Revenue Code (“Code”), including by allocating a portion of any payments, benefits or distributions in the nature of compensation (within the meaning of Section 280G(b)(2)) of the Code to the fair value of the non-competition and non-solicitation restrictions under the Agreement.
Mr. Donnelly is eligible to participate in the employee benefits generally applicable to employees of the Bank, including: group hospitalization, disability, health, dental, sick leave, life insurance, travel and/or accident insurance, retirement, pension, and/or other present or future tax-qualified and non-tax-qualified plans sponsored by the Bank.
Cash Bonus. For calendar year 2022, the Bank will pay Mr. Donnelly a pro rata cash bonus under the Annual Incentive Plan calculated at not less than the target performance level of 36%. This bonus will be paid in early 2023.
Restricted Stock Awards. The Company’s 2014 Equity Incentive Plan provides for restricted stock awards based upon Company and individual performance metrics. For the award anticipated to be granted in December 2022, the Company will calculate such award with a value of 30% of the annual base salary. For 2023, the award will be performance based.
The foregoing summary is qualified in its entirety by reference to the Agreement which is filed as herewith as Exhibit 10.1 to this Report, and incorporated herein by reference.
Stock Award Agreement. On May 10, 2022, Mr. Donnelly received a one-time award of 3,000 shares of Company common stock (“Sign-on Equity Award”) pursuant to a Stock Award Agreement. Such Sign-on Equity Award provides for vesting of such award at the rate of 70% as of the one year anniversary of the employment date, and 10% annually thereafter for three additional years during such period of continuous employment with the Company. The foregoing summary is qualified in its entirety by reference to the Stock Award Agreement which is filed as herewith as Exhibit 10.2 to this Report, and incorporated herein by reference.
Salary Continuation Agreement. Effective May 10, 2022, the Bank entered into a Salary Continuation Agreement with Mr. Donnelly. The Salary Continuation Agreement is intended to provide benefits to Mr. Donnelly upon retirement, death, or disability, or in the event of a Change in Control (as defined in the Salary Continuation Agreement). Upon a separation of service from the Bank at the Normal Retirement Age (as defined in the Salary Continuation Agreement) of 65, the Bank will be obligated to pay to Mr. Donnelly the Normal Retirement Benefit (as defined in the Salary Continuation Agreement) of $125,000, as specified in the Salary Continuation Agreement, in monthly installments for a period of fifteen (15) years (the “Age 65 Benefit”). An Executive who continues working past the Normal Retirement Age will earn an increased benefit for each month worked up to age 67. If an Executive has a separation from service (other than in connection with a Change in Control or a termination for cause) or becomes disabled prior to reaching Normal Retirement Age, he will be eligible for a reduced annual benefit equal to the annual retirement benefit accrued through the date of separation or disability payable in monthly installments for a period of fifteen (15) years beginning at Normal Retirement Age or the month after disability, as the case may be.
In the event of a Change in Control occurring prior to a separation from service, disability or Normal Retirement Age, Mr. Donnelly will be entitled to receive an annual benefit equal to the Normal Retirement Benefit in equal monthly installments for 15 years commencing the month following Normal Retirement Age in lieu of any other benefit under the Salary Continuation Agreement. In the event of a Change in Control occurring after Normal Retirement Age, but prior to a separation from service or disability, the Bank will pay Mr. Donnelly an annual benefit equal to the annual retirement benefit accrued through the date of the Change in Control for 15 years commencing the month following the Change in Control.
