UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _____)
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Catalyst Bancorp, Inc.
(Name of Registrant as Specified In Its Charter)
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April 12, 2022
11, 2023
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Catalyst Bancorp, Inc. The meeting will be held at our headquarters, located at 235 North Court Street, Opelousas, Louisiana, 70570, on Tuesday, May 17, 202216, 2023 at 8:00 a.m., Central time. The matters to be considered by shareholders at the annual meeting are described in the accompanying materials.
It is very important that your shares be voted at the annual meeting regardless of the number you own or whether you are able to attend the meeting in person. We urge you to mark, sign, and date your proxy card today and return it in the envelope provided, even if you plan to attend the annual meeting. This will not prevent you from voting in person, but will ensure that your vote is counted if you are unable to attend.
On behalf of the Board of Directors and all of the employees of Catalyst Bancorp, I thank you for your continued interest and support.
Sincerely,
Joseph B. Zanco
President and Chief Executive Officer
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CATALYST BANCORP, INC. 235 North Court Street Opelousas, Louisiana 70570 (337) 948-3033 | |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS | |
TIME | 8:00 a.m., Central time, Tuesday, May |
PLACE |
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ITEMS OF BUSINESS | (1) To elect two directors for a three-year term expiring in (2)
To ratify the appointment of Castaing, Hussey & Lolan, LLC, as our independent registered public accounting firm for the fiscal year ending December 31,
To transact such other business, as may properly come before the meeting or at any adjournment thereof. We are not aware of any other such business. |
RECORD DATE | Holders of Catalyst Bancorp common stock of record at the close of business on March |
ANNUAL REPORT | Our |
PROXY VOTING | It is important that your shares be represented and voted at the meeting. You can vote your shares by completing and returning the proxy card or voting instruction form sent to |
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| BY ORDER OF THE BOARD OF DIRECTORS
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Opelousas, Louisiana
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PROXY STATEMENT
OF
CATALYST BANCORP, INC.
PROXY STATEMENT
We are furnishing this proxy statement to holders of common stock of Catalyst Bancorp, Inc., the parent holding company of St. Landry Homestead Federal SavingsCatalyst Bank. Proxies are being solicited on behalf of our Board of Directors for use at the Annual Meeting of Shareholders to be held at our corporate headquarters located at 235 North Court Street, Opelousas, Louisiana 70570 on Tuesday, May 17, 202216, 2023 at 8:00 a.m., Central time, and at any adjournment thereof for the purposes set forth in the attached Notice of Annual Meeting of Shareholders. This proxy statement is first being mailed to shareholders on or about April 12, 2022.11, 2023.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 17, 2022. 16, 2023. This proxy statement and our 20212022 Annual Report are available on our website at at:
https://catalystbank.investorroom.com/annual-meeting.
What is the purpose of the annual meeting?
At our annual meeting, shareholders will act upon the matters outlined in the attached Notice of Annual Meeting of Shareholders, including the election of directors the adoption of the 2022 Stock Option Plan, the adoption of the 2022 Recognition and Retention Plan and Trust Agreement, the ratification of our independent registered public accounting firm, the adoption of a non-binding resolution to approve the compensation of our named executive officers and an advisory vote on the frequency of the non-binding resolution to approve the compensation of our named executive officers.firm. In addition, management may report on the performance of Catalyst Bancorp and respond to questions from shareholders.
Who is entitled to vote?
Only our shareholders of record as of the close of business on the voting record date for the annual meeting, March 28, 2022,27, 2023, are entitled to vote at the meeting. On the record date, we had 5,290,0005,058,612 shares of common stock issued and outstanding and no other class of equity securities outstanding. For each issued and outstanding share of common stock you own on the record date, you will be entitled to one vote on each matter to be voted on at the meeting, in person or by proxy.
How do I vote my shares?
After you have carefully read this proxy statement, indicate on your proxy card or voting instruction form how you want your shares to be voted. Then sign, date and mail your proxy card or voting instruction form in the enclosed prepaid return envelope or vote electronically over the Internet as soon as possible. You may also vote by telephone or the Internet if indicated on your proxy card or voting instruction form. This will enable your shares to be represented and voted at the annual meeting.
Voting instructions from participants in the Catalyst Bancorp, Inc. Employee Stock Ownership Plan and St. Landry Homestead Federal SavingsCatalyst Bank 401(k) Plan must be received by telephone or Internet by 11:59 p.m. Eastern time on Tuesday, May 10, 20229, 2023 or by mail to be received by May 10, 2022,9, 2023, to be used by the plan Trustees to determine the votes for plan shares.
If my shares are held in “street name”“street name” by my broker, could my broker automatically vote my shares?
Your broker may not vote on the election of directors the adoption of the 2022 Stock Option Plan, the adoption of the 2022 Recognition and Retention Plan and Trust Agreement, the proposal to adopt a non-binding resolution to approve the compensation of our named executive officers, or the advisory vote on the frequency of the non-binding resolution to approve the compensation of our named executive officers if you do not furnish instructions for such proposals.proposal. You should use the voting instruction form or broker card provided by the institution that holds your shares to instruct your broker to vote your shares or else your shares may not be voted or may be considered “broker non-votes.”
Your broker may vote in his or her discretion on the ratification of the appointment of our independent registered public accounting firm if you do not furnish instructions. If your broker votes in his or her discretion on proposal fourtwo and you did not provide instructions for proposalsproposal one, two, three, five or six, then your shares will be considered “broker non-votes” on proposals one, two, three, five or six.proposal one.
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Can I attend the meeting and vote my shares in person?
All shareholders are invited to attend the annual meeting. Shareholders of record can vote in person at the annual meeting. If your shares are held in “street name,” then you are not the shareholder of record and you must ask your broker or other nominee about how you can vote at the annual meeting.
Can I change my vote after I return my proxy card?
Yes. If you are a shareholder of record, there are three ways you can change your vote or revoke your proxy after you have sent in your proxy card.
● | First, you may complete and submit a new proxy card. Any earlier proxies will be revoked automatically. |
● | Second, you may send a written notice to the Secretary of Catalyst Bancorp, Inc., Mr. Ted D. Bellard, Corporate Secretary, Catalyst Bancorp, Inc., 235 North Court Street, Opelousas, Louisiana 70570, in advance of the meeting stating that you would like to revoke your proxy. |
● | Third, you may attend the annual meeting and vote in person. Any earlier proxy will be revoked. However, attending the annual meeting without voting in person will not revoke your proxy. |
If your shares are held in street name and you have instructed a broker or other nominee to vote your shares, you must follow directions you receive from your broker or other nominee to change your vote.
What constitutes a quorum?
The presence at the annual meeting, in person or by proxy, of the holders of a majority of the votes that all shareholders are entitled to cast on a particular matter to be acted upon at the annual meeting will constitute a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of votes considered to be present at the meeting.
What are the Board of Directors’Directors’ recommendations?
The recommendations of the Board of Directors are set forth under the description of each proposal in this proxy statement. In summary, the Board of Directors recommends that you vote (i) FOR the nominees for director described herein, (ii) FOR adoption of the 2022 Stock Option Plan, (iii) FOR adoption of the 2022 Recognition and Retention Plan and Trust Agreement, (iv)(ii) FOR ratification of the appointment of Castaing, Hussey & Lolan, LLC as our independent registered public accounting firm for the year ending December 31, 2022, (v) FOR approval of the non-binding resolution to approve the compensation of our named executive officers and (vi) for THREE (3) YEARS on the advisory vote on the frequency of the non-binding resolution to approve the compensation of our named executive officers.
2023.
The proxy solicited hereby, if properly signed and returned to us and not revoked prior to its use, will be voted in accordance with your instructions contained in the proxy. If no contrary instructions are given, each proxy signed and received will be voted in the manner recommended by the Board of Directors and, upon the transaction of such other business as may properly come before the meeting, in accordance with the best judgment of the persons appointed as proxies. Proxies solicited hereby may be exercised only at the annual meeting and any adjournment of the annual meeting and will not be used for any other meeting.
What vote is required to approve each item?
Directors are elected by a plurality of the votes cast with a quorum, a majority of the outstanding shares entitled to vote represented in person or by proxy, present. The two persons who receive the greatest number of votes of the holders of common stock represented in person or by proxy at the annual meeting will be elected directors. The affirmative vote of a majority of the total shares outstanding and entitled to vote at the annual meeting is required for approval of the proposals to adopt the 2022 Stock Option Plan and adopt the 2022 Recognition and Retention Plan and Trust Agreement. The affirmative vote of a majority of the votes cast by shareholders entitled to vote at the annual meeting is required for the approval of the proposal to ratify the appointment of our independent registered public accounting firm for the year ending December 31, 20222023. Abstentions and for approvalbroker non-votes are considered in determining the presence of a quorum, but will not affect the proposal to adopt the non-binding resolution to approve the compensation of our named executive officers. The frequency of the advisory vote on the non-binding resolution to approve the compensation of our named executive officers receiving the greatest number of votes (either three years, two years or one year) will be the frequency that shareholders approve.
Because of the required vote on the proposals to adopt the 2022 Stock Option Plan and 2022 Recognition and Retention Plan and Trust Agreement, abstentions will have the same effect as a vote against these proposals. For the same reason, the failure of any Catalyst Bancorp shareholder to vote by proxy or in personbe considered at the annual meeting will also have the effect of a vote against the proposals to adopt the 2022 Stock Option Plan and the 2022 Recognition and Retention Plan and Trust Agreement.Annual Meeting.
Election of Directors (Proposal One)
Our Articles of Incorporation provide that the Board of Directors will be divided into three classes as nearly equal in number as the then total number of directors constituting the Board of Directors permits. The directors are elected by our shareholders for staggered terms, and until their successors are elected and qualified. At the annual meeting, shareholders of Catalyst Bancorp will be asked to elect one class of directors, consisting of two directors, for a three-year term expiring in 2025,2026, and until their successors are elected and qualified.
Our Nominating and Corporate Governance Committee has recommended the re-election of Messrs. KidderLafleur and KleiserScruggins as directors. No director is related to any other director or executive officer by first cousin or closer. Each nominee and each director whose term continues currently serves as a director of Catalyst Bancorp and its subsidiary, St. Landry Homestead Federal SavingsCatalyst Bank.
Unless otherwise directed, each proxy card signed and returned by a shareholder will be voted for the election of the nominees for director listed in the table below. If any person named as a nominee should be unable or unwilling to stand for election at the time of the annual meeting, the proxies will nominate and vote for any replacement nominee or nominees recommended by our Board of Directors. At this time, the Board of Directors knows of no reason why any of the nominees listed in the table below may not be able to serve as a director if elected.
The tables below and on the following page present information concerning the nominees for director and each director whose term continues, including tenure as a director. Terms as directors for all directors include service as a director of St. Landry Homestead Federal SavingsCatalyst Bank prior to the formation of Catalyst Bancorp in 2021. Ages are reflected as of March 28, 2022.27, 2023.
Nominees for Director for a Three-Year Term Expiring in 20252026
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The Board of Directors recommends that you vote FOR election
of the nominees for Director.
Directors Whose Terms Are Continuing
Directors Whose Terms Expire in 2023
| Age and Principal Occupation During the Past Five Years/
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Frederick R. Lafleur | | Director. Retired CPA. President and Chief Executive Officer of Savoie’s Sausage & Food Products, Inc. (“Savoie’s”) since October 2019. Prior thereto, Executive Vice President and Chief Operations Officer of Savoie’s from January 2016 through September 2019. Age |
Mr. Lafleur brings management and leadership experience to the board as the Chief Executive Officer of a food processing and distribution company located in Opelousas, Louisiana. Mr. Lafleur serves on the Board of Directors of Vision St. Landry. He is a member of the American Institute of | ||
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Matthew L. Scruggins | | Director. Supervisor of Personnel, St. Landry Parish School System since 2009. Age |
Mr. Scruggins brings oversight experience to the board as supervisor of employees and staffing and oversight of payroll and benefits for the local St. Landry Parish School System. Mr. Scruggins is a member of the Louisiana |
The Board of Directors recommends that you vote FOR election
of the nominees for Director.
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Directors Whose Terms Are Continuing
Directors Whose Terms Expire in 2024
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Name | Age and Principal Occupation During the Past Five Years/
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Ted D. Bellard | | Director and Secretary. President and owner of Targil, Inc., a seasoning supply company located in Opelousas, Louisiana since July |
Mr. Bellard brings business and management expertise to the board as the owner of local businesses in the communities served by | ||
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Craig C. LeBouef, MBA, CPA, CFP | | Director. Partner of Going, Sebastien, Fisher & |
Mr. LeBouef brings to the board a broad knowledge in accounting and financial management and expertise in investment management and personal financial planning. Mr. LeBouef serves on the Board of Directors and was past President of the St. Landry-Evangeline United Way. He is a member of the American Institute of CPAs and the Society of Louisiana CPAs. He is a current member and past President of the Rotary Club of Opelousas. Director of | ||
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Joseph B. Zanco, CPA, CIA | | Director, President and Chief Executive Officer of |
Mr. Zanco brings public company experience to the board as a former Chief Financial Officer of a publicly traded company headquartered in Lafayette, Louisiana. Mr. Zanco serves on the Board of |
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Directors Whose Terms Expire in 2025
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Name | Age and Principal Occupation During the Past Five Years/ | |
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Todd A. Kidder | | Chairman of the Board of Catalyst Bank since December 2016. Engineering Technician, Louisiana State Department of Transportation since July 1987. Age 58. Mr. Kidder brings management expertise to the board as a utility relocation specialist responsible for coordinating the relocation of utilities in connection with state highway projects in an eight Parish area in Louisiana. Mr. Kidder serves as a committee member of the Opelousas General Health System Foundation and the Opelousas Chapter of Ducks Unlimited. Director of Catalyst Bank since 2009. |
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Kirk E. Kleiser | | Director. Senior Managing Principal and Founder of K & G On the Geaux LLC and Kleiser Enterprises, Inc., convenience food stores located in Upper Lafayette, Louisiana. Managing Member of All in G.S. LLC, Real Estate Holding Company. Age 67. Mr. Kleiser brings to the board experience in business planning and small business development as well as knowledge of the communities served by Catalyst Bank. Mr. Kleiser is a member of the Carencro Business Association and is a past member of the Chevron National Dealer Council. Director of Catalyst Bank since January 2021. |
Executive Officers Who Are Not Also Directors
Set forth below is information with respect to the principal occupations during the last five years for the fourthree executive officers of Catalyst Bancorp and/or our subsidiary, St. Landry Homestead Federal SavingsCatalyst Bank, who do not also serve as directors of Catalyst Bancorp. Ages are reflected as of March 28, 2022.
27, 2023.
Jacques L. J. Bourque, CPA, MBA, age 29,30, has served as Chief Financial Officer of St. Landry Homestead Federal SavingsCatalyst Bank and Catalyst Bancorp since February 2022. Mr. Bourque joined the company as Treasurer in October 2021. Previously, Senior Accountant for Home Bank, N.A., Lafayette, Louisiana, from October 2018 to October 2021. Prior thereto, Staff Auditor for Postlethwaite &
Netterville from June 2018 to October 2018, and Internal Auditor for Home Bank, N.A. from January 2017 to May 2018.
Jutta A. Codori, age 59, has served asSenior Vice President and Senior Administrative Officer of St. Landry Homestead Federal Savings Bank since February 2022. Previously, Senior Vice President of Deposit Operations and Chief Financial Officer of St. Landry Homestead Federal Savings Bank from October 2006 to February 2022. Prior thereto, Assistant Vice President of Teche Federal Savings Bank, a subsidiary of Teche Holding Co. and Assistant Vice President and Chief Financial Officer of First Federal Savings and Loan, a subsidiary of St. Landry Financial Co. from 1997 to 2004.
Simone S. Perry, age 4950 has served as Senior Vice President and Chief Credit Officer of St. Landry Homestead Federal SavingsCatalyst Bank since April 2021. Previously, Senior Vice President and Commercial Underwriting Manager for Iberiabank, Lafayette, Louisiana, from October 2009 through March 2021. Prior thereto, Business Lender, Commercial Underwriter and Portfolio Manager for Whitney Bank in Lafayette and Baton Rouge, Louisiana from October 1999 through October 2009.
Amanda Quebedeaux, age 48,49, has served as Senior Vice President and Director of Operations of St. Landry Homestead Federal SavingsCatalyst Bank since February 2022. Previously, Vice President and Director of Operations of St. Landry Homestead Federal SavingsCatalyst Bank since June 2021. Prior thereto, Vice President, Client Solutions System Administrator Manager, Hancock Whitney Bank and Senior Vice President, Director of Loan Operations, MidSouth Bank, a subsidiary of MidSouth Bancorp from 2004 to October 2018.
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Committees and Meetings of the Board of Directors
The Board of Directors of Catalyst Bancorp has established a Compensation Committee, Audit Committee and Nominating and Corporate Governance Committee. During the fiscal year ended December 31, 2021,2022, the Board of Directors of Catalyst Bancorp held eight meetings. No directorMr. Bellard attended fewer than 75% of the total number of Board meetings and committee meetings on which he served that were held during this period. The Board of Directors has determined that a majority of its members are independent directors as “independent director” is defined in the Nasdaq listing standards. Our independent directors are Messrs. Kidder, Bellard, Kleiser, Lafleur, LeBouef and Scruggins.
Audit Committee.The primary purpose of the Audit Committee, as set forth in the committee’s charter, is to assist the Board of Directors in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices. The Audit Committee reviews with management and the independent auditors the systems of internal control, reviews the annual financial statements, including the Annual Report on Form 10-K, and monitors our adherence in accounting and financial reporting to generally accepted accounting principles. The Board of Directors has identified Mr. LeBouef as a member of the Audit Committee who meets the Securities and Exchange Commission’s definition of audit committee financial expert. The Board of Directors believes that all of the Audit Committee members have sufficient expertise to fulfill their fiduciary duties.
The Audit Committee meets on an as needed basis and met fivefour times in 2021.2022. The Board of Directors and the Audit Committee adopted an Audit Committee Charter which is available on our website at www.stlandryhomestead.comwww.catalystbank.com under the “Investor Relations” heading.
Compensation Committee. The Compensation Committee reviews the compensation of our executive officers and did not meetmet four times in 2021.2022. No member of the Compensation Committee is a current or former officer or employee of Catalyst Bancorp or St. Landry Homestead Federal SavingsCatalyst Bank. The Compensation Committee has adopted a written charter which is available on our website at www.stlandryhomestead.comwww.catalystbank.com under the “Investor Relations” heading.
Nominating and Corporate Governance Committee. Nominations for director of Catalyst Bancorp are reviewed by the Nominating and Corporate Governance Committee and submitted to the full Board of Directors for approval.The Nominating and Corporate Governance Committee did not meet during 2021.2022. The Charter of the Nominating and Corporate Governance Committee is available on our website at www.stlandryhomestead.comwww.catalystbank.com under the “Investor Relations” heading.
Committee Membership. The following table sets forth the membership of the committees as of the date of this proxy statement.
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Director | | Audit | | Compensation | | Corporate Governance |
Todd A. Kidder | * | * | ** | |||
Kirk E. Kleiser | * | |||||
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Frederick R. Lafleur | * | |||||
Craig C. LeBouef | ** | * | ||||
Matthew L. Scruggins | * | ** |
* | Member |
** | Chair |
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* Member6
** ChairTable of Contents
Our Board of Directors is led by a Chairman selected by the Board from time to time. Presently, Mr. Kidder serves as Chairman of the Board. Other than Mr. Zanco, our President and Chief Executive Officer, all of our other directors are independent.
The Board of Directors has determined that the separation of the offices of Chairman of the Board and President enhances Board independence and oversight. Further, the separation of the Chairman of the Board permits the President and Chief Executive Officer to better focus on his responsibilities of managing the daily operations of Catalyst Bancorp and St. Landry Homestead Federal SavingsCatalyst Bank, enhancing shareholder value and expanding and strengthening our franchise while allowing the Chairman of the Board to lead the Board of Directors in its fundamental role of providing independent oversight and advice to management. Mr. Kidder is an independent director under the rules of the Nasdaq Stock Market.
Board’sBoard’s Role in Risk Oversight
Risk is inherent with every business, particularly financial institutions. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, cybersecurity risk and reputational risk. Management is responsible for the day-to-day management of the risks Catalyst Bancorp and St. Landry Homestead Federal SavingsCatalyst Bank face, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. The Board of Directors regularly discusses with management our major risk exposures, their potential impact on our business and steps taken to address them.
Members of senior management regularly attend meetings of the Board of Directors and address any questions or concerns raised by the Board on risk management or other matters. The Board’s risk oversight function is carried out through, among other factors, its review and approval of various policies and procedures, such as St. Landry Homestead Federal SavingsCatalyst Bank’s lending and investment policies, ratification or approval of investments and loans exceeding certain thresholds, and regular review of risk elements such as interest rate risk exposure, liquidity and problem assets. In addition, members of management keep the Board informed of the state of our cybersecurity posture and any developments or incidents related to our cybersecurity exposure.
Directors’Directors’ Attendance at Annual Meetings
Although we do not have a formal policy regarding attendance by members of the Board of Directors at annual meetings of shareholders, we expect that our directors will attend, absent a valid reason for not doing so. This will beSix of our firstseven directors attended our annual meeting of shareholders held inon May 17, 2022.
The Nominating and Corporate Governance Committee’s charter sets forth certain criteria the committee may consider when recommending individuals for nomination to the Board including:
● | ensuring that the Board of Directors, as a whole, is diverse by considering: |
o | individuals with various and relevant career experience; |
o | relevant technical skills; |
o | industry knowledge and experience; |
o | financial expertise (including expertise that could qualify a director as a “financial expert,” as that term is defined by the rules of the U.S. Securities and Exchange Commission); and |
o | local or community ties, and |
● | minimum individual qualifications, including: |
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o | mature judgment; |
o | familiarity with our business and industry; |
o | independence of thought; and |
o | an ability to work collegially. |
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The committee also may consider the extent to which the candidate would fill a present need on the Board of Directors. The Nominating and Corporate Governance Committee will also consider candidates for director suggested by other directors, as well as our management and shareholders. A shareholder who desires to recommend a prospective nominee for the Board of Directors should notify our Corporate Secretary in writing providing whatever supporting material the shareholder considers appropriate. Any shareholder wishing to make a nomination must follow our procedures for shareholder nominations which are described under “Shareholder Proposals, Nominations and Communications with the Board of Directors.”
Director Compensation Table. The following table sets forth total compensation paid to each director who served as a director of Catalyst Bancorp during 2021,2022, other than Mr. Zanco whose compensation is set forth below under “Executive Compensation.”
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| | | Fees Earned or Paid | | | Stock | | | Option | | | All Other | | | |
Name | | | in Cash | | | Awards (1) | | | Awards (1) | | | Compensation (2) | | | Total |
Todd A. Kidder | | $ | 39,000 | | $ | 112,571 | | $ | 92,215 | | $ | 2,275 | | $ | 246,061 |
Ted D. Bellard | |
| 39,000 | | | 112,571 | | | 92,215 | |
| 690 | |
| 244,476 |
Kirk E. Kleiser | |
| 31,200 | | | 112,571 | | | 92,215 | |
| — | |
| 235,986 |
Frederick R. Lafleur | |
| 31,200 | | | 112,571 | | | 92,215 | |
| 788 | |
| 236,774 |
Craig C. LeBouef | |
| 36,000 | | | 112,571 | | | 92,215 | |
| 788 | |
| 241,574 |
Matthew L. Scruggins | |
| 36,000 | | | 112,571 | | | 92,215 | |
| 2,751 | |
| 243,537 |
(1) | These amounts represent the aggregate grant date fair value of stock awards and option grants during the year ended December 31, 2022, in accordance with FASB ASC Topic 718. The assumptions used for calculating the grant date fair value are set forth in Note 14 of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. These amounts do not represent actual amounts paid to or realized by our directors for these awards during fiscal year 2022. As of December 31, 2022, each of our non-employee directors held the following aggregate number of unvested stock awards and outstanding options: |
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| | Aggregate Number of Equity Awards | ||
| | Outstanding at Fiscal Year End | ||
Name | | Stock Awards | | Option Awards |
Todd A. Kidder | | 8,464 | | 21,160 |
Ted D. Bellard. | | 8,464 | | 21,160 |
Kirk E. Kleiser. | | 8,464 | | 21,160 |
Frederick R. Lafleur | | 8,464 | | 21,160 |
Craig C. LeBouef | | 8,464 | | 21,160 |
Matthew L. Scruggins | | 8,464 | | 21,160 |
(2) | Includes premiums paid for supplemental health insurance benefits for all directors other than Mr. Kleiser and premiums paid for long term care coverage for Messrs. Kidder and Scruggins (the Bank pays premiums for supplemental long term healthcare insurance for non-employee directors whose services commenced prior to 2015). |
Name | Board/Committee Fees Earned or Paid in Cash | All Other Compensation (1) | Total | |||
Todd A. Kidder | $39,000 | $12,275 | $51,275 | |||
Ted D. Bellard | 39,000 | 10,690 | 49,690 | |||
Kirk E. Kleiser | 31,200 | 10,000 | 41,200 | |||
Frederick R. Lafleur | 31,200 | 10,788 | 41,988 | |||
Craig C. LeBouef | 34,800 | 10,788 | 45,588 | |||
Matthew L. Scruggins | 36,000 | 12,751 | 48,751 |
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Narrative to Director Compensation Table. Each director of St. Landry Homestead Federal SavingsCatalyst Bank currently receives $2,000 monthly, regardless of meeting attendance, and $600 and $400 per month for loan and audit committee membership, respectively. Directors receiveddid not receive a discretionary annual bonus of $10,000 in February 2022 for the 20212022 fiscal year. The Chairman and Secretary receive an additional $250 per month. Each of the current directors of Catalyst Bancorp also serves as a director of St. Landry Homestead Federal SavingsCatalyst Bank. No additional director fees are being paid to directors for their service on the Catalyst Bancorp Board of Directors.
In September 2022, members of the Board of Directors received stock options and stock awards under the Catalyst Bancorp, Inc. 2022 Stock Option Plan and the Catalyst Bancorp, Inc. 2022 Recognition and Retention Plan and Trust Agreement. Each of our non-employee directors received 21,160 stock options and 8,464 stock awards. All of the September 2022 stock options and stock awards are vesting at a rate of 20% per year commencing on the one-year anniversary of the date of grant, September 1, 2023.
Transactions With Related Persons
St. Landry Homestead Federal SavingsCatalyst Bank offers extensions of credit to its directors, officers and employees as well as members of their immediate families for the financing of their primary residences and other purposes. These loans are made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to St. Landry Homestead Federal SavingsCatalyst Bank, and none of such loans involve more than the normal risk of collectability or present other unfavorable features.
Section 22(h) of the Federal Reserve Act generally provides that any credit extended by a savings institution, such as St. Landry Homestead Federal SavingsCatalyst Bank, to its executive officers, directors and, to the extent otherwise permitted, principal shareholder(s), or any related interest of the foregoing, must be on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by the savings institution with non-affiliated parties; unless the loans are made pursuant to a benefit or compensation program that (i) is widely available to employees of the institution and (ii) does not give preference to any director, executive officer or principal shareholder, or certain affiliated interests of either, over other employees of the savings institution, and must not involve more than the normal risk of repayment or present other unfavorable features.
The following table shows the compensation paid by St. Landry Homestead Federal SavingsCatalyst Bank to its President and Chief Executive Officer and our other two otherhighest paid executive officers whose compensation exceeded $100,000 for the years ended December 31, 20212022 and 2020.2021.
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Name and Principal Position | | Year | | Salary | | Bonus | | Awards (1) | | Options (1) | | Compensation (2) | | Total | ||||||
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Joseph B. Zanco |
| 2022 | | $ | 300,000 | | $ | - | | $ | 281,428 | | $ | 230,538 | | $ | 95,133 | | $ | 907,099 |
President and Chief Executive Officer | | 2021 | | | 267,538 | | | 100,000 | | | - | | | - | | | 83,206 | | | 450,744 |
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Simone S Perry | | 2022 | |
| 160,000 | |
| 12,500 | |
| 112,571 | |
| 92,215 | |
| 21,259 | |
| 398,545 |
Senior Vice President and Chief Credit Officer | | 2021 | |
| 113,846 | |
| 40,000 | |
| - | |
| - | |
| 3,051 | |
| 156,897 |
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Amanda Quebedeaux | | 2022 | |
| 147,000 | |
| 15,000 | |
| 112,571 | |
| 92,215 | |
| 19,627 | |
| 386,413 |
Senior Vice President and | | 2021 | |
| 76,327 | |
| 15,000 | |
| - | |
| - | |
| 2,016 | |
| 93,343 |
(1) | Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards of restricted stock and grants of stock options during the 2022 fiscal year. The assumptions used in valuing the restricted stock awards and stock option awards are set forth in Note 14 to the Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2022. |
(2) | All other compensation does not include amounts attributable to other miscellaneous benefits. The costs to Catalyst Bank of providing such benefits during fiscal 2022 did not exceed $10,000 for any individual officer. Includes for Mr. Zanco, an annual vehicle allowance of $18,000, life insurance premiums of $25,600 and reimbursement of taxes of $16,043 under his Restricted Executive Benefit Agreement. Includes the fair market value, based on a closing price of $12.70 on December 31, 2022, of the shares of Catalyst Bancorp common stock allocated to the employee stock ownership plan accounts of all executive officers, and life insurance premiums, AD&D and matching contributions under Catalyst Bank’s 401(k) retirement plan. |
Name and Principal Position | Year | Salary | Bonus | All Other Compensation (1) | Total | |||||
Joseph B. Zanco President and Chief Executive Officer (since August 17, 2020) | 2021 2020 | $267,538 90,000 | $100,000 54,500 | $83,206 44,661 | $450,744 189,161 | |||||
Jutta A. Codori Senior Administrative Officer (Chief Financial Officer through January 2022) | 2021 2020 | 108,334 108,334 | 17,500 5,000 | 17,371 13,559 | 143,205 126,893 | |||||
Simone S. Perry Chief Credit Officer (since April 5, 2021) | 2021 2020 | 113,846 -- | 40,000 -- | -- -- | 153,846 -- |
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(1) All other compensation does not include amounts attributable to other miscellaneous benefits. The costs to St. Landry Homestead Federal Savings BankTable of providing such benefits during fiscal 2021 did not exceed $10,000 for any individual officer. Includes for Mr. Zanco, an annual vehicle allowance of $18,000, life insurance premiums of $25,600 and reimbursement of taxes of $17,107 under his Restricted Executive Benefit Agreement. Includes the fair market value, based on a closing price of $13.67 on December 31, 2021, of the shares of Catalyst Bancorp common stock allocated to the employee stock ownership plan accounts of Mr. Zanco and Ms. Codori, and life insurance premiums, AD&D and matching contributions under St. Landry Homestead Federal Savings Bank’s 401(k) retirement plan.Contents
Narrative to Summary Compensation Table.The board of directors approved Mr. Zanco’s base salary of $260,000 in 2020, which increased to $300,000 after completion of the conversion in October 2021. The dollar amount of total salary was based on the board’s perception of the local market for chief executive officer compensation and was intended to ensure that St. Landry Homestead Federal SavingsCatalyst Bank remained competitive in attracting and retaining a qualified chief executive officer. St. Landry Homestead Federal SavingsCatalyst Bank does not maintain a written bonus plan, although we have historically paid bonuses to our employees. Mr. Zanco received a $100,000 bonus in 2021 upon completion of the conversion pursuant to the terms of his employment agreement. Mr. Zanco’s Restricted Executive RetirementBenefit Agreement provides that St. Landry HomesteadCatalyst Bank pays the annual premium of $25,600 plus reimbursement of the related tax obligation on a $750,000 (face amount) life insurance policy owned by Mr. Zanco. Mr. Zanco will become vested in the cash value of the policy over 10 years commencing on December 31, 2024. Mr. Zanco is also provided with a monthly vehicle allowance of $1,500 and health insurance premium for Mr. Zanco and his eligible family members.
In September 2022, Mr. Zanco received stock options and stock awards under the Catalyst Bancorp, Inc. 2022 Stock Option Plan and the Catalyst Bancorp, Inc. 2022 Recognition and Retention Plan and Trust Agreement. Mr. Zanco received 52,900 stock options and 21,160 stock awards. All of the September 2022 stock options and stock awards are vesting at a rate of 20% per year commencing on the one-year anniversary of the date of grant, September 1, 2023.
Outstanding Equity Awards at Fiscal Year-End
The table below sets forth outstanding equity awards at December 31, 2022 to our named executive officers.
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| | Options Awards (1) | | Stock Awards | ||||||||||
| | Number of Securities | | | | | | | Number of Shares | | Market Value of | |||
| | Underlying | | | | | Options | | or Units of Stock | | Shares of Units of | |||
| | Unexercised Option | | Exercise | | Expiration | | That Have not | | Stock That Have | ||||
Name |
| Exercisable |
| Unexercisable |
| Price |
| Date |
| Vested (2) |
| Not Vested (3) | ||
Joseph B. Zanco | | — | | 52,900 | | $ | 13.30 | | 09/01/2032 | | 21,160 | | $ | 268,732 |
Simone S. Perry | | — | | 21,160 | | | 13.30 | | 09/01/2032 | | 8,464 | | | 107,493 |
Amanda Quebedeaux | | — | | 21,160 | | | 13.30 | | 09/01/2032 | | 8,464 | | | 107,493 |
(1) | Granted pursuant to Catalyst Bancorp, Inc. 2022 Stock Options Plan and vesting at a rate of 20% per year commencing on September 1, 2023. |
(2) | Granted Pursuant to the Catalyst Bancorp, Inc. 2022 Recognition and Retention Plan and Trust Agreement and vesting at a rate of 20% per year commencing on September 1, 2023. |
(3) | Calculated by multiplying the closing market price of our common stock on December 31, 2022, which was $12.70, by the applicable number of shares of common stock underlying the executive officer’s stock award. |
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St. Landry Homestead Federal SavingsCatalyst Bank has entered into an employment agreement with Mr. Zanco. Pursuant to the agreement, Mr. Zanco serves as President and Chief Executive Officer for a term of three years ending August 17, 2023. Prior to the expiration of the term of the agreement, the board of directors will review the agreement to determine whether to extend the term of the employment agreement for three additional years or such other time period mutually agreed upon. The employment agreement provides for an initial base salary of $260,000, which increased to $300,000 after completion of the conversion in October 2021. Mr. Zanco’s base salary may be increased at the discretion of the Board of Directors of St. Landry Homestead Federal SavingsCatalyst Bank.
The employment agreement provided that St. Landry Homestead Federal SavingsCatalyst Bank will offer Mr. Zanco the maximum allocation allowed for stock options and restricted stock awards under any established stock-based benefit plan (currently 25% of the stock compensation pools). In addition to life insurance benefits applicable for all employees, Mr. Zanco receives additional life insurance of $500,000 payable to his spouse or other beneficiary upon his death. The employment agreement provides that Mr. Zanco will receive a supplemental benefit of $750,000 vesting over 15 years.
years pursuant to his Restricted Executive Benefit Agreement.
The employment agreement is terminable with or without cause by St. Landry Homestead Federal SavingsCatalyst Bank. Mr. Zanco has no right to compensation or other benefits pursuant to the employment agreement for any period after termination for cause, as defined in the agreement. The employment agreement provides that in the event of an involuntary termination of employment (including a voluntary termination by Mr. Zanco as a result of a material breach of the agreement by St. Landry Homestead Federal SavingsCatalyst Bank or for “good reason”, including a change in the executive’s position, salary or duties without his consent), Mr. Zanco would be entitled to (1) a lump sum cash severance payment which is equal to twelve months of his base salary as of the date of termination, subject to Mr. Zanco executing a release of any claims against St. Landry HomesteadCatalyst Bank or its affiliates and (2) continued health insurance coverage until the earlier of twelve months or the date he receives substantially similar benefits from another employer.
The employment agreement provides that if Mr. Zanco’s employment terminates without cause or with good reason on the effective date of a change in control, as defined in the agreement, or within 30 calendar days after a change in control, then Mr. Zanco would be entitled to (1) a lump sum cash severance payment equal to 36 months of the greater of his base salary at the time of the change in control or the date of his termination and (2) continued health insurance coverage until the earlier of 36 months or the date he receives substantially similar benefits from another employer. If the agreement terminates as a result of Mr. Zanco’s death, his estate or beneficiary will be paid his base salary for twelve weeks and continued health coverage for his family over the same period.
Retirement benefits are an important element of a competitive compensation program for attracting senior executives, especially in the financial services industry. Our executive compensation program currently includes (i) a 401(k) profit sharing plan which enables our employees to supplement their retirement savings with elective deferral contributions and permits matching and discretionary contributions by us, and (ii) an employee stock ownership plan that allows participants to accumulate retirement benefits in the form of employer stock at no current cost to the participant.
401(k) Plan. St. Landry Homestead Federal SavingsCatalyst Bank sponsors the St. Landry Homestead Federal SavingsCatalyst Bank 401(k) Plan, which is a qualified, tax-exempt defined contribution plan with a salary deferral feature under Section 401(k) of the Internal Revenue Code. An employee of St. Landry Homestead Federal SavingsCatalyst Bank is eligible to become a participant in the plan after completing one month of employment in which the employee completed at least 83.3 hours of service. Eligible employees are entitled to enter the 401(k) plan on a monthly basis.
Under the 401(k) plan, during 20212022 participants were permitted to make salary deferral contributions (in whole percentages or specific dollar amounts) in any amount up to 100% of their plan salarypercentages) up to the maximum percentage of compensation allowed by law ($19,50020,500 for 2021)2022). Participants who are age 50 or older are permitted to make “catch up” contributions to the plan up to $6,500 (for 2021,2022, as indexed annually). During 2021, St. Landry Homestead Federal Savings2022, Catalyst Bank contributed a matching contribution amount equalup to 50%4% of the participant’s elective deferral. St. Landry Homestead Federal Savings Bank may also make a discretionary, fully-vested profit sharing contribution to the Plan.annual compensation.
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Upon termination of employment, including following retirement or disability, a participant may withdraw his or her vested account balance or defer commencement of the receipt of benefits until April 1 of the calendar year following the later of (i) the calendar year in which the participant reaches age 72 if the participant was born before 1951, age 73 for those born during the period January 1, 1951 through and including December 31, 1959, or age 75 for those born on or after January 1, 1960, or (ii) the calendar year in which he or she retires. Normal retirement age under the 401(k) plan is age 65. A participant may elect a single lump sum payment or annual installments over a period not in excess of the participant’s remaining life expectancy. If a participant dies prior to receipt of the entire value of his or her 401(k) plan account, the beneficiary can elect from among the benefit payment forms available under the 401(k) plan, including a lump sum distribution, installment payments and life expectancy distributions.
Employee Stock Ownership Plan.Catalyst Bancorp has established an employee stock ownership plan for our employees who have been credited with at least 1,000 hours of service during a 12-month period. As part of the conversion offering completed in October 2021, the employee stock ownership plan purchased 8.0% of the common stock issued in the conversion, or 423,200 shares, from Catalyst Bancorp utilizing a loan equal to 100% of the aggregate purchase price of the common stock acquired by our employee stock ownership plan. The loan to the employee stock ownership plan, which has a term of 20 years, is being repaid principally from St. Landry Homestead Federal SavingsCatalyst Bank’s contributions to the employee stock ownership plan, and the collateral for the loan is the common stock purchased by the employee stock ownership plan. We may, in any plan year, make additional discretionary contributions for the benefit of plan participants in either cash or shares of common stock, which may be acquired through the purchase of outstanding shares in the market or from individual shareholders, upon the original issuance of additional shares by Catalyst Bancorp or upon the sale of treasury shares by Catalyst Bancorp.
Shares purchased by our employee stock ownership plan with the loan proceeds are held in a suspense account and released for allocation to participants on a pro rata basis as debt service payments are made. Shares released from the employee stock ownership plan are allocated to each eligible participant’s employee stock ownership plan account based on the ratio of each such participant’s compensation, consisting of salary and bonus, to the total of such compensation of all eligible employee stock ownership plan participants. Forfeitures may be used for several purposes such as the payment of expenses or be reallocated among remaining participating employees. Account balances of participants in the employee stock ownership plan will be 100% vested after five years of service. Credit is given for years of service with St. Landry Homestead Federal SavingsCatalyst Bank prior to adoption of the employee stock ownership plan. In the case of a “change in control,” as defined in the employee stock ownership plan, however, participants will become immediately fully vested in their account balances. Participants will also become fully vested in their account balances upon death, disability or retirement. Benefits may be payable upon retirement or separation from service.
General
On March 23, 2022, the Board of Directors adopted the 2022 Stock Option Plan, which is designed to attract and retain qualified officers, employees and non-employee directors, provide officers, employees and non-employee directors with a proprietary interest in Catalyst Bancorp as an incentive to contribute to our success and reward officers, employees and non-employee directors for outstanding performance. The Stock Option Plan provides for the grant of incentive stock options intended to comply with the requirements of Section 422 of the Internal Revenue Code and non-incentive or compensatory stock options. Options may be granted to our officers, employees and directors except that non-employee directors will be eligible to receive only awards of non-qualified options. The Board of Directors believes that adoption of the Stock Option Plan is in the best interest of Catalyst Bancorp and our shareholders. If shareholder approval is obtained, options to acquire shares of common stock will be awarded to officers, employees and non-employee directors of Catalyst Bancorp and the Bank with an exercise price no less than the fair market value of the common stock on the date of grant.
Description of the Stock Option Plan
The following description of the Stock Option Plan is a summary of its terms and is qualified in its entirety by reference to the Stock Option Plan, a copy of which is attached hereto as Appendix A.
Administration. The Stock Option Plan will be administered and interpreted by the Compensation Committee of the Company’s Board of Directors that is currently comprised of Messrs. Kidder, Kleiser and Scruggins.
Number of Shares Covered by the Stock Option Plan. A total of 529,000 shares of common stock have been reserved for future issuance pursuant to the Stock Option Plan, which is equal to 10.0% of the shares sold in the conversion offering. The Stock Option Plan provides that grants to each officer or employee and each non-employee director shall not exceed 25% and 5% of the shares of common stock available under the Stock Option Plan, respectively. Option grants made to non-employee directors in the aggregate may not exceed 30% of the number of shares available under the Stock Option Plan. In the event of a stock split, reverse stock split or stock dividend, the number of shares of common stock available under the Stock Option Plan, the number of shares to which any option grant relates and the exercise price per share under any option shall be adjusted to reflect such increase or decrease in the total number of shares of common stock outstanding.
Stock Options. Under the Stock Option Plan, the Board of Directors or the committee appointed by the Board will determine which employees, including officers, and non-employee directors will be granted options, whether such options will be incentive or compensatory options (in the case of options granted to employees), the number of shares subject to each option and the exercise price of each option.
Option Exercise Price. Under the Stock Option Plan, the per share exercise price of both an incentive and a compensatory stock option must be no less than the fair market value of a share of common stock on the date the option is granted (110% of fair market value in the case of incentive stock options granted to any individuals who beneficially own more than 10% of the issued and outstanding shares of Catalyst Bancorp’s common stock).
Vesting. Options will generally become vested and exercisable at a rate no more rapid than 20% per year, commencing one year from the date of grant. The right to exercise will be cumulative. However, no vesting may occur on or after a participant's employment or service with Catalyst Bancorp and all of our subsidiaries is terminated. All options granted to participants will become vested and exercisable in full on the effective date of a change in control.
Duration of Options. Each stock option or portion thereof will be exercisable at any time on or after it vests and remain exercisable until the earlier of either: (i) ten years after its date of grant or (ii) six (6) months after the date on which the optionee's employment or service terminates, unless the committee or the Board of Directors determines at the date of grant to extend such period of exercise for a period of up to three (3) years from such termination. Unless stated otherwise at the time an option is granted, (a) if an optionee terminates his employment or service with Catalyst Bancorp and our subsidiary companies as a result of disability or retirement without having fully exercised his options, the optionee will have one year following his termination due to disability or retirement to exercise such options, and (b) if an optionee terminates his employment or service with Catalyst Bancorp following a change in control of Catalyst Bancorp without having fully exercised his options, the optionee shall have the right to exercise such options during the earlier of (i) the remainder of the original ten-year term of the option or (ii) eighteen (18) months after the date on which employment or service terminates. However, failure to exercise incentive stock options within 90 days after the date on which the optionee's employment terminates may result in adverse tax consequences to the optionee. If an optionee dies while serving as an employee or a non-employee director or terminates employment or service as a result of disability or retirement and dies without having fully exercised his options, the optionee's executors, administrators, legatees or distributees of his estate will have the right to exercise such options during the one year period following his death. In no event may any option be exercisable more than ten years from the date it was granted. If any incentive stock options are granted to an individual who beneficially owns more than 10% of our outstanding common stock, the duration of such option cannot be more than five years from the date of grant, rather than ten years.
Transferability. Stock options generally are non-transferable except by will or the laws of descent and distribution, and during an optionee's lifetime, may be exercisable only by the optionee or his guardian or legal representative. However, an optionee who holds non-qualified options may transfer such options to his or her immediate family, including the optionee's spouse, children, stepchildren, parents, grandchildren and great grandchildren, or to a duly established trust for the benefit of one or more of these individuals. Options so transferred may thereafter be transferred only to the optionee who originally received the grant or to an individual or trust to whom the optionee could have initially transferred the option. Options which are so transferred will be exercisable by the transferee according to the same terms and conditions as applied to the optionee.
Forfeiture Provisions. The Stock Option Plan requires forfeiture of any stock options granted to optionees who are subject to automatic clawback under Section 304 of the Sarbanes-Oxley Act of 2002 if Catalyst Bancorp is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the federal securities laws as a result of misconduct. In addition, the committee may in its discretion specify in any stock option agreement that any optionee reimburse Catalyst Bancorp for any benefit or gain realized from any option in the event an accounting restatement reduces the value of the option had the results been properly reported.
Paying for Shares. Payment for shares purchased upon the exercise of options may be made (a) in cash or by check, (b) by delivery of a properly executed exercise notice, together with irrevocable instructions to a broker to sell the shares and then to properly deliver to Catalyst Bancorp the amount of sale proceeds to pay the exercise price, all in accordance with applicable laws and regulations or (c) if permitted by the committee or the Board of Directors, by delivering shares of common stock (including shares acquired pursuant to the previous exercise of an option) with a fair market value equal to the total purchase price of the shares being acquired pursuant to the option, by withholding some of the shares of common stock which were purchased upon exercise of an option or any combination of the foregoing.
Term of the Stock Option Plan. Unless sooner terminated, the Stock Option Plan shall continue in effect for a period of ten years from May 17, 2022, assuming approval of the Stock Option Plan by our shareholders on that date. Termination of the Stock Option Plan shall not affect any previously granted and outstanding options.
Federal Income Tax Consequences. Under current provisions of the Internal Revenue Code, the federal income tax treatment of incentive stock options and compensatory stock options is different. Regarding incentive stock options, an optionee who meets certain holding period requirements will not recognize income at the time the option is granted or at the time the option is exercised, and a federal income tax deduction generally will not be available to Catalyst Bancorp at any time as a result of such grant or exercise. An optionee, however, may be subject to the alternative minimum tax upon exercise of an incentive stock option. With respect to compensatory stock options, the difference between the fair market value of the shares on the date of exercise and the option exercise price generally will be treated as compensation income upon exercise, and Catalyst Bancorp will be entitled to a deduction in the amount of income so recognized by the optionee.
Section 162(m) of the Internal Revenue Code generally limits the deduction for certain compensation in excess of $1.0 million per year paid by a publicly traded corporation to its chief executive officer, its chief financial officer and the three other most highly compensated executive officers in any calendar year (“covered executives”), with covered executives reaming subject to Section 162(m) for all subsequent years.
The Board of Directors believes that the likelihood of any impact on Catalyst Bancorp from the deduction limitation contained in Section 162(m) of the Internal Revenue Code in the foreseeable future is remote at this time.
The above description of tax consequences under federal law is necessarily general in nature and does not purport to be complete. Moreover, statutory provisions are subject to change, as are their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws.
Accounting Treatment. Catalyst Bancorp will recognize the cost of services received in share-based payment transactions, including the Stock Option Plan, and measure the cost on the grant-date fair value of the award. That cost will be recognized over the period during which an optionee is required to provide service in exchange for the award.
Shareholder Approval. No options will be granted under the Stock Option Plan unless the Stock Option Plan is approved by shareholders. Shareholder approval of the Stock Option Plan will also satisfy the federal tax requirements.
Options to be Granted. The Board of Directors of Catalyst Bancorp adopted the Stock Option Plan, and the committee established thereunder intends to meet promptly after approval by shareholders to determine the specific terms of options, including the allocation of options to executive officers, employees and non-employee directors of Catalyst Bancorp and the Bank. As of the date hereof, no specific determination has been made as to allocation of grants.
The Board of Directors recommends that you vote FOR adoption
of the 2022 Stock Option Plan.
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General
On March 23, 2022, the Board of Directors adopted the 2022 Recognition and Retention Plan and Trust Agreement, the objective of which is to enable Catalyst Bancorp to provide officers, employees and non-employee directors of Catalyst Bancorp and the Bank with a proprietary interest in Catalyst Bancorp and as an incentive to contribute to our success. Officers, employees and non-employee directors of Catalyst Bancorp and the Bank who are selected by the Board of Directors of Catalyst Bancorp or members of a committee appointed by the board will be eligible to receive benefits under the Recognition and Retention Plan. If shareholder approval is obtained, shares will be granted to officers, employees and non-employee directors as determined by the committee or the Board of Directors.
Description of the Recognition and Retention Plan
The following description of the Recognition and Retention Plan is a summary of its terms and is qualified in its entirety by reference to the Recognition and Retention Plan, a copy of which is attached hereto as Appendix B.
Administration. The Compensation Committee of the Board of Directors of Catalyst Bancorp, currently consisting of Messrs. Kidder, Kleiser and Scruggins, will administer the Recognition and Retention Plan and will be the initial trustees of the Trust established pursuant to the Recognition and Retention Plan.
Number of Shares Covered by the Recognition and Retention Plan. Upon shareholder approval of the Recognition and Retention Plan, Catalyst Bancorp will contribute sufficient funds to the Recognition and Retention Plan Trust so that the Trust can purchase 211,600 shares of common stock, or 4.0% of the shares sold in the conversion offering. It is currently anticipated that these shares will be acquired through open market purchases to the extent available, although Catalyst Bancorp reserves the right to issue previously unissued shares or treasury shares to the Recognition and Retention Plan. The issuance of new shares by Catalyst Bancorp would be dilutive to the voting rights of existing shareholders and to Catalyst Bancorp’s book value per share and earnings per share.
Grants. Shares of common stock granted pursuant to the Recognition and Retention Plan will be in the form of restricted stock generally payable at a rate no more rapid than 20% per year, beginning one year from the anniversary date of the grant. A recipient will be entitled to all shareholder rights with respect to shares which have been earned and distributed under the Recognition and Retention Plan. However, until such shares have been earned and distributed, they may not be sold, assigned, pledged or otherwise disposed of and are required to be held in the Trust. In addition, any cash dividends or stock dividends declared in respect of unvested share awards will be held by the Trust for the benefit of the recipients of such plan share awards and such dividends or returns of capital will be paid out proportionately by the Trust to the recipients thereof as soon as practicable after the plan share awards are earned.
If a recipient terminates employment or service with Catalyst Bancorp for any reason, other than upon a change in control, the recipient will forfeit all rights to the allocated shares under restriction. In the event of a change in control of Catalyst Bancorp, all shares subject to an award shall be deemed earned as of the effective date of such change in control.
Forfeiture Provisions. The Recognition and Retention Plan requires forfeiture of awards to recipients who are subject to automatic clawback under Section 304 of the Sarbanes-Oxley Act of 2002 if Catalyst Bancorp is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the federal securities laws as a result of misconduct. In addition, the committee may in its discretion specify in any award agreement that any recipient reimburse Catalysts Bancorp for any benefit or gain realized from any award in the event an accounting restatement reduces the value of the award had the results been properly reported.
Performance Awards. A grant of a performance award is a grant of a right to receive shares of common stock which is contingent upon the achievement of performance or other objectives during a specified period. The committee has the authority to determine the nature, length and starting date of the period during which a participant may earn a performance award and will determine the conditions that must be satisfied for a performance award to vest. These conditions may include specific performance objectives, continued service or employment for a specific period of time or a combination of conditions. The Recognition and Retention Plan sets forth some of the business criteria that can be used as a condition of earning a performance award.
Federal Income Tax Consequences. Pursuant to Section 83 of the Internal Revenue Code, recipients of Recognition and Retention Plan awards will recognize ordinary income in an amount equal to the fair market value of the shares of common stock granted to them at the time that the shares vest. A recipient of a Recognition and Retention Plan award may elect to accelerate the recognition of income with respect to his or her grant to the time when such awards are first granted to him or her, notwithstanding the vesting schedule of such awards. Catalyst Bancorp will be entitled to deduct as a compensation expense for tax purposes the same amounts recognized as income by recipients of Recognition and Retention Plan awards in the year in which such amounts are included in income.
Section 162(m) of the Internal Revenue Code generally limits the deduction for certain compensation in excess of $1.0 million per year paid by a publicly traded corporation to its covered executives. However, the Board of Directors believes that the likelihood of any impact on Catalyst Bancorp from the deduction limitation contained in Section 162(m) of the Internal Revenue Code in the foreseeable future is remote at this time.
The above description of tax consequences under federal law is necessarily general in nature and does not purport to be complete. Moreover, statutory provisions are subject to change, as are their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws.
Accounting Treatment. Catalyst Bancorp will recognize compensation expense as shares of common stock granted pursuant to the Recognition and Retention Plan vest. The amount of compensation expense recognized for accounting purposes is based upon the fair market value of the common stock at the date of grant to recipients, rather than the fair market value at the time of vesting for tax purposes, unless the grants are performance based. With respect to performance awards, the fair market value on the date of vesting will be recognized as compensation expense. The vesting of plan share awards will have the effect of increasing Catalyst Bancorp’s compensation expense and will be a factor in determining Catalyst Bancorp’s earnings per share on a fully diluted basis.
Shareholder Approval. No awards will be granted under the Recognition and Retention Plan unless the Recognition and Retention Plan is approved by our shareholders.
Shares to be Granted. The Board of Directors of Catalyst Bancorp adopted the Recognition and Retention Plan, and the Compensation Committee intends to grant shares to executive officers, employees and non-employee directors of Catalyst Bancorp and the Bank. The Recognition and Retention Plan provides that grants to each employee and each non-employee director shall not exceed 25% and 5% of the shares of common stock available under the Recognition and Retention Plan, respectively. Awards made to non-employee directors in the aggregate may not exceed 30% of the number of shares available under the Recognition and Retention Plan. Although, the committee expects to act promptly after receipt of shareholder approval to issue awards under the Recognition and Retention Plan, the timing of any such grants, the individual recipients and the specific amounts of such grants have not been determined.
The Board of Directors recommends that you vote FOR adoption of the
2022 Recognition and Retention Plan and Trust Agreement.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Proposal |
Our Audit Committee has appointed Castaing, Hussey & Lolan, LLC independent registered public accounting firm, to perform the audit of Catalyst Bancorp’s financial statements for the year ending December 31, 2022,2023, and further directed that their selection be submitted for ratification by the shareholders at the annual meeting.
We have been advised by Castaing, Hussey & Lolan that neither that firm nor any of its associates has any relationship with Catalyst Bancorp or St. Landry Homestead Federal SavingsCatalyst Bank other than the usual relationship that exists between independent registered public accounting firms and their clients. Castaing, Hussey & Lolan will have one or more representatives at the annual meeting who will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.
In determining whether to appoint Castaing, Hussey & Lolan as our independent registered public accounting firm, the Audit Committee considered whether the provision of services, other than auditing services, by Castaing, Hussey & Lolan is compatible with maintaining their independence. Each new engagement of Castaing, Hussey & Lolan was approved in advance by the Audit Committee, and none of those engagements made use of the de minimis exception to pre-approval contained in the SEC’s rules.
The Audit Committee selects our independent registered public accounting firm and pre-approves all audit services to be provided by it to Catalyst Bancorp. The Audit Committee also reviews and pre-approves all audit-related and non-audit related services rendered by our independent registered public accounting firm in accordance with the Audit Committee’s charter. In its review of these services and related fees and terms, the Audit Committee considers, among other things, the possible effect of the performance of such services on the independence of our independent registered public accounting firm. The Audit Committee separately approves other individual engagements as necessary. The chair of the Audit Committee has been delegated the authority to approve audit-related and non-audit related services in lieu of the full Audit Committee and presents all such previously-approved engagements to the full Audit Committee.
The following table sets forth the aggregate fees billed by Castaing, Hussey & Lolan for professional services in connection with the audit of our financial statements for the years ended December 31, 20212022 and 20202021 and fees paid by us to Castaing, Hussey & Lolan for audit-related services rendered by Castaing, Hussey & Lolan during fiscal 20212022 and 2020.2021.
| | | | | | |
| | Year Ended December 31, | ||||
|
| 2022 |
| 2021 | ||
Audit Fees(1) | | $ | 94,500 | | $ | 84,500 |
Audit-related fees(2) | |
| - | |
| 119,795 |
Tax fees | |
| - | |
| - |
All other fees(3) | |
| 4,125 | |
| 7,905 |
Total | | $ | 98,625 | | $ | 212,200 |
(1) | Audit fees consist of fees for professional services rendered for the audit of our financial statements, review of financial statements included in Catalyst Bancorp’s quarterly reports, and for services normally provided by the independent auditor in connection with statutory and regulatory filings or engagements. |
(2) | Audit-related fees for 2021 consist of fees incurred in connection with the review of registration statements in connection with the mutual to stock conversion of Catalyst Bank completed in 2021 and for 2021 and 2020, fees related to the re-audit of the 2019 financial statements. |
(3) | All other fees consist of other permissible services by an independent registered public accounting firm, including review of management’s accounting for certain items during the year. |
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
Audit Fees(1) | $ | 84,500 | $ | 48,500 | ||||
Audit-related fees(2) | 119,795 | 22,500 | ||||||
Tax fees | -- | -- | ||||||
All other fees(3) | 7,905 | -- | ||||||
Total | $ | 212,200 | $ | 71,000 |
___________________
(1) Audit fees consist of fees for professional services rendered for the audit of our financial statements, review of financial statements included in Catalyst Bancorp’s quarterly reports, and for services normally provided by the independent auditor in connection with statutory and regulatory filings or engagements.
(2) Audit-related fees for 2021 consist of fees incurred in connection with the review of registration statements in connection with the mutual to stock conversion of St. Landry Homestead Federal Savings Bank completed in 2021 and for 2021 and 2020, fees related to the re-audit of the 2019 financial statements.
(3) All other fees for 2021 consist of other permissible services by an independent registered public accounting firm, including review of management’s accounting for certain items during the year.
The Board of Directors recommends that you vote FORFOR the ratification of the appointment
of Castaing, Hussey & Lolanas our independent registered public accounting firm
for the fiscal year ending December 31, 2022.2023.
The Audit Committee has reviewed and discussed Catalyst Bancorp’s audited consolidated financial statements with management. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed in PCAOB Auditing Standard No. 16, (Communications with Audit Committees). The Audit Committee has received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with the independent accountant their independence. Based on the review and discussions referred to above in this report, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in Catalyst Bancorp’s Annual Report on Form 10-K for fiscal year ended December 31, 2021,2022, for filing with the Securities and Exchange Commission.