DEF 14A of Coastal Financial Corp
Filed Apr 17, 2025 · FY20240001437958-25-000076
ITEM 1. ELECTION OF DIRECTORS
ITEM 1. ELECTION OF DIRECTORS The Board of Directors currently consists of eleven members. Under our second amended and restated articles of incorporation, as amended, the Board of Directors is divided into three classes with three-year staggered terms, with approximately one-third of the directors elected each year. Four directors have terms that expire at the annual meeting. The Board of Directors has nominated Christopher D. Adams, Stephan Klee, and Thomas D. Lane to the class of Directors to serve until the 2028 annual meeting of shareholders and Steven D. Hovde to the class of Directors to serve until the 2026 annual meeting of shareholders or until their successors are elected, or until their earlier resignation or death. At the annual meeting, shareholders will vote to elect Christopher D. Adams, Stephan Klee and Thomas D. Lane whose terms expire at this annual meeting, to the class of Directors to serve for a term of three years and will vote to elect Steven D. Hovde whose term expires at this annual meeting, to the class of Directors to serve a term of one year. All nominees currently serve on the Board of Directors. Each of the nominees was recommended for election by the Governance & Nominating Committee, and each such recommendation was approved unanimously by the Board of Directors. Steven D. Hovde, Stephan Klee and Thomas D. Lane are independent directors within the meaning of the applicable Nasdaq listing rules. Unless you indicate on the proxy card that your shares should not be voted for the nominees, the Board of Directors intends that the proxies solicited by it and returned will be voted for the election of each of the Board of Directors’ nominees. If any nominee is unable to serve, the persons named in the proxy card will vote your shares to approve the election of any substitute proposed by the Board of Directors. Alternatively, the Board of Directors may adopt a resolution to reduce the size of the Board of Directors. At this time, the Board of Directors knows of no reason why any nominees might be unable to serve. The Board of Directors unanimously recommends a vote “FOR” the election of Christopher D. Adams, Steven D. Hovde, Stephan Klee and Thomas D. Lane. The election of each nominee requires a plurality of the votes properly cast for each nominee. Abstentions and broker non-votes are treated as present for quorum purposes only and will have no effect on the outcome of the proposal. Certain information about each of the nominees is furnished below, including their experience, qualifications, attributes or skills that caused the Governance & Nominating Committee and the Board of Directors to determine that the nominees should continue to serve as directors. The age indicated for each individual is as of December 31, 2024. There are no family relationships among the directors, director nominees or executive officers and none of the director nominees were previously selected or nominated for election as a director pursuant to any agreement or arrangement. The indicated period of service as a director includes service as a director of the Bank.
ITEM 1. ELECTION OF DIRECTORS
| Nominees for Election of Directors: | | | Christopher D. Adams Age: 45 Director since: 2016 Current term expires: 2025 | Biographical Information: Christopher D. Adams is a partner in the law firm of Adams & Duncan, Inc., P.S. in Everett, Washington since 2006. Mr. Adams practices in the areas of corporate law, commercial real estate and tax matters. Qualifications: The Company believes that Mr. Adams brings to the Board of Directors legal expertise and familiarity with our market area, and is well qualified to continue serving on the Board of Directors. | | Steven D. Hovde Age: 70 Director since: 2011 Current term expires: 2025 | Biographical Information: Steven D. Hovde is the Chair and Chief Executive Officer at Hovde Group, LLC, an investment banking and advisory firm that serves bank and thrift clients across the United States, since January 1988, where he is responsible for managing its investment banking activities, the strategic development of mergers and acquisitions of bank and thrift institutions, and its private equity activities. He serves as a director of Republic Bank of Chicago and Uncomming Giving Corp and as a trustee of several charitable foundations. Qualifications: The Company believes that Mr. Hovde provides the Board of Directors with important experience and insight into the financial services industry, and is well qualified to continue serving on the Board of Directors. | | Stephan Klee Age: 51 Director since: 2018 Current term expires: 2025 | Biographical Information: Stephan Klee has served as the Chief Financial Officer at Sagard Holdings Inc., which makes investments in innovative financial services companies, since September 2018. Prior to joining Sagard Holdings Inc., Mr. Klee served as Chief Financial Officer of Zenbanx Holding, Inc. from February 2015 to September 2017 and remained in an executive capacity after its merger with SoFi, Inc., one of the largest U.S. fintech companies. Previously, Mr. Klee served as a Senior Vice President at Bank of Nova Scotia, at ING Direct Canada, where he was CFO and Treasurer from 2011 to 2014, and at ING Direct USA, where he served as Chief of Staff from 2002 to 2011. Qualifications: The Company believes that Mr. Klee brings to the Board of Directors experience in private equity and finance, and is well qualified to continue serving on the Board of Directors. | | Thomas D. Lane Age: 55 Director since: 1997 Current term expires: 2025 | Biographical Information: Thomas D. Lane is the owner and president and chief executive officer of Dwayne Lane’s Auto Family, which operates five automobile dealerships, since March 1992. He is active in community organizations and previously served on the Economic Alliance Snohomish County board of trustees. Mr. Lane is a founding director of the Company. Qualifications: The Company believes that Mr. Lane brings to the Board of Directors leadership experience, familiarity with our market area, and is well qualified to continue serving on the Board of Directors. |
Directors Continuing in Office
Directors Continuing in Office
Directors Continuing in Office
| Directors Continuing in Office: | | | Sadhana Akella-Mishra Age: 48 Director since: 2019 Current term expires: 2027 | Biographical Information: Sadhana Akella-Mishra is currently consulting with a variety of Fintech companies. She previously served as the COO and Chief of Staff for a startup fintech company from September 2024 to March 2025. Prior to that time, she was the Chief Risk Officer for Finxact, Inc, since July 2018. Prior to that time, Ms. Akella-Mishra served as the Chief Information Security and Compliance Officer for Sunlight Payments (Purposeful) from May 2018 to June 2018, Chief Compliance Officer (Global) of Geoswift Ltd. from June 2017 to April 2018 and as the U.S. Head of Compliance for Geoswift US Inc. from November 2016 to June 2017. From April 2016 to November 2016, Ms. Akella-Mishra served as the Senior Manager, General Compliance of Ripple, Inc. Prior to that time, she served as the Chief Compliance Officer of Zenbanx Holding Ltd. from March 2014 to April 2016 and as a Senior Compliance Manager for Zenbanx Holding Ltd. from August 2013 to February 2014. From July 2007 to July 2013, Ms. Akella-Mishra served in various positions with Deutsche Bank, including as Americas Regional Head, Anti Financial Crime-Fraud from September 2012 to July 2013. Qualifications: The Company believes that Ms. Akella-Mishra brings to the Board of Directors compliance and information security expertise, familiarity with the financial services industry, and is well qualified to continue serving on the Board of Directors. | | Brian T. Hamilton Age: 47 Director since: 2024 Current term expires: 2027 | Biographical Information: Brian T. Hamilton joined the Company in 2023 as a Director and became President of CCBX in October 2024. Mr. Hamilton is a seasoned financial technology executive and business leader, with more than 25 years of experience in the banking, lending, payments and digital product development industries. A serial entrepreneur, with deep expertise in domestic and international settlement systems and digital platforms, Mr. Hamilton has held senior leadership roles at Capital One, serving as President of their Merchant Services division from January 2013 until February 2015, Wells Fargo from July 1998 until March 2006 and Verifone from January 2012 until January 2013, in addition to founding and operating multiple companies in the fintech space. Most recently Mr. Hamilton was co-founder and CEO of ONE (One Finance Inc.) from January 2019 until August 2023, which was acquired by a Walmart led joint venture in 2022. Prior to co-founding ONE, he was the founder of Azlo, a digital bank for small businesses, and helped to build out the BBVA Open Platform for sponsor banking services. Mr. Hamilton serves as a director for Till Financial Inc., Pocketbook Inc. and Frontlands Inc.. Mr. Hamilton is an honors graduate of Oregon State University, with technical certifications from Wells Fargo’s commercial banking school and various industry groups. Qualifications: The Company believes that Mr. Hamilton brings to our Board of Directors extensive experience across multiple aspects of the finance and technology industries, thought leadership, public speaking and merger and acquisitions, and is well qualified to continue serving on the Board of Directors. |
Directors Continuing in Office
| Directors Continuing in Office: | | | Rilla R. Delorier Age: 57 Director since: 2020 Current term expires: 2026 | Biographical Information: Rilla R. Delorier is a retired banking professional with over 30 years executive experience. Most recently, Ms. Delorier was the Chief Strategy and Digital Transformation Officer at Umpqua Bank from April 2017 to August 2020 where she was responsible for shifting from physical to digital service and sales models, developing new products, and automating operations. Ms. Delorier was at SunTrust Bank from February 2006 to February 2016, where she held multiple positions. As the leader of SunTrust’s Retail Bank, she was responsible for managing the profit and loss of a $2.7 billion retail banking business. Ms. Delorier serves as a director for WisdomTree, Inc., Atlantic Union Bankshares, Nymbus and Central City Concern. Throughout her career she has led innovation initiatives and been instrumental in business transformation. Qualifications: The Company believes that Ms. Delorier brings to the Board of Directors experience in developing new products, automating operations, implementing enhanced cyber-security practices, establishing strategic partnerships, using modernized analytics, and is well qualified to continue serving on the Board of Directors. | | Eric M. Sprink Age: 52 Director since: 2006 Current term expires: 2027 | Biographical Information: Eric M. Sprink serves as our Chief Executive Officer. Mr. Sprink joined the Company in late 2006 as President and Chief Operating Officer and became Chief Executive Officer in 2010. Mr. Sprink began his banking career working for Security Pacific Bank while enrolled at Arizona State University. He assumed increasing levels of responsibility in the areas of retail operations, consumer and commercial lending and wealth management with Security Pacific Bank and its successor, Bank of America. He then moved to Centura Bank, where he held management positions in retail operations and corporate finance. After Centura Bank was acquired, he held senior management positions at Washington Trust Bank and Global Credit Union. Mr. Sprink is active in industry trade groups and is a director and past Chair of the Community Bankers of Washington. Qualifications: The Company believes that Mr. Sprink brings to our Board of Directors leadership experience, significant experience in many facets of the financial services business, familiarity with our market area, and is well qualified to continue serving on the Board of Directors. | | Michael R. Patterson Age: 64 Director since: 2021 Current term expires: 2026 | Biographical Information: Michael R. Patterson is a Certified Public Accountant, registered in the State of New York with over 40 years of cross-sector experience. From May 2022 through January 2024, Mr. Patterson was employed as Chief Compliance Officer of Genesis Global Trading and Genesis Global Holding Company and its subsidiaries, which filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2023. Prior to that, he led Ernst & Young LLP’s Compliance Risk Management business in the firms Financial Services Office from January 2009 until June 2021. Mr. Patterson was an independent consultant and was with Ernst & Young from July 2021 through April 2022. Mr. Patterson serves as a director for United Texas Bank. Mr. Patterson is experienced in risk management, compliance, risk governance, financial accounting, and control matters based upon his experience at EY, LLP, Merrill Lynch & Co., BearingPoint and Arthur Andersen, LLP. He is most experienced in the banking and capital markets industries. Qualifications: The Company believes that Mr. Patterson brings to the Board of Directors experience in risk management, compliance, risk governance, financial accounting, control matters, and is well qualified to continue serving on the Board of Directors. |
Directors Continuing in Office
| Directors Continuing in Office: | | | Gregory S. Tisdel Age: 70 Director since: 2002 Current term expires: 2026 | Biographical Information: Gregory A. Tisdel has served as managing member of RKLG since 2008, was the owner of Tiz’s Door Sales, Inc., from July 1996 to July 2011, and a member of the City of Everett Planning Commission since January 2014. He serves on the Advisory Board of the Puget Sound Clean Air Agency since February 1985 and previously served as Special Advisor to the Economic Alliance Snohomish County from November 2011 to 2015. Mr. Tisdel has been active in community organizations, including the YMCA, American Red Cross Snohomish County Chapter and Volunteers of America. Qualifications: The Company believes that Mr. Tisdel brings to the Board of Directors leadership experience, familiarity with our market area and is well qualified to continue serving on the Board of Directors. | | Pamela R. Unger Age: 40 Director since: 2021 Current term expires: 2027 | Biographical Information: Pamela Unger is a Certified Public Accountant who supports venture capital funds with tax planning, compliance, and related investor issues and inquiries. She is currently the Chief Operating Officer at Julien Unger & Associates, PLLC, a Bellevue-based public accounting firm, specializing in tax compliance and planning. She joined Julien Unger & Associates in January 2024. Ms. Unger served as the Tax Director from January 2019 through August 2020, and as the Managing Director from September 2020 to January 2024 for Belltower Fund Group, Ltd., which is the Seattle-based fund administrator for over 20,000 venture capital funds launched on the AngelList Venture platform. From September 2007 to January 2019, Ms. Unger held various positions, most recently she was a Tax Manager, at PwC, a network of accounting firms. While at PwC she worked in the broader asset management sector handling taxes for a variety of clients within the industry, with a focus on venture capital, private equity and heavy experience related to foreign investing inbound and outbound compliance. Ms. Unger graduated from the University of Washington with a bachelor’s degree in business and a masters in tax. Qualifications: The Company believes that Ms. Unger provides the Board of Directors significant experience in the accounting industry, and is well qualified to serve on the Board of Directors. |
Directors Continuing in Office
| ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Overview of Compensation Programs
| What we do: | | What we don’t do: | | | • | Provide a combination of base salary and both short-term and long-term incentive awards which serve as financial incentives to increase retention and align the interests of our executive officers with those of our shareholders | • | No automatic or guaranteed annual salary increases | | • | Emphasis on delivering incentive compensation to our executive officers that is tied to actual Company performance compared to its peers and internal benchmarks | • | No guaranteed bonuses or guaranteed long-term incentive awards | | • | Independent compensation consultant regularly advises the Compensation Committee | • | No excessive perquisites | | • | Provide time-based share awards that vest ratably over several years to incentivize and tie executive officer pay to long-term performance of Company | • | Encourage unnecessary or excessive risk-taking by executives by limiting the use of multiple metrics in short and long-term incentive plans for executive officers | | • | Use of peer company data to help set executive compensation | • | Enter into employment contracts with executives containing single-trigger golden parachutes | | • | Maintain a formal clawback policy applicable to all incentive-based compensation | | |
Independent Compensation Consultant – Pearl Meyer & Partners LLC (“Pearl Meyer”)
Independent Compensation Consultant – Pearl Meyer & Partners LLC (“Pearl Meyer”) During 2024, the Compensation Committee engaged Pearl Meyer, an independent compensation consulting firm. Specifically, the Compensation Committee engaged Pearl Meyer to: •review the Company’s compensation philosophy and strategy; •advise and aid in the design of the CEO compensation package; •advise and aid in the design of executive officer compensation; •evaluate and make recommendations on incentive compensation plans; •review and advise on Board of Directors compensation; and •perform peer analysis. Under its charter, the Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other advisor to the Compensation Committee, only after assessing the independence of such person in accordance with SEC and Nasdaq requirements that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent. The Compensation Committee has assessed Pearl Meyer’s independence and determined that Pearl Meyer is independent and there was no conflict of interest resulting from retaining Pearl Meyer for this engagement.
Peer Group Selection
Peer Group Selection The Company used two peer groups for comparison purposes in evaluating and determining executive compensation for 2024 provided in consultation with Pearl Meyer. The Company’s compensation programs are more closely aligned with the first group, bank-only peers (“Bank Peers”). The performance-based equity components of the Company’s compensation programs are more closely aligned with the second group, composed only of BaaS peers (“BaaS Peers”). These groups were identified based primarily on lines of business and/or asset size. Recognizing that comparative pay assessments have inherent limitations, due to the lack of precise comparability of executive positions between companies, as well as the companies themselves, the comparative data are used only as a guide and the Compensation Committee does not set or target the compensation of our executives at specific levels or within specified percentile ranges relative to peer company pay levels. While the Compensation Committee considers peer data to be a helpful reference to assess the competitiveness and appropriateness of our executive compensation program, the Compensation Committee applies its own business judgment and experience to determine individual compensation. Our Compensation Committee will continue to work with our CEO and our compensation consultants to position pay based on a variety of factors, including market data for executive compensation drawn from our peer group. The Compensation Committee supplements the peer group analysis with references, as a touchstone and without specifically benchmarking to any given level, compensation data of broader technology and consumer companies to better understand our broader competitive positioning. The peer groups are updated annually by the Compensation Committee, based on a process that includes recommendations from internal sources, including the Company’s human resources department, and external sources such as the Compensation Committee’s independent compensation consultant, to reflect the companies against which we compete for executive talent or for shareholder investment. The specific characteristics of the financial institutions comprising the peer groups vary from year to year, but our Bank Peers are chosen based on a combination of factors that include lines of business and asset size and our BaaS Peers are selected based on lines of business and asset size. All of the Bank Peers and BaaS Peers are publicly-traded companies. Below is the list of peers used for analysis:
Peer Group Selection
| Institution Name | Ticker | Total Assets | | Bank Peers | | ($000s) | | Nicolet Bankshares, Inc. | NIC | 8,796,795 | | German American Bancorp, Inc. | GABC | 6,295,910 | | Community Trust Bancorp, Inc. | CTBI | 6,193,245 | | Great Southern Bancorp, Inc. | GSBC | 5,981,628 | | Mid Penn Bancorp, Inc. | MPB | 5,470,936 | | Independent Bank Corporation | IBCP | 5,338,104 | | Farmers National Banc Corp. | FMNB | 5,118,924 | | Bridgewater Bancshares, Inc. | BWB | 5,066,242 | | Bank First Corporation | BFC | 4,495,060 | | Southern First Bancshares, Inc. | SFST | 4,087,593 | | MVB Financial Corp. | MVBF | 3,128,704 | | Greene County Bancorp, Inc. | GCBC | 2,965,771 | | First Western Financial, Inc. | MYFW | 2,919,037 | | Blue Ridge Bankshares, Inc. | BRBS | 2,737,260 | | BaaS Peers | | | | The Bancorp, Inc. | TBBK | 8,727,543 | | Pathward Financial, Inc. | CASH | 7,622,342 | | Metropolitan Bank Holding Corp. | MCB | 7,300,749 | | Triumph Financial, Inc. | TFIN | 5,948,975 | | Green Dot Corporation | GDOT | 5,434,282 | | VersaBank | VBNK | 3,471,060 | | MVB Financial Corp. | MVBF | 3,128,704 | | Cass Information Systems, Inc. | CASS | 2,395,081 | | Esquire Financial Holdings, Inc. | ESQ | 1,892,503 |
Compensation Mix
| Named Executive Officer | Base Salary % | Cash Bonus % | Equity Award % | Other % | | Eric M. Sprink | 45.1% | 24.5% | 27.2% | 3.2% | | Curt T. Queyrouze | 48.8% | 17.6% | 29.5% | 4.1% | | Joel G. Edwards | 52.7% | 21.7% | 22.0% | 3.7% | | Brian T. Hamilton | 3.0% | 2.5% | 94.3%(1) | 0.2% | | Andrew G. Stines | 59.0% | 18.3% | 19.3% | 3.4% |
Compensation Mix
(1) Includes 75,000 PSUs awarded to Mr. Hamilton upon his hiring in 2024 to align his performance with shareholder returns and to retain his services for an extended period. The price of Company common stock at the time of grant was $53.99 per share. The PSUs are eligible to vest on the first day of each month beginning on October 1, 2024 until April 30, 2028 only if certain specified performance conditions are met. 60,000 PSUs are contingent on achieving stock price hurdles, which will be measured for achievement during the 43-month period beginning October 1, 2024 through April 30, 2028. A sustained stock price of at least $75 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of 20,000 shares; a sustained stock price of at least $90 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of up to 40,000 shares; and a sustained stock price of at least $105 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of the remainder, up to 60,000 shares. An additional 15,000 shares are eligible to vest on April 30, 2028, contingent on relative return on average equity compared to a comparator group, with the Company’s performance needing to be at least in the 80th percentile, or top 20%, of the group over the four-year period. We believe the achievement of these performance conditions will benefit shareholders of the Company by incentivizing increased shareholder value through higher stock prices and increased earnings.
Base Salaries
Base Salaries The Compensation Committee engages compensation consultants to evaluate the compensation paid to the NEOs, and the Company’s other executive officers, compared to that of the identified peer groups. The analysis conducted in 2023 was used in the decision-making process for determining the compensation program design for 2024. The analysis focuses on base salaries, short and long-term incentives compared to our peers. The Company strives to provide NEOs with a base salary that is competitive with other bank and BaaS organizations identified in our peer groups. Base salaries set the foundation for direct compensation, since the opportunity levels for our incentive plans are defined as a percentage of base salaries. In establishing base salaries of the Company’s other NEOs, the Compensation Committee typically considers the recommendations of the CEO, which are based on company performance, individual responsibility level, and individual contribution to strategic goals, financial management and leadership. Total compensation histories for each NEO, peer group data and a general understanding of executive compensation in the financial services industry are also considered. The Compensation Committee reviewed and approved base salaries for all NEOs and reported the decisions to the Board of Directors. The base salaries paid to the NEOs in 2024 and increases in such salaries from 2023 to 2024 are shown below:
Executive Incentive Plan
Executive Incentive Plan The Company maintains an Executive Management Incentive Plan (the “Plan”) for certain key officers, including the NEOs, to align executive compensation practices with the Company’s performance, strategic plan and long-term goals. Under the Plan, the Company provides for incentive compensation to NEOs in the form of cash, bonuses and long term equity incentives granted under the 2018 Plan with the total value paid and/or granted based upon the achievement of certain performance objectives in the prior fiscal year. The Compensation Committee sets specific goals for each executive officer based on peer performance, weightings for each goal, and thresholds for payment based on actual results compared to each goal. The CEO has the option to recommend an adjustment to the payout for all NEOs other than himself. In 2024, the Compensation Committee selected goals were (i) Return on Average Assets, (ii) Core Deposit Growth, (iii) Gross Loan Growth, and (iv) Net Charge Offs. Each of these goals were selected to support the strategic goals on the Company in its effort to increase shareholder value. The weighting of the goals was set by the Compensation Committee to maintain a balance of the different objectives. Strategic objectives include a variety of Company-specific goals related to Leadership, Team Development, Compensation Strategy and Framework, and Long-Term Capital Framework. The Compensation Committee, in consultation with management, was responsible for setting the appropriate targets for each of these strategic objectives based on internal projections and targets. The incentive compensation paid out to our NEOs as a result as a result of achieving these goals in 2023 was paid out 50% in cash and 50% in time-based restricted stock units (RSUs”) granted in 2024 that are eligible to vest over a four-year period. 2024 performance similarly resulted in incentive compensation for out NEOs paid 50% in cash in 2025 and 50% in RSUs granted in 2025. Time-based RSUs are critical to our compensation program. Time-based RSUs tie our NEOs to future Company performance through the stock value and reinforce actions that build long-term shareholder value. In addition to the awards provided under the Plan, the President of CCBX received performance-based RSUs in 2024 as a new hire award. These performance-based awards vest based on stock price and performing in the top 10% of a comparator group comprised of a subset of publicly-traded commercial banks and are designed to reward the executive for creating shareholder value. Details of those performance-based RSU grants are provided in the “Summary Compensation Table” below. The table below describes the goals, category weightings and payout thresholds for each NEO in 2024:
Executive Incentive Plan
| | | Sprink | | Hamilton | | Queyrouze | | Edwards | | Stines | | | Goal | Thresholds | Payout % | Weight % | Payout % | Weight % | Payout % | Weight % | Payout % | Weight % | Payout % | Weight % | | Return on Average Assets | 123.31% of 1.27% | 200.0% | 40.0% | 200.0% | 40.0% | 200.0% | 40.0% | 105.0% | 40.0% | 82.5% | 40.0% | | | 100% of 1.27% | 100.0% | | 100.0% | | 100.0% | | 70.0% | | 55.0% | | | | 70.87% of 1.27% | 50.0% | | 50.0% | | 50.0% | | 35.0% | | 27.5% | | | Core Deposit Growth | 437% of 3.75% | 200.0% | 12.5% | 200.0% | 12.5% | 200.0% | 12.5% | 105.0% | 12.5% | 82.5% | 12.5% | | | 100% of 3.75% | 100.0% | | 100.0% | | 100.0% | | 70.0% | | 55.0% | | | | 50% of 3.75% | 50.0% | | 50.0% | | 50.0% | | 35.0% | | 27.5% | | | Gross Loan Growth | 216% of 11.40% | 200.0% | 12.5% | 200.0% | 12.5% | 200.0% | 12.5% | 105.0% | 12.5% | 82.5% | 12.5% | | | 100% of 11.40% | 100.0% | | 100.0% | | 100.0% | | 70.0% | | 55.0% | | | | 60% of 11.40% | 50.0% | | 50.0% | | 50.0% | | 35.0% | | 27.5% | | | Net Charge Offs | 16% of 0.03% | 200.0% | 10.0% | 200.0% | 10.0% | 200.0% | 10.0% | 105.0% | 10.0% | 82.5% | 10.0% | | | 100% of 0.03% | 100.0% | | 100.0% | | 100.0% | | 70.0% | | 55.0% | | | | 200% of 0.03% | 50.0% | | 50.0% | | 50.0% | | 35.0% | | 27.5% | | | Board Discretionary | | | 25.0% | | 25.0% | | 25.0% | | 25.0% | | 25.0% | | Total | | | 100.0% | | 100.0% | | 100.0% | | 100.0% | | 100.0% |
Executive Incentive Plan
A proportional approach is used for calculating payments in the event performance results fall between the three threshold levels. No payout is made if the lowest threshold is not met and the payout will not exceed the amount associated with the top threshold in the table above. Those percentage payouts are shown in the table above.
Equity Grant Practices
Equity Grant Practices We do not grant equity awards in anticipation of the release of material non-public information, and we do not time the release of material non-public information based on equity award grant dates or for the purposes of affecting the value of executive compensation. We do not have a formal policy with respect to the timing of our equity award grants, and did not grant stock options in 2024.
RISK CONSIDERATIONS IN OUR COMPENSATION PROGRAMS
RISK CONSIDERATIONS IN OUR COMPENSATION PROGRAMS Each year, the Compensation Committee, together with the Company’s risk officers, conduct an in-depth risk assessment of the Company’s compensation policies and practices. This assessment reviews the key enterprise risks to which the Company is subject, including credit, liquidity, market/interest rate, compliance, operational, technology, strategic, reputational and other risks, and focuses on the compensation arrangements most likely to implicate those risks. We believe that our compensation policies and practices for our employees are reasonable and properly align our employees’ interests with those of our shareholders. We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. Although certain of our employees who are not NEOs are compensated by the number or dollar volume of transactions they complete, our extensive underwriting process is designed to prevent us from entering into transactions that deviate from our underwriting standards. We believe our compensation programs are designed to encourage appropriate risk management while discouraging behavior that may result in excessive risk. In this regard, the following elements have been incorporated in our compensation programs for executive officers: •Compensation mix of cash and equity awards to increase retention and align the incentives of our executive officers and shareholders; •Use of multiple metrics in short and long-term incentive plans for executive officers; •Application of caps on incentives; •Providing time-based share awards that vest ratably over four years and performance-based awards that vest after a specific performance period; •No automatic or guaranteed annual salary increases, bonuses or guaranteed long-term incentive awards; •No excessive perquisites; •Emphasizing long-term and performance-based compensation; and •Instituting a formal clawback policy applicable to all incentive based compensation.
Summary Compensation Table
Summary Compensation Table The following information is furnished for our NEOs:
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total | | Eric M. Sprink | 2024 | $842,000 | $82,665 | $508,823 | $375,069 | $59,706 | $1,868,263 | | Chief Executive Officer | 2023 | 810,000 | — | 726,125 | 407,300(10) | 60,360 | 2,003,785 | | | 2022 | 700,000 | 83,088 | 700,018 | 443,018 | 54,418 | 1,980,542 | | Brian T. Hamilton(5) | 2024 | $120,191 | $40,526 | $3,761,600(6) | $59,474 | $7,563 | $3,989,354 | | President, CCBX | 2023 | — | — | — | — | — | — | | | 2022 | — | — | — | — | — | — | | Curt T. Queyrouze (7) | 2024 | $445,000 | $— | $268,867 | $160,000 | $37,488 | $911,355 | | President, Community Bank | 2023 | 428,000 | — | 236,053 | 268,054(10) | 35,213 | 967,320 | | | 2022 | 233,333 | 299,761 | 1,879,290(8) | 169,254 | 17,078 | 2,598,716 | | Joel G. Edwards | 2024 | $389,000 | $33,406 | $162,431 | $126,594 | $27,096 | $738,527 | | Executive Vice President, Chief Financial Officer | 2023 | 374,000 | — | 178,504 | 162,183(10) | 27,660 | 742,347 | | | 2022 | 340,000 | 82,586 | 157,538 | 135,914 | 25,852 | 741,890 | | Andrew G. Stines(9) | 2024 | $322,992 | $9,678 | $105,903 | $90,322 | $18,760 | $547,655 | | Executive Vice President, Chief Risk Officer | 2023 | 310,321 | — | 107,108 | 105,733(10) | 18,510 | 541,672 | | | 2022 | — | — | — | — | — | — |
Summary Compensation Table
(1)The amounts reported in this column represent the annual discretionary cash bonuses earned by our NEOs for fiscal years 2024, 2023 and 2022 performance except for Mr. Queyrouze whose 2022 amount includes $66,761 prorated annual discretionary bonus, $146,000 signing bonus, and $87,000 moving bonus. (2)The amounts reported in this column represent the grant date fair value of the award of RSUs computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 using the methodology set forth in Note 15, "Stock Based Compensation" to the Company’s consolidated financial statements included in the Company’s Annual Report. In accordance with SEC rules, the amounts in this column have been revised for 2023 and 2022 to reflect the aggregate grant date fair values of the stock awards granted in the applicable year, even though the value awarded was based on the prior year’s performance and had previously been reported as having been granted in the year of performance. (3)The amounts reported in this column represent the value of incentive awards earned in 2024, 2023 and 2022, respectively, based on the Company’s performance against pre-established performance goals for each NEO approved by the Compensation Committee. (4)Includes the items specified in the All Other Compensation table below for 2024. (5)Mr. Hamilton was hired on September 30, 2024, therefore 2024 is a partial year of expense and there is no compensation to report for 2022 or 2023. (6)Includes 75,000 PSUs awarded to Mr. Hamilton upon his hiring in 2024 to align his performance with shareholder returns and to retain his services for an extended period. The price of Company common stock at the time of grant was $53.99 per share. The PSUs are eligible to vest on the first day of each month beginning on October 1, 2024 until April 30, 2028 only if certain specified performance conditions are met. 60,000 PSUs are contingent on achieving stock price hurdles, which will be measured for achievement during the 43-month period beginning October 1, 2024 through April 30, 2028. A sustained stock price of at least $75 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of 20,000 shares; a sustained stock price of at least $90 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of up to 40,000 shares; and a sustained stock price of at least $105 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of the remainder, up to 60,000 shares. An additional 15,000 shares are eligible to vest on April 30, 2028, contingent on relative return on average equity compared to a comparator group, with the Company’s performance needing to be at least in the 80th percentile, or top 20%, of the group over the four-year period. We believe the achievement of these performance conditions will benefit shareholders of the Company by incentivizing increased shareholder value through higher stock prices and increased earnings. RSAs granted to Mr. Hamilton for service as a non-employee director before becoming employed by the Company are not reported in the Summary Compensation Table and are reported in the Director Compensation Table. (7)Mr. Queyrouze was hired on June 1, 2022; therefore 2022 is a partial year of expense. (8)Includes 53,000 PSUs awarded to Mr. Queyrouze upon his hiring in 2022 to align his performance with shareholder returns and to retain his services for an extended period. The price of Company common stock at the time of grant was $38.51 per share. The PSUs cliff vest after six years of continuous service only if certain specified performance conditions are met. 33,000 PSUs are contingent on achieving stock price hurdles, which will be measured for achievement during the 24 months preceding the sixth anniversary of the grants (years five and six). A sustained stock price of at least $68.51 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of 10,000 shares; a sustained stock price of at least $83.51 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of 20,000 shares; and a sustained stock price of at least $98.51 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of the remainder, up to 33,000 shares. The vesting of an additional 20,000 shares is contingent on relative return on average equity compared to a comparator group, with the Company’s performance needing to be at least in the 90th percentile, or top 10%, of the group over the six-year period. We believe the achievement of these performance conditions will benefit the shareholders of the Company by incentivizing increased shareholder value through higher stock prices and increased earnings. (9)Mr. Stines qualified as an NEO for the first time in 2023, therefore there is no compensation to report for 2022. (10)Amounts were reduced for the amounts recovered pursuant to the compensation recovery policy required by the listing standards adopted pursuant to 17 CFR 240.10D-1 as follows: Mr. Sprink $1,508; Mr. Queyrouze $797; Mr. Edwards $244; Mr. Stines $159.
Grants of Plan Based Awards in 2024
Grants of Plan Based Awards in 2024 The following table provides supplemental information relating to all grants of plan-based equity and non-equity awards made during 2024 to help explain information provided above in the Summary Compensation Table.
Grants of Plan Based Awards in 2024
| | | Estimated Future Payouts Under Equity Incentive Plan Awards (# of shares) | | | | | | Name | Grant Date | Threshold (#)(3) | Target (#) | Maximum (#) | All other Stock Awards: Number of shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards(1) | | Eric M. Sprink | 2/5/2024 | — | — | — | 13,376(2) | $508,823 | | Brian T. Hamilton(3) | 9/30/2024 | 20,000 | 40,000 | 60,000 | — | 1,079,800(4) | | Brian T. Hamilton(5) | 9/30/2024 | — | 15,000 | — | — | 809,850 | | Brian T. Hamilton | 9/30/2024 | — | — | — | 25,000(6) | 1,349,750 | | Curt T. Queyrouze | 2/5/2024 | — | — | — | 7,068(2) | 268,867 | | Joel G. Edwards | 2/5/2024 | — | — | — | 4,270(2) | 162,431 | | Andrew G. Stines | 2/5/2024 | — | — | — | 2,784(2) | 105,903 |
Grants of Plan Based Awards in 2024
(1)The amounts reported in this column represent the grant date fair value of the award of RSUs and PSUs computed in accordance with the FASB ASC Topic 718 using the methodology set forth in Note 15, “Stock Based Compensation” to the Company’s consolidated financial statements included in the Company’s Annual Report. (2)Represents RSUs granted in 2024 for service/performance in 2023 and are included in the total compensation table for 2024. The RSUs vest over a four-year period from the grant date, with approximately one-fourth of the RSUs under the grant vesting on each of the first four anniversaries of the grant date. (3)Includes 60,000 PSUs awarded to Mr. Hamilton upon his hiring in 2024 to align his performance with shareholder returns and to retain his services for an extended period. The price of Company common stock at the time of grant was $53.99 per share. The PSUs are eligible to vest on the first day of each month beginning on October 1, 2024 until April 30, 2028 only if certain specified performance conditions are met. 60,000 PSUs are contingent on achieving stock price hurdles, which will be measured for achievement during the 43-month period beginning October 1, 2024 through April 30, 2028. A sustained stock price of at least $75 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of 20,000 shares; a sustained stock price of at least $90 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of up to 40,000 shares; and a sustained stock price of at least $105 per share for no less than 60 continuous trading days during the measurement period is required for the vesting of the remainder, up to 60,000 shares. (4)Represents the award payout if minimum performance targets are achieved. (5)Represents 15,000 PSUs awarded to Mr. Hamilton upon his hiring in 2024 to align his performance with shareholder returns and to retain his services for an extended period. The price of Company common stock at the time of grant was $53.99 per share. The PSUs are eligible to vest on April 30, 2028, contingent on relative return on average equity compared to a comparator group, with the Company’s performance needing to be at least in the 80th percentile, or top 20%, of the group over the four-year period. We believe the achievement of these performance conditions will benefit shareholders of the Company by incentivizing increased shareholder value through higher stock prices and increased earnings. (6)Represents RSUs granted in 2024 upon his hiring. These RSUs vest over a 43-month period, with 16.28% vesting on April 30, 2025, and 2.3256% vesting each month thereafter.
Outstanding Equity Awards at 2024 Fiscal Year End
Outstanding Equity Awards at 2024 Fiscal Year End The following table provides information regarding outstanding stock option awards held by our NEOs as of December 31, 2024.
Outstanding Equity Awards at 2024 Fiscal Year End
| | | Option Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price($) | Option Expiration Date | | Eric M. Sprink | 07/01/15 | 0(1) | 1,880 | 7.20 | 07/01/25 | | | 02/24/16 | 0(1) | 3,763 | 6.25 | 02/24/26 | | | 01/26/17 | 0(1) | 10,148 | 6.50 | 01/26/27 | | | 01/22/18 | 0(1) | 11,419 | 7.10 | 01/22/28 | | | 01/22/19 | 0(1) | 13,369 | 14.91 | 01/22/29 | | Brian T. Hamilton | — | | | | | | Curt T. Queyrouze | — | | | | | | Joel G. Edwards | 07/01/15 | 1,200(1) | 600 | 7.20 | 07/01/25 | | | 02/24/16 | 600(1) | 1,200 | 6.25 | 02/24/26 | | | 01/26/17 | 4,200(1) | 4,200 | 6.50 | 01/26/27 | | | 01/22/18 | 3,600(1) | 2,400 | 7.10 | 01/22/28 | | | 01/22/19 | 5,000(1) | 5,000 | 14.91 | 01/22/29 | | Andrew G. Stines | — | | | | |
Outstanding Equity Awards at 2024 Fiscal Year End
(1)These option awards vest over a ten-year period from the grant date, with one-tenth of the options under the grant becoming exercisable on each of the first nine anniversaries of the grant date and the final one-tenth of the options under the grant becoming exercisable 90 days prior to the tenth anniversary of the grant date. The following table provides information regarding outstanding restricted stock, RSUs and PSUs held by our NEOs as of December 31, 2024.
Outstanding Equity Awards at 2024 Fiscal Year End
| | | Stock Awards | | | | | Name | Grant Date | Number of Shares or Units of Stock That Have not Vested (#) | Market Value of Shares or Units of Stock That Have not Vested(1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) | | Eric M. Sprink | 2/3/2020 | 11,182(2) | $949,464 | — | $— | | | 1/25/2021 | 6,032(3) | 512,177 | — | — | | | 10/4/2021 | — | — | 100,000(4) | 8,491,000 | | | 1/25/2022 | 7,114(5) | 604,050 | — | — | | | 1/25/2023 | 12,549(5) | 1,065,536 | — | — | | | 2/5/2024 | 13,376(5) | 1,135,756 | — | — | | Brian T. Hamilton | 5/30/2024 | 2,034(6) | 172,707 | — | — | | | 9/30/2024 | 25,000(7) | 2,122,750 | 20,000(8) | 1,698,200 | | | 9/30/2024 | | | 15,000(9) | 1,273,650 | | Curt T. Queyrouze | 6/1/2022 | 2,334(10) | 198,180 | — | — | | | 6/1/2022 | — | — | 53,000(11) | 4,500,230 | | | 1/25/2023 | 4,080(5) | 346,433 | — | — | | | 2/5/2024 | 7,068(5) | 600,144 | — | — | | Joel G. Edwards | 2/3/2020 | 2,689(2) | 228,323 | — | — | | | 1/25/2021 | 2,471(3) | 209,813 | — | — | | | 1/25/2022 | 1,601(5) | 135,941 | — | — | | | 1/25/2023 | 3,085(5) | 261,947 | — | — | | | 2/5/2024 | 4,270(5) | 362,566 | — | — | | Andrew G. Stines | 2/3/2020 | 2,000(12) | 169,820 | — | — | | | 1/25/2021 | 1,516(3) | 128,724 | — | — | | | 1/25/2022 | 1,089(5) | 92,467 | — | — | | | 1/25/2023 | 1,861(5) | 158,018 | — | — | | | 2/5/2024 | 2,784(5) | 236,389 | — | — |
Outstanding Equity Awards at 2024 Fiscal Year End
(1)The amounts in this column are based on the closing stock price of $84.91 of the Company's common stock on December 31, 2024. (2)These RSUs vest over a ten-year period from the grant date, with approximately one-tenth of the RSUs under the grant vesting on each of the first ten anniversaries of the grant date. (3)These RSUs vest over a five-year period from the grant date, with approximately one-fifth of the RSUs under the grant vesting on each of the first five anniversaries of the grant date. (4)These PSUs are eligible to vest on October 4, 2027, the quantity of which is dependent upon achievement of specified performance goals. Each PSU represents the right to receive one share of common stock upon vesting. (5)These RSUs vest over a four-year period from the grant date, with approximately one-fourth of the RSUs under the grant vesting on each of the first four anniversaries of the grant date. (6)These RSAs vest one day prior to the 2025 Annual Shareholders’ meeting and were granted for service as a non-employee director before becoming employed by the Company. (7)These RSUs vest over a 43-month period, with 16.28% vesting on April 30, 2025, and 2.3256% vesting each month thereafter. (8)These PSUs are eligible to vest between October 1, 2024 and April 30, 2028, the quantity of which is dependent upon achievement of specified performance goals. Each PSU represents the right to receive one share of common stock upon vesting. (9)These PSUs are eligible to vest April 30, 2028, the quantity of which is dependent upon achievement of specified performance goals. Each PSU represents the right to receive one share of common stock upon vesting. (10)These RSUs vest over a three-year period from the grant date, with approximately one-third of the RSUs under the grant vesting on each of the first three anniversaries of the grant date. (11)These PSUs are eligible to vest on June 1, 2028, the quantity of which is dependent upon achievement of specified performance goals. Each PSU represents the right to receive one share of common stock upon vesting. (12)These restricted stock awards vest over an eight-year period from the grant date, with approximately one-eighth of the restricted stock award under the grant vesting on each of the first eight anniversaries of the grant date. The Company granted 100,000 PSUs to Mr. Sprink in 2021 to further align his performance with shareholder returns and to retain his services for an extended period. The price of a share at the time of the grant was $31.00. The PSUs cliff vest after six years of continuous service only if certain specified performance conditions are met. Fifty percent of the units (50,000 PSUs) are contingent on achieving stock price hurdles, which will be measured for achievement during the 24-months preceding the sixth anniversary of the grants (years five and six). A sustained stock price of at least $50.00 per share for no less than 60 continuous trading days during the measurement period is required to vest 25,000 shares and a sustained stock price of at least $60.00 per share for no less than 60 continuous trading days during the measurement period is required to vest 50,000 shares. The vesting of an additional 50,000 shares is contingent on relative return on average equity compared to a comparator group, with the Company’s performance needing to be at least in the 90th percentile, or top 10%, of the group over the six-year period. We believe the achievement of these performance conditions will benefit shareholders of the Company by incentivizing increased shareholder value through higher stock prices and increased earnings. The Company granted 53,000 PSUs to Mr. Queyrouze upon his hiring in 2022 to align his performance with shareholder returns and to retain his services for an extended period. The price of a share at the time of the grant was $38.51. The PSUs cliff vest after six years of continuous service only if certain specified performance conditions are met. 33,000 PSUs are contingent on achieving stock price hurdles, which will be measured for achievement during the 24-months preceding the sixth anniversary of the grants (years five and six). A sustained stock price of at least $68.51 per share for no less than 60 continuous trading days during the measurement period is required to vest 10,000 shares; a sustained stock price of at least $83.51 per share for no less than 60 continuous trading days during the measurement period is required to vest up to 20,000 shares and a sustained stock price of at least $98.51 per share for no less than 60 continuous trading days during the measurement period is required to vest the remainder, up to 33,000 shares. The vesting of an additional 20,000 shares is contingent on relative return on average equity compared to a comparator group, with the Company’s performance needing to be at least in the 90th percentile, or top 10%, of the group over the six-year period. We believe the achievement of these performance conditions will benefit shareholders of the Company by incentivizing increased shareholder value through higher stock prices and increased earnings. The Company granted 75,000 PSUs to Mr. Hamilton upon his hiring in 2024 to align his performance with shareholder returns and to retain his services for an extended period. The price of a share at the time of the grant was $53.99. The PSUs are eligible to vest on the first day of each month beginning on October 1, 2024 until April 30, 2028 only if certain specified performance conditions are met. 60,000 PSUs are contingent on achieving stock price hurdles, which will be measured for achievement during the 43-month period beginning October 1, 2024 through April 30, 2028. A sustained stock price of at least $75 per share for no less than 60 continuous trading days during the measurement period is required to vest 20,000 shares; a sustained stock price of at least $90 per share for no less than 60 continuous trading days during the measurement period is required to vest up to 40,000 shares and a sustained stock price of at least $105 per share for no less than 60 continuous trading days during the measurement period is required to vest the remainder, up to 60,000 shares. An additional 15,000 shares are eligible to vest on April 30, 2028, contingent on relative return on average equity compared to a comparator group, with the Company’s performance needing to be at least in the 80th percentile, or top 20%, of the group over the four-year period. We believe the achievement of these performance conditions will benefit shareholders of the Company by incentivizing increased shareholder value through higher stock prices and increased earnings.
Option Exercises and Stock Vested for 2024
Option Exercises and Stock Vested for 2024 The following table summarizes the stock awards that vested for, and stock options that were exercised by, NEOs during the fiscal year ended December 31, 2024. The amounts reflected below show the number of shares acquired at the time of exercise or vesting, as applicable. The amounts reported as value realized on vesting are shown on a before-tax basis.
Option Exercises and Stock Vested for 2024
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Eric M. Sprink | 86,135 | $3,768,162 | 12,619 | $518,131 | | Curt T. Queyrouze | — | — | 3,692 | 159,735 | | Joel G. Edwards | 1,200 | 38,508 | 3,513 | 144,415 | | Brian T. Hamilton (2) | — | — | — | — | | Andrew G. Stines | — | — | 2,422 | 99,099 |
Option Exercises and Stock Vested for 2024
(1) Reflects the closing price of the Company’s common stock on the vesting date multiplied by the number of shares vested. (2) Mr. Hamilton was hired in 2024 and thus does not have vested stock awards or options.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The table below sets forth the estimated payments to be made to each NEO in the event of a qualifying change in control as of the last business day of the year ended December 31, 2024. See the section titled “Employment and Change in Control Agreements with Named Executive Officers” for a description of the agreements pursuant to which these payments would be made.
Potential Payments Upon Termination or Change in Control
| Name | Benefit | Termination Without Cause or Departing for Good Reason | Qualifying Termination in Connection with a Change in Control | Death | Disability | | Eric M. Sprink | Severance pay | $2,141,734 | $2,933,300 | $— | $1,684,000 | | | Equity award vesting | 4,502,043 | 7,329,199 | — | 4,502,043 | | | Health benefits | 8,306 | 24,918 | — | 16,612 | | | Total Value | $6,652,083 | $10,287,418 | $— | $6,202,655 | | Brian T. Hamilton | Severance pay | $570,000 | $957,414 | $— | $470,000 | | | Equity award vesting | 740,500 | 2,122,750 | — | 740,500 | | | Health benefits | 7,138 | 14,275 | — | 7,138 | | | Total Value | $1,317,638 | $3,094,439 | $— | $1,217,638 | | Curt T. Queyrouze | Severance pay | $605,000 | $1,158,054 | $— | $445,000 | | | Equity award vesting | 463,694 | 1,144,757 | — | 463,694 | | | Health benefits | 8,306 | 16,612 | — | 8,306 | | | Total Value | $1,077,000 | $2,319,423 | $— | $917,000 | | Joel G. Edwards | Severance pay | $— | $1,118,687 | $— | $— | | | Equity award vesting | — | 2,017,490 | — | — | | | Health benefits | — | — | — | — | | | Total Value | $— | $3,136,177 | $— | $— | | Andrew G. Stines | Severance pay | $— | $322,992 | $— | $— | | | Equity award vesting | — | 785,418 | — | — | | | Health benefits | — | — | — | — | | | Total Value | $— | $1,108,410 | $— | $— |
Pay Ratio Disclosure
Pay Ratio Disclosure Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the annual total compensation of the principal executive officer to the annual total compensation of its median employee, other than the principal executive officer. The purpose of the pay ratio disclosure is to provide a quantitative measure of the equitability of pay within an organization. The pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. We believe our compensation philosophy and process yield an equitable result:
Pay Ratio Disclosure
| Median employee total annual compensation (other than the CEO) | $105,518 | | Total annual compensation of Eric M. Sprink, our CEO | $1,868,263 | | Ratio of CEO to median employee compensation | 18:1 |
Pay Ratio Disclosure
The pay ratio above represents the Company’s reasonable estimate. Applicable rules and guidance provide flexibility in how companies identify the median employee and other companies may use different methodologies or make different assumptions. In determining the median employee, a list of all employees as of December 31, 2024 of both the Company and the Bank was prepared, including all full-time, part-time, or temporary employees. As of December 31, 2024, the Company employed 495 persons, all of whom are in the United States. Wages and salaries were then annualized for any full-time and part-time employees that were not employed for the full calendar year. All other cash compensation received by our employees in 2024 (including 401(k) Plan employer contributions, medical/dental/vision premiums paid by the employer and any applicable cash perquisites) was added to the annualized wages and salaries to determine total cash compensation for purposes of this analysis. In order to determine the median employee, we then reviewed the employee list based upon a ranking of the total cash compensation of all employees other than our CEO. Upon identifying our median employee, we then calculated the median employee’s total annual compensation figure by aggregating the value of all wages, cash incentives, equity incentives, 401(k) Plan employer contributions, medical/dental/vision premiums paid by the employer and any applicable perquisites earned or paid in 2024 in the same manner as we calculated the total annual compensation of our CEO for purposes of the Summary Compensation Table.
2018 Omnibus Incentive Plan
| DIRECTOR COMPENSATION |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The Board of Directors determines the compensation of our non-employee directors in conjunction with recommendations made by the Compensation Committee. We use a combination of cash and share-based compensation to attract and retain qualified candidates to serve on the Board of Directors. Eric M. Sprink did not receive fees or other compensation for his service as a director of the Company or the Bank during the fiscal year ended December 31, 2024 and is not included in the director compensation table below. Non-employee director compensation in the form of cash paid and stock awards granted to Brian T. Hamilton prior to him becoming an employee is included below. No further non-employee director compensation will be paid to Mr. Hamilton. All compensation paid to Mr. Sprink and Mr. Hamilton as employees of the Company is included in the Summary Compensation Table. Our non-employee directors received compensation for service and attendance as follows during the year ended December 31, 2024: •The Chair of the Board of Directors received annual cash compensation of approximately $63,000; •Other directors received annual cash compensation of approximately $43,000; and •Committee chairs received additional cash compensation of $5,000 per committee chaired In addition to the cash compensation outlined above, non-employee directors, excluding the Chair of the Board of Directors, also received approximately $60,000 in restricted stock. The Chair of the Audit Committee receives an additional approximately $15,000 in restricted stock; Chairs of the Compensation and Non-Financial Risk Committees receive an additional approximately $12,500 in restricted stock; all other Committee Chairs will receive an additional approximately $10,000 in restricted stock; and the Chair of the Board of Directors receives approximately $90,000 in restricted stock. Restricted stock awards are granted in May of each year and vest one day prior to the next annual meeting date. Partial shares are not issued, therefore shares are rounded up to the nearest whole number. The following table sets forth information regarding compensation paid for the year ended December 31, 2024 to our non-employee directors:
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | | Stock Awards ($)(1) | | Total ($) | | | Christopher D. Adams | | 62,917 | | 90,027 | | 152,944 | | Sadhana Akella-Mishra | 47,917 | | 72,519 | | 120,436 | | | Rilla R. Delorier | 42,917 | | 60,033 | | 102,949 | | | Brian T. Hamilton | 34,167 | | 88,804 | | 122,971 | | | Steven D. Hovde | 47,917 | | 70,031 | | 117,947 | | | Stephan Klee | 47,917 | | 72,519 | | 120,436 | | | Thomas D. Lane | 52,917 | | 80,029 | | 132,945 | | | Michael R. Patterson | 47,917 | | 75,008 | | 122,925 | | | Gregory A. Tisdel | 42,917 | | 60,033 | | 102,949 | | | Pamela R. Unger | 42,917 | | 60,033 | | 102,949 | |
DIRECTOR COMPENSATION
(1)Amounts represent the aggregate grant date fair value of restricted stock awards granted during the respective fiscal year calculated in accordance with FASB ASC Topic 718. See Note 15, “Stock-Based Compensation,” to the Company's consolidated financial statements included in the Annual Report for a discussion of the assumptions we made in determining the grant date fair value of our equity awards. Restricted stock awards vest 100% one day prior to the Company's next Annual Meeting of Shareholders. As of December 31, 2024, each non-employee director held unvested shares of restricted stock as follows: Mr. Adams, 2,062 shares; Ms. Akella-Mishra, 1,661 shares; Ms. Delorier, 1,375 shares; Mr. Hamilton, 2,034 shares; Mr. Hovde, 1,604 shares; Mr. Klee, 1,661 shares; Mr. Lane, 1,833 shares; Mr. Patterson, 1,718 shares; Mr. Tisdel, 1,375 shares; Ms. Unger 1,375 shares.
Pay Versus Performance
Pay Versus Performance The information below describes the relationship between compensation actually paid to our CEO and other NEOs, and certain measures of financial performance, for the three years ended December 31, 2024, in accordance with Item 402(v) of Regulation S-K. Compensation actually paid, as determined under SEC requirements, does not necessarily reflect the actual amount of compensation earned by or paid to our Named Executive Officers during a covered year. For further information concerning our pay-for-performance philosophy and how we align executive compensation with our performance, refer to the Compensation Discussion and Analysis.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based on December 31, 2020 | | | | | Year | Summary Compensation Table Total for CEO (1)(5) | Compensation Actually Paid to CEO (1)(2) | Average Summary Compensation Table Total for non-CEO Named Executive Officers (3)(5) | Average Compensation Actually Paid to non-CEO Named Executive Officers (3) | Total Shareholder Return | Peer Group Total Shareholder Return(4) | Net Income (dollars in thousands) | Return on Average Assets | | 2024 | $1,868,263 | $9,612,332 | $1,546,723 | $3,698,933 | $404.33 | $134.22 | $45,219 | 1.15% | | 2023 | $2,003,785 | $1,515,616 | $700,546 | $612,939 | $211.48 | $123.48 | $44,579 | 1.28% | | 2022 | $1,980,542 | $1,454,819 | $1,670,303 | $2,092,317 | $226.29 | $106.40 | $40,625 | 1.38% | | 2021 | $4,514,200 | $10,882,059 | $647,199 | $1,529,305 | $241.05 | $126.82 | $27,005 | 1.24% |
Pay Versus Performance
(1)Eric M. Sprink served as our CEO in each of the years 2021, 2022, 2023 and 2024. (2)The dollar amounts reported represent “Compensation Actually Paid”, as calculated in accordance with SEC rules for the CEO and the average for Non-CEO NEOs for each reported year. These dollar amounts do not reflect actual amounts of compensation paid during the covered year, but reflect adjustments for (i) the year-end fair values of unvested equity awards granted in the current year, (ii) the year-over-year difference of year-end fair values for unvested awards granted in prior years, (iii) the fair values at vest date for awards granted and vested in the current year and (iv) the difference between prior year-end fair values and vest date fair values for awards granted in prior years. A reconciliation for the compensation actually paid is provided below. (3)Our non-CEO NEOs in each of the years 2021, 2022, 2023 and 2024 are as follows: •2024: Brian T. Hamilton, Curt T. Queyrouze, Joel G. Edwards and Andrew G. Stines. •2023: Curt T. Queyrouze, Joel G. Edwards, Russell A. Keithley and Andrew G. Stines. •2022: Curt T. Queyrouze and Joel G. Edwards. •2021: John J. Dickson and Joel G. Edwards. (4) Peer group is S&P 600 Small Cap which is the index included in the Performance Graph in the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2024. (5) Amounts for 2023 were reduced for the amounts recovered pursuant to the compensation recovery policy required by the listing standards adopted pursuant to 17 CFR 240.10D-1 as follows: Mr. Sprink $1,508; Mr. Queyrouze $797; Mr. Edwards $244; Mr. Stines $159. The following table reconciles the Summary Compensation Table compensation to the Compensation Actually Paid disclosed in the above table for the periods indicated:
Pay Versus Performance
| | | 2024 | | | | | CEO | Non CEO NEOs | | Summary Compensation Table Total Compensation | | $1,868,263 | $1,546,723 | | - | Grant date fair value of stock awards granted in fiscal year | (508,823) | (1,131,639) | | + | Fair value at fiscal year-end of outstanding and unvested awards granted in fiscal year | 1,135,756 | 2,422,525 | | +/- | Change in fair value of outstanding and unvested stock awards granted in prior fiscal years | 7,186,968 | 878,101 | | +/- | Change in fair value as of vesting date of stock awards granted in prior fiscal years for which applicable vesting conditions were satisfied during the fiscal year | (69,832) | (16,777) | | Compensation Actually Paid | | $9,612,332 | $3,698,933 |
Pay Versus Performance
| | | 2023 | | | | | CEO | Non CEO NEOs | | Summary Compensation Table Total Compensation | | $2,003,785 | $700,546 | | - | Grant date fair value of stock awards granted in fiscal year | (726,125) | (155,275) | | + | Fair value at fiscal year-end of outstanding and unvested awards granted in fiscal year | 743,024 | 162,363 | | +/- | Change in fair value of outstanding and unvested stock awards granted in prior fiscal years | (412,899) | (73,254) | | +/- | Change in fair value as of vesting date of stock awards granted in prior fiscal years for which applicable vesting conditions were satisfied during the fiscal year | (92,168) | (21,441) | | Compensation Actually Paid | | $1,515,616 | $612,939 |
Pay Versus Performance
| | | 2022 | | | | | CEO | Non CEO NEOs | | Summary Compensation Table Total Compensation | | $1,980,542 | $1,670,303 | | - | Grant date fair value of stock awards granted in fiscal year | (700,018) | (1,018,414) | | + | Fair value at fiscal year-end of outstanding and unvested awards granted in fiscal year | 676,115 | 1,501,680 | | +/- | Change in fair value of outstanding and unvested stock awards granted in prior fiscal years | (287,971) | (42,047) | | +/- | Change in fair value as of vesting date of stock awards granted in prior fiscal years for which applicable vesting conditions were satisfied during the fiscal year | (213,849) | (19,205) | | Compensation Actually Paid | | $1,454,819 | $2,092,317 |
Pay Versus Performance
| | | 2021 | | | | | CEO | Non CEO NEOs | | Summary Compensation Table Total Compensation | | $4,514,200 | $647,199 | | - | Grant date fair value of stock awards granted in fiscal year | (3,073,802) | $(107,007) | | + | Fair value at fiscal year-end of outstanding and unvested awards granted in fiscal year | 5,825,299 | 259,048 | | +/- | Change in fair value of outstanding and unvested stock awards granted in prior fiscal years | 3,450,049 | 695,774 | | +/- | Change in fair value as of vesting date of stock awards granted in prior fiscal years for which applicable vesting conditions were satisfied during the fiscal year | 166,314 | 34,292 | | Compensation Actually Paid | | $10,882,059 | $1,529,305 |
Pay Versus Performance
Changes in the Company’s stock price from period to period can have a material impact on the fair value amounts shown in the table above and, as a result, the Compensation Actually Paid from year to year may differ more dramatically. The following chart shows the Company’s stock price as of the dates indicated:
Pay Versus Performance
| 12/31/2024 | | 12/31/2023 | | 12/31/2022 | | 12/31/2021 | | | | 84.91 | | 44.41 | | 47.52 | | 50.62 |
Pay Versus Performance
Compensation Actually Paid to our CEO in 2021 was significantly impacted by the grant of 100,000 PSUs to further align his performance and to retain his services. These PSUs cliff vest after 6 years from grant date if certain specified performance conditions are met. Average Compensation Actually Paid to Non-CEO NEOs in 2022 was significantly impacted by the grant of 53,000 PSUs to the President of the Community Bank to further align his performance and to retain his services. These PSUs cliff vest after 6 years from grant date if certain specified performance conditions are met. Similarly, average Compensation Actually Paid to Non-CEO NEOs in 2024 was significantly impacted by the grant of 75,000 PSUs to the President - CCBX to further align his performance and to retain his services. These PSUs are eligible to vest at various quantities beginning October 1, 2024 through April 30, 2028 if certain specified performance conditions are met. More information on these PSUs can be found in the “Executive Compensation” section of this proxy statement.
OTHER INFORMATION RELATED TO DIRECTORS AND EXECUTIVE OFFICERS
OTHER INFORMATION RELATED TO DIRECTORS AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS
BOARD OF DIRECTORS 2.1 Number and Qualifications. All corporate powers shall be exercised by, or under the authority of, and the business and affairs of the corporation will be managed by a board of directors, the members of which need not be shareholders of the corporation or residents of the State of Washington. The range in the number of directors will be as set by the Articles of Incorporation with the exact number of directors to be determined by resolution of the Board of Directors from time to time. 2.2 Election - Term of Office. The directors will be elected by the shareholders pursuant to the Articles of Incorporation, to hold office for the terms specified in the Articles of Incorporation. 2.3 Mandatory Retirement. No person who is or will be 72 years old or older during his or her proposed term of office may be nominated, elected, re-elected, or appointed to the Board of Directors. 2.3 Vacancies. Except as otherwise provided by law, vacancies in the Board of Directors, whether caused by resignation, death, or otherwise, may be filled by the remaining directors, whether constituting a quorum or not, or by the shareholders entitled to vote for the positions vacated. Directors elected to fill vacancies will hold office during the unexpired term of their predecessors and until their successors are elected and qualified. 2.4 Annual Meeting. The annual meeting of the Board of Directors will be held immediately after and at the same place as the shareholders’ annual meeting or any later shareholders’ meeting at which directors are elected. 2.5 Regular Meetings. Regular meetings of the Board of Directors will be held on the dates and at the times and places decided by resolution of the Board of Directors. 2.6 Special Meetings. Special meetings of the Board of Directors may be held at any time and at any place whenever called by the Chairperson, the Chief Executive Officer, the President or any two (2) directors of the corporation. 2.7 Notice of Meetings. Notice of regular meetings of the Board of Directors is not required. Notice of the date, time, and place of special meetings of the Board of Directors must be given, by or at the direction of the Chairperson of the Board, the Chief Executive Officer, the President, the Secretary, or any person or persons calling the meeting, electronically or by mail, facsimile or personal communication over the telephone or otherwise, at least two (2) days prior to the day on which the meeting is to be held. No notice need be given if the time and place of the meeting has been fixed by resolution of the Board of Directors and a copy of the resolution has been mailed to every director at least two (2) days before the meeting. 2.8 Waiver of Notice. Notice of any meeting of the Board of Directors may be waived at any time, either before or after a meeting, if the waiver is in writing, signed by the director entitled to notice, and delivered to the corporation. Notice is waived by any director attending or participating in a meeting unless the director, at the beginning of the meeting or promptly on the director’s arrival, objects to holding the meeting or transacting business at the meeting and does not vote for or assent to any action taken at the meeting. 2.9 Quorum of Directors; Attendance. A majority of the number of directors fixed in accordance with the Articles of Incorporation or Bylaws from time to time will constitute a quorum for the transaction of business. The act of a majority of the directors present at a meeting at which a quorum is present will be the act of the Board of Directors. Members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of the Board or committee by means of a conference telephone or similar communication equipment by which all persons participating in the meeting can hear each other at the meeting. Participation by such means will constitute presence in person at a meeting. 2.10 Dissent by Directors. A director of the corporation who is present at a meeting of its Board of Directors at which action on any corporate matter is taken will be presumed to have assented to the action unless (a) the director objects at the beginning of the meeting, or promptly on his or her arrival, to holding the meeting or transacting business at the meeting; (b) the director’s dissent or abstention from the action taken is entered in the minutes of the meeting, or (c) the director delivers written notice of his or her dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation within a reasonable time after adjournment. The right of dissent or abstention is not available to a director who votes in favor of the action taken. 2.11 Action Without Meeting. Any action which may be or is required to be taken at a meeting of the Board of Directors, or any action which may be taken at a meeting of a committee designated by the Board of Directors, may be taken without a meeting if a written consent resolution, setting forth the action taken, is signed by all of the directors or all of the members of the committee, as the case may be, and is delivered to the corporation. The fully signed consent resolution will have the same force and effect as a unanimous vote. 2.12 Removal of Directors. One or more directors may be removed by the shareholders of the corporation in accordance with the provisions of the Articles of Incorporation of the corporation. Any vacancy caused by such removal may be filled by the shareholders at such meeting, and any director elected to fill such vacancy shall serve only for the unexpired term of his predecessor in office. 2.13 Executive Committee. By resolution adopted by a majority of the full Board of Directors, the Board may designate from among its members an Executive Committee of not less than two (2) members, and may designate one of such members as chairperson. Any member of the Board may serve as an alternate member of the Executive Committee in the absence of a regular member or members. The Executive Committee shall have and exercise all of the authority of the Board of Directors during intervals between meetings of the Board except that the Executive Committee shall not have the authority to: (1) authorize or approve a distribution except according to a general formula or method prescribed by the Board of Directors; (2) approve or propose to shareholders action required to be approved by shareholders; (3) fill vacancies on the Board of Directors or on any of its committees; (4) amend the Articles of Incorporation of the corporation; (5) adopt, amend, or repeal the Bylaws of the corporation; (6) approve a plan or merger not requiring shareholder approval, or (7) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except as authorized by the Board of Directors within limits specifically prescribed by the Board. 2.14 Other Committees. By resolution adopted by a majority of the full Board of Directors, the Board may designate from among its members such other committees as it may deem necessary, each of which shall consist of not less than two (2) directors and have such powers and duties as may from time to time be prescribed by the Board. 2.15 Rules of Procedure. The majority of the members of any committee may fix its rules of procedure. All actions by any committee shall be reported in written minutes available at any reasonable time to any Board member. Such actions shall be subject to revision, alteration and approval by the Board of Directors; provided, that no rights or acts of third parties who have relied in good faith on the authority granted herein shall be affected by such revision or alteration.