for payouts at, above, or below target based on the Bancorp’s results of return on assets, earnings per share growth, and efficiency ratio. Although net income may be positively impacted by all three plan metrics, net income is not a metric that is directly used in the Bancorp’s compensation programs at this time. For 2022, the Bancorp’s executives agreed not to receive any performance-based cash incentive payout awards under the Executive Incentive Plan. This also contributed to the decline in compensation actually paid to Mr. Bochnowski and the other Named Executive Officers for 2022 (as computed in accordance with Item 402(v) of Regulation S-K) despite the increase in net income over the same time period, as both the equity compensation and non-equity compensation components of total compensation were sensitive to the decrease in stock price over the period presented in the table.
Compensation of Directors for 2023
Compensation of Directors for 2023 The following table provides information concerning the compensation paid to or earned by the members of the Bancorp’s Board of Directors (except for Mr. Benjamin Bochnowski, who does not receive director’s fees) for their service as directors for 2023, whether or not deferred:
Compensation of Directors for 2023
| Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2)(3) | All Other Compensation ($)(4) | Total ($) | | David A. Bochnowski(5) | – | $28,067 | $196,653(6) | $224,720 | | Donald P. Fesko, O.D., FACHE(7) | $31,500 | $11,000 | – | $42,500 | | Danette Garza, J.D., CPA(8) | $31,750 | $11,000 | – | $42,750 | | Joel Gorelick | $31,750 | $11,000 | – | $42,750 | | Amy W. Han, Ph.D | $29,750 | $11,000 | – | $40,750 | | Robert E. Johnson, III | $29,750 | $11,000 | – | $40,750 | | Kenneth V. Krupinski | $30,000 | $11,000 | – | $41,000 | | Anthony M. Puntillo, D.D.S., M.S.D(9) | $41,750 | $11,000 | $21,450 | $74,200 | | James L. Wieser, J.D.(10) | $28,708 | $11,000 | $17,119 | $56,827 | | Robert W. Youman | $28,750 | $11,000 | – | $39,750 |
Compensation of Directors for 2023
| (1) Information on Mr. Benjamin Bochnowski, who is also a director, is included in the Summary Compensation Table above. |
Compensation of Directors for 2023
| (2) The amounts reflected in this column represent the aggregate grant date fair value of each stock award calculated in accordance with FASB ASC Topic 718. For restricted stock awards, the grant date fair value is calculated by multiplying the number of shares by the closing price of the Bancorp’s Common Stock on the grant date. Under the Bancorp’s Director Compensation Policy, each non-employee director will receive an equity award of the Bancorp’s Common Stock in an amount equal to approximately $11,000 for service provided during the prior fiscal year. The number of shares to be granted to each non-employee director is calculated by dividing $11,000 by the closing market price of the Bancorp’s Common Stock on the date of grant, which was $36.73 on February 6, 2023. The Bancorp did not issue any fractional shares resulting from this calculation to the non-employee directors. As a result, the Bancorp made awards under the 2015 Plan on February 6, 2023 of 299 shares of Common Stock to each of the non-employee directors, which were fully vested upon grant. See the table beginning on page 5 under the heading “Proposal 1 – Election of Directors” and the footnotes to that table for information regarding the number of shares of Common Stock held by each current director as of March 22, 2024. |
Compensation of Directors for 2023
| (3) As of December 31, 2023, the following directors had unvested shares of restricted stock: Ms. Garza – 148 shares, Mr. Gorelick – 296 shares, Dr. Han – 247 shares, Mr. Johnson 173 shares, Mr. Krupinski – 296 shares, Dr. Puntillo – 253 shares, and Mr. Wieser – 234 shares. |
Compensation of Directors for 2023
| (4) The total perquisites and other personal benefits for each of Mr. Fesko, Ms. Garza, Mr. Gorelick, Dr. Han, Mr. Johnson, Mr. Krupinski and Mr. Youman amounted to less than $10,000. |
Compensation of Directors for 2023
| (5) Mr. David Bochnowski retired from the Board effective June 30, 2023. |
Compensation of Directors for 2023
| (6) This amount reflects (i) $77,646, representing the base salary earned by Mr. D. Bochnowski for 2023 pursuant to the terms of his employment agreement; (ii) $2,831, representing Split Dollar Plan Life Insurance benefits on the life of Mr. D. Bochnowski; (iii) $2,107, representing dividends paid on restricted stock awards to Mr. D. Bochnowski; (iv) $10,153, |
Compensation of Directors for 2023
| representing premiums paid by the Bank for term life insurance on Mr. D. Bochnowski’s life pursuant to his employment agreement described above; (v) $70,641, representing auto expenses; (vi) $711, representing phone expenses; and (viii) $23,594 as a retirement gift based on Mr. D. Bochnowski’s years of service. Mr. D. Bochnowski elected the Bank’s employee and spouse medical benefit. The Bank’s paid portion of the medical coverage in 2023 was $8,969, and is also reflected in the amount in this column for Mr. D. Bochnowski. |
Compensation of Directors for 2023
| (7) Mr. Fesko resigned from the Board effective December 14, 2023. |
Compensation of Directors for 2023
| (8) Ms. Garza elected the Bank’s single medical benefit effective July 31, 2015. The Bank’s paid portion of the medical coverage in 2023 was $6,942. |
Compensation of Directors for 2023
| (9) Dr. Puntillo elected the Bank’s family medical benefit effective May 1, 2013. The Bank’s paid potion of the medical coverage in 2023 was $21,450. |
Compensation of Directors for 2023
| (10) Mr. Wieser elected the Bank’s family medical benefit effective January 1, 2016. The Bank’s paid portion of the medical coverage in 2023 was $17,119. |
Compensation of Directors for 2023
The Compensation and Benefits Committee is responsible for approving, subject to review by the Board of Directors as a whole, the compensation program for our non-employee directors. In that function, the Compensation and Benefits Committee considers market and peer company data regarding director compensation and evaluates the Bancorp’s director compensation practices in light of that data and the characteristics of the Bancorp as a whole, with the assistance of its independent compensation advisor. In November of 2020, the Board, acting upon the recommendation of the Compensation and Benefits Committee, approved the Non-Employee Director Compensation Policy (the “Director Compensation Policy”), which was effective January 1, 2021. On March 16, 2022, the Board, acting upon the recommendation of the Compensation and Benefits Committee, approved a revision to the Director Compensation Policy to, among other changes, provide for an annual cash retainer for the Lead Independent Director. Total cash fees paid to the non-employee directors for the year ended December 31, 2023, were $283,708 in the aggregate. Under the Director Compensation Policy, each non-employee director receives an annual cash retainer of $28,500 for the director’s service on the Board. The Lead Independent Director receives an additional cash retainer of $12,000 for his or her service on the Board. Each non-employee director who serves as the chair of a committee receives an additional annual cash retainer as follows: Chair of the Risk Management and Compliance Committee – $3,500; Chair of the Compensation and Benefits Committee – $3,000; the Chairs of all other Board committees – $2,500. Each non-employee director may elect to have all or a portion of his or her cash compensation deferred in accordance with the provisions of the Bancorp’s Amended Post 2004 Unfunded Deferred Compensation Plan for Directors. The Director Compensation Policy also provides that each non-employee director may receive an equity award of the Bancorp’s Common Stock in an amount equal to approximately $11,000 for service provided during the prior fiscal year. If made, such awards will be granted in February of each year and vest immediately upon grant. All equity awards made pursuant to the Director Compensation Policy are granted under the 2015 Plan. For 2024, the directors did not receive any equity awards. The Director Compensation Policy further provides that each non-employee director is entitled to participate in medical and vision health insurance coverage under the Bancorp’s group health insurance plan on the same terms and conditions as those applicable to the Bancorp’s employees. In addition, all costs and expenses related to attendance at approved seminars/conferences (including travel and attendance by spouses) are reimbursable by the Bancorp.