Louis J. Torchio
Northwest BancsharesAbout Louis J. Torchio
Louis J. Torchio, age 62, is President, Chief Executive Officer, and a Director of Northwest Bancshares, Inc. (NWBI); he was appointed CEO and joined the Board in August 2022 and has served as a director since 2022, with his current Board term expiring in 2026 . He holds a business administration degree with a minor in computer programming from Fairmont State University and an MBA in finance from Franklin University . Under his leadership in 2024, NWBI reported net income of $100.3 million (adjusted net income $132.8 million), adjusted ROAA of 0.92%, adjusted ROAE of 8.49%, an efficiency ratio of 64.11%, commercial loans reaching $2.0 billion (up $350 million YoY), and total deposits up 1.4% to $12.14 billion; uninsured deposits remained <25% of total (12% excluding intercompany/collateralized) . Cumulative TSR for the disclosure window shows a $100 investment in NWBI at $108.85 by year-end 2024 (peer index: $141.59) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Northwest Bancshares, Inc. | Senior EVP, Retail Lending | 2018–Aug 2022 | Led retail lending prior to CEO appointment; experience in organic growth and acquisitions . |
| Delaware County Bank | SVP, Residential & Consumer Lending | n/a | Senior lending leadership, built consumer lending capabilities . |
| Large regional and community banks (various) | Senior management/executive committee roles | n/a | Built organizations through organic growth and strategic acquisitions . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Various community boards (not specified) | Director/Member | n/a | Active community leadership; enhances local market connectivity . |
Fixed Compensation
- 2024 base salary: $874,470; increased 6% from $824,000 in 2023 (3% merit and 3% to offset elimination of the Holiday Bonus Plan) .
- Target annual bonus: 70% of base ($612,129) .
Multi-year reported compensation (as disclosed in the Summary Compensation Table):
| Year | Salary ($) | Stock awards ($) | Non-equity incentive plan ($) | Change in pension value ($) | All other comp ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2024 | 865,672 | 2,195,449 | 673,300 | 95,792 | 27,661 | 3,857,874 |
| 2023 | 816,615 | 511,417 | 206,000 | 107,523 | 32,835 | 1,932,721 |
| 2022 | 529,548 | 151,159 | 436,000 | 13,422 | 34,285 | 1,190,891 |
Perquisites and other: 2024 “All other compensation” comprised $13,800 401(k) match, $3,564 imputed life insurance, $4,939 dividends on unvested RSUs, and $5,358 social clubs .
Performance Compensation
Annual Management Bonus Plan (2024)
- Plan funded to 100% of target for Company performance after committee discretion; Mr. Torchio’s actual cash bonus equaled 77% of base pay ($673,300) reflecting individual multiplier .
| Metric | Weight | Threshold (50%) | Target (100%) | Max (150%) | Actual (Adj.) | % of Target | Weighted Payout |
|---|---|---|---|---|---|---|---|
| Adjusted ROAA | 40% | 0.74% | 0.87% | 1.10% | 0.92% | 110.90% | 44.36% |
| Adjusted ROAE | 30% | 6.97% | 8.20% | 10.66% | 8.49% | 105.90% | 31.77% |
| Efficiency ratio (ex-amortization, special items) | 15% | 67.50% | 65.00% | 60.00% | 64.11% | 108.90% | 16.34% |
| Loan growth | 15% | 3.23% | 4.62% | 6.00% | (1.39%) | — | — |
Long-Term Incentives (2024 design and grants)
- CEO LTI target: 90% of base salary ; mix tilted to performance (55% PSUs / 45% RSUs per CD&A summary; grants table shows 50%/50% for standard cycle plus a separate one-time RSU) .
| Grant type | Date | Units (#) | Grant value ($) | Vesting / Performance |
|---|---|---|---|---|
| RSUs (annual) | 3/20/2024 | 30,027 | 339,600 | Time-vest in 3 equal annual installments starting 1 year from grant . |
| PSUs (annual, target) | 3/20/2024 | 37,534 | 424,500 | 3-year cliff vest based on Relative Core ROAA vs KRX; 0–150% payout (25th/50th/75th percentile for 50%/100%/150%) . |
| RSUs (one-time retention) | 12/20/2024 | 149,813 | 2,000,000 approved value; ASC 718 grant-date fair value $1,561,051 | 4-year cliff vest; settled in two installments (second deferred 6 months post-departure); accelerated upon death/disability or Co. without-cause/Good Reason termination after age 65 . |
Notable: PSUs granted in 2022 did not vest because threshold performance criteria were not met (downside risk preserved) . The program uses double-trigger vesting for equity on change-in-control and has a clawback in line with SEC/Nasdaq rules; hedging/pledging prohibited; no tax gross-ups .
Equity Ownership & Alignment
- Beneficial ownership (as of Feb 18, 2025): 122,496 shares; includes 40,454 options exercisable within 60 days and 17,945 RSUs scheduled to vest within 60 days; no shares pledged .
- Shares outstanding: 127,514,858 (implies ~0.10% ownership; proxy denotes “<1%”) .
- Stock ownership guidelines: CEO 3x base salary; all NEOs currently meet guidelines; hedging/pledging prohibited .
Outstanding equity (12/31/2024)
| Category | Detail | Amount |
|---|---|---|
| Options – exercisable | Strikes/expiries: $16.59 (5/14/2028) 6,240; $17.27 (5/22/2029) 10,698; $9.71 (5/20/2030) 11,140; $13.68 (5/25/2031) 12,376; total 40,454 . | 40,454 |
| Options – unexercisable | 1,782 (vesting 5/22/2025), 4,330 (vesting 5/20/2025 & 2026), 3,094 (vesting 5/25/2025); total 9,206 . | 9,206 |
| Unvested RSAs/RSUs | 201,969 units; market value $2,663,971 at 12/31/2024 close . | 201,969; $2,663,971 |
| Unvested PSUs (target) | 68,082 units; market value $898,002 at 12/31/2024 close . | 68,082; $898,002 |
Vesting schedule (selected CEO awards)
| Grant | Units outstanding | Vesting mechanics |
|---|---|---|
| RSUs 3/20/2024 | 30,027 | 1/3 each year over 3 years . |
| PSUs 3/20/2024 | 37,534 (target) | Full vest at end of 3-year performance period subject to relative Core ROAA vs KRX . |
| RSUs 12/20/2024 (one-time) | 149,813 | 4-year cliff; special acceleration terms as noted above . |
Insider activity/pressure signals
- 2024 stock vested for CEO: 14,034 shares; no option exercises reported for CEO in 2024 .
- Policy prohibits hedging/pledging; none of the insiders had pledged shares; reduces forced-selling risk .
Employment Terms
| Term | Key provisions |
|---|---|
| Agreement term | Amended and restated 11/20/2024; CEO term through 11/1/2029; auto-renews 1 year on each anniversary . |
| Target pay in agreement | Bonus target 70% of base; LTI target 90% of base . |
| Severance (no cause/Good Reason, with or without CIC) | Lump sum equal to 3x highest base salary + 3x highest cash bonus over prior 3 years; 36 months medical/dental continuation; Section 409A delay as needed . |
| Change-in-control vesting | Double-trigger for equity awards under plan; acceleration on involuntary termination post-CIC; also acceleration on death/disability/normal retirement for time-based awards . |
| Non-compete / restrictive covenants | 12-month non-compete post-termination across states where NWBI operates (currently IN/NY/OH/PA) . |
| Death/Disability | Salary continuation (one year for death; disability per agreement), and continued medical/dental for dependents for three years post-death; D&O indemnification maintained . |
Illustrative potential payouts (assuming termination on 12/31/2024)
| Scenario | Severance pay ($) | Bonus ($) | Option accel ($) | RSA accel ($) | RSU accel ($) | PSU accel ($) | Health/other ($) |
|---|---|---|---|---|---|---|---|
| Involuntary no-cause / Good Reason | 2,623,410 | 2,019,900 | 15,068 | 56,915 | 2,607,056 | 898,002 | 66,421 (health) |
| Death | 874,470 | 673,300 | 15,068 | 59,915 | 2,607,056 | 384,860 | 25,673 (health) |
| Disability | 87,447 | 673,300 | 15,068 | 56,915 | 2,607,056 | 384,860 | 66,421 (health) |
Retirement and deferred benefits
- Pension present value (12/31/2024): $233,126 (qualified plan); SERP present value $156,349; accrued annual pension benefit $20,638 (early retirement estimate $17,489); SERP accrued annual benefit $13,841 .
- No tax gross-ups; clawback policy compliant with Rule 10D-1; insider trading policy on file .
Board Governance
- Board service: Director since 2022; term to expire 2026; CEO and Director (not independent) .
- Board leadership: Independent Chairman (Timothy B. Fannin); separate CEO and Chair structure .
- Committees: Standing committees include Audit, Compensation, Nominating & Corporate Governance, Risk, Innovation & Technology, and Trust; CEO is not listed as a member of these committees .
- Attendance: In 2024, the Board met 6 regular and 2 special meetings; no director or committee member attended fewer than 75% of applicable meetings .
- Majority voting policy in uncontested elections and annual Say-on-Pay (96% support in 2024) .
Compensation Structure Analysis
- Mix and alignment: For 2024, ~61% of CEO’s target compensation is variable; CEO’s LTI is predominantly performance-based (PSUs), with PSUs tied to relative Core ROAA vs. KRX (0–150% payout) .
- One-time retention grant: $2.0 million RSU in Dec 2024 with a 4-year cliff and deferred settlement supports retention but raises guaranteed equity exposure versus purely performance-tied equity; acceleration allowed only after age 65 for certain terminations (limits windfall risk) .
- Pay-for-performance: 2022 PSUs did not vest (downside protection), and 2024 annual bonus paid at 100% funding after discretion, with three of four KPIs at/above target but loan growth below threshold (committee rationale disclosed) .
- Governance: No hedging/pledging; no option repricing; no tax gross-ups; robust clawback and ownership guidelines (CEO 3x salary, compliant) .
Equity Ownership & Trading Signals
| Item | Detail |
|---|---|
| Beneficial ownership | 122,496 shares (<1% of outstanding); includes 40,454 options exercisable within 60 days and 17,945 RSUs scheduled to vest within 60 days; no pledging . |
| Upcoming vests | 3-year RSUs from 3/20/2024, and 4-year cliff RSUs from 12/20/2024 could create future sale windows, though deferral of a portion of the one-time RSU settlement until 6 months post-departure tempers near-term selling . |
| Option overhang | Mix of older strikes ($9.71–$17.27) with expiries 2028–2031 . |
Say-on-Pay, Peer Group, and Shareholder Feedback
- Say-on-Pay approval: >96% support at 2024 annual meeting .
- Benchmarking: Uses Pearl Meyer/McLagan data; peer group of similarly sized U.S. banks; compensation philosophy targets competitive market median .
Risk Indicators & Red Flags
- Positive: No hedging/pledging; robust clawback; double-trigger equity vesting; strong say-on-pay support; PSUs with real downside (2022 forfeiture) .
- Watch items: Generous CEO severance (3x salary and 3x bonus) without requiring a change-in-control; sizable 2024 one-time RSU retention grant ($2.0 million) increasing fixed equity exposure .
Employment Terms (Governance Details)
- Non-compete: 12 months post-termination across NWBI operating states (IN, NY, OH, PA) .
- Auto-renewal: Agreement automatically extends annually .
- CIC protections for other NEOs: Change-in-control agreements with 2x–3x salary+bonus and benefit continuation for specified executives (context for team stability) .
Investment Implications
- Alignment and retention: The heavy PSU weighting and forfeiture of 2022 PSUs indicate meaningful performance linkage; however, the $2.0 million 4-year cliff RSU (with deferred settlement) is a clear retention device that reduces near-term selling pressure and supports management continuity through 2028 .
- Incentive focus: 2024 KPIs emphasized profitability (ROAA/ROAE) and efficiency rather than pure balance sheet growth; committee discretion acknowledged the deliberate mix shift to commercial lending—suggesting continued focus on returns over absolute loan growth .
- Downside/cost risk: Severance economics (3x salary+3x bonus plus 36 months benefits) represent above-median protections even outside a CIC, a capital allocation consideration in adverse scenarios .
- Governance quality: Separate Chair/CEO roles, clawback, no hedging/pledging, and strong say-on-pay suggest low governance risk and support investor confidence in incentive integrity .