Compensation Recovery Policy
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Exhibit 97.1
Table of Contents
Introduction/Overview ............................................................................................................. 2
Administration ......................................................................................................................... 2
Covered Executives; Incentive-Based Compensation ............................................................. 4
Required Recoupment of Erroneously Awarded Compensation in the Event of an
Accounting Restatement ................................................................................................................. 4
Erroneously Awarded Compensation: Amount Subject to Recovery ..................................... 4
No Additional Payments .......................................................................................................... 6
No Indemnification or Reimbursement of Covered Executives .............................................. 6
Administrator Indemnification ............................................................................................. 6
Effective Date; Retroactive Application .............................................................................. 6
Amendment; Termination .................................................................................................... 7
Other Recoupment Rights; Company Claims ...................................................................... 7
Successors ............................................................................................................................ 7
Version Control .................................................................................................................... 7
Compensation Recovery Policy
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1.
Introduction/Overview
The Board of Directors (the “
Board
” and collectively, the “Boards”) of each of U.S. Century Bank
(the “
Bank
”) and USCB Financial Holdings, Inc. (the “
Company
” and collectively with the Bank,
the “
Companies
”) believe that it is in the best interests of the Companies and the Company’s
shareholders to adopt this Compensation Recovery Policy (the “
Policy
”), which provides for the
recovery of certain incentive compensation in the event of an Accounting Restatement (as defined
below). This Policy is designed to comply with, and shall be interpreted to be consistent with,
Section 10D of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), Rule
10D-1 promulgated under the Exchange Act (“
Rule 10D-1
”) and Nasdaq Listing Rule 5608 (the
“
Listing Standards
”).
2.
Administration
Except as specifically set forth herein, this Policy shall be administered by the Company’s
Compensation Committee (the “
Administrator
”). The Administrator is authorized to interpret and
construe this Policy and to make all determinations necessary, appropriate or advisable for the
administration of this Policy. Any determinations made by the Administrator shall be final and
binding on all affected individuals and need not be uniform with respect to each individual covered
by the Policy. In the administration of this Policy, the Administrator is authorized and directed to
consult with the (i) full Boards or such other committees of the Boards, such as the Company’s
Audit Committee, as may be necessary or appropriate as to matters within the scope of such other
committees’ responsibility and authority or (ii) the Companies’ counsel.
Subject to any limitation of applicable law, the Administrator may authorize and empower any
officer or employee of the Companies to take any and all actions necessary or appropriate to carry
out the purpose and intent of this Policy (other than with respect to any recovery under this Policy
involving such officer or employee).
3.
Definitions
As used in this Policy, the following definitions shall apply:
“Accounting Restatement”
statements due to the Company’s material noncompliance with any financial reporting requirement
under U.S. securities laws, including any required accounting restatement to correct an error in
previously issued financial statements that is material to the previously issued financial statements
(commonly referred to as “Big R” restatements), or that would result in a material misstatement if
the error were corrected in the current period or left uncorrected in the current period (commonly
referred to as “little r” restatements).
“Administrator”
“Applicable Period”
earlier
of (i) the date the Board, Audit Committee of the Board, or the officer or officers of the
Company authorized to take such action if Board action is not required, concludes (or reasonably
should have concluded) that an Accounting Restatement is required or (ii) the date a regulator,
court or other legally authorized entity directs the Company to undertake an Accounting
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Restatement. The “Applicable Period” also includes any transition period (that results from a
change in the Company’s fiscal year) within or immediately following the three completed fiscal
years identified in the preceding sentence;
except that a transition period that comprises a period
of at least nine months shall count as a completed fiscal year
.
“Covered Executives”
determined by the Administrator in accordance with the definition of “executive officer” set forth
in Rule 10D-1 and the Listing Standards and such other officers as may be determined in the
discretion of the Administrator.
“Erroneously Awarded Compensation”
Policy.
“Financial Reporting Measure”
accordance with the accounting principles used in preparing the Company’s financial statements,
and any measure that is derived wholly or in part from such measure and includes “non-GAAP”
measures for purposes of Regulation G promulgated under the Exchange Act. Financial Reporting
Measures include but are not limited to the following (and any measures derived from the
following): Company stock price; total shareholder return (“TSR”); revenues; net income; pre-tax
pre-provision (“PTPP”) income; operating income; operating net income; operating PTPP income;
operating revenues; tangible book value; tangible book value per share; operating diluted net
income per share; profitability or growth of one or more reportable segments; financial ratios (e.g.,
yield on loans, rates on deposits, efficiency ratio, operating efficiency ratio, nonperforming loans
to total loans, nonperforming assets to total assets, loans to assets ratio, loans to deposits ratio);
liquidity measures (e.g., capital, operating cash flow); return measures (e.g., net interest margin,
return on assets, return on equity, operating return on assets, PTPP return on assets, operating
PTPP return on assets, operating return on assets, operating return on equity); earnings measures
(e.g., earnings per share); any of such financial reporting measures relative to a peer group, where
the Company’s financial reporting measure is subject to an Accounting Restatement; and tax basis
income. A Financial Reporting Measure need not be presented within the Company’s financial
statements or included in a filing with the Securities and Exchange Commission.
“Incentive-Based Compensation”
vested based wholly or in part upon the attainment of a Financial Reporting Measure. Incentive-
Based Compensation is “received” for purposes of this Policy in the Company’s fiscal period
during which the Financial Reporting Measure specified in the Incentive-Based Compensation
award is attained, even if the payment or grant of such Incentive-Based Compensation occurs after
the end of that period. Examples of “Incentive-Based Compensation” include, but are not limited
to: non-equity incentive plan awards that are earned based wholly or in part on satisfying a
Financial Reporting Measure performance goal; bonuses paid from a “bonus pool,” the size of
which is determined based wholly or in part on satisfying a Financial Reporting Measure
performance goal; other cash awards based on satisfaction of a Financial Reporting Measure
performance goal; restricted stock awards, restricted stock units, performance share awards or
units, stock options and stock appreciation rights that are granted or become vested based wholly
or in part on satisfying a Financial Reporting Measure performance goal; and proceeds received
upon the sale of shares acquired through an incentive plan that were granted or vested based wholly
or in part on satisfying a Financial Reporting Measure performance goal. Examples of
compensation that is not “incentive-based compensation” include, but are not limited to: salaries
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(except to the extent a salary increase is earned wholly or in part based on the attainment of a
Financial Reporting Measure performance goal); bonuses paid solely at the discretion of the
Compensation Committee or Board that are not paid from a “bonus pool” that is determined by
satisfying a Financial Reporting Measure performance goal; bonuses paid solely upon satisfying
one or more subjective standards (e.g., demonstrated leadership) and/or completion of a specified
employment period; non-equity incentive plan awards earned solely upon satisfying one or more
strategic measures (e.g., consummating a merger or branch acquisition or divestiture), or
operational measures (e.g., opening a specified number of branches, completion of a project,
increase in market share); and equity awards for which the grant is not contingent upon achieving
any Financial Reporting Measure performance goal and vesting is contingent solely upon
completion of a specified employment period and/or attaining one or more nonfinancial reporting
measures.
4.
Covered Executives; Incentive-Based Compensation
This Policy applies to Incentive-Based Compensation received by a Covered Executive (a) after
beginning service as a Covered Executive; (b) if that person served as a Covered Executive at any
time during the performance period for such Incentive-Based Compensation; and (c) while the
Company had a listed class of securities on a national securities exchange. This Policy does not
apply to Incentive-Based Compensation received by a Covered Executive: (1) while that person
was serving in a non-executive capacity prior to becoming a Covered Executive or (2) who is a
Covered Executive on the date on which the Company is required to prepare an Accounting
Restatement but who was not a Covered Executive at any time during the performance period for
which the Incentive-Based Compensation is received.
5.
Required Recoupment of Erroneously Awarded Compensation in the Event of an
Accounting Restatement
In the event the Company is required to prepare an Accounting Restatement, the Company shall
reasonably promptly recoup the amount of any Erroneously Awarded Compensation received by
any Covered Executive, as calculated pursuant to Section 5 hereof, relating to the Applicable
Period.
6.
Erroneously Awarded Compensation: Amount Subject to Recovery
The amount of “Erroneously Awarded Compensation” subject to recovery under the Policy, as
determined by the Administrator, is the amount of Incentive-Based Compensation received by the
Covered Executive that exceeds the amount of Incentive-Based Compensation that would have
been received by the Covered Executive had such compensation been determined based on the
restated amounts.
Erroneously Awarded Compensation shall be computed by the Administrator without regard to
any taxes paid by the Covered Executive in respect of the Erroneously Awarded Compensation.
By way of example, with respect to any compensation plans or programs that take into account
Incentive-Based Compensation, the amount of Erroneously Awarded Compensation subject to
recovery hereunder includes, but is not limited to, the amount contributed to any notional account
based on Erroneously Awarded Compensation and any earnings accrued to date on that notional
amount.
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For Incentive-Based Compensation based on stock price or TSR: (a) the Administrator shall
determine the amount of Erroneously Awarded Compensation based on a reasonable estimate of
the effect of the Accounting Restatement on the stock price or TSR upon which the Incentive-
Based Compensation was received; and (b) the Company shall maintain documentation of the
determination of that reasonable estimate and provide such documentation to The Nasdaq Stock
Market (“Nasdaq”) and the Covered Executive(s).
7.
Method of Recoupment
The Administrator shall determine, in its sole discretion, the timing and method for reasonably
promptly recouping Erroneously Awarded Compensation hereunder, which may include without
limitation (a) seeking reimbursement of all or part of any cash or equity-based award, (b)
cancelling prior cash or equity-based awards, whether vested or unvested or paid or unpaid, (c)
cancelling or offsetting against any planned future cash or equity-based awards, (d) forfeiture of
deferred compensation, subject to compliance with Section 409A of the Internal Revenue Code of
1986, as amended (“IRC”) and the regulations promulgated thereunder, and (e) any other method
authorized by applicable law or contract. Subject to compliance with any applicable law, the
Administrator may affect recovery under this Policy from any amount otherwise payable to the
Covered Executive, including amounts payable to such individual under any otherwise applicable
Company plan, program or contract, including base salary, bonuses or commissions and
compensation previously deferred by the Covered Executive.
The Company is authorized and directed pursuant to this Policy to recoup Erroneously Awarded
Compensation in compliance with this Policy unless the Compensation Committee of the Board
has determined that recovery would be impracticable solely for the following limited reasons, and
subject to the following procedural and disclosure requirements:
●
The direct expense paid to a third party to assist in enforcing the Policy would exceed
the amount to be recovered. Before concluding that it would be impracticable to recover
any amount of Erroneously Awarded Compensation based on expense of enforcement,
the Administrator must make a reasonable attempt to recover such Erroneously
Awarded Compensation, document such reasonable attempt(s) to recover and provide
that documentation to Nasdaq;
●
Recovery would violate any law of the United States that was adopted prior to
November 28, 2022. Before concluding that it would be impracticable to recover any
amount of Erroneously Awarded Compensation based on a violation of law, the
Administrator must satisfy the applicable opinion and disclosure requirements of Rule
10D-1 and the Listing Standards; or
●
Recovery would likely cause an otherwise tax-qualified retirement plan, under which
benefits are broadly available to employees of the Company, to fail to meet the
requirements of Sections 401(a)(13) or 411(a) of the IRC and the regulations
thereunder.
If litigation becomes necessary to collect any Erroneously Awarded Compensation recoverable
under this Policy, the Company shall be entitled to recover from the Covered Executive(s) all of
its reasonable attorneys’ fees and costs of enforcement or collection.
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8.
No Additional Payments
In no event shall the Company be required to award Covered Executives an additional payment if
the Accounting Restatement results in a higher Incentive-Based Compensation payment.
9.
No Indemnification or Reimbursement of Covered Executives
Notwithstanding the terms of any other policy, program, agreement or arrangement, in no event
will the Company or any of its affiliates indemnify or reimburse a Covered Executive for any loss
under this Policy and in no event will the Company or any of its affiliates pay premiums or
reimburse the Covered Executive for premiums he or she paid on any insurance policy that would
cover a Covered Executive’s potential obligations with respect to Erroneously Awarded
Compensation under this Policy.
10.
Administrator Indemnification
Any members of the Administrator, and any other members of the Board or officers of the
Company who assist in the administration of this Policy, shall not be personally liable for any
action, determination or interpretation made with respect to this Policy and shall be fully
indemnified by the Company to the fullest extent under applicable law and Company policy with
respect to any such action, determination or interpretation. The foregoing sentence shall not limit
any other rights to indemnification of the members of the Board under applicable law or Company
policy.
11.
Effective Date; Retroactive Application
This Policy shall be effective as of December 1, 2023 (the “
Effective Date
”). The terms of this
Policy shall apply to any Incentive-Based Compensation that is received by Covered Executives
on or after October 2, 2023 , even if such Incentive-Based Compensation was approved, awarded
or granted to Covered Executives prior to the such date . Without limiting the generality of Section
7 hereof, and subject to applicable law, the Administrator may affect recovery under this Policy
from any amount of compensation approved, awarded, granted, payable or paid to the Covered
Executive prior to, on or after the Effective Date. This Policy shall supersede and replace any
existing policy regarding the recovery of Erroneously Awarded Compensation previously
approved by the Board.
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12.
Acknowledgement by Covered Executives; Condition to Eligibility for Incentive-
Based Compensation.
The Company will provide notice and seek acknowledgement of this Policy from each Covered
Executive in the form attached hereto as Exhibit A, provided that the failure to provide such notice
or obtain such acknowledgement will have no impact on the applicability or enforceability of this
Policy. After the Effective Date, the Company must be in receipt of a Covered Executive’s
acknowledgement as a condition to such Covered Executive’s eligibility to receive Incentive-
Based Compensation awarded or received after such date. All Incentive-Based Compensation
subject to this Policy will not be earned (other than for income tax purposes), even if already paid,
until the Policy ceases to apply to such Incentive-Based Compensation and any other vesting
conditions applicable to such Incentive-Based Compensation are satisfied.
13.
Amendment; Termination
The Board may amend, modify, supplement, rescind or replace all or any portion of this Policy at
any time and from time to time in its discretion, and shall amend this Policy as it deems necessary
to comply with applicable law or any rules or standards adopted by a national securities exchange
on which the Company’s securities are listed.
14.
Other Recoupment Rights; Company Claims
The Board intends that this Policy shall be applied to the fullest extent of the law. Any right of
recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of
recoupment that may be available to the Company under applicable law or pursuant to the terms
of any similar policy in any employment agreement, equity award agreement, or similar agreement
and any other legal remedies available to the Company.
Nothing contained in this Policy, and no recoupment or recovery as contemplated by this Policy,
shall limit any claims, damages or other legal remedies the Company, the Bank or any of their
respective affiliates may have against a Covered Executive arising out of or resulting from any
actions or omissions by the Covered Executive.
15.
Successors
This Policy shall be binding and enforceable against all Covered Executives and their
beneficiaries, heirs, executors, administrators or other legal representatives.
16.
Exhibit Filing Requirement
A copy of this Policy and any amendments thereto shall be posted on the Company’s website and
filed as an exhibit to the Company’s Annual Report on Form 10-K.
17.
Version Control
Compensation Recovery Policy
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Version
Approval Date
Effective Date
Document Name
Document
Issued
11/27/2023
12/01/2023
Compensation Recovery Policy
Compensation Recovery Policy
Effective as of: 12/01/2023
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EXHIBIT A
TO BE SIGNED BY THE COMPANY’S EXECUTIVE OFFICERS
:
Compensation Recovery Policy Acknowledgment
The undersigned agrees and acknowledges that I am fully bound by, and subject to, all of
the terms and conditions of USCB Financial Holdings, Inc. (the “Company”) Compensation
Recovery Policy (as may be amended, restated, supplemented or otherwise modified from time to
time, the “Policy”). Further, the undersigned agrees and acknowledges that the Policy supersedes
the provisions regarding Erroneously Awarded Compensation set forth in that certain
Compensation Policy of the Bank effective as of September 26, 2022. In the event of any
inconsistency between the Policy and the terms of any employment agreement to which I am a
party, or the terms of any compensation plan, program or agreement under which any
compensation has been granted, awarded, earned or paid, including but not limited to the 2015
Amended and Restated Equity Incentive Plan and the Companies’ defined annual cash incentive
plan, the terms of the Policy shall govern. In the event it is determined by the Administrator that
any amounts granted, awarded, earned or paid to me must be forfeited or reimbursed to the
Company, I will promptly take any action necessary to effectuate such forfeiture and/or
reimbursement. Any capitalized terms used in this Acknowledgment without definition shall have
the meaning set forth in the Policy.
By: ______________________________________
____________________________
[Name] Date
[Title]