DEF 14A of Smartfinancial Inc.
Filed Apr 9, 2024 · FY20230001558370-24-004885
Information about the directors
Information about the directors The following table shows, as of March 26, 2024, for each nominee to the Board of Directors: (1) his or her name; (2) his or her age; (3) his or her position(s) with SmartFinancial or SmartBank, other than as a director, if any; and (4) how long he or she has been a director of SmartFinancial, Legacy SmartFinancial and/or SmartBank.
Information about the directors
| Nominee | Age | Position(s) with SmartFinancial or SmartBank (other than as Director) | Director Since | | Cathy G. Ackermann | 74 | N/A | 2022 | | Victor L. Barrett | 71 | N/A | 2007 | | William (“Billy”) Y. Carroll, Jr. | 55 | President & CEO of SmartFinancial and President & CEO of SmartBank | 2007 | | William (“Bill”) Y. Carroll, Sr. | 84 | Vice Chairman of SmartFinancial and SmartBank | 2007 | | Ted C. Miller | 81 | N/A | 2007 | | David A. Ogle | 66 | N/A | 2007 | | John M. Presley | 63 | N/A | 2021 | | Steven B. Tucker | 71 | N/A | 2017 | | Wesley M. (“Miller”) Welborn | 65 | Chairman of SmartFinancial, Inc. and SmartBank | 2009 | | Keith E. Whaley, O.D. | 53 | N/A | 2007 | | Geoffrey A. Wolpert | 68 | N/A | 2007 |
Information about the directors
This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. We encourage you to read it carefully. We are distributing this proxy statement on or about April 9, 2024. In this proxy statement, the terms “we,” “our,” “ours,” “us,” “SmartFinancial”, “SMBK” and the “Company” refer to SmartFinancial, Inc. The term “SmartBank” refers to our wholly owned bank subsidiary, which is a Tennessee banking corporation. The terms “Board” and “Board of Directors” refer to the Board of Directors of SmartFinancial. We do not know of any business that will be presented for consideration at the Annual Meeting other than the matters described in this proxy statement. This proxy statement is dated April 9, 2024, and is being mailed or otherwise made available to the shareholders of SmartFinancial on or about April 9, 2024, along with the form of proxy.
PROPOSAL 1—ELECTION OF DIRECTORS
PROPOSAL 1—ELECTION OF DIRECTORS
Nominees and vote required to elect nominees
| Cathy E. Ackermann | | | Independent Director Age: 74 Director Since: 2022 | President and Chief Executive Officer of Ackermann Marketing & PR, a full-service marketing communications firm based in Knoxville, Tennessee with client service offices in Dallas, Texas and Washington, DC, ranked among the Top 100 public relations firms in the country. She is a nationally published author on the topic of integrated marketing and communications and on how to grow a successful professional services firm. Leadership: Ms. Ackermann has extensive knowledge of business growth, strategies and marketing. She brings experience in business acuity with her lengthy marketing and PR career. She has been the recipient of numerous awards and accolades for her leadership roles. Industry & Finance: Ms. Ackermann has been at the helm of Ackermann PR for over 40 years. She founded the firm in 1982 after serving as Director of Corporate Marketing and Promotions for the 1982 World’s Fair. She was responsible for generating millions in revenue and worked primarily with Fortune 500 companies. Her firm has become one of the top mid-sized, independent PR firms in the South. In its first five years, the company grew over 650 percent, placing Ackermann PR on Inc. magazine’s list of fastest-growing companies in the country, and the firm has continued its track record of growth and impressive client acquisitions. Civic Involvement: Ms. Ackermann is very involved in community organizations as a volunteer and serves on multiple boards of directors, including East Tennessee Children’s Hospital, UT Development Council, UT College of Communications Board of Visitors and Great Smoky Mountains Institute at Tremont, among others. She is a recent past member of the board of directors of the U.S. Council for PR Firms in New York and is a founding member of the Croft Society, a group of 20 of the top regional PR firms in the country. Past community board involvements include numerous organizations. |
Nominees and vote required to elect nominees
| Victor L. Barrett | | | Independent Director Age: 71 Director Since: 2007 | Co-founder and current partner of The Track Recreation Center, a family entertainment center business with locations in Pigeon Forge, Tennessee; Destin, Florida; and Gulf Shores, Alabama. Prior to 1984, he worked with various oil-related companies in accounting and finance positions in Houston, Texas. Leadership: Through his experience in the energy sector and as a successful business owner, Mr. Barrett has developed strong management, leadership, and financial experience. He also brings extensive knowledge of the East Tennessee business community to SmartFinancial. Industry & Finance: Mr. Barrett has served in various accounting and finance positions, and he is a licensed certified public accountant and in inactive status. Civic Involvement: He currently serves on the Gatlinburg Airport Authority Board and the City of Pigeon Ford Industrial Development Board. Mr. Barrett has previously served on the Board of the Tennessee Museum of Aviation. |
Nominees and vote required to elect nominees
| William (“Billy”) Y. Carroll, Jr. | | | President and Chief Executive Office of SmartFinancial, Inc. and SmartBank Age: 55 Director Since: 2007 | Currently serves as the President and Chief Executive Officer of SmartBank and SmartFinancial. Prior to starting at the Company in 2007, his financial industry tenure included various management roles, including the position of Board Member, Executive Vice President and Chief Financial Officer with Citizens National Bank in Sevierville, Tennessee. Leadership: Mr. Carroll, Jr.’s skills in management, leadership, business operations, accounting and finance have successfully positioned SmartBank throughout its diverse markets. Industry & Finance: With his many years of experience in the banking sector, he has extensive knowledge of the financial industry, including experience leading a publicly traded company. Civic Involvement: Active in his community, he currently serves as a director for the Federal Reserve Bank of Atlanta, as well as the Tennessee Bankers Association. Previously, he has served as a branch director for the Federal Reserve Bank of Atlanta’s Nashville Branch, a Board member for the Great Smoky Mountains Institute at Tremont, a member of both the University of Tennessee Haslam College of Business Finance Advisory Council and the University’s Chancellor’s Associates, as well as in various capacities with numerous other local organizations |
Nominees and vote required to elect nominees
| William (“Bill”) Y. Carroll, Sr. | | | Vice Chairman of the Board SmartFinancial, Inc. and SmartBank Age: 84 Director Since: 2007 | Served as SmartBank and Legacy SmartFinancial’s Board Chairman from its inception until 2016. Mr. Carroll, Sr. currently serves as Vice Chairman of both SmartBank’s and SmartFinancial’s Boards of Directors. Mr. Carroll, Sr. previously served as the Director of Business development for SmartBank from 2007 to 2019. He began his banking career in 1963 with Hamilton National Bank. He began serving with Citizens National Bank when it opened in 1973. While there, Mr. Carroll, Sr. moved from Vice President to the roles of President, Chief Executive Officer and Chairman of the Board. Leadership: With his expansive banking career, Mr. Carroll, Sr. brings a variety of skills and leadership values to the SmartFinancial organization. His role as President and CEO of Citizens National Bank included leading the senior management team through a period of heavy and successful growth. In his current role with SmartBank, he uses his leadership and management skills in business development. Industry & Finance: With considerable strategic insight and management skills built through his 50 years of experience in the financial industry, Mr. Carroll, Sr. brings a wealth of knowledge about the East Tennessee business community to SmartFinancial. Civic Involvement: Mr. Carroll, Sr. has served the banking industry in a variety of ways, including: past President and Board member of the Tennessee Bankers Association, past member of the Federal Home Loan Bank of Cincinnati, and member of the State Advisory Council of the U.S. Small Business Administration. Mr. Carroll, Sr. is the recipient of the Leader in Banking Excellence Award from the Tennessee Bankers Association. He also served as past Chairman of the Board of Fort Sanders Medical Center, and is a former member of the University of Tennessee Board of Trustees. |
Nominees and vote required to elect nominees
| Ted C. Miller | | | Independent Director Age: 81 Director Since: 2007 | Currently serves as the Business Manager and Partner of Dolly Parton Productions, a position he has held since 1986. Mr. Miller is a Director for World Choice Investments, which owns and operates restaurant and entertainment venues in multiple states and is a partner of newly formed 3 Peaks Custard, LLC, established in January 2021, which owns Andy’s Custard franchises in East Tennessee. Leadership: With over 50 years of marketing and strategic planning expertise, Mr. Miller brings unique knowledge and business acumen to the Board of Directors. Industry & Finance: While serving in the marketing industry, Mr. Miller has developed a deep knowledge of the tourism, recreation, and themed-attractions industry. His prior experience in various business leadership roles further informs his financial industry knowledge and contributes to his ability to lead and execute successful initiatives for impacted growth. Civic Involvement: Mr. Miller currently serves as the Vice Chairman of the Dollywood Foundation and the Imagination Library. |
Nominees and vote required to elect nominees
| David A. Ogle | | | Independent Director Age: 66 Director Since: 2007 | Currently serves as the Lead Independent Director of the Board of Directors. Mr. Ogle was the co-founder and currently serves as President of Five Oaks Development Group. Additionally, he is the founder of Five Oaks/Ogle, Inc., co-founder and President of Oaktenn, Inc., and co-founder and officer of Five Oaks Outlet Centers, Inc. His career also includes extensive development experience in tourism, retail, attraction and lodging sectors. Leadership: With his past experience starting and leading multiple commercial endeavors, Mr. Ogle’s extensive background in finance, management, business operations, and strategic development brings valuable strategic leadership to the SmartFinancial Board of Directors. Industry & Finance: As the founder of a number of commercial enterprises, Mr. Ogle has been one of the leading real estate developers and contractors in East Tennessee over the past quarter century. Civic Involvement: Highly active in his community, Mr. Ogle is the past Chairman of the Tennessee Real Estate Commission and past Chairman of the Board of Trustees for Carson Newman University. In December 2010, he was conferred an Honorary Doctorate of Business Administration from Carson Newman University. He has also been recognized by Business Tennessee magazine for his success as a Top Commercial Real Estate Developer. In 2007, he was inducted into the East Tennessee Business Hall of Fame. |
Nominees and vote required to elect nominees
| John M. Presley | | | Independent Director Age: 63 Director Since: 2021 | Currently serves as an independent consultant in the banking industry. He recently served as Executive Chairman of Sevier County Bancshares and Sevier County Bank, which were both acquired by SmartFinancial in 2021. Leadership: Mr. Presley brings comprehensive skills in management, leadership and business operations. His background in the banking sector will contribute expertise to SmartFinancial’s Board of Directors. Industry & Finance: Mr. Presley started his career with Ernst & Whitney as an auditor. He soon was recruited by Commerce Financial where he served in various capacities for over 20 years, including starting a de novo bank in Richmond, Virginia and growing it organically to $1 billion in assets in five years. He subsequently served as Chief Financial Officer for National Commerce Financial and led the transaction for their sale to SunTrust. Other positions held include Chief Financial Officer of Marshall & Ilsley Bank, Head of Strategic Initiatives/M&A for Fifth Third Bank, and Lead Director of Lumber Liquidators, and eventually Chairman, President and Chief Executive Officer. Civic Involvement: Mr. Presley is heavily involved with many charitable organizations including Be The Match and the Leukemia and Lymphoma Society. |
Nominees and vote required to elect nominees
| Steven B. Tucker | | | Independent Director Age: 71 Director Since: 2017 | The past President of Barnett Transportation, a liquid bulk transporter headquartered in Tuscaloosa, Alabama. Mr. Tucker is also a Principal in TriCo Resources, a trailer leasing company, as well as BTI Real Estate. He has an extensive background including service as an officer in the United States Army. After his military career, he joined the national accounting firm of Arthur Andersen, and became a certified public accountant. Mr. Tucker has over 20 years of public accounting experience. Prior to his appointment to the SmartFinancial Board, Mr. Tucker was Chairman of the Board of Directors of Capstone Bancshares, Inc. and Capstone Bank, which were both acquired by SmartFinancial in 2017. Leadership: In addition to his military career, Mr. Tucker’s extensive knowledge of the Alabama business community makes him a valuable asset to SmartFinancial’s growth strategy. His accounting experience, leadership skills and business acumen also lend insights that are crucial to SmartFinancial’s vision. Industry & Finance: Through his career as Chief Financial Officer and President of Barnett Transportation and his public accounting experience, Mr. Tucker has developed an extensive knowledge of the Alabama business community and the financial industry. Civic Involvement: Mr. Tucker’s many years of involvement with the Tuscaloosa Children’s Hands-On Museum has included the roles of Treasurer and President. He has served on the Board of the Alabama Trucking Association Workmen’s Compensation Fund, as well as other varied civic organizations. |
Nominees and vote required to elect nominees
| Wesley M. (“Miller”) Welborn | | | Chairman of the Board SmartFinancial Inc. and SmartBank Age: 65 Director Since: 2009 | Currently serves as Chairman of the Board of Directors of SmartFinancial and SmartBank. Mr. Welborn’s career has included a variety of ventures, including former Co-Founding Partner of the Lamp Post Group, a Chattanooga, Tennessee-based venture capital incubator, where he served from 2010 to 2015. He also has served for over 20 years as President of Welborn & Associates, Inc., a Chattanooga, Tennessee-based transportation consulting firm, and is the former President and Chief Executive Officer of the formerly publicly traded trucking company, Boyd Bros. Transportation, Inc. Mr. Welborn also serves as a director of Covenant Logistics Group, Inc. (NASDAQ-CVLG). Leadership: Mr. Welborn’s expansive and deep knowledge of the Chattanooga community is not only valuable for entrepreneurial and strategic initiatives, but he also provides experience with public company purchase and sale transactions. He brings experience in leadership and business operations with his past role as President & Chief Executive Officer of Boyd Bros. Transportation, Inc. Industry & Finance: Mr. Welborn’s former partnership with Welborn & Associates, Inc. and his role as President & Chief Executive Officer of Boyd Bros. Transportation, Inc. showcase his ability to understand high functioning companies, including the inner-workings of publicly traded companies. His involvement as a co-founding partner of the Lamp Post Group also proves his financial knowledge of strategic capital development. Civic Involvement: Mr. Welborn also serves on the Board of several non-profit organizations. |
Nominees and vote required to elect nominees
| Keith E. Whaley, O.D. | | | Independent Director Age: 53 Director Since: 2007 | Keith E. Whaley, O.D. founded Whaley Family Eyecare in Pigeon Forge, Tennessee. He studied at the University of Tennessee at Chattanooga and the University of Tennessee, Knoxville. He earned his Bachelor of Science in Biology and Doctor of Optometry from the Southern College of Optometry. In addition, Dr. Whaley is a cofounder and partner in Tennessee Homemade Wines, LLC (2015), Tennessee Cider Company, LLC (2019), and Southeastern Wines and Ciders, LLC (2023). Leadership: Dr. Whaley brings a considerable amount of knowledge of the Sevier County, Tennessee market, including his own skills in leadership, strategic development and financial experience with founding his own optometric practice, and serving in a variety of community roles. Industry & Finance: Dr. Whaley has experience within the Sevier County, Tennessee government system, serving as Mayor of Pigeon Forge, Tennessee from 2007-2011 and currently serves as a Pigeon Forge City Commissioner, a position he has held since October 2021. He served as a commissioner on the Sevier County Board of Commissioners from 2013-2021. Dr. Whaley serves as the secretary to the Board of Directors. Civic Involvement: Dr. Whaley holds memberships in the American Optometric Association, the Tennessee Association of Optometric Physicians (TAOP) and the East Tennessee Society of Optometric Physicians (ETOSP). He served on the TAOP Board of Trustees from 2001 2010. He is also a past Board member for the Pigeon Forge Rotary Club, where he served as President from 2003 to 2004. He formerly served as President of the Business Network International Sevier County Chapter. |
Nominees and vote required to elect nominees
| Geoffrey A. Wolpert | | | Independent Director Age: 68 Director Since: 2007 | The owner of The Park Grill and The Peddler Steakhouse in Gatlinburg, Tennessee. He has had an outstanding career in the hospitality industry with over 40 years of experience. He also has over 20 years’ experience in the financial industry, including positions on the Board of Directors for both The First National Bank of Gatlinburg and BankFirst, now known as Truist. Leadership: Mr. Wolpert has an extensive knowledge of business operations, and he brings strategic leadership and financial experience to the Board of Directors. His expansive career in the hospitality industry also includes a working knowledge of entrepreneurship. Industry & Finance: Mr. Wolpert has over two decades of serving as a board member for other financial institutions; his knowledge in the financial industry includes bank mergers and growth strategies. Civic Involvement: Mr. Wolpert was the recipient of the 2023 Good Scout Award by the Great Smokey Mountains Council of the Boy Scouts of America, recognized in 2000 as Volunteer of the Year by the Gatlinburg Chamber of Commerce, and received the 2004 Leadership Award from the United Way of Sevier County. He is also the founding President of the Gatlinburg Gateway Foundation. He is a past President for the Board of Governors for Arrowmont School of Arts and Crafts, and served as Chairman of the Development Committee for the school. |
2023 Director Compensation
2023 Director Compensation The Compensation Committee is responsible for reviewing, on an annual basis, the compensation paid to our directors and making recommendations to the Board on any adjustments to it. Periodically, the Compensation Committee engages an independent consultant to review director compensation amounts and structure using the same group of peer banks that is used by the Compensation Committee to review executive compensation. For more information, see the heading “Compensation Discussion and Analysis” and the section “Independent Compensation Consultant”. The following is a summary of the compensation paid to SmartFinancial, Inc. directors for 2023, and includes fees received as directors of SmartBank, as the case may be. Mr. Carroll, Jr., and Mr. Welborn are not included in the table below, as neither received compensation or fees as a director.
2023 Director Compensation
| | Fees Earned or | Stock Awards | Total | | Name | Paid in Cash ($) | ($)(2) | ($) | | Cathy G. Ackermann | 48,000 | 32,000 | 80,000 | | Victor L. Barrett | 67,000 | 32,000 | 99,000 | | William (“Bill”) Carroll Sr.(1) | 281,858 | — | 281,858 | | Ted C. Miller | 52,000 | 32,000 | 84,000 | | David A. Ogle | 73,000 | 32,000 | 105,000 | | John M. Presley | 39,000 | 32,000 | 71,000 | | Steve B. Tucker | 51,000 | 32,000 | 83,000 | | Keith E. Whaley | 44,000 | 32,000 | 76,000 | | Geoffrey A. Wolpert | 54,000 | 32,000 | 86,000 |
2023 Director Compensation
| (1) Includes $241,858 of total compensation from SmartBank as Director of Business Development. |
2023 Director Compensation
| (2) Reflects the grant date fair value of shares of restricted stock granted pursuant to the SmartFinancial 2015 Stock Incentive Plan, determined in accordance with FASB ASC Topic 718. Refer to Note 13 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding the assumptions used to value these awards. |
2024 Director Compensation
2024 Director Compensation To reduce any conflict of interest and focus on short-term success rather than long-term success, the compensation for the Board of Directors is limited to set fees for service (committee and board meeting fees) and any other compensation or benefit programs approved by the Board. The Company’s philosophy is to compensate the Board of Directors at the market median (50th percentile) for comparable financial institutions within the region of similar asset size. In January 2024, acting upon the recommendation of the Human Resources and Compensation Committee, the Board approved the following compensation program for the Board of SmartFinancial and standing committees for 2024:
2024 Director Compensation
| ● | An annual retainer for service on the Board of $32,000; |
2024 Director Compensation
| ● | An annual grant of restricted stock having a value of approximately $32,000; |
2024 Director Compensation
| ● | An annual retainer for the Lead Independent Director in the amount of $10,000; |
2024 Director Compensation
| ● | An annual retainer for Audit Committee members in the amount of $4,000, and an additional annual retainer for the Chairman of the Audit Committee in the amount of $8,000; |
2024 Director Compensation
| ● | An annual retainer for the Nominating Committee members in the amount of $3,000, and an additional annual retainer for the Chairman of the Nominating Committee in the amount of $3,000; |
2024 Director Compensation
| ● | An annual retainer for the Corporate Governance Committee members in the amount of $4,000, and an additional annual retainer for the Chairman of the Corporate Governance Committee in the amount of $4,000; |
2024 Director Compensation
| ● | An annual retainer for the Human Resources and Compensation Committee members in the amount of $4,000, and an additional annual retainer for the Chairman of the Human Resources and Compensation Committee in the amount of $5,000; and |
2024 Director Compensation
| ● | An annual retainer for the Strategic Oversight Committee members in the amount of $4,000, and an additional annual retainer for the Chairman of the Strategic Oversight Committee in the amount of $4,000. |
2024 Director Compensation
Pursuant to the program described above, each independent director was granted 1,211 shares of restricted stock on January 26, 2023, which shares, subject to the terms of the applicable grant agreements, vested on January 1, 2024 Additionally, also approved was compensation amounts for the SmartBank Board committees for 2024 as follows:
2024 Director Compensation
| ● | An annual retainer for the Director Loan Committee members in the amount of $12,000; and |
2024 Director Compensation
| ● | An annual retainer for the Asset Liability Committee members in the amount of $4,000. |
Compensation Philosophy
| ● | Drive performance relative to clearly defined goals, balancing short-term operational objectives with long-term strategic goals; |
Compensation Philosophy
| ● | Align executives’ long-term interests with shareholders by placing a substantial portion of total compensation at risk, contingent on Company performance and the executive’s ongoing employment; |
Best Practices
| What We Do | | What We Do Not Do | | | | Provide our NEOs with a performance-based cash incentive plan and a long-term equity incentive plan with multi-year vesting. | | No incentive plans which encourage inappropriate risk taking. | | | Compare NEOs compensation levels to peer group and take these results into consideration when making compensation related decisions. | | No tax-gross ups in our employment agreements and/or change in control arrangements. | | | Annual advisory “Say on Pay” vote. | | No hedging of Company stock by executive officers. | | | Stock ownership guidelines and stock holding requirements for the Board of Directors, Executive Vice Presidents, and CEO. | | No repricing of stock options without stockholder approval. | | | Committee is composed of independent directors overseeing the Company’s executive compensation policies. | | No excessive perquisites. | | | Utilize an outside independent compensation consultant. | | |
Independent Compensation Consultant
Independent Compensation Consultant The Committee has the sole authority to engage the services of any compensation consultant or advisor. In 2023, the Committee continued its engagement of services from Blanchard Consulting Group (“BCG”), an independent compensation consulting company focused on the banking industry. BCG was hired directly by the Committee and does not provide any other services to Company beyond independent compensation consulting services to the Committee. The Committee considered all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934, in determining that BCG’s work does not raise a conflict of interest. BCG reports directly to Committee, and management has not retained its own consultant. BCG periodically attends meetings of the Committee, physically or by any means of remote communication, and with or without management present. BCG assists the Committee in, among other things, analyzing current compensation conditions in the marketplace generally and among our peers specifically, assessing the competitiveness and appropriateness of compensation levels for our NEOs and Directors, and assists the Committee in its director evaluation process. For the Committee’s use in 2023, BCG produced a comprehensive review of executive and board compensation. The 2023 reviews evaluated the Company’s executive and board compensation to that of a custom peer group, as well as against regional and national banking surveys and BCG database information. The Committee used the findings from these reviews to assist with compensation related decisions.
Peer Group Selection and Analysis
Peer Group Selection and Analysis In 2023, the Committee has worked with BCG to determine and utilize a peer group of eighteen publicly traded banks (“Peer(s)”). This Peer group was originally developed in 2021 by BCG, with input from the Committee, and represents an update of the historical Peer group developed in 2021. The Peer group consists of banks with assets between $3.0 billion and $10.0 billion as of 2022 fiscal year-end and located in the southeastern states. The median asset size of our 2023 Peer group for year-end 2022 was $4.5 billion, with the Company’s assets at approximately $4.6 billion for the same time period. Currently the Company’s assets are approximately $5.0 billion. Our Peer group consisted of the following financial institutions:
Peer Group Selection and Analysis
| Community Trust Bancorp, Inc. | Capital City Bank Group, Inc. | | Southern Missouri Bancorp, Inc. | Wilson Bank Holding Company | | Origin Bancorp, Inc. | Southern First Bancshares, Inc. | | Stock Yards Bancorp, Inc. | HomeTrust Bancshares, Inc. | | BancPlus Corporation | Home Bancorp, Inc. | | The First Bancshares, Inc. | First Guaranty Bancshares, Inc. | | Business First Bancshares, Inc. | CapStar Financial Holdings, Inc. | | MetroCity Bankshares, Inc. | Red River Bancshares, Inc. | | Republic Bancorp, Inc. | Great Southern Bancorp, Inc. |
Peer Group Selection and Analysis
For the 2023 review of executive compensation against the Peer group, the Committee reviewed the following summary by BCG:
Peer Group Selection and Analysis
| ● | Total Cash Compensation – Base Salary + Annual Cash Incentives/Bonus |
Peer Group Selection and Analysis
| ● | Direct Compensation – Total Cash Compensation + One-Year (2022 for the peers) Equity Awards; and |
Peer Group Selection and Analysis
| ● | Total Compensation – Direct Compensation + Other Compensation + Retirement Benefits/Perquisites |
Peer Group Selection and Analysis
Based on SMBK’s financial performance, compensation goals, and current asset size, in comparison to the Peer group/market 50th percentile were appropriate:
Peer Group Selection and Analysis
| ● | “Total Cash Compensation” of the NEOs was below the peer group 50th percentile in 2022; |
Peer Group Selection and Analysis
| ● | For “Direct Compensation”, SMBK provided competitive equity awards; however, direct compensation remained below or near the 50th percentile due to the below market cash incentive awards ; and |
Peer Group Selection and Analysis
| ● | “Total Compensation” supports that SMBK has competitive executive benefits and perquisites as the NEO comparisons to peer remained similar or increased slightly for total compensation. |
Executive Compensation Components
| ● | performance-based annual cash incentives; |
Executive Compensation Components
| ● | long-term incentive compensation (awarded in the form of restricted stock units with five-year cliff vesting); |
Executive Compensation Components
| ● | employment contracts and/or change in control agreements. |
Executive Compensation Components
| (2) For more information, see the heading “Annual Executive Cash Incentive Plan” below. |
Executive Compensation Components
| (3) For more information, see the heading “Long-Term Incentive Plan” below. |
Annual Executive Cash Incentive Plan
Annual Executive Cash Incentive Plan Annual performance-based cash incentives are awarded based upon Company performance as well as individual performance. The purpose of the Annual Executive Cash Incentive Plan (“CIP”) is to align executive pay with performance, drive the Company’s strategic goals, and drive financial results. If performance is below a stated threshold, then no incentive is paid for the applicable component. Any CIP payouts are subject to certain clawback provisions, and the CIP payouts can be adjusted by the Committee based on extraordinary events. Cash incentives will be paid on an annual basis during the year following the year in which the services were performed and are contingent upon such executive officer’s continued employment with the Company through the date of payment. The established short-term cash incentive awards for the NEOs, as percentages of their 2023 base salary, as reflected in the table below.
Annual Executive Cash Incentive Plan
| NEO | Threshold | Target | Maximum | | William (“Billy”) Y. Carroll, Jr. | 20% | 40% | 80% | | Wesley M. (“Miller”) Welborn | 15% | 30% | 60% | | Ronald J. Gorczynski | 15% | 30% | 60% | | Rhett D. Jordan | 15% | 30% | 60% | | Cynthia A. Cain | 10% | 20% | 40% |
Annual Executive Cash Incentive Plan
The 2023 corporate goals in the CIP and actual results are as follows (dollars in thousands):
Annual Executive Cash Incentive Plan
| | | | | | 2023 | | | | Percentage | | | | Actual | Pay Out | | Summary of Criteria(5) | Weighting(5) | Threshold | Target | Maximum | Results | | | Operating Net Income(1) | 50.0% | $40,950 | $45,500 | $54,600 | $34,410 | —% | | Net Balance Loan Growth(2) | 12.5% | $3,416,308 | $3,497,649 | $3,578,989 | $3,444,462 | 67% | | Net Noninterest Bearing Deposit Growth(3) | 12.5% | $1,126,072 | $1,152,883 | $1,179,694 | $898,044 | —% | | Noninterest Income / Revenue(4) | 10.0% | 16.66% | 16.77% | 18.11% | 18.26% | 200% |
Annual Executive Cash Incentive Plan
| (1) Operating net income is a non-GAAP measure calculated by excluding the following from net income: securities gains and losses, merger related and restructuring expenses and other noncore operating items. |
Annual Executive Cash Incentive Plan
| (2) Amounts represent end of the year loan balances. |
Annual Executive Cash Incentive Plan
| (3) Amounts represent end of the year noninterest deposit balances. |
Annual Executive Cash Incentive Plan
| (4) Calculated by taking noninterest income divided by net interest income plus noninterest income. |
Annual Executive Cash Incentive Plan
| (5) The criteria for the NEOs are as stated, with the exception of Ms. Cain, who was subject to the Operating Net Income criteria at a 75.0% weighting. No other criteria applied to Ms. Cain. |
Annual Executive Cash Incentive Plan
In addition to the above Company-based metrics, each NEOs CIP award is based on individual performance or area of responsibility performance during 2023, as noted in the table below. The criteria relating to this measure includes leadership, strategic planning, succession planning, and financial results of both the Company and their area of responsibility. The 2023 CIP awards are summarized below:
Annual Executive Cash Incentive Plan
| | Company Component | | | Individual Performance Component | | | | | | | | | | | Individual | | | | | Award | Company | | Award | Performance | | | | | Percentage | Component | | Percentage | Component | 2023 CIP | | NEO | Weighting | Achievement | Total ($) | Weighting | Achievement | Total ($) | Total ($) | | William (“Billy”) Y. Carroll, Jr. | 85% | 33.4% | 65,635 | 15% | 200% | 69,300 | 134,935 | | Wesley M. (“Miller”) Welborn | 85% | 33.4% | 28,446 | 15% | 200% | 30,035 | 58,481 | | Ronald J. Gorczynski | 85% | 33.4% | 26,872 | 15% | 200% | 28,373 | 55,245 | | Rhett D. Jordan | 85% | 33.4% | 26,112 | 15% | 200% | 27,570 | 53,682 | | Cynthia A. Cain | 75% | —% | — | 25% | 200% | 24,075 | 24,075 |
Annual Executive Cash Incentive Plan
The following table shows the total payout opportunity and the total actual payout of annual cash incentives for the performance year ending December 31, 2023:
Annual Executive Cash Incentive Plan
| | | | % of Target | | NEO | 2023 CIP Target ($) | 2023 CIP Actual ($) | Awards | | William (“Billy”) Y. Carroll, Jr. | 231,000 | 134,935 | 58.4% | | Wesley M. (“Miller”) Welborn | 100,116 | 58,481 | 58.4% | | Ronald J. Gorczynski | 94,577 | 55,246 | 58.4% | | Rhett D. Jordan | 91,900 | 53,682 | 58.4% | | Cynthia A. Cain | 48,150 | 24,075 | 50.0% |
Annual Executive Long-Term Incentive Plan
Annual Executive Long-Term Incentive Plan The Company makes awards of restricted stock to the NEOs pursuant to the terms and conditions of SmartFinancial, Inc. 2015 Stock Incentive Plan. The Committee utilizes restricted stock as a long-term retention vehicle for key officers and utilizes an equity-based Long-Term Incentive Plan (“LTIP”) to support the Company’s pay for performance philosophy and reward key executives for creating long-term shareholder value. The performance goals utilized in the LTIP are linked to both corporate and shareholder performance criteria. If performance is below a stated threshold, then no incentive is available for the applicable component. Any LTIP issuances are subject to certain clawback provisions, and the LTIP can be adjusted by the Committee based on extraordinary events. The purpose of granting LTIP awards is to provide long-term incentive compensation to complement the short-term focus of the CIP. The LTIP also provides the NEOs with stock ownership, hence stockholder alignment, and provides the Company the opportunity to provide market competitive compensation that is aligned with performance. The number of shares of restricted stock to be issued is based on a percentage NEOs salary and converted to a share amount on the grant date. Once granted, the award is subject to cliff vesting on the fourth anniversary of the grant date, subject to the NEOs continued employment on the vesting date (with certain exceptions). The established long-term equity incentive awards for the NEOs, as percentages of their 2023 base salary, as reflected in the table below.
Annual Executive Long-Term Incentive Plan
| NEO | Threshold | Target | Maximum | | William “(Billy”) Y. Carroll, Jr. | 15% | 30% | 60% | | Wesley M. (“Miller”) Welborn | 10% | 20% | 40% | | Ronald J. Gorczynski | 10% | 20% | 40% | | Rhett D. Jordan | 10% | 20% | 40% | | Cynthia A. Cain | 10% | 15% | 20% |
Annual Executive Long-Term Incentive Plan
The 2023 corporate goals in the LTIP and actual results are as follows (dollars in thousands):
Annual Executive Long-Term Incentive Plan
| | | | | | 2023 | Pay | | | Percentage | | | | Actual | Out | | Summary of Criteria | Weighting | Threshold | Target | Maximum | Results | | | Operating Return on Average Tangible Common Equity(1) | 50% | 12.89% | 13.19% | 16.04% | 10.29% | —% | | Operating Earnings per Diluted Common Share Growth(2) | 50% | $2.00 | $2.67 | $3.20 | $2.03 | 52% |
Annual Executive Long-Term Incentive Plan
| (1) Operating return on average tangible common equity is operating earning net income (calculated as provided above) divided by average tangible common equity. |
Annual Executive Long-Term Incentive Plan
| (2) Operating earnings per diluted common share growth is operating earning net income (calculated as provided above) divided by the diluted number of shares outstanding. |
Annual Executive Long-Term Incentive Plan
The following table shows the total equity incentive opportunity and the total actual equity incentives awarded for the performance year ending December 31, 2023:
Annual Executive Long-Term Incentive Plan
| | | | % of Target | | NEO | 2023 LTIP Target ($) | 2023 LTIP Actual ($) (1) | Incentive | | William (“Billy”) Y. Carroll, Jr. | 173,250 | 45,252 | 26.1% | | Wesley M. (“Miller”) Welborn | 66,744 | 17,433 | 26.1% | | Ronald J. Gorczynski | 63,051 | 16,469 | 26.1% | | Rhett D. Jordan | 61,267 | 16,003 | 26.1% | | Cynthia A. Cain | 36,113 | 12,307 | 34.1% |
Annual Executive Long-Term Incentive Plan
| (1) These equity incentives were earned based on performance for the year ended 2023 but were not granted until January 30, 2024. The actual shares awarded for each. Mr. Carroll, 1,861 shares, Mr. Welborn, 717 shares, Mr. Gorczynski, 677 shares, Mr. Jordan, 658 shares, and Ms. Cain, 506 shares. |
Administration of the Incentive Plans
Administration of the Incentive Plans
Responsibilities of the President/CEO
| ● | Provide recommendations for the equity incentive award opportunity levels at target and maximum for all other Plan participants. The President/CEO will review the goals/objectives, adjust guideline awards for performance, and recommend final awards to the Committee for their approval. |
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table shows the compensation SmartFinancial paid for the years ended December 31, 2023, 2022 and 2021, to (i) its chief executive officer during the fiscal year ended December 31, 2023, (ii) its chief financial officer during the fiscal year ended December 31, 2023, and (iii) its three most highly compensated executive officers (other than its chief executive officer and chief financial officer) serving as executive officers at December 31, 2023, who earned over $100,000 for the fiscal year ended December 31, 2023 (collectively, the “Named Executive Officers”).
SUMMARY COMPENSATION TABLE
| | | | | | Non-Equity | | | | | | | | Stock | Incentive Plan | All Other | | | | | Salary | Bonus | Awards | Compensation | Compensation | Total | | NEO | Year | ($) | ($)(1) | ($)(2)(3) | ($) | ($)(6) | ($) | | William (“Billy”) Y. Carroll, Jr. | 2023 | 568,685 | — | 315,000 | 134,935 | 68,318 | 1,086,938 | | President and Chief Executive Officer | 2022 | 519,952 | — | 50,013 | 378,000 | 63,318 | 1,011,283 | | | 2021 | 494,930 | 297,500 | 175,617(4) | — | 61,562 | 1,029,609 | | Wesley M. ("Miller") Welborn | 2023 | 330,773 | — | 123,600 | 58,481 | 71,643 | 584,497 | | Chairman | 2022 | 307,990 | — | — | 166,165 | 66,045 | 540,199 | | | 2021 | 300,795 | 120,000 | 118,888 | — | 59,392 | 599,076 | | Ronald J. Gorczynski | 2023 | 311,933 | — | 114,639 | 55,246 | 44,063 | 525,881 | | Chief Financial Officer | 2022 | 285,201 | — | — | 154,118 | 40,516 | 479,834 | | | 2021 | 269,696 | 108,150 | 67,550 | — | 38,026 | 483,422 | | Rhett D. Jordan(5) | 2023 | 303,042 | — | 111,394 | 53,682 | 36,676 | 504,794 | | Chief Credit Officer | 2022 | 278,416 | — | — | 149,756 | 35,758 | 463,930 | | Cynthia A. Cain(5) | 2023 | 254,425 | 15,925 | 45,000 | 24,075 | 29,993 | 369,418 | | Chief Accounting Officer | | | | | | | |
SUMMARY COMPENSATION TABLE
| (1) Amounts in this column reflect the annual bonus paid for the 2021 year. In 2023, Ms. Cain was paid a bonus for her extraordinary efforts related to adoption and implementation of various Bank initiatives. |
SUMMARY COMPENSATION TABLE
| (2) Amounts in this column reflect the aggregate grant date fair value of restricted stock awards granted in 2023, 2022 and 2021 pursuant to the SmartFinancial 2015 Stock Incentive Plan, determined in accordance with FASB ASC Topic 718. Refer to Note 13 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for information regarding the assumptions used to value these awards. |
SUMMARY COMPENSATION TABLE
| (3) Stock awards earned based on performance during 2023 pursuant to the Executive Long-Term Incentive Plan were granted on January 30, 2024, and therefore not included in the Stock Awards column of the Summary Compensation Table for 2023. See “Compensation Discussion and Analysis” section for more information about the 2023 Long-Term Incentive Plan. |
SUMMARY COMPENSATION TABLE
| (4) The grant date fair value of Mr. Carroll’s grant of 1,934 restricted shares in 2022 was inadvertently included in the amount reported for Stock Awards for 2021. The grant date fair value of this grant is included for 2022 and the amount reported for 2021 has been corrected accordingly. |
SUMMARY COMPENSATION TABLE
| (5) Mr. Jordan was not a NEO for year 2021 and Ms. Cain was not a NEO for years end 2022 and 2021. |
SUMMARY COMPENSATION TABLE
| (6) All other compensation amounts for 2023 are detailed below. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table contains information about the named executive officers’ plan-based awards during 2023.
2023 Grants of Plan-Based Awards
| | | | | | All Other | | | | | | | | Stock Awards: | | | | | | | | Number of | Grant Date | | | | | | | Shares of | Fair Value of | | | | Estimated Possible Payouts Under | | | Stock or | Stock | | | | Non-Equity Incentive Plan Awards ($)(1) | | | Units | Awards | | NEO | Grant Date | Threshold | Target | Maximum | (#) | ($) | | William (“Billy”) Y. Carroll, Jr. | 1/25/23 | 115,500 | 231,000 | 462,000 | 11,873 | 314,991 | | Wesley M. (“Miller”) Welborn | 1/25/23 | 50,058 | 100,116 | 200,232 | 4,659 | 123,603 | | Ronald J. Gorczynski | 1/25/23 | 47,289 | 94,577 | 189,154 | 4,321 | 114,636 | | Rhett D. Jordan | 1/25/23 | 45,950 | 91,900 | 183,801 | 4,199 | 111,399 | | Cynthia A. Cain | 1/25/23 | 24,075 | 48,150 | 96,300 | 1,696 | 44,995 |
2023 Grants of Plan-Based Awards
| (1) Reflects annual cash incentive opportunities under the CIP. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table shows the number of outstanding shares of restricted stock held by the Named Executive Officers at December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year-End
| | Stock Awards | | | | | | Market Value | | | | Number of | of Shares or | | | | Shares or Units | Units of Stock | | | | of Stock That | That Have Not | | | | Have Not Vested | Vested | Vesting | | NEO | (#)(1) | ($)(2) | Date | | William (“Billy”) Y. Carroll, Jr. | 6,500 | 159,185 | 01/01/24 | | | 6,500 | 159,185 | 01/01/25 | | | 1,934 | 47,364 | 03/14/25 | | | 6,500 | 159,185 | 01/01/26 | | | 11,873 | 290,770 | 01/24/27 | | Wesley M. (“Miller”) Welborn | 4,400 | 107,756 | 01/01/24 | | | 4,400 | 107,756 | 01/01/25 | | | 4,400 | 107,756 | 01/01/26 | | | 4,659 | 114,099 | 01/24/27 | | Ronald J. Gorczynski | 2,500 | 61,225 | 01/01/24 | | | 2,500 | 61,225 | 01/01/25 | | | 2,500 | 61,225 | 01/01/26 | | | 4,321 | 105,821 | 01/24/27 | | Rhett D Jordan | 2,500 | 61,225 | 01/01/24 | | | 2,500 | 61,225 | 01/01/25 | | | 2,500 | 61,225 | 01/01/26 | | | 4,199 | 102,834 | 01/24/27 | | Cynthia A. Cain | 2,000 | 48,980 | 02/29/24 | | | 1,500 | 36,735 | 01/01/26 | | | 1,696 | 41,535 | 01/24/27 |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Each Named Executive Officer’s shares vest pro rata on an accelerated basis upon his death or disability and may, at the discretion of the Company’s Board of Directors, fully vest upon a change in control. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) Based on the closing price of SmartFinancial common stock on December 29, 2023, the last trading day of our fiscal year ($24.49). |
Stock Vested in 2023
Stock Vested in 2023 The following table sets forth information concerning the vesting of restricted stock units for our Named Executive Officers during the year ended December 31, 2023.
Stock Vested in 2023
| | Stock Awards | | | | Shares | | | | received Upon | Value Realized | | | Vesting | on Vesting | | NEO | (#) | ($)(1) | | William (“Billy”) Y. Carroll, Jr. | 2,000 | 54,240 | | Wesley M. (“Miller”) Welborn | — | — | | Ronald J. Gorczynski | — | — | | Rhett D. Jordan | — | — | | Cynthia A. Cain | — | — |
Stock Vested in 2023
| (1) The dollar amounts shown are determined by multiplying the number of shares that vested by the per share closing price of the common stock on the vesting date. |
Pay Versus Performance
Pay Versus Performance The following table summarizes the total compensation paid to our principal executive officer (i.e., our President and Chief Executive Officer) (“PEO”) and Non-PEO NEOs versus the performance of the Company for the fiscal years ended December 31, 2023, 2022, 2021 and 2020.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 | | | | | | | | | | Investment Based On | | | | | | | | | | | | | Company | | | | | Average | | | | | Selected | | | | | Summary | Average | | | | Measure– | | | Summary | | Compensation | Compensation | Total | Peer Group | | Operating | | | Compensation | Compensation | Table Total for | Actually Paid | Shareholder | Total | | Net Income | | | Table Total | Actually Paid to | Non-PEO NEOs | to Non-PEO | Return | Shareholder | Net Income ($) | ($) (in | | Year | PEO ($) | PEO ($)(1) | ($)(2) | NEOs ($)(1) (2) | ($) | Return ($)(3) | (in thousands) | thousands)(4) | | 2023 | 1,086,938 | 693,099 | 496,148 | 369,775 | 108.57 | 114.99 | 28,593 | 34,405 | | 2022 | 1,011,283 | 958,814 | 491,425 | 455,800 | 120.22 | 114.38 | 43,022 | 43,332 | | 2021 | 1,029,608 | 1,002,074 | 541,249 | 649,473 | 118.35 | 121.05 | 34,790 | 37,502 | | 2020 | 809,352 | 632,857 | 478,478 | 338,936 | 77.69 | 84.99 | 24,332 | 27,355 |
Pay Versus Performance
| (1) Compensation Actually Paid (“CAP”) amounts include total compensation as reported in the Summary Compensation Table, less the grant date fair value of stock awards (RSA), plus the change in fair value of equity awards during the reported year. A reconciliation of CAP to total compensation as reported in the Summary Compensation Table is shown in the table below. |
Pay Versus Performance
| (2) William (“Billy”) Carroll, Jr. was the PEO for each of 2023, 2022, 2021 and 2020. The non-PEO NEOs included in the average calculations for 2023 are Wesley M. Welborn, Ronald J. Gorczynski, Rhett D. Jordan and Cynthia A. Cain, average calculations for 2022 are Wesley M. Welborn, Ronald J. Gorczynski, Gregory L. Davis and Rhett D. Jordan and for 2021 and 2020, Wesley M. Welborn and Ronald J. Gorczynski. |
Pay Versus Performance
| (3) Peer group total shareholder return reflects the S&P SmallCap Bank Index, which is a market-capitalization-weighted index that tracks the performance of NYSE and NASDAQ-listed banks, insurance underwriters and specialty lenders in S&P's coverage universe with $250 million to $1 billion market capitalization as of most recent pricing data. The S&P SmallCap Bank Index is the same index used for our performance graph disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Pay Versus Performance
| (4) We selected operating net income, which is a non-GAAP measure, as the most important performance measurement for 2023. Operating net income is calculated by excluding the following from net income: securities gains and losses, merger related and restructuring expenses and other noncore operating items. |
Pay Versus Performance
| | | | Add: | | | | | | | | Change in | | Add: | | | | | | Value of | Add: Change in | Dividends on | | | | Summary | | Stock Awards | Value of Options | Restricted | Compensation | | | Compensation | Deduct: | during FY | during FY | Stock | Actually Paid | | Year | Table Total ($) | Stock Awards ($) | ($) | ($) | ($) | ($) | | William (“Billy”) Y. Carroll, PEO | | | | | | | | 2023 | 1,086,938 | (315,000) | (89,497) | — | 10,658 | 693,099 | | 2022 | 1,011,283 | (50,013) | (10,418) | — | 7,962 | 958,814 | | 2021 | 1,029,608 | (175,617) | 140,523 | — | 7,560 | 1,002,074 | | 2020 | 809,352 | (98,735) | (82,760) | — | 5,000 | 632,857 | | Average Non-PEO NEO's | | | | | | | | 2023 | 496,148 | (98,658) | (31,441) | — | 3,726 | 369,775 | | 2022 | 491,425 | — | (13,013) | (25,461) | 2,849 | 455,800 | | 2021 | 541,249 | (93,219) | 131,175 | 67,076 | 3,192 | 649,473 | | 2020 | 478,478 | (52,406) | (48,505) | (40,085) | 1,454 | 338,936 |
Description of Relationships Among Pay Versus Performance Measures
Description of Relationships Among Pay Versus Performance Measures In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our PEO and Non-PEO NEOs and Company performance for the fiscal years listed below. The Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Relationship Between PEO and Average Non-PEO NEOs Compensation Actually Paid and Company Total Shareholder Return (“TSR”)
Relationship Between PEO and Average Non-PEO NEOs Compensation Actually Paid and Company Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs. In addition, the graph compares our cumulative TSR and our Peer cumulative TSR for the indicated years. The cumulative TSR assumes an initial investment of $100 at the market close on December 31, 2019, in SMBK common stock and in the common stock of companies within our Peer group. A $100 investment in SMBK stock on December 31, 2019, would be valued at $108.57 at December 31, 2023, which slightly underperformed the TSR of a $100 investment in our Peer index, which would be valued at $112.03, invested over the same time period.
Relationship Between PEO and Average Non-PEO NEOs Compensation Actually Paid and Net Income
Relationship Between PEO and Average Non-PEO NEOs Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our other NEOs, and our Net Income each of the four most recently completed fiscal years.
Relationship Between PEO and Average Non-PEO NEOs Compensation Actually Paid and Operating Net Income
Relationship Between PEO and Average Non-PEO NEOs Compensation Actually Paid and Operating Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our other NEOs, and our operating net income during the four most recently completed fiscal years.
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, the following information about the relationship of the annual total compensation of our associates and the annual total compensation of our CEO. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. To determine the median associate for 2023, we used Box 5 wages reported on the 2023 Form W-2 as our consistently applied compensation measure for all individuals, excluding the CEO, who received compensation during 2023 through December 31, 2023. Our median employee identification date was December 31, 2023. Once we identified our median associate, we determined the annual total compensation of our median associate for 2023. We then calculated the CEO’s and median associate’s 2023 total compensation in a comparable manner to the CEO compensation provided in the Summary Compensation Table. For 2023, the total compensation paid to the CEO as $1,086,938. The total of all compensation paid to the median associate was $58,510. The CEO pay to median associate pay was approximately 19 to 1. The pay ratio identified above is a reasonable estimate calculated in a manner consistent with SEC rules. Pay ratios that are reported by our peers may not be directly comparable to ours because of differences in the composition of each company’s workforce, as well as the assumptions and methodologies used in the calculating the pay ratio, as permitted by SEC rules.