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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): September 18, 2020 (September 15, 2020)
 
 
 
CORTLAND BANCORP INC
(Exact name of registrant as specified in its charter)
 
  Ohio   001-38827   34-1451118  
             
  (State or other jurisdiction   (Commission   (I.R.S. Employer  
  of incorporation)   File Number)   Identification No.)  
 
 
194 West Main Street, Cortland, Ohio 44410
__________________________________________________
(Address of principal executive offices, including Zip Code)
 
 
Registrant’s telephone number, including area code: (330) 637-8040
________________________________________________________
 
 
 
Not Applicable
_________________________________________________
(Former name or former address, if changed since last report)
 
 
 
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 (see General Instructions A.2. below):
 
☐  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, No Par Value
CLDB
NASDAQ Capital 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(e) Compensatory Arrangements of Certain Officers
 
Amendment of short-term cash incentive plan. On September 15, 2020 the Board of Directors adopted an amended short-term cash incentive plan for executives. The Cortland Savings and Banking Company Amended Annual Incentive Plan for Executive Officers (the “Plan”) is a short-term cash incentive plan that rewards employees with additional cash compensation (the “Target Incentive”) if specified annual objectives are achieved, which can include bank-wide performance objectives, business unit goals, and individual performance goals. Up to 50% of the Target Incentive will be based on specific financial performance criteria established by the Committee on an annual basis (the “Specific Financial Performance Criteria”), and up to 50% of the Target Incentive will be based on the Committee's subjective evaluation of the participant’s performance in managing earnings, capital, liquidity, interest rate sensitivity and increased risks presented by economic and other factors. The Specific Financial Performance Criteria in effect for 2020 are loan and deposit growth, net income, return on assets, net interest margin, efficiency ratio, and asset quality. If targeted performance is achieved or exceeded in 2020, a participating officer will receive a cash bonus ranging from 25% to 40% of base salary, depending on the level of goal achievement. Assuming targeted goals for 2020 are achieved, cash distributions under the plan would occur, at the Compensation Committee’s discretion, during the fourth quarter of 2020 or within two and a half months following the end of the Plan Year (i.e., March 15, 2021). CEO James M. Gasior, COO Timothy Carney, Senior Vice President and Chief Lending Officer Stanley P. Feret, and Senior Vice President and Chief Financial Officer David J. Lucido are participants in the Plan. The Plan may be terminated by the Board of Directors at any time. This summary of the plan is qualified in its entirety by reference to the exhibit attached hereto.
 
Given the unprecedented and unforeseeable impact of the COVID-19 pandemic on the general economy, the banking industry, and the company's operations and financial performance during the first half of fiscal year 2020, the Board of Directors determined it was necessary to enhance the discretion of the Compensation Committee to award incentive compensation to executives under the Plan.
 
In reliance on SEC rules and guidance, the precise pre-tax income performance goal and the precise goals for each of the individual performance goals are confidential and are therefore withheld from the exhibits attached hereto.
 
Item 9.01 Exhibits.
 
(d) Exhibits.
 
10.35 Amended Annual Incentive Plan for Executive Officers, dated September 15, 2020
   
104 Cover Page Interactive Data File (formatted as Inline XBRL).
 
 
 
 
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.
 
 
Cortland Bancorp Inc
       
Date: September 18, 2020
By:
/s/ James M. Gasior
James M. Gasior
President & Chief Executive Officer
 
 
 

Exhibit 10.35

 

 

 

Cortland Savings and Banking Company

 

Amended Annual Incentive Plan for Executive Officers

 

 

The Cortland Savings and Banking Company Amended Annual Incentive Plan for Executive Officers (the “Plan”) is designed to provide short-term cash incentives to eligible executive officers of The Cortland Savings and Banking Company (the “Bank”) and any subsidiary in order to:

 

 

 

●

Attract and retain executive officers

 

●

Motivate executive officers to achieve Bank objectives

 

●

Reward executives for achieving performance targets

 

●

Align executive incentives with shareholder interests

 

●

Provide incentive awards consistent with peers based on performance

 

●

Limit risks to shareholder value

 

●

Comply with regulatory guidelines related to executive compensation and incentive awards

 

●

Enhance shareholder value

 

 

Plan Administration

 

The Plan will be administered by the Directors Compensation Committee (the “Committee”), including the setting of performance goals, establishing the cash awards that may be awarded and determining the degree to which performance goals have been achieved, as provided herein. The Committee will establish the baseline for incentive awards, such as Minimal Acceptable Return to Shareholders (MARS) and related criteria, as well as the incentive percentage for each participant, the performance criteria and weighting of same and will review the impact of the plan on financial results to ensure objectives are being met. The Committee retains discretion to pay incentives if the baseline for incentive awards is not met.

 

 

Eligibility

 

In the sole discretion of the Committee, an incentive may be paid to members of Executive Management when the Bank has met certain performance criteria established by the Committee and when each individual member has met individual performance criteria established by the Committee, all as provided by the Plan. The criteria for the current Plan Year (as defined below) are attached within Exhibit A. Cash awards earned under the Plan will be based upon a percentage of the participants’ base earnings (i.e. average base salary as of January 1 through December 31 of the Plan Year) in a given Plan Year (as defined below), and will range from 0% (for below threshold performance) to 40% (for superior performance), all as determined by the Committee. Base earnings do not include referral fees and any other compensation. Awards earned and payable, as determined by the Committee, will be paid, in the discretion of the Committee, during the final quarter of a Plan Year or within two and a half months following the end of a Plan Year (i.e., March 15). The Committee will determine which Executive Management positions may participate, while other named executive officers will be recommended by the Bank’s Chief Executive Officer and approved by the Committee. To receive awards under the Plan, a participant must be an active employee of the Bank on the date of payment, with certain exceptions for death, disability and retirement. The Plan is effective September 15, 2020, and performance years under the Plan run from January 1 through December 31 of each applicable year (each a “Plan Year”).

 

 
 

 

Target Incentive Opportunity

 

Each participant is assigned a target incentive amount (“Target Incentive”), expressed as a percentage of annual earned base compensation for the Plan Year. Up to 50% of such Target Incentive will be based on the specific financial performance criteria briefly described above and as established by the Committee on an annual basis (the “Specific Financial Performance Criteria”), and up to 50% of such Target Incentive will be based on the Committee's subjective evaluation of the participant’s performance in managing earnings, capital, liquidity, interest rate sensitivity and increased risks presented by economic and other factors. The Specific Financial Performance Criteria and the specific goals to be achieved may change from one Plan Year to the next, and likewise may be different for one employee category or tier from the performance criteria and goals applicable to another category or tier, and may be different for one employee within a particular category or tier from the performance criteria and goals applicable to another employee within that same category or tier.

 

 

The Specific Financial Performance Criteria and goals may take into account factors such as total revenue, revenue growth, net income, earnings, earnings growth, earnings per share, cash flow, efficiency ratio, total deposits, deposit growth, fee income, non-interest income, total loans, loan growth, net interest margin, asset quality loan charge offs, nonperforming assets-to-assets ratio, classified asset coverage ratio, return on assets, return on equity, customer satisfaction, peer data, market data, management input, and other factors. These criteria may differ somewhat from participant to participant, but are important factors intended to focus the participant’s efforts and represent areas within the participant’s control.

 

 

The Committee has the discretion to adjust the methodology for calculating the Target Incentive to account for extraordinary or unforeseen occurrences which may affect the determination of whether the Target Incentive was achieved. The Committee will have the sole authority and discretion to evaluate all aspects of the Bank’s incentive compensation awards and to determine performance and the total amount of compensation available to members of Executive Management in the aggregate. The Committee has the authority but not the obligation to exclude any extraordinary accounting items, including but not limited to changes in generally accepted accounting procedures, extraordinary non-recurring items, sales of major assets or regulatory changes.