ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANACE
|
Information about our Directors
The Board of Directors (“Board”)
currently consists of 11 directors and is divided into three classes as nearly equal in number as possible. Each class of directors
serves a staggered, three-year term so that the term of office of a single class expires each year. Set forth below are the names,
ages and length of service of each of the members of the Board.
Name
|
|
Age (1)
|
|
Term Expires
|
|
Position(s) Held
|
|
Director Since
|
Gail Gordon
|
|
65
|
|
2020
|
|
Director
|
|
2019
|
Edward J. Leppert
|
|
59
|
|
2020
|
|
Chairman of the Board
|
|
2001
|
Michael X. McBride
|
|
66
|
|
2020
|
|
Director
|
|
2017
|
Mark J. Hontz
|
|
53
|
|
2021
|
|
Director
|
|
1998
|
Walter E. Loeffler
|
|
71
|
|
2021
|
|
Director
|
|
2018
|
Peter A. Michelotti
|
|
51
|
|
2021
|
|
Senior Executive Vice President and Chief Operating Officer; Director
|
|
2018
|
Richard Branca
|
|
72
|
|
2022
|
|
Director
|
|
2005
|
Salvatore A. Davino
|
|
78
|
|
2022
|
|
Director
|
|
2018
|
Anthony Labozzetta
|
|
56
|
|
2022
|
|
President and Chief Executive Officer; Director
|
|
2010
|
Michael F. Lombardi
|
|
71
|
|
2022
|
|
Director
|
|
2018
|
Robert McNerney
|
|
61
|
|
2022
|
|
Director
|
|
2011
|
The principal occupation, education and
business experience, where applicable, of each director is set forth below. The biographical descriptions below include the specific
experience, qualifications, attributes and skills that led to the conclusion by the Board that such person should serve as a director
of the Company. Unless otherwise indicated, principal occupations shown for each director have extended for five or more years.
Ms. Gail Gordon began her career
working for PA Governor and US Attorney General Dick Thornburgh. Her expertise is in Government Relations, local advocacy and business
development. She has operated her own public affairs consultancy since 2009. She was also Of Counsel to a law firm from 2011 to
2018. She is also an accomplished public speaker and in 2019 appeared in an Emmy-nominated HBO documentary. She is a trustee of
Hackensack Meridian Health as well as four non-profit boards. She is a lifelong advocate for persons with disabilities and in 2016
was awarded the Betty Pendler award for her commitment.
Mr. Edward J. Leppert is a certified
public accountant and founder of Leppert Group LLC, and has been in public practice since 1986. Effective January 1, 2012, he was
elected Chairman of the Board of both the Company and SB One Bank. He previously served as Vice Chairman of the Board and has also
served as the Chairman of the Audit, Executive, and Nominating and Corporate Governance Committees. His experience with financial
and corporate governance matters and knowledge of the customers and communities in the northern New Jersey marketplace are beneficial
to us.
Mr. Michael X. McBride, Esq. is
an attorney and partner at Connell Foley LLP (“Connell Foley”) in Roseland, New Jersey. His practice focuses on real
estate and construction. From 2010 through 2015, Mr. McBride served as Connell Foley’s Managing Partner. He is admitted to
the New York State Bar and the New Jersey State Bar. Mr. McBride is a member of the board of directors of McBride Enterprises,
a New Jersey real estate and construction company. He is a graduate of Stanford University and Georgetown University Law Center.
Mr. McBride’s knowledge of the customers and communities in the northern New Jersey marketplace are beneficial to us and
provides us valuable insight into the current market.
Mr. Mark J. Hontz is a partner in
the Newton, New Jersey based law firm of Hollander, Strelzik, Pasculli, Hinkes, Wojcik, Gacquin, Vandenberg & Hontz, L.L.C.
and has been a practicing lawyer since 1992. His experience counseling various clients and business entities has given him insight
into many of the issues we deal with, including risk mitigation and corporate governance.
Mr. Walter E. Loeffler is a certified
public accountant and managing member of Walter E. Loeffler, CPA, LLC, a CPA firm since 1986. Mr. Loeffler has also served as President
of Business Valuation Associates, Inc. since 1995. Mr. Loeffler’s experience includes consulting services for closely-held
corporations, business valuations, forensic and traditional accounting services as well as tax return preparation. Mr. Loeffler
was a member of the board of directors of Community Bank of Bergen County, NJ and the Chairman of their Audit Committee.
Mr. Peter A. Michelotti has been
our Chief Operating Officer and Senior Executive Vice President since January 2018. He is a certified financial planner and he
was previously the President and Chief Executive Officer as well as a member of the board of directors of Community Bank of Bergen
County, NJ since January 2009. He held various other positions with Community Bank of Bergen County, NJ since 1987. He also has
held several officer and director positions with banking related associations. Mr. Michelotti has more than 30 years of banking
experience, including strategic planning, lending, regulatory compliance, risk management and operations.
Mr. Richard Branca is the owner
and President of Bergen Engineering Company, an East Rutherford, New Jersey general contractor established in 1945 that builds
commercial and industrial properties, hotels and printing plants. He is also the President of Branca Properties, which owns and
manages over 1.3 million square feet of office, warehouse and retail space. Mr. Branca is also an investor in Concord Hospitality,
an entity which owns or operates over 105 full and select service hotels throughout the United States and Canada. Mr. Branca’s
broad based business experience has provided him with insight and understanding of many of the same issues that both our small
business customers and we deal with today, including financial and strategic planning, capital allocation and management development.
Mr. Salvatore A. Davino is the owner
and President of Fidelity Land Development Corp., which owns and manages shopping centers, office buildings and recreation centers.
Mr. Davino was the Chairman of the Board of Enterprise Bank NJ and served as a trustee of Cathedral Healthcare Systems and the
Chairman of the Board of Columbus Hospital. In addition, Mr. Davino serves as a trustee of the Board of John Cabot University in
Rome, as the President of the Board of The Shepherds of Youth, on the Board of Overseers of Redemptoris Mater Seminary, as a member
of the Board of Opportunity Project and as a commissioner of the Italian-American Heritage Commission.
Mr. Anthony Labozzetta has been
our President and Chief Executive Officer since January 2010. He was previously an Executive Vice President of TD Bank from 2006
to 2010. Prior to joining TD Bank, Mr. Labozzetta served as the Senior Executive Vice President and COO of Interchange Financial
Services Corporation until its acquisition by TD Bank in 2006. Mr. Labozzetta also previously served as the Chief Financial Officer
of Interchange Financial Services Corporation. He was formerly a certified public accountant with Deloitte & Touche. With more
than 30 years of banking experience, including strategic planning and growth, regulatory compliance, investor relations, risk management,
mergers and acquisitions and management development, Mr. Labozzetta has extensive and diverse knowledge of the banking business.
Mr. Michael F. Lombardi is the senior
officer of Lombardi & Lombardi, P.A., a personal injury law firm. He is a director and principal shareholder of Chefs International,
Inc., a multi-unit casual restaurant operator. He is a principal of several real estate holding companies. He was a director of
Enterprise Bank NJ from 2004 until 2018, having served on the executive committee, loan committee, audit committee and ALCO committee.
Mr. Robert McNerney has been the
owner of a real estate company, McNerney & Associates, Inc., since 1981. McNerney & Associates, Inc. provides appraisal,
management, brokerage and development services throughout northern New Jersey and New York. He is a licensed appraiser and real
estate broker in NJ and NY and holds an MAI and SRA designation from the Appraisal Institute. He holds a CRE designation from the
Counselors of Real Estate, which is awarded to individuals nominated by their peers who possess extensive experience in the commercial
real estate business. Mr. McNerney’s extensive experience in the real estate markets and as a business owner provides us
valuable insight into the current market.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
WHO ARE NOT DIRECTORS
The following are our executive officers
who are not also members of the Board and therefore are not listed above:
Mr. Adriano Duarte CPA, age 48,
was appointed to the role of Executive Vice President and Chief Financial Officer in March 2019. Mr. Duarte has served as Senior
Vice President and Assistant Financial Officer of the Company since 2015. Mr. Duarte has also served as the Assistant Financial
Officer of SB One Bank since October 2015. Mr. Duarte has over 20 years of banking experience, including managing financial reporting,
accounting and treasury functions. Prior to joining the Company and SB One Bank, Mr. Duarte served as a Vice President and Financial
Reporting Manager at Investors Savings Bank from 1996 to 2011. Mr. Duarte is a licensed Certified Public Accountant and member
of the American Institute of Certified Public Accountants. Mr. Duarte received a Bachelor of Science degree and a Master of Business
Administration degree from Rutgers, The State University of New Jersey. Mr. Duarte is also an officer of the New York New Jersey
Chapter of Financial Managers Society, Inc., which services financial professionals from community banks, thrifts, and credit unions.
Mr. Anthony DeSenzo, age 51, was
appointed to the role of Executive Vice President and Head of Commercial Lending in June 2019. Mr. DeSenzo has over 28 years of
experience in diversified lending and credit underwriting. Prior to joining the Company, Mr. DeSenzo served as a Team Leader of
Commercial Real Estate in New Jersey at ConnectOne Bank from 2017 to 2019. Prior to ConnectOne Bank, Mr. DeSenzo served as Managing
Director and Relationship Manager of Commercial Real Estate at Capital One Bank/North Fork Bank from 2004 to 2017. Mr. DeSenzo
has also held senior positions at KeyBank, Bank of New York and First Union Bank.
Mr. Vito Giannola, age 43, has served
as Senior Executive Vice President and Chief Banking Officer of SB One Bank since March 2018 and has been with SB One Bank since
September 2010. Mr. Giannola has over 16 years of experience in retail, small business and government banking. Prior to joining
SB One Bank, Mr. Giannola served as Retail Market Manager and Senior Vice President with TD Bank, where he held various positions
throughout the bank. Mr. Giannola also held various positions with Chase and First Union (Wells Fargo).
Mr. Donald Haake, age 62, has served
as Senior Executive Vice President for regional banking of SB One Bank since December 2018. Don previously served as President
and CEO of Enterprise Bank NJ for the prior 12 years. Prior to joining Enterprise Bank NJ, he was Senior Vice President and Division
Executive for North Fork Bank’s 78 branch network in New Jersey and Rockland County, NY. Prior to North Fork Bank, Mr. Haake
was the President and Chief Operating Officer of Millennium bcpbank, headquartered in Newark, NJ. He has also held senior management
positions at The Bank of New York, where he directed the retail and business banking activities for their southern New Jersey operations.
Earlier in his 39-year career, Mr. Haake held management positions at Merrill Lynch and Citibank.
Mr. George Lista, age 60, has served
as the President and Chief Executive Officer of our subsidiary, SB One Insurance Agency, since 2001. Mr. Lista joined the Company
when we acquired SB One Insurance Agency in 2001. Mr. Lista served as Chief Operating Officer of SB One Insurance Agency prior
to its acquisition. Mr. Lista has 37 years of experience in the insurance industry.
Delinquent
Section 16(a) Reports
Section 16(a) of the Exchange Act requires
our directors and executive officers, and persons who own more than 10% of our common stock, to report to the SEC their initial
ownership of our common stock and any subsequent changes in that ownership. Specific due dates for these reports have been established
by the SEC and we are required to disclose in this Form 10-K/A any late filings or failures to file.
Based solely on our review of
the copies of such forms received by us, or written representations from certain reporting persons that no other reports were required
during the fiscal year ended December 31, 2019, we believe that, during the 2019 fiscal year, all of our directors and executive
officers complied with all Section 16(a) filing requirements applicable to them, except for Vito Giannola and Salvatore A. Davino
who each filed one Form 4 late due to administrative error.
Code
of Ethics and Corporate Governance Guidelines
We have a Code of Conduct, which applies
to all our directors, officers and employees. We also have a Senior Management Code of Ethics, which applies to our principal executive
officer, principal financial officer, principal accounting officer or controller or persons performing similar functions for us,
and which requires compliance with the Code of Conduct. The Senior Management Code of Ethics meets the requirements of a “code
of ethics” as defined by Item 406 of Regulation S-K.
We intend to satisfy the disclosure requirement
under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of our Code of Ethics that applies to our
principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar
functions, by posting such information on our website at the internet address set forth below. We did not amend or grant any waivers
of a provision of our Code of Ethics during 2019.
The Board adopted Corporate Governance
Guidelines to assure that it will have the necessary authority and practices in place to review and evaluate our business operations
as needed and to make decisions that are independent of our management. The Corporate Governance Guidelines are also intended to
align the interests of directors and management with those of our shareholders. The Corporate Governance Guidelines set forth the
practices the Board intends to follow with respect to Board independence, composition and selection, Board meetings and involvement
of senior executives, senior executive performance evaluation and succession planning, and Board committees and compensation.
The Code of Conduct, the Senior Management
Code of Ethics and the Corporate Governance Guidelines are available on our website at www.sbone.bank. The inclusion of
our website address here and elsewhere in this Form 10-K/A does not include or incorporate by reference the information on our
website into this Form 10-K/A.
Audit
Committee
The purpose of the Audit Committee is to
assist the Board’s oversight of our accounting and financial reporting process, including our internal audit function and
the audits of our financial statements.
The primary duties and responsibilities
of the Audit Committee are to:
|
·
|
oversee and monitor the financial reporting process, internal audit function and internal controls and procedures;
|
|
·
|
appoint, compensate and oversee the work of the independent auditors;
|
|
·
|
review and evaluate the audited financial statements with management and the independent auditors and report any substantive
issues found during the audit to the Board;
|
|
·
|
review and approve all transactions with related persons; and
|
|
·
|
provide an open avenue of communication among the independent auditors, financial and senior management, the internal audit
department and the Board.
|
The Audit
Committee is also responsible for the pre-approval of all audit, review, attest and non-audit services provided by our independent
auditors. The Audit Committee pre-approved 100% of the services performed by the independent registered public accounting firm
during 2019.
The Audit Committee may form and delegate
authority to one or more subcommittees (including a subcommittee consisting of a single member), as it deems appropriate from time
to time under the circumstances. Any decision of a subcommittee to pre-approve audit, review, attest or non-audit services shall
be presented to the full Audit Committee at its next scheduled meeting.
The Audit Committee is currently chaired
by Mr. Loeffler with Messrs. Hontz and Leppert as members. The Board reviews the definition of independence for Audit Committee
members on an annual basis and has determined that all members of our Audit Committee are independent (as defined in Rule 5605(a)(2)
of the NASDAQ Listing Rules and Rule 10A-3 under the Exchange Act). The Board has also determined that Messrs. Leppert and Loeffler
each qualify as an “audit committee financial expert” as defined in applicable SEC rules. The Audit Committee has a
written charter, which is available on our website at www.sbone.bank.
ITEM 11.
|
EXECUTIVE COMPENSATION
|
EXECUTIVE COMPENSATION
Executive Compensation Program Components and 2019 Pay
Decisions
The Company’s compensation program
consists of four components: base salary, annual (cash incentives), long-term (equity incentives) and benefits. The table below
summarizes the actual compensation paid to our President and Chief Executive Officer and the two other most highly compensated
executive officers, or collectively, the named executive officers, for the 2019 performance year, which consists of base salary,
annual (cash) incentives and equity grants. Additional details related to these components follow this table.
Anthony Labozzetta
|
—
|
President and Chief Executive Officer
|
Vito Giannola
|
—
|
Senior Executive Vice President and Chief Banking Officer
|
George Lista
|
—
|
Chief Executive Officer, SB One Insurance Agency
|
Executive
|
|
Base Salary
($)
|
|
|
Annual Incentive Award (Cash)
($)
|
|
|
Restricted Stock Grant
($)
|
|
|
Total Direct Compensation
($)
|
|
Anthony Labozzetta
|
|
|
556,304
|
|
|
|
279,501
|
|
|
|
279,492
|
|
|
|
1,115,297
|
|
Vito Giannola
|
|
|
280,000
|
|
|
|
100,431
|
|
|
|
100,433
|
|
|
|
480,864
|
|
George Lista
|
|
|
211,901
|
|
|
|
63,570
|
|
|
|
63,571
|
|
|
|
339,042
|
|
Below we summarize our programs and 2019
pay decisions.
Base Salary
The Compensation Committee of the Board
(the “Compensation Committee”) believes the purpose of base salary is to provide competitive and fair base compensation
that recognizes the executive’s role, responsibilities, experience and performance. Base salary represents fixed compensation
that is targeted to be competitive with the practices of comparable banks similar in size and region.
Typically, the Committee sets base salary
for each executive in the first quarter of each year effective January 1. Salaries are determined in consideration of the competitive
market for similar roles, as well as each individual’s experience, performance and contributions. Input from the Company’s
Chief Executive Officer is considered in setting executive salaries, while the Compensation Committee is solely responsible for
recommending the Company’s Chief Executive Officer’s salary.
Below is a summary of the salaries approved
by the Compensation Committee:
Executive
|
|
2018 Base Salary ($)
|
|
|
2019 Base Salary ($)
|
|
|
% Increase
|
|
Anthony Labozzetta
|
|
|
529,813
|
|
|
|
556,304
|
|
|
|
5.0
|
|
Vito Giannola
|
|
|
255,816
|
|
|
|
280,000
|
|
|
|
9.5
|
|
George Lista
|
|
|
201,810
|
|
|
|
211,901
|
|
|
|
5.0
|
|
The salary increases from 2018 to 2019
were a result of the Company’s growth and strong performance.
Executive Incentive Plan
The objective of the Company’s executive
incentive plan is to motivate and reward key members of executive management for achieving specific performance goals that support
the Company’s strategic plan through the use of cash awards and restricted stock. Awards under this plan represent compensation
that must be earned based upon performance. Awards for the CEO, Chief Banking Officer and CEO of SB One Insurance Agency are paid
50% in cash and 50% in equity with subsequent 3 year vesting.
The performance goals are developed in
conjunction with the annual business plan, approved by the Compensation Committee and presented to the full Board for final approval.
The incentive target opportunities and
performance measures for the 2019 compensation year are described below.
Award Opportunity: The table below
summarizes the 2019 incentive award opportunities (expressed as a percentage of base salary) available under our annual executive
incentive plan and paid only upon achievement of the performance goals. The total incentive opportunity is allocated in cash (and
equity in the case of the CEO and CFO) in accordance with the table below. The Committee believes payment in stock provides additional
retention and deferral of compensation that reinforces our desire to align pay with shareholder interests and provide long-term
compensation.
|
|
Total Incentive Opportunity
(% of Salary)
|
|
|
Cash Portion
(% of Salary)
|
|
|
Restricted Stock Portion
(% of Salary)
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
Anthony Labozzetta
|
|
|
40.0
|
|
|
|
80.0
|
|
|
|
120.0
|
|
|
|
20.0
|
|
|
|
40.0
|
|
|
|
60.0
|
|
|
|
20.0
|
|
|
|
40.0
|
|
|
|
60.0
|
|
Vito Giannola
|
|
|
30.0
|
|
|
|
60.0
|
|
|
|
90.0
|
|
|
|
15.0
|
|
|
|
30.0
|
|
|
|
45.0
|
|
|
|
15.0
|
|
|
|
30.0
|
|
|
|
45.0
|
|
George Lista
|
|
|
20.0
|
|
|
|
40.0
|
|
|
|
60.0
|
|
|
|
10.0
|
|
|
|
20.0
|
|
|
|
30.0
|
|
|
|
10.0
|
|
|
|
20.0
|
|
|
|
30.0
|
|
Performance Measures: The 2019 performance
measures required the Company to achieve increased levels of profitability and achieve other key goals aligned with the Company’s
business strategy. All participants have at least 50% of their incentive based on Net Income (Corporate or Division) to reinforce
our goal to fund incentives based on earnings. Corporate Net Income was adjusted for significant extraordinary events (including
acquisition costs and the impact of tax reform – deferred tax asset write down; see footnote below table for details).
Weightings for performance goals can vary
by participant. For the CEO, performance is strictly formulaic, with 50% of the incentive determined by Corporate Net Income and
50% based on 3-Year Average Return on Equity (ROE). For the Chief Banking Officer, performance is strictly formulaic, with 60%
of the incentive determined by equal weightings of 50% based on Corporate Net Income and 50% based on 3-Year Average Return on
Equity (ROE), and 40% of the incentive determined on business division goals of 80% based on Total Retail Deposits and 20% on Retail
Deposits Related Fee Income. We believe a rolling view of ROE as measured for the prior 3 years is an effective way to reward and
motivate sustained performance. The CEO of SB One Insurance Agency is measured based on the Business Unit goals: Net Income Before
Taxes, Total Commissions Revenue and Efficiency Ratio. The Compensation Committee believed these measures would drive the appropriate
focus by the executive team on overall performance of the Company.
The performance measures and goals were
established by the Compensation Committee and approved unanimously in January 2019. The following tables summarize the measures,
weightings and goals at threshold, target and stretch levels. The last column indicates the 2019 performance results for each goal.
Dollars are in thousands.
Corporate Officers (Chief Executive Officer and Chief Financial
Officer)
|
|
|
|
|
Performance Goals
|
|
Performance Measure
|
|
Weighting
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
Net Income
|
|
|
50.0
|
%
|
|
$
|
19,724
|
|
|
$
|
21,916
|
|
|
$
|
26,299
|
|
|
$
|
22,542
|
|
3-Year Average ROE
|
|
|
50.0
|
%
|
|
|
8.71
|
%
|
|
|
9.09
|
%
|
|
|
9.84
|
%
|
|
|
9.75
|
%
|
Chief Banking Officer
|
|
|
|
|
Performance Goals
|
|
Performance Measure
|
|
Weighting
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
Net Income
|
|
|
30.0
|
%
|
|
$
|
19,724
|
|
|
$
|
21,916
|
|
|
$
|
26,299
|
|
|
$
|
22,542
|
|
3-Year Average ROE
|
|
|
30.0
|
%
|
|
|
8.71
|
%
|
|
|
9.09
|
%
|
|
|
9.84
|
%
|
|
|
9.75
|
%
|
Total Retail Deposits
|
|
|
32.0
|
%
|
|
$
|
1,124,967
|
|
|
$
|
1,171,841
|
|
|
$
|
1,265,588
|
|
|
$
|
1,202,051
|
|
Retail Deposits Related Fee Income
|
|
|
8.0
|
%
|
|
$
|
2,557
|
|
|
$
|
2,663
|
|
|
$
|
2,876
|
|
|
$
|
2,612
|
|
Chief Executive Officer, SB One Insurance Agency
|
|
|
|
|
Performance Goals
|
|
Performance Measure
|
|
Weighting
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
Net Income Before Taxes
|
|
|
60.0
|
%
|
|
$
|
1,632
|
|
|
$
|
1,813
|
|
|
$
|
2,720
|
|
|
$
|
2,281
|
|
Total Commissions Revenue
|
|
|
20.0
|
%
|
|
$
|
7,278
|
|
|
$
|
8,086
|
|
|
$
|
12,130
|
|
|
$
|
8,216
|
|
SBOIA: Efficiency Ratio
|
|
|
20.0
|
%
|
|
|
86.0
|
%
|
|
|
77.6
|
%
|
|
|
74.5
|
%
|
|
|
72.2
|
%
|
2019 Performance and Awards: For
2019, performance for the CEO was determined to be 100.5% of base salary; performance for the Chief Banking Officer was determined
to be 71.7% of base salary and performance for the Chief Executive of SB One Insurance Agency was determined to be 60.0% of base
salary.
The following table summarizes the total
2019 annual incentive awards paid pursuant to the executive incentive plan. Payouts were made in February 2020 to the Chief Executive
Officer and the other named executive officers.
|
|
Total
|
|
|
Cash
(50% of Total)
|
|
|
Restricted Stock
(50% of Total)
|
|
|
|
% of Salary
|
|
|
Amount
($)
|
|
|
% of Salary
|
|
|
Amount
($)
|
|
|
% of Salary
|
|
|
Amount
($)
|
|
Chief Executive Officer
|
|
|
100.5
|
|
|
|
528,993
|
|
|
|
50.2
|
|
|
|
279,501
|
|
|
|
50.2
|
|
|
|
279.492
|
|
Chief Banking Officer
|
|
|
71.7
|
|
|
|
200,864
|
|
|
|
35.9
|
|
|
|
100,431
|
|
|
|
35.9
|
|
|
|
100,433
|
|
Chief Executive Officer, SB One Insurance Agency
|
|
|
60.0
|
|
|
|
127,141
|
|
|
|
30.0
|
|
|
|
63,570
|
|
|
|
30.0
|
|
|
|
63,571
|
|
2019 Retention Awards
We made special
retention awards to each of our NEOs in 2019 in the form of time-based restricted stock. These one-time awards were intended to
recognize and reward the NEOs for their performance and their role in the growth of the Company following the acquisition of Enterprise
Bank, NJ in December 2018 and its subsequent integration into the Company. The retention awards are also intended to provide the
NEOs with additional incentives to remain employed with us, as such awards will vest in three annual installments, subject to the
NEOs’ continued employment through the applicable vesting date.
Executive
|
|
Retention Award
($)
|
|
Anthony Labozzetta
|
|
|
170,880
|
|
Vito Giannola
|
|
|
85,440
|
|
George Lista
|
|
|
72,624
|
|
Executive Benefits
The Company’s executive compensation
program include base salary, annual cash incentive awards, longterm incentive awards and other benefit and perquisites, such as
retirement programs.
The Company provides select executives
certain benefits and perquisites, which the Compensation Committee believes are reasonable and consistent with the Company’s
overall compensation philosophy. The Compensation Committee regularly reviews and refines executive benefits to ensure market competitiveness.
Executive Perquisites. The Company
provides a limited number of perquisites to key executives that the Compensation Committee believes are necessary for conducting
business are reasonable and enable us to attract and retain high performing employees for our key senior management positions.
These benefits also allow our executives to maintain direct contact and involvement with current and prospective customers, as
well as non-profit organizations in the communities in which we do business. The Compensation Committee periodically reviews the
levels of perquisites and other personal benefits provided to the named executive officers.
The primary perquisites are: corporate
owned automobiles for certain executives, club memberships for certain executives and life insurance programs. These perquisites
represent a relatively insignificant portion of the total compensation of each named executive officer. The aggregate incremental
cost to the Company for these perquisites is set forth in the Summary Compensation Table under the “All Other Compensation”
column and related notes.
Risk Management
The Compensation Committee annually reviews
our executive compensation program to ensure it does not encourage unnecessary or excessive risk taking. In reviewing the program
for risk, the goal of the Compensation Committee is to design an executive compensation program that encourages prudent risk management
and discourages inappropriate risk-taking by granting balanced portfolio of executive compensation that includes fixed and variable
pay, annual and long-term pay, cash and equity.
Summary Compensation
Table
The table below sets forth the compensation
paid to our NEOs during each of the last two completed fiscal years (or the completed fiscal years during which the executive was
a named executive officer, if less).
Anthony Labozzetta
|
—
|
President and Chief Executive Officer
|
Vito Giannola
|
—
|
Senior Executive Vice President and Chief Banking Officer
|
George Lista
|
—
|
Chief Executive Officer, SB One Insurance Agency
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Stock
Awards(1)
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
All
Other Compensation(2)
($)
|
|
|
Total
($)
|
|
Anthony Labozzetta,
|
|
2019
|
|
|
556,304
|
|
|
|
279,492
|
|
|
|
279,501
|
|
|
|
129,427
|
|
|
|
1,244,724
|
|
President and Chief Executive Officer
|
|
2018
|
|
|
529,813
|
|
|
|
290,984
|
|
|
|
290,989
|
|
|
|
117,525
|
|
|
|
1,229,311
|
|
Vito Giannola,
|
|
2019
|
|
|
277,371
|
|
|
|
100,431
|
|
|
|
100,433
|
|
|
|
8,348
|
|
|
|
486,583
|
|
Senior Executive Vice President and Chief Banking Officer
|
|
2018
|
|
|
255,816
|
|
|
|
82,066
|
|
|
|
82,066
|
|
|
|
7,911
|
|
|
|
427,859
|
|
George Lista,
|
|
2019
|
|
|
211,512
|
|
|
|
63,570
|
|
|
|
63,571
|
|
|
|
240,355
|
|
|
|
579,009
|
|
Chief Executive Officer, SB One Insurance Agency
|
|
2018
|
|
|
200,729
|
|
|
|
46,472
|
|
|
|
46,494
|
|
|
|
179,558
|
|
|
|
473,253
|
|
|
(1)
|
The amounts set forth represent the aggregate grant date fair value of the stock awards and option awards, computed in accordance
with FASB ASC Topic 718. These amounts do not correspond to the actual value that the named executive officers will recognize.
Assumptions used in the calculation of these amounts are included in Note 18— Stock Incentive Plans to our fiscal year 2019
consolidated financial statements, which is included in our Annual Report on Form 10-K filed with the SEC on March 10, 2020.
|
|
(2)
|
Amounts in this column are set forth in the table below and include life insurance premiums, 401(k) employer contributions,
health savings account (“HSA”), contributions, SERPs, contributions and commissions. The named executive officers participate
in certain group life, health, disability insurance and medical reimbursement plans not disclosed in the Summary Compensation Table
that are generally available to salaried employees and do not discriminate in scope, terms and operation. In addition, for 2019,
the named executive officers were provided certain non-cash perquisites and personal benefits that did not exceed $10,000 in the
aggregate for any individual and are not included in the reported figures.
|
Name
|
|
Life Insurance Premiums($)
|
|
|
401(k) Employer Contributions ($)
|
|
|
HSA Contributions ($)
|
|
|
SERP Contributions ($)
|
|
|
Commissions
($)
|
|
|
Total
($)
|
|
Anthony Labozzetta
|
|
|
2,257
|
|
|
|
7,950
|
|
|
|
—
|
|
|
|
119,220
|
|
|
|
—
|
|
|
|
129,427
|
|
Vito Giannola
|
|
|
398
|
|
|
|
7,950
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,348
|
|
George Lista
|
|
|
4,155
|
|
|
|
7,950
|
|
|
|
1,250
|
|
|
|
—
|
|
|
|
227,000
|
|
|
|
240,355
|
|
Outstanding Equity
Awards at Fiscal Year-End Table
The table below sets forth information
regarding our named executive officers’ stock options and stock awards outstanding at December 31, 2019, whether granted
in 2019 or earlier, including awards that have been transferred other than for value.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
|
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
|
|
Option Exercise Price
|
|
|
Option Expiration Date
|
|
Grant Date
|
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
|
|
Market Value of Shares or Units of Stock That Have Not Vested (1)
($)
|
|
Anthony Labozzetta (2)(3)
|
|
2/24/2016
|
|
|
6,730
|
|
|
|
4,486
|
|
|
|
12.83
|
|
|
2/23/2026
|
|
5/03/2019
|
|
|
8,000
|
|
|
|
199,360
|
|
|
|
2/6/2015
|
|
|
5,221
|
|
|
|
1,305
|
|
|
|
10.25
|
|
|
2/6/2025
|
|
2/04/2019
|
|
|
13,293
|
|
|
|
331,262
|
|
|
|
11/5/2014
|
|
|
18,000
|
|
|
|
—
|
|
|
|
9.97
|
|
|
11/5/2024
|
|
7/31/2018
|
|
|
5,528
|
|
|
|
137,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2018
|
|
|
3,800
|
|
|
|
94,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2017
|
|
|
8,355
|
|
|
|
208,207
|
|
Vito Giannola (2)(4)
|
|
2/24/2016
|
|
|
5,000
|
|
|
|
2,000
|
|
|
|
12.83
|
|
|
2/23/2026
|
|
5/03/2019
|
|
|
4,000
|
|
|
|
99,680
|
|
|
|
11/5/2014
|
|
|
5,000
|
|
|
|
—
|
|
|
|
9.97
|
|
|
11/5/2024
|
|
2/04/2019
|
|
|
3,749
|
|
|
|
93,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/31/2018
|
|
|
2,488
|
|
|
|
62,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2018
|
|
|
1,101
|
|
|
|
27,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2017
|
|
|
3,296
|
|
|
|
82,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Lista(5)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
5/3/2019
|
|
|
3,400
|
|
|
|
84,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/22/2019
|
|
|
553
|
|
|
|
13,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/04/2019
|
|
|
1,570
|
|
|
|
39,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/31/2018
|
|
|
2,211
|
|
|
|
55,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2018
|
|
|
815
|
|
|
|
20,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2017
|
|
|
1,334
|
|
|
|
33,243
|
|
|
(1)
|
Market value is calculated on the basis of $24.92 per share, which is the closing sales price
for our common stock on December 31, 2019, the final trading day of the year.
|
|
(2)
|
Options vest one-fifth annually for five years following grant date.
|
|
(3)
|
4,355 shares will vest on January 25, 2020; 13,293 shares will vest over three years beginning
on February 4, 2020; 3,800 shares will vest over two years beginning February 28, 2020; 8,000 shares will vest over three years
beginning on May 3, 2020; 5,528 shares will vest over two years beginning July 31, 2020; and 4,000 shares will vest over two years
beginning January 25, 2021.
|
|
(4)
|
1,496 shares will vest on January 25, 2020; 3,749 shares will vest over three years beginning
on February 4, 2020; 1,101 shares will vest over two years beginning February 28, 2020; 4,000 shares will vest over three years
beginning on May 3, 2020; 2,488 shares will vest over two years beginning July 31, 2020; and 1,800 shares will vest over two years
beginning January 25, 2021.
|
|
(5)
|
1,334 shares will vest on January 25, 2020; 1,570 shares will vest over three years beginning
on February 4, 2020; 553 shares will vest over three years beginning on February 22, 2020; 815 shares will vest over two years
beginning March 2, 2020; 3,400 shares will vest over three years beginning on May 3, 2020; and 2,211 shares will vest over two
years beginning July 31, 2020.
|
Long-term Incentive Compensation
Long-term incentives are provided to the
named executive officers through awards made under the equity plans established by the Company and SB One Bank from time to time.
Amended and Restated Executive
Incentive and Deferred Compensation Plan
Under the SB One Bank Amended and Restated
Executive Incentive and Deferred Compensation Plan (the “Plan”) our executives who are selected to participate in the
Plan may earn awards paid in both cash and shares of our common stock; provided, that certain Company-wide and/or individual performance
criteria are met. The Compensation Committee annually determines performance criteria for each participating executive. Grants
of common stock are subject to a three-year vesting requirement, and all awards are subject to repayment in the metrics on which
the award is based are subsequently determined not to have been satisfied, due to a financial restatement or otherwise. Participants
in the Plan have the option to defer some or all of their compensation or cash incentive awards. Amounts so deferred will earn
interest at a rate equal to the average interest rate earned by SB One Bank on its investment portfolio.
2019 Equity Incentive Plan
Effective April 24, 2019, our shareholders
approved the 2019 Equity Incentive Plan (the “2019 Equity Plan”). The 2019 Equity Plan permits the Company to grant
options, restricted stock, restricted stock units, and unrestricted stock to any employee, officer, non-employee director, consultant
or advisor of the Company or its affiliates and any other individual whose participation is determined to be in the best interests
of the Company.
Except with respect to a maximum of 5%
of the aggregate share limit under the 2019 Equity Plan, time-based vesting awards may not vest any more rapidly than the one year
anniversary of the grant date, and awards which vest based on future performance must be subject to a performance period of at
least 12 months. However, the Compensation Committee may provide for earlier vesting in the event of the grantee’s death
or disability or in the event of a “change in control,” as defined in the 2019 Equity Plan.
Upon the occurrence of a “change
in control,” as defined in the 2019 Equity Plan, all outstanding shares of restricted stock and all restricted stock units
subject to time-based vesting will become immediately vested, and the shares of stock or cash subject thereto will be delivered
immediately before the occurrence of the change in control. With respect to awards which vest based on future performance, upon
the occurrence of a change in control, such awards will become vested, if at all, immediately before the occurrence of the change
in control based (i) first upon the actual achievement of the applicable performance goals (based on pro-rated performance metrics
through a date reasonably proximal to the change in control), or, if actual performance is not determinable, then target performance,
and (ii) then further pro-rated based upon the ratio of the number of days from the first day of the applicable performance period
to and including the date of the occurrence of such change in control to the total number of days in the applicable performance
period, each as determined by the Compensation Committee. In addition, either or both of the following two actions will be taken:
|
·
|
At least 15 days before the scheduled completion of the change in control, all options will become immediately exercisable
and will remain exercisable for a period of 15 days, which exercise will be effective upon the consummation of the change in control;
and/or
|
|
|
|
|
·
|
The Compensation Committee may provide that awards, whether or not exercisable, will be terminated and the holders of awards
will receive an amount in cash or securities based on the formula or fixed price per share paid to stockholders.
|
In general, a “change in control”
means:
|
·
|
a person or group becomes the beneficial owner of more than 50% of the combined voting power of our voting stock on a fully
diluted basis;
|
|
|
|
|
·
|
individuals who constitute the Board (and new directors whose election or nomination for election was approved by a majority
of such members) cease to constitute a majority of the Board;
|
|
|
|
|
·
|
a merger or consolidation of the Company, other than any such transaction in which the holders of our voting securities prior
to the transaction own at least a majority of the voting power of the surviving entity immediately after the transaction;
|
|
|
|
|
·
|
a sale of all or substantially all of our assets to another person or group; or
|
|
|
|
|
·
|
the consummation of a dissolution or liquidation of the Company.
|
If the Company is the surviving entity
in any reorganization, merger or consolidation of the Company with one or more other entities that does not constitute a change
in control, any option outstanding under the 2019 Equity Plan will apply to the securities to which a holder of the number of shares
of common stock subject to the option would have been entitled immediately following the transaction, with a corresponding proportionate
adjustment of the option exercise price, and performance-based awards will be adjusted accordingly.
We may reserve the right in an award agreement
to cause a forfeiture of the gain realized by a grantee with respect to an award on account of actions taken by, or failed to be
taken by, such grantee in violation or breach of, or in conflict with, any employment agreement, non-competition agreement, agreement
prohibiting solicitation of employees or clients of the Company or any affiliate, confidentiality obligations with respect to the
Company or any affiliate, or otherwise in competition with the Company or any affiliate, to the extent specified in such award
agreement. We may annul an outstanding award if the grantee thereof is an employee and is terminated for “Cause” as
defined in the applicable award agreement or the 2019 Equity Plan, as applicable.
Any award granted pursuant to the 2019
Equity Plan will be subject to mandatory repayment by the grantee to the Company to the extent (i) set forth in the 2019 Equity
Plan or in an award agreement, or (ii) the grantee is or becomes subject to a Company or affiliate clawback policy, or any applicable
laws which impose mandatory recoupment.
2013 Equity Incentive Plan
The Company also sponsors and maintains
the 2013 Equity Incentive Plan (the “2013 Equity Plan”), which was originally effective April 24, 2013. Prior to the
approval of the 2019 Equity Plan, the Company granted equity incentive awards, including options and restricted shares, to eligible
recipients pursuant to the terms and conditions of the 2013 Equity Plan. As of the approval of the 2019 Equity Plan, no further
awards will be granted under the 2013 Equity Plan, but outstanding awards granted under the 2013 Equity Plan shall continue to
be governed by the terms of the 2013 Equity Plan.
Subject to the exceptions described below,
upon the occurrence of a “change in control,” as defined in the 2013 Equity Plan, all outstanding shares of restricted
stock and all stock units will become immediately vested, and the shares of stock subject to outstanding stock units will be delivered
immediately before the occurrence of the change in control. In addition, either of the following two actions will be taken:
|
·
|
15 days before the scheduled completion of the change in control, all options will become immediately exercisable and will
remain exercisable for a period of 15 days, which exercise will be effective upon the consummation of the change in control; or
|
|
|
|
|
·
|
the Compensation Committee may provide that awards, whether or not exercisable, will be terminated and the holders of awards
will receive an amount in cash or securities based on the formula or fixed price per share paid to stockholders.
|
In general, a “change in control”
means:
|
·
|
a person or group becomes the beneficial owner of more than 50% of the combined voting power of our voting stock on a fully
diluted basis;
|
|
|
|
|
·
|
individuals who constitute the Board (and new directors whose election or nomination for election was approved by a majority
of such members) cease to constitute a majority of the Board;
|
|
|
|
|
·
|
a merger or consolidation of the Company, other than any such transaction in which the holders of our voting securities prior
to the transaction own at least a majority of the voting power of the surviving entity immediately after the transaction;
|
|
|
|
|
·
|
a sale of all or substantially all of our assets to another person or group; or
|
|
|
|
|
·
|
the stockholders adopt a plan or proposal for dissolution or liquidation of the Company.
|
If the Company is the surviving entity
in any reorganization, merger or consolidation of the Company with one or more other entities that does not constitute a change
in control, any option outstanding under the 2013 Equity Plan will apply to the securities to which a holder of the number of shares
of common stock subject to the option would have been entitled immediately following the transaction, with a corresponding proportionate
adjustment of the option exercise price
The Compensation Committee may provide
for different provisions to apply to an award under the 2013 Equity Plan than those described above.
We may reserve the right in an award agreement
to cause a forfeiture of the gain realized by a grantee with respect to an award on account of actions taken by, or failed to be
taken by, such grantee in violation or breach of, or in conflict with, any employment agreement, non-competition agreement, agreement
prohibiting solicitation of employees or clients of the Company or any affiliate, confidentiality obligations with respect to the
Company or any affiliate, or otherwise in competition with the Company or any affiliate, to the extent specified in such award
agreement. We may annul an outstanding award if the grantee thereof is an employee and is terminated for “Cause” as
defined in the applicable award agreement or the 2013 Equity Plan, as applicable.
Employment Agreements and Other Material
Agreements
Anthony Labozzetta
The Company and SB One Bank are parties
to an employment agreement with Mr. Labozzetta, pursuant to which he serves as President and Chief Executive Officer of the Company
and SB One Bank. The employment agreement provides for a three-year term which is automatically extended for an additional year
annually unless either party provides written notice terminating the automatic extension. The employment agreement provides that
Mr. Labozzetta will receive a base salary of at least $315,000, subject to increase or decrease as determined by the Board. Pursuant
to the terms of his employment agreement, Mr. Labozzetta was granted 50,000 shares of our common stock, subject to forfeiture and
restricted from transfer during the “Restricted Period,” as such term is defined in the employment agreement. 80% of
these shares were vested as of January 1, 2016 and the remaining 20% vested on January 1, 2017. He is also entitled to receive
customary fringe benefits, including an automobile, consistent with his position as President and Chief Executive Officer of the
Company and SB One Bank.
Mr. Labozzetta’s employment
agreement permits us to terminate him for cause (as defined in the agreement) at any time. In the event Mr. Labozzetta is terminated
for any reason other than cause, or in the event Mr. Labozzetta resigns his employment because he is reassigned to a position of
lesser rank or status than President and Chief Executive Officer, his place of employment is relocated by more than 50 miles from
its location on the date of the employment agreement, or his compensation or other benefits are reduced, Mr. Labozzetta, or in
the event of his death, his beneficiary, will be entitled to receive his base salary at the time of such termination or resignation
for the remaining term of the employment agreement, or one year, whichever is greater. In addition, we will continue to provide
Mr. Labozzetta with certain insurance and other benefits through the end of the term of the employment agreement.
Mr. Labozzetta’s employment agreement
also contains a change in control provision which would entitle Mr. Labozzetta to receive an amount equal to the base salary he
would have received had the employment agreement terminated according to its term, except that after the fifth anniversary of Mr.
Labozzetta’s employment, he will be entitled to a payment equal to 2.99 times his then current base salary and 2.99 times
the greater of the last bonus actually paid to him or his current bonus eligibility, assuming he performed at the targeted level.
Mr. Labozzetta’s employment agreement also contains a “gross-up payment” in the event any excise tax is imposed
on the benefits payable to Mr. Labozzetta upon a change in control. Mr. Labozzetta would also be entitled to continuation of his
health, medical, hospital and life insurance benefits for a period of three years.
On July 20, 2011, we entered into a SERP,
a non-qualified defined contribution pension plan that provides supplemental retirement income for Mr. Labozzetta. The SERP was
effective as of January 1, 2011. Based on the attainment of certain annual performance targets, we will make annual contributions
up to a maximum of 22% of Mr. Labozzetta’s annual base salary to the SERP for the benefit of Mr. Labozzetta. Any amounts
credited to the SERP will accrue interest equal to that paid by U.S. 10-year Treasury Notes for each applicable year. The SERP
provides for the benefits to be paid monthly over a five-year period commencing the first day of the month following the later
of Mr. Labozzetta’s 65 birthday, normal retirement age or termination of employment.
If Mr. Labozzetta’s employment is
terminated before normal retirement age, absent a change in control and other than by us for cause, the amount of the benefit payable
to Mr. Labozzetta would be a 100% vested interest in his account if he completed at least 10 years of plan participation. If Mr.
Labozzetta is terminated by us without cause or as a result of Mr. Labozzetta’s Resignation for Good Reason (as defined in
the SERP), Mr. Labozzetta would be entitled to a 100% vested interest in his account regardless of the number of years of plan
participation. If Mr. Labozzetta is employed by us at the time of a Change of Control (as defined in the SERP), Mr. Labozzetta
would automatically be entitled to a 100% vested interest in his account regardless of the number of years of plan participation.
If Mr. Labozzetta would become disabled or die before reaching normal retirement age, either he or his beneficiary would be entitled
to a 100% vested interest in his account. The SERP also contains a restrictive covenant conditioning Mr. Labozzetta’s receipt
of the benefits on his compliance with the non-compete provisions as defined in his employment agreement.
Vito Giannola
In September 2010, the Company and SB One
Bank entered into an employment agreement with Mr. Giannola. The employment agreement provides for the payment of an annual base
salary, which is currently $300,000. The employment agreement further provides for participation in the incentive plan for executive
officers of SB One Bank and any other employee benefit, incentive or retirement plans offered to employees generally or to senior
management of SB One Bank. In the event that Mr. Giannola’s employment is terminated by the Company or SB One Bank without
cause before a change in control of the Company, or if Mr. Giannola resigns for “good reason” as defined in the
employment agreement, the Company or SB One Bank will continue to pay Mr. Giannola his then current base salary, and continue
his health and other insurance benefits, for a period of one year. In the event that Mr. Giannola’s employment is terminated
by the Company or SB One Bank upon the occurrence of a change in control of the Company or if Mr. Giannola resigns for cause
within 18 months following the occurrence of a change in control of the Company, he is entitled to a lump sum payment equal
to two times his then-current base salary. In the event of the termination of his employment with SB One Bank, for a period of
one year following the date of such termination he will be subject to certain non-competition, non-solicitation, non-hire and cooperation
covenants.
George Lista
In connection with George Lista’s
continued service as President of SB One Insurance Agency, the Company and SB One Bank entered into an employment agreement dated
January 29, 2020 with George Lista. The employment agreement provides for the payment of an annual base salary in the amount of
$250,000 and an annual auto allowance of $15,300. The employment agreement further provides for participation in the incentive
plan for executive officers of SB One Bank and any other employee benefit, incentive or retirement plans offered to employees generally
or to senior management of SB One Bank. In the event that Mr. Lista’s employment is terminated by the Company or SB One Bank
without cause before a change in control of the Company, or if Mr. Lista resigns for “good reason” as defined in the
employment agreement, the Company or SB One Bank will continue to pay Mr. Lisa his then current base salary, and continue his health
and other insurance benefits, for a period of one year. In the event that Mr. Lista’s employment is terminated by the Company
or SB One Bank upon the occurrence of a change in control of the Company or if Mr. Lista resigns for cause within 18 months following
the occurrence of a change in control of the Company, he is entitled to a lump sum payment equal to two times his then-current
base salary. In the event of the termination of his employment with SB One Bank, for a period of one year following the date of
such termination he will be subject to certain non-competition, non-solicitation, non-hire and cooperation covenants.
DIRECTOR COMPENSATION
Meeting Fees
Our non-employee directors receive an annual
retainer of $15,000, except for the Chairman of the Board who receives an annual retainer of $78,000. In addition, non-employee
directors, other than the Chairman of the Board, receive a per-meeting fee of $750. Members of our committees also receive fees
for committee service or for serving as the chair of a committee. The chair of our Audit Committee receives an annual retainer
of $2,000 and a per-meeting fee of $1,000 and committee members receive a per-meeting fee of $1,000. The chair of our Compensation
Committee receives an annual retainer of $2,000 and a per-meeting fee of $750, and committee members receive a per-meeting fee
of $750. All members of the Nominating and Corporate Governance Committee receive a per-meeting fee of $600.
Director Deferred Compensation Agreement
The Board originally adopted a Director
Deferred Compensation Agreement (“DDCA”) for both SB One Bank and the Company in July 2006, which has subsequently
been amended. Under the terms of the DDCA, a director may elect to defer all or a portion of his fees for the coming year. In June
2016, the Board of Directors adopted an amendment to the DDCA which supersedes the prior amendment from September 2015. The amendment,
effective July 1, 2016, allows the Company’s Directors to elect to defer part or all of their fees into a stock account,
consisting of the Company’s common stock, which is administered through a rabbi trust. The Company is responsible for submitting
each director’s deferral to the trustee of the rabbi trust to be used for the purchase of the Company’s common stock.
Distributions from the director’s stock account shall be made in the same medium, the Company’s common stock. The DDCA
also provides an option to defer into a cash account that is credited with earnings at a rate equal to the average interest rate
earned by us on our investment portfolio. The election of either stock or cash is completed by each director in advance of the
year in which the fees are earned and cannot be changed for amounts deferred once the election is made for that year.
The participant’s benefit will be
distributed to the participant or his beneficiary upon a change in control of the Company, the termination of the DDCA, the occurrence
of an unforeseeable emergency, the termination of service or the participant’s death or disability. Upon distribution, a
participant’s benefit will be paid in monthly installments over a period of ten years and will be paid in cash, to the extent
such deferred amounts were credited with the average interest rate, and in stock, to the extent such deferred amounts were credits
with the total return on our common stock.
Director Compensation Table
The table below sets forth information
regarding compensation accrued or paid to our non-employee directors during the last fiscal year for their service on our Board.
Directors who are also our employees receive no additional compensation for their service as directors and are not set forth in
the table below.
Name
|
|
Fees Earned or Paid In Cash (1)
($)
|
|
|
Stock Awards (2)(3)
($)
|
|
|
Total
($)
|
|
Patrick E. Brady(5)
|
|
|
28,000
|
|
|
|
16,575
|
|
|
|
44,575
|
|
Richard Branca
|
|
|
42,100
|
|
|
|
16,575
|
|
|
|
58,675
|
|
Katherine H. Caristia
|
|
|
13,490
|
|
|
|
—
|
|
|
|
13,490
|
|
Dominick J. D’Agosta
|
|
|
26,500
|
|
|
|
16,575
|
|
|
|
43,075
|
|
Salvatore A. Davino
|
|
|
33,250
|
|
|
|
16,575
|
|
|
|
49,825
|
|
Gail Gordon
|
|
|
21,600
|
|
|
|
—
|
|
|
|
21,600
|
|
Mark J. Hontz
|
|
|
60,300
|
|
|
|
16,575
|
|
|
|
76,875
|
|
Edward J. Leppert
|
|
|
78,000
|
|
|
|
43,297
|
|
|
|
121,297
|
|
Walter E. Loeffler
|
|
|
44,850
|
|
|
|
16,575
|
|
|
|
61,425
|
|
Michael F. Lombardi
|
|
|
32,800
|
|
|
|
16,575
|
|
|
|
49,375
|
|
Michael X. McBride
|
|
|
33,050
|
|
|
|
16,575
|
|
|
|
49,625
|
|
Robert McNerney
|
|
|
41,050
|
|
|
|
16,575
|
|
|
|
57,625
|
|
(1)
|
Includes retainer payments, meeting fees and committee and/or chairmanship fees earned during
the fiscal year, whether such fees were paid currently or deferred.
|
(2)
|
Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 with
respect to restricted stock awards and option awards granted to our directors. These amounts do not correspond to the actual value
that the directors will recognize. Assumptions used in the calculation of these amounts are included in Note 18 — Stock Incentive
Plans to our fiscal year 2019 consolidated financial statements, which is included in our Annual Report on Form 10-K filed with
the SEC on March 10, 2020.
|
(3)
|
The following table lists the aggregate number of shares of restricted stock
and options outstanding at yearend for each non-employee director:
|
Name
|
|
Restricted Stock (4)
(#)
|
|
Patrick E. Brady
|
|
|
—
|
|
Richard Branca
|
|
|
1,404
|
|
Katherine H. Caristia
|
|
|
—
|
|
Dominick J. D’Agosta
|
|
|
1,192
|
|
Salvatore A. Davino
|
|
|
776
|
|
Gail Gordon
|
|
|
—
|
|
Mark J. Hontz
|
|
|
1,404
|
|
Edward J. Leppert
|
|
|
3,575
|
|
Walter E. Loeffler
|
|
|
1,192
|
|
Michael F. Lombardi
|
|
|
776
|
|
Michael X. McBride
|
|
|
1,404
|
|
Robert McNerney
|
|
|
1,404
|
|
(4)
|
Messrs. Brady, Branca, D’Agosta, Hontz, Loeffler, Lombardi and McBride, and Mses. Caristia
and Gordon deferred $28,000, $42,100, $15,275, $15,075, $22,325, $33,800, $33,250 $6,150 and $8,350, respectively, of their fees
pursuant to the DDCA.
|
(5)
|
Mr. Brady resigned from the Board effective September 24, 2019.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDPENENDENCE
|
TRANSACTIONS WITH RELATED PERSONS
We have made in the past and, assuming
continued satisfaction of generally applicable credit standards, expect to continue to make loans to directors, executive officers
and their associates (i.e. corporations or organizations for which they serve as officers or directors or in which they have beneficial
ownership interests of 10% or more). These loans have all been made in the ordinary course of our business on substantially the
same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons
and do not involve more than the normal risk of collectability or present other unfavorable features.
Other than the ordinary course lending
transactions described above, which must be approved by our Board under bank regulatory requirements, all related-person transactions
are reviewed and approved by our Audit Committee. This authority is provided to our Audit Committee under its written charter.
In reviewing these transactions, our Audit Committee seeks to ensure that each transaction is no less favorable than a transaction
with an unaffiliated third party.
Compensation arrangements for our directors
and named executive officers are described above under the sections entitled “Director Compensation” and “Executive
Compensation.”
Certain Related-Person Transactions
Other than compensation arrangements and
ordinary course lending transactions that (i) were made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable loan with persons that were not related to the Company and (ii) did not involve
more than the normal risk of collectability or present other unfavorable features, the following is a description of transactions
since January 1, 2019 to which we were a participant or will be a participant, and in which:
|
·
|
the amounts involved exceeded or will exceed $120,000; and
|
|
·
|
any of our directors, executive officers or holders of more than 5% of our common stock, or any member of the immediate family
of the foregoing persons, had or will have a direct or indirect material interest.
|
We rent our Augusta, New Jersey office
location from a real estate management company of which our executive officer, Mr. Lista, is a 50% owner. The lease expired in
July 2017. The Company paid to the real estate management company $154,959 and $151,987 for the years ended December 31, 2019 and
2018, respectively.
Board
of Directors Independence
Rule 5605 of the NASDAQ Marketplace Rules
(the “NASDAQ Listing Rules”) requires that independent directors compose a majority of a listed company’s board
of directors. In addition, the NASDAQ Listing Rules require that, subject to specified exceptions, each member of a listed company’s
audit, compensation, and nominating and corporate governance committees be independent and that audit committee members also satisfy
independence criteria set forth in Rule 10A-3 under the Exchange Act. Compensation committee members must also satisfy independence
criteria set forth in Rule 10C-1 under the Exchange Act. Under Rule 5605(a)(2) of the NASDAQ Listing Rules, a director will only
qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship that
would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered
independent for purposes of Rule 10A-3 under the Exchange Act, a member of an audit committee of a listed company may not, other
than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (i) accept,
directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries;
or (ii) be an affiliated person of the listed company or any of its subsidiaries. In addition to satisfying general independence
requirements under the NASDAQ Listing Rules, members of a compensation committee must also satisfy independence requirements set
forth in Rule 10C-1 under the Exchange Act and NASDAQ Listing Rule 5605(d)(2). Pursuant to Rule 10C-1 under the Exchange Act and
NASDAQ Listing Rule 5605(d)(2), in affirmatively determining the independence of a member of a compensation committee of a listed
company, the board of directors must consider all factors specifically relevant to determining whether that member has a relationship
with the company which is material to that member’s ability to be independent from management in connection with the duties
of a compensation committee member, including: (a) the source of compensation of such member, including any consulting, advisory
or other compensatory fee paid by the company to such member; and (b) whether such member is affiliated with the company, a subsidiary
of the company or an affiliate of a subsidiary of the company.
The Board consults with our legal counsel
to ensure that the Board’s determinations are consistent with relevant securities and other laws and regulations regarding
the definition of “independent,” including those set forth in pertinent NASDAQ Listing Rules, as in effect from time
to time. Consistent with these considerations, the Board has affirmatively determined that all of its directors, including the
director nominees, satisfy general independence requirements under the NASDAQ Listing Rules, other than Messrs. Labozzetta and
Michelotti. In making this determination, the Board found that none of the directors, other than Messrs. Labozzetta and Michelotti,
had a material or other disqualifying relationship with us that would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director, and that each director, other than Messrs. Labozzetta and Michelotti, is “independent”
as that term is defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. The Board determined that Mr. Labozzetta, our President
and Chief Executive Officer, and Mr. Michelotti, our Senior Executive Vice President and Chief Operating Officer, are not independent
directors by virtue of their respective current employment with us. The Board also determined that each member of the Audit, Compensation,
and Nominating and Corporate Governance Committees satisfies the independence standards for such committees established by the
SEC and the NASDAQ Listing Rules, as applicable.