Joseph B. Zanco

About Joseph B. Zanco

Joseph B. Zanco, CPA, CIA, is President and Chief Executive Officer of Catalyst Bank and a director of Catalyst Bancorp. He has served as CEO since August 2020 and as a director since January 2021; he previously was EVP/CFO of Home Bancorp, Inc. and Home Bank, N.A. (2008–2020) and Controller/Principal Accounting Officer at IBERIABANK (2005–2008). He is 55 years old as of March 31, 2025. The board separates the Chair and CEO roles, with an independent Chair; a majority of directors are independent . He serves on external boards including the Louisiana Association of Business and Industry, Community Foundation of Acadiana, and Vision St. Landry; he is past Chair of One Acadiana and a former trustee of Ochsner Lafayette General .

Past Roles

External Roles

Fixed Compensation

Perquisites and other compensation detail (2024):

• Vehicle allowance: $18,000; life insurance premiums: $25,600; tax reimbursement under Restricted Executive Benefit Agreement (REBA): $15,385; family health insurance premiums: $11,099; plus ESOP allocations and 401(k)/insurance benefits included in “all other” .

Compensation governance:

• Company does not maintain a written bonus plan; bonuses are historically discretionary .
• Clawback policy adopted (2023), with recoupment of incentive-based compensation for three years preceding any material restatement; Company will update to comply with listing standards .

Performance Compensation

Cash incentive (most recent year):

Equity awards and vesting (as of Dec 31, 2024):

Observations:

• Options granted under the 2022 Stock Option Plan vest 20% annually from 9/1/2023; RSUs granted under the 2022 Recognition & Retention Plan vest 20% annually from 9/1/2023 .
• Using the year-end 2024 share price of $11.77 used by the company for valuation, options with a $13.30 strike were out-of-the-money at year-end 2024 (−$1.53), reducing near-term exercise/sale pressure .

Insider trading controls:

• Blackout periods run from the 20th day of the last month of each quarter until 48 hours after earnings release; pre-clearance required; 10b5-1 plans allowed only when not in possession of MNPI .
• Short sales prohibited; hedging transactions (e.g., collars) require Board pre-clearance; open-ended orders prohibited .

Equity Ownership & Alignment

Beneficial ownership (record date March 31, 2025):

Vested vs. unvested and market values (as of Dec 31, 2024):

Notes:

• RSU market values use $11.77 closing price at 12/31/2024 per company methodology .
• Proxy does not disclose stock ownership guidelines or any pledging of company shares by Mr. Zanco. Insider policy discourages/controls hedging but does not explicitly address pledging in the excerpts cited .

Employment Terms

• Current Agreement: Amended employment agreement effective Aug 17, 2023; 3-year term ending Aug 17, 2026; Board to review for extension prior to expiry; base salary $300,000 (subject to increases) .
• Benefits: Additional $500,000 life insurance payable to spouse/beneficiary; company-paid family health insurance; supplemental REBA benefit of $750,000 vesting over 15 years .
• Severance (non‑CIC): If involuntary termination without cause or resignation for “good reason,” lump sum equal to 12 months base salary plus up to 12 months continued health coverage, subject to release .
• Change-in-Control (CIC): If terminated without cause or for good reason on the effective date or within 30 days after a CIC, lump sum equal to 36 months base salary (greater of base at CIC or termination) plus up to 36 months continued health coverage .
• Death: Salary continuation for 12 weeks and continued family health coverage for 12 weeks .
• Clawback: Company policy to recoup incentive compensation in case of material restatement (three-year lookback) ; broader Nasdaq Rule 5608-compliant clawback policy adopted Sept 27, 2023 and filed with 2024 Form 10‑K .

Board Governance

• Board Service: Director, Catalyst Bancorp and Catalyst Bank; CEO; not listed as a member of Audit, Compensation, or Nominating committees in proxy matrices .
• Independence: Majority independent; only CEO is non‑independent; Chair is independent (Todd A. Kidder). Separation of Chair and CEO roles .
• Committees (chairs/members): Audit (Chair: Craig C. LeBouef; members: Kidder, Scruggins); Compensation (Chair: Scruggins; members: Kidder, Kleiser); Nominating & Corporate Governance (Chair: Kidder; members: Lafleur, LeBouef) .
• Meetings/Attendance: Board met nine times in 2024; no director attended fewer than 75% of meetings; all seven directors attended the 2024 annual meeting .
• Director Compensation (context): Employee directors’ compensation is reported in executive compensation; no additional director fees are paid for service on the Catalyst Bancorp board .

Related-Party Transactions and Insider Controls

• Ordinary-course insider lending to directors/executive officers totaled ~$1.8 million at Dec 31, 2024; made on substantially the same terms as to the public and subject to Regulation O; the company has formal policies governing insider lending .
• Insider Trading Policy: prohibits trading while in possession of MNPI, mandates blackout periods, pre-clearance, and addresses short sales and hedging; 10b5-1 plans permitted with pre-clearance .

Director Compensation (for Zanco as director)

• As an employee director, Mr. Zanco’s compensation is disclosed under executive compensation and not in the director compensation table; directors receive monthly retainers/committee fees at the bank level and no additional fees for Catalyst Bancorp board service .

Say-on-Pay & Shareholder Feedback

• Triennial non-binding say-on-pay vote scheduled; shareholders determined frequency in 2022; a say-on-pay resolution is on the 2025 ballot .

Compensation Structure Analysis

• Cash vs. equity mix: 2024 compensation comprised salary ($300k), discretionary cash bonus ($30k), and “all other” ($106,997); no new stock or option grants reported for 2024 in the SCT; large equity grants were made in 2022, now vesting 20% annually .
• Performance linkage: No written bonus plan; 2024 bonuses paid on a discretionary basis, suggesting limited formulaic pay-for-performance linkage .
• Equity design: Time-vested RSUs and options; options currently out-of-the-money at 2024 year-end reference price, increasing retention but limiting near-term realizable value .
• Shareholder protections: Clawback policy in place; independent Compensation Committee; no committee member is a current/former officer or employee .

Risk Indicators & Red Flags

• Tax gross-ups: 2024 “all other” includes reimbursement of taxes related to the REBA ($15,385) .
• Discretionary bonuses: Absence of a formal, metric-based incentive plan could weaken pay-performance alignment .
• Concentration/pledging: No disclosure of share pledging by Mr. Zanco in cited documents; insider policy controls hedging/short sales but does not explicitly address pledging in the excerpts cited .
• Governance mitigants: Independent Chair, majority independent board, separation of Chair/CEO, and clawback policy .

Investment Implications

• Alignment and retention: Significant unvested RSUs (12,696) and unvested options (31,740) vesting through 2027 promote retention; options’ out-of-the-money status at the 2024 reference price reduces near-term monetization, potentially tempering selling pressure .
• Pay-for-performance: Discretionary bonus framework and lack of disclosed performance metrics reduce transparency of incentive alignment; however, presence of clawback and independent comp oversight are positives .
• Protection economics: Non‑CIC severance (1x salary + 12 months benefits) is modest for a CEO; CIC benefits (3x salary + 36 months benefits) are robust and triggered upon termination without cause/for good reason in connection with a change in control, implying meaningful deal-related retention and potential cost considerations in M&A scenarios .
• Governance quality: Board independence, separated leadership structure, attendance, and committee composition support oversight quality; as CEO and director (not Chair), dual-role concerns are mitigated by an independent Chair and committee structure .

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