DANVERS — Danversbank's top executives and directors were awarded a combined $12 million in stock options and incentives in 2009, a year after the bank converted to a stock-holding company, according to a Securities and Exchange Commission filing made public yesterday.
President and CEO Kevin Bottomley led the way with $3.65 million in stock options, driving his overall compensation to $4.86 million, more than four times his earnings in 2008. Two other executives received stock awards of more than $1.5 million each.
Thirteen members of the bank's board of directors, who are generally paid $20,000 to $40,000 per year, took in more than $300,000 each in stock awards and options.
Stockholders approved a stock option and incentive plan for the bank's officers, employees and directors in 2008, the year the bank converted from a mutual bank to a public bank.
The plan allows the bank's four-person compensation committee to award stock options. The committee approved the options in February 2009.
Danversbank Executive Vice President Michael McCurdy said the sizes of the stock options are "generally consistent" with those awarded by other banks that have converted to a stock-holding company. The options are usually larger in the first year after a bank has gone public, he said.
"The typical practice is to make that larger disbursement in year one," McCurdy said. "It's fair to say this isn't an annual practice."
McCurdy said other bank employees also received stock options.
Robert Lutts, president of Cabot Money Management in Salem, said the stock options were most likely a reward for executives and directors for executing Danversbank's merger with Beverly National Bank last year.
Danversbank bought Beverly National for $62 million in stock in June 2009. Danversbank is now the state's sixth largest bank, with $2.5 billion in assets and 27 branches. Last month, it opened a branch on Massachusetts Avenue in Boston.
"Beverly National has been around for 200 years. There's tremendous loyalty from the customer base that now is rolled into Danversbank," Lutts said. "Executing this deal is unlocking that value for Danversbank."
Lutts said stock options are designed to provide incentive for employees because their pay is linked to the bank's performance on the stock market. Danversbank stock opened at $10 per share when it went public in January 2008. The stock closed at near $15 yesterday.
Bottomley's $3.6 million in stock options raised his overall compensation for 2009 to $4,865,406. That includes a $470,253 salary and a $107,161 bonus.
Bottomley earned $1.1 million in 2008 and $868,962 in 2007, according to the SEC filing.
"I'm not going to completely defend Kevin Bottomley and his team, but I do know they're reasonable people and they have a good reputation in the community," Lutts said. "Kevin is a smart guy. He's been around a lot of banks. Their compensation system should be generated toward executing long-term goals."
Lutts said it is not unusual for members of the board of directors to also be awarded stock options. Board members at Danversbank are paid a $10,000 annual retainer and $800 per board meeting, among other compensation. Their stock options are valued at $323,657.
The stock awards represent the value of the bank's stock on Dec. 31, 2009, McCurdy said. The stocks vest over a five-year period.
Former Beverly National board members Mark Glovsky, Pamela Scott and Michael Tripoli did not receive stock options because they did not join the Danvers board until November.
Staff writer Paul Leighton can be reached at 978-338-2675 or firstname.lastname@example.org.
Danversbank 2009 compensation
Kevin Bottomley, president/CEO$4.86 million
John O'Neil, exec. VP$2.1 million
James McCarthy, exec. VP$2 million
Mark Panella, exec. VP$1.2 million
Michael McCurdy, exec. VP$528,984
Board of directors
Thirteen members of the board of directors got $323,657 each in stock options last year: