I am pleased to invite you to attend our annual meeting of stockholders of The Community Financial Corporation (the “Company”) to be held in the Board Room at the main office of Community Bank of the Chesapeake, located at 3035 Leonardtown Road, Waldorf, Maryland,virtually on Wednesday, May 15, 201925, 2022 at 10:00 a.m. This year’s annual meeting will be a virtual meeting conducted exclusively via live webcast. You will be able to attend the annual meeting and vote and submit questions during the annual meeting via a live webcast by visiting www.virtualshareholdermeeting.com/ TCFC2022.
IMPORTANT: The prompt return of proxies will save the Company the expense of further requests for proxies to ensure a quorum. A self-addressed envelope is enclosed for your convenience. No postage is required if mailed in the United States.
If you participate in the Community Bank of the Chesapeake Employee Stock Ownership Plan, you will receive a voting instruction card that reflects all shareswhich will allow you mayto direct the plan trustees to vote on your behalf under the plan. Under the terms of the Employee Stock Ownership Plan, all allocated shares of Company stock held by the plan are voted by the trustees, as directed by plan participants. All unallocated shares of Company common stock held by the plan, and allocated shares for which no voting instructions are received, are voted by the trustees in the same proportion as shares for which the trustees have received timely voting instructions, subject to the exercise of their fiduciary
duties. The deadline for returning your voting instructions to the Employee Stock Ownership Plan trustees is May 8, 2019.18, 2022.
Quorum. We will have a quorum and will be able to conduct the business of the annual meeting if the holders of a majority of the outstanding shares of common stock entitled to vote are represented at the meeting. If you return valid proxy instructions or virtually attend the meeting, in person, we will count your shares to determine whether there is a quorum, even if you abstain from voting. Broker non-votes (described below) also will be counted to determine the existence of a quorum.
Votes Required for Proposals. In voting on the election of directors, you may vote in favor of the nominees, withhold votes for all of the nominees, or withhold votes as to any of the nominees. There is no cumulative voting for the election of directors. Directors must be elected by a plurality of the votes cast at the annual meeting.
In voting on the ratification of the appointment of Dixon Hughes Goodman LLP as the Company’s independent registered public accounting firm and on the non-binding resolution to approve the compensation of the named executive officers, you may vote in favor of the proposal, vote against the proposal or abstain from voting. In voting on the frequency of the stockholder vote to approve the compensation of the named executive officers, you may chooseAll proposals that are not for the vote to occur every one, two, or three years or abstain from voting. All proposalselection of directors will be decided by the affirmative vote of a majority of the shares cast at the annual meeting.
For all proposals, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the outcome of the voting on the proposals.
Effect of Not Casting Your Vote. If you hold your shares in street name it is critical that you cast your vote if you want it to count in the election of directors (Item 1 of this proxy statement), or the approval of the non-binding advisory vote on executive compensation (Item 3 of this proxy statement), or the vote on the frequency of the stockholder vote to approve the compensation of the named executive officers (Item 4 of this proxy statement). Current regulations restrict the ability of your bank or broker to vote your shares on these matters on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote in the election of directors and the approval of the non-binding advisory vote on executive compensation no votes will be cast on your behalf. These are referred to as broker non-votes. Your bank or broker will, however, continue to have discretion to vote any shares for which you do not provide voting instructions on the ratification of the appointment of the Company’s independent registered public accounting firm (Item 2 of this proxy statement). If you are a stockholder of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the annual meeting.
Revocation of Proxy. Stockholders who execute proxies retain the right to revoke them at any time. Unless revoked, the shares represented by such proxies will be voted at the annual meeting virtually and all adjournments thereof. Proxies may be revoked by written notice delivered in person or mailedof revocation to the Secretary of the Company, by delivering a later-dated proxy or by attending the annual meeting and voting in person.person at the virtual annual meeting. Attendance at the virtual annual meeting will not in and of itself constitute revocation of your proxy.
CORPORATE GOVERNANCE
Director Independence. The Company’s Board of Directors currently consists of 1014 members, all of whom are independent under the listing requirements of The NASDAQ Stock Market, except for Michael L. Middleton, former Executive Chairman of the Boards of Directors of the Company and the Bank and William J. Pasenelli, President and Chief Executive Officer of the Company Chief Executive Officer of theand Bank and Vice Chair of the Boards of Directors of the Company and Bank, James M. Burke, President of the Company and Bank, Gregory C. Cockerham (retired December 31, 2019), former Executive Vice President and Chief Lending Officer of the Company and the Bank and James F. Di Misa (retired March 31, 2019), former Executive Vice President and Chief Operating Officer of the Company and the Bank. In determining the independence of its directors, the Board considered various transactions, relationships and arrangements between the Company and its directors that are not required to be disclosed in this proxy statement under the heading “Relationships and Transactions with the Company and the Bank,”, including (i) legal services performed by the Jenkins Law Firm, LLC, of which Louis P. Jenkins, Jr. is athe principal and to which the Bank paid an annual retainer of $115,000 in 2021, (ii) Michael B. Adams’ 25% ownership interest in GAFR Holdings, LLC, an entity from which the Bank leases space for a lending center and to which the Bank paid $99,708 in 2021, (iii) Mr. Adams’ position as President and sole owner of JON Properties, LLC, an entity receiving property maintenance fees from the Bank and to which the Bank paid $16,516 in 2021, (iv) consulting services performed by Mr. Di Misa pursuant to the terms of a consulting agreement between Mr. Di Misa and the Bank for which Mr. Di Misa was paid $70,000 in 2021, and (v) loans or lines of credit that the Bank has directly or indirectly made to each of the directors on the Board.
Board Leadership Structure.The Company currently separates the offices of President and Chief Executive Officer and Chairman of the Board. Doing so allows the President and Chief Executive Officer to better focus on his responsibilities of managing the day-to-day operations of the Company, enhancing stockholder value and expanding and strengthening the franchise while allowing the Chairman of the Board to lead the Board in its fundamental role of providing advice to and oversight of management. The Board also has created a Lead Director position to further enhance Board independence and oversight. Joseph V. Stone, Jr. is currently the Lead Director of the Board of Directors. Among other things, the Lead Director (i) presides at meetings of the Board at which the Chairman of the Board is not present, including executive sessions of the independent directors, and (ii) may call meetings of the independent directors.
The Board’s Role in Risk Oversight. Risk is inherent with every business and how well a business manages risk can ultimately determine its success. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day management of risks the Company faces, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. To do this, senior management attends the Board meetings and is available to discuss strategy and risks facing the Company and to address any questions or concerns raised by the Board on risk management and any other matters. The Board also provides strong oversight of the Company’s management and affairs through its standing committees and, when necessary, special meetings of independent directors.
Committees of the Board of Directors.The following table identifies the members of the Board’s Audit, EnterpriseBoard Risk Management,Oversight, Governance, Compensation and CompensationStrategic Initiatives Committees as of March 18, 2019.28, 2022. All members of the Audit, Governance and Compensation Committees are independent in accordance with the listing requirements of The NASDAQ Stock Market. Each committee operates under a written charter, which is approved by the Board of Directors, that governs its composition, responsibilities and operation. Each committee reviews and reassesses the adequacy of its charter at least annually.
Director | | | Audit Committee | | | Enterprise Risk Management Committee | | | Governance Committee | | | Compensation Committee | |
M. Arshed Javaid | | | | | | X | | | | | | | |
Louis P. Jenkins, Jr. | | | | | | X | | | X* | | | X* | |
Michael L. Middleton | | | | | | X | | | | | | | |
John K. Parlett, Jr. | | | X | | | X | | | | | | | |
William J. Pasenelli | | | | | | X | | | | | | | |
Mary Todd Peterson | | | X* | | | X | | | | | | X | |
E. Lawrence Sanders, III | | | X | | | | | | | | | | |
Austin J. Slater, Jr. | | | X | | | X* | | | X | | | X | |
Joseph V. Stone, Jr.** | | | X | | | X | | | X | | | X | |
Kathryn Zabriskie | | | | | | | | | X | | | X | |
Number of Meetings in 2018 | | | 8 | | | 3 | | | 5 | | | 9 | |
*
Chairperson
**
Lead Director
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Director |
| Audit Committee |
| Board Risk Oversight Committee |
| Governance Committee |
| Compensation Committee | | Strategic Initiatives Committee |
Michael B. Adams | | X | | X | | | | | | X |
Kimberly C. Briscoe-Tonic |
| X |
| X |
|
|
|
| | |
James M. Burke | | | | | | | | | | |
James F. Di Misa | | | | X | | | | | | X* |
Gregory C. Cockerham | | | | X | | | | | | X |
M. Arshed Javaid | | | | X | | | | | | X |
Louis P. Jenkins, Jr. |
|
|
| |
| X* |
| X* | | |
Rebecca M. McDonald |
| X |
| X |
|
|
|
| | |
William J. Pasenelli |
|
|
| |
|
|
|
| | |
Mary Todd Peterson |
| X* |
| |
| X |
| X | | |
E. Lawrence Sanders, III |
| X |
| X* |
|
|
|
| | |
Austin J. Slater, Jr.* |
| |
| |
| | | | | |
Joseph V. Stone, Jr. |
| | | | | X |
| X | | |
Kathryn M. Zabriskie |
|
|
|
|
| X |
| X | | X |
Number of Meetings in 2021 |
| 11 |
| 4 |
| 4 |
| 6 | | 0 |
______________________
*Chairperson
Audit Committee.The Audit Committee engages the Company’s independent registered public accounting firm and meets with them in connection with their annual audit and reviews the Company’s accounting and financial and regulatory reporting policies and practices. Other responsibilities of the Audit Committee include engagement of compliance and internal audit providers and the review with management of reports issued by such parties. The Board of Directors has determined that the Audit Committee does not have a member who is an “audit committee financial expert” as defined under the rules and regulations of the Securities and Exchange Commission. While the Board has not designated any individual Board member as an “audit committee financial expert,” the Board believes the level of financial knowledge and experience of the current members of the Audit Committee, including the ability to read and understand financial statements, is cumulatively sufficient to discharge the Audit Committee’s responsibilities. The Audit Committee acts under a written charter adopted by the Board of Directors, a copy of which is available free of charge in the Investor Relations portion of the “About Community Bank” section of the Company’s website (www.cbtc.comhttps://www.cbtc.com/about/investor-relations/corporate-governance/), and is available in print to any stockholder who requests a copy.
Enterprise
Board Risk ManagementOversight Committee.The EnterpriseBoard Risk ManagementOversight Committee assists the Board in its oversight responsibilities by focusing specifically on the Company’s enterprise risk management activities including the significant policies, procedures and practices employed to manage capital adequacy, market risk, earnings, credit risk, liquidity, compliance, regulatory, legal, reputation, and strategic operational risk and by providing recommendations to the Board and management on strategic guidance with respect to the assumption, management and mitigation of risk. The EnterpriseBoard Risk ManagementOversight Committee acts under a written charter adopted by the Board of Directors, a copy of which is available free of charge in the Investor Relations portion of the “About Community Bank” section of the Company’s website (www.cbtc.comhttps://www.cbtc.com/about/investor-relations/corporate-governance/), and is available in print to any stockholder who requests a copy.
Governance Committee.The The Governance Committee is responsible for promoting sound corporate governance policies that promote the best interests of the Company and its stockholders. The Committee’s responsibilities include: identification of director candidates; director education; recommendations on the size and composition of the Board and the boards of any subsidiaries, review of any stockholder proposals; monitoring of regulatory and statutory compliance; review of committee charters; and evaluations of Board oversight and effectiveness. The
Governance Committee also annually reviews and recommends, in conjunction with the Compensation Committee, the appropriate level of director compensation. The Governance Committee acts under a written charter adopted by the Board of Directors, a copy of which is available free of charge in the Investor Relations portion of the “About Community Bank” section of the Company’s website (www.cbtc.comhttps://www.cbtc.com/about/investor-relations/corporate-governance/), and is available in print to any stockholder who requests a copy.
Compensation Committee.The Compensation Committee approves the compensation objectives for the Company and the Bank and establishes the compensation for the Chief Executive Officer and other executives. Our Chief Executive Officer, Chief Operating OfficerPresident and Chief AdministrativeOperating Officer make recommendations to the Compensation Committee from time to time regarding the appropriate mix and level of compensation for other executives. The Compensation Committee reviews compensation for the Company’s executive officers to ensure an appropriate balance between short-term pay and long-term incentives. In addition to reviewing competitive market values, the Compensation Committee also examines the total compensation mix, pay-for-performance relationship, and how all elements, in the aggregate, comprise the executive’s total compensation package. Decisions by the Compensation Committee with respect to the compensation of executive officers are approved by the full Board of Directors. The Compensation Committee also annually reviews and recommends, in conjunction with the Governance Committee, the appropriate level of director compensation. The Compensation Committee acts under a written charter adopted by the Board of Directors, a copy of which is available free of charge in the Investor Relations portion of the “About Community Bank” section of the Company’s website (www.cbtc.comhttps://www.cbtc.com/about/investor-relations/corporate-governance/), and is available in print to any stockholder who requests a copy.
Strategic Initiatives Committee. The Strategic Initiatives Committee provides oversight and strategic guidance to management related to the Company’s planning and execution of key organizational initiatives and strategic projects. The Strategic Initiatives Committee reviews and makes recommendations to the Board with respect to policies, processes and systems that management uses to manage projects, new products, facilities and technology. The Strategic Initiatives Committee acts under a written charter adopted by the Board of Directors, a copy of which is available free of charge in the Investor Relations portion of the “About Community Bank” section of the Company’s website (https://www.cbtc.com/about/investor-relations/corporate governance/), and is available in print to any stockholder who requests a copy.
Director Nomination Process. The Governance Committee selectsidentifies nominees for election as directors. The Governance Committee seeks to create a Boardboard that is strong in its collective knowledge and has a diversity of skills and experience in accounting and finance, management and leadership, vision and strategy, business operations, business judgment, industry knowledge and corporate governance. To accomplish this, the Governance Committee considers a candidate’s knowledge of the banking business and involvement in community, business and civic affairs, and also considers whether the candidate would adequately represent
the Company’s market area. Any nominee for director must be highly qualified with regard to some or all of these attributes. In searching for qualified director candidates to fill vacancies on the Board, the Governance Committee solicits its current directors for the names of potential qualified candidates. The Governance Committee may also ask its directors to pursue their business contacts for the names of potentially qualified candidates. The Governance Committee would then consider the potential pool of director candidates, select the top candidates based on the candidates’ qualifications and the Company’s needs, and conduct a thorough investigation of each proposed candidate’s background. If a stockholder has submitted a proposed nominee in accordance with the procedures specified below, the Governance Committee would consider the proposed nominee, along with any other proposed nominees recommended by directors, in the same manner in which the Governance Committee would evaluate nominees for director recommended by the Board of Directors.Directors. The Governance Committee will also consider the extent to which a candidate helps the Board of Directors reflect the diversity of the Company’s stockholders, employees, customers and communities, including with respect to race, ethnicity, gender, age and other characteristics. The Company has taken steps to increase the diversity of its Board, and the Governance Committee will continue to seek opportunities to enhance board diversity in the future.
Consideration of Recommendations by Stockholders. The Governance Committee will consider recommendations for directors submitted by stockholders. Stockholders who wish the Governance Committee to consider their recommendations for nominees for director should submit their recommendations in writing to the
Governance Committee in care of the Corporate Secretary, The Community Financial Corporation, 3035 Leonardtown Road, Waldorf, Maryland 20601. Each written recommendation must set forth (1) the name of the recommended candidate, (2) the number of shares of stock of the Company that are beneficially owned by the stockholder making the recommendation and by the recommended candidate, and (3) a detailed statement explaining why the stockholder believes the recommended candidate should be nominated for election as a director. In addition, the stockholder making such recommendation must promptly provide any other information reasonably requested by the Governance Committee. To be considered by the Governance Committee for nomination for election at an annual meeting of stockholders, the recommendation must be received by the January 1 preceding that annual meeting. Additionally, to comply with the universal proxy rules (once effective) for our 2023 annual meeting of stockholders, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 28, 2023.
Board and Committee Meetings. During 2018,2021, the Board of Directors of the Company held 10seven meetings. No director attended fewer than 75% of the meetings of the Board of Directors and Board committees on which they served in 2018.2021, except for Kimberly C. Briscoe-Tonic whose ability to attend meetings was impacted by health issues.
Director Attendance at Annual Meeting of Stockholders.While the Company does not have a policy regarding Board member attendance at annual meetings of stockholders, it encourages directors to attend the annual meeting of stockholders. All of the Company’s directors attended the Company’s 20182021 annual meeting of stockholders.
Code of Ethics.The Community Financial Corporation maintains a Code of Ethics that is designed to ensure that the Company’s directors and employees meet the highest standards of ethical conduct. The Code of Ethics, which applies to all employees and directors, addresses conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. In addition, the Code of Ethics is designed to deter wrongdoing and promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance with all applicable laws, rules and regulations. Under the terms of the Code of Ethics, violations of the Code of Ethics reported by directors are required to be reported to the Chief Executive Officer, Corporate Secretary or the Audit Committee of the Board of Directors. Complaints regarding accounting matters must be reported to the Audit Committee Chair. A copy of the Code of Ethics is available free of charge in the Investor Relations portion of the “About Community Bank” section of the Company’s website (www.cbtc.comhttps://www.cbtc.com/about/investor-relations/corporate-governance/), and is available in print to any stockholder who requests a copy.
Management - Chief Officers. Our executive officers are elected by the Board of Directors and serve at the Board’s discretion. Below is information regarding our executive officers who are not directors. Ages presented are as of December 31, 2021.
Todd L. Capitani, age 55, joined the Bank in 2009. He serves as Executive Vice President and Chief Financial Officer of the Company and the Bank. Before joining the Bank, Mr. Capitani served as a Senior Finance Manager at Deloitte Consulting and as Chief Financial Officer at Ruesch International, Inc. Mr. Capitani has over 30 years of experience in corporate finance, controllership and external audit. Mr. Capitani is involved with several local charities, religious and community organizations. Mr. Capitani is a member of the American Institute of Certified Public Accountants and other civic groups. He serves on the Board of Directors for Annmarie Sculpture Garden & Arts Center. Mr. Capitani is a Certified Public Accountant and holds a Bachelor of Arts from the University of California at Santa Barbara. He also attended the Harvard Business School Program on Negotiation and the Yale School of Management Strategic Leadership Conference.
John A. Chappelle, age 36, joined the Bank in 2007. He serves as Executive Vice President and Chief Digital Officer of the Bank. Mr. Chappelle is responsible for the execution of digital banking strategies and oversees information technology, commercial services and consumer and residential lending. Mr. Chappelle has more than 10 years of banking experience. He serves on the Board of Directors for Bay Community Support Services and is Immediate Past Chairman of the Charles County Chamber of Commerce. He is a Maryland Bankers School graduate and holds a Master of Business Administration from the University of Maryland University College.
DIRECTOR COMPENSATION
Brian Scot Ebron, age 53, joined the Bank in 2018. He serves as Executive Vice President and Chief Banking Officer. Mr. Ebron is responsible for business development efforts and provides leadership for the areas of business development, credit administration and risk management. Mr. Ebron has worked in banking for over 30 years and has prior executive level experience. He serves on the Boards of Directors of Maryland Veterans Memorial Museum and Gwyneth’s Gift Foundation. Mr. Ebron also serves on the College of Southern Maryland’s Business Advisory Council. He holds a bachelor’s degree in economics from the University of North Carolina.
Christy M. Lombardi, age 45, joined the Bank in 1998. She serves as Executive Vice President and Chief Operating Officer of the Company and the Bank. Ms. Lombardi is responsible for corporate governance matters for the Company, and oversees bank operations, human resources and the Bank’s branch network. Ms. Lombardi has over 20 years of banking experience. She serves on the Board of Trustees of the College of Southern Maryland, the Advisory Board of the Maryland Banker’s Association Council of Professional Women in Banking and Finance and on the Southern Maryland Workforce Development Board. Ms. Lombardi served on the Board of Directors of the Calvert County Chamber of Commerce from 2012-2018. She is a Maryland Bankers School graduate and holds a Master of Science in management from University of Maryland University College as well as a Master of Business Administration. Ms. Lombardi is currently attending the ABA Stonier Graduate School of Banking program.
Lacey A. Pierce, age 36, joined the Bank in 2007. She serves as Executive Vice President and Chief Administrative Officer. Ms. Pierce is responsible for corporate administration matters and oversees lending administration, marketing, facilities and community stockholder relations. She has more than 10 years banking experience. Ms. Pierce serves on the Board of Directors of The Arc of Southern Maryland and Farming 4 Hunger. She is a Maryland Banking School graduate and holds a bachelor’s degree from Towson University. Ms. Pierce is currently attending the ABA Stonier Graduate School of Banking program.
Patrick D. Pierce, age 43, joined the Bank in 2003. He serves as Executive Vice President and Chief Lending Officer. Mr. Pierce is responsible for oversight of the Bank’s lending and business development teams, including Community Wealth Advisors, the Bank’s wealth division. Mr. Pierce has nearly 20 years of experience in banking and financial services. He serves on the Board of Directors of the University of Maryland Charles Regional Medical Center as the Secretary/Treasurer and is a Board Member and Treasurer for the La Plata Business Association. Mr. Pierce is a Maryland Bankers School graduate and holds a bachelor’s degree in business management from University of Maryland University College.
Talal Tay, age 44, joined the Bank in 2018. He serves as Executive Vice President and Chief Risk Officer of the Bank. Mr. Tay is responsible for enterprise risk management, loan review and information security. Mr. Tay also oversees internal audit, compliance and BSA. He has worked in the audit and risk areas of financial services for more than 20 years. Mr. Tay holds a bachelor’s degree in business marketing from Florida State University and accounting studies from the University of Texas at San Antonio. He holds a Certified Anti-Money Laundering Specialist designation.
| | |
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) |
The Company’s management team and Board of Directors recognize the importance of a continuous focus on environmental, social, and governance (“ESG”) issues. The Strategic Plan adopted by the Company includes the development of ESG-related initiatives as part of the Company’s long-term goals. The Strategic Initiatives Committee is tasked with overseeing the execution of the Company’s strategic initiatives, including ESG efforts under the plan.
Furthermore, the Company’s management team and the Board oversee and direct a range of matters that implicate ESG issues, such as the Company’s: sustainability practices, investments in human capital, social and community support efforts, and governance and risk management policies and procedures.
Sustainability
The Company is committed to operating in a sustainable manner and has undertaken a number of initiatives designed to reduce our impact on the environment and to promote environmentally friendly projects and practices. With a view to increasing efficiency and reducing waste, we are continuing to digitize manual back office and banking center functions. Over the past several years, we migrated our technology infrastructure to a cloud environment, which reduced our energy usage. Many of the Bank’s locations have been converted to energy efficient systems and finishes to minimize the carbon footprint, and any new buildings or locations will be constructed in this manner. In 2021, we increased the use of digitized records and e-signing technology resulting in a reduction of paper waste.
We believe that a focus on environmental sustainability, with the objective of reducing costs and improving sustainability of our operations, will provide a strategic benefit to the Company. Furthermore, the Company recognizes that climate change is a growing risk for our planet, and we are committed to doing our part to mitigate this risk by placing increased focus and emphasis on environmental consciousness.
Human Capital
Our Mission and Culture.The Bank’s mission is to exceed the expectations of our community, today and tomorrow. The Bank’s corporate culture is defined by core values which include integrity, accountability, professionalism, diversity, community-focused and communicative. We value our employees by investing in competitive compensation and benefit packages and fostering a team environment centered on professional service and open communication. Attracting, retaining and developing qualified, engaged employees who embody these values are crucial to the success of the Bank and Company. We believe that relations with our employees are good.
Employee Demographics. As of December 31, 2021, Community Bank employed 188 full and part time employees (187 full time equivalent employees) of which approximately 77% were women. In addition, for those employees identifying as such, approximately 21% of our workforce have diverse ethnic backgrounds.
Diversity and Inclusion.We are committed to building a diverse workforce and an inclusive work environment which are supported by our culture and values. We strive to attract and retain employees with diverse characteristics, backgrounds and perspectives, which inspires our team to achieve more creative and innovative solutions for our customers. With a commitment to equality, inclusion and workplace diversity, we focus on understanding, accepting, and valuing the differences between people. Our commitment to equal employment opportunities is demonstrated through an affirmative action plan which includes annual compensation analyses, ongoing reviews of our selection and hiring practices and an annual review of our plan to ensure we build and maintain a diverse workforce.
Compensation and Benefits.The Bank’s compensation and benefits package is designed to attract and retain a talented workforce. The Bank’s minimum wage for entry level positions is $17.00 per hour. In addition to salaries, benefits include a 401(k) plan with an employer matching contribution, an employee stock ownership plan, medical insurance benefits, paid short-term and long-term disability and life insurance, flexible spending accounts, tuition reimbursement, wellness benefits, paid time off, family leave and an employee assistance program.
Professional Development.The Bank invests in the growth of its employees by providing access to professional development and continuing education courses and seminars that are relevant to the banking industry and their job function within the Company. We offer our employees the opportunity to participate in various professional and leadership development programs. On-demand training opportunities include a variety of industry, technical, professional, business development, leadership and regulatory topics. Training to communicate the Bank’s culture, behavioral standards and expectations to employees is an important part of our training program.
Employee Health and Safety.The safety, health and wellness of our employees is a top priority. The COVID-19 pandemic presented unique challenges to maintain employee safety while continuing successful operations. To support our employees and customers during this time the Bank developed a pandemic response plan which established a phased approach for operating in the pandemic environment. The Bank greatly expanded remote work, established employee engagement and feedback initiatives to understand and respond to employee needs and concerns, broadened benefit offerings and established safety protocols regarding cleaning, personal hygiene and physical distancing to minimize the spread of illness in our work environments. The Bank did not furlough or lay-off any employees as a result of the pandemic.
Social Impact
We are a community bank committed to investing in the financial health and well-being of our neighbors, and we believe that the success of our communities is a shared responsibility. In 2021, the Bank supported over 150 community organizations and donated over $230,000 and countless volunteer hours. Throughout the COVID-19 pandemic, we continued to help our community and customers navigate economic uncertainty by originating a third round of SBA PPP loans. In 2020 and 2021 we originated $201.3 million of SBA PPP loans to more than 1,500 borrowers. The Company is passionate about being a good corporate citizen in the communities where we live and work.
Governance and Risk Management
We are committed to achieving excellence in our governance and risk management practices to support the Company’s long-term success. The Company’s Code of Ethics and Whistleblower Procedure ensures that our directors, officers, and employees are apprised of the requirements for maintaining compliance with all applicable rules and regulations. Our corporate governance policies and practices also include evaluations of the Board and its committees, which are responsible for broad oversight of Company and Bank operations.
Our internal risk management teams oversee compliance with applicable laws and regulations and coordinate with subject matter experts throughout the business to identify, monitor, and mitigate risk including information security risk management and cyber defense programs. These teams maintain rigorous testing programs and regularly provide updates to the Board and the Board Risk Oversight Committee, which periodically evaluates, and makes recommendations to the Board in regards to, the Company’s risk policies and procedures. The Company has a robust Information Security program that incorporates multiple layers of physical, logical, and written controls. We leverage the latest encryption configurations and technologies on our systems, devices, and third-party connections and further vet third-party vendors’ encryption, as required, through the organization’s vendor management process.
The following table provides the compensation received by the non-employee directors of the Company and the Bank during 2018.
Name | | | Fees Earned or Paid in Cash ($) | | | Non-qualified Deferred Compensation Earnings ($)(1) | | | Total ($) | |
Kimberly C. Briscoe-Tonic(2) | | | | $ | 18,000 | | | | | $ | — | | | | | $ | 18,000 | | |
M. Arshed Javaid | | | | | 36,000 | | | | | | — | | | | | | 36,000 | | |
Louis P. Jenkins, Jr. | | | | | 49,725 | | | | | | — | | | | | | 49,725 | | |
Michael L. Middleton | | | | | 50,000 | | | | | | 2,323 | | | | | | 52,323 | | |
John K. Parlett, Jr. | | | | | 43,500 | | | | | | — | | | | | | 43,500 | | |
Mary Todd Peterson | | | | | 47,900 | | | | | | — | | | | | | 47,900 | | |
E. Lawrence Sanders, III | | | | | 42,225 | | | | | | — | | | | | | 42,225 | | |
James R. Shepherd(3) | | | | | 21,125 | | | | | | — | | | | | | 21,125 | | |
Austin J. Slater, Jr. | | | | | 50,125 | | | | | | — | | | | | | 50,125 | | |
Joseph V. Stone, Jr. | | | | | 53,125 | | | | | | 3,634 | | | | | | 56,759 | | |
Kathryn Zabriskie | | | | | 44,725 | | | | | | — | | | | | | 44,725 | | |
(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name |
| Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) |
| Non-qualified Deferred Compensation Earnings ($)(3) | | All Other Compensation ($) |
| Total ($) |
Michael B. Adams | | $ | 38,050 | | | $ | 10,010 | |
| $ | — | | | $ | — | | | $ | 48,060 | |
Kimberly C. Briscoe-Tonic | | 33,025 | | | 10,010 | | | — | | | — | | | 43,035 | |
Gregory C. Cockerham | | 37,800 | | | 10,010 | |
| 2,089 | | | — | | | 49,899 | |
James F. Di Misa(4) | | 42,325 | | | 10,010 | |
| — | | | 70,000 | | | 122,335 | |
M. Arshed Javaid | | 37,075 | | | 10,010 | |
| 95,033 | | | — | | | 142,118 | |
Louis P. Jenkins, Jr. | | 43,825 | | | 10,010 | |
| — | | | — | | | 53,835 | |
Rebecca M. McDonald | | 38,550 | | | 10,010 | |
| — | | | — | | | 48,560 | |
Mary Todd Peterson | | 47,400 | | | 10,010 | | | — | | | — | | | 57,410 | |
E. Lawrence Sanders, III | | 44,550 | | | 10,010 | |
| 7,055 | | | — | | | 61,615 | |
Austin J. Slater, Jr. | | 100,000 | | | 10,010 | |
| — | | | — | | | 110,010 | |
Joseph V. Stone, Jr. | | 41,000 | | | 10,010 | |
| 46,844 | | | — | | | 97,854 | |
Kathryn M. Zabriskie | | 39,700 | | | 10,010 | |
| 34,025 | | | — | | | 83,735 | |
______________________
(1)Represents fees and retainers earned or paid in cash. Directors Javaid, Sanders, and Zabriskie deferred all or a portion of fees into the Directors’ Retirement Plan.
(2)Represents aggregate fair market value as of the grant date of restricted stock unit awards granted in fiscal year 2021 constituting an equity-based retainer for directors, as computed in accordance with FASB ASC Topic 718, Stock Compensation.
(3)Represents the portion of non-qualified deferred compensation earnings under the Community Bank of the Chesapeake Retirement Plan for Directors that was above the Internal Revenue Service long-term rate.Under the plan, interest is credited at a rate equal to the Company’s annualized return on equity or based on the gains or losses on the deemed investments.
(2)
Ms. Briscoe-Tonic serves as(4)Represents compensation for consulting services performed by Mr. Di Misa pursuant to the terms of a director ofconsulting agreement between Mr. Di Misa and the Bank.
(3)
Mr. Shepherd resigned from the Board of Directors of the Company effective February 8, 2017. Mr. Shepherd continues to serve as a director of the Bank.
The consulting agreement expired on December 31, 2021.
Cash RetainerRetainers and Meeting Fees for Directors.The following tables set forth the applicable cash retainers and fees that will be paid to directors for their service on the Boards of Directors of the Company and the Bank for 2019:2022:
Board of Directors of the Company:
| | | | | | | | |
Board of Directors of the Company: | | |
Annual Retainer | | | $15,000 |
Fee per Board Meeting (Regular or Special) | | $750 ($225 per telephonic meeting) |
Fee per Committee Meeting | | $500 ($225 per telephonic meeting) |
Annual Retainer for the Chairman of the Board | | (1) |
Annual Retainer for the Audit, Governance and Compensation Committee Chairs | | $5,000 |
Annual Retainer for Board Risk Oversight and Strategic Initiatives Committee Chairs | | $2,500 |