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

Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☒

Filed by a Party other than the Registrant  ☐

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Payment of Filing Fee (Check all boxes that apply):

 

 

April 10, 2024

Dear Shareholder,

You are cordially invited to attend the Annual Meeting of Shareholders (the “Annual Meeting”) of Dime Community Bancshares, Inc. (the “Company”), which will be held on May 23, 2024 at 10:00 a.m. Eastern Time. This year’s Annual Meeting will be a virtual meeting of shareholders, which will be conducted via live webcast. Shareholders will only be able to participate in the Annual Meeting online, vote shares electronically and submit questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/DCOM2024. Instructions on how to attend the Annual Meeting online and vote shares are described in the accompanying Proxy Statement.

The attached Notice of Annual Meeting of Shareholders and Proxy Statement describe the business to be transacted at the Annual Meeting. The Company’s Board of Directors has determined that an affirmative vote on the four matters to be considered at the Annual Meeting is in the best interests of the Company and its shareholders and unanimously recommends a vote “FOR” each of those matters. The directors and executive officers of the Company, as well as a representative of Crowe LLP, the accounting firm appointed by the Audit Committee of the Board of Directors to be the Company’s independent registered public accounting firm for the year ending December 31, 2024, will be present at the Annual Meeting.

2023 was marked by the failure of several regional banks. Despite the industry-wide challenges precipitated by these failures, the Company continued to execute on our growth plan. Over the past 12 months we have made numerous hires on both the deposit and lending fronts, capitalizing on market disruption and positioning us for future success. In 2023, we added a new healthcare lending vertical and added numerous deposit-gathering teams. These franchise enhancing actions are starting to pay dividends, with a robust loan pipeline and strong growth in deposits in the early parts of 2024.

We have also been mindful of the overall operating environment and consciously operated the Company at a non-interest expense-to-assets ratio level that is far below our peer group. Managing expenses prudently is a Company-wide focus for management and the Board of Directors.

In 2023, we promoted Stuart H. Lubow to the role of Chief Executive Officer. Mr. Lubow’s appointment as CEO was a natural evolution of the role he had begun to play at the Company and his vision for growing and diversifying the Company should be a positive for all of our stakeholders over time. Since the announcement of his promotion (July 28th 2023) to the end of 2023, the Company’s stock price outperformed its peer group.

On behalf of our Board of Directors and employees, we thank you for your continued support and hope you participate in our virtual Annual Meeting.

Sincerely yours,

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To be Held on May 23, 2024

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the “Annual Meeting”) of Dime Community Bancshares, Inc. (the “Company”) will be held virtually on Thursday, May 23, 2024 at 10:00 a.m. Eastern Time, to consider and vote upon the following:

In addition, we will consider and take action on such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. As of the date hereof, management is not aware of any other such business.

The Board of Directors has fixed March 28, 2024 as the record date for the Annual Meeting and any adjournment or postponement thereof. Only shareholders of record at the close of business on that date will be entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. A list of such shareholders will be available upon request for inspection by any shareholder for any lawful purpose germane to the Annual Meeting during the 10 days prior to the Annual Meeting and during the Annual Meeting.

We are relying upon a U.S. Securities and Exchange Commission rule that allows us to furnish proxy materials to shareholders over the Internet. As a result, beginning on or about April 10, 2024, we sent by mail or e-mail a Notice of Internet Availability of Proxy Materials to certain shareholders, containing instructions on how to access our proxy materials, including our Proxy Statement and annual report to shareholders, over the Internet and how to attend and vote at the Annual Meeting. Other shareholders received paper copies of our proxy materials. If you received your proxy materials by mail, the Notice of Annual Meeting, Proxy Statement, proxy card and annual report to shareholders are enclosed.

Internet availability of our proxy materials is designed to expedite receipt by shareholders and lower the cost and environmental impact of the Annual Meeting. However, if you received such a Notice of Internet Availability of Proxy Materials and would prefer to receive paper copies of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials to request paper copies.

If you hold our common stock through more than one account, you may receive multiple copies of these proxy materials and will have to follow the instructions for each in order to vote all of your shares of our common stock.

The Notice of Meeting, Proxy Statement, annual report to shareholders and sample proxy card are available for review at www.ProxyVote.com. The Notice of Meeting, Proxy Statement and annual report are also available on the Company’s website at www.dime.com. Information on our website is not a part of this Proxy Statement or accompanying materials.

This Proxy Statement is being furnished to the shareholders of Dime Community Bancshares, Inc. (the “Company,” “we,” “our” or “us”) in connection with the solicitation of proxies by the Company’s Board of Directors from holders of the shares of the Company’s issued and outstanding common stock, par value $0.01 per share (the “Common Stock”), for use at the virtual Annual Meeting of Shareholders to be held on May 23, 2024 (the “Annual Meeting”) at 10:00 a.m. Eastern Time, and at any adjournment or postponement thereof. This Proxy Statement and/or a Notice of Internet Availability of Proxy Materials is first being sent to shareholders on or about April 10, 2024.

The Company’s Board of Directors has fixed the close of business on March 28, 2024 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting (the “Record Date”). Accordingly, only shareholders of record at the close of business on March 28, 2024 will be entitled to vote at the Annual Meeting. There were 38,878,473 shares of Common Stock outstanding on the Record Date.

You are entitled to attend and participate in the Annual Meeting only if you were a Company shareholder as of the Record Date or if you hold a valid proxy for the Annual Meeting. If you plan to attend the Annual Meeting online, please be aware of what you will need to gain admission as described herein. If you do not comply with the procedures described herein for attending the Annual Meeting online, you will not be able to participate in the Annual Meeting. Shareholders may participate in the Annual Meeting by visiting www. virtualshareholdermeeting.com/DCOM2024. To attend online and participate in the Annual Meeting, shareholders of record will need to use their control number on their Notice of Internet Availability of Proxy Materials or proxy card. Beneficial shareholders who do not have a control number may gain access to the Annual Meeting by logging into their brokerage firm’s website and selecting the shareholder communications mailbox to link through to the Annual Meeting. Instructions should also be provided on the voting instruction card provided by their broker, bank, or other nominee.

We encourage you to access the Annual Meeting prior to the start time. Please allow ample time for online check-in, which will begin at 9:45 a.m. Eastern Time. If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual shareholder meeting log-in page. Shareholders may submit questions live during the meeting. Shareholders can also access copies of the Proxy Statement and annual report on the website.

Whether you are a shareholder of record or a beneficial shareholder, you may direct how your shares are voted without participating in the Annual Meeting. We encourage shareholders to vote well before the Annual Meeting, even if they plan to attend the Annual Meeting, by completing proxies online or by telephone, or, if they received printed copies of these materials, by mailing their proxy cards. Shareholders can vote via the Internet in advance of or during the Annual Meeting. Shareholders who attend the virtual Annual Meeting can vote during the meeting while the polls are open by clicking on the “Vote” button at www.virtualshareholdermeeting. com/DCOM2024 or submit questions during the Annual Meeting in the text box. Even if you plan to participate in the meeting, we recommend that you vote in advance by proxy, in case you later change your mind and determine not to participate in the meeting.

Each holder of Common Stock on the Record Date will be entitled to one vote at the Annual Meeting for each share held on the Record Date. You may vote your shares of Common Stock in advance of the meeting by marking and signing your Proxy Card and returning it in the enclosed postage-paid envelope, by telephone or Internet by following the instructions stated on your Notice of Internet Availability of Proxy Materials or Proxy Card or by attending and voting via the Internet during the Annual Meeting. All properly executed proxies received by the Company on or before 11:59 p.m. Eastern Time on May 22, 2024 will be voted in accordance with the instructions indicated thereon. If no instructions are given, executed proxies will be voted FOR the election of each of the nominees for director, FOR the ratification of the appointment of Crowe LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2024, FOR the approval of compensation of the Company’s Named Executive Officers (as defined herein), and FOR the approval of additional shares for the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan.

Management is not aware of any matters other than those set forth in the Notice of Annual Meeting of Shareholders that may be brought before the Annual Meeting. If any other matters properly come before the Annual Meeting, the person named in the proxy will vote the shares represented by all properly executed proxies on such matters in such manner as shall be determined by a majority of the Company’s Board of Directors.

If you hold your shares in street name, it is critical that you cast your vote if you want it to count in the election of directors and with respect to the advisory proposal regarding the compensation of our Named Executive Officers. Current regulations restrict the ability of your bank or broker to vote your uninstructed shares in the election of directors and other matters on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote with respect to the election of directors, the advisory vote regarding the compensation of our Named Executive Officers, and on the approval of additional shares for the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan, no votes will be cast on your behalf. These are referred to as “broker non-votes”. Your bank or broker does, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of our independent registered public accounting firm.

The presence by proxy or attendance via webcast at the Annual Meeting of the holders of at least a majority of the total number of shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum. Abstentions and broker non-votes will be counted as present for the purpose of determining whether a quorum is present.

Directors are elected by a plurality of the votes cast at the Annual Meeting, without regard to broker non-votes or proxies as to which authority to vote for a nominee is marked “WITHHOLD.” Shareholders may not vote their shares cumulatively for the election of directors.

Proposals 2, 3, and 4 require the affirmative vote of a majority of the votes cast at the Annual Meeting, without regard to broker non- votes or proxies marked “ABSTAIN.”

Although the advisory vote on the compensation of Named Executive Officers (Proposal 3) is non-binding as provided by law, the Company’s Board of Directors will review the results of the vote and consider them in making future determinations concerning executive compensation.

A proxy may be revoked at any time before it is voted by filing a written revocation of the proxy with the Company’s Corporate Secretary at 898 Veterans Memorial Highway, Suite 560, Hauppauge, New York 11788 or by submitting a duly executed proxy bearing a later date. A proxy also may be revoked by voting at the Annual Meeting.

The Company will bear the costs of soliciting proxies from its shareholders. In addition to the use of mail, proxies may be solicited by officers, directors or employees of the Company or its wholly-owned subsidiary Dime Community Bank (the “Bank”) by telephone or other forms of communication. The Company will also request persons, firms and corporations holding shares in their names or in the names of their nominees, which are beneficially owned by others, to send proxy materials to, and obtain proxies from, such beneficial owners, and will reimburse such holders for reasonable expenses incurred in connection therewith. The Company has hired Alliance Advisors to assist us in soliciting proxies and has agreed to pay a fee of $8,000, plus expenses, for their services.

Shareholders will be asked to cast a non-binding advisory vote on Proposal 3 regarding compensation to the Company’s Named Executive Officers and to cast a vote on proposal 4 for the approval of additional shares for the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan. The results of such votes may influence future compensation decisions. As a result, the Company’s senior executives have personal interests in the outcome of the proposal that are different from the interests of the Company’s other shareholders. The Board was aware of these interests and took them into account in recommending that the shareholders vote in favor of Proposal 3 and Proposal 4.

Although it has no official policy regarding director attendance at annual meetings, the Board of Directors considers attendance at shareholder meetings a priority. All of the Company’s directors attended the Annual Meeting of Shareholders held on May 25, 2023.

Persons and groups who beneficially own in excess of five percent of the Common Stock are required to file certain reports with the Company and the Securities and Exchange Commission (“SEC”) regarding such beneficial ownership. The following table sets forth, as of the Record Date, certain information as to the shares of Common Stock owned by persons who beneficially own more than five percent of the issued and outstanding shares of Common Stock. We know of no persons, except as listed below, who beneficially owned more than five percent of the outstanding shares of Common Stock as of the Record Date. Except for the column titled “Percent of Outstanding Shares,” and as otherwise indicated, the information provided in the table was obtained from filings with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Addresses provided are those listed in the filings as the address of the person authorized to receive notices and communications. For purposes of the table below and the table set forth under “Security Ownership of Management,” in accordance with Rule 13d-3 under the Exchange Act, a person is deemed to be the beneficial owner of any shares of Common Stock: (1) over which he or she has or shares, directly or indirectly, voting or investment power, and (2) of which he or she has the right to acquire beneficial ownership at any time within 60 days of the Record Date. As used herein, “voting power” includes the power to vote, or direct the voting of, Common Stock and “investment power” includes the power to dispose, or direct the disposition, of such shares. Unless otherwise noted, each beneficial owner has sole voting and sole investment power over the shares beneficially owned.

The following table sets forth information as of the Record Date with respect to the shares of Common Stock beneficially owned by each of the Company’s directors and the principal executive officer, principal financial officer and three most highly compensated executive officers (other than the principal executive and principal financial officer) of the Company (the “Named Executive Officers”), certain other executive officers, and all of the Company’s directors and executive officers as a group. Except as otherwise indicated, each person and each group shown in the table has sole voting and investment power with respect to the shares of Common Stock indicated.

The Company’s Insider Trading and Confidentiality of Information Policy prohibits directors and executive officers from pledging Common Stock as collateral for any loan.

The Company’s Board of Directors currently consists of twelve (12) members. Each director is elected annually to serve for a one-year term and until his or her successor shall have been elected and qualified. All members of the Board of Directors of the Company also serve on the Board of the Bank. In August 2023, Chief Executive Officer Stuart H. Lubow was appointed to the Board of Directors. In September 2023, Marcia Z. Hefter retired as a director of the Company and the Board appointed Judith H. Germano as her successor. In December 2023 Kevin M. O'Connor stepped down as a director of the Company. See “Recent Director Appointments," below.

The Board of Directors has nominated the following directors to serve on the Board for a term to expire at the 2025 annual meeting of shareholders.

The business experience of each of the Company’s directors nominated to be elected as directors, as well as the qualifications, attributes and skills that led the Board of Directors to conclude that each director should serve on the Board are as follows:

PROPOSAL 1.—ELECTION OF DIRECTIORS | General

PROPOSAL 1.—ELECTION OF DIRECTIORS | General

PROPOSAL 1.—ELECTION OF DIRECTIORS | General

It is intended that the proxies solicited on behalf of the Board of Directors will be voted at the Annual Meeting for the election of each of these nominees (other than proxies in which the vote is withheld as to any nominee). Each nominee has consented to being named in this Proxy Statement and to serve, if elected. If a nominee is unable to serve, the shares represented by all such proxies will be voted for the election of such substitute as the Board of Directors may recommend. At this time, the Board of Directors knows of no reason why a nominee would be unable to serve, if elected.

The Board has determined that, except as to Mr. Lubow, each member of the Board is an “independent director” within the meaning of the corporate governance listing standards of the Nasdaq Stock Market. Mr. Lubow is not considered independent because he is an employee of the Company. In reaching independence determinations of other directors, the Board considered any loans outstanding that were made by the Bank to a director and any related transactions between the Company and a director. See “Certain Relationships and Related Transactions,” below.

Each nominee for the Board of Directors brings relevant experience that provides sound oversight and guidance to management in developing corporate strategy, managing risk, and promoting an inclusive culture. Nominees for the Board possess the following skills, with “0” representing no skills and experience for that expertise, and “3” representing the highest level of skills and experience for that expertise, as determined by the Board:

 

The Board of Directors has established a Corporate Governance and Nominating Committee (the “Corporate Governance Committee”) for the selection of directors to be elected by the shareholders. Nominations of directors to the Board are recommended by the Corporate Governance Committee and determined by the full Board of Directors. The Board believes that it is appropriate to have the input of all directors with respect to the candidates to be considered for election to the Board by the shareholders. In this regard, the Board believes that each individual director has a unique insight into the operations of the Company and the Bank, the communities in which we operate, and the needs of the Company with respect to Board membership.

The Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are first considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of gaining new perspectives. The Corporate Governance Committee coordinates annual performance evaluations for the Board of Directors. All nominees for director currently serve on the Board. If any member of the Board does not wish to continue in service, or if the Committee decides not to re-nominate a member for re-election, or if the size of the Board is increased, or if it is determined that the existing skill level of the Board is not appropriate and a director replacement would fill any skill gaps, the Committee will solicit suggestions for director candidates from all Board members. The Corporate Governance Committee is authorized to retain search firm(s) to assist in the identification of candidates for director nominees. The Corporate Governance Committee is not limited to a specific process in identifying candidates and will consider potential nominees from various sources, including recommendations from shareholders as well as directors and officers of the Company. Individuals recommended by shareholders are evaluated in a manner identical to other potential nominees. The Corporate Governance Committee seeks a diverse group of candidates who possess the background, skills, and expertise to make a significant contribution to the Board, and to the Company and its shareholders. The Corporate Governance Committee annually assesses the skills of the directors in order to identify any skills gaps that might need to be addressed when searching for new director nominees. The Corporate Governance Committee shall select individuals as director nominees who shall have the highest personal and professional integrity, who shall have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of the Company’s shareholders.

The charter of the Corporate Governance Committee provides that diversity, inclusive of gender, race, and ethnicity shall be part of the selection criteria for determining the individuals to be considered for election and re-election to the Board. Further, the Corporate Governance Committee charter provides that the Corporate Governance Committee shall endeavor in good faith to include women and people of color in each candidate pool for a position on the Board. There are currently two women on the Board of Directors and one person of color.

In August 2023, newly appointed Chief Executive Officer (sometimes referred to herein as “CEO”) Stuart Lubow was appointed to the Board of Directors. Mr. Lubow's appointment coincided with then CEO Kevin O'Connor's stepping down as CEO of the Company effective August 31, 2023. Mr. O’Connor agreed to stay on the Board of Directors until December 31, 2023. Mr. O'Connor's separation from the Company is discussed in detail below under “Compensation Discussion and Analysis.” In September 2023, Lead Director Hefter retired from the Board of Directors. In accordance with the Company's Bylaws, Director Germano was appointed as Director Hefter's successor. Simultaneously, Director Suskind was appointed as Lead Director of the Board. See “Board Leadership Structure,” below. The Board utilized an outside firm for assistance in developing a pool of candidates to fill the Board seat vacated by Director Hefter. A list of twenty-four candidates was provided to the Company, out of which six were identified for screening. In addition to these six, three candidates were suggested by Board members, for a total of nine candidates. After discussing the strengths and weaknesses of each of the nine director candidates, it was agreed that Director Germano warranted further consideration and in-depth interviews as she possesses extensive experience in cybersecurity, which the Board identified as a skill set desirable for the Board. All directors were given the opportunity to meet with Director Germano. At the conclusion of this process, the Board concluded that Director Germano brings relevant skills that provide sound oversight and guidance in managing risk, and unanimously approved Director Germano as successor to Director Hefter.

The Company’s Bylaws set forth the procedures for the submission of director nominees by shareholders. Shareholders can submit nominations for director by writing to our Corporate Secretary, Dime Community Bancshares, Inc., 898 Veterans Memorial Highway, Suite 560, Hauppauge, New York 11788. The Corporate Secretary must receive a submission not less than ninety (90) days prior to the date of the Company’s proxy materials for the preceding year’s annual meeting. As more fully set forth in the Company’s Bylaws, the submission must include the following information:

A shareholder of the Company who wants to communicate with the Board of Directors or with any individual director can write to the Corporate Secretary, Dime Community Bancshares, Inc., 898 Veterans Memorial Highway, Suite 560, Hauppauge, New York 11788.

The letter should indicate that the author is a shareholder and if shares are not held of record, should include appropriate evidence of stock ownership. Depending on the subject matter, the Corporate Secretary will:

At each Board meeting, the Corporate Secretary shall present a summary of all communications received since the last meeting that were not forwarded and make those communications available to the directors.

The Board has adopted a Code of Ethics that is applicable to the officers, directors and employees of the Company, including the Company’s principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. The Code of Ethics is available on the Company’s website, www.dime.com. Amendments to and waivers from the Code of Ethics will also be disclosed on the Company’s website.

The following three standing committees facilitate and assist the Board in executing its responsibilities: the Audit Committee, the Compensation and Human Resources Committee (“Compensation Committee”) and the Corporate Governance Committee. The table below shows current membership for each of the standing Board committees.

In addition, the Company has a Board Compliance Risk, Enterprise Risk and Strategic Planning Committee. The Bank has a Board Credit Risk Committee. All of the Committees of the Board are comprised solely of independent directors.

The business of the Board of Directors of the Company and the Bank is conducted through meetings and activities of the Boards and their Committees. The Board of Directors of the Company and the Bank generally hold ten regular meetings during the course of a year, but will meet more often as may be necessary. The Board of Directors of the Company and the Bank met 14 times during 2023. Except Director Suskind, no director attended fewer than 75% in the aggregate of the total number of Board meetings held and the total number of Committee meetings on which he or she served during 2023, including Board and Committee meetings of the Bank and the Company. Director Suskind was excused from several Board and Committee meetings due to medical issues.

The Chairman of the Company is Kenneth J. Mahon. The Chairman provides overall leadership to enhance the effectiveness and performance of the Board of Directors and acts as the primary spokesperson for the Board of Directors and, among other things, confers with the Chief Executive Officer on reviewing and developing strategic initiatives for the Company and on succession planning and key hiring and firing decisions. The Company believes that the current separation of the Chairman and Chief Executive Officer roles is good governance policy and enhances Board independence and oversight.

At the closing of the Merger, the Company implemented a three-year “Specified Period” that provided, in part, for the Board of Directors to be comprised of an equal number of Legacy Dime and Legacy Bridge directors, an Executive Chairman, who was the former CEO of Legacy Dime, and an independent Lead Director, who was the former chairman of Legacy Bridge. This structure provided for equal representation of both institutions, continuity of leadership and an independent lead director under Nasdaq exchange rules. With the expiration of the Specified Period in February 2024, and Executive Chairman Mahon deemed independent under Nasdaq rules, the Company has reverted to an independent Chairman of the Board and previous Executive Chairman Mahon filling that role. The Executive Chairman title and Lead Director role was eliminated with the expiration of the Specified Period and the presence of an independent Chairman.

In the ordinary course of business, the Company faces various strategic, operating, compliance, reputational, technological, cybersecurity and financial risks. Management is responsible for the day-to-day management of risk, while the Board, as a whole and through its Committees, is responsible for the oversight of risk management. In its risk oversight role, the Board has the responsibility of satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed. The Enterprise Risk and Audit Committees assist the Board of Directors in its oversight of the Company’s corporate-wide risk management and in identifying, measuring, monitoring, and managing risks, and as to the Audit Committee in particular, material financial risks. The Enterprise Risk Committee of the Board is responsible for overseeing the Company’s risk management framework. It recommends to the Board for its approval the Company’s Risk Appetite Statement developed by management. The Risk Appetite Statement sets forth risk targets and tolerance ranges with respect to the amounts and types of risk that the Company is willing to accept. Key risk indicator limits and thresholds are measured and reported quarterly to the Enterprise Risk Committee. As part of its oversight of cybersecurity, the Enterprise Risk Committee receives quarterly updates from management with respect to the Company’s cybersecurity program, emerging cybersecurity risks, and status of operational changes meant to address cybersecurity risks. The Company’s Enterprise Risk Committee also receives regular reports from the Compliance Risk and Credit Risk Committees of the Board.

The Compliance Risk Committee of the Board assists the Board in fulfilling its compliance oversight responsibilities regarding consumer protection and fair lending, the Community Reinvestment Act, and BSA/AML compliance by, among other things, approving and reviewing the effectiveness of the Bank’s compliance management system and overseeing the assessment and monitoring of the risks associated with the Bank’s consumer compliance and BSA/AML activities. The Credit Risk Committee of the Board assists the Board in fulfilling its credit risk management functions by, among other things, setting acceptable levels of credit risk and reviewing the effectiveness of management’s administration and monitoring of credit risk. The Strategic Planning Committee of the Board assists the Board in its oversight of the capital planning of the Company, which includes the operating expense budget and key business plan objectives. In addition, management has established management ALCO, Compensation and Benefits, Credit Risk, Enterprise Risk, Loan Approval, Regulatory Compliance Risk, and Technology committees to provide regular reports as to the actions taken by management to adequately address those risks.

The Audit Committee consists of Directors Stein (Chairperson), Nielsen, Perry and Suskind. Each member of the Audit Committee is considered “independent” as defined in the Nasdaq corporate governance listing standards and under SEC Rule 10A-3. The duties and responsibilities of the Audit Committee include, among other things:

The Audit Committee met four times during 2023. The Audit Committee reports to the Board on its activities and findings. The Board of Directors has determined that Directors Stein, Nielsen, and Perry are “Audit Committee Financial Experts” as that term is used in the rules and regulations of the SEC.

The Audit Committee operates under a written charter adopted by the Board of Directors. A copy of the charter of the Audit Committee is available on the Company’s website, www.dime.com.

Management is responsible for the preparation of the Company’s consolidated financial statements and their assessment of the design and effectiveness of the Company’s internal control over financial reporting. The Independent Registered Public Accounting Firm is responsible for performing an independent audit of the Company’s consolidated financial statements and opining on the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing their reports thereon. As provided in its charter, the Audit Committee’s responsibilities include monitoring and overseeing these processes.

In discharging its responsibilities, the Audit Committee has:

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and filed with the SEC. In addition, the Audit Committee selected Crowe LLP to be the Company’s Independent Registered Public Accounting Firm for the year ending December 31, 2024, subject to the ratification of this appointment by the shareholders.

This report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference and shall not otherwise be deemed filed under such Acts.

The foregoing report has been furnished by Audit Committee members:

Kevin Stein, Chairperson

Raymond A. Nielsen

Joseph J. Perry

Dennis A. Suskind

The Compensation Committee is appointed by the Board of Directors to assist the Board in fulfilling its responsibilities relating to the compensation and benefits provided to the Company’s executive management and to review, administer, evaluate and recommend the benefit plans and overall compensation for the Company. The Compensation Committee met six times during 2023. The Compensation Committee consists of Directors Chen (Chairperson), Devine, Lindenbaum and McCoy, Jr. Each member of the Compensation Committee is considered independent as defined in the Nasdaq corporate governance listing standards. The Board has adopted a charter for the Compensation Committee, which is available on the Company’s website, www.dime.com.

The Compensation Committee’s responsibilities include, among other duties, the responsibility to:

Compensation recommendations for the CEO, Chief Financial Officer (“CFO”), Chief Lending Officer, Chief Technology Officer, and General Counsel are made by the Compensation Committee. Decisions regarding compensation, including equity and non-equity compensation, for the other officers are made under the authority of the Company’s CEO. In 2023, the Compensation Committee engaged Aon’s Human Capital Solutions practice, a division at Aon plc (otherwise known as McLagan) (“Aon”), an outside and independent national compensation consulting firm, to assist in the annual review of its compensation arrangements for the Named Executive Officers, the review of incentive compensation arrangements for other employee groups of the Bank, and to provide recommendations on the amount and form of director compensation. The fees paid to Aon for their services in 2023 totaled $155,640.

The Compensation Committee considered the independence of Aon, in light of SEC rules and Nasdaq listing standards. The Committee requested and received a report from Aon addressing the independence of Aon and its consultants, including the following factors: (1) other services provided to us by Aon; (2) fees paid by us as a percentage of Aon’s total revenue; (3) policies or procedures maintained by Aon that are designed to prevent a conflict of interest; (4) any business or personal relationships between the consultants and a member of the Committee; (5) any company stock owned by the consultants; and (6) any business or personal relationships between our executive officers and the consultants. The Committee discussed these considerations and concluded that the work performed by Aon and its consultants involved in the engagements did not raise any conflict of interest and that Aon has served as an independent compensation consultant.

At the request of the Compensation Committee, Compensation Committee meetings are attended by the CEO. At each meeting, the Compensation Committee meets in executive session, which excludes executive management. The Compensation Committee’s Chairperson reports the Committee’s recommendations on executive compensation to the Board.

None of the current members of the Compensation Committee, or former members who served during 2023, is, or was, an officer of the Company. During the year ended December 31, 2023, the Company had no “interlocking” relationships in which any executive officer of the Company is a member of the board of directors or compensation committee of another entity, one of whose executive officers is a member of the Company’s Board of Directors or Compensation Committee.

The Corporate Governance Committee is appointed by the Board of Directors to assist the Board in developing corporate governance principles applicable to the Company and to recommend nominees for directorships and committee memberships to the Board. The Corporate Governance Committee met three times during 2023. The Corporate Governance Committee consists of Directors Suskind (Chairperson), Devine, Lindenbaum and Stein. Each member is considered independent as defined in the Nasdaq corporate governance listing standards. The Board has adopted a charter for the Corporate Governance Committee, which is available on the Company’s website, www.dime.com.

The Corporate Governance Committee’s responsibilities include, among other duties, the responsibility to:

The Compensation and Governance Committees recommend Board compensation to the Board for its approval. The Company set non-employee director pay in 2021 upon the closing of the Merger. A review was performed of the compensation practices of a group of comparable institutions. At that time, the total amount of non-employee director compensation was positioned at between the 50th and 75th percentile of the comparison group. Consistent with a majority of the comparison group, non-employee director compensation was paid 55% in cash and 45% in restricted stock to vest one year after grant. In addition, Board Committee chair retainer fees were set at competitive levels. Consistent with the practice of the comparison group, no fees were paid for attendance at Board and Committee meetings. The directors’ compensation program is reviewed annually. Other than the elimination of chair retainers for several Committees as described below, under “Compensation Paid to Board Members in 2023,” Board compensation has remained unchanged since 2021 keeping in mind the overall economic environment and the Board’s focus on expense discipline.

All members of the Board of Directors of the Company also serve on the Board of the Bank. For fiscal year 2023, each outside non-employee director received an annual retainer fee of $130,000. The Chairman of the Board of Directors received an additional annual retainer of $60,000 and the Lead Director of the Board of Directors received an additional annual retainer of $25,000. The Chairpersons of the Audit, Compensation, and Enterprise Risk Committees received an annual Committee chair retainer of $25,000 and the Chairperson of the Corporate Governance Committee received an annual Committee chair retainer of $15,000. No Committee chair retainer was paid if the chair was also the Lead Director. Retainers for the compliance risk, credit risk and strategic planning Committees were eliminated in 2023. As previously noted, the position of Lead Director, along with the associated retainer, was also eliminated in February 2024. All retainers were paid 55% in cash and 45% in Common Stock (See, “Directors’ Stock Purchase Program,” below). The Company’s 2021 Equity Incentive Plan limits compensation to a non-employee director to $250,000 per year, inclusive of the grant date fair value of equity awards plus the amount of any cash-based compensation paid to the non-employee director. See “Director Summary Compensation Table,” below.

The Company maintains the Dime Community Bancshares, Inc. Directors’ Stock Purchase Program (the “DSPP”). The DSPP permits outside directors to receive, in the form of Common Stock, all or any portion of Board, Committee Chair or Lead Director retainers that are otherwise payable in cash. Any election must be made during a period when open market trading is permitted and can only be changed or revoked during a similar period. All elections and changes are subject to Compensation Committee or Board approval. Elections are limited to a specific calendar year, and, therefore, must be renewed and approved by the Compensation Committee or Board each year. Under the DSPP, cash compensation is converted into shares of Common Stock based on the closing price of the Common Stock on the Nasdaq Stock Market on the date on which the cash compensation would otherwise be paid. Ms. Chen and Mr. Perry participated in the DSPP during the year ended December 31, 2023.

The following table sets forth information pertaining to the compensation paid to non-employee directors for the fiscal year ended December 31, 2023:

Although the Board does not have a specific diversity policy, it recognizes that diverse representation on the Board serves to improve dialogue, decision-making, and culture in the boardroom. In recent years, our Corporate Governance Committee has focused on advancing continued diversity on the Board during refreshment activities by requiring that candidate pools include diverse individuals, including women and people of color, who meet the recruitment criteria. From the candidate pools, our Corporate Governance Committee will select our director candidates based on their qualifications and attributes as set forth above under, “Director Nominations.” Our director nominees include two women, or 17% of our Board, and a nominee identifying as more than one race.

Board diversity data is unchanged from March 31, 2023, the record date for our 2023 annual meeting.

The Company believes it is of utmost importance to share the fundamental values that guide our daily operating approach, as well as our passion for serving our customers and our diversified markets. We are committed to actions that contribute to positive and sustainable results for all members of the markets we serve and the dedicated workforce on which we rely. The Company has published an Environmental, Social and Governance (“ESG”) report. The report highlights the Company’s policies, practices and strong commitment to the environment, its community and corporate governance. The report is available on the Company’s website, at https://investors.dime.com/esg.

Below are the various ways the Company and the Bank invest in their environment, social responsibility and corporate governance.

The Company recognizes the importance of commercially responsible business practices. We have undertaken numerous initiatives that align with environmental mindfulness and will continue to evolve our practices over time. Given the location of our market on an island with many shore communities, it is paramount that we protect our community by making environmentally sound and conscious decisions while ensuring stability for the economic health of the people we serve.

A new Online Account Opening platform was rolled out in 2023. Consumers now have the ability to open any Savings, Checking MMA or CD account online and through mobile channels. The enhanced digital experience offers real time funding and has an added benefit of enhanced KYC and Fraud prevention. The Bank also implemented an enhanced escrow management digital platform in 2023. The platform supports escrow management across various verticals and offers self-service for our sophisticated customers. In addition to improving the quality of the customer experience, these digital solutions allow the Bank to reduce its environmental footprint by a reduction in customer travel and a reduction in paper consumption.

The Company’s facilities team constantly searches for ways to reduce our carbon footprint while providing a comfortable and safe working environment.

The Company supports third parties whose mission is to improve, preserve and protect our environment.

We believe that investment in our people and communities is key to building meaningful, lasting relationships that facilitate success for our employees, customers and communities.

The Company celebrates diversity and encourages diversity and inclusion throughout the organization.

The Company provides tools and resources to promote the health and safety of our employees.

The Company is committed to offering employees a variety of opportunities to enhance their skills, develop their knowledge and expand their professional capacities.

The Company is committed to building a resilient, sustainable company by staying true to a strong governance framework, ethical business practices and proactive thinking.

The following individuals are executive officers of the Company and/or the Bank, holding the offices set forth opposite their names as of the Record Date:

The executive officers are elected annually and hold office until their respective successors have been elected and qualified, or until death, resignation or removal by the Board of Directors.

Biographical information of the executive officers who are not directors of the Company or Bank is set forth below.

Mr. Caracappa joined the Bank as Senior Vice President and Director of Treasury Management in June 2020 and shortly thereafter was promoted to Executive Vice President of Treasury Management of the Bank in February 2021. Prior to joining the Company, Mr. Caracappa served as Senior Executive Vice President of Treasury Management at BankUnited from 2012 to 2020 and prior thereto, Senior Vice President and Managing Director at Herald National Bank from 2008 to 2012. Mr. Caracappa also served as Divisional Senior Vice President and Manager of Treasury Management and Corporate Products at Capital One Bank (formerly North Fork) from 1996 to 2008. Earlier in his career, Mr. Caracappa held management positions at various financial institutions.

Mr. Fegan joined Legacy Dime as Executive Vice President and Chief Technology Officer in 2019 and was promoted to Senior Executive Vice President and Chief Technology and Operations Officer of the Bank in April 2023. Mr. Fegan served as the Chief Information and Operations Officer of Investors Bank from 2017 to 2019 and prior thereto, from 2013 to 2017, was Chief Operations and Technology Officer at Bank Leumi. Previously, he served as Chief Information Officer and Head of Bank Operations for Suffolk County National Bank. Earlier in his career, Mr. Fegan held management positions at various financial institutions.

Mr. Gunther joined Legacy Dime as Executive Vice President and Chief Lending Officer in 2017 and was promoted to Senior Executive Vice President and Chief Lending Officer of the Company and Bank in February 2021. Mr. Gunther served as Executive Vice President and Chief Lending Officer of First Central Savings Bank from 2015 to 2016 and First Executive Vice President and Chief Lending Officer of Community National Bank from 2008 to 2015. Prior to his association with Community National Bank, Mr. Gunther held senior positions at various Long Island financial institutions.

Mr. Manseau has served as Senior Vice President and Chief Retail Banking Officer of the Bank since 2008. Prior thereto, Mr. Manseau served as Divisional Senior Vice President with North Fork Bancorporation, Inc. and Capital One from January 1990 to March 2008.

Mr. Miley served as Director of Digital Marketing of Legacy Dime from 2018 through the closing of the Merger when he assumed the same role for the Bank. In September 2023 he was promoted to his current role. Prior thereto, Mr. Miley oversaw Strategic Marketing from 2018 to February 2021. Previously, Mr. Miley was the owner and Chief Executive Officer of a national marketing agency for 10 years that specialized in digital marketing and strategy for various clients.

Mr. Porzelt, a Certified Public Accountant, served as Chief Risk Officer of Legacy Dime from 2017 to February 2021 when he was appointed EVP and Deputy Chief Risk Officer of the Company and the Bank. He was then promoted to Executive Vice President and Chief Risk Officer in June 2021. Prior to Joining Legacy Dime, Mr. Porzelt was a Managing Director of the Consulting Services Group at EisnerAmper LLP, and before joining EisnerAmper, Mr. Porzelt was associated with American International Group and was an Audit Partner at Deloitte and at Arthur Anderson.

Mr. Reddy joined Legacy Dime in 2017 and served as Executive Vice President and Chief Financial Officer from 2018 to 2021. He was promoted to Senior Executive Vice President and Chief Financial Officer of the Company and Bank in February 2021. Mr. Reddy held several investment banking roles with firms including Evercore Partners, from 2011 to 2014, Barclays Capital, from 2008 to 2011 and Lehman Brothers, from 2005 to 2008.

Ms. Schaubeck, an attorney admitted to practice in New York, joined Legacy Dime as Executive Vice President and General Counsel in 2018. Prior thereto, Ms. Schaubeck served as General Counsel to Sun Bancorp and its wholly-owned subsidiary, Sun National Bank, in New Jersey from September 2014 to January 2018 and General Counsel to Suffolk Bancorp and its wholly-owned subsidiary, Suffolk County National Bank, from 2012 to 2014. Previously, Ms. Schaubeck served as General Counsel to various Long Island community banks and was associated with various New York City and Long Island, New York law firms where she represented financial institutions and real estate clients.

Mr. Stonitsch served as Chief Talent Officer of the Bank from 2016 to February 2021 when he was appointed to his current role. Prior to joining the Bank in November 2016, Mr. Stonitsch held various senior Human Resource roles at Alma Bank, IDB Bank and JP Morgan Chase.

Mr. Teplitz has served as Chief Credit Officer of the Bank since 2020. Prior to joining the Bank in 2020, Mr. Teplitz served as Senior Credit Officer at Bank United from 2017 to 2020. Prior thereto, he spent 13 years with CapitalOne and North Fork Bank as a Senior Credit Officer. Mr. Teplitz began his career at Citibank where he spent 22 years in various functions including Divisional Controller, Relationship Management, Head of Underwriting, and Director of Loan Workout, North America.

This Compensation Discussion & Analysis (the “CD&A”) describes our executive compensation program and explains how the Compensation Committee made its 2023 compensation decisions for our named executive officers (also referred to in this CD&A as “NEOs”). The following table summarizes the Compensation Committee’s determination of the 2023 annual compensation for our current NEOs as well as comparative values for 2022.

On August 31, 2023, Kevin M. O’Connor, former CEO of the Company, separated from employment with the Company without Cause (as that term is defined in Mr. O’Connor’s Employment Agreement and Retention and Award Agreement, both dated October 16, 2020 (“Employment Agreement”)). The Company and Mr. O’Connor entered into an Agreement and General Release pursuant to which the Company made payment to Mr. O’Connor in accordance with the Company’s obligations under his Employment Agreement. Mr. O’Connor’s outstanding unvested restricted stock awards, inclusive of time vested restricted stock grants and performance-based restricted stock grants, were forfeited. The forfeitures include shares granted to Mr. O’Connor as part of the Merger. The payment to Mr. O’Connor is more fully described in the “Summary Compensation Table,” below. Mr. O’Connor continued to serve as a director of the Company through December 31, 2023. Simultaneously with Mr. O’Connor’s separation from service, Stuart H. Lubow was appointed as President and Chief Executive Officer and a member of the Board of Directors of the Company and the Bank. He previously served as President and Chief Operating Officer of the Company and the Bank.

Prior to the Merger, Mr. O’Connor was President and CEO of Legacy Bridge beginning in 2007. Mr. Lubow was appointed President and Chief Operating Officer of Legacy Dime in 2020 and had significant prior CEO experience. He served as CEO of Community National Bank from 2005 to 2015 and prior to that, CEO of Community State Bank. As part of the Merger, the Board believed it was important to retain both executives from a business continuity perspective and for client retention and growth. Mr. O’Connor was appointed CEO of the pro forma Company and Mr. Lubow was appointed President and Chief Operating Officer. The Merger agreement provided for a three-year employment contract for Mr. O’ Connor. Post completion of the Merger, and as part of the ongoing succession planning process at the Company, the Board had designated Mr. Lubow as the successor to Mr. O’Connor. As the Company approached the two-year anniversary of the Merger, discussions ensued about the optimal management structure and the status of Mr. O’Connor’s Employment Agreement. The Board eventually determined that with the passage of time the Company would be better positioned for the future with a singular CEO figure who could be the face and representative of the Company both externally and internally. All business facing units were already under the purview of Mr. Lubow and he had intimate knowledge of all aspects of the business lines and operations of the Company. Additional considerations included the ongoing expense of two senior level executives with similar backgrounds (see “Executive Compensation,” above). As such, the Board unanimously determined that it would be in the best interest of the Company to separate from Mr. O’Connor. With the return of stability to the banking system in the third quarter of 2023, the Board of Directors determined that it was an appropriate time to finalize its decision on CEO succession and Mr. Lubow was formally named CEO on July 28, 2023.

The economic considerations of waiting until Mr. O’Connor’s three-year Employment Agreement ran its course was considered against terminating Mr. O’Connor’s employment prior to the end of his Employment Agreement. A negotiated settlement was reached with Mr. O’Connor whereby he would receive, in accordance with the Company’s obligations under his Employment Agreement, a cash severance payment of $8,291,683 (exclusive of regular salary payments) and reimbursement of his legal fees in connection with his separation from the Company, in the amount of $135,000. Mr. O’Connor’s outstanding unvested restricted stock awards, inclusive of time vested restricted stock grants and performance-based restricted stock grants (at Maximum), totaling 97,130 shares, with a value of $2,069,840 as of August 31, 2023, were forfeited. The forfeitures include shares granted to Mr. O’Connor as part of the Merger. The treatment of Mr. O’Connor’s unvested restricted stock awards is consistent with the terms of the award agreements under which they were granted, which provided any restricted stock award that had not vested as of the date of his termination without Cause would expire and be forfeited.

The Company delivered solid results in 2023 despite a challenging economic environment, especially for the banking industry that was marked by the failure of three well known regional banks. Each of these institutions had specific balance sheet related challenges, and as such, investor focus over the course of the year was attuned to balance sheet strength and safety. In this context, the Company prioritized actions to fortify and strengthen its balance sheet which are noted in the highlights below.

(1) Deposits: Dime grew total deposits by over $276 million in 2023. We accomplished this by providing exemplary customer service, maintaining a strong balance sheet, and hiring productive deposit-gathering banking teams.

(2) Liquidity: The Company increased its on balance sheet liquidity, as measured by cash and securities, to $1.94 billion at December 31, 2023 from $1.71 billion at December 31, 2022 (representing a 13.45% increase). A significant focus was placed on broadening access to various asset-based sources of funding throughout the year.

(3) Non-Insured Deposits: The three regional banks that failed in 2023 had particularly high percentages of non-insured deposits. As such, significant focus was placed on improving the granularity of deposits and reducing non-insured deposits. In this regard, the Company’s level of non-insured deposits was reduced to 29% of total deposits at December 31, 2023 versus 33% at December 31, 2022. Our coverage of non-insured deposits (measured as on balance sheet liquidity and wholesale funding sources divided by non-insured deposits) increased to 185% as of February 29, 2024, versus 84% at February 28, 2023.

(4) Asset Quality: Despite the economic headwinds, the Company’s asset quality metrics remained stable on a year-over-year basis. Non- performing loans represented only .27% of total assets at December 31, 2023 compared to .45% of total assets at year-end 2022. This level compares favorably to the median of the Company’s Compensation Peer Group of .41% at December 31, 2023 (See “Market Data Usage,” below for a discussion of the Company’s Compensation Peer Group).

 

(5) Capital: The Company prudently grew all of its risk-based regulatory capital ratios over the course of 2023. The Company’s Tier 1 Common Equity Ratio grew from 9.15% as of December 31, 2022 to 9.84% as of December 31, 2023, and Total Risk-Based Capital grew from 12.89% to 13.54% during that same period. Maintaining a strong capital base in an uncertain economic environment positions the Company favorably for future growth.

 

(6) Dividend: In March 2023, the Company announced an increase in its quarterly common stock dividend by 4.2% from $0.24 per share to $0.25 per share. The dividend increase reflected the Company’s strong financial position.

(7) Expense Management: The Company maintained its strong focus on expense discipline. Despite increased pressures on costs due to the inflationary environment, the Company was able to keep its adjusted non-interest expense to average assets ratio well contained. The Company’s adjusted non-interest expense to average assets ratio was 1.45% for fiscal year 2023, compared to the Peer Group median of 1.98%.

 

(8) Long Term Franchise Enhancement: Management took several major foundational steps in 2023 to advance our mission of building a high-quality deposit franchise that funds a diversified asset base. During 2023, we capitalized on market disruption caused by the failures of several regional banks and hired 7 deposit-focused teams from the former Signature Bank and the former First Republic Bank. In a short period of time (June-December) these groups onboarded over 1,000 clients and grew deposits by approximately $333 million. In addition, the Bank built the infrastructure for a new healthcare-focused lending vertical by hiring a senior lender from an acquired institution. The addition of healthcare loans is expected to diversify the Company’s asset composition over time.

(9) Technology Upgrades: The Company made significant enhancements to its technology offerings in 2023. These upgrades included a brand-new digital banking platform and an escrow management platform. Upgrading our technology was a key differentiating factor in our efforts to recruit new bankers to the Bank. In addition, the Company completed an outsourcing of its core platform, which will enable us to better manage this aspect of technology costs.

(10) Community Reinvestment: The Bank maintained an overall Community Reinvestment Act rating of “Outstanding.”

While the Company’s stock price performance was below its Peer Group for calendar year 2023, it is important to note, and as outlined in the table below, the stock price performance of the Company since the announcement on July 28, 2023 of the appointment of Mr. Lubow as CEO was at the upper tier of the Peer Group. The Board of Directors believes that CEO Lubow’s new strategic plan, which is focused on growing deposits and diversification of the balance sheet, will create long-term shareholder value. As noted in the Company’s March 2024 investor presentation, available on the Company’s website, www.dime.com, deposits were up over $400 million from year-end 2023 to March 14, 2024, with market share gains in the Company’s Private and Commercial Bank driving the increase.

The Company’s executive compensation philosophy is, consistent with prudent banking business practices, to provide competitive target compensation opportunities with actual amounts earned commensurate with the Company’s financial performance and the generation of long-term value for shareholders through dividends and stock price appreciation. The goals of the executive compensation program are to enable the Company to attract, develop and retain an executive team capable of executing the long-term business plan and optimizing the Company’s performance for the benefit of its shareholders.

The Company sets a base salary to provide a reasonable level of predictable base income and short- and long- term performance-based compensation to provide the NEOs with clear opportunities to increase the value of their compensation by making meaningful progress to achieve these goals. These pay elements are intended to balance an appropriate mix of risk and return. Annual incentive awards are designed to provide incentives to encourage efforts to attain short-term goals, which do not encourage excessive risk taking. Long- term performance-based and time-vested restricted stock awards align executives’ interests with the Company’s shareholders, reward for long-term results that drive value for shareholders, and serve to retain executives over the long term.

The Compensation Committee, with the assistance of its independent compensation consultant, routinely reviews our compensation practices to ensure they support our compensation philosophy, are risk appropriate, market competitive and align our executives with shareholder interests. In support of this philosophy, the following summarizes the Company’s compensation governance and compensation practices:

For NEOs, compensation comparisons are based on a peer group of banks, taking into consideration asset size, geographic location, and loan portfolio composition. See ‘‘Market Data Usage,” below. However, reasonable exceptions to this market comparison methodology are considered as appropriate by the Compensation Committee. The Compensation Committee uses competitive compensation data from the annual total compensation study of peer companies to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally, the Compensation Committee uses multiple reference points when establishing targeted compensation levels. The Compensation Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader market. Instead, the Compensation Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as the Company’s business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning.

Our compensation program consists of three primary components: (i) base salary, (ii) cash-based, annual incentive awards (“AIP”), and (iii) equity-based, long-term incentive awards (“LTIP”). We also offer certain perquisites, retirement and other benefits. Performance-based, promotion equity awards were used in 2023 in conjunction with executive promotions and to further incent those executives to sustain long-term performance. Performance-based, promotion equity awards are extraordinary and are not a standard component of the executive compensation program.

The key features and percentage composition of each of these elements, excluding the performance-based, promotion equity awards, are described below, along with the aggregate compensation pay mix, at Target, for 2023.

The Compensation Committee conducted its annual Peer Group review in 2023. The purpose of this effort is to inform decisions on NEO pay levels and design. The key measures used in selecting the Company’s 2023 Compensation Peer Group were: asset size, geographic location, and loan portfolio composition with a focus on commercial lending.

Asset size of the Compensation Peer Group ranges from $8.5 billion to $30 billion, with a median of $13.9 billion. At year-end 2023, the Company had total assets of $13.6 billion.

Companies in the Compensation Peer Group are primarily located in the Northeast, New England, and the Mid-Atlantic and Mid-West regions.

Keeping in mind the Company’s focus on commercial lending, companies in the Peer Group have commercial loan portfolios (defined as the sum of commercial and industrial loans, construction loans, commercial real estate loans, and multi-family loans) comprising >= 50% of total loans.

During 2023 changes were made from the 2022 Compensation Peer Group to delete previous peer banks that were involved in mergers or did not satisfy the asset size criteria. Not all companies in the Compensation Peer Group reported data for each of our executive positions. The 22 companies comprising the Compensation Peer Group used to set fiscal year 2023 pay levels were:

Each NEO’s current compensation was compared to the applicable benchmark position within the Compensation Peer Group. A significant percentage of total compensation is allocated to incentives as a result of the philosophy mentioned above.

At the Company’s 2023 annual shareholders’ meeting, we received support for our executive compensation program with 80.4% of the votes by shareholders cast in favor of a non-binding resolution to approve 2022 NEO compensation. After considering suggestions from shareholders, the Company implemented the following changes to its 2023 executive compensation program.

The Company will continue to monitor the level of support for each say-on-pay proposal in the future and will consider this alongside other factors as it makes future executive compensation decisions.

Based on the Company’s 2023 performance, a peer group analysis of the compensation of the Company’s NEOs conducted by the Compensation Committee’s independent consultant, Aon, and the results of the 2023 shareholder advisory vote on 2022 executive compensation, the following 2023 compensation decisions were made by the Company in 2023, which are explained in more detail below.

The base salaries of the NEOs are reviewed annually by the Compensation Committee. NEO salary changes for 2023 reflect several factors, including market realignment, role expansions (promotion to CEO in the case of Mr. Lubow, and promotion to Senior Executive Vice President in the case of Mr. Fegan), responsibilities and merit increases. Base salaries for the NEOs for 2023 and 2022 are as follows.

The Compensation Committee takes its responsibility of setting executive compensation with the utmost importance and is continuously focused on managing the total executive compensation expense. Following the departure of prior CEO O’Connor in August 2023, Mr. Lubow was appointed CEO and assumed the responsibilities of CEO in addition to retaining his prior responsibilities as President and Chief Operating Officer. No new executives were hired and the Company realized cost savings from the elimination of Mr. O’Connor’s salary, as shown in the chart below.

 

The NEOs have incentive opportunities that are a combination of AIP and LTIP as a percentage of base salary. The target opportunities for 2023 are reflected below in comparison to 2022. The changes consider the opportunities offered by banks in the Company’s Compensation Peer Group, and assures alignment with the market and the roles and responsibilities of the executive.

In February 2024, the NEOs were paid annual cash incentives under the 2023 AIP for 2023 performance. The objectives of the 2023 AIP were to align annual incentive compensation with financial benchmarks set forth in the Company’s 2023 Strategic Plan, with a specific focus on managing expenses and improving the quality of the balance sheet. The 2023 AIP is comprised of a Corporate Factor (defined below) that represents 80% of the 2023 AIP opportunity, and a Discretionary Factor (defined below) that represents 20% of the 2023 AIP opportunity.

 

The following table sets forth the financial metrics under the 2023 AIP. These metrics comprise the “Corporate Factor” and account for 80% of the 2023 AIP opportunity.

In addition to the Corporate Factor, the Compensation Committee considered the following qualitative factors, which were assessed on a discretionary basis in finalizing 2023 AIP payouts. These business initiatives, administrative and operational efforts comprise the “Discretionary Factor” and account for 20% of the 2023 AIP.

A) Digital Transformation: 10%. Based on implementation of a new online account opening process and progress on the movement of applications to the cloud.

B) Other Discretion: 10%. In addition, the Compensation Committee considered the Company’s performance on the following measures:

The Compensation Committee believes that the 2023 AIP should balance risk-taking with performance. Therefore, the Compensation Committee maintains a risk-based capital performance gate/trigger. If the Company’s Consolidated Total Risk-Based Capital ratio is below 10.5% at year-end, bonus payments will be reduced to zero. As indicated earlier in the CD&A, our results were well above this level, permitting the payout of AIP based on the results of our key performance metrics. In addition, the Compensation Committee can apply additional discretion to payouts under the AIP as needed to reflect the business environment, market conditions, budgetary constraints, and other risk management considerations. The Compensation Committee also reserves the right to amend, modify and adjust payouts as necessary inclusive of downward compensation adjustments.

Each performance metric has a weighting and a range of performance that determines the payouts. Incentives pay out at a reduced level (i.e. 50% of Target) for Threshold performance, at 100% for Target performance, and at higher level (i.e. 150% of Target) for Maximum performance. Performance below Threshold will be zero. Performance in between levels is interpolated to reward incremental performance.

The table below summarizes the incentive opportunities for the NEOs for the 2023 AIP:

Results of the Corporate Factor relative to the pre-established objectives for 2023 were as follows:

As permitted by the 2023 AIP, the Compensation Committee also considered each NEO’s contribution to the following measures comprising the Discretionary Factor in determining each NEO’s 2023 AIP payment.

A) Digital Transformation: 10%. Based on implementation of new online account opening process and progress on the movement of applications to the cloud.

The Bank successfully implemented a new digital banking platform that allows customers to open any savings, checking, money market, or certificate of deposit account online and through mobile channels. The Bank also implemented a digital escrow management system that operates on mobile devices and desktops. Migration to the cloud was completed for many in-house Bank applications as was the migration of the Bank’s in-house core data center to its third- party core provider resulting in cost efficiency, scalability, reliability and advanced security measures.

B) Other Discretion: 10%.

After considering the above, the Compensation Committee concluded that the NEOs performance, relative to Target, warranted payments ranging from 100% to 120% for the Discretionary Factor.

Based upon the overall financial results and evaluation of the discretionary measures, in finalizing 2023 AIP payouts, the Compensation Committee approved the annual incentive payments in the table below. These amounts are noted in the column, “Non-Equity Incentive Plan Compensation,” in the Summary Compensation Table below.

The LTIP program is designed to meet the following objectives: long-term sustained performance, alignment with shareholders’ interests, executive equity interest in the Company, enable the Company to attract and retain top talent, balance risk and compensation, and position executive compensation to be competitive with market at performance goals. To accomplish these objectives, the 2023 LTIP consists of a combination of time-vested restricted stock and performance-vested restricted stock (i.e., performance shares), which places more emphasis on the latter than our Compensation Peer Group, as follows:

The table below reflects the performance metrics selected for the PRSAs for the 2023-2025 performance cycle. In order for PRSAs to vest, performance must be at or above the threshold performance set by the Compensation Committee. Once the defined threshold level of performance is achieved, payouts can vary from 50% of Target for Threshold level of performance to a maximum payout of 150% of Target for Maximum performance. This range of potential results is consistent with the practices of most of our peers and other banks. Performance in between levels is interpolated on a straight-line basis to reward incremental performance. Relative TSR performance will be measured based on the Company’s performance relative to constituents of the KBW Regional Banking Index.

The Compensation Committee deemed Relative TSR an important measure of the Company’s achievement for shareholders over the long term and aligns the performance of executives directly with the returns of shareholders.

In light of the failure of several regional banks in March 2023 and the Federal Reserve’s monetary tightening initiatives, the value of deposits has become paramount to the franchise value and long-term outperformance of all depository institutions. Keeping this concept in mind, and the highly competitive environment for deposits in the Bank’s marketplace, the Compensation Committee determined it prudent to create a long-term incentive metric for executives that was tied directly to the quality of the Bank’s deposit franchise.

In conjunction with its annual Peer Group review in 2023, and the desire to align the interests of executives with shareholders, the Compensation Committee increased the stock incentive opportunities for the NEOs. Each NEO’s long-term incentive opportunity was compared to the applicable benchmark position within the Compensation Peer Group and adjusted to be more in line with that of a comparable position and comparable responsibilities.

The table below summarizes the incentive opportunities for the NEOs for the 2023 LTIP:

In March 2023, the Compensation Committee awarded restricted stock to the NEOs under the 2023 LTIP at Target as follows: Mr. Lubow - 65% of base salary, or $455,003; Mr. Reddy – 40% of base salary, or $209,996; Mr. Fegan – 40% of base salary, or $161,992; Mr. Gunther - 40% of base salary, or $190,002; and Ms. Schaubeck – 40% of base salary, or $149,997. The long-term incentive awards were allocated 60% performance-based and 40% time-vested in accordance with the terms of the 2023 LTIP. The performance-based shares vest based on actual performance of the metrics at the end of the three-year performance period, i.e. at the end of 2025. The time-vested restricted shares vest ratably over three years from the date of grant.

The following awards were made under the 2023 LTIP assuming vesting at Target.

The performance metrics chosen for the 2021 Long-Term Incentive Plan (the “2021 LTIP”) were: Total Shareholder Return, Adjusted Efficiency Ratio, and Average Non-Interest-Bearing Deposits/Total Deposits. Since the Merger closed in the middle of the first quarter of 2021, the financial statements for the Company for the first quarter of 2021 did not include a full quarter of operations of Legacy Bridge. As such, the Compensation Committee determined that the starting point of the measurement period should begin on April 1, 2021 (for the Total Shareholder Return and Adjusted Efficiency ratio) to capture 100% of the operating results of the combined entity. The Average Non-Interest-Bearing Deposits/Total Deposits was measured for the quarter ended December 31, 2023. As with the 2023 LTIP, the 2021 LTIP was comprised of 60% performance -based restricted stock and 40% time-vested restricted stock. The time-vested restricted stock was awarded in 2021 and vests ratably over three years, with the final vesting occurring on July 1, 2024. While the performance results have already been determined, the performance-based restricted shares will actually vest on June 30, 2024.

In order for the performance shares to vest, performance must be at or above the threshold performance set by the Compensation Committee. Once the defined threshold level of performance is achieved, payouts can vary from 50% of Target for Threshold level of performance to a maximum payout of 150% of Target for Maximum performance. Performance in between levels is interpolated on a straight-line basis to reward incremental performance. TSR performance was measured based on the Company’s performance relative to constituents of the KBW Regional Banking Index.

The table below reflects the performance metrics selected for the PRSAs for the 2021 LTIP performance cycle and the results for each metric.