David W. Freeman
About David W. Freeman
David W. Freeman is age 68 and serves as Chief Executive Officer of QNB Corp. and QNB Bank since January 2013; he has been President since September 2010 and previously served as Chief Operating Officer from September 2010 to December 2012. Prior to QNB, he was Division President of the Drovers Bank Division of Fulton Bank from March 2002 to March 2010. He holds a B.S. in business management from Franklin University, an MBA from The Ohio State University, and is a graduate of the ABA Stonier Graduate School of Banking . QNB’s pay-versus-performance table shows “compensation actually paid” to the CEO aligning with cumulative TSR and net income trends over 2022–2024; TSR value of an initial $100 investment rose to $106.44 in 2024 as net income reached $11.45 million, with no equity awards granted to the CEO in 2023–2024 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| QNB Corp. and QNB Bank | Chief Executive Officer | Jan 2013–present | Principal executive leadership; performance reviewed semiannually by the Board and used in compensation decisions . |
| QNB Corp. and QNB Bank | President | Sep 2010–present | Executive leadership of QNB; Board cites CEO/President role as qualification to serve as director . |
| QNB Corp. and QNB Bank | Chief Operating Officer | Sep 2010–Dec 2012 | Senior operating leadership . |
| Fulton Bank (Drovers Bank Division) | Division President | Mar 2002–Mar 2010 | Led division operations prior to joining QNB . |
External Roles
| Organization | Role | Years |
|---|---|---|
| Habitat for Humanity of Bucks County | Board service (current) | Not disclosed . |
| Union Cemetery | Board service (current) | Not disclosed . |
| Boy Scouts Minsi Trails | Board service (current) | Not disclosed . |
| Bucks County Opportunity Council | Board service (current) | Not disclosed . |
| Chamber of Commerce for Greater Montgomery County | Board service (current) | Not disclosed . |
| United Way of Bucks County | Volunteer board (past) | Not disclosed . |
| St. Luke’s Upper Bucks | Volunteer board (past) | Not disclosed . |
| Upper Bucks YMCA | Volunteer board (past) | Not disclosed . |
| Bucks County Symphony | Volunteer board (past) | Not disclosed . |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 (approved) |
|---|---|---|---|---|
| Base Salary ($) | 551,565 | 584,000 | 610,300 | 675,000 (10.6% increase) |
- CEO pay ratio: 2024 CEO total compensation was $764,667; median employee compensation was $61,391; ratio 8:1 .
- Key perquisites (2024): Retirement Savings Plan contributions $27,600; HSA $1,000; country club dues $11,282; spousal conference/meals reimbursement $4,416 .
Performance Compensation
Incentives Paid
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Non-Equity Incentive Plan Compensation ($) | 55,151 | 35,040 | 73,236 |
| Option Awards ($ grant-date fair value) | 18,209 | 0 | 0 |
Annual Cash Incentive Plan Design and Results
| Metric (2024 plan) | Target thresholds | Actual (2024) | Payout impact | Notes |
|---|---|---|---|---|
| One-year EPS growth (Part 1) | 5% / 6% / 7% / 8% → payout 2% / 4% / 6% / 8% of salary | 18.53% | Optimum level achieved; contributed to aggregate 12% payout . | Payout confirmed by Board in Jan 2025 . |
| 3-year avg ROAE (Part 2) | 9% / 10% / 11% / 12% → payout 1% / 2% / 3% / 4% | Did not meet payout levels | No payout . | |
| 3-year avg ROAA (Part 2) | 0.84% / 0.92% / 1.00% / 1.08% → payout 1% / 2% / 3% / 4% | Did not meet payout levels | No payout . | |
| 5-year ROAE vs peer (Part 3) | Threshold 95–105% peers; Optimum >105% peers → payout 2% / 4% | 99.72% of peer avg ROAE | Threshold met; contributed to aggregate 12% payout . | |
| 5-year ROAA vs peer (Part 3) | Threshold 95–105% peers; Optimum >105% peers → payout 2% / 4% | 96.14% of peer avg ROAA | Threshold met; contributed to aggregate 12% payout . |
- 2024 aggregate cash incentive payout to NEOs was 12.00% of base salary, reflecting the Optimum EPS growth and Threshold peer-relative metrics with Part 2 metrics missed .
- 2025 updated plan adds loan and deposit growth and 3-year TSR vs peer, with total payout potential increased to 32% (Threshold 8%, Moderate 16%, Excellent 24%, Optimum 32%) .
Long-Term Incentives and Vesting
- Equity awards under 2015 Stock Incentive Plan were stock options; options pre-2023 vest after three years; options granted in 2023 and 2024 vest in equal annual installments over five years; ten-year term .
- 2015 plan expired February 2025; 2025 Equity Incentive Plan authorizes ISOs, NSOs, restricted stock, RSUs, and other equity-based awards; minimum one-year vesting; prohibits repricing; includes clawback and forfeiture provisions for harmful activity/non-compete/non-solicit breaches .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 31,107 shares; includes 3,375 options exercisable within 60 days; less than 1% of outstanding shares . |
| Shares outstanding basis | 3,702,294 shares outstanding as of record date; aggregate options exercisable within 60 days: 18,795 . |
| Pledging/hedging policy | Hedging, short positions, margin accounts, and pledging are prohibited; rare exceptions require demonstrated repayment capacity without pledged securities . |
| Outstanding options (12/31/2024) | 2/14/2020: 3,500 exercisable, $36.50, exp. 2/14/2025; 2/15/2021: 3,375 exercisable, $32.50, exp. 2/15/2026; 2/15/2022: 3,500 unexercisable, $37.26, exp. 2/15/2027 . |
| Option exercises (2024) | None . |
Outstanding Options Detail (Freeman)
| Grant Date | Exercisable (#) | Unexercisable (#) | Exercise Price ($) | Expiration Date |
|---|---|---|---|---|
| 2/14/2020 | 3,500 | 0 | 36.50 | 2/14/2025 |
| 2/15/2021 | 3,375 | 0 | 32.50 | 2/15/2026 |
| 2/15/2022 | 0 | 3,500 | 37.26 | 2/15/2027 |
Employment Terms
| Term | Provision |
|---|---|
| Agreement/renewal | Employment agreement auto-renews annually unless non-renewal notice ≥90 days before renewal . |
| Position & salary | CEO/President; current annual base salary $675,000; duties as assigned by Board . |
| Termination (pre-CIC) | Without cause or for “good reason”: 12 months of base salary and continuation of healthcare benefits for 12 months; death/disability: agreement terminates; benefits per plans . |
| Change in control (definition) | Includes merger/asset sale/stock acquisition ≥25% and Board-composition changes over two years, subject to specified Board approvals . |
| Termination (post-CIC) | Involuntary termination or “good reason”: lump sum equal to 2× annual base salary plus continuation of healthcare benefits for 2 years; 280G cutback to avoid excise tax . |
| Potential payouts (illustrative) | As of 12/31/2024: pre-CIC without cause or good reason: $610,300 severance + $30,969 welfare; post-CIC without cause or good reason: $1,220,600 severance + $61,938 welfare; options vest immediately upon CIC (no intrinsic value shown for CEO) . |
Board Governance
- Board structure: Independent non-employee Chairman; majority independent directors; independent directors meet separately at least twice annually; CEO Freeman is not independent under Nasdaq standards .
- Committees: Investment/ALCO, Audit, Compensation, Executive, Loan, Nominating & Governance, Strategic Planning, Wealth Management; Freeman serves on the full Board and Executive Committee .
- Attendance: Board held 12 meetings in 2024; all directors attended at least 80% of Board/committee meetings; all attended the May 21, 2024 annual meeting .
Committee Membership Snapshot (2024)
| Director | Board | Audit | Compensation | Executive | Nominating |
|---|---|---|---|---|---|
| David W. Freeman | X | X | |||
| Independent Chair and other members (for context) | See full roster: Bayles (Audit, Compensation Chair, Executive), Bergman (Audit), Bimes (Chair of Board, Executive, Nominating), Brown (Compensation, Executive, Nominating Chair), Mann (Audit, Compensation), Ray-Chaudhuri (Audit), Stauffer (Compensation, Executive), Stevenson (Audit Chair, Nominating) . |
- Director compensation policy: During 2025, directors except Mr. Freeman receive $20,000 annual retainer ($33,000 for Chair), $950 per Board meeting plus $1,200 if all 12 are attended; $500 per committee meeting; Audit Chair +$3,400; Compensation and Nominating Chairs +$2,500 .
Director Compensation
- Freeman, as an employee director, does not receive the standard director retainer or fees applicable to non-employee directors .
Say‑on‑Pay & Shareholder Voting (2025 Annual Meeting)
| Proposal | For | Against | Abstain | Broker non-votes |
|---|---|---|---|---|
| Advisory vote to approve NEO compensation | 1,821,422 | 62,497 | 9,134 | 479,279 |
| Frequency of future say‑on‑pay | 3 Years: 1,611,163; 2 Years: 35,555; 1 Year: 227,732; Abstain: 18,603; Broker non‑votes: 479,279 . | |||
| Approval of 2025 Equity Incentive Plan | 1,739,149 | 136,040 | 17,864 | 479,279 |
Compensation Committee & Peer Benchmarking
- Independent compensation consultant Herbein HR Consulting conducted an Executive Compensation Study in 2024, finding total compensation for top executives below market vs proxy peers/market data and annual incentive more heavily weighted to long-term performance with below-market payout opportunity; actions taken included 2025 salary adjustments, revised annual cash incentive plan with max payout increased from 24% to 32%, and peer group alignment; Compensation Committee targets the 50th percentile for total executive compensation .
- QNB disclosed 2023/2024 Mid-Atlantic peer institutions used for benchmarking and 2024 cash incentive design (up to 24% of base), with metrics and potential payouts per threshold/moderate/excellent/optimum levels .
Related Party Transactions
- Banking relationships with directors/officers conducted on market terms per Regulation O; aggregate indebtedness outstanding to the group was $16,632,426 as of February 28, 2025 .
Performance & Track Record
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Compensation Actually Paid to CEO ($) | 645,543 | 691,755 | 764,667 |
| Value of $100 Investment – TSR ($) | 77.14 | 80.31 | 106.44 |
| Net Income ($ thousands) | 15,921 | 9,483 | 11,448 |
Equity Plan Governance & Risk Controls
- 2025 Equity Incentive Plan prohibits option repricing and below‑market strike grants; minimum one‑year vesting; retains clawback/recoupment and reduction/forfeiture for harmful activity or covenant breaches; CEO may be delegated authority for limited awards but cannot grant to himself or Section 16 reporting persons .
- Insider trading and hedging/pledging policies prohibit hedging arrangements, short positions, margining, and pledging QNB securities; limited exceptions for pledging require demonstrable repayment capacity without resort to pledged shares .
Investment Implications
- Pay-for-performance linkage: CEO’s annual cash incentive is formulaically tied to EPS growth and ROAE/ROAA metrics and peer-relative performance; 2024 achieved Optimum EPS growth but missed ROAE/ROAA payouts, resulting in a modest 12% of salary bonus, indicating disciplined payout mechanics and sensitivity to core profitability and peer benchmarks .
- Alignment and dilution: CEO equity grants have been minimal in recent years (no CEO equity awards in 2023–2024), with outstanding legacy options largely near long-dated expirations; new 2025 plan introduces RSUs and broader equity vehicles with minimum vesting and anti-repricing, potentially improving long-term alignment while capping director awards and preserving governance protections .
- Retention and change-in-control economics: CEO’s agreement features auto-renewal and double-trigger CIC severance at 2× base plus two years of benefits with 280G cutback, and pre‑CIC severance at 1× base plus one year of benefits—balanced retention features without excise-tax gross-ups .
- Board independence and dual-role considerations: Freeman’s dual role as CEO and director is mitigated by an independent non‑employee Chairman, majority independent Board, executive sessions without management, and independent committees overseeing compensation and audit, reducing governance risk around independence .
- Shareholder sentiment: Strong support for 2025 say‑on‑pay and approval of the 2025 Equity Incentive Plan suggests investor acceptance of pay design and equity refresh, reducing near‑term governance overhangs .