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 2021.
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. In 2020, the Compensation Committee retained a specialized consultant to review the Bank's Salary Compensation scheme. The results of the consultant’s review are expected to be presented to the Board for consideration in 2021.
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, 2020, the aggregate amount of variable cash compensation paid by the Bank to its current executive officers for their services was $2,357,570.
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 7, 2020, the Bank granted to current executive officers 51,829 restricted stock units corresponding to 2019 performance. These restricted stock units vest 25% of the amount granted per year, with the first vesting on February 7, 2021, and the subsequent vestings on each anniversary of the first vesting date. As of December 31, 2020, the compensation cost charged against the Bank’s 2020 income in connection with these restricted stock units was $440,296. The total remaining compensation cost of $462,134 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 2020, the Bank charged to salaries expense $70,733 with respect to the contribution plan.
2020 Chief Executive Officer Compensation
The Bank´s current Chief Executive Officer’s compensation for 2020 included an annual base salary of $500,000, a signing bonus of $300,000, and limited perquisites and other benefits amounting to $19,690. The Chief Executive Officer is eligible to receive a severance payment of $1,000,000 upon his departure.
The compensation of the Bank’s former Chief Executive Officer up to March 9, 2020 included an annual base salary of $350,000, a performance-based cash bonus of $1,050,000, an aggregate of $2,333 related to the former Chief Executive Officer’s contribution plan, and limited perquisites and other benefits amounting to $1,557. In addition, the former Chief Executive Officer received a severance payment of $350,000 and other moving expenses totaling $28,567.