David A. Hedges
About David A. Hedges
President & CEO of Auburn National Bancorporation, Inc. and AuburnBank since January 1, 2023; director since November 2022; previously EVP & CFO (Dec 2015–Dec 2022) and held various roles since 2006; started career at KPMG’s financial services audit practice (2002–2006). Age 46, currently also serves on the East Alabama Medical Center Foundation Board of Directors . 2024 net income improved to $6.397M from $1.395M in 2023 (the latter impacted by 2023 balance sheet repositioning losses), while cumulative TSR measured on a $100 investment from 12/31/2021 stood at $83.66 at 12/31/2024 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Auburn National Bancorporation, Inc. | EVP & CFO | 2015–2022 | Led finance; promoted to CEO Jan 2023 . |
| Auburn National Bancorporation, Inc. | Various roles | 2006–2015 | Progression through finance/leadership roles prior to CFO . |
| KPMG LLP | Financial services audit | 2002–2006 | Audit and controls expertise in financial services . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| East Alabama Medical Center Foundation | Director | Current | Community ties; local stakeholder engagement . |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base salary ($) | $300,000 | $312,000 |
| Bonus (cash incentive) ($) | $0 | $36,000 (earned 2024; paid 2025) |
| All other compensation ($) | $41,224 (insurance $8,598; retirement/401(k) $11,375; director fees $21,250) | $45,222 (insurance $8,310; retirement/401(k) $11,612; director fees $25,300) |
| Total ($) | $341,224 | $393,222 |
| Target bonus % | Not disclosed | Not disclosed |
Notes:
- Hedges receives director fees for service as an employee director; these amounts are included in “All other compensation” .
Performance Compensation
| Component | Metric/Terms | 2023 | 2024 | Payout/vesting |
|---|---|---|---|---|
| Annual cash incentive | Performance metrics/weighting | Not disclosed | Not disclosed | Cash; bonuses earned in 2024 paid in 2025 |
| Annual cash incentive | Actual payout ($) | $0 | $36,000 | Cash (no vesting) |
| Equity awards (RSUs/PSUs/options) | Grants/vests | None granted; no awards outstanding | None granted; no awards outstanding | N/A |
| Clawback policy | Nasdaq Rule 5608-compliant | In place | In place | Enables recovery on restatements/violations |
| 2024 Equity & Incentive Plan | 350,000-share pool (~10% of shares) approved | Approved Apr 2024 | Available for future grants | No repricing without shareholder approval; change-in-control acceleration at committee discretion |
Disclosure gaps: The proxy does not disclose specific performance metrics, targets, or weightings for annual cash incentives (pay-for-performance transparency risk) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 12,860 shares (<1% of outstanding) as of Record Date (3,493,699 shares outstanding) |
| Vested vs unvested shares | No unvested equity; no outstanding equity awards |
| Options (exercisable/unexercisable) | None outstanding |
| Shares pledged as collateral | No pledging disclosed for Hedges (pledging noted only for another director) |
| Stock ownership guidelines | Not disclosed |
| Hedging/derivatives | Prohibited by Insider Trading Policy; 10b5-1 and other plans require pre-approval |
Employment Terms
| Term | Detail |
|---|---|
| CEO start date | January 1, 2023 |
| Employment agreement term/auto-renewal | Not disclosed |
| Severance | No severance agreements with named executive officers |
| Change-in-control (CIC) | No CIC agreements with named executive officers |
| Equity award CIC treatment | Plan allows acceleration/substitution at Compensation Committee discretion |
| Clawback | Erroneously Awarded Executive Incentive-Based Compensation Recovery Policy in place |
| Pension/Deferred comp | No pension or nonqualified deferred compensation benefits |
| Non-compete/Non-solicit | Not disclosed (plan allows restrictive covenants in award agreements) |
| Insider trading policy | Prohibits short sales/derivatives; requires pre-approval for Rule 10b5-1 and other trading plans |
Board Governance and Roles
- Board service: Director since 2022; currently serves on the Company’s Executive Committee (not on Audit or Compensation) .
- Dual-role implications: CEO is also a director; Board chair role is separated (Robert W. Dumas is Chairman). The Board maintains a Lead Independent Director (Anne M. May) and holds executive sessions of independent directors at least semi-annually, which mitigates independence concerns .
- Attendance: All directors attended at least 75% of Board/committee meetings in 2024 .
Performance & Track Record
- Strategic actions: Led December 2023 balance sheet repositioning that sold ~$111.3M of securities to pay down high-cost wholesale funding, with an after-tax loss of ~$4.7M; management projected ~$2.8M pre-tax NII uplift and ~$0.60 EPS benefit in 2024 with ~2.3-year earn-back .
- Financial outcomes: Net income increased to $6.397M in 2024 from $1.395M in 2023 (the latter reflecting repositioning losses) . Cumulative TSR on a $100 investment from 12/31/2021 to 12/31/2024 was $83.66, indicating underperformance over that period .
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income ($) | $10,346,000 | $1,395,000 | $6,397,000 |
| Cumulative TSR (Initial $100) | $74.01 | $71.93 | $83.66 |
Say-on-Pay & Shareholder Feedback
- Say-on-Pay approval: 96.1% in 2024; 97.4% in 2023, indicating strong shareholder support for executive compensation .
- Say-on-Frequency: Board recommends annual say-on-pay vote .
Compensation Committee Analysis
- Independence and tools: Committee comprised of independent directors; empowered to hire consultants and administer the 2024 Equity & Incentive Compensation Plan with anti-repricing provisions and clawbacks .
- Structure evolution: No equity awards granted in 2023 or 2024; new 2024 equity plan (10% of outstanding shares) introduces potential shift toward equity-based pay, aligning incentives but introducing modest dilution risk if fully utilized .
- Transparency gaps: Specific annual bonus metrics, targets, and weightings are not disclosed, limiting pay-for-performance visibility .
Related-Party Transactions and Red Flags
- Related-party transactions: None reportable above thresholds in 2023–2024; insider lending subject to Regulation O; Audit Committee reviews/approves related-party transactions .
- Hedging/pledging: Hedging prohibited; no pledging disclosed for Hedges .
- Officer exculpation: 2025 proposal to amend Certificate to extend DGCL 102(b)(7) exculpation to officers (narrow duty-of-care protection), aligning with market practice; not applicable to bad faith/loyalty breaches or derivative claims .
Investment Implications
- Alignment: Hedges’ pay is modest and largely cash-based with no equity awards outstanding; ownership is <1%, suggesting limited direct equity alignment until the 2024 plan is utilized .
- Retention risk: Absence of severance/CIC agreements reduces “golden parachute” concerns but may raise retention risk in a change-in-control scenario; clawback and strict insider-trading policies strengthen governance .
- Trading signals: No disclosed pledging and hedging prohibitions reduce forced-sale/overhang risk; introduction of an equity plan creates potential future grant events and modest dilution if deployed .
- Execution: The 2023 balance sheet repositioning and 2024 earnings rebound indicate willingness to take decisive balance sheet actions; TSR since 2021 remains below par, so sustained operational improvement will be important for investor confidence .