DEF 14A of Oak Valley Bancorp
Filed Apr 26, 2024 · FY20230001437749-24-013371
Board of Directors
Board of Directors Board Independence For 2023 and through the date of this proxy statement, a majority of the Board of Directors consisted of independent directors, as defined by the applicable rules and regulations of the Nasdaq Stock Market, as follows: Donald L. Barton Lynn R. Dickerson James L. Gilbert H. Randolph Holder Allison C. Lafferty Daniel J. Leonard Ronald C. Martin Janet S. Pelton Gary J. Strong Danny L. Titus Terrance P. Withrow The non-independent directors of the Board are Thomas A. Haidlen, who has related party transactions as described in the Information About Directors and Executive Officers section of this proxy statement, and Christopher M. Courtney, the Company’s Chief Executive Officer. In making its independence determinations, the Board considered transactions that occurred since the beginning of fiscal year 2023 between the Company and entities associated with the independent directors or members of their immediate family. All identified transactions that appeared to relate to the Company and a family member of, or entity with a known connection to, a director, was presented to the Board for consideration. In making its subjective determination that each of the Company’s directors other than Mr. Courtney and Mr. Haidlen is independent, the Board reviewed and discussed additional information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and the Company’s management. These transactions are described below under “Certain Relationships and Related Party Transactions.” Board and Committee Meeting Attendance During the fiscal year ended December 31, 2023, our Board of Directors held a total of twelve (12) meetings. Each incumbent director who was a director during 2023 attended at least 75% of the aggregate of (a) the total number of such meetings; and (b) the total number of meetings held by all committees of the Board on which such director served during 2023. Director Attendance at Annual Meetings of Shareholders The Board believes it is important for all directors to attend the Annual Meeting of Shareholders in order to show their support for the Company and to provide an opportunity for shareholders to communicate any concerns to them. The Company’s policy is to encourage, but not require, attendance by each director at the Company’s Annual Meeting of Shareholders. Eleven (11) of our thirteen (13) then-current directors attended our Annual Meeting of Shareholders in 2023. Communications with the Board The Board of Directors has established a process for shareholders to communicate with the Board of Directors or with individual directors. Shareholders who wish to communicate with the Board of Directors or with individual directors should direct written correspondence to our Corporate Secretary at our principal executive offices located at 125 North Third Avenue, Oakdale, California 95361. Our Corporate Secretary may (but is not required to) review all correspondence addressed to the Board, or to any individual member of the Board, for any correspondence that more suitably directed to management. Communications may be deemed inappropriate for this purpose if, for example, it is reasonably apparent from the face of the correspondence that it relates principally to a customer dispute. Our policies regarding the handling of shareholder communications to the Board were approved by a majority of our independent directors. Nomination of Directors The Board as a whole identifies and evaluates nominees for election as directors. The Board utilizes a variety of methods for identifying and evaluating nominees for director. Although there are no specific minimum qualifications, the Board considers some or all of the following criteria in considering candidates to serve as directors: ● commitment to ethical conduct and personal and professional integrity as evidenced by the person’s business associations; diversity efforts, service as a director or executive officer, involvement in other organizations (including any educational institutions), and any other commitment to ethical conduct and personal and professional integrity; ● objective perspective and mature judgment developed through business experiences and/or educational endeavors; ● the candidate’s ability to work with other members of the Board and management to further the Company’s goals and increase shareholder value; ● the ability and commitment to devote sufficient time to carry out duties and responsibilities as a director; ● demonstrated experience at policy-making levels in various organizations and in the areas that are relevant to our activities; ● the skills and experience of the potential nominee in relation to the capabilities already present on the Board of Directors; ● local community involvement; and ● such other attributes, including independence, that are relevant in constituting a board that satisfies the requirements imposed by the SEC, the Nasdaq Stock Market and applicable state law. In addition to the factors discussed above, the Board regularly assesses the appropriate size of the Board, and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Board considers various potential candidates for director. Candidates may come to the attention of the Board through current Board members, shareholders or other persons. As described below, the Board considers properly submitted shareholder nominations for candidates for the Board. Following verification of the shareholder status of persons nominating candidates, nominations are aggregated and considered by the Board at a regularly scheduled meeting, which is generally the first or second meeting prior to the issuance of the proxy statement for our annual meeting. If any materials are provided by a shareholder in connection with the nomination of a director candidate, such materials are forwarded to the Board. The Board does not have a formal written policy regarding consideration of director candidates recommended by shareholders. Instead, the Board considers all candidates who meet the requirements for nomination by a shareholder, based on the criteria discussed above, but the Board has no obligation to nominate such candidates. The Board believes that requiring shareholder nominations of director candidates to comply with specific requirements would create an unnecessary distinction and may limit the potential pool of qualified director candidates for the Board. Term of Office Directors serve for a three-year term or until their successors are elected. The Bylaws of the Company, as amended, authorize the Company to have a classified Board of Directors, divided into three classes, so long as the number of directors of the Company has been fixed at nine (9) or more directors. Currently, the Board has been fixed at thirteen (13) directors. Pursuant to Section 3.3 of the Company Bylaws, in the event that the authorized number of directors is fixed at nine (9) or more, the Board of Directors is to be divided into three classes, designated Class I, Class II and Class III. Each class shall consist of one-third of the directors or as close an approximation as possible. Each director in each class is elected for a term running until the third annual meeting next succeeding his or her election, until his successor shall have been duly elected and qualified. Accordingly, each nominee director, if elected, will hold office as follows until his or her successor is duly elected and qualified for the following terms:
Board of Directors
| Nominee | | Expiration of Term | | Donald L. | Barton | 2027 (1) | | Thomas A. | Haidlen | 2027 (1) | | Daniel J. | Leonard | 2027 (1) | | Richard A. | McCarty | 2027 (1) |
Board of Directors
(1) If elected at the Annual Meeting. The following table indicates the terms of the incumbent directors who are not up for election at the Annual Meeting:
Board of Directors
| Nominee | | Expiration of Term | | James L. | Gilbert | 2025 | | H. Randolph | Holder | 2025 | | Janet S. | Pelton | 2025 | | Gary J. | Strong | 2025 | | Danny L. | Titus | 2025 | | Christopher M. | Courtney | 2026 | | Lynn R. | Dickerson | 2026 | | Allison C. | Lafferty | 2026 | | Terrance P. | Withrow | 2026 |
Board of Directors
The Board does not have term limits, instead preferring to rely upon the evaluation procedures described herein as the primary methods of ensuring that each director continues to act in a manner consistent with the best interests of the shareholders and the Company. Number and Composition of Board Committees The Board may delegate portions of its responsibilities to committees of its members. These standing committees of the Board meet at regular intervals to attend to their particular areas of responsibility. Our Board has six (6) standing committees: Nominating Committee, Audit Committee, Loan Committee, Investment Committee, Compensation Committee and Community Reinvestment Act (“CRA”) Committee. An independent director, as defined by the applicable rules and regulations of the Nasdaq Stock Market, chairs the Board and its other standing committees. The chair of such committee determines the agenda, the frequency and the length of the meetings of such committee and receives input from committee members. Executive Sessions Independent directors meet in executive sessions throughout the year, including meeting annually to consider and act upon the recommendation of the Compensation Committee regarding the compensation and performance of the Chief Executive Officer. Evaluation of Board Performance A Board assessment and director self-evaluations are conducted annually in accordance with an established evaluation process and includes performance of committees. The Chair of the Nominating Committee, who is a rotating independent director, oversees this process and reviews the assessment and self-evaluation with the full Board. Management Performance and Compensation The Compensation Committee reviews and approves the Chief Executive Officer’s evaluation of the top management team on an annual basis. The Board (largely through the Compensation Committee) evaluates the compensation plans for senior management and other employees to ensure they are appropriate, competitive and properly reflect objectives and performance. Director Stock Ownership Guidelines The Company’s Bylaws require each Board member to hold shares of the Company’s common stock. Although the Board has not fixed any particular target holding, each director is encouraged to hold Company’s common stock for his or her own investment. Code of Ethics The Board expects all directors, as well as officers and employees, to display the highest standard of ethics, consistent with the principles that have guided the Company over the years. We have adopted a Code of Ethics, which is posted on our Internet website at www.ovcb.com, under the “About Us” tab, in the “Investor Relations” section, at the link for “Governance Documents.” Our Code of Ethics helps ensure that the financial affairs of the Company are conducted honestly, ethically, accurately, objectively, consistent with generally accepted accounting principles and in compliance with all applicable governmental law, rules and regulations. We will disclose any amendment to, or a waiver from a provision of our Code of Ethics on our website. Our Code of Ethics applies to our directors, executive officers, employees and consultants. Our Chief Executive Officer and all senior financial officers, including the Chief Financial Officer, are bound by our Code of Ethics. Reporting of Complaints/Concerns Regarding Accounting or Auditing Matters The Company’s Board of Directors has adopted procedures for receiving and responding to complaints or concerns regarding accounting and auditing matters. These procedures were designed to provide a channel of communication for employees and others who have complaints or concerns regarding accounting or auditing matters involving the Company. Employee concerns may be communicated in a confidential or anonymous manner to the Audit Committee of the Board. The Audit Committee Chair will make a determination on the level of inquiry, investigation or disposal of the complaint. All complaints are discussed with the Company’s senior management and monitored by the Audit Committee for handling, investigation and final disposition. The Chair of the Audit Committee will report the status and disposition of all complaints to the Board of Directors.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors
The Board of Directors The Board of Directors oversees our business and monitors the performance of management. In accordance with corporate governance principles, the Board does not involve itself in day-to-day operations. The directors keep themselves informed through, among other things, discussions with the Chief Executive Officer, other key executives and our principal outside advisors (legal counsel, outside auditors, and other consultants), by reading reports and other materials that we send them and by participating in Board and committee meetings. The Company’s Bylaws currently permit the number of Board members to range from eight (8) to fifteen (15), leaving the Board authority to fix the exact number of directors within that range. The Board has currently fixed the number of directors at thirteen (13). Directors Biographical information of our current directors, who are not executive officers and are not nominees for election, is set forth below: Ronald C. Martin, 77, has served as a director of the Bank since 1992 and of Oak Valley Bancorp since 2008. He was also the Bank’s Chief Executive Officer until June 2013. Mr. Martin began his banking career in 1977 with River City Bank in Sacramento, California. Between 1977 and 1987, he was employed in the Sacramento area, and from December 1987 to January 1992 he served as President and Chief Executive Officer of Butte Savings in Chico, California. Mr. Martin has a B.S. in Business Administration with an Accounting major from the University of Arizona. Mr. Martin is a veteran banker with a deep understanding of our local community banking needs. Mr. Martin’s term runs until the 2024 annual meeting. He is not standing for reelection. James L. Gilbert, 79, has been a Director of the Bank since 1991 and of Oak Valley Bancorp since 2008. Mr. Gilbert has lived in Oakdale, California since 1946. Mr. Gilbert is an owner and executive of A.L. Gilbert Co., a feed and seed business that has been in Oakdale for over 130 years. Mr. Gilbert has been involved in the feed and seed business as well as retail feed stores and almond farming for approximately 50 years. Mr. Gilbert enhances the connection between the Board and our community. H. Randolph Holder, 69, has been a director of the Bank and Oak Valley Bancorp since January 2016. Mr. Holder is President and CEO of Clarke Broadcasting Corp., which owns and operates KVML, KZSQ, and KKBN, Sonora’s local radio stations since 1986. In 2000, he launched the mymotherlode.com website and community portal. Holder resided in Sonora from 1986 to 1999 and currently maintains his businesses and a home in the community. He has been active in community affairs and is past President of the Tuolumne County Chamber of Commerce, the Economic Development Company of Tuolumne County, and a past Director of the Sonora Community Hospital Governing Board. Mr. Holder brings valuable business experience as well as an understanding of the local community. Janet S. Pelton, 69, has been a director of the Bank and Oak Valley Bancorp since June 2013. Ms. Pelton, a licensed certified public accountant since 1980, is a retired tax consultant and former tax partner from1995 to 2022 and managing partner from 2003 to 2013, for Atherton & Associates, LLP, a full-service public accounting firm based in Modesto, California. She practiced in public accounting for over 40 years, providing income tax and estate tax planning and preparation services to individuals, partnerships and corporations. Ms. Pelton brings tax and accounting expertise to the Board. Gary J. Strong, 61, was appointed to the boards of the Bank and Oak Valley Bancorp in November 2021. Mr. Strong was CEO of the California Gold Country Region of the American Red Cross from 2015 to March 2023 and is currently retired. He led the Sierra Delta and Northern California Chapters, which include more than 2,000 volunteers and 40 employees who respond to nearly 800 local disasters each year and serve close to four million residents in 26 counties. Mr. Strong is a CPA (inactive) having previously served as a big four accounting firm audit manager (1983-1990), as Controller at the Los Angeles Times (1990-2005) and as SVP/Finance at the Sacramento Bee (2005-2015). He has also served on board of directors of local American Red Cross chapters, the Sacramento Region Community Foundation, KVIE Public Television, Journalism Funding Partners, the Northern California Chapter of the National Association of Corporate Directors (NACD), and served on the local community advisory board of one of the largest banks in the nation. He currently resides in Granite Bay, California. Mr. Strong brings accounting experience to the board and a connection to the community through his non-profit background. Danny L. Titus, 79, has been a director of the Bank since 1992 and of Oak Valley Bancorp since 2008. Mr. Titus served as the President of Situs Investments, Inc. from 1989 to 2017, which manages real estate and investments. During the period from 1979 to 1988, Mr. Titus was the general manager of Steelgard, Inc., which manufactured portable buildings. Mr. Titus brings investment expertise to the Board. Lynn R. Dickerson, 66, joined the Board of Directors in January 2021. She was the CEO of the Gallo Center for the Arts from 2009 to 2021. Her twelve-year tenure was marked with operational excellence and tremendous community support. Prior to joining the Gallo Center, Dickerson had a successful 29-year career in the newspaper industry, serving as Publisher & President of The Modesto Bee and subsequently as Vice President of Operations for The McClatchy Company where she oversaw 11 of their 30 newspapers throughout the country. Dickerson is the past Board Chair for the Downtown Modesto Partnership, past President of Modesto Rotary Club and has served on many local boards and committees. She is a native Texan and a graduate of Texas A&M University where she earned a degree in Marketing. Lynn is a Stanislaus County resident. Ms. Dickerson adds knowledge of our local business markets and promotes community engagement. Allison Cherry Lafferty, 49, was appointed to the boards of the Bank and Oak Valley Bancorp in October 2017. Ms. Lafferty is President and Managing Shareholder at Kroloff, Belcher, Smart, Perry & Christopherson, a Professional Law Corporation. She has been with the firm since 1999, owner since 2006, and served as Managing Partner since 2014. She is experienced in all phases of litigation. Her practice focuses on commercial, real estate, product liability, and construction litigation. Ms. Lafferty earned her Juris Doctorate from the University of the Pacific, McGeorge School of Law in Sacramento. She has previously served as a member of the California State Bar Business Law Section, Agribusiness Committee, and previously served as a board member of the Stockton Arts Commission and Stockton Civic Theatre. Ms. Lafferty is a San Joaquin County resident and brings legal and business transactions expertise to the Board. Terrance P. Withrow, 64, was appointed to fill a vacancy on the boards of the Bank and Oak Valley Bancorp in November 2013. Mr. Withrow, a licensed certified public accountant since 1984, has served as Managing Partner of Withrow & Baggett, LLP, a full-service public accounting firm based in Modesto, California, since 2005. Mr. Withrow is a current member of the California Society of CPAs and has served as a Stanislaus County Supervisor for District 3 since 2011. Mr. Withrow is also an almond and grape farmer. Mr. Withrow enhances the connection between the Board and our community along with bringing accounting expertise to the Board. Board Leadership Structure
The Board of Directors
The Board of Directors is committed to maintaining an independent Board, and for many years, a majority of the Board has been comprised of independent directors. It has further been the practice of the Company to separate the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. The Chief Executive Officer is responsible for setting the strategic direction for the Company and the day-to-day leadership and performance of the Company. The role of the Chairman is to preside at executive sessions of the independent directors, serve as principal liaison between the independent Directors and the CEO, work with the CEO to set and approve the schedule and agenda for meetings of our Board of Directors and its committees, and direct the retention of advisors and consultants who report directly to the Board of Directors. The Board believes that the separation of the duties of the Chief Executive Officer and the Chairman of the Board eliminates any inherent conflict of interest that may arise when the roles are combined, and that an independent director can best provide the necessary leadership and objectivity required as Chairman of the Board. Board Authority for Risk Oversight The Board has ultimate authority and responsibility for overseeing the risk management of the Company. The Board monitors, reviews and reacts to material enterprise risks identified by management. The Board receives specific reports from executive management on financial, credit, liquidity, interest rate, capital, operational, cyber security, legal compliance and reputation risks and the degree of exposure to those risks. The Board helps ensure that management is properly focused on risk by, among other things, reviewing and discussing the performance of senior management and business line leaders. Several Board committees are responsible for risk oversight in specific areas. The Audit Committee oversees financial, accounting and internal control risk management policies. The Audit Committee also approves the independent auditor and its annual audit plan. The Audit Committee reports periodically to the Board on the effectiveness of risk management processes in place and the overall risk assessment of the Company’s activities. The Compensation Committee assesses and monitors risks in the Company’s compensation program. The Loan Committee reviews risks in our lending activities. The Investment Committee periodically assesses the risks of our investment portfolio. Board Diversity The table below provides certain highlights of the composition of our Board members. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f)(1).
The Board of Directors
| Board Diversity Matrix (As of March 31, 2024) | | | | | | Total Number of Directors | 13 | | | | | | Female | Male | Non-Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 3 | 10 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 0 | 1 | 0 | 0 | | White | 3 | 9 | 0 | 0 | | Did not disclose demographic background | 0 | | | |
The Board of Directors
Committees of the Board The Board delegates portions of its responsibilities to committees comprised of Board members. These standing committees of the Board meet at regular intervals to attend to their particular areas of responsibility. The Board has six (6) standing committees: the Nominating Committee, the Audit Committee, the Compensation Committee, the Loan Committee, the Investment Committee, and the CRA Committee. The Compensation, Audit, and Nominating Committee charters are available on our Internet website at www.ovcb.com, under the “About Us” tab in the “Investor Relations” section at the link for “Governance Documents.” Nominating Committee The Nominating Committee identifies individuals that are qualified to become Board members and makes recommendations to the full Board regarding candidates for election to the Board, leads the Board in an annual review of its performance, and recommends director appointments to Board committees. Subject to the standards required by applicable Nasdaq Stock Market listing rules, the Nominating Committee is comprised solely of independent directors of the Board. The Nominating Committee, consisting of eleven (11) independent Directors, makes recommendations to the Board regarding the Board’s composition and structure, nominations for elections of Directors, and policies and processes regarding principles of corporate governance to ensure the Board’s compliance with its fiduciary duties to the Company and its shareholders. The Nominating Committee reviews the qualifications of, and recommends to the Board, candidates as additions, or to fill Board vacancies, if any were to occur during the year. The Nominating Committee determines the required selection criteria and qualifications of Director nominees based upon the Company’s needs at the time nominees are considered. In general, Directors are expected to possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests of the Company’s shareholders. In addition to the foregoing considerations, the Nominating Committee considers criteria such as strength of character and leadership skills, general business acumen and experience, broad knowledge of the banking industry, number of other board seats, and willingness to commit the necessary time to ensure an active board whose members work well together and possess the collective knowledge and expertise required by the Board. The Nominating Committee considers these criteria for all candidates regardless of whether a candidate was identified by the Nominating Committee, by shareholders, or by any other source. The goal of the Nominating Committee is to seek to achieve a balance of knowledge and experience on the Company’s Board. To this end, the Nominating Committee seeks nominees with the highest professional and personal ethics and values, an understanding of the Company’s business and industry, diversity of business experience, expertise and backgrounds, a high level of education, broad-based business acumen and the ability to think strategically. The Nominating Committee ensures that the composition of the current Board reflects diversity in business, professional experience, skills, gender, ethnicity, and underrepresented minorities, and complies with all applicable listing and state law requirements. Our Board and Nominating Committee are committed to actively seeking highly qualified women and individuals from minority groups to include in the pool from which new candidates are selected. The Nominating Committee reviews the effectiveness of its charter in achieving the goals of the Nominating Committee as stated therein annually. The members of the Nominating Committee are Messrs. Barton, Dickerson, Gilbert, Leonard, Lafferty, Martin, Pelton, Holder, Strong, Titus and Withrow. Mr. Gilbert is the Chairman of the Nominating Committee. The Nominating Committee met one (1) time in 2023. The Board has determined that all members of the Nominating Committee are “independent” under the applicable rules and regulations of the Nasdaq Stock Market. Audit Committee We have an Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). The Audit Committee assists the Board in fulfilling the Board’s responsibilities for general oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, the independent auditors’ qualifications and independence, the performance of our internal audit function and independent auditors, and risk assessment and risk management. In addition, the Audit Committee reviews and discusses the annual audited financial statements with management and the independent auditors prior to finalizing and filing the Annual Report on Form 10-K with the SEC; reviews and discusses with management and the independent auditors any significant changes, significant deficiencies and material weaknesses regarding internal controls over financial reporting required by the Sarbanes-Oxley Act of 2002, oversees the internal audit function and the audits directed under its auspices, and establishes policies to ensure all non-audit services provided by the independent auditors are approved prior to work being performed. The Audit Committee also prepares the Audit Committee report for inclusion in the annual proxy statement; annually reviews the Audit Committee charter and the Committee’s performance; appoints, evaluates and determines the compensation of our independent auditors; reviews and approves the scope of the annual audit, the audit fee and the financial statements; reviews our disclosure controls and procedures, internal controls, internal audit function, and corporate policies with respect to financial information and earnings guidance; oversees investigations into complaints concerning financial matters; and reviews other risks that may have a significant impact on our financial statements. The Audit Committee works closely with management as well as our independent auditors. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company to retain, outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties. The members of the Audit Committee are Messrs. Gilbert, Lafferty, Leonard, Pelton, Strong and Withrow. Ms. Pelton is the Chair of the Audit Committee. The Audit Committee held nine (9) meetings during fiscal 2023. The Board has determined that all members of the Audit Committee are “independent” as that term is defined in Rule 5605(a)(2) of the Nasdaq Stock Market Rules and Rule 10A-3(b)(1) promulgated under the Exchange Act. The Board of Directors has determined that Mr. Withrow and Ms. Pelton, have: (i) an understanding of generally accepted accounting principles and financial statements; (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; (iii) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by our financial statements, or experience actively supervising one or more persons engaged in such activities; (iv) an understanding of internal control over financial reporting; and (v) an understanding of audit committee functions.
The Board of Directors
Therefore, the Board has determined that Mr. Withrow and Ms. Pelton each meet the definition of “audit committee financial expert” under the applicable rules and regulations of the SEC and are “financially sophisticated” as defined by the applicable rules and regulations of the Nasdaq Stock Market. The designation of a person as an audit committee financial expert does not result in the person being deemed an expert for any purpose, including under Section 11 of the Securities Act of 1933, as amended. The designation does not impose on the person any duties, obligations or liability greater than those imposed on any other audit committee member or any other director and does not affect the duties, obligations or liability of any other member of the Audit Committee or Board of Directors. The Audit Committee Report for 2023 appears on page 42 of this Proxy Statement. Compensation Committee The Compensation Committee establishes our compensation policy, determines the compensation paid to our executive officers and non-employee directors, recommends executive incentive compensation plans and equity-based plans and approves other compensation plans and retirement plans, and performs the various reviews required by the regulations enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Compensation Committee approves corporate goals related to the compensation of the executive officers, evaluates the executive officers’ performance and compensates the executive officers based on this evaluation. Messrs. Barton, Dickerson, Gilbert, Lafferty, Leonard, Martin, Pelton, Holder, Strong, Titus and Withrow are members of the Compensation Committee. Mr. Leonard is the Chair of the Compensation Committee. The Compensation Committee held four (4) meetings during fiscal 2023. The Board has determined that all members of the Compensation Committee are “independent” as that term is defined in Rule 5605(d)(2) of the Nasdaq Stock Market Rules, and the Compensation Committee consists solely of “independent directors” as defined in the Nasdaq Stock Market listing rules and Section 10C of the Securities Exchange Act of 1934. Loan Committee The Loan Committee monitors the activities of our lending function utilizing information presented to it by management at regular meetings of the committee. This includes, but is not limited to, the review of trends in outstanding credit relationships, key quality measures, significant borrowing relationships, large problem loans, industry concentrations, all significant lending policies, and the adequacy of the allowance for loan losses. The Loan Committee also reviews lending-related reports from regulators, auditors, and internal personnel. Each member of the Board of Directors serves on the Loan Committee, and Mr. Haidlen is the Chair of the Loan Committee. The Loan Committee held twenty-two (22) meetings during fiscal 2023. Investment Committee The Investment Committee reviews, identifies and classifies our assets based on credit risk, in accordance with regulatory guidelines. The Committee is also responsible for reviewing asset valuation and classification policies, as well as developing and monitoring asset disposition. In addition, the Committee reviews and monitors the Company’s investment portfolio, liquidity position and the risk of our interest-earning assets in comparison to its interest-bearing liabilities. Messrs. Barton, Courtney, Dickerson, Holder, Leonard, Martin, Pelton, Strong and Titus serve on the Investment Committee, and Mr. Barton is the Chair of the Investment Committee. The Investment Committee held four (4) meetings during fiscal 2023. CRA Committee The CRA Committee is responsible for oversight of our performance under the requirements of the Federal Community Reinvestment Act of 1977 and similar state law requirements. Messrs. Barton, Courtney, Dickerson, Gilbert, Haidlen, Lafferty, Martin, Titus and Withrow serve on the CRA Committee, and Ms. Dickerson is the Chair of the CRA Committee. The CRA Committee held four (4) meetings during fiscal 2023.
The Company Compensation Program
The Company Compensation Program Market Positioning and Pay Benchmarking The Compensation Committee considers the median compensation values of Northern California-based financial institutions that are similar in size to us in determining the compensation of the Chief Executive Officer and the other named executive officers. The data that the Compensation Committee considers are derived from reports from the California Bankers Association, prepared by Pearl Meyer & Partners, LLC (“Pearl Meyer”), a professional compensation consulting firm. These comparative survey data reports are used to benchmark executive compensation levels against banks that have executive positions with responsibilities similar in breadth and scope to ours and that compete with us for executive talent. For example, in 2023, our Compensation Committee reviewed the California Bankers Association report, which includes approximately 50 California banks. The Compensation Committee uses banks, each having assets between $801 million and $3.0 billion with average assets of about $1.58 billion, as the bank’s peer group. In 2023, our Compensation Committee also engaged the services of Pearl Meyer to conduct a thorough review of our executive compensation for fairness based on the California Bankers Association report. The results of the Pearl Meyers consultation in 2023 were used by the Compensation Committee to validate their determination of 2023 compensation and will be used for subsequent years. In the process of selecting Pearl Meyer as its compensation consultant, our Compensation Committee considered Pearl Meyer’s independence by taking into account the factors prescribed by the Nasdaq listing rules. Based on this evaluation, the Committee determined that no conflict of interest existed with respect to Pearl Meyer. Pearl Meyer did not provide any other services to the Company. With such information, the Compensation Committee reviewed and analyzed compensation for each executive and made adjustments as appropriate. The actual positioning of each named executive officer’s compensation was based on considerations of the executive’s performance, the performance of the Company and the individual business or corporate function for which the executive is responsible, the nature and importance of the position and role within the Company, the scope of the executive’s responsibility (including risk management and corporate strategic initiatives), and the individual’s success in promoting our core values and demonstrating leadership. Pay Mix We do not allocate between cash and non-cash compensation or short-term versus long-term compensation based on specific percentages. Instead, we believe that the compensation package for our executives should be generally in line with the prevailing market, consistent with each executive’s level of impact and responsibility. Chief Executive Officer Compensation Each year, the Compensation Committee meets with the other independent directors on our Board of Directors in an executive session to evaluate the performance of the Chief Executive Officer. In 2023, the Compensation Committee considered management’s continuing achievement of its short- and long-term goals versus its strategic objectives as well as financial targets. Emphasis was placed on performance factors of the Company’s business units and on personal performance goals established annually by the Compensation Committee. The Compensation Committee determined that the Chief Executive Officer’s base salary in 2023 was aligned with the Company’s compensation philosophy and is aligned with a comparable median salary of peer institutions.
Accounting Considerations
Accounting Considerations Accounting considerations play an important role in the design of our executive compensation program. Accounting rules require us to expense the fair value of restricted stock awards and the estimated fair value of our stock option grants, which reduces the amount of our reported profits. The Compensation Committee considers the amount of this expense when determining the amount of equity compensation to award.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal | | Salary | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Comp. | Total | | Position | Year | ($) (1) | ($) (2) | ($) (3) | ($) (4) | ($) | | Christopher M. Courtney | 2022 | 470,885 | 83,600 | 240,240 | 34,151 | 828,876 | | Chief Executive Officer | 2023 | 508,885 | 101,633 | 260,000 | 37,765 | 908,283 | | Richard A. McCarty | 2022 | 347,433 | 56,430 | 169,884 | 39,658 | 613,405 | | President and Chief Operating Officer | 2023 | 395,733 | 71,876 | 195,000 | 43,062 | 705,671 | | Michael J. Rodrigues | 2022 | 296,104 | 24,909 | 101,137 | 61,253 | 483,402 | | Executive Vice President/ Chief Credit Officer | 2023 | 323,117 | 29,702 | 111,250 | 66,235 | 530,304 |
Summary Compensation Table
| (1) Includes base salary plus cash paid in lieu of accrued vacation. |
Summary Compensation Table
| (2) Represents the grant date fair value of restricted stock awards granted during the fiscal year, as calculated in accordance with FASB ASC Topic 718, by multiplying the closing price of our stock on the trading day prior to the grant date by the number of shares granted. |
Summary Compensation Table
| (3) For more information on Non-Equity Incentive Plan Compensation, see “Bonuses” section above. |
Summary Compensation Table
| (4) Includes the following for each named executive: |
Summary Compensation Table
| | Economic | | Accrual for | | | | | Value of Death | 401(k) Plan | Salary | Perquisites- | Cash Dividends | | | Benefit of Life | Company | Continuation | Golf Membership | On Unvested | | | Insurance for | Matching | Agreement | Dues and Auto | Restricted | | | Beneficiaries ($) | Contributions ($) | Benefits ($) | Allowance ($) | Stock Awards ($) | | Christopher M. Courtney | 1,500 | 22,500 | — | 9,914 | 3,815 | | Richard A. McCarty | 624 | 22,500 | — | 17,283 | 2,655 | | Michael J. Rodrigues | 1,267 | 22,494 | 36,136 | 5,100 | 1,238 |
Summary Compensation Table
The economic value of the death benefit amounts shown above reflects the annual income imputed to each executive in connection with Company-owned split-dollar life insurance policies for which the Company has fully paid the applicable premiums. These policies are discussed under the sections of this Proxy Statement titled “Salary Continuation Agreements”. The amounts shown above in the “Accrual for Salary Continuation Agreement Benefits” column represent the executive salary continuation plan accrual from January 1, 2023 to December 31, 2023. The amounts were determined using interest rate and mortality rate assumptions consistent with those used in the Company’s consolidated financial statements and include amounts which the named executive officer may not currently be entitled to receive because such amounts are not vested. The assumptions used in the calculation of these amounts are described in Note 18 to the Company’s consolidated financial statements for the fiscal year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024.
Outstanding Equity Awards
Outstanding Equity Awards The following table shows the number of Company unvested shares of restricted common stock held by the Company’s named executive officers as of December 31, 2023.
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 | | | | | | | | | | | | | Equity | Equity | | | | | | | | | | Incentive | Incentive | | | | | | | | | | Plan | Plan | | | | | | | | | | Awards: | Awards: | | | | | | | | | | Number | Market or | | | | | | | | Number | Market | of | Payout | | | | | Equity | | | of | Value of | Unearned | Value of | | | | | Incentive | | | Shares | Shares | Shares, | Unearned | | | | | Plan | | | or | or | Units or | Shares, | | | | | Awards: | | | Units of | Units of | Other | Units or | | | Number of | Number of | Number of | | | Stock | Stock | Rights | Other | | | Securities | Securities | Securities | | | That | That | That | Rights | | | Underlying | Underlying | Underlying | Options | | Have | Have | Have | That Have | | | Unexercised | Unexercised | Unexercised | Exercise | Options | Not | Not | Not | Not | | | Options (#) | Options (#) | Unearned | Price | Expiration | Vested | Vested | Vested | Vested | | Name | Exercisable | Unexercisable | Options (#) | ($) | Date | (#) | ($) | (#) | ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g)(1) | (h)(2) | (i) | (j) | | Christopher M. Courtney | | | | | | 11,975 | 358,651 | | | | Richard A. McCarty | | | | | | 8,290 | 248,286 | | | | Michael J. Rodrigues | | | | | | 3,768 | 112,852 | | |
Outstanding Equity Awards at Fiscal Year End
| (1) The market values of the restricted stock awards are calculated by multiplying the number of restricted shares shown in the table by $29.95, the closing price of our shares of our common stock on December 31, 2023, the last trading day of fiscal 2023. |
Outstanding Equity Awards at Fiscal Year End
| (2) The restricted stock awards vest 20% annually over five years, subject to being a service provider through each vesting date, except in certain circumstances as described below in “Potential Payments Upon Termination or Change in Control”. |
Outstanding Equity Awards at Fiscal Year End
| | Vesting Dates | | | | | | | Name | 2/28/2024 | 2/28/2025 | 2/28/2026 | 2/28/2027 | 2/28/2028 | Total Unvested shares at 12/31/2023 | | Christopher M. Courtney | 3,981 | 3,157 | 2,471 | 1,623 | 743 | 11,975 | | Richard A. McCarty | 2,754 | 2,183 | 1,707 | 1,120 | 526 | 8,290 | | Michael J. Rodrigues | 1,291 | 1,007 | 774 | 479 | 217 | 3,768 | | | 8,026 | 6,347 | 4,952 | 3,222 | 1,486 | 24,033 |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Salary Continuation Agreements See discussion of salary continuation agreements above in section title “Components of Executive Compensation”. Richard A. McCarty’s Employment Agreement Mr. McCarty’s employment agreement provides for severance pay in an amount equal to three months of his current annual salary, payable in three equal monthly payments from date of such termination in the event of termination of employment other than for cause (as defined in his employment agreement) equal to the gross salary payable to him during the remainder of the term. In the event of a Change in Control, his employment agreement will automatically be terminated, in which case Mr. McCarty will be entitled to severance payments under his employment agreement such that the net amount received by Mr. McCarty, after taking into account federal, state and local income taxes payable as a result of such severance payments equals two years of his base salary based on the compensation in effect under his employment agreement plus the amount equal to the sum of the prior two years bonus (the “Severance Payment”). Notwithstanding the foregoing sentence, if the surviving, continuing, successor, or purchasing corporation, as the case may be, enters into a new employment agreement with Mr. McCarty (the “Replacement Agreement”) on terms acceptable to Mr. McCarty, which acceptance shall not be unreasonable withheld, his existing employment agreement will terminate but no severance payment will be due to him. Unless a Replacement Agreement is entered into on or before the Change in Control, the Company will pay the Severance Payment to him in a single lump sum payment on or before any such Change in Control. Mr. McCarty’s employment agreement expired on March 18, 2024. 2018 Equity Plan In addition, except as set forth in an award agreement, the 2018 Equity Plan provides that if the Company is not the surviving corporation following a change in control, and the surviving corporation following such change in control or the acquiring corporation (such surviving corporation or acquiring corporation, the “acquirer”) does not assume the outstanding awards or does not substitute equivalent equity awards relating to the securities of such acquirer or its affiliates for such awards, then each award will fully vest and terminate upon the effective time of the change in control. Except as set forth in an award agreement, if the Company is the surviving corporation following a change in control, or the acquirer assumes the outstanding awards or substitutes equivalent equity awards relating to the securities of such acquirer or its affiliates for such awards, then all such awards or substituted awards will remain outstanding and will be governed by their respective terms and the provisions of the 2018 Equity Plan. In addition, if (i) a participant’s status as a service provider is terminated without cause within 24 months following a change in control, and (ii) the Company is the surviving corporation following such change in control, or the acquirer assumes the outstanding awards or substitutes equivalent equity awards or such awards, then each award held by the participant will fully vest and terminate upon the related event. Finally, if a named executive officer reaches the Normal Retirement Age and retires, his or her restricted stock will fully vest upon retirement pursuant to the terms of his restricted stock award agreement. The table below sets forth the amounts that the named executive officers would receive in the event of (a) the retirement of the named executive officer, (b) early termination of the named executive officer or (c) the change in control of the Company, that in each case hypothetically occurred on December 31, 2023, as provided for under each named executive officer’s Continuation Agreement, the 2018 Equity Plan and in the case of Mr. McCarty, his employment agreement.
Potential Payments Upon Termination or Change in Control
| Name | Retirement ($) | Early Termination (Other than for Cause) ($) | Change in Control Where Equity Awards are Not Assumed and There is a Qualifying Termination of Employment ($) (2) | Change in Control Where Equity Awards are Assumed and There is a Qualifying Termination of Employment ($) (2) | | Christopher M. Courtney | 1,560,000 | 1,301,453 | 1,560,000 | 1,918,651 | | Richard A. McCarty | 1,200,000 | 1,093,270 | 2,904,194(1) | 3,152,480 | | Michael J. Rodrigues | 916,875 | 308,191 | 916,875 | 1,029,727 |
Potential Payments Upon Termination or Change in Control
| (1) Mr. McCarty is eligible to receive $1,200,000 from his Continuation Agreement, in addition to $1,704,194 from his employment agreement dated March 19, 2021. |
Potential Payments Upon Termination or Change in Control
| (2) A qualifying termination is defined as a separation of service within 24 months of a change in control for any reason other than death. |
CEO Pay Ratio
CEO Pay Ratio For 2023, our Company qualified as a “smaller reporting company” and therefore, we are not required to provide any pay ratio disclosure.
Pay Versus Performance
Pay Versus Performance The following table presents information regarding our executive compensation pay relative to corporate performance of our principal executive officer (“PEO”), Mr. Courtney, and non‐PEO named executive officers (“Non-PEO NEOs”) for 2021, 2022 and 2023.
Pay Versus Performance
| Pay Versus Performance | | | | | | | | Year | Summary Compensation Table Total For PEO ($) | Compensation Actually Paid to PEO ($) | Average Summary Compensation Table Total For non-PEO Named Executive Officers (1) ($) | Average Compensation Actually Paid to non-PEO Named Executive Officers (1) (2) ($) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (3) ($) | Net Income ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | 2021 | 932,317 | 941,598 | 537,959 | 542,778 | 106.49 | 16,337,000 | | 2022 | 828,876 | 890,034 | 548,404 | 579,639 | 140.85 | 22,902,000 | | 2023 | 908,283 | 996,245 | 617,988 | 662,493 | 188.46 | 30,848,000 |
Pay Versus Performance
____________________________
Pay Versus Performance
| (1) The Non-PEO named executive officers for each applicable year include the following individuals: Richard A. McCarty and Michael J. Rodrigues. |
Pay Versus Performance
| (2) The dollar amounts reported represent the “compensation actually paid”, or “CAP”, to the PEO and the Non-PEO NEOs, respectively, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to the PEO or the Non-PEO NEOs, respectively, during the applicable year. To calculate CAP for the PEO and average CAP for the Non-PEO NEOs, the following amounts were deducted from and added to Summary Compensation Table total compensation: |
Pay Versus Performance
| PEO SCT Total to CAP Reconciliation | | | | | | | | Year | SCT-PEO ($) | Fair Value of Equity Awards Granted in the Year ($) | Fair Value of Equity Awards Granted in the Year at year-end ($) | Change during fiscal year in Fair Value of Outstanding Unvested Equity Awards Granted in Prior Years ($) | Change in Fair Value from Prior Year-end to Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year ($) | CAP ($) | | 2021 | 932,317 | (68,438) | 73,689 | 4,997 | (967) | 941,598 | | 2022 | 828,876 | (83,600) | 99,660 | 40,378 | 4,720 | 890,034 | | 2023 | 908,283 | (101,633) | 111,294 | 60,291 | 18,010 | 996,245 |
Pay Versus Performance
| Average Non-PEO NEOs SCT Total to CAP Reconciliation | | | | | | | | Year | SCT-NEO ($) | Fair Value of Equity Awards Granted in the Year ($) | Fair Value of Equity Awards Granted in the Year at year end ($) | Change during fiscal year in Fair Value of Outstanding Unvested Equity Awards Granted in Prior Years ($) | Change in Fair Value from Prior Year-end to Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year ($) | CAP ($) | | 2021 | 537,959 | (35,504) | 38,228 | 2,599 | (504) | 542,778 | | 2022 | 548,404 | (40,670) | 48,482 | 20,966 | 2,457 | 579,639 | | 2023 | 617,988 | (50,789) | 55,617 | 30,456 | 9,221 | 662,493 |
Pay Versus Performance
| (3) Represents the cumulative three-year total return to shareholders of our common stock and assumes that the value of the investment was $100 on December 31, 2020, and that the subsequent dividends were reinvested. The stock price performance included in this column is not necessarily indicative of future stock price performance. |
Pay Versus Performance
The following graphs show the relationship between the compensation actually paid to our PEO and the average of the compensation actually paid to our other named executive officers to our total shareholder and net income over three most recently completed fiscal years.
Director Compensation
Director Compensation This section provides information regarding the compensation policies for non-employee directors and amounts paid to these directors in 2023. Overview Our director compensation is designed to attract and retain qualified, independent directors to represent our shareholders on the Board and act in their best interests. The Compensation Committee, which consists solely of independent directors, has primary responsibility for reviewing and recommending any changes to our director compensation program. All recommended compensation changes required approval or ratification by the full Board of Directors. Compensation for the members of our Board is reviewed periodically by the Compensation Committee. Our Board of Directors includes one Company officer: Mr. Christopher M. Courtney, who serves as the Chief Executive Officer of the Company. As a named executive officer, information regarding the compensation of Mr. Courtney can be found in the “Executive Compensation Discussion and Analysis” and the executive compensation disclosure tables provided within this Proxy Statement. Director Fees In 2023, non-employee Directors received a cash retainer in the amount of $3,000 per month. Directors who are employees do not receive any compensation for service as director. The following table provides compensation information for the year ended December 31, 2023 for each non-employee Director of the Company at that time.
Director Compensation Table
Director Compensation Table
Director Compensation Table
| | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | | Name | ($) | ($) (1) | ($) (1) | ($) | ($) (2) | ($) | | Donald L. Barton | 36,000 | — | — | — | 6,885 | 42,885 | | Lynn R. Dickerson | 36,000 | — | — | — | 9,373 | 45,373 | | James L. Gilbert | 36,000 | — | — | — | 931 | 36,931 | | Thomas A. Haidlen | 36,000 | — | — | — | 913 | 36,913 | | H. Randolph Holder, Jr. | 36,000 | — | — | — | 11,162 | 47,162 | | Allison C. Lafferty | 36,000 | — | — | — | 1556 | 37,556 | | Daniel J. Leonard | 36,000 | — | — | — | 880 | 36,880 | | Ronald C. Martin | 36,000 | — | — | — | 12,271 | 48,271 | | Janet S. Pelton | 36,000 | — | — | — | 9,245 | 45,245 | | Gary Strong | 36,000 | — | — | — | 2,994 | 38,994 | | Danny L. Titus | 36,000 | — | — | — | 1,162 | 37,162 | | Terrance P. Withrow | 36,000 | — | — | — | 5,484 | 41,484 |
Director Compensation Table
| (1) None of the independent directors were granted any stock options during 2023. As of December 31, 2023, there were no directors that held outstanding, fully exercisable stock options to purchase common stock. In 2023, none of the independent directors were granted shares of restricted stock, except H. Randolph Holder and Lynn R. Dickerson who each received a grant of 5,000 shares. As of December 31, 2023, H. Randolph Holder held 5,000 shares of restricted stock and Terrance P. Withrow held 5,000 shares of restricted stock. |
Director Compensation Table
| (2) The amounts include the director retirement agreements accrual from December 31, 2022 to December 31, 2023. The amounts were determined using interest rate and mortality rate assumptions consistent with those used in the Company’s consolidated financial statements and include amounts that the director may not currently be entitled to receive because such amounts are not vested. Assumptions used in the calculation of these amounts are included in Note 18 to the Company’s consolidated financial statements for the fiscal year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024. The amounts also include the economic value of the annual income imputed to each director in connection with Company-owned split-dollar life insurance policies for which the Company has fully paid the applicable premiums. |
Director Compensation Table
Director Retirement Agreements; Bank-Owned Life Insurance Policies On August 21, 2001, the Board of Directors of the Bank authorized Director Retirement Agreements with each director. The Company assumed the Director Retirement Agreements upon its reorganization with the Bank in May 2008, as the same individuals who served as directors of the bank became directors of the Company. As of December 31, 2023, Messrs. Dickerson, Leonard, Withrow, Holder, Strong, Ms. Lafferty and Ms. Pelton were also parties to Director Retirement Agreements with the Company. The Director Retirement Agreements are intended to encourage existing directors to remain directors, assuring us that we will have the benefit of the directors’ experience and guidance in the years ahead. For retirement after the later of age 72 or ten (10) years of service (the “Normal Retirement Age”), the Director Retirement Agreements provide for an annual benefit during the director’s lifetime of $12,000 for 10 years. If a director retires or becomes disabled before the Normal Retirement Age, he will receive a lump-sum payment in an amount equal to the retirement liability balance accrued by the Bank at the time of early retirement or disability. If a change in control occurs (as defined in the Director Retirement Agreements) and a director’s service terminates within 24 months after the change in control, the director will receive the retirement liability balance accrued and payable to the director for retirement at the Normal Retirement Age. The Bank has purchased insurance policies on the lives of its current directors, paying the premiums for these insurance policies with single premium payments totaling approximately $5,247,000 in aggregate. Although the Bank expects the policies on the directors’ lives to serve as a source of funds for benefits payable under the Director Retirement Agreements, the contractual entitlements arising under the Director Retirement Agreements are not funded and remain contractual liabilities of the Bank, payable upon each director’s termination of service. The policy interests are divided between us and each director. Under the Bank’s Split-Dollar Agreements and Split Dollar Policy endorsements with the directors, we are entitled to any insurance policy death benefits remaining after payment to the director’s beneficiary. We expect to recover the premium in full from the Bank’s portion of the policies’ death benefits. If a director is terminated for cause, we will not pay any benefits under his Director Retirement Agreement. For this purpose, the term “cause” means a director’s gross negligence or gross neglect of duties, fraud, disloyalty, dishonesty or willful violation of law or significant Company policies in connection with the director’s service that results in an adverse effect on us.
ELECTION OF DIRECTORS OF THE COMPANY
ELECTION OF DIRECTORS OF THE COMPANY The Board of Directors proposes that the following four (4) nominees to be elected until their successors are duly elected and qualified. Each of the nominees has consented to serve if elected. If any of them becomes unavailable to serve as a Director before the Annual Meeting, the Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board. Unless you indicate on the proxy card that your vote should be withheld from any or all of the nominees, your proxies will be voted for the election of each of these nominees. The following is a brief account of the business experience, including experience during the past five years, of each nominee. Donald L. Barton, 67, has been a director of the Bank since 2006 and of Oak Valley Bancorp since 2008. Mr. Barton is the managing partner at GoldRiver Orchards, a local walnut processing operation which his family started in 2003. Mr. Barton is the past Chairman of the Board of Western Agricultural Processors Association, an organization that provides advocacy, training and consulting for the tree nut industry of California. Barton also serves as chairman of the Liaison Action Committee of the California Walnut Handlers Coalition. Previously, he was Vice President Marketing at The Wornick Company, and President at Heidi’s Gourmet Desserts. Before that he had a number of managerial and executive positions in the food and agribusiness industries, including positions with Cargill and HJ Heinz. Mr. Barton is a Stanford graduate and earned his MBA from Santa Clara University. Mr. Barton is an Oakdale, California resident. Mr. Barton adds knowledge of the local economy to the Board. Thomas A. Haidlen, 77, has been a director of the Bank since 1991 and of Oak Valley Bancorp since 2008. Mr. Haidlen was born in Oakdale and has resided in Oakdale for over 50 years. He owns and operates the Haidlen Ford Dealership in Oakdale, California that was established in Oakdale in 1955. Mr. Haidlen helps connect our banking operations with the local commercial community. Daniel J. Leonard, 77, was appointed to fill a vacancy on the boards of the Bank and Oak Valley Bancorp in January 2012. Mr. Leonard currently serves as the President and Chief Executive Officer of Bronco Wine Company, where he has been employed for over 37 years. He is also the President and Chief Executive Officer of Bivio Transport & Logistics Company, providing logistic solutions to the California agricultural industry. He has served on the Board of Directors for the Wine Institute, a voice for the California wine industry, for the past 30 years. Mr. Leonard is currently on the Board of Opportunity Stanislaus, a local non-profit Economic Development Agency. He also serves as Chairman Emeritus of the Board of the Parent Resource Center, a Modesto, California non-profit organization, in which he has been involved for over 27 years. Mr. Leonard brings business and financial experience and additional business ties in our communities to Oak Valley Bancorp. Richard A. McCarty, 52, first joined Oak Valley Community Bank in 1996. Mr. McCarty became our President in 2022, Chief Operating Officer in 2017, our Senior Executive Vice President in 2016, our Chief Administrative Officer in 2008 and our Secretary in February 2010. He also served as the Bank’s Executive Vice President and Chief Financial Officer from 2000 to 2015. Mr. McCarty has a B.S. in Finance from California State University, Stanislaus. The Board of Directors of the Company is divided into three classes, designated Class I, Class II and Class III. Each class consists of one-third of the directors or as close an approximation as possible. Each director in each class is elected for a term running until the third annual meeting next succeeding his election, until his successor shall have been duly elected and qualified. Accordingly, each nominee director, if elected, will hold office as follows until his successor is duly elected and qualified for the following terms:
ELECTION OF DIRECTORS OF THE COMPANY
| Nominee | | Expiration of Term | | Donald L. | Barton | 2027 (1) | | Thomas A. | Haidlen | 2027 (1) | | Daniel J. | Leonard | 2027 (1) | | Richard A. | McCarty | 2027 (1) |
ELECTION OF DIRECTORS OF THE COMPANY
| Directors Continuing in Office | | Expiration of Term | | James L. | Gilbert | 2025 | | H. Randolph | Holder | 2025 | | Janet S. | Pelton | 2025 | | Gary J. | Strong | 2025 | | Danny L. | Titus | 2025 | | Christopher M. | Courtney | 2026 | | Lynn R. | Dickerson | 2026 | | Allison C. | Lafferty | 2026 | | Terrance P. | Withrow | 2026 |
ELECTION OF DIRECTORS OF THE COMPANY
| (1) If elected at the Annual Meeting. |
ELECTION OF DIRECTORS OF THE COMPANY
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES AS DIRECTORS. ONLY THOSE VOTES CAST “FOR” ARE COUNTED, WHILE “WITHHOLD” VOTES HAVE NO EFFECT IN THE ELECTION OF DIRECTORS.