UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 22, 2014
INTERVEST BANCSHARES CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 000-23377 | 13-3699013 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
| 1 Rockefeller Plaza, Suite 400, New York, New York | 10020-2002 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number Including Area Code: (212) 218-2800
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 Departure of Directors or Certain Officers, Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(a) On May 22, 2014, the Board of Directors of Intervest Bancshares Corporation (the “Company”) approved the Annual Incentive Plan for Senior Executives (the “Plan”), which had been approved by the Compensation Committee and recommended to the Board of Directors. The Plan is included in this Report as Exhibit 10.1. The Plan is effective for the year ending December 31, 2014.
The participants in the Plan are the senior executive team of the Company, consisting of the following officers: the Chief Executive Officer (Lowell S. Dansker), the President of the Company’s bank subsidiary (Keith A. Olsen), the Chief Financial Officer (John J. Arvonio), the Vice President (Stephen A. Helman); and the Chief Credit Officer of the Company’s bank subsidiary (Robert Tonne).
Plan participants will be eligible to receive target incentive awards, calculated as a percentage of base salary. The annual target bonus for each officer is set out in the Plan. The Board, in its discretion, may make awards in the form of cash or shares of the Company’s common stock (which would be issued under the Company’s 2013 Equity Incentive Plan). In the case of the Chief Executive Officer and the President of the Bank, the components include loan originations, corporate goals and individual performance, with the specific allocations set out in the Plan. For the other participants, the components are corporate goals and individual performance. The incentive awards based on corporate results will be determined as the weighted-average percent of actual annualized results against pre-determined annualized goals in specified performance criteria related to: return on equity; percentage increase in net income; return on average assets; percentage of non-performing assets; and efficiency ratio, with the annual thresholds and goals as specified in the Plan. The individual bonus award is based on an evaluation of the individual’s performance in contributing to the success of the Bank, as determined by the Board of Directors in its discretion. No awards will be made under loan origination or annualized corporate goals unless the Company achieves a minimum 7.0% return on equity. Corporate-based awards will be a weighted-average percent of annualized goal attainment for the five areas mentioned above and annualized performance below the threshold level within any particular category will be considered zero. Calculated awards may be increased or decreased by up to 10% in the discretion of the Compensation Committee. The goals and thresholds have been established for 2014 and it is contemplated that they will be reviewed on an annual basis.
(b) On May 22, 2014, the Board of Directors of Intervest National Bank (the “Bank”) approved an increase in the base salary of Mr. Robert W. Tonne, Chief Credit Officer of the Bank, from $205,000 to $215,000. The salary increase is effective as of June 1, 2014.
| Item 5.07 | Submission of Matters to a Vote of Security Holders |
The Annual Meeting of Shareholders (the “Meeting”) of the Company was held on May 22, 2014. As of the record date of March 31, 2014, there were a total of 22,021,190 shares of common stock outstanding and entitled to vote at the Meeting. At the Meeting, 20,547,174 shares of common stock were present in person or by proxy, representing a quorum.
At the meeting, the Company’s shareholders: (i) elected each of the ten persons listed below under “Election of Directors” to serve as a director of the Company until the next annual meeting of shareholders; (ii) approved a non-binding advisory proposal on executive officer compensation; and (iii) ratified the appointment of Hacker, Johnson & Smith, P.A., P.C., as the Company’s independent auditor for 2014.
The results of voting at the annual meeting on each such matter follows:
| 1. | Election of Directors. |
| Directors |
Votes For | Withheld | Broker Non-Votes | |||
| Michael A. Callen |
13,836,926 | 974,455 | 5,735,793 | |||
| C. Wayne Crowell |
14,040,375 | 771,006 | 5,735,793 | |||
| Lowell S. Dansker |
12,906,376 | 1,905,005 | 5,735,793 | |||
| Paul R. DeRosa |
14,026,505 | 784,876 | 5,735,793 | |||
| Stephen A. Helman |
12,891,176 | 1,920,205 | 5,735,793 | |||
| Wayne F. Holly |
14,029,405 | 781,976 | 5,735,793 | |||
| Susan Roth Katzke |
14,050,105 | 761,276 | 5,735,793 | |||
| Lawton Swan, III |
14,026,905 | 784,476 | 5,735,793 | |||
| Thomas E. Willett |
12,035,988 | 2,775,393 | 5,735,793 | |||
| Wesley T. Wood |
12,905,559 | 1,905,822 | 5,735,793 |
| 2. | Non-Binding Advisory Proposal on the Compensation of the Company’s Executive Officers. |
| Votes For |
Votes Against |
Abstain |
Broker Non-Votes | |||
| 12,527,331 |
2,219,155 | 64,895 | 5,735,793 |
| 3. | Ratification of appointment of Hacker, Johnson & Smith P.A., P.C. as independent auditor for 2014. |
| Votes For |
Votes Against |
Abstain |
Broker Non-Votes | |||
| 20,400,718 |
93,231 | 53,225 | None |
| Item 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits |
| Exhibit 10.1 | Annual Incentive Plan for Senior Executives |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| INTERVEST BANCSHARES CORPORATION | ||||||||
| Date: May 27, 2014 | By: | /s/ Lowell S. Dansker | ||||||
| Lowell S. Dansker | ||||||||
| Chairman and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Exhibit 10.1
INTERVEST BANCSHARES CORPORATION
Annual Incentive Plan for Senior Executives
Compensation Philosophy
| • | To support the overall objectives of the executive compensation program, which are to attract, motivate and retain highly talented executives |
| • | To align the focus and efforts of the executive team with the annual business objectives of the Bank |
| • | To provide rewards that are consistent with the performance level and contributions made by members of the executive team |
| • | To provide a balanced approach to compensation that will promote sound risk management |
| • | To align executive compensation with the creation of shareholder value |
| • | Focus on the achievement of specific, annual, strategic and tactical corporate and individual business objectives |
Risk Mitigating Factors
The Annual Incentive Plan for Senior Executives contains the following risk-mitigating factors:
| • | Activation of a significant portion of plan incentive earnings is tied to the achievement of a minimum level of performance against a return-on-equity target. |
| • | Target opportunities are aligned with the market. |
| • | A balanced approach using multiple performance criteria encourages a broader focus on the financial performance and health of the Bank. |
Eligibility
| • | Senior Executive Team |
| • | Chief Executive Officer |
| • | President/ Chief Operating Officer |
| • | Chief Financial Officer |
| • | Vice President/ Counsel |
| • | Chief Credit Officer |
Target Incentive Awards
| • | Calculated as a percent of Base Salary – Chart reflects salaries effective as of January 1, 2014 |
| Job Title |
% of Base Salary |
Annual Base Salary |
Annual Target Bonus |
Annual Total Cash Compensation |
||||||||||||
| Chief Executive Officer |
35.0 | % | $ | 1,127,722 | $ | 394,703 | $ | 1,522,425 | ||||||||
| President/ COO |
25.0 | % | $ | 620,000 | $ | 155,000 | $ | 775,000 | ||||||||
| Chief Financial Officer |
20.0 | % | $ | 290,000 | $ | 58,000 | $ | 348,000 | ||||||||
| Vice President/ Counsel |
20.0 | % | $ | 300,000 | $ | 60,000 | $ | 360,000 | ||||||||
| Chief Credit Officer |
20.0 | % | $ | 205,000 | $ | 41,000 | $ | 246,000 | ||||||||
| • | The Board may, at its discretion, award the annual bonus award to executives in the form of cash or stock. Award values for a 50/50 split would be as follows: |
| Job Title |
Annual Target Bonus/ Cash |
Annual Target Bonus/ Stock |
Approximate Shares @ $7.53/ share |
|||||||||
| Chief Executive Officer |
$ | 197,351 | $ | 197,351 | 26,209 | |||||||
| President/ COO |
$ | 77,500 | $ | 77,500 | 10,292 | |||||||
| Chief Financial Officer |
$ | 29,000 | $ | 29,000 | 3,851 | |||||||
| Vice President/ Counsel |
$ | 30,000 | $ | 30,000 | 3,984 | |||||||
| Chief Credit Officer |
$ | 20,500 | $ | 20,500 | 2,722 | |||||||
| * | Share value based on the stock price close on 4/17/14 |
Component Weightings
| • | Each component’s weighting will be dependent on the participant’s level in the organization with the major focus/weighting on critical area(s) of impact: |
| Position |
Loan Orig. Increase |
Corporate Goal |
Individual Performance |
|||||||||
| Chief Executive Officer |
55.0 | % | 20 | % | 25 | % | ||||||
| President/ Chief Operating Officer |
45.0 | % | 20 | % | 35 | % | ||||||
| Position |
Corporate Goal |
Individual Performance |
||||||
| Chief Financial Officer |
25 | % | 75 | % | ||||
| Vice President/ Counsel |
25 | % | 75 | % | ||||
| Chief Credit Officer |
25 | % | 75 | % | ||||
| • | Multiple annualized goals within component may also be weighted for importance |
Performance Components
| • | Increase in Loan Originations: (CEO and COO only) |
| • | 0.35% of increase in total loan origination values generated in the fiscal year will be used to create a bonus pool. Note: Only loans that meet the credit policies of the Bank will be included in the bonus pool calculation of loans under this plan component. |
| • | Calculation of the Loan Origination Pool Percentage: |
Sum of the Estimated Loan Origination Bonus Amounts for the CEO and COO/ Projected Increase in Loan Originations = Loan Origination Pool Percentage
CEO Portion of the Pool:
$394,703 * 55.0% = $217,086
COO Portion of the Pool:
$155,000 * 45.0% = $69,750
Total Amount of Incentive Pool at Target:
$217,086 + $69,750 = $286,836
Projected Growth in Loan Originations in 2014: $83,000,000
Loan Origination Bonus Pool: $286,836 / $83,000,000 = 0.35%
| • | Distribution of the Loan Origination Pool: Annually, the Board will review the growth in loan originations and distribute the incentive pool based on the contributions of the CEO and the COO and other factors that it may wish to consider. |
| • | Corporate: The incentive award based on Corporate results will be determined as the weighted average percent of actual annualized results against pre-determined annualized goals in the following performance criteria: |
| Criteria (Higher is Better) |
Annualized Threshold |
Annualized Goal |
Weight | |||||||||
| • Return on Equity |
7.5 | % | 8.0 | % | 40.0 | % | ||||||
| • % Increase in Net Income |
7.5 | % | 9.4 | % | 15.0 | % | ||||||
| • Return on Average Assets |
0.9 | % | 1.0 | % | 15.0 | % | ||||||
| Criteria (Higher is Better) |
Annualized Threshold |
Annualized Goal |
Weight | |||||||||
| • % Non-Performing Assets |
2.97 | % | 2.0 | % | 15.0 | % | ||||||
| • Efficiency Ratio |
38.0 | % | 34.0 | % | 15.0 | % | ||||||
Abbreviated Bonus Determination Table
| Wt. Avg. % Annualized Goal Attained |
% Bonus Earned | |||
| <25.0% |
0 | % | ||
| 25% |
10.0 | % | ||
| 50% |
25.0 | % | ||
| 75% |
50.0 | % | ||
| 100.0% |
100.0 | % | ||
| 150.0% |
200.0 | % | ||
Note: Actual awards will be pro-rated based on the percentage of annualized goal attainment against annualized corporate performance goals.
Annually, the Board will review the Annualized Goal and Threshold values to determine their suitability as performance factors for the next bonus period based on the Bank’s financial projections.
| • | Individual: The individual bonus award is based on an evaluation of the individual’s performance in contributing to the success of the Bank. Factors to be considered should be based on the individual’s job responsibilities and the scope of their authority. It would be difficult to anticipate and define all of the factors that might need to be considered when determining the amount of an executive bonus that would be prudent and appropriate to award under this bonus category. However, here are several factors that the Board might wish to consider: |
| • | The executive’s role in meeting and overcoming expected or unexpected challenges faced by the organization during the bonus period. Creative problem solving, resiliency, and resolve are all factors to consider. |
| • | The successful completion of project’s or assignments that were delegated to the executive during the year. |
| • | The degree to which the executive developed the competencies of the staff members within his or her span of control. |
| • | The effectiveness of the executive in controlling costs and utilizing the financial and other resources under his/ her control. |
Individual Bonus Determination Guideline Table
| Rating |
Description |
% of Target Bonus Award |
||||
| Superior |
Consistently exceeds reasonable performance standards and expectations in all important areas of job responsibility. |
120.0 | % | |||
| Commendable |
Usually exceeds reasonable performance standards and expectations in a few important areas of job responsibility. |
110.0 | % | |||
| Satisfactory |
Usually meets, but may on occasion exceed or fail to exceed, reasonable performance standards and expectations in the key areas of job responsibility. |
100.0 | % | |||
| Unsatisfactory |
Rarely exceeds reasonable performance standards and expectations in any key areas of job responsibility. |
0 | % | |||
Award Calculations
| • | No incentive awards will be made under the Loan Origination or Annualized Corporate Goals portions of the plan unless the Company achieves a minimum of 7.0% return on equity. |
| • | Corporate-based awards will be the weighted average percent of annualized goal attainment for the five corporate criteria/ goals. Annualized performance below the threshold level will be entered as a zero. |
| • | Individual Bonus Awards will be discretionary in nature and will be based on an evaluation of the individual executive’s success in achieving the goals assigned. Individual awards may be made if approved by the Board even if overall annualized Company performance is below threshold levels. |
Award Discretion
| • | Calculated awards may be adjusted by ±10% of the Award by the Compensation Committee of the Board of Directors as a way of recognizing performance outcomes that were above or below ordinary expectations or due to unexpected circumstances beyond the control of the executive. |
Award Payouts
| • | Awards will be paid as soon as reasonably possible following year-end. |
| • | Awards will be rounded to nearest $100. |
| • | A portion of the Award may, at the discretion of the Board of Directors, be in the form of equity or any equivalent instrument. |
Funding
| • | Funded from overall Company Operating Budget |
General/ Administrative
| • | Except for retirement, death, or disability the plan participant must be employed at end of Plan Year and at payout to receive award. |
| • | In the event of the retirement, death, or disability of a plan participant, a pro-rata portion of the bonus amount at target will be paid. |
| • | Targets and weightings may be changed based on shift in focus or industry standards |
| • | Plan administered by the Board of Directors. |
| • | Plan may be modified or terminated at any time. |
| • | Stock awards will be made under the Company’s Equity Incentive Plan. |