FARMERS & MERCHANTS BANCORP
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Rule 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
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March 28, 2025
Dear Fellow Stockholder:
I am delighted to invite you to attend our Annual Meeting (the “Annual Meeting” or “Meeting”) of Stockholders of Farmers & Merchants Bancorp (the
“Company”). The Meeting will be held at 2:00 P.M., Pacific Time, on May 12, 2025 by means of remote communication (commonly referred to as a “
virtual
” meeting).
You will find information in the enclosed proxy statement on how to attend the Meeting. The Board of Directors has determined that the 2025 Annual Meeting will once again be held over the web in a virtual meeting format only. You will not be
able to attend the Annual Meeting in person.
Your vote is important, regardless of the number of shares you hold. We will begin mailing proxy statements and the Company’s 2024 annual
report on or about April 4, 2025.
Even if you do not plan to attend the Annual Meeting, please read the enclosed proxy statement and
vote
your shares as promptly as possible by mail, telephone or the internet
. Voting promptly will save the Company additional expense in soliciting proxies and will ensure that your shares are represented at the
Meeting. Also, please retain a copy of your proxy card, since you will need information on the proxy card to access the virtual meeting.
If you need assistance in voting or have any questions, please contact Jehna Silva, VP Shareholder Relations at (209) 367-2348.
Our Board and management are committed to the success of the Company which in turn allows us to support all stakeholders in a balanced manner, including
our stockholders, clients, associates, and the communities we serve. Thank you for your continued confidence and support.
Sincerely,
Kent A. Steinwert
Chairman, President, and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 28, 2025
NOTICE
is hereby given that the 2025 Annual
Meeting of Stockholders of Farmers & Merchants Bancorp will be held:
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DATE
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May 12, 2025
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TIME
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2:00 p.m. Pacific Time
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LOCATION (VIRTUAL)
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This year’s Annual Meeting will be conducted solely online via live webcast. There is no
physical location for the Annual Meeting. You will be able to attend the Annual Meeting online, and vote your shares by mail, telephone, or the internet. You will be able to submit your questions during the Meeting by logging into
www.meetnow.global/M7Y67WY.
Additionally, you will need to enter the 15 digit control
number that is printed in the shaded bar on the front of your proxy card.
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ITEMS OF BUSINESS
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No.
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Proposal
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1.
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Elect seven (7) director nominees named in this proxy statement each for a term of one year.
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RECORD DATE
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Holders of record of the Company’s voting common stock at the close of business on March 14, 2025 (the “Record Date”) will be entitled to vote at
the Meeting or any adjournment or postponement of the Meeting.
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ANNUAL REPORT
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The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission (“SEC”) on March 14, 2025
(the “Annual Report”), accompanies this proxy statement.
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AVAILABLE MATERIALS
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The Company’s proxy statement and the Annual Report are also available on the internet at
www.fmbonline.com
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PROXY VOTING
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It is important that your shares be represented and voted at the Meeting. You can vote your shares by completing the enclosed proxy card and returning it by mail.
Registered stockholders, that is, stockholders who hold stock in their own names, can also vote their shares by telephone or via the internet. If your shares are held through a bank, broker or other nominee, check your proxy card to see
if you can also vote by telephone or the internet. Regardless of the number of shares you own, your vote is very important.
Please vote today
.
If you need assistance in voting or have any questions please contact Jehna Silva, VP Shareholder Relations at (209) 367-2348.
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- 2 -
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MEETING ADMISSION
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If you are a registered stockholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the virtual Annual
Meeting. Please follow the instructions on the notice or on the proxy card that you received. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the virtual Annual Meeting.
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To register to attend the virtual Annual Meeting you must submit proof of your proxy power (legal proxy) reflecting your Farmers & Merchants Bancorp holdings along
with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, or 2:00 p.m., Pacific Time, on May 8, 2025. You will receive a
confirmation of your registration by email after we receive your registration materials.
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Requests for registration should be directed to the following:
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Email:
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Forward the email from your broker granting you a Legal Proxy, or attach an image of your legal proxy to
legalproxy@computershare.com
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Mail:
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Computershare
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Farmers & Merchants Bancorp Legal Proxy
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P.O. Box 43001
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Providence, RI 02940-3001
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The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell
phones) running the most up-to-date version of applicable software and plug-ins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the Meeting. We encourage you to access the
Meeting prior to the start time. A link on the meeting page will provide further assistance should you need it.
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Please complete, sign and date, as promptly as possible, the enclosed proxy and immediately return it in the envelope provided for your use. This is important whether
or not you plan to join the virtual Annual Meeting. The giving of such proxy will not affect your right to revoke such proxy or to vote online, should you join the virtual Annual Meeting. Please retain a copy of your proxy card since
you will need information on the card to access the virtual meeting.
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March 28, 2025
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BY ORDER OF THE BOARD OF DIRECTORS
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/s/ Bart R. Olson
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Bart R. Olson
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Corporate Secretary
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- 3 -
PROXY STATEMENT FOR THE 2025 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 2025
General Information
The Board of Directors (the “Board of Directors” or “Board”) is providing you with these proxy materials in connection with its solicitation of proxies to
be voted at our 2025 Annual Meeting of Stockholders (the “Annual Meeting” or “Meeting”) to be held virtually on May 12, 2025, at 2:00 p.m., Pacific Time. In this Proxy Statement, Farmers & Merchants Bancorp may also be referred to as “we,”
“our” or “the Company.” The Notice of Annual Meeting, Proxy Statement, and a proxy or voting instruction card (the “Proxy Card”), together with our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Annual
Report”), are being mailed starting on or about April 4, 2025.
Items of Business
The Board is asking you to vote on the following items at the Annual Meeting:
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No.
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Proposal
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1.
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Elect seven (7) director nominees named in this proxy statement each for a term of one year.
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Who Can Vote
Only stockholders of record at the close of business on March 14, 2025 (the “Record Date”), will be
entitled to vote online at the virtual meeting or by proxy. On the Record Date, there were 699,798 shares of common stock outstanding and entitled to vote. Holders of common stock of the Company are entitled to one vote for each share held.
However, with respect to the election of Directors, each stockholder may be eligible to exercise cumulative voting rights.
See “Other Matters – Cumulative Voting” for additional information.
Notice and Access (Electronic Proxy)
Farmers & Merchants Bancorp offers electronic access in lieu of mail delivery of our Annual Report
and Proxy Statement. Should you want to elect not to receive a paper copy of our Annual Report and Proxy Statement, please sign up at
www.envisionreports.com/FMCB
. You may rescind electronic access at any time.
If you make this election, shortly before the Meeting you will receive a proxy card, along with voting instructions and the web address where you can
access that year’s annual report and the proxy statement.
If you have any questions regarding electronic access, please call Jehna Silva, VP Shareholder Relations, at (209) 367-2348.
Voting of Proxies
The shares represented by all properly executed proxies received in time for the virtual meeting will be voted in accordance with the stockholders’
choices specified therein.
Voting Requirements
In the election of Directors, the seven (7) director nominees receiving the most affirmative votes will be elected to the Board of Directors. Abstentions
and broker non-votes will have no effect on the election of Directors.
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Number of Shares Required to be Present to Hold the Meeting
A majority of the shares entitled to vote, represented either online during the virtual meeting or by properly executed proxies, will constitute a quorum
at the virtual meeting. Abstentions and broker “non-votes” are each included in the determination of the number of shares present and voting for purposes of determining the presence of a quorum. A broker “non-vote” occurs when a nominee holding
shares for a beneficial owner does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.
If a quorum is not present at the scheduled time of the Meeting, the chair of the Meeting or the holders of a majority of the shares of voting common
stock entitled to vote who are represented either online during the virtual meeting or by proxy, may adjourn the Meeting to another date, place or time. The time and place of the adjourned Meeting will be announced at the time the adjournment
is taken. An adjournment will have no effect on the business that may be conducted at the Annual Meeting.
How to Vote Your Shares
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You can vote your proxy by mail.
If you
properly complete, sign and return the proxy card, it will be voted in accordance with your instructions.
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You can vote your proxy by telephone.
If you are a registered stockholder, that is, if your shares are held in your own name, you can vote by telephone by following the instructions included on the proxy card. If you vote by telephone, you do not have to mail in your
proxy card. If your shares are held through a bank, broker or other nominee, check your proxy card to see if you can vote by telephone.
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You can vote your proxy via the internet.
If you are a registered stockholder, you can vote via the internet by following the instructions included on the proxy card. If your shares are held through a bank, broker or other nominee, check your proxy card to see if you
can also vote via the internet.
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You can vote online during the Annual Meeting.
If you are a registered stockholder, you can vote online during the Meeting. If your shares of common stock are held through a bank, broker or other nominee and you wish to vote your shares of common stock online during the
Meeting, you will need to obtain a legal proxy from the holder of your shares of common stock indicating that you were the beneficial owner of those shares of common stock on the Record Date for the Annual Meeting, and that you are
authorized to vote such shares of common stock. You are encouraged to vote by proxy prior to the Annual Meeting even if you plan to attend the Meeting.
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Revoking Your Proxy
If you are a registered stockholder, you can revoke your proxy and change your vote at any time before the polls close at the Annual Meeting by:
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submitting another proxy with a later date;
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giving written notice of the revocation of your proxy to the Company’s Corporate Secretary prior to the Meeting; or
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voting during the Meeting. (Your proxy will not be automatically revoked by your attendance at the Annual Meeting; you must actually vote during the Meeting to revoke
a prior proxy.)
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If your shares are held in street name, you should follow the instructions provided by your bank, broker or other holder of record to be able to
participate in the Meeting.
Proxy Solicitation Costs
The enclosed proxy is solicited on behalf of the Company’s Board of Directors. The Company will pay the cost of soliciting proxies in the accompanying
form. The Company’s officers, who will not be paid any additional compensation for such solicitation, may solicit proxies by mail, telephone, or fax. Upon request, the Company will reimburse brokers, dealers, banks and trustees, or their
nominees, for reasonable expenses incurred by them in forwarding proxy material to beneficial owners of the Company’s shares of common stock.
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Inspectors of Election
The Board of Directors has appointed two officers of the Company to act as Inspectors of Election at the Annual Meeting and Computershare to tabulate the
votes cast.
Director Nominees Unable to Stand for Election
If a Director nominee is unable to stand for election, the Board of Directors may either reduce the number of Directors to be elected or select a
substitute Director nominee. If a substitute Director nominee is selected, the persons named in the proxy will vote your shares for the substitute Director nominee unless you have withheld authority to vote for the Director nominee replaced.
Voting Results of the Meeting
We will announce preliminary voting results at the Annual Meeting and subsequently publish the results
of the votes, including the name of each Director elected at the Meeting, as well as a brief description of each matter voted upon, in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission (the “SEC”) within
four business days after the date of the Annual Meeting (on or before May 16, 2025). You may view this Current Report on Form 8-K, when available, on the Internet through the SEC’s website at
www.sec.gov
or through our website at
www.fmbonline.com
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Multiple Proxy Cards
If you receive multiple Proxy Cards, your shares are probably registered differently or are in more than one account. Vote all Proxy Cards received to
ensure that all your shares are voted. Unless you need multiple accounts for specific purposes, we recommend that you consolidate as many of your accounts as possible under the same name and address. If the shares are registered in your name,
contact our transfer agent, Computershare, at (800)736-3001; otherwise, contact your bank, broker or other nominee.
Board of Directors Voting Recommendations
The voting recommendations from the Board of Directors are as follows:
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No.
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Proposal
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Board Recommendation
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1.
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Elect seven (7) director nominees named in this proxy statement each for a term of one year.
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FOR
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ANNUAL MEETING BUSINESS MATTERS
PROPOSAL NO. 1—ELECTION OF DIRECTORS
The Board of Directors recommends a vote “FOR” each of the nominees listed below.
At this year’s virtual Annual Meeting, it will be proposed to elect seven (7) directors of the Company, each to hold office until the next annual meeting
and until their successors shall be elected and qualified. It is the intention of the proxy holders named in the enclosed proxy to vote such proxies (except those containing contrary instructions) for the seven (7) nominees named below.
- 6 -
The following table sets forth the names of each of the nominees for election as a Director, their age, their principal occupation for the past five years
and the period during which they have served as a Director of the Company (or the Bank).
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Name
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Age
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Principal Occupation
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Director
Since
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Edward Corum, Jr.
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72
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Managing General Partner, Corum Real Estate
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2003
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Stephenson K. Green
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79
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Retired Banker and Business Consultant
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2018
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Craig W. James
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65
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Owner, Insurance Brokerage
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2018
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Gary J. Long
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72
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Owner, Gary J. Long Jewelers
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2014
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Kevin Sanguinetti
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66
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Retired President, 1st American Title Company - Stockton
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2001
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Deborah E. Skinner
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62
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Retired Banker
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2025
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Kent A. Steinwert
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72
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Chairman, President & Chief Executive Officer
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1998
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Edward Corum, Jr.
Director since 2003
Chairman of the Personnel Committee; Member of the Nominating Committee, Audit & Risk Committee, and Co-Chairman of the Loan
Committee
Mr. Corum has served as a Director for 21 years, lives and is actively involved in the Sacramento market area, and provides real estate and financial
expertise to the Board.
Stephenson K. Green
Director since 2018
Member of the Audit & Risk Committee, and Personnel Committee, Chairman of the CRA Committee
Mr. Green has served as a Director for 7 years. Prior to his retirement in 2012, Mr. Green worked for 40 years in the commercial banking industry in
California. He lives and is actively involved in the Sacramento market area, and provides business banking and credit management expertise to the Board.
Craig W. James
Director since 2018
Co-Chairman of the Asset Liability Committee and Member of the CRA Committee
Mr. James has served as a Director of the Bank or the Company for 7 years. The Bank added Mr. James, a former director of Bank of Rio Vista, to the
Bank’s Board of Directors in connection with the Company’s acquisition agreement with Bank of Rio Vista. During 2022, Mr. James became a Director of the Company, as well as the Bank. Mr. James currently is an Owner/Broker of Northwestern
Insurance. He lives and is actively involved in the Lodi market area, and provides agriculture and small business expertise to the Board.
Gary J. Long
Director since 2014
Member of the Nominating Committee, Asset Liability Committee, and CRA Committee
Mr. Long has served as a Director for 10 years, lives and is actively involved in the Stockton market area, and provides small business expertise to the
Board.
Kevin Sanguinetti
Director since 2001
Chairman of the Audit & Risk Committee; Member of the Asset Liability Committee and Personnel Committee
Mr. Sanguinetti has served as a Director for 23 years, is actively involved in the Stockton market area, and provides real estate and financial expertise
to the Board.
Deborah E. Skinner
Director since 2025
Member of the CRA Committee and Asset Liability Committee
Ms. Skinner has worked for 40 years in the commercial banking industry primarily in California. For 24 years she was the Chief Administrative Officer of
the Company before retiring on December 31, 2024. She lives and is actively involved in the Lodi market area, and provides a deep understanding of the banking industry, banking operations, information technology and cybersecurity expertise to
the Board.
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Kent A. Steinwert
Director since 1998
Chairman of the Board of Directors; President and Chief Executive Officer; Chairman of the Nominating Committee; Member of the Asset
Liability Committee and Loan Committee
Mr. Steinwert has served as a Director for 26 years, and has 50 years of business, agriculture, real estate and consumer banking experience.
All nominees are considered to be “independent” as such term is defined by Nasdaq’s current listing rules with the exception of Ms. Skinner and Mr.
Steinwert. Ms. Skinner was employed by the Company during the last three years and has not received a salary from the Company following her retirement on December 31, 2024. Ms. Skinner served as a consultant to the Company from January 1,
2025 to January 24, 2025 and received compensation for such services. Mr. Steinwert is currently an employee of the Company, and does not receive additional compensation for his participation as a Board member, a committee member, or the
Chairman of the Board. Each of the nominees has been selected by the Nominating Committee.
None of the Directors were selected pursuant to arrangements or understandings other than with the Directors and stockholders of the Company acting within
their capacity as such. There are no family relationships among the Directors and executive officers, and none of the Directors serves as a Director of any company which has a class of securities registered under, or subject to periodic
reporting requirements of, the Securities Exchange Act of 1934, as amended, or any company registered as an investment company under the Investment Company Act of 1940.
The Nominating Committee of the Board of Directors follows the Bank’s policy regarding diversity in identifying new Director candidates. The Committee
looks to establish diversity on the Board through a number of demographics, experiences, skills and viewpoints, all with a view to identifying candidates that can assist the Board with its decision making. The Committee believes that the
current Board of Directors reflects diversity across a number of these factors.
The Board does not anticipate that any of the nominees will be unable to serve as a Director of the Company, but if that should occur before the Meeting,
the Board of Directors reserves the right to substitute as nominee another person of its choice in the place and stead of any nominee unable to serve. Proxy holders would vote to approve the election of such substitute nominee. The proxy
holders reserve the right to cumulate votes for the election of Directors and cast all of such votes for any one or more of the nominees, to the exclusion of the others, and in such order of preference as the proxy holders may determine in
their discretion, based upon the recommendation of the Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the knowledge of the Company, as of the Record Date, no person or entity was the beneficial owner of more than five percent (5%) of the outstanding
shares of the Company’s common stock.
For the purpose of this disclosure and the disclosure of shares owned by management, shares are considered to be “beneficially” owned if the person has or
shares the power to vote or direct the voting of the shares, the power to dispose of or direct the disposition of the shares, or the right to acquire beneficial ownership (as so defined) within 60 days of the Record Date.
The following table shows, as of the December 31, 2024, the number of common shares and the percentage of the total shares of common stock of the Company
beneficially owned by each of the current directors, by each of the nominees for election to the office of director, by each of the Named Executive Officers (as defined below) and by all directors and Named Executive Officers of the Company and
of the Bank as a group. Unless otherwise indicated, all shares of common stock held by each individual named in the table below are held by the trustee (the “Trustee”) of the Farmers & Merchants Bank of Central California and Farmers &
Merchants Bancorp Executive Retirement Plan Trust and the Senior Management Retention Plan Trust, which held as of December 31, 2024, a total of 68,524 shares (9.79% of the outstanding shares) attributable to the Directors and officers, some of
which are attributable below:
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Name and Address of Beneficial Owner
(1)
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Amount and
Nature of
Beneficial
Ownership
(2)(17)
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Percent of
Class
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Thomas A. Bennett
(3)
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53
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*
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Edward Corum, Jr.
(4)
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2,236
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*
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Stephenson K. Green
(5)
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743
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*
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Troy D. Harper
(6)
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-
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*
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Craig W. James
(7)
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472
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*
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Gary J. Long
(8)
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1,899
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*
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Ryan J. Misasi
(9)
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2,997
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*
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Bart R. Olson
(10)
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690
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*
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Kevin Sanguinetti
(11)
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8,285
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1.18%
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Deborah E. Skinner
(6)(12)
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4,842
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*
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Kent A. Steinwert
(13)
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31,538
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4.51%
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Calvin (Kelly) Suess
(14)
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3,394
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*
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John W. Weubbe
(15)
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901
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*
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David M. Zitterow
(16)
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1,520
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*
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All Directors, Nominees and Named Executive Officers as a group (14 persons)
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59,570
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8.51%
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* Beneficial ownership does not exceed one percent of common stock outstanding.
The table above includes the following notes:
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(1)
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Mail should be sent to a beneficial owner at the Company’s address marked “c/o Shareholder Relations”
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(2)
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Shares held by the Trustee are voted as directed by the Bank
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(3)
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53 shares held by Trustee
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(4)
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1,631 shares held by Trustee
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(5)
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558 shares held by Trustee
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(6)
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Ms. Skinner served as the Company’s Chief Administrative Officer until her retirement date of December 31, 2024, Mr. Harper joined the Company effective December 9,
2024 and assumed the role of Chief Administrative Officer on January 1, 2025; Ms. Skinner joined the Board of Directors effective January 15, 2025
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(7)
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389 shares held by Trustee
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(8)
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1,036 shares held by Trustee
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(9)
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2,887 shares held by Trustee
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(10)
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690 shares held by Trustee
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(11)
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1,397 shares held by Trustee
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(12)
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4,727 shares held by Trustee
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(13)
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29,725 shares held by Trustee
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(14)
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1,594 shares held by Trustee; Mr. Suess resigned from the Board of Directors effective January 14, 2025
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(15)
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901 shares held by Trustee
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(16)
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1,520 shares held by Trustee; and
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(17)
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All shares are beneficially owned, directly and indirectly, together with spouses. Unless otherwise indicated holders of shares which are not held by the Trustee,
share voting power with their spouses. None of the shares are pledged. The Company does not have an anti-hedging or anti-pledging policy.
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CORPORATE GOVERNANCE
Code of Ethics and Insider Trading Policy
The Company has adopted a Code of Conduct. A copy of the Code of Conduct will be provided, without charge, to any stockholder by mail. Requests should be
sent to the Company’s address, with Attention: Shareholder Relations. The Company intends to disclose promptly on its website any amendment to, or waiver from any provision of, the Code of Conduct applicable to executive officers and
Directors.
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The Company has
adopted an Insider Trading Policy
that governs the purchase, sale and other dispositions of our securities by directors, officers, and employees, as well as by the Company itself. We believe that the policies and procedures set forth in our Insider Trading Policy are
reasonably designed to promote compliance with insider trading laws, rules and regulations. A copy of the Insider Trading Policy was filed as Exhibit 19 to the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2025.
Director Independence
The Company follows Rule 5605(a)(2) of Nasdaq’s current listing rules to determine whether a Director is independent. With the exception of Mr. Steinwert,
who is currently an employee of the Company, and Ms. Skinner, who was employed by the Company during the past three years, all nominees are considered to be “independent.”
Board of Directors Meetings
The Company’s principal asset is its wholly-owned subsidiary, Farmers & Merchants Bank of Central California (the “Bank”). The Directors of the
Company are also Directors of the Bank.
During the calendar year ended December 31, 2024, the Board of Directors of the Company and the Board of Directors of the Bank met twelve (12) times. In
addition, as required, the Board holds telephonic meetings to address issues between monthly meetings. Each incumbent Director attended more than 75% of the meetings of the Board of Directors and the committees to which they were named. The
Company expects Directors to attend the annual meeting of stockholders. All Directors attended the virtual annual meeting of stockholders in May 2024.
Roles and Responsibilities of the Board of Directors
Leadership Structure
The Board of Directors has determined that the Chairmanship should reside with the Director who is most familiar with the banking industry, and who is the
most capable of setting strategic direction and integrating that direction with the Company’s day-to-day business development and risk management activities. Accordingly, since 2010 Mr. Steinwert has been unanimously elected to the position of
Chairman in addition to his role since 1997 as President and Chief Executive Officer of the Company.
The Board believes that the combination of these positions does not compromise the important “check-and-balance” role that independent Directors play in
the oversight of the Company since Mr. Steinwert is not a member of the Audit & Risk Committee or the Personnel Committee of the Board, and therefore key Board decisions and oversight regarding: (1) accounting, financial reporting, and
overall risk management; and (2) executive compensation are made only by the independent Directors on those committees. Furthermore, Mr. Steinwert receives no additional compensation for his roles as a Board member, a committee member, or the
Chairman of the Board, which provides cost savings to the Company.
As of this date, the Board of Directors has not formally designated a lead independent Director.
Role in Enterprise Risk Management
The Board of Directors is responsible for monitoring all aspects of the Company’s enterprise risk. Their involvement in enterprise risk management
centers on the following key roles and responsibilities:
|
|
1. |
The Board develops and approves the strategic plan and annual financial budget, and receives monthly reporting of financial and non-financial performance relative to
plan.
|
|
|
2. |
The Asset Liability Committee is a joint committee of management and the Board. As a result, independent Directors are actively involved in interest rate, liquidity
and investment risk management processes. The committee also reviews and examines budget vs. actual financial results on a quarterly basis.
|
- 10 -
|
|
3. |
The Loan Committee is a joint committee of management and the Board. The Loan Committee meets weekly to review all new and renewed loans over $2 million and evaluate
overall portfolio performance and risk. As a result, independent Directors are actively involved in the credit risk management process.
|
|
|
4. |
The Audit & Risk Committee is responsible for providing oversight of all internal controls, reviewing the reports of audits and examinations of the Bank and the
Company made by independent auditors, internal auditors, credit examiners, and regulatory agencies, and approving all SEC and other regulatory agency reports before they are filed.
|
|
|
5. |
The Personnel Committee is responsible for all performance evaluation and compensation decisions for the executive management team.
|
Committees of the Board
Nominating Committee
The Nominating Committee of the Company and the Bank identifies candidates to serve as Directors of the
Company and the Bank in the event of future Board openings. The Nominating Committee’s charter is available for review on the Company’s website at
http://www.fmbonline.com
.
During 2024, the committee was comprised of the following voting members: Messrs. Steinwert (Chairman), Corum, Long, and Suess. The Nominating Committee met one (1) time in 2024. Messrs.
Corum, Long and Suess were determined by the Board of Directors to be “independent” as such term is defined by Rule 5605(a)(2) of Nasdaq’s current listing rules. In February 2025, following the resignation of Mr. Suess, Mr. James, an
independent Director, was appointed to the Nominating Committee.
Audit & Risk Committee
The Audit & Risk Committee of the Company and the Bank is responsible for the ongoing adequacy of
the internal control environment, and oversees the activities of the internal and independent registered public accounting firm of the Company and the Bank with the aim of ensuring compliance with applicable laws. The Audit & Risk
Committee selects the independent registered public accounting firm. The committee’s charter is available for review on the Company’s website at
http://www.fmbonline.com
.
The Audit & Risk Committee reports to the Boards of Directors of the Company and the Bank, as appropriate. The Audit & Risk Committee reviews the reports of audits and examinations of the Company and
the Bank made by the independent registered public accounting firm, internal auditors, credit examiners, and regulatory agencies and reports the results to the Boards of Directors of the Company and the Bank. The Audit & Risk Committee
met eighteen (18) times in 2024 and is comprised of the following voting members: Messrs. Sanguinetti (Chairman), Corum and Green. Each of the Directors serving on the Audit & Risk Committee has been determined by the Board of Directors
to be “independent” as such term is defined by Rule 5605(a)(2) of Nasdaq’s current listing rules and in the SEC rules relating to audit committees. Mr. Sanguinetti has been determined by the Board of Directors to be a “financial expert” for
purposes of applicable regulations.
Personnel Committee
The Personnel Committee of the Company and the Bank: (1) reviews the Company’s overall compensation
strategies and practices; (2) reviews the employment contracts of all executive officers; (3) annually establishes executive compensation levels and performance evaluation measures for the Chief Executive Officer and Directors; and (4)
reviews the executive compensation levels and performance evaluation measures for the other executive officers of the Company. The Personnel Committee’s charter is available for review on the Company’s website at
http://www.fmbonline.com
.
The Company’s management: (1) provides information, analysis and recommendations for the Personnel Committee; and (2) manages the ongoing operations of
the compensation program.
- 11 -
In fulfilling their duties, the Personnel Committee periodically evaluates information obtained from independent sources regarding financial institutions
that we compete against for talent.
The Personnel Committee is comprised of the following voting members: Messrs. Corum (Chairman), Green and Sanguinetti. The Personnel Committee met ten
(10) times in 2024. Each of the Directors serving on the Personnel Committee has been determined by the Board of Directors to be “independent” as such term is defined by Rule 5605(a)(2) of Nasdaq’s current listing rules.
ALCO and Finance Committee (“Asset Liability Committee”)
The Asset Liability Committee of the Bank is responsible for the formulation, revision and administration of the Bank’s policies relating to financial
performance, annual budget, budget vs. actual results, interest rate, liquidity and investment risk management. The Asset Liability Committee is a joint committee of management and Directors. During 2024, the following Directors were voting
members: Messrs. Suess (Co-Chairman), James, Long, Sanguinetti, and Steinwert. The Committee met five (5) times in 2024. In February 2025, following the resignation of Mr. Suess, Mr. James, an independent Director, was appointed to the
committee and will serve as Co-Chairman. The other Co-Chairman is Bart Olson, Executive Vice President and Chief Financial Officer.
Loan Committee
The Loan Committee of the Bank is responsible for the formulation, revision and administration of the Bank’s policy relating to credit and loan risk
management. The Loan Committee meets weekly and is responsible for approving all new and renewed loans between $2 million and $15 million and reviewing all loans over $500,000. The Loan Committee is a joint committee of management and
Directors. The full Board approves loans over $15 million and reviews loans between $5 million and $15 million. The following Directors are voting members: Messrs. Corum (Co-Chairman) and Steinwert. The Loan Committee met fifty-two (52) times
in 2024. The other Co-Chairman is John Weubbe, Executive Vice President and Chief Credit Officer.
CRA (Community Reinvestment Act) Committee
The CRA Committee of the Company and the Bank monitors the Bank’s efforts and responsibilities to comply with the Community Reinvestment Act. The CRA
Committee makes recommendations to the Board of Directors to assure the Bank is meeting the credit, investment and service needs of the communities it serves. During 2024, the CRA Committee met twelve (12) times in 2024 and was comprised of the
following voting members: Messrs. Suess (Chairman), Green, James, and Long. In February 2025, following the resignation of Mr. Suess, Mr. Green, assumed the role of committee Chairman and Ms. Skinner was appointed to the committee.
Certain Relationships and Related Person Transactions
Certain Directors and Named Executive Officers of the Company and the Bank, and corporations and other organizations associated with them, and members of
their immediate families, were customers of and engaged in banking transactions, including loans, with the Bank in the ordinary course of business in 2024. Such loans were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable loans with borrowers not related to the Company or Bank. These loans did not involve more than the normal risk of collectability or have other unfavorable features. All Director and
Named Executive Officer loans must be approved by the Board of Directors.
- 12 -
No family relationships exist among any of our Directors or executive officers. There is a family relationship between one of our executive officers and
two of our employees. These employees participate in compensation and incentive plans or arrangements on the same basis as other employees with similar positions. The following individuals are related to our Chief Executive Officer as
indicated and have been employed by the Bank for a period of years in non-executive officer positions: Mr. Jared Steinwert (son), Regional Senior Vice President, Wholesale Banking, and Ms. Jehna Silva (daughter), Vice President, Shareholder
Relations. Neither of these individuals reports to the Chief Executive Officer, nor do they share a household with him. Their individual performance ratings and compensation are evaluated and approved by the independent Directors comprising
the Personnel Committee of the Board of Directors of the Bank, and are based on the recommendations of their respective managers in accordance with the Bank’s compensation practices applicable to employees holding similar positions with
comparable qualifications and responsibilities. There are three (3) regional wholesale banking managers and one shareholder relations manager Bank-wide. In 2024, the total annual compensation for the regional wholesale banking managers ranged
from approximately $844,000 to $1,283,000. Total annual compensation for the shareholder relations manager was $199,000. Mr. Jared Steinwert is the lowest paid of the three regional wholesale banking managers, and Ms. Silva is the only
shareholder relations manager. Compensation for these individuals is determined in a manner consistent with the Company’s practices that apply to all employees. Some of the compensation is commissions-based, and the methodology by which the
compensation is calculated is consistent with that used for other individuals having similar roles. Compensation and other terms of employment are determined on a basis consistent with the Company’s human resources policies.
DIRECTOR COMPENSATION
Directors of the Company, who are not employees of the Company or the Bank (“Outside Directors”), receive compensation for services. Mr. Steinwert, who
is an employee of the Company and the Bank, receives no additional compensation for his roles as a Director, a committee member, and the Chairman of the Board.
An Outside Director of both the Company and Bank receives a $3,200 fee for each Board meeting attended, and a $1,000 fee for each committee meeting
attended (committee Chairmen receive $1,200 with the exception of the Audit & Risk Committee Chairman who receives $1,400). In addition, each Outside Director is eligible to receive an annual cash bonus based on Company performance as
determined by the Personnel Committee and participated in the Equity Component of the Executive Retirement Plan (see “Executive Compensation—Compensation Discussion and Analysis – Qualified and Non-Qualified Retirement Programs”). The Board
approved the termination of the Executive Retirement Plan, effective as of November 29, 2024. Pursuant to regulations promulgated by the Department of Treasury, all account balances under the Executive Retirement Plan must be liquidated no
earlier than 12 months after the date of termination of the Executive Retirement Plan and no later than 24 months after the date of the termination of the Executive Retirement Plan. Effective as of January 1, 2025, each Outside Director is
eligible to participate in the Farmers & Merchants Bancorp 2025 Restricted Stock Retirement Plan (the “2025 Plan”), as adopted by the Board of Directors on October 2, 2024, and approved by the stockholders on November 25, 2024, or they may
elect to receive an additional quarterly cash bonus in lieu of a restricted stock award which vests over one year.
Outside Directors of the Company are compensated up to $550 per month to cover a portion of the cost of outside medical insurance. As an employee of the
Company, Mr. Steinwert does not receive this monthly benefit. Outside Directors of the Company do not participate in any retirement or medical plans of the Company or the Bank. The compensation earned by each Director of the Company (other
than Mr. Steinwert, who is a Named Executive Officer) during 2024 is set forth in the following “Directors Compensation Table”.
- 13 -
2024 Directors Compensation Table
|
Name
|
Fees Earned or
Paid in Cash
|
Non-qualified
Deferred
Compensation
Earnings
(1)
|
All Other
Compensation
(2)
|
Total
|
||||||||||||
|
Edward Corum, Jr.
(3)
|
$
|
125,400
|
$
|
152,000
|
$
|
91,600
|
$
|
369,000
|
||||||||
|
Stephenson K. Green
|
$
|
60,000
|
$
|
152,000
|
$
|
91,600
|
$
|
303,600
|
||||||||
|
Craig W. James
|
$
|
57,400
|
$
|
152,000
|
$
|
91,600
|
$
|
301,000
|
||||||||
|
Gary J. Long
|
$
|
58,400
|
$
|
152,000
|
$
|
91,600
|
$
|
302,000
|
||||||||
|
Kevin Sanguinetti
|
$
|
69,200
|
$
|
152,000
|
$
|
91,600
|
$
|
312,800
|
||||||||
|
Kent A. Steinwert
(4)
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||||
|
Calvin (Kelly) Suess
|
$
|
57,400
|
$
|
152,000
|
$
|
91,600
|
$
|
301,000
|
||||||||
| (1) |
The amounts in this column represent contributions to the Executive Retirement Plan - Equity Component. See Plan description in “Executive Compensation—Compensation
Discussion and Analysis - Qualified and Non-Qualified Retirement Programs” for further details.
|
| (2) |
All Outside Directors received an $85,000 bonus in 2024. Outside Directors are compensated up to $550 per month towards the cost of outside medical insurance.
|
| (3) |
Mr. Corum is a Co-Chairman of the Loan Committee which meets weekly, resulting in his fees exceeding those of the other Outside Directors whose committee
responsibilities are monthly in frequency.
|
| (4) |
Mr. Kent Steinwert was an employee of the Company in 2024 and received no additional compensation for his services as a Board member, a committee member, or the
Chairman of the Board. Mr. Steinwert is a Named Executive Officer and his compensation is listed in the “Summary Compensation Table”.
|
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Executive Officers Who Are Not Directors
The following table sets forth information with respect to the executive officers, who are not Directors or nominees for Director of the Company for 2024.
All executive officers serve at the discretion of the Board.
|
Name
|
Age
|
Position
|
Employed
Since
|
|
Thomas A. Bennett
|
48
|
EVP, Enterprise Risk Officer
|
2024
|
|
Troy D. Harper
(1)
|
57
|
EVP, Chief Administrative Officer
|
2024
|
|
Ryan J. Misasi
|
48
|
EVP, Retail Banking Division Manager
|
2014
|
|
Bart R. Olson
|
57
|
EVP, Chief Financial Officer
|
2023
|
|
Deborah E. Skinner
(1)
|
62
|
Former EVP, Chief Administrative Officer
|
2000
|
|
John W. Weubbe
|
63
|
EVP, Chief Credit Officer
|
2017
|
|
David M. Zitterow
|
52
|
EVP, Director of Wholesale Banking Division
|
2017
|
|
|
(1) |
Ms. Skinner served as the Company’s Chief Administrative Officer until her retirement from the Company, effective December 31, 2024. Mr. Harper joined the Company
effective December 9, 2024, and assumed the role of Chief Administrative Officer on January 1, 2025.
|
- 14 -
Roles and Responsibilities
The Board of Directors, operating both on its own and through its Personnel Committee: (1) reviews the Company’s overall compensation strategies and
practices; (2) reviews the employment contracts of all executive officers; and (3) annually establishes compensation levels and performance evaluation measures for the CEO (the CEO does not participate in these discussions) and the other
executive officers. As used in this Proxy Statement, the term “Named Executive Officer” means each officer listed in the 2024 Summary Compensation Table in this Proxy Statement, which includes the Company’s CEO, CFO, and the three most highly
compensated executive officers other than the chief executive officer and the chief financial officer during the 2024 fiscal year.
The role of the Company’s management is to: (1) provide information, analysis and recommendations for the Personnel Committee’s consideration; and (2)
manage the ongoing operations of the compensation program.
In fulfilling its duties, the Personnel Committee: (1) has the authority to retain and fund compensation consultants, independent legal counsel and other
compensation advisors; (2) considers those factors that impact the independence of such advisors prior to their selection; and (3) periodically evaluates information obtained from independent sources regarding financial institutions that we
compete against for talent. No outside compensation consultants or similar advisors were used in 2024.
Executive Compensation Strategy and Programs
The objective of the Company’s compensation strategy is to attract and retain talented individuals who can implement the Company’s strategic plan and
maximize long-term stockholder value.
In order to achieve these objectives, the Board has structured a compensation program that includes three major components: (1) annual base salary; (2)
annual performance-based bonus; and (3) qualified and non-qualified retirement plans.
Say On Pay Vote
In accordance with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), in the 2023 proxy
statement, the Company asked stockholders to provide advisory (non-binding) approval of executive compensation as described in the “Executive Compensation – Compensation Discussion and Analysis” section of the 2023 proxy statement. The results
of the election were that 92.95% of the shares voting approved the Company’s current executive compensation. Based on this 2023 stockholder advisory vote, the Board of Directors determined that no material changes were required to current
compensation strategies and programs. An additional vote was conducted on the frequency of future advisory votes on the approval of executive compensation. The results of this election were that 84.21% of the shares voting approved three
years as the frequency of future stockholder advisory votes on the executive compensation.
Performance Evaluation Measures
In evaluating the performance of each Named Executive Officer, the Personnel Committee considers a combination of objective and subjective factors,
including the following:
|
|
1. |
The Company’s annual financial performance (relative to both the current year’s budget and the overall performance of a select group of peer community banks as well as
the community bank industry as a whole) as measured by Net Income, Return on Average Assets, Return on Average Equity, and Efficiency Ratio;
|
|
|
2. |
Progress towards achieving the Company’s strategic plan;
|
|
|
3. |
Results of the Company’s and Bank’s regulatory examinations; and
|
|
|
4. |
Current economic and industry conditions.
|
- 15 -
These performance measurement factors are evaluated at least annually. Both the annual budget and strategic plan are approved in advance by the Board of
Directors and reevaluated during the year. The Personnel Committee periodically evaluates information obtained from independent sources regarding financial institutions that we compete against for talent (which increasingly include regional and
national banks and other financial services companies), and makes recommendations regarding changes to compensation programs.
Financial Highlights
In 2024, the Company accomplished the following:
|
|
• |
Record net income of $88.5 million, or $121.02 per share, up from $116.61 per share from the prior year; an increase of 3.78%.
|
|
|
• |
Net interest margin of 4.05%; loan yield of 6.08%; and cost of average total deposits of 1.35%.
|
|
|
• |
Effective management of operating expenses with an efficiency ratio at December 31, 2024 of 46.24%.
|
|
|
• |
Achieved a return on average assets of 1.64% in 2024.
|
|
|
• |
Achieved a return on average equity of 15.49% in 2024.
|
|
|
• |
Total assets at year-end 2024 grew slightly to $5.37 billion from $5.31 billion.
|
|
|
• |
Loans and leases held for investment and total deposits both grew modestly during 2024; year-end balances were $3.69 billion and $4.70 billion, respectively.
|
|
|
• |
Maintained a strong liquidity position with $212.6 million in cash, $1.2 billion in investment securities of which $464.4 million were available-for-sale, and a borrowing capacity of $2.1
billion, with no outstanding borrowings as of December 31, 2024.
|
|
|
• |
Strong capital position with a total risk-based capital ratio of 14.51%, common equity tier 1 ratio of 13.02%, tier 1 leverage ratio of 10.95% and a tangible common equity ratio of 10.46%;
all increases from the prior year.
|
|
|
• |
Credit quality remained strong with net charge-offs for the year of $0.7 million; $0.9 million of nonperforming
loans or leases at
year-end; and a total allowance for credit losses of 2.11% at year-end.
|
|
|
• |
Tangible book value per share increased from $717.05 as of December 31, 2023 to $800.52 as of December 31, 2024.
|
Peer Group
The Personnel Committee routinely compares our performance against selected peer companies. It utilizes this information as a reference for setting pay
and making decisions. In its determination, the Committee considers a variety of factors and characteristics including among other things, asset size, geography, market capitalization, credit quality, capital, performance on financial and
market-based measures, and the extent they compete with our business.
The peer group currently consists of the following:
| • |
|
Bank of Marin
|
• |
Bank of Stockton
|
|
| • |
|
Bank of the Sierra
|
• |
Community West Bank
|
|
| • |
|
Citizens Business Bank
|
• |
El Dorado Savings Bank
|
|
| • |
|
Exchange Bank
|
• |
First Northern Bank of Dixon
|
|
| • |
|
Five Star Bank
|
• |
Fremont Bank
|
|
| • |
|
Heritage Bank of Commerce
|
• |
Mechanics Bank
|
|
| • |
|
Poppy Bank
|
• |
Tri Counties Bank
|
- 16 -
The Committee does not solely rely on comparative data from the peer group. Such comparative data provides helpful market information about our peer
companies as a reference, but the Committee does not target any specific positioning or percentile, nor does it use a formulaic approach, in determining executive pay levels. The Committee may refer to other banks or financial companies outside
of the peer group for additional benchmarking information. It also utilizes other resources, including published compensation surveys and other available proxy and compensation data. All such comparative peer data and supplemental resources are
considered, along with the Company’s pay for performance and internal parity objectives within the leadership team. All applicable information is reviewed and considered in aggregate, and the Committee does not place any particular weighting on
any one factor.
Impact of Compensation Practices on the Company’s Risk Profile
The Bank is a “traditional” community bank that generates the majority of its income from the net interest margin generated between taking customer
deposits and making customer loans. Furthermore, credit risk is centrally controlled as reflected by the following: (1) no branch employee has the authority to approve, board or advance funds on a loan; all loan actions must be approved by
Credit Administration personnel, and the compensation of Credit Administration personnel is tied to loan quality, not loan volume or production; and (2) the Loan Committee, which includes one Outside Director (as defined below), must approve
all new and renewed loans between $2 million and $15 million and reviews all loans over $500,000. The full Board approves all loans greater than $15 million and reviews all loans between $5 million and $15 million.
We do not have non-traditional fee-based or proprietary trading financial business units that could materially increase this risk profile. Nor do we have
any business units where employees with loan approval authority generate any substantial amount of their total compensation based upon generating large volumes of activity or taking significant risks.
In order to ensure that the Company’s compensation strategies and programs do not result in inappropriate risk-taking on the part of executive management,
the Board has determined that:
|
|
1. |
Annual Performance-Based Bonuses must include consideration of the results of the Company’s and Bank’s regulatory examinations by the Federal Reserve Board, the
Federal Deposit Insurance Corporation and the California Department of Financial Protection and Innovation, all of which involve a review of the Company’s and the Bank’s risk management practices and resulting risk profile.
|
|
|
2. |
All parts of the Company’s non-qualified Executive Retirement Plan are structured such that the benefits cannot be withdrawn by the participant, or paid out by the
Company, until the participant retires, resigns, is terminated without cause or, in limited circumstances, reaches early retirement age. For designated contributions made on or after December 1, 2021, upon attainment of age 59½ the
participant can elect “In-Service Distributions”. This results in a significant portion of each executive’s compensation remaining at risk during their employment, so as to encourage adopting a long-term perspective and conservative
risk management practices. All balances are held in a trust but remain subject to the claims of the Company’s creditors in the event of the Company’s insolvency. The Board approved the termination of the Executive Retirement Plan
effective as of November 29, 2024. Under section 409A of the IRS code the distribution of the funds must occur between 12 and 24 months after the termination date.
|
|
|
3. |
Effective November 29, 2024, and in connection with the termination of the Executive Retirement Plan, the Stockholders approved the 2025 Plan, which became effective
as of January 1, 2025. The Board will determine when awards will be granted under the 2025 Plan, and the Participants to whom the awards are to be granted. Each award will state the number of shares and the vesting period of the
award. Once a share underlying an award vests, the transfer of the appropriate shares would be placed in the participant’s name and account of their choosing.
|
The Board has determined that the Company’s compensation practices are not likely to have a material adverse impact on the Company’s risk profile.
- 17 -
Annual Compensation Program
Base Salary and Annual Performance-Based Bonus
Each Named Executive Officer receives a monthly base salary and is eligible for an annual performance-based bonus. Given that the Company has not
historically granted equity-based compensation, in order to be competitive, total levels of annual compensation for each Named Executive Officer are targeted (assuming performance objectives are met) at the top range of financial
institutions that we compete against for talent.
Salaries are determined largely based upon comparative industry data for: (1) positions of similar responsibility in California institutions that we
compete against for talent; and (2) individuals with similar experience and expertise. Merit salary adjustments are evaluated periodically based on Company and individual performance. Goals and objectives are established annually for each
officer with performance evaluated at least annually.
Annual bonus compensation is paid according to the Company’s Executive Management Incentive Compensation Plan. Bonus compensation is awarded based
primarily on actual results against budgeted goals for the particular year including performance ratios and net income. Broad award guidelines are established annually for the CEO, currently 0-200% of base salary, and the other Named
Executive Officers, currently 0-125% of base salary. The Board reserves some discretion with regard to these guidelines when: (1) the Company’s profit performance exceeds budget; (2) the Company’s profit performance exceeds other peer
banking institutions in California; and/or (3) an individual’s performance in a given year was beyond expectation. The Board did not exercise its discretion to exceed award guidelines in 2024.
It is important to understand that the Company’s annual compensation program is not formula driven and relies substantially on subjective analysis.
The Named Executive Officers are assigned specific performance goals and objectives on a yearly basis but these individual goals and objectives are not tied to specific targeted compensation levels. Performance evaluation measures are not
prioritized or otherwise assigned a specific weighting. Indeed, some of the measures, such as results of regulatory examinations and local economic conditions, do not lend themselves to a weighted or formula approach.
Although the Board has established broad bonus payout guidelines, the Board has purposely avoided establishing either: (1) hard targets for any
performance factors; or (2) a weighting or formula as to how much each performance factor will contribute to the ultimate annual bonus for each Named Executive Officer. This philosophy has evolved based upon the Board’s belief that all
banks operate in volatile financial markets amidst external conditions over which the Named Executive Officer has little or no control.
Accordingly, before making annual bonus or other compensation decisions, it is important for the Board to evaluate and weigh all key performance
factors in the context of the current financial services environment and how the Named Executive Officer’s current year’s performance against those factors has influenced the Company’s progress toward achieving both short- and long-term
financial goals.
Since the Company has consistently been one of the highest performing bank holding companies in California over the past 10 years, a reflection of
what the Board considers well-balanced compensation practices that caused the Named Executive Officers to carefully consider the risks they assumed in the context of long-term financial performance, the Board believes that its approach to
“pay-for-performance” has achieved, and will continue to achieve, the desired results.
Each Named Executive Officer’s salary and annual bonus amounts for the last three years are disclosed in the “Summary Compensation Table.” All base
salaries and annual bonuses are paid in cash and fully expensed in the current year.
Qualified and Non-Qualified Retirement Programs
In developing the various parts of a long-term compensation program, the Board developed what it believes is an effective and competitive retirement
program.
- 18 -
The objectives of the Company’s retirement program are to: (1) successfully attract and retain talented individuals; and (2) align long-term
compensation directly with stockholder interests by rewarding prudent risk-taking and creation of long-term stockholder value through generation of high quality and sustainable financial performance.
The Company’s retirement program has been structured to provide benefits as follows:
|
|
1. |
Profit Sharing Plan, which provides qualified retirement benefits.
|
|
|
2. |
Executive Retirement Plan, which prior to its termination effective November 29, 2024, provided supplemental non-qualified retirement benefits and may consist of the following
components:
|
|
|
a. |
Salary Component, which provides benefits based upon each participant’s salary level;
|
|
|
b. |
Performance Component, which provides benefits based upon the Company’s long-term growth in net income and increase in market capitalization; and
|
|
|
c. |
Equity Component, which provides discretionary benefits amounts based upon Board approval, and contributions are invested primarily in the stock of the Company.
|
|
|
3. |
Bank Owned Life Insurance Program, which provides for a division of life insurance death proceeds between the Company and each participant’s designated beneficiary.
|
|
|
4. |
Effective as of January 1, 2025, in connection with the termination of the Executive Retirement Plan, retirement benefits will be provided under the new 2025 Restricted Stock
Retirement Plan.
|
All of the Company’s qualified and non-qualified retirement plans are structured as defined contribution plans to avoid the uncertain future financial
liabilities that can exist under defined benefit plans. The entire cost of these plans is expensed annually.
Qualified Profit Sharing Plan
Substantially all full-time employees of the Company, including each Named Executive Officer, participate in the Company’s qualified Profit Sharing
Plan. Two levels of contributions are made to the Profit Sharing Plan: (1) contributions equal to 5% of eligible salaries (subject to Internal Revenue Service limits) calculated according to criteria set forth in the plan; and (2)
additional discretionary contributions authorized by the Board of Directors. None of these contributions are dependent upon the employee contributing to the plan (i.e., the plan does not make “matching” contributions). Benefits pursuant to
the Profit Sharing Plan vest 0% during the first year of participation and 25% per full year thereafter, such that after five years such benefits are fully vested. Benefits under the Profit Sharing Plan are disclosed in the participant’s
Company Contributions to Qualified Retirement and 401(k) Plans in the “2024 All Other Compensation Table”.
Upon a Change in Control of the Company, each participant receives only the balance in their account, including any net earnings or losses thereon.
Non-Qualified Executive Retirement Plan
The Executive Retirement Plan is a non-qualified plan developed to supplement the Profit Sharing Plan, which as a qualified retirement plan, is
subject to annual benefits limitations set by the Internal Revenue Service. All contributions are subject to the claims of the Company’s creditors in the event of the Company’s insolvency. This results in a significant portion of each
executive’s compensation remaining at risk during their employment, which encourages each executive to adopt a long-term perspective and conservative risk management practices. The Executive Retirement Plan is intended to be compliant with
the provisions of Section 409A of the Internal Revenue Code. The Board approved the termination of the Executive Retirement Plan, effective as of November 29, 2024. Pursuant to regulations promulgated by the Department of Treasury, the
account balances under the Executive Retirement Plan will be liquidated no earlier than 12 months after the date of termination of the Executive Retirement Plan and no later than 24 months after the date of termination of the Executive
Retirement Plan.
The Equity Component of this Plan is invested primarily in the stock of the Company. Some level of the balances in other Plan components is also
invested in the stock of the Company (see Note 10 to Item 8. - Financial Statements and Supplementary Data - in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2024). Upon the liquidation of the
Executive Retirement Plan, all or a portion of the balances that are invested in stock of the Company will be distributed in stock of the Company, except as the Company determines to be necessary to satisfy tax withholding obligations.
- 19 -
The Company has established a grantor trust relating to its non-qualified plan to assist the Company in ensuring that it has cash on hand to meet its
contractual obligations under the plan. The Company makes contributions to the trust and directs the trustee to invest the contributions consistent with the plan benefit formulas. The investments are generally in the common stock of the
Company, cash equivalents and other liquid investments.
While plan participants are deemed to have their account balances invested in the common stock of the Company and other investments held by the
trustee, participants have no legal interest in the trust assets, and such assets are subject to the claims of the Company’s creditors in the event of the Company’s insolvency. The plan participant’s only right is their contractual right
to receive the benefit provided in the plan in accordance with its terms. The Company has no obligation under the Plan to maintain the trust.
Bank-Owned Life Insurance Program
The Company has a Bank-Owned Life Insurance (“BOLI”) program under which it has purchased single premium life insurance policies on the lives of the
Named Executive Officers as well as certain other senior officers of the Company. The Company is both the owner of, and beneficiary under, the policies. These policies provide: (1) financial protection to the Company in the event of the
death of an officer; and (2) significant income to the Company to offset the expense associated with the Company’s employee benefits with a favorable tax treatment.
As compensation to each participant for agreeing to allow the Company to purchase an insurance policy on his or her life, split-dollar agreements have
been entered into with each participant. These agreements provide for a division of the life insurance death proceeds between the Company and each participant’s designated beneficiary or beneficiaries. Participants have an interest only in
the death benefits of the policies, not in any cash surrender value that exists prior to death. For plans initiated prior to 2023 the participants fully vest in their split-dollar agreements after eight years of service or upon a Change in
Control. If the participant leaves the employ of the Company after vesting occurs (other than as part of a Change in Control), he or she cannot become employed by another financial institution and retain vesting. The dollar value of
premiums relating to that portion of the death proceeds that would be payable to the participant’s beneficiary or beneficiaries in the event of his or her death, as well as the tax gross-up payments related thereto, are disclosed in the
participant’s Tax Reimbursements in the “2024 All Other Compensation Table” below in this Proxy Statement.
In 2023, as compensation to each participant for agreeing to allow the Company to purchase an insurance policy on his or her life, a Survivor Income
Plan was entered into with certain executive officers and other senior officers of the Company. This offers a death benefit paid to the beneficiary of the participant if the employee passes away while an employee of the bank. If the
employee passes away after terminating their employment, the bank receives the BOLI death benefit but no Survivor Income Plan benefit is paid to the employee’s beneficiary.
2025 Restricted Stock Retirement Plan
The 2025 Plan was adopted by our Board on October 2, 2024, and was approved by the Stockholders on November 25, 2024, in connection with the
termination of the Executive Retirement Plan. The 2025 Plan authorizes awards up to 80,000 shares. No awards have been granted as of December 31, 2024. The terms of any awards, including any vesting requirements and transfer restrictions,
will be set forth in a restricted stock agreement, as determined by the Personnel Committee. Award recipients who are granted shares of restricted stock generally have all of the rights of a stockholder with respect to those shares,
provided that, at the discretion of the Personnel Committee, dividends and other distributions with respect to unvested shares of restricted stock may be credited and paid in respect of unvested shares, but only if such underlying shares
vest. In the event of a Change of Control of the Company, all outstanding awards under the 2025 Plan, to the extent unvested, will become fully vested. If a participant takes retirement, then the Personnel Committee may, in its sole
discretion, accelerate the vesting of any unvested awards of restricted shares under the 2025 Plan then held by the participant, and such restricted shares shall become fully vested. If a participant’s employment with the Company is
terminated due to the participant’s death or disability, then all unvested restricted shares then held by such participant will become fully vested. In all other circumstances in which a participant’s employment with the Company terminates,
all then unvested restricted shares shall be forfeited for no consideration. For more information regarding the grant of awards under the 2025 Plan following the end of the 2024 fiscal year, see “Grants of Awards Under the 2025 Plan” below.
- 20 -
Change of Control and Post-Termination Compensation
The Company’s approach to post-termination compensation depends upon the circumstances surrounding the Named Executive Officer’s termination and has
been designed by the Board to be competitive with industry-wide practices in order to attract and retain key executives.
|
|
1. |
If the Named Executive Officer takes retirement, or his or her employment is terminated due to death or disability, no supplemental payments are made, with the exception of certain
Named Executive Officers who receive a severance package if they become permanently disabled. They are entitled to all vested balances in qualified and non-qualified plans, (see “- Qualified and Non-Qualified Retirement Programs”
and “2024 Non-Qualified Deferred Compensation Table”), and, in the case of death, their designated beneficiaries would be entitled to their split-dollar life insurance death benefits (see “- Bank-Owned Life Insurance Program”
above).
|
|
|
2. |
If the Named Executive Officer is terminated for cause, all benefits in the Company’s non-qualified Executive Retirement Plan, whether vested or not, are forfeited in their
entirety. No other payments are made, but the Named Executive Officer is entitled to all vested balances in the Company’s qualified Profit Sharing Plan. The Board approved the termination of the Executive Retirement Plan effective
as of November 29, 2024. Under section 409A of the IRS code the distribution of the funds must occur between twelve and twenty-four months after the termination date.
|
|
|
3. |
If the Named Executive Officer is terminated without cause or for good reason, the terms of the Named Executive Officers’ employment contracts call for the Company to provide lump
sum payments of a range of 12.0 times monthly base compensation to 2.0 times the individual’s highest “Total” annual compensation as reported in the “Summary Compensation Table”. Each employment contract has been filed as an
exhibit to the Company’s reports with the SEC. In addition, upon termination without cause or for good reason, each Named Executive Officer is entitled to all vested balances in qualified and non-qualified plans (see “- Qualified
and Non-Qualified Retirement Programs” and “2024 Non-Qualified Deferred Compensation Table”). The payment of any severance benefits to the Named Executive Officers is conditioned upon the Named Executive Officer not announcing the
termination of his or her employment and executing a general release of claims in the Company’s favor.
|
|
|
4. |
In the case of a Change of Control, the Company has clauses in each Named Executive Officer’s employment contract, as filed as an exhibit to the Company’s reports with the SEC.
This means that each Named Executive Officer may be eligible to receive payments pursuant to their employment contracts, in addition to all vested balances in the Company’s non-qualified plans (see “- Qualified and Non-Qualified
Retirement Programs” and “2024 Non-Qualified Deferred Compensation Table”). Upon a Change of Control and conditioned upon execution of a non-competition and non-solicitation agreement and a general release of claims in the
Company’s favor, each Named Executive Officer is eligible to receive a lump-sum payment equal to: (1) up to a maximum of 2.0 times the individual’s highest “Total” compensation as reported in the “Summary Compensation Table”; plus
(2) up to three years of COBRA medical premiums (which range up to $187,000 per Named Executive Officer); plus (3) accelerated benefits under the Executive Retirement Plan (as more fully described in 5. below); plus (4) tax gross-up
payments to cover excise taxes under Internal Revenue Code Section 280G; plus (5) for certain Named Executive Officers, the cash value of their Company car. In addition to the above, certain Named Executive Officers would receive an
additional cash payment in a Change of Control ranging from $125,000 to $250,000 or from 0.25% to 0.50% of the total Bancorp stockholder value depending on the nature of the change in control.
|
- 21 -
|
|
5. |
Upon a Change in Control, under the Executive Retirement Plan’s Salary Component (see “– Non-Qualified Executive Retirement Plan”), which has been terminated by the Company, each
participant receives: (1) those amounts already contributed for past years of service including any net earnings or losses thereon; and (2) the present value (using a discount factor equal to the Treasury rate for the remaining
years to participant’s age 65) of forecasted contributions over the remaining years to participant’s age 65 (which, as of December 31, 2024, are estimated to be zero for each of the Named Executive Officers). Upon a Change in
Control, under the Executive Retirement Plan’s Performance Component (see “– Non-Qualified Executive Retirement Plan”), which has been terminated by the Company, each participant receives: (1) those amounts already contributed for
past years of service including net earnings or losses thereon; and (2) an amount equal to the difference (if any) between the purchase price and 20 times EPS which, as of December 31, 2024, would be zero for all Named Executive
Officers. Payments are made in accordance with prior participant elections made in compliance with Internal Revenue Code Section 409A. The Board approved the termination of the Executive Retirement Plan effective as of November
29, 2024. Under section 409A of the IRS code the distribution of the funds must occur between 12 and 24 months after the termination date.
|
|
|
6. |
Although no awards have been granted under the 2025 Plan as of December 31, 2024, any such award of restricted stock to a Named Executive Officer will accelerate and become fully
vested upon death, disability or Change of Control or, in the sole discretion of the Personnel Committee, when the Named Executive Officer takes retirement.
|
Employment Contracts, Perquisites, and Other Personal Benefits
The Company has employment agreements with each of its Named Executive Officers. These agreements are generally structured for an initial two-year
period and then renew automatically for successive two-year terms unless terminated by either party. The agreements provide for (i) a base salary (see “Summary Compensation Table”), (ii) salary increases at the discretion of the Board of
Directors based upon performance, (iii) participation in the Company’s annual performance-based bonus program, (iv) participation in certain non-qualified deferred compensation and retirement plans, (v) use of a Company-owned automobile or
automobile allowance, and (vi) certain insurance benefits. Under certain circumstances, in the event of termination of employment, each Named Executive Officer may be entitled to receive severance compensation, and in the event of a Change
of Control, each Named Executive Officer may be entitled to receive certain Change of Control compensation (see “Change of Control and Post-Termination Compensation” above).
Grants of Awards Under the 2025 Plan
On February 3, 2025, after the end of the 2024 fiscal year, each of our Named Executive Officers were granted restricted stock awards (“RSAs”) under
the 2025 Plan. The RSAs that were granted are subject to one of the following two vesting schedules: (i) ratable vesting over the two-year period following the applicable vesting commencement date; or (ii) ratable vesting over the
three-year period following the applicable vesting commencement date. The other terms and conditions, in addition to the applicable vesting schedule and vesting commencement date, of the RSAs are as set forth in the notice of restricted
stock award and restricted stock award agreement entered into by and between the Company and each Named Executive Officer, which are substantially in the form of the notice of restricted stock award and restricted stock award agreement that
was previously approved by our Board and filed with the SEC as Exhibit 10.1 to the Form 8-K dated January 14, 2025. Since the grants of the RSAs were based on 2024 compensation determinations but granted in 2025, they are not reported in
the “Summary Compensation Table” or the “Grants of Plan-Based Awards Table” for 2024.
- 22 -
Compensation Committee Report
Report of the Personnel Committee of the Board of Directors on Executive Compensation
The Personnel Committee has reviewed the Compensation Discussion & Analysis included herein with management and based upon those reviews and
discussions has recommended to the Board of Directors that the Compensation Discussion & Analysis be included in the Company’s annual report on Form 10-K and this proxy statement.
Respectfully Submitted,
|
|
|
||||
|
Edward Corum Jr.
|
Stephenson K. Green
|
Kevin Sanguinetti
|
- 23 -
Compensation Committee Interlocks and Insider Participation
Messrs. Sanguinetti, Corum and Green served in 2024 as members of the Personnel Committee. Each of the Directors serving on the Personnel Committee
has been determined by the Board of Directors to be “independent” as such term is defined by Rule 5605(a)(2) of Nasdaq’s current listing rules. During 2024, certain members of the Personnel Committee had loans or other extensions of credit
outstanding from the Bank. These loans were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with borrowers not
related to the Company or Bank. These loans are exempt from the loan prohibitions of the Sarbanes-Oxley Act of 2002 and did not involve more than the normal risk of collectability or have other unfavorable features.
Pay Ratio Disclosure
Pursuant to Item 402 of SEC Regulation S-K, the Company is required to disclose: (1) the median of the annual “total compensation” (defined as Wages,
Tips and Other Compensation as reported in Box 1 of a W-2 form plus any fringe benefits not subject to federal income tax) of all employees (defined as those employees on the payroll as of December 31st of the year) except the Principal
Executive Officer (Mr. Steinwert), which during 2024 was $88,021; and (ii) the ratio of the Principal Executive Officer’s total compensation (as reported in the “2024 Summary Compensation Table”) to the median annual total compensation of
all employees except the Principal Executive Officer, which during 2024 was 70.1 to 1.
To determine the median of the annual total compensation of all employees of the Company (other than our Principal Executive Officer), we identified
our total employee population as of December 31, 2024, which consisted of 384 individuals. As permitted by the disclosure rules, we annualized the compensation for any employees who were not employed by us for all of 2024. To identify the
“median employee” we conducted a full analysis of this employee population, without the use of statistical sampling. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology
we use for our Named Executive Officers as set forth in the “2024 Summary Compensation Table”.
Named Executive Officer Compensation
The following tables provide details regarding the various forms of remuneration paid by the Company for the services performed in all capacities by
each Named Executive Officer.
Since the Company has not offered: (1) stock options, or (2) defined benefit plans, and because the Company had not made any grants of restricted
stock under the 2025 Plan as of December 31, 2024, the following tables are not included herein: Grants of Plan-Based Awards, Outstanding Equity Awards at Fiscal Year-End, Option Exercises and Stock Vesting and Pension Benefits.
- 24 -
Named Executive Officer - 2024
Summary Compensation Table
|
Name
|
Year
|
Salary
(1)
|
Bonus
|
All Other
Compensation
(2)
|
Total
|
||||||||||||
|
Kent A. Steinwert
|
2024
|
$
|
905,327
|
$
|
1,400,000
|
$
|
3,863,597
|
$
|
6,168,924
|
||||||||
|
Chairman, President
|
2023
|
$
|
905,327
|
$
|
1,400,000
|
$
|
3,826,251
|
$
|
6,131,578
|
||||||||
|
& Chief Executive Officer
|
2022
|
$
|
905,327
|
$
|
1,400,000
|
$
|
3,829,928
|
$
|
6,135,255
|
||||||||
|
Bart R. Olson
|
2024
|
$
|
554,231
|
$
|
550,000
|
$
|
1,000,211
|
$
|
2,104,442
|
||||||||
|
Executive Vice President
|
2023
|
$
|
429,422
|
$
|
550,000
|
$
|
708,956
|
$
|
1,688,378
|
||||||||
|
Chief Financial Officer
|
2022
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
|
Ryan J. Misasi
|
2024
|
$
|
381,539
|
$
|
475,000
|
$
|
928,742
|
$
|
1,785,281
|
||||||||
|
Executive Vice President
|
2023
|
$
|
380,833
|
$
|
450,000
|
$
|
750,102
|
$
|
1,580,935
|
||||||||
|
Retail Banking Division Manager
|
2022
|
$
|
346,103
|
$
|
380,000
|
$
|
626,329
|
$
|
1,352,432
|
||||||||
|
Deborah E. Skinner
(3)
|
2024
|
$
|
500,382
|
$
|
550,000
|
$
|
1,454,884
|
$
|
2,505,266
|
||||||||
|
Executive Vice President
|
2023
|
$
|
453,846
|
$
|
550,000
|
$
|
1,247,802
|
$
|
2,251,648
|
||||||||
|
Chief Administrative Officer
|
2022
|
$
|
404,615
|
$
|
500,000
|
$
|
1,044,963
|
$
|
1,949,578
|
||||||||
|
David M. Zitterow
|
2024
|
$
|
390,032
|
$
|
325,000
|
$
|
705,461
|
$
|
1,420,493
|
||||||||
|
Executive Vice President
|
2023
|
$
|
362,660
|
$
|
375,000
|
$
|
608,880
|
$
|
1,346,540
|
||||||||
|
Director of Wholesale Banking
|
2022
|
$
|
332,372
|
$
|
330,000
|
$
|
550,711
|
$
|
1,225,083
|
||||||||
|
|
(1) |
Includes base salary and unused vacation pay. See “Executive Compensation – Compensation Discussion and Analysis - Annual Compensation Program” and “Employment Contracts, Perquisites,
and Other Personal Benefits”.
|
|
|
(2) |
See “2024 All Other Compensation Table” for additional details. Includes Non-Qualified Executive Retirement Plan contributions for 2024. See “Executive Compensation – Compensation
Discussion and Analysis – Qualified and Non-Qualified Retirement Programs - Non-Qualified Executive Retirement Plan” for details regarding the types of compensation deferred, measures of calculating plan earnings and terms of
payouts, withdrawals and other distributions.
|
|
|
(3) |
Ms. Skinner served as the Company’s Chief Administrative Officer until her retirement effective December 31, 2024. Mr. Harper joined the Company effective December
9, 2024, and assumed the role of Chief Administrative Officer on January 1, 2025.
|
- 25 -
2024 All Other Compensation Table – Named Executive Officer
|
Name
|
Year
|
Auto
Usage
(1)
|
Tax
Reimburse-
ments
(2)
|
Insurance
Premiums
|
Club Dues
|
Relocation
Expenses
|
Company
Contributions
to Non-
Qualified
Retirement
Plans
(3)
|
Company
Contributions
to Retirement
and 401(k)
Plans
(4)
|
Total
|
||||||||||||||||||||||||
|
Kent A. Steinwert
|
2024 |
$
|
5,223
|
$
|
27,612
|
$
|
31,564
|
$
|
9,573
|
$
|
-
|
$
|
3,747,806
|
$
|
41,819
|
$
|
3,863,597
|
||||||||||||||||
|
2023
|
$
|
6,220
|
$
|
25,195
|
$
|
29,025
|
$
|
8,064
|
$
|
-
|
$
|
3,714,247
|
$
|
43,500
|
$
|
3,826,251
|
|||||||||||||||||
|
2022
|
$
|
5,147
|
$
|
25,879
|
$
|
23,308
|
$
|
9,049
|
$
|
-
|
$
|
3,728,573
|
$
|
37,972
|
$
|
3,829,928
|
|||||||||||||||||
|
Bart R. Olson
|
2024
|
$
|
12,000
|
$
|
-
|
$
|
27,115
|
$
|
-
|
$
|
-
|
$
|
919,277
|
$
|
41,819
|
$
|
1,000,211
|
||||||||||||||||
|
2023
|
$
|
10,000
|
$
|
-
|
$
|
26
|
$
|
-
|
$
|
12,771
|
$
|
645,427
|
$
|
40,732
|
$
|
708,956
|
|||||||||||||||||
|
2022
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||||||||
|
Ryan J. Misasi
|
2024 |
$
|
3,870
|
$
|
-
|
$
|
27,115
|
$
|
16,661
|
$
|
-
|
$
|
839,277
|
$
|
41,819
|
$
|
928,742
|
||||||||||||||||
|
2023
|
$
|
3,861
|
$
|
-
|
$
|
24,958
|
$
|
15,200
|
$
|
-
|
$
|
662,584
|
$
|
43,500
|
$
|
750,102
|
|||||||||||||||||
|
2022
|
$
|
4,594
|
$
|
-
|
$
|
23,308
|
$
|
13,854
|
$
|
-
|
$
|
546,601
|
$
|
37,972
|
$
|
626,329
|
|||||||||||||||||
|
Deborah E. Skinner
|
2024 |
$
|
12,173
|
$
|
8,767
|
$
|
10,735
|
$
|
-
|
$
|
-
|
$
|
1,381,389
|
$
|
41,819
|
$
|
1,454,884
|
||||||||||||||||
|
2023
|
$
|
7,554
|
$
|
8,166
|
$
|
9,772
|
$
|
-
|
$
|
-
|
$
|
1,178,810
|
$
|
43,500
|
$
|
1,247,802
|
|||||||||||||||||
|
2022
|
$
|
3,233
|
$
|
9,023
|
$
|
8,543
|
$
|
-
|
$
|
-
|
$
|
986,192
|
$
|
37,972
|
$
|
1,044,963
|
|||||||||||||||||
|
David M. Zitterow
|
2024 |
$
|
12,000
|
$
|
-
|
$
|
21,307
|
$
|
38,295
|
$
|
-
|
$
|
592,041
|
$
|
41,819
|
$
|
705,461
|
||||||||||||||||
|
2023
|
$
|
12,000
|
$
|
-
|
$
|
18,376
|
$
|
18,188
|
$
|
-
|
$
|
516,845
|
$
|
43,471
|
$
|
608,880
|
|||||||||||||||||
|
2022
|
$
|
12,000
|
$
|
-
|
$
|
17,565
|
$
|
23,893
|
$
|
-
|
$
|
471,281
|
$
|
37,972
|
$
|
562,711
|
|||||||||||||||||
|
|
(1) |
Represents either the personal use of a company car or a receipt of a car allowance.
|
|
|
(2) |
Represents tax gross-up payments to reimburse executive for split-dollar life insurance premiums under the Company’s BOLI program.
|
|
|
(3) |
Includes Non-Qualified Executive Retirement Plan contributions for the current year. See “Executive Compensation – Compensation Discussion and Analysis – Qualified and Non-Qualified
Retirement Programs - Non-Qualified Executive Retirement Plan” for details regarding the types of compensation deferred, measures of calculating plan earnings and terms of payouts, withdrawals and other distributions.
|
|
|
(4) |
Represents contributions to the Company’s Profit Sharing Plan.
|
- 26 -
2024 Non-Qualified Deferred Compensation Table – Named Executive Officer
|
Name
|
Registrant
Contributions
in Last Fiscal
Year
(1)
|
Aggregate
Earnings in
Last Fiscal
Year
(2)
|
Aggregate
Withdrawals /
Distribution
(3)
|
Aggregate
Balance at Last
Fiscal Year
End
(1)(4)
|
||||||||||||
|
Kent A. Steinwert
|
$
|
3,747,806
|
$
|
1,177,429
|
$
|
(2,289,375
|
)
|
$
|
40,123,139
|
|||||||
|
Bart R. Olson
|
$
|
919,277
|
$
|
49,366
|
$
|
-
|
$
|
1,646,135
|
||||||||
|
Ryan J. Misasi
|
$
|
839,277
|
$
|
384,418
|
$
|
-
|
$
|
5,868,883
|
||||||||
|
Deborah E. Skinner
|
$
|
1,381,389
|
$
|
615,260
|
$
|
-
|
$
|
15,252,842
|
||||||||
|
David M. Zitterow
|
$
|
592,041
|
$
|
81,882
|
$
|
-
|
$
|
3,178,344
|
||||||||
|
|
(1) |
Represents Company contributions. See “Executive Compensation – Compensation Discussion and Analysis – Qualified and Non-Qualified Retirement Programs - Non-Qualified Executive
Retirement Plan” for details regarding the types of compensation deferred, measures of calculating plan earnings and terms of payouts, withdrawals and other distributions. Current year contributions are included in the “2024 All
Other Compensation Table”.
|
|
|
(2) |
To fund nonqualified retirement plan benefits, the Company has set aside money in a Master Trust, which is subject to the claims of the Company’s creditors in the event of insolvency.
General investment parameters are established by the Company, including allowable investment instruments and approved investment manager(s). Participants can then work with the investment manager(s) to request investment of their
vested balances according to their own risk profile, with no guarantees of principal provided by the Company.
|
|
|
(3) |
Mr. Steinwert’s withdrawals consisted of In-Service Distributions from the Non-Qualified Executive Retirement Plan Equity and Performance Components made throughout 2024.
|
|
|
(4) |
Represents the cumulative amount of the current and all previous years’ contributions and earnings or losses.
|
2024 Pay For Performance Disclosure
As required by Section 953(a) of the Dodd-Frank Act, and Item 402(v) of SEC Regulation S-K, we are providing the following information about executive
compensation actually paid (as defined by SEC rules) for our principal executive officer (CEO) and Non-CEO Named Executive Officers (other Named Executive Officers) and Company performance for the fiscal years listed below. This disclosure
is not incorporated by reference into our 2024 Annual Report on Form 10-K. For further information about the Company’s pay-for-performance philosophy and how the Personnel Committee aligns executive compensation with the Company’s
performance, refer to “Executive Compensation - Compensation Discussion and Analysis”. The amounts in the table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by Named Executive
Officers.
|
Year
|
Summary
Compensation
Table Total for
PEO
|
Compensation
Actually Paid
to PEO
|
Average
Summary
Compensation
Table Total for
Non-PEO
Named
Executive
Officers
|
Average
Compensation
Actually Paid
to Non-PEO
Named
Executive
Officers
|
Value of initial fixed $100
investment based on:
|
Net Income
|
Return on Average Equity |
|
||||||||||||||||||||||||||||
|
Total
Shareholder
Return
|
Peer Group
Total
Shareholder
Return
(1)
|
|||||||||||||||||||||||||||||||||||
|
2024
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
%
|
|
%
|
||||||||||||||||||
|
2023
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
%
|
|
%
|
||||||||||||||||||
|
2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
%
|
|
%
|
||||||||||||||||||
|
|
(1) |
The peer group used is the S&P 600 Regional Banks, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report on
Form 10-K for the year ended December 31, 2024. (“Total Stockholder Return” represents the cumulative total stockholder return during each measurement period and is calculated by dividing the sum of (i) the difference between the
share price at the end and the beginning of the measurement period, plus (ii) the cumulative amount of dividends paid on the stock for the measurement period, assuming dividend reinvestment, by the share price at the beginning of
the measurement period. Each amount assumes that $100 was invested in common stock on December 31, 2019, and dividends were reinvested for additional shares.) The comparison assumes $100 was invested for the period starting December
31, 2019, through the end of the listed year in the Company and in the S&P 600 Regional Banks index, respectively. Historical stock performance is not necessarily indicative of future stock performance.
|
- 27 -
The Company operates under a three (3) year strategic plan complemented by a current year operating budget with
net income
,
return on average equity
and
return on average assets
goals among others. These three financial performance measures are the three most important for
compensation purposes. As described in “Compensation Discussion and Analysis”, bonus awards under the Executive Management Incentive Compensation Plan are determined taking into account the actual results of net income, including actual
and relative profit performance. Additionally, amounts credited under the Executive Retirement Plan – Performance Component are impacted by net income, which is a component of long-term cumulative profitability, one of the measures used to
determine the amount credited to such account. Accordingly, a significant portion of the reported amount of compensation actually paid to our Named Executive Officers is linked to net income.
Total stockholder return (TSR) is not directly tied to any performance goals. However, the Executive Retirement Plan - Equity Component accounts are
invested primarily in Company stock, the Executive Retirement Plan – Salary Component permits elective investment in Company stock, and the balance in the account established for the Executive Retirement Plan - Performance Component is
indirectly impacted by the value of the Company’s stock because stock price is a factor in one of the performance measures (relative market capitalization) under such plan. Accordingly, the account balances maintained under the three plans
fluctuate based on our stock price and the compensation actually paid to our Named Executive Officers that relates to such plans decreases and increases based on an increase and decrease in our TSR. Accordingly, a substantial portion of the
compensation actually paid to our Named Executive Officers is aligned with our TSR. Our TSR is strong relative to the TSR of the peer group and has exceeded our average peer group by $26.92, or 21.7%, from December 31, 2019 to December 31,
2024.
- 28 -
AUDIT & RISK COMMITTEE REPORT
The following Audit & Risk Committee Report should not be deemed filed or incorporated by reference into any other document,
including Farmers & Merchants Bancorp’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report into any such filing by reference.
Report of the Audit & Risk Committee of the Board of Directors
The Audit & Risk Committee oversees relevant accounting, risk assessment, risk management and regulatory matters. It meets with the Company’s and
the Bank’s internal auditors and the independent registered public accounting firm to review the scope of their work as well as to review quarterly and annual financial statements and regulatory and public disclosures with the officers in
charge of financial reporting, control and disclosure functions. After reviewing the independent registered public accounting firm’s qualifications, partner rotation and independence, the Audit & Risk Committee also makes an annual
decision regarding selection of the independent registered public accounting firm. In addition, the Audit & Risk Committee reviews reports of examination conducted by regulatory agencies and follows up with management concerning
recommendations and required corrective action.
The Audit & Risk Committee reports regularly to the Boards of Directors of the Company and the Bank and has the authority to select, retain,
terminate and approve the fees and other retention terms of special counsel or other experts or consultants as it deems appropriate and necessary to perform its duties.
In performing its functions, the Audit & Risk Committee acts in an oversight capacity and necessarily relies on the work and assurances of
management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting firm, who, in their report, express an opinion on the conformity of the Company’s annual financial
statements to generally accepted accounting principles.
In connection with the December 31, 2024 consolidated financial statements of the Company, the Audit & Risk Committee: (1) reviewed and discussed
the audited financial statements with management and the independent registered public accounting firm; (2) discussed with the independent registered public accounting firm the matters required by AS 1301; and (3) received and discussed
with the independent registered public accounting firm the matters required by AS 1301, Communications with Audit & Risk Committees. The Audit & Risk Committee has also considered whether the independent registered public accounting
firm provision of non-audit services to the Company is compatible with maintaining the auditors’ independence. Based upon these reviews and discussions, the Audit & Risk Committee recommended to the Board of Directors that the audited
financial statements be included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2024.
|
|
|
||||
|
Kevin Sanguinetti, Chairman
|
Stephenson K. Green
|
Edward Corum Jr.
|
- 29 -
Fees and Services of Independent Registered Public Accounting Firm
On January 23, 2024, the Company’s Audit & Risk Committee approved the engagement of Crowe LLP to serve as our independent registered public
accounting firm for the fiscal year ending December 31, 2024. The appointment of Crowe LLP to serve as the Company’s new independent registered public accounting firm followed a decision by the Company’s previous independent registered
public accounting firm, Eide Bailly LLP, to exit the financial institution portion of its SEC audit practice, and therefore decline to stand for reappointment following completion of the Company’s financial statements for the year ended
December 31, 2023. This decision by Eide Bailly was made for reasons unrelated to the Company.
During the Company’s fiscal years ended December 31, 2023 and 2022, and for the subsequent interim period through January 22, 2024, neither the
Company nor anyone acting on its behalf consulted with Crowe LLP regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed; (ii) or the type of audit opinion that might be rendered
on the Company’s consolidated financial statements; or (iii) any written report or oral advice provided to the Company that Crowe LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting,
auditing or financial reporting issue; or (iv) any matter that was either the subject of a “disagreement” or a “reportable event” (as those terms are defined in Item 304(a)(1)(iv) and (v) of Regulation S-K, respectively).
Eide Bailly LLP’s reports on our consolidated financial statements and the effectiveness of internal control over financial reporting, which were
included in the Company’s Annual Reports on Form 10-K for the fiscal years ended December 31, 2023 and 2022, as filed with the Securities and Exchange Commission, did not contain an adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s fiscal years ended December 31, 2023 and 2022, (i) there were no disagreements within the meaning of Item 304(a)(1)(iv) of
Regulation S-K between the Company and Eide Bailly LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Eide Bailly LLP’s
satisfaction, would have caused it to make reference thereto in its reports; and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
We provided Eide Bailly LLP with a copy of the foregoing disclosures, as filed with the Securities and Exchange Commission on Form 8-K dated November
22, 2023 and January 25, 2024, and Eide Bailly LLP furnished us with a letter addressed to the Securities and Exchange Commission stating that it agreed with the above disclosures related to their firm. A copy of their letter, dated
November 20, 2023, was attached as Exhibit 16.1 to the Form 8-K dated November 22, 2023.
The following table sets forth the fees billed to the Company for the audit of our annual financial statements for the years ended December 31, 2024
(Crowe LLP) and 2023 (Eide Bailly LLP), and fees billed for other services rendered by Eide Bailly LLP during those periods:
|
Years Ended December 31
|
||||||||
|
2024
|
2023
|
|||||||
|
Audit and other related fees:
|
||||||||
|
Audit fees
|
$
|
845,000
|
$
|
550,000
|
||||
|
Audit-related fees
|
-
|
-
|
||||||
|
All other fees
(1)
|
-
|
21,200
|
||||||
|
$
|
845,000
|
$
|
571,200
|
|||||
|
|
(1) |
Represents audit fees for the Company’s profit sharing plan performed by Eide Bailly LLP, primary auditor in 2023.
|
All of the services provided by Crowe LLP and Eide Bailly LLP described above were approved by the Audit & Risk Committee.
- 30 -
Pre-approval of Services by the Company’s Independent Registered Public Accounting Firm
The Audit & Risk Committee has adopted a policy for pre-approval of audit and permitted non-audit services by the Company’s independent registered
public accounting firm. The Audit & Risk Committee will consider annually and, if appropriate, approve the provision of audit services by its independent registered public accounting firm and any provision of certain defined audit and
non-audit services. The Audit & Risk Committee will also consider on a case-by-case basis and, if appropriate, approve specific engagements that are not otherwise pre-approved.
Any proposed engagement that does not fit within the definition of a pre-approved service may be presented to the Audit & Risk Committee for
consideration at its next regular meeting or, if earlier consideration is required, to the Audit & Risk Committee or one or more of its members. The member or members to whom such authority is delegated shall report any specific
approval of services at its next regular meeting. The Audit & Risk Committee will regularly review summary reports detailing all services being provided by its independent registered public accounting firm.
The Company does not require that its independent registered public accounting firm attend the annual meeting of stockholders.
OTHER MATTERS
Indemnification
The Company’s Certificate of Incorporation and By-Laws provide for indemnification of officers, directors, employees and agents to the fullest extent
permitted by Delaware law. Delaware law generally provides for the payment of expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement reasonably incurred by the indemnitees provided such person acted in good
faith and in a manner he or she reasonably believed not to be opposed to the best interests of the corporation and with respect to any criminal action or proceeding if he or she had no reasonable cause to believe his or her conduct was
unlawful. However, in derivative suits, if the suit is lost, no indemnification is permitted in respect of any claim as to which the prospective indemnitee is adjudged to be liable for misconduct in the performance of his or her duty to the
Company and then only if, and only to the extent that, a court of competent jurisdiction determines the prospective indemnitee is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Finally, no
indemnification may be provided in any action or suit in which the only liability asserted against a director is pursuant to a statutory provision proscribing the making of loans, dividends, and distribution of assets under certain
circumstances.
The provisions regarding indemnification may not be applicable under certain federal banking and securities laws and regulations.
Stockholder Rights Plan
On August 5, 2008, the Board of Directors approved a Share Purchase Rights Plan (the “Rights Plan”), pursuant to which the Company entered into a
Rights Agreement dated August 5, 2008 (the “2008 Rights Agreement”), with Computershare as Rights Agent, and the Company declared a dividend of a right to acquire one preferred share purchase right (a “Right”) for each outstanding share of
the Company’s common stock, $0.01 par value per share, to stockholders of record at the close of business on August 15, 2008. Generally, the Rights are only triggered and become exercisable if a person or group (the “Acquiring Person”),
without the consent of the Company’s Board of Directors, acquires beneficial ownership of 10 percent or more of the Company’s common stock or announces a tender offer for 10 percent or more of the Company’s common stock.
- 31 -
The Rights Plan is similar to plans adopted by many other publicly traded companies. The effect of the Rights Plan is to discourage any potential
acquirer from triggering the Rights without first convincing the Company’s Board of Directors that the proposed acquisition is fair to, and in the best interest of, all of the stockholders of the Company. The provisions of the Plan, if
triggered by the Acquiring Person, will substantially dilute the equity and voting interest of any potential acquirer unless the Board of Directors approves of the proposed acquisition (under Article XV of the Company’s Certificate of
Incorporation, the Board of Directors has the authority to consider any and all factors in determining whether an acquisition is in the best interests of the Company and its stockholders). Each Right, if and when exercisable, will entitle
the registered holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock, no par value (“Preferred Share”), at the purchase price set forth in the Rights Plan for each one
one-hundredth of a share, subject to adjustment.
Each holder of a Right (except for the Acquiring Person, whose Rights will be null and void upon such event) shall thereafter have the right to
receive, upon exercise, that number of Common shares of the Company having a market value of two times the exercise price of the Right. At any time before a person becomes an Acquiring Person, the Rights can be redeemed, in whole, but not
in part, by the Company’s Board of Directors at a price of $0.001 per Right.
The Rights Plan was set to expire on August 5, 2018. On November 19, 2015, the Board of Directors approved a seven-year extension of the term of the
Rights Plan. Pursuant to an Amendment to the 2008 Rights Agreement dated February 18, 2016, the term of the Rights Plan was extended from August 5, 2018 to August 5, 2025. The extension of the term of the Rights Plan was intended as a means
to continue to guard against abusive takeover tactics and was not in response to any particular proposal. The Board also increased the purchase price under the Rights Plan from $1,200 to $1,600 per one one-hundredth of a Preferred Share, to
reflect the increase in the market price of the Company’s common stock since the adoption of the Rights Plan.
On April 5, 2024, the Company entered into an Amended and Restated Rights Agreement (the “Amended Rights Agreement”), which amended and restated the
2008 Rights Agreement. The Amended Rights Agreement extends the expiration date of the Company’s Rights Plan from the close of business on August 5, 2025, to the close of business on August 5, 2034. At the time of the termination of the
Amended Rights Agreement, all of the Rights distributed to holders of the Company’s Preferred Shares pursuant to the Amended Rights Agreement will expire. The Amended Rights Agreement also increased the purchase price per unit under the
2008 Rights Agreement from $1,600 per one one-hundredth of a Preferred Share, to $3,900 per one one-hundredth of a Preferred Share. The other changes reflected in the Amended Rights Agreement generally clarify the legal relationship between
the Rights Agent and the Company and were made to conform the agreement to provisions that have become customary in such agreements since the Rights Plan was originally adopted in 2008.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our Directors and executive officers to file reports of their ownership of the Company’s common stock with
the SEC. Based solely on a review of the filings made with the SEC and written representations from our Directors and executive officers, the Company believes that all reports required by Section 16(a) of the Exchange Act to be filed by
its Directors and executive officers during the last fiscal year were filed on a timely basis, except for one late filing due to an administrative oversight by the Company’s administrator, and one late filing to correct a director’s
reported holdings of shares of the Company’s common stock.
To its knowledge, the Company has no ten percent or greater stockholder.
Communications with Board of Directors
Any person, including any stockholder, desiring to communicate with, or make any concerns known to, the Company, Directors generally, non-management
Directors or an individual Director only may do so by submitting them in writing to Bart R. Olson, Corporate Secretary of Farmers & Merchants Bancorp, 111 W. Pine Street, Lodi, CA 95240. All correspondence must include information to
identify the person submitting the communication or concern, including name, address, telephone number and e-mail address (if applicable) together with information indicating the relationship of such person to the Company. The Secretary is
responsible for maintaining a record of any such communications or concerns and submitting them to the appropriate addressee(s) for potential action or response. The Company may institute appropriate procedures to establish the authenticity
of any communication or concern before forwarding. The Company is not obligated to investigate any anonymous submissions.
- 32 -
Stockholder Nominations, Notices and Proposals
Article III, Section 3.4 of the By-Laws of the Company provides a procedure for nomination for election of members of the Board of Directors of the
Company. Nominations for election to the Board of Directors may be made by the Board of Directors or by any holder of any outstanding class of capital stock of the Company entitled to vote for the election of Directors.
Nominations, other than those made by the Board of Directors, shall be made by notification in writing delivered or mailed to the Chairman of the
Nominating Committee at 111 West Pine Street, Lodi, CA 95240, not less than thirty (30) days or more than sixty (60) days prior to any meeting of stockholders called for election of Directors, provided, however, that if less than
twenty-one (21) days’ notice of the meeting is given to stockholders, such nomination shall be mailed or delivered to the President of the Company not later than the close of business on the seventh (7th) day following the day on which the
notice of meeting was mailed. If the Company’s 2026 annual meeting of stockholders is held on the second Monday of May (as has generally been the case over the last several years), any stockholder nomination, to be timely, must be received
by the Company not later than April 11, 2026 and not earlier than March 12, 2026. Notification must contain certain information as to each proposed nominee and as to each person acting alone or in conjunction with one or more persons, in
making such nomination or in organizing, directing or financing such nomination. The Chairman of the meeting may, in his or her discretion, determine and declare to the meeting that a nomination not made in accordance with the foregoing
procedure shall be disregarded.
A copy of the By-Laws of the Company can be obtained by written request to the Corporate Secretary
of the Company, Bart R. Olson, 111 West Pine Street, Lodi, CA 95240. A copy of the Nominating Committee’s charter, which outlines the Committee’s nominating process, including the standards and qualifications to be considered for Board
membership, is available for review on the Company’s website at
http://www.fmbonline.com
.
Pursuant to Article II, Section 2.6 of the Company’s By-Laws, in order for other business to be properly brought before a meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the Secretary of the Company and must have been a stockholder of record at the time such notice is given. To be timely, a stockholder’s notice shall be delivered to or
mailed (by United States registered mail, return receipt requested) and received at the principal executive offices of the Company not less than seventy (70) days nor more than ninety (90) days prior to the first anniversary date of the
preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than twenty (20) days, or delayed by more than seventy (70) days, from such anniversary date, notice by a
stockholder to be timely must be so delivered or mailed (by U.S. registered mail, return receipt requested) and received no earlier than the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the
later of the seventieth (70th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made.
Notice of any stockholder proposal by a stockholder to properly bring business before the 2026 annual meeting, to be timely, must be received by the
Company no later than March 3, 2026, and no earlier than February 11, 2026. Such stockholder’s notice to the Secretary must contain certain additional information, which is more particularly described in Article II, Section 2.6 of the
Company’s By-Laws. No business shall be conducted at an annual meeting of stockholders unless proposed in accordance with the foregoing procedures. The Chairman of the meeting shall, if the factors warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance with the foregoing procedure and such business shall not be transacted.
Under the Rules of the SEC, if a stockholder intends to include a proposal in the Company’s proxy statement and form of proxy for presentation at the
Company’s 2026 annual meeting of stockholders, the proposal must be received by the Company at its principal executive offices by December 5, 2025. In addition to these advance notice requirements, there are other requirements that a
stockholder must meet in order to have a proposal included in the Company’s proxy statement under the rules of the SEC.
- 33 -
A complete list of stockholders entitled to vote will be available for inspection by stockholders of record at the office of the Secretary of the
Company at 111 West Pine Street, Lodi, CA 95240 for the ten days prior to the Meeting.
Cumulative Voting
With respect to the election of Directors, each stockholder may be eligible to exercise cumulative voting rights and may be entitled to as many votes
as shall equal the number of shares of common stock held by such stockholder multiplied by the number of Directors to be elected, and such stockholder may cast all of such votes for a single nominee or may distribute them among two or more
nominees. For example, if you own 10 shares of common stock of the Company and 7 Directors are being elected, you have 70 votes – you can cast all of them for one nominee, or two or more nominees if you so choose. No stockholder shall be
entitled to cumulate votes (i.e., cast for any one or more nominees a number of votes greater than the number of shares of common stock of the Company held by such stockholder) unless the name(s) of the nominee(s) has (have) been placed in
nomination prior to the commencement of the voting in accordance with Article III, Section 3.4 of the Company’s By-laws and, in accordance with Article II, Section 2.9 of the Company’s By-laws, a stockholder has given at least two days
written notice to the Secretary of the Company of an intention to cumulate votes prior to the vote.
Other Matters
The Management and Directors of the Company are not aware of any other matters to be presented for consideration at the virtual annual meeting to be
held on May 12, 2025 or any adjournments or postponements thereof. If any other matters should properly come before the Meeting, it is intended that the persons named in the enclosed proxy will vote the shares represented thereby in
accordance with their best business judgment, pursuant to the discretionary authority granted therein.
No Incorporation by Reference of Certain Portions of This Proxy Statement
Notwithstanding anything to the contrary set forth in any of our previous filings made under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings made by us under those statutes, neither the Audit & Risk Committee Report nor the Report of the Personnel Committee of the Board of Directors on Executive Compensation is to be incorporated by
reference into any such prior filings, nor is such report to be incorporated by reference into any future filings made by us under those statutes.
- 34 -
TABLE OF CONTENTS