Kenneth Martinek
About Kenneth Martinek
Kenneth A. Martinek is Chairman and Chief Executive Officer of NorthEast Community Bancorp, Inc. and NorthEast Community Bank. He has served with the Bank since 1976, became CEO in 1991, was President from 1991–2013, has been a director since 1983, and has served as Board Chair since 2002; he was age 72 as of December 31, 2024 . 2024 operating performance metrics tied to his incentive plan included ROAA of 2.50%, Pre‑Tax, Pre‑Provision Net Income (PTPP NI) of $66.773 million, and an efficiency ratio of 37.00%, all exceeding plan stretch targets, which led to maximum bonus payouts; non‑performing loans were 0.00% at year‑end 2024 .
Revenue trend
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues ($USD) | 1,683,000 | 3,605,000* | 2,783,000* |
Values with an asterisk are retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| NorthEast Community Bancorp, Inc. | Chairman & Chief Executive Officer | 2006–present | Led the 2006 minority stock offering and the 2021 second‑step conversion/public offering . |
| NorthEast Community Bancorp, Inc. | President | 2006–Jan 2013 | Senior executive leadership across public company transition . |
| NorthEast Community Bank | Chief Executive Officer | 1991–present | Long‑tenured CEO; executed strategic capital transactions via holding company . |
| NorthEast Community Bank | President | 1991–Jan 2013 | Day‑to‑day leadership during growth phase . |
| NorthEast Community Bank | Director; Chairman of the Board | Director since 1983; Chair since 2002 | Board leadership and governance continuity . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No other public company directorships disclosed for Mr. Martinek in company filings reviewed . |
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (% of Salary) | Actual Annual Incentive ($) | All Other Compensation ($) |
|---|---|---|---|---|
| 2024 | 650,000 | 30% | 390,000 | 105,500 (ESOP allocation 72,461; auto allowance 8,000; life insurance imputed 10,683; dividends/interest on restricted stock 14,356) |
| 2023 | 525,000 | 30% | 315,000 | 60,505 |
Notes:
- No discretionary bonuses were awarded in 2024 .
- 2024 target opportunity for the CEO was $195,000 (30% of base), and payout was 200% of target .
Performance Compensation
| Plan Year | Metric | Weight | Threshold | Target | Stretch/Max | Actual | Payout Modifier/Notes |
|---|---|---|---|---|---|---|---|
| 2024 Annual Incentive | Return on Average Assets (ROAA) | 30% | 1.97% | 2.18% | 2.40% | 2.50% | Meets stretch; credit quality modifier applied with NPL/Total Loans at 0.00% (no reduction) . |
| 2024 Annual Incentive | Pre‑Tax, Pre‑Provision Net Income | 30% | $52.937m | $58.819m | $64.701m | $66.773m | Exceeded stretch . |
| 2024 Annual Incentive | Efficiency Ratio | 20% | 42.21% | 40.20% | 38.19% | 37.00% | Exceeded stretch . |
| 2024 Annual Incentive | Discretionary | 20% | 1 | 3 | 5 | 5 | Maximum score . |
- 2024 payout certified at 200% of target for CEO and other NEOs, reflecting above‑max performance on the financial metrics .
Equity Ownership & Alignment
| Item | Amount | Notes |
|---|---|---|
| Total beneficial ownership (common shares) | 280,886 | Includes 41,960 ESOP and 113,755 in 401(k); includes 51,660 unvested RS with voting but not investment power . |
| Options acquirable within 60 days | 96,100 | Beneficial ownership line item . |
| Ownership as % of shares outstanding | 2.7% | Based on 14,023,376 outstanding as of April 4, 2025 . |
| Unvested restricted stock (12/31/24) | 51,660 | Valued at $1,263,603 using $24.46 close on 12/31/24 . |
| Options outstanding (12/31/24) | 86,100 exercisable; 129,150 unexercisable | Exercise price $14.08; expiration 11/17/2032 . |
| Pledging | None indicated | “Unless otherwise indicated, none of the shares listed are pledged as security.” |
Outstanding awards detail (granted under 2022 Equity Incentive Plan):
- Grant date 11/17/2022: 86,100 restricted shares; 215,250 stock options; options exercise price $14.08; options expire 11/17/2032 .
- Vesting schedule (current disclosure): both options and restricted stock vest in five approximately equal annual installments commencing 11/17/2023, subject to continued employment .
Approximate upcoming vesting (derived from disclosed grant sizes and 5‑year vesting):
- Next vesting date: 11/17/2025; est. 17,220 RS and 43,050 options per tranche (based on initial 86,100 RS and 215,250 options, divided by 5) .
In‑the‑money indicator (as of 12/31/24): option intrinsic value approximates ($24.46 – $14.08) × total options; inputs from disclosed exercise price and market close .
Long‑Term Incentives (Grant History and Fair Value)
| Grant Year | Instrument | Grant Date | Quantity | Exercise Price | Expiration | Fair Value |
|---|---|---|---|---|---|---|
| 2022 | Restricted Stock | 11/17/2022 | 86,100 | — | — | $1,212,288 grant‑date fair value |
| 2022 | Stock Options | 11/17/2022 | 215,250 | $14.08 | 11/17/2032 | $972,930 grant‑date fair value |
| 2024 | Equity grants | — | — | — | — | No equity grants to NEOs in 2024 |
Plan design highlights:
- 2022 Equity Incentive Plan approved 9/29/2022; min vesting one year (limited exceptions), fungible share pool with 4% full‑value award limit; administered by independent Compensation Committee .
Employment Terms
| Term | Detail |
|---|---|
| Agreement | Employment agreements with Messrs. Martinek, Collazo, Hom; 36‑month term, evergreen 12‑month extensions absent notice . |
| Compensation eligibility | Base salary reviewed annually; eligible for short‑ and long‑term incentives at Compensation Committee discretion . |
| Severance (no change in control) | If terminated without cause/for good reason: 3× (base salary + target bonus) paid as salary continuation over 36 months; after‑tax COBRA reimbursement (offset by active employee rate) for up to COBRA eligibility/36 months/coverage from new employer; unpaid prior‑year bonus payable; equity per plan rules . |
| Change‑in‑Control (double trigger) | If terminated without cause/for good reason within 24 months after a change in control: lump sum 3× (base salary or higher CIC salary + target bonus or higher CIC target); plus lump sum equal to 3× prior‑year bonus payable on normal bonus date; lump sum medical/dental equal to 36 months of coverage less active employee charge; equity per plan rules . |
| 280G treatment | “Best net benefits” approach to avoid excise tax if beneficial after‑tax vs no reduction . |
| Disability/Death | Disability: 1× (base + target bonus) less LTD expected benefits, over 12 months; Death: 1× (base + target bonus) to beneficiary . |
| Restrictive covenants | Non‑compete 12 months (except upon CIC or involuntary termination other than cause); non‑solicit 12 months (other than termination following CIC); confidentiality . |
| Legal fees/indemnification | Reimbursement if executive prevails; indemnification to fullest extent permitted . |
| SERP | Supplemental plan provides normal retirement benefit equal to 50% of average base salary over prior 3 years; early retirement reductions; change‑in‑control lump sum; detailed payout provisions . |
Board Governance
- Roles: Martinek serves as Chairman and CEO; board cites efficiency benefits; Chairman has same vote as other directors and does not vote on related‑party transactions .
- Independence: All directors are independent except Kenneth A. Martinek (CEO), Jose M. Collazo (President/COO) and Charles A. Martinek (SVP/CCO) .
- Family relationship: Charles A. Martinek (director and SVP/CCO) is Mr. Martinek’s brother .
- Board/committee attendance: No director attended fewer than 100% of board and committee meetings in 2024 .
Committee structure (as of April 4, 2025):
| Committee | Chair | Members | 2024 Meetings |
|---|---|---|---|
| Audit | Charles M. Cirillo | Cirillo, Magier, McKenzie | 5 |
| Compensation | Diane B. Cavanaugh | Cavanaugh, McKenzie | 4 |
| Nominating/Corporate Governance | Kenneth H. Thomas | Thomas, Cavanaugh, Cirillo | 2 |
Director compensation context (non‑employee directors):
- Cash retainers and meeting fees disclosed; example 2024 totals include: Cirillo $75,425; Cavanaugh $61,924; Magier $61,425; McKenzie $58,650; Thomas $59,925; Swan $87,419 (includes Outside Director Retirement Program payments) .
- Fee schedules: Bank board $5,375 quarterly retainer + $1,525/meeting; Holdco board $1,000 quarterly retainer + $750/meeting; committee fees include $4,000 quarterly for Audit Chair, $1,250 quarterly for Comp/Nominating Chairs, and per‑meeting fees .
Annual meeting proposals/gov note:
- 2025 proxy included only director elections and auditor ratification; no say‑on‑pay advisory proposal on the ballot .
Related‑Party Transactions and Other Governance Notes
- 2024 legal services relationship: Director Joel L. Morgenthau’s law firm received $63,474 from the Bank and $592,233 was paid by borrowers for construction loan closings in 2024; appointment as director disclosed in 10/30/2024 8‑K and related‑party section in proxy .
- Loans to related parties: None outstanding as of 12/31/2024 .
- Section 16(a) compliance: Company believes all executive officers and directors complied with reporting requirements for 2024 .
- Stockholder agreement: Voting agreement with The Stilwell Group effective through August 27, 2025, limiting certain activist actions; Company believes Stilwell owned <5% as of the 2025 record date .
Compensation Structure Analysis
- Mix shift/cadence: No new equity grants in 2024; compensation for 2024 skewed to base + annual cash incentive; 2022 equity remains significant via unvested RS and options .
- Pay‑for‑performance: 2024 plan paid at 200% of target driven by above‑max outcomes on ROAA, PTPP NI, and efficiency; plan also includes a credit quality safeguard (NPLs/Total Loans) that did not reduce payouts in 2024 (0.00% NPLs) .
- CIC economics: 3× multiple (salary + target) plus 3× prior‑year bonus and benefits in a lump sum upon double‑trigger CIC termination—meaningful potential payout that could influence retention and sale dynamics .
- Equity alignment and potential selling pressure: Material unvested RS (51,660) and sizable options (215,250) with $14.08 strike; options are in‑the‑money at the 12/31/24 close ($24.46), implying substantial intrinsic value and potential exercise/sale cadence around annual vesting dates (e.g., ~11/17/2025) .
Employment Terms (Summary Table)
| Topic | Provision |
|---|---|
| Term / Renewal | 36 months; auto‑renews +12 months annually unless either party declines . |
| Base/Bonus | Base set/reviewed by board; eligible for annual and long‑term incentives . |
| Severance (no CIC) | 3× (base + target bonus) over 36 months + after‑tax COBRA reimbursement; unpaid bonus paid . |
| CIC (double trigger) | Lump sum 3× (base or higher CIC salary + target or higher CIC target) + lump sum = 3× prior‑year bonus; lump sum medical/dental for 36 months; equity per plan . |
| Disability/Death | 1× (base + target bonus) less LTD (disability) over 12 months; 1× (base + target) to beneficiary (death) . |
| Non‑compete / Non‑solicit | 12 months (limited exceptions for CIC scenarios) / 12 months . |
| 280G | Best‑net‑benefit cut‑back to avoid excise tax where advantageous . |
| SERP | 50% of 3‑yr average base at normal retirement; detailed early/CIC provisions . |
Investment Implications
- Alignment vs. execution: 2024 maximum bonus payout on ROAA/PTPP NI/efficiency, with zero NPLs, signals strong execution and alignment of cash incentives with profitability/efficiency and credit quality outcomes .
- Near‑term trading dynamics: Significant equity overhang from 2022 awards—51,660 unvested RS and 215,250 options at $14.08 strike—suggests possible vest‑related selling or option exercises around annual vesting dates (e.g., 11/17/2025), given the disclosed 12/31/24 price of $24.46; monitor Form 4s around those dates for supply signals .
- Governance risk/mitigants: Combined CEO/Chair and a family member on the board are governance risk factors, though committees are fully independent with 100% attendance in 2024; no share pledging disclosed for Mr. Martinek’s holdings .
- Change‑in‑control optionality: Large double‑trigger CIC package (3× cash metrics + 3× prior‑year bonus + benefits) creates both retention and potential M&A incentive considerations; the Stilwell agreement’s restrictions expire August 27, 2025, potentially increasing governance/activism optionality thereafter .