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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
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At the Annual Meeting of Shareholders (the
“Meeting”) of American River Bankshares (the “Company”) held on May 21, 2020, the Company’s shareholders
approved the 2020 Equity Incentive Plan (the “Plan”). The Plan, which replaces the Company’s 2010 Equity Incentive
Plan, authorizes the grant of awards relating to up to 250,000 shares of common stock in the form of stock options, restricted
stock awards, performance awards, restricted stock units (RSU’s), stock appreciation rights (SAR’s) and other stock-based
awards.
No stock option or SAR
may become vested or exercisable and no restricted stock, RSU or stock-based awards may become vested less than one year following
the grant date of such award; provided, however the Company’s compensation committee may provide for earlier exercisability
or vesting in the event a participant’s service terminates due to death or disability or following a change in control, and
the compensation committee may provide for earlier exercisability and vesting of awards that in the aggregate do not exceed 5%
of the total number of shares of common stock authorized to be issued under the Plan. Vesting and/or exercise of awards under the
Plan may also be made subject to satisfaction of financial criteria or other objective performance measures. The specific performance
measures listed in the 2020 Plan that the compensation committee may use in granting performance-based awards include the following:
total loans; loan growth; total deposits; total trust assets; fee income; demand deposits; business loans (or any other subgroup
of total loans), operating efficiency; net interest margin; return on assets; return on equity; return on capital; economic value
added; total shareholder return; net income; pre-tax income; operating profit margin; book value; earnings per share; earnings
growth; fee income; new trust assets; new trust fees; trust revenue; nonperforming assets to assets ratio; efficiency ratio; investment
services earnings; investment services revenue; stock price earnings ratio; earnings before taxes and unusual or nonrecurring items
as measured either against the annual budget or as a ratio to revenue.
The Company’s compensation committee
will determine the types of awards to be granted from among those provided under the Plan and the terms of such awards, including
the number of shares of common stock or other securities underlying the awards; restrictions and vesting requirements, which may
be time-based vesting or vesting upon satisfaction of performance goals and/or other conditions; the exercise price for options
and SARs, which may not be less than 100% of the fair market value of a share on the grant date; and, where applicable, the expiration
date of awards, which for options and SARs may not be more than 10 years after the grant date. All of the Company’s employees
(including executive officers), consultants and directors are eligible to participate in the Plan.
If the Company undergoes a change in control,
which includes certain corporate transactions such as a merger, reorganization or consolidation resulting in a change in majority
ownership, a sale of substantially all of assets, a sale of more than 50% of common stock, or a change in the majority of directors
on our Board during a 12-month period, then awards outstanding under the Plan may be assumed, substituted or otherwise continued
or may be cashed out or exchanged for other property based upon the fair market value of our common stock or the consideration
paid per share in the change in control. Awards that are not assumed, substituted, or otherwise continued upon such an event will
terminate if not exercised. Vesting and exercisability of awards outstanding upon a change in control may be accelerated at the
discretion of the compensation committee, which may include circumstances in which a participant’s employment is terminated
in connection with the change in control or in which the acquirer fails to assume, continue or substitute for such awards.
The Board of Directors may amend or terminate
the Plan at any time, provided that any such amendment or termination may not adversely affect any awards then outstanding without
the participant’s consent. Amendments to increase the number of shares of common stock available for awards under the Plan,
amendments to alter or delete the shareholder approval requirement for repricing options and SARs, and any other amendments for
which shareholder approval is required by applicable laws, regulations or stock exchange rules may not be adopted without shareholder
approval. No new awards will be granted under the Plan after March 17, 2030.
In addition, the Company’s compensation
committee adopted a performance based restricted stock program which, subject to approval of the Plan by the Company’s shareholders,
provides for target equity awards to the Company’s executive officers and other executives that may be chosen at the Company’s
Chief Executive Officer’s discretion. Target awards are based on annual salary in the following amounts: Chief Executive
Officer 25%; Chief Financial Officer, Chief Operating Officer and Chief Credit Officer, 20% each. The targets are set following
approval of the Company’s budget by the Board of Directors based on the criteria reflected in the Plan.
The foregoing description of the Plan and the
awards that may be granted thereunder is qualified in its entirety by the Plan itself, the forms of stock option agreement and
restricted stock grant agreement and the performance based restricted stock program, which are attached hereto as Exhibits 10.1,
10.2, 10.3, and 10.4, respectively.