UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [×]Filed by a Party other than Registrant □
Check the appropriate box:
□Preliminary Proxy Statement
□Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[×]Definitive Proxy Statement
□Definitive Additional Materials
□Soliciting Material Pursuant to §240.14a-12
EVANS BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[×]No fee required.
□Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
_____________________________________________________________________________________________________
(2)Aggregate number of securities to which transaction applies:
______________________________________________________________________________________________________
(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
______________________________________________________________________________________________________
(4)Proposed maximum aggregate value of transaction:
______________________________________________________________________________________________________
(5)Total fee paid:
______________________________________________________________________________________________________
□Fee paid previously with preliminary materials.
□Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
_____________________________________________________________________________________________________
(2)Form, Schedule, or Registration Statement No.:
______________________________________________________________________________________________________
(3)Filing Party:
__________________________________________________________________________________________________
(4)Date Filed:
___________________________________________________________________________________________________
|
|
|
|
Message from
The President & CEO
David Nasca
|
|
Dear Valued Shareholders, Clients, Associates and Friends
I am pleased to report that your Company experienced record results both in terms of production and income, amidst the challenges of the ongoing COVID Pandemic. We fought through compressed margins, abnormal levels of liquidity straining asset returns, historic prepayment and repayment activity in all loan portfolios, credit challenges for some businesses such as hospitality and lodging, and a difficult environment for our core strength of relationship building. Against this backdrop and operating in a hybrid fashion, we were able to deliver record levels of commercial and residential loan originations, successfully support businesses in our community with another round of Small Business Administration (SBA) Paycheck Protection Program (PPP) Loans, make progress in our newly acquired Rochester market, drive growth in cost effective core deposits and, together with our clients, strengthen credit quality.
While holding great expectations, 2021 continued to be an unprecedented time for business and society, driven by the sustained variability of COVID. The year began like 2020 ended - with business still being largely conducted in a remote stance, the government seeking to extend economic activity by providing stimulus to keep businesses and consumers afloat, and great uncertainty as to when some sense of normalcy might return.
Evans addressed multiple challenges - trying to keep people safe and healthy, staffing shortages, the war for scarce talent to fill openings, stress created by increased workloads, fear of sickness, new models of doing business, supply chain breakages, historically low interest rates, and by year-end, concern as to whether spikes in inflation were transitory. Great credit goes to our Branch Teams and Relationship Management Staff (Commercial and Consumer Lending, and Insurance) for their resilience and selfless work to support our clients and communities in the most difficult circumstances possible. They once again answered the call when another round of SBA PPP-2 loans was announced, producing approximately $95 million in loans to small businesses, of which approximately three quarters of what was lent was forgiven by year-end. These loans, together with approximately $200 million in PPP-1 loans forgiven during the prior year, resulted in a significant contribution to income.
Against this backdrop, Evans accomplished a great deal:
Evans opened a new community branch on August 30, 2021, in a low-income, minority neighborhood on the east side of Buffalo in a development known as Westminster Commons, a historically significant building for early immigrants originally constructed in 1893. This is the culmination of efforts, in conjunction with The Buffalo Federation of Neighborhood Centers (BFNC), to focus reinvestment and redevelopment in this underserved area.
In 2020, the Company announced the move to a new Administrative Headquarters in Williamsville but did not formally receive associates back into the office until July 6th with a formalized hybrid working model and focus on culture, which has always been a strength and hallmark of our company. The move was designed to bring staff together from three separate locations and drive operational efficiency and effectiveness while maintaining occupancy costs at prior levels. Two of the former buildings have been sold.
To understand how our talent felt about the Company, quantify associate experience, and gain insights to ensure everyone is connected and can contribute and create to their best, we partnered with the Great Place to Work’s Trust Model™. Evans received the highest annual survey participation by associates in 10 years and are honored that they have certified us as a Great Place to Work ™.
BUSINESS ACCOMPLISHMENTS
Commercial Banking
Despite the difficulties of the past year, the Commercial Banking Team once again performed at record production levels by meeting increased demand for commercial real estate, expanding market coverage with the addition of top tier talent, and being present for commercial businesses that needed financial assistance to grow or weather the challenges of the environment they faced.
|
·
| |
The Commercial Banking Team delivered record commercial loan production exceeding $312 million, which was critical to offsetting commercial loan payoffs that ran at double average rates. Payoffs were the result of historically low interest rates, intensified commercial real estate demand driving valuations, and increased sales of commercial businesses resulting from generational transfers, as principals rushed to transact before potential capital gains tax law changes (which were not implemented). These payoffs, though detrimental to balances, provided $700,000 in fees to the Bank. |
|
·
| |
In addition to record commercial loan production, the Company delivered $94 million in PPP-2 loans in the first quarter of 2021. During the year, $73 million of the $94 million PPP-2 balances were repaid/forgiven, as were $199 million of the $203 million PPP-1 loans, resulting in $8.8 million in fees received. |
|
·
| |
Credit quality improved during 2021, especially related to efforts to manage our hotel portfolio through pandemic challenges. There were upgrades to over 25% of this portfolio and the remainder of the portfolio is positioned for upgrade in 2023. |
|
·
| |
Significant experience and talent were added to the Commercial Real Estate and Commercial & Industrial Teams in both Buffalo and Rochester, New York, expanding penetration in those markets and introducing new contacts and clients to the Company. |
|
·
| |
Cash Management Sales produced a record $1 million in revenues. |
Consumer Banking
While Evans’ primary focus is meeting the needs of business and commercial customers, the recent modernization and growth of our consumer lending products allows us to meet community needs in a scalable and efficient manner, providing a superior experience and adding diverse streams of revenues.
|
·
| |
Financial Fitness: Evans introduced the “Know Your Worth” advertising campaign and tagline with a positive market reception. Our goal is to help clients feel confident and empowered, deliver an outstanding customer experience, and provide financial fitness. A team of associates, passionate about financial fitness, created content and tools for consumers and businesses to measure, track, and improve their financial health. Evans partnered with numerous non-profit organizations in Buffalo and Rochester to deliver various workshops virtually and in-person. |
|
·
| |
Digital Banking: As client preferences have evolved, Evans has adapted to continue delivering on the premium customer experience that our clients expect and deserve. While associates continue to serve clients in our branches as they always have, consumers are finding self-service tools, available through mobile and online banking, to be convenient and efficient as digital channel usage to open accounts, deposit checks, pay bills, and other functions continues to increase. During the year, upgrades were made to our digital deposit account opening platform, as well as our consumer loan platform, improving our ability to sell, process, underwrite, and close consumer loans in a scalable and compliant way. |
|
·
| |
Mortgage Banking: The Fairport Savings Bank acquisition in 2020 allowed us to stand-up a more robust residential mortgage organization with the combination of both companies’ operations, facilitating production of a record $119 million in mortgages in 2021. A new mortgage loan system allowed us to process a record number of loans as unprecedented refinancing activity continued. We have significantly expanded the mortgage team and plan to continue that expansion in 2022 and going forward. A more substantial mortgage program adds diversity to our revenue stream and complements our insurance agency and large and successful commercial banking business. |
Technology Evolution
While the core of the Bank’s business model is relationship-driven financing and service to business and consumer clients, as digital and self-service capabilities and acceptance of new technology exponentially expand, we have concentrated on creating capabilities that enhance these relationships. Technology strategy has been aligned to focus on enhance customer experience, operational efficiency, and scalability. The Company has begun to leverage robotic process and workflow automation and evaluate opportunities to partner with financial technology providers as part of our overall digital transformation strategy - the goal being to deliver strong and stable IT support for Bank growth.
Evans Insurance Agency
In an industry facing the headwinds of an aging sales talent demographic that has experienced attrition and a lack of fresh talent over the last several years, the Evans Agency was able to add two new Commercial Account Executives to a strong and experienced sales force after a fifteen-month search. The Agency also added two Personal Lines Account Executives to further strengthen and competitively support existing business retention and new policy sales.
Inclusion, Diversity, Equity and Awareness
Evans Bank is committed to making racial justice a priority and standing against all forms of hatred, discrimination, injustice, and violence. Our focus on Inclusion, Diversity, Equity & Awareness is strong.
This is not an initiative or a project but who we are and part of our cultural beliefs.
Our Inclusive Strategic Plan, which has just passed a year in existence, encompasses four pillars and lays out
5-year commitments in each.
Communication - Ensure company images are representative of the diversity within the communities we serve, and the unique qualities of our associates are celebrated.
Community Involvement - Focus on Community Reinvestment Act (CRA) partnerships within the community, providing financial support and service to non-profit and community partners through associate’s efforts with boards, financial education, and volunteerism.
Employee Experience and Recruitment - Efforts continue to be developed surrounding the lifecycle of an associate, most specifically related to
diversity in hiring. This includes recruitment and retention activities, creating a sense of belonging, and career development, planning, and support.
Procurement (WMBE Opportunities) - The Procurement Team revised purchasing guidelines and developed external referral partnerships that led to exceeding our spend goals for Women and Minority Owned Businesses in its first year.
Focus on Talent
Talent is a true differentiator for Evans and the key determinant for our success.
While humbled by our Great Place to Work certification, we have concentrated heavily on preparing our team for the continuously changing environment imposed by the pandemic. We provided development opportunities for leaders to learn and embrace techniques to foster communication and team empowerment. The Company provided individualized development paths for those transitioning into critical roles and launched detailed onboarding programs for new client-facing associates. Learning and development efforts, combined with consistent company and manager-led communication and programs celebrating our culture, enabled us to successfully weather the “Great Resignation of 2021” and sustain the competitive advantages provided by our talent.
The health and safety of our associates, clients, and community is a foremost priority and was evidenced in our execution of shifting business models - remote, in-office, and hybrid. We were able to sustain and excel in executing these strategies as associates appreciated the care, support, and flexibility that they received, returning significant and driven efforts on behalf of the Company. COVID-19 information and updates were provided regularly with prompt revisions to policies and procedures to address adjusting conditions. Public support for vaccinations was advocated through regular messaging, an onsite vaccination clinic, and acceleration of the annual Health Savings Account contribution by the Company for those completing their COVID-19 vaccination.
Community
Evans seeks to meet its values and honor its promise as a community based financial institution by supporting community projects and contributing our resources and business expertise to programs and entities that enrich our region. Examples in the past year include:
|
·
| |
Work/Life Solutions, a workforce support program launched in 2019 by Evans in partnership with and delivered by the United Way of Buffalo and Erie County to participating employers, marked its 1,000th call for assistance. This program helps employees overcome non-work-related issues attributing to decreased job performance and workplace attrition through an innovative set of on-site solutions. The most recent survey of participants reflected 100% satisfaction with the service provided. Participating employers grew to ten in the past year. |
|
·
| |
Persistence Preparatory Academy, a tuition-free, public charter school for kindergarten through 8th grade located on the East Side of Buffalo, moved to a newly renovated school building. In addition to the Bank financing the building rehabilitation, Evans Associates contributed time and effort to preparing the building for move-in and provided funding for the Evans Book Nook. |
|
·
| |
Evans supported and financed Bank client, Braymiller Market, in building a fresh food market in downtown Buffalo in an area deemed a food desert by the Mayor of the City of Buffalo. This was a major initiative to anchor a low-income housing market, provide fresh food to this area, add jobs for a successful retail and wholesale food operation, as well as serve as a catalyst for further development. |
|
·
| |
Evans financed the construction of Angela’s House, a 67-unit supportive living housing community, developed by CB Emmanuel Realty, LLC and Delta Development of Western New York, Inc. (associated with Catholic Charities and the Diocese of Buffalo). Utilizing a decommissioned Catholic School, the facility will provide affordable housing and include a segment of units for homeless seniors, those with hearing or visual impairment, and handicapped-accessible housing. There will be a full-time social worker on premises and Catholic Charities will provide referrals for physical and behavioral health needs. |
|
·
| |
We continued our five-year commitment to East Side Avenues, an initiative that ensures appropriate supports are in place for organizational leaders, assisting with planning and program design, and providing technical assistance for community-based organizations while lifting the voices of the people living and working on the East Side. The project provides capital and organizational support for five specific initiatives on the previously underserved East Side of Buffalo. In 2021, the organization launched its first round of funding for the Commercial Building Stabilization Fund; supported master planning efforts for three major community assets (Michigan Street African American Heritage Corridor, Central Terminal, and Broadway Market); selected and trained a second cohort of community-based commercial real estate developers; and funded much-needed commercial building enhancements for small businesses in the targeted area. These initiatives are led by a project implementation team from the University at Buffalo Regional Institute. |
Awards & Recognition
Evans executives were once again recognized this past year with Buffalo Business First’s “40 Under 40” Award and a Buffalo Black Achievers Award.
50/50 Women on Boards, a Global Education and Advocacy Campaign Movement, recognized Evans for having three female executives on its Board of Directors.
While 2021 was another year of trials and challenges, your Company and its associates delivered notable performance due to their tremendous commitment and resilience in the face of many hardships.
We look forward with hope and optimism to building off our success this past year and remaining a valued community partner as we support our clients through this most challenging time. We will continue to work diligently to deliver for all our stakeholders. Evans truly succeeds when we help others succeed and reach their fullest potential, be it our Shareholders, Community, Clients, or Associates.
Thank you for your trust and confidence in Evans Bank.
Sincerely,
DAVID J. NASCA
President and Chief Executive Officer
EVANS BANCORP, INC.
6460 Main Street
Williamsville, NY 14221
Proxy Statement
Dated March 25, 2022
For the Annual Meeting of Shareholders to be held May 3, 2022
General Information
This Proxy Statement is furnished to the shareholders of Evans Bancorp, Inc., a New York corporation (the “Company”), in connection with the solicitation of proxies for use at the Annual Meeting of Shareholders (the “Annual Meeting”) to be held virtually at meetnow.global/MTVRNTK on Tuesday, May 3, 2022 at 9:00 a.m. and at any adjournments thereof.
Shares of common stock represented by a properly executed proxy will be voted in the manner instructed, or if no instructions are indicated, “FOR” the election of the director nominees named therein, “FOR” the approval, on an advisory basis, of the compensation paid to the Company’s named executive officers, and “FOR” ratification of the appointment of Crowe LLP as the Company’s independent registered public accounting firm for fiscal year 2022. A proxy may be revoked at any time before it is voted at the Annual Meeting by delivering to the Secretary of the Company a written revocation or a duly executed proxy bearing a later date or by attending the Annual Meeting and voting at the meeting. Any shareholder of record may vote at the Annual Meeting, whether or not he or she has previously given a proxy. Attendance at the Annual Meeting will not have the effect of revoking a proxy unless you give proper written notice of revocation to the Secretary before the proxy is exercised or you vote by written ballot at the meeting. If you are a beneficial owner of shares held in street name and you wish to vote at the Annual Meeting, you must obtain a legal proxy from the organization that holds your shares.
The enclosed proxy is being solicited by the Board of Directors of the Company. The total cost of solicitation of proxies in connection with the Annual Meeting will be borne by the Company.
Internet Availability of Proxy Materials
We are relying upon a U.S. Securities and Exchange Commission rule that allows us to furnish proxy materials to shareholders over the Internet. As a result, on or about March 25, 2022, we sent by mail or e-mail a Notice Regarding the Availability of Proxy Materials containing instructions on how to access our proxy materials, including our Proxy Statement and Annual Report to Shareholders, over the Internet and how to vote. Internet availability of our proxy materials is designed to expedite receipt by shareholders and lower the cost and environmental impact of our Annual Meeting. However, if you received such a notice and would prefer to receive paper copies of our proxy materials, please follow the instructions included in the Notice Regarding the Availability of Proxy Materials.
If you received your proxy materials via e-mail, the e-mail contains voting instructions, including a control number required to vote your shares, and links to the Proxy Statement and the Annual Report to Shareholders on the Internet. If you received your proxy materials by mail, the Notice of Annual Meeting, Proxy Statement, proxy card and 2021 Annual Report on Form 10-K are enclosed.
If you hold our common stock through more than one account, you may receive multiple copies of these proxy materials and will have to follow the instructions for each in order to vote all of your shares of our common stock.
|
Important Notice Regarding the Availability of Proxy Materials
for the 2022 Annual Meeting of Shareholders to be Held on May 3, 2022:
Our Proxy Statement and 2021 Annual Report on Form 10-K are available
at www.edocumentview.com/EVBN
|
General Information
Questions and Answers About Our Annual Meeting
Q.Why Did I Receive this Proxy Statement?
Our Board is soliciting your proxy to vote at the meeting because you were a shareholder of our Company as of March 9, 2022, the Record Date, and are entitled to vote.
This Proxy Statement summarizes the information you need to know in order to cast a vote at the meeting.
Q.What Am I Voting On?
You are voting on three items:
•election of directors named in this Proxy Statement
•approval, by a non-binding advisory vote, of the compensation paid to the Company’s named executive officers (“Say on Pay”)
•ratification of the appointment of Crowe LLP as our independent registered public accounting firm for fiscal year 2022
Q.How Do I Vote?
Shareholders of record – registered shareholders
If you are a shareholder of record, there are four ways to Vote:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Telephone
|
|
|
|
By Internet
|
|
|
|
By Mail
|
|
|
|
At the Virtual Meeting
|
|
|
|
|
|
|
|
|
|
toll-free 1-800-652-8683 within the USA, US territories and Canada
|
|
|
|
www.envisionreports.com/EVBN
|
|
|
|
request, complete and return a paper proxy card
|
|
|
|
by electronic vote at the virtual meeting
|
Street name holders
Shares of our common stock that are held in a brokerage account in the name of the broker or by a bank, trustee, or other nominee are held in “street name.” If your shares are held in street name, you should follow the voting instructions provided by your broker, bank, trustee, or other nominee. If you hold your shares in street name and wish to vote at the meeting, please obtain instructions on how to vote at the meeting from your broker, bank, trustee or other nominee.
Q.What Are the Voting Recommendations of the Board of Directors?
|
|
|
|
|
|
|
|
Matter
|
|
Board
Recommendation
|
|
|
|
|
Election of the four directors named in this Proxy Statement
|
|
FOR EACH NOMINEE
|
|
|
|
|
Approval, on an advisory basis, of the compensation paid to the Company’s named executive officers (“Say on Pay”)
|
|
FOR
|
|
|
|
|
Ratification of the appointment of Crowe LLP as the Company’s independent registered public accounting firm for fiscal year 2022
|
|
FOR
|
If you return a properly executed proxy card without instructions, the persons named as proxies will vote your shares in accordance with the recommendations of our Board.
General Information
Q.Will Any Other Matters Be Voted On?
We do not know of any other matters that will be brought before the shareholders for a vote at the Annual Meeting. If any other matter is properly brought before the meeting, your signed paper or electronic proxy gives authority to the proxy holders, with full power of substitution, to vote your shares at their discretion.
Q.Why Haven’t I Received a Printed Copy of the Proxy Statement or Annual Report?
We are taking advantage of Securities and Exchange Commission (“SEC”) rules that allow companies to furnish proxy materials to shareholders via the Internet. This allows us to avoid printing and mailing proxy materials to shareholders who prefer to review the materials online. If you received a Notice of Internet Availability of Proxy Materials, or “Notice,” by mail, you will not receive a printed copy of the proxy materials, unless you submit a specific request.
The Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and annual report as well as how to submit your proxy over the Internet. If you received the Notice and would still like to receive a printed copy of the proxy materials, you should follow the instructions for requesting these materials included in the Notice. We plan to mail the Notice to shareholders on or about March 25, 2022.
Q.Who Can Attend the Annual Meeting Virtually?
Any Evans Bancorp, Inc. shareholder as of the close of business on the Record Date may attend the virtual meeting. To participate in the Annual Meeting, visit meetnow.global/MTVRNTK.
You will need the control number included in the shaded box on your Notice of Internet Availability of Proxy Materials on your proxy card or on the instructions that accompanied your proxy materials. The meeting will begin promptly at 9:00 a.m. Eastern Time on May 3, 2022. We encourage you to access the meeting prior to the start time leaving ample time for check in.
Shareholders who hold their shares through an intermediary, such as a bank or broker, must register in advance to vote and/or ask questions at the Annual Meeting. To register, shareholders must submit proof of proxy power (legal proxy) reflecting their Evans Bancorp, Inc. holdings along with their name and email address to Computershare at legalproxy@computershare.com. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 29, 2022. Shareholders will receive a confirmation email with a control number from Computershare regarding their registration.
Q.Who Is Entitled to Vote at the Meeting?
Only shareholders of record at the close of business on the Record Date of March 9, 2022 are entitled to receive notice of and to participate virtually in the Annual Meeting. If you were a shareholder of record on that date, you will be entitled to vote all of the shares you held on that date at the meeting, or at any postponement or adjournment thereof.
Q.How Many Votes Do I Have?
You will have one vote for each share of our common stock you owned at the close of business on the Record Date.
Q.What Constitutes a Quorum for the Annual Meeting?
The presence of the holders of a majority (greater than 50%) of the votes entitled to be cast at the meeting constitutes a quorum. Presence may be in person or by proxy. Abstentions and broker non-votes are counted as present and entitled to vote at the meeting for purposes of determining a quorum. Virtual attendance at our Annual Meeting constitutes presence in person for purposes of a quorum at the meeting.
Q.What Vote Is Required to Approve Each Proposal?
With respect to Item 1, directors are elected by a plurality of the votes cast. Plurality voting means that the number of candidates who receive the highest number of votes will be elected. “Votes cast” excludes abstentions and any broker non-votes. Accordingly, abstentions and broker non-votes will have no effect on the election of directors. Brokers do not have discretionary authority with respect to the election of directors.
General Information
With respect to Items 2 and 3, the affirmative vote of a majority of the votes cast is required for approval, assuming a quorum is present. With respect to Item 2, because this vote is advisory, it will not be binding upon the Board; however, the Human Resource and Compensation Committee and the Board have in the past considered and will continue to consider the outcome of the vote when making decisions for future executive compensation arrangements.
Brokers have discretionary authority to vote with respect to the ratification of the appointment of independent registered public accountants. Brokers do not have discretionary authority to vote with respect to the other proposals. Abstentions and broker non-votes will have no effect on Items 1, 2 and 3.
Q.What if I am a Beneficial Owner and Do Not Give Voting Instructions to My Broker? What is a Broker Non-Vote?
If you are a beneficial owner whose shares are held in “street name” (i.e., held of record by a broker, bank, trustee, or other nominee), you must instruct the broker, bank, trustee or other nominee how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker, bank, trustee or other nominee does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the nominee can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required. For the 2022 meeting, your broker does not have discretionary authority to vote on the election of directors or on the advisory vote to approve the Company’s executive compensation (the “Say-on-Pay” vote). If you do not provide voting instructions, a broker non-vote will occur and your shares will not be voted on these matters. Accordingly, it is particularly important that beneficial owners instruct their brokers how they wish to vote their shares.
Q.Can I Change My Vote or Revoke My Proxy?
Yes. You may change or revoke your proxy by sending in a new proxy card with a later date, casting a new vote by telephone or Internet or sending a written notice of revocation to our Corporate Secretary at Evans Bancorp, Inc., 6460 Main Street Williamsville, NY 14221. If you attend the meeting virtually and wish to vote at the meeting, you may request that your previously submitted proxy be revoked.
Q.How Will My Shares Be Voted if I Submit a Proxy Without Indicating My Vote?
If you submit a properly executed proxy without indicating your vote, your shares will be voted as follows:
•FOR each director nominee named in this Proxy Statement;
•FOR the approval, by a non-binding advisory vote, of the Company’s executive compensation; and
•FOR ratification of the appointment of Crowe LLP as our independent registered public accountants for 2022.
Q.Who to contact if I have questions about my shareholder information?
You can contact Computershare Investor Services by phone 888-294-8217 or by mail at P.O. Box 505005, Louisville, KY 40233-5005.
Voting Securities
Only holders of shares of common stock of record at the close of business on March 9, 2022 are entitled to notice of and to vote at the Annual Meeting and at all adjournments thereof. At the close of business on March 9, 2022, the Company had 5,497,890 shares of common stock outstanding. For all matters to be voted on at the Annual Meeting, holders of common stock are entitled to one vote per share.
A quorum of shareholders is necessary to hold a valid Annual Meeting. A majority of shares entitled to vote, present virtually or represented by proxy, shall constitute a quorum for the transaction of business at the Annual Meeting. Broker non-votes and abstentions will be counted as being present or represented at the Annual Meeting for purposes of establishing a quorum. A broker non-vote occurs on an item when a broker is not permitted to vote on that item without timely instruction from the beneficial owner of the shares and no instruction is given.
General Information
Vote Required and Board Recommendations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal
|
|
Vote Required
|
|
Board Recommendation
|
|
|
|
|
|
I.Election of Directors
|
|
Plurality of the votes cast
|
|
“FOR” election of the nominated
directors
|
|
|
|
|
|
IIAdvisory “Say-on-Pay” Vote
|
|
Majority of the votes cast
|
|
“FOR” the approval, on an advisory
basis, of the compensation paid to
our named executive officers
|
|
|
|
|
|
III.Ratification of Appointment of Independent Public Accounting Firm for 2022
|
|
Majority of the votes cast
|
|
“FOR” ratification of the
appointment of Crowe LLP
|
Plurality Vote – Proposal I
Under New York law and the Company’s bylaws, directors are elected by the affirmative vote, virtually or by proxy, of a plurality of the votes cast at a meeting at which a quorum is present, without regard to broker non-votes or abstentions. This means that, for Proposal I, the four director nominees identified in this Proxy Statement will be elected if they receive more affirmative votes than any other nominees.
Majority Vote – Proposals II and III
Proposals II and III must be approved by a majority of the votes cast at the Annual Meeting. This means that, in order for each of these proposals to be approved by the Company’s shareholders, the number of votes cast “For” a particular proposal must be greater than the number of votes cast “Against” that proposal.
Abstentions and Broker Non-Votes
If you hold your shares (i.e., they are registered) through a bank, broker or other nominee in “street name” but you do not provide the firm that holds your shares with your specific voting instructions, it will only be allowed to vote your shares on your behalf in its discretion on “routine” matters, but it cannot vote your shares in its discretion on your behalf on any “non-routine” matters. This result is known as a “broker non-vote”. Proposal I relating to the election of your Board’s nominees for Directors and Proposal II relating to Say on Pay are considered “non-routine” matters. Proposal III relating to the appointment of the Company’s independent auditors for fiscal year 2022 is considered a “routine” matter. While your broker will have discretionary authority to vote your uninstructed shares “for” or “against” or “abstain” from voting on Proposal III, your broker will have no discretionary authority to vote your shares on Proposals I and II at the Annual Meeting. If you hold your shares in street name, please follow the voting instructions sent to you by your bank, broker or other nominee.
Abstentions and broker non-votes will be counted as present for purposes of determining the existence of a quorum at the Annual Meeting. However, broker non-votes will not be treated as votes “cast” at the Annual Meeting and will have no effect on the outcome of any of the proposals to be considered at the Annual Meeting. Likewise, for Proposals I, II, and III, abstentions will not be treated as votes “cast” at the Annual Meeting and will have no effect on the outcome of these Proposals.
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth information, as of March 9, 2022, concerning:
•Each person whom we know beneficially owns more than 5% of our common stock.
•Each of our directors and nominees for the Board of Directors.
•Each of our Named Executive Officers, as defined below under “Executive Compensation”.
•All of our directors and executive officers as a group.
General Information
Beneficial ownership is determined under the rules of the Securities and Exchange Commission (the “SEC”) and generally includes voting or investment power with respect to our securities. Except as indicated in the footnotes to this table, the persons named in the table below have sole voting and investment power with respect to all shares of common stock beneficially owned. The number of shares beneficially owned by each person as of March 9, 2022 includes shares of common stock that such person has the right to acquire on or within 60 days after March 9, 2022 upon the exercise of vested stock options and also includes shares of restricted stock that are subject to forfeiture and transfer restrictions until the vesting date thereof. For each person or group included in the table below, percentage ownership is calculated by dividing the number of shares beneficially owned by such person, calculated as described in the previous sentence, by the sum of the 5,497,890 shares of common stock outstanding on March 9, 2022 plus the number of shares of common stock that such person or group has the right to acquire on or within 60 days after March 9, 2022. Beneficial ownership representing less than one percent is denoted with an asterisk “*”.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Number of Shares
Beneficially Owned
|
|
Percent of Class
|
|
|
|
|
|
Directors, Director Nominees and Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Battle
|
|
|
|
3,254
|
|
|
|
|
*
|
|
|
|
|
|
|
James E. Biddle, Jr.
|
|
|
|
23,185
|
|
|
|
|
*
|
|
|
|
|
|
|
John B. Connerton (1)
|
|
|
|
29,424
|
|
|
|
|
*
|
|
|
|
|
|
|
Jody L. Lomeo
|
|
|
|
3,280
|
|
|
|
|
*
|
|
|
|
|
|
|
Kevin D. Maroney
|
|
|
|
11,824
|
|
|
|
|
*
|
|
|
|
|
|
|
Robert G. Miller, Jr. (2)
|
|
|
|
83,521
|
|
|
|
|
1.51
|
%
|
|
|
|
|
|
Kimberley A. Minkel
|
|
|
|
2,705
|
|
|
|
|
*
|
|
|
|
|
|
|
David J. Nasca (3)
|
|
|
|
138,429
|
|
|
|
|
2.49
|
%
|
|
|
|
|
|
Christina P. Orsi
|
|
|
|
2,645
|
|
|
|
|
*
|
|
|
|
|
|
|
David R. Pfalzgraf, Jr.
|
|
|
|
4,342
|
|
|
|
|
*
|
|
|
|
|
|
|
Michael J. Rogers
|
|
|
|
6,797
|
|
|
|
|
*
|
|
|
|
|
|
|
Nora B. Sullivan
|
|
|
|
4,862
|
|
|
|
|
*
|
|
|
|
|
|
|
Thomas H. Waring, Jr. (4)
|
|
|
|
16,621
|
|
|
|
|
*
|
|
|
|
|
|
|
Aaron M. Whitehouse (5)
|
|
|
|
8,242
|
|
|
|
|
*
|
|
|
|
|
|
|
Lee C. Wortham
|
|
|
|
15,340
|
|
|
|
|
*
|
|
|
|
|
|
|
Directors, director nominees and executive officers as a group; 15 persons (6)
|
|
|
|
354,471
|
|
|
|
|
6.34
|
%
|
|
|
|
|
|
FJ Capital Management LLC (7)
1313 Dolley Madison Blvd, Ste 306
McLean, VA 22101
|
|
|
|
532,898
|
|
|
|
|
9.69
|
%
|
|
|
|
|
|
PL Capital Advisors, LLC (8)
750 Eleventh Street South, Suite 202
Naples, FL 34102
|
|
|
|
409,875
|
|
|
|
|
7.46
|
%
|
|
|
|
|
|
Manulife Financial Corporation (9)
200 Bloor Street East
Toronto, Ontario, Canada M4W 1E5
|
|
|
|
314,870
|
|
|
|
|
5.73
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Includes 13,626 shares that Mr. Connerton may acquire by exercise of options exercisable on March 9, 2022 or within 60 days thereafter and 3,007 shares of restricted stock that are subject to forfeiture and transfer restrictions until the vesting date thereof.
(2)Includes 24,610 shares that Mr. Miller may acquire by exercise of options exercisable on March 9, 2022 or within 60 days thereafter.
(3)Includes 2,344 shares owned jointly by Mr. Nasca and his wife, 552 shares owned by Mr. Nasca’s children, 52,815 shares that Mr. Nasca may acquire by exercise of options exercisable on March 9, 2022 or within 60 days thereafter and 7,738 shares of restricted stock that are subject to forfeiture and transfer restrictions until the vesting date thereof.
(4)Includes 1,184 shares held by Mr. Waring’s wife.
General Information
(5) Includes 612 shares that Mr. Whitehouse may acquire by exercise of options exercisable on March 9, 2022 or within 60 days thereafter and 1,394
shares of restricted stock that are subject to forfeiture and transfer restrictions until the vesting date thereof.
(6)Includes 91,663 shares that such persons may acquire by exercise of options exercisable on March 9, 2022 or within 60 days thereafter.
(7)Based on the most recently available Schedule 13G/A filed with the SEC on February 2, 2022. According to that report, the aggregate holdings consist of 504,755 shares held by Financial Opportunity Fund LLC and 28,143 shares held by a managed account that FJ Capital manages and of which FJ Capital is the managing member (reporting shared voting and dispositive power with respect to 532,898 shares).
(8)Based on the most recently available Schedule 13G/A filed with the SEC on February 9, 2022 on behalf of PL Capital Advisors, LLC, Richard J. Lashley, a managing member of PL Capital Advisors, and John W. Palmer, a managing member of PL Capital Advisors. PL Capital Advisors, Richard J. Lashley, and John W. Palmer reported shared voting and dispositive power with respect to 409,875 shares.
(9)Based on the most recently available Schedule 13G/A filed with the SEC on February 16, 2022 on behalf of Manulife Financial Corporation (“MFC”) and MFC’s indirect, wholly-owned subsidiaries, Manulife Investment Management (US) LLC (“MIM (US)”), and Manulife Investment Management Limited (“MIML”). MIM (US) reported sole voting and dispositive power with respect to 314,855 shares, and MIML reported sole voting and dispositive power with respect to 15 shares.
Equity Compensation Plans. All equity compensation plans maintained by the Company were approved by the Company’s shareholders. Shown below is certain information as of December 31, 2021 concerning the shares of the Company’s common stock that may be issued under existing equity compensation plans.
|
Equity Compensation Plan Information
|
|
Equity Compensation Plans Approved by Security Holders
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options
|
|
Weighted-
average exercise
price of
outstanding
options
|
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (1)
|
|
|
|
|
|
|
Evans Bancorp, Inc. 2019 Long-Term Equity Incentive Plan
|
|
|
|
56,560
|
|
|
|
|
$ 29.59
|
|
|
|
|
221,065
|
|
|
|
|
|
|
|
Evans Bancorp, Inc. 2009 Long-Term Equity Incentive Plan
|
|
|
|
176,083
|
|
|
|
|
$ 29.83
|
|
|
|
|
—
|
|
|
|
|
|
|
|
Evans Bancorp, Inc. 2013 Employee Stock Purchase Plan
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
60,811
|
|
|
|
|
|
|
|
Total
|
|
|
|
232,643
|
|
|
|
|
$ 29.77
|
|
|
|
|
281,876
|
|
(1)This column excludes shares reflected under the column “Number of Securities to be issued upon exercise of outstanding options.”
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the Company’s officers and directors, and persons who beneficially own more than 10% of the Company’s common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the Company and written representations from the Company’s officers and directors, the Company believes that during or with respect to fiscal year 2021, all reports required by Section 16(a) of the Exchange Act were timely filed, except that Robert G. Miller, Jr. filed a report on Form 4 that was three days late for a transaction relating to 256 shares of common stock.
Proposal I – Election of Directors
The Company’s bylaws provide for a classified board of directors, with three classes of directors, each nearly as equal in number as possible. Each class serves for a three-year term, and one class is elected each year. The Board of Directors is authorized by the Company’s bylaws to fix from time to time, the number of directors that constitute the whole Board of Directors. The Board size has been set at thirteen members. The nominees for director at the 2022 Annual Meeting are: David J. Nasca, David R. Pfalzgraf, Jr., Thomas H. Waring, Jr., and Lee C. Wortham, for terms to expire at the 2025 Annual Meeting and until their successors are duly elected and qualified.
The Board of Directors has no reason to believe that any nominee would be unable or unwilling to serve, if elected. In the event that any nominee for director becomes unavailable and a vacancy exists, it is intended that the Corporate Governance and Nominating Committee of the Board of Directors will recommend a substitute nominee for approval by the Board of Directors.
Required Vote
Under New York law and the Company’s bylaws, directors are elected by the affirmative vote, in person or by proxy, of a plurality of the votes cast at a meeting at which a quorum is present. Only votes actually cast will be counted for the purpose of determining whether a particular nominee received more votes than the persons, if any, nominated for the same seat on the Board of Directors. This means that, for Proposal I, the four director nominees identified in this Proxy Statement will be elected if they receive more affirmative votes than any other nominees. Votes to withhold in an uncontested election and broker non-votes will have no effect on the outcome of this vote.
Unless otherwise directed, the persons named in the proxy card intend to vote shares as to which proxies are received “FOR” each of the director nominees: David J. Nasca, David R. Pfalzgraf, Jr., Thomas H. Waring, Jr., and Lee C. Wortham.
|
|
|
|
|
|
|
|
|
|
|
|
|
✔
|
|
|
|
THE COMPANY’S BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS.
|
|
|
Proposal I – Election of Directors
Information Regarding Directors, Director Nominees and
Executive Officers
Board Diversity
|
|
|
|
Age
|
Corporate Governance
•11 of 13 Board of Directors are independent
•All members of the Audit, Human Resource and Compensation, and Corporate Governance and Nominating Committees are independent
•Positions of Chairman and CEO have been separated since 2001
•All directors are in compliance with stock ownership requirements
|
|
|
|
|
Gender
Tenure
|
Board Qualifications
|
Proposal I – Election of Directors
The following tables set forth the names, ages, and positions of the director nominees, the directors continuing in office, and the executive officers of the Company:
Nominees for Director:
|
Name
|
|
Age
|
|
Position
|
|
Term to
Expire
|
|
|
|
|
|
|
David J. Nasca †
|
|
64
|
|
Director
President and Chief Executive Officer of the Company
President and Chief Executive Officer of Evans Bank, N.A.
|
|
2025
|
|
|
|
|
|
|
David R. Pfalzgraf, Jr.
|
|
52
|
|
Director
|
|
2025
|
|
|
|
|
|
|
Thomas H. Waring, Jr.
|
|
64
|
|
Director
|
|
2025
|
|
|
|
|
|
|
Lee C. Wortham
|
|
64
|
|
Director
|
|
2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors Continuing in Office and Executive Officers:
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Term
Expires
|
|
|
|
|
|
|
Michael A. Battle
|
|
66
|
|
Director
|
|
2023
|
|
|
|
|
|
|
James E. Biddle, Jr.
|
|
60
|
|
Director
|
|
2023
|
|
|
|
|
|
|
Jody L. Lomeo
|
|
53
|
|
Director
|
|
2023
|
|
|
|
|
|
|
Kevin D. Maroney
|
|
64
|
|
Director
|
|
2024
|
|
Robert G. Miller, Jr.
|
|
65
|
|
Director
|
|
2024
|
|
|
|
|
|
|
Kimberley A. Minkel
|
|
56
|
|
Director
|
|
2024
|
|
|
|
|
|
|
Christina P. Orsi
|
|
50
|
|
Director
|
|
2024
|
|
|
|
|
|
|
Michael J. Rogers
|
|
64
|
|
Director
|
|
2024
|
|
|
|
|
|
|
Nora B. Sullivan
|
|
64
|
|
Director
|
|
2023
|
|
|
|
|
|
|
John B. Connerton †
|
|
55
|
|
Treasurer of the Company
Chief Financial Officer of Evans Bank, N.A.
|
|
—
|
|
|
|
|
|
|
Aaron M. Whitehouse †
|
|
51
|
|
President of The Evans Agency, LLC
|
|
—
|
†Executive Officer
Proposal I – Election of Directors
Directors, Director Nominees and Executive Officer Information
Set forth below are the biographies of (1) each of the nominees and continuing directors containing information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Board to determine that the person should serve as a director for the Company, and (2) the executive officers of the Company.
Nominees for Director
|
|
|
David J. Nasca
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Age: 64
Director Since: 2006
Committees:
Enterprise Risk
|
|
|
|
Biographical Information
Mr. Nasca has been a director of the Company since 2006. Mr. Nasca also serves as the President and Chief Executive Officer of the Company and as President and Chief Executive Officer of the Bank. He has held the position of President of the Company and the Bank since 2006, and Chief Executive Officer of the Company and the Bank since 2007. Mr. Nasca served as Chief Operating Officer of LifeStage, LLC, a health care services startup company, from October 2005 to August 2006. From June 2004 to July 2005, Mr. Nasca served as Executive Vice President of Strategic Initiatives of First Niagara Financial Group. Mr. Nasca held the position of Executive Vice President, Consumer Banking Group, Central New York Regional Executive of First Niagara Financial Group from June 2002 through June 2004. From October 2000 to June 2002, Mr. Nasca served as President and CEO of Iroquois Financial, Inc. and Cayuga Bank which were wholly owned by First Niagara Financial Group.
We believe Mr. Nasca provides our Board with information gained from hands-on management of our operations, identifying our near-term and long-term challenges and opportunities. The Board has determined that Mr. Nasca’s significant experience in the banking industry over the past 30 years, including operational, financial, and executive roles, as well as his unique perspective as leader of our management team, qualifies him for service as a member of our Board of Directors.
|
|
|
|
|
|
|
|
|
Proposal I – Election of Directors
|
|
|
David R. Pfalzgraf, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 52
Director Since: 2014
Committees:
Corporate Governance and Nominating (Chair), Human Resource and Compensation
|
|
|
|
Biographical Information
Mr. Pfalzgraf has been a director of the Company since 2014. He has been a Managing Partner of Rupp, Baase, Pfalzgraf, Cunningham LLC, a law firm specializing in private business enterprises ranging from closely-held family businesses to multi-national corporations, since April 2000. Mr. Pfalzgraf leads the firm’s corporate practice group, working primarily with private business enterprises ranging from closely-held family businesses to multi-national corporations. He assists clients with all corporate needs including business formations, restructurings, mergers and acquisitions, financing and investment, development, labor and employment issues, and commercial transactions.
We believe Mr. Pfalzgraf’s extensive legal and business experience makes him a valuable member of our Board of Directors, to serve as Chairman of its Corporate Governance and Nominating Committee, and to serve as a member of the Human Resource and Compensation Committee.
|
|
|
|
|
|
|
|
|
|
|
|
Thomas H. Waring, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 64
Director Since: 1998
Committees:
Human Resource and Compensation (Chair), Corporate Governance
and Nominating
|
|
|
|
Biographical Information
Mr. Waring has been a director of the Company since 1998. He has owned and managed Waring Financial Group, a financial planning, insurance and financial services and sales firm since 1996. Waring Financial Group was renamed GCW Risk and Benefit Solutions LLC in 2016. Mr. Waring is the majority member of Note Advisors, LLC, a fee only independent registered investment advisory entity formed in August 2014 and registered with the SEC. He has also been the managing member of Family & Business Directions, LLC, a fee-based consulting business serving family-held and closely-held business owners, their families, and key executives, since 2010. Mr. Waring’s financial services experience provides the Board with a deeper understanding of the products and services which the Company needs to provide in the marketplace to remain competitive, as well as the delivery of those products and services. Mr. Waring frequently advises high net worth individuals, family business owners and closely-held business owners. He is experienced in providing strategic planning and development advice, including designing and implementing executive and key employee benefits.
We believe that Mr. Waring’s qualifications to serve on our Board of Directors, as Chairman of the Human Resource and Compensation Committee and as a member of the Board’s Corporate Governance and Nominating Committee include his extensive sales and marketing experience with a financial services company, as well as his executive leadership and management experience.
|
|
|
|
|
|
|
|
|
Proposal I – Election of Directors
|
|
|
Lee C. Wortham
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director -
Chairman
Age: 64
Director Since: 2011
Committees:
Audit, Human Resource and Compensation, Corporate Governance
and Nominating,
Enterprise Risk
|
|
|
|
Biographical Information
Mr. Wortham has been a director of the Company since 2011 and has served as Chairman since April 2018. He has been a Partner and COO at Barrantys LLC, a consultant and service provider to wealthy families and family offices, since 2007. Prior to his role with Barrantys, Mr. Wortham was an Executive Vice President of First Niagara Financial Group from 2005 to 2007, where his responsibilities included wealth management, risk management, and corporate marketing. From 1999 to 2005, Mr. Wortham was the Executive Vice President of Global Private Client Services, Product Development, and Central Operations for The Bank of New York. Mr. Wortham held several positions at Chase Manhattan Bank and Chemical Bank (currently JP Morgan Chase & Co.) from 1985 to 1999, including leading the Global Private Bank’s activities in Europe, the Middle East, and Africa while based in London, England. He started his career at M&T Bank in retail banking from 1980 to 1985.
We believe Mr. Wortham’s extensive experience in the financial services industry makes him a valuable member of our Board, and its Audit, Human Resource and Compensation, Corporate Governance and Nominating, and Enterprise Risk Committees. His expertise has been valuable in helping the Board evaluate the Company’s strategies to diversify its product offerings and revenue streams as a growing and competitive financial institution.
|
|
|
|
|
|
|
|
|
Directors Continuing in Office and Executive Officers
|
|
|
Michael A. Battle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 66
Director Since: 2016
Committees:
Enterprise Risk, Corporate Governance and Nominating
|
|
|
|
Biographical Information
Mr. Battle has been a director of the Company since 2016. He has been a partner of the Washington, DC office of Barnes & Thornburg LLP, specializing in white collar criminal defense, as a member of the firm’s Litigation Department since April 2016. Mr. Battle’s practice focuses on commercial and civil litigation, white collar criminal matters, and appeals. Prior to his role with Barnes & Thornburg, Mr. Battle was a senior partner of Schlam, Stone & Dolan LLP from 2010 – April 2016 and was a partner of Fulbright & Jaworski LLP from 2007 – 2010. He was Director of the Executive Office for United States Attorneys from 2005 – 2007, providing administrative oversight of all 93 United States Attorneys and serving as a liaison between the United States Attorneys and the Justice Department and other federal agencies. Mr. Battle served as United States Attorney with the United States Attorney’s Office, Western District of New York, from 2002 – 2005. From 1996 – 2002, he was appointed by Governor George Pataki (and subsequently elected) to serve as Judge for Erie County Family Court, providing rulings in thousands of family-law and matrimonial cases. Mr. Battle served as Attorney in Charge with the New York State Attorney’s Office, Buffalo Regional Office, from 1995 – 1996. He was the Assistant Federal Defender with the Federal Defender’s Office, Western New York, from 1992 – 1995 and Assistant United States Attorney with the United States Attorney’s Office, Western District of New York, from 1985 – 1992. Mr. Battle began his career as an Attorney with the Legal Aid Society of New York, Civil Division, from 1981 – 1985.
We believe that Mr. Battle’s wide-ranging and extensive legal and governance experience make him a valuable member of our Board and its Enterprise Risk Committee and Corporate Governance and Nominating Committee.
|
|
|
|
|
|
|
|
|
|
|
|
James E. Biddle, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 60
Director Since: 2001
Committees:
Audit, Enterprise Risk
|
|
|
|
Biographical Information
Mr. Biddle has been a director of the Company since 2001. He has served as the Chairman and Treasurer of Mader Construction Co., Inc., since 2001. Mr. Biddle also has served as the Chief Financial Officer of Bullis Investors, LLC, since 2007. In addition, Mr. Biddle has served as the Vice President and Treasurer of Arric Corp., an environmental remediation company, since 1989. Mr. Biddle has extensive experience in the construction sector, an attribute that enables him to assist the Board in understanding the opportunities and risks of a large component of our loan portfolio. In addition, his experience as a treasurer provides the Board with skills in assessing risk and exercising diligence, which are functions relevant to his service on the Board’s Enterprise Risk Committee.
We believe that Mr. Biddle’s work in the construction industry, his continuing executive experience, and his proven financial acumen make him a very valuable member of our Board and its Audit Committee and Enterprise Risk Committee.
|
|
|
|
|
|
|
|
|
Directors Continuing in Office
|
|
|
Jody L. Lomeo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 53
Director Since: 2017
Committees:
Corporate Governance and Nominating, Human Resource and Compensation
|
|
|
|
Biographical Information
Mr. Lomeo has been a director of the Company since 2017. As of December 31, 2020 Mr. Lomeo retired as the President and Chief Executive Officer of Kaleida Health, a healthcare provider in Western New York. He served as Kaleida Health’s President and CEO since 2014. In addition to Kaleida Health, since 2014 he served as the President and Chief Executive Officer of the Great Lakes Health System of Western New York, the parent organization responsible for integrating the clinical activities of Kaleida Health, Erie County Medical Center Corporation (ECMC), University at Buffalo and the Center for Hospice & Palliative Care. Mr. Lomeo served as CEO of ECMC from 2009 – 2014.
We believe Mr. Lomeo’s significant executive experience and community leadership qualify him to serve as an integral member of our Board of Directors and its Corporate Governance and Nominating Committee and Human Resource and Compensation Committee.
|
|
|
|
|
|
|
|
|
|
|
|
Kevin D. Maroney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 64
Director Since: 2020
Committees:
Enterprise Risk
|
|
|
|
Biographical Information
Mr. Maroney has been a director of the Company since 2020. Mr. Maroney held the position of President and Chief Executive Officer of Fairport Savings Bank from January 2018 until May 1, 2020. On May 1, 2020 the Company acquired Fairport Savings Bank at which time Mr. Maroney became a director of the Company in accordance with the terms of the acquisition agreement. Prior to his position as Chief Executive Officer of Fairport Savings Bank, Mr. Maroney served in a number of executive and senior management roles, including Chief Financial Officer and Chief Operating Officer of Fairport Savings Bank.
We believe Mr. Maroney’s 40 plus years of banking experience and his extensive finance experience qualify him to serve on our Board of Directors.
|
|
|
|
|
|
|
|
|
Directors Continuing in Office
|
|
|
Robert G. Miller, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Age: 65
Director Since: 2001
Committees:
Enterprise Risk
|
|
|
|
Biographical Information
Mr. Miller has been a director of the Company since 2001. On March 29, 2019 Mr. Miller retired from the positions of Secretary of the Company, President of The Evans Agency, LLC (“TEA”), an indirect wholly-owned subsidiary of the Company, and Executive Vice President of Evans Bank, N.A (the “Bank”). Prior to retirement Mr. Miller served as the Secretary of the Company since April 2010, the President of TEA since 2000 and as Executive Vice President of Evans Bank, N.A. since December 2009. He also has served as the President of Evans National Financial Services, LLC, a wholly-owned subsidiary of the Company, since May 2002.
We believe Mr. Miller’s substantial experience in the financial services industry gives him a solid foundation from which to advise the Board with respect to financial service acquisition opportunities, and his experience overseeing a financial sales force provides him with a practical background on matters such as developing strategies to succeed in a highly competitive marketplace.
|
|
|
|
|
|
|
|
|
|
|
|
Kimberley A. Minkel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 56
Director Since: 2018
Committees:
Human Resource and Compensation, Enterprise Risk
|
|
|
|
Biographical Information
Ms. Minkel has been a director of the Company since 2018. She is President and Executive Director of the Niagara Frontier Transportation Authority (“NFTA”) since 2010. Ms. Minkel is responsible for managing a transportation system including light rail, bus, paratransit, and two airports within Western New York. Ms. Minkel manages an annual $288 million operating and capital budget that provides efficient and professional transportation services while engaging with board members, over 1,600 employees, stakeholders, and the general public in a manner consistent with the needs of a diverse community. Before her role as President and Executive Director of the NFTA, Ms. Minkel served as Director of Risk, Health, Safety, and Environmental Quality for the NFTA. In this role, she provided functional leadership within the areas of risk management including loss control, environmental, and safety.
We believe Ms. Minkel’s extensive executive experience and community leadership qualify her to serve on our Board of Directors and its Human Resource and Compensation Committee and Enterprise Risk Committee.
|
|
|
|
|
|
|
|
|
Directors Continuing in Office
|
|
|
Christina P. Orsi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 50
Director Since: 2018
Committees:
Audit, Human Resource and Compensation
|
|
|
|
Biographical Information
Mrs. Orsi has been a director of the Company since 2018. She is President of the John R. Oishei Foundation, the most comprehensive private foundation in Western New York, focusing on a broad range of interrelated issues, and offering philanthropic support that goes far beyond funding. She is responsible for guiding the long-term strategic direction of the Foundation, supporting and empowering our staff to respond quickly and effectively to the community’s needs, and driving its mission to improve the quality of life for all Western New Yorkers. Prior to that she was the Associate Vice President of the Office of Economic Development for the University at Buffalo (“UB”) since 2015. In this role, Mrs. Orsi lead UB’s Business and Entrepreneur Partnership with a focus on connecting business with UB faculty for collaboration on research and development; enabling business access to programs like START UP NY to help companies grow in New York State; and supporting the commercialization of faculty inventions to move the from idea to market. From 2007-2015, Mrs. Orsi was the Executive Director of the Regional Economic Development Council and Regional Director for Western New York for the Empire State Development Corporation. In this role, Mrs. Orsi provided strategic direction for the Regional Economic Development Council, established collaboration among diverse leaders throughout Buffalo Niagara, and led implementation of the Buffalo Billion Investment Strategy.
We believe that Mrs. Orsi’s extensive knowledge of economic development programs, private sector policy issues, and government agencies at the state, regional, and municipal levels qualify her to serve on our Board of Directors and its Audit Committee and Human Resource and Compensation Committee.
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Rogers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director-Vice Chairman
Age: 64
Director Since: 2011
Committees:
Audit (Chair),
Enterprise Risk
|
|
|
|
Biographical Information
Mr. Rogers has been a director of the Company since 2011. He is a certified public accountant in New York State and the managing member of a real estate development company, Oakgrove Development, LLC, a position he has held since 2009. Mr. Rogers was the Executive Vice President and Chief Financial Officer of Great Lakes Bancorp, Inc., the parent company of Greater Buffalo Savings Bank, from 2006 to 2008. From 2004 to 2006, Mr. Rogers worked as an independent consultant, principally on Sarbanes-Oxley initiatives and business rationalization reviews. Mr. Rogers worked at KPMG LLP, a leading accounting firm, from 1984 to 2004, serving as an audit partner from 1995 to 2004. In his role as an auditor at KPMG LLP, Mr. Rogers worked on several engagements for financial institutions, particularly banks.
We believe Mr. Rogers’ many years of experience have provided him with a very strong knowledge base on the banking industry. His previous roles as an audit partner, SEC reviewing partner, and CFO also demonstrate his high level of competence in the areas of finance and accounting in general, and SEC reporting in particular, qualify him to be our Audit Committee Chairman and a member of the Board’s Enterprise Risk Committee, and provide the Board an additional expert on these matters in an increasingly complex regulatory environment.
|
|
|
|
|
|
|
|
|
Directors Continuing in Office
|
|
|
Nora B. Sullivan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Director
Age: 64
Director Since: 2013
Committees:
Audit, Corporate Governance and Nominating,
Enterprise Risk
(Chair)
|
|
|
|
Biographical Information
Ms. Sullivan has been a director since 2013. She is President of Sullivan Capital Partners, LLC, a financial services company providing investment banking and consulting services to closely - held private businesses. Ms. Sullivan focuses on strategic planning, mergers and acquisitions, and governance matters. Prior to founding Sullivan Capital Partners in 2004, Ms. Sullivan worked for Citigroup Private Bank from 2000 to 2004, providing wealth management and private equity services to high net worth clients. From 1995 to 1999, Ms. Sullivan was Executive Vice President of Rand Capital Corporation, a publicly traded closed - end investment management company providing capital and managerial expertise to small and mid-size businesses. Ms. Sullivan began her career in the legal profession where she held various positions with significant legal responsibility and acquired a solid foundation in corporate related matters and business transactions. In 2015, Ms. Sullivan joined the board of directors of 22nd Century Group, Inc. and currently is Chairperson of the board. 22nd Century Group is a publicly traded company that is in the plant biotechnology industry and is a leader in tobacco harm reduction. She is currently and has been a member of the board of directors of several privately held businesses, working closely with fellow board members, management and ownership on strategic planning initiatives, developing exit strategies and implementing sound governance practices.
We believe Ms. Sullivan’s unique combination of legal experience and financial services expertise qualifies her to serve on our Board of Directors, and as a member of the Board’s Audit Committee and Corporate Governance and Nominating Committee.
|
|
|
|
|
|
|
|
|
Executive Officers
|
|
|
John B. Connerton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Age: 55
|
|
|
Biographical Information
Mr. Connerton was appointed Treasurer of the Company and Chief Financial Officer of the Bank on November 30, 2015. Prior to his appointment as Treasurer of the Company he had served as Principal Accounting Officer of the Company between 2002 and 2010 and again between 2013 and 2015. He has also served as Senior Vice President and Treasurer of the Bank since 2010. Prior to joining the Company, Mr. Connerton was a Senior Auditor specializing in auditing and consulting for banking, healthcare and manufacturing clients at Deloitte & Touche LLP.
|
|
|
|
|
|
|
|
|
|
|
Aaron M. Whitehouse
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Age: 51
|
|
|
|
Biographical Information
Mr. Whitehouse was appointed President of The Evans Agency, LLC., a wholly owned subsidiary of Evans Bank, on September 1, 2019. Prior to his appointment as President, he served as Chief Operating Officer between 2018 and 2019. He joined the Company in 2018 when Evans acquired Richardson & Stout, Inc., an independent insurance agency he co-owned since 1998. He is currently responsible for the overall leadership and strategic direction of the agency which includes Property and Casualty functions and Employee Benefits.
|
|
|
|
|
|
|
|
|
Corporate Governance
Independence of Directors
A substantial majority of the Board of Directors, and all members of the Audit, Human Resource and Compensation, and Corporate Governance and Nominating Committees, are independent, as affirmatively determined by the Board, consistent with the criteria established by NYSE American and as required by our bylaws.
The Board has conducted an annual review of director independence for all current nominees for election as directors and all continuing directors. During this review, the Board considered transactions and relationships during the prior year between each director or any member of his or her immediate family and the Company and its subsidiaries, affiliates and principal shareholders, including those of the type described below under “Transactions with Related Persons.” The Board also examined transactions and relationships between directors or their affiliates and members of senior management or their affiliates. The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.
As a result of this review, the Board affirmatively determined that the nominees David R. Pfalzgraf, Jr., Thomas H. Waring, Jr., and Lee C. Wortham meet the Company’s standard of independence, as do the following continuing directors: Michael A. Battle, James E. Biddle, Jr., Jody L. Lomeo, Kevin D. Maroney, Kimberley A. Minkel, Christina P. Orsi, Michael J. Rogers, and Nora B. Sullivan. As an executive officer of the Company, David J. Nasca has been determined not to be independent. As a previous executive officer of the Company, Robert G. Miller, Jr. has been determined not to be independent.
Leadership Structure. Lee C. Wortham has served as Chairman of the Company’s Board of Directors since April 2018. In his capacity as Chairman, Mr. Wortham chairs meetings of the Board and executive sessions of the Board, coordinates the activities of the other independent directors, and performs such other duties and responsibilities as the Board of Directors may determine. These duties also include chairing meetings of the Company’s shareholders, overseeing the preparation of agendas for meetings of the Board, keeping directors informed through the timely distribution of information and reports, maintaining contact with the Company’s CEO between meetings to stay current on developments and to determine when it may be appropriate to alert the Board to significant pending developments, serving as a liaison between independent directors and the CEO with respect to sensitive issues, and other matters.
The positions of Chairman and CEO have been separated since 2001. While the separation of these positions is not required by our bylaws, we believe that it is the most appropriate leadership structure for us at this time. We believe that it is advantageous to separate the two positions in order to provide for independent director control over the Board agenda and information flow, encourage open and lively communication between the independent directors and management, and to help balance the leadership of the Board.
Board of Directors Stock Ownership. Upon his or her first election or appointment to the Board of Directors, a new director must hold, or must obtain within 60 calendar days after such election or appointment, not less than $10,000 aggregate market value of the Company’s common stock, based on the trailing 365-day average price. A new director has a period of 5 years from the beginning of such director’s term of office to obtain the required $50,000 aggregate market value of the Company’s common stock. The value of a new director’s qualifying shares at the beginning of his or her term in office will be determined as of the date purchased or the date on which the individual becomes a director, whichever value is greater. As of the date of this Proxy Statement, all directors are in compliance with the Board of Directors stock ownership requirements. Our Insider Trading Policy prohibits directors, officers and employees from engaging in any hedging or monetization transactions involving Evans Bancorp securities.
Oversight of Risk Management. Our Enterprise Risk Committee (“ERC”) is responsible for overseeing and approving company-wide risk management practices. See the discussion of the ERC committee’s roles and responsibilities under the Board of Director’s Committees section.
Compensation Risk. The Human Resource and Compensation Committee, along with the ERC, considers risk and its influence on the Company’s compensation programs. This Committee reviews each compensation element individually and in the aggregate to ensure that the overall compensation program provides a balanced perspective that ultimately aligns pay with performance while also ensuring bonus / incentive programs do not motivate inappropriate risk-taking. Equity award levels and practices are set to foster shared interests between management and shareholders, but are not considered by the Committee to be at levels that would drive inappropriate behavior. In the Committee’s judgment, the compensation policies and practices of the Company do not give rise to material risks.
Corporate Governance
In addition, the Company is subject to interagency guidance issued by the FDIC, the FRB and the OCC designed to ensure that incentive compensation arrangements at banking organizations appropriately tie rewards to longer-term performance and do not undermine the safety and soundness of the organizations or create undue risks to the financial system. This guidance embodies three core principles, which are: (1) incentive compensation arrangements at a banking organization should provide employees incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risks; (2) these arrangements should be compatible with effective controls and risk management, and (3) these arrangements should be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors. We believe that our incentive compensation program satisfies the principles of this guidance.
Policy for Director Attendance at Annual Meeting. It is the policy of the Company that all directors be present at the Annual Meeting, barring unforeseen or extenuating circumstances. All directors who were then serving were present at the Company’s 2021 Annual Meeting, except for James E. Biddle, Jr.
Shareholder Communications with the Board of Directors. Shareholders and other parties interested in communicating directly with the Company’s Board of Directors may do so by writing to the Evans Bancorp, Inc. Board of Directors, 6460 Main Street, Williamsville, NY 14221. All correspondence received under this process is compiled and summarized by the Corporate Secretary of the Company and presented to the Board of Directors, in accordance with our Policy for Communication to the Board of Directors. Concerns relating to accounting, internal controls or auditing matters are handled in accordance with procedures established by the Audit Committee, as set forth in our Employee Complaint Procedure for Accounting and Auditing Matters. Each of these policies is available in the Governance Documents section of the Company’s website (https://evansbancorp.q4ir.com), which can be found by clicking on “Governance”, then “Governance Documents”.
Code of Ethics for Chief Executive Officer and Principal Financial Officers. The Company has a “Chief Executive Officer/Treasurer/Controller Code of Ethics,” which is applicable to the Company’s principal executive officer, principal financial officer, and principal accounting officer. The “Chief Executive Officer/Treasurer/Controller Code of Ethics” is available in the Governance Documents section of the Company’s website (https://evansbancorp.q4ir.com), which can be found by clicking on “Governance”, then “Governance Documents”. The Company intends to post amendments to or waivers from its code of ethics at this location on its website.
Board Meetings and Attendance at Board of Director and Committee Meetings. The Company’s Board of Directors met ten times during fiscal 2021, including one strategic planning meeting. Each incumbent director attended at least 75% of the aggregate of: (1) all meetings of the Company’s Board of Directors (held during the period for which he or she served as a director) and (2) all meetings held by the committees of the Company’s Board of Directors on which he or she served (during the periods that he or she served).
Availability of Committee Charters and Other Corporate Governance Documents. Current copies of the written charters for the Audit Committee, the Human Resource and Compensation Committee, and the Corporate Governance and Nominating Committee, copies of the Company’s “Chief Executive Officer/Treasurer/Controller Code of Ethics” and the “Code of Conduct,” the “Policy for Communication to the Board of Directors,” and the “Employee Complaint Procedure for Accounting and Auditing Matters” are available in the Governance Documents section of the Company’s website (https://evansbancorp.q4ir.com), which can be found by clicking on “Governance”, then “Governance Documents”.
Human Capital
At December 31, 2021, we employed 378 full-time equivalent employees. At that date, the average tenure of all of our full-time employees was approximately 6.3 years while the average tenure of our executive officers was approximately 10.7 years. None of our associates are represented by collective bargaining agreements. We believe our employee relations to be good.
Oversight of our corporate culture is an important element of our Board of Directors’ oversight of risk because our people are critical to the success of our corporate strategy. Our Board sets the “tone at the top,” and holds senior management accountable for embodying, maintaining, and communicating our culture to employees. In that regard, our culture is designed to embrace associates and create opportunities. We uphold that principle in everything we do. That commitment has been a central pillar in our approach to our employees and the communities we have proudly served for over 100 years. Our culture is designed to adhere to the timeless values of integrity, valuing others, talent, passion, ownership and alignment, and customer focus. In keeping with those values, we expect our people to treat each other and our customers with the highest level of honesty and respect and go out of their way to do the right thing. We dedicate resources to promote a safe and inclusive workplace; attract, develop and retain talented, diverse employees; promote a culture of integrity, caring and excellence; and reward and recognize employees for both the results they deliver and, importantly, how they deliver them. We seek to design careers that are fulfilling, with competitive compensation and benefits alongside a positive work-life balance. We also dedicate resources to fostering professional and personal growth with continuing education, on-the-job training and development programs.
Our associates are key to our success as an organization. We are committed to attracting, retaining and promoting top quality talent regardless of race, color, creed, religion, sex, national origin, age, disability, marital status, citizenship status, military status, sexual orientation, victims of domestic violence, protected veterans status, gender identity, genetic information, genetic predisposition or carrier status and any other category protected by law. We are dedicated to providing a workplace for our employees that is inclusive, supportive, and free of any form of discrimination or harassment; rewarding and recognizing our employees based on their individual results and performance as well as that of their department and the company overall; and recognizing and respecting all of the characteristics and differences that make each of our employees unique.
We believe employing a diverse workforce enhances our ability to serve our customers and our communities. By promoting and fostering a workforce that we believe is reflective of our customers and communities, we seek to better understand the financial needs of our prospects and customers and provide them with relevant financial service products. Understanding and supporting our community has always been a priority to us. We provide associates the opportunity to use paid time off to perform community service activities in their choice of ways. In 2021, this amounted to nearly 5,000 hours of community service performed by our associates. Our efforts are designed to enrich the lives of not only those that are in need but also the lives of our employees who participate in these meaningful and rewarding opportunities. As we move forward, we will continue to embrace diversity and approach it in a manner consistent with our philosophy, by focusing on our associates, our customers, and our community.
Board of Director Committees
The Company’s Board of Directors has four standing committees: the Audit Committee, the Corporate Governance and Nominating Committee, the Human Resource and Compensation Committee and the Enterprise Risk Committee. The members of each committee have been nominated by the Chairman of the Board of Directors and approved by the full Board. The names of the members of the Audit Committee, the Human Resource and Compensation Committee, and the Corporate Governance and Nominating Committee, together with a brief description of their functions, are set forth below.
Audit Committee:
|
|
|
|
|
|
|
|
Michael J. Rogers, Chair
|
|
Nora B. Sullivan
|
|
|
|
|
James E. Biddle, Jr.
|
|
Lee C. Wortham
|
|
|
|
|
Christina P. Orsi
|
|
|
The Audit Committee met five times during fiscal 2021. The Audit Committee is responsible for reviewing the financial information of the Company that will be provided to shareholders and others, overseeing the systems of internal controls which management and the Board of Directors have established, selecting and monitoring the performance of the Company’s independent auditors, and overseeing the Company’s audit and financial reporting processes. The Board of Directors has determined that James E. Biddle, Jr., Michael J. Rogers, Nora B. Sullivan and Lee C. Wortham each qualify as an “audit committee financial expert” as defined in Item 407(d) of Regulation S-K. Each member of the Audit Committee is an “independent director” in accordance with applicable NYSE American listing requirements, including the heightened independence requirements applicable to Audit Committee members, and Rule 10A-3(b)(1) under the Exchange Act. The Board of Directors has adopted an Audit Committee Charter, which is available in the Governance Documents section of the Company’s website at (https://evansbancorp.q4ir.com), which can be found by clicking on “Governance”, then “Governance Documents”.
Human Resource and Compensation Committee:
|
|
|
|
|
|
|
|
Thomas H. Waring, Jr., Chair
|
|
Christina P. Orsi
|
|
|
|
|
Jody L. Lomeo
|
|
David R. Pfalzgraf, Jr.
|
|
|
|
|
Kimberley A. Minkel
|
|
Lee C. Wortham
|
The Human Resource and Compensation Committee met five times during fiscal 2021. The Human Resource and Compensation Committee is responsible for administering the Company’s 2019 Long-Term Equity Incentive Plan and awarding new grants thereunder, for administering the Evans Excels Performance Incentive Plan, the Employee Stock Purchase Plan, the Executive Severance Plan, the SERP Plans (defined below), the Deferred Compensation Plan, and the Executive Incentive Retirement Plan, for making such determinations and recommendations as the Human Resource and Compensation Committee deems necessary or appropriate regarding the remuneration and benefits of employees of the Company and its subsidiaries, and, in addition, for reviewing with management the Compensation Discussion and Analysis and providing a report recommending to the Board of Directors whether the Compensation Discussion and Analysis should be included in the Proxy Statement.
The Human Resource and Compensation Committee has the authority to act on behalf of the Board of Directors in setting compensation policy, administering Board or shareholder-approved compensation plans, approving benefit programs and making decisions for the Board with respect to compensation of senior management. Except as otherwise required by the applicable rules of the SEC or the NYSE American, the Human Resource and Compensation Committee may delegate any of its responsibilities to a subcommittee comprised of one or more members of the Human Resource and Compensation Committee, the Board or members of management. As discussed in more detail below under “Compensation Discussion and Analysis,” the Company’s executive officers may attend Human Resource and Compensation Committee meetings to present data and analysis and to make recommendations regarding compensation, benefit plans and promotions for executive officers other than the President and CEO. The Human Resource and Compensation Committee, on an annual basis, reviews and approves corporate goals and objectives relevant to CEO and other officer compensation, evaluates the performance of the CEO and the other executive officers in light of those goals and objectives, and determines and recommends compensation levels for the CEO and the other executive officers to the full Board of Directors based on this evaluation.
Board of Director Committees
The Human Resource and Compensation Committee also has the authority to review and recommend to the full Board for approval director compensation, including board fees, committee fees and additional compensation, awards of restricted stock and stock options.
In carrying out its duties, the Human Resource and Compensation Committee has the authority to retain, at the Company’s expense, to oversee the work of, and to terminate, a compensation consultant. The Human Resource and Compensation Committee also has the authority to retain independent counsel and other advisors at the Company’s expense. During 2021, the Human Resource and Compensation Committee engaged McLagan of Aon Plc (“McLagan”), an independent firm, three times for three separate engagements. The first was to analyze the Company’s total executive compensation against banks of similar asset size which is detailed within the “Benchmark Analysis” area in “Executive Compensation”. The second matter was in reference to the November 2021 equity grant under the 2019 Long-Term Equity Incentive Plan detailed in the “Equity Incentives” portion of “Executive Compensation”. The third and final engagement was to provide recommendation on enhancing the current 2019 Long-Term Equity Incentive Plan for senior management to include a metric based element into the plan that is also discussed in “Equity Incentives”. The details of each engagement include material elements of the instructions given to the compensation consultant, and its recommendations.
The Human Resource and Compensation Committee reviews and re-approves, on an annual basis, its committee charter and the Company’s executive compensation philosophy, which is described in greater detail below. The Human Resource and Compensation Committee also conducts an annual self-assessment to confirm the Human Resource and Compensation Committee’s satisfactory completion of its responsibilities under its committee charter.
The Board of Directors has determined that each of the members of the Human Resource and Compensation Committee is an “independent director,” in accordance with applicable NYSE American listing requirements, including the heightened independence requirements applicable to compensation committee members. The Board of Directors has adopted a Human Resource and Compensation Committee Charter, which is available on the Company’s website at (https://evansbancorp.q4ir.com), by clicking on “Governance”, then “Governance Documents”.
Corporate Governance and Nominating Committee:
|
|
|
|
|
|
|
|
David R. Pfalzgraf, Jr., Chair
|
|
Nora B. Sullivan
|
|
|
|
|
Michael A. Battle
|
|
Thomas H. Waring, Jr.
|
|
|
|
|
Jody L. Lomeo
|
|
Lee C. Wortham
|
The Corporate Governance and Nominating Committee met four times during fiscal 2021. Its purpose is to assist the Board in developing and implementing corporate governance guidelines for the Company, and to provide oversight of the corporate governance affairs of the Company, including strategic planning. It is also charged with the responsibility of identifying and recommending to the Board candidates for director nominees to be presented to the shareholders for their consideration at the Annual Meetings of Shareholders, and to fill vacancies on the Board of Directors. The Board of Directors has determined that each of the members of the Corporate Governance and Nominating Committee is an “independent director,” in accordance with applicable NYSE American listing requirements. The Board of Directors has adopted a Corporate Governance and Nominating Committee Charter, which is available in the Governance Documents section of the Company’s website at (https://evansbancorp.q4ir.com), which can be found by clicking on “Governance”, then “Governance Documents”.
The Company’s bylaws set out the procedure to be followed by shareholders desiring to nominate directors for consideration at an annual meeting of shareholders. Under the Company’s bylaws, shareholder director nominations must be submitted to the Secretary of the Company in writing not less than 14 days nor more than 50 days immediately preceding the date of the annual meeting. If less than 21 days’ notice of the annual meeting is given to shareholders, nominations must be mailed or delivered to the Secretary of the Company not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification must contain the following information to the extent known by the notifying shareholder: (a) name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of common stock of the Company that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of common stock of the Company owned by the notifying shareholder. Candidates for nomination to the
Board of Director Committees
Board of Directors must meet criteria established from time to time by the Board of Directors or a duly authorized committee of the Board. Additionally, the Company’s bylaws require that, in order to serve as a director of the Company, an individual must be less than 70 years of age. The Company’s bylaws provide that a Director who obtains the age of 70 years old during his or her term as a Director may remain in office through the expiration of his or her term. Nominations not made in accordance with the bylaws of the Company may be disregarded by the presiding officer of the meeting, in his or her discretion, and upon his or her instruction, the inspectors of election may disregard all votes cast for each such nominee. However, in the event that any such nominee is nominated by more than one shareholder, the nomination shall be honored, and all votes cast in favor of such nominee shall be counted if at least one nomination for that person complies with the provisions of the bylaws of the Company.
The process whereby the Corporate Governance and Nominating Committee identifies director candidates may include identification of individuals well-known in the community in which the Company operates and individuals recommended to the Corporate Governance and Nominating Committee by current directors or officers who know those individuals through business or other professional relationships, as well as recommendations of individuals to the Corporate Governance and Nominating Committee by shareholders and customers. The Company has not historically received director candidate recommendations from its shareholders. However, the Corporate Governance and Nominating Committee will consider qualified nominees recommended by shareholders, and there is no difference in the manner in which the Corporate Governance and Nominating Committee will evaluate director candidates recommended by shareholders, as opposed to director candidates presented for consideration to the Corporate Governance and Nominating Committee by directors, officers or otherwise. The Corporate Governance and Nominating Committee, in conjunction with the CEO, maintains a list of potential director candidates based upon community reputation and contacts, record of accomplishments, and skill set. Additionally, the Corporate Governance and Nominating Committee reviews committee and Board assessments for competencies and needs and seeks to identify candidates that will assist in the continued development and enhancement of the Board of Directors. In its evaluation of prospective director candidates, the Corporate Governance and Nominating Committee considers an individual’s independence (as defined in the listing rules of the NYSE American), as well as his or her skills and experience relative to the needs of the Company. Director candidates meet personally with the members of the Corporate Governance and Nominating Committee and are interviewed to determine their satisfaction of the criteria referred to above. Although the Company has no policy regarding diversity, the charter of the Corporate Governance and Nominating Committee provides that diversity is one of the criteria it may consider when selecting individuals to recommend for Board membership, together with independence, sound judgment, skill, integrity, willingness to make the required time commitment, understanding of financial statements and knowledge of and experience in the Company’s and its subsidiaries’ businesses, and the interplay of a candidate’s experience with the experience of other members of the Board of Directors.
Board of Director Committees
Enterprise Risk Committee:
|
|
|
|
|
|
|
|
Nora B. Sullivan, Chair
|
|
Kimberley A. Minkel
|
|
|
|
|
Michael A. Battle
|
|
David J. Nasca
|
|
|
|
|
James E. Biddle, Jr.
|
|
Michael J. Rogers
|
|
|
|
|
Kevin D. Maroney
|
|
Lee C. Wortham
|
|
|
|
|
Robert G. Miller, Jr.
|
|
|
Our Enterprise Risk Committee (“ERC”) is responsible for overseeing and approving company-wide risk management practices throughout the Company, overseeing management’s risk assessment process and risk management infrastructure, reviewing management’s risk-management framework in the context of the Company’s size and business activities, and advising on risks that the Company may face. The ERC will review and discuss with management, at least annually, the Company’s risk governance structure and the Company’s risk management and risk assessment guidelines and policies regarding market, credit, operations, liquidity, funding, reputation, cybersecurity and franchise risk, and the Company’s risk tolerance. The ERC will review at least quarterly the major risk exposures of the Company and its business units against established risk management methodologies and targets. The Board’s role in the Company’s risk oversight process includes receiving reports, at least quarterly, from members of senior management on areas of material risk to the Company, including operational, financial, credit, liquidity, legal and regulatory, and strategic and reputational risks. The full Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives these reports from the appropriate “risk owner” within the organization to enable it to understand our risk identification, risk management and risk mitigation strategies. When a committee receives the report, the chairman of the relevant committee reports on the discussion to the full Board during the committee reports portion of the next Board meeting. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships. The Board’s role in the Company’s risk oversight process has not directly impacted its leadership structure.
Director Compensation
Director Compensation Philosophy. The Company’s director compensation program is designed to provide a compensation amount and structure that will attract and retain highly competent, skilled and engaged individuals for Board service. To ensure that its director compensation program remains competitive but appropriate, the Human Resource and Compensation Committee reviews director compensation, on an annual basis, against the same proxy peer group as that used in the review of executive compensation, as described below under “Executive Compensation – Compensation Discussion and Analysis.” The desired total director compensation is at the 50th percentile of the proxy peer group and is delivered in both cash and equity. While many of the companies in our proxy peer group do not rely on equity compensation for their directors, the Human Resource and Compensation Committee believes that using a mix of cash and equity compensation aligns director compensation with long term shareholder value, while at the same time providing directors with an appropriate compensation for their service.
Director Fees. Each director of the Company also serves as a member of the Board of Directors of the Bank. Non-employee directors do not receive compensation for attending meetings of the Bank’s Board, but do receive committee meeting fees. It is the policy of the Board that employee directors are not paid for their service on the Company’s or the Bank’s Board of Directors in addition to their regular employee compensation.
During fiscal 2021:
•Non-employee directors were paid a retainer at the rate of $1,708 in cash, payable on a monthly basis, and $1,708 per month in shares of restricted stock payable as a lump sum grant equal to $20,500 at the January board meeting. The number of shares of restricted stock awarded is calculated by dividing $20,500 by the closing price for a share of the Company’s common stock on the NYSE American on the date of grant. In January 2021, each non-employee director received a grant of 690 shares of restricted stock, at a grant date fair value of $29.71 per share, for service during 2021. Each restricted stock grant vests 100% on the first anniversary of the grant date, subject to full acceleration of vesting upon an individual’s death, disability, retirement or involuntary termination in connection with a change in control of the Company. Vesting of restricted stock grants is accelerated on a pro-rated basis upon the individual’s resignation.
•Non-employee directors were paid an annual cash retainer fee per committee as follows, with the fee paid over the course of the year in 12 equal monthly installments. In recognition of their heightened responsibilities, each committee chairperson is entitled to an annual retainer as described below. Members of the Enterprise Risk Committee did not receive an annual retainer and instead were paid per meeting attended, as set forth below.
•Audit Committee: Chairperson $6,750, Member $3,750
•Human Resources and Compensation Committee: Chairperson $4,750, Member $3,150
•Corporate Governance and Nominating Committee: Chairperson $3,350, Member $2,150
•Enterprise Risk Committee: Chairperson $800 per meeting, Member $600 per meeting
•Non-employee directors received $600 for attendance at a strategic planning meeting held outside of normal scheduled Board meetings and regular committee meetings.
•In addition to the annual service fee described above and Board meeting fees, the individual serving as Chairman of the Company’s Board of Directors and the Bank’s Board of Directors is entitled to receive an annual fee of $40,000. He or she does not receive committee meeting fees while serving as Chairman.
•In addition to the annual service fee described above and Board and committee meeting fees, the individual serving as Vice Chairman of the Company’s Board of Directors and the Bank’s Board of Directors is entitled to receive an annual fee of $5,000.
Director Compensation. The following table provides information with regard to the compensation paid to the Company’s non-employee directors for their service during the fiscal year ended December 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned or
Paid in Cash
($) (1)
|
|
Stock Awards
($) (2)(3)
|
|
Change in Pension Value and
Non-qualified Deferred
Compensation Earnings
($) (4)
|
|
Total
($)
|
|
|
|
|
|
|
|
Michael A. Battle
|
|
|
|
31,050
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
51,550
|
|
|
|
|
|
|
|
|
James E. Biddle, Jr.
|
|
|
|
32,650
|
|
|
|
|
20,500
|
|
|
|
|
6,580
|
|
|
|
|
59,730
|
|
|
|
|
|
|
|
|
Jody L. Lomeo
|
|
|
|
26,400
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
46,900
|
|
|
|
|
|
|
|
|
Kevin D. Maroney
|
|
|
|
28,900
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
49,400
|
|
|
|
|
|
|
|
|
Robert G. Miller, Jr.
|
|
|
|
28,900
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
49,400
|
|
|
|
|
|
|
|
|
Kimberley A. Minkel
|
|
|
|
32,050
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
52,550
|
|
|
|
|
|
|
|
|
Christina P. Orsi
|
|
|
|
28,000
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
48,500
|
|
|
|
|
|
|
|
|
David R. Pfalzgraf, Jr.
|
|
|
|
27,600
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
48,100
|
|
|
|
|
|
|
|
|
Michael J. Rogers
|
|
|
|
38,983
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
59,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nora B. Sullivan
|
|
|
|
37,400
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
57,900
|
|
|
|
|
|
|
|
|
Thomas H. Waring, Jr.
|
|
|
|
28,000
|
|
|
|
|
20,500
|
|
|
|
|
613
|
|
|
|
|
49,113
|
|
|
|
|
|
|
|
|
Lee C. Wortham
|
|
|
|
60,500
|
|
|
|
|
20,500
|
|
|
|
|
—
|
|
|
|
|
81,000
|
|
(1)Includes the aggregate amount of the cash retainer, plus all committee and/or chairmanship fees and meeting fees paid to each director for service in 2021.
(2)Reflects the fair value of the awards at grant date, in accordance with FASB ASC Topic 718 for financial statement reporting purposes. For additional information as to the assumptions made in valuation, see Note 14 to the financial statements filed with the SEC in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Amounts shown in the table are based on the Company’s accounting expense for these awards, and do not necessarily correspond to the actual value that may be realized by the directors.
(3)The following reflects all equity awards granted to each director that were outstanding as of December 31, 2021:
|
|
|
|
|
Name
|
|
Stock Awards (#)
|
|
|
|
|
Michael A. Battle
|
|
690
|
|
|
|
|
James E. Biddle, Jr.
|
|
690
|
|
|
|
|
Jody L. Lomeo
|
|
690
|
|
|
|
|
Kevin D. Maroney
|
|
690
|
|
|
|
|
Robert G. Miller, Jr.
|
|
690
|
|
|
|
|
Kimberley A. Minkel
|
|
690
|
|
|
|
|
Christina P. Orsi
|
|
690
|
|
|
|
|
David R. Pfalzgraf, Jr.
|
|
690
|
|
|
|
|
Michael J. Rogers
|
|
690
|
|
|
|
|
Nora B. Sullivan
|
|
690
|
|
|
|
|
Thomas H. Waring, Jr.
|
|
690
|
|
|
|
|
Lee C. Wortham
|
|
690
|
All equity awards granted to each director had a grant date fair value of $29.71.
(4)The Company maintains a non-qualified deferred compensation plan whereby the directors may elect to defer 1% to 100% of their fees until retirement or termination of service. The Company credits such deferrals at a rate determined at the beginning of each plan year equal to 1% over the prime rate as of each January 1st. This column reflects amounts credited under the deferred compensation plan during 2021 at interest rates greater than 120% of the applicable federal long-term rate then in effect. Only the above-market portion of interest credited to the participating directors’ accounts has been reported.
Human Resource and Compensation
Committee Interlocks and Insider
Participation
The members of the Human Resource and Compensation Committee during 2021 were: David R. Pfalzgraf, Jr., Thomas H. Waring, Jr. (Chair), Lee C. Wortham, Jody L. Lomeo, Kimberly A. Minkel and Christina P. Orsi. None of the members of the Human Resource and Compensation Committee was, during fiscal 2021 or previously, an officer or employee of the Company or any of its subsidiaries, and no member had a relationship requiring disclosure under “Transactions With Related Persons,” below.
During fiscal 2021, none of the Company’s executive officers served on the compensation committee (or equivalent) or on the board of directors of another entity with “interlocking” relationships requiring disclosure under applicable SEC rules.
Human Resource and Compensation
Committee Report
The information contained in this Human Resource and Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Exchange Act.
The Human Resource and Compensation Committee of the Board of Directors has reviewed and discussed the section of this Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on this review and discussion, the Human Resource and Compensation Committee recommended to the Board of Directors that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Human Resource and Compensation Committee
|
|
|
|
|
|
|
|
Thomas H. Waring, Jr., Chair
|
|
Christina P. Orsi
|
|
|
|
|
Jody L. Lomeo
|
|
David R. Pfalzgraf, Jr.
|
|
|
|
|
Kimberley A. Minkel
|
|
Lee C. Wortham
|
Executive Compensation
Compensation Discussion and Analysis
|
|
|
|
|
Compensation
Discussion and Analysis
Table of Contents
|
|
Executive Summary
|
|
|
32
|
|
|
Executive Compensation Philosophy
|
|
|
34
|
|
|
Compensation Program Objectives and Overview
|
|
|
34
|
|
|
Role of the Human Resource and Compensation Committee
|
|
|
34
|
|
|
Role of Executive Officers
|
|
|
35
|
|
|
Role of Compensation Consultants
|
|
|
35
|
|
|
Benchmarking Analysis
|
|
|
36
|
|
|
Compensation Recovery Policy
|
|
|
36
|
|
|
Elements of Executive Total Compensation
|
|
|
37
|
|
|
Employment Agreement
|
|
|
42
|
|
|
Post-Termination Compensation
|
|
|
42
|
|
|
Executive Severance Plan
|
|
|
42
|
|
|
Tax and Accounting Considerations
|
|
|
43
|
|
|
Say On Pay
|
|
|
43
|
|
|
Risk Assessment
|
|
|
43
|
|
|
Summary Compensation Table
|
|
|
44
|
|
|
Grants of Plan Based Awards
|
|
|
45
|
|
|
Employment and Change in Control Agreements with our NEOs
|
|
|
45
|
The following discussion provides an overview of the Company’s executive compensation program, including its philosophy and objectives, and the rationale for the Human Resources and Compensation Committee’s compensation decisions related to the following executives referred to in this discussion as “Named Executive Officers” (“NEOs”) for 2021:
|
|
|
|
|
Name
|
|
Title
|
|
|
|
|
David J. Nasca
|
|
President and Chief Executive Officer of the Company and the Bank
|
|
|
|
|
John B. Connerton
|
|
Treasurer of the Company and Executive Vice President and Chief Financial Officer of the Bank (principal financial officer)
|
|
|
|
|
Aaron M. Whitehouse
|
|
Senior Vice President of the Bank and President of The Evans Agency, LLC
|
Executive Summary
The Company delivered strong performance in 2021, continuing to successfully navigate a volatile environment to meet client needs. These efforts drove the Company’s record net income in its history and delivered progress on executing on the Company’s strategic goals.
2021 Performance Financial Highlights
Strategic Highlights
|
|
|
|
|
COMMERCIAL AND RESIDENTIAL LENDING
•Commercial and residential loan originations totaled a record $431 million – offset the historic prepayment and repayment activity during the year
•Successfully supported businesses in our community with another round of Paycheck Protection Program (PPP) loans
•Significant experience and talent were added to the Commercial Real Estate and Commercial & Industrial Teams in both Buffalo and Rochester, New York, expanding penetration in those markets and introducing new contracts and clients to Evans
•Expanded the mortgage team which adds diversity to our revenue stream and complements our insurance agency and large and successful commercial banking business
|
|
|
|
|
|
EVANS INSURANCE AGENCY
•Building out a strong and experienced sales force to further strengthen and competitively support existing business retention and new policy sales
|
|
|
|
|
|
TECHNOLOGY EVOLUTION
•Aligned to focus on advancing customer experience, operational efficiency and scalability
•Leverage robotic process and workflow automation and evaluate opportunities to partner with financial technology providers as part of our overall digital transformation strategy
•Goal to deliver strong and stable IT support for Bank growth
|
|
|
|
|
|
FOCUS ON TALENT
•Talent and culture are true differentiators for Evans and key determinants for our success
•Learning and development efforts, combined with consistent company and manager-led communication and programs, and focus on team empowerment and diversity
•Concentrated heavily on preparing our team for the continuously changing environment and future technology enhancements
|
|
|
|
|
|
COMMUNITY
•Evans seeks to meet its values and honor its promise as a community based financial institution
•Continue to support community projects and contribute our resources and business expertise to programs and entities that enrich our community
|
Executive Compensation
Executive Compensation Philosophy
The Company seeks to align the interests of its NEOs with the interests of its shareholders. The Company’s executive compensation program is designed to reflect and further the Company’s Strategic Plan objectives and reward executives for performance as measured against short-term goals, long-term sustained results to the Company’s shareholders, and the Company’s core values. The Company continues to design and monitor its compensation programs to further ensure that those programs are aligned with these objectives and reflect emerging best practices while at the same time avoiding the encouragement of excessive or unnecessary risk taking.
Key features of the Company’s executive compensation program are:
•A substantial percentage of short-term and long-term incentive compensation is tied to key corporate and individual performance goals established by the Human Resource and Compensation Committee to align the interests of NEOs with those of the Company’s shareholders.
•Compensation criteria are structured so that achievement of corporate and individual goals does not encourage excessive risk-taking through the use of guardrails, which provide a top and bottom metric to monitor performance, and a mix of performance metrics, which reduce the risk associated with any single performance metric.
•Performance-based compensation paid to our executive officers is subject to a “clawback” policy, providing for the return of incentive compensation in the event of a restatement of our financial statements involving fraud or illegal conduct.
•No tax “gross-ups” resulting from, but not limited to, a change in control, are provided in any employment or other agreement with our NEOs.
•Limited perquisites and personal benefits which are in place only when supporting a demonstrated business purpose. No excessive perquisites are provided to executive officers.
•Change in control provisions in the Company’s and the Bank’s employment and other agreements with its NEOs provide for payment of severance benefits, including accelerated vesting of stock options and restricted stock, only upon termination of employment without cause or voluntarily resignation due to job diminishment in connection with a change in control (a so-called “double-trigger” event).
•Except for certain corporate transactions described in section 4.4 of the 2019 Long-Term Equity Incentive Plan, and reductions of the exercise price of a stock option approved by the Company’s shareholders, neither the Committee nor the Board have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a stock option granted under the Plan.
•Our Insider Trading Policy prohibits directors and executive officers, including NEOs, from engaging in any hedging or monetization transactions involving the Company’s securities.
Compensation Program Objectives and Overview. The objective of the Company’s executive compensation programs is to attract, develop and retain executive officers capable of effectively leading the Company and maximizing performance for the benefit of the Company’s shareholders.
Role of the Human Resource and Compensation Committee. The Committee is composed solely of independent directors of the Company. It is responsible for all policies, practices and governance related to director and executive compensation and oversees the executive compensation program for our NEOs. As part of this responsibility, the Committee, on an annual basis, reviews and approves corporate goals and objectives relevant to executive compensation, and reviews and evaluates the performance of each of the senior executive officers, including the NEOs, in respect to those goals and objectives. Compensation for the NEOs is reviewed and approved by the Committee during the first quarter of each year based on performance during the prior year. Base salary is reviewed a second time, typically during the third fiscal quarter, to determine whether an individual’s performance merits a further increase, or to address other competitive changes that occur later in the fiscal year. The Committee administers, and makes grants under, the Company’s equity incentive plans. The Committee meets at least quarterly.
The decisions made regarding senior executive compensation, including NEO compensation, are based primarily upon the Committee’s assessment of each executive’s leadership and operational performance, and his or her potential to
Executive Compensation
contribute to the long-term success and sound operation of the Company and to enhance long-term shareholder value. While the Committee establishes objective performance measures, such as those under the cash bonus incentive plan, it primarily makes subjective assessments of each individual’s performance, rather than solely utilizing rigid formulas or short-term changes in business performance, to determine the amount and mix of compensation elements and whether each particular payment or award provides an appropriate incentive and reward for performance sustaining and enhancing long-term shareholder value. Key factors affecting the Committee’s subjective assessment of performance include the executive’s performance compared to the financial, operational, and strategic goals established by the Board of Directors at the beginning of each fiscal year; contribution to the Company’s financial results, particularly with respect to key metrics such as asset growth, disciplined investment; and organizational excellence to increase shareholder value. Additionally, the Committee assesses each executive’s presence in and commitment to the community.
Role of Executive Officers. Although the Committee is ultimately responsible for designing our executive compensation program, input from the Company’s President and Chief Executive Officer (“CEO”) is critical in ensuring the Committee has appropriate information to make informed decisions. In particular, the CEO attends Committee meetings to present data and analysis and to formulate recommendations regarding compensation for executive officers, benefit plans, and promotions. The CEO does not attend portions of Committee meetings during which the performance of the CEO is being evaluated or the compensation of the CEO is being determined.
Role of Compensation Consultant. Periodically, the Committee engages a compensation consultant to review the Company’s compensation programs and provide recommendations. During 2021, the Committee retained McLagan to complete an executive compensation analysis against banks of similar asset size; advise on the November 2021 equity grant under the 2019 Long-Term Equity Incentive Plan; and provide recommendation on enhancing the 2019 Long-Term Equity Incentive Plan for senior management to include a metric performance based element to the plan.
The Committee considered the independence of McLagan in light of SEC rules and New York Stock Exchange corporate governance listing standards, and received a report from McLagan addressing the independence of the firm and its consultants, which included the following factors: (1) that no other services were provided to the Company; (2) fees paid by the Company as a percentage of the firm’s total revenue; (3) policies or procedures maintained by the firm that are designed to prevent a conflict of interest; (4) that there were no business or personal relationships between the firm and its consultants and any member of the Committee; (5) any company stock owned by the firm and its consultants; and (6) that there were no business or personal relationships between the Company’s executive officers and the firm and its consultants. The Committee discussed these considerations and concluded that the work performed by McLagan and its consultants involved in the engagement did not raise any conflict of interest and concluded that they were independent Compensation Committee consultants.
Executive Compensation
Benchmark Analysis. The base salaries, short-term and long-term incentives provided to the NEOs are compared to a “benchmark” established using relevant industry compensation surveys and compensation information derived from proxy statements filed by other publicly held companies in the financial services industry. The Committee considers the compensation data and financial performance of the financial institutions included in those surveys and filings. For this analysis, the Committee also considers data from its proxy peer group. The 2021 Proxy Peer Group was compiled after the Committee reviewed the recommendations by the compensation consultant in 2020. The Committee concluded to include financial institutions with assets ranging from approximately 50% to 200% of the Company’s asset size, with return on assets, return on average equity and earnings per share similar to or better than the Company’s. The Committee also strived to include peers that had a comparable customer composition and geography. Based upon the Committee’s review and discussion, the 2021 Proxy Peer Group consists of 22 companies with no changes from 2020. 10 peers were included in the proxy peer group used since 2017 and 12 peers were added in 2020. The 2021 Proxy Peer Group is as follows:
|
|
|
|
|
1st Constitutional Bancorp
|
|
FNCB Bancorp, Inc.
|
|
Orrstown Financial Services
|
|
|
|
|
|
Chemung Financial Corp.
|
|
Greene County Bancorp, Inc.
|
|
QNB Corp.
|
|
|
|
|
|
ChoiceOne Financial Services
|
|
LCNB Corp.
|
|
People Financial Services
|
|
|
|
|
|
Cordorus Valley Bancorp, Inc.
|
|
Level One Bancorp, Inc.
|
|
Pioneer Bancorp
|
|
|
|
|
|
Enterprise Bancorp, Inc.
|
|
Macatawa Bank Corp.
|
|
Unity Bancorp, Inc.
|
|
|
|
|
|
Farmers & Merchants Bancorp
|
|
Mid Penn Bancorp, Inc.
|
|
Western New England Bancorp
|
|
|
|
|
|
Farmers National Banc. Corp.
|
|
NorthWest Indiana Bancorp
|
|
|
|
|
|
|
|
First Savings Financial Group
|
|
Old Second Bancorp, Inc.
|
|
|
The Committee also reviewed industry compensation data published by Pearl Meyer as well as by McLagan, by both asset size and geographic region. While the 2021 Proxy Peer Group reflected financial institutions that are the most similarly situated to the Company, the Committee believes that it is useful to examine the “best practices” of a broader group of companies, and that multiple sources of compensation data assist the Company in designing pay programs that are both contemporary and relevant. The Pearl Meyer compensation survey report for 2021 consisted of fifty-five (55) financial institutions from the Northeastern United States with asset sizes of $1 billion to $3 billion. The McLagan compensation survey report for 2021 consisted of twenty-three (23) financial institutions in economic regions in the United States similar to the Company’s and also segregated by asset size between $1 billion to $3 billion.
Separate from the NEO base salary benchmark analysis, the Committee engaged McLagan to analyze the Company’s total executive compensation against banks of similar asset size. The analysis concluded that the Company’s executive team was of a comparable size and executive compensation spend was at approximately the 50th percentile when compared to the sample. The report also concluded that due to the Company’s insurance agency which other similar asset sized banks do not have, the Company has a larger employee base when compared to the market causing the “percentage of total compensation spend to executives” to be at the 25th – 50th percentile of the similar asset sized bank group.
Compensation Recovery Policy. The Company’s Incentive Plan Clawback Policy provides for the recovery of performance-based compensation paid to certain senior executives of the Company, including the NEOs, in the event of a restatement of the Company’s consolidated financial statements. The policy applies to performance-based compensation paid during the three-year period prior to the correction of an accounting error, where the amount of such compensation paid to the executive was increased based on the erroneous financial statements, and the executive engaged in fraud or illegal conduct which materially contributed to the need for the restatement. The Company’s short-term and long-term incentive plans are subject to recovery pursuant to the Company’s Incentive Plan Clawback Policy.
Executive Compensation
Elements of Executive Total Compensation. The following discussion describes the key elements of the Company’s NEO compensation program and the actions taken with respect to each element for 2021. The Committee reviewed the various elements of executive compensation provided by the Company during 2021 with a view toward aligning executive interests with those of the Company’s shareholders and the long-term interests of the Company. The Committee determines the allocation of compensation among base salary, and short-term and long-term incentives by reviewing data from the Company’s Proxy Peer Group (described above), as well as using salary surveys and review of industry trends. The elements of the Company’s NEO compensation program include the following:
|
Compensation
Element
|
|
Description or Purpose
|
|
Fixed/
Performance-Based
|
|
Short-Long-Term
|
|
|
|
|
|
|
Base Salary
|
|
Attract and retain executives
|
|
Fixed
|
|
Short-Term
|
|
|
|
|
|
|
Annual Cash Incentives
|
|
Drive performance achievement and create shareholder value
|
|
Performance-Based
|
|
Short-Term
|
|
|
|
|
|
|
Equity Incentives
|
|
Aligns interests with shareholders and serves as a retention tool through multi-year vesting
|
|
Performance-Based
|
|
Long-Term
|
|
|
|
|
|
|
Benefits
|
|
Supplemental Retirement and Defined Contribution Plan
|
|
Fixed
|
|
Long-Term
|
|
|
|
|
|
|
Other Compensation
|
|
Retirement plans and health and welfare benefits on the same basis as other employees. Limited perquisites.
|
|
Fixed
|
|
Short- and Long- Term
|
1.Base Salary. Base salary is determined by individual factors, such as the employee’s role in the organization, scope and complexity of responsibility of the position, the market value of his or her job, the level of an individual’s expertise in the role and his or her performance in the position, as well as Company performance factors, such as Company financial performance, including earnings per share and growth in net income. Annual individual performance is measured for the CEO through a formal annual review by the Chairman of the Board of Directors and the Chairman of the Human Resource and Compensation Committee. Their review and recommendations are then shared and discussed with the full board (absent the CEO) prior to making a final determination. For other NEOs, individual performance is reviewed monthly with the CEO. During these monthly meetings, any performance concerns are shared with the executive, and corrective measures (if needed) are outlined. Based on these monthly meetings and the CEO’s evaluation of each individual’s performance, the CEO makes recommendations to the Committee regarding annual adjustments to base salary for each of the other NEOs. In determining base salary, the Committee also considers the level of achievement of corporate strategic and operational objectives established by the Committee as described above under “Compensation Discussion and Analysis – Role of the Human Resource and Compensation Committee.” The Committee also utilizes the compensation surveys and the Proxy Peer Group data as sources of information in determining base salary for Messrs. Nasca and Connerton. The Committee generally targets the 50th to the 75th percentile of the Proxy Peer Group for the base salary of Messrs. Nasca and Connerton. The base salary of Mr. Whitehouse is compared to data from the salary surveys, but not to Proxy Peer Group data due to a lack of comparable data for his position. As a result, Mr. Whitehouse’s compensation is generally determined based upon individual performance as compared to annual goals, including the achievement of corporate strategic and operational objectives. For Messrs. Nasca and Connerton, the Committee uses the survey and peer group data as a point of reference and comparison only, for purposes of establishing certain target percentiles, but does not use the data to set a specific level of compensation to be achieved.
For 2021, the Committee approved the following base salary for the NEOs:
|
Name
|
|
2021 Salary
|
|
|
2020 Salary
|
|
|
% Change
|
|
|
|
|
|
|
|
David J. Nasca
|
|
$
|
550,000
|
|
|
$
|
550,000
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
John B. Connerton
|
|
$
|
258,825
|
|
|
$
|
255,000
|
|
|
|
1.5
|
%
|
|
|
|
|
|
|
Aaron M. Whitehouse
|
|
$
|
211,627
|
|
|
$
|
208,000
|
|
|
|
1.7
|
%
|
Despite consistent strong performance and continued growth of the Company led by Mr. Nasca, the Committee decided to forgo a base salary increase due to concerns over the potential impact of the pandemic on returns for
Executive Compensation
2021. Modest base salary increases to Mr. Connerton and Mr. Whitehouse were made for the same reasons. Mr. Connerton’s salary was increased in recognition of his balance sheet management and overall financial leadership performance. Mr. Whitehouse’s salary was increased effective September 1, 2021 due to effective leadership of the Company’s commercial and personal insurance division. The 2021 base salary for Messrs. Nasca, Connerton and Whitehouse was 110%, 103% and 89%, respectively, of the weighted average base salary at the 50th percentile, as reported in the 2021 compensation surveys and 2020 Proxy Peer Group data utilized by the Committee as described above.
2.Annual Cash Incentive Compensation. The Company’s Excels Performance Incentive Plan (“the Company’s Excels Plan”) is a short-term (annual) cash incentive compensation plan intended to reward performance of officers of the Bank, including the NEOs. The plan is designed to motivate employees to attain desired objectives and to encourage teamwork and collaboration while aligning compensation with overall Company performance. The plan is a key element of the total compensation provided to the NEOs and allows the Company to remain competitive with the market by providing an opportunity for the NEOs to receive significant cash incentives. The design of the plan is intended to ensure that benefits paid to NEOs and other officers are in alignment with both the Company’s strategic plan and the achievement of individual performance goals. The award opportunities are linked to specific target and range of performance results for multiple performance measures and are calculated as a percentage of base salary in effect on the last day of the calendar during the relevant performance period, which runs from January 1st to December 31st. The Company typically makes payments in February of the year immediately following the end of the annual performance period. The following table illustrates the cash incentive opportunity for 2021 that would be payable to each of our NEOs if all individual goals were met at the specified level of performance (assuming no Committee discretionary override).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive as a % of Base Salary
|
|
|
|
|
|
|
NEO
|
|
Threshold
|
|
Target
|
|
Stretch
|
|
|
|
|
|
|
David J. Nasca
|
|
|
|
18.75
|
%
|
|
|
|
37.50
|
%
|
|
|
|
56.25
|
%
|
|
|
|
|
|
|
John B. Connerton
|
|
|
|
15.00
|
%
|
|
|
|
30.00
|
%
|
|
|
|
45.00
|
%
|
|
|
|
|
|
|
Aaron M. Whitehouse
|
|
|
|
12.00
|
%
|
|
|
|
24.00
|
%
|
|
|
|
36.00
|
%
|
The Committee determined these percentages by reviewing proxy peer group and compensation survey data and by aligning incentive levels with the goals of the Company’s Strategic Plan. In 2020, the Committee reduced the short-term incentive payments for the NEOs by 50% to preserve earnings to better align NEO total compensation with long term shareholder value and help fund the associate level incentive programs. In 2021, the Committee restored incentive payout percentages for NEOs to pre-pandemic incentive levels.
For 2021, the Committee utilized the Company’s annual adjusted net income, on a consolidated basis, as the performance metric for determining the Company’s performance under the Evans Excels Plan for Messrs. Nasca and Connerton. The Committee selected adjusted net income as a performance metric since the Committee believes it provides a reasonable balance between shareholder value and appropriate employee motivation and reward. Adjusted net income is a non-GAAP financial measure and is defined as net income (GAAP) as reported in the Company’s financial statements excluding the short-term cash incentive payment, which is calculated net of any tax impact associated with the short-term cash incentive payment. The goals set for 2021 and the actual results, as derived from GAAP net income, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Stretch
|
|
|
Actual
|
|
|
|
|
|
|
|
|
Net Income (GAAP)
|
|
$
|
16,812,660
|
|
|
$
|
17,513,188
|
|
|
$
|
18,517,122
|
|
|
$
|
24,042,711
|
|
|
|
|
|
|
|
|
Evans Excels Plan payments
|
|
|
1,531,189
|
|
|
|
2,852,056
|
|
|
|
4,127,643
|
|
|
|
3,789,850
|
|
|
|
|
|
|
|
|
Tax Effect
|
|
|
(398,109
|
)
|
|
|
(741,535
|
)
|
|
|
(1,073,187
|
)
|
|
|
(985,361
|
)
|
|
|
|
|
|
|
|
Adjusted Net Income
|
|
$
|
17,945,740
|
|
|
$
|
19,623,709
|
|
|
$
|
21,571,578
|
|
|
$
|
26,847,200
|
|
Executive Compensation
The Committee sets both Company and individual NEO goals each year in reviewing the Board-approved four-year Strategic Plan and aligns Board-approved business targets and associated desired metric results within the calendar year. The Company performance goals for each fiscal year are set in the fourth quarter of the year prior to the annual performance period, and individual performance goals are set in the first quarter of the relevant annual performance period.
The individual performance measures established by the Committee are a combination of financial and operational goals derived from the Company’s Strategic Plan objectives. Each corporate and individual performance measure receives a weighting, which represents its relative importance to the achievement of the particular goals in the Company’s Strategic Plan, and the NEO’s ability to influence these goals. For each individual performance measure, the Committee establishes a “target”, “threshold” and “stretch” standard.
The table below shows the performance measures and relative weightings of the various performance measures utilized for each NEO for 2021. A performance measure requiring an NEO to deliver on a specified Strategic Plan goal will be broken down into several specific goals/action items, and whether the NEO achieves that goal at threshold, target or stretch level (or not at all) will be determined by the Committee based on the extent to which the NEO achieved meaningful results toward those specific goals/action items. Under the terms of the Evans Excels Plan, an individual must be employed by the Company on the payment date to receive payment thereunder.
As the table above illustrates, the Company achieved stretch level of adjusted net income due to record loan originations, PPP fees recognized, efforts in working on criticized and impaired loans that led to a decrease in provision for loan losses and expense management including cost of funds.
Executive Compensation
The Evans Excel Plan allows the Committee to eliminate, adjust or grant an NEO’s incentive payout regardless of the individual or Company performance; however, such discretionary authority is exercised only in unusual circumstances as warranted. The Committee did not exercise any discretionary authority with the 2021 short-term incentive payment.
The total short-term incentive achievement level for each NEO in the 2021 plan year is listed in the table below:
|
|
|
|
|
NEO
|
|
Total Short Term Incentive Award
as Percentage of Base Salary
|
|
|
|
|
David J. Nasca
|
|
47.81%
|
|
|
|
|
John B. Connerton
|
|
45.00%
|
|
|
|
|
Aaron M. Whitehouse
|
|
12.00%
|
The amounts paid under the plan to each NEO for 2021 are set forth in the Summary Compensation Table that follows this Compensation Discussion and Analysis.
3.Equity Incentives. The Company’s shareholder-approved 2019 Long-Term Equity Incentive Plan (the “2019 Equity Plan”) is designed to provide key employees with a reward opportunity that aligns the interests of the participants with those of the Company’s shareholders by focusing on our Company’s performance over a longer period of time. The types of awards granted under the 2019 Equity Plan are restricted stock and stock options. The 2019 Equity Plan both links the size of awards granted to the NEOs to the past performance of the Company and ties the ultimate realizable value of those awards to the future value of the Company’s common stock, thereby aligning the NEOs’ interests with those of the Company’s shareholders, encouraging a balance between growth and prudent risk-taking.
Both restricted stock and stock option awards also have a retentive effect because they vest over a period of time, typically four years from the date of grant. Vesting of the outstanding restricted stock and stock options may be accelerated under certain circumstances, such as the executive’s death, disability or retirement, or if an executive’s employment is terminated in connection with a change in control of our Company. Holders of restricted stock receive dividends if and when dividends are paid on the Company’s common stock during the restrictive period, and have voting rights during the restriction period. Holders of stock options, on the other hand, have no rights as a shareholder until the options are exercised.
Awards granted under the equity incentive plan typically consist of 75% shares of restricted stock and 25% stock options, which the Committee believes is an appropriate formula to drive increased equity ownership by the Company’s executive officers. The Committee may also grant awards of stock appreciation rights and restricted stock units under the equity incentive plan, but it has not historically done so.
The Committee believes that the Evans Excels Plan and 2019 Equity Plan together create an appropriate balance between short-term and long-term performance goals and encourage appropriate risk-taking.
The Committee exercises its discretion in determining when to grant equity incentive awards, as well as the size and nature of the awards. Equity awards are typically granted on an annual basis, during the first quarter of the fiscal year, based on prior year financial performance, but may under certain circumstances be granted at other times during the year, for example, in connection with a new hire or a change in position within the Company. Specifically, the Committee assesses the Company’s performance during the prior year, the number of shares remaining available for issuance under the plan, the market price for the Company’s common stock, and the Committee’s subjective assessment of each individual’s performance. The Committee does not establish specified pre-determined target award values.
No equity awards were provided to executives during the normal first quarter timing in 2021 due to concerns over the potential impact of the pandemic on 2021 results. After consultation with McLagan, the Committee awarded an equity grant to executives in November 2021 as recognition of performance-to-date in 2021, and to further retention and shareholder alignment of executives in addition to preparing for the transition to the enhanced forward-looking performance-based equity program in 2022.
Executive Compensation
During 2021, the Committee approved the following equity awards (for more detail on the awards granted to the Company’s NEOs, see the “Summary Compensation Table” and “Grants of Plan-Based Awards” table below):
•Restricted Shares – during 2021, a total of 10,210 shares of restricted stock were granted to 8 employees, of which 4,820 were granted to our NEOs.
•Stock Options – during 2021, a total of 17,040 options were granted to 8 employees, of which 8,040 were granted to our NEOs.
As discussed above, the Committee engaged with McLagan to provide recommendations on enhancing the current 2019 Equity Plan for senior management to include a metric performance based element into the plan beginning with grants in the 2022 fiscal year. A plan was proposed to develop a more consistent approach to granting equity on an annual basis and to adopt grant guidelines or a formal award structure to help provide a framework for annual decisions surrounding long term incentive (LTI) awards. With a more formalized structure, the plan could improve alignment with the Company’s performance, enhance consistency with market practices and allow for efficiency and simplicity of administration. The LTI plan incorporates both time- and performance- vest shares with the total award value split across two weighted categories at the time of grant for the eight participants. Each participant’s award value is defined as a percentage of salary through a tiered structure shown below.
-Tier 1, CEO, Target Award Level % of Salary: 30%
-Tier 2, Executive Vice President, Target Award Level % of Salary: 25%
-Tier 3, Senior Vice President, Target Award Level % of Salary: 20%
In reviewing the proposal, the Committee decided to adopt the updated plan design for the Company’s senior leadership team with grants in the 2022 fiscal year. The updated plan design did not require any changes to the 2019 Equity Plan document previously approved by shareholders.
4.Supplemental Executive Retirement Plan (“SERP”). Mr. Nasca is the sole participant in the Evans Bank, N.A. Supplemental Executive Retirement Plan for Senior Executives (“Senior Executive SERP”) provided by the Bank, which increases his retirement benefit above amounts available under the Company’s tax-qualified and other pension programs. The Committee believes that this plan, and the level of benefit that is provided under this plan, is appropriate to promote retention and to recognize and reward long-term service to the Company. The Senior Executive SERP provides a benefit to Mr. Nasca of 35% of his base salary payable for a period of 15 years or the present value of which may be paid in a lump sum. Mr. Nasca has elected a present value lump sum payment. There is a 10-year vesting period with respect to Mr. Nasca’s benefits payable under the Senior Executive SERP. The Senior Executive SERP is unfunded and is considered a non-qualified plan for tax purposes.
5.Executive Incentive Retirement Plan. The Company provides certain key executives with an additional non-qualified retirement plan, the “Executive Incentive Retirement Plan” (“EIRP”). The plan provides an annual contribution by the Company equal to 5% of the executive’s base salary at year end, which then earns interest at prime plus 100 basis points. Mr. Connerton is the only NEO participating in this plan. The EIRP is unfunded and is considered a non-qualified plan for tax purposes.
The Committee froze the EIRP to new participants and to new contributions as of December 31, 2019. Participants will continue to earn interest at prime plus 100 basis points until their benefit distribution upon vesting and separation from service with the Company occurs. A new EIRP was adopted, effective on January 1, 2020, and implements the same provisions as the original EIRP except for the following enhancements:
•Participant eligibility criteria was increased from a minimum total cash compensation of $100,000 annually to total cash compensation of $150,000.
•A third payout criteria was created. Specifically, the participant is entitled to receive a distribution under the new ERIP upon his or her separation from service after attaining 62 and completing at least 10 years of service with the Company.
•The new ERIP also creates a one year non-compete and non-solicitation for consistency with the current executive severance plan and change in control agreements.
Executive Compensation
•Payments were adjusted from having both a single lump sum payout or a 15-year equal payment installment option to 2-to-15 year annual equal installments in order to provide the Company with a clawback opportunity in the event the participant fails to comply with the one year non-compete and non-solicitation covenants.
6.Perquisites. The Company provides its NEOs with limited perquisites designed to assist the NEOs in being productive and which the Committee believes are reasonable, competitive and consistent with its overall executive compensation program. These perquisites, the aggregate cost of which is disclosed in the “Summary Compensation Table” below, generally include an auto allowance and club memberships, which the Committee believes are important to the NEOs’ development of business relationships, an activity critical to the long-term success of the Company, and long-term disability insurance. The Company believes that its perquisites allow the NEOs to carry out their duties more effectively.
Employment Agreement. The Company believes the use of clear and concise employment contracts can be an effective tool to attract and retain senior executives, as well as to protect proprietary information and customer relationships. However, in recent years and consistent with trends in corporate governance, the Committee has been limiting its use of executive employment contracts. Currently, Mr. Nasca is the only NEO covered by an employment contract. Mr. Whitehouse’s employment contract ended on July 1, 2021 with his employment status transitioned to at-will. Mr. Nasca’s employment agreement is discussed under “Employment and Change in Control Agreements with our NEOs”.
Post-Termination Compensation. As referenced above, the Company has historically been a party to employment contracts with its NEOs which provide for certain severance payments, described below under “Potential Payments Upon Termination or Change-in-Control,” if the executive’s employment terminates under circumstances described in the employment contract. In addition, under the terms of the 2019 Long-Term Equity Incentive Plan, if there is a change in control of the Company, the executive may be entitled to full acceleration of his or her equity-based compensation upon the executive’s qualifying termination event thereafter, as described above under “Elements of Executive Total Compensation – Equity Incentives.” The Committee believes that these arrangements are important as a recruitment and retention device, as most of the companies with which we compete for executive talent have similar severance protections for their executives. These arrangements may help incentivize the executive to remain with the Company and to assist in any potential change in control transaction, which provides security for the executive and stability for the Company. The Committee attempts to balance protection of its executives upon a change in control with protection of the Company’s interests by making accelerated vesting available upon a change in control only if the executive is involuntarily terminated or voluntarily resigns due to a job diminishment in connection with the change in control (a so-called “double-trigger”). Additionally, the Committee links severance payments to agreements by the executive not to compete with the Company, solicit the Company’s employees or customers, or disclose confidential information.
Messrs. Nasca’s and Whitehouse’s employment agreements provide for post-termination compensation, including in connection with a change in control. Furthermore, Mr. Connerton is a party to a rolling two-year change in control agreement with the Company. The change in control agreement provides a double-trigger benefit. The change in control agreement is described below under “Employment and Change in Control Agreements with our NEOs.”
For further information on the potential payouts under these arrangements, see “Potential Payments Upon Termination or Change-in-Control” below.
Executive Severance Plan. The Company’s Executive Severance Plan provides coverage and severance benefits to executive officers who are not covered under an employment contract or, as to a termination of employment in connection with a change in control, under a change in control agreement. Under the Executive Severance Plan, a participant (1) whose employment is involuntarily terminated by the Company for reasons other than for cause, as defined in the plan, (2) who is required to move employment more than 35 miles from his or her current place of employment, and who rejects the relocation and terminates employment, or (3) whose aggregate compensation is materially reduced, and who terminates employment, will be eligible for severance payments under the Executive Severance Plan. Under the plan, a participant eligible for benefits would receive 12 months of salary continuance plus the participant’s short-term incentive amount at the target level, pro-rated for the time during the year in which the participant was actively employed by the Company. The severance payments will be made over the 12-month period following termination in accordance with the Company’s regular payroll cycle. In addition, the Company will reimburse eligible participants for up to $5,000 in outplacement services during the 12-month period following termination (payable in a lump sum, in cash). Payments and benefits under the Executive Severance Plan are subject to the participant’s compliance with one-year non-competition and non-solicitation covenants, and an employee will cease to be a participant in this plan if severance benefits are triggered under an employment contract or change in control agreement.
Executive Compensation
Mr. Connerton and Mr. Whitehouse are participants in the Executive Severance Plan (unless a termination of employment occurs in connection with a change in control). Mr. Nasca, who has an employment contract providing for severance benefits, does not participate in this plan.
Tax and Accounting Considerations. Section 162(m) of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act of 2017 (“TCJA”), generally denies publicly held corporations a federal income tax deduction for compensation exceeding $1,000,000 paid to the principal executive officer, principal financial officer, and the three other highest paid executive officers during any taxable year of the corporation beginning after December 31, 2016. TCJA provides “grandfathered” treatment for certain compensation in excess of the $1 million deductibility limitation, including compensation that is “qualified performance-based compensation” within the meaning of Section 162(m) prior to the TCJA, if payable pursuant to a written binding contract in effect as of November 2, 2017 that is not modified in any material respect thereafter. The Committee has historically attempted to structure its compensation arrangements to achieve deductibility under Section 162(m), unless the benefit of deductibility is considered by the Committee to be outweighed by the need for flexibility or attainment of other objectives. Since compensation objectives may not always be consistent with the requirements for tax deductibility, the Committee is prepared, when it deems appropriate, to enter into compensation arrangements under which payments will not be deductible under Section 162(m) of the Code.
Say On Pay. Proposal II provides the Company’s shareholders with the opportunity to cast a non-binding advisory vote on executive compensation. Shareholders are being asked to approve the compensation paid to the Company’s NEOs, as described in this proxy statement, including this “Compensation Discussion and Analysis” and the compensation tables and narrative discussions contained in this proxy statement under the caption “Executive Compensation”.
We attempt to maintain a regular dialogue with our major shareholders to discuss various corporate governance topics, including executive compensation that may be of interest to them. These discussions have provided useful guidance for the Committee as it reviews and adopts the various compensation policies and practices affecting our employees, including our NEOs. At our 2021 Annual Meeting of Shareholders, a substantial majority of our shareholders voted to approve the compensation paid to our NEOs, with 89% of the votes cast supporting the measure.
In reviewing the Company’s compensation programs and making decisions related to 2021 executive compensation, the Committee evaluated the results concerning the vote on the advisory resolution on executive compensation at that meeting. The Committee will continue to consider shareholder feedback when determining executive compensation.
Risk Assessment. The Committee believes that any risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. In addition, the Committee believes that the mix and design of elements of the Company’s executive compensation program do not encourage management to assume excessive risks and is evidenced through the following:
Each of the incentive plans establish lines of authority and risk mitigation, and are supported by strong governance, including active oversight by the Committee and the Board of Directors.
Performance-based compensation paid to our executive officers is subject to a “clawback” policy, providing for the return of incentive compensation in the event of a restatement of our financial statements involving fraud or illegal conduct.
Equity grants through the 2019 Long-Term Equity Incentive Plan are subject to multi-year vesting to align interests with shareholders.
Our Insider Trading Policy prohibits our directors and executive officers, including NEOs, from engaging in any hedging or monetization transactions involving the Company’s securities.
Executive Compensation
Summary Compensation Table. The following table sets forth the compensation of the Company’s NEOs for the fiscal years ended December 31, 2021, 2020 and 2019. The NEOs identified in the table below are the Company’s Principal Executive Officer, Principal Financial Officer, and one other individual who was serving as an executive officer as of December 31, 2021 and met the applicable SEC reporting threshold.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
Salary
|
|
Stock
Awards
(1)
|
|
Option
Awards
(1)
|
|
Non-Equity
Incentive Plan
Compensation
(2)
|
|
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
(3)
|
|
All Other
Compensation
(4)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
David J. Nasca
|
|
|
|
2021
|
|
|
|
$
|
550,000
|
|
|
|
$
|
123,820
|
|
|
|
$
|
41,262
|
|
|
|
$
|
262,955
|
|
|
|
$
|
—
|
|
|
|
$
|
61,396
|
|
|
|
$
|
1,039,433
|
|
|
President and CEO of the
|
|
|
|
2020
|
|
|
|
$
|
545,192
|
|
|
|
$
|
123,724
|
|
|
|
$
|
41,273
|
|
|
|
$
|
61,875
|
|
|
|
$
|
167,910
|
|
|
|
$
|
46,190
|
|
|
|
$
|
986,164
|
|
|
Company and the Bank
|
|
|
|
2019
|
|
|
|
$
|
518,269
|
|
|
|
$
|
99,330
|
|
|
|
$
|
33,089
|
|
|
|
$
|
211,371
|
|
|
|
$
|
311,048
|
|
|
|
$
|
53,314
|
|
|
|
$
|
1,226,421
|
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John B. Connerton
|
|
|
|
2021
|
|
|
|
$
|
258,090
|
|
|
|
$
|
48,434
|
|
|
|
$
|
16,146
|
|
|
|
$
|
116,471
|
|
|
|
$
|
—
|
|
|
|
$
|
48,237
|
|
|
|
$
|
487,378
|
|
|
Treasurer of the
|
|
|
|
2020
|
|
|
|
$
|
252,693
|
|
|
|
$
|
47,959
|
|
|
|
$
|
15,963
|
|
|
|
$
|
28,687
|
|
|
|
$
|
10,004
|
|
|
|
$
|
47,346
|
|
|
|
$
|
402,652
|
|
|
Company and Executive
|
|
|
|
2019
|
|
|
|
$
|
240,500
|
|
|
|
$
|
37,926
|
|
|
|
$
|
12,634
|
|
|
|
$
|
72,292
|
|
|
|
$
|
13,705
|
|
|
|
$
|
45,735
|
|
|
|
$
|
422,792
|
|
|
Vice President and CFO of the Bank
(principal financial officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aaron M. Whitehouse
|
|
|
|
2021
|
|
|
|
$
|
209,463
|
|
|
|
$
|
16,015
|
|
|
|
$
|
5,304
|
|
|
|
$
|
19,047
|
|
|
|
$
|
—
|
|
|
|
$
|
24,062
|
|
|
|
$
|
273,891
|
|
|
SVP and President of TEA
|
|
|
|
2020
|
|
|
|
$
|
202,616
|
|
|
|
$
|
31,377
|
|
|
|
$
|
10,438
|
|
|
|
$
|
17,514
|
|
|
|
$
|
—
|
|
|
|
$
|
20,297
|
|
|
|
$
|
282,242
|
|
|
|
|
|
|
2019
|
|
|
|
$
|
165,769
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
43,200
|
|
|
|
$
|
—
|
|
|
|
$
|
15,942
|
|
|
|
$
|
224,911
|
|
(1)Reflects the aggregate fair value of the awards at grant date as determined in accordance with FASB ASC Topic 718 for financial statement reporting purposes. For additional information as to the assumptions made in valuation, see Note 14 to the financial statements filed with the SEC in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Amounts shown in the table do not necessarily correspond to the actual value that may be realized by the NEOs.
(2)See “Compensation Discussion and Analysis – Elements of Executive Total Compensation – Short-Term Cash Incentive Compensation” for additional detail.
(3)With respect to Mr. Nasca, includes the aggregate change in the accumulated benefits under the Bank’s Senior Executive SERP. For 2021, the aggregate change in actuarial present value of accumulated benefits for Mr. Nasca was a decrease of $58,561. However, applicable SEC rules do not permit us to report a negative number in this column
With respect to Mr. Connerton, includes the aggregate change in the accumulated benefits under the Bank’s Defined Benefit Pension Plan. For 2021, the aggregate change in actuarial present value of accumulated benefits for Mr. Connerton was a decrease of $1,046. However, applicable SEC rules do not permit us to report a negative number in this column.
(4)For 2021, includes: 401(k) matching contributions of $17,400, $15,485, and $12,568 for Mr. Nasca, Mr. Connerton, and Mr. Whitehouse respectively; club dues for Mr. Nasca of $18,257; the Company’s contribution to the EIRP for Mr. Connerton of $18,689; the economic benefit of an endorsement split-dollar life insurance policy held by the Bank; dividends paid on unvested restricted stock awards; and auto allowances for Mr. Nasca, Mr. Connerton, and Mr. Whitehouse. Other than the items for which specified dollar amounts were provided, none of the items specified in this footnote (4) exceeded $10,000 for any individual NEO.
Executive Compensation
Grants of Plan-Based Awards. The following table reflects the terms of the compensation plan-based awards granted to Named Executive Officers in 2021.
Grants of Plan Based Awards
|
Name
|
|
Grant Date
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards (1)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
|
|
|
Exercise
or Base
Price of
Option
Awards
(per
share)
(2)
|
|
|
Grant
Date Fair
Value of
Stock and
Option
Awards
(3)
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Stretch
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Nasca
|
|
|
11/16/2021
|
|
|
$
|
103,125
|
|
|
$
|
206,250
|
|
|
$
|
309,375
|
|
|
|
3,170
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
123,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
5,290
|
|
|
$
|
39.06
|
|
|
$
|
41,262
|
|
|
|
|
|
|
|
|
|
|
|
|
John B. Connerton
|
|
|
11/16/2021
|
|
|
$
|
38,824
|
|
|
$
|
77,648
|
|
|
$
|
116,471
|
|
|
|
1,240
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
48,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
2,070
|
|
|
$
|
39.06
|
|
|
$
|
16,146
|
|
|
Aaron M. Whitehouse
|
|
|
11/16/2021
|
|
|
$
|
25,395
|
|
|
$
|
50,791
|
|
|
$
|
76,186
|
|
|
|
410
|
|
|
|
—
|
|
|
|
—
|
|
|
$ 16,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
680
|
|
|
|
$39.06
|
|
$ 5,304
|
|
|
(1)Values reflect possible payouts assuming both Company and individual performance at the specified levels under the Evans Excels Plan.
(2)Reflects the exercise price for the options granted, which was the closing market price for the Company’s common stock on the grant date.
(3)Reflects full grant date fair value in accordance with FASB ASC Topic 718 of the stock and options granted. For additional information as to the assumptions made in valuation, see Note 14 to the financial statements filed with the SEC in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The option and restricted stock awards in 2021 were granted under the Company’s 2019 Long-Term Equity Incentive Plan. 25% of the options and restricted stock granted will vest each year on the anniversary of the grant date, subject to acceleration of vesting upon the individual’s death, disability, retirement, or involuntary termination in connection with a change in control. The awards shown in the table above will be fully vested in 2025. Dividends are paid on unvested stock awards when and as declared by the Board of Directors.
Employment and Change in Control Agreements with our NEOs
Mr. Nasca is the only NEO with an employment contract. Mr. Whitehouse’s employment contract ended on July 1, 2021. Both Mr. Connerton and Mr. Whitehouse are employed on an “at will” basis, but are parties to a change in control agreement with the Company.
The material terms of Mr. Nasca’s employment contract are as follows:
David J. Nasca – Employment Agreement, by and among Mr. Nasca, the Company and the Bank, pursuant to which Mr. Nasca serves as the President and Chief Executive Officer of the Company and the Bank. On September 21, 2020, the Committee and Mr. Nasca agreed to a first amendment of Mr. Nasca’s Employment Agreement. With the first amendment, the terms of contract and non-renewal notice were updated. The sub-areas of payments upon an event of termination, disability, death or retirement; notice of termination, post-termination obligations, confidentiality, and source of payments and intended compliance were further clarified from the original agreement.
Prior to the first amendment and subject to prior termination, the term of Mr. Nasca’s employment was for a three-year term, which renewed daily until his 62nd birthday (October 27, 2019), at which time the contract had a remaining and declining three-year term. Automatic daily renewal would cease if the Bank gave Mr. Nasca written notice of non-renewal, in which case Mr. Nasca’s employment would end 36 months after the date of the non-renewal notice, unless the parties agree to a shorter period. The first amendment stated that Mr. Nasca’s employment period, under the first amendment, began on October 27, 2019 and will continue for a period of thirty-six (36) months, that is until October 27, 2022, unless Mr. Nasca and the Committee agree that the employment period shall end on an earlier date. Also, effective as of
Executive Compensation
October 27, 2022, Mr. Nasca’s employment period will continue on October 27, 2022 for a period of one (1) year and renew daily so that at all times Mr. Nasca has a remaining one (1) year term, except in the case of a non-renewal notice, and the employment period would expire and the employment agreement would terminate on October 27, 2025, unless Mr. Nasca and the Committee agree that the employment period shall end on an earlier date.
Under the first amendment, there are two methods of a non-renewal notice. Under the first method, the Committee may give Mr. Nasca written notice of non-renewal of the employment period for one (1) year term beginning on October 27, 2022 whereby the employment period shall end on the date that is one (1) year after the date of the non-renewal notice. Under the second method, Mr. Nasca may give the Committee written notice of non-renewal of the employment period for one (1) year term beginning on October 27, 2022 whereby the employment period would end on the date that is one (1) year after the date of the non-renewal notice. Both non-renewal notice situations do not render Mr. Nasca eligible in any way for a severance agreement or payment that was clarified in the first amendment and explained below.
Mr. Nasca’s employment agreement provides for an initial base salary, which is adjusted annually by the Board of Directors of Evans Bank, N.A., provided, however, that Mr. Nasca’s annual salary may not be decreased. Mr. Nasca is entitled to participate in all Company and Bank cash and equity incentive programs made available to senior executives, as well as all employee benefit plans, programs, and arrangements for which he qualifies. He is entitled to five weeks paid vacation each year, plus five sick days and customary bank holidays. The Bank provides Mr. Nasca with a monthly automobile allowance of $750 and reimburses him for reasonable club dues and certain other expenses he incurs in the performance of his duties under the agreement.
Within the first amendment, payments to Mr. Nasca upon an event of termination were clarified as stated below:
•Effective through and including October 27, 2022, by the Company or the Bank without “cause” or by Mr. Nasca for “good reason,” or under certain circumstances within two years following a “change in control” of the Company or in the event of his subsequent death, he (or his beneficiaries or estate) will be paid three times the sum of the highest base salary paid to him at any time under the employment agreement plus the average annual non-equity incentive bonus paid to Mr. Nasca in the three years prior to termination. The Company will also continue to provide amounts or benefits payable under applicable benefit plans for 36 months. Mr. Nasca’s change in control benefits may be reduced by the minimum amount necessary to avoid penalties under Section 280G of the Internal Revenue Code;
•If an Event of Termination occurs after October 27, 2022, by the Company or the Bank without “cause” or by Mr. Nasca for “good reason”, he will be paid the sum of the highest base salary paid to him at any time under the employment agreement and the average annual non-equity incentive bonus paid to Mr. Nasca in the three years prior to termination. If the event of termination is made in connection with an involuntary termination of employment or voluntary resignation for “good reason” within two years after a change of control under certain conditions, then Mr. Nasca is paid two times the sum of the highest annual rate of base salary paid to him at anytime under the agreement and the average annual incentive bonus paid to him during the three completed calendar years preceding the event of termination with such payment conditioned upon Mr. Nasca signing a general release acceptable to the Company. The Company will also continue to provide amounts or benefits payable under applicable benefit plans for 12 months.
•Termination because of “disability,” (i) Mr. Nasca will be entitled to participate in the short- and long-term disability plans and benefits offered by the Bank to senior executives, including long-term disability income replacement benefits and supplemental retirement benefits under a long-term disability program; and (ii) the Bank will continue to provide Mr. Nasca with certain life and medical insurance benefits under the same cost-sharing arrangement as in effect for active employees until Mr. Nasca’s (A) full-time employment by another employer, (B) attaining age 65, or (C) death.
Executive Compensation
•Termination by the Company or the Bank for “cause” or by Mr. Nasca other than for “good reason,” Mr. Nasca will not be entitled to payment of any amounts or benefits, other than that portion of his annual salary accrued through the date of termination and any accrued and unpaid vacation.
•An “event of termination” does not mean non-renewal of the employment agreement by the Committee or Mr. Nasca.
The Company’s or the Bank’s obligation to make such payments to Mr. Nasca are conditioned upon this compliance with his obligations of confidentiality, non-competition and non-solicitation set forth in the employment agreement.
John Connerton and Aaron Whitehouse – Change in Control Agreements. The Company entered into a two-year change in control agreement with each of Mr. Connerton and Mr. Whitehouse. The agreement provides that in the event of a change in control during the term of the agreement, followed by the person’s termination without cause or voluntary termination for good reason, he would be entitled to: (1) a cash lump sum payment equal to two times the highest rate of gross base salary earned during the prior 12 months; and (2) continued life insurance and non-taxable medical and dental coverage (under the same cost sharing arrangement) substantially comparable to the coverage maintained by the Bank for the person as of his date of termination for 24 months thereafter.
Potential Payments Upon Termination or Change-in-Control. The following table shows the potential incremental value transfer to each NEO under various termination or change-in-control scenarios as of December 31, 2021, the last business day of fiscal 2021. Unvested, unexercised stock options and unvested restricted stock awards are valued at the closing market price of the Company’s common stock on that date. The actual amounts to be paid out can only be determined at the time of such NEO’s separation from the Company. The amounts shown in the following table do not take into account any reductions that may be required in order to avoid penalties under Section 280G of the Internal Revenue Code.
|
|
|
|
|
|
|
|
|
Event
|
|
David Nasca
|
|
John Connerton
|
|
Aaron Whitehouse
|
|
|
|
|
|
|
Retirement or Voluntary Termination Without “Good Reason” (1)
|
|
$1,759,552
|
|
$211,004
|
|
$ —
|
|
|
|
|
|
|
Termination for “Cause” (1)
|
|
$1,759,552
|
|
$211,004
|
|
$ —
|
|
|
|
|
|
|
Termination Without “Cause” or for “Good Reason” (2)(5)
|
|
$4,010,711
|
|
$547,477
|
|
$287,814
|
|
|
|
|
|
|
“Change in Control” Termination (3)(5)
|
|
$4,694,482
|
|
$1,111,355
|
|
$516,483
|
|
|
|
|
|
|
Death (4)(5)
|
|
$3,423,470
|
|
$929,975
|
|
$516,483
|
|
|
|
|
|
|
Disability (6)
|
|
$2,486,628
|
|
$593,705
|
|
$93,227
|
(1)With respect to Mr. Nasca, reflects Senior Executive SERP actuarial present value of accumulated benefit obligation as of 12/31/21.
With respect to Mr. Connerton, reflects Defined Benefit Pension Plan (“Pension Plan”) actuarial present value of the accumulated benefit obligation as of 12/31/2021 and actuarial present value under the Executive Incentive Retirement Plan (“EIRP”) based on current vested benefit.
(2)With respect to Mr. Nasca, reflects (a) lump sum employment contract payout, (b) estimated value of healthcare benefits for 36 months, and (c) Senior Executive SERP actuarial present value of the accumulated benefit obligation as of 12/31/2021.
With respect to Mr. Connerton, reflects (a) lump sum Executive Severance Plan payout, (b) Pension Plan actuarial present value of the accumulated benefit obligation as of 12/31/2021 and (c) EIRP actuarial present value of the accumulated benefit obligation as of 12/31/2021 based on current vested benefit.
With respect to Mr. Whitehouse, reflects lump sum Executive Severance Plan payout.
(3)With respect to Mr. Nasca, reflects (a) lump sum employment contract payout, (b) estimated value of healthcare benefits for 36 months, (c) Senior Executive SERP actuarial calculated as the projected benefit obligation and (d) value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
With respect to Mr. Connerton, reflects (a) lump sum change in control agreement payout, (b) EIRP payout, including the present value of expected benefits through age 65, (c) Pension Plan actuarial present value of the accumulated benefit obligation as of 12/31/2021 and (d) value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
With respect to Mr. Whitehouse, (a) lump sum change in control agreement payout, (b) value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
(4)With respect to Mr. Nasca, reflects (a) Executive Life Insurance Plan lump sum death benefit, (b) estimated value of healthcare benefits for 24 months, (c) Senior Executive SERP lump sum payout calculated as the accumulated benefit obligation, and (d) value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
With respect to Mr. Connerton, reflects (a) Executive Life Insurance Plan lump sum death benefit, (b) EIRP actuarial present value of the accumulated benefit obligation as of 12/31/2021 based on current vested benefit, (c) Pension Plan actuarial present value of the accumulated benefit obligation as of 12/31/2021 and (d) value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
Executive Compensation
With respect to Mr. Whitehouse, (a) Executive Life Insurance Plan lump sum death benefit, (b) value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
(5)Payment may be postponed for a six month period to avoid application of Section 409A of the Internal Revenue Code.
(6)With respect to Mr. Nasca, reflects (a) estimated value of healthcare benefits for 24 months, (b) Senior Executive SERP lump sum payout calculated as the benefit obligation, and (c) value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
With respect to Mr. Connerton, reflects (a) EIRP actuarial present value of the accumulated benefit obligation as of 12/31/2021 based on current vested benefit, (b) Pension Plan actuarial present value of the accumulated benefit obligation as of 12/31/2021, and (c) value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
With respect to Mr. Whitehouse, reflects the value of stock awards and option awards that provide for accelerated vesting upon termination for the stated reason.
All post-termination payments under Mr. Nasca’s employment contract are linked to two-year confidentiality, non-competition and non-solicitation obligations. Payments under the change in control agreements with Mr. Connerton and Mr. Whitehouse are linked to one-year confidentiality, non-competition and non-solicitation obligations. The events that constitute “cause,” “good reason,” “disability” and “change in control” are described in the employment contract or change in control agreement with each NEO. Accelerated vesting of stock options and restricted stock awards assumes the awards are not converted into comparable awards with respect to voting securities of the surviving or acquiring entity upon a change in control of the Company, in accordance with the terms of the 2019 Long-Term Equity Incentive Plan.
Executive Compensation
Outstanding Equity Awards at Fiscal Year-End. The following table provides information about unexercised stock options and unvested restricted stock outstanding for the Named Executive Officers as of December 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(#) (1)
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock that
Have Not
Vested
(#) (1)
|
|
|
Market Value
of Shares
or Units of
Stock that
Have Not
Vested
(2)
|
|
|
|
|
|
|
|
|
|
|
David J. Nasca
|
|
|
—
|
|
|
|
5,290
|
|
|
$
|
39.06
|
|
|
|
11/16/2031
|
|
|
|
3,170
|
|
|
$
|
127,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,419
|
|
|
|
9,681
|
|
|
|
25.51
|
|
|
|
11/17/2030
|
|
|
|
3,880
|
|
|
|
156,364
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,300
|
|
|
|
3,300
|
|
|
|
36.12
|
|
|
|
4/15/2029
|
|
|
|
1,375
|
|
|
|
55,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,389
|
|
|
|
1,131
|
|
|
|
45.20
|
|
|
|
3/21/2028
|
|
|
|
573
|
|
|
|
23,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,150
|
|
|
|
—
|
|
|
|
39.50
|
|
|
|
3/22/2027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,300
|
|
|
|
—
|
|
|
|
25.00
|
|
|
|
3/16/2026
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,720
|
|
|
|
—
|
|
|
|
24.72
|
|
|
|
3/17/2025
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,670
|
|
|
|
—
|
|
|
|
22.93
|
|
|
|
4/24/2024
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,100
|
|
|
|
—
|
|
|
|
17.64
|
|
|
|
3/19/2023
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,380
|
|
|
|
—
|
|
|
|
15.50
|
|
|
|
5/4/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
John B. Connerton
|
|
|
—
|
|
|
|
2,070
|
|
|
$
|
39.06
|
|
|
|
11/16/2031
|
|
|
|
1,240
|
|
|
$
|
49,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
936
|
|
|
|
3,744
|
|
|
|
25.51
|
|
|
|
11/17/2030
|
|
|
|
1,504
|
|
|
|
60,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,260
|
|
|
|
1,260
|
|
|
|
36.12
|
|
|
|
4/15/2029
|
|
|
|
525
|
|
|
|
21,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,230
|
|
|
|
410
|
|
|
|
45.20
|
|
|
|
3/21/2028
|
|
|
|
208
|
|
|
|
8,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500
|
|
|
|
—
|
|
|
|
39.50
|
|
|
|
3/22/2027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
—
|
|
|
|
25.00
|
|
|
|
3/16/2026
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,710
|
|
|
|
—
|
|
|
|
24.72
|
|
|
|
3/17/2025
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,390
|
|
|
|
—
|
|
|
|
22.93
|
|
|
|
4/24/2024
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,460
|
|
|
|
—
|
|
|
|
17.64
|
|
|
|
3/19/2023
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aaron M. Whitehouse
|
|
|
—
|
|
|
|
680
|
|
|
$
|
39.06
|
|
|
|
11/16/2031
|
|
|
|
410
|
|
|
$
|
16,523
|
|
|
|
|
|
612
|
|
|
|
2,448
|
|
|
|
25.51
|
|
|
|
11/17/2030
|
|
|
|
984
|
|
|
|
39,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)The unexercisable options with the following expiration dates and the related unvested restricted shares will vest as indicated below:
|
|
|
|
|
|
|
|
Expiration Date
|
|
Vesting Schedule
|
|
|
|
|
3/21/2028
|
|
100% each on March 21, 2022
|
|
|
|
|
4/15/2029
|
|
50% each on April 15, 2022 and 2023
|
|
|
|
|
11/17/2030
|
|
33% each on November 17, 2022, 2023 and 2024
|
|
|
|
|
11/16/2031
|
|
25% each on November 16, 2022, 2023, 2024 and 2025
|
(2)The market value of stock awards was computed by multiplying the closing market price of the Company’s common stock on December 31, 2021 by the number of shares covered by the award.
Executive Compensation
Option Exercises and Stock Vested. The following table provides information about option exercises and the vesting of restricted stock during 2021 for the Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
|
|
Value Realized on
Exercise
|
|
Number of Shares
Acquired on Vesting
|
|
Value Realized on
Vesting (1)
|
|
|
|
|
|
|
|
David J. Nasca
|
|
8,980
|
|
$ 148,557
|
|
2,735
|
|
$ 97,855
|
|
|
|
|
|
|
|
John B. Connerton
|
|
5,160
|
|
$ 103,530
|
|
1,029
|
|
$ 36,884
|
|
|
|
|
|
|
|
Aaron M. Whitehouse
|
|
—
|
|
$ —
|
|
246
|
|
$ 9,601
|
(1)Calculated by multiplying the closing market price of the Company’s common stock on the vesting date by the number of shares vested.
Pension Benefits. The following table sets forth the present value of the accumulated pension benefits for the Named Executive Officers as of fiscal year-end 2021.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years Credited
Service
|
|
Present Value of
Accumulated
Benefit (1)
|
|
Payments During
Last Fiscal Year
|
|
|
|
|
|
|
|
David J. Nasca
|
|
Senior Executive SERP
|
|
15
|
|
$1,759,552
|
|
$ —
|
|
|
|
|
|
|
|
John B. Connerton
|
|
Defined Benefit Plan
|
|
18
|
|
$ 57,075
|
|
$ —
|
(1)The assumptions used to calculate the present value of accumulated benefits are set forth in Note 13 to the Consolidated Financial Statements of the Company in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The following describes the material factors necessary to understand the pension benefits that are provided to the Named Executive Officers under the Bank’s defined benefit pension and supplemental executive retirement plans.
Defined Benefit Pension Plan (Frozen). The Bank maintains a tax-qualified defined benefit pension plan (the “Pension Plan”) for all eligible employees, including employees of its subsidiaries and Mr. Connerton is the only NEO that is a participant in the Pension Plan. Effective January 31, 2008, the Pension Plan was frozen. All participants vested immediately in the Pension Plan at their then-present number of years of service, regardless of whether an employee had attained greater than five years of service on January 31, 2008. All benefits that eligible participants accrued in the Pension Plan prior to January 31, 2008 will be retained, but no additional benefits have accrued under the Pension Plan since that date. Employees will be eligible to receive accrued benefits at normal retirement age.
Upon retirement at age 65, vested participants are entitled to receive a monthly benefit. The following table indicates the annual retirement benefit that would be payable under the Pension Plan, upon retirement at age 65 in fiscal year 2021, expressed in the form of a single life annuity for the average annual earnings and years of credited service. The benefits listed below are not subject to deduction for Social Security or other offset amounts.
|
|
|
Years of Service at Normal Retirement
|
|
|
|
|
|
|
|
|
Final Average Compensation
|
|
10
|
|
|
20
|
|
|
30
|
|
|
40
|
|
|
|
|
|
|
|
|
$30,000
|
|
$
|
3,000
|
|
|
$
|
6,000
|
|
|
$
|
9,000
|
|
|
$
|
9,000
|
|
|
|
|
|
|
|
|
$50,000
|
|
$
|
5,000
|
|
|
$
|
10,000
|
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
$100,000
|
|
$
|
10,000
|
|
|
$
|
20,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
|
|
|
|
|
|
$150,000
|
|
$
|
15,000
|
|
|
$
|
30,000
|
|
|
$
|
45,000
|
|
|
$
|
45,000
|
|
|
|
|
|
|
|
|
$220,000
|
|
$
|
22,000
|
|
|
$
|
44,000
|
|
|
$
|
66,000
|
|
|
$
|
66,000
|
|
Pension Benefit Formula: 1% of compensation times years of service, subject to a maximum of 30 years of service.
Executive Compensation
A participant is eligible for early retirement under the Pension Plan if the participant retires before normal retirement age but after attaining age 59 and completing 5 years of service. An early retirement benefit is reduced 1/15th per year for each year that the benefit commences prior to normal retirement age. Mr. Connerton (age 55) is not eligible for early retirement.
Benefits under the Pension Plan are funded by an irrevocable, tax-exempt trust. The Pension Plan benefits of all participants, including those benefits of NEOs, are payable from the assets held by the tax-exempt trust.
Supplemental Executive Retirement Plan. Mr. Nasca is the only participant in the Senior Executive SERP. The Senior Executive SERP is available to senior executives deemed eligible by the Committee in its sole discretion. A participant is generally entitled to receive a benefit under the Senior Executive SERP upon a termination of employment, other than for “cause,” after the participant has completed 10 full calendar years of service with the Bank. No benefit is payable under the Senior Executive SERP if the participant’s employment is terminated for “cause” or if the participant voluntarily terminates before completing 10 full calendar years of service with the Bank. In addition, the payment of benefits under the Senior Executive SERP is conditioned upon certain agreements of the participant related to confidentiality, cooperation, non-competition, and non-solicitation. A participant will be entitled to a retirement benefit under the Senior Executive SERP if his or her employment with the Bank terminates other than for “cause” on or after the date the participant attains age 65. The “accrued benefit” is based on a percentage of the participant’s final average earnings (defined as salary and annual short-term cash incentive bonus, including the amount of any salary deferrals into the Company’s 401(k) and employee benefit plans), which is determined based upon the participant’s total annual compensation over the highest consecutive five calendar years of the participant’s employment with the Bank, accrued over the participant’s “required benefit service”. Mr. Nasca’s benefit percentage is 35% and his required benefit service is 15 years. A reduced early retirement benefit may be payable if the participant terminates before attaining age 62 (other than by reason of death, “disability” or following a “change in control”). The benefit is calculated in the same manner as the standard retirement benefit, but is reduced by 6% for each full calendar year prior to age 62 that the benefit is paid (e.g., reduced by 12% if the participant retires at age 60). Mr. Nasca is currently eligible for early retirement under the Senior Executive SERP.
Upon a participant’s death while employed by the Bank, the participant’s designated beneficiary will be entitled to a cash lump sum equal to the present value of the participant’s “accrued benefit”, without any reduction for early retirement. If a participant’s employment with the Bank terminates by reason of “disability”, the participant is entitled to a benefit to be calculated as if he or she had attained age 65 immediately before the disability and assuming his or her base salary had increased 3% each calendar year, then discounted to the lump sum present value as of the date of disability, and paid as a cash lump sum. If a participant’s employment is terminated without “cause” or the participant terminates with “good reason” (as defined in Internal Revenue Code Section 409A) within 24 months following a “change in control”, the participant is entitled to a benefit to be calculated as if he or she had attained age 65 immediately before termination and assuming his or her base salary had increased 3% each calendar year, then discounted to the lump sum present value and paid as a cash lump sum.
Executive Compensation
Executive Life Insurance Plan. The Company provides an endorsement split-dollar benefit to certain officers and directors in connection with bank-owned life insurance maintained by the Bank. This benefit does not carry into retirement. The benefit for all non-employee directors is in the amount of $200,000. The amount of the benefit for NEOs is 2.0 times base salary. For 2021, the amount of the benefits for each of Messrs. Nasca, Connerton and Whitehouse was $1,100,000, $520,000 and $420,000, respectively. The participant annually pays income tax on the imputed value of annual term life insurance premiums.
Employee Savings Plan. The Bank also maintains a tax-qualified 401(k) salary deferral plan to assist employees, including employees of its subsidiaries, in saving for retirement. All employees are eligible to participate on the first of the month following 30 days of employment. Eligible employees can contribute up to the maximum amount allowable under the Internal Revenue Code.
For 2021, all employees, including the NEOs, received a 100% match from the Company on contributions up to 6% of base salary. Employees are fully vested in these employer contributions after six years of service. Matching contributions credited to the accounts of NEOs are included in the “Summary Compensation Table,” above, under “All Other Compensation.”
Individual account earnings will depend on the performance of the particular funds in which the participant invests. Specific guidelines govern adjustments to contribution levels, investment decisions and withdrawals from the plan. The benefit is paid as an annuity unless the employee elects one of the optional forms of payment available under the plan.
Non-Qualified Deferred Compensation. The following table sets forth information for the Company’s Non-Qualified Deferred Compensation Plan for fiscal 2021:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive Contributions
in Last Fiscal Year
|
|
Aggregate
Earnings in Last
Fiscal Year
|
|
Aggregate
Withdrawals/
Distributions in Last
Fiscal Year
|
|
Aggregate Balance at
Last Fiscal Year End
|
|
|
|
|
|
|
|
John B. Connerton
|
|
$ —
|
|
$250
|
|
$ —
|
|
$6,128
|
The Company does not make contributions to the Non-Qualified Deferred Compensation Plan. The amount reported in the “Aggregate Balance at Last Fiscal Year End” column of this table for Mr. Connerton is reported as compensation in the Company’s Summary Compensation Table for previous fiscal year. Mr. Connerton did not contribute to this plan in fiscal 2021. Messrs. Nasca and Whitehouse do not participate in the Non-Qualified Deferred Compensation Plan.
The Deferred Compensation Plan allows NEOs to elect to defer 1% to 100% of their base salary until retirement or termination of service. Amounts deferred under the Deferred Compensation Plan are credited with interest at the prevailing prime rate, plus 100 basis points.
NEOs are immediately 100% vested in their account balance under the Non-Qualified Deferred Compensation Plan, including credited interest. NEOs may choose from a 5, 10 or 15 year payment plan or lump sum payment option. In 2016, the Non-Qualified Deferred Compensation Plan was frozen to all new entrants. Mr. Connerton, who was a participant in the Non-Qualified Deferred Compensation Plan when it was frozen to new entrants, is permitted to continue his participation in the plan, and Mr. Nasca is eligible to participate in the plan but has not elected a deferral. Mr. Whitehouse, nor any future NEOs, will be eligible to participate in this plan.
CEO Pay Ratio. The “CEO pay ratio”, which shows the relationship between the annual total compensation paid to our CEO and the annual total compensation paid to our median employee, may provide an additional insight to the Company’s compensation practices. As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and applicable SEC rules, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation our CEO:
•The median annual total compensation of all employees of the Company and its subsidiaries (other than the CEO) was $57,852.
•The annual total compensation of the CEO (as reported in the Summary Compensation Table included in this Proxy Statement) was $1,039,433.
•Based on this information, for 2021 the CEO’s annual total compensation was 18 times that of the median of the annual total compensation of all of our employees.
Executive Compensation
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:
1.To identify the “median employee” (ME) from our employee population, we analyzed the entire employee population other than the CEO. We determined that, as of December 31, 2021, our employee population consisted of 472 individuals, with all of these individuals located in the United States.
2.All full time, part time, seasonal and temporary workers who worked at least seven days in 2021 and who started on or before December 1, 2021 were included. The employee population we analyzed included all employees of the Company and all of its consolidated subsidiaries. We analyzed the amount of salary and wages of our employees as reflected in our payroll records as reported to the Internal Revenue Service on Form W-2 for 2021. In making this determination, we annualized the compensation of full-time, part-time, seasonal and temporary employees who were hired in 2021 but did not work for us for the entire fiscal year.
3.We then calculated the ME’s total compensation for 2021. The ME’s 2021 total compensation included the same components as the 2021 total compensation for our CEO as reported in the “Total” column of the Summary Compensation Table (SCT) included in this Proxy Statement, such as base salary, overtime, annual bonus, referral bonuses, stock award/options, 401(k) matching contributions, and any increase in value of defined benefit pension plans.
4.The annual total compensation of our CEO used for purposes of calculating the ratio was the amount reported in the “Total” column of the SCT.
5.The ratio of the CEO’s compensation to the median compensation of all employees other than the CEO was determined by comparing the CEO’s 2021 total compensation to the ME’s 2021 total compensation.
Transactions with Related Persons
The Company’s written policies and procedures with respect to transactions with related persons require the review and approval or ratification by the Audit Committee for any transaction in which the Company will be a participant and any related person has or will have a material interest (direct or indirect), other than transactions involving less than $5,000 when aggregated with all similar transactions. Related persons include the Company’s directors, director nominees and executive officers and their immediate family members, as well as persons owning more than 5% of the Company’s common stock and any immediate family member of such shareholder.
Under the Company’s Related Person Transaction Policy, a related person transaction may be consummated or continue if the Audit Committee has approved or ratified the transaction in accordance with the following guidelines: in considering whether to approve or ratify related person transactions, the Audit Committee will take into account, among other factors, (i) whether the related person transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party; (ii) whether the related person transaction has been reviewed and approved by the Company’s subsidiary banking institution in accordance with Federal Reserve Regulation O and the process and procedure established by such subsidiary banking institution to ensure compliance with Regulation O; (iii) whether the related person transaction is approved by the disinterested members of the Board of Directors; and (iv) whether the related person transaction involves compensation approved by the Company’s Human Resource and Compensation Committee.
The Audit Committee meets annually with management to discuss and review related person transactions for the current calendar year and the two previous calendar years, including the proposed aggregate value of such transactions. After review and discussion, the Audit Committee will determine, based on the above guidelines, whether to approve or ratify each related person transaction, and at each subsequently scheduled meeting, management will update the Audit Committee, as necessary, as to any material change to previously approved related person transactions and any proposed related person transactions.
The Bank has had, and in the future expects to have, banking and fiduciary transactions with directors and executive officers of the Company and some of their affiliates. All such transactions have been in the ordinary course of business and on substantially the same terms (including interest rates and collateral on loans) as those prevailing at the time for comparable transactions with unrelated third parties, and do not involve more than a normal risk of collectivity or present other unfavorable features.
Audit Committee Report
The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Exchange Act.
The Audit Committee has reviewed and discussed with the Company’s management and Crowe LLP, the Company’s independent registered public accounting firm, the audited consolidated financial statements of the Company contained in the Company’s Annual Report on Form 10-K for the 2021 fiscal year. The Audit Committee has also discussed with Crowe LLP the matters required to be discussed by Auditing Standard No. 1301, as adopted by the Public Company Accounting Oversight Board.
The Audit Committee has received and reviewed the written disclosures and the letter from Crowe LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Crowe LLP’s communications with the Audit Committee concerning independence, and has discussed with Crowe LLP its independence from the Company.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for its 2021 fiscal year for filing with the SEC.
Submitted by the Audit Committee,
Michael J. Rogers, Chairman
James E. Biddle, Jr.
Christina P. Orsi
Nora B. Sullivan
Lee C. Wortham
Independent Registered Public Accounting Firm
Crowe LLP served as the Company’s independent registered public accounting firm and conducted the audit of the Company’s consolidated financial statements for the year ending December 31, 2021. Representatives of Crowe LLP will be present at the Annual Meeting to respond to appropriate questions that may be raised, and they will have the opportunity to make a statement, if they so desire.
Effective March 13, 2020, KPMG LLP voluntarily resigned as the Company’s independent registered public accounting firm. KPMG LLP’s reports on the Company’s financial statements for the fiscal years ended December 31, 2019 and 2018 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. For the fiscal year ended December 31, 2019 and during the subsequent interim periods through March 13, 2020, there were no disagreements (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and KPMG LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG LLP, would have caused KPMG LLP to make reference to the subject matter of the disagreements in connection with KPMG LLP’s reports on the Company’s financial statements. For the fiscal year ended December 31, 2019 and during the subsequent interim periods through March 13, 2020, there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
The Audit Committee of the Board of Directors engaged Crowe LLP as the Company’s independent registered public accounting firm on March 13, 2020.
For the fiscal year ended December 31, 2019 and during the subsequent interim periods through March 13, 2020, neither the Company nor anyone acting on behalf of the Company consulted Crowe LLP regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, nor did Crowe LLP provide a written report or oral advice to the Company that Crowe LLP concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
Fees Billed by Crowe LLP. The following table shows the fees that Crowe LLP billed the Company for audit and other services provided for fiscal years 2021 and 2020. Audit fees consist of professional services rendered for the audit of the Company’s annual consolidated financial statements and internal control over financial reporting, review of the Company’s financial statements included in the Company’s quarterly reports on Form 10-Q, and services that are normally provided by independent auditors in connection with statutory and regulatory filings, including SEC filings or engagements for fiscal years 2021 and 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
460,000
|
|
|
$
|
440,000
|
|
|
|
|
|
|
Audit-Related Fees
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
Tax Fees
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
Total
|
|
$
|
460,000
|
|
|
$
|
440,000
|
|
All fees listed in the table above were pre-approved by the Company’s Audit Committee under the pre-approval policy described below.
The Audit Committee’s pre-approval policy details the types of audit, audit-related, tax and other services that have the general pre-approval of the Audit Committee, and the cost limits for those services. Unless a type of service to be provided by the independent auditors has received general pre-approval, it requires specific pre-approval by the Audit Committee. Also, any proposed services exceeding pre-approved cost levels require specific pre-approval by the Audit Committee.
Proposal II – Advisory Vote on the Compensation Paid to the Company’s Named Executive Officers
General
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended, the Company is requesting shareholder approval of a non-binding advisory resolution approving the compensation paid to the executive officers named in the Summary Compensation Table included in this proxy statement (the NEOs) as disclosed pursuant to the SEC’s executive compensation disclosure rules, including the “Compensation Discussion and Analysis”, compensation tables and narrative discussion provided in this proxy statement under the caption “Executive Compensation,” above. At our 2019 Annual Meeting of Shareholders, our shareholders expressed a preference that the advisory “Say on Pay” vote take place on the annual basis recommended by our Board of Directors. This preference was subsequently adopted by our Board of Directors, and so we are again providing our shareholders with a “Say-on-Pay” vote this year.
The Board of Directors requests that shareholders approve the following advisory resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
The Company believes that its compensation policies and procedures are effective in achieving the Company’s goals of rewarding sustained financial and operating performance and leadership excellence, aligning the executives’ long-term interests with those of the Company’s shareholders, and motivating the executives to remain with the Company for long and productive careers. These policies and procedures are described above under the section “Executive Compensation”. The Human Resource and Compensation Committee of the Board of Directors, composed entirely of independent directors, in consultation with consultants from time to time, oversees the Company’s compensation programs and monitors policies to ensure that those policies are appropriate.
The Company urges shareholders to read the section entitled “Executive Compensation”, above, including the “Compensation Discussion and Analysis”, the 2021 Summary Compensation Table and related tables, and the narrative included within that section, which provide detailed information on the Company’s compensation policies and practices and the compensation of the Named Executive Officers.
Non-Binding Resolution
This advisory resolution, commonly referred to as a “Say-on-Pay” resolution, is not binding on the Company, the Board of Directors or the Human Resource and Compensation Committee of the Board of Directors, and may not be construed as overruling any decision made by the Board. However, the Board and the Human Resource and Compensation Committee will take the voting results into account when evaluating the Company’s executive compensation program and considering future compensation arrangements.
Required Vote
The affirmative vote of the holders of a majority of the votes cast is needed to approve the non-binding advisory resolution approving the compensation paid to the NEOs. Under New York law, abstentions and broker non-votes will have no effect on the outcome of the vote.
Unless otherwise directed, the persons named in the proxy card intend to vote shares as to which proxies are received FOR approval of the non-binding advisory resolution approving the compensation paid to the Named Executive Officers.
|
|
|
✔
|
|
|
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS.
|
|
|
Proposal III – Ratification of the Appointment of Independent Registered Public Accounting
Firm
The Company is asking shareholders to ratify the appointment of Crowe LLP as our independent registered public accounting firm for our current fiscal year. Our 2022 fiscal year began on January 1, 2022 and will end on December 31, 2022. Although ratification is not legally required, the Company is submitting the appointment of Crowe LLP to our shareholders for ratification in the interest of good corporate governance. In the event that this appointment is not ratified, the Audit Committee of the Board will reconsider the appointment, but may still engage Crowe LLP as our independent registered public accounting firm.
The Audit Committee appoints the independent registered public accounting firm annually. Before appointing Crowe LLP as our independent registered public accounting firm for fiscal 2022, the Audit Committee carefully considered the firm’s experience and qualifications.
Required Vote
The affirmative vote of the holders of a majority of the votes cast is needed to approve the ratification of the appointment of Crowe LLP as the Company’s independent registered public accounting firm. Under New York law, abstentions and broker non-votes will have no effect on the outcome of the vote.
Unless authority to so vote is withheld, the persons named in the proxy card intend to vote shares as to which proxies are received FOR ratification of the appointment of Crowe LLP as to the Company’s independent registered public accounting firm for fiscal 2022.
|
|
|
✔
|
|
|
|
THE COMPANY’S BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF CROWE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2022.
|
|
|
Other Matters
The cost of solicitation of proxies will be borne by the Company. Solicitation other than by mail may be made by directors, officers or by regular employees of the Company, who will receive no additional compensation therefor, by personal or telephone solicitation, the cost of which is expected to be nominal.
The Board of Directors knows of no other matters to be presented for shareholder action at the Annual Meeting, other than the election of directors, the advisory vote on the compensation paid to our NEOs, and the ratification of the appointment of Crowe LLP as the Company’s registered public accounting firm. However, if other matters do properly come before the Annual Meeting or any adjournments thereof, the Board of Directors intends that the persons named in the proxies will vote upon such matters in accordance with their best judgment. A proxy granted by a shareholder will give the Board of Directors discretionary authority to vote on any matters of which the Company was not notified at least 45 days before the date on which the Company mailed its proxy materials for the prior year’s Annual Meeting.
Shareholder Proposals for 2023
Annual Meeting of Shareholders
Requirements for Shareholder Proposals to be Considered for Inclusion in the Company’s Proxy Materials. Shareholders of the Company may submit proposals on matters appropriate for shareholder action at meetings of shareholders in accordance with Rule 14a-8(e) promulgated under the Exchange Act. For such proposals to be included in the Company’s proxy materials relating to its 2023 Annual Meeting of Shareholders, all applicable requirements of Rule 14a-8 must be satisfied and such proposals must be received by the Company no later than November 23, 2022. Such proposals should be delivered to the Secretary, Evans Bancorp, Inc., 6460 Main Street, Williamsville, New York 14221.
Requirements for Shareholder Nominations to be Brought Before the Annual Meeting. Shareholder nominations to the Board of Directors are governed by the procedures for director nominations by shareholders contained in the Company’s bylaws, as described under “Board of Director Committees – Corporate Governance and Nominating Committee.” Nominations should be delivered to the Secretary, Evans Bancorp, Inc., 6460 Main Street, Williamsville, New York 14221. This requirement is in addition to, and separate from, the requirements that a shareholder must meet in order to have a proposal included in the proxy statement for the 2023 Annual Meeting under Rule 14a-8(e).
Notice of Solicitation of Proxies. In accordance with Rule 14a-19 promulgated under the Exchange Act, a shareholder intending to engage in a director election contest with respect to the Company’s 2023 Annual Meeting of Shareholders must give the Company notice of its intent to solicit proxies by providing the names of its nominees and certain other information at least 60 calendar days before the anniversary of the previous year’s annual meeting. This deadline is March 6, 2023.
A copy of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (without exhibits) is available free of charge at www.edocumentview.com/EVBN, at the SEC’s website (www.sec.gov) and at the Company’s website (https://evansbancorp.q4ir.com). The Annual Report on Form 10-K is also available, without charge, by writing or telephoning Michelle Baumgarden, Evans Bancorp, Inc., 6460 Main Street, Williamsville, NY 14221, (716) 926-2000.
By Order of the Board of Directors,
EVANS BANCORP, INC.
Michelle A. Baumgarden
Secretary
Williamsville, New York
March 25, 2022
EVANS ^te BANCORP INC. OODDDM ENDORSEMENTJ.INE SACKPACK pit MR A SAMPLE DESIGNATION (F ANY) ADO 1 ADO 2 ADO 3 ADO 4 ADO 5 ADO 6 C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Your vote matters - here's how to vote! You may vote online a by phone instead of mailing this card. 0$i0 03 Online Go to www.envisionrepoits.com/EVBN or scan the OR code - login details are located in the shaded bar below. Utiag t N*» pen, nur» your «th«ni « iho»n n tta M*. Please Oooot unte outs«* the aesqnat eU ores. Phone Call toll free 1-800-652-V0TE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/EVBN Annual Meeting Proxy Card (1234 5678 9012 345) ▼ IF VOTING BY MAIL. SIGN. DETACH ANO RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼Q Proposals - The Board of Directors recommends a vtrte FOR all the nominees listed and FOR Proposals 2 and 3. L Election of Director! tor a tore*-year term: 01 - David J. Hasca For □ WlthhoU □ 02 - David R. Pfalzgraf. Jr. For □ WithhoU □ 03 - Thomas H. Waring. Jr. For □ WRttfioH □ 04 • lee C. Wortham □ □ 2. Approval on an advisory basis, erf the compensation paid to our named executive o(tiers. For Against Abstain □ □ □ 3. Ratilication erf the appointment ot Crowe UP as Evans Bancorp. Inc/s independent registered pubic accounting firm tor fiscal year 2022. For Against Abstain □ □ □ 4. In their discretion, the proxies are authorized to vote on such other business as may properly come before the Thirty-Fourth Annual Meeting ol Shareholders or any adjournment(s) thereof. Q Authorized Signatures - This section must be completed for your vote to be counted. - Date and Sign Below Please sign exactly as name<s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardan, a custodian, please give ful title. Date <mm/dd/yyyy> - Please print date below. Signature 1 - Please keep signature wntNn the box. Signature 2 - Please keep signature within the box. C 1234567890 JNT 4 2 AV 536287 S*CASA»*.t(lHSA*fiA6 S£T IP 'O AOCCAUCO*t M0O4MMCIEKS1 m ASAWPtE ANO MR ASAWPl£ MO VH ASAMFU A**) V*< A SAWU ANO W ASAV**.e A*0 VH ASAMPli AMO m A SASFU ANO SP ASAUfLt AH)
The 2022 Annual Meeting of Shareholders of Evans Bancorp, Inc. will be held on Tuesday, May 3, 2022 at 9:00 a.m. Eastern Time, virtually via the internet at meetncw.global/MTVRNTK. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.envisionreports.com/EVBN Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/EVBN ▼ IF VOTING BY MAIL SIGN. DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE ▼ © EVANS BANCORPinc Revocable Proxy - Evans Bancorp, Inc. PROXY FOR THE THIRTY-FOURTH ANNUAL MEETING OF SHAREHOLDERS Evans Bancorp, Inc. This Proxy is Solicited on Behalf of the Board of Directors of Evans Bancorp, Inc. The undersigned hereby appoints Kevin 0. Maroney and Kimberley A. Minkel as Proxies, each with the power to appoint his/her substitute and hereby authorizes either of them to represent and to vote all the shares of Common Stock of Evans Bancorp, Inc. held of record by the undersigned at the close of business on March 9,2022 at the Thirty-Fourth Annual Meeting of Shareholders to be held on May 3,2022, at meetnow.global/MTVRNTK, or any adjournments thereof, upon the matters listed on the reverse side hereof. Each of the Proxies is authorized to vote, in his discret ion, upon such other mattersas may properly come before the meeting or any adjournment thereof. This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. If no direction is giveri this proxy will be voted FOR all the nominees listed in Proposal 1 and FOR Proposals 2 and 3; and with discretionary authority on such other matters as may properly come before the meeting or any adjournment thereof. Shareholders may revoke this proxy following the procedures described in the accompanying Proxy Statement. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated March 25,2022, and a copy of the Evans Bancorp. Inc. Annual Report on Form I0-K for the fiscal year ended December 312021 The undersigned hereby revokes any proxy or proxies heretofore given with respect to the Annual Meeting. PI EASE MARK. DATE, SIGN AND RETURN THE PROXY PROMPTLY, USING THE ENCLOSED ENVELOPE. Q Non-Voting Items Change of Address - Please print new address below.
Evans Bancorp (AMEX:EVBN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Evans Bancorp (AMEX:EVBN)
Historical Stock Chart
From Apr 2023 to Apr 2024
