Compensation of Executive Officers and Directors
The Compensation Committee has reviewed and discussed the below “Compensation of
Executive Officers and Directors” section with the Bank’s 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 Bank’s Proxy Statement for 2020.
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 2019, 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, 2019, the aggregate amount of variable cash
compensation paid by the Bank to its current executive officers for their services was $1,005,000.
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, 2019, the Bank granted to current executive officers 23,743 restricted
stock units corresponding to 2018 performance. These restricted stock units vest 25% of the amount granted per year, with the first vesting on February 6, 2020, and the subsequent vestings on each anniversary of the first vesting date. As of
December 31, 2019, the compensation cost charged against the Bank’s 2019 income in connection with these restricted stock units was $174,556. The total remaining compensation cost of $180,444 will be charged over a period of 3.1 years.
The Bank sponsors a defined contribution plan for its expatriate officers. The Bank’s
contributions are determined as a percentage of the eligible officer’s 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 2019, the Bank charged to salaries expense $82,050 with respect to the contribution plan.
2019 Chief Executive Officer Compensation
The compensation of the Bank’s Chief Executive Officer for 2019 included an annual base
salary of $350,000, and a performance-based cash bonus of $550,000, an aggregate of $14,000 from the Bank to the Chief Executive Officer’s contribution plan, and limited perquisites and other benefits amounting to $20,860. The Chief Executive
Officer is eligible to receive a severance payment of $350,000 upon his departure.
Results of the 2019 Advisory Vote on Compensation of Executive Officers
At the Company’s annual meeting of shareholders held on April 17, 2019, our shareholders
were asked to approve, on an advisory basis, the Bank's fiscal year 2018 executive officers’ compensation programs (commonly referred to as the “say on pay” proposal). A substantial majority (95.39%) 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 Bank’s approach to executive compensation, and therefore did not change its approach in fiscal
year 2019. The Compensation Committee will continue working to ensure that the design of the Bank’s executive officers’ compensation program is focused on long-term shareholder value creation and emphasizes pay for performance.