David M. Lobach, Jr.
About David M. Lobach, Jr.
David M. Lobach, Jr., 75, is Chairman, President and CEO of Embassy Bancorp, Inc. and Embassy Bank; he has served as CEO of the Bank since 2001, CEO of the Company since 2008, and Chairman since 2009, and was a co‑founder of the Bank . Under his leadership, the Company emphasizes efficiency and productivity; management cites growth from $0 to over $1.7 billion in assets over ~16 years with minimal dilution, and 15 consecutive years of dividend increases, supported by a board/management stake of ~29% of shares outstanding . Compensation decisions emphasize efficiency ratio and employee productivity ratios over pre‑set annual metrics, with bonuses determined on a discretionary basis .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Embassy Bancorp, Inc. / Embassy Bank | Chairman; President & CEO (Company); President & CEO (Bank); Co‑founder | Bank CEO since 2001; Company CEO since 2008; Chairman since 2009 | Led growth to >$1.7B assets with minimal dilution; relationship banking model, strong credit focus |
| Ambassador Bank | EVP & COO | Prior to 2001 | Senior operating leadership experience at a regional bank |
| First Valley Bank | Various leadership roles; private banking, commercial services, corporate BD, consumer lending, holding company | 19‑year tenure (earlier career) | Broad operating scope across key banking functions |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| St. Luke’s Hospital Network | Director (prior Chair) | Current (as of proxy) | Regional healthcare governance and community ties |
| Lehigh Carbon Community College Foundation | Director | Current | Community/education engagement |
| Bethlehem Area Vocational Technical School | Advisory Board Member | Current | Workforce development insight |
| Federal Reserve Bank of Philadelphia | Advisory Council Member | Former | Macro/regulatory perspective |
| Academic programs (Lehigh, Dickinson, Rutgers) | Instructor (various programs) | Former | Banking/business education experience |
Fixed Compensation
| Component | 2023 | 2024 | Notes |
|---|---|---|---|
| Base Salary ($) | 771,087 | 771,087 | 2025 current salary remains $771,087 |
| Target Bonus (% of salary) | Up to 30% | Up to 30% | Discretionary, not tied to pre‑set annual metrics |
| Actual Bonus ($) | 77,109 | 104,100 | Executives voluntarily took no pay raises in 2023–2024; 2023 bonuses reduced 50% to support broader team |
| All Other Compensation ($) | 53,394 | 48,346 | Includes 401(k) match, life insurance; personal use of company vehicle |
Performance Compensation
- Incentive philosophy and performance linkage: Annual bonuses are discretionary; the Board emphasizes efficiency ratio and employee productivity ratios (assets/employee, loans/employee, deposits/employee, net income/employee) rather than pre‑set annual performance criteria .
| Incentive Type | Metric(s) | Weighting | Target | Actual/Payout | Vesting/Terms |
|---|---|---|---|---|---|
| Annual Cash Bonus | Discretionary; informed by Company performance, budget, individual performance | N/A | N/A | 2024: $104,100; 2023: $77,109 | Cash, annual |
| Restricted Stock (Contractual) | Annual award ≥8% of salary | N/A | ≥8% of base salary | 12/13/2024 grants for 2023 services ($61,686.93) and 2024 services ($19,277.17) | 3‑year ratable vesting on each anniversary; automatic vesting upon change in control per SIP |
| Stock Options/PSUs | Not used | — | — | No option awards in 2023; none outstanding/exercisable as of April 21, 2025 | — |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 533,308 shares (6.98% of outstanding) |
| Ownership Breakdown | Includes 13,154 shares jointly with spouse; 53,300 by spouse; 222 jointly with son; 957 as custodian under UGMA |
| Shares Pledged (RED FLAG) | 18,524 shares pledged as security |
| Options | None presently exercisable; none reported outstanding |
| Director Fees | Does not receive director compensation as a Director (CEO/Chair) |
| Board/Management Ownership | Board and executive management collectively ~29% beneficial ownership as of 2/28/2025 |
Employment Terms
| Term | Key Provisions |
|---|---|
| Agreement Term | 5‑year employment agreement beginning Jan 1, 2018 with automatic one‑year extensions |
| Base Salary | $771,087 (current 2025 annual salary) |
| Annual Bonus | Up to 30% of salary (discretionary) |
| Equity Awards | Annual restricted stock with fair value not less than 8% of salary; vests over ≥3 years |
| SERP | Annual retirement benefit of $283,096 (comprised of $140,000 to age 65 and $143,096 to age 70), payable monthly over 15 years upon retirement |
| Change‑in‑Control (CIC) | If, within two years after a CIC, termination by the Bank (other than for cause/disability) or resignation by the executive, lump sum of 5x base salary + bonus; continuation of health/fringe benefits for 5 years |
| CIC Tax Gross‑up | Yes—excise tax gross‑up to make executive whole after 4999 excise tax (not deductible to Company) |
| Award Acceleration | SIP awards vest automatically upon CIC |
| Clawback | Not disclosed in proxy excerpts reviewed |
| Non‑compete/Restrictive Covenants | Restrictive covenants prohibiting business relationships infringing on Bank’s operation as consideration for CIC benefits |
| Section 409A Timing | Payments (non‑short‑term deferrals) to “specified employees” delayed until first day of seventh month after termination |
Board Governance
| Topic | Detail |
|---|---|
| Roles | Combined Chairman, President & CEO since 2009 (Company/Bank) |
| Independence | Not independent (CEO/Chair); Board states all but three directors are independent—exceptions: Lobach, Lesavoy (legal services/Red Bird officer), Banko (Red Bird officer/branch landlord) |
| Lead Independent Director | None appointed |
| Committees | Personnel Committee (compensation committee functions): Banko, Englesson, Lesavoy (Chair), Lobach (abstains on NEO matters); no formal charter . Audit Committee: Boyer, Englesson (Chair), Pittman, Yurconic, Gates Smith; Lobach attends non‑voting; all voting members independent . |
| Meetings & Attendance | Board met 14 times in 2024; all directors attended 100% of Board/committee meetings except Banko (90%) |
| Director Compensation | Non‑employee directors receive cash and restricted stock; Lobach receives no director compensation |
| Nomination Process | No standing nominating committee; Personnel Committee reviews candidates; all directors must be shareholders |
| Shareholder Context | 2025 proxy includes advisory votes on say‑on‑pay, frequency (Board recommends 3 years), auditor ratification; Board recommends against a shareholder proposal to pursue a sale |
Director Compensation (for context; excludes Lobach)
| Director | Fees Earned/Paid in Cash ($) | Restricted Stock Awards ($) | All Other ($) | Total ($) |
|---|---|---|---|---|
| Example (Banko III) | 26,924 | 26,896 | 53 | 53,873 |
| Others (Boyer, Englesson, Pittman, Smith, Lesavoy, Yurconic) | 30,002 or 4 | 29,998 or 59,996 | immaterial | ~60,000 each |
| Note | Lobach did not receive director compensation |
Company Performance Context (compensation-relevant)
| Measure | Company vs Peers |
|---|---|
| Net Overhead (2024) | 1.36% vs peer average 1.84% (PA banks $100M–$5B assets) |
| Salary Expense as % Avg Assets (2024) | Peers have 61% greater overall salary expense as % of average assets than Company |
| Dividends | 15 consecutive years of increases |
| Ownership Alignment | Board and management ~28.99% beneficial ownership as of Feb 28, 2025 |
Compensation Structure Analysis
- Mix and discretion: Heavy salary component; bonuses are discretionary and not tied to pre‑set annual metrics, which reduces risk‑taking incentives but weakens explicit pay‑for‑performance linkage .
- Equity design: Contractual RSU grants ≥8% of salary with 3‑year vesting; automatic vesting on CIC increases potential acceleration value .
- Peer benchmarking: The Board references internal efficiency and productivity ratios and peer salary/asset comparisons; no outside compensation consultant retained in 2024 and Personnel Committee has no formal charter .
- Pay decisions in down years: Executives took no pay raises in 2023–2024 and reduced 2023 bonuses by 50% to support broad employee pay—positive internal alignment signal .
- Golden parachute provisions: 5x salary+bonus CIC payout with 5‑year benefits and 4999 excise tax gross‑up—shareholder‑unfriendly red flags that may pressure say‑on‑pay sentiment in event‑driven scenarios .
Risk Indicators & Red Flags
- Pledging: 18,524 shares pledged—introduces potential forced‑selling/hedging risk (alignment concern) .
- CIC Tax Gross‑up: Company will gross‑up 4999 excise tax on golden parachute—shareholder‑unfriendly .
- Governance: Combined CEO/Chair with no Lead Independent Director—oversight independence concern .
- Award Acceleration: Automatic vesting upon CIC increases payout sensitivity to deal outcomes .
- Discretionary Bonus Design: Lack of pre‑set performance goals may reduce pay‑performance transparency .
Equity Ownership & Alignment (detail)
| Ownership Item | Amount |
|---|---|
| Beneficial Ownership | 533,308 shares (6.98%) |
| Pledged | 18,524 shares |
| Breakdown | Joint with spouse 13,154; spouse 53,300; joint with son 222; custodian 957 |
| Options | None presently exercisable; no option awards in 2023 |
Employment Terms (detail)
| Provision | Term |
|---|---|
| Term & Renewal | 5 years from Jan 1, 2018; auto 1‑year renewals |
| CIC Definition & Trigger | 409A definition; benefits if within two years post‑CIC employment is terminated by Bank (other than cause/disability) or by executive (resignation) |
| CIC Cash Multiple | 5x salary + bonus (lump sum) |
| Benefits Continuation | Health and fringe benefits for 5 years post‑termination |
| Excise Tax | Full gross‑up to make whole after 4999 excise tax; not deductible to Company |
| SERP | $283,096 annual benefit for 15 years (monthly), split between accruals to age 65 ($140,000) and to age 70 ($143,096) |
| RSU Vesting | ≥3 years; 12/13/2024 grants vest annually over 3 years |
| RSU Contractual Value | Annual award ≥8% of salary |
| Plan CIC Acceleration | SIP awards vest automatically upon CIC |
Board Service: History, Committees, Independence Implications
- Service history: Director and Chairman since 2009; President & CEO since 2008 (Company) and 2001 (Bank) .
- Committees: Serves on Personnel Committee (abstains on NEO matters); attends Audit Committee meetings in a non‑voting capacity .
- Independence: Classified as non‑independent; Board has not appointed a Lead Independent Director; combined CEO/Chair structure persists .
- Attendance: Board met 14 times in 2024; full attendance by all directors except one (Banko at 90%)—implies Lobach was at 100% .
- Dual‑role implications: Concentration of authority (CEO + Chair) without a Lead Independent Director may reduce independent oversight; however, high insider ownership (~29% aggregate Board/management) aligns economic interests with shareholders .
Investment Implications
- Alignment vs risk: Significant personal stake (6.98%) is alignment‑positive, but pledged shares (18,524) introduce potential selling pressure under adverse conditions; absence of a clawback and use of bonus discretion reduce performance accountability .
- Event‑driven sensitivities: Generous CIC economics (5x salary+bonus, 5 years of benefits) plus full excise tax gross‑up and automatic award vesting create substantial deal‑related payouts that could influence negotiating stances and dilute buyer economics; a “resignation within two years post‑CIC” trigger heightens payout probability .
- Governance posture: Combined CEO/Chair with no Lead Independent Director is a structural red flag for some investors; however, the board cites long‑termism, strong efficiency/productivity, low overhead vs peers, and sustained dividend growth as offsetting strengths .
- Compensation trajectory: Base salary held flat in 2023–2024, with reduced bonuses in 2023 to support broader team pay—a signal of internal alignment; restricted stock awards have resumed with multi‑year vesting, modest size (≥8% of salary), and CIC acceleration .
- Monitoring list: Track any Form 4 activity for selling/pledge changes; watch say‑on‑pay outcomes given CIC gross‑ups; assess progress on establishing a Lead Independent Director and any evolution toward objective performance metrics in annual incentives .