EMBASSY BANCORP, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
| o | Preliminary Proxy Statement |
| o | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x | Definitive Proxy Statement |
| o | Definitive Additional Materials |
| o | Soliciting Material Under Rule 14a-12 |
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Embassy Bancorp, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
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1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN
, that the Annual Meeting of the Shareholders of Embassy Bancorp, Inc. (the “Company”) will be held at the Best Western Lehigh Valley Hotel and Conference Center at 300 Gateway Drive, Bethlehem, Pennsylvania, on Thursday, June 19, 2014, at 5:30 p.m. E.D.T. to vote upon the following matters:
| (1) | To elect four (4) Directors of the Company to Class 1 for a term of three (3) years (see the attached proxy statement for a list of nominees). |
| (2) | To ratify the selection of ParenteBeard LLC as the Company’s independent registered public accounting firm for the year ending December 31, 2014. |
| (3) | To act upon such other business as may properly come before the meeting. |
The board of directors recommends that you vote “FOR” the election of each of the nominees for Director listed in the attached proxy statement; and “FOR” the ratification of the appointment of ParenteBeard LLC as the Company’s independent registered public accounting firm for the year ending December 31, 2014.
Only shareholders of record at the close of business on April 21, 2014 will be entitled to notice of, and to vote at, the meeting or any adjournment or postponement of the meeting
. Please complete, sign, date and return the enclosed proxy card as promptly as possible, whether or not you plan to attend the meeting in person, and return it in the enclosed return envelope.
The return of the enclosed proxy card will not in any way affect your right to attend the annual meeting. This notice and the attached proxy statement are being mailed to shareholders on or about the date hereof. We encourage you to read the proxy statement carefully.
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By Order of the Board of Directors
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/s/ Judith A. Hunsicker
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Bethlehem, Pennsylvania
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Judith A. Hunsicker
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May 5, 2014
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Secretary
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Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on June 19, 2014. This notice, the proxy statement, proxy card and 2013 Annual Report are available at:
http://materials.proxyvote.com/290791
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PROXY STATEMENT
100 Gateway Drive, Suite 100
Bethlehem, Pennsylvania 18017
(610) 882-8800
May 5, 2014
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Embassy Bancorp, Inc. (the “Company”) for use at the Company’s Annual Meeting of Shareholders to be held on Thursday, June 19, 2014 at 5:30 p.m. E.D.T. at the Best Western Lehigh Valley Hotel and Conference Center at 300 Gateway Drive, Bethlehem, Pennsylvania. This proxy statement and the accompanying proxy are first being mailed to shareholders of the Company on or about May 5, 2014.
Holding the Company’s common stock on April 21, 2014, the record date, entitles the holder to attend and vote at the meeting. On the record date, 7,333,764 shares of the Company’s common stock were outstanding. Each share of the Company’s common stock entitles its holder to one vote on all matters presented at the meeting, except for the election of directors, where shareholders have the right to vote cumulatively. See “What vote is required to approve each proposal?” below.
You will be asked to elect four (4) Directors as Class 1 Directors to serve for three-year terms expiring in 2017; and to ratify the selection of ParenteBeard LLC as the Company’s independent registered public accounting firm for the year ending December 31, 2014. The Board of Directors is not aware of any other matters to be presented for action at the annual meeting. If any other matter requiring a vote of the shareholders would be presented at the meeting, the proxies will vote according to the directions of the Company’s Board of Directors.
The Board of Directors recommends that you vote “FOR” the election of each of the nominees for Director listed in this proxy statement; and “FOR” ratification of the appointment of ParenteBeard LLC as the Company’s independent registered public accounting firm for the year ending December 31, 2014.
There are two methods. You may vote by completing and returning the enclosed proxy card or by attending the Annual Meeting and voting in person.
If you sign your proxy card but do not make any selections, your proxy will vote “FOR” the four (4) persons nominated for election as directors; and “FOR” ratification of the appointment of ParenteBeard LLC as the Company’s independent registered public accounting firm for the year ending December 31, 2014.
If you give the proxy we are soliciting, you may revoke it at any time before it is exercised:
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by signing and returning a later-dated proxy; or
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| · | by giving written notice to Embassy Bancorp, Inc., 100 Gateway Drive, Suite 100, Bethlehem, PA 18017, Attention: Judith A. Hunsicker, Corporate Secretary; or |
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by voting in person at the annual meeting after giving written notice to Judith A. Hunsicker, Corporate Secretary.
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A shareholder whose shares are held in “street name” should follow the instructions of his or her broker regarding revocation of proxies. You should note that your presence at the meeting without voting in person will not revoke an otherwise valid proxy.
The presence, in person or by proxy, of holders of at least a majority of the outstanding shares of common stock of the Company is necessary to constitute a quorum at the annual meeting. There must be a quorum for the meeting to be held. Abstentions are counted for purposes of determining the presence or absence of a quorum, but are not considered a vote cast under Pennsylvania law. Brokers holding shares in “street name” for their customers are generally not entitled to vote on certain matters unless they receive voting instructions from their customers. Such shares for which brokers have not received voting instructions from their customers are called “broker non-votes.” Under Pennsylvania law, broker non-votes will be counted to determine if a quorum is present with respect to any matter to be voted upon by shareholders at the meeting only if such shares have been voted at the meeting on a matter other than a procedural motion.
As of April 21, 2014, the record date, 7,333,764 shares of common stock were issued and outstanding. The holders of a majority of the outstanding shares, or at least 3,666,883 shares, must be present in person or represented by proxy in order to establish a quorum.
Election of Directors
Assuming the presence of a quorum, the four (4) nominees for Class 1 Director receiving the highest number of votes cast by shareholders entitled to vote for the election of Directors shall be elected. Votes withheld and broker non-votes will count neither for nor against the election of a nominee. Shareholders are permitted to vote cumulatively in the election of Directors only. This means that a shareholder may multiply the number of shares held by the number of Directors to be elected and cast the total number of votes so obtained for any one candidate or to divide such votes among the candidates in any manner the shareholder desires. To exercise cumulative voting rights via proxy, the shareholder must follow the instructions on the proxy card, including checking the box indicating that he or she is exercising cumulative voting and writing the number of shares to be voted for nominees. A shareholder may also exercise cumulative voting rights by voting his shares by ballot at the annual meeting. The nominees who receive the most votes will be elected. In the case where a proxy is signed but not marked, the proxy will not be voted cumulatively; shares will be voted for all nominees. If any nominee should refuse or be unable to serve, the proxy will be voted for such other person as shall be designated by the Board of Directors. The Company has no knowledge that any of the nominees will refuse or be unable to serve.
Other Proposals
Under the Bylaws of the Company, unless otherwise provided by law, a majority of votes cast by shares present, in person or by proxy, is necessary to approve other routine proposals or business properly presented at the meeting, including without limitation, the ratification of the selection of ParenteBeard LLC as the Company’s independent registered public accounting firm. Abstentions and broker non-votes will have no effect in calculating the votes on any such matters.
The Judges of Election appointed by the Board of Directors will count the votes cast in person or by proxy at the meeting.
The Company will bear its own cost of solicitation of proxies for the meeting. In addition to solicitation by mail, the company’s Directors, Executive Officers and employees may solicit proxies personally or by telephone, facsimile transmission or otherwise. These Directors, Executive Officers and employees will not be additionally compensated for their solicitation efforts, but may be reimbursed for out-of-pocket expenses incurred in connection with these efforts. The Company will reimburse brokerage firms, fiduciaries, nominees and others for their out-of-pocket expenses incurred in forwarding proxy materials to beneficial owners of shares of common stock held in their names.
Any shareholder who, in accordance with and subject to the provisions of the proxy rules of the Securities and Exchange Commission, wishes to submit a proposal for inclusion in the Company’s proxy statement for its 2015 annual meeting of shareholders must deliver the proposal in writing to the Secretary of Embassy Bancorp, Inc. at the Company’s principal executive offices at 100 Gateway Drive, Suite 100, Bethlehem, Pennsylvania, not later than January 6, 2015. Under Rule 14a-4(c) (1) promulgated under the Securities and Exchange Act of 1934, as amended, if any shareholder proposal intended to be presented at the 2014 annual meeting without inclusion in our proxy statement was received at our principal executive offices after March 23, 2014, then a proxy will have the ability to confer discretionary authority to vote on the proposal.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on June 19, 2014. This proxy statement, the enclosed proxy card and our 2013 Annual Report are available at
http://materials.proxyvote.com/290791
.
This proxy statement and the documents that have been incorporated herein by reference may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, these statements can be identified by the use of words such as “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “target,” “will,” “would” and similar expressions. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: ineffectiveness of our business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations, including industry consolidation and development of competing financial products and services; interest rate movements; changes in credit quality; difficulties in integrating distinct business operations, including information technology difficulties; volatilities in the securities markets; and deteriorating economic conditions, and other risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission (the “SEC”).
Although forward-looking statements help provide additional information about us, investors should keep in mind that forward-looking statements are only predictions, at a point in time, and are inherently less reliable than historical information. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement. We assume no obligation to update any forward-looking statement in order to reflect any event or circumstance that may arise after the date of this proxy statement, other than as may be required by applicable law or regulation.
ELECTION OF DIRECTORS
The Company’s Bylaws provide that the Company’s business shall be managed by a Board of Directors of not less than five and not more than twenty-five Directors,
who shall hold office for a three year term or until their successors are duly elected and qualified. Pursuant to the Bylaws, the Board of Directors is divided into three Classes: Class 1, Class 2 and Class 3, with each class serving a staggered, three year term of office and being as nearly equal in number as possible. Each of the members of the Company’s Board of Directors also serves as a Director of Embassy Bank for the Lehigh Valley, the Company’s wholly-owned bank subsidiary (the “Bank”).
The Board of Directors proposes the following four (4) nominees be elected as Class 1 Directors to hold office for a period of three (3) years and until their successors have been elected and qualified:
Frank (“Chip”) Banko III
Geoffrey F. Boyer, CFP
John P. Brew, Jr.
Robert (“Bert”) P. Daday
Each of the nominees currently serves as a Class 1 Director with a term expiring in 2014.
The four (4) nominees for Director receiving the highest number of votes cast by shareholders entitled to vote for the election of Directors shall be elected. Unless otherwise instructed, proxies received from shareholders will be voted for the election of the nominees. If the nominees should become unavailable for any reason, proxies received from shareholders will be voted in favor of substitute nominees, as the Board of Directors shall determine. The Board of Directors has no reason to believe that the nominees will be unable to serve if elected. Any vacancy occurring on the Board of Directors, for any reason, may be filled by a majority of the Directors then in office until the expiration of the term of the vacancy.
Shareholders are permitted to vote cumulatively in the election of Directors. See “What vote is required to approve each proposal? – Election of Directors” above for information about how to vote your shares cumulatively.
The Board of Directors recommends a vote
FOR
the election of the above-named nominees for election as Directors.
We provide below information as of the date of this proxy statement about each nominee and Director of the Company. The information includes information each Director has given the Company about his/her age, all positions held, principal occupation and business experience for the past five years. In addition to the information presented below regarding each nominee’s specific experience, qualifications, attributes and skills that led the Board of Directors to the conclusion that he or she should serve as a Director, the Company also believes that all of the current Directors and nominees have demonstrated good judgment, strength of character, and an independent mind, as well as a reputation for integrity and the highest personal and professional ethics. No Director of the Company is a Director of any other publicly-held company.
Nominees for Class 1 Director
(Current Class 1 Directors with terms expiring in 2014)
Frank “Chip” Banko III, 55
Mr. Banko III is President of Warren Distributing Co., a wholesale distribution company with three locations in New Jersey. He has worked in the family-owned and operated businesses since 1979, which include real estate holdings, and has a working knowledge of all aspects of those businesses. Mr. Banko III is currently a board member of Lehigh County Agricultural Society and has previously served on the board of the Wildlands Conservancy. The Board believes that Mr. Banko III’s experience as an entrepreneur, as well as his business knowledge, well qualifies him for service as a Director of the Company.
Geoffrey F. Boyer, CFP, 69
Mr. Boyer has been a Certified Financial Planner since 1985, with experience in financial planning, investments, insurance and banking. Mr. Boyer is a graduate, former board member and President of Leadership Lehigh Valley and has been named to Who’s Who in Finance and Industry. He served as a past President of the Emmaus Rotary Club. He formerly served on the Board of the Greater Lehigh Valley Chamber of Commerce and as President of the Small Business Council. With his wife, he previously served as Co-Chair of the Lehigh Valley Red Cross Clara Barton Society. Mr. Boyer is currently President of Boyer Financial Group and serves as an officer or director of several local small businesses and charitable endeavors. The Board believes that Mr. Boyer’s years of experience in financial planning, investments and insurance, as well as his knowledge and involvement in the community, well qualifies him for service as a Director of the Company.
John P. Brew, Jr., 58
Mr. Brew began his career in financial services in 1976 at L. F. Rothschild, where his work centered on community banks. During his subsequent tenure with Smith Barney, Mr. Brew started the Bank Advisory Group and dealt with hundreds of community banks nationwide. Mr. Brew has also served as principal of Investment Management Services for First National Bank of Bath and Pennsylvania Independent Bank. At present, Mr. Brew is Co-Chairman of Seifried & Brew LLC, which provides strategic content and context to the community banking industry. Mr. Brew is a nationally recognized speaker and author on community banking risk management and strategic planning. He has written books on community banking and recently co-authored “How the Seifried & Brew Total Risk Index Predicted 99% of Failed Banks”. The Board believes that Mr. Brew’s extensive experience in advising community banks with respect to asset liability management, investment portfolio management, risk tolerance levels and strategic goal setting, well qualifies him for service as a Director of the Company.
Robert (
“
Bert
”
) P. Daday, 83
Mr. Daday is a retired PPL executive. He was formerly special assistant to the President of PPL. He was formerly economic, development and community service manager for PPL. He has participated on the boards of such organizations as the Lehigh Valley Partnership, Lehigh Valley International Airport, Lehigh Valley Economic Development Corporation, Lehigh Valley Business Education Partnership, and the Commonwealth of Pennsylvania State Transportation Commission. The Board believes that Mr. Daday's role in community development and community service for PPL, as well as his knowledge and involvement within the community, well qualifies him for service as a Director of the Company.
Current Class 2 Directors (terms to expire in 2015)
John G. Englesson, 61
Mr. Englesson is currently President of zAxis Corp., advising business leaders on profitability growing their businesses. Mr. Englesson also holds 50% ownership of Integrity Business Services, LLC where he holds the positions of Executive Vice President and Secretary. He has served in a number of executive management positions, as well as on several boards of emerging technology businesses. He was one of the principal owners of Chadwick Telecommunications Corporation. Mr. Englesson has volunteered his time with numerous community organizations, including his current participation in the Allentown Economic Development Corporation as a Board Member. He has also served in Mayor of Allentown’s Transition Team as the Chair of the Community and Economic Development Committee, the Bethlehem Economic Development Corporation as its President, the Lehigh Valley Economic Development Corporation as its Chair, the Rotary Club of Bethlehem as its President, and the American Hellenic Educational Progressive Association as its President. The Board believes that Mr. Englesson’s entrepreneurial and technical experience, as well as his knowledge and involvement within the community, well qualifies him for service as a Director of the Company.
Elmer D. Gates, Lead Director, 84
Mr. Gates served as the non-executive Chairman of Embassy Bancorp, Inc. since its inception through June of 2009, and has since taken the position of Lead Director. Mr. Gates was formerly Chairman, President and Chief Executive Officer of Fuller Company which manufactures and sells equipment worldwide used in the mineral processing, pulp, cement, plastics and chemical industries. He was a founding director of Ambassador Bank, a board member of the Lehigh Valley Bank, and a member of the U.S. Export-Import Bank Advisory Committee. He is a past DeSales University Trustee and a current board member of the Lehigh Valley Partnership, a civic improvement agency. Mr. Gates is a past board member and Non-Executive Chairman of SI Handling Systems and past Director of PPL, both headquartered in the Lehigh Valley. The Board believes that Mr. Gates’ many years in executive leadership, his prior board involvement in a bank, and his knowledge and involvement within the community, well qualifies him for service as a Director of the Company.
M. Bernadette Holland, CFP, 57
Ms. Holland is Senior Vice President-Wealth Management and Portfolio Manager with Janney Montgomery Scott LLC and is a Certified Financial Planner. She currently serves as a Board member of the Bethlehem Boys and Girls Club. She is a past President of the Bethlehem Rotary Club and a Paul Harris Fellow. The Board believes that Ms. Holland’s many years of financial planning and investment portfolio management, as well as her knowledge and involvement within the community, well qualifies her for service as a Director of the Company.
Current Class 3 Directors (terms to expire in 2016)
Bernard M. Lesavoy, 55
Mr. Lesavoy is an attorney and holds a Master’s Degree in Business Administration, as well as a law degree. He has been practicing law in the Lehigh Valley since 1987. He is currently a member of Lesavoy Butz & Seitz LLC and heads the firm’s Corporate and Real Estate Departments. Mr. Lesavoy concentrates his practice in business, corporate, real estate, business succession, and estate planning matters. Mr. Lesavoy previously served on the advisory council of Ambassador Bank. His community involvement has included, among many others, service on the boards of the Greater Lehigh Valley Chamber of Commerce, the Bar Association of Lehigh County, and the South Whitehall Township Zoning Hearing Board. The Board believes that Mr. Lesavoy’s over twenty-five years of experience practicing law in the Lehigh Valley, his knowledge and involvement within the community, and his prior service on the advisory council of a bank, well qualifies him for service as a Director of the Company.
David M. Lobach, Jr. Chairman, 64
Mr. Lobach is the President, Chief Executive Officer, and Chairman of the Company and the Bank and has served as President and Chief Executive Officer since 2008 and 2001, respectively, and Chairman since 2009. He was co-founder of the Bank. He began his banking career in 1971. He was Executive Vice President and Chief Operating Officer of Ambassador Bank. During his 19-year tenure with First Valley Bank prior thereto, Mr. Lobach oversaw such areas as private banking, commercial services, corporate business development, consumer lending functions, and holding company activities. Mr. Lobach currently serves on the Board of St. Luke
’
s Hospital Network, previously as Chairman. In addition, he currently serves on the boards of Northampton County Historical Society, Lehigh County Seed Farm, Lehigh Valley Community Foundation, Lehigh Carbon Community College Foundation Board and on the advisory board for Bethlehem Area Vocational Technical School. He is a former member of the Federal Reserve Bank of Philadelphia Advisory Council. He has taught various banking and business programs at area colleges and universities, including Lehigh, Dickinson and Rutgers. He is a former member of the Board of Trustees of Moravian College Seminary in Bethlehem, PA. He is past vice chairman of Eastern States BankCard Association, Visa Division and has served the Lehigh Valley community as a volunteer on the boards of such organizations as Junior Achievement, Boys and Girls Club, United Way, Lehigh Valley Chamber of Commerce, State Theater, Pennsylvania Bankers Education Committee, Wellness Community (founding director) and the Girl Scouts. The Board believes that Mr. Lobach’s extensive and diverse banking background and experience, as well as his extensive knowledge of and involvement in the community, well qualifies him for service as a Director of the Company.
John C. Pittman, 64
Mr. Pittman is a photo finishing executive. He was a member of the advisory council of Ambassador Bank. Mr. Pittman is currently President and Chief Executive Officer of John C. Pittman/Sport Stars, Inc., an international photo manufacturing company specializing in the youth activities market. Prior to founding his photographic business, Mr. Pittman served as an educator in the fields of science and photography. Mr. Pittman speaks regularly to middle school students and is a member of the Amusement Ride Safety Board as an appointee of Governor Ridge and a member of the United States Selective Service System Appeal Board for the Commonwealth of PA.
The Board believes that Mr. Pittman’s experience as an entrepreneur operating his business in the Lehigh Valley, in addition to his prior service as advisory council to a bank, well qualifies him for service as a Director of the Company.
John T. Yurconic, 46
Mr. Yurconic is the President of the John Yurconic Agency, a local insurance, vehicle registration and driver’s license services agency with 11 locations in Lehigh, Northampton, Schuylkill, Berks and Carbon counties. He began his insurance career in 1989 after graduating from Lafayette College. Mr. Yurconic currently serves on the board of Synergy Holdings Corp., a workmen’s compensation specialist insurance company and PA Messenger Services, Inc. (Title N Go), a software solutions corporation. Mr. Yurconic has also served on the advisory council of Ambassador Bank. He currently serves on the board of St. Luke’s Hospital-Allentown and served prior as an executive board member for the Minsi Trail Council of the Boys Scouts of America. The Board believes that Mr. Yurconic’s experience in the insurance business since 1989, serving the greater Lehigh Valley community, his prior service as advisory council of a bank, and his knowledge and involvement within the community, well qualifies him for service as a Director of the Company.
All of the foregoing individuals have served as Directors since the organization of the Company in 2008, with the exception of Mr. Banko III (2011), and all have served as Directors of the Bank since its inception in 2001, with the exception of Mr. Yurconic (2007) and Mr. Banko III (2011).
Pursuant to the Pennsylvania Business Corporation Law of 1988, as amended, and the Company’s Bylaws, the business of the Company is managed under the direction of the Board of Directors. Members of the Board are kept informed of the Company’s business through discussions with the CEO and other Executive Officers, by reviewing materials provided to them, and by participation in meetings of the Board and its committees.
As of April 21, 2014, all but three members of the Board of Directors are considered independent as determined
in accordance with the independence standards of the NASDAQ Stock Market. Mr. Lobach, Chairman, President, and CEO of the Company, Bernard Lesavoy, Esquire, whose firm provides legal services to the Company and who also serves as an officer of Red Bird Associates, LLC, and Frank Banko III, who owns 45% of Red Bird Associates LLC and who receives rent from the Bank for a branch office are not considered independent in accordance with the independence standards of the NASDAQ Stock Market. In determining the Directors’ independence, in addition to matters disclosed under “Certain Relationships and Related Transactions” below, the Board of Directors considered each Director’s beneficial ownership of Company common stock, loan transactions between the Bank and the Directors, their family members and businesses with whom they are associated, as well as any contributions made to non-profit organizations with whom they are associated.
Except with respect to the individuals noted above, in each case, the Board determined that none of the transactions impaired the independence of the Director. For more information, please refer to “Certain Relationships and Related Transactions” below.
The Board has discretion to combine or separate the positions of Chairman and Chief Executive Officer of the Company. Until June of 2009, Elmer Gates served as Chairman of the Company and the Bank, while David M. Lobach, Jr. served as President and Chief Executive Officer of both entities. In connection with the resignation of Mr. Gates from the position of Chairman of the Board, which was effective as of the conclusion of the 2009 Annual Meeting of Shareholders, the Board of Directors appointed Mr. Lobach to the additional position of Chairman, believing that his service as President and Chief Executive Officer of the Bank and the Company since their respective inceptions, as well as his role as a founder of the Bank, uniquely qualified him for this role. The Board of Directors believes that at this time, Mr. Lobach’s leadership in these capacities will ensure that management is aligned with the Board and positioned to effectively implement the business strategy endorsed by the Board
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In connection with his resignation from the position of Chairman of the Board, Mr. Gates was appointed by the Board of Directors to serve as the Company’s Lead Director. Mr. Gates has been determined by the Board of Directors to be independent in accordance with the
independence standards of the NASDAQ Stock Market. The Lead Director is responsible for chairing meetings of the Board when the Chairman is excused or absent, for chairing any executive session of the Company’s independent Directors, and for calling special meetings of the independent Directors.
The Board is responsible for providing oversight of the Company’s risk management processes and for overseeing the risk management function of the Company. In carrying out its responsibilities, the Board of Directors works closely with senior risk officers and meets at least bi-annually to review management’s assessment of risk exposure and the process in place to monitor and control such exposure. In addition, the Audit Committee meets no less than quarterly to review annual and quarterly reports on Forms 10-Q and 10-K, internal audits and loan reviews, and meets in executive session with internal auditors, the Company’s principal accountants, and the Chief Financial Officer, among others, to assess risk that may affect the entire Company.
The Board of Directors held twelve meetings in 2013, and meets no less frequently than on a monthly basis.
During 2013, each of the Directors attended over 80% of the aggregate of all meetings of the Board and the committees on which he or she serves, with the exception of Mr. Banko III.
Each Director and nominee is expected to attend the Annual Meeting. All of the current Directors were present for the 2013 Annual Meeting of Shareholders, with the exception of Mr. Banko III, Mr. Brew, and Mr. Daday.
Audit Committee
The Audit Committee of the Company’s Board of Directors met four times during 2013, and operates pursuant to a written charter, a copy of which is available on the Company’s website at www.embassybank.com under “Investor Relations”. The Audit Committee is comprised of Messrs. Brew (Chairman), Boyer, Englesson, Yurconic, and Ms. Holland. Messrs. Lobach and Banko III attend the committee meetings in a non-voting capacity. All voting members of the Audit Committee are considered independent as determined in accordance with the independence standards of the NASDAQ Stock Market.
The Audit Committee is charged with providing assistance to the Board in fulfilling its responsibilities to the shareholders in the areas of financial controls and reporting. Principally, these responsibilities entail assessing the effectiveness of the internal control system over financial reporting, reviewing adherence to policies and procedures and assuring the safeguarding of all Company assets and the accuracy of the Company’s financial statements and reports. In so doing, it is the responsibility of the Audit Committee to monitor and maintain the lines of communications between the Board of Directors, external auditors, internal auditors and the senior management of the Company. The external auditor shall be ultimately accountable to the Audit Committee. Additionally, the Company’s independent registered public accounting firm has unrestricted access to the Audit Committee.
The Board of Directors has determined that Mr. Brew is an “audit committee financial expert” as defined in SEC Regulation S-K, by reason that, based upon Mr. Brew’s over thirty years’ experience in the investment and financial services industry and advising community banks, he has: an understanding of generally accepted accounting principles and financial statements; the ability to assess the general application of such principles in connection with accounting for estimates, accruals and reserves; an understanding of internal controls and procedures for financial reporting; and understanding of audit committee functions; and experience analyzing and evaluating financial statements presenting a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements. For further information regarding Mr. Brew, see “Nominees for Class 1 Director Current Class 1 Directors – John P. Brew, Jr.” above.
For further information regarding the Audit Committee, see the discussion under the caption: “Report of Audit Committee” below.
Other Committees; Personnel Committee
The Company does not have any other standing committees.
The Bank’s Personnel Committee performs the functions of a compensation committee. When acting in such capacity, the duties of the Personnel Committee are as follows: to establish the compensation of officers and employees of the Company and Bank; to examine periodically the compensation structure of the Company; and to supervise welfare, pension and other compensation plans of the Bank and the Company. With respect to the compensation of the Company’s Named Executive Officers, the Personnel Committee recommends to the full Board of Directors for its approval the compensation (both salary and bonus) of such persons based on, among other things, the following factors: the overall performance of the Company for the prior year; the amounts allocated in the Company’s budget toward compensation; and its review of the individual performance of the Named Executive Officers. The Personnel Committee delegates to the Named Executive Officers the authority to establish the compensation of all other employees of the Company, within the parameters established by the Committee.
The Company did not engage the services of a compensation consultant in 2013. As a member of the Personnel Committee, as well as President and Chief Executive Officer, Mr. Lobach abstains from all voting and discussion with respect to matters pertaining to the compensation of the Named Executive Officers. The Personnel Committee does not operate under a formal charter.
The Company’s Board of Directors does not have a standing nominating committee. The Bank’s Personnel Committee, however, reviews the qualifications of and makes recommendations to the Board of Directors of the Company regarding potential candidates to be nominated for election to the Board of Directors. The Personnel Committee is comprised of the following Directors: Messrs. Gates (Chairman), Brew, Lesavoy, Lobach, and Ms. Holland.
The Personnel Committee does not have a charter. It considers the nomination of all candidates for Director on a case-by-case basis. The factors considered by the Personnel Committee include a candidate’s education, business and professional background and experience, banking experience, character and integrity. Additionally, the Company’s Bylaws require that every Director be a shareholder of the Company.
Due to the infrequency of nominations, the Company does not have a written policy with respect to the nomination of candidates by shareholders; however, in considering nominations for Director, its policy is to not distinguish between nominations recommended by shareholders and those recommended by the Personnel Committee. If any shareholder wishes to recommend any candidate for nomination to the Board, he or she should submit the name of such person to the Personnel Committee at the address shown on the cover page of this Proxy Statement. In order to be considered for nomination in connection with the next annual meeting of shareholders, such name and the candidate’s principal occupation, business and professional background, education and banking experience should be provided to the Personnel Committee on or before the
deadline for submitting proposals
for inclusion in the Company’s proxy statement for its
next
annual meeting.
The Board of Directors does not have a formal process for shareholders to send communications to the Board of Directors. Investors wishing to communicate with the Board or any member may do so by addressing any communication, care of the Board or any Director, to the Company at the address shown on the first page of this proxy statement.
The Board of Directors has adopted a Code of Conduct (Ethics) policy governing the Company’s Directors, Executive Officers and employees. The Code of Conduct governs such matters as conflicts of interest and use of corporate opportunity, financial reporting, violation of the Company’s policies, and the like. A copy of the Code of Conduct (Ethics) policy is available on the Company’s website at www.embassybank.com under “Investor Relations”.
The Board of Directors of the Company has instituted a policy in connection with extensions of credit by the Bank to any director, officer or employee of the Company or Bank, or to any business entity in which a Director, officer or employee of the Company or Bank has a direct or indirect interest. These extensions of credit shall only be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons, and in the opinion of management do not involve more than the normal risk of collection or present other unfavorable features. At December 31, 2013, total loans and commitments of approximately $2.9 million were outstanding to our Executive Officers, Directors, and their affiliated businesses, which represented approximately 5.36% of our shareholders’ equity at such date.
In January 2003, an investment group comprised of persons related to the Company, including Mr. Lobach, Ms. Hunsicker, each of the current Directors of the Company and former Director Frank Banko, with the exception of Messrs. Banko III, Gates, Yurconic, and Ms. Holland, formed Red Bird Associates, LLC (“Red Bird”) for purposes of purchasing the office building in which the principal offices of the Bank and Company are located. Directors Brew and Englesson divested their ownership in Red Bird in 2009 and 2011, respectively. Frank Banko III now holds the interest in Red Bird originally held by Director Frank Banko.
Red Bird purchased the property subject to the existing leases of all tenants in the building, including the Bank. The previous owner of the building was unrelated to the Company, the Bank or any of the Directors. The original terms for the Bank’s lease were negotiated with the former owner in the year 2000. In 2012, the Bank and Red Bird agreed to extend the term through February 28, 2017 on terms comparable for similar space in the Lehigh Valley area. Red Bird received rents for the Gateway Drive location totaling $351,753 during 2013 and the Bank has an outstanding lease commitment to pay $1.16 million over the remaining term of the lease. Red Bird also owns 5,600 shares of Company common stock.
In March 2006, the Bank entered into a lease agreement with Frank Banko providing for the lease of 2,918 square feet of first floor office space for the purpose of opening a branch at 925 W. Broad St. in Bethlehem, which lease is now held by Director Frank Banko III. Prior to its execution, the Bank obtained a third party valuation of the market rent for the space and believes that the rental terms are fair, reasonable and comparable to the terms for similar space in the Lehigh Valley area. During 2013, the Bank paid $45,000 for rent of the West Broad St., Bethlehem, location and has an outstanding lease commitment to pay $120,000 over the remaining term of the lease.
Bernard M. Lesavoy, Esquire, serves as a Director of the Company and the Bank and is currently a principal of Lesavoy Butz & Seitz LLC. Lesavoy Butz & Seitz LLC provides legal services to the Company and the Bank. In 2013, the Company and the Bank paid $58,045 to Lesavoy Butz & Seitz LLC in consideration for such services.
Pursuant to the Company’s Code of Conduct (Ethics), the Board is responsible for overseeing transactions between the Company and/or the Bank and any of its affiliated parties, including Directors and Executive Officers. In accordance therewith, each of the foregoing transactions was approved by a majority of the disinterested Directors then in office. It is the policy of the Company to ensure that transactions with affiliates are conducted on an arm’s length basis.
We identify below each of the Executive Officers of the Company and the Bank, their age as of May 5, 2014, the position they currently hold and their professional experience. For purposes of this proxy statement, the Executive Officers identified below constitute the “Named Executive Officers” of the Company, as determined in accordance with SEC rules.
David M. Lobach, Jr., 64
See profile set forth above under the heading “Current Class 3 Directors”.
Judith A. Hunsicker, 53
Ms. Hunsicker is the Sr. Executive Vice President and Chief Operating and Financial Officer of the Company and the Bank, serving in such capacity since the organization of the respective entities in 2008 and 2001, respectively. She began her banking career in 1980. Prior to joining the Company, she was most recently a member of the senior management team of Lafayette Ambassador Bank and formerly Vice President and Chief Financial Officer of Ambassador Bank. Prior thereto, she was an Assistant Vice President/Commercial Services at First Valley Bank. She is a member of the Home Ownership Counseling Program of the Community Action Committee of the Lehigh Valley, and the Lehigh Valley CRA Officers Group. She serves on the finance committee of the Neighborhood Housing Services of the Lehigh Valley and previously served on the Board as its President. She is the chairperson and member of the boards and executive committees of the Lehigh Valley Community Land Trust, and Skills USA, Lehigh Valley Council. She also serves as an officer, board and executive committee member of Community Lender Community Development Corporation. She was previously a board member or volunteer with such organizations as the Bethlehem YMCA, New Bethany Ministries, Minsi Trails Council of the Boy Scouts of America, Lehigh Valley Coalition of Affordable Housing, and Junior Achievement of the Lehigh Valley.
James A. Bartholomew, 60
Mr. Bartholomew serves as Executive Vice President of the Company and the Bank, as well as Senior Lending Officer of the Bank. He began his banking career in 1974. Prior to joining the Bank at its inception on November, 2001, he was a Senior Vice President and Territory Sales Manager with PNC Bank (1992 to 2001), a Division Manager of Bank of Pennsylvania (1989 to 1992) and held various positions leading to Vice President at First Valley Bank (1974 to 1989). He has previously served as Chairman of the Board of Lehigh Valley Economic Development Corporation and on their Board of Directors. He has also served in the past as a Foundation Board Member at Bethlehem Catholic High School and Northampton Community College, and participated on the boards of the Allentown Boys Club, Hispanic American Organization and Allentown Economic Development Corporation.
Beneficial ownership of shares of the Company’s common stock is determined in accordance with SEC Rule 13d-3, which provides that a person should be credited with the ownership of any stock held, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, in which the person has or shares:
|
·
|
Voting power, which includes power to vote or to direct the voting of the stock;
|
|
·
|
Investment power, which includes the power to dispose or direct the disposition of the stock; or
|
|
·
|
The right to acquire beneficial ownership within 60 days after April 21, 2014.
|
The following table shows, to the best of the Company’s knowledge, those persons or entities, who owned of record or beneficially, on April 21, 2014, more than 5% of the Company’s outstanding common stock.
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership of Common Stock
|
Percentage of Common Stock Beneficially Owned
|
||||||
|
|
|
|
||||||
|
Frank Banko III
|
500,064
|
(1)
|
6.68
|
%
|
||||
|
c/o Embassy Bancorp, Inc.
|
||||||||
|
100 Gateway Drive, Suite 100
|
||||||||
|
Bethlehem, PA 18017
|
||||||||
(1) Includes 2,436 shares held by spouse and 2,543 shares attributable to Mr. Banko's interest in Red Bird.
The following table sets forth, as of April 21, 2014, and from information supplied by the respective persons, the amount and the percentage, if over 1%, of the common stock of the Company beneficially owned by each Director, each nominee for Director, each of the Named Executive Officers and all Executive Officers and Directors of the Company as a group.
|
Name of Individual or Identity of Group
|
Amount and Nature of Beneficial Ownership (1)
|
Percent of Class
|
||||||
|
|
|
|
||||||
|
Directors and Named Executive Officers
|
|
|
||||||
|
|
|
|
||||||
|
Frank Banko III
|
500,064
|
(2) |
6.68
|
%
|
||||
|
James R. Bartholomew
|
24,814
|
(3) |
*
|
|||||
|
Geoffrey F. Boyer
|
104,145
|
(4) |
1.39
|
%
|
||||
|
John P. Brew
|
305,516
|
(5) |
4.08
|
%
|
||||
|
Robert P. Daday
|
34,318
|
(6) |
*
|
|||||
|
John G. Englesson
|
82,643
|
(7) |
1.10
|
%
|
||||
|
Elmer D. Gates
|
263,629
|
(8) |
3.52
|
%
|
||||
|
M. Bernadette Holland
|
85,505
|
(9) |
1.14
|
%
|
||||
|
Judith A. Hunsicker
|
55,927
|
(10) |
*
|
|||||
|
Bernard M. Lesavoy
|
148,266
|
(11) |
1.98
|
%
|
||||
|
David M. Lobach, Jr.
|
369,823
|
(12) |
4.94
|
%
|
||||
|
John C. Pittman
|
369,348
|
(13) |
4.94
|
%
|
||||
|
John T. Yurconic
|
21,155
|
(14) |
*
|
|||||
|
|
||||||||
|
All Executive Officers, Directors and Nominees as a Group (13 Persons)
|
2,365,153
|
31.61
|
%
|
|||||
* Indicates beneficial ownership of less than 1%
(1) Unless otherwise indicated, to the knowledge of the Company, all persons listed have sole voting and investment power with respect to their shares of Company common stock, except to the extent authority is shared by spouses under applicable law. Pursuant to the rules of the SEC, the number of shares of common stock deemed outstanding includes shares issuable pursuant to options held by the respective person or group that are currently exercisable or may be exercised within 60 days of April 21, 2014 (“presently exercisable stock options”), in the amount of 72,414. Amounts reported in this column also include shares attributable to the respective person as a result of their ownership interest in Red Bird Associates, LLC. Fractional shares beneficially owned by such individuals have been rounded down to the number of whole shares beneficially owned. Beneficial ownership may be disclaimed as to certain of these shares.
(2) Includes 2,436 shares held by spouse and 2,543 shares attributable to Mr. Banko's interest in Red Bird.
(3) Includes 2,675 shares held jointly with spouse; 60 shares held by spouse as custodian for grandson; 60 shares held by spouse as custodian for granddaughter and 4,500 shares issuable pursuant to presently exercisable stock options.
(4) Includes 5,276 shares held by spouse; 12,043 shares held as custodian under UGMA; 206 shares attributable to Mr. Boyer's interest in Red Bird; and 1,425 shares issuable pursuant to presently exercisable stock options.
(5) Includes 35,250 shares held as custodian for BNK Advisory Group Retirement Plan and 1,425 shares issuable pursuant to presently exercisable stock options.
(6) Includes 32,348 shares held jointly with spouse; 545 shares attributable to Mr. Daday's interest in Red Bird; and 1,425 shares issuable pursuant to presently exercisable stock options.
(7) Includes 3,569 shares held by spouse; 2,794 shares held by spouse under UGMA; and 1,425 shares issuable pursuant to presently exercisable stock options.
(8) Includes 37,190 shares held as trustee of Mr. Gates's revocable trust; 218,781 shares held as trustee of spouse's revocable trust; and 1,425 shares issuable pursuant to presently exercisable stock options.
(9) Includes 150 shares held jointly with spouse, 47,391 shares held by spouse and 4,203 shares held by spouse as custodian under UGMA; and 1,425 shares issuable pursuant to presently exercisable stock options.
(10) Includes 51 shares held jointly with spouse; 51 shares held by son; 40 shares attributable to Ms. Hunsicker's interest in Red Bird; and 22,728 shares issuable pursuant to presently exercisable stock options.
(11) Includes 78,291 shares held jointly with spouse; 2,564 shares held by spouse; 22,301 held as custodian under UGMA; 412 shares attributable to Mr. Lesavoy's interest in Red Bird; and 1,425 shares issuable pursuant to presently exercisable stock options.
(12) Includes 45,174 shares held by spouse; 190 shares held jointly with son; 150 shares held as custodian under UGMA for granddaughter; 618 shares attributable to Mr. Lobach's interest in Red Bird; and 33,786 shares issuable pursuant to presently exercisable stock options.
(13) Includes 5,555 shares held by spouse; 150 shares held by spouse as custodian under UGMA; 618 shares attributable to Mr. Pittman's interest in Red Bird; and 1,425 shares issuable pursuant to presently exercisable stock options.
(14) All Shares held jointly with spouse.
Section 16(a) of the Securities Exchange Act of 1934, as amended (referred to herein as the “Exchange Act”), requires Directors, Executive Officers and persons who beneficially own more than 10% of the Company’s issued and outstanding common stock to file initial reports of ownership and reports of changes in beneficial ownership with the SEC. Such persons are also required to furnish the Company with copies of all Section 16(a) forms they file.
The Company believes that during the period January 1, 2013 through December 31, 2013, its Directors, Executive Officers and greater than 10% beneficial owners timely filed all reports required under Section 16(a) of the Exchange Act.
The following table summarizes the compensation paid by the Company to Directors for the fiscal year ended December 31, 2013, other than David M. Lobach, Jr., who did not receive compensation as a Director.
|
Name
|
Fees Earned or Paid in Cash
|
Restricted Stock Awards
|
Option Awards
|
Non-equity Incentive Plan Compensation
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings
|
All
Other Compensation (1)
|
Total
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Frank Banko III
|
$
|
4,878.00
|
$
|
4,872.00
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
104.00
|
$
|
9,854.00
|
||||||||||||||
|
Geoffrey F. Boyer
|
6,001.00
|
5,999.00
|
-
|
-
|
-
|
-
|
12,000.00
|
|||||||||||||||||||||
|
John P. Brew
|
4.80
|
11,424.00
|
-
|
-
|
-
|
142.00
|
11,570.80
|
|||||||||||||||||||||
|
Robert P. Daday
|
5,265.80
|
5,257.00
|
-
|
-
|
-
|
-
|
10,522.80
|
|||||||||||||||||||||
|
John G. Englesson
|
6,001.00
|
5,999.00
|
-
|
-
|
-
|
163.00
|
12,163.00
|
|||||||||||||||||||||
|
Elmer D. Gates
|
5,728.00
|
5,726.00
|
-
|
-
|
-
|
-
|
11,454.00
|
|||||||||||||||||||||
|
M. Bernadette Holland
|
4,889.00
|
4,879.00
|
-
|
-
|
-
|
130.00
|
9,898.00
|
|||||||||||||||||||||
|
Bernard M. Lesavoy
|
5,637.80
|
5,635.00
|
-
|
-
|
-
|
104.00
|
11,376.80
|
|||||||||||||||||||||
|
John C. Pittman
|
6,001.00
|
5,999.00
|
-
|
-
|
-
|
260.00
|
12,260.00
|
|||||||||||||||||||||
|
John T. Yurconic
|
5,560.00
|
5,558.00
|
-
|
-
|
-
|
42.00
|
11,160.00
|
|||||||||||||||||||||
(1) Includes bank owned life insurance "BOLI" purchased by the Company on certain of its employees and directors.
Pursuant to the Company’s Non-employee Director Compensation Program established in October 2010 and effective commencing with the 2011 fiscal year, each non-employee Director of the Company is entitled to receive annual compensation in the amount of $12,000 payable, at the election of the Director, in shares of Company common stock, par value $1.00 per share, or a combination of cash and Company common stock; provided, however, that the cash portion of any such election shall be limited to fifty percent (50%) of the total amount of the annual fee. On November 16, 2012, the Board approved an increase to the annual compensation paid to each non-employee Director of the Company to $15,000 effective with the 2013 fiscal year. Further, on January 17, 2014, the Board approved an increase to the annual compensation paid to each non-employee Director of the Company to $15,750 effective with the 2014 fiscal year. Company common stock issued in payment of the annual fee is issued pursuant to the Embassy Bancorp, Inc. 2010 Stock Incentive Plan.
In order for a Director to be eligible to receive the annual fee, a Director must have attended at least seventy-five percent (75%) of all meetings of the Board of Directors and of the committee(s) on which he or she serves held during the subject year. In the event that the Director attends at least seventy-five percent (75%), but less than one hundred percent (100%), of all such meetings held during a subject year, the annual fee will be prorated accordingly. For example, if a Director attended eighty percent (80%) of all meetings of the Board and of the committee(s) on which he or she serves held in 2012, he or she would be entitled to receive an annual fee equal to eighty percent (80%) of $12,000, or $9,600. If a Director attended seventy four percent (74%) of all such meetings held in 2012, he or she would not be entitled to receive an annual fee.
Non-employee Directors of the Company and the Bank remain eligible to participate in the Embassy Bancorp, Inc. 2010 Stock Incentive Plan. For information regarding the 2010 Stock Incentive Plan, see “Executive Compensation – Equity Incentive Plans” below.
The table below sets forth the compensation awarded to, earned by, or paid to each of the Named Executive Officers for the year ended December 31, 2013 and the prior fiscal year. While employed, executives are entitled to base salary, participation in the executive compensation programs identified below, and other benefits common to all employees of the Bank.
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Option Awards ($)(1)
|
Non-qualified Deferred Compensation Earnings ($)
|
All Other
Compensation
($) (2)
|
Total ($)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
David M. Lobach
|
2013
|
$
|
445,120
|
$
|
87,000
|
$
|
37,787
|
$
|
406,998
|
$
|
22,787
|
$
|
999,692
|
||||||||||||
|
CEO, President and
|
2012
|
$
|
422,900
|
$
|
85,000
|
$
|
23,381
|
$
|
255,574
|
$
|
20,943
|
$
|
807,798
|
||||||||||||
|
Chairman
|
|
||||||||||||||||||||||||
|
Judith A. Hunsicker
|
2013
|
$
|
297,460
|
$
|
58,000
|
$
|
25,252
|
$
|
75,461
|
$
|
10,695
|
$
|
466,868
|
||||||||||||
|
COO, CFO and
|
2012
|
$
|
278,000
|
$
|
56,000
|
$
|
15,694
|
$
|
65,331
|
$
|
9,909
|
$
|
424,934
|
||||||||||||
|
Senior Executive VP
|
|
||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
James R. Bartholomew
|
2013
|
$
|
225,714
|
$
|
38,000
|
$
|
-
|
$
|
117,541
|
$
|
5,980
|
$
|
387,236
|
||||||||||||
|
Executive Vice President
|
2012
|
$
|
210,948
|
$
|
36,000
|
$
|
-
|
$
|
88,271
|
$
|
3,925
|
$
|
339,144
|
||||||||||||
|
& SLO
|
|
||||||||||||||||||||||||
(1) Option awards are valued based upon the Black-Scholes option valuation model. The actual value, if any, that may be realized will depend on the excess of the stock price over the exercise price on the date the option is exercised. Therefore, there is no assurance the value realized will be at or near the value estimated by the Black-Scholes model. The assumptions underlying the Black-Scholes model are set forth in footnote 11 to our consolidated financial statements in our Annual Report on Form 10-K.
(2) Includes Deferred Salary Savings Plan (401 (k)) company matching contributions, life insurance premiums, and personal use of company vehicle.
The current annual salaries of the Named Executive Officers are: Mr. Lobach - $471,827; Ms. Hunsicker - $315,308 and Mr. Bartholomew - $239,257.
In 2003, the Bank adopted a 401(k) Plan for all of its employees, including the above Named Executive Officers. The Plan provides that the Bank will contribute 50% of the contribution made by each employee, with the Bank’s contribution not to exceed 4% of compensation. The Bank’s contribution to each of the Named Executive Officers is included in the table above in the column titled “All Other Compensation”.
In addition to the above described compensation, Executive Officers of the Company, as well as all other employees of the Company and the Bank, receive a benefit package consisting of hospitalization and health insurance coverage, optical and dental coverage, disability benefits and life insurance in the amount of three times annual salary in the event of death while employed. The Named Executive Officers each have employment agreements and supplement executive retirement plan agreements, as outlined below under “Agreements with Executive Officers,” and are eligible to participate in the Company’s 2010 Stock Incentive Plan, described below.
The following table sets forth information concerning the grant and exercise of stock options awarded to the Company’s Named Executive Officers. In accordance with their respective employment agreements, in February 2013 the Company issued an aggregate of 29,742 stock options to Mr. Lobach and Ms. Hunsicker (17,828 and 11,914 shares each, respectively) pursuant to the Company’s 2010 Stock Incentive Plan. These options vest ratably in three annual installments. No stock options were awarded from 2006 through 2011.
As of 12-31-13
|
|
|
Option Awards
|
||||||||||||
|
|
|
|
|
|
|
|||||||||
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Name and Principal Position
|
Year
|
Number of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
|||||||||
|
|
|
|
|
|
|
|||||||||
|
David M. Lobach
|
2013
|
-
|
17,828
|
$
|
7.00
|
02/22/22
|
||||||||
|
CEO, President and
|
2012
|
10,494
|
20,986
|
7.00
|
02/17/21
|
|||||||||
|
Vice Chairman
|
2005
|
12,799
|
-
|
10.00
|
12/29/14
|
|||||||||
|
|
Total
|
23,293
|
38,814
|
$
|
7.62
|
|
||||||||
|
|
|
|
||||||||||||
|
Judith A. Hunsicker
|
2013
|
-
|
11,914
|
$
|
7.00
|
02/22/22
|
||||||||
|
COO, CFO and
|
2012
|
7,044
|
14,087
|
7.00
|
02/17/21
|
|||||||||
|
Senior Executive VP
|
2005
|
8,640
|
-
|
10.00
|
12/29/14
|
|||||||||
|
|
Total
|
15,684
|
26,001
|
$
|
7.62
|
|
||||||||
|
|
|
|
||||||||||||
|
James R. Bartholomew
|
2005
|
4,500
|
-
|
$
|
10.00
|
12/29/14
|
||||||||
|
Executive Vice President
|
Total
|
4,500
|
-
|
$
|
10.00
|
|
||||||||
|
& SLO
|
|
|
||||||||||||
The Company does not currently maintain any non-qualified contributory deferred compensation plans in which its Named Executive Officers participate.
Employment Agreements
The Bank is party to an employment agreement, dated January 2006, with David M. Lobach, Jr., who is Chairman, President and Chief Executive Officer of the Company and the Bank. As amended, the agreement provides for perpetual employment until Mr. Lobach reaches the age of seventy, unless terminated for “cause” or otherwise as outlined in the agreement. Mr. Lobach currently receives an annual salary of $471,827, plus a bonus which shall not exceed 30% of his salary, as may be awarded by the Board of Directors. Mr. Lobach’s salary may be adjusted as mutually agreed by Mr. Lobach and the Bank. Mr. Lobach’s contract further provides for the potential annual award of stock options with market value of not less than 30% of his salary. Mr. Lobach’s contract also provides that in the event his employment terminates as a result of a change in control of the Company or Bank, he will receive 500% of his base salary and bonus in five annual payments and his health and other fringe benefits shall be continued for five years, in exchange for restrictive covenants which prohibit him from entering into business relationships which infringe on the operation of the Bank. See “Change in Control Provisions” below.
The Bank is party to an employment agreement, dated January 2006, with Judith A. Hunsicker, who is Sr. Executive Vice President, Chief Operating and Financial Officer of the Company and the Bank. As amended, the agreement provides for perpetual employment until Ms. Hunsicker reaches the age of seventy, unless terminated for “cause” or otherwise as outlined in the agreement. Ms. Hunsicker currently receives an annual salary of $315,308, plus a bonus which shall not exceed 30% of her salary, as may be awarded by the Board of Directors. Ms. Hunsicker’s salary may be adjusted as mutually agreed by Ms. Hunsicker and the Bank. Ms. Hunsicker’s contract further provides for the potential annual award of stock options with market value of not less than 30% of her salary. Ms. Hunsicker’s contract also provides that in the event her employment terminates as a result of a change in control of the Company or Bank, she will receive 500% of her base salary and bonus in five annual payments and her health and other fringe benefits shall be continued for five years, in exchange for restrictive covenants which prohibit her from entering into business relationships which infringe on the operation of the Bank. See “Change in Control Provisions” below.
The Bank is party to an employment agreement, dated February 2009, with Mr. Bartholomew, who is Executive Vice President of Commercial Lending. As amended, the agreement provides for a three year term with successive one year extensions, and at such salary and bonuses as shall be agreed by Mr. Bartholomew and the Bank. Mr. Bartholomew currently receives an annual salary of $239,257 and a bonus as may be awarded by the Board of Directors. Mr. Bartholomew’s contract also provides that in the event his employment terminates as a result of a change in control of the Company or Bank, he will receive 300% of his base salary in a lump sum and his health and other fringe benefits shall be continued for one year, in exchange for restrictive covenants which prohibit him from entering into business relationships which infringe on the operation of the Bank. See “Change in Control Provisions” below.
Mr. Lobach and Ms. Hunsicker’s employment agreements are automatically renewed, in perpetuity, until the age of 70, unless earlier terminated (1) by the Bank for cause, (2) by voluntary resignation or disability of the executive, (3) upon written notice from the Board of Directors for any other reason, with such termination effective five years from the date of notice, or (4) under the change in control provisions discussed below. Mr. Bartholomew’s employment agreement is for a three year term beginning February 2009, and thereafter automatically continues such that there is never less than three years remaining in the agreement, unless terminated upon prior notice.
Because potential payments to be made to the foregoing executives in connection with a change in control of the Company would subject the executives to a 20% excise tax as a golden parachute, the executives will be entitled to receive an additional gross up payment under the employment agreements equal to the total excise tax imposed. In the event such payments are made, the Internal Revenue Code and regulations promulgated thereunder provide that the golden parachute payment and tax gross up payment would not be deductible by the Company.
Supplemental Executive Retirement Plans
The Bank has entered into Supplemental Executive Retirement Plan agreements (“SERPs”) with Mr. Lobach which provide for the payment of benefits upon retirement. Benefits accrue through a normal retirement age of 65. Currently, the SERPs provide for the Bank’s annual payment of $283,096 to Mr. Lobach, of which $140,000 in benefits accrue through a normal retirement age of 65 and $143,096 in benefits accrue through a normal retirement age of 70, and are payable upon retirement after he reaches the specified normal retirement age. Lesser benefits are provided for retirement prior to the specified normal retirement age. The annual benefit is payable in equal monthly installments continuing for a period of fifteen (15) years.
The Bank has also entered into SERPs with Ms. Hunsicker and Mr. Bartholomew, which provide for the Bank’s annual payment of $189,185 to Ms. Hunsicker and $119,629 to Mr. Bartholomew upon their retirement after reaching age 65. Lesser benefits are provided for retirement prior to age 65. The annual benefit is payable in equal monthly installments continuing for a period of fifteen (15) years.
Pursuant to the agreements, if it is determined that any payment to be made to the foregoing executives under these agreements is subject to an excise tax imposed by Section 4999 of the Internal Revenue Code, the amounts payable to such executive under his or her agreement will be adjusted upward such that the executive will be in the same after-tax position as if no excise tax had been imposed.
Change in Control Provisions
The aforementioned employment agreements and SERPs with the Company’s Named Executive Officers all include change-in-control provisions which are designed to (1) assure the continuity of executive management during a threatened takeover; and (2) ensure executive management is able to objectively evaluate any change in control proposal and act in the best interests of shareholders during a possible acquisition, merger or combination. The Bank designed the agreements to be part of a competitive compensation package, thereby aiding in attracting and retaining top quality executives.
For purposes of the employment agreements and SERPs, “change in control” is defined to mean a change in the ownership or effective control of the Bank or the Company, as described in Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as amended.
With respect to Mr. Lobach and Ms. Hunsicker’s employment agreements, the executive is entitled to certain benefits if, at any time within two years after the change in control, any of the following triggering events occurs: (1) employment is terminated by the Bank for any reason other than cause or disability of the executive; or (2) employment is terminated by the executive for his/her reason. When a triggering event occurs following a change in control, Mr. Lobach and Ms. Hunsicker would be entitled to five times the sum of the executive’s annual base salary plus bonus, payable in five annual installments beginning on the effective date of resignation or termination, as well as health and other fringe benefits for a period of five years.
With respect to Mr. Bartholomew’s employment agreement, the executive is entitled to certain benefits if, at any time within one year after the change in control, any of the following triggering events occurs: (1) if he is discharged or resigns because the duties, position or title are materially changed, or (2) if he is relocated 50 miles beyond Routes 512 & 22 in Bethlehem, PA. When a triggering event occurs following a change in control, Mr. Bartholomew would be entitled to receive three times the sum of his annual base salary in one lump sum, payable within one year following the effective date of resignation or termination. Mr. Bartholomew would also receive health and other fringe benefits for one year.
With respect to the SERPs, if the individual’s employment with the Bank is involuntarily terminated within two years after a “Change in Control” (as defined above) of the Company, payment thereunder will commence immediately in an amount equal to the amount which would have been payable as though the executive retired from service with the Bank upon attaining normal retirement age.
If the individual is determined to be a “specified employee” (as defined in Section 409A of the Internal Revenue Code of 1986, as amended), payments to such individual pursuant to the employment agreements and SERPs, other than payments qualifying as short term deferrals or an exempt separation pay arrangement under Section 409A, shall not begin earlier than the first day of the seventh month after the date of termination.
Stock Option Plan
In connection with the reorganization of the Bank into a holding company structure, the Company assumed the Bank’s 2001 Stock Option Plan which was renamed the Embassy Bancorp, Inc. Option Plan (the “Plan”). The plan expired on May 10, 2011, and no new options may be granted under this plan. The Plan authorized the Board of Directors to grant options to officers, other employees and directors of the Company. The options granted under the Plan to directors were non-qualified options. The options granted under the Plan to officers and other employees were generally intended to be “incentive stock options,” and are subject to the limitations under Section 422 of the Internal Revenue Code. Shares issued upon exercise of options under the Plan may be funded from authorized but unissued shares of the Company or shares purchased in the open market.
All options granted under the Plan were subject to vesting requirements of not less than three years and the term shall not exceed ten years. The exercise price of the options granted was intended to reflect the fair market value of a share of common stock at the time of the grant. The purpose of the Option Plan was to enable the Company to attract and retain qualified persons as directors, officers and employees of the Company. For their services and efforts in organizing the Bank during the 15 month period prior to its opening for business and in consideration of the “risk” subscriptions by the original founding Directors to cover the organizational and pre-opening expenses of the Bank, each of the founding Directors was issued nine-year options under the Option Plan, including Mr. Lobach. In addition, each non-employee Director, with the exception of Mr. Banko III and Mr. Yurconic, received the following additional options for his or her services as such and for his or her services on the various committees of the Board:
|
Year
|
Number of Options
|
Exercise Price ($)
|
||||||
|
2005
|
1,425
|
10.00
|
||||||
The remaining options held by the Directors, other than Mr. Lobach (see the above table titled “Outstanding Equity Awards at Fiscal Year End” for information pertaining to Mr. Lobach), are exercisable at a weighted average price of $10.00 per share. The total number of options currently outstanding and exercisable and held by each Director is included in the table above titled “Beneficial Ownership of Principal Owners, Directors and Executive Officers”. In addition to the options held by Directors and Executive Officers of the Company, options have been granted to various employees of the
Company under the terms and for the purposes set forth in the Option Plan. In total, options for the purchase of 67,339 shares are outstanding at December 31, 2013
under the Option Plan at a weighted average exercise price of $10.00 per share.
No options were granted under the Option Plan from 2006 through 2012.
Stock Incentive Plan
At the Company’s annual meeting on June 16, 2010, the shareholders approved the Embassy Bancorp, Inc. 2010 Stock Incentive Plan (the “SIP”). The SIP authorizes the Board of Directors, or a committee authorized by the Board of Directors, to grant a stock award to (i) designated officers (including officers who are directors) and other designated employees at the Company and its subsidiaries, and (ii) non-employee members of the Board of Directors and advisors and consultants to the Company and its subsidiaries. The Board of Directors believes that the SIP will cause the designated participants to contribute materially to the growth of the Company. Awards issued under the SIP may take the form of incentive stock options as provided in Section 422 of the Internal Revenue Code of 1986, non-qualified stock options, stock appreciation rights, restricted stock and deferred stock awards. The terms of the awards, including the vesting schedule, if any, will be determined by the Board (or committee) at the time of grant. All options granted under the SIP will not have a term in which it may be exercised that is more than ten years from the time the option is granted.
As of April 21, 2014, the aggregate number of shares available for issuance under the SIP is 361,019. The SIP provides for appropriate adjustments in the number and kind of shares available for issuance thereunder in order to avoid dilution in the event of merger, stock splits, stock dividends or other changes in the capitalization of the Company. The SIP expires on June 15, 2020. In February 2013, the Company issued an aggregate of 8,764 shares of restricted stock to non-employee Directors in connection with the Non-employee Director Compensation Program, as well as stock options to purchase an aggregate of 29,742 shares of common stock to Mr. Lobach and Ms. Hunsicker (17,828 and 11,914 shares each, respectively), pursuant to the terms of their employment agreements. In total, options for the purchase of 82,353 shares are outstanding as of December 31, 2013 under the Incentive Plan at a weighted average exercise price of $7.00.
No awards were granted under the SIP during 2011 and 2010.
Awards issued under the Option Plan and SIP vest automatically upon a change in control of the Company.
RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Company’s Audit Committee has recommended, and the Company’s Board of Directors has approved, the selection of ParenteBeard LLC as the Company’s independent registered public accounting firm for the year ending December 31, 2014. The Board of Directors proposes that the shareholders ratify this selection. ParenteBeard LLC served as the Company’s independent registered public accounting firm for the 2013 fiscal year. Representatives of ParenteBeard LLC will attend the annual meeting, will have an opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.
Vote Required for Approval
The affirmative vote of a majority of the votes cast, in person or by proxy, is required to ratify the appointment of ParenteBeard LLC as the Company’s independent registered public accounting firm. Abstentions and broker non-votes will have no effect in calculating the votes on this proposal.
Recommendation of the Board of Directors
The Board of Directors recommends a vote
FOR
the ratification of the selection of ParenteBeard LLC as independent registered public accounting firm of the Company for the year ending December 31, 2014.
The Company’s independent registered public accounting firm for the year ended December 31, 2013 was ParenteBeard LLC and such firm is expected to be the Company’s independent registered public accounting firm for the current year. Representatives of the firm are expected to be present at the shareholder’s meeting for questions and will be given an opportunity to make a statement if they so desire.
Audit Fees and Other Fees
The following fees were paid by the Company to ParenteBeard LLC for services rendered in 2013 and 2012:
|
2013
|
2012
|
|||||||
|
|
|
|
||||||
|
Audit fees (1)
|
$
|
75,745
|
$
|
74,467
|
||||
|
Audit -related fees (2)
|
-
|
2,591
|
||||||
|
Tax fees (3)
|
15,673
|
9,163
|
||||||
|
All other fees (4)
|
-
|
45,695
|
||||||
|
|
$
|
91,418
|
$
|
131,916
|
||||
(1) Includes professional services rendered for the audit of the Company’s annual financial statements and review of financial statements included in Forms 10-Q and 10-K, or services normally provided in connection with statutory and regulatory filing and engagements, including out-of-pocket expenses.
(2) Includes assurance and related services reasonably related to the performance of the audit or review of financial statements.
(3) Tax fees include the following: preparation of state and federal tax returns and consultation on various other tax matters.
(4) Other fees for 2012 include assistance in implementing XBRL reporting.
The Audit Committee met four times during 2013. The Audit Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2013, with the Company’s management. In addition, the Committee has discussed with ParenteBeard LLC, the Company’s independent registered public accounting firm, the matters required to be discussed with the auditors, under PCAOB Auditing Standard No. 16, which include, among other items, matters related to the conduct of the audit of the Company’s financial statements. The Audit Committee has also received the written disclosures and the letter from ParenteBeard LLC required by PCAOB Rule 3526, and has discussed with ParenteBeard LLC its independence from the Company and its management with regard to all services provided.
The Audit Committee has considered whether the services rendered by ParenteBeard LLC with respect to audit, audit related, tax and other fees are compatible with maintaining their independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements of the Company for the fiscal year ended December 31, 2013, be included in the Company’s Annual Report on Form 10- K for the fiscal year ended December 31, 2013, for filing with the Securities and Exchange Commission.
The Audit Committee has adopted an Audit Committee Charter, the current version of which is available on the Company’s website at www.embassybank.com under “Investor Relations.”
March 28, 2014
John P. Brew, Chairman
Geoffrey F. Boyer
John G. Englesson
Bernadette M. Holland
John T. Yurconic
The Company’s 2013 Annual Report on Form 10-K for the year ended December 31, 2013 is being mailed with this proxy statement. The Company will provide, without charge, to any shareholder requesting the same in writing, a complete copy of its Annual Report on Form 10-K, as filed with the SEC. Such requests should be directed to Judith A. Hunsicker, Corporate Secretary, at the address shown on the first page of this proxy statement. The Form 10-K is also available on the SEC website at
http://www.sec.gov
and on the Company’s website at
www.embassybank.com
under “Investor Relations”.
As of the date of this proxy statement, the Board of Directors has no knowledge of any matters to be presented at the meeting other than those referred to above. If any other matters shall properly come before the meeting and be voted upon, your properly executed proxy card will be deemed to confer discretionary authority on the individuals named as proxies therein to vote the shares represented by such proxies as to any such matters in accordance with the direction of the Company’s Board of Directors.
REVOCABLE PROXY
EMBASSY BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
JUNE 19, 2014
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David M. Lobach, Jr. and Judith A. Hunsicker, or either of them, with full power of substitution, to act as proxies for the undersigned to vote all shares of common stock of Embassy Bancorp, Inc. (the “Company”) which the undersigned is entitled to vote at the 2014 Annual Meeting of Shareholders to be held at the Best Western Lehigh Valley Hotel and Conference Center at 300 Gateway Drive, Bethlehem, Pennsylvania, at 5:30 p.m. E.D.T. on Thursday, June 19, 2014, and at any adjournments or postponements thereof, as follows:
|
1.
|
Proposal to elect four directors to Class 1 for a three (3) year term.
|
Nominees: Frank “Chip” Banko III, Geoffrey F. Boyer, John P. Brew, Jr, Robert “Bert” P. Daday.
o
FOR all nominees listed herein
o
WITHHOLD AUTHORITY to vote for all
(except as withheld)
nominees listed herein
(Instructions: To withhold authority to vote for any individual nominee, strike that nominee’s name appearing above.)
Shareholders may vote cumulatively in the election of directors. This means that a shareholder may multiply the number of shares held by the number of directors to be elected and cast the total number of votes so obtained for any one candidate or to divide such votes among candidates in any manner the shareholder desires.
o
Check here if voting cumulatively and write the number of votes cast on the appropriate line (s) below:
|
Frank “Chip” Banko III
|
|
Geoffrey F. Boyer
|
|
|
|
|
|
|
|
John P. Brew, Jr
|
|
Robert “Bert” P. Daday
|
|
2.
|
Proposal to ratify the selection of ParenteBeard LLC as independent registered public accounting firm.
|
o
FOR
o
AGAINST
o
ABSTAIN
______ PLEASE CHECK IF YOU PLAN TO ATTEND THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
PROPOSALS 1, AND 2.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, AND 2. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE NAMED PROXIES AT THE DIRECTION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 19, 2014:
The Proxy Statement, the Notice of Annual Meeting of Shareholders, a form of the Proxy Card and the 2013 Annual Report to Shareholders are available at http://materials.proxyvote.com/290791.
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Print Name
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(Signature(s) of shareholder) | (Date) |
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| Print Name |
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(Signature(s) of shareholder) | (Date) |
|
Please sign exactly as your name appears on this card. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder may sign but only one signature is required.
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
IF YOUR ADDRESS HAS CHANGED, PLEASE INSERT YOUR ADDRESS IN THE FOLLOWING LINE:
TABLE OF CONTENTS
Annual Meeting InformationWho is entitled to vote?On what am I voting?How does the Board of Directors recommend I vote?How do I vote?How do I change my vote?What is a quorum?What vote is required to approve each proposal?Who will count the vote?How are proxies being solicited?What is the deadline for shareholder proposals for next years annual meeting?Internet Availability of Proxy MaterialsCautionary Statement Regarding Forward-Looking StatementsProposal 1 - Election of DirectorsBoard of DirectorsNominees for ElectionInformation as to Nominees and DirectorsGovernance of the CompanyDirector IndependenceLeadership Structure of the Board; Lead DirectorRole of the Board of Directors in Risk OversightAttendance at MeetingsCommittees of the Board of DirectorsNominating ProcessShareholder CommunicationsCode of Conduct (Ethics)Certain Relationships and Related TransactionsExecutive OfficersInformation Concerning Share OwnershipBeneficial Ownership of Principal HoldersBeneficial Ownership of Executive Officers and DirectorsSection 16(a) Beneficial Ownership Reporting ComplianceInformation Concerning CompensationDirector CompensationDirector Summary Compensation TableNon-employee Director Compensation ProgramEquity Incentive PlansExecutive CompensationSummary Compensation TableOutstanding Equity Awards at Fiscal Year-End TableAgreements with Executive OfficersEquity Incentive PlansProposal 2 Ratification of Independent Registered Public Accounting FirmRelationship with Independent Public Accountants