| ☐ | 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 |
| ☒ | No fee required. | |
| ☐ | Fee paid previously with preliminary materials. | |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11. |
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
| DATE | Wednesday, May
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| TIME | 10:00 a.m., Eastern Time
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| PLACE |
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| RECORD DATE | You are eligible to vote if you were a shareholder of record at the close of business on March |
MEETING AGENDA
Elect three Class III directors to serve until the 2025 annual meeting
| • | Elect four Class II directors to serve until the 2026 annual meeting and one Class III director to serve until the 2025 annual meeting |
Approve amendments to the Articles of Incorporation to declassify the Board of Directors
| • | Approve amendments to the Articles of Incorporation to declassify the Board of Directors |
Vote, on an advisory basis, to approve the compensation for the named executive officers
| • | Approve amendments to the Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments |
Ratify the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 2022
| • | Vote, on an advisory basis, to approve the compensation for the named executive officers |
| • | Vote, on an advisory basis, to approve the frequency of future votes to approve the compensation for the named executive officers |
Transact such other business as may properly come before the meeting
| • | Ratify the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 2023 |
THERE WILL BE NO PHYSICAL LOCATION FOR THE ANNUAL MEETING
In support of
| • | Transact such other business as may properly come before the |
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 6, 202211, 2023
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2022 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 18, 2022
This proxy statement and the 2021 Annual Report on Form 10-K are available at www.envisionreports.com/sasr.
| | Notice and Proxy Statement | |
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| | Notice and Proxy Statement | |
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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 20212022 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 20222023 annual meeting of shareholders. Notice of our annual meeting and this proxy statement were first sent or made available to shareholders on April 6, 2022.11, 2023.
20222023 ANNUAL MEETING INFORMATION
For additional information about our annual meeting, see “Information aboutAbout the Meeting” on page 59.63.
| | MEETING DATE: | May
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| | MEETING TIME: | 10:00 a.m. (Eastern)
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| | RECORD DATE: | March
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There will be no physical location forAnnual Meeting Admission. Admission to the annual meeting. Shareholders may attend, votemeeting is limited to our registered and ask questions atbeneficial holders as of the record date and persons holding valid proxies from these shareholders. Admission to the annual meeting only by logging in at https://meetnow.global/MMYUPAD. Registered shareholders will be required to enter a control number, which can be found on your Notice of Internet Availability, proxy card, electronic notification or voting instructions included with your proxy materials.requires valid, government-issued photo identification. If you holdare not a shareholder of record, you must also present proof of your shares through an intermediary, suchstock ownership as a bank or broker, seeof 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 59 for information regarding how to vote your shares during the meeting. If you do not have a control number, you may still attend the meeting as a guest, but you will not be able to vote your shares during the meeting.63.
VOTING MATTERS AND BOARD RECOMMENDATIONS
Proposal | Board Recommendation | More Information | ||
1) Election of
| ✓ “FOR” all nominees | Page 4 | ||
2) Approval of amendments to the Articles of Incorporation to declassify the Board of Directors
| ✓ “FOR” | Page | ||
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 | ||
| ✓ ONE YEAR | Page 59 | ||
6) The ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for
| ✓ “FOR” | Page | ||
| | Notice and Proxy Statement | 2023 | 1 |
PROXY SUMMARY |
HOW TO VOTE YOUR SHARES
Your vote is important. You may vote if you were a shareholder on March 9, 2022.8, 2023. Whether or not you plan to attend the virtual annual meeting, please cast your vote 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) | ||||
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BOARD OF DIRECTORS
Name | Occupation | Age | Independent | Director Since | Committee Memberships | Occupation | Age | Independent | Director Since |  |  |  |  |  | ||||||||||||||
Mona Abutaleb | CEO of Medical Technology Solutions, LLC | 59 | ✓ | 2015 |
Compensation Risk
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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 | President and CEO of SOME, Inc. | 65 | ✓ | 2012 |
Compensation (Chair) E&G Nominating
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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 | Chair (former CEO) of Rogers Consulting, Inc. | 66 | ✓ | 2005 |
E&G Risk (Chair) Nominating
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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 | Owner of Lemek, LLC, a franchisee for Panera Bread bakery-cafes. | 58 | ✓ | 2020 |
Audit Compensation
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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 | CFO of Nathan, Inc. | 68 | ✓ | 2005 |
Audit (Chair) E&G Nominating
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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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70
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✓
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2020
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Audit
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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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59
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✓
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2018
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Compensation
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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 | Retired. Former Managing Director and Head of Financial Services Investment Banking at Robert W. Baird & Co. | 63 | ✓ | 2019 |
Audit Risk
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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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68
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✓
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2020
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Compensation
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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, Chair | President and founder of RLO Contractors, Inc. | 65 | ✓ | 1991 |
Audit Compensation E&G (Chair) Risk Nominating
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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 | President and CEO of The Ruppert Companies | 68 | ✓ | 2002 |
E&G Nominating (Chair)
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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, Vice Chair | President and CEO Sandy Spring Bancorp, Inc. and Sandy Spring Bank | 57 |
| 2009 |
E&G Risk
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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 03/09/2022 E&GMarch 8, 2023
(1) Lead Independent Director
(2) Board Chair
M = Executive and GovernanceMember
C = Chair
2 |
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| | Notice and Proxy Statement | |
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PROXY SUMMARY |
BOARD COMPOSITION
GOVERNANCE HIGHLIGHTS
| ✓ | Continuing director education program | ✓ | |||
Mandatory director retirement age of 72 | ✓ | Stock ownership guidelines for directors and executive officers | ✓ | |||
Lead Independent Director with clearly-defined responsibilities | ✓ | Anti-hedging policy | ✓ | |||
Independent directors meet regularly in executive session | ✓ | ✓ | ||||
Audit, Compensation and Nominating and Governance Committees consist solely of independent directors | ✓ | ✓ | ||||
Audit Committee meets with auditor in executive session | ✓ | ✓ | ||||
Oversight of enterprise risk through Board Risk Committee | ✓ | |||||
| One share, one vote structure | ✓ | ||||
Annual board evaluations | ✓ | No shareholder rights plan | ✓ | |||
| | Notice and Proxy Statement | | 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.
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Our Board values diversity (inclusive of gender, race and ethnicity) and seeks to include directors with a broad range of backgrounds, professional experience, perspectives and skills. In compliance with Nasdaq Listing Rules, the following chart shows the diversity of the Board:
| Board Diversity Matrix as of March 9, 2022 | ||||||||
Total Number of Directors | 12 | |||||||
| Female | Male | Non-Binary | Did not Disclose | |||||
Part I: Gender Identity |
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Directors | 3 | 9 | 0 | 0 | ||||
Part II: Demographic Background |
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African American or Black |
| 1 |
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Alaskan Native or Native American |
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Asian |
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Hispanic or Latinx |
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Native Hawaiian or Pacific Islander |
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White | 11 |
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Two or More Races or Ethnicities |
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LGBTQ+ | 0 | |||||||
Did Not Disclose Demographic Background | 0 | |||||||
| 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 | |
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PROPOSAL 1: ELECTION OF DIRECTORS |
Our directors bring a balance of skills, qualifications and experience to their oversight of our company, as shown in the matrix below. The matrix identifies certain skills, qualifications and experience that the Board believes are relevant to our business. A director may possess other skills, qualifications and experience not indicated in the matrix that may be relevant and valuable to their service on our Board.
| 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 design and implementation of our risk management framework. | ● | ¡ | ● | ¡ | ● | ● | ¡ | ¡ | ¡ | ¡ | ● | ● | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 security of our operations, assets and systems. | ● | ● | ¡ | ● | ● | ¡ | ¡ | ¡ | ● | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | | 5 |
PROPOSAL 1: ELECTION OF DIRECTORS |
The Nominating and Governance Committee is responsible for identifying, evaluating, and recommending to the Board 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 and responsibilities of a director.
The Nominating and Governance Committee assesses 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 new 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, and individual Board members are encouraged to submit potential nominees to the Chair of the 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 terms of its engagement. Shareholders may also submit suggestions for qualified director candidates to the Corporate Secretary at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832. Submissions should include information regarding a candidate’s background, qualifications, experience and willingness to serve as a director. The Nominating and Governance Committee has not adopted any specific procedures for considering the recommendation of director nominees by shareholders, but will consider shareholder nominees on the same basis as other nominees. Please see “Proposals for the 20232024 Annual Meeting of Shareholders” on page 6165 for important information for shareholders who intend to submit a director nomination for the 20232024 annual meeting of shareholders.
VOTING 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 offails to receive more votes “withheld”“for” than votes “for”“against” will promptly tender his or her resignation following certification of the shareholder vote. The Nominating and Governance Committee will 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.
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| | Notice and Proxy Statement | |
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PROPOSAL 1: ELECTION OF DIRECTORS |
NOMINEES FOR ELECTION AND CONTINUING DIRECTORS
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW AS A DIRECTOR. |
CLASS IIIII DIRECTOR-NOMINEES – FOR TERMS EXPIRING AT THE 20252026 ANNUAL MEETING
| About
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| About
Mr. | |
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| | Notice and Proxy Statement | | 7 |
PROPOSAL 1: ELECTION OF DIRECTORS |
| About
Ms. | |
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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 2014-2017. He is a Harvard Law School graduate and previously served as Assistant Attorney General for Civil Rights under President George W. Bush. From 2005 to 2012, Mr. Boyd also served variously as Chair, President and CEO of the Freddie Mac Foundation, Inc. Among other distinctions, Mr. Boyd currently serves as chair of the NHP Foundation, a national nonprofit developer and owner of multi-family affordable housing with resident services. Mr. Boyd is a director of InfuSystem Holdings, Inc. (NYSE American: INFU). | |
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| | Notice and Proxy Statement | | 2023 | 9 |
PROPOSAL 1: ELECTION OF DIRECTORS |
WALTER C. MARTZ II | About
Mr. Martz has practiced law for over 42 years and is currently the Managing Member of Walter C. Martz LLC, in Frederick, Md., a general law practice encompassing a broad spectrum of legal matters ranging from corporate matters and estate administration to complex real estate and commercial banking transactions. Mr. Martz has also served on the Maryland Tax Court located in Baltimore since 1980 and | |
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MARK C. MICHAEL | About
In 2021, Mr. Michael became a Fellow at the Harvard Advanced Leadership Initiative located in Cambridge, Massachusetts. He is the co-founder of Occasions Caterers Inc., located in Washington, D.C. where he was CEO from 1986 to 2020 and remains a senior advisor. He also founded Protocol Staffing Services LLC, as well as Menus Catering, Inc. Mr. Michael was formerly on the President’s Council for Higher Achievement Program, and also served on the board of directors of DC Central Kitchen. He is a member of the US Chamber of Commerce, the Greater Washington Board of Trade, the Washington Convention and Visitors Bureau, and the International Society of Event Specialists. | |
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| | Notice and Proxy Statement | |
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PROPOSAL 1: ELECTION OF DIRECTORS |
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 provides aggregate, mulch, and specialized soil mixes including locally finished compost products. Mr. Orndorff’s experience in building a highly successful business with a strong reputation for quality, teamwork, and integrity is a testament to his leadership ability that is also strongly aligned with our culture and values. | |
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DANIEL J. SCHRIDER | About
Mr. Schrider has been part of Sandy Spring Bank for more than 30 years. He joined our company in 1989 as a commercial lender, he become an executive and Sandy Spring Bank’s Chief Credit Officer in 2003, and he was named President and Chief Executive Officer in 2009. Mr. Schrider holds a bachelor’s degree from the University of Maryland and an MBA from Mount St. Mary’s University. Mr. Schrider is also a graduate of the American Bankers Association Stonier Graduate School of Banking. A leader among community bankers, Mr. Schrider has served previously as a director of the American Bankers Association, the chair of the Maryland Bankers Association, and a chair of the Stonier Graduate School of Banking Advisory Board. | |
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INCUMBENT CLASS II DIRECTORS – TERMS EXPIRING AT THE 2023 ANNUAL MEETING
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| | Notice and Proxy Statement | | 11 |
PROPOSAL 1: ELECTION OF DIRECTORS |
INCUMBENT CLASS III DIRECTORS – TERMS EXPIRING AT THE 2025 ANNUAL MEETING
| MONA ABUTALEB STEPHENSON | About Ms. Abutaleb has been the Chief Executive Officer of Medical Technology Solutions, LLC, a provider of technology solutions for the healthcare industry, since December 2019. From 2013 to 2018, Ms. Abutaleb was the Chief Executive Officer of mindSHIFT Technologies, Inc., an IT outsourcing/managed services and cloud services provider, which was acquired by Ricoh Company, Ltd. in 2014. From 2006 to 2013, Ms. Abutaleb served as President and Chief Operating Officer of mindSHIFT. Ms. Abutaleb also served as Senior Vice President, Ricoh USA from 2015 to 2017 and Executive Vice President of Ricoh Global Services from 2017 to 2018. Ms. Abutaleb is also on the board of directors of Pentair plc (NYSE: PNR). | |
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Mr. | |
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| | Notice and Proxy Statement | |
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PROPOSAL 1: ELECTION OF DIRECTORS |
| CHRISTINA B. O’MEARA | About Ms. O’Meara is president and founder of O’Meara Properties, a real estate brokerage, development, and management firm. She has extensive experience with commercial property and is a licensed real estate broker. Ms. O’Meara is an owner of Reliable Contracting Company and an officer of related companies. She is a former Legislation Committee chair for the Anne Arundel County Association of Realtors and a past land use chair for the Anne Arundel Trade Council. Ms. O’Meara is active in the global community to support education and basic needs for children. She currently serves as a director of Kaleidoscope Child Foundation. | |
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| | Notice and Proxy Statement | 2023 | 13 |
CORPORATE 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 Policy,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 Policy,Guidelines, committee charters and other key governance documents are available on our website atwww.sandyspringbank.com by selecting “Investor Relations” at the top of the page, then “Governance Documents” under “Governance Information.”
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 PolicyGuidelines requires that not more than twoa substantial majority of our directors be non-independent.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 full 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 theemployed as our President and Chief Executive Officer and Mr. Cook is not independent because he served as an employee of the company.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.
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. The
Daniel Schrider serves as our Chair, also chairs the Executive and Governance Committee (see Executive and Governance Committee description below), which is empowered to act on behalf of the Board between regular Board meetings.
Under our Corporate Governance Policy, we separate the roles of ChairPresident and Chief Executive Officer. Separation ofThe Board believes that combining the Chair and the Chief Executive Officer roles facilitatesat this time supports clear accountability, effective decision-making and execution of corporate strategy.
The Board recognizes the importance of independent oversight over management and evaluationhas created the position of Lead Independent Director, who is elected by the independent members of the Chief Executive Officer’s performance and supports the Board’s independent oversightBoard. The responsibilities of the company’s performance.Lead Independent Director, as set forth in our Corporate Governance Guidelines, include:
| • | Presiding at any meeting of the Board at which the Chair is not present, including at executive sessions for independent directors. |
| • | Calling meetings of the independent directors or of the Board at such time and place as he or she determines. |
| • | Providing input to the Chair on Board meeting agendas, and adding agenda items in his or her discretion. |
| • | Providing input to the Chair on meeting schedules to assure that there is sufficient time for discussion of all agenda items. |
| • | 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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CORPORATE GOVERNANCE |
The Board has five standing committees: Audit, Compensation, ExecutiveNominating and Governance, Nominating,Risk and Risk.Executive. Each committee operates under a written charter, which may be found on our investor relations website at www.sandyspringbank.com.www.sandyspringbank.com. In 2022, the Board reorganized its committee functions by transferring oversight of governance matters to the Nominating Committee and renaming it the Nominating and Governance Committee. At the same time, the Executive and Governance Committee became the Executive Committee.
| AUDIT COMMITTEE
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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
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Brian J. Lemek Walter C. Martz II Mark C. Micklem Robert L. Orndorff
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| COMPENSATION COMMITTEE
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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
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Mona Abutaleb Stephenson Brian J. Lemek Mark C. Michael Christina B. O’Meara Robert L. Orndorff
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CORPORATE GOVERNANCE |
| COMMITTEE
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The
• 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
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• 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
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Ralph F. Boyd Mark E. Friis Pamela A. Little Craig A. Ruppert Daniel J. Schrider
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We believe that a strong risk management culture is vital to the success of our business. To mitigate the risks inherent in our business, we foster a culture that makes managing risk everyone’s responsibility at all levels of the company.
We have implemented a formal risk management framework that establishes the program by which we identify, assess, measure, monitor, report and control risks across the company. The risk management framework is designed to link risk appetite, and related risk monitoring and reporting, with our business strategy and capital plans. The risk management framework describes our risk management approach, including the adoption of the three lines of defense risk model, and outlines our risk management governance structure, including the roles of the Board, management, lines of business and internal audit. The Risk Committee reviews the risk management framework at least annually, or more often as needed to address changes in the company’sour risk profile or risk management best practices.
We have also adopted a risk appetite statement that identifies the level of risk we are willing to accept in pursuit of our strategic objectives. The company’sOur 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 theour operations of the company align with the company’sour risk appetite.
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CORPORATE GOVERNANCE |
The Board is responsible for overseeing the company’sour 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 full Board, including approval and oversight of the company’sour risk appetite statement, strategic plan, capital plan and financial plan, and the activities of its committees, principally the Risk Committee, Audit Committee and Compensation Committee.committees.
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Risk Committee | The Risk Committee has primary responsibility for overseeing our risk management framework. The committee reviews and approves | |||
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 | |||
Compensation Committee | The Compensation Committee has primary oversight of risks arising from | |||
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 the company’sour responsibility to protect the data provided by itsour clients and employees, understands how cyber risks could disrupt the company’sour operations, and is cognizant of the increasing risks and threats associated with the use of digital technology. Through the efforts of the Risk Committee, the Board oversees the company’sour continuing efforts to strengthen itsour information security infrastructure and staffing and enhance itsour technology controls and cybersecurity defenses.
As part of its oversight of operational risk, the Risk Committee is responsible for the oversight of information security and cybersecurity risk management. Our Chief Information Security Officer regularly reports to the Risk Committee on security events, testing, training, audits, new system assessments and vendor performance. These reports address topics such as the threat environment and vulnerability assessments, results of penetration testing, results of key cyber risk indicators and performance metrics, and the company’sour efforts to detect, prevent and respond to internal and external critical threats. The Risk Committee receives periodic updates on information security risk, the maturity of the company’sour 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 2021,2023, we published our inauguralthird 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 ExecutiveNominating and Governance Committee oversees the company’sour policies and practices on significant issues of corporate social responsibility and sustainability. The Compensation Committee assists the Board in the oversight of the company’sour 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
• 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 |
20212022 ESG HIGHLIGHTS
| $ |
Financing clean energy through Montgomery County Green Bank and DC Green Bank
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over
employee volunteer hours
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| Launched low-cost Bank On certified account to reach un- and under-banked customers | 57%
women in workforce | ||||
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people of color in workforce |
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| Adopted majority vote standard for director elections
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115For more detailed information, please see our Corporate Responsibility Report, which is available on our website at www.sandyspringbank.com.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 20212022 Annual Report on Form 10-K filed with the SEC.
The Board has established an annual self-assessment process that evaluates a different aspect of the Board’s effectiveness each year. On a rotating basis, the directors evaluate the Board as a whole, the Board committees, and individual director performance. The self-assessment process, which is managed by the ExecutiveNominating and Governance Committee, involves completion of annual surveys, review and discussion of the results of the surveys by both the committee and the full Board, as well as with individual directors in the case of peer evaluations, and communication of feedback to management to improve policies, processes and procedures to support Board and committee effectiveness. In 2021,2022, the Board completed an evaluation of the Board as a whole.individual director performance.
We believe that continuing director education is essential to the ability of directors to fulfill their roles. We provide both internal and external educational opportunities and association memberships for our directors. We encourage directors to participate 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 financial services industry.
BOARD AND COMMITTEE MEETING ATTENDANCE
During 2021,2022, the Board held nine regular meetings and one special meeting. Directors are expected to attend at least 80% of Board meetings and meetings of the committees upon which they serve. In 2021,2022, directors attended 99%96% of total Board and committee meetings, and each of the directors attended at least 75% of the total meetings of the Board and the committees on which he or she served in 2021.2022.
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CORPORATE GOVERNANCE |
Directors are expected to attend the company’sour annual meeting of shareholders. All of our directors serving at the time of the 20212022 annual meeting attended the 20212022 virtual annual meeting via teleconference.
CODE OF ETHICS AND BUSINESS CONDUCT
Our Board has adopted a Code of Ethics and Business Conduct (the Code) applicable to all directors, officers, and employees of the company. The Code of Ethics and Business Conduct may be found on our investor relations website at www.sandyspringbank.com. If we make any substantive amendments to the Code or grant any waiver from a provision of the Code that is required to be disclosed under the applicable rules of the SEC, we will disclose the nature of such amendments or waiver on our website or in a current report on Form 8-K.
STOCK OWNERSHIP REQUIREMENTS FOR DIRECTORS
Our Corporate Governance Policy requiresGuidelines require that directors own Sandy Spring stock equal in value to at least four times the lesser of 5,000 shares of company stock or company stock withannual cash retainer paid by us for service as a market value of $175,000 by January 1 following the director’s fifth anniversary of service. Unvested shares of restricted stock and restricted stock units count towards the satisfaction of the ownership requirement. Directorsdirector. Non-employee directors are expected to meet this ownership requirement within four years of joining the Board and to retain theall shares of companySandy Spring stock they receivereceived pursuant to their service as a Board member for soas long as they serve as a director. directors of the company.
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 (ii) restricted shares and shares issuable upon settlement of restricted stock units.
All of the directors exceed the minimum ownership requirements of the policy.
PROHIBITION ON HEDGING AND PLEDGING
Under our Insider Trading Policy, our directors, officers and employees may not at any time buy or sell options on company securities or other derivative securities that reference company securities and may not enter into hedging or similar transactions that are designed to offset any decrease in the market value of company securities. In addition, our directors and executive officers are prohibited from trading company securities on margin, borrowing against any account in which company securities are held, or pledging company securities as collateral for any loan. Our policy also prohibits directors and executive officers from engaging in short sales of companySandy Spring stock.
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DIRECTOR COMPENSATION |
Our director compensation program is designed to attract and retain highly qualified directors and align their interests with those of our shareholders. We compensate our non-employee directors with a combination of cash and equity awards. Directors who are employees of our company do not receive additional compensation for their service as Board members.
The Compensation Committee periodically reviews theour non-employee director compensation program and recommendsprogram. Any changes for approvalproposed by the Compensation Committee must be approved by the Board. TheDuring 2022, after consultation with the Compensation Committee’s independent compensation consultant, including an analysis of pay levels at the same peer companies used to evaluate the compensation of our named executive officers, the Compensation Committee did not recommend anyrecommended changes to our director compensation program, for 2021.which were approved by the Board. These changes, which targeted non-employee director compensation at the peer group median, included eliminating meeting attendance fees and adjustments to cash and equity retainers.
CASH COMPENSATION
Non-employee directors received cashOur non-employee director compensation in 2021 as follows:program currently consists of the following:
Annual cash retainer per director | $ | 30,000 |
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Chair of Board | $ | 40,000 |
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Audit Committee | $ | 15,000 |
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All other committees | $ | 10,000 |
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Board meeting attendance fee (per meeting) | $ | 1,200 |
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Attending an in-person Board meeting by phone | $ | 500 |
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Committee meeting attendance fee (per meeting) | $ | 1,000 |
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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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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 not paid for limited-purpose teleconference meetings, and members of the Nominating Committee are not paid when the Executive and Governance Committee meets on the same day. All directors of our company also serve as directors of Sandy Spring Bank, for which they do not receive any additional compensation.
EQUITYCOMPENSATION
On April 28, 2021, each director received a grant of restrictedRestricted stock units valued at approximately $35,000. The restricted stock units will vest over three years in equal increments,on the first anniversary of the date of grant, and vesting accelerates upon the permanent departure from the Board other than removal for just cause. Dividend equivalents are paid on the award when dividends are paid on shares of our common stock.
DEFERRED FEE ARRANGEMENTS
Directors are eligible to defer all or a portion of their fees under the Director Deferred Fee Plan. The amounts deferred accrue interest at 120% of the long-term Applicable Federal Rate, which is not considered “above market” or preferential. Except in the case of financial emergency, deferred fees and accrued interest are payable only following termination of a director’s service, at which time the director’s deferral account balance will be paid in a lump sum. Mr. Orndorff is a party to a Directors’ Fee Deferral Agreement, under which deferrals ceased in 2004, pursuant to which his beneficiary would receive a death benefit equal to the greater of the projected retirement benefit or the combined deferral account balance under the two fee deferral arrangements should his death occur while actively serving as a member of the Board.
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DIRECTOR COMPENSATION |
2021 2022 NON-EMPLOYEE DIRECTOR COMPENSATION
The following table shows the compensation received during 20212022 by our non-employee directors.
Name | Fees Earned or ($) | Stock Awards(2) ($) | All Other ($) | Total ($) | Fees Earned or ($) | Stock Awards(2) ($) | All Other ($) | Total ($) | ||||||||||||||||||||||||||||||||
Mona Abutaleb | 51,800 | 35,043 | 2,616 | 89,459 |
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Mona Abutaleb Stephenson | 61,675 | 50,033 | 2,487 | 114,195 |
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Ralph F. Boyd | 58,800 | 35,043 | 2,616 | 96,459 |
| 70,800 | 50,033 | 2,487 | 123,320 |
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Mark E. Friis | 61,800 | 35,043 | 5,016 | 101,859 |
| 74,800 | 50,033 | 5,487 | 130,230 |
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Brian J. Lemek | 47,800 | 35,043 | 2,223 | 85,066 |
| 60,425 | 50,033 | 2,496 | 112,954 |
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Pamela A. Little | 63,800 | 35,043 | 2,616 | 101,459 |
| 75,425 | 50,033 | 2,487 | 127,945 |
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James J. Maiwurm(4) | 5,400 | — | 708 | 6,108 |
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Walter C. Martz, II | 44,100 | 35,043 | 3,423 | 82,566 |
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Walter C. Martz II | 51,100 | 50,033 | 3,696 | 104,829 |
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Mark C. Michael | 44,800 | 35,043 | 2,616 | 82,459 |
| 49,525 | 50,033 | 2,487 | 102,045 |
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Mark C. Micklem | 50,800 | 35,043 | 2,813 | 88,656 |
| 61,550 | 50,033 | 2,543 | 114,126 |
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Gary G. Nakamoto(5) | 38,800 | 35,043 | 1,485 | 75,328 |
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Christina B. O’Meara | 44,800 | 35,043 | 2,223 | 82,066 |
| 50,925 | 50,033 | 2,496 | 103,454 |
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Robert L. Orndorff | 108,800 | 35,043 | 2,616 | 146,459 |
| 120,050 | 50,033 | 2,487 | 172,570 |
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Craig A. Ruppert | 54,800 | 35,043 | 2,616 | 92,459 |
| 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. |
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| (3) | Amounts in this column represent dividends paid on restricted stock, dividend equivalents paid on restricted stock units and meeting fees for attendance at advisory board meetings. |
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TRANSACTIONS WITH RELATED PERSONS |
TRANSACTIONS WITH RELATED PERSONS
The Board has adopted a written policy and procedures for the 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 of the company and members of their immediate families. To help identify related person transactions and relationships, each director and executive officer completes a questionnaire that requires the disclosure of any transaction or relationship that the person, or any member of his or her immediate family, has or is proposed to have with the company. The policy applies to any transaction in which our company is a participant, any related party has a direct or indirect material interest, and the amount involved exceeds $120,000, but excludes any transaction that does not require disclosure under Item 404(a) of SEC Regulation S-K, including banking, insurance, trust and wealth management services provided to related parties on substantially the same terms for comparable services provided to unrelated third parties. In addition, loans to related parties are excluded from the policy, but only if the loan (i) is made in the ordinary course of business, (ii) is on market terms or terms that are no more favorable than those offered to unrelated third parties, (iii) when made does not involve more than the normal risk of collectability or present other unfavorable features, (iv) would not be disclosed as nonaccrual, past due, restructured or a potential problem loan, and (v) complies with applicable law.
The 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 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 our directors or officers are subject to approval by the disinterested members of the Board per the terms of Regulation O and our policy.
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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 as of December 31, 2021.2022.
Name and Address | Number of Shares | Percentage of Common Stock Outstanding | ||||||||||
BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 |
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The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 |
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Dimensional Fund Advisors LP 6300 Bee Cave Road, Austin, TX 78746 |
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| (1) | According to the Schedule 13G/A filed by Blackrock, Inc. |
| (2) |
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According to the Schedule 13G/A filed by The Vanguard Group with the SEC on February |
According to the Schedule 13G/A filed by Dimensional Fund Advisors LP with the SEC on February |
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| | Notice and Proxy Statement | | 2023 | 25 |
STOCK OWNERSHIP INFORMATION |
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of February 16, 2022,8, 2023, with respect to the shares of common stock beneficially owned by each director and director-nominee, by the 20212022 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 3.2% of our outstanding common stock.
Name | Shares Owned(1)(2) | Restricted Stock Awards(3) | Right to Acquire(4) | Total Beneficial Ownership | Additional Stock Units(5) | Total | ||||||||||||||||||||||||||
Mona Abutaleb | 4,538 | 334 | 442 | 5,314 |
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| 1,212 | 6,526 | ||||||||||||||||||||
Ralph F. Boyd | 7,500 | 334 | 442 | 8,276 |
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| 1,212 | 9,488 | ||||||||||||||||||||
Mark E. Friis(6) | 44,477 | 334 | 442 | 45,253 |
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| 1,212 | 46,465 | ||||||||||||||||||||
Brian J. Lemek | 252,072 | — | 515 | 252,587 |
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| 1,285 | 253,872 | ||||||||||||||||||||
Pamela A. Little | 26,578 | 334 | 442 | 27,354 |
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| 1,212 | 28,566 | ||||||||||||||||||||
Walter C. Martz II(7) | 30,427 | — | 515 | 30,942 |
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| 1,285 | 32,227 | ||||||||||||||||||||
Mark C. Michael | 23,670 | 334 | 442 | 24,446 |
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| 1,212 | 25,658 | ||||||||||||||||||||
Mark C. Micklem | 12,963 | — | 942 | 13,905 |
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| 1,212 | 15,117 | ||||||||||||||||||||
Christina B. O’Meara(8) | 44,954 | 334 | 515 | 45,469 |
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| 1,285 | 46,754 | ||||||||||||||||||||
Robert L. Orndorff(9) | 168,011 | 334 | 442 | 168,787 |
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| 1,212 | 169,999 | ||||||||||||||||||||
Craig A. Ruppert | 106,618 | 334 | 442 | 107,394 |
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| 1,212 | 108,606 | ||||||||||||||||||||
Daniel J. Schrider (10) | 99,496 | 24,410 | — | 123,906 |
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| 21,914 | 145,820 | ||||||||||||||||||||
Philip J. Mantua(11) | 55,330 | 9,389 | — | 64,719 |
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| 8,396 | 73,115 | ||||||||||||||||||||
Joseph J. O’Brien, Jr.(12) | 51,748 | 12,021 | — | 63,769 |
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| 11,075 | 74,844 | ||||||||||||||||||||
Kenneth C. Cook (13) | 216,514 | 6,264 | 109,027 | 331,805 |
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| 7,829 | 339,634 | ||||||||||||||||||||
R. Louis Caceres | 36,556 | 8,673 | — | 45,229 |
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| 7,554 | 52,783 | ||||||||||||||||||||
All directors and all executive officers as a group (21 persons) | 1,237,642 | 91,369 | 115,419 | 1,444,430 |
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| 91,184 | 1,535,614 | ||||||||||||||||||||
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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|
|
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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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|
|
|
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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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|
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|
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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 “beneficially own” any share of common stock which he or she, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares: (a) voting power, which includes the power to vote, or to direct the voting of, such security; and/or (b) investment power, which includes the power to dispose, or to direct the disposition, of such security. |
| (2) | Only whole shares appear in the table. Fractional shares that may arise from reinvested dividends are not shown. |
| (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 and shares that the named individual or group has the right to acquire through the vesting of restricted stock units within 60 days of February |
| (5) | Includes restricted stock units and performance-based restricted stock units, reported at target levels, as to which no voting or investment power exists. |
| (6) | Includes 2,716 shares held through employee benefit plans. |
| (7) | Includes 30,782 shares owned by Mr. Friis’ Living Trust for which Mr. Friis and his spouse share investing and voting power. |
Includes 2,183 shares held in three trusts for which Mr. Martz is trustee. Mr. Martz has no pecuniary interest these holdings. |
Includes 7,343 shares owned by Ms. O’Meara’s |
Includes |
|
| (11) | Includes |
| (12) | Includes |
| (13) | Includes |
|
| | Notice and Proxy Statement | |
|
STOCK OWNERSHIP INFORMATION |
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers, and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership of our common stock with the SEC. Specific dates for such filings have been established by the SEC, and we are required to report in this proxy statement any failure to file reports in a timely manner in 2021.In 2022.
Based solely on the review of the copies of forms we have received and written representations from each person, all of the executive officers and directors have complied with filing requirements applicable to them with respect to transactions during 2021 with the single exception of a Form 4 for Gary J. Fernandes reporting the withholding of shares upon the vesting of restricted stock awards that was filed late due to delay in receiving EDGAR access codes from the SEC.2022.
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| | 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
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.
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| | | 1. EXECUTIVE SUMMARY |
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| | Notice and Proxy Statement | |
|
COMPENSATION DISCUSSION AND ANALYSIS |
2021 was a year of strong financial performance in a challenging operating environment. We began the year by supporting our clients with an additional $469 million of Paycheck Protection Program (PPP) loans, bringing our total PPP loan originations to over $1.6 billion. As the year progressed and COVID-19 vaccines became widely available, the economy rebounded and loan demand returned. We reopened our branch lobbies – which had been operating on an appointment only basis – in June and began phasing in our return to office plans in early July, with a full return to office as of November 1. Despite the challenges of the operating environment, we generated strong return metrics while making significant strides in our technology and digital investments.FINANCIAL HIGHLIGHTS
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| * | Non-GAAP financial measure. See our |
EXECUTIVE COMPENSATION PHILOSOPHY
Our Compensation Committee is committed to rewarding executive management for the company’s performance achieved through planning and execution. We achieve our objectives through an executive compensation program that is aligned, balanced, and rewarding.
Aligned – Executive compensation must be aligned with the company’sour strategic objectives, which state that the companywe will earn independence by creating franchise and shareholder value. In order to align compensation to this strategy, a significant portion of total compensation is tied to company performance, both absolute and relative.
Compensation must also be aligned with the competitive marketsorganizations 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 |
20212022 COMPENSATION HIGHLIGHTS
Annual Incentive Payout – Annual incentive opportunities are provided to our executive officers under our Executive Team Incentive Plan (ETIP).
$ |
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of Target Payout | |||
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| 148% of Target Payout
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Qualitative factors |
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20192020 - 2021 Performance Share2022 PRSU Payout – Performance sharesPRSUs have a three-year performance period with cliff vesting at the end of the performance period.
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of Target Payout | |||
$ |
| 114% of Target Payout | ||||||
84th percentile relative average ROTCE |
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| 150% of Target Payout
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TARGET COMPENSATION MIXTIED TO PERFORMANCE
We tie pay to performance by structuring a significant portion of our executives’ pay as at-risk compensation (63%(64% for CEO; 56%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 (32%(35% for CEO; 27%28% for other NEOs). Annual incentives are paid under the ETIP and the Executive Incentive Retirement Plan (EIRP). Equity awards are granted in the form of performance-based restricted stock units (PRSUs) and time-based restricted stock awards (RSAs).
| • | Annual incentive awards are based on our achievement of financial and strategic goals that are expected to drive shareholder value. Threshold performance objectives must be achieved for any payout to be earned. |
| • | Equity awards are granted in the form of performance-based restricted stock units (PRSUs) and time-based restricted stock units (RSUs). Payout of PRSUs is based on our ROTCE compared to our peers and is subject to possible adjustment based on our relative TSR. Threshold performance must be achieved for any PRSUs to be earned. |
“SAY ON PAY” RESULTS
At each annual meeting of shareholders, we ask our shareholders to vote on a non-binding resolution to approve the compensation for our named executive officers, commonly referred to as a “say on pay” vote. At our 20212022 annual meeting, over 97% of the shares voted were voted “for” the proposal. The committee considered this result and, in light of the strong support for our executive compensation program, did not make any significant changes to our executive compensation program.
|
| | Notice and Proxy Statement | |
|
COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION AND GOVERNANCE PRACTICES
Our executive compensation programs have strong governance components that support the pay-for-performance philosophy 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 Compensation Committee
|
O | Provide tax gross-ups to executive officers | |||||
✓ | Tie a significant portion of executive compensation to performance
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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 | |||||
✓ | Impose maximum caps on incentive compensation |
O | Provide excessive perquisites | |||||
✓ |
O | Permit hedging or pledging of Sandy Spring stock | ||||||
✓ | Require significant stock ownership by our named executive officers, including 4x base salary for our CEO and 2x base salary for our other executive officers |
O | Encourage excessive risk-taking through our compensation programs | |||||
✓ | Conduct an annual risk assessment of our compensation programs
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O | Provide supplemental executive retirement plans | |||||
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| | Notice and Proxy Statement | | 2023 | 31 |
COMPENSATION DISCUSSION AND ANALYSIS |
EXECUTIVE COMPENSATION PROGRAM ELEMENTS
The compensation elements for 20212022 included base salary, annual incentive, long-term incentive (equity) and a contribution to a deferred compensation plan as shown in the following table and described further herein. These elements did not change in 2021.2022.
| 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: • • Non-GAAP efficiency ratio • • Qualitative factors | Paid in cash after the end of the fiscal year | |||
Long-term Incentive PRSUs (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 • 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 | ||||
| Variable contribution to deferred compensation plan based on annual performance rewards superior performance relative to peers | Measured over a one-year period: •Relative | Contribution | |||
3. EXECUTIVE COMPENSATION GOVERNANCE AND PRACTICES
EXECUTIVE COMPENSATION PROCESS
Role of the Compensation Committee–The Compensation Committee, which consists entirely of independent directors, is responsible for establishing and approving 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 ETIP payouts based on significant individual or company performance shortfalls, as well as risk, compliance and regulatory matters.
Role of Compensation Consultant– The committee engages 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.
|
| | Notice and Proxy Statement | |
|
COMPENSATION DISCUSSION AND ANALYSIS |
The committee has sole authority and discretion to retain 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 determining executive compensation. In 2021,2022, our CEO presented to the committee specific recommendations for all executive officers, other than himself. In making his compensation recommendations for each of the executive officers, 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 made final decisions for 20212022 compensation opportunities. Our CEO does not make recommendations with respect to his own compensation or participate in the deliberations regarding the setting of his own compensation. Decisions related to the CEO’s 20212022 compensation opportunities were made independently by the committee in consultation with Meridian.
The Compensation Committee uses a peer group to perform 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 uses pay data as one factor in setting 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 2021,2022, the committee, with input and advice from Meridian, selected publicly traded companies with assets between approximately $6.5 to $30 billion (approximately one-half to two times the company’s assets) from the Mid-Atlantic region plus Connecticut, Massachusetts, North Carolina, Ohio, Virginia and West Virginia. The median asset size of the peer group was $13.3$12.7 billion, placing the company at the 51st percentile, based on assets as of June 30, 2020.2021. Compared to our prior peer group, Investors Bancorp, Inc. was removed due to its pending merger and ConnectOne Bancorp,Dime Community Bancshares, Inc. were added and Flushing Financial Corporation was removedwere added to better align the company’s asset size with the peer group median. The 20212022 peer group was comprised of the following 2021 companies:
Atlantic Union Bankshares Corp. (AUB) |
| |
Berkshire Hills Bancorp, Inc. (BHLB) |
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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) |
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First Commonwealth Financial Corp. (FCF) |
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First Financial Bancorp (FFBC) |
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| |
The committee determined that this peer group would be used for the relative performance comparisons in the ETIP, 20212022 PRSUs and the EIRP.NQDC Plan.
|
| | Notice and Proxy Statement | | 2023 | 33 |
COMPENSATION DISCUSSION AND ANALYSIS |
In determining base salaries, the committee considers the executive’s qualifications and experience, scope of responsibilities, the goals and objectives established for the executive, and the executive’s past performance. The committee seeks to pay a base salary, commensurate with the individual’s experience and performance, at market competitive levels. Mr. Schrider recommended base salaries for executive officers other than himself, and the committee determined Mr. Schrider’s salary. The resulting salary adjustments, shown below, were effective April 4, 2021.3, 2022.
Name | 2020 Base | Amount of Increase | 2021 Base | Percent Increase | 2021 Base | Amount of Increase | 2022 Base | Percent Increase | ||||||||||||||||||||||||||||||||
Daniel J. Schrider | $825,000 | $25,000 | $850,000 | 3.0% |
| $850,000 | $25,000 | $875,000 | 2.9% |
| ||||||||||||||||||||||||||||||
Philip J. Mantua | $425,000 | $15,000 | $440,000 | 3.5% |
| $440,000 | $15,000 | $455,000 | 3.4% |
| ||||||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | $500,000 | $17,500 | $517,500 | 3.5% |
| $517,500 | $17,500 | $535,000 | 3.4% |
| ||||||||||||||||||||||||||||||
Kenneth C. Cook | $425,000 | $25,000 | $450,000 | 5.9% |
| $450,000 | $15,000 | $465,000 | 3.3% |
| ||||||||||||||||||||||||||||||
R. Louis Caceres | $420,000 | $20,000 | $440,000 | 4.8% |
| $440,000 | $20,000 | $460,000 | 4.5% |
| ||||||||||||||||||||||||||||||
20212022 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 the company achieveswe 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.
2021 Target Award (as a % of base salary) | 2022 Target Award (as a % of base salary*) | |||||||||||||||||||||||
Name | Annual Incentive | Long-Term Incentive | Annual Incentive | Long-Term Incentive | ||||||||||||||||||||
Daniel J. Schrider | 75% | 90% |
| 75% | 100% |
| ||||||||||||||||||
Philip J. Mantua | 50% | 65% |
| 50% | 65% |
| ||||||||||||||||||
Joseph J. O’Brien, Jr. | 65% | 75% |
| 65% | 75% |
| ||||||||||||||||||
Kenneth C. Cook | 65% | 60% |
| 65% | 60% |
| ||||||||||||||||||
R. Louis Caceres | 50% | 60% |
| 55% | 65% |
| ||||||||||||||||||
| * | 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 2021,2022, 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. Cook,Caceres, whose opportunity was increased.
For 2021,2022, the target long-term incentive award opportunity for each NEO was allocated equally among PRSUs and RSAs.RSUs.
Annual incentive opportunities are provided to our executive officers under our Executive Team Incentive Plan (ETIP). The ETIP is a short-term, cash compensation plan designed to recognize and reward participants for their success in achieving specific company goals. For 2021,2022, the committee selected twothree financial metrics and two setsa set of qualitative metricsfactors under the ETIP. A relative weight was assigned to each metric to prioritize importance and relative contribution. Performance metrics were selected to incentivize and reward profitability, progress towards key strategic initiatives and operational excellence.
|
| | Notice and Proxy Statement | |
|
COMPENSATION DISCUSSION AND ANALYSIS |
The performance measures and respective weights for 20212022 were as follows:
Corporate Goal | Weight | |||||||
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Non-GAAP efficiency ratio | 25% |
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Qualitative factors | 15% |
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| 100% |
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Each financial metric was assigned a “threshold” or minimum performance level, a “target” level of performance, and a maximum level at which the award opportunity was capped. Achievement of the threshold performance level earns 50% of the target opportunity, achievement of the target performance level earns the target award, and achievement at or above the maximum performance level earns 150% of the target opportunity. Actual results for any metric that falls between performance levels are interpolated to calculate a proportionate award.
Awards under the ETIP are calculated as follows:
| Base Salary | X |
Target ETIP Opportunity Percentage
| X | Payment Level Achieved | = | Award |
Financial Metrics– The financial metrics for the 20212022 ETIP were pre-provision net revenue (PPNR)core earnings, non-GAAP efficiency ratio and non-GAAP efficiency ratio.core ROTCE.
PPNR is calculated as net interest income plus non-interest income minus non-interest expense. This metric excludes the effects of the provision for credit losses, which can vary significantly from period to period based on changes to economic forecasts, and income taxes. The committee chose PPNR because it reflects the operating performance of the company’s core business operations.
| • | 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. |
The non-GAAP efficiency ratio is calculated as adjusted non-interest expense divided by the sum of adjusted net interest income and adjusted non-interest income. See Annex A – Non-GAAP Financial Measures for more information on calculation of this metric. The committee chose this metric because it is a measure of operating expense control and efficiency of operations and is highly useful in comparing period-to-period operating performance of the company’s core business operations.
| • | 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 both PPNRcore earnings, the non-GAAP efficiency ratio and the non-GAAP efficiency ratiocore ROTCE were determined by reference to our 20212022 financial plan and evaluation of our 20202021 performance relative to our peer group.
TheQualitative Factors – Key qualitative factors that influence or reflect our performance measures and actual performance levels for 2021 were as follows ($000):
Corporate Goal | Threshold (50% of Target | Target Level (100% of | Maximum (150% of | Actual 2021 | Payment Level | |||||||||||||||||||
Pre-provision net revenue | $173,536 | $216,920 | $271,150 | 266,103(1) | 145.35% |
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Non-GAAP efficiency ratio | 54% | 50% | 46% | 46.17(2) | 147.88% |
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Strategic Initiatives – Priority strategic initiatives were identified by the committee at the same time as financial goals were established. Completion of these initiatives, or the specific phases expected to be completed in 2021, were considered to be critical for our long-term success.
| Description | Performance Level | ||||
Digital | Our multi-year | • • • Went live with phase 1 of our marketing cloud, which provides expanded marketing tools that work across channels and • •
| Target | |||
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Based on its assessment, the committee determined that the strategic initiatives component was earned at 95%. The committee did not assign particular weights to any single initiative.
Qualitative Factors – Key qualitative factors that influence or reflect the company’s performance were identified by the committee at the same time as financial goals were established. The committee did not establish quantitative thresholds for any of the qualitative factors that were financial metrics due to uncertainty about the impact of the COVID-19 pandemic and extent of the economic recovery. Instead, the committee determined to evaluate the specific qualitative factors in light of our 2021 financial plan and peer and industry performance.
Factor | Description | Achievement | Performance Level | |||
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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 | Above | |||
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| We evaluate employee engagement through the Great Place to Work survey. The | Achieved score of | ||||||
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Based on its assessment, the committee determined that the qualitative factors component was earned at 110%105%. The committee did not assign particular weightsassigned substantial weight to any single factor.digital optimization and alignment and data strategy.
20212022 Payouts – Combining the results for PPNR, non-GAAP efficiency ratiothe quantitative and the qualitative performance components produced payment at 130.61%124.23% of target.
Corporate Goal | Weight | Performance Achieved | Weighted Level | Threshold (50% of Target | Target Level (100% of | Maximum (150% of | 2022 Performance | Payment Level | Weight | Weighted Level | ||||||||||||||||||||||||||||||||||||||||||
Pre-provision net revenue | 40% | X | 145.35% | = | 58.14% | |||||||||||||||||||||||||||||||||||||||||||||||
Core earnings | $110,000 | $150,000 | $190,000 | $160,305(1) | 112.88% | 35% | 39.51% |
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Non-GAAP efficiency ratio | 25% | X | 147.88% | = | 36.97% | 56.50% | 53.00% | 49.50% | 49.66%(2) | 147.71% | 25% | 36.93% |
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Strategic initiatives | 20% | X | 95.00% | = | 19.00% | |||||||||||||||||||||||||||||||||||||||||||||||
Core ROTCE | 10.00% | 13.00% | 16.00% | 14.69%(3) | 128.17% | 25% | 32.04% |
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Qualitative factors | 15% | X | 110.00% | = | 16.50% |
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| 105.00% | 15% | 15.75% |
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| 130.61% |
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| 124.23% |
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The amounts paid under
| (1) | See Annex A – Non-GAAP Financial Measures for reconciliation to net income. |
| (2) | See Annex A – Non-GAAP Financial Measures for reconciliation to the GAAP efficiency ratio. |
| (3) | See Annex A – Non-GAAP Financial Measures for reconciliation to return on equity ratio. |
Mr. Schrider recommended that the ETIP for 2021committee use negative discretion to reduce his annual incentive payment to 100% to reflect declining financial performance are shown below and in the Summary Compensation Tablefourth quarter of 2022. The committee accepted Mr. Schrider’s recommendation, but noted that his management of the company was exemplary. The committee confirmed the awards for the other NEOs without adjustment.
Based on page 42.the performance and considerations described above, the committee approved the following annual incentive awards for 2022 performance.
Name |
($) | |||||||
Daniel J. Schrider | (100% of target) |
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Philip J. Mantua | (124.23% of target) |
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Joseph J. O’Brien, Jr. | (124.23% of target) |
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Kenneth C. Cook | (124.23% of target) |
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R. Louis Caceres | (124.23% of target) |
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36 |
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| | Notice and Proxy Statement | |
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COMPENSATION DISCUSSION AND ANALYSIS |
All annual incentive awards were paid in cash in March 2023 and are included in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table on page 42.
LONG-TERM INCENTIVE COMPENSATION
The company’sOur compensation philosophy identifies equity-based compensation as an effective means of aligning the interests of our shareholders, the performance of the company, and the retention of executive management. The committee utilized performance-based and time-based stock awards to accomplish these objectives. For 2021,2022, the target long-term incentive award opportunity for each NEO was allocated equally among PRSUs and RSAs,RSUs, as follows:
Name | Performance Restricted Stock Units (#) | Restricted Stock Awards (#) | Performance Restricted Stock Units (#) | Restricted Stock Units (#) | ||||||||||||||||||||
Daniel J. Schrider | 9,129 | 9,129 |
| 9,364 | 9,364 |
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Philip J. Mantua | 3,397 | 3,397 |
| 3,151 | 3,151 |
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Joseph J. O’Brien, Jr. | 4,611 | 4,611 |
| 4,276 | 4,276 |
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Kenneth C. Cook | 3,135 | 3,135 |
| 2,975 | 2,975 |
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R. Louis Caceres | 3,099 | 3,099 |
| 3,151 | 3,151 |
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20212022 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 2021,2022, 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 selected ROTCE because it is a comprehensive performance metric that is useful for comparing theour profitability of the company with that of itsour peers.
At the end of the three-year performance period, our executive officers can earn between 0% to 150% of the target number of PRSUs granted based on the percentile rank of the our average ROTCE for the three-year performance period relative to the average ROTCE of the companies in the our peer group.
Relative ROTCE Performance | Percentage of PRSUs Vesting | |||||||
75th percentile or above | 150% |
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50th percentile (Target) | 100% |
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25th percentile | 50% |
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Below 25th percentile | 0% |
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Actual performance between the 25th percentile and the 75th percentile will be interpolated to calculate a proportionate award.
Payouts calculated based on relative ROTCE performance are subject to a potential TSR modifier (increase or decrease) based on our TSR percentile performance relative to our peer group for the three-year performance period. Payments under the 20212022 PRSUs will be adjusted as follows:
Relative TSR Performance | Increase or Decrease in Payout(1) | |||||||
Top quartile (above 75th percentile) | +15% |
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Second quartile | None |
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Third quartile | None |
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Bottom quartile (25th percentile or below) | -15% |
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| (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. |
| | Notice and Proxy Statement | 2023 | 37 |
COMPENSATION DISCUSSION AND ANALYSIS |
PRSUs will be credited with dividends paid on the company’s commonSandy 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.
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Restricted Stock AwardsUnits – The company grants RSAsWe 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 RSAs,RSUs, executive officers share the risks and rewards of stock ownership. Through multi-year vesting, RSAsRSUs also serve as a retention vehicle. RSAsRSUs vest in equal installments over three years, provided that the recipient continues to be employed by the company on each vesting date. Dividends areRSUs will be credited with dividends paid on RSAs duringSandy Spring stock, which are subject to the same terms and conditions (including the same vesting period.and delivery schedule) as the underlying RSUs.
Results of 20192020 - 2021 Performance-based Awards2022 PRSUs – The three-year performance period for the 2019 performance shares2020 PRSUs concluded on December 31, 2021.2022. Payout of the award was based 50%one-third on our TSR relative to an industry peer group, and 50%one-third on our cumulative adjusted earnings per share.share and one-third on our ROTCE relative to our peer group.
Payout percentages at various levels of performance for the 2019 performance shares2020 PRSUs and actual results are illustrated in the table below.
Corporate Goal | Threshold (50% of Target | Target Level (100% of | Maximum (150% of | Actual 2021 | Payment Level | Threshold (50% of Target | Target Level (100% of | Maximum (150% of | Actual Performance | Performance Level Achieved | Weighted Payment Level | |||||||||||||||||||||||||||||||||||||||||
Relative TSR percentile | 40th | 50th | 75th | 82.76th | 150.00% |
| 25th | 50th | 75th | 37.33th | 74.67% | 24.89% |
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3-Year Adjusted Cumulative EPS | $9.16 | $9.89 | $10.66 | $11.54(1) | 150.00% |
| $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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| (1) | See Annex A – Non-GAAP Financial Measures for reconciliation to GAAP EPS. |
Payout of the 2019 performance shares was calculated as follows:
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The following table lists the number of 2019 performance shares2020 PRSUs to which our NEOs became vested at the end of the 20192020 – 20212022 performance cycle.
Name |
Earned at (#) | |||||||
Daniel J. Schrider |
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Philip J. Mantua |
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Joseph J. O’Brien, Jr. |
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Kenneth C. Cook |
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R. Louis Caceres |
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EXECUTIVE INCENTIVE RETIREMENT NON-QUALIFIED DEFERRED COMPENSATION PLAN
AllFor 2022, executive officers participate inreceived a nonqualified, deferred compensation plan known asperformance-based supplemental retirement benefit under the NQDC Plan. This benefit was previously provided under the Executive Incentive Retirement Plan (EIRP). TheConsistent with the benefit structure under the EIRP, was created to provide a performance-based supplemental retirement benefit. Executiveexecutive officers receivereceived a minimum cash contribution of 3% of base salary with the opportunity for increased contributions based on identified performance criteria.
For 2021,2022, the committee selected core return on average assets (Core(core ROAA) as the performance metric. This is the same metric as used in 2020.2021. 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 percent of average assets. The amount of the award is determined based on the company’s Coreour core ROAA as a percent of peer median, as reflected in the table below. The amount of the award based on achievement between performance levels is determined by straight-line interpolation.
Core ROAA as % of Peer Median | 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% |
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100% | Target | 9.375% |
| 7.5% |
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150% or above | Maximum | 20.000% |
| 15.0% |
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38 |
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| | Notice and Proxy Statement | |
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COMPENSATION DISCUSSION AND ANALYSIS |
In 2021, Core2022, our core ROAA for the company for purposes of the EIRP was 1.93%1.21%. See Annex A – Non-GAAP Financial Measures for reconciliation to GAAP ROAA. Compared to the peer group median of 1.44%1.31%, the companywe achieved 134.30%92.37% of the peer group’s result, yielding a contribution of 16.66%7.75% of base salary for Mr. Schrider and 12.65%6.36% for the other executive officers. The company’s 2021Company contributions for 2022 are shown in the Nonqualified Deferred Compensation table on page 47 along with a description of the terms and conditions for balances paid under the EIRP. The 2021NCDQ Plan. 2022 contributions are also included in the Summary Compensation Table on page 42, and potential awards are further described in the Grants of Plan-Based Awards table on page 44.
5. OTHER COMPENSATION PROGRAMS AND POLICIES
401(k) Plan – Executive officers are eligible to participate in benefit plans available to all employees, including the Sandy Spring Bank 401(k) Plan. The 401(k) plan provides a 100% match on the first 4% of salary deferred and a 50% match on the next 2% of salary deferred, up to the maximum allowed by IRS regulations.
Pension Plan – The Sandy Spring Bancorp, Inc. Retirement Income Plan (Pension Plan) was generally available to employees through December 31, 2007, at which time the Pension Plan was frozen. Of the named executive officers, Mr. Schrider, Mr. Mantua, and Mr. Caceres are participants. The accumulated benefit for each may be found in the Pension Benefits table on page 46.
Life Insurance Benefits –The company maintainsWe 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 the companyus in the event of the executive’s death while the agreement remains in effect. The amount payable to the executive officer’s beneficiaries is the lesser of two and one-half times the executive’s base salary or the net death proceeds of the policies, which is defined as the total death proceeds minus the greater of the cash surrender value of the policies or the aggregate premiums paid by the company. The split dollar life insurance agreements will terminate if the executive officer has a separation from service, other than as a result of the executive officer’s disability or following a change in control, prior to the executive officer’s normal retirement date or early retirement date. An executive officer’s normal retirement date is the date on which the executive officer has attained age 65 and an executive officer’s early retirement date is the date on which the executive officer has both attained age 60 and completed ten years of service. The Summary Compensation Table on page 42 includes the taxable income associated with this benefit in the column labeled All Other Compensation.
Deferred Compensation – Executive officers are eligible to participate in the company’s nonqualified deferred compensation plan. The deferred compensation planNQDC Plan, which provides the opportunity to defer up to 25% of base salary and up to 100% of cash bonuses for payment following the six-month anniversary of any separation from service. Interest accrues on the account balance at a rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly. Contributions during 2021 and year-end account balances can be found in the Nonqualified Deferred Compensation table.
In the fourth quarter of 2021, the committee adopted a new Non-Qualified Deferred Compensation Plan (NQDC Plan) to provide deferred compensation benefits for a select group of management and highly compensated employees, including the named executive officers. The NQDC Plan provides participants with the option to defer receipt of a portion of their base salary and annual cash incentives. Participant contributions will be fully vested at all times. At its sole discretion, the company may credit participant accounts with company contributions. The company determines who will receive discretionary contributions, as well as the amounts and timing of any such contributions. Distributions of participant accounts will be made following a participant’s separation of service, death, disability, unforeseeable emergency, or as of a future payment date specified by the participant. Participants’ accounts will increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and will beare 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 table.
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.
Business-Related Benefits and Perquisites– The committee believes that perquisites should be limited in scope and have a business-related purpose. The committee periodically reviews perquisites to ensure alignment with the desired philosophy. The committee approves specific perquisites or benefits for individuals based on the needs of the position.
In 2021,2022, 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 Compensation table on page 42. In addition, Mr. Schrider receives the use of a company-owned vehicle. Mr. O’Brien, Mr. Cook and Mr. Caceres each receive a car allowance of $1,000 per month. Mr. 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. Schrider, Mr. Mantua, and Mr. Caceres have access toCook maintains a corporate membership, at company expense, at a local country club for business purposes.club.
| | Notice and Proxy Statement | | 39 |
COMPENSATION DISCUSSION AND ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTSSEVERANCE BENEFITS
The company has entered intoIn 2022, we terminated our employment agreements with Mr. Schrider, Mr. Mantua, and Mr. O’Brien and Mr. Cook and aour change in control agreement with Mr. Caceres, and adopted an Executive Severance Plan that wouldwill provide themthe named executive officers with 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 ease of administration. The committee believes that providing for severance and change in control benefits areis an important element of our executive compensation program, supportsupports the creation of long-term shareholder value, and areis necessary to attract and retain top executive talent in a competitive market. The agreements areExecutive 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 agreements doExecutive Severance Plan does not provide for any tax indemnification or “gross-up” payments for any golden parachute excise tax payments, and all change in control benefits are subject to a “double-trigger” (i.e., a change in control plus a qualifying termination of employment).
The severance benefits payable to each named executive officer under the employment and change in control agreementsExecutive Severance Plan are described on page 48 under the “Executive Compensation Tables – Potential Payments upon Termination or Change in Control” section of this proxy statement.
EXECUTIVE COMPENSATION POLICIES
Stock Ownership Requirements for Executives –The Board believes that the company’sour executive officers should accumulate meaningful equity stakes in the company in order to further align their economic interests with those of shareholders. Our stock ownership guidelines require the CEO to own shares valued at four times his or her base salary, and other executive officers are required to own shares valued at two times his or her base salary. We 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 achieved the required level of ownership, the executive officer is required to retain not less than 50% of the net shares received as a result of any equity awards granted under the company’sour equity incentive plans. Shares owned directly or beneficially 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 performance measures, and shares held in the company’sour employee stock purchase plan or 401(k) plan are included in the stock ownership calculation. Stock options are not included. As of December 31, 2021,2022, each of the named executive officers met their ownership requirement.requirement or was on track to do so within the five year grace period.
Clawback Policy – Under our Clawback Policy, in the event the company iswe are required to prepare an accounting restatement due to the company’s material noncompliance with any financial reporting requirement under the securities laws, the Board will require reimbursement or forfeiture of any excess incentive-based compensation received by current or former executive officers during the three years preceding the date on which the company iswe are required to prepare the accounting restatement.
No Hedging and No Pledging – Under our Insider Trading Policy, the company’sour directors and executive officers are prohibited from shorting company securities, entering into hedging or similar transactions that are designed to offset any decrease in the market value of company securities, borrowing against any account in which company securities are held, and pledging company securities as collateral for any loan.
We regularly undertake a systematic risk analysis of each of the company’sour incentive compensation plans that is led by our risk management department and involves participants from our human resources and legal departments. We review the plan design and governance of each plan (including plan participants, performance measures, how performance is determined, and how well the plan is aligned with company goals and objectives) to determine whether the plan creates any undesired or unintentional risk of a material nature, taking into account the mitigation factors that exist for each plan. During 2021,2022, 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 company.
The committee considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which limits the amount of compensation that may be deducted for federal income tax purposes to $1 million per covered employee per taxable year. This $1 million annual limitation applies to all compensation paid to any individual who is the chief executive officer, chief financial officer or one of the other three most highly compensated executive officers for 2017 or any subsequent calendar year. Prior to 2018, an exception to this deduction limit was available for “performance-based” compensation that was approved by shareholders and otherwise satisfied the requirements of Section 162(m). As a result of changes to Section 162(m), we may no longer take an annual deduction for any compensation paid to any of our covered employees in excess of $1 million per covered employee. The committee has not adopted a policy that would require all compensation to be deductible because the committee believes it is in the best interests of the company to retain the flexibility to make compensation decisions that respond to market conditions, properly incentivize our executive officers, and continue to attract, retain and reward top executive talent.
40 |
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| | Notice and Proxy Statement | |
|
COMPENSATION COMMITTEE REPORT |
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the committee recommends to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
March 16, 202215, 2023
Ralph F. Boyd, Chair
Brian J. Lemek
Mark C. Michael
Christina B. O’Meara
Robert L. Orndorff
Mona Abutaleb Stephenson
| | Notice and Proxy Statement | | 41 |
EXECUTIVE COMPENSATION |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock ($) | Non-Equity ($) | Change in ($) | All Other ($) | Total ($) | Year | Salary ($) | Bonus ($) | Stock ($) | Non-Equity ($) | Change in ($) | All Other ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel J. Schrider President and Chief Executive Officer | 2021 | 842,308 | — | 742,553 | 995,269 | — | 65,701 | 2,645,831 | 2022 | 867,308 | — | 850,064 | 724,063 | — | 57,422 | 2,498,857 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 804,808 | 731,156 | 684,082 | 13,877 | 79,897 | 63,179 | 2,376,999 | 2021 | 842,308 | — | 742,553 | 974,281 | — | 65,701 | 2,624,843 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 743,269 | — | 479,634 | 564,648 | 80,740 | 61,170 | 1,929,461 | 2020 | 804,808 | 731,156 | 684,082 | — | 79,897 | 63,179 | 2,363,122 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Philip J. Mantua EVP, Chief Financial Officer | 2021 | 435,385 | — | 276,312 | 357,766 | — | 39,564 | 1,109,027 | 2022 | 450,385 | — | 286,048 | 311,561 | — | 36,299 | 1,084,293 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 419,885 | 257,125 | 267,479 | 10,343 | 33,311 | 33,976 | 1,022,120 | 2021 | 435,385 | — | 276,312 | 342,980 | — | 39,564 | 1,094,241 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 401,692 | — | 184,273 | 243,799 | 35,771 | 32,460 | 897,995 | 2020 | 419,885 | 257,125 | 267,479 | — | 33,311 | 33,976 | 1,011,776 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. EVP, Chief Banking Officer | 2021 | 512,115 | — | 375,059 | 514,192 | — | 59,947 | 1,461,728 | 2022 | 529,615 | — | 388,175 | 466,036 | — | 43,756 | 1,427,582 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 487,885 | 377,500 | 345,867 | 6,192 | — | 55,220 | 1,272,864 | 2021 | 512,115 | — | 375,059 | 504,777 | — | 59,947 | 1,451,898 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 446,923 | — | 220,903 | 284,977 | — | 51,752 | 1,004,555 | 2020 | 487,885 | 377,500 | 345,867 | — | — | 55,220 | 1,266,472 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kenneth C. Cook EVP, President of Commercial Banking | 2021 | 442,308 | — | 255,001 | 439,913 | — | 37,580 | 1,174,801 | 2022 | 460,385 | — | 270,071 | 405,059 | — | 30,511 | 1,166,026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kenneth C. Cook EVP, President of Commercial Banking | 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 | 2021 | 433,846 | — | 252,073 | 355,975 | — | 53,219 | 1,095,113 | 2022 | 453,846 | — | 286,048 | 343,558 | — | 43,798 | 1,127,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 412,462 | 254,100 | 238,372 | 9,010 | 51,215 | 53,710 | 1,018,869 | 2021 | 433,846 | — | 252,073 | 342,980 | — | 53,219 | 1,082,118 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 388,769 | — | 179,582 | 233,667 | 53,342 | 52,383 | 907,743 | 2020 | 412,462 | 254,100 | 238,372 | — | 51,215 | 53,710 | 1,009,859 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 |
For |
| (2) | Non-Equity Incentive Plan Compensation. For |
Name | ETIP ($) | Contributions ($) | Earnings ($) | Total ($) | ETIP ($) | Contributions ($) | Total ($) | |||||||||||||||||||||
Daniel J. Schrider | 832,639 | 141,642 | 20,988 | 995,269 | 656,250 | 67,813 | 724,063 | |||||||||||||||||||||
Philip J. Mantua | 287,342 | 55,638 | 14,786 | 357,766 | 282,623 | 28,938 | 311,561 | |||||||||||||||||||||
Joseph J. O’Brien, Jr. | 439,339 | 65,438 | 9,415 | 514,192 | 432,010 | 34,026 | 466,036 | |||||||||||||||||||||
Kenneth C. Cook | 382,034 | 56,903 | 976 | 439,913 | 375,485 | 29,574 | 405,059 | |||||||||||||||||||||
R. Louis Caceres | 287,342 | 55,638 | 12,995 | 355,975 | 314,302 | 29,256 | 343,558 | |||||||||||||||||||||
| (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings. In |
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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 | Dividends on Restricted Stock | 401(k) Matching Contribution | Perquisites* | Total All Other Compensation | ||||||||||||||||||||||||
Daniel J. Schrider | 31,857 | 14,500 | 19,344 | 65,701 | 20,451 | 15,250 | 21,721 | 57,422 | ||||||||||||||||||||||||
Philip J. Mantua | 12,356 | 14,500 | 12,708 | 39,564 | 7,795 | 15,250 | 13,255 | 36,299 | ||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | 15,612 | 14,500 | 29,835 | 59,947 | 10,130 | 15,250 | 18,377 | 43,756 | ||||||||||||||||||||||||
Kenneth C. Cook | 7,516 | 14,500 | 15,564 | 37,580 | 5,858 | 15,250 | 9,403 | 30,511 | ||||||||||||||||||||||||
R. Louis Caceres | 11,463 | 14,500 | 27,256 | 53,219 | 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. |
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EXECUTIVE COMPENSATION |
The following table sets forth information on plan-based awards made to the named executive officers in 2021.2022.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2)(3) | All Other (#) | Grant Date ($) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2)(3) | All Other (#) | Grant Date ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel J. Schrider | RSA | 3/10/2021 | 9,129 | 371,276 | RSU | 3/16/2022 | 9,364 | 425,032 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PRSU | 3/10/2021 | 4,565 | 9,129 | 13,694 | 371,276 | PRSU | 3/16/2022 | 4,682 | 9,364 | 14,046 | 425,032 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETIP | 318,750 | 637,500 | 956,250 | ETIP | 328,125 | 656,250 | 984,375 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EIRP | 25,500 | 79,688 | 170,000 | NQDC Plan | 26,250 | 82,031 | 175,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Philip J. Mantua | RSA | 3/10/2021 | 3,397 | 138,156 | RSU | 3/16/2022 | 3,151 | 143,024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PRSU | 3/10/2021 | 1,699 | 3,397 | 5,096 | 138,156 | PRSU | 3/16/2022 | 1,576 | 3,151 | 4,727 | 143,024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETIP | 110,000 | 220,000 | 330,000 | ETIP | 113,750 | 227,500 | 341,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EIRP | 13,200 | 33,000 | 66,000 | NQDC Plan | 13,650 | 34,125 | 68,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | RSA | 3/10/2021 | 4,611 | 186,529 | RSU | 3/16/2022 | 4,276 | 194,088 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 3/10/2021 | 2,306 | 4,611 | 6,917 | 186,529 | PRSU | 3/16/2022 | 2,138 | 4,276 | 6,414 | 194,088 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETIP | 168,188 | 336,375 | 504,563 | ETIP | 173,875 | 347,750 | 521,625 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EIRP | 15,525 | 38,813 | 77,625 | NQDC Plan | 16,050 | 40,125 | 80,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kenneth C. Cook | RSA | 3/10/2021 | 3,135 | 127,500 | RSU | 3/16/2022 | 2,975 | 135,035 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PRSU | 3/10/2021 | 1,568 | 3,135 | 4,703 | 127,500 | PRSU | 3/16/2022 | 1,488 | 2,975 | 4,463 | 135,035 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETIP | 146,250 | 292,500 | 438,750 | ETIP | 151,125 | 302,250 | 453,375 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EIRP | 13,500 | 33,750 | 67,500 | NQDC Plan | 13,950 | 34,875 | 69,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Louis Caceres | RSA | 3/10/2021 | 3,099 | 126,036 | RSU | 3/16/2022 | 3,151 | 143,024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PRSU | 3/10/2021 | 1,550 | 3,099 | 4,649 | 126,036 | PRSU | 3/16/2022 | 1,576 | 3,151 | 4,727 | 143,024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETIP | 110,000 | 220,000 | 330,000 | ETIP | 126,500 | 253,000 | 379,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EIRP | 13,200 | 33,000 | 66,000 | 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 – |
| (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 |
| (3) | PRSUs will be credited with dividends paid on |
| (4) | The amounts reported are the aggregate grant date fair value of |
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EXECUTIVE COMPENSATION |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table shows information regarding all unvested equity awards held by the named executive officers at December 31, 2021.2022.
| Option Awards | Stock Awards | 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 ($)(1) | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Option ($) | 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 | 3/15/2017 | 1,211(2) | 58,225 | 4/25/2018 | 1,565(2) | 55,135 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4/25/2018 | 3,129(3) | 150,442 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/06/2019 | 2,418(4) | 116,257 | 12,001(5) | 577,008 | 3/11/2020 | 4,262(3) | 150,150 | 15,907(4) | 560,404 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/11/2020 | 8,523(6) | 409,786 | 20,445(7) | 982,996 | 3/10/2021 | 6,086(5) | 214,410 | 14,459(6) | 509,383 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2021 | 9,129(8) | 438,922 | 13,982(9) | 672,255 | 3/16/2022 | 9,364(7) | 329,894 | 14,422(8) | 508,072 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Philip J. Mantua | 3/15/2017 | 567(2) | 27,261 | 4/25/2018 | 581(2) | 20,469 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4/25/2018 | 1,163(3) | 55,917 | 3/11/2020 | 1,666(3) | 58,693 | 6,220(4) | 219,131 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/06/2019 | 929(4) | 44,666 | 4,610(5) | 221,649 | 3/10/2021 | 2,265(5) | 79,796 | 5,380(6) | 189,547 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/11/2020 | 3,333(6) | 160,251 | 7,994(7) | 384,352 | 3/16/2022 | 3,151(7) | 111,010 | 4,853(8) | 170,967 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2021 | 3,397(8) | 163,328 | 5,203(9) | 250,160 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | 3/15/2017 | 597(2) | 28,704 | 4/25/2018 | 695(2) | 24,485 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4/25/2018 | 1,390(3) | 66,831 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/06/2019 | 1,114(4) | 53,561 | 5,527(5) | 265,738 | 3/11/2020 | 2,155(3) | 75,921 | 8,043(4) | 283,355 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/11/2020 | 4,309(6) | 207,177 | 10,337(7) | 497,003 | 3/10/2021 | 3,074(5) | 108,297 | 7,303(6) | 257,286 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2021 | 4,611(8) | 221,697 | 7,062(9) | 339,541 | 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 | 10/15/2013 | 47,867 | $10.96 | 10/15/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/18/2014 | 7,838 | $10.96 | 2/18/2024 | 2/18/2014 | 7,838 | $10.96 | 2/18/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/19/2015 | 35,784 | $14.77 | 5/19/2025 | 5/19/2015 | 35,784 | $14.77 | 5/19/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6/16/2015 | 7,466 | $14.77 | 6/16/2025 | 6/16/2015 | 7,466 | $14.77 | 6/16/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/16/2016 | 10,072 | $16.20 | 2/16/2026 | 2/16/2016 | 10,072 | $16.20 | 2/16/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4/01/2020 | 3,129(6) | 150,442 | 7,508(7) | 360,985 | 4/01/2020 | 1,565(9) | 55,135 | 5,841(4) | 205,778 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2021 | 3,135(8) | 150,731 | 4,802(9) | 230,880 | 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 | 3/15/2017 | 559(2) | 26,877 | 4/25/2018 | 570(2) | 20,081 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4/25/2018 | 1,140(3) | 54,811 | 3/11/2020 | 1,485(3) | 52,317 | 5,543(4) | 195,280 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/06/2019 | 905(4) | 43,512 | 4,491(5) | 215,927 | 3/10/2021 | 2,066(5) | 72,785 | 4,908(6) | 172,919 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/11/2020 | 2,970(6) | 142,798 | 7,124(7) | 342,522 | 3/16/2022 | 3,151(7) | 111,010 | 4,853(8) | 170,967 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2021 | 3,099(8) | 149,000 | 4,747(9) | 228,236 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Aggregate market values were computed by multiplying the closing price of |
| (2) |
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2018 RSAs. |
| (3) |
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| 45 |
EXECUTIVE COMPENSATION |
| (7) | 2022 |
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| (9) | Mr. Cooks’s outstanding 2020 RSAs and 2021 RSAs vested upon his retirement on February 28, 2023. |
OPTION EXERCISES AND STOCK VESTED
The following table provides information for each of our named executive officers regarding the exercise of stock options and the vesting of stock awards during 2021. The value realized upon the exercise of stock options is equal to the difference between the market price of company stock on the date of exercise and the exercise price of the options.2022. The value realized upon the vesting of stock awards is based on the market price of companySandy Spring stock on the vesting date.
| Option Awards | Stock Awards | Stock Awards | ||||||||||||||||||||||||||
Name | Number (#) | Value on Exercise ($) | Number of Acquired (#) | Value Upon Vesting ($) | Number of Acquired (#) | Value Upon Vesting ($) | ||||||||||||||||||||||
Daniel J. Schrider | 15,873 | 659,327 | 24,499 | 1,121,419 | ||||||||||||||||||||||||
Philip J. Mantua | 6,428 | 266,829 | 9,488 | 434,294 | ||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | 7,464 | 310,803 | 11,625 | 531,906 | ||||||||||||||||||||||||
Kenneth C. Cook | 22,656 | 843,757 | 1,565 | 67,968 | 2,609 | 117,196 | ||||||||||||||||||||||
R. Louis Caceres | 5,988 | 249,119 | 9,045 | 414,179 | ||||||||||||||||||||||||
| (1) | Includes the gross number of RSAs and performance shares covering the |
The following table shows the estimated present value of the accumulated benefit under the Sandy Spring Bancorp, Inc. Retirement Income Plan (Pension Plan) for those named executive 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 (#) | Present Value of ($) | Plan Name | Number of Years (#) | Present Value of ($) | ||||||||||||||||||
Daniel J. Schrider | Pension Plan | 19 | 488,333 | Pension Plan | 19 | 343,150 | ||||||||||||||||||
Philip J. Mantua | Pension Plan | 9 | 272,053 | Pension Plan | 9 | 218,920 | ||||||||||||||||||
R. Louis Caceres | Pension Plan | 9 | 357,934 | Pension Plan | 9 | 269,154 | ||||||||||||||||||
| (1) | For additional information on the Pension Plan and the valuation methods and material assumptions applied in quantifying the present value of the current accrued benefit, see Note |
Benefits under the Pension Plan are provided on a 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
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Pension Plan benefit equals the sum of three parts: (a) the benefit accrued as of December 31, 2000, based on the formula of 1.5% of highest five-year average salary as of that date times years of service as of that date, plus (b) 1.75% of each year’s earnings after December 31, 2000 (1.75% of career average earnings) through December 31, 2005, and (c) 1.0% of each year’s earnings thereafter, through December 31, 2007.
The Pension Plan permits early retirement at age 55 after 10 years of service completed after December 31, 2000. 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
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| | 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 following table provides information regarding executive and company contributions, 20212022 earnings and year-end account balances for the named executive officers under the company’sour deferred compensation plans.
Name | Plan Name | Executive ($) | Registrant ($) | Aggregate in 2021(3) ($) | Aggregate ($) | Aggregate ($) | Plan Name | Executive ($) | Registrant ($) | Aggregate in 2022(3) ($) | Aggregate ($) | Aggregate ($) | ||||||||||||||||||||||||||||||||
Daniel J. Schrider | EIRP | n/a | 141,642 | 20,988 | - | 1,122,541 | EIRP | n/a | - | 15,780 | - | 1,138,321 | ||||||||||||||||||||||||||||||||
| NQDC Plan | - | 67,813 | - | - | 67,813 | |||||||||||||||||||||||||||||||||||||||
Philip J. Mantua | EIRP | n/a | 55,638 | 14,786 | - | 746,687 | EIRP | n/a | - | 25,995 | - | 772,682 | ||||||||||||||||||||||||||||||||
| NQDC Plan | - | 28,938 | - | - | 28,938 | |||||||||||||||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | EIRP | n/a | 65,438 | 9,415 | - | 505,480 | EIRP | n/a | - | (57,562) | - | 447,918 | ||||||||||||||||||||||||||||||||
| Deferred Compensation Plan | - | - | 414 | - | 19,345 | NQDC Plan | - | 34,026 | - | - | 34,026 | |||||||||||||||||||||||||||||||||
| Deferred Compensation Plan | - | - | 673 | - | 20,018 | |||||||||||||||||||||||||||||||||||||||
Kenneth C. Cook | EIRP | n/a | 56,903 | 976 | - | 102,504 | EIRP | n/a | - | 3,569 | - | 22,914 | ||||||||||||||||||||||||||||||||
| NQDC Plan | - | 29,574 | - | - | 29,574 | |||||||||||||||||||||||||||||||||||||||
R. Louis Caceres | EIRP | n/a | 55,638 | 12,995 | - | 662,967 | 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 |
| (3) |
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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 |
The following describes the material features of our nonqualified deferred compensation plans in which the named executive officers participate.
Executive Incentive RetirementNon-Qualified Deferred Compensation Plan–Each of our named executive officers participatesis 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 iswas credited annually to the participant’s deferred benefit account. Each year, the Compensation Committee determinesdetermined the performance measures by which a deferral bonus above the minimum may be earned. Performance measures and awards for 2021 are described under “Compensation Discussion and Analysis – 2021 Compensation” on page 38. Employer contributions under the EIRP and earnings on EIRP balances vest immediately. Interest accruesPrior to 2022, interest accrued on the account balancesbalance 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 –Each of our named executive officers is eligible Prior to participate in2022, we maintained a deferred compensation plan that provided the Sandy Spring Bank Deferred Compensation Plan (Deferred Compensation Plan), which is a nonqualified retirement savings plan. Participants mayopportunity to defer up to 25% of base salary and/or commissions earned during the year and up to 100% of bonus compensation. Interest accruescash 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. Participants will receive theirBeginning in 2022, participants’ accounts increase or decrease based on the hypothetical investment of the account balance followingbalances in one or more investment funds and are credited and debited in accordance with the six- month anniversaryactual financial performance of any separation from service. Participants are not subject to U.S. federal income tax on amounts that they defer or any investment earnings until those amounts are distributed to them.such funds.
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Under agreements that we have with 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 named executive officers, our named executive officers are entitled to compensationsenior executives and key employees in the event that their employment terminates under certain circumstances. The amount of the compensation depends on, among other things, the circumstances under which the executive officer terminates employment. In addition, our equity incentive awards contain standard provisions that cause awards to vest or be forfeited upon termination of employment, depending on the reason for termination.
The agreements that each named executive officer has with the company and the treatment of equity awards upon termination are described below, along with a table on page 51 that quantifies the amount that would become payable to each named executive officer as a result of his termination of employment.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
Daniel J. Schrider – The company entered into an employment agreement with Mr. Schrider as of January 1, 2009 to provide for his employment as President and CEO. The initial term of the agreement was for three years and provides that the Board 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 June 30, 2024. The agreement addresses such matters as Mr. Schrider’s base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.
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 without just cause, Mr. Schrider will receive his base salary and medical benefits for the remainder of the term of the agreement.
If Mr. Schrider’s 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 just cause, notwithstanding that such termination or he terminates his employment with good reason, asresignation 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 agreement (referredplan) 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 herein asresult in a “qualifying termination”),change of control (as defined in each casethe 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, he will receive a lump-sum payment equalwere to three times his average annual compensation forcause the past five years precedingparticipant to be subject to the change in control and medical benefits for the remaining termexcise tax provisions of the agreement.
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 andSection 4999 of the Internal Revenue Code for anof 1986, then the amount of the severance benefits will either be reduced, such that the excise tax on “excess parachute payments.” If any payments to Mr. Schrider trigger such excise tax, hewould not be applicable, or the participant will be entitled to receiveretain his or her full severance benefits, whichever results in the greater of the following, whichever gives him the highest net better 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 position to the excise tax.participant.
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 byExecutive Severance Plan, a covenant not to competeparticipant who undergoes an involuntary termination other than for one year and not to solicit employees for two years following termination of employment, except in the eventcause outside of a change in control.
Philip J. Mantua and Joseph J. O’Brien, Jr. – The company entered into employment agreements with Mr. Mantua and Mr. O’Brien on January 13, 2012covered period relating to provide for each executive’s employment in their respective positions. The terms of the present agreements end on June 30, 2023. Each year, the Board may act to extend the term for an additional year so that the remaining term becomes two years. The agreements do not automatically renew. The agreements address such matters as base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.
The agreements do not provide for any special or additional compensation in the event of termination due to retirement, death or resignation. In the event of termination due to disability, the executive will receive base compensation, less any applicable disability benefits, and health and welfare benefits for the remaining term of the agreement. In the event of termination by the company without just cause, or termination by the executive with good reason, as defined in the agreements, the executive will receive his base salary for the remaining term of the agreement at the highest annual rate paid in the 12 months preceding the termination plus annual cash bonuses (pro-rated for a partial year) as a lump sum payment.
If, in connection with a change in control as defined by Section 409A of the Internal Revenue Code, the executive’s employment is terminated, either involuntarily without just cause or voluntarily with good reason, within six months priorwill receive, subject to the change in control or up to two years after the change in control, the executive will receiveparticipant’s execution of a lump-sum payment equal to 2.99 times the sumgeneral release of annual salary at the highest rate paid in the preceding 12 months plus the amount of any cash bonus received for the past 12 months. The executive would also receive the continuation of health, life and disability insurance benefits for a period of three years following termination. If the total value of the benefits provided and paymentsclaims:
| • | 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 |
madeEach 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 the executive in connection with a change in control eitherand a severance multiplier of one for termination outside of a covered period. Severance benefits payable under the agreement alone or togetherExecutive 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 other payments and benefits received, would resulttheir participation in an “excess parachute payment” under Section 280Gthe Executive Severance Plan, each of the Internal Revenue Code,named executive officers agreed to the severance payment will be reduced or revised so that the aggregate payments do not include an excess parachute payment.
The executive is prohibited from conflicts of interest and is required to maintain the confidentiality of nonpublic information regarding the company and its clients. The executive is also bound by a covenant not to compete and not to interfere with other employees following termination of his employment for the remaining term of the agreement. The post-termination restrictions do not apply if there is aor change in control or if the executive’s employment is terminated without just cause by the company or with good reason by the executive.
Kenneth C. Cook – The company entered into an employment agreement with Mr. Cook on September 23, 2019 in connection with the acquisition of Revere Bank, for which he served as co-Chief Executive Officer, which became effective on April 1, 2020 when the acquisition was completed. The agreement has a term of 30 months. The agreement addresses such matters as base salary, participation in incentive compensation, participation in benefit plans, vacation, insurance and other fringe benefits.agreement.
The agreement does not provide for any special or additional compensation in the event of termination due to retirement, death, disability or resignation without good reason. In the event of termination by the company without just cause, or termination by Mr. Cook with good reason, as defined in the agreement, Mr. Cook will receive his base salary for the remaining term of the agreement at the highest annual rate paid in the 12 months preceding the termination plus annual cash bonuses (pro-rated forExecutive Severance Plan also includes a partial year) as a lump sum payment. The agreement does not provide for any special severance benefit in the event of termination in connection with a change in control.
Mr. Cook is prohibited from conflicts of interestnon-disclosure obligation and is required to maintain the confidentiality of nonpublic information regarding the company and its clients. Mr. Cook is also bound by covenants not to compete,an obligation not to solicit clients, and not to interfere with otherour employees following termination of employment for any reasonor clients for a period of 24 months.
R. Louis Caceres – Mr. Caceres has a change in control agreement with12 months after the company. The change in control agreement has a term of two years. On each anniversary date of the agreement, the agreement will automatically be extended for an additional year, unless either party has given written notice at least 60 days prior to the anniversary dateparticipant’s termination of the agreement that the agreement will not be extended.
If a change in control occurs and Mr. Caceres’ employment is involuntarily terminated without just cause or Mr. Caceres voluntarily terminates employment with good reason, as defined in the agreement, during the term of the agreement, Mr. Caceres will be entitled to a payment equal to 2.99 times his total compensation, which is defined as one year’s base salary plus bonus payments and all other taxable compensation. Mr. Caceres would also receive the continuation of health, life and disability insurance benefits for a period of three years following termination. Under the change in control agreement, if the total value of the benefits provided and payments made to Mr. Caceres in connection with a change in control, either under the change in control agreement alone or together with other payments and benefits that he has the right to receive, would result in the imposition of an excise tax under Section 280G of the Internal Revenue Code, his severance payment will be reduced or revised so that the aggregate payments do not trigger the payment of the excise tax.employment.
EQUITY AWARDS – CONSEQUENCES OF TERMINATION OF EMPLOYMENT
The following table shows how RSAsequity awards are treated if a named executive officer terminates employment:
| Event | Consequences | ||
| 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. |
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The following table shows how PRSUs are treated if a named executive officer terminates employment:
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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. |
| | Notice and Proxy Statement | 2023 | 49 |
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, 20212022 is set forth in the Pension Benefits and Nonqualified Deferred Compensation tables. All of our named executive officers are fully vested in the benefits described in those sections, except for Mr. O’Brien, whose unvested balance in the EIRP was $6,718 at December 31, 2021, and there is no increase in those benefits upon termination. Benefits under the EIRP are forfeited in the event of termination for cause.
POTENTIAL PAYMENTS 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, 20212022 are shown in the table below. These amounts are estimates only. The actual amounts to be paid can only be determined at the time the executive becomes eligible for payment. Valuation of equity awards was based on the closing price of our common stock on December 31, 2021,30, 2022, which was $48.08$35.23 per share. In the event of termination for just cause or resignation without good reason,voluntary termination, the named executive officers would receive only their salary through the date of termination.
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Name | Death ($) | Disability ($) | Termination ($) | Change in ($) | Death ($) | Disability ($) | Termination ($) | Change in ($) | ||||||||||||||||||||||||||||
Daniel J. Schrider | Cash severance(1)(2) | — | — | 2,125,000 | 4,216,021 | Cash severance(1)(2) | — | — | 875,000 | 4,593,750 | ||||||||||||||||||||||||||
Welfare benefits(3) | — | 74,978 | 49,804 | 89,974 | Welfare benefits(3) | — | — | 31,654 | 94,961 | |||||||||||||||||||||||||||
Split-dollar life insurance(4) | 2,125,000 | — | — | — | Split-dollar life insurance(4) | 2,187,500 | — | — | — | |||||||||||||||||||||||||||
RSAs(5) | 1,173,633 | 1,173,633 | — | 1,173,633 | RSAs/RSUs(5) | 749,589 | 749,589 | — | 749,589 | |||||||||||||||||||||||||||
PRSUs(6) | 1,103,484 | — | — | 1,103,484 | PRSUs(6) | 678,304 | — | — | 678,304 | |||||||||||||||||||||||||||
Philip J. Mantua | Cash severance(1)(2)(7) | — | 660,000 | 978,750 | 1,950,975 | Cash severance(1)(2)(7) | — | — | 455,000 | 2,047,500 | ||||||||||||||||||||||||||
Welfare benefits(3) | — | 29,882 | — | 59,764 | Welfare benefits(3) | — | — | 31,654 | 94,961 | |||||||||||||||||||||||||||
Split-dollar life insurance(4) | 1,100,000 | — | — | — | Split-dollar life insurance(4) | 1,137,500 | — | — | — | |||||||||||||||||||||||||||
RSAs(5) | 451,423 | 451,423 | — | 451,423 | RSAs/RSUs(5) | 269,967 | 269,967 | — | 269,967 | |||||||||||||||||||||||||||
PRSUs(6) | 423,056 | — | — | 423,056 | PRSUs(6) | 240,343 | — | — | 240,343 | |||||||||||||||||||||||||||
Joseph J. O’Brien, Jr. | Cash severance(1)(2)(7) | — | 776,250 | 1,263,750 | 2,519,075 | Cash severance(1)(2)(7) | — | — | 535,000 | 2,648,250 | ||||||||||||||||||||||||||
Welfare benefits(3) | — | 29,882 | — | 59,764 | Welfare benefits(3) | — | — | 31,654 | 94,961 | |||||||||||||||||||||||||||
Split-dollar life insurance(4) | 1,293,750 | — | — | — | Split-dollar life insurance(4) | 1,337,500 | — | — | — | |||||||||||||||||||||||||||
RSAs(5) | 577,970 | 577,970 | — | 577,970 | RSAs/RSUs(5) | 359,346 | 359,346 | — | 359,346 | |||||||||||||||||||||||||||
PRSUs(6) | 557,680 | — | — | 557,680 | PRSUs(6) | 326,196 | — | — | 326,196 | |||||||||||||||||||||||||||
Kenneth C. Cook | Cash severance(1)(2)(7) | — | 337,500 | 512,813 | — | |||||||||||||||||||||||||||||||
RSAs(5) | 301,173 | 301,173 | — | 301,173 | ||||||||||||||||||||||||||||||||
PRSUs(6) | 153,904 | — | — | 153,904 | ||||||||||||||||||||||||||||||||
R. Louis Caceres | Cash severance(1)(2) | — | — | — | 1,943,500 | Cash severance(1)(2) | — | — | 460,000 | 2,139,000 | ||||||||||||||||||||||||||
Welfare benefits(3) | — | — | — | 59,764 | Welfare benefits(3) | — | — | 31,654 | 94,961 | |||||||||||||||||||||||||||
Split-dollar life insurance(4) | 1,100,000 | — | — | — | Split-dollar life insurance(4) | 1,150,000 | — | — | — | |||||||||||||||||||||||||||
RSAs(5) | 416,998 | 416,998 | — | 416,998 | RSAs/RSUs(5) | 256,193 | 256,193 | — | 256,193 | |||||||||||||||||||||||||||
PRSUs(6) | 323,482 | — | — | 323,482 | PRSUs(6) | 229,257 | — | — | 229,257 | |||||||||||||||||||||||||||
| (1) | Amounts are payable under the terms of the |
| (2) | Amounts listed under “Change in control and qualifying termination” do not reflect the fact that under the |
| (3) | Amount represents health insurance benefits to be paid under the |
| (4) | Amounts are payable to the named executive officer’s beneficiaries under split-dollar life insurance agreements that |
| (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 | ||
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EXECUTIVE COMPENSATION |
RELATIONSHIP BETWEEN PAY AND FINANCIAL PERFORMANCE
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CEO PAY RATIO |
The company isWe 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 the company’sour payroll records and the methodology described below, and was calculated in a manner consistent with SEC rules. Because SEC rules for identifying the median employee and calculating the pay ratio allow companies to use variety of methodologies, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
The companyWe selected October 29, 2021November 20, 2022 as the determination date for identifying the median employee. Year-to-date taxable wages paid from January 1, 20212022 to October 29, 2021November 20, 2022 for all employees as of the determination date, with the exception of Mr. Schrider, were arrayed from lowest to highest. Wages of newly hired permanent employees were adjusted to represent wages for the entire measurement period. This period captured all incentive payments for the tax year as well as the vesting of equity awards, as applicable. The median employee was identified, and total compensation for the median employee was calculated in the manner required for the Summary Compensation Table. Mr. Schrider’s total compensation for 2021,2022, as disclosed in the Summary Compensation Table, was $2,645,831$2,498,857 and the median employee’s was $93,268,$87,157, producing a ratio of 2829 to 1.
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PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS |
APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS
BACKGROUND
The company’sOur 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 ExecutiveNominating 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 20222023 annual meeting of shareholders, the The Board of Directors of the Corporation shall be divided into three classes as nearly equal in number as the then total number of directors constituting the entire Board of Directors shall permit, which classes shall be designated Class I, Class II and Class III. At each annual meeting of shareholders beginningin 1992with the 20232024 annual meeting of shareholders, successors to theclass ofdirectors whose terms expires at such annual meeting shall be elected for a term of three yearsexpiring at the next annual meeting of shareholders following the director’s election and until such director’s successor is elected and qualifies, or until his or her earlier death, resignation, disqualification or removal.
(1)The following directors shall be assigned to Class I and shall serve until the 1994 annual meeting of shareholders:
Andrew N. Adams, Jr.
Robert L. 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
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PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS |
Notwithstanding the foregoing, a director whose term shall expire at any annual meeting shall continue to serve until such time as his successor shall have been duly elected and shall have qualifiedunless his position on the Board of Directors shall have been abolished by action taken to reduce the size of the Board of Directors prior to said meeting.
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Should the number of directors of the Corporation be reduced, the directorship(s) eliminated shall be allocated among classes as appropriate so that the number of directors in each class is as nearly equal as possible. The Board of Directors shall designate, by the name of the incumbent(s), the position(s) to be abolished. Notwithstanding the foregoing, no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. Should the number of directors of the Corporation be increased, the additional directorships shall be allocated among classes as appropriate so that the number of directors in each class is as nearly equal as possible.
Whenever the holders of anyone or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the Board of Directors shall consist of said directors so elected in addition to the number of directors fixed as provided above in this Article IX. Notwithstanding the foregoing, and except as otherwise may be required by applicable law, whenever the holders of anyone or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the terms of the director or directors elected by such holders shall expire at the next succeeding annual meeting of shareholders.
ARTICLE XI of the Articles of Incorporation would be deleted in its entirety and replaced with new ARTICLE XI.
Subject to the rights of the holders of any class separately entitled to elect one or more directors, any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the directors then in office, whether or not a quorum, or by the affirmative vote of the holders of a majority of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors.A director so chosen by shareholders shall hold office for the remainder of the term of the class to which the director is assigned.A director elected by theBoard of Directorsshareholders to fill a vacancy resulting from the removal of a director shall hold office for the remainder of the term of the removed director. A director elected by the Board of Directors to fill a vacancy resulting from any cause other than removal of a director shall hold office for a term expiring at the followinguntil the next annual meeting of shareholders and until his or her successor is elected and qualifies.
REASONS FOR THE PROPOSED AMENDMENTS
The ExecutiveNominating 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 ExecutiveNominating 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 the company’sour vulnerability to coercive takeover tactics. The Board also recognizes the growingstrong sentiment among the investment community in favor of annual elections, that many institutional investors believe that the election of directors is the primary means for shareholders to influence corporate governance policies and to hold management accountable for implementing those policies, and that a classified board structure does not enable shareholders to express a view on each director’s performance by means of an annual vote.
After carefully weighing these and other factors (including that the number of public companies with classified boards continues to decline), the Board has determined that it is in the best interests of the company and our shareholders to declassify the Board and recommends that shareholders approve the proposed amendments to effectuate the declassification.
EFFECT OF THE PROPOSED AMENDMENTS
If the proposed amendments are approved, the current classified board structure will be phased out over a three-year period beginning at the 20232024 annual meeting of shareholders. Directors elected to three-year terms prior to the effectiveness of the proposed amendment (including the directors elected at this annual meeting) will complete those terms. Beginning with the 20232024 annual meeting, directors will stand for election on an annual basis for one-year terms. Beginning with the 20252026 annual meeting of shareholders, all directors will stand for election annually and the Board will no longer be classified.
If the proposed amendments to the Articles of Incorporation to declassify the Board are not approved by our shareholders, the Articles of Incorporation will not be amended as set forth above and the Board will continue to be classified with directors serving staggered, three-year terms.
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.
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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.
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PROPOSAL 4: ADVISORY VOTE TO APPROVE THE COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS |
ADVISORY VOTE TO APPROVE THE COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Protection Act requires companies to submit to shareholders a non-binding vote on the compensation of the named executive officers, as described in the Compensation Discussion and Analysis, the tabular disclosure regarding named executive officer compensation, and the accompanying narrative disclosure in this proxy statement. The Board 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 and may not be construed as overruling a decision by the Board nor to create or imply any additional fiduciary duty by the Board. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
The Board 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 with theour long-term success of the company and the interests of shareholders.
VOTING STANDARD
This matter will be decided by the vote of a majority of the votes cast at the annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
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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 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 frequency of shareholder approval of 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 annual “say on pay” vote will allow shareholders to provide timely, direct input on our executive compensation philosophy, policies and practices as disclosed in the proxy statement each year, and recommends that shareholders select a frequency of every one year. As an advisory vote, the results of the vote on this proposal are not binding on the Board.
VOTING STANDARD
This matter 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EVERY “ONE YEAR” AS THE PREFERRED FREQUENCY FOR THE ADVISORY VOTE ON THE APPROVAL OF COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS.
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PROPOSAL |
RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the company’sour financial statements. The committee has appointed Ernst & Young LLP to serve as the company’sour independent registered public accounting firm for fiscal 2022.2023. In accordance with established policy, the Board is submitting the appointment of Ernst & Young LLP to the vote of the shareholders for ratification. In the event the appointment is not ratified by 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 2023.2024.
In reaching its decision to engage Ernst & Young LLP, the committee 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 committee and with management, and the fee structure that was negotiated. After discussion of these factors, the committee 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 2022.2023.
Ernst & Young LLP 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 independence standards, were pre-approved by the committee.
Representatives of Ernst & Young LLP are expected to be present 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
This matter will be decided by the majority of the votes cast at the annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “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, 20212022 and December 31, 2020,2021, together with fees billed for other services.
2021 ($) | 2020 ($) | 2022 ($) | 2021 ($) | |||||||||||||
Audit Fees | 1,050,000 | 1,280,500 | 1,577,000 | 1,050,000 | ||||||||||||
Audit-Related Fees | — | — | — | — | ||||||||||||
Tax Services | 279,000 | 207,000 | 187,766 | 279,000 | ||||||||||||
All Other Fees | — | — | 50,000 | — | ||||||||||||
Total | 1,329,000 | 1,487,500 | 1,814,766 | 1,329,000 | ||||||||||||
“Audit Fees” consist of fees for professional services rendered for the annual audit of the company’sour consolidated financial statements, including the integrated audit of internal control over financial reporting, and review of financial statements included in the company’sour 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. Also included in 2020 are fees related to implementation of the current expected credit loss model and the acquisitions of Revere Bank and Rembert Pendleton Jackson.
“Tax Services” consist of 1099 processing fees for trust clients of Sandy Spring Bank.
“All Other Fees” consist of fees for permissible services not related to financial reporting.
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PROPOSAL |
AUDIT COMMITTEE’S PREAPPROVAL POLICIES AND PROCEDURES
The committee 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 LLP. An exception for preapproval of non-audit services may be made if:
the aggregate amount of all such non-audit services provided to the company constitutes not more than 5% of the total amount of revenues paid by it to the independent registered public accounting firm during the fiscal year in which the non-audit services are provided;
| • | the aggregate amount of all such non-audit services provided to the company constitutes not more than 5% of the total amount of revenues paid by it to the independent registered public accounting firm during the fiscal year in which the non-audit services are provided; |
such services were not recognized by the company at the time of the engagement to be non-audit services; and the non-audit services are promptly brought to the attention of the committee and approved by the committee or by one or more members of the committee to whom authority to grant such approval has been delegated by the committee prior to the completion of the audit.
| • | such services were not recognized by the company at the time of the engagement to be non-audit services; and the non-audit services are promptly brought to the attention of the committee and approved by the committee or by one or more members of the committee to whom authority to grant such approval has been delegated by the committee prior to the completion of the audit. |
All audit services, tax services and permitted non-audit services to be performed by Ernst & Young LLP have been preapproved by the committee as required by SEC regulations and the committee’s charter without exception. The committee also has determined that the amount and nature of non-audit services rendered by Ernst & Young LLP to the company is consistent with its independence.
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AUDIT COMMITTEE REPORT |
The Audit Committee of the Board of Directors is currently composed of five independent directors and operates under a written charter adopted by the Board. The Audit Committee is appointed by the Board to assist the Board in monitoring: (1) the integrity of the company’s accounting and financial statements and reporting process; (2) the qualifications, independence, and performance of the company’s independent registered public accounting firm; and (3) the qualifications and performance of the company’s internal audit department.
The committee is directly responsible for the appointment and oversight of the independent registered public accounting firm, including review of their general qualifications, specific experience in the financial sector, and compensation structure. The committee has engaged Ernst & Young LLP since 2013. 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 2021,2022, the committee met eight times, four of which were to approve quarterly earnings releases, to carry out its duties and responsibilities as set forth in the Audit Committee charter that is available on the company’s investor relations website.
In fulfilling its oversight duties, the committee:
reviewed and discussed with management and Ernst & Young LLP the scope and effectiveness of the company’s disclosure controls and procedures;
| • | reviewed and discussed with management and Ernst & Young LLP the scope and effectiveness of the company’s disclosure controls and procedures; |
reviewed and discussed the company’s audited and unaudited financial statements with management and Ernst & Young LLP each quarter, prior to filing with the SEC and releasing to the public, for purposes of evaluating their accuracy and fair presentation of the company’s financial condition;
| • | reviewed and discussed the company’s audited and unaudited financial statements with management and Ernst & Young LLP each quarter, prior to filing with the SEC and releasing to the public, for purposes of evaluating their accuracy and fair presentation of the company’s financial condition; |
discussed with Ernst & Young LLP the critical audit matters and the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC, including, but not limited to, the audit strategy, scope and plan for the audit work, and the significant risks and areas of audit focus;
| • | discussed with Ernst & Young LLP the critical audit matters and the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC, including, but not limited to, the audit strategy, scope and plan for the audit work, and the significant risks and areas of audit focus; |
met with Ernst & Young LLP, with and without members of management present, to discuss the results of their evaluation of the integrity of the company’s financial reporting;
| • | met with Ernst & Young LLP, with and without members of management present, to discuss the results of their evaluation of the integrity of the company’s financial reporting; |
received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable standards of the Public Company Accounting Oversight Board;
| • | 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;
| • | reviewed and discussed with Ernst & Young LLP the matter of auditor independence; |
met regularly with the company’s chief internal auditor, with and without members of management present, to review and approve the annual risk-based audit plan, to review all audit reports, to track the timely resolution of any findings, and to assess the performance of the chief internal auditor; and
| • | met regularly with the company’s chief internal auditor, with and without members of management present, to review and approve the annual risk-based audit plan, to review all audit reports, to track the timely resolution of any findings, and to assess the performance of the chief internal auditor; and |
reviewed and monitored compliance with the “whistleblower” provisions of the Sarbanes-Oxley Act.
| • | reviewed and monitored compliance with the “whistleblower” provisions of the Sarbanes-Oxley Act. |
Based upon the reviews and discussions described above, the committee recommended to the company’s Board of Directors that the audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.
February 16, 202214, 2023 Pamela A. Little, Chair
Brian J. Lemek
Walter C. Martz II
Mark C. Micklem
Robert L. Orndorff
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INFORMATION ABOUT THE MEETING |
HOW CAN I PARTICIPATE IN THE ANNUAL MEETING?
Our annual meeting will be held on May 18, 2022 at 10:00 a.m., Eastern Time by meansAll holders of a live webcast. There will be no physical location forSandy Spring stock as of the record date (March 8, 2023) and persons holding valid proxies from such shareholders are invited to attend the annual meeting. To participate in the virtual meeting, access the meeting site https://meetnow.global/MMYUPAD and register using the control number found on your Notice of Internet Availability of Proxy Materials, proxy card or voting instruction form. You must have the control number in order to vote your shares at the meeting. Online access will begin at 9:30 a.m. We encourage you to access the meeting webcast prior to the start time. If you hold your shares through an intermediary, such as a broker or bank, you must pre-register with our transfer agent, as described below, to obtain a control number that will allow you to vote at the annual meeting.
HOW CAN I ASK QUESTIONS?
You may submit questions either before or during the meeting. To submit a question, access the virtual meeting site at https://meetnow.global/MMYUPAD. Click on the Q&A icon and submit your question. Questions pertinent to meeting matters will be answered during the meeting, subject to time limitations.
WILL I BE ABLE TO VOTE MY SHARES DURING THE MEETING?
You will be able to vote your shares electronically during the annual meeting. Please see “Voting Matters” below for additional information on voting. We encourage you to vote your shares priorgain entrance to the annual meeting.
Pre-registration for Beneficial Holders. Shareholders holding shares through an intermediary, such asmeeting, you must present valid, government-issued photo identification. If you are not a broker or bank,shareholder of record, you must register in advance if they want to vote their shares at the annual meeting. These shareholders must submit a copyalso present evidence of your legal proxy reflecting yourownership of Sandy Spring Bancorp, Inc. holdings along with your name and email address to Computershare by email to legalproxy@computershare.com or by mail to: Computershare, Sandy Spring Bancorp, Inc., Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001. Requests for registration must be received no later than 5:00 p.m. Eastern Time on May 13, 2021. To accessstock as of the meeting go to https://meetnow.global/MMYUPAD.record date.
Shares Entitled to Vote. Holders of the company’sSandy Spring common stock, par value $1.00 per share, as of the close of business on the record date of March 9, 20028, 2023 are eligible to vote at the annual meeting. On that date, 45,425,66244,820,452 shares of common stock were outstanding and eligible to vote. Each share of common stock entitles the holder to one vote on the items of business to be considered at the annual meeting.
Quorum Requirements. The presence, in person or by proxy, of holders of a majority of the company’sour outstanding common stock is required to constitute a quorum for the transaction of business at the annual meeting. Shareholders who deliver valid proxies or attend the meeting virtually using their control numberin 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 present at the meeting shares present but not voting, shares for which we have received proxies but for which holders have abstained from voting, and broker “non-votes” (explained below).
Voting Procedures. You may vote your shares in one of several ways, depending upon how you own your shares.
If you are a shareholder of record, meaning that you hold Sandy Spring stock directly (not through a bank, broker or other nominee), you canmay vote in person at the annual meeting or by submitting your proxy in any one of fourfollowing ways:
Voting on the internet.
| • | Voting on the internet. Go to www.envisionreports.com/sasr and follow the instructions. You will need to have your control number (from your |
| • | 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 when you go to the website.
Voting by telephone. Call the phone number on your proxy card or voting instruction form and follow the instructions. You will need to have your control number with you when you call.
Voting by mail. Complete, sign, date and return your proxy card in the envelope provided in advance of the meeting.
Voting at the virtual meeting. You will be able to vote your shares at the virtual meeting by accessing the virtual meeting site https://meetnow.global/MMYUPAD and registering asare a shareholder with the control number found on your Notice of Internet Availability of Proxy Materials or proxy card.
Ifbeneficial holder, meaning that you hold your shares through a bank, broker or other nominee, you must follow the voting instructions you receive from the holder of record to vote your shares. If you wishare a beneficial owner and you would like to vote in person at the annual meeting, you must follow the instructions above to obtainalso present a control number. written legal proxy from your broker, bank, or other nominee.
If you hold your
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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 isnot allowed to vote shares on your behalf on such matters without your specific instruction.If you do not instruct your broker how to vote on these matters, no votes will be cast on your behalf. Your broker will have discretion to vote any uninstructed shares on matters considered routine items, such as ratification of the appointment of the independent registered public accounting firm (Proposal 4)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).
All shares represented by valid proxies that are not revoked will be voted at the annual meeting in accordance with your voting instructions. If you properly submit a proxy without specifying how you want your shares to be voted, your shares will be voted in accordance with the recommendations of the Board. If your shares are held with the company’sour transfer agent, Computershare, and you do not return your proxy, no votes will be cast on your behalf.
Employee shareholders. If you participate in the Sandy Spring Bank 401(k) Plan (the “401(k) plan”), and your plan account holds shares of our common stock, you must provide voting instructions to Principal Trust Company, the trustee for the 401(k) plan by internet, telephone, or proxy card for the shares to be voted according to your instructions. Your voting instructions to the trustee will be held in strict confidence. The deadline to provide voting instructions for shares held in the 401(k) plan is May 13, 2022,19, 2023, at 11:59 p.m., Eastern time.Time. After the voting instruction deadline, you will not be able to submit voting instructions or change prior voting instructions for any shares. If you do not direct the trustee how to vote the shares in your 401(k) plan account, the trustee will vote the shares in the 401(k) plan in the same proportion as the voting instructions it receives from other participants as of the voting instruction deadline.
VOTES REQUIRED
Proposal 1: Election of Directors. Directors are elected by a plurality of the votes cast at the annual meeting by holders of common stock. This means that the three nominees for election as directors who receive the most affirmative votes will be elected. Pursuant to our Articles of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. The Board has adopted a majority vote policy that provides that, in an uncontested election, if an incumbent director nominee receives a greater number of votes “withheld” than cast “for” the director’s election, the director is required to immediately tender their resignation from the Board. Upon receipt of the director’s resignation, the Nominating Committee will make a recommendation to the Board about whether to accept or reject the resignation. The Board will act on the Nominating Committee’s recommendation within 120 days from the annual meeting.
| • | Proposal 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, |
Proposal 2: Amendment of Articles of Incorporation. The amendments to the Articles of Incorporation to declassify the Board will be approved if the holders of at least 80 percent of the outstanding shares of common stock entitled to vote at the annual meeting vote in favor of the amendments.
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Proposal 3: Advisory vote on executive compensation. The advisory vote on the compensation of the named executive officers disclosed in the proxy statement will be approved if the votes cast “for” the proposal exceed the votes cast “against” the proposal.
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 4: Ratification of appointment of independent registered public accounting firm. Ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for 2022 will be approved if the votes cast “for” the proposal exceed the votes cast “against” the proposal.
| • | 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 cast a vote are not considered “votes cast” and will therefore have no effect on the voting outcome of the election of directors, the advisory vote on executive compensation, 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 failure to cast a vote will have the same effect as a vote “against” amendment of the Articles of Incorporation.Incorporation in Proposal 2 and 3.
A “broker non-vote” occurs on an item of business when a registered shareholder does not vote its client’s shares on the item but votes on another matter presented at the meeting. This typically occurs when the registered shareholder (usually a broker or bank) has either voting instructions from its client or discretionary voting authority under NYSE rules to vote on one item of business and not on other items. Brokers and other share custodians do not have discretion to vote on non-routine matters unless the beneficial owner of the shares has given explicit voting instructions. Consequently, if you do not give your broker or share custodian explicit voting instructions, your shares will not be voted on the election of directors, amendment of the Articles of Incorporation, or the advisory vote on executive compensation, and your shares will instead be considered “broker non-votes” on each such item. The ratification of the appointment of Ernst & Young LP as our independent registered public accounting firm for 20222023 is considered a routine matter and, as such, your broker or share custodian of record is entitled to vote your shares on such proposal in its discretion if you do not provide voting instructions on that item.
Revocation of Proxies. Shareholders who execute proxies retain the right to revoke them at any time before their shares are voted by proxy at the meeting. A shareholder may revoke a proxy by delivering a signed statement to our Corporate Secretary prior to the annual meeting or by delivering an executed proxy bearing a later date (including a proxy given by internet or telephone). You may also revoke a previously issued proxy by voting at the virtual annual meeting.
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To reduce the amount of paper used in producing these proxy materials, as well as lower printing and mailing expenses, the company is furnishing its proxy statement and annual report via the Internet according to the SEC rules for “Notice and Access.” On or about April 6, 2022, the company mailed a Notice of Internet Availability of Proxy Materials to all shareholders who had not previously elected to receive their proxy materials by mail or electronically containing instructions on how to access this proxy statement and our annual report and how to vote online. Upon receipt of the Notice of Internet Availability, shareholders may choose to request a printed copy of proxy materials at no charge, and this preference will be maintained for future mailings.
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 annual report with separate proxy cards or separate Notices of Internet Availability, to multiple shareholders who share an address, unless we receive contrary instructions. If (1) you and another registered holder share an address and each receive paper copies of our proxy material and wish to receive only one paper copy or (2) you share an address with another registered holder, received a single set of our proxy materials, and would like to receive separate copies, you may request a change in delivery preferences by telephoning our transfer agent at 1-800-368-5948 or writing the transfer agent at Computershare Trust Company, P.O. Box 505005, Louisville, KY 40233.43078, 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
We will pay the cost of soliciting proxies. In addition to soliciting proxies by mail or electronic delivery, we also may solicit proxies through our directors, officers, and employees. None of our directors, officers or employees will receive any additional or special compensation for soliciting
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INFORMATION ABOUT THE MEETING |
proxies. In addition, we have engaged Alliance Advisors,Georgeson LLC to assist us in soliciting proxies at an estimated cost of $7,000$9,500 plus expenses. We also will reimburse banks, brokers and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners of our stock.
PROPOSALS FOR THE 20232024 ANNUAL MEETING OF SHAREHOLDERS
Under SEC Rule 14a-8, a shareholder desiring to make a proposal to be included in the proxy statement for the 20232024 annual meeting of shareholders must submit such proposal to the following address: Corporate Secretary, Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832. Proposals must be received no later than the close of business on December 7, 2022,13, 2023, and must comply with SEC Rule 14a-8 in order for the proposal to be considered for inclusion in the company’sour 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 candidates for election to the 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 the preceding year’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 no later than the later of the 90 days prior to such 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. To be in proper form, the notice must contain the information required by Article II, Section 13 of our Bylaws.
If the shareholder (or a qualified representative of the shareholder) does not appear at the annual meeting to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted.
To comply with the universal 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 email to ir@sandyspringbank.com.
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, the companywe knew of no other matters that might be presented for shareholder action at the annual meeting.
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ANNEX A: NON-GAAP FINANCIAL MEASURES |
ANNEX A: NON-GAAP FINANCIAL MEASURES
As discussed in the Compensation Discussion and Analysis included in this proxy statement, the Compensation Committee uses non-GAAP financial measures to evaluate the company’sour performance under the company’sour incentive compensation plans. Typically, the Compensation Committee adjusts GAAP net income, or elements of net income, for non-core performance items so that participants are compensated for the company’sour 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:
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| • | 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, |
| • | Adjusted EPS. Adjusted earnings and the related measure of adjusted earnings per share reflect net income exclusive of merger, acquisition and |
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These non-GAAP financial measures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures with similar names that may be presented by other companies. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.
PRE-PROVISION NET REVENUECORE EARNINGS AND CORE ROTCE
(In thousands) | ||||||||
Net income (a) | $ | |||||||
Plus/(less) non-GAAP | ||||||||
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| 4,333 | |||||||
Contingent payment expense | 929 | |||||||
Gain on disposal of assets | (12,309) | |||||||
Investment securities losses | ||||||||
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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% | |||||||
| (1) | Net of combined federal and state marginal tax rate. |
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ANNEX A: NON-GAAP FINANCIAL MEASURES |
NON-GAAP EFFICIENCY RATIO
(Dollars in thousands) | ||||||||
Non-interest expense (a) | $ | |||||||
Less non-GAAP adjustments: | ||||||||
Amortization of intangible assets | ||||||||
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Non-interest expense – as adjusted (b) | $ | |||||||
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Net interest income plus non-interest income (c) | $ | |||||||
Plus non-GAAP adjustment: | ||||||||
Tax-equivalent income | ||||||||
Investment securities losses | 345 | |||||||
Less non-GAAP adjustment: | ||||||||
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Net interest income plus non-interest income – as adjusted (d) | $ | |||||||
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Efficiency ratio (non-GAAP) (b ÷ d) | ||||||||
3-YEAR ADJUSTED CUMULATIVE EPS
(In thousands, except per share data) | 2021 | 2020 | 2019 | 2022 | 2021 | 2020 | ||||||||||||||||||
Net income | $235,107 | $96,953 | $116,433 | $166,298 | $235,107 | $96,953 | ||||||||||||||||||
Plus non-GAAP adjustments (net of tax): | ||||||||||||||||||||||||
Merger and acquisition expense | 34 | 19,614 | 999 | |||||||||||||||||||||
Merger, acquisition and disposal expense | 796 | 34 | 19,614 | |||||||||||||||||||||
Branch closing costs | 1,944 | 712 | 359 | 1,944 | 712 | |||||||||||||||||||
Contingent payment expense | 929 | — | — | |||||||||||||||||||||
Loss on FHLB redemption | 6,779 | 4,619 | — | — | 6,779 | 4,619 | ||||||||||||||||||
Gain on sale of assets | (12,309 | ) | — | — | ||||||||||||||||||||
Merger-related provision for credit losses | — | 13,636 | — | — | — | 13,636 | ||||||||||||||||||
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Net income – as adjusted | $243,864 | $135,534 | $117,791 | $155,714 | $243,864 | $135,534 | ||||||||||||||||||
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Diluted weighted average common shares | 46,899 | 44,132 | 35,618 | 45,039 | 46,899 | 44,132 | ||||||||||||||||||
Diluted net income per common share (GAAP) | $4.98 | $2.19 | $3.25 | $3.68 | $4.98 | $2.19 | ||||||||||||||||||
Diluted net income per common share – as adjusted (non-GAAP) | $5.20 | $3.05 | $3.29 | $3.46 | $5.20 | $3.05 | ||||||||||||||||||
A-2 |
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ANNEX A: NON-GAAP FINANCIAL MEASURES |
CORE ROAA
(Dollars in thousands) | |||||||||
Net income (a) | $ | ||||||||
Plus/(less) non-GAAP adjustments (net of tax1): | |||||||||
Merger, acquisition and | |||||||||
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Amortization of intangible assets | |||||||||
Contingent payment expense | 985 | ||||||||
Gain on disposal of assets | (13,048) | ||||||||
Investment securities gains | 273 | ||||||||
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Core income (non-GAAP) (b) | $ | ||||||||
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Average assets (c) | $ | ||||||||
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Core return on average assets (non-GAAP) (b ÷ c) | |||||||||
| (1) | Net of federal tax only for comparability to peer group. |
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C123456789 000004 ENDORSEMENT_LINE SACKPACK 000000000.000000 extSandy Spring Bancorp Your vote matters–here’s how to vote! MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Your vote matters - here's how to vote! 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 Go to www.envisionreports.com/SASR or scan the QR code -— login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/SASR Using a black ink pen, mark your votes with an X as shown in this example. Sign up for electronic delivery at Please do not write outside the designated areas. 2022www.envisionreports.com/SASR 2023 Annual Meeting Proxy Card 1234 5678 9012 345 IF 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 4.6 and for EVERY 1 YEAR on Proposal 5. + 1. Election of Directors: 01 - Mona Abutaleb 02 - For Against Abstain For Against Abstain For Against Abstain 01—Mark E. Friis 02—Brian J. Lemek 03—Pamela A. Little 04—Craig A. Ruppert 05—Kenneth C. Micklem 03 - Christina B. O'MearaCook For WithholdAgainst Abstain For Against Abstain 2. Approve 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. 4.5. 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'scompany’s independent registered public accounting firm for 2022.2023. B Authorized Signatures -— This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) -— Please print date below. Signature 1 -— Please keep signature within the box. Signature 2 -— Please keep signature within the box. C 1234567890 J N T 1 P C F 5 3 7 2 0 3 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 03LILD+ 1UPX 567595 03RI5C
Sandy Spring Bancorp, Inc.'s Annual Meeting of Shareholders will be held on Wednesday, May 18, 2022 at 10:00 a.m. Eastern Time, virtually via the internet at https://meetnow.global/MMYUPAD. To access the virtual meeting, you must have the 15-digit number that is printed in the shaded bar located on the reverse side of this form. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.envisionreports.com/SASR Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/SASR IFF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Sandy Spring Bancorp, Inc. + Notice of 20222023 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting - May 18, 2022 Aaron M. Kaslow and Philip J. Mantua or either 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 meeting of shareholders of Sandy Spring Bancorp, Inc. to be held on May 18, 202224, 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"“401(k) plan”), this proxy card covers all shares for which you have right to give voting instructions to Principal Trust Company, the trustee for the 401(k) plan. Your voting instructions to the trustee will be held in strict confidence. The deadline to provide voting instructions for shares held in the 401(k) plan is May 13, 2022,19, 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 approval 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 3)4), EVERY 1 YEAR for the vote, on an advisory basis, to approve the frequency of future votes to approve the compensation for the named executive officers (Proposal 5) and FOR the ratification of the appointment of Ernst & Young LLP as the company'scompany’s independent registered public accounting firm for 20222023 (Proposal 4)6). In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address -— Please print new address below. Comments -— Please print your comments below.