DEF 14A of Fidelity D & D Bancorp Inc
Filed Mar 27, 2024 · FY20230001437749-24-009504
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
(PROPOSAL NO. 1) Qualification and Nomination of Directors The Company’s by-laws provide that the Board of Directors consist of at least three directors and be classified into three classes. Each class is elected for a term of three years. Accordingly, the terms of the classes expire at successive annual meetings. The Board of Directors may fix the number of directors and their respective classifications within the foregoing limits. A majority of the Board of Directors may also fill vacancies on the Board, and the person appointed to fill the vacancy serves, until the expiration of the term of office of the class of directors to which he or she was appointed. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL TO ELECT THE THREE NOMINEES LISTED BELOW AS CLASS A DIRECTORS OF THE COMPANY. Currently, Class A consists of three directors, Class B consists of two directors, and Class C consists of four directors. Shareholders will elect three Class A directors at the annual meeting to serve for a three-year term that expires at the Company’s annual meeting in the year 2027. The proxy holders will vote the proxies for the election of each of the nominees named below, unless you indicate that your vote should be withheld from any or all of them. Each nominee elected as a director will continue in office until his or her successor has been duly elected and qualified, or until his or her death, resignation, or retirement. The Board of Directors nominated John T. Cognetti, Michael J. McDonald and HelenBeth G. Vilcek to serve as Class A directors until the 2027 annual meeting of shareholders. Ms. Vilchek and Messrs. Cognetti and McDonald are presently members of the Board of Directors and have consented to serve another term, if elected. If any of the nominees is unable to serve for any reason, a majority of the Board of Directors then in office may fill the vacancy until the expiration of the term of the class of directors to which he or she was appointed. The Board of Directors is proposing the following nominees for election as Class A Directors at the annual meeting:
(PROPOSAL NO. 1)
| John T. Cognetti | Michael J. McDonald | HelenBeth G. Vilcek |
BOARD OF DIRECTORS AND MANAGEMENT
BOARD OF DIRECTORS AND MANAGEMENT Information as to Directors and Nominees The following biographies contain selected information with respect to the directors of the Company. The information includes each person’s age as of March 13, 2024, and principal occupation for at least the past five years. Current Class A Directors (to serve until 2024) and Nominees (to serve until 2027, if reelected) John T. Cognetti Mr. Cognetti, age 74, has been a Director of the Company since 1999. He has served as a member of the Bank’s Board of Directors since 1988. Mr. Cognetti is the former President of Hinerfeld Commercial Real Estate, based in Scranton, Pennsylvania. With his background, education and forty-six years’ experience in real estate brokerage, he provides insight on issues, trends and values of the regional and national commercial real estate markets. He also provides guidance to the Board on Bank owned real estate issues. Having hired and managed sales professionals in his business, Mr. Cognetti shares his insight on personnel, marketing, and management issues. Michael J. McDonald, Esquire Mr. McDonald, age 69, has been a Director of the Company since 1999, and he has served as a member of the Bank’s Board of Directors since 1994. A founding partner in the law firm of McDonald and MacGregor, LLC in Scranton, Pennsylvania. Mr. McDonald’s education and legal experience provide valuable insight for the Company and Bank. HelenBeth G. Vilcek Ms. Vilcek, age 66, has been a Director of the Company and member of the Bank’s Board of Directors since 2020. Ms. Vilcek is the owner of Garofalo Real Estate, a property management company located in Easton, Pennsylvania. Ms. Vilcek serves on the board and chairs the audit committee at the Bank of Bird-in-Hand in Bird-in-Hand, Pennsylvania. She was an original investor with the former Premier Bank, Doylestown, Pennsylvania. Ms. Vilcek is active in the community and is a Past Grand Matron of the Order of Eastern Star for the state of Pennsylvania. Ms. Vilcek’s experience and community involvement provides valuable insight for the Company and Bank. Current Class B Directors (to serve until 2026) William J. Joyce, Sr. Mr. Joyce, age 65, has been a Director of the Company and member of the Bank’s Board of Directors since 2020. Mr. Joyce is the former Principal of Joyce Insurance Group located in Pittston, Pennsylvania. Mr. Joyce has expertise in risk assessment and management, financial statement preparation, review, and analysis. Mr. Joyce holds an associate degree in Hotel and Restaurant Management from the Culinary Institute of America and has a Property & Casualty Insurance License in the Commonwealth of Pennsylvania. Mr. Joyce’s education, experience and community involvement provide valuable insight for the Company and Bank. Alan Silverman Mr. Silverman, age 66, has been a Director of the Company and member of the Bank’s Board of Directors since 2020. Mr. Silverman is a Certified Public Accountant for over thirty years, and operates his own firm specializing in meeting the needs of the healthcare industry. He is one of the founders and CEO of PrimeMed P.C. Mr. Silverman has acted as President of not-for-profit nursing home corporations, serving the Medicaid community, and is a past President of Glen Oak Country Club. Mr. Silverman’s background provides valuable financial knowledge for the Company and Bank. Current Class C Directors (to serve until 2025) Brian J. Cali, Esquire Mr. Cali, age 71, has been a Director of the Company and a member of the Bank's Board of Directors since February of 2001. He is the managing owner of Brian J. Cali and Associates, a Pennsylvania law firm located in Dunmore, Pennsylvania. He has been a practicing attorney for over 40 years. Mr. Cali is also the owner of several businesses located in Northeastern Pennsylvania. Attorney Cali's law practice and the experience he has in the operation and management of several businesses provides a wealth of knowledge as a Director and as Chairman. Richard M. Hotchkiss Mr. Hotchkiss, age 80, has been a Director of the Company and a member of the Bank’s Board of Directors since 2020. Mr. Hotchkiss, a veteran, has been the owner of several businesses including a family lumber business, convenience store, gas station and freight hauling company. Upon retiring he became a PA Certified UCC building inspector. Mr. Hotchkiss served at the former MNB Corporation as the Chairman of the Building Committee and Chairman of the Board of Directors. Mr. Hotchkiss’s leadership experience in business operations provides valuable knowledge for the Company and Bank. Daniel J. Santaniello Mr. Santaniello, age 58, has been a Director of the Company and a member of the Bank’s Board of Directors since March 2011. Mr. Santaniello has served as President and Chief Executive Officer of the Corporation and Bank since December 2010. Mr. Santaniello had previously served as Vice President and Chief Operating Officer of the Company since May 2004. Mr. Santaniello has a broad knowledge of banking from his many years in the industry. Paul C. Woelkers Mr. Woelkers, age 64, has been a Director of the Company and a member of the Bank’s Board of Directors since July 2021. Mr. Woelkers founded Lackawanna Mobile X-Ray, spending his career growing the company throughout seven states in the Mid-Atlantic region and beyond. In 2010, he sold the company and is now President of Lackawanna Mobile X-Ray, acquiring 170 former clients back into his service fold. Mr. Woelkers served as a member of the Board of Directors of the former Landmark Bancorp Inc. Mr. Woelkers’ leadership experience in business provides valuable knowledge for the Company and Bank. Listed below is a board diversity matrix chart pursuant to the Nasdaq Board Diversity Rules as of February 1, 2024.
BOARD OF DIRECTORS AND MANAGEMENT
| Total Number of Directors | 9 | | | | | | Female | Male | Non-Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 1 | 8 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 0 | 0 | 0 | 0 | | Alaskan Native or Native American | 0 | 0 | 0 | 0 | | Asian | 0 | 0 | 0 | 0 | | Hispanic or Latino | 0 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 1 | 8 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | 0 | | | | | Did Not Disclose Demographic Background | 0 | | | |
BOARD OF DIRECTORS AND MANAGEMENT
Listed below is a board diversity matrix chart pursuant to the Nasdaq Board Diversity Rules as of February 1, 2023.
BOARD OF DIRECTORS AND MANAGEMENT
| Total Number of Directors | 10 | | | | | | Female | Male | Non-Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 2 | 8 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 0 | 0 | 0 | 0 | | Alaskan Native or Native American | 0 | 0 | 0 | 0 | | Asian | 0 | 0 | 0 | 0 | | Hispanic or Latino | 0 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 2 | 8 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | 0 | | | | | Did Not Disclose Demographic Background | 0 | | | |
EXECUTIVE COMPENSATION
| ● Base Pay | ● Incentive Plan | | ● Broad Based Benefits | ● Retirement Plan | | ● Profit Sharing Contributions | ● Equity Based Compensation | | ● Employee Stock Purchase Plan | ● Perquisites |
EXECUTIVE COMPENSATION
Base Pay Base pay is a fixed amount of money paid to the executive and is the core of the Company's executive compensation, allowing a predictable level of income. It is paid in exchange for sustained performance of duties and responsibilities and is mainly determined by the position held, experience within the position, performance, longevity and benchmarking resources. There is no specific formula or weight used in determining the base pay, but each factor is reviewed separately in developing the amount. Gaining guidance from similar positions within the marketplace, input from compensation consultants, and reviews of peer banks of comparable asset size within the state assist in the determination. The Committee uses its business judgment and input from the Chief Executive Officer in determining the amount of increase in base pay to award the other named executive officers. Incentive Plan The Committee annually approves incentive plans for various areas of the Company, including an Annual Incentive Plan (AIP) covering the named executive officers. The incentive plans, as a part of overall compensation plans, provide an opportunity for reward for meeting and exceeding established performance goals as well as recognition of individual achievements. Its purpose is to motivate, reward and reinforce performance and achievement of the executive's team and individual goals in support of strategic objectives for growth and profitability. Linked to bank and individual performance factors, the plan provides a form of variable cash compensation. Factors and weighting, which are reviewed annually and may be updated from year to year, are determined at the beginning of each plan year. Actual performance is compared to the goals set and awards are determined based on meeting and exceeding the annual performance objectives. The plan focuses on achievement of the goals in support of the strategic objectives of the Company and the best interest of the shareholders. For the year 2023, the plan focused on goals of earnings per share, asset growth, average Key Performance Indicator score and a board discretion component calculated against threshold, target and maximum performance measures. Broad Based Benefits The Company offers competitive and comprehensive benefit plans to all qualifying employees, including the named executives. The benefit plans offer additional incentive to recruit and retain employees. The plans, including health insurances, short and long-term disability programs and term life insurance, help to protect the Company's employees from the financial consequences of being uninsured. Each executive is eligible to participate in these plans to the same extent as all other employees of the Company. Retirement Plan Consistent with the Company's Compensation Philosophy, the Company provides a 401(k) plan for all full-time employees and for part-time employees working over a certain threshold of hours, subject to certain eligibility requirements regarding age and length of employment. The Company provides up to a 6% match of employee contributions which incents employees to save for retirement. Contributions by the executives and subsequent bank matches are subject to the normal discrimination testing for 401(k) plans and are limited by those rules. Profit Sharing Contribution The 401(k) plan maintains a discretionary profit-sharing option with eligibility rules mirroring the 401(k) plus the requirement of being an active employee as of the plan's year end. Participation is inclusive of executives under the same terms. The Company may make a discretionary annual award to all eligible employees based on the Company's profitability. The Company believes that this plan encourages longevity with the Company and encourages the employees to assist in keeping the Company profitable. No profit-sharing contributions were made to employees in 2023. Equity Based Compensation Equity based compensation provides an incentive to attract, retain and reward persons performing services for the Company through providing the means by which eligible executives may be given the opportunity to benefit from increases in value of the common stock through the granting of awards. In accordance with the Compensation Philosophy of the Bank, the Compensation Committee believes that incenting through equity-based compensation plans will advance the interests of the Company and its shareholders by motivating executives to contribute to the growth and profitability of the Company. In 2022, the Company approved the 2022 Omnibus Stock Incentive Plan to replace the 2012 Omnibus Stock Incentive Plan that is designed to provide stock-based compensation grants which can consist of stock options (qualified and non-qualified), SSARs, stock awards and restricted stock, stock units and restricted stock units, performance awards and directors' fees. The vesting period encourages management continuity and aligns the interests of the participants with those of the shareholders. In 2023, the Long-Term Incentive Plan (LTIP) set parameters for a one-year period. The awards in the LTIP are calculated following the end of the Company's 2023 fiscal year and are based on peer metrics of return on equity (ROE) performance, Core Earnings per Share (EPS) and a board discretion component. Restricted Stock awards with a three-year vesting period were granted to named executives in February 2024 for the year 2023. Clawback The plan contains a clawback provision wherein awards will be recalculated if the relevant performance factor upon which they are based is restated or otherwise adjusted within the thirty-six (36) month period following the public release of the financial information. Any material overpayments or adjustments required by law will be owed back to the Company. In the event the Corporation or Bank is required to prepare an account restatement because of the awardee's misconduct or fraudulent activity, then the awardee shall return and refund to the Bank the entire award that was received based upon the erroneous data. Employee Stock Purchase Plan An Employee Stock Purchase Plan is offered to all employees, including executives. The plan's purpose is to provide eligible employees the opportunity to acquire or increase their ownership interest in the company through the purchase of a limited number of shares of Company stock at a discounted price. This program assists in aligning the interests of the employees with those of the shareholders and it provides further incentive to employees to enhance the financial results of the Company. The Employee Stock Purchase Plan is an optional program with entry available at the beginning of each year. Supplemental Executive Retirement Plan The Bank has entered into a supplemental executive retirement plan ("SERP") with Messrs. Santaniello, DeFrancesco, Walsh and Pacyna. The intent of entering into the SERPs was to recognize the valuable services each executive has performed for the Bank, to encourage the executive's continued employment, and to provide the executive with additional incentive to achieve corporate objectives by providing additional retirement benefits. The triggering events are normal retirement age, disability, change in control and early termination as long as the early termination occurs after the first day of the fourth plan year. The triggering events are designed to further the plan's intent to encourage continued employment. The Committee determined it was in the best interest of the Bank to structure the SERPs as defined contribution plans and not to provide for specific guaranteed amounts upon retirement to shift a portion of the risks associated with SERPs to the executive. The SERPs also contain a forfeiture provision should the executive violate certain noncompetition agreements to which the executive is a party. Split Dollar Life Insurance
EXECUTIVE COMPENSATION
The Bank has entered into split dollar life insurance agreements ("Split Dollar Agreement") with Messrs. Santaniello, DeFrancesco, Walsh and Pacyna. The intent of entering into the Split Dollar Agreement was to recognize the valuable services each executive has performed for the Bank, to encourage the executive's continued employment, and to provide the executive with additional incentive to achieve corporate objectives by providing additional life insurance benefits. The Split Dollar Agreement will vest upon the earlier of disability, change in control, normal retirement age or a date chosen by the Board. Upon death while still employed by the Bank, the executive's beneficiary will receive the lesser of three (3) times the executive's base salary or the net death proceeds as defined in the policy. Upon the death of Messrs. Santaniello, DeFrancesco, Walsh or Pacyna, following vesting and termination of employment, the executive will be entitled to the lesser of two (2) times his highest base salary or the net death proceeds. If death occurs prior to vesting, the Bank will receive all death proceeds. Perquisites Consistent with the Company's Compensation Philosophy, select executives may receive perquisites for purposes of providing opportunities to cultivate business. Perquisites are considered an important part of the executive compensation mix and include business use of automobiles and/or memberships to country clubs and social clubs. Use of a Company automobile is essential to conduct bank business in locations away from the office and developing relationships through outside activities via use of club memberships provides opportunity to market new and current clients. Any expense that is personal in nature is expected to be reimbursed to the Company by the executives. Role of Executive Officers in Compensation Decisions The Compensation Committee makes all compensation decisions with respect to executive officers. The Chief Executive Officer provides input to the Compensation Committee based on daily oversight of the other named executives and presents compensation recommendations. The Compensation Committee evaluates the recommendations derived from executive performance and other factors and incorporates its interactions with executive officers in their respective positions in determining the level of compensation appropriate for the named executives. The Chief Executive Officer is excluded from discussion when his performance and compensation are discussed, and no other executive officer is present when discussions regarding compensation occur. Role of Executive Compensation Philosophy in Determining Executive Compensation The Company has adopted a Compensation Philosophy designed to assist in attracting, retaining and motivating key talent. It was developed to maintain a competitive and pay-for-performance-focused executive compensation plan. The plan does not provide specific compensation recommendations for the named officers but provides the guidance in developing and implementing compensation strategies for the executives. Benchmarking In determining the appropriate levels of executive compensation, the Compensation Committee reviews levels of compensation from a variety of standard sources. Through these resources, the Compensation Committee educates itself on the current trends in compensation. Resources include Blanchard Consulting Group's study of executive compensation, reviews of public information containing compensation levels of similar peer banks, general compensation surveys and comparisons of executive compensation levels within the marketplace and regionally. No specific weight is given to any of the resources. With banking being a highly regulated industry, adherence with regulatory guidelines is given the utmost consideration. Changes in 2023 Executive Officer Compensation The Summary Compensation Table outlines actual compensation of the executive officers. The changes in base pay for named executive officers were based upon their performance and achievement of goals, their longevity with the Bank, their respective positions and data obtained from recent surveys as reviewed by the Compensation Committee. The Company also provides employment agreements to the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief Lending Officer and the Chief Consumer Banking Officer. The Compensation Committee believes that it is appropriate to provide employment agreements to these executive officers in order to protect the Company through the non-competition provisions contained in the agreements. Triggering Events in Contracts The Company is currently a party to employment agreements with Messrs. Santaniello, DeFrancesco, Walsh, and Pacyna and Ms. Turkington. Employment agreements are standard in the financial services industry and are used to protect the Company's client base through non-competition provisions. The agreements are also used to balance the financial goals of the executive with the needs of the Bank. The triggering events that provide payment which are prevalent in the financial services industry include:
EXECUTIVE COMPENSATION
| ● | Change in control |
EXECUTIVE COMPENSATION
| ● | Non-renewal of employment agreement |
PAY VS. PERFORMANCE
PAY VS. PERFORMANCE The following discusses the relationship of compensation actually paid to named executive officers and the financial performance of the Company. Compensation is compared to performance metrics of the cumulative Total Shareholder Return and Net Income to provide shareholders with a more transparent, readily comparable, and understandable disclosure of executive compensation and to assess executive compensation actually paid relative to financial performance.
PAY VS. PERFORMANCE
| Year | Summary Compensation Table Total for PEO(1) $ | Compensation Actually Paid to PEO(1) $ | Average Summary Compensation Table Total for Non-PEO NEOs(2) $ | Average Compensation Actually Paid to Non-PEO NEOs(3) $ | Value of Initial Fixed $100 Investment Based On Total Shareholder Return(4) % | Net Income(5) $ | | 2023 | 865,183 | 1,039,025 | 432,043 | 494,668 | 30.31% | 18,209,518 | | 2022 | 979,155 | 929,236 | 510,148 | 494,464 | -22.68% | 30,021,579 | | 2021 | 927,380 | 862,538 | 482,391 | 463,699 | -6.23% | 24,007,739 |
PAY VS. PERFORMANCE
| (1) Daniel J. Santaniello was the Company's Principal Executive Officer (PEO) for each of the 2021, 2022 and 2023 fiscal years. |
PAY VS. PERFORMANCE
| (2) Salvatore R. DeFrancesco, Jr., Eugene J. Walsh and Michael J. Pacyna were the Company's Non-PEO Named Executive Officers (NEOs) for each of the 2021, 2022 and 2023 fiscal years. Ruth Turkington was included in the Company’s Non-PEO Named Executive Officers (NEOs) for 2023. |
PAY VS. PERFORMANCE
| (3) The amounts disclosed reflect the following adjustments to the amounts reported in the Summary Compensation Table. |
PAY VS. PERFORMANCE
| | 2023 | | 2022 | | 2021 | | | | PEO $ | Non-PEO NEO's $ | PEO $ | Non-PEO NEO's $ | PEO $ | Non-PEO NEO's $ | | Less Change in Pension Value & NQ Deferred Compensation Earnings | - | - | - | - | (11,994) | (4,807) | | Less Stock Award | (82,840) | (35,126) | (155,505) | (71,310) | (155,980) | (68,477) | | Increase for Fair Value of Awards Granted during Year that Remain Unvested as of Year End | 182,562 | 77,296 | 147,501 | 64,755 | 128,266 | 67,535 | | Change in Fair Value from Prior to Current Year End of Awards Granted Prior to the Year that were Outstanding & Unvested as of Year End | 57,750 | 13,712 | (49,349) | (13,275) | (12,114) | (6,659) | | Change in Fair Value from Prior Year End to Vesting Date of Awards Granted Prior to Year that Vested during Year | 4,034 | 2,221 | (2,408) | (1,308) | (17,897) | (9,220) | | Increase based on Dividends or Other Earnings Paid during year prior to Vesting Date of Award(6) | 12,336 | 4,522 | 9,842 | 5,454 | 4,877 | 2,936 | | Total Adjustments | 173,842 | 62,625 | (49,919) | (15,684) | (64,842) | (18,692) |
PAY VS. PERFORMANCE
| (4) Computed based on a hypothetical investment of $100 in common stock on January 1, 2021, with dividends paid reinvested. |
PAY VS. PERFORMANCE
| (5) As reported on Company’s Consolidated Statements of Income for the applicable fiscal reporting year, as provided under Part II Item 8 of the Company’s Annual Report on Form 10-K. |
PAY VS. PERFORMANCE
| (6) Dividends earned on the restricted stock are forfeitable until the vesting date of the underlying restricted stock. |
PAY VS. PERFORMANCE
Relationship Between Compensation Actually Paid and Performance Measures Relationship Between Compensation Actually Paid to our PEO and the Average of the Compensation Actually Paid to the Other NEOs and the Company's Cumulative Total Shareholder Return (TSR). From 2022 to 2023, the compensation actually paid to our PEO and the average of the compensation actually paid to the Other NEOs increased by 11.81 and 0.04% respectively, compared to a 233.64% increase in our TSR over the same time period. From 2021 to 2022, the compensation actually paid to our PEO and the average of the compensation actually paid to the Other NEOs increased by 7.73% and 6.63%, respectively, compared to a 181.70% decrease in our TSR over the same time period. Relationship Between Compensation Actually Paid to our PEO and the Average of the Compensation Actually Paid to the Other NEOs and the Company's Net Income. From 2022 to 2023, the compensation actually paid to our PEO and the average of the compensation actually paid to the Other NEOs increased by same 11.81% and same 0.04%, respectively, compared to a 39.35% decrease in our Net Income over the same time period. From 2021 to 2022, the compensation actually paid to our PEO and the average of the compensation actually paid to the Other NEOs increased by 7.73% and 6.63%, respectively, compared to a 25.05% increase in our Net Income over the same time period.
Summary Compensation Table
Summary Compensation Table The following table provides the annual and equity-based compensation for services rendered in all capacities to the Company and the Bank for the fiscal year ended December 31, 2023, for those persons who were: The current President and Chief Executive Officer, the Chief Financial Officer, and the other three most highly compensated executive officers of the Company or Bank to the extent such person’s total exceeded $100,000.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus(6) ($) | Stock Awards(7) ($) | Option Awards(7) ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation(8) ($) | Total ($) | | Daniel J. Santaniello, President and Chief Executive Officer of the Company and the Bank | 2023 2022 | 460,135 423,846 | 148,000 225,000 | 82,840 155,507 | - - | - - | 174,208(1) 174,802(1) | 865,183 979,155 | | Salvatore R. DeFrancesco, Jr., Treasurer and Chief Financial Officer of the Company; Executive Vice President and Chief Financial Officer of the Bank | 2023 2022 | 294,077 269,460 | 75,000 112,000 | 44,190 79,780 | - - | - - | 113,539(2) 112,060(2) | 526,806 573,300 | | Eugene J. Walsh, Vice President and Chief Operating Officer of the Company; Executive Vice President and Chief Operating Officer of the Bank | 2023 2022 | 277,846 260,375 | 65,000 108,000 | 36,886 75,035 | - - | - - | 92,175(3) 90,352(3) | 471,907 533,762 | | Michael J. Pacyna, Jr., Executive Vice President and Chief Lending Officer of the Bank | 2023 2022 | 231,788 217,308 | 50,000 69,435 | 32,461 59,118 | - - | - - | 75,477(3) 77,522(4) | 389,726 423,383 | | Ruth Turkington Executive Vice President and Chief Consumer Banking Officer | 2023 | 149,279 | 54,000 | 71,060 | | - | 65,394(5) | 339,733 |
Summary Compensation Table
| (1) Figure represents the personal use value of a company automobile of $3,671 in 2023 and $3,359 in 2022. It also includes contributions for the 401(k) match and profit-sharing plan of $19,800 in 2023 and $18,300 in 2022. Included is $75 of life insurance premiums paid by the Company in 2023 and 2022. In addition, $8,054 was paid by the Company on behalf of Mr. Santaniello for country club and membership dues during 2023 and $10,445 in 2022. Also included is a contribution for the SERP of $142,608 in 2023 and $142,608 in 2022. |
Summary Compensation Table
| (2) Figure represents automobile allowance of $10,400 in 2023 and 2022. It also includes contributions for the 401(k) match and profit-sharing plan of $19,800 in 2023 and $18,300 in 2022. Included is $75 of life insurance premiums paid by the Company in 2023 and 2022. In addition, $6,812 was paid by the Company on behalf of Mr. DeFrancesco for country club and membership dues during 2023 and $6,818 in 2022. Also included is a contribution for the SERP of $76,452 in 2023 and $76,452 in 2022. |
Summary Compensation Table
| (3) Figure represents automobile allowance of $6,000 in 2023 and $5,662 in 2022. It also includes contributions for the 401(k) match and profit-sharing plan of $19,800 in 2023 and $18,300 in 2022. Included is $75 for life insurance premiums paid by the Company in 2023 and 2022. Also included is a contribution for the SERP of $66,300 in 2023 and $66,300 in 2022. |
Summary Compensation Table
| (4) Figure represents automobile allowance of $6,000 in 2023 and $3,462 in 2022. It also includes contributions for the 401(k) match and profit-sharing plan of $14,346 in 2023 and $17,653 in 2022. Included is $75 for life insurance premiums paid by the Company in 2023 and 2022. In addition, $0 was paid by the Company on behalf of Mr. Pacyna for country club and membership dues during 2023 and $1,261 in 2022. Also included is a contribution for the SERP of $55,056 in 2023 and $55,056 in 2022. |
Summary Compensation Table
| (5) Figure represents automobile allowance of $3,323 in 2023. It also includes contributions for the 401(k) match and profit-sharing plan of $1,927 in 2023. Included is $337 for life insurance premiums paid by the Company in 2023. Also included are relocation expenses of $59,807 paid by the Company on behalf of Ms. Turkington. |
Summary Compensation Table
| (6) Figures include awards received following the end of the fiscal year based on the reporting year’s performance metrics under the AIP for 2023 and 2022. |
Summary Compensation Table
| (7) Figures include awards received following the end of the fiscal year based on the reporting year's performance metrics for restricted stock awarded under the LTIP in February 2023 based on $49.43 per share and in February 2024 based on $46.96 per share. Figure for Ms. Turkington also includes Initial Equity Grant based on $44.06 per share. SSARs were not awarded in 2023 or 2024. |
Summary Compensation Table
| (8) Figures include contributions to the Supplemental Executive Retirement Plan, under which Messrs. Santaniello, DeFrancesco and Walsh vested on January 1, 2020, and Mr. Pacyna vested on January 1, 2022. |
Summary Compensation Table
Employment Agreements Each named executive entered into a three-year term employment agreement with annual extensions. Agreement entry dates for each are:
Summary Compensation Table
| ● | Mr. Santaniello – March 23, 2011 |
Summary Compensation Table
| ● | Mr. DeFrancesco – March 17, 2016, replacing a previously executed change in control agreement and severance agreement dated December 31, 2008 |
Summary Compensation Table
| ● | Mr. Walsh – March 29, 2017, replacing a previously executed change in control agreement and severance agreement dated June 26, 2015 |
Summary Compensation Table
| ● | Mr. Pacyna – March 20, 2019, replacing a previously executed change in control agreement and severance agreement dated March 29, 2017 |
Summary Compensation Table
| ● | Ms. Turkington – April 20, 2023 |
Summary Compensation Table
Under the terms of the employment agreements, in the event the named executive is terminated without cause, after a change in control, or by the named executive for good reason, he/she will receive two (2) times his/her annual base salary plus benefits for two years. He/She is also bound by non-competition and non-solicitation provisions.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | Daniel J. Santaniello | 10,720 2,906 | - - - - | 49.50 59.70 | 02/05/2028 02/04/2029 | 8,449 | 490,295 | | Salvatore R. DeFrancesco, Jr. | 4,322 3,623 5,740 1,665 | - - - - | 21.60 26.17 49.50 59.70 | 02/01/2026 02/06/2027 02/05/2028 02/04/2029 | 4,369 | 253,533 | | Eugene J. Walsh | 5,380 1,586 | - - - - | 49.50 59.70 | 02/05/2028 02/04/2029 | 4,242 | 246,163 | | Michael J. Pacyna, Jr. | 5,170 1,494 | - - - - | 49.50 59.70 | 02/05/2028 02/04/2029 | 3,272 | 189,874 | | Ruth Turkington | - | - | - | - | 1,000 | 58,030 |
Outstanding Equity Awards at Fiscal Year-End
(1) All outstanding SSARs are currently vested and exercisable. (2) The restricted stock vests 100% ending 2/16/2024 and 2/15/2025 and 2/21/2026. (3) The market value was computed using the market price of the Company’s stock at the end of 2023 - $58.03 per share.
NONQUALIFIED DEFERRED COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION On March 29, 2017, the Company entered into separate supplemental executive retirement (SERP) agreements with Messrs. Santaniello, DeFrancesco and Walsh pursuant to which the Company will credit an amount to a SERP account established for each participant’s behalf while they are actively employed by the Company for each calendar month from March 1, 2017 until the normal retirement age. The SERP account will be credited with interest at an annual rate equal to 4.00%, compounded monthly. This rate is fixed from plan inception until all payments are distributed. The SERP account is payable in 180 monthly installments commencing upon separation of service after attaining normal retirement age. If separation from service occurs following the first day of the fourth plan year for a reason other than death, disability or following a change in control, the participant will receive the SERP account balance at that date, payable in 60 monthly installments beginning at normal retirement age. If the executive terminates prior to the first day of the fourth plan year, the executive will forfeit all rights under the SERP. On January 1, 2020, Messrs. Santaniello, DeFrancesco and Walsh met the service requirements to vest into accrued SERP benefits. On March 20, 2019, the Bank entered into a SERP with Mr. Pacyna under the same considerations as afforded to Messrs. Santaniello, DeFrancesco and Walsh. On January 1, 2022, Mr. Pacyna met the service requirements to vest into accrued SERP benefits.
POTENTIAL PAYMENTS UPON TERMINATION
POTENTIAL PAYMENTS UPON TERMINATION Payments under each executive's contracts as detailed below would be triggered by termination of executive's employment for cause, good reason, disability, death, voluntary separation absent good reason, involuntary termination absent cause, and in the event of a change in control. The value of equity awards was calculated using $58.03 per share, the closing market price of the Company’s common stock on December 31, 2023. The tables below show the payments upon termination of Messrs. Santaniello, DeFrancesco, Walsh, and Pacyna and Ms. Turkington as of December 31, 2023:
POTENTIAL PAYMENTS UPON TERMINATION
| Form of Compensation: | Death ($) | Disability ($) | Cause ($) | Good Reason* ($) | Voluntary, Absent Good Reason ($) | Change in Control* ($) | Non- renewal ($) | Involuntary Without Cause* ($) | | Daniel J. Santaniello | | | | | | | | | | Severance | - | - | - | 950,000 | - | 950,000 | - | 950,000 | | Life Insurance | 1,425,000 | - | - | - | - | - | - | - | | SERP | 1,122,278 | 1,122,278 | - | - | - | 1,122,278 | - | - | | Equity awards: | | | | | | | | | | Restricted Stock SSARs | - 91,442 | - 91,442 | - - | - 91,442 | - 91,442 | 490,295 91,442 | - 91,442 | - 91,442 | | Salvatore R. DeFrancesco, Jr. | | | | | | | | | | Severance | - | - | - | 600,000 | - | 600,000 | - | 600,000 | | Life Insurance | 900,000 | - | - | - | - | - | - | - | | SERP | 601,652 | 601,652 | - | - | - | 601,652 | - | - | | Equity awards: | | | | | | | | | | Restricted Stock SSARs | - 321,853 | - 321,853 | - - | - 321,853 | - 321,853 | 253,533 321,853 | - 321,853 | - 321,853 | | Eugene J. Walsh | | | | | | | | | | Severance | - | - | - | 564,000 | - | 564,000 | - | 564,000 | | Life Insurance | 846,000 | - | - | - | - | - | - | - | | SERP | 521,759 | 521,759 | - | - | - | 521,759 | - | - | | Equity awards: | | | | | | | | | | Restricted Stock SSARs | - 45,891 | - 45,891 | - - | - 45,891 | - 45,891 | 246,163 45,891 | - 45,891 | - 45,891 | | Michael J. Pacyna, Jr. | | | | | | | | | | Severance | - | - | - | 472,500 | - | 472,500 | - | 472,500 | | Life Insurance | 708,750 | - | - | - | - | - | - | - | | SERP | 294,008 | 294,008 | | | | 294,008 | | | | Equity awards: | | | | | | | | | | Restricted Stock SSARs | - 44,100 | - 44,100 | - - | - 44,100 | - 44,100 | 189,874 44,100 | - 44,100 | - 44,100 | | Ruth Turkington | | | | | | | | | | Severance | - | - | - | 540,000 | - | 540,000 | - | 540,000 | | Life Insurance | 450,000 | - | - | - | - | - | - | - | | SERP | - | - | | | | - | | | | Equity awards: | | | | | | | | | | Restricted Stock SSARs | - - | - - | - - | - - | - - | 58,030 - | - - | - - |
POTENTIAL PAYMENTS UPON TERMINATION
* Tables do not include cost of benefits On December 31, 2023, if the Company terminated any of the above named executive’s employment without cause, if he/she terminated his/her employment for good reason, or if his/her employment terminated in connection with a change in control, he/she would have been entitled to a severance payment equal to two times his/her current annual salary, payable on the first business day of the month following the date that is six months after his/her termination from employment, and health care, life and disability benefits for two years. According to the split dollar agreement, if the named executive officer had died prior to separation from service, his named beneficiary would have been entitled to the lesser of 3 times his base salary as of the date of his death or the net death proceeds. The vesting date is the earliest of disability, change in control, normal retirement age or the date the Board chooses to vest the executive in the benefits. If the named executive dies after separation from service which occurs after the vesting date, his beneficiary shall be entitled to the lesser of 2 times the highest base salary earned by the executive in any calendar year or the net death proceeds. According to the SERP agreement, if the named executive officer experienced a disability, the Company would pay him the SERP account balance calculated as of the date of determination of disability paid in 60 consecutive monthly installments commencing on the month following disability. If a change in control occurred, the Company would have paid him the sum of the SERP account balance plus the present value of the expected remaining monthly amounts paid in 36 consecutive monthly installments commencing on the month following the change in control. In the event he died, the Company would have paid his beneficiary the SERP account balance, paid in 60 consecutive monthly installments commencing on the month following his death. In the event of a change in control, provided the named executive officer remained continuously employed with the Company, all unvested restricted stock would have immediately become and remained vested. If the Company terminated the named executive officer’s employment for any reason, except disability, death or cause, any vested SSARs on the date of termination may be exercised within 90 days after termination. In the case of death or disability, he or his beneficiary would have twelve months after termination to exercise the SSARs. In the event of a change in control, all outstanding SSARs would have immediately become and remained vested and exercisable. If after leaving the Company, the named executive officer engages in acts that violate the Company’s policies as set forth in the employment agreement, regarding non-competition, non-solicitation, confidentiality, or non-disparagement, in the judgement of the Compensation Committee, the entire amount of any incentive payments awarded to him/her under the long-term incentive plan during the most recent 12-month period shall be repaid in total. The executive shall also forfeit any non-distributed benefits under the SERP if the executive violates any of the provisions in the employment agreement regarding the covenant not to compete and unauthorized disclosures. This forfeiture provision shall not apply following a change in control.
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS Directors receive no remuneration for attendance at the Company’s Board of Directors meetings. However, the Bank pays each non-employee member of its Board of Directors a regular quarterly fee. During 2023, the Bank paid $8,750 per quarter to each non-employee Bank director for his or her services. In addition, the Chairman of the Board received an additional $3,750 per quarter, the Audit Committee Chairman received an additional $2,500 per quarter, and members of the Executive Committee received an additional $2,500 per quarter. The Bank does not compensate employee directors for attendance at Board of Directors meetings or committee meetings. In the aggregate, the Bank paid its directors $1,461,240 for all services rendered for 2023.
Director Compensation Table
Director Compensation Table
Director Compensation Table
| | Fees Earned | Stock | | | | or Paid in | Awards | Total | | Name | Cash ($) (1) | ($) | ($) | | Brian J. Cali | 88,000 | 98,860 | 186,860 | | Michael J. McDonald | 83,000 | 98,860 | 181,860 | | Kristin D. O’Donnell | 22,500 | 98,860 | 121,360 | | John T. Cognetti, William J. Joyce, Sr., Richard M. Hotchkiss, HelenBeth G. Vilcek, Alan Silverman and Paul C. Woelkers, each | 63,000 | 98,860 | 161,860 | | (1) Includes a $28,000 bonus for each Director over and above their regular Director, Chairman and Committee fees for 2023, paid in the first quarter of 2024. Except for Kristin D. O'Donnell who resigned from the Board in May of 2023. | | | |
Director Compensation Table
2012 Director Stock Incentive Plan The Company maintains an independent director stock incentive plan (the “2012 Director Plan”) that was approved by the shareholders at the 2012 Annual Meeting. The purpose of this plan is to advance the development, growth and financial condition of the Company by providing an incentive, through participation in the appreciation of the common stock of the Company, in order to secure, retain and motivate members of the Company’s Board of Directors who are not officers or employees of the Company or the Bank. In the 2012 Director Plan, the Company reserved 750,000 shares of its no-par common stock for issuance under the plan. Under the 2012 Director Plan, directors are eligible to be awarded stock-based compensation grants which can consist of non-qualified stock options, stock appreciation rights or restricted stock. The 2012 Director Plan has expired and no awards were granted from the plan after May 3, 2022. 2022 Omnibus Stock Incentive Plan The Company maintains an omnibus stock incentive plan (the 2022 Omnibus Plan) that was approved by the shareholders at the 2022 Annual Meeting. The 2022 Omnibus Plan replaced the 2012 Omnibus Plan and the 2012 Director Stock Incentive Plan and will expire on, and no stock-based awards will be granted after the year 2032. The purpose of this plan is to advance the development, growth and financial condition of the Company and each subsidiary thereof, by providing incentives through participation in the appreciation in the value of the Company’s common stock. In return, the Company hopes to secure, retain and motivate directors and employees who may be responsible for the supervision, operation and for the management of the affairs of the Company and any subsidiary now or hereafter existing by aligning the interest of its employees and directors with the interest of its shareholders. In the 2022 Omnibus Plan, the Company reserves 500,000 shares of its no-par common stock for issuance under the plan. In the 2022 Omnibus Plan, directors and employees are eligible to be awarded stock-based compensation grants which can consist of stock options (qualified and non-qualified), SSARs, stock awards and restricted stock, stock units and restricted stock units, performance awards and directors’ fees.