You are cordially invited
to attend the 2016 Annual Meeting of Shareholders of Access National Corporation. The meeting will be held on Thursday, May 19,
2016, at 4:00 p.m. at the Corporation’s office located at 1800 Robert Fulton Drive, Reston, Virginia. The accompanying Notice
and Proxy Statement describe the matters to be presented at the meeting. Enclosed is our annual report to shareholders for the
year ended December 31, 2015, which will be reviewed at the Annual Meeting.
We appreciate your
continuing loyalty and support of Access National Corporation, its subsidiaries and their divisions, including Access National
Bank, Access National Mortgage, Access National Leasing Corporation and Access Capital Management Holding, LLC.
PROPOSAL THREE
Ratification
of the Selection of Independent Public Accountants
BDO USA, LLP served
as the Corporation’s independent public accountants for the fiscal year ended December 31, 2015, and has been selected by
the Audit Committee as independent public accountants for the Corporation for the fiscal year ending December 31, 2016. In the
event the selection of BDO USA, LLP is not ratified by the shareholders, the Audit Committee will consider a change in independent
public accountants for the fiscal year ending December 31, 2017.
The Audit Committee
is directly responsible for the appointment, compensation, retention and oversight of the work of BDO USA, LLP as the Corporation’s
independent auditor. In order to assure continuing auditor independence, the Audit Committee periodically considers whether
there should be regular rotation of the independent auditor. The members of the Audit Committee and the Board believe that
continued retention of BDO USA, LLP to serve as the Corporation’s independent auditor is in the best interest of the Corporation
and its shareholders.
If not otherwise specified,
proxies will be voted
FOR
ratification of the selection of BDO USA, LLP. Representatives of BDO USA, LLP are expected to
be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and are expected to be available
to respond to appropriate questions.
The
Board of Directors recommends a vote “FOR” proposal THREE to ratify the selection of BDO USA, LLP to serve as independent
public accountants for the fiscal year ending December 31, 2016.
corporate
governance and the board of directors
The current Board of
Directors is comprised of seven members, a majority of whom are “independent,” as defined by the listing standards
of the NASDAQ Stock Market, Inc. (“Nasdaq”). The Board of Directors has determined in accordance with the Nasdaq listing
standards that these independent directors have no relationships with the Corporation that would interfere with the exercise of
their independent judgment in carrying out the responsibilities of a director. The independent directors during 2015 were Messrs.
Anzilotti, Babbitt, Edgemond, Jadlos, Kody and Friedman. Mr. Jadlos resigned from the Board of Directors effective June 18, 2015.
The current independent directors are Messrs. Anzilotti, Babbitt, Edgemond, Kody and Friedman.
There are no family
relationships among any of our current directors and executive officers.
During 2015, there
were 14 meetings of the Board of Directors of the Corporation. Attendance at Board meetings and Board committees was in person
or by telephone. All of the directors attended at least 75% of all meetings of the Board and Board committees on which he served.
When directors are unable to attend a meeting, it is the Corporation’s practice to provide all meeting materials to the director,
and the Chief Executive Officer (“CEO”) consults and apprises the director of the meeting’s subject matter, or
the Committee Chair apprises the director if it is a committee on which the CEO does not serve.
The Corporation has
not adopted a formal policy on directors’ attendance at its annual meetings of shareholders, although all board members are
invited and encouraged to attend and, historically, most have done so. Seven of the eight board members then serving attended the
2015 Annual Meeting of Shareholders.
Board Leadership
Structure and Role in Risk Oversight.
With the resignation of James Jadlos, who had served as Chairman since 2011, on June
18, 2015, Michael Anzilotti was appointed Chairman. The Board believes the interests of the Corporation are best served with the
CEO and Chairman positions separated. The Corporation believes this structure is most appropriate as it allows Michael Clarke,
the CEO, to focus on the day-to-day direction of the Corporation in furtherance of the long-term strategy established by the
Board of Directors, while the Chairman is able to provide strategic guidance to the CEO, handle issues related to shareholder relations,
and set the agenda for and preside over the Board of Director meetings. While the Board is responsible for risk oversight as part
of its overall duties, the Audit Committee organizes and sets the tone for risk management in the Corporation. The Audit Committee
maintains a robust charter and oversees the internal and external audit programs, including loan review, to ensure appropriate
integrity and controls are in place. The Audit Committee reviews and adopts enterprise–wide risk assessments, approves all
audit contractors and audit engagements, and reviews and evaluates the work product of all auditors designed to monitor the effectiveness
of policies and controls and identify potential weaknesses and the status of remediation efforts for previously identified weaknesses
or potential weaknesses. The Audit Committee includes only independent directors and excludes and operates independently of the
CEO.
The Board meets regularly
in Executive Sessions, excluding any employee-director or member of management, and includes the independent public accountants
in those sessions no less than annually. The independent public accountant partner in charge of the Corporation’s audit communicates
independently with the Audit Committee Chair on a quarterly basis.
The Board of Directors
has standing Audit, Nominating and Governance, Compensation, and Loan Committees.
Nominating and Governance
Committee.
Members of the Nominating and Governance Committee during 2015 were Messrs. Anzilotti (Chair), Babbitt, Edgemond,
Jadlos, Kody and Friedman, each of whom was independent under the Nasdaq listing standards. Mr. Jadlos resigned from the Board
of Directors on June 18, 2015. The current members of the Nominating and Governance Committee are Messrs. Anzilotti (Chair), Babbitt,
Edgemond, Kody and Friedman, each of whom is independent under the Nasdaq listing standards. The committee met one time in 2015.
The committee is responsible for making recommendations to the full Board regarding nominations of individuals for election to
the Board of Directors and for evaluating the Board’s structure, personnel, committee composition and general governance
processes. The committee operates pursuant to a written charter adopted by the Board of Directors, which is available on the Corporation’s
website,
www.AccessNationalBank.com
under “Investor Relations - Governance Documents”. The Board of Directors
reviews and reassesses the adequacy of this charter annually.
Qualifications for
consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the
existing Board composition. However, minimum qualifications include high level leadership experience in business activities, breadth
of knowledge about issues affecting the Corporation and time available for meetings and consultation on company matters. In addition,
in accordance with the Corporation’s bylaws, no person may be nominated to be or elected a director who would be 70 or older
on the date of election. Although the Nominating and Governance Committee Charter does not set forth a formal policy regarding
diversity, the committee seeks a diverse group of candidates who possess the background, skills and expertise to make a significant
contribution to the Board of Directors, to the Corporation and to its shareholders. The committee evaluates each candidate's
qualities in the context of how that candidate would relate and contribute to the Board of Directors as a whole to ensure the Board
is comprised of an appropriately diverse group that reflects the needs of the Board of Directors and Corporation at that time.
The committee evaluates potential nominees, whether proposed by shareholders or otherwise, by reviewing their qualifications, results
of personal and business reference interviews and other relevant information. Candidates whose evaluations are favorable are then
recommended by the committee for selection by the full Board. The full Board then selects and recommends candidates for nomination
as directors for shareholders to consider and vote upon at the annual meeting.
The Board has concluded
that each director and director nominee possesses the personal traits described above. In considering the directors’ and
director nominees’ individual experience, qualifications, attributes and skills, the Board has concluded that the appropriate
experience, qualifications, attributes and skills are represented for the Board as a whole and for each of the Board’s committees.
In addition, each director and director nominee possesses characteristics that led the Board to conclude that such person should
serve as a director. The specific experience, qualifications, attributes and skills that the Board believes that each director
and director nominee possesses are discussed in the table under Proposal One Election of Directors on page 4.
While there are no
formal procedures for shareholders to submit director candidate recommendations, the Nominating and Governance Committee will consider
candidates recommended by shareholders in writing. Such written submissions should include the name, address, and telephone number
of the recommended candidate, along with a brief statement of the candidate’s qualifications to serve as a director. All
such shareholder recommendations should be submitted to the attention of the Corporation’s Secretary at the Corporation's
principal office in Reston, Virginia and must be received by January 31, 2017 in order to be considered by the Nominating and Governance
Committee for the next annual election of directors. Any candidates recommended by a shareholder will be reviewed and considered
in the same manner as all other director candidates considered by the Nominating and Governance Committee.
In addition, in accordance
with the Corporation’s bylaws, any shareholder entitled to vote in the election of directors generally may nominate one or
more persons for election as director(s) at an annual meeting if advance notice of the nomination is provided in writing.
Notice of any such shareholder nominations for the next annual election of directors must be received by the Corporation’s
Secretary at the Corporation’s principal office in Reston, Virginia, no later than March 19, 2017, provided that notice of
nominations shall not be required to be made more than 90 days prior to the date of the 2017 Annual Meeting.
In order to be valid,
notice of a shareholder nomination must set forth (1) the name and address of the shareholder who intends to make the nomination;
(2) the name and address of the person or persons to be nominated; (3) a representation that the shareholder is a record holder
of stock of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (4) a description of all arrangements or understandings between the shareholder
and each nominee and any other person or persons (naming such persons) pursuant to which the shareholder is making the nomination;
(5) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the SEC, had the nominee been nominated, or intended to be nominated, by the Board of Directors,
including the amount and nature of the nominee’s beneficial ownership of the Corporation, the nominee’s principal occupation
for the past five years, his or her age and a discussion of the specific experience, qualifications, attributes or skills that
led to the conclusion that the nominee should serve as a director; and (6) the written consent of each nominee to serve as a director
if elected.
Compensation Committee.
Members of the Compensation Committee during 2015 were Messrs. Friedman (Chair), Anzilotti, Babbitt, Edgemond, Jadlos and Kody,
each of whom was independent and eligible for compensation committee service under the Nasdaq listing standards. Mr. Jadlos resigned
from the Board of Directors on June 18, 2015. The current members of the Compensation Committee are Messrs. Friedman (Chair), Anzilotti,
Babbitt, Edgemond and Kody, each of whom is independent and eligible for compensation committee service under the Nasdaq listing
standards. The committee met three times in 2015. The committee is responsible for recommending the level of compensation of each
executive officer of the Corporation and its subsidiaries, the granting of equity based compensation, employment agreements and
other employee compensation plans for approval by the full Board of Directors, except that the Chief Executive Officer is not present
during deliberations or voting with respect to his compensation, and the Executive Vice President / Chief Lending Officer (“CLO”)
is not present during deliberations or voting with respect to his compensation. The committee operates pursuant to a written charter
adopted by the Board of Directors, which the committee reviews and reassesses annually and recommends any changes to the Board
of Directors for approval. The charter is available on the Corporation’s website,
www.AccessNationalBank.com
under
“Investor Relations - Governance Documents”.
Audit Committee.
Members of the Audit Committee during 2015 were Messrs. Edgemond (Chair), Anzilotti, Babbitt, Friedman, Jadlos and Kody, each
of whom satisfied the independence and financial literacy requirements of the Nasdaq listing standards and SEC regulations applicable
to audit committee members. Mr. Jadlos resigned from the Board of Directors on June 18, 2015. The current members of the Audit
Committee are Messrs. Edgemond (Chair), Anzilotti, Babbitt, Friedman and Kody, each of whom satisfies the independence requirements
and financial literacy requirements of the Nasdaq listing standards and SEC regulations applicable to audit committee members.
While the Board of
Directors believes that all of its Audit Committee members have the necessary experience and level of financial sophistication
to serve effectively on the Audit Committee, the Board has determined that the Corporation does not currently have an “audit
committee financial expert,” as defined by the SEC's rules and regulations, serving on the Audit Committee. Nevertheless,
the Board of Directors believes that the cumulative experience of the directors serving on the Audit Committee is adequate to provide
appropriate oversight of the Corporation’s and the Bank’s audit functions. The members of the Audit Committee have
significant management and financial oversight experience in businesses of various size and complexity across a variety of industries.
In addition, all members of the Audit Committee have past employment experience in finance or accounting or comparable experience
which results in each individual’s financial sophistication.
The Audit Committee
assists the Board in its oversight duties with respect to financial reporting, internal controls and other matters relating to
corporate governance. The Audit Committee reviews and approves various audit functions including the year-end audit performed by
the Corporation’s independent public accountants. The Audit Committee met seven times during 2015. The committee operates
pursuant to a written charter adopted by the Board of Directors, which is available on the Corporation’s website,
www.AccessNationalBank.com
under “Investor Relations - Governance Documents”. See Report of the Audit Committee on page 34.
Code of Ethics.
The Corporation has adopted a Code of Ethics that applies to its directors, executives and employees. The Corporation’s
Code of Ethics is available on the Corporation’s website,
www.AccessNationalBank.com
under “Investor Relations
- Governance Documents”.
Restrictions on
Trading in Company Securities.
The Corporation has adopted an Insider Trading Policy that applies to its directors, executives
and employees. The Insider Trading Policy prohibits all directors, executives and employees from purchasing financial instruments
or otherwise engaging in transactions designed to hedge or offset any decrease in the market value of the Corporation’s common
stock, including prepaid variable forward contracts, equity swaps, collars and exchange funds. The Insider Trading Policy also
prohibits directors, executives and employees from engaging in short sales involving the Corporation’s common stock. Under
the Insider Trading Policy, directors, executives and employees may hold shares of the Corporation’s common stock in margin
accounts and/or pledge such shares as collateral for a loan, although the Insider Trading Policy recommends limits on such transactions
to prevent inadvertent violations of the securities laws.
Shareholder Communications
with the Board of Directors
Shareholders who wish
to contact the Board of Directors or any of its members may do so by addressing their written correspondence to the Board of Directors
as a whole or the individual director, c/o Corporate Secretary, Access National Corporation, 1800 Robert Fulton Drive, Suite 300,
Reston, Virginia 20191. All shareholder communications must be written and should contain the address, telephone number and email
address, if any, of the person submitting the communication. All shareholder communications will be delivered to their addressees.
Correspondence directed to an individual Board member will be referred, unopened, to that member. Correspondence not directed to
a particular Board member will be referred, unopened, to the Secretary or CEO.
Executive Officers
Who Are Not Directors
Name
(Age)
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Executive
Officer
Since
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Current
Position
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Previous
Business Experience
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Margaret M. Taylor (52)
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2012
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Executive Vice President and Chief Financial Officer, Access National Corporation and Access National Bank
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Ms. Taylor has served as Executive Vice President and Chief Financial Officer of the Corporation and Bank since December 2015. Prior to this, Ms. Taylor served as Senior Vice President and Chief Financial Officer of the Corporation and Bank since June 2012 and Senior Vice President, Accounting and Finance, of the Corporation and Bank from April 2012 to June 2012. Before joining the Corporation and Bank, Ms. Taylor was a Partner at Dixon Hughes Goodman LLP, an accounting firm providing attestation and consulting services to a client base consisting of financial institutions and public companies. Ms. Taylor is a certified public accountant and first joined Dixon Hughes Goodman LLP in September 1999. Ms. Taylor graduated from Kennesaw State University Summa Cum Laude with a Bachelor of Business Administration.
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Dean F. Hackemer (51)
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2004
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President, Access National Mortgage, a division of Access National Bank; Senior Vice President, Access National Bank
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Mr. Hackemer currently serves as President of Access National Mortgage (“ANM”) and Senior Vice President of the Bank. Mr. Hackemer has served as Senior Vice President of the Bank since 2004, President of Access National Mortgage Corporation (“ANMC”) from 2004 to 2011 and Chief Executive Officer of ANMC from 2005 to 2011. In 2011, the Bank dissolved ANMC and established ANM, a division of Access National Bank. From 2002 to 2004, Mr. Hackemer served as Executive Vice President and Chief Operating Officer of ANMC. From 1992 to 2002 he served as a loan officer, Vice President and Senior Vice President of Mortgage Investment Corporation. Mr. Hackemer graduated from the University of Virginia with a B.A. degree in economics. Mr. Hackemer has over 28 years of banking and mortgage banking experience.
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy and General
Objectives
The overall objective
of the Corporation’s various compensation programs is to attract and retain skilled personnel. The Corporation believes the
attraction and retention of skilled professionals has been the single most important contributing factor to the Corporation’s
success. The Corporation recruits for and places high performance expectations upon its personnel. In order to attract highly skilled
personnel, the Corporation aims to provide attractive compensation plans that allow top performing personnel to be well compensated
when compared to local bank competitors.
The Compensation Committee
periodically assesses the overall compensation provided to its employees, executives and directors against a variety of benchmarks
to provide points of reference. The Compensation Committee examines industry sponsored studies, industry white papers, reports
in trade publications and practices within individual companies, composites and subgroups of publicly traded banking companies.
In reviewing these various data sources and performance comparisons, the Compensation Committee examines and considers not only
the absolute value of each element of compensation and the total compensation, but also the allocation of each element within the
total. The Compensation Committee does not rely upon any single source or formula to explicitly benchmark and determine the pay
of its employees and executives.
Although only an advisory
vote, the Compensation Committee and Board of Directors also considered the results of the most recent shareholder advisory vote
on executive compensation that occurred at the 2015 Annual Meeting of Shareholders. Approximately 91% of the shareholder votes
cast were FOR approval of the compensation of the Corporation’s named executive officers as disclosed in the 2015 Proxy Statement.
In consideration of affirmative shareholder approval as well as other factors addressed in this discussion, the Compensation Committee
and Board of Directors have maintained the same compensation program for the Corporation’s executives, which it believes
to be appropriate under its philosophy of aligning the interests of the executives with the interests of its shareholders.
For this discussion,
compensation benefits may be characterized as current compensation and long-term compensation. The Corporation’s current
compensation is designed to provide employees with current cash compensation that is viewed favorably and competitively by the
employee. Examples of current compensation are base salaries, commissions and cash bonuses. Employees and officers responsible
for revenue production and executive duties are compensated more highly than back office and administrative employees. Long-term
compensation benefits are designed to provide each employee with the opportunity to create long-term wealth and financial security.
Examples of long-term compensation include option awards and retirement plan contributions. Select long-term compensation benefits
also serve to align the employee’s long-term interests with that of the Corporation’s shareholders. Furthermore, the
Corporation fosters, and in some instances requires, ownership in the Corporation and use of the Corporation’s products and
services by personnel at all levels.
Compensation of executive
officers is based upon the Compensation Committee’s review of the performance and qualifications of each executive in the
context of the business environment, defined job responsibilities, goals and objectives, and is established at least annually.
Total compensation of each executive is comprised of base salary and performance-based compensation consisting of annual cash bonuses
and stock option awards. In addition, each executive is entitled to participate in all other Corporation-provided benefits such
as health and life insurance coverage and the retirement savings plan. The basic compensation arrangement, as well as other covenants
and terms designed to protect and benefit the interests of both parties, may be set forth in employment contracts. Unlike many
banking companies, the Corporation does not have a supplemental retirement plan (a non-qualified executive benefit plan referred
to as a SERP) and does not expect to adopt any such plan in the future. The Corporation does not believe such plans are effective
in aligning executive behavior with shareholder interest.
Compensation Programs as They Relate
to Risk Management
The Compensation Committee
and Board conducted their annual assessment between December 2015 and January 2016 and believe the Corporation’s compensation
policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Corporation, do
not encourage imprudent risk-taking behavior, and are consistent with maintaining the organization’s safety and soundness.
The business of banking and the delivery of financial services involve a high degree of risk, and risk management is an integral
ingredient to a successful enterprise in this industry. The Corporation places a priority on fundamental building blocks to guard
against excessive risk taking as follows: 1) Comprehensive Board approved policies and procedures are in place that define risk
limits, approval authorities, exception processes and reporting thereof; 2) An effective audit program is in place that includes
an enterprise-wide risk management assessment, monitoring and testing program; and 3) Employees and management are held to standards
of personal and professional conduct and standards with respect to industry sanctions or investigations, adverse personal financial
circumstances, credit, issues with municipal and taxing authorities or creditors or criminal backgrounds.
The Corporation does
not have any compensation arrangements whereby any individual at any level has direct or individual authority over any decision
that directly enriches their income. The Corporation does employ individuals who work on a commission or incentive basis. There
are enhanced quality control and audit programs contained in the Audit Committee’s audit program that monitor the quality
and performance of business generated by such individuals to guard against potential abuse of such programs. Additionally, the
compensation program as it relates to the Corporation’s named executive officers includes, but is not limited to, the following
features as further safeguards to mitigate risk, as well as to align executive officer interests with those of the shareholders:
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§
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Minimum ownership requirements in the
Corporation’s stock;
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Claw-back features; and
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§
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Oversight of all executive compensation
by the Compensation Committee, which is comprised of only non-employee “independent” directors.
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Board Process
The Compensation Committee
of the Corporation’s Board of Directors is responsible for recommending and administering compensation of the Corporation’s
executive officers, including the named executive officers, and directors. The Committee is comprised of all of the non-employee
“independent” directors, as such terms are defined by the SEC and the Nasdaq listing standards. The Committee operates
pursuant to a written charter adopted by the Board of Directors. The Committee reviews and reassesses this charter annually and
recommends any changes to the Board of Directors for approval.
Under the Corporation’s
2009 Stock Option Plan, the Committee may delegate all or part of its duties and obligations to a designated officer(s) to administer
the plan with respect to awards to employees who are not subject to Section 16 of the Exchange Act. The Compensation Committee
has delegated authority to the CEO or joint authority to the CFO and CLO to authorize option awards for the purpose of recruiting
and retaining non-executive officers and employees of the Corporation. The Committee historically has not used the services
of a compensation consultant with respect to executive and/or director compensation matters, and did not do so for 2015, and does
not currently plan to do so for 2016.
The Compensation Committee
monitors the compensation environment by reviewing information from various trade resources and publications. The CEO prepares
a spreadsheet of data for each executive officer based on performance, and with that, the Committee commences its work to prepare
for annual reviews, performance evaluations, bonus awards and salary adjustments early in the fourth quarter of each year. The
Committee begins by reviewing past practices and any current issues that have been brought to light that may affect the decision
process. With the assistance of the CEO and the Corporate Secretary, the Committee Chair prepares draft evaluations of each named
executive officer that outline performance assessments and the various components of compensation. The drafts are reviewed by the
Compensation Committee and refined as the year-end financial statement closing process proceeds. The CEO also submits a draft of
option award recommendations for all officers and employees other than the named executive officers. Generally, by the time the
Board of Directors meeting takes place in January, the financial statements are deemed to be final and the Compensation Committee
has finalized its recommendations for action by the full Board of Directors. The Board reviews the recommendations, makes any changes
and approves the compensation elements at the same meeting as the financial statements are considered final.
Employment Agreements
The Corporation does
not have any employment agreements with its executives. All executive officer employment agreements are with the Bank, which are
described below.
On March 15, 2013,
the Bank and Mr. Clarke entered into a new employment agreement under which Mr. Clarke serves as President and CEO of the Bank
for an initial annual base salary of $370,000, subject to annual increases at the discretion of the Board of Directors. Mr. Clarke’s
agreement also provides for an annual cash performance bonus based upon a performance evaluation by the Board of Directors and
in an amount determined in the discretion of the Board of Directors, which could exceed 100% of his base salary, eligibility for
an annual grant of at least 10,000 stock options issued at market value and other benefits including life insurance, family health
insurance, disability insurance coverage and privileges generally provided to executives, as well as vacation and reimbursement
of reasonable business expenses. The agreement also provided for Mr. Clarke to receive 10,000 stock options upon entering into
the agreement, which were awarded on the effective date of the agreement.
Mr. Clarke’s
agreement was for an initial term of 3 years ending March 31, 2016, with automatic 1 year renewals unless at least 120 days advance
notice of nonrenewal is provided by either party prior to the end of the initial term or any extended term. The current term of
the agreement ends on March 31, 2017. Mr. Clarke serves at the pleasure of the Bank’s Board of Directors. The agreement contains
change in control provisions which are described in the Change in Control Benefits section. The agreement also contains clawback
provisions subject to and in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act. If the Board of Directors
determines that the financial information used to determine the cash bonus, other incentive-based compensation, the value of the
Bank, any financial losses, or exposure to inappropriate risks requires any financial restatement or causes a material noncompliance
with the financial reporting requirements for the Bank, then the Board of Directors may require the repayment of all or any portion
of the cash bonus or other incentive-based compensation paid to Mr. Clarke for the year for which such financial restatement or
material non-compliance occurred. Finally, the agreement contains a covenant requiring Mr. Clarke to maintain ownership in the
Corporation’s common stock in an amount equal to the lesser of $1,850,000 (five times his initial base salary under the agreement)
or 100,000 shares for so long as the agreement remains in effect.
On March 15, 2013,
the Bank and Mr. Shoemaker entered into a new employment agreement under which Mr. Shoemaker serves as Executive Vice President
of the Bank. The current term of the agreement ends on March 31, 2017. The terms of Mr. Shoemaker’s agreement are substantially
the same as Mr. Clarke’s agreement, except as follows. Mr. Shoemaker’s initial annual base salary under the agreement
was $296,800, subject to annual increases at the discretion of the Board of Directors, his annual cash performance bonus opportunity
is up to 75% of his base salary, and he is eligible to receive an annual grant of at least 7,500 stock options issued at market
value. The agreement also provided for Mr. Shoemaker to receive 7,500 stock options upon entering the agreement, which were awarded
on the effective date of the agreement. The agreement contains change in control provisions which are described in the Change in
Control Benefits section. Mr. Shoemaker is also required to maintain ownership in the Corporation’s common stock in an amount
equal to the lesser of $742,000 (two and one half times his initial base salary under the agreement) or 50,000 shares for so long
as the agreement remains in effect.
On May 9, 2013, the
Bank and Ms. Taylor entered into an employment agreement under which Ms. Taylor serves as Senior Vice President (now Executive
Vice President) and Chief Financial Officer (“CFO”) of the Bank. The current term of the agreement ends on March 31,
2017. The terms of Ms. Taylor’s agreement are substantially the same as Mr. Clarke’s agreement, except as follows.
Ms. Taylor’s initial annual base salary under the agreement was $260,000, subject to annual increases at the discretion of
the Board of Directors, her annual cash performance bonus opportunity is up to 30% of her base salary, and she is eligible to receive
an annual grant of at least 3,500 stock options issued at market value. The agreement also provided for Ms. Taylor to receive 1,500
stock options upon entering into the agreement, which were awarded on the effective date of the agreement. The agreement contains
change in control provisions which are described in the Change in Control Benefits section. Ms. Taylor is also required to maintain
ownership in the Corporation’s common stock in the following amounts for so long as the agreement remains in effect: a. During
the first year of the agreement, the lesser of 500 shares or $5,000; b. During the second year of the agreement, the lesser of
1,000 shares or $10,000; and c. During the third year of the agreement, the lesser of 2,000 shares or $20,000 and increasing thereafter
by the lesser of 1,000 shares or $10,000 on each anniversary of the commencement date until the requirement reaches the lesser
of 5,000 shares or $50,000 where it shall remain for so long as the agreement remains in effect.
On March 15, 2013,
the Bank and Mr. Hackemer entered into a new employment agreement under which Mr. Hackemer serves as President of Access National
Mortgage, a division of Access National Bank, and Senior Vice President of the Bank. The current term of the agreement ends on
March 31, 2017. The terms of Mr. Hackemer’s agreement are substantially the same as Mr. Clarke’s agreement, except
as follows. Mr. Hackemer’s initial annual base salary under the agreement was $350,000, subject to annual increases at the
discretion of the Board of Directors, his annual cash performance bonus opportunity is up to 100% of his base salary, and he is
eligible to receive an annual grant of at least 5,000 stock options issued at market value. The agreement also provided for Mr.
Hackemer to receive 5,000 stock options upon entering into the agreement, which were awarded on the effective date of the agreement.
The agreement contains change in control provisions which are described in the Change in Control Benefits section. Mr. Hackemer
is also required to maintain ownership in the Corporation’s common stock in an amount equal to the lesser of $875,000 (two
and one half times his initial base salary under the agreement) or 50,000 shares for so long as the agreement remains in effect.
On November 19, 2013,
Messrs. Clarke, Shoemaker, Hackemer and Ms. Taylor entered into amendments to their employment agreements. Each amendment
provides that, if Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), could apply
to compensation to be paid under each executive’s employment agreement in connection with a change in control in the ownership
or control of the Bank, cash payments to the executive shall be reduced to the extent necessary so that none of the executive’s
compensation shall be considered an “excess parachute payment” under Section 280G of the Code (such reduction, the
“280G Cutback”); provided, however, that no such reduction shall be made if the net economic benefit to the executive
of compensation to be paid in connection with a change in control in the ownership or control of the Bank is greater without
giving effect to the 280G Cutback.
The Corporation presently
utilizes the following elements of compensation that are discussed generally and specifically as it relates to its named executive
officers.
Base Salaries and Cash Bonuses (Non-Equity
Incentive)
As the practice is
customary in the financial services industry, the Corporation chooses to pay base salaries on regular intervals to reward employees
for their qualifications and the discharge of duties in tending to the daily affairs of the Corporation. The Corporation expects
base salaries to provide its employees with adequate cash flow to afford a lifestyle commensurate with their professional status
and accomplishments. Certain sales personnel receive commissions as their primary compensation in lieu of salaries in order to
reward successful sales efforts. The Corporation determines base salaries within the framework of general practices within the
industry and considers individual duties and responsibilities in making salary determinations. Salary adjustments are made from
time to time to reward performance against periodic goals and expanding the scope of activity and responsibility. Base salaries
are the most important element of compensation as many other elements discussed in this Compensation Discussion and Analysis are
determined based upon the underlying base salary of the employee or executive.
Regarding non-equity
incentives, the Corporation’s practice is to award cash bonuses annually to its officers and other select employees based
upon satisfaction of selected performance objectives during the preceding year. This practice is designed to encourage executives
and employees to reach and exceed financial and non-financial goals in the continuing development of the Corporation’s business.
The Corporation pays this compensation element to motivate performance that advances the ongoing interests of its shareholders.
Cash bonuses that are paid to officers and employees other than the named executive officers are predicated upon similar factors,
adjusted for individual job responsibilities. In general, “line” or customer contact personnel are provided the opportunity
to earn cash bonuses of up to 25% of their base salary, and administrative and back office positions up to 15% of base salary.
For officers and employees
other than the named executive officers, salaries and cash bonuses are administered under policies and guidelines set forth by
management that are deemed reasonable for the nature of each employee’s responsibility, business conditions, skills, and
performance. Generally all employees receive a competitive base salary commensurate with their skills, experience and responsibilities.
The Corporation has a Salary Administration Program that is managed by the Director of Human Resources that ensures that properly
documented performance reviews and salary adjustments are made in time intervals that are appropriate.
Evaluations of the
named executive officers are administered by the Compensation Committee and Board of Directors and are also performance based,
with an additional subjective element, at the full discretion of the Board. In addition to the base cash bonus, an additional amount
of cash bonus may be awarded under this subjective evaluation and is intended to reward exceptional performance primarily in areas
such as Return on Equity and Return on Assets, both at nominal levels and in relation to peers. The evaluation criteria for named
executive officer base salary adjustments are substantially similar to and reviewed at the same time as the performance factors
for cash bonuses.
The following table
summarizes each of the named executive officer’s salaries for 2016 and the total cash bonus received as a result of their
respective 2015 performance reviews.
Name
|
|
2016 Base Salary
($)
|
|
|
2015 Cash Bonus
($)
|
|
Michael W. Clarke
|
|
|
425,000
|
|
|
|
385,000
|
|
Robert C. Shoemaker
|
|
|
325,000
|
|
|
|
232,500
|
|
Margaret M. Taylor
|
|
|
305,000
|
|
|
|
125,000
|
|
Dean F. Hackemer
|
|
|
374,400
|
|
|
|
375,000
|
|
With respect to base
salary increases, cash bonuses and awards of stock options, which are granted at the discretion of the Board, the Committee subjectively
evaluates the factors in their totality and does not employ a formula which predetermines the relative weighting of the factors.
The named executive
officers of the Corporation (other than the President of the Mortgage division) are primarily evaluated based upon their respective
functional responsibilities and the quantitative and qualitative assessment factors indicated below. Under each assessment factor,
there are sub-components that are rated on a scale of 0-5, with 0 indicating “Failure to Perform” and 5 indicating
“Outstanding” performance. The sub-components are then aggregated into a composite rating or average resulting in a
0-5 rating for each of the broader assessment factors. The assessment factors are then aggregated into an overall composite or
average rating that is applied toward the eligible base cash bonus as set forth in the executive’s employment contract. There
is no minimum payment threshold.
|
¨
|
Regulatory Exam / Audit
results. The maximum bonus award would be achieved by maintaining high ratings against corporate objectives in all of the sub-components.
|
|
¨
|
Asset Quality
(This
assessment factor only applies to the CEO and CLO, and is the most significant factor considered for the CLO).
The maximum
bonus award would be achieved by maintaining outstanding ratings in Regulatory and Loan Reviews as well as outstanding asset quality
measures compared against various peer groups.
|
|
¨
|
Return on Equity. The
maximum bonus award would be achieved by both meeting budget goals and outperforming peers.
|
|
¨
|
General Budget Performance.
The maximum bonus award would be achieved by meeting or exceeding budget goals.
|
|
§
|
Net Income - consolidated
|
|
§
|
Net Income - Bank only before tax and
provision for loan losses
|
|
¨
|
Leadership, Governance
and Relationships. The maximum bonus award would be achieved by ratings of outstanding in each of the sub-components.
|
|
§
|
Adherence to Policies and Plans
|
|
¨
|
Strategic Direction
(This
assessment factor only applies to the CEO)
. The maximum bonus award would be achieved by ratings of outstanding in each of
the sub-components.
|
|
§
|
Maintenance / expansion of coverage by
equity research firms
|
|
§
|
Performance of other business lines
|
When evaluating the performance in Asset
Quality and Return on Equity, the Compensation Committee assesses data from the following sources:
|
Ø
|
All FDIC-insured commercial banks with
assets between $1 and $10 billion. The data is released quarterly by the FDIC (
www2.fdic.gov/qbp
) and for 2015 summarizes
the averages of key data points for approximately 486 commercial banks. The average asset size of banks within the group was $1.24
billion compared to the Bank’s reported total assets of $1.12 billion as of September 30, 2015. This data source is focused
upon operating commercial banks and is used to compare performance of the Corporation’s subsidiary bank, exclusive of the
holding corporation.
|
|
Ø
|
The Quarterly Community Bank Report as
published by Ambassador Financial Group. For 2015, this peer data contains performance statistics for 22 commercial banks and consolidated
public
holding companies of commercial banks established since 1980 in the Washington DC MSA region. The Corporation’s
total assets of $1.12 billion as of September 30, 2015 fall above the peer group median of $593 million. This peer group is ranked
by Return on Equity (“ROE”) (year-to-date) in descending order in Table A below.
|
Table A
|
|
Total
Assets
($000,000)
|
|
|
ROE
(%)
|
|
Access National Bank, Reston
|
|
|
1,118
|
|
|
|
17.32
|
|
Cardinal Bank, McLean
|
|
|
3,842
|
|
|
|
13.31
|
|
Capital Bank, Rockville
|
|
|
699
|
|
|
|
13.26
|
|
EagleBank, Bethesda
|
|
|
5,864
|
|
|
|
12.76
|
|
WashingtonFirst Bank, Reston
|
|
|
1,595
|
|
|
|
10.00
|
|
Congressional Bank, Bethesda
|
|
|
466
|
|
|
|
9.63
|
|
Revere Bank, Laurel
|
|
|
795
|
|
|
|
9.37
|
|
Old Line Bank, Bowie
|
|
|
1,324
|
|
|
|
8.80
|
|
John Marshall Bank, Reston
|
|
|
885
|
|
|
|
8.47
|
|
First Virginia Community Bank, Fairfax
|
|
|
682
|
|
|
|
8.46
|
|
Bank of Georgetown, Washington
|
|
|
1,216
|
|
|
|
8.39
|
|
Sonabank, McLean
|
|
|
1,017
|
|
|
|
8.11
|
|
Monument Bank, Bethesda
|
|
|
503
|
|
|
|
6.97
|
|
Chain Bridge, McLean
|
|
|
440
|
|
|
|
6.80
|
|
Damascus Community Bank, Damascus
|
|
|
289
|
|
|
|
6.77
|
|
Frederick County Bank, Frederick
|
|
|
358
|
|
|
|
5.13
|
|
County First Bank, La Plata
|
|
|
223
|
|
|
|
5.08
|
|
BlueRidge Bank, Frederick
|
|
|
210
|
|
|
|
5.05
|
|
Oak View National Bank, Warrenton
|
|
|
173
|
|
|
|
4.96
|
|
Freedom Bank of Virginia, Fairfax
|
|
|
390
|
|
|
|
4.73
|
|
MainStreet Bank, Herndon
|
|
|
481
|
|
|
|
4.04
|
|
City First Bank, Washington
|
|
|
250
|
|
|
|
1.05
|
|
MEDIAN
|
|
|
593
|
|
|
|
8.25
|
|
This peer group comparison is
used to obtain additional public data of financial institutions that are not tracked for operating banks through the FDIC source
listed above.
|
Ø
|
Data generated from SNL
Financial, LC of peer financial institutions comprised of banks or consolidated public holding companies located in Virginia, Maryland
and Washington DC operating during any portion of the 12 months ended September 30, 2015 with market capitalization of $50 million
to $1 billion, and total assets between $481 million and $4.91 billion, with a median of $1.11 billion. This peer data contains
performance statistics for 35 banks and consolidated public holding companies of banks and thrifts, ranked by Return on Average
Equity (“ROAE”) (last 12 months) in descending order in Table B below.
|
Table B
|
|
Total Assets
($000)
|
|
|
ROAA
(%)
|
|
|
ROAE
(%)
|
|
Access National Corporation
|
|
|
1,118,229
|
|
|
|
1.39
|
|
|
|
14.65
|
|
Cardinal Financial Corporation
|
|
|
3,881,736
|
|
|
|
1.34
|
|
|
|
11.94
|
|
Monarch Financial Holdings, Inc.
|
|
|
1,121,590
|
|
|
|
1.17
|
|
|
|
11.45
|
|
Benchmark Bankshares Inc.
|
|
|
508,026
|
|
|
|
1.27
|
|
|
|
11.10
|
|
Chesapeake Financial Shares, Inc.
|
|
|
665,778
|
|
|
|
1.17
|
|
|
|
10.92
|
|
C&F Financial Corporation
|
|
|
1,373,371
|
|
|
|
0.98
|
|
|
|
10.62
|
|
Burke & Herbert Bank and Trust
|
|
|
2,675,018
|
|
|
|
1.21
|
|
|
|
10.37
|
|
National Bankshares, Inc.
|
|
|
1,144,125
|
|
|
|
1.49
|
|
|
|
10.10
|
|
F & M Bank Corp.
|
|
|
656,101
|
|
|
|
1.25
|
|
|
|
10.03
|
|
Carter Bank & Trust
|
|
|
4,908,264
|
|
|
|
0.83
|
|
|
|
9.72
|
|
Revere Bank
|
|
|
794,843
|
|
|
|
0.85
|
|
|
|
9.68
|
|
First Capital Bancorp, Inc.
|
|
|
623,253
|
|
|
|
0.76
|
|
|
|
9.10
|
|
WashingtonFirst Bankshares, Inc.
|
|
|
1,598,889
|
|
|
|
0.84
|
|
|
|
8.78
|
|
John Marshall Bank
|
|
|
884,537
|
|
|
|
1.07
|
|
|
|
8.53
|
|
Eagle Financial Services, Inc.
|
|
|
638,069
|
|
|
|
0.98
|
|
|
|
8.25
|
|
Sandy Spring Bancorp, Inc.
|
|
|
4,611,034
|
|
|
|
0.96
|
|
|
|
8.15
|
|
FVCBankcorp, Inc.
|
|
|
682,112
|
|
|
|
0.90
|
|
|
|
8.09
|
|
American National Bankshares, Inc.
|
|
|
1,512,437
|
|
|
|
1.04
|
|
|
|
8.02
|
|
Old Line Bancshares, Inc.
|
|
|
1,331,378
|
|
|
|
0.84
|
|
|
|
7.86
|
|
Fauquier Bankshares, Inc.
|
|
|
594,204
|
|
|
|
0.67
|
|
|
|
7.17
|
|
First Community Bancshares, Inc.
|
|
|
2,478,116
|
|
|
|
0.96
|
|
|
|
7.14
|
|
Middleburg Financial Corporation
|
|
|
1,261,290
|
|
|
|
0.70
|
|
|
|
6.99
|
|
Southern National Bancorp of Virginia, Inc.
|
|
|
1,017,887
|
|
|
|
0.83
|
|
|
|
6.75
|
|
Community Financial Corporation
|
|
|
1,111,976
|
|
|
|
0.62
|
|
|
|
6.26
|
|
Calvin B. Taylor Bankshares, Inc.
|
|
|
486,531
|
|
|
|
0.98
|
|
|
|
5.90
|
|
Community Bankers Trust Corporation
|
|
|
1,149,185
|
|
|
|
0.56
|
|
|
|
5.89
|
|
Eastern Virginia Bankshares, Inc.
|
|
|
1,242,387
|
|
|
|
0.60
|
|
|
|
5.43
|
|
First United Corporation
|
|
|
1,320,315
|
|
|
|
0.44
|
|
|
|
5.23
|
|
Old Point Financial Corporation
|
|
|
878,952
|
|
|
|
0.53
|
|
|
|
5.22
|
|
MainStreet Bank
|
|
|
480,972
|
|
|
|
0.45
|
|
|
|
4.48
|
|
Shore Bancshares Inc.
|
|
|
1,117,813
|
|
|
|
0.58
|
|
|
|
4.44
|
|
Howard Bancorp Inc.
|
|
|
924,493
|
|
|
|
0.40
|
|
|
|
4.38
|
|
Virginia National Bankshares Corporation
|
|
|
548,773
|
|
|
|
0.46
|
|
|
|
4.27
|
|
Xenith Bankshares, Inc.
|
|
|
970,988
|
|
|
|
0.33
|
|
|
|
3.06
|
|
Hampton Roads Bankshares, Inc.
|
|
|
1,977,612
|
|
|
|
0.28
|
|
|
|
2.75
|
|
MEDIAN
|
|
|
1,111,976
|
|
|
|
0.55
|
|
|
|
6.71
|
|
The employment agreement
of the President and CEO of the Bank provides that he is eligible to receive an annual base salary increase and an annual cash
bonus in an amount which could exceed 100% of his base salary, based upon a performance evaluation by the Board of Directors and
as determined in the discretion of the Board of Directors. Based upon the Committee’s evaluation of 2015 performance, Mr.
Clarke received a composite evaluation of 4.72. This resulted in a 5.2% base salary increase for 2016 over 2015 to $405,000. In
addition to this base salary increase, the Board of Directors approved an additional $20,000 market adjustment to Mr. Clarke’s
base salary for 2016 to $425,000. The additional increase was the result of an assessment by the Compensation Committee of CEO
compensation relative to various performance metrics of the peer banks listed in Tables C-1 and C-2 below. The Committee concluded
that the Corporation’s performance compares favorably to the peers, generally has a more complex business model, and that
Mr. Clarke’s salary is generally lower than the CEO’s of most peer banks performing at this level. As part of his 2015
performance evaluation, Mr. Clarke was also awarded a cash bonus of $192,500 as a base level award and $192,500 as an additional
discretionary amount for exceptional performance in Return on Average Assets, Return on Average Equity and Non-Interest Income
compared to the peer data shown in Tables C-1 and C-2, the total of which represented 100.0% of his $385,000 base salary for 2015.
The bonus was paid in March 2016.
Table C-1, Regional
Peers
Data generated from SNL Financial,
LC of peer financial institutions comprised of banks or consolidated public holding companies located in Urban MSAs in Virginia,
Maryland and Pennsylvania operating during any portion of the 12 months ended September 30, 2015 with total assets between $800
million and $3 billion, with a median of $1.2 billion. This peer data contains performance statistics for 19 banks and consolidated
public holding companies of banks and thrifts, ranked by the most recent quarter Return on Average Assets (ROAA) and Return on
Average Tangible Capital Equity (ROATCE) as of September 30, 2015, ranked by ROATCE in descending order in Table C-1 below. The
Corporation was ranked first in both of these performance categories among this peer set. 2014 CEO salaries for this peer set ranged
from $260 thousand to $512 thousand. Mr. Clarke’s 2014 base salary of $370 thousand was below the median salary of $372 thousand.
|
|
Total
Assets
($)
|
|
|
ROAA
(%)
|
|
|
ROATCE
(%)
|
|
|
CEO
Salary
($)
|
|
|
CEO Total
Compensation
($)
|
|
Access National Corporation
|
|
|
1,118,229
|
|
|
|
1.38
|
|
|
|
15.30
|
|
|
|
370,000
|
|
|
|
802,674
|
|
Bryn Mawr Bank Corporation
|
|
|
2,952,742
|
|
|
|
1.17
|
|
|
|
14.18
|
|
|
|
400,000
|
|
|
|
1,292,538
|
|
Univest Corporation of Pennsylvania
|
|
|
2,851,568
|
|
|
|
1.10
|
|
|
|
12.99
|
|
|
|
450,000
|
|
|
|
913.792
|
|
C&F Financial Corporation
|
|
|
1,373,371
|
|
|
|
1.05
|
|
|
|
12.96
|
|
|
|
300,000
|
|
|
|
904,991
|
|
Mid Penn Bancorp, Inc.
|
|
|
915,265
|
|
|
|
0.80
|
|
|
|
11.52
|
|
|
|
339,212
|
|
|
|
368,480
|
|
WashingtonFirst Bankshares, Inc.
|
|
|
1,598,889
|
|
|
|
0.90
|
|
|
|
10.79
|
|
|
|
495,000
|
|
|
|
993,890
|
|
Codorus Valley Bancorp, Inc.
|
|
|
1,397,076
|
|
|
|
0.85
|
|
|
|
10.67
|
|
|
|
410,192
|
|
|
|
706,217
|
|
Eastern Virginia Bankshares, Inc.
|
|
|
1,242,387
|
|
|
|
0.68
|
|
|
|
9.92
|
|
|
|
328,511
|
|
|
|
589,787
|
|
Old Line Bancshares, Inc.
|
|
|
1,331,378
|
|
|
|
0.94
|
|
|
|
9.88
|
|
|
|
490,000
|
|
|
|
1,091,590
|
|
QNB Corp.
|
|
|
1,039,317
|
|
|
|
0.87
|
|
|
|
9.70
|
|
|
|
332,567
|
|
|
|
394,389
|
|
John Marshall Bank
|
|
|
884,537
|
|
|
|
1.02
|
|
|
|
8.46
|
|
|
|
300,000
|
|
|
|
588,720
|
|
Southern National Bancorp of Virginia, Inc.
|
|
|
1,017,887
|
|
|
|
0.87
|
|
|
|
8.16
|
|
|
|
360,800
|
|
|
|
719,821
|
|
Orrstown Financial Services, Inc.
|
|
|
1,274,340
|
|
|
|
0.78
|
|
|
|
7.57
|
|
|
|
414,027
|
|
|
|
811,273
|
|
Fox Chase Bancorp, Inc.
|
|
|
1,098,797
|
|
|
|
0.97
|
|
|
|
6.06
|
|
|
|
370,400
|
|
|
|
586,967
|
|
Community Financial Corporation
|
|
|
1,111,976
|
|
|
|
0.57
|
|
|
|
6.19
|
|
|
|
382,762
|
|
|
|
596,322
|
|
Xenith Bankshares, Inc.
|
|
|
970,988
|
|
|
|
0.40
|
|
|
|
4.84
|
|
|
|
260,000
|
|
|
|
419,959
|
|
Community Bankers Trust Corporation
|
|
|
1,149,185
|
|
|
|
0.36
|
|
|
|
4.00
|
|
|
|
375,000
|
|
|
|
497,329
|
|
Howard Bancorp, Inc.
|
|
|
924,493
|
|
|
|
0.33
|
|
|
|
3.84
|
|
|
|
275,000
|
|
|
|
499,738
|
|
Republic First Bancorp, Inc.
|
|
|
1,380,814
|
|
|
|
0.16
|
|
|
|
1.90
|
|
|
|
512,115
|
|
|
|
642,889
|
|
MEDIAN
|
|
|
1,195,786
|
|
|
|
0.86
|
|
|
|
9.08
|
|
|
|
372,200
|
|
|
|
619,606
|
|
Table C-2, National
Peers
Data generated from SNL Financial,
LC of peer financial institutions comprised of banks or consolidated public holding companies located in the United States operating
during any portion of the 12 months ended September 30, 2015 with market capitalization (“market cap”) of $50 million
to $1 billion, with a median of $326 million. For this peer set, minimum performance criteria was applied in order to obtain a
national, high performing peer set, which included last twelve months Return on Average Equity (“ROAE”) of at least
12.0%, last twelve months Return on Average Assets (“ROAA”) of at least 1.2% and non-interest income of at least 12.0%
as of September 30, 2015. The Corporation was at or above the median for each of the three (3) performance categories. This peer
data contains performance statistics for 24 banks and consolidated public holding companies of banks and thrifts, ranked by ROAE
in descending order in Table C-2 below. The Corporation’s ROAE ranked 11 out of the 24 peers. 2014 CEO salaries in this peer
set ranged from $121 thousand to $873 thousand. Mr. Clarke’s 2014 base salary of $370 thousand was below the median salary
of $394 thousand.
|
|
Market Cap
(in millions) ($)
|
|
|
ROAA
(%)
|
|
|
ROAE
(%)
|
|
|
Non-Interest
Income/
Revenue
(%)
|
|
|
CEO Salary
($)
|
|
|
CEO Total
Compensation
($)
|
|
CommunityOne Bancorp
|
|
|
326.3
|
|
|
|
6.86
|
|
|
|
66.36
|
|
|
|
20.27
|
|
|
|
481,250
|
|
|
|
820,042
|
|
DCB Financial Corp.
|
|
|
56.8
|
|
|
|
2.22
|
|
|
|
25.00
|
|
|
|
21.99
|
|
|
|
235,950
|
|
|
|
340,357
|
|
First BanCorp
|
|
|
673.0
|
|
|
|
2.65
|
|
|
|
21.04
|
|
|
|
13.09
|
|
|
|
873,077
|
|
|
|
2,249,616
|
|
Orrstown Financial Services, Inc.
|
|
|
141.1
|
|
|
|
2.11
|
|
|
|
20.39
|
|
|
|
33.47
|
|
|
|
414,027
|
|
|
|
811,273
|
|
Thomasville Bancshares Inc.
|
|
|
174.4
|
|
|
|
1.45
|
|
|
|
16.86
|
|
|
|
27.87
|
|
|
|
200,000
|
|
|
|
271,197
|
|
Live Oak Bancshares, Inc.
|
|
|
385.8
|
|
|
|
2.14
|
|
|
|
15.39
|
|
|
|
77.25
|
|
|
|
512,025
|
|
|
|
793,644
|
|
West Bancorp
|
|
|
303.3
|
|
|
|
1.33
|
|
|
|
15.15
|
|
|
|
12.98
|
|
|
|
350,000
|
|
|
|
764,851
|
|
Union Bankshares, Inc.
|
|
|
121.2
|
|
|
|
1.27
|
|
|
|
14.89
|
|
|
|
29.08
|
|
|
|
274,423
|
|
|
|
392,771
|
|
First NBC Bank Holding Company
|
|
|
678.6
|
|
|
|
1.68
|
|
|
|
14.87
|
|
|
|
7.75
|
|
|
|
491,667
|
|
|
|
1,467,078
|
|
Howard Bancorp, Inc.
|
|
|
92.6
|
|
|
|
1.36
|
|
|
|
14.86
|
|
|
|
29.42
|
|
|
|
275,000
|
|
|
|
499,738
|
|
Access National Corporation
|
|
|
211.4
|
|
|
|
1.40
|
|
|
|
14.71
|
|
|
|
39.47
|
|
|
|
370,000
|
|
|
|
802,674
|
|
Fidelity Southern Corporation
|
|
|
497.7
|
|
|
|
1.25
|
|
|
|
14.47
|
|
|
|
55.57
|
|
|
|
750,000
|
|
|
|
1,527,585
|
|
Orange County Business Bank
|
|
|
53.2
|
|
|
|
2.99
|
|
|
|
13.88
|
|
|
|
10.06
|
|
|
|
351,633
|
|
|
|
588,173
|
|
Stock Yards Bancorp, Inc.
|
|
|
555.6
|
|
|
|
1.44
|
|
|
|
13.56
|
|
|
|
31.31
|
|
|
|
545,000
|
|
|
|
1,615,046
|
|
City Holding Company
|
|
|
688.7
|
|
|
|
1.57
|
|
|
|
13.54
|
|
|
|
31.98
|
|
|
|
500,000
|
|
|
|
1,152,889
|
|
Pacific City Financial Corporation
|
|
|
125.3
|
|
|
|
1.24
|
|
|
|
12.94
|
|
|
|
25.62
|
|
|
|
121,200
|
|
|
|
186,484
|
|
Bank of South Carolina Corporation
|
|
|
79.6
|
|
|
|
1.30
|
|
|
|
12.81
|
|
|
|
16.22
|
|
|
|
200,001
|
|
|
|
228,717
|
|
German American Bancorp Inc.
|
|
|
432.7
|
|
|
|
1.34
|
|
|
|
12.78
|
|
|
|
24.37
|
|
|
|
330,000
|
|
|
|
874,028
|
|
Wilshire Bancorp, Inc.
|
|
|
892.1
|
|
|
|
1.46
|
|
|
|
12.56
|
|
|
|
23.61
|
|
|
|
393,750
|
|
|
|
1,010,618
|
|
Northrim BanCorp, Inc.
|
|
|
182.5
|
|
|
|
1.44
|
|
|
|
12.55
|
|
|
|
41.87
|
|
|
|
271,459
|
|
|
|
558,267
|
|
Citizens Financial Services, Inc.
|
|
|
162.2
|
|
|
|
1.36
|
|
|
|
12.44
|
|
|
|
18.46
|
|
|
|
329,231
|
|
|
|
397,218
|
|
Cardinal Financial Corporation
|
|
|
709.3
|
|
|
|
1.39
|
|
|
|
12.41
|
|
|
|
30.36
|
|
|
|
665,000
|
|
|
|
2,250,784
|
|
Washington Trust Bancorp, Inc.
|
|
|
655.9
|
|
|
|
1.22
|
|
|
|
12.30
|
|
|
|
35.48
|
|
|
|
514,596
|
|
|
|
1,134,661
|
|
Lakeland Financial Corporation
|
|
|
756.1
|
|
|
|
1.29
|
|
|
|
12.20
|
|
|
|
22.60
|
|
|
|
424,693
|
|
|
|
1,263,292
|
|
MEDIAN
|
|
|
326.3
|
|
|
|
1.44
|
|
|
|
13.88
|
|
|
|
25.62
|
|
|
|
393,750
|
|
|
|
811,273
|
|
The employment agreement
of the Executive Vice President, Chief Lending Officer provides that he is eligible to receive an annual base salary increase and
annual cash bonus in an amount up to 75% of his base salary based upon a performance evaluation by the Board of Directors. The
amount of his annual cash bonus is at the discretion of the Board of Directors, and could exceed 75% of his base salary. For 2015
performance, Mr. Shoemaker received a composite evaluation of 4.73. This resulted in a 4.8% base salary increase for 2016 over
2015 to $325,000. As part of his 2015 performance evaluation, Mr. Shoemaker was also awarded a cash bonus of $116,250 as a base
level award and $116,250 as an additional discretionary amount for exceptional performance in Return on Average Assets and Return
on Average Equity compared to the peer data shown in Tables A and B, as well as recognition of strong year over year loan growth,
growth in bank segment net income before loan loss provision and taxes, and good asset quality statistics and management thereof,
particularly in desirable asset classes that have helped grow core deposits. The total award of $232,500 represented 75.0% of his
$310,000 base salary for 2015. The bonus was paid in March 2016.
The employment agreement
of the Executive Vice President, Chief Financial Officer provides that she is eligible to receive an annual base salary increase
and annual cash bonus in an amount up to 30% of her base salary based upon a performance evaluation by the Board of Directors.
The amount of her annual cash bonus is at the discretion of the Board of Directors, and could exceed 30% of her base salary. For
2015 performance, Ms. Taylor received a composite evaluation of 4.70. This resulted in a 4.7% base salary increase for 2016 over
2015 to $305,000. As part of her 2015 performance evaluation, Ms. Taylor was also awarded a cash bonus of $87,000 as a base level
award and $38,000 as an additional discretionary amount for exceptional performance in Return on Average Assets and Return on Average
Equity compared to peer data shown in Tables A and B and recognition of her performance in exceeding expectations in the areas
of business strategy involvement including a proactive approach to segment reporting and controls, investor relations, capital
planning, and internal management reporting effectiveness. The total award of $125,000 represented 43.1% of her $290,000 base salary
of 2015. The bonus was paid in March 2016
.
The President of the
Mortgage division, which position is currently held by Mr. Hackemer, is evaluated based upon the following performance factors
of such business unit. Each of the 4 factors is equally weighted. Within each factor are sub-components of performance factors.
The same 0-5 rating scales as described above are utilized in Mr. Hackemer’s evaluation. The maximum bonus award would be
achieved by meeting or exceeding the budget or established goals in each of the sub-components, and a minimum composite score of
2.5 is required to receive any base level cash bonus.
|
§
|
Net Income – Access National Mortgage
division, compared to budget
|
|
§
|
Net Income - consolidated Corporation,
compared to budget
|
|
¨
|
Infrastructure
Development / Business Plan Adherence
|
|
§
|
Expansion of in-bound volume
|
|
§
|
Referral Program with Bank
|
|
¨
|
Quality
Control Program
|
|
§
|
Regulatory Compliance / Exam
|
|
§
|
Repurchases / Indemnifications
|
|
§
|
Post-Settlement Documents
|
|
¨
|
Leadership, Governance
and Relationships
|
|
§
|
Adherence to Policies and Plans
|
The employment agreement
of the President of the Mortgage division provides that he is eligible to receive an annual base salary increase and annual cash
bonus in an amount up to 100% of his base salary, based on an evaluation by the Board of Directors of the performance factors listed
above. The amount of his annual cash bonus is at the discretion of the Board of Directors, and could exceed 100% of his base salary.
Based upon the Committee’s evaluation of 2015 performance, Mr. Hackemer received a composite evaluation of 4.66, which was
above the minimum performance threshold. This resulted in a 4.0% base salary increase for 2016 over 2015 to $374,400. As part of
his 2015 performance evaluation, Mr. Hackemer was also awarded a base level cash bonus of $335,520, and in recognition of exceeding
expectations in loan volume and profitability, increased margins, compliance updates and risk management and mitigation, the Compensation
Committee awarded Mr. Hackemer a discretionary cash bonus of $39,480 for 2015. The total award of $375,000 represented 104.2% of
his $360,000 base salary for 2015. The bonus was paid in March 2016.
The cash bonuses as
described above are also reported in the
Summary Compensation Table
under the columns “Bonus” and ”Non-Equity
Incentive Plan Compensation”, as well as in the
Grants of Plan-Based Awards
table under the “Estimated Possible
Payouts Under Non-Equity Incentive Plan Awards” column.
Dividend Reinvestment and Stock Purchase
Plan (DRSPP)
The Corporation maintains
a DRSPP as a benefit to its shareholders. Consistent with its philosophy of facilitating employee stock ownership, the Corporation
actively facilitates participation in the DRSPP by its officers and employees. The DRSPP is available to all shareholders of the
Corporation on the same basis as employees, except that non-employee shareholders cannot use the payroll deduction feature to make
optional purchases under the plan. The Corporation facilitates regular payroll deductions and permits after tax bonuses to be used
to make purchases under the plan. The plan provides that shares acquired from the Corporation through the plan are purchased at
a 5% discount from the market price. Once contributions are made to the plan, the employee participant is free to trade or withdraw
funds from the plan in a manner consistent with any other shareholder participant.
This practice is designed
to reward employee stock ownership. The Corporation chooses to provide this element because it believes employee stock ownership
motivates the Corporation’s employees to pursue the long-term success of the Corporation and aligns their interests with
those of the Corporation’s other shareholders.
Most of the Corporation’s
named executive officers and directors participate in this plan.
Executive Stock Ownership Covenants
The Corporation requires
its named executive officers to maintain ownership in the Corporation’s common stock as described in the Employment Agreements
section. The following table shows as of March 31, 2016, the required and actual beneficial ownership of the Corporation’s
common stock of each named executive officer, and the aggregate value based upon the closing price of $19.83. Each of their beneficial
holdings exceeded their respective requirement.
|
|
Requirement: Lesser of
|
|
|
Actual
|
|
|
Ownership
Value vs.
|
|
Name
|
|
Shares (#)
|
|
|
Value
|
|
|
Shares (#)
|
|
|
Value
|
|
|
Requirement
|
|
Michael W. Clarke
|
|
|
100,000
|
|
|
$
|
1,850,000
|
|
|
|
791,754
|
|
|
$
|
15,700,482
|
|
|
|
849
|
%
|
Robert C. Shoemaker
|
|
|
50,000
|
|
|
$
|
742,000
|
|
|
|
418,541
|
|
|
$
|
8,299,668
|
|
|
|
1,119
|
%
|
Margaret M. Taylor
|
|
|
2,000
|
|
|
$
|
20,000
|
|
|
|
4,108
|
|
|
$
|
81,462
|
|
|
|
407
|
%
|
Dean F. Hackemer
|
|
|
50,000
|
|
|
$
|
875,000
|
|
|
|
275,304
|
|
|
$
|
5,459,278
|
|
|
|
624
|
%
|
Option Awards
In recent years, stock
options are the only form of equity compensation the Corporation has granted. The Corporation does not grant restricted stock or
other forms of equity compensation. The Corporation makes option awards to select officers and employees. The objective of the
option awards is to provide long-term compensation that aligns the officers’ and employees’ interests with those of
the shareholders in building share value. The Corporation has chosen to pay this element of compensation as it finds it desirable
for its employees to generate wealth due to favorable performance of the Corporation’s stock in the future. Furthermore,
this long-term benefit helps the Corporation attract and retain high caliber professionals.
The Corporation’s
practice is to grant option awards during the first quarter of each year to reward and recognize performance in the immediately
preceding fiscal year. The Board’s schedule is determined several months in advance, and the proximity of any option awards
to significant news announcements or other market events is coincidental. The option awards were granted in the first quarter of
2016 for performance in 2015 and provide for vesting in 4 equal annual installments. Vesting only requires passage of time and
continued affiliation with the Corporation and does not require any level of future performance. The option awards were priced
at the closing price on the award date. The Corporation expects future option awards to have similar vesting, terms and pricing
provisions as the awards granted in the first quarter of 2016.
As outlined in their
employment agreements, the executive officers are each entitled to minimum annual option awards for any year in which the executive
earns an annual cash bonus under the cash bonus methodology described above. The following is a summary of the annual minimum and
actual awards made to each named executive officer for the year ended December 31, 2015.
Executive
|
|
Annual
Minimum
Award
|
|
|
Actual
Award
|
|
Michael W. Clarke
|
|
|
10,000
|
|
|
|
10,000
|
|
Robert C. Shoemaker
|
|
|
7,500
|
|
|
|
7,500
|
|
Margaret M. Taylor
|
|
|
3,500
|
|
|
|
5,000
|
|
Dean F. Hackemer
|
|
|
5,000
|
|
|
|
7,500
|
|
The awards for the
named executive officers are predicated upon the Compensation Committee’s evaluation of performance of the indicated executive.
For 2015, Mr. Hackemer was awarded additional options over the annual minimum award provided in his employment agreement for exceeding
expectations in loan volume and profitability, increased margins, compliance updates and risk management and mitigation. For 2015,
Ms. Taylor was awarded additional options over the annual minimum award provided in her employment agreement for exceeding expectations
in the areas of business strategy involvement, including a proactive approach to segment reporting and controls, investor relations,
capital planning and internal management reporting effectiveness.
Option awards for officers
and select employees other than the named executive officers are administered in a similar manner. The terms are generally the
same. The non-executive officer and employee awards are directed towards line personnel and other key support positions. General
guidelines of annual awards are up to 10% of the employee’s base salary calculated upon the aggregate exercise price of the
award. Awards are predicated upon the employee’s specific performance for the prior year just ended, as well as the overall
corporate performance compared against goal objectives.
All Other Compensation
The Corporation has
a 401(k) defined contribution plan available to all employees subject to qualifications under the plan. The plan allows officers
and employees of all levels to contribute earnings into a retirement account on a pre-tax basis. In addition, it has been the Corporation’s
practice to make discretionary contributions to the plan. In 2015, the Corporation made discretionary contributions to participant
accounts equal to 50% of the employees’ contributions. This element of compensation is designed to reward long-term savings
and encourage financial security. The Corporation thinks it is in its best interest to encourage its employees to attain long-term
financial security through active savings. This compensation benefit is consistent with that philosophy. Furthermore, an attractive
retirement plan helps the Corporation attract and retain high caliber professionals. In 2015, each of the Corporation’s named
executive officers participated in the 401(k) plan and received matching contributions that are reported under the “All Other
Compensation” column of the
Summary Compensation Table
as well as in the
All Other Compensation
table.
Certain positions within
the Corporation require the Corporation’s officers and employees to travel and incur communications costs. The Corporation
generally does not provide perquisites such as Corporation owned vehicles or cellular phones. The Corporation provides its named
executive officers with expense allowances that are commensurate with the requirements of the duties and role of the individual
within the Corporation’s business and the community. Under their employment agreements, Messrs. Clarke, Shoemaker and Hackemer
each receive a flat dollar amount for auto expenses and communication expenses. The objective of these types of compensation benefits
is to compensate select employees for use of their personal assets in the discharge of their duties. The Corporation does not “audit”
the underlying activity so it is possible that actual expenses incurred by the employee may be more or less than the benefit provided.
The amount paid is the Corporation’s estimate of the appropriate cost for the indicated service or asset. The aggregate amount
of these benefits is reported on the employee’s Form W-2 and included in the taxable income reported by the Corporation for
the employee. These auto and communication expense amounts for the Corporation’s named executive officers for 2015 are reported
under the “All Other Compensation” column of the
Summary Compensation Table
as well as in the
All Other Compensation
table. In 2016, these monthly expense amounts will be:
Executive
|
|
Auto
|
|
|
Communication
|
|
Michael W. Clarke
|
|
$
|
700
|
|
|
$
|
100
|
|
Robert C. Shoemaker
|
|
$
|
600
|
|
|
$
|
100
|
|
Margaret M. Taylor
|
|
|
-0-
|
|
|
|
-0-
|
|
Dean F. Hackemer
|
|
$
|
600
|
|
|
$
|
100
|
|
The Corporation’s named executive
officers participate in and receive the same health insurance benefits as all other employees. However, in order to attract and
retain high level executives, the Corporation has found it necessary to pay the amount of the premium that would normally be payable
by the employee. The premiums are reported in the “All Other Compensation” column of the
Summary Compensation Table
as well as in the
All Other Compensation
table.
Perquisites
The Corporation does
not provide any personal benefits to its named executive officers outside of those discussed above. The Corporation currently does
not provide any of the following to any of its named executives: club memberships not used exclusively for business purposes, extraordinary
life insurance coverage, personal financial or tax advice, personal travel, housing or living expenses, security services, commuting
expenses, or discounts on products or services that are not generally available to all other employees.
Change In Control Benefits
Change in control benefits
for certain named executive officers are designed to compensate executives in the event there is a significant change in the Corporation’s
business that effectively renders the executives’ services unnecessary or diminished in stature. The Corporation has chosen
to make this benefit available in order to attract and retain the executives. Such benefits are customary in the financial services
industry and are designed to provide executives with a liquidity event that can assist them in maintaining their lifestyle while
seeking new employment. The re-employment time for high level executives is generally longer than for other professionals. This
element of compensation is an important long-term compensation component that facilitates retention in an industry segment that
is characterized by high volumes of merger and acquisition activity.
Mr. Clarke’s
employment agreement contains change in control provisions which are detailed in the
Potential Payments Upon Termination or
Change in Control
table. If, during the term of the agreement, the Bank terminates Mr. Clarke’s employment without cause
(as defined in the agreement) or Mr. Clarke terminates his employment for good reason (as defined in the agreement), Mr. Clarke
will be entitled at termination to a lump sum payment equal to 2.75 times his highest reported compensation as reported on Form
W-2 in the three full years preceding the termination date. Additionally, Mr. Clarke will be entitled to any bonuses that have
been accrued or earned as of the termination date that remain unpaid, and medical, life and disability insurance paid by the Bank
(subject to elimination if Mr. Clarke becomes employed and substantially similar coverage is made available to him) for one year
from the termination date. If Mr. Clarke’s employment is terminated voluntarily by him within 180 days after a change in
control (as defined in the agreement), he will be entitled to the same benefits as if termination were by him for good reason.
Also, in the event of a change in control, Mr. Clarke will have the right to assume at cost any insurance contracts owned by the
Bank which were acquired for purposes of insuring against Mr. Clarke’s death or disability. The agreement also contains non-competition
and non-solicitation covenants for a period of one year following termination of Mr. Clarke’s employment other than a termination
by the Bank without cause or by Mr. Clarke for good reason (except that in the case of a termination in connection with a change
in control, the covenants will apply). If Mr. Clarke’s employment is terminated by his disability (as defined in the agreement)
or death, he or his estate will be paid a lump sum payment at termination equal to 75% of the lump sum payment that would have
been paid to him upon a termination following a change in control. (Mr. Clarke or his estate will not receive the bonus and medical,
life and disability insurance that would have been received upon a termination following a change in control). In the event the
Bank terminates Mr. Clarke’s employment for cause or termination by Mr. Clarke without good reason, Mr. Clarke will be entitled
to Bank paid family coverage health insurance benefits for one year from the termination.
The change in control
provisions in Mr. Shoemaker’s employment agreement are substantially the same as Mr. Clarke’s agreement, except as
follows. The lump sum payment due for termination by the Bank without cause or Mr. Shoemaker’s termination for good reason
or in connection with Mr. Shoemaker’s termination following a change in control will be equal to 2.0 times his highest reported
compensation reported on Form W-2 in the three full years preceding the termination date.
The change in control
provisions in Ms. Taylor’s employment agreement are substantially the same as Mr. Clarke’s agreement, except as follows.
The lump sum payment due for termination by the Bank without cause or Ms. Taylor’s termination for good reason or in connection
with Ms. Taylor’s termination following a change in control will be equal to 1.0 times her highest reported compensation
reported on Form W-2 in the three full years preceding the termination date.
The change in control
provisions in Mr. Hackemer’s employment agreement are substantially the same as Mr. Clarke’s agreement, except as follows.
The lump sum payment due for termination by the Bank without cause or Mr. Hackemer’s termination for good reason or in connection
with Mr. Hackemer’s termination following a change in control will be equal to 1.5 times his highest reported compensation
reported on Form W-2 in the three full years preceding the termination date.
Potential Payments Upon Termination
or Change in Control
The following table
shows the estimated payments to or benefits to be received by each of the named executive officers upon the following termination
events or upon a change of control of the Corporation, in each case assuming that each termination event or the change in control
occurred on December 31, 2015, and assuming a stock price of $20.46 which was the closing stock price of the Corporation’s
common stock on December 31, 2015. The amounts reflected in the following table are estimates, as the actual amounts to be paid
to or received by a named executive officer can only be determined at the time of termination or change in control.
At termination, a named
executive officer is entitled to receive all amounts accrued and vested under our 401(k) plan according to the same terms as other
employees participating in those plans, so these benefits are not reflected in the table below. A named executive officer is also
entitled to receive amounts earned during his term of employment regardless of the manner in which the named executive officer’s
employment is terminated. These amounts include earned and unpaid base salary and vested stock or option awards and are not reflected
in the table below. As a benefit to all employees, the Bank provides life insurance in the amount of 2 times the employee’s
annual salary at the time of death, subject to a maximum of $500,000. These amounts are not included in the table below as the
benefit is available to all full-time employees on the same basis.
|
|
|
|
Employer termination
without cause,
Employee termination
with good reason, or
Employee termination
within 180 days after a
change in control
|
|
|
Employer
termination
with cause or
Employee
termination
without good
reason
|
|
|
Termination as a
consequence of
death or disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Clarke
|
|
Post termination compensation
|
|
$
|
2,037,027
|
(1)
|
|
$
|
0
|
|
|
$
|
1,527,770
|
(7)
|
|
|
Earned and unpaid cash bonus
|
|
$
|
385,000
|
(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Health care benefits continuation
|
|
$
|
24,540
|
(5)
|
|
$
|
21,984
|
(5)
|
|
$
|
0
|
|
|
|
Early vesting of unvested options
|
|
$
|
134,175
|
(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Total Value
|
|
$
|
2,580,742
|
(8)
|
|
$
|
21,984
|
|
|
$
|
1,527,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert C. Shoemaker
|
|
Post termination compensation
|
|
$
|
1,035,144
|
(2)
|
|
$
|
0
|
|
|
$
|
776,358
|
(7)
|
|
|
Earned and unpaid cash bonus
|
|
$
|
232,500
|
(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Health care benefits continuation
|
|
$
|
23,915
|
(5)
|
|
$
|
21,984
|
(5)
|
|
$
|
0
|
|
|
|
Early vesting of unvested options
|
|
$
|
100,631
|
(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Total Value
|
|
$
|
1,392,190
|
(8)
|
|
$
|
21,984
|
|
|
$
|
776,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margaret M. Taylor
|
|
Post termination compensation
|
|
$
|
371,617
|
(3)
|
|
$
|
0
|
|
|
$
|
278,713
|
(7)
|
|
|
Earned and unpaid cash bonus
|
|
$
|
125,000
|
(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Health care benefits continuation
|
|
$
|
3,237
|
(5)
|
|
$
|
0
|
(5)
|
|
$
|
0
|
|
|
|
Early vesting of unvested options
|
|
$
|
49,033
|
(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Total Value
|
|
$
|
548,887
|
(8)
|
|
$
|
0
|
|
|
$
|
278,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean F. Hackemer
|
|
Post termination compensation
|
|
$
|
1,055,138
|
(4)
|
|
$
|
0
|
|
|
$
|
791,354
|
(7)
|
|
|
Earned and unpaid cash bonus
|
|
$
|
375,000
|
(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Health care benefits continuation
|
|
$
|
28,028
|
(5)
|
|
$
|
26,763
|
(5)
|
|
$
|
0
|
|
|
|
Early vesting of unvested options
|
|
$
|
114,156
|
(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Total Value
|
|
$
|
1,572,322
|
(8)
|
|
$
|
26,763
|
|
|
$
|
791,354
|
|
|
(1)
|
Lump sum payment equal to 2.75x highest reported compensation as reported on Form W-2 in 3 full
years preceding termination date.
|
|
(2)
|
Lump sum payment equal to 2.0x highest reported compensation as reported on Form W-2 in 3 full
years preceding termination date.
|
|
(3)
|
Lump sum payment equal to 1x highest reported compensation as reported on Form W-2 in 3 full
years preceding termination date.
|
|
(4)
|
Lump sum payment equal to 1.5x highest reported compensation as reported on Form W-2 in 3 full
years preceding termination date.
|
|
(5)
|
Continuation of medical, life and disability insurance
for one year from the termination date for employer termination without cause, employee termination with good reason, and employee
termination within 180 days after a change in control. Continuation of medical insurance for one year from the termination
date for employer termination with cause or employee termination without good reason. Ms. Taylor did not participate in the medical
insurance program in 2015.
|
|
(6)
|
Options may first be exercised on the date of the change
in control.
|
|
(7)
|
Lump sum payment equal to 75% of the lump sum payment
that would have been paid upon a termination following a change in control.
|
|
(8)
|
For termination within 180 days after a change in control,
these amounts do not take into account any reductions that may be required in order to comply with the 280G Cutback provision
in each named executive officer’s employment agreement, if such 280G Cutback is applicable.
|
|
(9)
|
Cash bonus accrued or earned and unpaid as of the termination
date.
|