Martin K. Birmingham
About Martin K. Birmingham
Martin K. Birmingham, age 58, has served as President & CEO of Financial Institutions, Inc. (FISI) and Five Star Bank since 2013 and has been a director since 2013 . He holds a BA from St. Lawrence University, an MBA from the University of Rochester Simon Business School, and an honorary doctorate from St. John Fisher College . In 2024, FISI reported a net loss of $41.6M driven by a strategic investment securities restructuring and litigation/fraud costs; diluted EPS was -$2.75, net interest income was $163.6M, net interest margin 2.86%, and PPNI (adjusted) was $54.5M; TSR value of a $100 investment was $109.51 for 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Financial Institutions, Inc. / Five Star Bank | President & CEO | 2013–present | Led strategic refocus on core community banking, capital raise, and balance sheet restructuring . |
| Five Star Bank | President & Chief of Community Banking | 2012–2013 | Oversight of community banking operations . |
| Five Star Bank | Commercial Banking Executive & Rochester Region President | 2005–2012 | Regional growth and commercial banking leadership . |
| The National Bank of Geneva (former subsidiary) | President, CEO & Director | 2005 | Pre-consolidation leadership of subsidiary . |
| Bank of America | President, Rochester Region | 2004–2005 | Regional market leadership . |
| Fleet Financial Group / Bank of America | Progressive corporate banking roles incl. Regional President | 1989–2004 | Multi-decade corporate banking experience . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| New York Bankers Association | Chair and Past Treasurer | Current | Industry leadership . |
| AAA of Central and Western New York, Inc. | Past Chair and Past Vice Chair | Current/Past | Nonprofit civic engagement . |
| Greater Rochester Chamber of Commerce | Director | Current | Community/business leadership . |
| MCC Foundation; ROC2025; The Business Council of NY State; University of Rochester Medical Center | Director/Member | Current | Multiple civic/education boards . |
| St. John Fisher College | Past Chair | Past | Higher education governance . |
| Multiple nonprofits (Strong Museum, St. Ann’s Foundation, United Way, Red Cross, Seneca Park Zoo, YMCA) | Board roles | Past | Broad civic involvement . |
Fixed Compensation
| Item | 2024 | Notes |
|---|---|---|
| Base Salary | $738,589 | +3% merit increase in March 2024 . |
| Target Bonus % (EIP) | 50% of salary | Threshold 25%, max 75% . |
| Actual Bonus Paid (EIP) | $288,050 | Reflects 2024 EIP payout and individual modifier . |
| Perquisites – Vehicle Stipend | $12,000 | $1,000/month . |
| Perquisites – Club Memberships | $10,014 | Business development/community engagement . |
| Group Term Life Insurance (taxable) | $2,322 | 2024 value . |
Performance Compensation
Annual Cash Incentive (EIP) – Structure and 2024 Outcomes
| Metric | Weight | Threshold | Target | Maximum | Actual/Result | Weighted Contribution |
|---|---|---|---|---|---|---|
| Pre-Provision Net Income (PPNI) ($MM) | 40% | $44.87 | $59.83 | $68.80 | $54.47 (normalized) | 32.8% |
| Total Loan Growth (%) | 20% | 0.94% | 1.45% | 1.81% | 0.41% | 0.0% |
| Non-Public Deposit Growth (%) | 20% | 4.22% | 6.49% | 8.11% | 3.92% | 0.0% |
| Net Charge-off Ratio (%) | 20% | 0.43% | 0.34% | 0.26% | 0.20% | 30.0% |
- Committee normalized PPNI to exclude the after-tax securities loss and litigation settlement; EIP pool funded at 62.8% of target; CEO’s EIP earned was 39.0% of base salary before individual modifier and totaled $288,050 .
Long-Term Incentive (LTIP) – 2024 Grants and Design
| Component | Weight vs Salary | Grant Units | Vesting/Performance |
|---|---|---|---|
| Time-based RSUs | 30% of salary | 11,614 | Cliff vest 3 years from 3/7/2024 (3/7/2027), continuous employment required . |
| PSUs – Relative ROAE | 30% of salary target | 5,807 target (1, 1.5x max) | 3-year (1/1/2024–12/31/2026); payout based on percentile vs NASDAQ Bank Index; threshold 30th, target 50th, max 80th; Tier 1 capital gateway met (8.5% threshold; actual 11.21%) . |
| PSUs – ROAA (absolute) | 30% of salary target | 5,807 target | 3-year average ROAA goals: threshold 0.849%, target 0.884%, max 0.920%; same gateway and employment conditions . |
PSU outcomes for prior grants: 2022 PSUs paid 0% for both Relative ROAE and ROAA given 2024 restructuring impacts (Relative ROAE ranked 13th percentile; ROAA 0.48%) .
Equity Ownership & Alignment
| Category | Amount | Notes |
|---|---|---|
| Beneficial ownership (common shares) | 152,677 | As of April 2, 2025 . |
| Shares outstanding (common) | 20,109,712 | As of April 2, 2025 . |
| Ownership as % of common | ~0.76% (152,677 / 20,109,712) | Calculated from disclosed counts. |
| Unvested RSUs | 28,642 | Vesting tranches: 6,356 (3/16/2025), 10,672 (3/21/2026), 11,614 (3/7/2027) . |
| Unvested PSUs (at threshold count) | 12,730 | Company projects below-threshold (0%) vesting for PSUs granted in 2022–2024 given 2024 restructuring impact . |
| Market value of unvested RSUs | $781,640 | Based on $27.29 closing price at 12/31/2024 . |
| Stock options held | None | As of 12/31/2024 for all directors/EMC . |
| Ownership guidelines | 3x annual base salary for CEO | All directors and EMC met requirements in 2024 . |
| Hedging/pledging | Prohibited | Policy bans pledging, margin holding, and derivatives/hedging . |
Insider selling pressure assessment:
- Near-term RSU vesting schedule: 6,356 shares (Mar 2025), 10,672 (Mar 2026), 11,614 (Mar 2027) adds periodic supply, but absence of options and PSU projections to 0% reduce incremental selling catalysts .
- Hedging/pledging ban and ownership policy elevate alignment and limit leverage-related forced sales .
Employment Terms
| Term | Provision | Notes |
|---|---|---|
| Agreement term | 3-year initial; auto-renews 1-year unless notice | Executive agreements for CEO and NEOs . |
| Change-in-control structure | Double trigger | CIC + qualifying termination required for payout . |
| Cash severance multiple | 2.99x (salary + 3-year avg bonus) | Lump sum within 10 days of termination . |
| Health benefits continuation | Up to 36 months | Post-termination coverage . |
| Equity acceleration | RSUs/PSUs vest; PSUs at greater of target or actual through termination date | Subject to gateway and plan terms . |
| Non-compete / Non-solicit | 24 months post-qualifying termination (CEO) | 24 months for CEO; shorter durations for other NEOs . |
| Section 280G cutback | Yes | Payments capped below excise tax thresholds . |
Potential payments illustration (12/31/2024 assumptions):
- Total for CEO upon CIC and qualifying termination: $4,984,834 (pay continuation $3,364,748; equity vesting $1,563,280; health $56,806) .
- Death/disability equity vesting value: $1,563,280 .
Board Governance
- Structure: Separate Chair (Susan R. Holliday) and CEO; the Board believes separation supports focus and independent oversight . CEO is the sole management director; all other directors are independent under Nasdaq/SEC standards .
- Committee memberships: Six standing committees (Audit; Executive; Management Development & Compensation; Nominating & Governance; Risk Oversight; Technology & Data), all comprised of independent directors; CEO attends by invitation and is excused as appropriate .
- Meetings/attendance: Board met 12 times in 2024; all directors attended >75% of Board and committee meetings; Annual meeting attendance: all directors .
Compensation & Incentives Program (Design Features)
- Clawback: SEC/Nasdaq-compliant clawback policy for incentive-based pay over prior three completed fiscal years upon a material restatement; no clawbacks to date .
- Risk management: CRO certifies incentives; gateway capital requirements baked into EIP and PSUs; prohibition on hedging/pledging/margin accounts .
- Pay-for-performance: Significant variable pay via EIP and PSUs; 2024 PSUs projected to 0% given restructuring impact; EIP normalized to exclude extraordinary items .
Performance & Track Record
| Measure | 2024 | 2023 |
|---|---|---|
| Net (loss)/income ($000s) | $(41,646) | $50,264 |
| Diluted EPS | $(2.75) | $3.15 |
| Net interest income ($MM) | $163.6 | $165.7 (implied: stated “$2.1M lower than 2023”) |
| Net interest margin (%) | 2.86 | 2.94 (8 bps lower YOY) |
| Noninterest income ($MM) | $(46.7) | $48.2 |
| PPNI Adjusted ($000s) | $54,470 | $60,440 |
| TSR (Value of $100 investment) | $109.51 | $80.80 |
Strategic actions: Sale of insurance subsidiary (approx. $27.0M proceeds; after-tax gain $11.2M), wind-down of Banking-as-a-Service, and oversubscribed equity offering (net proceeds ~$108.6M) followed by securities portfolio restructuring (sold $653.5M AFS, pre-tax loss $100.2M; reinvested at higher yields) to improve forward NII/NIM .
Compensation Peer Group (Benchmarking)
| Peer Group Used for 2024 Decisions | Peer Group Updated for 2025 Decisions |
|---|---|
| 1st Source; Arrow; Bar Harbor; Camden; CNB; Community Trust Bancorp; First Commonwealth; First Financial; German American; Horizon; Independent Bank; Lakeland; Midland States; Park National; Peoples Bancorp; QCR; S&T; Stock Yards; Tompkins; Washington Trust . | Arrow; Bar Harbor; Camden; Civista; CNB; Farmers National; First Busey; First Commonwealth; First Financial; German American; Horizon; Independent Bank; Mercantile Bank; Midland States; Park National; Peoples Bancorp; Premier Financial; S&T; Tompkins; Washington Trust . |
MD&C Committee uses peer analysis and independent consultant (Aon) but does not target a specific percentile across elements; design emphasizes market-competitive ranges and at-risk pay .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay support: 88.5% “FOR” .
- Ongoing outreach: More than two dozen largest shareholders representing >50% of shares engaged in late 2024; feedback incorporated into practices .
Related Party Transactions and Red Flags
- Related party lending conforms to regulatory standards; no material related-party transactions >$120,000 in 2024 beyond normal compensation and disclosed items .
- Hedging/pledging strictly prohibited; no stock options outstanding at YE 2024; gateway capital requirements; double-trigger CIC; clawback adopted; dividends not paid on unvested equity .
Expertise & Qualifications
- Education: BA (St. Lawrence), MBA (Simon), Honorary Doctorate (St. John Fisher) .
- Industry leadership: NY Bankers Association Chair; multiple civic boards .
- Board skills: Matrix lists Birmingham with Financial Expert, Financial Services Industry, Public Board, Risk Oversight, and M&A experience .
Equity Vesting Schedule (Key Dates)
| Date | Shares Vesting (RSUs) | Notes |
|---|---|---|
| Mar 16, 2025 | 6,356 | From prior grants . |
| Mar 21, 2026 | 10,672 | From 2023 grants . |
| Mar 7, 2027 | 11,614 | 2024 RSUs . |
Investment Implications
- Alignment: CEO holds ~0.76% of common shares and meets 3x salary ownership guideline; no options and hedging/pledging prohibited—reducing leverage/forced-sale risk and signaling alignment .
- Near-term supply: RSU vesting cadence adds measured supply; PSUs for 2022–2024 projected at 0% reduces additional vesting-related selling pressure absent performance recovery .
- Pay-for-performance: 2024 EIP normalized for extraordinary items—supports retention while maintaining performance orientation; future PSU trajectory will be sensitive to ROAA and relative ROAE improvements post-securities restructuring .
- CIC economics: 2.99x cash multiple plus equity acceleration and 36 months benefits under double-trigger structure could affect negotiations in strategic transactions; 280G cutbacks mitigate excise tax exposures .
- Execution risk: 2024 loss tied to deliberate portfolio actions; management expects higher NII/NIM in 2025 from reinvestment, but PSU metrics and shareholder returns hinge on sustained credit discipline, deposit mix improvements, and expense controls .