Troy Harper
About Troy Harper
Troy D. Harper, age 57, is Executive Vice President and Chief Administrative Officer at Farmers & Merchants Bancorp (FMCB), joining effective December 9, 2024 and assuming the CAO role on January 1, 2025 . He brings 30+ years of operational experience in financial services, including 20+ years in commercial and retail banking; prior roles include EVP, Chief Information & Operations Officer at HomeStreet Bank, and positions at the FDIC, Pierce Commercial Bank, CGI Group, and Deloitte Consulting, with a B.S. in finance and accounting management from Northeastern University . Company performance metrics central to pay decisions include net income, ROAE, ROAA, and TSR; FMCB reported net income of $75.1M (2022), $88.3M (2023), and $88.5M (2024), with ROAE of 16.04% (2022) and 17.05% (2023–2024), ROAA of 1.41% (2022) and 1.68% (2023–2024), and TSR value-of-$100 invested of $170.09 (2022), $165.09 (2023), and $150.84 (2024) .
Company performance context (used in compensation decisions):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Net Income ($USD) | $75,090,000 | $88,314,000 | $88,457,000 |
| Return on Average Equity (%) | 16.04% | 17.05% | 17.05% |
| Return on Average Assets (%) | 1.41% | 1.68% | 1.68% |
| TSR – Value of $100 Invested | $170.09 | $165.09 | $150.84 |
| Peer Group TSR – S&P 600 Regional Banks | $119.53 | $130.34 | $123.92 |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| HomeStreet Bank | EVP, Chief Information & Operations Officer | Not disclosed | Led deposit, loan, treasury management operations, IT, corporate real estate, and security |
| FDIC | Banking/operational role | Not disclosed | Federal regulatory and operations experience |
| Pierce Commercial Bank | Banking/operational role | Not disclosed | Commercial bank operations and process management |
| CGI Group | Operational role | Not disclosed | Technology-enabled operations and consulting exposure |
| Deloitte Consulting | Consulting role | Not disclosed | Process improvement and strategic operations advisory |
| Northeastern University | B.S. in Finance & Accounting Management | Not applicable | Foundational finance/accounting training |
Fixed Compensation
FMCB executive pay program comprises: annual base salary paid monthly, annual performance-based cash bonus, and qualified/non-qualified retirement plans; historically no equity grants before the 2025 Plan transition . Bonuses operate under broad guidelines with no hard targets or weightings, relying on net income and relative performance with NEO bonus guideline ranges currently 0–125% of base salary (CEO 0–200%); Board discretion was not used to exceed guidelines in 2024 . Employment agreements are typically two-year initial terms with automatic two-year renewals, covering base salary, bonus participation, non-qualified retirement/deferred plans, company automobile/allowance, and certain insurance benefits .
| Component | Structure/Terms | Notes |
|---|---|---|
| Base Salary | Paid monthly; set by Board using comparative industry data and performance | Discretionary merit adjustments based on individual/company performance |
| Annual Bonus | Executive Management Incentive Compensation Plan; 0–125% of base salary guideline for non-CEO NEOs | No hard targets/weightings; driven by net income and relative performance; Board did not exceed guidelines in 2024 |
| Retirement/Deferred | Participation in qualified and non-qualified plans | Executive Retirement Plan terminated effective Nov 29, 2024; distributions per 409A within 12–24 months |
| Perquisites | Company car or allowance; certain insurance benefits | Disclosed as part of “All Other Compensation” categories for NEOs |
Performance Compensation
FMCB’s bonus design is deliberately non-formulaic; performance goals are evaluated holistically rather than via fixed weights or targets, with emphasis on net income and profitability relative to peers . The company terminated its legacy non-qualified Executive Retirement Plan and adopted equity-based compensation via a Restricted Stock Retirement Plan effective for 2025 grants .
| Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Net Income | Not weighted; qualitative | No hard target | Company achieved $88.5M in 2024 | Within discretion up to guideline cap | Cash bonus (current year expense) |
| ROAE / ROAA | Not weighted; qualitative | No hard target | ROAE 17.05%, ROAA 1.68% in 2024 | Within discretion up to guideline cap | Cash bonus |
| TSR (context) | Informational (pay-versus-performance disclosure) | Not target-linked | TSR value-of-$100 was $150.84 in 2024 | Informational | Not applicable |
| 2025 Restricted Stock Awards | Ratable vesting over 2 or 3 years from commencement date | Not applicable | Grants made Feb 3, 2025 to NEOs | RSAs awarded | Equity vests per schedule; accelerates on death/disability/CoC; committee may accelerate upon retirement |
Equity Ownership & Alignment
As of December 31, 2024, Troy D. Harper had no reported beneficial ownership of FMCB common stock; beneficial ownership entries show “-” with percent of class denoted “*” (under 1%) . The company indicates none of the shares reported in the table are pledged and states it does not have an anti-hedging or anti-pledging policy . Equity awards under the 2025 Restricted Stock Retirement Plan were granted to NEOs on February 3, 2025; awards vest ratably over two or three years and accelerate upon death, disability, change-of-control, or, at committee discretion, upon retirement; unvested shares are restricted from sale, transfer, assignment, or pledging and are forfeited upon most other terminations .
| Ownership Item | As of 12/31/2024 | Notes |
|---|---|---|
| Shares Beneficially Owned | — | “*” denotes under 1% of class |
| Percent of Class | Under 1% (“*”) | No person >5% holder; Trustee holds aggregate 68,524 shares for directors/officers |
| Pledging/Hedging | None pledged; no anti-hedging/anti-pledging policy | Company-level statement in ownership table notes |
| 2025 Equity Awards | RSAs granted Feb 3, 2025 to NEOs | 2- or 3-year ratable vesting; acceleration on death/disability/CoC/retirement discretion |
Employment Terms
Harper serves at the discretion of the Board as an executive officer; FMCB utilizes employment agreements for NEOs with two-year initial terms and automatic two-year renewals, covering base salary, bonus participation, deferred/retirement plan participation, auto/allowance, and insurance . Severance and change-of-control terms are robust, including multiples of compensation, COBRA premiums, and 280G tax gross-ups.
| Provision | Term | Detail |
|---|---|---|
| Employment Agreement | Two-year initial; auto-renews for successive two-year terms | Applies to NEOs; Board sets salary/bonus participation; perqs include company car/allowance and insurance |
| Termination Without Cause / Good Reason | Lump sum between 12× monthly base to up to 2.0× highest Total annual compensation | Plus vested qualified/non-qualified balances; conditioned on non-announcement and general release |
| Change-of-Control (CoC) | Lump sum up to 2.0× highest Total annual compensation | Plus up to three years COBRA premiums (up to $187,000 per NEO), accelerated Executive Retirement Plan benefits, 280G excise tax gross-up, and for certain NEOs an additional $125,000–$250,000 or 0.25%–0.50% of total stockholder value; conditioned on non-compete/non-solicit and general release |
| Equity – CoC/Retirement/Death/Disability | Accelerated vesting | RSAs become fully vested upon death, disability, or CoC; Personnel Committee may accelerate upon retirement; otherwise unvested shares forfeited |
| Non-Qualified Executive Retirement Plan | Terminated Nov 29, 2024 | Distributions under 409A between 12–24 months post-termination; CoC benefits detailed; current-year contributions reflected in “All Other Compensation” |
| Garden Leave/Notice Period | No extension of “Service” by notice period or garden leave | RSA agreement specifies service termination mechanics; vesting may be adjusted per leave policies |
Related Party and Governance Notes
- No arrangements, family relationships, or related party transactions under Item 404(a) related to Harper’s appointment were disclosed; he will work closely with outgoing CAO Deborah Skinner through year-end to ensure transition .
- Personnel Committee members (Sanguinetti, Corum, Green) were determined independent under Nasdaq rules; certain committee members had ordinary course loans from the Bank under standard terms, exempt from SOX loan prohibitions .
Risk Indicators & Red Flags
- No anti-hedging/anti-pledging policy disclosed in the proxy’s ownership section; while none of the reported shares are pledged, the absence of policy is a governance red flag for alignment .
- CoC economics include 280G excise tax gross-ups and potential additional cash payments tied to transaction value ($125k–$250k or 0.25%–0.50%), which are generally considered shareholder-unfriendly and may weaken pay-for-performance optics .
- Equity awards accelerate fully on CoC, potentially misaligning retention incentives around transaction timing .
- Bonus program lacks hard targets or weightings, relying on subjective evaluation despite guidelines; while historically associated with strong performance, it can reduce transparency on pay-for-performance linkages .
Compensation Structure Analysis
- Structural shift: FMCB historically did not grant equity; with termination of the Executive Retirement Plan (Nov 29, 2024) and adoption of the 2025 Restricted Stock Retirement Plan, equity now enters the pay mix via RSAs with 2–3 year ratable vesting .
- Guaranteed vs at-risk pay: Bonuses are at-risk but non-formulaic; RSAs add deferred equity but accelerate on CoC/death/disability, limiting long-term retention effect in certain scenarios .
- Tax gross-ups: 280G excise tax gross-ups are explicitly provided under CoC—an investor-unfriendly feature that raises governance concerns .
Equity Ownership & Alignment Details
| Item | Detail |
|---|---|
| Beneficial Ownership (Harper) | No shares reported as of 12/31/2024; under 1% of class |
| Ownership Guidelines | Not disclosed for executives; company notes no anti-hedging/anti-pledging policy |
| RSAs Terms | 2- or 3-year ratable vesting from commencement; dividends on unvested shares credited but paid only upon vesting; unvested shares restricted from sale/transfer/assignment/pledge; forfeiture on most terminations; full acceleration on death/disability/CoC; committee discretion upon retirement |
Employment Terms (Expanded)
| Topic | Disclosure |
|---|---|
| Start Date | Joined FMCB Dec 9, 2024; assumed CAO role Jan 1, 2025 |
| Contract Term | Two-year initial with auto-renewing two-year terms |
| Severance Multiple | 12× monthly base up to 2.0× highest Total annual compensation (without cause/good reason) |
| CoC Multiple | Up to 2.0× highest Total annual compensation plus COBRA, gross-up, accelerated retirement benefits, and possible transaction-related cash |
| Non-Compete/Non-Solicit | Required to obtain CoC benefits (execution of agreement and general release) |
| Clawbacks | Not disclosed in proxy/8-Ks searched |
| Deferred Comp | Executive Retirement Plan terminated; distributions per 409A 12–24 months post-termination |
Investment Implications
- Alignment improving with equity: Transition from non-qualified retirement plan to RSAs adds equity-based at-risk pay for NEOs, enhancing long-term alignment versus the prior plan; however, full CoC acceleration and absence of anti-hedging/anti-pledging policy temper retention and alignment signals .
- Limited insider selling pressure near term: Harper reported no beneficial holdings as of 12/31/2024, and RSAs restrict transfer until vesting; vesting is ratable over 2–3 years, suggesting a gradual unlock rather than immediate sell pressure, subject to plan acceleration events .
- Pay-for-performance transparency risk: Bonuses lack defined weights/targets, relying on subjective evaluation despite guideline ranges tied to performance context (net income, ROAE/ROAA), which may challenge rigorous pay-for-performance assessments even amid strong company profitability .
- CoC economics and gross-ups: The inclusion of 280G gross-ups and potential transaction-based cash payments is shareholder-unfriendly and could create perceived misalignment if strategic alternatives emerge; monitor any RSAs granted amounts and future Form 4 filings to track ownership buildup and potential selling catalysts .
Not disclosed items: Specific base salary, target bonus %, actual bonus paid for Troy Harper; RSA grant share counts and vesting commencement date; ownership guidelines multiples; clawback policy; non-compete duration/scope; insider trades. These should be monitored in future proxy filings and Form 4s.