On May 17, 2022, the Board of Directors of the Company (the “Board”) approved a Letter Agreement, dated as of May 17, 2022 (the “Agreement”), by and
between FinWise Bank, the Company’s wholly-owned subsidiary (the “Bank”), and James Noone (the “Recipient”) for a retention bonus arrangement with the Recipient, who serves as the Chief Credit Officer and Executive Vice President of the Bank, in the
amount of $520,000, less applicable deductions and withholdings (the “Retention Bonus”). The Agreement is the definitive written agreement for the retention bonus arrangement approved by the Compensation Committee of the Board on March 29, 2022. The
Retention Bonus is advanced and payable in cash in two equal payments, the first of which was made on April 1, 2022, and the second of which is advanced and payable on the next Bank payroll cycle following January 15, 2023. To earn the Retention
Bonus, however, the Recipient must be actively employed by the Bank through January 15, 2023 (the “Retention Bonus Date”).
The foregoing is a summary of certain material terms of the Agreement, does not purport to be complete, and is qualified in its entirety by reference to
the full text of the form of the Agreement attached hereto as Exhibit 10.1 and incorporated herein by reference.
Also on May 17, 2022, the Board, acting on the recommendation of its Compensation Committee, adopted an executive compensation program for the Company’s
CEO and other executive officers, excluding David Tilis, which, in addition to base salary, comprises a cash bonus plan (the “Cash Bonus Plan”) that will be used to calculate cash bonuses that may become payable to with respect to 2022 and a
long-term incentive plan (the “LTIP”) that will be used to award equity compensation in 2022.
Cash Bonus Plan
The Cash Bonus Plan is intended to align pay with financial performance and shareholder value creation by basing cash bonuses on the achievement of
specified levels of pre-tax net income. The CEO’s bonus will be based entirely on pre-tax net income, while bonuses for the other executive officers will be based 75% on pre-tax net income and 25% on department goals to be established by the
Compensation Committee.
The bonuses paid based on achievement of specified levels of pre-tax net income
or department goals may range from 0 to 175% of the target bonus amounts, with threshold, target and maximum bonus levels. No bonus
amount is provided for performance below the threshold level, which is 80% of the target
level; 50% of the target bonus amount is provided for performance at the threshold level; the target bonus amount is provided for
performance at the target level;
and 175% of the target bonus amount is provided for performance at or greater than 120% of the target level
. Actual bonus amounts are calculated by linear
interpolation between the different levels, i.e., between the threshold and the target and between the target and the maximum.
For 2022, the amount payable under the Cash Bonus Plan ranges from $0 to $787,500 for Kent Landvatter, Chief Executive Officer and President, based on
a target bonus of $450,000
and from $0 to $297,500 for Javvis Jacobson, Chief Financial Officer and Executive Vice President,
and James Noone, Chief Credit Officer and Executive Vice
President, each based on
a target bonus of $170,000 (of which
25
% is based on department goals and 75% is
based on the
pre-tax net income target
and, in each case, eligible to be paid at 175% of target in the event of maximum level achievement).
The Compensation Committee can reduce the bonus for
all employees covered by the Cash Bonus Plan collectively by up to 25%
if it determines, in its sole discretion, that inappropriate risk was taken by
the Company. In addition, the Committee retains the ability to assess the
incentive plan outcomes and determine if any discretionary adjustments should be considered
for any covered employee to best align with overall performance and shareholder interests.
LTIP
The long-term incentive grants are intended to align executives with the company’s value creation. Grants under the LTIP are expected be made pursuant
to the Company’s 2019 Stock Option Plan or other equity incentive plan of the Company and will comprise a combination of restricted stock and stock options. 80% of the LTIP award value will be in the form of restricted stock
and 20% of the LTIP award value will be in the form of stock options
, with both grants vesting ratably over three years based on achievement of specified levels of the Company’s return on
average assets (ROAA).
The
award values for the LTIP grants are $700,000
for Mr. Landvatter, $270,000 for
Mr. Jacobson
and $210,000 for Mr. Noone.