VOTING
SECURITIES AND PRINCIPAL SHAREHOLDERS
Securities Ownership of
Directors, Nominees, Officers and Certain Beneficial Owners
The following table sets
forth certain information concerning the number and percentage of whole shares
of the Companys common stock beneficially owned by its directors, nominees for
director, executive officers whose compensation is disclosed, and by its
directors and all executive officers as a group, as of March 20, 2008, as
well as information regarding each other person known by the Company to own in
excess of five percent of the outstanding common stock. Except as otherwise
indicated, all shares are owned directly, the named person possesses sole
voting and sole investment power with respect to all such shares, and none of
such shares are pledged as security. Except as set forth below, the Company
knows of no other person or persons who beneficially own in excess of five
percent of the Companys common stock. Further, the Company is not aware of any
arrangement which at a subsequent date may result in a change of control of the
Company.
Name
|
|
Position
|
|
Number of Shares
|
|
Percentage(1)
|
|
|
|
|
|
|
|
|
|
Leonard L. Abel
|
|
Chairman of Board of
Company,
Director of Bank
|
|
299,719
|
(2)
|
3.06
|
%
|
|
|
|
|
|
|
|
|
Leslie M. Alperstein, Ph.D.
|
|
Director of Company
|
|
64,674
|
(3)
|
0.66
|
%
|
|
|
|
|
|
|
|
|
Dudley C. Dworken
|
|
Director of Company and
Bank
|
|
185,591
|
(4)
|
1.90
|
%
|
|
|
|
|
|
|
|
|
Michael T. Flynn
|
|
Executive Vice
President, Chief Operating
Officer and Director of Company;
President - District of Columbia Division
of Bank
|
|
26,664
|
(5)
|
0.27
|
%
|
|
|
|
|
|
|
|
|
Harvey M. Goodman
|
|
Director of Company and
Bank
|
|
97,882
|
(6)
|
1.00
|
%
|
|
|
|
|
|
|
|
|
Philip N. Margolius
|
|
Director of Company and
Bank
|
|
208,773
|
(7)
|
2.13
|
%
|
|
|
|
|
|
|
|
|
Ronald D. Paul
|
|
President, Chief
Executive Officer and
Director of Company; Chairman of Board
and Chief Executive Officer of Bank
|
|
709,084
|
(8)
|
7.19
|
%
|
|
|
|
|
|
|
|
|
Donald R. Rogers
|
|
Director of Company and
Bank
|
|
44,052
|
(9)
|
0.45
|
%
|
|
|
|
|
|
|
|
|
Leland M. Weinstein
|
|
Director of Company and
Bank
|
|
107,641
|
(10)
|
1.10
|
%
|
|
|
|
|
|
|
|
|
James H. Langmead
|
|
Senior Vice President,
Chief Financial
Officer of Company and Executive Vice
President, Chief Financial Officer of Bank
|
|
11,385
|
(11)
|
0.12
|
%
|
|
|
|
|
|
|
|
|
Thomas D. Murphy
|
|
Executive Vice
President, President
Montgomery County Division of Bank
|
|
63,100
|
(12)
|
0.64
|
%
|
|
|
|
|
|
|
|
|
Susan G. Riel
|
|
Executive Vice
President, Chief Operating
Officer of Bank
|
|
62,435
|
(13)
|
0.64
|
%
|
|
|
|
|
|
|
|
|
Martha Foulon-Tonat
|
|
Executive Vice
President, Chief Lending
Officer of Bank
|
|
84,732
|
(14)
|
0.86
|
%
|
|
|
|
|
|
|
|
|
All directors and executive officers of Company as a
group (13 persons)
|
|
|
|
1,965,732
|
(15)
|
19.48
|
%
|
|
|
|
|
|
|
|
|
Other 5% Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neal R. Gross
|
|
|
|
607,988
|
(16)
|
6.25
|
%
|
(1)
Represents
percentage of 9,780,418 shares issued and outstanding as of March 20,
2008, except with respect to individuals holding options exercisable within 60
days of that date, in which event, represents percentage of shares issued and
outstanding plus the number of shares for which that person holds options
exercisable within 60 days of March 20, 2008, and except with respect to
all directors and executive officers of the Company as a group, in which case
represents percentage of shares issued and outstanding plus the number of
shares for which those persons hold such options. Certain shares beneficially
owned by the Companys directors and executive officers may be held in accounts
with third party firms, where such shares may from time to time be subject to a
security interest for margin credit provided in accordance with such firms
policies.
(Footnotes
continued on following page)
3
(Footnotes continued on following
page)
(2)
Includes
options and warrants to purchase 10,140 shares of common stock, 202,039 shares
of common stock held jointly and 13,308 shares held by his spouse.
(3)
Includes
53,742 shares of common stock held jointly, and options to purchase 1,342
shares of common stock.
(4)
Includes
options to purchase 1,083 shares of common
stock, 63,420 shares held in a trust of which Mr. Dworken is
beneficiary, 28,178 shares held jointly and 23,335 shares held by his spouse
and 68,840 shares held in trusts for the benefit of members of his family.
(5)
Includes
options to purchase 26,300 shares of common stock, and 234 shares held in an
IRA for his spouse. Mr. Flynn is not being nominated for reelection as
director.
(6)
Includes
options and warrants to purchase 17,145 shares of common stock, 64,906 shares
held jointly with Mr. Goodmans spouse and 12,823 shares held by or in
trust for members of his family.
(7)
Includes
options to purchase 3,737 shares of common stock, 163,871 shares in trust
accounts for which Mr. Margolius has voting rights, 6,760 shares held by
his spouse and 23,444 held in a profit sharing account for which Mr. Margolius
is the beneficiary.
(8)
Includes
options to purchase 77,184 shares of common stock and 263,766 shares held in
trust for his children. Includes 73,028 shares held by a third party trustee in
a trust for the benefit of family members of Mr. Paul, as to which he
disclaims beneficial ownership. Mr. Pauls business address is c/o Ronald
D. Paul Companies, 4416 East West Highway, Bethesda, Maryland 20814.
(9)
Includes options and warrants to purchase 9,310 shares
of common stock, 14,167 shares held by his spouse and 20,280 share for benefit
of his children.
(10)
Includes
50,500 shares held jointly and options to purchase 18,037 shares of common
stock.
(11)
Includes
options to purchase 10,116 shares of common stock and 1,269 shares held jointly
with Mr. Langmeads spouse.
(12)
Includes
options to purchase 51,863 shares of common stock and 773 shares held by his
spouse for their minor child.
(13)
Includes
options to purchase 41,634 shares of common stock and 11,928 shares held
jointly with her spouse.
(14)
Includes
options to purchase 50,340 shares of common stock, and 2,756 shares held in
trust for minor children. Also includes 25,493 shares held by Ms. Foulon-Tonats
spouse, as to which she disclaims beneficial ownership.
(15)
Includes
options and warrants to purchase 318,231 shares of common stock.
(16)
Includes
options to purchase 2,752 shares of common stock. Mr. Gross is a member of
the Board of Directors of EagleBank. Mr. Gross business address is c/o
Neal R. Gross & Co., Inc., 1323 Rhode Island Avenue, NW,
Washington, DC 20005.
ELECTION
OF DIRECTORS
The Board of Directors
has nominated eight (8) persons for election as director at the meeting,
for a one-year period until the 2009 Annual Meeting of Shareholders and until
their successors have been elected and qualified. Each of the nominees for
election as a director currently serves as a member of the Board of Directors. Unless
authority is withheld, all proxies in response to this solicitation will be
voted for the election of the nominees listed below. Each nominee has indicated
a willingness to serve if elected. However, if any nominee becomes unable to
serve, the proxies received in response to this solicitation will be voted for
a replacement nominee selected in accordance with the best judgment of the
persons named as proxies. The Board of Directors has determined that each director
and nominee for election as director, other than Mr. Paul and Mr. Flynn,
is an independent director as that term is defined in Rule 4200(a)(15)
of The NASDAQ Stock Market (NASDAQ). In
making this determination, the Board of Directors was aware of and considered
the loan and deposit relationships with directors and their related interests
which the Company enters into in the ordinary course of its business, and the
arrangements which are disclosed under Certain Relationships and Related
Transactions in this proxy statement.
Vote
Required and Board Recommendation.
Nominees receiving a
plurality of the votes cast at the meeting in the election of directors will be
elected as director, in the order of the number of votes received.
The Board of Directors recommends that shareholders vote FOR each of
the nominees to the Companys Board of Directors.
Nominees for Election as
Directors
Set forth below is
certain information concerning the directors of the Company and the nominees
for election as director of the Company. Except as otherwise indicated, the
occupation listed has been such persons principal occupation for at least the
last five years. Each of the nominees for election as a director of the
Company, other than Mr. Alperstein, also currently serves as a director of
the Bank. Except as noted below, each nominee has served as a director of the
Company since its organization.
Leonard
L. Abel.
Mr. Abel, 81, is Chairman of the Board of
Directors of the Company, and has served in that position since the
organization of the Company. Until retiring in 1993, Mr. Abel was
partner-in-charge of the certified public accounting firm of Kershenbaum, Abel,
Kernus and Wychulis, Rockville, Maryland with which he served for forty-five
years. From October 1996, until resigning in September 1997, Mr. Abel
was a member of the Board of Directors of F&M National Corporation (NYSE)
and its wholly owned subsidiary, F&M Bank - Allegiance, Bethesda,
4
Maryland, and prior to
that time was Chairman of the Board of Allegiance Bank, N.A. (collectively with
F&M Bank - Allegiance, Allegiance) and its holding company Allegiance
Banc Corporation, from their organization until their acquisition by F&M
National Corporation, which was subsequently acquired by BB&T Corporation (F&M).
Mr. Abel was also Chairman of the Board of Directors of Central National
Bank of Maryland from 1968 until its acquisition in 1986 by Citizens Bank of
Maryland (now SunTrust Banks, Inc.).
Leslie
M. Alperstein, Ph.D.
Mr. Alperstein, 65, has been
President of Washington Analysis Corp. and its predecessor firm, Washington
Analysis LLC, a leading governmental policy investment research group in
Washington, D.C., since its inception in 1973. He has served as Executive
Managing Director and Director of Research of HSBC Securities, Inc.,
Director of Economic and Investment Research for NatWest Securities, Prudential
Securities, Shields Model Roland, Inc. and Legg Mason & Co. His
professional memberships include the National Association of Business
Economists, the National Economists Club, and the Washington Society of
Investment Analysts. Mr. Alperstein was appointed to the Board of
Directors in September 2003.
Dudley C.
Dworken.
Mr. Dworken, 58, has served as a director of
the Company since August 1999. Mr. Dworken is a private investor and
real estate developer. Mr. Dworken is the owner of Curtis Chevrolet, an
automobile dealership in Washington, D.C. Mr. Dworken was a Director of
Allegiance from 1987 until October 1997, and a director of Allegiance Banc
Corporation from 1988 until its acquisition by F&M. Mr. Dworken is an
active member of numerous community, business, charitable and educational
institutions in the Washington, D.C./Montgomery County area.
Michael T. Flynn.
Mr. Flynn,
60, has served as Executive Vice President and Chief Operating Officer of the
Company and President District of Columbia Division of the Bank, since June 2006
and previously was President of the Bank. Mr. Flynn has over 36 years
experience in the banking industry in the Washington, D.C. and Maryland region.
Prior to joining EagleBank in January 2004, he was the Washington region
executive for Mercantile Bankshares Corporation from April 2003. He
previously was the Director of Strategic Planning for Allfirst Financial, Inc.,
and prior to that held several executive level positions for Bank of America
and predecessor companies. He has been involved in community affairs throughout
his career, particularly educational groups including the American Institute of
Banking and the Corcoran College of Art & Design. He is a Director of
the Workforce Investment Council of the District of Columbia and the Maryland
Banking School. Mr. Flynn was appointed to the Board of Directors in January 2004.
Mr. Flynn is not being nominated for reelection as a director, based upon
the Nominating Committees and Boards desire to minimize the number of inside
directors.
Harvey M.
Goodman.
Mr. Goodman, 52, has been with The Goodman,
Gable, Gould Company, the Maryland based public insurance adjusting firm where
he serves as President, since 1977. He is a director and past president of the
National Association of Public Insurance Adjusters, and is a director and
principal of Adjusters International, a national public adjusting firm. Mr. Goodman
has served as a director of the Bank since its organization, and was appointed
to the Board of Directors of the Company in January 2007.
Philip N.
Margolius.
Mr. Margolius, 68, a graduate of Dartmouth
College and Yale Law School, is a partner in The Margolius Firm, a law firm in
Washington, D.C., and until 2003 was a principal in the law firm of Margolius,
Mallios and Rider, LLP. He specializes in estate planning, probate, real
estate, non-profit organizations. Mr. Margolius has been an adjunct
professor at the Washington College of Law at American University and lectures
to professional groups in the community on estate planning.
Washingtonian Magazine
named him one of the areas leading
real estate attorneys
.
Mr. Margolius has served on the Board
of the Bank since June 2000 and was appointed to the Board of Directors of
the Company in September 2003.
Ronald D.
Paul.
Mr. Paul, 52, is President and Vice Chairman of
the Board of Directors of the Company and Chairman of the Board of Directors of
the Bank, and has served in such positions since the organization of the
Company and the Bank. Since June 2006, he has served as Chief Executive
Officer of the Bank, and he served as Interim President of the Bank from November 3,
2003 until January 26, 2004. Mr. Paul is President of Ronald D. Paul
Companies and RDP Management, which are engaged in the business of real estate
development and management activities. He is active in private investments,
including as Chairman of Bethesda Investments, Inc., a private venture
capital fund. Mr. Paul was a director of Allegiance from 1990 until September 1997,
and a director of Allegiance Banc Corporation from 1990 until its acquisition
by F&M, including serving as Vice Chairman of the Board of Directors from 1995.
5
Mr. Paul is also
active in various charitable organizations, including serving as Vice Chairman
of the Board of Directors of the National Kidney Foundation from 1996 to 1997,
and its Chairman from 2002 to 2003.
Donald R.
Rogers.
Mr. Rogers, 62, has been engaged in the private
practice of law since 1972 with the Rockville, Maryland based firm Shulman,
Rogers, Gandal, Pordy & Ecker, P.A., of which he is a partner. Mr. Rogers
was a member of the Board of Directors of Allegiance from 1987 until October 1997.
Mr. Rogers has served as a director of the Bank since its organization,
and was appointed to the Board of Directors of the Company in January 2007.
Leland M.
Weinstein.
Mr. Weinstein, 45, has served as President of
Syscom Services, Inc., a technology consulting and integration firm, since
1997. Previously, he spent thirteen years with Automated Digital Systems (ADS),
an integrator of duplication and fax technologies, where he rose to president
and owner of the company (he sold ADS to Alco Standard Corporation, which
became Ikon Office Solutions). Mr. Weinstein has been appointed to
advisory councils for Xerox, Intel/Dialogic, Sharp Electronics,
Captaris/Rightfax, Murata Business Systems, Brooktrout Technologies, Panasonic
Electronics and the technology council of the American Society of Association
Executives (ASAE). He sits on the Board of Governors of the University of
Maryland Alumni Association and is involved in numerous charities. Mr. Weinstein
has served on the Board of the Bank since 1998 and as a director of the Company
since May 2005.
Election of Directors of the Bank
If elected, the nominees
for election as directors intend to vote for Mr. Abel, Mr. Dworken, Mr. Goodman,
Mr. Margolius, Mr. Paul, Mr. Rogers, Mr. Weinstein and the
following persons to serve as directors of the Bank, each of whom currently
serves as a director of the Bank.
Arthur H.
Blitz.
Mr. Blitz, 67, an attorney engaged in private
practice since 1971, is a partner in the Bethesda, Maryland law firm of Paley,
Rothman, Goldstein, Eig, Rosenberg & Cooper, Chartered. Mr. Blitz
was a director of Allegiance at various times from 1987 to October 1997.
Steven L.
Fanaroff.
Mr. Fanaroff, 48, is Vice President - Chief Financial
Officer of Magruder Holdings, Inc., a regional supermarket chain, with
which he has served since 1981. Mr. Fanaroff served on the Board of
Directors of Allegiance from 1990 until October 1997.
Neal R.
Gross
. Mr. Gross, 65, is founder, Chairman and Chief
Executive Officer of Neal R. Gross & Co. which provides court
reporting services to attorneys, the federal government, private organizations
and individuals since 1977. Mr. Gross previously served as a director of
Century Bancshares, Inc., from 1995 until its acquisition by United
Bankshares, Inc. in 2001.
Benson
Klein.
Mr. Klein, 63, has been an attorney in Montgomery
County since 1970, and a principal with Ward & Klein, Chartered, since
1978. Mr. Klein is also engaged in real estate investment activities in
Montgomery County. He served as a director of F&M Bank - Allegiance from
1996 to 1997 and previously served as a director of Lincoln National Bank. Mr. Klein
is currently, and has been, a member of a variety of community, business and
charitable institutions in the Washington, D.C./Montgomery County area.
Bruce H.
Lee.
Mr. Lee, 43, is President of Development of Lee
Development Group, a closely held family real estate business founded in 1920
and based in downtown Silver Spring. He is principal broker of record for
Montgomery Land Company, LLC, which specializes in commercial sales, leasing,
and property management and the general partner of Montgomery 1936 Land Company
LLC. Mr. Lee was the charter president of the Greater Silver Spring
Chamber in 1993. Mr. Lee was an elected Council member and Chairman of the
Township of Chevy Chase View.
Kim
Natovitz.
Ms. Natovitz, 44, is the President of The
Natovitz Group, Inc., an independent general agency that provides
insurance and business related services for both individuals and companies. Ms. Natovitz
is currently, and has been, active in a variety of community and charitable
institutions in the metropolitan Washington D.C. area.
6
Benjamin
N. Soto.
Mr. Soto, 39, is a principal of Paramount Title
and Escrow, LLC, a Washington D.C. based law firm and title company he founded
in 2000. Prior to forming Paramount, Mr. Soto was a partner in the firm of
Garza, Regan, Rosenblatt, PC, where he practiced real estate and bankruptcy law.
He frequently lectures to members of the D.C. Bar, is a former chair of the
Bankruptcy Section of the National Bar Association, and in 2002, was
appointed by Mayor Anthony A. Williams to serve on the D.C. Board of Real
Property Assessments and Appeals. He is also a member of the D.C. Land Title
Association, Maryland Land Title Association, Better Business Bureau and the
D.C. Chamber of Commerce. Mr. Soto was appointed to the Banks Board of
Directors in November 2006.
James A.
Soltesz.
Mr. Soltesz, 53, has served as Chief Executive
Officer of Loiederman Soltesz Associates, Inc., a land development
engineering and consulting firm since 1997. Mr. Soltesz was appointed to
the Banks Board of Directors in September 2007. Mr. Soltesz serves
on the Board of Trustees of Georgetown Preparatory School, Mater Dei School, as
a Life Director of the Maryland-National Capital Area Building Industry
Association, and Catholic Charities Foundation. His firm includes 280 people
located in six offices throughout the metropolitan area of Washington, DC.
Worthington
H. Talcott, Jr.
Mr. Talcott, 55, an attorney
engaged in private practice since 1979, has been a partner in Shulman, Rogers,
Gandal, Pordy & Ecker, P.A. since 1998. Mr. Talcott has been an
active member of the Juvenile Diabetes Foundation, serving as a member of the
Board of Directors for the Capital Chapter from 1992 to 1996, and as President
of the Capital Chapter from 1994 to 1995.
Eric H.
West.
Mr. West, 45, is a founding principal of West,
Lane & Schlager/Oncor International, specializing in tenant
representation and strategic real estate consulting in the Washington, D. C.
metropolitan area. During his career, Mr. West has
developed a specialty in not-for-profit organizations and corporations, leading
to ongoing relationships with such diverse groups as The National Council on
the Aging, The American Forest and Paper Association, The American Iron &
Steel Institute, among many others.
Committees, Meetings and
Procedures of the Board of Directors
Meetings.
The Board of Directors of the Company met fifteen (15) times
during 2007. All members of the Board of Directors of the Company attended at
least 75% of the meetings held by the Board of Directors and by all committees
on which such member served during the 2007 fiscal year or any portion thereof.
Audit
Committee.
The Board of Directors has a standing Audit
Committee. The Audit Committee is responsible for the selection, review and
oversight of the Companys independent accountants, the approval of all audit,
review and attest services provided by the independent accountants,
the integrity of the Companys reporting
practices
and evaluation of the Companys internal controls and
accounting procedures. It also periodically reviews audit reports with the
Companys independent auditors. The Board of Directors has adopted a written
charter for the Audit Committee.
A copy of
the charter is available on the Companys website at www.eaglebankmd.com.
The
Audit Committee of the Company is currently comprised of Mr. Dworken, the
Chairman, and Messrs. Abel, Alperstein and Weinstein. Each of the members
of the Audit Committee is independent,
as
determined under the definition of independence adopted by NASDAQ for audit
committee members in Rule 4350(d)(2)(A).
During the 2007 fiscal
year, the Audit Committee of the Company met seven (7) times.
The Board of Directors has determined that Mr. Alperstein
is an audit committee financial expert as defined under regulations of the
Securities and Exchange Commission.
The audit committee is
also responsible for the pre-approval of all non-audit services provided by its
independent auditors. Non-audit services are only provided by the Companys
auditors to the extent permitted by law. Pre-approval is required unless a de
minimus exception is met. To qualify for the de minimus exception, the
aggregate amount of all such non-audit services provided to the Company must
constitute not more than five percent of the total amount of revenues paid by
the Company to its independent auditors during the fiscal year in which the
non-audit services are provided; such services were not recognized by the
Company at the time of the engagement to be non-audit services; and the
non-audit services are promptly brought to the attention of the committee and
approved prior to the completion of the audit by the committee or by one or
more members of the committee to whom authority to grant such approval has been
delegated by the committee.
7
Nominating
Committee.
The Board of Directors has a standing nominating
committee, consisting of all of the members of the Board of Directors who are independent
directors
within the meaning of NASDAQ Rule 4200(a)(15).
The nominating committee is responsible for the evaluation of nominees for
election as director, the nomination of director candidates for election by the
shareholders and evaluation of sitting directors.
The Board of Directors has adopted a charter addressing the nominations
process. A copy of the charter is available on the Companys website at
www.eaglebankmd.com.
The
Board has not developed a formal policy for the identification or evaluation of
nominees.
In general, when the Board determines that expansion of the
Board or replacement of a director is necessary or appropriate, the nominating
committee will review, through candidate interviews with members of the Board
and management, consultation with the candidates associates and through other
means, a candidates honesty, integrity, reputation in and commitment to the
community, judgment, personality and thinking style, willingness to invest in
the Company, residence, willingness to devote the necessary time, potential
conflicts of interest, independence, understanding of financial statements and
issues, and the willingness and ability to engage in meaningful and
constructive discussion regarding Company issues. The committee would review
any special expertise, for example, expertise that qualifies a person as an
audit committee financial expert, and membership or influence in a particular
geographic or business target market, or other relevant business experience. To
date the Company has not paid any fee to any third party to identify or
evaluate, or to assist it in identifying or evaluating, potential director
candidates.
The nominating committee
will consider director candidates nominated by shareholders during such times
as the Company is actively considering obtaining new directors. Candidates
recommended by shareholders will be evaluated based on the same criteria
described above. Shareholders desiring to suggest a candidate for consideration
should send a letter to the Companys Secretary and include: (a) a
statement that the writer is a shareholder (providing evidence if the persons
shares are held in street name) and is proposing a candidate for consideration;
(b) the name and contact information for the candidate; (c) a
statement of the candidates business and educational experience; (d) information
regarding the candidates qualifications to be director, including but not
limited to an evaluation of the factors discussed above which the Board would
consider in evaluating a candidate; (e) information regarding any
relationship or understanding between the proposing shareholder and the
candidate; (f) information regarding potential conflicts of interest; and (g) a
statement that the candidate is willing to be considered and willing to serve
as director if nominated and elected. Because of the limited resources of the
Company and the limited opportunity to seek additional directors, there is no
assurance that all shareholder proposed candidates will be fully considered,
that all candidates will be considered equally, or that the proponent of any
candidate or the proposed candidate will be contacted by the Company or the
Board, and no undertaking to do so is implied by the willingness to consider
candidates proposed by shareholders.
Compensation
Committee.
The Board of Directors has an Executive
Compensation Committee, consisting of all of the members of the Board of
Directors who are independent directors
within
the meaning of NASDAQ Rule 4200(a)(15). The Executive Compensation
Committee has the sole responsibility for determining executive compensation,
including that of the named executive officers. The Executive Compensation
Committee makes determination with respect to salary levels, bonus compensation
and equity compensation awards for executive officers. In exercising its role,
the Executive Compensation Committee may consider information or
recommendations to the Executive Compensation Committee provided by the
Compensation
Committee of the Bank, which determines compensation policy for nonexecutive
employees. The Bank Compensation Committee is currently comprised of Mr. Blitz,
the Chairman, and Messrs. Abel, Dworken, Natovitz, Paul, Rogers and
Weinstein. Mr. Paul does not participate in, or remain present during,
discussions of his compensation.
Neither
the Executive Compensation Committee of the Company nor the Bank Compensation
Committee has a charter. During the 2007 fiscal year, the Executive
Compensation Committee met one (1) time.
In January 2008, the
Executive Compensation Committee authorized the retention of a compensation
consultant every other year to assist the Company in evaluating executive
compensation levels and the form of executive compensation. The first year of
such retention will be during 2008 in connection with compensation levels for
2009. Previously, in 2005, the Compensation Committee of the Bank engaged Clark
Consulting (Clark), an executive compensation and benefits consulting firm of
national scope and reputation, to evaluate whether its compensation levels were
reasonably competitive and to make specific compensation plan recommendations
with respect to changes in executive compensation levels and development of an
equity compensation strategy.
8
Compensation Committee Interlocks
and Insider Participation.
No member of the Executive Compensation Committee has served as an
officer or employee of the Company or Bank at any time. None of our executive
officers serve as a member of the compensation committee of any other company
that has an executive officer serving as a member of our Board of Directors. None
of our executive officers serve as a member of the board of directors of any
other company that has an executive office serving as a member of the Executive
Compensation Committee. Except for loans and deposit transactions in the
ordinary course of business made on substantially the same terms, including
interest rates and collateral, as those for comparable transactions with
unaffiliated parties, and not presenting more than the normal risk of
collectability or other unfavorable features, no member of the Executive
Compensation Committee or any of their related interests has any material
interest in any transaction involving more than $120,000 to which the Company
is a party.
Shareholder Communications.
Company shareholders who wish to communicate with the Board of Directors
or an individual director can write to Eagle Bancorp, Inc., 7815 Woodmont
Avenue, Bethesda, Maryland 20814, Attention: Zandra D. Nichols, Corporate
Secretary. Your letter should indicate that you are a shareholder, and whether
you own your shares in street name. Depending on the subject matter, management
will: (a) forward the communication to the director or directors to whom
it is addressed; (b) handle the inquiry directly or delegate it to
appropriate employees, such as where the communication is a request for
information, a stock related matter, or a matter related to ordinary course
matters in the conduct of the Companys banking business; or (c) not
forward the communication where it is primarily commercial or political in
nature, or where it relates to an improper, frivolous or irrelevant topic.
Communications which are not forwarded will be retained until the next Board
meeting, where they will be available to all directors.
Director Attendance at the Annual Meeting.
The Board of Directors believes it is
important for all directors to attend the annual meeting of shareholders in
order to show their support for the Company and to provide an opportunity for
shareholders to communicate any concerns to them. Accordingly, it is the policy
of the Company to encourage all directors to attend each annual meeting of
shareholders unless they are unable to attend by reason of personal or family
illness or pressing matters. All
of the Companys directors attended the 2007
annual meeting of shareholders, other than Mr. Eugene F. Ford Sr., who did
not stand for reelection at the 2007 annual meeting.
Audit Committee Report
The Audit Committee has
been appointed to assist the Board of Directors in fulfilling the Boards
oversight responsibilities by reviewing the financial information that will be
provided to the shareholders and others, the systems of internal controls
established by management and the Board and the independence and performance of
the Companys audit process.
The Audit Committee has:
(1) reviewed and
discussed with management the audited consolidated financial statements
included in the Companys Annual Report on Form 10-K;
(2) discussed with
Stegman & Company, the Companys independent auditors, the matters
required to be discussed by Statement of Auditing Standards No. 61,
Communications with Audit Committees
, as amended, as adopted
by the Public Company Accounting Oversight Board in Rule 3200T; and
(3) has received the
written disclosures and letter from Stegman & Company, as required by
Independence Standards Board Standard No. 1,
Independence
Discussions with Audit Committees
, as adopted by the Public Company
Accounting Oversight Board in Rule 3600T, and discussed with Stegman &
Company, its independence.
9
Based on these reviews
and discussions, the Audit Committee has recommended to the Board of Directors
that the audited consolidated financial statements be included in the Companys
annual report on Form 10-K for the year ended December 31, 2007. The
Audit Committee has also considered whether the amount and nature of non-audit
services provided by Stegman & Company is compatible with the auditors
independence.
|
Members of the Audit
Committee
|
|
|
|
Dudley C. Dworken,
Chairman
|
|
Leonard L. Abel
|
|
Leslie M. Alperstein
|
|
Leland M. Weinstein
|
Director Compensation
The following table sets
forth information regarding compensation paid to, or earned by, non-employee
directors of the Company during the fiscal year ended December 31, 2007
for service as members of the Company and Bank Boards of Directors. Members of
the Board of Directors who are employees do not receive additional cash
compensation for service on the Board of Directors.
Name
|
|
Fees Earned or
Paid in Cash
|
|
All Other
Compensation
|
|
Total
|
|
Leonard L. Abel
|
|
$
|
75,000
|
|
$
|
|
|
$
|
75,000
|
|
Leslie M.
Alperstein, Ph.D.
|
|
$
|
10,700
|
|
$
|
|
|
$
|
10,700
|
|
Dudley C.
Dworken
|
|
$
|
27,600
|
|
$
|
|
|
$
|
27,600
|
|
Eugene F.
Ford, Sr.(1)
|
|
$
|
4,600
|
|
$
|
|
|
$
|
4,600
|
|
Harvey M.
Goodman
|
|
$
|
17,700
|
|
$
|
|
|
$
|
17,700
|
|
Philip N.
Margolius
|
|
$
|
21,300
|
|
$
|
|
|
$
|
21,300
|
|
Donald R. Rogers
|
|
$
|
15,000
|
|
$
|
|
|
$
|
15,000
|
|
Leland M.
Weinstein
|
|
$
|
21,800
|
|
$
|
|
|
$
|
21,800
|
|
(1)
Mr. Ford served as a director
through the 2007 annual meeting of shareholders, and did not stand for
reelection at that meeting.
During 2007, each
non-employee director of the Company and Bank, other than Mr. Abel,
received an annual retainer of $5,000 in cash ($7,500) if a member of both the
Bank and Company Board of Directors), plus a cash fee of $300 for each meeting
of the Board of Directors of the Company, the Board of Directors of the Bank or
a committee of the Board of the Company or the Bank attended ($400 per meeting
of a committee if serving as chair of the committee). Directors of both the
Company and the Bank are eligible to receive grants of options under the
Companys stock option plans, however, no options were issued to any
non-employee directors in 2007, and no expense related to prior grants to
non-employee directors was recognized in 2007. In 2007, an aggregate of
$193,700 in retainers and meeting fees were paid to members of the Board of
Directors of the Company for service on the Board of Directors of the Company
and Bank, and $118,675 was paid to members of only the Board of Directors of
the Bank for such service.
During 2008, non-employee
directors, other than Mr. Abel, are entitled to receive an annual cash
retainer of $5,000 ($7,500 if serving on both the Company and Bank Board of
Directors) and a per meeting fee of $300 ($400 if serving as chair of a
committee). Fees paid to members of the Board of Directors are determined by
the Board in its discretion. However, the Board believes that Director fees
appear to be modest based on published reports and statistical comparisons. The
Bank Director Annual Compensation Review in cooperation with Clark Consulting
Group publishes an annual survey. That report shows that for Banks in the asset
size of $501 million - $1 billion the annual retainer for directors was $10,000
and the per meeting fee was $600, both of which were significantly higher than
paid by the Company and Bank. Additionally, in January 2008, each of Mr. Paul
and the non-employee members of the Company Board of Directors, other than Mr. Abel
and Mr. Alperstein, was granted options to purchase 3,250 shares of common
stock for service on the Company and Bank Boards. Mr. Alperstein, who
serves only on the Company Board of Directors, was granted options to purchase
2,000 shares of common stock, and Mr. Abel declined the grant. Each other
member of the Bank Board of Directors was granted options to purchase 1,250
shares of common stock. All of
10
such options have an
exercise price of $13.0543 per share, a five year term, and vest in three
substantially equal installments, on the date of grant, and the first and
second anniversaries of the date of grant. The grant date fair value of these
grants were $7,755 for each recipient other than Mr. Alperstein and $4,772
for Mr. Alperstein.
At December 31,
2007, the non-employee directors had outstanding option awards, vested and
unvested, to purchase shares of common stock as follows: Mr. Abel 47,109
shares; Mr. Alperstein 676 shares; Mr. Dworken 0 shares; Mr. Goodman
16,062 shares; Mr. Margolius 2,654 shares; Mr. Rogers 8,227
shares and Mr. Weinstein 16,954 shares.
During 2007, Mr. Abel,
the Chairman of the Board of Directors of the Company received an annual
payment of $75,000 in lieu of regular director fees from the Company and the
Bank, the same amount he received in 2006. Mr. Abel and the Company are
parties to an agreement governing his service and compensation. The term of Mr. Abels
current agreement expires on December 31, 2010. On each December 31,
the term of the agreement automatically extends for one additional year, unless
Mr. Abel has given notice of his intention not to renew the term. Under
his agreement, Mr. Abel is entitled to receive an annual fee, currently
$75,000, subject to periodic increase, in lieu of all other fees for service on
the Boards of Directors or any committees of the Company and the Bank. In the
event of termination of Mr. Abels service on the Board of Directors for
any reason other than for cause (as defined), Mr. Abel (or his estate), is
entitled to receive an amount equal to 2.99 times his then current annual fee,
subject to certain limitations in the event that his termination occurs in
connection with a change in control (as defined) of the Company or the Bank. If
Mr. Abel were entitled to receive the termination benefits as of December 31,
2007, he would receive approximately $224,250, unless the termination were in
connection with a change in control, in which case he would receive
approximately $143,968. Mr. Abels compensation is determined by the
Companys Board, exclusive of Mr. Abels participation, and is based on
the best judgment of the members of the Board, taking into consideration his
total value to the Company and the Bank and the various aspects of his
contribution.
The Company does not
maintain any discretionary bonus or non-equity incentive plans or compensation
programs, deferred compensation, defined contribution or defined benefit
retirement plans, for non-employee directors, or in which such directors may
participate.
Executive Officers Who Are Not
Directors
Set forth below is
certain information regarding persons who are executive officers of the Company
or the Bank and who are not directors of the Company. Except as otherwise
indicated, the occupation listed has been such persons principal occupation
for at least the last five years.
Susan G.
Riel.
Ms. Riel, 58, Executive Vice President Chief
Operating Officer of the Bank, and formerly Chief Administrative Officer,
previously served as Executive Vice President - Chief Operating Officer of
Columbia First Bank, FSB from 1989 until that institutions acquisition by
First Union Bancorp in 1995. Ms. Riel has over 28 years of experience in
the commercial banking industry.
James H.
Langmead
. Mr. Langmead, 58, Senior Vice President and
Chief Financial Officer of the Company since January 2007, and Executive
Vice President and Chief Financial Officer of the Bank since January 2005,
previously served as Chief Financial Officer of Sandy Spring Bank and Sandy
Spring Bancorp. Mr. Langmead, a CPA, served in various financial and
senior management roles with Sandy Spring Bank from 1992 through 2004. Prior to
that time, Mr. Langmead managed the finance group at the Bank of
Baltimore.
Thomas D.
Murphy.
Mr. Murphy, 60, has served as President
Montgomery County Division of the Bank since June 2006, and was previously
Executive Vice President - Chief Operating Officer of the Bank. He served at
Allegiance from September 1994, including as Executive Vice President and
Chief Operating Officer from December 1995 until November 1997. Prior
to his service at Allegiance, he served in the same position at First
Montgomery Bank from August 1991 until its acquisition by Sandy Spring
National Bank of Maryland in December 1993,
and he served as a Vice President of that organization until September 1994.
Mr. Murphy has 33 years experience in the commercial banking industry.
Active in community affairs, he is past president of the Bethesda-Chevy Chase
Chamber of Commerce.
11
Martha Foulon-Tonat
.
Ms. Tonat, 52, Executive Vice President and Chief Lending Officer of the
Bank, served at Allegiance Bank from January 1990 to December 1997. Her
duties included being Senior Vice President and Chief Lending Officer. Prior to
her service at Allegiance Bank, Ms. Tonat served at various commercial
banks in the area. She has over 24 years experience in the commercial banking
industry.
Compensation Disclosure and Analysis
In this Compensation
Disclosure and Analysis, we give an overview and analysis of our compensation
program and policies, the material compensation decisions we have made under
those programs and policies, and the material factors that we considered in
making those decisions. Later in this proxy statement under the heading Executive
Compensation Tables, you will find a series of tables containing specific
information about the compensation earned or paid in 2007 to Mr. Paul, the
Chief Executive Officer of the Company, Mr. Langmead, the Chief Financial
Officer, and the four most highly compensated executive officers of the Company
(including officers of the Bank) who received total compensation of $100,000 or
more during the fiscal year ended December 31, 2007, referred to as our named
executive officers.
Compensation
Objectives
The primary objectives of
the Board of Directors with respect to executive compensation is to tie annual
and long-term cash and stock incentives to the achievement of measurable
Company and individual performance objectives, thereby aligning the executives
incentive with maintaining and increasing shareholder value. We attempt to
achieve these objectives through compensation policies and programs that tie a
significant portion of our named executives officers overall compensation,
potentially 30-45% in the form of cash bonuses and equity compensation awards,
to our short and long term financial performance. We also recognize that ours
is a highly competitive market for executive officers, and that we compete for
personnel against not only local community banks in Montgomery County and
Washington D.C., but against national, regional and local institutions that
operate in the entire metropolitan Washington D.C. area, and in surrounding
markets. Our compensation philosophy is to reward our executives with compensation
at or above market competitive rates, regardless of institution size, while
rewarding outstanding performance. Although each of our executive officers is
responsible for different areas of the Bank, they are viewed as having the same
level of responsibility, therefore, the same base compensation is warranted. We
differentiate the achievements of each executive officers performance in the
cash bonus and equity compensation award.
During 2005, the
Compensation Committee of the Bank first engaged Clark Consulting (Clark), an
executive compensation and benefits consulting firm of national scope and
reputation, to evaluate whether the Companys compensation levels were
reasonably competitive and to make specific compensation plan recommendations
with respect to changes in executive compensation levels and development of an
equity compensation strategy. The Company requested Clarks review, as an
objective third party, to summarize issues relative to topics such as
competitive executive compensation and incentive practices with the intent to
identify appropriate compensation levels. The review utilized 2005 proxy data
for a peer group of 23 publicly traded banks(1), the selection of which was
based upon similarities in asset size, geographic location, and performance
(the custom peer group). A second peer group(2), comprised of the local
community banks against which the Company perceives itself as directly
competing for personnel (the supplemental peer group), was also reviewed. It
was found that the Companys equity based compensation, over three years, was
on average in the 75
th
percentile compared to the custom peer group,
while its equity compensation levels generally trailed those of the
supplemental peer group. Therefore, based on the review of this peer group
information, the Company sought to establish the 2006 Stock Plan, and to
increase the percentage of executive compensation tied to performance based
equity awards. In addition, as part of the overall review it was found that
when
(1)
First
Mariner Bancorp, Inc. (FMAR); First United Corp (FUNC); Columbia Bancorp, Inc./Columbia
Bank (acquired by Fulton Financial Corporation (FULT)); National Bankshares
Inc. (NKSH); Shore Bancshares Inc. (SHBI); BCSB Bankcorp Inc. (BCSB); CNB
Financial Corp. (CCNE); Republic First Bancorp Inc. (FRBK); Harleysville
Savings Financial (HARL); Abington Community Bancorp (ABBC); Severn Bancorp
Inc. (SVBI); Eastern Virginia Bankshares (EVBS); Old Point Financial Corp.
(OPOF); Bryn Mawr Bank Corp. (BMTC); Fidelity Bancorp Inc. (FSBI); C&F
Financial Corp. (CFFI); Middleburg Financial Corp. (MBRG); QNB Corp. (QNBC);
Premier Community Bankshares (PREM); Highlands Bankshares Inc. (HBKA );
Washington Savings Bank FSB (WSB); Tri-County Financial Corp. (TCFC); Alliance
Bankshares Corp. (ABVA).
(2)
Sandy
Spring Bancorp, Inc. (SASR); First Mariner Bancorp, Inc.; Cardinal
Financial Corporation (CFNL); Columbia Bancorp, Inc./Columbia Bank;
Virginia Commerce Bancorp, Inc. (VCBI); James Monroe Bancorp, Inc./James
Monroe Bank (acquired by Mercantile Bankshares Corporation/PNC Financial Group, Inc.).
12
cash compensation was
compared to the 75
th
percentile of the custom peer group, the
Companys level of cash compensation was trailing slightly, and was found to be
low or below market, and to be below market when compared to the supplemental
peer group. The Company did not retain a compensation consultant in connection
with 2007 compensation decisions, although the Executive compensation committee
has authorized the retention of a consultant on a biannual basis, commencing
with 2008 decisions regarding 2009 compensation. Accordingly, compensation
decisions for 2007 were made without the direct input of any independent third
party, but based on the Executive Compensation Committees evaluation of
changes in the compensation at the comparable companies, and current challenges
facing the Company and community banking industry.
Compensation
Components
The key components of our
executive compensation program for all named executive officers other than Mr. Paul
consist of a base salary, performance-based compensation plans including our
Senior Executive Incentive Bonus Plan, a performance based cash bonus plan, and
the 2006 Stock Plan, a long-term equity based compensation plan, potential
discretionary cash bonuses, and a 401(k) Plan. Base salary and bonus, or cash
compensation, comprise the substantial portion of total executive compensation.
For Mr. Paul, whose formal responsibilities have increased in recent
years, base salary is the principal form of compensation, along with awards of
stock options, which ties a significant portion of his compensation to
increases in shareholder value as reflected in long term increases in the price
of the common stock.
Base
Salary
The Board of Directors
believes that base salary for named executive officers should be targeted at
market competitive levels, regardless of the size of the institution, while
rewarding outstanding performance with above-average total compensation. Base
salaries are reviewed annually and adjusted from time to time, based on our
review of market data and assessment of Company and individual executive
performance. For 2007, base salaries were targeted to be competitive with salaries
of the supplemental peer group, while changes made to base salaries for 2008
were targeted to maintain the competitiveness of overall compensation with that
peer group.
Senior
Executive Incentive Bonus Plan
Executive management,
including all named executive officers other than Mr. Paul, participates
in the annual incentive bonus plan for senior executives. Under the plan, an
executive is eligible to earn a percentage of his or her base salary based on
achievement of Company and individual performance objectives. During 2007,
participating executives could earn up to 23% of base salary in bonus, based
upon Company wide and individual performance metrics, which can vary each year.
The incentive bonus plan was established to maintain the competitiveness of our
total cash compensation for executives compared to peers. In order for the
executive to receive any portion of the potential aggregate bonus payout, the
Company must first meet established income goals. Then, component portions of
the aggregate potential bonus may be earned, based upon the achievement of
designated performance targets relating to Non Interest Income, Net Interest
Margin, Efficiency Ratio, Deposit Growth, Loan Growth, Non Interest Expense
and/or other financial performance measures. The measures to which each named
executives award is subject may vary depending on the officers area of
responsibility. Each component portion of the potential bonus is subject to
payment only if the target is met or exceeded in total, with no provision for
partial or graduated payments. The actual bonus which an individual named
executive officer may receive may therefore be equal to or below the indicated
amount or percentage. In addition, the Board of Directors reserves the right to
grant a discretionary bonus in addition to the performance related bonus, or to
award all or a portion of the aggregate potential bonus where the targets are
not met, based upon extenuating factors. No amounts were paid pursuant to the
Senior Executive Incentive Bonus Plan for 2007 performance, as targets were not
met, although discretionary bonuses were paid to named executive officers other
than Mr. Paul. For 2008, participating officers are eligible to earn up to
23% of base salary under this plan.
Equity
Compensation
We believe that our
long-term interests are best advanced by aligning the interests of our
executive officers with the interests of our shareholders. Accordingly, we make
awards of stock options, stock appreciation rights (SARS) and restricted
stock available to our executive officers pursuant to our 2006 Stock Plan,
which was adopted
13
by our shareholders in
2006. Previously, stock options were granted under our 1998 Stock Option Plan,
but options may no longer be granted under the 1998 Stock Option Plan. Mr. Paul
has been granted only stock options in order to tie his potential compensation
to increases in shareholder value as reflected in the stock price. In 2007,
other named executive officers were granted SARs with an expected value of 5%
of base salary and performance based restricted stock with a grant date fair
value of up to 20% of base salary assuming the maximum award were received.
Previously all executive officers received awards of stock options, generally
vesting in two equal annual installments, commencing on the date of grant. These
awards are targeted to the 75
th
percentile of the custom peer group.
In 2008, all named executive officers received grants of stock options, with
three installment vesting.
Equity compensation
awards for named executive officers and employees are generally approved in January or
early February of each year, or in connection with revisions to annual
compensation. Awards may be made periodically for new hires during the year. Awards
are based on a number of criteria including the relative rank of the executive
within the Company and his or her specific contributions to the success of the
Company. Our equity award process is independent of any consideration of the
timing of the release of material nonpublic information, including with respect
to the determination of grant dates or stock option exercise prices. Similarly,
we expect that the release of material nonpublic information will not be timed
with the purpose or intent to affect the value of executive compensation
401(k) Plan
Our 401(k) Plan
allows all officers and employees of the Company working 1,000 hours or more in
a calendar year to defer a portion of their compensation, and provides a match
of up to 3% of their base salaries and bonus amounts, subject to certain IRS
limitations. While the decision to match employee contributions is
discretionary, all employees receive the same percentage match.
Employment
and Severance Arrangements
Each of our named executive
officers has an employment agreement which contains provisions for payments
upon a change in control of the Company, and provides for noncompetition and
nonsolicitation provisions benefiting the Company under certain circumstances. These
agreements are described in detail under the caption Executive Compensation
Tables Employment Agreements. The Executive Compensation Committee, believes
that the agreements provide continuity of executive management, employment
security which is conducive to maximum employee effort and valuable protections
for the Company and its executive officers.
Inter-Relationship
of Elements of Total Compensation
The various elements of
the compensation package are not interrelated. For example, if it does not
appear as though the target bonus will be achieved, the size of equity
compensation awards will not be affected. While the potential size of an
element of compensation may be expressed as a percentage of base or total
compensation, there is no significant interplay of the various elements of
total compensation between each other. If awards that are granted in one year
become less valuable, or less likely of vesting, the amount of the bonus or
base compensation to be paid the executive officer for the next year is not impacted. Similarly, if equity awards
become extremely valuable, the amount of base compensation or bonus to be
awarded for
the next year
is not affected. While the Board has
discretion to make exceptions to any base compensation or bonus payouts under
existing plans, it has not approved any exceptions to the plans with regard to
any executive officers.
Other
Information
We have no equity or
security ownership requirements or guidelines for executive officers, however,
all of the executive officers own common stock, and options to purchase common
stock, SARs payable in common stock or performance based awards of restricted
stock pursuant to our equity compensation plans. We also have no policy with
regard to the adjustment or recovery of awards or payments if the relevant
company performance measures upon which they are based are restated or
otherwise adjusted in a manner that would reduce the size of an award or
payment. We have not the need to address such circumstances, and expect that we
would address the issue of award or payment
14
recovery at the time
circumstances requiring it present themselves, in light of all the facts and
circumstances. Perquisites, which are not material to the named executives
overall compensation, are noted in the Summary Compensation Table.
Input from
the Chief Executive Officer is considered
by the Executive Compensation Committee and Bank Compensation Committee
regarding the criteria to be used to determine base salary, bonuses and other
benefits for
named executive officers other than
the Chief Executive Officer. Although input from
the Chief Executive Officer is considered by the Executive
Compensation Committee, it is not given any disproportionate weight. The
Executive Compensation Committee has the final authority on compensation
matters for all executive officers.
Compensation
Committee Report
We have reviewed and
discussed the foregoing Compensation Disclosure and Analysis with management.
Based on our review and discussion with management we have recommended to the
Board of Directors that the Compensation Disclosure and Analysis be included in
this proxy statement and incorporated by reference in our annual report on Form 10-K
for the year ended December 31, 2007.
Members of the Companys Executive Compensation
Committee
|
|
|
|
Leonard L. Abel
|
|
Philip
N. Margolius, Chairman
|
Leslie
M. Alperstein, Ph.D.
|
|
Donald
R. Rogers
|
Dudley
C. Dworken
|
|
Leland
M. Weinstein
|
Harvey
M. Goodman
|
|
|
This report shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed
filed under such acts.
Executive Compensation Tables
The following table sets
forth a comprehensive overview of the compensation for Mr. Paul, the
President of the Company, Mr. Langmead, the Chief Financial Officer of the
Company, and the four most highly compensated executive officers of the Company
(including officers of the Bank) who received total compensation of $100,000 or
more during the fiscal year ended December 31, 2007.
Summary Compensation Table
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus(1)
|
|
Stock
Awards(2)
|
|
Option
Awards(2)
|
|
Non Equity
Incentive Plan
Compensation
|
|
All Other
Compensation
|
|
Total
|
|
Ronald D. Paul,
President and Chief
|
|
2007
|
|
$
|
350,000
|
|
$
|
|
|
$
|
|
|
$
|
74,228
|
|
$
|
|
|
$
|
|
|
$
|
424,228
|
|
Executive Officer
of the Company;
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive
Officer of the Bank
|
|
2006
|
|
$
|
197,827
|
|
$
|
|
|
$
|
|
|
$
|
24,308
|
|
$
|
|
|
$
|
|
|
$
|
222,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James H.
Langmead, Senior Vice
|
|
2007
|
|
$
|
231,525
|
|
$
|
20,000
|
|
$
|
6,829
|
|
$
|
6,029
|
|
$
|
|
|
$
|
19,697
|
(3)
|
$
|
284,080
|
|
President, Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of the Company;
Executive Vice
|
|
2006
|
|
$
|
207,595
|
|
$
|
14,327
|
|
$
|
7,871
|
|
$
|
5,211
|
|
$
|
|
|
$
|
5,691
|
(4)
|
$
|
240,695
|
|
President, Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of the Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Flynn,
Executive Vice
|
|
2007
|
|
$
|
236,080
|
|
$
|
5,000
|
|
$
|
7,325
|
|
$
|
6,703
|
|
$
|
|
|
$
|
18,460
|
(5)
|
$
|
273,568
|
|
President, Chief
Operating Officer of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the Company;
President - District of
|
|
2006
|
|
$
|
236,080
|
|
$
|
5,000
|
|
$
|
9,768
|
|
$
|
6,505
|
|
$
|
|
|
$
|
18,290
|
(6)
|
$
|
275,643
|
|
Columbia Division
of the Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas D. Murphy,
Executive Vice
|
|
2007
|
|
$
|
231,525
|
|
$
|
12,500
|
|
$
|
7,090
|
|
$
|
6,429
|
|
$
|
|
|
$
|
21,479
|
(7)
|
$
|
279,023
|
|
President of the
Company; President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Montgomery
County Division of
|
|
2006
|
|
$
|
220,500
|
|
$
|
12,500
|
|
$
|
9,123
|
|
$
|
6,075
|
|
$
|
|
|
$
|
19,922
|
(8)
|
$
|
268,120
|
|
the Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan G. Riel,
Executive Vice
|
|
2007
|
|
$
|
231,525
|
|
$
|
27,500
|
|
$
|
7,090
|
|
$
|
6,429
|
|
$
|
|
|
$
|
20,367
|
(9)
|
$
|
292,911
|
|
President Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of the Bank
|
|
2006
|
|
$
|
207,595
|
|
$
|
27,500
|
|
$
|
9,123
|
|
$
|
5,511
|
|
$
|
|
|
$
|
18,430
|
(10)
|
$
|
268,159
|
|
15
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus(1)
|
|
Stock
Awards(2)
|
|
Option
Awards(2)
|
|
Non Equity
Incentive Plan
Compensation
|
|
All Other
Compensation
|
|
Total
|
|
Martha Foulon-Tonat,
Executive
|
|
2007
|
|
$
|
231,525
|
|
$
|
12,500
|
|
$
|
7,090
|
|
$
|
6,429
|
|
$
|
|
|
$
|
16,653
|
(11)
|
$
|
274,197
|
|
Vice President
Chief Lending
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer of the
Bank
|
|
2006
|
|
$
|
207,595
|
|
$
|
12,500
|
|
$
|
9,123
|
|
$
|
5,511
|
|
$
|
|
|
$
|
14,726
|
(12)
|
$
|
249,455
|
|
(1)
Reflects amounts earned pursuant to the
discretionary awards under Companys Senior Executive Incentive Bonus Plan.
Amounts shown are earned and accrue in the year indicated and are paid in the
following year, except with respect to Mr. Langmeads 2006 payment, which
was earned and paid 2006.
(2)
Represents
the amount of expense recognized in year indicated with respect to awards of
performance based restricted stock (in the case of Stock Awards) and options
and SARs (in the case of Option Awards) for financial reporting purposes. Please
refer to note 11 to the Companys Consolidated Financial Statements for the
year ended December 31, 2007 for a discussion of the assumptions used in
calculating the grant date fair value.
(3)
Includes
$9,000 car allowance, $3,799 insurance premium and $6,898 401(k) matching
contribution.
(4)
Represents
401(k) matching contribution.
(5)
Includes
$9,000 car allowance, $2,690 insurance premium and $6,770 401(k) matching
contribution.
(6)
Includes
$9,000 car allowance, $2,690 insurance premium and $6,588 401(k) matching
contribution. Does not include $51,065 of income recognized by Mr. Flynn
as a result of the disqualifying disposition of shares issued upon the exercise
of incentive stock options.
(7)
Includes
$9,000 car allowance, $5,534 insurance premium and $6,945 401(k) matching
contribution.
(8)
Includes
$7,800 car allowance, $5,534 insurance premium and $6,588 401(k) matching contribution.
(9)
Includes
$9,000 car allowance, $4,422 insurance premium and $6,945 401(k) matching
contribution.
(10)
Includes
$7,800 car allowance, $4,432 insurance premium and $6,208 401(k) matching contribution.
(11)
Includes
$9,000 car allowance, $909 insurance premium and $6,744 401(k) matching
contribution.
(12)
Includes
$7,800 car allowance, $728 insurance premium and $6,198 401(k) matching contribution.
The Company does not
maintain (i) any defined benefit retirement plans, or (ii) any
nonqualified deferred compensation programs or arrangements.
Employment
Agreements.
The Company and Mr. Paul are parties to an
employment agreement governing his service and compensation as President of the
Company.
The current term of Mr. Pauls
employment agreement expires on December 31, 2010. On each December 31,
the term of the agreement automatically extends for one additional year, unless
Mr. Paul has given notice of his intention not to renew the term. Under
his agreement, Mr. Paul is entitled to receive a current annual base
salary of $350,000, subject to periodic increase. Mr. Paul was not granted
options during 2007, although he was granted incentive options to purchase
25,000 shares of common stock, and nonincentive options to purchase 3,250
shares of common stock in his capacity as a director, in January 2008. Mr. Paul
may receive additional grants of options and may also receive a bonus in the
discretion of the Board of Directors. The compensation under Mr. Pauls
employment agreement is in lieu of all other cash fees for service on the
Boards of Directors or any committees of the Company and the Bank. In the event
of termination of Mr. Pauls employment for any reason other than for
cause (as defined), Mr. Paul (or his estate), is entitled to receive an
amount in cash equal to 2.99 times his then current base salary, subject to
certain limitations in the event that his termination occurs in connection with
a change in control (as defined) of the Company or the Bank. In addition, all
of Mr. Pauls options will immediately vest upon any termination.
If Mr. Paul were
entitled to receive the termination benefits as of December 31, 2007, he
would receive approximately $1,050,000, or approximately $363,508 if the
termination were in connection with a change in control. Additionally, in the
event of any termination, all of the unvested options held by Mr. Paul
will accelerate and become immediately exercisable. At December 31, 2007,
all of the 29,151 unvested options held by Mr. Paul were out-of the money.
Each of the five other
named executive officers has an employment agreement with EagleBank. Each of
the agreements, other than Mr. Flynns expires December 31, 2009. Mr. Flynns
agreement expires December 31, 2008. The table below sets forth the
current base salary, amount of Bank paid life insurance (at standard rates),
and annual car allowance to which the named executive officers are entitled. Each
of these officers is also entitled to participation in all other health,
welfare, benefit, stock, option and bonus plans, if any, generally available to
all officers and employees of the Bank or the Company. Under each agreement if
the officers employment is terminated without cause for reasons other than
death, disability or in connection with a change of control (as defined),
he/she would be entitled to receive continued payment of base salary through
the end of the term of his/her agreement, subject to his/her compliance with
the noncompete and nondisturbance provisions of the agreement. The
16
noncompete and
nondisturbance provisions (the Noncompete Provisions) provide that (i) for
180 days after termination, or until the end of the original term of the agreement,
whichever is earlier, the officer will not in any capacity render any services
to a bank or savings and loan or a holding company of a bank or savings and
loan or to any person or entity that is
attempting to form a Bank, with respect to any office, branch or other facility
that is (or is proposed to be) located within a thirtyfive (35) mile radius of
the location of the Companys headquarters, and (ii) for twelve (12)
months after the last date of employment, the officer will not, directly or
indirectly, induce or attempt to induce any customers, suppliers, officers,
employees, contractors, consultants, agents or representatives of, or any other
person that has a business relationship with, the Company or any of its parent,
subsidiaries and affiliates to discontinue, terminate or reduce the extent of
their relationship with the Company and/or any such parent, subsidiary or
affiliate or to take any action that would disrupt or otherwise be
disadvantageous to any such relationship, or otherwise solicit any customer or
employee of the Company. The amount to which each of the officers would be
entitled to if he/she were terminated, other than for cause or in connection
with a change in control, as of December 31, 2007 is set forth in the
fifth column of the table below.
In the event of
termination of the other named executive officers employment, or reduction in
his/her compensation or position or responsibilities within 120 days before or
after a change in control, or the voluntary termination of employment within
the 30 day period following 120 days after a change in control, each of the
other named executive officers would be entitled to receive a lump sum payment
equal to 2.99 times his/her base salary, subject to adjustment to avoid adverse
tax consequences resulting from characterization of such payment for tax
purposes as a parachute payment, and all unvested stock options, SARs and
restricted stock awards would immediately vest and become exercisable. The
amount of the cash payment which each of the other named executive officers
would be entitled to receive if the change in control termination benefits were
paid as of December 31, 2007 is set forth in column 6 of the table below,
the value of the accelerated equity awards is set forth in column 7 of the
table below, and the sum of these two amounts is set forth in column 8.
Column Number
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|
6
|
|
7
|
|
8
|
|
Name and Title
|
|
Base
Salary
|
|
Car
Allowance
|
|
Bank Paid Life
Insurance (at
standard rates)(1)
|
|
Payment
Following
Termination
Without Cause
|
|
Cash Payment
Upon
Termination in
Connection with
a Change in
Control
|
|
Value of Equity
Awards
Accelerated Upon
a Change in
Control(2)
|
|
Sum of Amounts
Payable Upon a
Change in
Control (Sum of
Columns 6 and 7)
|
|
Michael T. Flynn, Executive Vice President, Chief Operating Officer
of the Company; President - District of Columbia Division of the Bank
|
|
$
|
243,101
|
|
$
|
9,000
|
|
$
|
750,000
|
|
$
|
243,101
|
|
$
|
705,879
|
|
$
|
15,888
|
|
$
|
721,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James H. Langmead, Senior Vice President, Chief Financial Officer of the Company; Executive
Vice President, Chief Financial Officer of the Bank
|
|
$
|
243,101
|
|
$
|
9,000
|
|
$
|
750,000
|
|
$
|
486,202
|
|
$
|
651,972
|
|
$
|
14,290
|
|
$
|
666,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas D. Murphy, Executive Vice President of the Company; President
Montgomery County Division of the Bank
|
|
$
|
243,101
|
|
$
|
9,000
|
|
$
|
750,000
|
|
$
|
486,202
|
|
$
|
631,930
|
|
$
|
15,234
|
|
$
|
647,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan G. Riel, Executive Vice President Chief Operating Officer of the Bank
|
|
$
|
243,101
|
|
$
|
9,000
|
|
$
|
750,000
|
|
$
|
486,202
|
|
$
|
543,784
|
|
$
|
15,234
|
|
$
|
559,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha Foulon -Tonat, Executive Vice President
Chief Lending Officer of the Bank
|
|
$
|
243,101
|
|
$
|
9,000
|
|
$
|
750,000
|
|
$
|
486,202
|
|
$
|
531,880
|
|
$
|
15,234
|
|
$
|
547,113
|
|
(1)
The cost of this benefit is reflected under All
Other Compensation in the Summary Compensation Table, and the amount paid in
respect of each officer is reflected in the footnotes to that table.
(2)
Reflects the excess of the last trade price
for the Companys common stock on December 31, 2007 over the exercise or
strike price of unvested options and SARs, plus the last trade price of
unvested shares of restricted stock. Out of the money options and SARs have
been excluded from the calculation.
17
Grants of Plan-Based Awards
The
following table presents information regarding awards made during 2007 to named
executive officers under the Companys 2006 Stock Plan and Senior Executive
Incentive Bonus Plan.
|
|
|
|
Estimated Future
Payouts Under
Non-Equity
Incentive Plan
Awards
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards(1)
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
|
|
Exercise or
Base Price
of Option
Awards
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
|
|
Name
|
|
Grant Date
|
|
Target
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
Ronald D. Paul
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James H. Langmead
|
|
2/1/2007
|
|
$
|
53,250
|
|
692
|
|
1,384
|
|
2,769
|
|
|
|
4,062
|
(2)
|
$
|
16.73
|
|
$
|
57,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Flynn
|
|
2/1/2007
|
|
$
|
54,298
|
|
706
|
|
1,412
|
|
2,823
|
|
|
|
4,142
|
(2)
|
$
|
16.73
|
|
$
|
59,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas D. Murphy
|
|
2/1/2007
|
|
$
|
53,250
|
|
692
|
|
1,384
|
|
2,769
|
|
|
|
4,062
|
(2)
|
$
|
16.73
|
|
$
|
57,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan G. Riel
|
|
2/1/2007
|
|
$
|
53,250
|
|
692
|
|
1,384
|
|
2,769
|
|
|
|
4,062
|
(2)
|
$
|
16.73
|
|
$
|
57,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha
Foulon-Tonat
|
|
2/1/2007
|
|
$
|
53,250
|
|
692
|
|
1,384
|
|
2,769
|
|
|
|
4,062
|
(2)
|
$
|
16.73
|
|
$
|
57,881
|
|
(1) Represents the number of shares subject to
performance based awards of restricted stock under the Companys 2006 Stock
Plan.
(2) Represents the number of shares subject to
awards, not performance based, of SARs under the Companys 2006 Stock Plan.
Under the 2006 Stock
Plan, implemented in 2006 the Company can make award options, stock
appreciation rights (SARs) and restricted stock employees of the Company and
Bank, including all of the named executive officers. While Mr. Paul is
eligible for grants of SARs and restricted stock under the 2006 Stock Plan, to
date he has received awards of stock options only, as a result of negotiations
between Mr. Paul and the Executive Compensation Committee, and the
determination by the Executive Compensation Committee that the equity portion
of his compensation should be linked to the increase in the market price of the
Companys common stock, which best reflects the creation of shareholder value,
and not narrower performance goals which while essential to long term
shareholder value, may not be rewarded in the market price of the common stock.
Mr. Paul did not receive any equity compensation awards in 2007.
A SAR is
a right that entitles the holder to receive, all
or a percentage of the difference between (i) the fair market value of the
shares of common stock subject to the SAR at the time of its exercise, and (ii) the
fair market value of such shares at the time the SAR was granted.
The
SAR awards made to named executive officers in 2007 vest on February 1,
2010, will be exercisable until February 28, 2010, and entitle the holders
to receive the difference between the grant date and exercise date fair market
value of the indicated number of shares of common stock, payable in shares of
common stock. The SAR awards are not subject to any performance or other
conditions, other than continued employment. The shares of restricted stock
awarded in 2007 are performance based awards within the meaning of the 2006
Stock Plan, and vest in whole or in part on February 1, 2010, subject to
the satisfaction of the threshold, target, or maximum award performance
conditions established by the Board of Directors.
The base price of SARs
and the exercise price of stock options may not be less than 100% of the market
value of the common stock on the date of grant. Under the 2006 Plan, the market
value is the average of the high and low selling price on the NASDAQ on date in
question. The equity award process is independent of any consideration of the
timing of the release of material nonpublic information, including with respect
to the determination of grant dates or stock option exercise prices. Similarly,
we expect that the release of material nonpublic information will not be timed
with the purpose or intent to affect the value of executive compensation. In
general, equity awards other than those to new hires are made in January or
February of each year, or in connection with the adjustment of salary
levels.
The payouts under
non-equity incentive plan awards reflected in the table represent the maximum
amount of formula payment which the named executive officer could have earned
with respect to 2006 performance under the
Senior Executive Incentive Bonus Plan if each of the performance targets
established by the Board of Directors in its
18
capacity as compensation
committee were achieved. The aggregate amount which could be earned
represented, in 2007, 23% of salary. A portion of the aggregate amount is
subject to the achievement of designated Company or divisional performance
targets. Each such portion is subject to payment only if the target is met or
exceeded in total, with no provision for partial or graduated payments. The
targets were established with the expectation that the goals were stretch
goals, representing performance standards in excess of expected results. Mr. Paul
does not participate in the Senior Executive Incentive Bonus Plan. No amounts
were paid in 2008 in respect of the 2007 awards.
Outstanding Equity Awards at Fiscal Year-End
The following table sets
forth, on an award by award basis, information concerning all awards of stock
options, SARs and restricted stock held by named executive officers at December 31,
2007. All options and SARs were granted with an exercise or base price of 100%
of market value as determined in accordance with the applicable plan. The
number of shares subject to each award and the exercise or base price have been
adjusted to reflect all stock dividends, and stock splits effected after the
date of such award, but have not otherwise been modified.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (1)
|
|
Ronald D. Paul
|
|
1,847
|
(2)
|
|
|
$
|
3.3812
|
|
3/30/2010
|
|
|
|
|
|
|
|
1,847
|
(2)
|
|
|
$
|
3.3812
|
|
6/29/2010
|
|
|
|
|
|
|
|
1,847
|
(2)
|
|
|
$
|
3.2756
|
|
9/29/2010
|
|
|
|
|
|
|
|
1,847
|
(2)
|
|
|
$
|
3.5419
|
|
12/30/2010
|
|
|
|
|
|
|
|
1,738
|
(2)
|
|
|
$
|
3.5496
|
|
3/30/2011
|
|
|
|
|
|
|
|
959
|
(2)
|
|
|
$
|
6.5089
|
|
6/29/2011
|
|
|
|
|
|
|
|
916
|
(2)
|
|
|
$
|
6.8047
|
|
9/29/2011
|
|
|
|
|
|
|
|
1,040
|
(2)
|
|
|
$
|
6.0059
|
|
12/30/2011
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
7.1066
|
|
1/30/2012
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
7.7811
|
|
2/27/2012
|
|
|
|
|
|
|
|
564
|
(2)
|
|
|
$
|
9.3195
|
|
3/30/2012
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
9.0237
|
|
4/29/2012
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
9.1716
|
|
5/30/2012
|
|
|
|
|
|
|
|
564
|
(2)
|
|
|
$
|
8.6095
|
|
6/29/2012
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
6.6568
|
|
7/30/2012
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
7.4320
|
|
8/30/2012
|
|
|
|
|
|
|
|
564
|
(2)
|
|
|
$
|
7.1006
|
|
9/29/2012
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
7.3077
|
|
10/30/2012
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
7.4320
|
|
11/29/2012
|
|
|
|
|
|
|
|
564
|
(2)
|
|
|
$
|
8.0828
|
|
12/30/2012
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
8.2840
|
|
1/30/2013
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
8.7692
|
|
2/27/2013
|
|
|
|
|
|
|
|
564
|
(2)
|
|
|
$
|
8.1361
|
|
3/31/2013
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
8.1184
|
|
4/29/2013
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
8.1365
|
|
5/31/2013
|
|
|
|
|
|
|
|
564
|
(2)
|
|
|
$
|
8.8757
|
|
6/29/2013
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
8.0947
|
|
7/30/2013
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
8.5207
|
|
8/30/2013
|
|
|
|
|
|
|
|
564
|
(2)
|
|
|
$
|
8.9941
|
|
9/29/2013
|
|
|
|
|
|
|
|
561
|
(2)
|
|
|
$
|
10.2722
|
|
10/30/2013
|
|
|
|
|
|
19
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested(1)
|
|
Ronald D. Paul
|
|
561
|
(2)
|
|
|
$
|
10.1775
|
|
11/29/2013
|
|
|
|
|
|
|
|
44,944
|
(3)
|
|
|
$
|
10.4556
|
|
12/30/2013
|
|
|
|
|
|
|
|
849
|
(4)
|
29,151
|
(4)
|
$
|
18.7150
|
|
10/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Flynn
|
|
|
|
2,226
|
(5)
|
$
|
19.4600
|
|
1/31/2009
|
|
|
|
|
|
|
|
|
|
4,142
|
(6)
|
$
|
16.725
|
|
2/28/2010
|
|
|
|
|
|
|
|
18,350
|
(7)
|
|
|
$
|
11.3846
|
|
1/23/2014
|
|
|
|
|
|
|
|
8,450
|
(7)
|
|
|
$
|
11.9882
|
|
1/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
607
|
(8)
|
$
|
7,345
|
|
|
|
|
|
|
|
|
|
|
|
706
|
(9)
|
$
|
8,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James H. Langmead
|
|
8,450
|
(7)
|
|
|
$
|
12.1716
|
|
1/03/2015
|
|
|
|
|
|
|
|
|
|
1,793
|
(5)
|
$
|
19.4600
|
|
1/31/2009
|
|
|
|
|
|
|
|
|
|
4,062
|
(6)
|
$
|
16.725
|
|
2/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
489
|
(8)
|
$
|
5,917
|
|
|
|
|
|
|
|
|
|
|
|
692
|
(9)
|
$
|
8,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas D. Murphy
|
|
8,872
|
(7)
|
|
|
$
|
3.3812
|
|
12/11/2009
|
|
|
|
|
|
|
|
|
|
2,079
|
(5)
|
$
|
19.4600
|
|
1/31/2009
|
|
|
|
|
|
|
|
|
|
4,062
|
(6)
|
$
|
16.725
|
|
2/28/2010
|
|
|
|
|
|
|
|
14,196
|
(7)
|
|
|
$
|
6.1285
|
|
5/15/2011
|
|
|
|
|
|
|
|
5,915
|
(7)
|
|
|
$
|
5.9468
|
|
12/1/2011
|
|
|
|
|
|
|
|
8,450
|
(7)
|
|
|
$
|
11.0882
|
|
1/10/2013
|
|
|
|
|
|
|
|
4,647
|
(7)
|
|
|
$
|
8.4894
|
|
5/18/2013
|
|
|
|
|
|
|
|
8,450
|
(7)
|
|
|
$
|
10.3550
|
|
1/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
567
|
(8)
|
$
|
6,861
|
|
|
|
|
|
|
|
|
|
|
|
692
|
(9)
|
$
|
8,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan G. Riel
|
|
8,872
|
(7)
|
|
|
$
|
3.3812
|
|
12/2/2008
|
|
|
|
|
|
|
|
|
|
2,079
|
(5)
|
$
|
19.4600
|
|
1/31/2009
|
|
|
|
|
|
|
|
|
|
4,062
|
(6)
|
$
|
16.725
|
|
2/28/2010
|
|
|
|
|
|
|
|
5,915
|
(7)
|
|
|
$
|
3.4869
|
|
7/6/2010
|
|
|
|
|
|
|
|
8,281
|
(7)
|
|
|
$
|
6.1285
|
|
5/15/2011
|
|
|
|
|
|
|
|
4,225
|
(7)
|
|
|
$
|
5.9468
|
|
12/4/2011
|
|
|
|
|
|
|
|
4,647
|
(7)
|
|
|
$
|
8.1894
|
|
5/18/2013
|
|
|
|
|
|
|
|
8,450
|
(7)
|
|
|
$
|
10.9290
|
|
1/11/2014
|
|
|
|
|
|
|
|
8,450
|
(7)
|
|
|
$
|
11.9882
|
|
1/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
567
|
(8)
|
$
|
6,861
|
|
|
|
|
|
|
|
|
|
|
|
692
|
(9)
|
$
|
8,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha Foulon-Tonat
|
|
8,872
|
(2)
|
|
|
$
|
3.3812
|
|
12/2/2008
|
|
|
|
|
|
|
|
|
|
2,079
|
(5)
|
$
|
19.4600
|
|
1/31/2009
|
|
|
|
|
|
|
|
|
|
4,062
|
(6)
|
$
|
16.725
|
|
2/28/2010
|
|
|
|
|
|
20
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested(1)
|
|
Martha Foulon-Tonat
|
|
5,915
|
(7)
|
|
|
$
|
3.4869
|
|
7/6/2010
|
|
|
|
|
|
|
|
8,281
|
(7)
|
|
|
$
|
6.1285
|
|
5/15/2011
|
|
|
|
|
|
|
|
4,225
|
(7)
|
|
|
$
|
5.9468
|
|
12/4/2011
|
|
|
|
|
|
|
|
4,647
|
(7)
|
|
|
$
|
8.1894
|
|
5/18/2013
|
|
|
|
|
|
|
|
8,450
|
(7)
|
|
|
$
|
10.9290
|
|
1/11/2014
|
|
|
|
|
|
|
|
8,450
|
(7)
|
|
|
$
|
11.9882
|
|
1/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
567
|
(8)
|
$
|
6,861
|
|
|
|
|
|
|
|
|
|
|
|
692
|
(9)
|
$
|
8,373
|
|
(1)
Based on the $12.10 closing price of the
common stock on December 31, 2007.
(2)
Vested immediately upon grant.
(3)
Represents grant of stock options pursuant to
Companys 1998 Stock Option Plan. Vest in installments, commencing with an
installment of 4,391 shares immediately upon grant, three annual installments of 9,562 shares on January 15,
2004 through 2006 and a final installment of 8,044 shares on January 15,
2007.
(4)
Represents grant of stock options pursuant to
Companys 2006 Stock Plan. Vests in installments, commencing with an
installment of 849 shares on January 1, 2007, five annual installments of
5,343 shares on January 1, 2008 through 2012 and a final installment of
2,436 shares on January 1, 2013.
(5)
Represents grant of SARs pursuant to the
Companys 2006 Stock Plan. Such grant vests in its entirety on January 1,
2009 if the grantee is continuously employed by the Company through such date.
(6)
Represents grant of SARs pursuant to the
Companys 2006 Stock Plan. Such grant vests in its entirety on February 1,
2010 if the grantee is continuously employed by the Company through such date.
(7)
Represents grant of stock options pursuant to
the Companys 1998 Stock Option Plan. All options have a term of 10 years from
the date of grant. Except as otherwise indicated, such awards vested in two
equal installments, the first on the date of grant and the second on the first
anniversary thereof.
(8)
Represents threshold level grant of
performance based restricted stock pursuant to the Companys 2006 Stock Plan. Vests,
subject to satisfaction of designated performance conditions, on January 31,
2009.
(9)
Represents threshold level grant of
performance based restricted stock pursuant to the Companys 2006 Stock Plan. Vests,
subject to satisfaction of designated performance conditions, on February 28, 2010.
Options Exercised and Stock Vested
The following table sets
forth information regarding options exercised by the named executive officers
during 2007, and the aggregate amount realized upon such exercises, based on
the difference between the closing market value on the exercise date and the
exercise or base price.
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
Number of Shares
|
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
|
Acquired on
|
|
Value Realized on
|
|
Name
|
|
Exercise
|
|
Exercise
|
|
Vesting
|
|
Vesting
|
|
Ronald D. Paul
|
|
118,300
|
|
$
|
1,105,403
|
|
|
|
|
|
James H. Langmead
|
|
|
|
|
|
|
|
|
|
Michael T. Flynn
|
|
1,500
|
|
$
|
6,623
|
|
|
|
|
|
Thomas D. Murphy
|
|
|
|
|
|
|
|
|
|
Susan G. Riel
|
|
|
|
|
|
|
|
|
|
Martha Foulon-Tonat
|
|
|
|
|
|
|
|
|
|
Employee
Benefit Plans.
The Bank provides a benefit program which
includes health and dental insurance, life and long term and short term
disability insurance and a 401(k) plan under which the Company makes
matching contributions up to 3% of an employees salary, for all officers and
employees working 1,000 hours or more in a calendar year.
21
Equity
Compensation Plans.
The Company maintains two equity
compensation plans, the 1998 Stock Option Plan (the 1998 Plan), adopted by
shareholders at the 1999 annual meeting, and the 2006 Stock Plan (the 2006
Stock Plan), adopted by the shareholders at the 2006 annual meeting. The
purpose of each plan is to attract, retain, and motivate key officers, employee
and directors of the Company and the Bank by providing them with a stake in the
success of the Company as measured by the value of its shares.
Under the 1998 Plan,
1,485,551 shares of common stock (as adjusted for the 25% stock split in the
form of a dividend paid on March 31, 2000, the 40% stock split in the form
of a dividend paid on June 15, 2001 and the 30% stock splits in the form
of stock dividends paid on February 28, 2005 and July 5, 2006), were
available for issuance upon the exercise of incentive stock options (ISOs) or
non-incentive stock options (Non-ISOs) granted to key employees, and warrants
(Warrants) and other Non-ISOs granted to directors. At March 20, 2008,
an aggregate of 568,473 options to purchase common stock were outstanding under
the 1998 Plan. No further options may be granted under the 1998 Plan, which was
terminated upon approval by shareholders of the 2006 Stock Plan.
Under the 2006 Stock
Plan, an aggregate of 650,000 shares of common stock (as adjusted) are
available for issuance upon the exercise of incentive stock options,
nonincentive stock options and SARs, and the award of shares of restricted
stock to such employees as the Committee may designate, and may grant Non-ISOs
to directors and advisory board members of the Company, the Bank, and their
affiliates. In the event of any merger, consolidation, recapitalization,
reorganization, reclassification, stock dividend, split-up, combination of
shares or similar event in which the number or kind of shares is changed
without receipt or payment of consideration by the Company, the number and kind
of shares of stock as to which options, SARs and restricted stock may be
awarded under the 2006 Stock Plan, the affected terms of all outstanding
options, SARs and shares of restricted stock, and the aggregate number of
shares of common stock remaining available for grant under the 2006 Stock Plan
will be adjusted.
The 2006 Stock Plan is
administered by a committee (the Committee), appointed by the Board of
Directors of the Company, consisting of not less than three (3) members of
the Board. Members of the Committee must be independent within the meaning of
the listing requirements of NASDAQ, may not be employees, and serve at the
pleasure of the Board of Directors. The members of the Executive Compensation
Committee are also designated as the Stock Option Committee, with
Mr. Weinstein serving as Chairman.
The 2006 Stock Plan has a
term of ten years from May 26, 2006, its effective date, after which date
no awards may be granted. The maximum term for an option or SAR is ten years
from its date of grant, except that the maximum term of an ISO may not exceed
five years if the optionee owns more than 10% of the common stock on the date
of grant. The expiration of the 2006 Stock Plan, or its termination by the Committee,
will not affect any award then outstanding.
The exercise price of
options under the 2006 Stock Plan may not be less than 100% of the fair market
value of the common stock on the date of grant. In the case of an optionee who
owns more than 10% of the outstanding common stock on the date of grant, such
option price may not be less than 110% of fair market value of the shares. The
base price of SARs may not be less than 100% of the fair market value of the
common stock on the date of grant. If the common stock is listed on a national
securities exchange (including the Nasdaq Stock Market) on the date of grant,
then the market value per share will be not less than the average of the
highest and lowest selling price. In the event that the fair market value per
share of the common stock falls below the exercise price of previously granted
options, the Committee will have the authority, with the consent of the
optionee, to cancel outstanding options and to issue new options with an
exercise price equal to the then current fair market price per share of the
common stock, provided that no such repricing will occur without ratification
or approval by the shareholders.
Restricted stock is an award of shares of common stock
that is subject to forfeiture, restrictions against transfer, meeting specific
corporate or individual performance or achievement standards or goals, or other
conditions or restrictions set forth in an award agreement.
The Committee has discretion at the time of
making a restricted stock grant to determine a period of up to five years
during which the shares granted will be subject to restrictions, and the
conditions that must be satisfied in order for the shares of restricted stock
to become unrestricted (i.e., vested and nonforfeitable). For example, the
Committee may condition vesting upon a recipients continued employment or upon
the recipients attainment of specific corporate, divisional, or individual
performance or achievement standards or goals. However, the minimum vesting
period for restricted stock is three years if the vesting is based solely on
the
22
passage of time and continued employment, although vesting may occur
ratably over such period; and the minimum measurement date for vesting of
restricted stock based upon performance criteria is one year.
Until a recipients interest vests, restricted stock
is nontransferable and forfeitable. Nevertheless, the recipient may be entitled
to vote the restricted stock and to receive dividends and other distributions
made with respect to restricted stock grants that are issued subject to
forfeiture in the event that the vesting conditions are not met, as opposed to
shares that are issued only upon satisfaction of the conditions. To the extent
that a recipient becomes vested in restricted stock and has satisfied
applicable income tax withholding obligations, the Company will deliver
unrestricted shares of common stock to the recipient. At the end of the
restriction period, the recipient will forfeit to the Company any issued shares
of restricted stock as to which the recipient did not earn a vested interest
during the restriction period, i.e. where the performance based conditions are
not met.
Change in
Control.
Notwithstanding the provisions of any option, SAR or
restricted stock award which provide for its exercise or vesting in
installments or subject to conditions, all awards will be immediately
exercisable and fully vested upon the occurrence of a change in control. At the
time of a change in control that does not constitute a transaction, the
participant shall, at the discretion of the Committee, be entitled to receive
cash in an amount equal to the excess of the fair market value of the common
stock subject to an option or SAR over the exercise price of such shares, in
exchange for the cancellation of such options and SARs by the optionee.
Notwithstanding the previous sentence, in no event may an option or SAR be
cancelled in exchange for cash, within the six-month period following the date
of its grant.
In the event of a change
in control that is a transaction, all awards of options, SARs and restricted
stock must be surrendered, and with respect to each award surrendered, the
Board will in its sole and absolute discretion determine whether the holder of
the surrendered award will receive: (1) an award for the number and kind
of shares into which each outstanding share (other than shares held by
dissenting shareholders) is changed or exchanged, together with an appropriate
adjustment to the exercise price; (2) the number and kind of shares into
which each outstanding share (other than shares held by dissenting
shareholders) is changed or exchanged in the transaction that are equal in
market value to the excess of the market value on the date of the transaction
of the shares subject to the option or SAR, over the exercise price; or
(3) a cash payment (from the Company or the successor corporation) in an
amount equal to the excess of the market value on the date of the transaction
of the shares subject to the option or SAR over the exercise price.
For purposes of the 2006
Plan, change in control means any one of the following events: (1) the
acquisition of ownership, holding or power to vote more than 50% of the Banks
or Companys voting stock, (2) the acquisition of the power to control the
election of a majority of the Banks or Companys directors, (3) the
exercise of a controlling influence over the management or policies of the Bank
or the Company by any person or by persons acting as a group (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(4) the failure of Continuing Directors to constitute at least
two-thirds of the Board of Directors of the Company or the Bank (the Company
Board) during any period of two consecutive years. For purposes of this Plan,
Continuing Directors shall include only those individuals who were members of
the Company Board at the Effective Date and those other individuals whose
election or nomination for election as a member of the Company Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office. The decision of the Committee as to whether a change in control has
occurred shall be conclusive and binding. Transaction means (i) the
liquidation or dissolution of the Company, (ii) a merger or consolidation
in which the Company is not the surviving entity, or (iii) the sale or
disposition of all or substantially all of the Companys assets. No adjustment
upon a change in control, a transaction or otherwise may be made in such a
manner as to constitute a modification, within the meaning of
Section 424(h) of the Code, of outstanding ISOs. If, by reason of any
such adjustments, an optionee becomes entitled to new, additional, or different
shares of stock or securities, such new, additional, or different shares of
stock or securities shall thereupon be subject to all of the conditions and
restrictions which were applicable to the shares pursuant to the option before
the adjustment was made.
As of December 31,
2007, the Company had options for the purchase of an aggregate of 716,297
shares of common stock issued and outstanding under all equity compensation
plans, SARs which may only be settled by the issuance of stock outstanding with
respect to 30,647 shares and restricted
stock awards with respect to 26,579 shares outstanding. Subsequent to
December 31, 2007, options to purchase an aggregate of 79,300 shares of
common stock were granted to non-executive officer employees, an aggregate of
34,000 options were granted to directors of the
23
Company and Bank
(including Mr. Paul), as disclosed under Election of Directors Director
Compensation above, and options were granted to the named executive officers
as set forth below:
Name
|
|
Options Granted
|
|
Ronald D. Paul
|
|
25,000
|
|
Michael T. Flynn
|
|
3,000
|
|
James H.
Langmead
|
|
5,000
|
|
Thomas D. Murphy
|
|
4,000
|
|
Susan G. Riel
|
|
5,000
|
|
Martha
Foulon-Tonat
|
|
4,500
|
|
All executive
officers as group (6 persons)
|
|
46,500
|
|
All of the options
granted to named executive officers subsequent to December 31, 2007 have
an exercise price of $13.0543 per share and have a ten year term. All of the
options, other than those granted to Mr. Paul, vest in three substantially
equal annual installments, commencing on the date of grant. Mr. Pauls
options vest as follows: 4,167 on January 16, 2013, 7,660 on
January 16, 2014, 7,660 on January 16, 2015 and 5,513 on
January 16, 2016.
At March 20, 2008,
335,675 shares of common stock remained available for issuance pursuant to the
2006 Stock Plan.
Employee
Stock Purchase Plan.
The Company also maintains the 2004
Employee Stock Purchase Plan (the ESPP). Under the ESPP a total of 253,500
shares of common stock, were reserved for issuance to eligible employees at a
price equal to at least 85% of the fair market value of the shares of common
stock on the date of grant, and subject to limitations contained in the
Internal Revenue Code. Grants each year expire no later than the last business
day of January in the calendar year following the year in which the grant
is made. No grants were made under the ESPP in 2007 or in 2008. The ESPP
expires in June 2008. As of March 20, 2008, 125,094 shares of common
stock remained available for issuance under this Plan.
Certain Relationships and Related
Transactions
The Bank has had, and
expects to have in the future, banking transactions in the ordinary course of
business with some of its and the Companys directors, officers, and employees
and their associates. In the past, all of such transactions have been on the
same terms, including interest rates, maturities and collateral requirements as
those prevailing at the time for comparable transactions with non-affiliated
persons and did not involve more than the normal risk of collectability or
present other unfavorable features. Loans to insiders require approval by the
Board of Directors, with any interested director not participating. The Company
also applies the same standards to any other transaction with an insider.
Additionally, loans and other related party transactions involving Company
directors must be reviewed and approved by the Audit Committee.
The maximum aggregate
amount of loans (including lines of credit) to officers, directors and
affiliates of the Company and Bank during the year ended December 31, 2007
amounted to $18.2 million, representing approximately 22.4% of the Companys
total shareholders equity at December 31, 2007. In the opinion of the
Board of Directors, the terms of these loans are no less favorable to the Bank
than terms of the loans from the Bank to unaffiliated parties. On
December 31, 2007, $18.2 million of loans were outstanding to individuals
who, during 2007, were officers, directors or affiliates of the Company and
Bank. At the time each loan was made, management believed that the loan
involved no more than the normal risk of collectability and did not present
other unfavorable features. None of such loans were classified as Substandard,
Doubtful or Loss.
The Bank leases certain
office space, at a current monthly rental of $41,936, excluding certain pass
through expenses, from two limited liability companies in which a trust for the
benefit of Mr. Pauls children has an 85% interest in the first company
and a 51% interest in the second company.
Mr. Rogers
is a partner in the law firm Shulman, Rogers, Gandal, Pordy & Ecker,
P.A. which has provided, and continues to provide, legal services to the
Company and its subsidiaries. During 2007, the Company and its subsidiaries
paid aggregate fees of approximately $21,372 to that firm.
24
The Bank has obtained
certain deposits through title company clients in which Mr. Soto, a
director of the Bank has a direct interest, and for which a broker fee of .50%
of average deposits is paid to him monthly in arrears. During 2007,
approximately $28 thousand in broker fees was paid.
Mr. Goodman is
President of The Goodman, Gable, Gould Company, a public insurance adjusting
firm, which represents the Bank, on a contingent fee basis, in connection with
insurance claims in respect of a charged off loan. No amounts were paid to that
firm during 2007.
Ryan Riel, the adult son
of Ms. Riel, is employed by the Bank as a loan officer. During 2007,
Mr. Riels compensation was $120,000 plus incentive bonus payments and
awards of stock options. Mr. Riels compensation is determined on the same
basis as all other comparable employees, and is determined by the Bank Compensation
Committee, without any participation or input by Ms. Riel.
AMENDMENT
TO ARTICLES OF INCORPORATION
TO
INCREASE AUTHORIZED CAPITAL STOCK
At the meeting, the
shareholders are being asked to approve an amendment to the Companys Articles
of Incorporation which would increase the number of authorized shares of common
stock from 20,000,000 shares to 50,000,000 shares. The Board of Directors is
proposing the amendment to ensure that a sufficient amount of capital stock is
available for issuance in the future by the Company, upon action of the Board
of Directors. The Board of Directors believes that the proposed increase in the
authorized common stock is in the best interest of the Company and unanimously
recommends a vote
FOR
the
proposed amendment.
The Amendment.
The Board of Directors has
approved, subject to shareholder approval, the amendment of Article III of
the Articles of Incorporation to read in its entirety as follows:
ARTICLE III.
Capital Stock.
The number of shares of
stock of all classes which the Corporation shall have authority to issue is
fifty one million (51,000,000), fifty million (50,000,000) of which shall be
Common Stock, par value $.01 per share and one million (1,000,000) of which
shall be preferred stock, par value $.01 per share, and the aggregate par value
of all shares of all classes of stock is $510,000. The Board of Directors, by action of a majority of the
full Board of Directors, shall have the authority to issue the shares of
preferred stock from time to time on such terms as it may determine, and to
divide the preferred stock into one or more classes or series, and, in
connection with the creation of such classes or series to fix by resolution or
resolutions the designations, voting powers, preferences, participation,
redemption, sinking fund, conversion, dividend, and other optional or special
rights of such classes or series, and the qualifications, limitations or
restrictions thereof.
Purpose of Amendment
. The Articles of
Incorporation currently authorize the issuance of up to 21,000,000 shares of
capital stock, 20,000,000 of which are common stock and 1,000,000 of which are
undesignated preferred stock. As of the record date for the meeting, the
Company had 9,780,418 shares of common stock outstanding, 1,369,814 shares of
common stock reserved for issuance to directors, officers and employees under
the Companys equity compensation plans, and 453,000 shares of common stock
reserved for issuance under the Companys dividend reinvestment plan.
Additionally, in connection with the proposed merger pursuant to which the
Company will acquire Fidelity & Trust Financial Corporation in a stock
for stock transaction, the Company has reserved an aggregate of 4.5 million
shares of common stock for issuance in the proposed merger and upon the
exercise of options issued under Fidelity & Trust Financial
Corporations option plans. This leaves only 3,896,768 authorized, unissued and
unreserved shares of common stock available for issuance in capital raising
transactions, as stock dividends, stock splits or for other corporate purposes.
While the
Company has no current plans to issue any shares of capital stock other than
pursuant to the plans and agreements described above, the Company may decide to
issue common stock in connection with, among other things, capital raising,
corporate acquisitions and other transactions, stock splits, stock dividends,
and existing and future benefit plans. The currently available number of shares
of common stock may not be sufficient to enable the Company to promptly respond
to its capital or transactional needs. A delay in a transaction necessary to
obtain shareholder
25
approval, and the risk of not
obtaining shareholder approval, could be detrimental to the Company and its
shareholders in pursuing attractive opportunities, or responding to market
conditions.
Therefore, the
Board is proposing an amendment of the Articles of Incorporation to increase
the authorized capital stock from 21,000,000 to 51,000,000 shares, which would
increase the authorized common stock available for issuance from 20,000,000 to
50,000,000 shares.
Authorized,
unissued and unreserved capital stock may be issued from time to time for any
proper purpose without further action of the shareholders, except as required
by the Articles of Incorporation and applicable law. Each share of common stock
authorized for issuance has the same rights as, and is identical in all
respects to, each other share of common stock. The newly authorized shares of common
stock will not affect the rights, such as voting and liquidation rights, of the
shares of common stock currently outstanding. Shareholders will not have
preemptive rights to purchase any subsequently issued shares of common stock.
The ability of the Board
of Directors to issue additional shares of capital stock without additional
shareholder approval may be deemed to have an anti-takeover effect, since
unissued and unreserved shares of capital stock could be issued by the Board of
Directors in circumstances that may have the effect of deterring takeover bids.
The Board of Directors does not intend to issue any additional shares of
capital stock except on terms which it deems in the best interests of the
Company and its shareholders.
Vote
Required and Recommendation of the Board of Directors.
Approval of the proposed
amendment to the Articles of Incorporation requires the favorable vote of at
least two-thirds of the outstanding stock entitled to vote. It is expected that
all of the 1,579,802 shares, or 16.2% of the outstanding common stock over
which directors of the Company exercise voting power will be voted for the
proposed amendment.
The Board of Directors unanimously recommends that shareholders vote
FOR approval of the proposed amendment.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of
the Board of Directors has selected Stegman & Company to audit the
Companys financial statements for the fiscal year ending December 31,
2008. Stegman & Company has audited the financial statements of the
Company since its organization. Representatives of Stegman & Company
are expected to be present at the meeting and available to respond to
appropriate questions. The representatives also will be provided with an
opportunity to make a statement, if they desire.
Fees Paid to Independent
Accounting Firm
Audit
Fees.
During 2007, the aggregate amount of fees billed to the
Company by Stegman & Company for services rendered by it for the audit
of the Companys financial statements and review of financial statements
included in the Companys reports on Form 10-Q, and for services normally
provided in connection with statutory and regulatory filings was $94,083. In
2006, Stegman & Company billed $95,233 for such services.
AuditRelated
Fees.
During 2007, the aggregate amount of fees billed to the
Company by Stegman & Company for services related to the performance
of audit services was $12,100. These services included an audit of the
Companys 401(k) Plan. In 2006, Stegman & Company billed the
Company $17,073 for services related to the performance of the audit services.
These services included an audit of the Companys 401(k) Plan and research
and other assistance in determining and establishing the appropriate accounting
for the Companys 2006 Stock Plan and certain loans held by the Company.
Tax Fees.
During 2007, the aggregate amount of fees billed to the
Company by Stegman & Company for tax advice, compliance and planning
services was $9,108. In 2006, Stegman & Company billed $7,600 for such
services.
All Other
Fees.
Stegman & Company did not bill the Company any
amounts for other services in 2007 or 2006.
26
None
of the engagements of Stegman & Company to provide services other than
audit services was made pursuant to the
de
minimus
exception to the pre-approval requirement contained in the
rules of the Securities and Exchange Commission and the Companys audit
charter.
FORM 10-K
ANNUAL REPORT
The
Company will provide, without charge, to any shareholder of record entitled to
vote at the meeting or any beneficial owner of common stock solicited hereby, a
copy of its 2007 Annual Report on Form 10-K filed with the Securities and
Exchange Commission, upon the written request of such shareholder. Requests
should be directed to Zandra D. Nichols, Corporate Secretary, at the Companys
executive offices, 7815 Woodmont Avenue, Bethesda, Maryland 20814.
COMPLIANCE
WITH SECTION 16(a) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of
the Securities Exchange Act of 1934 requires the Companys directors and
executive officers, and persons who own more than ten percent of the common
stock, to file reports of ownership and changes in ownership on Forms 3, 4 and
5 with the Securities and Exchange Commission, and to provide the Company with
copies of all Forms 3, 4, and 5 they file.
Based solely upon the Companys review of the copies of the
forms which it has received and written representations from the Companys
directors, executive officers and ten percent shareholders, the Company is not
aware of any failure of any such person to comply with the requirements of
Section 16(a), except that a Form 3 and a Form 4 reporting one
transaction for Mr. Rogers, a Form 4 reporting two transactions for
Mr. Paul and a Form 4 reporting two transactions for
Mr. Goodman, were not filed in a timely manner.
OTHER
MATTERS
The Board of Directors of
the Company is not aware of any other matters to be presented for action by
shareholders at the meeting. If, however, any other matters not now known are
properly brought before the meeting or any adjournment thereof, the persons
named in the accompanying proxy will vote such proxy in accordance with their
judgment on such matters.
SHAREHOLDER
PROPOSALS
All shareholder proposals
to be presented for consideration at the next annual meeting and to be included
in the Companys proxy materials must be received by the Company no later than
December 4, 2008. Shareholder proposals for nominations for election as
director must be received by the Company no later than January 4, 2009. In
order to be eligible for consideration at the next annual meeting of
shareholders, the Company must receive notice of shareholder proposals for
business other than the election of directors to be conducted at the annual
meeting which are not proposed to be included in the Companys proxy materials
not less than thirty and not more than ninety days before the date of the
annual meeting, or if less than forty five days notice of the meeting is given,
by the earlier of two days before the meeting and fifteen days after the notice
of the meeting is mailed.
|
By Order of the Board
of Directors
|
|
|
|
|
|
Zandra D. Nichols,
Corporate Secretary
|
April 4, 2008
27
FRONT
PROXY - EAGLE BANCORP, INC.
This Proxy is solicited on behalf
of the Board of Directors
The undersigned hereby makes, constitutes and appoints
Arthur H. Blitz and Bruce H. Lee, and each of them (with the power of
substitution), proxies for the undersigned to represent and to vote, as
designated below, all shares of common stock of Eagle Bancorp, Inc. (the Company)
which the undersigned would be entitled to vote if personally present at the
Companys Annual Meeting of Shareholders to be held on May 22, 2008 and at
any adjournment or postponement of the meeting.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be
voted
FOR
all of the nominees set forth on
the reverse side and
FOR
the
proposal to amend the Articles of Incorporation.
In addition, this proxy
will be voted at the discretion of the proxy holder(s) upon any other
matter which may properly come before the meeting or any adjournment or
postponement of the meeting.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
BACK
Annual Meeting Proxy Card
A. Election of Directors
1. The Board of Directors recommends a vote FOR
the listed nominees.
|
For
|
Withhold
|
|
01 - Leonard L. Abel
|
o
|
o
|
|
02 - Leslie M.
Alperstein
|
o
|
o
|
|
03 - Dudley C. Dworken
|
o
|
o
|
|
04 - Harvey M. Goodman
|
o
|
o
|
|
05 - Philip N. Margolius
|
o
|
o
|
|
06 - Ronald D. Paul
|
o
|
o
|
|
07 Donald R. Rogers
|
o
|
o
|
|
08 - Leland M. Weinstein
|
o
|
o
|
|
B. Issue
The Board of Directors recommends a vote FOR the
following proposal.
|
For
|
Against
|
Abstain
|
2.
|
Proposal to approve the amendment to the Articles of
Incorporation to increase the authorized common stock to 50,000,000 shares
|
o
|
o
|
o
|
|
|
|
|
|
Please check here if you plan to attend the Annual
Meeting.
o
c. Authorized Signatures Sign Here This section must be
completed for your instructions to be executed.
Important: Please
date and sign your name as addressed, and return this proxy in the enclosed
envelope. When signing as executor,
administrator, trustee, guardian, etc., please give full title as such. If the shareholder is a corporation, the
proxy should be signed in the full corporate name by a duly authorized officer
whose title is stated.
Signature
1 Please keep signature within the box
|
|
Signature
2 Please keep signature within the box
|
|
Date
(mm/dd/yyyy)
|
|
|
|
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