The notice of meeting and proxy statement accompanying this letter describe the specific business to be acted upon.
In addition to the specific matters to be acted upon, there will be a report on the progress of the Company and an opportunity for questions of general interest to the shareholders. questions.
We hope that you will join us at this year’s Annual Meeting and look forward to personally greeting those of you who are able to attend.
It is important that your shares be represented at the meeting. Whether or not you plan to attend the Annual Meeting, please vote your shares by: (1) accessing the Internet at the website included on the proxy card, (2) calling the toll-free number shown on the proxy card, or (3) completing, signing, and returning the enclosed proxy card as soon as possible in the postage-paid envelope provided.
City Holding Company thanks you for your consideration and your continued support.
We urge you to sign and return the enclosed proxy or transmit your voting instructions by telephone or Internet as promptly as possible, regardless of your plans to attend the meeting. Please refer to the instructions on the proxy card for details about transmitting your voting instructions by telephone or Internet. If you attend the meeting, you may vote your shares in person via live webcast, even if you have previously signed and returned your proxy or transmitted your voting instructions by telephone or Internet.
This statement is furnished in connection with the solicitation of proxies to be used at the Annual Meeting of Shareholders of City Holding Company (the “Company” or “City”) to be held on Wednesday, April 19, 2017.24, 2024.
The solicitation of proxies in the enclosed form is made on behalf of the Board of Directors of the Company. The cost of preparing, assembling, and mailing the proxy material and of reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and clerical expenses of transmitting copies of the proxy material to the beneficial owners of shares held of record by such persons will be borne by the Company. The Company does not currently intend to solicit proxies otherwiseother than by use of the mail, but certain officers and regular employees of the Company or its subsidiaries, without additional compensation, may use their best efforts, by telephone or otherwise, to obtain proxies. The proxy materials are being mailed on or about March 20, 2017,25, 2024 to shareholders of record at the close of business on March 3, 201712, 2024 (the “Record Date”).
The Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2016,2023 is being furnished with this Proxy Statement to shareholders of record onas of the Record Date. The Annual Report to Shareholders does not constitute a part of this Proxy Statement or the proxy solicitation material.
The Securities and Exchange Commission (“SEC”) has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process is commonly referred to as “householding.”
The Company has implemented “householding” in an effort to reduce the number of duplicate mailings to the same address. This process benefits both shareholders and the Company because it eliminates unnecessary mailings delivered to your home and helps to reduce the Company’s expenses. “Householding” will not be used, however, if the Company has received contrary instructions from one or more of the shareholders sharing an address. We will continue to “household” indefinitely until you instruct us otherwise. You may notify the Company that you would like to receive separate copies of the Company’s annual report and proxy statement in the future, or that you would like to receive one copy for multiple shareholders sharing an address, by calling Computershare Investor Services, LLCtelephoning our transfer agent at 1-800-568-3476, or by mail towriting the attention of City Holdingtransfer agent at: Computershare Trust Company c/o Computershare Investor Services, LLC,N.A., P. O. Box 43078, Providence, RI 02940-3078. If you would like to receive a separate copy of the Company’s 20172024 Proxy Statement and 20162023 Annual Report, please contact Victoria A. Faw, Corporate Secretary, City Holding Company, 25 Gatewater Road, Cross Lanes,P. O. Box 7520, Charleston, WV 2531325356-0520, or call 304-769-1100.1-304-769-1100. Even if your household receives only one annual report and one proxy statement, the Company will continue to send a separate proxy card for each shareholder residing at your address. Please note, however, that if a broker holds shares of the Company on your behalf (that is, in “street name” (e.g., e.g., in a brokerage account or retirement plan account)), you may continue to receive duplicate mailings.
The proxy may be revoked at any time before the shares subject to it are voted by (i) notifying, in writing, Victoria A. Faw, Corporate Secretary, City Holding Company, P. O. Box 7520, Charleston, WV 25356-0520, (ii) executing a proxy bearing a later date (including a proxy given over the Internet or by telephone), or (iii) voting in person at the Annual Meeting the shares represented by the proxy. (Your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote in person at the Annual Meeting.) If your shares are held by a broker on your behalf (that is, in street name), you must contact your broker or nominee to revoke your proxy.
If you participate in City Holding Company’s 401(k) Plan & Trust and hold shares of Company common stock in your plan account as of the Record Date, you will receive a request for voting instructions from the tabulation agent on behalf of the trustee (Cityof the Company’s operating subsidiary City National Bank)Bank of West Virginia (“City National Bank”) with respect to your plan shares. If you hold Company common stock outside of the plan, you will vote those shares separately. You are entitled to direct City National Bank how to vote your plan shares.
In the absence of voting instructions to the contrary, shares represented by validly executed proxies will be voted in accordance with the foregoing recommendations. If any other matters are properly presented for consideration at the Annual Meeting, the persons named as proxies and acting thereunder will have discretion to vote on those matters according to their best judgment to the same extent as the person delivering the proxy would be entitled to vote. At this time, the Company is not aware of any other matters that may come before the Annual Meeting.
The Company’s only authorized voting equity security is its Common Stock.
outstanding shares of the Company’s Common Stock entitled to a vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Abstentions will be counted as shares present for purposes of determining the presence of a quorum. A quorum must be present before any business, including the shareholder votes listed above, can be conducted.
Information included in this table is based upon the “beneficial ownership” rules issued under the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”). Under these rules, a person is deemed to be a beneficial owner of any shares of our common stock if that person has or shares “voting power,” which includes the power to vote or direct the voting of the shares, or “investment power,” which includes the right to dispose or direct the disposition of the shares. Thus, under the rules, more than one person may be deemed to be a beneficial owner of the same shares. A person is also deemed to be a beneficial owner of any shares as to which that person has the right to acquire beneficial ownership within 60 days.
The following table lists each shareholder of the Company who is the beneficial owner of more than 5% of the Company’s Common Stock, the only class of stock outstanding, as of March 3, 2017.12, 2024.
Jeffrey D. Legge filed two late Form 4s with respect to two open market sale transactions.
GOVERNANCE AND NOMINATING COMMITTEE REPORT
The Governance and Nominating Committee of the Board of Directors (the “Governance Committee”) is comprised of four independentfive directors and operates under a written charter adopted by the Board of Directors. All five of the directors, including the chair of the Governance Committee, are independent in accordance with Nasdaq rules. The Governance Committee is charged with the responsibilities of: (i) identifying individuals qualified to become Board members; (ii) selecting or recommending that the Board select the director nominees for the next annual meeting of shareholders; and (iii) overseeing corporate governance matters for the Company.
Director candidates are nominated by the Governance Committee. The Governance Committee will consider director candidates recommended by shareholders (see “Shareholder Proposals and Nominations” on page 42)Nominations”), other members of the Board, officers and employees of the Company and other sources that the Governance Committee deems appropriate.The Governance Committee’s written charter directs the Governance Committee to evaluate the candidates based upon the totality of the merits of each candidate and not based upon minimum qualifications or attributes.In considering individual nominees, the Governance Committee takes into account the qualifications of other Board members to ensure that a broad variety of skill sets and experience beneficial to the Company and its business are represented on the Board of Directors.The Company believes that all directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the shareholders.Further, the backgrounds and qualifications of directors, as a group, should provide a mix of experience, knowledge, and abilities that will allow the Board to fulfill its responsibilities.The Governance Committee evaluates all director candidates in the same manner regardless of the source of the recommendation. Some of the criteria used by the Governance Committee to evaluate the candidates, including those selected for nomination at the 2017 Annual Meeting, include:
▪Personal and professional integrity
▪Prior business experience, including knowledge of the banking business
▪Education
▪Age
▪Skills that may be relevant to the Company’s business
▪Geographic distribution of the candidates
▪Prior board experience with the Company or other publicly traded companies
▪Involvement in community, business and civic affairs
In the context of nominating directors, the Company has no officialwritten policy regarding diversity. Nevertheless,how diversity should be considered in the director nomination process.The Governance Committee seeks to ensure that there is diversity of thought among the directors as the Committee believes that diversity of thought results in a more comprehensive analysis of each issue and informs better decision-making which will ultimately result in greater shareholder value.Diversity of thought may stem from many factors, including personal and professional experience, socio-economic background, age, gender, race, education, religion, nationality, skill set, geographic representation, and involvement in community, business, and civic affairs.The Governance Committee does not assign a specific weight to any factor and recognizes that no particular factor is necessarily applicable to all prospective nominees.The Board’s Governance Committee believes that its existing Board is, in fact, well diversified with regard to geographical representation, business backgrounds, civic involvement,in terms of knowledge, experience, skills, and experienceother characteristics, and that varying perspectives are presented on bank boards or comparable organizations – all factors that the Governance Committee believes to be important to representing the interests of the Company’s shareholders.key issues.
The Governance Committee is also empowered to retain outside advisors to assist in the performance of its functions with the sole authority to agree to fees and other terms of engagement.The Governance Committee did not hire any outside advisors to assist them with respect to the selection of candidates for director nominations in 20162024, and has not hired one for evaluation of the current slate of directors nominated in these materials.
The Governance Committee has nominated for election as Class IIII directors, all of whom currently serve as Class IIII directors of the Company, Robert D. Fisher, Jay C. Goldman, Patrick C. Graney IIIGregory A. Burton, J. Thomas Jones, James L. Rossi and Charles R. Hageboeck,Diane W. Strong-Treister, to serve three-year terms expiring at the 20202027 Annual Meeting. In addition, the Governance Committee recommended, and the Board of Directors approved, James M. Parsons to stand for election as a Class III nominee at the 2024 Annual Meeting to serve for a two-year term expiring at the 2026 Annual Meeting.
Respectfully submitted,
Jay C. Goldman,Robert D. Fisher, Chairman
John R. Elliot
William H. File III
Robert D. FisherJ. Thomas Jones
Sharon H. Rowe
Diane W. Strong-Treister
February 21, 201728, 2024
ELECTION OF DIRECTORS
(Proposal 1)
The Company’s Board of Directors of the Company currently consists of thirteen (13) members. David W. Hambrick, a Class I director, intends to resign as a director effective as of the 2017 Annual Meeting. Upon Mr. Hambrick's resignation, one of the four Class I director seats will be vacant. The Company's Amended and Restated Bylaws authorize the remaining Directors to fill a vacancy on the Board created by a resignation. The Board intends to fill the vacancy in due course.
In accordance with the Company’s Amended and Restated Bylaws, the Board of Directors is classified into three classes as nearly equal in number as the then total number of Directorsdirectors constituting the whole Board permits. Each class is to be elected to separate three-year terms with each term expiring in different years. At each Annual Meeting,annual meeting, the directors orand nominees constituting one class are elected for a three-year term. The term of Class IIII directors expires at the 20172024 Annual Meeting. There are four nominees for election as Class IIII directors to serve for terms of three years expiring at the Annual Meeting in 2020.2027. Messrs. Fisher, Goldman, GraneyBurton, Jones, and HageboeckRossi and Ms. Strong-Treister currently serve as directors of the Company and will stand for re-election as Class I directors. The Company's Amended and Restated Bylaws authorize the remaining Directors to fill a vacancy on the Board by an affirmative vote of a majority of the remaining directors. Mr. Parsons was appointed as a director by the Board of Directors in January 2024 to fill a vacant seat and has been recommended and approved by the Board of Directors to stand for election as a Class III directors.director.The Company’s Amended and Restated Bylaws require any director appointed by the Board to stand for election by the shareholders at the annual meeting next following his appointment..
Each director elected will continue in office until a successor has been elected. If any nominee is unable to serve, which the Board of Directors has no reason to expect, the persons named on the accompanying proxy card intend to vote for the balance of those named and, if they deem it advisable, for a substitute nominee. The names of the nominees for directors submitted by the Governance Committee and the names of the directors of the Company whose terms of office will continue after the Annual Meeting are listed below. Director ages are shown as of the Annual Meeting date, April 19, 2017.24, 2024.
The Board of Directors recommends that shareholders vote “FOR” all of the Class IIII nominees shown below.below and “FOR” Class III nominee James M. Parsons.
CLASS IIII DIRECTORS (Nominees for a term to expire in 2020)2027)
Robert D. FisherGregory A. Burton, 64, has served as a director since 1994.July 2021. Mr. Fisher received a Bachelor’s degree (finance) from West Virginia UniversityBurton helped start BrickStreet Mutual Insurance, “BrickStreet”, in 2006 and a Doctor of Jurisprudence degree (law) from West Virginia University College of Law. He is the managing member of Adams, Fisher & Chappell, PLLC in Ripley, WV. Mr. Fisher is active and well known in the legal community in West Virginia, having served as President of The West Virginia Bar from 2006its Chief Executive Officer until 2017. In April 2017, BrickStreet merged with Motorists Mutual (Ohio) to 2007.form what is now Encova Mutual Insurance Group, “Encova”. Mr. Fisher joinedBurton retired as the Board of Bank of Ripley in 1987 and, subsequent to its merger with City Holding Company, the City Holding Company Board in 1994. He lives in the Jackson County market and is very active in community affairs, providing him knowledgeExecutive Chairman of the communitycombined entity on December 31, 2021 and its leaders. The Governance Committee of the Board nominated Mr. Fisher based upon his legal expertise, his community experience and his prior board service. Mr. Fisher owns, directly or indirectly, 29,057 shares of City Holding Company common stock.
Jay C. Goldman, 73, has served as a director since 1988. Mr. Goldman received Bachelor’s degrees (business administration and real estate) from Morris Harvey College and the University of Charleston, respectively, and a Doctor of Jurisprudence degree (law) from West Virginia University. Mr. Goldman is a licensed and State-certified real estate appraiser and licensed real estate broker, as well as a member of the WV State Bar. He serves on the Board of DirectorsEncova in a non-executive capacity until September of 2022 when he retired from the West Virginia Chamber of Commerce and is a past trustee of the University of Charleston. Mr. Goldman is currently President of Goldman Associates, Inc., a real-estate firm based in Charleston, WV providing real-estate brokerage, appraisals, and consulting services. As a result, Mr. Goldman’s knowledge regarding real estate and construction throughout West Virginia is extensive and highly beneficial to City. Mr. Goldman’s knowledge of the economy and leaders throughout the State of WV is also exceptionally strong. Mr. Goldman served as a Municipal Judge for the City of Charleston and as Mayor of Charleston, WV from 1999 until 2003. He is, therefore, knowledgeable about political and municipal issues in West Virginia. Mr. Goldman joined the City National Bank Board of Directors in 1986 and the City Holding Company Board of Directors in 1988. As Chairman of City’s Governance Committee, Mr. Goldman has attended numerous Continuing Education conferences on these topics.Board. The Governance Committee of the Board nominated Mr. GoldmanBurton based upon his expertise in real estate, which is an important industry for City’s commercial lending business, his knowledge of the WV economy and its leaders, hiswork experience in governance matters,city and his prior board experience. Mr. Goldman owns, directly or indirectly, 24,636 shares of City Holding Company common stock.
Patrick C. Graney III, 63, was appointed to the Board of Directors in July 2015 and elected by the shareholders to serve a one year term at the April 2016 Annual Meeting. Mr. Graney a received a bachelor’s degree from the College of Arts and Sciences at the University of Virginia and a master’s degree in business administration also from the University of Virginia’s Darden School. He is the Founder and President of PCG, Inc., a private investment company. In addition, he is a well-known business leader in the state of West Virginia principally focused on the distribution of petroleum products. He was the owner of Petroleum Products, Inc., a fuel distributor, from December 1975 to December 2012, and One Stop Stores, a chain of convenience stores, from December 1981 to July 2015. Mr. Graney is active in community affairs, and currently servesgovernment, as a director of the West Virginia Coal Association, the West Virginia Chamber of Commerce and Ramaco Resources, Inc. He also serveswell as Chairman of the Executive Board of the Buckskin Council of the Boy Scouts and Secretary of the Board of the University of Charleston. He also served as a Class B Director representing West Virginia on the Board
of the Richmond Federal Reserve from December 2008 to December 2013. The Governance Committee of the Board nominated Mr. Graney based on his experience operating a successful business with staff located in many disparate locations and his credentials within the banking, industry. Mr. Graney owns, directly or indirectly, 2,800 shares of City Holding Company common stock.
Charles R. Hageboeck, 54, has served as a director since 2005. Mr. Hageboeck received a Ph.D. in Economics from Indiana University in 1991.financial and insurance industries. He has spent most of his career in banking. He now serves as City’s Chief Executive Officer and President. Mr. Hageboeck was formerly with Indiana National Bank, NBD Bank, N.A., and Peoples Bank of Indianapolis. Mr. Hageboeck was the Chairman of the West Virginia Banker’s Association and currently serves on the Boardsboards of the West Virginia Chamber of Commerce, the University of Charleston (Vitality and Executive Committees), the JF Allen Company Board of Directors, which is a privately-held company, and the Board of Visitors for West Virginia Bankers Association, and Thomas Health Systems. In 2012,State University. Mr. Hageboeck was recognized as a recipient of the State Journal’s prestigious “Who’s Who in West Virginia Business” award. Mr. Hageboeck was elected to City’s Board upon becoming CEO in 2005, and is the only management director on the Board. The Governance Committee of the Board nominated Mr. Hageboeck by virtue of his role as City’s Chief Executive Officer and due to his strong experience as an officer at both smaller and larger banking institutions. Mr. HageboeckBurton owns, directly or indirectly, 84,9361,590 shares of City Holding Company common stock.
CLASS I DIRECTORS (Directors whose terms expire in 2018)
John R. ElliotJ. Thomas Jones, 71,74, has served as a director since 2007. Mr. Elliot received Bachelor’s degrees from Kent State University (architecture) and West Virginia Institute of Technology (health care administration). Mr. Elliot founded John Elliot Associates, Architects & Planners in 1972 and Continental Health Care Construction Company in 1980, both which specialized in the design and construction of nursing homes. In 1982, Mr. Elliot founded AMFM, LLC, which today operates 16 skilled nursing facilities with over 1,197 beds throughout West Virginia and employs more than 1,800 people. In addition, Mr. Elliot founded Lifetree Therapy Company in 2014 and Lifetree Pharmacy in 2015. The Governance Committee considers AMFM to be a company of similar size and complexity to City Holding Company. As the owner and President of AMFM, the Board of Directors of City considers that Mr. Elliot’s business experience makes him a highly qualified addition to the Board. Mr. Elliot currently serves as Chairman of the West Virginia Symphony Orchestra, a member of the Board of the Clay Center for Arts and Sciences, and member of the Executive Committee of the Kent State University Foundation. He has also served on the boards of the United Way, the YMCA, Buckskin Council, Boy Scouts of America and the Sunrise Art Museum, and as a trustee of the AIA-WV Foundation for Architecture, giving him deep knowledge of the Charleston economy and its leaders. Mr. Elliot was the President of the West Virginia Health Care Association and has served as the Regional Multi-facility Vice Chair and Secretary for the American Health Care Association, providing him a high level of industry experience in the health care industry. In 2010, Mr. Elliot was recognized as a recipient of the State Journal’s prestigious “Who’s Who in West Virginia Business” award and in 2012, the West Virginia Health Care Association selected him as their President's Choice Award winner. In 2015, he was named the “Spirit of the Valley” award recipient by the YMCA of Kanawha Valley. Mr. Elliot owns, directly or indirectly, 167,026 shares of City Holding Company common stock.
David W. Hambrick, 75, has served as a director since 1993. Mr. Hambrick received a Bachelor’s degree (finance) from the University of Florida and Doctor of Jurisprudence degree (law) from West Virginia University College of Law. Mr. Hambrick was President and Chief Executive Officer of First National Bank of Alderson from 1976 until 1986; Executive Vice President and Trust Officer of Greenbrier Valley National Bank from 1986 until 2000; Executive Vice President of Horizon Bancorp, Inc. until December 1998; and Vice President of City Holding Company from 1999 until March 2000. During his tenure, he held a variety of lending, trust and financial positions including several years as principal financial officer. In addition, Mr. Hambrick was a member of the Board of the Greenbrier Valley National Bank from 1993 to 1999; a member of the Board of Horizon Bancorp, Inc. from 1993 until its merger with City Holding Company on December 31, 1998; and, subsequently, he has been a member of the City Holding Company Board, giving him long-term historical perspective regarding the banking industry. Mr. Hambrick resides in Alderson, WV and is active in civic affairs within the region, providing him strong knowledge of the Greenbrier County, WV market and its business leaders. The Governance Committee nominated Mr. Hambrick based upon his knowledge of the banking industry, his knowledge of the Greenbrier County market and his long service to City and its predecessor boards. Mr. Hambrick owns, directly or indirectly, 46,360 shares of City Holding Company common stock. Mr. Hambrick intends to resign as a director effective as of the 2017 Annual Meeting.
J. Thomas Jones, 67, was appointed to the Board of Directors in July 2013.Mr. Jones was the Chief Executive Officer of West Virginia United Health System located in Fairmont, WV, from 2003 until January 2014.Following his retirement, he served as the Consultant to the CEO of West Virginia United Health Systemuntil 2015.During his tenure at United Health System, he oversaw its expansion from two hospitals—Ruby Memorial in Morgantown and United Hospital Center in Clarksburg—to include hospitals in Morgantown,Martinsburg, Ranson and Parkersburg and become the largest health system in the state, employing over 10,000 people on 6six campuses.Mr. Jones was appointed to The Board of Governors of West Virginia University in 2014. 2014 and served as its Chair until July 2022.He has also been active in the state’s business community, and was inducted in 2012 into the West Virginia Business Hall of Fame. He has been chair of the Board of Directors of the West Virginia Chamber of Commerce, and has served on the boards of the American Hospital Association, the West Virginia Higher Education Policy Commission, Arch Coal, Premier Inc. and many other local, state, and national groups. In 2008, WV Executive magazine named Mr. Jones one of the 50 Most Influential Leaders in West Virginia.He was also recognized as an Outstanding Alumnae of the West Virginia University College of Business and Economics.
The Governance Committee nominated Mr. Jones based upon his business experience running a large, complex organization as well as his extensive knowledge of the Morgantown and central WV markets.Mr. Jones owns, directly or indirectly, 3,7324,980 shares of City Holding Company common stock.
James L. Rossi, 62,69, has served as a director since 2001.(1)Mr. Rossi, a licensed CPA, received his Bachelor’s degree from West Virginia University.Mr. Rossi maintained his own public accounting firm, James Rossi, CPA from September 1978 to July 2008.From July 2008 until his retirement in May 2013, Mr. Rossi was the Chief Financial Officer of Valtronics, Inc. (which manufactures products for
commercial and industrial clients).Mr. Rossi is also a member of Flesher, LLC, a limited liability real estate leasing and development company.Mr. Rossi also serves on the Board of Directors of Fruth Pharmacy, a privately-held company, which operates 25 retail pharmacies in WV, KY and OH and employs over 600 people.He also served as the Finance & Audit Chair for Pleasant Valley Hospital board of directors until October 2022 when it was acquired by Mountain Health Network and serves on the advisory boards of the Mason County Development Authority and the Mason County Homeless Shelter.The Governance Committee considers Mr. Rossi’s accounting background, and status as an accounting expert, a key reason why he has been nominated and elected to City’s Board of Directors. Additionally, Mr. Rossi joined the Board of Directors of The Peoples National Bank (formerly known as The Peoples Bank of Point Pleasant) in 1997, the Board of Directors of City National Bank in 1999 and the City Holding Company Board of Directors in 2001.The Governance Committee nominated Mr. Rossi based on his long experience on bank boards, his deep roots in Mason County, WV, and his knowledge regarding that local economy and its leaders.Mr. Rossi owns, directly or indirectly, 16,55519,233 shares of City Holding Company common stock.
Diane W. Strong-Treister, 67, has served as a director since 2018. Ms. Strong-Treister attended Rio Grande College and West Virginia State College. She has worked with Manpower, an employment/staffing company, since January 1987 and has been the President and franchise owner since 1997. Ms. Strong-Treister is active in community affairs and serves on the Executive Board of the Workforce Investment Board for the State of West Virginia, the Executive Board of Buckskin Council of the Boy Scouts, the Charleston Roundtable Committee of the Federal Reserve Bank of Richmond, member of the Association of Manpower Franchise Owners (AMFO) for North America (prior Chair), the board of directors of the Charleston Alliance, Vice Chair of the Charleston Chamber, board of directors for the West Virginia Manufacturer’s Education Fund, membership Chair of the Mountain State YPO Gold board, and the board of visitors for West Virginia State University. Ms. Strong-Treister is a registered and certified Women Business Enterprise National Council (WBENC) member, was recognized in 2014 as a recipient of the YWCA Women of Achievement and was honored as a member of West Virginia Executive’s Sharp Shooters Class of 2020. The Governance Committee of the Board nominated Ms. Strong-Treister based on her experience operating a successful business with multiple offices located throughout the states of West Virginia and Kentucky and as a major employer for businesses within the administrative, industrial, professional and healthcare divisions. Ms. Strong-Treister owns, directly or indirectly, 4,263 shares of City Holding Company common stock.
CLASS III DIRECTORS (Nominee for a term to expire in 2026)
James M. Parsons, 67, was appointed to the Board of Directors in January 2024. Mr. Parsons attended West Virginia University and earned his bachelor’s degree in Business Administration and accounting. From August 2005 to December 31, 2023 he served as the Chief Financial Officer of Ball Homes, LLC, a residential development company, headquartered in Lexington, Kentucky with operations in Kentucky and Tennessee. Following his retirement from Ball Homes, LLC in December 2023, Mr. Parsons is serving as the co-trustee of the D. Ray Ball, Jr. Revocable Trust, a trust formed to manage a portfolio of rental real estate properties. Mr. Parsons was a former director and chair of the Audit Committee of Limestone Bancorp, Inc. (formerly NASDAQ: LMST) and Limestone Bank from April 2015 until September 2023, when it was acquired. He is a certified public accountant and a former member of both the Kentucky and American Institutes of CPA's. The Governance Committee of the Board nominated Mr. Parsons based on his background in finance, real estate development and accounting which will strengthen the Board’s depth of expertise in all three areas. Mr. Parsons owns, directly or indirectly, 100 shares of City Holding Company common stock.
CLASS II DIRECTORS (Directors whose terms expire in 2019)2025)
Charles W. Fairchilds, 69,76, has served as a director since 2013. Mr. Fairchilds was President of Allied Ready Mix Company in Waynesboro, VA from 1987 until his retirement in January 2009. In this role, he was responsible for all aspects of three operating divisions that specialized in construction materials and employed over 150 people. Prior to joining Allied Ready Mix Company, Mr. Fairchilds owned and operated his own machine shop business in Waynesboro, VA for over three years. He started his manufacturing career with Cummins Engine Company in 1973, holding various manufacturing positions within the company, including serving as Plant Manager of the Columbus Engine Plant, which had over a million square feet of space and housed 5,500 employees, until his departure in 1983. During his time in Waynesboro and Augusta County (Virginia), Mr. Fairchilds previously served his community in a variety of different roles includingas the President of the Waynesboro YMCA and the Waynesboro/East Augusta Chamber of Commerce. He earned his MBA at the University of Virginia. Mr. Fairchilds previously served on the Board of Directors of Community Bank (“Community”), Staunton, VA, beginning in 1996 until its merger with City Holding Company in January 2013. Additionally, he served as Chairman of the Audit Committee of Community.He has served on City’s Board since January 2013. The Governance Committee believes that due to his education and professional experiences, Mr. Fairchilds brings strong leadership, management, finance and accounting skills to the Company’s Board. Mr. Fairchilds owns, directly or indirectly, 8,11110,188 shares of City Holding Company common stock.
William H. File III, 69,76, has served as a director since 2001. (1)Mr. File received a Bachelor’s degree (political science)in political science from Lynchburg College, Virginia, and a Doctor of Jurisprudence degree (law) degree from West Virginia University College of Law. Mr. File is a member ofpracticing attorney and a partner in the firm File Payne Scherer & File PLLC and is the City Solicitor for Beckley, West Virginia. Mr. File was
first elected to the Bank of Raleigh Board of Directors in 1984. He was a member of the Board of Horizon Bancorp, Inc. from 1993 until its merger with City Holding Company on December 31, 1998;1998, and, subsequently, he has been a member of the City National Bank and City Holding Company Boards until the present date. He is Chairman of the West Virginia Educational Broadcasting Authority that oversees public television and public radio in West Virginia, and is Past President and legal advisor to the Beckley Area Foundation, a $40 Million community foundation serving the Raleigh County market. Mr. File has deep knowledge of the Raleigh County economy and its local leaders. The Governance Committee of the Board nominated Mr. File based upon his legal expertise, his knowledge of the Raleigh County market, and his long tenure on bank boards. Mr. File owns, directly or indirectly, 24,20027,004 shares of City Holding Company common stock.
Tracy W. Hylton II, 68,75, has served as a director since 1993.Mr. Hylton is the President of Eller, Inc., a construction and reclamation company; President of Patience, Inc., a surface coal mining operation;company, and President of Lightning, Inc., a lease holding and coal sales company. Mr. Hylton has a number of business interests including those in coal, automotive retailing,auto dealerships, hotels in various states, retail and real estate. Through these business interests he has knowledge of, and contacts with, many other business people throughout the State of West Virginia. He is an active participant in a number of civic organizations, including the Raleigh County YMCA.organizations. Mr. Hylton joined the Board of the Bank of Raleigh in 1984, the Board of Horizon Bancorp, Inc. in 1993, and subsequent to the merger with City on December, 31, 1998, the City Holding Company Board. Mr. Hylton has deep business contacts and knowledge of the West Virginia and Raleigh County marketplace. The Governance Committee of the Board nominated Mr. Hylton based upon his varied business interests, knowledge, and contacts, his knowledge of the Raleigh County market, and his experience on bank boards. Mr. Hylton owns, directly or indirectly, 54,52469,531 shares of City Holding Company common stock.
C. Dallas Kayser, 65,72, has served as a director since 1995. Since January 1, 2016, he has served as the non-executive Chairman of the Board of City Holding Company. Mr. Kayser received his Bachelor’s degree (economics) from Marshall University and his Doctor of Jurisprudence from the West Virginia University College of Law. He isIn December 2020, he retired as the senior partner of Kayser Layne & Clark, PLLC and hasPLLC. He had been in the private practice of law since 1976. He is the Treasurer of Deerfield Development Company. HeCompany and has previously served as the Chairman of the Board of Trustees of Pleasant Valley Hospital and currently serves as the secretary and on its finance and executive committee.committees. In addition, he has served as the Chairman of the
Board of Trustees of the United Methodist Foundation of West Virginia, Inc. and served on its Executive, Compensation, Audit and Investment Committees. HeMr. Kayser is a charter member of the Mason County Community Foundation. He has been a guest speaker at bank director conferences in Chicago, IL and Nashville, TN.The Governance Committee nominated Mr. Kayser based upon his legal background, his broad business and community involvement, and his experience on bank boards. Mr. Kayser owns, directly or indirectly, 21,75525,808 shares of City Holding Company common stock.
Sharon H. Rowe, 65,72, has served as a director since 2001. (1)Mrs.Ms. Rowe attended West Virginia University.In February 2013, Ms. Rowe formed a limited liability company, SHR Consulting, LLC, which provides public relations, marketing and events planning services.She retired as Vice President of Communications of The Greenbrier Resort and Club Management Company in 2005 after 27 years with the company and subsequently served as a senior consultant to two marketing communications firms until forming SHR Consulting, LLC. Mrs.Ms. Rowe joined the BoardBoards of Greenbrier Valley National Bank and Horizon Bancorp, Inc. in 1996, the Board of City National Bank of West Virginia in 1999 and, subsequently, in 2001, the City Holding Company Board of Directors.A recognized leader in West Virginia’s tourism industry, she serves onis the West Virginia Tourism Commission and isimmediate past chairChair and member of the Board of Directors of the West Virginia Hospitality and Travel Association. Mrs.Ms. Rowe serves as a director on numerous boards in West Virginia including the advisory board of the Clay Center for the Arts and Sciences, The Mary Babb Randolphthe Leadership Council of the WVU Cancer Center Board of Visitors,Institute, the Greenbrier County Convention and Visitors Bureau, and HospiceCare.She is the current President and a Director Emeritus of The Education Alliance. The Governance Committeemember of the Board nominated Mrs. Rowe based upon her marketingboard of directors of United Way of the Greenbrier Valley and communications experience, prior bankis the current Chair and a member of the board service and her statewide involvement. Mrs.of directors of Carnegie Hall WV.Ms. Rowe owns, directly or indirectly, 10,82311,515 shares of City Holding Company common stock.
| |
(1)
| Prior to 2001, the director served on the City National Bank of West Virginia Board. |
CLASS III DIRECTORS (Directors whose terms expire in 2026)
Robert D. Fisher, 71, has served as a director since 1994.Mr. Fisher received a Bachelor’s degree (finance) from West Virginia University and a Doctor of Jurisprudence degree (law) from West Virginia University College of Law.He is a practicing attorney and the managing member of Adams, Fisher & Chappell, PLLC in Ripley, WV.Mr. Fisher is active and well known in the legal community in West Virginia, having served as President of the West Virginia State Bar from 2006 to 2007.Mr. Fisher joined the Board of Bank of Ripley in 1987 and, subsequent to its merger with City Holding Company, the City Holding Company Board in 1994.He lives in Jackson County, WV and is very active in community affairs, providing him with a deep knowledge of the community and its leaders.He currently serves as Chairman of the Board of Jackson General Hospital and is the President of the West Virginia Bar Association and serves on its Executive Council.In 2017, Mr. Fisher was awarded the prestigious North Star Award from the Boy Scouts of America in recognition of his significant contributions to scouting.In addition, in 2019, Mr. Fisher was recognized as a Fellow of the American Bar Foundation, a distinction limited to one percent of lawyers licensed to practice in each jurisdiction, and, in 2021, was the recipient of West Virginia Executive’s “Lawyers and Leaders” Award.Mr. Fisher owns, directly or indirectly, 43,278 shares of City Holding Company common stock.
Charles R. Hageboeck, 61, has served as a director since 2005. Mr. Hageboeck received a Ph.D. in Economics from Indiana University in 1991. He has spent most of his career in banking. He now serves as City’s Chief Executive Officer and President. Mr. Hageboeck was formerly with Indiana National Bank, NBD Bank, N.A., and Peoples Bank of Indianapolis. Mr. Hageboeck is a past Chairman of the West Virginia Banker’s Association and currently serves on the Boards of the West Virginia Chamber of Commerce, the West Virginia Bankers Association and the Buckskin Council of the Boy Scouts. In 2018, Mr. Hageboeck was named as “Community Banker of the Year” by American Banker. Mr. Hageboeck was elected to City’s Board upon becoming CEO in 2005, and is the only management director on the Board. Mr. Hageboeck owns, directly or indirectly, 55,243 shares of City Holding Company common stock.
Javier A. Reyes, 49, has served as a director since August 2021.Mr. Reyes earned his bachelor’s degree in economics from the Instituto Tecnológico y de Estudios Superiores de Monterrey and his doctorate in economics from Texas A&M University.On July 1, 2023, following his selection by the board of trustees, Mr. Reyes became the Chancellor of the University of Massachusetts Amherst.From August 2021 until June 2023, Mr. Reyes was employed by the University of Illinois Chicago, serving first as Provost and Vice Chancellor for Academic Affairs and then, beginning in July 2022, as interim Chancellor.From 2016 through July 2021, Mr. Reyes served as the Milan Puskar Dean of the John Chambers College of Business and Economics at West Virginia University. While at West Virginia University, he served as Vice President for Start-up West Virginia from November 2018 until July 2021.Mr. Reyes has experience in investment banking and has been a visiting scholar at several international institutions. He has served as grant reviewer for the National Science Foundation and as an invited academic scholar for the International Monetary Fund and the European Bank for Reconstruction and Development. He is a an Ex-Officio trustee for the Field Museum in Chicago and has also served on the national board of directors for the Association for Latino Professionals for America (ALPFA) and the national board of directors for the University Professional and Continuing Education Association.Mr. Reyes currently serves on the board of Miller Industries, Inc. (NYSE: MLR), the World's Largest Manufacturer of Towing and Recovery Equipment®.Mr. Reyes owns, directly or indirectly, 1,145 shares of City Holding Company common stock.
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
Board of Directors
The Company is managed under the direction of the Board of Directors, which has adopted Codes of Business Conduct and Ethics and charters for the Governance and Nominating Committee, Compensation Committee and the Audit Committee that set forth certain corporate governance practices. These documents are available on the Company’s Internet website at http://www.bankatcity.com under the CorporateInvestors link and Governance linksubcategory located at the bottomtop of the page.
Board Leadership Structure and Oversight of Risk
The Company’s CEO does not serve as the Chairman of the Board. During 2016,2023, the Chairman of the Board was C. Dallas Kayser, who presides at all meetings of the Board and meetings of the independent directors. The decision to separate the roles of CEO and Chairman reflects internal control considerations and allows the Chairman to maintain an independent role in the oversight of management. The Chairman of the Board also chairs the Executive Committee, which is comprised of the chairmen of the other standing committees and the Company'sCompany’s CEO. The Board’s involvement in risk management includes: monthly reports and presentations by the Company’s Chief Credit Officer on credit trends, past-due loans, non-accruing loans, and classified loans; monthly reports and presentations by the Company’s Executive Vice President (“EVP”) of Commercial Banking on lending activity within the prior month; reports on Information Security presented by the Company’s Chief Information Officer and the Information Security Officer monthly and in greater depth at least annually; monthly reports on liquidity and transactions within the Company’s investment portfolio; monthly reports on capital; quarterly reports on interest rate risk and enterprise risk management; oversight of the internal audit function, regulatory compliance and loan review by the Audit Committee; annual reports to the Board of Directors from the Company’s primary regulators; oversight of significant legal risks presented by the Company’s Chief LegalSenior Vice President & General Counsel; oversight of governance issues by the Governance Committee; and through other reports from management on additional areas of risk as they are identified or requested.
City also has an internal risk committee chaired by its Chief Financial Officer. City’s internal risk committee is comprised of members of management from various line units. The committee typically meets eight to ten times a year to discuss current events and to receive reports from management members noting how City is in compliance with its risk profile. During 2023, the Board of Directors appointed the Audit Chair, or his designee, to attend each of the internal risk committee meetings to represent the Board and to provide feedback to management. In addition, the Board receives a copy of each of the minutes of internal risk committee meetings on, at least, a quarterly basis for their review.
Security Standards and Security Risk Insurance
The Company conducts various independent tests on an annual basis to assess internal controls for information technology. This testing, performed by a third party, includes internal and external penetration testing, internal controls tests, and social engineering tests. These tests help us to gauge our compliance with information security standards and regulatory requirements. The Company also performs various internal self-assessments for information security risks, cybersecurity risks, and technology risks.
Additionally, all employees are required to take annual information security training via our online training program.Our information security team proactively and regularly provides simulated phish testing with training, and employees are educated via Security eAlerts and other communications sent periodically throughout the year as well as more regular formalized training for various groups and committees.
The Company also maintains insurance coverage for claims arising fromunauthorized access to data, failure to provide notification of a data breach where required by law, failure to destroy confidential information, failure to comply with a privacy policy, wrongful collection of private or confidential information, failure to prevent a security breach that results in the inability of authorized users to gain system access, the participation in a distributed denial of service attack, or the transmission of malware.
Environmental Social and Governance (ESG)
The Company believes that earning the trust of customers, shareholders, and other stakeholders is a foundation of the Company’s success. Inherent in the trust and confidence our various stakeholders place in the Company is a requirement that the Company’s Board of Directors and management team be cognizant of the Company’s role as a corporate citizen, and the need for the Company to play that role responsibly. That is why the Board and management work to integrate environmental, social, and governance (“ESG”) considerations into the Company’s business.
The Company views ESG, especially the environmental and social aspects of ESG, to be local in nature, and therefore we focus our corporate citizenship efforts primarily in the communities we serve. Some of these local efforts include:
•Encouraging and supporting employees in local volunteer efforts;
•Providing start up and growth capital through loans to local innovators and entrepreneurs;
•Promoting affordable housing projects;
•Investing in economic and community development projects;
•Supporting chambers of commerce, business accelerators and other organizations, including those focused on minority and women-owned businesses;
•Donating to aid organizations that support those in need across our footprint’ and
•Utilizing sustainable elements and processes when remodeling/renovating branch locations and other offices.
In the coming year, the Company expects to reaffirm its role as a responsible corporate citizen by continuing to incorporate ESG considerations in various aspects of its business.
Management Succession Planning and Development
Succession planning and talent development are important at all levels within our organization. The Board oversees management’s succession plan for key positions at the senior officer level, and most importantly for the Chief Executive Officer position. The Board annually reviews succession plans for senior management and the CEO, including both a long-term succession plan and an emergency succession plan. The Board’s succession planning activities are ongoing and strategic, and may be supported by independent third-party consultants. In addition, the CEO annually provides his assessment to the Board of senior leaders and their potential to succeed at key senior management positions.
Independence of Directors
Nasdaq rules require that a majority of the directors of Nasdaq-listed companies be “independent.” An “independent director” generally means a person other than an officer or employee of the listed company or its subsidiaries, or any other individual having a relationship, which, in the opinion of the listed company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Certain categories of persons are deemed not to be independent under the Nasdaq rules, such as persons employed by the listed company within the last three years, and persons who have received (or whose immediate family members have received) payments exceeding a specified amount from the listed company within the last three years, excluding payments that are not of a
disqualifying nature (such as compensation for board service, payments arising solely from investments in the listed company’s securities, and benefits under a tax-qualified retirement plan). Nasdaq rules impose somewhat more stringent independence requirements on persons who serve as members of the audit committee and the compensation committee of a listed company.
On an annual basis, the independent directors of the Board of Directors evaluates and assesses directors’ independence. In doing so, they evaluate, among other factors, any transactions, relationships, and arrangements that could prohibit a finding of director independence, or that could impair the independence of the director. Of the thirteen persons who servedserving on our Board of Directors during 2016,as of the date of this Proxy, we believe twelve are independent. We believe that Messrs. Elliot,Burton, Fairchilds, File, Fisher, Goldman, Graney, Hambrick, Hylton, Jones, Kayser, Parsons, Reyes, Rossi and Ms.Mmes. Rowe and Strong-Treister are “independent” for purposes of Nasdaq rules. Mr. Hageboeck is not considered
independent because he is an officer of City Holding Company.
The Board of Directors has also determined that no current member of the Governance, Audit or Compensation Committees has any material relationship with the Company (either directly or indirectly as a partner, shareholder, or officer of an organization that has a relationship with the Company), and that all members of these committees meet the criteria for independence under the Nasdaq listing standards.standards as of the date of this Proxy.
Meetings of Independent Directors
Independent members of the Board of Directors generally meet in executive sessions without management either immediately preceding or immediately following every regularly scheduled Board meeting. Other sessions may be called by the Chairman in his or her own discretion or at the request of the independent members of the Board. The independent directors met eleveneight times in 2016.2023. Mr. Kayser, the independent Chairman, led both the regular meetings of the Company’s directors as well as the executive sessions of independent directors during 2016.2023.
Attendance at Annual Meeting
Although there is no formal written policy, the Company expects all directors to attend the Annual Meeting of Shareholders each year and historically more than a majority have done so. All directors except Mr. Jones, attended the most recent Annual Meeting of Shareholders held on April 27, 2016.26, 2023.
Communications with the Board of Directors
The Board of Directors has unanimously approved a process for shareholders to send communications to the Board of Directors and individual directors. Shareholders and other interested persons may communicate with the full Board of Directors, a specified committee of the Board, the independent directors or a specified individual member of the Board in writing by mail c/o City Holding Company, 25 Gatewater Road, P. O. Box 7520, Charleston, WV 25356-0520, Attention: Victoria A. Faw, Corporate Secretary. All communications will be forwarded to the Board of Directors, the specified committee of the Board or the specified individual director, as appropriate. The Company screens all mail for security purposes.
Availability of Codes of Business Conduct and Ethics and Committee Charters
In December 2009, the Company adopted a new Code of Business Conduct and Ethics which applies to all employees (including its chief executive officer and chief financial officer). Members of the Board of Directors are governed by a separate Code of Business Conduct and Ethics approved in January 2004. All members of the Board of Directors attest annually to their continued compliance with the Code of Business Conduct and Ethics annually.Ethics. Both of the Codes of Business Conduct and Ethics and the charters of the Audit Committee, Compensation Committee, and Governance and Nominating Committee are available on the Company’s Internet website athttp://www.bankatcity.com under the CorporateInvestors link and Governance linksubcategory located at the bottomtop of the page. The Company intends to disclose any changes in or waivers from its Codes of Business Conduct and Ethics by posting such information on its website or by filing a Form 8-K.
Committees of the Board of Directors and Meeting Attendance
The full Board of Directors met, twelveeither in person, by videoconference, or by teleconference, ten times during the fiscal year ended December 31, 2016.2023. All of the members of the Board of Directors of the Company attended at least 75% of both the aggregate meetings of the Board of Directors and all committees on which such director served during 2016.2023.
Membership on Certain Board Committees
The Board of Directors of City Holding Company has established an Audit Committee, Executive Committee, Nominating and Governance Committee, Compensation Committee, and Trust Committee. The following table sets forthCommittee members are appointed annually after the membershipAnnual Meeting of suchShareholders. Current member composition of these committees and the independence of each director as of the date of this proxy statement.statement is as follows:
| | | | | | | | | | | | | | | | | | | | |
| Director | Executive
Committee | Audit
Committee | Governance
and
Nominating
Committee | Compensation
Committee | Trust
Committee | Independent (1) |
| | | | | | |
| Gregory A. Burton | | | | X | X | Yes |
| Charles W. Fairchilds | | | | X | | Yes |
| William H. File III | X | | X | Chairman | X | Yes |
| Robert D. Fisher | | X | Chairman | | | Yes |
| Charles R. Hageboeck | X | | | | | No |
| Tracy W. Hylton II | | X | | | X | Yes |
| J. Thomas Jones | | | X | X | | Yes |
| C. Dallas Kayser | Chairman | | | | | Yes |
James M. Parsons (2) | | X | | | | Yes |
| Javier A. Reyes | | X | | | | Yes |
James L. Rossi (3) | X | Chairman | | | | Yes |
| Sharon H. Rowe | | X | X | | | Yes |
| Diane W. Strong-Treister | | X | X | | | Yes |
| | | | | | |
Number of Meetings
Held in 2023 | 0 | 6 | 4 | 3 | 1 | 6 |
|
| | | | | | |
| Director | Executive Committee | Audit Committee | Nominating and Governance Committee | Compensation Committee | Trust Committee | Independent* |
| | | | | | | |
| John R. Elliot | X | | X | Chairman | | X |
| Charles W. Fairchilds | | X | | | | X |
| William H. File III | | | X | X | X | X |
| Robert D. Fisher | | X | X | | | X |
| Jay C. Goldman | X | | Chairman | | | X |
| Patrick C. Graney III | | | | X | | X |
| Charles R. Hageboeck | X | | | | | |
| David W. Hambrick | | X | | | | X |
| Tracy W. Hylton II | | X | | | X | X |
| J. Thomas Jones | | | | X | | X |
| C. Dallas Kayser | Chairman | | | | | X |
| James L. Rossi | X | Chairman | | | | X |
| Sharon H. Rowe | | X | | | | X |
| | | | | | | |
Number of Meetings Held in 2016 | 0 | 6 | 1 | 3 | 2 | 11 |
(2) Mr. Parsons was appointed to the Board of Directors and the Audit Committee in January 2024. He is considered to be an “audit committee financial expert”.
| |
*
| Director meets the independence requirements as defined in the listing standards of Nasdaq and SEC Regulations. |
(3) Mr. Rossi, in addition to being the Audit Committee chairman, is considered to be an “audit committee financial expert”.
Executive Committee
For the fiscal year ended December 31, 2016,2023, the Executive Committee consisted of Messrs. Elliot, Goldman, Hageboeck, Kayser (Chairman), File, Fisher, Hageboeck, and Rossi. Subject to limitations imposed by the West Virginia Business Corporation Act, the Executive Committee has the power to act between meetings of the Board on virtually all matters that the Board could act upon, but generally as a matter of practice reserves its function for special or emergency purposes. The Executive Committee did not meet during the fiscal year ended December 31, 2016.2023.
Compensation Committee
During 2016,2023, the Compensation Committee was comprised of Messrs. ElliotFile (Chairman), File, GraneyBurton, Fairchilds, and Jones. The Board of Directors has determined that each of the current members of the Compensation Committee, including the chairman of the committee, is “independent” within the meaning of the general independence standards of the listing standards of Nasdaq. For a description of the function of the Compensation Committee, see the “Board Compensation Committee Report on Executive Compensation” beginning on page 29.. The Compensation Committee met three times during the fiscal year ended December 31, 2016 and each of its members attended 100% of the meetings held.2023.
Audit Committee
In 2016,2023, the Audit Committee included Messrs. Rossi (Chairman), Fairchilds, Fisher, Hambrick, Hylton, Reyes, and Ms.Mmes. Rowe and Strong-Treister, none of whom is employed by the Company. Mr. Parsons was appointed to the Audit Committee concurrent with his appointment to the Board of Directors in January 2024. The Board of Directors has determined that each of the current members of the Audit Committee is “independent” within the
meaning of the enhanced independence standards for audit committee members in the Securities Exchange Act and rules thereunder, and as incorporated into Nasdaq listing standards. standards during 2023.
The Board of Directors has also determined that both James L. Rossi, Chairman of the Audit Committee, is anand James M. Parsons are “audit committee financial expert”experts” within the meaning of the rules promulgated by the SEC pursuant to the Sarbanes-Oxley Act of 2002 and is “independent” within the meaning of the enhanced independence standards for audit committee members in the Nasdaq listing standards.
The Audit Committee held six meetings during fiscal year 2016.2023. The Audit Committee selects the Company’s independent registered public accounting firm (subject to advisory shareholder ratification), considers the scope of the audit, reviews the activities and recommendations made by the Company’s internal auditors, and considers comments made by the independent registered public accounting firm with respect to the Company’s internal control structure.
Governance and Nominating Committee
During 2016,2023, the Governance and Nominating Committee (“Governance Committee”) consisted of Messrs. GoldmanFisher (Chairman), Elliot, File, Jones and Fisher.Mmes. Rowe and Strong-Treister. The Board of Directors has determined that each of the current members of the Governance Committee is “independent” within
the meaning of the general independence standards of the listing standards of Nasdaq. For a description of the function of the Governance Committee, see the “Governance and Nominating Committee Report” on page 6.. The Governance Committee met one timethree times during fiscal year 2016.2023.
Director Candidate Recommendations and Nominations by Shareholders. The Governance Committee Charter provides that the Governance Committee will consider director candidate recommendations by shareholders. Any shareholder entitled to vote for the election of directors may (1) recommend candidates for election to the Board of Directors or (2) nominate persons for election to the Board of Directors if such shareholder complies with the procedures set forth in the Company’s Amended and Restated Bylaws, which are summarized in “Shareholder Proposals and Nominations” beginning on page 42..
Governance and Nominating Committee Process for Identifying and Evaluating Director Candidates. For a description of the Governance Committee’s process for identifying and evaluating candidates for election to the Board of Directors, see the “Governance and Nominating Committee Report” on page 6.. The Governance Committee did not receive any recommendations from any shareholders in connection with the 20172024 Annual Meeting.
Trust Committee
During 2016,2023, Board representatives on the Trust Committee consisted of Messrs. File (Chairman), Burton, and Hylton. The Trust Committee met two times during fiscal year 2016.2023. The Trust Committee exercises general oversight of the trust activities of the Company’s lead subsidiary, City National Bank.
Compensation of Directors
For 2016,2023, non-employee directors of the Company received anfees as follows:
| | | | | |
| Meeting Fees | 2023 |
| Each meeting of Board of Directors attended | $1,200 |
| Each Board Committee meeting attended | $750 |
| Per diem educational fee | $1,200 |
Annual Cash Retainer (1) | $33,500 |
Annual Equity Retainer (2) | $32,000 |
| Board Chairman | $55,000 |
| Committee chairs: | |
| Audit Committee | $10,000 |
| Compensation Committee | $5,000 |
| Governance and Nominating Committee | $5,000 |
(1) Annual cash retainer fees are paid to directors quarterly.
(2) The annual equity retainer is paid in the form of $20,000 plus $1,000 for each Board meeting and $750 for each committee meeting attended. In addition, Messrs. Elliot, Goldman, Kayser and Rossi received committee chair and Chairman feesa director stock award to all non-employee directors of $5,000, $5,000, $25,000 and $10,000, respectively. the Company as of December 31st (pro-rated based on the number of month's service) during the first quarter of the year.
Expenses associated with attending meetings, such as travel costs and meals, are considered integrally and directly related to the performance of their duties as directors, are not considered to be personal benefits or perquisites and are not separately disclosed. For further discussion as to compensation philosophy, please see the “Compensation Discussion and Analysis“.
On January 27, 2016,February 26, 2023, the Board awarded $30,000the equivalent of $32,000 of Company Common Stock or 321 shares, par value $2.50, to each non-employee director of the Company as of the date of grant and pro-rated based upon their months of service during the prior year. The market price of Company Common Stock on the date of grant, January 27, 2016,February 26, 2023, was $42.38$99.62 per share.
Bank of Raleigh Directors Deferred Compensation Plan
Between 1987 and 1998, ten directors of the former Bank of Raleigh deferred all or part of their director fees in exchange for compensation that was deferred until their 70th birthdays. The Bank of Raleigh was part of Horizon Bancorp, Inc., which merged with the Company on December 31, 1998. The shareholders of both corporations ratified that merger and the benefits due under the Bank of Raleigh Directors Deferred Compensation Plan when they approved the merger in 1998. Directors File and Hylton were directors of the former Bank of Raleigh, and are covered by these plans.the plan. Under the terms of these plans,the plan, directors were given the opportunity to defer all or a portion of their directors’ fees for their service to the Bank of Raleigh beginning in 1987 through 1998. As a result of such deferrals, these directors (or their survivors) are entitled to payments for a period of 15 years upon reaching retirement age, as defined by the plans,plan, or death. The methodology for calculating future benefits for these directors was established at the time that the deferrals were made, and is unaffected by their current service on the Board of the Company. The Company accrued the present value of these obligations on its Consolidated Balance Sheet. Their deferred benefits under the plan are as follows:
| | | | | | | | | | | | | | |
| Monthly Pension Benefit | Pension Start Date | Present Value of Benefit @ 12/31/23 | Expense Recognized In 2023 In Regard to Benefits |
| | | | |
| William H. File III | $6,631 | | 7/1/2017 | $531,479 | | $33,018 | |
| Tracy W. Hylton II | $4,790 | | 9/1/2018 | $422,925 | | $26,117 | |
|
| | | | | | | | | | |
| | Monthly Pension Benefit | Pension Start Date | Present Value of Benefit @ 12/31/16 | Expense Recognized In 2016 In Regard to Benefits |
| | | | | |
| William H. File III |
| $6,631 |
| 7/1/2017 |
| $770,311 |
|
| $44,751 |
|
| Tracy W. Hylton II |
| $4,790 |
| 9/1/2018 |
| $518,867 |
|
| $30,143 |
|
2016Board Diversity
In August 2021, the SEC approved a Nasdaq Stock Market proposal to adopt new listing rules relating to board diversity and disclosure. As approved by the SEC, the new Nasdaq listing rules require all Nasdaq listed companies to disclose consistent, transparentdiversity statistics regarding their boards of directors. The rules, as amended in December 2022, also require most Nasdaq listed companies to have, or explain why they do not have, at least one diverse director, by December 31, 2023 and two diverse directors by December 31, 2025. These diverse directors must include one who self-identifies in one or more of the of the following categories: Female, Underrepresented Minority or LGBTQ+. Accordingly, the Company has surveyed its directors and concluded that it would be in compliance with Nasdaq’s diversity requirement. The Board Diversity Matrix below presents the Board’s diversity statistics in the format prescribed by the Nasdaq rules.
| | | | | | | | | | | | | | |
| BOARD DIVERSITY MATRIX (As of March 12, 2024) |
|
| Female | Male | Non-Binary | Did not
Disclose Gender |
|
| Total Number of Directors | 13 |
| Part I: Gender Identity |
| Directors | 2 | 10 | 0 | 1 |
| Part II: Demographic Background |
| African American or Black | 0 | 0 | 0 | 0 |
| Alaskan Native or Native American | 0 | 0 | 0 | 0 |
| Asian | 0 | 0 | 0 | 0 |
| Hispanic or Latinx | 0 | 1 | 0 | 0 |
| Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 |
| White | 2 | 9 | 0 | 0 |
| Two or More Races or Ethnicities | 0 | 0 | 0 | 0 |
| LGBTQ+ | 0 |
| Did Not Disclose Demographic Background | 1 |
2023 DIRECTOR COMPENSATION
| | | | | | | | | | | | | | |
2023 DIRECTOR COMPENSATION
|
| Name | Fees Earned
or Paid in
Cash
($) | Stock Awards
($) | Change in Pension Value
and Nonqualified
Deferred Compensation
Earnings
($) | Total
($) |
| | | | |
| Gregory A. Burton | 48,500 | 31,978 | - | 80,478 |
| Charles W. Fairchilds | 47,750 | 31,978 | - | 79,728 |
| William H. File III | 56,500 | 31,978 | 33,018 | 121,496 |
| Robert D. Fisher | 57,250 | 31,978 | - | 89,228 |
Charles R. Hageboeck (1) | - | - | - | - |
| Tracy W. Hylton II | 51,500 | 31,978 | 26,117 | 109,595 |
| J. Thomas Jones | 50,000 | 31,978 | - | 81,978 |
| C. Dallas Kayser | 100,500 | 31,978 | - | 132,478 |
| Javier A. Reyes | 50,000 | 31,978 | | 81,978 |
| James L. Rossi | 58,800 | 31,978 | - | 90,778 |
| Sharon H. Rowe | 52,250 | 31,978 | - | 84,228 |
| Diane W. Strong-Treister | 52,250 | 31,978 | - | 84,228 |
|
| | | | |
2016 DIRECTOR COMPENSATION
|
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | Total ($) |
| | | | | |
| John R. Elliot | 39,250 | 29,963 | - | 69,213 |
| Charles W. Fairchilds | 36,500 | 29,963 | - | 66,463 |
| William H. File III | 35,750 | 29,963 | 44,751 | 110,464 |
| Robert D. Fisher | 36,500 | 29,963 | - | 66,463 |
| Jay C. Goldman | 37,000 | 29,963 | - | 66,963 |
Patrick C. Graney III (1) | 34,250 | 14,960 | - | 49,210 |
Charles R. Hageboeck (2) | - | - | - | - |
| David W. Hambrick | 36,500 | 29,963 | - | 66,463 |
| Tracy W. Hylton II | 37,250 | 29,963 | 30,143 | 97,356 |
| J. Thomas Jones | 32,250 | 29,963 | - | 62,213 |
| C. Dallas Kayser | 63,750 | 29,963 | - | 93,713 |
| James L. Rossi | 46,500 | 29,963 | - | 76,463 |
| Sharon H. Rowe | 36,500 | 29,963 | - | 66,463 |
| |
(1)
| Mr. Graney joined the Board of Directors in July 2015 and received a pro-rated stock award in January 2016. |
(2)(1) Mr. Hageboeck, President and CEO of the Company, does not receive fees for director or committee service or for meeting attendance.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the “Audit Committee”) is comprised of sixseven independent directors and operates under a written charter adopted by the Board of Directors. The Audit Committee selects the Company’s independent registered public accounting firm, subject to advisory shareholder ratification. Management is responsible for the Company’s internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and for performing an audit of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. In this context, the Audit Committee has met and held discussions with management and Ernst & YoungCrowe LLP (“Ernst & Young”Crowe”), the Company’s independent registered public accounting firm.
Management represented to the Audit Committee that the Company’s audited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, and the Audit Committee has reviewed and discussed the audited consolidated financial statements with management and Ernst & Young.Crowe.
The Audit Committee has discussed with Ernst & YoungCrowe the matters required to be discussed by the statement on Auditing Standards No. 1301 as adopted by the Public Company Accounting Oversight Board.
The Audit Committee has also received the written disclosures and the letter from Ernst & YoungCrowe regarding that firm’s communication with the Audit Committee concerning independence as required by applicable requirements of the Public Company Accounting Oversight Board, and has discussed with Ernst & YoungCrowe that firm’s independence from the Company. The Audit Committee has also considered whether the provision of non-audit related services by Ernst & YoungCrowe is compatible with maintaining Ernst & Young’sCrowe’s independence and determined that Ernst & Young’sCrowe’s independence has not been impaired.
Based upon the Audit Committee’s discussions with management and Ernst & YoungCrowe and the Audit Committee’s review of the representations of management and the report of Ernst & YoungCrowe to the Audit Committee, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 20162023 filed with the Securities and Exchange Commission.
Respectfully submitted,
James L. Rossi, Chairman
Charles W. Fairchilds
Robert D. Fisher
David W. Hambrick
Tracy W. Hylton II
James M. Parsons
Javier A, Reyes
Sharon H. Rowe
Diane W. Strong-Treister
February 21, 201727, 2024
This report shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless the Company specifically incorporates this report by reference. It will not be otherwise filed under such Acts.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal 2)
Our Board has ratified the decision of the Audit Committee to engage Ernst & YoungCrowe LLP (“Ernst & Young”Crowe”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017.2024. Crowe has served as the Company’s independent registered public accounting firm since 2019. Although we are not required to do so, it has been our practice to seek shareholder ratification of this appointment as a matter of good corporate governance. Representatives of Ernst & YoungCrowe will be present at the Annual Meeting to make a statement, if they desire to do so, and to respond to appropriate questions.
If the shareholders fail to ratify the selection, the Board may reconsider whether or not to retain Ernst & YoungCrowe and reserves the discretion to retain Ernst & YoungCrowe as our independent registered public accounting firm. Even if the selection is ratified, the Board in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Board determines that such change would be in the best interests of the Company and its shareholders.
The Audit Committee and the Board of Directors unanimously recommend the shareholders vote “FOR”
such ratification on an advisory basis.
Principal Accounting Fees and Services
During the fiscal years ended December 31, 20162023 and 2015,2022, the Company engaged Ernst & YoungCrowe as its independent registered public accounting firm principally to perform the annual audit of its consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting, and to render other allowable services. The following table lists fees paid to Ernst & YoungCrowe for services rendered in fiscal years 20162023 and 2015:2022:
| | | | | | | | |
| 2023 | 2022 |
Audit Fees (1) | $ | 793,145 | | $ | 624,300 | |
Audit-Related Fees (2) | 15,000 | | 53,560 | |
| Tax Fees | — | | — | |
| All Other Fees | — | | — | |
| Total Fees | $ | 808,145 | | $ | 677,860 | |
|
| | | | | | |
| | 2016 | 2015 |
Audit Fees (1) | $ | 633,400 |
| $ | 585,800 |
|
| Audit-Related Fees | — |
| — |
|
Tax Fees (2) | 103,639 |
| 78,625 |
|
| All Other Fees | — |
| — |
|
| Total Fees | $ | 737,039 |
| $ | 664,425 |
|
(1)Audit Fees include fees associated with the annual audit of the Company’s consolidated financial statements, included in its Annual Report on Form 10-K filed with the SEC, the audit of the effectiveness of the Company’s internal control over financial reporting, reviews of the Company’s quarterly reports on Form 10-Q filed with the SEC as well as the issuance of consents in filings with the SEC.
| |
(1)
| Audit Fees include fees associated with the annual audit of the Company’s consolidated financial statements, included in its Annual Report on Form 10–K filed with the SEC, the audit of the effectiveness of the Company’s internal control over financial reporting, reviews of the Company’s quarterly reports on Form 10-Q filed with the SEC, the issuance of consents in filings with the SEC, and the performance of procedures relating to the comfort letter. |
| |
(2)
| Tax Fees primarily include fees related to preparation, review and filing of tax returns as well as tax advisory services. |
(2)Audit-Related Fees include fees and expenses associated with the filing of an S-8 Registration Statement with the Securities and Exchange Commission during the fiscal year 2023, filing of an S-4 and S-4/A Registration Statement with the Securities and Exchange Commission during the fiscal year 2022 and database license fees in fiscal year 2022.
Pre-Approval Policies and Procedures
The Audit Committee Charter requires that the Audit Committee pre-approve all audit and non-audit services to be provided to the Company by the independent registered public accounting firm, provided, however, that the Audit Committee may specifically authorize its chairman to pre-approve the provision of any non-audit service to the Company. All of the services described above which Ernst & YoungCrowe provided and for which they billed the Company, were pre-approved by the Company’s Audit Committee. For the fiscal year ended December 31, 2016,2023, the Company’s Audit Committee did not waive the pre-approval requirement of any non-audit services provided to the Company by Ernst & Young.Crowe.
APPROVAL OF AN AMENDMENT TO OUR ARTICLES OF INCORPORATION, AS AMENDED, TO IMPLEMENT A MAJORITY VOTING STANDARD IN UNCONTESTED DIRECTOR ELECTIONS
(Proposal 3)
Under this proposal, we are asking our shareholders to adopt an amendment to our Articles of Incorporation, as amended (the “Articles”), to implement a majority voting standard in uncontested director elections. The Company currently uses a plurality voting standard, which means that the nominees for director receiving the highest number of “for” votes at the Company’s Annual Meeting are elected as directors to fill the number of open positions on the Board.
Some of our shareholders have recently showed support in favor of implementing a majority voting standard for uncontested director elections. This change will require amending the Company’s Articles, which requires Board approval and shareholder approval. The Board of Directors is proposing that the Company change to a majority voting standard to reflect the desire of our shareholders and reinforce our commitment to accountability and strong corporate governance practices. In December 2016, our Governance and Nominating Committee recommended, and our Board of Directors unanimously adopted, resolutions approving and recommending to shareholders the adoption of an amendment to our Articles to implement a majority voting standard in uncontested director elections.
Under the proposed majority voting standard, in order for a candidate to be elected to our Board of Directors in an uncontested election, the number of votes cast “for” the candidate’s election must exceed the number of votes cast “against” his or her election. Abstentions and broker non-votes would not be considered votes “for” or “against” the candidate. An “uncontested election” means an election in which the number of director candidates does not exceed the number of directors to be elected. In all other director elections, which we refer to as “contested elections,” the plurality voting standard would apply.
Our Board of Directors has concluded that the adoption of the proposed majority voting standard in uncontested elections will give shareholders a greater voice in determining the composition of our Board, both by giving effect to shareholder votes “against” a director candidate, and by requiring a majority of shareholder votes for a candidate to become or remain a director on our Board. The adoption of this standard is intended to reinforce the accountability of our Board of Directors to our shareholders. If adopted at this Annual Meeting, the majority voting standard would apply to all future uncontested elections of directors.
Our Articles currently do not address the voting standard that applies to the election of directors, which means, under West Virginia law, that the plurality voting standard applies unless our Articles are amended. If this proposal is approved by the shareholders, Article X of the Articles of Incorporation will be amended to add the following section:
Section 6. Directors shall be elected by the vote of a plurality of the votes cast in the election of directors, for which purpose broker non-votes and abstentions shall not be counted; provided, however, that if there is an Uncontested Election (hereinafter defined), and a nominee (including a currently serving director nominated for reelection) does not receive a Majority Vote for Election (hereinafter defined), then such nominee shall immediately after the certification of the shareholder vote relating to such election, submit his or her resignation, subject to acceptance or declination by the Board of Directors. Such resignation shall be effective upon the first to occur of: (i) acceptance by the Board of Directors or (ii) 90 days after the date of certification of the shareholder vote relating to the election. An Uncontested Election is defined as an election in which the number of director candidates does not exceed the number of directors to be elected. A Majority Vote for Election is defined as more shareholder votes being cast for such nominee’s election than against such nominee’s election, counting votes against such nominee’s election or for which voting authority for such nominee’s election is expressly withheld, but not including abstentions or broker non-votes. No resignation shall be required to be submitted in the event a nominee does not receive a Majority Vote for Election in an election which is not an Uncontested Election. The Board of Directors shall establish a policy and procedures relating to the submission, and the acceptance or declination, of such resignations.
If the amendment is approved at this Annual Meeting, then beginning with the 2018 annual meeting of shareholders, each nominee for election as director in an uncontested election will have to receive a majority of the votes cast in the election (excluding abstentions and broker non-votes) “for” his or her election, and any nominee who does not would be required to immediately submit his or her resignation, subject to acceptance or declination by the Board of Directors.
The resignation of a director who did not receive enough votes to be elected would become effective upon the earlier of its acceptance by the Board of Directors or 90 days after certification of the shareholder vote relating to the election, unless the resignation is declined by the Board of Directors. The 90 day period for effectiveness of a resignation is provided in order to permit the Board with sufficient time to determine whether to fill the resigning director's seat and, if a determination is made to fill the seat, to identify and vet candidates with the appropriate skills, expertise and understanding of the Company's business and industry which may be necessary to serve successfully as a director of the Company. Under the proposed amendment, the Board of Directors would retain the right to decline a resignation, but anticipates that it would only exercise
that right in extraordinary circumstances, as may be necessary to ensure the continued successful operation of the Company. The Company would file a Current Report on Form 8-K reporting the Board of Director’s decision to accept a resignation, or, in the event that a resignation is declined, disclosing the decision to decline and an explanation of the Board’s reasons for declining the resignation. In a contested election of directors, where there are more candidates for election than there are seats on the Board of Directors up for election, directors would continue to be elected on the basis of a plurality vote.
The proposed amendment is permitted under the laws of the State of West Virginia, the Company’s state of incorporation, and, assuming approval by a majority vote of shareholders at the Annual Meeting, would become effective upon the filing of Articles of Amendment with the Secretary of State of West Virginia. If the proposed amendment is approved by the shareholders, this filing is expected to happen shortly after the Annual Meeting.
The Board believes that the adoption of the foregoing proposed amendment to the Articles of Incorporation is in the best interests of all shareholders and unanimously recommends that shareholders vote “FOR” its adoption.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The directors constituting the Compensation Committee in 20162023 were Messrs. ElliotFile (Chairman), File, GraneyBurton, Fairchilds and Jones. None of the individuals who served as a member of the Compensation Committee during calendar year 20162023 were at any time officers or employees of the Company or any of its subsidiaries or had any relationship with the Company requiring disclosure under SEC regulations.
EXECUTIVE OFFICERS OF CITY HOLDING COMPANY
The following table sets forth the name of each “named executive officer,” as that term is defined by the SEC rules, and the principal positions and offices held with the Company as of December 31, 2016.2023. Each of these officers has served as an executive officer of the Company for at least five years. Officers’ ages are shown as of the date of the Annual Meeting, April 19, 2017.24, 2024.
| | | | | | | | |
| Name | Age | Business Experience |
| | |
Name | Age | Business Experience |
| Charles R. Hageboeck | 5461 | President and Chief Executive Officer, City Holding Company and City National Bank since February 2005.
|
| David L. Bumgarner | 59 | Executive Vice President and Chief Financial Officer, City Holding Company and City National Bank from June 2001 – January 2005.
|
Craig G. Stilwell | 61 | Executivesince April 2019. Senior Vice President of Retail Banking, City Holding Company and City National Bank since February 2005. Executive Vice President of Marketing & Human Resources,Chief Financial Officer, City Holding Company and City National Bank from May 2001 – February 2005.
2005 - March 2019.
|
| John A. DeRito | 6774 | Executive Vice President of Commercial Banking, City Holding Company and City National Bank since June 2004.
|
David L. BumgarnerMichael T. Quinlan, Jr. | 5255 | SeniorExecutive Vice President and Chief Financial Officer,of Retail Banking, City Holding Company and City National Bank since February 2005.
January 2021. Senior Vice President of Retail Banking of City National Bank of West Virginia since 2001. |
| Jeffrey D. Legge | 5360 | SeniorExecutive Vice President, Chief Administrative Officer and Chief Information Officer, City Holding Company and City National Bank since October 2019. Senior Vice President, City Holding Company and City National Bank from December 2005.
2005 - September 2019.
|
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The following discussion provides an overview and analysis of the Compensation Committee’s philosophy and objectives in designing the Company’s compensation programs as well as the compensation determinations relating to the President and Chief Executive Officer, Chief Financial Officer, EVP of RetailCommercial Banking, EVP of CommercialRetail Banking, and the Chief Administrative Officer/Chief Information Officer, who are collectively referred to as the “named executive officers” or “executives.”
This discussion should be read together with the compensation tables for our named executive officers, which can be found following this discussion.
Executive Summary
Financial and Strategic Highlights
City Holding Company completed another successful year in 20162023 in regards to financial performance. Financial highlights include:
•Net income of $52.1$114.4 million
•Return on Average Assets (“ROAA”) of 1.36%1.87% (1.96% after adjusting for the impact of the acquisition and integration expenses)
•Return on Average Tangible Common Equity (“ROATCE”) of 14.8%23.8% (24.8% after adjusting for the impact of acquisition and integration expenses)
•Efficiency ratio of 54.8%46.0%
•Net interest margin of 3.50%4.01%
Loan balances increased $184 million
Key Compensation Outcomes
Compensation outcomes for 20162023 reflected the Company’s strong performance, which exceeded peer averages during the year, and subsequently included cash and equity awards that were generally above targeted performance levels as determined under the Company’s executive incentive plans.
•Salaries: Salaries were set in 20162023 based in part upon recommendations from an independent outside compensation consultant, McLagan, Partners, Inc.a part of the Human Capital Solutions practice at Aon plc (“McLagan”), an Aon Hewitt company.
.
•Cash Incentives: The Company performed above targeted performance levels in 2016 and achieved its2023. Annual cash incentives are based on the Company’s relative performance triggers relatingon Return on Average Tangible Common Equity (ROATCE) as compared to capital and asset quality.the Company's peer group. The Company’s targetrelative ROATCE for 2023 was 12%24.8% (excluding the impact of the acquisition and its actual performance ROATCE was 14.8%. By comparison,integration expenses) and placed it in the regional100th percentile of the Company’s peer group's ROATCE in 2016 was 11.8%.group for 2023. As a result, executives received cash incentives aboverelative to the ROATCE plan at 200% of their targeted payout levels. Awards were 138-154% of targeted payout levels.
•Long-Term Incentives: The Company granted restricted stockRestricted Stock Units (“RSUs”) and stock optionsPerformance Stock Units (“PSUs”) in early 2016 based on Company and executive performance in 2015. Awards values2023. Targeted levels of PSUs were tied to base salary, but actual grants will be determined based on both formalizedupon Company performance goals andduring 2023-2025.
•The Company did not make special grants to executives in the Board’s subjective assessment of Company and individual performance. Based on these factors, executives received equity equal to 94-134% of targeted payout levels.
most recent fiscal year.
Say-on-Pay Vote
The Compensation Committee evaluates the Company’s executive compensation programs in light of market conditions, shareholder views, and governance considerations, and makes changes as appropriate. As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company is required to permit a separate non-binding advisory shareholder vote to approve the compensation of its executives. In 2011,2023, the Company’s shareholders voted to hold this advisory “say-on-pay” vote every year. The shareholders will again vote on the frequency of say-on-pay votes at the 20172029 Annual Meeting.
At the 20162023 annual shareholders meeting, shareholders overwhelmingly approved the compensation of the executives, with 97.4%95.4% of shareholder votes cast in favor of the advisory say-on-pay proposal. The Company considered the number of votes cast in favor of the 20162023 say-on-pay proposal to be a positive endorsement of its current pay practices and believes the vote result is evidence
that its compensation policies and decisions have been in the best interests of shareholders. As a result, the Compensation Committee retained its overall approach to executive compensation and did not make significant changes to the executive compensation program. The Company will continue to monitor the level of support for each say-on-pay proposal in the future, including the results of Proposal 43 of the 20172024 Annual Meeting described herein, and will consider this alongside other factors as it makes future executive compensation decisions.
Executive Compensation Philosophy
The Compensation Committee believes that its principal responsibility is to ensure that the Company’s compensation practices allow it to keep qualified management and to focus management on achieving business and financial objectives intended to increase shareholder returns and drive sustained value creation without promoting excessive risk taking.
The Compensation Committee believes that overall compensation should reflect compensation levels of comparable executives at peer institutions while also taking into account individual responsibilities and contributions to the Company’s overall performance as measured by profitability, the market price of the Company’s stock, and progress made toward achieving long-term strategic objectives.
In line with its pay-for-performance philosophy, the Compensation Committee believes that executives whose companies have performed well should be better compensated than executives whose companies have performed poorly. As such, the Company has generally targeted base salaries near the peer group median, provided strong cash incentive opportunities when the Company performs well, and granted stock compensation that rewards management for long-term success. The Company has not emphasized tenure-based compensation such as defined benefit pension plans and SERPs. The Company’s Board considers such forms of compensation to be misaligned with shareholder interests because it believes these forms of compensation generally reward tenure instead of performance. In short, the executives are accountable for the performance of the Company and the Board has designed the compensation program to reflect this.
Role of the Compensation Committee
The Compensation Committee is responsible for the design, implementation and administration of the compensation programs for executive officers and directors of the Company. The Compensation Committee completed the following actions relative to 20162023 executive compensation:
•Reviewed and approved stock ownership requirements of named executive officers and directors, first effective in 2012
•Hired an independent compensation consultant to assist in a review of executive compensation, and with their assistance:
| |
◦ | Reviewed and approved the compensation peer group |
| |
◦ | Reviewed base salaries for the named executive officers |
| |
◦ | Reviewed the Company’s compensation philosophy |
| |
◦ | Reviewed and approved the 2016 cash incentive plan |
| |
◦ | Reviewed and approved equity awards to named executive officers |
| |
◦ | Reviewed and approved cash incentive payments for named executive officers |
| |
◦ | Reviewed the Compensation Committee Charter |
◦Reviewed and approved the compensation peer group
◦Reviewed base salaries for the named executive officers
◦Reviewed and re-approved the Company’s compensation philosophy
◦Reviewed and approved equity awards to named executive officers
◦Reviewed and approved cash incentive payments for named executive officers
◦Reviewed and approved the 2024 cash incentive plan
Role and Relationship of the Compensation Consultant
As permitted by the Compensation Committee Charter, in 2016 the Compensation Committee engaged an independent outside compensation consultant, McLagan, an Aon Hewitt company,in 2023, to provide independent executive compensation advice and market compensation information. During 2016, McLagan assistedassists the Compensation Committee with the following initiatives:
•Reviewed and updated a peer group of institutions for compensation benchmarking
Compiled information relating to executive compensation from peer banks
•Advised the Compensation Committee on changes in industry compensation practices and provided insight on emerging regulations
•Provided recommendations to the Compensation Committee regarding salaries and the appropriate level of cash incentives and equity awards
Assisted in the redesign of the Company’s annual cash incentive for 2017
•Compiled information relating to board of director compensation from peer banks
The Compensation Committee evaluated McLagan’s analysis and recommendations alongside other factors when making compensation decisions affecting the Company’s 2016 executive compensation program and when submitting its own recommendations to the Board on these matters.
Pursuant to the terms of its retention, McLagan reported directly to the Compensation Committee, which retains sole authority to select, retain, terminate, and approve the fees and other retention terms of its relationship with McLagan. McLagan did not provide
any services outside those related to executive compensation and the Compensation Committee approved all projects completed by McLagan.
In February 2017,2024, the Compensation Committee reviewed its relationship with McLagan and considered McLagan’s independence in light of all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Securities Exchange Act and under the applicable Nasdaq listing rules. The Compensation Committee received a report from McLagan addressing its independence, including the following factors: (1) additional services provided to the Company by McLagan; (2) fees paid by the Company as a percentage of McLagan'sMcLagan’s total revenue; (3) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (4) any business or personal relationships between the senior advisors and a member of the Compensation Committee; (5) any Company stock owned by the senior advisors; and (6) any business or personal relationships between the executives and the senior advisors. The Compensation Committee discussed these considerations and concluded that the work performed by McLagan and McLagan'sMcLagan’s senior advisors involved in the engagements did not raise any conflict of interest.
Role of Management
The CEO assists the Compensation Committee in recommending agenda items for its meetings and by gathering and producing information for these meetings. As requested by the Compensation Committee, the CEO participates in Compensation Committee meetings to discuss executive compensation, evaluate the performance of both the Company and individual executives, and provide pertinent financial, legal, or operational information. The CEO provides his insights and suggestions regarding compensation, but only Compensation Committee members, in executive session without the CEO or any other members of management present, vote on executive compensation decisions and other Company compensation matters under their purview for recommendation to the Board of Directors.
In 2016,2023, the CEO made recommendations to the Compensation Committee regarding base salaries, incentive goals, and equity awards for executives other than himself. The Compensation Committee retained discretion to approve or modify recommendations prior to approval or, in the case of equity awards, prior to presentation before the Board of Directors for approval. The Compensation Committee discussed the CEO’s recommendations with him, but made final deliberations in executive session, without the CEO or any other members of management present.
Balancing Profitability and Risk
The Compensation Committee is responsible for establishing incentive plans for executive officers that achieve an appropriate balance between Company results and risk. The Compensation Committee recognizes that the business of banking inherently requires that the Company take on certain risks—in its lending activities, its depository activities, its investing activities, as well as many other facets of the traditional banking business. For instance, every loan made represents the extension of “risk” in exchange for a return in the form of interest paid by the customer to the bank. However, the Company recognizes that if incentive compensation is tied disproportionately to short-term performance metrics, or if proper controls and balances are not in place, there is some possibility that executives might be induced to take on excessive risk in pursuit of short-term gains, which would result in an undesirable risk-return balance.
To help ensure that incentive plans appropriately balance profitability and risk, the Compensation Committee has undertaken a comprehensive review of the Company’s various incentive plans in accordance with the final joint guidance issued by banking regulators regarding compensation risk. In support of its risk management goal, the Compensation Committee noted that the Company has established a compensation philosophy that balances short-term incentives paid for achieving strong short-term results with long-term stock incentives whose value would be negatively impacted by loan losses in the long-run. In addition, the executive incentive plans incorporate asset quality and capital triggers to help ensure that executives appropriately balance return and risk. The triggers also help ensure that incentives are appropriate and justifiable in the context of the Company’s overall financial condition. If asset quality or capital levels deteriorate below thresholds prescribed by the Board, incentives would be reduced or eliminated.
Upon due consideration of these items, the Compensation Committee believes that the Company’s incentive plans are designed in such a way as to encourage executives to take only prudent levels of risk in the pursuit of strong performance on behalf of shareholders. Furthermore, it believes that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on its business or operations.
Competitive Benchmarking and Peer Groups
The Compensation Committee believes that it is important to periodically review compensation in the context of the Company’s performance and the compensation offered by its peers in the market, which it considers to include companies of similar size, markets, and products. For fiscal year 2016,2023, the Company reviewed its performance compared to two peer groups, as well as compensation of executives at peer banks.
•National Peer Group – The National Peer Group includes publicly traded banks with total assets between $2$3 and $5$8 billion (99(101 banks as of December 31, 2016)2023). This group was used for performance comparisons and was not used to conduct a formal market analysis of compensation.
•Regional Peer Group – The Regional Peer Group was determined in 2016. Theis reviewed on an annual basis. For 2023, the peer group is comprised of 1822 publicly-traded banks, and was based on the following criteria:
◦Asset size in the range of $3 billion - $13 billion
| |
◦ | Asset size in the range of $2 billion - $8.5 billion |
| |
◦ | At least 15% of revenues from non-interest income |
| |
◦ | Commercial loans < 85% of total loans |
| |
◦ | Operating in Indiana, Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, Virginia, West Virginia, and New York (excluding New York City) |
| |
▪ | excludes companies in top 5 metro areas (MSA’s) |
| |
▪ | excludes thinly traded companies |
◦ROAA & ROATCE > 0%
◦At least 10% of revenue from non-interest income
◦Commercial loans < 90% of total loans
◦More than 30 branches
◦Headquartered in Illinois, Indiana, Kentucky, New York (excluding New York City), North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia
▪excludes companies in top 5 metro areas (MSAs)
▪excludes thrifts
▪excludes thinly traded companies
The banks included in the Company’s 2023 “Regional Peer Group” (including their home state and stock exchange ticker symbol) are:
|
| | | | | | | |
1st Source Corporation (IN, SRCE) | | BNC Bancorp (NC, BNCN)CNB Financial Corp. (PA, CCNE) |
Cardinal Financial Corporation (VA, CFNL) | | Community Trust Bancorp Inc. (KY, CTBI) | | FB Financial Corporation (TN, FBK) |
| Financial Institutions, Inc. (NY, FISI) | | First Bancorp (NC, FBNC) |
| First Commonwealth Financial Corporation (PA, FCF) |
| First Community Bancshares,Bank Shares, Inc. (VA, FCBC) |
| First Financial Corporation (IN, THFF) | | First Mid-Illinois Bancshares, Inc. (IL, FMBH) |
First Merchants Corporation (IN, FRME) | | MainSource Financial Group,German American Bancorp, Inc. (IN, MSFG)GABC) | | Home Trust Bancshares Inc. (NC, HTBI) |
| Horizon Bancorp Inc. (IN, HBNC) | | Midland States Bancorp Inc. (IL, MSBI) |
Park SterlingNational Corporation (NC, PSTB)(OH, PRK) | | Peoples Bancorp, Inc. (OH, PEBO) |
| Republic Bancorp, Inc. (KY, RBCAA) | | S&T Bancorp, Inc. (PA, STBA) |
| S.Y.Stock Yards Bancorp, IncInc. (KY, SYBT) | | Summit Financial Group, Inc. (WV, SMMF) |
Sandy Spring Bancorp, Inc. (MD, SASR) | | Tompkins Financial Corp (NY, TMP) |
Union First Market Bankshares Corporation (VA, UBSH) | | Univest Corp. of Pennsylvania (PA, UVSP) |
Performance Comparison to Market
Based upon two measures of profitability (ROAA and ROATCE), the Company was clearly a top performer in 20162023 compared to both the National and Regional Peer Groups. The Company’s performance ranked above the median and was in the top decile of both peer groups on both performance metrics, as shown in the table below.None of the Company's performance metrics have been adjusted for acquisition-related expenses.
| | | | | | | | | | | | | | | | | |
| Performance Measures - 2023 | CHCO | National
Peer Group
(Median) | CHCO to National
Peer Group
(Percentile Rank) | Regional
Peer Group
(Median) | CHCO to Regional
Peer Group
(Percentile Rank) |
| Size | | | | | |
| Total Assets | $6.2B | $4.9B | 74% | $7.8B | 39% |
| Net Income | $114.4M | $43.1M | 96% | $78.0M | 78% |
| Number of Branches | 98 | 34 | 98% | 73 | 87% |
| Profitability | | | | | |
| ROAA | 1.96% | 0.94% | 96% | 1.27% | 100% |
| ROATCE | 24.8% | 12.5% | 96% | 14.7% | 100% |
|
| | | | | |
Performance Measures – 2016 | CHCO | National
Peer Group
(Median) | CHCO to National
Peer Group
(Percentile Rank) | Regional
Peer Group
(Median) | CHCO to Regional
Peer Group
(Percentile Rank) |
| Size | | | | | |
| Total Assets | $4.0B | $3.1B | 72% | $4.2B | 37% |
| Net Income | $52.1M | $26.1M | 97% | $48.2M | 58% |
| Number of Branches | 85 | 34 | 93% | 69 | 74% |
| Profitability | | | | | |
| ROAA | 1.36% | 0.93% | 97% | 1.02% | 95% |
| ROATCE | 14.8% | 10.4% | 91% | 11.8% | 100% |
Discussion of Executive Compensation Components
The following table outlines the major elements of 20162023 total compensation for our executives:
| | | | | | | | | | | | | | |
| | | | |
| Compensation Element | Description
and Purpose
| Link to Performance | Fixed/
Performance Based | Short/Long-Term |
| Base Salary | Helps attract and retain executives through periodic payments of market-competitive base pay | Based on individual performance, experience, and scope of responsibility. Used to establish cash and equity incentive award opportunities. | Fixed | Short-Term |
| Cash Incentives | Encourages achievement of financial performance metrics that create near-term shareholder value | Quantitatively ties the executive’s compensation directly to factors that are judged important to the success of the Company and within each executive’s own sphere of influence.
Most executives share a common profitability goal tied to Return on Average Tangible Common Equity (ROATCE), while a portion75% of the incentive plan for the EVP of Commercial Banking is tied to commercial loan growth.
Incentivesgrowth and 50% of the incentive plan for all executives are conditioned on additional performance triggers that help ensure the Company remains positionedEVP of Retail Banking is tied to perform over the long-term.
divisional retail goals.
| Performance Based | Short-Term |
| Long-Term Incentive Awards | Aligns long-term interests of executives and shareholders while creating a retention incentive through multi-year vesting | GrantTarget grant values are based partiallyupon base salary. 40% of grants are RSUs and 60% are PSUs. RSUs have one, two and three year vesting—but also have a two year “holding period”. RSUs are settled in stock at the conclusion of the two year holding period. PSUs vest at the end of three years. Actual grants are based upon target grants modified by the Company’s relative performance on Return on Assets (ROA) during the achievement of predefined Company performance objectives and partiallythree year period as well as by the Company’s relative Total Shareholder Return on the Board’s subjective evaluation of performance.
Resulting awards are designed to maintain a link to the long-term interests of shareholders and emphasize long-term demonstrated financial performance through a tie to the Company’s stock price and dividend payments over time.as compared to the peer group.
| Performance Based | Long-Term |
| Other Compensation | Dividends on restricted stock and health and welfare benefits on the same basis as other employees | Dividends on restricted stock further enhance the executive’s link to shareholders by ensuring they share in the distribution of income generated from ongoing financial performance. | Fixed & Performance Based | Short-Term & Long-Term |
Base Salary
The Compensation Committee reviews executive salaries of its peers, but always bases determinations on the qualifications, experience and performance of the individual executives and value of the positions to the organization.
In 2016,2023, the Compensation Committee reviewed the performance of individual executives within the scope of their own responsibilities in the Company. The CEO’s performance was evaluated based upon the performance of the Company as a whole. The Compensation Committee also reviewed the results of the market compensation study performed by McLagan and noted that the salariescompensation for the executives werewas generally below the median of its peers.
After reviewing peer salary levels, recommendations from McLagan, and noting the performance of the Company and individual executives, the Compensation Committee recommended, and the Board approved, salaries as described below:
| | | | | | | | | | | | | | |
| Name | Title | 2021
Salary | 2022
Salary | 2023
Salary |
| Charles R. Hageboeck | President & CEO | $649,740 | | $649,740 | | $674,740 | |
| David L. Bumgarner | Chief Financial Officer | 285,000 | 315,000 | 340,000 |
| John A. DeRito | EVP, Commercial Banking | 299,890 | 310,000 | 320,000 |
| Michael T. Quinlan, Jr. | EVP, Retail Banking | 285,000 | 335,000 | 385,000 |
| Jeffrey D. Legge | EVP, Operations/CIO | 275,000 | 290,000 | 297,500 |
|
| | | | | | | | | | |
| Name | Title | 2014 Salary | 2015 Salary | 2016 Salary |
| Charles R. Hageboeck | President & CEO |
| $500,000 |
|
| $525,000 |
|
| $575,000 |
|
| David L. Bumgarner | Chief Financial Officer | 207,000 |
| 213,000 |
| 227,500 |
|
| Craig G. Stilwell | EVP Retail Banking | 330,000 |
| 350,000 |
| 367,000 |
|
| John A. DeRito | EVP Commercial Banking | 250,000 |
| 258,000 |
| 270,000 |
|
| Jeffrey D. Legge | SVP Operations/CIO | 175,000 |
| 195,000 |
| 210,000 |
|
Cash Incentives
The Company’s cash incentive plan is designed to motivate executives to achieve the Company’s annual performance objectives by tying a portion of compensation directly to factors that will create both short-term and long-term value to the Company’s shareholders.
The Board has determined that Return on Average Tangible Common Equity (“ROATCE”) represented the best measure of the Company’s success on behalf of its shareholders and determined to useuses ROATCE as the primary performance goal in the cash incentive plan for most executives
and departmental performance goalgoals for the EVP of Commercial Banking.Banking and the EVP of Retail Banking are also considered. Cash incentive payments are subject to capital and asset quality triggers to discourage excessive risk-taking and ensure the plan balances profitability with the Company’s safety and soundness as a financial institution.
The tables below show the 20162023 performance goals and results, goal weighting within the cash incentive plan, total cash incentive award opportunities, and payouts under the plan for 2016.2023.
| | | | | | | | |
| Name | Title | Goal Weighting |
| | |
Name | Title | Goal Weighting |
| Charles R. Hageboeck | President & CEO | 100% ROATCE |
| David L. Bumgarner | Chief Financial Officer | 100% ROATCE |
Craig G. StilwellJohn A. DeRito | EVP Commercial Banking | 25% ROATCE
75% Commercial Loan Growth |
| Michael T. Quinlan, Jr. | EVP Retail Banking | 100%50% ROATCE
50% Retail Performance |
John A. DeRito | EVP Commercial Banking | 50% ROATCE
50% Commercial Loan Growth
|
| Jeffrey D. Legge | SVP Operations/CIO | 100% ROATCE |
|
| | | | | |
| | 2016 Performance Goals | | Actual 2016 Result |
| | Threshold | Target | Maximum | |
| ROATCE | 8% | 12% | 17% | | 14.8% |
The 20162023 commercial loan growth target applicable to Mr. DeRito was 2.5%4.0%. During 2016, average loans outstanding grew 4.2%, and2023, year-over-year commercial loan growth was 9.9%.7.9%, excluding the acquisition of Citizens.
The 2023 retail performance plan applicable to Mr. Quinlan was based upon growing various consumer loan and deposit relationship categories. During 2023, growth in these categories was approximately 132% of Mr. Quinlan‘s targeted growth levels.
The table below shows the 20162023 ROATCE performance result as calculated for purposes of the incentive plan.
| | | | | |
| | | |
20162023 ROATCE – Reconciliation (in thousands) |
| Reported Income Before Income Taxes |
$143,106 | | $77,211
|
| Merger-Related (Income) and Expenses, net | 6,507 | |
| Adjusted Reported Income Before Income Taxes | 25,083149,613 | |
| Income Taxes | 30,172 | |
| Adjusted Net Income |
$119,441 | | $52,128
|
| Average Equity |
$635,289 | | $431,031
|
| Average Intangible Assets | 79,456153,937 | |
| Average Tangible Equity |
$481,352 | | $351,575
|
| Return on Average Tangible Common Equity | 14.824.8 | % |
The executives’ receipt of long-term incentive awards is also conditioned on the same capital and asset quality triggers utilized in the cash incentive plan. Executives are not eligible
.
Based upon this adjusted ROATCE as compared to receive awards in any given year if these performance triggers are not met.
The Board reviewed each executive’s performance and the Company’s performance and approved discretionary awards with values that equaled the formula-based portion of the grant. The table below shows the resulting total 2016 award values along with the long-term incentive opportunity levels established for the year. Award values are expressed as a percentage of 2016 base salaries given that the awards were granted in early 2017peer group, cash incentives based on 2016 salaries and performance.2023 performance were calculated as follows:
| | | | | | | | | | | | | | | | | | | | |
| Cash Incentive Award Opportunity as % of Salary | | Actual 2023 Award |
| Name | Threshold | Target | Maximum | | (% of salary) | ($) |
| Charles R. Hageboeck | 0% | 60% | 120% | | 120% | 809,688 |
| David L. Bumgarner | 0% | 45% | 90% | | 90% | 306,000 |
| John A. DeRito | 0% | 45% | 90% | | 90% | 288,000 |
| Michael T. Quinlan, Jr. | 0% | 45% | 90% | | 69% | 266,233 |
| Jeffrey D. Legge | 0% | 35% | 70% | | 70% | 208,250 |
|
| | | | | | |
| | Cash Incentive Award Opportunity as % of Salary | | Actual 2016 Award |
| Name | Threshold | Target | Maximum | | (% of salary) | ($) |
| Charles R. Hageboeck | 0% | 45% | 75% | | 62% | 356,385 |
| David L. Bumgarner | 0% | 25% | 42% | | 34% | 78,328 |
| Craig G. Stilwell | 0% | 35% | 58% | | 48% | 176,931 |
| John A. DeRito | 0% | 35% | 58% | | 54% | 145,925 |
| Jeffrey D. Legge | 0% | 25% | 42% | | 34% | 72,303 |
Long-Term Incentives
The Company believes in structuring its compensation plans to reflect an appropriate balance between short-term incentive compensation that rewards management for maintaining strong current financial performance and long-term compensation that rewards management for increases in the long-term underlying value of the Company. The Company also recognizes the importance of maintaining a stable and qualified executive management team to the long-term success of the institution. To support these objectives, the Company provides the executives with the opportunity to receive equity-based awards in the form of both stock options and restricted stock. The table below outlines the characteristics of the Company’s long-term incentives, which are granted under the "CityCity Holding Company 20132023 Incentive Plan".
Plan. The company did make any special equity-based awards or grants to any executive in 2023 not provided for in the Company's 2023 Incentive Plan. | | | | | |
| |
| Stock Options | Options derive their value through price-appreciationprice appreciation only and therefore, motivate executives to increase stock price. The Company does not weight options as heavily as restricted stock in the total (30% of 2016 equity grant). The City Holding Company 20132023 Incentive Plan is silent on what would happen if options reach their expiration date and are "underwater"“underwater”; however, the Board has voted that the Company would not buy out underwater options. |
Restricted Stock
| Restricted stock rewards executives for long-term stock price increases and preserves alignment with shareholders throughout all stock price performance conditions—both above and below the price on the date of grant. The Compensation Committee has chosen to emphasize restricted stock (70% of 2016 equity grant) to ensure that a majority of each executive’s long-term compensation remains aligned with shareholders even during periods of general market decline. The Company provides dividends on restricted stock to allow executives to share in the distribution of income generated from the Company’s ongoing financial performance and further align the interests of the executives with those of shareholders. Dividend payments ensure that executives are immediately affected by any decrease or increase in the Company’s dividend payments. |
VestingRestricted Stock Units | UnderRestricted stock units reward executives for long-term stock price increases and preserve alignment with shareholders throughout all stock price conditions—both above and below the City Holding Company 2013 Incentive Plan minimum vesting for options orprice on the date of the grant. The Compensation Committee does not grant restricted shares is not required. However, thestock units as heavily as performance stock units in total award (40% of 2023 equity grant). The Board established a five-year vesting period of one, two and three years for executivesrestricted stock units, followed by a two-year holding period. The Company does not pay dividends on restricted stock units during the vesting period to encourage the executives, to remain a part ofbut dividends will be accrued and contributedistributed to the Company’sexecutive after such shares are no longer subject to vesting and hold requirement periods. |
| Performance Stock Units | Performance share units reward executives for long-term success. Both stock optionsprice increases and restrictedpreserve alignment with shareholders throughout all stock vest in three equal parts—three, four,price conditions—both above and five years frombelow price on the date of grant. Additionally, stock options and restricted stock awarded in 2014, 2015 and 2016 willThe Compensation Committee has chosen to emphasize performance units (60% of 2023 equity grant) to ensure that a majority of each executive’s long-term compensation remains aligned with shareholders, as the shares are only vestearned if the Company earns anmeets certain specific long-term financial objectives. The payout of the performance share units are based on a combination of both the Company’s three-year average ROAA overROA and the Company’s total shareholder return (“TSR”) during a three-year performance period relative to the ROA for the selected peer companies (see table below). The Board established a vesting period of three years for performance share units. The Company does not pay dividends on performance share units during the vesting period that is equal to or greater than the median ROAA for all banks overexecutives, but dividends will be accrued and distributed to the immediately preceding 20 yearexecutive after such shares are no long subject to the vesting requirement period. |
Vesting -
Restricted Stock Units | Restricted stock units will vest in three separate installments after their grant date of approximately 33.33% per installment on the first, second and third anniversaries of the grant date. The restricted stock units will then be subject to a two-year holding period provided, however, that all merger and acquisition expenses are excluded from such calculation.after the vesting date. Executives would forfeit unvested shares upon leaving the Company’sCompany’s employment prior to the completion of the vesting period.and holding periods. |
| Vesting -Performance Stock Units | Performance stock units will vest on the third anniversary of the grant date. Executives would forfeit unvested shares upon leaving the Company’s employment prior to the completion of the vesting period. |
| | | | | |
| Timing of Awards | The Compensation Committee has adopted a general practice of providing long-term incentive awards to executives annually in conjunction with the payment of cash incentives based on the performance of the Company and the executive in the previous year, typically in February or March of each year. However, the Compensation Committee may consider recommendations for stock grants to the Company’s executive officers at any time, at its own discretion, and as circumstances necessitate. |
| Pricing of Awards | It is the Company’s policy that the exercise price of all option and restricted stock grants be equal to the closing price of the Company’s common stock on the date the option or restricted stock is granted. |
The Board approves annualIn 2018, based upon discussions with independent compensation consultant McLagan, the Company redesigned its equity awards. Targets for equity awards are determined based upon responsibility level and during 2023 ranged from 35% to the executives based 50% on formalized goal achievement and 50% on the Board’s subjective evaluation60% of Company and executive performance. The performance goals used to determine a portion of the equity grant are the same goals used to determine cash incentives—based primarily on ROATCE. In this way, the value ultimately delivered to executives through equity awards is based both on annual performance (determines value at grant) and long-term stock price performance (determines realizable value). Goals and goal weighting used to determine the awards granted in early 2016 were as follows.
|
| | |
Name | Title | Goal Weighting |
Charles R. Hageboeck | President & CEO | 50% ROATCE (2015)
50% Board Discretion
|
David L. Bumgarner | Chief Financial Officer | 50% ROATCE (2015)
50% Board Discretion
|
Craig G. Stilwell | EVP Retail Banking | 50% ROATCE (2015)
50% Board Discretion
|
John A. DeRito | EVP Commercial Banking | 25% ROATCE (2015)
25% Commercial Loan Growth (2015)
50% Board Discretion
|
Jeffrey D. Legge | SVP Operations/CIO | 50% ROATCE (2015)
50% Board Discretion
|
The table below shows the 2015 performance goals and the actual results used in the determinationbase salary. 40% of equity awards are Restricted Stock Units (“RSUs”) and have one, two and three year vesting. RSUs also have a two-year holding period. RSUs will be settled in stock at the conclusion of the two-year holding period. 60% of target equity awards are Performance Stock Units (“PSUs”) which vest in three years and will be settled in stock. However, the actual amount of stock awarded from PSUs issued in 2023 will depend upon actual performance. Performance will be based upon the Company's relative performance on Return on Assets (“ROA”) and on Total Shareholder Return (“TSR”). Depending upon the Company’s ROA over 2023-2025 as compared to its peer group, the actual number of shares granted in early 2016 and appearingat the end of 2025 may range from 0% to 200% of the target grant. Executives will only earn the maximum (200% of the target grant) if the Company outperforms all banks in the Summary Compensation Table for 2016. Performance was abovepeer group on ROA between 2023 and 2025. The actual grant will further be modified by the target goal level.
|
| | | | | |
| | 2015 Performance Goal | | Actual 2015 Result |
| | Threshold | Target | Maximum | |
| ROATCE* | 8% | 14% | 20% | | 16.1% |
Average Commercial Loan Growth (Mr. DeRito only)** | -- | 2.25% | -- | | 0.4% |
* Expenses associated with acquisition are excluded from ROATCE calculations. ** Loan growth excluding loans associated with the 2015 acquisition of three branches from AFB.
|
Performance Triggers – Payment of incentives are subject to the following conditions |
Company must receive “well-capitalized” rating by primary regulators (achieved in 2015). Ratio of non-performing assets to total assets cannot exceed 4.84% (achieved in 2015). |
The table below showsCompany’s relative performance as compared to the 2015 ROATCE performance result as calculated for purposespeer group on TSR, which may decrease or increase the grant by up to 25%. If the Company would have both the strongest ROA over three years and the best total shareholder return over three years, then the executives would receive 250% of the incentive plan. The final ROATCE result excludes expenses associated withtargeted number of shares awarded from PSUs. If the Company’s acquisitionROA is in the bottom quartile of three branchesits peer group over the 2023-2025 period, the executives would receive no shares from American Founders Bank, Inc.the PSU award.
| | | | | | | | | | | |
| Name | Target Equity Award Opportunity as a % of Salary | 2023 RSU Grants | 2023 PSU Target Grants |
| Charles R. Hageboeck | 60% | 1,565 | 2,348 |
| David L. Bumgarner | 45% | 569 | 854 |
| John A. DeRito | 45% | 560 | 840 |
| Michael T. Quinlan, Jr. | 45% | 604 | 908 |
| Jeffrey D. Legge | 35% | 408 | 611 |
| | | | | | | | | | | |
| ROA Component | At or below the 25th percentile | At the 50th percentile | At the 100th percentile |
| Percent of grant awarded at vest date | 0% | 100% | 200% |
The actual number of shares vested will be interpolated accordingly for performance between the 25th and 50th percentile and the 50th and 100th percentile.
After consideration of ROA, the actual number of performance shares awarded will further be increased or decreased by a loss the Company recognized related to a partnership investment in Mountaineer Capital LP.
|
| | | |
2015 ROATCE – Reconciliation for expenses associated with acquisition
(in thousands)
|
Reported Income Before Income Taxes |
| $82,511 |
|
Merger Expenses | 598 |
|
Loss on Investment in Mountaineer Capital LP | 1,450 |
|
Adjusted Reported Income Before Income Taxes | 84,559 |
|
Income Taxes | 29,511 |
|
Adjusted Net Income |
| $55,048 |
|
Average Equity |
| $415,051 |
|
Average Intangible Assets | 72,071 |
|
Average Tangible Equity |
| $342,980 |
|
Return on Average Tangible Common Equity | 16.1 | % |
The executives’ receipt of long-term incentive awards is also conditionedmodifier based on the same capitalCompany’s TSR relative to the TSR of the selected peer companies.
| | | | | | | | | | | |
| TSR Component | At or below the 25th percentile | At the 50th percentile | At or above the 75th percentile |
| Percent of grant awarded at vest date | 75% | 100% | 125% |
The amount vested will be interpolated accordingly for performance between the 25th and asset quality triggers utilized in the cash incentive plan. Executives are not eligible to receive awards in any given year if these performance triggers are not met.
The Board reviewed each executive’s performance50th percentile and the Company’s performance50th and approved discretionary awards with values that equaled the formula-based portion of the grant. The table below shows the resulting total 2016 award values along with the long-term incentive opportunity levels established for the year. Award values are expressed as a percentage of 2016 base salaries given that the awards were granted in early 2017 based on 2016 salaries and performance.
75th percentile.
|
| | | | | | | | |
| | Total Long-Term Incentive Award Opportunity as % of Salary | | Actual 2016 Award |
| Name | Threshold | Target | Maximum | | (% of salary) | Grant Date Fair Value ($) | # Options | # Restricted Shares |
| Charles R. Hageboeck | 0% | 45% | 75% | | 60% | 317,011 | 10,980 | 5,074 |
| David L. Bumgarner | 0% | 25% | 42% | | 34% | 71,469 | 2,475 | 1,144 |
| Craig G. Stilwell | 0% | 35% | 58% | | 47% | 164,384 | 5,694 | 2,631 |
| John A. DeRito | 0% | 35% | 58% | | 33% | 84,664 | 2,933 | 1,355 |
| Jeffrey D. Legge | 0% | 25% | 42% | | 34% | 65,417 | 2,266 | 1,047 |
Stock Ownership Requirement
The Compensation Committee bases a large part of its compensation philosophy on aligning the interests of executives with those of shareholders. As a result, the Board adopted share ownership guidelinesrequirements for executives in late 2011.2011, which were updated in January 2017. These guidelines require that within a five-year period from the date a person becomes a named executive officer, he or she must hold Company shares in value equal to the following:
•President & CEO – 2x4x base salary
•Other Named Executive Officers – 1x base salary
The Compensation Committee monitors whether the executives have satisfied or are making progress toward satisfying the share ownership guidelines. As of December 31, 2016,2023, all named executive officers, including the CEO, have been determined to be in compliance with the stock ownership guidelines. In making this determination, the Compensation Committee considers common shares deemed to be held for the executive in the 401(k) Plan, common shares beneficially owned by the executive (but excluding options whether or not exercisable), and restricted common shares granted to the executive.
In January 2017, upon recommendation of the Compensation Committee, the full Board of Directors approved a change in the stock ownership requirement for the President & CEO to increase the value of Company shares he or she must hold from 2x base salary to 4x base salary. Mr. Hageboeck is in compliance with the newly implemented increase in the stock ownership requirement for the President & CEO.
In February 2017, the Board revised the stock ownership guidelines for directors of the Company. The revised guidelines now require that each director to ownowns 2,500 shares of Company common stock equal to 2,500 shares within five years of becoming a director, and newdirector. New directors are required to acquire at least 500 shares within one year of joining the Board. All directors have been determined to be in compliance with the requirements of the stock ownership guidelines.requirements.
Stock Ownership Restrictions – Pledging and Hedging
In addition to these ownership requirements for named executive officers and directors of the Company, the Company also has policies in place for executive officers and directors of the Company prohibiting the pledging and hedging of Company securities as follows:
•Directors and executive officers are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan or other financial obligation.
•Directors and executive officers are prohibited from engaging in any hedging transactions, such as prepaid variable forwards, equity swaps, collars and exchange funds.
Other General Employee Benefits
Executive officers are eligible to participate in all employee benefit plans that are available to eligible employees generally, including health insurance, life and disability insurance, and 401(k) matching contributions.
Clawback Policies
Compensation recovery policies, or “clawbacks,” began to be used with the enactment of the Sarbanes-Oxley Act in 2002, which required that in the event of any restatement of a financial statement based on executive misconduct, public companies must recoup incentives paid to the company’s CEO and CFO within 12 months preceding the restatement. The Company’s CEO and CFO are currently subject to the Sarbanes-Oxley clawback provision, which is set forth in Section 304 of the Sarbanes-Oxley Act, and provides that if an issuer “is required to prepare an accounting restatement due to material noncompliance of the issuer, as a result of misconduct, with any financial reporting requirement under the securities laws,” the CEO and CFO shall reimburse the issuer for any bonus or other incentive-based or equity-based compensation received, and any profits realized from the sale of the securities of the issuer, during the year following issuance of the original financial report.
In addition, duringDuring 2014, the Board approved an Executive Officer Compensation Clawback Policy. This Policy applies to the Company’s current and former executive officers and other senior officers and authorizes recoupment with respect to incentive compensation (including stock options awarded as compensation) paid to current or former executive officers of the Company. The Policy requires any executive officer of the Company to reimburse or forfeit any incentive compensation received by such executive officer in the event that the Company issues an accounting restatement of its financial statements (other than as a result of a change in accounting principles). The Board will determine, in its sole discretion, the manner for recouping incentive compensation. In addition, the Compensation Committee may cancel, in whole or in part, outstanding performance based awards, where the Compensation Committee took into account the financial performance of the Company in granting such awards and the financial results were subsequently reduced due to such restatement. The recoupment of incentive compensation
under this Policy
is in addition to any other right or remedy available to the Company, including termination of employment or institution of civil or criminal proceedings. The SEC and Nasdaq are expected to issue final rules relating to clawback requirements pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, and management will continue to monitor the rule-making process with respect to any revisions that may be required to comply with new regulations.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the “Compensation Committee”) is comprised of four directors, all of whom (i) satisfy the definition of “independent” under the listing standards of Nasdaq, and (ii) are “non-employee directors” as defined by Rule 16b-3 under the Securities Exchange Act and (iii) are “outside directors” as defined by Section 162(m) of the Internal Revenue Code.Act. The Compensation Committee operates under a written charter adopted by the Board of Directors. Compensation Committee members are appointed by the Board and may be removed by the Board in its discretion. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees, as the Compensation Committee may deem appropriate, provided the subcommittees are composed entirely of independent directors.
The Compensation Committee also has the authority, to the extent it deems necessary or appropriate, to retain a compensation consultant to assist in the evaluation of directors, the Chief Executive Officer or senior executive compensation. The Compensation Committee has sole authority to retain and terminate any such consulting firm, including sole authority to approve the firm’s fees and other retention terms. The Compensation Committee also has the authority, to the extent it deems necessary or appropriate, to retain other advisors. The Company provides for appropriate funding, as determined by the Compensation Committee, for payment of compensation to any consulting firm or other advisors employed by the Compensation Committee. In addition, the Compensation Committee makes regular reports to the Board and proposes any necessary action to the Board for full Board approval.
In 2023, the Compensation Committee engaged McLagan, a part of the Human Capital Solutions practice at Aon plc, as its compensation consultant. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) with management and based upon such review and discussions with management and the representations of management relating thereto, the Compensation Committee recommended that the Board of Directors include the CD&A in the Company’s proxy statement sent to shareholders in connection with the Annual Meeting and through incorporation by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 20162023 filed with the Securities and Exchange Commission, and as applicable, in the Company’s proxy statement sent to shareholders in connection with the annual meeting.Commission.
Respectfully submitted,
John R. Elliot, Chairman
William H. File III, Chairman
Patrick C. Graney, IIIGregory A. Burton
Charles W. Fairchilds
J. Thomas Jones
February 21, 201728, 2024
This report shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless the Company specifically incorporates this report by reference. It will not be otherwise filed under such Acts.
2023 SUMMARY COMPENSATION TABLE
The following table provides information concerning the compensation of the named executive officers for our three most recently completed fiscal years.
| | | | | | | | | | | | | | | | | | | | | | | |
SUMMARY COMPENSATION
|
Name and
Principal Position | Year | Salary | Stock Awards(1) | Option Awards(1) | Non-Equity Incentive Plan Compensation(2) | All Other
Compensation (1),(3) | Total |
| | ($) | ($) | ($) | ($) | ($) | ($) |
| | | | | | | |
| Charles R. Hageboeck | 2023 | 674,740 | 389,813 | - | 809,688 | 20,322 | 1,894,563 |
| President, Chief Executive Officer and Director | 2022 | 649,740 | 389,840 | - | 647,531 | 13,537 | 1,700,648 |
| (Principal Executive Officer) | 2021 | 649,740 | 389,802 | - | 407,582 | 11,380 | 1,458,504 |
| | | | | | | |
| David L. Bumgarner | 2023 | 340,000 | 141,759 | - | 306,000 | 13,156 | 800,915 |
| Chief Financial Officer | 2022 | 315,000 | 99,707 | - | 209,286 | 11,562 | 635,555 |
| (Principal Financial Officer) | 2021 | 285,000 | 98,167 | - | 104,289 | 11,380 | 498,836 |
| | | | | | | |
| John A. DeRito | 2023 | 320,000 | 139,468 | - | 288,000 | 16,587 | 764,055 |
| Executive Vice President, Commercial Banking | 2022 | 310,000 | 134,870 | - | 125,885 | 20,703 | 591,458 |
| 2021 | 299,890 | 134,970 | - | 125,837 | 21,536 | 582,233 |
| | | | | | | |
| Michael T. Quinlan, Jr. | 2023 | 385,000 | 150,625 | - | 266,233 | 13,620 | 815,478 |
Executive Vice President,
Retail Banking | 2022 | 335,000 | 99,707 | - | 184,987 | 10,583 | 630,277 |
| 2021 | 285,000 | 84,143 | - | 99,294 | 5,508 | 473,945 |
| | | | | | | |
| Jeffrey D. Legge | 2023 | 297,500 | 101,513 | - | 208,250 | 12,717 | 619,980 |
| Executive Vice President, Operations/CIO | 2022 | 290,000 | 95,643 | - | 168,592 | 11,677 | 565,912 |
| 2021 | 275,000 | 94,603 | - | 100,630 | 11,042 | 481,275 |
|
| | | | | | | |
SUMMARY COMPENSATION
|
Name and
Principal Position | Year | Salary | Stock Awards(1) | Option Awards(1) | Non-Equity Incentive Plan Compensation(2) | All Other
Compensation (1),(3) | Total |
| | | ($) | ($) | ($) | ($) | ($) | ($) |
| | | | | | | | |
| Charles R. Hageboeck | 2016 | 575,000 | 221,886 | 95,125 | 356,385 | 95,711 | 1,344,108 |
| President, Chief Executive Officer and Director | 2015 | 525,000 | 222,842 | 91,414 | 316,969 | 83,218 | 1,239,443 |
| (Principal Executive Officer) | 2014 | 500,000 | 227,615 | 97,561 | 318,375 | 74,357 | 1,217,908 |
| | | | | | | | |
| David L. Bumgarner | 2016 | 227,500 | 50,027 | 21,442 | 78,328 | 29,353 | 406,651 |
| Chief Financial Officer | 2015 | 213,000 | 38,453 | 15,770 | 71,444 | 27,899 | 360,566 |
| (Principal Financial Officer) | 2014 | 207,000 | 54,960 | 23,556 | 73,226 | 25,985 | 384,727 |
| | | | | | | | |
| Craig G. Stilwell | 2016 | 367,000 | 115,054 | 49,330 | 176,931 | 49,591 | 757,906 |
| Executive Vice President, Retail Banking | 2015 | 350,000 | 114,381 | 46,924 | 164,353 | 47,432 | 723,090 |
| | 2014 | 330,000 | 109,608 | 45,983 | 163,433 | 41,459 | 690,483 |
| | | | | | | | |
| John A. DeRito | 2016 | 270,000 | 59,254 | 25,410 | 145,925 | 44,349 | 544,938 |
| Executive Vice President, Commercial Banking | 2015 | 258,000 | 67,585 | 27,720 | 84,673 | 45,139 | 483,117 |
| | 2014 | 250,000 | 91,437 | 39,196 | 96,533 | 38,056 | 515,222 |
| | | | | | | | |
| Jeffrey D. Legge | 2016 | 210,000 | 45,785 | 19,632 | 72,303 | 17,991 | 365,711 |
| Senior Vice President, Operations/CIO | 2015 | 195,000 | 43,347 | 17,772 | 65,407 | 18,286 | 339,812 |
| | 2014 | 175,000 | 43,409 | 18,602 | 61,906 | 14,347 | 313,264 |
| |
(1)
| (1) Amounts reflect the grant date fair value of stock options and restricted stock awards. See Note Fourteen to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 regarding assumptions underlying valuation of equity awards. |
| |
(2)
| Amounts reflect cash bonuses awarded to named executive officers. These bonuses were earned in fiscal years 2014, 2015 and 2016 and paid in 2015, 2016 and 2017. |
| |
(3)
| “All Other Compensation” for 2014, 2015 and 2016 consists of the following: (i) the Company’s matching contribution under the City Holding Company 401(k) Plan & Trust, (ii) group term life insurance premium payments, and (iii) dividends paid on restricted shares. |
Actual Cash Equivalent Compensation Received
The Summary Compensation Table (“SCT”) on page 30 is required by the SEC. However, the SCT includes several forms of non-cash compensation—including options, restricted stock, matching 401(k) contributions and the value of term life insurance. It is difficult to compare these forms of compensation when comparing executive compensation to external compensation statistics because of the non-cash component. In particular, stock-based compensation is valued as of the date of grant—in the case of restricted stock at the market price on the date of grant. In the case of stock options, the SCT reflects the value of the grant as calculated using the Black-Scholes Option Pricing Model. The Black-Scholes Options Pricing Model is a theoretically appealing method to calculate the prospective value of stock options granted to employees, but can be dramatically different than values actually received by the employee once the grant is both vested and exercised. Therefore, the following table (Actual Cash Equivalent Compensation Table), has been prepared as a supplement to the SCT and includes five years of compensation data for the executive officers. It includes the executive officer’s base salary, any cash incentives or bonuses, the value of restricted stock measured byawards. See Note Thirteen to the stock’s price asconsolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 regarding assumptions underlying valuation of equity awards.
(2) Amounts reflect cash bonuses awarded to named executive officers. These bonuses were earned in fiscal years 2021, 2022 and 2023 and paid in 2022, 2023 and 2024.
(3) “All Other Compensation” for 2021, 2022 and 2023 consists of the first day thatfollowing: (i) the executive hadCompany’s matching contribution under the right to sell the stockCity Holding Company 401(k) Plan & Trust and receive cash, the value of any stock options upon their exercise, and the value of all dividends paid to the executive on restricted stock granted to them but not yet exercised. The primary difference between the SCT and the Actual Cash Equivalent Compensation Table is that stock awards in the form of both restricted stock and stock options granted to(ii) group term life insurance premium payments.
the executive officers between 2012-2016 are represented in the SCT in such a way as to imply that the executive officers have already received significant compensation from such awards whereas in the Actual Cash Equivalent Compensation Table such stock grants are not included until such time as the executive officers could actually convert the stock grant into cash, and then only at the value actually realizable.
The compensation table shown below is not required by the SEC and this table should not be read as a substitute for the foregoing SCT which is required by the SEC.
|
| | | | | | | |
ACTUAL CASH EQUIVALENT COMPENSATION
|
Name and
Principal Position | Year | Salary | Vested Restricted Stock Awards | Exercise of Stock Option Awards |
Cash Incentive Compensation | Dividends
on Restricted Stock | Total |
| | | ($) | ($) | ($) | ($) | ($) | ($) |
| | | | | | | | |
| Charles R. Hageboeck | 2016 | 575,000 | 193,320 | 81,132 | 356,385 | 78,139 | 1,283,976 |
| President, Chief Executive Officer and Director | 2015 | 525,000 | 93,220 | 430,995 | 316,969 | 72,562 | 1,438,746 |
| (Principal Executive Officer) | 2014 | 500,000 | 91,300 | 109,375 | 318,375 | 64,158 | 1,083,208 |
| | 2013 | 460,000 | - | 571,721 | 325,191 | 54,388 | 1,411,300 |
| | 2012 | 450,000 | - | 51,411 | 263,588 | 44,920 | 809,919 |
| | | | | | | | |
| David L. Bumgarner | 2016 | 227,500 | 54,541 | 17,075 | 78,328 | 19,104 | 396,548 |
| Chief Financial Officer | 2015 | 213,000 | 30,297 | 31,393 | 71,444 | 18,066 | 364,200 |
| (Principal Financial Officer) | 2014 | 207,000 | 29,373 | 19,550 | 73,226 | 16,660 | 346,109 |
| | 2013 | 200,000 | 13,972 | 73,267 | 78,500 | 14,551 | 380,290 |
| | 2012 | 195,000 | 87,150 | - | 63,416 | 13,547 | 359,113 |
| | | | | | | | |
| Craig G. Stilwell | 2016 | 367,000 | 145,780 | 150,400 | 176,931 | 36,137 | 876,248 |
| Executive Vice President, Retail Banking | 2015 | 350,000 | 46,610 | 139,375 | 164,353 | 34,126 | 734,464 |
| | 2014 | 330,000 | 45,650 | - | 163,433 | 30,000 | 569,083 |
| | 2013 | 285,000 | 29,940 | 88,684 | 156,608 | 25,673 | 585,905 |
| | 2012 | 275,000 | - | 47,716 | 125,342 | 21,978 | 470,036 |
| | | | | | | | |
| John A. DeRito | 2016 | 270,000 | 145,780 | 146,188 | 145,925 | 17,676 | 735,569 |
| Executive Vice President, Commercial Banking | 2015 | 258,000 | 39,619 | 169,024 | 84,673 | 27,852 | 579,168 |
| | 2014 | 250,000 | 38,803 | - | 96,533 | 25,180 | 410,516 |
| | 2013 | 238,000 | 25,948 | 53,541 | 130,627 | 21,580 | 469,696 |
| | 2012 | 230,000 | 87,150 | - | 103,135 | 19,376 | 439,661 |
| | | | | | | | |
Jeffrey D. Legge (1) | 2016 | 210,000 | 30,901 | 16,138 | 72,303 | 10,524 | 339,866 |
| Senior Vice President, Operations/CIO | 2015 | 195,000 | 18,644 | 20,563 | 65,407 | 9,507 | 309,121 |
| | 2014 | 175,000 | 18,260 | 18,825 | 61,906 | 8,147 | 282,138 |
| | 2013 | 158,000 | 13,972 | 8,655 | 62,015 | 5,105 | 247,747 |
| |
(1)
| Mr. Legge was named as an executive officer of the Company as of February 26, 2014. Mr. Legge’s compensation for 2012 is not included because he was not a named executive officer during that year. |
GRANTS OF PLAN-BASED AWARDS
Each of the named executive officers is compensated under a predefined incentive plan tied to quantifiable goals. Each officer’sexecutive’s incentive plan has a targeted payout if the officerexecutive hits predefined goals (Target)("Target"). Each officerexecutive must hit certain minimum goals in order to have any payout at all (Threshold)("Threshold"). These incentive plans have a prescribed maximum of two times the targeted payout,maximums ("Maximum") and it is possible that the officersexecutives might receive more than their targeted payouts if performance is very good.
For example, Mr. Hageboeck’s incentive plan for 20162023 was tied to the Company’s return on average tangible common equity (ROATCE).relative performance of ROATCE as compared to the Company’s peer group. A targeted incentive of 45%60% of Mr. Hageboeck’s base salary is earned if the ROATCECompany’s relative performance is 12%.at the 50th percentile of its peer group. If the ROATCErelative performance is lower, the incentive earned is lower. If the ROATCE is lower than 9%,relative performance falls below the 25th percentile of the peer group, no incentive is earned. If ROATCEthe relative performance is more than 12%, thenat the 100th percentile, the incentive willwould be higher than the targeted amount.120% of Mr. Hageboeck’s base salary. However, under no circumstances would the incentive exceed 90%120% of base salary.
Similarly, the other named executive officers have incentive plans based upon formulas as described earlier (see “Cash Incentives” on page 24.).
The table below sets forth information concerning the targets, thresholds and maximums for each named executive officer’s non-equity incentive plan-based awards as of December 31, 2016.2023. See "“Long-Term Incentives" on page 26Incentives” for material terms of equity grants under the City Holding Company 20132023 Incentive Plan.
| | | | | | | | | | | | | | | | | | | | |
| | Estimated future payouts under
non-equity incentive plan awards | | |
| Name |
Grant Date | Threshold | Target | Maximum | All other stock awards: Number of shares of stock or restricted units |
Grant date fair value of target stock awards |
| | ($) | ($) | ($) | (#) | ($) |
| | | | | | |
Charles R. Hageboeck
(Principal Executive Officer) | 2/22/2023 | none | 389,844 | 779,688 | 3,913 | 389,813 | |
David L. Bumgarner
(Principal Financial Officer) | 2/22/2023 | none | 141,750 | 283,500 | 1,423 | 141,759 |
| John A. DeRito | 2/22/2023 | none | 139,500 | 279,000 | 1,400 | 139,468 |
| Michael T. Quinlan, Jr. | 2/22/2023 | none | 150,750 | 301,500 | 1,512 | 150,625 |
| Jeffrey D. Legge | 2/22/2023 | none | 101,500 | 203,000 | 1,019 | 101,513 |
|
| | | | | | | | | |
| | | Estimated future payouts under non-equity incentive plan awards | | | | |
| Name |
Grant Date | Threshold | Target | Maximum | All other stock awards: Number of shares of stock or units | All other option awards: Number of securities underlying options |
Exercise or base price of option awards |
Grant date fair value of stock and option awards |
| | | ($) | ($) | ($) | (#) | (#) | ($/Sh) | ($) |
| | | | | | | | | |
| Charles R. Hageboeck | 2/24/2016 | none | 258,750 | 431,250 | 5,074 | 10,980 | 43.73 | 317,011 |
|
| (Principal Executive Officer) | | | | | | | | |
| | | | | | | | | |
| David L. Bumgarner | 2/24/2016 | none | 56,875 | 94,800 | 1,144 | 2,475 | 43.73 | 71,469 |
|
| (Principal Financial Officer) | | | | | | | | |
| | | | | | | | | |
| Craig G. Stilwell | 2/24/2016 | none | 128,450 | 214,100 | 2,631 | 5,694 | 43.73 | 164,384 |
|
| | | | | | | | | |
| | | | | | | | | |
| John A. DeRito | 2/24/2016 | none | 94,500 | 157,500 | 1,355 | 2,933 | 43.73 | 84,664 |
|
| | | | | | | | | |
| | | | | | | | | |
| Jeffrey D. Legge | 2/24/2016 | none | 52,500 | 87,500 | 1,047 | 2,266 | 43.73 | 65,417 |
|
EQUITY HOLDINGS
Outstanding Equity Awards At Fiscal Year-End
The following table sets forth the number of exerciseable and unexerciseable stock options, option exercise prices and expiration dates, the number of unvested stock awards along with their market values and the number and value of equity incentive plan awards held by the named executive officers as of the fiscal year ended December 31, 2016.2023. Each outstanding award is represented by a separate row, which indicates the number of securities underlying the award.
For option awards, the table discloses the exercise price and the expiration date of the options. For stock awards, the table provides the number of shares of stock that have not vested and the aggregate market value of shares of stock that have not vested.
| | | | | | | | | | | | | | | | | | | | | | | |
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END |
| Option Awards | | Stock Awards |
| Name | Number of
Securities
Underlying
Unexercised
Options | Number of
Securities
Underlying
Unexercised
Options | Option
Exercise
Price | Option
Expiration
Date | Vesting Date(1) | Number of Shares or Units of Stock That Have Not Vested (2) | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested |
| (#) | (#) | ($) | | | (#) | ($) |
| Exerciseable | Unexerciseable | | | | | |
| | | | | | | |
| Charles R. Hageboeck | 1,017 | | - | 66.32 | 2/22/2027 | 2/22/2024 | 522 | 57,556 |
| (Principal Executive Officer) | 2,524 | | - | 66.32 | 2/22/2027 | 2/23/2024 | 665 | 73,323 |
| 2,524 | | - | 66.32 | 2/22/2027 | 2/24/2024 | 671 | 73,984 |
| - | - | - | - | 2/24/2024 | 3,019 | 332,875 |
| - | - | - | - | 2/22/2025 | 522 | 57,556 |
| - | - | - | - | 2/23/2025 | 665 | 73,323 |
| - | - | - | - | 2/23/2025 | 2,994 | 330,118 |
| - | - | - | - | 2/22/2026 | 521 | 57,445 |
| - | - | - | - | 2/22/2026 | 2,348 | 258,890 |
| | | | | | | |
| David L. Bumgarner | - | - | - | - | 2/22/2024 | 190 | 20,949 |
| (Principal Financial Officer) | - | - | - | - | 2/23/2024 | 170 | 18,744 |
| - | - | - | - | 2/24/2024 | 169 | 18,634 |
| - | - | - | - | 2/24/2024 | 760 | 83,798 |
| - | - | - | - | 2/22/2025 | 190 | 20,949 |
| - | - | - | - | 2/23/2025 | 170 | 18,744 |
| - | - | - | - | 2/23/2025 | 766 | 84,459 |
| - | - | - | - | 2/22/2026 | 189 | 20,839 |
| - | - | - | - | 2/22/2026 | 854 | 94,162 |
| | | | | | | |
| John A. DeRito | 502 | - | 44.43 | 3/26/2024 | 2/22/2024 | 187 | 20,619 |
| 600 | - | 46.61 | 2/26/2025 | 2/23/2024 | 230 | 25,360 |
| 807 | - | 44.43 | 3/26/2024 | 2/24/2024 | 232 | 25,580 |
| 1,033 | - | 66.32 | 2/22/2027 | 2/24/2024 | 1,046 | 115,332 |
| 1,033 | - | 66.32 | 2/22/2027 | 2/22/2025 | 187 | 20,619 |
| 1,034 | | - | 66.32 | 2/22/2027 | 2/23/2025 | 230 | 25,360 |
| - | - | - | - | 2/23/2025 | 1,036 | 114,229 |
| - | - | - | - | 2/22/2026 | 186 | 20,508 |
| - | - | - | - | 2/22/2026 | 840 | 92,618 |
| | | | | | | |
|
| | | | | | | |
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END |
| | Option Awards | | Stock Awards |
| Name | Number of Securities Underlying Unexercised Options | Number of Securities Underlying Unexercised Options | Option Exercise Price | Option Expiration Date | Vesting Date(1) | Number of Shares of Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested |
| | (#) | (#) | ($) | | | (#) | ($) |
| | Exerciseable | Unexerciseable | | | | | |
| | | | | | | | |
| Charles R. Hageboeck | - | - | - | - | (2) | 20,250 | 1,368,900 |
| (Principal Executive Officer) | - | 2,008 | 44.430 | 3/26/2024 | 3/26/2017 | 1,707 | 115,393 |
| | - | 6,803 | 35.390 | 3/28/2022 | 3/28/2017 | 5,114 | 345,706 |
| | - | 1,978 | 46.610 | 2/26/2025 | 2/26/2018 | 1,593 | 107,687 |
| | - | 6,803 | 37.740 | 2/27/2023 | 2/27/2018 | 5,114 | 345,706 |
| | - | 2,008 | 44.430 | 3/26/2024 | 3/26/2018 | 1,707 | 115,393 |
| | - | 3,660 | 43.730 | 2/24/2026 | 2/24/2019 | 1,691 | 114,312 |
| | - | 1,978 | 46.610 | 2/26/2025 | 2/26/2019 | 1,593 | 107,687 |
| | - | 2,010 | 44.430 | 3/26/2024 | 3/26/2020 | 1,709 | 115,528 |
| | - | 3,660 | 43.730 | 2/24/2026 | 2/24/2020 | 1,691 | 114,312 |
| | - | 1,980 | 46.610 | 2/26/2025 | 2/26/2020 | 1,595 | 107,822 |
| | - | 3,660 | 43.730 | 2/24/2026 | 2/24/2021 | 1,692 | 114,379 |
| | | | | | | | |
| David L. Bumgarner | - | - | - | - | (3) | 5,375 | 363,350 |
| (Principal Financial Officer) | - | 485 | 44.430 | 3/26/2024 | 3/26/2017 | 412 | 27,851 |
| | - | 1,555 | 35.390 | 3/28/2022 | 3/28/2017 | 1,169 | 79,024 |
| | - | 341 | 46.610 | 2/26/2025 | 2/26/2018 | 275 | 18,590 |
| | - | 1,555 | 37.740 | 2/27/2023 | 2/27/2018 | 1,169 | 79,024 |
| | - | 485 | 44.430 | 3/26/2024 | 3/26/2018 | 412 | 27,851 |
| | - | 825 | 43.730 | 2/24/2026 | 2/24/2019 | 381 | 25,756 |
| | - | 341 | 46.610 | 2/26/2025 | 2/26/2019 | 275 | 18,590 |
| | - | 485 | 44.430 | 3/26/2024 | 3/26/2020 | 413 | 27,919 |
| | - | 825 | 43.730 | 2/24/2026 | 2/24/2020 | 381 | 25,756 |
| | - | 342 | 46.610 | 2/26/2025 | 2/26/2020 | 275 | 18,590 |
| | - | 825 | 43.730 | 2/24/2026 | 2/24/2021 | 382 | 25,823 |
| | | | | | | | |
| Craig G. Stilwell | - | - | - | - | (4) | 8,125 | 549,250 |
| | - | 967 | 44.430 | 3/26/2024 | 3/26/2017 | 822 | 55,567 |
| | - | 3,234 | 35.390 | 3/28/2022 | 3/28/2017 | 2,431 | 164,336 |
| | - | 1,015 | 46.610 | 2/26/2025 | 2/26/2018 | 818 | 55,297 |
| | - | 3,234 | 37.740 | 2/27/2023 | 2/27/2018 | 2,431 | 164,336 |
| | - | 967 | 44.430 | 3/26/2024 | 3/26/2018 | 822 | 55,567 |
| | - | 1,898 | 43.730 | 2/24/2026 | 2/24/2019 | 877 | 59,285 |
| | | | | | | | | | | | | | | | | | | | | | | |
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END |
| Option Awards | | Stock Awards |
| Name | Number of
Securities
Underlying
Unexercised
Options | Number of
Securities
Underlying
Unexercised
Options | Option
Exercise
Price | Option
Expiration
Date | Vesting Date(1) | Number of Shares or Units of Stock That Have Not Vested (2) | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested |
| (#) | (#) | ($) | | | (#) | ($) |
| Exerciseable | Unexerciseable | | | | | |
Michael T. Quinlan, Jr. (3) | - | - | - | - | 2/22/2024 | 202 | 22,273 |
| - | - | - | - | 2/23/2024 | 170 | 18,744 |
| - | - | - | - | 2/24/2024 | 145 | 15,988 |
| - | - | - | - | 2/24/2024 | 651 | 71,779 |
| - | - | - | - | 4/29/2024 | 800 | 88,208 |
| - | - | - | - | 8/1/2024 | 600 | 66,156 |
| - | - | - | - | 2/22/2025 | 201 | 22,162 |
| - | - | - | - | 2/23/2025 | 170 | 18,744 |
| - | - | - | - | 2/23/2025 | 766 | 84,459 |
| - | - | - | - | 2/26/2025 | 800 | 88,208 |
| - | - | - | - | 4/25/2025 | 400 | 44,104 |
| - | - | - | - | 2/22/2026 | 201 | 22,162 |
| - | - | - | - | 2/22/2026 | 908 | 100,116 |
| - | - | - | - | 4/29/2026 | 400 | 44,104 |
| - | - | - | - | 2/26/2027 | 400 | 44,104 |
| | | | | | | |
| Jeffrey D. Legge | 512 | - | 66.32 | 2/22/2027 | 2/22/2024 | 136 | 14,995 |
| - | - | - | - | 2/22/2024 | 350 | 38,591 |
| - | - | - | - | 2/23/2024 | 164 | 18,083 |
| - | - | - | - | 2/24/2024 | 163 | 17,972 |
| - | - | - | - | 2/24/2024 | 732 | 80,710 |
| - | - | - | - | 2/22/2025 | 136 | 14,995 |
| - | - | - | - | 2/23/2025 | 164 | 18,083 |
| - | - | - | - | 2/23/2025 | 740 | 81,592 |
| - | - | - | - | 2/22/2026 | 136 | 14,995 |
| - | - | - | - | 2/22/2026 | 611 | 67,369 |
|
| | | | | | | |
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END |
| | Option Awards | | Stock Awards |
| Name | Number of Securities Underlying Unexercised Options | Number of Securities Underlying Unexercised Options | Option Exercise Price | Option Expiration Date | Vesting Date(1) | Number of Shares of Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested |
| | (#) | (#) | ($) | | | (#) | ($) |
| | Exerciseable | Unexerciseable | | | | | |
| | - | 1,015 | 46.610 | 2/26/2025 | 2/26/2019 | 818 | 55,297 |
| | - | 968 | 44.430 | 3/26/2024 | 3/26/2020 | 823 | 55,635 |
| | - | 1,898 | 43.730 | 2/24/2026 | 2/24/2020 | 877 | 59,285 |
| | - | 1,017 | 46.610 | 2/26/2025 | 2/26/2020 | 818 | 55,297 |
| | - | 1,898 | 43.730 | 2/24/2026 | 2/24/2021 | 877 | 59,285 |
| | | | | | | | |
| John A. DeRito | - | - | - | - | (5) | 6,375 | 430,950 |
| | - | 807 | 44.430 | 3/26/2024 | 3/26/2017 | 686 | 46.374 |
| | - | 2,687 | 35.390 | 3/28/2022 | 3/28/2017 | 2,020 | 136,552 |
| | - | 600 | 46.610 | 2/26/2025 | 2/26/2018 | 483 | 32,651 |
| | - | 2,687 | 37.740 | 2/27/2023 | 2/27/2018 | 2,020 | 136,552 |
| | - | 807 | 44.430 | 3/26/2024 | 3/26/2018 | 686 | 46,374 |
| | - | 978 | 43.730 | 2/24/2026 | 2/24/2019 | 452 | 30,555 |
| | - | 600 | 46.610 | 2/26/2025 | 2/26/2019 | 483 | 32,651 |
| | - | 807 | 44.430 | 3/26/2024 | 3/26/2020 | 686 | 46,374 |
| | - | 978 | 43.730 | 2/24/2026 | 2/24/2020 | 452 | 30,555 |
| | - | 600 | 46.610 | 2/26/2025 | 2/26/2020 | 484 | 32,718 |
| | - | 977 | 43.730 | 2/24/2026 | 2/24/2021 | 451 | 30,488 |
| | | | | | | | |
| Jeffrey D. Legge | - | 383 | 44.430 | 3/26/2024 | 3/26/2017 | 325 | 21,970 |
| | - | 1,196 | 35.390 | 3/28/2022 | 3/28/2017 | 899 | 60,772 |
| | - | 384 | 46.610 | 2/26/2025 | 2/26/2018 | 310 | 20,956 |
| | - | 1,196 | 37.740 | 2/27/2023 | 2/27/2018 | 899 | 60,772 |
| | - | - | - | - | (6) | 1,500 | 101,400 |
| | - | 383 | 44.430 | 3/26/2024 | 3/26/2018 | 325 | 21,970 |
| | - | 755 | 43.730 | 2/24/2026 | 2/24/2019 | 349 | 23,592 |
| | - | 384 | 46.610 | 2/26/2025 | 2/26/2019 | 310 | 20,956 |
| | - | 383 | 44.430 | 3/26/2024 | 3/26/2019 | 327 | 22,105 |
| | - | 755 | 43.730 | 2/24/2026 | 2/24/2020 | 349 | 23,592 |
| | - | 386 | 46.610 | 2/26/2025 | 2/26/2020 | 310 | 20,956 |
| | - | 756 | 43.730 | 2/24/2026 | 2/24/2021 | 349 | 23,592 |
(2) Performance stock units included in this column represent a targeted number of shares. The actual number of shares vested at the end of the vesting period may be more or less than the target number of performance stock units granted depending upon the Company’s relative performance as compared to its peer group. The targeted performance stock units granted in 2021 and vesting in 2024 were as follows: 3,019 for Mr. Hageboeck; 760 for Mr. Bumgarner; 1,046 for Mr. DeRito; 651 for Mr. Quinlan; and 732 for Mr. Legge. The targeted performance stock units granted in 2022 and vesting in 2025 were as follows: 2,994 for Mr. Hageboeck; 766 for Mr. Bumgarner; 1,036 for Mr. DeRito; 766 for Mr. Quinlan; and 740 for Mr. Legge. The targeted performance stock units granted in 2023 and vesting in 2026 were as follows: 2,348 for Mr. Hageboeck; 854 for Mr. Bumgarner; 840 for Mr. DeRito; 908 for Mr. Quinlan; and 611 for Mr. Legge.
| |
(1)
| VestingDate applies to both option awards and stock awards.
|
| |
(2)
| Mr. Hageboeck was awarded 22,250 shares of restricted stock on 4/29/2009. Those restricted shares will vest as follows: 4/30/2017 – 4,000 shares; 4/30/2018 – 6,000 shares; 4/30/2019 – 10,250 shares. Cumulative vesting of 22,250 shares will occur upon an involuntary termination after a change in control. |
| |
(3)
| Mr. Bumgarner was awarded 5,875 shares of restricted stock on 7/15/2009. Those restricted shares will vest as follows: 7/15/2017 – 500 shares; 7/15/2018 – 1,000 shares; 7/15/2019 – 1,000 shares; 7/15/2020 – 2,875 shares. Cumulative vesting of 5,875 shares will occur upon an involuntary termination after a change in control. |
| |
(4)
| Mr. Stilwell was awarded 10,125 shares of restricted stock on 4/29/2009. Those restricted shares will vest as follows: 4/30/2017 – 2,500 shares; 4/30/2018 – 2,700 shares; 4/30/2019 – 2,925 shares. Cumulative vesting of 10,125 shares will occur upon an involuntary termination after a change in control. |
| |
(5)
| Mr. DeRito was awarded 8,375 shares of restricted stock on 4/29/2009. Those restricted shares will vest as follows: 4/30/2017 – 2,000 shares; 4/30/2018 – 2,500 shares; 4/30/2019 – 1,875 shares. Cumulative vesting of 8,375 shares will occur upon an involuntary termination after a change in control. |
| |
(6)
| Mr. Legge was awarded 1,500 shares of restricted stock on 9/25/2013. Those restricted shares will vest as follows: 9/25/2021 – 500 shares; 9/25/2022 – 500 shares; 9/25/2023 – 500 shares. Cumulative vesting occurs on involuntary termination after a change of control as follows: 9/26/2015 to 9/25/2016 – 900 shares; 9/26/2017 to 9/25/2018 – 1,200 shares; after 9/26/2018 – 1,500 shares. |
(3) Mr. Quinlan was awarded 1,200 shares of restricted stock on 4/20/2019. These restricted shares will vest as follows: 4/29/2024 - 800 shares; 4/29/2026 - 400 shares. Mr. Quinlan was awarded 1,200 shares of restricted stock on 2/26/2021. These restricted shares will vest as follows: 2/26/2025 - 800 shares; 2/26/2027 - 400 shares. Cumulative vesting of each award (1,200 shares and 1,200 shares) will occur upon an involuntary termination after a change of control.
Option Exercises and Stock Vested
The following table shows the number of stock options exercised and the value realized upon exercise by the named executive officers during the fiscal year ended December 31, 2016.2023.
|
| | | | |
| OPTION EXERCISES AND STOCK VESTED |
| | Option Awards | Stock Awards |
| Name | Number of Shares Acquired on Exercise | Value Realized Upon Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting |
| | (#) | ($) | (#) | ($) |
| | | | | |
| Charles R. Hageboeck | 6,250 | 81,132 | 4,000 | 193,320 |
| (Principal Executive Officer) | | | | |
| | | | | |
| David L. Bumgarner | 1,250 | 17,075 | 1,150 | 54,541 |
| (Principal Financial Officer) | | | | |
| | | | | |
| Craig G. Stilwell | 9,000 | 150,400 | 3,000 | 145,780 |
| | | | | |
| John A. DeRito | 8,000 | 146,188 | 3,000 | 145,780 |
| | | | | |
| Jeffrey D. Legge | 1,250 | 16,138 | 650 | 30,901 |
| | | | | | | | | | | | | | |
| OPTION EXERCISES AND STOCK VESTED |
| Option Awards | Stock Awards |
| Name | Number of
Shares
Acquired
on Exercise | Value
Realized
Upon
Exercise | Number of
Shares
Acquired on
Vesting | Value
Realized
on
Vesting |
| (#) | ($) | (#) | ($) |
| | | | |
Charles R. Hageboeck
(Principal Executive Officer) | - | - | 9,545 | 938,969 |
David L. Bumgarner
(Principal Financial Officer) | - | - | 2,372 | 233,345 |
| John A. DeRito | - | - | 3,323 | 326,841 |
| Michael T. Quinlan, Jr. | - | - | 1,550 | 143,867 |
| Jeffrey D. Legge | - | - | 2,781 | 268,508 |
POST-EMPLOYMENT PAYMENTS
Post-Employment Compensation
The tables shown below summarize the estimated payments to be made under each contract, agreement, plan or arrangement which provides for payments to a named executive officer at, following or in connection with any termination of employment including by resignation, retirement, disability, a change in control of the Company, a change in the named executive officer’s responsibilities or a constructive termination of the named executive officer. The information shown below is as of the most recent fiscal year ended December 31, 2016.2023.
Vested Cash Termination Benefits – Hageboeck & Stilwell
Mr. Hageboeck (currently the Company’s CEO) and Mr. Stilwell (currently the Company’s EVP of Retail Banking) werewas part of the original five member “turnaround team” that joined the Company in 2001 when the Company was significantly troubled. In 2001, the Company signed agreements with all five of the then executive officers which provided that each of these officers had the opportunity to voluntarily resign after the turnaround was complete and receive a “Termination Benefit.” For Mr. Hageboeck, and Mr. Stilwell, the Termination Benefit equaled two years of cash compensation following four years of service to the company. The Termination Benefits for Mr. Hageboeck and Mr. Stilwell vested in 2005 following four years of service with the Company. Three of the other executive officers originally employed as part of the “turnaround team” terminated their employment with the Company during 2004 and 2005 and received the promised cash Termination Benefit as provided under their respective 2001 employment agreements. The Company asked Mr. Hageboeck and Mr. Stilwell to accept their positionshis position as the Company’s CEO and Executive Vice President in 2005, and thesethis cash Termination Benefit remainremains fully vested and havehas been preserved in subsequent employment contracts with Mr. Hageboeck and Mr. Stilwell.Hageboeck. The voluntary termination benefitsTermination Benefits grow each year at an amount equal to the one-year constant maturity treasury rate and cannot be forfeited except where the officer personally profits from willful fraudulent activity that materially and adversely affects the Company. The cost of this vested Termination Benefit has been fully accrued and expensed by the Company.
Change of Control Severance Benefits
The Compensation Committee and the Board of Directors believes that it is in the best interests of the Company to provide the Company’s named executive officers with some income protection in the event that the Company is acquired. In such an instance, it is very likely that the named executive officers would lose their current employment. Given the relatively small number of comparable positions within the industry, the Compensation
Committee recognizes that it would take each of the named executive officers significant time to find comparable employment. Severance benefits are common at the Company’s peers, and attracting and retaining qualified leaders for the Company necessitate such compensation. Each of the named executive officers of the Company have been afforded such protection under agreements signed by the Company and each such agreement also includes significant protections for the Company in that the named executive officers are prohibited from competing with the Company following termination. Particularly given the importance of such non-compete and non-solicit provisions, the Compensation Committee believes that these benefits are in the Company’s best interests.
Share-Based Payments (Options, Restricted Stock, Long-Vested Restricted Stock)
Estimated payments include items such as restricted shares that would vest in the case of the executive’s death, disability, or upon a change of control of the Company. It should be noted that the value of these awards would have been reportable under the Summary Compensation Table in the year in which they were granted and will have been expensed over the vesting period. For purposes of calculating values for these tables, generally restricted shares and units outstanding for each Named Executive Officernamed executive officer were deemed to have fully vested as of December 31, 20162023 (at the closing price of Company common stock on that date, which was $67.60)$110.26) in the event of death, disability or in a change of control. However, certain shares granted to executive officers in 2009, and referred to previously as “long-vested shares,” specifically provided for alternate vesting schedules. In the event of death or disability, the long-vested shares will vest proportionately between the date of grant and the final vesting date of the award (ten to eleven years from the grant date). In the event of a change of control, the shares will vest immediately. The 1,500 long-vested shares granted to Mr. Legge in 2013 provided for alternate vesting schedules. In the event of his death or disability, the 1,500 shares granted to Mr. Legge in 2013 will vest proportionately between the date of grant and the final vesting date of the award. In the event of a change of control, the shares will vest 80% in 2016 and 100% in 2017. Calculations regarding the value of such restricted stock assumed a change of control effective December 31, 20162023 at the closing stock price on that date. With respect to unexercised but fully vested options, the estimated payments reflect the “spread,” which is the difference between the market price and the exercise price of any unexercised but fully vested options as of December 31, 20162023 whose exercise price was lower than the market value of the Company’s common stock on that day. Unexercised but fully vested options that are “in-the-money” could be exercised for value at the present time, and thus would have value to an executive in the event of death, disability, change of control, or voluntary termination or termination without cause. Additionally, unvested in-the-money options would vest upon a change of control.
Health Insurance
The Company maintains a self-insured health plan. As a result, the cost of providing health care coverage to the Company’s named executive officers can only be estimated based on the current average cost of care across the Company’s insured employee base. The actual costs to the Company would depend upon the health experience of the named executive officer and his or her dependents during the period that coverage was in effect. The Company carries reinsurance for claims for any covered employee or dependent in excess of $125,000.$235,000.
Life insurance benefits for officers of City Holding Companyexecutives are calculated at base salary times 2 andtwo. Such benefits are available to all of the Company’s full-time equivalent employees.
Charles R. Hageboeck, President & Chief Executive Officer
The following table describes potential payments upon termination for various reasons for Charles R. Hageboeck, the Company’s President and Chief Executive Officer.
| | | | | | | | | | | | | | | | | | | | | | | |
| POST-EMPLOYMENT PAYMENTS – HAGEBOECK |
Executive Benefits and Payments
Upon Termination | Cash Payments ($) (1) | Health Insurance ($) (3) | Life
Insurance
($) | Option Awards In-the-Money ($) (2) | Restricted Stock Awards ($) (6) | Total Compensation ($) (1) |
| Termination for Just Cause | - | - | - | - | - | - |
Termination Without Just Cause (2) | 4,453,284 | 100,568 | - | 266,496 | | - | 4,820,348 |
Voluntary Termination at 12/31/2023 (2)(5) | 1,405,427 | 100,568 | - | 266,496 | | - | 1,772,491 |
Death (2) | 4,453,284 | - | 1,349,480 | 266,496 | | 1,315,071 | 7,384,331 |
Disability (2)(4) | 4,453,284 | 100,568 | - | 266,496 | | 1,315,071 | 6,135,419 |
Change of Control (2)(5) | 4,453,284 | 100,568 | - | 266,496 | | 1,315,071 | 6,135,419 |
|
| | | | | | | | |
| | POST-EMPLOYMENT PAYMENTS – HAGEBOECK |
Executive Benefits and Payments Upon Termination | Cash Payments ($) (1) | Health Insurance ($) (3) | Life Insurance ($) | Option Awards In-the-Money ($) (2) | Restricted Stock Awards ($) (7) | Tax Gross-Up ($) | Total Compensation ($) (1) |
| Termination for Just Cause | - | - | - | - | - | - | - |
| Termination Without Just Cause | 2,794,155 | 99,208 | - | - | - | - | 2,893,363 |
Voluntary Termination at 12/31/2016 (6) | 1,248,541 | 99,208 | - | - | - | - | 1,347,749 |
| Death | 2,794,155 | - | 1,150,000 | - | 2,754,215 | - | 6,698,370 |
Disability (4) | 2,794,155 | 99,208 | - | - | 2,754,215 | - | 5,647,578 |
Change of Control (5) | 2,794,155 | 99,208 | - | 948,574 | 3,072,826 | - | 6,914,762 |
| |
(1)
| (1)Included in the amounts in this column is a Termination Benefit (see (6) below) of $1,248,541 for Mr. Hageboeck that has been fully accrued and expensed by the Company. |
| |
(2)
| Vested option awards in-the-money for Mr. Hageboeck are exercisable for 90 days following his termination of employment for termination without just cause, voluntary termination, death or disability. All option awards in-the-money will become 100% vested upon a change in control. For purposes of |
calculating the amounts in this column the spread between the exerciseis a Termination Benefit of 36,548 options in-the-money$1,405,427 for Mr. Hageboeck that were unvested at December 31, 2016 and the market value of the Company’s common stock on December 31, 2016 of $67.60 has been calculatedfully accrued and expensed by the Company. Mr. Hageboeck provides for a change of control.
| |
(3)
| The Employment Agreement for Mr. Hageboeck provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 60 months under either the Company’s plan or comparable coverage. The estimated value of this benefit is $99,208 and would be effective if Mr. Hageboeck’s employment were terminated voluntarily by Mr. Hageboeck or if terminated by the Company without just cause, due to a change of control, or due to disability. |
| |
(4)
| In the event of disability, the employment contract for Mr. Hageboeck providesTermination Benefit that he have up to 12 months of continuous disability before his employment agreement may be terminated. After that, the Company may terminate his employment and he is entitled to receive an amount equal to “Termination Compensation” times three (which represents three years of compensation). Termination Compensation will be the highest amount of cash compensation received by the officer in the prior three fiscal years. Thus, Termination Compensation for Mr. Hageboeck will be determined in reference to the calendar year ended December 31, 2016 as $931,385 reduced by the amount of any compensation received pursuant to any applicable disability insurance plan of the Company. Amounts shown in this row are payable in either a lump sum or over a severance period. |
| |
(5)
| The Employment and/or Change in Control Agreements for each of the named executive officers provides for salary continuation for a period following termination as a result of a change in control as defined by the respective agreements. The amount shown in this row for Mr. Hageboeck reflects Termination Compensation of $931,385 times three (which represents three years of compensation), as provided for in his employment agreement and amendments thereto. Mr. Hageboeck can elect to receive this amount as a lump sum or over a severance period of three years. For three years after a termination as a result of a change in control, Mr. Hageboeck is bound by non-compete, non-solicitation, and confidentiality restrictions. Additionally, Mr. Hageboeck’s Employment and/or Change in Control Agreement provides that if Mr. Hageboeck collects an amount arising from any and all sources of compensation from the Company exceeding the product of 2.99 and Mr. Hageboeck's “base amount” as defined in Section 280G(b)(3) of the Internal Revenue Code (“Code § 280G”) at the time of a change in control, the Company shall pay Mr. Hageboeck 147.5% of the federal excise taxes payable by Mr. Hageboeck under Internal Revenue Code § 4999. As of December 31, 2016, the Company is unable to determine if any such amount related to Code § 280G would be payable to Mr. Hageboeck. |
| |
(6)
| Mr. Hageboeck and Mr. Stilwell joined the Company in 2001 when the Company was significantly troubled as part of a “turnaround team.” The Company signed agreements with Mr. Hageboeck, Mr. Stilwell, and three other executive officers providing them the opportunity to voluntarily resign and receive a Termination Benefit following four years of service to the Company. These benefits for Mr. Hageboeck and Mr. Stilwell became fully vested in 2005. Three of the other executives with such benefits terminated their employment with the Company during 2004 and 2005 and received payments under their respective 2001 employment agreements. The Company asked Mr. Hageboeck and Mr. Stilwell to accept positions as the Company’s CEO and Executive Vice-President in 2005, and the voluntary Termination Benefits remain vested and have been preserved in subsequent employment contracts with Mr. Hageboeck and Mr. Stilwell. The voluntary Termination Benefits grow each year at an amount equal to the one-year constant maturity treasury rate and cannot be forfeited except where the officer personally profits from willful fraudulent activity that materially and adversely affects the Employer. The costs of this vested Termination Benefit have been fully accrued and expensed by the Company. |
| |
(7)
| Mr. Hageboeck holds 45,456 restricted shares. Of these restricted share awards, 25,206 shares become 100% vested upon death, disability or a change in control. The remaining 20,250 long-vested shares vest proportionately over the ten-year period following the grant date in the event of death or disability. In the event of a change of control these long-vested shares would be 100% vested as of December 31, 2016. |
David L. Bumgarner, Chief Financial Officer
The following table describes potential payments upon termination for various reasons for David L. Bumgarner, the Company’s Chief Financial Officer.
|
| | | | | | |
| POST-EMPLOYMENT PAYMENTS – BUMGARNER |
Executive Benefits and Payments Upon Termination | Cash Payments ($) | Health Insurance ($) | Life Insurance ($) | Option Awards In-the-Money ($) (1) | Restricted Stock Awards ($) (2) | Total Compensation ($) |
| Termination for Just Cause | - | - | - | - | - | - |
| Termination Without Just Cause | - | - | - | - | - | - |
| Voluntary Termination at 12/31/2016 | - | - | - | - | - | - |
| Death | - | - | 455,000 | - | 621,288 | 1,076,288 |
| Disability | - | - | - | - | 621,288 | 621,288 |
Change of Control (3)(4) | 305,828 | 19,842 | - | 210,803 | 738,124 | 1,274,597 |
| |
(1)
| Vested option awards in-the-money for Mr. Bumgarner are exercisable for 90 days following his termination of employment for termination without just cause, voluntary termination, death or disability. All option awards in-the-money will become 100% vested upon a change in control. For purposes of calculating the amounts in this column, the spread between the exercise of 8,064 options in-the-money that were unvested at December 31, 2016 and the market value of the Company’s common stock on December 31, 2016 of $67.60 has been calculated for a change of control. |
| |
(2)
| Mr. Bumgarner holds 10,919 restricted shares. Of these restricted share awards, 5,544 shares become 100% vested upon death, disability or a change in control. The remaining 5,375 long-vested shares vest proportionately over the eleven-year period following the grant date in the event of death or disability. In the event of a change of control, these long-vested shares would be 100% vested as of December 31, 2016. |
| |
(3)
| The Change in Control Agreement for Mr. Bumgarner provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 12 months under either the Company’s plan or comparable coverage. The estimated value of this benefit is $19,842 and would be effective if Mr. Bumgarner’s employment were terminated by the Company because of a change of control. |
| |
(4)
| The Employment and/or Change in Control Agreements for each of the named executive officers provides for salary continuation for a period following termination as a result of a Change in Control as defined by the respective agreements. The amount shown in this row for Mr. Bumgarner reflects Termination Compensation of $305,828 (which represents one year of compensation), as provided in his employment agreement and amounts thereto. Mr. Bumgarner can elect to receive this amount as a lump sum or over a severance period of 12 months. In addition, for one year after a termination as a result of a change in control, Mr. Bumgarner is bound by non-compete and non-solicitation restrictions. |
Craig G. Stilwell
The following table describes potential payments upon termination for various reasons for Craig G. Stilwell, the Company’s Executive Vice President of Retail Banking.
|
| | | | | | | | |
| | POST-EMPLOYMENT PAYMENTS – STILWELL |
Executive Benefits and Payments Upon Termination | Cash Payments ($) (1) | Health Insurance ($) (4) | Life Insurance ($) | Option Awards In-the-Money ($) (2) | Restricted Stock Awards ($) (3) | Tax Gross-Up ($) | Total Compensation ($) |
| Termination for Just Cause | - | - | - | - | - | - | - |
| Termination Without Just Cause | 1,631,793 | 99,208 | - | - | - | - | 1,731,001 |
Voluntary Termination at 12/31/2016 (6)(7) | 771,040 | 99,208 | - | - | - | - | 870,248 |
| Death | 1,631,793 | - | 734,000 | - | 800,937 | - | 3,166,730 |
Disability (5) | 1,631,793 | 99,208 | - | - | 800,937 | - | 2,531,938 |
Change of Control (6) | 1,631,793 | 99,208 | - | 467,846 | 839,186 | - | 3,038,033 |
| |
(1)
| Included in the amounts in this column is a Termination Benefit (see (7) below) of $771,040 for Mr. Stilwell that has been fully accrued and expensed by the Company.
|
| |
(2)
| Vested option awards in-the-money for Mr. Stilwell are exercisable for 90 days following his termination of employment for termination without just cause, voluntary termination, death or disability. All option awards in-the-money will become 100% vested upon a change in control. For purposes of calculating the amounts in this column, the spread between the exercise of 18,111 unvested option awards and the market value of the Company’s common stock on December 31, 2016 of $67.60 has been calculated for a change of control. |
| |
(3)
| Mr. Stilwell holds 20,539 restricted shares. Of these restricted share awards, 12,414 shares become 100% vested upon death, disability or a change in control. The remaining 8,125 long-vested shares vest proportionately over the ten-year period following the grant date in the event of death or disability. In the event of a change of control these long-vested shares would be 100% vested at December 31, 2016. |
| |
(4)
| The Employment Agreement for Mr. Stilwell provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 60 months under either the Company’s plan or comparable coverage. The estimated value of this benefit is $99,208 and would be effective if Mr. Stilwell’s employment were terminated voluntarily by Mr. Stilwell or if terminated by the Company without just cause, due to a change of control, or due to disability. |
| |
(5)
| In the event of disability, the employment contract for Mr. Stilwell provides that he have up to 12 months of continuous disability before his employment agreement may be terminated. After that, the Company may terminate his employment and he is entitled to receive an amount equal to Termination Compensation times three (which represents three years of compensation). Termination Compensation will be the highest amount of cash compensation received by the officer in the prior three fiscal years. Thus, Termination Compensation for Mr. Stilwell will be determined in reference to the calendar year ended December 31, 2016 as $543,931, reduced by the amount of any compensation received pursuant to any applicable disability insurance plan of the Company. |
| |
(6)
| The Employment and/or Change in Control Agreements for each of the named executive officers provides for salary continuation for a period following termination as a result of a change in control as defined by the respective agreements. The amount shown in this row for Mr. Stilwell reflects Termination Compensation of $543,931 times three (which represents three years of compensation), as provided for in his employment agreement and amendments thereto. Mr. Stilwell can elect to receive this amount as a lump sum or over a severance period of three years. For three years after a termination as a result of a change in control, Mr. Stilwell is bound by non-compete, non-solicitation, and confidentiality restrictions. Additionally, Mr. Stilwell’s Employment and/or Change in Control Agreement provides that if Mr. Stilwell collects an amount arising from any and all sources of compensation from the Company exceeding the product of 2.99 and Mr. Stilwell's “base amount” as defined in Section 280G(b)(3) of the Internal Revenue Code (“Code § 280G”) at the time of a change in control, the Company shall pay Mr. Stilwell 147.5% of the federal excise taxes payable by Mr. Stilwell under Internal Revenue Code § 4999. As of December 31, 2016, the Company is unable to determine if any such amount related to Code § 280G would be payable to Mr. Stilwell. |
| |
(7)
| Mr. Hageboeck and Mr. Stilwell joined the Company in 2001 when the Company was significantly troubled as part of a “turnaround team.” The Company signed agreements with Mr. Hageboeck, Mr. Stilwell, and three other executive officers providing them the opportunity to voluntarily resign and receive a Termination Benefit following four years of service to the Company. These benefits for Mr. Hageboeck and Mr. Stilwell became fully vested in 2005. Three of the other executives with such benefits terminated their employment with the Company during 2004 and 2005 and received payments under their respective 2001 employment agreements. The Company asked Mr. Hageboeck and Mr. Stilwell to accept positions as the Company’s CEO and Executive Vice-President |
in 2005 and the voluntary Termination Benefits remain vestedis payable if and have been preserved in subsequent employment contracts withwhen Mr. Hageboeck and Mr. Stilwell.voluntarily terminates this employment with the Company. The voluntary Termination Benefits growBenefit grows each year at an amount equal to the one-yearone–year constant maturity treasury rate and cannot be forfeited except where the officer personally profits from willful fraudulent activity that materially and adversely affects the Employer.Company.
(2)Vested option awards in-the-money for Mr. Hageboeck are exercisable for 90 days following his termination of employment for termination without just cause, voluntary termination, death or disability.
(3) The costsEmployment Agreement for Mr. Hageboeck provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 60 months under either the Company’s plan or comparable coverage. The estimated value of this vested Termination Benefit have been fully accruedbenefit is $100,568 and expensedwould be effective if Mr. Hageboeck’s employment were terminated voluntarily by Mr. Hageboeck or if terminated by the Company.Company without just cause, due to a change of control, or due to disability.
(4) In the event of disability, the Employment Agreement for Mr. Hageboeck provides that he has up to 12 months of continuous disability before his Employment Agreement may be terminated. After that, the Company may terminate his employment and he is entitled to receive an amount equal to “Termination Compensation” times three (which represents three years of compensation). Termination Compensation will be the highest amount of cash compensation received by the officer in the prior three fiscal years. Thus, Termination Compensation for Mr. Hageboeck will be determined in reference to the calendar year ended December 31, 2023 as $1,484,428 reduced by the amount of any compensation received pursuant to any applicable disability insurance plan of the Company. Amounts shown in this row are payable in either a lump sum or over a severance period.
(5) The Employment and/or Change in Control Agreements for each of the named executive officers provides for salary continuation for a period following termination as a result of a change in control as defined by the respective agreements. The amount shown in this row for Mr. Hageboeck reflects Termination Compensation of $1,484,428 times three (which represents three years of compensation), as provided for in his Employment Agreement and amendments thereto. Mr. Hageboeck can elect to receive this amount as a lump sum or over a severance period of three years. For three years after a termination as a result of a change in control, Mr. Hageboeck is bound by non-compete, non-solicitation, and confidentiality restrictions. Additionally, Mr. Hageboeck’s Employment and/or Change in Control Agreement provides that if Mr. Hageboeck collects an amount arising from any and all sources of compensation from the Company exceeding the product of 2.99 and Mr. Hageboeck’s “base amount” as defined in Section 280G(b)(3) of the Internal Revenue Code (“Code § 280G”) at the time of a change in control, the Company shall pay Mr. Hageboeck 147.5% of the federal excise taxes payable by Mr. Hageboeck under Internal Revenue Code § 4999. As of December 31, 2023, the Company is unable to determine if any such amount related to Code § 280G would be payable to Mr. Hageboeck.
(6) Mr. Hageboeck holds 11,927 restricted shares, which become 100% vested upon death, disability or a change in control.
David L. Bumgarner, Chief Financial Officer
The following table describes potential payments upon termination for various reasons for David L. Bumgarner, the Company’s Chief Financial Officer.
| | | | | | | | | | | | | | | | | | | | |
| POST-EMPLOYMENT PAYMENTS – BUMGARNER |
Executive Benefits and Payments
Upon Termination | Cash
Payments
($) | Health Insurance ($) (2) | Life
Insurance
($) | Option Awards
In-the-Money
($) | Restricted Stock Awards ($) (1) | Total Compensation
($) |
| Termination for Just Cause | - | - | - | - | - | - |
| Termination Without Just Cause | - | - | - | - | - | — |
| Voluntary Termination at 12/31/2023 | - | - | - | - | - | — |
Death (1) | - | - | 680,000 | - | 381,279 | 1,061,279 |
Disability (1) | - | - | - | - | 381,279 | 381,279 |
Change of Control (2)(3) | 1,292,000 | 30,059 | - | - | 381,279 | 1,703,338 |
(1) Mr. Bumgarner holds 3,458 restricted shares, which become 100% vested upon death, disability or a change in control.
(2)The Change in Control Agreement for Mr. Bumgarner provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 24 months under either the Company’s plan or comparable coverage. The estimated value of this benefit is $30,059 and would be effective if Mr. Bumgarner’s employment were terminated by the Company because of a change of control.
(3)The Employment and/or Change in Control Agreements for each of the named executive officers provides for salary continuation for a period following termination as a result of a Change in Control as defined by the respective agreements. The amount shown in this row for Mr. Bumgarner reflects Termination Compensation of $646,000 (which represents one year of compensation), as provided in his employment agreement and amendments thereto. Mr. Bumgarner can elect to receive this amount as a lump sum or over a severance period of 24 months. In addition, for two years after a termination as a result of a change in control, Mr. Bumgarner is bound by non-compete and non-solicitation restrictions.
John A. DeRito
The following table describes potential payments upon termination for various reasons for John A. DeRito, the Company’s Executive Vice President of Commercial Banking.
|
| | | | | | |
| POST-EMPLOYMENT PAYMENTS – DERITO |
Executive Benefits and Payments Upon Termination | Cash Payments ($) | Health Insurance ($) | Life Insurance ($) | Option Awards In-the-Money ($) (1) | Restricted Stock Awards ($) (2) | Total Compensation ($) |
| Termination for Just Cause | - | - | - | - | - | - |
Termination Without Just Cause (4) | 479,913 | 22,894 | - | - | - | 502,808 |
| Voluntary Termination at 12/31/2016 | - | - | - | - | - | - |
| Death | - | - | 540,000 | - | 516,087 | 1,056,087 |
| Disability | - | - | - | - | 516,087 | 516,087 |
Change of Control (3)(5) | 831,850 | 39,683 | - | 330,669 | 555,469 | 1,757,672 |
| | | | | | | | | | | | | | | | | | | | |
| POST-EMPLOYMENT PAYMENTS – DERITO |
Executive Benefits and Payments
Upon Termination | Cash
Payments
($) | Health Insurance ($) (3)(4) | Life
Insurance
($) | Option Awards In-the-Money ($) (1) | Restricted Stock Awards ($) (2) | Total Compensation
($) |
| Termination for Just Cause | - | - | - | - | - | - |
Termination Without Just Cause (3) | 701,538 | 17,342 | - | 260,575 | - | 979,455 |
| Voluntary Termination at 12/31/2023 | - | - | - | 260,575 | - | 260,575 |
Death (2) | - | - | 640,000 | 260,575 | 252,716 | 1,153,291 |
Disability (2) | - | - | - | 260,575 | 252,716 | 513,291 |
Change of Control (4)(5) | 1,216,000 | 30,059 | - | 260,575 | 252,716 | 1,759,350 |
| |
(1)
| Vested option awards in-the-money for Mr. DeRito are exercisable for 90 days following his termination of employment for termination without just cause, voluntary termination, death or disability. All option awards in-the-money will become 100% vested upon a change in control. For purposes of calculating the amounts in this column, the spread between the exercise of 12,528 unvested option awards and the market value of the Company’s common stock on December 31, 2016 of $67.60 has been calculated for a change of control. |
| |
(2)
| Mr. DeRito holds 15,278 restricted shares. Of these restricted share awards, 8,903 shares become 100% vested upon death, disability or a change in control. The remaining 6,375 long-vested shares vest proportionately over the ten-year period following the grant date in the event of death or disability. In the event of a change of control these long-vested shares would be 100% vested as of December 31, 2016. |
| |
(3)
| The Change in Control Agreement for Mr. DeRito provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 24 months under either the Company’s plan or comparable coverage. The estimated value of this benefit is $39,683 and would be effective if Mr. DeRito’s employment were terminated because of a change of control. |
| |
(4)
| Mr. DeRito’s Change in Control Agreement provides that if Mr. DeRito is terminated without just cause, Mr. DeRito will be paid an amount equal to his Termination Compensation for 60 weeks and provided health insurance coverage for 60 weeks. |
| |
(5)
| The Employment and/or Change in Control Agreements for each of the named executive officers provides for salary continuation for a period following termination as a result of a change in control as defined by the respective agreements. The amount shown in this row for Mr. DeRito reflects Termination Compensation of $415,925 times two (which represents two years of compensation), as provided in his employment agreement and amounts thereto. Mr. DeRito can elect to receive this amount as a lump sum or over a severance period of two years. In addition, for two years after a termination as a result of a change in control, Mr. DeRito is bound by non-compete and non-solicitation restrictions. |
(1)Vested option awards in-the-money for Mr. DeRito are exercisable for 90 days following his termination of employment for termination without just cause, voluntary termination, death or disability.
(2) Mr. DeRito holds 4,174 restricted shares, which become 100% vested upon death, disability or a change in control.
(3)Mr. DeRito’s Change in Control Agreement provides that if Mr. DeRito is terminated without just cause, Mr. DeRito will be paid an amount equal to his Termination Compensation for 60 weeks and provided health insurance coverage for 60 weeks.
(4)The Change in Control Agreement for Mr. DeRito provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 24 months under either the Company’s plan or comparable coverage. The estimated value of this benefit is $30,059 and would be effective if Mr. DeRito’s employment were terminated because of a change of control.
(5)The Employment and/or Change in Control Agreements for each of the named executive officers provides for salary continuation for a period following termination as a result of a change in control as defined by the respective agreements. The amount shown in this row for Mr. DeRito reflects Termination Compensation of $608,000 times two (which represents two years of compensation), as provided in his employment agreement and amendments thereto. Mr. DeRito can elect to receive this amount as a lump sum or over a severance period of two years. In addition, for two years after a termination as a result of a change in control, Mr. DeRito is bound by non-compete and non-solicitation restrictions.
Michael T. Quinlan, Jr.
The following table describes potential payments upon termination for various reasons for Michael T. Quinlan, Jr., the Company’s Executive Vice President of Retail Banking.
| | | | | | | | | | | | | | | | | | | | |
| POST-EMPLOYMENT PAYMENTS – QUINLAN |
Executive Benefits and Payments
Upon Termination | Cash
Payments
($) | Health Insurance ($) (3) | Life
Insurance
($) | Option Awards
In-the-Money
($) | Restricted Stock Awards ($) (1) | Total Compensation
($) |
| Termination for Just Cause | - | - | - | - | - | - |
| Termination Without Just Cause | - | - | - | - | - | - |
| Voluntary Termination at 12/31/2023 | - | - | - | - | - | - |
Death (2) | - | - | 770,000 | - | 729,039 | 1,499,039 |
Disability (2) | - | - | - | - | 729,039 | 729,039 |
Change of Control (2)(3) | 1,302,466 | 30,059 | - | - | 729,039 | 2,061,564 |
(1) Mr. Quinlan holds 6,814 restricted shares which become 100% vested upon death, disability or a change in control.
(2)The Change in Control Agreement for Mr. Quinlan provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 24 months. The estimated value of this benefit is $30,059 and would be effective if Mr. Quinlan’s employment were terminated either by the Company, or by the employee for “good cause” as defined in the Agreement, following a change of control.
(3)Mr. Quinlan is employed under a Change in Control Agreement which provides for salary continuation for a period following termination as a result of a Change in Control as defined under the agreement. The amount shown in this row for Mr. Quinlan reflects Termination Compensation of $651,233 (which represents 24 months of compensation), as provided in his Change in Control Agreement. Mr. Quinlan can elect to receive this amount as a lump sum or over a severance period of 24 months. In addition, for 24 months after a termination as a result of a change in control, Mr. Quinlan is bound by non-compete and non-solicitation restrictions.
Jeffrey D. Legge
The following table describes potential payments upon termination for various reasons for Jeffrey D. Legge, the Company’s SeniorExecutive Vice President of Operations and Chief Information Officer.
| | | | | | | | | | | | | | | | | | | | |
| POST-EMPLOYMENT PAYMENTS – LEGGE |
Executive Benefits and Payments
Upon Termination | Cash
Payments
($) | Health Insurance ($) (3) | Life
Insurance
($) | Option Awards In-the-Money ($)(1) | Restricted Stock Awards ($) (2) | Total Compensation
($) |
| Termination for Just Cause | - | - | - | - | - | - |
| Termination Without Just Cause | - | - | - | 22,497 | - | 22,497 |
| Voluntary Termination at 12/31/2023 | - | - | - | 22,497 | - | 22,497 |
Death (2) | - | - | 595,000 | 22,497 | 367,386 | 984,883 |
Disability (2) | - | - | - | 22,497 | 367,386 | 389,883 |
Change of Control (2)(4) | 1,011,500 | 25,521 | - | 22,497 | 367,386 | 1,426,904 |
|
| | | | | | |
| POST-EMPLOYMENT PAYMENTS – LEGGE |
Executive Benefits and Payments Upon Termination | Cash Payments ($) | Health Insurance ($) | Life Insurance ($) | Option Awards In-the-Money ($)(1) | Restricted Stock Awards ($) (2) | Total Compensation ($) |
| Termination for Just Cause | - | - | - | - | - | - |
| Termination Without Just Cause | - | - | - | - | - | - |
| Voluntary Termination at 12/31/2016 | - | - | - | - | - | - |
| Death | - | - | 420,000 | - | 587,833 | 1,007,833 |
| Disability | - | - | - | - | 587,833 | 587,833 |
Change of Control (3)(4) | 282,303 | 19,842 | - | 179,170 | 409,304 | 890,619 |
| |
(1)
| Vested option awards in-the-money for Mr. Legge are exerciseable for 90 days following his termination of employment for termination without just cause, voluntary termination, death or disability. All option awards in-the-money will become 100% vested upon a change in control. For purposes of calculating |
(1) Vested option awards in-the-money for Mr. Legge are exerciseable for 90 days following his termination of employment for termination without just cause, voluntary termination, death or disability.
(2) Mr. Legge holds 3,332 restricted shares which become 100% vested upon death, disability or a change in control.
(3)The Change in Control Agreement for Mr. Legge provides for a continuation of health insurance coverage on the amountssame terms as were in this column, the spread between the exerciseeffect prior to his termination of 6,961 options in-the-money that were unvested at December 31, 2016 and the marketemployment for a period of up to 24 months. The estimated value of this benefit is $25,521 and would be effective if Mr. Legge’s employment were terminated either by the Company’s common stock on December 31, 2016 of $67.60 has been calculatedCompany, or by the employee for “good cause” as defined in the Agreement, following a change of control.
| |
(2)
| Mr. Legge holds 6,252 restricted shares. Of these restricted share awards, 4,752 shares become 100% vested upon death, disability or a change in control. The remaining 1,500 long-vested shares vest proportionately over the ten-year period following the grant date in the event of death or disability. In the event of a change of control these long-vested shares vest 80% and 100%, on September 25th, 2017 and 2018, respectively. |
| |
(3)
| The Change in Control Agreement for Mr. Legge provides for a continuation of health insurance coverage on the same terms as were in effect prior to his termination of employment for a period of up to 12 months. The estimated value of this benefit is $19,842 and would be effective if Mr. Legge’s employment were terminated either by the Company, or by the employee for “good cause” as defined in the Agreement, following a change of control. |
| |
(4)
| Mr. Legge is employed under a Change in Control Agreement which provides for salary continuation for a period following termination as a result of a Change in Control as defined by the respective agreements. The amount shown in this row for Mr. Legge reflects Termination Compensation of $282,303 (which represents one year of compensation), as provided in his Change in Control Agreement. Mr. Legge can elect to receive this amount as a lump sum or over a severance period of 12 months. In addition, for one year after a termination as a result of a change in control, Mr. Legge is bound by non-compete and non-solicitation restrictions. |
(4)Mr. Legge is employed under a Change in Control Agreement which provides for salary continuation for a period following termination as a result of a Change in Control as defined under the agreement. The amount shown in this row for Mr. Legge reflects Termination Compensation of $505,750 (which represents two years of compensation), as provided in his Change in Control Agreement. Mr. Legge can elect to receive this amount as a lump sum or over a severance period of 24 months. In addition, for two years after a termination as a result of a change in control, Mr. Legge is bound by non-compete and non-solicitation restrictions.
Employment Agreements
The Company entered into an employment agreementsagreement with Charles R. Hageboeck and Craig G. Stilwell on July 25, 2007, replacing agreementsthe agreement previously entered into during 2001. These agreements haveThis agreement has a term of two years, but automatically renewrenews each month for an additional month unless either the Company or the officer serves notice to the other to fix the term to a definite two-year term. Both Mr. Hageboeck’s and Mr. Stilwell’s employment agreements addressagreement addresses salary, incentives and other benefits. In the event that either Mr. Hageboeck or Mr. Stilwell voluntarily terminate theirterminates his employment with the Company for any reason or at any time, the officerMr. Hageboeck will be entitled to receive a certain sum of money, plus interest from and after December 31, 2006, paid over 36 months. This covenant within the Employment AgreementsAgreement between the Company and Mr. Hageboeck and Mr. Stilwell preserves Termination BenefitsBenefit available to themhim that were part of the original employment agreementsagreement between the Company and the officersMr. Hageboeck originally signed on June 11, 2001 and May 15, 2001, respectively.2001. At December 31, 2016,2023, Mr. Hageboeck could voluntarily resign and the Company would be obligated to make payments to him over 36 months totaling $1,248,541 plus interest at the Treasury One-Year Constant Maturity rate until paid in full. At December 31, 2016, Mr. Stilwell could voluntarily resign and the Company would be obligated to make payments to him over 36 months totaling $771,040$1,405,427 plus interest at the Treasury One-Year Constant Maturity rate until paid in full. The Company has accrued expense to reflect the costs of this benefit.The benefit totaling$2,019,582.These benefits just described for Mr. Hageboeck and Mr. Stilwell areis deemed fully vested and shall not be subject to risk of forfeiture under any circumstances, including any of the reasons that qualify for “Just Cause” as described below and as provided under the Agreements,agreements, except where the officer personally profits from his willful fraudulent activity and that activity materially and adversely affects the Company. Additionally, the Company is required to make health insurance available to both officersMr. Hageboeck for a period of up to five years following voluntary termination.
In the event of termination without Just Cause, death, or disability, each of Mr. Hageboeck and Mr. Stilwell areis entitled to receive three times his Termination Compensation, which is defined as equal to the highest amount of cash compensation paid to or for the benefit of the Employeeemployee in respect of any of the three most recent calendar years ending prior to the date of termination, determined by reference to the annual cash compensation (including salary, cash-based incentive compensation, and cash-based bonus but not including equity incentive compensation) of the Summary Compensation Table set forth in the Company’s proxy statement for such year. Additionally, both Mr. Hageboeck and Mr. Stilwell’sHageboeck’s employment contracts requirecontract requires the Company to provide health insurance for five years in the event that theirhis employment terminates due to disability or without Just Cause.
The Company entered into a Change in Control and Termination Agreement on June 28, 2004 with John A. DeRito. Under this agreement, in the event of a change in control, Mr. DeRito may voluntarily terminate his employment with the Company until the expiration of the 24-month period after the change in control for “Good Reason” as defined in the Agreementagreement and be entitled to receive benefits as described
in the Post Employment Compensation Table above. Mr. DeRito’s Change in Control and Termination Agreement also provides that if Mr. DeRito is terminated without Just Cause, he will receive benefits as described in the Post-Employment Compensation Table above. “Just Cause” shall mean termination, accomplished by vote of the Company’s Board of Directors, related to Mr. DeRito’s personal dishonesty, gross incompetence, willful misconduct, breach of a fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation, gross negligence, malfeasance (other than traffic violations or similar offenses) or a final cease-and-desist order, conviction of a felony or of a misdemeanor involving moral turpitude, unethical business practices in connection with the Company’s business, or misappropriation of the Company’s assets or similarly serious violation of policy of the Company.
The Company entered into a Change in Control Agreement with David L. Bumgarner on February 1, 2005.May 4, 2022. Mr. Bumgarner’s Agreementagreement provides that in the event of a change in control of the Company, Mr. Bumgarner may voluntarily terminate his employment with the Company until the expiration of the 12-month24-month period after the change in control for “Good Reason” as defined in the Agreementagreement and receive benefits as shown in the Post-Employment Compensation Table above.
The Company entered into a Change in Control Agreement with Michael T. Quinlan, Jr. on May 4, 2022. Mr. Quinlan’s agreement provides that in the event of a change in control of the Company, Mr. Quinlan may voluntarily terminate his employment with the Company until the expiration of the 24-month period after the change in control for “Good Reason” as defined in the agreement and receive benefits as shown in the Post-Employment Compensation Table above.
The Company entered into a Change in Control Agreement with Jeffrey D. Legge on February 6, 2006.May 4, 2022. Mr. Legge’s Agreementagreement provides that in the event of a change in control of the Company, Mr. Legge may voluntarily terminate his employment with the Company until the expiration of a 12-month24-month period after the change in control for “Good Reason” as defined in the Agreementagreement and receive benefits as shown in the Post-Employment Compensation Table above.
Pay vs Performance
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pay Versus Performance Table for 2023 |
| | | | | Value of Initial Fixed $100 Investment Based On: | | |
| Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for non-PEO NEOs(3) | Compensation Actually Paid to non-PEO NEOs(2) | TSR(4) | Peer Group TSR(5) | City's Net Income (in thousands)(6) | Return On Average Assets(7) |
| | | | | | | | |
| | | | | | | | |
| 2023 | $ | 1,894,563 | | $ | 2,731,310 | | $ | 750,107 | | $ | 991,689 | | $ | 128.53 | | $ | 111.44 | | $ | 114,365 | | 1.87 | % |
| 2022 | $ | 1,700,648 | | $ | 2,432,213 | | $ | 605,800 | | $ | 774,909 | | $ | 124.92 | | $ | 109.30 | | $ | 102,071 | | 1.71 | % |
| 2021 | $ | 1,458,504 | | $ | 1,842,789 | | $ | 510,454 | | $ | 605,647 | | $ | 106.52 | | $ | 113.52 | | $ | 88,080 | | 1.49 | % |
| 2020 | $ | 1,629,367 | | $ | 1,657,555 | | $ | 645,178 | | $ | 636,293 | | $ | 87.83 | | $ | 83.66 | | $ | 89,595 | | 1.66 | % |
(1) The compensation paid to Mr. Hageboeck are the amounts of total compensation reported for each corresponding year in the "Total" of the "Summary Compensation Table for 2023." (2) The amounts reported as Compensation Actually Paid to PEO and the average for the non-PEO NEO's as computed in accordance with Item 402(v) of SEC Regulation S-K. The dollar amounts reported do not reflect the actual value of compensation earned or paid to Mr. Hageboeck and the average for the non-PEO NEO's during the applicable year. The following adjustments were made to Mr. Hageboeck's and the average for the non-PEO NEO's total compensation for each year in accordance with Item 402(v) of SEC Regulation S-K to determine the compensation actually paid to Mr. Hageboeck and the average for the non-PEO NEO's:
| | | | | | | | | | | | | | |
| Year | Reported Summary Compensation Table Total | Reported Grant Date Fair Value of Equity Awards(A) | Equity Award Adjustments(B) | Compensation Actually Paid |
| | | | |
| Charles R. Hageboeck, President & CEO | | |
| 2023 | $ | 1,894,563 | | $ | (389,813) | | $ | 1,226,560 | | $ | 2,731,310 | |
| 2022 | $ | 1,700,648 | | $ | (389,840) | | $ | 1,121,405 | | $ | 2,432,213 | |
| 2021 | $ | 1,458,504 | | $ | (389,802) | | $ | 774,087 | | $ | 1,842,789 | |
| 2020 | $ | 1,629,367 | | $ | (382,208) | | $ | 410,396 | | $ | 1,657,555 | |
| | | | |
| Average of Other NEO's | | |
| 2023 | $ | 750,107 | | $ | (133,342) | | $ | 374,924 | | $ | 991,689 | |
| 2022 | $ | 605,800 | | $ | (107,481) | | $ | 276,590 | | $ | 774,909 | |
| 2021 | $ | 510,454 | | $ | (102,981) | | $ | 198,174 | | $ | 605,647 | |
| 2020 | $ | 645,178 | | $ | (126,686) | | $ | 117,801 | | $ | 636,293 | |
(A) The "Reported Grant Date Fair Value of Equity Awards" represents the amount reported as "Stock Awards" in the "Summary Compensation Table for 2023" for the applicable year. (B) The "Equity Award Adjustments" for each applicable year include the following adjustments: (i) the year-end value of any equity awards granted in the applicable year that were outstanding and unvested at the end of the applicable year; (ii) the amount of change as of the end of the applicable year (from the previous year-end) in fair value of any equity awards granted in prior years that were still outstanding and unvested as of the applicable year-end; (iii) for equity awards that were granted and vested in the same applicable year, the fair value of the equity awards on the vesting date; (iv) for equity awards granted in prior years that vested in the applicable year, the amount of change as of the vesting date (from the previous year-end) in fair value of the equity awards; (v) for equity awards granted in prior years that were determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value as of the previous year-end; and (vi) the dollar value of any dividends or other earnings paid on equity awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such equity awards or included in any other component of "total compensation" for the applicable year. The fair value of all unvested PSU's is based on the expected vesting percentile of PSU's for a given year which would be earned under conditions noted in the "Long-Term Incentives" discussion. The adjustments in calculating the "Equity Award Adjustments" are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Year | Year-End Value of Outstanding and Unvested Equity Awards Granted in Applicable Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Fair Value on Vesting Date of Awards Granted & Vested in Applicable Year | Year over Year Change in Fair Value of Equity Awards that Vested in the Applicable Year | Awards Granted in Prior Years that Are Determined to Fail to Meet Vesting Conditions During the Applicable Year, the Fair Value at the Previous Year-End | Dollar Value of Dividends or Other Earnings Paid on Equity Awards not Otherwise Reflected in the Fair Value of Such Award or Included in Any Other Component of Total Compensation | Total Equity Award Adjustments |
| | | | | | | |
| Charles R. Hageboeck, President & CEO | | | | | |
| 2023 | $ | 455,000 | | $ | 683,977 | | $ | — | | $ | 67,973 | | $ | — | | $ | 19,610 | | $ | 1,226,560 | |
| 2022 | $ | 497,395 | | $ | 617,069 | | $ | — | | $ | (11,158) | | $ | — | | $ | 18,099 | | $ | 1,121,405 | |
| 2021 | $ | 388,078 | | $ | 302,050 | | $ | — | | $ | 65,779 | | $ | — | | $ | 18,180 | | $ | 774,087 | |
| 2020 | $ | 350,376 | | $ | 63,620 | | $ | — | | $ | (24,907) | | $ | — | | $ | 21,307 | | $ | 410,396 | |
| | | | | | | |
| Average of Other NEO's | | | | | |
| | | | | | | |
| 2023 | $ | 154,665 | | $ | 194,897 | | $ | — | | $ | 17,604 | | $ | — | | $ | 7,758 | | $ | 374,924 | |
| 2022 | $ | 137,343 | | $ | 135,741 | | $ | — | | $ | (3,830) | | $ | — | | $ | 7,336 | | $ | 276,590 | |
| 2021 | $ | 102,514 | | $ | 69,090 | | $ | — | | $ | 18,659 | | $ | — | | $ | 7,911 | | $ | 198,174 | |
| 2020 | $ | 112,414 | | $ | 17,073 | | $ | — | | $ | (20,270) | | $ | — | | $ | 8,584 | | $ | 117,801 | |
(3) NEOs included in the Average Calculation are:
2023: Messrs. David L. Bumgarner, John A. DeRito, Michael T. Quinlan, Jr., and Jeffrey D. Legge
2022: Messrs. David L. Bumgarner, John A. DeRito, Michael T. Quinlan, Jr., and Jeffrey D. Legge
2021: Messrs. David L. Bumgarner, John A. DeRito, Michael T. Quinlan, Jr., and Jeffrey D. Legge
2020: Messrs. David L. Bumgarner, John A. DeRito, Craig G. Stilwell, and Jeffrey D. Legge
(4) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period (determined in accordance with Item 402(v) of SEC Regulation S-K), assuming dividend reinvestment, and the difference between City's common share price at the end and beginning of the measurement period by City's common share price at the beginning of the measurement period.
(5) Peer group total shareholder return using the KBW NASDAQ Regional Bank Index.
(6) The dollar amounts reported represent the amount of Net Income (in thousands) reflected in City's audited consolidated financial statements for each of the applicable years.
(7) City has determined that ROAA is the financial performance measurement that, in City's assessment, represents the most important performance measurement not otherwise disclosed in this table that is used by City to link compensation actually paid to City's NEOs for the most recently completed fiscal year.
As described in greater detail in the section captioned "EXECUTIVE COMPENSATION - Compensation Discussion and Analysis," City's executive compensation program includes variable components in the form of annual incentive and long-term incentive awards. The metrics that City uses for both annual incentive compensation and long-term incentive awards are selected based on the objective of incentivizing our NEOs to increase shareholder value. Changes in shareholder value are reflected in compensation actually paid above through fair value of City's equity awards. Compensation actually paid for 2021 reflects an increase in the fair value of these equity awards as a result of an increase in City's common share price from $69.55 at December 31, 2020 to $81.79 at December 31, 2021. Compensation actually paid for 2022 reflects an increase in the fair value of these equity awards as a result of an increase in City's common share price from $81.79 at December 31, 2021 to $93.09 at December 31, 2022. Compensation actually paid for 2023 reflects an increase in the fair value of these equity awards as a result of an increase in City's common share price from $93.09 at December 31, 2022 to $110.26 at December 31, 2023. The most important financial performance measures used by City to link executive compensation actually paid to the NEOs for the most recently completed fiscal year, to City's performance are shown in the table below as follows:
As described in more detail in the section captioned "EXECUTIVE COMPENSATION - Compensation Discussion and Analysis," City's executive compensation program includes variable components in the form of annual incentive compensation and long-term incentive awards. While City utilizes several performance measures to align executive compensation with City's performance, not all of those measures are presented in the "Pay Versus Performance Table for 2023."Moreover, City generally seeks to incentivize long-term performance and, therefore, does not specifically align City's performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of SEC Regulation S-K) for a particular year. In accordance with Item 402(v) of SEC Regulation S-K, City is providing the following descriptions of the relationships between information presented in the "Pay Versus Performance Table for 2023."
As demonstrated by the following graph, the amount of compensation actually paid to Mr. Hageboeck and the average amount of compensation actually paid to City's other NEOs as a group (excluding Mr. Hageboeck) is generally aligned with City's cumulative TSR over the four years presented in the "Pay Versus Performance Table for 2023."The alignment of compensation actually paid with City's cumulative TSR over the period presented is due to the fact that a significant portion of the compensation actually paid to Mr. Hageboeck and to the other NEOs is comprised of equity awards. The estimated grant date fair value of the target PSU award in 2023 was approximately 11% of total direct compensation for Mr. Hageboeck and approximately 10% of total direct compensation for the other NEOs.
The following graph details City's cumulative TSR in comparison to the Regional Compensation Peer Group (as defined in the section captioned "EXECUTIVE COMPENSATION - Compensation Discussion and Analysis") cumulative TSR for each of the measurement periods (determined in accordance with Item 402(v) of SEC Regulation S-K) as presented in the "Pay Versus Performance Table for 2023."
As demonstrated by the following graph, the amount of compensation actually paid to Mr. Hageboeck and the average amount of compensation actually paid to City's other NEOs as a group (excluding Mr. Hageboeck) is generally aligned with City's net income over the four years presented in the "Pay Versus Performance Table for 2023." While City does not use net income as a performance measure in the overall executive compensation program, the measure of net income is correlated with the measure of ROATCE, which City does use in setting
goals for annual incentive compensation and ROAA and TSR which City does use in determining the vesting of PSUs that are awarded to the NEOs. As described in more detail in the section captioned "EXECUTIVE COMPENSATION - Compensation Discussion and Analysis," the target annual incentive compensation as a percent of 2023 base salary was 60% for Mr. Hageboeck and 42.5% for the other NEOs.
As described in more detail in the section captioned "EXECUTIVE COMPENSATION - Compensation Discussion and Analysis," the number of PSUs earned is based on the cumulative ROAA for a three-fiscal-year performance period as well as by City's relative TSR as compared to its Regional Peer Group. As demonstrated by the following graph, the amount of compensation actually paid to Mr. Hageboeck and the average amount of compensation actually paid to City's other NEOs as a group (excluding Mr. Hageboeck) is generally aligned with City's ROAA over each of the four years presented in the "Pay Versus Performance Table for 2023."
As described in more detail in the section captioned "EXECUTIVE COMPENSATION - Compensation Discussion and Analysis," the amount of annual incentive compensation is tied to City's ROATCE as compared to its Regional Peer Group. As demonstrated in the following graph, the amount of compensation actually paid to Mr. Hageboeck and the average amount of compensation actually paid to City's other NEOs as a group (excluding Mr. Hageboeck) is generally aligned with City's ROATCE over each of the four years presented in the "Pay Versus Performance Table for 2023."
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission adopted a rule requiring annual disclosure of the annual total compensation (as defined below) for the Chief Executive Officer (the “CEO”) and for the median employee along with the ratio of the CEO’s annual total compensation to the median employee’s annual total compensation.
Our median employee was identified through the following procedure: (1) we obtained a list of all employees (including full-time, part-time, temporary or seasonal) employed as of December 31, 2023, excluding our CEO; (2) we annualized the compensation of full-time and part-time permanent employees who were employed as of December 31, 2023, but did not work for the Company the entire year in 2023 (no full-time equivalent adjustments were made for part-time employees); (3) total compensation was then calculated in same manner for all employees as shown for our CEO in the “Summary Compensation Table”; and (4) we then selected the employee that ranked as the median (468 of 930).
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| Annual Total Compensation of Mr. Hageboeck, CEO | $1,894,563 |
| Annual Total Compensation of Median Employee | $40,977 |
| Ratio of CEO to Median Employee Compensation | 46x |
NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Proposal 4)3)
The Company is providing shareholders with a non-binding advisory vote on compensation programs for our named executive officers (sometimes referred to as “Say-on-Pay”). Accordingly, you may vote on the following resolution at the 20172024 Annual Meeting, the consideration of which is required pursuant to Section 14A of the Securities Exchange Act:
“Resolved, “Resolved, that the shareholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure in this Proxy Statement.”
This vote is advisory in nature and therefore, is non-binding. The Board of Directors and the Compensation Committee, which is comprised of independent directors, expect to take into account the outcome of the vote when considering future executive compensation decisions to the extent they can determine the cause or causes of any significant negative voting results. The Company solicits shareholder advisory votes on executive compensation annually.
As described in detail under “Compensation Discussion and Analysis,” our compensation programs are designed to motivate our executives to create a successful and high-performing company.company with an appropriate balance of return and risk. We believe that our compensation program, with its balance of short-term incentives (including cash and equity awards vesting over periods of up to five years) and long-term incentives (including long-vested restricted share awards) reward sustained performance that is aligned with long-term shareholder interests. Shareholders are encouraged to read the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure.
The Board of Directors unanimously recommends that you vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure.
NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE
ON EXECUTIVE COMPENSATION
(Proposal 5)
In addition to providing shareholders with the opportunity to cast an advisory vote on executive compensation, the Company this year is providing shareholders with an advisory vote on whether the advisory vote on executive compensation should be held every one, two or three years.
The Board of Directors believes that an annual vote for the non-binding advisory vote on executive compensation is the optimal interval for conducting and responding to a “say on pay” vote because it will allow us to obtain information on our shareholders’ views of the compensation of our named executive officers on a more consistent basis. Shareholders who have concerns about executive compensation during the interval between “say on pay” votes are welcome to bring their specific concerns to the attention of the Board. Please refer to “Communications with the Board of Directors” in this Proxy Statement for information about communicating with the Board or its individual members.
The proxy card provides shareholders with the opportunity to choose among one of four options (holding the vote every one, two or three years, or abstaining) and, therefore, shareholders will not be voting to approve or disapprove the Board of Directors' recommendation.
Although this advisory vote on the frequency of the “say on pay” vote is non-binding, the Board of Directors and the Compensation Committee will take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation.
The Board of Directors unanimously recommends that you select 1 YEAR for future non-binding advisory votes on executive compensation.
CERTAIN TRANSACTIONS INVOLVING DIRECTORS AND
EXECUTIVE OFFICERS
The Company’s subsidiaries had, and expect to have in the future, banking transactions with directors and executive officers of the Company, their immediate families and entities in which they are principal owners (more than 10% ownership interest). These transactions are in the ordinary course of business and on substantially the same terms, including interest rates and security, as those prevailing at the same time for comparable transactions with others and do not involve more than the normal risk of collectability or present other unfavorable factors.
The Company’s loan policy requires that all extensions of credits to directors and executive officers and their related interests, as defined in Item 404 of SEC Regulation S-K, must be reviewed and approved by the Executive Loan Committee and promptly reported to the Board of Directors. If required by the procedural and financial requirements of Regulation O of the Board of Governors of the Federal Reserve System, such credits will be approved in advance by a majority of disinterested directors. Directors and executive officers may not be present for discussions on their own loans, loans involving their related interests or loans involving any other conflict of interest situation and must abstain from voting on such credits.
In relation to other related party transactions with directors and executive officers and their related interests, the Company adheres to an unwritten policy whereby before the Company or any of its subsidiaries enters into any transaction for which the value of the transaction is expected to be at least $120,000, and an interested party in the transaction is a director, executive officer, an immediate family member of a director or executive officer, or a shareholder owning 5% or greater of the Company’s outstanding stock, the Board of Directors must review and approve the transaction. In reviewing any such potential transaction, the directors will consider the fairness of the transaction to the Company, whether the transaction would or could compromise the interested party’s independence and judgment, the best interests of the Company, and such other factors determined advisable by the Board of Directors.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Under the regulations of the SEC, any shareholder desiring to make a proposal pursuant to Rule 14a-8 of the SEC’s proxy rules to be acted upon at the Company’s 20182025 Annual Meeting of Shareholders must present such proposal to the Company’s Secretary at the principal executive offices of the Company at 25 Gatewater Road, Charleston, West Virginia 25313,WV 25313-1408, not later than November 22, 201725, 2024 in order for the proposal to be considered for inclusion in the Company’s proxy statement for the 20182025 Annual Meeting of Shareholders. SEC rules establish a different deadline for submission of shareholder proposals that are not intended to be included in our proxy statement with respect to discretionary voting. The deadline for these proposals for the 20182025 Annual Meeting is February 5, 2018.10, 2025. If a shareholder gives notice of such a proposal after this deadline, the proxies will be allowed to use their discretionary voting authority to vote against the shareholder proposal when and if it is raised at the Annual Meeting.
Pursuant to the Company’s Amended and Restated Bylaws, a shareholder may nominate persons for election to the Board of Directors at an annual shareholder meeting and, pursuant to the Governance and Nominating Committee Charter, the Governance Committee considers nominees recommended by shareholders, in each case, if written notice is submitted to the Company’s Secretary at the principal executive offices of the Company not less than 120 calendar days prior to April 24, 2025 (December 25, 2018, or December 26, 2017.2024).
The shareholder’s notice must include:
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o | as to each person whom the shareholder proposes to nominate for election as a director: |
o as to each person whom the shareholder proposes to nominate for election as a director:
▪all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest or is otherwise required pursuant to Regulation 14A under the Exchange Act; and
▪such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and
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o | as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: |
o as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made:
▪the name and address of such shareholder, as they appear on the Company’s books, and of such beneficial owner;
▪the class and number of shares of the Company’s Common Stock that are owned beneficially and of record by such shareholder and such beneficial owner;
▪a description of all arrangements or understandings between the shareholder and each nominee and any other persons (naming them) pursuant to which the nominations are to be made by the shareholder;
▪a representation that such shareholder is a holder of record of the Company’s Common Stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination; and
▪a representation if the shareholder intends to solicit proxies from shareholders in support of such nomination.
In order for a shareholder to bring other business before a shareholder meeting, timely notice must be received by the Company’s Secretary not less than 120 calendar days prior to April 25, 2018,24, 2025, or December 26, 2017.25, 2024. The shareholder’s notice must contain:
o as to each matter:
▪a brief description of the business desired to be brought before the meeting;
▪the reasons for conducting such business at the meeting;
▪in the event that such business includes a proposal to amend the Company’s Articles of Incorporation or Bylaws, the language of the proposed amendment; and
▪any material interest in such business of such shareholder and of the beneficial owner, if any, on whose behalf the proposal is made; and
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o | as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made, the information described above, with respect to the shareholder proposing such business. |
o as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made, the information described above with respect to the shareholder proposing such business.
The Company is required to present a shareholder’s nomination or proposal only if the shareholder meets all of the above requirements and appears or sends a qualified representative to present such proposal at the shareholder meeting. The requirements found in the Company’s Amended and Restated Bylaws are separate from and in addition to the requirements of the SEC that a shareholder must meet to have a proposal included in the Company’s proxy statement. The deadline for providing notice for solicitation of proxies of nominees other than the Company’s nominees will be February 24, 2025.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not informed of any matters, other than those stated above, that may be brought before the Annual Meeting. However, if any other matters are brought before the Annual Meeting or any adjournments or postponements thereof, the persons named on the accompanying proxy card or their substitutes will vote with respect to such matters in accordance with their best judgment.
Directions to City Holding Company’s 2017 Annual Meeting which will be held in the Don Morris Room on the second floor of the Memorial Student Center at Marshall University, One John Marshall Drive, Huntington, West Virginia 25755 follow below:
From I-64 West: Take Exit 11 (Hal Greer Boulevard/Downtown). Turn right at the end of the ramp toward Hal Greer Boulevard. Continue along Hal Greer Boulevard. Turn right onto Sixth Avenue. The Sixth Avenue Parking Facility will be the first left on John Marshall Drive. The Memorial Student Center is a short walk down John Marshall Drive and across Fifth Avenue from the Sixth Avenue Parking Facility.
From I-64 East: Take Exit 11 (Hal Greer Boulevard/Downtown). Turn left at the end of the ramp toward Hal Greer Boulevard. Continue along Hal Greer Boulevard. Turn right onto Sixth Avenue. The Sixth Avenue Parking Facility will be the first left on John Marshall Drive. The Memorial Student Center is a short walk down John Marshall Drive and across Fifth Avenue from the Sixth Avenue Parking Facility.
From US-52 East: Follow US 52E to Chesapeake (Ohio). Cross the Ohio-West Virginia bridge. Turn left onto Fifth Avenue and continue along Fifth Avenue to the intersection of Hal Greer Boulevard. Turn left onto Hal Greer Boulevard and continue to the intersection of Hal Greer
Boulevard and Sixth Avenue. Turn left onto Sixth Avenue. The Sixth Avenue Parking Facility will be the first left on John Marshall Drive. The Memorial Student Center is a short walk down John Marshall Drive and across Fifth Avenue from the Sixth Avenue Parking Facility.
Parking is available for all persons attending the Annual Meeting in the Sixth Avenue Parking Facility at Marshall University. Please mention to the parking attendant that you are attending City Holding Company's Annual Meeting and your parking will be free of charge.
ANNUAL REPORT
The Company has included a copy of its Annual Report on Form 10-K for the year ended December 31, 2016,2023, as filed with the SEC, with this proxy statement. A request for an additional copy, which will be provided without charge to shareholders of the Company, should be directed to Victoria A. Faw, Corporate Secretary, City Holding Company, 25 Gatewater Road, Cross Lanes,Charleston, WV 2531325313-1408 or by calling 304-769-1100.1-304-769-1100. The Company's Form 10-K will also be available on the SEC'sSEC’s website at http://www.sec.gov, and through a link at the Investor Relations, SEC Filings section of the Company's website (http://www.bankatcity.com).
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| By Order of the Board of Directors, |
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| Victoria A. Faw, |
| Secretary |
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March 20, 201725, 2024
