DEF 14A 1 olbk-20160525xdef14a.htm DEF 14A 2016 Proxy

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. _____)

 

 

 

 

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Soliciting Material under §240.14a-12

 

OLD LINE BANCSHARES, INC.

(Name of Registrant as Specified In Its Charter)

 

 

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

 

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B&W

 

OLD LINE BANCSHARES, INC.

1525 Pointer Ridge Place

Bowie, Maryland  20716

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 25, 2016 AT 5:00 P.M.

 

The Annual Meeting of Stockholders of Old Line Bancshares, Inc., a Maryland corporation, will be held on May 25, 2016, at 5:00 p.m., local time, at Old Line Bancshares, Inc.’s office located at 1525 Pointer Ridge Place, Bowie, Maryland for the following purposes:

1.

To elect five directors to serve for a three-year term ending at the Annual Meeting of Stockholders to be held in 2019, and until their successors are duly elected and qualified.

2.

To ratify the appointment of Dixon Hughes Goodman LLP as independent public accountants to audit the financial statements of Old Line Bancshares, Inc. for 2016.

3.

To vote on a non-binding advisory proposal to approve the compensation of our named executive officers.

4.

To act upon any other matter that may properly come before the meeting or any adjournment or postponement thereof.

Only stockholders of record at the close of business on April 4, 2016 will be entitled to notice of and to vote at the meeting or any adjournment or postponement thereof. 

Accompanying this notice is a proxy statement and proxy form.  Whether or not you plan to attend the meeting,  you are urged to submit your proxy as soon as possible so that your shares can be voted at the meeting in accordance with your instructions.  You may vote by signing, dating and mailing the proxy card or by telephone by calling 1-800-690-6903 and following the voice mail prompts or over the Internet by following the instructions at www.proxyvote.com.  You will need information from your proxy card or electronic delivery notice to submit your proxy.  You may revoke your proxy at any time prior to or at the meeting by written notice to Old Line Bancshares, Inc., by executing a proxy bearing a later date, or by attending the meeting and voting in person.

You are cordially invited to attend the meeting in person.

 

 

 

 

By Order of the Board of Directors,

 

Mark A. Semanie, Secretary

 

 

Bowie, Maryland

 

April 21, 2016

 

 

 

 

 


 

OLD LINE BANCSHARES, INC.

1525 Pointer Ridge Place

Bowie, Maryland  20716

 

PROXY STATEMENT

 

Annual Meeting of Stockholders to be held on

May 25, 2016 at 5:00 P.M.

 

INTRODUCTION

 

This Proxy Statement is furnished on or about April 21, 2016 to stockholders of Old Line Bancshares, Inc. in connection with the solicitation of proxies by Old Line Bancshares, Inc.’s Board of Directors to be used at the annual meeting of stockholders described in the accompanying notice (the “Annual Meeting”) and at any adjournments or postponements thereof.  The purposes of the Annual Meeting are set forth in the accompanying notice of annual meeting of stockholders. 

 

This proxy material is being sent to Old Line Bancshares, Inc.’s stockholders on or about April 21, 2016.  Old Line Bancshares, Inc.’s annual report on Form 10-K, including financial statements for the year ended December 31, 2015 has been mailed to all stockholders with this proxy material.

 

If you are a stockholder of record (i.e. you own the shares directly in your name), you may attend the meeting and vote in person as long as you present valid proof of identification at the meeting.  If you hold your shares in Old Line Bancshares, Inc. beneficially but not of record (i.e. the shares are held in the name of a broker or other nominee for your benefit) you must present proof of beneficial ownership in order to attend the meeting, which you can generally obtain from the record holder, and you must obtain a proxy from the record holder in order to vote your shares if you wish to cast your vote in person at the meeting.  For further information, please contact our executive offices at (301) 430-2500 during regular business hours.

 

SOLICITATION AND REVOCATION OF PROXIES

The enclosed proxy is solicited by the Board of Directors of Old Line Bancshares, Inc.  The Board of Directors selected Gregory S. Proctor and John M. Suit, II or either of them, to act as proxies with full power of substitution.  The proxy is revocable at any time prior to or at the Annual Meeting by written notice to Old Line Bancshares, Inc., by executing a proxy bearing a later date, or by attending the Annual Meeting and voting in person.  A written notice of revocation of a proxy should be sent to the Secretary, Old Line Bancshares, Inc., 1525 Pointer Ridge Place, Bowie, Maryland 20716, and will be effective if received by the Secretary prior to the Annual Meeting.  The presence of a stockholder at the Annual Meeting alone will not automatically revoke such stockholder’s proxy.

 

In addition to solicitation by mail, officers and directors of Old Line Bancshares, Inc. may solicit proxies personally or by telephone.  Old Line Bancshares, Inc. will not specifically compensate these persons for soliciting such proxies.  Old Line Bancshares, Inc. will bear the cost of soliciting proxies. These costs may include reasonable out of pocket expenses in forwarding proxy materials to beneficial owners.  Old Line Bancshares, Inc. will reimburse brokers and other persons for their reasonable expenses in forwarding proxy materials to customers who are beneficial owners of the common stock of Old Line Bancshares, Inc. registered in the name of nominees. 

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON May 25, 2016

 

The Proxy Statement for the annual meeting and our annual report on Form 10-K for the year ended December 31, 2015 are available at www.proxyvote.com. 


 

Whether or not you plan to attend the Annual Meeting, you may submit a proxy to vote your shares via Internet, telephone or mail as outlined below.  You will need information from your proxy card or electronic delivery notice to submit your proxy to vote your shares by Internet or telephone.

 

·

By Internet:  Go to www.proxyvote.com and follow the instructions. 

·

By Telephone:  Call 1-800-690-6903 and follow the voice mail prompts. 

·

By Mail:  Mark your vote, sign your name exactly as it appears on your proxy card, date your proxy card and return it in the envelope provided.

 

OUTSTANDING SHARES AND VOTING RIGHTS

Stockholders of record at the close of business on April 4, 2016 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting.  As of the close of business on that date, there were outstanding and entitled to vote 10,802,560  shares of common stock, $0.01 par value per share, each of which is entitled to one vote.

The presence, in person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting will be necessary to constitute a quorum at the Annual Meeting.  Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting.

 

Assuming a quorum is present, the affirmative vote of a plurality of the shares cast in person or represented by proxy at the Annual Meeting is required to elect the director nominees.  In other words, the nominees to receive the greatest number of votes cast, up to the number of nominees up for election, will be elected.  Abstentions and broker non-votes will not affect the outcome of the election of directors. 

 

The affirmative vote of at least a majority of all votes cast at the Annual Meeting is sufficient for the ratification of the appointment of Dixon Hughes Goodman LLP.  Abstentions and broker non-votes are not included in calculating votes cast with respect to this proposal and will have no effect on the outcome of this proposal.

 

The affirmative vote of at least a majority of all votes cast at the Annual Meeting is required for the approval of the non-binding resolution to approve the compensation of our named executive officers.  Abstentions and broker non-votes are not included in calculating votes cast with respect to this proposal and will have no effect on the outcome of this proposal.

 

If your shares are held in the name of a bank, brokerage firm or other similar holder of record (referred to as “in street name”), you will receive instructions from the holder of record that you must follow in order for you to specify how your shares will be voted.  If you do not specify how you would like your shares to be voted, your shares held in street name may still be voted but only by certain record holders and only with respect to certain limited matters.  In general, holders of record who are brokers have the authority to vote shares for which their customers do not provide voting instructions on certain routine, uncontested items. In the case of contested items or items deemed non-routine, the brokerage institution holding street name shares cannot vote the shares if it has not received voting instructions. These are considered to be “broker non-votes.”  If your shares are held of record by a person or institution other than a broker, whether those shares can be voted without specific instructions from you will depend on your individual arrangement with that record holder, in particular, whether you have granted such record holder discretionary authority to vote your shares.

 

Under the applicable rules of the various securities exchanges applicable to their member brokerage firms, the proposal to ratify the appointment of our independent registered public accounting firm is considered a “routine” item upon which brokerage firms may vote in their discretion on behalf of their clients if such clients have not furnished voting instructions.  If your broker holder of record signs and returns a proxy card on your behalf, but does not indicate how the common stock should be voted, the common stock represented on the proxy card will be voted FOR ratification of the appointment of Dixon Hughes Goodman LLP as our independent public accounting firm for 2016.  The election of directors and the non-binding advisory vote to approve the compensation of our named executive officers are considered “non-routine” items for which brokerage firms may not vote in their discretion on behalf of clients who do not furnish voting instructions and, thus, there may be “broker non-votes” at the Annual Meeting with respect to these proposals.  IF YOU HOLD YOUR SHARES IN STREET NAME THROUGH A BROKER, YOU MUST PROVIDE VOTING INSTRUCTIONS TO YOUR BROKER RECORD HOLDER IN ORDER FOR YOUR SHARES TO BE VOTED ON IN THE ELECTION OF DIRECTORS AND THE NON-BINDING ADVISORY VOTE ON THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION. FURTHER, IF YOUR SHARES ARE HELD IN STREET NAME BY A


 

BANK OR OTHER NOMINEE TO WHOM YOU HAVE NOT GRANTED DISCRETIONARY AUTHORITY TO VOTE YOUR SHARES, YOUR SHARES WILL NOT BE VOTED ON ANY PROPOSAL AT THE MEETING UNLESS YOU PROVIDE VOTING INSTRUCTIONS TO YOUR RECORD HOLDER.

 

All proxies will be voted as directed by the stockholder on the proxy form.  A proxy, if executed and not revoked, will be voted in the following manner (unless it contains instructions to the contrary, in which event it will be voted in accordance with such instructions), except that shares held by brokers for which instructions were not received by the beneficial owners will only be voted with respect to ratification of the auditors:

FOR the nominees for director named below.

FOR ratification of the appointment of Dixon Hughes Goodman LLP as independent public accountants for 2016.

FOR the non-binding advisory resolution approving the compensation of our named executive officers.

Proxies will be voted in the discretion of the holder on such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

 

IT IS ANTICIPATED THAT OLD LINE BANCSHARES, INC.’S DIRECTORS AND OFFICERS WILL VOTE THEIR SHARES OF COMMON STOCK IN FAVOR OF THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS LISTED, FOR THE RATIFICATION OF THE APPOINTMENT OF DIXON HUGHES GOODMAN LLP AND FOR THE NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.


 

OWNERSHIP OF OLD LINE BANCSHARES COMMON STOCK

The following tables set forth, as of the Record Date, information with respect to the beneficial ownership of Old Line Bancshares’ common stock by each director, by its executive officers and by all of its directors and executive officers as a group, as well as information regarding each other person that Old Line Bancshares believes owns in excess of 5% of the outstanding common stock.  Unless otherwise noted below, Old Line Bancshares believes that each person named in the table has or will have the sole voting and sole investment power with respect to each of the securities reported as owned by such person. 

DIRECTORS & EXECUTIVE OFFICERS

 

 

 

 

 

 

 

 

 

 

Name of Beneficial Owner

 

Number of
Shares Owned

 

Number of Options
Owned (1)

 

Total Number
of Shares
Beneficially
Owned (2)

 

Percent of
Class Owned(3)

 

 

 

 

 

 

 

 

 

Joseph E. Burnett(4)

 

42,767 

 

58,519 

 

101,286 

 

0.94% 

Craig E. Clark(5)

 

193,817 

 

4,800 

 

198,617 

 

1.84% 

James W. Cornelsen(6)

 

147,775 

 

167,506 

 

315,281 

 

2.92% 

G. Thomas Daugherty(7)

 

546,769 

 

5,800 

 

552,569 

 

5.12% 

James F. Dent

 

68,062 

 

8,300 

 

76,362 

 

0.71% 

Andre' J. Gingles

 

49,066 

 

6,300 

 

55,366 

 

0.51% 

Thomas H. Graham

 

2,954 

 

3,600 

 

6,554 

 

0.06% 

William J. Harnett

 

1,051,837 

 

3,600 

 

1,055,437 

 

9.77% 

Frank Lucente

 

146,714 

 

8,300 

 

155,014 

 

1.43% 

Gail D. Manuel(8)

 

38,531 

 

8,300 

 

46,831 

 

0.43% 

Carla Hargrove McGill

 

7,573 

 

3,600 

 

11,173 

 

0.10% 

M. John Miller

 

3,296 

 

5,030 

 

8,326 

 

0.08% 

Gregory S. Proctor, Jr.(9)

 

42,037 

 

8,300 

 

50,337 

 

0.47% 

Jeffrey A. Rivest

 

20,657 

 

4,800 

 

25,457 

 

0.24% 

Mark A. Semanie

 

8,860 

 

8,532 

 

17,392 

 

0.16% 

Suhas R. Shah(10)

 

24,766 

 

8,300 

 

33,066 

 

0.31% 

John M. Suit, II(11)

 

53,960 

 

7,300 

 

61,260 

 

0.57% 

Frank E. Taylor (12)

 

11,935 

 

5,800 

 

17,735 

 

0.16% 

All directors & executive officers as a group (18 people)

 

2,461,376 

 

326,687 

 

2,788,063 

 

25.81% 

(1)

Indicates options exercisable within 60 days of the Record Date.

(2)

The total number of shares beneficially owned includes shares of common stock owned by the named persons as of the Record Date and shares of common stock subject to options held by the named persons that are exercisable as of, or within 60 days of, the Record Date.

(3)

The shares of common stock subject to options are deemed outstanding for the purpose of computing the percentage ownership of the person holding the options, but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

(4)

Includes 1,620 shares of common stock held jointly with his spouse.

(5)

Includes 138,214 shares of common stock held jointly with his spouse.  Does not include 17,256 shares of common stock an individual retirement account owns for the benefit of his spouse and 1,334 shares of common stock his spouse owns individually.  Mr. Clark disclaims beneficial ownership in such shares.

(6)

Includes 12,122 shares of common stock held jointly with his spouse. 

(7)

Includes 246,467 shares of common stock The Daugherty, LLC owns.  Mr. Daugherty is managing member of The Daugherty, LLC.  Excludes 54,729 shares of common stock his spouse individually owns.  Mr. Daugherty’s address is c/o Old Line Bank, 1525 Pointer Ridge Place, Bowie, Maryland 20716.

(8)

Includes 14,451 shares of common stock owned jointly with her spouse and 6,424 shares of common stock Trinity Memorial Gardens owns.  Ms. Manuel is the owner and a Director of Trinity Memorial Gardens.

(9)

Includes 3,500 shares of common stock held jointly with his spouse.

(10)

Includes 14,622 shares of common stock held jointly with his spouse.

(11)

Includes 24,207 shares of common stock owned by the John M. Suit II Revocable Trust and 27,503 shares of common stock owned by the Joan Marie Suit Revocable Trust.  Mr. Suit is trustee and beneficiary of these trusts.

(12)

Includes 5,964 shares of common stock owned jointly with his spouse and 424 shares of common stock owned with his adult son, 674 shares of common stock owned with his adult daughter and 674 shares of common stock owned with another adult daughter.

 


 

OTHERS WITH OWNERSHIP IN EXCESS OF 5%

 

 

 

 

(1)

 

 

 

Name of Beneficial Owner and
Addresses
of 5% Owners

 

Number of
Shares
Owned(1)

 

Percent of
Class
Owned

 

 

 

 

 

Endeavour Capital Advisors, Inc.(2)

 

783,515 

 

7.25% 

410 Greenwich Avenue

 

 

 

 

Greenwich, CT 06830

 

 

 

 

 

 

 

 

 

Banc Fund, VI L.P.(3)

 

637,496 

 

5.90% 

20 North Wacker Drive, Suite 3300

 

 

 

 

Chicago, Illinois  60606

 

 

 

 

 

 

 

 

 

Wellington Management Group, LLP(4)

 

629,540 

 

5.83% 

280 Congress Street

 

 

 

 

Boston, MA  02210

 

 

 

 

 

 

 

 

 

FJ Capital Management, LLC(5)

 

587,876 

 

5.44% 

1313 Dolley Madison Blvd, Ste 306

 

 

 

 

McLean, VA 22101

 

 

 

 

 

(1)

Source: SNL Financial, LLC.

(2)

Endeavour Capital Advisors, Inc., a Delaware Corporation, Laurence M. Austin and Mitchell J. Katz jointly reported in a Schedule 13G/A filed with the Securities and Exchange Commission on February 16, 2016 that, they share voting and investment power of 783,515 shares of common stock. 

(3)

Banc Fund VI L.P., an Illinois limited partnership, Banc Fund VII L.P., an Illinois limited partnership, Banc Fund VIII L.P., an Illinois limited partnership and Banc Fund IX L.P., an Illinois limited partnership, jointly reported in a Schedule 13G/A filed with the Securities and Exchange Commission on February 9, 2016 that Banc Fund VI L.P. has sole voting and investment power of 57,073 shares of common stock, that Banc Fund VII L.P. has sole voting and investment power of 188,386 shares of common stock, that Banc Fund VIII L.P. has sole voting and investment power of 382,037 shares of common stock and that Banc Fund IX L.P. has sole voting and investment power of 10,000 shares of common stock.  The general partner of Banc Fund VI is MidBanc VI L.P., whose principal business is to be a general partner of Banc Fund VI.  The general partner of Banc Fund VII is MidBanc VII L.P., whose principal business is to be a general partner of Banc Fund VII.  The general partner of Banc Fund VIII is MidBanc VIII L.P., whose principal business is to be a general partner of Banc Fund VIII.  The general partner of Banc Fund IX is MidBanc IX L.P., whose principal business is to be a general partner of Banc Fund IX.  The general partner of MidBanc VI, MidBanc VII, MidBanc VIII and MidBanc IX is The Banc Funds Company, L.L.C. (“TBFC”), whose principal business is to be a general partner of MidBanc VI, MidBanc VII, MidBanc VIII and MidBanc IX.  TBFC is an Illinois corporation whose principal shareholder is Charles J. Moore.  Mr. Moore has been the manager of Bank Fund VI, Bank Fund VII, Bank Fund VIII and Bank Fund IX since their respective inceptions.  As manager, Mr. Moore has voting and dispositive power over the securities of the Company held by each of those entities.  As the controlling member of TBFC, Mr. Moore controls TBFC, and therefore each of the partnership entities directly and indirectly controlled by TBFC.

(4)

Wellington Management Group, LLP, a Massachusetts limited liability partnership, Wellington Group Holdings LLP, a Delaware limited liability partnership, Wellington Investment Advisors Holdings LLP, a Delaware limited liability partnership and Wellington Management Group LLP, a Massachusetts limited liability partnership, jointly reported in a Schedule 13G/A filed with the Securities and Exchange Commission on February 11, 2016 that they share voting and investment power of 629,540 shares of common stock that are held of record by clients of one or more investment advisers directly or indirectly owned by Wellington Management Group LLP.  Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the investment advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP. 

(5)

FJ Capital Management, LLC, a Virginia limited liability company, and Martin S. Freedman jointly reported in a Schedule 13G/A filed with the Securities and Exchange Commission on February 17, 2015 that they each have shared voting power of 587,876 shares of common stock and shared investment power of 172,491 of such shares of common stock, comprised of (i) 170,225 shares of common stock held by Financial Opportunity Fund, LLC, of which FJ Capital Management LLC is the managing member, (ii) 415,385 shares of common stock held by Bridge Equities, III, LLC, of which FJ Capital Management, LLC is the sub-investment advisor and (iii) 2,266 shares of common stock owned by a managed account that FJ Capital Management, LLC manages.  Martin S. Freedman in the Managing Member of FJ Capital Management, LLC.


 

PROPOSAL I

ELECTION OF DIRECTORS

 

The Board of Directors currently has 15 directors, divided into three classes – Class A, Class B and Class C.  The directors in each class are elected to serve for a three-year term and until their respective successors are duly elected and qualified. 

 

The Board of Directors is recommending the election of James W. Cornelsen, James F. Dent, Thomas H. Graham, Carla Hargrove McGill and Jeffrey A. Rivest as Class A directors for a term ending at the 2019 annual meeting of stockholders. 

 

All of the nominees are currently directors of Old Line Bancshares, Inc. and each nominee has consented to serve as a director, if elected.  The directors whose terms have not expired will continue to serve as directors until the expiration of their respective terms. 

 

It is not contemplated that any of the nominees will become unavailable to serve, but if that should occur before the Annual Meeting, proxies that do not withhold authority to vote for the nominees listed below will be voted for another nominee, or nominees, selected by the Board of Directors.

 

A plurality of the shares cast at the Annual Meeting is necessary in order for each director to be elected.  Abstentions and broker non-votes have no effect on the outcome of the election. 

 

Information regarding the nominees and the directors who will continue to serve unexpired terms follows. 

 

The Board of Directors recommends that stockholders vote “FOR” the election of all nominees.

 

Nominees for election to the Board of Directors for a three-year term expiring in 2019:

 

James W. Cornelsen, 61, is the President and Chief Executive Officer of Old Line Bancshares, Inc. and Old Line Bank.  He joined Old Line Bank as President and Chief Executive Officer and became a member of its Board of Directors in 1994.  He has been a member of the Board of Directors of Old Line Bancshares, Inc. since its incorporation in April 2003, and currently serves as Chairman of the Loan Committee and the Asset and Liability Committee.  He has over 35 years of commercial banking experience.  Mr. Cornelsen serves on the American Bankers Association (ABA) Community Bankers Council, as well as on its Administrative Committee, the ABA Payment Solutions Board of Directors and the ABA Board of Directors Fund for Economic Growth.  Additionally, Mr. Cornelsen serves on the Board of Directors of the Greater Washington Board of Trade, the Maryland Chamber of Commerce, The Foundation Schools, and the Greater Prince George’s Business Roundtable.  He is the Past Chairman of the Board of Directors of the Prince George’s County Chamber of Commerce and the Past Chairman of the Board of Trustees of St. Mary’s Ryken High School, Leonardtown, Maryland.  He has also served on the Board of Directors of Maryland Financial Bank and the Board of Directors of the Maryland Bankers Association, in addition to serving on various committees of the Maryland Bankers Association.  He also previously served on the ABA Membership Committee and the Board of Directors of Historic Sotterley Plantation, and is active in many community organizations.  The Board of Directors believes that Mr. Cornelsen’s qualifications to serve on the Board and as President and Chief Executive Officer of Old Line Bancshares, Inc. include his many years of banking experience and proven leadership in the success of these companies combined with his leadership as Chair of the Loan and Asset and Liability Committees.

James F. Dent, 79, is a founding member of Old Line Bank and has served as a member of the Board of Directors since 1988. He also served as a member of the Board of Directors of Old Line Bancshares, Inc. since its 2003 incorporation. Mr. Dent was a successful businessman, owning and operating an award-winning State Farm Insurance Agency from 1961 until his retirement in 2006. Additionally, he served on the boards of, and led various non-profit, charitable and service organizations, chaired the Economic Development Commission and was president of the Maryland Association of Counties, was appointed to lead other county and state commissions/committees, and served as county commissioner for eight years. Mr. Dent currently serves on the Loan and Compensation Committees. The Board of Directors believes that Mr. Dent’s more than 50 years’ successful experience in the insurance industry in our market area, his active involvement in the founding and continued oversight of Old Line Bank, and his extensive experience providing community leadership uniquely qualify him for his membership on the Board of Directors of Old Line Bancshares, Inc. and Old Line Bank.


 

Thomas H. Graham, 56, has served as Vice President of People Strategy and Human Resources at Pepco Holdings Inc., a regional energy holding company that provides utility service to more than two million customers, since August 2013. Prior to that, Mr. Graham held several positions at the company since 1986, including Pepco Region President, Pepco Regional Vice President, Manager, Strategic Accounts and Manager, Billing Services and Investigations. He is responsible for developing and implementing enterprise-wide policies and programs encompassing all aspects of human resource management including employment, employee and labor relations, employee benefits, succession planning, compensation, development, diversity programs, and management and employee assistance. Mr. Graham currently serves on the board of the Center for Energy Workforce Development (Immediate Past Chair) and Maryland Chamber of Commerce (Immediate Past Chair). Mr. Graham is also on the boards for Heroes, Inc., Excellence in Education Foundation for Prince George's County School System, Greater Prince George’s Business Roundtable, Mid-Atlantic Plan Sponsors and Prince George’s County Economic Development Corporation. Other affiliations include Leadership Maryland, Leadership Montgomery, American Association of Blacks in Energy (DC Chapter President) and Leadership Prince George’s (Immediate Past Chair). Mr. Graham has been a member of the Board of Directors of Old Line Bancshares, Inc., and Old Line Bank since November 2013. The Board of Directors believes his qualifications to serve as a Director of Old Line Bank and Old Line Bancshares, Inc. include his exceptional leadership and management expertise and his business affiliations in our market area. He is currently a member of the Asset and Liability Committee and the Risk Committee.

Carla Hargrove McGill, 54, has served as President of Hargrove, Inc., a Lanham, Maryland headquartered company that designs and executes a wide range of events from trades shows and galas to presidential inaugurals, since 2008; prior to that she held the position of Vice President of Special Events.  Ms. McGill serves as a board member of The Foundation Schools and as a committee member for the Anne Arundel Medical Center Gala. Ms. McGill became a director of Old Line Bancshares and Old Line Bank in April 2013, and is currently a member of the Asset and Liability and Risk Committees.  The Board of Directors of Old Line Bancshares, Inc. and Old Line Bank believe that Ms. McGill’s experience managing and operating her own business, her affiliations within the local community and her active involvement in the in local charitable organizations uniquely qualify her for membership on our Board. 

Jeffrey A. Rivest, 63, served as President and Chief Executive Officer of the University of Maryland Medical Center from 2004 through his retirement in August 2015.  In this position he was responsible for all aspects of organizational strategy and operations for a 750 bed academic medical center with 7,000 employees.  From 1988 through 2004, he held several positions at The Children’s Hospital of Philadelphia, starting with Senior Vice President for Clinical and Ambulatory Service, moving on to Executive Vice President and Chief Operating Officer and finishing his time there as Executive Vice President and Chief Operating Officer.  Mr. Rivest has additionally held seat on multiple Boards, which currently include the University Care Board of Directors since 2006, the Maryland Medicine Comprehensive Insurance Program Board of Directors Executive Committee since 2010, and the Maryland Medicine Comprehensive Insurance program Board of Directors since 2005.  He previously served on the Maryland Highway Safety Foundation Board from 2009 through 2010, the United Way of Central Maryland Board from 2010 through 2012 and Maryland Hospital Association Executive committee of the Board of Trustees from 2007 through 2009.  Mr. Rivest has served as a director of Old Line Bancshares and Old Line Bank since September 2012 and currently serves on the Old Line Bank/Old Line Bancshares, Inc. Corporate Governance Committee, Risk Committee and the Asset and Liability Committee. He also previously served on the Audit Committee.  The Board of Directors believes the Mr. Rivest’s qualifications to serve on the Board center on his extensive management and strategic organizational experience.  With local roots and numerous affiliations in the business community, Mr. Rivest provides invaluable business development opportunities to our organization. 

 

Continuing Directors

 

The directors whose terms are not expiring at the Annual Meeting are as follows:

 

Term Expiring at the 2017 Annual Meeting

 

Craig E. Clark, 74, retired in 2006 as President of Waldorf Carpets, Inc., a wholesale and retail flooring company, which he established in 1969.  Mr. Clark is a founder of Old Line Bank.  He has served as Chairman of the Board of Directors of Old Line Bank since 1994 and of Old Line Bancshares, Inc. since its incorporation in 2003 and has served as a member of the Board of Directors of Old Line Bank since 1988.  Mr. Clark is a member of each of the Board of Directors’ committees with the exception of the Loan Committee and Risk Committee.  The Board of Directors of Old Line Bancshares, Inc. and Old Line Bank believe that Mr. Clark’s experience managing and operating his own business, his


 

affiliations within the local community and his active involvement in the founding and oversight of Old Line Bank uniquely qualify him to be Chairman and a member of the Board of Directors.  Mr. Clark demonstrates his commitment through his involvement in all levels of Board governance.  He additionally lends his expertise and experience to a myriad of special projects including but not limited to business development, branch expansion and overall asset growth.

 

G. Thomas Daugherty, 70, was the President of Maryland Bankcorp and Maryland Bank & Trust from 2001 through April 1, 2011 when they merged into Old Line Bancshares, Inc. and Old Line Bank, respectively.  He was a Director of Maryland Bank & Trust Company from 1995 through the April 1, 2011 effective date of the merger.  From 1977 to 2001, Mr. Daugherty was an attorney specializing in real estate and business law.  He is a member of the Maryland Bar Association and the District of Columbia Bar Association.  He holds a Juris Doctorate from the University of Baltimore, a BA from the College of William and Mary, and an AA from St. Mary’s College of Maryland.  He has served as Vice President of St. Mary’s College of Maryland Foundation and is trustee emeritus of the Board of Trustees of St. Mary’s College of Maryland. Additional prior community activities include the St. Mary’s County Economic Development Commission, the Lexington Park Redevelopment Commission, and he served 12 years (including four years as President) of the St. Mary’s County Housing Authority Board.  He is currently a member of the Southern Maryland Navy Alliance, and the Lexington Park Rotary Club. As a current member of the Old Line Bank Board, he serves on the Asset and Liability Committee.  The Board of Directors of Old Line Bancshares and Old Line Bank believes that Mr. Daugherty’s qualifications to serve on the boards of Old Line Bancshares and Old Line Bank include his many years of banking experience, his community contacts, and his knowledge of the former Maryland Bank & Trust’s customer base and market area.

 

Gail D. Manuel, 60, is the owner and a Director of Trinity Memorial Gardens and Mausoleum in Waldorf, Maryland.  She is a past member of the Board of Directors of the Charles County Chamber of Commerce, past member of the Charles County Planning Commission and past President of Charles County Zonta Club.  She resides in Welcome, Maryland.  She has been a member of the Board of Directors of Old Line Bank since 1992 and Old Line Bancshares, Inc. since its incorporation in 2003.  Ms. Manuel serves on the Asset and Liability, Risk and Compensation Committees.  The Board of Directors of Old Line Bancshares, Inc. and Old Line Bank believes that Ms. Manual’s qualifications for serving on the Board of Directors of Old Line Bank and Old Line Bancshares, Inc. include her many years of active involvement with the Board of Directors, her experience owning and operating a small business in our market area and her long standing affiliations with the local business community.

 

Gregory S. Proctor Jr., 52, is President and Chief Executive Officer of G.S. Proctor & Associates, Inc., a Maryland registered lobbying and consulting firm, which he established in 1995.  He resides in Upper Marlboro, Maryland.  He has been a member of the Board of Directors of Old Line Bancshares, Inc. and Old Line Bank since 2004.  He currently serves on the Loan and Compensation and Corporate Governance Committees.  The Board of Directors believes his qualifications to serve as a Director of Old Line Bank and Old Line Bancshares, Inc. include his legislative knowledge, his management and consulting skills and his business affiliations in our market area.

 

Suhas R. Shah, CPA,  61, is a principal and member of Source One Business Services, LLC, and has served in that capacity since 1986 and is a principal and shareholder of Regan Schickner Shah Harper, LLC. and has served in that capacity since 1986.  Source One Business Services, LLC provides cash flow and budgeting analysis, computer consulting and tax planning and preparation for corporations, individuals, estates and trusts, as well as litigation support, financial forecasts and merger and acquisitions advisory services to a variety of clients. Regan, Russell, Schickner & Shah, P.A. is a certified public accounting firm.  Mr. Shah resides in Marriottsville, Maryland. He has been a member of the Board of Directors of Old Line Bancshares. Inc. and Old Line Bank since January 2006.  He currently serves on the Asset and Liability Committee and as Chair of the Audit Committee.  The Board of Directors believes that Mr. Shah’s qualifications for these positions include his educational background, extensive experience with public and financial accounting matters, his financial expertise, his accounting certification and his affiliations with the business community in our market area.

Term Expiring at the 2018 Annual Meeting

 

Andre' J. Gingles, 58, has been the owner of Gingles, LLC, a law firm now located in Laurel, Maryland, since 2003.  Mr. Gingles’ practice concentrates on large mixed use projects involving land use, zoning and government relations.  He has been a member of the Board of Directors of Old Line Bancshares, Inc. and Old Line Bank since June 2011.  Mr. Gingles is an accomplished and effective senior executive with extensive management and leadership experience in the public and private sectors.  Mr. Gingles has served in the Prince George’s County Government in multiple capacities and provides counsel to several metropolitan real estate development companies on a variety of business and land use issues. 


 

He holds a bachelor’s degree from Howard University, Washington, D.C. and a Juris Doctorate degree from Southern University Law Center, Baton Rouge, LA.  He holds membership in a number of professional and community organizations to include serving as Chairman of the Foundation Schools and Past Chairman of Trial Courts Judicial Nominating Commission for District 13, Prince Georges County, Maryland.  The Board of Directors believes that Mr. Gingles’ extensive knowledge of Old Line Bank’s market areas and familiarity with businesses located in those areas provides significant assistance to Old Line Bank in achieving business development goals and market growth.  Currently, he is a member of the Asset and Liability and the Corporate Governance Committees.  His experience working with local government and his extensive legal background provide additional insight to the Board with regard to future planning and strategic development.

 

William J. Harnett, 85, was a Director of WSB Holdings, Inc. since its formation in January 2008, served as a Director of The Washington Savings Bank, F.S.B. since its inception in 1982 and served as Chairman of the Board of WSB Holdings, Inc. and The Washington Savings Bank from 1988 until May 10, 2013, when they merged into Old Line Bancshares, Inc. and Old Line Bank, respectively.  He also served as Chief Executive Officer of The Washington Savings Bank from 1988 until he retired as Chief Executive Officer in February 2005.  He also was founder, Chairman and Chief Executive Officer of Washington Homes, Inc., before it was sold in 1988.  The Board of Directors of Old Line Bancshares, Inc. and Old Line Bank believe that Mr. Harnett’s qualifications to serve as a Director include his extensive knowledge of the banking industry, which include the business and operations of a financial institution as well as the risks faced in the industry, as a result of his long tenure with The Washington Savings Bank as both a director and former CEO, as well as his knowledge of the former The Washington Savings Bank’s customer base and market area. 

 

Frank Lucente, Jr., 74, is President of Lucente Enterprises, Inc., an investment holding company that he established in 1985.  Mr. Lucente has previously served as a director of Peoples National Bank, Suburban Bank (also known as Columbia Bank) and Prince George’s Community College.  He is currently a partner in Chesapeake Custom Homes, Diamond Custom Homes and Heritage Investment Company.  He has also been a partner in Robin Hood Homes, Diamond Development, Kings Grant, Inc., Regent Construction Company, Diamond Renovations, Diamond Utilities and Bay of America (which is now National Harbor).  Mr. Lucente has been a partner in entities that have built over 800,000 square feet of commercial office spaces and has been involved in the construction and development of over 5,700 homes in the Washington Metropolitan Area.  Mr. Lucente resides in Palm Beach County, Florida and Edgewater, Maryland.  He has been a member of the Board of Directors of Old Line Bank since 2002 and Old Line Bancshares, Inc. since its incorporation in 2003.  He has served as Vice Chairman of the Board of Directors of Old Line Bancshares, Inc. and Old Line Bank since 2003.  He is currently a member of the Loan Committee.  The Board of Directors believes Mr. Lucente’s qualifications for these positions include his business affiliations in our market area, his knowledge of the real estate industry and his operational and management expertise gained from his many years as a business owner and previous director at financial institutions and entities affiliated with our industry.

 

John M. Suit, II, 71, served as Senior Vice President for Branch Banking and Trust (BB&T) from 2003 through his retirement in 2006.  From 1996 until 2003, Mr. Suit served as Chairman of the Board of Farmers Bank of Maryland.  Mr. Suit also served as President, CEO and Director of Farmers National Bancorp and Farmers National Bank of Maryland from 1989 to 1996.  Mr. Suit lives in Annapolis, Maryland.  He has served on the Board of Directors of Old Line Bancshares, Inc. and Old Line Bank since 2007.  He currently serves on the Audit, Corporate Governance, Loan, and Compensation Committees.  The Board of Directors believes his qualifications for these positions include his financial expertise resulting from his prior Chairman and executive officer positions and his leadership in the banking industry.

 

Frank Taylor, 66,  has been the President of Taylor Gas Company, Inc., a family business founded in 1950 that markets propane throughout the lower part of Southern Maryland, since 1982.  He served on the Board of Directors for Maryland Bank and Trust Company, N.A. from 1995 until its merger with Old Line Bank in 2011.  He previously served on the Board of Governors of the Calvert Marine Museum and currently serves on their Finance Committee.  He has also served on a variety of other Boards and Commissions including the United States Navy League, St. Mary’s County Metropolitan Commission, Three Oaks Center, Mid-Atlantic Propane Gas Association, National Propane Gas Association, St. Mary’s County Chamber of Commerce and The St. Mary’s County Planning Commission, and is a member of Leadership Southern Maryland Class of 2016.  He began serving on the Board of Directors of Old Line Bancshares, Inc. and Old Line Bank in 2011 and is currently a member of the Audit and Risk Committees.  The Board of Directors believes his qualifications to serve as a director include his extensive community banking experience as a director as well as his experience on numerous other Boards.  His extensive knowledge of Old Line Bank’s Southern Maryland market and familiarity with businesses located in that area provides invaluable insight with regard to future planning and strategic development in that market.


 

 

The Board of Directors has determined that Directors, Craig E. Clark, James F. Dent, Andre´ Gingles, Thomas H. Graham, Gail D. Manuel, Carla Hargrove McGill, Gregory S. Proctor, Jr., Jeffery A. Rivest, Suhas R. Shah, John M. Suit, II, and Frank Taylor are “independent” as defined under the applicable rules and listing standards of the NASDAQ Stock Market LLC.

 

Director Selection Process

 

The Corporate Governance Committee selects nominees for director and considers a variety of factors to ensure diversity and that the Board of Directors, as a whole, is diverse and consists of individuals with various and relevant career experience, relevant technical skill, industry knowledge and experience, financial expertise, local or community ties and minimum individual qualifications, including high moral character, mature judgment, familiarity with our business and industry, independence of thought and an ability to work collegially.

 

The Board of Directors also conducts a self-assessment annually, which our Corporate Governance Committee reviews and discusses with the Board.  At a meeting of the non-management directors of the Board, the Corporate Governance Committee presents this review and recommends individuals for re-election to the Board of Directors and any new individuals for nomination who may enhance the diversity of the Board of Directors.

 

Board Leadership Structure

 

Craig E. Clark has served as Chairman of the Board of Directors of Old Line Bank since 1994 and of Old Line Bancshares, Inc. since its incorporation in 2003.  He has served as a member of the Board of Directors of Old Line Bank since its inception in 1988. 

 

The Chairman of the Board of Directors organizes the work of the Board and ensures that it has access to sufficient information to enable it to carry out its functions.  Those functions include monitoring our performance and the performance of management.  The Chairman is also responsible for presiding over all meetings of the Board of Directors and stockholders, oversight of the distribution of information to Directors, appointment of committee members and the chairs of those committees as well as the oversight and strategic planning for Old Line Bancshares, Inc. and Old Line Bank.

 

The Board of Directors believes that in order to maintain independent oversight of management it is important that the Chairman is not an officer or employee of Old Line Bancshares, Inc. or Old Line Bank.  Independent directors and management provide different perspectives and roles in strategy development.  The Chief Executive Officer sits on the Board of Directors to facilitate the dissemination of information and understanding between the Board of Directors and management but does not hinder the Board’s overall independence.   Although the Board of Directors has not adopted a formal policy in this regard, the Chairman of the Board of Directors has been an independent director since inception of Old Line Bancshares, Inc. 

 

BOARD MEETINGS AND COMMITTEES

 

Old Line Bancshares, Inc.’s Board of Directors meets for regular meetings each month (usually the fourth Wednesday of each month) and convenes additional special meetings as circumstances may require.  The Board of Directors of Old Line Bancshares, Inc. and Old Line Bank met 13 times during 2015.  Each director attended at least 75% of the total number of meetings of the Board of Directors and the Board committees of Old Line Bancshares, Inc. and Old Line Bank of which he or she was a member during 2015, with the exception of Mr. Harnett. 

 

The Board of Directors of Old Line Bancshares, Inc. has standing Audit, Corporate Governance, Compensation and Strategic Opportunities Committees.  Old Line Bank also has a number of standing committees, including the Asset and Liability Committee, Risk Committee, Audit Committee, Compensation Committee, Loan Committee and Corporate Governance Committee.  The members of Old Line Bancshares, Inc.’s and Old Line Bank’s Audit, Compensation and Corporate Governance Committees are the same, and these committees typically hold joint meetings.

 

Old Line Bancshares, Inc.’s policy provides that, in the absence of an unavoidable conflict, all directors are expected to attend the annual meeting of Old Line Bancshares, Inc.’s stockholders.  Fourteen of our then-current 15


 

members of the Board of Directors of Old Line Bancshares, Inc. attended the 2015 annual meeting (Mr. Harnett did not attend).

Oversight of Risk Management

 

The Board of Directors has an active role in overseeing and monitoring Old Line Bancshares’ risk management processes.  The Board of Directors regularly reviews information regarding our asset quality, securities portfolio, capital, liquidity, compensation, financial reporting, strategic plan, products, security and operations.  The Board of Directors oversees the risk management process through correlated committee processes and through Board management and/or participation in these committees.  In 2015, the Board established the Old Line Bancshares, Inc. Risk Committee to assist with this oversight, as further discussed below.  The Compensation Committee is responsible for overseeing the management of risks related to our executive and non-executive compensation plans.  The Audit Committee has responsibility for oversight of financial reporting, information technology, security and regulatory risks.  The Corporate Governance Committee manages risk associated with the Board of Directors, including independence and competence of the directors.  The Asset and Liability Committee, which consists of directors and one senior officer of Old Line Bank, is responsible for oversight of the management of risks associated with our policies and procedures related to financial management, interest rate sensitivity, liquidity, investment, and capital.  The Loan Committee is responsible for management of risk associated with loans and reviews loans as set forth in Old Line Bank’s loan policy.  The purpose of the Strategic Opportunities Committee is to review and assess, and to assist the Company’s Board of Directors in reviewing and assessing, potential mergers and acquisitions.

 

Old Line Bancshares, Inc. has also contracted with outside vendors to conduct internal audits.  The firms, working in coordination with the Chief Risk Officer, report to the Chairman of the Audit Committee.  On an annual basis, or more frequently if required, the Audit Committee approves a schedule of internal reviews and audits for the firm to complete.  The findings from their reviews and audits are reported to the Audit Committee.  The Chair of the Audit Committee makes a full report of each finding to the full Board of Directors.

 

The Board of Directors does not believe that the administration of its risk oversight function has had any effect on its leadership structure as described above.

 

Risk Committee

 

Old Line Bancshares, Inc.’s Risk Committee members are Jeffrey Rivest, Thomas Graham, Gail Manuel, Carla Hargrove McGill and Frank Taylor.  The Risk Committee was established to document, review and approve the enterprise-wide risk management practices of Old Line Bancshares and Old Line Bank and assist the Board of Directors in fulfilling their responsibility to oversee the Company’s risk management.  The Committee held six meetings in 2015.  The Committee’s responsibilities include: (i) monitoring and advising the Board of Directors regarding the Company’s risk exposures, such as credit, market, liquidity, operational, compliance, legal, strategic and reputational risks; (ii) establishing a level of risk tolerance, evaluating and monitoring the adequacy and effectiveness of the Company’s risk management framework to ensure strategic plans and business operation are commensurate with the established risk tolerance and appropriately identifying, monitoring and controlling risk; (iii) monitoring the work of the Enterprise Risk Oversight Committee, a management committee; (iv) reviewing, approving and monitoring the Company’s risks, risk appetite and supporting risk tolerance levels;  and (v) reviewing reports from the Enterprise Risk Oversight Committee and management to ensure risks are managed within the approved risk tolerances.  The Risk Committee will maintain responsibility for all areas of risk, however, they may delegate direct oversight of specific areas of risk to other Board committees as deemed appropriate.  To minimize the duplication of time and effort, the Committee may defer to those other committees with respect to such specific matters, but it will consult with, and may request reports or information from, those other committees in order to ensure that such matters are adequately addressed as part of the Company’s enterprise-wide risk management framework.

 

Asset and Liability Committee

 

Old Line Bancshares, Inc.’s Asset and Liability Committee members are James W. Cornelsen, Craig E. Clark, G. Thomas Daugherty, Andre´ Gingles, Thomas H. Graham, Carla Hargrove McGill, Suhas R. Shah, and Erin G. Lyddane, our Senior Vice President of Operations.  The Asset and Liability Committee held four meetings in 2015.  The committee’s responsibilities include: (i) monitoring actual financial performance compared with established guidelines and plans, identifying causes for variances, and determining the actions needed to change performance; (ii) determining liquidity requirements and monitoring the sources and uses of liquidity, including the status of contingency plans; (iii) monitoring


 

Old Line Bank’s exposure to potential interest rate changes and determining strategies to minimize the risk of loss; (iv) reviewing and revising as necessary the near term forecast for sources and uses of funds and the pricing on these funds; and (v) managing and maintaining, in a manner consistent with the goals of the Board of Directors capital adequacy, asset and investment quality, earnings at the maximum level possible within the constraints of prudent banking and the reasonable requirements of customers and the community, growth which is sound, profitable and balanced without the sacrifice of quality of service and ensuring compliance with applicable laws and banking regulations.

 

Audit Committee

 

Old Line Bancshares, Inc.’s Audit Committee members are Craig E. Clark, John M. Suit, II, Suhas R. Shah and Frank Taylor.  The Board of Directors has determined that each of these individuals is independent, as defined under the applicable rules and listing standards of the NASDAQ Stock Market LLC and the rules and regulations of the Securities and Exchange Commission (the “SEC”).  In addition, the Board of Directors has determined that each committee member is able to read and understand fundamental financial statements, including Old Line Bancshares, Inc.’s consolidated balance sheet, income statement and cash flow statement.  In addition, the Board of Directors has determined that Mr. Shah is an “audit committee financial expert” as the rules and regulations of the SEC define that term.

 

The Audit Committee of Old Line Bancshares, Inc. and Old Line Bank held four meetings in 2015.  The Audit Committee’s primary responsibilities are to assist the Board by monitoring: (i) the integrity of the financial statements of Old Line Bancshares, Inc.; (ii) the independent auditors’ qualifications and independence; (iii) the performance of Old Line Bancshares, Inc.’s and its subsidiaries’ internal audit function and independent auditors; (iv) Old Line Bancshares, Inc.’s system of internal controls; (v) Old Line Bancshares, Inc.’s financial reporting and system of disclosure controls; and (vi) Old Line Bancshares, Inc.’s compliance with legal and regulatory requirements.

 

In addition, the Audit Committee was appointed to oversee treatment of, and any necessary investigation concerning, any employee complaints or concerns regarding Old Line Bancshares, Inc.’s accounting and auditing matters.  Pursuant to procedures adopted by Old Line Bancshares, Inc., any employee with such complaints or concerns is encouraged to report them, anonymously if they desire, to the Chair of the Audit Committee for investigation, and appropriate corrective action, by the Audit Committee.

 

The Audit Committee has a written charter, a copy of which is available in the shareholder relations section of Old Line Bank’s website at www.oldlinebank.com.  

 

Corporate Governance Committee

 

Old Line Bancshares, Inc.’s Corporate Governance Committee, members are John M. Suit, II, Craig E. Clark, Andre´ J. Gingles, Jeffrey A. Rivest and Gregory S. Proctor, Jr.  The Board of Directors has determined that each of these individuals is independent, as defined under the applicable rules and listing standards of the NASDAQ Stock Market LLC.  The Corporate Governance Committee has a written charter, a copy of which is available in the shareholder relations section of Old Line Bank’s website at www.oldlinebank.com.  The Corporate Governance Committee of Old Line Bancshares, Inc. held two meetings in 2015.

 

The Corporate Governance Committee determines whether the incumbent directors should stand for reelection to the Board of Directors and identifies and evaluates candidates for membership on the Board of Directors.  In the case of a director nominated to fill a vacancy on the Board of Directors due to an increase in the size of the Board of Directors, the Corporate Governance Committee recommends to the Board of Directors the class of directors in which the director-nominee should serve.  The Corporate Governance Committee also conducts appropriate inquiries into the backgrounds and qualifications of possible director candidates and reviews and makes recommendations regarding the composition and size of the Board of Directors.

 

In identifying and evaluating candidates for membership on the Board of Directors, the Corporate Governance Committee takes into account all factors it considers appropriate.  These factors may include ensuring that the Board of Directors, as a whole, is diverse and consists of individuals with various and relevant career experience, relevant technical skill, industry knowledge and experience, financial expertise, local or community ties and minimum individual qualifications, including high moral character, mature judgment, familiarity with the our business and industry, independence of thought and an ability to work collegially.  However, the committee retains the right to modify any or all of these factors from time to time. 


 

 

The Corporate Governance Committee also evaluates candidates for nomination to the Board of Directors who are recommended by a stockholder.  Stockholders who wish to recommend individuals for consideration by the Corporate Governance Committee to become nominees for election to the Board may do so by submitting a written recommendation to the Secretary of Old Line Bancshares, Inc. at 1525 Pointer Ridge Place, Bowie, Maryland  20716.  Submissions must include sufficient biographical information concerning the recommended individual, including age, five-year employment history with employer names and a description of the employer’s business, whether such individual can read and understand basic financial statements and board memberships for the Corporate Governance Committee to consider.  A written consent of the individual to stand for election if nominated and to serve if elected by the stockholders must accompany the submission.  The Corporate Governance Committee will consider recommendations received by a date not later than 120 calendar days before the date the Proxy Statement was released to stockholders in connection with the prior year’s annual meeting for nomination at that annual meeting.  The Corporate Governance Committee will consider nominations received beyond that date at the annual meeting subsequent to the next annual meeting.

 

The Corporate Governance Committee identifies potential candidates through various methods, including but not limited to, recommendations from existing directors, customers and employees. 

 

The Corporate Governance Committee evaluates nominees for directors recommended by security holders in the same manner in which it evaluates any nominees for directors.  Minimum qualifications include high moral character, mature judgment, familiarity with Old Line Bancshares, Inc.’s business and industry, independence of thought and ability to work collegially.

 

Compensation Committee

 

Old Line Bancshares, Inc.’s Compensation Committee members are Craig E. Clark, James F. Dent, Gail D. Manuel, Gregory S. Proctor, Jr. and John M. Suit, II.  The Board of Directors has determined that each of these individuals is independent, as defined under the applicable rules and listing standards of the NASDAQ Stock Market LLC.  The Compensation Committee of Old Line Bancshares, Inc. and Old Line Bank held three meetings in 2015.

 

The Compensation Committee evaluates the performance of the President and Chief Executive Officer and makes recommendations to the Board of Directors regarding the President and Chief Executive Officer’s compensation.  The Compensation Committee also reviews current industry practices regarding compensation packages provided to executive management and the Board of Directors, including salary, bonus, stock options and other perquisites.  Based on recommendations from the President and Chief Executive Officer, the Compensation Committee approves compensation provided to members of executive management, excluding the President and Chief Executive Officer.    The President and Chief Executive Officer bases his recommendation primarily on our results as outlined in the Incentive Plan Model and Stock Option Model, as well as his own evaluation of the officer’s performance during the year.  The Compensation Committee also evaluates and recommends to the Board of Directors fees for non-employee board members.  The Compensation Committee has adopted a written charter, a copy of which is available in the shareholder relations section of Old Line Bank’s website at www.oldlinebank.com.

 

In 2015, the Compensation Committee engaged, for the second year, Meyer Chatfield Compensation Advisors to conduct an executive officer and director compensation review.  Those reviews provided information about the performance of our peer banks with respect to return on average assets, asset growth, net interest margin and non-performing assets and compared Old Line Bank’s performance to the peer banks’ performance.  The reviews also provided information on base and bonus compensation for the executive management teams and boards of directors of the banks in the peer banks and compared Old Line Bank’s compensation structure to the peer banks.  The Compensation Committee used these surveys to assist them in determining the appropriate salary levels for the executive officers and directors. 

 

Compensation Committee Interlocks and Insider Participation

 

During the fiscal year ended December 31, 2015, Messrs. Clark, Dent, Proctor and Suit and Ms. Manuel served as members of our Compensation Committee.  No such person is currently, or has been at any time, one of our officers or employees.  None of our executive officers currently serves, or has served during the last completed fiscal year, as a member of the Board of Directors or Compensation Committee of any other entity that has or had one or more executive officers serving as a member of our Board of Directors or Compensation Committee.

 


 

DIRECTOR COMPENSATION

 

The following table discloses all fees and other payments to each director for the fiscal year ended December 31, 2015.

 

 

 

 

 

 

 

 

 

 

Name

    

Fees Earned
or
Paid in Cash

    

Stock
Awards(1)

    

Option
Awards(2)(3)

    

Total

 

 

$

 

$

 

$

 

$

Craig E. Clark

 

76,000 

 

4,314 

 

6,108 

 

86,422 

James W. Cornelsen(4)

 

-

 

-

 

-

 

-

G. Thomas Daugherty

 

39,200 

 

4,314 

 

6,108 

 

49,622 

James F. Dent

 

44,800 

 

4,314 

 

6,108 

 

55,222 

Andre Gingles

 

39,600 

 

4,314 

 

6,108 

 

50,022 

Thomas H. Graham

 

42,100 

 

4,314 

 

6,108 

 

52,522 

William J. Harnett

 

35,500 

 

4,314 

 

6,108 

 

45,922 

Frank Lucente

 

48,000 

 

4,314 

 

6,108 

 

58,422 

Gail D. Manuel

 

40,900 

 

4,314 

 

6,108 

 

51,322 

Carla Hargrove McGill

 

40,100 

 

4,314 

 

6,108 

 

50,522 

Gregory S. Proctor

 

44,800 

 

4,314 

 

6,108 

 

55,222 

Jeffrey A. Rivest

 

41,800 

 

4,314 

 

6,108 

 

52,222 

Suhas Shah

 

39,200 

 

4,314 

 

6,108 

 

49,622 

John M. Suit, II

 

47,200 

 

4,314 

 

6,108 

 

57,622 

Frank Taylor

 

41,600 

 

4,314 

 

6,108 

 

52,022 

Total

 

$
620,800 

 

$
60,396 

 

$
85,512 

 

$
766,708 

 

(1)

We estimated the fair value of the 300 restricted stock awards granted at $14.38 using the closing stock price on February 25, 2015.  There were no unvested Director stock awards outstanding as of December 31, 2015.

(2)

We estimated the fair value of the stock option awards granted at $5.09 per option using the Black-Scholes valuation model as outlined in Note 15-Employee Benefits in Item 8 Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2015.

(3)

The aggregate number of vested options outstanding is disclosed in the Security Ownership of Management and Certain Security Holders table.  There were no unvested Director stock option awards outstanding at December 31, 2015. 

(4)

Mr. Cornelsen is an executive officer and is not compensated for his services as a director.

 

For 2015, each non-employee Director of Old Line Bank, other than the Chairman of the Board and the Vice Chairman of the Board, received $700 for each attended meeting of the Board of Directors, $300 for each attended meeting of the Loan Committee and $400 for each attended meeting of the Corporate Governance Committee, the Compensation Committee, the Audit Committee and the Asset and Liability Committee.  The Chairmen of the Corporate Governance Committee, the Compensation Committee and the Audit Committee also received an additional $300 for each attended meeting of their respective committees.  If a Director attends any of these meetings via teleconference in lieu of in person, the Director will receive $200 instead of the regular in-person payment.  Each non-employee Director of Old Line Bank, other than the Chairman of the Board and the Vice Chairman of the Board, also received an $8,000 quarterly retainer.  During 2015, the Chairman of the Board received an annual retainer of $76,000 and the Vice Chairman received an annual retainer of $48,000 in lieu of attendance fees. 

 

In September 2012, the Board of Directors adopted a resolution providing directors who retire from the Board with at least seven years of service a payment of $50,000, payable in three annual installments.

 

Old Line Bancshares, Inc. has paid no cash remuneration, direct or otherwise, to its directors since its incorporation.  It is expected that unless and until Old Line Bancshares, Inc. becomes actively involved in additional businesses other than owning all the capital stock of Old Line Bank, it will pay no separate cash compensation to the directors of Old Line Bancshares, Inc. in addition to that paid to them by Old Line Bank in their capacities as directors of Old Line Bank.  However, Old Line Bancshares, Inc. may determine in the future that such separate cash compensation is appropriate.

 

In February 2015, Old Line Bancshares granted 300 shares of restricted stock and options to purchase 1,200 shares of our common stock to each non-employee director.  The options have an exercise price of $14.38, the closing


 

price of the common stock on the NASDAQ Stock Market on February 25, 2015, the date of the grant.  The options vested immediately and the restricted stock vested on December 31, 2015.

 

In February 2016, Old Line Bancshares granted 600 shares of restricted stock and options to purchase 1,200 shares of our common stock to each non-employee director.  The options have an exercise price of $17.75, the closing price of the common stock on the NASDAQ Stock Market on February 24, 2016, the date of the grant.  The options vested immediately and the restricted stock will vest on December 31, 2016, assuming that the applicable director is still serving on the Board of Directors on such date.


 

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

The primary objective of our executive compensation program is to attract and retain talented and motivated executive officers that will contribute to the Company’s overall success.  Executive officers are instrumental to supporting growth and profitability as well as minimizing risk, resulting in the advancement of shareholder interests.  The performance of each of the executive officers has a potentially vital impact on our profitability; therefore, we believe the design and administration of the compensation program is of considerable importance.

Executive Compensation Philosophy and Objectives

Old Line Bank strives to provide a compensation package that is based on the Company’s overall performance, increase in shareholder value and the performance of the individual executive.  We, therefore, assess our executive officers’ performance both objectively and subjectively using both financial measures, as identified in our incentive compensation plan, as well as non-financial goals that include risk mitigation and attainment of strategic objectives. As such, we believe executive compensation should be comprised of both fixed and variable pay.  Our executive compensation package includes base salary, performance-based cash incentives, performance-based equity incentives and benefits. 

 

We establish base salaries for our named executives to be competitive with peer institutions and that are structured to attract talent.  Performance-based cash and equity incentives, both short and long term, are variable in nature and are based on specific Bank performance metrics established to drive desired behavior in alignment with the Bank’s strategic plan.  Certain benefits, such as the Salary Continuation Plan and equity incentives, in addition to providing a benefit, also serve as a mechanism to retain our best talent.

 

Annually, our Compensation Committee performs a review of our executive officers’ total compensation.  This review assists the Committee with determining whether our executive officers are appropriately compensated relative to external benchmarks.  The Committee considers the Company’s strategic objectives, individual contributions to company objectives and our performance in relation to peers.  The Committee receives annual input from the Chief Executive Officer regarding the performance of each of the other executive officers.  In addition, the Committee evaluates the performance of the Chief Executive Officer in order to make decisions regarding his compensation.

 

The Committee strives to provide a program that will attract, retain, motivate and reward our executive officers, which ultimately creates value for our stockholders.  To do this, they have established a program that is designed to:

 

·

provide compensation opportunities that are competitive within our market and industry;

·

link a portion of total compensation to the achievement of identified goals in a way that rewards higher performance levels; and

·

align executive interests with those of our stockholders by using equity as a component of our incentive program and ensure that executives are not encouraged or rewarded for taking excessive risk.

 

Identification of Named Executive Officers for 2015

 

This Compensation Discussion and Analysis provides information about the 2015 compensation for our named executive officers, who include:

 

·

James W. Cornelsen, President and Chief Executive Officer

·

Joseph E. Burnett, Executive Vice President and Chief Lending Officer

·

Mark A. Semanie, Executive Vice President and Chief Operating Officer

·

M. John Miller, Executive Vice President and Chief Credit Officer

·

Elise Hubbard, Senior Vice President and Chief Financial Officer

 

Compensation Committee and Advisor Independence

 

The Compensation Committee is composed solely of independent directors, and has under its own authority, engaged its own independent advisors, including a compensation consultant and legal counsel.


 

Shareholder Advisory Vote on Executive Compensation

 

We conduct an annual shareholder advisory vote on the compensation of the named executive officers, and our Board of Directors and the Compensation Committee carefully consider the outcome of these advisory votes when making compensation decisions.  In 2015, in excess of 71% of our stockholders voted in favor of the non-binding advisory proposal to approve the compensation of our named executive officers.  The Compensation Committee has made no significant changes to our pay practices; however, it continues to be the Committee’s goal to maintain alignment of our pay practices with the best interests of the Company and its stockholders.  We will, therefore, continue to evaluate the appropriateness of the Company’s compensation program and consider stockholder feedback throughout the evaluation process. 

 

Compensation-Related Risk Assessment

 

We conduct an annual evaluation of our compensation programs, policies and practices to ensure that they reflect an appropriate level of risk-taking but do not encourage our employees to take excessive or unnecessary risks that could have an adverse impact on the Bank.

 

Change in Control and Termination Arrangements

 

As further described below, our post-employment compensation arrangements for Messrs. Cornelsen, Burnett, Semanie and Miller include payments under the salary continuation plan agreements described below, continued payments (including, with respect to Messrs. Burnett, Semanie and Miller, an annual grant of stock options) for the remaining term of their employment agreements and immediate vesting of unvested options upon a change of control and, with respect to Messrs. Burnett, Semanie and Miller, if they are involuntarily terminated without cause.  Mr. Cornelsen is also entitled to receive post-employment payments under his salary continuation plan agreement.  In addition, Mr. Cornelsen is entitled to receive a termination payment equal to 1.99 times his average annual compensation if his employment is terminated (i) involuntarily without cause, (ii) upon his permanent disability, (iii) by him for good reason including a material reduction in his duties or failure to be elected as President and Chief Executive Officer, or (iv) voluntarily by Mr. Cornelsen prior to or within six months following consummation of a change in control of Old Line Bancshares or Old Line Bank.  Mr. Cornelsen is additionally entitled to receive a separate non-competition payment equal to one times his average annual compensation if his employment is terminated for any reason other than cause.  This provision was added to his employment agreement upon completion of an analysis of the impact to the Company should Mr. Cornelsen leave and compete with Old Line Bank in the same geographic region.  Were he to leave and take three senior loan officers with him, the impact on the Company was estimated to be approximately $7.8 million assuming the movement of 10% of their loan portfolios.  This amount would grow to $19.5 million upon movement of 25% of their loan portfolios.

 

The Compensation Committee believes that these agreements are necessary to provide a competitive total compensation plan to attract and retain the employment of our executive officers who are a party to the agreements. 

 

The Role of the Compensation Committee

 

The Compensation Committee is responsible for establishing our compensation philosophy and reviews and approves our executive compensation programs, including the specific compensation of our executive officers. The Compensation Committee has the authority to retain special counsel and other advisors, including compensation consultants, to assist in carrying out its responsibilities to determine the compensation of our executive officers.  Such compensation components include base salary levels, target bonus opportunities, actual bonus payments, equity awards and benefits. The Compensation Committee meets on a regularly-scheduled basis and at other times as needed.  To carry out its responsibilities, the Compensation Committee reviews, at least annually, all executive compensation programs.  This review helps to ensure compensation actions are aligned with our compensation philosophy, provide appropriate targets for performance incentives for our executive officers and are competitive with the market and our peer companies.

 

Compensation Consultants

 

The Compensation Committee, under authority granted by its charter, occasionally utilizes outside consultants, actuaries and attorneys to assist it in developing and implementing our compensation program, including incentive compensation arrangements and the Supplemental Executive Retirement Plan.

 


 

During 2015, the Compensation Committee continued their engagement with Meyer Chatfield Compensation Advisors (“MCCA”), who conducted an executive officer and director compensation review.  Per Committee instruction, their engagement provides market data, information on compensation trends, and commentary and analysis relating to executive and director compensation.  In addition, the Committee also requested their review and input on the CEO’s Employment Agreement as well as assistance with the performance of an updated 280G analysis with regard to potential change in control payments to our CEO.  MCCA assisted the Committee in its assessment of the compensation peer group and executive compensation benchmarking. MCCA provided no services to and received no fees from the Company, or its affiliates, other than in connection with the engagement entered into by the Compensation Committee.  The amount of fees paid or payable by the Bank to MCCA in respect to the engagement was $24,000 for 2015.  There are no personal relationships between MCCA and any member of the Compensation Committee other than in respect of the engagement.  No employee of MCCA owns and stock of the Company and there are no business or personal relationships between MCCA and any executive officer of the Company other than in respect to the engagement entered into by the Compensation Committee of the Company.  The Committee has concluded that there are no conflicts of interest with regard to the engagement of MCCA.

 

The Compensation Committee utilized a proxy peer group to review compensation levels for the executive team and board of directors, similar to studies performed in previous years.  We strive to continue as a high performing bank, thus we excluded peers that did not meet certain minimum performance levels with regards to return on average assets, asset growth, net interest margin and non-performing assets.  Old Line Bank’s 2015performance compared favorably to our compensation peer group and ranked from the 25th percentile up to the 91st percentile on key performance metrics.  Old Line Bank continues to exhibit strong performance in asset growth rates.

 

The Role of Management

 

In addition to input from its compensation consultants, the Committee also considers input from senior management regarding financial performance in relation to the budget and the attainment of incentive plan metrics.  The

Chief Operating Officer and Chief Financial Officer, with input from the Chief Executive Officer, are responsible for the development of annual budget, which is reviewed and approved by the Board of Directors.  The budget provides the foundation for setting performance goals and targets to be achieved during the fiscal year and included in the incentive compensation plan.  The Committee also receives information regarding executive officer compensation and benefits from the Director of Human Resources.  The Director of Human Resources prepares Compensation Committee and Board meeting materials and performs work as requested by the Compensation Committee, including working with the compensation consultants in preparation of peer analyses for the Committee’s consideration. 

 

The Chief Executive Officer attends Compensation Committee meetings as needed and makes recommendations regarding base salary, bonuses and other benefits for named executive officers other than the Chief Executive Officer.  Although the Committee considers such input, the Compensation Committee has final authority on compensation matters for all named executive officers.

 

Peer Review and Performance Comparisons

 

The Compensation Committee regularly reviews market information provided by our compensation consultants.  The primary data sources used provide information publicly disclosed by a peer group of publicly traded banks.  The Committee reviews comparative compensation and benefit information contained in the public filings of our peer group as identified below. 

 

The purpose of the peer group is to provide relative comparative data to assist the Board in making sound decisions with respect to the Bank’s compensation practices.  The peer group was developed from an initial group of 176 publically traded banks with 2013 compensation data and assets between $700 million and $2.5 billion.  This group of banks was then narrowed down based on relevant criteria, including asset size, geographic location, number of offices, number of employees, and performance metrics.  The 2015 peer group contains 22 publically traded banks with available 2014 compensation data and 2014 assets between $917 and $3.5 billion.

 


 

 

 

2015 Peer Group

BSB Bancorp, Inc.

Enterprise Bancorp, Inc.

Community Financial Corporation

Bar Harbor Bankshares

1st Constitution Bancorp

BCB Bancorp, Inc.

Clifton Bancorp Inc.

ConnectOne Bancorp, Inc.

Peapack-Gladstone Financial Corporation

10 

Bridge Bancorp, Inc.

11 

First of Long Island Corporation

12 

Suffolk Bancorp

13 

Bryn Mawr Bank Corporation

14 

Fox Chase Bancorp, Inc.

15 

QNB Corp.

16 

Republic First Bancorp, Inc.

17 

Hingham Institution for Savings

18 

Univest Corporation of Pennsylvania

19 

Access National Corporation

20 

Southern National Bancorp of Virginia, Inc.

21 

Middleburg Financial Corporation

22 

Washington First Bankshares, Inc.

 

The Compensation Committee considers the compensation data, as well as other competitive market factors, when making base salary decisions for the executives.  We also consider this data to ensure our award opportunities under our cash and equity incentive plans are competitive and reasonable.  Based on its 2015 analysis, the Committee adjusted executive base salaries to keep base compensation in line with peers.  The Bank also has a formal performance-based annual cash incentive plan.  Details surrounding this plan are disclosed later in this section, however the compensation review validated that the current target and maximum award levels under the annual cash incentive plan are competitive, ranging from a target of 40.0% to a maximum of 60.0% of salary for Mr. Cornelsen and 25.0% target to 37.5% maximum for the other named executive officers.  The Compensation Committee also uses performance to determine annual equity awards.  Equity awards, once earned, are subject to a three-year vesting schedule.

 

The Compensation Committee additionally considers overall company performance and its effect on stockholders.

 

The Committee believes our financial results and total shareholder return compare favorably with our peer group indicating a strong pay and performance alignment.

 


 

The following graph illustrates five year shareholder return.

 

Picture 5

 

SNL US Bank and Thrift:  All major Exchanges Banks and Thrifts in SNL’s coverage universe

SNL US Financial Institutions:  All Financial Institutions in SNL’s coverage universe whose primary shares trade on a US exchange

 

Components of the Compensation Program

 

The elements of the compensation programs for the Bank’s executive officers, which are base salary, cash incentives, equity incentives, and benefits, are detailed below.  While the Compensation Committee considers total compensation when reviewing benchmarking data, one component does not specifically affect another as they each serve unique purposes. In addition to providing a benefit to the executive each component serves the purpose of either attracting or retaining talent. 

 

Base Salary

 

The Compensation Committee views base salary as the foundation of the compensation program and is a primary consideration for attracting experienced talent.  Our executive compensation program provides base salaries and benefits, which include health, disability and life insurance programs, a 401(k) retirement program and paid leave, to compensate executive officers for the performance of core duties and responsibilities associated with their individual positions.  We establish our executive officers’ base salaries using criteria that includes technical expertise, individual responsibility level, organizational performance and the competitive data from the peer group identified above and believe that base salaries should be paid at a level affords us the ability to hire and retain experienced individuals in our industry that can effectively contribute to the achievement of our strategic business goals. 

 

Base salary for the Bank’s Chief Executive Officer is set by the Committee on an annual basis. Base salaries for the Bank’s executive officers other than its Chief Executive Officer are made on an annual basis and are based upon recommendations by the Chief Executive Officer. The factors for the Committee's compensation decisions include Bank financial performance, industry base salaries within the Peer Group, the nature and responsibilities of the position, the


 

contribution and experience of the officer, and the length of the officer's service with the Bank. The Compensation Committee additionally considers the specific contributions of each executive officer and the officer’s opportunity for professional growth when approving annual salary adjustments.  While our performance incentive plan provides executive officers rewards for the Bank’s attainment of budgeted goals, it is through base salary that executives are rewarded for their individual contributions to the organization. 

 

In 2015, special focus was given to the successful completion of the acquisition of Regal Bank & Trust and each officer’s contributions to that transaction. 

 

Annual Cash Incentive Plan.

 

The Annual Cash Incentive Plan (“ACIP”) was implemented to reward executives for achieving and exceeding predefined performance goals.  In doing so, the Committee believes the ACIP also provides a focus on those goals identified by the Committee as being important to the overall performance of the Company, while also serving as a retention tool.  In 2015, due to their strategic contributions to the Company, Messrs. Cornelsen, Burnett, Miller and Semanie were identified by the Compensation Committee as participants in the ACIP.  As her responsibilities are, at this time, more focused in nature, Ms. Hubbard was not identified as a participant in the ACIP or as eligible to receive target-based awards as discussed under “-Equity Incentive Plan.”  Ms. Hubbard is, however, eligible for, and received in 2015, discretionary equity and non-equity awards.

The ACIP is performance-based with cash award opportunities defined for threshold, target and maximum performance levels.  Under the 2015 Incentive Plan Model, at the target levels, Mr. Cornelsen was eligible to receive a bonus equal to 40.0% of his base salary and Mr. Burnett, Mr. Miller and Mr. Semanie were eligible to receive a target bonus equal to 25.0% of their base salaries. Maximum award levels are set at 60.0% and 37.5% of base salary, respectively, subject to a modifier as described below.  If a threshold performance level is not achieved, the portion of the award for that metric will be 0%.

Each year, the Compensation Committee works with management to set Bank-wide performance-based goals based on the Bank’s budget and strategic plan.  The Committee reviews the combination of performance metrics each year to ensure that they do not encourage risky behavior or expose Old Line Bancshares, Inc. to material risk.  In addition, we aim to discourage focus on achievement of one metric at the expense of the others.  The Board ultimately approves the performance metrics at the beginning of each performance year.  The Compensation Committee certifies performance of goals each year and has ultimate discretion over payouts.  

In October 2012, the Compensation Committee approved the addition of modifiers to certain performance metrics, which are used to rank our performance relative to our peers and allow for reductions and/or increases to executive incentive payouts based on that performance comparison.  It is the Committee’s belief that the application of incentive modifiers to goals provides a balanced approach that is consistent with our compensation philosophy while discouraging excessive risk taking and goal manipulation.  In 2015, the Committee applied a modifier to the earnings per share (“EPS”) metric, following the guidelines below.

 

 

 

Percentile Comparison Multiplier

Less than 40th Percentile

0.50

40th – 49th Percentile

0.75

50th – 59th Percentile

1.00

60th – 74th Percentile

1.50

Greater than 74th Percentile

2.00

 

In 2015 our EPS percentage fell in the 60th percentile compared to peer, therefore the 1.50 multiplier was applied to the potential payout in that category, increasing the payout to the executives by 50%.

Performance metrics for 2015 included total shareholder return, return on equity, non-performing assets, and EPS.  The executives achieved stretch performance on three of these goals in 2015 which, with the 1.50% modifier applied to EPS, resulted in a bonus payout of 61.24% for Mr. Cornelsen and 38.28% for each of Mr. Burnett, Mr. Semanie and Mr. Miller.

 


 

The following table illustrates plan metrics, goals and actual incentive payouts as a percentage of base salary.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

Total Shareholder
Return
(20% Weighting)

   

Return on
Equity
(20% Weighting)

   

Earnings Per

Share

(40% Weighting)

   

Earnings Per
Share
(40% Weighting)

   

Potential Cash Incentive
as a % of Salary
CEO

   

Potential Cash
Incentive
as a % of Salary
Other Execs.

threshold

 

51.06

 

5.86

 

0.96

 

$
0.74

 

20.00%

 

12.50%

target

 

63.83

 

7.32

 

0.79

 

$
0.92

 

40.00%

 

25.00%

stretch

 

76.60

 

8.78

 

0.70

 

$
1.10

 

60.00%

 

37.50%

actual performance

 

61.41

 

8.85

 

0.54

 

$
1.13

 

55.24%

 

34.53%

actual payout

 

 

 

 

 

 

 

 

 

35.29%

 

38.28%

 

Equity Incentive Plan

 

The Compensation Committee believes that equity should represent a significant part of executive compensation and further aligns the interest of management with those of our stockholders and provides for a longer-term retention tool.  We have been incorporating equity as an element of executive compensation since 2005.  Under the Equity Incentive Plan, the target award levels the named executive officers (other than Ms. Hubbard) would be eligible to receive are equal to a fair value of 20% of salary (for Mr. Cornelsen) or 10% of salary (for Mr. Burnett, Mr. Miller and Mr. Semanie).  Maximum equity awards are 20% of base salary for Messrs. Burnett, Miller and Semanie and 40% of base salary for Mr. Cornelsen. 

Equity grants are performance-based, that is, the final equity award (if any) is based on whether Old Line Bancshares, Inc. meets the cumulative threshold, target or stretch levels for financial metrics in a given year; for example, overall attainment of 75% of the total target goal results in the payment of 75% of the payout at the target level for the CEO and other executive officers respectively.  For 2015, these metrics included total shareholder return, return on equity, non-performing assets, and EPS.  The Committee believes that utilizing the same metrics for both cash and equity awards enhances executive focus on those areas identified as being of strategic importance. Once year-end financial results are final, the Committee determines the fair value of equity award for each executive.  This is then delivered in a combination of restricted stock and stock options, which, once granted, are subject to a three-year vesting schedule.  

 

On February 22, 2016, the Compensation Committee of the Board of Directors of Old Line Bancshares, Inc. and Old Line Bank reviewed the financial performance of Old Line Bancshares, Inc. and Old Line Bank for the fiscal year ended December 31, 2015 in order to determine equity awards for the named executive officers.

 

Based on this review and upon finalization of our year-end financial statements, effective February 24, 2016, we issued equity awards to Mr. Cornelsen totaling 36.80% of his base salary, to Mr. Burnett totaling 18.40% of his base salary, to Mr. Semanie totaling 18.40% of his base salary and to Mr. Miller totaling 18.40% of his base salary.

 

Other Benefits

 

Our executives are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life and disability insurance and our 401(k) plan, in each case on the same basis as our other employees.  Mr. Cornelsen and Mr. Burnett are also covered by a bank owned life insurance policy that provides for a split-dollar benefit.  Additionally, Mr. Cornelsen, Mr. Burnett and Mr. Semanie are provided a supplemental executive retirement plan.  Both additional benefits are discussed in greater detail below.

 

We provide a Company-owned automobile to Mr. Cornelsen due to the amount of travel required as a representative of the Company. We also provide one country club membership to Mr. Cornelsen to help facilitate his role as a Company representative.

 

Risk Assessment Procedures

We have reviewed our compensation policies and programs for all of our employees and have determined that the compensation policies and incentive compensation programs in place are not reasonably likely to have a material adverse effect on Old Line Bancshares, Inc. or the Bank and do not encourage our employees to take excessive risks.  We are confident that the internal controls and procedures we have in place throughout our organization sufficiently manage


 

any inherent risk in our programs. Among other things, our executive compensation programs reflect the following policies and practices:

·

The Compensation Committee is composed solely of independent directors, under its own authority, and has engaged its own independent compensation consultant;

 

·

We conduct an annual shareholder advisory vote on the compensation of the named executive officers, and our Board of Directors and the Compensation Committee carefully consider the outcome of these advisory votes;

 

·

We do not provide significant perquisites or other personal benefits to our executive officers other than the Supplemental Executive Retirement Plan and bank owned life insurance, which the Committee has determined does not encourage our executives to take unnecessary risks, as they are defined benefits and not related to any specific performance metric.  Our executive officers participate in our health and welfare benefit programs on the same basis as all of our employees; and

 

·

Annually, the Board of Directors reviews and approves all policies of the Bank to ensure that they reflect an appropriate level of risk-taking but do not encourage our employees to take excessive or unnecessary risks that could have an adverse impact on the Bank.

 

Compensation Committee Report

 

The Compensation Committee has reviewed the Compensation Discussion and Analysis included in this Proxy Statement and discussed it with Company management.  Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

 

 

Compensation Committee:

 

 

 

By: Craig E. Clark

 

James F. Dent

 

Gail D. Manuel

 

Gregory S. Proctor, Jr.

 

John M. Suit, II

 

 


 

Summary Compensation Table

 

The following table sets forth the compensation paid by Old Line Bank to its Chief Executive Officer, Chief Financial Officer and to the next three most highly compensated executive officers who received total compensation in excess of $100,000 during 2015 (the “named executive officers”).    

 

SUMMARY COMPENSATION TABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and
Principal
Position

  

Year

  

Salary

  

Bonus

  


Stock
Awards(6)

  


Option
Awards(7)

  

Non-Equity
Incentive Plan
Compensation(8)

  

Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings

  

All
Other
Compensation

  

Total

 

 

 

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

$

James W. Cornelsen

 

2013

 

400,000 

 

 

 

44,000 

 

103,000 

 

258,000 

 

205,833 

 

14,851 

 

1,025,684 

President & CEO(1)

 

2014

 

490,000 

 

 

 

42,924 

 

100,156 

 

172,921 

 

257,803 

 

27,786 

 

1,091,590 

 

 

2015

 

514,500 

 

 

 

56,800 

 

132,535 

 

315,080 

 

281,447 

 

22,350 

 

1,322,712 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph E. Burnett

 

2013

 

215,180 

 

 

 

12,000 

 

28,000 

 

107,000 

 

30,331 

 

11,749 

 

404,260 

Executive Vice

 

2014

 

235,000 

 

 

 

10,434 

 

24,346 

 

63,215 

 

-

 

13,053 

 

346,048 

President & CLO(2)

 

2015

 

246,750 

 

 

 

13,621 

 

31,781 

 

94,456 

 

-

 

13,891 

 

400,499 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark A. Semanie

 

2013

 

192,673 

 

 

 

12,000 

 

28,000 

 

107,000 

 

-

 

9,177 

 

348,850 

Executive Vice

 

2014

 

260,000 

 

 

 

11,544 

 

26,936 

 

69,940 

 

-

 

13,325 

 

381,745 

President & COO(3)

 

2015

 

273,000 

 

 

 

15,070 

 

33,162 

 

104,504 

 

52,708 

 

13,643 

 

492,087 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M. John Miller

 

2014

 

200,000 

 

 

 

8,880 

 

20,720 

 

53,800 

 

-

 

8,306 

 

291,706 

Executive Vice

 

2015

 

210,000 

 

 

 

11,592 

 

27,048 

 

80,388 

 

 

 

10,246 

 

339,274 

President & CCO(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elise M. Hubbard

 

2014

 

125,000 

 

 

 

-

 

-

 

-

 

-

 

5,342 

 

130,342 

Senior Vice

 

2015

 

150,000 

 

30,000 

 

18,750 

 

 

 

-

 

 

 

8,215 

 

206,965 

President & CFO(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Other compensation includes: $10,200, $10,400 and $10,600 in contributions to Old Line Bank’s 401(k) retirement plan in 2013, 2014 and 2015 respectively; $4,051, $4,078 and 3,735 in long term disability insurance premiums paid on Mr. Cornelsen’s behalf in 2013, 2014 and 2015, respectively; and $600, $1,200 and $1,200 in short term disability insurance premiums paid on Mr. Cornelsen’s behalf in 2013, 2014 and 2015, respectively.  Other compensation for Mr. Cornelsen also includes $12,060 and $12,250 for the value of the Company-owned car provided to Mr. Cornelsen and $9,305 and $5,500 in country club dues for 2014 and 2015, respectively.

(2)

Other compensation includes: $8,598, $9,379 and $10,600 in contributions to Old Line Bank’s 401(k) retirement plan in 2013, 2014 and 2015, respectively; $2,551, $4,114 and $2,091 in long term disability premiums paid by Old Line Bank on Mr. Burnett’s behalf in 2013, 2014 and 2015, respectively; and $600, $1,200 and $1,200 in short term disability premiums paid by Old Line Bank on Mr. Burnett’s behalf in  2013, 2014 and 2015, respectively. 

(3)

Other compensation includes: $7,707, $10,351 and $10,600 in contributions to Old Line Bank’s 401(k) retirement plan in 2013, 2014 and 2015, respectively; $920, $1,774 and $1,843 in long term disability insurance premiums paid by Old Line Bank on Mr. Semanie’s behalf in 2013, 2014 and 2015, respectively; and $550, $1,200 and $1,200 in short term disability insurance premiums paid by Old Line Bank on Mr. Semanie’s behalf in 2013, 2014 and 2015, respectively.

(4)

Other compensation includes:  $6,111 and $7,599 in contribution to Old Line Bank’s 401(k) retirement plan in 2014 and 2015, respectively; $995 and $1,447 in long term disability premiums paid on Mr. Miller’s behalf in 2014 and 2015, respectively; and $1,200 in short term disability premiums paid on Mr. Miller’s behalf in each of 2014 and 2015.

(5)

Other compensation includes:  $3,977 and $6,850 in contributions to Old Line Bank’s 401(k) retirement plan in 2014 and 2015, respectively; $500 in long term disability premiums paid on Ms. Hubbard’s behalf in each of 2014 and 2015; and $865 in short term disability premiums paid on Ms. Hubbard’s behalf in each of 2014 and 2015.

(6)

Consists of restricted stock awards.  Restricted stock value is based on the share price at issuance of $16.76, $14.38 and $17.75 for the years 2013, 2014 and 2015, respectively.  Restricted stock was granted in February 2014, February 2015 and February 2016 based on the previously year’s performance under the Old Line Bancshares’ Incentive Plan Model for Messrs. Cornelsen, Burnett, Semanie and Miller.  Ms. Hubbard’s restricted stock award was granted in July 2015 for her individual performance over the previous 12 months and its value is based on the share price at issuance of $15.71.

(7)

We estimated the weighted average fair value of the options granted at $4.69, $5.09 and $5.38 using the Black-Scholes option pricing model for grants issued for performance in 2013, 2014 and 2015, respectively. The model assumed volatility rates of 30.605%, 40.894% and 34.3190% respectively, expected life of five years for 2013 and 2014 and ten years for 2015.  The yield rate was based on the 5-year note for years 2013 and 2014 and the 10-year note for 2015.

(8)

Paid in February 2014, February 2015 and February 2016 based on the previous year’s performance under Old Line Bancshares’ Incentive Plan Model.

 


 

Grants of Plan-Based Awards

 

The following table sets forth information on plan-based awards made to the named executive officers, with the exception of Ms. Hubbard, during the year ended December 31, 2015. The stock options and restricted stock earned by Mr. Cornelsen, Mr. Burnett, Mr. Miller and Mr. Semanie based on the incentive plan awards they received during 2015, as disclosed in the Summary Compensation Table and discussed in the Compensation Discussion and Analysis above, were issued in 2016 based on 2015 performance.

 

Grants of Plan-Based Awards

Fiscal Year 2015

 

 

 

 

 

 

 

 

 

 

 

 

Name

Grant
Date(1)

Issue
Date(2)

Estimated Possible
Payouts Under
Non-Equity Incentive
Plan Awards(3) 

Estimated Possible
Payouts Under
Equity Incentive
Plan Awards(4)

Exercise or Base
Price of Option
Awards(5)

Grant Date Fair Value of Stock and Option Awards(6)

 

 

 

Thres-
hold
$

Target
$

Stretch
$

Thres-
hold
$

Target
$

Stretch
$

 

$

James  Cornelsen

2/23/2015

2/24/2016

102,900 
205,800 
308,700 
51,450 
102,900 
205,800 
17.75 
100,080 

Joseph  Burnett

2/23/2015

2/24/2016

30,844 
61,688 
92,531 
12,338 
24,675 
49,350 
17.75 
24,344 

M. John Miller

2/23/2015

2/24/2016

26,250 
52,500 
78,750 
10,500 
21,000 
42,000 
17.75 
20,724 

Mark Semanie

2/23/2015

2/24/2016

34,125 
68,250 
102,375 
13,650 
27,300 
54,600 
17.75 
26,937 

 

(1)

Date Committee approved 2015 Incentive Plan and related metrics.

(2)

Date Equity grants were issued in relation to the 2015 Incentive Plan.

(3)

The information included in the Threshold, Target and Stretch columns reflects the range of potential non-equity payouts under the 2015 Executive Incentive Plan.

(4)

The information included in the Threshold, Target and Stretch columns reflects the range of potential equity payouts under the 2015 Executive Incentive Plan; equity is calculated as a percentage of salary and grants are made in the form of a split between restricted stock and stock options, with the number of restricted stock grants based on share price at issuance and the number of options calculated at issuance based on the Black Scholes option model.  Actual award amounts are included in the Summary Compensation Table.

(5)

This reflects the closing stock price on date of issuance.

(6)

Represents the fair value of stock on the grant date.

 

Employment Agreements

 

Old Line Bank has entered into employment agreements with each of James W. Cornelsen, Joseph W. Burnett, Mark A. Semanie and M. John Miller.

 

Elise Hubbard is an at-will employee and not subject to an employment agreement.  As an officer of the Company, she receives a base salary and is eligible to receive a discretionary cash and/or equity-based bonus.  She is eligible to participate in all other benefit plans that are generally available to our salaried employees.

 

As of December 10, 2015, Old Line Bank entered into a second amended and restated employment agreement with Mr. Cornelsen (replacing a 2011 agreement) to serve as the President and Chief Executive Officer of Old Line Bank and Old Line Bancshares, Inc.  This agreement provides for an initial term ending on March 30, 2019, which may be extended by the Board of Directors for one additional year or such greater term as the Board of Directors deems appropriate.  Mr. Cornelsen’s employment agreement is currently set to expire in March 2020. 

 

Mr. Cornelsen’s employment agreement provides for an annual base salary that is subject to annual review and increase as may be determined by the Board of Directors.  His 2016 base salary has been approved at $550,515. Mr. Cornelsen may also receive an annual cash or non-cash bonus as determined by the Board of Directors.  In addition, Mr. Cornelsen is entitled to receive an annual grant of options to purchase at least 3,750 shares of common stock of Old Line Bancshares, Inc., assuming such options are available for grant under a stockholder-approved stock option or equity incentive plan.  The agreement also provides that Mr. Cornelsen will not be compensated for his attendance at Board of Directors’ meetings and that he is entitled to an automobile provided by Old Line Bank and to participate in such other bonus, incentive and other executive compensation programs as are made available to senior management of Old Line Bank from time to time.

 


 

Mr. Cornelsen’s employment agreement terminates upon Mr. Cornelsen’s death or by mutual written agreement.  In addition, Mr. Cornelsen may terminate the agreement within six months following (or in certain circumstances, in anticipation of) a “change in control,” as defined in the agreement, or for good reason as defined in the agreement.  Old Line Bank may terminate the agreement for certain events constituting cause as defined in the agreement.  Either party may also terminate the agreement without cause or good reason or upon Mr. Cornelsen’s permanent disability provided that such party provides 60 days prior written notice to the other party.  Please see “—Potential Payments Upon Termination of Employment or Change in Control” for a discussion of the post-termination payments provided under Mr. Cornelsen’s employment agreement.  

 

The agreement also contains non-compete, non-solicitation and confidentiality provisions. 

 

On January 26, 2011, Old Line Bank entered into an amended and restated employment agreement with Mr. Burnett, as amended as of January 1, 2013, to serve as Executive Vice President of Old Line Bank.  The agreement provides for an initial term of two years, which Old Line Bank may extend annually for one additional year or such greater term as it deems appropriate.   Mr. Burnett’s employment agreement is currently set to expire in March 2018.

 

On May 13, 2013, Old Line Bank entered into an employment agreement with Mark A. Semanie to serve as Executive Vice President of Old Line Bank.  His agreement provides for an initial term of two years, which Old Line Bank may extend annually for one additional year or such greater term as it deems appropriate.  Mr. Semanie’s employment agreement is currently set to expire in March 2018.

 

On February 26, 2014, Old Line Bank entered into an employment agreement with Martin J. Miller to serve as Executive Vice President of Old Line Bank.  His agreement provides for an initial term of two years, which Old Line Bank may extend annually for one additional year or such greater term as it deems appropriate.  Mr. Miller’s employment agreement is currently set to expire in March 2018.

 

Under their agreements each of the aforementioned executive officers is entitled to an annual base salary and may receive an annual discretionary bonus.  In addition, each is entitled to receive an annual grant of options to purchase at least 2,250 shares of common stock of Old Line Bancshares, Inc., assuming such options are available for grant under a stockholder-approved stock option or equity incentive plan.    Mr. Burnett’s annual salary is currently set at $264,023, Mr. Semanie’s annual base salary is currently set at $292,110 and Mr. Miller’s annual base salary is currently set at $224,700. 

 

 Each such agreement terminates upon the employee’s death, in which case all non-vested stock options will immediately vest, or physical or mental incapacitation that has left the employee unable to perform his duties for a period of 60 consecutive days.  In addition, the employee may terminate his agreement voluntarily.  Old Line Bank may terminate each agreement for certain events constituting cause as defined in the agreements or without cause.  If Old Line Bank terminates the agreements other than for cause, the employee is entitled to be paid his salary and benefits, including options provided for in the agreement (which shall vest upon grant), for the remaining term of the agreement, and all unvested stock options shall immediately vest.  In addition, each employee is entitled to receive the remaining balance of his unused vacation and personal leave at the termination of employment unless the employee is terminated for cause.  The agreements also contain non-compete, non-solicitation and confidentiality provisions.

 

Salary Continuation Agreements and Supplemental Life Insurance Agreements

 

On January 3, 2006, Old Line Bank entered into supplemental life insurance agreements and salary continuation agreements with each of Mr. Cornelsen and Mr. Burnett.    Under the supplemental life insurance agreements, Old Line Bank is obligated to cause the payment of death benefits to the executives’ designated beneficiaries in the following amounts: Mr. Cornelsen - $1,621,687 and Mr. Burnett - $696,059. 

 

The salary continuation agreements provide that, if they are employed with the Bank when they reach age 65, Mr. Cornelsen will be paid an annual amount of $131,607 and Mr. Burnett will be paid an annual amount of $23,177 beginning upon their termination of employment.  Mr. Burnett is over the age of 65 and therefore will begin to receive these payments upon termination of his employment.  If the executive dies while receiving payments, but prior to receiving all the payments due, the unpaid balance of the payment will continue to be paid to his beneficiary.  All payments under these agreements are paid in monthly installments for a 15-year period.  Under this salary continuation agreement, if Mr. Cornelsen becomes no longer employed by the Bank (voluntarily or involuntarily) prior to age 65 other than due to his death or following a change in control, he will be paid an annual amount ranging from $96,982 to $126,076, depending


 

on the date his employment is terminated, beginning on the first day of the month following his 65th birthday.  If Mr. Cornelsen dies prior to age 65 and while employed by the Bank, his beneficiary will receive annual payments of $131,607.  This agreement also provides that if Mr. Cornelsen’s employment is terminated following a change in control of the Bank, as defined in the agreement, then in lieu of the payments discussed above he will be entitled to an annual payment of $131,607. 

 

Effective February 26, 2010, Old Line Bank entered into an additional the salary continuation plan agreement with each of Messrs. Cornelsen and Burnett pursuant to which they are entitled to additional benefits. 

 

Under the 2010 salary continuation plan agreements, upon reaching the age of 65 with respect to Mr. Cornelsen or 68 with respect to Mr. Burnett, the executives will be paid the following annual amounts for 15 years: Mr. Cornelsen - $28,131; and Mr. Burnett - $5,895.  If the executive dies while receiving payments, but prior to receiving all the payments due, the unpaid balance of the payment will continue to be paid to his beneficiary.  All payments under the agreements are paid in monthly installments and continue for 15 years, other than as described below.  Mr. Burnett reached the age of 68 and began receiving these payments in 2013.  Under this salary continuation agreement, if Mr. Cornelsen dies before reaching age 65 or becomes disabled, as defined in the agreement, while employed by the Bank, or he otherwise becomes no longer employed by the Bank (voluntarily or involuntarily) other than following a change in control, he or his beneficiary will be paid an annual amount ranging from $17,792 to $26,687, depending on the date of the event. Such benefit begins on the first day of the second month following the earlier of the date Mr. Cornelsen reaches age 65 or dies.  This agreement also provides for change in control payments to be paid to Mr. Cornelsen if he is employed with the Bank upon a change in control (as defined in the agreement) of the Bank that occurs prior to his normal retirement age or any termination of his employment.  The change in control payments range from $23,619 to $27,342 annually, depending on the date of the change in control, and will be paid to Mr. Cornelsen or his beneficiary, as applicable, beginning (in most cases) the second month following the month in which his employment is terminated.  If, however, Mr. Cornelsen’s employment with the Bank is terminated for any reason (whether voluntarily or involuntarily) within 24 months following a change in control, he may instead opt to be paid the change in control payments in (i) a lump sum, (ii) monthly installments over two years, or (iii) monthly installments over five years.  

 

Effective October 1, 2012, Old Line Bank entered into two additional salary continuation plan agreements with Mr. Cornelsen pursuant to which Mr. Cornelsen will receive additional benefits.

 

The first 2012 salary continuation plan agreement provides that if Mr. Cornelsen remains employed by the Bank until he reaches the age of 65, he will be entitled to receive, beginning on the first day of the second month following his 65th birthday, an annual payment of $63,991.  Such payment will continue for 15 years.  If Mr. Cornelsen dies while receiving payments, but prior to receiving all the payments due, the unpaid balance of the payment will continue to be paid to his beneficiary.  If Mr. Cornelsen dies before reaching age 65, becomes disabled, as defined in the agreement, while employed by the Bank, or he otherwise becomes no longer employed by the Bank (voluntarily or involuntarily) other than following a change in control, he or his beneficiary will be paid an annual amount ranging from $21,723 to $51,745, depending on the date of the event, for a period of 15 years.  Such benefits are payable monthly generally beginning on the first day of the second month following the earlier of Mr. Cornelsen’s 65th birthday or death.  The agreement also provides for change in control payments to be paid to Mr. Cornelsen if he is employed with the Bank upon a change in control (as defined in the agreement) of the Bank that occurs prior to his 65th birthday.  The change in control payments range from $53,892 to $62,386 annually, depending on the date of the change in control, and will be paid on a monthly basis to Mr. Cornelsen or his beneficiary, as applicable, for a period of 15 years beginning (in most cases) on the first day of the second month following the date of termination of Mr. Cornelsen’s employment with the Bank.  If, however, Mr. Cornelsen’s employment with the Bank is terminated for any reason (whether voluntarily or involuntarily) within 24 months following a change in control, he may instead opt to be paid the change in control payments in (i) a lump sum, (ii) monthly installments over two years, or (iii) monthly installments over five years.

The second 2012 salary continuation plan agreement provides that if Mr. Cornelsen remains employed by the Bank until he reaches the age of 65, he will be entitled to receive, beginning on the first day of the second month following his 80th birthday, an annual payment of $223,729.  If Mr. Cornelsen dies before reaching age 65 or becomes disabled, as defined in the agreement, while employed by the Bank, or he otherwise becomes no longer employed by the Bank (voluntarily or involuntarily) other than following a change in control, he or his beneficiary will be paid an annual amount ranging from $75,979 to $180,913, depending on the date of the event, for a period of five years.  Such death benefit is payable to Mr. Cornelsen’s beneficiary beginning on the first day of the second month following the 15th anniversary of his death, while the other payments begin on the first day of the second month following Mr. Cornelsen’s 80th birthday,


 

in each case on a monthly basis  The agreement also provides for change in control payments to be paid to Mr. Cornelsen if he is employed with the Bank upon a change in control (as defined in the agreement) of the Bank that occurs prior to his normal retirement age.  The change in control payments range from $188,419 to $218,119 annually, depending on the date of the change of control, and will be paid on a monthly basis for a period of five years beginning on the 15th anniversary of the first day of the second month following the date of termination of Mr. Cornelsen’s employment with the Bank.  If, however, Mr. Cornelsen’s employment with the Bank is terminated for any reason (whether voluntarily or involuntarily) within 24 months following a change in control, he may instead opt to be paid the change in control payments in (i) a lump sum or (ii) monthly installments over two years.  All payments under this agreement will be paid to Mr. Cornelsen’s beneficiary if he should die before five years of payments are made.

Effective January 1, 2014, Old Line Bank entered into a salary continuation plan agreement with Mr. Semanie pursuant to which Mr. Semanie will receive benefits.  The agreement provides that if Mr. Semanie remains employed by the Bank until he reaches the age of 65, he will be entitled to receive, beginning on the first day of the second month following his 65th birthday, an annual payment of $154,435.  Such payment will continue for 15 years.  If Mr. Semanie dies while receiving payments, but prior to receiving all the payments due, the unpaid balance of the payment will continue to be paid to his beneficiary.  If Mr. Semanie dies before reaching age 65 or becomes disabled, as defined in the agreement, while employed by the Bank, or he otherwise becomes no longer employed by the Bank other than following a change in control, he or his beneficiary will be paid an annual amount ranging from $21,675 and $151,726, depending on the date of the event, for a period of 15 years.  Such benefits are payable monthly and generally beginning on the first day of the second month following the earlier of Mr. Semanie’s 65th birthday or death.  The agreement also provides for change in control payments to be paid to Mr. Semanie if he is employed with the Bank upon a change in control (as defined in the agreement) of the Bank that occurs prior to his 65th birthday.  The change in control payments range from $84,953 to $152,563 annually, depending on the date of the change in control, and will be paid on a monthly basis to Mr. Semanie or his beneficiary, as applicable, for a period of 15 years beginning (in most cases) on the first day of the second month following the date of termination of Mr. Semanie’s employment with the Bank.  If, however, Mr. Semanie’s employment with the Bank is terminated for any reason (whether voluntarily or involuntarily) within 24 months following a change in control, he may instead opt to be paid the change in control payments in (i) a lump sum, (ii) monthly installments over two years, or (iii) monthly installments over five years.

The salary continuation plan agreements described above all provide, however, that the executive is not entitled to any benefits under the agreement if he is terminated for cause, as described in the agreement. 

The following charts show the annual amount of payments that will be made to Messrs. Cornelsen and Semanie pursuant to the salary continuation agreements:

 

 

 

 

 

James. W Cornelsen 2006 and 2010 Plan

Assumed
Separation
Date

Age

Early
Termination
Annual
Benefit(1)

Disability
Annual
Benefit(1)

Change in
Control Annual
Benefit(2)

1/1/2016

61

$114,774

$114,774

$135,018

1/1/2017

62

 127,437

 127,437

 141,769

1/1/2018

63

 140,100

 140,100

 148,858

1/1/2019

64

 152,763

 152,763

 156,301

6/23/2019(3)

65

 159,738

 159,738

 159,738

 

(1)

Payments are made in 180 equal monthly installments commencing within 60 days following the earlier of normal retirement age or death.

(2)

Payments are made in 180 equal monthly installments commencing at separation of service.

(3)

This is the date the executive reaches normal retirement age.


 

 

 

 

 

 

James. W Cornelsen 2012-A Plan

Age 65 Payment with 15 Year Guarantee

Assumed
Separation
Date

Age

Early
Termination
Annual
Benefit(1)

Disability
Annual
Benefit(1)

Change in
Control Annual
Benefit(2)

10/1/2015

61

$21,723

$21,723

$53,892

10/1/2016

62

 30,702

 30,702

 56,586

10/1/2017

63

 40,680

 40,680

 59,416

10/1/2018

64

 51,745

 51,745

 62,386

6/23/2019(3)

65

 63,991

 63,991

 63,991

 

(1)

The early termination benefit or disability benefit under the plan shall be the annual benefit amount determined for the year in which termination or disability occurs, as applicable multiplied by 15.

(2)

The change in control benefit shall be the change in control annual benefit amount determined for the year in which the change in control occurs, multiplied by 15.

(3)

This is the date that the executive reaches normal retirement age.

 

 

 

 

 

 

James. W Cornelsen 2012-B Plan

Age 80 Payment with 5 Year Guarantee

Assumed
Separation
Date

Age

Early
Termination
Annual
Benefit(1)

Disability
Annual
Benefit(1)

Change in
Control Annual
Benefit(2)

10/1/2015

61

$75,979

$ 75,979

$188,419

10/1/2016

62

 107,341

 107,341

 197,840

10/1/2017

63

 142,227

 142,227

 207,732

10/1/2018

64

 180,913

 180,913

 218,119

6/23/2019(3)

65

 223,729

 223,729

 223,729

 

(1)

The early termination benefit or disability benefit under the plan shall be the annual benefit amount determined for the year in which termination or disability occurs, as applicable multiplied by five.

(2)

The change in control benefit shall be the change in control annual benefit amount determined for the year in which the change in control occurs, multiplied by five.

(3)

This is the date that the executive reaches normal retirement age and becomes vested in the normal retirement benefit.

 

 

 

 

 

Mark A. Semanie

Assumed
Separation
Date

Age

Early
Termination
Annual
Benefit(1)

Disability
Annual
Benefit(1)

Change in
Control Annual
Benefit(2)

1/1/2016

52

  21,675

  21,675

  84,953

1/1/2017

53

  32,513

  32,513

  89,200

1/1/2018

54

  43,350

  43,350

  93,660

1/1/2019

55

  54,188

  54,188

  98,343

1/1/2020

56

  65,025

  65,025

103,260

1/1/2021

57

  75,863

  75,863

108,424

1/1/2022

58

  86,700

  86,700

113,845

1/1/2023

59

  97,538

  97,538

119,537

1/1/2024

60

108,375

108,375

125,514

1/1/2025

61

119,213

119,213

131,789

1/1/2026

62

130,050

130,050

138,379

1/1/2027

63

140,888

140,888

145,298

1/1/2028

64

151,726

151,726

152,563

4/22/2028(3)

65

154,435

154,435

154,435

 

(1)

Payments are made in 180 equal monthly installments commencing within 60 days following normal the earlier of


 

retirement age or death.

(2)

Payments are made in 180 equal monthly installments commencing at separation of service.

(3)

This is the date the executive reaches normal retirement age.

Changes in Nonqualified Deferred Compensation

 

The following table shows the changes in the balance of the named executive officers’ supplemental executive retirement plans during 2015.

 

 

 

 

 

 

 

 

Executive

Plan Name

Executive
Contributions
in Last Fiscal
Year
        $        

Registrant
Contributions
in Last Fiscal
Year
        $        

Aggregate
Earnings in
Last Fiscal
Year
        $        

Aggregate
Withdrawal/
Distribution
        $        

Aggregate
Balance at
Last Fiscal
Year End
        $        

James Cornelsen

Plan 1

n/a

120,011

0

       0

776,892

 

Plan 2

n/a

  30,494

0

       0

141,763

 

2012-A

n/a

  87,248

0

       0

251,654

 

2012-B

n/a

  71,589

0

       0

232,810

Joseph Burnett

Plan 1

n/a

           0

0

       0

228,927

 

Plan 2

n/a

   3,300

0

5,895

  53,388

Mark Semanie

Plan 2014

n/a

  55,682

0

       0

  94,303

 

Participant contributions are not permitted under the supplemental executive retirement plans.

 


 

The following table discloses information about unexercised options and equity incentive plan awards outstanding as of the end of our last fiscal year.  Mr. Miller and Ms. Hubbard had no outstanding equity awards at December 31, 2015. 

 

OUTSTANDING EQUITY AWARDS 

AT FISCAL YEAR-END

DECEMBER 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPTION AWARDS

 

 

 

 

 

STOCK AWARDS

 

Number of Securities
Underlying Unexercised
Options: Exercisable

 

Number of Securities
Underlying Unexercised
Options:
Unexercisable(1)

 

Option Exercise
Price

 

Option
Expiration Date

 

Grant
Date

 

Number
of
Shares
That Have Not
Vested(2)

 

Market
Value
of
Shares
That Have Not Vested

 

#

 

#

 

$

 

 

 

 

 

#

 

$

James W. Cornelsen

-

 

19,661 

 

14.38 

 

2/25/2025

 

2/25/2015

 

2,984 

 

52,429 

 

7,328 

 

14,657 

 

16.76 

 

2/26/2024

 

2/26/2014

 

1,750 

 

30,748 

 

12,731 

 

6,366 

 

12.04 

 

2/27/2023

 

2/27/2013

 

769 

 

13,511 

 

28,764 

 

-

 

8.00 

 

12/31/2021

 

 

 

-

 

-

 

8,576 

 

-

 

7.82 

 

1/27/2021

 

 

 

-

 

-

 

11,823 

 

-

 

7.13 

 

1/28/2020

 

 

 

-

 

-

 

33,800 

 

-

 

6.30 

 

1/22/2019

 

 

 

-

 

-

 

18,200 

 

-

 

7.75 

 

1/31/2018

 

 

 

-

 

-

 

15,000 

 

-

 

10.48 

 

1/25/2017

 

 

 

-

 

-

Total

136,222 

 

40,684 

 

 

 

 

 

 

 

5,503 

 

96,688 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph E. Burnett

-

 

4,779 

 

14.38 

 

2/25/2025

 

2/25/2015

 

725 

 

12,738 

 

1,992 

 

3,985 

 

16.76 

 

2/26/2024

 

2/26/2014

 

478 

 

8,398 

 

4,063 

 

2,032 

 

12.04 

 

2/27/2023

 

2/27/2013

 

246 

 

4,322 

 

12,560 

 

-

 

8.00 

 

12/31/2021

 

 

 

-

 

-

 

2,814 

 

-

 

7.82 

 

1/27/2021

 

 

 

-

 

-

 

5,441 

 

-

 

7.13 

 

1/28/2020

 

 

 

-

 

-

 

8,700 

 

-

 

6.30 

 

1/22/2019

 

 

 

-

 

-

 

9,800 

 

-

 

7.75 

 

1/31/2018

 

 

 

-

 

-

 

5,200 

 

-

 

10.48 

 

1/25/2017

 

 

 

-

 

-

Total

50,570 

 

10,796 

 

 

 

 

 

 

 

1,449 

 

25,459 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark A. Semanie

-

 

5,287 

 

14.38 

 

2/25/2025

 

2/25/2015

 

802 

 

14,091 

 

1,992 

 

3,985 

 

16.76 

 

2/26/2024

 

2/26/2014

 

478 

 

8,398 

Total

1,992 

 

9,272 

 

 

 

 

 

 

 

1,280 

 

22,490 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M. John Miller

-

 

4,067 

 

14.38 

 

02/25/2025

 

02/25/2015

 

617 

 

10,841 

Total

-

 

4,067 

 

 

 

 

 

 

 

617 

 

10,841 

 

(1)

One-third of the options with an expiration date of 02/25/2025 became exercisable on 02/25/2016, 1/3 will become exercisable on 02/25/2017 and the remaining 1/3 will become exercisable on 02/25/2018. One-half of the un-exercisable options with an expiration date of 02/26/2024 became exercisable on 02/26/2016 a