Table of Contents
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
INFORMATION
REQUIRED IN A PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No._____)
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Filed
by Registrant ☒
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Filed
by Party other than Registrant ☐
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Check
the appropriate box:
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☐
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Materials Pursuant to §240.14a-12
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Eagle
Bancorp, Inc.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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The
Annual Meeting Of Shareholders Will Be Held
on
Thursday, May 21, 2020 at 10:00 A.M. EDT
Virtual
Meeting Only – No Physical Meeting Location
To
The Shareholders of Eagle Bancorp, Inc.:
Proxy
Statement
The
Board of Directors of Eagle Bancorp, Inc. is soliciting your proxy for use at the Annual Meeting of Shareholders, to be held virtually
at 10:00 A.M. EDT on Thursday, May 21, 2020, and at any adjournment or postponement of the meeting. Due to the impact of the novel
coronavirus disease, COVID-19, this year, we will host a virtual-only meeting. You may join the Annual Meeting remotely by visiting
http://www.viewproxy.com/EagleBankCorp/2020/vm and entering in your control number and
the password received in your registration confirmation. Audio only access to the meeting will be available by calling 1 (562)
247-8321. A shareholder may request the Company to provide a physical location from which to access the virtual meeting, subject
to any restrictions in effect under federal or state law. Shareholders must submit their request for a physical location to the
Company by close of business on Tuesday, May 19, 2020.
This
proxy statement and proxy card are being sent to shareholders of the Company on or about April 6, 2020, to shareholders of record
as of March 26, 2020, the record date for the meeting. A copy of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019, which includes our audited financial statements, also accompanies this proxy statement.
In
this proxy statement, we refer to (a) Eagle Bancorp, Inc. as the “Company,” “Eagle,” “we”
or “us,” (b) the Company Board of Directors as the “Board” or “Board of Directors” and (c)
EagleBank, our wholly owned subsidiary, as “EagleBank” or the “Bank.”
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 21, 2020. A
copy of this proxy statement, our Annual Report on Form 10-K for the year ended December 31, 2019, and our Report to Shareholders
is available online at http://viewproxy.com/eaglebankcorp/2020.
This
year, we are using the “Notice and Access” method of providing proxy materials to our beneficial shareholders via
the Internet instead of mailing printed copies. We believe that this process will provide beneficial shareholders with a convenient
and quick way to access the proxy materials, including this proxy statement and our Annual Report on Form 10-K for the year ended
December 31, 2019. Also accessible is our Report to Shareholders and an authorization for a proxy to vote your shares. This allows
us to conserve natural resources, and reduce the costs of printing and distributing the proxy materials.
Most
shareholders will not receive paper copies of the proxy materials unless they request them. Instead, the Important Notice Regarding
Availability of Proxy Materials, which we refer to as the Notice and Access card, has been mailed to our beneficial shareholders
to provide instructions regarding how to access and review all of the proxy materials on the Internet. The Notice and Access card
also tells you how to submit your proxy vote via the Internet or telephone. If you would like to
receive a paper or email copy
of our proxy materials, you should follow the instructions for requesting such materials printed on the Notice and Access card.
Registered
shareholders will be mailed printed copies of the proxy materials, including this proxy statement, our Annual Report on Form 10-K
for the year ended December 31, 2019, our 2019 Report to Shareholders and a proxy card to vote your shares.
To
ensure that as many shares as possible are represented, we strongly recommend that you vote in advance of the Annual Meeting,
even if you plan to attend remotely.
As
part of our effort to maintain a safe and healthy environment at our Annual Meeting and to protect the well-being of our shareholders,
after closely monitoring statements issued by the World Health Organization (who.int), the Centers for Disease Control and Prevention
(cdc.gov), and the Maryland State Department of Health (health.maryland.gov) regarding the novel coronavirus disease, COVID-19,
we have decided to host the Annual Meeting by means of remote communication this year (i.e., a virtual-only meeting), as allowed
by applicable law. We are sensitive to the public health and travel concerns our shareholders may have and restrictions and recommendations
that public health and other governmental officials may issue. Note that the decision to proceed with a virtual-only meeting this
year will not mean we will utilize a virtual-only format or any means of remote communication for future annual meetings.
Notice
of Meeting:
The
Annual Meeting of Shareholders of Eagle Bancorp, Inc. (the “Company”) will
be held at 10:00 A.M. EDT on Thursday, May 21, 2020 at http://www.viewproxy.com/EagleBankCorp/2020/vm
(with audio only access available at 1 (562) 247-8321) * for the following
purposes:
1. To elect eight directors to serve until the
2021 Annual Meeting of Shareholders and until their successors are duly elected and qualified;
2. To ratify the appointment of Dixon Hughes Goodman
LLP as the Company’s independent registered public accounting firm to audit the consolidated financial statements
of the Company for the year ended December 31, 2020;
3. To vote on a non-binding, advisory resolution
approving the compensation of our named executive officers; and
4. To transact any other business that may properly
come before the meeting or any adjournment or postponement of the meeting.
Shareholders
of record as of the close of business on March 26, 2020 are entitled to notice of and to vote at the meeting or any adjournment
or postponement of the meeting.
To
attend the virtual meeting at http://www.viewproxy.com/EagleBankCorp/2020/vm,
please enter your 16-digit control number (found on your proxy card or Notice and Access card) and the password received
in your registration confirmation. Please follow the instructions on your proxy card, Notice and Access card or voter
instruction form for additional information. Audio only access to the meeting will be available by dialing 1 (562) 247-8321.
A shareholder may request the Company to provide a physical location from which to access the virtual meeting, subject
to any restrictions in effect under federal or state law. Shareholders must submit their request for a physical location
to the Company by close of business on Tuesday, May 19, 2020.
YOUR
VOTE IS VERY IMPORTANT. Whether or not you plan to attend the meeting, we urge you to vote and submit your proxy in
order to ensure the presence of a quorum.
Registered
shareholders may vote:
● By
Internet: go to https://www.aalvote.com/EGBN;
● By toll-free telephone: call 1 (866) 804-9616;
or
● By mail: mark, sign, date and promptly mail the
enclosed proxy card in the enclosed postage-paid envelope.
If
your shares are not registered in your name, please see the voting instructions provided by your recordholder (typically
your broker) on how to vote your shares. You will need additional documentation from your recordholder in order to vote
in person at the virtual meeting.
*
As part of our effort to maintain a safe and healthy environment at our Annual Meeting and to protect the well-being of
our shareholders, after closely monitoring statements issued by the World Health Organization (who.int), the Centers for
Disease Control and Prevention (cdc.gov), and the Maryland State Department of Health (health.maryland.gov) regarding
the novel coronavirus disease, COVID-19, we have decided to host the Annual Meeting by means of remote communication this
year (i.e., a virtual-only meeting), as allowed by applicable law. We are sensitive to the public health and travel concerns
our shareholders may have and restrictions and recommendations that public health and other governmental officials may
issue. Note that the decision to proceed with a virtual-only meeting this year will not mean we will utilize a virtual-only
format or any means of remote communication for future annual meetings.
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By
Order of the Board of Directors,
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Eagle Bancorp, Inc.
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(i)
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2020 Proxy Statement
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Jane
E. Cornett, Corporate Secretary
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April
6, 2020
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Table
of Contents
Eagle Bancorp, Inc.
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(ii)
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2020 Proxy Statement
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Eagle Bancorp, Inc.
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(iii)
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2020 Proxy Statement
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Proxy
Statement
When
and where is the Annual Meeting of Shareholders being held?
As
part of our effort to maintain a safe and healthy environment at our Annual Meeting and to protect the well-being of our shareholders,
after closely monitoring statements issued by the World Health Organization (who.int), the Centers for Disease Control and Prevention
(cdc.gov), and the Maryland State Department of Health (health.maryland.gov) regarding the novel coronavirus disease, COVID-19,
we have decided to host the Annual Meeting by means of remote communication this year (i.e., a virtual-only meeting), as allowed
by applicable law. We are sensitive to the public health and travel concerns our shareholders may have and restrictions and recommendations
that public health and other governmental officials may issue. There will be no physical meeting location. However, a shareholder
may request the Company to provide a physical location from which to access the virtual meeting, subject to any restrictions in
effect under federal or state law. Shareholders must submit their request for a physical location to the Company by close of business
on Tuesday, May 19, 2020.
The
virtual meeting is being held at 10:00 A.M., EDT on Thursday, May 21, 2020. To participate in the virtual meeting, you must register
in advance. Please follow the instructions found on your proxy card, Notice and Access card or voter instruction form, and found
below on pages 2 and 3 of this proxy. On the day of the meeting, visit http://www.viewproxy.com/EagleBankCorp/2020/vm
and enter your control number (found on your proxy card or Notice and Access card) and the password received in your
registration confirmation. You may begin to log into the meeting platform beginning at 9:30 A.M. EDT on May 21, 2020. Audio only
access to the meeting will be available by dialing 1 (562) 247-8321. The meeting will begin promptly at 10:00 A.M., EDT on Thursday,
May 21, 2020.
Note
that the decision to proceed with a virtual-only meeting this year will not mean we will utilize a virtual-only format or any
means of remote communication for future annual meetings.
How
do I attend the Annual Meeting virtually and submit questions or make comments?
To
be admitted to the Annual Meeting at http://www.viewproxy.com/EagleBankCorp/2020/vm, you
must enter the control number (found on your proxy card or Notice and Access card) and the password received in your registration
confirmation. Audio only access to the meeting will be available by dialing 1 (562) 247-8321. If you hold your shares through
a broker, you must register in advance using the instructions below.
If
you wish to submit a question or make a comment before the Annual Meeting or during the Annual Meeting, you may log into http://www.viewproxy.com/EagleBankCorp/2020/vm
and enter your control number and the password received in your registration confirmation beginning at 9:30 A.M. EDT,
on May 21, 2020. Once past the login screen, click on the ‘‘messages’’ icon at the top of the screen and
type your question or comment in the “Ask a question” field and then click to submit. Questions or comments pertinent
to meeting matters will be addressed during the Annual Meeting, subject to time constraints. Questions or comments that relate
to proposals that are not properly submitted before the Annual Meeting, relate to matters that are not proper subject for action
by shareholders, are irrelevant to the Company’s business, relate to material non-public information of the Company, relate
to personal concerns or grievances, are derogatory to individuals or that are otherwise in bad taste, are in substance repetitious
of a question or comment made by another shareholder, or are not otherwise suitable for the conduct of the Annual Meeting as determined
in the sole discretion of the Company, will not be answered. Additional rules of conduct and procedures may apply during the Annual
Meeting and will be available for you to review in advance of the meeting at www.viewproxy.com/EagleBankCorp/2020/vm.
Any questions pertinent to meeting matters that cannot be answered during the Annual Meeting due to time constraints will be posted
online and answered at www.viewproxy.com/EagleBankCorp/2020. The questions and answers will be available as soon as practical
after the meeting and will remain available until May 28, 2020 after posting.
What
am I being asked to vote on at the meeting?
You
are being asked to vote on three proposals at the meeting:
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1.
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the
election of eight directors for a one year term until the 2021 Annual Meeting of Shareholders
and until their successors are duly elected and qualified;
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Eagle Bancorp, Inc.
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2020 Proxy Statement
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2.
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the
ratification of the appointment of Dixon Hughes Goodman LLP as the Company’s independent
registered public accounting firm for the year ended December 31, 2020; and
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3.
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a
non-binding, advisory resolution approving the compensation of our named executive officers.
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How
does the Board recommend I vote?
The
Board unanimously recommends that you vote:
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FOR
the
election of all of the nominees for election as director (see Proposal 1 on page 14);
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FOR
the
ratification of accountants (see Proposal 2 on page 67); and
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FOR
the
nonbinding resolution approving our named executive officer compensation (see Proposal
3 on page 68).
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Who
is entitled to vote at the meeting?
Only
shareholders of record of the Company’s common stock, par value $0.01 per share (the “common stock”), at the
close of business on March 26, 2020, will be entitled to notice of and to vote at the meeting or any adjournment or postponement
of the meeting. On that date, the Company had 32,208,795 shares of common stock outstanding, held by approximately 10,196 total
shareholders, including 622 shareholders of record. The common stock is the only class of securities entitled to vote at the meeting.
If
your shares are registered directly in your name with Computershare Trust Company, N.A., our transfer agent, then you are a shareholder
of record. As a shareholder of record, you must register to be able to attend the Annual Meeting via live audio webcast, and can
vote your shares electronically at https://www.aalvote.com/EGBN. (Please see “How
do I register in advance to attend, vote, and submit questions or comments at the annual meeting virtually?” below for more
information.) You may vote in person at the meeting, or vote by proxy, using any of the following three methods to submit your
proxy:
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by
Internet: go to https://www.aalvote.com/EGBN
and follow the instructions provided;
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by
toll-free telephone: call 1 (866) 804-9616; or
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by
mail: mark, sign, date and promptly mail the enclosed proxy card in the enclosed
postage-paid envelope.
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If
your shares are held in an account at a broker, bank or other nominee (collectively, your “broker”), rather than in
your name, then you are a beneficial owner of “street name” shares, and these proxy materials are being forwarded
to you by your broker. Your broker is entitled to vote your shares at the meeting or submit a proxy. (Please see the next question
for important information regarding voting by your broker.) As a beneficial owner, you are entitled to direct your broker
how to vote your shares. You will need to follow the directions your broker provides you and give the broker instructions as to
how the broker should vote your shares by following the instructions you received from your broker. If you want to vote your shares
held in street name at the meeting, you will need to obtain a “legal proxy” from your broker authorizing you to vote
your shares. A brokerage statement or the voting instruction form you received from your broker will not allow you to vote at
the meeting. (Please see “How do I register in advance to attend, vote, and submit questions or comments at the annual meeting
virtually?” below for more information.) Please note that your broker may have a deadline for submitting voting instructions
that is earlier than the voting deadline for recordholders.
Whether
or not you plan to attend the meeting, we urge you to vote and submit your proxy, either by Internet, telephone or mail, or to
instruct your broker how to vote, in order to ensure the presence of a quorum.
Will
my broker vote my shares for me?
Under
the rules of the New York Stock Exchange (“NYSE”) applicable to its member firms, your broker will not vote your shares
on the election of directors or the advisory resolution on executive compensation unless they receive instructions from you.
If you hold your shares through a broker, it is extremely important that you instruct your broker how to vote your shares.
The election of directors (even if not contested) and the non-binding advisory vote on executive compensation are not considered
“routine” matters. As such, your broker cannot vote your shares with respect to these proposals if you do not give
instructions, although your broker can vote your shares with respect to the ratification of the appointment of independent registered
public accounting firm.
Eagle Bancorp, Inc.
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2020 Proxy Statement
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How
do I register in advance to attend, vote, and submit questions or comments at the annual meeting virtually?
If
you are a shareholder of record of the common stock (i.e., your shares are registered directly in your name with Computershare
Trust Company, N.A., our transfer agent), you must register in advance to attend the Annual Meeting virtually. Please register
to attend the Annual Meeting at http://www.viewproxy.com/EagleBankCorp/2020 by 11:59 PM
EDT on May 19, 2020. You will need to enter your name, phone number, virtual control number (included on your proxy card) and
email address as part of the registration, following which, you will receive an email confirming your registration, as well as
the password to attend the Annual Meeting. On the day of the Annual Meeting, if you have properly registered, you may enter the
Annual Meeting by logging in using the password you received via email in your registration confirmation at http://www.viewproxy.com/EagleBankCorp/2020/vm
(you will need the virtual control number assigned to you in your registration confirmation email). If you wish to
vote your shares electronically at the Annual Meeting, you will need to visit http://www.aalvote.com/EGBN
during the Annual Meeting while the polls are open (you will need the virtual control number assigned to you in your
registration confirmation email).
If
you hold your shares “in street name” through a broker, you must register in advance to attend, vote, and submit questions
or comments at the Annual Meeting virtually. To register to attend the Annual Meeting, you will need to obtain proxy power (a
“legal proxy”) from your broker. A brokerage statement or the voting instruction form you received from your broker
will not allow you to attend or vote at the virtual meeting. Please register to attend the Annual Meeting at http://www.viewproxy.com/EagleBankCorp/2020
by 11:59 PM EDT on May 19, 2020. You will need to enter your name, phone number and email address, and provide a copy
of your legal proxy (which may be uploaded to the registration website or sent via VirtualMeeting@viewproxy.com
as part of the registration), following which, you will receive an email confirming your registration, your virtual
control number, as well as the password to attend the Annual Meeting. Please note, if you do not provide a copy of the legal proxy,
you may still attend the Annual Meeting but you will be unable to vote your shares electronically at the Annual Meeting. On the
day of the Annual Meeting, if you have properly registered, you may enter the Annual Meeting by logging in using the password
you received via email in your registration confirmation at http://www.viewproxy.com/EagleBankCorp/2020/vm
(you will need the virtual control number assigned to you in your registration confirmation email). If you wish to
vote your shares electronically at the Annual Meeting, you will need to visit http://www.aalvote.com/EGBN
during the Annual Meeting while the polls are open (you
will need the virtual control number assigned to you in your registration confirmation email).
What
if I have trouble accessing the meeting virtually?
The
virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops,
laptops, tablets and cell phones) running the most updated version of applicable software and plugins. Participants should ensure
that they have a strong WiFi connection wherever they intend to participate in the meeting. Please be sure to check in by 9:30
A.M/ EDT on May 21, 2020, the day of the Annual Meeting, so that Alliance Advisers may address any technical difficulties before
the Annual Meeting live audio webcast begins.
If
you encounter any technical difficulties accessing the virtual meeting platform on the meeting day, please email VirtualMeeting@viewproxy.com
or call 866-612-8937. Technical support will be available starting at 9:00A.M. EDT on May 21, 2020.
How
many votes do I have?
You
have one vote for each share of common stock you hold as of the record date on each matter submitted for the vote of shareholders.
You do not have the right to cumulate votes in the election of directors.
What
is the quorum requirement for the meeting?
Representation,
by virtual attendance or proxy, of holders of at least a majority of the total number of outstanding shares of common stock is
necessary to constitute a quorum at the meeting.
How
will proxies be voted and counted?
Properly
executed proxies received by the Company in time to be voted at the meeting will be voted as you specify. If you do not specify
how you want your shares voted, proxies will be voted:
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FOR
the
election of all the nominees for election as directors;
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Eagle Bancorp, Inc.
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2020 Proxy Statement
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FOR
the
ratification of the appointment of Dixon Hughes Goodman LLP; and
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FOR
the
non-binding, advisory resolution approving the compensation of our named executive officers.
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We
do not know of any other matters that will be brought before the meeting. If other matters are properly brought before the meeting,
the persons named in the proxy intend to vote the shares to which the proxies relate in accordance with their best judgment.
The
Inspector of Election appointed for the meeting will determine the presence of a quorum and will tabulate the votes cast at the
meeting. Abstentions will be treated as present for purposes of determining a quorum, but as unvoted for purposes of determining
the approval of any matter submitted to the vote of shareholders. If a broker advises the Company that it cannot vote on a matter
because the beneficial owner has not provided voting instructions and it does not have discretionary voting authority on a particular
matter, this is a “broker non-vote” with respect to that matter. Shares subject to broker non-votes will be counted
as shares present or represented at the meeting for purposes of determining whether a quorum exists; however, such shares will
not be considered as present or voted with respect to the matters on which the broker does not have the power to vote.
Can
I revoke my proxy after I submit it?
Yes.
You may revoke your proxy or change your vote at any time before it is voted at the meeting by:
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granting
a later proxy with respect to the same shares;
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sending
written notice to Jane E. Cornett, Corporate Secretary of the Company, 7830 Old Georgetown
Road, Third Floor, Bethesda, Maryland 20814 at any time prior to the proxy being voted;
or
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Your
attendance at the virtual meeting will not, in itself, revoke your proxy. If your shares are held in the name of your broker,
please see the voting form provided by your broker for additional information regarding the voting of your shares.
What
votes are required to approve the election of directors and the other proposals?
Under
our Articles of Incorporation and Bylaws, directors are elected at the Annual Meeting by a plurality of the votes cast in the
election. Since this is not a contested election, nominees who do not receive more votes cast for their election than votes withheld
or cast against their election must submit their resignation after certification of the vote. Approval of the proposals to ratify
the appointment of our independent registered public accounting firm and to approve the nonbinding, advisory resolution on compensation
of our named executive officers requires the affirmative vote of a majority of the votes cast on such matters.
How
are proxies being solicited?
In
addition to the use of these proxy materials, proxies may also be solicited personally or by telephone by officers, employees
or directors of the Company or its subsidiary, EagleBank, who will not receive any special compensation for their services in
soliciting proxies. Additionally, we have engaged Alliance Advisors, LLC (“Alliance”), a proxy solicitation firm,
to assist us in the distribution of proxy materials and the solicitation of votes. We will pay Alliance a base fee of $9,000,
plus per-call fees and reimbursement of its out-of-pocket expenses for its services. We may also reimburse brokers, custodians,
nominees and other fiduciaries for their reasonable out-of-pocket and clerical costs for forwarding proxy materials to their principals.
The cost of this proxy solicitation is being paid by the Company.
How
can I find out the results of the voting at the annual meeting?
Voting
results will be announced by the filing of a Current Report on Form 8-K within four business days after the Annual Meeting. If
final voting results are unavailable at that time, we will file an amended Current Report on Form 8-K within four business days
after the day final results are available.
What
does it mean if I receive more than one set of materials?
This
most likely means you hold shares of common stock in more than one way. For example, you may own some shares directly as a shareholder
of record and other shares through a broker, or you may own shares
Eagle Bancorp, Inc.
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2020 Proxy Statement
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through
more than one broker. In these situations, you may receive multiple sets of proxy materials or Notice and Access cards. In order
to vote all the shares you own, you must complete, sign, and return all of the proxy cards or voting instruction forms, or follow
the instructions for any alternative voting procedure on each of the Notice and Access cards or voting forms you receive. Each
proxy card or voting instruction form you receive should come with its own prepaid return envelope. If you vote by mail, make
sure you return each voting form in the return envelope that accompanied that voting form.
Why
aren’t all of the shareholders who are in my household getting their own copy of the proxy materials?
In
some cases, only one set of the proxy materials is delivered to multiple shareholders sharing an address. However, this delivery
method, called “householding,” is not used if we have received contrary instructions from one or more of the shareholders.
We will deliver promptly, upon written or oral request, a separate copy of this proxy statement and the Annual Report to a shareholder
at a shared address to which a single copy of the documents were delivered. To request a separate delivery of these materials
now or in the future, you should submit a written request to: Jane E. Cornett, Corporate Secretary, at the Company’s executive
offices, 7830 Old Georgetown Road, Bethesda, Maryland 20814, or by calling (301) 986-1800. Additionally, any shareholders who
are presently sharing an address and receiving multiple copies of shareholder mailings and who would prefer to receive a single
copy of such materials may let us know by directing that request to us in the manner provided above.
Eagle Bancorp, Inc.
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2020 Proxy Statement
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Proxy
Statement Summary
Introduction
Eagle
Bancorp, Inc. is the parent company of EagleBank. The Bank operates as a community bank alternative to the super-regional financial
institutions, which dominate the Bank’s primary market area, which is the Washington, D.C. metropolitan area. The market
is the 5th largest regional economy in the United States. The Bank operates a commercially oriented business model
and has expertise in commercial real estate lending and delivering services to small and mid-sized businesses and non-profit organizations.
The Bank also provides consumer banking services including residential mortgage lending to individuals. The cornerstone of the
Bank’s philosophy is to provide superior, personalized service to its clients. The Bank focuses on relationship banking,
providing each client with a number of services, familiarizing itself with, and addressing, client needs in a proactive, personalized
fashion. The Bank’s businesses model allows it to operate a branch light strategy with the expense savings from smaller
branch systems being invested in quality, well trained personnel and IT systems delivering convenience and security to our customers.
The Company’s capital ratios are well above those required to be considered well capitalized. The Board of Directors is
committed to building upon the Company’s 22 years of successful operations by providing oversight of the Banks’s strategy
and operations, and maintaining the highest standard of corporate governance.
Our
Mission
We
have a mission to be the most respected and profitable community bank in the Washington, D.C. metropolitan area. To do this, we
put relationships first and relentlessly deliver the most compelling service and value.
Our
Values: Relationships F•I•R•S•T
Flexible
We
begin our
relationships based on our time-tested tradition of listening to our customer, collaborating with colleagues and designing a comprehensive,
creative solution that brings value to and appreciation from our customer. We enhance the relationship with empowered ‘YES,
We Can’ service and live up to our strong belief that formulas do not make good banking sense, relationships do. We are
entrepreneurial – it is our differentiator.
Involved
We
build our
relationships by developing a rapport that is based on partnership, mutual respect and a desire to delight. We are unwavering
in our commitment to the goals and growth of our customers, colleagues and community through volunteerism. We believe that doing
the little extras and staying involved with our customer demonstrates our difference.
Responsive
We
shape our
relationships by taking ownership for being ever-responsive, from beginning to end, day in and day out. We understand that reliable,
accurate and time-sensitive communication is fundamental to preserving reputation and relationships, internally and externally.
Strong
We
strengthen our
relationships each time we are called upon for our expertise and know-how. We are committed to enhancing our professional knowledge
in order to remain credible, current and strong partners with our customers, colleagues and community. Our history of sustaining
a well-capitalized and profitable position emphasizes our strength and reinforces our relationships.
Trusted
We
uphold our
relationships with honesty, openness and reliability. We can be counted on to do “the right thing.” We understand
that underlying a sound, long-lasting relationship is the essential element of trust. Trust can be lost in a moment, so we are
vigilant in our actions and words.
Eagle Bancorp, Inc.
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6
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2020 Proxy Statement
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Corporate
Social Responsibility - Our Commitment to the Community
Since
its founding in 1998, EagleBank has been committed to principles of community engagement, inclusiveness and sustainability. This
report sets forth the activities undertaken by the Bank that reflect its leadership with regards to responsible lending, sustainability,
philanthropy and ethical governance.
With
94% of its loan portfolio in Washington DC Maryland and Virginia, the Bank is passionate about its role as a lender to local businesses.
By lending to small and mid-size businesses, the Bank helps build and grow local employment and the regional economy.
Economic
Development Activities – Responsible Lending
EagleBank
is recognized as one of the leading commercial real estate lenders in the Washington metropolitan area, but we are more than that.
We aim to meet the banking and credit needs of all the communities in which we conduct business. Assisting low and moderate-income
individuals and organizations as well as supporting consumers and small businesses in transitional neighborhoods is key to meeting
the mission of the Bank.
Affordable
Housing: We take a special interest in helping
our local communities provide affordable housing. Specialized programs and projects we have financed include:
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●
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EagleBank
offers a broad range of lending programs that promote affordable and sustainable home
ownership for low and moderate-income individuals and families – as well as those
with limited down payment capacity. EagleBank offers no and low down payment programs
such as the HomePossible, HomeReady, Maryland Mortgage Programs, DC Open Doors Home Purchase
Assistance Program, Employer Assisted Housing, the Landed Program, and the Federal Home
loan Bank down payment program. These programs foster home ownership in Maryland and
the District of Columbia. In 2019, the EagleBank Residential Lending Division originated
1,632 mortgage loans of which 11% totaling over $53 million were financed through affordable
home loan and assistance programs.
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●
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In
addition to loans, EagleBank has from its own portfolio invested $52 million in CRA qualified
bonds, which funded 170 single family mortgages in low and moderate income census tracts
throughout the Washington metropolitan area. In addition the Bank has committed over
$70 million to purchasing Low Income Housing Tax Credits which help to finance 27 different
low and moderate income multifamily apartment buildings in our region.
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●
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In
meeting the needs of our diverse customers and communities, EagleBank is proud to have
committed nearly $60 million in financing to the Hill East Opportunity Zone nominated
by Washington, D.C. Mayor Muriel Bowser. Hill East will include housing for a mix of
income levels and 13,000 square feet of much needed retail amenities to this unique neighborhood
of Southeast D.C.
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●
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Similarly,
EagleBank provided the financing for the acquisition and construction of a 70-unit multifamily
building in Rockville, Maryland that is being developed as an inclusive-housing community
that will provide affordable housing specifically for people with disabilities. The building
will offer 53 low-income and 17 market-rate units with 25% of all units reserved for
people with disabilities. The project was advanced by a nonprofit with the goal of creating
an affordable, accessible and integrated environment where individuals with developmental
disabilities could live and thrive.
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●
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EagleBank
is also contributing financing to the redevelopment of the historic Walter Reed Army
Medical Center in Northwest, D.C. A 66 acre portion of the 110 acre site was designated
for sale to the District of Columbia for re-development. The project, known as The Parks
at Walter Reed, will contain residential, retail, office and hospitality space. EagleBank
is funding the land development costs for the 66 acre site and financing for The Brooks,
an 89 unit condominium building offering both market rate and affordable housing. In
addition to providing more affordable housing in a central part of the city, The Brooks
will add significant texture to the adaptive re-use of existing historic structures at
The Parks project.
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Energy/Environment:
EagleBank has long been committed to sustainability.
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●
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In
2017, EagleBank provided the financing of the nation’s largest single PACE financing
note issued for clean energy. This $25 million note financed the installation of state-of-the-art
energy and water efficiency measures, specifically an 884 KW solar array and storm water
retention systems at D.C. United’s 20,000 seat Audi Field soccer stadium. The measures
were made possible through the Department of Energy and Environment’s Property
Assessed Clean Energy (DC PACE) program and EagleBank.
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Eagle Bancorp, Inc.
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7
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2020 Proxy Statement
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Small
Business Lending: Small business support has
always been a cornerstone of EagleBank’s commitment to the Washington, D.C. region.
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●
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As
such, EagleBank has been a Top SBA Lender over the last two decades and provides financing
under both the 7a and 504 programs offered by the SBA. We have consistently been among
the leading community bank SBA lenders according to data compiled by the U.S. Small Business
Administration’s Washington Metropolitan Area District Office.
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●
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In
addition, the Bank has relationships with state and local governments and government
agencies, and has worked with them to develop cooperative economic development programs.
With Montgomery County, Maryland we worked to design the Small Business Plus! Program
in which the County places deposits in local banks and the Banks commit to make loans
to local small businesses. Since the inception of the program in 2012 the bank has made
$521 million in small business loans. The economic activity funded by these loans has
led to the creation of 1,800 new jobs in the county. The Bank also helped develop a similar
program sponsored by the Washington Suburban Sanitary Commission (“WSSC”)
known as the Business Investment and Growth (“BIG”) Program. Under the program
the WSSC places deposits with local community banks which allows them to increase lending
to local small and minority owned businesses within the WSSC’s bi-county area.
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Philanthropy
EagleBank
believes in giving back and in fostering good corporate citizenship. As a result, EagleBank dedicates resources to the community
through the EagleBank Foundation which raises money for breast cancer research and treatment, survivorship and caregiver knowledge.
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●
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The
EagleBank Foundation’s Annual Golf Classic has provided over $4.3 million to area
hospitals for the ongoing fight against breast cancer. Other beneficiaries of the EagleBank
Foundation include The Wellness Center, The Berm Foundation and the Children’s
Inn at NIH.
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●
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The
EagleBank Foundation also offers the Matching Gifts Program to support employees in their
contributions to worthy causes. The program matches 1:1 contributions made by employees
to eligible 501(c)(3) organizations up to a maximum of $100 per year, per employee.
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●
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In
addition to the efforts of the Foundation, in 2019 EagleBank provided $1.1 million in
contributions or sponsorship funding to many civic and non-profit organizations in the
Washington, D.C. metropolitan area.
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●
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As
an example, EagleBank is a sponsor of DC Scores – a program that creates neighborhood
teams that work with youth in disadvantaged neighborhoods to help them gain the skills
and confidence to succeed on the playing field, the classroom and in life. The program
is also supported by Washington’s professional soccer team, DC United, and has
served over 2,800 young people in the Washington Metro area.
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|
●
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The
Company is committed and proud to promote volunteerism as a way to enrich our communities,
build teamwork and enhance the lives of customers and team members throughout the region.
EagleBank volunteers have worked on behalf of many agencies ranging from Habitat for
Humanity and Mentor Prize to Junior Achievement. In 2019, our employees spent 4,800 hours
supporting 65 diverse organizations throughout Northern Virginia, Suburban Maryland and
the District of Columbia.
|
Equal
Opportunity, Education and Employee Development
Human
capital management is a critical component of our sustainability programs and a key driver of our Company’s success. EagleBank
takes a Total Reward approach in attracting, retaining and rewarding its associates. Our average employee tenure is over 5 years
with almost 20% of our staff having 10 or more years of service with the Company.
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●
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Equal
Employment Opportunity: EagleBank
provides equal employment opportunity for all persons in regards to hiring, working conditions,
compensation, benefits and appointments for advancement and training and development.
EagleBank partners with and supports local veteran, disability and workforce readiness
programs by providing employment opportunities and job skills training. Managers receive
training on equal employment, unconscious bias, retaliation and harassment.
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●
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Diversity:
EagleBank
values diversity at every level of the organization including staff, management and the
Board of Directors. Of our total work force, 59% are minority and 60% are female. Our
president is a woman and 33% of our Senior Staff are female. At the Board level, 4 of
8 directors are women and the Board includes 1 minority.
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Eagle Bancorp, Inc.
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8
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2020 Proxy Statement
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The
Bank promotes professional development by offering a number of programs that enable employees
to grow their careers including an Education Assistance Program.
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●
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The
Bank’s Commercial Banking Development Program was launched in 2015 and is aimed
at providing highly-skilled graduates the opportunity to experience five different operations
departments of the Bank over the course of 12-18 months.
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|
●
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The
Bank’s Leadership Essentials Program is offered to allow leadership-minded employees
to help grow their banking knowledge base and leadership skills. Required courses within
this program include Crucial Conversations, Performance Management, and Leadership Styles,
Coaching for Performance, Interviewing Skills and EagleBank Strategy.
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●
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Scholarship
programs and professional internships have always been a component of the Company’s
approach to development. EagleBank provides $25,000 in scholarships to George Mason University
and the Montgomery College Foundation. Students from area colleges and universities also
participate in the EagleBank Summer Internship Program offered by our Commercial and
Real Estate Lending Divisions. Students enrolled in these programs assist with lending
projects, data and analytical reporting, and portfolio management services.
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Compliance
and Ethics: Our culture of integrity starts
with our Code of Business Conduct and Ethics (“Code”) which applies to all employees, directors and executive officers
of the Eagle Bancorp, Inc. and its subsidiaries. In addition, we look to engage with third-parties that share our commitment to
our Relationships F-I-R-S-T core values.
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●
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New
employees are required to complete training on the Code within 30 days from their date
of hire and annually acknowledge the Code and the Business Conduct Ethics and Conflicts
of Interest Policy. In fiscal year 2019, completion of both these requirements was at
100%.
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|
●
|
In
addition, role-based in-person and online training was delivered to advance understanding
of regulatory and policy requirements of specific compliance areas such as Regulation
O, and Related Party Transactions.
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●
|
Our
management team is focused on fostering a culture of trust so that employees at every
level feel comfortable speaking up about concerns or potential conflicts of interest.
To that end the Ethics Office facilitates a quarterly survey of all employees to disclose
potential conflicts of interest and field questions regarding the Code. Associates are
strongly encouraged to be proactive in seeking guidance and to promptly contact the Ethics
Office with questions regardless of the nature of the matter. Management takes all questions
raised seriously and enforces a strict non-retaliation policy.
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●
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All
complaints and concerns regarding possible violations of, or non-compliance with, our
Code, a policy or a law or regulation, or retaliatory acts against anyone who makes such
a complaint or assists in the investigation of such a complaint, may be made directly
to the chair of the Audit Committee or by phone or web reporting using our confidential
hotline at ethicspoint.com. Reports may be made anonymously.
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EagleBank
is proud of the many ways we support our employees and our community, the Washington metropolitan area.
Eagle
Bancorp, Inc. at a Glance – 2019
How
Did We Perform?
|
● Net
Income for the year was $143 million, a 6.1% decline from 2018. The primary reason for
the decrease was compression in the net interest margin due to a challenging interest
rate market.
● Even
with the moderate decrease in earnings, the Company continues to be one of the most profitable and well capitalized community
banks in the country. Return on average assets (“ROAA”) for the year was 1.6% and return on average common
equity (“ROAE”)(1) was 12.2%. At year end, the total capital ratio was 16.2%.
● Total
assets grew 7.1% during the year to reach $9 billion at year end, while maintaining strong credit quality and a favorable
Efficiency Ratio(2) .
● During
the year the Book Value per common share increased 11.07% to $35.82 and Tangible Book Value(3) per share increased
12.0% to $32.67.
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Eagle Bancorp, Inc.
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9
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2020 Proxy Statement
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What
are Our Pay Practices and Perspective?
|
● We
seek to pay our named executive officers (“NEOs”) commensurate with their
performance and appropriately situated relative to peers.
● NEO
compensation components are decided through performancel-based cash bonuses and equity-based compensation that align our
executives’ interests with shareholder interests.
● Executives
do not receive any significant special perks or gross-ups.
● Compensation
is subject to strong corporate governance and independent board oversight.
● Compensation
plans reflect valued feedback from shareholder engagement efforts.
● Pay
policies are consistent with best practices, including maintaining a sound set of compensation principles, managing our
equity awards responsibly, utilizing “double trigger” provisions in senior executive officer employment agreements,
making a significant portion of equity compensation subject to the achievement of performance goals, and closely monitoring
trends for executive compensation.
|
How
Do We Address Risk?
|
● We
significantly enhanced our Risk Management programs during 2019.
● We
maintain share ownership, anti-hedging and pledging policies.
● Our
compensation program includes clawback/recovery provisions.
|
Why
Should our Shareholders Approve our “Say on Pay” Advisory Vote?
|
● Our
2019 results represent solid performance compared to our performance metrics, goals and
peer group performance. (See peer group tables on page 50-51)
● Pay
is commensurate with Company and individual performance, and peers.
● Pay
programs continue to evolve based on shareholder feedback and industry best practices.
● Pay
practices and policies are aligned with interests of shareholders.
● Pay
is subject to extensive risk and control features.
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(1)
|
ROAE
is a non-GAAP financial measure calculated by dividing net income, which was $142.9 million
for 2019, by the average common shareholders’ equity, which was $1.17 billion for
2019. The GAAP reconciliations are included in our Annual Report on Form 10-K for the
year ended December 31, 2019, or our 2019 Form 10-K.
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(2)
|
Efficiency
Ratio is a non-GAAP financial measure defined as the ratio of noninterest expense, which
was $139.9 million for 2019 to total revenue, which was $349.7 million for 2019. The
GAAP Reconciliations are included in our 2019 Form 10-K.
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(3)
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Tangible
Book Value per share is a non-GAAP financial measure and is calculated by subtracting
intangible book value per common share from the book value per common share. The Intangible
book value per common share was $3.15 and the book value per common share was $35.82.
The GAAP Reconciliations are included in our 2019 Form 10-K.
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Shareholder
Engagement
Our
Engagement Process
Our
Board and management are committed to engaging with our shareholders and soliciting their views and input on important performance,
governance, executive compensation, and other matters.
Year-Round
Engagement and Board Reporting. Our management
team conducts shareholder outreach throughout the year and informs our Board about the issues that our shareholders tell us matter
most to them.
Transparency
and Informed Governance Enhancements. Our Board
regularly reviews our governance practices and policies, including our shareholder engagement practices, with an eye toward continual
improvement. Shareholder input is shared with our Board and its committees, facilitating a dialogue that provides shareholders
with insight into our governance practices and informs them of our Company’s enhancement of those practices. In addition
to considering shareholder sentiments, our Board regularly reviews the voting results of our Annual Meetings, the governance practices
of our peers and other companies, and current trends in governance.
Eagle Bancorp, Inc.
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10
|
2020 Proxy Statement
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The
Shareholder Engagement Process
Outreach
to Shareholders
We
value the opinion of our shareholders and for the last five years have conducted an outreach program to our shareholders to encourage
an open dialogue on compensation and governance matters relevant to our business. We listened carefully over the last few years
and have made many substantial changes to our compensation and governance practices based on the Say-on-Pay votes and the subsequent
shareholder engagements. Greater detail can be found later in this proxy statement, in the Compensation Discussion and Analysis
section starting on page 30.
Our
recent shareholder engagement has been an important source of guidance for the Company, and we intend to continue such efforts
during 2020 and beyond.
Board
and Shareholder Engagement
The
Board maintains a process for shareholders and interested parties to communicate with the Board. Shareholders and interested parties
may write or call our Board as provided below.
Shareholder
Communications
If
you wish to communicate with the Board of Directors or an individual director, you can (a) write to Eagle Bancorp, Inc., 7830
Old Georgetown Road, Bethesda, Maryland 20814, Attention: Jane E. Cornett, Corporate Secretary, or (b) email to jcornett@eaglebankcorp.com,
(c) call (301) 986-1800 or (d) go to www.ir.eaglebankcorp.com, click “Contact Us” in the upper right hand corner.
Your letter should indicate that you are a shareholder, and whether you own your shares as a registered holder or 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 the ordinary course of conduct of the Company’s 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.
Eagle Bancorp, Inc.
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11
|
2020 Proxy Statement
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WRITE
|
|
CALL
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EMAIL
|
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WEB
|
Corporate
Secretary
Eagle
Bancorp, Inc.
7830
Old Georgetown Road, 3rd Floor Bethesda, Maryland 20814
|
|
(301)
986-1800
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|
jcornett@eaglebankcorp.com
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http://ir.eaglebankcorp.com
click
“Contact Us” in the upper right hand corner
|
Corporate
Governance
The
Company believes that strong governance practices are a critical component of the management of any successful financial institution
and are integral to achieving long term shareholder value. The Board of Directors is committed to conducting business according
to the highest standards and actively oversees management to develop the appropriate policies and practices for the Company’s
customer interactions, day-to-day operations and participation as a responsible member of our community. The Board monitors best
practices and gathers feedback from multiple sources, including our shareholders, to assure our adherence to this commitment.
Key
governance principles that the Board has adopted include:
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●
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Long
standing commitment to corporate social responsibility
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●
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Board
oversight of Company strategy and performance
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●
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Risk
oversight by newly-formed Risk Committee of the Board
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●
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Code
of Business Conduct and Ethics
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●
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Corporate
Governance Guidelines
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●
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6
of 8 Directors are Independent under stock exchange rules and federal securities laws
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●
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Separation
of Chief Executive Officer (“CEO”) and Chair of the Board
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●
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Independent
lead director
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|
●
|
Diversity
of Board membership
|
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●
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Active
shareholder engagement process
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●
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Board
and Committee authority to retain independent advisors
|
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●
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Executive
compensation plans designed to align management with long term shareholder interests
|
|
●
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Annual
Board and Committee evaluation process
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|
●
|
Regular
executive session meetings of Independent Directors
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●
|
Active
Board participation in CEO and senior executives and key personnel succession planning
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●
|
Policy
providing for return of incentive compensation (“Clawback Policy”)
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●
|
Executive
incentive compensation plans include long term time-vested equity awards and performance-vested
equity awards
|
Critical
governance practices that the Company has enacted include:
|
●
|
Annual
election of Board members
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●
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Majority
approval required for Director elections (resignation if majority approval is not received)
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●
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Annual
“ Say-on-Pay” advisory votes on executive compensation
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●
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No
shareholder rights plan (“Poison Pill”)
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●
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Double
trigger clause on executive change-of-control payments
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●
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Share
ownership requirements for Directors and Executives
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●
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Policies
prohibiting hedging and short sales, and limiting pledging of Company stock
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Eagle Bancorp, Inc.
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12
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2020 Proxy Statement
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The
following sections of this proxy statement provide further details of our governance policies and procedures, our approach to
managing risk within the Company, the design of our executive compensation plans, the goals and performance of each named executive
officer and the resulting compensation awarded to each executive. Copies of the Code of Business Conduct and Ethics can be found
at http://ir.eaglebankcorp.com/govdocs. We will disclose any changes to or waivers pursuant
to the Code of Business Conduct and Ethics on that website.
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 Company’s common
stock beneficially owned by its directors, its executive officers whose compensation is disclosed in this proxy statement, and
by its directors and all executive officers as a group, as of March 26, 2020. 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. Unvested shares of restricted stock (time-vested only) are included in ownership amounts. Except as set
forth below, the Company knows of no other person or persons who may beneficially own in excess of five percent of the Company’s
common stock. Further, the Company is not aware of any arrangement which at a subsequent date may result in a change in control
of the Company.
Name
|
Position
|
Shares
|
Percentage(1)
|
Directors
|
Matthew
D. Brockwell
|
Director
of Company and Bank
|
575
|
*
|
Theresa
G. LaPlaca
|
Director
of Company and Bank
|
3,563
|
*
|
A.
Leslie Ludwig
|
Director
of Company and Bank
|
10,801
|
*
|
Norman
R. Pozez
|
Executive
Chairman of Company and Bank
|
89,919(2)
|
*
|
Kathy
A. Raffa
|
Director
of Company and Bank
|
18,151
|
*
|
Susan
G. Riel
|
President,
Chief Executive Officer and Director of Company and Bank
|
216,651(3)
|
*
|
James
A. Soltesz
|
Director
of Company and Bank
|
13,070
|
*
|
Benjamin
M. Soto
|
Director
of Company and Bank
|
10,996
|
*
|
Other
Named Executive Officers
|
Charles
D. Levingston
|
Executive
Vice President, Chief Financial Officer of Company and Bank
|
13,187
|
*
|
Antonio
F. Marquez
|
Executive
Vice President of Company; SEVP, President of Commercial Banking
|
34,002(4)
|
*
|
Lindsey
S. Rheaume
|
Executive
Vice President of Company; EVP, Chief Lending Officer – Commercial and Industrial of Bank
|
19,053
|
*
|
Janice
L. Williams
|
Executive
Vice President of Company; SEVP, Chief Credit Officer of Bank
|
80,353
|
*
|
Ronald
D. Paul
|
Former
Chair, President and Chief Executive Officer of Company, Chair and Chief Executive Officer of Bank
|
1,523,011(5)
|
4.64%
|
All
Directors, Nominees and Executive Officers as a Group (13 persons)
|
510,321(6)
|
1.56%
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Eagle Bancorp, Inc.
|
13
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2020 Proxy Statement
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Other 5% Shareholders
|
|
BlackRock,
Inc.
|
4,950,137(7)
|
14.9%
|
The
Vanguard Group
|
3,240,473(8)
|
9.74%
|
Wasatch
Advisors, Inc.
|
3,100,121(9)
|
9.30%
|
●
|
-
less than one percent ownership
|
|
(1)
|
Represents
the percentage of 32,208,795 shares issued and outstanding as of March 26, 2020. Certain
shares beneficially owned by the Company’s 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 firm’s
policies.
|
|
(2)
|
Includes
26,164 shares held by Mr. Pozez’s IRA. Does not include restricted shares to be
awarded on April 2, 2020 as described below under the caption “Chairman Agreements”.
|
|
(3)
|
Includes
58,317 shares held jointly with Ms. Riel’s spouse. Approximately 12,317 shares
are pledged as collateral, which represents approximately 5.9% of holdings by Mr. and
Ms. Riel.
|
|
(4)
|
Includes
1,567 shares held jointly with Mr. Marquez’s spouse.
|
|
(5)
|
Mr.
Paul resigned from his positions at the Company and Bank, effective March 20, 2019. The
Company has no current information as to the nature or amount of Mr. Paul’s beneficial
ownership of the Company’s common stock. The amount presented represents the Company’s
understanding of Mr. Paul’s ownership as of March 20, 2019, the record date for
the 2019 Annual Meeting of Shareholders. There can be no assurance that these disclosures
accurately reflect Mr. Paul’s current beneficial ownership. At March 20, 2019,
the Company believes the reported figured included (i) 119,969 shares held by a charitable
foundation over which Mr. Paul shared voting and investment powers; (ii)15,000 shares
held by a defined benefit plan over which Mr. Paul shared voting and investment power;
(iii) 68,906 shares of common stock held by trusts in which members of Mr. Paul’s
family have discretionary interests, over which he did not have voting or investment
power, and as to which he disclaimed beneficial ownership; and did not include 42,164
shares of common stock contributed to Charitable Lead Annuity Trusts in which Mr. Paul
had a residual interest, but as to which he did not have or share voting or dispositive
power.
|
|
(6)
|
An
aggregate of 12,317 shares are pledged by members of this group as collateral, which
represents 1.88% of their aggregate holdings. This excludes Mr. Paul.
|
|
(7)
|
Based
solely on beneficial ownership of shares and percentage of outstanding shares as reported
in a Schedule 13G/A filed on February 4, 2020. Blackrock, Inc.’s address is 55
East 52nd Street, New York, New York 10055.
|
|
(8)
|
Based
solely on beneficial ownership of shares and percentage of outstanding shares as reported
in a Schedule 13G/A filed on February 12, 2020. The Vanguard Group’s address is
100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
|
|
(9)
|
Based
solely on beneficial ownership of shares and percentage of outstanding shares as reported
in a Schedule 13G filed on February 10, 2020. Wasatch Advisors Inc.’s address is
505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84108.
|
Proposal
1: Election of Directors
The
Board of Directors has nominated eight persons for election as directors at the 2020 Annual Meeting, for a one-year period until
the 2021 Annual Meeting of Shareholders and until their successors have been elected and qualified.
We
are presenting for election by the shareholders the following eight nominees to our Board of Directors. We are proud of our Board
members and the diversity found in the group. Additional information about each Director’s experience, skills and qualifications
can be found beginning on Page 17.
Name
|
Age
|
Director
Since
|
Independent
|
Principal
Occupation
|
Committee
Membership
|
Mathew
D. Brockwell
|
58
|
2019
|
Yes
|
Retired
Audit Partner - PricewaterhouseCoopers, LLP
|
Governance
& Nominating (Chair)
Audit
Risk
|
Theresa
G. LaPlaca
|
60
|
2019
|
Yes
|
Retired
Executive Vice President – Wells Fargo & Company
|
Risk
(Chair)
Audit
Lead
Director
|
A.
Leslie Ludwig
|
58
|
2019
|
Yes
|
Principal
– L&L Advisors
|
Compensation
(Chair)
Risk
|
Norman
R. Pozez
|
65
|
2008
|
No
|
Chairman
and CEO – Uniwest Companies, Inc.
|
Risk
|
Kathy
A. Raffa
|
61
|
2018
|
Yes
|
Office
Managing Partner – Marcum, LLP
|
Audit
(Chair)
Governance
& Nominating
|
Eagle Bancorp, Inc.
|
14
|
2020 Proxy Statement
|
|
|
|
Susan
G. Riel
|
70
|
2017
|
No
|
President
& CEO – Eagle Bancorp, Inc. and EagleBank
|
|
James
A. Soltesz
|
65
|
2019
|
Yes
|
CEO
– Soltesz, Inc.
|
Compensation
Governance
& Nominating
|
Benjamin
M. Soto
|
51
|
2019
|
Yes
|
Principal
of Premium Title and Escrow, LLC
|
Compensation
|
Unless
you vote AGAINST, or ABSTAIN with respect to, one or more nominees for election as director, all proxies received in response
to this solicitation will be voted for the election of the nominees listed below. Each of the nominees for election as a director
currently serves as a member of the Board of Directors and as a member of the Board of Directors of the Bank. 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
rules of The Nasdaq Stock Market (“Nasdaq”) require that a majority of the members of the Board be “independent
directors.” The Board of Directors has determined that each director and nominee for election as director, other than Mr.
Pozez and Ms. Riel, is an “independent director” as that term is defined in Rule 5605(a)(2) of the Nasdaq rules. The
Board has also considered whether the members of the Audit and Compensation Committees are independent under the heightened standards
of independence required by Sections 5605(c)(2)(A) and 5605(d)(2)(A), respectively, of the Nasdaq rules, and has determined that
they are. Additionally, each of the persons who served on the Board of Directors during 2019 (including any person who was not
a member of the Board of Directors as of December 31, 2019), was independent within the meaning of Rule 5605(a)(2), other than
Mr. Paul and Ms. Riel. In making these determinations, 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,
the arrangements which are disclosed under “Certain Relationships and Related Party Transactions” in this proxy statement,
and the compensation arrangements described under “Director Compensation.”
As
required under applicable Nasdaq listing standards, our independent directors meet in regularly scheduled executive sessions at
which only independent directors are present.
Set
forth below is information concerning the nominees for election as directors. Except as otherwise indicated, the occupation listed
has been such person’s principal occupation for at least the last five years. Each of the nominees also serves as a director
of the Bank as it is the Company’s policy to have the same members on each of the boards of the Company and the Bank.
Nominees
for the Board of Directors
Matthew
D. Brockwell
(RETIRED)
AUDIT PARTNER AT PRICEWATERHOUSECOOPERS LLP (PWC)
Matthew
Brockwell is a former Audit Partner at PricewaterhouseCoopers LLP (PwC). Prior to his retirement in 2019, he was a Financial Services
Audit Partner and previously held positions in PwC’s Washington, D.C. Region Financial Services practice. He has over 35
years of experience working with financial services firms in the US and abroad. His practice included both SEC registered and
privately held companies, as well as both foreign and US government agencies.
Mr.
Brockwell obtained a B.A. from the University of Oklahoma, an MBA from the Columbia Graduate School of Business and attended both
the Wharton School-Boards That Lead and the Stonier Graduate School of Banking.
Theresa
G. LaPlaca
(RETIRED)
EXECUTIVE VICE PRESIDENT AT WELLS FARGO
Eagle Bancorp, Inc.
|
15
|
2020 Proxy Statement
|
|
|
|
Theresa
G. LaPlaca is a former Executive Vice President at Wells Fargo & Company. Prior to her retirement in 2019, she was the Executive
Vice President and Head of the Conduct Risk Management Group and a member of the Management Committee at Wells Fargo. Prior to
that she was the Chief Financial Officer of Wells Fargo’s Wealth and Investment Management businesses. Ms. LaPlaca previously
served as the Chief Financial Officer for CitiStreets Retirement Services Division. She is a past member of the Queens University
of Arts Advisory Board and previously served as a Board Director and Treasurer of the Nevins Foundation and the St. Anthony Foundation
of Charlotte.
Ms.
LaPlaca obtained a Bachelors in Education from Shenandoah University.
A.
Leslie Ludwig
CO-FOUNDER
OF L&L ADVISORS
A.
Leslie Ludwig is the co-founder of L&L Advisors, a commercial real estate consulting firm, and a retired Partner and Chairperson
of the Management Committee at JBG Smith (formerly the JBG Companies), where she oversaw the Finance, Accounting, Human Resources,
Investor Reporting, Insurance and Marketing functions. Prior to joining The JBG Companies, she was Senior Vice President at Wachovia
Bank, serving as a Commercial Real Estate Relationship Manager. Ms. Ludwig is a member of CREW (Commercial Real Estate Women),
and formerly on the Investment Advisory Committee for the National Multifamily Housing Corporation, the Virginia Tech Real Estate
Industry Advisory Board and the Advisory Board of CREW, and has served as Bank Director since 2017.
Ms.
Ludwig obtained a B.A. from Frostburg State University.
Norman
R. Pozez
EXECUTIVE
CHAIRMAN OF EAGLE BANCORP, INC.; EXECUTIVE CHAIRMAN OF EAGLEBANK; CHAIRMAN & CHIEF EXECUTIVE OFFICER OF UNIWEST COMPANIES
Norman
Pozez is Chairman and Chief Executive Officer of The Uniwest Companies which include, Uniwest Construction, Inc., Uniwest Commercial
Realty, Inc., and Uniwest Hospitality, Inc. Prior to these appointments, Mr. Pozez was Chief Operating Officer of The Hair Cuttery
of Falls Church, Virginia, and served as Regional Director of Real Estate and Construction for Payless ShoeSource. Mr. Pozez is
a licensed Real Estate Broker in Washington, D.C., Maryland and Virginia.
Mr.
Pozez obtained an A.B. Degree, magna cum laude, from Washington University in St. Louis and a JD from the Washburn University
School of Law.
Kathy
A. Raffa
OFFICE
MANAGING PARTNER OF MARCUM, LLP'S WASHINGTON, D.C., REGION
Kathy
Raffa was the President of Raffa, PC, a top 100
accounting firm based in Washington, D.C., until its merger in 2018 with Marcum, LLP, one of the
largest independent public accounting and advisory services firms in the nation. She currently serves as the Office Managing Partner
for Marcum’s Washington, D.C. region offices. She is also an audit partner and oversees a wide range of services for nonprofit
clients. Prior to Raffa, PC, she spent the first 10 years of her career at Coopers & Lybrand (now PricewaterhouseCoopers).
She has a CPA certificate from the District of Columbia and Maryland and is a member of the Board of Trustees of Trinity Washington
University.
Ms.
Raffa obtained a Bachelor of Science in Economics
from the Wharton School at the University of Pennsylvania.
Susan
G. Riel
PRESIDENT
& CHIEF EXECUTIVE OFFICER OF EAGLE BANCORP, INC.
PRESIDENT & CHIEF EXECUTIVE OFFICER OF EAGLEBANK
Eagle Bancorp, Inc.
|
16
|
2020 Proxy Statement
|
|
|
|
Ms.
Riel is President and Chief Executive Officer of the Company and Bank. She is responsible for leading the Bank’s overall
growth strategies and enhancing shareholder value. Prior to being named CEO in 2019, Ms. Riel was Senior Executive Vice President
and Chief Operating Officer of the Bank, and Executive Vice President of the Company. Ms. Riel has been with the Company since
1998, and has been a member of the Company Board of Directors since 2017 and the Bank Board since 2018.
James
A. Soltesz
CHIEF
EXECUTIVE OFFICER OF SOLTESZ, INC.
James
Soltesz has served as Chief Executive Officer of Soltesz, Inc., an engineering and consulting firm, since 2006. He served 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 the Catholic Charities Foundation. Mr. Soltesz also chairs the Montgomery County Executive
Business Advisory Board, and has served as a director of the Bank since 2007.
Mr.
Soltesz holds an M.B.A. from the University of Cincinnati, an M.S. in Civil Engineering from Georgia Institute of Technology and
a B.S. in Civil Engineering from Purdue University.
Benjamin
M. Soto
PRINCIPAL
OF PREMIUM TITLE & ESCROW, LLC
Benjamin
Soto is a real estate transactions attorney and principal of Premium Title and Escrow, LLC, a Washington, D.C.-based full service
title company providing commercial and residential real estate closings in DC, MD and VA. He is also the owner of Paramount Development,
LLC, which is focused on the acquisition and ground up development of commercial buildings and hotels in Washington, D.C. He is
a former board member of the National Bar Association, and the DC Sports and Entertainment Commission, and a former Vice-Chair
of the DC Board of Real Property Assessment and Appeals.
Mr.
Soto is a Board Director of the DC Chamber of Commerce, the DC Land Title Association, the DC Public Education Fund, National
Foundation for Affordable Housing Solutions and the Georgetown Day School. Mr. Soto has served as a Director of the Bank since
2006. Mr. Soto earned a B.S. in Finance & Administration from the American University and a JD from the Washington College
of Law.
Vote
Required and Board Recommendation
As
this is an uncontested election of directors, our Articles of Incorporation and Bylaws provide that directors are elected by a
plurality of the votes cast in the election; provided, however, that any nominee who does not receive more votes cast than are
withheld or cast against such nominee, must, immediately after the certification of the shareholder vote, submit his or her resignation,
subject to acceptance or declination by the Board of Directors, to be effective upon the first to occur of (i) acceptance by the
Board of Directors or (ii) 120 days after the date of the certification. The Board of Directors unanimously recommends that
shareholders vote FOR each of the nominees for election as directors.
Director
Skills and Qualifications
Experience
|
Matthew
D. Brockwell
|
Theresa
G. LaPlaca
|
A.
Leslie Ludwig
|
Norman
R. Pozez
|
Kathy
A. Raffa
|
Susan
G. Riel
|
James
A. Soltesz
|
Benjamin
M. Soto
|
Other
Public Company
|
|
✓
|
|
|
|
✓
|
|
|
Eagle Bancorp, Inc.
|
17
|
2020 Proxy Statement
|
|
|
|
Leadership
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
Accounting
/ Finance
|
✓
|
✓
|
✓
|
|
✓
|
|
|
✓
|
Designated
Audit Committee Financial Expert
|
✓
|
|
|
|
✓
|
|
|
|
Mergers
& Acquisitions
|
✓
|
✓
|
|
✓
|
|
✓
|
|
✓
|
Commercial
Real Estate
|
|
|
✓
|
✓
|
|
|
✓
|
✓
|
Compensation
|
|
|
✓
|
✓
|
|
✓
|
|
✓
|
Risk
Management
|
✓
|
✓
|
✓
|
|
✓
|
✓
|
|
|
Board
Leadership Structure
2019
Leadership Changes and Restructuring
During
2019, the Company made significant changes in its Board structure and Board leadership. Prior to his resignation on March 20,
2019, Ronald D. Paul had served as both Chair of the Board and CEO of the Company. Upon Mr. Paul’s resignation, the Board
decided to separate the two roles and on March 21, 2019 elected Norman R. Pozez as an independent Chair of the Board. Mr. Pozez
had served as a Director of the Company since 2008 and as Vice Chair of the Board since 2018. He also served as the Chair of the
Governance & Nominating Committee of the Board. Coincident with the establishment of an independent Chair, the Board eliminated
the role of Lead Director and Vice Chair.
On
March 21, 2019, the Board appointed Susan G. Riel as Interim President and CEO of the Company. Ms. Riel, who is a Director, had
previously held the position of Executive Vice President of the Company. On May 6, 2019, the Board named Ms. Riel as the permanent
President and CEO. The selection of Mr. Pozez and Ms. Riel had been contemplated by the Company’s Succession Plan.
Coincident
with the establishment of an independent Chair, the Board eliminated the role of Lead Director and Vice Chair. The Board Chair
has significant core responsibilities including:
|
●
|
Chairs
the Annual Shareholders Meeting
|
|
●
|
Guides
discussions at Board meetings and encourages director participation and input
|
|
●
|
Engages
with directors between Board meetings to further identify items for consideration
|
|
●
|
Sets
Board meeting schedules and agendas in consultation with the CEO and Corporate Secretary
|
|
●
|
Interacts
regularly with the CEO, CFO and other members of the senior staff regarding matters relevant
to the Board’s oversight responsibilities
|
|
●
|
Meets
frequently with clients and shareholders and communicates necessary feedback to the Board
and management.
|
During
2019 the Company also re-organized the structure and membership of both the Company and Bank Boards. The size of the Bank board
was reduced and the membership of both boards was aligned, with all directors serving as members of both the Company and Bank
Boards. During the year, the Company elected
Eagle Bancorp, Inc.
|
18
|
2020 Proxy Statement
|
|
|
|
two new directors with extensive experience in the financial services field and specific
expertise in accounting, risk management, internal controls and governance. With the new Directors who were elected this year,
the composition of the Board now includes four female directors and one minority director.
The
Company believes that the Board Committees are a critical component to the Board’s performance of its oversight and guidance
functions. During 2019, the Company conducted a review of its Committee structures and placement within the organization. All
of the Board Committee charters were reviewed and standardized and Committee membership was evaluated. Within the last two years,
new Chairs have been named for the Audit Committee and the Compensation Committee. In October 2019, the Board formed a Risk Committee.
Given the importance of the Committees in our governance process, the Chairs of each Committee are considered a part of our Board
leadership.
2020
Leadership Changes
In
March 2020, the Board of Directors determined that Mr. Pozez’ role should include additional management responsibilities
and appointed him Executive Chairman. He will continue to collaborate with Ms. Riel, our President and CEO, in leading the Company
and the Bank. In order to ensure continued independent oversight at the highest levels, the Board of Directors appointed Theresa
G. LaPlaca as Lead Independent Director. As Lead Independent Director, her responsibilities will include:
|
●
|
Serve
as an independent sounding board on the development and presentation of significant issues,
plans and strategies for Board consideration with the Chair
|
|
●
|
Preside
at all meetings of the Board at which the Chairman is not present
|
|
●
|
Call
and preside at all meetings and executive sessions of independent directors
|
|
●
|
Develop
and approve meeting agendas and approve materials for meetings of independent directors
|
|
●
|
Serve
as a conduit of views, concerns and issues between the Chairman and the independent directors
|
|
●
|
Approve
Board meeting agendas, Board pre-read materials and other information sent to the Board,
and proposed meeting calendars and schedules
|
|
●
|
Organize
and lead the Board’s annual self-assessment, in consultation with the Governance
and Nominating Committee
|
|
●
|
Be
available for consultation and direct communication upon the reasonable request of major
shareholders
|
|
●
|
Perform
such other duties as the Board may from time to time delegate or assign to assist the
Board in the fulfillment of its responsibilities
|
In
addition, as Mr. Pozez stepped down from his position on the Board Committees in connection with his appointment as Executive
Chair, the Board revised its Board Committee memberships and appointed new Chairs of the Committees as follows:
Name
|
Committee
Chair
|
Mathew
D. Brockwell
|
Governance
& Nominating
|
Theresa
G. LaPlaca
|
Risk
|
A.
Leslie Ludwig
|
Compensation
|
Kathy
A. Raffa
|
Audit
|
The
Company will continue to evaluate its structure and practices to maintain the highest standards of corporate governance.
Eagle Bancorp, Inc.
|
19
|
2020 Proxy Statement
|
|
|
|
Board
and Committee Oversight of Risk
One
of the many duties of the Board is to oversee the Company’s risk management policies and practices to ensure that the appropriate
risk management systems are employed throughout the Company. The Company faces a broad array of risks, including but not limited
to credit, liquidity, interest rate/market, operational, strategic, compliance/legal/regulatory and reputational risks. The Board
of Directors of the Company, all of the members of which are also members of the Board of Directors of the Bank, is actively involved
in the Company’s and Bank’s risk oversight activities. These Directors, working through several chartered committees
of the Board, including the Risk Committee established on October 23, 2019, with the assistance of chartered management committees,
review and approve the policies of the Company and Bank. The Boards of Directors regularly review the minutes and other reports
from the Board and Management Committees of the Company and Bank. The Board exercises its role of risk oversight in a variety
of ways, including the following:
Board
of Directors
|
● Monitors
overall corporate performance, including financial results, the integrity of financial
and other controls, and the effectiveness of the Company’s legal, credit, compliance
and enterprise risk management programs, risk governance practices, and risk mitigation
efforts.
● Oversees
management’s implementation and utilization of appropriate risk management systems at all levels of the Company.
● Reviews
risks in the context of the Company’s annual strategic planning and the annual budget review.
● Receives
reports from management on and routinely considers critical risk topics, including: operational, financial, regulatory,
strategic, security, personnel, legal, reputational, and technology/cybersecurity, as well as any emerging risks that
might affect the Company.
|
Audit
Committee
|
● Assists
the Board in fulfilling its oversight of financial risk exposures and implementation
and effectiveness of the Company’s compliance with legal and regulatory requirements,
policies and programs.
● Oversees
qualifications, performance and independence of our Company's independent registered public accounting firm.
● Oversees
performance of the Company's Internal Audit function and the Chief Audit Executive, and reviews reports from the Chief
Audit Executive.
● Reviews
Quarterly Financial Statements and approves Annual Reporting to the SEC on Form 10K and Quarterly Reporting to the SEC
on Form 10Q
● Oversees
overall compliance with the Code of Business Conduct and Ethics, and reviews and approves related party transactions.
● Reports
its discussions to the Board for consideration and action when appropriate.
|
Compensation
Committee
|
● Assists
the Board in fulfilling its oversight of risks that may arise in connection with the
Company’s compensation programs and practices.
● Reviews
the design and goals of the Company’s compensation programs and practices in the context of possible risks to the
Company’s financial and reputational well-being.
● Determines
compensation (cash and non-cash) of non-employee directors.
● Reviews
the Company’s strategies and supporting processes of management succession planning, leadership development, and
executive retention.
● Reviews,
discusses and recommends for inclusion in the Company’s proxy statement, the Compensation Disclosure and Analysis
and the Compensation Committee Report appearing in the proxy statement.
● Approves
Senior Executive Incentive Plan (“SEIP”), Long Term Incentive Plan (“LTIP”), and Executive Officer
compensation and benefits.
● Reports
its discussions to the Board for consideration and action when appropriate.
|
Eagle Bancorp, Inc.
|
20
|
2020 Proxy Statement
|
|
|
|
Governance
and Nominating Committee
|
● Assists
the Board in fulfilling its oversight of risks that may arise in connection with the
Company’s governance structures and processes.
● Conducts
periodic evaluations of the Company’s governance practices and Board performance.
● Reviews
shareholder proposals submitted to the Company.
● Identifies
qualified Board members and evaluates performance of the Directors.
● Reports
its discussions to the Board for consideration and action when appropriate.
|
Risk
Committee
|
● Assists
the Board by providing oversight of the Company’s risk governance framework and
risk functions, including the strategies, policies, procedures, processes, and systems
established by management to identify, measure, monitor, and manage major risks of the
Company.
● Promotes
a robust and effective risk culture, facilitates Board-level oversight of risk-related issues, and serves as a resource
to management by overseeing major risks across the Company and enhancing management’s and Board’s understanding
of the Company’s overall risk appetite and risk management activities and effectiveness.
● Monitors
emerging risks that might affect the Company and propose action plan to the Board as deemed necessary.
● Makes
recommendations to the Board, including those with regard to the overall risk profile and capital of the Company.
● Reports
its discussions to the Board for consideration and action when appropriate.
|
The
Board of Directors has adopted written charters of the Audit, Governance and Nominating, and Compensation Committees. Copies of
the Committees’ charters can be found at http://ir.eaglebankcorp.com/govdocs.
2019
Meetings, Committees, and Procedures of the Board of Directors
Our
Board of Directors met thirteen (13) times during 2019. All members of the Board of Directors of the Company attended at least
75% of the meetings held by the Board of Directors and all committees on which such member served during 2019 or any portion thereof.
The
Board of Directors has a standing Audit Committee, Compensation Committee, Governance & Nominating Committee and Risk Committee.
The following table sets forth the membership of these committees throughout 2019 and meeting information for each of these committees
during the fiscal year ended December 31, 2019. Following the chart is a description of each committee and its functions.
Name
|
Audit
Committee
|
Compensation
Committee
|
Governance
& Nominating Committee
|
Risk
Committee
|
Leslie
M. Alperstein, Ph.D.(1)
|
Y
|
Y
|
|
|
Mathew
D. Brockwell(2)
|
VC
|
|
|
X
|
Dudley
C. Dworken(3)
|
|
Y
|
|
|
Harvey
M. Goodman(1)
|
|
Y
|
|
|
A.
Lynn Hackney(4)
|
|
|
|
|
Theresa
G. LaPlaca(5)
|
X
|
|
|
C
|
A.
Leslie Ludwig(6)
|
|
C
|
|
VC
|
Ronald
D. Paul(7)
|
|
|
|
|
Norman
R. Pozez(8)
|
X
|
X
|
C
|
X
|
Kathy
A. Raffa(9)
|
C
|
Y
|
Y
|
|
Susan
G. Riel
|
|
|
|
|
Eagle Bancorp, Inc.
|
21
|
2020 Proxy Statement
|
|
|
|
Donald
R. Rogers(3)
|
|
|
|
|
James
A. Soltesz(10)
|
|
|
X
|
|
Benjamin
M. Soto (11)
|
|
X
|
|
|
Leland
M. Weinstein(12)
|
Y
|
VC
|
VC
|
|
Number
of Meetings in 2019
|
14
|
9
|
5
|
1(13)
|
C
denotes Chair of Committee.
VC
denotes Vice Chair of Committee.
X
denotes member of the Committee at December 31, 2019.
Y
denotes member of the Committee during 2019.
(1)
|
Mr.
Alperstein and Mr. Goodman resigned from the Board of Directors of the Company as of
September 25, 2019.
|
(2)
|
Mr.
Brockwell joined the Board of Directors of the Company on November 1, 2019.
|
(3)
|
Mr.
Dworken and Mr. Rogers resigned from the Board of Directors of the Company as of July
1, 2019.
|
(4)
|
Ms.
Hackney joined the Board of Directors of the Company as of July 1, 2019, and resigned
from the Board of Directors of the Company and Bank as of September 25, 2019.
|
(5)
|
Ms.
LaPlaca joined the Board of Directors of the Company as of July 1, 2019.
|
(6)
|
Ms.
Ludwig joined the Board of Directors of the Company as of July 1, 2019 and became Chair
of the Compensation Committee on July 1, 2019. Ms. Ludwig served as a non-voting member
of the Audit Committee from February 26, 2019 through July 1, 2019.
|
(7)
|
Mr.
Paul resigned from his positions at the Company and Bank, as of March 20, 2019.
|
(8)
|
Mr.
Pozez also served as Vice Chair of the Company until March 21, 2019, at which date he
became Chair of the Board of Directors of the Company.
|
(9)
|
Ms.
Raffa served as a member of the Compensation Committee until May 16, 2019.
|
(10)
|
Mr.
Soltesz joined the Board of Directors of the Company as of May 16, 2019 and became a
voting member of the Governance and Nominating Committee on May 16, 2019.
|
(11)
|
Mr.
Soto, joined the Board of Directors of the Company as of July 1, 2019. Mr. Soto became
a member of the Compensation Committee on October 23, 2019.
|
|
(12)
|
Mr.
Weinstein served as Lead Director of the Company until May 16, 2019 and as a member of
the Audit Committee until October 23, 2019. Mr. Weinstein resigned from the Board of
Directors of the Company and Bank as of March 9, 2020.
|
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(13)
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The
Risk Committee was created on October 23, 2019.
|
Audit
Committee
The
Audit Committee is responsible for the selection, review and oversight of the Company’s independent registered public accounting
firm (occasionally referred to as the “independent accountants”), the approval of all audit, review and attestation
services provided by the independent accountants, the integrity of the Company’s reporting practices and evaluation of the
Company’s internal controls and internal control function and accounting procedures, including review and approval of quarterly
and annual filings with the Securities and Exchange Commission on Forms 10-Q and 10-K and internal audit departments plans and
reports. It also reviews audit reports with the Company’s independent accountants. Each member of the Audit Committee is
independent, as determined under the definition of independence adopted by Nasdaq for audit committee members in Rule 5605(c)(2)(A).
The Board of Directors has determined that Ms. Raffa and Mr. Brockwell are “audit committee financial experts” 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 accountants. Non-audit
services are only provided by the independent auditors to the extent permitted by law. Pre-approval is required unless a “de
minimis” exception is met. To qualify for the “de minimis” 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 accountants 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 by one or more members of the committee to whom authority to grant such
approval has been delegated by the committee prior to the commencement of the non-audit services. The Audit Committee is also
responsible for the appropriate review and approval, to the extent required by law of related party transactions and oversees
the Business Conduct, Ethics and Conflicts of Interest Program.
Compensation
Committee
The
Compensation Committee makes determinations with respect to salary levels, bonus compensation and equity compensation awards for
executive officers, among others. The Compensation Committee has the
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sole responsibility for determining executive compensation,
including that of the named executive officers, and for establishing compensation philosophy. Each member of the Compensation
Committee is independent, as determined under the definition of independence adopted by Nasdaq for compensation committee members
in Rule 5605(d)(2)(A). The Compensation Committee is also responsible for succession planning for the Company and the Bank.
For
further information on the role of the Compensation Committee, see page 48.
During
2019, the Compensation Committee retained and worked with Compensation Advisors, an executive compensation and benefits consulting
firm of national scope and reputation, to advise it in connection with executive compensation decisions.
Governance
& Nominating Committee
The
Governance & Nominating Committee consists of three members of the Board of Directors who are independent directors within
the meaning of Nasdaq Rule 5605(a)(2). The Governance & Nominating Committee is responsible for the evaluation of nominees
for election as director, the recommendation to the Board of Directors of director candidates for nomination for election by the
shareholders and the evaluation of sitting directors.
The
Board has not developed a formal policy for the identification or evaluation of nominees. In general, when the Board determines
that expansion or reduction of the Board or replacement of a director is necessary or appropriate, the Governance & Nominating
Committee will review, through candidate interviews with members of the Board and management, consultation with the candidate’s
associates and other means, a candidate’s honesty, integrity, reputation in and commitment to the community, judgment, personality
and thinking style, willingness to invest in the Company, residence, market knowledge, 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 Governance & Nominating Committee will review
any special expertise, for example, expertise that qualifies a person as an audit committee financial expert, membership or influence
in a particular geographic or business target market, expertise in technology, cybersecurity and risk management or other relevant
business experience. The Board of Directors and the Governance & Nominating Committee have not established a specific diversity
component in their consideration of candidates for director, but strongly recognizes the benefits of having directors with diverse
backgrounds and perspectives. In the last year, one minority director and two female directors have been added to the Company
Board. To date, the Company has not paid any fee to any third party to identify, evaluate, or assist it in identifying or evaluating,
potential director candidates.
The
Governance & Nominating Committee will consider director candidates nominated by shareholders during such times as the Company
is actively considering obtaining new directors, and on the same basis as candidates proposed by the Governance & Nominating
Committee, the Board or other sources. 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 Company’s Corporate Secretary
not later than ninety (90) days prior to the month and day one year subsequent to the date that the proxy materials regarding
the last election of directors to the Board were mailed to the shareholders and include: (a) a statement that the writer is a
shareholder (providing evidence if the person’s shares are held in street name) and is proposing a candidate for consideration;
(b) the full name, age, date of birth and contact information (including the business and residence addresses and telephone numbers)
for the candidate; (c) a statement of the candidate’s business and educational experience, including a list of positions
held for at least the preceding five years; (d) information regarding the candidate’s qualifications to be director, including
but not limited to an evaluation of the factors discussed above which the Board will consider when 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; and (h) a signed representation by each such nominee that the nominee will timely provide any other
information reasonably requested by the Company for the purpose of preparing its disclosures in regard to the solicitation of
proxies for the election of directors. 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.
No undertaking to do so is implied by the willingness to consider candidates proposed by shareholders.
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In
addition, the Governance & Nominating Committees regularly discusses the contributions of the persons then serving as directors,
to ensure alignment with the strategic and tactical directions of the Company. Formal evaluations of the directors are conducted
biannually.
Risk
Committee
The
Company formed the Risk Committee on October 23, 2019 to assist the Company Board by providing oversight of the Company’s
risk governance framework and risk functions, including the strategies, policies, procedures, processes, and systems established
by management to identify, measure, monitor and manage major risks of the Company including, but not limited to liquidity, interest
rate/ market, credit, operational, compliance/legal/regulatory, reputational, and strategic risks.
The
Board takes risk management and its oversight responsibilities very seriously. The Company accepts a certain degree of risk with
each business decision it makes. The Board recognizes that risk management does not eliminate risk, but seeks to achieve an appropriate
balance of risk and return. Recognizing the risk inherent in the Company’s business and managing those risks within the
Company’s risk appetite and capital position is critical for optimizing shareholder value and ensuring a safe and sound
operation of the Company.
The
Company instills a culture of risk management throughout the organization by integrating top-down direction and governance with
bottom-up business line commitment and accountability. Executive officers and other key management executives meet regularly (at
least quarterly) to review and discuss risk management. Management committees, comprised of senior management seek to identify
and address issues to ensure that risks and remediation of such risks are carefully considered.
Compensation
Committee Interlocks and Insider Participation
No
member of the 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 officer serving as a member of the 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, and
for transactions described under “Director Compensation” and “Certain Relationships and Related Party Transactions,”
no member of the 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.
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
because of personal or family illness or pressing matters. All of the nine directors in office at the time attended the 2019 annual
meeting of shareholders.
Audit
Committee Report
The
Audit Committee has:
1. reviewed
and discussed with management the audited consolidated financial statements and the auditors’ report on internal controls
included in the Company’s Annual Report on Form 10-K;
2. discussed
with Dixon Hughes Goodman LLP, the Company’s independent registered public accounting firm, the matters required to be discussed
by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission; and
3. received
the written disclosures and letter from Dixon Hughes Goodman LLP as required by the applicable requirements of the Public Company
Accounting Oversight Board, regarding the independent accountants’ communications with the Audit Committee concerning independence,
and has discussed with Dixon Hughes Goodman LLP, its independence.
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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 Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The Audit
Committee has also considered whether the amount and nature of non-audit services provided by Dixon Hughes Goodman LLP is compatible
with the auditor’s independence.
Members
of the Audit Committee
Kathy
A. Raffa, Chair
Matthew
D. Brockwell Theresa G. LaPlaca
|
Director
Compensation
The
following table sets forth information regarding the annualized fee rate schedule approved for the non-employee directors of the
Company, other than Mr. Pozez after he became Chair of the Board, in effect January 1 to June 30, 2019 and then modified effective
July 1, 2019 in conjunction with the reorganization of the Boards of Directors of the Company and Bank for service as members
of the Company and Bank Boards of Directors. Members of the Boards of Directors who are employees of the Company or Bank do not
receive additional cash compensation for service on the Board of Directors. Mr. Pozez, the Company and the Bank have entered into
a Chairman Compensation Agreement, dated as of May 31, 2019 and amended and restated as of December 31, 2019, governing his compensation
for his service as Chair of the Board of Directors of the Company and the Bank. The terms of this agreement are described below
under the caption “Chairman Agreements” at page 27. His compensation arrangements were not revised in connection with
his appointment as Executive Chairman in March 2020.
2019
Component
|
Annualized
Amount ($) January 1 to June 30
|
Annualized
Amount ($) July 1 to December 31
|
Annual
Cash Retainer – Company
|
$10,000
|
$10,000
|
Annual
Cash Retainer – Bank
|
$
5,000
|
$5,000
|
Annual
Committee Chair Retainers:
|
●
Audit
|
$30,000
|
$50,000
|
●
Compensation
|
$20,000
|
$50,000
|
●
Governance & Nominating
|
$25,000
|
N/A
|
●
Risk Committee
|
N/A
|
$50,000
|
Annual
Lead Director Retainer
|
$50,000
|
$85,000
|
Per
Meeting Fees
|
Committee
Chair
|
$3,000
|
$3,000
|
Board
or Committee – Company & Bank
|
$1,500
|
$1,500
|
Non-employee
directors also receive an annual award of restricted stock. All of these awards vest in three annual installments commencing on
the first anniversary of the date of grant.
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The
following table sets forth the actual amounts of compensation paid to each non-employee director for service as a member of the
Board of Directors of the Company in 2019.
Name
|
Fees
Earned or Paid in Cash
|
Stock
Awards (1)
|
Option
Awards (2)
|
All
Other Compensation(3)
|
Total
|
Leslie
M. Alperstein, Ph.D.(4)
|
$49,000
|
$261,960
|
$--
|
$4,514
|
$315,474
|
Mathew
D. Brockwell(5)
|
$6,500
|
$--
|
$--
|
$--
|
$6,500
|
Dudley
C. Dworken(6)
|
$27,500
|
$261,960
|
$--
|
$2,243
|
$291,703
|
Harvey
M. Goodman(4)
|
$44,500
|
$261,960
|
$--
|
$2,106
|
$308,566
|
A.
Lynn Hackney(7)
|
$37,000
|
$62,674
|
$--
|
$--
|
$99,674
|
Theresa
G. LaPlaca(8)
|
$47,806
|
$--
|
$--
|
$1,034
|
$48,840
|
A.
Leslie Ludwig(9)
|
$93,250
|
$62,674
|
$--
|
$--
|
$155,924
|
Norman
R. Pozez
|
$830,414
|
$549,961
|
$--
|
$2,858
|
$1,383,233
|
Kathy
A. Raffa
|
$112,000
|
$299,989
|
$--
|
$3,103
|
$415,092
|
Donald
R. Rogers(6)
|
$21,500
|
$261,960
|
$--
|
$2,806
|
$286,266
|
James
A. Soltesz(10)
|
$152,500
|
$149,995
|
$--
|
$2,858
|
$305,353
|
Benjamin
M. Soto (11)
|
$50,500
|
$62,674
|
$--
|
$1,433
|
$114,607
|
Leland
M. Weinstein (12)
|
$203,500
|
$299,989
|
$--
|
$2,023
|
$505,512
|
(1)
|
Represents
the grant date fair value of shares of restricted stock awarded during 2019. Dr. Alperstein
– 4,698 shares; Mr. Dworken – 4,698 shares; Mr. Goodman – 4,698 shares;
Ms. Hackney – 1,124 shares; Ms. Ludwig – 1,124 shares; Mr. Pozez –
9,863 shares; Ms. Raffa – 5,380 shares; Mr. Rogers – 4,698 shares; Mr. Soltesz
- 2,690 shares; Mr. Soto – 1,124 shares and Mr. Weinstein – 5,380 shares.
At December 31, 2019, the non-employee directors had unvested shares of restricted stock
as follows: Mr. Brockwell – 0 shares; Dr. Alperstein – 0 shares; Mr. Dworken
– 0 shares; Mr. Goodman – 0 shares; Ms. Hackney – 0 shares; Ms. LaPlaca
– 0 shares; Ms. Ludwig – 1,124 shares; Mr. Pozez – 9,863 shares; Ms.
Raffa – 5,380 shares; Mr. Rogers – 0 shares; Mr. Soltesz -2,690 shares; and
Mr. Weinstein –5,380 shares. Grant date fair value is calculated based on the closing
price of the Company’s shares on the date of grant.
|
(2)
|
At
December 31, 2019, there were no outstanding option awards, vested or unvested, held
by non-employee directors.
|
(3)
|
Premiums
on long term care insurance provided to non-employee directors.
|
(4)
|
Mr.
Alperstein and Mr. Goodman resigned from the Board of Directors of the Company and Bank
as of September 25, 2019.
|
(5)
|
Mr.
Brockwell joined the Boards of Directors of the Company on November 1, 2019.
|
(6)
|
Mr.
Dworken and Mr. Rogers resigned from the Board of Directors of the Company as of July
1, 2019.
|
(7)
|
Ms.
Hackney, a member of the Board of Directors of the Bank since 2016, joined the Board
of Directors of the Company as of July 1, 2019, and resigned from the Boards of Directors
of the Company and Bank as of September 25, 2019.
|
(8)
|
Ms.
LaPlaca joined the Boards of Directors of the Company and Bank as of July 1, 2019.
|
(9)
|
Ms.
Ludwig, a member of the Bank Board of Directors since 2017, joined the Board of Directors
of the Company as of July 1, 2019.
|
(10)
|
Mr.
Soltesz, a member of the Bank Board of Directors since 2007, joined the Board of Directors
of the Company as of May 16, 2019.
|
(11)
|
Mr.
Soto, a member of the Bank Board of Directors since 2006, joined the Board of Directors
of the Company as of July 1, 2019.
|
(12)
|
Mr.
Weinstein resigned from the Board of Directors of the Company and Bank as of March 9,
2020.
|
Director
Fees
In
connection with the resignation of Messrs. Alperstein, Dworken, Goodman and Rogers and Ms. Hackney, the Company and the Bank entered
into agreements with each of the resigning directors, pursuant to which all unvested awards of restricted stock units, restricted
stock and options to purchase stock previously granted to them as partial compensation for board service, vested in full. As a
result, the resigning directors received vesting of shares of restricted stock as follows: Mr. Alperstein – 8,509 shares;
Mr. Dworken – 8,509 shares; Mr. Goodman – 8,509 shares; Ms. Hackney – 2,037 shares; and Mr. Rogers: -8,148 shares.
In connection with the resignation of Mr. Weinstein, the Company and the Bank entered into an agreement pursuant to which he was
permitted to retain fees previously paid to him for future service but forfeited unvested restricted stock awards. Under all of
the agreements, each of the resigning directors agree to comply with certain nonsolicitation, noninterference and nondisparagement
provisions for a period of two years from the date of their resignation.
In
February 2020, non-employee directors of the Company were awarded shares of restricted stock as follows: Mr. Brockwell –
560 shares; Ms. LaPlaca - 3,363 shares; Ms. Ludwig – 6,726 shares; Ms. Raffa, 6,727 share;
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Mr. Pozez – 43,441 shares;
Mr. Soltesz - 6,726 shares; Mr. Soto – 3,363 shares, and Mr. Weinstein – 6,726 shares All of these awards vest in
three annual installments commencing on the first anniversary of the date of grant. For 2020, each non-employee director of the
Company is entitled to receive annual retainers of $15,000 in cash in the aggregate, for service as a member of both the Company
and Bank Board of Directors, plus a cash fee of $1,500 for each meeting attended of the Board of Directors of the Company. The
Chairs of Bank level committees will be entitled to a $3,000 per meeting fee with members receiving $1,500 per meeting fee in
2020. The Chair of the Audit Committee is entitled to a retainer of $50,000. The Chair of the Compensation Committee is entitled
to a retainer of $50,000. The Chair of the Governance & Nominating Committee is entitled to a retainer of $50,000. The Chair
of the Risk Committee is entitled to a retainer of $50,000. The Chair of the Director’s Loan Committee is entitled to a
retainer of $35,000 and the Vice Chair is entitled to a retainer of $25,000.
Following
the sudden resignation of Mr. Paul, former Chairman and CEO of the Company, Mr. Pozez, former Vice Chair of the Company’s
Board was appointed Chairman of the Company and Bank on March 21, 2019. Mr. Pozez quickly became intensely involved in the responses
of the Company and Bank to Mr. Paul’s resignation, ensuring a smooth transition by having meetings with significant customers,
attending meetings with investors and investor conferences, interacting with regulatory agencies, and attending Board and management
committee meetings. Mr. Pozez initiated a significant restructuring of the Board and its governance activities in preparation
for heightened expectations of Board oversight. Significant areas impacted by Mr. Pozez’s leadership include:
|
●
|
Board
structure and leadership, including reduced Company and Bank Board membership, augmented with additional talent in governance,
risk and controls
|
|
●
|
Shifting
of oversight from Bank Board Committees to Management Committees
|
|
●
|
Realignment
of Board Committee leadership and membership based on skillsets
|
|
●
|
Risk
Committee and risk-based reporting to the Board
|
|
●
|
New
Corporate Governance Guidelines
|
Chairman
Agreements
The
Company, the Bank and Mr. Pozez are parties to a Chairman Compensation Agreement, dated as of May 31, 2019 and amended and restated
as of December 31, 2019, governing his compensation for service as Chairman of the Board of Directors of the Company and the Bank.
Under his original agreement in respect of 2019, Mr. Pozez was entitled to receive an annual retainer of $900,000 (subject to
automatic future increases) and was paid a prorated amount of $705,000 for 2019. Under his original agreement, Mr. Pozez was also
intended to receive, an award of restricted stock with a value of $705,206 which would vest in three substantially equal installments
commencing on the first anniversary of the date of grant with acceleration upon his ceasing to be a member of the Board of both
the Company and the Bank. Due to an oversight, the award was not granted. However, upon realizing the error, the Compensation
Committee took action on March 27th to grant him the award with a grant date of April 2, 2020 with the number of shares to be
determined by dividing the award value by the closing price of Company common stock on The Nasdaq Capital Market on the grant
date, and rounding down to the next lower whole number of shares. Under his amended and restated agreement. Mr. Pozez is currently
entitled to an annual retainer of $1,035,000 (subject to automatic increases by an amount not less than 5% of the preceding year’s
retainer, as determined by the Compensation Committee). Mr. Pozez is also entitled to receive an award of shares of restricted
stock having a value of $1,937,500 as of the award date, which award was made on February 10, 2020. His award vests in three substantially
equal installments commencing on the first anniversary of the date of grant. Mr. Pozez is entitled to receive future equity awards
as the Compensation Committee may determine in its sole discretion. The agreement provides that the Compensation Committee does
not intend to make any additional equity awards to Mr. Pozez prior to 2023. Mr. Pozez is also eligible to participate in any life,
disability, health or other insurance benefits as the Company or Bank may make available to nonemployee directors, on the same
terms and conditions as other nonemployee directors. The agreement will terminate if Mr. Pozez is not reelected or appointed to
the Board of Directors, if he is removed as a director or as Chairman, or if he is not reappointed as Chairman. If the agreement
is terminated following a change in control then Mr. Pozez would, subject to execution, delivery and irrevocability of an appropriate
release, be entitled to receive a lump sum cash payment equal to 1.99 times the sum of his then current annual compensation and
the value of the equity award made in the year in which termination occurs, subject to any limitation necessary to avoid the imposition
of certain excise taxes. The agreement
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contains noncompetition, nonsolicitation, noninterference and nondisparagement provisions
which are applicable during the term of the agreement and for a period of two years from the date of termination of the agreement.
The
Company, the Bank and Mr. Pozez are also parties to an Amended and Restated Non-Compete Agreement, dated as of December 31, 2019.
Mr. Pozez’s non-compete agreement provides that in the event of certain terminations of his service as Chairman following
a change in control, as defined in his Chairman Compensation Agreement, and subject to his timely signing and delivering of a
General Release and Waiver and subject to his continued compliance with the noncompetition provisions of the noncompete agreement,
the Company and Bank shall, for one year following the date on which the release requirement is met, is executed and delivered
to the Bank, continue to pay Mr. Pozez monthly in arrears, compensation at the rate being paid as of the termination date, together
with an additional amount equal to one-twelfth of the equity award value as of the termination date, for each month of the period
during which the officer is in full compliance with the provisions of the agreement. Mr. Pozez agrees that for a period of one
year following his termination as Chairman, he will not, directly or indirectly, in any capacity (whether as a proprietor, owner,
agent, officer, director, shareholder, organizer, partner, principal, manager, member, employee, contractor, consultant or otherwise)
engage in employment or provide services to any financial services enterprise engaged in the business of offering retail customer
and commercial deposit accounts and/or loan products.
Other
Compensation for Directors
Other
than the cash fees, equity awards and long term care insurance described above, the Company does not maintain any 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 and who are not directors of the
Company. Except as otherwise indicated, the occupation listed has been such person’s principal occupation for at least the
last five years.
Charles
D. Levingston, CPA
Mr.
Levingston, 40, Executive Vice President and Chief Financial Officer of the Bank and Company since April 2017, previously served
as Executive Vice President of Finance at the Bank. Mr. Levingston, a Certified Public Accountant, served in various financial
and senior management roles at the Bank prior to his current role. Mr. Levingston joined the Bank in January 2012, and previously
worked at The Federal Reserve Banks of Atlanta and Philadelphia as a commissioned Bank Examiner, and at PriceWaterhouseCoopers
as a Manager in the Advisory practice. He has over 18 years of experience in the banking industry.
Antonio
F. Marquez
Mr.
Marquez, 61, Senior Executive Vice President and President of Commercial Banking since February 2020, and formerly Chief Lending
Officer - Commercial Real Estate of the Bank, and Executive Vice President of the Company, joined the Company in August 2011.
Mr. Marquez has over 35 years of experience in the banking industry. Prior to joining the Company, he established the real estate
lending franchise for HSBC for the Washington, D.C. market. Earlier he was the head of Commercial Real Estate lending at Chevy
Chase Bank from 1997 to 2005 and previously held various lending positions at The Riggs National Bank in Washington, D.C. after
starting his career at the Chase Manhattan Bank in New York.
Lindsey
S. Rheaume
Mr.
Rheaume, 59, Executive Vice President and Chief Lending Officer – Commercial and Industrial of the Bank and Executive Vice
President of the Company, joined the Company in December 2014. Prior to joining the Company, he served as Relationship Executive
for JPMorgan Chase, responsible for business development in the Washington, D.C., suburban Maryland and Northern Virginia market.
Previously, he served as Executive Vice President and Commercial Lending Manager at Virginia Commerce Bank, which was acquired
by United Bankshares, Inc. in 2014, where he managed the bank's entire commercial and industrial lending activities. Earlier in
his career, he held various senior commercial lending, credit, and leadership positions with SunTrust Bank, GE Capital and Bank
of America.
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Paul
Saltzman, Esquire
Mr.
Saltzman, 59, is Executive Vice President & Chief Legal Officer. He joined the Company in January of 2020 and is responsible
for all legal activities of the Company and the Bank. Mr. Saltzman had most recently been a partner in the Banking and Financial
Institutions Advisory Practice at White & Case since mid 2018. Prior to that he was Vice Chairman at Deutsche Bank from 2015
to 2018, where he helped lead capital stress testing, regulatory remediation and transaction banking in the Americas region. From
2010 to 2015, Mr. Saltzman also served as General Counsel of The Clearing House Payments Company, and President and General Counsel
of its then affiliated trade association (now Bank Policy Institute). He holds a B.A. from Clark University and a J.D. from the
Boston University School of Law and is a member of the New York State Bar.
Janice
L. Williams, Esquire
Ms.
Williams, 63, Senior Executive Vice President and Chief Credit Officer of the Bank since February 2020, and formerly Executive
Vice President – Chief Credit Officer of the Bank and Vice President of the Company, has served with the Company as Credit
Officer, Senior Credit Officer, and Chief Credit Officer since 2003. Prior to employment with the Bank, Ms. Williams served with
Capital Bank, Sequoia Bank, and American Security Bank. Additionally, Ms. Williams, a graduate of Georgetown University Law Center
and a Member of the Maryland Bar, was previously employed in the private practice of law in Maryland.
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Open
Letter from Compensation Committee Chair
Dear
Reader,
The
Company is committed to maintaining a balanced compensation program designed to fairly reward pay for performance, align
management’s interests with those of our shareholders and lead to the long term success of the company.
The
Compensation Committee is composed solely of independent directors. It is our responsibility to design and execute competitive
compensation programs that further the interests of shareholders and demonstrate strong pay for performance alignment.
It is also our responsibility to ensure that your views on executive compensation are heard and considered. During 2018
we continued our traditional outreach program with our major shareholders. In 2019, we expanded our shareholder outreach
to our 40 largest institutional shareholders. We spoke with many long term retail shareholders and also engaged with two
major shareholder advisory services. Based on the feedback received from those shareholder engagements, for the 2019 compensation
program we retained the basic structure of the plan design and administration. We reviewed the performance metrics to
ensure alignment with the Company’s strategic plan and made some changes to ensure that is less qualitative and
more formulaic. The key design elements still include a base salary plus short-term performance incentives and long-term
performance based equity incentive awards as well as time vested equity awards. The majority of the potential compensation
of each executive is variable and performance based. We seek to be transparent in describing our compensation practices,
including the clear disclosure of goals and actual performance on the various metrics measured in our Senior Executive
Incentive Plan.
The
compensation program described in the following Compensation Disclosure and Analysis reflects the guidance received through
our shareholder engagement process as well the advice of our independent compensation consultant. We are committed to
evolving a sound and competitive compensation program which will align with the long term interests of our shareholders.
A.
Leslie Ludwig
Chair,
Compensation Committee
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Compensation
Discussion and Analysis
This
Compensation Discussion and Analysis (“CD&A”) provides information about the 2019 compensation for our
Chief Executive Officer, Chief Financial Officer and our next three most highly compensated executive officers as well as Ronald
D. Paul, our former President and Chief Executive Officer, who resigned on March 20, 2019.
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Susan
G. Riel, our President and Chief Executive Officer.
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Charles
D. Levingston, our Executive Vice President and Chief Financial Officer.
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Antonio
F. Marquez, our Senior Executive Vice President and President of Commercial Banking.
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Lindsey
S. Rheaume, our Executive Vice President, Chief Commercial & Industrial Lending
Officer.
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Janice
L. Williams, our Senior Executive Vice President and Chief Credit Officer.
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Compensation
information for our named executive officers is presented in the compensation tables following this Compensation Discussion and
Analysis.
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This
Compensation Discussion and Analysis describes our executive compensation program for 2019. It also describes how the Compensation
Committee (the “Compensation Committee”) arrived at the specific compensation decisions for our named executive officers,
and discusses key factors that the Compensation Committee considered in determining their compensation.
Executive
Summary
2019
Financial Results and Operating Highlights
The
Company, headquartered in Bethesda, Maryland, was incorporated under the laws of the State of Maryland on October 28, 1997, to
serve as the bank holding company for EagleBank. The Company was formed by a group of local businessmen and professionals with
significant prior experience in community banking in the Company's market area, together with an experienced community bank senior
management team.
The
Company has a long history of growth and balanced financial performance. During 2019, we continued to generate growth in loans
and deposits and deposit market share and during the year we reached $9 billion in total assets. We continue to maintain strong
asset quality and our results benefit from a very favorable efficiency ratio. Net income for the year was $143 million, a moderate
6% decrease from 2018. The challenging interest rate environment, with a flatter yield curve led to a decrease in the net interest
margin and we also saw an elevated level of legal expenses. Our Total Shareholder Return for the year was 1%.
While
net income showed a moderate decrease during the year, the Company continues to show growth in assets and top line revenue. Additionally,
the Company’s capital levels remain well above well capitalized regulatory levels and favorable as compared to peer banking
companies. Tangible book value per share increased by 12% in 2019 and has shown strong growth over one, three and five years.
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The
2019 results continue the Company’s tradition of strong financial performance. In addition, the Company has achieved strong
five-year compound annual growth rates (“CAGR”) in several key areas, including:
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5-Year
CAGR of Net Income: 21%
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5-Year
CAGR of Revenue: 12%
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5-Year
CAGR of Earnings Per Diluted Share: 16%
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5-Year
CAGR of Tangible Book Value Per Share(1): 18%
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5-Year
CAGR of Deposits: 11%
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5-Year
CAGR of Loans: 12%
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(1)
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Tangible
Book Value per share is a non-GAAP financial measure and is calculated by subtracting
intangible book value per common share from the book value per common share. The Intangible
book value per common share was $3.15 in 2019 and the book value per common share was
$35.82 in 2019. The GAAP Reconciliations are included in our 2019 Form 10-K.
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(2)
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Efficiency
Ratio is a non-GAAP financial measure defined as the ratio of noninterest expense, which
was $139.9 million for 2019 to total revenue, which was $349,7 million for 2019. The
GAAP Reconciliations are included in our 2019 Form 10-K
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(3)
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For
the year ended December 31, 2017, operating earnings exclude one-time charges to reduce
the carrying value of net deferred tax assets by $14.6 million, required as a result
of the reduction in corporate income tax rates to 21% in The Tax Cut and Jobs Act (the
“Tax Act”). Reconciliations of GAAP earnings to operating earnings are contained
in our 2017 Form 10-K.
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Shareholder
Feedback
In
2019 we expanded the scope of our shareholder outreach programs. Members of the Board of Directors participate along with senior
management and our investor relations team. We communicate with our largest institutional shareholders on a regular basis and
have substantively engaged with many of them. We also meet with retail shareholders in our community. We appreciate the perspectives
our shareholders have on our compensation program and practices and have implemented a number of changes to our program in prior
years. During our engagement process in 2019, our shareholders were generally pleased with the structure of our compensation program
and we had meaningful discussions with them about the relative alignment of pay and performance and the design structure of our
compensation plans. We remain committed to providing compensation that motivates and rewards our corporate success and the success
of our shareholders. We believe the adjustments made in response to shareholder feedback will enhance that effort. Below is a
summary of the key elements of our compensation program:
Compensation
Practice
|
Eagle
Bancorp Policy/Program
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Pay
for Performance
|
We
require that a significant portion of our executive officer’s cash and equity compensation be based on performance and
“at risk.” Our Senior Executive Incentive Plan allows our senior executives to earn a cash award based on achievement
of Company and individual performance goals, and 50% of equity awards under our LTIP are earned based on Company performance
against pre-established metrics over a three year period with the other 50% vesting over three year with value tied solely
to Company stock price. The SEIP is designed to provide cash incentives on a formulaic basis, subject to caps. The Compensation
Committee considers performance relative to our strategic plan and budget as well as relative to peers in making pay decisions
for our executives.
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Double
Trigger in the Event of a Change in Control
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Our
senior executives’ employment agreements contain pure double trigger provisions in the event of a change in control.
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Robust
Stock Ownership Policy
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We
have a policy mandating ownership by the CEO, directors and executive officers, based on a multiplier of their respective
base salary or annual retainer.
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Prohibit
Hedging of Company Stock
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We
have a policy
prohibiting executive officers and members of the Board of Directors from engaging in transactions intended to hedge or offset the market value of Company stock owned by them.
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Restrict
Pledging of Company Stock
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We
have a policy restricting the amount of Company stock executive officers and members of the Board of Directors may pledge
as collateral.
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2019
Advisory Vote on Executive Compensation
At
our 2019 Annual Shareholders Meeting, our say-on-pay proposal received support from 55% of the votes cast, a lower level of support
than the two prior years, in which the support level for the say-on-pay proposal was 96%. In the spring of 2019, in anticipation
of the Annual Meeting and thereafter, we continued our shareholder outreach program to gather feedback regarding our executive
compensation program, our corporate governance practices and related matters.
2019
Shareholder Engagement Process and Results
Over
the year, and into the fall/winter of 2019/2020, we reached out to our 40 largest institutional shareholders who collectively
owned approximately 67% of the outstanding shares, and had individual conversations with fifteen shareholders who owned approximately
43% of the Company. In the process, we did speak with four of our five largest shareholders. We had excellent dialogues with these
shareholders and also engaged with two prominent shareholder advisory firms. Our Board Chair Noman Pozez participated in the outreach
program, as well as A. Leslie Ludwig, Chair of the Compensation Committee and Leland Weinstein, former Vice Chair of the Governance
& Nominating Committee. Susan Riel, the CEO, participated in many of the sessions with institutional investors, as well as
meeting and speaking with retail investors in our local market. Ms. Riel recused herself from all conversations relating to her
compensation.
The
conversations with our shareholders covered many executive compensation matters as well as many of the corporate governance policies
and enhancements made during the year. What we learned in these dialogues can be summarized as follows:
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During
the shareholder engagement sessions we held, some of the investors were more focused
on our Company’s corporate governance policies and practices than with compensation
related matters. Most of the shareholders we spoke with firmly approved of the changes
the Company had made during the year to the structure and composition of the Board and
Board committees. We received favorable comments regarding the skills and capabilities
of the new directors added during the year and the increased diversity now present on
the Board.
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The
shareholders were also pleased by the enhancement to the risk management capabilities
and practices implemented by the Company in 2019.
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During
the engagement sessions we held most of our shareholders expressed their approval of
the basic design of our executive compensation program, in which the payments available
to the executives include base salary plus short-term performance incentives and long-term
performance based equity awards as well as time vested equity awards.
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We
also heard that some shareholders were concerned about the relative level of compensation
of our former CEO, as compared to peers, and a perceived lack of alignment of pay and
performance, which they measured primarily by the 3 Year TSR. Many of the discussions
with shareholders occurred after the resignation of the former Chairman and CEO, and
after the appointment of an independent Chair and a new CEO in March of 2019.
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In
the discussions, most of the shareholders favorably acknowledged that the compensation
plan for the new CEO, Susan G. Riel, was based on her experience and capabilities, designated
responsibilities and market comparatives.
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In
regards to the alignment of pay and performance, there did not seem to be a consensus
among our shareholders as to the appropriate way to measure the Company performance.
Some shareholders look almost exclusively at the 3 Year TSR. Others prefer to look at
the return over a longer period. However, most of the shareholders with whom we spoke
indicated that performance should
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be measured against several financial metrics which
are standard for the banking industry such as: Earnings Per Share, Tangible Book Value,
ROAA, ROAE, Capital Ratios, Credit Quality and Efficiency.
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Our
shareholders feel that a significant portion of the executive’s pay opportunity
should be in performance based incentives, or in their words “at risk.” This
type of plan should lead to an alignment of executive compensation with the performance
of the Company and the individual executive.
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We
held discussions on the rigor of our goal setting process and the use of industry averages
or indexes as a goal, compared to an absolute number. Many shareholders stated that use
of an appropriate index was a reasonable approach.
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The
shareholders expressed that the performance of an individual executive should be measured
primarily by a formulaic approach without significant reliance on qualitative or discretionary
measures.
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Our
shareholders commented that having a “clawback” provisions in our incentive
awards was an important component of the Company’s overall Risk Management strategy.
|
Based
on the favorable feedback about the basic design structure of our compensation plans we received from our shareholder engagement
efforts in 2018 and early 2019, for the 2019 executive compensation program we maintained the same basic plan design for 2019
but made changes to take into account the concerns we had heard.
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The
components of the potential compensation for each executive are:
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Short-Term
Performance Based Cash Incentive
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Long-Term
Equity Incentive
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○
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50%
Time Vested over 3 years
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○
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50%
Performance Vested at the end of 3 year period
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The
performance metrics used to set the goals for the named executives also remained the
same as in 2018, however we reviewed the weighting of the various metric factors for
each of named executives to ensure greater alignment with the Company’s strategic
plan.
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Performance
metrics for the CFO were modified.
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We
enhanced the level of detail provided in the CD&A, particularly regarding the compensation
of our CEO.
|
For
the 2020 incentive compensation plan we made a further modification. Based primarily on input from the Company’s strategic
planning process, as well as continuing shareholder engagements, for 2020 we modified the performance metrics in the incentive
plan by eliminating the Individual Performance category for each of the named executives. The objective was to foster a more cohesive
management team as well as making performance analysis less qualitative and more formulaic. We value the input from our compensation
advisors and our shareholders as we continue to evolve our compensation plans.
Compensation
Philosophy
We
design our executive compensation program to be driven by performance, rewarding our executives for creating value for shareholders
and representing sound governance principles. The following sets forth the best practices that we adhere to in designing and determining
our executive compensation.
Our
compensation philosophy provides the guiding principles for structuring compensation programs that embody these values. The policies
and underlying philosophy governing the Company’s executive compensation program, as endorsed by the Compensation Committee
and the Board of Directors, are designed to accomplish the following:
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Maintain
a compensation program that is equitable in a competitive marketplace.
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Provide
compensation opportunities that provide the ability to vary pay in line with performance.
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Encourage
achievement of long term strategic objectives and enhancement of shareholder value.
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Recognize
and reward individual initiative and achievements.
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Maintain
an appropriate balance between base salary and short and long term incentive opportunities.
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Allow
the Company to compete for, retain, and motivate talented executives critical to its
success.
|
The
Compensation Committee seeks to target executive total compensation commensurate with performance by the Company and the individual.
Our goal is to provide pay for performance through annual and long term incentives that reward a combination of strategic and
financial achievements as well as our performance relative to industry peers. The Compensation Committee annually considers the
Company’s performance when setting pay. Goals for specific components include:
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Base
salaries for executives are generally targeted at the 50th percentile of high
performing peers with variation reflective of each executive’s role, performance,
experience and contribution.
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The
Senior Executive Incentive Plan targets cash compensation to align with performance.
High performance is expected to result in pay that is aligned with our performance relative
to peers/industry. Performance below goals and peers is designed to result in pay below
peers.
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Long
term incentives in the form of time-vested restricted stock are granted based on a look-back
on the prior year’s performance. The Compensation Committee believes that time-based
vesting incentivizes retention, supports our ownership goals and encourages shareholder
alignment. Time-vested equity is awarded when performance goals are met, with the potential
for higher awards when goals are exceeded.
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Long
term incentives in the form of performance-vested restricted stock units (occasionally
referred to as “PRSUs”) are based on a look-back on the prior year’s
performance. Performance vested restricted stock units will vest based on future Company
performance relative to specific financial metrics.
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Our
current practice is to target 50% of equity based compensation potential through awards
vesting over time, and 50% through performance based awards with a multi-year performance
period.
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Benefits
and perquisites are not a significant component of total 2019 compensation.
|
The
Compensation Committee is committed to tying compensation to performance and ensuring that compensation, both cash and equity,
is commensurate with our financial results and ranking relative to peers. The Committee believes the Company’s current executive
team is of extremely high caliber and contributed significantly to the Company’s strong historical growth and impressive
continued performance. Rewarding, motivating and retaining a strong executive team are critical to the continued success of the
Company.
Our
Compensation Drivers
In
determining compensation levels, we utilize five key drivers:
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Incentive
plans are designed to encourage achievement of our strategic business goals and reinforce
our business values. All our incentive pay programs and decisions are filtered through
the perspective of ensuring sound compensation practices that do not encourage inappropriate
risk-taking or result in excessive compensation.
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●
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Pay
levels should be fair and internally equitable. Fairness is vital in all compensation
programs and results. We do not discriminate in the creation or implementation of pay
programs. Pay is based on demonstrated performance, skills, commitment and results.
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●
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We
pay for performance and the attainment of our vision, business strategy, operating imperatives
and results. A meaningful percentage of overall executive compensation is based on
Company and individual performance. Our compensation programs are geared to performance
as the basis of determining pay. Our incentive plans are designed to drive prudent individual
and enterprise performance.
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We
recognize the impact of the individual. Not all positions have the same level of
responsibilities, require the same skills and qualifications or have the same effect
on the Company. Our compensation programs enable us to reward both Company results and
individual performance in furtherance of our philosophy of being fair and paying for
performance and thus motivate our officers to perform and succeed as reflected in our
stated goals.
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We
are mindful of the market. The market sets the framework for opportunity. Then it
is Company and individual achievements that drive the payouts and awards. We seek to
provide market-based
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compensation commensurate with performance, to attract and retain
top executive talent, while providing value to shareholders.
|
Our
Pay Mix
The
cornerstone of our executive compensation program is competitive pay for demonstrated performance. We seek to ensure that the
compensation received by our executives is aligned with our performance, and that a meaningful portion of our executives’
pay is contingent on the achievement of annual and forward-looking long term performance goals that drive our success as a Company
and accordingly, add value for our shareholders.
For
example, the 2019 target and actual cash incentive and compensation mix for Ms. Riel, our CEO, are shown below:
SEIP
Cash Incentive Payout 2019
|
Target:
|
Actual:
|
$1,631,250
|
$1,387,510
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CEO
Pay Ratio
Rules
of the Securities and Exchange Commission (“SEC”) require most publicly traded companies to provide information regarding
the relationship of the median annual total compensation of our employees, other than our Chief Executive Officer, to the annual
total compensation of our Chief Executive Officer. As we had more than one person serve as our Chief Executive Officer during
2019, we may, under SEC rules, elect to use a weighted blend of compensation received by our Chief Executive Officers, or we may
annualize the compensation of the Chief Executive Officer in office as of the date we identify our median employee. We have elected
to use the compensation of Ms. Riel, annualizing her 2019 compensation as Chief Executive Officer, and including her compensation
reported for 2019 in the Summary Compensation Table. Ms. Riel’s 2019 stock awards represent awards made in February 2019
under the LTIP for 2018 performance. The non-equity incentive plan compensation represent amounts paid under the SEIP in February
2020 with respect to 2019 performance, as her award opportunities were revised following her appointment as President and Chief
executive Officer.
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SEC
rules require us to determine our median employee only once every three years, provided that there have been no material changes
in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change
to our pay ratio disclosure. We identified the median employee by calculating the total cash compensation of all persons who were
employed by us as of December 31, 2019, including full time and part time employees. We considered regular pay for salaried and
hourly employees, overtime, and taxable cash benefits, including cash incentive payments, phone and auto allowances, and referral
fee income, for the year ended December 31, 2019, as reflected by our internal payroll records. We did not consider non-taxable
compensation in selecting the median employee. We made annualizing adjustments to the compensation of full time employees who
joined us mid-year.
We
then ranked the 2019 compensation received by all of the employees in our employee population other than our CEO to determine
our median employee.
We
calculated our median employee’s 2019 annual total compensation in the same manner as our named executive officers’
compensation is determined for purposes of the Summary Compensation Table.
Based
on this methodology, we determined that:
|
●
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The
annual total compensation of our median employee was $93,792.
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●
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The
annual total compensation of Ms. Riel, our President and Chief Executive Officer, was
$3,128,056.
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The
ratio of Ms. Riel’s total compensation for 2019 to that of the median employee
was 33 to 1.
|
Readers
should note that because different companies may determine their median employee based on different factors and using different
adjustments, assumptions or exclusions, our pay ratio may not be comparable to the pay ratio disclosed by other companies.
Compensation
Components
The
key components of our 2019 executive compensation program for all named executive officers consisted of a base salary, the SEIP,
a Long Term Incentive Plan, a 401(k) Plan, and for certain named executive officers other than Mr. Levingston, a nonqualified
supplemental executive retirement benefit program. Ms. Riel also received use of a Company paid apartment. The Committee typically
reviews and determines executive compensation in the first quarter of the year. However, due to circumstances that arise during
the year, the Committee may adjust or approve a compensation component at other times during the year, as warranted.
(remainder
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The
following table outlines the major elements of 2019 total compensation for our NEOs:
Compensation
Element
|
Purpose
|
Link
to Performance
|
Fixed/
Performance-Based
|
Short/Long
Term
|
Base
Salary
|
Helps
attract and retain executives through market-competitive base pay
|
Reflects
individual experience, performance and contribution of each executive
|
Fixed
|
Short
Term
|
Annual
Cash SEIP
|
Encourages
achievement of short term strategic and financial performance metrics that create long term shareholder value
|
Based
on achievement of short term, predefined corporate performance objectives and an assessment of individual performance
|
Performance-Based
|
Short
Term
|
Retention
Bonus
|
Helps
retain key executives
|
Award
amount is determined by Compensation Committee. A portion of the award is dependent on the executive’s continued employment
|
Fixed
|
Short
Term
|
Long
Term Incentive Plan
|
Aligns
executives’ interests with shareholders, motivates and rewards long term sustained performance, and creates a retention
incentive through multi-year vesting
|
Award
amount is determined by the Compensation Committee based on Company and individual performance
A
portion of the award is contingent on future 3-year performance
|
Performance-Based
|
Long
Term
|
Senior
Executive Retirement Plan
|
Provides
income security into retirement and creates a retention incentive through multi-year vesting
|
N/A
|
Fixed
|
Long
Term
|
Benefits
and Perquisites
|
Establishes
limited perquisites in line with market practice, as well as health and welfare and 401(k) benefits on the same basis as our
general employee population
|
N/A
|
Fixed
|
Short
Term
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Pay
Practices Aligned with Compensation Philosophy
We
believe the effectiveness of our compensation program is dependent upon our pay practices corresponding to our compensation philosophy.
The table below illustrates this strong relationship and further underscores our commitment to maintaining an executive compensation
program that is consistent with best practice.
(remainder
of page is intentionally blank)
STRONG
ALIGNMENT WITH SHAREHOLDERS (WHAT WE DO)
|
Compensation
philosophy
We
believe our compensation philosophy promotes a best practice approach to compensation, including: (i) tying pay to performance
and aligning with shareholder interests; (ii) attracting, retaining, and properly motivating top talent; (iii) integrating
risk with compensation; (iv) maintaining strong governance; and (v) transparency.
|
Hedging/pledging
policy
Senior
executives are prohibited from any hedging of our shares, unvested restricted stock, or unexercised options, including
through short sales.
Senior
executives are prohibited from pledging more than 50% of their shares as collateral and such pledged shares cannot represent
more than 25% of such executive’s net worth.
|
Pay
at risk
The
majority of NEO compensation is “at-risk” and contingent on achievement of business goals that are integrally
linked to shareholder value and safety and soundness.
|
Clawback
policy
The
Company reserves the right to clawback compensation (cash and equity) based on materially inaccurate financial statements,
or whenever required by applicable law, regulation, or exchange listing standard.
|
Use
of variable compensation in deferred equity.
Significant
portions of NEO variable compensation is in deferred Company common stock; 50% of which is time vested over a 3-year period
and 50% of which is performance vested at the end of a 3-year period. Value of equity at vesting is based on stock price
at that time (in addition to achievement of pre-established goals for PRSUs).
|
Competitive
benchmarking
To
make informed decisions on pay levels and pay practices, we benchmark ourselves against our peer group of highly performing,
similarly situated banks. We believe external market data is an important component of maintaining pay practices that
will attract and retain top talent, while driving shareholder value.
|
Risk
events impact pay
In
making pay decisions, we consider material risk and control issues, and make adjustments to compensation, if appropriate.
|
Responsible
use of equity
We
manage our equity award program responsibly, using only approximately 0.46% of weighted average diluted shares in 2019.
|
Share
ownership guidelines
Senior
executives, including NEOs, are required to own a minimum of shares of our common stock with a value equal to twice their
base salary; the CEO must own a minimum of three times her base salary.
|
Shareholder
outreach
Each
year, we solicit feedback from our top shareholders on our compensation and governance programs and practices. The Compensation
Committee considers this feedback when making compensation decisions.
|
2019
Programs and Pay Decisions
2019
was a year of mixed financial performance for the Company. While we reported a moderate decrease in the level of net income and
Earnings Per Share, we grew our revenue, loans, deposits and market share. We remain among the most profitable community banks
in the U.S., as measured by ROAA and ROAE, with very strong capital ratios and ranked in the top tier of our peer group for most
of the defined performance metrics. The compensation awards made to our executives for 2019 were based on the Compensation Committee’s
assessment of Company and individual performance as compared to the goals which had been
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established for 2019 and as compared
to the pre-determined peer group. The details of the comparison of Company performance as compared to specified goals is shown
in the table on page 43. The comparison of our performance as compared to the peer group recommended by Compensation Advisors
is in the table on page 51.
In
addition to financial performance, the Compensation Committee also takes into consideration risk management practices within the
organization, including the results of federal and state regulatory examinations and internal control matters that may be identified
from internal or independent audits throughout the year. The Compensation Committee and the Board also consider market survey
data provided by Compensation Advisors, our independent compensation consulting firm.
Below
is a summary of our 2019 compensation programs and pay decisions with respect to the compensation of the named executive officers:
The
Compensation Committee believes that base salaries for named executive officers should be targeted at market competitive levels,
generally at the 50th percentile but also considering experience and performance of the individual executive. Base
salaries are reviewed annually and adjusted based on our review of market data and assessment of individual executive performance.
Named
Executive Officer
|
2019
Base Salary
|
2020
Base Salary
|
Susan
G. Riel
|
$725,000(1)
|
$800,000
|
Charles
D. Levingston
|
$383,040
|
$417,514
|
Antonio
F. Marquez
|
$463,485
|
$509,834
|
Lindsey
S. Rheaume
|
$409,375
|
$421,656
|
Janice
L. Williams
|
$466,098
|
$510,144
|
Ronald
D. Paul(2)
|
$1,001,919
|
N/A
|
|
(1)
|
Reflects
Ms. Riel’s salary effective March 21, 2019. Prior to her beginning service as President
and Chief Executive Officer, her base salary for 2019 was $570,114.
|
|
(2)
|
Mr.
Paul resigned from his position at the Company, effective March 20, 2019.
|
●
|
Senior
Executive Incentive Plan
|
|
The
SEIP was established to reward our executives for achieving or exceeding predefined performance
goals. In 2019 all named executive officers participated in the SEIP, except for Mr.
Paul who resigned from his positions at the Company, effective March 20, 2019. Under
the SEIP, an executive is eligible to earn an award based on achievement of Company and
individual performance objectives. This design serves to place a significant portion
of each NEOs compensation “at risk.” The Compensation Committee utilizes
a formulaic approach under the SEIP including caps (or maximum payouts) on the amount
that can be earned. While the SEIP provides the Compensation Committee the ability to
adjust the payout indicated by the formula, in 2019, no such discretionary adjustments
were made. However, due to inadvertent errors in calculation of bonuses for 2019 performance,
certain executives received payouts that were more than their formulaic amounts and Ms.
Riel received a payout that was less than her formulaic amounts, with actual aggregate
payouts $2,121 less than the aggregate formulaic amounts. The Compensation Committee,
in consultation with Ms. Riel, decided to approve the amounts paid (which are set forth
below).
|
|
|
The
Compensation Committee defines performance measures and goals for each executive. The
performance measures support our strategic plan and are allocated to executives to create
accountability and ensure rewards are tied to our financial and strategic success. The
performance measures and weights applicable to our named executive officers are summarized
in the table below:
|
Eagle Bancorp, Inc.
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41
|
2020 Proxy Statement
|
|
|
|
2019
Performance Measure
|
Ms.
Riel
|
Mr.
Levingston
|
Mr.
Marquez
|
Mr.
Rheaume
|
Ms.
Williams
|
Adjusted
Net Income
|
25%
|
15%
|
15%
|
15%
|
15%
|
Efficiency
Ratio (KRX Median)
|
15%
|
25%
|
|
|
|
EPS
Growth (KRX Median)
|
20%
|
|
|
|
|
Strategic
Alignment
|
|
20%
|
|
|
|
Annual
Average Loan Growth for Division CRE
|
|
|
20%
|
|
|
Annual
Average Loan Growth for Division C&I
|
|
|
|
25%
|
|
Growth
of Annual Average/Portfolio of Deposit Penetration and Deposit Only Relationships – Divisions CRE & C&I
|
|
|
20%
|
20%
|
|
Non-Interest
Income FHA
|
|
|
10%
|
|
|
Non-Performing
Assets
|
|
|
|
|
30%
|
Expenses
(Non-Interest Expenses)
|
|
|
|
|
15%
|
Net
Interest Margin (KRX Median)
|
15%
|
|
|
|
|
Net
Interest Margin
|
|
20%
|
20%
|
20%
|
|
Charge-Offs
|
|
|
|
|
20%
|
Department/Individual
Performance
|
25%
|
20%
|
15%
|
20%
|
20%
|
Specific
performance goals and a range of performance for each measure are defined at the start of the performance period. For the Efficiency
Ratio and the EPS Growth measures, the goals set were not an absolute number but is a peer group average. The KRX index is based
on the performance of a group of approximately 50 community and regional banks.
Below
we summarize the performance ranges for each measure, actual performance and the payout percentage used to calculate the incentive
payout for each named executive officer. Adjusted net income is a non-GAAP financial measure. It was calculated by adjusting the
Company’s net income for certain non-operating revenues and expenses, including charges related to compensation expenses
associated with the resignation of our former Chairman and CEO and certain directors, legal fees and expenditures associated with
ongoing governmental investigations, one-time FDIC insurance premium credits and gains related to the termination of certain swap
contracts.
Eagle Bancorp, Inc.
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42
|
2020 Proxy Statement
|
|
|
|
Performance
Measure
|
Threshold
|
Target
|
Target
Plus
|
Actual
Performance (Adjusted)
|
Adjusted
Net Income
|
$139,880,162
|
$164,564,896
|
$189,249,630
|
$148,538,786
|
Efficiency
Ratio (KRX Median)
|
62.82%
|
54.63%
|
46.44%
|
37.69%
|
EPS
Growth (KRX Median)
|
4.05%
|
4.76%
|
5.47%
|
-5.43%(1)
|
Annual
Average Loan Growth for Division CRE
|
$330,383,487
|
$388,686,455
|
$446,989,423
|
$497,432,000(1)
|
Annual
Average Deposit Growth for Division CRE
|
$153,000,000
|
$180,000,000
|
$207,000,000
|
$109,444,000(1)
|
Annual
Average Loan Growth for Division C&I
|
$236,912,468
|
$278,720,550
|
$320,528,633
|
$182,059,000(1)
|
Annual
Average Deposit Growth for Division C&I
|
$163,625,000
|
$192,500,000
|
$221,375,000
|
$278,036,000(1)
|
Non-Interest
Income FHA
|
$4,404,320
|
$5,181,553
|
$5,958,786
|
$527,000(1)
|
Non-Performing
Assets
|
$40,406,431
|
$35,136,027
|
$29,865,623
|
$50,216,240(1)
|
Expenses
(Non-Interest Expenses)
|
$163,555,121
|
$142,221,844
|
$120,888,567
|
$131,512,456
|
Net
Interest Margin (KRX Median)
|
3.01%
|
3.54%
|
4.07%
|
3.77%(1)
|
Net
Interest Margin
|
3.45%
|
4.06%
|
4.67%
|
3.77%(1)
|
Charge-Offs
|
$12,275,248
|
$10,674,129
|
$9,073,010
|
$9,376,076(1)
|
Participants
receive a pay out of incentive awards at, above or below target, depending on performance results of each performance goal as
may be adjusted in accordance with the Plan. Performance must be at least 15% above target goals to achieve target-plus payouts.
Based
on performance in 2019, the named executive officers received incentive cash payments under the SEIP that were 77% to 103% of
their target incentive opportunities.
Named
Executive Officer
|
2019
Incentive Compensation at Threshold
|
2019
Incentive Compensation at Target
|
2019
Incentive Compensation at Target Plus
|
Cap
|
Actual
Payout for 2019 Performance
|
Susan
G. Riel (1)
|
$906,250
|
$1,631,250
|
$2,175,000
|
$2,356,250
|
$1,387,510
|
Charles
D. Levingston
|
$134,064
|
$229,824
|
$306,432
|
$383,040
|
$237,482
|
Antonio
F. Marquez
|
$301,265
|
$417,137
|
$509,834
|
$625,705
|
$340,748
|
Lindsey
S. Rheaume
|
$245,625
|
$327,500
|
$388,906
|
$450,313
|
$257,126
|
Janice
L. Williams
|
$302,964
|
$419,488
|
$512,708
|
$582,623
|
$315,271
|
Ronald
D. Paul (2)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
(1)
|
Reflects
Ms. Riel’s opportunity as revised following her appointment as President and Chief
Executive Officer.
|
(2)
|
Mr.
Paul resigned from his positions at the Company and Bank, effective March 20, 2019. As
a result, he was not eligible to receive any amounts under the SEIP for 2019 performance.
|
|
|
Payments
under the SEIP are subject to the Company’s clawback policy.
|
The
Compensation Committee maintains the right to exercise discretion in paying bonuses outside of the SEIP in appropriate circumstances.
In February 2019, retention bonuses were awarded to three key employees – Ms. Riel, Mr. Marquez, and Mr. Rheume. In
recognition of her value to the Company, Ms. Riel was granted $300,000 to be paid in three equal installments in 2019, 2020 and
2021, subject to continued employment. In consideration of their excellent service to the Company and to bring their overall
compensation in line with peers, Mr. Marquez was granted $200,000 and Mr. Rheume was granted $150,000 in each case to be paid
in two equal installments in 2019 and 2020, subject to continued employment.
Eagle Bancorp, Inc.
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|
2020 Proxy Statement
|
|
|
|
In February 2020 a retention bonus was awarded to
Ms. Williams in consideration of her excellent service to the Company and to bring her overall compensation in line with peers,
Ms. Williams was granted $200,000 to be paid in two equal installments in 2020 and 2021, subject to continued employment.
●
|
Long
Term Equity Compensation – Time Vested
|
We
believe equity ownership aligns our executives with our shareholders, promotes a long term focus on the performance and success
of the Company and serves as a powerful means of retaining our high performing executives.
In
February 2020, consistent with our historical practice, we granted equity in the form of restricted stock to our named executive
officers based on an assessment of Company-wide and individual performance in 2019, as well as direct compensation values in accordance
with our market analysis.
To
determine the amount of the equity award to a particular executive, that executive’s performance is considered along with
payouts he/she earned under our SEIP. We then determine the optimal level of compensation (base salary plus cash incentives plus
equity) that we believe each executive should receive. For example, a high performing executive who achieved target-plus performance
levels on all of his/her goals, as well as the Company-wide goals, would receive an equity award reflective of the matching percentile
compared to peers. The Compensation Committee carefully reviews each executive’s performance as well as the Company’s
performance relative to peers. Equity awards also reflect having executives’ pay be in line with performance. Using this
methodology, the time-vested equity awards granted to named executive officers in 2020 in respect of 2019 performance, ranged
from 55% to 125% of an executive’s 2019 base salary.
The
2020 time-vested equity awards vest ratably over three years commencing on the first anniversary of the date of grant. This helps
retain executives and ensure they maintain a long term focus on maintaining and improving Company-wide performance. We believe
this feature of the plan enhances shareholder value for the long term. Our equity ownership guidelines reinforce our goal for
executives to acquire and hold significant stock.
●
|
Long
Term Equity Compensation – Performance Vested
|
In
2016, the Compensation Committee included performance-based vesting into the Long Term Incentive Plan starting with respect to
2015 performance. This performance-based vesting supplements the use of time-based vesting restricted stock. The 2020 award consists
of 50% performance-based restricted stock units and 50% time-vested restricted stock. In February 2020, PRSUs were awarded subject
to performance-based vesting following a three-year measurement period, 2020 - 2022. At the end of the period, two metrics shall
be measured to determine vesting. An executive officer may vest in awards related to either, one or both metrics, depending on
the Company performance. In order to receive any vesting for this component, the Company needs to perform at a minimum level of
performance. The two metrics for the 2020 – 2022 performance grant are:
|
●
|
Return
on Average Assets (“ROAA”) based on the KBW Nasdaq Regional Banking Index
(KRX); and
|
|
●
|
Total
Shareholder Return (“TSR”) compared to KRX.
|
Performance
shares will vest based on the Company’s ranking for both the first and second metric relative to the KBW Nasdaq Regional
Banking Index (“KRX”) and can range from 50% at threshold to 150% at maximum depending on performance. The first metric
will be based on the Company’s Return on Average Assets (“ROAA”) compared to the KRX. The second metric will
be based on the Company’s Total Shareholder Return (“TSR”) compared to the KRX. Threshold for both measures
is defined as median performance, target is defined as the 62.5 percentile, and stretch (or maximum) is defined as the 75th percentile
or greater. Performance shares will vest based on the Company’s ranking for the metrics relative to the KRX and payouts
can range from 50% at threshold to 150% at maximum depending on performance. Payouts are interpolated on a straight-line basis
in between these points. If the metric does not reach threshold performance (i.e. 25th percentile of the KRX ROAA or
TSR), PRSUs for that metric will not vest. If only the threshold is met for a metric, then 50% of the award shall become vested.
If the maximum is met for a metric, then 150% of the target award shall become vested (with points in between measured on a straight-line
interpolation).
Eagle Bancorp, Inc.
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|
2020 Proxy Statement
|
|
|
|
Metric
performance will be calculated and PRSUs vest no later than March 31 of the year following the performance period (i.e. 2022 for
the 2019 awards), or as soon thereafter as data is available. An executive must be employed by the Company on December 31 of the
last year of the relevant performance period, and on the vesting date in order to vest in shares underlying a PRSU, except in
the event of death, disability or retirement.
The
Compensation Committee concluded that the target goals are reasonably achievable with good performance and are sufficiently challenging
but not overly difficult. The Long Term Incentive Plan does not include unlimited upside for exceeding goals, as there is a maximum
award tied to each metric.
The
Compensation Committee retains the authority to make adjustments to applicable targets and calculations in the event of extraordinary
regional circumstances, such as a regional economic downturn arising from force majeure events. The Committee recognizes
the impact of COVID-19 and the extraordinary global and regional economic impact and may take this in to account as it considers
applicable targets and calculations. Since the Index includes a national array of banks, the Committee felt that it was important
to be able to react to some circumstances uniquely affecting the Washington, D.C. metropolitan area, such as a terrorist act and
the resulting effect on the economy, and therefore, Company performance.
The
Long Term Incentive Plan is subject to the Company’s clawback policy.
Time-vested
restricted stock and PRSUs were issued to our executive officers in February 2020 based on 2019 performance as set forth below:
Name
|
Time
Vested Restricted Stock
|
PRSUs
(at Target)
|
Susan
G. Riel (1)
|
20,319
|
20,319
|
Charles
D. Levingston
|
4,723
|
4,723
|
Antonio
F. Marquez
|
7,534
|
7,534
|
Lindsey
S. Rheaume
|
4,589
|
4,589
|
Janice
L. Williams
|
7,576
|
7,576
|
Ronald
D. Paul (2)
|
--
|
--
|
All
executive officers as group (6 persons)
|
44,741
|
44,741
|
|
(1)
|
Ms.
Riel was appointed Interim President and Chief Executive Officer of the Company and Bank,
effective March 21, 2019 and was appointed as permanent President and Chief Executive
Officer on May 6, 2019.
|
|
(2)
|
Mr.
Paul resigned from his positions at the Company and Bank, effective March 20, 2019. See
footnote 8 to the “Potential Payments Upon Termination or Change in Control”
table.
|
We
note that under the SEC rules the equity awards made in 2020 for performance in 2019 are not reflected in the Summary Compensation
Table in this proxy statement but will be reflected in next year’s proxy statement regarding 2020 compensation as they were
granted in that year.
2017
– 2019 PRSUs
The
performance award granted February 14, 2017 contained the following metrics, potential performance payout and our actual results:
Measures
|
Weight
|
|
|
Threshold
|
Target
|
Stretch/Maximum
|
Actual
Results
|
|
Average
Annual Earnings Per Share Growth
|
33.33%
|
Median
|
62.5
Percentile
|
75
Percentile
|
43rd
|
|
Average
Annual Total Shareholder Return
|
33.33%
|
Median
|
62.5
Percentile
|
75
Percentile
|
88th
|
|
Average
Annual Return on Average Assets
|
33.33%
|
Median
|
62.5
Percentile
|
75
Percentile
|
6th
|
|
Payout
Range (% of Target)
|
100%
|
50%
|
100%
|
150%
|
|
|
Eagle Bancorp, Inc.
|
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|
2020 Proxy Statement
|
|
|
|
On
February 10, 2020 the performance award granted February 14, 2017 vested and shares were paid out at a fair market value of $44.60
as follows:
Name
|
Performance
Measure
|
Shares
Awarded at Target
|
Award
Level
Payout
|
Award
Level
%
Payout
|
Share
Payout
|
Susan
G. Riel
|
Average
Annual Earnings Per Share Growth
|
1,582
|
Below
Threshold
|
0%
|
--
|
Average
Annual Total Shareholder Return
|
1,582
|
Below
Threshold
|
0%
|
--
|
Average
Annual Return on Assets
|
1,581
|
Maximum
|
150%
|
2,372
|
Antonio
F. Marquez
|
Average
Annual Earnings Per Share Growth
|
1,073
|
Below
Threshold
|
0%
|
--
|
Average
Annual Total Shareholder Return
|
1,073
|
Below
Threshold
|
0%
|
--
|
Average
Annual Return on Assets
|
1,074
|
Maximum
|
150%
|
1,611
|
Lindsey
S. Rheaume
|
Average
Annual Earnings Per Share Growth
|
678
|
Below
Threshold
|
0%
|
--
|
Average
Annual Total Shareholder Return
|
678
|
Below
Threshold
|
0%
|
--
|
Average
Annual Return on Assets
|
677
|
Maximum
|
150%
|
1,016
|
Janice
L. Williams
|
Average
Annual Earnings Per Share Growth
|
960
|
Below
Threshold
|
0%
|
--
|
Average
Annual Total Shareholder Return
|
960
|
Below
Threshold
|
0%
|
--
|
Average
Annual Return on Assets
|
961
|
Maximum
|
150%
|
1,442
|
Ronald
D. Paul (1)
|
Average
Annual Earnings Per Share Growth
|
5,649
|
Below
Threshold
|
0%
|
--
|
Average
Annual Total Shareholder Return
|
5,649
|
Below
Threshold
|
0%
|
--
|
Average
Annual Return on Assets
|
5,648
|
Maximum
|
0%
|
--
|
(1)
|
Mr.
Paul resigned from his positions at the Company, effective March 20, 2019. See footnote
8 to the “Potential Payments Upon Termination or Change in Control” table.
|
●
|
Supplemental
Executive Retirement Plan
|
The
Company also provides certain of its executive officers, including all of the named executive officers other than the former Chief
Executive Officer, with a supplemental retirement benefit, with benefits payable well into retirement years, in order to focus
our executives on long term Company performance. This Supplemental Executive Retirement Plan (“SERP”), adopted by
the Company in 2013 with respect to all participating officers other than Mr. Levingston, provides for a lifetime retirement benefit
utilizing annuities as a funding source, a program that at the time cost approximately 86% of the cost of similar plans for comparably
situated executives that did not utilize annuities. Mr. Levingston’s SERP was adopted in January 2020. The target retirement
age for the benefit is age 67, with reduced benefits prior to age 67. Please refer to the discussion accompanying the Summary
Compensation Table and Pension Benefits for additional information regarding the SERP.
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, subject to certain IRS limitations. While the
decision to match employee contributions is discretionary, all employees receive the same percentage match.
Eagle Bancorp, Inc.
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2020 Proxy Statement
|
|
|
|
●
|
Health
and Welfare Benefits
|
We
provide health benefits to our executive officers, including the named executive officers, generally on the same basis as all
of our full-time employees. These benefits include medical and dental benefits, short term and long term disability insurance,
and basic life insurance coverage. The Company also provides long term care insurance coverage to directors if they are eligible
and executive officers. We design our employee benefits programs to provide choice and to be affordable and competitive in relation
to the market, and to be compliant with applicable laws and practices. We adjust our employee benefits programs as needed based
upon regular monitoring of applicable laws and practices and the competitive market.
The
Compensation Committee believes our current executive compensation policies and practices are effective in advancing our long
term strategic plan, reasonable in relation to our compensation peer group and responsible in encouraging the named executive
officers to work for meaningful shareholder returns without taking unnecessary or excessive risks.
●
|
Employment,
Non-Compete and Severance Arrangements
|
Each
of our named executive officers has an employment agreement, which provides for payments upon a change in control of the Company
under a pure double trigger. Each named executive officer is also party to a non-compete agreement, which provides for payments
following termination without cause or in connection with a change in control, which payments are contingent on compliance with
the noncompetition, nonsolicitation and noninterference provisions of the agreement following such termination. None of these
agreements provide tax gross-ups. These agreements are described in detail under “Employment and Non-Compete Agreements”
following the Summary Compensation Table. The Committee believes that the agreements provide continuity of executive management
and employment security, which is conducive to maximum employee effort and valuable protections for the Company and its executive
officers.
CEO
Pay for Performance
We
operate in a highly dynamic business environment, which has been and continues to be characterized by rapidly changing market
and customer trends, regulatory changes and requirements, as well as increased expectations from shareholders for meaningful growth
without excessive risk taking. To succeed in this environment, our senior leadership must be able to continually refine and enhance
products and services; respond to competitive challenges in our markets; attract, satisfy and retain customers; and demonstrate
an ability to quickly identify and capitalize on business opportunities.
In
establishing our CEO’s compensation, we seek to motivate and reward the achievement of our annual and longer term financial
and strategic objectives, and to align the CEO’s compensation with our shareholders’ long term interests. Accordingly,
the Compensation Committee focuses on using incentive compensation with long term Company performance implications as a key element
of the CEO’s total direct compensation opportunity. By focusing on performance-based pay opportunities tied to specific
performance goals, the Compensation Committee seeks to ensure the CEO’s pay is aligned with Company performance and the
value provided to our shareholders. The compensation plan rewards the CEO if the Company’s performance is exceptional compared
to its peer group with the ability to earn at the higher end of the payouts under the SEIP and receive share awards of restricted
stock and PRSUs under the Long Term Incentive Plan. In 2016, the Compensation Committee enhanced the performance-based pay program
to include performance-vested equity that will incentivize future performance. The value of the awards and stock ownership will
change based on the stock performance of the Company.
Eagle Bancorp, Inc.
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2020 Proxy Statement
|
|
|
|
Executive
Compensation Process
The
Role of the Compensation Committee
The
Compensation Committee, among its other responsibilities, establishes the overall compensation philosophy and reviews and approves
the executive compensation program, including the specific compensation of our executive officers, including the named executive
officers. The Compensation Committee has the authority to retain special counsel and other advisors, including compensation consultants,
to assist in carrying out its responsibilities to determine the compensation of our executive officers.
The
Committee considers information from its compensation consultant and legal counsel, as well our Chief Financial Officer and our
Human Resources department, to formulate recommendations with respect to specific compensation actions. The Compensation Committee
makes all final decisions regarding compensation, including base salary levels, target bonus opportunities, actual bonus payments
and equity awards. The Compensation Committee meets on a regularly scheduled basis and at other times, as needed.
The
Compensation Committee regularly conducts a review of the executive compensation program to assess whether our compensation elements,
actions and decisions (i) are aligned with our vision, mission, values, corporate goals and compensation philosophy, (ii) provide
appropriate short term and long term incentives for our executive officers and (iii) are competitive with the compensation of
the executives in comparable positions at the companies with which we compete for executive talent.
As
part of this process, the Compensation Committee takes into consideration the CEO’s recommendations for NEOs other than
the CEO and a competitive market analysis prepared by its independent compensation consultant. In the course of its deliberations,
the Compensation Committee also considers competitive positioning, internal equity and our corporate and individual achievements
against one or more short term and long term performance objectives. The Compensation Committee considers all of this information
in light of their individual experience, knowledge of the Company, knowledge of the peer companies, knowledge of each named executive
officer and business judgment in making decisions regarding executive compensation and our executive compensation program.
Eagle Bancorp, Inc.
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|
|
|
|
As
part of this process, the Compensation Committee also evaluates the performance of the CEO each year and makes all decisions regarding
the CEO’s base salary adjustments (if any), bonus payments and equity awards. The CEO is not present during any of the deliberations
regarding the CEO’s own compensation.
The
Role of Consultants – Compensation Advisors
The
Compensation Committee has engaged the services of Compensation Advisors as its independent advisor on matters of executive and
board compensation (the “Engagement”). Compensation Advisors reports directly to the Committee and provides no other
remunerated services to the Company or any of its affiliates. The Company has affirmatively determined that no conflicts of interest
exist between the Company and Compensation Advisors or any individuals working on the Company’s account on Compensation
Advisors’ behalf. In reaching such determination, the Company considered the following enumerated factors, all of which
were attested to or affirmed by Compensation Advisors:
|
●
|
During
2019, Compensation Advisors provided no services to and received no fees from the Company
other than in connection with the Engagement;
|
|
●
|
Compensation
Advisors has adopted and put in place adequate policies and procedures designed to prevent
conflicts of interest, which policies and procedures were provided to the Company;
|
|
●
|
There
are no business or personal relationships between Compensation Advisors and any member
of the Compensation Committee other than in respect of (i) the Engagement, or (ii) work
performed by Compensation Advisors for any other company, board of directors or compensation
committee for whom such Committee member also serves as an independent director;
|
|
●
|
No
employee of Compensation Advisors owns any stock of the Company; and
|
|
●
|
There
are no business or personal relationships between Compensation Advisors and any executive
officer of the Company other than in respect of the Engagement.
|
The
Role of Management
Input
from the CEO is considered by the Compensation Committee regarding the criteria to be used to determine base salary, bonuses and
other benefits for named executive officers other than the CEO. Although input from the CEO is considered by the Compensation
Committee, the Compensation Committee exercises final authority on compensation matters for all named executive officers. The
CEO is not present at meetings during which the CEO’s compensation is discussed and determined.
Competitive
Positioning
In
making compensation decisions, the Compensation Committee considers the profitability and relative performance of the Company,
as well as the intangible value and performance of the Company’s management team. In this review, the Compensation Committee
seeks to evaluate executive pay in a manner that ensures future compensation arrangements for the selected executive officers
are compliant with regulatory practices, competitive in the marketplace and reflective of the Company’s performance and
culture. In this process, the Compensation Committee, with the assistance of the compensation advisor, selects a custom peer group
of publicly-traded banks and bank holding companies, and may review other survey data, to help in the review and establishment
of executive compensation arrangements.
The
Company worked with Compensation Advisors to develop a peer group in 2019 for base salary and incentive compensation comparisons.
The peer group contains 25 public banks between $4.7 billion and $19.5 billion in assets. The peer group was selected based on
several factors, including assets, market capitalization and regional similarities, recognizing the substantial increase in Company
assets and market capitalization in the last several years. Two of the banks from the previous year’s peer group removed
from the list due to their acquisition by another institution. Bridge Bancorp, Inc. and National Bank Holdings Corporation were
chosen as replacements which met the criteria.
Eagle Bancorp, Inc.
|
49
|
2020 Proxy Statement
|
|
|
|
Eagle
Bancorp Peer Group
Atlantic
Union Bankshares Corporation
|
Lakeland
Bancorp, Inc.
|
Bancorp,
Inc.
|
National
Bank Holdings Corporation
|
Berkshire
Hills Bancorp, Inc.
|
NBT
Bancorp Inc.
|
Boston
Private Financial Holdings, Inc.
|
Northwest
Bancshares, Inc.
|
Bridge
Bancorp, Inc.
|
Provident
Financial Services, Inc.
|
Brookline
Bancorp, Inc.
|
S&T
Bancorp, Inc.
|
Community
Bank System, Inc.
|
Sandy
Spring Bancorp, Inc.
|
ConnectOne
Bancorp, Inc.
|
Tompkins
Financial Corporation
|
Customers
Bancorp, Inc.
|
TowneBank
|
Dime
Community Bancshares, Inc.
|
United
Bankshares, Inc.
|
First
Commonwealth Financial Corporation
|
WesBanco,
Inc.
|
Flushing
Financial Corporation
|
WSFS
Financial Corporation
|
Independent
Bank Corp.
|
|
(remainder
of page intentionally blank)
Eagle Bancorp, Inc.
|
50
|
2020 Proxy Statement
|
|
|
|
Eagle
Bancorp Peer Group Performance
|
Bank
|
Ticker
|
City
|
State
|
ROAE
(%)
|
ROAA
(%)
|
NIM
(%)
|
Efficiency
Ratio (%)
|
NPAs/
Assets (%)
|
Core
EPS Growth (%)
|
Net
Charge-offs/ Avg Loans (%)
|
|
|
|
|
|
2019Y
|
2019Y
|
2019Y
|
2019Y
|
2019Y
|
2019Y
|
2019Y
|
1
|
Atlantic
Union Bankshares Corporation
|
AUB
|
Richmond
|
VA
|
7.90
|
1.15
|
3.69
|
59.16
|
0.19
|
10.89
|
0.17
|
2
|
Bancorp,
Inc.
|
TBBK
|
Wilmington
|
DE
|
10.45
|
1.10
|
3.29
|
68.95
|
0.16
|
NA
|
0.13
|
3
|
Berkshire
Hills Bancorp, Inc.
|
BHLB
|
Boston
|
MA
|
5.75
|
0.75
|
3.17
|
62.70
|
0.31
|
(13.25)
|
0.34
|
4
|
Boston
Private Financial Holdings, Inc.
|
BPFH
|
Boston
|
MA
|
10.05
|
0.93
|
2.80
|
68.76
|
0.18
|
22.15
|
-
|
5
|
Bridge
Bancorp, Inc.
|
BDGE
|
Bridgehampton
|
NY
|
10.84
|
1.09
|
3.29
|
56.83
|
0.09
|
(3.90)
|
0.13
|
6
|
Brookline
Bancorp, Inc.
|
BRKL
|
Boston
|
MA
|
9.56
|
1.15
|
3.51
|
54.98
|
0.28
|
7.55
|
0.11
|
7
|
Community
Bank System, Inc.
|
CBU
|
De
Witt
|
NY
|
9.41
|
1.53
|
3.74
|
60.35
|
0.22
|
0.91
|
0.15
|
8
|
ConnectOne
Bancorp, Inc.
|
CNOB
|
Englewood
Cliffs
|
NJ
|
10.41
|
1.22
|
3.36
|
46.22
|
0.80
|
24.57
|
0.09
|
9
|
Customers
Bancorp, Inc.
|
CUBI
|
Wyomissing
|
PA
|
7.94
|
0.74
|
2.75
|
64.50
|
0.18
|
(6.35)
|
0.08
|
10
|
Dime
Community Bancshares, Inc.
|
DCOM
|
Brooklyn
|
NY
|
5.96
|
0.57
|
2.41
|
59.92
|
0.17
|
(20.90)
|
0.20
|
11
|
First
Commonwealth Financial Corporation
|
FCF
|
Indiana
|
PA
|
10.32
|
1.31
|
3.75
|
57.69
|
0.42
|
7.94
|
0.18
|
12
|
Flushing
Financial Corporation
|
FFIC
|
Uniondale
|
NY
|
7.35
|
0.59
|
2.47
|
66.94
|
0.19
|
(22.79)
|
0.04
|
13
|
Independent
Bank Corp.
|
INDB
|
Rockland
|
MA
|
10.87
|
1.52
|
4.04
|
54.58
|
0.42
|
20.20
|
0.03
|
14
|
Lakeland
Bancorp, Inc.
|
LBAI
|
Oak
Ridge
|
NJ
|
10.14
|
1.12
|
3.33
|
56.38
|
0.32
|
6.71
|
-
|
15
|
National
Bank Holdings Corporation
|
NBHC
|
Greenwood
Village
|
CO
|
14.47
|
1.38
|
3.93
|
62.28
|
0.61
|
17.45
|
0.19
|
16
|
NBT
Bancorp Inc.
|
NBTB
|
Norwich
|
NY
|
11.32
|
1.26
|
3.58
|
59.83
|
0.31
|
1.82
|
0.36
|
17
|
Northwest
Bancshares, Inc.
|
NWBI
|
Warren
|
PA
|
8.48
|
1.05
|
3.84
|
63.94
|
0.67
|
5.76
|
0.23
|
18
|
Provident
Financial Services, Inc.
|
PFS
|
Jersey
City
|
NJ
|
8.09
|
1.15
|
3.33
|
54.21
|
0.44
|
(0.64)
|
0.18
|
19
|
S&T
Bancorp, Inc.
|
STBA
|
Indiana
|
PA
|
9.79
|
1.29
|
3.64
|
54.85
|
1.08
|
3.44
|
0.22
|
20
|
Sandy
Spring Bancorp, Inc.
|
SASR
|
Olney
|
MD
|
10.51
|
1.39
|
3.51
|
52.61
|
0.50
|
7.09
|
0.03
|
21
|
Tompkins
Financial Corporation
|
TMP
|
Ithaca
|
NY
|
12.55
|
1.22
|
3.39
|
62.76
|
0.47
|
(0.39)
|
0.10
|
22
|
TowneBank
|
TOWN
|
Portsmouth
|
VA
|
8.73
|
1.19
|
3.46
|
69.30
|
0.27
|
(2.60)
|
0.04
|
23
|
United
Bankshares, Inc.
|
UBSI
|
Charleston
|
WV
|
7.83
|
1.34
|
3.37
|
51.05
|
0.75
|
4.83
|
0.15
|
24
|
WesBanco,
Inc.
|
WSBC
|
Wheeling
|
WV
|
7.49
|
1.24
|
3.62
|
57.95
|
0.35
|
(5.68)
|
0.09
|
25
|
WSFS
Financial Corporation
|
WSFS
|
Wilmington
|
DE
|
8.92
|
1.30
|
4.42
|
66.32
|
0.32
|
8.46
|
0.22
|
|
25th
Percentile
|
|
|
|
7.94
|
1.09
|
3.29
|
63.94
|
0.47
|
(2.92)
|
0.19
|
|
50th
Percentile
|
|
|
|
9.56
|
1.19
|
3.46
|
59.83
|
0.32
|
4.13
|
0.13
|
|
75th
Percentile
|
|
|
|
10.45
|
1.30
|
3.69
|
54.98
|
0.19
|
8.07
|
0.08
|
|
95th
Percentile
|
|
|
|
12.30
|
1.49
|
4.01
|
51.36
|
0.16
|
21.86
|
0.01
|
|
Eagle
Bancorp, Inc.
|
EGBN
|
Bethesda
|
MD
|
12.20
|
1.61
|
3.77
|
39.99
|
0.56
|
(2.94)
|
0.13
|
|
Eagle
Bancorp, Inc. Percentile Rank
|
|
|
92nd
|
HIGHEST
|
85th
|
HIGHEST
|
19th
|
26th
|
54th
|
|
Source:
Compensation Advisors
|
Eagle Bancorp, Inc.
|
51
|
2020 Proxy Statement
|
|
|
|
Other
Compensation Policies
●
|
Compensation
Recovery Policy (“Clawback”)
|
The
Board of Directors has adopted a policy relating to the “clawback” of incentive compensation paid to executive officers
in the event of certain restatements of our financial statements. Under this policy, the Board of Directors will, to the full
extent required by applicable law, regulation or exchange listing standards in all appropriate cases, require reimbursement of
any bonus paid or incentive compensation awarded to the executive, and/or effect the cancellation of unvested equity awards previously
granted to the executive if: (1) the amount of the bonus or incentive compensation was calculated based on the achievement of
financial results that were subsequently the subject of a material restatement; (2) the executive engaged in intentional misconduct
or (3) applicable law, regulation or listing standard so requires.
●
|
Robust
Stock Ownership Guidelines
|
The
Company has adopted a policy requiring that our executive officers and directors own, directly or indirectly, shares of our common
stock having a value as follows:
|
●
|
CEO:
3 times base salary
|
|
●
|
Directors:
3 times annual retainer/base fee
|
|
●
|
Executive
Officers: 2 times base salary
|
The
persons subject to this requirement have five years after commencing service; executive officers and directors in office as of
the date of the policy was adopted have until December 31, 2020 to satisfy the minimum holdings requirement.
●
|
Anti-hedging/Anti-pledging
Policies
|
The
Company has adopted a policy prohibiting our employees, including our executive officers and directors from engaging in any hedging
of the Company’s common stock, including buying or selling puts or calls, short sales, or any other hedging transaction.
The Company currently does not have any policy prohibiting the hedging of the Company’s common stock that applies to its
employees other than its executive officers.
The
Company’s policy also limits the ability of directors and executive officers to pledge Company common stock that they own.
The policy limits pledging to one-half of the number of shares owned by such person for purposes of the Company’s ownership
guidelines, and limits the value of such pledged shares to 25% of the director’s or executive officer’s net worth.
We
do not provide any significant perquisites or other personal benefits to our executive officers other than those outlined in the
Summary Compensation Table on page 56; our executive officers participate in our health and welfare benefit programs on the same
basis as all of our employees. Certain executive officers were provided a Supplemental Executive Retirement Plan as described
on page 46.
●
|
No
Tax ‘‘Gross-Ups’’ or Payments
|
We
do not provide any “gross-ups” or tax payments in connection with any cash or equity compensation element or any excise
tax “gross-up” or tax reimbursement in connection with any change in control payments or benefits.
●
|
Timing
and Pricing of Equity Awards
|
Equity
compensation awards for named executive officers and employees are generally approved in the first quarter of each year. Awards
may be made periodically for new hires during the year. Awards are based on a number of criteria including the Company’s
performance, the relative ranking of the employee within the Company and his or her specific contributions to the success of the
Company.
The
grant date is established when the Compensation Committee approves the grant. We set the exercise price for our stock as the closing
price on the grant date. Our equity award process is independent of any
Eagle Bancorp, Inc.
|
52
|
2020 Proxy Statement
|
|
|
|
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.
●
|
Prohibit
Re-Pricing or Exchange
|
Our
equity based compensation plans do not permit re-pricing or exchange of underwater options without shareholder approval.
●
|
No
Guaranteed Minimum Bonus
|
Our
SEIP does not guarantee any minimum bonus to executive officers.
Risk
Assessment of Incentive Compensation Programs
In
setting compensation, the Compensation Committee also considers the risks to the Company’s shareholders and the achievement
of our goals that may be inherent in our compensation programs. Although a significant portion of some employees’ compensation
is performance-based and “at-risk,” we believe our compensation program is appropriately structured and does not pose
a material risk to the Company. The Compensation Committee receives feedback from the Chief Risk Officer identifying any risks
associated with any named executive officer compensation plans and other employee incentive compensation plans. The report below
outlines our process and the steps taken to mitigate any risks that were uncovered in our discussions.
Executive
Compensation Plan Risk Assessment
Our
Chief Risk Officer has reviewed the 2019 SEIP and LTIP and the other 2019 Incentive Plans, and concluded that the incentive compensation
arrangements appropriately balance risk and reward, are compatible with effective controls and risk management, and are supported
by strong corporate governance, including active and effective oversight by the Board of Directors. The risk assessment considers
the incentive plan mix, measures, design features, goal setting, Unfair Deceptive or Abusive Acts or Practices (UDAAP) and controls
and governance protocols. This feedback was provided to the Compensation Committee. The conclusions were based on the following:
|
●
|
The
SEIP is a formal performance-based plan in which the Compensation Committee is deeply
involved. The Board of Directors establishes Company-wide goals early in the performance
year through approval of the budget, and communicates these performance goals to the
Compensation Committee for their review and approval. The 2019 SEIP used a balance of
Company-wide goals, strategic goals and individual or departmental goals, and customized
the goals each year based on each executive’s functional responsibility. The Compensation
Committee is active in setting and approving the Company-wide goals each year. Once these
are presented to the Compensation Committee, the Compensation Committee will discuss
and approve, or revise the goals of all executives. The Compensation Committee also has
the ability to make certain discretionary adjustments to payouts under the SEIP as it
may deem appropriate.
|
|
●
|
The
LTIP is a long term performance based equity compensation plan. The LTIP consists of
two components, a time vested award, which provides a portion of compensation based on
past performance; and a future performance based award. The Compensation Committee has
the discretion to modify final grants as necessary to ensure an appropriate reflection
of the Company’s performance and circumstances. The Compensation Committee establishes
broad performance goals against budget and third party performance as measured against
one or more publicly available industry indices. Once these are presented to the Compensation
Committee, the Compensation Committee will discuss and approve, or revise the goals for
all named executives.
|
|
●
|
When
setting actual officer-specific Company goals, we consider not only our annual budget,
but also our strategic initiatives, peer performance and individual goals, which we believe
mitigates the risk and keeps executives focused on the long-term success of the Company.
The Compensation Committee reviews the individual performance evaluations of named executives
each year, not only to determine final award payouts, but also to discuss developmental
opportunities for our
|
Eagle Bancorp, Inc.
|
53
|
2020 Proxy Statement
|
|
|
|
|
|
named executives. In addition, incentives are predicated on satisfactory
regulatory reviews as well as individual performance.
|
|
●
|
We
believe that target and target plus awards are reasonable and competitive based on market
research that was provided by our compensation consultant. We also pay out on a pro-rata
basis for actual performance results that fall in between threshold, target and target
plus levels but not above the established caps. We believe this reduces the likelihood
of an executive misstating numbers to reach the next award level or withholding information
to count toward the next performance year.
|
|
●
|
A
“clawback” provision under the SEIP and LTIP allows us to recover all or
part of a cash or stock incentive award in certain cases of inaccurate financial statement
information that resulted in a restatement of our financial statements, or on a fraudulent,
willful or grossly negligent misrepresentation or where required by law. Accordingly,
such activities would not be rewarded. The Clawback Policy also permits the Company to
recover equity based compensation whenever required by applicable law, regulation, or
exchange listing standard.
|
The
individual named executive officer employment agreements, which have previously been reviewed and approved by the Compensation
Committee, provide for the payment to each named executive officer of base salaries, certain insurance benefits, car allowances,
and eligibility for participation in our incentive plans, equity compensation plans and other compensation programs we may adopt,
as well as certain benefits and payments upon termination or a change in control. None of the agreements provides for any specific
mandatory variable or incentive pay, or any other conditional compensation. As such, the Compensation Committee believes that
none of such agreements present any material threat to our capital or earnings, encourage taking undue or excessive risks, or
encourage manipulation of financial data in order to increase the size of an award.
The
2020 SEIP uses five equally weighted Company-wide goals and eliminates strategic, individual and department goals from the variable
component of executive compensation. As with the 2019 SEIP, the Compensation Committee is active in setting and approving the
Company-wide goals.
Non-Executive
Compensation Plan Risk Assessment
Our
Chief Risk Officer reviewed the 2019 incentive programs in which employees who are not executive officers participate, and provided
analysis and conclusions to the Compensation Committee. It was concluded that the incentive compensation arrangements appropriately
balance risk and reward, are compatible with effective controls and risk management, promote appropriate sales practices and are
supported by strong corporate governance, including active and effective oversight by the Board of Directors. The risk assessment
considers the incentive plan mix, measures, design features, goal setting and controls and governance protocols. The following
incentive compensation plans were reviewed:
|
●
|
Under
the Lending and Community Banking Incentive Plans, certain employees are compensated
with cash incentives calculated as a specific percentage of salary or of qualifying loans,
deposits and other business they produce. A portion of the potential compensation under
these plans is tied to individual and/or team performance and paid on an annual basis.
There are also components, such as the collection of loan fees and the expansion of existing,
or the establishing of new, customer deposit accounts, that are paid quarterly. We believe
intrinsic features of these plans and commercial nature of our business protects us against
unnecessary risk taking, including the plan modifier that reduces or eliminates incentive
payouts when asset quality measures decline or fall below minimum acceptable levels and
for unacceptable sales practices.
|
|
●
|
Under
the FHA Multifamily Group Incentive Plan, employees of the FHA Multifamily group are
compensated with cash incentives for results relative to behaviors that exceed assigned
corporate goals and objectives based on both production targets and a profitability model.
|
|
●
|
Under
the Residential Lending Operations Incentive Plan, there is an incentive program for
loan processors, loan closers, and underwriters. Loan processors and loan closers are
paid for each loan closed. Underwriters are paid for each loan dispositioned, regardless
of the decision made.
|
|
●
|
Under
the Insurance Sales and Investment Advisory Services Introduction Incentive Plans, employees
are compensated with cash incentives for qualified referrals that are consented to by
customers.
|
Clawback
provisions are included in all incentive compensation plans. All of our incentive plans call for the employee to be in good standing
with no adverse written performance documentation. Once an employee
Eagle Bancorp, Inc.
|
54
|
2020 Proxy Statement
|
|
|
|
receives adverse written documentation for performance, the
employee is ineligible to receive incentive payments for a minimum of 90 days.
Residential
mortgage loan officers are generally compensated based on loan production. There are separate agreements with each mortgage loan
officer outlining his/her individual compensation package.
The
2020 Lending and Community Banking Incentive Plan is substantially the same as 2019; however, a new goal component for the pricing
of loans has been included and the plan modifier has been expanded to include portfolio management measurement criteria. The 2020
Residential Lending Operations, Insurance Sales and Investment Advisory Services Introduction Incentive Plans are substantially
the same as 2019 plans.
(remainder
of page intentionally blank)
Compensation
Committee Report
We
have reviewed and discussed the foregoing Compensation Discussion 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, 2019.
Members
of the Compensation Committee
A.
Leslie Ludwig, Chair
James
A. Soltesz Benjamin M. Soto
|
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 Ms. Riel, the President and Chief Executive Officer
of the Company beginning on March 21, 2019; Mr. Levingston, the Chief Financial Officer of the Company; the three most highly
compensated executive officers of the Company who received total compensation of $100,000 or more during the fiscal year ended
December 31, 2019; and Mr. Paul, the Chairman, Chief Executive Officer and President of the Company through March 20, 2019. The
Summary Compensation Table does not reflect rights to purchase shares of common stock at a discount to the market price granted
to or exercised by named executive officers under the Company’s 2011 Employee Stock Purchase Plan.
(remainder
of page intentionally blank)
Eagle Bancorp, Inc.
|
55
|
2020 Proxy Statement
|
|
|
|
Summary
Compensation Table
Name
and Principal Position
|
Year
|
Salary
|
Bonus
(1)
|
Stock
Awards (2)
|
Non-Equity
Incentive Plan Compensation (3)
|
Change
in Pension Value and Non-Qualified Deferred Compensation Earnings (4)
|
All
Other Compensation (8)
|
Total
|
Susan
G. Riel,
President & CEO of Company and Bank (6)
|
2019
|
$690,449
|
$100,000
|
$818,111
|
$1,387,510
|
$41,316
|
$90,670
|
$3,128,056
|
2018
|
$527,883
|
$--
|
$729,027
|
$652,162
|
$28,166
|
$83,743
|
$2,020,981
|
2017
|
$502,746
|
$--
|
$675,256
|
$613,789
|
$37,916
|
$38,186
|
$1,867,893
|
Charles
D. Levingston,
EVP; CFO of Company and Bank
|
2019
|
$383,040
|
$--
|
$376,268
|
$237,482
|
$--
|
$30,240
|
$1,027,030
|
2018
|
$342,000
|
$--
|
$213,751
|
$208,415
|
$--
|
$24,399
|
$788,565
|
2017
|
$285,000
|
$--
|
$21,130
|
$169,716
|
$--
|
$24,554
|
$500,400
|
Antonio
F. Marquez,
SEVP; President of Commercial Banking
|
2019
|
$463,485
|
$100,000
|
$610,907
|
$343,876
|
$52,021
|
$39,779
|
$1,610,068
|
2018
|
$421,350
|
$--
|
$576,330
|
$296,673(7)
|
$48,076
|
$34,759
|
$1,377,188
|
2017
|
$397,500
|
$--
|
$458,244
|
$346,952
|
$44,375
|
$41,103
|
$1,288,174
|
Lindsey
S. Rheaume,
EVP,
CLO-C&I of Bank
|
2019
|
$409,375
|
$75,000
|
$465,150
|
$244,026
|
$60,776
|
$27,996
|
$1,282,323
|
Janice
L. Williams,
SEVP–CCO
of Bank
|
2019
|
466,098
|
$--
|
$614,364
|
$299,390
|
$101,423
|
$27,094
|
$1,508,369
|
2018
|
$423,725
|
$--
|
$509,231
|
$529,656
|
$93,731
|
$22,178
|
$1,578,521
|
2017
|
$407,428
|
$--
|
$410,039
|
$509,285
|
$86,513
|
$31,095
|
$1,444,360
|
Ronald
D. Paul,
Chair, President and CEO of Company; CEO of Bank (5)
|
2019
|
$235,366
|
$--
|
$1,926,732
|
$--
|
$--
|
$18,045
|
$2,180,143
|
2018
|
$963,384
|
$--
|
$2,720,250
|
$3,020,122
|
$--
|
$80,159
|
$6,783,915
|
2017
|
$906,743
|
$--
|
$2,411,743
|
$2,474,192
|
$--
|
$82,031
|
$5,874,709
|
|
(1)
|
Represents
portion of retention bonus paid in calendar year indicated.
|
|
(2)
|
Represents
the grant date fair value of awards of time-vested restricted shares and PRSUs granted
in February of the year indicated, but representing compensation for performance in the
prior year 2018. In prior year proxy statements, we disclosed the grant date fair value
of awards granted in respect of performance in the year indicated and granted in the
following year. We have revised our practice in light of SEC guidance to disclose fair
value of awards in the year granted which has led to changes in the Stock Awards and
Total columns for the years disclosed in this Summary Compensation Table.
|
The
per-share grant date fair value for PRSUs granted in 2019 with respect to 2018 performance with non-market-based performance conditions
was equal to the closing price of the common stock on the date the shares were granted, or $55.76. The grant date fair value of
the PRSUs granted in 2019, assuming the highest level of performance conditions is met, would have been $1,445,048 for Mr. Paul,
$282,201 for Mr. Levingston, $458,180 for Mr. Marquez, $613,583 for Ms. Riel and $460,773 for Ms. Williams.
The
number of shares of time-vested restricted stock granted on February 11, 2019 to Messrs. Paul, Levingston and Marquez and Mmes.
Riel and Williams were 17,277, 3,374, 5,478, 7,336 and 5,509, respectively. The number of PRSUs granted on February 11, 2019 with
respect to 2018 performance to Messrs. Paul, Levingston and Marquez and Mmes. Riel and Williams were 17,277, 3,374, 5,478, 7,336
and 5,509, respectively.
The
per-share grant date fair value for PRSUs granted in 2018 with respect to 2017 performance with non-market-based performance conditions
was equal to the closing price of the common stock on the date the shares were granted, or $60.45. The grant date fair value of
the PRSUs granted in 2018, assuming the highest level of performance conditions is met, would have been $2,040,188 for Mr. Paul,
$160,313 for Mr. Levingston, $432,248 for Mr. Marquez, $546,770 for Ms. Riel and $381,923 for Ms. Williams.
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The
number of shares of time-vested restricted stock granted on February 12, 2018 in respect to 2017 performance to Messrs. Paul,
Levingston and Marquez and Mmes. Riel and Williams were 22,500, 1,768, 4,767, 6,030 and 4,212, respectively. The number of PRSUs
granted on February 12, 2018 to Messrs. Paul, Levingston and Marquez and Mmes. Riel and Williams were 22,500, 1,768, 4,767, 6,030
and 4,212, respectively.
The
per-share grant date fair value for PRSUs granted in 2017 with respect to 2016 performance with non-market-based performance conditions
was equal to the closing price of the common stock on the date the shares were granted, or $45.50. The per-share grant date fair
value for PRSUs granted in 2017 with market-based performance conditions is estimated based on the use of a Monte Carlo valuation
methodology, which resulted in a per-share grant date fair value of $36.81. The grant date fair value for PRSUs granted is based
on the probable outcomes of the performance conditions as determined in accordance with FASB ASC Topic 718. The grant date fair
value of the PRSUs granted in 2017, assuming the highest level of performance conditions is met, would have been $1,461,331 for
Mr. Paul, $277,685 for Mr. Marquez, $409,177 for Ms. Riel and $248,451 for Ms. Williams.
On
February 10, 2020, the Company made awards of restricted stock and PRSUs in respect for 2019 performance having grant date fair
values as follows: Ms. Riel - $1,722,852; Mr. Levingston - $400,468; Mr. Marquez - $638,808; Mr. Rheaume - $389,106; Ms. Williams
- $642,369.
For
time-vested restricted stock, fair value is based on the Company’s closing price on the date of grant. For awards that are
performance-based, compensation expense is recorded based on the probability of achievement of the goals underlying the grant.
|
(3)
|
Reflects
amounts awarded under the Company’s Senior Executive Incentive Plan. Amounts shown
are based on performance in the year indicated and are paid in the following year.
|
|
(4)
|
Represents
the value of the increase in the named executive officer’s accumulated benefit
under such officers SERP, adopted in 2013, assuming normal retirement at age 67 and a
discount rate of 4.5%. Amounts reflected in this column are not currently payable to
the named executive officers and are not considered for purposes of determining the identities
of the named executive officers. Please refer to the discussion under the caption “SERP”
below, and to the Pension Benefits table below for additional information about the SERP.
|
|
(5)
|
Mr.
Paul resigned from his position at the Company, effective March 20, 2019.
|
|
(6)
|
Ms.
Riel was appointed Interim President and Chief Executive Officer of the Company and Bank,
effective March 21, 2019 and on a permanent basis on May 6, 2019.
|
|
(7)
|
Also
includes an additional cash incentive payment of $95,871 under the 2018 Senior Executive
Incentive Plan determined to be owed to Mr. Marquez following the filing of last year’s
proxy statement, reflecting adjustments to his goals which were not addressed at the
time initial awards for 2018 performance were approved.
|
|
(8)
|
Other
compensation consisted of the following items:
|
Name
|
Year
|
Car
Allowance
|
Insurance
Premiums
|
Housing
|
401(k)
Matching Contributions
|
Susan
G. Riel
|
2019
|
$14,538
|
$20,308
|
$47,424
|
$8,400
|
2018
|
$9,000
|
$19,069
|
$47,424
|
$8,250
|
2017
|
$9,000
|
$21,086
|
$--
|
$8,100
|
Charles
D. Levingston
|
2019
|
$9,000
|
$12,841
|
$--
|
$8,400
|
2018
|
$9,000
|
$11,453
|
$--
|
$3,946
|
2017
|
$6,925
|
$13,660
|
$--
|
$3,969
|
Antonio
F. Marquez
|
2019
|
$13,000
|
$18,379
|
$--
|
$8,400
|
2018
|
$13,000
|
$16,411
|
$--
|
$5,348
|
2017
|
$13,000
|
$22,141
|
$--
|
$5,962
|
Janice
L. Williams
|
2019
|
$9,000
|
$9,694
|
$--
|
$8,400
|
2018
|
$9,000
|
$8,289
|
$--
|
$4,889
|
2017
|
$9,000
|
$13,995
|
$--
|
$8,100
|
Lindsey
Rheaume
|
2019
|
$12,000
|
$7,596
|
$--
|
$8,400
|
Ronald
D. Paul (5)
|
2019
|
$4,154
|
$6,955
|
$--
|
$6,936
|
2018
|
$18,000
|
$53,909
|
$--
|
$8,250
|
2017
|
$18,000
|
$55,931
|
$--
|
$8,100
|
During
2019, the Company did not maintain any nonqualified deferred compensation programs or arrangements, other than a deferred compensation
arrangement for Mr. Paul. The Company has accrued for its potential obligation to pay Mr. Paul $976,347, but has not paid any
amounts to Mr. Paul. In February 2013, the Bank adopted SERP for certain senior executives, including all of the named executive
officers other than Mr. Paul and Mr. Levingston. In January 2020, the Bank entered into a SERP for Mr. Levingston. Under the SERP,
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|
|
upon an executive’s retirement, the Bank will pay a stated monthly payment for the executive’s lifetime. The retirement
benefit is tied to a percentage of the executive’s projected average base salary over the five years preceding retirement,
assuming retirement at age 67. The SERP provides that (a) the benefits vest ratably over six years of service to the Bank, with
the executive receiving credit for years of service prior to entering into the SERP, (b) death, disability and change-in-control
will be deemed to be retirement resulting in immediate vesting, and (c) the monthly amount will be reduced if retirement occurs
earlier than age 67 for any reason other than death, disability or change-in-control. The SERP further provides for a death benefit
in the event the executive has not received at least 180 monthly installments of supplemental retirement benefits; the death benefit
will be based upon an election by the executive for either a lump sum payment or continued monthly installment payments, such
that the executive and the executive’s beneficiary have received payment(s) sufficient to equate to a cumulative 180 monthly
installments. The benefits to the named executive officers as of December 31, 2019 are as set forth in the following table:
Name
|
Title
|
Percentage
of Projected Salary
|
Susan
G. Riel (1)
|
President
and CEO – Company and Bank
|
35%
|
Charles
D. Levingston
|
EVP
and CFO – Company and Bank
|
N/A
|
Antonio
F. Marquez
|
SEVP
and CLO – Commercial Real Estate (Bank)
|
25%
|
Janice
L. Williams
|
SEVP
and CCO (Bank)
|
30%
|
Lindsey
S. Rheaume
|
EVP
and CLO – Commercial and Industrial (Bank)
|
20%
|
Ronald
D. Paul (2)
|
CEO
– Company and Bank
|
N/A
|
|
(1)
|
Ms.
Riel was appointed Interim President and Chief Executive Officer of the Company and Bank,
effective March 21, 2019.
|
|
(2)
|
Mr.
Paul resigned from his positions at the Company and Bank, effective March 20, 2019.
|
The
SERP Agreements are unfunded arrangements maintained primarily to provide supplemental retirement benefits and comply with Section
409A of the Internal Revenue Code (the “Code”). The Bank has elected to finance the retirement benefits by purchasing
annuities that have been designed to provide a future source of funds for the lifetime retirement benefits of the SERP Agreements.
The primary impetus for utilizing annuities is a substantial savings in compensation expense for the Bank as opposed to a traditional
SERP. For additional information regarding the SERP, please refer to the table under the caption “Pension Plan.”
Employment
and Non-Compete Agreements
The
Bank and Ms. Riel are parties to an Amended and Restated Employment Agreement, dated as of December 31, 2019, governing her service
as President and Chief Executive officer of the Company and Bank. Pursuant to her agreement, Ms. Riel is entitled to a current
annual base salary of $800,000, and 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, including a car allowance of $1,500 per month and
a life insurance benefit of $750,000. The compensation under Ms. Riel’s 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. Ms. Riel’s agreement provides
if her employment is terminated without cause for reasons other than death, disability or in connection with a change of control
(as defined), she would be entitled to payment of health insurance premiums under COBRA for one year, and to continued health
and life insurance benefits for three years if the termination is in connection with a change in control.
In
the event of the termination of Ms. Riel’s employment as a result of her retirement (as defined) on or after June 30, 2021
(other than pursuant to her voluntary termination following a reduction in title, duties, responsibilities or compensation following
a change in control), and subject to execution of an appropriate release, she shall be entitled to receive a lump-sum cash payment
of one times her salary at the rate being paid as of the termination date. Ms. Riel would be entitled to 1.99 times the sum of
her (a) annual salary at the highest rate in effect during the twelve month period immediately preceding her termination date
and (b) cash bonus(es) paid in the most recent twelve months if her employment is terminated without cause (as defined) (i) within
one hundred twenty (120) days immediately prior to and in conjunction with a change in control or (ii) within twelve (12) months
following consummation of a change in control; or within twelve months following consummation of a change in control, her title,
duties and or position have been materially reduced such
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|
|
that she is not in comparable positions in the publicly traded holding
company and in the bank (with materially comparable compensation, benefits, contractual terms and conditions and responsibilities
and is located within twenty-five (25) miles of her primary worksite) to the position she held immediately prior to the change
in control, and within thirty (30) days after notification of such reduction she notifies the Bank that she is terminating employment
due to such change in her employment unless such change is cured within thirty (30) days of such notice by providing her with
a comparable position (including materially comparable compensation and benefits and is located within twenty-five (25) miles
of her primary worksite).
Each
of the four other named executive officers has an amended and restated employment agreement with the Bank. The other named executive
officers have 2020 base salaries as follows: Mr. Levingston - $417,514; Mr. Marquez – $509,834; Mr. Rheaume - $421,656;
Ms. Williams - $510,144. Each of these officers is also entitled to long term care insurance and to participation in all other
health, welfare, benefit, stock, option and bonus plans, if any, generally available to all executive officers and employees of
the Bank or the Company. Under each agreement if the officer’s employment is terminated without cause for reasons other
than death, disability or in connection with a change in control (as defined), he/she would be entitled to receive continued payment
of health insurance premiums under COBRA for one year. In the event of termination of the other named executive officer’s
respective employment without cause within 120 days before a change in control, or within 12 months after a change in control,
or the reduction in his/her compensation or position or responsibilities, Mr. Levingston, Mr. Marquez, Mr. Rheaume, and Ms. Williams
would be entitled to receive a lump sum payment equal to 1.99 times the sum of (i) his/her base salary at the highest rate in
effect during the 12 months preceding termination, (ii) cash bonuses (incentive plan and discretionary, if any) paid to the officer
in the most recent 12 months, as well as three years continuation of health insurance, in each case subject to adjustment to avoid
adverse tax consequences resulting from characterization of such payment for tax purposes as an “excess parachute payment.”
Ms.
Riel and the other named executive officers are also a party to an amended and restated non-compete agreement with the Bank. The
non-compete agreements provide that in the event of termination of the officer’s employment by the Bank without “cause”
as defined in such officer’s amended and restated employment agreement, including without limitation, in the event of a
“change in control” as defined in the officer’s amended and restated employment agreement, or such officer’s
resignation following a change in control as provided in the officer’s amended and restated employment agreement (collectively,
“Separation”), and subject to the officer timely signing and delivering to the Bank (a) a General Release and Waiver,
and such release becoming irrevocable, and (b) continued compliance with the confidentiality and non-competition provisions of
the non-compete agreement the Bank shall, for one (1) year following the date on which the release is executed and delivered to
the Bank, continue to pay the officer, monthly in arrears, salary at the rate being paid as of the termination date, together
with an additional amount equal to one-twelfth of the most recent annual cash bonus (incentive plan and discretionary, if any),
if any, for each month of the period during which the officer is in full compliance with the provisions of the agreement.
The
non-compete agreements require that for one year after applicable separation, the officer will not, directly or indirectly, in
any capacity (whether as a proprietor, owner, agent, officer, director, shareholder, organizer, partner, principal, manager, member,
employee, contractor, consultant or otherwise) engage in employment or provide services to any financial services enterprise engaged
in the business of offering retail customer and commercial deposit accounts and/or loan products.
The
Company and Mr. Paul were parties to an amended and restated employment agreement, effective as of January 1, 2017, as amended,
governing his service and compensation as President and Chief Executive Officer of the Company until his resignation in March
2019. Mr. Paul was also entitled to receive a monthly automobile allowance of $1,500 and $40,000 annually toward life insurance.
Mr. Paul was entitled to long term care insurance and to participate in all other benefit programs generally available to employees
or directors of the Bank or the Company. The compensation under Mr. Paul’s employment agreement was 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 certain terminations
of Mr. Paul’s employment, but not including termination for cause (as defined), and not including his resignation, Mr. Paul
(or his estate), was entitled to receive an amount in cash equal to 1.99 times his then current base salary and most recent annual
cash bonuses and equity awards, and continuation of all benefits for three years 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, subject to
the effect of such provisions, under such circumstances all of Mr. Paul’s options and restricted stock would immediately
vest.
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|
Potential
Payments Upon Termination or Change in Control
The
table below sets forth the base salary as of December 31, 2019, and the amount of Bank paid life insurance (at standard rates)
to which the named executive officers are entitled. The amount to which each of the named executive officers would be entitled
to if he/she were terminated, other than for cause or in connection with a change in control, is set forth in the fourth column
of the table below. Such amounts include full payment of amounts due under the non-compete agreements. At December 31, 2019, no
named executive officer is entitled to any payment (including any acceleration of vesting) as a result of the executive’s
voluntary termination of employment, termination with cause or retirement. All amounts payable upon a termination would be paid
by the Company or its successor.
The
estimated amounts to which each of the named executive officers would be entitled to receive upon a termination in connection
with a change in control as of December 31, 2019, are (a) the cash payment including the full amount payable under the non-compete
agreements (without adjustment for other amounts which might be payable as a result of the change in control) is set forth in
column 5 of the table below, (b) the value of the accelerated equity awards is set forth in column 6 of the table below, and (c)the
value of the accelerated vesting of benefits under the SERP is in column 7. The sum of these three amounts is set forth in column
8.
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
Name
|
Base
Salary
|
Bank
Paid Life Insurance (at standard rates)(1)
|
Payment
Following Termination Without Cause(2)
|
Cash
Payment Upon Termination in Connection with a Change in Control(2)
|
Value
of Equity Awards Accelerated Upon a Change in Control(3)
|
Value
of SERP Vesting Acceleration
|
Sum
of Amounts Payable Upon a Change in Control (Sum of Columns 5, 6, & 7)(4)
|
Susan
G. Riel (5)
|
$725,000
|
$750,000
|
$1,666,551(6)
|
$4,983,222(7)
|
$1,537,048
|
$--
|
$6,520,270
|
Charles
D. Levingston
|
$383,040
|
$750,000
|
$777,154(6)
|
$2,293,780(7)
|
$476,963
|
N/A
|
$2,770,743
|
Antonio
F. Marquez
|
$463,485
|
$750,000
|
$1,200,014(6)
|
$3,588,299(7)
|
$1,146,355
|
$251,681
|
$4,986,335
|
Lindsey
S. Rheaume
|
$423,725
|
$750,000
|
$737,080(6)
|
$2,203,869(7)
|
$813,045
|
$499,661
|
$3,516,575
|
Janice
L. Williams
|
$466,098
|
$750,000
|
$1,188,749(6)
|
$3,554,441(7)
|
$1,080,510
|
$329,475
|
$4,964,426
|
Ronald
D. Paul (8)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
(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)
|
Includes
amounts payable under non-compete agreements.
|
(3)
|
Reflects
the excess of the value of unvested shares of restricted stock and PRSUs based on the
last trade price for the Company’s common stock on December 31, 2019 (assuming
vesting of the target number of shares subject to the award).
|
(4)
|
Reflects
estimated maximum cash payment upon termination in connection with a change in control
plus the accelerated value of equity awards. Does not reflect adjustment, if any, to
total amount for effect of Section 280G limitation.
|
(5)
|
Ms.
Riel was appointed Interim President and Chief Executive Officer of the Company and Bank,
effective March 21, 2019.
|
(6)
|
Includes
the value of one (1) year of health insurance coverage under COBRA, at current rates.
|
(7)
|
Includes
the value of three (3) years of health insurance under COBRA, at current rates.
|
(8)
|
Mr.
Paul resigned from his positions at the Company and Bank, effective March 20, 2019.As
a result of his resignation, Mr. Paul was not eligible to receive any such payments as
of December 31, 2019. The Company has accrued for its potential obligation to issue Mr.
Paul certain shares of restricted stock and shares subject to PRSUs which were unvested
($4.5 million) as of the date of his resignation, but has not issued any shares to Mr.
Paul.
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|
Grants
of Plan-Based Awards
The
payouts under Estimated Future Payouts Under Non-Equity Incentive Plan Awards reflected in the table represent the amount of formula
payment which the named executive officer could have earned with respect to 2019 performance under the SEIP if each of the performance
targets established by the Compensation Committee were achieved. The following table presents information regarding awards made
during 2019 to named executive officers under the Company’s 2016 Stock Plan and SEIP. The amounts reflected under All Other
Stock Awards and Grant Date Fair Value of Stock and Option Awards reflect the shares of restricted stock and PRSUs issued in 2019
under the 2019 Long Term Incentive Plan and the 2016 Stock Plan.
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|
|
Grant
Date
|
Type
of
Award
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
All
Other Stock Awards Number of Shares of Stock or Units
|
Grant
Date Fair Value of Stock and Option Awards at Target
|
Threshold
|
Target
|
Target
Plus
|
Cap
|
Threshold
|
Target
|
Maximum
|
Susan
G. Riel (1)
|
2/11/2019
|
SEIP
|
$906,250
|
$1,631,250
|
$2,175,000
|
$2,356,250
|
N/A
|
N/A
|
N/A
|
--
|
--
|
2/11/2019
|
Time
Vested Restricted Stock
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
7,336
|
$409,055
|
2/11/2019
|
PRSUs
|
N/A
|
N/A
|
N/A
|
N/A
|
3,668
|
7,336
|
11,004
|
--
|
$409,055
|
Charles
D. Levingston
|
2/11/2019
|
SEIP
|
$134,064
|
$229,824
|
$306,432
|
$383,040
|
N/A
|
N/A
|
N/A
|
--
|
--
|
2/11/2019
|
Time
Vested Restricted Stock
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
3,374
|
$188,134
|
2/11/2019
|
PRSUs
|
N/A
|
N/A
|
N/A
|
N/A
|
1,688
|
3,374
|
5,061
|
--
|
$188,134
|
Antonio
F. Marquez
|
2/11/2019
|
SEIP
|
$301,265
|
$417,137
|
$509,834
|
$625,705
|
N/A
|
N/A
|
N/A
|
--
|
--
|
2/11/2019
|
Time
Vested Restricted Stock
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
5,478
|
$305,453
|
2/11/2019
|
PRSUs
|
N/A
|
N/A
|
N/A
|
N/A
|
2,740
|
5,478
|
8,217
|
--
|
$305,453
|
Lindsey
S. Rheaume
|
2/11/2019
|
SEIP
|
$245,625
|
$327,500
|
$388,906
|
$450,313
|
N/A
|
N/A
|
N/A
|
--
|
--
|
2/11/2019
|
Time
Vested Restricted Stock
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
4,171
|
$232,575
|
2/11/2019
|
PRSUs
|
N/A
|
N/A
|
N/A
|
N/A
|
2,086
|
4,171
|
6,256
|
--
|
$232,575
|
Janice
L. Williams
|
2/11/2019
|
SEIP
|
$302,964
|
$419,488
|
$512,708
|
$582,623
|
N/A
|
N/A
|
N/A
|
--
|
--
|
2/11/2019
|
Time
Vested Restricted Stock
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
5,509
|
$307,182
|
2/11/2019
|
PRSUs
|
N/A
|
N/A
|
N/A
|
N/A
|
2,755
|
5,509
|
8,263
|
--
|
$307,182
|
Ronald
D. Paul (2)
|
2/11/2019
|
SEIP
|
$1,252,399
|
$2,254,317
|
$3,005,757
|
$3,506,717
|
N/A
|
N/A
|
N/A
|
--
|
--
|
2/11/2019
|
Time
Vested Restricted Stock
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
22,500
|
$963,366
|
2/11/2019
|
PRSUs
|
N/A
|
N/A
|
N/A
|
N/A
|
11,250
|
22,500
|
33,750
|
--
|
$963,366
|
(1) Ms.
Riel was appointed Interim President and Chief Executive Officer of the Company and Bank,
effective March 21, 2019. Awards shown reflect awards as adjusted following her permanent
appointment as President and Chief Executive Officer.
(2) Mr. Paul resigned from his positions
at the Company and Bank, effective March 20, 2019. As a result of his resignation, Mr. Paul is no longer eligible to receive
any such payments.
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The
payouts under Estimated Future Payouts Under Non-Equity Incentive Plan Awards reflected in the table represent the amount of formula
payment which the named executive officer could have earned with respect to 2019 performance under the SEIP if each of the performance
targets established by the Compensation Committee were achieved at the threshold, target and target plus levels. The aggregate
amount that could be earned by our current named executive officers, at the target level, represented from 50% to 131% of salary
in 2019.
A
portion of the aggregate amount is subject to the achievement of designated Company or individual performance targets. No amounts
are payable if the Company does not achieve at least 85% of the adjusted net income goal. If at least the threshold performance
metric is met, proportional payouts are made if performance is between payout levels. The targets were established with the expectation
that the goals were stretch goals, representing performance standards in excess of expected results. The attainment of target-plus
levels poses highly challenging goals to performance achievement and represents a substantial percentage return on incentive costs.
The amounts paid in 2020 pursuant to the SEIP for 2019 performance represented from 71% to 103% of base salary for the named executive
officers. The actual amounts earned with respect to 2019 performance, which reflect payments for achievement of results in certain
categories in excess of target levels, are reflected in the Summary Compensation Table for 2019 in the column labeled “Nonequity
Incentive Plan Compensation.”
The
foregoing table does not reflect rights to purchase shares of common stock at a discount to the market price granted to or exercised
by named executive officers during 2019 under the Company’s 2011 Employee Stock Purchase Plan, which is generally available
to substantially all employees.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information concerning stock-based awards that have not vested for each NEO outstanding as of December
31, 2019. As of December 31, 2019 there were no outstanding unexercised options.
Name
|
Stock
Awards
|
Number
of Shares or Units of Stock that Have Not Vested
|
Market
Value of Shares or Units of Stock that have Not Vested(1)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1)
|
Susan
G. Riel (2)
|
|
|
4,745(3)
|
$230,749
|
2,140(4)
|
$104,068
|
|
|
|
|
6,030(5)
|
$293,239
|
4,020(6)
|
$195,493
|
|
|
7,336(7)
|
$356,750
|
|
|
|
|
7,336(8)
|
$356,750
|
Charles
D. Levingston
|
113(4)
|
$5,495
|
|
|
|
|
1,768(5)
|
$85,978
|
1,179(6)
|
$57,335
|
|
|
3,374(7)
|
$164,078
|
|
|
|
|
|
3,374(8)
|
$164,078
|
(table
continued on following page)
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Name
|
Stock
Awards
|
Number
of Shares or Units of Stock that Have Not Vested
|
Market
Value of Shares or Units of Stock that have Not Vested(1)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1)
|
Antonio
F. Marquez
|
|
|
3,220(3)
|
$156,589
|
1,452(4)
|
$70,611
|
|
|
|
|
4,767(5)
|
$231,819
|
3,178(6)
|
$154,546
|
|
|
5,478(7)
|
$266,395
|
|
|
|
|
5,478(8)
|
$266,395
|
Lindsey
S. Rheaume
|
|
|
2,033(3)
|
$98,865
|
917(4)
|
$44,594
|
|
|
|
|
3,256(5)
|
$158,339
|
2,171(6)
|
$105,576
|
|
|
4,171(7)
|
$202,836
|
|
|
|
|
4,171(8)
|
$202,836
|
Janice
L. Williams
|
|
|
2,881(3)
|
$140,103
|
1,300(4)
|
$63,219
|
|
|
|
|
4,212(5)
|
$204,830
|
2,808(6)
|
$136,553
|
|
|
5,509(7)
|
$267,903
|
|
|
|
|
5,509(8)
|
$267,903
|
Ronald
D. Paul (9)
|
N/A
|
N/A
|
N/A
|
N/A
|
(1)
|
Based
on the $48.63 closing price of the common stock on December 31, 2019.
|
(2)
|
Ms.
Riel was appointed Interim President and Chief Executive Officer of the Company and Bank,
effective March 21, 2019.
|
(3)
|
Represents
2017 grant of PRSUs pursuant to the Company’s 2016 Stock Plan. Award vests in one
installment on the third anniversary of the date of grant if underlying performance goals
relating to three-year measurement period are met.
|
(4)
|
Represents
2017 grant of time-vested restricted stock pursuant to the Company’s 2016 Stock
Plan. Award vests in three equal annual installments commencing on the first anniversary
of the date of grant.
|
(5)
|
Represents
2018 grant of PRSUs pursuant to the Company’s 2016 Stock Plan. Award vests in one
installment on the third anniversary of the date of grant if underlying performance goals
relating to three-year measurement period are met.
|
(6)
|
Represents
2018 grant of time-vested restricted stock pursuant to the Company’s 2016 Stock
Plan. Award vests in three equal annual installments commencing on the first anniversary
of the date of grant.
|
(7)
|
Represents
2019 grant of time-vested restricted stock pursuant to the Company’s 2016 Stock
Plan. Award vests in three equal annual installments commencing on the first anniversary
of the date of grant.
|
(8)
|
Represents
2019 grant of PRSUs pursuant to the Company’s 2016 Stock Plan. Award vests in one
installment on the third anniversary of the date of grant if underlying performance goals
relating to three-year measurement period are met.
|
(9)
|
Mr.
Paul resigned from his positions at the Company and Bank effective March 20, 2019. See
footnote 8 to the “Potential Payments Upon Termination or Change in Control”
table.
|
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Options
Exercised and Stock Vested
The
following table sets forth information regarding options exercised by the named executive officers during 2019, the aggregate
amount realized upon such exercises, based on the difference between the closing market price on the exercise date and the exercise
or base price, and information regarding shares of restricted stock held by named executive officers which vested during 2019,
and the value realized upon such vesting based on the closing price on the vesting date. The following table does not reflect
rights to purchase shares of common stock at a discount to the market price granted to or exercised by named executive officers
under the Company’s 2011 Employee Stock Purchase Plan. Readers should note that the grant date fair value of awards of options
and restricted stock, the vesting and exercise of which is disclosed below, has been included in prior years in the compensation
of named executive officers, and therefore does not represent additional compensation paid by the Company.
Name
|
Option
Awards
|
Stock
Awards
|
Number
of Shares Acquired on Exercise
|
Value
Realized on Exercise
|
Number
of Shares Acquired on Vesting
|
Value
Realized on Vesting
|
Susan
G. Riel (1)
|
--
|
--
|
11,941
|
$673,626
|
Charles
D. Levingston
|
--
|
--
|
810
|
$45,632
|
Antonio
F. Marquez
|
--
|
--
|
8,065
|
$454,855
|
Lindsey
S. Rheaume
|
--
|
--
|
5,596
|
$315,073
|
Janice
L. Williams
|
--
|
--
|
7,480
|
$421,917
|
Ronald
D. Paul (2)
|
17,349
|
$775,956
|
36,909
|
$2,081,065
|
|
(1)
|
Ms.
Riel was appointed Interim President and Chief Executive Officer of the Company and Bank,
effective March 21, 2019 and was appointed as permanent President and Chief Executive
Officer on May 6, 2019.
|
|
(2)
|
Mr.
Paul resigned from his positions at the Company and Bank, effective March 20, 2019. See
footnote 8 to the “Potential Payments Upon Termination or Change in Control”
table.
|
Employee
Benefit Plans
The
Bank provides a benefit program that 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 employee’s salary, for all officers
and employees working 1,000 hours or more in a calendar year. Executive officers and directors also are provided long term care
insurance. The Company also maintains the 2011 Employee Stock Purchase Plan, which is a qualified plan under Section 423 of the
Internal Revenue Code (the “ESPP”). Under the ESPP, substantially all employees other than certain part time employees
and those who have not been with the Company for at least six months, and employees who are greater than 5% shareholders, are
eligible to purchase shares of the Company’s common stock at a discount to the market price.
(remainder
of page intentionally blank)
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Pension
Benefits
The
following table provides information regarding the present value of the accumulated benefit to each of the named executive officers
based on the number of years of credited service under the SERP as of December 31, 2019. Please refer to the discussion under
the caption “Supplemental Executive Retirement Plan” and accompanying the Summary Compensation Table for additional
information regarding the SERP.
Name
|
Plan
Name
|
Number
of Years of Credited Service
|
Present
Value of Accumulated Benefits(1)
|
Payments
During Last Fiscal Year
|
Ronald
D. Paul
|
N/A
|
N/A
|
N/A
|
N/A
|
Charles
Levingston
|
N/A
|
N/A
|
N/A
|
N/A
|
Susan
G. Riel
|
Supplemental
Executive Retirement and Death Benefit Agreement
|
22
|
$1,770,301
|
$--
|
Antonio
F. Marquez
|
Supplemental
Executive Retirement and Death Benefit Agreement
|
9
|
$288,669
|
$--
|
Lindsey
S. Rheaume
|
Supplemental
Executive Retirement and Death Benefit Agreement
|
4
|
$102,690
|
$--
|
Janice
L. Williams
|
Supplemental
Executive Retirement and Death Benefit Agreement
|
17
|
$562,223
|
$--
|
(1)
|
Calculated
based on the utilization of the unit credit actuarial method for quantifying accumulated
benefits, based on an annuity product which is used to finance the benefits and a discount
rate of 4.50%.
|
Certain
Relationships and Related Party Transactions
The
Bank has had, and expects to have in the future, banking transactions in the ordinary course of business with some of the Company’s
directors, executive officers, and their related parties. All of such transactions have been on substantially 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.
The Audit Committee review and approval process includes the Audit Committee taking into account, among other factors it deems
appropriate, whether the terms are fair to the Company and on terms at least as favorable as would apply if the other party was
not or did not have an affiliation with the a director of executive officer of the Company; whether the related party transaction
would impair the independence of a director or executive officer; and whether the related party transaction would present an improper
conflict of interest for any director or executive officer.
All
of such loans are performing and none of such loans are disclosed as nonaccrual, past due, restructured or potential problem loans.
The
Bank leases office space from a company wholly owned by Mr. Paul, former Chairman/CEO of the Company. The Bank also leases office
space from a limited liability company in which a trust for the benefit of Mr. Paul’s children has a majority interest.
During 2019, the Bank paid an aggregate of approximately $2.6 million in rent in respect of these two properties, excluding certain
pass through expenses; such leases reflect market rates at the time of lease negotiation.
Mr.
Rogers former Director of the Company is a shareholder 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 2019, the Company and its subsidiaries
paid aggregate fees of approximately $928,944 to that firm. Fees are based on hourly rates at standard firm rates or below.
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Additionally,
Mr. Rogers is the Chairman of the EagleBank Foundation, a 501(c)(3) non-profit, raising over $4.3 million to improve the well-being
of our community by providing financial support to local charitable organizations that help foster and strengthen vibrant, healthy,
cultural and sustainable communities. During 2019, the Company and its subsidiaries paid $181,802 to the EagleBank Foundation
to support its annual golf tournament and other donations supporting various charities.
Ryan
Riel, the son of Ms. Riel, is employed by the Bank as a Senior Market Executive. During 2019, Mr. Riel’s total compensation
was $654,162, including base salary, incentive bonus payments and awards of restricted stock. Mr. Riel’s compensation is
determined on the same basis as all other comparable employees, and is determined by the Compensation Committee, without any participation
or input by Ms. Riel.
William
Sherrill, a son-in-law of Ms. Riel, is employed by the Bank as a Senior Mortgage Banker. During 2019, Mr. Sherrill’s total
compensation was $131,615, which was primarily commission and incentive income. Mr. Sherrill’s compensation is determined
on the same basis as other comparable employees under a defined commission plan, without any participation or input by Ms. Riel.
Kenneth
Van Valkenburgh, the brother-in-law of Mr. Paul, former Chairman/CEO of the Company, is employed by the Bank as a Vice President,
Insurance Manager. During 2019, Mr. Van Valkenburgh’s total compensation was $221,283, including base salary, an incentive
bonus payment and an award of restricted stock. Mr. Van Valkenburgh’s compensation was determined on the same basis as other
comparable employees, without any participation or input by Mr. Paul.
Proposal
2: Ratification of the Appointment of Independent Registered Public Accounting Firm
The
Audit Committee of the Board of Directors has selected Dixon Hughes Goodman LLP (“DHG”) as the Company’s independent
registered public accounting firm to audit the Company’s financial statements for the fiscal year ending December 31, 2020.
Representatives of DHG 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. Services provided to the Company and its subsidiaries
by DHG in 2019 are described under “Fees Paid to Independent Accounting Firms” below. Additional information regarding
the Audit Committee is provided in the Report of the Audit Committee and under the caption “Election of Directors - Meetings,
Committees and Procedures of the Board of Directors.”
Vote
Required and Board Recommendation
The
affirmative vote of a majority of votes cast on the proposal is required for approval of the ratification of the appointment of
the independent registered public accounting firm. If the shareholders fail to ratify this appointment, the Audit Committee will
reconsider whether to retain DHG, and may retain DHG or another firm, without resubmitting the matter to shareholders. The
Board of Directors recommends that shareholders vote FOR the ratification of the appointment
of DHG as the Company’s independent registered public accounting firm.
Fees
Paid to Independent Accounting Firm
Audit
Fees
During
2019, the aggregate amount of fees billed to the Company by DHG for services rendered by it for the audit of the Company’s
financial statements and review of financial statements included in the Company’s reports on Form 10-Q, and for services
normally provided in connection with statutory and regulatory filings was $727,510. In 2018, DHG billed $353,914 for such services.
Audit–Related
Fees
During
2019, the aggregate amount of fees billed to the Company by DHG for services related to the performance of other audit services
was $93,750. These services included services in connection with the Company’s securities and regulatory filings and GNMA
and HUD audits. During 2018, the aggregate amount of
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fees billed to the Company by DHG for services related to the performance
of other audit services was $64,250. These services included services in connection with securities and regulatory filings, GNMA
and HUD audits.
Tax
Fees
During
2019, the aggregate amount of fees billed to the Company by DHG for services related to tax advice, compliance and planning services
was $86,185. During 2018, DHG did not bill the Company for tax advice, compliance or planning services.
All
Other Fees
No
other fees were billed to the Company by DHG for years 2019 or 2018.
None
of the engagements of DHG to provide non-audit services was made pursuant to the de minimis exception to the pre-approval
requirement contained in the rules of the Securities and Exchange Commission and the Company’s Audit Committee charter.
Audit services may not be approved under the de minimis exception.
Proposal
3: Non-Binding Advisory Vote on Executive Compensation
Section
14A of the Securities Act of 1934, added as Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and
the rules of the Securities and Exchange Commission adopted thereunder (“Section 14A”), requires that a separate,
advisory, shareholder resolution to approve the compensation of executives, as disclosed pursuant to the compensation disclosure
rules of the Securities and Exchange Commission, must be included in the Company’s proxy materials for the annual meeting.
As a result, the Company is providing shareholders with the opportunity to cast a non-binding advisory vote at the meeting to
approve the compensation of the Company’s executives. This proposal, commonly known as a “Say-on-Pay” proposal,
gives shareholders the opportunity to endorse or not endorse our executive pay program through the following resolution:
RESOLVED,
that the shareholders approve the compensation of the Company’s named executive officers, as disclosed in this proxy statement
for the 2020 Annual Meeting pursuant to the rules of the Securities and Exchange Commission, which disclosure includes the “Compensation
Discussion and Analysis” section, the tabular disclosure regarding named executive officer compensation and the accompanying
narratives.
Because
this vote is advisory, it will not be binding upon the Board of Directors. However, the Compensation Committee will take into
account the outcome of the vote when considering future executive compensation arrangements. Under Section 14A, the vote may not
be construed as overruling a decision by the Company or the Board of Directors, changing or implying any change in the fiduciary
duties of the Company or the Board of Directors; or creating or implying any additional fiduciary duty of the Company or the Board
of Directors. The next Say-on-Pay proposal will be put before shareholders at the 2021 Annual Meeting.
Shareholders
are encouraged to read the section of this proxy statement titled “Compensation Discussion and Analysis” including
the tabular disclosure regarding named executive officer compensation, together with the accompanying narrative disclosures.
Vote
Required and Board Recommendation
The
affirmative vote of a majority of the votes cast at the meeting on the proposal is required for the approval of this resolution.
It is expected that all of the shares of the common stock entitled to vote on the proposal over which directors of the Company
exercise voting power will be voted for the proposal. We believe our compensation policies are strongly aligned with the long
term interests of the Company and its shareholders. As such, the Board of Directors recommends that shareholders vote FOR
approval of this non-binding advisory resolution.
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Form
10-K Annual Report
The
Company will provide, without charge, to any shareholder entitled to vote at the meeting or any beneficial owner of common stock
solicited hereby, a hard copy of its Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities
and Exchange Commission, upon the written request of such shareholder. Requests should be directed to Jane E. Cornett, Corporate
Secretary, at the Company’s executive offices, 7830 Old Georgetown Road, Bethesda, Maryland 20814. It is also available
electronically through www.sec.gov and www.eaglebankcorp.com.
Delinquent
Section 16(a) Reports
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s 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 (the “Commission”).
Based
solely upon the Company’s review of the copies of the Forms 3 and 4 which have been filed electronically with the Commission
during the year ended December 31, 2019, and Forms 5 filed electronically with the Commission with respect to the year ended December
31, 2019, and written representations from the Company’s 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: one Form
4, each reporting one transaction, for each of Mr. Levingston, Mr. Marquez, Mr. Paul, Mr. Soltesz Mr. Rheaume and Ms. Williams,
were not filed in a timely manner, and Forms 3 for Ms. Hackney, Ms. LaPlaca, Ms. Ludwig, Mr. Soltesz and Mr. Soto 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 Company’s proxy materials must be received by the Company
no later than December 10, 2020. Shareholder proposals for nominations for election as
director must be received by the Company no later than January 9, 2021. 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 Company’s
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.
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By
Order of the Board of Directors
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Jane
E. Cornett, Corporate Secretary
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April
6, 2020
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Eagle Bancorp, Inc.
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69
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2020 Proxy Statement
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PROXY
This Proxy is solicited on behalf of the Board of Directors The undersigned hereby makes, constitutes and appoints Terry D.
Weber and Carlos R. Oliva 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 Company’s Annual Meeting of Shareholders to be held on May 21,
2020. The Annual Meeting of Stockholders will be held virtually. In order to attend the meeting, you must register at http://
www.viewproxy.com/EagleBankCorp/2020 by 11:59 PM EST on May 19, 2020. On the day of the Annual Meeting of Stockholders, if
you have properly registered, you may enter the meeting at http://www.viewproxy.com/ EagleBankCorp/2020/vm by logging in using
the password you received via email in your registration confirmation 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, FOR the proposal to ratify the appointment of the independent registered public accounting firm, and FOR
the resolution approving the Company’s named executive officer compensation. 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.
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Shareholders to be held May 21, 2020 The Proxy Statement, our Annual Report on Form 10-K
for the year ended December 31, 2019 and our Report to Shareholders are available at http://viewproxy.com/eaglebankcorp/2020/
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Please
mark your votes like this The Board of Directors recommends a vote FOR the listed nominees, and FOR Proposals 2 and
3. 1. To elect 8 directors 01 - Mathew D. Brockwell 02 - Theresa G. LaPlaca 03 - A. Leslie Ludwig 04 - Norman R. Pozez
05 - Kathy A. Raffa 06 - Susan G. Riel 07 - James A. Soltesz 08 - Benjamin M. Soto 2. To ratify the appointment of
Dixon Hughes Goodman LLP as the Companys independent registered public accounting firm to audit the consolidated financial
statements of the Company for the year ended December 31, 2020; FOR AGA INSTABSTAIN FOR
FOR FOR FOR FOR FOR FOR FOR AGAINST AGAINST
AGAINST AGAINST AGAINST AGAINST AGAINST AGAINST ABSTAIN ABSTAIN
ABSTAIN ABSTAIN ABSTAIN ABSTAIN ABSTAIN ABSTAIN 3. To vote
on a non-binding, advisory resolution approving the compen-sation of our named executive officers FORAGAINST
ABSTAIN I plan on attending the meeting 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
tittle is stated. Date: (mm/dd/yyyy) Signature Signature (if held jointly) Change of Address (Please print address
below) CONTROL NUMBER PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. As a stockholder of Eagle Bancorp,
Inc., you have the option of voting your shares electronically through the Internet or by telephone, eliminating the need
to return the proxy card. Your electronic vote authorizes the named proxies to vote your shares in the same manner as if you
marked, signed, dated and returned the proxy card. Votes submitted electronically over the Internet or by telephone must be
received by 11:59 PM EST on May 20, 2020. As a Registered Holder, you may vote your shares at the Annual Meeting by first
registering at http://www.viewproxy.com/EagleBankCorp/2020 using your Virtual Control Number below. Your registration must
be received by 11:59 PM EST on May 19, 2020. On the day of the meeting, you may log in to the meeting at http://www.viewproxy.com/EagleBankCorp/2020/VM
using the password you received via email in your registration confirmation and follow instructions to vote your shares. Please
have your Virtual Control Number with you during the meeting in order to vote. Further instructions on how to attend and vote
at the Annual Meeting are contained in the Proxy Statement in the section titled “Questions and Answers About the Proxy
Materials and Our Annual Meeting - What do I need to do to attend the Annual Meeting virtually?”. CONTROL NUMBER PROXY
VOTING INSTRUCTIONS Please have your 11 digit control number ready when voting by Internet or Telephone MAIL Vote Your Proxy
by Mail: Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. TELEPHONE Vote Your Proxy by Phone: Call 1 (866) 804-9616 Use any touch-tone telephone to vote your proxy. Have your proxy
card available when you call. Follow the voting instructions to vote your shares. INTERNET Vote Your Proxy on the Internet:
Go to www.AALvote.com/EGBN Have your proxy card available when you access the above website. Follow the prompts to vote your
shares.
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