James Hughes
About James Hughes
James A. Hughes, age 66, is President, Chief Executive Officer and Director of Unity Bancorp, Inc. and Unity Bank; he has served on the Board since 2002. He holds a B.S. in Accounting (Mount St. Mary’s), an MBA (Seton Hall), and is a Certified Public Accountant, grounding his leadership in finance and controls . Under his leadership in 2024, Unity delivered TSR of 49.84% (vs. KBW Bank 32.63% and S&P 500 24.9%), EPS grew 5.7% to $4.06, NIM expanded 10 bps to 4.16%, net interest income rose $3.6M (+3.8%), loans grew $88.6M (+4.1%), and deposits grew $176.2M (+9.2%) . Hughes is not independent as CEO, while Unity maintains a separate, independent Chairman structure .
Past Roles
No additional prior roles beyond current CEO/President and Director were disclosed in the latest and prior proxy biographies .
External Roles
- Public-company directorships: None disclosed for any Director, including Mr. Hughes .
Board Service & Governance
- Board tenure and term: Director since 2002; nominated for a new term expiring at the 2028 Annual Meeting .
- Independence and leadership: Not independent (Company policy states all Directors except the CEO were independent in 2024). The Chair and CEO roles are separated with a non-employee Chair .
- Committee roles: Board committee matrix shows Hughes serves on the Executive Loan Committee and the Asset Liability Committee (ALCO) .
- Attendance: Board met 12 times in 2024; no Director attended fewer than 75% of combined Board/committee meetings .
Fixed Compensation
Compensation summary for Mr. Hughes (NEO – CEO):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 700,000 | 735,000 | 764,400 |
| Target Annual Incentive (% of Salary) | — | — | 70.0% |
| Non-Equity Incentive Paid ($) | 558,600 | 587,530 | 655,473 |
| Stock Awards – Grant-Date Fair Value ($) | 507,240 | 371,520 | 497,340 |
| All Other Compensation ($) | 441,417 | 666,412 | 1,382,895 |
| Total Compensation ($) | 2,207,257 | 2,360,462 | 3,300,108 |
Key design elements and governance:
- Clawback policy; double-trigger CIC; no excise tax gross-ups; no option repricing under the equity plan .
- Committee (independent) sets CEO/CFO pay; no outside compensation consultant currently used .
Performance Compensation
2024 Executive Bonus Program design and outcomes:
| Element | Weighting | Threshold | Target | Cap | 2024 Performance | Payout Factor |
|---|---|---|---|---|---|---|
| PPNR ROAA vs. Peers | 25% | 50% | 100% | 150% | 242.72% | 150% (capped) |
| PPNR ROAE vs. Peers | 25% | 50% | 100% | 150% | 223.66% | 150% (capped) |
| Individual/Strategic Goals (Committee discretion) | 50% | n/a | n/a | n/a | n/a | Included in overall result |
| Overall Outcome (CEO) | — | — | — | — | — | 122.5% of target; Actual $655,473 vs target $535,080 |
Equity awards (2024):
- 18,000 restricted shares granted 3/8/2024 at $27.63 (grant-date FV $497,340); vests in 4 equal annual installments starting 3/8/2025; carries voting and dividend rights .
Realized performance-linked value (2024):
- Options exercised: 16,490 shares; value realized $530,177 .
- Stock vested: 15,000 shares; value realized $432,330 .
Equity Ownership & Alignment
Beneficial ownership and alignment indicators (as of 2/28/2025):
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 299,514 shares (2.91% of class) |
| Breakdown | 144,308 direct; 9,382 in 401(k); 100,000 options immediately exercisable; 45,000 restricted stock; 824 DRIP shares |
| Pledged Shares | None of the reported shares are pledged |
| Upcoming Vesting (CEO RS) | 45,000 unvested RS across grants vesting ratably; 2024 grant 18,000 vests 4,500/yr 2025–2028 |
| 2024 Form-Table Realizations | Options exercised and stock vested as shown above |
Vesting schedule detail (CEO aggregate 45,000 unvested RS as of 2/28/2025):
- 10,000 granted 3/25/2021: 2,500 vesting annually; 2,500 remaining unvested (final tranche 2025) .
- 8,000 granted 8/31/2021: 2,000 vesting annually; 2,000 remaining unvested (final tranche 2025) .
- 18,000 granted 3/16/2022: 4,500 vesting annually; 9,000 remaining unvested (2025–2026) .
- 18,000 granted 5/5/2023: 4,500 vesting annually; 13,500 remaining unvested (2025–2027) .
- 18,000 granted 3/8/2024: 4,500 vesting annually; 18,000 unvested (2025–2028) .
Options outstanding (selected CEO lines at 12/31/2024):
- 11,000 @ $8.95 exp. 2/25/2026; 10,000 @ $21.15 exp. 3/9/2028; 14,000 @ $18.77 exp. 12/21/2028; 25,000 @ $20.61 exp. 3/12/2029; 15,000 @ $16.27 exp. 3/16/2030; 25,000 @ $20.56 exp. 3/25/2031 .
Deferred compensation and retirement alignment:
- SERP: Company-recorded contribution $1,037,967 in 2024; aggregate SERP balance $6,322,019 at YE 2024 .
- CEO deferred compensation: $589,926 of 2024 bonus credited to deferred plan; total deferred compensation credited $657,877 and interest $313,586 in 2024 under Company’s deferred fee plan .
Employment Terms
Employment agreement (Amended & Restated), evergreen three-year term (daily auto-extend) with termination conditions; includes severance and CIC protections and post-CIC non-compete/non-solicit .
| Trigger | Cash | Health Benefits | Equity | Other Terms |
|---|---|---|---|---|
| Termination without cause / good cause resignation | 18 months base salary, paid in installments | Continued medical, life, etc., up to 18 months (ceases upon comparable new employment) | No acceleration | Definition of “Good Cause” includes material reduction in duties or base salary |
| Termination within 18 months post-CIC | 18 months base salary + prior FY cash bonus, installments | Continued benefits up to 18 months | All unvested stock awards accelerate upon CIC | Post-CIC 18-month non-compete and non-solicit; cash equal to 18 months base + prior FY bonus in exchange |
| Termination within 18 months post-“Significant Acquisition” | 18 months base salary + prior FY bonus, installments | — | All unvested stock awards accelerate | “Significant Acquisition” defined as issuance ≥25% of voting securities as consideration |
Potential payout illustration (as of 12/31/2024):
| Scenario (12/31/2024) | Total |
|---|---|
| Termination without cause | $1,161,824 (cash $1,146,600 + benefits $15,224) |
| Termination following a CIC | $5,581,820 (cash CIC $1,802,073 + non-compete $1,802,073 + benefits $15,224 + accelerated RS vesting $1,962,450) |
SERP benefit: upon retirement after age 66, annual benefit equals 60% of average base salary over the preceding 36 months, payable up to 15 years, CPI-adjusted; beneficiary continuation applies per plan .
Compensation Structure Diagnostics
- Cash vs. Equity mix: Meaningful equity usage via multi-year vesting RS; equity awards sized annually; options remain outstanding from prior grants; no option repricing permitted .
- Metric rigor: 2024 used relative PPNR ROAA/ROAE vs peer banks (PA/NJ, $0.6B–$24B assets); performance substantially exceeded peers, resulting in capped formulaic payout on quantitative components; overall CEO payout at 122.5% of target .
- Governance safeguards: Clawback policy; double-trigger CIC; no excise tax gross-ups .
Risk Indicators & Related Party
- Pledging/Hedging: None of the reported shares are pledged; no hedging policy disclosure found in proxy .
- Related party transactions: Only ordinary-course banking relationships; all such transactions reviewed/approved by Audit & Risk Committee; no non-ordinary-course related party transactions in 2024–2023 .
- Section 16 compliance: Company reports timely filings for 2024 with one clerical Form 4A correction for a different Director; none noted for Hughes .
Investment Implications
- Alignment and upside capture: Strong pay-for-performance linkage with relative PPNR metrics and substantial equity exposure (45,000 unvested RS; annual vesting cadence through 2028). 2024 over-performance versus peers supports above-target bonus (122.5% of target) and signals execution strength, while clawback/double-trigger and no gross-ups mitigate governance risk .
- Retention vs. overhang: Evergreen employment term, SERP balance ($6.32M) and unvested RS (notably 18,000 shares vesting across 2025–2028) support retention; expect vesting events of ~18,000 shares in 2025, ~13,500 in 2026–2027, and ~4,500 in 2028, which can create periodic supply from net share settlements or sales for tax/liquidity .
- Governance and board oversight: CEO is a Director but not the Chair; independent Chair structure and committee independence reduce dual-role concerns; Hughes serves on credit (Executive Loan) and ALCO committees, consistent with a bank CEO’s operating remit, but independence remains a watch point in contentious decisions .
- Performance track record: TSR of 49.84% in 2024 alongside EPS/NIM growth, deposit and loan expansion underscore value creation during a challenging rate environment; continuation of relative PPNR outperformance is a positive leading indicator for incentive outcomes and share performance if sustained .