James C. Hagan

About James C. Hagan

James C. Hagan is President, Chief Executive Officer, and a director of Western New England Bancorp (WNEB); he has served as CEO since December 31, 2008, President since June 2005, and as a director since 2009 . He is 62 years old as of the May 9, 2024 annual meeting, with a banking background in credit administration and commercial lending, and holds a B.S. from Westfield State University and an MBA from American International College . Under his leadership, WNEB’s 2023 net income declined to $15.1 million ($0.70 diluted EPS) from $25.9 million ($1.18) in 2022 amid industry rate pressure; ROAE was 6.47% in 2023 vs. 11.85% in 2022, and net interest income fell 14.3% year over year, reflecting higher funding costs, while asset quality remained strong (NPLs/loans 0.32%) . Board governance separates the Chair and CEO roles (independent Chair since 2020), and all directors other than Mr. Hagan are independent, mitigating dual‑role concerns .

Past Roles

External Roles

Fixed Compensation

Multi-year CEO compensation (as reported in the Summary Compensation Table):

• 2024 base salary approved at $748,371 (6.0% increase from $706,010 in 2023) .
• Nonqualified Deferred Compensation: Company contributed $93,000 to Hagan’s NQDC in 2023; he contributed $4,418, bringing the aggregate balance to $97,418 at FYE 2023 .
• Legacy DB pension plan was terminated; Hagan was a participant; termination completed in 2023 with final expense recognition and annuity purchase for remaining liabilities .

Performance Compensation

Short-Term Incentive (STI) – Design and Results

• Target opportunity: 45% of base salary for CEO; pool funds 0%–150% of target with threshold/target/stretch goals; awards subject to corporate (75%) and individual (25%) components .
• 2023 payout: 77% of target ($243,000) reflecting mixed performance relative to goals .

2023 STI corporate metrics and outcomes:

• 2024 STI framework continued; Non‑Equity Incentive awarded for 2024 was $268,240 (SCT) , and base salaries were reviewed/raised effective early 2024 .

Long-Term Incentive (LTI) – Structure and Grants

• LTI objectives: 50% performance shares (PSUs) and 50% time‑based RSUs; performance goals are ROAE and three‑year cumulative EPS; payouts range 50% (threshold) to 150% (stretch); three‑year performance periods with “catch‑up” feature; vest within 75 days after measurement period end .

Recent CEO equity grants:

Select LTI performance goal frameworks:

• 2021–2023 plan: ROAE targets 6.25% (target 2021), 6.50% (2022), 6.75% (2023) and EPS cumulative target $1.97; plan paid at stretch 150% with 69,376 PSUs vested on Mar 5, 2024 (Hagan earned 14,715) .
• 2024–2026 plan: ROE thresholds/targets/stretch of 5.05%/5.61%/6.17% (2024), 6.18%/6.86%/7.55% (2025), 7.30%/8.11%/8.92% (2026); cumulative EPS target $2.50; Hagan 2024 LTI target is 35% of base .

Clawback and ownership:

• Incentive Compensation Recovery Policy adopted Nov 20, 2023 (SEC/NASDAQ compliant); operates in addition to plan recoupments .
• NEO stock ownership guidelines require holdings equal to 1x base salary within 5 years; all NEOs in compliance as of Dec 31, 2023 .

Equity Ownership & Alignment

Beneficial ownership (as of March 11, 2024):

Breakdown of Hagan’s beneficial ownership:

• 28,192 unvested RSUs with sole voting power .
• 204,570 shares held directly with sole voting/investment power .
• 45,904 ESOP shares for his account with shared voting power .
• 12,229 shares in 401(k) with shared voting and sole investment power .
• Outstanding equity awards at FYE 2023 (market value at $9.00/sh): 4,212 time‑based (2022 grant, $37,908), 8,370 time‑based (2023 grant, $75,330), 8,174 unearned PSUs (2022 plan, $73,566), 6,247 unearned PSUs (2023 plan, $56,219), and 14,715 earned PSUs from 2021 plan (market value $132,435 at 12/29/23 pricing) .

Hedging/pledging policy:

• Insider Trading Policy requires pre‑clearance and prohibits short‑selling; exercise of stock options during blackout is prohibited; hedging is restricted for Section 16 insiders; pledging prohibitions are not explicitly disclosed in the cited sections .

Employment Terms

• Employment agreement: Initial three‑year term with annual one‑year extensions at Board discretion; includes non‑compete during employment and for 12 months post‑termination, non‑solicit for 12 months, and confidentiality covenants .
• Severance/change‑of‑control (double‑trigger): If terminated without cause or resigns for “good reason” following a change in control, lump‑sum equals 3x highest salary over prior three years plus 3x estimated annual bonus, plus three years of incremental retirement/benefit restoration and company contributions that would have been credited, plus 36 months of medical/dental/vision at active‑rate cost; time‑based equity vests, performance‑based equity vests at target .
• Say‑on‑pay: 97% support in 2023; 2024 say‑on‑pay approved (For: 14,002,320; Against: 289,114; Abstain: 393,585) .

Board Governance

• Board independence: All directors except Mr. Hagan are independent under NASDAQ rules; Mr. Hagan is not independent due to employment .
• Board leadership/committee structure: Independent Chair (Lisa G. McMahon) since 2020; Hagan serves on the Executive Committee and Finance & Risk Management Committee; Audit, Compensation, and Nominating/Governance committees comprised of independent directors .
• Attendance: In 2023, Company board held 4 meetings; Bank board held 11 regular and 2 strategic meetings; directors collectively attended 97% of 39 scheduled meetings .

Compensation Structure Analysis

• Mix shift: Equity remains meaningful, with LTI target increased for CEO to 35% of base starting 2022, indicating continued emphasis on multi‑year alignment; PSUs set at 50% of LTI with ROAE and three‑year EPS goals .
• STI discipline: 2023 payout at 77% of target reflected sub‑threshold NIM and PTPPI offset by excellent asset quality (NPL metric at 150%), demonstrating formulaic linkage and Committee restraint (no discretionary upward adjustments) .
• Governance controls: Active use of independent consultant (Pearl Meyer), triennial peer updates, formal clawback policy, and ownership guidelines; say‑on‑pay outcomes supportive (97% in 2023; approved in 2024) .
• No repricing/gross‑ups: Policies prohibit option repricing without shareholder approval and tax gross‑ups; program discourages excessive risk taking .

Investment Implications

• Pay-for-performance alignment: STI/LTI frameworks are tightly coupled to profitability (PTPPI), efficiency (expense ratio), NIM, credit quality, ROAE, and three‑year EPS; 2023 outcomes flowed through to payouts (77% of target), supporting alignment and limiting windfalls in tougher rate environments .
• Retention risk vs. change‑of‑control economics: Employment agreement with automatic renewals and significant double‑trigger CIC protection (3x salary and bonus; 36‑month benefits; equity acceleration) reduces flight risk but could inflate deal‑related costs and potential dilution from accelerated equity .
• Insider selling pressure signals: Substantial unvested/time‑based and performance‑based awards with three‑year cycles create periodic vesting events; while hedging is restricted and short‑selling prohibited, there is no explicit disclosure of pledging prohibitions in the referenced sections; monitor Form 4s around vest dates for liquidity activity .
• Governance quality: Independent Chair, independent key committees, and high say‑on‑pay support, combined with clawback and stock ownership policies, mitigate CEO/director dual‑role concerns and support shareholder oversight .
• Execution risk: 2023 pressure on net interest income and profitability (net income down to $15.1M; ROAE 6.47%) highlights rate‑sensitivity and deposit competition risks; compensation metrics and targets anticipate a multi‑year improvement trajectory via ROE and EPS goals through 2026 .

Note: All data reflect disclosures in WNEB’s 2024 and 2025 proxy statements and related 8‑K filings as cited above.