| ☒ | | Filed by the Registrant xPreliminary Proxy Statement
| Filed by a Party other than the Registrant o
☐ | | | Check the appropriate box: | x Preliminary Proxy Statement
| oConfidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | | ☐ | | o
Definitive Proxy Statement | | ☐ | | o
Definitive Additional Materials | | ☐ | | o
Soliciting Material pursuant to §240.14a-12 |
SANDY SPRING BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): | | | x☒ | | No fee required. | o☐ | | Fee paid previously with preliminary materials. | | ☐ | | Fee computed on table belowin exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)14a6(i)(1) and 0-11. |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS | | | | DATE | | Wednesday, May 24, 2023 | | TIME | | 10:00 a.m., Eastern Time | | PLACE | | Manor Country Club, 14901 Carrollton Road, Rockville, MD 20853 | | RECORD DATE | | You are eligible to vote if you were a shareholder of record at the close of business on March 8, 2023 |
MEETING AGENDA | • | | 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 eliminate the supermajority vote requirement for certain amendments |
| • | | 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 |
| • | | Ratify the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 2023 |
| • | | Transact such other business as may properly come before the meeting |
 YOUR VOTE IS VERY IMPORTANT
Please submit your proxy as soon as possible by internet, telephone, or mail. Submitting your proxy by one of these methods will ensure your representation at the annual meeting regardless of whether you attend the meeting. Instructions for voting by internet or telephone can be found on your proxy card or voting instruction form. By order of the Board of Directors, Aaron M. Kaslow General Counsel, Chief Administrative Officer & Secretary April , 2023 | | | | | 
| | | Notice and Proxy Statement | 2023 | | |
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| | | Notice and Proxy Statement | 2023 | | |
 17801 Georgia Avenue, Olney, Maryland 20832
NOTICE OF 2010PROXY SUMMARY This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider in deciding how to vote your shares. Please read the entire proxy statement before voting. For information about our company’s performance, please review our 2022 Annual Report on Form 10-K. You have received these proxy materials because our Board of Directors is soliciting your proxy to vote your shares during the 2023 annual meeting of shareholders. Notice of our annual meeting and this proxy statement were first sent or made available to shareholders on April , 2023. 2023 ANNUAL MEETING OF SHAREHOLDERS
INFORMATIONFor additional information about our annual meeting, see “Information About the Meeting” on page 63. | | | | | MEETING DATE: | | Date:May 24, 2023 | | | MEETING TIME: | Wednesday, May 5, 2010 | 10:00 a.m. (Eastern) | | | RECORD DATE: | | March 8, 2023 | | | MEETING LOCATION: | | Manor Country Club, 14901 Carrollton Road, Rockville, MD 20853 |
Annual Meeting Admission. Admission to the annual meeting is limited to our registered and beneficial holders as of the record date and persons holding valid proxies from these shareholders. Admission to the annual meeting requires valid, government-issued photo identification. If you are not a shareholder of record, you must also present proof of your stock ownership as of the record date. The use of cameras, recording devices, phones, and other electronic devices is strictly prohibited. See “Information About the Meeting – Attending the Meeting” on page 63. VOTING MATTERS AND BOARD RECOMMENDATIONS | | | | | | | | | | Time: | 3:00 p.m., EDT | Proposal | | | | Place: | Ten Oaks Ballroom | | Board Recommendation | | 5000 Signal Bell Lane, Clarksville, MD 21029More Information |
The 2010 annual meeting of shareholders of Sandy Spring Bancorp, Inc. (Bancorp) will be held as indicated above for the purposes of considering:
| | | 1) Election of four Class II directors and one Class III director | | (1)✓ “FOR” all nominees | The election of four (4) director-nominees to serve as Class III directors with terms expiring at the 2013 annual meeting, in each case until their successors are duly elected and qualified; and |
| | (2)Page 4 | | A non-binding resolution | | 2) Approval of amendments to the Articles of Incorporation to declassify the Board of Directors | | ✓ “FOR” | | Page 55 | | | | 3) Approval of amendments to the Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments | | ✓ “FOR” | | Page 57 | | | | 4) Advisory vote to approve the compensation offor the named executive officers; andofficers |
| | (3)✓ “FOR” | | Page 58 | | | | 5) Advisory vote on the frequency of future votes to approve the compensation for the named executive officers | | ✓ ONE YEAR | | Page 59 | | | | 6) The ratification of the appointment of Grant ThorntonErnst & Young LLP as the independent registered public accounting firm for the year 2010;2023 | | ✓ “FOR” | | Page 60 |
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| | | Notice and Proxy Statement | 2023 | | 1 |
| (4) | A shareholder proposal on the declassification of the board of directors; andPROXY SUMMARY |
| (5) | Such other business as may properly come before the annual meeting or any adjournment thereof. |
Enclosed with this noticeHOW TO VOTE YOUR SHARES Your vote is important. You may vote if you were a proxy card, the 2010 proxy statement and 2009 Annual Report on Form 10-K. Only holders of record of Bancorp's common stock as of the close of businessshareholder on March 10, 2010 will be entitled8, 2023. Whether or not you plan to notice of, and to vote at,attend the annual meeting, or any adjournment thereof. Please complete the proxy card and mail it in the enclosed envelope. You may also choose toplease cast your vote your sharesas promptly as possible using the Internet,one of these methods: | | | | | | | | | | 
| | 
| | 
| | Online before the meeting | | By Phone | | By Mail | www.envisionreports.com/sasr
(record holders)
www.proxyvote.com
(beneficial owners) | | Call the phone number on your
proxy card (record holders) or
voting instruction form
(beneficial owners) | | Complete, sign, date and mail your
proxy card (record holders) or
your voting instruction form
(beneficial owners) | | | | | |
BOARD OF DIRECTORS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Occupation | | Age | | Independent | | Director
Since | |  | |  | |  | |  | |  | | | | | | | | | | | Mona Abutaleb Stephenson | | CEO of Medical Technology Solutions, LLC | | 60 | | ✓ | | 2015 | | | | M | | M | | | | | | | | | | | | | | | Ralph F. Boyd | | President and CEO of SOME, Inc. | | 66 | | ✓ | | 2012 | | | | | | C | | M | | M | | | | | | | | | | | Kenneth C. Cook | | Retired. Former EVP, President of Commercial Banking at Sandy Spring Bank | | 62 | | | | 2023 | | | | M | | | | | | | | | | | | | | | | | Mark E. Friis | | Chair (former CEO) of Rogers Consulting, Inc. | | 67 | | ✓ | | 2005 | | | | C | | | | M | | M | | | | | | | | | | | Brian J. Lemek | | Owner of Lemek, LLC, a franchisee for Panera Bread bakery-cafes. | | 59 | | ✓ | | 2020 | | M | | | | M | | | | | | | | | | | | | | | Pamela A. Little | | CFO of Nathan, Inc. | | 69 | | ✓ | | 2005 | | C | | | | | | M | | M | | | | | | | | | | | Walter C. Martz II | | Managing Member of Walter C. Martz LLC law firm. | | 71 | | ✓ | | 2020 | | M | | | | | | | | | | | | | | | | | | | Mark C. Michael | | Fellow at the Harvard Advanced Leadership Initiative | | 60 | | ✓ | | 2018 | | | | | | M | | | | | | | | | | | | | | | Mark C. Micklem | | Retired. Former Managing Director and Head of Financial Services Investment Banking at Robert W. Baird & Co. | | 64 | | ✓ | | 2019 | | M | | M | | | | | | | | | | | | | | | | | Christina B. O’Meara | | President and founder of O’Meara Properties | | 69 | | ✓ | | 2020 | | | | | | M | | | | | | | | | | | | | | | Robert L. Orndorff(1) | | President and founder of RLO Contractors, Inc. | | 66 | | ✓ | | 1991 | | M | | M | | M | | M | | C | | | | | | | | | | | Craig A. Ruppert | | President and CEO of The Ruppert Companies | | 69 | | ✓ | | 2002 | | | | | | | | C | | M | | | | | | | | | | | Daniel J. Schrider(2) | | President and CEO Sandy Spring Bancorp, Inc. and Sandy Spring Bank | | 58 | | | | 2009 | | | | M | | | | | | M |
Ages as explained on the proxy card. If you attend the meeting, you may withdraw your proxy and vote in person.
of March 8, 2023(1) Lead Independent Director (2) Board Chair M = Member C = Chair | | | | | | | | | 2 | |
| | | | Notice and Proxy Statement | 2023 | | | |
By order of the board of directors, | | Ronald E. Kuykendall | General Counsel & SecretaryPROXY SUMMARY |
Olney, Maryland
March 29, 2010
Important Notice Regarding the Availability of Proxy Materials for the
2010 Annual Meeting of Shareholders to be held on May 5, 2010
This proxy statement and the 2009 Annual Report on Form 10-K are available at
www.sandyspringbank.com/proxy
Table of Contents
BOARD COMPOSITION 
GOVERNANCE HIGHLIGHTS General Information | 3 | | | | | | | | Who Can Vote | 3 | | Executing Your Right to Vote | 3 | | Recent Changes In Regulations Will Affect Your Vote | 3 | | Costs of Proxy Solicitation | 3 | | Telephone and Internet Voting | 4 | | Changing Your Vote | 4 | | Delivery and Accessibility of Proxy Materials | 4 | PROPOSAL I: Election of Directors | 4 | | Information About Nominees and Incumbent Directors | 4 | Corporate Governance and Other Matters | 7 | | Corporate Governance Policy and Code of Business Conduct | 7 | | Director Independence | 7 | | Board Leadership Structure | 7 | | Chairman Selection Process | 7 | | Board’s Role in Risk Oversight | 7 | | Board Committees | 8 | | Director Attendance at Meetings | 9 | | Director Compensation | 10 | Stock Ownership of Directors and Executive Officers | 12 | Owners of More Than 5% of Bancorp's Common Stock | 13 | Transactions and Relationships with Management | 13 | Section 16(a) Beneficial Ownership Reporting Compliance | 13 | Compensation Discussion and Analysis | 14 | | Restrictions on Executive Compensation for TARP-CPP Participants | 14 | | Compensation Actions in 2009 | 14 | | Overall Compensation Philosophy and Guiding Principles | 15 | | Compensation Decision Process | 15 | | Role of the Compensation Committee, Management and the Compensation | | Election of directors by majority vote | Consultants in the Executive Compensation Process | 15✓ | | Continuing director education program | | ✓ | | Compensation Structure and Elements | 16 | | Mandatory director retirement age of 72 | Factors for Determining Compensation | 18 | | | Employment and Change-in-Control Agreements with Named Executive Officers✓ | 19 | | Impact of Accounting and Tax on the Form of Compensation | 20 | | | Stock Ownership Guidelinesownership guidelines for directors and executive officers | 20 | ✓ | Compensation Committee Report | 21 | | | Executive Compensation TablesLead Independent Director with clearly-defined responsibilities | 23 | ✓ | | Anti-hedging policy | | ✓ | PROPOSAL II: A Non-Binding Resolution to Approve the Compensation of the Named | | | | Independent directors meet regularly in executive session | | Executive Officers✓ | 29 | Clawback policy | | ✓ | PROPOSAL III: The Ratification of the Appointment of Grant Thornton LLP as the | | | | Audit, Compensation and Nominating and Governance Committees consist solely of independent directors | | Independent Registered Public Accounting Firm for the Year 2010✓ | 30 | Code of Ethics and Business Conduct available on website | | ✓ | Audit and Non-Audit Fees | 30 | | | Audit Committee's Pre-Approval Policies and Procedures for ServicesCommittee meets with auditor in executive session | 31 | ✓ | | Corporate governance policies available on website | | ✓ | Report of the Audit Committee | 31 | | | PROPOSAL IV: A Shareholder Proposal on the DeclassificationOversight of theenterprise risk through Board of DirectorsRisk Committee | 32 | ✓ | | One share, one vote structure | | ✓ | Shareholder Proposals | | | | Annual board evaluations | | ✓ | | No shareholder rights plan | | ✓ |
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| | | Notice and CommunicationsProxy Statement | 2023 | 34 | 3 |
SANDY SPRING BANCORP, INC.
PROXY STATEMENT
General Information
This proxy statement | 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 furnished in connection withauthorized to fix the solicitation of proxies by the boardnumber of directors, up to a maximum of Sandy Spring Bancorp, Inc. (Bancorp) to be used at the 2010 annual meeting of shareholders on Wednesday, May 5, 2010, at 3:00 p.m. EDT at Ten Oaks Ballroom, 5000 Signal Bell Lane, Clarksville, Maryland 21029.15. The notice of annual meeting, the proxy card, and this proxy statement are being first mailed on or about March 24, 2010, to shareholders of record as of the close of business on March 10, 2010 (the Record Date).
Who Can Vote
You can vote if you owned shares of Bancorp common stock, par value $1.00 per share, as of the close of business on the Record Date. Each share of common stock is entitled to one vote. The number of common shares outstanding on the Record Date was 16,606,427. When you give Bancorp your proxy, you authorize Bancorp to vote your shares per your instructions whether or not you attend the annual meeting. The presence, in person or by proxy, of at least a majority of the total number of outstanding shares of common stock is necessary to constitute a quorum at the annual meeting.
Executing Your Right to Vote
By completing and returning the enclosed proxy card in time to be voted at the annual meeting, the shares represented by it will be voted in accordance with the instructions marked on the card. Executed but unmarked proxies will be voted on all business matters as recommended by the board of directors with the exception of the shareholder proposal (Proposal IV) which will receive no vote. Proxies marked as abstentions and proxies for shares held in the name of a bank, broker, or other nominee marked as not voted will be counted only for purposes of determining a quorum at the annual meeting.
The board of directors does not know of any other matters that are to come before the annual meeting except for incidental, procedural matters. If any other matters are properly brought before the annual meeting, the persons named in the accompanying proxy card will vote the shares represented by each proxy on such matters as determined by a majority of the board of directors.
Recent Changes in Regulations Will Affect Your Vote
If you hold your shares through a bank or broker it is critical that you cast your vote if you want it to count in the election of directors (Proposal I of this proxy statement). In the past, if you did not indicate how you wanted your shares voted in the election of directors, your bank or broker was allowed to vote those shares on your behalf in the election of directors as they felt appropriate. Changes in regulations have taken away the ability of your bank or broker to vote your shares in the election of directors without your specific instruction. Thus, if you do not instruct your bank or broker how to vote in the election of directors, no votes will be cast on your behalf. Your bank or broker will, however, continue to have discretion to vote any uninstructed shares on routine items such as the ratification of the appointment of the Bancorp’s independent registered public accounting firm (Proposal III). If you are a registered shareholder, meaning you hold your shares directly with Bancorp, and you do not return your proxy, no votes will be cast on your behalf on any of the items of business at the annual meeting.
Costs of Proxy Solicitation
The cost of soliciting proxies will be borne by Bancorp. In addition to the solicitation of proxies by mail, Bancorp also may solicit proxies through its directors, officers, and employees. Bancorp also will request persons, firms, and corporations holding shares in their names or in the name of nominees that are beneficially owned by others to send proxy materials to and obtain proxies from those beneficial owners and will reimburse the holders for their reasonable expenses in doing so.
Telephone and Internet Voting
Bancorp is pleased to offer its shareholders the convenience of voting by telephone and online via the Internet. Please check your proxy card for instructions.
Changing Your Vote
Your presence at the annual meeting will not automatically revoke your proxy. However, you may revoke a proxy at any time prior to its exercise by 1) filing a written notice of revocation with Ronald E. Kuykendall, General Counsel and Secretary; or 2) delivering to Bancorp a duly executed proxy bearing a later date; or 3) by attending the annual meeting and casting a ballot in person.
Delivery and Accessibility of Proxy Materials
Bancorp plans to take advantage of the householding rules of the Securities and Exchange Commission (SEC) that permit the delivery of one set of the proxy materials to shareholders who have the same address to achieve the benefit of reduced printing and mailing costs. Shareholders residing at a shared address will continue to receive separate proxy cards. If you wish to receive a separate set of materials, please write or call as specified below, and we will promptly mail them to you at no charge. If a bank, broker or other nominee holds your shares, please contact your bank, broker or nominee directly.
The Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the SEC, but excluding exhibits, is provided with this proxy statement and both documents are available on the Internet at www.sandyspringbank.com/proxy. Shareholders may obtain a copy of the exhibits to the Annual Report on Form 10-K by writing Ronald E. Kuykendall, General Counsel and Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832. Shareholders also may access a copy of the Form 10-K including exhibits on the SEC Web site at www.sec.gov.
PROPOSAL I: Election of Directors
The board of directorsBoard currently is divided into three classes, nearly equal in number as possible. In general, the term ofwith only one class of directors expiresbeing 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 within that class or their successors 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-yearterm of three years or until their successorsbeginning in 2024.The Board has nominated four Class II directors for election for a three-year term expiring in 2026. They are electedMark E. Friis, Brian J. Lemek, Pamela A. Little and qualified.
Craig A. Ruppert. The following changes have occurredBoard has also nominated Kenneth C. Cook for a two-year term expiring in the composition of the board since the last annual meeting. On December 31, 2009, Chairman Hunter R. Hollar, former President and CEO of Bancorp, retired from the board of directors as announced on October 1, 2009. On January 1, 2010, Vice Chairman Robert L. Orndorff succeeded Mr. Hollar as Chairman of the Board. Upon the recommendation of the Nominating Committee, Mr. Dennis A. Starliper was elected to the board of directors and took the oath of office on February 24, 2010. He will serve until his election by the shareholders at the annual meeting.
Therefore, a total of four2025. All Class II director-nominees are before you for election: Solomon Graham, Gilbert L. Hardesty, Lewis R. Schumann, and Dennis A. Starliper, all of whom are incumbent directors in Class III. With respectwho have been elected previously by the shareholders. Mr. Cook was appointed to the election of directors, a plurality of all the votes cast at the annual meeting will be sufficient to elect a nomineeBoard in October 2022 effective upon his retirement as a director.
Information About Nominees and Incumbent Directors
The following information sets forth the namesan executive officer of the four nominees for election describing their skills, experience and qualifications for election.company on February 28, 2023. Each nominee has given his consentconsented to be nominated and has agreed to serve, if elected. If any person nominated by the board of directorsBoard is unable to acceptstand for election for any reason, the proxies willshares represented at our annual meeting may be voted for the election of such other person or personsanother candidate as the present boardBoard may designate, or our Board may choose to reduce its size. BOARD DIVERSITY Our Board values diversity (inclusive of gender, race and ethnicity) and seeks to include directors may designate. | | | | | | | | | | | | 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 | | | | | | | | | | | | | | Directors | | 3 | | 10 | | 3 | | 9 | | | | | | Demographic Background | | | | | | | | | | | | | | African American or Black | | | | 1 | | | | 1 | | | | | | White | | 3 | | 9 | | 3 | | 8 |
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| | | | Notice and Proxy Statement | 2023 | | | |
Also provided is information on the background, | PROPOSAL 1: ELECTION OF DIRECTORS |
DIRECTOR SKILLS Our directors bring a balance of skills, qualifications and experience to their oversight of our company, as shown in the remaining incumbent directors. Unless described otherwise, eachmatrix below. The matrix identifies certain skills, qualifications and experience that the Board believes are relevant to our business. A director has held his or her current occupation for at least five years,may possess other skills, qualifications and experience not indicated in the ages listed are as of the Record Date. At this time, none of the directors servematrix that may be relevant and valuable to their service on any other public or for-profit company board.
All directors of Bancorp and its principal subsidiary Sandy Spring Bank (the Bank) are composed of the same persons. Throughout this proxy statement, the singular use of "board of directors" or "board" shall be intended to refer to both boards unless otherwise indicated.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED BELOW AS A DIRECTOR OF BANCORP.
Class III Directors – Nominees for Terms to Expire at the 2013 Annual Meeting:
our Board. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Solomon Graham, 67, Director since 1994
Mr. Graham is the founder and President of Quality Biological, Inc., a biotechnology firm providing reagents for medical research established in 1983. A prominent, award-winning businessman in the local community, Mr. Graham has served on the boards of several non-profit organizations as well as being an advisor to state and local government. Mr. Graham brings his business expertise as well as superior insight to local issues within Bancorp’s market area.
| | | | | | | | | | | | | | | | Gilbert L. Hardesty, 69, Director since 1997
Prior to his retirement
| | | Abutaleb | | | Boyd | | | Cook | | | Friis | | | Lemek | | | Little | | | Martz | | | Michael | | | Micklem | | | O’Meara | | | Orndorff | | | Ruppert | | | Schrider | | | | | | | | | | | | | | | | | SKILL/EXPERIENCE | | Executive Leadership Experience in 1997, Mr. Hardesty worked as the President of Annapolis Federal Savings Bank and its successor organization Crestar Bank-Annapolis for a total of 11 years. Before that, Mr. Hardesty was an executive with Clark Melvin & Associates, Inc., an insuranceleadership position provides the perspective required to understand and brokerage firm. Mr. Hardesty is valued by the board for his financial industry knowledgedirect business operations, analyze risk, manage human capital, oversee implementation of organizational change, and executive management experience. As chairman of the Chesapeake Advisory Board, Mr. Hardesty has been instrumental in developing business in the eastern region of Bancorp’s market.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. |
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| | | Notice and Proxy Statement | 2023 | | 5 |
Lewis R. Schumann | PROPOSAL 1: ELECTION OF DIRECTORS |
NOMINATION PROCESS 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 2024 Annual Meeting of Shareholders” on page 65 for important information for shareholders who intend to submit a director nomination for the 2024 annual meeting of shareholders. VOTING STANDARD FOR UNCONTESTED ELECTIONS With respect to the election of directors, a majority of votes cast at the annual meeting is required to elect a nominee as a director. In an uncontested election, an incumbent director-nominee who fails to receive more votes “for” than “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, which shall promptly disclose its decision and the basis for its decision. | | | | | | | | | 6 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| 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 II DIRECTOR-NOMINEES – FOR TERMS EXPIRING AT THE 2026 ANNUAL MEETING | | | | MARK E. FRIIS | | About Mr. Friis is currently the chair of Rodgers Consulting, Inc., 66, Director since 1994 having previously served as the firm’s President and CEO from 2001-2016. Headquartered in Germantown, Maryland, Rodgers Consulting is a land development planning and engineering firm; specializing in town planning, urban design, development entitlements, site engineering and natural resource management for developers, builders, institutions and corporations in the suburban Maryland region. Mr. SchumannFriis is a member of the Urban Land Institute, the Maryland Building Industry Association, and the American Planning Association. He holds an attorneyundergraduate degree from the University of Maryland and principala graduate degree from Hood College, where he currently serves on the Board of Trustees. | 
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| | | | BRIAN J. LEMEK | | About Mr. Lemek is the founder and owner of Lemek, LLC, the franchisee for Panera Bread bakery-cafes in Miller, Millerthe state of Maryland. Lemek, LLC currently owns and Canby, Chtd,operates over 50 locations. In 2010, Mr. Lemek founded Lemek Slower Lower LLC, which owns six Panera Bread Cafes in Southern New Jersey and Delaware. Mr. Lemek currently serves on the board of trustees of his alma mater, Saint Ambrose University in Davenport, Iowa, where he chairs the Building & Grounds Committee. | 
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| PROPOSAL 1: ELECTION OF DIRECTORS |
| | | | PAMELA A. LITTLE | | About Ms. Little is the Chief Financial Officer of Nathan, Inc., a private international economic and analytics consulting firm that works with government and commercial clients around the globe. From 2014 to 2018, she was the Executive Vice President and Chief Financial Officer of Modern Technology Solutions Inc., an employee-owned government contractor, for which she remains on the board of directors. Ms. Little has over 35 years of experience working with companies ranging from privately held start-up firms to large, publicly traded government contracting firms. Ms. Little also serves on the board of Excella, a management and technology consulting firm in Northern Virginia, and is a Trustee of Norwich University. | 
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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 oldest locallargest 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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| 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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| PROPOSAL 1: ELECTION OF DIRECTORS |
| | | | WALTER C. MARTZ II | | About Mr. Martz has practiced law firms,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 retired as the Chief Judge in 2022. Mr. Martz was a co-founder, director and vice chair of the board of BlueRidge Bank, which merged with Revere Bank in 2016. | 
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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 headswas 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 firm’s taxPresident’s Council for Higher Achievement Program, and business division. In addition to specializing in tax issues, Mr. Schumann has expertise in commercial leasing and real estate development. Mr. Schumann brings extensive professional expertise and business acumen toalso served on the board. His firm is located in the heartboard of Bancorp’s service area anddirectors of DC Central Kitchen. He is a prominent centermember of influence in the local business community.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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| | Dennis A. Starliper, 63, Director since 2010
Mr. Starliper worked for Provident Bankshares Corporation for 24 years | | Notice and held the position of Chief Financial Officer for 10 years. He retired in 2009. Prior to joining Provident, Mr. Starliper worked for Fairchild Industries, a Fortune 500 aerospace manufacturer. The qualifications that led to Mr. Starliper’s election were his deep industry experience with a large and respected, local bank; his corporate experience with a publicly-traded company; and his financial expertise.Proxy Statement | 2023 | | | |
Incumbent Class I Directors – Continuing
| Susan D. Goff, 64, Director since 1994
Ms. Goff is the former President of Mid-Atlantic Medical Services, Inc., (MAMSI) a publicly-held company. In 2004, MAMSI was sold to UnitedHealthcare and Ms. Goff became the regional executive overseeing all products in seven states. She retired in 2005. As chairman of the Compensation Committee for Bancorp, Ms. Goff has augmented her considerable executive management experience through regular continuing education on current trends in executive and board compensation.
| PROPOSAL 1: ELECTION OF DIRECTORS |
| | | | ROBERT L. ORNDORFF | | | Robert, L. Orndorff, Chairman, 53, Director since 1991
About Mr. Orndorff is the founder and President of RLO Contractors, Inc., a leading residential and commercial excavating and grading company based in central Maryland.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 andthat is also strongly aligned with Bancorp’sour culture and values. He | 
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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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| 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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| | | | MARK C. MICKLEM | | About Mr. Micklem retired from Robert W. Baird & Co. Incorporated, in 2018 where he was a Managing Director and Head of Financial Services Investment Banking for 12 years. While at Baird, Mr. Micklem focused on providing capital financing and merger and acquisition advisory services to banks and other financial services companies. Prior to joining Baird, Mr. Micklem was head of the Financial Services Investment Banking Group at Legg Mason for 10 of his 21 years there. During his career, Mr. Micklem completed more than 250 financing and M&A advisory engagements for financial services companies. | 
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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 local civic organizationsthe global community to support education and bringsbasic needs for children. She currently serves as a director of Kaleidoscope Child Foundation. | 
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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 Guidelines, committee charters and other key governance documents, which we review and modify on a regular basis to reflect best practices, recent developments, and legal and regulatory requirements. Our Corporate Governance Guidelines, committee charters and other key governance documents are available on our website atwww.sandyspringbank.com by selecting “Investor Relations” at the top of the page, then “Governance Documents” under “Governance Information.” DIRECTOR INDEPENDENCE Nasdaq Listing Rules require that a majority of our directors and each member of our Audit Committee, Compensation Committee and Nominating and Governance Committee be independent. In addition, our Corporate Governance Guidelines requires that a substantial majority of our directors be independent. A director may be determined to be independent only if the Board has determined that he or she has no relationship with the company that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Nominating and Governance Committee advises and makes recommendations to the Board regarding director independence. After considering the committee’s recommendation, the Board affirmatively determined that all current members of the Board, other than Mr. Schrider and Mr. Cook, are independent directors and independent for purposes of the committees on which they serve in accordance with applicable Nasdaq and Securities and Exchange Commission (SEC) independence rules and requirements. The Board determined that Mr. Schrider is not independent because he is employed as our President and Chief Executive Officer and Mr. Cook is not independent because he served as an employee of the company within the past three years. To determine the independence of the directors, the Board considered certain transactions, relationships, or arrangements between those directors, their immediate family members, or their affiliated entities, on the one hand, and the company, on the other hand. Certain directors, their respective immediate family members, and/or affiliated entities have deposit or credit relationships with, or received investment or wealth management services from, Sandy Spring Bank or one of its subsidiaries in the ordinary course of business. The Board determined that all of these transactions, relationships, or arrangements were made in the ordinary course of business, were made on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party, were not criticized or classified, non-accrual, past due, restructured or a potential problem, complied with applicable banking laws, and did not otherwise impair any director’s independence. BOARD LEADERSHIP STRUCTURE Our Board is led by the Chair. Under our Bylaws, the Chair is elected annually by the Board from among the directors and presides over each Board meeting and performs such other duties as may be incident to the office of the Chair. Daniel Schrider serves as our Chair, President and Chief Executive Officer. The Board believes that combining the Chair and the Chief Executive Officer roles at this time supports clear accountability, effective decision-making and execution of corporate strategy. The Board recognizes the importance of independent oversight over management and has created the position of Lead Independent Director, who is elected by the independent members of the Board. The responsibilities of the Lead Independent Director, as set forth in our Corporate Governance Guidelines, include: | • | | 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 boardChair on Board meeting agendas, and adding agenda items in his business experienceor 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 knowledgeresponsibly 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. | | | | | | | | | 14 | |
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BOARD COMMITTEES The Board has five standing committees: Audit, Compensation, Nominating and Governance, Risk and Executive. Each committee operates under a written charter, which may be found on our investor relations website at 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 | | The primary responsibility of the local market.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 |  | Other Committee Members | Brian J. Lemek Walter C. Martz II Mark C. Micklem Robert L. Orndorff | Meetings in 2022: 8 |
| | | | COMPENSATION COMMITTEE | | The responsibilities of the Compensation Committee include: • developing our executive compensation philosophy and reviewing and approving compensation and benefit programs applicable to the company’s executive officers, including base salary, incentive compensation, equity awards, and retirement benefits. • reviewing and recommending to the Board the compensation of the company’s non-employee directors; • assessing whether the company’s compensation programs generally are designed in a manner that does not encourage or reward unnecessary or excessive risk-taking; • administering the company’s equity compensation plans; • oversight of the company’s human capital management strategy, including initiatives on diversity, equity and inclusion, employee well-being and engagement; and • retaining and overseeing an independent compensation consultant to support the committee, approving related fees and engagement terms, and determining that the consultant’s work raises no conflicts of interest. All members are independent and meet additional Nasdaq and SEC independence standards for compensation committee members. | Committee Chair: Ralph F. Boyd |  | Other Committee Members | Mona Abutaleb Stephenson Brian J. Lemek Mark C. Michael Christina B. O’Meara Robert L. Orndorff | Meetings in 2022: 7 |
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| | | | NOMINATING AND GOVERNANCE COMMITTEE | | The responsibilities of the Nominating and Governance Committee include: • reviewing the composition of the Board at least annually to ensure the Board reflects the desired skills, experience, diversity, and other qualifications as well as affirming whether each director qualifies as “independent” as defined by Nasdaq Listing Rules; • recommending the appropriate size of the Board; • identifying, screening and reviewing individuals qualified to serve as directors, consistent with the criteria developed and approved by the Board; and • recommending to the Board for approval the candidates for nomination for election or re-election by the shareholders. • reviewing the company’s Corporate Governance Guidelines at least annually and making recommendations for updates; • oversight of the annual evaluation of the CEO and executive succession planning; • managing the Board’s process of annual evaluation; • oversight of ethics and business conduct; and • oversight of the company’s policies and practices on significant issues of corporate social responsibility including environmental, social, and corporate governance (ESG) and sustainability. All members are independent. | Committee Chair: Craig A. Ruppert |  | 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 |  | 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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| | | | 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 |  | Other Committee Members | Ralph F. Boyd Mark E. Friis Pamela A. Little Craig A. Ruppert Daniel J. Schrider | Executive and Governance Committee Meetings in 2022: 4 | Executive Committee Meetings in 2022: 0 | | |
BOARD OVERSIGHT OF RISK We believe that a strong risk management culture is vital to the success of our business. To mitigate the risks inherent in our business, we foster a culture that makes managing risk everyone’s responsibility at all levels of the company. We have implemented a formal risk management framework that establishes the program by which we identify, assess, measure, monitor, report and control risks across the company. The risk management framework is designed to link risk appetite, and related risk monitoring and reporting, with our business strategy and capital plans. The risk management framework describes our risk management approach, including the adoption of the three lines of defense risk model, and outlines our risk management governance structure, including the roles of the Board, management, lines of business and internal audit. The Risk Committee reviews the risk management framework at least annually, or more often as needed to address changes in our risk profile or risk management best practices. We have also adopted a risk appetite statement that identifies the level of risk we are willing to accept in pursuit of our strategic objectives. Our risk appetite is articulated through qualitative statements and quantitative metrics that cover the broad array of risks relevant to the company, including credit, market, liquidity, capital, operational, strategic and reputational risks. The Board reviews and approves our risk appetite statement annually. On a quarterly basis, we evaluate the risks facing the company and our risk appetite metrics against the risk appetite statement to ensure that our operations align with our risk appetite. | | | | |
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The Board is responsible for overseeing our risk management processes by informing itself about our material risks and evaluating whether management has reasonable risk management and control processes in place to address those risks. The Board oversees risk management through the actions of the Board, including approval and oversight of our risk appetite statement, strategic plan, capital plan and financial plan, and the activities of its committees. | | | | | | | Board of Directors | | | | | | | | | | | | Risk Committee | | The Risk Committee has primary responsibility for overseeing our risk management framework. The committee reviews and approves our risk appetite statement, key risk management policies and the charter of the Executive Risk Committee, monitors compliance with the risk management framework and risk limits, and oversees the work of our risk management function. The committee oversees credit risk, including lending and credit policies and asset quality, financial risk, including interest rate risk, liquidity risk, capital risk and market risk, and operational risk, including compliance risk, business continuity planning, information and cyber security risk, and third-party risk. The committee receives a quarterly enterprise risk report as well as regular updates on key and emerging risks. The Risk Committee reports regularly to the Board regarding material matters discussed at meetings of the Risk Committee, as well as the current status of risk and action items. | | | | | | | | | | | | Audit Committee | | The Audit Committee plays a significant role in the Board’s exercise of its risk oversight responsibilities. This committee has primary oversight of risks arising from our financial reporting, internal control processes and public disclosure. The Audit Committee reviews management’s assessment of our internal control over financial reporting, meets regularly with our independent auditors to discuss the results of their quarterly reviews and annual audit, and receives internal audit reports that enable it to monitor operational risk throughout the company. To ensure candid reporting, the Audit Committee meets in separate executive sessions with our independent auditors and Chief Internal Auditor. The committee coordinates any substantive or systemic findings with the Risk Committee through a liaison member who serves on both committees. The Audit Committee regularly reports to the Board on its risk management activities. | | | | | | | | | | | | Compensation Committee | | The Compensation Committee has primary oversight of risks arising from our incentive compensation plans and programs. On an annual basis, the committee receives a risk assessment that enables the committee to determine whether our incentive compensation plans and programs create risks that are likely to have a material adverse effect or would encourage excessive risk-taking. | | | | | | | | | | | | | Nominating and Governance Committee | | The Nominating and Governance Committee oversees risks relating to our corporate governance structure, board leadership and effectiveness, and management and board succession planning. | | |
Board Oversight of Cybersecurity Risk Our Board recognizes our responsibility to protect the data provided by our clients and employees, understands how cyber risks could disrupt our operations, and is cognizant of the increasing risks and threats associated with the use of digital technology. Through the efforts of the Risk Committee, the Board oversees our continuing efforts to strengthen our information security infrastructure and staffing and enhance our technology controls and cybersecurity defenses. As part of its oversight of operational risk, the Risk Committee is responsible for the oversight of information security and cybersecurity risk management. Our Chief Information Security Officer regularly reports to the Risk Committee on security events, testing, training, audits, new system assessments and vendor performance. These reports address topics such as the threat environment and vulnerability assessments, results of penetration testing, results of key cyber risk indicators and performance metrics, and our efforts to detect, prevent and respond to internal and external critical threats. The Risk Committee receives periodic updates on information security risk, the maturity of our information security program, and updates on related investments and results. On an annual basis, the Risk Committee reviews and approves our information security program and information security policy. | | | | | | | | | 18 | |
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS Strengthening our communities through our products and services, investing in our communities and serving our neighbors and friends has always been at the heart of our mission as a community financial institution. As investors and the business community coalesce around the importance of environmental, social and governance issues (ESG), we are developing an approach to corporate and environmental sustainability that aligns with the nature of our business and the evolution of ESG principles in the financial services industry. In 2023, we published our third Corporate Responsibility Report, which summarizes our efforts and performance on ESG matters that we and our stakeholders view as among the most important to our business. The Board has responsibility for overseeing policies, programs and strategies related to ESG matters and receives updates, at least annually, from management on ESG matters, including investor sentiment, our Corporate Responsibility Report, and ESG initiatives. Board committees also play an important role in oversight of ESG matters. The Nominating and Governance Committee oversees our policies and practices on significant issues of corporate social responsibility and sustainability. The Compensation Committee assists the Board in the oversight of our human capital management strategy, including strategies and initiatives on diversity, equity, and inclusion, employee well-being and engagement. | | | | | | 
ENVIRONMENT | David E. Rippeon, Director, 61, Director since 1997
Mr. Rippeon
| 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 Presidentkey to our ability to deliver a remarkable client experience. We create a great place to work by: • building a diverse and CEOinclusive 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 Gaithersburg Farmers Supply Inc.,ethics and integrity in all that we do. We live these principles by: • adopting Corporate Governance Guidelines that promote sound and effective governance • adhering to a dealershipCode of Ethics and Business Conduct that sets expectations aligned with our core values • creating a culture of risk management in heavy farm equipment. Under Mr. Rippeon’s leadership,which managing risk is everyone’s responsibility at all levels of the company has expanded into three counties in Maryland, consistent with Bancorp’s market, and has significantly increased sales. Mr. Rippeon is valued for his business experience and knowledge of the local market. |
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| | | Notice and Proxy Statement | 2023 | | Daniel J. Schrider, Director, 45, Director since 2009
Mr. Schrider was named President and CEO of Sandy Spring Bancorp, Inc. on January 1, 2009 and joined the board at that time. Mr. Schrider started his career with Sandy Spring Bank in 1989 and achieved significant success in the commercial banking area. He joined the executive team in 2003 as the Chief Credit Officer and leader in commercial services. Mr. Schrider is active in professional and civic organizations and currently serves on the board of the Maryland Bankers Association.
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Incumbent Class II Directors - Continuing
| Mark E. Friis, Director, 54, Director since 2005
Mr. Friis is President and principal owner of Rodgers Consulting, Inc., a land planning and engineering firm. He is a member of the American Institute of Certified Planners and has numerous affiliations with area professional and civic organizations as well as local government. Mr. Friis is valued for his business management experience and in-depth knowledge of the local economy. Mr. Friis chairs the Bank’s Frederick Advisory Board.
| CORPORATE GOVERNANCE |
2022 ESG HIGHLIGHTS | | | | | | $662K donated to 135 local nonprofits | | Financing clean energy through Montgomery County Green Bank and DC Green Bank |
| | | | | over 5,200 employee volunteer hours | | Pamela A. Little, Director, 56, Director since 2005
Ms. Little has over 25 years of experience in companies ranging from privately held start-up firmsLent $187M to large, publicly-traded government contracting firms. Since 2007, she has been the CFO of ATSC, a publicly-traded provider of IT services. She is the former CFO of Athena Innovative Solutions, Inc. (2005-2007) and the former CFO of ZKD, Inc. (2004-2005) where she was responsible for negotiating the sale of the firm. Ms. Little is valued for her range of business experience with public companies, and her financial expertise.
first-time home buyers |
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| | Launched low-cost Bank On certified account to reach un- and under-banked customers | | Craig A. Ruppert, Director, 56, Director since 2002
Mr. Ruppert is President57% women in workforce |
| | | | | 41% people of color in workforce | | 
| | Formed employee teams to lead development of diversity, equity and CEO of The Ruppert Companies which is comprised of commercial landscape constructioninclusion plan | Reduced purchased paper nearly 50% from 2019 level | | Adopted majority vote standard for director elections |
For more detailed information, please see our Corporate Responsibility Report, which is available on our website at www.sandyspringbank.com. Information on our website is not incorporated by reference into this proxy statement. Additional disclosures about human capital management can be found in our 2022 Annual Report on Form 10-K filed with the SEC. BOARD SELF-ASSESSMENT The Board 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 Nominating and Governance Committee, involves completion of annual surveys, review and discussion of the results of the surveys by both the committee and the Board, as well as with individual directors in the case of peer evaluations, and communication of feedback to management to improve policies, processes and procedures to support Board and committee effectiveness. In 2022, the Board completed an evaluation of individual director performance. BOARD EDUCATION We believe that continuing director education is essential to the ability of directors to fulfill their roles. We provide both internal 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 2022, the Board held nine regular meetings and one special meeting. In 2022, directors attended 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 2022. | | | | | | | | | 20 | |
| | | | Notice and management located in five states; tree-growing operations; and industrial property development. Mr. Ruppert is a former Class B director of the Federal Reserve Bank of Richmond, and has been recognized for being a noted, local philanthropist. A highly successful entrepreneur, Mr. Ruppert strengths lie in strategic planning, executive management, and business expertise.Proxy Statement | 2023 | | | |
Corporate Governance and Other Matters
Corporate Governance Policy and CodeANNUAL MEETING ATTENDANCE Directors are expected to attend our annual meeting of Business Conduct Bancorp's business affairs and strategic direction are overseen by its boardshareholders. All of directors. The board remains committed to setting a toneour directors serving at the time of the highest ethical standards and performance for Bancorp's management, officers, and company as a whole. The board believes that strong corporate governance practices are a critical element of doing business today. To that end,2022 annual meeting attended the Corporate Governance Policy is reviewed periodically to ensure it reflects the best interests of Bancorp and its shareholders.
In addition, Bancorp's board of directors2022 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 Bancorp and its subsidiaries. It sets forth the legal and ethical standards that govern the conduct of business performed by Bancorp and its subsidiaries.company. The Code of Ethics and Business Conduct includes a Code of Ethics established pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, related SEC regulations, and the listing standards of the Nasdaq Stock Market, Inc. More information about corporate governance, including the Corporate Governance Policy and the Code of Ethics, may be found on Bancorp'sour investor relations Web site maintainedwebsite at www.sandyspringbank.com.
Director Independence
In accordancewww.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 Guidelines require that directors own Sandy Spring stock equal in value to at least four times the annual cash retainer paid by us for service as a director. Non-employee directors are expected to meet this ownership requirement within four years of joining the Board and to retain all shares of Sandy Spring stock received pursuant to their service as a Board member for as long as they serve as directors of the company. Compliance with the Corporate Governanceminimum 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, no more than two insideour directors, officers and employees may be on the boardnot at any one time. Alltime buy or sell options on company securities or other directors must be independent. An inside director is defined as a directorderivative securities that is employedreference company securities and may not enter into hedging or was employed within the last three years as either an officer of Bancorp or the Bank and serves as a member of the board of directors. In making its determination of independence, the board of directors did not consider anysimilar transactions relationship, or arrangements that are not includeddesigned to offset any decrease in the sectionmarket value of this proxy statement entitled "Transactions and Relationships with Management."
The board of directors has affirmatively determined that all directors other than Mr. Schrider are independent under Nasdaq's listing standards. The board of directors complies with or exceeds the independence requirements for the board and board committees established by the Nasdaq Stock Market Inc., federal securities and banking laws and the additional standards included in Bancorp's Corporate Governance Policy.
Board Leadership Structure
The Corporate Governance Policy provides for the selection of a chairman of the board from among the independentcompany securities. In addition, our directors and states that itexecutive 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 Sandy Spring stock. | | | | |
| | | Notice and Proxy Statement | 2023 | | 21 |
DIRECTOR COMPENSATION Our director compensation program is the policy of the boarddesigned to separate the offices of the chairmanattract and the chief executive officer. This allows the chairman to maintain an independent role in the oversight of management. The chairman of the board also chairs the Executiveretain highly qualified directors and Governance Committee which is comprised of the chairmen of the other standing committees (see Executive and Governance Committee description on page 8).
Chairman Selection Process
In 2009, the board discussed and agreed upon a more robust and inclusive process for the annual election of the chairman of the board beginning in 2011. It was decided that each year, the Executive and Governance Committee would solicit input from all directors for desired characteristics and accept nominations for chairman. The Committee would consider the nominees and inform the board of the candidate(s) for consideration at the annual organization meeting. It is generally understood that this process may result in more frequent changes to the position of chairman than in the past.
Board’s Role in Risk Oversight
Bancorp’s board fulfills a significant role in the oversight of risk in the company both through the actions of the board as a whole andalign their interests with those of its committees. Credit risk is overseen specifically by the Credit Risk Committee which monitors overall asset qualityour shareholders. We compensate our non-employee directors with a combination of cash and the adequacyequity awards. Directors who are employees of the allowanceour company do not receive additional compensation for loan and lease losses. their service as Board members.The Compensation Committee periodically reviews semi-annual reports on risk to the company associated with incentiveour non-employee director compensation plans. The Audit Committee meets regularly with the independent registered public accounting firm, to receive reports on the results of the audited financial statements. In addition, the Audit Committee receives internal audit reports to monitor operational risk throughout the company. The board receives quarterly updates from the Bancorp’s Asset Liability Committee to ensure compliance with policies concerning interest rate risk, liquidity risk, and capital adequacy. Finally, the board receives a quarterly update from the General Counsel on any pending large litigation in order to be aware of any potential legal risk facing Bancorp or any of its subsidiaries.
Board Committees
Bancorp's board of directors has the following standing committees: Audit, Executive and Governance, Compensation, Credit Risk, and Nominating. The charter for each committee may be found on Bancorp's investor relations Web site at www.sandyspringbank.com. The functions, composition, and number of meetings for these committees in 2009 were as follows:
Audit Committee - The Audit Committee is appointedprogram. Any changes proposed by the board to assist in monitoring the integrity of the financial statements and of financial reporting, including the proper operation of internal and disclosure controls and procedures in accordance with the Sarbanes-Oxley Act of 2002, compliance with legal and regulatory requirements and the independence and performance of internal and external auditors. The Audit Committee reviews the Forms 10-K and 10-Q prior to filing. All members of the committee meet all requirements and independence standards as defined in applicable law, regulations of the SEC, Nasdaq's listing standards, the Federal Deposit Insurance Act and related regulations. The board has determined that Pamela A. Little qualifies as an audit committee financial expert under the Nasdaq listing standards and applicable securities regulations. During 2009, the Audit Committee held eleven meetings.
Executive and Corporate Governance Committee - This committee conducts board business between regular monthly meetings as needed and provides oversight and guidance to the board of directors to ensure that the structure, policies, and processes of the board and its committees facilitate the effective exercise of the board's role in the governance of Bancorp. The committee reviews and evaluates the policies and practices with respect to the size, composition, independence and functioning of the board and its committees as stated in the Corporate Governance Policy. This committee was re-structured in 2009 to be comprised of the chairmen of the standing committees of the board, the chairman of the board, the president and CEO, and the “lead director” if one is appointed by the board. During 2009, the Executive and Corporate Governance Committee held seven meetings.
Compensation Committee – Members of this committee are independent directors within the meaning of the Nasdaq listing standards. The Compensation Committee recommends salaries and other compensation for executive officers, considers other compensation and benefit plans and makes recommendations to the board regarding grants and awards under the 2005 Omnibus Stock Plan. In compliance with the laws and regulations promulgated in connection with Bancorp’s participation in the TARP Program, the Compensation Committee is also responsible for ensuring the compensation plans of Bancorp and its subsidiaries do not encourage excessive risk. During 2009, the Compensation Committee held five meetings.
Credit Risk Committee – The Credit Risk Committee was chartered in May 2009 for the purpose of supporting the board in the performance of its duties and responsibilities with regard to credit-related activities. The Credit Risk Committee has responsibility for approving all loans requiring board approval; reviewing and approving all credit-related activities that are required by law or regulation tomust be approved by the boardBoard. During 2022, after consultation with the Compensation Committee’s independent compensation consultant, including but not limited to: reviewingan analysis of pay levels at the same peer companies used to evaluate the compensation of our named executive officers, the Compensation Committee recommended changes to our director compensation program, which were approved by the Board. These changes, which targeted non-employee director compensation at the peer group median, included eliminating meeting attendance fees and approving the adequacyadjustments to cash and equity retainers.Our non-employee director compensation program currently consists of the allowance for credit losses; monitoring the performance and qualityfollowing: | | | | | | | | | | | | | Annual restricted stock unit grant | | $ | 50,000 | | | | | | | | | Annual cash retainer | | $ | 50,000 | | | | | | | | | Board chair annual cash retainer (if applicable) | | $ | 55,000 | | | | | | | | | Lead Independent Director annual cash retainer (if applicable) | | $ | 55,000 | | | | | | | | | Additional annual cash retainer for committee chairs: | | | | | | | | | | | | Audit Committee | | $ | 20,000 | | | | | | | | | Risk Committee | | $ | 17,500 | | | | | | | | | Compensation Committee | | $ | 15,000 | | | | | | | | | Nominating and Governance Committee | | $ | 15,000 | | | | | | | | | Additional annual cash retainer for committee members | | | | | | | | | | | | Audit Committee | | $ | 10,000 | | | | | | | | | Risk Committee | | $ | 9,000 | | | | | | | | | Compensation Committee | | $ | 7,500 | | | | | | | | | Nominating and Governance Committee | | $ | 7,500 | | | | | |
All directors of Bancorp’s credit portfolio; ensuring that Bancorp’s credit risk management activities are aligned with the Bancorp’s overall business strategy; and reviewing and approving Bancorp’s credit risk policies. During 2009, the Credit Risk Committee had eight meetings.
Nominating Committee - Members of this committee are independent directors within the meaning of the Nasdaq listing standards. The Nominating Committee makes recommendations to the board of directors with respect to nominees for election as directors. In exercising its responsibilities, the Nominating Committee considers general, minimum criteria and particular goals and needs of Bancorp for additional competencies or characteristics. Each director of Bancorp is expected to exhibit the highest standards in exercising his or her duty of loyalty, care and commitment to all shareholders and to protect the values and legacy of the organization. Additionally, directors must manage themselves well in their personal deportment and display the ability to challenge the thinking of others and to influence them with constructive approaches. Directors must be able to read and act upon complex financial statements and analyses. Finally, directors need to be able to apply informed judgment and long-term, conceptual and systemic thinking to all decisions. The board gathers input from all directors prior to the recruitment of a new director in order to form a collective picture of the competencies needed. The boardour company also values diversity and seeks to include women and members of minority groups to maintain a range of thinking and personality styles. The Nominating Committee encourages suggestions for qualified candidates to the board from the Chief Executive Officer, the Chairman of the Board, other directors, and from shareholders, and is responsible for the evaluation of such suggestions. Shareholders may submit suggestions for qualified director candidates by writing to Ronald E. Kuykendall, General Counsel and Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832. Submissions should include information regarding a candidate's background, qualifications, experience and willingness to serve as a director. In addition, the Nominating Committee may consider candidates submitted by a third party search firm hired for the purpose of identifying director candidates. The Nominating Committee uses the same process for evaluating all nominees, including those recommended by shareholders, using the board membership criteria described above. Please see "Shareholder Proposals and Communications." During 2009, the Nominating Committee held eleven meetings.
Current Board Committee Membership
Name | | Executive | | Audit | | Compensation | | Credit Risk | | Nominating | Mark E. Friis | | | | | | X | | | | X | Susan D. Goff | | X | | | | Chairman | | | | | Solomon Graham
| | X | | | | | | | | Chairman | Gilbert L. Hardesty | | | | | | | | X | | X | Pamela A. Little | | X | | Chairman | | | | | | | Robert L. Orndorff | | Chairman | | X | | X | | | | | David E. Rippeon | | | | X | | X | | | | | Craig A. Ruppert | | | | | | X | | X | | X | Daniel J. Schrider | | X | | | | | | Chairman | | | Lewis R. Schumann | | | | X | | | | X | | | Dennis A. Starliper(1)
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(1)Mr. Starpliper will receive his committee assignments at the next annual organization meeting in May 2010.
Director Attendance at Board and Committee Meetings
Each of Bancorp’s directors takes his and her commitment to serve on the board very seriously as demonstrated by the superior attendance record achieved each year. During 2009, the board of directors held twelve regular meetings and one special meeting with overall attendance averaging 98%. In accordance with Bancorp’s Corporate Governance Policy, all incumbent directors attended over 80% of the aggregate of (a) the total number of meetings of the board of directors and (b) the total number of meetings held by all committees on which they served.
Attendance at the Annual Meeting of Shareholders
The board of directors believes it is important for all directors to attend the annual meeting of shareholders in order to show their support for Bancorp and to provide an opportunity for shareholders to express any concerns to them. Bancorp has adopted a policy that all directors should attend each annual meeting of shareholders unless they are unable to attend by reason of personal or family illness or pressing matters. All directors were present at the 2009 annual meeting.
Director Compensation
Cash Compensation – Only non-employee directors are compensated for their service as board members. Directors of Sandy Spring Bank, each received an annual retainer of $11,200 with $28,000 paid to the chairman of the board, pro-rated for any partial year of service. The chairman of the Audit Committee received an additional retainer of $6,000 and all other committee chairmen each received an additional retainer of $4,000. Non-employee directors received $880 for attendance at each meeting of the board of directors and also $800 for attendance at each committee meeting. Directors are encouraged to attend all meetings in person unless the meeting is called by teleconference. Directors who attend an in-person meeting by phone were paid a reduced meeting fee of $500. Finally, those directors who serve as chairman of regional advisory boards are paid $600 for each advisory board meeting attended. Bancorp directorswhich they do not receive any additional compensation (beyond compensation received for service as Bank directors); however, non-employee directors would receive a fee of $880 for attendance at a meeting of Bancorp's board of directors not held in conjunction with a meetingcompensation.Restricted stock units vest on the first anniversary of the Bank's boarddate of directors.
Director Fee Deferral Plan - Directorsgrant, 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 the Bankour common stock.DEFERRED FEE ARRANGEMENTS Directors are eligible to defer all or a portion of their fees under the Director Deferred Fee Deferral Plan. In 2009, theThe amounts deferred accruedaccrue interest at 120% of the long-term Applicable Federal Rate, which is not considered “above market” or preferential. Except in the case of death or financial emergency, deferred fees and accrued interest are payable only following termination of a director'sdirector’s service, onat which time the board. In the eventdirector’s deferral account balance will be paid in a director dies during active service, the Bank may pay benefits that exceed deferred fees and accrued interestlump sum. Mr. Orndorff is a party to a Directors’ Fee Deferral Agreement, under which deferrals ceased in 2004, pursuant to which his beneficiary would receive a death benefit equal to the extent the Bank owns an insurance policy in effect on the director’s life at the time of death that pays a greater amount than the total of deferred fees and accrued interest.
Director Stock Purchase Plan – Directors of the Bank haveprojected retirement benefit or the option of using from 50 to 100% ofcombined deferral account balance under the two fee deferral arrangements should his or her annual retainer fee to purchase newly issued Bancorp common stock at the current fair market value at the time the retainer is paid in accordance with the plan. Directors make an annual election to participate in advance and participation in the plan is ratified by the board.
Equity Compensation - Bancorp directors are also eligible to receive non-incentive stock options, stock appreciation rights, and restricted stock under Bancorp's 2005 Omnibus Stock Plan. These options havedeath occur while actively serving as a maximum term of seven years and an exercise price that may not be less than 100%member of the closing price of the common stock on the date of grant. Director options are included in the computation of share dilution. In 2009, upon the recommendation of the Compensation Committee, the board granted 1,665 shares of restricted stock to each of ten non-employee directors. The shares had a grant date fair value of $12.01 per share. The restricted stock vests over three years in equal increments, and vesting is accelerated upon retirement from the board.
Board.2009 Non-Employee Director Compensation
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| | | | Notice and Proxy Statement | 2023 | | | |
| Name | | Fees Earned or Paid in Cash (1) | | | Stock Awards (2) | | | Option Awards (3) | | | All Other Compensation (4) | | | Total | | David H. Fogg(5) | | $ | 19,213 | | | $ | - | | | | - | | | $ | - | | | $ | 19,213 | | | Mark E. Friis | | $ | 35,460 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 56,022 | | | Susan D. Goff | | $ | 34,180 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 54,742 | | | Solomon Graham | | $ | 38,260 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 58,822 | | Marshall H. Groom(6) | | $ | 7,240 | | | $ | - | | | | - | | | $ | 60 | | | $ | 7,300 | | | Gilbert L. Hardesty | | $ | 41,460 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 62,022 | | | Hunter R. Hollar | | $ | 61,960 | | | $ | 19,997 | | | | - | | | $ | 990 | | | $ | 82,946 | | | Pamela A. Little | | $ | 33,480 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 54,042 | | Charles F. Mess, Sr.(6) | | $ | 5,040 | | | $ | - | | | | - | | | $ | 99 | | | $ | 5,139 | | | Robert L. Orndorff | | $ | 36,580 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 57,142 | | | David E. Rippeon | | $ | 29,460 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 50,022 | | | Craig A. Ruppert | | $ | 39,060 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 59,622 | | | Lewis R. Schumann | | $ | 34,260 | | | $ | 19,997 | | | | - | | | $ | 565 | | | $ | 54,822 | |
2022 NON-EMPLOYEE DIRECTOR COMPENSATION The following table shows the compensation received during 2022 by our non-employee directors. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fees Earned or
Paid in Cash(1) ($) | | | Stock Awards(2) ($) | | | All Other
Compensation(3) ($) | | | Total ($) | | | | | | | | | | | Mona Abutaleb Stephenson | | | 61,675 | | | | 50,033 | | | | 2,487 | | | | 114,195 | | | | | | | | | | | | Ralph F. Boyd | | | 70,800 | | | | 50,033 | | | | 2,487 | | | | 123,320 | | | | | | | | | | | | Mark E. Friis | | | 74,800 | | | | 50,033 | | | | 5,487 | | | | 130,230 | | | | | | | | | | | | Brian J. Lemek | | | 60,425 | | | | 50,033 | | | | 2,496 | | | | 112,954 | | | | | | | | | | | | Pamela A. Little | | | 75,425 | | | | 50,033 | | | | 2,487 | | | | 127,945 | | | | | | | | | | | | Walter C. Martz II | | | 51,100 | | | | 50,033 | | | | 3,696 | | | | 104,829 | | | | | | | | | | | | Mark C. Michael | | | 49,525 | | | | 50,033 | | | | 2,487 | | | | 102,045 | | | | | | | | | | | | Mark C. Micklem | | | 61,550 | | | | 50,033 | | | | 2,543 | | | | 114,126 | | | | | | | | | | | | Christina B. O’Meara | | | 50,925 | | | | 50,033 | | | | 2,496 | | | | 103,454 | | | | | | | | | | | | Robert L. Orndorff | | | 120,050 | | | | 50,033 | | | | 2,487 | | | | 172,570 | | | | | | | | | | | | Craig A. Ruppert | | | 62,175 | | | | 50,033 | | | | 2,487 | | | | 114,695 | | | | | |
| (1) | All or a portion of the reported cash compensation may be deferred under the Director Fee Deferral Plan. Please see the description of “Director Compensation” on page 9. |
| (2) | On MarchMay 25, 20092022, each director serving at the directors noted above weretime was granted 1,665 shares of1,229 restricted stock.stock units. The value reported represents the grant date fair value of the award computed in accordance with FASB ACSASC Topic 718. The value was based upon Bancorp’s stock price of $12.01 on the date of the grant. AtOn December 31, 2009,2022, Ms. Abutaleb, Mr. Boyd, Mr. Friis, Ms. Little, Mr. Michael, Mr. Micklem, Mr. Orndorff and Mr. Ruppert each non-employee director had 1,996 unvested shares ofheld 2,185 restricted stock.stock units, and Ms. O’Meara, Mr. Lemek, and Mr. Martz each held 2,251 restricted stock units. |
| (3) | At December 31, 2009 Mr. Fogg had no stock options; Mr. Friis had 2,459 vested stock options and 840 unvested; Ms. Goff has 6,881 vested stock options and 840 unvested; Mr. Graham had 6,119 vested stock options and 840 unvested; Mr. Groom had no stock options; Mr. Hardesty had 11,687 vested stock options and 840 unvested; Mr. Hollar had no stock options; Ms. Little had 2,459 vested stock options and 840 unvested; Dr. Mess had no stock options; Mr. Orndorff had 10,840 vested stock options and 840 unvested; Mr. Rippeon had 7,921 vested stock options and 840 unvested; Mr. Ruppert had 6,375 vested stock options and 840 unvested; Mr. Schumann had 10,474 vested stock options and 840 unvested. |
| (4) | IncludesAmounts in this column represent dividends paid on unvested restricted stock.stock, dividend equivalents paid on restricted stock units and meeting fees for attendance at advisory board meetings. |
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| (5)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 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. | Mr. Fogg joined the board on June | | | | | | | | 24 2009 | |
| | | | Notice and resigned effective December 28, 2009.Proxy Statement | 2023 | | | |
| (6)STOCK OWNERSHIP INFORMATION |
STOCK OWNERSHIP INFORMATION 5% OWNERS OF COMPANY STOCK The following table provides information about those holders known to us to be the beneficial owners of 5% or more of our outstanding shares of common stock as of December 31, 2022. | Mr. Groom | | | | | | | | | | | | | | | | Name and Dr. Mess retired fromAddress | | Number of Shares | | | Percentage of Common Stock Outstanding | | | | | | | | | BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 | | | 4,411,976(1) | | | | 9.9% | | | | | | | | | | The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | | | 2,839,370(2) | | | | 6.4% | | | | | | | | | | Dimensional Fund Advisors LP 6300 Bee Cave Road, Austin, TX 78746 | | | 2,508,246(3) | | | | 5.6% | | | | | |
| (1) | According to the boardSchedule 13G/A filed by Blackrock, Inc. with the SEC on April 22, 2009.January 24, 2023, BlackRock, Inc., had sole voting power with respect to 4,115,596 shares and sole dispositive power with respect to 4,411,976 shares. |
| (2) | According to the Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2023, The Vanguard Group had shared power to vote 42,044 shares, sole dispositive power with respect to 2,754,018, and shared dispositive power with regard to 85,352 shares. |
| (3) | According to the Schedule 13G/A filed by Dimensional Fund Advisors LP with the SEC on February 10, 2023, Dimensional Fund Advisors had sole voting power with respect to 2,462,692 shares and sole dispositive power with respect to 2,508,246 shares. Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Issuer that are owned by the Funds, and may be deemed to be the beneficial owner of the shares held by the Funds. However, all securities reported compensation reflects amounts earned from January 1, 2009 through April 22, 2009.in this schedule are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. |
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Stock Ownership of Directors and Executive Officers
| STOCK OWNERSHIP INFORMATION |
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth information as of February 10, 2010,8, 2023, with respect to the shares of common stock beneficially owned by each director continuing in office and nominee for director of Bancorp,director-nominee, by the 2022 named executive officers, and by all directors and executive officers as a group. No individual holds more than 1% of Bancorpthe total outstanding shares of common stock. All directors and executive officers as a group and by the following executive officersbeneficially own 3.2% of Bancorp and Bank: Daniel J. Schrider, Philip J. Mantua, Frank Small, R. Louis Caceres, William W. Hill, IV (Named Executive Officers for 2009). Directors’ qualifying shares are included in shares owned. Name | | Number of Shares Owned (excluding options and restricted stock) (1) (2) | | | Shares of Restricted Stock | | | Number of Shares That May Be Acquired Within 60 Days by Exercising Options (3) | | | Total | | | Percentage of Common Stock Outstanding (*Less than 1%) | | | Mark E. Friis | | | 21,592 | | | | 1,996 | | | | 2,879 | | | | 26,467 | | | | * | | | Susan D. Goff | | | 15,147 | | | | 1,996 | | | | 7,301 | | | | 24,444 | | | | * | | | Solomon Graham | | | 14,260 | | | | 1,996 | | | | 6,539 | | | | 22,795 | | | | * | | | Gilbert L. Hardesty | | | 8,348 | | | | 1,996 | | | | 12,107 | | | | 22,451 | | | | * | | | Pamela A. Little | | | 5,176 | | | | 1,996 | | | | 2,879 | | | | 10,051 | | | | * | | | Robert L. Orndorff | | | 153,873 | | | | 1,996 | | | | 11,260 | | | | 167,129 | | | | 1.0 | % | | David E. Rippeon | | | 13,225 | | | | 1,996 | | | | 8,341 | | | | 23,562 | | | | * | | | Craig A. Ruppert | | | 52,571 | | | | 1,996 | | | | 6,795 | | | | 61,362 | | | | * | | | Lewis R. Schumann | | | 14,407 | | | | 1,996 | | | | 10,894 | | | | 27,297 | | | | * | | Dennis A. Starpliper(4) | | | - | | | | - | | | | - | | | | - | | | | * | | Daniel J. Schrider(5) | | | 5,415 | | | | 14,765 | | | | 38,886 | | | | 59,066 | | | | * | | Philip J. Mantua(6) | | | 8,111 | | | | 7,995 | | | | 28,529 | | | | 44,635 | | | | * | | Frank H. Small(7) | | | 7,694 | | | | 7,116 | | | | 71,035 | | | | 85,845 | | | | * | | R. Louis Caceres(8) | | | 3,230 | | | | 8,344 | | | | 33,479 | | | | 45,053 | | | | * | | William W. Hill, IV(9) | | | 1,699 | | | | - | | | | 9,867 | | | | 11,566 | | | | * | | | All directors and all executive officers as a group (17 persons) | | | 331,606 | | | | 72,810 | | | | 287,438 | | | | 691,854 | | | | 4.16 | % |
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 | | | | | | | | | | | Non-Employee Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mona Abutaleb Stephenson | | | 5,570 | | | | | | | | 442 | | | | 6,012 | | | | | | | | | | | | 1,742 | | | | 7,754 | | | | | | | | | | | Ralph F. Boyd | | | 8,815 | | | | | | | | 442 | | | | 9,257 | | | | | | | | | | | | 1,742 | | | | 10,999 | | | | | | | | | | | Kenneth C. Cook(6) | | | 218,801 | | | | 3,655 | | | | 109,985 | | | | 332,441 | | | | | | | | | | | | 12,720 | | | | 345,161 | | | | | | | | | | | Mark E. Friis(7) | | | 45,509 | | | | | | | | 442 | | | | 45,951 | | | | | | | | | | | | 1,742 | | | | 47,693 | | | | | | | | | | | Brian J. Lemek | | | 249,882 | | | | | | | | 515 | | | | 250,397 | | | | | | | | | | | | 1,742 | | | | 252,139 | | | | | | | | | | | Pamela A. Little | | | 27,610 | | | | | | | | 442 | | | | 28,052 | | | | | | | | | | | | 1,742 | | | | 29,794 | | | | | | | | | | | Walter C. Martz II(8) | | | 31,237 | | | | | | | | 515 | | | | 31,752 | | | | | | | | | | | | 1,742 | | | | 33,494 | | | | | | | | | | | Mark C. Michael | | | 24,730 | | | | | | | | 442 | | | | 25,172 | | | | | | | | | | | | 1,742 | | | | 26,914 | | | | | | | | | | | Mark C. Micklem | | | 14,225 | | | | | | | | 442 | | | | 14,667 | | | | | | | | | | | | 1,742 | | | | 16,409 | | | | | | | | | | | Christina B. O’Meara(9) | | | 45,764 | | | | | | | | 515 | | | | 46,279 | | | | | | | | | | | | 1,742 | | | | 48,021 | | | | | | | | | | | Robert L. Orndorff(10) | | | 169,043 | | | | | | | | 442 | | | | 169,485 | | | | | | | | | | | | 1,742 | | | | 171,227 | | | | | | | | | | | Craig A. Ruppert | | | 113,509 | | | | | | | | 442 | | | | 113,951 | | | | | | | | | | | | 1,742 | | | | 115,693 | | | | | | | | | | | Named Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Daniel J. Schrider(11) | | | 108,053 | | | | 11,913 | | | | 3,121 | | | | 123,087 | | | | | | | | | | | | 37,521 | | | | 160,608 | | | | | | | | | | | Philip J. Mantua(12) | | | 59,049 | | | | 4,512 | | | | 1,014 | | | | 64,575 | | | | | | | | | | | | 13,576 | | | | 78,151 | | | | | | | | | | | Joseph J. O’Brien, Jr.(13) | | | 56,190 | | | | 5,924 | | | | 1,425 | | | | 63,539 | | | | | | | | | | | | 18,202 | | | | 81,741 | | | | | | | | | | | R. Louis Caceres | | | 39,590 | | | | 4,121 | | | | 1,014 | | | | 44,725 | | | | | | | | | | | | 12,720 | | | | 52,783 | | | | | | | | | | | All directors and executive officers as a group (21 persons) | | | 1,284,843 | | | | 44,208 | | | | 125,679 | | | | 1,454,730 | | | | | | | | | | | | 150,938 | | | | 1,605,668 | |
| (1) | Under the rules of the SEC, an individual is considered to "beneficially own"“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 participation in the dividend reinvestment planreinvested 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 exercisable onand shares that the Record Date andnamed individual or group has the right to acquire through the vesting of restricted stock units within 60 days thereafter.of February 8, 2022. |
(4) | Mr. Starliper joined the board on February 24, 2010. At that time he owned 2,000 shares of Bancorp common stock. |
| (5) | Mr. Schrider's shares include 3,366Includes 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. On December 15, 2009, 800 stock options granted to |
| (7) | Includes 30,782 shares owned by Mr. SchriderFriis’ Living Trust for which Mr. Friis and his spouse share investing and voting power. |
| (8) | Includes 2,183 shares held in 1999 expired.three trusts for which Mr. Martz is trustee. Mr. Martz has no pecuniary interest these holdings. |
(6)(9) | Includes 7,343 shares owned by Ms. O’Meara’s spouse. |
| (10) | Includes 157,380 shares owned by trusts for which Mr. Mantua's shares include 7,333Orndorff and his spouse, as co-trustees, share investment and voting power. |
| (11) | Includes 6,893 shares held through employee benefit plans. |
(7)(12) | On December 15, 2009, 6,750 stock options granted to Mr. Small in 1999 expired. |
(8) | Mr. Caceres' shares include 2,502Includes 12,319 shares held through employee benefit plans. On December 15, 2009, 2,081 stock options granted to Mr. Caceres in 1999 expired. |
(9)(13) | Mr. Hill’s shares include 342Includes 5,674 shares held through employee benefit plans. Mr. Hill’s employment with the Bank ended on December 31, 2009, |
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| | | | Notice and all unvested restricted stock and unvested stock options were forfeited on that date.Proxy Statement | 2023 | | | |
Owners of More Than 5% of Bancorp’s Common Stock
Beneficial owners of more than 5% of the common stock are required to file certain ownership reports under the federal securities laws. The following table shows the common stock beneficially owned by the person or entity who has filed a report reporting beneficial ownership that exceeds 5% of Bancorp’s outstanding common stock at December 31, 2009.
Name | | Amount and Nature of Beneficial Ownership(1) | | | Percentage of Shares Outstanding(2) | | Blackrock, Inc. 40 East 52nd Street, New York, NY 10022 | | | 977,669 | | | | 5.88 | % | Dimensional Fund Advisors, LP Austin, Texas | | | 975,377 | | | | 5.87 | % |
(1) | Beneficial ownership is defined by rules of the SEC, and includes shares that the person or entity has, or shares, voting or investment power over.STOCK OWNERSHIP INFORMATION |
(2) | Calculated by Bancorp based upon shares reported as beneficially owned by the listed person or entity and shares of Bancorp common stock outstanding as of the Record Date. |
Transactions and Relationships with Management
Bancorp and the Bank have had in the past, and expect to have in the future, banking transactions with directors and executive officers in the ordinary course of business on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with other persons. In the opinion of management, these transactions do not and will not involve more than the normal risk of collectability or present other unfavorable features.
Bancorp's written Code of Ethics requires that all related party transactions involving executive officers or directors, as defined in Item 404 of SEC Regulation S-K, must be reviewed and approved by the Audit Committee, another independent committee of directors, or the independent directors on the board. As required by federal regulations, extensions of credit by the Bank to directors and executive officers are subject to the procedural and financial requirements of Regulation O of the Board of Governors of the Federal Reserve System, which generally require advance approval of such transactions by uninterested directors. Other related party transactions as defined in Item 404 (generally, any financial transactions, arrangements, or relationships, regardless of dollar amount, other than extensions of credit and bank deposits) are reviewed by the independent directors with the affected director not present or voting.
Director Lewis R. Schumann is a partner in the Rockville, Maryland law firm of Miller, Miller and Canby, Chtd. which the Bank has retained during 2009 and expects to retain during the current year for legal services on matters of real estate, and trust and estate administration.
Section 16(a) Beneficial Ownership Reporting Compliance
DELINQUENT SECTION 16(A) REPORTS Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp'sour directors, executive officers, and directors, and any persons who own more than ten percent10% of a registered class of Bancorp's equity securities,our common stock to file reports of ownership and changes in ownership on Forms 3, 4, and 5of our common stock with the SEC. Executive officers, directorsSpecific dates for such filings have been established by the SEC, and greater than ten percent shareholderswe are required by applicable regulations to furnish Bancorp with copies of all Forms 3, 4, and 5 they file. report in this proxy statement any failure to file reports in a timely manner In 2022. Based solely on the review of the copies of such forms it haswe have received and written representations from each person, all of Bancorp'sthe executive officers and directors have complied with filing requirements applicable to them with respect to transactions during 2009.
2022. | | | | |
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| COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION DISCUSSION AND ANALYSIS | | | | | | | | | 28 | |
| | | | Notice and Proxy Statement | 2023 | | | |
Compensation Discussion and Analysis
The following discussion and analysis describes Bancorp's philosophy, processes, elements of and factors for determining compensation for the named executive officers for 2009 who were: the Principal Executive Officer, Daniel J. Schrider; the Principal Financial Officer, Philip J. Mantua; Executive Vice President and Chief Operating Officer, Frank Small; Executive Vice President for Personal Banking and Investment Management, R. Louis Caceres; and Executive Vice President for Commercial Banking William W. Hill, IV. Mr. Hill resigned from employment as of December 31, 2009.
Restrictions on Executive Compensation for TARP-CPP Participants
On February 17, 2009 the American Recovery and Reinvestment Act of 2009 (ARRA) significantly amended the Emergency Economic Stabilization Act of 2008 (ESSA) and charged the U. S. Treasury with the task of establishing additional standards for executive compensation for participants of the Capital Purchase Program under the Troubled Asset Relief Program (TARP-CPP). The U.S. Treasury published these additional standards on June 15, 2009. Among those standards specifically impacting Bancorp are the following:
| COMPENSATION DISCUSSION AND ANALYSIS |
1. EXECUTIVE SUMMARY FINANCIAL HIGHLIGHTS | | ·* | Bancorp is prohibited from paying or accruingNon-GAAP financial measure. See our 2022 Annual Report on Form 10-K for additional information and a bonusreconciliation to the five most highly compensated employees.directly comparable GAAP financial measure. | |
| · | Bancorp must ensure that bonuses paid to any senior executive officer or any of the next 20 most highly compensated employees are subject to being repaid to Bancorp if the bonus was based on materially inaccurate financial statement or any other materially inaccurate performance criteria. |
| · | Bancorp is prohibited from paying any “golden parachute” payment for the departure from the company for any reason to any senior executive officer or any of the next five most highly compensated employees. |
| · | Bancorp is prohibited from paying any reimbursement of taxes owed with respect to any compensation (known as a “gross up” payment) to any senior executive officer or any of the next 20 most highly compensated employees. |
The employees described above have been identified, including all executive officers, and agreements have been executed with each to amend any existing compensation plan or agreement that may be at conflict with the restrictions set forth in ESSA as amended by ARRA. Bancorp EXECUTIVE COMPENSATION PHILOSOPHY Our Compensation Committee is committed to full compliancerewarding 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 all lawsour strategic objectives, which state that we will earn independence by creating franchise and regulations including those connectedshareholder value. In order to beingalign compensation to this strategy, a TARP-CPP participant.
significant portion of total compensation is tied to company performance, both absolute and relative.Compensation Actions in 2009 On January 1, 2009 Daniel J. Schrider was promoted to President and Chief Executive Officer upon the retirement of Hunter R. Hollar. Mr. Schrider’s compensation was increased commensuratemust also be aligned with the position of chief executive officer.
On December 15, 2009 Mr. Small’s employment agreement expired, and he received a change-in-control severance agreement. The TARP-CPP restrictions currently prohibit any payment under this agreement.
On December 31, 2009 agreements were executed with each of the named executive officers (excluding Mr. Hill) to amend any existing compensation plancompetitive organizations in order to maintain compliance under TARP-CPP. With regardattract and retain the talent, skills, and experience needed in executive management. The committee works with an independent compensation consultant to these officers,receive periodic analyses that benchmark compensation with market trends and practices.Finally, compensation must align the agreements directly affected terms containedinterests 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 employment agreementsform of Messrs. Schrider, Mantua,equity. Balanced – Executive compensation must balance a number of factors. Compensation should have a proper mix of fixed and Caceres,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 change-in-control agreement with Mr. Small, and the restricted stock award agreements for each. Overall Compensation Philosophy & Guiding Principles
Bancorp’s executive compensation philosophy did not materially change in 2009 in view of the severe limitations on compensation resulting from participation in TARP-CPP. In general, the compensation philosophy is intendedmeans to attract, motivate, and retain topthe 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. | | | | |
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| COMPENSATION DISCUSSION AND ANALYSIS |
2022 COMPENSATION HIGHLIGHTS Annual Incentive Payout – Annual incentive opportunities are provided to our executive talent,officers under our Executive Team Incentive Plan (ETIP). | | | | | | | | | | | | | $160.3 million core earnings | | | 
| | | 113% of Target Payout | | 2022 ETIP
124.23% of Target Payout | 49.66% non-GAAP efficiency ratio | | |
| | | 148% of Target Payout | 14.69% core ROTCE | | |
| | | 128% of Target Payout | Qualitative factors | | |
| | | 105% of Target Payout |
2020 - 2022 PRSU Payout – PRSUs have a three-year performance period with cliff vesting at the end of the performance period. | | | | | | | | | | | | | 37th percentile relative 3-year TSR | | |
| | | 75% of Target Payout | | 2020 Performance Shares
112.85% of Target Payout | $11.71 3-year adjusted EPS | | |
| | | 114% of Target Payout | 84th percentile relative average ROTCE | | |
| | | 150% of Target Payout |
COMPENSATION TIED TO PERFORMANCE We tie pay to link executive rewardsperformance by structuring a significant portion of our executives’ pay as at-risk compensation (64% for CEO; 57% for other NEOs), and we align the interests of our executives with shareholder interests, to achieve strategic business objectives, and to rewardthose of our shareholders by delivering a balanced approach to short-term and long-term performance. The philosophy incorporates elements that are nonperformance-based (e.g., salary, benefits and limited perquisites) and performance-based (e.g., annual incentivesmeaningful portion of our executives’ pay in the form of cashequity compensation (35% for CEO; 28% for other NEOs). 
| • | | Annual incentive awards are based on our achievement of financial and strategic goals that are expected to 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 2022 annual meeting, over 97% of the shares voted were voted “for” the proposal. The committee considered this result and, retirement contributions,in light of the strong support for our executive compensation program, did not make any significant changes to our executive compensation program. | | | | | | | | | 30 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| 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 equity-based awards).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 | | | | O | | Provide “single-trigger” vesting of equity awards upon a change in control | | | | | | | | | | | | | | | ✓ | | Require a minimum performance threshold be attained before any incentive compensation is paid | | | | O | | Provide “single-trigger” severance upon a change in control | | | | | | | | | | | | | | | ✓ | | Impose maximum caps on incentive compensation | | | | O | | Provide excessive perquisites | | | | | | | | | | | | | | | ✓ | | Require reimbursement or forfeiture (“clawback”) of excess incentive compensation in the event of certain accounting restatements | | | | 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 | | | | O | | Provide supplemental executive retirement plans | | | | | | | | | |
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Under this philosophy, executives are paid market competitive salaries based on experience, expertise | COMPENSATION DISCUSSION AND ANALYSIS |
2. COMPENSATION COMPONENTS EXECUTIVE COMPENSATION PROGRAM ELEMENTS The compensation elements for 2022 included base salary, annual incentive, long-term incentive (equity) and individual performance. Incentive compensation in the form of an annual cash bonus, an annuala contribution to a deferred compensation retirement plan as shown in the following table and annual equity awards is intended to be market competitive and commensurate with company performance.described further herein. These compensation programs are externally benchmarkedelements did not change in 2022. | | | | | | | | | | | | | Description/Objectives | | Performance Rewarded | | Form and Timing of Payment | | | | | Base Salary | | Fixed base of cash compensation reflective of each executive’s role, performance, skills and contributions | | Recognizes each executive’s individual performance and contribution in his/her role | | Paid in cash bi-weekly | | | | | Annual Incentive (ETIP) | | Variable payment based on achievement of performance metrics aligned with company strategy | | Measured over a one-year period: • Core earnings • Non-GAAP efficiency ratio • Core ROTCE • Qualitative factors | | Paid in cash after the end of the fiscal year | | | | | Long-term Incentive PRSUs (50%) RSUs (50%) | | Performance-based restricted stock units intended to incentivize performance against metrics aligned with strategic long-term goals | | Measured over a three-year period: • Relative core ROTCE • Relative total shareholder return | | Paid in shares after the end of three-year performance period | | Time-based restricted stock units intended to align executives’ interests with shareholder interests and promote retention | | Value realized depends on stock price performance | | Paid in shares pro-rata over three-year vesting period | | | | | NQDC Plan | | Variable contribution to deferred compensation plan based on annual performance rewards superior performance relative to peers | | Measured over a one-year period: • Relative core ROAA | | Contribution credited to deferred compensation plan after the end of the fiscal year |
3. EXECUTIVE COMPENSATION GOVERNANCE AND PRACTICES EXECUTIVE COMPENSATION PROCESS Role of the total compensation paid by comparably sized banks.
By following the above described portfolio approach to compensation and benefits, the executive is provided a measure of security as to the minimum levels of compensation he or she is eligible to receive, and also is motivated to focus on the business measures that will produce a high level of performance for Bancorp. In addition, the committee believes this approach reduces the risk of recruitment of top executive talent by competitors.
Compensation Decision Process Committee–The Compensation Committee, is comprisedwhich consists entirely of independent directors, and is appointed annually by the board of directors to assist the board in managing compensation and benefit plans for the executive officers. The committee operates under a written charter reviewed and approved by the board.
Under normal circumstances the Compensation Committee would consider a wide range of factors influencing the determination of compensation, including company performance, individual performance, attainment of goals, market conditions and more. However, the overarching considerations for determining compensation in 2009 for the named executive officers were compliance with the TARP-CPP restrictions and the company’s performance.
Role of Management, the Compensation Committee, and Compensation Consultants in the Executive Compensation Process
Role of Management - In 2009, Mr. Schrider and the executive officers, as customary, were responsible for the development of Bancorp’s strategic planestablishing and annual business plan, which were reviewed and approved by the board of directors. The business plan provided the foundationapproving compensation for setting performance goals and targets to be achieved during the fiscal year and included in incentive compensation plans.
Mr. Schrider, in collaboration with the external compensation consultant, developed recommendations for the executive compensation recommendations. Ronald E. Kuykendall, Bancorp’s General Counsel, provided legal interpretation and guidance on compliance with the TARP-CPP restrictions as they related to executive compensation. Mr. Mantua provided information regarding company performance and comparisons with peer bank performance.
Mr. Schrider, Mr. Mantua, and Mr. Kuykendall, as well as other members of management, are regularly requested to attend Compensation Committee meetings where company performance, market considerations, and legal interpretation is discussed. Executive management is not present during final deliberations and only committee members vote on executive compensation matters.
Role of the Compensation Committee - The basic responsibilities of the Compensation Committee are to review, recommend or approve compensation policies applicable to namedall executive officers, including participationour CEO and other NEOs, and for overseeing and administering our executive compensation program, which includes establishing performance measures;goals for our incentive compensation plans, annually approving a peer group of companies used to consider the relationshipbenchmark compensation of corporate performance to total compensation; to recommend salary and bonus levels and equity-based awards forour executive officers, for consideration by the board of directors; and to review the adequacyadministering our equity and effectiveness of various compensation and benefit plans and succession planning of Bancorp. retirement plans.The chairmanchair of the committee reports committee actions or recommendations to the board of directorsBoard following each committee meeting.
Mr. Schrider became chiefThe 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 officer on January 1, 2009compensation consultant to provide commentary, analysis and so did not receive a formal performance evaluation duringexpertise relating to executive compensation. Since 2017, the coursecommittee has engaged Meridian Compensation Partners, LLC (“Meridian”) as its independent executive compensation consultant. Representatives of the year. However, the process previously adopted by Bancorp has not changed. The CEO evaluation process is coordinated by an outside consultant,Meridian attend and involves receiving feedback from each director separatelyparticipate in committee meetings and anonymously for compilation. The Compensation Committee is expected to use the results of future evaluations inexecutive sessions at which executive compensation decisions.
Decisions regarding compensationmatters are considered, and Meridian performs various analyses for the named executive officers are made bycommittee, including peer group benchmarking and analyses regarding the committee with consideration given to recommendations from Mr. Schrideralignment of pay and independent consultants. Decisions by the committee with respect to compensation are approved by the board of directors.performance. | | | | | | | | | 32 | |
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The committee has the authority to obtain advice and assistance from internal or external legal, human resources, accounting or other experts, advisors, or consultants as it deems desirable or appropriate. | COMPENSATION DISCUSSION AND ANALYSIS |
The committee has sole authority and discretion to retain and terminate any compensation consultantsMeridian and to approve the feefees, scope and theother terms of engagement. Details on the committee's functions are described in its charter, which has been approvedMeridian’s engagement, with full funding provided by the boardcompany. The committee annually reviews the independence of directorsMeridian in light of SEC rules and regulations and Nasdaq Listing Rules regarding compensation consultant independence and has affirmatively concluded that Meridian is available on Bancorp’s Investor Relations Web Site maintained at www.sandyspringbank.com.
independent from the company and has no conflicts of interest relating to its engagement by the committee.Role of Compensation Consultants - The committee is advised by independent compensation consultants and advisors.Management – Our CEO supports the committee’s process for determining executive compensation. In general, the consultants provide compensation benchmarking and analytical data and render advice2022, our CEO presented to the committee regardingspecific recommendations for all aspectsexecutive officers, other than himself. In making his compensation recommendations for each of the committee'sexecutive 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 includingfor 2022 compensation opportunities. Our CEO does not make recommendations with respect to his own compensation or participate in the chiefdeliberations regarding the setting of his own compensation. Decisions related to the CEO’s 2022 compensation opportunities were made independently by the committee in consultation with Meridian. PEER GROUP The Compensation Committee uses a peer group to perform assessments of executive officer'scompensation as well as to measure performance review process.under annual and long-term incentive plans. The committee has direct access toreviews compensation data from our peers along with pay survey data in establishing base salaries, target pay opportunities and the consultantsamount and control over their engagement.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 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, Ohio, Virginia and West Virginia. The median asset size of the peer group was advised by a consulting firm during 2009$12.7 billion, placing the company at the 51st percentile, based on assets as of June 30, 2021. Compared to our prior peer group, Investors Bancorp, Inc. was removed due to its pending merger and Dime Community Bancshares, Inc. and Flushing Financial Corporation were added to better align the company’s asset size with the peer group median. The 2022 peer group was comprised of the following 21 companies: | | | | | Atlantic Union Bankshares Corp. (AUB) | | Fulton Financial Corporation (FULT) | | | Berkshire Hills Bancorp, Inc. (BHLB) | | Independent Bank Corp. (INDB) | | | Brookline Bancorp, Inc. (BRKL) | | NBT Bancorp, Inc. (NBTB) | | | Community Bank System, Inc. (CBU) | | OceanFirst Financial Corp. (OCFC) | | | ConnectOne Bancorp, Inc. (CNOB) | | Park National Corporation (PRK) | | | Customers Bancorp, Inc. (CUBI) | | S&T Bancorp, Inc. (STBA) | | | Dime Community Bancshares, Inc. (DCOM) | | TowneBank (TOWN) | | | Eagle Bancorp, Inc. (EGBN) | | United Bankshares, Inc. (UBSI) | | | First Commonwealth Financial Corp. (FCF) | | Wesbanco, Inc. (WSBC) | | | First Financial Bancorp (FFBC) | | WSFS Financial Corporation (WSFS) | | | Flushing Financial Corporation (FFIC) | | |
The committee determined that was engaged to conduct a review and competitive assessment of total compensation and benefitsthis peer group would be used for the named executive officers, and to provide a comprehensive assessment of the competitiveness and effectiveness of the total executive compensation programs. The consultant assistedrelative performance comparisons in the identification of relevant peer groups and provided other market data used by Bancorp for benchmarking and has provided advice regarding levels and components of compensation for each named executive officer.
Compensation Structure and Elements
Bancorp's compensation structure for named executive officers consists of five main elements: base salary, the Sandy Spring Leadership Incentive Plan, the Executive Incentive Retirement Plan, equity-based awards, and executive benefits and perquisites. Following is a summary of the role of each component, a description of how decisions regarding the components are madeETIP, 2022 PRSUs and the specific decisions made in 2009 as they relate to the named executive officers.NQDC Plan. | | | | |
| | | Notice and Proxy Statement | 2023 | | 33 |
Base Salary - Base salary is paid bi-weekly and reviewed annually as a critical element of executive compensation. | COMPENSATION DISCUSSION AND ANALYSIS |
4. 2022 COMPENSATION BASE SALARY In determining base salaries, the committee considers the executive'sexecutive’s qualifications and experience, scope of responsibilities, the goals and objectives established for the executive, and the executive'sexecutive’s past performance. The committee seeks to pay a base salary, commensurate with the individual’s experience and performance, 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 3, 2022. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | 2021 Base
Salary | | | Amount
of
Increase | | | 2022 Base
Salary | | | Percent
Increase | | | | | | | | | | | Daniel J. Schrider | | | $850,000 | | | | $25,000 | | | | $875,000 | | | | 2.9% | | | | | | | | | | | | Philip J. Mantua | | | $440,000 | | | | $15,000 | | | | $455,000 | | | | 3.4% | | | | | | | | | | | | Joseph J. O’Brien, Jr. | | | $517,500 | | | | $17,500 | | | | $535,000 | | | | 3.4% | | | | | | | | | | | | Kenneth C. Cook | | | $450,000 | | | | $15,000 | | | | $465,000 | | | | 3.3% | | | | | | | | | | | | R. Louis Caceres | | | $440,000 | | | | $20,000 | | | | $460,000 | | | | 4.5% | | | | | |
2022 TARGET AWARD OPPORTUNITIES Our executive officers have a target award opportunity for annual and long-term goals, which represents the amount of award received if we achieve the performance goals set by the committee. In determining the target award opportunity for each executive, the committee considers, among other things, the overall mix of an NEO’s total compensation and the value of awards made to other executives, as well as competitive salary practicesthe value of cash incentive and equity-based compensation awarded to comparable NEOs at financial institutions inour peer companies. The table below summarizes the peer group benchmarking (see "Pay Levelsaward opportunities for the NEOs at the target level of performance. | | | | | | | | | | | | | | | | | | | | 2022 Target Award
Opportunities (as a % of base salary*) | | | | | | | | | Name | | Annual Incentive
Award
Opportunity | | | Long-Term Incentive
Award
Opportunity | | | | | | | | | Daniel J. Schrider | | | 75% | | | | 100% | | | | | | | | | | Philip J. Mantua | | | 50% | | | | 65% | | | | | | | | | | Joseph J. O’Brien, Jr. | | | 65% | | | | 75% | | | | | | | | | | Kenneth C. Cook | | | 65% | | | | 60% | | | | | | | | | | R. Louis Caceres | | | 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 2022, target payout opportunities for annual cash incentives and Benchmarking").
In 2009, Mr. Schrider received an annual base salary increase from $350,000 to $450,000 or 28.6% in conjunction with his promotion to chief executive officer on January 1, 2009. The amount of the increase was determined by the Compensation Committee with market data provided by the consultant. The committee recommended, and the board approved, placing Mr. Schrider’s base salary close to the median of the range for comparable positions based on Mr. Schrider’s years of experience in executive management, demonstrated leadership ability, and generally strong personal performance.
The Compensation Committee recommended and the board approved an adjustment to Mr. Small’s base salary from $312,500 to $265,000 or -15.2% effective January 11, 2009. The adjustment resulted from an organizational change that narrowed Mr. Small’s job responsibilities. The amount was determined by comparing Mr. Small’s current responsibilities, experience and seniority against market compensation data.
The other named executive officers did not receive salary increases for 2009 based on management’s decision to forego increases for management level positions through senior vice president. This recommendation was approved by the Compensation Committee.
Sandy Spring Leadership Incentive Plan - In 2009, of the named executive officers only Mr. Hill was eligible to participate in the Sandy Spring Leadership Incentive Plan (2009 SSLIP), a short-termlong-term incentive plan. Under the TARP-CPP restrictions, Messrs. Schrider, Mantua, Small and Caceres were prohibited from participating.
The 2009 SSLIP was designed to pay a cash awardawards as a percentage of annual earnings based on company performance compared to pre-established performance indicators and defined award levels. Performance measures reflect critical goals that are defined eachbase salary remained unchanged from the prior year as partfor all of the business planning process,NEOs, except for Mr. Caceres, whose opportunity was increased.For 2022, the target long-term incentive award opportunity for each NEO was allocated equally among PRSUs and RSUs. ANNUAL INCENTIVE COMPENSATION Annual incentive opportunities are provided to our executive officers under our Executive Team Incentive Plan (ETIP). The ETIP is a short-term, cash compensation plan designed to recognize and reward participants are paid based onfor their success in achieving specific company performance. This approach supportsgoals. For 2022, the desirecommittee selected three financial metrics and a set of qualitative factors under the ETIP. A relative weight was assigned to foster a collaborative team-oriented culture. 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. | | | | | | | | | 34 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| COMPENSATION DISCUSSION AND ANALYSIS |
The 2009 approved performance measures and respective weights for 2022 were as follows: | | | | | | | | | | | | Corporate Goal | | Weight | | | | | | | | Core earnings | | | 35% | | | | | | | | | Non-GAAP efficiency ratio | | | 25% | | | | | | | | | Core ROTCE | | | 25% | | | | | | | | | Qualitative factors | | | 15% | | | | | | | | | | | | 100% | | | | | |
Each financial metric was assigned a “threshold” or minimum performance level, a “target” level of performance, and a maximum level at which are weighted based on business plan goals, were: Earnings Per Share Growth, Noninterest Income to Total Revenue, Efficiency Ratio, and Average Deposit Growth. Specificthe 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 2022 ETIP were core earnings, non-GAAP efficiency ratio and core ROTCE. | • | | Core earnings is calculated as net income exclusive of investment securities gains and loss, amortization of intangible assets, and other extraordinary and nonrecurring items, all on a net of tax basis. See Annex A – Non-GAAP Financial Measures for more information on calculation of this metric. The committee chose core earnings because it reflects the operating performance of our core business operations. |
| • | | The non-GAAP efficiency ratio is calculated as adjusted non-interest expense divided by the sum of adjusted net interest income and adjusted non-interest income. See Annex A – Non-GAAP Financial Measures for more information on calculation of this metric. The committee chose this metric because it is a measure of operating expense control and efficiency of operations and is highly useful in comparing period-to-period operating performance of our core business operations. |
| • | | Core ROTCE is calculated as core earnings divided by average tangible common equity. Tangible common equity is calculated as total stockholders’ equity exclusive of goodwill and other intangible assets. See Annex A – Non-GAAP Financial Measures for more information on calculation of this metric. The committee chose this metric because it is one of the most significant financial measures utilized by shareholders in valuing the company. |
The targets for core earnings, the non-GAAP efficiency ratio and core ROTCE were determined by reference to our 2022 financial plan and evaluation of our 2021 performance relative to our peer group. Qualitative Factors – Key qualitative factors that influence or reflect our performance were identified by the committee at the same time as financial goals as well as minimumwere established. | | | | | | | | | | | Factor | | Description | | Achievement | | Performance
Level | | | | | Digital optimization and alignment and data strategy | | Our multi-year program to enhance our information technology and data infrastructure will provide a seamless, unified digital banking platform that is expected to reduce friction for clients and employees, enable digital sales, allow us to offer first-class technologies, improve efficiency, and give us the flexibility to meet the changing needs of our clients. Transitioning our data management to a cloud platform will enable us to modernize our digital and analytics capabilities and transition to a more data-driven culture. | | • Piloted our new retail online and mobile banking platform. • Developed online account opening platform, which went live in early 2023. • Went live with phase 1 of our marketing cloud, which provides expanded marketing tools that work across channels and automate marketing work flows. • Implemented Zelle, the popular peer-to-peer payment solution. • Completed data lake build and continued data integration. | | Target |
| | | | |
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| COMPENSATION DISCUSSION AND ANALYSIS |
| | | | | | | | | | | Factor | | Description | | Achievement | | Performance
Level | | | | | Client survey results | | We conduct quarterly client surveys to determine our SEE (Success, Effort, Emotion) Score, which indicates the level of client loyalty and engagement. We also track our Net Promoter Score (NPS), which measures the loyalty of clients through one question: How likely is it that you would recommend Sandy Spring Bank to a friend or colleague? NPS is calculated as the percentage of promoters minus the percentage of detractors. | | Achieved average SEE score of 74.5 and NPS score of 54 for 2022, which we believe are both well above industry average. | | Above target | | | | | Employee engagement results | | We evaluate employee engagement through the Great Place to Work survey. The company originally utilized this survey in 2020 and re-surveys employees approximately every 18 months. | | Achieved score of 82% on the Great Place to Work statement (Taking everything into account, I would say this is a Great Place to Work), which is an excellent score and qualifies us for the Great Place to Work certification. | | Above target |
Based on its assessment, the committee determined that the qualitative factors component was earned at 105%. The committee assigned substantial weight to digital optimization and maximums were establishedalignment and data strategy. 2022 Payouts – Combining the results for eachthe quantitative and qualitative performance measure. In additioncomponents produced payment at 124.23% of target. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate Goal | | Threshold
Performance
Level (50% of Target
Funding) | | | Target
Performance Level (100% of
Target
Funding) | | | Maximum
Performance
Level (150% of
Target
Funding) | | | 2022
Performance | | | Payment Level | | | Weight | | | Weighted
Payment Level | | | | | | | | | | | | | | Core earnings | | | $110,000 | | | | $150,000 | | | | $190,000 | | | | $160,305(1) | | | | 112.88% | | | | 35% | | | | 39.51% | | | | | | | | | | | | | | | Non-GAAP efficiency ratio | | | 56.50% | | | | 53.00% | | | | 49.50% | | | | 49.66%(2) | | | | 147.71% | | | | 25% | | | | 36.93% | | | | | | | | | | | | | | | Core ROTCE | | | 10.00% | | | | 13.00% | | | | 16.00% | | | | 14.69%(3) | | | | 128.17% | | | | 25% | | | | 32.04% | | | | | | | | | | | | | | | Qualitative factors | | | | | | | | | | | | | | | | | | | 105.00% | | | | 15% | | | | 15.75% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 124.23% | | | | | |
| (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 committee use negative discretion to these measures, the 2009 SSLIP had a net income “trigger” which prohibited a payout unless earnings met a specific level. For 2009, earnings were insufficientreduce his annual incentive payment to meet the trigger and there was no payment from the 2009 SSLIP100% to any participant, including Mr. Hill. Executive Incentive Retirement Plan - The Executive Incentive Retirement Plan (EIRP) replaced Supplemental Executive Retirement Agreements with the named executive officers in 2008. Participationreflect declining financial performance in the EIRPfourth 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 2009 was prohibited by the TARP-CPP restrictions for Messrs. Schrider, Mantua, Small, and Caceres. Only Mr. Hill was eligible to participate in 2009. The EIRP is a defined contribution plan that provides for contributions to be made to the participants' plan accounts basedother NEOs without adjustment.Based on the attainment of criteria established by the board of directors on an annual basis. In 2009, management recommended, and the Compensation Committee approved, that no benefit be paid based on Bancorp’s performance and general market conditions. considerations described above, the committee approved the following annual incentive awards for 2022 performance. | | | | | | | | | | Name | | 2022 ETIP Award ($) | | | | | | | Daniel J. Schrider | | 656,250
(100% of target) | | | | | | | | Philip J. Mantua | | 282,623
(124.23% of target) | | | | | | | | Joseph J. O’Brien, Jr. | | 432,010
(124.23% of target) | | | | | | | | Kenneth C. Cook | | 375,485
(124.23% of target) | | | | | | | | R. Louis Caceres | | 314,302
(124.23% of target) | | | | |
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| | | | Notice and Proxy Statement | 2023 | | | |
The executive’s vested account balance | COMPENSATION DISCUSSION AND ANALYSIS |
All annual incentive awards were paid in cash in March 2023 and are included in the EIRP (including balances accrued underNon-Equity Incentive Plan Compensation column in the former Supplemental Executive Retirement Agreements) will be distributed to the executive following termination of employment either in a lump sum or in installments, at the election of the executive. No payments will be made to an executive who is terminated for just cause. Deferral bonus awards under the plan vest over a period of 15 years and automatically vest upon the executive’s death or disability or upon a change in control.
Effective January 1, 2009, theSummary Compensation committee recommended, and the board approved, an amendment to the EIRP that changed the interest rate for account balances to “120% of the long-term Applicable Federal Rate (AFR), adjusted monthly.” This change was made so that participants were receiving a current market rate that is attractive, but not considered above market.
Equity-Based Awards - -Bancorp’sTable on page 42. LONG-TERM INCENTIVE COMPENSATION Our compensation philosophy identifies equity-based compensation as among the mostan effective means of creating a long-term link betweenaligning the interests of Bancorp'sour shareholders, and the performance of the organizationcompany, and the retention of executive management. The committee has increasingly weightedutilized performance-based and time-based stock awards to accomplish these objectives. For 2022, the compensation of namedtarget long-term incentive award opportunity for each NEO was allocated equally among PRSUs and RSUs, as follows: | | | | | | | | | | | | | | | | | | Name | | Performance Restricted Stock Units (#) | | | Restricted Stock Units (#) | | | | | | | | | Daniel J. Schrider | | | 9,364 | | | | 9,364 | | | | | | | | | | Philip J. Mantua | | | 3,151 | | | | 3,151 | | | | | | | | | | Joseph J. O’Brien, Jr. | | | 4,276 | | | | 4,276 | | | | | | | | | | Kenneth C. Cook | | | 2,975 | | | | 2,975 | | | | | | | | | | R. Louis Caceres | | | 3,151 | | | | 3,151 | | | | | |
2022 Performance Restricted Stock Units – PRSUs are designed to align pay and long-term performance. We grant PRSUs to executive officers toward equity-based awards. Vesting schedulesto incentivize production of superior long-term shareholder returns through achievement of long-term financial performance. PRSUs have a three-year performance period ending December 31, 2024, with cliff vesting at the end of the performance period. For 2022, the committee selected return on tangible common equity (ROTCE) as the performance metric, with payouts based on our average annual ROTCE performance over the three-year measurement period relative to our peer group. ROTCE is defined as net income attributable to common shareholders, adjusted to exclude extraordinary items, divided by average tangible common equity. The committee selected ROTCE because it is a comprehensive performance metric that is useful for equity-based awards support a goalcomparing our profitability with that of retentionour peers. At the end of key leaders.
Under Bancorp’s 2005 Omnibus Stock Plan, executives are normally eligiblethe three-year performance period, our executive officers can earn between 0% to receive annual equity awards150% 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 formour peer group. | | | | | | | | | | | | Relative ROTCE Performance | | Percentage of PRSUs Vesting | | | | | | | | 75th percentile or above | | | 150% | | | | | | | | | 50th percentile (Target) | | | 100% | | | | | | | | | 25th percentile | | | 50% | | | | | | | | | Below 25th percentile | | | 0% | | | | | |
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 2022 PRSUs will be adjusted as follows: | | | | | | | | | | | | Relative TSR Performance | | Increase or Decrease in Payout(1) | | | | | | | | Top quartile (above 75th percentile) | | | +15% | | | | | | | | | Second quartile | | | None | | | | | | | | | Third quartile | | | None | | | | | | | | | Bottom quartile (25th percentile or below) | | | -15% | | | | | |
| (1) | Subject to overall payout cap of 150% of target. There will be no upward adjustment if the company’s TSR for the three-year performance period is negative. |
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| COMPENSATION DISCUSSION AND ANALYSIS |
PRSUs will be credited with dividends paid on Sandy Spring stock during the time period when the PRSUs are outstanding, which will be reinvested in additional units, adjusted for performance and paid out in shares if and when the underlying PRSU is earned and paid. Restricted Stock Units – We grant RSUs to align the interests of executive officers with those of our shareholders by creating an incentive to create and preserve long-term shareholder value. Through RSUs, executive officers share the risks and rewards of stock options, restrictedownership. Through multi-year vesting, RSUs also serve as a retention vehicle. RSUs vest in equal installments over three years, provided that the recipient continues to be employed by the company on each vesting date. RSUs will be credited with dividends paid on Sandy Spring stock, and stock appreciation rights. However, the limitations under TARP-CPP allow Bancorp to grant only awards of long-term restricted stockwhich are subject to the named executive officers. Undersame terms and conditions (including the TARP-CPP restrictions, Bancorp may award long-term restricted stock to employees whose compensation is limited so longsame vesting and delivery schedule) as the valueunderlying RSUs. Results of 2020 - 2022 PRSUs – The three-year performance period for the 2020 PRSUs concluded on December 31, 2022. Payout of the award does not exceed 33%was based one-third on our TSR relative to an industry peer group, one-third on our cumulative adjusted earnings per share and one-third on our ROTCE relative to our peer group. Payout percentages at various levels of performance for the 2020 PRSUs and actual results are illustrated in the table below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate Goal | | Threshold
Performance
Level (50% of Target
Award) | | | Target
Performance Level (100% of
Target
Award) | | | Maximum
Performance
Level (150% of
Target
Award) | | | Actual
Performance | | | Performance Level Achieved | | | Weighted Payment Level | | | | | | | | | | | | | Relative TSR percentile | | | 25th | | | | 50th | | | | 75th | | | | 37.33th | | | | 74.67% | | | | 24.89% | | | | | | | | | | | | | | 3-Year Adjusted Cumulative EPS | | | $10.62 | | | | $11.46 | | | | $12.36 | | | | $11.71(1) | | | | 113.89% | | | | 37.96% | | | | | | | | | | | | | | Relative ROTCE percentile | | | 25th | | | | 50th | | | | 75th | | | | 84.21th | | | | 150.00% | | | | 50.00% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 112.85% | | | | | |
| (1) | See Annex A – Non-GAAP Financial Measures for reconciliation to GAAP EPS. |
The following table lists the number of 2020 PRSUs to which our NEOs became vested at the end of the recipient’s annual compensation. The Compensation Committee recommended, and the Stock Option Committee approved, restricted stock awards to each of the named2020 – 2022 performance cycle. | | | | | | | | | | | | Name | | 2020 PRSUs Earned at 112.85% of Target (#) | | | | | | | | Daniel J. Schrider | | | 16,065 | | | | | | | | | Philip J. Mantua | | | 6,282 | | | | | | | | | Joseph J. O’Brien, Jr. | | | 8,123 | | | | | | | | | Kenneth C. Cook | | | 5,899 | | | | | | | | | R. Louis Caceres | | | 5,598 | | | | | |
NON-QUALIFIED DEFERRED COMPENSATION PLAN For 2022, executive officers calculated asreceived a percentageperformance-based supplemental retirement benefit under the NQDC Plan. This benefit was previously provided under the Executive Incentive Retirement Plan (EIRP). Consistent with the benefit structure under the EIRP, executive officers received a minimum cash contribution of 3% of base salary with the opportunity for increased contributions based on identified performance criteria. For 2022, the committee selected core return on average assets (core ROAA) as follows:
the performance metric. This is the same metric as used in 2021. The committee chose core ROAA because it reflects the operating performance of our core business operations. Core ROAA is calculated as core income, which excludes realized gains on the sale of securities, amortization of intangibles and nonrecurring items, as a percent of average assets. The amount of the award is determined based on our 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% | | | | | | | | | 100% | | Target | | 9.375% | | | | 7.5% | | | | | | | | | 150% or above | | Maximum | | 20.000% | | | | 15.0% | | |
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| | | | Notice and Proxy Statement | 2023 | | | |
| Executive | | % of Base Salary | | | Economic Value | | | Daniel J. Schrider | | | 33 | % | | $ | 148,500 | | | Philip J. Mantua | | | 33 | % | | $ | 79,200 | | | Frank Small | | | 25 | % | | $ | 66,250 | | | R. Louis Caceres | | | 33 | % | | $ | 85,800 | | | William Hill | | | 33 | % | | $ | 77,550 | |
Additional details | COMPENSATION DISCUSSION AND ANALYSIS |
In 2022, our core ROAA was 1.21%. See Annex A – Non-GAAP Financial Measures for reconciliation to GAAP ROAA. Compared to the peer group median of 1.31%, we achieved 92.37% of the peer group’s result, yielding a contribution of 7.75% of base salary for Mr. Schrider and 6.36% for the other executive officers. Company contributions for 2022 are shown in the Nonqualified Deferred Compensation table on page 47 along with a description of the 2009 restricted stockterms and conditions for balances paid under the NCDQ Plan. 2022 contributions are also included in the Summary Compensation Table on page 42, and potential awards may be foundare further described in the Grants of Plan BasedPlan-Based Awards table on page 25.
Benefits and Perquisites - The purpose of executive benefits and perquisites is to provide economic value to attract, retain, and motivate key executives. Bancorp's policy on executive benefits has been to provide benefits consistent with market practice. The committee believes that perquisites should be limited in scope and value and periodically reviews perquisites to ensure alignment with our desired philosophy.
Currently, the named executive44.5. OTHER COMPENSATION PROGRAMS AND POLICIES OTHER COMPENSATION ELEMENTS 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. CashRetirement 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 Deferred Profit Plan (401(k) Plan) and the Employee Stock Purchase Plan (ESPP). Other benefits and perquisitesMr. Caceres are participants. The accumulated benefit for each may be provided atfound in the discretionPension Benefits table on page 46. Life Insurance Benefits –We maintain split dollar life insurance agreements with Mr. Schrider, Mr. Mantua, Mr. O’Brien and Mr. Caceres. Pursuant to the agreements, the executive officer’s designated beneficiary will be entitled to share in the death proceeds payable under one or more life insurance policies owned by us in the event of the committee. executive’s death while the agreement remains in effect. The amount payable to the executive officer’s beneficiaries is the lesser of two and one-half times the executive’s base salary or the net death proceeds of the policies, which is defined as the total death proceeds minus the greater of the cash surrender value of the policies or the aggregate premiums paid by the company. The split dollar life insurance agreements will terminate if the executive officer has a separation from service, other than as a result of the executive officer’s disability or following a change in control, prior to the executive officer’s normal retirement date or early retirement date. An executive officer’s normal retirement date is the date on which the executive officer has attained age 65 and an executive officer’s early retirement date is the date on which the executive officer has both attained age 60 and completed ten years of service. The Summary Compensation Table on page 42 includes the taxable income associated with this benefit in the column labeled All Other Compensation. Deferred Compensation – Executive officers are eligible to participate in the NQDC Plan, which provides deferred compensation benefits for a select group of management and highly compensated employees, including the named executive officers. The NQDC Plan provides participants with the option to defer receipt of a portion of their base salary and annual cash incentives. Participant contributions will be fully vested at all times. At its sole discretion, the company may credit participant accounts with company contributions. The company determines who will receive discretionary contributions, as well as the amounts and timing of any such contributions. Distributions of participant accounts will be made following a participant’s separation of service, death, disability, unforeseeable emergency, or as of a future payment date specified by the participant. Participants’ accounts increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and are credited and debited in accordance with the actual financial performance of such funds. Participants elect the investment funds in which their accounts are hypothetically invested. Contributions during 2022 and year-end account balances can be found in the Nonqualified Deferred Compensation 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 2009,2022, perquisites for eachall of the named executive officers included paymenteligibility for a company-paid, supplemental long-term disability insurance policy and a long-term care insurance policy, and a comprehensive executive health screening the values for which, if applicable, are represented under “All Other Compensation” in the Summary of Compensation table on page 23.42. In addition, Mr. Schrider receivedreceives the use of a company-paid automobile. Factors for Determining Compensation
Bancorp Goal Setting for Compensation Purposes - On an annual basis, the boardcompany-owned vehicle. Mr. O’Brien, Mr. Cook and Mr. Caceres each receive a car allowance of directors approves the annual profit plan, including a detailed business plan and financial plan. These plans are designed to support the multi-year strategic plan by setting annual targets for achievement. Once the business and financial plans are approved by the board of directors, the performance goals for the short-term incentive plans are derived directly from the stated target financial results. During 2009$1,000 per month. Mr. Schrider, Mr. Mantua, and Mr. Mantua reported onCaceres 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 performance of Bancorp to the board of directors at each regularly scheduled meeting.
Pay Levels and Benchmarking - Pay levelscompany for executives are determined using a number of factors, including: the individual's role and job responsibilities; the individual's experience and expertise; the pay levels of internal peers; pay levels in the competitive market for similar positions; performance and contributionpersonal use of the individual;membership. Mr. Cook maintains a membership, at company expense, at a local country club. | | | | |
| | | Notice and Proxy Statement | 2023 | | 39 |
| COMPENSATION DISCUSSION AND ANALYSIS |
SEVERANCE BENEFITS In 2022, we terminated our employment agreements with Mr. Schrider, Mr. Mantua, and performance of Bancorp as a whole. Each of these factorsMr. O’Brien and our change in control agreement with Mr. Caceres, and adopted an Executive Severance Plan that will provide the named executive officers with severance benefits if their employment is analyzed as part of the compensation review process, with an emphasis placed on market and competitive information.
In view of the TARP-CPP restrictions, the most helpful comparative data was from other TARP-CPP participating banks.terminated under certain circumstances. The committee assessed competitive market compensation usingdecided to consolidate executive severance arrangements under a number of data sourcessingle plan in order to gauge industry practicesprovide for consistency of other banking organizations including information publicly disclosed by a selected peer groupbenefits and ease of publicly traded banking organizations. Even though compensation processes were very limited due to TARP-CPP and at the time 2009 base salaries were set final regulations had not been issued, the committee still benefitted from reviewing comparative data from peer banks. The specific elements of compensation reviewed as part of this comparable company analysis include base salaries, annual performance bonuses, and long-term incentives relative to the peer group. Matches to proxy compensation data are made based on the role of the executive, rather than rank to ensure a better comparison.
The peer group used in 2009 was compiled by the consultant and approved by the committee. It includes banking organizations of similar asset size in the region (two factors that influence executive compensation in financial institutions). The peer group is reviewed and updated annually for appropriateness and compatibility.administration. The committee believes that providing for severance and change in control benefits is an important element of our executive compensation program, supports the creation of long-term shareholder value, and is necessary to attract and retain top executive talent in a groupcompetitive market. The Executive Severance Plan is intended to ensure that management can fairly consider potential change in control transactions that could result in loss of approximately 20 comparative bankstheir jobs. The Executive 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 Executive 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 our 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 contiguous statesexecutive officer has achieved the required level of Delaware, Pennsylvania, Virginia, West Virginia, Ohio, New Jerseyownership, the executive officer is required to retain not less than 50% of the net shares received as a result of any equity awards granted under our equity incentive plans. Shares owned directly or beneficially by the executive officer or in the name of an immediate family member, restricted shares and North Carolina as well as Maryland provides a market perspective for executive compensation.
The following groupshares issuable upon settlement of 20 banking institutions was used by Bancorp for 2009.restricted stock units, other than those subject to performance measures, and shares held in our employee stock purchase plan or 401(k) plan are included in the stock ownership calculation. Stock options are not included. As of December 31, 2007, these banks were between $2 and $7 billion in total assets, with an average asset size2022, each of approximately $3.6 billon, consistent with Bancorp's asset size.
Park National Corporation, OH | Provident Bankshares Corp., MD(1)
| F.N.B. Corporation, PA | National Penn Bancshares, Inc., PA | First Commonwealth Financial, PA | Pennsylvania Commerce Bancorp, PA | Wesbanco, Inc., WV | Harleysville National Corp., PA | S&T Bancorp, Inc., PA | First Financial Bancorp, OH | Sun Bancorp, Inc., NJ | Union Bankshares Corp., VA | Lakeland Bancorp, Inc., NJ | TowneBank, VA | City Holding Company, WV | Virginia Commerce Bancorp, Inc, VA | First Bancorp, NC | NewBridge Bancorp, NC | First Community Bancshares, Inc., VA | Carter Bank & Trust | |
(1) Provident Bankshares Corp. was acquired by M&T Bank May 23, 2009
Committee Discretion and Final Compensation Decisions - The committee retains the discretion to decrease all forms of incentive payouts based on significant individual or Bancorp performance shortfalls. Therefore the committee chose to adopt the recommendations put forth by management thatnamed executive officers would not receive a payment frommet their ownership requirement or was on track to do so within the Executive Incentive Retirement Plan for 2009. The committee also retainsfive year grace period.Clawback Policy – Under our Clawback Policy, in the discretionevent we are required to increase awards or consider special awards for significant performance, orprepare an accounting restatement due to subjective factors described above. No such awards were made in 2009. Employment and Change-In-Control Agreementsmaterial noncompliance with Named Executive Officers
Mr. Schrider received a new employment agreement in connection with his promotion to chief executive officer (CEO) on January 1, 2009. The initial term is three years and provides thatany financial reporting requirement under the term may be extended for an additional year at each anniversary so thatsecurities laws, the remaining term again becomes three years. The Executive and Governance Committee annually reviews performance and recommends the decision on whether to extend the CEO’s employment agreement.
Mr. Mantua also has an employment agreement in his capacity as chief financial officer. The term of this agreement is two years and automatically renews for an additional year upon each anniversary unless written notice not to renew has been given by Mr. Mantua. The employment agreements address matters such as the executive’s salary and participation in compensation and benefit plans.
In 2009, employment agreements with the remaining executive officers began to expire. On December 15, 2009 Mr. Small’s employment agreement expired and was replaced with a Change-in-Control severance agreement. Mr. Caceres’ employment agreement is scheduled to expire on August 5, 2010, at which time Mr. CaceresBoard will receive a Change-in-Control severance agreement.
The Change-in-Control severance agreements provide the executive with 2.99 times annual salary and other compensation plus the continuation of benefits for three years. This is the same benefit that is provided in the employment agreements for Messrs. Schrider, Mantua and Caceres, however the employment agreements also provide that Bancorprequire reimbursement or the Bank will assume the obligationforfeiture of any excise taxes for which the executive is liable. Under the Change-in-Control severance agreements, the payment to the executive is reduced so as not to incur additional taxes.
Under the terms of TARP-CPP, payments under the Change-in-Control agreements are prohibited. The TARP-CPP restrictions prohibit “golden parachute” payments, defined as any payment for “departure from the company for any reason, except for payments for services performedexcess incentive-based compensation received by current or benefits accrued” to any named executive officer. These restrictions were promulgated retroactively to TARP-CPP participants through the amendments under the ARRA and required all TARP-CPP participants to amend existing employment agreements to comply. Therefore, while subject to the TARP-CPP restrictions, Messrs. Schrider, Mantua, and Caceres would not receive any payments upon termination of employment other than for services performed or benefits accrued except for payments made pursuant to a tax-qualified pension or retirement plan, payments made by reason of the employee’s death or disability, or payments required by state law.
Each executive is prohibited from conflicts of interest, and is required to maintain the confidentiality of nonpublic information regarding Bancorp and its clients. Each executive is also bound by a covenant not to compete and not to interfere with other employees following termination of employment. The post-termination restrictions do not apply if there is a change-in-control and, in the case of the executive officers other than Mr. Schrider, if the executive's employment is terminated without Just Cause by Bancorp or with Good Reason by the executive.
Impact of Accounting and Tax on the Form of Compensation
The committee and Bancorp consider the accounting and tax (individual and corporate) consequences of the compensation plans prior to making any changes to the plans.
The committee has considered the impact of FASB ASC Topic 718, which Bancorp adopted on January 1, 2006, on Bancorp's use of equity-based awards. This consideration factored heavily in our decision to use a mix of restricted stock and stock options beginning in 2006.
The committee also considers the limits on deductibility of compensation imposed by Section 162(m) of the Internal Revenue Code (the Code) with respect to annual compensation exceeding $1 million, or $500,000 with respect to seniorformer executive officers during the period thatthree years preceding the U.S. Treasury Department holds an equity or debt position in Bancorp pursuantdate on which we are required to prepare the TARP-Capital Purchase Program,accounting restatement.No Hedging and Section 280(g) of the Code with respect to change-in-control payments exceeding specified limits. Stock Ownership Guidelines
Bancorp does not currently have a formal stock ownership requirement for executives, but all of the currentNo Pledging – Under our Insider Trading Policy, our directors and executive officers own Bancorp common stock. are prohibited from shorting company securities, entering into hedging or similar transactions that are designed to offset any decrease in the market value of company securities, borrowing against any account in which company securities are held, and pledging company securities as collateral for any loan. COMPENSATION RISK ASSESSMENT We encourage stock ownership by executives onregularly undertake a voluntary basis. Bancorp retains the discretion to implement a minimum ownership requirementsystematic risk analysis of mandatory holding period for shares received undereach of our equity compensation plan. Compensation Committee Report
Pursuant to the requirements under the TARP-CPP, the Compensation Committee has assumed responsibility for the review of the risk associated withincentive 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 employees of Bancorpeach plan. During 2022, the committee reviewed and its subsidiaries. In Marchdiscussed risk assessments and October 2009, the Committee received reports from Bancorp’s seniorprepared by our risk officers containing analysis on the risk levels present in executive compensation plans. This analysis was expanded to include alland determined that our incentive compensation plans and presentedare not reasonably likely to the Committee on March 11, 2010. The following summary supports the conclusion of the Committee that these compensation plans do not encourage unnecessary or material risk-taking.
Executive Compensation Plan Risk Assessment
2009 Sandy Spring Leadership Incentive Plan - The 2009 Sandy Spring Leadership Incentive Plan (2009 SSLIP) was comprised of four weighted performance measures as described on page 16. The senior risk officers determined that under the prevailing economic conditions the only measure considered viable in yielding a reward was the Average Deposit Growth measure. While it is possible for pressure to be applied to raise deposit rates for the sole purpose of achieving growth in average deposits, the resulting increased cost of funds could theoretically create pressure to make higher yielding loans, i.e. riskier, to compensate. However, the senior risk officers concluded that current policies together with regular asset-liability reports to the board sufficiently mitigated against this possibility. In addition, the 2009 SSLIP contained a net income “trigger” which prohibited a bonus payment unless a specified net income level was achieved, another mitigating factor to support overall balance in the plan. In 2009, the net income trigger was not achieved and therefore there were no bonuses paid under the 2009 SSLIP. Further, the majority of executive officers were prohibited from receiving any bonus due to the compensation restrictions plans on TARP-CPP participants, thus nullifying the risk factors contained in the plan for those individuals.
Executive Incentive Retirement Plan - The calculation for the Executive Incentive Retirement Plan (EIRP) is based on Bancorp’s performance as measured by Return on Average Equity (ROAE) in comparison to the performance of a defined peer group. ROAE is a widely used, broad-based performance measure among banks. The senior risk officers concluded that using such a broad performance measure does not encourage participants to take unnecessary or excessive risks that would threaten the value of the company. The EIRP was determined to be an incentive compensation plan and subject to the compensation restrictions on TARP-CPP participants. There were no payments made from this plan for 2009.
Non-Executive Compensation Plan Risk Assessment
2009 Sandy Spring Leadership Incentive Plan - The 2009 Sandy Spring Leadership Incentive Plan (2009 SSLIP) extended participation to officers within senior management. In addition, the success of the 2009 SSLIP was used to determine 50% of the total bonus payments from the incentive plans described below. This feature was incorporated in the plans with the goal of tying individual performance rewards to overall company performance. As discussed under Executive Compensation Plan Risk Assessment above, the Committee concluded that this plan does not encourage unnecessary or excessive risk taking.
Retail Division Compensation Plans - For 2009, the retail incentive plans for regional and branch managers were based on six weighted factors calculated for the specific branch or region of branches. The weight on any single factor did not exceed 25% so as to encourage balanced performance. Results for each branch or region were compiled from system- generated reports. Participants were unable to influence product features, pricing, or credit decisions. For 2009, half of the plan’s incentive was contingenthave a material adverse impact on the 2009 SSLIP, meaning that a participant only received the full incentive payment if the 2009 SSLIP yielded a payment at the targeted value. Therefore the conditions for payment under this plan were based on a combination of individual and company performance. The 2009 SSLIP did not yield any payment. For 2010, caps have been added and the plan will be audited periodically for accuracy.
company. | | | | | | | | | 40 | |
| | | | Notice and Proxy Statement | 2023 | | | |
Commercial Banking Compensation Plans - For 2009, the various plans under the Commercial Banking Group included multiple (4 to 8) weighted factors. Most factors were weighted 10-15% to encourage balanced performance. One plan contained four factors, with one factor weighing 40%. The commercial loan process provides adequate controls to ensure credit risk is properly managed and asset quality is maintained. Results are compiled by system-generated reports, and all exceptions are reviewed by the Chief Credit Officer. For 2010, caps have been added to these plans.
| COMPENSATION COMMITTEE REPORT |
COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, we have recommendedthe committee recommends to the board of directorsBoard that the Compensation Discussion and Analysis be included in this proxy statement and in Bancorp's Annual Report on Form 10-K for the year ended December 31, 2009.statement. March 15, 2023 Ralph F. Boyd, Chair Brian J. Lemek Mark C. Michael Christina B. O’Meara Robert L. Orndorff Mona Abutaleb Stephenson | | | | |
| | | Notice and Proxy Statement | 2023 | | 41 |
The Compensation Committee certifies the following:
EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($) | | | Bonus ($) | | | Stock
Awards(1) ($) | | | Non-Equity
Incentive Plan
Compensation(2) ($) | | | Change in
Pension Value &
Nonqualified
Deferred
Compensation
Earnings(3) ($) | | | All Other
Compensation(4) ($) | | | | | | | | | Total ($) | | | | | | | | | | | | | Daniel J. Schrider President and Chief Executive Officer | | | 2022 | | | | 867,308 | | | | — | | | | 850,064 | | | | 724,063 | | | | — | | | | 57,422 | | | | | | | | | | | | 2,498,857 | | | | | 2021 | | | | 842,308 | | | | — | | | | 742,553 | | | | 974,281 | | | | — | | | | 65,701 | | | | | | | | | | | | 2,624,843 | | | | | 2020 | | | | 804,808 | | | | 731,156 | | | | 684,082 | | | | — | | | | 79,897 | | | | 63,179 | | | | | | | | | | | | 2,363,122 | | | | | | | | | | | | | Philip J. Mantua EVP, Chief Financial Officer | | | 2022 | | | | 450,385 | | | | — | | | | 286,048 | | | | 311,561 | | | | — | | | | 36,299 | | | | | | | | | | | | 1,084,293 | | | | | 2021 | | | | 435,385 | | | | — | | | | 276,312 | | | | 342,980 | | | | — | | | | 39,564 | | | | | | | | | | | | 1,094,241 | | | | | 2020 | | | | 419,885 | | | | 257,125 | | | | 267,479 | | | | — | | | | 33,311 | | | | 33,976 | | | | | | | | | | | | 1,011,776 | | | | | | | | | | | | | Joseph J. O’Brien, Jr. EVP, Chief Banking Officer | | | 2022 | | | | 529,615 | | | | — | | | | 388,175 | | | | 466,036 | | | | — | | | | 43,756 | | | | | | | | | | | | 1,427,582 | | | | | 2021 | | | | 512,115 | | | | — | | | | 375,059 | | | | 504,777 | | | | — | | | | 59,947 | | | | | | | | | | | | 1,451,898 | | | | | 2020 | | | | 487,885 | | | | 377,500 | | | | 345,867 | | | | — | | | | — | | | | 55,220 | | | | | | | | | | | | 1,266,472 | | | | | | | | | | | | | Kenneth C. Cook EVP, President of Commercial Banking | | | 2022 | | | | 460,385 | | | | — | | | | 270,071 | | | | 405,059 | | | | — | | | | 30,511 | | | | | | | | | | | | 1,166,026 | | | | | 2021 | | | | 442,308 | | | | — | | | | 255,001 | | | | 438,937 | | | | — | | | | 37,580 | | | | | | | | | | | | 1,173,826 | | | | | 2020 | | | | 291,135 | | | | 294,750 | | | | 251,160 | | | | — | | | | — | | | | 27,965 | | | | | | | | | | | | 865,010 | | | | | | | | | | | | | R. Louis Caceres EVP, Chief Wealth Officer | | | 2022 | | | | 453,846 | | | | — | | | | 286,048 | | | | 343,558 | | | | — | | | | 43,798 | | | | | | | | | | | | 1,127,250 | | | | | 2021 | | | | 433,846 | | | | — | | | | 252,073 | | | | 342,980 | | | | — | | | | 53,219 | | | | | | | | | | | | 1,082,118 | | | | | 2020 | | | | 412,462 | | | | 254,100 | | | | 238,372 | | | | — | | | | 51,215 | | | | 53,710 | | | | | | | | | | | | 1,009,859 | |
| (1) | Stock Awards. The amounts reported are the aggregate grant date fair value of stock awards granted in the year shown computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. The values in this column reflect the full grant date fair value of all equity awards granted during the year, although RSAs and RSUs are subject to vesting periods based on continued employment and the number of PRSUs that vest depends on whether we achieve specified performance measures. For more information about these awards and the calculation of their fair value, see Note 12 – Share Based Compensation in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. 2022 stock awards are described under “Compensation Discussion and Analysis – 2022 Compensation,” and details regarding these awards can be found in the Grants of Plan-Based Awards table. Details regarding outstanding stock awards can be found in the Outstanding Equity Awards at Fiscal Year-End table. |
| | 1) | We have reviewed with senior risk officers the senior executive officer (SEOs) compensation plans and have made all reasonable efforts to ensure that these plans do not encourage SEOs to take unnecessary and excessive risks that threaten the value of Bancorp; |
| 2) | We have reviewed with senior risk officers the employee compensation plans and have made all reasonable efforts to limit any unnecessary risks these plans pose to Bancorp; and |
| 3) | We have reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of Bancorp to enhance the compensation of any employee. |
March 11, 2010
Susan D. Goff, Chairman | Robert L. Orndorff | Mark E. Friis | David E. Rippeon | Craig A. Ruppert |
Executive Compensation
Summary of Compensation Table
The following table summarizes compensation earned by or awarded to Bancorp's named Executive Officers for the three most recent completed fiscal years.
Name and Principal Position | | Year | | Salary | | | Stock Awards (1) | | | Option Awards (2) | | | Non-Equity Incentive Plan Compensation (3) | | | Change in Pension Value & Nonqualified Deferred Compensation Earnings (4) | | | All Other Compensation (5) | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Daniel J. Schrider | | 2009 | | $ | 450,000 | | | $ | 148,504 | | | | - | | | $ | 7,286 | | | $ | 6,210 | | | $ | 25,184 | | | $ | 637,184 | | | President & Chief | | 2008 | | $ | 269,324 | | | $ | 69,900 | | | $ | 47,400 | | | $ | 25,992 | | | $ | 31,856 | | | $ | 24,814 | | | $ | 469,286 | | | Revenue Officer | | 2007 | | $ | 241,869 | | | | - | | | | - | | | | - | | | $ | 27,731 | | | $ | 12,565 | | | $ | 282,165 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Philip J. Mantua | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Vice | | 2009 | | $ | 240,000 | | | $ | 79,206 | | | | - | | | $ | 11,092 | | | $ | 4,514 | | | $ | 12,208 | | | $ | 347,020 | | | President & Chief | | 2008 | | $ | 237,335 | | | $ | 34,950 | | | $ | 27,255 | | | $ | 28,846 | | | $ | 20,410 | | | $ | 11,364 | | | $ | 360,160 | | | Financial Officer | | 2007 | | $ | 221,285 | | | | - | | | | - | | | | - | | | $ | 107,030 | | | $ | 8,910 | | | $ | 337,225 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Frank H. Small | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Vice | | 2009 | | $ | 265,000 | | | $ | 66,247 | | | | - | | | $ | 59,743 | | | $ | 28,134 | | | $ | 23,910 | | | $ | 443,034 | | | President & Chief | | 2008 | | $ | 312,500 | | | $ | 34,950 | | | $ | 27,255 | | | $ | 119,482 | | | $ | 78,925 | | | $ | 20,555 | | | $ | 593,667 | | | Operating Officer | | 2007 | | $ | 304,385 | | | | - | | | | - | | | | - | | | $ | 163,972 | | | $ | 16,018 | | | $ | 484,375 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. Louis Caceres | | 2009 | | $ | 260,000 | | | $ | 85,799 | | | | - | | | $ | 8,598 | | | $ | 5,195 | | | $ | 19,234 | | | $ | 378,826 | | | Executive Vice | | 2008 | | $ | 257,900 | | | $ | 27,960 | | | $ | 23,700 | | | $ | 25,070 | | | $ | 25,143 | | | $ | 15,831 | | | $ | 375,604 | | | President | | 2007 | | $ | 241,869 | | | | - | | | | - | | | | - | | | $ | 82,705 | | | $ | 11,899 | | | $ | 336,473 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William W. Hill, IV | | 2009 | | $ | 235,000 | | | $ | 77,549 | | | | - | | | | - | | | $ | 4,473 | | | $ | 19,746 | | | $ | 336,768 | | | Executive Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | RepresentsFor 2022, the grant date fair value of PRSUs included in this column is based on payout at target, which we have determined to be the probable level of achievement of the performance measures related to those awards. Assuming the highest level of performance is achieved, which would result in the vesting of 150% of the PRSUs granted, the aggregate grant date fair value of the PRSUs would be: $637,548 for Mr. Schrider; $214,559 for Mr. Mantua; $291,131 for Mr. O’Brien; $202,576 for Mr. Cook; and $214,559 for Mr. Caceres. |
| (2) | Non-Equity Incentive Plan Compensation. For 2022, the amounts reported are the total of cash awards under the ETIP and company contribution credited to the officer’s account under the NQDC Plan, as indicated in the table below. |
| | | | | | | | | | | | | | | | | | Name | | ETIP
Cash Awards ($) | | | Contributions
to NQDC
Plan ($) | | | Total
Non-Equity
Incentive Plan
Compensation ($) | | | | | | Daniel J. Schrider | | | 656,250 | | | | 67,813 | | | | 724,063 | | | | | | Philip J. Mantua | | | 282,623 | | | | 28,938 | | | | 311,561 | | | | | | Joseph J. O’Brien, Jr. | | | 432,010 | | | | 34,026 | | | | 466,036 | | | | | | Kenneth C. Cook | | | 375,485 | | | | 29,574 | | | | 405,059 | | | | | | R. Louis Caceres | | | 314,302 | | | | 29,256 | | | | 343,558 | |
| (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings. In 2022, there was a decrease in pension values for Mr. Schrider, Mr. Mantua and Mr. Caceres of $145,180, $53,133 and $88,780, respectively, because of changes in actuarial assumptions in 2022 as compared to 2021. For years in which changes in actuarial assumptions result in a decrease in pension value, rather than report a negative number, a change of $0 is reported. Neither an increase nor decrease in the pension value resulting from changes in actuarial assumptions results in any increase or decrease in benefits payable to participants under the pension plan. |
| | | | | | | | | 42 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| (4) | All Other Compensation. Detail for the amounts of All Other Compensation is as follows: |
| | | | | | | | | | | | | | | | | | | | | | | Name | | Dividends on
Restricted
Stock | | | 401(k)
Matching
Contribution | | | Perquisites* | | | Total All Other
Compensation | | | | | | | Daniel J. Schrider | | | 20,451 | | | | 15,250 | | | | 21,721 | | | | 57,422 | | | | | | | Philip J. Mantua | | | 7,795 | | | | 15,250 | | | | 13,255 | | | | 36,299 | | | | | | | Joseph J. O’Brien, Jr. | | | 10,130 | | | | 15,250 | | | | 18,377 | | | | 43,756 | | | | | | | Kenneth C. Cook | | | 5,858 | | | | 15,250 | | | | 9,403 | | | | 30,511 | | | | | | | R. Louis Caceres | | | 7,152 | | | | 15,250 | | | | 21,396 | | | | 43,798 | |
| * | Perquisites include car allowance or personal use of company vehicle, long-term care and supplemental disability insurance premiums paid on behalf of the executive, executive health screening, and the taxable income associated with the executive officer’s split dollar life insurance benefit. |
| | | | |
| | | Notice and Proxy Statement | 2023 | | 43 |
GRANTS OF PLAN-BASED AWARDS The following table sets forth information on plan-based awards made to the named executive officers in 2022. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | | | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2)(3) | | | All Other
Stock
Awards:
Number of
shares of
stock (#) | | | Grant Date
Fair Value of
Stock and
Options
Awards (4) ($) | | Name | | | | Grant Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | | | | | | | | | | | | Daniel J. Schrider | | RSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,364 | | | | 425,032 | | | | | | | | | | | | | | | | PRSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 4,682 | | | | 9,364 | | | | 14,046 | | | | | | | | 425,032 | | | | | | | | | | | | | | | | ETIP | | | | | | | 328,125 | | | | 656,250 | | | | 984,375 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NQDC Plan | | | | | | | 26,250 | | | | 82,031 | | | | 175,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Philip J. Mantua | | RSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,151 | | | | 143,024 | | | | | | | | | | | | | | | | PRSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 1,576 | | | | 3,151 | | | | 4,727 | | | | | | | | 143,024 | | | | | | | | | | | | | | | | ETIP | | | | | | | 113,750 | | | | 227,500 | | | | 341,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NQDC Plan | | | | | | | 13,650 | | | | 34,125 | | | | 68,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Joseph J. O’Brien, Jr. | | RSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,276 | | | | 194,088 | | | | | | | | | | | | | | | | PRSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 2,138 | | | | 4,276 | | | | 6,414 | | | | | | | | 194,088 | | | | | | | | | | | | | | | | ETIP | | | | | | | 173,875 | | | | 347,750 | | | | 521,625 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NQDC Plan | | | | | | | 16,050 | | | | 40,125 | | | | 80,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Kenneth C. Cook | | RSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,975 | | | | 135,035 | | | | | | | | | | | | | | | | PRSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 1,488 | | | | 2,975 | | | | 4,463 | | | | | | | | 135,035 | | | | | | | | | | | | | | | | ETIP | | | | | | | 151,125 | | | | 302,250 | | | | 453,375 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NQDC Plan | | | | | | | 13,950 | | | | 34,875 | | | | 69,750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. Louis Caceres | | RSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,151 | | | | 143,024 | | | | | | | | | | | | | | | | PRSU | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 1,576 | | | | 3,151 | | | | 4,727 | | | | | | | | 143,024 | | | | | | | | | | | | | | | | ETIP | | | | | | | 126,500 | | | | 253,000 | | | | 379,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NQDC Plan | | | | | | | 13,800 | | | | 34,500 | | | | 69,000 | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | The amounts in these columns represent the threshold, target and maximum amounts of potential cash incentive payments that may be earned under the indicated plans as established by the Compensation Committee. These plans and awards are described under “Compensation Discussion and Analysis – 2022 Compensation.” The actual amounts earned by each executive are disclosed in 2008the Summary Compensation Table. |
| (2) | The amounts in these columns represent the threshold, target and 2009maximum number of shares that may be earned with respect to PRSUs granted in 2022. Earned shares will be paid following the end of the 2022-2024 performance period, based on the extent to which the performance measures have been achieved. These awards are described under “Compensation Discussion and Analysis – 2022 Compensation.” |
| (3) | PRSUs will be credited with dividends paid on Sandy Spring stock during the time period when the PRSUs are outstanding, which will be reinvested in additional units, adjusted for performance and paid out in shares if and when the underlying PRSU is earned and paid. |
| (4) | The amounts reported are the aggregate grant date fair value of RSU and PRSU awards computed in accordance with FASB ACSASC Topic 718 (see Note 13718. Refer to note (1) in the Consolidated Financial Statements in Bancorp’s Annual ReportSummary Compensation Table for additional detail on Form 10-K). There were no awards granted in 2007. |
(2) | Represents the grant date fair value forof awards. Details regarding outstanding stock awards can be found in the stock option awards in 2008. There were no stock option awards granted in 2007,Outstanding Equity Awards at Fiscal Year-End table. |
| | | | | | | | | 44 | |
| | | | Notice and executives were restricted from receiving stock options awards in 2009 under TARP-CPP. See the discussion of the assumptions used for these values in Note 13 to the Consolidated Financial Statements contained in Bancorp's Annual Report on Form 10-K.Proxy Statement | 2023 | | | |
(3) | For 2009, the values in this column represent earnings on existing balances in the Executive Incentive Retirement Plan (EIRP). Mr. Hill did not have a balance in the plan. There were no payments made under the EIRP or the Sandy Spring Leadership Incentive Plan (SSLIP) in 2009.EXECUTIVE COMPENSATION |
(4) | This column presents the change in value with respect to Bancorp's Pension Plan for each year. See the table of Pension Benefits on page 26. None of the named executive officers participate in the Deferred Compensation Plan. |
(5) | This column consists of the value of perquisites and personal benefits for the named executive officers including educational benefits, supplemental long term care and disability insurance, 401(k) matching funds, dividends on unvested restricted stock, and life insurance benefits. Mr. Schrider also has the use of a company-owned vehicle. |
Outstanding Equity Awards at Fiscal Year End
ThisOUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table shows outstandinginformation regarding all unvested equity awards toheld by the named executive officers at December 31, 2009. | | | Option Awards | | | Stock Awards | | | Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | | | | 12/13/2000 | | | 2,499 | | | - | | | | 14.54 | | | 12/13/2010 | | | | | | | - | | | Daniel J. Schrider | | 12/21/2001 | | | 2,000 | | | - | | | | 32.25 | | | 12/21/2011 | | | - | | | | - | | | | | 12/11/2002 | | | 4,700 | | | - | | | | 31.25 | | | 12/11/2012 | | | - | | | | - | | | | | 12/17/2003 | | | 5,000 | | | - | | | | 38.91 | | | 12/17/2013 | | | - | | | | - | | | | | 12/15/2004 | | | 6,625 | | | - | | | | 38.00 | | | 12/15/2014 | | | - | | | | - | | | | | 12/14/2005 | | | 6,395 | | | - | | | | 38.13 | | | 12/14/2012 | | | - | | | | - | | | | | 12/13/2006 | | | 5,000 | | | | | | | 37.40 | | | 12/13/2013 | | | (3)400 | | | | 3,556 | | | | | 3/26/2008 | | | 3,334 | | | (4) 6,666 | | | | 27.96 | | | 03/26/2015 | | | (5) 2,000 | | | | 17,780 | | | | | 3/25/3009 | | | - | | | - | | | | - | | | - | | | (6)12,365 | | | | 109,925 | | | | | 12/13/2000 | | | 1,800 | | | - | | | | 14.54 | | | 12/13/2010 | | | | | | | - | | | Philip J. Mantua | | 12/21/2001 | | | 1,500 | | | - | | | | 32.25 | | | 12/21/2011 | | | - | | | | - | | | | | 12/11/2002 | | | 1,750 | | | - | | | | 31.25 | | | 12/11/2012 | | | - | | | | - | | | | | 12/17/2003 | | | 2,200 | | | - | | | | 38.91 | | | 12/17/2013 | | | - | | | | - | | | | | 12/15/2004 | | | 6,050 | | | - | | | | 38.00 | | | 12/15/2014 | | | - | | | | - | | | | | 12/14/2005 | | | 6,395 | | | - | | | | 38.13 | | | 12/14/2012 | | | - | | | | - | | | | | 12/13/2006 | | | 5,000 | | | - | | | | 37.40 | | | 12/13/2013 | | | (3) 400 | | | | 3,556 | | | | | 3/26/2008 | | | 1,917 | | | (4) 3,833 | | | | 27.96 | | | 03/26/2015 | | | (5) 1,000 | | | | 8,890 | | | | | 3/25/2009 | | | - | | | - | | | | - | | | - | | | (6) 6,595 | | | | 58,630 | | | | | 12/13/2000 | | | 12,001 | | | - | | | | 14.54 | | | 12/13/2010 | | | | | | | - | | | Frank H. Small | | 12/21/2001 | | | 6,400 | | | - | | | | 32.25 | | | 12/21/2011 | | | - | | | | - | | | | | 12/11/2002 | | | 8,350 | | | - | | | | 31.25 | | | 12/11/2012 | | | - | | | | - | | | | | 12/17/2003 | | | 10,325 | | | - | | | | 38.91 | | | 12/17/2013 | | | - | | | | - | | | | | 12/15/2004 | | | 11,250 | | | - | | | | 38.00 | | | 12/15/2014 | | | - | | | | - | | | | | 12/14/2005 | | | 11,875 | | | - | | | | 38.13 | | | 12/14/2012 | | | - | | | | - | | | | | 12/13/2006 | | | 7,000 | | | - | | | | 37.40 | | | 12/13/2013 | | | (3) 600 | | | | 5,334 | | | | | 3/26/2008 | | | 1,917 | | | (4) 3,833 | | | | 27.96 | | | 03/26/2015 | | | (5) 1,000 | | | | 8,890 | | | | | 3/25/2009 | | | - | | | - | | | | - | | | - | | | (6) 5,516 | | | | 49,037 | | | | | 12/21/2001 | | | 3,000 | | | - | | | | 32.25 | | | 12/21/2011 | | | | | | | - | | | R. Louis Caceres | | 12/11/2002 | | | 4,700 | | | - | | | | 31.25 | | | 12/11/2012 | | | - | | | | - | | | | | 12/17/2003 | | | 5,000 | | | - | | | | 38.91 | | | 12/17/2013 | | | - | | | | - | | | | | 12/15/2004 | | | 6,050 | | | - | | | | 38.00 | | | 12/15/2014 | | | - | | | | - | | | | | 12/14/2005 | | | 6,395 | | | - | | | | 38.13 | | | 12/14/2012 | | | - | | | | - | | | | | 12/13/2006 | | | 5,000 | | | | | | | 37.40 | | | 12/13/2013 | | | (3) 400 | | | | 3,556 | | | | | 3/26/2008 | | | 1,667 | | | (4) 3,333 | | | | 27.96 | | | 03/26/2015 | | | (5) 800 | | | | 7,112 | | | | | 3/25/2009 | | | - | | | - | | | | - | | | - | | | (6) 7,144 | | | | 63,510 | | | | | 12/17/2003 | | | 2,200 | | | | | | | 38.91 | | | (7)3/31/2010 | | | | | | | | | | William W. Hill | | 12/15/2004 | | | 2,875 | | | | | | | 38.00 | | | 3/31/2010 | | | | | | | | | | | | 12/14/2005 | | | 2,530 | | | | | | | 38.13 | | | 3/31/2010 | | | | | | | | | | | | 12/13/2006 | | | 1,662 | | | | | | | 37.40 | | | 3/31/2010 | | | (8) - | | | | - | | | | | 3/26/2008 | | | (8)600 | | | - | | | | 27.96 | | | 3/31/2010 | | | (8) - | | | | - | | | | | 3/25/2009 | | | - | | | - | | | | - | | | - | | | (8) - | | | | - | |
2022. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | | | Stock Awards | | | | | | | | | | | | Name | | Grant Date | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Option
Exercise
Price ($) | | | Option
Expiration
Date | | | | | | Number of
shares or
units of
stock that
have not
vested (#) | | | Market
value of
shares or
units of
stock
that have
not vested
($)(1) | | | Equity
incentive
plan awards:
Number of
unearned
shares, units
or other
rights that
have not
vested (#) | | | Equity
incentive
plan awards:
Market or
payout value
of unearned
shares,
units or
other rights
that have
not vested
($)(1) | | | | | | | | | | | | Daniel J. Schrider | | | 4/25/2018 | | | | | | | | | | | | | | | | | | | | 1,565(2) | | | | 55,135 | | | | | | | | | | | | | | | | | | | | | | | 3/11/2020 | | | | | | | | | | | | | | | | | | | | 4,262(3) | | | | 150,150 | | | | 15,907(4) | | | | 560,404 | | | | | | | | | | | | | | | 3/10/2021 | | | | | | | | | | | | | | | | | | | | 6,086(5) | | | | 214,410 | | | | 14,459(6) | | | | 509,383 | | | | | | | | | | | | | | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 9,364(7) | | | | 329,894 | | | | 14,422(8) | | | | 508,072 | | | | | | | | | | | | Philip J. Mantua | | | 4/25/2018 | | | | | | | | | | | | | | | | | | | | 581(2) | | | | 20,469 | | | | | | | | | | | | | | | | | | | | | | | 3/11/2020 | | | | | | | | | | | | | | | | | | | | 1,666(3) | | | | 58,693 | | | | 6,220(4) | | | | 219,131 | | | | | | | | | | | | | | | 3/10/2021 | | | | | | | | | | | | | | | | | | | | 2,265(5) | | | | 79,796 | | | | 5,380(6) | | | | 189,547 | | | | | | | | | | | | | | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 3,151(7) | | | | 111,010 | | | | 4,853(8) | | | | 170,967 | | | | | | | | | | | | Joseph J. O’Brien, Jr. | | | 4/25/2018 | | | | | | | | | | | | | | | | | | | | 695(2) | | | | 24,485 | | | | | | | | | | | | | | | | | | | | | | | 3/11/2020 | | | | | | | | | | | | | | | | | | | | 2,155(3) | | | | 75,921 | | | | 8,043(4) | | | | 283,355 | | | | | | | | | | | | | | | 3/10/2021 | | | | | | | | | | | | | | | | | | | | 3,074(5) | | | | 108,297 | | | | 7,303(6) | | | | 257,286 | | | | | | | | | | | | | | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 4,276(7) | | | | 150,643 | | | | 6,586(8) | | | | 232,007 | | | | | | | | | | | | Kenneth C. Cook | | | 10/15/2013 | | | | 47,867 | | | | $10.96 | | | | 10/15/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/18/2014 | | | | 7,838 | | | | $10.96 | | | | 2/18/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5/19/2015 | | | | 35,784 | | | | $14.77 | | | | 5/19/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6/16/2015 | | | | 7,466 | | | | $14.77 | | | | 6/16/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/16/2016 | | | | 10,072 | | | | $16.20 | | | | 2/16/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/01/2020 | | | | | | | | | | | | | | | | | | | | 1,565(9) | | | | 55,135 | | | | 5,841(4) | | | | 205,778 | | | | | | | | | | | | | | | 3/10/2021 | | | | | | | | | | | | | | | | | | | | 2,090(9) | | | | 73,631 | | | | 4,965(6) | | | | 174,928 | | | | | | | | | | | | | | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 2,975(7) | | | | 104,809 | | | | 4,828(8) | | | | 170,099 | | | | | | | | | | | | R. Louis Caceres | | | 4/25/2018 | | | | | | | | | | | | | | | | | | | | 570(2) | | | | 20,081 | | | | | | | | | | | | | | | | | | | | | | | 3/11/2020 | | | | | | | | | | | | | | | | | | | | 1,485(3) | | | | 52,317 | | | | 5,543(4) | | | | 195,280 | | | | | | | | | | | | | | | 3/10/2021 | | | | | | | | | | | | | | | | | | | | 2,066(5) | | | | 72,785 | | | | 4,908(6) | | | | 172,919 | | | | | | | | | | | | | | | | 3/16/2022 | | | | | | | | | | | | | | | | | | | | 3,151(7) | | | | 111,010 | | | | 4,853(8) | | | | 170,967 | |
| (1) | All outstanding equity awards were issued under Bancorp’s 1999 Stock Option Plan or Bancorp’s 2005 Omnibus Stock Plan. |
(2) | Aggregate market values are based uponwere computed by multiplying the closing price of $8.89 on December 31, 2009. |
(3) | Remaining shares granted on December 13, 2006 will vest in equal amounts on each anniversary of the grant up to and including December 13, 2011. |
(4) | Remaining options granted on March 26, 2008 will vest in equal amounts on March 26, 2010 and March 26, 2011. |
(5) | Remaining shares granted on March 26, 2008 will vest in equal amounts on the anniversary of the grant through March 26, 2013. |
(6) | Shares granted on March 25, 2009 will vest in accordance with TARP-CPP restrictions as applicable. |
(7) | Under the terms of the grant of stock options, the expiration of Mr. Hill’s vested outstanding stock options accelerated to March 31, 2010. |
(8) | Mr. Hill forfeited a total of 6,843 unvested shares of restricted stock and 1,200 unvested stock options on December 31, 2009 in connection with his resignation. In addition, the expiration of vested stock options accelerated to March 31, 2010. |
Grants of Plan-Based Awards
The following table sets forth information on the restricted stock awards (RSA) made in 2009 under the 2005 Omnibus Stock Plan to the named executive officers and the estimated potential award that was possible under the 2009 SSLIP as described on page 17 for Mr. Hill.
Under the TARP-CPP, awards of long-term restricted stock to any of the five most highly compensated employees as of 2009 are subject to the following:
| · | The value of the grant cannot exceed 1/3 of the employee's annual compensation. |
| · | The employee must forfeit the restricted stock if the employee does not remain employed for at least two years from the date of grant, other than due to death, disability or change in control. |
| · | The stock can only be transferred in proportion to the amount of TARP securities that have been redeemed. For example, 25% becomes transferrable when 25% of TARP securities are redeemed, 50% becomes transferrable when 50% of TARP securities are redeemed, etc. |
The restrictions outlined above apply to the 2009 grants for Messrs. Schrider, Small, and Caceres.
| | | | | | | Estimated Possible Payouts under non-equity incentive plan awards | | | All other stock awards: Number of | | All other option awards: Number of securities | | Exercise or Base Price of | | Grant Date Fair Value of Stock and | | | Name | | | | Grant Date | | Threshold (1) | | | Target | | | Maximum | | | shares of stock (#) | | underlying options (#) | | Awards ($/share) | | Option Awards ($)(2) | | | Daniel J. Schrider | | RSA | | 3/25/2009 | | | | | | | | | | | 12,365 | | | | | | $ 148,504 | | | Philip J. Mantua | | RSA | | 3/25/2009 | | | | | | | | | | | | 6,595 | | | | | | $ | 79,206 | | | Frank Small | | RSA | | 3/25/2009 | | | | | | | | | | | | 5,516 | | | | | | $ | 66,247 | | | R. Louis Caceres | | RSA | | 3/25/2009 | | | | | | | | | | | | 7,144 | | | | | | $ | 85,799 | | | William | | SSLIP | | | | $ | 29,375 | | | $ | 58,750 | | | $ | 88,125 | | | | | | | | | | | | | | W. Hill,IV | | RSA | | 3/25/2009 | | | | | | | | | | | | | | | 6,457 | | | | | | $ | 77,549 | |
(1) | The amount listed for the threshold assumes that all performance measures achieve the threshold level established under the plan. A lesser bonus would be earned if only some of the performance measures achieved the threshold level. No bonus would be earned if either none of the performance measures achieved threshold or the trigger level of net income was not achieved. In 2009, the level of net income was insufficient to create a payment from SSLIP. |
(2) | The grant date fair value of each equity award is based on the closing price of $12.01$35.23 per share on the grant date. |
Option Exercises and Stock Vested
The following table shows exercises of stock options by the named executive officers during 2009 and the value realized by them upon exercise.
| | | Option Awards | | | Stock Awards | | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized Upon Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized Upon Vesting(1) ($) | | | Daniel J. Schrider | | | - | | | | - | | | | 378 | | | $ | 4,277 | | | Philip J. Mantua | | | - | | | | - | | | | 628 | | | $ | 7,422 | | | Frank H. Small | | | - | | | | - | | | | 444 | | | $ | 4,861 | | | R. Louis Caceres | | | - | | | | - | | | | 328 | | | $ | 3,648 | | | William W. Hill, IV | | | | | | | | | | | 105 | | | $ | 1,171 | |
(1) | The value realized upon vesting is equal to the closing market price of Bancorpcompany common stock on the date of vesting multipliedDecember 30, 2022 by the number of shares acquired.or units. |
| (2) | 2018 RSAs. The amount reportedoutstanding award is scheduled to vest on April 25, 2023. |
| (3) | 2020 RSAs. The outstanding award is scheduled to vest on April 1, 2023. |
| (4) | 2020 PRSUs. On March 15, 2023, the aggregateCompensation Committee certified the achievement of the applicable performance measures for the PRSU cycle ending on December 31, 2022 at 112.85% of the target level, at which time the shares vesting from multiple grantswere vested and paid. See page 38 for a description of restricted stock.the results of this award. |
| (5) | 2021 RSAs. One-half of the outstanding award is scheduled to vest on April 1, 2023, and one-half of the outstanding award is scheduled to vest on April 1, 2024. |
| (6) | 2021 PRSUs. Vesting is subject to achievement of specific performance measures. The number of PRSUs shown in the table assumes the maximum level of performance is achieved and includes accumulated reinvested dividend equivalent shares as of December 31, 2022. The actual number of PRSUs will be determined based on the 2021 – 2023 performance period. |
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| | | Notice and Proxy Statement | 2023 | | 45 |
Pension Benefits
| (7) | 2022 RSUs. One-third of the outstanding award is scheduled to vest on April 1, 2023, one-third of the outstanding award is scheduled to vest on April 1, 2024, and one-third of the outstanding award is scheduled to vest on April 1, 2025. |
| (8) | 2022 PRSUs. Vesting is subject to achievement of specific performance measures. The number of PRSUs shown in the table assumes the maximum level of performance is achieved and includes accumulated reinvested dividend equivalent shares as of December 31, 2022. The actual number of PRSUs will be determined based on the 2022 – 2024 performance period. |
| (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 2022. The value realized upon the vesting of stock awards is based on the market price of Sandy Spring stock on the vesting date. | | | | | | | | | | | | | | | Stock Awards | | | | | Name | | Number of
Shares Acquired
on Vesting(1) (#) | | | Value
Realized Upon Vesting ($) | | | | | Daniel J. Schrider | | | 24,499 | | | | 1,121,419 | | | | | Philip J. Mantua | | | 9,488 | | | | 434,294 | | | | | Joseph J. O’Brien, Jr. | | | 11,625 | | | | 531,906 | | | | | Kenneth C. Cook | | | 2,609 | | | | 117,196 | | | | | R. Louis Caceres | | | 9,045 | | | | 414,179 | |
| (1) | Includes the gross number of RSAs and performance shares covering the 2019 – 2021 performance period that vested or were settled and paid in 2022, and includes any amounts that were withheld for applicable taxes. On March 15, 2023, the Compensation Committee certified the achievement of the applicable performance measures for the PRSU cycle ending on December 31, 2022, at which time those shares were vested and paid. |
PENSION BENEFITS The following table shows the estimated present value of the accumulated benefit under the Sandy Spring Bancorp, Inc. Retirement Income Plan (Pension Plan) for eachthose named executive officer.
| Name | | Plan Name | | Years of Credited Service | | | Present Value of Accumulated Benefit (1) | | | Daniel J. Schrider | | Pension Plan | | | 19 | | | $ | 93,489 | | | Philip J. Mantua | | Pension Plan | | | 9 | | | $ | 67,504 | | | Frank H. Small | | Pension Plan | | | 17 | | | $ | 391,315 | | | R. Louis Caceres | | Pension Plan | | | 9 | | | $ | 77,978 | | | William W. Hill, IV | | Pension Plan | | | 4 | (2) | | $ | 66,008 | |
officers who participate in the Pension Plan. All benefit accruals under the Pension Plan were frozen as of December 31, 2007. | | | | | | | | | | | | | | | | | | Name | | Plan Name | | | Number of Years
Credited Service (#) | | | Present Value of
Accumulated Benefit(1) ($) | | | | | | Daniel J. Schrider | | | Pension Plan | | | | 19 | | | | 343,150 | | | | | | Philip J. Mantua | | | Pension Plan | | | | 9 | | | | 218,920 | | | | | | R. Louis Caceres | | | Pension Plan | | | | 9 | | | | 269,154 | |
| (1) | This planFor additional information on the Pension Plan and relatedthe valuation methods and material assumptions are includedapplied in quantifying the present value of the current accrued benefit, see Note 1413 – Pension, Profit Sharing, and Other Employee Benefit Plans in the Notes to the Consolidated Financial Statements included in the 2009our Annual Report on Form 10-K. |
(2) | Mr. Hill had 4 years of credited service at the time the Pension Plan was frozen. He continued to accumulate years of service for vesting purposes. |
Sandy Spring Bancorp's Retirement Income Plan, a defined benefit, tax-qualified pension plan (Pension Plan), was generally available to employees through December 31, 2007. The Pension Plan was frozen as of December 31, 2007. Benefits under the Pension Plan are provided on a 10-year certain and life basis, with survivor benefits for the employee’s spouse, and are not subject to deduction for Social Security or other offset amounts. Earnings covered byWhen the Pension Plan arewas active, earnings covered were total wages, including elective pre-tax contributions under Sectionthe 401(k) of the Internal Revenue Code,Plan, bonuses, and other cash compensation which for the named executive officers correspond, in general,up to the total ofallowable limit under the amounts in the "Salary" and "Non-Equity Incentive Plan Compensation" columns in the Summary Compensation Table, up to a total of $225,000.
Internal Revenue Code. The Pension Plan benefit equals the sum of three parts: (a) the benefit accrued as of December 31, 2000, based on the formula of 1.5% of highest five-year average salary as of that date times years of service as of that date, plus (b) 1.75% of each year'syear’s earnings after December 31, 2000 (1.75% of career average earnings) through December 31, 2005, and (c) 1.0% of each year'syear’s earnings thereafter. thereafter, through December 31, 2007.The Pension Plan permits early retirement at age 55 after at least 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 | | | | | | | | | 46 | |
| | | | Notice and Proxy Statement | 2023 | | | |
Nonqualified Deferred 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 summarizes theprovides information regarding executive and company contributions, 2022 earnings and earningsyear-end account balances for the named executive officers under the Executive Incentive Retirement Plan (EIRP). None of the named executive officers participate in the Deferred Compensation Plan.
| Name | | Plan Name | | Executive Contributions in Last Fiscal Year (1) | | | Registrant Contributions in Last Fiscal Year (2) | | | Aggregate Earnings in Last Fiscal Year (3) | | | Aggregate Withdrawals/ Distributions | | | Aggregate Balance at Last Fiscal Year End (4) | | | Daniel J. Schrider | | EIRP | | | n/a | | | | - | | | $ | 7,286 | | | | - | | | $ | 163,280 | | | Philip J. Mantua | | EIRP | | | n/a | | | | - | | | $ | 11,092 | | | | - | | | $ | 248,578 | | | Frank Small | | EIRP | | | n/a | | | | - | | | $ | 59,743 | | | | - | | | $ | 1,338,959 | | | R. Louis Caceres | | EIRP | | | n/a | | | | - | | | $ | 8,598 | | | | - | | | $ | 192,700 | | | William W. Hill | | EIRP | | | n/a | | | | - | | | | - | | | | - | | | | - | |
our deferred compensation plans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Plan Name | | Executive
Contributions
in 2022(1) ($) | | | Registrant
Contributions
in 2022(2) ($) | | | Aggregate
Earnings in 2022(3) ($) | | | Aggregate
Withdrawals/
Distributions ($) | | | Aggregate
Balance at
12/31/2022(4) ($) | | | | | | | | | Daniel J. Schrider | | EIRP | | | n/a | | | | - | | | | 15,780 | | | | - | | | | 1,138,321 | | | | | | | | | | | | NQDC Plan | | | - | | | | 67,813 | | | | - | | | | - | | | | 67,813 | | | | | | | | | Philip J. Mantua | | EIRP | | | n/a | | | | - | | | | 25,995 | | | | - | | | | 772,682 | | | | | | | | | | | | NQDC Plan | | | - | | | | 28,938 | | | | - | | | | - | | | | 28,938 | | | | | | | | | Joseph J. O’Brien, Jr. | | EIRP | | | n/a | | | | - | | | | (57,562) | | | | - | | | | 447,918 | | | | | | | | | | | NQDC Plan | | | - | | | | 34,026 | | | | - | | | | - | | | | 34,026 | | | | | | | | | | | | Deferred Compensation Plan | | | - | | | | - | | | | 673 | | | | - | | | | 20,018 | | | | | | | | | Kenneth C. Cook | | EIRP | | | n/a | | | | - | | | | 3,569 | | | | - | | | | 22,914 | | | | | | | | | | | | NQDC Plan | | | - | | | | 29,574 | | | | - | | | | - | | | | 29,574 | | | | | | | | | R. Louis Caceres | | EIRP | | | n/a | | | | - | | | | (23,672) | | | | - | | | | 639,295 | | | | | | | | | | | | NQDC Plan | | | - | | | | 29,256 | | | | - | | | | - | | | | 29,256 | |
| (1) | Participant contributions are not permitted under the EIRP. |
| (2) | There were no payments madeRepresents amounts earned in 2022 and credited to the executive officer’s account under the NQDC Plan in 2023, after the Compensation Committee certified the achievement of the applicable performance measure. Contributions under the NQDC Plan are described under “Compensation Discussion and Analysis – 2022 Compensation” on page 38. These amounts are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
| (3) | Each of the NQDC Plan, the EIRP and the Deferred Compensation Plan credits plan balances with the actual financial performance of investment funds in which the plan balances are hypothetically invested. Earnings on plan balances under the EIRP are included in 2009 as describedthe Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. Earnings on page16. |
(3) | Earningsplan balances for the EIRP accrued atDeferred Compensation Plan are not included in the rate of 120% of the Long-Term Applicable Federal Rate adjusted monthly.Summary Compensation Table because they are not considered to be above-market or preferential. |
| (4) | The former Supplemental Executive Retirement Agreements were replaced withaggregate balance under the EIRP as described on page16. The beginning balance for each participant’s EIRP account was the accrued balance as of December 31, 20072022 for each named executive officer includes the following aggregate amount of prior registrant contributions and aggregate earnings that were previously earned and reported as compensation in the Summary Compensation Table for the years 2008 through 2021 as follows: Mr. Schrider, $992,539; Mr. Mantua, $538,047; Mr. O’Brien, $449,389; Mr. Cook, $57,879; and Mr. Caceres, $503,935. The aggregate balance under the former Supplemental Executive Retirement Agreements. Those balances are subject to a 15-year vesting scheduleDeferred Compensation Plan as of December 31, 2022 for Messrs. MantuaMr. O’Brien includes $3,613 of prior earnings that were previously earned and Caceres, andreported as compensation in the current vesting level is 50%. Earnings and payments under the EIRP vest immediately.Summary Compensation Table. |
Potential Payments Upon Termination
The following table summarizesdescribes the estimated payments tomaterial features of our nonqualified deferred compensation plans in which the named executive officers were entitled uponparticipate. Non-Qualified Deferred Compensation Plan – Each of our named executive officers is eligible to participate in the Non-Qualified Deferred Compensation Plan (NQDC Plan), which provides deferred compensation benefits for a terminationselect group of employmentmanagement 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 different,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 circumstances under their employment agreements,by the participant. | | | | |
| | | Notice and Proxy Statement | 2023 | | 47 |
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 2005 Omnibus StockEIRP, a guaranteed minimum deferral bonus equal to 3% of a participant’s base salary was credited annually to the participant’s deferred benefit account. Each year, the Compensation Committee determined the performance measures by which a deferral bonus above the minimum may be earned. Employer contributions under the EIRP and earnings on EIRP balances vest immediately. Prior to 2022, interest accrued on the account balance at a rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly. Beginning in 2022, participants’ accounts increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and are credited and debited in accordance with the actual financial performance of such funds. Participants may generally elect to receive distribution of their vested account balance in a lump sum or in annual installments payable over up to 15 years commencing following separation from service or at a later date not beyond the first business day of the January occurring after the year in which the Participant attains age 70. A participant whose employment is terminated for just cause will forfeit his or her account balance. Deferred Compensation Plan – Prior to 2022, we maintained a deferred compensation plan that provided the opportunity to defer up to 25% of base salary and prior stock plansup to 100% of cash bonuses for payment following the six-month anniversary of any separation from service. Prior to 2022, interest accrued on the account balance at a rate equal to 120% of the long-term Applicable Federal Rate, adjusted monthly. Beginning in 2022, participants’ accounts increase or decrease based on the hypothetical investment of the account balances in one or more investment funds and are credited and debited in accordance with the actual financial performance of such funds. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL SEVERANCE BENEFITS On December 14, 2022, the Board, as part of its ongoing review of the company’s executive compensation and retention program, approved the terms of the Sandy Spring Bancorp, Inc. Executive Severance Plan. The purpose of the Executive Severance Plan is to provide severance benefits to certain of our senior executives and key employees in the event their employment is terminated in certain circumstances, including certain terminations related to a change in control. The Executive Severance Plan is intended to secure the continued services of our executive and key employees and to ensure their continued dedication to their duties in the event of any threat or occurrence of a change in control. The Executive Severance Plan is also intended to provide a level of security to executive and key employees who are terminated without cause, notwithstanding that such termination or resignation has occurred outside of a covered period relating to a change in control. Under the Executive Severance Plan, a participant who undergoes an involuntary termination other than for cause (as defined in the plan) or voluntary termination for good reason (as defined in the plan) during the period commencing with our initial public announcement of the agreements or other actions that are expected or intended to result in a change of control (as defined in the plan) and ending 24 months following the occurrence of such change in control will receive, subject to the participant’s execution of a general release of claims: | • | | a lump sum cash payment equal to the participant’s pro-rata bonus for the year in which he or she is terminated; |
| • | | a lump sum cash payment equal to the participant’s severance multiple, multiplied by the sum of (i) the greater of (x) the participant’s base salary as in effect immediately before the applicable change in control occurred or (y) the participant’s base salary as in effect on the participant’s termination date and (ii) the participant’s target bonus for the year in which the termination date occurs; and |
| • | | if the participant elects continuation coverage under COBRA, a lump sum cash payment equal to the amount obtained by multiplying (i) the monthly cost for continuation coverage under COBRA (as in effect as of the participant’s termination date) for group medical, dental and vision coverage for the participant and his or her dependents immediately before the participant’s termination date by (ii) the number of months represented by the participant’s severance multiple. |
If the severance benefits under which stock options remain outstanding. Benefitsthe Executive Severance Plan, along with any other payments occurring in connection with a change in control of the company, were to cause the participant to be subject to the excise tax provisions of Section 4999 of the Internal Revenue Code of 1986, then the amount of the severance benefits will either be reduced, such that the excise tax would not be applicable, or the participant will be entitled to retain his or her full severance benefits, whichever results in the better after-tax position to the participant. Under the Executive Severance Plan, a participant who undergoes an involuntary termination other than for cause outside of a covered period relating to a change in control will receive, subject to the participant’s execution of a general release of claims: | • | | a lump sum cash payment equal to the participant’s pro-rata bonus for the year in which he or she is terminated; |
| • | | cash severance in an amount equal to the participant’s severance multiple, multiplied by the participant’s base salary as in effect on the participant’s termination date; and |
| • | | if the participant elects continuation coverage under COBRA, a cash payment equal to the amount obtained by multiplying (i) the monthly cost for continuation coverage under COBRA (as in effect as of the participant’s termination date) for group medical, dental and vision coverage for the participant and his or her dependents immediately before the participant’s termination date by (ii) the number of months represented by the participant’s severance multiple. |
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| | | | Notice and Proxy Statement | 2023 | | | |
Each of the named executive officers, other than Mr. Cook, who retired effective as of February 28, 2023, has been designated as a participant in the Executive Severance Plan with a severance multiplier of three for termination occurring during a covered period related to a change in control and a severance multiplier of one for termination outside of a covered period. Severance benefits payable under the PensionExecutive Severance Plan or 401(k)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 are not included. The amounts shownand any other severance arrangement maintained by us. In connection with their participation in the Executive Severance Plan, each of the named executive officers agreed to the termination of his employment or change in control agreement. The Executive Severance Plan also includes a non-disclosure obligation and an obligation not to solicit our employees or clients for a period of 12 months after the date of the participant’s termination of employment. EQUITY AWARDS – CONSEQUENCES OF TERMINATION OF EMPLOYMENT The following table do not reflect any limitations imposed on participants in the TARP-CPP, which would have the effect of reducing, and possibly eliminating, any severance payments. | POTENTIAL PAYMENTS UPON TERMINATION | | Daniel J. Schrider | | | Philip J. Mantua | | | Frank Small | | | R. Louis Caceres | | | William W. Hill, IV | | | Termination without a Change-in-Control: | | | | | | | | | | | | | | | | Retirement: (1) | | | | | | | | | | | | | | | | | Employment agreements | | $ | - | | | $ | - | | | | n/a | | | $ | - | | | | n/a | | EIRP (2) | | | 163,280 | | | | 129,313 | | | | 1,338,959 | | | | 101,793 | | | | - | | | Equity awards | | | - | | | | - | | | | - | | | | - | | | | - | | | Total | | $ | 163,280 | | | $ | 129,313 | | | $ | 1,338,959 | | | $ | 101,793 | | | $ | - | | | Death: | | | | | | | | | | | | | | | | | | | | | | Employment agreements | | $ | - | | | $ | - | | | | n/a | | | $ | - | | | | n/a | | EIRP (2) | | | 163,280 | | | | 248,578 | | | | 1,338,959 | | | | 192,700 | | | | | | Equity awards (3) | | | 131,261 | | | | 71,076 | | | | 63,261 | | | | 74,178 | | | | 60,834 | | | Total | | $ | 294,541 | | | $ | 319,654 | | | $ | 1,402,220 | | | $ | 266,878 | | | $ | 60,834 | | | Disability: | | | | | | | | | | | | | | | | | | | | | Employment agreements (4) | | $ | 38,300 | | | $ | 269,449 | | | | n/a | | | $ | 167,687 | | | | n/a | | EIRP (2) | | | 163,280 | | | | 248,578 | | | | 1,338,959 | | | | 192,700 | | | | | | Equity awards (3) | | | 131,261 | | | | 71,076 | | | | 63,261 | | | | 74,178 | | | | 60,834 | | | Total | | $ | 294,541 | | | $ | 589,103 | | | $ | 1,402,220 | | | $ | 434,565 | | | $ | 60,834 | |
| Voluntary termination by executive officer: | | | | | | | | | | | | | | | | | Employment agreements | | | - | | | $ | - | | | | n/a | | | | - | | | | n/a | | EIRP (2) | | | 163,280 | | | | 129,313 | | | $ | 1,338,959 | | | $ | 101,793 | | | | | | | Equity awards | | | - | | | | - | | | | - | | | | - | | | | | | | Total | | $ | 163,280 | | | $ | 129,313 | | | $ | 1,338,959 | | | $ | 101,793 | | | $ | - | | | Termination by Bancorp with just cause | | None | | | None | | | None | | | None | | | | | | | Termination by Bancorp without Just Cause or by executive with Good Reason: | | | | | | | | | | | | | | | | | | | | | Employment agreements (5) | | $ | 950,800 | | | $ | 269,449 | | | | n/a | | | $ | 167,687 | | | | n/a | | EIRP (2) | | | 163,280 | | | | 129,313 | | | | 1,338,959 | | | | 101,793 | | | | - | | | Equity awards | | | - | | | | - | | | | - | | | | - | | | | - | | | Total | | $ | 1,114,080 | | | $ | 398,762 | | | $ | 1,338,959 | | | $ | 268,480 | | | $ | - | | | Termination in connection with a Change-in- Control: | | | | | | | | | | | | | | | | | | | | | Employment or Change-in-Control agreements - comp and benefits (6) | | $ | 1,652,903 | | | $ | 804,284 | | | $ | 1,018,266 | | | $ | 881,311 | | | $ | 886,236 | | Employment agreements-tax gross up (7) | | | | | | | | | | | - | | | | | | | | - | | EIRP (2) | | | 163,280 | | | | 248,578 | | | | 1,338,959 | | | | 192,700 | | | | - | | Equity awards (3) | | | 131,261 | | | | 71,076 | | | | 63,261 | | | | 74,178 | | | | 60,834 | | | Total | | | | | | | | | | $ | 2,420,486 | | | | | | | $ | 947,070 | |
shows how equity awards are treated if a named executive officer terminates employment: | | | | | | | | Award Type | | Event | | Consequences | | | | RSAs | | Death | | Unvested RSAs immediately vest | | Disability | | Unvested RSAs immediately vest upon termination | | Voluntary or involuntary termination | | Unvested RSAs are forfeited | | Change in control | | No impact absent termination of employment; unvested RSAs immediately vest upon a qualifying termination within 24 months of the change in control(1) | | | | RSUs | | Death | | Unvested RSUs immediately vest | | Disability | | Unvested RSUs immediately vest upon termination | | Involuntary termination for just cause | | Unvested RSUs are forfeited | | Involuntary termination without just cause | | Unvested RSUs continue to vest on original schedule, subject to execution of general release of claims | | Voluntary termination | | Unvested RSUs are forfeited | | Retirement(2) | | Unvested RSUs continue to vest on original schedule, subject to execution of general release of claims and covenant not to compete | | Change in control | | No impact absent termination of employment; unvested RSUs immediately vest upon a qualifying termination within 24 months of the change in control | | | | PRSUs | | Death | | PRSUs immediately vest at target level | | Disability | | PRSUs continue to earn and pay based on actual performance | | Involuntary termination for just cause | | PRSUs are forfeited | | Involuntary termination without just cause | | PRSUs continue to earn and pay based on actual performance, prorated to reflect the portion of the performance period that the executive officer was employed by the company | | Voluntary termination | | PRSUs are forfeited | | Retirement(2) | | PRSUs continue to earn and pay based on actual performance, subject to execution of a general release of claims | | Change in control | | PRSUs continue to earn based on continued employment, with performance measures deemed to be satisfied at the target level; PRSUs immediately vest upon a qualifying termination within 24 months of the change in control |
| (1) | Does not include benefits payable under Bancorp's pension plan. |
(2) | In all cases of termination, except for Just Cause, the executive is entitledFor grants prior to the vested accrued balance in the EIRP account. Unvested deferred bonus awards2020, RSAs will automaticallyimmediately vest upon the executive’s death or disability or upon the occurrence of a Change-in-Control. The benefit is payable to the executive or his or her designated beneficiary, as applicable, either in a lump sum or in fixed annual installments over a minimum of 2 years and up to 15 years. See "Executive Incentive Retirement Plan" on page 17. Mr. Hill did not a balance in the EIRP. |
(3) | Includes (a) the market value of restricted stock for which vesting is accelerated and (b) the market value of shares issuable upon the exercise of options for which vesting is accelerated less the option exercise price. |
(4) | Mr. Schrider’s employment agreement provides for benefit coverage to continue for him and his dependents for the remaining term of the agreement. On December 31, 2009 there were 24 months remaining. Under their respective employment agreements, Messrs. Mantua and Caceres will be paid full salary net of payments under any long term disability policies, plus benefits, for the remaining term of the agreement following termination. Mr. Caceres agreement will expire August 10, 2010. The remaining term of Mr. Mantua’s agreement was 12.7 months as of December 31, 2009. The amounts shown are salary plus benefits costs for the remaining term. All executives receive the group long term disability policy which pays a benefit of 50% of base salary after 180-days of disability with a cap of $6,000 per month and may elect to purchase additional coverage up to 66.67% of salary or a cap of $14,000 per month. The executive long term disability policy supplements the group plan benefit to make up for the salary restrictions to provide a maximum total benefit of 65% of salary. |
(5) | The executive is entitled to salary and benefits for the remaining term of the agreement in the event of termination by Bancorp without Just Causeof employment, other than for just cause, within 12 months of a change in control. |
| (2) | Retirement means any voluntary or byinvoluntary termination (other than for death, disability or just cause) after the executive reaches age 65 or age 60 with Good Reason.ten years of continuous service. |
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| | | Notice and Proxy Statement | 2023 | | 49 |
(6) | EXECUTIVE COMPENSATION |
OTHER POTENTIAL PAYMENTS Following termination of employment, our named executive officers would receive payment of retirement benefits and nonqualified deferred compensation under the various plans in which they participate. The value of those benefits as of December 31, 2022 is set forth in the Pension Benefits and Nonqualified Deferred Compensation tables. All of our named executive officers are fully vested in the benefits described in those sections, and there is no increase in those benefits upon termination. Benefits under the EIRP are forfeited in the event of termination for cause. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL Potential payments to our named executive officers pursuant to existing plans and arrangements in event of their termination or a change of control as of December 31, 2022 are shown in the table below. These amounts are estimates only. The actual amounts to be paid can only be determined at the time the executive becomes eligible for payment. Valuation of equity awards was based on the closing price of our common stock on December 30, 2022, which was $35.23 per share. In the event of termination for cause or voluntary termination, the named executive officers would receive only their salary through the date of termination. | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | | Death ($) | | | Disability ($) | | | Termination
without
cause ($) | | | Change in
control
and
qualifying
termination ($) | | | | | | | | Daniel J. Schrider | | Cash severance(1)(2) | | | — | | | | — | | | | 875,000 | | | | 4,593,750 | | | | | | | | | | Welfare benefits(3) | | | — | | | | — | | | | 31,654 | | | | 94,961 | | | | | | | | | | Split-dollar life insurance(4) | | | 2,187,500 | | | | — | | | | — | | | | — | | | | | | | | | | RSAs/RSUs(5) | | | 749,589 | | | | 749,589 | | | | — | | | | 749,589 | | | | | | | | | | | PRSUs(6) | | | 678,304 | | | | — | | | | — | | | | 678,304 | | | | | | | | Philip J. Mantua | | Cash severance(1)(2)(7) | | | — | | | | — | | | | 455,000 | | | | 2,047,500 | | | | | | | | | | Welfare benefits(3) | | | — | | | | — | | | | 31,654 | | | | 94,961 | | | | | | | | | | Split-dollar life insurance(4) | | | 1,137,500 | | | | — | | | | — | | | | — | | | | | | | | | | RSAs/RSUs(5) | | | 269,967 | | | | 269,967 | | | | — | | | | 269,967 | | | | | | | | | | | PRSUs(6) | | | 240,343 | | | | — | | | | — | | | | 240,343 | | | | | | | | Joseph J. O’Brien, Jr. | | Cash severance(1)(2)(7) | | | — | | | | — | | | | 535,000 | | | | 2,648,250 | | | | | | | | | | Welfare benefits(3) | | | — | | | | — | | | | 31,654 | | | | 94,961 | | | | | | | | | | Split-dollar life insurance(4) | | | 1,337,500 | | | | — | | | | — | | | | — | | | | | | | | | | RSAs/RSUs(5) | | | 359,346 | | | | 359,346 | | | | — | | | | 359,346 | | | | | | | | | | | PRSUs(6) | | | 326,196 | | | | — | | | | — | | | | 326,196 | | | | | | | | R. Louis Caceres | | Cash severance(1)(2) | | | — | | | | — | | | | 460,000 | | | | 2,139,000 | | | | | | | | | | Welfare benefits(3) | | | — | | | | — | | | | 31,654 | | | | 94,961 | | | | | | | | | | Split-dollar life insurance(4) | | | 1,150,000 | | | | — | | | | — | | | | — | | | | | | | | | | RSAs/RSUs(5) | | | 256,193 | | | | 256,193 | | | | — | | | | 256,193 | | | | | | | | | | | PRSUs(6) | | | 229,257 | | | | — | | | | — | | | | 229,257 | |
| (1) | The employment agreements or Change-in-Control agreements in place at December 31, 2009 provide a paymentAmounts are payable under the terms of 2.99 times salary and other compensation in a lump sum and the value of three calendar years of health and welfare benefits to which the executives are entitledExecutive Severance Plan. Amounts payable in the event of termination by Bancorp without Just Cause or by the executivecause would be paid over one year in accordance with Good Reason within the period beginning six months before and ending two years after a Change-in-Control. An executive also is entitled to these benefitsour normal payroll practices. Amounts payable in the event he terminates his employment for any reason within the sixty-day period that begins six months after the closing of an agreement that triggered thea qualifying termination following a change in control.control would be paid in a lump sum. |
(7)(2) | Messrs. Schrider, MantuaAmounts listed under “Change in control and Caceres were entitled toqualifying termination” do not reflect the fact that under the Executive Severance Plan payments in connection with a payment to offset the federalchange in control that would result in a golden parachute excise tax on excess parachute payments. Thisunder Sections 280G and 4999 of the Internal Revenue Code may be reduced in certain circumstances so that such tax iswould not apply. |
| (3) | Amount represents health insurance benefits to be paid under the Executive Severance Plan based upon monthly premiums being paid as of December 31, 2022. |
| (4) | Amounts are payable ifto the named executive officer’s beneficiaries under split-dollar life insurance agreements that we have entered into with the named executive officers. |
| (5) | Amount represents the value of Change-in-Control relatedunvested 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 exceeds three times the executive's five-year average compensation. The amountremain subject to the taxcompany’s actual performance. Therefore, no amounts are shown for these scenarios. |
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| | | | Notice and Proxy Statement | 2023 | | | |
PAY VERSUS PERFORMANCE The following table provides information regarding compensation paid to the company’s chief executive officer and other named executive officers along with the cumulative total shareholder return of the company and a peer group index, the company’s net income and the company’s core ROTCE, which is the most important financial performance measure (that is not otherwise disclosed in the table) used by the company to link compensation actually paid to the company’s named executive officers, for 2022, to company performance. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 excessyears 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 Change-in-Control paymentsportion of the 2018, 2019 and 2020 equity awards that exceedwould vest based on the average compensation. Forcompany’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. |
| | | | | | | | Notice and Proxy Statement | 2023 | | 51 |
| (2) | The named executive officers for each of the years presented in the table it is assumedwere 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 full amountchief executive officer for each of the benefit payable under the employment agreements is paid. However, restrictions on severance payments by participantsyears presented in the TARP-CPP prohibit these tax gross-up payments.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 MEASURES
The following table lists the most important financial performance measures used by us to link compensation actually paid to our named executive officers for 2022 to company performance.
| | | | | Core earnings | | | | | | | | | | Core return on tangible common equity | | | | | Core return on average assets | | |
For explanations of these financial performance measures and reconciliation to the applicable amount measured in accordance with GAAP, see Annex A. For explanations of how these financial performance measures were used to determine 2022 pay for our chief executive officer and other named executive officers, see “Compensation Discussion and Analysis – 2022 Compensation” on page 34. PROPOSAL II: A Non-Binding Resolution | | | | | | | | | | 52 | | | | | | Notice and Proxy Statement | 2023 | | | |
RELATIONSHIP BETWEEN PAY AND FINANCIAL PERFORMANCE The charts below describe the relationship between compensation actually paid to Approveour chief executive officer and other named executive officers (as calculated above) and our financial and stock performance. Generally, compensation actual paid is directionally aligned with the Compensationcompany’s cumulative TSR, net income and core ROTCE. | | | | | | | | Notice and Proxy Statement | 2023 | | 53 |
CEO PAY RATIO We are required by SEC rules to disclose the median of the Namedannual total compensation of all employees of the company (excluding the Chief Executive Officers
Officer), the annual total compensation of the Chief Executive Officer, and the ratio of these two amounts (the “pay ratio”). The Emergency Economic Stabilization Actpay ratio below is a reasonable estimate based on our payroll records and the methodology described below, and was calculated in a manner consistent with SEC rules. Because SEC rules for identifying the median employee and calculating the pay ratio allow companies to use variety of 2008methodologies, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as amended, requires Bancorp, duringother companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.We selected November 20, 2022 as the determination date for identifying the median employee. Year-to-date taxable wages paid from January 1, 2022 to November 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 in which any obligation arising from Bancorp’s participationcaptured 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 TARP-CPP remainsmanner required for the Summary Compensation Table. Mr. Schrider’s total compensation for 2022, as disclosed in the Summary Compensation Table, was $2,498,857 and the median employee’s was $87,157, producing a ratio of 29 to 1. | | | | | | | | | 54 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS |
PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS BACKGROUND Our Articles of Incorporation currently divide the Board of Directors into three classes, with the members of each class serving for staggered three-year terms. As a result, only one class of directors stands for election at each annual meeting of shareholders, such that shareholders vote on and elect approximately one-third of the Board each year. At this annual meeting, our shareholders are being asked to approve and adopt a proposal to amend the Articles of Incorporation to declassify the Board. This proposal is the same as the Board’s proposal last year, which did not receive a sufficient number of votes despite our adjourning the annual meeting to solicit additional votes. At the 2022 annual meeting, the proposal to declassify the Board (through amendment to Article IX of the Articles of Incorporation) was approved by 77.9% of the outstanding shares, which fell short of the required 80% threshold by a small margin. While the Board’s prior proposal was unsuccessful, the large number of votes that it received indicates that there is substantial shareholder interest in declassifying the Board and providing for the annual election of directors. The Nominating and Governance Committee considered and then recommended to the Board the proposed amendments to the company’s Articles of Incorporation to declassify the Board. The Board accepted this recommendation, determined that the proposed amendments are advisable, and unanimously approved the amendments, subject to shareholder approval at this annual meeting. If shareholders approve the amendments, they will become effective upon the filing of Articles of Amendment to the company’s Articles of Incorporation with the Maryland Department of Assessments and Taxation. We intend to file the Articles of Amendment shortly after the annual meeting. TEXT OF THE PROPOSED AMENDMENTS Section (B) of ARTICLE IX of the Articles of Incorporation would be deleted in its entirety and replaced with new Section (B). Additions are indicated in double underline, and deletions are indicated in strikethrough. B. Classified Board Election of Directors. Until the 2023 annual meeting of shareholders, the The Board of Directors of the Corporation shall be divided into three classes as nearly equal in number as the then total number of directors constituting the entire Board of Directors shall permit, which classes shall be designated Class I, Class II and Class III. At each annual meeting of shareholders beginning in 1992 with the 2024 annual meeting of shareholders, successors to the class of directors whose terms expires at such annual meeting shall be elected for a term of three yearsexpiring at the next annual meeting of shareholders following the director’s election and until such director’s successor is elected and qualifies, or until his or her earlier death, resignation, disqualification or removal. (1) The following directors shall be assigned to Class I and shall serve until the 1994 annual meeting of shareholders: Andrew N. Adams, Jr. Robert L. Mitchell Robert L. Orndorff, Jr. (2) The following directors shall be assigned to Class 11 and shall serve until the 1993 annual meeting of shareholders: William M. Canby John Chirtea Willard H. Derrick Hunter R. Hollar (3) The following directors shall be assigned to Class III and shall serve until the 1992 annual meeting of shareholders. Charles F. Mess Louisa W. Riggs Francis Snowden W. Drew Stabler | | | | |
| | | Notice and Proxy Statement | 2023 | | 55 |
| PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS |
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 qualified unless his position on the Board of Directors shall have been abolished by action taken to reduce the size of the Board of Directors prior to said meeting. Should the number of directors of the Corporation be reduced, the directorship(s) eliminated shall be allocated among classes as appropriate so that the number of directors in each class is as nearly equal as possible. The Board of Directors shall designate, by the name of the incumbent(s), the position(s) to be abolished. Notwithstanding the foregoing, no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. Should the number of directors of the Corporation be increased, the additional directorships shall be allocated among classes as appropriate so that the number of directors in each class is as nearly equal as possible. 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 the Board of Directors shareholders 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 Nominating and Governance Committee and the Board periodically consider our corporate governance practices and structures in light of the continuing evolution of best practices. As part of that process, the Board considers corporate trends, peer practices, the views of our institutional shareholders and the guidelines of proxy advisory firms. As such, the Nominating and Governance Committee and the Board have, from time to time, reviewed the classified board structure. The Board recognizes that a classified structure may offer advantages, such as promoting continuity and stability, encouraging its directors to take a long-term perspective and reducing our vulnerability to coercive takeover tactics. The Board also recognizes the strong sentiment among the investment community in favor of annual elections, that many institutional investors believe that the election of directors is the primary means for shareholders to influence corporate governance policies and to hold management accountable for implementing those policies, and that a classified board structure does not enable shareholders to express a view on each director’s performance by means of an annual vote. After carefully weighing these and other factors (including that the number of public companies with 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 2024 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 2024 annual meeting, directors will stand for election on an annual basis for one-year terms. Beginning with the 2026 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. | | | | | | | | | 56 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| PROPOSAL 3: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTE REQUIREMENT FOR CERTAIN AMENDMENTS |
PROPOSAL 3: APPROVAL OF AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTE REQUIREMENT FOR CERTAIN AMENDMENTS BACKGROUND The company’s Articles of Incorporation currently require the affirmative vote of the holders of not less than 80 percent of the outstanding shares of capital stock of the company entitled to vote generally in the election of directors, voting together as a single class, to repeal, alter, amend or rescind the provisions of Article VI (authorization of issuance of stock), Article IX (directors), Article XII (approval of certain transactions), Article XIII (approval of business combinations with controlling parties), Article XIV (evaluation of business combinations) and Article XIX (amendment of Articles of Incorporation). At this annual meeting, our shareholders are being asked to approve and adopt a proposal to amend the Articles of Incorporation to eliminate the supermajority requirement for amendment of certain provisions of the Articles of Incorporation and require only a majority of all votes entitled to be cast on the matter to amend all provisions of the Articles of Incorporation. The Nominating and Governance Committee considered and then recommended to the Board the proposed amendments to the company’s Articles of Incorporation. The Board accepted this recommendation, determined that the proposed amendments are advisable, and unanimously approved the amendments, subject to shareholder approval at this annual meeting. If shareholders approve the amendments, they will become effective upon the filing of Articles of Amendment to the company’s Articles of Incorporation with the Maryland Department of Assessments and Taxation. We intend to file the Articles of Amendment shortly after the annual meeting. TEXT OF THE PROPOSED AMENDMENTS ARTICLE XIX of the Articles of Incorporation would be amended to read as follows. Additions are indicated in double underline, and deletions are indicated in strikethrough. The Corporation reserves the right to repeal, alter, amend or rescind any provision contained in these Articles in the manner now or hereafter prescribed by law, and all rights conferred on shareholders herein are granted subject to this reservation. Notwithstanding the foregoing, the provisions set forth in Articles VI, IX, XII, XIII, XIV and this Article XIX of these Articles may not be repealed, altered, amended or rescinded in any respect unless the same Any amendment of these Articles shall be valid and effective if such amendment is approved by the affirmative vote of the holders of not less than eighty percent (80%) a majority of the outstanding shares of capital stock of the Corporation all the votes entitled to vote generally in the election of directors (considered for this purpose as a single class) be cast on the matterat a meeting of the shareholders called for that purpose (provided that notice of such proposed adoption, repeal, alteration, amendment or rescission is included in the notice of such meeting). REASONS FOR THE PROPOSED AMENDMENTS The Nominating and Governance Committee and the Board periodically consider our corporate governance practices and structures in light of the continuing evolution of best practices. As part of that process, the Board considers corporate trends, peer practices, the views of our institutional shareholders and the guidelines of proxy advisory firms. As such, the Board has determined that requiring only a majority of all votes entitled to be cast on the matter to amend all provisions of the Articles of Incorporation is in the best interests of the company and our shareholders. Accordingly, the Board has directed that these amendments be submitted to the shareholders for their consideration and has recommended that the shareholders approve the proposed amendments. REQUIRED VOTE The affirmative vote of at least 80 percent of outstanding shares of common stock entitled to vote at the annual meeting is required for shareholders to approve the proposed amendments to the Articles of Incorporation. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THIS PROPOSAL. | | | | |
| | | Notice and Proxy Statement | 2023 | | 57 |
| PROPOSAL 4: ADVISORY VOTE TO APPROVE THE COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS |
PROPOSAL 4: 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 the shareholders a non-binding vote on the compensation of Bancorp’sthe 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-on-pay”“say on pay” proposal, gives Bancorp’sour shareholders the opportunity to endorse or not endorse Bancorp’sthe executive paycompensation program and policies through the following resolution:
“Resolved, that the shareholders approve the compensation of the named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and related material in this proxy statement.”
This vote will not be binding on the board of directorsBoard and may not be construed as overruling a decision by the boardBoard nor to create or imply any additional fiduciary duty by the board.Board. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
In voting to approve the above resolution, shareholders may vote for the resolution, against the resolution or abstain from voting. This matter will be decided by the affirmative vote of a majority of the votes cast at the annual meeting. On this matter, abstentions will have no effect on the voting.
The board of directorsBoard believes that theour compensation practices of Bancorp are designed to accomplish the objectives described in the Compensation Discussion and Analysis and that they are appropriately aligned to thewith our long-term success of Bancorp 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” APPROVALTHIS PROPOSAL. | | | | | | | | | 58 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| PROPOSAL 5: ADVISORY VOTE ON THE FREQUENCY OF FUTURE VOTES TO APPROVE THE COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS |
PROPOSAL 5: ADVISORY VOTE ON THE FREQUENCY OF FUTURE VOTES TO APPROVE THE COMPENSATION OFFOR THE NAMED EXECUTIVE OFFICERS. PROPOSAL III: OFFICERSThe RatificationDodd-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 Appointmentnamed 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 Grant Thornton LLPeither 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 Independent Registered Public Accounting Firm for the Year 2010 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 6: RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
PROPOSAL 6: 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 our financial statements. The committee has appointed the firm of Grant ThorntonErnst & Young LLP to serve as Bancorp’sour independent registered public accounting firm for 2010.fiscal 2023. In accordance with established policy, the boardBoard is submitting this proposalthe appointment of Ernst & Young LLP to the vote of the shareholders for ratification. In the event the appointment is not ratified by a majority of the shareholders it is anticipated that no change in auditors will be made for the current year because of the difficulty and expense of making a change so long after the beginning of the year, but the vote will be considered in connection with the auditor appointment for 2011.
On March 18, 2008, Bancorp dismissed McGladrey2024.In reaching its decision to engage Ernst & Pullen,Young LLP, (McGladrey), which had previously servedthe committee considered the independence factors, the length of the audit firm’s tenure as our independent auditor, for Bancorp. The reportsthe 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 McGladrey onthese factors, the consolidated financial statementscommittee concluded that it was in the best interests of Bancorp asshareholders to continue the engagement of and for the fiscal year ended December 31, 2007 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. In connection with its audit for the fiscal year ended December 31, 2007, there were no disagreements with McGladrey on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of McGladrey, would have caused McGladrey to make reference to such disagreements in its report on the consolidated financial statements for such years.
In voting to ratify the appointment of Grant ThorntonErnst & Young LLP as Bancorp’sour independent registered public accounting firm for 2010, shareholders may vote2023.Ernst & Young LLP provides tax compliance services for trust clients of Sandy Spring Bank, the proposal, againstfees for which are billed to those clients. These services, which are permissible under applicable independence standards, were pre-approved by the proposal or abstain from voting. 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 affirmative vote of a majority of the votes cast at the annual meeting. On this matter, abstentions will have no effect on the voting.
Representatives of Grant Thornton LLP will be present at the annual meeting, will be given the opportunity to make a statement, and be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF GRANT THORNTON LLP AS BANCORP'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2010.
Audit and Non-Audit Fees
“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 Sandy Spring Bancorp, Inc. and subsidiaries by Grant ThorntonErnst & Young LLP for the yearyears ended December 31, 20092022 and 2008December 31, 2021, together with fees billed for other services.
| | | 2009 | | | 2008 | | Audit Fees(1) | | $ | 382,080 | | | $ | 361,905 | | | Audit-Related Fees | | | - | | | | - | | | Tax Services | | | - | | | | - | |
| (1) | Audit fees consist of fees for professional services rendered for the audit of Bancorp’s consolidated financial statements and review of financial statements included in Bancorp’s | | | | | | | | | | | | | | | | 2022 ($) | | | 2021 ($) | | | | | Audit Fees | | | 1,577,000 | | | | 1,050,000 | | | | | Audit-Related Fees | | | — | | | | — | | | | | Tax Services | | | 187,766 | | | | 279,000 | | | | | All Other Fees | | | 50,000 | | | | — | | | | | Total | | | 1,814,766 | | | | 1,329,000 | |
“Audit Fees” consist of fees for professional services rendered for the annual audit of our consolidated financial statements, including the integrated audit of internal control over financial reporting, review of financial statements included in our quarterly reports on Form 10-Q, review services, consents and comfort letters in connection with securities offerings, and services normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements. “Tax Services” consist of 1099 processing fees for trust clients of Sandy Spring Bank. “All Other Fees” consist of fees for permissible services not related to financial reporting. | | | | | | | | | 60 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| PROPOSAL 6: RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
AUDIT COMMITTEE’S PREAPPROVAL POLICIES AND PROCEDURES The committee is required to pre-approve all auditing services and permitted non-audit services provided by our 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 connection with statutory and regulatory filings or engagements.which the non-audit services are provided; |
Audit Committee's Preapproval Policies and Procedures for Services
The Audit Committee is required to pre-approve all auditing| • | | 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 provided by Bancorp's independent registered public accounting firm. There is an exception for preapproval of non-audit services if the aggregate amount of all such non-audit services provided to Bancorp constitutes not more than 5% of the total amount of revenues paid by it to its independent registered public accounting firms during the fiscal year in which the non-audit services are provided; such services were not recognized by Bancorp 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 prior to the completion of the audit 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. All audit services and permitted non-audit services to be performed by Bancorp's independent registered public accounting firmErnst & Young LLP have been preapproved by the Audit Committeecommittee as required by SEC regulations and the Audit Committee'scommittee’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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ReportAUDIT COMMITTEE REPORT The Audit Committee of the Audit Committee
Bancorp'sBoard 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 of directorsBoard to assist the boardBoard in monitoringmonitoring: (1) the integrity of the company’s accounting and financial statements compliance with legal and regulatory requirements, andreporting 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 and external auditors. audit department.The committee (1) has reviewedis directly responsible for the appointment and discussedoversight of the audited financial statements with management; (2) has discussed with Bancorp's independent registered public accounting firm, including review of their general qualifications, specific experience in the matters required to be discussed by Statement of Auditing Standards 61 (Communication with Audit Committees);financial sector, and (3)compensation structure. The committee has received the written disclosuresengaged Ernst & Young LLP since 2013. The company’s management is responsible for its internal controls and the letter from Bancorp'sfinancial reporting process. Ernst & Young LLP is responsible for performing an independent registered public accounting firm required by applicable requirementaudit of the Public Company Accounting Oversight Boardcompany’s consolidated financial statements and discussed independenceissuing an opinion on the conformity of those financial statements with Bancorp's independent registered public accounting firm. principles generally accepted in the United States and expressing an opinion on the effectiveness of the company’s internal control over financial reporting. In 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 the company’s audited and unaudited financial statements with management and Ernst & Young LLP each quarter, prior to filing with the SEC and releasing to the public, for purposes of evaluating their accuracy and fair presentation of the company’s financial condition; |
| • | | discussed with Ernst & Young LLP the critical audit matters and the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC, including, but not limited to, the audit strategy, scope and plan for the audit work, and the significant risks and areas of audit focus; |
| • | | met with Ernst & Young LLP, with and without members of management present, to discuss the results of their evaluation of the integrity of the company’s financial reporting; |
| • | | received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable standards of the Public Company Accounting Oversight Board; |
| • | | reviewed and discussed with Ernst & Young LLP the matter of auditor independence; |
| • | | met regularly with the company’s chief internal auditor, with and without members of management present, to review and approve the annual risk-based audit plan, to review all audit reports, to track the timely resolution of any findings, and to assess the performance of the chief internal auditor; and |
| • | | reviewed and monitored compliance with the “whistleblower” provisions of the Sarbanes-Oxley Act. |
Based upon this review, discussion, disclosures,the reviews and materialsdiscussions described in (1) through (3),above, the committee recommended to the boardcompany’s Board of directorsDirectors that the audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2009. 2022. February 14, 2023 Pamela A. Little, Chair Brian J. Lemek Walter C. Martz II Mark C. Micklem Robert L. Orndorff | | | | | | | | | 62 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| INFORMATION ABOUT THE MEETING |
INFORMATION ABOUT THE MEETING ATTENDING THE MEETING All holders of Sandy 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 gain entrance to the annual meeting, you must present valid, government-issued photo identification. If you are not a shareholder of record, you must also present evidence of ownership of Sandy Spring stock as of the record date. VOTING MATTERS Shares Entitled to Vote. Holders of Sandy Spring common stock, par value $1.00 per share, as of the close of business on the record date of March 8, 2023 are eligible to vote at the annual meeting. On that date, 44,820,452 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 committeepresence, in person or by proxy, of holders of a majority of our 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 in person will be considered part of the quorum. Once a share is represented for any purpose at the meeting, it is deemed present for quorum purposes for the remainder of the meeting. We intend to include as 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 may vote in person at the annual meeting or by submitting your proxy in any one of following ways: | • | | Voting on the internet. Go to www.envisionreports.com/sasr and follow the instructions. You will need to have your control number (from your proxy card) with you when you go to the website. |
| • | | Voting by telephone. Call the phone number on your proxy card and follow the instructions. You will need to have your control number with you when you call. |
| • | | Voting by mail. Complete, sign, date and return your proxy card in the envelope provided in advance of the meeting. |
If you are a beneficial 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 are a beneficial owner and you would like to vote in person at the meeting, you must also haspresent a written legal proxy from your broker, bank, or other nominee. If you hold your shares through a bank, broker, or other nominee, it is critical that you cast your vote if you want it to count for Proposals 1, 2, 3, 4 and 5. Your broker is not allowed to vote shares on your behalf on such matters without your specific instruction. If you do not instruct your broker how to vote on these matters, no votes will be cast on your behalf. Your broker will have discretion to vote any uninstructed shares on matters considered whetherroutine items, such as ratification of the amount and natureappointment of non-audit services rendered by Bancorp'sthe independent registered public accounting firm (Proposal 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 consistent with its independence.
March 11, 2010
Pamela A. Little, Chairman | Robert L. Orndorff | Craig A. Ruppert | David E. Rippeon |
PROPOSAL IV: Shareholder Proposal on the Declassification of
the Board of Directors
Bancorp received notice that Mr. Gerald R. Armstrong, 910 Sixteenth Street, No. 412, Denver Colorado 80202-2917, intends to present the proposal set forth belownot revoked will be voted at the annual meeting. Accordingmeeting in accordance with your voting instructions. If you properly submit a proxy without specifying how you want your shares to information provided by Mr. Armstrong, he owned 849.846be voted, your shares will be voted in accordance with the recommendations of the Board. If your shares are held with our transfer agent, Computershare, and 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 Bancorpour 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 19, 2023, at 11:59 p.m., Eastern Time. After the voting instruction deadline, you will not be able to submit voting instructions or change prior voting instructions for any shares. If you do not direct the trustee how to vote the shares in your 401(k) plan account, the trustee will vote the shares in the 401(k) plan in the same proportion as the voting instructions it receives from other participants as of the date the proposal was submitted. The Board disclaims any responsibility for the contentvoting instruction deadline. VOTES REQUIRED | • | | Proposal 1: Election of Directors. In an uncontested election, nominees for election as directors will be elected to the Board if the votes cast “for” the nominee’s election exceed the votes cast “against” his or her election. Pursuant to our Articles of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. If an incumbent director nominee does not receive the required votes for election, |
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| INFORMATION ABOUT THE MEETING |
| the director is required to immediately tender their resignation from the Board. Upon receipt of the director’s resignation, the Nominating and Governance Committee will make a recommendation to the Board about whether to accept or reject the resignation. The Board will promptly disclose its decision regarding the resignation and the basis for the decision. |
| • | | Proposal 2: Amendment of Articles of Incorporation to declassify the Board. The amendments to the Articles of Incorporation to declassify the Board will be approved if the holders of at least 80 percent of the outstanding shares of common stock entitled to vote at the annual meeting vote in favor of the amendments. |
| • | | Proposal 3: Amendment of Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments. The amendments to the Articles of Incorporation to eliminate the supermajority vote requirement for certain amendments will be approved if the holders of at least 80 percent of the outstanding shares of common stock entitled to vote at the annual meeting vote in favor of the amendments. |
| • | | Proposal 4: Advisory vote on executive compensation. The advisory vote on the compensation of the named executive officers disclosed in the proxy statement will be approved if the votes cast “for” the proposal exceed the votes cast “against” the proposal. |
| • | | Proposal 5: Advisory vote on frequency of shareholder vote on executive compensation. The advisory vote on the frequency of the shareholder vote on compensation of the named executive officers disclosed in the proxy statement will be decided by the vote of a majority of the votes cast at the annual meeting. Shareholders may vote for the frequency of “One Year,” “Two Years,” or “Three Years” or may “Abstain.” Because this proposal has three choices, it is possible that no choice will receive a majority of the votes cast. Therefore, the Board will consider the choice that receives the highest number of votes as the choice supported by shareholders. |
| • | | Proposal 6: Ratification of appointment of independent registered public accounting firm. Ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for 2023 will be approved if the votes cast “for” the proposal exceed the votes cast “against” the proposal. |
Abstentions and the statement in support of the proposal, whichBroker Non-Votes.Abstentions, “broker non-votes” (explained below) and failure to cast a vote are presented in the form received from the shareholder.
“RESOLUTION: That the shareholders of SANDY SPRING BANCORP request its Board of Directors to take the steps necessary to eliminate classification of terms of the Board of Directors to require that all Directors stand for election annually. The Board declassification shall be completed in a manner that does not affect the unexpired terms of the previously-elected Directors.
Shareholder Statement in Support of Proposal IV:
“The current practice of electing only one-third of the directors for three-year terms is not in the best interest of the corporation or its shareholders. Eliminating this staggered system increases accountability and gives shareholders the opportunity to express their views on the performance of each director annually. The proponent believes the election of directors is the strongest way that shareholders influence the direction of any corporation and our corporation should be no exception.
“As a professional investor, the proponent has introduced the proposal at several corporations which have adopted it. In others, opposed by the board or management, it has received votes in excess of 70% and is likely to be reconsidered favorably.
“The proponent believes that increased accountability must be given our shareholders whose capital has been entrusted in the form of share investments expecially [sic] during these times of great economic challenge.
“Arthur Levitt, former Chairman of The Securities and Exchange Commission said, “In my view, it’s best for the investor if the entire board is elected once a year. Without annual election of each director, shareholders have far less control over who represents them.”
“While management may argue that directors need and deserve continuity, management should become aware that continuity and tenure may be best assured when their performance as directors is exemplary and is deemed beneficial to the best interests of the corporation and its shareholders.
“The proponent regards as unfounded the concern expressed by some that annual election of all directors could leave companies without experienced directors in the event that all incumbents are voted out by shareholders.
“In the unlikely event that shareholders do vote to replace all directors, such a decision would express dissatisfaction with the incumbent directors and reflect the need for change.
“If you agree that shareholders may benefit from greater accountability afforded by annual election of all directors, please vote ‘FOR’ this proposal.”
THE BOARD IS “NEUTRAL” ON THIS PROPOSAL
Board’s Position on Shareholder Proposal
In 2008, Bancorp’s board of directors presented to the shareholders a proposal to de-classify the board by recommending action to amend the articles of incorporation and in so doing eliminate the classification of the board of directors. That proposal failed to receive the 80% affirmative vote of outstanding shares required for passage.
In the last two years, Bancorp has installed a new president and chief executive officer and five members of the board have retired. With the recent additions, 25% of the board’s membership has served for less than five years. Over the next five years, two more directors will reach the mandatory retirement age of 70, again, creating turnover.
The board is mindful of the arguments in favor of declassification, some of which are referenced by the proponent. However, the board is of the view that the choice of whether a board should be classified or declassified must be made on a case-by-case basis. While Bancorp’s board was supportive of this idea as stated in its 2008 proposal, the question of whether a declassified board is best for Bancorp at this time is debatable. In reviewing this matter and making a determination to remain neutral on this proposal, the board considered the degree of shareholder support received for the 2008 proposal. It also considered, among other things, the change in circumstances arising from the nation’s current economic downturn and, in particular, the dramatic impact on financial institutions. The leverage that a classified board affords to prevent sudden and disruptive efforts and potentially abusive tactics by groups or entities that may wish to take control has become more important during uncertain times. A classified board could enable the board to focus on fundamentals, set and maintain a strategic direction in troubled financial times to promote the long-term interests of the company, and to protect and enhance shareholder value. Given these factors and the level of turnover that our board has recently experienced“votes cast” and will experience over the next five years, it is not unreasonable to conclude that a classified board is in the company’s and shareholders’ best interests, at this time.
For these reasons, the board has elected to not make a “for” or “against” recommendation on this proposal. However, the board will treat the vote on this proposal as an opportunity for the shareholders to express their views on the subject without being influenced by any recommendation that the board might make. If the shareholders approve this proposal by an affirmative margin approaching the percentage necessary to approve a change in the articles of incorporation, the board will further review the advisability of our classified board structure and determine whether it would be in the best interests of the company and the shareholders to present an amendment to the articles of incorporation at a future annual meeting.
Approval of this shareholder proposal requires the affirmative vote of a majority of the votes cast at the annual meeting. The proposal, if approved by the shareholders, is advisory in nature and would constitute a recommendation to the board and would not in itself effectuate the changes contemplated by the proposal. Further action by the shareholders would be required to amend the company's articles of incorporation. Under the articles of incorporation, an 80% percent vote of the outstanding shares would be required for approval. In addition, under Maryland law, amendments to the articles of incorporation require recommendation from the Board prior to submission to the shareholders.
If shareholders return a validly executed proxy solicited by the board, the shares represented by the proxy will be voted on this proposal in the manner specified by the shareholder. If shareholders do not specify the manner in which their shares are to be voted on this proposal, such shares will be counted as abstentions. On the passage of this matter, abstentions willtherefore have no effect on the voting result.
Shareholder Proposalsoutcome 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 Communications
From timefailure to time, individual shareholders may wish to submit proposals that they believe should be voted upon bycast a vote will have the shareholders. The SEC has adopted regulations that governsame effect as a vote “against” amendment of the inclusionArticles of such proposalsIncorporation in Bancorp's annual proxy materials. Shareholder proposals intended to beProposal 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 2011meeting. 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 2023 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 annual meeting. DELIVERY OF PROXY MATERIALS To reduce the expenses of delivering duplicate proxy materials to shareholders, we rely on SEC rules that permit us to deliver a single proxy statement and annual report with separate proxy cards to multiple shareholders who share an address, unless we receive contrary instructions. If (1) you and another registered holder share an address and each receive paper copies of our proxy material and wish to receive only one paper copy or (2) you share an address with another registered holder, received a 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 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 | | | | | | | | | 64 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| INFORMATION ABOUT THE MEETING |
proxies. In addition, we have engaged Georgeson LLC to assist us in soliciting proxies at an estimated cost of $9,500 plus expenses. We also 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 2024 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 2024 annual meeting of shareholders may be eligible for inclusion in Bancorp's proxy materials for that annual meeting if received by Bancorp at its executive offices not later than November 24, 2010 unless the date of the 2011 annual meeting is more than 30 days from May 5, 2011, in which case the deadline is a reasonable time before Bancorp begins to print and mail proxy materials. Anymust submit such proposals shall be subjectproposal to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934.
In addition, Bancorp's bylaws require that to be properly brought before an annual meeting, shareholder proposals for new business must be delivered to or mailed and received by Bancorp not less than thirty nor more than ninety days prior to the date of the meeting; provided, however, that if less than forty-five days notice of the date of the meeting is given to shareholders, such notice by a shareholder must be received not later than the fifteenth day following the date on which notice of the date of the meeting was mailed to shareholders or two days before the date of the meeting, whichever is earlier. Each such notice given by a shareholder must set forth certain information specified in the bylaws concerning the shareholder and the business proposed to be brought before the meeting.
Shareholders also may nominate candidates for election as a director, provided that such nominations are made in writing and received by Bancorp at its executive offices not later than December 24, 2010. The nomination should be sent to the attention of Ronald E. Kuykendall, General Counsel andaddress: Corporate Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832,20832. Proposals must be received no later than the close of business on December 13, 2023, and must include, concerningcomply with SEC Rule 14a-8 in order for the proposal to be considered for inclusion in our proxy statement. Simply submitting a proposal does not guarantee that it will be included.In addition, under our Bylaws, if a shareholder wishes to present nominations for director nominee,candidates for election to the following information: full name, age,Board or other business for consideration at an annual meeting of shareholders, the shareholder must give the Corporate Secretary written notice of the shareholder’s intent to do so. The notice must be received by the Corporate Secretary no later than 90 days and no earlier than 120 days prior to the anniversary date of birth, educational background and business experience, including positions held for at least the preceding five years, home and office addresses and telephone numbers, and a signed representation to timely provide all information requested by Bancorp for preparationyear’s annual meeting. However, if the date of its disclosures regarding the solicitation of proxies for election of directors. The name of eachannual meeting is more than 30 days before or more than 60 days after such candidate for directoranniversary date, then the notice must be placedreceived 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 nominationproper 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 byto present a shareholder present in person. The nominee must alsonomination or proposed business, such nomination shall be present in person at the annual meeting. A vote for a person who hasdisregarded and such proposed business shall not been duly nominated pursuant to these requirements will be deemed to be void.
Bancorp's shareholders may communicatetransacted.To comply with the boarduniversal proxy rules, shareholders who intend to solicit in support of director nominees other than the company’s nominees must provide a notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended, by no later than March 25, 2024. COMMUNICATION WITH OUR BOARD Communications to the Board may be sent to Sandy Spring Bancorp, Inc., Attention: Corporate Secretary, 17801 Georgia Avenue, Olney, Maryland 20832 and marked to the attention of the Board or any of its committees, the independent directors as a group, or any individual director or directors. Communications also may be sent by addressing correspondenceemail to ir@sandyspringbank.com. OTHER BUSINESS In the event that any matter not described herein is properly presented for a shareholder vote at the annual meeting, or any adjournment thereof, the persons named in the form of proxy will vote in accordance with their best judgment. At the time this proxy statement went to print, we knew of no other matters that might be presented for shareholder action at the annual meeting. | | | | |
| | | Notice and Proxy Statement | 2023 | | 65 |
| ANNEX A: NON-GAAP FINANCIAL MEASURES |
ANNEX A: NON-GAAP FINANCIAL MEASURES As discussed in the Compensation Discussion and Analysis included in this proxy statement, the Compensation Committee uses non-GAAP financial measures to evaluate our performance under our incentive compensation plans. Typically, the Compensation Committee adjusts GAAP net income, or elements of net income, for non-core performance items so that participants are compensated for our core performance and not penalized or rewarded for non-core charges or unusual gains. Non-GAAP measures used in this proxy statement consist of the following: | • | | Core earnings. Core earnings and the related measures of core return on tangible common equity and core return on average assets reflect net income exclusive of merger, acquisition and disposal expense, amortization of intangible assets, contingent payment expense, gain on disposal of assets and investment securities losses, on a net of tax basis. |
| • | | Non-GAAP efficiency ratio. The efficiency ratio is non-interest expense as a percentage of net interest income plus non-interest income. The non-GAAP efficiency ratio adjusts non-interest expense to exclude amortization of intangible assets, contingent payment expense, and merger, acquisition and disposal expense, adjusts net interest income to include tax-equivalent income, and adjusts non-interest income to exclude gain on disposal of assets and investment securities losses. |
| • | | Adjusted EPS. Adjusted earnings and the related measure of adjusted earnings per share reflect net income exclusive of merger, acquisition and disposal expense, branch closing costs, contingent payment expense, loss on early redemption of FHLB borrowings, and merger-related provision for credit losses, on a net of tax basis. |
These non-GAAP financial measures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures with similar names that may be presented by other companies. The following tables present reconciliations of these non-GAAP measures to the board or such directorapplicable amounts measured in care of the Secretary at Bancorp's main office by mail, courier, or facsimile or by e-mail through Bancorp’s "contact us" feature of the investor relations area of its Web site at www.sandyspringbank.com. accordance with GAAP. CORE EARNINGS AND CORE ROTCE By order of the board of directors, | | | | | | | | | | | Ronald E. Kuykendall | | General Counsel & Secretary(In thousands) | | 2022 | | | | | | | | Net income (a) | | | $166,299 | | | | | | Plus/(less) non-GAAP adjustments (net of tax1): | | | | | | | | | Merger, acquisition and disposal expense | | | 796 | | | | | | Amortization of intangible assets | | | 4,333 | | | | | | Contingent payment expense | | | 929 | | | | | | Gain on disposal of assets | | | (12,309) | | | | | | Investment securities losses | | | 257 | | | | | | | | | | | | | | Core earnings (b) | | | $160,305 | | | | | | | | | | | | | | Average total stockholders’ equity | | | $1,480,198 | | | | | | Average goodwill | | | 366,244 | | | | | | Average other intangible assets, net | | | 23,009 | | | | | | | | | | | | | | Average tangible common equity (c) | | | $1,090,945 | | | | | | | | | | | | | | Return on average tangible common equity (GAAP) (a ÷ c) | | | 15.24% | | | | | | | | | Core return on average tangible common equity (non-GAAP) (b ÷ c) | | | 14.69% | | | | | |
| (1) | Net of combined federal and state marginal tax rate. |
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| | | Notice and Proxy Statement | 2023 | | A-1 |
Olney, Maryland
March 29, 2010
 
| ANNEX A: NON-GAAP FINANCIAL MEASURES |
NON-GAAP EFFICIENCY RATIO | | | | | | | | | | | | (Dollars in thousands) | | 2022 | | | | | | | | Non-interest expense (a) | | | $257,293 | | | | | | Less non-GAAP adjustments: | | | | | | | | | Amortization of intangible assets | | | 5,814 | | | | | | Contingent payment expense | | | 1,247 | | | | | | Merger, acquisition and disposal expense | | | 1,068 | | | | | | | | | | | | | | Non-interest expense – as adjusted (b) | | | $249,164 | | | | | | | | | | | | | | Net interest income plus non-interest income (c) | | | $514,023 | | | | | | Plus non-GAAP adjustment: | | | | | | | | | Tax-equivalent income | | | 3,841 | | | | | | Investment securities losses | | | 345 | | | | | | Less non-GAAP adjustment: | | | | | | | | | Gain on disposal of assets | | | 16,516 | | | | | | | | | | | | | | Net interest income plus non-interest income – as adjusted (d) | | | $501,693 | | | | | | | | | | | | | | Efficiency ratio (GAAP) (a ÷ c) | | | 50.05% | | | | | | | | | Efficiency ratio (non-GAAP) (b ÷ d) | | | 49.66% | | | | | |
3-YEAR ADJUSTED CUMULATIVE EPS | | | | | | | | | | | | | | | | | | (In thousands, except per share data) | | 2022 | | | 2021 | | | 2020 | | | | | | Net income | | | $166,298 | | | | $235,107 | | | | $96,953 | | Plus non-GAAP adjustments (net of tax): | | | | | | | | | | | | | Merger, acquisition and disposal expense | | | 796 | | | | 34 | | | | 19,614 | | Branch closing costs | | | | | | | 1,944 | | | | 712 | | Contingent payment expense
| | | 929 | | | | — | | | | — | | Loss on FHLB redemption | | | — | | | | 6,779 | | | | 4,619 | | Gain on sale of assets | | | (12,309 | ) | | | — | | | | — | | Merger-related provision for credit losses | | | — | | | | — | | | | 13,636 | | | | | | | | | | | | | | | | | | | Net income – as adjusted | | | $155,714 | | | | $243,864 | | | | $135,534 | | | | | | | | | | | | | | | | | | | Diluted weighted average common shares
| | | 45,039 | | | | 46,899 | | | | 44,132 | | | | | | Diluted net income per common share (GAAP)
| | | $3.68 | | | | $4.98 | | | | $2.19 | | | | | | Diluted net income per common share – as adjusted (non-GAAP) | | | $3.46 | | | | $5.20 | | | | $3.05 | |
| | | | | | | | | A-2 | |
| | | | Notice and Proxy Statement | 2023 | | | |
| ANNEX A: NON-GAAP FINANCIAL MEASURES |
CORE ROAA | | | | | | | | | | | | (Dollars in thousands) | | 2022 | | | | | | | | Net income (a) | | | $166,299 | | | | | | Plus/(less) non-GAAP adjustments (net of tax1): | | | | | | | | | Merger, acquisition and disposal expense | | | 844 | | | | | | Amortization of intangible assets | | | 4,593 | | | | | | Contingent payment expense | | | 985 | | | | | | Gain on disposal of assets | | | (13,048) | | | | | | Investment securities gains | | | 273 | | | | | | | | | | | | | | Core income (non-GAAP) (b) | | | $159,946 | | | | | | | | | | | | | | Average assets (c) | | | $13,218,824 | | | | | | | | | Return on average assets (GAAP) (a ÷ c) | | | 1.26% | | | | | | | | | Core return on average assets (non-GAAP) (b ÷ c) | | | 1.21% | | | | | |
| (1) | Net of federal tax only for comparability to peer group. |
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| | | Notice and Proxy Statement | 2023 | | A-3 |
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