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Section 1: DEF 14A (DEF 14A)

catc-def14a_20190513.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

(RULE 14a-101)

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.)

 

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

 

CAMBRIDGE BANCORP

 

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

  

No fee required.

 

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)   

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

 

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

 

 

 

 

 


 

 

March 19, 2019

 

Dear Shareholder:

 

I am pleased to invite you to our 2019 Annual Meeting of Shareholders, which will be held at 8:30 A.M. Eastern Time on Monday, May 13, 2019 at The Charles Hotel in Cambridge, Massachusetts. The meeting will be preceded by breakfast at 8:00 A.M.

 

Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting.

 

To assist you in voting your shares, you will find enclosed the Notice of Annual Meeting of Shareholders, the 2019 Proxy Statement and our 2018 Annual Report on Form 10-K, which includes our audited financial statements.

 

Please promptly submit your proxy by telephone, Internet or by mail, whether or not you plan to attend the Annual Meeting. Your vote is important regardless of the number of shares you own. Voting by proxy will not prevent you from voting in person at the Annual Meeting but will assure that your vote is counted if you cannot attend. If you decide to attend the Annual Meeting and vote in person, you may withdraw your proxy at that time. We encourage you to vote your shares according to the instructions on the enclosed proxy card or on the Notice of Internet Availability of Proxy Materials.

 

On behalf of the Board of Directors and employees of Cambridge Bancorp, we thank you for your continued interest in and support of the Company.

 

Cordially,

 

 

Denis K. Sheahan

Chairman and Chief Executive Officer

Cambridge Bancorp

Cambridge Trust Company

  

IF YOU HAVE ANY QUESTIONS, PLEASE CALL US AT (617) 876-5500

 

 


 

CAMBRIDGE BANCORP

1336 Massachusetts Avenue

Cambridge, MA 02138

(617) 876-5500

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

DATE

May 13, 2019

 

 

TIME

8:30 A.M. Eastern Time

 

 

PLACE

The Charles Hotel

1 Bennett Street

Cambridge, MA 02138

 

 

ITEMS OF BUSINESS

(1)

Election of the nominees named in the attached proxy statement as directors to serve on the Board of Directors for a term of office stated.

 

(2)

Consideration and approval of a non-binding advisory resolution on the compensation of Cambridge Bancorp’s named executive officers.

 

(3)

To ratify, on an advisory basis, the appointment of KPMG LLP as Cambridge Bancorp’s independent registered public accounting firm for the fiscal year ending December 31, 2019.

 

(4)

Consideration of any other business properly brought before the Annual Meeting, and any adjournment or postponement thereof.

 

 

 

 

A proxy statement describing the matters to be considered at the Annual Meeting is attached to this notice.

 

RECORD DATE

The record date for the Annual Meeting is March 15, 2019. Only shareholders of record as of the close of business on that date may vote at the Annual Meeting or any adjournment thereof.

 

 

PROXY VOTING

You are cordially invited to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting, please promptly submit your proxy by telephone, Internet or by signing and returning the proxy card by mail. Submitting a proxy will not prevent you from attending the Annual Meeting and voting in person. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder.

 

 By Order of the Cambridge Bancorp Board of Directors,

 

 

 

 

 

 

Michael Carotenuto

 

 

Corporate Secretary

 

 

 

Cambridge, Massachusetts

March 19, 2019

 

YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY SHARES YOU OWN! Please promptly
vote your shares as instructed in the Notice of Internet Availability of Proxy Materials and/or proxy card sent
to you. Voting procedures are described in the proxy statement enclosed herewith.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON May 13, 2019.

 

This proxy statement is available free of charge at http://ir.cambridgetrust.com/CorporateProfile/

 

 


 

Table of Contents

 

THE ANNUAL MEETING AND VOTING PROCEDURES

1

General

1

Notice Regarding the Availability of Proxy Materials

1

Who can vote?

1

How can I obtain a copy of the proxy statement?

1

How do I vote?

2

What are the quorum requirements?

2

What are the Board’s voting recommendations?

3

How many votes are needed?

3

What is the effect of broker non-votes?

3

Can I revoke my proxy?

3

Who is soliciting the proxies?

4

PROPOSAL 1 – ELECTION OF DIRECTORS

5

Vote Required

5

Our Recommendation

5

Information About the Company’s Board of Directors

5

INFORMATION ABOUT THE COMPANY’S EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

8

CORPORATE GOVERNANCE

9

Board of Directors; Board Leadership Structure

9

Board’s Role in Risk Oversight

9

Board of Directors Independence

9

Director Nominations

10

Shareholder Communications with the Board

11

Code of Ethics

11

Committees of the Board of Directors

11

COMPENSATION DISCUSSION AND ANALYSIS

14

Director Compensation

35

TRANSACTIONS WITH RELATED PERSONS

37

Related-Person Transactions Policy and Procedures

37

Transactions with Certain Related Persons

37

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

37

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

37

Principal Shareholders

38

Security Ownership of Officers and Directors

38

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

39

PROPOSAL 2 – NON-BINDING ADVISORY RESOLUTION ON THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS

39

Vote Required

39

Our Recommendation

39

General

39

PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

41

Vote Required

41

Our Recommendation

41

Independent Registered Public Accounting Firm Fees and Services

41

Audit Committee Pre-Approval Requirements

42

HOUSEHOLDING OF PROXY MATERIALS

42

SHAREHOLDER PROPOSALS

42

OTHER MATTERS

43

 

 

 


 

CAMBRIDGE BANCORP
1336 Massachusetts Avenue

Cambridge, MA 02138
(617) 876-5500

 

PROXY STATEMENT
FOR THE 2019 ANNUAL MEETING OF SHAREHOLDERS
To Be Held on MAY 13, 2019

 

THE ANNUAL MEETING AND VOTING PROCEDURES 

 

General

This proxy statement contains information about the 2019 Annual Meeting of Shareholders of Cambridge Bancorp. The meeting will be held on Monday, May 13, 2019, beginning at 8:30 A.M. Eastern Time at The Charles Hotel, 1 Bennett Street, Cambridge, Massachusetts 02138. Cambridge Bancorp is, for ease of reference, sometimes referred to in this proxy statement as the “Company,” “we,” “us” or “our.” Cambridge Trust Company, the Company’s wholly-owned bank subsidiary, is for ease of reference referred to in this proxy statement as “Cambridge Trust” or the “Bank.” The term “Annual Meeting,” as used in this proxy statement, means the 2019 Annual Meeting of Shareholders and includes any adjournment or postponement of such meeting.

 

We have sent you this proxy statement and the proxy card because the Company’s Board of Directors (the “Board”) is soliciting your proxy to vote at the Annual Meeting. At the Annual Meeting, shareholders will vote upon the matters that are summarized in the formal meeting notice. This proxy statement contains important information for you to consider when deciding how to vote. Please read it carefully.  You do not need to attend the Annual Meeting to vote your shares. You may vote by proxy over the telephone, Internet or by mail, and your votes will be cast for you at the Annual Meeting. This process is described below in the section entitled “How do I vote?”

 

Notice Regarding the Availability of Proxy Materials

Under rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), we furnish our proxy materials on the Internet.  Instructions on how to access and review the proxy materials on the Internet can be found on the proxy card sent to shareholders of record and on the Notice of Internet Availability of Proxy Materials sent to shareholders who hold their shares through a brokerage firm or bank, also referred to as holding shares in “street name.”

 

Who can vote?

Shareholders of record at the close of business on March 15, 2019 (the “Record Date”) are entitled to vote. Each share of common stock of the Company (“common stock”) is entitled to one vote at the Annual Meeting.  On the Record Date, there were 4,123,636 shares of common stock outstanding and entitled to vote.  The Company has no other outstanding voting security.

 

If on March 15, 2019, your shares were registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC, then you are a shareholder of record. As a shareholder of record, you may vote in person at the Annual Meeting or vote by proxy.

 

Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy over the telephone, Internet or by mail as instructed below to ensure your vote is counted.

 

How can I obtain a copy of the proxy statement? 

A copy of the proxy statement will be provided free of charge, upon request, to any registered or beneficial owner of common stock entitled to vote at the Annual Meeting. If you want to receive a paper copy of the proxy statement or annual report, please follow the instructions provided with your proxy materials and on your proxy card or voter instruction form.

  

The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding registrants, including the Company.

 

1


 

How do I vote?

With respect to Proposal One, you may vote "FOR" all nominees, "WITHHOLD" your vote as to all nominees, or "FOR" all nominees except those specific nominees from whom you "WITHHOLD" your vote.  With respect to each of Proposal Two and Proposal Three, you may vote "FOR," "AGAINST" or "ABSTAIN." The procedures for voting are as follows:

 

Shareholder of Record: Shares Registered in Your Name

 

If you are a shareholder of record, you may (a) vote in person at the Annual Meeting or (b) vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy over the telephone, Internet or by mail as instructed below to ensure your vote is counted. You may still attend the Annual Meeting and vote in person even if you have already voted by proxy.  As a shareholder of record, you have four voting options:

 

 

Over the Internet at the Internet address shown on your proxy form;

 

By telephone, by calling the telephone number on your proxy form;

 

By mail, by completing, signing, dating, and returning your proxy form; or

 

By attending the Annual Meeting and voting your shares in person.

 

If you sign the proxy card but do not make specific choices, your proxy will vote your shares “FOR” each of the proposals as set forth in the Notice of Annual Meeting of Shareholders.

 

If any other matter is presented at the Annual Meeting, your proxy will vote the shares represented by all properly executed proxies on such matters as a majority of the Board determines. As of the date of this proxy statement, we know of no other matters that may be presented at the Annual Meeting, other than those listed in the Notice of Annual Meeting of Shareholders.

 

Beneficial Owner: Shares Registered in the Name of Broker or Bank

 

If on March 15, 2019, your shares were held not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the shareholder of record for purposes of voting at the Annual Meeting.

 

As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You should have received a proxy card and voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail the proxy card and voting instructions to ensure that your vote is counted. Alternatively, you may vote by telephone or over the Internet as instructed by your broker or bank, if applicable. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.

 

Employee Stock Ownership Plan

 

If shares are held for your benefit in the Cambridge Bancorp Employee Stock Ownership Plan (the “ESOP”), you are generally entitled to direct the trustees of the ESOP’s related trust as to the manner in which any of the common stock allocated to your ESOP account is voted. The trustees will vote unallocated shares, if any, in their discretion and will vote allocated shares for which no vote is received in the same proportion that the trustees are directed to vote with respect to shares for which specific voting instructions are received.  Your voting instructions must be received by 5:00 P.M., Eastern Time on May 12, 2019, to be counted.

 

Even if you plan to attend the Annual Meeting, you are encouraged to vote by proxy prior to the meeting.

  

What are the quorum requirements?

A quorum is necessary to hold a valid meeting. A quorum will be present if shareholders holding at least a majority of the Company’s outstanding shares of common stock entitled to vote at the Annual Meeting are present at the Annual Meeting in person or are represented by proxy. If you return a valid proxy form or vote in person at the meeting, you will be considered part of the quorum.  Abstentions and broker non-votes are counted as being present for purposes of determining the presence of a quorum.

 

On the Record Date, there were 4,123,636 shares of common stock outstanding and entitled to vote. Thus, the holders of 2,061,819 shares of common stock must be present in person or represented by proxy at the Annual Meeting to have a quorum.

 

If there is no quorum, the holders of a majority of shares of common stock present at the Annual Meeting in person or represented by proxy may adjourn the Annual Meeting to another date.

 

2


 

What are the Board’s voting recommendations?

The Board recommends that you vote as follows:

 

(1) “FOR” the election of Thalia M. Meehan, Jody A. Rose, Cathleen A. Schmidt and Denis K. Sheahan as Class III Directors;

(2) “FOR” the approval of a non-binding advisory proposal on the compensation of the Company’s named executive officers; and

(3) “FOR” the proposal to ratify, on an advisory basis, the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019.

 

How many votes are needed?

Proposal 1: Election of Directors. With respect to Proposal One, you may vote "FOR" all director nominees, "WITHHOLD" your vote as to all nominees, or "FOR" all nominees except those specific nominees from whom you "WITHHOLD" your vote.  A plurality of votes cast, in person or represented by proxy, at the Annual Meeting and entitled to vote is required for the election of directors in uncontested elections, with each share being entitled to vote for as many individuals as there are directors to be elected and for whose election the share is entitled to vote. Therefore, the four director nominees receiving the highest number of “FOR” votes will be elected.  For purposes of Proposal One, votes marked “WITHOLD” and other shares not voted (whether by broker non-vote or otherwise) will not be counted as votes cast and will have no effect on the result of the vote.   However, both abstentions and broker non-votes will count toward the presence of a quorum.  There is no cumulative voting in the election of directors.

  

Proposal 2: Consideration and Approval of a Non-Binding Advisory Resolution on the Compensation of the Company’s Named Executive Officers. With respect to Proposal Two, you may vote "FOR," "AGAINST" or "ABSTAIN." The affirmative vote of a majority of the votes cast, in person or represented by proxy, at the Annual Meeting and entitled to vote is required to approve the non-binding advisory resolution of the compensation of the Company’s named executive officers.  For purposes of Proposal Two, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.  However, both abstentions and broker non-votes will count toward the presence of a quorum.

  

Proposal 3: To Ratify, on an Advisory Basis, the Appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019.  With respect to Proposal Three, you may vote "FOR," "AGAINST" or "ABSTAIN." The affirmative vote of a majority of votes cast, in person or represented by proxy at the Annual Meeting and entitled to vote is required to ratify the appointment of the Company’s independent registered public accounting firm.  For purposes of Proposal Three, abstentions will not be counted as votes cast and will have no effect on the result of the vote.  However, abstentions will count toward the presence of a quorum.

 

What is the effect of broker non-votes?

“Broker non-votes” are proxies received from brokers or other nominees holding shares on behalf of their clients who have not been given specific voting instructions from their clients with respect to non-routine matters. Brokers who hold their customers’ shares in “street name” may, under the applicable rules of the exchange and other self-regulatory organizations of which the brokers are members, sign and submit proxies for such shares and may vote such shares on routine matters, which typically include the ratification of the appointment of the Company’s independent registered public accounting firm. Proposals 1 and 2 are considered “non-routine” and Proposal 3 is considered “routine” under The NASDAQ Marketplace Rules (the “NASDAQ Listing Rules”).

 

If your broker returns a proxy but does not vote on a proposal, this will constitute a “broker non-vote.” A broker non-vote will have no effect on the outcome of any proposal.

 

Can I revoke my proxy?

Yes. You may revoke your grant of proxy at any time before the final vote at the Annual Meeting. If you are the shareholder of record, you may revoke your proxy in any one of the following four ways:

 

 

filing a written revocation of the proxy with the Company’s Corporate Secretary, which must be received by the Corporate Secretary at least one business day prior to the Annual Meeting;

 

entering a new vote over the Internet or by telephone;

 

attending and voting in person at the Annual Meeting; or

 

submitting another duly executed proxy card bearing a later date which, must be received by the Company’s Corporate Secretary at least one business day prior to the Annual Meeting.

 

If your shares are held by your broker, bank or another party as a nominee or agent, contact your bank, broker, or other nominee, and you should follow the instructions provided by such party in order to revoke your proxy.

 

3


 

Your personal attendance at the Annual Meeting does not revoke your proxy. Your last vote, prior to or at the Annual Meeting, is the vote that will be counted.

 

Who is soliciting the proxies?

The Company will bear the cost of solicitation of proxies, including preparation, assembly, printing and mailing of the Notice of Annual Meeting of Shareholders, the proxy card and any additional information furnished to shareholders. The proxy form accompanying this proxy statement is solicited by the Board. Proxies may be solicited by officers, directors, and regular supervisory and executive employees of the Company, none of whom will receive any additional compensation for their services. The Company has engaged The Proxy Advisory Group as proxy solicitor to help solicit proxies for a fee of approximately $7,000 plus reasonable out-of-pocket expenses. Such solicitations may be made personally or by mail, facsimile, telephone, messenger, or via the Internet. The Company may reimburse persons holding shares of common stock in their names or in the names of nominees, but not owning such shares beneficially, such as brokerage houses, banks, and other fiduciaries, for the expense of forwarding solicitation materials to their principals. All of the costs of solicitation of proxies will be paid by the Company.

 

Annual Report on Form 10-K and Additional Materials

 

The Notice of Annual Meeting, this proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 have been made available to all shareholders entitled to vote at the Annual Meeting and who received the Notice of Internet Availability of Proxy Materials. The Annual Report on Form 10-K, as well as this proxy statement, can also be viewed at http://ir.cambridgetrust.com/CorporateProfile/.

4


 

PROPOSAL 1 – ELECTION OF DIRECTORS

 

The Board is divided into three classes as nearly equal in number as possible. One class of directors is elected annually for a term of three years. Directors continue to serve until their three-year term expires and until their successors are elected and qualified, unless they earlier reach the mandatory retirement age of 72, die, or resign.

 

The Board, upon recommendation of the Corporate Governance Committee of the Board (the “Governance Committee”), has nominated Thalia M. Meehan, Jody A. Rose, Cathleen A. Schmidt and Denis K. Sheahan, referred to in this proxy statement as the “board nominees,” for election at the Annual Meeting to the class of directors whose terms will expire at the 2022 Annual Meeting.  The experience, qualifications, and other attributes, of each of the board nominees, as well as the continuing directors, are described below under “Information About the Company’s Board of Directors.”

 

Each of the board nominees has consented to being named in this proxy statement and to serve, if elected, and the Company has no reason to believe that any of them will be unable to serve if elected. If, however, any of the board nominees should not be available for election at the time of the Annual Meeting, it is the intention of the persons named as proxies to vote the shares to which the proxy relates for the election of such other person or persons as may be designated by the Board.  If for any reason these nominees prove unable or unwilling to stand for election or cease to qualify to serve as directors, the Board will nominate alternates or reduce the size of the Board to eliminate the vacancies. There are no arrangements or understandings between us and any director, or nominee for directorship, pursuant to which such person was selected as a director or nominee.

 

Vote Required

      A plurality of votes cast, in person or represented by proxy, at the Annual Meeting and entitled to vote is required for the election of directors in uncontested elections, with each share being entitled to vote for as many individuals as there are directors to be elected and for whose election the share is entitled to vote. Therefore, the four director nominees receiving the highest number of “FOR” votes will be elected.  For purposes of Proposal One, votes marked “WITHOLD” and other shares not voted (whether by broker non-vote or otherwise) will not be counted as votes cast and will have no effect on the result of the vote.   However, both abstentions and broker non-votes will count toward the presence of a quorum.  There is no cumulative voting in the election of directors. 

 

Our Recommendation

the board unanimously recommends YOU vote “for” THE ELECTIon OF EACH OF THE BOARD NOMINEES.  

 

Information About the Company’s Board of Directors

General

The Company’s Board currently consists of 14 members.  On January 22, 2019, Anne M. Thomas and David C. Warner tendered their resignation from the Board in connection with the age requirement of our bylaws. Donald T. Briggs and Susan R. Windham-Bannister also submitted resignation letters in connection with their ongoing employment responsibilities.  All resignations will take effect at the commencement of the Annual Meeting. As a result, pursuant to our bylaws, the Board has reduced the size of the Board of Directors to 12 directors, such reduction to be effective upon the effectiveness of the non-continuing directors’ resignations at the commencement of the Annual Meeting. The name, age and length of service of each of the nominees, the continuing directors and the non-continuing directors of the Board are set forth below:

 

Director Nominees

 

Age(1)

 

Term
Expires

 

Position(s) Held

 

Director
Since(2)

Cathleen A. Schmidt

 

59

 

2019

 

Director

 

2016

Denis K. Sheahan

 

54

 

2019

 

Director; Chairman and Chief Executive Officer

 

2015

Thalia M. Meehan

 

58

 

n/a

 

n/a

 

n/a

Jody A. Rose

 

43

 

n/a

 

n/a

 

n/a

 

Continuing Directors

 

Age(1)

 

Term
Expires

 

Position(s) Held

 

Director
Since(2)

Sarah G. Green

 

71

 

2020

 

Director

 

2014

Edward F. Jankowski

 

68

 

2020

 

Director

 

2016

Leon A. Palandjian

 

49

 

2020

 

Director

 

2006

Linda Whitlock

 

71

 

2020

 

Director

 

2002

Jeanette G. Clough

 

65

 

2021

 

Director

 

2008

Hambleton Lord

 

57

 

2021

 

Director

 

2012

R. Gregg Stone

 

66

 

2021

 

Director

 

2009

Mark D. Thompson

 

62

 

2021

 

Director; President

 

2017

 

5


 

Non-Continuing Directors

 

Age(1)

 

Term
Expires

 

Position(s) Held

 

Director
Since(2)

Donald T. Briggs

 

51

 

2021

 

Director

 

2013

Susan R. Windham-Bannister

 

67

 

2021

 

Director

 

2016

Anne M. Thomas

 

72

 

2019

 

Director

 

1979

David C. Warner

 

72

 

2019

 

Lead Director

 

1999

 

(1)

At May 13, 2019.

(2)

Includes terms served on the Board of Directors of Cambridge Trust, as applicable.

 

The principal occupation, education and business experience, where applicable, of each nominee for election as director and each continuing are set forth below. Unless otherwise indicated, principal occupations shown for each director have extended for five or more years.

 

Board Nominees

Cathleen A. Schmidt, Age 59.  Since 2013, Ms. Schmidt has served as Executive Director and Chief Executive Officer at McLane Middleton Professional Association, a full service law firm with headquarters in Manchester, New Hampshire.  Prior to that, she spent six years as President and CEO of Citizen’s Bank New Hampshire/Vermont.  She has served as a director of the Company and of Cambridge Trust since 2016.  The Board has determined that Ms. Schmidt is qualified to serve as a director based upon her prior service as a director of the Company and of Cambridge Trust including her service on numerous Board committees.  In addition, Ms. Schmidt brings to the Board her experience in executive management of a large regional bank, expertise in retail banking, and knowledge of the New Hampshire market.

 

Denis K. Sheahan, Chairman, Chief Executive Officer, Age 54.  Mr. Sheahan serves as Chief Executive Officer of the Company and of Cambridge Trust.  Prior to joining the Company in 2015, Mr. Sheahan spent 19 years at Independent Bank Corp. and Rockland Trust in various capacities including Chief Operating Officer, Chief Financial Officer, and Controller.  He has served as a director of the Company and of Cambridge Trust since 2015.  The Board has determined that Mr. Sheahan is qualified to serve as a director based upon his prior service as a director of the Company and of Cambridge Trust and his extensive experience in many areas of banking and financial services.  Mr. Sheahan has experience in positions of executive leadership at publicly traded companies and knowledge of the communities that the Company serves.

 

Thalia M. Meehan, 58. Ms. Meehan is currently an independent director at Safety Insurance. Ms. Meehan retired from Putnam Investments in 2016 after 27 years in the Tax Exempt Bond Group, where she was Team Leader and Portfolio Manager from 2006 to 2016. She was previously Head of Tax Exempt Credit Research at Putnam. Ms. Meehan also serves on the Strategic Advisory Committee of Build American Mutual since January 2018, as well as on the board of Boston Women in Public Finance since 2013. Ms. Meehan is a CFA charter holder and a graduate of Williams College.  The Board has determined that Ms. Meehan is qualified to serve as a director based upon her prior service as a director on numerous boards and her background in financial services.

 

Jody A. Rose, 43. Ms. Rose is the President of the New England Venture Capital Association where she works in partnership with the venture and startup communities on initiatives that aim to position New England as an attractive region for entrepreneurs and investors. Prior to joining the New England Venture Capital Association in 2015, Ms. Rose held executive-level roles since 2014 with both enterprise corporations and lean startups, focusing primarily on corporate development in mobile, eCommerce and digital media.

 

Ms. Rose currently serves on the board of directors for My Sister’s Keeper, is a member of the Massachusetts Women’s Forum, and is a member of The Boston Foundation’s Innovation Economy Leadership Council. In 2016 Jody received an Honorary Doctorate of Business Administration from Mount Ida College, was named by The Boston Business Journal as a member of The BBJ’s Power 50: The Game Changers, and most recently co-founded Hack.Diversity – a program that tackles the underrepresentation of high-skilled minorities of color in Boston’s Innovation Economy. In 2017 she was the recipient of the Ad Club’s Rosoff Award for visionary empowerment of diversity and in 2018 Jody received uAspire’s First One award and was recognized by Boston Magazine as one of the 100 most influential people in Boston.  The Board has determined that Ms. Rose is qualified to serve as a director based upon her prior service as a director on numerous boards and her background in marketing and venture capital.

 

6


 

Continuing Directors

Class II Directors

Jeanette G. Clough, Age 65.  Since November 1998, Ms. Clough has served as the Chief Executive Officer and President of Mount Auburn Hospital.  Ms. Clough has served as a director of the Company and of Cambridge Trust since 2008.  The Board has determined that Ms. Clough is qualified to serve as a director based upon her prior service as a director of the Company and of Cambridge Trust including her service on numerous Board committees, her experience as Chief Executive Officer of a large healthcare organization, and her knowledge of the communities in the Company’s market area.

 

Hambleton Lord, Age 57.  Mr. Lord has over 30 years’ experience in the software industry founding and building industry leading companies.  He is the CEO and co-founder of Seraf, a financial services software company that provides professional portfolio management tools for investors in early stage companies. In addition, he is the Chairman of Launchpad Venture Group, a Boston-based angel investor group that focuses on seed stage technology and life science companies. Mr. Lord has served as a director of the Company and of Cambridge Trust since 2012 and currently serves as Chair of the Compensation Committee.  The Board has determined that Mr. Lord is qualified to serve as a director based upon his prior service as a director of the Company and of Cambridge Trust including his service on numerous Board committees, his experience as an angel investor, his knowledge of the software industry and innovation economy in Massachusetts, and his knowledge of the business communities in the Company’s market area.

 

R. Gregg Stone, Age 66.  Mr. Stone serves as Manager of Kestrel Management, LLC, through which he manages venture capital and family investments.  He has worked in the investment industry since 1986 when he joined Pell, Rudman & Co., Inc. as a Vice President from the law firm Hemenway & Barnes.  Mr. Stone has served on the boards of a number of private companies and charities including serving on the board of NovaCare from its acquisition by Foster Management Company in 1985 through its initial public offering in 1986 until 1993.  Mr. Stone has served as director of the Company and of Cambridge Trust since 2009.  The Board has determined that Mr. Stone is qualified to serve as a director based upon his prior service as a director of the Company and of Cambridge Trust including his service on numerous Board committees, and his background in investment management and venture capital.

 

Mark D. Thompson, President, Age 62.  Mr. Thompson serves as President of the Company and of Cambridge Trust and oversees the Company’s private banking activities including wealth management, personal banking and marketing.  Prior to joining the Company in 2017, Mr. Thompson spent 22 years at Boston Private Bank & Trust Company in various capacities including Chief Executive Officer.  Prior to joining Boston Private Bank & Trust, Mr. Thompson was an Executive Vice President and a founding officer at Wainwright Bank & Trust Company. The Board has determined that Mr. Thompson is qualified to serve as a director based upon his extensive experience in banking and financial services, including his experience in executive leadership positions of a publicly traded company.

Class I Directors

Sarah G. Green, Age 71.  Before her retirement in 2013, Ms. Green was the Chief Operating Officer at the Federal Reserve Bank of Richmond for seven years.  Prior to that, Ms. Green was an Executive Officer at the Federal Reserve Bank of Boston for 28 years.  Ms. Green has served as a director of the Company and of Cambridge Trust since 2014, and she is currently Chair of the Audit Committee.  The Board has determined that Ms. Green is qualified to serve as a director based upon her prior service as a director of the Company and of Cambridge Trust including her service on numerous Board committees and her leadership of director education activities, her experience as an executive at the Federal Reserve System, her knowledge of payments systems, and her broad experience in serving on non-profit boards.

 

Edward F. Jankowski, Age 68.  Before his retirement in 2015, Mr. Jankowski held many roles during his 16 years at Independent Bank Corp. and Rockland Trust, a Massachusetts commercial bank, including Senior Vice President, Residential Lending and Corporate Compliance, Chief Technology and Operations Officer, Chief Risk Officer and Chief Internal Auditor.  Before joining Rockland Trust Mr. Jankowski served as SVP of North Shore Bank, and SVP at Multibank Service Corp., a subsidiary of Multibank Financial Corp.  Mr. Jankowski is a Certified Public Accountant.  Mr. Jankowski has served as a director of the Company and of Cambridge Trust since 2016.  The Board believes that Mr. Jankowski is qualified to serve as a director based upon his prior service as a director of the Company and of Cambridge Trust including his service on numerous Board committees, his knowledge of banking regulation and risk management, his training as a certified public accountant, and his experience as an executive of a publicly traded organization in the banking and finance industry.

 

Leon A. Palandjian, MD, CFA, Age 49.  Dr. Palandjian is the Chief Risk Officer of Intercontinental Real Estate Corporation, a national real estate investment, development, and management firm headquartered in Boston, MA. His investment experience spans venture capital, private and public equity, in the life science and real estate sectors. Dr. Palandjian has served as a director of the Company and of Cambridge Trust since 2006 and was Lead director from 2014 until January 2017 and is currently Chair of the Trust

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Committee. The Board has determined that Dr. Palandjian is qualified to serve as a director based upon his prior service as a director of the Company and of Cambridge Trust including his service on numerous Board committees, his extensive experience in equity investment and finance, his CFA qualification, and his knowledge of the communities in the Company’s market area.

 

Linda Whitlock, Age 71.  Ms. Whitlock founded in 2010, and is a Principal of, The Whitlock Group, a management and strategy consulting firm.  Previously, Ms. Whitlock was President and Chief Executive Officer of Boys & Girls Clubs of Boston from 1999 to 2008. She has held numerous other executive management and director positions at Harvard Real Estate, MA Government Land Bank, and several venture capital portfolio companies, among others.  Ms. Whitlock has served as a director of the Company and of Cambridge Trust since 2002, and was the Company’s first Lead Director from 2011 until 2014.  She chaired the recent search for a new chief executive officer of the Company, and is currently Chair of the Governance Committee.  The Board believes that Ms. Whitlock is qualified to serve as a director based upon her prior service as a director of the Company and of Cambridge Trust including her service on numerous Board committees, her experience as a Chief Executive Officer, and her extensive governance experience on the boards of public and private companies and charitable organizations based in the Company’s market area.

INFORMATION ABOUT THE COMPANY’S EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS 

 

The following individuals are the current executive officers of the Company and/or Cambridge Trust who are not directors. The executive officers hold office until their respective successors have been appointed and qualified, or until death, resignation or removal by the Board. In addition, we have entered into Employment Agreements with certain executive officers, which set forth the terms of their employment. Ages reflected are as of the Annual Meeting date of May 13, 2019.

Michael F. Carotenuto, Age 33.  Mr. Carotenuto has been the Chief Financial Officer and Treasurer of Cambridge Trust since November 2016.  Mr. Carotenuto most recently served as Senior Vice President, Director of Treasury and Internal Reporting at Belmont Savings Bank since 2011.  Prior to that, he worked at People’s United Financial, Inc. as an Accounting Policies Advisor and was on the Risk Advisory Services staff at Ernst & Young, LLP. Mr. Carotenuto serves as Secretary of the Company and of Cambridge Trust, he is also a licensed certified public accountant though no longer in public practice.  

Martin B. Millane, JrAge 62.  Mr. Millane joined Cambridge Trust in 2004 as Senior Vice President, Commercial Real Estate.  In 2010, he became Senior Vice President, Senior Lending Officer and was promoted to his current role of Executive Vice President, Chief Lending Officer in 2014.  Prior to joining Cambridge Trust, Mr. Millane was a Senior Vice President in Commercial Lending at Century Bank.

Kerri A. Mooney, Age 50.  Ms. Mooney joined Cambridge Trust in 2018 and serves as Senior Vice President and Director of Private Banking Offices. Prior to joining Cambridge Trust Ms. Mooney worked as the Director of Branches for HarborOne Bank from October 2016 to June 2018. Prior to that, she was the First Vice President and District Manager at Rockland Trust from July 2010 to October 2016 where she led Rockland Trust's Greater Boston banking offices.

Puneet Nevatia, Age 46.  Mr. Nevatia joined Cambridge Trust in 2018 as Senior Vice President and Chief Information Officer. Prior to his appointment, Mr. Nevatia served as an Executive Client Partner within the financial services division of Sapient Corporation, a global consulting company that provides business, technology, digital transformation, and marketing services to clients since October 2012. Prior to Sapient, Mr. Nevatia worked in a number of financial service firms, including Babson Capital and Wellington Management.

Jennifer A. Pline, Age 59.  Ms. Pline joined Cambridge Trust in 2017 and serves as Executive Vice President, and Head of the Company’s Wealth Management Group.  Prior to joining Cambridge Trust, Ms. Pline worked as Managing Director, Chief Trusts & Gifts Officer at Harvard Management Company since 2005.  Prior to that, she worked at Standish Mellon Asset Management as the Director of Client Service and was a vice president at Standish, Ayer & Wood, Inc.  Ms. Pline is a Chartered Financial Analyst.  

Pilar Pueyo, Age 57.  Ms. Pueyo joined Cambridge Trust in 2016 as Senior Vice President, and Director of Human Resources.  Prior to joining Cambridge Trust, Ms. Pueyo spent 17 years at Boston Private Bank and Trust Company where she was responsible for the delivery and execution of Human Resources strategy, programs, and services to support its business strategy.

John J. Sullivan, Age 60. Mr. Sullivan serves as Senior Vice President, Director of Consumer Lending at Cambridge Trust. Mr. Sullivan has held various leadership positions within the private banking and wealth management industry. Prior to joining Cambridge Trust in 2017, Mr. Sullivan spent 16 years at Boston Private Bank & Trust Company, where he served in various capacities including Executive Vice President, Wealth Management and Trust; and Executive Vice President, Residential Lending. Prior to that, he spent 10 years at Citizens Bank as a Residential Loan Officer.

Jennifer M. Willis, Age 52.  Ms. Willis joined Cambridge Trust in 2017 as Senior Vice President and Chief Marketing Officer. Prior to joining Cambridge Trust, Ms. Willis spent 17 years at Boston Private Bank & Trust Company where she provided strategic, operational, and administrative oversight for the marketing group. Prior to joining Boston Private, Ms. Willis held various marketing roles at Bank of Boston.

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CORPORATE GOVERNANCE 

 

Board of Directors; Board Leadership Structure  

Since Mr. Sheahan, the Company’s Chief Executive Officer, also serves as Chairman of the Board, the Board elected an independent director, R. Gregg Stone, to serve as a Lead Director. In April 2018, the Board determined that Mr. Stone will serve as the Company’s Lead Director and succeed Mr. Warner upon the effectiveness of Mr. Warner’s retirement from the Board at the commencement of the Annual Meeting. The Lead Director coordinates the activities of the other independent directors, acts as a liaison between the Board and the Chief Executive Officer, leads executive sessions, and performs such other duties as the Board requests. The Board provides oversight of the Chief Executive Officer and other management of the Company and Cambridge Trust to ensure that the long-term interests of shareholders are being served. The Board believes that having a combined Chairman and principal executive officer, coupled with a lead independent director, is the most appropriate leadership structure for the Company, especially given Mr. Sheahan’s extensive experience in banking and financial services and his extensive knowledge of the Company and its governance. This structure allows Board discussions regarding performance and strategic matters to be led by the person who oversees the Company’s strategy and operations and establishes a single voice to speak on behalf of the Company, while the lead independent director component of the structure provides independent leadership that mitigates any real or perceived conflicts of interest. The Board typically will have nine regularly scheduled meetings a year, and additional meetings when necessary or advisable, at which reports on the management and performance of the Company and Cambridge Trust are reviewed. The Board has also established the Board Committees described below which regularly meet and report back to the Board on the responsibilities delegated to them. In addition to its general oversight role, the Board also: selects, evaluates, and compensates the Chief Executive Officer and oversees Chief Executive Officer succession planning; reviews, monitors, and, when necessary or appropriate, approves fundamental financial and business strategies and major corporate actions; assesses major risks facing the Company or Cambridge Trust and options for their mitigation; and seeks to maintain the integrity of financial statements and the integrity of compliance with law and ethics of the Company and Cambridge Trust.

 

The Board held nine regular meetings and two special meetings during the fiscal year ended December 31, 2018. Each incumbent director attended at least 75% of the total of (i) the meetings of the Board held during the period for which he/she has been a director and (ii) the meetings of the committee(s) on which that particular director served during such period, except for Mr. Briggs who attended 50% of the meetings of the Board, the Compensation Committee, and Governance Committee.

 

The Company’s policy is that all directors and nominees attend the Annual Meeting. At the 2018 annual meeting of shareholders, Sarah G. Green, Cathleen A. Schmidt, and Susan R. Windham-Bannister were not able to attend the meeting.  

 

Board’s Role in Risk Oversight

The Board has the ultimate authority and responsibility for overseeing risk management at the Company. Some aspects of risk oversight are fulfilled at the full Board level. For example, the Board regularly receives reports from management on numerous risk components that impact the operations and reputation of the Company. The Board delegates other aspects of its risk oversight function to its committees.

 

The Audit Committee oversees, reviews and monitors, including discussing with management, the internal auditors and the independent auditor, the Company’s and Cambridge Trust’s major risk exposures and the steps management is taking to monitor and control such exposures, including the Company’s enterprise risk management approach, risk assessment and risk management policies.

 

The Compensation Committee oversees the management of risks that may be posed by the Company’s compensation practices and programs. As part of this process, the Compensation Committee reviews the Company’s incentive plans to ensure that such plans adequately manage risk and do not cause excessive risk taking.

 

Board of Directors Independence

Rule 5605 of the NASDAQ Listing Rules requires that independent directors compose a majority of a listed company’s board of directors. In addition, the NASDAQ Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under Rule 5605(a)(2) of the NASDAQ Listing Rules, a director will only qualify as an “independent director” if, in the opinion of the Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 under the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (i) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries. In addition to

9


 

satisfying general independence requirements under the NASDAQ Listing Rules, members of a compensation committee must also satisfy independence requirements set forth in Rule 10C-1 under the Exchange Act and NASDAQ Listing Rule 5605(d)(2). Pursuant to Rule 10C-1 under the Exchange Act and NASDAQ Listing Rule 5605(d)(2), in affirmatively determining the independence of a member of a compensation committee of a listed company, the board of directors must consider all factors specifically relevant to determining whether that member has a relationship with the company which is material to that member’s ability to be independent from management in connection with the duties of a compensation committee member, including: (a) the source of compensation of such member, including any consulting, advisory or other compensatory fee paid by the company to such member; and (b) whether such member is affiliated with the company, a subsidiary of the company or an affiliate of a subsidiary of the company.

 

The Board consults with outside legal counsel to ensure that their determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent NASDAQ Listing Rules, as in effect from time to time.

 

Consistent with these considerations, the Board has affirmatively determined that all of its directors, including the board nominees, satisfy general independence requirements under the NASDAQ Listing Rules, other than Messrs. Sheahan and Thompson. In making this determination, the Board found that none of the directors, other than Messrs. Sheahan and Thompson, had a material or other disqualifying relationship with us that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and that each director, other than Messrs. Sheahan and Thompson, is “independent” as that term is defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. The Board determined that Mr. Sheahan, Chief Executive Officer, and Mr. Thompson, President, are not independent directors by virtue of their current employment with us. The Board also determined that each member of the Audit, Governance and Compensation Committees satisfies the independence standards for such committees established by the SEC and the NASDAQ Listing Rules, as applicable.

 

Director Nominations

The Board, upon recommendation of the Governance Committee, selects director nominees to be presented for shareholder approval at the Annual Meeting, including the nomination of incumbent directors for reelection and the consideration of any director nominations submitted by shareholders. As of the date of this proxy statement, the Governance Committee had not received any shareholder recommendations for nominees in accordance with our bylaws in connection with the Annual Meeting.

 

In evaluating the qualifications of potential new directors, the Board considers the following set of recruitment criteria:

 

Directors should, as a result of their occupation, background, and/or experience, possess a mature business judgment that enables them to make a positive contribution to the Board.  Directors are expected to bring an inquisitive and objective perspective to their duties.  Directors should possess, and demonstrate through their actions on the Board, exemplary ethics, integrity, and values.

 

Each candidate’s leadership experience, business experience and acumen, familiarity with relevant industry issues, and such other relevant skills and experience as may contribute to the Board’s effectiveness and the Company’s success.

 

Based upon the characteristics of the then-current Board, the Governance Committee takes Board diversity into account with respect to personal attributes and characteristics, including with respect to race, ethnicity, gender, age, cultural backgrounds, professional experience, skills, and other qualifications.

 

While familiarity with the communities that Cambridge Trust serves is one factor to be considered in determining if an individual is qualified to serve as a director, it is not a controlling factor.  The Board believes that a significant portion of the directors should be, and are, drawn from the communities that the Company serves.

Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time.  Directors are expected to offer their resignation in the event of any significant change in circumstances that renders them incapable of performing their duties.  Directors who attain the age of 72 during their elected term as a director will retire from the Board as of the next annual meeting of shareholders.

According to our bylaws, to recommend a director nominee, a shareholder must provide written notice to Corporate Secretary, c/o Elaine Virzi, Cambridge Trust Company, 1336 Massachusetts Avenue, Cambridge, Massachusetts 02138. This notice must be provided not fewer than 50 days nor more than 70 days before the annual meeting of shareholders; provided, however, that, if less than 60 days’ prior public disclosure of the date of the meeting is made, notice by the shareholder must be received not later than the close of business on the earlier of the 10th day following the day on which such public disclosure was made or the day before the meeting. Such shareholder’s notice must set forth (i) the name and address of such shareholder and of each person to be nominated; (ii) the class and number of shares of capital stock of the Company beneficially owned by such shareholder and by each person to be nominated; (iii) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate such person(s); (iv) a description of all arrangements between such shareholder and each person to be nominated by the shareholder; (v) such other information regarding each nominee proposed in the notice as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC; and (vi) the consent of each nominee to serve as a director of the Company if elected.

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Shareholder Communications with the Board

The Board will give appropriate attention to written communications on issues that are submitted by shareholders and will respond as appropriate. Communications will be forwarded to all members of the Board or specified individual directors if they relate to substantive matters and include suggestions or comments that are considered to be appropriate for Board consideration. Shareholders who wish to send communications to the Board should submit them, in writing, to Corporate Secretary, c/o Elaine Virzi, Cambridge Trust Company, 1336 Massachusetts Avenue, Cambridge, Massachusetts 02138.

 

Code of Ethics

The Board has also adopted a code of business conduct and ethics (the “Code of Ethics”) that applies to all employees, officers and directors. Each employee, officer and director participates in an annual training session that focuses on topics covered by the Company’s Code of Ethics. The training reinforces the Company’s core values and commitment to full compliance with applicable laws and regulations. You can find links to the Code of Ethics on the Company’s website at: http://ir.cambridgetrust.com/govdocs. The inclusion of the Company’s website address here and elsewhere in this proxy statement does not include or incorporate by reference the information on the Company’s website into this proxy statement.

 

You can also obtain a printed copy of the Committee charters (referenced in “Committees of the Board of Directors”) and the Code of Ethics, without charge, by contacting us at the following address:

Cambridge Bancorp

1336 Massachusetts Avenue

Cambridge, MA 02138

ATTN: Corporate Secretary

 

Committees of the Board of Directors

The Board has an Audit Committee, a Compensation Committee and a Governance Committee along with other various committees. The Board has adopted a charter for each of the Audit Committee, the Compensation Committee, and the Governance Committee, as well as qualification guidelines for board members.  The following table provides meeting information for the year ended December 31, 2018, for each committee:

 

Name

 

Audit Committee

 

Compensation Committee

 

Governance Committee

Donald T. Briggs (1)

 

 

 

X

 

X

Jeannette G. Clough

 

X**

 

X

 

 

Sarah G. Green

 

X*

 

X

 

X

Edward F. Jankowski

 

X**

 

 

 

 

Hambleton Lord

 

X

 

X*

 

 

Leon A. Palandjian

 

X

 

 

 

 

Cathleen A. Schmidt

 

 

 

 

 

 

Denis K. Sheahan

 

 

 

 

 

 

R. Gregg Stone

 

X

 

X

 

X

Anne M. Thomas (1)

 

 

 

 

 

 

Mark D. Thompson

 

 

 

 

 

 

David C. Warner (1)

 

 

 

X

 

X

Linda Whitlock

 

 

 

 

 

X*

Susan R. Windham-Bannister (1)

 

 

 

 

 

X

Total meetings in 2018

 

4

 

4

 

7

 

*

Committee Chair

**

Financial Expert

 

(1)

Mses. Thomas and Windham-Bannister and Messrs. Warner and Briggs will serve on the committees indicated until the commencement of the Annual Meeting.

 

Audit Committee

The Audit Committee oversees the Company’s accounting and financial reporting processes, including its internal audit function, risk management oversight, the external and internal audits of the Company’s financial statements, the integrity of the financial statements of the Company, the qualifications, independence and performance of the independent auditor engaged by the Company and compliance with applicable legal and regulatory requirements. The Audit Committee may form and delegate authority to one or

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more subcommittees (including a subcommittee consisting of a single member), as it deems appropriate from time to time under the circumstances. A copy of the Audit Committee’s charter is available on the Company’s website at: http://ir.cambridgetrust.com/govdocs. During the year ended December 31, 2018, the Audit Committee held four meetings. The members of the Audit Committee currently are Mses. Clough and Green (Chair), and Messrs. Jankowski, Lord, Palandjian and Stone.   Each of the members of the Audit Committee meets the independence requirements under the NASDAQ Listing Rules and applicable rules and regulations of the SEC. The Board has determined that each member of the Audit Committee is financially literate and that Ms. Clough and Mr. Jankowski qualify as “audit committee financial experts,” as that term is defined in Item 407(d)(5) of Regulation S-K.

 

Audit Committee Report

The Audit Committee has reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 2018, with management and the Company’s independent registered public accounting firm, KPMG LLP. The Audit Committee has discussed with KPMG LLP the matters required to be discussed by Public Company Accounting Oversight Board, or PCAOB, Auditing Standard No. 1301. The Audit Committee has also received the written disclosures and the letter from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP’s communications with the Audit Committee concerning independence, and has discussed with KPMG LLP the firm’s independence. Based on the foregoing, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, for filing with the SEC.

 

 

Audit Committee of the Board of Directors of Cambridge Bancorp

 

Sarah G. Green, Chair

 

Jeanette G. Clough

 

Edward F. Jankowski

 

Hambleton Lord

 

Leon Palandjian

 

R. Gregg Stone

 

Corporate Governance Committee

The Governance Committee has overall responsibility for recommending corporate governance policies and procedures and board operations for the Company. The Governance Committee provides recommendations for action by the Board related to the appropriate size, composition, function, needs and effectiveness of the Board and its committees, develops and implements corporate governance principles and practices for the Company and oversees implementation of the Company’s Code of Ethics, including reviewing Company transactions involving related parties and other potential conflicts of interest.  The Governance Committee identifies director candidates, reviews the qualifications and experience of each person considered as a nominee for election or reelection as a director, recommends director nominees to fill vacancies on the Board and for approval by the Board and the shareholders. A copy of the Governance Committee’s charter is available on the Company’s website at: http://ir.cambridgetrust.com/govdocs. During the year ended December 31, 2018, the Governance Committee held seven meetings. The members of the Governance Committee are Mses. Green, Whitlock (Chair), and Windham-Bannister and Messrs. Briggs, Stone, and Warner.  Ms. Windham-Bannister and Messrs. Briggs and Warner will serve on the Governance Committee until the commencement of the Annual Meeting. Each member of the Governance Committee meets the independence requirements under the NASDAQ Listing Rules.

 

Compensation Committee

The Compensation Committee’s responsibilities include: (i) assisting the Board in carrying out its responsibilities in determining the compensation of the Chief Executive Officer, the President and the other executive officers of the Company and Cambridge Trust; (ii) establishing compensation policies that will attract and retain qualified personnel through an overall level of compensation that is comparable to, and competitive with, others in the industry and in particular, peer financial institutions; and (iii) assisting the Board with the design and development, for approval, of equity and cash compensation plans.

 

The Compensation Committee also makes recommendations to the Board on the executive officers to whom equity and cash awards shall be granted, the number of shares to be granted to each, and the time or times at which such awards should be granted.

 

The Chief Executive Officer reviews the performance of the executive officers of the Company and Cambridge Trust (other than the Chief Executive Officer) and, based on that review, makes recommendations to the Compensation Committee about the compensation of executive officers other than himself. The Chief Executive Officer does not participate in any deliberations or approvals by the Compensation Committee or the Board with respect to his own compensation. The Compensation Committee makes recommendations to the Board about all compensation decisions involving the Chief Executive Officer and the other executive officers of the Company and Cambridge Trust. The Board reviews and votes to approve, in its discretion, all compensation decisions

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involving the Chief Executive Officer and the executive officers of the Company and Cambridge Trust. The Compensation Committee and the Board use summaries of proposed overall short-term and long-term compensation, summaries of compensation decisions made in past years, and competitive survey data showing current and historic elements of compensation, and other relevant information when reviewing executive officer and Chief Executive Officer compensation. Compensation Committee meetings are attended by the Chief Executive Officer, other than while his compensation and benefits are discussed. For a description of the role of the Chief Executive Officer in determining or recommending the amount of compensation paid to the Company’s named executive officers during the year ended December 31, 2018, see “Compensation Discussion and Analysis.”

 

During the year ended December 31, 2018, the Compensation Committee held four meetings. The members of the Compensation Committee are Messrs. Lord (Chair), Briggs, Stone and Warner and Mses. Clough and Green.  Messrs. Briggs and Warner will serve on the Compensation Committee until the commencement of the Annual Meeting. Each of the members of the Compensation Committee meets the independence requirements under the NASDAQ Listing Rules, and also serve on the Compensation Committee of the Company’s subsidiary, Cambridge Trust. A copy of the Compensation Committee’s charter is available on the Company’s website at: http://ir.cambridgetrust.com/govdocs. The Compensation Committee may delegate to its chairperson or any other Compensation Committee member such power and authority as the Compensation Committee deems appropriate, except such powers and authorities required by law to be exercised by the whole Compensation Committee or subcommittee thereof. For information on the role of compensation consultants determining or recommending the amount or form of executive or director compensation, see “Compensation and Discussion Analysis - Oversight Responsibility for Executive Compensation – Role of the Compensation Consultant.”

 

Compensation Committee Interlocks and Insider Participation

In 2018, the Compensation Committee was comprised entirely of independent directors, Messrs. Lord (Chair), Briggs, Stone and Warner and Mses. Clough and Green. No member of the Compensation Committee is a current, or during 2018 was a former, executive officer or employee of the Company or any of its subsidiaries. During 2018, J.M. Forbes & Co., where Mr. Warner, one of the Company’s directors, is a partner, purchased research subscription services from the Company’s Wealth Management division for an aggregate value of approximately $121,000.  Such purchase was approved by the Board pursuant to the policies and procedures described herein. In 2018, none of the Company’s executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee of the Company.

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis discusses our compensation policies and determinations that apply to our named executive officers. When we refer to our named executive officers, or “NEOs,” we are referring to the following individuals whose 2018 compensation is set forth below in the Summary Compensation Table and subsequent compensation tables.  

 

Name

 

Position

Denis K. Sheahan

 

Chief Executive Officer

Michael F. Carotenuto

 

Chief Financial Officer

Martin B. Millane, Jr.

 

Executive Vice-President, Chief Lending Officer

Jennifer A. Pline

 

Executive Vice-President, Wealth Management

Mark D. Thompson

 

President

 

Executive Summary

 

2018 Business Highlights

 

Cambridge Bancorp (together with its bank subsidiary, unless the context otherwise requires, the “Company”) is a Massachusetts corporation and has one bank subsidiary, Cambridge Trust Company (the “Bank”), formed in 1890. As of December 31, 2018, the Company had total assets of approximately $2.1 billion and operated 10 full-service private banking offices in Eastern Massachusetts. As a Private Bank, we focus on four core services: Wealth Management, Commercial Banking, Residential Lending and Personal Banking. The Bank’s customers consist primarily of consumers and small- and medium-sized businesses throughout Greater Boston and Southern New Hampshire. The Company’s Wealth Management Group has five offices: two in Boston, Massachusetts and three in New Hampshire in Concord, Manchester, and Portsmouth. As of December 31, 2018, the Company had assets under management and administration of approximately $2.9 billion.  

 

2018 was a year of continued growth and strong performance for the Company, as measured by numerous metrics:

 

 

Net income (core) increased 28.6% from 2017 (from $18.69 million to $24.03 million)

 

Diluted EPS (core) increased 27.5% from 2017 (from $4.55 to $5.80)

 

Wealth Management revenue increased 9.4% (from $23.0 million to $25.2 million)

 

Return on Average Equity (core) was 15.45%, which represents top decile performance vs. the most recent publicly available data in the Bank Holding Company Performance Report (for institutions with similar asset size) as published by the Federal Financial Institutions Examination Council.

 

    

 

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GAAP to Non-GAAP Reconciliation (dollars in thousands except per share data)

 

Statement on Non-GAAP Measures: The Company believes the presentation of the following non-GAAP financial measures provides useful supplemental information that is essential to an investor’s proper understanding of the results of operations and financial condition of the Company. Management uses non-GAAP financial measures in its analysis of the Company’s performance. These non-GAAP measures should not be viewed as substitutes for the financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

 

Net Income (Core) / Diluted EPS (Core)

 

2018

 

 

2017

 

Net Income (a GAAP measure)

 

$

23,881

 

 

$

14,816

 

Merger Expenses (Pretax)

 

 

201

 

 

 

 

Tax Effect of Merger-related Expenses(1)

 

 

(56

)

 

 

 

Impact of the Tax Cuts and Jobs Act of 2017(2)

 

 

 

 

 

3,869

 

Net Income (Core) (a non-GAAP measure)

 

$

24,026

 

 

$

18,685

 

Weighted average diluted shares

 

 

4,098,633

 

 

 

4,065,754

 

Diluted earnings per share (Core) (a non-GAAP measure)

 

$

5.80

 

 

$

4.55

 

 

 

 

 

 

 

 

 

 

Return on Average Equity (Core)

 

2018

 

 

2017

 

Net income (core) (a non-GAAP measure)

 

$

24,026

 

 

$

18,685

 

Average shareholders' equity

 

$

155,546

 

 

$

141,488

 

Return on average equity (core) (a non-GAAP measure)

 

 

15.45

%

 

 

13.21

%

 

(1)

The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company’s combined marginal tax rate to only those items included in net taxable income.

(2)

Income tax adjustment related to the re-measurement of net deferred tax assets due to the Tax Cuts and Jobs Act.

 

The Company’s performance was reflected in its stock price.  Based on its closing stock price of $83.25 per share on December 31, 2018, the last trading day of the year, the Company’s total shareholder return for 2018 was 6.75% (assuming reinvestment of dividends), outperforming both the peer group and the broader market.  

 

 

15


 

Key Components of 2018 Compensation

 

The primary elements of our total direct compensation program for the NEOs are set forth below. 

 

Compensation Component

Link to Business
and Talent Strategies

2018 Compensation Actions

Base Salary
(Page 19)

     Represents the “fixed” amount of compensation executives receive in exchange for performing their roles.

     Competitive with market median (that is, the 50th percentile) for comparable roles in similar organizations.

     Actual salaries reflect each individual’s experience, tenure, performance, and contribution to the Company.

     Merit-based increases and market adjustments for 2018 ranged from 0% to 11.1%.

Short-Term Incentive Compensation
(Page 19)

     Rewards the achievement of annual performance (both Company and individual).

     Target incentive opportunity (as a percentage of base salary) is aligned with market/industry practice.

     Actual awards reflect performance relative to annual Company and individual performance.

     Short-term cash incentive awards were earned at an average of 134.7% due to strong Return on Equity performance and Operating Income results.  

Long-Term Equity
Incentive Compensation
(Page 22)

     Rewards long-term sustained performance and aligns executives with shareholder interests.

     2018 annual equity-based awards consisted of performance-based restricted stock units (“PRSUs”) and time-based restricted stock units (“RSUs”).

     Equity awards create a strong ownership culture.

     PRSUs are subject to a 3-year performance period (2018-2020) and will be earned based on Return on Assets and Diluted Earnings Per Share growth performance as compared to the industry index.  RSUs vest in even annual increments over a three-year period.

 

 

Compensation Philosophy

The Company’s compensation philosophy is intended to provide a total compensation package that is competitive with market practice while varying awards to recognize Company and individual performance. The objective is to provide competitive pay for achieving performance goals consistent with the Company’s business objectives and performance compared to industry. Actual compensation should exceed market when superior performance is achieved, and be lower than market when performance falls below expectations.

 

In aggregate, the objectives of the Company’s compensation program are to:

 

Attract and retain talented members of senior management;

 

Provide a competitive total compensation and benefits package;

 

Reward superior performance (appropriately balancing short-term and long-term objectives); and

 

Align management interests with those of shareholders.

16


 

Since a significant portion of the executive officers total compensation is performance-based (short-term and long-term incentives), the Company expects its compensation will vary on an annual basis, however, over the long-term, the executive officers compensation will align with the Company’s long-term performance. In the aggregate, the Company believes its total compensation program provides appropriate balance that enables the Company to ensure proper pay-performance alignment and reduces the potential that its plans might motivate inappropriate risk-taking. The Company’s program balances:

 

Short-term and long-term performance;

 

Bank and individual performance;

 

Quantitative/financial performance goals and qualitative/discretionary performance; and

 

Absolute performance (the Company’s internal goals) and relative performance (compared to industry).

The targeted mix of total direct compensation that the Company established at the beginning of 2018 for our CEO and the other NEOs is illustrated below. The Company believes the mix of compensation components, the allocation between cash and equity, the time horizon between short-term and long-term and the differentiation between fixed and variable compensation collectively provide appropriate incentives to motivate near-term performance, while at the same time providing significant incentives to keep the executives focused on longer-term corporate goals that drive shareholder value.

 

 

CEO Targeted Pay Mix

Salary

Annual Cash Incentive

PRSUs & RSUs

Total

% of Total Compensation

32%

19%

49%

100%

Cash vs. Equity

51%

49%

100%

Fixed vs. Variable

32%

68%

100%

 

 

 

 

 

Other NEOs Targeted Pay Mix (average)

Salary

Annual Cash Incentive

PRSUs & RSUs

Total

% of Total Compensation

45%

19%

36%

100%

Cash vs. Equity

64%

36%

100%

Fixed vs. Variable

45%

55%

100%

 

Executive Compensation Practices

The Compensation Committee reviews on an ongoing basis the Company’s executive compensation program to evaluate whether it supports the Company’s executive compensation philosophies and objectives and is aligned with shareholder interests. Our executive compensation practices are comprised of the following, each of which the Compensation Committee believes reinforces our executive compensation objectives:

 

   Pay for performance by structuring a significant percentage of target annual compensation in the form of variable, at-risk compensation

   Pre-established performance goals that are aligned with creation of shareholder value

   Market comparison of executive compensation against a relevant peer group

   Use of an independent compensation consultant reporting directly to the Compensation Committee and providing no other services to the Company

   Stock ownership guidelines for executive officers and directors

   Clawback policy

   Mitigate undue risk through strong governance practices

 

   We do not have Section 280G excise tax gross-ups

   We do not pay dividends or dividend equivalents on unearned performance-based units

   We do not allow repricing of underwater stock options without shareholder approval

   We do not allow hedging or short sales of our securities

   We do not allow pledging of our securities

 

 

17


 

Oversight Responsibilities for Executive Compensation

 

Role of the Compensation Committee and Management

Although the Compensation Committee makes independent recommendations to the Board on all matters related to compensation of the named executive officers, certain members of management are requested to attend and provide input to the Compensation Committee throughout the year. Input may be sought from the Chief Executive Officer, the President, the Chief Financial Officer and the Senior Vice President and Director of Human Resources, and others as needed to ensure the Compensation Committee has the information and perspective it needs to carry out its duties.

The Compensation Committee meets with the Chief Executive Officer to discuss his performance and compensation, but ultimately decisions regarding his compensation are made based upon the Compensation Committee’s deliberations, as recommended and approved by the Board, as well as input from the compensation consultant, as requested. The Compensation Committee considers recommendations from the Chief Executive Officer, as well as input from the compensation consultant as requested, to make compensation decisions for other executives.

 

Role of the Compensation Consultant

The Compensation Committee has the sole authority to retain and terminate a compensation consultant and to approve the consultant’s fees and all other terms of the engagement. The Compensation Committee has direct access to outside advisors and consultants throughout the year on matters relating to executive compensation. The Compensation Committee has direct access to and meets periodically with the compensation consultant independently of management.

 

During 2018, the Compensation Committee retained the services of Frederic W. Cook & Co., Inc. (“FW Cook”), an independent outside consulting firm specializing in executive and board compensation, to assist the Compensation Committee. FW Cook reports directly to the Compensation Committee and carries out its responsibilities to the Compensation Committee in coordination with both the Chief Executive Officer and the Senior Vice President and Director of Human Resources. Services include conducting benchmarking studies, establishing compensation guidelines, designing incentive programs, assisting with the proxy disclosure, and providing insight on emerging regulations and best practices.

 

The Compensation Committee regularly reviews the services provided by its outside consultants and believes that FW Cook has no conflict of interest in providing executive compensation consulting services.

 

Use of Peer Groups and Survey Information

 

The Compensation Committee engaged FW Cook to conduct a competitive review of the Company’s executive compensation program. A primary data source used in setting market-competitive guidelines for the executive officers is the information publicly disclosed by a peer group of other publicly traded banks which the Compensation Committee uses only as a competitive reference point and not as a determinative factor when making executive compensation decisions.

 

The Compensation Committee engaged FW Cook to assess the relevance of the companies within the peer group and makes changes when appropriate. Banks selected as peers for compensation purposes are public and actively traded banks which align with some or all of the following criteria:

 

Asset sizes between $600 million and $6 billion;

 

Fee/revenue mix greater than 20%;

 

Geographic location in a metropolitan area; and

 

With a wealth management operation.

Based on these criteria, the following companies are currently included in the Company’s peer proxy group:

 

 

Arrow Financial Corporation

Independent Bank Corp.

 

Bryn Mawr Bank Corporation

NBT Bancorp Inc.

 

Camden National Corporation

Orrstown Financial Services, Inc.

 

Chemung Financial Corporation

Peapack-Gladstone Financial Corporation

 

Citizens & Northern Corporation

Univest Corporation of Pennsylvania

 

First Bancorp, Inc.

Washington Trust Bancorp, Inc.

 

Franklin Financial Services Corporation

 

 

In addition to reviewing information from the peer group, the Compensation Committee evaluates executive compensation by reviewing national and regional surveys that cover a broader group of companies.

18


 

The Role of Shareholder Say-on-Pay Votes

The Company provides its shareholders with the opportunity to cast an annual advisory, non-binding vote on executive compensation (a “say-on-pay proposal”), and subsequently evaluates these results. At the 2018 annual meeting of shareholders, the Company’s say-on-pay proposal was supported by 94% of the votes cast. The Compensation Committee believes that the voting results affirm shareholders’ overall support of the Company’s approach to executive compensation. The Compensation Committee will continue to consider feedback from shareholders, including the outcome of the Company’s say-on-pay proposal, when making future compensation decisions for its named executive officers.

 

Compensation Program Elements

 

Base Salary

In early 2018, performance evaluations of Mr. Sheahan and the other executive officers were completed with respect to their 2017 performance. The Board approved base salary increases for all executive officers, other than Mr. Thompson, based upon the recommendations of the Compensation Committee, which were derived from, in the case of the executive officers other than Mr. Sheahan, the evaluation of their performance by Mr. Sheahan and, in the case of Mr. Sheahan, the Board’s performance evaluation of Mr. Sheahan. The Compensation Committee also took into account market position versus peers.

 

Executive

2017 Base Salary

Increase (%)

2018 Base Salary

Denis K. Sheahan

$479,000

3%

$493,000

Michael F. Carotenuto

$225,000

11%

$250,000

Martin B. Millane, Jr.

$282,050

3%

$291,000

Jennifer A. Pline

$400,000

3%

$412,000

Mark D. Thompson

$450,000

$450,000

 

Short-Term Incentives

 

The Compensation Committee approved an executive officer annual incentive plan for use in 2018 (the “2018 Incentive Plan”). All determinations regarding the achievement of any performance goals, the achievement of individual performance goals and objectives, and the amounts awarded under the 2018 Incentive Plan were made by the Compensation Committee. The 2018 Incentive Plan expressly reserved the Compensation Committee’s right, in its sole and absolute discretion, to reduce, including a reduction to zero, any award otherwise payable.

 

The 2018 Incentive Plan creates a cash incentive program based upon the Company’s financial performance, with awards determined by the product of the participant’s Target Award multiplied by the combined Bank and Individual Performance Adjustment Factors, subject to adjustment in accordance with the 2018 Incentive Plan. Each of these components is discussed in greater detail below.

 

The award payable to any participant can be less than or more than the Target Award, depending upon the Company’s performance against the criteria used to determine the Bank and the Individual Performance Adjustment Factors and any exercise of Compensation Committee discretion to make adjustments in accordance with the 2018 Incentive Plan.

 

The 2018 Incentive Plan defines the “Target Award” as a percentage of an executive officer’s base salary and provides a range of opportunity around targets defined as “threshold” (50% of the target incentive opportunity) and “stretch” (150% of the target incentive opportunity). The applicable Target Awards and thresholds are shown by executive officer in the following table. For performance between threshold and target and between target and stretch, the payout percentage is computed on an interpolated basis.

 

2018 Short-Term Incentive Targets (% of Base Salary)

 

 

Below

 

Threshold

 

Target

 

Stretch

 

Executive

Threshold

 

(50% of Target)

 

(100% of Target)

 

(150% of Target)

 

Denis K. Sheahan

0%

 

30%

 

60%

 

90%

 

Michael F. Carotenuto

0%

 

17.5%

 

35%

 

52.5%

 

Martin B. Millane, Jr.

0%

 

20%

 

40%

 

60%

 

Jennifer A. Pline

0%

 

20%

 

40%

 

60%

 

Mark D. Thompson

0%

 

25%

 

50%

 

75%

 

19


 

Each participant has predefined performance goals with weightings that determine the annual incentive award. There are two performance categories – Bank Performance and Individual Performance, as shown in the table below. Weightings vary based upon the officer’s role at the Bank.

 

Executive

Bank Performance Weighting

Individual Performance Weighting

Denis K. Sheahan

75%

25%

Michael F. Carotenuto

75%

25%

Martin B. Millane, Jr.

40%

60%

Jennifer A. Pline

25%

75%

Mark D. Thompson

25%

75%

 

Payout under the 2018 Incentive Plan was determined by multiplying the Target Award by the combined Bank and Individual Performance Adjustment Factors.

 

Bank Performance Measures and Goals. The 2018 Incentive Plan determines the Bank Performance Adjustment Factor based upon a combination of the Company’s Return on Equity (“ROE”) performance against peers, calculated on an after-tax basis, and Operating Income results against budget, within specified ranges set forth in the 2018 Incentive Plan which specify threshold, target, and maximum performance levels, as shown in the chart below. These measures were selected because the Compensation Committee believes these performance metrics closely align with both the Company’s short-term strategy and its long-term objective of creating sustainable shareholder value. The 2018 Incentive Plan defines Operating Income to exclude security gains and losses, taxes, and other material non-recurring items as determined by the Compensation Committee. The range of the Bank Performance Adjustment Factor set forth in the 2018 Incentive Plan is as follows:

 

Bank Performance Measures

2018 Performance Goals

Actual Performance

(Equally Weighted)

Threshold

Target

Stretch

Return on Equity (after Tax)

80% of 75th Percentile of
Peer Index Performance

75th Percentile of Peer
Index Performance

120% of 75th Percentile
of Peer Index Performance

15.48% ROE, 126% of 75th  percentile

Operating Income
(before security gains/losses, taxes, and other material non-recurring items)

50% of Budgeted
Operating Income

$14.52 million

Operating Income Per
Budget

$29.04 million

120% of Budgeted
Operating Income

$34.8 million

$31.3 million or 119.3%

 

The ROE performance measure is determined by comparing the Company’s ROE performance against the Commercial Bank Peer Group. The Commercial Bank Peer Group is defined as Commercial Banks with assets $500M - $5B, located in the Northeast (CT, MA, ME, NH, NJ, NY, PA, RI and VT) and traded on the New York Stock Exchange, the NASDAQ Stock Market, and the over-the-counter bulletin board (OTCBB).

 

The Compensation Committee’s determinations under the 2018 Incentive Plan are not required to be uniform and could be made selectively among persons who received, or who were eligible to receive, a cash award. The Compensation Committee has the right, in its sole and absolute discretion, to make adjustments to the Bank Performance Adjustment Factor within the defined parameters set forth in the 2018 Incentive Plan based upon: one-time, non-recurring, or extraordinary events or any other reason that the Compensation Committee deems appropriate; adjust any awards by considering factors such as regulatory compliance and credit quality; and to reduce, including a reduction to zero, any cash award otherwise payable.

 

Individual Performance Measures and Goals. In addition to the Bank performance goals, participants had individual goals that focused on department/team performance (such as lending growth or deposit growth) and/or individual performance. The mix of these

20


 

goals varies by role. Performance targets and ranges for each measure were set at the beginning of 2018. If performance-to-goal cannot be quantified, committee judgment will be used to evaluate goal attainment.

 

Name

Individual Performance Goals

Denis K. Sheahan

Strategic vision and execution

Investor outreach

Enhance brand awareness, marketing efforts and brand identity

Maintain effective Company-wide risk management

Enhance Talent Development, Succession Planning and Community Reinvestment Act efforts

Negotiate merger with Optima Bank & Trust Company

 

Michael F. Carotenuto

 

 

   Enhance the Bank’s interest rate risk strategy

   Strengthen the Company’s enterprise risk management process

   Improve internal reporting and data analytics

   Increase efficiency and operating leverage

 

Martin B. Millane, Jr

   Growth in loans, deposits and fee-based revenue

   Monitor and strengthen credit risk management practices

   Enhance commercial loan diversification

   Succession planning and talent development

 

Jennifer A. Pline

   Growth in wealth management assets under management, revenue and operating margin

   Working with the Chief Investment Officer, enhance investment platform

   Succession planning and performance measurement

   Assess and recommended adjustments to business line technology needs

 

Mark D. Thompson

Implement the Bank’s private banking growth strategy

Growth in deposits, loans and wealth management assets

Increase brand awareness, marketing efforts and brand identity

Recruit and engage private bankers to drive strategic objectives

Support and improve the organization’s cross teaming and client experience efforts

Talent development and succession planning

 

 

 

Goal attainment was measured as follows:

 

Performance

Did not Achieve

Partially Achieved

Fully Achieved

Clearly

Exceeded

Award as of % of Target

0% to 25%

26% to 90%

91% to 110%

111% to 150%

 

Actual 2018 Results and Short-Term Incentives Paid

 

 

Target Short Term Incentive Opportunity

 

Bank Performance

 

Individual Performance

 

Short Term Incentive Paid

 

% of Target

 

 

 

 

Target

 

Earned %

 

Subtotal

 

Target

 

Earned %

 

Subtotal

 

 

 

 

 

Denis K. Sheahan

$

295,800

 

$

221,850

 

134.7%

 

$

298,769

 

$

73,950

 

140%

 

$

103,529

 

$

402,298

 

136%

 

Michael F. Carotenuto

$

87,500

 

$

65,625

 

134.7%

 

$

88,377

 

$

21,875

 

150%

 

$

32,813

 

$

121,190

 

139%

 

Martin B. Millane, Jr.

$

116,400

 

$

46,560

 

134.7%

 

$

62,703

 

$

69,840

 

150%

 

$

104,760

 

$

167,463

 

144%

 

Jennifer A. Pline

$

164,800

 

$

41,200

 

134.7%

 

$

55,485

 

$

123,600

 

88%

 

$

109,262

 

$

164,747

 

100%

 

Mark D. Thompson

$

225,000

 

$

56,250

 

134.7%

 

$

75,760

 

$

168,750

 

22%

 

$

36,740

 

$

112,500

 

50%

 

 

21


 

Additional Cash Bonus Payment

 

To recognize significant achievement in 2018 relating to loan growth, deposit growth and sustained asset quality metrics, the Compensation Committee approved an additional, discretionary cash bonus payment of $32,537 to Mr. Millane.

 

Long-Term Incentives

 

Equity compensation and stock ownership serve to link the net worth of executive officers to the performance of the Company’s common stock and therefore provide an incentive to accomplish the strategic, long-term objectives established by the Company to maximize long-term shareholder returns. Long-term equity compensation grants are also designed to be a retention tool for the individuals to whom they are awarded and are made based on competitive factors, such as equity compensation awarded by peers and amounts that are determined to be appropriate in order to retain key personnel.

The Compensation Committee believes the best interests of shareholders and executives are more closely aligned when executives who have substantial responsibility for the Company’s management and growth are provided an opportunity to increase their ownership of our stock. The 2018 Long Term Incentive Plan (“LTI”) awards included grants of restricted stock units that enable our NEOs and other executives to participate in the long-term appreciation of our shareholder value, while feeling personally invested in the impact of any business setbacks, whether Company-specific or industry-based. Based on the grant date value of the awards and assuming target level of achievement for the PRSUs, the 2018 LTI awards granted to our NEOs were composed 25% of RSUs, which vest based on service requirements alone, and 75% of PRSUs, which vest based on a combination of performance and service requirements.

By providing meaningful equity awards, the executives’ wealth creation opportunity is directly tied to Company and stock price performance. Furthermore, LTI awards assist with retention since the awards are subject to vesting related to an individual’s continued employment or service.

 

The final award payout for the PRSUs granted under the 2018 LTI will be determined based upon achievement of specified levels of return on assets (“ROA”) and diluted earnings per share (“EPS”) growth over a three-year period measured against the Commercial Bank Peer Group, an industry index (the same index used within the 2018 Incentive Plan). The Compensation Committee selected relative ROA and diluted EPS growth as compared to peer as the primary performance metrics for the 2018 LTI awards because it believes management should be incented to provide multi-year earnings growth and strong Bank profitability. The Compensation Committee also believes that relative ROA and diluted EPS growth are good indicators of shareholder value creation. Further, the Compensation Committee believes that it has set challenging, yet attainable, forward-looking incentive goals.  Any dividends declared during the performance period are accrued and paid out in cash only to the extent that the PRSUs ultimately vest following the completion of the performance period.

 

The range of performance levels and corresponding payout schedule is shown in the table below (relative ROA and diluted EPS growth are equally-weighted to determine payout):

 

 

Threshold

 

 

Target

 

 

Stretch

Relative 3-year average ROA and 3-year average diluted EPS growth performance

 

25th percentile

 

 

 

50th percentile

 

 

 

90th percentile

Payout

 

25% of award

 

 

 

100% of award

 

 

 

200% of award

 

2018 Target LTI Awards

The following table summarizes the grant-date fair value of the 2018 LTI awards, assuming the PRSUs vest based on target level of achievement:

 

2018 Long-Term Incentive Target Values

 

Executive

PRSUs (at Target)

 

RSUs

 

Total Grant-Date Fair Value

 

Denis K. Sheahan

$

562,520

 

$

187,507

 

$

750,027

 

Michael F. Carotenuto

$

168,748

 

$

56,275

 

$

225,023

 

Martin B. Millane, Jr.

$

168,748

 

$

56,275

 

$

225,023

 

Jennifer A. Pline

$

168,748

 

$

56,275

 

$

225,023

 

Mark D. Thompson

$

337,497

 

$

112,473

 

$

449,970

 

 

2016 PRSU Results and Final Award Payouts

 

In 2016, the Company granted PRSU awards to certain executives, including two of our current NEOs (Mr. Sheahan and Mr. Millane). The 2016 PRSUs were eligible to vest upon achievement of ROA and EPS performance as compared to an industry index for the period January 1, 2016 through December 31, 2018. Based on the Company’s performance through December 31, 2018, the

22


 

Compensation Committee determined that these awards would vest at 130% of target, and the final award payouts to Messrs. Sheahan and Millane are summarized in the following table.  Messrs. Carotenuto and Thompson and Ms. Pline did not receive 2016 PRSUs awards because they had not yet joined the Company at the time of grant.

 

Executive

Target # of Shares

 

# of Shares Vested

 

Denis K. Sheahan

 

3,538

 

 

4,599

 

Martin B. Millane, Jr.

 

1,360

 

 

1,768

 

 

Changes for 2019

 

The Compensation Committee regularly evaluates the Company’s programs and policies to ensure continued alignment with the pay-for-performance philosophy and business strategy. For 2019, the Compensation Committee reviewed the structure of the ROE metric in the short-term incentive plan and determined to reformat that measure to (1) only allow for payout under that measure if ROE is at or above the 75th percentile of peers; and (2) scale actual payouts between threshold and maximum for that measure based on internal operating budget targets. A full description of the 2019 short-term incentive plan will be included in the proxy statement for the 2020 annual meeting.

 

In addition, the Compensation Committee made certain changes to the Company’s treatment of equity awards upon separation of service to enhance compensation governance and align with market best practices. For 2019, the Company’s equity awards have been amended as follows:

 

 

provide for pro-rata vesting acceleration upon voluntary termination only when in connection with a qualified retirement, defined as a total of 70 years of age + service, with a minimum age of 60;

 

provide for acceleration of options upon separation due to disability or death (for consistency in treatment with other award types); and

 

move all awards to double-trigger treatment upon change in control, requiring a qualified termination following a change in control to trigger acceleration of outstanding equity awards.

 

Retirement Benefits

 

Nonqualified Retirement Plans for Executive Officers. The Company maintains several nonqualified retirement programs for executive officers.  Historically, the Board provided a nonqualified defined benefit supplemental executive retirement plan (a “DB SERP”) to help accomplish the objectives of its nonqualified executive officer retirement program.  In 2016, the Board approved, at the recommendation of the Compensation Committee, a change to this program.  New entrants to the Company’s nonqualified deferred compensation program for executives are now provided a nonqualified defined contribution supplemental executive retirement plan (a “DC SERP”).  As of December 31, 2018, only Mr. Sheahan had a DB SERP.  Mr. Thompson, Mr. Millane, and Ms. Pline participate in a DC SERP. Mr. Carotenuto currently does not participate in any nonqualified retirement programs. For detailed descriptions of Mr. Sheahan’s DB SERP and the DC SERPs, please refer to the sections entitled “Executive Compensation Tables – Pension Benefits” and “Executive Compensation Tables – Nonqualified Deferred Compensation,” respectively.

 

The Company also maintains the Cambridge Trust Company Executive Deferred Compensation Plan (the “EDCP”).  The EDCP permits certain highly compensated employees of the Bank to defer up to 50% of their base salaries and up to 100% of all performance-based compensation.  The Compensation Committee administers the EDCP and annually selects the employees who are eligible to participate.  Each participant is 100% vested in his or her account and has the right to direct the investment of his or her account balance by choosing from among investment alternatives made available by the Compensation Committee.  Each account is credited with earnings or losses arising from the performance of the investments selected by the participant and no participant receives above-market or preferential returns pursuant to the terms of the EDCP.  A participant’s account balance will be paid out, subject to the terms of the EDCP, upon a separation from service, or upon death or disability, in a lump sum payment, unless the participant has elected annual installment payments (when available).  Participants may also elect to receive an in-service distribution and distribution in the event of an unforeseeable emergency is available.

 

Qualified Retirement Plans for Executive Officers. The Company sponsors the Cambridge Bancorp Employee Retirement Plan, a tax-qualified, non-contributory defined benefit pension plan (the “DB Plan”) covering substantially all employees hired before May 2, 2011- including Mr. Millane.  The plan was frozen to new employees hired after that date.  In October 2017, the Company announced its decision to freeze the accrual of benefits for all participants in the DB Plan, effective as of December 31, 2017.  The actuarially determined present values of the named executive officers’ retirement benefits as of the end of last year are reported in the section entitled “Executive Compensation Tables – Pension Benefits.”

 

The Company also maintains a tax-qualified defined contribution plan (the “Profit Sharing Plan” or “401(k) Plan”) that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of the Internal Revenue Code

23


 

of 1986, as amended (the “Internal Revenue Code”). The Company matches employee contributions up to 100% of the first 4% of each participant’s salary. Each year, the Company may also make discretionary contributions to the Profit Sharing Plan.  Employees, including our named executive officers, are eligible to participate in the 401(k) feature of the Profit Sharing Plan on the first day of their initial date of service after attainment of age 21.  Employees, including our named executive officers, are eligible to participate in the discretionary contribution feature of the Profit Sharing Plan after the employee has attained the age of 21, completed 12 months of employment, and 1,000 hours of service. The employee must be employed on the last day of the calendar year, or retire at the normal retirement age of 65 during the calendar year, to receive the discretionary contribution. Effective as of January 2019, employees are now eligible to participate in the discretionary contribution portion of the Profit Sharing Plan on the first day of their initial date of service after attainment of age 18.

 

In addition to the DB Plan and the Profit Sharing Plan, the Company maintains an employee stock ownership plan (“ESOP”). The ESOP is a tax-qualified defined contribution plan in which our employees, including our named executive officers, are eligible to participate on either January 1 or July 1 of each year, whichever date occurs soonest after the employee has attained the age of 21 and completed 12 months of service consisting of at least 1,000 hours of service.  In general, pursuant to the terms of the ESOP, the Company contributes funds to the ESOP trust fund, and the contributed funds are allocated among all the participants’ accounts according to their relative levels of compensation (subject to IRS limits).

 

Perquisites

The Company provides certain perquisites to Mr. Sheahan that the Compensation Committee believes are reasonable and consistent with the Company’s overall compensation program. To encourage his continued presence in our local community, the Company reimburses Mr. Sheahan in an amount of up to $85,000 per year for expenses incurred in connection with maintaining housing near our Harvard Square office and as a car allowance, plus the income taxes resulting from such reimbursements. The attributed costs of the perquisites provided to Mr. Sheahan for 2018 are included in the “All Other Compensation” column of the “Summary Compensation Table” below.

 

 

Change in Control Agreements and Other Severance Arrangements

 

The Company has previously entered into double-trigger change in control agreements with certain key employees, including the named executive officers, and, in November 2018, the Company entered into amended and restated change in control agreements with Messrs. Carotenuto and Millane and Ms. Pline. The change in control agreements are designed to promote stability and continuity of senior leadership. The Compensation Committee believes that the interests of shareholders will be best served if the interests of management are aligned with them. The Compensation Committee further believes that providing change in control benefits should eliminate, or at least reduce, the reluctance of management to pursue potential change in control transactions that may be in the best interests of shareholders.  The Compensation Committee approved the November 2018 amendment and restatement of the change in control agreements with Messrs. Carotenuto and Millane and Ms. Pline, which increased each NEO’s change in control severance multiple from 1x to 2x, in order to further the preceding goals by aligning each NEO’s change in control severance with the market practice.  In addition, the Company has entered into letter agreements with each of Mr. Thompson and Ms. Pline that would provide severance benefits in the event that their employment is terminated under certain circumstances unrelated to a change in control. These agreements are described in detail under “Executive Compensation – Potential Payments Upon Termination or Change in Control” below.  

 

Tax and Accounting Considerations

 

Taxation of “Parachute” Payments.  Sections 280G and 4999 of the Internal Revenue Code provide that certain individuals who hold significant equity interests in the Company and certain executive officers and other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the Company that exceed certain prescribed limits, and that we (or our successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any of the named executive officers, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Internal Revenue Code, and we have not agreed, and are not otherwise obligated, to provide any executive officer with such a “gross-up” or other reimbursement.

Section 162(m).  Section 162(m) of the Internal Revenue Code limits the deductibility of certain compensation to $1,000,000 in any one year for certain executive officers. The Compensation Committee has previously designed elements of the Company’s compensation programs to conform to Section 162(m) of the Internal Revenue Code and related regulations so that total compensation paid to our NEOs would not exceed $1,000,000 in any one year, except for compensation payments that qualified as “performance-based.” However, recent changes to Section 162(m) eliminated the “performance-based” exception, except for a limited exception with respect to written, binding contracts in effect on November 2, 2017, and, as a result, following the transition period for new SEC registrants, executive compensation is not likely to be fully deductible. While the Compensation Committee considers tax and accounting implications as one factor when considering executive compensation, they are not the only factors considered. Other

24


 

important considerations outweigh tax or accounting considerations. In addition, the Compensation Committee reserves the right to establish compensation arrangements that may not be fully tax deductible under applicable tax laws.

 

Accounting for Stock-Based Compensation.  The Company follows Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718, for our stock-based compensation awards. ASC 718 requires companies to measure the compensation expense for all share-based payment awards made to employees based on the grant date fair value of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards.

 

Compensation Policies and Practices

 

 

Summary

Director Stock Ownership, Executive Stock Ownership and Retention

In December 2017, the Compensation Committee approved stock ownership guidelines intended to ensure that the interests of our executives and directors are economically aligned with those of our shareholders. The requirements under that policy were determined after a review of peer and broader market ownership guideline levels. These guidelines establish target levels of ownership of our common stock within five years (either by December 31, 2022, or within five years of becoming subject to the guidelines). Guidelines are calculated based on the following multiples of compensation:

•   Chief Executive Officer – a multiple of three times annual base salary;

•   Other Executive Officers – a multiple of one times annual base salary; and

•   Non-Employee Directors – three times annual equity retainer.

The Compensation Committee believes that the higher target multiples applicable to the Chief Executive Officer and our other executive officers are appropriate given the greater relative scope of responsibilities relating to long-term shareholder value creation associated with those positions.

These target levels determine whether the executive must retain additional stock acquired upon the vesting and release of restricted stock awards (“RSAs”) or restricted stock units (including RSUs and PRSUs). Specifically, unless and until the value of our common stock held by a participant equals or exceeds his or her target level at the end of a calendar year, this executive must retain:

•   At least 50% of our common stock received upon the vesting and release of RSAs or restricted stock units during the following year, after payment or withholding of any applicable exercise price and taxes; and

•   All other shares of our common stock held by the participant.

We apply the value of unvested RSAs and RSUs toward satisfying these guidelines, but do not apply the value of unvested PRSUs, as the PRSUs are “at risk” and the associated shares may or may not ultimately be delivered. Compliance with the guidelines will be measured annually as of December 31 and reviewed by the Compensation Committee.

Recovery of Incentive Compensation (Clawback Provisions)

Under our incentive plans or award agreements, we may seek to recover certain performance-based incentive compensation (including incentive-based equity compensation) granted to our executives in the event we are required to restate our financial results, other than a restatement due to changes in accounting principles or applicable law.

Policy on Short Sales, Derivatives, Hedging, and Pledging of Stock

Pursuant to our Insider Trading and Confidentiality Policy (the “Policy”), no employee or non-employee director of the Company may engage in short sales of our securities, purchases or sales of puts, calls or other derivative securities based on our securities, or purchases of financial instruments that are designed to hedge or offset any decrease in the market value of our securities. The Policy also prohibits our directors and senior executives from pledging or otherwise encumbering our equity securities as collateral for indebtedness, including holding shares in a margin or similar account that would subject our equity securities to margin calls.

Equity Grant Practices

The Company’s practice is to grant annual equity awards to eligible recipients, including our NEOs, during the first quarter of the year. In the event of grants related to new hires or other off-cycle awards, the grants are generally made on the 15th day of the mid-month of each quarter following approval of the award.

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Summary

Compensation Risk Assessment

The Compensation Committee oversees an annual risk assessment of the Company’s compensation programs to determine whether such programs are reasonably likely to have a material adverse effect on the Company. For 2018, the Compensation Committee concluded that the Company’s compensation programs were appropriately balanced to mitigate compensation-related risk with cash and stock elements, financial and non-financial goals, formal goals and discretion, and short-term and long-term rewards. The Company also has policies to mitigate compensation-related risk, including stock ownership guidelines, clawback provisions, and prohibitions on employee pledging and hedging activities. Furthermore, the Compensation Committee believes the Company’s policies on ethics and compliance along with its internal controls also mitigate against unnecessary or excessive risk-taking.

 

Compensation Committee Report(1)

 

The Compensation Committee met with management to review and discuss the Compensation Discussion and Analysis disclosures discussed above. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company’s Form 10-K for its 2018 fiscal year, and the Board has approved the recommendation.

 

 

Compensation Committee of the Board of Directors of Cambridge Bancorp

 

Hambleton Lord, Chair

Donald T. Briggs

 

Jeanette Clough

 

Sarah G. Green

R. Gregg Stone

 

David C. Warner

 

(1)

The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing we make under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

26


 

Executive Compensation Tables  

The following tables, narratives, and footnotes provide compensation information for our named executive officers during 2018:

2018 SUMMARY COMPENSATION TABLE 

 

Name and Principal Position

 

Year

 

Salary

 

 

Bonus

(1)

 

 

Stock Awards

(2)

 

 

Option Awards

 

 

Non-Equity Incentive Plan Compensation

(3)

 

 

 

 

Change in

Pension Value

and

Nonqualified Deferred Compensation Earnings

(4)

 

 

All Other Compensation

(5)

 

 

Total

 

(a)

 

(b)

 

(c)

 

 

(d)

 

 

(e)

 

 

(f)

 

 

(g)

 

 

 

 

(h)

 

 

(i)

 

 

(j)

 

Denis K. Sheahan,

 

2018

 

$

493,000

 

 

$

 

 

$

750,027

 

 

$

 

 

$

402,298

 

 

 

 

$

178,385

 

 

$

101,692

 

 

$

1,925,402

 

CEO

 

2017

 

$

478,950

 

 

$

 

 

$

162,729

 

 

$

 

 

$

390,116

 

 

 

 

$

202,270

 

 

$

104,916

 

 

$

1,338,981

 

Michael F. Carotenuto,

 

2018

 

$

250,000

 

 

$

 

 

$

225,023

 

 

$

 

 

$

121,190

 

 

 

 

$

 

 

$

17,423

 

 

$

613,636

 

CFO

 

2017

 

$

225,000

 

 

$

50,000

 

 

$

167,517

 

 

$

 

 

$

93,557

 

 

 

 

$

 

 

$

10,955

 

 

$

547,029

 

Martin B. Millane, Jr.

 

2018

 

$

291,000

 

 

$

32,537

 

 

$

225,023

 

 

$

 

 

$

167,463

 

 

 

 

$

 

 

$

56,984

 

 

$

773,007

 

EVP, CLO

 

2017

 

$

282,050

 

 

$

 

 

$

88,807

 

 

$

 

 

$

110,960

 

 

 

 

$

111,719

 

 

$

56,754

 

 

$

650,290

 

Jennifer A. Pline,

 

2018

 

$

412,000

 

 

$

 

 

$

225,023

 

 

$

 

 

$

164,747

 

 

 

 

$

 

 

$

79,088

 

 

$

880,858

 

EVP, WM

 

2017

 

$

369,744

 

 

$

 

 

$

139,996

 

 

$

 

 

$

196,402

 

 

 

 

$

 

 

$

48,010

 

 

$

754,152

 

Mark D. Thompson,

 

2018

 

$

450,000

 

 

$

 

 

$

449,970

 

 

$

 

 

$

112,500

 

 

 

 

$

 

 

$

80,833

 

 

$

1,093,303

 

President

 

2017

 

$

121,154

 

 

$

200,000

 

 

$

450,038

 

 

$

 

 

$

 

 

 

 

$

 

 

$

16,711

 

 

$

787,903

 

 

(1)

For Mr. Millane, amount reflects an additional, discretionary cash bonus related to his 2018 performance.

(2)

Assumptions used in the calculation of these amounts are included in Note 14 – Share-Based Compensation to our fiscal year 2018 consolidated financial statements, which is included in our Annual Report on Form 10-K filed with the SEC on March 18, 2019. Amounts listed in column (e) are not actual dollar amounts received by our named executive officers in 2018, but instead represent the aggregate grant date fair value of the stock awards granted in 2018 calculated in accordance with ASC 718. For PRSUs, the probable outcome of performance is assumed to be at the target level.  The maximum value of the PRSU awards assuming performance at the highest level for Mr. Sheahan, Mr. Carotenuto, Mr. Millane, Ms. Pline, and Mr. Thompson is $1,125,040, $337,497, $337,497, $337,497, and $674,994, respectively.

(3)

Amounts listed in column (g) represent the cash payments which were approved for performance under the 2018 Incentive Plan. The 2018 Incentive Plan is described in detail above in our “Compensation Discussion and Analysis.”

(4)

Amount listed in column (h) represents the aggregate change in the actuarial present value of the accumulated benefits under the DB SERP for Mr. Sheahan.  For Mr. Millane, the aggregate change in the actuarial present value of his accumulated benefits under the DB Plan decreased by $11,950, but this decrease is not reflected in column (h) pursuant to SEC rules.  Mr. Sheahan’s DB SERP and the DB Plan are described in detail above in our “Compensation Discussion and Analysis” and below under “Pension Benefits.”

(5)

The following table shows the components of column (i) for 2018:

 

 

 

Dividends on Unvested RSAs(1)

 

 

401(k) Plan Company Contributions(2)

 

 

ESOP Company Contributions(3)

 

 

Company Contributions to DC SERP(4)

 

 

Personal Expense Reimbursements(5)

 

 

Total

 

Denis K. Sheahan

 

$

1,520

 

 

$

11,000

 

 

$

4,172

 

 

$

 

 

$

85,000

 

 

$

101,692

 

Michael F. Carotenuto

 

$

2,251

 

 

$

11,000

 

 

$

4,172

 

 

$

 

 

$

 

 

$

17,423

 

Martin B. Millane, Jr.

 

$

1,616

 

 

$

11,000

 

 

$

4,172

 

 

$

40,196

 

 

$

 

 

$

56,984

 

Jennifer A. Pline

 

$

3,076

 

 

$

11,000

 

 

$

4,172

 

 

$

60,840

 

 

$

 

 

$

79,088

 

Mark D. Thompson

 

$

4,833

 

 

$

11,000

 

 

$

 

 

$

65,000

 

 

$

 

 

$

80,833

 

 

(1)

With respect to RSAs, named executive officers are entitled to all dividends paid on such awards during the applicable restricted period.

(2)

Amounts reflect the Company’s matching contributions to the accounts of the named executive officers under the 401(k) Plan. Pursuant to the terms of the 401(k) Plan, the Company matches employee contributions up to 100% of the first 4% of each participant’s salary. The 401(k) Plan is described in detail above in our “Compensation Discussion and Analysis.”

(3)

Amounts reflect Company contributions to the accounts of the named executive officers. The ESOP is described in detail above in our “Compensation Discussion and Analysis.”

(4)

The DC SERPs are described in detail below under “Nonqualified Deferred Compensation.”

(5)

The Company reimburses Mr. Sheahan in an amount of up to $85,000 per year for expenses incurred in connection with maintaining housing near our Harvard Square office and as a car allowance, plus the income taxes resulting from such

27


 

reimbursements.  In 2018, the Company reimbursed Mr. Sheahan for housing and car expenses in the amount of $47,343, and for the income taxes resulting from such reimbursements in the amount of $37,657.  

 

2018 GRANTS OF PLAN-BASED AWARDS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other

 

 

All Other

 

 

 

Grant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock

 

 

Option

 

 

 

Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Awards:

 

 

Awards:

 

Exercise

 

Fair