Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Establishment of 2023 Cash Incentive Program
On January 24, 2023, the Compensation Committee of the Board of Directors (the
"Compensation Committee") of First US Bancshares, Inc. (the "Company")
established an annual cash incentive program for the Company's fiscal year
ending December 31, 2023 for certain executive officers and key employees of the
Company and its subsidiaries, including the Company's named executive officers -
James F. House, President and Chief Executive Officer of the Company and First
US Bank (the "Bank"); Thomas S. Elley, Chief Financial Officer of the Company
and the Bank; and William C. Mitchell, Senior Executive Vice President, Consumer
Banking, of the Bank (the "2023 Cash Incentive Program"). Under the 2023 Cash
Incentive Program, certain executive officers and key employees of the Company
have a short-term incentive cash bonus opportunity based on certain corporate
and individual performance objectives established by the Compensation Committee.
With respect to the Company's named executive officers, the cash bonus
opportunity is based on the achievement of certain specified levels of financial
performance, specifically the Company's (i) consolidated pre-tax income for 2023
(25% of the total cash bonus opportunity); (ii) consolidated pre-tax return on
average assets ("ROAA") for 2023 (30% of the total cash bonus opportunity for
Messrs. House and Elley; 25% of the total cash bonus opportunity for Mr.
Mitchell); (iii) consolidated pre-tax return on average tangible equity
("ROATE") for 2023 (25% of the total cash bonus opportunity for Messrs. House
and Elley; 15% of the total cash bonus opportunity for Mr. Mitchell); and (iv)
net loan growth in indirect lending for 2023 ("Loan Growth") (15% of the total
cash bonus opportunity for Mr. Mitchell only). For each of the named executive
officers, the cash bonus opportunity also contains a discretionary component
(the "Discretionary Component") (20% of the total cash bonus opportunity), to be
determined by the Compensation Committee. Factors to be considered in
determining the Discretionary Component may include, but are not limited to,
contribution to the long-term profitability and growth of the Company,
achievement of strategic projects or initiatives, commitment to integrity and
the values of the Company, improvement in total shareholder return, successful
expansion efforts, balance sheet management, gains on peer group comparisons,
successful implementation of reorganization strategies and successful
implementation of cost control strategies. The cash bonus opportunity is subject
to reduction (up to 35% of the total cash bonus opportunity) based on
deterioration of the Company's regulatory ratings or other negative regulatory
findings. The individual target bonus opportunity for the three named executive
officers participating in the 2023 Cash Incentive Program is 45% of 2023 base
salary for Mr. House; 35% of 2023 base salary for Mr. Elley; and 35% of 2023
base salary for Mr. Mitchell.
Under the 2023 Cash Incentive Program, the Company's named executive officers
will receive 100% of their target bonus opportunity if the Company's final
consolidated pre-tax income, ROAA, ROATE and Loan Growth (for Mr. Mitchell) for
2023 are 100% of the Company's budgeted consolidated pre-tax income, ROAA, ROATE
and Loan Growth for the year, and if the named executive officers receive 100%
of the Discretionary Component. The named executive officers will receive 50% of
their target bonus opportunity if the Company achieves a threshold level of
performance (approximately 80% of the Company's budgeted consolidated pre-tax
income, 80% of the Company's budgeted ROAA, 80% of the Company's budgeted ROATE,
and 80% of the Company's budgeted Loan Growth (for Mr. Mitchell)), and if the
named executive officers receive 80% of the Discretionary Component. The named
executive officers will receive 150% of their target bonus opportunity if the
Company achieves a maximum level of performance (approximately 120% of the
Company's budgeted consolidated pre-tax income, 120% of the Company's budgeted
ROAA, 120% of the Company's budgeted ROATE, and 120% of the Company's budgeted
Loan Growth (for Mr. Mitchell)), and if the named executive officers receive
120% of the Discretionary Component. Payouts between the threshold and maximum
amounts will be calculated by the Compensation Committee using straight-line
interpolation, as described in the 2023 Cash Incentive Program.
The Compensation Committee may make adjustments to the terms and conditions of,
and the criteria included in, awards under the 2023 Cash Incentive Program in
recognition of extraordinary, unusual or nonrecurring events affecting a
participant or the Company or the financial statements of the Company, or in
certain other instances specified in the 2023 Cash Incentive Program. The
Compensation Committee, in its sole discretion, may take into account the impact
of such extraordinary, unusual or nonrecurring events (positive or negative) in
determining a participant's relative achievement of the performance objectives.
The 2023 Cash Incentive Program provides for recoupment of cash bonus payments
based on (i) achievement of financial results that are subsequently the subject
of a restatement due to material noncompliance with any financial reporting
requirement under either GAAP or the federal securities laws, other than as a
result of changes to accounting rules and regulations, or (ii) a subsequent
finding that the financial information or performance objectives used by the
Compensation Committee to determine the amount of any cash bonus payments were
materially inaccurate. Additionally, cash bonus payments are subject to
recoupment based on a participant's conduct that is not in good faith and that
materially disrupts, damages, impairs or interferes with the business of the
Company.
A copy of the 2023 Cash Incentive Program is attached as Exhibit 10.1 to this
Current Report on Form 8-K and is incorporated by reference herein. The
foregoing description of the 2023 Cash Incentive Program does not purport to be
a complete description and is qualified in its entirety by reference to Exhibit
10.1.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Exhibit
10.1 2023 Cash Incentive Program
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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