DEF 14A of Shore Bancshares Inc, Apr 16, 2024

DEF 14A of Shore Bancshares Inc

Filed Apr 16, 2024 · FY20230001628280-24-016343

Open on EDGAR

  1. PROPOSAL 1: ELECTION OF DIRECTORS

    PROPOSAL 1: ELECTION OF DIRECTORS

  2. Classification of the Company’s Directors

    Classification of the Company’s Directors The Company completed its merger of equals with Community Financial effective July 1, 2023. In accordance with the terms of the merger agreement, the number of directors constituting our Board is set at 20 members including 12 directors who served on the Company’s Board immediately prior to the effective time of the merger, and eight former directors of Community Financial. The 12 legacy members of the Company’s Board who currently serve on the Board are: Alan J. Hyatt, William E. Esham, III, John A. Lamon, III, Frank E. Mason, III, Esther A. Streete, David S. Jones, Clyde V. Kelly, III, David W. Moore, Dawn M. Willey, R. Michael Clemmer, Jr., James A. Judge and Konrad M. Wayson. The eight former members of the Community Financial Board of Directors who currently serve on the Company’s Board are: Mary Todd Peterson, Rebecca M. McDonald, Michael B. Adams, James M. Burke, Austin J. Slater, Jr., Louis P. Jenkins, Jr., Joseph V. Stone, Jr. and E. Lawrence Sanders, III. Consistent with the terms of the merger agreement and in accordance with the terms of the Company’s Amended and Restated Articles of Incorporation, as amended and supplemented (the “Charter”), our Board is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, as follows: •The Class I directors are William E. Esham, III, John A. Lamon, III, Frank E. Mason, III, Rebecca M. McDonald, Mary Todd Peterson and Esther A. Streete, whose terms will expire at the annual meeting of shareholders to be held in 2025; •The Class II directors are Michael B. Adams, James M. Burke, Louis P. Jenkins, Jr., David S. Jones, Clyde V. Kelly, III, David W. Moore, Austin J. Slater, Jr. and Dawn M. Willey, whose terms will expire at the annual meeting of shareholders to be held in 2026; and •The Class III directors are R. Michael Clemmer, Jr., Alan J. Hyatt, E. Lawrence Sanders, III, Konrad M. Wayson, Joseph V. Stone, Jr. and James A. Judge, whose terms will expire at the Annual Meeting. Following the merger, the Board evaluated the number of members serving on the Board and determined to decrease the size of the Board from 20 to 18 directors effective as of the Annual Meeting. In connection with the plan to reduce the size of the Board, Messrs. Judge and Stone were not nominated for re-election to the Board at the Annual Meeting. The Board currently expects that the size of the Board may be further reduced in future years to as few as 13 members. As a result, the Board has determined not to balance the class sizes at this time. The plan to reduce the size of the Board is subject to the Board’s further evaluation and discretion. Changes to the size of the Board will be structured so that, over time, the number of directors in each Board class will be as nearly equal as possible.

  3. Election Procedures; Term of Office

    Election Procedures; Term of Office At each annual meeting of shareholders, or special meeting in lieu thereof, upon the expiration of the term of a class of directors, the successors to such directors will be elected to serve from the time of election and qualification until the third annual meeting following his or her election and the election and qualification of his or her successor. Any change in the Board resulting from an increase or decrease in the number of directors will be distributed by the Board among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

  4. Board Diversity Matrix

    Board Diversity Matrix Our Board values diversity and seeks to include directors with a broad range of backgrounds, professional experience, skills and perspectives. In compliance with Nasdaq Rules, the matrix below shows the diversity of the Board.

  5. Board Diversity Matrix

    | | As of March 27, 2023 | | As of April 2, 2024 | | | Total Number of Directors | 15 | | 20 | | | | Female | Male | Female | Male | | Gender Identity | | | | | | Directors | 3 | 12 | 4 | 16 | | Demographic Background | | | | | | African American or Black | 1 | | 1 | | | White | 2 | 12 | 3 | 16 |

  6. Board Skills and Experience Matrix

    Board Skills and Experience Matrix Our Board members have a broad set of qualifications, attributes, skills and experience that are well suited to oversee the Company’s strategy and operations. A summary of the attributes and qualifications of our directors is presented below. These skills collectively allow our directors to effectively oversee the Company and create an engaged, effective, and strategically-oriented Board.

  7. Nomination Process

    Nomination Process The Governance Committee is responsible for assembling and maintaining a list of qualified candidates to fill vacancies on the Board, and it periodically reviews this list and researches the talent, skills, expertise, and general background of these candidates. The Governance Committee will from time to time review and consider candidates recommended by shareholders. Shareholder recommendations should be submitted in writing to: Shore Bancshares, Inc., 18 East Dover Street, Easton, Maryland 21601, Attn: Andrea E. Colender, Secretary; and must specify (i) the recommending shareholder’s contact information, (ii) the class and number of shares of capital stock beneficially owned by the recommending shareholder, (iii) the name, address and credentials of the candidate for nomination, and (iv) the candidate’s consent to be considered as a candidate. Whether recommended by a shareholder or chosen independently by the Governance Committee, a candidate will be selected for nomination based on his or her talents and the needs of the Board. The Governance Committee does not have a formal policy pursuant to which it considers specific diversity criteria when selecting nominees, such as education, professional experience, skills, race or gender. Rather, the Governance Committee’s goal in selecting nominees is to identify persons who have business and other ties to the communities and industries we serve, and who have skills, education and other attributes that will meet the needs of the Board at that time and, generally, that are complimentary to the skills and attributes possessed by existing directors. When searching for and appointing directors to fill a particular committee position, the Governance Committee searches for persons who will meet the independence standards required for those committees and who possess skills and attributes that will allow the committee to be effective. The Governance Committee also strives to select individuals who it believes will work well with the other directors at the highest level of integrity and effectiveness. A candidate, whether recommended by a shareholder or otherwise, will not be considered for nomination unless he or she is of good character and is willing to devote adequate time to Board duties. In assessing the qualifications of potential candidates, the Governance Committee will also consider the candidate’s experience, judgment, and civic and community relationships, and the diversity of backgrounds and experience among existing directors. Certain Board positions, such as Audit Committee membership, may require other special skills, expertise, or independence from the Company. It should be noted that a shareholder recommendation is not a nomination, and there is no guarantee that a candidate recommended by a shareholder will be approved by the Governance Committee or nominated by the Board. A shareholder who desires to nominate a candidate for election may do so only in accordance with Article II, Section 4 of our Bylaws which provides that directors may be nominated by shareholders by written request to the Secretary of the Company received not less than 120 days nor more than 180 days prior to the date fixed for the meeting. Additional time constraints are applicable in the cases of a change in shareholder meeting date or a special meeting called for the purpose of electing directors. As provided in the Bylaws, the notice of nomination must specify: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the number of shares of our capital stock owned by each proposed nominee; (d) the name and residence address of the notifying shareholder; (e) the number of shares of our capital stock owned by the notifying shareholder; (f) the consent in writing of the proposed nominee as to the proposed nominee’s name being placed in nomination for director; (g) a description of all arrangements or understandings between such notifying shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such notifying shareholder; (h) a representation that such notifying shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (i) all information relating to such proposed nominee that would be required to be disclosed by Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), assuming such provisions would be applicable to the solicitation of proxies for such proposed nominee.

  8. Nominees for Election

    Nominees for Election Our Board has approved the nomination of R. Michael Clemmer, Jr., Alan J. Hyatt, E. Lawrence Sanders, III and Konrad M. Wayson for re-election as Class III directors at the Annual Meeting. Information about the principal occupations, business experience and qualifications of these nominees is provided below under the heading “Qualifications of 2024 Director Nominees and Continuing Directors.” Ages presented are as of December 31, 2023.

  9. QUALIFICATIONS OF 2024 DIRECTOR NOMINEES AND CONTINUING DIRECTORS

    QUALIFICATIONS OF 2024 DIRECTOR NOMINEES AND CONTINUING DIRECTORS

  10. Class III Director Nominees

    Class III Director Nominees

  11. Class III Director Nominees

    | R. MICHAEL CLEMMER, JR. Age: 56 Director Since: 2016 Committees: Executive Board Risk Oversight (Chair) | Mr. Clemmer served as a director of Talbot Bank since 2012 and subsequently became a director of Shore United Bank (the “Bank”) and the Company after the merger of Talbot Bank and CNB in 2016. Mr. Clemmer is President of Salisbury, Inc., a company that designs and manufactures pewter, sterling silver and other metal giftware, a position he has held since 1991. In 1995, Mr. Clemmer founded Executive Decision, Inc., a corporate recognition company. Since 1992, Mr. Clemmer has been involved in the development, acquisition and renovation of industrial and commercial property. He is founder of Waterside Properties LLC, a property development and management company. Mr. Clemmer is a graduate of the University of Richmond and has been a resident of Talbot County since 1982. In nominating Mr. Clemmer, the Governance Committee considered as important factors Mr. Clemmer’s leadership capabilities, real estate development in our key market area, and his civic participation in the business community. | | ALAN J. HYATT Age: 70 Director Since: 2021 (Chairman since 2021) Committees: Executive (Chair) | Mr. Hyatt joined the Company’s Board as the Chairman on November 1, 2021, as a result of the merger between the Company and Severn Bancorp, Inc. (“Severn”). Prior to joining the Company’s Board, Mr. Hyatt served as the Chairman and CEO of Severn and Severn Bank, FSB (“Severn Bank”). Mr. Hyatt is a partner with the Annapolis law firm Hyatt & Weber, P.A., concentrating his practice on banking, land use, real estate, and commercial law. Mr. Hyatt serves as counsel to area real estate developers and entrepreneurs, with active representation in land use cases, commercial transactions and commercial litigation. Mr. Hyatt received his law degree from the University of Baltimore School of Law in 1978 and is an honors graduate of Bryant College of Business Administration (now Bryant University). He is a member of the Maryland State Bar Association and the Anne Arundel County Bar Association. He serves on the Board of Trustees of Luminis Health, The Anne Arundel County Retirement and Pension System, and The Annapolis Community Foundation. In nominating Mr. Hyatt, the Governance Committee considered as important factors Mr. Hyatt’s experience as an attorney and businessman, Mr. Hyatt brings strong legal and financial skills important to the oversight of the Company’s financial reporting, and enterprise and operational risk management. |

  12. Class III Director Nominees

    | E. LAWRENCE SANDERS, III Age: 67 Director Since: 2023 Committees: Board Risk Oversight | Mr. Sanders was appointed as a director of the Company and the Bank in 2023 as a result of the merger between the Company and Community Financial. Prior to joining the Company’s Board, Mr. Sanders served as a director of Community Financial and Community Bank of the Chesapeake since 2018. He is President of Edward L. Sanders Insurance Agency, which provides multi-line insurance services to clients in Maryland since 1903. Mr. Sanders graduated from NC State University in 1978, obtained his Certified Insurance Counselor designation in 1979 and became a licensed Insurance Advisor in 1981. Mr. Sanders served on the board of directors of County First Bank for 28 years and served as chairman of the board from 2013 to 2018. He is a current member and past President of the Charles County Rotary, past director for the Professional Insurance Agent’s Association, past director and past President for the Civista Foundation and current director for the Charles County Rotary Foundation. In nominating Mr. Sanders, the Governance Committee considered as important factors Mr. Sander’s extensive financial, and operational knowledge from his experience as an owner of an insurance agency. His years of experience serving as a bank director provides the Board valuable insight regarding corporate governance, regulatory compliance, risk assessment practices and bank operations. | | KONRAD M. WAYSON Age: 63 Director Since: 2021 Committees: Audit Board Risk Oversight | Mr. Wayson joined the Company’s Board on November 1, 2021, as a result of the merger between the Company and Severn. Prior to joining the Company’s board, Mr. Wayson served as a director of Severn since 2009 and a director of Severn Bank, since 2008. Mr. Wayson is a partner of Wayson Landholdings since 1996 and has been the managing partner since 2007. Mr. Wayson also serves as the Secretary and Treasurer of Hopkins & Wayson, Inc., a general contractor servicing Maryland, Washington D.C. and Virginia since 1984. Mr. Wayson was the Chief Financial Officer of Childs Landscaping from 1997 until 2004 when the company was sold. Mr. Wayson served as chairman of the Anne Arundel County Public Schools Ethics Panel for 15 years. Stepping down in 2023, Mr. Wayson has served on the Anne Arundel Medical Foundation Board, the Anne Arundel Economic Development Corporation Board, and the Anne Arundel School Board. Mr. Wayson is a graduate of Salisbury University where he received a Bachelor of Science degree in business administration. In nominating Mr. Wayson, the Governance Committee considered as important factors Mr. Wayson’s experience as a treasurer and businessman and his strong financial skills, which is important to the oversight of the Company’s financial reporting, and enterprise and operational risk management. |

  13. Continuing Directors

    Continuing Directors

  14. Class I Directors

    Class I Directors

  15. Class I Directors

    | WILLIAM E. ESHAM, III Age: 58 Director Since: 2020 Committees: Compensation Executive | Mr. Esham was appointed to serve as a director of both the Company and the Bank in June of 2020. Mr. Esham is a partner in the law firm of Ayres, Jenkins, Gordy & Almand, P.A., specializing in real estate law, located in Ocean City, Maryland. Mr. Esham also serves on the Board of Trustees for Worcester Preparatory School and the Board of Directors for Atlantic General Hospital. Mr. Esham holds a Bachelor of Arts from Washington and Lee University and a Juris Doctor from University of Baltimore. Mr. Esham’s qualifications to serve on our Board include his legal expertise in real estate law and his prior bank board of director experience with Shore Bank during the period of 2012-2016 (which was acquired by Xenith Bank in 2016) and Peninsula Bank's Advisory Board during the period of 1996-2006. |

  16. Class I Directors

    | JOHN A. LAMON, III Age: 66 Director Since: 2021 Committees: Compensation Governance | Mr. Lamon joined the Company’s Board on November 1, 2021, as a result of the merger between the Company and Severn Bancorp, Inc. Prior to joining the Company’s board, Mr. Lamon served as a director of Severn Bancorp since 2009 and a director of Severn Savings Bank, FSB, since 2008. Mr. Lamon currently serves as the Director of Business Development for Ironmark, a leading marketing agency in Maryland. Prior to this position, Mr. Lamon was the President and Owner of John A. Lamon & Associates, a promotional marketing company, before selling the business to G&G Outfitters, Inc. Mr. Lamon received his Bachelor of Arts degree from the University of Maryland, College Park, where he was a two-time All American lacrosse player. Mr. Lamon has received the Willis Bilderback Volunteer Award and the Wille Gateau Youth Services Award. Mr. Lamon has served on various boards including, St. Mary’s School, The Annapolis Touchdown Club, St. Mary’s Royal Blue Club and the University of Maryland M Club. Mr. Lamon’s qualifications to serve on our Board include his business and marketing experience, which is important to the oversight of the Company’s financial reporting, and enterprise and operational risk management. | | FRANK E. MASON, III Age: 61 Director Since: 2011 Committees: Governance Board Risk Oversight Strategic Initiatives & Technology | Mr. Mason served as a director of the Company and The Talbot Bank of Easton, Maryland a wholly-owned bank subsidiary of the Company (“Talbot Bank”) since 2011 and subsequently became a director of Shore United Bank after the merger of Talbot Bank and CNB, a wholly-owned bank subsidiary of the Company (“CNB”) in 2016. Mr. Mason served as Chairman of the Board for the Company and Bank from 2017 through October 31, 2021. Mr. Mason is the President and Chief Executive Officer of JASCO Incorporated, a manufacturer and distributor of analytical instrumentation for the scientific research community, a position he has held since 2004. JASCO Incorporated, which is a subsidiary of JASCO Corporation located in Tokyo, Japan, operates throughout North and South America. Prior to becoming President and Chief Executive Officer, Mr. Mason served as JASCO Incorporated’s Chief Operations Officer from 1996 to 2004 and as its Sales Director for North America from 1987 to 1995. Mr. Mason has a Bachelor of Arts degree from the University of Maryland, College Park, and a Master of Business Administration from Johns Hopkins University. Mr. Mason’s qualifications to serve on the Board include his experience in leading a large corporation, his financial and operational knowledge. | | REBECCA MIDDLETON MCDONALD, CPA Age: 50 Director Since: 2023 Committees: Audit Board Risk Oversight Strategic Initiatives & Technology | Ms. McDonald was appointed as a director of the Company and the Bank in 2023 as a result of the merger between the Company and Community Financial. Prior to joining the Company’s Board, Ms. McDonald served as a director of Community Financial and Community Bank of the Chesapeake since 2020. She is a partner at Cherry Bekaert Advisory, LLC a national business advisory firm. She has 28 years of experience providing accounting advisory services and financial transformation support to both private and public companies. Ms. McDonald specializes in a range of services, such as outsourced and project based accounting, SEC reporting, audit and IPO readiness, internal control and process improvement analysis, and due diligence support for mergers and acquisitions. Ms. McDonald has also held various finance roles with a publicly traded company. Ms. McDonald is a member of the American Society of Certified Public Accountants. She serves as the Treasurer on the Board of Trustees of Commonwealth Academy. Ms. McDonald holds a Bachelor of Science from Elon University. Ms. McDonald’s qualifications to serve on the Board include her extensive audit, public accounting, and executive level experience. Ms. McDonald’s proficiencies provide the Board with a skill set critical to successfully operating the Company and Bank. |

  17. Class I Directors

    | MARY TODD PETERSON Age: 69 Director Since: 2023 Committees: Audit (Chair) Compensation Executive | | Ms. Peterson was appointed as a director of the Company and the Bank in 2023 as a result of the merger between the Company and Community Financial. Prior to joining the Company’s Board, Ms. Peterson served as a director of Community Financial and Community Bank of the Chesapeake since 2010. She retired in May 2018 as the senior advisor to the Chairman and CEO of ProAssurance Corporation supporting key strategic initiatives. In February 2016, she retired as the President and Chief Executive Officer of Medmarc Insurance Group and as a Director of Medmarc Casualty Insurance Company and its subsidiary Noetic Specialty Insurance Company, both of which are subsidiaries of ProAssurance. Ms. Peterson had been associated with Medmarc since 2001 where she also held the positions of Chief Financial Officer and Chief Operating Officer. From 1993 to 2001, Ms. Peterson was a Partner with Johnson Lambert & Co., a certified public accounting firm. Ms. Peterson also held positions with Acacia Life Insurance Company, Oxford Development Corporation and Ernst & Whinney (now Ernst & Young). Prior to her retirement from Medmarc, Ms. Peterson served as a member of the Property Casualty Insurers Association of America (“PCI”) Board of Governors, Chair of PCI’s Investment Committee and a member of PCI’s Executive and Finance Committees. In September 2020, Ms. Peterson joined the Board of Directors of ProAssurance American Mutual, A Risk Retention Group where she serves on the Executive and Investment Committees. Ms. Peterson is a member of the American Institute of Certified Public Accountants. Ms. Peterson’s qualifications to serve on the Board include her extensive executive-level experience in a mid-size company setting within the financial services industry combined with extensive experience in public accounting. Ms. Peterson’s financial and operational expertise within the insurance industry, including proficiencies in corporate governance and risk assessment, provide the Board with a skill set critical to successfully operating the Company and Bank. | | ESTHER A. STREETE Age: 48 Director Since: 2022 Committees: Audit Executive | Ms. Streete was appointed to serve as a director of both the Company and the Bank on August 1, 2022. Ms. Streete is a Principal at McNamee Hosea, a full-service Maryland business law firm. She has worked at McNamee Hosea since 2005. She is a Certified Public Accountant (CPA) and an attorney who specializes in tax, estate & business planning, business succession planning, estate administration, probate and trust administration. Ms. Streete has affiliations with the Maryland Association of Certified Public Accountants, Maryland State Bar Association, and Anne Arundel County Bar Association. Ms. Streete holds a Bachelor of Science from Frostburg State University, a Juris Doctor from the University of Maryland School of Law and a Master of Laws in Taxation from the University of Baltimore School of Law. Ms. Streete’s qualifications to serve on our Board include her experience as an attorney, certified public accountant, and her expertise in financial planning, estate and trust administration. | |

  18. Class II Directors

    Class II Directors

  19. Class II Directors

    | MICHAEL B. ADAMS Age: 57 Director Since: 2023 Committees: Executive Strategic Initiatives & Technology (Chair) | Mr. Adams was appointed as a director of the Company and the Bank in 2023 as a result of the merger between the Company and Community Financial. Prior to joining the Company’s board, Mr. Adams served as a director of Community Financial and Community Bank of the Chesapeake since 2021. He is the President of JON Properties, LLC., a full service commercial real estate company in Fredericksburg, Virginia. JON Properties has won numerous awards, particularly for its work on Historic Renovation and tax credit projects in the Fredericksburg, Virginia region. Mr. Adams founded JON Properties in 2006. It is located at 900 Princess Anne Street Fredericksburg, VA 22401. Prior to starting JON Properties, Mr. Adams worked at WEB Equipment, Inc., a dealer in rough terrain forklifts. Mr. Adams served as President of WEB Equipment, Inc. from 1995 to 2006. Mr. Adams serves, or has served, on numerous boards of community organizations. These include the Fredericksburg Rotary Club, the Cal Ripken, Sr. Foundation, the Fredericksburg Area Museum, the Central Virginia Housing Coalition, Loisann’s Hope House and the Germanna Community College Education Foundation. Mr. Adams is also a member of the Fredericksburg Builders Association, the National Association of Home Builders, the Fredericksburg Realtors Association and the National Realtors Association. Mr. Adams attended Prince George’s Community College and the University of Maryland where he studied business management. Mr. Adams holds a Class A General Contractors License and is a licensed real estate broker in the state of Virginia. Mr. Adams’ qualifications to serve on our Board include his management and strategic knowledge through his experience as founder and owner of a local business. His experience as a business owner adds valuable expertise regarding local issues and provides first-hand understanding of the needs of business owners in the environment in which the Bank operates. | | JAMES M. BURKE Age: 55 Director Since: 2023 | Mr. Burke was appointed President and CEO and director of the Company and the Bank on July 1, 2023 as a result of the merger between the Company and Community Financial. Prior to the merger, Mr. Burke served as the President and CEO and director of Community Financial and Community Bank of the Chesapeake. Mr. Burke has over 30 years of banking experience. He currently serves on the Board of directors of the Federal Home Loan Bank of Atlanta. Mr. Burke is the former Chairman of the Board of Directors of University of Maryland Charles Regional Medical Center, former Chairman of the Board of Directors for St. Mary’s Ryken High School, Trustee for Historic Sotterley and is active in other civic groups. Mr. Burke is a Maryland Bankers School graduate and holds a Bachelor of Arts from High Point University. He is also a graduate of the East Carolina Advanced School of Commercial Lending and attended the Harvard Business School Program on Negotiation. Mr. Burke’s qualifications to serve on our Board include his extensive experience in the banking industry that affords our Board valuable insight regarding the business and operations of the Bank and the Company. Mr. Burke’s strategic leadership abilities, financial acumen and knowledge of the Company’s and the Bank’s business position him well to serve as President and CEO and as a director. |

  20. Class II Directors

    | LOUIS P. JENKINS, JR. Age: 52 Director Since: 2023 Committees: Compensation (Chair) Executive Governance | Mr. Jenkins was appointed as a director of the Company and the Bank in 2023 as a result of the merger between the Company and Community Financial. Prior to joining the Company’s Board, Mr. Jenkins served as a director of Community Financial and Community Bank of the Chesapeake since 2000. He is the principal of Jenkins Law Firm, LLC, located in LaPlata, Maryland. Before entering private practice, Mr. Jenkins served as an Assistant State’s Attorney in Charles County, Maryland from 1997 to 1999. In addition to his private practice, Mr. Jenkins serves as Court Auditor for the Circuit Court for Charles County, Maryland and attorney for the Charles County Board of Elections. From 2017-2019, Mr. Jenkins served as a member of the Board of Directors of the University of Maryland Medical System. Mr. Jenkins has also served as a board member of several other public service organizations including the University of Maryland Charles Regional Medical Center, Southern Maryland Chapter of the American Red Cross, Charles County Chamber of Commerce and the Charles County Bar Association. Mr. Jenkins’ qualifications to serve on our Board include his experience as an attorney, which provides the Board with substantial knowledge regarding issues facing the Company and the Bank. In addition, Mr. Jenkins brings a critical perspective to the lending and governance function of the Company and the Bank. Mr. Jenkins’ experience in the public sector adds valuable expertise regarding local issues and provides first-hand understanding of the local political and business environment in which the Bank operates. | | DAVID S. JONES Age: 64 Director Since: 2021 Committees: Compensation Governance | Mr. Jones joined the Company’s Board on November 1, 2021, as a result of the merger between the Company and Severn Bancorp, Inc. Prior to joining the Company’s Board, Mr. Jones served as a director of Severn Bancorp since 2012 and a director of Severn Savings Bank, FSB, since 2011. Mr. Jones cofounded Southern Drywell, Inc., a septic system contractor in Annapolis and currently serves as the company’s President. Mr. Jones also cofounded Jones of Annapolis, Inc. a demolition and excavation contractor in Annapolis and currently serves as the company’s Secretary and Treasurer. Mr. Jones qualifications to serve on our Board include his many years of business experience, which is important to the oversight of the Company’s financial reporting, and enterprise and operational risk management. | | CLYDE V. KELLY, III Age: 70 Director Since: 2016 Committees: Compensation Executive Governance (Chair) | Mr. Kelly served as a director of CNB since 2005 and subsequently became a director of the Company and the Bank after the merger of CNB and Talbot Bank in 2016. Mr. Kelly has been the President and General Manager of Kelly Distributors, Inc Distributors since 1987, a company that distributes Anheuser-Busch InBev and craft brewery brands in Talbot, Queen Anne’s, Caroline, Dorchester and Kent counties of Maryland. Mr. Kelly’s qualifications to serve on our Board include his leadership of a large company, familiarity with an important market area in which we compete, and his experience on a bank board. | | DAVID W. MOORE Age: 59 Director Since: 2014 Committees: Compensation | Mr. Moore has been a director of the Company since 2014. He previously served as a director of The Felton Bank since 2001 and subsequently became a director of CNB after the merger of The Felton Bank and CNB in 2010. He became a director of the Bank after the merger of Talbot Bank and CNB in 2016. Mr. Moore has served as President and CEO of The Milford Housing Development Corporation (MHDC) since 2004 and President of East Coast Property Management since 2011. He received his associate degree in construction management from Delaware Technical and Community College in 1984 and his Bachelor of Science degree in business management in 1994. Mr. Moore’s qualifications to serve on our Board include his experience in banking in both Delaware and Maryland as well as his expertise in our key market areas. |

  21. Class II Directors

    | AUSTIN J. SLATER, JR. Age: 70 Director Since: 2023 | Mr. Slater was appointed as Lead Independent Director and Vice Chair of the Company and the Bank in 2023 as a result of the merger between the Company and Community Financial. Prior to joining the Company’s Board, Mr. Slater served as Chairman of the Board of Directors of Community Financial and Community Bank of the Chesapeake since 2020. Prior to becoming Chair, he served as a director since 2002. He is a retired executive from the electric energy industry. Mr. Slater formerly served on the Board of Directors of the Federal Reserve Bank of Richmond, Baltimore Branch, as Chairman of the Board of the Maryland Chamber of Commerce and Chairman of the Board of Trustees for the College of Southern Maryland. He currently serves on the Board of Governors for the Shepherd University and as Treasurer for the Shepherd University Foundation, as well as numerous other industry and civic organizations. Mr. Slater holds a Master of Business Administration in finance from the George Washington University and a Bachelor of Science in accounting from Shepherd University. Mr. Slater’s qualifications to serve on our Board include his extensive management level experience in a large company setting outside of the financial services industry. Mr. Slater’s financial acumen and operational experience allow him to understand the complexities of the Company and the Bank. His experience in a regulated industry has exposed Mr. Slater to many of the issues facing companies today, particularly regulated entities, making Mr. Slater a valued component of a well-rounded board. | | DAWN M. WILLEY Age: 61 Director Since: 2020 Committees: Audit Board Risk Oversight Strategic Initiatives & Technology | Mrs. Willey joined the Company as a director in December of 2020. Mrs. Willey was the founding CEO of Bridgeforce Inc., a trusted advisor to many of the largest lenders in the world. Mrs. Willey retired in 2013 and served as Board Chairperson through 2019. Mrs. Willey has also served on the Board of Katabat, a financial service SAS cloud computing company until its sale in 2020. Prior to launching an entrepreneurial career in 2000, Mrs. Willey held the position of Executive Vice President with MBNA, later purchased by Bank of America. Mrs. Willey’s qualifications to serve on our Board include a 16-year career with MBNA, where she was responsible for the oversight and implementation of a variety of operations including: portfolio risk strategies, investment evaluation and development of strategic business technology initiatives for collections, fraud, credit acquisition and portfolio risk management. |

  22. COMPENSATION OF NON-EMPLOYEE DIRECTORS

    COMPENSATION OF NON-EMPLOYEE DIRECTORS

  23. Director Compensation Table

    Director Compensation Table

  24. Director Compensation Table

    | Name | Fees earned or paid in cash ($)(1) | Fees earned or paid in restricted stock ($)(2) | Non-qualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | | Michael B. Adams(5) | 20,008 | 26,992 | - | 739 | 47,739 | | Blenda Armistead(9) | 14,625 | 11,254 | - | 525 | 26,404 | | R. Michael Clemmer, Jr. | 40,013 | 26,987 | - | 1,838 | 68,838 | | William E. Esham, III | 37,513 | 26,987 | - | - | 64,500 | | Alan J. Hyatt(6) | 50,013 | 26,987 | - | 150,741 (7) | 227,741 | | Louis P. Jenkins, Jr.(5) | 20,008 | 26,992 | - | 510 | 47,510 | | David S. Jones | 35,013 | 26,987 | - | 1,701 | 63,701 | | James A. Judge | 37,513 | 26,987 | - | 741 | 65,241 | | Clyde V. Kelly, III | 40,013 | 26,987 | - | 741 | 67,741 | | John A. Lamon | 35,013 | 26,987 | - | 741 | 62,741 | | Rebecca M. McDonald(5) | 17,508 | 26,992 | - | 510 | 45,010 | | David W. Moore | 37,513 | 26,987 | - | - | 64,500 | | Mary Todd Peterson(5) | 20,008 | 26,992 | - | 510 | 47,510 | | E. Lawrence Sanders, III(5) | 17,508 | 26,992 | 6,637 | 510 | 51,647 | | Austin J. Slater, Jr.(5) | 17,508 | 26,992 | - | 759 | 45,259 | | Joseph V. Stone, Jr.(5) | 17,508 | 26,992 | 29,269 | 510 | 74,279 | | Esther A. Streete | 37,513 | 26,987 | - | 139 | 64,639 | | Jeffrey E. Thompson(8) | 20,013 | 13,494 | - | 556 | 34,063 | | Konrad M. Wayson | 35,013 | 26,987 | - | 1,701 | 63,701 | | Dawn M. Willey | 35,013 | 26,987 | - | 1,701 | 63,701 |

  25. Director Compensation Table

    (1) Includes fees for which the director has elected to receive shares of our Common Stock in lieu of cash. The number of shares of stock received by each director in lieu of cash during 2023 was as follows: Mr. Mason 2,287 shares for $40,000; Mr. Clemmer 2,287 shares for $40,000; Ms. Willey 2,001 shares for $35,000; Mr. Wayson 2,001 shares for $35,000; Mr. Jones 2,001 shares for $35,000; and Mr. Adams 1,901 for $20,000. (2) Includes amounts earned for serving on the Board of the Company paid in the form of restricted stock. The amounts reflect the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718, “Accounting for Stock Compensation” (“ASC 718”). See Note 14 to the consolidated audited financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 regarding assumptions underlying valuation of equity awards. (3) Represents the portion of non-qualified deferred compensation earnings that was above the Internal Revenue Service long-term rate. Under the plan, interest is credited at a rate equal to the Company’s annualized return on equity or based on the gains or losses on the deemed investments. (4) Represents dividends paid on unvested restricted stock. (5) Messrs. Adams, Jenkins, Sanders, Slater, Stone, and Ms. McDonald and Ms. Peterson joined the Board effective July 1, 2023 upon completion of the Company’s merger with Community Financial. (6) The position of Chairman of the Board is paid a higher annual retainer than the remaining directors. (7) Represents compensation of $150,000 for consulting services performed by Mr. Hyatt pursuant to the terms of a consulting agreement between Mr. Hyatt and the Bank and $741 in dividends paid on unvested restricted stock. (8) Mr. Thompson resigned from the Board of Directors of Company effective July 1, 2023 upon the closing of the Company’s acquisition of Community Financial. (9) Ms. Armistead’s service on the Board of Directors concluded with the expiration of her term as a director on May 23, 2023.

  26. Company Director Compensation

    Company Director Compensation In 2023, our non-employee directors received an annual retainer of $35,000, paid quarterly. In addition, the Chairman of the Board receives an additional annual retainer fee of $15,000 and the Chairs for each of the remaining committees of the Board receive an additional annual retainer fee of $5,000. Directors have the option to receive their retainers in the form of cash or restricted stock issued pursuant to the 2016 Equity Plan. Retainers paid in stock have a one-year vesting period. Directors also received an equity retainer valued at $27,000 in 2023.

  27. Key Compensation Developments for 2023

    | Compensation Element | Committee Determination | Background | | Base Salary | All base salaries adjusted based on peer data. | In December 2022, the Legacy Committee determined that 2023 base salaries for Messrs. Beatty and Adkins and Ms. Stevens should be increased by 5.00%, 3.85% and 4.55%, respectively. As of the Merger Effective Date, Mr. Burke and Ms. Lombardi continued to receive the same base salaries they received while employed at Community Financial – no changes were made in connection with the merger. | | Short-Term Incentives | Discretionary Bonuses were awarded to Mr. Burke, Ms. Stevens and Ms. Lombardi. | The Legacy Committee did not establish formal performance metrics for the Company’s short-term incentive plan in 2023 in light of the merger between the Company and Community Financial. Rather, the Compensation Committee reviewed the Company’s overall financial performance at the end of the year and the individual performance of the NEOs and awarded discretionary bonuses to the NEOs. The Compensation Committee worked with Aon, the Company’s independent compensation consultant, during the first quarter of 2024 to establish a formal short-term incentive program for 2024 with robust performance metrics and incentive opportunities for the NEOs. | | Retention Agreements | The Legacy Committee approved Retention Agreements for Mr. Burke, Ms. Lombardi and Ms. Stevens. | In accordance with the terms of the merger agreement, the Company entered into retention agreements with the active NEOs which provided each active NEO with a RSU grant that vests ratably over a two year period. Further, each active NEO waived “good reason” for terminating employment under their existing employment agreements that arose from changes in their responsibilities or duties as a result of the merger. | | Assumption and Amendment of Employment Agreements | The Legacy Committee approved the assumption of the employment agreements by and between each of Mr. Burke and Ms. Lombardi and Community Financial as of the Merger Effective Date. | In accordance with the terms of the merger agreement, the Company assumed all of the rights and obligations under the employment agreements between each of Mr. Burke and Ms. Lombardi and Community Financial. The assumed agreements expire on the second anniversary of the Merger Effective Date at which time Mr. Burke and Ms. Lombardi will each enter into a change of control agreement with the Company. | | Consulting Agreement | The Legacy Committee approved consulting agreement with former President and CEO post-merger. | In accordance with the terms of the merger agreement, the Company entered into a six-month consulting agreement with Mr. Beatty. | | Say-on-Pay Advisory Vote | 88.36% voted in support of our legacy executive compensation program. | Company continued to receive support of its executive compensation program pre-merger. | | Benchmarking | The Legacy Committee made no changes to the peer group. Peer group was only used for base salary decisions for former NEOs. Compensation Committee approved new peer group for 2024 compensation decisions. | The Legacy Committee approved the criteria and the inclusion of companies considered peers at the start of 2023. Following the Merger Effective Date, the Company engaged Aon to review its entire executive incentive program, and significant changes to the peer group were made to reflect the Company’s increased size as a result of the merger. Data from the revised peer group was reviewed in establishing executive compensation programs for 2024. | | Recoupment Policy | The Compensation Committee approved a clawback policy for incentive compensation received on or after October 2, 2023. | Clawback policy satisfies the requirements of the Nasdaq Rules. |

  28. Governance Practices

    Governance Practices Our executive compensation program contains strong governance components that support our compensation philosophy and sound incentive compensation practices. •Active oversight by the Compensation Committee consisting solely of independent directors; •Assistance regularly provided to the Compensation Committee by an independent compensation consultant selected by the Compensation Committee; •Perquisites are limited; •No excise tax gross-ups, pursuant to Section 280G of the Internal Revenue Code, are contained in employment, change in control agreements or any other executive compensation arrangements; •Executives are discouraged from engaging in hedging transactions to offset the economic risk of owning our Common Stock; and •Executives are subject to robust share ownership guidelines.

  29. Compensation Consultant

    Compensation Consultant Aon, our current independent compensation consultant, works with the Compensation Committee to review our executive compensation program relative to our performance and similarly sized institutions. The independent consultant attends meetings and supports the Compensation Committee’s deliberations regarding executive compensation. While the Compensation Committee considers input from the independent consultant, the Compensation Committee’s decisions are the product of many factors and considerations. Management works with the independent consultant at the direction of the Compensation Committee to develop materials and analyses that are critical to the Compensation Committee’s evaluations and determinations. Such materials include data for use in determining an appropriate peer group, competitive market assessments and guidance on best practices and regulatory developments. During the first half of 2023 (prior to the Merger Effective Date), the Company engaged Hunt Financial Group to provide the Company with advice on benchmarking base salaries. The Legacy Committee considered Hunt Financial Group’s independence for the 2023 fiscal year and whether its work raised conflicts of interest under the Nasdaq Rules. Considering these factors, the Legacy Committee determined that the work performed by Hunt Financial Group did not create any conflict of interest and that Hunt Financial Group was independent of the Company’s management.

  30. Benchmarking and Peer Group Analysis

    Benchmarking and Peer Group Analysis During 2023 the Legacy Committee used the peer data provided from Hunt Financial Group, an independent compensation consulting firm, to evaluate base salaries for Mr. Beatty, Mr. Adkins and Ms. Stevens, the Company’s 2022 named executive officers. In the fourth quarter of 2023, the Compensation Committee engaged Aon to prepare a new peer group for 2024 executive and director compensation decisions. The peer group used by the Legacy Committee for establishing 2023 compensation is as follows:

  31. Benchmarking and Peer Group Analysis

    | Company | City | State | | Business First Bancshares, Inc. | Baton Rouge | LA | | Carter Bankshares, Inc | Martinsville | VA | | Summit Financial Group, Inc. | Moorefield | WV | | Southern First Bancshares, Inc. | Greenville | SC | | Primis Financial Corp. | McLean | VA | | First Community Bankshares, Inc. | Bluefield | VA | | Orrstown Financial Services, Inc. | Shippensburg | PA | | FVCBankcorp, Inc. | Fairfax | VA | | Capital Bancorp, Inc. | Rockville | MD | | Parke Bancorp, Inc. | Sewell | NJ |

  32. ELEMENTS OF COMPENSATION AND 2023 PAY DECISIONS

    | COMPENSATION ELEMENT | PURPOSE | | Base Salary | •Provide financial predictability and stability through fixed compensation; •Provide a salary that is market competitive; •Promote the retention of executives; and •Provide fixed compensation that reflects the scope, scale and complexity of the executive’s role. | | Short-Term Incentives | •Align management and shareholder interests; •Provide appropriate incentives to achieve our annual operating plan; •Provide market competitive cash compensation when targeted performance objectives are met; •Provide appropriate incentives to exceed targeted results. | | Long-Term Equity Incentives | •Align management and long-term shareholder interests; •Balance the short-term nature of other compensation elements with long-term retention of executive talent; •Focus our executives on the achievement of long-term strategies and results; •Create and sustain shareholder value; and •Support the growth and operational profitability of the Company. | | Employment and Retention Agreements | •Enable us to attract and retain talented executives; •Protect Company interests through appropriate post-employment restrictive covenants, including non-competition and non-solicitation; •Ensure management is able to analyze any potential change in control transaction objectively; and •Provide for continuity of management in the event of a change in control. | | Non-Qualified Retirement and Deferred Compensation Benefits | •Provide supplemental retirement benefits to certain executives to provide a competitive compensation package. | | Other Benefits | •Limit perquisites and use as competitively appropriate and necessary only to attract and retain executive talent. |

  33. 2023 Short-Term Incentive Program (“2023 STIP”)

    2023 Short-Term Incentive Program (“2023 STIP”) The short-term incentive program provides our NEOs with the opportunity to earn cash incentive compensation for achieving specific Company performance goals. The program uses a balanced scorecard approach by establishing threshold, target and maximum incentive opportunities tied to performance factors aligned with the annual strategic plan approved by the Board. The total amount of each NEO’s incentive award under the short-term incentive plan is determined by considering performance against a scorecard of financial performance metrics that ties to our annual business plan, along with the results of a holistic assessment of each executive. All of these components are part of a scorecard that is provided to each NEO and used by the Compensation Committee to determine annual short-term incentive awards. The Legacy Committee did not establish formal performance metrics for the Company’s short term incentive plan in 2023 in light of the merger between the Company and Community Financial. This decision was influenced by the timing of the merger six months into the performance year, as well as the complexity associated with estimating the year-end financial performance for an organization being combined mid-year from two organizations that were previously operating independently and similar in size to one another. These challenges were accentuated by uncertainty in the broader banking industry. Instead, the Compensation Committee reviewed its overall financial performance at the end of the year against a peer group of banks similar in size to the combined organization. Specifically, the company reviewed its performance on pre-tax pre-provision return on average assets, pre-tax pre-provision return on average equity, efficiency ratio, non-performing assets, and net interest margin for the last six months of 2023, corresponding to the performance period following the closing of the merger. After adjusting for one-time merger expenses, the Company’s performance was compared with both peer medians and peer 75th percentiles for each of these measures. The Compensation Committee evaluated the Company’s performance on these metrics as well as the individual performance of the named executive officers and subjectively determined the bonus amount that would be awarded to each of the Company’s NEOs.

  34. 2023 STIP Award Determination

    2023 STIP Award Determination Following the Compensation Committee’s review in February 2024, the Compensation Committee awarded incentive payouts between threshold and target performance as noted below. The short-term incentive program payouts were distributed in cash.

  35. 2023 STIP Award Determination

    | Executive | Target Incentive (% of Salary) | Target Incentive($) | Amount Awarded (% of Salary) | Amount Awarded($) | | James M. Burke | 30% | 160,680 | 21.00% | 112,476 | | Donna J. Stevens | 25% | 86,250 | 17.50% | 60,375 | | Christy Lombardi | 25% | 87,250 | 17.50% | 61,075 |

  36. 2023 Long Term Incentive Program

    2023 Long Term Incentive Program No equity awards were granted under the 2023 Long Term Incentive Program.

  37. Executive Agreements

    Executive Agreements We maintain employment, retention, change-in-control, and consulting agreements with certain NEOs. For a detailed description of these agreements, please see the narrative following the Summary Compensation Table regarding these agreements.

  38. Equity Compensation Grant and Award Practices

    Equity Compensation Grant and Award Practices As a general matter, the Compensation Committee's process is independent of any consideration of the timing of the release of material non-public information, including with respect to the determination of grant dates. Similarly, the Company has never timed the release of material non-public information with the purpose or intent of affecting the value of executive compensation. In general, the release of such information reflects long-established timetables for the disclosure of material non-public information such as earnings releases or, with respect to other events reportable under federal securities laws, the applicable requirements of such laws with respect to the timing of disclosure. The Company has not granted stock options since February 6, 2017.

  39. SUMMARY COMPENSATION TABLE

    SUMMARY COMPENSATION TABLE The following table sets forth for the last two fiscal years the total remuneration for services in all capacities awarded to, earned by, or paid to our Named Executive Officers (the Company’s former CEO and CFO, the Company’s current CEO and the two most highly compensated executive officers other than the CEO who were serving as executive officers as of December 31, 2023).

  40. SUMMARY COMPENSATION TABLE

    | Name and Principal Position | Year | Salary ($) | Bonus ($)(1)(2) | Stock Awards ($)(3) | Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($) (5) | Total ($) | | James M. Burke(6) President Chief Executive Officer | 2023 2022 | 247,200 - | 312,476 - | 155,008 - | 58,825 - | 25,511 - | 799,020 - | | Donna J. Stevens Chief Operating Officer | 2023 2022 | 345,000 330,000 | 105,941 141,685 | 45,570 - | 132,071 28,300 | 14,909 8,453 | 643,491 508,438 | | Christy Lombardi(7) Chief Human Resources Officer | 2023 2022 | 161,077 - | 104,939 - | 261,140 - | 37,843 - | 17,844 - | 582,843 - | | Lloyd L. Beatty, Jr.(8) Former President and Chief Executive Officer | 2023 2022 | 331,962 600,000 | – 264,130 | - - | 23,745 12,221 | 2,785,155 33,427 | 3,140,862 909,778 | | Vance Adkins(9) Former Chief Financial Officer | 2023 2022 | 142,269 260,000 | – – | - - | (6,006) - | 716,673 10,820 | 852,936 270,820 |

  41. SUMMARY COMPENSATION TABLE

    (1)Amounts reflect cash bonuses awarded to the NEOs under the 2023 Short-term Incentive Program. (2)Includes cash retention bonuses paid to Mr. Burke, Ms. Stevens and Ms. Lombardi in the amounts of $200,000, $45,566, and $43,864, respectively. (3)Represents the aggregate grant date fair value of the granting of 13,409, 3,942, and 22,590 restricted stock units (“RSUs”) to Mr. Burke, Ms. Stevens, and Ms. Lombardi respectively as retention awards related to the change in control. The RSUs were granted in July 2023 and will vest over two years beginning on the first anniversary date of the grant. (4)Represents the sum of above-market earnings under the Company’s deferred compensation plan and the aggregate change in the present value of accumulated benefits under the Supplemental Executive Retirement Plans (“SERPs”) from the prior completed fiscal year to the current fiscal year. Includes an aggregate change in the present value of accumulated benefits under the SERPs of $58,825, $132,071, $37,843, $23,745, and $(6,006) to Mr. Burke, Ms. Stevens, Ms. Lombardi, Mr. Beatty, and Mr. Adkins, respectively. (5)Details of the amounts reported in the “All Other Compensation” column for 2023 are provided in the table below. (6)In connection with the merger of the Company and Community Financial, James M. Burke, the former President and Chief Executive Officer of Community Financial, was appointed as President and Chief Executive Officer of the Company and the Bank effective as of July 1, 2023. This table only include amounts paid to Mr. Burke post-merger. (7)In connection with the merger of the Company and Community Financial, Christy Lombardi, the former Chief Operating Officer of Community Financial, was appointed as the Chief Human Resources Officer of the Company and the Bank effective as of July 1, 2023. This table only includes amounts paid to Ms. Lombardi post-merger. (8)Mr. Beatty, Jr. resigned from his position as President and Chief Executive Officer, in connection with the merger of the Company and Community Financial, effective as of July 1, 2023. (9)Mr. Adkins terminated his employment with the Company effective as of July 1, 2023.

  42. SUMMARY COMPENSATION TABLE

    | Item | Burke | Stevens | Lombardi | Beatty | Adkins | | Employer contribution to 401(k) Plan | $10,438 | $9,416 | $ - | $17,638 | $9,487 | | Imputed income under split-dollar life insurance arrangement | 639 | 1,615 | 343 | 4,748 | - | | Automobile | 3,465 | - | 10,218 | 30,063 | - | | Club dues | 2,654 | - | - | 5,498 | - | | Dividends paid on unvested restricted stock | 7,551 | 1,106 | 7,016 | - | - | | Group term life benefit | 764 | 2,772 | 267 | 1,360 | 210 | | Change-in-control severance payments | - | - | - | 2,673,449 | 684,130 | | Accrued paid leave payments | - | - | - | 52,399 | 22,846 |

  43. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

    OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END The following table provides information with respect to outstanding equity awards held by the NEOs at December 31, 2023.

  44. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

    | | | Stock Awards | | | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | Mr. Burke | 02/04/2021 02/04/2021 02/10/2022 02/10/2022 02/02/2023 03/06/2023 03/06/2023 05/01/2023 07/01/2023 | 950 (2) 2,848 (3) 1,192(4) 1,788 (5) 214(6) 4,692 (7) 4,695(8) 293(6) 13,409(9) | 13,538 40,584 16,986 25,479 3,050 66,861 66,904 4,175 191,078 | | Ms. Stevens | 07/01/2023 | 3,942(9) | 56,174 | | Ms. Lombardi | 02/04/2021 02/04/2021 02/10/2022 02/10/2022 03/06/2023 03/06/2023 07/01/2023 | 529(2) 1,586(3) 657(4) 985(5) 1,018(7) 1,020(8) 22,590(9) | 7,538 22,601 9,362 14,036 14,507 14,535 321,908 | | Mr. Beatty | - | - | - | | Mr. Adkins | - | - | - |

  45. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

    (1) Based upon the Company’s closing stock price of $14.25 per share at December 29, 2023. (2) Units vest in three equal installments beginning on February 4, 2022. (3) Performance shares for the 2021-2023 performance period converted to time-based restricted stock units at merger and vest in full on February 4, 2024. (4) Units vest in three equal installments beginning on February 10, 2023. (5) Performance shares for 2022-2024 performance period converted to time-based restricted stock units at merger and vests in full on February 10, 2025. (6) Restricted shares vest on the first anniversary of the grant date. (7) Units vest in three equal installments beginning on March 6, 2024. (8) Performance shares for the 2023-2026 performance period converted to time-based restricted stock units at merger and vests in full on March 6, 2027. (9) Units vest in two equal installments beginning on July 1, 2024.

  46. PAY-VERSUS-PERFORMANCE

    | Year | Summary Compensation Table Total for CEO ($)(1) Beatty | Compensation Actually Paid to CEO ($) Beatty | Summary Compensation Table Total for CEO ($)(1) Burke | Compensation Actually Paid to CEO ($) Burke | Average Summary Compensation Table Total for Non-CEO NEOs ($) | Average Compensation Actually Paid to Non-CEO NEOs ($) | Value of Initial Fixed $100 Investment based on Total Shareholder Return ($) | Net Income ($) | | 2023 | 3,140,861 | 3,140,570 | 799,020 | 823,190 | 693,090 | 1,413,810 | 82.09 | 11,228 | | 2022 | 909,778 | 864,130 | - | - | 445,382 | 431,495 | 100.40 | 31,177 | | 2021 | 1,105,740 | 816,533 | - | - | 467,578 | 416,411 | 120.10 | 15,367 |

  47. Relationship Between Compensation Actually Paid and Performance

    Relationship Between Compensation Actually Paid and Performance As we discussed above, we completed our merger with Community Financial on July 1, 2023, and continue on-going integration efforts. It is not uncommon for TSR to take time to stabilize following a period of merger activity, and this is exhibited in the decline in our TSR following the merger and integration with Community Financial. In addition, economic factors including inflation, elevated interest rates and bank failures in early 2023 have had a significant impact on financial institutions stock performance and consequently TSR’s over the last 13 months. The Company believes these external economic factors to be outside of the Company’s control, but also believe it is the responsibility of the Company’s Chief Executive Officer and named executive officers to navigate, adapt, and execute the Company’s strategic objectives despite these rapidly changing economic conditions. When assessing the compensation actually paid to our current Chief Executive Officer, Mr. Burke and other named executive officers, over the same period of 2023, the Company considers their performance to be satisfactory based on completing a successful merger and integration while restructuring the Company’s balance sheet to withstand recent economic challenges previously mentioned above. In addition, the Compensation Committee has established a compensation package for the newly appointed Chief Executive Officer and named executive officers it believes are commensurate with other peer financial institutions of a similar size and earnings potential. When assessing the compensation actually paid to our former Chief Executive Officers, Mr. Beatty, it is noted that his compensation in 2023 included his change-in-control severance payment which was directly tied to the merger with Community Financial and constituted 85% of total compensation actually paid. The remaining compensation paid in 2023 excluding the change-in-control severance payment, represented approximately six months of compensation and when compared to 2022 represented an increase of 7.5%, which aligns with the Company’s financial performance. The slight increases in compensation actually paid to our former Chief Executive Officer and other named executive officers between 2022 and 2021 period reflect the Company’s otherwise strong performance, including an increase in net income of over 100%. Observing the previous three years, compensation actually paid to each of our Chief Executive Officers and named executive officers has aligned with the Company’s financial performance and successful execution of merger-related activities.

  48. 1. ELECTION OF DIRECTORS

    1. ELECTION OF DIRECTORS FOR all nominees ☐ WITHHOLD AUTHORITY to vote ☐ *EXCEPTIONS ☐ listed below for all nominees listed below Alan J. Hyatt, Konrad M. Wayson, R. Michael Clemmer, Jr., E. Lawrence Sanders, III (INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the “Exceptions” box and write that nominee’s name in the space provided below). *Exceptions: ____________________________________________ 2. ADOPTION OF A NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS. FOR AGAINST ABSTAIN ☐ ☐ ☐ The undersigned acknowledges receipt from the Company prior to the execution of this vote authorization form of the Notice of Annual Meeting, a Proxy Statement for the Annual Meeting and the Company’s 2023 Annual Report on Form 10-K. PARTICIPANT’S NAME Dated: ____________________, 2024 ___________________________________ SIGNATURE OF PARTICIPANT Please complete this direction form and sign, date and return it by email to barbara.lucas@shoreunitedbank.com or by mail to Barbara Lucas, Shore United Bank, P. O. Box 38, Waldorf, MD 20604 by May 23, 2024.