DEF 14A of Primis Financial Corp.
Filed Nov 8, 2024 · FY20230001558370-24-015070
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Election Procedures; Term of Office; Director Retirements
Election Procedures; Term of Office; Director Retirements The Board of Directors currently consists of ten directors. Following the date of the Annual Meeting, the Board of Directors will consist of ten directors in the event that each of the nominees is elected. In accordance with the Company’s Amended and Restated Bylaws, members of the Board of Directors are divided into three classes, Class I, Class II and Class III. The members of each class are elected for a term of office to expire at the third succeeding annual meeting of stockholders following their election. The Board of Directors has approved the nomination of Robert Y. Clagett, Deborah B. Diaz and Charles A. Kabbash to serve as Class III directors. The terms of the Class III directors expire at the annual meeting of stockholders in 2027 and until his or her successor is duly elected and qualified or until his earlier resignation or removal. The nominees receiving a plurality of the votes of the shares of Common Stock present virtually or by proxy at the Annual Meeting and entitled to vote on the election of directors will be elected. Unless the authority to vote for the election of directors is withheld, all shares of Common Stock represented by proxy will be voted FOR the election of the nominees. If the nominees become unavailable to serve as a director for any reason before the election, the shares represented by proxy will be voted for such other person, if any, as may be designated by the Board of Directors. The Board of Directors has no reason to believe that the nominees will be unavailable to serve as a director. Mr. Robert Y. Clagett, Ms. Deborah B. Diaz and Mr. Charles A. Kabbash have consented to being named herein and to serve if elected. Any director vacancy occurring after the election may be filled only by a majority vote of the remaining directors, even if there is less than a quorum of the Board of Directors. The biographies of the nominees and continuing directors and executive officers below contains information regarding the person’s service as a director and/or executive officer, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Corporate Governance Committee and the Board of Directors to determine that the person should serve as a director and/or executive officer.
Nominee for Election
Nominee for Election The following table sets forth the name, age and position with the Company and Primis Bank (the “Bank”) for the nominees for election as directors of the Company:
Nominee for Election
| Name | Age | Positions with the Company and Bank | | Robert Y. Clagett | 84 | Class III Director of the Company; Director of the Bank | | Deborah B. Diaz | 67 | Class III Director of the Company; Director of the Bank | | Charles A. Kabbash | 87 | Class III Director of the Company; Director of the Bank |
Nominee for Election
Robert Y. Clagett has served as a director of the Company and the Bank since August 2014. Mr. Clagett has practiced law in the State of Maryland since 1967, with a primary focus in real estate law. He previously served as a director of Prince George’s Federal Savings Bank commencing in 1967 and was elected President and Chief Executive Officer in 1968. Mr. Clagett served as President of Prince George’s Federal Savings Bank from 1968 to 2005, and served as Chief Executive Officer from 1968 to 2014. The Company believes Mr. Clagett’s qualifications to sit on the Board of Directors include his extensive banking experience and legal expertise. Deborah B. Diaz has served as a director of the Company and the Bank since October 2020. Ms. Diaz is CEO of Catalyst ADV, a technology and strategic growth advisory firm, and venture capital advisor developing new business markets and industry partnership opportunities since 2016. Catalyst ADV currently provides advisory services to high tech, transportation and aerospace clients such as Google, Boeing, Dell Technologies, Leidos, Equinix, PTC and many other notable public companies. Previously, Ms. Diaz served as Chief Technology Officer and Deputy Chief Information Officer at the National Aeronautics and Space Administration responsible for global system infrastructure, investment oversight, risk management, data management, innovation and technology infusion from 2009 to 2016. As Chief Information Officer for Science and Technology of the Department of Homeland Security, she was responsible for all global defense and research system infrastructure and manufacturer delivery to support a $1 billion portfolio from 2002 to 2007. She has also served as a senior government executive and international consultant in the areas of intellectual property, patents, digital transformation, data forensics, and foreign joint ventures. Ms. Diaz serves on the advisory boards of Dell Technologies; Intel Corporation; Equinix, Inc.; Raytheon Forcepoint and on the National Association of Corporate Directors (“NACD”) Capital Area Chapter Board. Ms. Diaz has also previously served on multiple private company and non-profit boards. Ms. Diaz was NACD Directorship Certified in 2019. The Company believes Ms. Diaz qualifications to sit on the Board of Directors include her extensive operational experience as a technology executive and strategic cybersecurity expert focused on digital transformation and risk management. Charles A. Kabbash has served as a director of the Company and the Bank since April 2005. Mr. Kabbash is the owner of 414 Associates, a real estate investment and holding company, operating primarily in the Charlottesville, Virginia area since 1984. Mr. Kabbash has also served a partner in Kabbash, Fox & Gentry Commercial Real Estate since 2009 and is the owner of Kabbash Business Brokerage, which negotiates the purchase or sale of businesses. Both of these firms also operate primarily in the Charlottesville area. In addition, Mr. Kabbash is the co-owner, along with his wife, Rebecca Gentry, of CandR LLC, a company investing in emerging businesses. Mr. Kabbash was a realtor at Summit Realty from 2002 to 2009. Mr. Kabbash is heavily involved in the business, political and civic community in Charlottesville, Virginia. The Company believes Mr. Kabbash’s qualifications to sit on the Board of Directors include his management and operational expertise from years spent as a professional realtor, investor and consultant. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES LISTED ABOVE FOR ELECTION TO THE BOARD OF DIRECTORS.
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS Members of the Company’s and the Bank’s Board of Directors are expected to have the appropriate skills and characteristics necessary to function in the Company and Bank’s current operating environment and contribute to its future direction and strategies. These include legal, financial, management and other relevant skills. In addition, the Company looks to achieve a diversified Board, including members with varying experience, age, perspective, residence, background, race, gender, and other demographic characteristics. The following table sets forth certain information with respect to the Company’s Class I and Class II directors whose terms of office do not expire at the Annual Meeting, and the executive officers of the Company and the Bank who are not also directors:
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
| Name | Age | Positions with the Company and Bank | | Directors: | | | | John F. Biagas | 59 | Class I Director of the Company; Director of the Bank | | Robert Y. Clagett | 84 | Class III Director of the Company; Director of the Bank | | Deborah B. Diaz | 67 | Class III Director of the Company; Director of the Bank | | John M. Eggemeyer | 76 | Class I Director of the Company; Director of the Bank | | F. L. Garrett, III | 83 | Class I Director of the Company; Director of the Bank | | Dr. Allen R. Jones Jr. | 60 | Class I Director of the Company; Director of the Bank | | Charles A. Kabbash | 87 | Class III Director of the Company; Director of the Bank | | W. Rand Cook | 70 | Class II Director of the Company; Director of the Bank | | Eric A. Johnson | 70 | Class II Director of the Company; Director of the Bank | | Dennis J. Zember, Jr. | 54 | Class II Director of the Company; Director of the Bank; President and Chief Executive Officer of each of the Company and the Bank | | Executive Officers: | | | | Matthew A. Switzer | 46 | Executive Vice President and Chief Financial Officer of each of the Company and the Bank | | Rickey A. Fulk | 57 | Executive Vice President of the Company and President of the Bank | | Ann-Stanton C. Gore | 38 | Executive Vice President and Chief Marketing Officer of each of the Company and the Bank |
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
John F. Biagas has been a director of the Company and the Bank since the closing of the Company’s merger with Eastern Virginia Bankshares, Inc. (“EVBS”) in June 2017. Mr. Biagas served as a director of EVBS and Eastern Virginia Bank (“EVB”) from 2014 until 2017, and has been the owner, President and CEO of Bay Electric Co., Inc., an electrical and general contractor located in Newport News, Virginia since 1997. Mr. Biagas is a Master Electrician licensed in four states and the District of Columbia. Bay Electric serves a very diverse client base and specializes in general contracting as well as in design/build general and electrical construction, security/technology solutions and services, and solar photovoltaic. Under Mr. Biagas’ direction, Bay Electric has become one of the fastest growing minority-owned electrical and general construction contractors in the Mid-Atlantic region with annual revenues in excess of $70 million. Mr. Biagas is also the Vice Rector for the Old Dominion University Board of Visitors and serves as vice chair of the Student Advancement Committee and as a member of the Administration and Finance Committee. Mr. Biagas provides the Board of Directors essential guidance related to his business development expertise and general business experience through owning and operating a fast-paced contracting company and working on multi-million dollar projects. Mr. Biagas brings to the Board of Directors extensive experience in identifying potential risks and rewards in real estate development and construction. Mr. Biagas also brings to the Board of Directors leadership skills and oversight experience through his service on numerous local, statewide and national boards, including the U.S. Chamber of Commerce Board of Directors, a founding and current member of the Virginia Chapter of the Young Presidents Organization and as a founding member and director of Virginia Company Bank from its inception in 2005 until its acquisition by EVBS in 2014. John M. Eggemeyer has been a director of the Company and the Bank since June 15, 2021. Mr. Eggemeyer is a Founder and Managing Principal of Castle Creek Capital LLC which has been an investor in the banking industry since 1990. Mr. Eggemeyer has over 40 years of experience in the banking industry and has been involved in more than 75 bank acquisitions. In 2006, the American Banker honored Mr. Eggemeyer as “Community Banker of the Year” for his success as a builder of community banking companies. Prior to founding Castle Creek, Mr. Eggemeyer spent nearly 20 years as a senior executive with some of the largest banking organizations in the U.S. with responsibilities across a broad spectrum of banking activities. Mr. Eggemeyer has served as the Chairman of PacWest Bancorp since its formation in 2000, is a Board member of The Bancorp, Northpointe Bancshares, Inc. and was a founder and Director of Guaranty Bancorp. Previously, he was Chairman and Chief Executive Officer of White River Capital and a Board member of TCF Financial Corporation, Western Bancorp and American Financial Realty. Mr. Eggemeyer’s civic and philanthropic efforts have been focused in the areas of improving the quality of instruction in education and expanding educational opportunities for lower income students. He was a founder and past President of the Rancho Santa Fe Community School Endowment and was a member of the Rancho Santa Fe School Site Selection Committee. He also helped establish the Minnesota Charter of A Better Chance, a national organization committed to creating improved educational opportunities for minority high school students. Mr. Eggemeyer is a Life Trustee of Northwestern University where he serves on the Finance and Investment Committees and is a past Trustee of the Bishop’s School of La Jolla, California and the Parent Advisory Board at Stanford University. Mr. Eggemeyer holds a Bachelor of Science degree from Northwestern University and an M.B.A. from the University of Chicago. Mr. Eggemeyer brings to the Board of Directors extensive experience in identifying potential risks and rewards in the banking industry. The Company benefits from his experience and counsel as a member of our board. F.L. Garrett, III has served as a director of the Company and the Bank since the closing of the Company’s merger with EVBS in June 2017. Mr. Garrett served as Vice Chairman of the Board of Directors of EVBS and previously served as Chairman of the Board of Directors of a predecessor of EVB. Mr. Garrett served as a director of the Bank and a predecessor of the Bank from 1982 until June 2017. Mr. Garrett has owned Harborside Storage since 1994, a boat storage company and has been an active realtor with Long & Foster Real Estate in Essex County, Virginia and neighboring areas since 1989. As a local business owner and a successful realtor, Mr. Garrett contributes to the Board of Directors a strong sense of changing economic and market conditions in the Company’s market areas. Mr. Garrett has also developed extensive knowledge of our business during his extended service to the Company, the Bank and one of the Bank’s predecessors. Dr. Allen R. Jones Jr. has been a director of the Company and the Bank since June 15, 2021. Dr. Jones is a licensed physical therapist in the Commonwealth of Virginia. Dr. Jones is the owner and CEO of Dominion Physical Therapy, a practice he founded in 1990 and has since expanded to six locations in the Hampton Roads region. Virginia has been Dr. Jones’ home since 1987, the year he completed his degree in physical therapy from the University of Connecticut. Dedicated to continuing education, he earned a Doctor of Physical Therapy degree from Rocky Mountain University School of Health Professions in Provo, Utah, in 2014 and also holds a postgraduate certification in Clinical Management of Head, Facial and Neck Pain and TMJ Disorders. He has been a member of the American Physical Therapy Association since 1988. Dr. Jones’ passion for high-quality care has led to numerous awards for his practice, as well as statewide leadership positions. In 2014, Gov. Terry McAuliffe appointed him to the Virginia State Board of Physical Therapy. Dr. Jones was reelected as Chairman of the Board of Physical Therapy for the state of Virginia on August 11, 2020, where he previously served as Chairman in 2017 and 2018. Dr. Jones served as Chairman for two consecutive years (2019-2021) for the Board of Health Professions. For three decades, Dr. Jones has worked hard to foster a spirit of community involvement and service through his practice. In 2014, Dr. Jones provided financial and staffing support for a collaborative trip with Old Dominion specialists to the Dominican Republic to educate clinical staff there on the treatment of autism spectrum disorder. Dr. Jones serves as a board member of Norfolk State University Foundation and Old Dominion University School of Physical Therapy & Athletic Training. Dr. Allen contributes to the Board of Directors with strong ties to its surrounding communities in the Company’s market areas. Dr. Allen has also developed extensive knowledge of our business as he served as our Hampton Advisory Board Chairman since 2018.
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
W. Rand Cook has been serving as Chairman of the Board of each the Company and the Bank since 2020. Mr. Cook has also served as a director of the Company and the Bank since the closing of the Company’s merger with EVBS in June 2017. Mr. Cook served as Chairman of the Board of Directors of EVBS and served as a director of EVB and a predecessor of EVB from 2000 until June 2017. Mr. Cook is a Partner in the law firm of McCaul, Martin, Evans and Cook, P.C., where he has been practicing law since 1985, and is the Commissioner of Accounts for Hanover County Circuit Court. Mr. Cook holds both MBA and JD degrees, and maintains an active law practice that focuses on corporate law and debtor and creditor rights. Mr. Cook brings experience in corporate governance, strategic planning and financial planning to the Board of Directors, and his legal background gives Mr. Cook valuable insight into various legal risks that the Company may encounter. Previously, Mr. Cook worked with the Virginia General Assembly, which provides Mr. Cook with a unique perspective on state legislative and regulatory environments. Eric A. Johnson has served as a director of the Company and the Bank since the closing of the Company’s merger with EVBS in June 2017. For over 45 years, Mr. Johnson has been in the real estate business. Mr. Johnson has served as a real estate broker with Mason Realty in Middlesex, Virginia since 1976 and served as a director of EVB and a predecessor of EVB from 1988 until June 2017. In addition, Mr. Johnson previously owned Urbanna Market and Urbanna Builders Supply, both of which generated multi-million dollar annual sales. Mr. Johnson brings experience in local real estate markets to the Board of Directors, as well as entrepreneurial spirit, business judgment and knowledge of local business markets that he has developed through his business ventures. Dennis J. Zember, Jr. has served as a director of the Company and the Bank since February 2020. Mr. Zember was appointed President and Chief Executive Officer of both the Company and the Bank on February 19, 2020. Mr. Zember was previously Executive Vice President and Chief Operating Officer of Ameris Bancorp from June 2016 through June 2018 and Chief Financial Officer of Ameris Bancorp from February 2005 through December 2017. The Company believes Mr. Zember’s qualifications to sit on the Board of Directors include his extensive banking experience from years spent as an executive in the industry.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Appropriate compensation is critical to attracting, retaining and motivating directors who have the qualities necessary to serve the Corporation as a director and who meet the guidelines set forth by our Governance Committee. The following discusses the Company’s approach to director compensation.
2023 Director Compensation(1)
2023 Director Compensation(1) The following table contains information concerning the compensation of the directors of the Company and the Bank for the fiscal year ended December 31, 2023. The named executive officers who also serve (or served) as directors did not receive any compensation for their service as directors for the fiscal year ended December 31, 2023.
2023 Director Compensation(1)
| | Fees Earned or | All Other | | | | Paid in Cash | Compensation | | | Name | ($) | ($)(2) | Total ($) | | John F. Biagas | 53,500 | 25,000 | 78,500 | | Robert Y. Clagett | 53,500 | 25,000 | 78,500 | | W. Rand Cook | 80,200 | 25,000 | 105,200 | | Deborah B. Diaz | 50,100 | 25,000 | 75,100 | | John M. Eggemeyer | 45,800 | - | 45,800 | | F.L. Garrett, III | 50,800 | 25,000 | 75,800 | | Eric A. Johnson | 48,000 | 25,000 | 73,000 | | Allen R. Jones, Jr. | 43,800 | 25,000 | 68,800 | | Charles A. Kabbash | 47,200 | 25,000 | 72,200 |
2023 Director Compensation(1)
| (1) Non-employee directors were not awarded stock options or stock awards in 2023. As of December 31, 2023, none our non-employee directors held any stock awards. |
2023 Director Compensation(1)
| (2) Represents the value of the shares of Company common stock purchased by the director for which the Bank provided funding pursuant to the Company’s stock matching program described above. |
Role of Compensation Consultant and Market Data
Role of Compensation Consultant and Market Data As discussed earlier in this Proxy Statement, in 2023, the Compensation Committee engaged the Consultant to provide advice with respect to executive officer and director compensation for 2023. The Consultant reviewed a peer group comprised of 24 mid-Atlantic U.S. banks ranging in assets from $2.3 billion to $6.0 billion, with median assets of $3.2 billion and median market cap of $406 million. The peer group consisted of the following banks: ACNB Corporation, American National Bankshares, Blue Ridge Bankshares, C&F Financial Corporation, Capital City Bank Group, CapStar Financial Holdings, Carter Bankshares, City Holding, CNB Financial, Codorus Valley Bancorp, Colony Bankcorp, First Bank, First Community Bancshares, HomeTrust Bancshares, MetroCity Bankshares, Mid Penn Bancorp, MVB Financial, Orrstown Financial Services, Peoples Financial Services, SmartFinancial Inc., Southern First Bancshares, Summit Financial Group, Shore Bancshares, Inc. and Wilson Bank Holding Company. The Consultant reviewed base salary, total cash compensation, targeted total cash compensation and targeted total direct compensation of our executive officers as compared to the peer group. The Company did not benchmark the compensation of its named executive officers to a certain percentage or range of compensation within the market data provided by the Consultant. Instead, the Compensation Committee used this information as a point of reference for measurement, but not as the determinative factor in setting the compensation of the Company’s named executive officers. The Compensation Committee did not use the compensation data to “target” a specific compensation level for any given executive. Rather, the Compensation Committee used its understanding of peer group compensation as a starting point for its decision making. Because the comparative compensation information is just one of the analytical tools that are used in setting named executive officer compensation, the Compensation Committee has discretion in determining the nature and extent of its use. Further, given the limitations associated with comparative pay information for setting individual executive compensation, including the difficulty of assessing and comparing wealth accumulation through equity gains and post-employment amounts, the Compensation Committee may elect not to use the comparative compensation information at all in the course of making compensation decisions.
Components of Executive Compensation
| ● | cash incentive awards; |
Components of Executive Compensation
| ● | long-term equity incentive awards; |
Components of Executive Compensation
| ● | severance protection through employment agreements. |
Non-Equity Incentive Compensation
Non-Equity Incentive Compensation The Compensation Committee spent considerable time in 2023, in coordination with the full Board of Directors and the CEO, aligning targets for incentive pay with the Company’s short-term goals. In 2023, the Compensation Committee established the following goals with high and low ranges of achievement around the target and with each goal weighted equally:
Non-Equity Incentive Compensation
| | | Incentive Payout Rates Versus Targets | | | | | Financial Measure | Weighting | 75% | 100% | 125% | Actual | | Net Income as Percent of Budget(1) | 35% | 90% | 100% | 110% | 72% | | Non-Brokered Deposit Growth(2) | 25% | 10% | 15% | 20% | 25% | | Gross Loan Growth(3) | 20% | 6% | 8% | 10% | 9% | | Year-End Nonperforming Assets / Assets(4) | 20% | | 0.50% | | 0.19% |
Non-Equity Incentive Compensation
| (1) Reported net income for 2023, adjusted for certain one-time items, as a percentage of budgeted net income for 2023. |
Non-Equity Incentive Compensation
| (2) Represents growth in non-brokered deposits from December 31, 2022 to December 31, 2023. |
Non-Equity Incentive Compensation
| (3) Represents growth in gross loans held for investment, excluding Paycheck Protection Program balances, from December 31, 2022 to December 31, 2023. |
Non-Equity Incentive Compensation
| (4) Represents the level of nonperforming assets to total assets by December 31, 2023. This metric was measured on a pass or fail basis in the incentive plan. |
Non-Equity Incentive Compensation
Targets incentive percentages of base salary were determined for executive management. These targets combined with the payout ranges above would determine short-term incentives. The following table shows the target incentive payout levels for each named executive assuming midpoint performance on the established goals:
Non-Equity Incentive Compensation
| | | | | Calculated | | | | | | | Target | Incentive | Actual | | | | | Target | Incentive | Payment | Incentive | Actual | | Named Executive | Salary ($) | (% of Salary) | Payment ($) | (at 74%) ($) | Payment ($) | (% of Salary) | | Dennis J. Zember, Jr. | $674,872 | 50% | $337,436 | $249,703 | $— | 0% | | Matthew A. Switzer | 329,994 | 35% | 115,498 | 85,468 | — | 0% | | Rickey A. Fulk | 300,959 | 30% | 90,288 | 66,813 | — | 0% | | G. Cody Sheflett | 299,984 | 35% | 104,994 | 77,696 | — | 0% | | Ann-Stanton C. Gore | 256,160 | 30% | 76,848 | 56,868 | — | 0% |
Non-Equity Incentive Compensation
As noted above, actual results relative to 2023 goals implied a payout of 74% of targeted incentive amounts for the year. However, the Compensation Committee noted that, while progress on multiple strategic initiatives was made in 2023, net income for the year was below expectations. As a result, the Compensation Committee used its discretion to eliminate short-term incentive payments for executive management for 2023.
Long-Term Equity Incentive Awards
Long-Term Equity Incentive Awards The Company maintains an equity compensation program for its named executive officers and other key employees, in order to attract, retain and motivate key employees and enable those persons to participate in the long-term success of the Company. In 2021, the Compensation Committee began including performance-based grants in management’s long-term equity incentive awards to increase the alignment of management incentives with long-term goals versus time-based grants alone. For 2022 and 2023, the Compensation Committee chose to make all awards performance-based. The performance-based restricted stock units are convertible, on a one-for-one basis, into shares of stock based on the level of achievement of the Company’s adjusted earnings per share compound annual growth over the 5-year performance period commencing the year of the grant. The following table details the performance targets and payout levels for the 2022 and 2023 performance unit grants.
Long-Term Equity Incentive Awards
| Adjusted EPS CAGR(1) | | Payout | | 2022 | 2023 | Factor | | 12% | 10% | 150% | | 10% | 8% | 100% | | 8% | 6% | 75% | | 6% | 5% | 50% | | < 6% | < 5% | 0% |
Long-Term Equity Incentive Awards
| (1) Calculated as the five-year compound annual growth rate in credit-adjusted pre-tax operating earnings per share beginning the year of the grant. |
Long-Term Equity Incentive Awards
Amendment to Mr. Zember’s Performance Units. During 2023, the Compensation Committee amended Mr. Zember’s 2021 and 2022 performance units (collectively, the “Zember Performance Unit Amendment”) to provide that (i) with respect to the 2021 performance units, to the extent that the Company meets the performance targets that would entitle Mr. Zember to earn more than 50,000 shares upon settlement of the award in 2026 (or, in certain limited circumstances, an earlier date as provided in the award agreement), Mr. Zember’s award will be limited at 50,000 shares of stock and he will be entitled to the cash value of any shares earned in excess of 50,000 (with the value of any cash awards received by Mr. Zember in 2026 limited to $500,000); and (ii) with respect to the 2022 performance units, to the extent that the Company meets the performance targets that would entitle Mr. Zember to earn more than 50,000 shares upon settlement of the award in 2027 (or, in certain limited circumstances, an earlier date as provided in the award agreement), Mr. Zember’s award will be limited at 25,233 shares of stock, and he will be entitled to the cash value of any shares earned in excess of 25,233 (with the value of any cash awards received by Mr. Zember in 2027 limited to $500,000). The terms of Mr. Zember’s 2023 performance units are consistent with those provided in the Zember Performance Unit Amendment.
Employment Agreements
Employment Agreements During 2023, the Company and the Bank were party to employment agreements with our named executive officers. The Compensation Committee and the Bank believe that the employment and change-in-control agreements are a critical tool in retaining our executive team. These agreements also include certain protections for the Company and the Bank in the form of post-employment restrictive covenants. Employment Agreement with Mr. Zember. Effective December 20, 2022, the Company entered into an amended and restated employment agreement with Mr. Zember, President and Chief Executive Officer of the Company and the Bank. The amended and restated agreement amends and restates in its entirety the original employment agreement with Mr. Zember, dated February 19, 2020 (the “Original Employment Agreement”). The amended and restated employment agreement is substantially the same as the Original Employment Agreement, except as described herein. Pursuant to the amended and restated agreement, Mr. Zember’s base salary was set at $642,735 to align with his 2022 base salary, with eligibility for annual increases at the Compensation Committee’s discretion, and the Company committed to providing Mr. Zember life insurance in the amount of $5,000,000, with fifty percent (50%) of the proceeds directed to the Company and fifty percent (50%) of the proceeds directed to Mr. Zember’s designated beneficiary. The amended and restated agreement also provides that if Mr. Zember’s employment is terminated without cause or he resigns for good reason following a change in control, then his performance-based equity awards will be deemed to have been earned as of his termination date based upon the actual level of achievement of all relevant performance goals measured as of the date of such termination. Employment Agreement with Mr. Switzer. Effective January 10, 2021, the Company was party to an employment agreement with Mr. Switzer, pursuant to which Mr. Switzer serves as Executive Vice President and Chief Financial Officer of the Company and the Bank. The employment agreement has an initial two-year term that would expire on January 10, 2023, subject to automatic two-year renewals unless either party provided written notice of non-renewal no later than sixty days before any renewal date. Mr. Switzer’s employment agreement provides for an annual base salary and eligibility for equity awards and annual bonuses and certain other benefits, and payment of private club dues. Mr. Switzer’s employment agreement also provided that any incentive compensation paid to Mr. Switzer, including both equity and cash incentive compensation, is subject to repayment or clawback as further described in the agreement. Employment Agreement with Mr. Fulk. Effective October 25, 2023, the Company entered into an employment agreement with Mr. Fulk, pursuant to which Mr. Fulk serves as Executive Vice President of the Company and the Bank. The employment agreement has an initial two-year term that would expire on September 13, 2023, subject to automatic two-year renewals unless either party provided written notice of non-renewal no later than sixty days before any renewal date. Mr. Fulk’s employment agreement provides for an annual base salary and eligibility for equity awards and annual bonuses and certain other benefits, and payment of private club dues. Mr. Fulk’s employment agreement also provided that any incentive compensation paid to Mr. Fulk, including both equity and cash incentive compensation, is subject to repayment or clawback as further described in the agreement. Employment Agreement with Ms. Gore. Effective September 13, 2021, the Company entered into an employment agreement with Ms. Gore, pursuant to which Ms. Gore serves as Executive Vice President and Chief Marketing Officer of the Company and the Bank. The employment agreement has an initial two-year term that would expire on September 13, 2023, subject to automatic two-year renewals unless either party provided written notice of non-renewal no later than sixty days before any renewal date. Ms. Gore’s employment agreement provides for an annual base salary and eligibility for equity awards and annual bonuses and certain other benefits, and payment of private club dues. Ms. Gore’s employment agreement also provided that any incentive compensation paid to Ms. Gore, including both equity and cash incentive compensation, is subject to repayment or clawback as further described in the agreement.
Summary Compensation Table
Summary Compensation Table The following table provides information regarding the compensation paid or accrued by the Company to or on behalf of the Company’s named executive officers for the fiscal years ended December 31, 2023, 2022, and 2021.
Summary Compensation Table
| | | | | | | Change in | | | | | | | | | | Pension | | | | | | | | | | Value and | | | | | | | | | Non-equity | Nonqualified | | | | | | | | | Incentive | Deferred | | | | Name and | | | | Stock | Plan | Compensation | All Other | | | Principal Position | Year | Salary ($) | Bonus ($) | Awards ($) (1) | Compensation ($) | Earnings ($) | Compensation ($) | Total ($) | | Dennis J. Zember, Jr. | 2023 | $672,194 | $- | $459,000 | $- | $- | $65,500(2) | $1,196,693 | | President and Chief Executive Officer | 2022 | 639,112 | - | 498,102 | 250,000 | - | 45,963 | 1,433,177 | | | 2021 | 617,500 | - | 631,575 | 341,550 | - | 27,142 | 1,617,767 | | Matthew A. Switzer | 2023 | 328,750 | - | 102,000 | - | - | 26,716(3) | 457,466 | | Executive Vice President and | 2022 | 312,500 | - | 106,470 | 100,000 | - | 28,261 | 547,231 | | Chief Financial Officer | 2021 | 291,023 | | 199,340 | 110,000 | - | 42,302 | 642,665 | | Rickey A. Fulk | 2023 | 256,667 | - | 102,000 | - | - | 15,345(4) | 374,011 | | Executive Vice President and | | | | | | | | | | President of Primis Bank | | | | | | | | | | G. Cody Sheflett | 2023 | 298,750 | - | 102,000 | - | - | 3,957(5) | 404,707 | | Executive Vice President and | 2022 | 277,175 | - | 94,640 | 80,000 | - | 4,890 | 456,705 | | Chief Information Officer | 2021 | 236,708 | - | 97,500 | 84,000 | - | 4,535 | 422,743 | | Ann-Stanton C. Gore(7) | 2023 | 259,167 | - | 102,000 | - | - | 11,596(6) | 372,762 | | Executive Vice President and | | | | | | | | | | Chief Marketing Officer | | | | | | | | |
Summary Compensation Table
| (1) Represents the aggregate grant date fair value of stock awards and performance units awarded pursuant to the Company’s 2010 Stock Awards and Incentive Plan (the “2010 Plan”) and the 2017 Plan in the applicable fiscal year, computed in accordance with FASB ASC Topic 718. No options were granted in 2023, 2022 or 2021. The grant date fair value of stock awards granted in 2023, 2022 and 2021 and the performance units granted in 2023, 2022 and 2021 were based on the fair market value of the stock on the grant date. The grant date fair value of the performance units was calculated using the target number of units granted, which is the target level of performance achievement under the 2023, 2022 and 2021 performance units. The grant date fair value of the performance units granted in 2023 assuming, instead, maximum level of performance achievement is as follows: Mr. Zember, $688,500; Mr. Switzer, $153,000; Mr. Fulk, $153,000; Mr. Sheflett, $153,000; and Ms. Gore, $153,000.The grant date fair value of the performance units granted in 2022 assuming, instead, maximum level of performance achievement is as follows: Mr. Zember, $747,153; Mr. Switzer, $159,705; Mr. Sheflett, $141,960; and Ms. Gore, $124,215. The grant date fair value of the performance units granted in 2021 assuming, instead, maximum level of performance achievement is as follows: Mr. Zember, $947,363; Mr. Switzer, $73,125; and Mr. Sheflett, $73,125. |
Summary Compensation Table
| (2) The amount included as “All Other Compensation” for 2023 includes: (i) 401(k) matching contribution ($18,307), (ii) dividends on restricted stock ($3,600), (iii) matching contribution to a Health Savings Account ($1,000), (iv) reimbursement of club dues ($39,970), and (v) imputed income related to group term life insurance ($2,622). |
Summary Compensation Table
| (3) The amount included as “All Other Compensation” for 2023 includes: (i) 401(k) matching contribution ($14,794), (ii) dividends on restricted stock ($2,895), (iii) matching contribution to a Health Savings Account ($1,000), (iv) reimbursement of club dues ($6,936), and (v) imputed income related to group term life insurance ($1,092). |
Summary Compensation Table
| (4) The amount included as “All Other Compensation” for 2023 includes: (i) benefit from imputed income as a beneficiary of BOLI ($950), (ii) 401(k) matching contribution ($11,550), (iii) dividends on restricted stock ($560), and (iv) imputed income related to group term life insurance ($2,285). |
Summary Compensation Table
| (5) The amount included as “All Other Compensation” for 2023 includes: (i) restricted stock dividends ($2,065), (ii) imputed income as a beneficiary of a BOLI ($384), and (iii) imputed income related to group term life insurance ($1,508). |
Summary Compensation Table
| (6) The amount included as “All Other Compensation” for 2023 includes: (i) 401(k) matching contribution ($9,471), (ii) dividends on restricted stock ($1,620), and (iii) imputed income related to group term life insurance ($505). |
Summary Compensation Table
| (7) Ms. Gore was not a named executive officer in 2022 or 2021. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table contains information about the named executive officers’ grants of stock units during 2023, all of which were granted under the 2017 Plan. No stock options were granted during 2023.
2023 Grants of Plan-Based Awards
| | | | | | | | | All Other | Grant Date | | | | | | | | | | Stock Awards: | Fair Value of | | | | | | | | | | Number of | Stock and | | | | Estimated Possible Payouts Under | | | Estimated Possible Payouts Under | | | Shares of | Option | | | | Non-Equity Incentive Plan Awards ($) | | | Equity Incentive Plan Awards (#) | | | Stock or | Awards ($) (2) | | Name | Grant Date | Threshold | Target (1) | Maximum | Threshold | Target | Maximum | Units (#) | Target | | Dennis J. Zember, Jr. | 11/16/2023(3) | $- | $- | $- | - | 45,000 | 67,500 | $- | $459,000 | | | | - | 337,436 | 367,805 | - | - | - | - | - | | Matthew A. Switzer | 11/16/2023(3) | - | - | - | - | 10,000 | 15,000 | - | 102,000 | | | | - | 115,498 | 125,893 | - | - | - | - | - | | Rickey A. Fulk | 11/16/2023(3) | - | - | - | - | 10,000 | 15,000 | - | 102,000 | | | | - | 90,288 | 98,414 | - | - | - | - | - | | G. Cody Sheflett | 11/16/2023(3) | - | - | - | - | 10,000 | 15,000 | - | 102,000 | | | | - | 104,994 | 114,444 | - | - | - | - | - | | Ann-Stanton C. Gore | 11/16/2023(3) | - | - | - | - | 10,000 | 15,000 | - | 102,000 | | | | - | 76,848 | 83,764 | - | - | - | - | - |
2023 Grants of Plan-Based Awards
| (1) Reflects target payout levels for Annual Incentive Award payments. |
2023 Grants of Plan-Based Awards
| (2) Reflects the grant date fair value of the stock awards computed in accordance with FASB ASC Topic 718. |
2023 Grants of Plan-Based Awards
| (3) Reflects 2023 performance units which are eligible to vest on March 15, 2028, based on achievement of pre-established performance goals and, in the case of Mr. Zember, subject to the terms and conditions provided in the Zember Performance Unit Amendment. |
2023 Grants of Plan-Based Awards
As described in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022, the financial statements included in Part II, Item 8. Financial Statements and Supplementary Data were restated as of and for the year ended December 31, 2022, to correct the accounting for an agreement with a third-party that originates and services a consumer loan portfolio for the Company (the “Consumer Program”). The error corrections required a recovery analysis under the Clawback Policy, which was effective from and after October 2, 2023, in accordance with Section 5608 of the Nasdaq Listing Rules. The Clawback Policy was filed with the Annual Report on Form 10-K for the year ended December 31, 2023, as Exhibit 97. In accordance with the Nasdaq Listing Rules, the Clawback Policy only applies to incentive compensation received on or after October 2, 2023. Accordingly, any incentive compensation received prior to that date is not subject to recovery under the Clawback Policy. The Compensation Committee concluded that recovery of compensation was not required pursuant to the Clawback Policy because none of the “incentive compensation” covered by the Clawback Policy that otherwise may have been impacted by the restatement has been paid or otherwise settled to the executive officers. As described earlier in this Proxy Statement, the Compensation Committee used its discretion to eliminate short-term incentive payments for executive management for 2023. No amounts have been settled or otherwise paid with respect to the 2021 Performance Units, 2022 Performance Units and 2023 Performance Units because their respective performance periods have not yet concluded. Amounts earned, if any, under the 2021 Performance Units, 2022 Performance Units and 2023 Performance Units will be paid based on appropriately restated metrics following the conclusion of the respective performance periods.
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table contains information concerning the named executive officers’ outstanding stock options, stock awards and stock units as of December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | | | | | | | | Equity Incentive Plan Awards | | Number of | Market Value | | | Number of | Number of | | | Number of | Market or Payout | Shares or | of Shares | | | Securities | Securities | | | Unearned Shares, | Value of Unearned | Units of | or Units | | | Underlying | Underlying | Option | | Units, or Other | Shares, Units, or | Stock | of Stock | | | Unexercised | Unexercised | Exercise | Option | Rights That Have | Other Rights That | That Have | That Have | | | Options (#) | Options (#) | Price | Expiration | Not Vested | Have Not Vested | Not Vested | Not Vested | | Name | Exercisable | Unexercisable | ($) | Date | (#) | ($) (1) | (#) | ($) (1) | | Dennis J. Zember, Jr. | - | - | $- | - | - | $- | 8,000 | $101,280(2) | | | - | - | - | - | 42,105 | 533,049 | - | -(3) | | | - | - | - | - | 42,105 | 533,049 | - | -(4) | | | - | - | - | - | 45,000 | 569,700 | - | -(5) | | Matthew A. Switzer | - | - | - | - | - | - | 4,800 | 60,768(6) | | | - | - | - | - | - | - | 1,950 | 24,687(7) | | | - | - | - | - | 3,250 | 41,145 | - | -(3) | | | - | - | - | - | 9,000 | 113,940 | - | -(4) | | | - | - | - | - | 10,000 | 126,600 | - | -(5) | | Rickey A. Fulk | - | - | - | - | - | - | 400 | 101,280(8) | | | - | - | - | - | - | - | 800 | 101,280(9) | | | - | - | - | - | 10,000 | 126,600 | - | -(5) | | G. Cody Sheflett | 2,500 | - | 10.47 | 7/22/2024 | - | - | - | - | | | 4,000 | - | 11.43 | 6/19/2025 | - | - | - | - | | | 4,500 | - | 11.99 | 6/17/2026 | - | - | - | - | | | - | - | - | - | - | - | 800 | 10,128(8) | | | - | - | - | - | - | - | 1,600 | 20,256(9) | | | - | - | - | - | - | - | 1,950 | 24,687(7) | | | - | - | - | - | 3,250 | 41,145 | - | -(3) | | | - | - | - | - | 8,000 | 101,280 | - | -(4) | | | - | - | - | - | 10,000 | 126,600 | - | -(5) | | Ann-Stanton C. Gore | - | - | - | - | - | - | 3,000 | 37,980(7) | | | - | - | - | - | 7,000 | 88,620 | - | -(4) | | | - | - | - | - | 10,000 | 126,600 | - | -(5) |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Market value is calculated based on $12.66, the closing price of the Company’s Common Stock on the NASDAQ Global Market on December 29, 2023, the last trading day of 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) The restricted shares vest in two approximately equal installments on each of February 19, 2024 and 2025. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (3) Reflects the 2021 performance units (at target) which are eligible to vest on March 15, 2026 based on the level of achievement of the Company’s adjusted EPS compound annual growth during the performance period commencing January 1, 2021 and ending December 31, 2025, and, in the case of Mr. Zember, subject to the terms and conditions provided in the Zember Performance Unit Amendment (the “2021 Performance Units”). |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (4) Reflects the 2022 performance units (at target) which are eligible to vest on March 15, 2027 based on the level of achievement of the Company’s adjusted EPS compound annual growth during the performance period commencing January 1, 2022 and ending December 31, 2026, and, in the case of Mr. Zember, subject to the terms and conditions provided in the Zember Performance Unit Amendment (the “2022 Performance Units”). |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (5) Reflects the 2023 performance units (at target) which are eligible to vest on March 15, 2028 based on the level of achievement of the Company’s adjusted EPS compound annual growth during the performance period commencing |
Outstanding Equity Awards at 2023 Fiscal Year-End
| January 1, 2023 and ending December 31, 2027, and, in the case of Mr. Zember, subject to the terms and conditions provided in the Zember Performance Unit Amendment (the “2023 Performance Units”). |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (6) The restricted shares vest in three approximately equal installments on each of January 11, 2024, 2025 and 2026. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7) The restricted shares vest in two approximately equal installments on each on September 1, 2024 and 2025. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (8) The restricted shares vest on January 24, 2024. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (9) The restricted shares vest in two approximately equal installments on each of February 14, 2024 and 2025. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (10) The restricted shares vest in three approximately equal installments on each of September 13, 2024, 2025 and 2026. |
2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | | Number of | | Number of | | | | Shares | Value | Shares | Value | | | Acquired on | Realized on | Acquired on | Realized on | | | Exercise | Exercise | Vesting | Vesting | | Name | (#) | ($) | (#) | ($) (1) | | Dennis J. Zember, Jr. | - | $- | 4,000 | $47,760 | | Matthew A. Switzer | - | - | 2,250 | 26,702 | | Rickey A. Fulk | - | - | 1,200 | 9,096 | | G. Cody Sheflett | - | - | 2,750 | 34,732 | | Ann-Stanton C. Gore | - | - | 1,000 | 8,380 |
2023 Option Exercises and Stock Vested
| (1) Reflects the number of shares of stock vesting multiplied by the price per share of Company common stock on the vesting date. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Employment Agreement with Mr. Zember. On February 19, 2020, the Company and the Bank entered into an employment agreement with Mr. Zember, which agreement was amended and restated on December 20, 2022. If Mr. Zember resigns for good reason or if the Company terminates his employment without cause, then he is entitled to receive any accrued obligations under the employment agreement and, subject to his compliance with certain restrictive covenants and the execution, delivery and non-revocation of a release of claims:
Potential Payments Upon Termination or Change in Control
| ● | a lump sum payment equal to three times the sum of (A) his base salary and (B) his highest cash bonus earned with respect to any fiscal year within the three most recently completed fiscal years immediately preceding the termination date, which amount shall be paid in cash on before the 60th day after the termination date, |
Potential Payments Upon Termination or Change in Control
| ● | continuing health insurance benefits for himself and his covered spouse and dependents, with such premiums paid by the company, for eighteen months, |
Potential Payments Upon Termination or Change in Control
| ● | any issued but unvested restricted stock, stock options, phantom stock or other long-term incentive will be deemed to be fully vested as of the date of termination, and |
Potential Payments Upon Termination or Change in Control
| ● | if such termination follows a change in control, his performance-based equity awards will be deemed to have been earned as of his termination date based upon the actual level of achievement of all relevant performance goals measured as of the date of such termination, subject to the Zember Performance Unit Amendment with respect to the performance units granted in 2021 and 2022. |
Potential Payments Upon Termination or Change in Control
Employment Agreements with Ms. Gore and Messrs. Fulk and Switzer. On September 13, 2021, October 25, 2023 and January 10, 2021, the Company entered into an employment agreement with Ms. Gore, Mr. Fulk and Mr. Switzer, respectively. Pursuant to their employment agreements, if the executive resigns for good reason or the Company terminates his or her employment without cause, the executive is entitled to receive any accrued obligations under the employment agreement and, subject to the executive’s compliance with certain restrictive covenants and execution, delivery and non-revocation of a release of claims:
Potential Payments Upon Termination or Change in Control
| ● | a lump sum payment equal to two times the sum of the executive’s (A) base salary and (B) highest cash bonus earned with respect to any fiscal year within the two most recently completed fiscal years immediately preceding the termination date (or if the termination occurs in within the first year of the employment period, 50% of base salary), which amount will be paid in cash on before the 60th day after the termination date, |
Potential Payments Upon Termination or Change in Control
| ● | a pro rata bonus payment based on actual performance for the year of termination; |
Potential Payments Upon Termination or Change in Control
| ● | continuing health insurance benefits for himself and his covered spouse and dependents, with such premiums paid by the company, for eighteen months; and |
Potential Payments Upon Termination or Change in Control
| ● | any issued but unvested restricted stock, stock options, phantom stock or other long-term incentive will be deemed to be fully vested as of the date of termination, |
Potential Payments Upon Termination or Change in Control
Code Section 280G. Under the employment agreements with Messrs. Zember, Switzer and Fulk and Ms. Gore, if the payments and benefits under the employment agreement, together with other payments and benefits the executive may have the right to receive, on account of a change in control would exceed the maximum limit imposed on the total of such payments and benefits by Section 280G of the Code (without triggering the excise tax imposed under Section 4999 of the Code), the agreement provides for a comparison of two alternative scenarios for addressing Section 280G and Section 4999 of the Code, and the application of the scenario that leaves the executive in the more favorable net after-tax position. Specifically, the executive will receive whichever of the following is more favorable to him or her on a net after-tax basis: (i) the payments and benefits reduced to the extent necessary so that none of the payments or benefits is subject to the excise tax or (ii) the full amount of the payments and benefits, which is subject to the excise tax, with the executive being responsible for paying any excise tax imposed. Restrictive Covenants. Each employment agreement contains confidentiality provisions and covenants not to compete and not to solicit customers or employees that are in effect for 18 months after termination of employment. Definitions. or purposes of the employment agreements:
Potential Payments Upon Termination or Change in Control
| ● | the executive will generally have “good reason” to terminate his or her employment if the company negatively changes certain important aspects of the executive’s employment, including reducing the executive’s authority, responsibility or salary, removes the executive from his or her position, moves the executive’s principal office a material distance, reduces the executive’s fringe benefits, fails to comply with any material term of the agreement, fails to require any successor to expressly assume and agree to perform the obligations under the agreement, or provides written notice of non-renewal of the initial term or any renewal term of the agreement; and |
Potential Payments Upon Termination or Change in Control
| ● | termination for “cause” generally includes the executive’s willful misconduct, misappropriation or embezzlement of funds or property, fraud or dishonesty, failure to perform material duties or responsibilities or failure to follow reasonable instructions or policies, conviction of, indictment for or entry of a guilty plea or plea of no contest with respect to a felony or misdemeanor involving moral turpitude, breach of a material term of the agreement or material violation of applicable policies, codes and standards of behavior, willful violation of any final cease-and-desist order, breach of a fiduciary duty or conduct likely to result in material injury to the Company or the Bank. |
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, we are providing the following information about the relationship of the annual total compensation of our employees 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. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported below should not be used as a basis for comparison between companies. For 2023, our last completed fiscal year, the median of the annual total compensation of all employees of the Company (other than our CEO) was $53,934 and the annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was $1,196,693. Based on this information, for 2023, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 22 to 1. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustment and estimates that we used were as follows:
CEO PAY RATIO
| ● | We selected December 31, 2023 as the date upon which we would identify the “median employee.” As of December 31, 2023, we had 511 employees working at the Company and its consolidated subsidiaries. |
CEO PAY RATIO
| ● | We used taxable income as reported on Form W-2 as our consistently applied compensation measure, with the measurement period being calendar year 2023. |
CEO PAY RATIO
| ● | We determined that the “median employee” was a full-time, salaried employee located in the United States, with total compensation for the 12-month period ending December 31, 2023 in the amount of $53,934. |
CEO PAY RATIO
| ● | With respect to the annual total compensation of the “median employee,” we identified and calculated the elements of such employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. |
CEO PAY RATIO
| ● | The annual total compensation of our CEO was $1,196,693, which is the amount reported in the “Total” column of our 2023 Summary Compensation Table included in this Proxy Statement. |
Pay Versus Performance
Pay Versus Performance
Pay Versus Performance
| | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for CEO - Dennis Zember ($)(1) | Summary Compensation Table Total for CEO - Joe A. Shearin ($)(2) | Compensation Actually Paid to CEO - Dennis Zember ($)(1)(7) | Compensation Actually Paid to CEO - Joe A. Shearin ($)(2)(7) | Average Summary Compensation Table Total for Non-CEO NEOs ($)(3) | Average Compensation Actually Paid to Non-CEO NEOs ($)(3)(7) | TSR | Peer Group TSR(4) | Net Income (loss) ($)(5) | Loan Growth (%)(6) | | 2023 | 1,196,693 | - | 1,354,283 | - | 402,237 | 436,294 | 116 | 106 | (7,832) | 9.2 | | 2022 | 1,433,177 | - | 1,236,552 | - | 477,995 | 436,380 | 104 | 114 | 14,148 | 30.1 | | 2021 | 1,617,767 | - | 1,767,008 | - | 510,044 | 488,097 | 128 | 140 | 31,113 | 6.5 | | 2020 | 1,267,310 | 2,404,110 | 778,260 | 2,231,710 | 514,564 | 360,396 | 77 | 64 | 21,581 | (2.8) |
Pay Versus Performance
| (1) Mr. Zember joined the Company and the Bank as President and Chief Executive Officer on February 19, 2020. |
Pay Versus Performance
| (2) Mr. Shearin retired from his position as President and Chief Executive Officer the Company and the Bank on February 19, 2020. |
Pay Versus Performance
| (3) For fiscal year 2023, the Company’s Non-CEO NEOs were Mathew A. Switzer, Rickey A. Fulk, G. Cody Sheflett and Ann-Stanton Gore. For fiscal year 2022, the Company’s Non-CEO NEOs were Mathew A. Switzer, Marie T. Leibson, G. Cody Sheflett and Stephen B. Weber. For fiscal year 2021, the Company’s Non-CEO NEOs were Mathew A. Switzer, Jeffrey L. Karafa, Marie T. Leibson, G. Cody Sheflett and Stephen B. Weber. |
Pay Versus Performance
| (4) The Peer Group TSR is the total return of the Nasdaq Bank Index for the same period, 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
| (5) Presented in thousands. |
Pay Versus Performance
| (6) Represents growth in gross loans held for investment for the period, excluding loans from the Paycheck Protection Program. We determined loan growth to be the most important financial performance measure used to link Company performance to Compensation Actually Paid (“CAP”) to our PEO and Non-CEO NEOs. |
Pay Versus Performance
| (7) CAP is defined by the SEC and is computed by starting with the “Total” column of the Summary Compensation Table (“SCT”) for each year and then: |
Pay Versus Performance
| ● | subtracting the amount in the “Stock Awards” column of the SCT for such year, |
Pay Versus Performance
| ● | adding, for all unvested equity awards granted during the reporting year and outstanding on the last day of the reporting year, the fair value as of the last day of the reporting year, |
Pay Versus Performance
| ● | adding, for all unvested equity awards granted prior to the reporting year and outstanding on the last day of the reporting year, the change in fair value from the last day of the preceding year to the last day of the reporting year, |
Pay Versus Performance
| ● | adding, for equity awards vesting during the reporting year, the change in fair value from the last day of the preceding year to the vesting date, |
Pay Versus Performance
| ● | adding the value of any dividends or other earnings paid in the reporting year on unvested equity awards that are not otherwise included in the total compensation for the reporting year, |
Pay Versus Performance
| ● | subtracting the amount in the “Change in Pension Value & Nonqualified Deferred Compensation Earnings” column of the SCT for such year, and |
Pay Versus Performance
| ● | adding, for all defined benefit and actuarial pension plans, (A) the service cost, calculated as the actuarial present value attributable to services rendered during the reporting year, plus (B) the prior service cost, calculated as the entire cost of benefits granted in a plan amendment during the reporting year that are attributed by the benefit formula to services rendered in periods prior to the amendment. |
Pay Versus Performance
For this purpose, the fair value of equity awards is computed in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements. This may result in a difference in the share value input used for the fair value calculation at year-end when compared to the share value used for performance-based share awards at time of award but the assumptions used in calculating the fair value of the awards did not differ in any material respect from the assumptions used to calculate the grant date fair value of the awards as reported in the Summary Compensation Table for the applicable years. The following tables reflect the adjustments made to SCT total compensation to compute CAP for the position of CEO and average CAP for our other NEOs:
Pay Versus Performance
| CEO SCT Total to CAP Reconciliation - Dennis Zember | 2023 | 2022 | 2021 | | SCT Total Compensation | $1,196,693 | $1,433,177 | $1,617,767 | | SCT Stock Awards | (459,000) | (498,102) | (631,575) | | Fair Value of New Unvested Equity Awards | 569,700 | 498,944 | 631,996 | | Change in Fair Value of Existing Unvested Equity Awards | 42,930 | (170,972) | 46,400 | | Change in Fair Value of Vesting Equity Awards | 360 | (31,696) | 95,620 | | Dividends on Unvested Equity Awards | 3,600 | 5,200 | 6,800 | | SCT Change in Pension Value & Nonqualified Deferred Compensation Earnings | — | — | — | | Service Cost & Prior Service Cost | — | — | — | | CAP | $1,354,283 | $1,236,552 | $1,767,008 | | CEO SCT Total to CAP Reconciliation - Joe A. Shearin | 2020 | | | | SCT Total Compensation | $2,404,110 | | | | SCT Stock Awards | (159,300) | | | | Fair Value of New Unvested Equity Awards | — | | | | Change in Fair Value of Existing Unvested Equity Awards | — | | | | Change in Fair Value of Vesting Equity Awards | (14,900) | | | | Dividends on Unvested Equity Awards | 1,800 | | | | SCT Change in Pension Value & Nonqualified Deferred Compensation Earnings | — | | | | Service Cost & Prior Service Cost | — | | | | CAP | $2,231,710 | | | | Average Non-CEO NEOs SCT Total to CAP Reconciliation | 2023 | 2022 | 2021 | | SCT Total Compensation | $402,237 | $477,995 | $510,044 | | SCT Stock Awards | (102,000) | (91,683) | (87,868) | | Fair Value of New Unvested Equity Awards | 126,600 | 91,838 | 33,773 | | Change in Fair Value of Existing Unvested Equity Awards | 9,275 | (34,010) | 26,361 | | Change in Fair Value of Vesting Equity Awards | (1,602) | (11,234) | 2,671 | | Dividends on Unvested Equity Awards | 1,785 | 3,474 | 3,117 | | SCT Change in Pension Value & Nonqualified Deferred Compensation Earnings | — | — | — | | Service Cost & Prior Service Cost | — | — | — | | CAP | $436,294 | $436,380 | $488,097 |
BENEFICIAL OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AND PRINCIPAL STOCKHOLDERS
| (5) Includes 8,000 shares of Restricted Common Stock granted under the 2017 Equity Compensation Plan. See “Outstanding Equity Awards at 2023 Fiscal Year-End” table for vesting of restricted stock. |