Timothy Terry

About Timothy Terry

Timothy Terry is President and Chief Executive Officer of OptimumBank (the Bank) and has served as the Company’s Principal Executive Officer since June 2016; he was appointed President and CEO of the Bank in February 2013 and is 70 years old . He holds a BBA in finance from Western Michigan University and is a graduate of the ABA Stonier Graduate School of Banking . Under Terry’s leadership, OPHC reported 2024 net earnings of $13.1 million (up from $6.3 million in 2023) and total assets of $933 million at year-end 2024, reflecting strong growth momentum entering 2025 . He signed the 2024 Form 10-K CEO certifications as Principal Executive Officer on February 26, 2025, underscoring his executive accountability for reporting and controls .

Company performance snapshot under Terry

Past Roles

External Roles

No external public company directorships or external board roles were disclosed for Terry. None were listed in the 2025 and 2024 proxy statements .

Fixed Compensation

Notes:

• Terry serves as Principal Executive Officer of the holding company and President/CEO of the Bank since February 2013; compensation is disclosed at the Company/Bank level .

Performance Compensation

Plan-level mechanics (equity plan):

• Options: all outstanding options become fully vested upon a change in control (single-trigger per plan description) .
• Restricted stock: fully vests upon death/disability; or upon a change in control if the participant’s service is terminated within 12 months thereafter (double-trigger) .
• The Company sought shareholder approval in 2025 to increase shares available under the 2018 Equity Incentive Plan from 1,050,000 to 1,550,000, citing ongoing need to attract/retain management; as of the proxy date, 688,512 shares had been issued under the plan .

Compensation metrics and design:

• The Compensation Committee oversees executive pay; it did not use compensation consultants and no specific formulaic performance metrics (e.g., revenue/EBITDA/TSR) were disclosed for executive bonuses or equity grants in 2023–2024 .

Equity Ownership & Alignment

Additional alignment indicators:

• Options: None held by executive officers; no option grants in 2023–2024 .
• Hedging/Pledging: The Company had not adopted a hedging policy as of the 2025 proxy and allowed executives/directors to engage in hedging (short sales, derivatives) pending policy adoption—this is a potential alignment red flag; no disclosure on stock pledging was provided .
• Ownership guidelines: No executive stock ownership guidelines or compliance status were disclosed .

Employment Terms

• Role and start: Appointed President and CEO of the Bank in February 2013; serving as Principal Executive Officer of the Company since June 2016 .
• Contracts/Severance: No specific employment agreement, severance multiple, or non-compete/nonsolicit terms were disclosed for Terry in the latest proxy and 10-K .
• Change-in-control (equity): Per the 2018 plan, options fully vest upon change in control; restricted stock accelerates upon change in control if service is terminated within 12 months, or upon death/disability (see Performance Compensation) .

Performance & Track Record

Notable operational developments:

• Achieved SBA preferred lender status on February 18, 2025, after launching SBA 7(a) lending in 2023, evidencing expansion of lending capabilities .
• The 2025 proxy emphasizes continuing use of equity compensation and requests an increase in plan share reserve, supporting ongoing retention/attraction efforts .

Compensation Committee Analysis

• Committee composition: Moishe Gubin (Chair), Thomas Procelli, and Avi Zwelling; all independent under exchange standards .
• Practices: No external compensation consultants used; committee met two times during 2024; no executive role in determining director pay .
• Hedging policy gap: Company had not yet adopted a hedging policy as of the 2025 proxy (plans to adopt following the meeting), meaning executives could hedge holdings—potential misalignment risk until policy implemented .

Risk Indicators & Red Flags

• Hedging allowed (policy pending): Executives and directors could engage in hedging and derivatives on OPHC stock as of the 2025 proxy—this can dilute pay-for-performance alignment until a formal anti-hedging policy is adopted .
• Options repricing/modification: None disclosed; no options outstanding for executives .
• Related-party transactions: None above $120,000 since January 1, 2024; insider/affiliate loans totaled $122,500 (0.02% of portfolio) and were performing at 12/31/24 .
• Section 16(a) compliance: Company believes all required insider ownership/change filings in 2024 were timely .

Equity Incentive Plan & Potential Dilution

• Issued under plan to date: 688,512 shares; proposed to increase authorization by 500,000 shares (to 1,550,000) in 2025 to maintain grant capacity for executives and directors .

Investment Implications

• Pay and performance: Cash compensation and time-based restricted stock grants rose alongside material improvements in profitability and balance sheet scale in 2024; however, the absence of disclosed, formulaic performance metrics (e.g., revenue, ROA/ROE, TSR) for payouts weakens explicit pay-for-performance linkage .
• Alignment and overhang: Terry’s beneficial ownership is modest (0.33% as of March 2025) with no options outstanding, and the company is expanding equity plan capacity—investors should monitor share issuance rates and dilution versus returns on equity expansion .
• Retention and CoC: The plan provides for accelerated vesting on change in control (single-trigger for options; double-trigger for restricted stock), supporting retention and deal certainty; lack of disclosed severance or non-compete terms limits visibility into exit economics or post-termination protections .
• Governance risk: Until a hedging policy is implemented, insider hedging is permitted, a misalignment risk that could soften incentive effects of equity awards; adoption and enforcement of the pending policy is a key watch item .