Virginia M. Anderson

About Virginia M. Anderson

Executive Vice President and Chief Internal Audit Officer at Shore Bancshares, Inc. (appointed January 1, 2025); age 66 as of December 31, 2024; bachelor’s in business administration and master’s in finance from Loyola University of Maryland; 30+ years of external/internal audit and financial reporting experience (prior roles include Managing Director of Audit at Dixon Hughes Goodman, LLP and VP, Special Projects at Community Bank of the Chesapeake leading CECL implementation and financial reporting) . Company performance factors tied to 2024 incentives were PTPP ROAA, efficiency ratio, NIB deposit mix, and NIM, with actuals of 1.08% PTPP ROAA, 68.54% efficiency ratio, 28.09% average NIB deposits/retail, and 3.10% NIM, leading to below-target cash payouts to NEOs; this frames the pay-for-performance environment Ms. Anderson operates within . SHBI’s 2024 say‑on‑pay support was 94.4%, indicating strong investor endorsement of compensation design .

Past Roles

External Roles

Fixed Compensation

• Base salary, target bonus %, and actual bonus paid for Ms. Anderson are not disclosed (she is not a named executive officer in the 2025 proxy). SHBI’s compensation philosophy emphasizes competitive base pay, limited perquisites, and no excise tax gross‑ups, with strong governance (independent committee, external consultant) .
• Perquisites for NEOs include automobile allowances and certain club dues; broader benefits include medical/dental/vision, basic life, LTD, qualified pension/401(k) (policies apply enterprise‑wide) .
• Clawback policy adopted to meet Nasdaq requirements; incentive compensation can be recouped for restatement‑related excess over the prior three completed fiscal years; no fault required; Compensation Committee administers .

Performance Compensation

Company Annual STIP (2024 design)

• Committee interpolation yielded below‑target cash payouts to NEOs; STIP features a -20% modifier if NPAs/Assets breach threshold .

Company LTIP (structure for 2024 awards to NEOs)

• Time‑based RSUs vest ratably over 3 years; PSUs vest based on relative ROAA/ROAE vs ~94-peer banks (assets $3–$12B), performance period 1/1/2024–12/31/2026 .
• CIC protection for equity: double‑trigger—time‑based RSUs vest in full and PSUs deemed satisfied at target upon involuntary/good‑reason termination within 12 months post‑CIC .

Ms. Anderson – RSU Vesting Schedule (Form 3)

• This creates identifiable vest events potentially increasing selling pressure at vest dates; note the company’s ownership policy requires holding 100% of net profit shares until guideline met, mitigating near‑term sell pressure .

Equity Ownership & Alignment

Beneficial Ownership (Record Date: April 1, 2025)

Ownership Detail

• ESOP: 268 shares where Anderson has voting but not investment power .
• Form 3 (filed Jan 8, 2025): 438 common shares (direct) and 268 ESOP; plus 433 RSUs (derivative) with scheduled vesting above .
• Stock ownership guidelines: Section 16 executive officers must hold 1x base salary in Company stock; retention ratio is 100% of net profit shares until the multiple is met .
• Anti‑hedging/pledging: Prohibits writing options and short sales; hedging transactions discouraged and subject to Compliance Officer review; policy references anti‑hedging/pledging framework, with case‑by‑case review for hedging .
• No options outstanding under the 2016 plan; equity usage is RSUs/PSUs; 2016 plan shortfall led to proposal of 2025 plan adding 1,000,000 shares to the pool (73,967 remained available under 2016 as of April 1, 2025) .

Employment Terms

• Appointment: EVP & Chief Internal Audit Officer effective January 1, 2025 .
• Agreements: Employment/CIC agreements disclosed for CEO/CFO and CIC for COO; none disclosed for Ms. Anderson—skip unless later filed .
• CIC equity terms (company‑wide): double‑trigger vesting at target for PSUs and full vest for RSUs upon involuntary/good‑reason termination within 12 months post‑CIC .
• Clawback: Restatement‑based recoupment for incentive pay over prior three completed fiscal years; no fault required; meets Nasdaq rules .
• Tax gross‑ups: No excise tax gross‑ups under 280G/4999 in employment/CIC arrangements .
• Insider trading: Prohibits short‑selling and writing options; hedging discouraged subject to compliance review .

Say‑on‑Pay & Shareholder Feedback

Compensation Peer Group (2024 decisions)

• Aon‑advised peer group of regional/community banks (selected by size, business model, geography) used to calibrate competitiveness; examples include NBT Bancorp, Eagle Bancorp, First Commonwealth Financial, S&T Bancorp, Premier Financial, Kearny Financial, Tompkins Financial, Univest, Peoples Bancorp, City Holding, Financial Institutions, CNB Financial, Mid Penn Bancorp, The First of Long Island, Carter Bankshares, Farmers National, Arrow Financial, Summit Financial, Southern First, Primis Financial, Peoples Financial Services, Home Trust, Civista Bancshares .
• Committee targets around market median with adjustments for role scope, skills, and internal equity .

Risk Indicators & Red Flags

• Hedging/pledging: Hedging discouraged and subject to review; short‑selling/writing options prohibited; no pledging activity disclosed for Anderson—alignment preserved .
• Clawback: Robust, no‑fault restatement policy reduces windfall risk .
• Excise tax gross‑ups: None—shareholder‑friendly .
• Insider transactions: Form 3 filed on Jan 8, 2025; no Form 4 sale transactions found to date in available filings—a neutral signal on selling pressure .
• Related party/ordinary banking relationships: Loans/deposits to insiders conducted on market terms under federal regs; outstanding insider loans were ~$54.3M and deposits ~$35.8M as of year‑end 2024—no unfavorable features disclosed .

Investment Implications

• Alignment: Ownership is modest (~0.003% of SHBI) but reinforced by 1x salary ownership guideline and 100% net‑share retention until guideline met, reducing near‑term selling on vest events .
• Vesting/Supply: RSU tranches vested in Feb and Mar 2025; a final 142‑unit tranche vests Mar 6, 2026—watch for micro‑scale supply at vest; retention rules temper distribution into the float .
• Pay‑for‑performance: Company STIP metrics missed target on ROAA and efficiency in 2024, producing below‑target NEO payouts; LTIP emphasizes relative ROAA/ROAE vs peers—internal audit leadership aligns with strengthening controls in that context .
• Governance quality: Strong clawback, anti‑hedging, no tax gross‑ups, and independent compensation oversight point to disciplined incentive risk control—low red flags at the executive‑policy level .
• Retention risk: No specific employment/CIC agreement disclosed for Anderson; equity grants (RSUs/PSUs) and ownership requirements provide retention hooks; monitor future proxies or 8‑Ks for any tailored arrangements .

Data sources: 2025 DEF 14A (executive officers, ownership, equity plans, STIP/LTIP, governance), 2024 DEF 14A (say‑on‑pay, policies), 2023/2022/2019/2018 proxies (historical context), and SEC Form 3 (initial beneficial ownership and RSU vesting).
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