AMESBURY, MA – BankProv, a subsidiary of Provident Bancorp (NASDAQ:PVBC), Inc., has entered into new employment agreements with two key executives as disclosed in a recent SEC filing. Joseph B. Reilly, serving as President and Chief Executive Officer, and Kenneth R. Fisher, the Executive Vice President and Chief Financial Officer, are the focal points of these contracts, which were finalized on October 25, 2024.
The agreements establish an initial three-year term for Mr. Reilly and a two-year term for Mr. Fisher, with provisions for extension. A change in control of the company triggers an automatic extension to ensure a minimum duration of three years for Mr. Reilly and two years for Mr. Fisher from the change's effective date.
Under the terms, Mr. Reilly will receive an annual base salary of $472,750, while Mr. Fisher's salary is set at $370,000, both subject to potential increases. They are also eligible for incentive and bonus programs and will receive standard senior management employee benefits. Additionally, Mr. Reilly will be compensated with a monthly payment of $597.50 to cover after-tax Medicare costs, an amount which the Bank may adjust at its discretion.
The agreements detail circumstances under which severance payments would be made. For involuntary termination outside of cause, disability, or death, or resignation with "good reason," the executives would receive their accrued obligations plus severance equal to their remaining salary and average annual bonus. Post-change in control, the severance would be a lump sum of three times the base salary for Mr. Reilly or two times for Mr. Fisher. COBRA premium payments would also be covered by the Bank for up to 12 months.
"Good reason" is defined within the agreements and includes significant reductions in salary or incentive opportunities, diminished executive authority, relocation of work by more than 35 miles, or a material breach by the Bank.
InvestingPro Insights
As BankProv secures its leadership with new executive agreements, InvestingPro data provides additional context to the company's financial position. Provident Bancorp, Inc. (NASDAQ:PVBC) currently has a market capitalization of $175.57 million, with a price-to-earnings (P/E) ratio of 33.18. This relatively high P/E ratio aligns with an InvestingPro Tip indicating that the company is "trading at a high earnings multiple."
Despite the focus on executive retention, InvestingPro Tips suggest some challenges ahead. Analysts anticipate a sales decline in the current year, and the company "suffers from weak gross profit margins." This could explain the emphasis on incentive and bonus programs in the new executive agreements, as the company may be looking to motivate leadership to navigate through potential headwinds.
On a positive note, InvestingPro Tips indicate that PVBC is expected to remain profitable this year, maintaining its streak of profitability over the last twelve months. This stability may have factored into the decision to offer substantial severance packages to key executives in the event of leadership changes.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for PVBC, providing a deeper understanding of the company's financial health and market position.
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