DEF 14A of SB Financial Group, Inc.
Filed Mar 8, 2024 · FY20230001213900-24-021032
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS In accordance with the Regulations of the Company, three directors will be elected at the Annual Meeting for terms of three years each. The Board proposes that each of the three director nominees identified below be re-elected for a new term of three years expiring in 2027. Each of these nominees was approved by the Board upon the recommendation of the Governance and Nominating Committee. Each individual elected as a director at the Annual Meeting will hold office for a term of three years and until his or her successor is elected and qualified, or until his or her earlier resignation, removal from office or death. Pursuant to the procedures set forth under the Regulations and Ohio law, the three nominees who receive the greatest number of votes will be elected as directors of the Company. Common Shares represented by properly submitted proxies will be voted FOR the election of the Board’s nominees unless authority to vote for one or more nominees is withheld. Shareholders may withhold authority to vote for the entire slate as nominated or may withhold the authority to vote for one or more nominees. Common Shares as to which the authority to vote is withheld will be counted for quorum purposes, but will not be counted toward the election of the individual nominees for whom the authority to vote has been withheld. If a nominee becomes unavailable or unable to serve as a director for any reason prior to the Annual Meeting, the individuals designated as proxy holders reserve full discretion to vote the Common Shares represented by the proxies they hold for the election of the remaining nominees and for the election of any substitute nominee designated by the Board. The Board has no reason to believe that any of the nominees named below will not serve if elected. The Board of Directors proposes the election of the following persons, all of whom were recommended by the Governance and Nominating Committee, to three-year terms that will expire in 2027:
ELECTION OF DIRECTORS
| Name | Age | Position(s) Held | Director Since | | George W. Carter | 64 | Director, SBFG and State Bank | 2013 | | Tom R. Helberg | 64 | Director, SBFG and State Bank | 2018 | | Timothy J. Stolly | 66 | Director, SBFG and State Bank | 2010 |
YOUR BOARD RECOMMENDS THAT SHAREHOLDERS
YOUR BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE ELECTION OF ALL OF THE BOARD’S NOMINEES
VOTE FOR THE ELECTION OF ALL OF THE BOARD’S NOMINEES The following directors will continue to serve after the Annual Meeting for the terms indicated:
VOTE FOR THE ELECTION OF ALL OF THE BOARD’S NOMINEES
| Name | Age | Position(s) Held | Director Since | Term Expires | | Timothy L. Claxton | 59 | Director, SBFG and State Bank | 2021 | 2026 | | Gaylyn J. Finn | 75 | Director, SBFG and State Bank | 2010 | 2026 | | Richard L. Hardgrove | 85 | Lead Independent Director, SBFG and State Bank | 2004 | 2025 | | Rita A. Kissner | 78 | Director, SBFG and State Bank | 2004 | 2026 | | Mark A. Klein | 69 | Director, Chairman, President and Chief Executive Officer, SBFG and State Bank | 2010 | 2025 | | William G. Martin | 57 | Director, SBFG and State Bank | 2014 | 2025 |
VOTE FOR THE ELECTION OF ALL OF THE BOARD’S NOMINEES
There are no family relationships among any of the directors, nominees for election as directors and executive officers of the Company. The following gives certain information, as of the Record Date, concerning each nominee for election as a director of the Company and each director whose term will continue after the Annual Meeting. The following also provides an overview of certain specific skills that qualify each of our current directors and director nominees to serve as a director or to be nominated for re-election as a director. Unless otherwise indicated, each person has held his or her principal occupation for more than five years. Mr. Carter has over 34 years of experience in the utility industry while serving in executive leadership positions for over 23 years. He has recently retired from the position of President and Chief Executive Officer of the Paulding Putnam Electric Cooperative, an electric utility serving Ohio and Indiana, a position which he had held since 2005. Prior to that role, Mr. Carter served as Director of Finance and Administration for a utility for 12 years. Mr. Carter also serves as a Director of Buckeye Power Inc., an electric generation cooperative that has assets of $2 billion, and formerly served on its executive and audit committees. He also serves as a director of United Utility Supply, a materials supply company. Mr. Carter is an active member of his community, currently serving on the Paulding County Economic Development board and as President on the Paulding Community Improvement Corporation (CIC) Mr. Carter also formerly served as a board member and past President of the United Way of Paulding County and also served on the board of the Regional Growth Partnership, Toledo, OH. Prior to his appointment to the Company and the State Bank Boards, he served on State Bank’s Paulding County Advisory Board. Mr. Carter was appointed to the Boards of Directors of the Company and State Bank in 2013. He currently is the Chairman of the Compensation Committee and also serves on the Audit Committee and State Bank’s Executive Loan Committee. He is also the board liasion to the Paulding County Advisory Board. Mr. Claxton has extensive experience in business acquisitions, banking, estate planning and administration, loan documentation and mortgage foreclosure. He is a partner at Burt Blee, a law firm in Fort Wayne, Indiana. He has practiced law for 32 years and focuses his practice in the areas of real estate, business, banking and estate planning and administration. He is actively involved in the Fort Wayne community, including serving as Secretary and a Director of Stavreti Scholarship, Inc., and as an active member of the Volunteer Lawyers Program. Mr. Claxton was appointed as a director of the Company and State bank in August 2021, after previously serving on State Bank’s Fort Wayne Advisory Board. He currently serves on the Governance and Nominating Committee, the Board’s Loan Review Committee and the Trust and Investment Review Committee. Mr. Claxton is also the board liaison to the Fort Wayne Advisory Board. Mr. Finn brings to the Board an extensive financial and risk management background. He served as Treasurer and Associate Vice President for Finance for Bowling Green State University until 2008. While serving at Bowling Green State University, Mr. Finn was responsible for receipts, disbursement, financial reporting and investing functions of the university as well as the risk management function. He is a holder of a CPA certificate (currently inactive) and previously worked for a large public accounting firm. Mr. Finn also served as a corporate controller for seven years. He has over 36 years’ experience as a financial executive in the for-profit and non-profit arenas. He currently serves as trustee of the Wood County Hospital while providing leadership as past Chairman in 2014 and 2015. He also serves on the finance committee of The Cocoon Shelter, a non-profit organization. Mr. Finn’s experience in finance has qualified him as an “audit committee financial expert” under Securities and Exchange Commission (“SEC”) guidelines. Mr. Finn has been a director of the Company and State Bank since 2010. He currently is the Chairman of the Audit Committee and also serves on the Board’s Loan Review Committee. He is also the board liaison to the Bowling Green and Fulton County Advisory Boards. Mr. Hardgrove brings an extensive background in finance and financial institution management. He has over 50 years of banking experience, during which he served as the CEO of three different banks with assets of $500 million to $5 billion, as well as serving 16 years as the CEO of a bank holding company. As CEO of financial institutions, he led these financial institutions through a number of successful mergers. Mr. Hardgrove also formerly served as the Deputy Superintendent of Banks for the State of Ohio. He has served as a bank director for 42 years. Mr. Hardgrove currently serves as Lead Independent Director of the Company and State Bank. Mr. Hardgrove has been a director of the Company and State Bank since 2004. He is a member of the Compensation Committee and the Governance and Nominating Committee. He is also the board liaison to the Columbus Advisory Board. Mr. Helberg has extensive knowledge and experience in real estate law. He is Of Counsel specializing in real estate related matters at the law firm of Liebenthal Levine Ltd in Toledo, OH. He has also served as the Legal Counsel and Principal of a commercial real estate development and investment company since 1984. Mr. Helberg has significant board service experience having served on the boards of directors of numerous for-profit and non-profit organizations. Prior to his appointment to the Board of the Company and State Bank, Mr. Helberg served on State Bank’s Toledo Advisory Board. He currently is a member of the American Bar Association. Mr. Helberg is a past Director of the Toledo Hospital Foundation Board and Sylvania Township Zoning Board of Appeals. Mr. Helberg formerly served on the Board of Directors of two mid-west Ohio banks. Mr. Helberg was appointed as a director of the Company and State Bank in February 2019 and is the Chairman of the Board’s Loan Review Committee and is also a member of the Audit and Trust Committees. He is also board liaison to the Toledo Advisory Board. Ms. Kissner has broad knowledge of finance and leadership in local government. Her diverse professional background includes having served as Mayor of Defiance, a mid-sized Northwest Ohio town, as well as finance director and auditor. She exercised her leadership skills as the former Main Street Director of the Defiance Development and Visitors Bureau, and she also currently serves as a trustee and past Board Chair of Defiance College. Ms. Kissner has been a director of the Company and State Bank since 2004. Ms. Kissner currently serves as Chairperson of the Trust and Investment Review Committee and is also a member of the Audit Committee and Compensation Committees. She is also board liaison to the Defiance County Advisory Board.
VOTE FOR THE ELECTION OF ALL OF THE BOARD’S NOMINEES
Mr. Klein brings extensive experience in the financial institution industry. He was appointed Chairman, President and CEO of the Board of Directors of SB Financial in 2015. Previously, he served as President and CEO of SB Financial since 2010 and State Bank since 2006. Mr. Klein is a graduate of Defiance College in Defiance, Ohio with a Bachelor of Science Degree in Finance. He is a graduate of the University of Wisconsin – Madison Graduate School of Banking, and received his Master of Business Administration (MBA) degree from Bowling Green State University. Mr. Klein recently attained a Certificate of Management Excellence (CME) at Harvard Business School. Prior to joining the Company and State Bank, he was Senior Vice President Private Banking of Sky Bank, Toledo, Ohio from 2004 to January 2006, and Vice President and Team Leader of Sky Bank, Toledo, Ohio from 2000 to 2004. From 1994 to 1999, he was Executive Vice President and Senior Lender at a $450 million Sky Bank affiliate. Mr. Klein has served as the past Chair of the ProMedica Defiance Regional Hospital Board, past member of the Defiance City Schools Board of Education for 20 years while serving as its president for four terms, served on the State of Ohio Banking Commission and as a member of The Defiance College Board of Trustees. Mr. Klein has also served on the Federal Reserve Bank of Cleveland’s Fourth District, Community Depository Institutions Advisory Council (CDIAC). Mr. Klein is active in his community including board membership in the local Community Improvement Corporation (CIC) and as its VP. He is also a past member of the Defiance Area Foundation and Defiance City School Foundation. Mr. Martin has an extensive background in finance and leadership in northwest Ohio. With over 35 years’ experience in finance and accounting, he started his career at Arthur Young (now Ernst & Young) in Toledo, OH where he passed the Ohio CPA Exam in 1993 (now non practicing). He then held the position of VP Controller with a large furniture manufacturer. Mr. Martin is currently President of the Spangler Candy Company, a 117 year old family-owned privately held company in Bryan, OH where he has been employed for the past 23 years. Mr. Martin also serves as a Director of Spangler Candy Company. In the local community, Mr. Martin has significant community involvement as a Member of the Bryan Area Foundation (former Chairman 2016-2018), past Treasurer of the Williams County Family YMCA, and serves on various committees at Bryan St. Patrick Catholic Church. Prior to his appointment to the Company and State Bank Boards, he served on State Bank’s Williams County Advisory Board. Mr. Martin was appointed as a director of SBFG and State Bank in 2014. Mr. Martin currently serves on the Company’s Governance and Compensation Committees and is also Chairman of the State Bank’s Executive Loan Committee. He is also the board liaison to the Williams County Advisory Board. Mr. Stolly brings to the Board over 43 years of experience in the insurance industry, as well a strong sales, services and management background. He currently serves as Past President of Stolly Insurance Agency Inc., a regional independent insurance agency instituted in 1904. Mr. Stolly has significant community involvement. He currently is President of the Lima Interfaith Senior Housing board, and previously served as past president of The Lima Allen County Chamber of Commerce, Allen County Council on Aging, Lima Noon Optimists, Shawnee Country Club and also served on the advisory board of directors for Bluffton University, Ohio Northern University, Safeco Insurance Company and Motorists Insurance Company. He also served as a board of director member for the Ohio Insurance Association Prior to his appointment to the Company and State Bank Boards, he served on State Bank’s Lima Advisory Board. Mr. Stolly has been a director of the Company and State Bank since 2010. He currently is Chairman of the Board’s Governance and Nominating Committee and also serves on the Trust and Investment and Executive Loan Committees. He is also the board liaison to the Lima Advisory Board.
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Director Independence
Director Independence The Board has reviewed, considered and discussed each director’s relationships, both direct and indirect, with the Company and its subsidiaries, including those described under the heading “TRANSACTIONS WITH RELATED PERSONS” beginning on page 34 of this proxy statement. As part of its review, the Board has considered and discussed the compensation and other payments, if any, each director has, both directly and indirectly, received from or made to the Company and its subsidiaries in order to determine whether such director qualifies as independent based on the definition of an “independent director” set forth in Rule 5605(a)(2) of the Marketplace Rules of The NASDAQ Stock Market (“NASDAQ”). The Board has affirmatively determined that the Board has at least a majority of independent directors, and that each of the following individuals who currently serve as directors, or who served as a director of the Company during the 2023 fiscal year, has and had no financial or personal relationships, either directly or indirectly, with the Company or its subsidiaries (other than compensation as a director of the Company and its subsidiaries, banking relationships in the ordinary course of business with the Company’s banking subsidiaries and ownership of the Company’s Common Shares as described in this proxy statement) and thus qualifies as an “independent director” under NASDAQ Marketplace Rule 5605(a)(2): George W. Carter, Timothy L. Claxton, Gaylyn J. Finn, Richard L. Hardgrove, Tom R. Helberg, Rita A. Kissner, William G. Martin and Timothy J. Stolly. The Board has determined that Mark A. Klein does not qualify as an independent director because he currently serves as an executive officer of the Company and certain of its subsidiaries.
Director Qualifications and Review of Director Nominees
Director Qualifications and Review of Director Nominees To fulfill its responsibility to recruit and recommend to the full Board nominees for election as Directors, the Governance and Nominating Committee reviews the composition of the Board to determine the qualifications and areas of expertise needed to further enhance the composition of the Board, and works to identify and attract candidates with those qualifications. The Governance and Nominating Committee has adopted a written policy regarding qualifications of directors. Pursuant to this policy, individuals who are nominated for election to the Board must possess certain minimum personal and professional qualities, including, without limitation, personal integrity and ethical character; demonstrated achievement in business, professional, governmental, communal, scientific or educational fields; sound judgment borne of management or policy-making experience; and a general appreciation regarding major issues facing public companies of a size and operational scope similar to the Company. The policy also requires the Governance and Nominating Committee to consider the contributions that a candidate can be expected to make to the collective functioning of the Board based upon the totality of the candidate’s credentials, experience and expertise, the composition of the Board at the time, and other relevant circumstances. The Governance and Nominating Committee considers candidates for the Board from any reasonable source, including shareholder recommendations. The Governance and Nominating Committee does not evaluate candidates differently based on who has made the recommendation or the source of the recommendation. The Governance and Nominating Committee has the authority under its charter to hire and pay a fee to consultants or search firms to assist in the process of identifying and evaluating candidates. No such consultants or search firms have been used to date and, accordingly, no fees have been paid to consultants or search firms. The Company does not have a written policy that requires the consideration of diversity in identifying nominees for election to the Board. However, the Governance and Nominating Committee’s policy regarding qualifications of directors provides that the Company will seek to promote through the nominations process appropriate diversity on the Board of professional background, experience, expertise, perspective, age, gender, ethnicity and country of citizenship. The Board believes that each nominee and current Board member brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including corporate governance and board service, executive management, banking, insurance, accounting and finance, legal, real estate, marketing and government.
Engagement of Independent Compensation Consultant
Engagement of Independent Compensation Consultant The Compensation Committee has the sole authority to engage the services of any compensation consultant or advisor. It is the policy of the Compensation Committee to conduct a periodic, independent review of the Company’s compensation programs to verify the reasonableness of its compensation programs for executives, directors and key officers as compared to peer groups and ensure compliance with all applicable federal and state laws, rules and regulations. The independent reviews are conducted by a firm or individual who does not provide other services or products to the Company. In addition, the independent firm must not have any other personal or business relationships with any Board member or any officer of the Company. The Compensation Committee considers all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act, in determining that the work performed by its compensation consultants does not raise a conflict of interest. Since 2011, the Compensation Committee has periodically engaged the services of Blanchard Consulting Group (“BCG”), a nationally recognized independent financial institution compensation consulting company. BCG was engaged to evaluate board compensation and executive compensation in 2022. The 2022 executive study focused on all aspects of executive total compensation, including base salaries, cash incentives/bonuses, equity incentives and grants, other compensation and perquisites, and executive benefits and retirement programs. The information and analyses provided by BCG in 2022 was used by the Compensation Committee in making its executive compensation decisions for the 2023 fiscal year. It is the Company’s intent to conduct these studies on a biennial basis, with the next board and executive compensation analysis to be conducted in 2024. As part of the 2022 executive total compensation review, BCG utilized a peer group of nineteen (19) publicly traded bank holding companies. The peer group was developed jointly by BCG and the Company. The Company’s peer group was comprised of public bank holding companies with similar attributes to the Company, such as: asset size, revenue, geography, and a similar business model. The peer group focused on banks with assets between $1.0 billion and $3.5 billion as of 2022 fiscal year-end (2022Y) and located in Indiana, Kentucky, Michigan, Missouri, Ohio, Pennsylvania, and Wisconsin. The peer group median asset size ($1.7 billion as of 2022Y) is slightly larger than the Company ($1.3 billion as of 2022Y), but historically this has been intentional to account for the significant additional off-balance sheet assets under care at the Bank (wealth management and real estate mortgage) totallying over $3.2 billion. The Company’s current asset size remains approximately $1.3 billion. The BCG study on executive compensation contained peer group information on total compensation, but also included additional banking industry survey data and banking industry trend information. The industry survey and trend information was derived from BCG databases and surveys that focus almost exclusively within the banking marketplace.
Peer Group Bank Holding Companies
Peer Group Bank Holding Companies The peer group bank holding companies utilized in the 2022 executive total compensation review included the bank holding companies listed below. Changes to the peer group from 2021 to 2022 consisted of removing County Bancorp, Inc., Kentucky Bancshares, Inc., and MutualFirst Financial, Inc. due to acquisitions. These three peers were replaced with PSB Holdings, Inc., Richmond Mutual Bancorporation, Inc., and CSB Bancorp, Inc. The three new peers were chosen based on having similar attributes to the Company.
Peer Group Bank Holding Companies
| Company | Location | | Civista Bancshares, Inc. | Sandusky, OH | | Macatawa Bank Corporation | Holland, MI | | ACNB Corporation | Gettysburg, PA | | Southern Missouri Bancorp, Inc. | Poplar Bluff, MO | | Farmers & Merchants Bancorp, Inc. | Archbold, OH | | Citizens & Northern Corporation | Wellsboro, PA | | Citizens Financial Services, Inc. | Mansfield, PA | | Norwood Financial Corp. | Honesdale, PA | | LCNB Corp. | Lebonon, OH | | First Savings Financial Group, Inc. | Jeffersonville, IN | | Finward Bancorp (formerly NorthWest Indiana Bancorp) | Munster, IN | | Limestone Bancorp, Inc. | Louisville, KY | | AmeriServ Financial, Inc. | Johnstown, PA | | Middlefield Banc Corp. | Middlefield, OH | | First Keystone Corporation | Berwick, PA | | PSB Holdings, Inc. | Wausau, WI | | Richmond Mutual Bancorporation, Inc. | Richmond, IN | | Ohio Valley Banc Corp. | Gallipolis, OH | | CSB Bancorp, Inc. | Millersburg, OH |
Peer Group Bank Holding Companies
In its review of executive compensation, the Compensation Committee reviewed the following data provided by BCG:
Peer Group Bank Holding Companies
| ● | Total cash compensation = Base salary + Annual cash incentives / bonus; |
Peer Group Bank Holding Companies
| ● | Direct compensation = Total cash compensation + Three-year average equity awards (equity granted in years 2019-2022 by the 19 peer bank holding companies); and |
Peer Group Bank Holding Companies
| ● | Total compensation = Direct compensation + Other compensation + Retirement Benefits / Perquisites |
Peer Group Bank Holding Companies
The Committee’s evaluation of the peer group comparison and BCG’s assessment of our compensation practices and levels concluded:
Peer Group Bank Holding Companies
| ● | The Company’s financial performance varied compared to the peer group; however, most performance metrics (ROAA, ROAE, NPAs/assets, tangible equity ratio, core EPS growth, and three year total return) were near or above the peer group 50th percentile; |
Peer Group Bank Holding Companies
| ● | The Company has adequate and appropriate compensation tools available to attract, motivate and retain high-quality, skilled executives and to provide a mix of short- and long-term compensation opportunities; |
Peer Group Bank Holding Companies
| ● | “Total cash compensation” of the Company’s top three executive proxy officers was considered generally competitive compared to peers when the Compensation Committee factored in the individual officers, their performance, and the Company’s performance; |
Peer Group Bank Holding Companies
| ● | For “Direct compensation,” the Company was generally near median levels of the peer group; and |
Peer Group Bank Holding Companies
| ● | “Total compensation” remains competitive to peer and supports that the Company has competitive executive benefits. |
Annual Base Salaries
| ● | market data provided by independent outside consultants, such as BCG (peer group and banking industry survey data); |
Non-Equity Incentive Compensation
Non-Equity Incentive Compensation The Incentive Compensation Plan is a company-wide performance-based incentive compensation program which is intended to link incentive compensation directly to the Company’s and individual’s performance and, thereby, to shareholder value. The following were some of the 2023 organization-wide objectives supported by the plan:
Non-Equity Incentive Compensation
| ● | build a high-performance financial company; |
Non-Equity Incentive Compensation
| ● | grow the business; |
Non-Equity Incentive Compensation
| ● | ensure sound operations, policies and procedures; and |
Non-Equity Incentive Compensation
| ● | build on the value proposition strength within each business unit. |
Non-Equity Incentive Compensation
The following table sets forth the range of potential payouts under the 2023 Incentive Compensation Plan for the NEOs. When determining the incentive plan opportunity levels, the Compensation Committee evaluated competitive market data (peer group and banking industry data for banks between $1 billion and $3 billion in asset size as provided by the 2023 BCG executive compensation analysis) along with the experience level, duties, and responsibilities expected of each NEO position. The overall 2023 non-equity incentive plan earning opportunities as a percent of salary were unchanged from 2022. The Company and Compensation Committee determined that they remained competitive and appropriate for 2023. The Plan has a minimum after tax net income ($6.5 million in 2023) “circuit breaker” [below which no incentive payouts will be made] and requires employees to be employed in “good standing” in order to receive a payout.
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| | Payouts Under Non-Equity Incentive Plan (as a % of Base Salary) | | | 2023 Actual Payouts (as a % of | | Executive Officer | Threshold | Target | Maximum | salary(1)) | | Mark A. Klein | 15.0% | 30.0% | 60.0% | 11.41% | | Anthony V. Cosentino | 12.5% | 25.0% | 50.0% | 8.39% | | David A. Homoelle | 12.5% | 25.0% | 50.0% | 12.20% |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| (1) 2023 salary as reported in the Summary Compensation Table. |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
The 2023 non-equity incentive plan goals and weightings remained largely unchanged from 2022, except that the goal of Return on Average Common Equity was added for Mr. Klein and Mr. Cosentino. The 10 percent weighting in this category was achieved by lowering the weighting in several other categories. The performance criteria are reviewed annually, and the Company believes they remain the most appropriate measures of annual performance based on the Company’s strategic goals.
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| Mark A. Klein 2023 Non-Equity Incentive Results | | | | | | | | Goal | Weighting | Threshold | Target | Maximum | Actual 2023 Result | Cash Reward | | Return on Assets (%) | 20% | 0.86 | 0.92 | 1.00 | 0.91 | $25,193 | | Diluted EPS | 10% | $1.65 | $1.79 | $1.90 | $1.75 | $11,778 | | Efficiency Ratio (%) | 20% | 72.75 | 71.50 | 69.75 | 73.47 | $0 | | Non-performing Asset Ratio* | 10% | 65% | 70% | 80% | 60% | $0 | | Chargeoffs & Loss on Assets* | 10% | 60% | 65% | 75% | 57% | $0 | | Return on Tangible Common Equity | 10% | 10% | 12.50% | 14% | 12.78% | $16,307 | | Common Stock Price** | 20% | 75% | 100% | 125% | 51% | $0 | | TOTAL | | | | | | $53,278 |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| * As compared to internal peer group of publically traded bank holding companies of asset size between $500 million and $2.88 billion. |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| ** As compared to the KBW NASDAQ Bank Index (BKX). |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| Anthony V. Cosentino 2023 Non-Equity Incentive Results | | | | | | | | Goal | Weighting | Threshold | Target | Maximum | Actual 2023 Result | Cash Reward | | Return on Assets (%) | 15% | 0.86 | 0.92 | 1.00 | 0.91 | $8,418 | | Diluted EPS | 10% | $1.65 | $1.79 | $1.90 | $1.75 | $5,248 | | Efficiency Ratio (%) | 20% | 72.75 | 71.50 | 69.75 | 73.47 | $0 | | Non-performing Asset Ratio* | 15% | 65% | 70% | 80% | 60% | $0 | | Chargeoffs & Loss on Assets* | 10% | 60% | 65% | 75% | 57% | $0 | | Return on Tangible Common Equity | 10% | 10% | 12.50% | 14% | 12.78% | $7,265 | | Common Stock Price** | 20% | 75% | 100% | 125% | 51% | $0 | | TOTAL | | | | | | $20,931 |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| * As compared to internal peer group of publically traded bank holding companies of asset size between $500 million and $2.88 billion. |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| ** As compared to the KBW NASDAQ Bank Index (BKX) |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| David A. Homoelle 2023 Non-Equity Incentive Results * | | | | | | | | Goal | Weighting | Threshold | Target | Maximum | Actual 2023 Result | Cash Reward | | Referrals | 10% | 2,869 | 5,738 | 14,344 | 0 | $0 | | Regional Deposit Balance Growth | 25% | $12,800,000 | $19,178,000 | $27,508,000 | $3,246,082 | $0 | | Regional Commercial & Consumer Loan Balance Growth | 25% | $14,361,002 | $20,630,000 | $30,545,002 | $8,003,655 | $0 | | Regional Commercial Loan Fees | 10% | $141,120 | $201,600 | $302,400 | $157,964 | $1,834 | | Regional Profitability-EPS (annual) | 15% | 0.30 | 0.33 | 0.35 | 0.29 | $0 | | Return on Assets (%) | 15% | 0.86 | 0.92 | 1.00 | 0.91 | $3,945 | | Basis Points on RRE Volume | | | | | | $22,615 | | TOTAL | | | | | | $28,393 |
Non-Equity Incentive Compensation Plan Opportunity Levels for 2023 Fiscal Year and Actual Payouts Made
| * Based on 50% of salary. Mr. Homoelle is the Regional President of the Columbus region but is also the Residential Real Estate (“RRE”) Executive. The above payout relates to the regional profitiability of the Columbus region. Mr. Homoelle also receives an incentive of basis points (tiered) on Residential Real Estate production.. For 2023, Mr. Homoelle received $22,615 for RRE production. |
Equity-Based Awards
Equity-Based Awards The Company believes that it is also important to provide equity compensation, which serves as an incentive for long-term corporate financial performance. The Company’s equity incentive plans are intended to encourage participants to acquire and retain a financial interest in the Company, to remain in the service of the Company and to put forth maximum efforts for the success of the Company. Equity based awards enable the Company and its subsidiaries to compete effectively for the services of potential employees and directors by furnishing an additional incentive to join and/or remain with the Company and its subsidiaries. Our 2017 Plan, authorizes grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted common shares, and restricted stock units. The 2017 Plan prohibits back-dating or re-pricing of stock options and the minimum vesting period for restricted stock awards is three years. In recent years, the Company has granted equity to executive officers in the form of restricted common shares (“Restricted Shares”) with a four-year ratable vesting schedule (25% per year, beginning one year from date of grant). The Compensation Committee determined that the use of Restricted Shares or full-value equity grants is very prevalent within the banking industry based on our independent compensation consulting studies and regulatory best practices and, as such, determined that it was appropriate from a market competitive standpoint to continue to incent executives with this type of equity award in 2023. As a result, pursuant to the SB Financial Long-Term Compensation Plan, on February 3, 2024, the Company granted Restricted Shares to its executive officers, including the NEOs and other management, as determined by the Company’s Return on Average Assets (ROAA) performance for the 2023 fiscal year. The Plan’s performance objectives are determined by using the Company’s performance history, peer data, market data, and management’s judgment of what reasonable levels can be reached based on previous experience. The table below sets forth the 2023 grant levels for the NEOs based on 2023 ROAA performance. For 2023, the grant levels were increased by 25 percent compared to the 2022 grant levels to better align with he peer level incentives. For the 2023 fiscal year, the Company’s equity-based incentive ROAA was 91 basis points, therefore, awards were nearly made at the target level of performance. The grant date fair value of the Restricted Shares shown in the table below will be reflected in our 2025 proxy statement.
Equity Incentive Plan Restricted Share Grant Levels (Granted in 2024)
Equity Incentive Plan Restricted Share Grant Levels (Granted in 2024)
Equity Incentive Plan Restricted Share Grant Levels (Granted in 2024)
| | Actual Restricted Shares Award Earned in | Share Grants Under Equity Incentive Plan | | | | Executive Officer | 2023 | Threshold | Target | Maximum | | Mark A. Klein | 3,436 | 1,875 | 3,750 | 7,500 | | Anthony V. Cosentino | 1,720 | 940 | 1,875 | 3,750 | | David A. Homoelle | 1,720 | 940 | 1,875 | 3,750 |
Employment, Change of Control Benefits and Severance Benefits
Employment, Change of Control Benefits and Severance Benefits Employment Agreement. The Company entered into an Amended and Restated Employment Agreement, dated as of January 22, 2018, with Mark A. Klein, Chairman, President and Chief Executive Officer of the Company and State Bank (the “A&R Employment Agreement”) which superseded Mr. Klein’s Employment Agreement dated July 15, 2015. Under the terms of the A&R Employment Agreement, Mr. Klein is entitled to receive certain severance or change of control payments and benefits if he is terminated by the Company under certain circumstances. Information regarding the payments and benefits provided under the A&R Employment Agreement is set forth under the heading “AGREEMENTS WITH EXECUTIVE OFFICERS - EMPLOYMENT AGREEMENT” beginning on page 20 of this proxy statement. Change of Control Agreements. The Company has entered into Amended and Restated Change of Control Agreements with certain executive officers, including each of the NEOs (the “A&R Change of Control Agreements”). Under the terms of the A&R Change of Control Agreements, each of the NEOs is entitled to receive certain benefits, including a lump sum cash payment, if the executive officer is terminated by the Company under certain circumstances in connection with a “change of control” of the Company. We feel these agreements are valuable to the Company as they provide additional protection and incentive for our executive officers to work through a potential change in control if the board and leadership determines this is in the best interest of the shareholders. Information regarding the A&R Change of Control Agreements is set forth under the heading “AGREEMENTS WITH EXECUTIVE OFFICERS - CHANGE OF CONTROL AGREEMENTS” beginning on page 21 of this proxy statement. SERP Agreements. The Company has entered into Amended and Restated Supplemental Executive Retirement Plan Agreements with each of the NEOs (the “A&R SERP Agreements”). Under the terms of the A&R SERP Agreements, the executive officers are entitled to receive certain benefits following retirement. We feel these agreements provide a strong retention vehicle for three of our key leaders at the Company. These type of agreements are exclusively used for only a select few of our leaders. Information regarding the payments and benefits provided under the A&R SERP Agreements is set forth under the heading “AGREEMENTS WITH EXECUTIVE OFFICERS - SERP AGREEMENTS” beginning on page 22 of this proxy statement. Other Benefits and Perquisites. The Company also provides its executive officers with a few additional perquisites and other personal benefits, such as 401(k) matching contributions, auto allowances, life insurance benefits, social dues and memberships, that the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain quality employees for key positions.
Summary Compensation Table for 2023
Summary Compensation Table for 2023 The following table sets forth the cash compensation as well as certain other compensation awarded or paid to, or earned by, each of the NEOs of the Company.
Summary Compensation Table for 2023
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | Name and Principal Position(s) | Year | Salary | Bonus | Stock Awards (1) | Nonequity Incentive Plan Compensation (2) | Change in Pension Value & Deferred Compensation Earnings (3) | All Other Compensation (4) | Total | | Mark A. Klein | | | | | | | | | | Chairman, President & CEO | 2023 | $466,864 | -- | $53,980 | $53,278 | $16,396 | $54,729 | $645,247 | | of the Company and State Bank | 2022 | $442,611 | -- | $45,463 | $160,171 | $66,441 | $42,084 | $756,770 | | Anthony V. Cosentino | | | | | | | | | | Executive Vice President & Chief Financial Officer of | 2023 | $249,606 | -- | $27,021 | $20,931 | $32,766 | $22,162 | $352,486 | | the Company and State Bank | 2022 | $236,538 | -- | $22,798 | $71,319 | $38,983 | $22,831 | $392,469 | | David A. Homoelle | | | | | | | | | | Regional President and Residential | 2023 | $232,810 | -- | $27,021 | $28,393 | $30,938 | $21,184 | $340,346 | | Real Estate Executive | 2022 | $215,964 | -- | $22,798 | $59,713 | $34,119 | $17,971 | $350,565 |
Summary Compensation Table for 2023
| (1) The amounts shown in column (e) reflect the equity award payouts under the SB Financial Long-Term Compensation Plan and are computed in accordance with FASB ASC Topic 718. Such equity award payouts in 2023 and 2022 consisted of awards of Restricted Shares granted under the 2017 Plan of the Company with a grant date fair value of $15.71 in 2023 and a grant date fair value of $16.52 in 2022. Grants of Restricted Shares have a four-year ratable vesting schedule. There were no stock option awards made during 2023 or 2022. The number of Restricted Shares granted in 2023 included 3,436 shares to Mr. Klein, 1,720 to Mr. Cosentino, and 1,720 shares to Mr. Homoelle. In 2022, 2,752 Restricted Shares were awarded to Mr. Klein, 1,380 shares to Mr. Cosentino, and 1,380 shares to Mr. Homoelle. | | (2) The amounts shown in column (f) reflect cash incentives earned under the Company’s Incentive Compensation Plan. | | (3) The amounts shown in column (g) reflect the actuarial increase in the present value of the NEO’s accumulated benefits under his SERP Agreement determined using assumptions consistent with those used in the Company’s financial statements and includes amounts that the NEO may not currently be entitled to receive because such amounts are not vested. | | (4) The amount shown in column (h) reflects “All Other Compensation”, which includes the following perquisites and personal benefits: |
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control The following table sets forth the payments that would have been made to the NEOs if any of the events detailed in the table had occurred on December 31, 2023. These payments reflect amounts and benefits payable under each of the agreements with the NEOs. Actual payment amounts can only be determined at the time of an NEO’s actual separation from service from the Company.
Potential Payments Upon Termination or Change-in-Control
| Name | Voluntary Termination on 12/31/23 | Termination without cause under Change of Control on 12/31/23 | Death on 12/31/23 | Early Retirement on 12/31/23 | Disability on 12/31/23 | | Mark A. Klein | | | | | | | Lump sum COC payment | -- | $1,424,368 | -- | -- | -- | | Cobra | $76,664 | 114,995 | -- | -- | -- | | Group Term Life Insurance | -- | -- | $952,754 | -- | -- | | Value of Stock | 153,500 | 153,500 | 153,500 | $153,500 | $153,500 | | SERP | 1,857,871 | 1,857,871 | -- | 1,857,871 | 1,857,871 | | BOLI | -- | -- | 1,974,320 | -- | -- | | Total | $2,088,035 | $3,550,734 | $3,080,574 | $2,011,371 | $2,011,371 | | Anthony V. Cosentino | | | | | | | Lump sum COC payment | -- | 509,384 | -- | -- | -- | | Cobra | -- | 76,664 | -- | -- | -- | | Group Term Life Insurance | -- | -- | 509,384 | -- | -- | | Value of Stock | 76,827 | 76,827 | 76,827 | 76,827 | 76,827 | | SERP | 644,612 | 573,057 | -- | 382,038 | 490,540 | | BOLI | -- | -- | 649,790 | -- | -- | | Total | $721,438 | $1,235,932 | $1,236,001 | $458,865 | $567,367 | | David A. Homoelle | | | | | | | Lump sum COC payment | -- | 472,772 | -- | -- | -- | | Cobra | -- | 57,498 | -- | -- | -- | | Group Term Life Insurance | -- | -- | 472,770 | -- | -- | | Value of Stock | 70,687 | 70,687 | 70,687 | 70,687 | 70,687 | | SERP | -- | 750,000 | -- | -- | 390,868 | | BOLI | -- | -- | 750,000 | -- | -- | | Total | $70,687 | $1,350,954 | $1,293,457 | $70,687 | $461,555 |
Outstanding Equity Awards
Outstanding Equity Awards The following table sets forth information regarding the unvested Restricted Shares held by each of the NEOs as of December 31, 2023. All stock options previously granted under the Company’s 2008 Plan have either been exercised or expired. All of the Restricted Shares listed in the table below were granted under the Company’s 2017 Plan. Dollar amounts have been rounded up to the nearest whole dollar.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
| | Stock Awards (1) | | | Name | Number of Shares or Units of Stock that have not Vested (1) | Market Value of Shares or Units of Stock that have not Vested ($) | | Mark A. Klein | | | | | 4,223(a) | $64,823 | | | 3,688(b) | 56,611 | | | 2,188(c) | 33,586 | | | 688(d) | 10,561 | | Anthony V. Cosentino | | | | | 2,112(a) | $32,419 | | | 1,845(b) | 28,321 | | | 1,095(c) | 16,808 | | | 345(d) | 5,296 | | David A. Homoelle | | | | | 1,570(a) | $24,100 | | | 1,445(b) | 22,181 | | | 1,095(c) | 16,808 | | | 345(d) | 5,296 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Restricted Shares awarded pursuant to the 2017 Plan. Restricted Shares are subject to restrictions on transferability and risk of forfeiture until they become fully vested on (a) February 5, 2024, (b) February 5, 2025, (c) February 5, 2026 and (d) February 5, 2027. The Market Value of Restricted Shares was computed based on the closing market price of the Company’s Common Shares on December 31, 2023 ($15.35). |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
Pay Versus Performance Table for 2023
Pay Versus Performance Table for 2023
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. Company TSR
Compensation Actually Paid vs. Company TSR
Compensation Actually Paid vs. Company TSR
| | Summary | | Average Summary | Average | Value of Initial Fixed $100 Investment Based On: | | | Year | Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Compensation Table Total for Non-PEO NEOs(3) | Compensation Actually Paid to Non-PEO NEOs(4) | Total Shareholder Return(5) | Net Income (millions)(6) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | 2023 | $645,246 | $564,211 | $346,416 | $347,707 | $93 | $12.1 | | 2022 | 756,770 | 821,958 | 371,516 | 411,951 | 87 | 12.5 | | 2021 | 888,803 | 970,429 | 405,166 | 436,409 | 112 | 18.3 |
Compensation Actually Paid vs. Company TSR
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Klein (our Chief Executive Officer and President) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Summary Compensation Table for 2023” on page 19. |
Compensation Actually Paid vs. Company TSR
| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Klein, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Klein during the applicable year. In accordance with the requirements of Item 401(v) of Regulation S-K, the following adjustments were made to Mr. Klein’s total compensation for each year to determine the compensation actually paid: |
Compensation Actually Paid vs. Company TSR
| Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Reported Change in the Acturial Present Value of Pension Benefits(c) | Pension Benefit Adjustments(d) | Compensation Actually Paid to PEO | | 2023 | $645,246 | $(53,980) | $21,171 | $(16,396) | $(31,831) | $564,211 | | 2022 | 756,770 | (45,463) | 60,968 | (66,441) | 116,125 | 821,958 | | 2021 | 888,803 | (120,000) | 140,361 | (131,825) | 186,684 | 964,024 |
Compensation Actually Paid vs. Company TSR
| (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. |
Compensation Actually Paid vs. Company TSR
| (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) the amount of 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 the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the 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 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. |
Compensation Actually Paid vs. Company TSR
The amounts deducted or added in calculating the equity award adjustments are as follows:
Compensation Actually Paid vs. Company TSR
| Year | Year End Fair Value of Equity Awards | Year Over Year Change in Fair Value of Outstanding and Unvested Equity Awards | 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 | $42,243 | $(16,000) | $- | $(5,072) | $- | $- | $21,171 | | 2022 | 101,700 | (29,341) | - | (11,392) | - | - | 60,968 | | 2021 | 118,020 | 17,194 | - | 5,147 | - | - | 140,361 |
Compensation Actually Paid vs. Company TSR
| (c) The amounts included in this column are the amounts reported in “Change in Pension Value & Deferred Compensation Earnings” column of the Summary Compensation Table for 2023 on page 19. |
Compensation Actually Paid vs. Company TSR
| (d) The total pension benefit adjustments for each applicable year include the aggregate of two components related to Mr. Klein’s SERP Agreement: (i) the actuarially determined service cost for services rendered by Mr. Klein during the applicable year (the “service cost”); and (ii) the entire cost of benefits granted in a plan amendment (or initiation) during the applicable year that are attributed by the benfit formula to services rendered in periods prior to the plan amendment or initiation (the “prior service cost”), in each case, calculated in accordance with U.S. GAAP. |
Compensation Actually Paid vs. Company TSR
The amounts deducted or added in calculating the pension benefit adjsutments are as follows:
Compensation Actually Paid vs. Company TSR
| Year | Service Cost | Prior Service Cost | Total Pension Benefit Adjustments | | 2023 | $(48,946) | $17,115 | $(31,831) | | 2022 | 17,115 | 99,010 | 116,125 | | 2021 | 99,010 | 87,674 | 186,684 |
Compensation Actually Paid vs. Company TSR
| (3) The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Klein) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Klein) included for purposes of calculating the average amounts in each applicable year are Anthony V. Cosentino (our Executive Vice President and Chief Financial Officer) and David A. Homoelle (our Regional President and Residential Real Estate Executive). |
Compensation Actually Paid vs. Company TSR
| (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Klein), 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 NEOs as a group (excluding Mr. Klein) 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 NEOs as a group (excluding Mr. Klein) for each year to determine the compensation actually paid, using the same methodology described above in Note 2: |
Compensation Actually Paid vs. Company TSR
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards | Average Equity Award Adjustments(a) | Average Reported Change in the Actuarial Present Value of Pension Benefits | Average Pension Benefit Adjustments(b) | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | $346,416 | $(27,021) | $11,402 | $(31,852) | $48,761 | $347,707 | | 2022 | 371,516 | (22,798) | 37,322 | (36,551) | 62,461 | 411,951 | | 2021 | 405,166 | (60,000) | 66,031 | (38,692) | 65,326 | 437,831 |
Compensation Actually Paid vs. Company TSR
(a) The amounts deducted or added in calculating the total average equity award adjustments are as follows:
Compensation Actually Paid vs. Company TSR
| Year | Average Year End Fair Value of Equity Awards | Year Over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year Over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments | | 2023 | $21,183 | $(7,688) | $- | $(2,093) | $- | $- | $11,402 | | 2022 | 50,850 | (14,896) | - | 1,369 | - | - | 37,322 | | 2021 | 59,010 | 5,147 | - | 1,874 | - | - | 66,031 |
Compensation Actually Paid vs. Company TSR
(b) The amounts deducted or added in calculating the total pension benefit adjustments are as follows:
Compensation Actually Paid vs. Company TSR
| Year | Average Service Cost | Average Prior Service Cost | Total Average Pension Benefit Adjustments | | 2023 | $20,088 | $28,673 | $48,761 | | 2022 | 28,673 | 33,788 | 62,461 | | 2021 | 33,788 | 31,538 | 65,326 |
Compensation Actually Paid vs. Company TSR
| (5) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
Compensation Actually Paid vs. Company TSR
| (6) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
Compensation Actually Paid vs. Company TSR
Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the section captioned “COMPENSATION OF EXECUTIVE OFFICERS” beginning on page 11 of this proxy statement, the Company’s executive compensation program includes variable components in the form of cash- and equity-based incentive bonus awards. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the “Pay Versus Performance Table for 2023”. Moreover, the Company seeks to incentivize both short-term and long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the “Pay Versus Performance Table for 2023”. Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, the amount of compensation actually paid to Mr. Klein and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Klein) is generally aligned with the Company’s cumulative TSR over the three years presented in the “Pay Versus Performance Table for 2023”. The alignment of compensation actually paid with the Company’s cumulative TSR over the period is largely due to the fact that a material portion of the compensation actually paid to Mr. Klein and to the other NEOs is comprised of cash- and equity-based incentive compensation that takes into account, among various other factors, the Company’s common stock price as well as other performance measures (such as Return on Assets and Diluted EPS) that can generally impact the Company’s common stock price. For additional information regarding the performance measures used to determine cash- and equity-based incentive compensation for the Company’s NEOs, see the section captioned “COMPENSATION OF EXECUTIVE OFFICERS—2023 Executive Compensation Components” beginning on page 15 of this proxy statement. Compensation Actually Paid and Net Income As demonstrated by the following graph, the amount of compensation actually paid to Mr. Klein and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Klein) is generally aligned with the Company’s net income over the three years presented in the “Pay Versus Performance Table for 2023”. While the Company does not use net income as a specific performance measure in the overall executive compensation program, the measure of net income is correlated with other performance measures, such as Return on Assets and Diluted EPS, which the Company does use for setting goals for the cash- and equity-based incentive compensation awarded to the NEOs. For additional information regarding the performance measures used to determine cash- and equity-based incentive compensation for the Company’s NEOs, see the section captioned “COMPENSATION OF EXECUTIVE OFFICERS—2023 Executive Compensation Components” beginning on page 15 of this proxy statement.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The Company uses a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, the Company considers the significant amount of time and expertise that directors expend in fulfilling their duties to the Company as well as the skill level required by the Company of members of the Board. It is the policy of the Compensation Committee to conduct a periodic, independent review of the Company’s director compensation programs to verify the reasonableness of its director compensation program as compared to peer groups and compliance with all applicable federal and state laws, rules and regulations. The independent reviews are conducted by a firm or individual who does not provide other services or products to the Company beyond compensation consulting. In addition, the independent firm must not have any other personal or business relationships with any Board member or any officer of the Company. The Compensation Committee considers all relevant factors, in determining that the work performed by its compensation consultants does not raise a conflict of interest. In 2023, the Compensation Committee engaged the services of BCG, a nationally recognized independent financial institution compensation consulting company to assess our director compensation as compared to market practices. This engagement focused on all aspects of director compensation, including board retainer and meeting fees, committee fees, equity grants and other compensation and perquisites. As part of this director compensation review, BCG utilized the same peer group of publicly traded bank holding companies that was used in connection with the 2023 executive total compensation review as set forth on page 13 and gathered and reviewed total director compensation and performance data for these peer bank holding companies. BCG also provided additional banking industry survey data regarding director compensation and trends. The report confirmed our director pay levels were competitive versus market (above the 50th percentile of peer). The report of findings from this study was utilized by the Compensation Committee to assist it in making board compensation recommendations and decisions in 2023. Based upon this review, among other factors, it was determined that slight changes to director compensation in both cash and equity were needed from 2022 to 2023. The company plans to engage BCG again in 2025 to conduct an updated board compensation study.
Director Compensation for 2023 Fiscal Year
Director Compensation for 2023 Fiscal Year The table below summarizes the compensation awarded or paid to, or earned by, each of the non-employee directors of the Company during the 2023 fiscal year. No director who is also an employee of the Company or one of its subsidiaries receives compensation for his service as a director or as a committee member of the Company or any of its subsidiaries.
Director Compensation Table for 2023 Fiscal Year
Director Compensation Table for 2023 Fiscal Year
Director Compensation Table for 2023 Fiscal Year
| | Fees Earned or Paid in Cash ($) | | | | | | | Name | SBFG Director | State Bank Director | | Stock Awards(1) | All Other Compensation | Total | | George W. Carter | $23,030 | $17,815 | -- | $19,070 | -- | $59,915 | | Timothy L. Claxton | 19,530 | 19,096 | -- | 19,070 | -- | 57,696 | | Gaylyn J. Finn | 29,030 | 17,490 | -- | 19,070 | -- | 65,590 | | Richard L. Hardgrove | 39,530 | 17,490 | -- | 19,070 | -- | 76,090 | | Tom R. Helberg | 23,030 | 18,690 | -- | 19,070 | -- | 60,790 | | Rita A. Kissner | 19,530 | 19,715 | -- | 19,070 | -- | 58,315 | | William G. Martin | 19,530 | 18,890 | -- | 19,070 | -- | 57,490 | | Timothy J. Stolly | 23,030 | 21,815 | -- | 19,070 | -- | 63,915 |
Director Compensation Table for 2023 Fiscal Year
| (1) Amounts reflect the aggregate grant date fair value of Restricted Shares, computed in accordance with FASB ASC Topic 718. Restricted Share grants of 1,392 shares were granted to each director of the Company in February 2023 at a price of $16.52 per share and all shares vested in August 2023 with a vesting price of $13.70. |