SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934 (Amendment No. )
99 Park Avenue, 12th Floor
New York, New York 10016
(212) 659-0600
President and Chief Executive Officer
99 Park Avenue, 12th Floor
New York, New York 10016
(212) 659-0600
ANNUAL MEETING OF STOCKHOLDERS
Corporate Secretary
April 22, 2024
99 Park Avenue, 12th Floor
New York, New York 10016
(212) 659-0600
May 29, 2024
Metropolitan Bank Holding Corp. Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Name and Address of Beneficial Owners
|
| |
Amount of Shares
Owned and Nature of Beneficial Ownership(1) |
| |
Percent of Shares
of Common Stock Outstanding |
| ||||||
Five Percent Stockholders | | | | | | | | | | | | | |
T. Rowe Price Investment Management, Inc.
101 E. Pratt Street Baltimore, MD 21201 |
| | | | 998,668(2) | | | | | | 8.9% | | |
FMR LLC
245 Summer Street Boston, Massachusetts 02210 |
| | | | 994,466(3) | | | | | | 8.8% | | |
BlackRock, Inc.
55 East 52nd Street New York, New York 10055 |
| | | | 873,464(4) | | | | | | 7.8% | | |
Patriot Financial Partners III, L.P.
100 Matsonford Road, Suite 210 Randor, Pennsylvania 19087 |
| | | | 668,684(5) | | | | | | 5.9% | | |
The Vanguard Group
100 Vanguard Blvd. Malvern, Pennsylvania 19355 |
| | | | 601,497(6) | | | | | | 5.3% | | |
Directors and Nominees | | | | | | | | | | | | | |
Mark R. DeFazio
|
| | | | 240,040 | | | | | | 2.1% | | |
Anthony J. Fabiano
|
| | | | 10,033 | | | | | | * | | |
Dale C. Fredston
|
| | | | 16,168 | | | | | | * | | |
David J. Gold
|
| | | | 24,731 | | | | | | * | | |
Harvey M. Gutman
|
| | | | 17,643 | | | | | | * | | |
Terence J. Mitchell
|
| | | | 15,526 | | | | | | * | | |
Chaya Pamula
|
| | | | 6,063 | | | | | | * | | |
Robert C. Patent
|
| | | | 163,582(7) | | | | | | 1.4% | | |
Maria F. Ramirez
|
| | | | 30,557(8) | | | | | | * | | |
William Reinhardt
|
| | | | 18,780 | | | | | | * | | |
Katrina Robinson
|
| | | | 6,063 | | | | | | * | | |
George J. Wolf, Jr.
|
| | | | 26,715 | | | | | | * | | |
Named Executive Officers | | | | | | | | | | | | | |
Laura Capra
|
| | | | 34,801 | | | | | | * | | |
Scott Lublin
|
| | | | 58,082 | | | | | | * | | |
Nick Rosenberg
|
| | | | 33,213(9) | | | | | | * | | |
Gregory Sigrist(10)
|
| | | | 5,166 | | | | | | * | | |
Daniel F. Dougherty(11)
|
| | | | 20,405 | | | | | | * | | |
All directors and named officers as a group (17 persons)
|
| | | | 727,568 | | | | | | 6.5% | | |
Director Since: 1999
Age: 60
Director Since: 2008
Age: 77
Director Since: 2021
Age: 41
Director Since: 2001
Age: 71
Age: 71
Director Since: 2016
Age: 49
Director Since: 2017
Age: 71
Director Since: 2021
Age: 58
Director Since: 2020
Age: 63
Director Since: 1999
Age: 73
Director Since: 2014
Age: 75
Director Since: 2013
Age: 77
|
|
| |
|
|
Director
|
| |
Audit
Committee |
| |
Compensation
Committee |
| |
Corporate
Governance and Nominating Committee |
| |||||||||
Mark J. DeFazio
|
| | | | | | | | | | | | | | | | | | |
Anthony J. Fabiano
|
| | | | | | | | | | | | | | | | | | |
Dale C. Fredston
|
| | | | | | | | | | | | | | | | X* | | |
David J. Gold
|
| | | | X | | | | | | X | | | | | | X | | |
Harvey M. Gutman
|
| | | | | | | | | | | | | | | | X | | |
Terence J. Mitchell
|
| | | | | | | | | | X | | | | | | X | | |
Chaya Pamula
|
| | | | X | | | | | | | | | | | | | | |
Robert C. Patent
|
| | | | | | | | | | X | | | | | | X | | |
Maria F. Ramirez
|
| | | | X | | | | | | | | | | | | | | |
William Reinhardt
|
| | | | X* | | | | | | X | | | | | | X | | |
Katrina Robinson
|
| | | | | | | | | | | | | | | | X | | |
George J. Wolf, Jr.
|
| | | | X | | | | | | X* | | | | | | | | |
Number of meetings in 2023
|
| | | | 12 | | | | | | 5 | | | | | | 5 | | |
Director
|
| |
ORM
Committee |
| |
ALCO
|
| |
ARG
Committee |
| |
Credit
Committee** |
| |
COC
|
| |
Technology
Committee |
| ||||||||||||||||||
Mark R. DeFazio**
|
| | | | X | | | | | | X | | | | | | X | | | | | | X | | | | | | | | | | | | X | | |
Anthony J. Fabiano
|
| | | | X | | | | | | | | | | | | | | | | | | | | | | | | X | | | | | | X | | |
Dale C. Fredston
|
| | | | X | | | | | | | | | | | | | | | | | | | | | | | | X | | | | | | | | |
David J. Gold**
|
| | | | | | | | | | | | | | | | X | | | | | | X | | | | | | | | | | | | | | |
Harvey M. Gutman**
|
| | | | | | | | | | X | | | | | | X | | | | | | X | | | | | | | | | | | | | | |
Terence J. Mitchell
|
| | | | X* | | | | | | | | | | | | | | | | | | | | | | | | X* | | | | | | X | | |
Chaya Pamula
|
| | | | X | | | | | | X | | | | | | | | | | | | | | | | | | | | | | | | X* | | |
Robert C. Patent**
|
| | | | | | | | | | X | | | | | | X* | | | | | | X* | | | | | | | | | | | | | | |
Maria F. Ramirez
|
| | | | X | | | | | | X* | | | | | | | | | | | | | | | | | | | | | | | | | | |
William Reinhardt**
|
| | | | X | | | | | | X | | | | | | X | | | | | | X | | | | | | X | | | | | | | | |
Katrina Robinson
|
| | | | X | | | | | | X | | | | | | | | | | | | | | | | | | | | | | | | | | |
George J. Wolf, Jr.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Number of meetings in 2023
|
| | | | 4 | | | | | | 4 | | | | | | 4 | | | | | | 31 | | | | | | 17 | | | | | | 4 | | |
Dale C. Fredston
David J. Gold
Terence J. Mitchell
Chaya Pamula
Element
|
| |
Type
|
| |
2023 Highlights
|
|
Base Salary | | | Fixed | | |
When setting base salaries, the Compensation Committee considers factors such as experience, responsibilities, job performance, and market compensation information.
In 2023, the Compensation Committee approved base salary increases for all NEOs other than Mr. DeFazio.
|
|
Short-Term
Cash Incentive Compensation (Annual Incentive Plan) |
| | Variable | | |
The Company maintains a performance-based annual cash incentive plan for the NEOs, which is contingent on the achievement of pre-established financial results for the Company and individual performance objectives tied to each NEO’s specific role and responsibilities. The financial performance metrics generally have threshold, target and maximum goals to further align pay with performance.
|
|
Long-Term
Incentive Awards (Equity) |
| | Variable | | |
The Compensation Committee, in its discretion, determines equity grants for the NEOs after considering each executive’s performance, previous grant history, comparison to our peer group, and retention needs.
|
|
|
WHAT WE DO
|
| |
WE DO NOT
|
| | ||
|
✓
Use an independent compensation consultant that is retained by and reports to the Compensation Committee
✓
Tie a significant portion of executive compensation to performance
✓
Conduct an annual risk assessment of our compensation programs
✓
Mitigate compensation risk by subjecting annual and long-term incentive plans to payment caps
✓
Maintain a compensation clawback policy
✓
Use stock ownership guidelines for executive officers
|
| |
Permit hedging of Company stock
|
| | ||
|
Encourage excessive risk-taking through our compensation programs
|
| | |||||
|
Provide supplemental executive retirement plans
|
| | |||||
|
Offer excessive executive perquisites
|
| | | |
| Amalgamated Financial Corp. (AMAL) | | | Hingham Institution for Savings (HIFS) | |
| Bank First Corporation (BFC) | | | Merchants Bancorp (MBIN) | |
| Byline Bancorp, Inc. (BY) | | |
National Bank Holdings Corporation (NBHC)
|
|
| Cantaloupe, Inc. (CTLP) | | | Pathward Financial, Inc. (CASH) | |
| Cass Information Systems, Inc. (CASS) | | | QCR Holdings, Inc. (QCRH) | |
| ConnectOne Bancorp, Inc. (CNOB) | | | The Bancorp, Inc. (TBBK) | |
| Enterprise Bancorp, Inc. (EBTC) | | | Univest Financial Corporation (UVSP) | |
| EVO Payments, Inc. (EVOP) | | | Veritex Holdings, Inc. (VBTX) | |
| First Foundation Inc. (FFWM) | | | Q2 Holdings, Inc. (QTWO) | |
Name
|
| |
Title
|
| |
2022
Base Salary |
| |
Increase Percentage
|
| |
2023
Base Salary |
| |||||||||
Mark R. DeFazio
|
| |
President & CEO
|
| | | $ | 980,000 | | | | | | 0.0% | | | | | $ | 980,000 | | |
Scott Lublin
|
| | EVP & CLO | | | | $ | 472,443 | | | | | | 4.0% | | | | | $ | 491,341 | | |
Greg Sigrist(1)
|
| | EVP & CFO | | | | $ | 374,920 | | | | | | 3.0% | | | | | $ | 386,168 | | |
Daniel Dougherty(2)
|
| | EVP & CFO | | | | $ | 290,000 | | | | | | 37.93% | | | | | $ | 400,000 | | |
Laura Capra
|
| | EVP & HRB | | | | $ | 373,161 | | | | | | 4.0% | | | | | $ | 388,088 | | |
Nick Rosenberg
|
| | EVP & HGPG | | | | $ | 404,771 | | | | | | 3.0% | | | | | $ | 416,915 | | |
| | |
Performance Goals
|
| | | | |
Incentive
Payout |
| ||||||||||||||||||
| | |
Threshold
|
| |
Target(1)
|
| |
Maximum
|
| |
Outcome
|
| |||||||||||||||
Annual Net Income Growth of between 8% and 12% Per Year
|
| | | | — | | | | | $ | 250,000 | | | | | | — | | | |
Target
|
| | | $ | 250,000(2) | | |
ROATCE (15.0% to 15.6% dependent on Net Income range)
|
| | | | — | | | | | $ | 450,000 | | | | | | — | | | |
Target
|
| | | $ | 450,000(3) | | |
Safety and Soundness(4)
|
| | | | — | | | | | $ | 300,000 | | | | | | — | | | |
Target
|
| | | $ | 300,000(5) | | |
Total
|
| | | | | | | | | | | | | | | | | | | | | | | | $ | 1,000,000 | | |
| | |
Performance Goals
|
| | | | | | | | | | |||||||||||||||
| | |
Threshold
(85%) |
| |
Target
(100%) |
| |
Maximum
(118%) |
| |
Outcome
|
| |
Incentive
Payout(1) |
| ||||||||||||
Annual Net Income Growth of between 8% and 12% Per Year
|
| | | $ | 61,418 | | | | | $ | 122,835 | | | | | $ | 184,253 | | | |
Target
|
| | | $ | 122,835 | | |
ROATCE (15.0% to 15.6% dependent on Net Income range)
|
| | | $ | 61,418 | | | | | $ | 122,835 | | | | | $ | 184,253 | | | |
Target
|
| | | $ | 122,835 | | |
Annual Net Loan Growth (12% year over year)
|
| | | $ | 30,709 | | | | | $ | 61,418 | | | | | $ | 92,126 | | | |
Maximum
|
| | | $ | 92,126 | | |
Net Increase of 60MM in Lending Deposit
|
| | | $ | 30,709 | | | | | $ | 61,418 | | | | | $ | 92,126 | | | |
Maximum
|
| | | $ | 92,126 | | |
Net Charge Offs not to exceed 50 basis points
|
| | | $ | 30,709 | | | | | $ | 61,418 | | | | | $ | 92,126 | | | |
Maximum
|
| | | $ | 92,126 | | |
No net increases in the number of material policy exceptions or in credit file required documentation
|
| | | $ | 30,709 | | | | | $ | 61,418 | | | | | $ | 92,126 | | | |
Maximum
|
| | | $ | 92,126 | | |
Total(2) | | | | $ | 245,670 | | | | | $ | 491,341 | | | | | $ | 737,011 | | | | | | | | $ | 614,176 | | |
| | |
Performance Goals
|
| | | | | | | | | | |||||||||||||||
| | |
Threshold
(85%) |
| |
Target
(100%)(2) |
| |
Maximum
(118%)(3) |
| |
Outcome
|
| |
Incentive
Payout |
| ||||||||||||
Annual Net Income Growth of between 8% and 12% Per Year
|
| | | $ | 30,000 | | | | | $ | 60,000 | | | | | $ | 90,000 | | | |
Target
|
| | | $ | 60,000 | | |
ROATCE (15.0% to 15.6% dependent on Net Income range )
|
| | | $ | 30,000 | | | | | $ | 60,000 | | | | | $ | 90,000 | | | |
Target
|
| | | $ | 60,000 | | |
Become established as a trusted partner with
executive owners on deposit sourcing and overall pricing |
| | | $ | 12,000 | | | | | $ | 24,000 | | | | | $ | 36,000 | | | |
Maximum
|
| | | $ | 36,000 | | |
Continue to enhance off-balance sheet funding sources and work across the Company teams to increase capacity, as appropriate
|
| | | $ | 12,000 | | | | | $ | 24,000 | | | | | $ | 36,000 | | | |
Maximum
|
| | | $ | 36,000 | | |
Enhance & automate liquidity pipeline reporting process (loans and deposit options) and lead conversation with executive owners, as appropriate
|
| | | $ | 12,000 | | | | | $ | 24,000 | | | | | $ | 36,000 | | | |
Maximum
|
| | | $ | 36,000 | | |
Continue to drive the weekly loan pricing/target process
|
| | | $ | 12,000 | | | | | $ | 24,000 | | | | | $ | 36,000 | | | |
Maximum
|
| | | $ | 36,000 | | |
Implement internal IRR/Liquidity Platform
|
| | | $ | 12,000 | | | | | $ | 24,000 | | | | | $ | 36,000 | | | |
Maximum
|
| | | $ | 36,000 | | |
Total(4) | | | | $ | 120,000 | | | | | $ | 240,000 | | | | | $ | 360,000 | | | | | | | | $ | 300,000 | | |
| | |
Performance Goals
|
| | | | | | | | | | |||||||||||||||
| | |
Threshold
(85%) |
| |
Target
(100%) |
| |
Maximum
(118%) |
| |
Outcome
|
| |
Incentive
Payout(1) |
| ||||||||||||
Annual Net Income Growth of between 8% and 12% Per Year
|
| | | $ | 46,645 | | | | | $ | 97,022 | | | | | $ | 145,533 | | | |
Target
|
| | | $ | 97,022 | | |
ROATCE (15.0% to 15.6% dependent on Net Income
range) |
| | | $ | 46,645 | | | | | $ | 97,022 | | | | | $ | 145,533 | | | |
Target
|
| | | $ | 97,022 | | |
Net Deposit Growth of $250 million ($50MM DDA/$200MM money market interest bearing)
|
| | | $ | 48,511 | | | | | $ | 97,022 | | | | | $ | 145,533 | | | |
Maximum
|
| | | $ | 145,533 | | |
Maintains high level of customer service
satisfaction |
| | | $ | 19,404 | | | | | $ | 38,809 | | | | | $ | 58,213 | | | |
Maximum
|
| | | $ | 58,213 | | |
Assist in increasing lending deposit relationships
|
| | | $ | 9,702 | | | | | $ | 19,404 | | | | | $ | 29,107 | | | |
Maximum
|
| | | $ | 29,107 | | |
Satisfactory retail audit reports
|
| | | | NA | | | | | $ | 19,404 | | | | | $ | 19,404 | | | |
Maximum
|
| | | $ | 19,404 | | |
Satisfactory retail regulatory reports
|
| | | | NA | | | | | $ | 19,404 | | | | | $ | 19,404 | | | |
Maximum
|
| | | $ | 19,404 | | |
Total(2) | | | | $ | 170,907 | | | | | $ | 388,088 | | | | | $ | 562,727 | | | | | | | | $ | 465,705 | | |
| | |
Performance Goals
|
| | | | | | | | | | |||||||||||||||
| | |
Threshold
(85%) |
| |
Target
(100%) |
| |
Maximum
(118%) |
| |
Outcome
|
| |
Incentive
Payout(1) |
| ||||||||||||
Annual Net Income Growth of between 8% and 12% Per Year
|
| | | $ | 52,114 | | | | | $ | 104,229 | | | | | $ | 156,343 | | | |
Target
|
| | | $ | 104,229 | | |
ROATCE (15.0% to 15.6% dependent on Net Income
range) |
| | | $ | 52,114 | | | | | $ | 104,229 | | | | | $ | 156,343 | | | |
Target
|
| | | $ | 104,229 | | |
GPG Pre-Tax Income of 4.895MM
|
| | | $ | 31,269 | | | | | $ | 62,537 | | | | | $ | 93,806 | | | |
Maximum
|
| | | $ | 93,806 | | |
Deposit Growth of 150MM with 10% DDA growth
|
| | | $ | 31,269 | | | | | $ | 62,537 | | | | | $ | 93,806 | | | |
Threshold
|
| | | $ | 31,269 | | |
Effectively manage the pipeline of new business through implementation
|
| | | $ | 10,423 | | | | | $ | 20,846 | | | | | $ | 31,269 | | | |
Maximum
|
| | | $ | 31,269 | | |
Net new relationships increase by 6 to 10 programs year-over-year
|
| | | $ | 20,846 | | | | | $ | 41,691 | | | | | $ | 62,537 | | | |
Target
|
| | | $ | 41,691 | | |
Assist in streamlining risk assessment of new clients and programs
|
| | | $ | 10,423 | | | | | $ | 20,846 | | | | | $ | 31,269 | | | |
Target
|
| | | $ | 20,846 | | |
Total(2) | | | | $ | 208,457 | | | | | $ | 416,915 | | | | | $ | 625,372 | | | | | | | | $ | 427,338 | | |
| | |
2023 Long-Term Incentive Target Awards
|
| |||||||||
Named Executive Officer
|
| |
Time-Based Restricted
Stock Units (#) |
| |
Performance-Based
Restricted Stock Units (#) |
| ||||||
Mark DeFazio
|
| | | | 26,794 | | | | | | — | | |
Scott Lublin
|
| | | | 9,494 | | | | | | — | | |
Greg Sigrist(1)
|
| | | | 6,278 | | | | | | — | | |
Daniel Dougherty(2)
|
| | | | 1,786 | | | | | | — | | |
Laura Capra
|
| | | | 6,624 | | | | | | — | | |
Nick Rosenberg
|
| | | | 7,321 | | | | | | — | | |
David J. Gold
Terence J. Mitchell
Robert C. Patent
William P. Reinhardt
Name and principal position
|
| |
Year
|
| |
Salary
($) |
| |
Stock
Awards ($)(1) |
| |
Non-Equity
Incentive Plan Compensation ($) |
| |
All Other
Compensation ($)(2) |
| |
Total
($) |
| ||||||||||||||||||
Mark R. DeFazio
President and CEO |
| | | | 2023 | | | | | | 980,000 | | | | | | 1,500,000 | | | | | | 500,000 | | | | | | 26,460 | | | | | | 3,006,460 | | |
| | | 2022 | | | | | | 980,000 | | | | | | 3,106,384 | | | | | | 500,000 | | | | | | 25,710 | | | | | | 4,612,094 | | | ||
| | | 2021 | | | | | | 800,000 | | | | | | 2,991,918 | | | | | | 500,000 | | | | | | 85,260 | | | | | | 4,377,178 | | | ||
Gregory Sigrist(3)
EVP and Chief Financial Officer |
| | | | 2023 | | | | | | 386,168 | | | | | | 351,488 | | | | | | — | | | | | | 11,200 | | | | | | 748,856 | | |
| | | 2022 | | | | | | 374,920 | | | | | | 389,340 | | | | | | 117,163 | | | | | | 10,710 | | | | | | 892,133 | | | ||
| | | 2021 | | | | | | 360,500 | | | | | | 220,500 | | | | | | 129,780 | | | | | | 9,480 | | | | | | 720,260 | | | ||
Daniel Dougherty(4)
EVP and Chief Financial Officer |
| | | | 2023 | | | | | | 400,000 | | | | | | 100,000 | | | | | | 75,000 | | | | | | 11,460 | | | | | | 586,460 | | |
| | | 2022 | | | | | | 290,000 | | | | | | — | | | | | | 100,000 | | | | | | 2,992 | | | | | | 392,992 | | | ||
| | | 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Laura Capra
EVP and Head of Retail Banking |
| | | | 2023 | | | | | | 388,088 | | | | | | 370,829 | | | | | | 116,426 | | | | | | 11,460 | | | | | | 886,803 | | |
| | | 2022 | | | | | | 373,161 | | | | | | 367,830 | | | | | | 123,610 | | | | | | 10,710 | | | | | | 875,311 | | | ||
| | | 2021 | | | | | | 355,391 | | | | | | 360,469 | | | | | | 122,610 | | | | | | 9,480 | | | | | | 847,950 | | | ||
Scott Lublin
EVP and Chief Lending Officer |
| | | | 2023 | | | | | | 491,341 | | | | | | 531,498 | | | | | | 153,544 | | | | | | 11,460 | | | | | | 1,187,843 | | |
| | | 2022 | | | | | | 472,443 | | | | | | 424,918 | | | | | | 177,166 | | | | | | 10,710 | | | | | | 1,085,237 | | | ||
| | | 2021 | | | | | | 449,946 | | | | | | 2,204,540 | | | | | | 250,000 | | | | | | 9,480 | | | | | | 2,913,966 | | | ||
Nick Rosenberg
EVP and Head of Global Payments |
| | | | 2023 | | | | | | 416,915 | | | | | | 409,831 | | | | | | 106,835 | | | | | | 11,460 | | | | | | 945,040 | | |
| | | 2022 | | | | | | 404,771 | | | | | | 437,853 | | | | | | 136,610 | | | | | | 10,710 | | | | | | 989,944 | | | ||
| | | 2021 | | | | | | 389,203 | | | | | | 398,816 | | | | | | 145,951 | | | | | | 9,480 | | | | | | 943,450 | | |
| | |
All Other Compensation
|
| |||||||||||||||||||||
Name
|
| |
Life
insurance premiums ($) |
| |
Transportation
($) |
| |
401(k)
Employer Contribution ($) |
| |
Total
($) |
| ||||||||||||
Mark R. DeFazio
|
| | | | 780 | | | | | | 15,780 | | | | | | 9,900 | | | | | | 26,460 | | |
Gregory Sigrist
|
| | | | 650 | | | | | | 650 | | | | | | 9,900 | | | | | | 11,200 | | |
Daniel Dougherty
|
| | | | 780 | | | | | | 780 | | | | | | 9,900 | | | | | | 11,460 | | |
Laura Capra
|
| | | | 780 | | | | | | 780 | | | | | | 9,900 | | | | | | 11,460 | | |
Scott Lublin
|
| | | | 780 | | | | | | 780 | | | | | | 9,900 | | | | | | 11,460 | | |
Nick Rosenberg
|
| | | | 780 | | | | | | 780 | | | | | | 9,900 | | | | | | 11,460 | | |
| | | | | | | | |
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1) |
| |
Estimated Future Payouts Under
Equity Incentive Plan Awards(2) |
| |
All
Other Stock Awards: Number of Shares of Stock or Units (#) |
| |
Grant Date
Fair Value of Stock and Option Awards(3) ($) |
| ||||||||||||||||||||||||||||||||||||
Name
|
| |
Grant Type
|
| |
Grant
Date |
| |
Threshold
($) |
| |
Target
($) |
| |
Maximum
($) |
| |
Threshold
($) |
| |
Target
(#) |
| |
Maximum
(#) |
| ||||||||||||||||||||||||||||||
Mark R. DeFazio
|
| |
RSU
|
| |
3/1/2023
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 26,794 | | | | | | 1,500,000 | | |
| AIP | | | | | | | | — | | | | | | 1,000,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Gregory Sigrist
|
| |
RSU
|
| |
3/1/2023
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,278 | | | | | | 351,488 | | |
| AIP | | | | | | | | 168,714 | | | | | | 386,168 | | | | | | 543,634 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Daniel Dougherty
|
| |
RSU
|
| |
3/1/2023
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,786 | | | | | | 100,000 | | |
| AIP | | | | | | | | 120,000 | | | | | | 240,000 | | | | | | 360,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Laura Capra
|
| |
RSU
|
| |
3/1/2023
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,624 | | | | | | 370,829 | | |
| AIP | | | | | | | | 170,907 | | | | | | 388,088 | | | | | | 562,727 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Scott Lublin
|
| |
RSU
|
| |
3/1/2023
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,494 | | | | | | 531,498 | | |
| AIP | | | | | | | | 245,670 | | | | | | 491,341 | | | | | | 737,001 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Nick Rosenberg
|
| |
RSU
|
| |
3/1/2023
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,321 | | | | | | 409,831 | | |
| AIP | | | | | | | | 208,457 | | | | | | 416,915 | | | | | | 625,372 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | |
Stock Awards
|
| |||||||||||||||||||||||||||
| | |
Stock Award
Grant Date |
| |
Number of
shares or units of stock that have not vested |
| |
Fair value
of shares or units of stock that have not vested(1)($) |
| |
Equity
Incentive Plan Awards: Number of unearned shares, units or other rights that have not vested |
| |
Equity
Incentive Plan Awards: Market or payout value of unearned shares, units or other rights that have not vested(1)($) |
| |||||||||||||||
Mark R. DeFazio
|
| | |
|
3/1/2023
|
| | | |
|
8,931(2)
|
| | | |
|
494,599
|
| | | |
|
—
|
| | | |
|
—
|
| |
| |
|
3/1/2023
|
| | | |
|
17,863(3)
|
| | | |
|
989,253
|
| | | |
|
—
|
| | | |
|
—
|
| | ||
| |
|
6/1/2022
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
20,800(4)
|
| | | |
|
1,151,904
|
| | ||
| |
|
2/23/2022
|
| | | |
|
3,278(5)
|
| | | |
|
181,536
|
| | | |
|
—
|
| | | |
|
—
|
| | ||
| |
|
2/23/2021
|
| | | |
|
3,280(6)
|
| | | |
|
181,646
|
| | | |
|
—
|
| | | |
|
—
|
| | ||
Daniel Dougherty
|
| | |
|
3/1/2023
|
| | | |
|
1,786(2)
|
| | | |
|
98,909
|
| | | |
|
—
|
| | | |
|
—
|
| |
Laura Capra
|
| | |
|
3/1/2023
|
| | | |
|
6,624(2)
|
| | | |
|
366,837
|
| | | |
|
—
|
| | | |
|
—
|
| |
| |
|
2/23/2022
|
| | | |
|
2,411(5)
|
| | | |
|
133,521
|
| | | |
|
—
|
| | | |
|
—
|
| | ||
| |
|
2/23/2021
|
| | | |
|
2,365(6)
|
| | | |
|
130,974
|
| | | |
|
—
|
| | | |
|
—
|
| | ||
Scott Lublin
|
| | |
|
3/1/2023
|
| | | |
|
9,494(2)
|
| | | |
|
525,778
|
| | | |
|
—
|
| | | |
|
—
|
| |
| |
|
2/23/2022
|
| | | |
|
2,786(5)
|
| | | |
|
154,289
|
| | | |
|
—
|
| | | |
|
—
|
| | ||
| |
|
5/3/2021
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
10,000(4)
|
| | | |
|
553,800
|
| | ||
| |
|
2/23/2021
|
| | | |
|
1,951(6)
|
| | | |
|
108,046
|
| | | |
|
—
|
| | | |
|
—
|
| | ||
Nick Rosenberg
|
| | |
|
3/1/2023
|
| | | |
|
7,321(2)
|
| | | |
|
405,437
|
| | | |
|
—
|
| | | |
|
—
|
| |
| |
|
2/23/2022
|
| | | |
|
2,870(5)
|
| | | |
|
158,941
|
| | | |
|
—
|
| | | |
|
—
|
| | ||
| |
|
2/23/2021
|
| | | |
|
2,617(6)
|
| | | |
|
144,929
|
| | | |
|
—
|
| | | |
|
—
|
| |
| | |
Options Exercises and Stock Vested
|
| |||||||||||||||||||||
| | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||
Name
|
| |
Number of Shares
Acquired on Exercise (#) |
| |
Value Realized on
Exercise ($) |
| |
Number of Shares
Acquired on Vesting(1) (#) |
| |
Value Realized on
Vesting(2) ($) |
| ||||||||||||
Mark R. DeFazio
|
| | | | 220,200 | | | | | | 4,630,806 | | | | | | 14,755 | | | | | | 825,837 | | |
Gregory Sigrist
|
| | | | — | | | | | | — | | | | | | 2,724 | | | | | | 152,299 | | |
Laura Capra
|
| | | | — | | | | | | — | | | | | | 3,571 | | | | | | 199,655 | | |
Scott Lublin
|
| | | | — | | | | | | — | | | | | | 3,345 | | | | | | 187,019 | | |
Daniel Dougherty
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Nick Rosenberg
|
| | | | — | | | | | | — | | | | | | 4,053 | | | | | | 226,603 | | |
Name
|
| |
Executive
Contributions in Last Fiscal Year ($) |
| |
Registrant
Contributions in Last Fiscal Year ($) |
| |
Aggregate
Earnings in Last Fiscal Year (#) |
| |
Aggregate
Withdrawals / Distributions ($) |
| |
Aggregate
Balance at Last Fiscal Year End ($)(1) |
| |||||||||||||||
Mark R. DeFazio
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,170,896(2) | | |
Gregory Sigrist
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Capra
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Scott Lublin
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,107,600(3) | | |
Nick Rosenberg
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Daniel Dougherty
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | |
Termination
for Cause ($)(1) |
| |
Termination
Without Cause or for Good Reason ($)(2) |
| |
Payments
Due Upon Change in Control ($)(3) |
| |
Disability
($)(4) |
| |
Death
($)(5) |
| |||||||||||||||
Cash severance
|
| | |
|
—
|
| | | | | 3,440,000 | | | | | | 3,440,000 | | | | | | 3,440,000 | | | | | | 3,440,000 | | |
Restricted stock vesting(6)
|
| | |
|
—
|
| | | | | 2,998,938 | | | | | | 2,998,938 | | | | | | 2,998938 | | | | | | 2,998,938 | | |
| | |
Termination
for Cause ($)(1) |
| |
Termination
Without Cause or for Good Reason ($)(2) |
| |
Payments
Due Upon Change in Control ($)(3) |
| |
Disability
($)(4) |
| |
Death
($)(5) |
| |||||||||||||||
Cash severance
|
| | |
|
—
|
| | | | | 982,681 | | | | | | 982,681 | | | | | | 491,341 | | | | | | 491,341 | | |
Restricted stock vesting(6)
|
| | |
|
—
|
| | | | | 1,421,633 | | | | | | 1,421,633 | | | | | | 1,421,633 | | | | | | 1,421,633 | | |
| | |
Termination
for Cause ($)(1) |
| |
Termination
Without Cause or for Good Reason ($)(7) |
| |
Payments
Due Upon Change in Control ($)(7) |
| |
Disability
($)(4) |
| |
Death
($)(5) |
| |||||||||||||||
Cash severance
|
| | |
|
—
|
| | | | | 400,000 | | | | | | 400,000 | | | | | | 400,000 | | | | | | 400,000 | | |
Restricted stock vesting(6)
|
| | |
|
—
|
| | | | | 104,785 | | | | | | 104,785 | | | | | | 104,785 | | | | | | 104,785 | | |
| | |
Termination
for Cause ($)(1) |
| |
Termination
Without Cause or for Good Reason ($)(7) |
| |
Payments
Due Upon Change in Control ($)(7) |
| |
Disability
($)(4) |
| |
Death
($)(5) |
| |||||||||||||||
Cash severance
|
| | |
|
—
|
| | | | | 400,000 | | | | | | 400,000 | | | | | | 400,000 | | | | | | 400,000 | | |
Restricted stock vesting(6)
|
| | |
|
—
|
| | | | | 668,838 | | | | | | 668,838 | | | | | | 668,838 | | | | | | 668,838 | | |
| | |
Termination
for Cause ($)(1) |
| |
Termination
Without Cause or for Good Reason ($)(7) |
| |
Payments
Due Upon Change in Control ($)(7) |
| |
Disability
($)(4) |
| |
Death
($)(5) |
| |||||||||||||||
Cash severance
|
| | |
|
—
|
| | | | | 1,125,732 | | | | | | 1,125,732 | | | | | | 1,125,732 | | | | | | 1,125,732 | | |
Restricted stock vesting(6)
|
| | |
|
—
|
| | | | | 709,307 | | | | | | 709,307 | | | | | | 709,307 | | | | | | 709,307 | | |
| | Year(1) | | | | Summary Compensation Table for PEO ($) | | | | Compensation Actually Paid to PEO ($)(2)(3) | | | | Average Summary Compensation Table Total for Non-PEO NEOs ($) | | | | Average Compensation Actually Paid to Non-PEO NEOs ($)(2)(3) | | | | Value of Fixed $100 Investment Based On: | | | | Net Income (in millions) ($) | | | | Non- GAAP ROATCE | | | ||||||||||||||||||||||||||||
| Total Shareholder Return ($) | | | | Peer Group Total Shareholder Return ($)(4) | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | (a) | | | | (b) | | | | (c) | | | | (d) | | | | (e) | | | | (f) | | | | (g) | | | | (h) | | | | (i) | | | ||||||||||||||||||||||||
| | 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
| | 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
| | 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
| | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PEO Adjustments | | | | 2023 ($) | | | | 2022 ($) | | | | 2021 ($) | | | | 2020 ($) | | | ||||||||||||
| | Summary Compensation Table Total | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Deduct Fair Value of Equity Awards included in Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Add Fair Value of Awards Granted in Current Year and Outstanding and Unvested at Year-End | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Add Change in Fair Value of Awards Granted in Prior Years and Outstanding and Unvested at Year-End | | | | | | ( | | | | | | | ( | | | | | | | | | | | | | ( | | | | |
| | Add Fair Value of Awards Granted and Vested in Current Year | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Add Change in Fair Value of Awards Granted in Prior Years that Vested during Year | | | | | | ( | | | | | | | ( | | | | | | | | | | | | | ( | | | | |
| | Deduct Fair Value of Equity Awards Granted in Prior Years Forfeited in the Covered Year | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Total CAP | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Non-PEO NEO Adjustments | | | | 2023 ($) | | | | 2022 ($) | | | | 2021 ($) | | | | 2020 ($) | | | ||||||||||||
| | Summary Compensation Table Total | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Deduct Fair Value of Equity Awards included in Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Add Fair Value of Awards Granted in Current Year and Outstanding and Unvested at Year-End | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Add Change in Fair Value of Awards Granted in Prior Years and Outstanding and Unvested at Year-End | | | | | | ( | | | | | | | ( | | | | | | | | | | | | | ( | | | | |
| | Add Fair Value of Awards Granted and Vested in Current Year | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Add Change in Fair Value of Awards Granted in Prior Years that Vested during Year | | | | | | ( | | | | | | | ( | | | | | | | | | | | | | ( | | | | |
| | Deduct Fair Value of Equity Awards Granted in Prior Years Forfeited in the Covered Year | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Total CAP | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net Income Adjustments ($mm) | | |||
Net Income before income tax expense (GAAP) | | | | | | | |
Adjustments for: | | | | | | | |
Increase in cost of funds related to crypto deposit outflows | | | | | | | |
Decline in GPG Revenue | | | | | | | |
Increased operating expenses(A) | | | | | | | |
Partial Reversal of Regulatory settlement reserve | | | | | ( | | |
Adjusted Pre-tax net income | | | | | | | |
Estimated Tax rate | | | | | | | |
Adjusted Net Income | | | | | | |
| | | Average Common Equity Adjustments ($mm) | | |||
Average common equity | | | | | | | |
Less: average intangible assets | | | | | | | |
Average tangible common equity | | | | | | | |
Adjusted Net Income | | | | | | | |
Divided by: Average Tangible Common Equity | | | | | | | |
Adjusted ROATCE | | | | | | |
| | Financial Performance Measures | | |
| | | | |
| | | | |
| | | | |
Name(1)
|
| |
Fees earned
or paid in cash ($) |
| |
Stock
Awards ($)(2) |
| |
Total
($) |
| |||||||||
Anthony J. Fabiano
|
| | | | 84,000 | | | | | | 140,950 | | | | | | 224,950 | | |
Dale C. Fredston
|
| | | | 136,500 | | | | | | 140,950 | | | | | | 277,450 | | |
David J. Gold(3)
|
| | | | 238,500 | | | | | | 140,950 | | | | | | 379,450 | | |
Harvey M. Gutman(3)
|
| | | | 181,000 | | | | | | 140,950 | | | | | | 321,950 | | |
Terence J. Mitchell
|
| | | | 215,000 | | | | | | 140,950 | | | | | | 355,950 | | |
Chaya Pamula
|
| | | | 147,500 | | | | | | 140,950 | | | | | | 288,450 | | |
Robert C. Patent(3)
|
| | | | 212,000 | | | | | | 140,950 | | | | | | 352,950 | | |
Maria F. Ramirez
|
| | | | 142,500 | | | | | | 140,950 | | | | | | 283,450 | | |
William Reinhardt(3)
|
| | | | 454,500 | | | | | | 140,950 | | | | | | 595,450 | | |
Katrina Robinson
|
| | | | 93,500 | | | | | | 140,950 | | | | | | 234,450 | | |
George J. Wolf, Jr.
|
| | | | 149,500 | | | | | | 140,950 | | | | | | 290,450 | | |
Chair
|
| |
Retainer
|
| |||
Board Chair
|
| | | $ | 75,000 | | |
Compensation Committee Chair
|
| | | | 15,000 | | |
Audit Committee Chair
|
| | | | 50,000 | | |
ORM Committee Chair
|
| | | | 25,000 | | |
Governance Committee Chair
|
| | | | 15,000 | | |
ARG Committee Chair
|
| | | | 5,000 | | |
Credit Committee Chair
|
| | | | 10,000 | | |
COC Chair
|
| | | | 10,000 | | |
Technology Committee Chair
|
| | | | 10,000 | | |
Committee Meeting
|
| |
Fee
|
| |||
Audit Committee
|
| | | $ | 5,000 | | |
Compensation Committee
|
| | | | 4,000 | | |
Governance Committee
|
| | | | 4,000 | | |
ARG Committee
|
| | | | 3,500 | | |
Credit Committee
|
| | | | 3,500 | | |
ORM Committee
|
| | | | 3,500 | | |
ALCO
|
| | | | 3,500 | | |
COC
|
| | | | 3,500 | | |
Technology Committee
|
| | | | 3,500 | | |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| | |
2023
|
| |
2022
|
| ||||||
Audit Fees
|
| | | $ | 567,026 | | | | | $ | 527,600 | | |
Audit-Related Fees
|
| | | | 39,500(1) | | | | | | 12,500(2) | | |
Tax Fees
|
| | | | — | | | | | | — | | |
All Other Fees
|
| | | | — | | | | | | — | | |
AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN
| What is the purpose of this proposal? | | |
We operate in a challenging marketplace in which our success depends to a great extent on our ability to attract and retain employees, non-employee directors and other service providers of the highest caliber. Our stock incentive program provides a range of incentive tools and sufficient flexibility to permit the Compensation Committee of the Board to implement them in ways that will make the most effective use of the shares that our stockholders authorize for incentive purposes. As a human capital-based business that must competitively attract, compensate, retain, and align our employees, the Current Equity Incentive Plan is a key component of our firm-wide compensation program.
Our pay-for-performance oriented culture relies heavily on stock-based compensation to align the interests of our employees with those of our stockholders. As a result, and by design, our pay mix is focused more heavily on equity-based compensation relative to comparable financial institutions. Our aim is to provide a meaningful portion of annual incentives in the form of stock, rather than cash, to further align the interests of our employees with those of stockholders. We grant shares primarily in the form of restricted stock units, which account for a significant portion of our annual incentive payments.
Because we rely on restricted stock units in lieu of cash compensation for payment of our annual incentives, our use of equity-based compensation is necessarily broader relative to other comparable financial institutions. This is evidenced by the fact that approximately 23% of our employees received equity grants from the Current Equity Incentive Plan in 2023.
In the event that the proposal is not approved, we do not anticipate that we can provide any significant additional equity grants for the remainder of 2024 and until stockholders approve additional shares under the Current Equity Incentive Plan. If sufficient shares are not available, we may be forced to increase the cash component of our annual incentive compensation as a substitute for the missing equity component. We believe this would not be in our stockholders’ best interests as it would (a) limit our ability to attract and retain key talent, (b) remove incentives aligning our senior leaders and employees with stockholders to drive firm-wide performance and create long-term stockholder value, and (c) increase cash compensation expense over time and use cash that might be better utilized if reinvested in our business.
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| How will the additional 358,000 shares affect our current stockholders? | | |
Aggregate potential dilution (fully-diluted overhang) is intended to be a measure of the total potential stockholder dilution posed by an equity plan and outstanding equity awards. Over the long-term, we remain committed to managing our aggregate potential dilution. Based on (a) current total unvested equity awards outstanding and (b) potential future awards under the Current Equity Incentive Plan, if the Amended and Restated 2022 Equity Incentive Plan is approved by stockholders, our aggregate potential dilution would be 5.54% of fully-diluted common shares outstanding (as of April 4, 2024). This level of aggregate potential dilution is well below the median aggregate potential dilution of our compensation peer group (see details below).
The Compensation Committee, in consultation with its independent consultant, FW Cook, has evaluated current practices of financial institutions and other comparable companies in our marketplace in
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terms of aggregate potential dilution levels. The Compensation Committee’s analysis shows that, if our stockholders approve the additional 358,000 shares, our aggregate potential dilution (including outstanding equity awards under the Current Equity Incentive Plan) would be positioned well below the median of our peer group, as shown below (refer to page 61 for a detailed calculation of our aggregate potential dilution).
5.54%
Our aggregate potential dilution as of April 4, 2024, including the additional 358,000 shares in our amended Equity Incentive Plan.
6.28%
The median aggregate potential dilution of our peer group (calculations generally reflect data as of our peer companies’ 2022 fiscal year-ends, the most recent period for which complete information was publicly available at the time of the analysis).
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| How does the Company use equity? | | |
We believe that equity awards constitute an important component in a balanced, comprehensive compensation program and we use equity more broadly relative to industry peers, in accordance with our compensation philosophy and objectives of aligning pay with performance. We use equity compensation to appropriately incentivize and align our senior leaders and other employees and to execute on our strategic plan to build stockholder value, while providing appropriate stockholder protections. Our most significant use of equity arises from our annual incentive compensation, where we grant a portion of our senior leaders’ and employees’ annual incentive compensation in restricted stock units in lieu of cash. In 2023, restricted stock units were granted to approximately 23% of our employees. Of all 2023 equity awards, 85% were awarded as part of annual incentive payments.
We believe the Amended and Restated 2022 Equity Incentive Plan is appropriately designed to align with our strategic plan, by allowing us to continue to pay a meaningful portion of annual incentive awards in the form of restricted stock units, in lieu of cash. This incentivizes long-term performance and aligns the interests of senior leaders and employees with those of stockholders. As a result of this strategy, a large majority of our total equity awards are granted in the form of annual incentives, as demonstrated below:
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Majority of Equity Awards Granted
As Annual Incentives, In Lieu of Cash |
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Will any other term of the Current Equity Incentive Plan change if this amendment and restatement is approved?
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If this proposal is approved by stockholders, an additional 358,000 shares will be authorized and no other material terms of the Current Equity Incentive Plan will change.
Features of the Amended and Restated 2022 Equity Incentive Plan are aligned with market best practices, and include:
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No “evergreen” provision (which would automatically increase the number of shares).
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1-year minimum vesting period.
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Prohibition against stock option repricing.
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Double-trigger change-in-control provisions.
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No 280G excise tax gross up.
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Limitation of grants to non-employee directors.
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Prohibition on recycling of equity awards.
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No hedging or pledging of equity-based awards permitted by our employees (including executive officers) and non-employee directors.
Additionally, performance-based equity awards will be subject to recovery under our clawback policy (refer to page 34 for details).
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Why does the Board of Directors recommend that I vote FOR this proposal?
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Without your approval of this proposal, we do not anticipate having sufficient equity to grant any significant additional equity awards in 2024 and until stockholders approve additional shares under the Current Equity Incentive Plan. If sufficient shares are not available, we would be forced to increase the cash component of our annual incentive compensation to make up for the missing equity component. We believe this would not be in our stockholders’ best interests as it would (a) limit our ability to attract and retain key talent, (b) remove incentives aligning our employees and our senior leaders with stockholders to drive firm-wide performance and create long-term stockholder value (c) increase cash compensation expense and use cash that might be better utilized if reinvested in our business.
The ability to issue equity is fundamental to our compensation philosophy and core objectives for the following reasons:
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Pay for performance — We pay for performance. Our employees’ annual incentives are based on our profitability, among other performance metrics. We grant a portion of our senior leaders’ and employees’ annual incentives in the form of restricted stock units in lieu of cash for services already performed and profits already generated. In 2023, these restricted stock unit awards for services already performed and revenue already generated have been granted to approximately 23% of our employees, and have made up 85% of the equity awards we have granted during the year.
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Sustain and strengthen the franchise — We operate in a highly competitive industry and our results are driven in large part by the talents, expertise, and efforts of our employees. Our compensation program, including our ability to grant equity awards, is the primary means by which we attract and recruit new employees. In addition, our equity awards are restricted, which means they generally vest ratably over three years’ time only as long as an employee remains
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employed by the Company. These restrictions provide a powerful retention tool with respect to the senior leaders and employees upon whom the future growth and success of the Company depend.
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Align risk and reward — We are committed to using a mix of compensation to create an environment that encourages increased profitability for the Company without undue risk taking. Our use of equity compensation in lieu of cash allows us to tie a portion of our senior leaders’ and employees’ compensation to the Company’s long-term results, performance, and financial strength.
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Align employees with stockholders — By providing our senior leaders and employees with an ownership stake in the Company, our use of equity compensation incentivizes these employees to create long-term value for our stockholders.
Your approval of this proposal would allow us to continue to grant equity to attract and retain key talent and provide a meaningful portion of annual incentives in the form of equity compensation.
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Aggregate Potential Dilution
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As of 4/4/24(1)
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| | Stock options outstanding (A) | | | | | | 0 | | | |
| | Total full value shares (restricted stock awards / units and performance-based RSUs) outstanding (B) | | | | | | 294,744 | | | |
| | Remaining shares available for grant under Equity Incentive Plan (C) | | | | | | 3,133 | | | |
| | Additional shares being requested under the amended Equity Incentive Plan (D) (2) | | | | | | 358,000 | | | |
| | Basic common shares outstanding as of record date (E) | | | | | | 11,191,958 | | | |
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Aggregate potential dilution (fully-diluted overhang):
= (A+B+C+D) / (A+B+C+D+E) |
| | | | | 5.54% | | | |
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2023
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2022
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2021
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Stock options granted
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Time-based restricted stock awards / units granted
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| | | | 198,498 | | | | | | 83,151 | | | | | | 78,582 | | |
Performance-based RSUs earned
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| | | | 30,800 | | | | | | 29,200 | | | | | | 30,000(1) | | |
Weighted average basic common shares outstanding
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| | | | 11,060,110 | | | | | | 10,929,021 | | | | | | 9,011,700 | | |
Share usage rate (“burn rate”)
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| | | | 2.07% | | | | | | 1.03% | | | | | | 1.20% | | |
Key Attribute
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Feature
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Discussion
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Equity Award Types | | |
Stock Options (non-qualified stock options and incentive stock options), Restricted Stock and Restricted Stock Units.
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The Amended and Restated 2022 Equity Incentive Plan provides the Company with equity award types predominately used in the marketplace to provide flexibility in meeting its compensation objectives.
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Award Vesting Criteria:
Performance Awards and Service-Based Awards |
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The vesting of Awards may be subject to the achievement of performance measures as determined by the Compensation Committee or subject to time-based vesting over a period of continuous service (i.e., service-based).
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Based on the Compensation Committee’s evaluation of current market practices and past Company practices, a portion of equity award grants under the Amended and Restated 2022 Equity Incentive Plan is expected to be subject to performance-based vesting. The Compensation Committee intends to continue to use a third-party independent compensation consultant to review its equity award grant practices.
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Minimum Vesting Period | | |
The Compensation Committee will determine the vesting schedule or performance criteria for each Award. Subject to certain limited exceptions as set forth in the Amended and Restated 2022 Equity Incentive Plan, at least 95% of the Awards under the Amended and Restated 2022 Equity Incentive Plan will vest no earlier than one year after the grant date.
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The Compensation Committee will set the vesting schedule or conditions as a part of its view that equity awards are a longer-term compensation element.
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Prohibition Against
Stock Option Repricing |
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Unless approved by the Company’s stockholders, neither the Compensation Committee nor the Board of Directors will have the right to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a Stock Option previously granted under the Amended and Restated 2022 Equity Incentive Plan (including cancellation in exchange for a cash payment in excess of the Award’s in-the-money value or in exchange for Stock Options or other Awards), except in the event of a Change in Control or certain corporate transactions set forth in the Amended and Restated 2022 Equity Incentive Plan (including stock splits, and stock dividends) or adjustments approved by the Company’s stockholders.
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The Compensation Committee believes that repricing Stock Options is contrary to the objectives of Stock Options and would not be in alignment with the interest of stockholders.
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Key Attribute
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Feature
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Discussion
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No Dividends or
Dividend Equivalents on Unvested Awards |
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Dividends or dividend equivalents payable on unvested awards subject to time-based vesting or performance-based vesting shall be distributed to a participant on or after the vesting date of such award. If the underlying award does not vest, the participant will not receive such dividends or dividend equivalents.
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The Compensation Committee believes that the timing of dividend and dividend equivalent payments is appropriately aligned with the interests of stockholders.
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Acceleration of Vesting — Committee Discretion
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Vesting of Awards may be accelerated by the Compensation Committee, at its discretion.
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The Compensation Committee determined that discretion to accelerate awards is important to allow the Company to respond to employment-related matters or other unforeseen circumstances that could warrant consideration of acceleration.
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Acceleration of Vesting — Termination of Service without Cause or Resignation for Good Reason following a Change in Control (i.e., an Involuntary Termination of Service)
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Unless otherwise specified by the Compensation Committee:
All unvested service-based Awards will vest upon an Involuntary Termination of Service within 24 months following a Change in Control. Stock Options will remain exercisable for one year following an Involuntary Termination of Service following a Change in Control.
All Performance Awards will vest upon an Involuntary Termination of Service following a Change in Control based on the greater of actual performance or at the target level.
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The Compensation Committee determined that a “double trigger” in connection with a Change in Control weighs the Company’s need for a meaningful retention tool with any future acquirer’s ability to appropriately manage human resources during any merger integration. The Amended and Restated 2022 Equity Incentive Plan does not contain a “single trigger” or 280G excise tax gross-ups.
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Share Limitations | | |
The maximum number of shares of stock that may be delivered to participants under the Amended and Restated 2022 Equity Incentive Plan is 716,000 shares, subject to adjustment as set forth in the Amended and Restated Equity Incentive Plan, less any grants made prior to the date hereof under the Current Equity Incentive Plan (any of which may be granted as Incentive Stock Options).
As of April 4, 2024 (the latest practicable date before the printing of this Proxy Statement) the closing price of the Company’s common stock, as reported on the New York Stock Exchange, was $35.74.
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The Compensation Committee evaluated a number of factors in determining the appropriate plan size, including past grant practices, the grant practices of peer banks, the stockholder value transfer to participants, and guidelines of proxy advisors.
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Key Attribute
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Feature
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Discussion
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Limitation of Grants to Non-Employee Directors
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The aggregate grant date fair value of all Awards granted to any non-Employee Director during any single calendar year, plus the total cash compensation paid to such director for services rendered for such calendar year, shall not exceed $800,000 (or $950,000 in the case of a Chairman of the Board).
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The Compensation Committee expects that it will continue to use the services of an independent compensation consultant to assist it in making equity award grants, but believes it is important to provide calendar year compensation limitations for its non-employee directors.
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Prohibition on Recycling of Equity Awards
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Only Awards that are forfeited, expired or settled in cash are available for reissuance under the Amended and Restated 2022 Equity Incentive Plan. Shares tendered or withheld to pay the exercise price of a Stock Option or to cover taxes related to any Award are not again available for grant.
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The Compensation Committee believes that conservative recycling of equity awards is an important provision in the Amended and Restated 2022 Equity Incentive Plan and properly aligns with the interests of stockholders.
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Automatic Exercise of
Stock Options |
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At the Compensation Committee’s discretion, Stock Options that are exercisable but unexercised as of the day immediately before their expiration date may be automatically exercised on behalf of a participant, in accordance with procedures established by the Compensation Committee.
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The Compensation Committee believes that providing for an automatic exercise is in the best interest of the Company and participants and provides an efficient mechanism to exercise Stock Options.
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Equitable Adjustments;
Performance Measures |
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If shares of Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company, such adjustments and other substitutions will be made to the Amended and Restated 2022 Equity Incentive Plan and to Awards in a manner the Committee deems equitable or appropriate taking into consideration the accounting and tax consequences, including such adjustments in the aggregate number and kinds of shares for which grants may be made under the Amended and Restated 2022 Equity Incentive Plan, the maximum number of shares that may be issued pursuant to Incentive Stock Options and, in the aggregate or to any Participant, in the number, class, kind and
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The Company believes these “equitable adjustment” provisions are standard market practice and are only utilized by the Committee, in its discretion, to the extent it deems doing so is appropriate and retains the intended value of Awards.
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Key Attribute
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Feature
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Discussion
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option or exercise price of securities subject to outstanding Awards granted under the Amended and Restated 2022 Equity Incentive Plan.
In establishing any performance measures for Awards under the Amended and Restated 2022 Equity Incentive Plan, the Committee may provide for the exclusion of the impact of an event or occurrence which the Committee determines should appropriately be excluded, including: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) dividends declared on the Company’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses incurred in connection with a merger, branch acquisition or similar transaction. Performance measures will be modified, to the extent applicable, to reflect a change in the outstanding shares by reason of any stock dividend or stock split, or a corporate transaction, as described in the Amended and Restated 2022 Equity Incentive Plan.
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Plan Category
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Number of
Securities To be Issued Upon Exercise of Outstanding Options and Restricted Stock Units |
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Weighted-
Average Exercise Price of Outstanding Options and Restricted Stock Units |
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Number of
Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Number of Securities To be Issued Upon Exercise of Outstanding Options and Restricted Stock Units) |
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Equity Compensation Plans Approved By Security Holders
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| | | | 323,852 | | | | | $ | 63.98 | | | | | | 1,193 | | |
Equity Compensation Plans Not Approved By Security Holders
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Total
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| | | | 323,852 | | | | | $ | 63.98 | | | | | | 1,193 | | |
Metropolitan Bank Holding Corp.
99 Park Avenue, 12th Floor
New York, New York 10016
Phone: (212) 365-6721
[email protected]
GENERAL
AWARDS
SHARES SUBJECT TO PLAN
CHANGE IN CONTROL
COMMITTEE
AMENDMENT AND TERMINATION
GENERAL TERMS
DEFINED TERMS; CONSTRUCTION