DEF 14A of PCB Bancorp, Apr 8, 2024

DEF 14A of PCB Bancorp

Filed Apr 8, 2024 · FY20230001423869-24-000013

Open on EDGAR

  1. ELECTION OF DIRECTORS OF THE COMPANY

    ELECTION OF DIRECTORS OF THE COMPANY

  2. Summary

    Summary In accordance with the Company’s bylaws, the number of directors may be no less than five and no more than nine, with the specific number within the range set by resolution of the Board of Directors (the “Board”) or the shareholders. Currently, the Board has eight directors and eight directors will be elected at the Annual Meeting. Each director will hold office until the next Annual Meeting of Shareholders and until his or her successor is elected and qualified. Unless authority to vote for the election of any directors is withheld, all proxies will be voted for the election of the eight nominees listed below and recommended by the Board. The nominees receiving the highest number of affirmative votes of the shares entitled to be voted for them shall be elected as directors. Abstentions, broker non-votes and votes cast against nominees have no effect on the election of directors. If any of the nominees should unexpectedly decline or be unable to act as a director, proxies may be voted for a substitute nominee to be designated by the Board or the Board may reduce the number of directors to be elected at the Annual Meeting. The Board has no reason to believe that any nominee will become unavailable and has no present intention to nominate persons in addition to or in lieu of those named below.

  3. Director Nomination Process

    Director Nomination Process The Board formed a Nominating and Governance Committee to, among other things, assist the Board in identifying appropriate candidates for Board membership. As specified in its charter, the Nominating and Governance Committee is appointed by the Board to help the Board identify qualified individuals to become members of the Board, consistent with criteria approved by the Board, and to recommend to the Board the director nominees for the annual meetings of shareholders. All nominees for director identified in this proxy statement were approved and recommended by the Nominating and Governance Committee. The Nominating and Governance Committee will utilize the same standards for evaluating director candidates recommended by shareholders as it does for candidates proposed by the Board or members thereof. The Nominating and Governance Committee considers many factors in nominating individuals to serve on the Board, including the following: •satisfactory results of any background investigation; •business and professional experience and expertise; •financial resources; •ability to devote the time and effort necessary to fulfill the responsibilities of a director; •involvement in community activities in the market areas served by the Company and its affiliates that may enhance the reputation of the Company and its affiliates; •a candidate’s contribution to an appropriate balance on the Board of professional knowledge, business expertise, varied industry knowledge, and financial expertise; •basic knowledge of the banking industry, financial regulatory system, and laws and regulation that govern the Company and its subsidiaries; and •“independence” and “financial literacy,” as defined under applicable rules promulgated by the SEC pursuant to the Sarbanes-Oxley Act of 2002, and Nasdaq Listing Rules. Shareholders who wish to make suggestions or recommendations about director nominations should forward their written suggestions to the Chairman of the Board addressed to PCB Bancorp, Attn: Corporate Secretary, 3701 Wilshire Boulevard, Suite 900, Los Angeles, California 90010. Submission of a recommendation in this fashion does not constitute a formal nomination under the Company’s bylaws. See “Other Matters -- Shareholder Nominations and Proposals” below. While the Board carefully considers diversity of professional disciplines and backgrounds when evaluating director candidates, it has not adopted a formal diversity policy. At present, the Board does not engage a third party to identify and evaluate potential director candidates.

  4. Director Nominee Qualifications and Experience

    Director Nominee Qualifications and Experience The Board currently consists of eight members, each of whom is a nominee for election at the Annual Meeting. Each of the directors will be elected to serve a one-year term, until their successors are duly elected and qualified. Our directors are not required to be a shareholder of the Company in order to qualify to serve as a director. All current directors of the Company, except Don Rhee, also serve as directors of the Company’s subsidiary, PCB Bank (the “Bank”). As discussed in greater detail below, the Board has affirmatively determined that, during the last fiscal year, seven of our eight directors qualified as independent directors based upon the rules of Nasdaq and the SEC. There are no arrangements or understandings between any of the directors and any other person pursuant to which he or she was selected as a director. The following table sets forth certain summary information about our current directors, including their names, ages, and the year in which they began serving as a director and any committee memberships they may hold. No current director has any family relationship, as defined in Item 401 of Regulation S-K, with any other director or with any of our executive officers. None of our directors has been involved in any bankruptcy or criminal proceedings, nor have there been any judgments or injunctions brought against any of our directors during the last ten years that we consider material to the evaluation of the ability and integrity of any director.

  5. Director Nominee Qualifications and Experience

    | | | | Committee Membership | | | | Name and Position | Age | Director Since | Audit | Compensation | Nominating and Governance | | Kijun Ahn, Ph.D. | 68 | 2007 (1) | | Chair | Member | | Daniel Cho | 59 | 2020 | Member | Member | | | Haeyoung Cho | 69 | 2011 | | | | | Janice Chung | 67 | 2021 | Member | | | | Sang Young Lee, Chairman | 73 | 2007 | | Member | Chair | | Hong Kyun “Daniel” Park | 65 | 2015 | Chair (2) | | | | Don Rhee | 68 | 2015 | | Member | Member | | Henry Kim, President & Chief Executive Officer | 57 | 2018 | | | |

  6. Director Nominee Qualifications and Experience

    (1)Dr. Ahn has been a director for the Company since 2007, except for the year of 2014. (2)Mr. Park serves as the Audit Committee financial expert. None of the Company’s directors is a director of any other company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940, whose common stock is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. The business experience of each of the current directors, who are nominees for election at the Annual Meeting is set forth below. Kijun Ahn, Ph.D. As one of the founding members of the Boards of the Company and the Bank, Dr. Ahn has extensive knowledge and experience in the fields of civil engineering and construction and provides the Board with valuable insights with regards to the Bank’s customers and issues involving these industries. Dr. Ahn was a project manager at Moffatt and Nichol, a global infrastructure advisory firm that specializes in structural, coastal, and civil engineering; environmental sciences; economics analysis; inspection and rehabilitation; and program management solutions. Throughout his 30 plus years of experience in the construction and development field, Dr. Ahn managed many major projects, including public infrastructure projects in the state of California and Hawaii. Dr. Ahn earned his Bachelor of Science degree from Seoul National University in Seoul, Korea and Doctorate degree in Civil Engineering from Washington University in St. Louis, Missouri. Daniel Cho. Mr. Cho has served on the Board of the Bank since April 2017 and on the Board of the Company since May 2020. Mr. Cho is a highly accomplished entrepreneur and a subject matter expert in Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”) compliance and Fintech. Mr. Cho founded Banker’s Toolbox in 2000, which served over 750 banks and credit unions in the U.S as a leader in BSA/AML software. Mr. Cho sold Banker’s Toolbox in 2015. Prior to Banker’s Toolbox, Mr. Cho was a banker for 12 years working as an SBA loan manager and an IT manager. Mr. Cho has served as the Chief Executive Officer of Maya Tech since August 2016. Mr. Cho brings the Board valuable experience regarding BSA/AML compliance, banking and technology matters. Mr. Cho holds a Bachelor of Arts degree in Economics from University of California at Berkeley. Haeyoung Cho. Ms. Cho was the President and Chief Executive Officer of the Company and the Bank from October 2011 until her retirement in December 2017. Ms. Cho is one of the founding executives of the Bank and played an instrumental role in successfully navigating the institution through the financial crisis and growing the Bank into an institution with over a billion dollars in assets. Ms. Cho began her banking career in 1983 and brings over 36 years of Korean-American community banking experience. As a career banking executive and the Company’s former President and Chief Executive Officer, Ms. Cho brings the Board deep banking expertise and insights regarding the Bank’s operations. Ms. Cho earned her Bachelor of Arts degree in business administration from Duksung University in Seoul, Korea and a Master of Business Administration degree from University of Phoenix. Ms. Cho also attended the Graduate School of Banking at Colorado in Denver, Colorado. Janice Chung. Ms. Chung has served on the Boards of the Company and the Bank since November 2021. Ms. Chung is the Chief Executive Officer of BIC Technologies Group, a firm that specializes in providing technology and engineering services to companies processing rare metals, including titanium dioxide and base materials for solar cells and semi-conductors, primarily to global companies in South Korea and China, since 2016. Prior to BIC Technologies Group, from 1999 to 2002, Ms. Chung was the Chief Executive Officer of cyberPulse Network Group that provided innovation-focused management consulting services to South Korean public and private sectors including startup venture incubation, raising capital for the startups, strategic business planning, technology transfer, technology commercialization in the global market and structuring new business investments. From 1996 to 1998, Ms. Chung, as a Certified Public Accountant, was a partner at Coopers & Lybrand LLP, now known as, PricewaterhouseCoopers, at its International Tax Division in New York. Ms. Chung brings the Board valuable management, executive and accounting experience. Ms. Chung earned her Bachelor of Science degree in business administration from the University of Southern California. Henry Kim. Mr. Kim served as the Chief Credit Officer, Chief Operating Officer and Corporate Secretary since the formation of the Bank in September 2003.In January 2018, Mr. Kim was promoted as the President and Chief Executive Officer of PCB Bancorp and PCB Bank. Mr. Kim is currently a member of the Board of Directors for both the Company and the Bank. As the Bank’s Chief Operating Officer, Mr. Kim spearheaded the expansion of the Bank’s branch network in Southern California and into the greater New York City metropolitan market, and led the expansion of extensive loan production office network in seven different states. As the President and Chief Executive Officer, he successfully took the Company public in August 2018. Under Mr. Kim’s leadership and growth strategies, the Bank’s total assets consistently increased from $1.44 billion at December 31, 2017 to $2.79 billion at December 31, 2023, and the Company’s shareholders’ equity increased from $142.2 million to $348.9 million over that same time period. In addition to being an experienced banker, as the Company’s President and Chief Executive Officer, Mr. Kim brings the Board valuable insights regarding the Company’s operations. Mr. Kim is a graduate of University of California at Santa Barbara with a BS degree in Applied Mathematics in 1989, and graduated from Pacific Coast Banking School in 2012. Sang Young Lee. Mr. Lee is one of the founding members of the Boards of the Company and the Bank, and the current Chairman of the Boards of the Company and the Bank. Mr. Lee has served as the President and Chief Executive Officer of Lee’s Gold & Diamond Import, Inc. since 1988. Founded in 1988, Lee’s Gold & Diamond Import, Inc. specializes in wholesale distribution of various jewelry products in the greater Los Angeles area. Mr. Lee provides the Board with extensive insight into the trade industry and also possesses the business acumen and knowledge of the economic environment in that industry which is a tremendous asset to the Board. Mr. Lee also previously served as the Chairman of the Boards of the Company and the Bank from 2009 to 2012. Mr. Lee earned his Bachelor of Arts degree in law from Han Yang University and a Master of Business Administration degree in International Trade from Korea University in Seoul, Korea.

  7. Director Nominee Qualifications and Experience

    Hong Kyun “Daniel” Park. Mr. Park has served on the Boards of the Company and the Bank since 2015. He is a Certified Public Accountant and a partner of KNP, LLP, a greater Los Angeles-based accounting firm, where he has served both international and domestic middle market companies since 2017. Prior to that, Mr. Park was a partner of CKP, LLP, an accounting firm, from 2012 to 2016. Mr. Park brings over 30 years of business and accounting experience to the Board, having previously served with such prestigious accounting firms as Ernst & Young, Arthur Andersen, PwC, Deloitte & Touche, and also served as the Chief Financial Officer of several private companies. Mr. Park’s in-depth knowledge of accounting principles and auditing standards generally accepted in the U.S., as well as his valuable perspective on various industries, is a tremendous asset to the Board. Mr. Park is currently a member of AICPA and the California CPA Society. He had also served over 15 years on the Board of Governors at City Club Los Angeles. Mr. Park earned his Bachelor of Arts degree in Economics and Business from University of California at Los Angeles. Don Rhee. Mr. Rhee has served on the Board of the Company since 2015. In 1988, Mr. Rhee founded Active USA, Inc., a Los Angeles-based apparel manufacturer, where he currently serves as the President and Chief Executive Officer. Mr. Rhee is a prominent leader in the Korean-American apparel business owners’ community, becoming the President of San Pedro Fashion Mart Association in 2013 and Chief Executive Officer of The World Korean Business Convention in 2015. From 1999 to 2011, Mr. Rhee was a director at Saehan Bancorp, which merged into a bank that eventually became a part of Bank of Hope. Mr. Rhee has extensive experience in the apparel manufacturing industry and a deep understanding of the commercial customers’ banking needs. In February 2023, Mr. Rhee was awarded the Dongbaek (Camellia) Medal of the Order of Civil Merit, one of the highest civilian awards, from the Korean government for his many philanthropic activities and significant meritorious contributions to the field of education. Mr. Rhee earned his Bachelor of Science degree in Architecture and an honorary Doctorate in business administration from Yeungnam University in Korea.

  8. Compensation of Directors

    Compensation of Directors The following table sets forth information regarding 2023 compensation for each of our non-employee directors.

  9. Compensation of Directors

    | Name | Fees Earned and Paid in Cash (1) | Equity Awards | All Other Compensation (2) | Total | | Kijun Ahn | $67,000 | $— | $24,000 | $91,000 | | Daniel Cho | $79,000 | $— | $21,523 | $100,523 | | Haeyoung Cho | $67,000 | $— | $84,000 | $151,000 | | Janice Chung | $67,000 | $— | $24,000 | $91,000 | | Sang Young Lee, Chairman | $79,000 | $— | $24,000 | $103,000 | | Hong Kyun ”Daniel” Park | $67,000 | $— | $19,504 | $86,504 | | Don Rhee | $49,000 | $— | $24,000 | $73,000 |

  10. Compensation of Directors

    (1)Amounts shown include payment of Board membership retainer fees for the Company and the Bank Board meetings, committee membership fees and specific purpose committee membership fees. (2)All Other Compensation reflects health insurance benefits. For Haeyoung Cho, includes $60,000 in consulting fees. Non-employee director fees for 2023 reflect fees for service on both the Boards of the Company and the Bank. Non-employee directors of the Bank were paid a monthly retainer of $6,000, while the Chairman of the Board of the Bank was paid a monthly retainer of $7,500. In addition, non-executive directors of the Bank that also served on the director’s loan committee were paid an additional monthly retainer of $500 and chair of the Bank’s Risk and Compliance Committee (Director Daniel Cho), were paid an additional monthly retainer of $1,000. The member of the Board of the Company who did not also serve on the Board of the Bank (Director Don Rhee) was paid a monthly retainer of $5,000.

  11. Summary Compensation Table

    Summary Compensation Table The following table sets forth information regarding the total compensation for the years ended December 31, 2023 and 2022 of our Chief Executive Officer and our two other most highly compensated executive officers during the year ended December 31, 2023, who we refer to as our “named executive officers.”

  12. Summary Compensation Table

    | Name | Year | Base Salary | Short Term Cash Incentive | Restricted Stock Awards (1) | Stock Option Award | All Other Compensation (2) | Total | | Henry Kim | 2023 | $498,077 | $450,000 | $— | $66,156 | $83,923 | $1,098,156 | | | 2022 | $448,077 | $400,000 | $549,000 | $— | $86,243 | $1,483,320 | | Timothy Chang | 2023 | $297,692 | $120,000 | $— | $— | $40,145 | $457,837 | | | 2022 | $278,425 | $120,000 | $— | $— | $39,636 | $438,061 | | David W. Kim | 2023 | $292,385 | $70,000 | $— | $— | $29,543 | $391,928 | | | 2022 | $269,231 | $— | $— | $102,162 | $87,692 | $459,085 |

  13. Summary Compensation Table

    (1) The amount represents the grant date fair value of the RSAs granted, calculated in accordance with FASB ASC Topic 718. Fair values of stock awards were valued at the closing price of the Company's common stock on the grant date of the awards. (2) “All Other Compensation” for the named executive officers during the fiscal years ended December 31, 2023 and 2022 is summarized below.

  14. Summary Compensation Table

    | Name | Year | Auto Allowance | Company 401(k) Match (i) | Dividends on Unvested RSAs | Cellphone Reimbursement | Other (ii) | Total | | Henry Kim | 2023 | $20,184 | $22,500 | 23,610 | $1,054 | $16,575 | $83,923 | | | 2022 | $18,730 | $20,249 | $31,558 | $1,076 | $14,630 | $86,243 | | Timothy Chang | 2023 | $20,112 | $17,862 | $1,071 | $1,100 | $— | $40,145 | | | 2022 | $20,126 | $16,705 | $1,605 | $1,200 | $— | $39,636 | | David W. Kim | 2023 | $12,000 | $17,543 | $— | $— | $— | $29,543 | | | 2022 | $11,539 | $16,153 | $— | $— | $60,000 | $87,692 |

  15. Summary Compensation Table

    (i) Amount reflects the Company matching contribution under the 401(k) Plan. (ii) Amount for Mr. Henry Kim reflects club dues and amount for Mr. David W. Kim reflects a signing bonus paid to him as a part of his employment terms.

  16. Outstanding Equity Awards at Fiscal Year End

    Outstanding Equity Awards at Fiscal Year End The following table provides information for each of our named executive officers regarding outstanding awards held by the officers as of December 31, 2023, as adjusted for stock splits. Market values are presented as of the end of 2023 (based on the assumed per share fair market value of our common stock of $18.43 on December 29, 2023).

  17. Outstanding Equity Awards at Fiscal Year End

    | | | Option Awards | | | | | RSAs | | | | | | Number of Securities Underlying Unexercised Options (1) | | | | Number of Shares of Unvested RSAs (1) | Market Value of Shares of Unvested RSAs | | Name | Grant Date | Expiration Date | Exercisable | Unexercisable | Exercise Price | Intrinsic Value | | | | Henry Kim | 10/28/2015 | 10/28/2025 | 24,734 | — | $10.33 | $200,345 | | | | | 01/02/2018 | 01/02/2028 | 50,000 | — | $14.75 | $184,000 | | | | | 10/25/2023 | 10/25/2033 | — | 21,000 | $15.04 | $71,190 | | | | | 08/01/2019 | | | | | | 2,000 | $36,860 | | | 01/14/2021 | | | | | | 11,261 | $207,540 | | | 01/01/2022 | | | | | | 20,000 | $368,600 | | Timothy Chang | 10/28/2015 | 10/28/2025 | 27,000 | — | $10.33 | $218,700 | | | | | 08/01/2019 | | | | | | 1,000 | $18,430 | | David W. Kim | 01/03/2022 | 01/03/2032 | 4,000 | 16,000 | $22.29 | $— | | |

  18. Outstanding Equity Awards at Fiscal Year End

    (1) All unexercised options are subject to vesting; 20% to vest on each anniversary date for options granted on January 3, 2022 and vest in three equal annual installment on each anniversary for options granted on October 25, 2023. (2) RSAs granted on August 1, 2019 and January 1, 2022 to vest equally over five years and RSAs granted on January 14, 2021 will vest equally over three years.

  19. Pay Versus Performance Table

    Pay Versus Performance Table The following table provides information about the relationship between compensation actually paid to our Principal Executive Officer (“PEO”), Mr. Henry Kim, and other non-PEO Named Executive Officers (“NEOs”) and certain financial performance metrics of the Company using a methodology that has been prescribed by the SEC.

  20. Pay Versus Performance Table

    | Fiscal Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based on Total Shareholder Return | Net Income | | 2023 | $1,098,156 | $1,170,270 | $424,883 | $427,490 | $108.08 | $30,705,000 | | 2022 | $1,483,320 | $1,285,784 | $448,573 | $418,966 | $83.29 | $34,987,000 | | 2021 | $822,677 | $1,396,921 | $307,671 | $381,577 | $221.56 | $40,103,000 |

  21. Pay Versus Performance Table

    (1) The names of non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023 and 2022, Timothy Chang and David W. Kim, and (ii) for 2021, Timothy Chang and Andrew Chung. The following table presents amounts that were deducted from or added to Summary Compensation Table (“SCT”) total compensation to calculate Compensation Actually Paid (“CAP”) to our PEO and average CAP to our non-PEO NEOs. The fair value of stock option awards was determined using methodologies and assumptions developed in a manner substantively consistent with those used to determine the grant date fair value of such awards.

  22. Pay Versus Performance Table

    | | Fiscal Year | | | | | 2023 | 2022 | 2021 | | Reconciliation of PEO SCT Total to CAP | | | | | PEO SCT total | $1,098,156 | $1,483,320 | $822,677 | | Deduct: amounts reported under the “Restricted Stock Awards” column in the SCT | (66,156) | (549,000) | (350,002) | | Add: year-end fair value of awards granted in the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year | 109,578 | 442,250 | 741,897 | | Add: amount of change in fair value as of the end of the covered fiscal year (from the end of the prior fiscal year) of any awards granted in prior years that are outstanding and unvested as of the end of the covered fiscal year | 4,079 | (113,249) | 163,788 | | Add: amount of change in fair value from the end of the prior fiscal year to the vesting date for awards granted in prior years that vest in the covered fiscal year. | 24,613 | 22,463 | 18,561 | | PEO CAP | $1,170,270 | $1,285,784 | $1,396,921 | | Reconciliation of Non-PEO NEO Average SCT Total to Average CAP | | | | | Average SCT total | $424,883 | $448,573 | $307,671 | | Deduct: amounts reported under the “Stock Option Awards” column in the SCT | — | (51,081) | — | | Add: year-end fair value of awards granted in the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year | — | 27,119 | — | | Add: amount of change in fair value as of the end of the covered fiscal year (from the end of the prior fiscal year) of any awards granted in prior years that are outstanding and unvested as of the end of the covered fiscal year | 2,085 | (4,484) | 54,506 | | Add: amount of change in fair value from the end of the prior fiscal year to the vesting date for awards granted in prior years that vest in the covered fiscal year. | 522 | (1,161) | 19,400 | | Average Non-PEO NEO CAP | $427,490 | $418,966 | $381,577 |

  23. Narrative Discussion of Pay Versus Performance

    Narrative Discussion of Pay Versus Performance PEO and Non-PEO NEO CAP and Total Shareholder’s Return (“TSR”) The amount of PEO CAP and the average Non-PEO NEO CAP is generally aligned with the Company’s TSR over the periods presented in the table. The alignment of CAP with the Company’s TSR is because a significant portion of the PEO CAP is comprised of equity awards and fair value changes of Non-PEO NEOs’ existing equity awards are closely related to the Company’s TSR. There were no equity awards granted to Non-PEO NEOs in 2023, 2022 or 2021, other than the stock option awards granted for Mr. David W. Kim as a part of his initial employment terms. In addition, Mr. David W. Kim received a signing bonus of $60,000 as a part of his employment terms. PEO and Non-PEO NEO CAP and Net Income The amount of PEO CAP and the average Non-PEO NEO CAP is generally aligned with the Company’s net income over the periods presented in the table, as the Company uses net income as a performance measure in the overall executive compensation program among other financial and non-financial measures. The Company’s annual short-term cash incentive payable to our PEO is provided for in his employment agreement and is equal to the lesser of 1.5% of pre-tax profit for that year or his then current base salary, plus discretionary bonuses to be determined by the Board, if any. The short-term cash incentives for Non-PEO NEOs’ are discretionary. In addition, Mr. David W. Kim received a signing bonus of $60,000 and stock option awards as a part of his employment terms. PEO and Non-PEO NEO CAP and SCT Compensation amount of equity awards on SCT is based on the grant date value of equity awards granted during the fiscal year whereas CAP is based on the fair value of equity awards granted during the year valued at year end and the change in value of prior year’s awards, including awards granted in prior fiscal years. Thus, CAP reflects all outstanding equity awards while SCT is based on only the equity award issued in the same year. The Company’s stock price increased in 2023 and decreased in 2022 compared from the prior year-end, resulting in SCT and CAP being very comparable. In 2021, a significant portion of the PEO and Non-PEO NEOs’ CAP increased compared to SCT due to increases in the fair value of the equity awards and the Company’s stock price at year end.