INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Exchange Act of 1934
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material pursuant to §240.14a-12 |
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):x☒ No fee required.¨Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.(1)Title of each class of securities to which transaction applies:☐ (2)Aggregate number of securities to which transaction applies:(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):(4)Proposed maximum aggregate value of transaction:(5)Total fee paid:¨Fee paid previously with preliminary materials: materials.☐ ¨Check box if any part of the fee is offset as providedFee computed on table in exhibit required by Item 25(b) per Exchange Act Rule 0-11(a)(2)Rules 14a6(i)(1) and identify0-11.
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
| DATE | Wednesday, May 24, 2023 | |
| TIME | 10:00 a.m., Eastern Time | |
| PLACE | Manor Country Club, 14901 Carrollton Road, Rockville, MD 20853 | |
| RECORD DATE | You are eligible to vote if you were a shareholder of record at the |
MEETING AGENDA
| • | Elect four Class II directors to serve until the |
| • | ||
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:
Approve amendments to the Articles of |
| • | Approve amendments to the Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments |
| • | Vote, on an advisory basis, to approve the compensation for the named executive |
| • | Vote, on an advisory basis, to approve the |
| • | Ratify the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 2023 |
| • | Transact such other business as may properly come before the meeting |
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, Chief Administrative Officer & Secretary
April 11, 2023
| | Notice and Proxy Statement | 2023 |
| | Notice and Proxy Statement | 2023 |
PROXY SUMMARY |
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 2022 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 2023 annual meeting of shareholders. Notice of our annual meeting and this proxy statement were first sent or made available to shareholders on April 11, 2023.
2023 ANNUAL MEETING INFORMATION
For additional information about our annual meeting, see “Information About the Meeting” on page 63.
| | MEETING DATE: | May 24, 2023 | |
| | MEETING TIME: | 10:00 a.m. (Eastern) | |
| | RECORD DATE: | March 8, 2023 | |
| | MEETING LOCATION: | Manor Country Club, 14901 Carrollton Road, Rockville, MD 20853 |
Annual Meeting Admission. Admission to the annual meeting is limited to our registered and beneficial holders as of the record date and persons holding valid proxies from these shareholders. Admission to the annual meeting requires valid, government-issued photo identification. If you are not a shareholder of record, you must also present proof of your stock ownership as of the record date. The use of cameras, recording devices, phones, and other electronic devices is strictly prohibited. See “Information About the Meeting – Attending the Meeting” on page 63.
VOTING MATTERS AND BOARD RECOMMENDATIONS
Proposal | Board Recommendation | More Information | ||
1) Election of four Class II directors and one Class III director | ✓ “FOR” all nominees | Page 4 | ||
2) Approval of amendments to the Articles of Incorporation to declassify the Board of Directors | ✓ “FOR” | Page 55 | ||
3) Approval of amendments to the Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments | ✓ “FOR” | Page 57 | ||
4) Advisory vote to approve the compensation for the named executive officers | ✓ “FOR” | Page 58 | ||
5) Advisory vote on the frequency of future votes to approve the compensation for the named executive officers | ✓ ONE YEAR | Page 59 | ||
6) The ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for | ✓ “FOR” | Page 60 | ||
| | Notice and Proxy Statement | 2023 | 1 |
PROXY SUMMARY |
The board of directors established February 28, 2018, as the record date for this meeting. Shareholders of record as of the close of business on that date are entitled to receive this notice of meeting and vote their shares at the meeting and any adjournments or postponements of the meeting.HOW TO VOTE YOUR SHARES
Your vote is very important. The board urges each You may vote if you were a shareholder to promptly sign and return the enclosed proxy cardon March 8, 2023. Whether or to use telephone or Internet voting, as described on the card. Ifnot you chooseplan to attend the annual meeting, you may withdrawplease cast your proxy and vote in person.as promptly as possible using one of these methods:
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| Online before the meeting | By Phone | By Mail | ||
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) | ||
BOARD OF DIRECTORS
Name | Occupation | Age | Independent | Director Since |  |  |  |  |  | |||||||||
Mona Abutaleb Stephenson
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CEO of Medical Technology Solutions, LLC
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60
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✓
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2015
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M
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M
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Ralph F. Boyd
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President and CEO of SOME, Inc.
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66
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✓
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2012
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C
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M
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M
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Kenneth C. Cook
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Retired. Former EVP, President of Commercial Banking at Sandy Spring Bank
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62
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2023
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M
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Mark E. Friis
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Chair (former CEO) of Rogers Consulting, Inc.
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67
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✓
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2005
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C
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M
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M
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Brian J. Lemek
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Owner of Lemek, LLC, a franchisee for Panera Bread bakery-cafes.
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59
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✓
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2020
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M
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M
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Pamela A. Little
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CFO of Nathan, Inc.
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69
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✓
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2005
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C
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M
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M
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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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71
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✓
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2020
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M
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Mark C. Michael
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Fellow at the Harvard Advanced Leadership Initiative
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60
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✓
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2018
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M
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Mark C. Micklem
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Retired. Former Managing Director and Head of Financial Services Investment Banking at Robert W. Baird & Co.
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64
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✓
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2019
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M
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M
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Christina B. O’Meara
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President and founder of O’Meara Properties
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69
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✓
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2020
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M
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Robert L. Orndorff(1)
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President and founder of RLO Contractors, Inc.
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66
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✓
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1991
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M
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M
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M
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M
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C
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Craig A. Ruppert
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President and CEO of The Ruppert Companies
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69
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✓
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2002
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C
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M
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Daniel J. Schrider(2)
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President and CEO Sandy Spring Bancorp, Inc. and Sandy Spring Bank
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58
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2009
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M
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M
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Ages as of March 8, 2023
(1) Lead Independent Director
(2) Board Chair
M = Member
C = Chair
2 |
| | Notice and Proxy Statement | 2023 |
PROXY SUMMARY |
BOARD COMPOSITION
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
GOVERNANCE HIGHLIGHTS
| | Notice and Proxy Statement | 2023 | 3 |
PROPOSAL 1: ELECTION OF DIRECTORS |
PROPOSAL 1: ELECTION OF DIRECTORS
Our Board of Directors currently has 13 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 declassify the Board so that directors are elected annually by shareholders. If these amendments are approved by shareholders (see Proposal 2 on page 55), nominees will be elected for a one-year term beginning in 2024.
The Board has nominated four Class II directors for election for a three-year term expiring in 2026. They are Mark E. Friis, Brian J. Lemek, Pamela A. Little and Craig A. Ruppert. The Board has also nominated Kenneth C. Cook for a two-year term expiring in 2025. All Class II director-nominees are incumbent directors who have been elected previously by the shareholders. Mr. Cook was appointed to the Board in October 2022 effective upon his retirement as an executive officer of the company on February 28, 2023. 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.
BOARD 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 | ||||||||
Total Number of Directors | As of March 8, 2023 13 | As of March 9, 2022 12 | ||||||
| Female | Male | Female | Male | |||||
Gender Identity |
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Directors | 3 | 10 | 3 | 9 | ||||
Demographic Background |
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African American or Black |
| 1 |
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White | 3 | 9 | 3 | 8 | ||||
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| | Notice and Proxy Statement | 2023 |
PROPOSAL 1: ELECTION OF DIRECTORS |
Sandy Spring Bancorp, Inc.DIRECTOR SKILLS
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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| Abutaleb | Boyd | Cook | 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. | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||
Consumer Business and Financial Services Experience with consumer products and services or the financial services industry provides insight that assists the Board in overseeing the operation of our business and implementation of our strategic plan. | ¡ | ¡ | ● | ¡ | ¡ | ¡ | ¡ | ● | ¡ | ¡ | ¡ | ● | ||||||||||||||||||||||||||||||||||||||||||
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 to provide guidance in its independent oversight of the | ● | ¡ | ● | ¡ | ● | ● | ¡ | ¡ | ¡ | ¡ | ● | ● | ||||||||||||||||||||||||||||||||||||||||||
Technology/Information Security/Cybersecurity Experience with and understanding of technology, information systems and/or cybersecurity is important in overseeing our ongoing investment in and development of critical technology, as well as the | ● | ● | ¡ | ● | ● | ¡ | ¡ | ¡ | ¡ | ● | ||||||||||||||||||||||||||||||||||||||||||||
Human Capital Management Directors with an understanding of human capital management and compensation help the Board to effectively oversee our efforts to recruit, retain and develop key talent and provide valuable insight in determining compensation of the CEO and other executive officers. | ● | ¡ | ● | ¡ | ● | ● | ● | ● | ¡ | ¡ | ● | ● | ||||||||||||||||||||||||||||||||||||||||||
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 | 2023 | 5 |
PROPOSAL 1: ELECTION OF DIRECTORS |
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:
 |  |  |
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.
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 and Governance 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 and Governance 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 and Governance Committee also considers whether the candidate would enhance the diversity of the Board in terms of gender, ethnicity, race, experience and skills.
The Nominating and Governance 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 and Governance Committee. The Nominating and Governance 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 and Governance 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 2024 Annual Meeting of Shareholders” on page 42.
Information About Nominees and Incumbent Directors
The65 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 election2024 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 pluralitymajority of all the votes cast at the annual meeting will be sufficientis required to elect a nominee as a director. In an uncontested election, an incumbent director-nominee who receives a greater number of votes “withheld” thanfails to receive more votes “for” shallthan “against” will promptly tender his or her resignation following certification of the shareholder vote. The Nominating and Governance 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, which shall promptly disclose its decision and the basis for its decision.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED BELOW AS A DIRECTOR OF SANDY SPRING BANCORP, INC.
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| | Notice and Proxy Statement | 2023 |
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.
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CLASS II DIRECTOR-NOMINEES – FOR TERMS EXPIRING AT THE 2026 ANNUAL MEETING
| MARK E. FRIIS |
| for developers, builders, institutions and corporations in the suburban Maryland region. Mr. | |
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| BRIAN J. LEMEK | About Mr. Lemek is the founder and owner of Lemek, LLC, the franchisee for Panera Bread bakery-cafes in the state of Maryland. Lemek, LLC currently owns and operates over 50 locations. In 2010, Mr. Lemek founded Lemek Slower Lower LLC, which owns six Panera Bread Cafes in Southern New Jersey and Delaware. Mr. Lemek currently serves on the board of trustees of his alma mater, Saint Ambrose University in Davenport, Iowa, where he chairs the Building & Grounds Committee. | |
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| | Notice and Proxy Statement | 2023 | 7 |
PROPOSAL 1: ELECTION OF DIRECTORS |
| PAMELA A. LITTLE | About Ms. Little is the Chief Financial Officer of Nathan, Inc., a | |
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| CRAIG A. RUPPERT | About Mr. Ruppert is the founder, President and CEO of The Ruppert Companies, which is comprised of Ruppert Landscape, Inc., one of the largest commercial landscape construction and management companies in the US, located in seven states and the District of Columbia; Ruppert Nurseries, Inc., a premier large-caliper wholesale tree growing and moving operation in the eastern US; and Ruppert Properties, LLC, an industrial and office property development and management company in the Washington/Baltimore metropolitan region. A noted entrepreneur and philanthropist, Mr. Ruppert was inducted into the Washington Business Hall of Fame In 2021. | |
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| | Notice and Proxy Statement | 2023 |
PROPOSAL 1: ELECTION OF DIRECTORS |
CLASS III DIRECTOR-NOMINEE – FOR TERM EXPIRING AT THE 2025 ANNUAL MEETING
| KENNETH C. COOK | About Mr. Cook retired in February 2023 as Executive Vice President and President of Commercial Banking for Sandy Spring Bank. Previously, Mr. Cook was Co-CEO of Revere Bank from 2010 to April 2020 when Revere Bank was acquired by Sandy Spring Bank. Prior to that time, he served as Regional President, Suburban Washington for PNC Bank from 2007 to 2010 and as President and CEO of Mercantile Potomac Bank from 1994 to 2007. | |
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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 SOME, Inc. a Washington D.C. based inter-faith non-profit that provides emergency and food services, health care, substance abuse treatment and counseling, remedial education and employment training, and affordable housing with supportive services for seniors, veterans, and vulnerable individuals and families in our nation’s capital. Formerly, Mr. Boyd was Sr. Resident Fellow for Leadership and Strategy at the Urban Land Institute (ULI) from 2018-2020, and was CEO of ULI Americas from 2017-2018. Prior to that Mr. Boyd was CEO of the Massachusetts Region of The American Red Cross from | |
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| WALTER C. MARTZ II | About
| estate administration to complex real estate and commercial banking transactions. Mr. | |
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| MARK C. |
| In 2021, Mr. Michael | |
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| ROBERT L. ORNDORFF | About
| 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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| | Notice and | 11 |
PROPOSAL 1: ELECTION OF DIRECTORS |
Class II Director-NomineeINCUMBENT CLASS III DIRECTORS – For Term To Expire at the 2020 Annual MeetingTERMS EXPIRING AT THE 2025 ANNUAL MEETING
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| MONA ABUTALEB STEPHENSON |
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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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| MARK C. MICKLEM |
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| CHRISTINA B. O’MEARA | About
| a past land use chair for the Anne Arundel Trade Council. Ms. | |
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| | Notice and Proxy Statement | 2023 | 13 |
CORPORATE GOVERNANCE |
Incumbent Class III Directors - Terms ExpiringCORPORATE GOVERNANCE
We are committed to strong corporate governance practices that promote the long-term interests of our shareholders and strengthen the accountability of our Board and management.
Our governance framework is set forth in our Corporate Governance Guidelines, committee charters and other key governance documents, which we review and modify on a regular basis to reflect best practices, recent developments, and legal and regulatory requirements. Our Corporate Governance Guidelines, committee charters and other key governance documents are available on our website atwww.sandyspringbank.com by selecting “Investor Relations” at the 2019 Annual Meetingtop of the page, then “Governance Documents” under “Governance Information.”
DIRECTOR INDEPENDENCE
Nasdaq Listing Rules require that a majority of our directors and each member of our Audit Committee, Compensation Committee and Nominating and Governance Committee be independent. In addition, our Corporate Governance Guidelines requires that a substantial majority of our directors be independent. A director may be determined to be independent only if the Board has determined that he or she has no relationship with the company that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
The Nominating and Governance Committee advises and makes recommendations to the Board regarding director independence. After considering the committee’s recommendation, the Board affirmatively determined that all current members of the Board, other than Mr. Schrider and Mr. Cook, are independent directors and independent 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 employed as our President and Chief Executive Officer and Mr. Cook is not independent because he served as an employee of the company within the past three years.
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 the company, on the other hand. Certain directors, their respective immediate family members, and/or affiliated entities have deposit or credit relationships with, or received investment or wealth management services from, Sandy Spring Bank or one of its subsidiaries in the ordinary course of business. The Board determined that all of these transactions, relationships, or arrangements were made in the ordinary 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 did not otherwise impair any director’s independence.
BOARD LEADERSHIP STRUCTURE
Our Board is led by the Chair. Under our Bylaws, the Chair is elected annually by the Board from among the directors and presides over each Board meeting and performs such other duties as may be incident to the office of the Chair.
Daniel Schrider serves as our Chair, President and Chief Executive Officer. The Board believes that combining the Chair and the Chief Executive Officer roles at this time supports clear accountability, effective decision-making and execution of corporate strategy.
The Board recognizes the importance of independent oversight over management and has created the position of Lead Independent Director, who is elected by the independent members of the Board. The responsibilities of the Lead Independent Director, as set forth in our Corporate Governance Guidelines, include:
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 | Providing input to the Chair on Board meeting agendas, and adding agenda items in his or her discretion. |
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| • | Providing input to the Chair on information submitted by management that is necessary or appropriate for the independent directors to effectively and responsibly perform their duties. |
| • | Facilitating communication between the Chief Executive Officer and the independent directors. |
| • | Functioning as a “sounding board” and advisor to the Chief Executive Officer on issues and other matters affecting the company. |
| • | If requested by major shareholders, being reasonably available for consultation or direct communication. |
In addition, under the charter of the Executive Committee, the Lead Independent Director chairs the committee when the Board chair is not independent.
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Age: 71
Director since: 2010
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Corporate Governance and Other Matters
BOARD COMMITTEES
The board remains committed to settingBoard has five standing committees: Audit, Compensation, Nominating and Governance, Risk and Executive. Each committee operates under 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 element of doing business today. To that end, the Corporate Governance Policy is reviewed regularly to ensure that it reflects the best interests of the Company and its shareholders. The policywritten charter, which may be found on our investor relations website atwww.sandyspringbank.com.
In addition, our board2022, the Board reorganized its committee functions by transferring oversight of directors has adopted a Code of Business Conduct (“Code”) applicablegovernance matters to all directors, officers, and employees of the Company and its subsidiaries. It sets forth the legal and ethical standards that govern the conduct of business performed by the Company and its subsidiaries. The Code is intended to meet the requirements of Section 406 of the Sarbanes-Oxley Act of 2002, related SEC regulations, and the listing rules of Nasdaq Stock Market, Inc. The Code of Business Conduct may be found on our investor relations website atwww.sandyspringbank.com.
The board of directors has affirmatively determined that all directors other than Mr. Schrider and Ms. Andersen are independent. In conjunction with the acquisition of WashingtonFirst, and effective as of December 29, 2017, the Company entered into a separation and consulting agreement with Shaza L. Andersen setting forth her entitlements under her employment agreement with WashingtonFirst in connection with her termination of employment with WashingtonFirst and her service as a non-employee director of and consultant to the Company. The separation and consulting agreement provides for a consulting period of 12 months and a consulting fee of $18,333.33 per month. The agreement was filed as an exhibit to Form 8-K on January 2, 2018.
The board complies with or exceeds the independence requirements for the board and board committees established by the Nasdaq Stock Market, federal securities and banking laws and the additional standards included in our Corporate Governance Policy.
Plurality Plus Resignation Policy
In response to feedback from our shareholder engagement efforts, the 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 considered by the Nominating Committee which will make a recommendation toand renaming it the board.
Board Leadership Structure, EducationNominating and Self-Assessment Process
The Company’s bylaws provide forGovernance Committee. At the annual election of a chairman of the board from among the directors, and the Corporate Governance Policy states it is the board’s policy to separate the offices of the chairman and the chief executive officer. This separate role allows the chairman to maintain independence in the oversight of management. The chairman of the board also chairssame time, the Executive and Governance Committee (seebecame the Executive Committee.
| 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 2022: 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 Stephenson Brian J. Lemek Mark C. Michael Christina B. O’Meara Robert L. Orndorff | ||
Meetings in 2022: 7 |
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CORPORATE GOVERNANCE |
| NOMINATING AND GOVERNANCE COMMITTEE | The responsibilities of the Nominating and Governance 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; • 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. • reviewing the company’s Corporate Governance Guidelines at least annually and making recommendations for updates; • 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. | |
Committee Chair: Craig A. Ruppert | ||
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Other Committee Members | ||
Ralph F. Boyd Mark E. Friis Pamela A. Little Robert L. Orndorff | ||
Nominating and Governance Committee Meetings in 2022: 1 | ||
Nominating Committee Meetings in 2022: 1 |
| 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 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 and Mr. Cook. | |
Committee Chair: Mark E. Friis | ||
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Other Committee Members | ||
Mona Abutaleb Stephenson Kenneth C. Cook Mark C. Micklem Robert L. Orndorff Daniel J. Schrider | ||
Meetings In 2022: 6 |
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CORPORATE GOVERNANCE |
| EXECUTIVE COMMITTEE | The Executive 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. 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 | ||
Executive and Governance Committee Meetings in 2022: 4 | ||
Executive Committee Meetings in 2022: 0 |
BOARD OVERSIGHT OF RISK
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 our 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. Our 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 our operations align with our risk appetite.
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CORPORATE GOVERNANCE |
The Board is responsible for overseeing our risk management processes by informing itself about our material risks and evaluating whether management has reasonable risk management and control processes in place to address those risks. The Board oversees risk management through the actions of the Board, including approval and oversight of our risk appetite statement, strategic plan, capital plan and financial plan, and the activities of its committees.
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Risk Committee | The Risk Committee has primary responsibility for overseeing our risk management framework. The committee reviews and approves our 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 our 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 our financial reporting, internal control processes and public disclosure. The Audit Committee reviews management’s assessment of our internal control over financial reporting, meets regularly with our 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 our 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 Board on its risk management activities. | |||
Compensation Committee | The Compensation Committee has primary oversight of risks arising from our 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. | |||
Nominating and Governance Committee | The Nominating and Governance Committee oversees risks relating to our corporate governance structure, board leadership and effectiveness, and management and board succession planning. | |||
Board Oversight of Cybersecurity Risk
Our Board recognizes our responsibility to protect the data provided by our clients and employees, understands how cyber risks could disrupt our 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 our continuing efforts to strengthen our information security infrastructure and staffing and enhance our 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 our 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 our 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.
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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 2023, we published our third 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 Nominating and Governance Committee description below), that is empowered to actoversees our policies and practices on behalfsignificant issues of corporate social responsibility and sustainability. The Compensation Committee assists the board between regular board meetings.Board in the oversight of our 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 Corporate Governance Guidelines that promote 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 |
2022 ESG HIGHLIGHTS
| $662K donated to 135 local nonprofits | Financing clean energy through Montgomery County Green Bank and DC Green Bank | |||
over 5,200 employee volunteer hours | Lent $187M to first-time home buyers | |||
| Launched low-cost Bank On certified account to reach un- and under-banked customers | 57% women in workforce | ||||
41% people of color in workforce |
| Formed employee teams to lead development of diversity, equity and inclusion plan | ||
Reduced purchased paper nearly 50% from 2019 level | Adopted majority vote standard for director elections | |||
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 2022 Annual Report on Form 10-K filed with the SEC.
BOARD SELF-ASSESSMENT
The board is committed to self-improvement andBoard 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 Nominating 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 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,2022, the Audit Committee receivesBoard completed an evaluation of individual director performance.
BOARD EDUCATION
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 2022, the Board held nine regular meetings and coordinatesone special meeting. In 2022, directors attended 96% of total Board and committee meetings, and each of the findings withdirectors attended at least 75% of the Risk Committee through a liaison member who servestotal meetings of the Board and the committees on both committees.which he or she served in 2022.
CORPORATE GOVERNANCE |
ANNUAL MEETING ATTENDANCE
Directors are expected to attend our annual meeting of shareholders. All of our directors serving at the time of the 2022 annual meeting attended the 2022 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 is described as follows:
Audit Committee - The Audit Committee is appointed by www.sandyspringbank.com. If we make any substantive amendments to the board to assist in monitoring: 1) the integrityCode or grant any waiver from a provision of the financial statements and financial reporting, includingCode that is required to be disclosed under 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, regulationsrules of the SEC, Nasdaq listing rules,we will disclose the Federal Deposit Insurance Actnature 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 Guidelines require that directors own Sandy Spring stock equal in value to at least four times the annual cash retainer paid by us for service as a director. Non-employee directors are expected to meet this ownership requirement within four years of joining the Board and related regulations. The board has determined that Pamela A. Little qualifiesto retain all shares of Sandy Spring stock received pursuant to their service 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 meetingsa Board member for as needed and provides oversight and guidance to the board oflong as they serve as directors to ensure that the structure, policies, and processes of the boardcompany.
Compliance with the minimum stock ownership level is determined annually on each December 31 by multiplying the number of shares owned by the average closing price of Sandy Spring stock during the preceding 12-month period. Sandy Spring stock holdings that count toward meeting the ownership requirements include (i) shares owned directly or beneficially by the director or in the name of an immediate family member and its committees facilitate the effective exercise(ii) restricted shares and shares issuable upon settlement of restricted stock units.
All of the board's role in governingdirectors exceed the Company. The committee reviews and evaluates the policies and practices with respect to the size, composition, independence and functioningminimum ownership requirements of the boardpolicy.
PROHIBITION ON HEDGING AND PLEDGING
Under our Insider Trading Policy, our directors, officers and its committees as statedemployees 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 Corporate Governance Policy. This committee ismarket 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 responsible for maintaining the Codeprohibits directors and executive officers from engaging in short sales 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.Sandy Spring stock.
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DIRECTOR COMPENSATION |
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-employeeDIRECTOR COMPENSATION
Our director compensation program is designed to attract 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 reviewretain highly qualified directors 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 affairsalign their interests 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
Eachthose of our shareholders. We compensate our non-employeedirectors takes hiswith a combination of cash 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. Allequity awards. Directors who are employees of our directors were in attendance at the 2017 annual meeting.
Cash Compensation
Only non-employee directors are compensatedcompany do not receive additional compensation for their service as boardBoard members.
The Compensation Committee is responsible for reviewingperiodically reviews our non-employee director compensation and will periodically commission a market comparison to ensureprogram. Any changes proposed by the Compensation Committee must be approved by the Board. During 2022, after consultation with the Compensation Committee’s independent compensation levels are appropriate and commensurate with peer companies. Suchconsultant, including an analysis was last completed in 2016. As a result annual retainers for directors were increased.
In 2017,of pay levels at the chairman received an annual cash retainersame peer companies used to evaluate the compensation 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;our named executive officers, the Compensation Committee $7,000; Executive and Governance $5,000; Nominating Committee $5,000; and Risk Committee $5,000. Boardrecommended changes to our director compensation program, which were approved by the Board. These changes, which targeted non-employee director compensation at the peer group median, included eliminating meeting attendance fees were fixed at $1,200 per board meeting and $1,000 per committee meeting.adjustments to cash and equity retainers.
Our non-employee director compensation program currently consists of the following:
Annual restricted stock unit grant | $ | 50,000 |
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Annual cash retainer | $ | 50,000 |
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Board chair annual cash retainer (if applicable) | $ | 55,000 |
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Lead Independent Director annual cash retainer (if applicable) | $ | 55,000 |
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Additional annual cash retainer for committee chairs: |
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Audit Committee | $ | 20,000 |
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Risk Committee | $ | 17,500 |
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Compensation Committee | $ | 15,000 |
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Nominating and Governance Committee | $ | 15,000 |
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Additional annual cash retainer for committee members |
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Audit Committee | $ | 10,000 |
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Risk Committee | $ | 9,000 |
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Compensation Committee | $ | 7,500 |
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Nominating and Governance Committee | $ | 7,500 |
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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 were not paid when the Executive & Governance Committee met 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.
Equity Compensation
On March 15, 2017, each director received aRestricted stock units vest on the first anniversary of the date of grant, of restricted stock valued at $25,000 of Company common stock. The restricted stock 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. Dividend equivalents are paid on the award when dividends are paid on shares of our common stock.
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 | ||||||||
22 |
| | Notice and Proxy Statement | 2023 |
DIRECTOR COMPENSATION |
2022 NON-EMPLOYEE DIRECTOR COMPENSATION
The following table shows the compensation received during 2022 by our non-employee directors.
Name | Fees Earned or ($) | Stock Awards(2) ($) | All Other ($) | Total ($) | ||||||||||||||||
Mona Abutaleb Stephenson | 61,675 | 50,033 | 2,487 | 114,195 |
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Ralph F. Boyd | 70,800 | 50,033 | 2,487 | 123,320 |
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Mark E. Friis | 74,800 | 50,033 | 5,487 | 130,230 |
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Brian J. Lemek | 60,425 | 50,033 | 2,496 | 112,954 |
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Pamela A. Little | 75,425 | 50,033 | 2,487 | 127,945 |
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Walter C. Martz II | 51,100 | 50,033 | 3,696 | 104,829 |
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Mark C. Michael | 49,525 | 50,033 | 2,487 | 102,045 |
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Mark C. Micklem | 61,550 | 50,033 | 2,543 | 114,126 |
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Christina B. O’Meara | 50,925 | 50,033 | 2,496 | 103,454 |
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Robert L. Orndorff | 120,050 | 50,033 | 2,487 | 172,570 |
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Craig A. Ruppert | 62,175 | 50,033 | 2,487 | 114,695 |
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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 May 25, 2022, each director serving at the |
| (3) | Amounts in this column represent dividends paid on restricted |
| | Notice and Proxy Statement | 2023 | 23 |
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 our directors and executive officers 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.
24 |
| | Notice and Proxy Statement | 2023 |
STOCK OWNERSHIP INFORMATION |
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, 2022.
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 | 4,411,976(1) | 9.9% | ||||||||||
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 2,839,370(2) | 6.4% | ||||||||||
Dimensional Fund Advisors LP 6300 Bee Cave Road, Austin, TX 78746 | 2,508,246(3) | 5.6% | ||||||||||
| (1) | According to the Schedule 13G/A filed by Blackrock, Inc. with the SEC on January 24, 2023, BlackRock, Inc., had sole voting power with respect to 4,115,596 shares and sole dispositive power with respect to 4,411,976 shares. |
| (2) | According to the Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2023, The Vanguard Group had shared power to vote 42,044 shares, sole dispositive power with respect to 2,754,018, and shared dispositive power with regard to 85,352 shares. |
| (3) | According to the Schedule 13G/A filed by Dimensional Fund Advisors LP with the SEC on February 10, 2023, Dimensional Fund Advisors had sole voting power with respect to 2,462,692 shares and sole dispositive power with respect to 2,508,246 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 (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Issuer 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 in this schedule are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. |
| | Notice and Proxy Statement | 2023 | 25 |
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, 2018,2023, with respect to the shares of common stock beneficially owned by each director and director-nominee, by the 20172022 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 | ||||||||||||||||||||||||||
Non-Employee Directors |
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Mona Abutaleb Stephenson | 5,570 |
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| 442 | 6,012 |
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| 1,742 | 7,754 | ||||||||||||||||||
Ralph F. Boyd | 8,815 |
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| 442 | 9,257 |
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| 1,742 | 10,999 | ||||||||||||||||||
Kenneth C. Cook(6) | 218,801 | 3,655 | 109,985 | 332,441 |
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| 12,720 | 345,161 | ||||||||||||||||||||
Mark E. Friis(7) | 45,509 |
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| 442 | 45,951 |
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| 1,742 | 47,693 | ||||||||||||||||||
Brian J. Lemek | 249,882 |
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| 515 | 250,397 |
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| 1,742 | 252,139 | ||||||||||||||||||
Pamela A. Little | 27,610 |
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| 442 | 28,052 |
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| 1,742 | 29,794 | ||||||||||||||||||
Walter C. Martz II(8) | 31,237 |
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| 515 | 31,752 |
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| 1,742 | 33,494 | ||||||||||||||||||
Mark C. Michael | 24,730 |
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| 442 | 25,172 |
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| 1,742 | 26,914 | ||||||||||||||||||
Mark C. Micklem | 14,225 |
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| 442 | 14,667 |
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| 1,742 | 16,409 | ||||||||||||||||||
Christina B. O’Meara(9) | 45,764 |
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| 515 | 46,279 |
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| 1,742 | 48,021 | ||||||||||||||||||
Robert L. Orndorff(10) | 169,043 |
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| 442 | 169,485 |
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| 1,742 | 171,227 | ||||||||||||||||||
Craig A. Ruppert | 113,509 |
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| 442 | 113,951 |
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| 1,742 | 115,693 | ||||||||||||||||||
Named Executive Officers |
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Daniel J. Schrider(11) | 108,053 | 11,913 | 3,121 | 123,087 |
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| 37,521 | 160,608 | ||||||||||||||||||||
Philip J. Mantua(12) | 59,049 | 4,512 | 1,014 | 64,575 |
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| 13,576 | 78,151 | ||||||||||||||||||||
Joseph J. O’Brien, Jr.(13) | 56,190 | 5,924 | 1,425 | 63,539 |
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| 18,202 | 81,741 | ||||||||||||||||||||
R. Louis Caceres | 39,590 | 4,121 | 1,014 | 44,725 |
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| 12,720 | 52,783 | ||||||||||||||||||||
All directors and executive officers as a group (21 persons) | 1,284,843 | 44,208 | 125,679 | 1,454,730 |
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| 150,938 | 1,605,668 | ||||||||||||||||||||
| (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 |
| (6) | Includes 2,716 shares held through employee benefit plans. |
| (7) | Includes |
| (8) | Includes 2,183 shares held in three trusts for which Mr. Martz is trustee. Mr. Martz has no pecuniary interest these holdings. |
| (9) | Includes |
| (10) | Includes 157,380 shares owned by trusts for which Mr. |
| (11) | Includes 6,893 shares held through employee benefit |
| (12) | Includes 12,319 shares held through employee benefit plans. |
| (13) | Includes 5,674 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 | % | ||||
26 |
| | Notice and |
STOCK OWNERSHIP INFORMATION |
Transactions and Relationships with ManagementDELINQUENT SECTION 16(A) REPORTS
Directors and officers of the Company obtain banking products 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.
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.
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 rulesSection 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers, and Exchange Commission. This discussion should be readpersons who own more than 10% of our common stock to file reports of ownership and changes in conjunctionownership of our common stock with the compensation tablesSEC. Specific dates for such filings have been established by the SEC, and accompanying narrative that can be found startingwe are required to report in this proxy statement any failure to file reports in a timely manner In 2022.
Based solely on page 28. For 2017, the namedreview of the copies of forms we have received and written representations from each person, all of the executive officers were:and directors have complied with filing requirements applicable to them with respect to transactions during 2022.
| | Notice and Proxy Statement | 2023 | 27 |
COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION 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 2022: 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. | TABLE OF CONTENTS | |||||||||
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| | Notice and Proxy Statement | 2023 |
COMPENSATION DISCUSSION AND ANALYSIS |
1. EXECUTIVE SUMMARY
FINANCIAL HIGHLIGHTS
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Non-GAAP financial measure. See our 2022 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 our strategic objectives, which state that we 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 competitive organizations in order to attract and retain the talent, skills, and experience needed in executive management. The committee works with an independent compensation consultant to receive periodic analyses that benchmark compensation with market trends and practices.
Finally, compensation must align the interests of executives with those of shareholders to ensure that management will be rewarded for increasing shareholder value. To accomplish this, a significant portion of total compensation is in the form of equity.
Balanced – Executive compensation must balance a number of factors. Compensation should have a proper mix of fixed and variable elements, compensation arrangements should use multiple performance measures for balanced achievement, awards should balance short and long-term results with short and long-term career objectives, including retirement, and compensation must always balance risk with reward so as not to encourage excessive risk-taking.
Rewarding – Executive compensation must provide the means to attract, motivate, and retain the caliber of talent and leadership needed to support the company’s long record of growth and profitability. Compensation arrangements should motivate executives to work collaboratively and creatively to generate a high-level of synergistic performance by and among the officers and employees.
| | Notice and Proxy Statement | 2023 | 29 |
COMPENSATION DISCUSSION AND ANALYSIS |
2022 COMPENSATION HIGHLIGHTS
Annual Incentive Payout – Annual incentive opportunities are provided to our executive officers under our 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 Highlights
2017 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:
$160.3 million core earnings |
| 113% of Target Payout | 2022 ETIP 124.23% of Target Payout | |||||
49.66% non-GAAP efficiency ratio |
| 148% of Target Payout | ||||||
14.69% core ROTCE |
| 128% of Target Payout | ||||||
Qualitative factors |
| 105% of Target Payout | ||||||
2020 - 2022 PRSU Payout – PRSUs have a three-year performance period with cliff vesting at the end of the performance period.
37th percentile relative 3-year TSR |
| 75% of Target Payout | 2020 Performance Shares 112.85% of Target Payout | |||||
$11.71 3-year adjusted EPS |
| 114% of Target Payout | ||||||
84th percentile relative average ROTCE |
| 150% of Target Payout | ||||||
COMPENSATION TIED TO PERFORMANCE
We tie pay to performance by structuring a significant portion of our executives’ pay as at-risk compensation (64% for CEO; 57% 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 (35% for CEO; 28% for other NEOs).
| • | Annual incentive awards are based on our achievement of financial and strategic goals that are expected to |
| • | Equity awards are granted in the |
“SAY ON PAY” RESULTS
“Say On Pay” Vote and Shareholder Alignment
On May 3, 2017, 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 2022 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:
30 |
| | Notice and |
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.
| I AT SANDY SPRING WE | I WE DO NOT | |||||||
✓ | Use an independent compensation consultant that is retained by and reports to the | O | Provide tax gross-ups to executive officers | |||||
✓ | Tie a significant portion of executive compensation to performance | O | Provide “single-trigger” vesting of equity awards upon a change in control | |||||
✓ | Require a minimum performance threshold be attained before any incentive compensation is paid | O | Provide “single-trigger” severance upon a change in control | |||||
✓ | Impose maximum caps on incentive compensation | O | Provide excessive perquisites | |||||
✓ | Require reimbursement or forfeiture (“clawback”) of excess incentive compensation in the | |||||||
O | Permit hedging or pledging of Sandy Spring stock |
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.
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:
✓
O
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Conduct an annual risk assessment of our compensation programs
O | Provide supplemental executive retirement plans | |||||
| | Notice and Proxy Statement | 2023 | 31 |
COMPENSATION DISCUSSION AND ANALYSIS |
2. COMPENSATION COMPONENTS
EXECUTIVE COMPENSATION PROGRAM ELEMENTS
The compensation elements for 2022 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 2022.
| Description/Objectives | Performance Rewarded | Form and Timing of Payment | ||||
Base Salary | 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 | |||
Annual Incentive (ETIP) | Variable payment based on achievement of performance metrics aligned with company strategy | Measured over a one-year period: • Core earnings • Non-GAAP efficiency ratio • Core ROTCE • Qualitative factors | Paid in cash after the end of the fiscal year | |||
Long-term Incentive PRSUs (50%) RSUs (50%) | Performance-based restricted stock units intended to incentivize performance against metrics aligned with strategic long-term goals | Measured over a three-year period: • Relative core ROTCE • Relative total shareholder return | Paid in shares after the end of three-year performance period | |||
| Time-based restricted stock units 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 | ||||
NQDC Plan | Variable contribution to deferred compensation plan based on annual performance rewards superior performance relative to peers | Measured over a one-year period: • Relative core ROAA | Contribution credited to deferred compensation plan after the end of the fiscal year | |||
3. EXECUTIVE COMPENSATION GOVERNANCE AND PRACTICES
EXECUTIVE COMPENSATION PROCESS
Role of the Compensation Committee–The Compensation Committee, 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.
The chair of the committee reports committee actions to the Board following each committee meeting.
The committee retains the discretion to decrease all forms of incentiveETIP payouts based on significant individual or Companycompany performance shortfalls. shortfalls, as well as risk, compliance and regulatory matters.
Role of Compensation Consultant– The committee also retainsengages an independent executive compensation consultant to provide commentary, analysis and expertise relating to executive compensation. Since 2017, the committee has engaged Meridian Compensation Partners, LLC (“Meridian”) as its independent executive compensation consultant.
Representatives of Meridian attend and participate in committee meetings and executive sessions at which executive compensation matters are considered, and Meridian performs various analyses for the committee, including peer group benchmarking and analyses regarding the alignment of pay and performance.
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| | Notice and Proxy Statement | 2023 |
COMPENSATION DISCUSSION AND ANALYSIS |
The committee has sole authority and discretion to increase awards or consider special awardsretain and terminate Meridian and to approve the fees, scope and other terms of Meridian’s engagement, with full funding provided by the company.
The committee annually reviews the independence of Meridian in light of SEC rules and regulations 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 its engagement by the committee.
Role of Management – Our CEO supports the committee’s process for significant performance or duedetermining executive compensation. In 2022, our CEO presented to subjective factors, or exclude extraordinary non-recurring results.
After the announcementcommittee specific recommendations for all executive officers, other than himself. In making his compensation recommendations for each of the merger with WashingtonFirst on May 16, 2017, Mr. Schrider recommendedexecutive officers, our CEO considers individual performance, contributions toward our long-term performance, the scope of each individual’s responsibilities, and market data provided by the committee’s independent compensation consultant. Exercising its independent judgment, the committee approvedmade final decisions for 2022 compensation opportunities. Our CEO does not make recommendations with respect to his own compensation or participate in the exclusiondeliberations regarding the setting of merger costs and expenseshis own compensation. Decisions related to branch closures when calculating the 2017 annual cash incentive award paidCEO’s 2022 compensation opportunities were made independently by the committee in consultation with Meridian.
PEER GROUP
The Compensation Committee uses a peer group 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 Salary
Base salary is the fundamental elementperform assessments of executive 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 the amount and mix of annual and long-term incentive awards for our executive officers. The committee reviews salariesuses pay data as one factor in March in conjunctionsetting pay, but does not pay to a particular benchmark level.
The committee approves a group of publicly traded banks and bank holding companies each year to serve as the peer group. For 2022, the committee, with annual performance appraisalsinput 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, Ohio, Virginia and West Virginia. The median asset size of the peer group was $12.7 billion, placing the company at the 51st percentile, based on assets as of June 30, 2021. Compared to our prior peer group, Investors Bancorp, Inc. was removed due to its pending merger and Dime Community Bancshares, Inc. and Flushing Financial Corporation were added to better align the company’s asset size with the peer group median. The 2022 peer group was comprised of the following 21 companies:
Atlantic Union Bankshares Corp. (AUB) | Fulton Financial Corporation (FULT) | |
Berkshire Hills Bancorp, Inc. (BHLB) | Independent Bank Corp. (INDB) | |
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) | |
Dime Community Bancshares, Inc. (DCOM) | TowneBank (TOWN) | |
Eagle Bancorp, Inc. (EGBN) | United Bankshares, Inc. (UBSI) | |
First Commonwealth Financial Corp. (FCF) | Wesbanco, Inc. (WSBC) | |
First Financial Bancorp (FFBC) | WSFS Financial Corporation (WSFS) | |
Flushing Financial Corporation (FFIC) | ||
The committee determined that this peer group would be used for the preceding year. relative performance comparisons in the ETIP, 2022 PRSUs and the NQDC Plan.
| | Notice and Proxy Statement | 2023 | 33 |
COMPENSATION DISCUSSION AND ANALYSIS |
4. 2022 COMPENSATION
BASE SALARY
In determining base salaries, the committee consideredconsiders the executive'sexecutive’s qualifications and experience, scope of responsibilities, the goals and objectives established for the executive, and the executive'sexecutive’s past performance. The committee seeks to pay a base salary, commensurate with the individual’s experience and performance, and relative to market.at market competitive levels. Mr. Schrider recommended base salaries for executive officers other than himself, and the committee deliberated ondetermined Mr. Schrider’s salary. The resulting salary increases,adjustments, shown below, were effective March 26, 2017, are shown in the following table.April 3, 2022.
| Name | Base Salary | Amount of Increase | New Base Salary | Percent Increase | 2021 Base | Amount of Increase | 2022 Base | Percent Increase | ||||||||||||||||||||||||||||
| Daniel J. Schrider | $ | 598,800 | $ | 12,000 | $ | 610,800 | 2.00 | % | $850,000 | $25,000 | $875,000 | 2.9% |
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| Philip J. Mantua | $ | 340,000 | $ | 13,000 | $ | 353,000 | 3.82 | % | $440,000 | $15,000 | $455,000 | 3.4% |
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| Joseph J. O’Brien, Jr. | $ | 358,000 | $ | 22,000 | $ | 380,000 | 6.15 | % | $517,500 | $17,500 | $535,000 | 3.4% |
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Kenneth C. Cook | $450,000 | $15,000 | $465,000 | 3.3% |
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| R. Louis Caceres | $ | 335,000 | $ | 11,000 | $ | 346,000 | 3.28 | % | $440,000 | $20,000 | $460,000 | 4.5% |
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| Ronald E. Kuykendall | $ | 280,000 | $ | 9,000 | $ | 289,000 | 3.21 | % | ||||||||||||||||||||||||||||
2022 TARGET AWARD OPPORTUNITIES
Our executive officers have a target award opportunity for annual and long-term goals, which represents the amount of award received if we achieve the performance goals set by the committee. In determining the target award opportunity for each executive, the committee considers, among other things, the overall mix of an NEO’s total compensation and the value of awards made to other executives, as well as the value of cash incentive and equity-based compensation awarded to comparable NEOs at our peer companies. The table below summarizes the award opportunities for the NEOs at the target level of performance.
2022 Target Award (as a % of base salary*) | ||||||||||||
Name | Annual Incentive | Long-Term Incentive | ||||||||||
Daniel J. Schrider | 75% | 100% |
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Philip J. Mantua | 50% | 65% |
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Joseph J. O’Brien, Jr. | 65% | 75% |
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Kenneth C. Cook | 65% | 60% |
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R. Louis Caceres | 55% | 65% |
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| * | 2022 base salary is used to determine the annual incentive award opportunity. Prior year base salary is used to calculate the long-term incentive award opportunity. |
For 2022, 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. Caceres, whose opportunity was increased.
Short-TermFor 2022, the target long-term incentive award opportunity for each NEO was allocated equally among PRSUs and RSUs.
ANNUAL INCENTIVE COMPENSATION
Annual incentive opportunities are provided to our executive officers under our Executive Team Incentive Compensation
Plan (ETIP). The annual incentive planETIP is a short-term, cash compensation plan designed to recognize and reward participants for their success in achieving specific Companycompany goals. In 2017,For 2022, the committee selected three financial metrics and a set of qualitative factors 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.
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| | Notice and Proxy Statement | 2023 |
COMPENSATION DISCUSSION AND ANALYSIS |
The performance measures and respective weights for 2022 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.as follows:
Corporate Goal | Weight | |||||||
Core earnings | 35% | |||||||
Non-GAAP efficiency ratio | 25% | |||||||
Core ROTCE | 25% | |||||||
Qualitative factors | 15% | |||||||
| 100% | ||||||||
Each corporate goalfinancial metric was assigned a “threshold” or minimum performance level, a “target” level of performance, and a “maximum”maximum level at which the award opportunity was capped. For achievementAchievement of the threshold performance level each executive participant would earnearns 50% of his or her respectivethe target opportunity. Achievementopportunity, achievement of the target performance level would earnearns the target award, and achievement at or above the maximum performance level would earnearns 150% of the target opportunity. ResultsActual results for any goalmetric that falls between performance levels would beare interpolated to calculate a proportionate award.
Awards under the ETIP are calculated as follows:
Generally speaking, target levels were based on the planned or expected performance
| Base Salary | X | Target ETIP Opportunity Percentage | X | Payment Level Achieved | = | Award |
Financial Metrics– The financial metrics for the year2022 ETIP were core earnings, non-GAAP efficiency ratio and core ROTCE.
| • | Core earnings is calculated as net income exclusive of investment securities gains and loss, amortization of intangible assets, and other extraordinary and nonrecurring items, all on a net of tax basis. See Annex A – Non-GAAP Financial Measures for more information on calculation of this metric. The committee chose core earnings because it reflects the operating performance of our 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 our core business operations. |
| • | Core ROTCE is calculated as core earnings divided by average tangible common equity. Tangible common equity is calculated as total stockholders’ equity exclusive of goodwill and other intangible assets. See Annex A – Non-GAAP Financial Measures for more information on calculation of this metric. The committee chose this metric because it is one of the most significant financial measures utilized by shareholders in valuing the company. |
The targets for core earnings, the non-GAAP efficiency ratio and core ROTCE were determined by reference to our 2022 financial plan and evaluation of our 2021 performance relative to our peer group.
Qualitative Factors – Key qualitative factors 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,influence or reflect our performance were identified by the committee established a minimum performance trigger of 90% of planned net income, which must be achieved before any incentives could be paid.at the same time as financial goals were established.
Factor | Description | Achievement | Performance Level | |||
Digital optimization and alignment and data strategy | Our multi-year program 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. | • Piloted our new retail online and mobile banking platform. • Developed online account opening platform, which went live in early 2023. • Went live with phase 1 of our marketing cloud, which provides expanded marketing tools that work across channels and automate marketing work flows. • Implemented Zelle, the popular peer-to-peer payment solution. • Completed data lake build and continued data integration. | Target | |||
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
| | Notice and Proxy Statement | 2023 | 35 |
COMPENSATION DISCUSSION AND ANALYSIS |
Factor | Description | Achievement | Performance Level | |||
Client survey results | We conduct quarterly client surveys to determine our SEE (Success, Effort, Emotion) Score, which indicates the level of client loyalty and engagement. We also track our Net Promoter Score (NPS), which measures the loyalty of clients through one question: How likely is it that you would recommend Sandy Spring Bank to a friend or colleague? NPS is calculated as the percentage of promoters minus the percentage of detractors. | Achieved average SEE score of 74.5 and NPS score of 54 for 2022, which we believe are both well above industry average. | Above target | |||
Employee engagement results | We evaluate employee engagement through the Great Place to Work survey. The company originally utilized this survey in 2020 and re-surveys employees approximately every 18 months. | Achieved score of 82% on the Great Place to Work statement (Taking everything into account, I would say this is a Great Place to Work), which is an excellent score and qualifies us for the Great Place to Work certification. | Above target | |||
Based 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, 2017,its assessment, the committee met and considered a recommendation from Mr. Schrider to exclude the merger costs realized in 2017 and branch closure expenses that were also related to the overall branch strategy in view of such a significant acquisition. The recommendation was based on the premisedetermined that the 2017 financial plan, on which the corporate goals were based, only included organic growth. In addition, the acquisitionqualitative factors component was expected to close late in the year thereby generating merger-related expenses without realizing any offsetting revenue.earned at 105%. The committee approved the exclusions recommended by Mr. Schrider.assigned substantial weight to digital optimization and alignment and data strategy.
The committee reviewed2022 Payouts – Combining the results for the established goals, adjusted for the exclusions noted above, before exercising its authority to approve the cash payments to the executives on February 7, 2018. The committee first determined that the trigger net income level was surpassed permitting awards to be paid. The committee then reviewed the actualquantitative and qualitative performance to the goals as set forth below. To calculate thecomponents produced payment level, the weight for each goal was multiplied by the level of achievement for that goal. The sum of all payment levels equaled 111.23%at 124.23% of target.
Corporate Goal | Threshold (50% of Target | Target Level (100% of | Maximum (150% of | 2022 Performance | Payment Level | Weight | Weighted Level | |||||||||||||||||||||||||
Core earnings | $110,000 | $150,000 | $190,000 | $160,305(1) | 112.88% | 35% | 39.51% |
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Non-GAAP efficiency ratio | 56.50% | 53.00% | 49.50% | 49.66%(2) | 147.71% | 25% | 36.93% |
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Core ROTCE | 10.00% | 13.00% | 16.00% | 14.69%(3) | 128.17% | 25% | 32.04% |
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Qualitative factors |
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| 105.00% | 15% | 15.75% |
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| 124.23% |
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See Annex A – Non-GAAP Financial Measures for reconciliation to net income. |
| (2) | See Annex A – Non-GAAP Financial Measures for reconciliation to the GAAP efficiency ratio. |
| (3) | See Annex A – Non-GAAP Financial Measures for reconciliation to return on equity ratio. |
Mr. Schrider recommended that the committee use negative discretion to reduce his annual incentive payment to 100% to reflect declining financial performance in the fourth quarter of 2022. The committee accepted Mr. Schrider’s recommendation, but noted that his management of the company was exemplary. The committee confirmed the awards for the other NEOs without adjustment.
Based on the performance and considerations described above, the committee approved the following annual incentive awards for 2022 performance.
Name | 2022 ETIP Award ($) | |||||
Daniel J. Schrider | 656,250 (100% of target) | |||||
Philip J. Mantua | 282,623 (124.23% of target) | |||||
Joseph J. O’Brien, Jr. | 432,010 (124.23% of target) | |||||
Kenneth C. Cook | 375,485 (124.23% of target) | |||||
R. Louis Caceres | 314,302 (124.23% of target) | |||||
The performance measures, respective weights, target and actual performance levels for 2017 were:
| Corporate Goal | Weight | Target Level | Actual 2017 | Goal Achievement Level | Payment Level | |||||||||||||||
| Pre-tax, Pre-provision, Net Income Growth | 25 | % | 13.17 | % | 22.74 | % | 150.00 | %(3) | 37.50 | % | ||||||||||
| Fee-based Revenue Growth(1) | 15 | % | 9.59 | % | 4.38 | % | 0.00 | % | 0.00 | % | ||||||||||
| Efficiency Ratio | 15 | % | 57.53 | % | 54.59 | % | 150.00 | %(3) | 22.50 | % | ||||||||||
| Nonperforming Assets to Total Assets | 15 | % | 0.57 | % | 0.58 | % | 93.75 | % | 14.06 | % | ||||||||||
| Average Loan Growth | 15 | % | 11.63 | % | 11.43 | % | 97.80 | % | 14.67 | % | ||||||||||
| Average Core Deposit Growth(2) | 15 | % | 7.04 | % | 10.18 | % | 150.00 | %(3) | 22.50 | % | ||||||||||
| 100 | % | 111.23 | % | |||||||||||||||||
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| | Notice and |
COMPENSATION DISCUSSION AND ANALYSIS |
The following table showsAll annual incentive awards were paid in cash in March 2023 and are included in the calculation ofNon-Equity Incentive Plan Compensation column in the 2017 annual cash incentive award for each named executive officer at 111.23% of the target opportunity.Summary Compensation Table on page 42.
| 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 INCENTIVE COMPENSATION
Long-Term, Equity-Based Compensation
The Company’s establishedOur compensation philosophy identifies equity-based compensation as an effective means of creating a link betweenaligning the interests of our shareholders, the performance of the Companycompany, and the retention of executive management. The committee utilized performanceperformance-based and time-vested restrictedtime-based stock awards to accomplish these objectives. For 2022, the target long-term incentive award opportunity for each NEO was allocated equally among PRSUs and RSUs, as follows:
Name | Performance Restricted Stock Units (#) | Restricted Stock Units (#) | ||||||||||
Daniel J. Schrider | 9,364 | 9,364 |
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Philip J. Mantua | 3,151 | 3,151 |
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Joseph J. O’Brien, Jr. | 4,276 | 4,276 |
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Kenneth C. Cook | 2,975 | 2,975 |
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R. Louis Caceres | 3,151 | 3,151 |
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2022 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 ending December 31, 2024, with cliff vesting at the end of the performance period.
For 2022, 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 traditionally considers equity awards in March in conjunctionselected ROTCE because it is a comprehensive performance metric that is useful for comparing our profitability with that of our peers.
At the annual performance review process. Therefore, the awards made in March 2017 recognized 2016 Company and individual performance. The percentage valuesend of the awards werethree-year performance period, our executive officers can earn between 0% to 150% of the target number of PRSUs granted based on the benchmark data provided by Meridian. Mr. Schrider recommended, andpercentile rank of the committee approved, an award above targetour average ROTCE for each executive in orderthe three-year performance period relative to recognize the record-breaking performance in 2016. The awards, expressed as a percentageaverage ROTCE 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 providedcompanies in the Grants of Plan-Based Awards table on page 30.our peer group.
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.
Relative ROTCE Performance | Percentage of PRSUs Vesting | |||||||
75th percentile or above | 150% | |||||||
50th percentile (Target) | 100% | |||||||
25th percentile | 50% | |||||||
Below 25th percentile | 0% | |||||||
Beginning in 2016,Actual performance between 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,25th percentile 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.
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 2022 PRSUs will be adjusted as follows:
Relative TSR Performance | Increase or Decrease in Payout(1) | |||||||
Top quartile (above 75th percentile) | +15% | |||||||
Second quartile | None | |||||||
Third quartile | None | |||||||
Bottom quartile (25th percentile or below) | -15% | |||||||
| (1) | 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. |
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COMPENSATION DISCUSSION AND ANALYSIS |
PRSUs will be credited with dividends paid on Sandy Spring 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.
Restricted Stock Units – We grant RSUs to align the interests of executive officers with those of our shareholders by creating an incentive to create and preserve long-term shareholder value. Through RSUs, executive officers share the risks and rewards of stock ownership. Through multi-year vesting, RSUs also serve as a retention vehicle. RSUs vest in equal installments over three years, provided that the recipient continues to be employed by the company on each vesting date. RSUs will be credited with dividends paid on Sandy Spring stock, which are subject to the same terms and conditions (including the same vesting and delivery schedule) as the underlying RSUs.
Results of 2020 - 2022 PRSUs – The Performance Periodthree-year performance period for these shares was established as January 1, 2017 tothe 2020 PRSUs concluded on December 31, 2019,2022. Payout of the award was based one-third on our TSR relative to an industry peer group, one-third on our cumulative adjusted earnings per share and the average stock priceone-third on our ROTCE relative to our peer group.
Payout percentages at various levels of performance for the 20 days preceding2020 PRSUs and actual results are illustrated in the beginning and ending of the performance period will be used for comparison.table below.
Corporate Goal | Threshold (50% of Target | Target Level (100% of | Maximum (150% of | Actual Performance | Performance Level Achieved | Weighted Payment Level | ||||||||||||||||||||||
Relative TSR percentile | 25th | 50th | 75th | 37.33th | 74.67% | 24.89% |
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3-Year Adjusted Cumulative EPS | $10.62 | $11.46 | $12.36 | $11.71(1) | 113.89% | 37.96% |
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Relative ROTCE percentile | 25th | 50th | 75th | 84.21th | 150.00% | 50.00% |
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| 112.85% |
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|
| |||||||||
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
| (1) | See Annex A – Non-GAAP Financial Measures for reconciliation to GAAP EPS. |
The following table lists the number of days elapsed in2020 PRSUs to which our NEOs became vested at the end of the 2020 – 2022 performance period.cycle.
Name | 2020 PRSUs Earned at 112.85% of Target (#) | |||||||
Daniel J. Schrider | 16,065 | |||||||
Philip J. Mantua | 6,282 | |||||||
Joseph J. O’Brien, Jr. | 8,123 | |||||||
Kenneth C. Cook | 5,899 | |||||||
R. Louis Caceres | 5,598 | |||||||
Upon NON-QUALIFIED DEFERRED COMPENSATION PLAN
For 2022, executive officers received a change in control, neitherperformance-based supplemental retirement benefit under 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 isNQDC Plan. This benefit was previously provided in the Grants of Plan-Based Awards table on page 30.
Deferred Compensation and Retirement Benefits
Executive Incentive Retirement Plan
All executives participate in a nonqualified, deferred compensation plan known asunder the Executive Incentive Retirement Plan (“EIRP”)(EIRP). Unlike most executive supplemental retirement plans,Consistent with the benefit structure under the EIRP, provides contributions in consideration of the Company’s performance each year. Executives receiveexecutive officers received a minimum cash contribution of 3% of base salary with the opportunity for increased contributions based on identified performance criteria.
For 2017,2022, the committee established the attainment ofselected core return on average assets (“ROAA”) compared to(core ROAA) as the medianperformance metric. This is the same metric as used in 2021. The committee chose core ROAA because it reflects the operating performance of our core business operations. Core ROAA is calculated as core income, which excludes realized gains on the sale of securities, amortization of intangibles and nonrecurring items, as a regional grouppercent of average assets. The amount of the award is determined based on our core ROAA as a percent of peer banks. This peer group usedmedian, as reflected in the same criteria as the peer group described on page 21, asset size and regional geography, with performance updated at the endtable below. The amount of the award based on achievement between performance period on December 31, 2017. The 2017 schedule for deferral contributions was approved as follows:levels is determined by straight-line interpolation.
| Return on Average Assets Percentile Versus Peer Group | Deferral Contribution for % of Base Salary | Deferral Contribution for President & CEO % of Base Salary | ||||||
| 80% or below | minimum 3.000 | % | minimum 3.000 | % | ||||
| > 80% to 90% | 4.500 | % | 5.125 | % | ||||
| > 90% to 100% | 6.500 | % | 7.250 | % | ||||
| >100% to 110% | 7.500 | % | 9.375 | % | ||||
| >110% to 120% | 9.000 | % | 11.500 | % | ||||
| >120% to 130% | 10.500 | % | 13.625 | % | ||||
| >130% to 140% | 12.000 | % | 15.750 | % | ||||
| >140% to 150% | 13.500 | % | 17.875 | % | ||||
| >150% or above | 15.000 | % | 20.000 | % | ||||
Core ROAA as % of Peer Median | Performance Level | CEO | Other Participating Officers | |||||||
Award as a % of Base Salary |
Award as a % of Base Salary | |||||||||
70% or below | Threshold | 3.000% |
| 3.0% |
| |||||
100% | Target | 9.375% |
| 7.5% |
| |||||
150% or above | Maximum | 20.000% |
| 15.0% |
| |||||
38 |
| | Notice and Proxy Statement | 2023 |
COMPENSATION DISCUSSION AND ANALYSIS |
In 2017,2022, our core ROAA was 1.21%. See Annex A – Non-GAAP Financial Measures for the Company was 1.02%.reconciliation to GAAP ROAA. Compared to the peer group median of 0.92%1.31%, the Companywe achieved 110%92.37% of the peer group’s result, yielding a deferral contribution of 9.375%7.75% of base salary for Mr. Schrider and 7.50%6.36% for the other executive officers. TheCompany contributions are calculated in the following table.
| Name | Payment Level Earned | Base Salary | 2017 Deferral Contribution | |||||||||
| Daniel J. Schrider | 9.375 | % | $ | 610,800 | $ | 57,262 | ||||||
| Philip J. Mantua | 7.500 | % | $ | 353,000 | $ | 26,475 | ||||||
| Joseph J. O’Brien, Jr. | 7.500 | % | $ | 380,000 | $ | 28,500 | ||||||
| R. Louis Caceres | 7.500 | % | $ | 346,000 | $ | 25,950 | ||||||
| Ronald E. Kuykendall | 7.500 | % | $ | 289,000 | $ | 21,675 | ||||||
The amounts of the 2017 deferral contributionsfor 2022 are shown in the Nonqualified Deferred Compensation Plans section beginningtable on page 3247 along with a description of the terms and conditions for balances paid under the EIRP. The 2017 deferralNCDQ Plan. 2022 contributions are also included in the Summary of Compensation tableTable on page 28,42, and potential awards are further described in the Grants of Plan-Based Awards table on page 30.44.
5. OTHER COMPENSATION PROGRAMS AND POLICIES
OTHER COMPENSATION ELEMENTS
401(k) Plan
The named executive – Executive officers are eligible to participate in benefit plans available to all employees, including the Sandy Spring Bank 401(k) Plan. The 401(k) Planplan provides a 100% match on the first 3%4% of salary deferred and a 50% match on the next 2% of salary deferred, up to the maximum allowed by the IRS regulations.
Pension Plan
– The Sandy Spring Bancorp, Inc. Retirement Income Plan (Pension Plan) 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. KuykendallCaceres are participants. The accumulated benefit for each may be found in the Pension Benefits table on page 31.46.
Life Insurance Benefits –We maintain 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 us 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 NQDC Plan, which provides 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 increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and are 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. Contributions during 2022 and year-end account balances can be found in the Nonqualified Deferred Compensation Plantable.
ExecutivesPrior to 2022, we maintained a deferred compensation plan that provided the opportunity to defer up to 25% of base salary and other officers whoup to 100% of cash bonuses for payment following the six-month anniversary of any separation from service. Prior to 2022, interest accrued on the account balance at a rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly. Beginning in 2022, participants’ accounts increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and are eligible may participatecredited and debited in accordance with the Sandy Spring Bank Deferred Compensation Plan as described on page 32. Currently, only Mr. O’Brien participates in this plan.actual financial performance of such funds.
Business-Related Benefits and Perquisites
–The committee believes that perquisites should be limited in scope and have a business-related purpose. The committee periodically reviews perquisites to ensure alignment with the desired philosophy. The committee approves specific perquisites or benefits for individuals based on the needs of the position.
In 2017,2022, 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.
42. In addition, Mr. Schrider receives the use of a company-owned vehicle. Mr. CaceresO’Brien, Mr. Cook and Mr. O’BrienCaceres 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. 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. Cook maintains a membership, at company expense, at a local country club.
| | Notice and Proxy Statement | 2023 | 39 |
COMPENSATION DISCUSSION AND ANALYSIS |
Role of the Compensation Committee, Management and Compensation Consultants in the Executive Compensation Process
Role of the Compensation Committee
The Compensation Committee is made up of all independent directors as required under the Nasdaq listing rules. Details on the committee's functions are described in thecommittee’s charter, which has been approved by the board of directors and is available on our Investor Relations website.
The committee has the authority to obtain advice and assistance from internal or external legal, human resources, accounting or other experts, advisors, or consultants as it deems desirable or appropriate. The committee has sole authority to retain and terminate any compensation consultant and to approve the fee and the terms of engagement. For 2017, the committee engaged an independent consulting firm specializing in executive compensation.
SEVERANCE BENEFITS
In 2017, the committee reviewed2022, we terminated our employment agreements with Mr. Schrider, Mr. Mantua, and approved all aspects of compensation plansMr. O’Brien and policies applicable toour change in control agreement with Mr. Caceres, and adopted an Executive Severance Plan that will provide the named executive officers including participationwith severance benefits if their employment is terminated under certain circumstances. The committee decided to consolidate executive severance arrangements under a single plan in order to provide for consistency of benefits and performance measures. In carrying out its duties,ease of administration. The committee believes that providing for severance and change in control benefits is an important element of our executive compensation program, supports the committee considered the relationshipcreation of corporate performancelong-term shareholder value, and is necessary to total compensation; set salaryattract and bonus levelsretain top executive talent in a competitive market. The Executive Severance Plan is intended to ensure that management can fairly consider potential change in control transactions that could result in loss of their jobs. The Executive Severance Plan does not provide for any tax indemnification or “gross-up” payments for any golden parachute excise tax payments, and equity-based awards for executive officers; and reviewed the adequacy and effectivenessall change in control benefits are subject to a “double-trigger” (i.e., a change in control plus a qualifying termination of various compensation and benefit plans. The chairman of the committee reported committee actions to the board of directors following each committee meeting.
employment).
The committee worked closely with Mr. Schriderseverance benefits payable to review and discuss his recommendations foreach named executive officer under the other executive officers. The committee also consideredExecutive Severance Plan are described on page 48 under the market analysis provided by the compensation consultant to assess market practices, the mix“Executive Compensation Tables – Potential Payments upon Termination or Change in Control” section of fixed and variable compensation, and the levels of compensation for each executive.this proxy statement.
EXECUTIVE COMPENSATION POLICIES
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.
Role of Management
In 2017, Mr. Schrider and the executive officers, as customary, were responsible for the development of the annual business 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 analysis provided by the compensation consultant and at the direction of the committee, Mr. Schrider developed recommendations for executive compensation other than his own. Mr. Kuykendall provided the committee with legal interpretation and guidance on governance issues. Mr. Mantua provided the committee with information regarding the Company’s performance and comparisons with peer banks’ performance.
Messrs. Schrider, Mantua, and Kuykendall, as well as other members of management regularly attended portions of the Compensation Committee meetings where company performance, market considerations, and legal analyses were discussed. However, management was not present during final deliberations on executive compensation, and only committee members voted on executive compensation matters.
Role of Independent Compensation Consultant
The committee engages an independent executive compensation consultant to provide commentary, analysis and expertise relating to executive compensation. For 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.
The 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 long-term incentive compensation and supplemental executive retirement benefits. The analysis provided the committee with a broad array of information with which to assess the Company’s compensation program, and it served as a foundation for compensation decisions. The committee had direct access to the consultant and control over the engagement at all times.
Additional Compensation Policies, Practices and Considerations
Stock Ownership Requirements for Executives
In response–The Board believes that our 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 our 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 our employee stock purchase plan or 401(k) plan are included in the stock ownership calculation. Stock options are not included. As of December 31, 2022, each of the named executive officers own Company common stock in excess of this requirement.met their ownership requirement or was on track to do so within the five year grace period.
Clawback Policy
In 2012, the board approved a– Under our Clawback Policy, for the Recovery of Performance Compensation, also known as a “clawback” policy. The policy states that in the event the Company iswe are required to prepare an accounting restatement due to the material noncompliance by the Company with any financial reporting requirement under the securities laws, the Company, at the direction and sole 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 Company iswe are required to prepare the accounting restatement, basedrestatement.
No Hedging and No Pledging – Under our Insider Trading Policy, our 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.
COMPENSATION RISK ASSESSMENT
We regularly undertake a systematic risk analysis of each of our 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 2022, 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 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
40 |
| | Notice and Proxy Statement | 2023 |
The committee and the Company consider the accounting and tax (individual and corporate) consequences of the compensation plans prior to making any changes to the plans. Section 162(m) of the Internal Revenue Code concerns the tax deductibility of compensation paid to the CEO and each of the three highest compensated officers, other than the principal financial officer. The Tax Cuts and Jobs Act, signed into law in December, 2017, limits our ability to deduct performance-based compensation in excess of $1 million with respect to stock based awards granted after November 2, 2017, and annual incentive awards paid for fiscal year 2018 and later years.
COMPENSATION COMMITTEE REPORT |
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the committee recommends to the board of directorsBoard that the Compensation Discussion and Analysis be included in this proxy statement.
March 15, 2023
Ralph F. Boyd, Chair
Brian J. Lemek
Mark C. Michael
Christina B. O’Meara
Robert L. Orndorff
Mona Abutaleb Stephenson
| ||||
| Notice and Proxy Statement | 2023 | 41 |
EXECUTIVE COMPENSATION |
EXECUTIVE COMPENSATION
Executive Compensation TablesSUMMARY COMPENSATION TABLE
Summary Compensation Table
The following table summarizes compensation for the named executive officers for the three most recent completed fiscal years.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock ($) | Non-Equity ($) | Change in ($) | All Other ($) | Total ($) | ||||||||||||||||||||||||||||||||
Daniel J. Schrider President and Chief Executive Officer | 2022 | 867,308 | — | 850,064 | 724,063 | — | 57,422 | 2,498,857 | ||||||||||||||||||||||||||||||||
| 2021 | 842,308 | — | 742,553 | 974,281 | — | 65,701 | 2,624,843 | |||||||||||||||||||||||||||||||||
| 2020 | 804,808 | 731,156 | 684,082 | — | 79,897 | 63,179 | 2,363,122 | |||||||||||||||||||||||||||||||||
Philip J. Mantua EVP, Chief Financial Officer | 2022 | 450,385 | — | 286,048 | 311,561 | — | 36,299 | 1,084,293 | ||||||||||||||||||||||||||||||||
| 2021 | 435,385 | — | 276,312 | 342,980 | — | 39,564 | 1,094,241 | |||||||||||||||||||||||||||||||||
| 2020 | 419,885 | 257,125 | 267,479 | — | 33,311 | 33,976 | 1,011,776 | |||||||||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. EVP, Chief Banking Officer | 2022 | 529,615 | — | 388,175 | 466,036 | — | 43,756 | 1,427,582 | ||||||||||||||||||||||||||||||||
| 2021 | 512,115 | — | 375,059 | 504,777 | — | 59,947 | 1,451,898 | |||||||||||||||||||||||||||||||||
| 2020 | 487,885 | 377,500 | 345,867 | — | — | 55,220 | 1,266,472 | |||||||||||||||||||||||||||||||||
Kenneth C. Cook EVP, President of Commercial Banking | 2022 | 460,385 | — | 270,071 | 405,059 | — | 30,511 | 1,166,026 | ||||||||||||||||||||||||||||||||
| 2021 | 442,308 | — | 255,001 | 438,937 | — | 37,580 | 1,173,826 | |||||||||||||||||||||||||||||||||
| 2020 | 291,135 | 294,750 | 251,160 | — | — | 27,965 | 865,010 | |||||||||||||||||||||||||||||||||
R. Louis Caceres EVP, Chief Wealth Officer | 2022 | 453,846 | — | 286,048 | 343,558 | — | 43,798 | 1,127,250 | ||||||||||||||||||||||||||||||||
| 2021 | 433,846 | — | 252,073 | 342,980 | — | 53,219 | 1,082,118 | |||||||||||||||||||||||||||||||||
| 2020 | 412,462 | 254,100 | 238,372 | — | 51,215 | 53,710 | 1,009,859 | |||||||||||||||||||||||||||||||||
| Name and | Stock Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value & Nonqualified Deferred Compensation Earnings | All Other Compensation | ||||||||||||||||||||||
| Principal Position | Year | Salary | (1) | (2) | (3) | (4) | Total | |||||||||||||||||||
| 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 | |||||||||||||
| (1) | 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 and RSUs are subject to vesting periods based on continued employment and the number of PRSUs that vest depends on whether we achieve specified performance measures. For more information about these awards and the calculation of their fair value, see Note 12 – 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, 2022. 2022 stock awards are described under “Compensation Discussion and Analysis – 2022 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 2022, 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: $637,548 for Mr. Schrider; $214,559 for Mr. Mantua; $291,131 for Mr. O’Brien; $202,576 for Mr. Cook; and $214,559 for Mr. Caceres. |
| (2) | Non-Equity Incentive Plan Compensation. For 2022, the amounts reported are the total of cash awards under the ETIP and company contribution credited to the officer’s account under the NQDC Plan, as indicated in the table below. |
Name | ETIP ($) | Contributions ($) | Total ($) | |||||||||
Daniel J. Schrider | 656,250 | 67,813 | 724,063 | |||||||||
Philip J. Mantua | 282,623 | 28,938 | 311,561 | |||||||||
Joseph J. O’Brien, Jr. | 432,010 | 34,026 | 466,036 | |||||||||
Kenneth C. Cook | 375,485 | 29,574 | 405,059 | |||||||||
R. Louis Caceres | 314,302 | 29,256 | 343,558 | |||||||||
| (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings. In 2022, there was a decrease in pension values for Mr. Schrider, Mr. Mantua and Mr. Caceres of $145,180, $53,133 and $88,780, respectively, because of changes in actuarial assumptions in 2022 as compared to 2021. For years in which changes in actuarial assumptions result in a decrease in pension value, rather than report a negative number, a change of $0 is reported. Neither an increase nor decrease in the pension value resulting from changes in actuarial assumptions results in any increase or decrease in benefits payable to participants under the pension plan. |
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| | Notice and Proxy Statement | 2023 |
EXECUTIVE COMPENSATION |
| (4) | All Other Compensation. Detail for the amounts of All Other Compensation is as follows: |
Name | Dividends on Restricted Stock | 401(k) Matching Contribution | Perquisites* | Total All Other Compensation | ||||||||||||
Daniel J. Schrider | 20,451 | 15,250 | 21,721 | 57,422 | ||||||||||||
Philip J. Mantua | 7,795 | 15,250 | 13,255 | 36,299 | ||||||||||||
Joseph J. O’Brien, Jr. | 10,130 | 15,250 | 18,377 | 43,756 | ||||||||||||
Kenneth C. Cook | 5,858 | 15,250 | 9,403 | 30,511 | ||||||||||||
R. Louis Caceres | 7,152 | 15,250 | 21,396 | 43,798 | ||||||||||||
| * | Perquisites include car allowance or personal use of company vehicle, long-term care and supplemental disability insurance premiums paid on behalf of the executive, executive health screening, and the taxable income associated with the executive officer’s split dollar life insurance benefit. |
| | Notice and Proxy Statement | 2023 | 43 |
EXECUTIVE COMPENSATION |
GRANTS OF PLAN-BASED AWARDS
The following table sets forth information on plan-based awards made to the named executive officers in 2022.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2)(3) | All Other (#) | Grant Date ($) | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||
Daniel J. Schrider | RSU | 3/16/2022 | 9,364 | 425,032 | ||||||||||||||||||||||||||||||||||||||
| PRSU | 3/16/2022 | 4,682 | 9,364 | 14,046 | 425,032 | |||||||||||||||||||||||||||||||||||||
| ETIP | 328,125 | 656,250 | 984,375 | |||||||||||||||||||||||||||||||||||||||
| NQDC Plan | 26,250 | 82,031 | 175,000 | |||||||||||||||||||||||||||||||||||||||
Philip J. Mantua | RSU | 3/16/2022 | 3,151 | 143,024 | ||||||||||||||||||||||||||||||||||||||
| PRSU | 3/16/2022 | 1,576 | 3,151 | 4,727 | 143,024 | |||||||||||||||||||||||||||||||||||||
| ETIP | 113,750 | 227,500 | 341,250 | |||||||||||||||||||||||||||||||||||||||
| NQDC Plan | 13,650 | 34,125 | 68,250 | |||||||||||||||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | RSU | 3/16/2022 | 4,276 | 194,088 | ||||||||||||||||||||||||||||||||||||||
| PRSU | 3/16/2022 | 2,138 | 4,276 | 6,414 | 194,088 | |||||||||||||||||||||||||||||||||||||
| ETIP | 173,875 | 347,750 | 521,625 | |||||||||||||||||||||||||||||||||||||||
| NQDC Plan | 16,050 | 40,125 | 80,250 | |||||||||||||||||||||||||||||||||||||||
Kenneth C. Cook | RSU | 3/16/2022 | 2,975 | 135,035 | ||||||||||||||||||||||||||||||||||||||
| PRSU | 3/16/2022 | 1,488 | 2,975 | 4,463 | 135,035 | |||||||||||||||||||||||||||||||||||||
| ETIP | 151,125 | 302,250 | 453,375 | |||||||||||||||||||||||||||||||||||||||
| NQDC Plan | 13,950 | 34,875 | 69,750 | |||||||||||||||||||||||||||||||||||||||
R. Louis Caceres | RSU | 3/16/2022 | 3,151 | 143,024 | ||||||||||||||||||||||||||||||||||||||
| PRSU | 3/16/2022 | 1,576 | 3,151 | 4,727 | 143,024 | |||||||||||||||||||||||||||||||||||||
| ETIP | 126,500 | 253,000 | 379,500 | |||||||||||||||||||||||||||||||||||||||
| NQDC Plan | 13,800 | 34,500 | 69,000 | |||||||||||||||||||||||||||||||||||||||
| (1) | 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 – 2022 Compensation.” The actual amounts earned by each executive are disclosed in the Summary Compensation Table. |
| (2) | The amounts in these columns represent the threshold, target and maximum number of shares that may be earned with respect to PRSUs granted in 2022. Earned shares will be paid following the end of the 2022-2024 performance period, based on the extent to which the performance measures have been achieved. These awards are described under “Compensation Discussion and Analysis – 2022 Compensation.” |
| (3) | PRSUs will be credited with dividends paid on Sandy Spring 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. |
| (4) | The amounts reported are the aggregate grant date fair value of RSU and PRSU awards computed in accordance with FASB ASC Topic 718. |
44 |
| | Notice and |
EXECUTIVE COMPENSATION |
| 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 | ||||||||
Outstanding Equity Awards at Fiscal Year EndOUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table shows information regarding all unvested equity awards held by the named executive officers at December 31, 2017. These awards are subject to forfeiture until vested, and the ultimate value of performance-based awards is unknown.2022.
| 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 | |||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Option ($) | Option Expiration Date | Number of (#) | Market value of shares or units of stock that have not vested ($)(1) | Equity (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)(1) | ||||||||||||||||||||||||||||
Daniel J. Schrider | 4/25/2018 | 1,565(2) | 55,135 | |||||||||||||||||||||||||||||||||
| 3/11/2020 | 4,262(3) | 150,150 | 15,907(4) | 560,404 | ||||||||||||||||||||||||||||||||
| 3/10/2021 | 6,086(5) | 214,410 | 14,459(6) | 509,383 | ||||||||||||||||||||||||||||||||
| 3/16/2022 | 9,364(7) | 329,894 | 14,422(8) | 508,072 | ||||||||||||||||||||||||||||||||
Philip J. Mantua | 4/25/2018 | 581(2) | 20,469 | |||||||||||||||||||||||||||||||||
| 3/11/2020 | 1,666(3) | 58,693 | 6,220(4) | 219,131 | ||||||||||||||||||||||||||||||||
| 3/10/2021 | 2,265(5) | 79,796 | 5,380(6) | 189,547 | ||||||||||||||||||||||||||||||||
| 3/16/2022 | 3,151(7) | 111,010 | 4,853(8) | 170,967 | ||||||||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | 4/25/2018 | 695(2) | 24,485 | |||||||||||||||||||||||||||||||||
| 3/11/2020 | 2,155(3) | 75,921 | 8,043(4) | 283,355 | ||||||||||||||||||||||||||||||||
| 3/10/2021 | 3,074(5) | 108,297 | 7,303(6) | 257,286 | ||||||||||||||||||||||||||||||||
| 3/16/2022 | 4,276(7) | 150,643 | 6,586(8) | 232,007 | ||||||||||||||||||||||||||||||||
Kenneth C. Cook | 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 | 1,565(9) | 55,135 | 5,841(4) | 205,778 | ||||||||||||||||||||||||||||||||
| 3/10/2021 | 2,090(9) | 73,631 | 4,965(6) | 174,928 | ||||||||||||||||||||||||||||||||
| 3/16/2022 | 2,975(7) | 104,809 | 4,828(8) | 170,099 | ||||||||||||||||||||||||||||||||
R. Louis Caceres | 4/25/2018 | 570(2) | 20,081 | |||||||||||||||||||||||||||||||||
| 3/11/2020 | 1,485(3) | 52,317 | 5,543(4) | 195,280 | ||||||||||||||||||||||||||||||||
| 3/10/2021 | 2,066(5) | 72,785 | 4,908(6) | 172,919 | ||||||||||||||||||||||||||||||||
| 3/16/2022 | 3,151(7) | 111,010 | 4,853(8) | 170,967 | ||||||||||||||||||||||||||||||||
| (1) |
Aggregate market values |
| (2) | 2018 RSAs. The outstanding award is scheduled to vest on |
| (3) | 2020 RSAs. The outstanding award is scheduled to vest |
| (4) | 2020 PRSUs. On March 15, 2023, the Compensation Committee certified the achievement of the applicable performance measures for the PRSU cycle ending on December 31, 2022 at 112.85% 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. |
| (5) | 2021 RSAs. One-half of the outstanding award is scheduled to vest on April 1, 2023, and one-half of the outstanding award is scheduled to vest on April 1, 2024. |
| (6) | 2021 PRSUs. Vesting is subject to achievement of specific |
| | Notice and Proxy Statement | 2023 | 45 |
EXECUTIVE COMPENSATION |
| (7) | 2022 RSUs. One-third of the outstanding award is scheduled to vest on April 1, 2023, one-third of the outstanding award is scheduled to vest on April 1, 2024, and one-third of the outstanding award is scheduled to vest on April 1, 2025. |
| (8) | 2022 PRSUs. Vesting is subject to |
| (9) | Mr. Cooks’s outstanding 2020 RSAs and 2021 RSAs vested upon his retirement on February 28, 2023. |
Grants of Plan-Based AwardsOPTION EXERCISES AND STOCK VESTED
The following table sets forthprovides information on plan-based awards made to thefor each of our named executive officers. These include restrictedofficers regarding the exercise of stock options and the vesting of stock awards (“RSA”), performance-vested restrictedduring 2022. The value realized upon the vesting of stock awards (“PRSA”) and cash awards underis based on the 2015 Omnibus Incentive Plan andmarket price of Sandy Spring stock on 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 | ||||||||||||||||||||||||||||
| Stock Awards | ||||||||
Name | Number of Acquired (#) | Value Upon Vesting ($) | ||||||
Daniel J. Schrider | 24,499 | 1,121,419 | ||||||
Philip J. Mantua | 9,488 | 434,294 | ||||||
Joseph J. O’Brien, Jr. | 11,625 | 531,906 | ||||||
Kenneth C. Cook | 2,609 | 117,196 | ||||||
R. Louis Caceres | 9,045 | 414,179 | ||||||
| (1) | Includes the gross number of RSAs and performance shares covering the 2019 – 2021 performance period that vested or were settled and paid in |
Option Exercises and Stock VestedPENSION BENEFITS
The following table shows the value realized upon the vesting of restricted stock awards in 2017.
| Stock Awards | ||||||||
| Number of | Value Realized | |||||||
| Shares Acquired | Upon Vesting | |||||||
| on Vesting | (1) | |||||||
| Executive | (#) | ($) | ||||||
| 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 | |||||
Pension Benefits
The 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 | Number of Years (#) | Present Value of ($) | ||||||||||||||||
| Daniel J. Schrider | Pension Plan | 19 | $ | 364,797 | Pension Plan | 19 | 343,150 | |||||||||||||||
| Philip J. Mantua | Pension Plan | 9 | $ | 213,743 | Pension Plan | 9 | 218,920 | |||||||||||||||
| Joseph J. O’Brien, Jr.(2) | Pension Plan | - | 0 | |||||||||||||||||||
| R. Louis Caceres | Pension Plan | 9 | $ | 274,193 | Pension Plan | 9 | 269,154 | |||||||||||||||
| Ronald E. Kuykendall | Pension Plan | 8 | $ | 351,719 | ||||||||||||||||||
| (1) | For additional information on the Pension Plan and |
Benefits under the Pension Plan are provided on a 10-year certain and life basis, with survivor benefits for the employee’s spouse, and are not subject to deduction for Social Security or other offset amounts. When the Pension Plan was active, earnings covered were total wages, including elective pre-tax contributions under the 401(k) Plan, bonuses, and other cash compensation up to the allowable limit under the Internal Revenue Code.
The Pension Plan benefit equals the sum of three parts: (a) the benefit accrued as of December 31, 2000, based on the formula of 1.5% of highest five-year average salary as of that date times years of service as of that date, plus (b) 1.75% of each year'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.
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.
The Pension Plan was terminated effective as of June 30, 2022. We have filed an application with the Internal Revenue Service for a determination as to the tax-qualified status of the Pension Plan at the time of termination and have filed appropriate notices and documents related to the Pension Plan’s termination and wind-down with the Pension Benefit Guaranty Corporation. All participants who are not already receiving annuities will be
Pay Ratio
46 |
| | Notice and Proxy Statement | 2023 |
EXECUTIVE COMPENSATION |
given the opportunity to elect a lump sum payout. Benefit obligations of participants who do not elect a lump sum or who are being paid in an annuity form will be transferred under an annuity contract from a highly-rated insurance company that will pay and administer future benefit payments. There will be no change in the benefit earned by Pension Plan participants as a result of these actions. The Pension Plan termination is subject to regulatory approvals and we have the right to change the effective date of the Pension Plan termination or to revoke our decision to terminate the Pension Plan, but we currently have no intent to do so.
NONQUALIFIED DEFERRED COMPENSATION
The Companyfollowing table provides information regarding executive and company contributions, 2022 earnings and year-end account balances for the named executive officers under our deferred compensation plans.
Name | Plan Name | Executive ($) | Registrant ($) | Aggregate in 2022(3) ($) | Aggregate ($) | Aggregate ($) | ||||||||||||||||
Daniel J. Schrider | EIRP | n/a | - | 15,780 | - | 1,138,321 | ||||||||||||||||
| NQDC Plan | - | 67,813 | - | - | 67,813 | |||||||||||||||||
Philip J. Mantua | EIRP | n/a | - | 25,995 | - | 772,682 | ||||||||||||||||
| NQDC Plan | - | 28,938 | - | - | 28,938 | |||||||||||||||||
Joseph J. O’Brien, Jr. | EIRP | n/a | - | (57,562) | - | 447,918 | ||||||||||||||||
| NQDC Plan | - | 34,026 | - | - | 34,026 | |||||||||||||||||
| Deferred Compensation Plan | - | - | 673 | - | 20,018 | |||||||||||||||||
Kenneth C. Cook | EIRP | n/a | - | 3,569 | - | 22,914 | ||||||||||||||||
| NQDC Plan | - | 29,574 | - | - | 29,574 | |||||||||||||||||
R. Louis Caceres | EIRP | n/a | - | (23,672) | - | 639,295 | ||||||||||||||||
| NQDC Plan | - | 29,256 | - | - | 29,256 | |||||||||||||||||
| (1) | Participant contributions are not permitted under the EIRP. |
| (2) | Represents amounts earned in 2022 and credited to the executive officer’s account under the NQDC Plan in 2023, after the Compensation Committee certified the achievement of the applicable performance measure. Contributions under the NQDC Plan are described under “Compensation Discussion and Analysis – 2022 Compensation” on page 38. These amounts are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
| (3) | Each of the NQDC Plan, the EIRP and the Deferred Compensation Plan credits plan balances with the actual financial performance of investment funds in which the plan balances are hypothetically invested. Earnings on plan balances under 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. |
| (4) | The aggregate balance under the EIRP as of December 31, 2022 for each named executive officer includes the following aggregate amount of prior registrant contributions and aggregate earnings that were previously earned and reported as compensation in the Summary Compensation Table for the years 2008 through 2021 as follows: Mr. Schrider, $992,539; Mr. Mantua, $538,047; Mr. O’Brien, $449,389; Mr. Cook, $57,879; and Mr. Caceres, $503,935. The aggregate balance under the Deferred Compensation Plan as of December 31, 2022 for Mr. O’Brien includes $3,613 of prior earnings that were previously earned and reported as compensation in the Summary Compensation Table. |
The following describes the material features of our nonqualified deferred compensation plans in which the named executive officers participate.
Non-Qualified Deferred Compensation Plan – Each of our named executive officers is eligible to participate in the Non-Qualified Deferred Compensation Plan (NQDC Plan), which provides 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 are 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. In 2022, the company credited each of the executive officers with a deferral bonus based on achievement of a specified performance measure. The company contribution vests immediately. Performance measures and awards for 2022 are described under “Compensation Discussion and Analysis – 2022 Compensation” on page 38.
Participants’ accounts increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and are 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. 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.
| | Notice and Proxy Statement | 2023 | 47 |
EXECUTIVE COMPENSATION |
Executive Incentive Retirement Plan –Prior to 2022, each of our named executive officers participated in the Executive Incentive Retirement Plan (EIRP), a deferred compensation plan that provides for supplemental executive retirement benefits. Under the EIRP, a guaranteed minimum deferral bonus equal to 3% of a participant’s base salary was credited annually to the participant’s deferred benefit account. Each year, the Compensation Committee determined the performance measures by which a deferral bonus above the minimum may be earned. Employer contributions under the EIRP and earnings on EIRP balances vest immediately. Prior to 2022, interest accrued on the account balance at a rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly. Beginning in 2022, participants’ accounts increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and are credited and debited in accordance with the actual financial performance of such funds.
Participants may generally elect to receive distribution of their vested account balance 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 first business day of the January occurring after the year in which the Participant attains age 70. A participant whose employment is terminated for just cause will forfeit his or her account balance.
Deferred Compensation Plan – Prior to 2022, we maintained a deferred compensation plan that provided 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. Prior to 2022, interest accrued on the account balance at a rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly. Beginning in 2022, participants’ accounts increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and are credited and debited in accordance with the actual financial performance of such funds.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
SEVERANCE BENEFITS
On December 14, 2022, the Board, as part of its ongoing review of the company’s executive compensation and retention program, approved the terms of the Sandy Spring Bancorp, Inc. Executive Severance Plan. The purpose of the Executive Severance Plan is to provide severance benefits to certain of our senior executives and key employees in the event their employment is terminated in certain circumstances, including certain terminations related to a change in control. The Executive Severance Plan is intended to secure the continued services of our executive and key employees and to ensure their continued dedication to their duties in the event of any threat or occurrence of a change in control. The Executive Severance Plan is also intended to provide a level of security to executive and key employees who are terminated without cause, notwithstanding that such termination or resignation has occurred outside of a covered period relating to a change in control.
Under the Executive Severance Plan, a participant who undergoes an involuntary termination other than for cause (as defined in the plan) or voluntary termination for good reason (as defined in the plan) during the period commencing with our initial public announcement of the agreements or other actions that are expected or intended to result in a change of control (as defined in the plan) and ending 24 months following the occurrence of such change in control will receive, subject to the participant’s execution of a general release of claims:
| • | a lump sum cash payment equal to the participant’s pro-rata bonus for the year in which he or she is terminated; |
| • | a lump sum cash payment equal to the participant’s severance multiple, multiplied by the sum of (i) the greater of (x) the participant’s base salary as in effect immediately before the applicable change in control occurred or (y) the participant’s base salary as in effect on the participant’s termination date and (ii) the participant’s target bonus for the year in which the termination date occurs; and |
| • | if the participant elects continuation coverage under COBRA, a lump sum cash payment equal to the amount obtained by multiplying (i) the monthly cost for continuation coverage under COBRA (as in effect as of the participant’s termination date) for group medical, dental and vision coverage for the participant and his or her dependents immediately before the participant’s termination date by (ii) the number of months represented by the participant’s severance multiple. |
If the severance benefits under the Executive Severance Plan, along with any other payments occurring in connection with a change in control of the company, were to cause the participant to be subject to the excise tax provisions of Section 4999 of the Internal Revenue Code of 1986, then the amount of the severance benefits will either be reduced, such that the excise tax would not be applicable, or the participant will be entitled to retain his or her full severance benefits, whichever results in the better after-tax position to the participant.
Under the Executive Severance Plan, a participant who undergoes an involuntary termination other than for cause outside of a covered period relating to a change in control will receive, subject to the participant’s execution of a general release of claims:
| • | a lump sum cash payment equal to the participant’s pro-rata bonus for the year in which he or she is terminated; |
| • | cash severance in an amount equal to the participant’s severance multiple, multiplied by the participant’s base salary as in effect on the participant’s termination date; and |
| • | if the participant elects continuation coverage under COBRA, a cash payment equal to the amount obtained by multiplying (i) the monthly cost for continuation coverage under COBRA (as in effect as of the participant’s termination date) for group medical, dental and vision coverage for the participant and his or her dependents immediately before the participant’s termination date by (ii) the number of months represented by the participant’s severance multiple. |
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EXECUTIVE COMPENSATION |
Each of the named executive officers, other than Mr. Cook, who retired effective as of February 28, 2023, has been designated as a participant in the Executive Severance Plan with a severance multiplier of three for termination occurring during a covered period related to a change in control and a severance multiplier of one for termination outside of a covered period. Severance benefits payable under the Executive Severance Plan will replace (and be paid in lieu of) any severance benefits that a participant otherwise is eligible to receive under any other agreements entered into between us and participant, and no participant will be entitled to severance benefits under both the Executive Severance Plan and any other severance arrangement maintained by us. In connection with their participation in the Executive Severance Plan, each of the named executive officers agreed to the termination of his employment or change in control agreement.
The Executive Severance Plan also includes a non-disclosure obligation and an obligation not to solicit our employees or clients for a period of 12 months after the date of the participant’s termination of employment.
EQUITY AWARDS – CONSEQUENCES OF TERMINATION OF EMPLOYMENT
The following table shows how equity awards are treated if a named executive officer terminates employment:
Award Type | Event | Consequences | ||
RSAs | Death | Unvested RSAs immediately vest | ||
| Disability | Unvested RSAs immediately vest upon termination | |||
| Voluntary or involuntary termination | Unvested RSAs are forfeited | |||
| Change in control | No impact absent termination of employment; unvested RSAs immediately vest upon a qualifying termination within 24 months of the change in control(1) | |||
RSUs | Death | Unvested RSUs immediately vest | ||
| Disability | Unvested RSUs immediately vest upon termination | |||
| Involuntary termination for just cause | Unvested RSUs are forfeited | |||
| Involuntary termination without just cause | Unvested RSUs continue to vest on original schedule, subject to execution of general release of claims | |||
| Voluntary termination | Unvested RSUs are forfeited | |||
| Retirement(2) | Unvested RSUs continue to vest on original schedule, subject to execution of general release of claims and covenant not to compete | |||
| Change in control | No impact absent termination of employment; unvested RSUs immediately vest upon a qualifying termination within 24 months of the change in control | |||
PRSUs | 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(2) | PRSUs continue to earn and pay based on actual performance, subject to execution of a general release of claims | |||
| Change in control | 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 | |||
| (1) | For grants prior to 2020, RSAs will immediately vest in the event of termination of employment, other than for just cause, within 12 months of a change in control. |
| (2) | 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. |
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EXECUTIVE COMPENSATION |
OTHER POTENTIAL PAYMENTS
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, 2022 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, 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 UPON TERMINATION OR CHANGE IN CONTROL
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, 2022 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 30, 2022, which was $35.23 per share. In the event of termination for cause or voluntary termination, the named executive officers would receive only their salary through the date of termination.
Name | Death ($) | Disability ($) | Termination ($) | Change in ($) | ||||||||||||||
Daniel J. Schrider | Cash severance(1)(2) | — | — | 875,000 | 4,593,750 | |||||||||||||
Welfare benefits(3) | — | — | 31,654 | 94,961 | ||||||||||||||
Split-dollar life insurance(4) | 2,187,500 | — | — | — | ||||||||||||||
RSAs/RSUs(5) | 749,589 | 749,589 | — | 749,589 | ||||||||||||||
PRSUs(6) | 678,304 | — | — | 678,304 | ||||||||||||||
Philip J. Mantua | Cash severance(1)(2)(7) | — | — | 455,000 | 2,047,500 | |||||||||||||
Welfare benefits(3) | — | — | 31,654 | 94,961 | ||||||||||||||
Split-dollar life insurance(4) | 1,137,500 | — | — | — | ||||||||||||||
RSAs/RSUs(5) | 269,967 | 269,967 | — | 269,967 | ||||||||||||||
PRSUs(6) | 240,343 | — | — | 240,343 | ||||||||||||||
Joseph J. O’Brien, Jr. | Cash severance(1)(2)(7) | — | — | 535,000 | 2,648,250 | |||||||||||||
Welfare benefits(3) | — | — | 31,654 | 94,961 | ||||||||||||||
Split-dollar life insurance(4) | 1,337,500 | — | — | — | ||||||||||||||
RSAs/RSUs(5) | 359,346 | 359,346 | — | 359,346 | ||||||||||||||
PRSUs(6) | 326,196 | — | — | 326,196 | ||||||||||||||
R. Louis Caceres | Cash severance(1)(2) | — | — | 460,000 | 2,139,000 | |||||||||||||
Welfare benefits(3) | — | — | 31,654 | 94,961 | ||||||||||||||
Split-dollar life insurance(4) | 1,150,000 | — | — | — | ||||||||||||||
RSAs/RSUs(5) | 256,193 | 256,193 | — | 256,193 | ||||||||||||||
PRSUs(6) | 229,257 | — | — | 229,257 | ||||||||||||||
| (1) | Amounts are payable under the terms of the Executive Severance Plan. Amounts payable in the event of termination without cause would be paid over one year in accordance with our normal payroll practices. Amounts payable in the event of a qualifying termination following a change in control would be paid in a lump sum. |
| (2) | Amounts listed under “Change in control and qualifying termination” do not reflect the fact that under the Executive Severance Plan 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 may be reduced in certain circumstances so that such tax would not apply. |
| (3) | Amount represents health insurance benefits to be paid under the Executive Severance Plan based upon monthly premiums being paid as of December 31, 2022. |
| (4) | Amounts are payable to the named executive officer’s beneficiaries under split-dollar life insurance agreements that we have entered into with the named executive officers. |
| (5) | Amount represents the value of unvested RSAs and RSUs that would vest upon termination of employment. |
| (6) | 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. |
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EXECUTIVE COMPENSATION |
Value of initial fixed $100 investment (3) based on: | ||||||||||||||||||||||||||||||||
| Year | Summary Compensation Table total for Chief Executive Officer ($) | Compensation actually paid to Chief Executive Officer (1) ($) | Average Summary Compensation Table total for NEOs other than CEO ($) | Average compensation actually paid to NEOs other than CEO (2) ($) | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) | Net Income (000s) ($) | Core ROTCE | ||||||||||||||||||||||||
| 2022 | 2,498,857 | 1,799,152 | 1,201,288 | 939,530 | 103.70 | 106.01 | 166,299 | 14.69% | ||||||||||||||||||||||||
| 2021 | 2,624,843 | 3,921,201 | 1,200,521 | 1,689,467 | 133.72 | 117.08 | 235,107 | 22.04% | ||||||||||||||||||||||||
| 2020 | 2,363,122 | 2,232,193 | 1,010,747 | 971,867 | 88.20 | 87.90 | 96,953 | 13.61% | ||||||||||||||||||||||||
| (1) | Daniel J. Schrider served as President and Chief Executive Officer for each of the years presented in the table. Compensation actually paid to Mr. Schrider for each of the years presented in the table, as calculated in accordance with SEC regulations, was as follows: |
2022 ($) | 2021 ($) | 2020 ($) | ||||||||||
| Total compensation in Summary Compensation Table | 2,498,857 | 2,624,843 | 2,363,122 | |||||||||
| Minus: aggregate change in pension value | — | — | (79,897 | ) | ||||||||
| Minus: stock awards reported in Summary Compensation Table | (850,064 | ) | (742,553 | ) | (684,082 | ) | ||||||
Plus: fair value* at fiscal year-end of unvested stock awards granted during covered fiscal year | 668,630 | 887,076 | 856,358 | |||||||||
Plus/Minus: change in fair value* at fiscal year-end of unvested stock awards granted in any prior fiscal year | (461,827 | ) | 1,043,988 | (86,178 | ) | |||||||
| Plus/Minus: change in fair value at vesting date of stock awards granted in any prior fiscal year | (56,444 | ) | 107,947 | (137,130 | ) | |||||||
| Plus: dividends paid on stock awards not included in total compensation | — | — | — | |||||||||
| Compensation actually paid | 1,799,152 | 3,921,201 | 2,232,193 | |||||||||
| * | We used a Monte Carlo simulation to determine the grant date fair value of the portion of the 2018, 2019 and 2020 equity awards that would vest based on the company’s total shareholder return and revalued those awards as of the end of the first and second years of the performance period using the same valuation methodology for purposes of this table. We remeasured the fair value at the end of the three-year performance period and on the vesting date based on the payout resulting from the company’s actual relative TSR (as previously disclosed) and the closing price of company common stock. The remeasured fair value of the 2018 awards was $32.96 per share as of December 31, 2019. The remeasured fair value of the 2019 awards was $34.70 per share as of December 31, 2019 and $ 34.84 per share as of December 31, 2020. The remeasured fair value of the 2020 awards was $36.40 as of December 31, 2020 and $72.37 as of December 31, 2021. |
| We remeasured the fair value at fiscal year end of the 2018 through 2022 equity awards (or portion thereof) subject to performance conditions based on the probable outcome of the performance conditions as of the last day of the fiscal year and the closing price of company common stock on the last trading day of the year. We remeasured the fair value of such awards on the vesting date based on the payout resulting from the company’s actual performance (as previously disclosed) and the closing price of company common stock. The estimated payout of the portion of the 2018 awards based on cumulative EPS was 100% at December 31, 2019 and December 31, 2020. The estimated payout of the portion of the 2019 awards based on cumulative EPS was 100% at December 31, 2019 and 2020 and 150% at December 31, 2021. The estimated payout of the portion of the 2020 awards based on cumulative EPS was 100% at December 31, 2020, 125% at December 31, 2021 and 140% at December 31, 2022. The estimated payout of the portion of the 2020 awards based on relative ROTCE was 100% at December 31, 2020 and 150% at December 31, 2021 and 2022. The estimated payout of the 2021 awards was 100% at December 31, 2021 and 137% at December 31, 2022. The estimated payout of the 2022 awards was 100% at December 31, 2022. |
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EXECUTIVE COMPENSATION |
| (2) | The named executive officers for each of the years presented in the table were as follows: for 2022 and 2021, Philip J. Mantua, Joseph J. O’Brien, Jr., Kenneth C. Cook and R. Louis Caceres; for 2020, Mr. Mantua, Mr. O’Brien, Mr. Cook and Kevin Slane. The average compensation actually paid to the named executive officers other that the chief executive officer for each of the years presented in the table, as calculated in accordance with SEC regulations, was as follows: |
2022 ($) | 2021 ($) | 2020 ($) | |||||||||||||
| Total compensation in Summary Compensation Table | 1,201,288 | 1,200,521 | 1,010,747 | ||||||||||||
| Minus: aggregate change in pension value | — | — | (8,328 | ) | |||||||||||
| Minus: stock awards reported in Summary Compensation Table | (307,585 | ) | (289,611 | ) | (249,622 | ) | |||||||||
Plus: fair value* at fiscal year-end of unvested stock awards granted during covered fiscal year | 243,395 | 345,996 | 312,513 | ||||||||||||
Plus/Minus: change in fair value* at fiscal year-end of unvested stock awards granted in any prior fiscal year | (178,151 | ) | 393,575 | (46,503 | ) | ||||||||||
| Plus/Minus: change in fair value at vesting date of stock awards granted in any prior fiscal year | (19,417 | ) | 38,988 | (46,941 | ) | ||||||||||
| Plus: dividends paid on stock awards not included in total compensation | — | — | — | ||||||||||||
| Compensation actually paid | 939,530 | 1,689,467 | 971,867 | ||||||||||||
| * | See Note 1 above for information on the remeasurement of fair value of stock awards at fiscal year end and vesting dates. |
| (3) | Cumulative total shareholder return (TSR) assumes an initial investment of $100 as of the market close on December 31, 2019. The peer group used for this purpose is the KBW Nasdaq Regional Bank Index. |
FINANCIAL PERFORMANCE MEASURESCore earnings | ||
Non-GAAP efficiency ratio | ||
Core return on tangible common equity | ||
Core return on average assets | ||
| 52 | | | Notice and Proxy Statement | 2023 |
EXECUTIVE COMPENSATION |
RELATIONSHIP BETWEEN PAY AND FINANCIAL PERFORMANCE
| | Notice and Proxy Statement | 2023 | 53 |
CEO PAY RATIO |
CEO PAY RATIO
We are 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 our 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.
We selected November 3, 201720, 2022 as the determination date for identifying the median employee under Item 402(u) of Regulation S-K. employee. Year-to-date taxable wages paid from January 1, 20172022 to November 3, 201720, 2022 for all employees employed as of the determination date, with the exception of Mr. Schrider, were arrayed from lowest to highest. Wages of newly hired permanent employees were adjusted to represent wages for the entire measurement period. This period captured all incentive payments for the tax year as well as the vesting of equity awards, as applicable. Once the data was complete, theThe median employee was identified, and total compensation for the median employee was calculated according to Item 402(c).in the manner required for the Summary Compensation Table. Mr. Schrider’s total compensation for 20172022, as disclosed in the Summary Compensation Table, was $1,480,686$2,498,857 and the median employee’s was $62,004,$87,157, producing a ratio of 24:29 to 1.
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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
BACKGROUND
Our 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.
This proposal is the same as the Board’s proposal last year, which did not receive a sufficient number of votes despite our adjourning the annual meeting to solicit additional votes. At the 2022 annual meeting, the proposal to declassify the Board (through amendment to Article IX of the Articles of Incorporation) was approved by 77.9% of the outstanding shares, which fell short of the required 80% threshold by a small margin. While the Board’s prior proposal was unsuccessful, the large number of votes that it received indicates that there is substantial shareholder interest in declassifying the Board and providing for the annual election of directors.
The Nominating 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.
TEXT OF THE PROPOSED AMENDMENTS
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. Classified Board Election of Directors. Until the 2023 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 beginning in 1992 with the 2024 annual meeting of shareholders, successors to the class of directors 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. Mitchell
Robert 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. Canby
John Chirtea
Willard H. Derrick
Hunter R. Hollar
(3) The following directors shall be assigned to Class III and shall serve until the 1992 annual meeting of shareholders.
Charles F. Mess
Louisa W. Riggs
Francis Snowden
W. Drew Stabler
| | Notice and Proxy Statement | 2023 | 55 |
PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS |
Nonqualified Deferred Compensation Plans
Executive Incentive Retirement Plan
AllNotwithstanding 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 qualified unless his position on the Board of Directors shall have been abolished by action taken to reduce the size of the named executive officers participateBoard 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 Executive Incentive Retirement Plan (“EIRP”), a deferred compensation plan that replaced supplemental executive retirement agreements (“SERAs”) withnumber of directors shall have the named executive officers. Prior balances carried over fromeffect of shortening the SERAs vest over 15 years and automatically vest uponterm of any incumbent director. Should the executive’s death or disability or upon a change in control. Deferral contributions and earnings paid under the EIRP vest immediately. Earnings on EIRP balances accrue at an interest rate equal to 120%number of directors of the long-term Applicable Federal Rate, adjusted monthly.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.
The executive’s account balance (including vested balances accrued underWhenever the former SERAs) will be distributedholders 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 executive pernumber 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 EIRP following terminationdirector or directors elected by such holders shall expire at the next succeeding annual meeting of employment eithershareholders.
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 lump summajority 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 installments, at the election of the executive. No payments will be made to an executive who is terminated for just cause as defined in the plan. The EIRP provides a minimum, annual contribution of 3% of base salary. Each year, the Compensation Committee determines the performance criteriadirectors. A director so chosen 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 Plan
Under the terms of Sandy Spring Bank Deferred Compensation 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 participant will receive the account balance following the six month anniversary of any separation from service.
The following table summarizes the contributions, earnings and balances for the named executive officers under the EIRP, and earnings from the Sandy Spring Bank Deferred Compensation Plan.
| Executive | Registrant | Aggregate | Aggregate | |||||||||||||||||||
| Contributions in | Contributions in | Earnings in Last | Aggregate | Balance at Last | ||||||||||||||||||
| Last Fiscal Year | Last Fiscal Year | Fiscal Year | withdrawals/ | Fiscal Year End | ||||||||||||||||||
| Executive | Plan Name | (1) | (2) | (3) | Distributions | (4) | ||||||||||||||||
| 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 | |||||||||||||
Agreements with Executives and Potential Payments Upon Termination or Change in Control
Daniel J. Schrider
The Company and the Bank have an employment agreement with Mr. Schrider to provide for his employment as President and CEO. The initial term of the agreement was for three years and provides that the board of directors 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. The agreement addresses such matters as Mr. Schrider’s base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.
There is no specific compensation provision under Mr. Schrider’s agreement for termination due to retirement, death, or voluntary resignation. Should Mr. Schrider become disabled, the board must provide written notice 30 days in advance of termination. Mr. Schrider will receive his full base salary, benefits, and any perquisites other than bonus during the time of incapacity leading up to the date of termination less any benefits paid under existing disability plans. For termination by Mr. Schrider with good reason or involuntary termination by the Company or Bank without just cause, Mr. Schrider will receive his base salary and medical benefitsshareholders shall hold office for the remainder of the term of the agreement.
Inclass to which the eventdirector is assigned. A director elected by the Board of Directors shareholders to fill a vacancy resulting from the removal of a change in control duringdirector shall hold office for the remainder of the term of the agreement, 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 thereafter, if Mr. Schrider’s employmentuntil his or her successor is terminated without just cause or he terminates his employmentelected and qualifies.
REASONS FOR THE PROPOSED AMENDMENTS
The Nominating and 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 Nominating and Governance Committee and the Board have, from time to time, reviewed the classified board structure.
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 our vulnerability to coercive takeover tactics. The Board also recognizes the strong 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 good reason, as definedclassified boards continues to decline), the Board has determined that it is in the agreement, he will receive a lump-sum payment equal to three times his average annual compensation for the past five years preceding the change in control and medical benefits for the remaining termbest interests of the agreement.company and our shareholders to declassify the Board and recommends that shareholders approve the proposed amendments to effectuate the declassification.
EFFECT OF THE PROPOSED AMENDMENTS
Mr. Schrider’s agreement does not entitle him to receive any tax indemnification payments (a “gross-up”) if payments under his employment agreement or any other payments trigger liability under Sections 280G and 4999 ofIf the Internal Revenue Code for an excise tax on “excess parachute payments.” If any payments to Mr. Schrider trigger such excise tax, heproposed amendments are approved, the current classified board structure will be entitled to receive the greater of the following, whichever gives him the highest net after-tax amount: (a) the full payments and benefits provided for under the agreement, in which case he would be responsible for any resulting excise tax, or (b) one dollar less than the amount that would subject him to the excise tax.
Under the terms of his agreement, Mr. Schrider is prohibited from conflicts of interest, and is required to maintain the confidentiality of nonpublic information regarding the Company and its clients. He is also bound byphased out over a covenant not to compete for one year and not to solicit employees for two years following termination of employment, except in the event of a change in control.
Philip J. Mantua
The Company and the Bank entered into an employment agreement with Mr. Mantua on January 13, 2012 to provide for his employment as chief financial officer. The term of the present 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. Mantua’s agreement does not automatically renew. The agreement addresses such matters as Mr. Mantua’s base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.
Mr. Mantua's employment agreement does not provide for any special or additional compensation in the event of termination due to retirement, death or resignation. For termination due to disability, Mr. Mantua will receive base compensation, less any applicable disability benefits, and benefits for the remaining term of the agreement. For termination by the Company without just cause, or termination by Mr. Mantua with good reason, as defined in the agreement, Mr. Mantua will receive his base salary for the remaining term of the agreementthree-year period beginning at the highest2024 annual rate paid in the 12 months preceding the termination plus annual cash bonuses as a lump sum payment.
If, in connection with a change in control, as defined by Section 409Ameeting of the Internal Revenue Code, Mr. Mantua’s employment is terminated, either involuntarily without just cause or voluntarily with good reason, within six monthsshareholders. Directors elected to three-year terms prior to the change in control or up to two years aftereffectiveness of the change in control, heproposed amendment (including the directors elected at this annual meeting) will receive a lump-sum payment equal to 2.99 timescomplete those terms. Beginning with the sum2024 annual meeting, directors will stand for election on an annual basis for one-year terms. Beginning with the 2026 annual meeting of his annual salary atshareholders, all directors will stand for election annually and the highest rate paid in the preceding 12 months plus the amount of any other compensation received for the past 12 months. Mr. Mantua would also receive the continuation of health benefits including life and disability insurances for a period of three years following termination. Board will no longer be classified.
If the total value of the benefits provided and payments made to Mr. Mantua 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.
Mr. Mantua is prohibited from conflicts of interest, and is required to maintain the confidentiality of nonpublic information regarding the Company and its clients. He is also bound by a covenant not to compete and not to interfere with other employees following termination of employment for the remaining term of the agreement. The post-termination restrictions do not apply if there is a change in control or if the executive's employment is terminated without just cause by the Company or with good reason by the executive.
Joseph J. O’Brien, Jr.
The Company and the Bank entered into an employment agreement with Mr. O’Brien on January 13, 2012 to provide for his employment as Executive Vice President for Commercial and Retail Banking. The present term of the agreement ends on June 30, 2019. Effective July 1, 2013, and continuing on each July 1 thereafter, the board of directors may take action to extend the term for an additional year so that the remaining term becomes two years. Mr. O’Brien’s agreement does not automatically renew. The agreement addresses such matters as Mr. O’Brien’s base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.
Mr. O’Brien's employment agreement does not provide for any special or additional compensation in the event of termination due to retirement, death or resignation. For termination due to disability, Mr. O’Brien will receive base compensation, less any applicable disability benefits, and benefits for the remaining term of the agreement. For termination by the Company without just cause, or termination by Mr. O’Brien with good reason, as defined in the agreement, Mr. O’Brien will receive his base salary for the remaining term of the agreement at the highest annual rate paid in the 12 months preceding the termination plus annual cash bonuses as a lump sum payment.
If, in connection with a change in control, as defined by Section 409A of the Internal Revenue Code, Mr. O’Brien’s employment is terminated, either involuntarily without just cause or voluntarily with good reason, within six months priorproposed amendments to the change in control or upArticles of Incorporation to two years afterdeclassify the change in control, he will receive a lump-sum payment equal to 2.99 timesBoard are not approved by our shareholders, the sumArticles 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.
Mr. O’Brien is prohibited from conflicts of interest, and is required to maintain the confidentiality of nonpublic information regarding the Company and its clients. He is also bound by a covenant not to compete and not to interfere with other employees following termination of employment for the remaining term of the agreement. The post-termination restrictions do not apply if there is a change in control or if the executive's employment is terminated without just cause by the Company or with good reason by the executive.
R. Louis Caceres and Ronald E. Kuykendall
Mr. Caceres and Mr. Kuykendall each have a change in control severance agreement with the Company and the Bank. The change in control agreement has a term of two years, also known as the “Covered Period.” On each anniversary date of the agreement, the agreement will automatically be extended for an additional year, unless either party has given written notice at least 60 days prior to the anniversary date of the agreement that the agreementIncorporation will not be extended.amended as set forth above and the Board will continue to be classified with directors serving staggered, three-year terms.
REQUIRED VOTE
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.
If a change in control occurs and the executive’s employment is involuntarily terminated without just cause or the executive voluntarily terminates employment with good reason, as defined in the agreement, during the Covered Period, the executive will be entitled to a payment equal to 2.99 times his total compensation, which is defined as one year’s base salary plus bonus payments and all other taxable compensation. The executive would also receive the continuation of health benefits, including life and disability insurances, for a period of three years following termination. Under the change in control agreements, if the total value of the benefits provided and payments made to the executive in connection with a change in control, either under the change in control agreement alone or together with other payments and benefits that he has the right to receive, would result in the imposition of an excise tax under Section 280G of the Internal Revenue Code, his severance payment will be reduced or revised so that the aggregate payments do not trigger the payment of the excise tax.
Potential Payments Upon Termination or Change in Control
The following table summarizes the estimated payments to which the named executive officers were entitled upon termination as of December 31, 2017. 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 | ||||||||||
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| | Notice and Proxy Statement | 2023 |
PROPOSAL 3: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTE REQUIREMENT FOR CERTAIN AMENDMENTS |
PROPOSAL 3:
APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTE REQUIREMENT FOR CERTAIN AMENDMENTS
BACKGROUND
The company’s Articles of Incorporation currently require the affirmative vote of the holders of not less than 80 percent of the outstanding shares of capital stock of the company entitled to vote generally in the election of directors, voting together as a single class, to repeal, alter, amend or rescind the provisions of Article VI (authorization of issuance of stock), Article IX (directors), Article XII (approval of certain transactions), Article XIII (approval of business combinations with controlling parties), Article XIV (evaluation of business combinations) and Article XIX (amendment of Articles of Incorporation).
At this annual meeting, our shareholders are being asked to approve and adopt a proposal to amend the Articles of Incorporation to eliminate the supermajority requirement for amendment of certain provisions of the Articles of Incorporation and require only a majority of all votes entitled to be cast on the matter to amend all provisions of the Articles of Incorporation.
The Nominating and Governance Committee considered and then recommended to the Board the proposed amendments to the company’s Articles of Incorporation. 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.
TEXT OF THE PROPOSED AMENDMENTS
ARTICLE XIX of the Articles of Incorporation would be amended to read as follows. Additions are indicated in double underline, and deletions are indicated in strikethrough.
The Corporation reserves the right to repeal, alter, amend or rescind any provision contained in these Articles in the manner now or hereafter prescribed by law, and all rights conferred on shareholders herein are granted subject to this reservation. Notwithstanding the foregoing, the provisions set forth in Articles VI, IX, XII, XIII, XIV and this Article XIX of these Articles may not be repealed, altered, amended or rescinded in any respect unless the same Any amendment of these Articles shall be valid and effective if such amendment is approved by the affirmative vote of the holders of not less than eighty percent (80%) a majority of the outstanding shares of capital stock of the Corporation all the votes entitled to vote generally in the election of directors (considered for this purpose as a single class) be cast on the matterat a meeting of the shareholders called for that purpose (provided that notice of such proposed adoption, repeal, alteration, amendment or rescission is included in the notice of such meeting).
REASONS FOR THE PROPOSED AMENDMENTS
The Nominating and 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 Board has determined that requiring only a majority of all votes entitled to be cast on the matter to amend all provisions of the Articles of Incorporation is in the best interests of the company and our shareholders. Accordingly, the Board has directed that these amendments be submitted to the shareholders for their consideration and has recommended that the shareholders approve the proposed amendments.
REQUIRED VOTE
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.
| | Notice and Proxy Statement | 2023 | 57 |
PROPOSAL 4: ADVISORY VOTE TO APPROVE THE COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS |
PROPOSAL 2: A Non-Binding Resolution to Approve the Compensation4:
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 boardBoard recommended and the shareholders elected to have this proposal submitted annually.
This proposal, commonly known as a “Say“say on Pay”pay” proposal, gives our shareholders the opportunity to endorse or not endorse the executive compensation program and policies through the following resolution:
“Resolved, that the shareholders approve the compensation of the named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and related material in this proxy statement.”
This vote will not be binding on the board of directorsBoard and may not be construed as overruling a decision by the 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.
The board of directorsBoard believes that theour compensation practices of the Company are designed to accomplish the objectives described in the Compensation Discussion and Analysis and that they are appropriately aligned to thewith our long-term success of the Company and the interests of shareholders.
Voting Standard VOTING STANDARD
This matter will be decided by the affirmative vote of a majority of the votes cast at the annual meeting. On this matter, abstentions and broker non-votes will have no effect on the voting. Accordingly, it is particularly important that beneficial owners of our stock instruct their brokers or nominees how to vote their shares.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVALTHIS PROPOSAL.
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| | Notice and Proxy Statement | 2023 |
PROPOSAL 5: ADVISORY VOTE ON THE FREQUENCY OF FUTURE VOTES TO APPROVE THE COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS |
PROPOSAL 5:
ADVISORY VOTE ON THE FREQUENCY OF FUTURE VOTES TO APPROVE THE COMPENSATION OFFOR THE NAMED EXECUTIVE OFFICERS.
PROPOSAL 3: An amendment to the articles of incorporation to increase authorized capital stock from 50,000,000 shares to 100,000,000 shares
OFFICERS
The boardDodd-Frank Wall Street Reform and Protection Act requires companies to submit to shareholders a non-binding vote on the frequency of directors is seeking shareholder approval forof compensation of the named executive officers. At least every six years, shareholders will be given the opportunity to vote on whether the “say on pay” resolution (presented in Proposal 4 above) should be held every one, two, or three years. In 2017, the Board recommended and the shareholders elected to have the “say on pay” proposal submitted annually.
The Board is asking shareholders to indicate their preferred voting frequency of either every one, two or three years. The Board has determined that an amendmentannual “say on pay” vote will allow shareholders 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 issuanceprovide timely, direct input on our executive compensation philosophy, policies and practices as disclosed in the future. The board believesproxy statement each year, and recommends that shareholders select a frequency of every one year. As an advisory vote, the proposed increase in authorized capital stock is in the best interestresults of the Company.vote on this proposal are not binding on the Board.
Amendment
The board proposes to amend the first sentence of Article V of the articles of incorporation to read in its entirety as follows:
“The aggregate number of shares of all classes of capital stock which the corporation has authority to issue is 100,000,000 shares of capital stock, $1.00 par value per share, amounting in aggregate par value to $100,000,000.”
Purpose of the Amendment
The articles of incorporation currently authorize the issuance of up to 50,000,000 shares of capital stock. All of the authorized shares are initially classified as common stock. As of the record date, the Company had 35,644,141 shares of common stock outstanding and 2,650,843 shares of common stock reserved for issuance to directors, officers, employees and shareholders under various compensation and benefit plans which leaves 11,705,016 authorized, unissued and unreserved shares available for issuance in capital raising transactions, stock splits, stock dividends, or other corporate purposes.
In the future the Company may issue capital stock in connection with, among other things, corporate acquisitions and other transactions, stock splits, stock dividends, and existing and future benefit plans. While the Company currently does not have any plans to issue additional capital stock (other than pursuant to various compensation and benefit plans currently in existence), the board may determine that the issuance of additional stock in the future, either in connection with a corporate acquisition or otherwise, is in the best interests of the Company. In that event, the Company could need a substantial amount of capital stock available for issuance, and the 11,705,016 shares available as of the record date could be insufficient. As a result, the board is proposing an amendment of the articles of incorporation to increase the authorized capital stock from 50,000,000 shares to 100,000,000 shares, which would increase the authorized unissued and unreserved capital stock available for issuance from 11,705,016 to 61,705,016 shares.
Authorized, unissued and unreserved capital stock may be issued from time to time for any proper purpose without further action of the shareholders, except as required by the articles of incorporation and applicable law. Each share of common stock authorized for issuance has the same rights as, and is identical in all respects to, each other share of common stock. The newly authorized shares of common stock will not affect the rights, such as voting and liquidation rights, of the shares of common stock currently outstanding. Shareholders will not have preemptive rights to purchase any subsequently issued shares of capital stock.
The Company’s articles of incorporation authorize the board, without further shareholder action, to classify and reclassify any unissued shares of capital stock into a class or classes of preferred stock and to provide for the issuance of the shares of preferred stock in series, and by filing articles supplementary to the articles of incorporation pursuant to the applicable law of the State of Maryland, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. Preferred stock may be issued with preferences and designations as the board may from time to time determine. The board may, without shareholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the Company’s common stock.
If the authorized, unissued and unreserved capital stock is not increased, the Company may not be able to promptly respond to its capital or transactional needs. The delay necessary in obtaining shareholder approval could be detrimental to the Company and its shareholders in pursuing opportunities or responding to market conditions. The board does not intend to issue any additional shares of capital stock except on terms which it deems in the best interests of the Company and its shareholders.
Voting Standard VOTING STANDARD
This matter will be decided by the affirmative vote of two-thirdsa majority of the outstanding shares entitled to votevotes cast at the annual meeting. Shareholders may vote for the frequency of “One Year,” “Two Years,” or “Three Years” or may “Abstain.” Because this proposal has three choices, it is possible that no choice will receive a majority of the votes cast. Therefore, the Board will consider the choice that receives the highest number of votes as the choice supported by shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”FOR EVERY “ONE YEAR” AS THE PREFERRED FREQUENCY FOR THE ADVISORY VOTE ON THE APPROVAL OF COMPENSATION FOR THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATIONNAMED EXECUTIVE OFFICERS.
PROPOSAL 6: RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
PROPOSAL 4: 6:
RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The RatificationAudit Committee of the AppointmentBoard is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our financial statements. The committee has appointed Ernst & Young LLP to serve as the Independent Registered Public Accounting Firm for the Year 2018
The Audit Committee (“the committee” in this section) has engaged Ernst & Young LLP (“Ernst & Young”) as the Company’sour independent registered public accounting firm for the year 2018.fiscal 2023. 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.
2024.
In reaching its decision to engage Ernst & Young LLP, the Audit Committeecommittee considered the independence factors, the length of the audit firm’s tenure as the Company’sour 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 2018.2023.
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.
committee.
Representatives of Ernst & Young 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 Standard
In voting to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2018, shareholders may vote for the proposal, against the proposal or abstain from voting. This matter will be decided by the majority of the votes cast at the annual meeting. On this matter, abstentions will have no effect on the voting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2018.“FOR” THIS PROPOSAL.
AUDIT AND NON-AUDIT FEES
The following table presents fees for professional audit services rendered for the audit of theour annual financial statements of the Company and subsidiaries by Ernst & Young LLP for the years ended December 31, 20162022 and December 31, 20172021, 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 | ||||
2022 ($) | 2021 ($) | |||||||
Audit Fees | 1,577,000 | 1,050,000 | ||||||
Audit-Related Fees | — | — | ||||||
Tax Services | 187,766 | 279,000 | ||||||
All Other Fees | 50,000 | — | ||||||
Total | 1,814,766 | 1,329,000 | ||||||
“Audit Fees” consist of fees for professional services rendered for the annual audit of our consolidated financial statements, including the integrated audit of internal control over financial reporting, review of financial statements included in our quarterly reports on Form 10-Q, review services, consents and comfort letters in connection with securities offerings, and services normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.
“Tax Services” consist of 1099 processing fees for trust clients of Sandy Spring Bank.
“All Other Fees” consist of fees for permissible services not related to financial reporting.
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| | Notice and |
PROPOSAL 6: RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Audit Committee's Preapproval Policies and Procedures for Audit and Non-Audit Services
AUDIT COMMITTEE’S PREAPPROVAL POLICIES AND PROCEDURES
The Audit Committeecommittee is required to pre-approve all auditing services and permitted non-audit services provided by the Company’sour 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 |
| • | such services were not recognized by the |
All audit services, tax services and permitted non-audit services to be performed by Ernst & Young LLP have been preapproved by the Audit Committeecommittee as required by SEC regulations and the Audit Committee'scommittee’s charter without exception. The Committeecommittee also has determined that the amount and nature of non-audit services rendered by Ernst & Young LLP to the Companycompany is consistent with its independence.
AUDIT COMMITTEE REPORT |
AUDIT COMMITTEE REPORT
The Audit Committee of the Audit Committee
The 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.
All 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.
department.
The Committeecommittee is directly responsible for the appointment and oversight of the independent registered public accounting firm, including review of their general qualifications, specific experience in the financial sector, and compensation structure. The Committeecommittee has engaged Ernst & Young LLP since 2013.
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 2017,2022, 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 LLP the scope and effectiveness of the |
| • | reviewed and discussed the |
| • | discussed with Ernst & Young |
| • | met with Ernst & Young LLP, with and without members of management present, to discuss the results of their evaluation of the integrity of the |
| • | 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 |
| • | reviewed and monitored compliance with the “whistleblower” provisions of the Sarbanes-Oxley Act. |
Based upon the review, discussion, disclosures,reviews and materialsdiscussions described above, the Committee recommendscommittee recommended to the 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, 2017.2022.
February 14, 2023 Pamela A. Little, Chair
Brian J. Lemek
Walter C. Martz II
Mark C. Micklem
Robert L. Orndorff
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| | Notice and Proxy Statement | 2023 |
INFORMATION ABOUT THE MEETING |
INFORMATION ABOUT THE MEETING
General InformationATTENDING THE MEETING
NoticeAll holders of Sandy Spring stock as of the record date (March 8, 2023) and Accessibility of Proxy Materials
For our 2018persons holding valid proxies from such shareholders are invited to attend the annual meeting. To gain entrance to the annual meeting, to save significant printing and mailing expenses, the Company is furnishing its proxy statement and annual report via the Internet according to the SEC rules for “Notice and Access.” On March 14, 2018, the Company mailedyou must present valid, government-issued photo identification. If you are not a Noticeshareholder of Internet Availabilityrecord, you must also present evidence 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 receiptownership of Sandy Spring stock as of the Notice, shareholders may chooserecord date.
VOTING MATTERS
Shares Entitled to request a printed copyVote. Holders of proxy materials at no charge, and this preference will be maintained for future mailings.
To further reduce costs, the Company utilizes the householding rules of the SEC that permit the delivery of one set of proxy materials or notice of availability of these materials to shareholders who have the same address. If you wish to receive a separate copy of this proxy statement and annual report or notice of availability of these materials for each shareholder at your household, please follow the instructions on the Notice, and materials will be mailed to you at no charge. If a broker, or other nominee, holds your shares, please contact your broker or nominee directly.
Who Can Vote and What Constitutes a Quorum
Shareholders of CompanySandy Spring common stock, par value $1.00 per share, as of the close of business on the Record Date may vote. Each sharerecord date of common stock is entitledMarch 8, 2023 are eligible to one vote. As ofvote at the Record Date 35,644,141annual meeting. On that date, 44,820,452 shares of common stock were outstanding and eligible to vote. When you exercise your rightEach share of common stock entitles the holder to one vote you authorizeon the persons named as proxiesitems of business to vote your shares per your instructions whether or not you attendbe considered at the annual meeting.
Quorum Requirements. The presence, in person or by proxy, of at leastholders of a majority of the total number ofour outstanding shares of common stock is necessaryrequired to constitute a quorum for the transaction of business at the annual meeting. Proxies markedShareholders who deliver valid proxies or attend the meeting in person 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 abstentionspresent at the meeting shares present but not voting, shares for which we have received proxies but for which holders have abstained from voting, and proxies forbroker “non-votes” (explained below).
Voting Procedures. You may vote your shares held in one of several ways, depending upon how you own your shares.
If you are a shareholder of record, meaning that you hold Sandy Spring stock directly (not through a bank, broker or other nominee), you may vote in person at the nameannual meeting or by submitting your proxy in any one of following ways:
| • | Voting on the internet. Go to www.envisionreports.com/sasr and follow the instructions. You will need to have your control number (from your proxy card) with you when you go to the website. |
| • | Voting by telephone. Call the phone number on your proxy card 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. |
If you are abeneficial holder, meaning that you hold your shares through a bank, broker or other nominee, marked as not voted (broker non-votes) will be counted only for purposesyou must follow the voting instructions you receive from the holder 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 wantrecord to vote your shares, we will vote your shares in accordance with the recommendations of the board.shares. If your sharesyou are held with the Company’s transfer agent, Computershare, or in an employee benefit plan,a beneficial owner and you do not returnwould like to vote in person at the meeting, you must also present a written legal proxy from your proxy, no votes will be cast on your behalf.
The board of directors does not know of anybroker, bank, or 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.
nominee.
If you hold your 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, 3, 4 and 3.5. 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)6).
If you have questions or need assistance in voting your shares, please call our proxy solicitor, Georgeson LLC, at 866-357-4029 (toll free).
TelephoneAll 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 our transfer agent, Computershare, and Internet Votingyou do not return your proxy, no votes will be cast on your behalf.
We are pleasedEmployee 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 offer our shareholdersPrincipal Trust Company, the convenience of votingtrustee for the 401(k) plan by internet, telephone, and Internet. Please refer to your Notice or proxy card for the shares to be voted according to your instructions. If you hold your sharesYour voting instructions to the trustee will be held in street name, your broker may allow youstrict confidence. The deadline to provide voting instructions by telephonefor shares held in the 401(k) plan is May 19, 2023, at 11:59 p.m., Eastern Time. After the voting instruction deadline, you will not be able to submit voting instructions or viachange prior voting instructions for any shares. If you do not direct the Internet. Please refertrustee 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 provided by your broker.it receives from other participants as of the voting instruction deadline.
VOTES REQUIRED
| • | Proposal 1: Election of Directors. In an uncontested election, nominees for election as directors will be elected to the Board if the votes cast “for” the nominee’s election exceed the votes cast “against” his or her election. Pursuant to our Articles of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. If an incumbent director nominee does not receive the required votes for election, |
| | Notice and Proxy Statement | 2023 | 63 |
INFORMATION ABOUT THE MEETING |
the director is required to immediately tender their resignation from the Board. Upon receipt of the director’s resignation, the Nominating and Governance Committee will make a recommendation to the Board about whether to accept or reject the resignation. The Board will promptly disclose its decision regarding the resignation and the basis for the decision. |
| • | Proposal 2: Amendment of Articles of Incorporation to declassify the Board. 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: Amendment of Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments. The amendments to the Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments 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 4: 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 5: Advisory vote on frequency of shareholder vote on executive compensation. The advisory vote on the frequency of the shareholder vote on compensation of the named executive officers disclosed in the proxy statement will be decided by the vote of a majority of the votes cast at the annual meeting. Shareholders may vote for the frequency of “One Year,” “Two Years,” or “Three Years” or may “Abstain.” Because this proposal has three choices, it is possible that no choice will receive a majority of the votes cast. Therefore, the Board will consider the choice that receives the highest number of votes as the choice supported by shareholders. |
| • | Proposal 6: 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 2023 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 Attendcast a vote are not considered “votes cast” and will therefore have no effect on the Meeting In Personvoting outcome of the election of directors, the advisory vote on executive compensation, the advisory vote on the frequency of the shareholder 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 Whatfailure to Bringcast a vote will have the same effect as a vote “against” amendment of the Articles of Incorporation in Proposal 2 and 3.
All shareholders will be asked to check-inA “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 registration desk prior to admittance tomeeting. This typically occurs when the meeting. Shareholders who own Company stock throughregistered 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 nominee, will needitems. Brokers and other share custodians do not have discretion to bring a statement as proofvote on non-routine matters unless the beneficial owner of ownership along with photo identification. No camerasthe shares has given explicit voting instructions. Consequently, if you do not give your broker or recording equipment will be permitted in the meeting, and all cell phones must be turned off. If you holdshare custodian explicit voting instructions, your shares throughwill 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 2023 is considered a routine matter and, as such, your broker or other nominee, and you wishshare custodian of record is entitled to vote your shares on such proposal in personits 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, you will need to ask the holder formeeting. A shareholder may revoke a legal proxy. You will need to bring the legal proxy with you to the meeting and turn it in withby delivering a signed ballot that will be providedstatement to you at the meeting.
Your presence atour Corporate Secretary prior to the annual meeting will not automatically revoke your proxy. However, you may revoke your proxy at any time prior to its exerciseor by 1) filing a written notice of revocation with Ronald E. Kuykendall, General Counsel and Secretary; or 2) delivering a dulyan executed proxy bearing a later date;date (including a proxy given by internet or 3) attendingtelephone). You may also revoke a previously issued proxy by voting at the annual meetingmeeting.
DELIVERY OF PROXY MATERIALS
To reduce the expenses of delivering duplicate proxy materials to shareholders, we rely on SEC rules that permit us to deliver a single proxy statement and castingannual report with separate proxy cards 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 our proxy material and wish to receive only one paper copy or (2) you share an address with another registered holder, received a ballotsingle set of our proxy materials, and would like to receive separate copies, you may request a change in person.delivery preferences by telephoning our transfer agent at 1-800-368-5948 or writing the transfer agent at Computershare Trust Company, P.O. Box 43078, Providence, RI 02940.
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 nominee.
Costs of Proxy Solicitation COSTS OF PROXY SOLICITATION
TheWe will pay 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
64 |
| | Notice and Proxy Statement | 2023 |
INFORMATION ABOUT THE MEETING |
proxies. In addition, we have engaged Georgeson LLC to assist us in soliciting proxies at an estimated cost of $9,500 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.
PROPOSALS FOR THE 2024 ANNUAL MEETING OF SHAREHOLDERS
Tabulation of Votes and Public Announcement of Results
The board of directors has appointed the Company’s transfer agent, Computershare,Under SEC Rule 14a-8, 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 Communications
From time to time, individual shareholders may wish to submit proposals that they believe should be voted upon by the shareholders. The SEC has adopted regulations that govern the inclusion of such proposalsincluded in the Company's annual proxy materials. Shareholder proposals intended to be presented atstatement for the 20192024 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.
In addition, the Company's bylaws require that to be properly brought before an annual meeting, shareholder proposals for new business must be delivered to or mailed and received by the secretary not less than thirty nor more than ninety days prior to the date of the meeting; provided, however, that if less than forty-five days’ notice of the date of the meeting is given to shareholders, such notice by a shareholder must be received not later than the fifteenth day following the date on which notice of the date of the meeting was mailed to shareholders or two days before the date of the meeting, whichever is earlier. Each such notice given by a shareholder must set forth certain information specified in the bylaws concerning the shareholder and the business proposed to be brought before the meeting.
Shareholders also may nominate candidates for election as a director, provided that such nominations are made in writing and received at the Company’s executive offices not later than December 14, 2018. 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 13, 2023, and must include, concerningcomply with SEC Rule 14a-8 in order for the proposal to be considered for inclusion in our proxy statement. Simply submitting a proposal does not guarantee that it will be included.
In addition, under our Bylaws, if a shareholder wishes to present nominations for director 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.
If the 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 at the annual meeting. A vote for a person who hasdisregarded and such proposed business shall not been duly nominated pursuant to these requirements will be deemed to be void.transacted.
Shareholders may communicateTo comply with the boarduniversal proxy rules, shareholders who intend to solicit in support of director nominees other than the company’s nominees must provide a notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended, by no later than March 25, 2024.
COMMUNICATION WITH OUR BOARD
Communications to the Board 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 group, or any individual director or directors. Communications also may be sent by addressing correspondenceemail to ir@sandyspringbank.com.
OTHER BUSINESS
In the event that any matter not described herein is properly presented for a shareholder vote at the annual meeting, or any adjournment thereof, the persons named in the form of proxy will vote in accordance with their best judgment. At the time this proxy statement went to print, we knew of no other matters that might be presented for shareholder action at the annual meeting.
| | Notice and Proxy Statement | 2023 | 65 |
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 our performance under our 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 our 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 following:
| • | Core earnings. Core earnings and the related measures of core return on tangible common equity and core return on average assets reflect net income exclusive of merger, acquisition and disposal expense, amortization of intangible assets, contingent payment expense, gain on disposal of assets and investment securities losses, on a net of tax basis. |
| • | 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, contingent payment expense, and merger, acquisition and disposal expense, adjusts net interest income to include tax-equivalent income, and adjusts non-interest income to exclude gain on disposal of assets and investment securities losses. |
| • | Adjusted EPS. Adjusted earnings and the related measure of adjusted earnings per share reflect net income exclusive of merger, acquisition and disposal expense, branch closing costs, contingent payment expense, loss on early redemption of FHLB borrowings, and merger-related provision for credit losses, 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 board or such directorapplicable amounts measured in care of the secretary at the Company's main office by mail, courier, or facsimile or by e-mail through the Company’s "contact us" feature of the investor relations area of its web site atwww.sandyspringbank.com.accordance with GAAP.
CORE EARNINGS AND CORE ROTCE
(In thousands) | 2022 | |||||||
Net income (a) | $166,299 | |||||||
Plus/(less) non-GAAP adjustments (net of tax1): | ||||||||
Merger, acquisition and disposal expense | 796 | |||||||
Amortization of intangible assets | 4,333 | |||||||
Contingent payment expense | 929 | |||||||
Gain on disposal of assets | (12,309) | |||||||
Investment securities losses | 257 | |||||||
Core earnings (b) | $160,305 | |||||||
Average total stockholders’ equity | $1,480,198 | |||||||
Average goodwill | 366,244 | |||||||
Average other intangible assets, net | 23,009 | |||||||
Average tangible common equity (c) | $1,090,945 | |||||||
Return on average tangible common equity (GAAP) (a ÷ c) | 15.24% | |||||||
Core return on average tangible common equity (non-GAAP) (b ÷ c) | 14.69% | |||||||
Net of |
|  | | Notice and Proxy Statement | 2023 | A-1 |
ANNEX A: NON-GAAP FINANCIAL MEASURES |
NON-GAAP EFFICIENCY RATIO
(Dollars in thousands) | 2022 | |||||||
Non-interest expense (a) | $257,293 | |||||||
Less non-GAAP adjustments: | ||||||||
Amortization of intangible assets | 5,814 | |||||||
Contingent payment expense | 1,247 | |||||||
Merger, acquisition and disposal expense | 1,068 | |||||||
Non-interest expense – as adjusted (b) | $249,164 | |||||||
Net interest income plus non-interest income (c) | $514,023 | |||||||
Plus non-GAAP adjustment: | ||||||||
Tax-equivalent income | 3,841 | |||||||
Investment securities losses | 345 | |||||||
Less non-GAAP adjustment: | ||||||||
Gain on disposal of assets | 16,516 | |||||||
Net interest income plus non-interest income – as adjusted (d) | $501,693 | |||||||
Efficiency ratio (GAAP) (a ÷ c) | 50.05% | |||||||
Efficiency ratio (non-GAAP) (b ÷ d) | 49.66% | |||||||
3-YEAR ADJUSTED CUMULATIVE EPS
(In thousands, except per share data) | 2022 | 2021 | 2020 | |||||||||
Net income | $166,298 | $235,107 | $96,953 | |||||||||
Plus non-GAAP adjustments (net of tax): | ||||||||||||
Merger, acquisition and disposal expense | 796 | 34 | 19,614 | |||||||||
Branch closing costs | 1,944 | 712 | ||||||||||
Contingent payment expense | 929 | — | — | |||||||||
Loss on FHLB redemption | — | 6,779 | 4,619 | |||||||||
Gain on sale of assets | (12,309 | ) | — | — | ||||||||
Merger-related provision for credit losses | — | — | 13,636 | |||||||||
|
|
|
|
|
| |||||||
Net income – as adjusted | $155,714 | $243,864 | $135,534 | |||||||||
|
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| |||||||
Diluted weighted average common shares | 45,039 | 46,899 | 44,132 | |||||||||
Diluted net income per common share (GAAP) | $3.68 | $4.98 | $2.19 | |||||||||
Diluted net income per common share – as adjusted (non-GAAP) | $3.46 | $5.20 | $3.05 | |||||||||
A-2 |
| | Notice and Proxy Statement | 2023 |
ANNEX A: NON-GAAP FINANCIAL MEASURES |
CORE ROAA
(Dollars in thousands) | 2022 | |||||||
Net income (a) | $166,299 | |||||||
Plus/(less) non-GAAP adjustments (net of tax1): | ||||||||
Merger, acquisition and disposal expense | 844 | |||||||
Amortization of intangible assets | 4,593 | |||||||
Contingent payment expense | 985 | |||||||
Gain on disposal of assets | (13,048) | |||||||
Investment securities gains | 273 | |||||||
Core income (non-GAAP) (b) | $159,946 | |||||||
Average assets (c) | $13,218,824 | |||||||
Return on average assets (GAAP) (a ÷ c) | 1.26% | |||||||
Core return on average assets (non-GAAP) (b ÷ c) | 1.21% | |||||||
| (1) | Net of federal tax only for comparability to peer group. |
| | Notice and Proxy Statement | 2023 | A-3 |
IMPORTANT ANNUAL MEETING INFORMATION 000004 ENDORSEMENT_LINE______________ SACKPACK_____________Sandy Spring Bancorp Your vote matters–here’s how to vote! MR A SAMPLE You may vote online or by phone instead of mailing this card. DESIGNATION (IF ANY) Votes submitted electronically must be ADD 1 ADD 2 received by 1:00am, Eastern Time, on ADD 3 May 24, 2023. ADD 4 ADD 5 Online ADD 6 C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on April 25, 2018. Vote by Internet • Go to www.envisionreports.com/sasr • 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! Using a black ink pen, mark your votes with an X as shown in this example. Sign up for electronic delivery at Please do not write outside the designated areas. www.envisionreports.com/SASR 2023 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. q A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2, 3, 4 and 6 and for EVERY 1 YEAR on Proposal 2, Proposal 3, and Proposal 4.5. + 1. Election of DirectorsDirectors: For Withhold 01 - Ralph F. Boyd, Jr. 04 - Robert L. Orndorff 07 - Shaza L. AndersenAgainst Abstain For Withhold 02 - Joseph S. Bracewell, III 05 - DanielAgainst Abstain For Against Abstain 01—Mark E. Friis 02—Brian J. SchriderLemek 03—Pamela A. Little 04—Craig A. Ruppert 05—Kenneth C. Cook For Withhold 03 - Mark C. Michael 06 - Joe R. ReederAgainst Abstain For Against Abstain 2. A non-binding resolutionApprove amendments to the Articles of Incorporation to declassify the Board of Directors. 3. Approve amendments to the Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments. 1 Year 2 Years 3 Years Abstain 4. Vote, on an advisory basis, to approve the compensation for the named executive officers. For Against Abstain 4. Ratification5. Vote, on an advisory basis, to approve the frequency of future votes to approve the compensation for the named executive officers. 6. Ratify 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 Abstain2023. 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 3 6 6 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 02SF5B+ 1UPX 567595 03RI5C
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/SASR F VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy — Sandy Spring Bancorp, Inc. 2018+ Notice of 2023 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting Ronald E. Kuykendall,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 24, 2023 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 19, 2023, 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 approval of amendments to the Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments (Proposal 3), FOR the vote, on an advisory basis, to approve the compensation for the named executive officers (Proposal 2)4), FOREVERY 1 YEAR for the amendmentvote, on an advisory basis, to approve the articlesfrequency of incorporationfuture votes to approve the compensation for the named executive officers (Proposal 3)5) and FOR the ratification of the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 20182023 (Proposal 4)6). In their discretion, the proxy holdersproxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side.)
side) Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below.
