Glen E. Shu
Executive Vice President, President of Specialty Finance Group and President of Bay View Funding at HERITAGE COMMERCE
Executive
About Glen E. Shu
Executive Vice President; President of Heritage Bank of Commerce’s Specialty Finance Group and President of Bay View Funding since October 2019. Age 56; B.S. Finance, San Jose State University; 30+ years in financial services with prior roles at Bay View Commercial Finance Group (factoring), KBK Financial, and Concord Growth (1992–1998) . In 2024, Heritage reported net income of $40.5M ($0.66 diluted EPS), deposits +10% YoY, loans +4%; NIM 3.28% amid higher funding costs, demonstrating disciplined credit and strong liquidity—context for incentive metric selection (ROATCE, pre-tax income, asset quality, growth) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Bay View Commercial Finance Group (division of Bay View Bank) | EVP, Underwriting & Operations (factoring) | Not disclosed | Led factoring underwriting/operations; expertise in higher-risk structured finance |
| KBK Financial | Various roles | 1992–1998 | Commercial finance experience; portfolio growth and credit skills |
| Concord Growth Corporation | Various roles | 1992–1998 | Asset-based lending execution; deal sourcing and risk management |
External Roles
None disclosed in company filings .
Fixed Compensation
| Component | 2023 | 2024 | Notes |
|---|---|---|---|
| Base Salary ($) | $352,879 | $373,258 (amended agreement effective Feb 1, 2024) | Annual review by CEO and Compensation Committee |
| Auto Allowance ($/month) | $800 | $800 | Perquisite to support business duties |
| 401(k) Company Match (max $) | $3,000 | $3,000 | Broad-based plan participation |
| Life Insurance Coverage | 2× salary (capped at $700,000) | 2× salary (capped at $700,000) | Company-paid |
| Long-Term Care Insurance | Lifetime benefit up to $72,000 | Lifetime benefit up to $72,000 | Company-paid |
| All Other Compensation ($) | $23,836 | Not disclosed | Includes perquisites/imputed insurance values |
Performance Compensation
Cash Incentive – Bay View Funding (BVF) Division Plan (FY2023)
| Metric | Weighting | Target | Actual | Payout ($) | Vesting |
|---|---|---|---|---|---|
| BVF EBITDA vs Budget | 100% | 90%+ of budget | 82.27% of budget | $130,157 | Cash; paid Q1 2024 |
Notes:
- Target bonus opportunity: 50% of base salary under the BVF Non-BDO Incentive Plan (metric: quantitative EBITDA) .
- Glen transitioned to the Company-wide Executive Officer Cash Incentive Program beginning 2024 (company scorecard + differentiated qualitative goals) .
Equity Awards (Granted May 2, 2023 under 2013/2023 Equity Plans)
| Award Type | % of Base Salary | Shares | Grant Date Fair Value ($) | Vesting |
|---|---|---|---|---|
| RSUs | 45% | 10,929 | $80,984 | Ratable over 3 years; accelerates on change-in-control, death, disability |
| PRSUs | 45% | 10,929 | $80,984 | Cliff after 3-year performance period contingent on relative ROATCE |
PRSU Performance Mechanics (2023 Cohort Performance Period 2024–2026)
| ROATCE Percentile vs Peer Group | Vesting Outcome |
|---|---|
| 35th percentile (Threshold) | 50% of PRSUs vest |
| 50th percentile (Target) | 100% of PRSUs vest |
| 75th percentile (Maximum) | 150% of PRSUs vest (straight-line interpolation applies) |
Equity Ownership & Alignment
| Item | Status/Amount | Date/Context |
|---|---|---|
| Total Beneficial Ownership (Shares) | 97,251 | As of Feb 29, 2024 |
| Exercisable Options (within 60 days) | 28,000 | As of Feb 29, 2024 |
| Unvested Restricted Stock/Units (Shares) | 12,053 | As of Feb 29, 2024 |
| Ownership as % of Shares Outstanding | <1% (company denotes “*” = less than 1%) | As of Feb 29, 2024 |
| Stock Ownership Guidelines | Executives: 1× base salary; retain 50% of shares post-compliance; options/unvested PSUs excluded | |
| Compliance with Guidelines | All executives in compliance (2023) ; all executives in compliance (2024) | |
| Pledging/Hedging | Prohibited for officers/directors |
Outstanding equity details (12/31/2023 snapshot):
- Options: 5,000 @ $10.34 expiring 5/3/2026; 8,000 @ $9.36 expiring 4/28/2025; 15,000 @ $8.07 expiring 11/1/2024 .
- Unvested awards valued at $9.38/sh for 12/31/2024 market value calculations (company methodology; used in 2024 tables) .
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment Agreement | Amended and restated Feb 1, 2024; base salary $373,258; eligibility for Executive Officer Cash Incentive Program; perquisites and insurance as above |
| Severance – Change in Control | Cash severance $863,007; health insurance premiums $105,480; accelerated vesting of unvested equity $336,397; total illustrative package $1,304,884 (as of 12/31/2023 scenario) |
| Severance – Involuntary (Without Cause) | Cash severance $503,067; health insurance premiums $52,740; total illustrative $555,807 |
| Equity Treatment | RSUs/PRSUs accelerate on change-in-control, death, disability (single-trigger equity vesting) |
| Clawback | Incentive Compensation Recovery policy applicable to senior management (restatement, “no fault” recovery), compliant with Nasdaq/SEC rules |
| Insider Trading | Robust insider trading policy; prohibitions on hedging, pledging, margin purchases |
| Deferred/Retirement Programs | Not listed as a SERP participant; SERP participants disclosed as CEO Jones, CFO McGovern, CRO Reuter |
Performance & Track Record
- 2023 BVF performance was below quantitative EBITDA threshold (82.27% vs 90%), but Glen received $130,157 recognizing leadership across BVF, Specialty Finance, SBA, and interim stewardship of HOA; qualitative achievements included sales campaign redesign, workforce efficiency gains, and DEIB/Core Values contributions .
- Company context: net income $64.4M in 2023 (second-best year), strong asset quality; advisory “Say-on-Pay” support at ~96% (2023) and 97.2% (2024) indicating shareholder endorsement of pay program design and performance linkage .
Compensation Structure Analysis
- Shift toward balanced incentive design: Glen moved from division EBITDA-only plan (BVF) to company-wide Executive Officer Cash Incentive Program in 2024, increasing alignment with enterprise metrics and risk controls (company scorecard + qualitative goals; capital gate) .
- Long-term equity mix: Introduction of PRSUs in 2023 linked to relative ROATCE (50% of LTI value) strengthens pay-for-performance; RSUs (remaining 50%) support retention and ownership guidelines .
- Governance posture: Single-trigger equity vesting on change-of-control is prevalent in peer banks (as disclosed); clawback, anti-hedging/pledging, and ownership guidelines mitigate misalignment risks .
Director Governance, Peer Group, and Say-on-Pay (context)
- Compensation peer group includes Banc of California, Heritage Financial, TriCo, Westamerica, etc. (assets $2.4B–$13B), with local wage adjustments applied for San Jose market .
- Advisory vote support: 96% (2023) and 97.2% (2024) on NEO compensation .
Investment Implications
- Alignment improving: Transition to enterprise-wide cash plan and PRSU-based LTI reduces silo risk and better ties Glen’s incentives to shareholder value (ROATCE vs peers) .
- Retention vs selling pressure: Meaningful unvested RSUs/PRSUs and ongoing vesting schedules suggest continued retention incentives; anti-hedging/pledging policy curbs misalignment. Ownership <1% but includes 97,251 shares and 28,000 exercisable options, indicating skin-in-the-game without concentration risk .
- Change-of-control economics: Single-trigger equity acceleration plus double-trigger cash/benefits produce substantial payouts ($1.30M in illustrative CoC scenario), which can influence behavior during strategic events; clawback and capital gates provide counterbalances .
- Execution risk: Historical division-focused metrics led to sub-threshold BVF EBITDA in 2023 (82.27% vs 90% target), but qualitative deliverables and expanded 2024 responsibilities mitigate concerns; enterprise diversification of metrics should dampen volatility in incentive outcomes .