John F. Carmody

About John F. Carmody

Executive Vice President and Chief Credit Officer of Norwood Financial Corp (Wayne Bank), age 55 as of the record date; appointed Chief Credit Officer in October 2013 and Executive Vice President in April 2015, with prior service at Wayne Bank since April 2001, indicating ~24 years of tenure through 2025 . Company pay-versus-performance disclosures show cumulative TSR of 18.99% from 12/31/2021 to 12/31/2024, while net income declined from $29.23M (2022) to $16.76M (2023) and was $(0.16)M in 2024, underscoring earnings pressure in 2024 . The Compensation Committee approved a $1.5M discretionary bonus pool for 2024 despite negative net income, with Carmody’s bonus set at 24% of base salary, highlighting a discretionary orientation rather than strict formulaic linkage to financial targets .

Past Roles

External Roles

No external public-company directorships or nonprofit board roles were disclosed for Carmody in the proxy’s executive background section .

Fixed Compensation

Perquisites (2024):

• 401(k) matching contributions: $23,453
• Life insurance premiums: $2,396
• Club dues: $1,780
• Automobile allowance: $6,000

Performance Compensation

Annual Cash Incentive Program (structure and 2024 outcome):

• Plan design: Bonus pool typically set as a % of pre-tax earnings; awards based on pre-defined Company financial measures and individual goals, with discretionary adjustments by the Board/Committee .
• 2024 pool/outcome: Board approved $1,500,000 bonus pool despite negative net income; Carmody received $56,332 (24% of base) .
• Clawback: Incentive-Based Compensation Recovery Policy adopted in 2023 to recover erroneously awarded compensation .

Equity Ownership & Alignment

Beneficial ownership:

• Shares beneficially owned: 19,578; <1% of shares outstanding as of record date (March 4, 2025) .
• Group ownership (directors, nominees, executive officers): 764,368 shares; 8.2% .

Outstanding unvested restricted stock and vesting:

Ownership policy and hedging/pledging:

• Company has not adopted an anti-hedging or anti-pledging policy; hedging and pledging are not expressly prohibited for executives and directors (alignment risk) .
• Director stock ownership guidelines exist for “Director Retainer Shares” mechanics; executive officer stock ownership guidelines not disclosed .

Insider trading/Section 16 compliance:

• Form 4 timing: Carmody sold 364 shares of vested restricted stock for tax withholding on Dec 26, 2023; Form 4 filed Jan 2, 2024 (administrative timing note) .

Employment Terms

Change-in-control (CIC) severance agreement:

• Benefit multiple: 1× base salary upon involuntary termination without just cause or voluntary termination with good reason during the period from 6 months before to 1 year after a CIC; also permits voluntary termination for any reason within 30 days post-CIC and receive severance (single-trigger feature), subject to 280G tax-deductible limits .
• Future intent: Company intends in future extensions to limit to involuntary or good reason only and remove the “walk-away” within 30 days right .

Salary Continuation Agreement (SERP-like):

• Normal Retirement Benefit: $48,000 per annum, paid monthly over 15 years starting at Normal Retirement Age 65; increases if working past NRA up to age 67 .
• CIC treatment: Benefit equal to Normal Retirement Benefit (or accrued amount) payable over 15 years, depending on timing relative to NRA .
• Conditions: Non-compete and non-solicitation restrictions apply post-termination as a condition to continued receipt of benefits; no benefits if termination for cause .

Deferred compensation:

• Executive Elective Deferral Plan: Non-qualified deferrals of salary/bonus with annual interest equal to WSJ prime + 200 bps (max 9%, min 2%); interest retroactively reduced to 2% if non-compete/non-solicit violated .

Equity plans and vesting protection:

• RSUs/options vest 100% upon change-in-control; RSUs earn dividends prior to vesting; options vest upon death/disability; RSUs vest to next event upon death/disability .

Clawback:

• Incentive-Based Compensation Recovery Policy adopted in 2023 (erroneously awarded comp recoverable) .

Hedging/pledging:

• Not prohibited by policy (potential misalignment risk) .

Performance & Track Record

Company TSR and net income:

Notable 2024 compensation decision:

• Board approved $1.5M bonus pool despite negative net income, with NEO bonuses paid at 24–25% of base (including Carmody at 24%), reflecting discretionary overlay versus strict pay-for-performance metrics .

Compensation Structure Analysis

• Cash vs equity mix (2024 for Carmody): Salary $235,326; cash bonus $56,332; equity $40,875; perquisites $33,629—tilted toward cash given limited RSU value and no options .
• Shift in equity vehicles: RSUs granted annually with 5-year pro-rata vesting; options not granted to Carmody in 2024 .
• Discretionary bonuses despite negative net income: Board authorized pool, underscoring judgment-based bonuses regardless of Net Income in 2024 .
• Hedging/pledging permissibility: No anti-hedging/anti-pledging policy—potential misalignment with long-term shareholder interests .
• CIC protection: Single-trigger feature (30-day walk-away) currently permitted under his CIC agreement; Company indicates intent to move to double-trigger on future extension .

Equity Ownership & Alignment (Detail)

Employment & Contracts (Retention Risk)

• Tenure and role continuity: CCO since 2013; EVP since 2015—deep institutional knowledge lowers transition risk .
• CIC and SERP benefits: Provide security; single-trigger element could raise pay-for-performance concerns in a transaction context .
• Non-compete/non-solicit: Required for continuation of SERP benefits; specific durations not disclosed in proxy .
• Insider trading policy: Adopted and filed as an exhibit to 10-K .

Investment Implications

• Alignment risks: Absence of anti-hedging/anti-pledging policy and discretionary bonus funding in a negative net income year suggest weaker pay-for-performance alignment and potential for insider selling pressure upon scheduled RSU vesting .
• Retention dynamics: SERP ($48,000/year for 15 years) and CIC protection encourage stability, but single-trigger severance availability (walk-away within 30 days of CIC) can misalign incentives in M&A scenarios; Company’s stated intent to move to double-trigger mitigates future risk .
• Ownership “skin-in-the-game”: Carmody’s beneficial ownership (<1%) with time-based RSU accrual provides ongoing equity exposure, though overall stake is modest; options exposure is nil at FY-end 2024 .
• Performance backdrop: TSR positive across multi-year windows, but 2024 net loss and the Committee’s discretionary bonus decisions highlight execution risk and governance judgment that investors should monitor through 2025+ .
• Compliance note: Minor Section 16 timing issue in 2023 related to tax withholding sale; not material but indicates process rigor to monitor .