ENTERPRISE BANCORP INC /MA/ (Form: 8-K, Received: 04/23/2021 14:53:10)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 23, 2021 (April 20, 2021)

ENTERPRISE BANCORP, INC.

(Exact name of registrant as specified in charter)

Massachusetts

001-33912

04-3308902

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)



222 Merrimack Street
Lowell,	Massachusetts	01852
(Address of principal executive offices)		(Zip Code)

(978)459-9000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	EBTC	NASDAQ Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) 2021 Variable Compensation Incentive Plan. On April 20, 2021, the Board of Directors of Enterprise Bank and Trust Company (the “Bank”), the wholly owned banking subsidiary of Enterprise Bancorp, Inc. (the “Company”), approved the Enterprise Bank 2021 Variable Compensation Incentive Plan (the “2021 Incentive Plan”), including approval of specific performance factors, performance targets and percentage payout amounts for 2021. The 2021 Incentive Plan applies to employees, including the Company’s named executive officers, who do not otherwise participate in any form of individual-based incentive plan maintained by the Bank.

The 2021 Incentive Plan is designed to acknowledge and reward bank-wide performance objectives. Eligible employees receive a target incentive opportunity, which is a set percentage of an individual’s base salary for the plan year (i.e., salary earnings for the year ending on December 31, 2021). Each participating employee is assigned to an incentive group based upon the employee’s position and role in the Bank. The performance factors that apply vary between incentive groups based on the role of the employee. The weights assigned to each performance factor (which determine the percentage of the total incentive payment that may be earned by an employee through accomplishment of the performance target applicable to such factor) differ by incentive group.

The total compensation pool available for incentive payouts under the 2021 Incentive Plan will be determined by the Company’s overall performance for the 2021 Incentive Plan year. The Company must attain a specified level of performance in Income, as defined below (the “threshold” level), for the plan year for a payout to be made under the performance factors outlined in the 2021 Incentive Plan. Income under the 2021 Incentive Plan is defined as pre-tax income excluding variable compensation plan expense, the provision for credit losses, gains or losses on sales of investment securities, losses on the prepayment of borrowings or subordinated debt, and gains or losses on the early termination of hedged transactions.

Each of the Company’s named executive officers are in the “Bankwide” incentive group under the 2021 Incentive Plan. Payouts under the “Bankwide” incentive group will be based on Income, which performance factor results will be reduced if the Company’s provision for credit losses exceeds the budgeted level for 2021. Higher levels of payout may be accomplished if the Income performance level exceeds “threshold”, including reaching “target” and “stretch” levels for a maximum incentive opportunity to be paid under the 2021 Incentive Plan of 150% of the target incentive opportunity. Any payout for the 2021 Incentive Plan year will be made on or before March 15, 2022 and will be paid as outlined below.

Each of Messrs. George L. Duncan and Richard W. Main, the Company’s Executive Chairman and President, respectively, may receive an incentive payout under the 2021 Incentive Plan ranging from 1% of base salary if the Bank accomplishes the “threshold” levels for the performance factor to 45% at “target” levels and 67.5% at “stretch” levels.

Mr. John P. Clancy, Jr., the Company’s Chief Executive Officer, may receive an incentive payout under the 2021 Incentive Plan ranging from 1% of base salary if the Bank accomplishes the “threshold” levels for the performance factor to 50% at “target” levels and 75% at “stretch” levels.

Mr. Stephen J. Irish, the Company’s Managing Director of Wealth Management and Chief Operating Officer, may receive an incentive payout under the 2021 Incentive Plan ranging from 1% of base salary if the Bank accomplishes the “threshold” levels for the performance factor to 37.5% at “target” levels and 56.25% at “stretch” levels.

Mr. Joseph R. Lussier, the Company’s Chief Financial Officer and Treasurer, may receive an incentive payout under the 2021 Incentive Plan ranging from 1% of base salary if the Bank accomplishes the “threshold” levels for the performance factor to 30% at “target” levels and 45% at “stretch” levels.

In addition, the Compensation and Human Resources Committee, as authorized by the Board of Directors, has the discretion to (i) amend, modify, or discontinue any of the terms and conditions of the

2021 Incentive Plan at any time it deems appropriate and will determine on at least an annual basis, those employees of the Bank that will be eligible to participate in the 2021 Incentive Plan, (ii) determine whether the occurrence of an extraordinary event outside the control of the Company, and which affects the Company’s financial statements, should impact the payout under the 2021 Incentive Plan, (iii) require recoupment of a partial or full payout received by a Senior Vice President or above if there is a material negative restatement resulting from material noncompliance with certain rules and regulations, and (iv) the Compensation and Human Resources Committee has final and binding interpretation if there is any ambiguity as to the meaning of any terms or provisions of the 2021 Incentive Plan and employees will be subject to disciplinary action up to and including termination of employment if inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards are performed.

The foregoing description is a summary of the 2021 Incentive Plan and is qualified in its entirety by reference to the copy of the 2021 Incentive Plan that is attached as Exhibit 10.1 to this Current Report on Form 8-K and is hereby incorporated by reference to this Current Report on Form 8-K.

Supplemental Executive Retirement and Deferred Compensation Plan 2021 Addendum. At a meeting held on April 20, 2021, the Company’s Board of Directors, on the recommendation of the Compensation and Human Resources Committee, approved the Enterprise Bank Supplemental Executive Retirement and Deferred Compensation Plan (the “SERP”) 2021 Addendum (the “2021 SERP Addendum”), including approval of service-based and performance-based contributions for the Chief Executive Officer and the Executive Vice Presidents of the Company, including the Managing Director of Wealth Management and Chief Operating Officer, Mr. Irish, and the Chief Financial Officer and Treasurer, Mr. Lussier. The contributions for the 2021 SERP plan year will be made on or before March 15, 2022 and will be contributed as outlined below.

The Company’s Chief Executive Officer, Mr. Clancy, will receive a service-based contribution of $75,000 and will be eligible to receive an additional performance-based contribution outlined below based on the following criteria for 2021:


	0%	25%	50%	75%	100% (Target)	125%	150%
Income Metric	44.9M	48.5M	52.1M	55.7M	59.3M	62.9M	66.5M
Chief Executive Officer Contribution Amount:	$0	$12,500	$25,000	$37,500	$50,000	$100,000	$150,000

The Company’s Managing Director of Wealth Management and Chief Operating Officer, Mr. Irish, will receive a service-based contribution of $18,000. The Company’s Chief Financial Officer and Treasurer, Mr. Lussier, will receive a service-based contribution of $7,000. Mr. Irish and Mr. Lussier will each be eligible to receive an additional performance-based contribution outlined below based on the following criteria for 2021:


	0%	25%	50%	75%	100% (Target)	125%	150%
Income Metric	44.9M	48.5M	52.1M	55.7M	59.3M	62.9M	66.5M
Executive Vice Presidents Contribution Amount:	$0	$1,750	$3,500	$5,250	$7,000	$14,000	$21,000

Income under the 2021 SERP Addendum is defined as pre-tax income excluding variable compensation plan expense, the provision for credit losses, gains or losses on sales of investment securities, losses on the prepayment of borrowings or subordinated debt, and gains or losses on the early termination of hedged transactions. Additionally, the Income performance factor result will be reduced if the Company’s provision for credit losses exceeds the budgeted level for 2021. Any contribution for the 2021 SERP plan year will be made on or before March 15, 2022.

The foregoing description is a summary of the 2021 SERP Addendum and is qualified in its entirety by reference to the copy of the Enterprise Bank Supplemental Executive Retirement and Deferred

Compensation Plan filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on March 3, 2019 and the 2021 SERP Addendum that is attached as Exhibit 10.2 to this Current Report on Form 8-K and is hereby incorporated by reference to this Current Report on Form 8-K.




Item 9.01.	Financial Statements and Exhibits.

(d)	The following exhibits are included with this Current Report on Form 8-K:

	Exhibit 10.1	Enterprise Bank 2021 Variable Compensation Incentive Plan.

	Exhibit 10.2	Enterprise Bank Supplemental Executive Retirement and Deferred Compensation Plan 2021 Addendum.

[Remainder of Page Intentionally Blank]

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




	ENTERPRISE BANCORP, INC.


Date: April 23, 2021	By:	/s/ Joseph R. Lussier
		Joseph R. Lussier
		Executive Vice President, Treasurer and Chief Financial Officer

2021 Variable Compensation Incentive Plan

Purpose and Objective

The 2021 Variable Compensation Incentive Plan (the Plan) incents and rewards for Bank and Individual performance.

Participant Eligibility

Regular team members who do not participate in an individual sales incentive plan or an individual commission plan are eligible to participate in the Plan. Temporary and co-operative team members are ineligible to participate in the Plan. If your hire date is after January 1 of the current plan year, you will be eligible for a pro-rata payout, based on wages earned during the plan year.

Target Awards

You will have a target variable compensation opportunity (target percentage), which is a percentage of your regular earnings (base salary) earned in the current plan year.

Determination of Variable Compensation Incentive Payout

You will be assigned to a variable compensation incentive group based upon your position and role. The attached addendum outlines your specific performance factor(s).

The Bank must attain the Plan threshold for the Income performance factor (the “threshold”) in the current plan year for a payout to be made. If the threshold is achieved, the Plan payouts will be determined by the precise financial performance achieved in the plan applied to the target to determine the payout. The maximum incentive opportunity to be paid under this plan is 150% of target.

Timing of Payouts and Plan Payouts

The performance period is January 1 through December 31 of the current plan year. If it is determined that participants will receive a payout under the Plan, payouts will be received on or before March 15, following the plan year.

Payouts will be made in a cash lump sum. Incentive awards will be considered taxable income to participants in the year paid and will be subject to withholding for required income and other applicable taxes.

Team Member Individual Performance

Team member’s individual performance will be taken into consideration when determining final payouts under the 2021 Variable Compensation Incentive Plan based on results and impacts. Team member’s individual performance may be reduced up to 25% of the total Plan payout if a team member is not meeting performance expectations.

Termination of Employment

If a Plan participant terminates employment before the payout out date, an incentive award will not be paid. Participants must be an active team member of the Bank on the date the Plan incentive is paid to receive the award.

If a participant retires at or after the age of 62 and has been employed for at least three months in the current plan year, the participant is eligible to receive a pro-rata payout to be received within 30 days following the retirement date. If a participant passes away or employment ends as a result of disability during the Plan year, the participant or the participant’s beneficiary is eligible to receive a pro-rata payout to be received within 30 days following death or disability. Payouts will be based upon the participant’s wages earned in the current Plan year and management’s estimate of year-end results at the participant’s employment end date.

Plan Authorization and Discretion

This Plan was developed based on the Bank’s existing business, market and economic conditions, current services, and staff assignments and is authorized by the Board of Directors and administered by the Compensation and Human Resources Committee. If changes occur that are substantial enough to affect these conditions, services, or assignments, the Compensation and Human Resources Committee may add to, amend, modify, or discontinue any of the terms and conditions of the Plan at any time as it deems appropriate. The Compensation and Human Resources Committee will determine on at least an annual basis, those team members of the Bank that will be eligible to participate in the Plan.

Extraordinary Event

An extraordinary event, such as a windfall, or a federal or state compliance, Community Reinvestment Act (CRA) or safety and soundness rating below satisfactory, or another unusual event, may either positively or negatively impact the Bank’s financial results and conditions. The Compensation and Human Resources Committee will have discretion whether the extraordinary event will impact the payout under the Plan.

Clawback Provision

If the Bank’s reported financial or operating results are determined to be subject to material negative restatement due to material noncompliance with any financial reporting requirement under the securities laws, fraud, or misconduct (other than a restatement caused by a change in applicable accounting rules or interpretations), the Compensation and Human Resources Committee may require recoupment of full or partial payout made to participants with an officer status of Senior Vice President (SVP) or above.

Ethics and Interpretation

If there is any ambiguity as to the meaning of any terms or provisions of this Plan or any questions as to the correct interpretation of any information contained therein, the Bank’s interpretation expressed by the Compensation and Human Resources Committee will be final and binding.

The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards, will subject the team member to disciplinary action up to and including termination of employment. In addition, any incentive compensation as provided by the Plan to which the team member would otherwise be entitled will be revoked.

Miscellaneous

The Plan will not be deemed to give any participant the right to be retained in the employ of the Bank nor will the Plan interfere with the right of the Bank to discharge any participant at any time. The relationship between team members and the Bank is one of at-will employment.

This Plan and the transactions and payments hereunder shall, in all respect, be governed by, and construed and enforced in accordance with applicable governmental laws and regulations. Each provision in this Plan is severable, and if any provision is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not, in any way, be affected or impaired thereby.

Addendum: Bankwide Group

Participant Scorecard


Performance Factor	Weight	At Threshold				Target				Stretch
		0%	25%	50%	75%	100%	125%	150%	175%	200%
Income*	100%	44.9M	48.5M	52.1M	55.7M	59.3M	62.9M	66.5M	70.1M	73.7M

Scorecard Calculation Information:

The scorecard will be calculated using a precise payout level based on actual performance between levels. For example, if the Bank’s Income result is $56.5M, which falls between the 75% and 100% payout levels, the Plan payout will be 81%, before the Provision for Credit Losses adjustor is applied. Thus, before the impact of the adjustor and any individual performance adjustment, an individual’s incentive payout would be 81% of target.

Scorecard Adjustor for the Provision for Credit Losses:

If the actual Provision for Credit Losses is at budget of $9 million, there will be no adjustment to the Income performance factor results. Every dollar that the Provision for Credit Losses exceeds budget, the amount above $9 million is multiplied by 75% and applied as reduction to the Income performance factor results. For example, if the Provision for Credit Losses exceeds budget by $1 million, the Income performance factor results will be reduced by $750,000.

* Income is defined as pre-tax income excluding variable compensation plan expense, the provision for credit losses, gains or losses on sales of investment securities, losses on the prepayment of borrowings or subordinated debt, and gains or losses on the early termination of hedged transactions.

Enterprise Bank Supplemental Executive Retirement and Deferred Compensation Plan

2021 Addendum

This Addendum to the Enterprise Bank Supplemental Executive Retirement and Deferred Compensation Plan (the "Plan") is effective for the Plan year commencing on January 1, 2021 (the "2021 Plan Year") and is intended to set forth certain provisions of the Plan that are determined at the discretion of the Compensation and Human Resources Committee of the Enterprise Bank and Trust Company Board of Directors (the "Compensation and Human Resources Committee"). Plan eligibility and Plan contributions will be reviewed annually by the Compensation and Human Resources Committee.

Plan Eligibility

The Chief Executive Officer and individuals with an officer status of Executive Vice President as of March 16, 2021 will be eligible for Plan contributions.

Employer Plan Contribution

Plan contributions will be made annually on or before March 15 of the year following the plan year and will be as follows for 2021:

Service Based Contributions

A service-based contribution of $7,000 will be made for the following Executive Vice Presidents for 2021:

•Chief Commercial Lending Officer

•Branch Administration Director

•Construction Lending Director

•Chief Risk Officer

•Chief Banking Officer

•NH Community Banking and Lending Director

•Chief Mortgage and Consumer Lending Officer

•Chief Sales, Community and Customer Relationship Officer

•Chief Human Resources Officer

•Chief Digital and Operations Officer

•Regional Commercial Lending Director

•Chief Information Officer

•Chief Financial Officer & Treasurer

A service-based contribution of $18,000 will be made for the following Executive Vice Presidents for 2021:

•Managing Director of Wealth Management & Chief Operating Officer

A service-based contribution of $75,000 will be made for the Chief Executive Officer for 2021.

Performance Based Contributions

The particpants will each receive an additional contribution based on the performance of the Income metric:


	0%	25%	50%	75%	100% (Target)	125%	150%
Income Metric*	44.9M	48.5M	52.1M	55.7M	59.3M	62.9M	66.5M
Executive Vice Presidents Contribution Amount:	$0	$1,750	$3,500	$5,250	$7,000	$14,000	$21,000
Chief Executive Officer Contribution Amount:	$0	$12,500	$25,000	$37,500	$50,000	$100,000	$150,000

Scorecard Calculation Information:

The scorecard will be calculated using a precise payout level based on actual performance between levels. For example, if the Bank’s Income result is $56.5M, which falls between the 75% and 100% payout levels, the Plan payout will be 81%, before the Provision for Credit Losses adjustor is applied. Thus, before the impact of the adjustor, an individual’s performance based contribution would be 81% of target.

Scorecard Adjustor for the Provision for Credit Losses: