DEF 14A of Princeton Bancorp, Inc.
Filed Mar 29, 2024 · FY20230001193125-24-082050
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The board of directors is elected by the shareholders to represent their interest in the Company. Our board of directors works closely with executive management and oversees the development and execution of our business strategy.
Board Composition
Board Composition The Company is managed by our board of directors. Our articles of incorporation provide that the number of directors constituting the entire board of directors will not be less than three nor more than 25, and further provide that the exact number will be fixed from time to time by our board of directors. The board of directors has fixed the number of directors constituting the entire board of directors at eight.
Nomination Process
Nomination Process The board of directors has a nomination committee that makes reports and recommendations to the board from time to time, but no less frequently than annually, regarding the size of the board and board nominees. While the Bank does not have a formal diversity policy for membership on the board of directors, the Bank currently has two “diverse” directors as defined in the board diversity rules adopted by Nasdaq, Judith Giacin and Stephen Shueh. When a vacancy occurs on the board, the nomination committee and the full board will seek directors who represent a mix of backgrounds and experiences that will enhance the quality of the board’s deliberations and decisions. The nomination committee will consider, among other factors, diversity with respect to viewpoint, skills, experience and community involvement in its evaluation of candidates for board membership. The current members of the board of directors have a diversity of experience and a wide variety of backgrounds, skills, qualifications, and viewpoints that strengthen their ability to carry out their oversight role on behalf of our shareholders. The following matrix is provided to illustrate the knowledge, skills and experience of the directors that serve on our board. The matrix does not encompass all of the knowledge, skills and experience of our directors, and the fact that a particular knowledge, skill or experience is not listed does not mean that a director does not possess it. In addition, the absence of a particular knowledge, skill or experience with respect to any of our directors does not mean the director in question is unable to contribute to the decision-making process in that area. However, the matrix indicates a specific area of focus or expertise that the directors bring to our board. More information on each director’s qualifications and background can be found in the director biographies below. Our nomination committee regularly review the attributes required of board members in order to better facilitate our long-term goals and operational performance, enhance our corporate culture and promote diversity and inclusiveness at our company. The following matrix shows those skills and the number of directors having each skill, highlighting the diversity of skills on the board of directors, as well as age and board tenure information.
Nomination Process
| Director Experience | Number of Directors | Director Tenure | Number of Directors | | Business Generation | 8 | Less than Eight Years | 1 | | Mergers and Acquisitions | 1 | Nine to Fifteen Years | 1 | | Public Company Executive | 2 | Greater than Fifteen Years | 6 | | Accounting/Finance | 6 | | | | Branding/Marketing | 3 | Director Age | | | Regulatory | 3 | 45 to 55 | 1 | | Real Estate | 5 | 55 to 65 | 1 | | Asset/Liability Management | 6 | 65 to 75 | 2 | | Tech and Cyber | 1 | 75 and Over | 4 | | Community Reinvestment | 5 | | |
Nomination Process
The following matrix summarizes certain demographic characteristics of the board of directors:
Nomination Process
| Board Diversity Matrix (As of March 4, 2024) | | | | Total Number of Directors | 8 | | | Part I: Gender Identity | Female | Male | | Directors | 1 | 7 | | Part II: Demographic Background | | | | Asian | 0 | 1 | | Native Hawaiian or Pacific Islander | 0 | 1 | | White | 1 | 6 | | Two or More Races or Ethnicities | 0 | 1 | | LBGTQ+_ | 0 | |
Nomination Process
The board of directors has nominated the eight director candidates identified in this proxy statement, and it is intended that the proxies solicited by the board of directors will be voted “FOR” the election of each of the board of directors’ director nominees (unless the shareholder otherwise directs). If, for any reason, any board of directors’ director nominee becomes unavailable for election or service on the board of directors, the proxy solicited by the board of directors will be voted for such substituted director nominee as is selected by the board of directors. The board of directors has no reason to believe that any of the director nominees are not available or will not serve if elected.
Director Nominees
Director Nominees Each director nominee has been nominated to serve until the 2025 Annual Meeting of shareholders, and until his or her successor is elected and qualified. Each nominee is an incumbent director of the Company. The names of our directors and certain information about them are set forth below. Richard J. Gillespie, Chairman. Richard J. Gillespie is the retired Founder and President of Gillespie, Inc. Started in 1973, the agency grew to become one of the 75 largest advertising agencies in the United States with annual billings in excess of $200 million. The agency was acquired by McCann-Erickson in 1998 and Mr. Gillespie served on both the North American and Worldwide Boards of the firm’s direct marketing division before retiring in 2005. Highly experienced in financial services marketing, Mr. Gillespie has worked with many major banks and financial services companies including Capital One, The Bank of New York, Household and MBNA, to name a few. He was elected to the New Jersey Advertising Hall of Fame. He also served as Vice Chairman and later Chairman of MediGuide America, a health services company with clients in over 60 countries, from 2006 until it was sold in 2023. He has also served as President of RG Development, a real estate development firm with interests in New Jersey, since 2006. Richard Gillespie is 79 years old and has served on our board of directors since 2007. Mr. Gillespie is qualified to serve as a director due to his previous board experience, his familiarity with the financial services industry and his business ties to our market. Stephen Distler, Vice Chairman. Stephen Distler spent 25 years in the financial services industry. From 1984 to 2002 he worked at Warburg Pincus, LLC, one of the world’s pre-eminent private equity investment firms, principally serving as Managing Director and Treasurer. He is an active venture investor and a member of the board of directors of Teachers Support Network, Inc., a for-profit education company. Since 2008, he has been co-owner of Elements, a restaurant in Princeton, New Jersey. Stephen Distler is 70 years old and has served on our board of directors since 2007. Mr. Distler is qualified to serve as a director due to the broad experience garnered during a lengthy career in the financial services industry, his business evaluation and development skills and his ties to the local business community. Ross Wishnick, Vice Chairman. Ross Wishnick was a homebuilder for 25 years specializing in the development of active adult communities. He was a senior executive with Crestwood Village, Inc. (1978-1997), a New Jersey developer and one of the pioneers in that segment of the homebuilding industry. In addition, Mr. Wishnick was a founding director of First Washington State Bank headquartered in Windsor, New Jersey, and served as such from 1988 to 2005. He served on the loan, personnel and technology committees during his tenure. Mr. Wishnick was a member of (2009 to 2020) and chaired the Princeton Human Services Commission, which provides services to youths and seniors in general assistance and advocacy for this segment of the local population. As part of this Commission, Mr. Wishnick took the lead on founding Send Hunger Packing Princeton (2013-present), which provides supplemental weekend food for low resource students. Mr. Wishnick was also a member of the advisory board of the Princeton Education Foundation (PEF) (2010-2013). PEF supports excellence in Princeton Regional Schools by contributing raised funds for capital improvements, educational programs and teacher support. Mr. Wishnick is also a member and past treasurer of the Princeton Democratic Municipal Committee (PDMC) (2008-present) which is an elected position. In March 2021, Mr. Wishnick and his son opened a Jersey Mike’s Subs franchise in Massachusetts, and have subsequently been approved to open three additional locations. Ross Wishnick is 72 years old, has served on our board of directors since 2007 and currently serves as Vice Chairman. Mr. Wishnick is qualified to serve as a director due to his commercial real estate development skills, his previous bank director experience and his ties to the local community. Edward J. Dietzler. Edward Dietzler currently serves as the Company’s and the Bank’s president and chief executive officer. Mr. Dietzler joined the Bank in September 2009 as Senior Vice President of Corporate Development and was promoted to Executive Vice President and Chief Operations Officer in March 2011. He became Acting President in January 2012 and was promoted to President of the Bank in May 2012. In June 2012, Mr. Dietzler was appointed to the board of directors of the Bank. In January 2018, he was named chief executive officer of the Bank. He has served as the president and chief executive officer of the Company since its formation in February 2022. Prior to coming to the Bank, he was the Managing Director at Bear Stearns Bank and Trust in Princeton, New Jersey from November 2007 through August 2008. While at Bear Stearns he was responsible for all aspects of banking and mortgage operations. From May 2003 through October 2007, he was with Yardville National Bank as First Senior Vice President of Capital Markets, where he oversaw the balance sheet and capital management. Prior to that, Mr. Dietzler was with GMAC Mortgage as the Director of Risk Management from December 1997 through May 2003 and was responsible for derivative trading and balance sheet management. Mr. Dietzler is 59 years old. Mr. Dietzler is a graduate of Widener University where he earned a Master’s degree in Business Administration. Throughout his career, Mr. Dietzler has been active in numerous community, charitable and educational organizations in the local area. Mr. Dietzler is qualified to serve as a director due to his role as the president of the Bank, his business development skills, his familiarity with our operations and his ties to our market. Judith A. Giacin. Judith A. Giacin is a founding member of the Certified Public Accounting firm Horvath & Giacin, P.C. She has been a Certified Public Accountant for over 40 years helping clients to achieve both personal and corporate financial goals. She is currently a member of the New Jersey Society of Certified Accountants and a member of the American Institute of Certified Public Accountants. Ms. Giacin earned her Masters of Business Administration (MBA) from Rutgers University. Judith A. Giacin is 77 years old and has served on our board of directors since 2007. Ms. Giacin is qualified to serve as a director due to her expertise and skills as a Certified Public Accountant, her familiarity with our operations, her business ties to our market and her involvement in local community activities. The board of directors has determined that Ms. Giacin is an “audit committee financial expert,” as defined in the regulations of the SEC.
Director Nominees
Robert N. Ridolfi, Esq. Robert N. Ridolfi is the managing member of the law firm Robert N. Ridolfi, LLC, specializing in land use and real estate law. Since 1974, he has been both a licensed attorney in the State of New Jersey and a member of U.S. District Court, District of New Jersey. He is a 1970 graduate of Princeton University and a 1974 graduate of the University of Denver’s College of Law. Since 1974, Mr. Ridolfi has been a member of both the New Jersey Bar Association and the Mercer County Bar Association, where for several years he served as Chairman of the Real Estate Section. In 2014, he was appointed a member of the Mercer County Judicial and Prosecutorial Due Diligence Committee. Mr. Ridolfi has served as the attorney for the Mercer County Planning Board since 2007. Mr. Ridolfi has also been a Life Governor of the Board of Trustees for the Princeton Charter Club since 2002. He has had significant experience in complex residential and commercial financing transactions. Throughout his career, Mr. Ridolfi has been active in numerous communities as well as charitable and educational organizations in the Hopewell, New Jersey area. Mr. Ridolfi was recently elected to the Board of Directors of the Trumbull Atwood Association, the governing body of a residential condominium development in Stonington, Connecticut. Mr. Ridolfi is 76 years old and has served on our board of directors since 2007. Mr. Ridolfi is qualified to serve as a director due to his skills in the area of real estate law, his familiarity with our operations and his deep ties to the local community. Stephen K. Shueh. Since 1997, Stephen K. Shueh has been a Managing Partner of Roundview Capital, a money management firm for high net worth families and institutions. He is also a Partner in Interlock Capital, and serves on the board of directors of Greyscale AI, a Series A Silicon Valley based company. Mr. Shueh received an A.B. with honors from Princeton University, and earned an M.B.A. from The Wharton School of the University of Pennsylvania where he was the recipient of the Dean’s Award. He helped create, and currently serves on, the investment committee to manage the endowment for Grounds for Sculpture, which was founded in 1992 by artist and philanthropist John Seward Johnson II. He has chaired the Endowment Management Committee for the United Way of Greater Mercer County since 2009. He has been active with the Princeton YMCA since 2003, and served as Chairman of the Joint Trustees of the Princeton YMCA/YWCA in 2015. He served on the board of the Montgomery Basketball Association from 2014 to 2024. He has served as Vice President of the Montgomery Township Education Foundation since 2013. In 2016, he joined the Montgomery Township Recreation Committee to help manage the township’s significant investments in its parks and recreational facilities. He currently serves as Chairman of the Recreation Committee. He served on the board of directors for the various funds managed by Lightbox Ventures, an early-stage venture firm in India, from 2019 to 2022. Stephen Shueh is 48 years old and has served on our board of directors since 2008. Mr. Shueh is qualified to serve as a director due to his business development skills, his experience as a director, his familiarity with our operations, and his ties to our market. Martin Tuchman. Martin Tuchman has served as the Chairman and Chief Executive Officer of The Tuchman Group, a firm with holdings in real estate, banking and international shipping, since 2007. He has served on the Board of Directors of FTAI Aviation Ltd., a NASDAQ listed company, since November 2022. He served on the Board of Directors of Fortress Transportation and Infrastructure, LLC, a New York Stock Exchange listed company, from May 2015 to November 2022. Mr. Tuchman served as Vice Chairman of First Choice Bank in Lawrenceville, New Jersey from December 2008 to April 2015, and served as Chairman of First Choice Bank from April 2015 to December 2016. He served on the Board of Directors of Yardville National Bancorp from 2000 to 2007. He served on the Board of Directors of Horizon Lines, Inc. from November 2011 to May 2015 and on the Board of Directors of SeaCube Container Leasing Ltd., from March 2011 to April 2013. Mr. Tuchman holds a Bachelor of Science degree in Mechanical Engineering from the New Jersey Institute of Technology and a M.B.A. from Seton Hall University. Mr. Tuchman is 83 years old and joined our board of directors in September 2017. Mr. Tuchman is qualified to serve as a director due to his previous board experience, his experience as a bank director, his extensive business leadership experience and his ties to our market. Except as described above with regard to Mr. Tuchman and FTAI Aviation, Ltd., no director of the Company is also a director of a company having a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, referred to as the “Exchange Act,” or subject to the requirements of Section 15(d) of such act, or any company registered as an investment company under the Investment Bank Act of 1940. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF ITS NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY, EACH TO SERVE UNTIL THE 2025 ANNUAL MEETING OF SHAREHOLDERS, AND UNTIL HIS OR HER SUCCESSOR IS ELECTED AND QUALIFIED.
ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION
| • | Our executive compensation program is designed to attract and retain executive officers by offering a competitive salary, the potential for short-term and long-term incentive compensation awards (cash and stock), tax-qualified retirement benefits and health and welfare benefits. |
ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICER COMPENSATION
| • | The Company’s compensation practices have not and do not include the abusive and short-term practices that have been prevalent at some large financial institutions. The Company’s compensation program does not encourage excessive and unnecessary risks that would threaten the value of the Company. |
BOARD OF DIRECTORS AND COMMITTEES
Based upon its review and the considerations and discussions referenced above, the audit committee recommended to the board of directors that the Company’s audited consolidated financial statements be included in the Company’s annual report on Form 10-K for the year ended December 31, 2023. Submitted by the Audit Committee: Judith A. Giacin (chair) Robert N. Ridolfi Richard J. Gillespie Martin Tuchman March 19, 2024 Compensation Processes and Procedures The compensation/HR committee is organized and conducts its business pursuant to a written charter adopted by the board of directors, along with a written compensation philosophy that is reviewed annually by the compensation/HR committee. A copy of the current charter of the compensation/HR committee is posted under the “Governance Documents” tab on the “Investor Relations” page of the Bank’s website at www.thebankofprinceton.com. At least annually, the compensation/HR Committee reviews and reassesses the adequacy of its charter and recommends any proposed changes to the full board of directors for approval as necessary. The compensation/HR Committee Charter requires the committee to oversee and administer the Company’s benefit plans and policies, as well as recommend to the board of directors the remuneration for our named executive officers and directors. Each year, the compensation/HR Committee reviews and evaluates the compensation of the directors and the total compensation package for the named executive officers. The evaluation performed by the compensation/HR Committee involves gathering relevant compensation and benefit information through market data and trends, as well as best practices in the banking industry. The compensation/HR Committee reports the results of its evaluation, along with compensation and benefit recommendations, to the board of directors, which makes the final determination on all compensation decisions regarding the directors and the named executive officers. The compensation/HR Committee also reviews aggregate salary and bonus budget information for non-executive employees. During 2023, when evaluating the competitiveness and effectiveness of the Company’s compensation program, the compensation/HR Committee considered compensation data generated by S&P Global Market Intelligence from financial institutions located in New Jersey, Maryland and Pennsylvania ranging in asset size from $1 billion and $2.6 billion, the Pearl Meyer competitive assessment dated November 2021 and the New Jersey Bankers Association Executive Salary Survey which provides market data for New Jersey financial institutions that participate in the survey. The market data included: base salary ranges, short-term and long-term equity and cash incentives and total executive compensation. In light of the individual performance of each named executive officer and the compensation data reviewed, the compensation/HR Committee set 2023 base salaries for Messrs. Dietzler and O’Donnell and Ms. Adkins at $600,000, $500,000 and $295,000, respectively. In recognition of the Company’s strong financial performance in 2023 and to further the Company’s long-term incentive program, our named executive officers were awarded restricted stock units in January 2024. The restricted stock units were awarded under the terms of the Company’s 2018 Equity Incentive Plan. The restricted stock unit awards (and related dividend equivalents) vest ratably over a three-year period. Dividend equivalents associated with any restricted stock unit award are not distributed until the underlying award vests. In the event an executive terminates employment for reasons other than death, all unvested restricted stock units will be forfeited. In the event of death, all unvested restricted stock units will vest. In the event of a change in control (as defined in the 2018 Equity Incentive Plan) all unvested restricted stock units will vest. See “– Summary Compensation Table” for the restricted stock unit awards granted to our named executive officers in 2023. In 2023, the compensation/HR committee continued to structure the Company’s executive compensation program based on the following objectives set forth in the Company’s compensation philosophy:
BOARD OF DIRECTORS AND COMMITTEES
| 3. | Structure incentive compensation plans and arrangements around the attainment of individual and Company performance goals and the balance of an appropriate mix of risk and return; and |
BOARD OF DIRECTORS AND COMMITTEES
| 4. | Maintain double trigger employment and change in control agreements (“executive agreements”) where necessary and appropriate to insure a stable executive management team. |
BOARD OF DIRECTORS AND COMMITTEES
| • | performance-based cash-based short-term incentives; |
BOARD OF DIRECTORS AND COMMITTEES
| • | long-term equity-based incentives (restricted stock units); |
BOARD OF DIRECTORS AND COMMITTEES
| • | employment agreements; and |
BOARD OF DIRECTORS AND COMMITTEES
| • | Discretion provided to the compensation/HR committee to set targets, monitor performance, and determine final incentive award payouts to the named executive officers; |
BOARD OF DIRECTORS AND COMMITTEES
| • | Short-and long-term incentive programs that provide a balanced mixture of cash and equity compensation; |
BOARD OF DIRECTORS AND COMMITTEES
| • | Multi-year service-based vesting conditions with respect to the grant of Restricted Stock Units (RSUs) and its supplemental executive retirement plan; and |
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock awards ($)(1) | Nonequity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All other compensation ($)(4) | Total ($) | | Edward J. Dietzler, | 2023 | 600,000 | — | 281,428 | 329,315 | 233,349 | 33,125 | 1,477,217 | | President and Chief Executive Officer | 2022 | 525,000 | — | 202,192 | 331,541 | 216,619 | 38,842 | 1,314,194 | | Daniel O’Donnell, | 2023 | 500,000 | — | 228,177 | 274,429 | 152,447 | 36,086 | 1,191,139 | | Executive Vice President, General Counsel and Chief Operating Officer | 2022 | 460,000 | — | 173,312 | 290,493 | 141,707 | 32,101 | 1,097,613 | | Stephanie Adkins, | 2023 | 290,000 | — | 68,456 | 122,318 | — | 24,212 | 504,987 | | Executive Vice President and Chief Lending Officer | 2022 | 265,000 | — | 63,543 | 124,816 | — | 24,281 | 477,640 |
Summary Compensation Table
| (1) This column reflects the total grant date fair value for all restricted stock unit awards granted during the years ended December 31, 2023 and 2022, as applicable. The assumptions used in the calculation of these amounts are described in the Notes to our consolidated financial statements, which are included in the annual report accompanying this proxy statement. |
Summary Compensation Table
| (2) Represents amounts awarded under the Bank’s Management Incentive Plan. |
Summary Compensation Table
| (3) For each year, the amounts represent the change in the actuarial present value of the named executive officer’s accumulated benefit under his Supplemental Executive Retirement Plan (“SERP”) as computed on the pension plan measurement dates used for financial statement reporting purposes for the Company’s audited financial statements in the applicable fiscal year. |
Summary Compensation Table
| (4) Compensation in this column includes the economic benefit accruing to each named executive officers under life insurance policies on his or her life, any automobile allowance, the Bank’s matching contribution to accounts under its 401(k) tax-deferred defined contribution retirement plan, cell phone allowances, cash contributed by the Bank for the executive’s account under the Bank’s Employee Stock Ownership Plan and used to purchase shares of the Company’s common stock, and/or club membership dues. |
Summary Compensation Table
Employment and Other Agreements Employment Agreements The Bank maintains an employment agreement with each of Mr. Dietzler, Mr. O’Donnell and Ms. Adkins (each, an “Agreement”). Each Agreement provides the officer with an annual base salary, subject to discretionary increases by the Bank, and entitles him or her to participate in any officer benefit, incentive compensation plans and arrangements available to officers and executive officers of the Bank. The current 2024 base salaries for Messrs. Dietzler and O’Donnell and Ms. Adkins are $650,000, $540,000 and $304,500, respectively. Under each Agreement, the officer’s employment may be terminated for specified events of Cause (as defined in the Agreement), in which case the parties’ obligations under the Agreement will cease. If the officer’s employment is terminated without Cause or if the officer terminates his or her employment for Good Reason (as defined in the Agreement) and there has not been a Change in Control, the Bank will pay the officer a cash severance payment. Under the terms of the Dietzler and O’Donnell employment agreements, the cash severance payment would be equal to the sum of two times: (i) the officer’s then base salary and (ii) the officer’s three year average of his highest annual bonus paid (cash or stock) during the term of the Agreement. Under terms of the employment agreement with Ms. Adkins, the cash severance payment would be equal to her then current annual base salary. Under the Agreement, if within twenty-four months of a Change in Control the Bank or its successor terminates an officer’s employment for reasons other than Cause, or the officer terminates his or her employment for Good Reason, the Bank (or its successor) will pay Messrs. Dietzler and O’Donnell, a lump sum cash severance payment equal to the sum of three times: (i) the officer’s then base salary and (ii) the officer’s three year average of his highest annual bonus paid (cash or stock) during the term of the Agreement and Ms. Adkins will receive a Change in Control lump sum cash severance payment equal to two times her base salary. In addition to the cash payment, the Bank or its successor will provide the officer and his or her eligible dependents, at no cost to him, with continued health and medical benefits for eighteen months following termination of employment. If during the term of the Agreement, the officer voluntarily terminates his or her employment without Good Reason, retires or dies, the obligations of the parties under the Agreement will cease, unless the officer dies or becomes disabled after providing notice of termination for Good Reason, in which case, the officer, or his or her estate, as the case may be, will be entitled to the amounts described above. During his or her employment and for a period of six months after a termination of employment, each Agreement prohibits the officer from competing with the Bank, soliciting the Bank’s customers and borrowers, and soliciting or endeavor to entice away from the Bank certain types of Bank employees within any county in which the Bank has a branch or loan production office. The Dietzler and O’Donnell employment agreements each provide for the reduction of any Change in Control payments to the officer to the extent necessary so that he will not receive “excess parachute payments” under Section 280G of the Internal Revenue Code, which would result in the imposition of an excise tax under Section 4999 of the Internal Revenue Code, but only if, by reason of such reduction, the “net after-tax benefit” (as defined in the Agreement) to the officer will exceed the net after-tax benefit if such reduction were not made. Ms. Adkins’ employment agreement provides that the payments and benefits she will receive in the event of a Change in Control will be reduced to $1.00 less the value of three times her base amount as determined under Section 280G of the Internal Revenue Code (to the extent necessary to avoid excess parachute payments). Supplemental Executive Retirement Plan The Bank maintains a SERP for the benefit of Mr. Dietzler and Mr. O’Donnell. The board of directors believes that Mr. Dietzler and Mr. O’Donnell are critical to the successful execution of the Bank’s strategic plan, and therefore the Bank implemented the SERP to both incentivize and retain these executives. The SERP provides these executives with supplemental retirement income payable in the form of a life annuity. Upon separation of service upon the attainment of age 65, the annual retirement benefit for Messrs. Dietzler and O’Donnell is $120,728 and $67,037, respectively. SERP benefits vest ratably over a four-year period that commenced in 2021. The executives will also fully vest in their SERP benefits in the event of a “Change in Control” (as defined in the SERP) of the Bank. In the event an executive experiences a separation from service for “Cause” (as defined in the SERP), the executive will forfeit his entire SERP benefit, regardless of vesting. In the event an executive has a separation from service prior to full vesting for reasons other than Cause or a Change in Control, the executive will receive a benefit equal to the vested portion of his account balance in the SERP, which is the amount accrued by the Bank under generally accepted accounting principles as of such date (the “Account Balance”.) Vested benefits are distributed upon: (i) the executive’s death; or (ii) the later of the executive’s attainment of age 65 (normal retirement age) or separation from service. In the event an executive dies while in active service with the Bank, his beneficiary will receive a lump sum payment equal to his Account Balance in the SERP at the time of death. In the event an executive dies while in pay status but before receiving 180 monthly payments, his beneficiary will receive the remaining Account Balance. If an executive has already received 180 monthly payments at the time of his death, his beneficiary will not be entitled to a death benefit. The SERP also provides that in connection with a Change in Control, a rabbi trust will be formed and the annuity placed in the trust. See “ – Summary Compensation Table – Change in Pension Value and Non-qualified Deferred Compensation Earnings” for aggregate change in the actuarial present value of the accumulated benefit. Equity Incentive Plans The Company’s 2018 Equity Incentive Plan (“2018 Plan”) is the foundation for the Company’s long-term incentive compensation program. The 2018 Plan expands the types of equity-based awards that may be granted to employees, directors, consultants, and other service providers. The 2018 Plan permits the board of directors to grant stock options, restricted stock awards and restricted stock units (“RSUs”). The shares subject to or related to options, restricted stock awards and restricted stock units under the 2018 Plan are authorized and unissued shares of our common stock. The maximum number of shares that may be issued upon the exercise of options or the grant of restricted stock awards or RSUs under the 2018 Plan is 328,910. If and to the extent awards granted under the 2018 Plan terminate, expire, cancel or are forfeited without being exercised and/or delivered, the shares subject to such awards will again be available for grant under the 2018 Equity Plan. The 2018 Plan gives the compensation/HR committee and the board of directors the authority to determine the vesting schedule and other conditions of any equity-based award granted under the 2018 Plan.
Summary Compensation Table
The Company’s long-term incentive program grants the named executive officers Restricted Stock Units based on the Company’s performance for the applicable fiscal year. All long-term incentive awards vest ratably over a three (3) year period. The value of each RSU grant is determined as a percentage of each named executive officer’s base salary. In addition, the Bank’s short-term incentive plan (Management Incentive Plan), provides the compensation/HR committee with the discretion to pay annual bonuses in cash or stock. In addition to the 2018 Plan, the Company maintains additional equity plans that have equity awards outstanding; however no further awards maybe granted under such plans. See Note 15 - Stock-Based Compensation to our consolidated financial statements, which is included in the annual report accompanying this proxy statement, for additional information regarding our equity awards, including the approach and assumptions used to value these awards. All outstanding options under these plans, and all outstanding restricted stock awards and RSUs under the 2018 Plan, will become fully vested and exercisable upon a change in control of the Company. The Company made no stock option grants to its named executive officers or its directors in 2023. Management Incentive Plan. The Bank maintains the Management Incentive Plan to provide selected members of management, including our named executive officers with a short-term cash-based award in recognition for their collective and individual contributions to the success of the Bank. The plan focuses on performance measures that are critical to the Bank’s growth, profitability and maintenance of a strong capital position and provides each participant with various stated incentive opportunities as a percentage of base salary. The 2023 performance measures were: (1) net income (40% weighting), (2) net loan funding (10% weighting), (3) return on average assets (20% weighting) and (4) non-accrual + REO/total assets (20% weighting). While the primary focus of the plan in 2023 was on the Bank’s financial performance, the plan also included a qualitative component with a 10% weighting. The qualitative component consisted of risk management, governance and strategic initiatives. Management’s accomplishments in these areas were as follows:
Summary Compensation Table
| Qualitative Measure | Assessment | | Risk Management | Management established and continued to monitor significant policies and programs to measure, monitor and manage the Bank’s risk exposures and business activities. In addition, management continued its commitment to protecting client information and devoted significant time and attention to information security / cybersecurity risks through investment in cybersecurity software and training. | | Governance | Management focused on corporate responsibility and ESG efforts in 2023 through participation in and implementation of several initiatives, including the following: • Employee Training and education opportunities, including training on diversity and inclusion issues. • Commitment to the communities served by the Bank with over $252,900 contributed to over 175 charitable organizations and bank-wide participation in a variety of community outreach programs, including financial literacy and elder abuse/fraud. | | Strategic Initiatives | Management successfully • Executed on its growth strategy by (1) completing its acquisition of Noah Bank and successfully integrating it into the Bank, and (2) negotiating a merger agreement with Cornerstone Financial Corporation that was signed in early 2024. • Completed its reorganization into a holding company structure to allow for greater flexibility in accomplishing strategic initiatives. • Continued execution of the Company’s Stock Repurchase Plan. |
Summary Compensation Table
See “– Summary Compensation Table” for the dollar amount of the 2023 payouts to our named executive officers under the plan. Employee Stock Ownership Plan Effective January 1, 2021, the Bank adopted an employee stock ownership plan (“ESOP”) in order to enhance the Bank’s employee retirement program. Under the ESOP, all employees of the Bank who have attained age 21 and completed 1,000 hours of service during a six-month period following their date of hire become a participant in the ESOP on the first day of the month following their satisfaction of the plan’s eligibility requirements. The ESOP provides that each plan year, the Bank, at its discretion, may contribute cash to the ESOP Trust for the purpose of purchasing Company stock, or the Company may make a direct contribution of Company stock to the ESOP Trust. The Company stock is then allocated to the accounts of active participants based on each active participant’s plan compensation as a percentage of total plan compensation as of December 31 of each plan year. The board of directors of the Bank, in its sole discretion, determines the amount of any discretionary contributions that may be made and may elect to leverage our ESOP. The benefits allocated to participant ESOP accounts vest at a rate of 25% for each year of service in which a participant performs 1,000 hours of service. ESOP account balances become fully vested upon death, attainment of normal retirement age, termination of the ESOP or a change in control. All participants are entitled to direct the ESOP Trustee how to vote the shares of Bank stock allocated to their ESOP accountants. In addition, all dividends (if any) paid on the Bank stock held in the ESOP Trust will be allocated to the participant ESOP Accounts as earnings. The named executive officers are eligible to participate in our ESOP under the same terms and conditions as all of our employees. The amounts in the “Summary Compensation Table —All Other Compensation” include the 2023 and 2022 ESOP allocations to our named executive officers. 401(k) Plan We maintain a 401(k) plan for our employees. Under the 401(k) plan, all employees are eligible to contribute the maximum allowed by the Internal Revenue Code. We may make discretionary matching contributions. During the years ended December 31, 2023 and 2022, matching contributions were made to certain of our named executive officers that elected to participate in our 401(k) plan. The named executive officers are eligible to participate in our 401(k) plan under the same terms and conditions as all of our employees. The amounts in the “Summary Compensation Table — All Other Compensation” column include 2023 and 2022 employer matching contributions under the 401(k) plan to our named executive officers.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE In August 2022, the SEC adopted final rules to implement Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The following information about the relationship between executive compensation actually paid and certain financial performance of the Corporation is provided pursuant to Item 402(v) of SEC Regulation S-K.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for Principal Executive Officer (“PEO”)(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (“NEOs”)(3) | Average Compensation Actually Paid to Non-PEO NEOs(4) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return (“TSR”)(5) | Net Income (Loss) (thousands)(6) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | 2023 | 1,477,217 | 2,002,312 | 848,063 | 1,120,437 | 132.15 | 25,765 | | 2022 | 1,314,194 | 1,632,724 | 787,626 | 933,903 | 142.55 | 26,494 | | 2021 | 1,072,265 | 1,199,591 | 650,307 | 714,099 | 128.11 | 22,486 |
PAY VERSUS PERFORMANCE
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Dietzler (President and Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation—Summary Compensation Table.” |
PAY VERSUS PERFORMANCE
| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Dietzler, as computed in accordance with Item 402(v) of SEC Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Dietzler during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Dietzler’s total compensation for each year to determine the compensation actually paid: |
PAY VERSUS PERFORMANCE
| Year | Reported Summary Compensation Table Total for PEO ($) | Reported Value of Equity Awards(a) ($) | Equity Award Adjustments(b) ($) | Compensation Actually Paid to PEO ($) | | 2023 | 1,477,217 | 281,428 | 525,095 | 2,002,312 | | 2022 | 1,314,194 | 202,192 | 318,530 | 1,632,724 | | 2021 | 1,072,265 | 132,995 | 127,327 | 1,199,592 |
PAY VERSUS PERFORMANCE
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” columns in the Summary Compensation Table for the applicable year. |
PAY VERSUS PERFORMANCE
| (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) an amount equal to the change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, an amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: |
PAY VERSUS PERFORMANCE
| Year | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation ($) | Total Equity Award Adjustments ($) | | 2023 | 10,741 | 366,004 | N/A | 128,210 | N/A | 20,140 | 525,095 | | 2022 | 10,776 | 163,844 | N/A | 128,210 | N/A | 15,700 | 318,530 | | 2021 | 49,027 | 60,302 | N/A | 11,722 | N/A | 6,275 | 127,327 |
PAY VERSUS PERFORMANCE
| (3) The dollar amounts reported in column (d) represent the average of the amounts reported for our company’s named executive officers as a group (excluding Mr. Dietzler) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the named executive officers (excluding Mr. Dietzler) included for purposes of calculating the average amounts in each applicable year are as follows: for 2023 and 2022, Mr. O’Donnell, and Ms. Adkins. |
PAY VERSUS PERFORMANCE
| (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the named executive officers as a group (excluding Mr. Dietzler), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the named executive officers as a group (excluding Mr. Dietzler) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the named executive officers as a group (excluding Mr. Dietzler) for each year to determine the compensation actually paid, using the same methodology described in Note 2 above: |
PAY VERSUS PERFORMANCE
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs ($) | Average Reported Value of Equity Awards ($) | Average Equity Award Adjustments(a) ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 848,063 | 148,317 | 272,374 | 1,120,437 | | 2022 | 787,626 | 118,427 | 146,277 | 933,903 | | 2021 | 650,307 | 73,483 | 63,792 | 714,099 |
PAY VERSUS PERFORMANCE
| (a) The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
PAY VERSUS PERFORMANCE
| Year | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation ($) | Total Equity Award Adjustments ($) | | 2023 | 5,661 | 209,750 | N/A | 45,955 | N/A | 11,008 | 272,374 | | 2022 | 6,312 | 85,443 | N/A | 45,955 | N/A | 8,567 | 146,277 | | 2021 | 27,089 | 23,914 | N/A | 9,661 | N/A | 3,127 | 63,792 |
PAY VERSUS PERFORMANCE
| (5) Cumulative TSR is calculated by dividing the sum of the cumulative amount of cash dividends for the measurement period, assuming dividend reinvestment, and the difference between the Corporation’s share price at the end and the beginning of the measurement period by the share price at the beginning of the measurement period. |
PAY VERSUS PERFORMANCE
| (6) The dollar amounts reported represent the amount of net income (loss) reflected in our consolidated audited financial statements for the applicable year. |
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance Table. Compensation Actually Paid and Net Income (Loss) In 2021 and 2022, our net income has increased by 62.9% and 17.8%, respectfully. In 2023 our net income decreased by 2.8% against the previous net income from 2022. The compensation actually paid for both our PEO and non-PEO NEOs increased by 21.7%, 32.8%, and 18.2%, respectfully, in 2021, 2022, and 2023. Compensation Actually Paid and Cumulative TSR The amount of compensation actually paid to Mr. Dietzler, our PEO, and our named executive officers as a group, NEOs (excluding Mr. Dietzler) is aligned with the Company’s TSR over the two year period ended December 31, 2022, but not for the year ended December 31, 2023. When using the value of stock at December 31, 2020 as a benchmark, and stating the value of an initial fixed investment of $100, our TSR rose to $128.11 in 2021, and $142.55 in 2022, and decreased to $132.15 in 2023. As reflected in the above analysis, the compensation actually paid increased, by 21.7% in 2021, 32.8% in 2022, and 18.2% in 2023. A significant portion of the compensation actually paid to the PEO and NEOs is comprised of both an increase in base salary in 2023 that reflects our strong performance in 2022 and equity awards, tranches of which were granted in 2023 and previous tranches vesting in 2023 causing a more significant rise in compensation actually paid for that year. Further information regarding these awards can be found above in our Summary Compensation Table. All information provided above under the “Pay Versus Performance Information” heading will not be deemed to be incorporated by reference in any filing of our company under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023
| | Option Awards | | | | Stock Awards | | | Name | Number of securities underlying unexercised options exercisable (#) | Number of securities underlying unexercised options unexercisable (#) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(12) | | Edward Dietzler | 1,400(1) | — | 14.03 | 2/18/2024 | 2,068(9) | 74,241 | | | 2,600(2) | — | 16.29 | 12/17/2024 | 4,476(10) | 160,688 | | | 6,400(3) | — | 17.13 | 3/24/2025 | 8,662(11) | 310,966 | | | 7,500(4) | — | 32.00 | 3/15/2027 | | | | | 15,000(5) | — | 32.69 | 5/30/2028 | | | | Daniel O’Donnell | 3,250(2) | — | 16.29 | 12/17/2024 | 1,633(9) | 58,625 | | | 5,000(3) | — | 17.13 | 3/24/2025 | 3,836(10) | 137,712 | | | 10,000(7) | — | 22.00 | 4/10/2026 | 7,023(11) | 252,126 | | | 7,500(4) | — | 32.00 | 3/15/2027 | | | | | 15,000(5) | — | 32.69 | 5/30/2028 | | | | Stephanie Adkins | 3,000(3) | — | 17.13 | 3/24/2025 | 653(9) | 23,443 | | | 10,000(8) | — | 18.17 | 7/15/2025 | 1,406(10) | 50,475 | | | 4,000(7) | — | 22.00 | 4/10/2026 | 2,107(11) | 75,641 | | | 2,500(4) | — | 32.00 | 3/15/2027 | | | | | 5,000(5) | — | 32.69 | 5/30/2028 | | |
Outstanding Equity Awards at December 31, 2023
| (1) Options granted on 2/18/2014. |
Outstanding Equity Awards at December 31, 2023
| (2) Options granted on 12/17/2014. |
Outstanding Equity Awards at December 31, 2023
| (3) Options granted on 3/24/2015 |
Outstanding Equity Awards at December 31, 2023
| (4) Options granted on 3/15/2017 |
Outstanding Equity Awards at December 31, 2023
| (5) Options granted on 5/30/2018 |
Outstanding Equity Awards at December 31, 2023
| (7) Options granted on 4/10/2016. |
Outstanding Equity Awards at December 31, 2023
| (8) Options granted on 7/15/2015. |
Outstanding Equity Awards at December 31, 2023
| (9) Consists of restricted stock units awarded granted on 1/27/2021 under the 2018 Plan, that vest in 1/3 installments over a three year period. |
Outstanding Equity Awards at December 31, 2023
| (10) Consists of restricted stock units awarded granted on 1/26/2022 under the 2018 Plan, that vest in 1/3 installments over a three year period. |
Outstanding Equity Awards at December 31, 2023
| (11) Consists of restricted stock units awarded granted on 1/25/2023 under the 2018 Plan, that vest in 1/3 installments over a three year period. |
Outstanding Equity Awards at December 31, 2023
| (12) The market value of the units is determined by multiplying the closing market price of the Company’s common stock at December 29, 2023 (which was $35.90 per share) by the number of units of stock. |
2023 Compensation of Directors
2023 Compensation of Directors The following table presents all forms of compensation awarded to our non-employee directors for the year ended December 31, 2023.
2023 Compensation of Directors
| Name | Fees earned or paid in cash ($) | Stock awards ($) | Restricted stock unit awards ($)(1) | All other compensation ($)(2) | Total ($) | | Stephen Distler | 80,000 | — | 32,490 | — | 112,490 | | Judith Giacin | 80,000 | — | 32,490 | — | 112,490 | | Richard Gillespie | 80,000 | — | 40,613 | 7,201 | 127,814 | | Robert N. Ridolfi | 80,000 | — | 32,490 | 325 | 112,815 | | Stephen Shueh | 80,000 | — | 32,490 | 10,386 | 122,876 | | Martin Tuchman | 80,000 | — | 32,490 | 325 | 112,815 | | Ross Wishnick | 80,000 | — | 32,490 | — | 112,490 |
2023 Compensation of Directors
| (1) This column reflects the total grant date fair value for all restricted stock unit awards granted during the fiscal year ended December 31, 2023. The assumptions used in the calculation of these amounts are described in the Notes to our consolidated financial statements, which are included in the annual report accompanying this proxy statement. |
2023 Compensation of Directors
| (2) Compensation in this column includes the economic benefit accruing to each named director for club membership dues paid by the Company. |
2023 Compensation of Directors
As of December 31, 2023, each director had the following outstanding stock option and restricted stock unit awards:
2023 Compensation of Directors
| Name | Option Awards | Restricted Stock Unit Awards(1) | | Stephen Distler | 17,000 | 1,000 | | Judith Giacin | 17,000 | 1,000 | | Richard Gillespie | 17,000 | 1,250 | | Robert N. Ridolfi | 17,000 | 1,000 | | Stephen Shueh | 17,000 | 1,000 | | Martin Tuchman | — | 1,000 | | Ross Wishnick | 17,000 | 1,000 |
2023 Compensation of Directors
| (1) Each restricted stock unit represents a contingent right to receive one share of Company common stock which right vests after a one-year cliff vesting period. |
2023 Compensation of Directors
Director compensation has been limited to retainer fees earned or paid in cash and/or common stock, and non-qualified stock option grants or restricted stock units (RSU), normally awarded once per year. Fees earned or paid in cash and option and RSU grants are discretionary and are authorized by our board of directors.