UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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SANDY SPRING BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| SANDY SPRING BANCORP, INC. |
| (Name of Registrant as Specified in Its Charter) |
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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2021 Proxy Statement
Notice of Annual Meeting of Shareholders
to be held on April 28, 2021
 | Our Story |  | Our Community |  | Our Mission | ||||
| In 1868, our company was founded to serve the interests of all people in the local community. It would serve the needs of each person, one at a time, and through the dedicated efforts of its employees, make the community a better place to live, work, raise a family and run a business. Through the years, that commitment has never wavered. Today, over 150 years later, we proudly serve as one of the area’s oldest and largest independent financial institutions. Proud of our past, and excited for the future. | Through the shared effort of our employees, we give back to our community all year long. While we devote significant resources to non-profits across our region, our employees are encouraged and supported to volunteer individually with their favorite cause. View our 2020 Corporate Responsibility Report at www.sandyspringbank.com to learn more about our commitment to the community, our employees, and the environment. | We promise to be a financial advocate and deliver the best possible solutions through a consistently remarkable experience – without exception. Central to this promise are our core principles. We commit ourselves each day to: 4be responsive in every way, 4always take the extra step, 4take the long view, 4make it our own and 4always do what is right. | |||||||
Voluntary Electronic Delivery of Proxy Materials
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| Our Commitment to the Environment | |
| As a good corporate citizen, we are committed to safeguarding the environment. Guided by this strong sense of purpose we implement safe and sustainable business practices to minimize the environmental impact whenever possible. | |||
Shareholders of Record Enroll at www.computershare-na.com/green or scan the QR code |  | Beneficial Owners Enroll at www.proxyvote.com or scan the QR code |  |
Environmental Impact Statement Combined with your adoption of electronic delivery of proxy materials, and the elimination of 2,896 sets of proxy materials, we can reduce the impact on the environment by: | ||||||
 | Using 4.3 fewer tons of wood, or the equivalent of 26 trees |  | Saving 23,000 gallons of water, or the equivalent of filling 1 swimming pool | |||
 | Using 27.3 million fewer BTUs, or the equivalent of the amount of energy used by 33 refrigerators for one year |  | Eliminating 1,260 pounds of solid waste | |||
 | Using 19,300 fewer pounds of GHG, including CO2, or the emissions of 2 automobiles running for one year |  | Eliminating 2 pounds of hazardous air pollutants | |||
| Environmental impact estimates were calculated using the Environmental Paper Network Paper Calculator. For more information visit www.papercalculator.org. | ||||||
 | www.SandySpringBank.com |
NOTICE OF 20182021 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
Wednesday, April 25, 2018,28, 2021, 10:00 a.m.
Company HeadquartersVirtual Only - Willard H. Derrick Building
17801 Georgia Avenue, Olney, MD 20832www.meetingcenter.io/206713387
The 2018Due to concerns about the COVID-19 virus and the safety of our meeting attendees, the Board of Directors has authorized the 2021 annual meeting of shareholders of to be conducted solely online via live webcast. You will be able to attend and participate in the annual meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting: www.meetingcenter.io/206713387 at the date and time described in the accompanying proxy statement. The password for the meeting is SASR2021. There is no physical location for the annual meeting.
Sandy Spring Bancorp, Inc., intends to return to in-person shareholder meetings in future years, assuming the current COVID-19 health crisis is no longer a concern. Meanwhile, we are excited to embrace the latest technology to provide expanded access, improved communication, and a safe environment for everyone.
The 2021 annual meeting will be held as indicated above for the purpose of considering:
| (1) | The election of |
| (2) | A non-binding resolution to approve the compensation for the named executive officers; |
| (3) |
| Such other business as may properly come before the annual meeting or any adjournment thereof. |
The board of directors established February 28, 2018,24, 2021, as the record date for this meeting. Shareholders of record as of the close of business on that date are entitled to receive this notice of meeting and vote their shares at the meeting and any adjournments or postponements of the meeting.
Your vote is very important. The board urges each shareholder to promptlyimportant. You may vote your shares online or by telephone by no later than 10:00 a.m., Eastern time, on April 28, 2021, as directed in the proxy materials. If you received a printed copy of the proxy materials, you may also complete, sign and return the enclosed proxy card or to use telephone or Internet voting as described on the card.instruction form by mail. If you choose to attend the virtual meeting, you may withdraw your proxy and vote in person.online during the course of the meeting.
| By order of the board of directors, | |
  | |
| Olney, MD | |
| March 17, 2021 | General Counsel & Secretary |
Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of Shareholders to be Held on April 28, 2021 This proxy statement and the 2020 Annual Report on Form 10-K are available at www.envisionreports.com/sasr. |
Important Notice Regarding the Availability of Proxy Materials for the
2018 Annual Meeting of Shareholders to be Held on April 25, 2018
This proxy statement and the 2017 Annual Report on Form 10-K are available at
www.envisionreports.com/sasr.
TABLE OF CONTENTS
2 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Sandy Spring Bancorp, Inc.SANDY SPRING BANCORP, INC.
Proxy StatementPROXY STATEMENT
The board of directors of Sandy Spring Bancorp, Inc., has furnished this proxy statement to you in connection with the solicitation of proxies to be used at the 20182021 annual meeting of shareholders (“annual meeting”) or any postponement or adjournment of the meeting. The notice of annual meeting is being first mailedsent or made available on or about March 14, 201817, 2021 to shareholders of record as of the close of business on the record date.February 24, 2021 (the “Record Date”). In this proxy statement, the “Company,” “Bancorp,” “we,” “our” or similar references mean Sandy Spring Bancorp, Inc., and its subsidiaries. The “board”“Bank” refers to Sandy Spring Bank. The “Board” refers to the board of directors of Sandy Spring Bancorp, Inc.
The Board chose to hold the annual meeting in virtual format only due to the coronavirus pandemic, which has elevated health safety concerns for our shareholders, making the virtual-only format the safe means for attending the annual meeting.
The following is an overview of information described in more detail throughout this proxy statement. This is only a summary, and we encourage you to read the entire proxy statement carefully before voting. For complete information about the Company’s performance, please review our 20172020 Annual Report on Form 10-K.
Please refer to your Notice of Internet Availability of Proxy Materials (“Notice”) for instructions on how to attend and participate in this year’s virtual-only annual meeting. If you wish to cast your vote during the meeting, you must register with your control number printed on the Notice or Proxy Card.
| Date and Time: | Wednesday, April |
| Virtual meeting site: | www.meetingcenter.io/206713387 |
| Record Date: | February |
Voting Matters and Board Recommendations
| Proposal | Board Recommendation | More Information | |||
| 1) | Election of five Class I | directors. | “FOR” all nominees | Page 5 | |
| 2) | A non-binding resolution to approve the compensation for the named executive | officers. | “FOR” | ||
| Page 37 | |||||
| 3) The ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the year | 2021. | “FOR” | Page 38 |
How To Cast Your Vote
Even if you plan to attend the annual meeting in person, please cast your vote as promptly as possible by following the instructions on the Notice of Availability of Proxy Materials and the proxy voting card using:
| Internet | Telephone | |
 |  |  |
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 3 |
Summary of Governance PracticesGOVERNANCE HIGHLIGHTS
The Company is committed to governance practices that support our long-term strategy, demonstrate high levels of integrity, and earn the confidence of investors. This table is as of the Record Date.
| Current Board and Governance Information | ||||
| Board Size | ||||
| 14 | ||||
| Independent Chairman | ||||
| Yes | ||||
| Independent Directors | ||||
| 13 | ||||
| 21 | % | |||
| Minority Directors | 21 | % | ||
| Average Age of Directors | ||||
| 63 years | ||||
| Average Tenure of Directors | 9 years | |||
| Mandatory Director Retirement Age | ||||
| 72 years | ||||
| Director Term | 3 years | |||
| Regular Board Meetings in | 9 | |||
| Special Board Meetings in 2020 | 3 | |||
| Average Attendance at Board and Committee Meetings | ||||
| 99 | % | |||
| Plurality Plus Resignation in Uncontested Director Elections | ||||
| Yes | ||||
| Independent Directors Meet Regularly in Executive Session | ||||
| Yes | ||||
| Independent Audit Committee Meets with Auditor in Executive Session | ||||
| Yes | ||||
| Board Risk Committee | ||||
| Yes | ||||
| Annual Board Evaluations | ||||
| Yes | ||||
| Continuing Education Program | ||||
| Yes | ||||
| Stock Ownership Guidelines for Directors and Executives | ||||
| Yes | ||||
| Anti-Hedging Policy | ||||
| Yes | ||||
| Clawback Policy | ||||
| Yes | ||||
| Code of Ethics and Business Conduct available on website | ||||
| Yes | ||||
| Corporate Governance Policies available on website | Yes | |||
| 4 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
PROPOSAL 1: Election of DirectorsELECTION OF DIRECTORS
The boardBoard is elected by the shareholders to represent their interest in the Company. With the exception of those matters reserved for shareholders, the boardBoard is the highest and ultimate decision-making authority. The boardBoard works closely with executive management and oversees the development and execution of our business strategy.
Board Complement
Our boardBoard currently has 15 members14 members. The Company maintains a classified board, meaning that only a portion of the Board is elected each year. The classified structure provides stability of leadership and supports our long-term strategy. The Board is divided into three classes in as equal number.number as possible. In general, the term of only one class of directors expires each year, and the directors within that class are elected for a term of three years or until their successors are elected and qualified.
In connection with the acquisition of WashingtonFirst Bankshares, Inc., (“WashingtonFirst”) and the related merger of WashingtonFirst Bank into Sandy Spring Bank, the Company agreed to appoint four WashingtonFirst directors to the Company’s board. Upon completion of the acquisition on January 1, 2018, former WashingtonFirst Chairman Joseph S. Bracewell, former WashingtonFirst CEO and director Shaza L. Andersen, and WashingtonFirst directors Mark C. Michael and Joe R. Reeder joined the Company’s board. Also effective upon closing, director Susan D. Goff retired from the board after 23 years of dedicated service.
On December 13, 2017, the board of directors approved an amendment toPer the Company’s bylaws, that permits a director to continue to serve onJames J. Maiwurm, having attained the age of 72, will retire from board afterservice at the close of the annual meeting. If all nominees are elected, following the annual meeting of shareholders immediately following his or her seventy-second (72nd) birthday if (i) he or she was appointedthe Board will stand at 13 members.
Board Diversity
The Board values diversity and seeks to the board ofinclude directors in connection with a corporate acquisition, consolidation, or mergerbroad range of backgrounds, experience and (ii)personality styles as well as representation of women, different ethnicities, and a range of ages and tenure. The following graphs show the Nominating Committee and boardbreakdown of directors determine that his or her continued service would bethe Board as of substantial benefit to the Company in recognizing the benefit of such acquisition, consolidation or merger. The board’s nomination of Mr. Bracewell (age 71) is made under this provision; and, if elected, Mr. Bracewell is expected to serve a complete term of three years.Record Date.
Director-Nominees
A total of seven directors are
Director Nominees
The Board has nominated for election.five Class I director-nominees are before youdirectors for election tofor a three-year term to expireexpiring in 2021:2024. They are Ralph F. Boyd, Jr., Joseph S. Bracewell,Walter C. Martz II, Mark C. Michael, Robert L. Orndorff, and Daniel J. Schrider. Joe R. Reeder is nominated toAll Class II for a two-year term expiring in 2020, and Shaza L. Andersen is nominated to Class III for a one-year term expiring in 2019. All of these nomineesI director-nominees are currently serve on the board, and Mr. Boyd, Mr. Orndorff, and Mr. Schriderdirectors who have been elected previously by the shareholders.
Nomination Process
The Nominating Committee is responsible for recruiting and recommending candidates to the board.Board. In exercising its duties, the committee considers the present skills and experience on the board andBoard to determine the desired qualifications that are desired in order towill meet the Company’s changing needs.
Our Corporate Governance Policy outlines the general competencies required of all directors including the highest standards in exercising his or her duty of loyalty, care and commitment to all of our shareholders. Prior to the recruitment of a new director, the boardBoard gathers input from all directors in order to form a collective picture of the particular competencies needed to fulfill the board’sBoard’s obligations and support our long-term strategy. Such competencies may include expertise in: the banking industry, financial matters, risk management, marketing, a particular geographic market, regional economics, strategic planning, executive management, technology or other relevant qualifications. The board also valuessubjects. In addition to these competencies, the Board actively considers the balance of diversity on the Board and seeks to includewill seek qualified candidates that will achieve and maintain a broad range of backgrounds, experience and personality styles.Board that reflects the local community.
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 5 |
The Nominating Committee encourages suggestions for qualified director candidates from the chief executive officer, the chairman of the board, other directors, and from shareholders, and is responsible for the evaluation of such suggestions. Shareholders may submit suggestions for qualified director candidates by writing to Ronald E. Kuykendall,Aaron M. Kaslow, General Counsel and Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832. Submissions should include information regarding a candidate's background, qualifications, experience and willingness to serve as a director. In addition, the Nominating Committee may consider candidates submitted by a third party search firm hired for this purpose. The Nominating Committee uses the same process for evaluating all nominees, including those recommended by shareholders, using the board membership criteria described above. Please see "Shareholder Proposals and Communications" on page 42.41.
Information About Nominees and Incumbent Directors
The information below sets forth the names of the nominees for election describing their skills, experience and qualifications for election. Each has given his or her consent to be nominated and has agreed to serve, if elected. If any person nominated by the board of directorsBoard is unable to stand for election, the shares represented by proxies may be voted for the election of such other person or persons as the present board of directorsBoard may designate.
Also provided is information on the background, skills, and experience of the remaining incumbent directors. Unless described otherwise, each director has held his or her current occupation for at least five years, and the ages listed are as of the Record Date.
Voting Standard for Uncontested Elections
With respect to the election of directors, a plurality of all the votes cast at the annual meeting will be sufficient to elect a nominee as a director. In an uncontested election, an incumbent director-nominee who receives a greater number of votes “withheld” than votes “for” shallwill promptly tender his or her resignation following certification of the shareholder vote. The Nominating Committee shallwill consider the resignation, taking into consideration any information it deems to be appropriate and relevant, and make a recommendation to the board.Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING
NOMINEES NAMED BELOW AS A DIRECTOR OF SANDY SPRING BANCORP, INC.
Class I Director-Nominees – For Terms To ExpireExpiring at the 20212024 Annual Meeting
Ralph F. Boyd
| Age: Director since: 2012
Independent
Committees: Compensation Chair, Executive & Governance, Nominating
Skills and qualifications: | Mr. Boyd is the President & Chief Executive Officer for |
| 6 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Walter C. Martz II
| Age: Director since: 2020 Independent Committee: Audit Skills and qualifications: Extensive professional business experience, prior bank board experience, deep knowledge of local market, and leadership skills. | Mr. Martz has practiced law for over 42 years and is currently the Managing Member of Walter C. Martz LLC, in Frederick, Md., a general law practice encompassing a broad spectrum of legal matters ranging from corporate matters and estate administration to complex real estate and commercial banking transactions. Mr. Martz has also served on the Maryland Tax Court located in Baltimore since 1980 and is currently the Chief Judge. Mr. Martz was a cofounder, director and vice chairman of the board of BlueRidge Bank, which merged with Revere Bank in 2016. He was also a director of the former Revere Bank and was elected to the Board upon the merger with Sandy Spring Bank on April 1, 2020. |
Mark C. Michael | Age: 58 Director since: 2018
Independent
Skills and qualifications: |
|
| In 2021, Mr. Michael |
Robert L. Orndorff Chairman
| Age: Director since: 1991
Independent
Committees: Executive & Governance Chairman, ex officio on all committees
Skills and qualifications:
| Mr. Orndorff is the founder and President of RLO Contractors, Inc., a leading residential and commercial excavating and grading company in central Maryland that also provides mulch and topsoil products. Mr. Orndorff’s experience in building a highly successful business with a strong reputation for quality, teamwork, and integrity is a testament to his leadership ability that is also strongly aligned with the Company’s culture and values.
|
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 7 |
Daniel J. Schrider President & CEO
| Age: Director since: 2009
Non-Independent
Committees: Executive & Governance, Risk
Skills and qualifications: |
Mr. Schrider has been part of Sandy Spring Bank for A leader among community bankers, Mr. Schrider
|
Incumbent Class II Director-NomineeIII Directors – For Term To ExpireTerms Expiring at the 20202022 Annual Meeting
 
| Age:
|
Class III Director-Nominee – For Term To Expire at the 2019 Annual Meeting
|
|
Incumbent Class II Directors - Terms Expiring at the 2020 Annual Meeting
|
|
|
| ||
|
Director since: 2015
Independent
Committees:
Skills and qualifications: Executive leadership experience, | Ms. Abutaleb has been the Chief Executive Officer of Medical Technology Solutions, LLC, a provider of technology solutions for the healthcare industry, since December 2019. From 2013 to 2018, Ms. Abutaleb was the Chief Executive Officer of mindSHIFT Technologies, Inc., an IT outsourcing/managed services and | |
|
|
Mark C. Micklem | Age: 62 Director since: 2019 Independent Committees: Compensation, Risk Skills and qualifications: Industry expertise, in-depth financial and capital markets experience, and M&A expertise. | Mr. Micklem retired from Robert W. Baird & Co. Inc., in 2018 where he was a Managing Director and Head of Financial Services Investment Banking for 12 years. While at Baird, Mr. Micklem focused on providing capital financing and merger and acquisition advisory services to banks and other financial services companies. Prior to joining Baird, Mr. Micklem was head of the Financial Services Investment Banking Group at Legg Mason for 10 of his 21 years there. During his career, Mr. Micklem completed more than 250 financing and M&A advisory engagements for financial services companies. Capital raising assignments included IPOs as well as public and private offerings of a variety of debt and equity securities. |
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Incumbent Class III Directors - Terms Expiring at the 2019 Annual Meeting
| Age:
|
|
Director since: 2011
Independent
Skills and qualifications:
|
|
Experience in | Mr. Nakamoto is the principal of The Nakamoto Group, LLC, a consulting firm |
 Christina B. O’Meara | Age: 67 Director since: 2020 Independent Committee: Compensation Skills and qualifications: Commercial real estate expertise, executive leadership skills, deep knowledge of the | Ms. O’Meara is president and founder of |
Incumbent Class II Director - Terms Expiring at the 2023 Annual Meeting
Mark E. Friis | Age: 65 Director since: 2005 Independent Committees: Risk, Executive & Governance, and Nominating Skills and qualifications: Business management experience, strategic planning, and in-depth knowledge of the local economy and housing market trends. | Mr. Friis is currently the Chairman of Rodgers Consulting, Inc., having previously served as the privately held firm’s President and CEO from 2001-2016. Headquartered in Germantown, Maryland, Rodgers Consulting is a land development planning and engineering firm; specializing in town planning, urban design, development entitlements, site engineering and natural resource management for developers, builders, institutions and corporations in the suburban Maryland region. Mr. Friis is a member of the |
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 9 |
Brian J. Lemek
| Age: Director since:
Independent
Skills and qualifications:
| Mr. |
Pamela A. Little | Age: 67 Director since: 2005 Independent Committees: Audit Chairman, Executive & Governance, Nominating Skills and qualifications: Broad range of business experience including public companies, financial expertise, knowledge of mergers and acquisitions, executive leadership skills, and human resources experience. | Ms. Little is the Chief Financial Officer of Nathan, Inc., a private international economic and analytics consulting firm that works with government and commercial clients around the globe. From 2014 to 2018, she was the Executive Vice President and Chief Financial Officer of Modern Technology Solutions Inc., an employee-owned government contractor, for |
Craig A. Ruppert | Age: 67 Director since: 2002 Independent Committees: Nominating Chairman, Executive & Governance Skills and qualifications: Strategic planning, executive management, commercial real estate, and extensive business expertise. | Mr. Ruppert is the founder, President and CEO of The Ruppert Companies, which is comprised of Ruppert Landscape, Inc., a commercial landscape construction and management company located in seven states and the District of Columbia; Ruppert Nurseries, Inc., a tree growing and moving operation; and Ruppert Properties, LLC, an industrial property development and management company. |
| 10 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Corporate Governance and Other MattersCORPORATE GOVERNANCE
The board remainsBoard is committed to setting a tone of the highest ethical standards and performance for our management, officers, and the Company as a whole. The boardBoard believes that strong corporate governance practices are a critical element of doing business today. To that end, the Corporate Governance Policy is reviewed regularly to ensure that it reflects the best interests of the Company and its shareholders. The policy may be foundis on our investor relations website atwww.sandyspringbank.com.
In addition, our board of directorsBoard has adopted a Code of Ethics and Business Conduct (“Code”) applicable to all directors, officers, and employees of the Company and its subsidiaries. It sets forth the legal and ethical standards that govern the conduct of business performed by the Company and its subsidiaries. The Code is intended to meet the requirements of Section 406 of the Sarbanes-Oxley Act of 2002, related SEC regulations,Ethics and the listing rules of Nasdaq Stock Market, Inc. The Code of Business Conduct may be found on our investor relations website atwww.sandyspringbank.com.
The board of directorsBoard has affirmatively determined that all directors other thanexcept Mr. Schrider and Ms. Andersen are independent. In conjunction with the acquisition of WashingtonFirst, and effective as of December 29, 2017, the Company entered into a separation and consulting agreement with Shaza L. Andersen setting forth her entitlements under her employment agreement with WashingtonFirst in connection with her termination of employment with WashingtonFirst and her service as a non-employee director of and consultant to the Company. The separation and consulting agreement provides for a consulting period of 12 months and a consulting fee of $18,333.33 per month. The agreement was filed as an exhibit to Form 8-K on January 2, 2018.
The boardBoard complies with or exceeds the independence requirements for the boardBoard and board committees established by the Nasdaq Stock Market, federal securities and banking laws and the additional standards included in our Corporate Governance Policy.
Plurality Plus Resignation Policy
In response to feedback from our shareholder engagement efforts, the boardBoard revised the Corporate Governance Policy in 2017 to require an incumbent director to promptly submit a letter of resignation if he or she receives more “withhold” votes than “for” votes in an uncontested election at an annual meeting of shareholders. The resignation will be considered by the Nominating Committee, which will make a recommendation to the board.Board.
Board Leadership Structure, Education and Self-Assessment Process
The Company’s bylaws provide for the annual election of a chairman of the boardBoard from among the directors, and the Corporate Governance Policy states it is the board’sBoard’s policy to separate the offices of the chairman and the chief executive officer. This separate role allows the chairman to maintain independence in the oversight of management. The chairman of the board also chairs the Executive and Governance Committee (see Executive and Governance Committee description below), thatwhich is empowered to act on behalf of the boardBoard between regular boardBoard meetings.
The boardBoard is committed to self-improvement and has established an annual self-assessment process that evaluates a different aspect of board effectiveness each year. In 2017, that process was facilitated by The Center for Board Excellence (“CBE”), an independent consultant. All directors completed an assessment of individual director performance. The results of the evaluation were compiled by CBE, and a written report was given2020, due to the chairman. The chairman discussedgeneral disruption caused by the results with each director confidentially.global pandemic, the Board did not engage in its normal evaluation process and is scheduled to resume in 2021.
Board’s Role in Risk Oversight
The boardBoard fulfills a significant role in the oversight of risk in the Company both through the actions of the boardBoard as a whole and those of its committees. The board’sBoard’s Risk Committee has duties and responsibilities for broad risk oversight. The Risk Committee receives regular reports on: credit risk, asset quality,on the adequacystatus of the allowance for loan losses, investmentCompany’s enterprise risk profiles, interest rate risk,management program, which covers the following identified categories of risk: credit, market, liquidity, capital adequacy, cybersecurity, vendor management, corporate insurance, litigation managementoperational, strategic, and regulatory compliance.reputational. The Compensation Committee reviews reports on risk to the Company associated with incentive compensation plans. The Audit Committee meets regularly with the independent registered public accounting firm to receive reports on the results of the audit and review process. In addition, the Audit Committee receives internal audit reports that enable it to monitor operational risk throughout the Company and coordinates theany substantive or systemic findings with the Risk Committee through a liaison member who serves on both committees.
Environmental, Social and Governance Matters
The Board oversees a range of matters pertaining to environmental, social and governance (“ESG”) topics, including: the Company’s governance policies and practices; our systems of risk management and controls; our investment in our employees; the manner in which we serve our clients and support our communities; and how we advance sustainability in our business and operations. Beginning this year, we are publishing a dedicated Corporate Responsibility Report, which summarizes our efforts and performance on ESG matters, that we and our stakeholders view as among the most important to our business. The Company’s 2020 Corporate Responsibility Report is available on our website at www.sandyspringbank.com/cr20.
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 11 |
The board of directorsBoard has the followingfive standing committees: Audit, Executive and Governance, Nominating, Compensation, and Risk. The charter for each committee may be found on our investor relations website atwww.sandyspringbank.com. Each committee’s function is described as follows:
Audit Committee – - The Audit Committee is appointed by the boardBoard to assist in monitoring: 1)(1) the integrity of the Company’s accounting and financial statements and financial reporting includingprocess; (2) the proper operation of internal control over financial reporting and disclosure controls and procedures in accordance with the Sarbanes-Oxley Act of 2002; 2) compliance with legal and regulatory requirements; and 3) thequalifications, independence and performance of the Company’s independent registered public accounting firm; and (3) the qualifications and performance of the Company’s internal and external auditors.audit department. The Audit Committee is directly responsible for the appointment and oversight of the external auditor, including review of their qualifications and compensation. The Audit Committee reviews the quarterly earnings press releases, as well as the Forms 10-Q and 10-K prior to filing. All members of the committee meet all requirements and independence standards as defined in applicable law, regulations of the SEC, Nasdaq listing rules, the Federal Deposit Insurance Act and related regulations. The boardBoard has determined that Pamela A. Little qualifies as an audit committee financial expert under the Nasdaq listing rules and applicable securities regulations.
Executive and Governance Committee – - This committee conducts boardBoard business between regular meetings as needed and provides oversight and guidance to the board of directorsBoard to ensure that the structure, policies, and processes of the boardBoard and its committees facilitate the effective exercise of the board'sBoard's role in governing the Company. The committee reviews and evaluates the policies and practices with respect to the size, composition, independence and functioning of the boardBoard and its committees as stated in the Corporate Governance Policy. This committee is also responsible for maintaining the Code of Ethics and Business Conduct, the annual CEO evaluation process, and the annual boardBoard evaluation process.
Nominating Committee – - Members of this committee are independent directors within the meaning of the Nasdaq listing rules. The Nominating Committee makes recommendations to the boardBoard with respect to nominees for election as directors. In exercising its responsibilities, the Nominating Committee considers general criteria and particular goals andobjectives or needs of the Company for additional competencies or characteristics.specific competencies. The committee also has the authority to engage an outside search firm to source qualified candidates. See page 5 for a discussion of the nomination process.
Compensation Committee – Members of this committee are independent directors within the meaning of the Nasdaq listing rules. The Compensation Committee is responsible for developing executive compensation philosophy and determining all elements of compensation for executive officers including base salaries, short-term incentive compensation, equity awards, and retirement benefits. In addition, the committee considers other compensation and benefit plans on behalf of the boardBoard as required by regulation. The committee is charged with assessing whether the compensation plans encourage or reward unnecessary or excessive risk-taking by participants. The committee is also responsible for reviewing and making recommendations for non-employee director compensation and administering the Company’s equity compensation plans.
Risk Committee – The Risk Committee is responsible for assisting the boardBoard in its oversight of the Company’s enterprise risk management, including the review and approval of significant policies and practices concerning the various risks described in its charter as well as the analysis and assessment of potential risk in order to make recommendations to the boardBoard on strategic initiatives. The boardBoard delegates to the Risk Committee the oversight of specific risks as mandated by law or regulation, the authority to manage the Company’s affairs with regard to risk and the authority to handle unresolved issues referred to it by the boardBoard for further deliberation and recommendation. The Risk Committee works closely with the Chief Risk Officer to monitor key risk indicators and oversee the Company’s enterprise risk management structure.
| 12 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Current Board Committee Membership and Number of Meetings –
| Name | Executive & Governance | Nominating | Audit | Compensation | Risk | |||||
| Number of meetings in 2017 | 5 | 2 | 8(1) | 7 | 6 | |||||
| Mona Abutaleb | X | X | ||||||||
| Shaza L. Andersen | X | |||||||||
| Ralph F. Boyd, Jr. | X | X | Chair | |||||||
| Joseph S. Bracewell | X | |||||||||
| Mark E. Friis | X | X | ||||||||
| Robert E. Henel, Jr. | X | X | Chair | |||||||
| Pamela A. Little | X | X | Chair | |||||||
| James J. Maiwurm | X | X | ||||||||
| Mark C. Michael | ||||||||||
| Gary G. Nakamoto | X | |||||||||
| Robert L. Orndorff(2) | Chair | X | X | X | X | |||||
| Joe R. Reeder | ||||||||||
| Craig A. Ruppert | X | Chair | ||||||||
| Daniel J. Schrider | X | X | ||||||||
| Dennis A. Starliper | X |
| Name | Executive & Governance | Nominating | Audit | Compensation | Risk |
| Number of meetings in 2020 | 4 | 3 | 8(1) | 6 | 6 |
| Mona Abutaleb | X | X | |||
| Ralph F. Boyd, Jr. | X | X | Chair | ||
| Mark E. Friis | X | X | Chair | ||
| Brian J. Lemek | X | ||||
| Pamela A. Little | X | X | Chair | ||
| James J. Maiwurm | X | X | |||
| Walter C. Martz, II | X | ||||
| Mark C. Michael | X | ||||
| Mark C. Micklem | X | X | |||
| Gary G. Nakamoto | X | ||||
| Christina B. O’Meara | X | ||||
| Robert L. Orndorff | Chair | X | X | X | X |
| Craig A. Ruppert | X | Chair | |||
| Daniel J. Schrider | X | X |
(1) The Audit Committee met four times in person and four times by teleconference to approve quarterly earnings releases.
(2)As chairman of the board, Mr. Orndorff is an ex officio member of all committees.
Director Attendance at Board and Committee Meetings
Each of our directors takes his and her commitment to serve on the boardBoard very seriously as demonstrated by the superior attendance record achieved each year. During 2017,2020, the boardBoard held 10nine regular meetings with overall attendance averaging 96%and three special meetings. Attendance at all Board and committee meetings averaged 99%. In accordance with the Corporate Governance Policy, all incumbent directors attended well over 80% of the aggregate of (a) the total number of meetings of the board of directorsBoard and (b) the total number of meetings held by all committees on which they served.
Attendance at the Annual Meeting of Shareholders
The board of directorsBoard believes it is important for all directors to attend the annual meeting of shareholders to show support for the Company and to provide an opportunity to interact with shareholders directly. It is our policy that directors should attend the annual meeting of shareholders unless unable to attend by reason of personal or family illness or other urgent matters. In 2020, due to concerns for the COVID-19 pandemic and the safety of our directors and shareholders, the annual meeting was held in a virtual-only format for the first time. All of our directors were in attendance atattended the 20172020 annual meeting.meeting via teleconference.
Cash Compensation
Only non-employee directors are compensated for their service as board members. TheIn 2020, the Compensation Committee is responsible for reviewingdecided to leave non-employee director compensation and will periodically commission a market comparison to ensure compensation levels are appropriate and commensurate with peer companies. Such an analysis was last completed in 2016. As a result annual retainers for directors were increased.unchanged from the prior year.
In 2017, the chairmanCash Compensation – Non-employee directors received an annual cash retainer of $52,000, and each non-employee director received an annual cash retainer of $25,000. The committee chairmen received an additional annual cash retainercompensation in 2020 as follows: Audit Committee $9,000; Compensation Committee $7,000; Executive and Governance $5,000; Nominating Committee $5,000; and Risk Committee $5,000. Board meeting attendance fees were fixed at $1,200 per board meeting and $1,000 per committee meeting.
| Annual Cash Retainer Per Director | $ | 30,000 | ||
| Additional Cash Annual Retainer for Board and Committee Chairs | ||||
| Chair of Board | $ | 40,000 | ||
| Audit Committee | $ | 15,000 | ||
| All Other Committees | $ | 10,000 | ||
| Board Meeting Attendance Fee (per meeting) | $ | 1,200 | ||
| Attending an in-person Board meeting by phone | $ | 500 | ||
| Committee Meeting Attendance Fee (per meeting) | $ | 1,000 |
Directors
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 13 |
Under normal circumstances, directors are encouraged to attend all meetings in person unless the meeting is called by teleconference. Beginning in March 2020, all board and board committee meetings were held by virtual communication software. Directors who attended a regular board meeting by phone were paid a reduced meeting fee of $500.compensated for these meetings per usual. Directors were not paid for limited-purpose teleconference meetings, and members of the Nominating Committee were not paid when the Executive & Governance Committee met on the same day. All directors of the Company also serve as directors of Sandy Spring Bank, for which they did not receive any additional compensation.
Equity Compensation –
On March 15, 2017,11, 2020, each director received a grant of restricted stock units valued at $25,000 of Company common stock.$35,000. The restricted stock units will vest over three years in equal increments, and vesting is acceleratedaccelerates upon the permanent departure from the boardBoard other than removal for just cause.
DirectorDeferred Fee Deferral PlanArrangements –
Directors are eligible to defer all or a portion of their fees under the Director Deferred Fee Deferral Plan. The amounts deferred accrue interest at 120% of the long-term Applicable Federal Rate, which is not considered “above market” or preferential. Except in the case of death or financial emergency, deferred fees and accrued interest are payable only following termination of a director's service. Inservice, at which time the eventdirector’s deferral account balance will be paid in a director dies during active service, the Bank will pay benefits that exceed deferred fees and accrued interestlump sum. Mr. Orndorff is a party to a Directors’ Fee Deferral Agreement, under which deferrals ceased in 2004, pursuant to which his beneficiary would receive a death benefit equal to the extentgreater of the Bank owns an insurance policy in effect onprojected retirement benefit or the director’s life atcombined deferral account balance under the timetwo fee deferral arrangements should his death occur while actively serving as a member of death that pays a greater amount than the total of deferred fees and accrued interest.Board.
Director Stock Purchase Plan
Each director has the option of using from 50% to 100% of his or her annual retainer fee to purchase newly issued common stock at the current fair market value at the time the retainer is paid in accordance with the plan. Directors make an annual election to participate in advance, and participation in the plan is ratified by the board.
20172020 Non-Employee Director Compensation
| Fees Earned or | All Other | |||||||||||||||
| Paid in Cash | Stock Awards | Compensation | Total | |||||||||||||
| Name | (1) | (2) | (3) | |||||||||||||
| Mona Abutaleb | $ | 43,400 | $ | 25,000 | $ | 1,169 | $ | 69,569 | ||||||||
| Ralph F. Boyd, Jr. | $ | 48,400 | $ | 25,000 | $ | 1,670 | $ | 75,070 | ||||||||
| Mark E. Friis | $ | 46,000 | $ | 25,000 | $ | 1,670 | $ | 72,670 | ||||||||
| Susan D. Goff | $ | 41,000 | $ | 25,000 | $ | 1,670 | $ | 67,670 | ||||||||
| Robert E. Henel, Jr. | $ | 54,000 | $ | 25,000 | $ | 1,670 | $ | 80,670 | ||||||||
| Pamela A. Little | $ | 56,000 | $ | 25,000 | $ | 1,670 | $ | 82,670 | ||||||||
| James J. Maiwurm | $ | 43,800 | $ | 25,000 | $ | 1,169 | $ | 69,969 | ||||||||
| Gary G. Nakamoto | $ | 43,200 | $ | 25,000 | $ | 1,670 | $ | 69,870 | ||||||||
| Robert L. Orndorff | $ | 88,000 | $ | 25,000 | $ | 1,670 | $ | 114,670 | ||||||||
| Craig A. Ruppert | $ | 47,000 | $ | 25,000 | $ | 1,670 | $ | 73,670 | ||||||||
| Dennis A. Starliper | $ | 45,000 | $ | 25,000 | $ | 1,670 | $ | 71,670 | ||||||||
| Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation(3) | Total | ||||||||||||
| Ralph F. Boyd, Jr. | $ | 62,200 | $ | 35,000 | $ | 2,481 | $ | 99,681 | ||||||||
| Mark E. Friis | $ | 64,400 | $ | 35,000 | $ | 3,681 | $ | 103,081 | ||||||||
| Robert E. Henel, Jr. (4) | $ | 13,000 | - | $ | 756 | $ | 13,756 | |||||||||
| Brian J. Lemek | $ | 47,500 | $ | 35,000 | $ | 1,391 | $ | 83,891 | ||||||||
| Pamela A. Little | $ | 67,400 | $ | 35,000 | $ | 2,481 | $ | 104,881 | ||||||||
| James J. Maiwurm | $ | 54,400 | $ | 35,000 | $ | 2,481 | $ | 91,881 | ||||||||
| Walter C. Martz, II | $ | 46,500 | $ | 35,000 | $ | 1,991 | $ | 83,491 | ||||||||
| Mark C. Michael | $ | 48,700 | $ | 35,000 | $ | 2,422 | $ | 86,122 | ||||||||
| Mark C. Micklem | $ | 54,400 | $ | 61,433 | $ | 2,095 | $ | 117,928 | ||||||||
| Gary G. Nakamoto | $ | 51,400 | $ | 35,000 | $ | 3,081 | $ | 89,481 | ||||||||
| Christina B. O’Meara | $ | 47,500 | $ | 35,000 | $ | 1,391 | $ | 83,891 | ||||||||
| Robert L. Orndorff | $ | 111,499 | $ | 35,000 | $ | 2,481 | $ | 148,881 | ||||||||
| Joe R. Reeder(4) | $ | 8,000 | - | $ | 697 | $ | 8,697 | |||||||||
| Craig A. Ruppert | $ | 58,400 | $ | 35,000 | $ | 2,481 | $ | 95,881 | ||||||||
| Mona Abutaleb Stephenson | $ | 56,400 | $ | 35,000 | $ | 2,481 | $ | 93,881 | ||||||||
| (1) | All or a portion of the reported cash compensation may be deferred under the Director Fee Deferral Plan. Please see the description of “Director Compensation” on page |
| (2) | On March |
| (3) | Amounts in this column represent dividends paid on restricted |
| (4) | Messrs. Henel and Reeder retired from the Board effective June 4, 2020 at which time their outstanding restricted stock vested. |
| 14 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Stock Ownership Requirements for Directors
According to the Company’s bylaws, qualified directors are required to hold unencumbered shares of common stock with a fair market value of $1,000. The Corporate Governance Policy requires this minimum ownership position to increase with each year of service up to the lesser of 5,000 shares or $175,000 in fair market value by January 1st following the director’s fifth anniversary of service. All of the directors exceed the requirements of the policy.
Section 16(a) Beneficial Ownership Reporting ComplianceHedging Policy
Under our Insider Trading Policy, the Company’s directors, officers and employees are prohibited from entering into hedging or monetarization transactions, such as short sales, publicly-traded options, margin accounts, equity swaps, puts, calls, forwards or similar arrangements, with respect to Company securities.
SECTION 16(A) REPORTING COMPLIANCE
General
Section 16(a) of the Securities Exchange Act of 1934 requires that executive officers and directors, and any persons who own more than ten percent of a registered class of the Company’s equity securities file reports of ownership and changes in ownership with the SEC.Securities and Exchange Commission (“SEC”). Specific dates for such filings have been established by the SEC, and the Company is required to report in this proxy statement any failure to file reports in a timely manner in 2017. 2020.
Delinquent Section 16(a) Reports
Based solely on the review of the copies of forms it has received and the written representation from each person, all the executive officers and directors have complied with filing requirements applicable to them with respect to transactions during 2017.2020 with the single exception of a Form 4 for Kenneth C. Cook that was filed one day late.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Stock Ownership of Certain Beneficial Owners
| Name | Amount and Nature of Beneficial Ownership | Percentage of Shares Outstanding as of March 1, 2021 | ||||||
| BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 | 4,386,212 | (1) | 9.2 | % | ||||
| Dimensional Fund Advisors LP 6300 Bee Cave Road, Austin, TX 78746 | 2,754,083 | (2) | 5.8 | % | ||||
| T. Rowe Price Associates, Inc. 100 E. Pratt Street, Baltimore, MD 21202 | 2,604,130 | (3) | 5.5 | % | ||||
| The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 2,479,823 | (4) | 5.2 | % | ||||
| (1) | According to the Schedule 13G/A filed by Blackrock, Inc., with the SEC on February 1, 2021, BlackRock, Inc., had sole voting power with respect to 4,176,175 shares and sole dispositive power with respect to 4,386,212 shares. |
| (2) | According to the Schedule 13G/A filed by Dimensional Fund Advisors LP on February 16, 2021, Dimensional Fund Advisors had sole voting power with respect to 2,648,782 shares and sole dispositive power with respect to 2,754,083 shares. Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In its role as investment advisor, sub-advisor and/or manager Dimensional may be deemed to be the beneficial owner of the shares held by the Funds. However, all securities reported are owned by the Funds. Dimensional Fund Advisors LP disclaims beneficial ownership of such securities. |
| (3) | According to the Schedule 13G/A filed by T. Rowe Price Associates, Inc., with the SEC on February 16, 2021, T. Rowe Price Associates, Inc. had sole voting power with respect to 630,470 shares, and sole dispositive power with respect to 2,604,130. |
| (4) | According to the Schedule 13G/A filed by The Vanguard Group, with the SEC on February 10, 2021, The Vanguard Group had shared power to vote 42,615 shares, sole dispositive power with respect to 2,398,535, and shared dispositive power with regard to 81,288 shares. |
| | 15 |
StockBeneficial Ownership of Certain Beneficial OwnersDirectors and Executive Officers
The following table sets forth information as of February 8, 2018,16, 2021, with respect to the shares of common stock beneficially owned by each director and director-nominee, by the 20172020 named executive officers, and by all directors and executive officers as a group. No individual holds more than 1% of the total outstanding shares of common stock. All directors and executive officers as a group beneficially own 3.31%3.05% of the Company’s outstanding common stock.
| Name | Shares Owned (1) (2) | Restricted Stock | Shares That May (3) | Total | ||||||||||||
| Mona Abutaleb | 948 | 1,196 | - | 2,144 | ||||||||||||
| Shaza L. Andersen | 77,344 | - | - | 77,344 | ||||||||||||
| Ralph F. Boyd, Jr. | 3,467 | 1,514 | - | 4,981 | ||||||||||||
| Joseph S. Bracewell(4) | 308,741 | - | - | 308,741 | ||||||||||||
| Mark E. Friis(5) | 35,193 | 1,514 | - | 36,707 | ||||||||||||
| Robert E. Henel, Jr. | 8,903 | 1,514 | - | 10,417 | ||||||||||||
| Pamela A. Little | 19,714 | 1,514 | - | 21,228 | ||||||||||||
| James J. Maiwurm | 1,577 | 1,196 | - | 2,773 | ||||||||||||
| Mark C. Michael(6) | 103,405 | - | - | 103,405 | ||||||||||||
| Gary G. Nakamoto | 5,572 | 1,514 | - | 7,086 | ||||||||||||
| Robert L. Orndorff | 164,765 | 1,514 | - | 166,279 | ||||||||||||
| Joe R. Reeder | 55,767 | - | - | 55,767 | ||||||||||||
| Craig A. Ruppert | 77,954 | 1,514 | - | 79,468 | ||||||||||||
| Dennis A. Starliper | 9,168 | 1,514 | - | 10,682 | ||||||||||||
| Daniel J. Schrider(7) | 60,498 | 30,537 | - | 91,035 | ||||||||||||
| Philip J. Mantua(8) | 38,884 | 13,698 | - | 52,582 | ||||||||||||
| Joseph J. O’Brien(9) | 30,079 | 14,772 | - | 44,851 | ||||||||||||
| R. Louis Caceres | 20,819 | 13,841 | - | 34,660 | ||||||||||||
| Ronald E. Kuykendall(10) | 25,467 | 10,119 | - | 35,586 | ||||||||||||
| All directors and all executive officers as a group (21 persons) | 1,061,506 | 115,352 | 1,341 | 1,178,199 | ||||||||||||
| Name | Shares Owned(1)(2) | Restricted Stock Awards(3) | RSUs Vesting Within 60 days and Exercisable Options | Total Beneficial Ownership | Additional Underlying Stock Units(4) | Total | ||||||||||||||||||
| Mona Abutaleb Stephenson | 3,545 | 885 | 442 | 4,872 | 884 | 5,756 | ||||||||||||||||||
| Ralph F. Boyd, Jr. | 6,303 | 885 | 442 | 7,630 | 884 | 8,514 | ||||||||||||||||||
| Mark E. Friis(5) | 43,484 | 885 | 442 | 44,811 | 884 | 45,695 | ||||||||||||||||||
| Brian J. Lemek | 251,546 | - | 515 | 252,061 | 1,031 | 253,092 | ||||||||||||||||||
| Pamela A. Little | 25,585 | 885 | 442 | 26,912 | 884 | 27,796 | ||||||||||||||||||
| James J. Maiwurm(6) | 5,740 | 885 | 442 | 7,067 | 884 | 7,951 | ||||||||||||||||||
| Walter Clayton Martz II(7) | 29,901 | - | 515 | 30,416 | 1,031 | 31,447 | ||||||||||||||||||
| Mark C. Michael | 24,476 | 885 | 442 | 25,803 | 884 | 26,687 | ||||||||||||||||||
| Mark C. Micklem | 12,000 | - | 943 | 12,943 | 1,384 | 14,327 | ||||||||||||||||||
| Gary G. Nakamoto | 8,021 | 885 | 442 | 9,348 | 884 | 10,232 | ||||||||||||||||||
| Christina B. O’Meara(8) | 44,428 | - | 515 | 44,943 | 1,031 | 45,974 | ||||||||||||||||||
| Robert L. Orndorff(9) | 167,018 | 885 | 442 | 168,345 | 884 | 169,229 | ||||||||||||||||||
| Craig A. Ruppert | 103,000 | 885 | 442 | 104,327 | 884 | 105,211 | ||||||||||||||||||
| Daniel J. Schrider (10) | 84,468 | 34,098 | - | 118,566 | 12,785 | 131,351 | ||||||||||||||||||
| Philip J. Mantua(11) | 50,609 | 13,432 | - | 64,041 | 4,999 | 69,040 | ||||||||||||||||||
| Joseph J. O’Brien(12) | 44,086 | 16,306 | - | 60,392 | 6,464 | 66,856 | ||||||||||||||||||
| R. Louis Caceres | 30,821 | 12,714 | - | 43,535 | 4,455 | 47,990 | ||||||||||||||||||
| Kevin Slane(12) | 7,024 | 8,408 | - | 15,433 | 2,743 | 18,176 | ||||||||||||||||||
| All directors and all executive officers as a group (22 persons) | 1,186,199 | 124,446 | 138,149 | 1,448,794 | 57,338 | 1,506,132 | ||||||||||||||||||
| (1) | Under the rules of the SEC, an individual is considered to "beneficially own" any share of common stock which he or she, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares: (a) voting power, which includes the power to vote, or to direct the voting of, such security; and/or (b) investment power, which includes the power to dispose, or to direct the disposition, of such security. |
| (2) | Only whole shares appear in the table. Fractional shares that may arise from |
| (3) | Includes time-based restricted stock |
| (4) | Includes |
| (5) | Includes 30,782 shares owned by |
| (6) | Mr. Maiwurm will retire from the Board on April 28, 2021 at which time all outstanding restricted stock awards will vest. |
| (7) | Includes |
| (8) | Includes 7,343 shares owned by |
| (9) | Includes 154,606 shares owned by trusts for which Mr. |
| Mr. Schrider’s shares include |
| Mr. Mantua’s shares include |
| Mr. O’Brien’s shares include |
| Mr. |
| 16 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Owners of More than 5% of Sandy Spring Bancorp, Inc. Common StockRELATED PARTY TRANSACTIONS
This table lists the beneficial owners of moreThe Board adopted a written policy with respect to “related party transactions” to document procedures pursuant to which such transactions are reviewed, approved or ratified. Under SEC rules, “related parties” include any director, executive officer, or greater than 5% of our outstanding common stock.
| Name | Amount and Nature of Beneficial Ownership | Percentage of Shares as of Feb 9, 2018 | ||||||
BlackRock, Inc. 55 East 52nd Street, New York, NY 10022 | 2,594,359 | (1) | 7.3 | % | ||||
| Dimensional Fund Advisors LP 6300 Bee Cave Road, Austin, TX 78746 | 1,852,353 | (2) | 5.2 | % | ||||
Transactions and Relationships with Management
Directors and officersstockholder of the Company, obtainand their immediate family members. The policy applies to any transaction in which the Company is a participant, any related party has a direct or indirect material interest, and the amount involved exceeds $120,000, but excludes any transaction that does not require disclosure under Item 404(a) of SEC Regulation S-K, including banking, productsinsurance, trust and wealth management services from Sandy Spring Bank in the normal and ordinary course of business. Such services may include but are not limitedprovided to deposit accounts, loans, trust services, asset management, and insurance for personal or business needs. These products and services are providedrelated parties on substantially the same terms including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons notservices provided to unrelated third parties. In addition, loans to related parties are excluded from the policy, but only if the loan (i) is made in the ordinary course of business, (ii) is on market terms or terms that are no more favorable than those offered to the Company and the Bank. In the opinion of management, these transactions dounrelated third parties, (iii) when made does not involve more than the normal risk of collectability or present other unfavorable features.features, (iv) would not be disclosed as nonaccrual, past due, restructured or a potential problem loan, and (v) complies with applicable law.
Related party transactionsThe Audit Committee, with assistance from the Company’s General Counsel, is responsible for reviewing and, where appropriate, approving or ratifying any related person transaction involving executive officersthe Company or directors, as defined in Item 404 of SEC Regulation S-K, are subject to review by the board. its subsidiaries and related parties.
As required by federal regulations, extensions of credit by the Bank to directors and executive officers are subject to the procedural and financial requirements of Regulation O of the Board of Governors of the Federal Reserve System, which generally require advance approval of such transactions by disinterested directors. Extensions of credit to directors or officers of the Company and Bank are subject to approval by the disinterested members of the Risk CommitteeBoard per the terms of Regulation O and Bank policy. If total exposure to an officer or director exceeds $500,000, extensions of credit to that officer or director are subject to approval by all disinterested directors on the board.
Related party transactions as defined in Item 404 (generally, any financial transactions, arrangements, or relationships, regardless of dollar amount, other than extensions of credit and bank deposits) are subject to review by the independent directors with the affected director not present or voting. Effective as of December 29, 2017, the Company entered into an agreement with Shaza L. Andersen setting forth entitlements under her employment agreement with WashingtonFirst in connection with her termination of employment with WashingtonFirst and her service as a non-employee director of and consultant to the Company. This agreement was approved by the board of directors and filed with the SEC as an exhibit to Form 8-K on January 2, 2018.
Compensation Discussion and AnalysisCOMPENSATION DISCUSSION AND ANALYSIS
The following compensation discussion and analysis is intended to provide shareholders with(“CD&A”) provides a detailed description of the Company’s executive compensation philosophy, components, and the factors used by the Compensation Committee (or “committee” within this section) for determining executive2020 compensation for the Company’s named executive officers, as identified by the Company pursuant to the rules of the Securities and Exchange Commission. This discussion should be read in conjunction with the compensation tables and accompanying narrative that can be found starting on page 28.30. For 2017,2020, the named executive officers were:
| Daniel J. Schrider | President, Chief Executive Officer | ||
| Philip J. Mantua | EVP, Chief Financial Officer | ||
| Joseph J. O’Brien, Jr. | EVP, Chief Banking Officer | ||
| R. Louis Caceres | EVP, Wealth Management, Insurance, | ||
| Kevin Slane | EVP, |
Executive Summary
Sandy Spring Bancorp, Inc. (the “Company”) is headquartered in the suburban Washington, D.C. town of Olney, Maryland and is the holding company for Sandy Spring Bank, a premier community bank in the greater D.C. region. With over 60 locations in Maryland, Virginia, and the District of Columbia, we offer a broad range of commercial and retail banking services, mortgages, private banking, and trust services throughout central Maryland, Northern Virginia, and the District of Columbia. Through our subsidiaries Sandy Spring Insurance Corporation, West Financial Services, Inc., and Rembert Pendleton Jackson, we also offer a comprehensive array of insurance products and wealth management services.
2020 Financial Performance and Business Highlights – 2020 was an extraordinary year by any standard and would have been so for the Company without the impact of a global pandemic. The executive compensation program is designedyear was to be consistentan ambitious one with two acquisitions scheduled to close, a major integration of systems, facilities and people, and the implementation of a significant new accounting standard for loan losses known as Current Expected Credit Losses (“CECL”). All of these were accomplished in the midst of, and in addition to, responding to the needs of our compensation philosophy, to support long-term growth, to reward performance,community, clients and to be competitive among our peers.employees during the pandemic.
2017 Company Performance Highlights
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 17 |
2017 Executive Compensation DecisionsOn February 3, 2020, the Company closed on the acquisition of Rembert Pendleton Jackson (“RPJ”), a highly-regarded financial management and investment advisory firm, adding a new subsidiary and expanding our wealth management business. At the time of closing, RPJ added $1.3 billion in assets under management, bringing total assets under management to $4.5 billion at the time. By December 31, 2020, assets under management reached $5.2 billion and income from wealth management increased 35% over 2019.
The Compensation Committee began its workacquisition of Revere Bank (“Revere”) with $2.8 billion in assets, our largest acquisition to date, closed on executive compensationApril 1, 2020. This strategic, in-market transaction allowed us to deepen our presence in the Greater Washington, DC metropolitan area, realize significant efficiencies through the consolidation of nine branch offices, and cross the threshold of $10 billion in assets in a meaningful way. We also gained three experienced directors on the Board, and added former Co-CEOs Kenneth C. Cook and Andrew F. Flott, among many other talented individuals, to our team. The integration of systems with Revere occurred on August 17, 2020, five months into the COVID-19 crisis.
By the time the Revere transaction closed, the national and local economy was already severely affected by the pandemic. Management had activated business continuity plans, and on March 16, 2020 branch lobbies were closed to walk-in service. A full description of our response to the pandemic is provided below.
Our most significant contribution came in the form of Paycheck Protection Plan (“PPP”) loans to small businesses throughout our market. On March 27, 2020, Congress authorized the Small Business Administration (“SBA”) to implement this relief program, initiating a surge of requests from clients. In response, our credit teams went to exceptional lengths to establish systems, processes, and funding. Over 200 employees worked on the PPP initiative to make 5,445 loans for 2017 by reviewing$1.1 billion to local businesses in a matter of weeks. Over 70% of these loans averaged under $50,000 each. A tremendous effort that yielded extraordinary results, Sandy Spring Bank made more PPP loans in the established compensation philosophy,greater Washington, D. C. market than any other locally headquartered bank.
The stress of business closures at the onset of the COVID-19 crisis led to economic forecasts that had a substantial impact on the Company’s 2016 financialnet income for the second quarter of 2020. In addition to M&A expenses and related charges that impacted this period, the economic inputs in our CECL model translated into an additional $44 million in provision for credit loss expense, resulting in a loss for the quarter of $14.3 million.
The Federal Reserve’s emergency response to cut interest rates on March 15, 2020 brought interest rates to historic lows and drove a surge in demand for mortgage loans. For the year 2020, income from mortgage banking activities increased 172% over 2019. This increase, together with the acquisition of RPJ, resulted in a 44% increase in noninterest income for 2020.
Without the burden of M&A costs and high provision expense, the second half of 2020 yielded record results. Following the successful integration of Revere and RPJ, net income for the third quarter was $44.6 million, $0.94 per diluted share a 14.6% increase over 2019, and net income for the fourth quarter was $56.7 million, $1.19 per diluted share a 48.6% increase from the prior year.
Asset quality remained very strong throughout 2020. At December 31, 2020, the allowance for credit losses was $165.4 million or 1.59% of outstanding loans and 143% of nonperforming loans. Net charge-offs for the year were 0.01% of total average loans compared to 0.03% in 2019.
Non-interest expense increased 43% for 2020. Excluding the impact of M&A expenses and $5.9 million in prepayment penalties resulting from the liquidation of acquired FHLB borrowings, growth in expenses was 26% over the prior year. The non-GAAP efficiency ratio for 2020 was 46.53% compared to 51.52% in 2019.
Lastly, capital levels and liquidity measures remained at or above all policy guidelines during 2020. At December 31, 2020, the Company had a total risk-based capital ratio of 13.93%, a tier 1 risk-based capital ratio of 10.58% and a tier 1 leverage ratio of 8.92%. Details on the Company’s performance and the goals and objectives set forthcan be found in the 2017annual report on Form 10-K for the year ended December 31, 2020.
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Alongside financial plan. success in 2020, Sandy Spring Bank was named a 2020 Best Bank to Work For by American Banker, a list of only 85 banks from across the country. For the second year in a row, the Bank was also named a Top Workplace by both The committee tookWashington Post and Baltimore Sun, and, based on a culture assessment completed by over 700 employees, Sandy Spring Bank was certified as a “Great Place to Work” by the following actions:Great Place to Work Institute. These accolades were based on direct feedback from employees during a very challenging year.
Response to COVID-19 – As the significant threat of the COVID-19 pandemic became clear, we implemented pandemic protocols to help ensure the safety and wellbeing of our employees and their families and enable them to continue to provide high-level, uninterrupted support to our clients. Specifically, we:
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| · | Temporarily closed certain branches that do not have drive-thru facilities. All branches have since re-opened for appointment-only business though some may have reduced hours. |
| · | Transitioned approximately 85% of non-branch personnel to teleworking. |
| · | Developed comprehensive guidance for responding to a COVID-19 diagnosis or exposure in our operations. |
In July 2020, we began a phased approach to returning employees to the office while continuing to operate with appointment-only lobby access in all branch offices and capping staffing levels at non-branch facilities at 25 percent of normal occupancy. Our return-to-work roadmap has been informed, in part, by feedback from employee surveys. We have committed to continue operating in “phase 1” of our roadmap through June 30, 2021.
To support employees and their personal needs during the pandemic, we took the following steps for all employees.
| · | Enhanced Personal Leave. We established a special enhanced personal leave benefit by providing up to two weeks of additional paid time off to employees who are unable to work for reasons related to COVID-19. We also created a COVID-19 hardship leave benefit, comparable to the benefit created under the Families First Coronavirus Response Act, which provides up to 12 additional weeks of expanded family and medical leave for specified reasons related to COVID-19. |
| · | Appreciation Bonus. Branch personnel and support staff whose responsibilities do not permit them to work remotely were awarded a bonus of up to $1,200. |
| · | Well-being Resources. All employees had access to resources to support mental health and wellness through our Employee Assistance Program. |
| · | Open Lines of Communication. Executive management communicated frequently with employees, providing regular updates regarding safety measures and the resources and benefits available. |
Throughout the challenge of the COVID-19 pandemic, we have remained fully operational and committed to safely serving our clients. We also took steps to help alleviate the financial impact of the pandemic for clients.
| · | Increased services available through drive-thru facilities. |
| · | Launched webpage to provide clients with up-to-date information about bank services, resources and federal relief. |
| · | Established a moratorium on foreclosures and repossessions. |
| · | Waived fees for all ATM transactions through January 31, 2021. |
| · | Waived certain fees for remote check deposits for business clients. |
| · | Waived certain penalties for early CD withdrawals less than $10,000. |
Many of our small business clients operate hotels, restaurants, retail properties and other businesses that have been affected by the pandemic, or work for such businesses. To help clients weather this crisis, we provided temporary payment accommodations that allowed clients to defer their loan payments without penalty.
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 19 |
2020 Executive Compensation Elements
The compensation elements for 2020 included base salary, short-term incentive, long-term incentive (equity) and a deferred cash bonus as shown in the following table and described further herein. These elements did not change materially in 2020.
| Description | Objectives | Performance Metrics | |||
| Base Salary | Cash | · | |||
| Annual Incentive | Cash payment based on performance | · | Reward achievement of performance metrics | See “Elements of Compensation – Executive | |
| metrics from annual business plan. | · | Attract and motivate talent | Team Incentive | ||
| · | Encourage focus on overall company performance | ||||
| Long-term Incentive | Performance-based restricted stock units | · | Reward performance over time. | · | Relative 3-year TSR |
| · | Attract and motivate talent | · | EPS Growth | ||
| · | Align with shareholder interests | · | Relative return on average | ||
| Time-based restricted stock | · | Attract and retain talent | · | 3-year service, pro-rata annual vesting | |
| · | Align with shareholder interests | ||||
| Deferred Cash | Deferred cash bonus based on | · | Reward superior performance to | · | Relative return on average assets |
| annual performance | · | Supplement retirement | |||
| · | Attract and | ||||
“Say On Pay” Vote and Shareholder Alignment
On May 3, 2017,June 4, 2020 shareholders were asked to votevoted on a non-binding resolution to approve the compensation for the named executive officers, commonly referred to as a “Say on Pay” vote. The resolution was approved with an affirmative vote of 96.82%,97% of votes cast, which reflects a strong vote of confidence in our executive compensation program and practices.
The committee consistently utilizes the following practices to ensure executive compensation is aligned with shareholder interests:
| 20 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Executive Compensation Practices
| Yes | No | Avoided Practices | ||
| ü | Independent compensation consultant retained by and reports to the Compensation Committee. | X | No tax gross-ups | |
| ü | Significant portion of compensation is performance-based. |
| ü | Minimum performance must be attained before any awards can be paid. | X | No “single trigger” severance upon a change in control |
| ü | X | No excessive perquisites | ||
| ü | Incentive compensation is subject to | X | No hedging or pledging of stock | |
| ü | NEOs are subject to stock ownership requirements. | X | No encouraging excessive risk-taking | |
| ü | Annual risk assessment related to executive compensation programs. | X | No SERPs |
Executive Compensation Philosophy
The Compensation Committee of the board is committed to rewarding executive management for the Company’s performance achieved through planning and execution. Therefore, the committee has developed a philosophy that identifies three guiding principles to properly structure and design elements of executive compensation. In short, executive compensation philosophy has several objectives:should be aligned, balanced, and rewarding.
Aligned – Executive compensation must be aligned with the Company’s strategic objectives, which state that the Company will earn independence by creating franchise and shareholder value. In order to align compensation to this strategy, a significant portion of total compensation is tied to Company performance, both absolute and relative.
Compensation must also be aligned with the competitive markets in order to attract and retain the talent, skills, and experience needed in executive management. The committee works with an independent compensation consultant to receive periodic analyses that benchmark compensation with market trends and practices.
Finally, compensation must align the interests of executives with those of shareholders to ensure that management will be rewarded for increasing shareholder value. To accomplish this, a significant portion of total compensation is in the form of equity.
Balanced – Executive compensation must balance a number of factors. Compensation should have a proper mix of fixed and variable elements, compensation arrangements should use multiple performance measures for balanced achievement, awards should balance short and long-term results with short and long-term career objectives, including retirement, and compensation must always balance risk with reward so as not to encourage excessive risk-taking.
Rewarding – Executive compensation must provide the means to attract, motivate, and retain the caliber of talent and leadership needed to support the Company’s long record of growth and profitability. Compensation arrangements should motivate executives to work collaboratively and creatively to generate a high-level of synergistic performance by and among the officers and employees.
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 21 |
To protect shareholders’ interests, the Committee is also committed to ensuring that rewards are not excessive or paid to the Company’s detriment. Consequently, compensation arrangements incorporate devices such as triggers, thresholds, and maximums, and the board has adopted a “clawback” policy in the event of an accounting restatement. In addition, the committee periodically conducts a risk analysis to ensure that compensation programs do not reward excessive risk-taking.
The committee strives tobelieves this philosophy will ensure the executives have a market-driven level of base compensation and benefits, with the opportunity for significant short and long-term rewards tied to performance and shareholder value. See Elements of Compensation on page 21 for information on how the committee allocates compensation to further the Company’s compensation philosophy.
Factors for Determining Compensation
Goal Setting for Compensation Purposes–
On an annual basis, the board of directorsBoard approves the Company’s annual financial plan. This plan is designed to support a multi-year strategic plan by setting annual targets for achievement that support the long-term objectives expressed in the strategic plan. Once the annual financial plan is approved by the board of directors, theBoard, performance measures and targets for incentive-based compensation are derived from the financial plan. Mr. Schrider and Mr. Mantua report on the Company’s performance to the board of directorsBoard at each regularly scheduled board meeting.
Peer Group Benchmarking–
A critical element of the Company’s compensation philosophy is a comparative analysis of the compensation mix and levels relative to a peer group of publicly traded, commercial banks. This analysis is a key driver of specific compensation decisions for the named executive officers and ensures proper alignment between our performance and compensation programs relative to peers, thus enabling the Company to attract and retain executive talent through competitive compensation programs.
Each year the committee reviews the peer group to determine if adjustments are necessary. For 2017,2020, the committee selected publicly-traded commercial banks with assets between approximately $3.0$7 to $8.5$22.0 billion in 2016 and2019 from the Mid-Atlantic region plus Virginia, West Virginia, North Carolina, Massachusetts, and Ohio. The median asset size of the peer group was $4.9$11.2 billion, which placedplacing the Company at the 4850th percentile inbased on the pro forma asset size atin anticipation of the time.Revere Bank acquisition. Peer proxy data was also supplemented with survey data from national banking surveys. The 20172020 peer group included the following 2119 banks, of which 1417 were used the previous year:
| VA | Independent Bank Corporation | MA | |
| Berkshire Hills Bancorp, Inc. | NY | ||
| NJ | |||
| Park National Corporation | OH | ||
| S&T Bancorp, Inc. | PA | ||
| First Commonwealth Financial Corp. | PA | ||
| First | OH | Wesbanco, Inc. | WV |
| Flushing Financial Corporation | NY | WSFS Financial Corporation | DE |
| Fulton Financial Corporation | PA |
Committee Discretion and Final Compensation Decisions –
The committee retains the discretion to decrease all forms of incentive payouts based on significant individual or Company performance shortfalls.shortfalls, as well as risk, compliance and regulatory matters. The committee also retains the discretion to increase awards or consider special awards for significant performance or due to subjective factors, or exclude extraordinary non-recurring results.
After the announcementElements of the merger with WashingtonFirst on May 16, 2017, Mr. Schrider recommended and the committee approved the exclusion of merger costs and expenses related to branch closures when calculating the 2017 annual cash incentive award paid to executives discussed further on page 22. The committee agreed that neither the merger nor the related branch closures were included in the formulation of the target levels of the corporate goals.Compensation
Base Salary –
Base salary is the fundamental element of executive compensation, and thecompensation. The committee reviews salaries in March in conjunction with annual performance appraisals for the preceding year. In determining base salaries, the committee consideredconsiders the executive's qualifications and experience, scope of responsibilities, the goals and objectives established for the executive, and the executive's past performance. The committee seeks to pay a base salary, commensurate with the individual’s experience and performance, and relative to market.at market competitive levels. Mr. Schrider recommended base salaries for executive officers other than himself, and the committee deliberated on Mr. Schrider’s salary. The resulting salary increases,adjustments, shown below, were effective March 26, 2017, are shown in the following table.22, 2020.
| Name | Base Salary | Amount of Increase | New Base Salary | Percent Increase | ||||||||||||
| Daniel J. Schrider | $ | 598,800 | $ | 12,000 | $ | 610,800 | 2.00 | % | ||||||||
| Philip J. Mantua | $ | 340,000 | $ | 13,000 | $ | 353,000 | 3.82 | % | ||||||||
| Joseph J. O’Brien, Jr. | $ | 358,000 | $ | 22,000 | $ | 380,000 | 6.15 | % | ||||||||
| R. Louis Caceres | $ | 335,000 | $ | 11,000 | $ | 346,000 | 3.28 | % | ||||||||
| Ronald E. Kuykendall | $ | 280,000 | $ | 9,000 | $ | 289,000 | 3.21 | % | ||||||||
| 22 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
| Name | Prior Base Salary | Amount of Increase | New Base Salary | Percent Increase | ||||||||||||
| Daniel J. Schrider | $ | 750,000 | $ | 75,000 | $ | 825,000 | 10.0 | % | ||||||||
| Philip J. Mantua | $ | 406,000 | $ | 19,000 | $ | 425,000 | 4.7 | % | ||||||||
| Joseph J. O’Brien, Jr. | $ | 455,000 | $ | 45,000 | $ | 500,000 | 9.9 | % | ||||||||
| R. Louis Caceres | $ | 392,000 | $ | 28,000 | $ | 420,000 | 7.1 | % | ||||||||
| Kevin Slane | $ | 362,000 | $ | 13,000 | $ | 375,000 | 3.6 | % | ||||||||
Short-TermExecutive Team Incentive CompensationPlan (“ETIP”) –
The annual incentive planETIP is a short-term, cash compensation plan designed to recognize and reward participants for their success in achieving specific Company goals. In 2017,goals and paid under the 2015 Omnibus Incentive Plan, which was approved by shareholders.
At the time the committee met to approve performance measures were tied directly tometrics and targets in March 2020, the committee recognized the significant uncertainty that the COVID-19 pandemic would have on the Company’s 2017 financial planbusiness, employees and were selected because they contributeclients. As a result, the committee determined it would be impractical to establish specific performance targets at that time. Over several meetings, through the long-term viabilitysummer and fall, the committee developed a robust list of quantitative and qualitative performance factors that the committee would use to determine annual incentive awards at the end of the Company; develop immediate and future revenue; and build the Company’s general franchise value. The goals have been consistent in recent years, and reflect the committee’s intention to reward performance based on core operating metrics. The committee also believes that multiple goals provideyear. Below is a balanced approach that discourages excessive risk-taking by participants, all of which is consistent with our compensation philosophy.
Each corporate goal was assigned a “threshold” or minimum performance level, a “target” level of performance, and a “maximum” level at which the award opportunity was capped. For achievement of threshold level, each executive participant would earn 50% of his or her respective target opportunity. Achievementlist of the targetquantitative and qualitative performance level would earn the target award, and achievement at or above the maximum performance level would earn 150% of the target opportunity. Results for any goal that falls between performance levels would be interpolated to calculate a proportionate award.
Generally speaking, target levels were based on the planned or expected performance for the year that would support the Company’s strategic plan. Threshold levels represented a minimum level of acceptable improvement over the prior year while the maximum was set at a proportionate stretch levelfactors that would be potentially attainable under ideal conditions. A relative weight was assigned to each goal to prioritize importance. Finally,evaluated at year end by the committee established a minimum performance trigger of 90% of planned net income, which must be achieved before any incentives could be paid.committee:
| Quantitative Performance Factors | Qualitative Performance Factors | |
| Pre-tax, pre-provision, pre-merger income | Integration of RPJ and Revere Bank | |
| Operating earnings | Corporate response to COVID-19 pandemic | |
| Operating ROAA | Paycheck Protection Program (PPP) | |
| Operating ROATCE | External recognitions | |
| Non-GAAP Efficiency Ratio | ||
| Fee Income Growth | ||
| Capital Ratios |
The corporate goals selectedquantitative measures evaluated for 2017 include two2020 included non-GAAP measures: pre-tax, pre-provision net incomemeasures such as the non-GAAP efficiency ratio and a traditional efficiency ratio.operating earnings. Management believes that these measures focusfocused on the core operating results of the Company and provideprovided a meaningful comparison of performance from year to year. In making their decision, the committee was provided with reports that reconciled all non-GAAP measures to GAAP measures. A full discussion regarding the use of these non-GAAP measures may be found in the Annual Report on Form 10-K for the year ended December 31, 2017.2019.
After the announcement of the definitive agreement with WashingtonFirst on May 16, 2017,At year end the committee met to discuss performance against the pre-defined quantitative and considered a recommendation from Mr. Schrider to exclude the merger costs realized in 2017 and branch closure expenses that were also related to the overall branch strategy in view of such a significant acquisition. The recommendation was based on the premise that the 2017 financial plan, on which the corporate goals were based, only included organic growth. In addition, the acquisition was expected to close late in the year thereby generating merger-related expenses without realizing any offsetting revenue. The committee approved the exclusions recommended by Mr. Schrider.qualitative performance factors above.
The committee reviewedResults of the results for the established goals, adjusted for the exclusions noted above, before exercising its authority to approve the cash payments to the executives on February 7, 2018. The committee first determined that the trigger net income level was surpassed permitting awards to be paid. The committee then reviewed the actual performance to the goals as set forth below. To calculate the payment level, the weight for each goal was multiplied by the level of achievement for that goal. The sum of all payment levels equaled 111.23% of target.quantitative measures were:
| · | Pre-tax, pre-provision, pre-merger income. The result for 2020 was $235.2 million, which exceeded the 2020 financial plan by $18.8 million. |
| · | Operating earnings. This metric excludes provision expense (net of tax), merger expense (net of tax), PPP funding expense (net of tax) and PPP interest income. The Company reached its financial plan target of $165 million for 2020. |
| · | Operating return on average assets (excluding PPP loans). The result for 2020 was 1.50%, which exceeded the financial plan target of 1.48% for 2020. |
| · | Operating return on average tangible common equity. The result for 2020 was 17.71% compared to the financial plan target of 18.33% for 2020. |
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The performance measures, respective weights, target and actual performance levels for 2017 were:
| Corporate Goal | Weight | Target Level | Actual 2017 | Goal Achievement Level | Payment Level | |||||||||||||||
| Pre-tax, Pre-provision, Net Income Growth | 25 | % | 13.17 | % | 22.74 | % | 150.00 | %(3) | 37.50 | % | ||||||||||
| Fee-based Revenue Growth(1) | 15 | % | 9.59 | % | 4.38 | % | 0.00 | % | 0.00 | % | ||||||||||
| Efficiency Ratio | 15 | % | 57.53 | % | 54.59 | % | 150.00 | %(3) | 22.50 | % | ||||||||||
| Nonperforming Assets to Total Assets | 15 | % | 0.57 | % | 0.58 | % | 93.75 | % | 14.06 | % | ||||||||||
| Average Loan Growth | 15 | % | 11.63 | % | 11.43 | % | 97.80 | % | 14.67 | % | ||||||||||
| Average Core Deposit Growth(2) | 15 | % | 7.04 | % | 10.18 | % | 150.00 | %(3) | 22.50 | % | ||||||||||
| 100 | % | 111.23 | % | |||||||||||||||||
| · | Fee income growth. Total fee income for 2020 was $102 million, which exceeded the financial plan target by $18.9 million or 23% for 2020. |
The following table shows the calculation
| · | Capital adequacy. All capital measures remained above regulatory and (higher) internal policy limits. |
Results of the 2017 annual cash incentive awardqualitative measures were:
| · | Integration of RPJ and Revere Bank. The committee noted that integrations of both acquisitions were completed successfully and on schedule despite the remote work environment imposed by the pandemic. |
| · | Corporate response to the COVID-19 pandemic. The committee recognized the success of management in responding to the needs of employees and clients as described above under “Response to COVID-19.” |
| · | Paycheck Protection Program. The committee noted the extraordinary effort of the Company in originating over 5,400 loans totaling $1.135 billion under phase one of PPP that ran through August 8, 2020. |
| · | External recognitions. Finally the committee also took note of the many recognitions received by the Company in 2020, several of which were based on employee feedback. These recognitions were a top workplace by The Washington Post and Baltimore Sun for the second consecutive year; one of American Banker’s Best Banks to Work For; certification as A Great Place to Work by the Great Place to Work Institute; #1 company for employee volunteerism in the Washington Business Journal; and being named the Top Bank in Maryland and one of America’s Best-in-State Banks by Forbes. |
In February 2021, the committee reviewed the results above and recognized that 2020 was an extraordinary year for eachmany reasons. The pandemic created unprecedented challenges for the Company’s business, employees and customers, and leadership immediately shifted priorities to ensure employee safety and customer response. This was also done in the midst of the acquisition and integration of two companies and while taking on the additional workload to participate in the Paycheck Protection Program. Despite the obstacles, core performance of the Company was very strong and the Company achieved new milestones in its mortgage and wealth businesses.
After significant discussion, the committee approved target payouts for all participants in the ETIP, including the named executive officer at 111.23% ofofficers. The amounts paid are shown below and in the target opportunity.Summary Compensation Table on page 30.
| Name | Base Salary | Target Opportunity | Payment Level Earned at 111.23% | 2017 Cash Award | Target Opportunity (as a % of base salary) | Target Opportunity ($) | 2020 ETIP Paid | |||||||||||||||||||||
| Daniel J. Schrider | $ | 610,800 | 50 | % | 55.615 | % | $ | 339,690 | 75 | % | $ | 618,750 | $ | 618,750 | ||||||||||||||
| Philip J. Mantua | $ | 353,000 | 40 | % | 44.49 | % | $ | 157,060 | 50 | % | $ | 212,500 | $ | 212,500 | ||||||||||||||
| Joseph J. O’Brien, Jr. | $ | 380,000 | 40 | % | 44.49 | % | $ | 169,073 | 65 | % | $ | 325,000 | $ | 325,000 | ||||||||||||||
| R. Louis Caceres | $ | 346,000 | 40 | % | 44.49 | % | $ | 153,946 | 50 | % | $ | 210,000 | $ | 210,000 | ||||||||||||||
| Ronald E. Kuykendall | $ | 289,000 | 35 | % | 38.93 | % | $ | 112,512 | ||||||||||||||||||||
| Kevin Slane | 45 | % | $ | 168,750 | $ | 168,750 | ||||||||||||||||||||||
Long-Term, Equity-Based Compensation –
The Company’s established compensation philosophy identifies equity-based compensation as an effective means of creating a link betweenaligning the interests of our shareholders, the performance of the Company, and the retention of executive management. The committee utilized performanceperformance-based and time-vestedtime-based restricted stock awards to accomplish these objectives.
The committee traditionally considers equityEquity awards were granted in March in conjunction with the annual performance review process. Therefore, the awards made in March 2017 recognized 2016 Company and individual performance.2020. The percentagetarget values of the awards were based on the benchmark data provided by Meridian. Mr. Schrider recommended, and the committee approved, an award above target for each executive in order to recognize the record-breaking performance in 2016. The awards, expressed as a percentage of base salary as of December 31, 2016,2019, were approvedconsistent with the median benchmark data provided by Meridian. Half of the committeeaward, issued in restricted stock (“RSA”), will vest ratably over three years. The second half of the award, granted in restricted stock units (“RSUs”), will vest based on March 15, 2017 as follows: 57.25% for Mr. Schrider, 47.25% for Messrs. Mantua, O’Brien,achievement of performance measures.
| 24 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
2020 | ||||||||||||||
| Executive | Title | Time-based | Performance- | Total | ||||||||||
| Daniel J. Schrider | President & Chief Executive Officer | 45.0 | % | 45.0 | % | 90.0 | % | |||||||
| Philip J. Mantua | EVP - Chief Financial Officer | 32.5 | % | 32.5 | % | 65.0 | % | |||||||
| Joseph J. O'Brien, Jr. | EVP - Chief Banking Officer | 37.5 | % | 37.5 | % | 75.0 | % | |||||||
| R. Louis Caceres | EVP - Wealth Mgmt, Insurance, Mortgage | 30.0 | % | 30.0 | % | 60.0 | % | |||||||
| Kevin Slane | EVP - Chief Risk Officer | 20.0 | % | 20.0 | % | 40.0 | % | |||||||
| (1) | Base salary as of December 31, 2019. |
The number of RSAs and Caceres,RSUs and 41.25% for Mr. Kuykendall. Theaward values are providedpresented in the Grants of Plan-Based Awards table on page 30.32.
Under the 2015 Omnibus Incentive Plan, the number of shares constituting the restricted stock award is determined by the closing stock priceThe 2020 performance RSUs will vest based on the day beforeCompany’s level of achievement of the grant date. The actual number of shares was rounded tofollowing performance measures during the nearest whole share.three-year performance period beginning on January 1, 2020, and ending on December 31, 2022:
| Relative three-year total shareholder return (“TSR”) | ||
| · | Cumulative earnings per share (“EPS”) | |
| · | Relative average return on tangible common equity (“ROTCE”). |
Beginning in 2016, the committee added a performance-based component to the equity grants that ties a portionOne third of the award to the Company’s shareholder return. The same practice was used for the 2017 awards: 75% of the value was awarded in restricted stock that will vest in equal increments over five years, and the remaining 25%performance RSUs will vest based upon the achievement of three-year total shareholder return (“TSR”) comparedTSR relative to a broader index ofpublicly-traded U.S. banks between 50% and 150%200% of the Company’s asset size. TheThreshold performance is 25th percentile, target performance is 50th percentile and maximum performance is 75th percentile.
One third of the performance RSUs will vest based upon the achievement of mediancumulative EPS over the performance period, adjusted for certain one-time or extraordinary events, such as future M&A activity, compared to specific levels for threshold, target, and maximum.
The final third of the indexperformance RSUs will vest based upon the achievement of ROTCE relative to the peer group listed on page 22. Threshold performance is 25th percentile, target performance is 50th percentile and maximum performance is 75th percentile.
Final payout can range between 0% to 150% of target. For all measures, achievement at threshold will result in vesting the shares atof 50% of the target level. Achievement of the 75th percentile compared to the indexaward, achievement at target will result in vesting of 100% of the target award, and achievement at or above maximum awardwill result in vesting of 150% of the target level. Thresholdaward. Actual performance was set at the achievement of the 40th percentile compared to the indexbetween threshold and will result in 50% of the target level. Actual performanceor between target and maximum will be interpolated to calculate a proportionate award.
Termination provisions for the equity grants are as follows:
| · | The time-based RSAs will vest immediately upon the death or disability of the executive. The performance RSUs will immediately vest at the target level upon death. Upon disability or a qualified retirement, the RSUs will vest under the terms of the award agreement as if employment continued through the end of the performance period. In the case of retirement, vesting is conditioned on the executive executing a general release of all then existing claims against the Company and its affiliates in relation to claims relating to or arising from the executive’s employment. For these purposes, a qualified retirement may occur when the executive reaches age 65 or age 60 with 10 years of continuous service. |
| · | If the Company terminates the executive’s employment without just cause (other than following a change in control) prior to the end of the performance period, the performance RSUs will continue to vest, and the executive will be entitled to receive the number of shares based on actual achievement of the performance-based vesting conditions, prorated to reflect the portion of the performance period that the executive was employed by the Company. |
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 25 |
| · | Upon a change in control, neither the time-based RSAs nor performance-based RSUs is subject to accelerated vesting nor cash settlement except to the extent that the definitive agreement for the change in control provides for such accelerated vesting or cash settlement. Performance criteria will be deemed to be satisfied at the target level and awards will vest solely by reference to the executive’s continued employment. If, however, within 24 months after the change in control, the executive’s employment is terminated by the Company without just cause or by the executive with good reason, as defined in the award agreement, the award will fully vest upon termination. Additional detail is provided in the Grants of Plan-Based Awards table on page 32. |
Results of 2018-2020 Performance-based Awards – In March 2018, the Compensation Committee granted performance-based restricted stock to the executive officers. The Performance Periodaward was determined by the three-year TSR performance relative to publicly-traded U.S. banks between 50% and 200% of the Company’s asset size and the attainment of certain cumulative adjusted EPS levels, both equally weighted.
The Committee received a report prepared by Aon Equity Services certifying the result for these shares was established asrelative TSR performance for the performance period of January 1, 20172018 to December 31, 2019,2020 at 111.39% of target and the average stock price for the 20 days preceding the beginning and endinga report of the adjusted EPS performance period will be usedat 56.38% of target. The combined result was an award of 83.89% of target, including shares accumulated through dividend reinvestment, for comparison.each executive as follows:
| Name | Target Opportunity (#) | 2018 Performance RSA at | ||||||
| Daniel J. Schrider | 5,758.08 | 4,830.41 | ||||||
| Philip J. Mantua | 2,139.60 | 1,795.06 | ||||||
| Joseph J. O’Brien, Jr. | 2,559.19 | 2,148.25 | ||||||
| R. Louis Caceres | 2,096.52 | 1,759.64 | ||||||
| Kevin Slane | 2,785.30 | 2,336.97 | ||||||
Deferred Compensation, Retirement Benefits, and Life Insurance Benefits
Both the time-based and performance-based restricted stock will vest immediately upon the death or disability of the executive; however, the performance-based awards will vest at the target level adjusted proportionately for the number of days elapsed in the performance period.
Upon a change in control, neither the time-based nor performance-based restricted stock is subject to accelerated vesting nor cash settlement except to the extent that the definitive agreement for the change in control provides for such accelerated vesting or cash settlement. Performance criteria will be deemed to be satisfied at the target level and awards will vest solely by reference to the executive’s continued employment. If, however, within twelve months after the change in control, the executive’s employment terminates, other than for just cause, the award will fully vest. Additional detail is provided in the Grants of Plan-Based Awards table on page 30.
Deferred Compensation and Retirement Benefits
Executive Incentive Retirement Plan –
All executives participate in a nonqualified, deferred compensation plan known as the Executive Incentive Retirement Plan (“EIRP”). Unlike most executive supplemental retirement plans, the EIRP provides contributions in consideration of the Company’s performance each year. Executives receive a minimum cash contribution of 3% of base salary with the opportunity for increased contributions based on identified performance criteria. For 2017,2020, the committee establisheddetermined to use the attainmentmeasure of core return on average assets (“Core ROAA”) compared, as reported by S&P Global Market Intelligence, as a percent of the peer group median Core ROAA. This measure was similar to the metric of GAAP ROAA as percent of peer group median, which had been used for the past several years. The committee approved the use of Core ROAA, rather than GAAP ROAA, due to the uneven impact of COVID-19, M&A expenses, and the implementation of the new CECL accounting standard (and variable timing of implementation) in 2020. A report comparing the Company’s Core ROAA to the median Core ROAA of a regional group of peer banks. This peer group used the same criteria as the peer group described on page 21, asset size and regional geography, with performance updated at the end of22 for the performance period onended December 31, 2017.2020 was provided to the committee on February 10, 2021. For those peer banks for which Core ROAA was not calculated by S&P Global Market Intelligence, GAAP ROAA was used. The 20172020 schedule for deferral contributions, as follows, was approved as follows:the same one used for the past several years:
| Return on Average Assets Percentile Versus Peer Group | Deferral Contribution for % of Base Salary | Deferral Contribution for President & CEO % of Base Salary | ||||||
| 80% or below | minimum 3.000 | % | minimum 3.000 | % | ||||
| > 80% to 90% | 4.500 | % | 5.125 | % | ||||
| > 90% to 100% | 6.500 | % | 7.250 | % | ||||
| >100% to 110% | 7.500 | % | 9.375 | % | ||||
| >110% to 120% | 9.000 | % | 11.500 | % | ||||
| >120% to 130% | 10.500 | % | 13.625 | % | ||||
| >130% to 140% | 12.000 | % | 15.750 | % | ||||
| >140% to 150% | 13.500 | % | 17.875 | % | ||||
| >150% or above | 15.000 | % | 20.000 | % | ||||
| 26 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
| Return on Core Average Assets as a Percent of Peer Group Median | Deferral Contribution for % of Base Salary | Deferral Contribution for President & CEO % of Base Salary | ||||||
| 80% or below | minimum 3.000 | % | minimum 3.000 | % | ||||
| > 80% to 90% | 4.500 | % | 5.125 | % | ||||
| > 90% to 100% | 6.500 | % | 7.250 | % | ||||
| >100% to 110% | 7.500 | % | 9.375 | % | ||||
| >110% to 120% | 9.000 | % | 11.500 | % | ||||
| >120% to 130% | 10.500 | % | 13.625 | % | ||||
| >130% to 140% | 12.000 | % | 15.750 | % | ||||
| >140% to 150% | 13.500 | % | 17.875 | % | ||||
| >150% or above | 15.000 | % | 20.000 | % | ||||
In 2017,2020, Core ROAA for the Company was 1.02%1.07%. Compared to the peer group median of 0.92%0.88%, the Company achieved 110%121.6% of the peer group’s result, yielding a deferral contribution of 9.375%13.625% of base salary for Mr. Schrider and 7.50%10.50% for the other executive officers. The contributions are calculated in the following table.
| Name | Payment Level Earned | Base Salary | 2017 Deferral Contribution | |||||||||
| Daniel J. Schrider | 9.375 | % | $ | 610,800 | $ | 57,262 | ||||||
| Philip J. Mantua | 7.500 | % | $ | 353,000 | $ | 26,475 | ||||||
| Joseph J. O’Brien, Jr. | 7.500 | % | $ | 380,000 | $ | 28,500 | ||||||
| R. Louis Caceres | 7.500 | % | $ | 346,000 | $ | 25,950 | ||||||
| Ronald E. Kuykendall | 7.500 | % | $ | 289,000 | $ | 21,675 | ||||||
The amounts of the 20172020 deferral contributions are shown in the Nonqualified Deferred Compensation Plans section beginning on page 3233 along with a description of the terms and conditions for balances paid under the EIRP. The 20172020 deferral contributions are also included in the Summary of Compensation tableTable on page 28,30, and potential awards are further described in the Grants of Plan-Based Awards table on page 30.32.
401(k) Plan –
The named executive officers are eligible to participate in benefit plans available to all employees, including the Sandy Spring Bank 401(k) Plan. The 401(k) Plan provides a 100% match on the first 3%4% of salary deferred and a 50% match on the next 2% of salary deferred, up to the maximum allowed by the IRS regulations.
Pension Plan –
The Sandy Spring Bancorp, Inc. Retirement Income Plan (Pension Plan)(“Pension Plan”) was generally available to employees through December 31, 2007, at which time the Pension Plan was frozen. Of the named executive officers, Mr.Messrs. Schrider, Mr. Mantua, Mr.and Caceres and Mr. Kuykendall are participants. The accumulated benefit for each may be found in the Pension Benefits table on page 31.33.
Life Insurance Benefits – The Company has legacy split dollar life insurance agreements with Messrs. Schrider, Mantua, and Caceres. Under the agreements, in the event of the executive’s death (1) prior to separation from service or (2) after separation from service, other than for cause, following (a) the executive’s attaining age 65, (b) attaining age 60 and 10 years of service, (c) the executive’s disability, or (d) a change in control (as defined in the agreement), the executive’s beneficiary will be entitled to receive from the death proceeds of certain insurance policies owned by the Bank an amount equal to the lesser of (x) two and one-half times the executive’s base salary or (y) the total death proceeds of the policies minus the greater of (i) the cash surrender value or (ii) the aggregate premiums paid by the Bank. The Summary Compensation Table on page 30 includes the value of these benefits in the column labeled All Other Compensation.
Nonqualified Deferred Compensation Plan –
Executives and other officers who are eligible may participate in the Sandy Spring Bank Deferred Compensation Plan as described on page 32.33. Currently, only Mr. O’Brien participates in this plan.
Business-Related Benefits and Perquisites
The committee believes that perquisites should be limited in scope and have a business-related purpose. The committee periodically reviews perquisites to ensure alignment with the desired philosophy. The committee approves specific perquisites or benefits for individuals based on the needs of the position.
In 2017,2020, perquisites for all of the named executive officers included eligibility for a company-paid, supplemental long-term disability insurance policy and a long-term care insurance policy, and a comprehensive executive health screening the values for which, if applicable, are represented under “All Other Compensation” in the Summary of Compensation table on page 28.30.
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 27 |
In addition, Mr. Schrider receives the use of a company-owned vehicle. Mr. Caceres and Mr. O’Brien each receive a car allowance of $1,000 per month. Mr. O’Brien maintains a membership, at company expense, at a country club in Northern Virginia for business development purposes. Mr. O’Brien reimburses the Company for personal use of the membership. Mr. Schrider, Mr. Mantua, and Mr. Caceres have access to a corporate membership at a local country club for business purposes.
Role of the Compensation Committee, Management and Compensation Consultants in the Executive Compensation Process
Role of the Compensation Committee
–The Compensation Committee is made up of all independent directors as required under the Nasdaq listing rules. Details on the committee's functions are described in thecommittee’s charter, which has been approved by the board of directorsBoard and is available on our Investor Relationsinvestor relations website.
The committee has the authority to obtain advice and assistance from internal or external legal, human resources, accounting or other experts, advisors, or consultants as it deems desirable or appropriate. The committee has sole authority to retain and terminate any compensation consultant and to approve the fee and the terms of engagement. For 2017,2020, the committee engaged an independent consulting firm specializing in executive compensation.
In 2017,2020, the committee reviewed and approved all aspects of compensation plans and policies applicable to the named executive officers, including participation and performance measures. In carrying out its duties, the committee considered the relationship of corporate performance to total compensation; set salary and bonus levels and equity-based awards for executive officers; and reviewed the adequacy and effectiveness of various compensation and benefit plans. The chairmanchair of the committee reported committee actions to the board of directorsBoard following each committee meeting.
The committee worked closely with Mr. Schrider to review and discuss his recommendations for the other executive officers. The committee also considered the market analysis provided by the compensation consultant to assess market practices, the mix of fixed and variable compensation, and the levels of compensation for each executive.
The CEO performance evaluation for 20162020 was coordinated by BoardVantage, Inc. (formerly Center for Board ExcellenceExcellence), an affiliate of Nasdaq, and involved receiving feedback from each director separately and anonymously for compilation. The Executive and Governance Committee reviewed the compiled evaluation and provided feedback to Mr. Schrider. The Compensation Committee used this evaluation in compensation decisions concerning Mr. Schrider.
Role of Management
– In 2017,2020, Mr. Schrider and the executive officers, as customary, were responsible for the development of the Company’s annual business and financial plans as well as a long-term strategic plan, which were reviewed and approved by the board of directors.Board. The financial plan provided the foundation for setting the performance goalsmeasures and targets to be achieved during the fiscal year that were included in incentive compensation plans.
Utilizing the analysis provided by the compensation consultant and at the direction of the committee, Mr. Schrider developed recommendations for executive compensation other than his own. Mr. Kuykendall provided the committee with legal interpretation and guidance on governance issues. Mr. Mantua provided the committee with information regarding the Company’s performance and comparisons with peer banks’ performance.
Messrs. Schrider, Mantua, and Kuykendall,General Counsel and Secretary Aaron M. Kaslow as well as other members of management regularly attended portions of the Compensation Committee meetings where companyCompany performance, market considerations, risk and legal analyses were discussed. However, management was not present during final deliberations on executive compensation, and only committee members voted on executive compensation matters.
Role of Independent Compensation Consultant
– The committee engages an independent executive compensation consultant to provide commentary, analysis and expertise relating to executive compensation. For 20172020 compensation decisions, the committee engaged Meridian.Meridian Compensation Partners, LLC (“Meridian”). The committee reviewed the Nasdaq independence standards and determined Meridian to be independent with no identified conflicts of interest. The committee had direct access to the consultant and control over the engagement at all times.
The committee considered a market analysis compiled by Meridian when deliberating compensation decisions for 2017.2020. This analysis included, but was not limited to, an assessment of the Company’s compensation programs compared to its peers recommendations forthat included base salary, annual and long-term incentive opportunities and total direct compensation and target direct compensation as well as long-term incentive compensation and supplemental executive retirement benefits.compensation. The analysis provided the committee with a broad array of information with which to assess the Company’s compensation program, and it served as a foundation for compensation decisions. TheIn 2020, the committee had direct access to the consultantrequested and control over the engagement at all times.received recommendations from Meridian concerning Mr. Schrider’s compensation.
| 28 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Additional Compensation Policies, Practices and Considerations
Stock Ownership Requirements for Executives
In response– The board believes that the Company’s executive officers should accumulate meaningful equity stakes in the Company in order to investor feedback, the board approved formalfurther align their economic interests with those of shareholders. Our stock ownership requirements for executives in 2016. The guideline states thatguidelines require the CEO is required to own shares valued at three times his or her base salary, and other executive officers are required to own shares valued at one times his or her base salary. The officer has five years from the date of hire or promotion to be compliant with these guidelines. All of the named executive officers own Company common stock in excess of this requirement.are compliant with the policy.
Clawback Policy
In 2012, the board approved a– Under our Clawback Policy for the Recovery of Performance Compensation, also known as a “clawback” policy. The policy states that in the event the Company is required to prepare an accounting restatement due to the material noncompliance by the Company with any financial reporting requirement under the securities laws, the Company, at the direction and sole discretion of the Compensation Committee and the board of directors,Board will recover from any current or former executive officer of the Company who received incentive-based compensation during the three years preceding the date on which the Company is required to prepare the accounting restatement, based on the erroneous data, in excess of what would have been paid to the executive officer under the accounting restatement.
Hedging Policy – Under our Insider Trading Policy, the Company’s directors, officers and employees are prohibited from entering into hedging or similar transactions that are designed to offset any decrease in the market value of Company securities.
Risk Assessment of Compensation Policies and Practices – The committee, in consultation with management, periodically assesses the Company’s compensation policies and practices and considers whether our executive compensation program encourages unnecessary or excessive risk taking. The committee also reviews with management the various executive, non-executive, and functional incentive plans operated by the Company. Our executives receive a significant proportion of compensation in the form of equity awards that have performance and vesting features extending over several years. The executives are also subject to stock ownership requirements ensuring they have significant value tied to long-term stock price performance, which discourages imprudent risk-taking. Performance-based equity awards vest based on Company performance over a three-year period, encouraging our executives to focus on long-term performance in addition to annual results. Based on this this review, the Committee determined that the compensation plans are not likely to encourage unnecessary or excessive risk or have a material adverse impact on the company.
Impact of Accounting and Taxation on the Form of Compensation
– The committee and the Company consider the accounting and tax (individual and corporate) consequences of the compensation plans prior to making any changes to the plans. Section 162(m) of the Internal Revenue Code concernslimits the amount of compensation that may be deducted for federal income tax deductibility ofpurposes to $1 million per covered employee per taxable year. This $1 million annual limitation applies to all compensation paid to any individual who is the CEO and eachChief Executive Officer, Chief Financial Officer or one of the other three highestmost highly compensated executive officers other than the principal financial officer. The Tax Cuts and Jobs Act, signed into law in December,for 2017 limits our ability to deduct performance-based compensation in excess of $1 million with respect to stock based awards granted after November 2, 2017, and annual incentive awards paid for fiscal year 2018 and later years.or any subsequent calendar year.
Compensation Committee ReportCOMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the committee recommends to the board of directorsBoard that the Compensation Discussion and Analysis be included in this proxy statement.
March 10, 2021
Ralph F. Boyd, Jr., Chairman
Mark E. Friis
Mark C. Micklem
Mark C. Michael
Robert L. Orndorff
Mona Abutaleb Stephenson
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 29 |
Executive Compensation TablesEXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table summarizes compensation for the named executive officers for the three most recent completed fiscal years.
| Name and | Stock Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value & Nonqualified Deferred Compensation Earnings | All Other Compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principal Position | Year | Salary | (1) | (2) | (3) | (4) | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value & Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | (2) | (3) | (4) | (5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Daniel J. Schrider | 2017 | $ | 605,266 | $ | 356,711 | $ | 414,931 | $ | 48,715 | $ | 55,064 | $ | 1,480,686 | 2020 | $ | 804,808 | $ | 731,156 | $ | 684,082 | $ | 13,877 | $ | 79,897 | $ | 63,179 | $ | 2,376,999 | ||||||||||||||||||||||||||||||
| President, Chief | 2016 | $ | 594,785 | $ | 289,660 | $ | 387,516 | $ | 23,781 | $ | 57,708 | $ | 1,353,450 | 2019 | $ | 743,269 | $ | - | $ | 479,634 | $ | 564,648 | $ | 80,740 | $ | 61,170 | $ | 1,929,461 | ||||||||||||||||||||||||||||||
| Executive Officer | 2015 | $ | 600,692 | $ | 285,004 | $ | 366,795 | $ | - | $ | 61,681 | $ | 1,314,172 | 2018 | $ | 694,254 | $ | 150 | $ | 525,512 | $ | 477,223 | $ | - | $ | 56,876 | $ | 1,754,015 | ||||||||||||||||||||||||||||||
| Philip J. Mantua | 2017 | $ | 349,500 | $ | 167,177 | $ | 198,891 | $ | 23,048 | $ | 26,626 | $ | 765,242 | 2020 | $ | 419,885 | $ | 257,125 | $ | 267,479 | $ | 10,343 | $ | 33,311 | $ | 33,976 | $ | 1,022,120 | ||||||||||||||||||||||||||||||
| EVP, Chief Financial | 2016 | $ | 336,538 | $ | 129,550 | $ | 181,168 | $ | 12,525 | $ | 27,388 | $ | 687,169 | 2019 | $ | 401,692 | $ | - | $ | 184,273 | $ | 243,799 | $ | 35,771 | $ | 32,460 | $ | 897,995 | ||||||||||||||||||||||||||||||
| Officer | 2015 | $ | 333,192 | $ | 123,612 | $ | 170,606 | $ | - | $ | 27,404 | $ | 654,814 | 2018 | $ | 380,038 | $ | 18,150 | $ | 195,283 | $ | 207,790 | $ | - | $ | 25,757 | $ | 827,018 | ||||||||||||||||||||||||||||||
| Joseph J. O'Brien, Jr. | 2017 | $ | 374,077 | $ | 176,011 | $ | 205,384 | $ | 543 | $ | 44,832 | $ | 800,847 | 2020 | $ | 487,885 | $ | 377,500 | $ | 345,867 | $ | 6,192 | $ | 310 | $ | 55,220 | $ | 1,272,974 | ||||||||||||||||||||||||||||||
| EVP, Commercial & | 2016 | $ | 355,000 | $ | 137,484 | $ | 184,012 | $ | - | $ | 43,746 | $ | 720,242 | |||||||||||||||||||||||||||||||||||||||||||||
| Retail Banking | 2015 | $ | 355,038 | $ | 133,201 | $ | 173,487 | $ | - | $ | 46,386 | $ | 708,112 | |||||||||||||||||||||||||||||||||||||||||||||
| EVP, Chief Banking | 2019 | $ | 446,923 | $ | - | $ | 220,903 | $ | 284,977 | $ | 548 | $ | 51,752 | $ | 1,005,103 | |||||||||||||||||||||||||||||||||||||||||||
| Officer | 2018 | $ | 412,885 | $ | 20,150 | $ | 233,532 | $ | 233,606 | $ | 624 | $ | 44,343 | $ | 945,140 | |||||||||||||||||||||||||||||||||||||||||||
| R. Louis Caceres | 2017 | $ | 342,308 | $ | 164,695 | $ | 192,992 | $ | 33,139 | $ | 47,823 | $ | 780,957 | 2020 | $ | 412,462 | $ | 254,100 | $ | 238,372 | $ | 9,010 | $ | 51,215 | $ | 53,710 | $ | 1,018,869 | ||||||||||||||||||||||||||||||
| EVP, Wealth Mgmt, | 2016 | $ | 332,692 | $ | 129,550 | $ | 176,861 | $ | 16,963 | $ | 44,232 | $ | 700,298 | 2019 | $ | 388,769 | $ | - | $ | 179,582 | $ | 233,667 | $ | 53,342 | $ | 52,383 | $ | 907,743 | ||||||||||||||||||||||||||||||
| Mortgage, Insurance | 2015 | $ | 333,865 | $ | 124,607 | $ | 168,589 | $ | - | $ | 47,942 | $ | 675,003 | 2018 | $ | 371,577 | $ | 17,150 | $ | 191,372 | $ | 200,324 | $ | - | $ | 44,452 | $ | 824,875 | ||||||||||||||||||||||||||||||
| Ronald E. Kuykendall | 2017 | $ | 285,846 | $ | 120,188 | $ | 152,419 | $ | 28,744 | $ | 25,886 | $ | 613,083 | |||||||||||||||||||||||||||||||||||||||||||||
| EVP, General | 2016 | $ | 277,923 | $ | 94,529 | $ | 139,400 | $ | 18,658 | $ | 26,948 | $ | 557,458 | |||||||||||||||||||||||||||||||||||||||||||||
| Counsel & Secretary | 2015 | $ | 279,039 | $ | 91,202 | $ | 133,171 | $ | - | $ | 27,007 | $ | 530,419 | |||||||||||||||||||||||||||||||||||||||||||||
| Kevin Slane | 2020 | $ | 362,283 | $ | 208,125 | $ | 146,769 | $ | 933 | $ | - | $ | 36,712 | $ | 754,882 | |||||||||||||||||||||||||||||||||||||||||||
| EVP, Chief Risk | 2019 | $ | 358,769 | $ | - | $ | 132,337 | $ | 185,886 | $ | - | $ | 34,093 | $ | 711,085 | |||||||||||||||||||||||||||||||||||||||||||
| Officer | 2018 | $ | 220,769 | $ | 150,000 | $ | 357,439 | $ | 138,463 | $ | - | $ | 119,711 | $ | 986,382 | |||||||||||||||||||||||||||||||||||||||||||
| (1) | The amounts reported for 2020 represent the cash awards under the Executive Team Incentive Plan (“ETIP”) and the Executive Incentive Retirement Plan (“EIRP”) described on pages 23 and 26 respectively and as shown below: |
| Executive | 2020 ETIP Cash Awards | 2020 Contributions to the EIRP | Total Bonus Compensation | |||||||||
| Daniel J. Schrider | $ | 618,750 | $ | 112,406 | $ | 731,156 | ||||||
| Philip J. Mantua | $ | 212,500 | $ | 44,625 | $ | 257,125 | ||||||
| Joseph J. O’Brien, Jr. | $ | 325,000 | $ | 52,500 | $ | 377,500 | ||||||
| R. Louis Caceres | $ | 210,000 | $ | 44,100 | $ | 254,100 | ||||||
| Kevin Slane | $ | 168,750 | $ | 39,375 | $ | 208,125 | ||||||
| (2) | The amounts reported are the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. |
| The amounts reported for 2020 are |
| 2017 Cash | 2017 | 2017 | Total Non-equity | |||||||||||||
| Awards Under | Contributions | Earnings on | Incentive Plan | |||||||||||||
| OIP | to the EIRP | EIRP | Compensation | |||||||||||||
| Daniel J. Schrider | $ | 339,690 | $ | 57,263 | $ | 17,978 | $ | 414,931 | ||||||||
| Philip J. Mantua | $ | 157,060 | $ | 26,475 | $ | 15,356 | $ | 198,891 | ||||||||
| Joseph J. O’Brien, Jr. | $ | 169,073 | $ | 28,500 | $ | 7,811 | $ | 205,384 | ||||||||
| R. Louis Caceres | $ | 153,946 | $ | 25,950 | $ | 13,096 | $ | 192,992 | ||||||||
| Ronald E. Kuykendall | $ | 112,512 | $ | 21,675 | $ | 18,232 | $ | 152,419 | ||||||||
| (4) | The amount reported for Mr. O’Brien represents earnings on non-qualified deferred compensation. |
| This column consists of other |
| Executive | Dividends on Restricted Stock | Car Allowance or Personal Use of Vehicle | 401(k) Match | Other | Total All Other Compensation | |||||||||||||||
| Daniel J. Schrider | $ | 30,440 | $ | 4,557 | $ | 14,250 | $ | 13,932 | $ | 63,179 | ||||||||||
| Philip J. Mantua | $ | 12,154 | $ | - | $ | 14,250 | $ | 7,572 | $ | 33,976 | ||||||||||
| Joseph J. O’Brien, Jr. | $ | 14,585 | $ | 12,000 | $ | 14,250 | $ | 14,385 | $ | 55,220 | ||||||||||
| R. Louis Caceres | $ | 11,535 | $ | 12,000 | $ | 14,250 | $ | 15,925 | $ | 53,710 | ||||||||||
| Kevin Slane | $ | 7,550 | $ | - | $ | 14,250 | $ | 14,912 | $ | 36,712 | ||||||||||
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Outstanding Equity Awards at Fiscal Year End
The following table shows information regarding all unvested equity awards held by the named executive officers at December 31, 2017.2020. These awards are subject to forfeiture until vested, and the ultimate value of performance-based awards is unknown.
| Stock Awards | ||||||||||||||||||||
| Name | Grant Date | Number of shares or units of stock that have not vested | Market value of shares or units of stock that have not vested | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested | Equity incentive plan awards: Market or payout value of unearned shares, united or other rights that have not vested | |||||||||||||||
| (#)(1) | ($)(2) | (#) | ($) | |||||||||||||||||
| Daniel J. Schrider | 3/27/2013 | (3) | 2,596 | 101,296 | ||||||||||||||||
| 3/05/2014 | (4) | 4,170 | 162,713 | |||||||||||||||||
| 3/18/2015 | (5) | 6,527 | 254,684 | |||||||||||||||||
| 3/16/2016 | (6) | 6,352 | 247,855 | (8) | 1,391 | 54,257 | ||||||||||||||
| 3/15/2017 | (7) | 6,053 | 236,188 | (9) | 1,029 | 40,132 | ||||||||||||||
| Philip J. Mantua | 3/27/2013 | (3) | 1,041 | 40,620 | ||||||||||||||||
| 3/05/2014 | (4) | 1,940 | 75,699 | |||||||||||||||||
| 3/18/2015 | (5) | 2,831 | 110,466 | |||||||||||||||||
| 3/16/2016 | (6) | 2,841 | 110,856 | (8) | 622 | 24,251 | ||||||||||||||
| 3/15/2017 | (7) | 2,836 | 110,661 | (9) | 482 | 18,808 | ||||||||||||||
| Joseph J. O’Brien, Jr. | 3/27/2013 | (3) | 1,285 | 50,141 | ||||||||||||||||
| 3/05/2014 | (4) | 2,101 | 81,981 | |||||||||||||||||
| 3/18/2015 | (5) | 3,050 | 119,011 | |||||||||||||||||
| 3/16/2016 | (6) | 3,015 | 117,645 | (8) | 660 | 25,734 | ||||||||||||||
| 3/15/2017 | (7) | 2,987 | 116,553 | (9) | 507 | 19,783 | ||||||||||||||
| R. Louis Caceres | 3/27/2013 | (3) | 1,202 | 46,902 | ||||||||||||||||
| 3/05/2014 | (4) | 1,956 | 76,323 | |||||||||||||||||
| 3/18/2015 | (5) | 2,854 | 111,363 | |||||||||||||||||
| 3/16/2016 | (6) | 2,841 | 110,856 | (8) | 622 | 24,251 | ||||||||||||||
| 3/15/2017 | (7) | 2,795 | 109,061 | (9) | 475 | 18,515 | ||||||||||||||
| Ronald E. Kuykendall | 3/27/2013 | (3) | 886 | 34,572 | ||||||||||||||||
| 3/05/2014 | (4) | 1,431 | 55,838 | |||||||||||||||||
| 3/18/2015 | (5) | 2,089 | 81,513 | |||||||||||||||||
| 3/16/2016 | (6) | 2,073 | 80,888 | (8) | 454 | 17,696 | ||||||||||||||
| 3/15/2017 | (7) | 2,039 | 79,562 | (9) | 347 | 13,520 | ||||||||||||||
| Stock Awards | ||||||||||||||||
| Name | Grant Date | Number of shares or units of stock that have not vested | Market value of shares or units of stock that have not vested | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested | |||||||||||
| (#) | ($)(1) | (#) | ($) | |||||||||||||
| Daniel J. Schrider | 3/16/2016 | (2) | 1,588 | $ | 51,118 | |||||||||||
| 3/15/2017 | (3) | 2,421 | $ | 77,932 | ||||||||||||
| 4/25/2018 | (4) | 4,694 | $ | 151,100 | (5) | 4,830 | $ | 155,478 | ||||||||
| 3/06/2019 | (6) | 4,836 | $ | 155,671 | (7) | 7,774 | $ | 250,245 | ||||||||
| 3/11/2020 | (8) | 12,785 | $ | 411,549 | (9) | 13,348 | $ | 429,672 | ||||||||
| Philip J. Mantua | 3/16/2016 | (2) | 710 | $ | 22,855 | |||||||||||
| 3/15/2017 | (3) | 1,134 | $ | 36,503 | ||||||||||||
| 4/25/2018 | (4) | 1,744 | $ | 56,139 | (5) | 1,795 | $ | 57,781 | ||||||||
| 3/06/2019 | (6) | 1,858 | $ | 59,809 | (7) | 2,860 | $ | 92,063 | ||||||||
| 3/11/2020 | (8) | 4,999 | $ | 160,918 | (9) | 5,219 | $ | 168,000 | ||||||||
| Joseph J. O’Brien, Jr. | 3/16/2016 | (2) | 754 | $ | 24,271 | |||||||||||
| 3/15/2017 | (3) | 1,195 | $ | 38,467 | ||||||||||||
| 4/25/2018 | (4) | 2,086 | $ | 67,148 | (5) | 2,148 | $ | 69,144 | ||||||||
| 3/06/2019 | (6) | 2,227 | $ | 71,687 | (7) | 2,451 | $ | 78,898 | ||||||||
| 3/11/2020 | (8) | 6,464 | $ | 208,076 | (9) | 6,749 | $ | 217,250 | ||||||||
| R. Louis Caceres | 3/16/2016 | (2) | 710 | $ | 22,855 | |||||||||||
| 3/15/2017 | (3) | 1,118 | $ | 35,988 | ||||||||||||
| 4/25/2018 | (4) | 1,709 | $ | 55,013 | (5) | 1,760 | $ | 56,654 | ||||||||
| 3/06/2019 | (6) | 1,811 | $ | 58,296 | (7) | 2,008 | $ | 64,638 | ||||||||
| 3/11/2020 | (8) | 4,455 | $ | 143,406 | (9) | 4,651 | $ | 149,716 | ||||||||
| Kevin Slane | 5/01/2018 | (4) | 2,187 | $ | 70,400 | (5) | 2,337 | $ | 75,228 | |||||||
| 3/06/2019 | (6) | 1,334 | $ | 42,941 | (7) | 2,162 | $ | 69,585 | ||||||||
| 3/11/2020 | (8) | 2,743 | $ | 88,297 | (9) | 2,863 | $ | 92,160 | ||||||||
| (1) |
| Aggregate market values are based upon the closing price of |
| Remaining shares granted on March 16, 2016 will vest ratably on each April 1st through 2021. |
| Remaining shares granted on April 25, 2018 will vest ratably on the anniversary of the grant through April 25, 2023. |
| (5) | The performance conditions applicable to this award were satisfied as of December 31, 2020 and the shares subject to this award vested on February 10, 2021 based on achievement at 83.89% of the target level. See page 25 for a description of the results of this award. |
| (6) | Remaining shares granted on March 6, 2019 will vest ratably on each April 1st through 2022. |
| (7) | These shares are subject to vesting based upon the achievement of specific |
| (8) | Shares granted on March 11, 2020 will vest ratably on each April 1st starting April 1, 2021 through 2023. |
| (9) | These shares are subject to vesting based upon the achievement of specific |
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 31 |
Grants of Plan-Based Awards
The following table sets forth information on plan-based awards made to the named executive officers.officers in 2020. These include time-based restricted stock awards (“RSA”), performance-vestedperformance-based restricted stock awardsunits (“PRSA”RSUs”) andthat vest based on certain performance criteria, cash awards under the 2015 OmnibusExecutive Team Incentive Plan (“ETIP”), and deferred cash awards under the Executive Incentive Retirement Plan (“EIRP”) for 2017..
| All Other | ||||||||||||||||||||||||||||||||||
| Stock | ||||||||||||||||||||||||||||||||||
| Awards: | Grant Date Fair | |||||||||||||||||||||||||||||||||
| Estimated Future Payouts Under | Estimated Future Payouts Under | Number of | Value of Stock | |||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Awards(1) | Equity Incentive Plan Awards(2) | shares of | and Options | |||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | stock | Awards(3) | |||||||||||||||||||||||||
| ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | |||||||||||||||||||||||||||
| Daniel J. Schrider | RSA | 3/15/2017 | 6,053 | 257,131 | ||||||||||||||||||||||||||||||
| PRSA | 3/15/2017 | 1,009 | 2,017 | 3,026 | 99,579 | |||||||||||||||||||||||||||||
| Cash Award | $ | 152,700 | $ | 305,400 | $ | 458,100 | ||||||||||||||||||||||||||||
| EIRP | $ | 18,324 | $ | 57,263 | $ | 122,160 | ||||||||||||||||||||||||||||
| Philip J. Mantua | RSA | 3/15/2017 | 2,836 | 120,473 | ||||||||||||||||||||||||||||||
| PRSA | 3/15/2017 | 473 | 946 | 1,419 | 46,704 | |||||||||||||||||||||||||||||
| Cash Award | $ | 70,600 | $ | 141,200 | $ | 211,800 | ||||||||||||||||||||||||||||
| EIRP | $ | 10,590 | $ | 26,475 | $ | 52,950 | ||||||||||||||||||||||||||||
| Joseph J. O'Brien, Jr. | RSA | 3/15/2017 | 2,987 | 126,888 | ||||||||||||||||||||||||||||||
| PRSA | 3/15/2017 | 498 | 995 | 1,493 | 49,123 | |||||||||||||||||||||||||||||
| Cash Award | $ | 76,000 | $ | 152,000 | $ | 228,000 | ||||||||||||||||||||||||||||
| EIRP | $ | 11,400 | $ | 28,500 | $ | 57,000 | ||||||||||||||||||||||||||||
| R. Louis Caceres | RSA | 3/15/2017 | 2,795 | 118,732 | ||||||||||||||||||||||||||||||
| PRSA | 3/15/2017 | 466 | 931 | 1,397 | 45,963 | |||||||||||||||||||||||||||||
| Cash Award | $ | 69,200 | $ | 138,400 | $ | 207,600 | ||||||||||||||||||||||||||||
| EIRP | $ | 10,380 | $ | 25,950 | $ | 51,900 | ||||||||||||||||||||||||||||
| Ronald E. Kuykendall | RSA | 3/15/2017 | 2,039 | 86,617 | ||||||||||||||||||||||||||||||
| PRSA | 3/15/2017 | 340 | 680 | 1,020 | 33,572 | |||||||||||||||||||||||||||||
| Cash Award | $ | 50,575 | $ | 101,150 | $ | 151,725 | ||||||||||||||||||||||||||||
| EIRP | $ | 8,670 | $ | 21,675 | $ | 43,350 | ||||||||||||||||||||||||||||
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of shares of stock | Grant Date Fair Value of Stock and Options Awards (3) | ||||||||||||||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||
| ($) | ($) | ($) | (#) | (#) | (#) | (#) | ($) | ||||||||||||||||||
| Daniel J. Schrider | RSA | 3/11/2020 | 12,785 | $ | 337,268 | ||||||||||||||||||||
| RSU | 3/11/2020 | 6,393 | 12,785 | 19,178 | $ | 346,813 | |||||||||||||||||||
| ETIP | $ | 309,375 | $ | 618,750 | $ | 928,125 | |||||||||||||||||||
| EIRP | $ | 24,750 | $ | 77,344 | $ | 165,000 | |||||||||||||||||||
| Philip J. Mantua | RSA | 3/11/2020 | 4,999 | $ | 131,874 | ||||||||||||||||||||
| RSU | 3/11/2020 | 2,500 | 4,999 | 7,499 | $ | 135,606 | |||||||||||||||||||
| ETIP | $ | 106,250 | $ | 212,500 | $ | 318,750 | |||||||||||||||||||
| EIRP | $ | 12,750 | $ | 31,875 | $ | 63,750 | |||||||||||||||||||
| Joseph J. O'Brien, Jr. | RSA | 3/11/2020 | 6,464 | $ | 170,520 | ||||||||||||||||||||
| RSU | 3/11/2020 | 3,232 | 6,464 | 9,696 | $ | 175,346 | |||||||||||||||||||
| ETIP | $ | 162,500 | $ | 325,000 | $ | 487,500 | |||||||||||||||||||
| EIRP | $ | 15,000 | $ | 37,500 | $ | 75,000 | |||||||||||||||||||
| R. Louis Caceres | RSA | 3/11/2020 | 4,455 | $ | 117,523 | ||||||||||||||||||||
| RSU | 3/11/2020 | 2,228 | 4,455 | 6,683 | $ | 120,849 | |||||||||||||||||||
| ETIP | $ | 105,000 | $ | 210,000 | $ | 315,000 | |||||||||||||||||||
| EIRP | $ | 12,600 | $ | 31,500 | $ | 63,000 | |||||||||||||||||||
| Kevin Slane | RSA | 3/11/2020 | 2,743 | $ | 72,360 | ||||||||||||||||||||
| RSU | 3/11/2020 | 1,372 | 2,743 | 4,115 | $ | 74,408 | |||||||||||||||||||
| ETIP | $ | 84,375 | $ | 168,750 | $ | 253,125 | |||||||||||||||||||
| EIRP | $ | 11,250 | $ | 28,125 | $ | 56,250 | |||||||||||||||||||
| (1) | The information in these columns reflects the range of potential payouts under the indicated plans as established by the Compensation Committee. The actual amounts earned by each executive under such plans are disclosed in the Summary Compensation Table. |
| (2) | These columns show the range of possible awards for performance-based vesting of restricted |
| (3) | The amounts reported are the aggregate grant date fair value of the awards computed in accordance with the FASB ASC Topic 718. The grant date per share fair value for the RSA was |
Option Exercises and Stock Vested
The following table shows the value realized upon the vesting of restricted stock awards in 2017.2020.
| Stock Awards | Stock Awards | |||||||||||||||
| Name | Number of Shares Acquired on Vesting | Value Realized Upon Vesting (1) | ||||||||||||||
| Number of | Value Realized | (#) | ($) | |||||||||||||
| Shares Acquired | Upon Vesting | |||||||||||||||
| on Vesting | (1) | |||||||||||||||
| Executive | (#) | ($) | ||||||||||||||
| Daniel J. Schrider | 10,658 | $ | 435,254 | 8,957 | $ | 201,486 | ||||||||||
| Philip J. Mantua | 4,499 | $ | 183,804 | 3,733 | $ | 83,990 | ||||||||||
| Joseph J. O’Brien, Jr. | 5,174 | $ | 211,303 | 4,177 | $ | 93,974 | ||||||||||
| R. Louis Caceres | 4,857 | $ | 198,347 | 3,695 | $ | 83,132 | ||||||||||
| Ronald E. Kuykendall | 3,557 | $ | 145,261 | |||||||||||||
| Kevin Slane | 2,854 | $ | 70,869 | |||||||||||||
| (1) | The value realized upon vesting is equal to the |
| 32 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Pension Benefits
The following table shows the present value of the accumulated benefit under the Sandy Spring Bancorp, Inc. Retirement Income Plan (“Pension Plan”) for eachthose named executive officer.officers who participate in the Pension Plan. All benefit accruals under the Pension Plan were frozen as of December 31, 2007.
| Name | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit(1) | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit(1) | ||||||||||||||
| Daniel J. Schrider | Pension Plan | 19 | $ | 364,797 | Pension Plan | 19 | $ | 501,782 | ||||||||||||
| Philip J. Mantua | Pension Plan | 9 | $ | 213,743 | Pension Plan | 9 | $ | 274,964 | ||||||||||||
| Joseph J. O’Brien, Jr.(2) | Pension Plan | - | 0 | |||||||||||||||||
| R. Louis Caceres | Pension Plan | 9 | $ | 274,193 | Pension Plan | 9 | $ | 364,782 | ||||||||||||
| Ronald E. Kuykendall | Pension Plan | 8 | $ | 351,719 | ||||||||||||||||
| (1) | This plan and related valuation methods and assumptions are included in Note |
Benefits under the Pension Plan are provided on a 10-year certain and life basis, with survivor benefits for the employee’s spouse, and are not subject to deduction for Social Security or other offset amounts. When the Pension Plan was active, earnings covered were total wages, including elective pre-tax contributions under the 401(k) Plan, bonuses, and other cash compensation up to the allowable limit under the Internal Revenue Code.
The Pension Plan benefit equals the sum of three parts: (a) the benefit accrued as of December 31, 2000, based on the formula of 1.5% of highest five-year average salary as of that date times years of service as of that date, plus (b) 1.75% of each year's earnings after December 31, 2000 (1.75% of career average earnings) through December 31, 2005, and (c) 1.0% of each year's earnings thereafter, through December 31, 2007. The Pension Plan permits early retirement at age 55 after 10 years of service completed after December 31, 2000.
Pay Ratio
The Company is required by SEC rules to disclose the median of the annual total compensation of all employees of the Company (excluding the Chief Executive Officer), the annual total compensation of the Chief Executive Officer, and the ratio of these two amounts (the “pay ratio”). The pay ratio below is a reasonable estimate based on the Company’s payroll records and the methodology described below, and was calculated in a manner consistent with SEC rules. Because SEC rules for identifying the median employee and calculating the pay ratio allow companies to use variety of methodologies, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
As a result of the acquisitions of Revere Bank and RPJ, the employee population grew by 188 employees in 2020. The Company selected November 3, 201713, 2020 as the determination date for identifying the median employee under Item 402(u) of Regulation S-K.employee. Year-to-date taxable wages paid from January 1, 20172020 to November 3, 201713, 2020 for all employees employed as of the determination date, with the exception of Mr. Schrider, were arrayed from lowest to highest. Wages of newly hired permanent employees were adjusted to represent wages for the entire measurement period. This period captured all incentive payments for the tax year as well as the vesting of equity awards, as applicable. Once the data was complete, theThe median employee was identified, and total compensation for the median employee was calculated according to Item 402(c).in the manner required for the Summary Compensation Table. Mr. Schrider’s total compensation for 20172020, as disclosed in the Summary Compensation Table, was $1,480,686$2,376,999 and the median employee’s was $62,004,$76,814, producing a ratio of 24:31 to 1.
Nonqualified Deferred Compensation Plans
Executive Incentive Retirement Plan -
All of the named executive officers participate in the Executive Incentive Retirement Plan (“EIRP”), a deferred compensation plan that replaced supplemental executive retirement agreements (“SERAs”) with the named executive officers. Prior balances carried over from the SERAs vest over 15 years and automatically vest upon the executive’s death or disability or upon a change in control. DeferralEmployer contributions under the EIRP and earnings paid under theon EIRP balances vest immediately. Earnings on EIRP balances accrue at an interest rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly.
The executive’s account balance (including vested balances accrued under the former SERAs) will be distributed to the executive per the terms of the EIRP following termination of employment either in a lump sum or in installments, at the election of the executive. No payments will be made to an executive who is terminated for just cause as defined in the plan. The EIRP provides a minimum, annual contribution of 3% of base salary. Each year, the Compensation Committee determines the performance criteria by which a deferral bonus over the minimum may be earned as described under Deferred“Deferred Compensation, and Retirement Benefits, and Life Insurance Benefits” on page 24.26.
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 33 |
Sandy Spring Bank Deferred Compensation Plan -
Under the terms of Sandy Spring Bank Deferred Compensation Plan (“NQDC”), participants may defer up to 25% of base salary and/or commissions earned during the year and up to 100% of bonus compensation. Interest accrues on the account balance at a rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly. The participant will receive the account balance following the six monthsix-month anniversary of any separation from service.
The following table summarizes the contributions, earnings and balances for the named executive officers under the EIRP and earnings from the Sandy Spring Bank Deferred Compensation Plan.
| Executive | Registrant | Aggregate | Aggregate | |||||||||||||||||||||||||||||||||||||||||
| Contributions in | Contributions in | Earnings in Last | Aggregate | Balance at Last | ||||||||||||||||||||||||||||||||||||||||
| Last Fiscal Year | Last Fiscal Year | Fiscal Year | withdrawals/ | Fiscal Year End | ||||||||||||||||||||||||||||||||||||||||
| Executive | Plan Name | (1) | (2) | (3) | Distributions | (4) | Plan Name | Executive Contributions in Last Fiscal Year (1) | Registrant Contributions in Last Fiscal Year (2) | Aggregate Earnings in Last Fiscal Year (3) | Aggregate withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year End (4) | ||||||||||||||||||||||||||||||||
| Daniel J. Schrider | EIRP | n/a | $ | 57,263 | $ | 17,978 | - | $ | 634,717 | EIRP | n/a | $ | 112,406 | $ | 13,877 | - | $ | 959,911 | ||||||||||||||||||||||||||
| Philip J. Mantua | EIRP | n/a | $ | 26,475 | $ | 15,356 | - | $ | 519,712 | EIRP | n/a | $ | 44,625 | $ | 10,343 | - | $ | 676,263 | ||||||||||||||||||||||||||
| Joseph J. O’Brien, Jr. | EIRP | n/a | $ | 28,500 | $ | 7,811 | - | $ | 279,380 | EIRP | n/a | $ | 52,500 | $ | 6,192 | - | $ | 430,627 | ||||||||||||||||||||||||||
| NQDC | $ | - | n/a | $ | 543 | - | $ | 17,449 | NQDC | - | - | $ | 310 | - | $ | 18,931 | ||||||||||||||||||||||||||||
| R. Louis Caceres | EIRP | n/a | $ | 25,950 | $ | 13,096 | - | $ | 446,586 | EIRP | n/a | $ | 44,100 | $ | 9,010 | - | $ | 594,334 | ||||||||||||||||||||||||||
| Ronald E. Kuykendall | EIRP | n/a | $ | 21,675 | $ | 18,232 | - | $ | 607,269 | |||||||||||||||||||||||||||||||||||
| Kevin Slane | EIRP | n/a | $ | 39,375 | $ | 993 | - | $ | 99,993 | |||||||||||||||||||||||||||||||||||
| (1) | Participant contributions are not permitted under the EIRP. |
| (2) |
| (3) | Earnings for the EIRP and NQDC accrue at the rate of 120% of the Long-Term Applicable Federal Rate adjusted monthly. Earnings for the EIRP are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page |
| (4) | As of December 31, |
Agreements with Executives and Potential Payments Upon Termination or Change in Control
Daniel J. Schrider
The Company and the Bank have an employment agreement with Mr. Schrider to provide for his employment as President and CEO. The initial term of the agreement was for three years and provides that the board of directorsBoard may take action to extend the term for an additional year at each anniversary so that the remaining term again becomes three years. Mr. Schrider’s agreement does not automatically renew. The Executive and Governance Committee reviews CEO performance annually and recommends whether or not to extend the CEO’s employment agreement. Mr. Schrider’s employment agreement currently has a term expiring on July 1, 2020.June 30, 2022. The agreement addresses such matters as Mr. Schrider’s base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.
There is no specific compensation provision under Mr. Schrider’s agreement for termination due to retirement, death, or voluntary resignation. Should Mr. Schrider become disabled, the board must provide written notice 30 days in advance of termination. Mr. Schrider will receive his full base salary, benefits, and any perquisites other than bonus during the time of incapacity leading up to the date of termination less any benefits paid under existing disability plans. For termination by Mr. Schrider with good reason or involuntary termination by the Company or Bank without just cause, Mr. Schrider will receive his base salary and medical benefits for the remainder of the term of the agreement.
In the event of a change in control during the term of the agreement, and, thereafter, if Mr. Schrider’s employment is terminated without just cause or he terminates his employment with good reason, as defined in the agreement, he will receive a lump-sum payment equal to three times his average annual compensation for the past five years preceding the change in control and medical benefits for the remaining term of the agreement.
| 34 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
Mr. Schrider’s agreement does not entitle him to receive any tax indemnification payments (a “gross-up”) if payments under his employment agreement or any other payments trigger liability under Sections 280G and 4999 of the Internal Revenue Code for an excise tax on “excess parachute payments.” If any payments to Mr. Schrider trigger such excise tax, he will be entitled to receive the greater of the following, whichever gives him the highest net after-tax amount: (a) the full payments and benefits provided for under the agreement, in which case he would be responsible for any resulting excise tax, or (b) one dollar less than the amount that would subject him to the excise tax.
Under the terms of his agreement, Mr. Schrider is prohibited from conflicts of interest, and is required to maintain the confidentiality of nonpublic information regarding the Company and its clients. He is also bound by a covenant not to compete for one year and not to solicit employees for two years following termination of employment, except in the event of a change in control.
Philip J. Mantua and Joseph J. O’Brien, Jr., and Kevin Slane
The Company and the Bank entered into an employment agreementagreements with Mr. Mantua and Mr. O’Brien on January 13, 2012, and with Mr. Slane on March 29, 2018 to provide for hiseach executive’s employment as chief financial officer.in their respective positions. The termterms of the present agreement endsagreements end on June 30, 2019. Effective July 1, 2013, and continuing on each July 1 thereafter,2022. Each year, the board of directorsBoard may take actionact to extend the term for an additional year so that the remaining term becomes two years. Mr. Mantua’s agreementThe Agreement does not automatically renew. The agreementAgreement addresses such matters as Mr. Mantua’s base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.
Mr. Mantua's employment agreement doesThe agreements do not provide for any special or additional compensation in the event of termination due to retirement, death or resignation. For termination due to disability, Mr. Mantuathe executive will receive base compensation, less any applicable disability benefits, and health and welfare benefits for the remaining term of the agreement. For termination by the Company without just cause, or termination by Mr. Mantuathe executive with good reason, as defined in the agreement, Mr. Mantuaagreements, the executive will receive his base salary for the remaining term of the agreement at the highest annual rate paid in the 12 months preceding the termination plus annual cash bonuses (pro-rated for a partial year) as a lump sum payment.
If, in connection with a change in control, as defined by Section 409A of the Internal Revenue Code, Mr. Mantua’sthe executive’s employment is terminated, either involuntarily without just cause or voluntarily with good reason, within six months prior to the change in control or up to two years after the change in control, hethe executive will receive a lump-sum payment equal to 2.99 times the sum of his annual salary at the highest rate paid in the preceding 12 months plus the amount of any other compensationcash bonus received for the past 12 months. Mr. MantuaThe executive would also receive the continuation of health benefits including life and disability insurances for a period of three years following termination. If the total value of the benefits provided and payments made to Mr. Mantuathe executive in connection with a change in control, either under the employment agreement alone or together with other payments and benefits that he has the right to receive,received, would result in the imposition of an excise tax under Section 280G of the Internal Revenue Code, histhe severance payment will be reduced or revised so that the aggregate payments do not trigger the payment of the excise tax.
Mr. MantuaThe executive is prohibited from conflicts of interest, and is required to maintain the confidentiality of nonpublic information regarding the Company and its clients. HeThe executive is also bound by a covenant not to compete and not to interfere with other employees following termination of employment for the remaining term of the agreement. The post-termination restrictions do not apply if there is a change in control or if the executive's employment is terminated without just cause by the Company or with good reason by the executive.
Joseph J. O’Brien, Jr.R. Louis Caceres
The Company and the Bank entered into an employment agreement with Mr. O’Brien on January 13, 2012 to provide for his employment as Executive Vice President for Commercial and Retail Banking. The present term of the agreement ends on June 30, 2019. Effective July 1, 2013, and continuing on each July 1 thereafter, the board of directors may take action to extend the term for an additional year so that the remaining term becomes two years. Mr. O’Brien’s agreement does not automatically renew. The agreement addresses such matters as Mr. O’Brien’s base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.
Mr. O’Brien's employment agreement does not provide for any special or additional compensation in the event of termination due to retirement, death or resignation. For termination due to disability, Mr. O’Brien will receive base compensation, less any applicable disability benefits, and benefits for the remaining term of the agreement. For termination by the Company without just cause, or termination by Mr. O’Brien with good reason, as defined in the agreement, Mr. O’Brien will receive his base salary for the remaining term of the agreement at the highest annual rate paid in the 12 months preceding the termination plus annual cash bonuses as a lump sum payment.
If, in connection with a change in control, as defined by Section 409A of the Internal Revenue Code, Mr. O’Brien’s employment is terminated, either involuntarily without just cause or voluntarily with good reason, within six months prior to the change in control or up to two years after the change in control, he will receive a lump-sum payment equal to 2.99 times the sum of his annual salary at the highest rate paid in the preceding 12 months plus the amount of any other compensation received for the past 12 months. Mr. O’Brien would also receive the continuation of health benefits including life and disability insurances for a period of three years following termination. If the total value of the benefits provided and payments made to Mr. O’Brien in connection with a change in control, either under the employment agreement alone or together with other payments and benefits that heCaceres has the right to receive, would result in the imposition of an excise tax under Section 280G of the Internal Revenue Code, his severance payment will be reduced or revised so that the aggregate payments do not trigger the payment of the excise tax.
Mr. O’Brien is prohibited from conflicts of interest, and is required to maintain the confidentiality of nonpublic information regarding the Company and its clients. He is also bound by a covenant not to compete and not to interfere with other employees following termination of employment for the remaining term of the agreement. The post-termination restrictions do not apply if there is a change in control or if the executive's employment is terminated without just cause by the Company or with good reason by the executive.
R. Louis Caceres and Ronald E. Kuykendall
Mr. Caceres and Mr. Kuykendall each have a change in control severance agreement with the Company and the Bank. The change in control agreement has a term of two years, also known as the “Covered Period.” On each anniversary date of the agreement, the agreement will automatically be extended for an additional year, unless either party has given written notice at least 60 days prior to the anniversary date of the agreement that the agreement will not be extended.
| | 35 |
If a change in control occurs and the executive’s employment is involuntarily terminated without just cause or the executive voluntarily terminates employment with good reason, as defined in the agreement, during the Covered Period, the executive will be entitled to a payment equal to 2.99 times his total compensation, which is defined as one year’s base salary plus bonus payments and all other taxable compensation. The executive would also receive the continuation of health benefits, including life and disability insurances, for a period of three years following termination. Under the change in control agreements, if the total value of the benefits provided and payments made to the executive in connection with a change in control, either under the change in control agreement alone or together with other payments and benefits that he has the right to receive, would result in the imposition of an excise tax under Section 280G of the Internal Revenue Code, his severance payment will be reduced or revised so that the aggregate payments do not trigger the payment of the excise tax.
Potential Payments Upon Termination or Change in Control
The following table summarizes the estimated payments to which the named executive officers were entitled upon termination as of December 31, 2017.2020. Benefits payable under the Pension Plan, the 401(k) Plan, bank-owned life insurance, and vested balances under non-qualified, deferred compensation plans are not included.
| Daniel J. | Philip J. | Joseph J. | R. Louis | Ronald E. | ||||||||||||||||
| Schrider | Mantua | O’Brien, Jr. | Caceres | Kuykendall | ||||||||||||||||
| Death: | ||||||||||||||||||||
| Employment agreements | $ | - | $ | - | $ | - | n/a | n/a | ||||||||||||
| EIRP(1) | $ | - | $ | - | $ | 30,299 | $ | - | $ | - | ||||||||||
| Equity awards(2) | $ | 1,101,843 | $ | 493,177 | $ | 532,835 | $ | 499,187 | $ | 348,678 | ||||||||||
| Total | $ | 1,101,843 | $ | 493,177 | $ | 563,134 | $ | 499,187 | $ | 348,678 | ||||||||||
| Disability: | ||||||||||||||||||||
| Employment agreements(3) | $ | 1,565,542 | $ | 552,625 | $ | 593,125 | n/a | n/a | ||||||||||||
| EIRP(1) | $ | - | $ | - | $ | 30,299 | $ | - | $ | - | ||||||||||
| Equity awards(2) | $ | 1,101,843 | $ | 493,177 | $ | 532,835 | $ | 499,187 | $ | 348,678 | ||||||||||
| Total | $ | 2,667,385 | $ | 1,045,803 | $ | 1,156,259 | $ | 499,187 | $ | 348,678 | ||||||||||
| Voluntary termination or retirement by executive: | ||||||||||||||||||||
| Employment agreements | $ | - | $ | - | $ | - | n/a | n/a | ||||||||||||
| EIRP | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Equity awards | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Total | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Termination by the Company without Just Cause or by executive with Good Reason: | ||||||||||||||||||||
| Employment agreements(3) | $ | 1,565,542 | $ | 765,090 | $ | 823,610 | n/a | n/a | ||||||||||||
| EIRP | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Equity awards | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Total | $ | 1,565,542 | $ | 765,090 | $ | 823,610 | $ | - | $ | - | ||||||||||
| Termination in connection with a change in control (CIC): | ||||||||||||||||||||
| Employment or CIC agreements(3) | $ | 3,171,840 | $ | 1,571,330 | $ | 1,687,979 | $ | 1,541,089 | $ | 1,230,549 | ||||||||||
| EIRP(1) | $ | - | $ | - | $ | 30,299 | $ | - | $ | - | ||||||||||
| Equity awards(4) | $ | 1,191,515 | $ | 534,418 | $ | 576,364 | $ | 540,037 | $ | 363,588 | ||||||||||
| Total(5) | $ | 4,363,355 | $ | 2,105,748 | $ | 2,294,642 | $ | 2,081,126 | $ | 1,594,138 | ||||||||||
| Daniel J. Schrider | Philip J. Mantua | Joseph J. O’Brien, Jr. | R. Louis Caceres | Kevin Slane | ||||||||||||||||
| Death: | ||||||||||||||||||||
| EIRP(1) | $ | - | $ | - | $ | 13,149 | $ | - | ||||||||||||
| Equity awards(2) | $ | 1,414,667 | $ | 556,981 | $ | 689,460 | $ | 517,280 | $ | 332,898 | ||||||||||
| Life Insurance Benefits(3) | $ | 2,062,500 | $ | 1,062,500 | $ | - | $ | 1,050,000 | $ | - | ||||||||||
| Total | $ | 3,477,167 | $ | 1,619,481 | $ | 702,609 | $ | 1,567,280 | $ | 332,898 | ||||||||||
| Disability: | ||||||||||||||||||||
| Employment agreements(4) | $ | 2,106,207 | $ | 663,724 | $ | 776,224 | n/a | $ | 589,099 | |||||||||||
| EIRP(1) | $ | - | $ | - | $ | 13,149 | $ | - | $ | - | ||||||||||
| Equity awards(5) | $ | 1,414,667 | $ | 556,981 | $ | 689,460 | $ | 517,280 | $ | 332,898 | ||||||||||
| Total | $ | 3,520,874 | $ | 1,220,705 | $ | 1,478,833 | $ | 517,280 | $ | 921,997 | ||||||||||
| Qualified Retirement (age 65 or age 60 + 10 years of service): | ||||||||||||||||||||
| Equity awards(6) | $ | - | $ | 160,918 | $ | - | $ | - | $ | - | ||||||||||
| Total | $ | - | $ | 160,918 | $ | - | $ | - | $ | - | ||||||||||
| Termination by the Company without Just Cause or by executive with Good Reason: | ||||||||||||||||||||
| Employment agreements(7) | $ | 2,106,207 | $ | 956,250 | $ | 1,237,500 | n/a | $ | 815,625 | |||||||||||
| EIRP(1) | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Equity awards | $ | 137,046 | $ | 53,586 | $ | 69,289 | $ | 47,754 | $ | 29,403 | ||||||||||
| Total | $ | 2,243,253 | $ | 1,009,836 | $ | 1,306,789 | $ | 47,754 | $ | 845,028 | ||||||||||
| Termination in connection with a change in control (CIC): | ||||||||||||||||||||
| Employment or CIC agreements(8) | $ | 4,018,993 | $ | 2,060,163 | $ | 2,684,307 | $ | 2,096,774 | $ 1, 788,782 | |||||||||||
| EIRP(1) | $ | - | $ | - | $ | 13,149 | $ | - | $ | - | ||||||||||
| Equity awards(9) | $ | 1,492,425 | $ | 586,856 | $ | 725,723 | $ | 546,393 | $ | 354,348 | ||||||||||
| Total(10) | $ | 5,511,418 | $ | 2,647,019 | $ | 3,422,729 | $ | 2,643,137 | $ | 2,143,130 | ||||||||||
| (1) | Any unvested portion of the accumulated EIRP balance immediately vests upon death, disability or change in control, as shown above for Mr. O’Brien. The |
| (2) | Represents the value of unvested restricted stock grants that will vest upon termination according to the terms of each award agreement. In the event of the executive’s death, |
| (3) |
| (4) | In the event of termination due to disability Messrs. Schrider, Mantua, O’Brien, and |
| 36 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
| (6) | Upon a qualified retirement, performance RSUs granted in 2020 will continue to vest under the terms of the award agreement as if employment continued through the end of the performance period. The amounts shown are calculated based on the closing price of Company common stock of $32.19 on December 31, 2020 and assume vesting at the target level. |
| (7) | Termination without Just Cause or with Good Reason would result in Mr. Schrider receiving base salary and medical benefits for the remaining term of his agreement which as of December 31, 2020 was 30 months. Messrs. Mantua, O’Brien, and Slane would each receive base salary and pro-rated annual cash bonuses for the remaining term of the agreement, which was 18 months. |
| (8) | Assumes termination in connection with a change in control in which case each executive would receive the respective payment described on pages 34-35. |
| (9) | Time-vested restricted stock awards granted prior to 2020 will vest upon termination of employment, other than for just cause, within |
PROPOSAL 2: A Non-Binding Resolution to Approve the CompensationNON-BINDING RESOLUTION TO APPROVE THE COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS
for the Named Executive Officers
The Dodd-Frank Wall Street Reform and Protection Act requires companies to submit to shareholders a non-binding vote on the compensation of the named executive officers, as described in the Compensation Discussion and Analysis, the tabular disclosure regarding named executive officer compensation, and the accompanying narrative disclosure in this proxy statement. The boardBoard recommended and the shareholders elected to have this proposal submitted annually.
This proposal, commonly known as a “Say on Pay” proposal, gives our shareholders the opportunity to endorse or not endorse the executive compensation program and policies through the following resolution:
“Resolved, that the shareholders approve the compensation of the named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and related material in this proxy statement.”
This vote will not be binding on the board of directorsBoard and may not be construed as overruling a decision by the board nor to create or imply any additional fiduciary duty by the board.Board. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
The board of directorsBoard believes that the compensation practices of the Company are designed to accomplish the objectives described in the Compensation Discussion and Analysis and that they are appropriately aligned towith the long-term success of the Company and the interests of shareholders.
Voting Standard
This matter will be decided by the affirmative vote of a majority of the votes cast at the annual meeting. On this matter, abstentions and broker non-votes will have no effect on the voting. Accordingly, it is particularly important that beneficial owners of our stock instruct their brokers or nominees how to vote their shares.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS.
| | 37 |
PROPOSAL 3: An amendment to the articles of incorporation to increase authorized capital stock from 50,000,000 shares to 100,000,000 shares
The board of directors is seeking shareholder approval for an amendment to the Company’s articles of incorporation to increase the authorized capital stock from 50,000,000 shares to 100,000,000 shares. The board of directors is proposing the amendment to ensure that a sufficient amount of capital stock is available for issuance in the future. The board believes that the proposed increase in authorized capital stock is in the best interest of the Company.
Amendment
The board proposes to amend the first sentence of Article V of the articles of incorporation to read in its entirety as follows:
“The aggregate number of shares of all classes of capital stock which the corporation has authority to issue is 100,000,000 shares of capital stock, $1.00 par value per share, amounting in aggregate par value to $100,000,000.”
Purpose of the Amendment
The articles of incorporation currently authorize the issuance of up to 50,000,000 shares of capital stock. All of the authorized shares are initially classified as common stock. As of the record date, the Company had 35,644,141 shares of common stock outstanding and 2,650,843 shares of common stock reserved for issuance to directors, officers, employees and shareholders under various compensation and benefit plans which leaves 11,705,016 authorized, unissued and unreserved shares available for issuance in capital raising transactions, stock splits, stock dividends, or other corporate purposes.
In the future the Company may issue capital stock in connection with, among other things, corporate acquisitions and other transactions, stock splits, stock dividends, and existing and future benefit plans. While the Company currently does not have any plans to issue additional capital stock (other than pursuant to various compensation and benefit plans currently in existence), the board may determine that the issuance of additional stock in the future, either in connection with a corporate acquisition or otherwise, is in the best interests of the Company. In that event, the Company could need a substantial amount of capital stock available for issuance, and the 11,705,016 shares available as of the record date could be insufficient. As a result, the board is proposing an amendment of the articles of incorporation to increase the authorized capital stock from 50,000,000 shares to 100,000,000 shares, which would increase the authorized unissued and unreserved capital stock available for issuance from 11,705,016 to 61,705,016 shares.
Authorized, unissued and unreserved capital stock may be issued from time to time for any proper purpose without further action of the shareholders, except as required by the articles of incorporation and applicable law. Each share of common stock authorized for issuance has the same rights as, and is identical in all respects to, each other share of common stock. The newly authorized shares of common stock will not affect the rights, such as voting and liquidation rights, of the shares of common stock currently outstanding. Shareholders will not have preemptive rights to purchase any subsequently issued shares of capital stock.
The Company’s articles of incorporation authorize the board, without further shareholder action, to classify and reclassify any unissued shares of capital stock into a class or classes of preferred stock and to provide for the issuance of the shares of preferred stock in series, and by filing articles supplementary to the articles of incorporation pursuant to the applicable law of the State of Maryland, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. Preferred stock may be issued with preferences and designations as the board may from time to time determine. The board may, without shareholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the Company’s common stock.
If the authorized, unissued and unreserved capital stock is not increased, the Company may not be able to promptly respond to its capital or transactional needs. The delay necessary in obtaining shareholder approval could be detrimental to the Company and its shareholders in pursuing opportunities or responding to market conditions. The board does not intend to issue any additional shares of capital stock except on terms which it deems in the best interests of the Company and its shareholders.
Voting Standard
This matter will be decided by the affirmative vote of two-thirds of the outstanding shares entitled to vote at the annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVALRATIFICATION OF THE PROPOSED AMENDMENT TOAPPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE ARTICLES OF INCORPORATION
PROPOSAL 4: The Ratification of the Appointment of Ernst & Young LLP as the Independent Registered Public Accounting Firm for the Year 2018YEAR 2021
The Audit Committee (“the committee” in this section) has engaged Ernst & Young LLP (“Ernst & Young”) as the Company’s independent registered public accounting firm for the year 2018.2021. In accordance with established policy, the board is submitting this proposal to the vote of the shareholders for ratification. In the event the appointment is not ratified by a majority of the shareholders it is anticipated that no change in auditors will be made for the current year because of the difficulty and expense of making a change so long after the beginning of the year, but the vote will be considered in connection with the auditor appointment for 2019.2022.
In reaching its decision to engage Ernst & Young, the Audit Committeecommittee considered the independence factors, the length of the audit firm’s tenure as the Company’s independent auditor, the audit firm’s past performance, the audit firm’s relationship with the Committeecommittee and with management, and the fee structure that was negotiated. After discussion of these factors, the Committeecommittee concluded that it was in the best interestsinterests. of shareholders to continue the engagement of Ernst & Young as our independent registered public accounting firm for 2018.2021.
In 2017, Ernst & Young was engaged by the Company to complete tax compliance services related to the preparation of U. S. federal and state income tax returns for the Company and its subsidiaries for the year ended December 31, 2016. Ernst & Young also provides tax compliance services for trust clients of Sandy Spring Bank, the fees for which are billed to those clients. These services, which are permissible under applicable SEC and PCAOB independence standards, were pre-approved by the Audit Committee. The fees paid for these services are disclosed below.committee.
Representatives of Ernst & Young will be present and available atduring the annual meetingAnnual Meeting to respond to appropriate questions.
Voting Standard
In voting to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2018, shareholders may vote for the proposal, against the proposal or abstain from voting. This matter will be decided by the majority of the votes cast at the annual meeting. On this matter, abstentions will have no effect on the voting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2018.
The following table presents fees for professional audit services rendered for the audit of the annual financial statements of the Company and subsidiaries by Ernst & Young for the years ended December 31, 20162020 and December 31, 20172019, together with fees billed for other services.
| Ernst & Young | Ernst & Young | |||||||
| 2017 | 2016 | |||||||
| Audit Fees(1) (2) | $ | 653,000 | $ | 615,000 | ||||
| Tax Services(3) | 95,000 | 85,000 | ||||||
| All other fees(4) | 155,800 | 115,000 | ||||||
| Total | $ | 903,800 | $ | 815,000 | ||||
| 2020 | 2019 | |||||||
| Audit Fees | $ | 1,280,500 | $ | 875,600 | ||||
| Tax Services | - | - | ||||||
| All other fees | $ | 207,000 | 178,987 | |||||
| Total | $ | 1,487,500 | $ | 1,054,587 | ||||
“Audit fees” consist of fees for professional services rendered for the annual audit of the Company’s consolidated financial statements, including the integrated audit of internal control over financial reporting, and review of financial statements included in the Company’s quarterly reports on Form 10-Q and services normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements. Also included are fees related to implementation of the current expected credit loss model and the acquisitions of Revere Bank and Rembert Pendleton Jackson.
“All other fees” consist of 1099 processing fees for trust clients of Sandy Spring Bank.
Audit Committee's Preapproval Policies and Procedures for Audit and Non-Audit Services
The Audit Committeecommittee is required to pre-approve all auditing services and permitted non-audit services provided by the Company’s independent registered public accounting firm, Ernst & Young. An exception for preapproval of non-audit services may be made if:
| · | the aggregate amount of all such non-audit services provided to the Company constitutes not more than 5% of the total amount of revenues paid by it to the independent registered public accounting firm during the fiscal year in which the non-audit services are provided; |
| · | such services were not recognized by the Company at the time of the engagement to be non-audit services; and the non-audit services are promptly brought to the attention of the |
| 38 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
All audit services, tax services and permitted non-audit services to be performed by Ernst & Young have been preapproved by the Audit Committeecommittee as required by SEC regulations and the Audit Committee'scommittee's charter without exception. The Committeecommittee also has determined that the amount and nature of non-audit services rendered by Ernst & Young to the Company is consistent with its independence.
Voting Standard
The Company’s management is responsible for its internal controls and financial reporting process. TheIn voting to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm is responsible for performing an independent audit2021, shareholders may vote for the proposal, against the proposal or abstain from voting. This matter will be decided by the majority of the Company’s consolidated financial statements and issuing an opinionvotes cast at the annual meeting. On this matter, abstentions will have no effect on the conformity of those financial statements with accounting principles generally accepted in the United Stated and expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. voting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ERNST & YOUNG AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021.
The Company's Audit Committee is appointed by the board of directors to assist the board in monitoring: 1)(1) the integrity of the Company’s accounting and financial statements and financial reporting includingprocess; (2) the proper operation of internal controls over financial reporting, disclosure controls and procedures, and certifications made in accordance with the Sarbanes-Oxley Act of 2002; 2) compliance with legal and regulatory requirements, and 3) thequalifications, independence, and performance of the Company’s independent registered public accounting firm; and (3) the qualifications and performance of the Company’s internal and external auditors.audit department.
All members of the committee are independent and financially literate as defined in applicable law, regulations of the SEC, Nasdaq listing rules, the Federal Deposit Insurance Act and related regulations. Pamela A. Little, the CFO of an employee-owneda private government contractor, has been identified by the board as meeting the definition of an audit committee financial expert under SEC regulations.
The Committeecommittee is directly responsible for the appointment and oversight of the independent registered public accounting firm, including review of their general qualifications, specific experience in the financial sector, and compensation structure. The Committee has engaged Ernst & Young LLP since 2013. Pursuant to the five-year mandated rotation, a new lead engagement partner was designated for 2020. The Company’s management is responsible for its internal controls and financial reporting process. Ernst & Young is responsible for performing an independent audit of the Company’s consolidated financial statements and issuing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States and expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
In 2017,2020, the Committeecommittee met eight times, (four times in person and four times by teleconferenceof which were to approve quarterly approve earnings releases)releases, to carry out its duties and responsibilities as set forth in theAudit Committee Charter which may be found that is available on the Company’s Investor Relations website.
Among theseIn fulfilling its oversight duties, the Committee:committee:
| · | reviewed and discussed with management and Ernst & Young the scope and effectiveness of the Company’s |
| · | reviewed and discussed the Company’s audited and unaudited financial statements with management and Ernst & Young each quarter, prior to filing with the SEC and releasing to the public, for purposes of evaluating their accuracy and fair presentation of the Company’s financial condition; |
| · | discussed with Ernst & Young |
| · | met with Ernst & Young, with and without members of management present, to discuss the results of their evaluation of the integrity of the Company’s financial reporting; |
| · | received and reviewed the written disclosures and the letter from Ernst & Young required by applicable standards of the Public Company Accounting Oversight Board; |
| · | reviewed and discussed with Ernst & Young the matter of auditor independence; |
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 39 |
| · | met regularly with the Company’s chief internal auditor, with and without members of management present, to review and approve the annual risk-based audit plan, to review all audit reports, to track the timely resolution of any findings, and to assess the performance of the chief internal auditor; and |
| · | reviewed and monitored compliance with the “whistleblower” provisions of the Sarbanes-Oxley Act. |
Based upon the review, discussion, disclosures,reviews and materialsdiscussions described above, the Committee recommendscommittee recommended to the Company’s board of directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2017.2020.
| February | Pamela A. Little, |
| James J. Maiwurm | |
| Walter C. Martz II | |
| Mark C. Micklem | |
| Robert L. Orndorff |
General InformationGENERAL INFORMATION
Notice and Accessibility of Proxy Materials
For our 2018 annual meeting,2021 Annual Meeting, to save significant printing and mailing expenses, the Company is furnishing its proxy statement and annual report via the Internet according to the SEC rules for “Notice and Access.” On or about March 14, 2018,17, 2021, the Company mailed a Notice of Internet Availability of Proxy Materials (“Notice”) to all shareholders who had not previously elected to receive their proxy materials by mail or electronically containing instructions on how to access this proxy statement and our annual report and how to vote online. Upon receipt of the Notice, shareholders may choose to request a printed copy of proxy materials at no charge, and this preference will be maintained for future mailings.
To further reduce costs, the Company utilizes the householding rules of the SEC that permit the delivery of one set of proxy materials or notice of availability of these materials to shareholders who have the same address. If you wish to receive a separate copy of this proxy statement and annual report or notice of availability of these materials for each shareholder at your household, please follow the instructions on the Notice, and materials will be mailed to you at no charge. If a broker, or other nominee, holds your shares, please contact your broker or nominee directly.nominee.
Who Can Vote and What Constitutes a Quorum
Shareholders of Company common stock, par value $1.00 per share, as of the close of business on the Record Date may vote. Each share of common stock is entitled to one vote. As of the Record Date, 35,644,14147,423,290 shares of common stock were outstanding and eligible to vote. When you exercise your right to vote, you authorize the persons named as proxies to vote your shares per your instructions whether or not you attend the annual meeting. The presence, in person or by proxy, of at least a majority of the total number of outstanding shares of common stock is necessary to constitute a quorum at the annual meeting. Proxies marked as abstentions and proxies for shares held in the name of a broker, or other nominee, marked as not voted (broker non-votes) will be counted only for purposes of determining a quorum at the annual meeting.
By submitting your proxy instructions in time to be voted at the annual meeting, the shares represented by your proxy will be voted in accordance with those instructions. If you submit a signed proxy card and do not specify how you want to vote your shares, we will vote your shares in accordance with the recommendations of the board.Board. If your shares are held with the Company’s transfer agent, Computershare, or in an employee benefit plan, and you do not return your proxy, no votes will be cast on your behalf.
The board of directorsBoard does not know of any other matters that are to come before the annual meeting except for incidental or procedural matters. If any other matters are properly brought before the annual meeting, the persons named in the accompanying proxy card will vote the shares represented by each proxy on such matters in accordance with their best judgment.
| 40 | Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
If you hold your shares through a broker, or other nominee, it is critical that you cast your vote if you want it to count for Proposals 1 2, and 3.2. Your broker is not allowed to vote shares on your behalf on such matters without your specific instruction.If you do not instruct your broker how to vote on these matters, no votes will be cast on your behalf. Your broker will however, have discretion to vote any uninstructed shares on matters considered routine items, such as the ratification of the appointment of the independent registered public accounting firm (Proposal 4)3).
We are pleased to offer our shareholders the convenience of voting by telephone and Internet. Please refer to your Notice or proxy card for instructions. If you hold your shares in street name, your broker may allow you to provide voting instructions by telephone or via the Internet. Please refer to the instructions provided by your broker.
How to Attend the Virtual Annual Meeting In Person and What to BringYou Will Need
All shareholdersThere will be askedno physical location for the 2021 Annual Meeting. The meeting will be held live via webcast. Shareholders will need to check-inaccess www.meetingcenter.io/206713387 on April 28, 2021 by 10:00 a.m. and register using the control number found on your Notice or proxy card. You must have the control number in order to vote your shares at the registration desk prior to admittance to the meeting. Shareholders who own Company stock through a broker or other nominee will need to bring a statement as proof of ownership along with photo identification. No cameras or recording equipment will be permitted in the meeting, and all cell phones must be turned off. If you hold your shares through a broker, or other nominee, and you wish to vote your shares in person atduring the meeting you will need to ask the holder for a legal proxy. You will needproxy and request a control number from Computershare in order to bringsubmit a vote. The password for this meeting is SASR 2021.
Virtual Meeting Registration for Street Owners
All shareholders can listen to the virtual meeting and ask questions by signing on to the virtual meeting as a guest. Shareholders holding shares through an intermediary, such as a broker or bank, must register in advance if they want to vote their shares at the annual meeting virtually. These shareholders must submit a copy of your legal proxy reflecting your Sandy Spring Bancorp, Inc. holdings along with youyour name and email address to Computershare by email to legalproxy@computershare.com or by mail to: Computershare, Sandy Spring Bancorp, Inc., Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001. Requests for registration must be received no later than 5:00 p.m. Eastern Time on April 21, 2021. To access the meeting and turn it in with a signed ballot that will be providedgo to you atwww.meetingcenter.io/206713387 using the meeting.password: SASR2021.
Your presence atRegistering to attend the virtual annual meeting will not automatically revoke your proxy. However, you may revoke your proxy at any time prior to its exercise by 1)(1) filing a written notice of revocation with Ronald E. Kuykendall,Aaron M. Kaslow, General Counsel and Secretary; or 2)(2) delivering a duly executed proxy bearing a later date; or 3)(3) attending the virtual annual meeting in real time and casting ayour ballot in person.
The cost of soliciting proxies will be borne by the Company. In addition to the solicitation of proxies by mail, the Company also may solicit proxies through its directors, officers, and employees. The Company will also request persons, firms, and corporations holding shares in their names or in the name of nominees that are beneficially owned by others to send proxy materials to and obtain proxies from those beneficial owners and will reimburse the holders for their reasonable expenses in doing so.
Tabulation of Votes and Public Announcement of Results
The board of directorsBoard has appointed the Company’s transfer agent, Computershare, to act as inspector of election at the annual meeting of shareholders. A designated representative from Computershare, under oath, will carry out the duties of tabulating the votes at the meeting. The results will be announced at the end of the meeting, and filed with the SEC on Form 8-K within four business days. Shareholders may view the Form 8-K on the investor relations page ofwww.sandyspringbank.com.
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement | 41 |
Shareholder Proposals and CommunicationsSHAREHOLDER PROPOSALS AND COMMUNICATIONS
From time to time, individual shareholders may wish to submit proposals that they believe should be voted upon by the shareholders. The SEC has adopted regulations that govern the inclusion of such proposals in the Company's annual proxy materials. Shareholder proposals intendedIn order to be presented at the 2019 annual meeting of shareholders may be eligible for inclusionincluded in the proxy materials for thatto be provided to shareholders in advance of the 2022 annual meeting, notice of a shareholder proposal must be received on or prior to November 28, 2021; however, if received at the Company’s executive offices not later than November 14, 2018 unless the date of the 20192022 annual meeting is held more than 30 days frombefore or after April 25, 2019, in which case28, 2022, the deadline for receipt of such notice is any date allowing a reasonable time before we provide the Company beginsproxy materials to print and mail proxy materials.our shareholders. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934.
In addition, the Company's bylaws require that to be properly brought before an annual meeting, shareholder proposals for new business must be delivered to or mailed and received by the secretary not less than thirty nor more than ninety days prior to the date of the meeting; provided, however, that if less than forty-five days’ notice of the date of the meeting is given to shareholders, such notice by a shareholder must be received not later than the fifteenth day following the date on which notice of the date of the meeting was mailed to shareholders or two days before the date of the meeting, whichever is earlier. Each such notice given by a shareholder must set forth certain information specified in the bylaws concerning the shareholder and the business proposed to be brought before the meeting.
Shareholders also may nominate candidates for election as a director, provided that such nominations are made in writing and received at the Company’s executive offices not later than December 14, 2018.17, 2021. The nomination should be sent to the attention of Ronald E. Kuykendall,Aaron M. Kaslow, General Counsel and Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832, and must include, concerning the director nominee, the following information: full name, age, date of birth, educational background and business experience, including positions held for at least the preceding five years, home and office addresses and telephone numbers, and a signed representation to timely provide all information requested by the Company for preparation of its disclosures regarding the solicitation of proxies for election of directors. The name of each such candidate for director must be placed in nomination at the annual meeting by a shareholder present in person. The nominee must also be present in person at the annual meeting. A vote for a person who has not been duly nominated pursuant to these requirements will be deemed to be void.
Shareholders may communicate with the board of directorsBoard or any individual director by addressing correspondence to the boardBoard or such director in care of the secretary at the Company's main office by mail, courier, or facsimile or by e-mail through the Company’s "contact us" feature ofinformation" on the investor relations areapage of its web site atwww.sandyspringbank.com.
| By order of the board of directors, | |
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| Olney, MD | Aaron M. Kaslow |
| March 17, 2021 | General Counsel & Secretary |
| Notice of Annual Meeting of Shareholders and 2021 Proxy Statement |
IMPORTANT ANNUAL MEETING INFORMATION 000004 ENDORSEMENT_LINE______________ MMMMMMMMMMMMMMMMMMMMMMMMMMM C123456789000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext000004ENDORSEMENT_LINE______________ SACKPACK_____________ MR A SAMPLE000000000.000000 ext 000000000.000000 extMMMMMMMMMMR ASAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on April 25, 2018. Vote by Internet • Go to www.envisionreports.com/sasr • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message Using6Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.areas.Your vote matters – here’s how to vote!You may vote online or by phone instead of mailing this card.Online Go to www.envisionreports.com/SASR or scan the QR code — login details are located in the shaded bar below.PhoneCall toll free 1-800-652-VOTE (8683) within the USA, US territories and CanadaSave paper, time and money! Sign up for electronic delivery at www.envisionreports.com/SASR2021 Annual Meeting Proxy Card 1234 5678 9012 345 • IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals•Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR ProposalProposals 2 Proposal 3, and Proposal 4.3. A 1. Election of DirectorsDirectors: +For Withhold For Withhold 01For Withhold01 - Ralph F. Boyd, Jr. 04Jr.02 - Walter C. Martz II03 - Mark C. Michael04 - Robert L. Orndorff 07 - Shaza L. Andersen For Withhold 02 - Joseph S. Bracewell, III 05Orndorff05 - Daniel J. SchriderSchriderFor Against Abstain For Withhold 03 - Mark C. Michael 06 - Joe R. Reeder 2.Against Abstain2. A non-binding resolution to approve the compensation for the named executive officers. For Against Abstain 4. Ratification3. The ratification of the appointment of Ernst & Young LLP as the named executive officers. independent registered public accounting firm for 2018. For Against Abstain 3. An amendment to the articles of incorporation to increase authorized capital stock from 50,000,000 shares to 100,000,000 shares. For Against Abstain B Non-Voting Items Change of Address — Please print your new address below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. C Authorizedyear 2021.Authorized Signatures — This section must be completed for your vote to be counted. — Datecount. Please date and Sign Belowsign below. B Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T 1 P C F 3 6 6 3 3 0 1 MRbox.MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140UPTOACCOMMODATEC 1234567890 JNT140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLEASAMPLE AND 1PCF 492028 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 02SF5BMMMMMMM +03EJRB
Sandy Spring Bancorp, Inc.’s Annual Meeting of Shareholders will be held on Wednesday, April 28, 2021 at 10:00 a.m. Eastern Time, virtually via the internet at www.meetingcenter.io/206713387. To access the virtual meeting, you must have the 15-digit number that is printed in the shaded bar located on the reverse side of this form. The password for this meeting is — SASR2021.Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.envisionreports.com/SASRSmall steps make an impact.Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/SASR• IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy — Sandy•Sandy Spring Bancorp, Inc. 2018+Notice of 2021 Annual Meeting of Shareholders ProxyShareholdersProxy Solicited by Board of Directors for Annual Meeting Ronald E. Kuykendall, and Philip— April 28, 2021Philip J. Mantua and Aaron M. Kaslow or anyeither of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meetingannual meeting of Shareholdersshareholders of Sandy Spring Bancorp, Inc., to be held on April 25, 201828, 2021 at 10:00 a.m. or at any postponement or adjournment thereof. Sharesthereof.Shares represented by this proxy will be voted as directed by the shareholder. If no such directions are indicated, the proxy holders will have authority to vote FOR each of the director-nominees (Proposal 1), FOR the non-binding resolution to approve the compensation for the named executive officers (Proposal 2), FOR the amendment to the articles of incorporation (Proposal 3)(Proposal2) and FOR the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for 20182021 (Proposal 4)3). In their discretion, the proxy holdersproxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side.)side) Non-Voting Items C Change of Address — Please print new address below. Comments — Please print your comments below.+
