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xbrli:pure
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 23, 2023
This Proxy Statement is being furnished to shareholders of ConnectOne Bancorp, Inc. (the “Company”) in connection with the solicitation by the Board of Directors of proxies to be used at the Annual Meeting of Shareholders to be held via webcast at 9:15 a.m. on May 23, 2023. We are holding our Annual Meeting via webcast. Because the Annual Meeting is virtual via live webcast, shareholders will not be able to attend the Annual Meeting in person but may participate by joining the live webcast. Please go to:
www.virtualshareholdermeeting.com/CNOB2023
for instructions on how to participate in the Annual Meeting. Any shareholder may participate and listen live to the webcast of the Annual Meeting over the Internet at such site. Shareholders of record as of April 3, 2023 may vote and submit questions either in advance of or while participating in the Annual Meeting via the Internet by using the control number included in the on the proxy statement or proxy card. The webcast starts at 9:15 a.m. We encourage you to access the meeting prior to the start time. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log-in page.
About the Annual Meeting
Why have I received these materials?
The accompanying proxy is solicited by the Board of Directors of ConnectOne Bancorp, Inc. (referred to throughout this Proxy Statement as the “Company” or “we”), the holding company for ConnectOne Bank, in connection with our Annual Meeting that will take place virtually on May 23, 2023. You are cordially invited to electronically participate in the Annual Meeting and are requested to vote on the proposals described in this Proxy Statement.
Who is entitled to vote at the Annual Meeting?
Holders of Common Stock as of the close of business on April 3, 2023, will be entitled to vote at the Annual Meeting. On April 3, 2023, there were outstanding and entitled to vote 39,094,630 shares of Common Stock, each of which is entitled to one vote with respect to each matter to be voted on at the Annual Meeting.
How do I vote my shares at the Annual Meeting?
If you are a “record” shareholder of Common Stock (that is, if you hold Common Stock in your own name as of April 3, 2023 on the Company’s stock records maintained by our transfer agent, Broadridge Financial Solutions, Inc.), you may vote by proxy or online at the Annual Meeting. To vote by proxy, you may use one of the following methods:
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Telephone voting, by dialing the toll-free number and following the instructions on your proxy card;
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Internet voting, by accessing the Internet at the web address stated on the proxy card and following the instructions; or
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Vote by mail, by completing and returning the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.
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If you hold your shares in “street name”, i.e., through a broker or other custodian, you must follow the voting instructions provided to you by your broker or custodian.
Can I change my vote after I return my proxy card?
Any shareholder of record has the power to revoke their proxy at any time before it is voted. You may revoke your proxy before it is voted at the Annual Meeting by:
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voting again by telephone or the Internet, or completing a new proxy card with a later date – your latest vote will be counted;
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filing with the Secretary of the Company written notice of such revocation; or
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participating in the virtual Annual Meeting and voting online during the meeting.
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What constitutes a quorum for purposes of the Annual Meeting?
The presence at the Annual Meeting online or by proxy of the holders of a majority of the voting power of all outstanding shares of Common Stock entitled to vote shall constitute a quorum for the transaction of business. Proxies marked as abstaining (including proxies containing broker non-votes) on any matter to be acted upon by shareholders will be treated as present at the meeting for purposes of determining a quorum but will not be counted as votes cast on such matters.
Why is it important to vote my shares?
If we do not have a quorum present at the Annual Meeting, we will need to adjourn the meeting to solicit additional proxies. This will cause additional expense and delay for the Company.
What vote is required to approve each item?
Pursuant to the New Jersey Business Corporation Act (“NJBCA”), directors are elected by affirmative vote of a plurality of the votes cast. Notwithstanding the foregoing, in accordance with the Company’s Bylaws, each of the Company’s directors has submitted an irrevocable resignation from the Board, which shall become effective in the event such director does not receive at least a majority of the votes cast in any uncontested election. In such an event, the director’s resignation will become effective at the earlier of (i) the selection of a replacement director by the Board of Directors, or (ii) 90 days after certification of such stockholder vote. Accordingly, in the event that a nominee for re-election to the Board receives a plurality of the votes cast, but not a majority, he or she shall be re-elected to the Board under the provisions of the NJBCA, but his or her service shall continue only until such resignation becomes effective. Therefore, as a practical matter, re-election to a new term on the Board requires the affirmative vote of a majority of the votes cast at the Annual Meeting.
The amendment to the 2017 Equity Compensation Plan, nonbinding resolution with respect to executive compensation, and the proposal for the ratification of the appointment of the independent registered public accountants, require the affirmative vote of a majority of the votes cast at the Annual Meeting by shares represented online or by proxy.
Summary of the Proposals
How does the Board recommend that I vote my shares?
Unless you give other instructions on your proxy card, the persons named as proxies on the card will vote in accordance with the recommendations of the Board of Directors. The Board’s recommendation is set forth together with the description of each item in this Proxy Statement. In summary, the Board recommends a vote:
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FOR the directors’ nominees to the Board of Directors;
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FOR the Amendment to the 2017 Equity Compensation Plan;
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FOR approval of the non-binding resolution with respect to executive compensation; and
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FOR ratification of the appointment of Crowe LLP as the Company’s independent registered public accountants for the fiscal year ending December 31, 2023.
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With respect to any other matters that properly come before the Annual Meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion in the best interests of the Company. On the date this Proxy Statement went to press, the Board of Directors had no knowledge of any business other than that described in this proxy statement that would be presented for consideration at the Annual Meeting.
Who will bear the expense of soliciting proxies?
The Company will bear the cost of soliciting proxies. In addition to the solicitation by mail, proxies may be solicited personally or by telephone, facsimile or electronic transmission by our employees. In addition, we have retained Laurel Hill Advisory Group, LLC at an estimated cost of $6,500 plus reimbursement of out-of-pocket expenses, including per call fees for each call made, to assist in the solicitation of proxies. We also have agreed to indemnify Laurel Hill Advisory Group, LLC against certain liabilities in connection with this proxy solicitation.
Compensation Committee Interlocks and Insider Participation
There are no compensation committee “interlocks,” which generally means that no executive officer of the Company or the Bank served as a director or member of the compensation committee of another entity, one of whose executive officers serves as a director or member of the Compensation Committee of the Company.
Board Leadership; Lead Independent Director
Frank Sorrentino III, the Company’s President and CEO, also serves as Chairman. The Board considered the fact that Mr. Sorrentino had served as Chairman, President and CEO of our predecessor company, believed that that structure had worked well for the predecessor company and noted the success that Mr. Sorrentino had in growing the predecessor company. The Board believes that the combination of these two roles at this time provides the benefit of more consistent communication and coordination throughout the organization. This, in turn, will result in a more effective and efficient implementation of corporate strategy and is important in unifying the Company’s strategy behind a single vision.
Our Board has also appointed Mr. Stephen T. Boswell, an independent director, to serve as Lead Independent Director of the Board. As Lead Independent Director, Mr. Boswell is charged with presiding over all Board meetings when the Chairman is not present and presides over meetings of the non-management directors held in executive session. The Lead Independent Director has the responsibility of meeting and consulting with the Chairman and Chief Executive Officer on Board and committee meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the Chairman and Chief Executive and advising him on the efficiency of the Board meetings, and facilitating teamwork and communication between the non-management directors and management.
Majority Vote Requirement
Although the NJBCA provides that elections to the Board of Directors are approved under a plurality voting standard, the Company’s has adopted a “majority voting” standard in uncontested elections in its bylaws. Pursuant thereto, each director has delivered to the Board an irrevocable resignation, which shall become effective in the event that, in an uncontested election, such director receives fewer “for” votes than “against” or “withhold” votes. Such resignation shall become effective upon (i) the selection of a replacement director, or (ii) 90 days after certification of such stockholder vote. The Board believes that this strategy best places ultimate authority of Board composition in the hands of the Company’s shareholders.
Risk Oversight
In General
Risk is an inherent part of the business of banking. Financial risks faced by the Bank include credit risk relating to its loans and interest rate risk as it pertains to its entire balance sheet. The Bank is also exposed to non-financial risks relating to its operations, personnel, and regulatory environment, as well as extraneous risks surrounding regional and global socioeconomic conditions. The Board of Directors oversees these risks through the adoption of policies and by delegating oversight to certain committees, such as the Audit and Risk Committee, which is chartered with the responsibility to oversee and manage the risk profile of the Bank, and through our Chief Risk Officer. This is accomplished through risk assessments, periodic committee meetings, and reporting from risk owners and control functions. Other committees focus on risks arising from specific Company activities, including the Loan and Asset/Liability Committee of the Bank. These committees exercise oversight by establishing a corporate environment that promotes timely and effective disclosure, fiscal accountability and compliance with all applicable laws and regulations.
Cyber security risks are overseen by the Bank’s IT/Technology Committee, which is a management committee consisting of the Chief Executive Officer, Bank President, Chief Financial Officer, Chief Operations Officer, Chief Risk Officer, Chief Compliance Officer, Chief Credit Officer, Information Technology Manager and the Technology Oversight manager. The purpose of this committee is to identify and assess current information technology threats and risks, including those related to the Company’s new technology projects and ongoing strategic initiatives. On a quarterly basis, the Chief Operations Officer updates the full board of directors on the activities undertaken by the IT/Technology Committee. The Company has also established a cyber security training program, which requires every employee and member of the board to undertake annual training. The Bank’s cyber security compliance program is audited by the Bank’s outsourced internal auditor. Finally, the Bank maintains insurance which may provide coverage for expenses and certain losses incurred in connection with a cyber security incident.
Hedging and Pledging Policy
The Company considers it inappropriate for any director or officer to enter into speculative transactions in the Company’s securities to attempt to separate the economic risk of holding the Company’s securities from the ownership of the securities. The Company’s insider trading policy therefore prohibits the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s securities. This prohibition also includes hedging or monetization transactions, such as forward sale contracts, in which the stockholder continues to own the underlying security without all the risks or rewards of ownership. In addition, the policy prohibits directors and executive officers from pledging Company securities, either as collateral for a loan or otherwise. However, outstanding pledges as of the time the policy was amended to prohibit pledging (November 23, 2021) were grandfathered and may remain in place. The prohibitions also do not apply to a broker-assisted cashless exercise of stock options granted as part of a Company incentive plan.
Environmental, Social, and Corporate Governance
The Company believes it is both socially important, and good business, to conduct its business in a manner that provides a return to its shareholders and contributes to the well-being of its customers, employees, and the communities it serves.
As part of its commitment to ESG matters, the Board amended the charter of the Board’s Nominating and Corporate Governance Committee to provide that Committee with oversight over the Company’s ESG planning and initiatives. In assigning oversight of the Company’s ESG matters to the Nominating and Corporate Governance Committee, the Board sought to ensure that the Board would have direct involvement and supervision of these matters.
Set forth below are some representative examples of the Company’s ESG efforts so far:
Environmental
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We seek to incorporate sustainability into our operations through the procurement of sustainable office supplies. As part of our procurement strategy, we purchase SFI certified copy paper and FSC certified paper supplies. We also use copiers and printers that are Energy Star certified and have an ink and toner recycling program.
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To reduce our energy usage, we have begun retrofitting our branches and offices with LED and other forms of low voltage lighting. As of December 31, 2022, we have retrofitted approximately 65% of our branch locations.
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Provided two charging stations for electric vehicles.
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Social
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We encourage employee volunteerism to support causes throughout the Bank’s footprint. In 2022, Bank employees donated almost 820 hours in volunteer work both through individual and Bank-organized activities.
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We encourage and support financial literacy programs, providing resources to approximately 30 free/reduced lunch schools within our markets. In addition, from 2021 into early 2023, the Bank sponsored financial literacy programs for 788 Union Township High School students covering over 1,992 hours of learning.
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We actively contribute to charitable causes in the communities we serve – during 2022 we contributed over $335,000 to over 150 different charitable organizations and schools.
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We maintain clear policies prohibiting discrimination in lending based on gender, race or national origin. Our antidiscrimination policies can be found on our website at https://ir.connectonebank.com/documents-notifications/govdocs/default.aspx.
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To provide greater access to our services, we provide digital, mobile and online banking services and continue to make investments in these areas to further enhance these services.
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Our Federal regulators have assigned us a Community Reinvestment Act rating of Satisfactory.
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People
The Company believes that creating a positive work environment for its employees is critical to our success and our ability to serve our customers and generate a return for our shareholders. We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion and transfer from within the organization. We have formalized our commitment to training, education and mentoring through our ConnectOne University program.
ConnectOne University houses our training, leadership development, continuing education and mentorship programs. Through ConnectOne University, employees:
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Receive and complete required job training related to their position with the Company, such as compliance training and position specific training. Classes include an ABA approved curriculum as well as other third party and Company proprietary courses;
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May take classes to attain job specific certifications to help with career development;
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May take continuing education classes related to other positions and operations at the Company;
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May take business related continuing education classes at partner community colleges and other institutions through a New Jersey State grant program;
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May participate in career mentoring programs in which employees meet with senior officers of the Company to discuss career development; and
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May participate in a tuition reimbursement program under which the Company will reimburse employees for up to $5,250 in tuition expense related to approved business-related course work at any school.
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During 2022, 236 employees participated in our leadership and mentoring programs within ConnectOne University.
Through ConnectOne University, we also sponsor two employees each year to attend the Stonier Graduate School of Banking. This is a competitive process requiring an employee to be nominated by the employee’s manager and then participate in a panel interview.
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We offer our employees a full benefits program, including health insurance, flexible spending accounts, a 401(k) plan with the Company matching employee contributions up to 5.0% of the employee’s compensation, and an employee discount program under which our employees get discounts at various retailers and service providers.
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We request employee feedback and concerns through our annual Employment Engagement Survey. The results of this survey are presented to our senior management group for the identification of action items to be implemented. During 2021, approximately 74% of our employees participated in the Engagement Survey, and in 2022 approximately 86% of our employees participated in the Engagement Survey.
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Diversity and Inclusion
The Company strongly believes that having a workforce and Board that is reflective of the communities it serves is an important way to provide value to its employees, customers, and shareholders. As part of this effort, the Company has taken several actions to encourage and promote diversity at the Bank:
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We provide Board oversight of Company policies related to social responsibility issues, including diversity and equal opportunity employment, through the Compensation Committee as well as the Nominating and Corporate Governance Committee through its oversight of ESG maters.
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We conduct an annual Employee Engagement Survey to evaluate Bank employees’ opinions on various topics, including diversity at the Bank.
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We have adopted policies affirming our commitment to equal opportunity and equal pay and prohibiting discrimination and harassment. These policies can be found on our website at https://ir.connectonebank.com/documents-notifications/govdocs/default.aspx.
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The Company recognizes that developing a diverse and inclusive workplace is an ongoing process that requires broad participation from all employee levels and strongly supports Board, management, and employee involvement for diversity and inclusion events and initiatives.
Corporate Governance
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As discussed above, our Nominating and Corporate Governance Committee of our Board of Directors has been appointed to oversee the Company’s ESG performance and initiatives.
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We maintain, through an independent third party, a whistleblower hotline that is available seven days a week, 24 hours a day, and that permits employees to anonymously report concerns and have policies prohibiting retaliation against any employee raising a good faith concern.
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We maintain a detailed code of ethics, which includes provisions on conflicts of interest, and which is available on our website at https://ir.connectonebank.com/documents-notifications/govdocs, as well as detailed policies prohibiting money laundering, bribery and other corrupt practices.
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Our Board takes an active role in our cybersecurity risk program, and we maintain a cybersecurity training program for our employees and members of our Board – See “Risk Oversight”.
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EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee (the “Committee”) and the Company are both committed to a pay-for-performance philosophy. This Compensation Discussion & Analysis (“CD&A”) provides information about the strategies and policies developed to ensure that executive compensation is strongly correlated with the Company’s overall performance and the individual performance of our executives.
Our Named Executive Officers (“NEOs”) for 2022 were:
Frank Sorrentino III
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Chairman, President, & Chief Executive Officer
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William S. Burns
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Senior Executive Vice President & Chief Financial Officer
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Elizabeth Magennis
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Bank President
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Christopher Ewing
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Executive Vice President & Chief Operations Officer
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Michael O’Malley
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Executive Vice President & Chief Risk Officer
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Executive Summary
Business Results
Fiscal year 2022 represented another successful year for the Company, as the economy continued its recovery from the COVID-19 pandemic but began to face substantial headwinds from increased inflation and actions taken by the Federal Reserve to slow inflation, including substantial increases in interest rates and reductions in the money supply, during the second half of the year.
Despite all the uncertainty in 2022, we achieved strong full-year results with reported net income available to common shareholders of $119.2 million. We achieved strong growth in our loan portfolio, and in shareholders’ equity and tangible book value per share, while continuing to maintain solid asset quality and regulatory capital ratios. During 2022, we accomplished the following:
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Strong financial operating performance:
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Diluted earnings per share were $3.01 for 2022, representing a return on tangible common equity of 14.48%, a return on average common equity of 11.46%, a return on assets of 1.36%, and PPNR (pre-provision net revenue) as a percent of average assets was 2.17%.
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For the full-year 2022, our efficiency ratio was 39.0%, in the top-tier of industry performance.
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Our net interest margin increased to 3.69% during 2022.
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Tangible book value per share increased by 7.9% to $21.71 at year-end 2022 from $20.12 at year-end 2021.
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Gross loans increased by 18.6% to $8.1 billion at year-end 2022 from $6.8 billion at year-end 2021.
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Asset quality remained solid. Our nonperforming assets ratio declined to 0.46% at year-end 2022 compared to 0.76% at year-end 2021.
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Our tangible common equity ratio at year-end exceeded 9%.
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2022 Compensation Decisions in Support of our Pay for Performance Philosophy
Our executive compensation program, practices and pay decisions are designed to be directly aligned with shareholders through rigorous stock ownership guidelines and equity based long-term incentives. As a result, our executive team is better rewarded when our stockholders see greater returns, and rewarded less when returns are not strong.
Our Compensation Approach
Our long-range mission is to produce value for our shareholders by providing outstanding service and responsiveness to the markets and customers we serve. These goals are reflected in the Company’s compensation programs for its executive officers by:
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Ensuring that our key NEOs maintain and hold a significant equity interest in the Company, thereby further aligning management interests with those of the shareholders, by making a significant portion of incentive compensation payable in Company stock and through robust stock ownership guidelines for our NEOs;
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Creating balanced incentives that do not encourage NEOs to expose the Company to inappropriate risks by providing excessive compensation that could lead to material loss;
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Providing a market competitive overall compensation package so that the Company may attract, retain and reward highly qualified, motivated and productive executives; and
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Rewarding individuals based on their responsibility and achievements within a framework that is internally equitable.
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Performance-Based Compensation
Pay-for-performance is a key objective of our executive compensation program. A significant portion of our compensation program focuses on performance-based pay that rewards our achievements on an annual basis as well as our ability to deliver long-term value to our stockholders. We have a balanced approach to total compensation that includes a mix of base/fixed pay and variable/performance-based pay, a proportion of cash and equity and a proportion of short- and long-term incentive compensation. For the fiscal year 2022, our compensation targets and pay mix (targeting market median) are show below and represent our goal to provide:
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Significant portion of target pay that is at-risk and based on performance (66% for CEO and 52% for other NEOs).
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Meaningful portion of pay that is denominated as equity (37% for CEO and 26% for other NEOs).
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Half of our equity share grants will vest only if predetermined performance goals are achieved.
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CEO Target Pay Mix
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Other NEOs Target Pay Mix (1)
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(1)
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Weighted Average of the Named Executive Officers other than the Chief Executive Officer
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Compensation Design Principles and Governance Best Practices
The design principles of our executive compensation programs are intended to protect and promote the interests of our stockholders. Below we summarize certain practices we have implemented to drive performance and those we have not implemented because we do not believe they would serve our stockholder’s long-term interests.
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Pay for Performance — We provide a significant portion of pay based on performance (short- and long-term incentives)
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Sound Risk Management — We discourage excessive risk taking and have designed our incentive plans with appropriate risk-mitigating features, as well as the ability of the Committee to negatively adjust payouts.
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Caps on Incentives — We subject both short- and long-term incentive payments to caps.
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Clawback — We have adopted a clawback policy requiring the return of incentive compensation in the event of a financial restatement.
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Stock Ownership Guidelines — We require our executives and directors to own and hold significant shares in our Company.
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Double-Trigger Change-in-Control (CIC) — CIC benefits pursuant to employment or change in control agreements are only paid upon a termination event following a CIC.
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Independence — The Committee engages an independent compensation consultant.
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Competitive Benchmarking — The Committee engages an independent consultant to benchmark our compensation practices regularly to ensure executive compensation is consistent with market and best practices.
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Vesting Requirements – Awards of restricted stock are made subject to vesting requirements, generally three years, to encourage retention of our high performing employees.
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o
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Tax Gross-Ups — We do not provide excise tax gross-ups on benefits or in change-in-control agreements.
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o
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Stock Option Repricing — Our equity plans do not permit repricing of stock options that are out-of-the-money.
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o
|
Excessive Perquisites — We do not permit perquisites other than those that are business-related.
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|
o
|
Dividends on Unvested Stock Awards— We do not pay dividends or dividend equivalents on unearned performance units or deferred stock units.
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o
|
Hedging/Pledging - Our insider trading policy prohibits the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s securities. This prohibition also includes hedging or monetization transactions, such as forward sale contracts, in which the stockholder continues to own the underlying security without all the risks or rewards of ownership. The policy also prohibits our directors and executive officers from pledging Company stock as collateral for a loan or otherwise (although pledges in effect on the date the policy was amended, November 23, 2021, to prohibit pledging were grandfathered and allowed to remain in place).
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Say on Pay/Say on Frequency
The Company solicited a shareholder advisory vote on executive compensation in 2022, which received approval of 97.6% of the shares voted. Our shareholders have annually provided an advisory vote on executive compensation, which our Compensation Committee reviews and considers each year. While the say on pay vote is a formal means of soliciting shareholder feedback, the Company welcomes the opportunity to engage with shareholders any time.
Executive Compensation Objectives and Policies
We use our executive compensation programs to align the interests of executive officers with our shareholders. Our programs are designed to attract, retain and motivate leadership to support our growth and sustain our competitive advantage. Our compensation opportunities are aligned with the competitive market with actual pay that is designed to vary dependent on performance. We utilize a balance of fixed and variable pay components, cash and equity, and short and long-term performance horizons to determine our pay. Our compensation program is designed to support our business strategies, align our pay with our performance and reinforce sound compensation governance to mitigate excessive risk taking. The table below gives an overview of the compensation components used in our program and matches each with one or more of the objectives described above.
Compensation Component
|
|
Purpose/Objective
|
Base Salary
|
● |
provides a competitive level of fixed income based on role, experience and individual performance; target market median
|
|
|
|
Annual Incentive Plan
|
● |
motivates and rewards executives for performance on key financial, operational and individual objectives in support of our annual business plan and broader corporate strategies
|
|
|
|
|
● |
rewards vary based on performance (higher performance will result in above market median pay; lower performance will result in below market median pay) |
|
|
|
Long-Term Incentive Plan
|
● |
aligns executives’ interests with those of shareholders through equity-based compensation
|
|
|
|
|
● |
rewards executives for long-term shareholder value creation |
|
|
|
|
● |
encourages retention through multiple year vesting |
|
|
|
|
● |
motivates and rewards executives for performance – vesting and value is tied to achievement of specific performance and/or stock price appreciation |
|
|
|
Other Benefits
|
● |
provides a base level of competitive benefits for executive talent
|
|
|
|
Employment Agreements/Severance & CIC Agreements
|
● |
provides employment security to key executives
|
|
|
● |
focuses executives on company performance and transactions that are in the best interests of shareholders, regardless of the impact such transactions may have on the executive’s employment |
2022 Executive Compensation Program and Pay Decisions:
Base Salary
The Compensation Committee reviews salaries each year with the goal to retain competitive positioning with the market as the Company continues to grow. The Committee considers the benchmark data provided by its consultant, performance, experience and any unique contributions of the role(s) as appropriate. The table below summarizes the salaries effective as of January 1, 2021 and January 1, 2022:
Executive
|
|
2021 Base Salary
|
|
|
2022 Base Salary
|
|
|
Increase
|
|
Frank Sorrentino
|
|
$ |
825,000 |
|
|
$ |
900,000 |
|
|
|
9.09 |
% |
William S. Burns
|
|
$ |
430,000 |
|
|
$ |
465,000 |
|
|
|
8.14 |
% |
Elizabeth Magennis
|
|
$ |
450,000 |
|
|
$ |
500,000 |
|
|
|
11.11 |
% |
Christopher Ewing
|
|
$ |
375,000 |
|
|
$ |
390,000 |
|
|
|
4.00 |
% |
Michael O'Malley
|
|
$ |
325,000 |
|
|
$ |
350,000 |
|
|
|
7.69 |
% |
In early 2023, based on the updated market benchmarking conducted by the Committee’s consultant, the Compensation Committee approved the following base salaries for 2023:
Executive
|
|
2023 Base Salary
|
|
|
Percent Increase from 2022
|
|
Frank Sorrentino
|
|
|
945,000 |
|
|
|
5.00 |
% |
William S. Burns
|
|
|
488,000 |
|
|
|
4.95 |
% |
Elizabeth Magennis
|
|
|
525,000 |
|
|
|
5.00 |
% |
Christopher Ewing
|
|
|
400,000 |
|
|
|
2.56 |
% |
Michael O'Malley
|
|
|
368,000 |
|
|
|
5.14 |
% |
Peer Group & Competitive Benchmarking
The Compensation Committee periodically conducts comprehensive benchmark reviews. As a result, the peer group analysis and competitive benchmarking conducted in November 2021 was used to assess and set 2022 compensation levels. Peer banks consisted of publicly traded Mid-Atlantic, Connecticut, Massachusetts, and Rhode Island bank holding companies with a total asset range of $4 billion to $20 billion, that positioned the Company appropriately versus assets of the peers at the time of selection. Below is a list of the 2022 peer group companies.
2022 Peer Group
|
|
Berkshire Hills Bancorp
|
Independent Bank Corp.
|
Brookline Bancorp
|
Lakeland Bancorp
|
Cambridge Bancorp
|
OceanFirst Financial
|
Community Bank System
|
Peapack-Gladstone Financial
|
Customers Bancorp
|
Provident Financial Services
|
Dime Community Bancshares
|
Sandy Spring Bancorp
|
Eagle Bancorp
|
The Bancorp
|
Flushing Financial
|
Univest Financial
|
HarborOne Bancorp
|
Washington Trust Bancorp
|
Annual Incentive
An important element of our performance-based pay program is our Executive Annual Incentive Plan, which provides cash incentives based on attaining pre-established goals. Each participant has a target incentive opportunity expressed as a percentage of base salary, although actual payouts can range from a 50% payout at threshold performance to 150% of target for stretch performance, with no payout below threshold. The 2022 incentive targets, which were increased up to 10% of salary from 2021, based on market data, are summarized below.
|
|
Target Incentive Opportunity
|
|
|
|
(+/- 50% for each performance goal for
|
|
Executive
|
|
threshold, target and stretch)
|
|
Frank Sorrentino III
|
|
|
85 |
% |
William S. Burns
|
|
|
60 |
|
Elizabeth Magennis
|
|
|
60 |
|
Christopher Ewing
|
|
|
50 |
|
Michael O’Malley
|
|
|
35 |
|
The Compensation Committee establishes performance measures on an annual basis that are tied specifically to the Company’s financial performance (return on average assets, operating efficiency ratio and tangible book value) and individual executive performance. These metrics were selected by the Compensation Committee to reflect our profitability, strategic priorities and shareholder value. The weights and performance goals of these factors are summarized in the following table:
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Stretch
|
|
Performance Measure
|
|
Weight
|
|
|
(50%) |
|
|
(100%) |
|
|
(150%) |
|
Core Return on Assets (ROA)
|
|
|
25 |
%
|
|
|
1.00 |
%
|
|
|
1.20 |
%
|
|
|
1.40 |
%
|
Operating Efficiency Ratio (1)
|
|
|
25 |
%
|
|
|
44.0 |
%
|
|
|
42.0 |
%
|
|
|
40.0 |
%
|
Tangible Book Value Per Share
|
|
|
25 |
%
|
|
$ |
19.75 |
|
|
$ |
20.5 |
|
|
$ |
21.25 |
|
Individual Strategic Performance
|
|
|
25 |
%
|
|
|
|
|
|
Varies
|
|
|
|
|
|
(1)The Operating Efficiency Ratio is calculated as total noninterest expenses, excluding amortization of intangibles, foreclose property expense and other non-operating expenses, divided by the sum of (i) net interest income, on a fully taxable equivalent basis and (ii) noninterest income, excluding securities gains/losses and other nonrecurring items.
At the end of the year, the Compensation Committee determined a payout percentage based on an assessment of the Company’s three quantitative financial measures as well as an assessment of each executive’s performance and contribution toward strategic goals. The corporate results were calculated as follows:
Performance Measure
|
|
2022
Performance
|
|
Result
|
|
Payout Result
|
|
Core Return on Assets (ROA)
|
|
|
1.47 |
% |
Above Stretch
|
|
150% |
|
Operating Efficiency Ratio
|
|
|
39.0 |
% |
Above Stretch
|
|
150% |
|
Tangible Book Value Per Share
|
|
$ |
21.71 |
|
Above Stretch
|
|
150% |
|
Individual Strategic Performance
|
|
|
|
|
(See Next Paragraph)
|
|
100% |
- |
150% |
|
In determining the performance on the individual portion of the annual incentive, the Committee considered its assessment of the Chief Executive Officer’s performance and the Chief Executive Officer’s evaluation of the Named Executive Officers’ performance. In light of strong performance on operational, strategic, financial shareholder metrics, and in consideration of the significant individual and collective achievements of the executive team during 2022, the Committee approved payouts of 100% to 150% of target on the individual performance portion for all Named Executive Officers. The table below summarizes some of the key accomplishments considered by the Committee in determining the individual component.
Named Executive Officers
|
|
Select 2022 Individual Results
|
Frank Sorrentino III
|
|
● Managed the Executive Team to provide the leadership required to accomplish the stated goals of Company
● Ensured that the Board was well positioned, in terms of information, updates and guidance to exercise its oversight of the Company’s strategic direction
● Led Company’s continuing technology development and innovation initiatives to further position the Company as a technology forward partner
● Active engagement with all stakeholders including Institutional Investors, Management, Community and Digital users
● Served a critical role as the public face of the Company for client development
● Provided active engagement with potential M&A partners
● Provided strategic advice to all Board Committees on all topics affecting the Company
● Led the Company to one of its best growth years based on metrics, size and capability
|
|
|
|
William S. Burns
|
|
● Managed capital, liquidity, loan and deposit pricing, wholesale funding, and securities portfolio to produce top tier financial performance in return on assets and equity, operating revenue, net interest margin, and tangible book value growth
● Efficiency ratio remained below 40%, reflecting corporate-wide oversight, guidance, and operational discipline
● Led the financially disciplined analysis and review of several potential M&A transactions
● Streamlined and automated procedures within the Finance Division, resulting in strengthened controls and efficiency, while setting a “gold standard” for the entire organization
● Provided guidance and support to the Board of Directors, enhancing its oversight of the Bank during a complex financial and economic operating environment
|
Elizabeth Magennis
|
|
● Led the Bank’s organic loan and deposit growth of 18.6% and 16.2%, respectively, over the prior year.
● Managed an approximately 25% increase in full-time employees, capitalizing on market disruption generated by M&A.
● Oversaw geographic expansion into South Florida and Eastern Long Island
● Enhanced and expanded corporate-wide education and training programs, leading to greater employee productivity and lower turnover
|
|
|
|
Christopher Ewing
|
|
● Continue to reduce Core Operating costs as we continue to grow. Four-year trend of Core costs has been reduced by 33%, while assets have grown 60%
● Launched Internal Data Lake for better insights into data, more efficient data retrieval, as well as improved information management and reporting.
● Established a new AWS Development Cloud Environment that included enhanced secure connectivity and integration with our present Azure Cloud and Third-Party providers Cloud environments.
● Redesigned the banks current SD-WAN network for a faster, cutting-edge implementation with increased redundancy, enhanced security monitoring to 24/7/365 solutions and near 100% uptime.
● Enhanced our multi-level approach related to Cybersecurity past just increased technical monitoring to include increased IT Governance initiatives as well as employee and Client education.
|
Michael O’Malley
|
|
● As the Bank’s first Chief Risk Officer, implemented, enhanced and formalized risk management structure for the organization
● Revamped committees at both the Management and Board levels to enhance oversight and management of the Bank's risk profile.
● Enhanced enterprise wide risk governance documentation and practices to provide greater transparency to Executive Management and Board Committees.
● Developed and rolled out a program to enhance the identification, communication and mitigation of risks inherent to new products and services.
● Provided effective challenge over the lifecycle of several initiatives with unique risk profiles, and supported the development of right-sized control environments around them.
|
Executive
|
|
2022 Target Annual
Incentive Award
|
|
2022 Actual Annual
Incentive Award
|
Frank Sorrentino III
|
|
$765,000
|
|
$1,147,500
|
William S. Burns
|
|
279,000
|
|
418,500
|
Elizabeth Magennis
|
|
300,000
|
|
450,000
|
Christopher Ewing
|
|
195,000
|
|
268,125
|
Michael O’Malley
|
|
122,500
|
|
183,750
|
Long-Term Incentives – Equity-Based Awards
The Company’s long-term incentive plan (“LTIP”) is designed to be performance-based, align executives with shareholder interest and promote the long-term success of the Company. In March 2022, the Committee approved a target long-term incentive award (split evenly between performance shares and time vested deferred stock).
2022 LTIP Mix–All NEOs
![cnob20230406_def14aimg016.jpg](https://content.edgar-online.com/edgar_conv_img/2023/04/13/0001437749-23-010170_cnob20230406_def14aimg016.jpg)
Time-vested deferred stock unit (DSU) awards have a target opportunity but can be granted based on a look back on performance based on the Compensation Committee’s assessment of business environment, affordability, and corporate and individual performance. The value of awards granted may vary from 0% – 150% of target for that component, based on the Committee assessment. Once granted, deferred stock vests ratably over a three-year period, and is subject to forfeiture if the grantee leaves service prior to the vesting date.
Performance-based restricted shares (Performance shares) are granted at target and earned based on our future three-year performance for the period January 1, 2022 through December 31, 2024. The potential number of shares that can vest following the three-year performance period range from 0% to 150% of the target levels depending on our Core Return on Average Assets (Core ROA) performance relative to an industry index. Core ROA was determined by the Compensation Committee to be an effective indicator of the profitability of the Company. Strong Core ROA, over time, particularly relative to industry competitors, enhances the Company’s performance and aligns with shareholder value. As used herein, “Core ROA” is defined by S&P Capital IQ is net income, excluding the after-tax effect of realized gains/losses on securities, nonrecurring items and amortization of intangibles and goodwill divided by average assets
The Industry Index allows for relative comparison of the Company’s performance to the performance of other banks of similar size/region during the same three-year performance period. The Industry Index is objectively determined and consists of banks in the Mid-Atlantic and Northeast Region with total assets between $4.0 billion and $20.0 billion, traded on the NASDAQ or NYSE exchanges.
Performance shares vest after three years based on the Company’s Core ROA performance relative to the Industry Index banks in accordance with the payout scale below:
CNOB Ranking vs. Industry
|
|
% of Performance Units Earned
|
Index
|
|
(2022 – 2024)
|
75th percentile and above
|
|
|
150
|
%
|
|
50th percentile
|
|
|
100
|
%
|
|
30th percentile
|
|
|
50
|
%
|
|
Below 30th percentile
|
|
|
0
|
%
|
|
Below is a summary of the 2022 grants.
Performance shares were issued in March 2022 at target, since vesting is dependent upon actual performance during the three-year period commencing January 1, 2022 and ending December 31, 2024.
Deferred Stock Units were granted in March 2022 based on the Compensation Committee’s consideration of 2021 Company and Individual performance. Considerations in determining the award of restricted stock units included continued strong profitability and low operating efficiency ratio, and individual performance contributions that collectively resulted in a strong market positioning for the Company going forward. Based on these assessments, the Committee approved grants at 150% of target.
|
|
Performance Units
|
|
|
Deferred Stock Units
|
|
|
Total
|
|
|
|
Target # Shares
|
|
|
Grant Value
|
|
|
# Shares
|
|
|
Grant Value
|
|
|
Grant Value
|
|
Frank Sorrentino III
|
|
|
15,092 |
|
|
$ |
495,018 |
|
|
|
22,637 |
|
|
$ |
742,494 |
|
|
$ |
1,237,512 |
|
William S. Burns
|
|
|
4,253 |
|
|
|
139,498 |
|
|
|
6,380 |
|
|
|
209,264 |
|
|
|
348,762 |
|
Elizabeth Magennis
|
|
|
4,573 |
|
|
|
149,994 |
|
|
|
6,860 |
|
|
|
225,008 |
|
|
|
375,002 |
|
Christopher Ewing
|
|
|
3,567 |
|
|
|
116,998 |
|
|
|
5,351 |
|
|
|
175,513 |
|
|
|
292,511 |
|
Michael O'Malley
|
|
|
1,867 |
|
|
|
61,237 |
|
|
|
2,801 |
|
|
|
91,873 |
|
|
|
153,110 |
|
By policy, we do not pay current dividends or dividend equivalents on unearned performance units or deferred stock units.
2020 – 2022 Performance Share Vesting
Performance shares granted in the first quarter of 2020 were designed to vest between 0% to 150% of target based on the Company’s relative core return on assets compared to an objectively determined industry index (i.e., U.S. bank holding companies headquartered in the Northeast and Mid-Atlantic regions with total assets between $2.0 billion and $11.0 billion as of year-end 2018). Based on data reported by S&P Global for the period January 1, 2020 through December 31, 2022, the Company’s actual core return on assets of 1.44% ranked at the 94th percentile (above the 75th percentile payout level) resulting in the vesting of 150% of the target performance shares.
Benefits and Other Compensation
Retirement Benefits and Perquisites
One of the goals of the Company’s compensation program is to provide limited retirement benefits to our NEOs as an additional retention tool. The Company therefore entered into Supplemental Executive Retirement Plans with Frank Sorrentino III, William S. Burns, Elizabeth Magennis, and Christopher Ewing, and supplemented those plans in 2021 Supplemental Executive Retirement Plans for each of Frank Sorrentino III, William S. Burns, and Elizabeth Magennis. The benefits under each plan differ based upon a number of factors, including, among others, the participant’s age, the reason for any separation from service, and whether the participant has met the vesting requirements set forth in the plan at the time of any payment triggering event. In addition, Executives participate in the ConnectOne Bank 401(k) Retirement Plan, which is offered to all Bank employees. As stated in the Executive Compensation Objectives and Policies section, the Bank does not place emphasis on perquisites for NEOs, although a car allowance is provided to this group to offset any and all automobile expenses (mileage, tolls, insurance, gas) incurred as part of their job duties.
Employment Agreements
The Company is party to employment agreements with several executives. The following is a summary of those agreements.
Mr. Sorrentino’s Employment Agreement
The employment agreement with Mr. Sorrentino has an initial three-year term, and will automatically renew for one additional year unless any party provides written notice of its intention not to renew. Under the agreement, Mr. Sorrentino will receive an annual base salary of at least $735,000, subject to an increase as determined by the Board. He will also be eligible to participate in the Company’s incentive plans and other benefit plans for executive officers. Under the agreement, the Company or Bank will reimburse Mr. Sorrentino for his reasonable business expenses, and provide him with a $1,250 monthly car allowance. In the event that Mr. Sorrentino’s employment is terminated without “cause” or he resigns for “good cause”, as such terms are defined in the employment agreement, he is entitled to receive a lump sum cash payment equal to two and a half (2.5) times the sum of his current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Mr. Sorrentino will receive: (i) a lump sum cash payment equal to three (3) times the sum of Mr. Sorrentino’s current base salary and target cash bonus; (ii) a prorated bonus for the year of termination based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid, and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended.
Mr. Burns’ Employment Agreement
The employment agreement with Mr. Burns has an initial three-year term, and will automatically renew for one additional year unless any party provides written notice of its intention not to renew. Under the agreement, Mr. Burns will receive an annual base salary of at least $381,000, subject to an increase as determined by the Board. He will also be eligible to participate in the Company’s incentive plans and other benefit plans for executive officers. Under the agreement, the Company or Bank will reimburse Mr. Burns for his reasonable business expenses, and provide him with a $750 monthly car allowance. In the event that Mr. Burns’ employment is terminated without “cause” or he resigns for “good cause”, as such terms are defined in the employment agreement, he is entitled to receive a lump sum cash payment equal to two and a half (2.5) times the sum of his current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Mr. Burns will receive: (i) a lump sum cash payment equal to three (3) times the sum of Mr. Burns’ current base salary and target cash bonus; (ii) a prorated bonus for the year of termination, based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended.
Ms. Magennis’ Employment Agreement
The employment agreement with Ms. Magennis has an initial three-year term, and will automatically renew for one additional year unless any party provides written notice of its intention not to renew. Under the agreement, Ms. Magennis will receive an annual base salary of at least $352,000, subject to an increase as determined by the Board. She will also be eligible to participate in the Company’s incentive plans and other benefit plans for executive officers. Under the agreement, the Company or Bank will reimburse Ms. Magennis for her reasonable business expenses, and provide her with a $750 monthly car allowance. In the event that Ms. Magennis’ employment is terminated without “cause” or she resigns for “good cause”, as such terms are defined in the employment agreement, she is entitled to receive a lump sum cash payment equal to one and a half (1.5) times the sum of her current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Ms. Magennis will receive: (i) a lump sum cash payment equal to two (2) times the sum of Ms. Magennis’ current base salary and target cash bonus; (ii) a prorated bonus for the year of termination, based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended.
Mr. Ewing’s Employment Agreement
The employment agreement with Mr. Ewing has an initial three-year term, and will automatically renew for one additional year unless any party provides written notice of its intention not to renew. Under the agreement, Mr. Ewing will receive an annual base salary of at least $310,000, subject to increase as determined by the Board. He will also be eligible to participate in the Company’s incentive plans and other benefit plans for executive officers. Under the agreement, the Company or Bank will reimburse Mr. Ewing for his reasonable business expenses, and provide him with a $750 monthly car allowance. In the event that Mr. Ewing’s employment is terminated without “cause” or he resigns for “good cause”, as such terms are defined in the employment agreement, he is entitled to receive a lump sum cash payment equal to three-fourths (0.75) times the sum of his current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Mr. Ewing will receive: (i) a lump sum cash payment equal to one (1) times the sum of Mr. Ewing’s current base salary and target cash bonus; (ii) a prorated bonus for the year of termination based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended.
Mr. O’Malley’s Employment Agreement
The employment agreement with Mr. O’Malley has an initial three-year term, and will automatically renew for one additional year unless any party provides written notice of its intention not to renew. Under the agreement, Mr. O’Malley will receive an annual base salary of at least $325,000, subject to increase as determined by the Board. He will also be eligible to participate in the Company’s incentive plans and other benefit plans for executive officers. Under the agreement, the Company or Bank will reimburse Mr. O’Malley for his reasonable business expenses, and provide him with a $750 monthly car allowance. In the event that Mr. O’Malley’s employment is terminated without “cause” or he resigns for “good cause”, as such terms are defined in the employment agreement, he is entitled to receive a lump sum cash payment equal to three-fourths (0.75) times the sum of his current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Mr. O’Malley will receive: (i) a lump sum cash payment equal to one (1) times the sum of Mr. O’Malley’s current base salary and target cash bonus; (ii) a prorated bonus for the year of termination based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended.
Roles & Responsibilities
Compensation Committee
The Compensation Committee of the Board of Directors is responsible for discharging the Board’s duties in executive compensation matters and for administering the Company’s incentive and equity-based plans. This includes oversight of the total compensation programs for the Company’s CEO and other executive officers, including all Named Executive Officers. The Committee is comprised solely of independent directors. The Committee receives input and data from Finance and Human Resources functions as well as outside consultants and advisors to provide external reference and perspective.
The Committee reviews all compensation components for the Company’s Chief Executive Officer and other executive officers, including base salary, annual incentive, long-term incentives/equity and other benefits and perquisites. The Committee reviews the Chief Executive Officer’s performance annually and makes decisions regarding the Named Executive Officers’ compensation, including base salary, incentives and equity grants based on this review. The Compensation Committee reviews its decisions with the full Board of Directors.
The Committee has the sole authority and resources to obtain advice and assistance from internal or external legal, human resources, accounting or other advisors, or consultants as it deems desirable or appropriate. The Committee has direct access to outside advisors and consultants throughout the year as they relate to executive compensation. The Committee has direct access to and meets periodically with the compensation consultant independently of management.
Independent Compensation Consultant
The Compensation Committee retains Meridian Compensation Partners LLC (“Meridian”) as its compensation consultant. Meridian reports directly to the Committee and performs no other work for the Company. The Consultant carries out its responsibilities to the Committee as requested by the Committee. The Committee has reviewed and concluded that Meridian’s consultation services comply with the standards adopted by the SEC and by NASDAQ with respect to compensation advisor independence and conflicts of interest.
Management
Although the Committee makes independent determinations on all matters related to compensation of the Named Executive Officers, certain members of management may be requested to attend or provide input to the Committee. Input may be sought from the Chief Executive Officer, Chief Financial Officer, or others to ensure the Committee has the information and perspective it needs to carry out its duties.
In particular, the Committee seeks input from the Chief Executive Officer on matters relating to strategic objectives, Company performance goals and input on his assessment of the Named Executive Officers, including contribution and individual performance of each of his direct reports. The Chief Executive Officer and the Chief Financial Officer often assist the Committee on matters of design, administration and operation of the Company’s compensation programs.
Although executives may provide insight, suggestions or recommendations regarding executive compensation, they are not present during the Compensation Committee’s deliberations or vote. Only Compensation Committee members vote on decisions regarding executive compensation. The Committee regularly meets in executive session without management present. While the Chief Executive Officer makes recommendations on other Named Executive Officers, the Committee is ultimately responsible for approving compensation for all Named Executive Officers. The Chief Executive Officer’s compensation is discussed in executive session without members of management, including the Chief Executive Officer, present.
Additional Information about Our Compensation Practices
As a matter of sound governance, we follow certain practices with respect to our compensation program. We regularly review and evaluate our compensation practices in light of regulatory developments, market standards and other considerations.
Anti-Hedging/Pledging Policy
Our insider trading policy prohibits the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s securities. This prohibition also includes hedging or monetization transactions, such as forward sale contracts, in which the stockholder continues to own the underlying security without all the risks or rewards of ownership. The policy also prohibits directors and executive officers from pledging the Company’s securities as collateral for a loan or otherwise (although pledges outstanding as of the date the policy was amended to prohibit pledging (November 23, 2021) are allowed to remain in effect).
Policy on Incentive Compensation Clawback
The Company has a clawback policy requiring the return of incentive compensation in the event of a financial restatement. Specifically, if the Company restates its financial statements, then, to the fullest extent permitted by law, the Company shall require each current or former executive officer, to reimburse such compensation that would have been in excess of that which would have been paid based to him or her upon the financial statements as so restated.
Stock Ownership Guidelines
The Compensation Committee has a stock ownership policy that requires officers with the title Executive Vice President and above, together with members of the Board, to own a significant amount of the Company’s stock. Specific guidelines are:
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Six (6) times the then annual base salary for the Chief Executive Officer
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Three (3) times the then annual base salary for the Bank President and the Senior Executive Vice President, Chief Financial Officer
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Two (2) times the then annual base salary for other Executive Vice Presidents
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Directors, other than the CEO and Bank President, are expected to achieve ownership equal to five (5) times the sum of (i) the then-current annual cash retainer and (ii) the then-current value of the annual equity award.
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The period to achieve compliance is five (5) years from the day the individual becomes subject to the policy. The Compensation Committee monitors ownership levels and compliance on an annual basis. Below is a summary of shares that qualify for the ownership requirements described above (unexercised stock options and unvested performance shares are excluded):
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Beneficially owned shares that the individual owns or has voting power over, including the power to vote (including restricted shares), or to direct the voting; and/or, investment power including the power to dispose or to direct the disposition.
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Shares owned by an individual in the Company’s benefit plans (e.g., 401(k)).
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The Compensation Committee evaluates compliance with our stock ownership policy annually, and has determined that at year end 2022, all of our executive officers were in compliance.
Risk Assessment Review
The Committee reviews the structure and components of our compensation arrangements, the material potential sources of risk in our business lines and compensation arrangements, and various policies and practices of the Company that mitigate this risk. Within this framework, the Committee discusses the parameters of acceptable and excessive risk-taking and the general business goals and concerns of the Company. In particular, the Committee focuses on the risks associated with the design of each plan, the mitigation factors that exist for each plan, additional factors that could be considered and an overall risk assessment with respect to the plans. All of our plans have links to corporate or business line results that allow for funding to be adjusted downward, awards are capped, and our governance procedures ensure awards are reviewed for appropriateness before they are distributed.
We have determined our executive and employee incentive compensation plans are not reasonably likely to have a material adverse effect on the Company. Further, it is both the Committee’s and management’s intent to continue to evolve our processes going forward by monitoring regulations and best practices for sound incentive compensation.
Accounting & Tax Treatment of Compensation
The accounting and tax treatment of compensation generally has not been a factor in determining the amounts of compensation for our executive officers. However, the Compensation Committee and management have considered the accounting and tax impact of various program designs to balance the potential cost to the Company with the benefit to the executive.
Report of the Compensation Committee
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis, or CD&A, contained in this proxy statement with management. Based on the Compensation Committee’s review of and discussion with management with respect to the CD&A, the Compensation Committee has recommended to the Board of Directors of the Company that the CD&A be included in this proxy statement and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for filing with the SEC.
The foregoing report is provided by the Compensation Committee of the Board of Directors:
Stephen T. Boswell (Chair)
Kathern Nukk-Freeman
William A. Thompson
Summary Compensation Table
The following table sets forth for the prior three years the compensation paid to (a) the Company’s Chief Executive Officer and Chief Financial Officer and our three other most highly compensated executive officers earning in excess of $100,000 for the fiscal year ended December 31, 2022 and who were serving as of December 31, 2022, (collectively the “Named Executive Officers”):
Summary Compensation Table
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Salary
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Bonus
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Stock Awards(1)
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Option Awards
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Non-equity incentive plan compensation
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Change in pension value and non-qualified deferred compensation earnings
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All other compensation(2)
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Total
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Name and Principal Position
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Year
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($)
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($) |
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($) |
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($) |
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($) |
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($) |
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($) |
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($) |
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Frank Sorrentino III, Chairman & Chief Executive Officer
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2022
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$ |
900,000 |
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$ |
- |
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$ |
1,237,512 |
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- |
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$ |
1,147,500 |
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$ |
685,309 |
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$ |
35,794 |
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$ |
4,006,115 |
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2021
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825,000 |
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- |
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928,125 |
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- |
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928,000 |
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352,817 |
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35,044 |
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3,068,986 |
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2020
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825,000 |
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- |
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1,031,249 |
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- |
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773,438 |
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185,691 |
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33,015 |
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2,848,393 |
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William S. Burns, Senior Executive Vice President & Chief Financial Officer
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2022
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$ |
465,000 |
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$ |
- |
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$ |
348,762 |
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$ |
- |
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$ |
418,500 |
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$ |
470,779 |
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$ |
29,794 |
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$ |
1,732,835 |
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2021
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430,000 |
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- |
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290,260 |
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- |
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323,000 |
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233,595 |
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29,044 |
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1,305,899 |
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2020
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430,000 |
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- |
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322,508 |
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- |
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268,750 |
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122,343 |
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28,782 |
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1,172,383 |
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Elizabeth Magennis, President of ConnectOne Bank
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2022
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$ |
500,000 |
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$ |
- |
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$ |
375,002 |
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$ |
- |
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$ |
450,000 |
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$ |
149,540 |
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$ |
26,182 |
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$ |
1,500,724 |
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2021
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450,000 |
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- |
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303,763 |
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- |
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338,000 |
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69,759 |
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25,432 |
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1,186,954 |
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2020
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422,500 |
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- |
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315,001 |
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- |
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281,250 |
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32,898 |
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25,178 |
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1,076,827 |
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Chris Ewing, Executive Vice President & Chief Operations Officer
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2022
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$ |
390,000 |
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$ |
- |
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$ |
292,511 |
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$ |
- |
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$ |
268,125 |
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$ |
104,468 |
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$ |
29,794 |
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$ |
1,084,898 |
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2021
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375,000 |
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- |
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247,503 |
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- |
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281,000 |
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120,483 |
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29,044 |
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1,053,030 |
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2020
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375,000 |
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- |
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281,259 |
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- |
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225,000 |
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94,333 |
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28,782 |
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1,004,374 |
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Michael O'Malley, Executive Vice President & Chief Risk Officer
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2022
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$ |
350,000 |
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$ |
- |
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$ |
153,110 |
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$ |
- |
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$ |
183,750 |
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$ |
- |
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$ |
16,510 |
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$ |
703,370 |
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2021
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325,000 |
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- |
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- |
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- |
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171,000 |
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- |
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10,320 |
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506,320 |
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2020
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27,088 |
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27,088 |
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(1)
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Stock awards reported in 2022 reflect the grant date fair value of deferred stock units awards and performance units awards under Accounting Standards Codification Topic No. 718, Compensation-Stock Compensation (“ASC Topic 718”) granted by the Compensation Committee under the Equity Incentive Plan, which permits the Compensation Committee to determine to pay awards, in whole or in part, in the form of grants of stock-based awards under the Long-Term Stock Incentive Plan. Deferred stock units awards are time-based, while the performance units awards are performance-based.
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(2)
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Mr. Sorrentino’s “All other compensation” total includes a $15,000 annual car allowance for 2020, 2021 and 2022.
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(3)
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Mr. O’Malley commenced employment with the Company on November 30, 2020.
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Time-based deferred stock units awards
The value of the time-based deferred stock units awards reported in column (e) for each of our Named Executive Officers’ were as follows:
Name
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Value of Deferred Stock Unit Awards Issued in 2022 (a)
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Frank Sorrentino III
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$ |
742,494 |
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William S. Burns
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209,264 |
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Elizabeth Magennis
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225,008 |
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Christopher Ewing
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175,513 |
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Michael O’Malley
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91,873 |
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(a)
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These values are based on the market value at the time of grant. Restrictions on time-based deferred stock units awards lapse at the rate of one-third each year over a three-year period.
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Performance units awards
Restrictions on performance-based awards lapse based on achievement of the performance goals set forth in the awards agreement based on performance as compared to peer groups. The following tables detail the value of the performance units award at the time they were granted, assuming a probable outcome regarding performance, and the value assuming the maximum achievement of performance goals.
Name
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Target Value at Grant Date
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Maximum Value at Grant Date
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Frank Sorrentino III
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$ |
495,018 |
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$ |
742,526 |
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William S. Burns
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139,498 |
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209,248 |
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Elizabeth Magennis
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149,994 |
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224,992 |
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Christopher Ewing
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116,998 |
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175,496 |
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Michael O’Malley
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61,237 |
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91,856 |
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POST-TERMINATION BENEFITS
Employment Agreements
The Company and the Bank are parties to employment agreements with Messrs. Frank Sorrentino III, our Chairman, Chief Executive Officer, and President, William S. Burns our Senior Executive Vice President and Chief Financial Officer, Christopher Ewing, our Executive Vice President and Chief Operations Officer, and Ms. Elizabeth Magennis, our Bank President. Each of these agreements include provisions with respect to post-termination benefits, as described below.
In the event that Mr. Sorrentino’s employment is terminated without “cause” or he resigns for “good cause”, as such terms are defined in the employment agreement, he is entitled to receive a lump sum cash payment equal to two and a half (2.5) times the sum of his current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Mr. Sorrentino will receive: (i) a lump sum cash payment equal to three (3) times the sum of Mr. Sorrentino’s current base salary and target cash bonus; (ii) a prorated bonus for the year of termination based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid, and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended. The following table summarizes potential payments to Mr. Sorrentino assuming a triggering termination of employment occurred on December 31, 2022, and calculated based on actual performance meeting targeted objectives. The table does not reflect benefits under plans that do not discriminate in favor of executive officers and are available generally to all salaried employees.
Payments and Benefits
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Involuntary Termination without Cause or Resignation for Good Reason
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Change in Control
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Involuntary Termination without Cause or Resignation for Good Reason following a Change in Control
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Cash Compensation
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$ |
4,162,500 |
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$ |
- |
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$ |
4,995,000 |
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Value of Continued Health and Welfare Benefits
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$ |
30,532 |
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$ |
- |
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$ |
30,532 |
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Acceleration of Stock Awards
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$ |
- |
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$ |
2,203,812 |
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$ |
2,203,812 |
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Acceleration of Benefits Pursuant to Supplemental Executive Retirement Plans
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$ |
- |
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$ |
- |
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$ |
1,971,033 |
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* Pursuant to the Supplemental Executive Retirement Plan and the 2021 Supplemental Executive Retirement Plan, Mr. Sorrentino’s benefit will accelerate upon a change of control if followed by a separation of service within 2 years of the date thereof, irrespective of whether it was a termination “without cause” or a resignation for “good reason.”
In the event that Mr. Burns’ employment is terminated without “cause” or he resigns for “good cause”, as such terms are defined in the employment agreement, he is entitled to receive a lump sum cash payment equal to two and a half (2.5) times the sum of his current base salary and target cash bonus; (ii) a prorated target bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Mr. Burns will receive: (i) a lump sum cash payment equal to three (3) times the sum of Mr. Burns’ current base salary and target cash bonus; (ii) a prorated bonus for the year of termination based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended. The following table summarizes potential payments to Mr. Burns assuming a triggering termination of employment occurred on December 31, 2022, and calculated based on actual performance meeting targeted objectives. The table does not reflect benefits under plans that do not discriminate in favor of executive officers and are available generally to all salaried employees.
Payments and Benefits
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Involuntary Termination without Cause or Resignation for Good Reason
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Change in Control
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Involuntary Termination without Cause or Resignation for Good Reason following a Change in Control
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Cash Compensation
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$ |
1,860,000 |
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$ |
- |
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$ |
2,232,000 |
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Value of Continued Health and Welfare Benefits
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$ |
41,375 |
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$ |
- |
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$ |
41,375 |
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Acceleration of Stock Awards
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$ |
- |
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$ |
660,207 |
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$ |
660,207 |
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Acceleration of Benefits Pursuant to Supplemental Executive Retirement Plans
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$ |
- |
|
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$ |
- |
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$ |
584,607 |
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* Pursuant to the Supplemental Executive Retirement Plan and the 2021 Supplemental Executive Retirement Plan, Mr. Burns’ benefit will accelerate upon a change of control if followed by a separation of service within 2 years of the date thereof, irrespective of whether it was a termination “without cause” or a resignation for “good reason.”
In the event that Ms. Magennis’ employment is terminated without “cause” or she resigns for “good cause”, as such terms are defined in the employment agreement, she is entitled to receive a lump sum cash payment equal to one and a half (1.5) times the sum of her current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Ms. Magennis will receive: (i) a lump sum cash payment equal to two (2) times the sum of Ms. Magennis’ current base salary and target cash bonus; (ii) a prorated bonus for the year of termination based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended. The following table summarizes potential payments to Ms. Magennis assuming a triggering termination of employment occurred on December 31, 2022, and calculated based on actual performance meeting targeted objectives. The table does not reflect benefits under plans that do not discriminate in favor of executive officers and are available generally to all salaried employees.
Payments and Benefits
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Involuntary Termination without Cause or Resignation for Good Reason
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|
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Change in Control
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|
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Involuntary Termination without Cause or Resignation for Good Reason following a Change in Control
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|
Cash Compensation
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|
$ |
2,000,000 |
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|
$ |
- |
|
|
$ |
2,400,000 |
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Value of Continued Health and Welfare Benefits
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|
$ |
16,109 |
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|
$ |
- |
|
|
$ |
16,109 |
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Acceleration of Stock Awards
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|
$ |
- |
|
|
$ |
688,169 |
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$ |
688,169 |
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Acceleration of Benefits Pursuant to Supplemental Executive Retirement Plans
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|
$ |
- |
|
|
$ |
- |
|
|
$ |
995,622 |
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* Pursuant to the Supplemental Executive Retirement Plan and the 2021 Supplemental Executive Retirement Plan, Ms. Magennis’ benefit will accelerate upon a change of control if followed by a separation of service within 2 years of the date thereof, irrespective of whether it was a termination “without cause” or a resignation for “good reason.”
In the event that Mr. Ewing’s employment is terminated without “cause” or he resigns for “good cause”, as such terms are defined in the employment agreement, he is entitled to receive a lump sum cash payment equal to three-fourths (0.75) times the sum of his current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Mr. Ewing will receive: (i) a lump sum cash payment equal to one (1) times the sum of Mr. Ewing’s current base salary and target cash bonus; (ii) a prorated bonus for the year of termination based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended. The following table summarizes potential payments to Mr. Ewing assuming a triggering termination of employment occurred on December 31, 2022, and calculated based on actual performance meeting targeted objectives. The table does not reflect benefits under plans that do not discriminate in favor of executive officers and are available generally to all salaried employees.
Payments and Benefits
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|
Involuntary Termination without Cause or Resignation for Good Reason
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|
|
Change in Control
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|
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Involuntary Termination without Cause or Resignation for Good Reason following a Change in Control
|
|
Cash Compensation
|
|
$ |
438,750 |
|
|
$ |
- |
|
|
$ |
585,000 |
|
Value of Continued Health and Welfare Benefits
|
|
$ |
41,375 |
|
|
$ |
- |
|
|
$ |
41,375 |
|
Acceleration of Stock Awards
|
|
$ |
- |
|
|
$ |
563,560 |
|
|
$ |
563,560 |
|
Acceleration of Benefits Pursuant to Supplemental Executive Retirement Plans
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
190,474 |
|
* Pursuant to the Supplemental Executive Retirement Plan, Mr. Ewing’s benefit will accelerate upon a change of control if followed by a separation of service within 2 years of the date thereof, irrespective of whether it was a termination “without cause” or a resignation for “good reason.”
In the event that Mr. O’Malley’s employment is terminated without “cause” or he resigns for “good cause”, as such terms are defined in the employment agreement, he is entitled to receive a lump sum cash payment equal to three-fourths (0.75) times the sum of his current base salary and target cash bonus; (ii) a prorated bonus for the year of termination and (iii) continued health and welfare benefits for up to 18 months. If such a termination occurs within two years following a change in control (as defined in the employment agreement), Mr. Ewing will receive: (i) a lump sum cash payment equal to one (1) times the sum of Mr. O’Malley current base salary and target cash bonus; (ii) a prorated bonus for the year of termination based on actual performance and will be paid at the time annual bonuses for such year are ordinarily paid and (iii) continued health and welfare benefits for up to 18 months. The severance benefits are subject to reduction in the event the benefits would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended. The following table summarizes potential payments to Mr. Ewing assuming a triggering termination of employment occurred on December 31, 2022, and calculated based on actual performance meeting targeted objectives. The table does not reflect benefits under plans that do not discriminate in favor of executive officers and are available generally to all salaried employees.
Payments and Benefits
|
|
Involuntary Termination without Cause or Resignation for Good Reason
|
|
|
Change in Control
|
|
|
Involuntary Termination without Cause or Resignation for Good Reason following a Change in Control
|
|
Cash Compensation
|
|
$ |
354,375 |
|
|
$ |
- |
|
|
$ |
472,500 |
|
Value of Continued Health and Welfare Benefits
|
|
$ |
41,375 |
|
|
$ |
- |
|
|
$ |
41,375 |
|
Acceleration of Stock Awards
|
|
$ |
- |
|
|
$ |
113,012 |
|
|
$ |
113,012 |
|
Acceleration of Benefits Pursuant to Supplemental Executive Retirement Plans
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
CEO Pay Ratio
Frank Sorrentino III, our Chairman and Chief Executive Officer, had fiscal 2022 total compensation of $4,006,115, as reflected in the Summary Compensation Table above. We estimate that the median annual compensation for all Company employees, excluding Mr. Sorrentino, was $78,000 for 2022, based on a median total cash compensation as of December 31, 2022. As a result, Mr. Sorrentino’s 2022 annual compensation was approximately 51.36 times that of the median annual compensation for all employees.
Pay Versus Performance Table for 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Initial Fixed $100 Investment Based On:
|
|
|
|
|
|
|
|
|
|
Year
|
|
Summary Compensation Table Total for PEO (1)
|
|
|
Compensation Actually Paid to PEO (2)
|
|
|
Average Summary Compensation Table Total for Non-PEO NEOs(3)
|
|
|
Average Summary Compensation Actually Paid to Non-PEO NEOs(4)
|
|
|
TSR (5)
|
|
|
Peer Group TSR(6)
|
|
|
Net Income (7) (thousands)
|
|
|
Core Return on Average Assets (8)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(e)
|
|
|
(f)
|
|
|
(e)
|
|
|
(e)
|
|
2022
|
|
$ |
4,006,115 |
|
|
$ |
2,703,464 |
|
|
$ |
1,255,457 |
|
|
$ |
957,200 |
|
|
$ |
100.4 |
|
|
$ |
111.2 |
|
|
$ |
125,211 |
|
|
|
1.47 |
% |
2021
|
|
|
3,068,986 |
|
|
|
5,282,254 |
|
|
|
1,046,208 |
|
|
|
1,597,023 |
|
|
|
131.9 |
|
|
|
121.9 |
|
|
|
130,353 |
|
|
|
1.66 |
% |
2020
|
|
|
2,848,393 |
|
|
|
2,878,128 |
|
|
|
970,211 |
|
|
|
1,021,790 |
|
|
|
78.6 |
|
|
|
83.1 |
|
|
|
71,289 |
|
|
|
1.16 |
% |
|
(1)
|
The dollar amounts reported in column (b) are the amounts of total compensation reported for Frank Sorrentino III (our Chairman and CEO) for each corresponding year in the “Total” column of the “Summary Compensation Table for 2022.”
|
|
(2)
|
The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Sorrentino, as computed in accordance with Item 402(v) of SEC Regulation S-K. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to Mr. Sorrentino during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to Mr. Sorrentino total compensation for each year to determine the compensation actually paid to Mr. Sorrentino:
|
|
|
2022
|
|
|
2021
|
|
|
2020
|
|
|
|
$ |
4,006,115 |
|
|
$ |
3,068,986 |
|
|
$ |
2,848,393 |
|
Deduction for amount reported in “Stock Awards” column of the Summary Compensation Table:
|
|
|
(1,237,512 |
) |
|
|
(928,125 |
) |
|
|
(1,031,249 |
) |
Addition of fair value at fiscal year (FY) end, of equity awards granted during the FY that remained outstanding:
|
|
|
913,419 |
|
|
|
1,202,812 |
|
|
|
1,894,932 |
|
Addition of change in fair value at FY end versus prior FY end for awards granted in a prior FY that remained outstanding:
|
|
|
(940,510 |
) |
|
|
1,659,697 |
|
|
|
(307,450 |
) |
Addition of change in fair value at vesting date versus prior FY end for awards granted in a prior FY that vested during the FY:
|
|
|
(7,274 |
) |
|
|
292,667 |
|
|
|
(517,043 |
) |
Deduction for values reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table:
|
|
|
(685,309 |
) |
|
|
(352,817 |
) |
|
|
(185,691 |
) |
Addition of service costs and prior service costs:
|
|
|
654,535 |
|
|
|
339,034 |
|
|
|
176,236 |
|
Compensation Actually Paid (CAP)
|
|
$ |
2,703,464 |
|
|
$ |
5,282,254 |
|
|
$ |
2,878,128 |
|
|
(3)
|
The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s Named Executed Officers (“NEOs”) as a group (excluding Mr. Sorrentino) in the “Total” column of the “Summary Compensation Table for 2022” in each applicable year. The names of the NEOs (excluding Mr. Sorrentino) included for the purpose of calculating the average amounts in each applicable year are William S. Burns, Elizabeth Magennis, Christopher Ewing and Michael O’Malley for 2022; William S. Burns, Elizabeth Magennis, Christopher Ewing and Laura Criscione for 2021; William S. Burns, Elizabeth Magennis, Christopher Ewing and Michael McGrover for 2020.
|
|
(4)
|
The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Sorrentino), as computed in accordance with Item 402(v) of SEC Regulation S-K. The names of the NEOs (excluding Mr. Sorrentino) included for the purpose of calculating the average amounts in each applicable year are William S. Burns, Elizabeth Magennis, Christopher Ewing and Michael O’Malley for 2022; William S. Burns, Elizabeth Magennis, Christopher Ewing and Laura Criscione for 2021; William S. Burns, Elizabeth Magennis, Christopher Ewing and Michael McGrover for 2020. The dollar amounts reported do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Sorrentino) during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Sorrentino) for each year to determine the compensation actually paid, using the same methodology described above in footnote (2):
|
|
|
2022
|
|
|
2021
|
|
|
2020
|
|
Summary Compensation Table Total:
|
|
$ |
1,255,457 |
|
|
$ |
1,046,208 |
|
|
$ |
970,211 |
|
Deduction for amount reported in “Stock Awards” column of the Summary Compensation Table:
|
|
|
(292,346 |
) |
|
|
(252,213 |
) |
|
|
(233,833 |
) |
Addition of fair value at fiscal year (FY) end, of equity awards granted during the FY that remained outstanding:
|
|
|
215,783 |
|
|
|
312,192 |
|
|
|
485,369 |
|
Addition of change in fair value at FY end versus prior FY end for awards granted in a prior FY that remained outstanding:
|
|
|
(210,744 |
) |
|
|
424,198 |
|
|
|
(75,357 |
) |
Addition of change in fair value at vesting date versus prior FY end for awards granted in a prior FY that vested during the FY:
|
|
|
(1,637 |
) |
|
|
71,482 |
|
|
|
(120,821 |
) |
Deduction for values reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table:
|
|
|
(181,174 |
) |
|
|
(110,573 |
) |
|
|
(73,666 |
) |
Addition of service costs and prior service costs:
|
|
|
171,861 |
|
|
|
105,729 |
|
|
|
69,887 |
|
Compensation Actually Paid (CAP)
|
|
$ |
957,200 |
|
|
$ |
1,597,023 |
|
|
$ |
1,021,790 |
|
|
(5)
|
Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period (determined in accordance with Item 402(v) of SEC Regulation S-K), assuming dividend reinvestment, and the difference between the Company’s common share price at the end and the beginning of the measurement period by the Company’s common share price at the beginning of the measurement period.
|
|
(6)
|
Represents the weighted peer group cumulative TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each measurement period for which a return is indicated. The peer group used for this purpose is the Company’s peer group as defined in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis.” The same financial services holding companies were included in the Company’s Compensation Peer Group disclosed in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis” in the Company’s Proxy Statement for each of the 2022 Annual Meeting and the 2021 Annual Meeting of Shareholders.
|
|
(7)
|
The dollar amounts reported represent the amount of net income (in thousands) reflected in the Company’s audited consolidated financial statements for the applicable year.
|
|
(8)
|
While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, we have determined that Core Return on Average Assets (“Core ROAA”) is the financial performance measure that, in Company's opinion, represents the most important performance measure (that is not otherwise required to be disclosed in this table) we used to link compensation actually paid to the Company’s NEOs for the most recently completed fiscal year to the Company's performance. Our Compensation Committee believes Core ROAA is the most comprehensive and consistent measure of profitability and the least likely to be impacted by items that can conflict with optimal performance. Use of Core ROAA eliminates the impact of nonrecurring items such as merger charges. Set forth below are the most important financial performance measures we used to link compensation actually paid to the CEO and Other NEOs to our performance for the year ended December 31, 2022:
● Core ROAA
● Efficiency Ratio
● Attainment of a target tangible book value per share.
|
Grants of Plan-Based Awards
The following table represents the grants of awards to the Named Executive Officers in 2022:
Grants of Plan-Based Awards
|
|
|
|
|
Estimated future payouts under non-equity incentive plan awards
|
|
|
Estimated future payouts under equity incentive plan awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Grant Date
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
All other stock awards: Number of shares of stock or units
|
|
|
All other stock awards: Number of securities underlying options
|
|
|
Exercise or base price of option awards
|
|
|
Grant date fair value of stock and option awards
|
|
|
|
|
($) |
|
|
($) |
|
|
($) |
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/share)
|
|
|
(#)
|
|
(a)
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
Frank Sorrentino III
|
3/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,546 |
|
|
|
15,092 |
|
|
|
22,638 |
|
|
|
22,637 |
|
|
|
|
|
|
|
|
|
|
$ |
1,237,512 |
|
William S. Burns
|
3/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,127 |
|
|
|
4,253 |
|
|
|
6,380 |
|
|
|
6,380 |
|
|
|
|
|
|
|
|
|
|
|
348,762 |
|
Elizabeth Magennis
|
3/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,287 |
|
|
|
4,573 |
|
|
|
6,860 |
|
|
|
6,860 |
|
|
|
|
|
|
|
|
|
|
|
375,002 |
|
Christopher Ewing
|
3/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,784 |
|
|
|
3,567 |
|
|
|
5,351 |
|
|
|
5,351 |
|
|
|
|
|
|
|
|
|
|
|
292,511 |
|
Michael O'Malley
|
3/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
934 |
|
|
|
1,867 |
|
|
|
2,801 |
|
|
|
2,801 |
|
|
|
|
|
|
|
|
|
|
|
153,110 |
|
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth, for each of the Named Executive Officers, information regarding outstanding stock options and stock awards as of December 31, 2022:
Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of securities underlying unexercised options (#) exercisable
|
|
|
Number of securities underlying unexercised options (#) un-exercisable
|
|
|
Equity incentive plan awards: Number of securities underlying unexercised unearned options
|
|
|
Option exercise price
|
|
|
Option expiration date
|
|
|
Number of shares or units of stock that have not vested
|
|
|
Market value of shares or units of stock that have not vested
|
|
|
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested
|
|
|
Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested
|
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Frank Sorrentino III
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
- |
|
|
|
n/a |
|
|
|
32,770 |
|
|
|
793,362 |
|
|
|
92,972 |
|
|
$ |
2,250,858 |
|
William S. Burns
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
n/a |
|
|
|
10,248 |
|
|
|
248,104 |
|
|
|
22,620 |
|
|
|
547,624 |
|
Elizabeth Magennis
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
n/a |
|
|
|
10,306 |
|
|
|
249,508 |
|
|
|
22,958 |
|
|
|
555,819 |
|
Christopher Ewing
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
n/a |
|
|
|
8,789 |
|
|
|
212,782 |
|
|
|
24,807 |
|
|
|
600,584 |
|
Michael O'Malley
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
n/a |
|
|
|
- |
|
|
|
- |
|
|
|
1,867 |
|
|
|
45,200 |
|
Options Exercised and Stock Vested
The following table sets forth certain information regarding exercises of options or vesting of shares during the Company’s fiscal year ended December 31, 2022 by our Named Executive Officers:
Option Exercises and Stock Vested
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
Name
|
|
Number of shares acquired on exercise
|
|
|
Value realized on exercise
|
|
|
Number of shares acquired on vesting
|
|
|
Value realized on vesting
|
|
|
|
(#)
|
|
|
($) |
|
|
(#)
|
|
|
($) |
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
Frank Sorrentino III
|
|
|
- |
|
|
$ |
- |
|
|
|
58,668 |
|
|
$ |
1,911,756 |
|
William S. Burns
|
|
|
- |
|
|
|
- |
|
|
|
18,221 |
|
|
|
593,731 |
|
Elizabeth Magennis
|
|
|
- |
|
|
|
- |
|
|
|
17,699 |
|
|
|
576,604 |
|
Christopher Ewing
|
|
|
- |
|
|
|
- |
|
|
|
15,665 |
|
|
|
510,462 |
|
Michael O'Malley
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Nonqualified Deferred Compensation
Supplemental Executive Retirement Plan
Each participants listed below are parties to a Supplemental Executive Retirement Plan Agreement and a Split Dollar Life Insurance Agreement. Each of Messrs. Sorrentino and Burns and Ms. Magennis are also parties to a 2021 Supplemental Executive Retirement Plan Agreement dated April 1, 2022 that augments and supplements the original Supplemental Executive Retirement Plan Agreement. Subject to their terms and conditions, each Supplemental Executive Retirement Plan agreement and 2021 Supplemental Executive Retirement Plan Agreement is an unfunded promise intended to provide each of the participants with certain supplemental benefits upon retirement, or if earlier, upon his or her separation from service for certain qualifying terminations of employment. The amount and timing of payment of the supplemental retirement benefits vary based on a number of factors, including, among others, the participant’s age, the reason for any separation from service, and whether the participant has met the vesting requirements set forth in the agreement at the time of any payment triggering event.
The benefit amount payable to each Participant is a certain percentage of the Executive’s final salary, as defined in the Plan, exclusive of bonus, incentive compensation, and benefits as of the date of the termination of employment), as follows:
Participant
|
|
Final Salary Percentage
|
|
Frank Sorrentino III
|
|
|
37.5 |
% |
William S. Burns
|
|
|
30.0 |
|
Elizabeth Magennis
|
|
|
30.0 |
|
Christopher Ewing
|
|
20.0
|
|
Split Dollar Life Insurance Agreement
Pursuant to each of the Split Dollar Life Insurance Agreements, each named executive officer’s designated beneficiary will be entitled to share in the death proceeds payable under a life insurance policy owned by the Bank in the event of the participant’s death while the Agreement remains in effect. The amounts payable to the participants’ beneficiaries vary among the participants, and the age at which a participant dies.
The following table sets forth certain information regarding nonqualified deferred compensation benefits to the Named Executive Officer of the Company during the Company’s fiscal year ended December 31, 2022:
Nonqualified Deferred Compensation
|
Name
|
|
Executive contributions in 2022
|
|
Registrant contributions in 2022
|
|
Aggregate earnings in 2022
|
|
Aggregate withdrawals/ distributions
|
|
Aggregate balance at last 2022
|
(a)
|
|
($)
(b)
|
|
($)
(c)
|
|
($)
(d)
|
|
($)
(e)
|
|
($)
(f)
|
Frank Sorrentino III
|
|
|
|
685,309
|
|
|
|
|
|
1,349,008
|
William S. Burns
|
|
|
|
470,779
|
|
|
|
|
|
913,626
|
Elizabeth Magennis
|
|
|
|
149,540
|
|
|
|
|
|
271,527
|
Chris Ewing
|
|
|
|
104,468
|
|
|
|
|
|
383,688
|
Director Compensation
The following table sets forth certain information regarding compensation earned by or paid to the Directors during the Company’s fiscal year ended December 31, 2022:
Director Compensation
|
|
|
|
Fees earned or paid in cash
|
|
|
Stock Awards
|
|
|
Options awards
|
|
|
Non-equity incentive plan compensation
|
|
|
Change in pension value and nonqualified deferred compensation earnings
|
|
|
All other compensation
|
|
|
Total
|
|
Name
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Frank W. Baier
|
|
$ |
124,000 |
|
|
$ |
53,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
177,000 |
|
Stephen T. Boswell
|
|
|
134,250 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
187,250 |
|
Frank Huttle III
|
|
|
88,375 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
141,375 |
|
Michael Kempner
|
|
|
60,250 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
113,250 |
|
Nicolas Minoia
|
|
|
127,250 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
180,250 |
|
Joseph Parisi Jr.
|
|
|
47,000 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
100,000 |
|
William A. Thompson
|
|
|
71,250 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
124,250 |
|
Daniel Rifkin
|
|
|
96,750 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
149,750 |
|
Katherin Nukk-Freeman
|
|
|
71,250 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
124,250 |
|
Mark Sokolich
|
|
|
60,250 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
113,250 |
|
Anson Moise
|
|
|
60,250 |
|
|
|
53,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
113,250 |
|
We pay the non-employee members of the Company’s Board an annual fee of $49,000. Board members serving on committees also receive $1,000. Committee Chairs also receive an additional stipend for this service in this role. Our Directors are also eligible to participate in our equity compensation plans. Each board member was awarded 1,911 restricted shares subject to forfeiture in 2022.
Interest of Management and Others in Certain Transactions; Review, Approval or Ratification of Transactions with Related Persons
We utilize the MWW Group to provide advertising and public relations assistance and advice. Michael Kempner, one of our directors, is the President and CEO of the MWW Group, Inc. During 2022, we paid the MWW Group a total of $266,015 for its services, including marketing, branding and related services. We believe the fees charged the Bank by the MWW Group are at least as favorable to the Bank as we could receive from an unaffiliated third party. We have continued to use the services of the MWW Group during 2022.
We utilize Otterstedt Insurance Agency (“Otterstedt”), of which Joseph Parisi, Jr. (who was on our Board of Directors until his passing in October 2022) served as Chairman of the Board and CEO. During 2022, we paid Otterstedt a total of $203,382 in commissions attributable to Otterstedt. We believe the commissions charged the Bank by Otterstedt are at least as favorable to the Bank as we could receive from an unaffiliated third party. We have continued to use Otterstedt during 2023.
Members of our Board of Directors, including our Chairman and CEO Frank Sorrentino III and Messrs. Boswell, Huttle, and Kempner, are, either directly or through their interests in family limited liability companies, members of a limited liability company that is the sole member of a limited liability company that owns our John Street, Hackensack branch locations, which are leased by the Bank. Our Board members collectively own 44.4% of the membership interests in this limited liability company. Each of Messrs. Sorrentino, Huttle, Boswell and Kempner owns an 11.1% interest in the limited liability company. No director is the managing member or a manager or officer or any of the limited liability companies which serve as the landlords or the parent limited liability company. The lease for our John Street, Hackensack branch has a term ending on December 31, 2026. The Bank has the option to extend the lease term for up to one additional five-year period. The initial rent for the branch was $148,000 per year, and the rent will increase annually by the greater of 2.50% or the rate of increase of the consumer price index for the greater New York metropolitan area. During any option period, the rent will be reset to the greater of the prior year’s rent or the “market rent”, as defined in the lease, and will then increase annually by the greater of 2.50% or the rate of increase of the consumer price index for the greater New York metropolitan area. For 2022, the Bank paid a total rent of $209,477 for the John Street, Hackensack branch.
Nicholas Minoia, a member of our Board of Directors, is a member of a limited liability company which owns our Summit, New Jersey branch. Mr. Minoia owns approximately 50% of the membership interests in this limited liability company, and serves as its manager. The lease for the Summit branch has a term ending on February 1, 2024. The Bank has the option to extend the lease term for up to three additional five-year periods, or a total of fifteen additional years. The initial rent for the branch was $81,000 per year, and the rent will increase as set forth in the lease. During any option period, the rent will be as per the amounts set forth in the lease. For 2022, the Bank paid a total rent of $137,269 for the Summit, New Jersey branch.
Daniel Rifkin, a member of our Board of Directors, is a member of a limited liability company which owns the Bardonia branch. Mr. Rifkin owns approximately 50% of the membership interests in this limited liability company, and does not serve as its managing member. The lease for the Bardonia branch has a term ending on August 31, 2028. The Bank has the option to extend the lease term for one additional five-year period. The rent paid by the Bank in 2022 was $275,284, and will increase three (3%) percent yearly, including any extension terms. In the event that the Bank exercises the option to terminate occupancy rights to the second floor office space, the rent will be adjusted as set forth in the lease.
Mr. Rifkin is also a member of a separate limited liability company which owns the Blauvelt branch. Mr. Rifkin owns approximately 50% of the membership interests in this limited liability company, and does not serve as its managing member. The lease for the Blauvelt branch has a term ending on February 28, 2028. The rent paid by the Bank in 2022 was $105,753 with increases as set forth in the lease.
PROPOSAL 2
AMENDMENT TO THE 2017 EQUITY COMPENSATION PLAN
The Board of Directors has approved for submission a proposed amendment to the Company’s 2017 Equity Compensation Plan (the “Plan”), increasing the number of shares that may be issued under the Plan from 750,000 to 1,200,000 (the “Amendment”).
At adoption, the Plan was approved by Company’s shareholders at the 2017 Annual Meeting to authorize the Company to issue stock options, restricted stock, deferred stock and/or performance units to eligible participants (“Awards”). The Board of Directors continues to believe, as it did at adoption, that management and employees should have an equity stake in the Company, and that equity should be a significant part of management’s compensation. The Board believes that this will ensure that the interests of management and the shareholders are closely aligned.
The Plan was originally created to permit Awards for up to 750,000 shares. As of April 3, 2023, 690,791 shares have been granted, leaving only 59,209 shares available for future awards. Accordingly, the Board is unable to effectively use equity awards as an incentive to attract and retain management as we continue to grow. Therefore, the Board has unanimously recommended and submitted for shareholder approval an amendment to the Plan to amend and restate clause (a) of Section 5 of the Plan so that the number of shares (or equivalents) issuable under the plan will increase by 450,000, so that the maximum number of shares issuable under the Plan will be 1,200,000. No other changes are being made to the Plan, and the other terms and conditions of the Plan will remain as approved by the shareholders at the 2017 Annual Meeting.
The Company believes that the Amendment will improve the Company’s ability to attract and retain talented management.
Required Vote
IN ORDER FOR THE AMENDMENT TO BE APPROVED, THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK CAST AT THE ANNUAL MEETING IS REQUIRED.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED “FOR” APPROVAL OF THE AMENDMENT.
Recommendation
THE BOARD OF DIRECTOS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE AMENDMENT.
PROPOSAL 3
APPROVAL, ON AN ADVISORY BASIS, OF COMPENSATION OF THE COMPANY’S
EXECUTIVE OFFICERS
Under Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, companies with securities registered with the Securities and Exchange Commission under the Exchange Act are required to provide shareholders the opportunity to vote on a non-binding advisory proposal to approve the compensation of executives. The Company has determined to implement this requirement by providing shareholders with a simple vote that indicates their position (by a yes or no vote) with respect to our executive compensation.
Our Board of Directors annually reviews and approves corporate and/or individual goals and objectives relevant to the compensation of our executive officers, evaluates performance in light of those goals and objectives, and determines compensation levels based on this evaluation, as described elsewhere in this proxy statement. In determining any long-term incentive component of compensation, the Board will consider all such factors as it deems relevant, such as performance and relative shareholder return, the value of similar incentive awards at comparable companies and the awards granted in previous years. We also believe that both the Company and shareholders benefit from these compensation policies.
The Board recommends that shareholders approve, in an advisory vote, the following resolution:
“Resolved, that the shareholders approve the executive compensation of the Company, as described in this proxy statement, including the tabular disclosure regarding executive officers in this Proxy Statement.”
Because your vote is advisory, it will not be binding upon the Board. However, the Board will take into account the outcome of the vote when considering future executive compensation arrangements.
RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE ADVISORY PROPOSAL SET FORTH ABOVE.
PROPOSAL 4
RATIFICATION OF INDEPENDENT AUDITORS
The Audit and Risk Committee has appointed the firm of Crowe LLP to act as our independent registered public accounting firm and to audit our consolidated financial statements for the fiscal year ending December 31, 2023. This appointment will continue at the pleasure of the Audit and Risk Committee and is presented to the shareholders for ratification as a matter of good governance. In the event that this appointment is not ratified by our shareholders, the Audit and Risk Committee will consider that fact when it selects independent auditors for the following fiscal year.
Crowe LLP has served as our independent registered public accounting firm since July 1, 2014, and one or more representatives of Crowe LLP will be present at the Annual Meeting. These representatives will be provided with an opportunity to make a statement at the Annual Meeting if they desire to do so and will be available to respond to appropriate questions from shareholders.
The following table sets forth a summary of the fees billed or expected to be billed to the Company by Crowe for professional services rendered for the years ended December 31, 2022 and 2021.
PRINCIPAL ACCOUNTING FIRM FEES
Aggregate fees billed to the company for the fiscal years ended December 31, 2022 and 2021 by the Company’s principal accounting firm are shown in the following table:
|
|
Fiscal Year Ended
|
|
|
|
December 31
|
|
|
|
2022
|
|
|
2021
|
|
Audit Fees
|
|
$ |
773,000 |
|
|
$ |
715,900 |
|
Audit Related Fees
|
|
|
- |
|
|
|
50,000 |
|
Tax Fees (1)
|
|
|
19,883 |
|
|
|
28,820 |
|
Other Fees
|
|
|
31,210 |
|
|
|
158,892 |
|
Total Fees
|
|
$ |
824,093 |
|
|
$ |
953,612 |
|
(1)
|
Consists of tax filing and tax related compliance and other advisory services.
|
Required Vote
THE PROPOSAL TO RATIFY THE SELECTION OF CROWE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2023 FISCAL YEAR REQUIRES AN AFFIRMATIVE VOTE OF THE MAJORITY OF THE SHARES REPRESENTED ONLINE OR BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE ON THE PROPOSAL.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF CROWE LLP AS THE COMPANY’S INDEPENDENT AUDITORS
SHAREHOLDER PROPOSALS
Proposals of shareholders to be included in the Company’s 2024 proxy material must be received by the secretary of the Company no later than January 23, 2024.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent shareholders are required by regulations of the Securities and Exchange Commission to furnish the Company with copies of all Section 16(a) forms they file. The Company believes that all persons associated with the Company and subject to Section 16(a) have made all required filings on a timely basis for the fiscal year ended December 31, 2022, except for each of Frank Sorrentino III, William S. Burns, Elizabeth Magennis, Christopher J. Ewing, and Laura Criscone; one transaction occurring on March 23, 2022, and three transactions occurring on March 25, 2022 (the “Delinquent Reports”). Each of the foregoing is related to netting transactions for tax withholding in connection with the vesting of restricted stock granted in prior years. Each of the Delinquent Reports results from a delay in the calculations of the number of shares to be netted out.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come before the Annual Meeting. However, in the event such other matters come before the meeting, it is the intention of the persons named in the proxy to vote on any such matters in accordance with the recommendation of the Board of Directors.
ConnectOne Bancorp (NASDAQ:CNOB)
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