Compensation of Executive Officers and Directors
The Compensation Committee has reviewed and discussed the below Compensation of Executive Officers and Directors section with the Banks management, and based on this review and discussion, the Compensation Committee has recommended to the Board that the following Compensation of Executive Officers and Directors discussion be included in the Banks Proxy Statement for 2019.
Compensation Consultant
The Compensation Committee has authority to retain compensation consulting firms to assist it in the evaluation of executive officer and employee compensation and benefit programs. During 2018, the Compensation Committee did not retain or obtain the advice of any compensation consultant.
Executive Officers Compensation
Annually, in order to incentivize the alignment and collaboration of all areas of the Bank, the Bank pays to its executive officers variable compensation, based on the extent to which each officer meets certain individual and corporate objectives which are defined by the Board of Directors. This variable compensation is paid in both cash and in stock options and/or restricted stock units.
During the fiscal year ended December 31, 2018, the aggregate amount of cash compensation paid by the Bank to the executive officers employed in the Banks Corporate Headquarters for their services was $1,013.379.
In February 2008, the Board approved the 2008 Stock Incentive Plan (as amended, the 2008 Plan), which allows the Bank, from time to time, to grant restricted shares, restricted stock units, stock options and/or other stock-based awards to the directors, executive officers and non-executive employees of the Bank. This plan was revised in October 2015, and amended and restated as the 2015 Stock Incentive Plan (2015 Plan).
On February 6, 2018, the Bank granted to current executive officers 23,412 restricted stock units corresponding to 2017 performance. These restricted stock units vest 25% of the amount granted per year, with the first vesting on February 6, 2019, and the subsequent vestings on each anniversary of the first vesting date. As of December 31, 2018, the compensation cost charged against the Banks 2018 income in connection with these restricted stock units was $271,734. The total remaining compensation cost of $308,886 will be charged over a period of 2.9 years.
The Bank sponsors a defined contribution plan for its expatriate officers. The Banks contributions are determined as a percentage of the eligible officers annual salary, with each officer contributing an additional amount withheld from his salary. All contributions are administered by a trust through an independent third party. During 2018, the Bank charged to salaries expense $49,487 with respect to the contribution plan.
2018 Chief Executive Officer Compensation
The compensation of the Banks Chief Executive Officer for 2018 included an annual base salary of $350,000, and a performance-based cash bonus of $500,000, an aggregate of $14,000 from the Bank to the Chief Executive Officers contribution plan, and limited perquisites and other benefits amounting to $19,690. The Chief Executive Officer is eligible to receive a severance payment of $350,000 upon his departure.
The former Chief Executive Officer who retired on April 30, 2018, received a total cash compensation of $500,000 during 2018, including a contractual severance payment of $350,000.
Results of the 2018 Advisory Vote on Compensation of Executive Officers
At the Companys annual meeting of shareholders held on April 11, 2018, our shareholders were asked to approve, on an advisory basis, the Banks fiscal year 2017 executive officers compensation programs (commonly referred to as the say on pay proposal). A substantial majority (93.16%) of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes that these results affirm our shareholders support for the Banks approach to executive compensation, and therefore did not change its approach in the fiscal year 2018. The Compensation Committee will continue working to ensure that the design of the Banks executive officers compensation program is focused on long-term shareholder value creation and emphasizes pay for performance.