UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Securities Exchange Act of 1934
Filed by the Registrant x☒
Filed by a Party other than the Registrant ¨☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material pursuant to |
SANDY SPRING BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. | |
Fee paid previously with preliminary materials. | ||
☐ | Fee computed on table |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE | Wednesday, May 18, 2022 | |
TIME | 10:00 a.m., Eastern Time | |
PLACE | The meeting will be held live via the internet in virtual format only at https://meetnow.global/MMYUPAD | |
RECORD DATE | You are eligible to vote if you were a shareholder of record at the close of business on March 9, 2022 |
MEETING AGENDA
Elect three Class III directors to serve until the 2025 annual meeting
Approve amendments to the Articles of Incorporation to declassify the Board of Directors
Vote, on an advisory basis, to approve the compensation for the named executive officers
Ratify the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 2022
Transact such other business as may properly come before the meeting
THERE WILL BE NO PHYSICAL LOCATION FOR THE ANNUAL MEETING
In support of the health and safety of our shareholders and employees, we will hold our annual meeting this year solely by means of remote communication via webcast at https://meetnow.global/MMYUPAD. You will be able to attend and participate in the virtual annual meeting online, vote your shares electronically, and submit questions prior to and during the meeting. If you plan to attend the annual meeting virtually, please review the information on attendance procedures on page 59 of this proxy statement.
YOUR VOTE IS VERY IMPORTANT
Please submit your proxy as soon as possible by internet, telephone, or mail. Submitting your proxy by one of these methods will ensure your representation at the annual meeting regardless of whether you attend the meeting. Instructions for voting by internet or telephone can be found on your proxy card or voting instruction form.
By order of the Board of Directors,
Aaron M. Kaslow
General Counsel & Secretary
April 6, 2022
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2022 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 18, 2022
This proxy statement and the 2021 Annual Report on Form 10-K are available at www.envisionreports.com/sasr.
| Notice and Proxy Statement | 2022 |
| Notice and Proxy Statement | 2022 |
PROXY SUMMARY |
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider in deciding how to vote your shares. Please read the entire proxy statement before voting. For information about our company’s performance, please review our 2021 Annual Report on Form 10-K.
You have received these proxy materials because our Board of Directors is soliciting your proxy to vote your shares during the 2022 annual meeting of shareholders. Notice of our annual meeting and this proxy statement were first sent or made available to shareholders on April 6, 2022.
2022 ANNUAL MEETING INFORMATION
For additional information about our annual meeting, see “Information about the Meeting” on page 59.
| MEETING DATE: | May 18, 2022 | |
| MEETING TIME: | 10:00 a.m. (Eastern) | |
| RECORD DATE: | March 9, 2022 | |
| VIRTUAL MEETING LOCATION: | https://meetnow.global/MMYUPAD |
There will be no physical location for the annual meeting. Shareholders may attend, vote and ask questions at the meeting only by logging in at https://meetnow.global/MMYUPAD. Registered shareholders will be required to enter a control number, which can be found on your Notice of Internet Availability, proxy card, electronic notification or voting instructions included with your proxy materials. If you hold your shares through an intermediary, such as a bank or broker, see page 59 for information regarding how to vote your shares during the meeting. If you do not have a control number, you may still attend the meeting as a guest, but you will not be able to vote your shares during the meeting.
VOTING MATTERS AND BOARD RECOMMENDATIONS
Proposal | ||||
Board Recommendation | More Information | |||
1) Election of three Class III directors | ||||
✓ “FOR” all nominees | Page 4 | |||
2) Approval of amendments to the Articles of Incorporation to declassify the Board of Directors | ||||
✓ “FOR” | Page 53 | |||
NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
Wednesday, April 25, 2018, 10:00 a.m.
Company Headquarters - Willard H. Derrick Building
17801 Georgia Avenue, Olney, MD 20832
The 2018 annual meeting of shareholders of Sandy Spring Bancorp, Inc., will be held as indicated above for the purpose of considering:
3) Advisory vote to approve the compensation for the named executive |
✓ “FOR” | Page 55 | |||
4) The ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for | ✓ “FOR” | Page 56 |
HOW TO VOTE YOUR SHARES
Your vote is important. You may vote if you were a shareholder on March 9, 2022. Whether or not you plan to attend the virtual annual meeting, please cast your vote as promptly as possible using one of these methods:
Online before the meeting | By Phone | By Mail | Online during the meeting | |||
www.envisionreports.com/sasr (record holders) www.proxyvote.com (beneficial owners) | Call the phone number on your proxy card (record holders) or voting instruction form (beneficial owners) | Complete, sign, date and mail your proxy card (record holders) or your voting instruction form (beneficial owners) | Attend our annual meeting logging into the virtual annual meeting website and vote by following the instructions provided on the website | |||
| Notice and Proxy Statement | 2022 | 1 |
PROXY SUMMARY |
The board of directors established February 28, 2018, as the record date for this meeting. Shareholders of recordBOARD OF DIRECTORS
Name | Occupation | Age | Independent | Director Since | Committee Memberships | |||||
Mona Abutaleb | CEO of Medical Technology Solutions, LLC | 59 | ✓ | 2015 |
Compensation Risk
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Ralph F. Boyd | President and CEO of SOME, Inc. | 65 | ✓ | 2012 |
Compensation (Chair) E&G Nominating
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Mark E. Friis | Chair (former CEO) of Rogers Consulting, Inc. | 66 | ✓ | 2005 |
E&G Risk (Chair) Nominating
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Brian J. Lemek | Owner of Lemek, LLC, a franchisee for Panera Bread bakery-cafes. | 58 | ✓ | 2020 |
Audit Compensation
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Pamela A. Little | CFO of Nathan, Inc. | 68 | ✓ | 2005 |
Audit (Chair) E&G Nominating
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Walter C. Martz II
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Managing Member of Walter C. Martz LLC law firm.
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70
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✓
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2020
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Audit
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Mark C. Michael
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Fellow at the Harvard Advanced Leadership Initiative
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59
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✓
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2018
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Compensation
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Mark C. Micklem | Retired. Former Managing Director and Head of Financial Services Investment Banking at Robert W. Baird & Co. | 63 | ✓ | 2019 |
Audit Risk
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Christina B. O’Meara
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President and founder of O’Meara Properties
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68
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✓
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2020
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Compensation
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Robert L. Orndorff, Chair | President and founder of RLO Contractors, Inc. | 65 | ✓ | 1991 |
Audit Compensation E&G (Chair) Risk Nominating
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Craig A. Ruppert | President and CEO of The Ruppert Companies | 68 | ✓ | 2002 |
E&G Nominating (Chair)
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Daniel J. Schrider, Vice Chair | President and CEO Sandy Spring Bancorp, Inc. and Sandy Spring Bank | 57 |
| 2009 |
E&G Risk
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Ages as of the close of business on that date are entitled to receive this notice of meeting03/09/2022 E&G = Executive and vote their shares at the meeting and any adjournments or postponements of the meeting.Governance
2 | | Notice and Proxy Statement | 2022 |
PROXY SUMMARY |
BOARD COMPOSITION
Your vote is very important. The board urges each shareholder to promptly sign and return the enclosed proxy card or to use telephone or Internet voting, as described on the card. If you choose to attend the meeting, you may withdraw your proxy and vote in person.
GOVERNANCE HIGHLIGHTS
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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
| Notice and Proxy Statement | 2022 | 3 |
PROPOSAL |
PROPOSAL 1: ELECTION OF DIRECTORS
Our Board of Directors currently has 12 members. Under our Articles of Incorporation and Bylaws, the Board is authorized to fix the number of directors, up to a maximum of 15. The Board currently is divided into three classes, with only one class of directors being elected each year and each class serving a three-year term. The Board has approved amendments to our Articles of Incorporation to The Board has nominated three Class III directors for election for a three-year term expiring in 2025. They are Mona Abutaleb, Mark C. Micklem, and Christina B. O’Meara. All Class III director-nominees are currently directors who have been elected previously by the shareholders. Each nominee has consented to be nominated and has agreed to serve, if elected. If any person nominated by the Board is unable to stand for election for any reason, the shares represented at our annual meeting may be voted for the election of another candidate as the present Board may designate, or our Board may choose to reduce its size. | In Memoriam GARY G. NAKAMOTO 1964 - 2021 Gary G. Nakamoto served as an independent director of our company since 2011. Mr. Nakamoto was the principal of The Nakamoto Group, LLC, a consulting firm based in Great Falls, Virginia. We remember Gary for his warmth and humor and his unwavering support for our company. |
37BOARD DIVERSITY
Our Board values diversity (inclusive of gender, race and ethnicity) and seeks to include directors with a broad range of backgrounds, professional experience, perspectives and skills. In compliance with Nasdaq Listing Rules, the following chart shows the diversity of the Board:
Board Diversity Matrix as of March 9, 2022 | ||||||||
Total Number of Directors | 12 | |||||||
Female | Male | Non-Binary | Did not Disclose | |||||
Part I: Gender Identity |
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Directors | 3 | 9 | 0 | 0 | ||||
Part II: Demographic Background |
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African American or Black |
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Alaskan Native or Native American |
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Asian |
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Hispanic or Latinx |
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Native Hawaiian or Pacific Islander |
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White | 11 |
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Two or More Races or Ethnicities |
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LGBTQ+ | 0 | |||||||
Did Not Disclose Demographic Background | 0 |
4 | | Notice and Proxy Statement | 2022 |
Proxy Statement
Our directors bring a balance of skills, qualifications and experience to their oversight of our company, as shown in the matrix below. The board of directors of Sandy Spring Bancorp, Inc., has furnished this proxy statementmatrix identifies certain skills, qualifications and experience that the Board believes are relevant to youour business. A director may possess other skills, qualifications and experience not indicated in connection with the solicitation of proxiesmatrix that may be relevant and valuable to be used at the 2018 annual meeting of shareholders (“annual meeting”) or any postponement or adjournment of the meeting. The notice of annual meeting is being first mailedtheir service on or about March 14, 2018 to shareholders of record as of the close of business on 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” refers to the board of directors of Sandy Spring Bancorp, Inc.
Proxy Summary
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 2017 Annual Report on Form 10-K.Board.
Voting Matters and Board Recommendations
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Boyd | Friis | Lemek | Little | Martz | Michael | Micklem | O’Meara | Orndorff | Ruppert | Schrider | |||||||||||||||||||||||||||||||||||||||||
SKILL/EXPERIENCE | Executive Leadership Experience in an executive leadership position provides the perspective required to understand and direct business operations, analyze risk, manage human capital, oversee implementation of organizational change, and develop and execute strategic plans. | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||
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:
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Summary of Governance Practices
The Company is committed to governance practices that support our long-term strategy, demonstrate high levels of integrity, and earn the confidence of investors.
✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||||
Consumer Business and Financial Services Experience with consumer products and services or the financial services industry provides insight that assists the Board | ¡ | ¡ | ¡ | ¡ | ¡ | ¡ | ¡ | ● | ¡ | ¡ | ¡ | ● | ||||||||||||||||||||||||||||||||||||
Financial Reporting and Accounting Knowledge of or experience in accounting, financial reporting or auditing processes and standards assists the Board in overseeing our financial position and condition and ensuring accuracy and transparency in reporting. | ● | ¡ | ¡ | ¡ | ● | ¡ | ● | ● | ¡ | ● | ● | |||||||||||||||||||||||||||||||||||||
Legal and Regulatory Understanding legal risks and obligations and experience with regulated businesses, regulatory requirements and relationships with regulators is important because we operate in a regulated industry. | ¡ | ● | ¡ | ¡ | ● | ¡ | ¡ | ¡ | ● | |||||||||||||||||||||||||||||||||||||||
Risk Management Risk is inherent in the operation of our business. Having directors with experience and expertise in risk management allows the Board | ● | ¡ | ¡ | ● | ● | ¡ | ● | ¡ | ¡ | ● | ● | |||||||||||||||||||||||||||||||||||||
Technology/Information Security/Cybersecurity Experience with and understanding of | ● | ¡ | ● | ● | ● | ¡ | ¡ | ¡ | ● | |||||||||||||||||||||||||||||||||||||||
Human Capital Management Directors with an understanding of | ● | ¡ | ● | ● | ● | ● | ● | ¡ | ¡ | ¡ | ● | |||||||||||||||||||||||||||||||||||||
Commercial Real Estate/Market Knowledge Directors with experience in commercial real estate in our service area provide insight into our strategic planning, risk management, our market area and the needs of the local communities we serve. | ● | ● | ● | ● | ¡ | ¡ | ¡ | ¡ | ● | ¡ | ● | ● | ||||||||||||||||||||||||||||||||||||
Public Company Governance Knowledge of public company governance practices and policies assists the Board in considering and adopting corporate governance practices, interacting with stakeholders and understanding the impact of various policies on our business. | ||||||||||||||||||||||||||||||||||||||||||||||||
✓ |
● | Technical or Managerial Expertise – derived from direct and hands-on experience or director managerial experience with the subject matter during his/her career. | |
¡ | Working Knowledge – derived through Board or relevant committee membership at Sandy Spring or another company, executive leadership of a company in the relevant industry, consulting, investment banking, or private equity investing. |
| Notice and Proxy Statement | 2022 | 5 |
PROPOSAL 1: ELECTION OF DIRECTORS |
PROPOSAL 1: Election of Directors
The board is elected by the shareholders to represent their interest in the Company. With the exception of those matters reserved for shareholders, the board is the highest and ultimate decision-making authority. The board works closely with executive management and oversees the development and execution of our business strategy.
Board Complement
Our board currently has 15 members divided into three classes in equal number. 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 to the Company’s bylaws that permits a director to continue to serve on the board after the annual meeting of shareholders immediately following his or her seventy-second (72nd) birthday if (i) he or she was appointed to the board of directors in connection with a corporate acquisition, consolidation, or merger and (ii) the Nominating Committee and board of directors determine that his or her continued service would be 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.
Director-Nominees
A total of seven directors are nominated for election. Class I director-nominees are before you for election to a three-year term to expire in 2021: Ralph F. Boyd, Jr., Joseph S. Bracewell, Mark C. Michael, Robert L. Orndorff, and Daniel J. Schrider. Joe R. Reeder is nominated to 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 nominees currently serve on the board, and Mr. Boyd, Mr. Orndorff, and Mr. Schrider have been elected previously by the shareholders.
Nomination ProcessNOMINATION PROCESS
The Nominating Committee is responsible for recruitingidentifying, evaluating, and recommending candidates to the board. In exercising itsBoard a slate of nominees for election at each annual meeting of shareholders. All director nominees are expected to exhibit high standards of integrity and independence of thought and judgment, participate in a constructive and collegial manner, and be willing to devote sufficient time to carrying out the duties the committee considers the present skills and experience on the board and the qualifications that are desired in order to 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 recruitmentresponsibilities of a new director the board gathers input from all directors in order to form a collective picture of the particular competencies needed to fulfill the board’s obligations and support our long-term strategy. Such competencies may include expertise in: the banking industry, financial matters, risk management, marketing, a geographic market, regional economics, strategic planning, executive management, technology or other relevant qualifications. The board also values diversity and seeks to include a broad range of backgrounds, experience and personality styles.
director.
The Nominating Committee encourages suggestionsassesses the skill areas currently represented on the Board, as well as those skill areas represented by directors expected to retire from the Board in the near future, against the skills matrix described above. The committee also considers recommendations from members of the Board regarding skills that could improve the overall ability of the Board to carry out its function. Based on this analysis, the committee targets specific skill areas or experience as the focus of consideration for qualifiednew directors to join the Board.
The Nominating Committee also considers whether the candidate would enhance the diversity of the Board in terms of gender, ethnicity, race, experience and skills.
The Nominating Committee may retain an independent search firm to assist with identifying director candidates, fromand individual Board members are encouraged to submit potential nominees to the chief executive officer, the chairmanChair of the board,Nominating Committee. The Nominating Committee has the sole authority to retain and terminate any search firm used to identify director candidates, including sole authority to approve its fees and the other directors, and from shareholders, and is responsible for the evaluationterms of such suggestions.its engagement. Shareholders may also submit suggestions for qualified director candidates by writing to Ronald E. Kuykendall, General Counsel andthe Corporate Secretary at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832. Submissions should include information regarding a candidate'scandidate’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 useshas not adopted any specific procedures for considering the recommendation of director nominees by shareholders, but will consider shareholder nominees on the same process for evaluating all nominees, including those recommended by shareholders, using the board membership criteria described above.basis as other nominees. Please see "Shareholder Proposals and Communications"“Proposals for the 2023 Annual Meeting of Shareholders” on page 42.
Information About Nominees and Incumbent Directors
The61 for important 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 consentshareholders who intend to be nominated and has agreed to serve, if elected. If any person nominated by the board of directors is unable to stand for election, the shares represented by proxies may be votedsubmit a director nomination for the election2023 annual meeting of such other person or persons as the present board of directors may designate.shareholders.
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 ElectionsVOTING 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
6 | | Notice and Proxy Statement | 2022 |
PROPOSAL 1: ELECTION OF DIRECTORS |
Class I Director-Nominees – For Terms To Expire at the 2021 Annual MeetingNOMINEES FOR ELECTION AND CONTINUING DIRECTORS
![]() ![]() | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW AS A DIRECTOR. |
CLASS III DIRECTOR-NOMINEES – FOR TERMS EXPIRING AT THE 2025 ANNUAL MEETING
MONA ABUTALEB | About
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 cloud services provider, which was acquired by Ricoh Company, Ltd. in 2014. From 2006 to 2013, Ms. Abutaleb served as President and Chief Operating Officer of mindSHIFT. Ms. Abutaleb also served as Senior Vice President, Ricoh USA from 2015 to 2017 and Executive Vice President of Ricoh Global Services from 2017 to 2018. Ms. Abutaleb is also on the board of directors of Pentair plc (NYSE: PNR). | |
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| Notice and Proxy Statement | 2022 | 7 |
PROPOSAL 1: ELECTION OF DIRECTORS |
CHRISTINA B. O’MEARA | About
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INCUMBENT CLASS I DIRECTORS – TERMS EXPIRING AT THE 2024 ANNUAL MEETING
RALPH F. BOYD | About
| Mr. Boyd is the President and Chief Executive Officer for | |
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WALTER C. MARTZ II | About
| estate administration to complex real estate and commercial banking transactions. Mr. | |
MICHAEL |
| In 2021, Mr. Michael | |
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| Notice and Proxy Statement | 2022 | 9 |
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ROBERT L. |
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| Mr. Orndorff is the founder and President of RLO Contractors, Inc., a leading residential and commercial excavating and grading company in central Maryland established in 1976. In 2002, RLO expanded to include a products division that | |
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DANIEL J. SCHRIDER |
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Mr. Schrider has been part of Sandy Spring Bank for A leader among community bankers, Mr. Schrider |
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PROPOSAL 1: ELECTION OF DIRECTORS |
ClassINCUMBENT CLASS II Director-NomineeDIRECTORS – For Term To Expire at the 2020 Annual MeetingTERMS EXPIRING AT THE 2023 ANNUAL MEETING
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MARK E. FRIIS |
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Class III Director-Nominee – For Term To Expire at the 2019 Annual Meeting
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Incumbent Class II Directors - Terms Expiring at the 2020 Annual Meeting
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BRIAN J. LEMEK | About Mr. Lemek is the founder and | |
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PROPOSAL 1: ELECTION OF DIRECTORS |
PAMELA A. LITTLE |
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CRAIG A. RUPPERT |
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Incumbent Class III Directors - Terms Expiring at the 2019 Annual Meeting
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Corporate Governance and Other MattersCORPORATE GOVERNANCE
The board remainsWe are committed to setting a tone of the highest ethical standards and performance for our management, officers, and the Company as a whole. The board believes that strong corporate governance practices are a critical elementthat promote the long-term interests of doing business today. To that end,our shareholders and strengthen the accountability of our Board and management.
Our governance framework is set forth in our Corporate Governance Policy, is reviewed regularlycommittee charters and other key governance documents, which we review and modify on a regular basis to ensure that it reflectsreflect best practices, recent developments, and legal and regulatory requirements. Our Corporate Governance Policy, committee charters and other key governance documents are available on our website atwww.sandyspringbank.com by selecting “Investor Relations” at the best intereststop of the Companypage, then “Governance Documents” under “Governance Information.”
Nasdaq Listing Rules require that a majority of our directors and its shareholders. The policy mayeach member of our Audit Committee, Compensation Committee and Nominating Committee be found on our investor relations website atwww.sandyspringbank.com.
independent. In addition, our boardCorporate Governance Policy requires that not more than two of our directors be non-independent. A director may be determined to be independent only if the Board has adopted a Code of Business Conduct (“Code”) applicable to all directors, officers, and employeesdetermined that he or she has no relationship with the company that, in the opinion of the Company and its subsidiaries. It sets forthBoard, would interfere with the legal and ethical standards that governexercise of independent judgment in carrying out the conductresponsibilities 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, 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.
Director Independencea director.
The board of directors hasNominating Committee advises and makes recommendations to the full Board regarding director independence. After considering the committee’s recommendation, the Board affirmatively determined that all directorscurrent members of the Board, other than Mr. Schrider, are independent directors and Ms. Andersen are independent. In conjunctionindependent for purposes of the committees on which they serve in accordance with applicable Nasdaq and Securities and Exchange Commission (SEC) independence rules and requirements. The Board determined that Mr. Schrider is not independent because he is the acquisitionPresident and Chief Executive Officer of WashingtonFirst,the company.
To determine the independence of the directors, the Board considered certain transactions, relationships, or arrangements between those directors, their immediate family members, or their affiliated entities, on the one hand, 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 tocompany, on 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 board compliesother hand. Certain directors, their respective immediate family members, and/or affiliated entities have deposit or credit relationships with, or exceedsreceived investment or wealth management services from, Sandy Spring Bank or one of its subsidiaries in the independence requirements forordinary course of business. The Board determined that all of these transactions, relationships, or arrangements were made in the board and board committees established by the Nasdaq Stock Market, federal securities andordinary course of business, were made on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party, were not criticized or classified, non-accrual, past due, restructured or a potential problem, complied with applicable banking laws, and the additional standards included in our Corporate Governance Policy.did not otherwise impair any director’s independence.
Plurality Plus Resignation Policy
In response to feedback from our shareholder engagement efforts, the board 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 consideredOur Board is led by the Nominating Committee, which will make a recommendation toChair. Under our Bylaws, the board.
Board Leadership Structure, Education and Self-Assessment Process
The Company’s bylaws provide forChair is elected annually by the annual election of a chairman of the boardBoard from among the directors and presides over each Board meeting and performs such other duties as may be incident to the Corporate Governance Policy states it is the board’s policy to separate the officesoffice of the chairman and the chief executive officer. This separate role allows the chairman to maintain independence in the oversight of management.Chair. The chairman of the boardChair 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.
Under our Corporate Governance Policy, we separate the roles of Chair and Chief Executive Officer. Separation of the Chair and Chief Executive Officer roles facilitates effective oversight and evaluation of the Chief Executive Officer’s performance and supports the Board’s independent oversight of the company’s performance.
| Notice and Proxy Statement | 2022 | 13 |
CORPORATE GOVERNANCE |
The Board has five standing committees: Audit, Compensation, Executive and Governance, Nominating, and Risk. Each committee operates under a written charter, which may be found on our investor relations website at www.sandyspringbank.com.
| AUDIT COMMITTEE | The primary responsibility of the Audit Committee is to assist the Board in fulfilling its oversight responsibility for: • the integrity of the company’s accounting and financial statements and reporting processes; • the qualifications, independence, and performance of the independent auditors; and • the qualifications and performance of the company’s internal audit function. The Audit Committee is also responsible for: • the appointment, compensation, retention and oversight of the company’s independent auditors; • pre-approval of all audit and permissible non-audit services to be performed by the company’s independent auditors; • reviewing all major financial reports in advance of filing or distribution, including the company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and quarterly earnings press releases; and • reviewing the effectiveness of the company’s system of internal controls. All members are financially literate as required by the Nasdaq listing rules. All members are independent and meet additional Nasdaq and SEC independence standards for audit committee members. The Board has determined that Pamela A. Little and Mark C. Micklem are each an audit committee financial expert as defined by the SEC. | |
Committee Chair: Pamela A. Little | ||
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Other Committee Members | ||
Brian J. Lemek Walter C. Martz, II Mark C. Micklem Robert L. Orndorff | ||
Meetings in 2021: 8 |
| COMPENSATION COMMITTEE | The responsibilities of the Compensation Committee include: • developing our executive compensation philosophy and reviewing and approving compensation and benefit programs applicable to the company’s executive officers, including base salary, incentive compensation, equity awards, and retirement benefits. • reviewing and recommending to the Board the compensation of the company’s non-employee directors; • assessing whether the company’s compensation programs generally are designed in a manner that does not encourage or reward unnecessary or excessive risk-taking; • administering the company’s equity compensation plans; • oversight of the company’s human capital management strategy including initiatives on diversity, equity and inclusion, employee well-being and engagement; and • retaining and overseeing an independent compensation consultant to support the committee, approving related fees and engagement terms, and determining that the consultant’s work raises no conflicts of interest. All members are independent and meet additional Nasdaq and SEC independence standards for compensation committee members. | |
Committee Chair: Ralph F. Boyd | ||
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Other Committee Members | ||
Mona Abutaleb Brian J. Lemek Mark C. Michael Christina B. O’Meara Robert L. Orndorff | ||
Meetings in 2021: 6 |
14 | | Notice and Proxy Statement | 2022 |
CORPORATE GOVERNANCE |
| EXECUTIVE AND GOVERNANCE COMMITTEE | The Executive and Governance Committee is authorized to exercise the authority of the Board between regular meetings, except to the extent limited by law or the company’s charter documents. The Executive and Governance Committee also oversees the company’s governance structure and practices. The responsibilities of the Executive and Governance Committee include: • reviewing the company’s Corporate Governance Policy at least annually and making recommendations for updates; • reviewing the qualifications and independence of the directors as well as the composition of the Board and each committee’s membership; • oversight of the annual evaluation of the CEO and executive succession planning; • managing the Board’s process of annual evaluation; • oversight of ethics and business conduct; and • oversight of the company’s policies and practices on significant issues of corporate social responsibility including environmental, social, and corporate governance (ESG) and sustainability. All members are independent, except for Mr. Schrider. | |
Committee Chair: Robert L. Orndorff | ||
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Other Committee Members | ||
Ralph F. Boyd Mark E. Friis Pamela A. Little Craig A. Ruppert Daniel J. Schrider | ||
Meetings in 2021: 4 |
| NOMINATING COMMITTEE | The responsibilities of the Nominating Committee include: • reviewing the composition of the Board at least annually to ensure the Board reflects the desired skills, experience, diversity, and other qualifications as well as affirming whether each director qualifies as “independent” as defined by Nasdaq Listing Rules; • recommending the appropriate size of the Board; • overseeing the Company’s policies and processes for identifying and reviewing director candidates; • engaging an outside search firm, as needed, to source qualified candidates; • identifying, screening and reviewing individuals qualified to serve as directors, consistent with the criteria developed and approved by the Board; and • recommending to the Board for approval the candidates for nomination for election or re-election by the shareholders. All members are independent. | |
Committee Chair: Craig A. Ruppert | ||
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Other Committee Members | ||
Ralph F. Boyd Mark E. Friis Pamela A. Little Robert L. Orndorff | ||
Meetings in 2021: 2 |
| Notice and Proxy Statement | 2022 | 15 |
CORPORATE GOVERNANCE |
| RISK COMMITTEE | The Risk Committee assists the Board in its oversight of the company’s enterprise risk management. The responsibilities of the Risk Committee include: • monitoring the direction and trend of major risks relative to the our business operations and strategies; • reviewing and recommending to the Board updates to our enterprise risk management structure and risk appetite statement at least annually; • reviewing and approving significant risk management policies and controls that reflect our risk management philosophy, principles, and limits consistent with the risk appetite statement; and • receiving comprehensive reports on enterprise level risk exposures and measurements, including relevant forecast information, and risk management programs including cybersecurity, business continuity, vendor management, and regulatory compliance. All members are independent, except for Mr. Schrider. | |
Committee Chair: Mark E. Friis | ||
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Other Committee Members | ||
Mona Abutaleb Mark C. Micklem Robert L. Orndorff Daniel J. Schrider | ||
Meetings in 2021: 6 |
We believe that a strong risk management culture is vital to the success of our business. To mitigate the risks inherent in our business, we foster a culture that makes managing risk everyone’s responsibility at all levels of the company.
We have implemented a formal risk management framework that establishes the program by which we identify, assess, measure, monitor, report and control risks across the company. The risk management framework is designed to link risk appetite, and related risk monitoring and reporting, with our business strategy and capital plans. The risk management framework describes our risk management approach, including the adoption of the three lines of defense risk model, and outlines our risk management governance structure, including the roles of the Board, management, lines of business and internal audit. The Risk Committee reviews the risk management framework at least annually, or more often as needed to address changes in the company’s risk profile or risk management best practices.
We have also adopted a risk appetite statement that identifies the level of risk we are willing to accept in pursuit of our strategic objectives. The company’s risk appetite is articulated through qualitative statements and quantitative metrics that cover the broad array of risks relevant to the company, including credit, market, liquidity, capital, operational, strategic and reputational risks. The Board reviews and approves our risk appetite statement annually. On a quarterly basis, we evaluate the risks facing the company and our risk appetite metrics against the risk appetite statement to ensure that the operations of the company align with the company’s risk appetite.
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CORPORATE GOVERNANCE |
The boardBoard is committedresponsible for overseeing the company’s risk management processes by informing itself about our material risks and evaluating whether management has reasonable risk management and control processes in place to self-improvementaddress those risks. The Board oversees risk management through the actions of the full Board, including approval and oversight of the company’s risk appetite statement, strategic plan, capital plan and financial plan, and the activities of its committees, principally the Risk Committee, Audit Committee and Compensation Committee.
Board of Directors | ||||
Risk Committee | The Risk Committee has primary responsibility for overseeing our risk management framework. The committee reviews and approves the company’s risk appetite statement, key risk management policies and the charter of the Executive Risk Committee, monitors compliance with the risk management framework and risk limits, and oversees the work of the company’s risk management function. The committee oversees credit risk, including lending and credit policies and asset quality, financial risk, including interest rate risk, liquidity risk, capital risk and market risk, and operational risk, including compliance risk, business continuity planning, information and cyber security risk, and third-party risk. The committee receives a quarterly enterprise risk report as well as regular updates on key and emerging risks. The Risk Committee reports regularly to the Board regarding material matters discussed at meetings of the Risk Committee, as well as the current status of risk and action items. | |||
Audit Committee | The Audit Committee plays a significant role in the Board’s exercise of its risk oversight responsibilities. This committee has primary oversight of risks arising from the company’s financial reporting, internal control processes and public disclosure. The Audit Committee reviews management’s assessment of the company’s internal control over financial reporting, meets regularly with the company’s independent auditors to discuss the results of their quarterly reviews and annual audit, and receives internal audit reports that enable it to monitor operational risk throughout the company. To ensure candid reporting, the Audit Committee meets in separate executive sessions with the company’s independent auditors and Chief Internal Auditor. The committee coordinates any substantive or systemic findings with the Risk Committee through a liaison member who serves on both committees. The Audit Committee regularly reports to the full Board on its risk management activities. | |||
Compensation Committee | The Compensation Committee has primary oversight of risks arising from the company’s incentive compensation plans and programs. On an annual basis, the committee receives a risk assessment that enables the committee to determine whether our incentive compensation plans and programs create risks that are likely to have a material adverse effect or would encourage excessive risk-taking. | |||
Board Oversight of Cybersecurity Risk
Our Board recognizes the company’s responsibility to protect the data provided by its clients and employees, understands how cyber risks could disrupt the company’s operations, and is cognizant of the increasing risks and threats associated with the use of digital technology. Through the efforts of the Risk Committee, the Board oversees the company’s continuing efforts to strengthen its information security infrastructure and staffing and enhance its technology controls and cybersecurity defenses.
As part of its oversight of operational risk, the Risk Committee is responsible for the oversight of information security and cybersecurity risk management. Our Chief Information Security Officer regularly reports to the Risk Committee on security events, testing, training, audits, new system assessments and vendor performance. These reports address topics such as the threat environment and vulnerability assessments, results of penetration testing, results of key cyber risk indicators and performance metrics, and the company’s efforts to detect, prevent and respond to internal and external critical threats. The Risk Committee receives periodic updates on information security risk, the maturity of the company’s information security program, and updates on related investments and results. On an annual basis, the Risk Committee reviews and approves our information security program and information security policy.
| Notice and Proxy Statement | 2022 | 17 |
CORPORATE GOVERNANCE |
ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS
Strengthening our communities through our products and services, investing in our communities and serving our neighbors and friends has always been at the heart of our mission as a community financial institution. As investors and the business community coalesce around the importance of environmental, social and governance issues (ESG), we are developing an approach to corporate and environmental sustainability that aligns with the nature of our business and the evolution of ESG principles in the financial services industry. In 2021, we published our inaugural 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 Board has responsibility for overseeing policies, programs and strategies related to ESG matters and receives updates, at least annually, from management on ESG matters, including investor sentiment, our Corporate Responsibility Report, and ESG initiatives. Board committees also play an important role in oversight of ESG matters. The Executive and Governance Committee oversees the company’s policies and practices on significant issues of corporate social responsibility and sustainability. The Compensation Committee assists the Board in the oversight of the company’s human capital management strategy, including strategies and initiatives on diversity, equity, and inclusion, employee well-being and engagement.
ENVIRONMENT | We recognize that we all have a role to play in environmental sustainability and combatting climate change. We foster sustainability by: • embracing digital tools to reduce paper usage and reliance on paper intensive processes • reducing waste and energy and resource usage in our facilities • financing clean energy and energy efficiency projects | |
SOCIAL | We believe that all members of our communities should have the opportunity to enjoy prosperous and fulfilling lives and that our success should enrich all stakeholders. We help lift up our clients and our communities by: • making financial products and services accessible and affordable • supporting area non-profit organizations that promote affordable housing, financial literacy, education, and health and wellness • volunteering with organizations across our footprint | |
PEOPLE | Attracting, retaining and developing a diverse, highly skilled workforce where employees feel included, respected and valued is key to our ability to deliver a remarkable client experience. We create a great place to work by: • building a diverse and inclusive workplace where all backgrounds, experience, interests and skills are respected, appreciated and encouraged • providing employees with opportunities to advance and grow their careers with our company through systematic talent management, career development and succession planning • delivering competitive compensation and benefits that exceed expectations | |
GOVERNANCE | We believe in strong governance and a culture of ethics and integrity in all that we do. We live these principles by: • adopting a Corporate Governance Policy that promotes sound and effective governance • adhering to a Code of Ethics and Business Conduct that sets expectations aligned with our core values • creating a culture of risk management in which managing risk is everyone’s responsibility at all levels of the company |
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CORPORATE GOVERNANCE |
2021 ESG HIGHLIGHTS
$494K donated to 110 local nonprofits | Financing clean energy through Montgomery County Green Bank and DC Green Bank |
over 6,000 employee volunteer hours | Lent $307M to first-time home buyers | |||
59% women in workforce | Launched formalized mentor program for diverse leaders | Paid over $475K in COVID-19 leave benefits | ||
38% people of color in workforce | $1.6B Paycheck Protection Program Loans | |||
| $15 minimum wage |
For more detailed information, please see our Corporate Responsibility Report, which is available on our website at www.sandyspringbank.com. Information on our website is not incorporated by reference into this proxy statement. Additional disclosures about human capital management can be found in our 2021 Annual Report on Form 10-K filed with the SEC.
The Board has established an annual self-assessment process that evaluates a different aspect of boardthe Board’s effectiveness each year. In 2017, that process was facilitated by The Center forOn a rotating basis, the directors evaluate the Board Excellence (“CBE”), an independent consultant. All directors completed an assessment ofas a whole, the Board committees, and individual director performance. The resultsself-assessment process, which is managed by the Executive and Governance Committee, involves completion of the evaluation were compiled by CBE,annual surveys, review and a written report was given to the chairman. The chairman discussed the results with each director confidentially.
Board’s Role in Risk Oversight
The board fulfills a significant role in the oversightdiscussion of risk in the Company both through the actions of the board as a whole and those of its committees. The board’s Risk Committee has duties and responsibilities for broad risk oversight. The Risk Committee receives regular reports on: credit risk, asset quality, the adequacy of the allowance for loan losses, investment risk profiles, interest rate risk, liquidity, capital adequacy, cybersecurity, vendor management, corporate insurance, litigation management and regulatory compliance. 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 auditsurveys by both the committee and review process.the full Board, as well as with individual directors in the case of peer evaluations, and communication of feedback to management to improve policies, processes and procedures to support Board and committee effectiveness. In addition,2021, the Audit Committee receivesBoard completed an evaluation of the Board as a whole.
We believe that continuing director education is essential to the ability of directors to fulfill their roles. We provide both internal audit reports that enable itand external educational opportunities and association memberships for our directors. We encourage directors to monitor operational risk throughoutparticipate in external continuing director education programs, and we reimburse directors for their expenses associated with such activities. Continuing director education also is provided during Board meetings and as stand-alone information sessions outside of meetings. Our Board hears from management as well as from subject matter experts on corporate governance and other matters relevant to Board service, including matters related to the Companyfinancial services industry.
BOARD AND COMMITTEE MEETING ATTENDANCE
During 2021, the Board held nine regular meetings and coordinatesone special meeting. Directors are expected to attend at least 80% of Board meetings and meetings of the findings withcommittees upon which they serve. In 2021, directors attended 99% of total Board and committee meetings, and each of the Risk Committee through a liaison member who servesdirectors attended at least 75% of the total meetings of the Board and the committees on both committees.which he or she served in 2021.
| Notice and Proxy Statement | 2022 | 19 |
CORPORATE GOVERNANCE |
Directors are expected to attend the company’s annual meeting of shareholders. All of our directors serving at the time of the 2021 annual meeting attended the 2021 virtual annual meeting via teleconference.
CODE OF ETHICS AND BUSINESS CONDUCT
Our Board Committees
has adopted a Code of Ethics and Business Conduct (the Code) applicable to all directors, officers, and employees of the company. The boardCode of directors has the following standing committees: Audit, ExecutiveEthics and Governance, Nominating, Compensation, and Risk. The charter for each committeeBusiness Conduct may be found on our investor relations website atwww.sandyspringbank.com. Each committee’s function www.sandyspringbank.com. If we make any substantive amendments to the Code or grant any waiver from a provision of the Code that is describedrequired to be disclosed under the applicable rules of the SEC, we will disclose the nature of such amendments or waiver on our website or in a current report on Form 8-K.
STOCK OWNERSHIP REQUIREMENTS FOR DIRECTORS
Our Corporate Governance Policy requires that directors own the lesser of 5,000 shares of company stock or company stock with a market value of $175,000 by January 1 following the director’s fifth anniversary of service. Unvested shares of restricted stock and restricted stock units count towards the satisfaction of the ownership requirement. Directors are expected to retain the shares of company stock they receive pursuant to their service as a Board member for so long as they serve as a director. All of the directors exceed the minimum ownership requirements of the policy.
PROHIBITION ON HEDGING AND PLEDGING
Under our Insider Trading Policy, our directors, officers and employees may not at any time buy or sell options on company securities or other derivative securities that reference company securities and may not enter into hedging or similar transactions that are designed to offset any decrease in the market value of company securities. In addition, our directors and executive officers are prohibited from trading company securities on margin, borrowing against any account in which company securities are held, or pledging company securities as collateral for any loan. Our policy also prohibits directors and executive officers from engaging in short sales of company stock.
20 | | Notice and Proxy Statement | 2022 |
DIRECTOR COMPENSATION |
Our director compensation program is designed to attract and retain highly qualified directors and align their interests with those of our shareholders. We compensate our non-employee directors with a combination of cash and equity awards. Directors who are employees of our company do not receive additional compensation for their service as Board members.
The Compensation Committee periodically reviews the director compensation program and recommends changes for approval by the Board. The Compensation Committee did not recommend any changes to our director compensation program for 2021.
CASH COMPENSATION
Non-employee directors received cash compensation in 2021 as follows:
Audit Committee - The Audit Committee is appointed by the board to assist in monitoring: 1) the integrity of the financial statements and financial reporting, including 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) the independence and performance of internal and external auditors. 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 board 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 board business between regular meetings as needed and provides oversight and guidance to the board of directors to ensure that the structure, policies, and processes of the board and its committees facilitate the effective exercise of the board'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 board and its committees as stated in the Corporate Governance Policy. This committee is also responsible for maintaining the Code of Business Conduct, the annual CEO evaluation process, and the annual board 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 board with respect to nominees for election as directors. In exercising its responsibilities, the Nominating Committee considers general criteria and particular goals and needs of the Company for additional competencies or characteristics. 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 board 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 board 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 board on strategic initiatives. The board 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 board for further deliberation and recommendation.
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 |
(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 board very seriously as demonstrated by the superior attendance record achieved each year. During 2017, the board held 10 meetings with overall attendance averaging 96%. 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 directors 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 directors 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. All of our directors were in attendance at the 2017 annual meeting.
Cash Compensation
Only non-employee directors are compensated for their service as board members. The Compensation Committee is responsible for reviewing 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.
In 2017, the chairman 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 retainer 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 |
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Additional cash annual retainer for Board and committee chairs |
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Chair of Board | $ | 40,000 |
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Audit Committee | $ | 15,000 |
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All other committees | $ | 10,000 |
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Board meeting attendance fee (per meeting) | $ | 1,200 |
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Attending an in-person Board meeting by phone | $ | 500 |
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Committee meeting attendance fee (per meeting) | $ | 1,000 |
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Directors are encouraged to attend all meetings in person unless the meeting is called by teleconference. Directors who attended a regular board meeting by phone were paid a reduced meeting fee of $500. Directors were not paid for limited-purpose teleconference meetings, and members of the Nominating Committee wereare not paid when the Executive &and Governance Committee metmeets on the same day. All directors of the Companyour company also serve as directors of Sandy Spring Bank, for which they diddo not receive any additional compensation.
EQUITYEquity CompensationCOMPENSATION
On March 15, 2017,April 28, 2021, each director received a grant of restricted stock units valued at $25,000 of Company common stock.approximately $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.
Director Fee Deferral PlanDEFERRED FEE ARRANGEMENTS
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. Indirector’s service, 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.
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.Board.
2017 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 |
| Notice and Proxy Statement | 2022 | 21 |
DIRECTOR COMPENSATION |
2021 NON-EMPLOYEE DIRECTOR COMPENSATION
The following table shows the compensation received during 2021 by our non-employee directors.
Name | Fees Earned or ($) | Stock Awards(2) ($) | All Other ($) | Total ($) | ||||||||||||||||
Mona Abutaleb | 51,800 | 35,043 | 2,616 | 89,459 |
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Ralph F. Boyd | 58,800 | 35,043 | 2,616 | 96,459 |
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Mark E. Friis | 61,800 | 35,043 | 5,016 | 101,859 |
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Brian J. Lemek | 47,800 | 35,043 | 2,223 | 85,066 |
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Pamela A. Little | 63,800 | 35,043 | 2,616 | 101,459 |
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James J. Maiwurm(4) | 5,400 | — | 708 | 6,108 |
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Walter C. Martz, II | 44,100 | 35,043 | 3,423 | 82,566 |
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Mark C. Michael | 44,800 | 35,043 | 2,616 | 82,459 |
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Mark C. Micklem | 50,800 | 35,043 | 2,813 | 88,656 |
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Gary G. Nakamoto(5) | 38,800 | 35,043 | 1,485 | 75,328 |
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Christina B. O’Meara | 44,800 | 35,043 | 2,223 | 82,066 |
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Robert L. Orndorff | 108,800 | 35,043 | 2,616 | 146,459 |
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Craig A. Ruppert | 54,800 | 35,043 | 2,616 | 92,459 |
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(1) | All or a portion of the reported cash compensation may be deferred under the Director Fee Deferral Plan. |
(2) | On April 28, 2021, each director serving at the |
(3) | Amounts in this column represent dividends paid on restricted |
(4) | Mr. Maiwurm retired from the Board effective April 28, 2021 at which time his outstanding restricted stock vested. |
(5) | Mr. Nakamoto died on June 22, 2021. |
22 | | Notice and Proxy Statement | 2022 |
TRANSACTIONS WITH RELATED PERSONS |
Stock Ownership RequirementsTRANSACTIONS WITH RELATED PERSONS
The Board has adopted a written policy and procedures for Directorsthe review, approval or ratification of transactions that could potentially be required to be reported under the SEC rules for disclosure of transactions in which related persons have a direct or indirect material interest. Related persons include directors and executive officers of the company and members of their immediate families. To help identify related person transactions and relationships, each director and executive officer completes a questionnaire that requires the disclosure of any transaction or relationship that the person, or any member of his or her immediate family, has or is proposed to have with the company. The policy applies to any transaction in which our 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, insurance, trust and wealth management services provided to related parties on substantially the same terms for comparable services 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 unrelated third parties, (iii) when made does not involve more than the normal risk of collectability or present other unfavorable features, (iv) would not be disclosed as nonaccrual, past due, restructured or a potential problem loan, and (v) complies with applicable law.
AccordingThe Audit Committee, with assistance from our General Counsel, is responsible for reviewing and, where appropriate, approving or ratifying any related person transaction involving our company or its subsidiaries and related parties.
As required by federal regulations, extensions of credit by Sandy Spring Bank to directors and executive officers are subject to the Company’s bylaws, qualifiedprocedural 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 our directors or officers are requiredsubject to hold unencumberedapproval by the disinterested members of the Board per the terms of Regulation O and our policy.
| Notice and Proxy Statement | 2022 | 23 |
STOCK OWNERSHIP INFORMATION |
5% OWNERS OF COMPANY STOCK
The following table provides information about those holders known to us to be the beneficial owners of 5% or more of our outstanding shares of common stock with a fair market valueas 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.December 31, 2021.
Section 16(a) Beneficial Ownership Reporting Compliance
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. 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. 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.
Name and Address | Number of Shares | Percentage of Common Stock Outstanding | ||||||||||
BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 | 4,352,382(1) | 9.6% | ||||||||||
T. Rowe Price Associates, Inc. 100 E. Pratt Street, Baltimore, MD 21202 | 2,910,314(2) | 6.4% | ||||||||||
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 2,480,515(3) | 5.5% | ||||||||||
Dimensional Fund Advisors LP 6300 Bee Cave Road, Austin, TX 78746 | 2,425,462(4) | 5.3% |
(1) | According to the Schedule 13G/A filed by Blackrock, Inc., with the SEC on February 1, 2022, BlackRock, Inc., had sole voting power with respect to 4,037,072 shares and sole dispositive power with respect to 4,352,382 shares. |
(2) | According to the Schedule 13G/A filed by T. Rowe Price Associates, Inc., with the SEC on February 14, 2022, T. Rowe Price Associates, Inc. had sole voting power with respect to 760,162 shares, and sole dispositive power with respect to 2,910,314. |
(3) | According to the Schedule 13G/A filed by The Vanguard Group, with the SEC on February 10, 2022, The Vanguard Group had shared power to vote 42,321 shares, sole dispositive power with respect to 2,398,093, and shared dispositive power with regard to 82,422 shares. |
(4) | According to the Schedule 13G/A filed by Dimensional Fund Advisors LP on February 8, 2022, Dimensional Fund Advisors had sole voting power with respect to 2,372,470 shares and sole dispositive power with respect to 2,425,462 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 certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries may possess voting and/or investment power over the securities that are owned by the Funds, and 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. |
24 | | Notice and Proxy Statement | 2022 |
STOCK OWNERSHIP INFORMATION |
Stock Ownership of Certain Beneficial Owners
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of February 8, 2018,16, 2022, with respect to the shares of common stock beneficially owned by each director and director-nominee, by the 20172021 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%3.2% of our 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) | Right to Acquire(4) | Total Beneficial Ownership | Additional Stock Units(5) | Total | ||||||||||||||||||||||||||
Mona Abutaleb | 4,538 | 334 | 442 | 5,314 |
|
|
|
|
|
| 1,212 | 6,526 | ||||||||||||||||||||
Ralph F. Boyd | 7,500 | 334 | 442 | 8,276 |
|
|
|
|
|
| 1,212 | 9,488 | ||||||||||||||||||||
Mark E. Friis(6) | 44,477 | 334 | 442 | 45,253 |
|
|
|
|
|
| 1,212 | 46,465 | ||||||||||||||||||||
Brian J. Lemek | 252,072 | — | 515 | 252,587 |
|
|
|
|
|
| 1,285 | 253,872 | ||||||||||||||||||||
Pamela A. Little | 26,578 | 334 | 442 | 27,354 |
|
|
|
|
|
| 1,212 | 28,566 | ||||||||||||||||||||
Walter C. Martz II(7) | 30,427 | — | 515 | 30,942 |
|
|
|
|
|
| 1,285 | 32,227 | ||||||||||||||||||||
Mark C. Michael | 23,670 | 334 | 442 | 24,446 |
|
|
|
|
|
| 1,212 | 25,658 | ||||||||||||||||||||
Mark C. Micklem | 12,963 | — | 942 | 13,905 |
|
|
|
|
|
| 1,212 | 15,117 | ||||||||||||||||||||
Christina B. O’Meara(8) | 44,954 | 334 | 515 | 45,469 |
|
|
|
|
|
| 1,285 | 46,754 | ||||||||||||||||||||
Robert L. Orndorff(9) | 168,011 | 334 | 442 | 168,787 |
|
|
|
|
|
| 1,212 | 169,999 | ||||||||||||||||||||
Craig A. Ruppert | 106,618 | 334 | 442 | 107,394 |
|
|
|
|
|
| 1,212 | 108,606 | ||||||||||||||||||||
Daniel J. Schrider (10) | 99,496 | 24,410 | — | 123,906 |
|
|
|
|
|
| 21,914 | 145,820 | ||||||||||||||||||||
Philip J. Mantua(11) | 55,330 | 9,389 | — | 64,719 |
|
|
|
|
|
| 8,396 | 73,115 | ||||||||||||||||||||
Joseph J. O’Brien, Jr.(12) | 51,748 | 12,021 | — | 63,769 |
|
|
|
|
|
| 11,075 | 74,844 | ||||||||||||||||||||
Kenneth C. Cook (13) | 216,514 | 6,264 | 109,027 | 331,805 |
|
|
|
|
|
| 7,829 | 339,634 | ||||||||||||||||||||
R. Louis Caceres | 36,556 | 8,673 | — | 45,229 |
|
|
|
|
|
| 7,554 | 52,783 | ||||||||||||||||||||
All directors and all executive officers as a group (21 persons) | 1,237,642 | 91,369 | 115,419 | 1,444,430 |
|
|
|
|
|
| 91,184 | 1,535,614 |
(1) | Under the rules of the SEC, an individual is considered to |
(2) | Only whole shares appear in the table. Fractional shares that may arise from |
(3) | Includes restricted stock awards as to which the holder has voting power. |
(4) | Includes shares that the named individual or group has the right to acquire through the exercise of vested stock options |
(5) | Includes restricted stock units and performance-based restricted stock units, reported at target levels, as to which no voting or investment power exists. |
(6) | Includes |
(7) | Includes 2,183 shares held in three trusts for which Mr. Martz is trustee. Mr. Martz has no pecuniary interest these holdings. |
(8) | Includes |
(9) | Includes 156,348 shares owned by trusts for which Mr. |
(10) | Includes 6,671 shares held through employee benefit plans and |
(11) | Includes 11,330 shares held through employee benefit plans. |
(12) | Includes 5,491 shares held through employee benefit plans. |
(13) | Includes 2,256 shares held through employee benefit plans. |
Owners of More than 5% of Sandy Spring Bancorp, Inc. Common Stock
This table lists the beneficial owners of more 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 | % |
| Notice and | 25 |
STOCK OWNERSHIP INFORMATION |
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers, and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership of our common stock with the SEC. Specific dates for such filings have been established by the SEC, and we are required to report in this proxy statement any failure to file reports in a timely manner in 2021.
Based solely on the review of the copies of forms we have received and written representations from each person, all the executive officers and directors have complied with filing requirements applicable to them with respect to transactions during 2021 with the single exception of a Form 4 for Gary J. Fernandes reporting the withholding of shares upon the vesting of restricted stock awards that was filed late due to delay in receiving EDGAR access codes from the SEC.
26 | | Notice and |
COMPENSATION DISCUSSION AND ANALYSIS |
Transactions and Relationships with ManagementCOMPENSATION DISCUSSION AND ANALYSIS
This section describes our executive compensation philosophy, the material components of our compensation program, and the factors used for determining compensation earned by the following persons who were our named executive officers, or “NEOs,” in 2021: Daniel J. Schrider President and Chief Executive Officer Philip J. Mantua Executive Vice President and Chief Financial Officer Joseph J. O’Brien, Jr. Executive Vice President and Chief Banking Officer Kenneth C. Cook Executive Vice President and President of Commercial Banking R. Louis Caceres Executive Vice President and Chief Wealth Officer Each of our NEOs is a member of our Executive Leadership Team, which includes other key members of our senior management. This discussion should be read in conjunction with the compensation tables and accompanying narrative starting on page 42. | ||||||||||
| | 1. EXECUTIVE SUMMARY | 28 | ||||||||
28 | ||||||||||
Executive Compensation Philosophy | 28 | |||||||||
2021 Compensation Highlights | 29 | |||||||||
Target Compensation Mix | 29 | |||||||||
“Say on Pay” Results | 29 | |||||||||
Compensation and Governance Practices | 30 | |||||||||
| | 31 | |||||||||
Executive Compensation Program Elements | 31 | |||||||||
| | 31 | |||||||||
Executive Compensation Process | 31 | |||||||||
Peer Group | 32 | |||||||||
| | 33 | |||||||||
Base Salary | 33 | |||||||||
2021 Target Award Opportunities | 33 | |||||||||
Annual Incentive Compensation | 33 | |||||||||
Long-term Incentive Compensation | 37 | |||||||||
Executive Incentive Retirement Plan | 38 | |||||||||
| | 39 | |||||||||
Other Compensation Elements | 39 | |||||||||
Employment and Change in Control Agreements | 40 | |||||||||
Executive Compensation Policies | 40 | |||||||||
Compensation Risk Assessment | 40 | |||||||||
Tax Considerations | 40 | |||||||||
Directors
| Notice and Proxy Statement | 2022 | 27 |
COMPENSATION DISCUSSION AND ANALYSIS |
2021 was a year of strong financial performance in a challenging operating environment. We began the year by supporting our clients with an additional $469 million of Paycheck Protection Program (PPP) loans, bringing our total PPP loan originations to over $1.6 billion. As the year progressed and officersCOVID-19 vaccines became widely available, the economy rebounded and loan demand returned. We reopened our branch lobbies – which had been operating on an appointment only basis – in June and began phasing in our return to office plans in early July, with a full return to office as of November 1. Despite the challenges of the Company obtain banking productsoperating environment, we generated strong return metrics while making significant strides in our technology and services from Sandy Spring Bank in the normal and ordinary course of business. Such services may include but are not limited to deposit accounts, loans, trust services, asset management, and insurance for personal or business needs. These products and services are provided on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to the Company and the Bank. In the opinion of management, these transactions do not involve more than the normal risk of collectability or present other unfavorable features.digital investments.
Related party transactions involving executive officers or directors, as defined in Item 404 of SEC Regulation S-K, are subject to review by the board. 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 Committee 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.
Core Earnings* $212M Core earnings, which exclude provision expense and non-recurring and non-cash items, increased 12% over 2020. | Loans $10.0B Excluding PPP loans, loans grew 5% in 2021 as loan demand surged in the second half of the year. | Deposits $10.6B Deposits grew 6% in 2021, | ||||||
Non-GAAP Efficiency* 46.17% Our non-GAAP efficiency ratio improved from 46.53% in 2020 and was in the top quartile of our peers. | Core ROATCE* 18.93% Our core return on average tangible | Core ROAA* 1.65% Our core return on average | ||||||
Tangible Book Value* $24.90/share Tangible book value per share grew 10% in 2021. | Core EPS* $4.52/share Core earnings per share | Dividends $1.28/share We increased our dividend |
Compensation Discussion and Analysis
The following discussion and analysis is intended to provide shareholders with 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 executive 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. For 2017, the named executive officers were:
Non-GAAP financial measure. See our 2021 Annual Report on Form 10-K for additional information and a reconciliation to the most directly comparable GAAP financial measure. |
EXECUTIVE COMPENSATION PHILOSOPHY
Our Compensation Committee is committed to rewarding executive management for the company’s performance achieved through planning and execution. We achieve our objectives through an executive compensation program that is 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.
28 | | Notice and Proxy Statement | 2022 |
COMPENSATION DISCUSSION AND ANALYSIS |
Executive Summary
The executive compensation program is designed to be consistent with our compensation philosophy, to support long-term growth, to reward performance, and to be competitive among our peers.
2017 Company Performance HighlightsAnnual Incentive Payout
2017 – Annual incentive opportunities are provided to our executive officers under our Executive Compensation Decisions
The Compensation Committee began its work on executive compensation for 2017 by reviewing the established compensation philosophy, the Company’s 2016 financial performance and the goals and objectives set forth in the 2017 financial plan. The committee took the following actions:Team Incentive Plan (ETIP).
$266.1 million pre-provision net revenue | 145% of Target Payout | 2021 ETIP 130.61% of Target Payout | ||||||
46.17% non-GAAP efficiency ratio | 148% of Target Payout | |||||||
Achievement of strategic initiatives | 95% of Target Payout | |||||||
Qualitative factors | 110% of Target Payout |
2019 - 2021 Performance Share Payout – Performance shares have a three-year performance period with cliff vesting at the end of the performance period.
64% 3-year total shareholder return
150% of Target Payout
150.00%
of Target Payout
$11.54 3-year adjusted EPS
150% of Target Payout
We tie pay to performance by structuring a significant portion of our executives’ pay as at-risk compensation (63% for CEO; 56% for other NEOs), and we align the interests of our executives with those of our shareholders by delivering a meaningful portion of our executives’ pay in the form of equity compensation (32% for CEO; 27% for other NEOs). Annual incentives are paid under the ETIP and the Executive Incentive Retirement Plan (EIRP). Equity awards are granted in the form of performance-based restricted stock units (PRSUs) and time-based restricted stock awards (RSAs).
“Say On Pay” Vote and Shareholder Alignment “SAY ON PAY” RESULTS
On May 3, 2017,At each annual meeting of shareholders, were askedwe ask our shareholders to vote on a non-binding resolution to approve the compensation for theour named executive officers, commonly referred to as a “Say“say on Pay”pay” vote. At our 2021 annual meeting, over 97% of the shares voted were voted “for” the proposal. The resolution was approved with an affirmative votecommittee considered this result and, in light of 96.82%, athe strong vote of confidence insupport for our executive compensation practices.program, did not make any significant changes to our executive compensation program.
The committee consistently utilizes the following practices to ensure executive compensation is aligned with shareholder interests:
| Notice and | 29 |
COMPENSATION DISCUSSION AND ANALYSIS |
Executive Compensation Philosophy COMPENSATION AND GOVERNANCE PRACTICES
The Company’sOur executive compensation programs have strong governance components that support the pay-for-performancephilosophy has several objectives:of our Compensation Committee and align the executive compensation program with the long-term interests of our shareholders.
The committee strives to 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 directors 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 financial plan is approved by the board of directors, the 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 directors at each regularly scheduled 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.
✓ Use an independent compensation consultant that is retained by and reports to the Compensation Committee O ✓ Tie a significant portion of executive compensation to performance O ✓ Require a minimum performance threshold be attained before any incentive compensation is paid O ✓ O ✓ O ✓ O ✓ Conduct an annual risk assessment of our compensation programs O 30 | Notice and Proxy Statement | 2022 COMPENSATION DISCUSSION AND ANALYSIS The compensation elements for 2021 included base salary, annual incentive, long-term incentive (equity) and a contribution to a deferred compensation plan as shown in the following table and described further herein. These elements did not change in 2021. Base Salary Annual Incentive (ETIP) Measured over a one-year period: • Pre-provision net revenue • Non-GAAP efficiency ratio • Strategic initiatives • Qualitative factors Long-term Incentive PRSUs (50%) RSAs (50%) Measured over a three-year period: • Relative return on average tangible common equity • Relative total shareholder return Executive Incentive Retirement Plan (EIRP) 3. EXECUTIVE COMPENSATION GOVERNANCE AND PRACTICES Role of the Compensation Committee–The Compensation Committee, The chair of the committee reports committee actions to the Board following each committee meeting. The committee retains the discretion to decrease Role of Compensation Consultant– The committee Representatives of Meridian attend and participate in committee meetings and executive sessions at which executive compensation matters are considered, Target Level Actual 2017 | Notice and 31 COMPENSATION DISCUSSION AND ANALYSIS Deferral Contribution for % of Base Salary Deferral Contribution for President & CEO % of Base Salary The committee has company. The committee Role of Management – Our CEO supports the committee’s process for determining executive compensation. In The Atlantic Union Bankshares Corp. (AUB) Independent Bank Corp. (INDB) Berkshire Hills Bancorp, Inc. (BHLB) Investors Bancorp, Inc. (ISBC) Brookline Bancorp, Inc. (BRKL) NBT Bancorp, Inc. (NBTB) Community Bank System, Inc. (CBU) OceanFirst Financial Corp. (OCFC) ConnectOne Bancorp, Inc. (CNOB) Park National Corporation (PRK) Customers Bancorp, Inc. (CUBI) S&T Bancorp, Inc. (STBA) Eagle Bancorp, Inc. (EGBN) TowneBank (TOWN) First Commonwealth Financial Corp. (FCF) United Bankshares, Inc. (UBSI) First Financial Bancorp (FFBC) Wesbanco, Inc. (WSBC) Fulton Financial Corporation (FULT) WSFS Financial Corporation (WSFS) The committee determined that this peer group would be used for the relative performance comparisons in the ETIP, 2021 PRSUs and the EIRP. 32 | Notice and Proxy Statement | 2022 COMPENSATION DISCUSSION AND ANALYSIS In determining base salaries, the committee considers 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 Name 2020 Base 2021 Base Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres Our executive officers have a target award opportunity for annual and long-term goals, which represents the amount of award received if the company achieves the performance goals set by the committee. The table below summarizes the award opportunities for the NEOs at the target level of performance. 2021 Target Award (as a % of base salary) Name Annual Incentive Long-Term Incentive Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres For 2021, target payout opportunities for annual cash incentives and long-term incentive awards as a percentage of base salary remained unchanged from the prior year for all of the NEOs, except for Mr. Cook, whose opportunity was increased. For 2021, the target long-term incentive award opportunity for each NEO was allocated equally among PRSUs and RSAs. Annual incentive opportunities are provided to our executive officers under our Executive Team Incentive Plan (ETIP). The ETIP is a short-term, cash compensation plan designed to recognize and reward participants for their success in achieving specific company goals. For 2021, the committee selected two financial metrics and two sets of qualitative metrics under the ETIP. A relative weight was assigned to each metric to prioritize importance and relative contribution. Performance metrics were selected to incentivize and reward profitability, progress towards key strategic initiatives and operational excellence. | Notice and Proxy Statement | 2022 33 COMPENSATION DISCUSSION AND ANALYSIS The performance measures and respective weights for 2021 were as follows: Corporate Goal Pre-provision net revenue Non-GAAP efficiency ratio Strategic initiatives Qualitative factors Each financial metric was assigned a “threshold” or minimum performance level, a “target” level of performance, and a maximum level at which the award opportunity was capped. Achievement of the threshold performance level earns 50% of the target opportunity, achievement of the target performance level earns the target award, and achievement at or above the maximum performance level earns 150% of the target opportunity. Actual results for any metric that falls between performance levels are interpolated to calculate a proportionate award. Awards under the ETIP are calculated as follows: Target ETIP Opportunity Percentage Payment Level Achieved Financial Metrics– The financial metrics for the 2021 ETIP were pre-provision net revenue (PPNR) and non-GAAP efficiency ratio. PPNR is calculated as net interest income plus non-interest income minus non-interest expense. This metric excludes the effects of the provision for credit losses, which can vary significantly from period to period based on changes to economic forecasts, and income taxes. The committee chose PPNR because it reflects the operating performance of the company’s core business operations. The non-GAAP efficiency ratio is calculated as adjusted non-interest expense divided by the sum of adjusted net interest income and adjusted non-interest income. See Annex A – Non-GAAP Financial Measures for more information on calculation of this metric. The committee chose this metric because it is a measure of operating expense control and efficiency of operations and is highly useful in comparing period-to-period operating performance of the company’s core business operations. The targets for both PPNR and the non-GAAP efficiency ratio were determined by reference to our 2021 financial plan and evaluation of our 2020 performance relative to our peer group. The performance measures and actual performance levels for 2021 were as follows ($000): Corporate Goal Threshold (50% of Target Target Level (100% of Maximum (150% of Actual 2021 Payment Level Pre-provision net revenue Non-GAAP efficiency ratio See Annex A – Non-GAAP Financial Measures for reconciliation to net income. See Annex A – Non-GAAP Financial Measures for reconciliation to the GAAP efficiency ratio. 34 | Notice and Proxy Statement | 2022 COMPENSATION DISCUSSION AND ANALYSIS Strategic Initiatives – Priority strategic initiatives were identified by the committee at the same time as financial goals were established. Completion of these initiatives, or the specific phases expected to be completed in 2021, were considered to be critical for our long-term success. Initiative Digital Optimization and Alignment • Introduced on-line chat for web and on-line banking • Updated mobile and on-line banking • Substantial progress towards integration with core processor • Established foundation for internal development operations • Initiated implementation of marketing technology solutions • Established cloud platform and stood up data mastering capability with enterprise level customer profile • Commenced ingestion of data to create master customer record. nCino Installation • Went live in July 2021. • Created training materials and trained all users. • Integrated supporting applications. • Transitioned substantially all commercial loan origination to the nCino platform. ALM Model Replacement • Completed model build • Incorporated data inputs • Initiated model validation Loan Pricing Model Implementation • Completed transition to new model in third quarter of 2021 Based on its assessment, the committee determined that the strategic initiatives component was earned at 95%. The committee did not assign particular weights to any single initiative. Qualitative Factors – Key qualitative factors that influence or reflect the company’s performance were identified by the committee at the same time as financial goals were established. The committee did not establish quantitative thresholds for any of the qualitative factors that were financial metrics due to uncertainty about the impact of the COVID-19 pandemic and extent of the economic recovery. Instead, the committee determined to evaluate the specific qualitative factors in light of our 2021 financial plan and peer and industry performance. Factor Paycheck Protection Program forgiveness • We made over 8,500 forgivable loans for $1.6 billion under the Small Business Administration’s Paycheck Protection Program, including over 3,100 loans for $469 million in 2021. • Assisted clients in obtaining forgiveness for over 8,100 loans totaling $1.5 billion. Client survey results | Notice and Proxy Statement | 2022 35 COMPENSATION DISCUSSION AND ANALYSIS Factor Net charge-offs to average loans Loan growth (excluding PPP) Deposit growth Based on its assessment, the committee determined that the qualitative factors component was earned at 110%. The committee did not assign particular weights to any single factor. 2021 Payouts – Combining the results for PPNR, non-GAAP efficiency ratio and the qualitative performance components produced payment at 130.61% of target. Corporate Goal Weighted Level Pre-provision net revenue Non-GAAP efficiency ratio Strategic initiatives Qualitative factors The amounts paid under the ETIP for 2021 performance are shown below and in the Summary Compensation Table on page 42. Name 2021 ETIP Paid at 130.61% of Target ($) Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres 36 | Notice and Proxy Statement | 2022 COMPENSATION DISCUSSION AND ANALYSIS The company’s compensation philosophy identifies equity-based compensation as an effective means of aligning the interests of our shareholders, the performance of the company, and the retention of executive management. The committee utilized performance-based and time-based stock awards to accomplish these objectives. For 2021, the target long-term incentive award opportunity for each NEO was allocated equally among PRSUs and RSAs, as follows: Name Performance Restricted Stock Units (#) Restricted Stock Awards (#) Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres 2021 Performance Restricted Stock Units – PRSUs are designed to align pay and long-term performance. We grant PRSUs to executive officers to incentivize production of superior long-term shareholder returns through achievement of long-term financial performance. PRSUs have a three-year performance period with cliff vesting at the end of the performance period. For 2021, the committee selected return on tangible common equity (ROTCE) as the performance metric, with payouts based on our average annual ROTCE performance over the three-year measurement period relative to our peer group. ROTCE is defined as net income attributable to common shareholders, adjusted to exclude extraordinary items, divided by average tangible common equity. The committee selected ROTCE because it is a comprehensive performance metric that is useful for comparing the profitability of the company with that of its peers. At the end of the three-year performance period, our executive officers can earn between 0% to 150% of the target number of PRSUs granted based on the percentile rank of the our average ROTCE for the three-year performance period relative to the average ROTCE of the companies in the our peer group. Relative ROTCE Performance 75th percentile or above 50th percentile (Target) 25th percentile Below 25th percentile Actual performance between the 25th percentile and the 75th percentile will be interpolated to calculate a proportionate award. Payouts calculated based on relative ROTCE performance are subject to a potential TSR modifier (increase or decrease) based on our TSR percentile performance relative to our peer group for the three-year performance period. Payments under the 2021 PRSUs will be adjusted as follows: Relative TSR Performance Increase or Decrease in Payout(1) Top quartile (above 75th percentile) Second quartile Third quartile Bottom quartile (25th percentile or below) Subject to overall payout cap of 150% of target. There will be no upward adjustment if the company’s TSR for the three-year performance period is negative. PRSUs will be credited with dividends paid on the company’s common stock during the time period when the PRSUs are outstanding, which will be reinvested in additional units, adjusted for performance and paid out in shares if and when the underlying PRSU is earned and paid. | Notice and Proxy Statement | 2022 37 COMPENSATION DISCUSSION AND ANALYSIS Restricted Stock Awards – The company grants RSAs to Results of 2019 - 2021 Performance-based Awards – The three-year performance period for the 2019 performance shares concluded on December 31, 2021. Payout of the award was based 50% on our TSR relative to an industry peer group and 50% on our cumulative adjusted earnings per share. Payout percentages at various levels of performance for the 2019 performance shares and actual results are illustrated in the table below. Corporate Goal Threshold (50% of Target Target Level (100% of Maximum (150% of Actual 2021 Payment Level Relative TSR percentile 3-Year Adjusted Cumulative EPS See Annex A – Non-GAAP Financial Measures for reconciliation to GAAP EPS. Payout of the 2019 performance shares was calculated as follows: TSR The following table lists the number of 2019 performance shares to which our NEOs became vested at the end of the 2019 – 2021 performance cycle. Name 2019 Performance Shares Earned at 150.00% of Target (#) Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres All executive officers participate in a nonqualified, deferred compensation plan known as the Executive Incentive Retirement Plan (EIRP). The EIRP was created to provide a performance-based supplemental retirement benefit. Executive officers receive a minimum cash contribution of 3% of base salary with the opportunity for increased contributions based on identified performance criteria. For 2021, the committee selected core return on average assets (Core ROAA) as the performance metric. This is the same metric as used in 2020. Core ROAA is calculated as core income, which excludes realized gains on the sale of securities, amortization of intangibles and nonrecurring items, as a percent of average assets. The amount of the award is determined based on the company’s Core ROAA as a percent of peer median, as reflected in the table below. The amount of the award based on achievement between performance levels is determined by straight-line interpolation. Core ROAA as % of Peer Median Award as a % of Base Salary Award as a % of Base Salary 70% or below 100% 150% or above 38 | Notice and Proxy Statement | 2022 COMPENSATION DISCUSSION AND ANALYSIS In 2021, Core ROAA for the company for purposes of the EIRP was 1.93%. See Annex A – Non-GAAP Financial Measures for reconciliation to GAAP ROAA. Compared to the peer group median of 1.44%, the company achieved 134.30% of the peer group’s result, yielding a contribution of 16.66% of base salary for Mr. Schrider and 12.65% for the other executive officers. The company’s 2021 contributions are shown in the Nonqualified Deferred Compensation table on page 47 along with a description of the terms and conditions for balances paid under the EIRP. The 2021 contributions are also included in the Summary Compensation Table on page 42, and potential awards are further described in the Grants of Plan-Based Awards table on page 44. 5. OTHER COMPENSATION PROGRAMS AND POLICIES 401(k) Plan – 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 4% of salary deferred and a 50% match on the next 2% of salary deferred, up to the maximum allowed by IRS regulations. Pension Plan – The Sandy Spring Bancorp, Inc. Retirement Income 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. Schrider, Mr. Mantua, and Mr. Caceres are participants. The accumulated benefit for each may be found in the Pension Benefits table on page 46. Life Insurance Benefits –The company maintains split dollar life insurance agreements with Mr. Schrider, Mr. Mantua, Mr. O’Brien and Mr. Caceres. Pursuant to the agreements, the executive officer’s designated beneficiary will be entitled to share in the death proceeds payable under one or more life insurance policies owned by the company in the event of the executive’s death while the agreement remains in effect. The amount payable to the executive officer’s beneficiaries is the lesser of two and one-half times the executive’s base salary or the net death proceeds of the policies, which is defined as the total death proceeds minus the greater of the cash surrender value of the policies or the aggregate premiums paid by the company. The split dollar life insurance agreements will terminate if the executive officer has a separation from service, other than as a result of the executive officer’s disability or following a change in control, prior to the executive officer’s normal retirement date or early retirement date. An executive officer’s normal retirement date is the date on which the executive officer has attained age 65 and an executive officer’s early retirement date is the date on which the executive officer has both attained age 60 and completed ten years of service. The Summary Compensation Table on page 42 includes the taxable income associated with this benefit in the column labeled All Other Compensation. Deferred Compensation – Executive officers are eligible to participate in the company’s nonqualified deferred compensation plan. The deferred compensation plan provides the opportunity to defer up to 25% of base salary and up to 100% of cash bonuses for payment following the six-month anniversary of any separation from service. Interest accrues on the account balance at a rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly. Contributions during 2021 and year-end account balances can be found in the Nonqualified Deferred Compensation table. In the fourth quarter of 2021, the committee adopted a new Non-Qualified Deferred Compensation Plan (NQDC Plan) to provide deferred compensation benefits for a select group of management and highly compensated employees, including the named executive officers. The NQDC Plan provides participants with the option to defer receipt of a portion of their base salary and annual cash incentives. Participant contributions will be fully vested at all times. At its sole discretion, the company may credit participant accounts with company contributions. The company determines who will receive discretionary contributions, as well as the amounts and timing of any such contributions. Distributions of participant accounts will be made following a participant’s separation of service, death, disability, unforeseeable emergency, or as of a future payment date specified by the participant. Participants’ accounts will increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and will be credited and debited in accordance with the actual financial performance of such funds. Participants elect the investment funds in which their accounts are hypothetically invested. 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 2021, 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 Compensation table on page 42. In addition, Mr. Schrider receives the use of a company-owned vehicle. Mr. O’Brien, Mr. Cook and Mr. Caceres each receive a car allowance of $1,000 per month. Mr. O’Brien maintains a membership, at company expense, at a local country club 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. | Notice and Proxy Statement | 2022 39 COMPENSATION DISCUSSION AND ANALYSIS The company has entered into employment agreements with Mr. Schrider, Mr. Mantua, Mr. O’Brien and Mr. Cook and a change in control agreement with Mr. Caceres that would provide them with severance benefits if their employment is terminated under certain circumstances. The committee believes that providing for severance and change in control benefits are an important element of our executive compensation program, support the creation of long-term shareholder value, and The Stock Ownership Requirements for Executives Clawback Policy No Hedging and No Pledging – Under our Insider Trading Policy, the company’s directors and executive officers are prohibited from shorting company securities, entering into hedging or similar transactions that are designed to offset any decrease in the market value of company securities, borrowing against any account in which company securities are held, and pledging company securities as collateral for any loan. We regularly undertake a systematic risk analysis of each of the company’s incentive compensation plans that is led by our risk management department and involves participants from our human resources and legal departments. We review the plan design and governance of each plan (including plan participants, performance measures, how performance is determined, and how well the plan is aligned with company goals and objectives) to determine whether the plan creates any undesired or unintentional risk of a material nature, taking into account the mitigation factors that exist for each plan. During 2021, the committee reviewed and discussed risk assessments and reports prepared by our risk officers and determined that our incentive compensation plans are not reasonably likely to encourage unnecessary or excessive risk or have a material adverse impact on the The committee 40 | Notice and Proxy Statement | 2022 COMPENSATION 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 March 16, 2022 Ralph F. Boyd, Chair Brian J. Lemek Mark C. Michael Christina B. O’Meara Robert L. Orndorff Mona Abutaleb Stephenson | Notice and Proxy Statement | 2022 41 EXECUTIVE COMPENSATION Name and Principal Position Salary ($) Bonus ($) Stock ($) Non-Equity ($) Change in ($) All Other ($) Total ($) Daniel J. Schrider President and Chief Executive Officer Philip J. Mantua EVP, Chief Financial Officer Joseph J. O’Brien, Jr. EVP, Chief Banking Officer Kenneth C. Cook EVP, President of Commercial Banking R. Louis Caceres EVP, Chief Wealth Officer Stock Awards. The amounts reported are the aggregate grant date fair value of stock awards granted in the year shown computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. The values in this column reflect the full grant date fair value of all equity awards granted during the year, although RSAs are subject to vesting periods based on continued employment and the number of PRSUs that vest depends on whether the company achieves specified performance measures. For more information about these awards and the calculation of their fair value, see Note 13 – Share Based Compensation in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. 2021 stock awards are described under “Compensation Discussion and Analysis – 2021 Compensation,” and details regarding these awards can be found in the Grants of Plan-Based Awards table. Details regarding outstanding stock awards can be found in the Outstanding Equity Awards at Fiscal Year-End table. For 2021, the grant date fair value of PRSUs included in this column is based on payout at target, which we have determined to be the probable level of achievement of the performance measures related to those awards. Assuming the highest level of performance is achieved, which would result in the vesting of 150% of the PRSUs granted, the aggregate grant date fair value of the PRSUs would be: $556,935 for Mr. Schrider; $207,254 for Mr. Mantua; $281,314 for Mr. O’Brien; $191,271 for Mr. Cook; and $189,074 for Mr. Caceres. Non-Equity Incentive Plan Compensation. For 2021, the amounts reported are the total of the following: (a) cash awards under the ETIP, (b) company contribution credited to the officer’s account under the EIRP and (c) earnings on outstanding EIRP balances, as indicated in the table below. Name ETIP ($) Contributions ($) Earnings ($) Total ($) Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres Change in Pension Value and Nonqualified Deferred Compensation Earnings. In 2021, there was a decrease in pension values for Mr. Schrider, Mr. Mantua and Mr. Caceres of $13,452, $2,911 and $6,848, respectively, because of changes in actuarial assumptions in 2021 as compared to 2020. For years in which changes in actuarial assumptions result in a decrease in pension value, rather than report a negative number, a change of $0 is reported. Neither an increase nor decrease in the pension value resulting from changes in actuarial assumptions results in any increase or decrease in benefits payable to participants under the pension plan. 42 | Notice and Proxy Statement | 2022 EXECUTIVE COMPENSATION All Other Compensation. Detail for the amounts of All Other Compensation is as follows: Name Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres Perquisites include car allowance or personal use of company vehicle, long-term care and supplemental disability insurance premiums paid on behalf of the executive, executive health screening, and the taxable income associated with the executive officer’s split dollar life insurance benefit. | Notice and Proxy Statement | 2022 43 EXECUTIVE COMPENSATION The following table sets forth information on plan-based awards made to the named executive officers in 2021. Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) Estimated Future Payouts Under Equity Incentive Plan Awards (2)(3) All Other (#) Grant Date ($) Name Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres The amounts in these columns represent the threshold, target and maximum amounts of potential cash incentive payments that may be earned under the indicated plans as established by the Compensation Committee. These plans and awards are described under “Compensation Discussion and Analysis – 2021 Compensation.” The actual amounts earned by each executive are disclosed in the Summary Compensation Table. The amounts in these columns represent the threshold, target and maximum number of shares that may be earned with respect to PRSUs granted in 2021. Earned shares will be paid following the end of the 2021-2023 performance period, based on the extent to which the performance measures have been achieved. These awards are described under “Compensation Discussion and Analysis – 2021 Compensation.” PRSUs will be credited with dividends paid on the company’s common stock during the time period when the PRSUs are outstanding, which will be reinvested in additional units, adjusted for performance and paid out in shares if and when the underlying PRSU is earned and paid. The amounts reported are the aggregate grant date fair value of RSA and PRSU awards computed in accordance with FASB ASC Topic 718. 44 | Notice and EXECUTIVE COMPENSATION The following table shows information regarding all unvested equity awards held by the named executive officers at December 31, Name Option ($) Number of (#) Equity (#) Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres Aggregate market values 2017 RSAs. The outstanding award is scheduled to vest 2018 RSAs.One-half of the outstanding award is scheduled to vest on April 25, 2022, and one-half of the outstanding award is scheduled to vest on April 25, 2023. | Notice and Proxy Statement | 2022 45 EXECUTIVE COMPENSATION 2019 RSAs. The outstanding award is scheduled to 2019 Performance Shares. On February 15, 2022, the Compensation Committee certified the achievement of the applicable performance measures for the performance share cycle ending on December 31, 2021 at 150% of the target level, at which time the shares were vested and paid. See page 38 for a description of the results of this award. 2020 RSAs.One-half of the outstanding award is scheduled to vest on April 1, 2022, and one-half of the outstanding award is scheduled to vest on April 1, 2023. 2020 PRSUs. Vesting is subject to achievement of specific 2021 RSAs.One-third of the outstanding award is scheduled to vest on April 1, 2022, one-third of the outstanding award is scheduled to vest on April 1, 2023, and one-third of the outstanding award is scheduled to vest on April 1, 2024. 2021 PRSUs. Vesting is subject to The following table Name Number (#) Value on Exercise ($) Number of Acquired (#) Value Upon Vesting ($) Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres Includes the gross number of RSAs and performance shares covering the 2018 – 2020 performance period that vested or were settled and paid in The following table shows the Number of Years (#) Present Value of ($) For additional information on the Pension Plan and Benefits under the Pension Plan are provided on a 46 | Notice and Proxy Statement | 2022 EXECUTIVE COMPENSATION 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 The Pension Plan permits early retirement at age 55 after 10 years of service completed after December 31, 2000. Mr. Schrider, Mr. Mantua and Mr. Caceres meet the requirements for retirement under the Pension Plan. If a participant begins pension payments prior to normal retirement age, the payments are reduced based on a reduction schedule specified in the plan. NONQUALIFIED DEFERRED COMPENSATION The following table provides information regarding executive and company contributions, 2021 earnings and year-end account balances for the named executive officers under the company’s deferred compensation plans. Name Executive ($) Registrant ($) Aggregate in 2021(3) ($) Aggregate ($) Aggregate ($) Daniel J. Schrider Philip J. Mantua Joseph J. O’Brien, Jr. Kenneth C. Cook R. Louis Caceres Participant contributions are not permitted under the EIRP. Represents amounts earned in 2021 and credited to the executive officer’s account in 2022, after the Compensation Committee certified the achievement of the applicable performance measure. Contributions under the EIRP are described under “Compensation Discussion and Analysis – 2021 Compensation” on page 38. These amounts are included in the Summary Compensation Table in the column labeled Non-Equity Incentive Plan Compensation. The EIRP and the Deferred Compensation Plan credit plan balances with interest at the rate of 120% of the Long-Term Applicable Federal Rate adjusted monthly. Earnings on plan balances for the EIRP are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. Earnings on plan balances for the Deferred Compensation Plan are not included in the Summary Compensation Table because they are not considered to be above-market or preferential. As of December 31, 2021, $6,718 of Mr. O’Brien’s EIRP balance was unvested. The balances for the other named executives are fully vested. Upon inception of the EIRP in 2008, Mr. Schrider, Mr. Mantua, Mr. O’Brien and Mr. Caceres were credited with an account balance equal to the accrued benefit under individual Supplemental Executive Retirement Agreements, which were terminated at that time. Such amounts, along with company contributions and earnings under the EIRP, were reported as compensation in the Summary Compensation Table in prior years. The aggregate balance with respect to the Deferred Compensation Plan includes the following amounts that were previously reported in the Summary Compensation Tables for prior fiscal years: Mr. O’Brien’s elective deferrals of $12,172 and earnings on deferred compensation of $4,236. The named executive officers participate. Executive Incentive Retirement Plan Under the will forfeit his or her account balance. | Notice and Proxy Statement | 2022 47 Under agreements that we have with The agreements that each named executive officer has with the company and Daniel J. Schrider – The 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 Mr. Schrider’s agreement does not entitle him to receive any tax indemnification payments (a 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 Philip J. Mantua and Joseph J. O’Brien, Jr. – The If, in connection with a change in control, as defined by Section 409A of the Internal Revenue Code, 48 | Notice and Proxy Statement | 2022 EXECUTIVE COMPENSATION made to – The control. Mr. R. Louis Caceres – Mr. Caceres has a change in control If a change in control occurs and The following table officer terminates employment: Event Consequences Death Unvested RSAs immediately vest Disability Unvested RSAs immediately vest Voluntary or involuntary termination Unvested RSAs are forfeited Change in control No impact absent termination of employment; unvested For grants prior to 2020, RSAs will | Notice and Proxy Statement | 2022 49 EXECUTIVE COMPENSATION The following table shows how PRSUs are treated if a named executive officer terminates employment: Event Death PRSUs immediately vest at target level Disability PRSUs continue to earn and pay based on actual performance Involuntary termination for just cause PRSUs are forfeited Involuntary termination without just cause PRSUs continue to earn and pay based on actual performance, prorated to reflect the portion of the performance period that the executive officer was employed by the company Voluntary termination PRSUs are forfeited Retirement(1) PRSUs continue to earn and pay based on actual performance, subject to execution of a general release of claims Change in PRSUs continue to earn based on continued employment, with performance measures deemed to be satisfied at the target level; PRSUs immediately vest upon a qualifying termination within 24 months of the change in control Retirement means any voluntary or involuntary termination (other than for death, disability or just cause) after the executive reaches age 65 or age 60 with ten years of continuous service. Following termination of employment, our named executive officers would receive payment of retirement benefits and nonqualified deferred compensation under the various plans in which they participate. The value of those benefits as of December 31, 2021 is set forth in the Pension Benefits and Nonqualified Deferred Compensation tables. All of our named executive officers are fully vested in the benefits described in those sections, except for Mr. O’Brien, whose unvested balance in the EIRP was $6,718 at December 31, 2021, and there is no increase in those benefits upon termination. Benefits under the EIRP are forfeited in the event of termination for cause. Potential payments to our named executive officers pursuant to existing plans and arrangements in event of their termination or a change of control as of December 31, 2021 are shown in the table below. These amounts are estimates only. The actual amounts to be paid can only be determined at the time the executive becomes eligible for payment. Valuation of equity awards was based on the closing price of our common stock on December 31, 2021, which was $48.08 per share. In the event of termination for just cause or resignation without good reason, the named executive officers would receive only their salary through the date of termination. 50 | Notice and Proxy Statement | 2022 EXECUTIVE COMPENSATION Name Death ($) Disability ($) Termination ($) Change in ($) Daniel J. Schrider Cash severance(1)(2) Welfare benefits(3) Split-dollar life insurance(4) RSAs(5) PRSUs(6) Philip J. Mantua Cash severance(1)(2)(7) Welfare benefits(3) Split-dollar life insurance(4) RSAs(5) PRSUs(6) Joseph J. O’Brien, Jr. Cash severance(1)(2)(7) Welfare benefits(3) Split-dollar life insurance(4) RSAs(5) PRSUs(6) Kenneth C. Cook Cash severance(1)(2)(7) RSAs(5) PRSUs(6) R. Louis Caceres Cash severance(1)(2) Welfare benefits(3) Split-dollar life insurance(4) RSAs(5) PRSUs(6) Amounts are payable under the Amounts listed under “Change in control and qualifying termination” do not reflect the fact that under the employment agreement the company has entered into with Mr. Schrider payments in connection with a change in control that would result in a golden parachute excise tax under Amount represents health insurance benefits to be paid under the applicable employment or change in control agreement based upon monthly premiums being paid as of December 31, 2021. Amounts are payable to the named executive officer’s beneficiaries under split-dollar life insurance agreements that the company has entered into with the named executive officers. Amount represents the value of unvested RSAs that would vest upon termination of employment. Amount represents the value of PRSUs that would vest and be paid upon death or a qualified termination following a change in control. Following termination due to disability, retirement or without just cause, PRSU payments remain subject to the company’s actual performance. Therefore, no amounts are shown for these scenarios. Amounts listed under “Disability” will be reduced by any payments received by the named executive officer during the remaining term of his employment agreement under a long-term disability plan or policy maintained by the company. | Notice and Proxy Statement | 2022 51 CEO 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. The company selected October 29, 2021 as the determination date for identifying the median employee. Year-to-date taxable wages paid from January 1, 2021 to October 29, 2021 for all employees 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. The median employee was identified, and total compensation for the median employee was calculated in the manner required for the Summary Compensation Table. Mr. Schrider’s total compensation for 2021, as disclosed in the Summary Compensation Table, was $2,645,831 and the median employee’s was $93,268, producing a ratio of 28 to 1. 52 | Notice and Proxy Statement | 2022 PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS The company’s Articles of Incorporation currently divide the Board of Directors into three classes, with the members of each class serving for staggered three-year terms. As a result, only one class of directors stands for election at each annual meeting of shareholders, such that shareholders vote on and elect approximately one-third of the Board each year. At this annual meeting, our shareholders are being asked to approve and adopt a proposal to amend the Articles of Incorporation to declassify the Board. The Executive and Governance Committee considered and then recommended to the Board the proposed amendments to the company’s Articles of Incorporation to declassify the Board. The Board accepted this recommendation, determined that the proposed amendments are advisable, and unanimously approved the amendments, subject to shareholder approval at this annual meeting. If shareholders approve the amendments, they will become effective upon the filing of Articles of Amendment to the company’s Articles of Incorporation with the Maryland Department of Assessments and Taxation. We intend to file the Articles of Amendment shortly after the annual meeting. Section (B) of ARTICLE IX of the Articles of Incorporation would be deleted in its entirety and replaced with new Section (B). Additions are indicated in double underline, and deletions are indicated in strikethrough. B. | Notice and Proxy Statement | 2022 53 PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS Whenever the holders of anyone or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the Board of Directors shall consist of said directors so elected in addition to the number of directors fixed as provided above in this Article IX. Notwithstanding the foregoing, and except as otherwise may be required by applicable law, whenever the holders of anyone or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the terms of the director or directors elected by such holders shall expire at the next succeeding annual meeting of shareholders. ARTICLE XI of the Articles of Incorporation would be deleted in its entirety and replaced with new ARTICLE XI. Subject to the rights of the holders of any class separately entitled to elect one or more directors, any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the directors then in office, whether or not a quorum, or by the affirmative vote of the holders of a majority of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors. The Executive The Board recognizes that a classified structure may offer advantages, such as promoting continuity and stability, encouraging its directors to take a long-term perspective and reducing the company’s vulnerability to coercive takeover tactics. The Board also recognizes the growing sentiment among the investment community in favor of annual elections, that many institutional investors believe that the election of directors is the primary means for shareholders to influence corporate governance policies and to hold management accountable for implementing those policies, and that a classified board structure does not enable shareholders to express a view on each director’s performance by means of an annual vote. After carefully weighing these and other factors (including that the number of public companies with classified boards continues to decline), the Board has determined that it is in the best interests of the company and our shareholders to declassify the Board and recommends that shareholders approve the proposed amendments to effectuate the declassification. If the proposed amendments are approved, the current classified board structure will be phased out over a three-year period beginning at the 2023 annual meeting of shareholders. Directors elected to three-year terms prior to the effectiveness of the proposed amendment (including the directors elected at this annual meeting) will complete those terms. Beginning with the 2023 annual meeting, directors will stand for election on an annual basis for one-year terms. Beginning with the 2025 annual meeting of shareholders, all directors will stand for election annually and the Board will no longer be classified. If the proposed amendments to the Articles of Incorporation to declassify the Board are not approved by our shareholders, the Articles of Incorporation will not be amended as set forth above and the Board will continue to be classified with directors serving staggered, three-year terms. The affirmative vote of at least 80 percent of outstanding shares of common stock entitled to vote at the annual meeting is required for shareholders to approve the proposed amendments to the Articles of Incorporation. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THIS PROPOSAL. 54 | Notice and Proxy Statement | 2022 PROPOSAL 3: ADVISORY VOTE TO APPROVE THE COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS ADVISORY VOTE TO APPROVE THE COMPENSATION 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 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 The This matter will be decided by the THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” | Notice and Proxy Statement | 2022 55 PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The 2023. In reaching its decision to engage Ernst & Young LLP, the committee. Representatives of Ernst & Young THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE The following table presents fees for professional audit services rendered for the audit of the annual financial statements of the 2021 ($) 2020 ($) Audit Fees Audit-Related Fees Tax Services All Other Fees Total “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 in 2020 are fees related to implementation of the current expected credit loss model and the acquisitions of Revere Bank and Rembert Pendleton Jackson. “Tax Services” consist of 1099 processing fees for trust clients of Sandy Spring Bank. 56 | Notice and PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The 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 committee and approved by the committee or by one or more members of the committee to whom authority to grant such approval has been delegated by the committee prior to the completion of the audit. All audit services, tax services and permitted non-audit services to be performed by Ernst & Young LLP have been preapproved by the | Notice and Proxy Statement | 2022 57 AUDIT COMMITTEE REPORT The Audit Committee of the department. The The company’s management is responsible for its internal controls and financial reporting process. Ernst & Young LLP 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 reviewed and discussed with management and Ernst & Young LLP the scope and effectiveness of the company’s disclosure controls and procedures; reviewed and discussed the company’s audited and unaudited financial statements with management and Ernst & Young LLP 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 LLP the critical audit matters and the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC, including, but not limited to, the audit strategy, scope and plan for the audit work, and the significant risks and areas of audit focus; met with Ernst & Young LLP, 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 LLP required by applicable standards of the Public Company Accounting Oversight Board; reviewed and discussed with Ernst & Young LLP the matter of auditor independence; 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 February 16, 2022 Pamela A. Little, Chair Brian J. Lemek Walter C. Martz II Mark C. Micklem Robert L. Orndorff 58 | Notice and Proxy Statement | 2022 INFORMATION ABOUT THE MEETING Our annual meeting will be held on May 18, 2022 at 10:00 a.m., Eastern Time by means of a live webcast. There will be no physical location for the annual meeting. To participate in the virtual meeting, access the meeting site https://meetnow.global/MMYUPAD and register using the control number found on your Notice You may submit questions either before or during the meeting. To submit a question, access the virtual meeting site at https://meetnow.global/MMYUPAD. Click on the Q&A icon and submit your question. Questions pertinent to meeting matters will be answered during the meeting, subject to time limitations. You will be able to vote your shares electronically during the annual meeting. Please see “Voting Matters” below for additional information on voting. We encourage you to vote your shares prior to the annual meeting. Pre-registration for Beneficial Holders. 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. These shareholders must submit a copy of your legal proxy reflecting your Sandy Spring Bancorp, Inc. holdings along with your 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 May 13, 2021. To access the meeting go to https://meetnow.global/MMYUPAD. Shares Entitled to Vote. Holders of the company’s common stock, par value $1.00 per share, as of the close of business on the record date of March 9, 2002 are eligible to vote at the annual meeting. On that date, 45,425,662 shares of common stock were outstanding and eligible to vote. Each share of common stock entitles the holder to one vote on the items of business to be considered at the annual meeting. Quorum Requirements. The presence, in person or by proxy, of holders of a majority of the company’s outstanding common stock is required to constitute a quorum for the transaction of business at the annual meeting. Shareholders who deliver valid proxies or attend the meeting virtually using their control number will be considered part of the quorum. Once a share is represented for any purpose at the meeting, it is deemed present for quorum purposes for the remainder of the meeting. We intend to include as present at the meeting shares present but not voting, shares for which we have received proxies but for which holders have abstained from voting, and broker “non-votes” (explained below). Voting Procedures. You may vote your shares in one of several ways, depending upon how you own your shares. If you are a shareholder of record, you can vote any one of four ways: Voting by telephone. Call the phone number on your proxy card or voting instruction form and follow the instructions. You will need to have your control number with you when you call. Voting by mail. Complete, sign, date and return your proxy card in the envelope provided in advance of the meeting. Voting at the virtual meeting. You will be able to vote your shares at the virtual meeting by accessing the virtual meeting site https://meetnow.global/MMYUPAD and registering as a shareholder with the control number found on your Notice of Internet Availability of Proxy Materials or proxy card. If you hold your shares through a bank, broker or other nominee, you must follow the voting instructions you receive from the holder of record to vote your shares. If you wish to vote at the annual meeting, you must follow the instructions above to | Notice and Proxy Statement | 2022 59 INFORMATION ABOUT THE MEETING shares through a bank, broker, or other nominee, it is critical that you cast your vote if you want it to count for Proposals 1, 2 and 3. Your broker isnot 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 have discretion to vote any uninstructed shares on matters considered routine items, such as ratification of the appointment of the independent registered public accounting firm (Proposal 4). All shares represented by valid proxies that are not revoked will be voted at the annual meeting in accordance with your voting instructions. If you properly submit a proxy without specifying how you want your shares to be voted, your shares will be voted in accordance with the recommendations of the Board. If your shares are held with the company’s transfer agent, Computershare, and you do not return your proxy, no votes will be cast on your behalf. Employee shareholders. If you participate in the Sandy Spring Bank 401(k) Plan (the “401(k) plan”), and your plan account holds shares of our common stock, you must provide voting instructions to Principal Trust Company, the trustee for the 401(k) plan by internet, telephone, or proxy card for the shares to be voted according to your instructions. Your voting instructions to the trustee will be held in strict confidence. The deadline to provide voting instructions for shares held in the 401(k) plan is May 13, 2022, at 11:59 p.m., Eastern time. After the voting instruction deadline, you will not be able to submit voting instructions or change prior voting instructions for any shares. If you do not direct the trustee how to vote the shares in your 401(k) plan account, the trustee will vote the shares in the 401(k) plan in the same proportion as the voting instructions it receives from other participants as of the voting instruction deadline. Proposal 1: Election of Directors. Directors are elected by a plurality of the votes cast at the annual meeting by holders of common stock. This means that the three nominees for election as directors who receive the most affirmative votes will be elected. Pursuant to our Articles of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. The Board has adopted a majority vote policy that provides that, in an uncontested election, if an incumbent director nominee receives a greater number of votes “withheld” than cast “for” the director’s election, the director is required to immediately tender their resignation from the Board. Upon receipt of the director’s resignation, the Nominating Committee will make a recommendation to the Board about whether to accept or reject the resignation. The Board will act on the Nominating Committee’s recommendation within 120 days from the annual meeting. Proposal 2: Amendment of Articles of Incorporation. The amendments to the Articles of Incorporation to declassify the Board will be approved if the holders of at least 80 percent of the outstanding shares of common stock entitled to vote at the annual meeting vote in favor of the amendments. Proposal 3: Advisory vote on executive compensation. The advisory vote on the compensation of the named executive officers disclosed in the proxy statement will be approved if the votes cast “for” the proposal exceed the votes cast “against” the proposal. Proposal 4: Ratification of appointment of independent registered public accounting firm. Ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for 2022 will be approved if the votes cast “for” the proposal exceed the votes cast “against” the proposal. Abstentions and Broker Non-Votes.Abstentions, “broker non-votes” (explained below) and failure to cast a vote are not considered “votes cast” and will therefore have no effect on the voting outcome of the election of directors, the advisory vote on executive compensation, or the ratification of the appointment of Ernst & Young LP as our independent registered public accounting firm. Abstentions, broker non-votes and failure to cast a vote will have the same effect as a vote “against” amendment of the Articles of Incorporation. A “broker non-vote” occurs on an item of business when a registered shareholder does not vote its client’s shares on the item but votes on another matter presented at the meeting. This typically occurs when the registered shareholder (usually a broker or bank) has either voting instructions from its client or discretionary voting authority under NYSE rules to vote on one item of business and not on other items. Brokers and other share custodians do not have discretion to vote on non-routine matters unless the beneficial owner of the shares has given explicit voting instructions. Consequently, if you do not give your broker or share custodian explicit voting instructions, your shares will not be voted on the election of directors, amendment of the Articles of Incorporation, or the advisory vote on executive compensation, and your shares will instead be considered “broker non-votes” on each such item. The ratification of the appointment of Ernst & Young LP as our independent registered public accounting firm for 2022 is considered a routine matter and, as such, your broker or share custodian of record is entitled to vote your shares on such proposal in its discretion if you do not provide voting instructions on that item. Revocation of Proxies. Shareholders who execute proxies retain the right to revoke them at any time before their shares are voted by proxy at the meeting. A shareholder may revoke a proxy by delivering a signed statement to our Corporate Secretary prior to the annual meeting or by delivering an executed proxy bearing a later date (including a proxy given by internet or telephone). You may also revoke a previously issued proxy by voting at the virtual annual meeting. 60 | Notice and Proxy Statement | 2022 INFORMATION ABOUT THE MEETING To reduce the amount of paper used in producing these proxy materials, as well as lower printing and mailing expenses, the To If a bank, broker, or other nominee, holds your shares and you receive multiple copies of our proxy materials and you would like to receive only one copy, or if you and another shareholder receive only one copy and would like to receive multiple copies, please contact your bank, broker or We PROPOSALS FOR THE 2023 ANNUAL MEETING OF SHAREHOLDERS Under SEC Rule In addition, under our Bylaws, if a shareholder wishes to present nominations for director If the Communications to the In the | Notice and Proxy Statement | 2022 61 ANNEX A: NON-GAAP FINANCIAL MEASURES ANNEX A: NON-GAAP FINANCIAL MEASURES As discussed in the Compensation Discussion and Analysis included in this proxy statement, the Compensation Committee uses non-GAAP financial measures to evaluate the company’s performance under the company’s incentive compensation plans. Typically, the Compensation Committee adjusts GAAP net income, or elements of net income, for non-core performance items so that participants are compensated for the company’s core performance and not penalized or rewarded for non-core charges or unusual gains. Non-GAAP measures used in this proxy statement consist of the Pre-provision net revenue. Pre-provision net revenue is calculated as net interest income plus non-interest income minus non-interest expense. This metric is equivalent to GAAP net income exclusive of the Non-GAAP efficiency ratio. The efficiency ratio is non-interest expense as a percentage of net interest income plus non-interest income. The non-GAAP efficiency ratio adjusts non-interest expense to exclude amortization of intangible assets, loss on early redemption of FHLB borrowings, and merger and acquisition expense, adjusts net interest income to include tax-equivalent income, and adjusts non-interest income to exclude investment securities gains. Adjusted EPS. Adjusted earnings and the related measure of adjusted earnings per share reflect net income exclusive of merger and acquisition expense, branch closing costs, loss on early redemption of FHLB borrowings, and merger-related provision for credit losses, on a net of tax basis. Core ROAA. Core income and the related measure of core return on average assets reflect net income exclusive of gain on the sale of held to maturity and available for sale securities, amortization of intangibles, goodwill and nonrecurring items, on a net of tax basis. These non-GAAP financial measures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures with similar names that may be presented by other companies. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP. (In thousands) Net income Plus/(less) non-GAAP adjustments: Income tax expense Provision/(credit) for credit losses Pre-provision net revenue | Notice and Proxy Statement | 2022 A-1 ANNEX A: NON-GAAP FINANCIAL MEASURES (Dollars in thousands) Non-interest expense (a) Less non-GAAP adjustments: Amortization of intangible assets Loss on FHLB redemption Merger and acquisition expense Non-interest expense – as adjusted (b) Net interest income plus non-interest income (c) Plus non-GAAP adjustment: Tax-equivalent income Less non-GAAP adjustment: Investment securities gains Net interest income plus non-interest income – as adjusted (d) Efficiency ratio (GAAP) (a ÷ c) Efficiency ratio (non-GAAP) (b ÷ d) (In thousands, except per share data) Net income Plus non-GAAP adjustments (net of tax): Merger and acquisition expense Branch closing costs Loss on FHLB redemption Merger-related provision for credit losses Net income – as adjusted Diluted weighted average common shares Diluted net income per common share (GAAP) Diluted net income per common share – as adjusted (non-GAAP) A-2 | Notice and Proxy Statement | 2022 ANNEX A: NON-GAAP FINANCIAL MEASURES (Dollars in thousands) Net income (a) Plus/(less) non-GAAP adjustments (net of tax1): Merger and acquisition expense Investment securities gains Loss on FHLB redemption Amortization of intangible assets Core income (non-GAAP) (b) Average assets (c) Return on average assets (GAAP) (a ÷ c) Core return on average assets (non-GAAP) (b ÷ c) Net of federal tax only for comparability to peer group. | Notice and Proxy Statement | 2022 A-3 Sandy Spring Bancorp, Inc.'s Annual Meeting of Shareholders will be held on Wednesday, May 18, 2022 at 10:00 a.m. Eastern Time, virtually via the internet at https://meetnow.global/MMYUPAD. 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. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.envisionreports.com/SASR Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/SASR IF Each year the committee reviews the peer group to determine if adjustments are necessary. For 2017, the committee selected publicly-traded commercial banks with assets between approximately $3.0 to $8.5 billion in 2016 and from the Mid-Atlantic region plus Virginia, West Virginia, North Carolina, and Ohio. The median asset size was $4.9 billion which placed the Company at the 48th percentile in asset size at the time. Peer proxy data was also supplemented with survey data from national banking surveys. The 2017 peer group included the following 21 banks, of which 14 were used the previous year:I AT SANDY SPRING WE I WE DO NOT BNC BancorpNCFlushing Financial CorporationNYProvide tax gross-ups to executive officers Bridge Bancorp, Inc.NYLakeland Bancorp, Inc.NJCapital Bank Financial Corp.NCPark National CorporationOHCardinal Financial CorporationVAPark Sterling CorporationNCProvide “single-trigger” vesting of equity awards upon a change in control ConnectOne Bancorp, Inc.NJPeapack-Gladstone Financial Corp.NJCity Holding CompanyWVPeoples Bancorp, Inc.OHEagle Bancorp, Inc.MDS&T Bancorp, Inc.PAProvide “single trigger” severance upon a change in control First BancorpNCTompkins Financial Corp.NYFirst Commonwealth Financial Corp.PATowneBankVAFinancial Institutions, Inc.NYUnion Bankshares CorporationImpose maximum caps on incentive compensationVAProvide excessive perquisites FirstTie incentive compensation to a clawback policy Permit hedging or pledging of Long Island CorporationSandy Spring stockNYRequire significant stock ownership by our named executive officers, including 4x base salary for our CEO and 2x base salary for our other executive officers Encourage excessive risk-taking through our compensation programs Provide supplemental executive retirement plans EXECUTIVE COMPENSATION PROGRAM ELEMENTS
Description/Objectives Performance Rewarded Form and Timing of Payment Fixed base of cash compensation reflective of each executive’s role, performance, skills and contributions Recognizes each executive’s individual performance and contribution in his/her role Paid in cash bi-weekly Variable payment based on achievement of performance metrics aligned with company strategy Paid in cash after the end of the fiscal year Performance-based restricted stock units intended to incentivize performance against metrics aligned with strategic long-term goals Paid in shares after the end of three-year performance period Time-based restricted stock intended to align executives’ interests with shareholder interests and promote retention Value realized depends on stock price performance Paid in shares pro-rata over three-year vesting period Variable contribution to deferred compensation plan based on annual performance rewards superior performance relative to peers Relative return on average assets Contribution allocated after the end of the fiscal year EXECUTIVE COMPENSATION PROCESS
Discretionwhich consists entirely of independent directors, is responsible for establishing and Final Compensation Decisionsapproving compensation for all executive officers, including our CEO and other NEOs, and for overseeing and administering our executive compensation program, which includes establishing performance goals for our incentive compensation plans, annually approving a peer group of companies used to benchmark compensation of our executive officers, and administering our equity and retirement plans.all forms of incentiveETIP payouts based on significant individual or Companycompany performance shortfalls. shortfalls, as well as risk, compliance and regulatory matters.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 announcement 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.Base SalaryBase salary is the fundamental element ofengages an independent executive compensation consultant to provide commentary, analysis and the committee reviews salaries in March in conjunction with annual performance appraisals for the preceding year. In determining base salaries, the committee considered the executive's qualifications and experience, scope of responsibilities, the goals and objectives established for theexpertise relating to 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. Mr. Schrider recommended base salaries for executive officers other than himself, and the committee deliberated on Mr. Schrider’s salary. The resulting salary increases, effective March 26, 2017, are shown in the following table.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 % 21Short-Term Incentive CompensationThe annual incentive plan is a short-term, cash compensation plan designed to recognize and reward participants for their success in achieving specific Company goals. In 2017, the performance measures were tied directly to the Company’s 2017 financial plan and were selected because they contribute to the long-term viability 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 provide 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. Achievement of the target 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 level that would be potentially attainable under ideal conditions. A relative weight was assigned to each goal to prioritize importance. Finally, the committee established a minimum performance trigger of 90% of planned net income, which must be achieved before any incentives could be paid.The corporate goals selected for 2017 include two non-GAAP measures: pre-tax, pre-provision net income and a traditional efficiency ratio. Management believes that these measures focus on the core operating results of the Company and provide a meaningful comparison of performance from year to year. 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.After the announcement of the definitive agreement with WashingtonFirst on May 16,compensation. Since 2017, the committee methas engaged Meridian Compensation Partners, LLC (“Meridian”) as its independent executive compensation consultant.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.The committee reviewed the resultsMeridian performs various analyses for the established goals, adjusted forcommittee, including peer group benchmarking and analyses regarding 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 levelalignment of achievement for that goal. The sum of all payment levels equaled 111.23% of target.pay and performance.22The performance measures, respective weights, target and actual performance levels for 2017 were:Corporate Goal Weight
Performance
Performance 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 % (1)Fee-based revenue sources were defined as: gains on sale of mortgages, insurance commissions, revenue from West Financial Services, bank card fees,trust fee income.Proxy Statement | 2022(2)Core deposits were defined as: checking and savings accounts, money market accounts, and repurchase agreements.(3)These corporate goals exceeded the stretch level and therefore payouts were capped at 150%.The following table shows the calculation of the 2017 annual cash incentive award for each named executive officer at 111.23% of the target opportunity.Name Base Salary Target
Opportunity Payment
Level Earned
at 111.23% 2017 Cash
Award Daniel J. Schrider $ 610,800 50 % 55.615 % $ 339,690 Philip J. Mantua $ 353,000 40 % 44.49 % $ 157,060 Joseph J. O’Brien, Jr. $ 380,000 40 % 44.49 % $ 169,073 R. Louis Caceres $ 346,000 40 % 44.49 % $ 153,946 Ronald E. Kuykendall $ 289,000 35 % 38.93 % $ 112,512 Long-Term, Equity-Based CompensationThe Company’s established compensation philosophy identifies equity-based compensation as an effective means of creating a link between the interests of our shareholders, the performance of the Company and the retention of executive management. The committee utilized performance and time-vested restricted stock awards to accomplish these objectives.The committee traditionally considers equity awards in March in conjunction with the annual performance review process. Therefore, the awards made in March 2017 recognized 2016 Company and individual performance. The percentage 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, were approved by the committee on March 15, 2017 as follows: 57.25% for Mr. Schrider, 47.25% for Messrs. Mantua, O’Brien, and Caceres, and 41.25% for Mr. Kuykendall. The values are provided in the Grants of Plan-Based Awards table on page 30.Under the 2015 Omnibus Incentive Plan, the number of shares constituting the restricted stock award is determined by the closing stock price on the day before the grant date. The actual number of shares was rounded to the nearest whole share.23Beginning in 2016, the committee added a performance-based component to the equity grants that ties a portion 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% will vest based upon the achievement of three-year total shareholder return (“TSR”) compared to a broader index of U.S. banks between 50% and 150% of the Company’s asset size. The achievement of median compared to the index will result in vesting the shares at the target level. Achievement of the 75th percentile compared to the index will result in the maximum award of 150% of the target level. Threshold performance was set at the achievement of the 40th percentile compared to the index and will result in 50% of the target level. Actual performance will be interpolated to calculate a proportionate award. The Performance Period for these shares was established as January 1, 2017 to December 31, 2019, and the average stock price for the 20 days preceding the beginning and ending of the performance period will be used for comparison.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 BenefitsExecutive Incentive Retirement PlanAll 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 contribution of 3% of base salary with the opportunity for increased contributions based on identified performance criteria. For 2017, the committee established the attainment of return on average assets (“ROAA”) compared to the median 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 of the performance period on December 31, 2017. The 2017 schedule for deferral contributions was approved as follows:Return on Average
Assets Percentile
Versus Peer Group
Executive Officers 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, ROAA for the Company was 1.02%. Compared to the peer group median of 0.92%, the Company achieved 110% of the peer group’s result, yielding a deferral contribution of 9.375% for Mr. Schrider and 7.50% for the other executive officers. The contributions are calculated in the following table.24Name 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 2017 deferral contributions are shown in the Nonqualified Deferred Compensation Plans section beginning on page 32 along with a description of the terms and conditions for balances paid under the EIRP. The 2017 deferral contributions are also included in the Summary of Compensation table on page 28, and potential awards are further described in the Grants of Plan-Based Awards table on page 30.401(k) PlanThe 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% of salary deferred and a 50% on the next 2% of salary deferred up to the maximum allowed by the IRS regulations.Pension PlanThe Sandy Spring Bancorp, Inc. Retirement Income 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. Schrider, Mr. Mantua, Mr. Caceres, and Mr. Kuykendall are participants. The accumulated benefit for each may be found in the Pension Benefits table on page 31.Nonqualified Deferred Compensation PlanExecutives and other officers who are eligible may participate in the Sandy Spring Bank Deferred Compensation Plan as described on page 32. Currently, only Mr. O’Brien participates in this plan.Business-Related Benefits and PerquisitesThe 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, 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.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.25Role of the Compensation Committee, Management and Compensation Consultants in the Executive Compensation ProcessRole of the Compensation CommitteeThe 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 directors and is available on our Investor Relations website.thesole 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 authoritydiscretion to retain and terminate any compensation consultantMeridian and to approve the feefees, scope and theother terms of engagement. For 2017,Meridian’s engagement, with full funding provided by the committee engaged an independent consulting firm specializing in executive compensation.In 2017, 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 chairman of the committee reported committee actions to the board of directors following each committee meeting.worked closely with Mr. Schriderannually reviews the independence of Meridian in light of SEC rules and Nasdaq Listing Rules regarding compensation consultant independence and has affirmatively concluded that Meridian is independent from the company and has no conflicts of interest relating to review and discuss his recommendations for the other executive officers. The committee also considered the market analysis providedits engagement by the compensation consultant to assess market practices, the mix of fixed and variable compensation, and the levels of compensation for each executive.committee.The CEO performance evaluation for 2016 was coordinated by Center for Board Excellence 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.2017, Mr. Schrider and2021, our CEO presented to the committee specific recommendations for all executive officers, other than himself. In making his compensation recommendations for each of the executive officers, as customary, were responsible forour CEO considers individual performance, contributions toward our long-term performance, the developmentscope of the annual businesseach individual’s responsibilities, and financial plans as well as a long-term strategic plan, which were reviewed and approved by the board of directors. The financial plan provided the foundation for setting the performance goals and targets to be achieved during the fiscal year that were included in incentive compensation plans.Utilizing the analysismarket data provided by the committee’s independent compensation consultant and at the direction ofconsultant. Exercising its independent judgment, the committee Mr. Schrider developedmade final decisions for 2021 compensation opportunities. Our CEO does not make recommendations for executivewith respect to his own compensation other thanor participate in the deliberations regarding the setting of his own. Mr. Kuykendall providedown compensation. Decisions related to the CEO’s 2021 compensation opportunities were made independently by the committee in consultation 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.Meridian.Messrs. Schrider, Mantua, and Kuykendall, as well as other members of management regularly attended portions of theThe Compensation Committee meetings where company performance, market considerations, and legal analyses were discussed. However, management was not present during final deliberations onuses a peer group to perform assessments of executive compensation, and only committee members voted on executive compensation matters.Role of Independent Compensation ConsultantThe committee engages an independent executive compensation consultant to provide commentary, analysis and expertise relating to executive compensation. For 2017 compensation decisions, the committee engaged Meridian. The committee reviewed the Nasdaq independence standards and determined Meridian to be independent with no identified conflicts of interest.26The committee considered a market analysis compiled by Meridian when deliberating compensation decisions for 2017. This analysis included, but was not limited to, an assessment of the Company’s compensation programs compared to its peers, recommendations for total direct compensation and target direct compensation as well as to measure performance under annual and long-term incentive plans. The committee reviews compensation data from our peers along with pay survey data in establishing base salaries, target pay opportunities and supplementalthe amount and mix of annual and long-term incentive awards for our executive retirement benefits. officers.analysis providedcommittee approves a group of publicly traded banks and bank holding companies each year to serve as the peer group. For 2021, the committee, with input and advice from Meridian, selected publicly traded companies with assets between approximately $6.5 to $30 billion (approximately one-half to two times the company’s assets) from the Mid-Atlantic region plus Connecticut, Massachusetts, North Carolina, Ohio, Virginia and West Virginia. The median asset size of the peer group was $13.3 billion, placing the company at the 51st percentile, based on assets as of June 30, 2020. Compared to our prior peer group, Investors Bancorp, Inc. and ConnectOne Bancorp, Inc. were added and Flushing Financial Corporation was removed to better align the company’s asset size with the peer group median. The 2021 peer group was comprised of the following 20 companies:broad arraybase salary, commensurate with the individual’s experience and performance, at market competitive levels. Mr. Schrider recommended base salaries for executive officers other than himself, and the committee determined Mr. Schrider’s salary. The resulting salary adjustments, shown below, were effective April 4, 2021.
Salary Amount
of
Increase
Salary Percent
Increase $825,000 $25,000 $850,000 3.0% $425,000 $15,000 $440,000 3.5% $500,000 $17,500 $517,500 3.5% $425,000 $25,000 $450,000 5.9% $420,000 $20,000 $440,000 4.8% 2021 TARGET AWARD OPPORTUNITIES
Opportunities
Award
Opportunity
Award
Opportunity 75% 90% 50% 65% 65% 75% 65% 60% 50% 60% Weight 40% 25% 20% 15% 100% Base Salary X X = Award
Performance
Level
Funding)
Performance
Target
Funding)
Performance
Level
Target
Funding)
Performance $173,536 $216,920 $271,150 266,103(1) 145.35% 54% 50% 46% 46.17(2) 147.88% (1) (2) Description Achievements Performance
LevelOur multi-year project to enhance our information technology and data infrastructure will provide a seamless, unified digital banking platform that is expected to reduce friction for clients and employees, enable digital sales, allow us to offer first-class technologies, improve efficiency, and give us the flexibility to meet the changing needs of our clients. Transitioning our data management to a cloud platform will enable us to modernize our digital and analytics capabilities and transition to a more data-driven culture. Target Utilizing nCino’s commercial banking system is expected to shorten our loan origination cycle, improve the loan officer and client experience, and streamline underwriting and portfolio management. Target Replacement of our asset/liability modeling tool enables us to conduct more sophisticated financial forecasting and stress testing. Below Target Replacement of our loan pricing model gives us more sophisticated pricing capability and facilitates the transition away from LIBOR. Target Description Achievement Performance
LevelCompletion of the forgiveness process is essential to helping our clients recover from the effects of the COVID-19 pandemic and enabling the company to transition its resources back to execution of its core strategies. Target We conduct quarterly client surveys to determine our SEE (Success, Effort, Emotion) Score, which indicates the level of client loyalty and engagement. Achieved average score of 78 for 2021, which is well above industry average. Above Target Description Achievement Performance
LevelThe ratio of net charge-offs to average loans is a key indicator of credit quality and loan portfolio performance. Net charge-offs of 0.11% of average loans matched peer average and reflected continued strong asset quality. Target Interest income is our primary source of revenue, with interest and fees on loans accounting for over 90% of that revenue source. Year over year loan growth of 5.0% exceeded peer average and plan, aided by significant commercial loan growth. Above Target Customer deposits provide a stable, low-cost source of funds. Year over year deposit growth of 5.9% slightly lagged peer average, but exceeded plan, as we strengthened core deposits and reduced brokered and other high cost deposits. Target Weight Performance
Achieved
Payment 40% X 145.35% = 58.14% 25% X 147.88% = 36.97% 20% X 95.00% = 19.00% 15% X 110.00% = 16.50% 130.61% 832,639 287,342 439,339 382,034 287,342 LONG-TERM INCENTIVE COMPENSATION
9,129 9,129 3,397 3,397 4,611 4,611 3,135 3,135 3,099 3,099 Percentage of PRSUs Vesting 150% 100% 50% 0% +15% None None -15% (1) assessalign the Company’sinterests of executive officers with those of our shareholders by creating an incentive to create and preserve long-term shareholder value. Through RSAs, executive officers share the risks and rewards of stock ownership. Through multi-year vesting, RSAs also serve as a retention vehicle. RSAs vest in equal installments over three years, provided that the recipient continues to be employed by the company on each vesting date. Dividends are paid on RSAs during the vesting period.
Performance
Level
Award)
Performance
Target
Award)
Performance
Level
Target
Award)
Performance 40th 50th 75th 82.76th 150.00% $9.16 $9.89 $10.66 $11.54(1) 150.00% (1) + EPS = Final Payout 150.00% x 50% = 75.00% 150.00% x 50% = 75.00% 150.00% 12,001 4,610 5,527 — 4,491 EXECUTIVE INCENTIVE RETIREMENT PLAN
Performance Level CEO Other Participating Officers Threshold 3.000% 3.0% Target 9.375% 7.5% Maximum 20.000% 15.0% EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
it served asare necessary to attract and retain top executive talent in a foundationcompetitive market. The agreements are intended to ensure that management can fairly consider potential change in control transactions that could result in loss of their jobs. The agreements do not provide for compensation decisions. any tax indemnification or “gross-up” payments for any golden parachute excise tax payments, and all change in control benefits are subject to a “double-trigger” (i.e., a change in control plus a qualifying termination of employment).committee had direct accessseverance benefits payable to each named executive officer under the consultantemployment and change in control overagreements are described on page 48 under the engagement at all times.“Executive Compensation Tables – Potential Payments upon Termination or Change in Control” section of this proxy statement. EXECUTIVE COMPENSATION POLICIES
Additional Compensation Policies, Practices and ConsiderationsIn 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 threefour times his or her base salary, and other executive officers are required to own shares valued at onetwo times his or her base salary. TheWe expect new executive officers to be in compliance with these requirements within five years of being appointed to their position. Until the executive officer has five years fromachieved the daterequired level of hireownership, the executive officer is required to retain not less than 50% of the net shares received as a result of any equity awards granted under the company’s equity incentive plans. Shares owned directly or promotionbeneficially by the executive officer or in the name of an immediate family member, restricted shares and shares issuable upon settlement of restricted stock units, other than those subject to be compliant with these guidelines. Allperformance measures, and shares held in the company’s employee stock purchase plan or 401(k) plan are included in the stock ownership calculation. Stock options are not included. As of December 31, 2021, each of the named executive officers own Company common stock in excess of thismet their ownership requirement.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 Companycompany is required to prepare an accounting restatement due to the company’s material noncompliance by the Company with any financial reporting requirement under the securities laws, the Company, at the direction and sole discretionBoard will require reimbursement or forfeiture of the Compensation Committee and the board of directors, will recover from any excess incentive-based compensation received by current or former executive officer of the Company who received incentive-based compensationofficers during the three years preceding the date on which the Companycompany is required to prepare the accounting restatement, basedrestatement.erroneous data, in excess of what would have been paid to the executive officer under the accounting restatement.company.Impact of Accounting and Taxation on the Form of Compensation TAX CONSIDERATIONS
andconsiders the Company consider the accounting and tax (individual and corporate) consequencesdeductibility of theexecutive compensation plans prior to making any changes to the plans.under Section 162(m) of the Internal Revenue Code, concernswhich limits 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 thanfor 2017 or any subsequent calendar year. Prior to 2018, an exception to this deduction limit was available for “performance-based” compensation that was approved by shareholders and otherwise satisfied the principal financial officer. The Tax Cuts and Jobs Act, signed into law in December, 2017, limitsrequirements of Section 162(m). As a result of changes to Section 162(m), we may no longer take an annual deduction for any compensation paid to any of our ability to deduct performance-based compensationcovered employees in excess of $1 million with respectper covered employee. The committee has not adopted a policy that would require all compensation to stock based awards granted after November 2, 2017,be deductible because the committee believes it is in the best interests of the company to retain the flexibility to make compensation decisions that respond to market conditions, properly incentivize our executive officers, and annual incentive awards paid for fiscal year 2018continue to attract, retain and later years.reward top executive talent.Compensation Committee ReportCOMPENSATION COMMITTEE REPORTboard of directorsBoard that the Compensation Discussion and Analysis be included in this proxy statement.March 7, 2018 Ralph F. Boyd, Jr., ChairmanMark E. FriisJames J. MaiwurmGary G. NakamotoRobert L. Orndorff27Executive Compensation TablesEXECUTIVE COMPENSATIONSummary Compensation TableThe following table summarizes compensation for the named executive officers for the three most recent completed fiscal years.SUMMARY COMPENSATION TABLEName 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 Daniel J. Schrider 2017 $ 605,266 $ 356,711 $ 414,931 $ 48,715 $ 55,064 $ 1,480,686 President, Chief 2016 $ 594,785 $ 289,660 $ 387,516 $ 23,781 $ 57,708 $ 1,353,450 Executive Officer 2015 $ 600,692 $ 285,004 $ 366,795 $ - $ 61,681 $ 1,314,172 Philip J. Mantua 2017 $ 349,500 $ 167,177 $ 198,891 $ 23,048 $ 26,626 $ 765,242 EVP, Chief Financial 2016 $ 336,538 $ 129,550 $ 181,168 $ 12,525 $ 27,388 $ 687,169 Officer 2015 $ 333,192 $ 123,612 $ 170,606 $ - $ 27,404 $ 654,814 Joseph J. O'Brien, Jr. 2017 $ 374,077 $ 176,011 $ 205,384 $ 543 $ 44,832 $ 800,847 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 R. Louis Caceres 2017 $ 342,308 $ 164,695 $ 192,992 $ 33,139 $ 47,823 $ 780,957 EVP, Wealth Mgmt, 2016 $ 332,692 $ 129,550 $ 176,861 $ 16,963 $ 44,232 $ 700,298 Mortgage, Insurance 2015 $ 333,865 $ 124,607 $ 168,589 $ - $ 47,942 $ 675,003 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 Year
Awards(1)
Incentive Plan
Compensation(2)
Pension Value &
Nonqualified
Deferred
Compensation
Earnings(3)
Compensation(4) 2021 842,308 — 742,553 995,269 — 65,701 2,645,831 2020 804,808 731,156 684,082 13,877 79,897 63,179 2,376,999 2019 743,269 — 479,634 564,648 80,740 61,170 1,929,461 2021 435,385 — 276,312 357,766 — 39,564 1,109,027 2020 419,885 257,125 267,479 10,343 33,311 33,976 1,022,120 2019 401,692 — 184,273 243,799 35,771 32,460 897,995 2021 512,115 — 375,059 514,192 — 59,947 1,461,728 2020 487,885 377,500 345,867 6,192 — 55,220 1,272,864 2019 446,923 — 220,903 284,977 — 51,752 1,004,555 2021 442,308 — 255,001 439,913 — 37,580 1,174,801 2021 433,846 — 252,073 355,975 — 53,219 1,095,113 2020 412,462 254,100 238,372 9,010 51,215 53,710 1,018,869 2019 388,769 — 179,582 233,667 53,342 52,383 907,743 (1) (1)(2)
Cash Awards
to EIRP
on EIRP
Non-Equity
Incentive Plan
Compensation 832,639 141,642 20,988 995,269 287,342 55,638 14,786 357,766 439,339 65,438 9,415 514,192 382,034 56,903 976 439,913 287,342 55,638 12,995 355,975 (3) (4) Dividends on
Restricted
Stock 401(k)
Matching
Contribution Perquisites* Total All Other
Compensation 31,857 14,500 19,344 65,701 12,356 14,500 12,708 39,564 15,612 14,500 29,835 59,947 7,516 14,500 15,564 37,580 11,463 14,500 27,256 53,219 *
Stock
Awards:
Number of
shares of
stock
Fair Value of
Stock and
Options
Awards (4) Grant Date Threshold
($) Target
($) Maximum
($) Threshold
(#) Target
(#) Maximum
(#) RSA 3/10/2021 9,129 371,276 PRSU 3/10/2021 4,565 9,129 13,694 371,276 ETIP 318,750 637,500 956,250 EIRP 25,500 79,688 170,000 RSA 3/10/2021 3,397 138,156 PRSU 3/10/2021 1,699 3,397 5,096 138,156 ETIP 110,000 220,000 330,000 EIRP 13,200 33,000 66,000 RSA 3/10/2021 4,611 186,529 RSU 3/10/2021 2,306 4,611 6,917 186,529 ETIP 168,188 336,375 504,563 EIRP 15,525 38,813 77,625 RSA 3/10/2021 3,135 127,500 PRSU 3/10/2021 1,568 3,135 4,703 127,500 ETIP 146,250 292,500 438,750 EIRP 13,500 33,750 67,500 RSA 3/10/2021 3,099 126,036 PRSU 3/10/2021 1,550 3,099 4,649 126,036 ETIP 110,000 220,000 330,000 EIRP 13,200 33,000 66,000 (1) (2) (3) (4) Awards consist of restricted stock, a portion of which vest ratably over five years and a portion that vests basedRefer to note (1) in the Summary Compensation Table for additional detail on the achievement of certain performance criteria. The performance-based awards assume the probable outcome of performance conditions for the targeted potentialgrant date fair value of the award. For valuation and discussion of the assumptions related to theseawards. Details regarding outstanding stock awards see Note 12 to the Consolidated Financial Statementscan be found in the Annual Report on Form 10-K. Based on the fair valueOutstanding Equity Awards at grant date, the following are the maximum potential values of the performance shares for the 2017 – 2019 performance period assuming maximum level of performance is achieved: Mr. Schrider, $149,369; Mr. Mantua, $70,056; Mr. O’Brien, $73,685; Mr. Caceres, $68,945; and Mr. Kuykendall, $50,357.Fiscal Year-End table.(2)The amounts reported are the total of the cash awards under the 2015 Omnibus Incentive Plan (“OIP”)the Executive Incentive Retirement Plan (“EIRP”) and the earnings on existing EIRP balances as shown below:Proxy Statement | 2022 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 (3)This column presents the change in present value of the accumulated benefit with respect to the Pension Plan for each year. See the table of Pension Benefits on page 31. (4)This column consists of other items of compensation and the value of perquisites and personal benefits for the named executive officers including as applicable: supplemental long term care and disability insurance, executive health screening, and life insurance premiums. Mr. Schrider has the use of a company-owned vehicle. Each executive received dividends on restricted stock as follows: Mr. Schrider received $27,923; Mr. Mantua received $12,381; Mr. O’Brien received $13,504; Mr. Caceres received $12,650; and Mr. Kuykendall received $9,253. Messrs. O’Brien and Caceres each received $12,000 in car allowance. Each executive received $10,800 in 401(k) matching funds.28Outstanding Equity Awards at Fiscal Year EndOUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END2017. These awards are subject to forfeiture until vested, and the ultimate value of performance-based awards is unknown.2021. Stock Awards Name Grant
Date Number of
shares or
units of stock
that have not
vested Market value
of shares or
units of stock
that have not
vested Equity incentive
plan awards:
Number of
unearned shares,
units or other
rights that have
not vested Equity incentive
plan awards:
Market or payout
value of
unearned shares,
united or other
rights that have
not vested (#)(1) ($)(2) (#) ($) Daniel J. Schrider 3/27/2013 (3) 2,596 101,296 3/05/2014 (4) 4,170 162,713 3/18/2015 (5) 6,527 254,684 3/16/2016 (6) 6,352 247,855 (8) 1,391 54,257 3/15/2017 (7) 6,053 236,188 (9) 1,029 40,132 Philip J. Mantua 3/27/2013 (3) 1,041 40,620 3/05/2014 (4) 1,940 75,699 3/18/2015 (5) 2,831 110,466 3/16/2016 (6) 2,841 110,856 (8) 622 24,251 3/15/2017 (7) 2,836 110,661 (9) 482 18,808 Joseph J. O’Brien, Jr. 3/27/2013 (3) 1,285 50,141 3/05/2014 (4) 2,101 81,981 3/18/2015 (5) 3,050 119,011 3/16/2016 (6) 3,015 117,645 (8) 660 25,734 3/15/2017 (7) 2,987 116,553 (9) 507 19,783 R. Louis Caceres 3/27/2013 (3) 1,202 46,902 3/05/2014 (4) 1,956 76,323 3/18/2015 (5) 2,854 111,363 3/16/2016 (6) 2,841 110,856 (8) 622 24,251 3/15/2017 (7) 2,795 109,061 (9) 475 18,515 Ronald E. Kuykendall 3/27/2013 (3) 886 34,572 3/05/2014 (4) 1,431 55,838 3/18/2015 (5) 2,089 81,513 3/16/2016 (6) 2,073 80,888 (8) 454 17,696 3/15/2017 (7) 2,039 79,562 (9) 347 13,520 Option Awards Stock Awards Grant Date Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Exercise
Price Option
Expiration
Date
shares or
units of
stock that
have not
vested Market
value of
shares or
units of
stock
that have
not vested
($)(1)
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) 3/15/2017 1,211(2) 58,225 4/25/2018 3,129(3) 150,442 3/06/2019 2,418(4) 116,257 12,001(5) 577,008 3/11/2020 8,523(6) 409,786 20,445(7) 982,996 3/10/2021 9,129(8) 438,922 13,982(9) 672,255 3/15/2017 567(2) 27,261 4/25/2018 1,163(3) 55,917 3/06/2019 929(4) 44,666 4,610(5) 221,649 3/11/2020 3,333(6) 160,251 7,994(7) 384,352 3/10/2021 3,397(8) 163,328 5,203(9) 250,160 3/15/2017 597(2) 28,704 4/25/2018 1,390(3) 66,831 3/06/2019 1,114(4) 53,561 5,527(5) 265,738 3/11/2020 4,309(6) 207,177 10,337(7) 497,003 3/10/2021 4,611(8) 221,697 7,062(9) 339,541 10/15/2013 47,867 $10.96 10/15/2023 2/18/2014 7,838 $10.96 2/18/2024 5/19/2015 35,784 $14.77 5/19/2025 6/16/2015 7,466 $14.77 6/16/2025 2/16/2016 10,072 $16.20 2/16/2026 4/01/2020 3,129(6) 150,442 7,508(7) 360,985 3/10/2021 3,135(8) 150,731 4,802(9) 230,880 3/15/2017 559(2) 26,877 4/25/2018 1,140(3) 54,811 3/06/2019 905(4) 43,512 4,491(5) 215,927 3/11/2020 2,970(6) 142,798 7,124(7) 342,522 3/10/2021 3,099(8) 149,000 4,747(9) 228,236 (1) (1)Awards made prior to 2016 were made under the 2005 Omnibus Stock Plan. Starting in 2016, awards were made under the 2015 Omnibus Incentive Plan.(2)are based uponwere computed by multiplying the closing price of $39.02$48.08 per share of Companycompany common stock on December 31, 2017.2021 by the number of shares or units.(2) (3)Remaining shares granted on March 27, 2013 will ratably on each April 1st through 2018.(4)Remaining shares granted on March 5, 2014 will vest ratably on each April 1st through 2019.(5)Remaining shares granted on March 18, 2015 will vest ratably on each April 1st through 2020.(6)Remaining shares granted on March 16, 2016 will vest ratably on each April 1st through 2021.(7)Shares granted on March 15, 2017 will vest ratably beginning on April 1, 2018 and each April 1st through 2022.(3) (8)These shares are subject(4) vesting based uponvest on April 1, 2022.(5) (6) (7) goals.performance measures. The amountsnumber of PRSUs shown assumein the thresholdtable assumes the maximum level of performance is achieved.achieved and includes accumulated reinvested dividend equivalent shares as of December 31, 2021. The actual award, if any,number of PRSUs will be determined as of December 31, 20182022 based on the 2016-20182020 – 2022 performance period.(8) (9) These shares are vesting based upon the achievement of specific goals.performance measures. The amountsnumber of PRSUs shown assumein the thresholdtable assumes the maximum level of performance is achieved.achieved and includes accumulated reinvested dividend equivalent shares as of December 31, 2021. The actual award, if any,number of PRSUs will be determined as of December 31, 20192023 based on the 2017-20192021 – 2023 performance period.29Grants of Plan-Based AwardsOPTION EXERCISES AND STOCK VESTEDsets forthprovides information on plan-basedfor each of our named executive officers regarding the exercise of stock options and the vesting of stock awards madeduring 2021. The value realized upon the exercise of stock options is equal to the named executive officers. These include restricteddifference between the market price of company stock on the date of exercise and the exercise price of the options. The value realized upon the vesting of stock awards (“RSA”), performance-vested restrictedis based on the market price of company stock awards (“PRSA”) and cash awards underon the 2015 Omnibus Incentive Plan and the Executive Incentive Retirement Plan (“EIRP”) for 2017.vesting date. 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 Option Awards Stock Awards
of Shares
Acquired
on Exercise
Realized
Shares
on Vesting(1)
Realized 15,873 659,327 6,428 266,829 7,464 310,803 22,656 843,757 1,565 67,968 5,988 249,119 (1) (1)The informationthese columns reflects the range of potential payouts under the indicated plans as established by2021, and includes any amounts that were withheld for applicable taxes. On February 15, 2022, 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 stock. The awards will vest based onCommittee certified the achievement of total shareholder return (“TSR”) compared to an index of U.S. commercial banks of similar size over the 2017-2019applicable performance period. The number of shares awarded will range from a threshold of 50% of target for minimum performance at the 40th percentile, 100% of target for performance at the 50th percentile, to a maximum of 150% of target for performance at the 75th percentile. Actual performance will be interpolated to determine a proportionate award. Relative 3-year TSR below the 40th percentile will result in no award. Dividends on the unvested award accumulate additional shares determined by the market price on the dividend payment date, and these shares will be subject to the same performance vesting criteria as the original award. Upon death or disability of the executive, the award will vest at the target level adjusted proportionately for the number of days elapsed in the performance period. Upon a change in control, the performance criteria will be deemed satisfied at the target level, and the award will vest based on continued employment of the executive or per the terms of the definitive agreement evidencing the change in control. If the executive is terminated within twelve months after the occurrence of a change in control, other than for just cause, the award will become fully vested.(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 $42.48, the closing price on the day before the grant date. The grant date per share fair value of the PRSA was determined by an independent, third-party valuation assuming the probable outcomemeasures for the performance criteria. The result was a valuation of $49.37 per share.share cycle ending on December 31, 2021, at which time those shares were vested and paid.30Option Exercises and Stock VestedPENSION BENEFITSvalue realized upon the vesting of restricted stock awards in 2017. Stock Awards Number of Value Realized Shares Acquired Upon Vesting on Vesting (1) Executive (#) ($) Daniel J. Schrider 10,658 $ 435,254 Philip J. Mantua 4,499 $ 183,804 Joseph J. O’Brien, Jr. 5,174 $ 211,303 R. Louis Caceres 4,857 $ 198,347 Ronald E. Kuykendall 3,557 $ 145,261 (1)The value realized upon vesting is equal to the closing market price of Company common stock on the date of vesting multiplied by the number of shares acquired. The amount reported is the aggregate of shares vesting from multiple grants of restricted stock.Pension BenefitsThe following table shows theestimated present value of the accumulated benefit under the Sandy Spring Bancorp, Inc. Retirement Income Plan (“Pension 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
Credited Service
Accumulated Benefit(1) Daniel J. Schrider Pension Plan 19 $ 364,797 Pension Plan 19 488,333 Philip J. Mantua Pension Plan 9 $ 213,743 Pension Plan 9 272,053 Joseph J. O’Brien, Jr.(2) Pension Plan - 0 R. Louis Caceres Pension Plan 9 $ 274,193 Pension Plan 9 357,934 Ronald E. Kuykendall Pension Plan 8 $ 351,719 (1) (1)This planrelatedthe valuation methods and material assumptions are includedapplied in quantifying the present value of the current accrued benefit, see Note 1314 – Pension, Profit Sharing, and Other Employee Benefit Plans in the Notes to the Consolidated Financial Statements included in theour Annual Report on Form 10-K.(2)Mr. O’Brien does not participate in the Pension Plan.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. TheThe year'syear’s earnings after December 31, 2000 (1.75% of career average earnings) through December 31, 2005, and (c) 1.0% of each year'syear’s earnings thereafter, through December 31, 2007. Plan Name
Contributions
in 2021(1)
Contributions
in 2021(2)
Earnings
Withdrawals/
Distributions
Balance at
12/31/2021(4)(5)(6) EIRP n/a 141,642 20,988 - 1,122,541 EIRP n/a 55,638 14,786 - 746,687 EIRP n/a 65,438 9,415 - 505,480 Deferred Compensation Plan - - 414 - 19,345 EIRP n/a 56,903 976 - 102,504 EIRP n/a 55,638 12,995 - 662,967 Pay Ratio(1) (2) (3) (4) (5) (6) Company selected November 3, 2017 asfollowing describes the determination date for identifyingmaterial features of our nonqualified deferred compensation plans in which the median employee under Item 402(u) of Regulation S-K. Year-to-date taxable wages paid from January 1, 2017 to November 3, 2017 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, the median employee was identified, and total compensation for the median employee was calculated according to Item 402(c). Mr. Schrider’s total compensation for 2017 was $1,480,686 and the median employee’s was $62,004, producing a ratio of 24:1.31Nonqualified Deferred Compensation PlansAll–Each of theour named executive officers participateparticipates in the Executive Incentive Retirement Plan (“EIRP”)(EIRP), a deferred compensation plan that replacedprovides for supplemental executive retirement agreements (“SERAs”) withbenefits.named executive officers. Prior balances carried over fromEIRP, a guaranteed minimum deferral bonus equal to 3% of a participant’s base salary is credited annually to the SERAs vest over 15 yearsparticipant’s deferred benefit account. Each year, the Compensation Committee determines the performance measures by which a deferral bonus above the minimum may be earned. Performance measures and automatically vest upon the executive’s death or disability or upon a change in control. Deferralawards for 2021 are described under “Compensation Discussion and Analysis – 2021 Compensation” on page 38. Employer contributions and earnings paid under the EIRP vest immediately. Earningsand earnings on EIRP balances accruevest immediately. Interest accrues on account balances at an interesta rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly.The executive’sParticipants may generally elect to receive distribution of their vested 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 annual installments payable over up to 15 years commencing following separation from service or at a later date not beyond the electionfirst business day of the executive. No payments will be made to an executive whoJanuary occurring after the year in which the Participant attains age 70. A participant whose employment 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 Compensation and Retirement Benefits on page 24.Sandy Spring Bank Deferred Compensation PlanUnder–Each of our named executive officers is eligible to participate in the terms of Sandy Spring Bank Deferred Compensation Plan participants(Deferred Compensation Plan), which is a nonqualified retirement savings plan. 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 participantParticipants will receive thetheir account balance following the sixsix- month anniversary of any separation from service. Participants are not subject to U.S. federal income tax on amounts that they defer or any investment earnings until those amounts are distributed to them.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) Daniel J. Schrider EIRP n/a $ 57,263 $ 17,978 - $ 634,717 Philip J. Mantua EIRP n/a $ 26,475 $ 15,356 - $ 519,712 Joseph J. O’Brien, Jr. EIRP n/a $ 28,500 $ 7,811 - $ 279,380 NQDC $ - n/a $ 543 - $ 17,449 R. Louis Caceres EIRP n/a $ 25,950 $ 13,096 - $ 446,586 Ronald E. Kuykendall EIRP n/a $ 21,675 $ 18,232 - $ 607,269 (1)Participant contributions are not permitted under the EIRP.(2)Payments made under the EIRP in 2017 as described on page 24. These amounts are included in the Summary Compensation Table under Non-Equity Incentive Plan Compensation.(3)EXECUTIVE COMPENSATIONEarnings 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 28. Earnings for the NQDC are not included in the Summary Compensation Table because they are not considered to be above-market or preferential.(4)As of December 31, 2017, $30,299 of Mr. O’Brien’s balance was unvested. The balances for the other named executives are fully vested.AgreementsPOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLExecutivesour named executive officers, our named executive officers are entitled to compensation in the event that their employment terminates under certain circumstances. The amount of the compensation depends on, among other things, the circumstances under which the executive officer terminates employment. In addition, our equity incentive awards contain standard provisions that cause awards to vest or be forfeited upon termination of employment, depending on the reason for termination.Potential Payments Upon Termination or Change in Controlthe treatment of equity awards upon termination are described below, along with a table on page 51 that quantifies the amount that would become payable to each named executive officer as a result of his termination of employment. EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
Company and the Bank havecompany entered into an employment agreement with Mr. Schrider as of January 1, 2009 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, 2024. 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.32boardBoard 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, ifIf Mr. Schrider’s employment is terminated without just cause or he terminates his employment with good reason, as defined in the agreement (referred to herein as a “qualifying termination”), in each case following a change in control of the company, 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.“gross-up”“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.Companycompany 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.Company and the Bankcompany entered into an employment agreementagreements with Mr. Mantua and Mr. O’Brien on January 13, 2012 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,2023. 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 agreement doesThe agreements do not automatically renew. The agreement addressesagreements address 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. ForIn the event of 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. ForIn the event of termination by the Companycompany 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.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 insurancesinsurance benefits for a period of three years following termination. If the total value of the benefits provided and paymentsMr. 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“excess parachute payment” 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.include an excess parachute payment.33Mr. MantuaThe executive is prohibited from conflicts of interest and is required to maintain the confidentiality of nonpublic information regarding the Companycompany 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'sexecutive’s employment is terminated without just cause by the Companycompany or with good reason by the executive.Joseph J. O’Brien, Jr.Kenneth C. Cook Company and the Bankcompany entered into an employment agreement with Mr. O’BrienCook on January 13, 2012 to provideSeptember 23, 2019 in connection with the acquisition of Revere Bank, for his employmentwhich he served as co-ChiefExecutive Vice President for Commercial and Retail Banking.Officer, which became effective on April 1, 2020 when the acquisition was completed. The presentagreement has a 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.months. 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 employmentThe agreement does not provide for any special or additional compensation in the event of termination due to retirement, death, disability or resignation. For termination due to disability, Mr. O’Brien will receive base compensation, less any applicable disability benefits, and benefits forresignation without good reason. In the remaining termevent of the agreement. For termination by the Companycompany without just cause, or termination by Mr. O’BrienCook with good reason, as defined in the agreement, Mr. O’BrienCook 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, The agreement does not provide for any special severance benefit in the event of termination 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 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.O’BrienCook is prohibited from conflicts of interest and is required to maintain the confidentiality of nonpublic information regarding the Companycompany and its clients. HeMr. Cook is also bound by a covenantcovenants not to compete, not to solicit clients, and not to interfere with other employees following termination of employment for the remaining termany reason for a period of the agreement. The post-termination restrictions do not apply if there is24 months.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. KuykendallMr. Caceres and Mr. Kuykendall each have a change in control severance agreement with the Company and the Bank.company. The change in control agreement has a term of two years, also known as the “Covered Period.”years. 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.34the executive’sMr. Caceres’ employment is involuntarily terminated without just cause or the executiveMr. Caceres voluntarily terminates employment with good reason, as defined in the agreement, during the Covered Period,term of the executiveagreement, Mr. Caceres 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 executiveMr. Caceres would also receive the continuation of health, benefits, including life and disability insurances,insurance benefits for a period of three years following termination. Under the change in control agreements,agreement, if the total value of the benefits provided and payments made to the executiveMr. Caceres 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 EQUITY AWARDS – CONSEQUENCES OF TERMINATION OF EMPLOYMENT
summarizes the estimated payments to which theshows how RSAs are treated if a named executive officers were entitled upon termination as of December 31, 2017. 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 (1)AnyportionRSAs immediately vest upon a qualifying termination within 24 months of the accumulated EIRP balance immediately vests upon death, disability or change in control as shown above for Mr. O’Brien. The aggregate balances for the other executives are fully vested. The vested account balance(1)(1) be distributed to the executive following termination of employment, unless terminated for Just Cause, either in a lump sum or in installments, based on the prior election of the executive.(2)Represents the value of unvested restricted stock grants that willimmediately vest upon termination according to the terms of each award agreement. In the event of the executive’s death or disability awards of time-vested restricted stock will fully vest. Awards that vest upon achievement of performance criteria will partially vest based on the number of days elapsed in the performance period at the time of death or disability. The amounts shown are calculated based on the closing price of Company common stock of $39.02 on December 31, 2017.(3)Assumes that in the event of termination Messrs. Schrider, Mantua and O’Brien would each receive his base salary plus medical benefits for the remainder of the term of his agreement which as of December 31, 2017 was 30 months for Mr. Schrider and 18 months for Messrs. Mantua and O’Brien. The total amount would be reduced by disability benefits payable under insurance programs maintained by the Company, if applicable.(4)Equity awards granted under the 2005 Omnibus Stock Plan vest immediately upon a change in control. Restricted stock awards granted under the 2015 Omnibus Incentive Plan are not subject to accelerated vesting except to the extent the definitive agreement evidencing a change in control provides for such vesting and/or settlement or cash out of awards. Awards that vest based on the achievement of performance criteria will be deemed satisfied and fixed at the target level. This table assumes termination of employment, other than for just cause, within twelve12 months of a change in control,control.Consequences which case all remaining restricted stock grantedcontrol(1) OTHER POTENTIAL PAYMENTS
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
without just
cause or by
executive with
good reason
control
and
qualifying
termination — — 2,125,000 4,216,021 — 74,978 49,804 89,974 2,125,000 — — — 1,173,633 1,173,633 — 1,173,633 1,103,484 — — 1,103,484 — 660,000 978,750 1,950,975 — 29,882 — 59,764 1,100,000 — — — 451,423 451,423 — 451,423 423,056 — — 423,056 — 776,250 1,263,750 2,519,075 — 29,882 — 59,764 1,293,750 — — — 577,970 577,970 — 577,970 557,680 — — 557,680 — 337,500 512,813 — 301,173 301,173 — 301,173 153,904 — — 153,904 — — — 1,943,500 — — — 59,764 1,100,000 — — — 416,998 416,998 — 416,998 323,482 — — 323,482 (1) 2015 Omnibus Incentive Plan will fully vest.(5)Other than with respectterms of the named executive officer’s employment or change in control agreement. Amounts payable to Mr. Schrider in the payment shown is subjectevent of termination without just cause or for good reason and to reduction ifMr. Mantua and Mr. O’Brien in the aggregate payments triggerevent of termination due to disability would be paid over the paymentremaining term of the applicable agreement in accordance with the company’s normal payroll practices. Amounts payable to Mr. Mantua, Mr. O’Brien and Mr. Cook in the event of termination without just cause or for good reason and to Mr. Schrider, Mr. Mantua, Mr. O’Brien and Mr. Caceres in the event of a qualifying termination following a change in control would be paid in a lump sum.(2) SectionSections 280G and 4999 of the Internal Revenue Code.Code may be reduced in certain circumstances so that such tax would not apply and that under the employment agreements the company has entered into with Mr. Mantua and Mr. O’Brien and the change in control agreement the company has entered into with Mr. Caceres payments in connection with a change in control that would result in a golden parachute excise tax under Sections 280G and 4999 of the Internal Revenue Code would be reduced so that such tax would not apply.(3) (4) (5) (6) (7) 35 A Non-Binding Resolution to Approve the Compensation BACKGROUND
TEXT OF THE PROPOSED AMENDMENTS
Classified Board Election of Directors. Until the 2022 annual meeting of shareholders, the The Board of Directors of the Corporation shall be divided into three classes as nearly equal in number as the then total number of directors constituting the entire Board of Directors shall permit, which classes shall be designated Class I, Class II and Class III. At each annual meeting of shareholders beginningin 1992with the 2023 annual meeting of shareholders, successors to theclass ofdirectors whose terms expires at such annual meeting shall be elected for a term of three yearsexpiring at the next annual meeting of shareholders following the director’s election and until such director’s successor is elected and qualifies, or until his or her earlier death, resignation, disqualification or removal.(1)The following directors shall be assigned to Class I and shall serve until the 1994 annual meeting of shareholders:Andrew N. Adams, Jr.Robert L. MitchellRobert L. Orndorff, Jr.(2)The following directors shall be assigned to Class 11 and shall serve until the 1993 annual meeting of shareholders:William M. CanbyJohn ChirteaWillard H. DerrickHunter R. Hollar(3)The following directors shall be assigned to Class III and shall serve until the 1992 annual meeting of shareholders.Charles F. MessLouisa W. RiggsFrancis SnowdenW. Drew StablerNotwithstanding the foregoing, a director whose term shall expire at any annual meeting shall continue to serve until such time as his successor shall have been duly elected and shall have qualifiedunless his position on the Board of Directors shall have been abolished by action taken to reduce the size of the Board of Directors prior to said meeting.Should the number of directors of the Corporation be reduced, the directorship(s) eliminated shall be allocated among classes as appropriate so that the number of directors in each class is as nearly equal as possible. The Board of Directors shall designate, by the name of the incumbent(s), the position(s) to be abolished. Notwithstanding the foregoing, no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. Should the number of directors of the Corporation be increased, the additional directorships shall be allocated among classes as appropriate so that the number of directors in each class is as nearly equal as possible.A director so chosen by shareholders shall hold office for the A director elected by theNamedremainder of the term of the class to which the director is assigned.Board of Directorsshareholders to fill a vacancy resulting from the removal of a director shall hold office for the remainder of the term of the removed director. A director elected by the Board of Directors to fill a vacancy resulting from any cause other than removal of a director shall hold office for a term expiring at the followinguntil the next annual meeting of shareholders and until his or her successor is elected and qualifies. REASONS FOR THE PROPOSED AMENDMENTS
Officersand Governance Committee and the Board periodically consider our corporate governance practices and structures in light of the continuing evolution of best practices. As part of that process, the Board considers corporate trends, peer practices, the views of our institutional shareholders and the guidelines of proxy advisory firms. As such, the Executive and Governance Committee and the Board have, from time to time, reviewed the classified board structure. EFFECT OF THE PROPOSED AMENDMENTS
REQUIRED VOTE
boardBoard recommended and the shareholders elected to have this proposal submitted annually.board of directorsBoard and may not be construed as overruling a decision by the boardBoard 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.board of directorsBoard believes that the compensation practices of the Companycompany 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 Companycompany and the interests of shareholders.Voting Standard VOTING STANDARD
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.APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS.THIS PROPOSAL.36 PROPOSAL 3: An amendment to the articles of incorporation to increase authorized capital stock from 50,000,000 shares to 100,000,000 sharesThe 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.AmendmentThe 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 AmendmentThe 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.37If 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 StandardThis 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” APPROVAL OF THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATIONRatificationAudit Committee of the AppointmentBoard is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the company’s financial statements. The committee has appointed Ernst & Young LLP to serve as the Independent Registered Public Accounting Firm for the Year 2018The Audit Committee (“the committee” in this section) has engaged Ernst & Young LLP (“Ernst & Young”) as the Company’scompany’s independent registered public accounting firm for the year 2018.fiscal 2022. In accordance with established policy, the boardBoard is submitting this proposalthe appointment of Ernst & Young LLP 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.Audit Committeecommittee considered the independence factors, the length of the audit firm’s tenure as the Company’scompany’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 interests of shareholders to continue the engagement of Ernst & Young LLP as our independent registered public accounting firm for 2018.2022.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 alsoLLP 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.willLLP are expected to be present and available at the annual meeting, will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions. VOTING STANDARD
Voting StandardIn 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."FOR" THE RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2018.“FOR” THIS PROPOSAL.38 AUDIT AND NON-AUDIT FEES
Companycompany and subsidiaries by Ernst & Young LLP for the years ended December 31, 20162021 and December 31, 20172020, 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 1,050,000 1,280,500 — — 279,000 207,000 — — 1,329,000 1,487,500 (1)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,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.Proxy Statement | 2022(2)Also includes fees for professional services rendered for the review of the Registration Statement on Form S-4 filed with the SEC in connection with the acquisition of WashingtonFirst Bankshares, Inc.(3)Tax services consist of all tax compliance services.(4)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 AUDIT COMMITTEE’S PREAPPROVAL POLICIES AND PROCEDURES
Audit Committeecommittee is required to pre-approve all auditing services and permitted non-audit services provided by the Company’scompany’s independent registered public accounting firm, Ernst & Young.Young LLP. 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 Committee and approved by the Committee or by one or more members of the Committee to whom authority to grant such approval has been delegated by the Committee prior to the completion of the audit.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 LLP to the Companycompany is consistent with its independence.Audit CommitteeThe Company’s managementBoard of Directors is responsible for its internal controlscurrently composed of five independent directors and financial reporting process.operates under a written charter adopted by the Board. The Company’s independent registered public accounting firm 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 Stated and expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. The Company's Audit Committee is appointed by the board of directorsBoard to assist the boardBoard 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 internalthe company’s independent registered public accounting firm; and external auditors.39All members(3) the qualifications and performance 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-owned government contractor, has been identified by the board as meeting the definition of ancompany’s internal audit committee financial expert under SEC regulations.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 Committeecommittee has engaged Ernst & Young LLP since 2013.2017,2021, 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 foundcharter that is available on the Company’s Investor Relationscompany’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 Sarbanes-Oxley Act disclosure controls and procedures;·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 all matters required to be discussed by Auditing Standard No. 1301 (Communications with Audit Committees)(formerly Auditing Standard No. 16) and other applicable laws and regulations including, but not limited to, the audit strategy, scope and plan for the audit work, and the significant risks and areas of audit focus;·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;·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.review, discussion, disclosures,reviews and materialsdiscussions described above, the Committee recommendscommittee recommended to the boardcompany’s Board of directorsDirectors that the audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2017.2021.February 21, 2018Pamela A. Little, ChairmanMona AbutalebJames J. MaiwurmRobert L. Orndorff40General InformationINFORMATION ABOUT THE MEETING HOW CAN I PARTICIPATE IN THE ANNUAL MEETING?
and Accessibilityof Internet Availability of Proxy Materials, proxy card or voting instruction form. You must have the control number in order to vote your shares at the meeting. Online access will begin at 9:30 a.m. We encourage you to access the meeting webcast prior to the start time. If you hold your shares through an intermediary, such as a broker or bank, you must pre-register with our transfer agent, as described below, to obtain a control number that will allow you to vote at the annual meeting. HOW CAN I ASK QUESTIONS?
WILL I BE ABLE TO VOTE MY SHARES DURING THE MEETING?
For our 2018Voting on the internet. Go to www.envisionreports.com/sasr and follow the instructions. You will need to have your control number (from your Notice of Internet Availability or proxy card) with you when you go to the website.save significantobtain a control number. If you hold your VOTES REQUIRED
Companycompany is furnishing its proxy statement and annual report via the Internet according to the SEC rules for “Notice and Access.” On March 14, 2018,or about April 6, 2022, the Companycompany 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 of Internet Availability, shareholders may choose to request a printed copy of proxy materials at no charge, and this preference will be maintained for future mailings.further reduce costs, the Company utilizes the householding rulesexpenses of the SEC that permit the delivery of one set ofdelivering duplicate proxy materials or notice of availability of these materials to shareholders, who have the same address. If you wishwe rely on SEC rules that permit us to receivedeliver a separate copy of thissingle proxy statement and annual report with separate proxy cards, or noticeseparate Notices of availabilityInternet Availability, to multiple shareholders who share an address, unless we receive contrary instructions. If (1) you and another registered holder share an address and each receive paper copies of theseour proxy material and wish to receive only one paper copy or (2) you share an address with another registered holder, received a single set of our proxy materials, for each shareholderand would like to receive separate copies, you may request a change in delivery preferences by telephoning our transfer agent at your household, please follow1-800-368-5948 or writing the instructions on the Notice, and materials will be mailed to youtransfer agent at no charge. Computershare Trust Company, P.O. Box 505005, Louisville, KY 40233.nominee directly.nominee.Who Can Vote and What Constitutes a QuorumShareholders 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 35,644,141 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. 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 directors 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.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.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).41 COSTS OF PROXY SOLICITATION
are pleased to offer our shareholderswill pay 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 Meeting In Person and What to BringAll shareholders will be asked to check-in 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 at the meeting, you will need to ask the holder for a legal proxy. You will need to bring the legal proxy with you to the meeting and turn it in with a signed ballot that will be provided to you at the meeting.Your presence at the annual meeting will not automatically revoke your proxy. However, you may revoke your proxy at any time prior to its exercise by 1) filing a written notice of revocation with Ronald E. Kuykendall, General Counsel and Secretary; or 2) delivering a duly executed proxy bearing a later date; or 3) attending the annual meeting and casting a ballot in person.The cost of soliciting proxies will be borne by the Company.proxies. In addition to the solicitation ofsoliciting proxies by mail the Companyor electronic delivery, we also may solicit proxies through itsour directors, officers, and employees. The CompanyNone of our directors, officers or employees will receive any additional or special compensation for soliciting proxies. In addition, we have engaged Alliance Advisors, LLC to assist us in soliciting proxies at an estimated cost of $7,000 plus expenses. We also request persons, firms,will reimburse banks, brokers and corporations holding sharesother nominees for their expenses in their names or in the name of nominees that are beneficially owned by others to sendsending proxy materials to and obtain proxies from thosetheir customers who are beneficial owners and will reimburse the holders for their reasonable expenses in doing so.of our stock.Tabulation of Votes and Public Announcement of Results14a-8,The board of directors has appointed the Company’s transfer agent, Computershare, a shareholder desiring 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 willmake a proposal to 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.Shareholder Proposals and CommunicationsFrom 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 proposalsincluded in the Company's annual proxy materials. Shareholder proposals intended to be presented atstatement for the 20192023 annual meeting of shareholders may be eligible for inclusion in the proxy materials for that annual meeting if received at the Company’s executive offices not later than November 14, 2018 unless the date of the 2019 annual meeting is more than 30 days from April 25, 2019, in which case the deadline is a reasonable time before the Company begins to print and mail proxy materials. Anymust submit such proposals shall be subjectproposal to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934.42In 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. The nomination should be sent to the attention of Ronald E. Kuykendall, General Counsel andaddress: Corporate Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832,20832. Proposals must be received no later than the close of business on December 7, 2022, and must include, concerningcomply with SEC Rule 14a-8 in order for the proposal to be considered for inclusion in the company’s proxy statement. Simply submitting a proposal does not guarantee that it will be included.nominee,candidates for election to the following information: full name, age,Board or other business for consideration at an annual meeting of shareholders, the shareholder must give the Corporate Secretary written notice of the shareholder’s intent to do so. The notice must be received by the Corporate Secretary no later than 90 days and no earlier than 120 days prior to the anniversary date of birth, educational background and business experience, including positions held for at least the preceding five years, homeyear’s annual meeting. However, if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, then the notice must be received no earlier than 120 days prior to such annual meeting and office addresses and telephone numbers, and a signed representationno later than the later of the 90 days prior to timely provide all information requestedsuch annual meeting or the 10 days following the day on which public announcement of the date of the annual meeting is first made by the Company for preparationcompany. To be in proper form, the notice must contain the information required by Article II, Section 13 of its disclosures regardingour Bylaws.solicitationshareholder (or a qualified representative of proxies for election of directors. The name of each such candidate for director must be placed in nominationthe shareholder) does not appear at the annual meeting byto present a shareholder present in person. The nominee must alsonomination or proposed business, such nomination shall be present in person atdisregarded and such proposed business shall not be transacted.annual meeting. A vote forBoard may be sent to Sandy Spring Bancorp, Inc., Attention: Corporate Secretary, 17801 Georgia Avenue, Olney, Maryland 20832 and marked to the attention of the Board or any of its committees, the independent directors as 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 directorsgroup, or any individual director or directors. Communications also may be sent by addressing correspondenceemail to ir@sandyspringbank.com.boardevent that any matter not described herein is properly presented for a shareholder vote at the annual meeting, or such directorany adjournment thereof, the persons named in carethe form of proxy will vote in accordance with their best judgment. At the time this proxy statement went to print, the company knew of no other matters that might be presented for shareholder action at the annual meeting.secretary at the Company's main office by mail, courier, or facsimile or by e-mail through the Company’s "contact us" feature of the investor relations area of its web site atwww.sandyspringbank.com.following:• By orderboardeffects of directors,income taxes and the provision (credit) for credit losses.•
• Ronald E. Kuykendall• General Counsel & Secretary PRE-PROVISION NET REVENUE
Olney, Maryland2021 March 14, 2018$235,107 76,552 (45,556) $266,103 NON-GAAP EFFICIENCY RATIO
2021 $260,470 6,600 9,117 45 $244,708 $526,573 3,703 212 $530,064 49.47% 46.17% 3-YEAR ADJUSTED CUMULATIVE EPS
2021 2020 2019 $235,107 $96,953 $116,433 34 19,614 999 1,944 712 359 6,779 4,619 — — 13,636 — $243,864 $135,534 $117,791 46,899 44,132 35,618 $4.98 $2.19 $3.25 $5.20 $3.05 $3.29 CORE ROAA
2021 $235,107 36 (167) 7,202 5,214 $247,392 $12,818,202 1.83% 1.93% 43(1)
IMPORTANT ANNUAL MEETING INFORMATIONC123456789 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ENDORSEMENT_LINE SACKPACK 000000000.000000 ext MR A SAMPLE 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! InsteadYour vote matters - here's how to vote! You may vote online or by phone 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 •this card. Online Go to www.envisionreports.com/sasr • OrSASR or scan the QR code with your smartphone • Follow- login details are located in the steps outlined on the secure website Vote by telephone •shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories &and Canada on a touch tone telephone • Follow the instructions provided by the recorded messageSave paper, time and money! Sign up for electronic delivery at www.envisionreports.com/SASR Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2022 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 —- The Board of Directors recommends a vote FOR all the nominees listed and FOR ProposalProposals 2, Proposal 3 and Proposal 4. 1. Election of Directors For WithholdDirectors: 01 - Ralph F. Boyd, Jr. 04 - Robert L. Orndorff 07 - Shaza L. Andersen For WithholdMona Abutaleb 02 - Joseph S. Bracewell, III 05 - Daniel J. Schrider For Withhold 03 - Mark C. Michael 06Micklem 03 - Joe R. ReederChristina B. O'Meara For Withhold For Against Abstain 2. A non-binding resolutionApprove amendments to the Articles of Incorporation to declassify the Board of Directors. 3. Vote, on an advisory basis, to approve the compensation for the named executive officers. For Against Abstain 4. Ratification ofRatify the appointment of Ernst & Young LLP as the company's 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 Abstain2022. 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 Authorized Signatures —- This section must be completed for your vote to be counted. — Datecount. Please date and Sign Belowsign below. 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 5 3 6 67 2 0 3 3 0 1 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 02SF5B03LILDYOU 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 Spring Bancorp, Inc. 2018Notice of 2022 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting Ronald E. Kuykendall,- May 18, 2022 Aaron M. Kaslow and Philip J. Mantua 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, 2018May 18, 2022 at 10:00 a.m. or at any postponement or adjournment thereof. Employee shareholders. If you hold shares in the Sandy Spring Bank 401(k) Plan (the "401(k) plan"), this proxy card covers all shares for which you have right to give voting instructions to Principal Trust Company, the trustee for the 401(k) plan. Your voting instructions to the trustee will be held in strict confidence. The deadline to provide voting instructions for shares held in the 401(k) plan is May 13, 2022, at 11:59 p.m., Eastern time. If you do not direct the trustee how to vote the shares in your 401(k) plan account, the trustee will vote the shares in the 401(k) plan in the same proportion as the voting instructions it receives from other participants as of the voting instruction deadline. 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 resolutionapproval of amendments to the Articles of Incorporation to declassify the Board of Directors (Proposal 2), FOR the vote, on an advisory basis, to approve the compensation for the named executive officers (Proposal 2), FOR the amendment to the articles of incorporation (Proposal 3) and FOR the ratification of the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for 20182022 (Proposal 4). 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) C Non-Voting Items Change of Address - Please print new address below. Comments - Please print your comments below.