DEF 14A of Lakeland Financial Corp
Filed Feb 29, 2024 · FY20230000721994-24-000016
What happens if a director nominee is unable to stand for re-election?
What happens if a director nominee is unable to stand for re-election? The Board may, by resolution, provide for a lesser number of directors or designate a substitute nominee. In the latter case, shares represented by proxies may be voted for a substitute nominee. Proxies cannot be voted for more than 11 nominees. As of the date of this proxy statement, we have no reason to believe any nominee will be unable to stand for re-election.
Director Compensation
Director Compensation During 2023, directors who were not employees of Lakeland Financial or Lake City Bank were paid the following retainer fees:
Director Compensation
| Component | Amount | | Annual Director Retainer | $35,000 | | Annual Audit Committee Chairman Additional Retainer | 15,000 | | Annual Lead Independent Director Retainer | 15,000 | | Annual Governance Committee Chairman Additional Retainer | 10,000 | | Annual Compensation Committee Chairman Additional Retainer | 10,000 | | Annual Corporate Risk Committee Chairman Additional Retainer | 10,000 | | Annual Chairman of the Board Additional Retainer | 40,000 | | Annual Stock Grant (number of shares) | 1,300 |
Director Compensation
Each director of Lakeland Financial is also a director of Lake City Bank and is not compensated separately for service on Lake City Bank’s Board. Mr. Findlay, who is Chairman of the Board and also serves as our Chief Executive Officer, and Ms. Pruitt, who is a director and also serves as our President, are not paid any fees for their service as directors. The directors’ fees are reviewed annually by the Compensation Committee. Under the 2017 Equity Incentive Plan, directors may be awarded non-qualified stock options or stock grants at the discretion of the Compensation Committee, subject to an annual limitation for each director of 10,000 shares subject to stock options or stock appreciation rights and 10,000 shares subject to stock awards. In 2024, each non-employee director will receive two separate awards of 650 shares, for a total award of 1,300 shares, of Lakeland Financial stock upon approval by the Board of the first award in January and the second award in July. All final decisions regarding director compensation, whether in cash or equity, are made by the full board after receiving recommendations from the Compensation Committee. Since 2011, the Board has maintained a stock ownership policy that currently requires directors hold a minimum of 5,000 shares of Lakeland Financial within five years a becoming a director. At the time the ownership requirement was set at its current level, 5,000 shares represented approximately the same value as five times the annual cash retainer for directors. This requirement will be reviewed each year by the Nominating and Corporate Governance Committee and may be adjusted to maintain a similar ratio. As of December 31, 2023, all of our non-employee directors met the requirements of our stock ownership policy. The following table provides information on 2023 compensation for non-employee directors who served during 2023.
Director Compensation
| Name (a) | Fees Earned or Paid in Cash(1) (b) | Stock Awards(2)(3) (c) | Total (d) | | A. Faraz Abbasi | $35,000 | $79,086 | $114,086 | | Blake W. Augsburger | 46,958 | 79,086 | 126,044 | | Robert E. Bartels, Jr. | 35,000 | 79,086 | 114,086 | | Darrianne P. Christian | 45,000 | 79,086 | 124,086 | | Michael L. Kubacki | 69,778 | 79,086 | 148,864 | | Emily E. Pichon | 45,000 | 79,086 | 124,086 | | Steven D. Ross | 35,000 | 79,086 | 114,086 | | Brian J. Smith | 35,000 | 79,086 | 114,086 | | Bradley J. Toothaker | 50,000 | 79,086 | 129,086 | | M. Scott Welch | 35,000 | 79,086 | 114,086 |
Director Compensation
(1)We maintain the Lakeland Financial Corporation Directors Fee Deferral Plan under which non-employee directors are permitted to defer receipt of their directors fees and earn a rate of return based upon the performance of our stock. The amounts shown in this column include amounts that may have been deferred by the directors. We may, but are not required to, fund the deferred fees into a trust which may hold our stock. The plan is nonqualified and the directors have no interest in the trust. The deferred fees and any earnings thereon are unsecured obligations of Lakeland Financial. No director received preferential or above-market earnings on deferred compensation. Any shares held in the trust are treated as treasury shares and may not be voted on any matter presented to shareholders. The number of shares attributable to each director under the plan is set forth in the footnotes to the Beneficial Ownership Table below. (2)Represents the grant date fair value for fully vested stock awards based on a share price of $73.66 as of January 10, 2023 and $48.01 as of July 11, 2023, in accordance with FASB ASC Topic 718 - “Compensation-Stock Compensation.” See the discussion of equity awards in Note 14 of the Notes to Consolidated Financial Statements for Lakeland Financial’s financial statements for the year ended December 31, 2023. The number of fully vested shares granted during 2023 for each non-employee director was 1,300, 650 on January 10, 2023 and 650 on July 11, 2023. (3)As of December 31, 2023, none of our non-employee directors held any outstanding stock awards or options.
Director Compensation
| 2024 PROXY STATEMENT | 19 |
A. Faraz Abbasi
A. Faraz Abbasi
A. Faraz Abbasi
| Age 51 Director Since 2022 Committees Audit, Compensation | | | | | | | | Background •Managing Partner at Indianapolis, Indiana-based Centerfield Capital, a private equity investment firm that works closely with equity sponsors, independent sponsors, business owners, and management teams who seek subordinated debt and equity financing to build companies and create value. •Responsible for overseeing the partnership, investor relations, overseeing due diligence and portfolio management. •Member of the Partnership’s Investment Committee. •In sales and operations at Praxair, Inc. and Rodel, Inc. before joining Centerfield in 2001. Director Qualifications We consider Mr. Abbasi to be a qualified candidate for service on the Board as well as the Audit Committee and the Compensation Committee due to his experience and leadership working with investors and companies from a variety of sectors. | | | | | | | | | | | | | | Industry | Board | Finance | Human Capital Management | Corporate Governance & Ethics |
A. Faraz Abbasi
| 26 | |
Blake W. Augsburger
Blake W. Augsburger
Blake W. Augsburger
| Age 60 Director Since 2011 Committees Compensation (Vice Chair), Nominating and Corporate Governance (Chair) | | | | | | | | Background •Founder and Chief Executive Officer of LEA Professional, which designs and manufactures audio amplifiers for the commercial, residential and professional audio markets. •Former Executive Vice President and America’s Country Manager for Harman International Industries, Inc., a Fortune 500 company that designs and manufactures audio and infotainment products and systems. •Served for ten years as the President of the Harman Professional Division, which is based in Northridge, California. Director Qualifications We consider Mr. Augsburger to be a qualified candidate for service on the Board as well as the Nominating and Corporate Governance Committee and the Compensation Committee due to his leadership skills and expertise developed as a former executive of a large, complex public company. | | | | | | | | | | | | | | Brand | Technology | Board | Human Capital Management | Corporate Governance & Ethics |
Blake W. Augsburger
Robert E. Bartels, Jr.
Blake W. Augsburger
| Age 59 Director Since 2002 Committees Audit, Nominating and Corporate Governance (Vice Chair) | | | | | | | | | Background •Partner in Incedo LLC, a family office and real estate management company. •Former President and Chief Executive Officer of Martin’s Supermarkets, Inc., a regional supermarket chain headquartered in South Bend, Indiana. Director Qualifications We consider Mr. Bartels to be a qualified candidate for service on the Board as well as the Audit Committee and the Nominating and Corporate Governance Committee due to his skills and expertise acquired as the former leader of a successful business that is prominent in many of our markets. Mr. Bartels was a third-generation family business owner with approximately 37 years of supermarket and retail experience, including 21 years of executive practice. | | | | | | | | | | | | | | | | Brand | Board | Finance | Human Capital Management | Risk Management | Corporate Governance & Ethics |
Blake W. Augsburger
| 2024 PROXY STATEMENT | 27 |
Darrianne P. Christian
Darrianne P. Christian
Darrianne P. Christian
| Age 52 Director Since 2018 Committees Compensation, Corporate Risk (Chair) | | | | | | | Background •Currently involved with leading strategic initiatives for BCforward, a global information technology consulting and workforce fulfillment firm founded by Ms. Christian and her husband, Justin Christian, in 1998. •Former program manager and an IT consultant from 1995-2003 and former officer with the Central Intelligence Agency from 1990-1995. •Board member of Newfields (formerly the Indianapolis Museum of Art), the Central Indiana Community Foundation, IMPACT Central Indiana and the Eskenazi Foundation. •Works closely with the Justin and Darrianne Christian Center for Diversity and Inclusion at DePauw University. Director Qualifications We consider Ms. Christian to be qualified to serve on the Board as well as the Compensation Committee and the Corporate Risk Committee due to her personal and professional engagement with several prominent nonprofits located in Indianapolis and her professional experience in the technology sector, which we believe will be valuable as we work to ensure that we remain innovative in providing technology-driven solutions to our clients. | | | | | | | | | | | | Technology | Board | Risk Management | Corporate Governance & Ethics |
David M. Findlay
David M. Findlay
David M. Findlay
| Age 62 Director Since 2010 Committees Corporate Risk | | | | | | | | | | Background •Presently serves as the Chairman of the Board and Chief Executive Officer of Lakeland Financial and Lake City Bank. •Served as President and Chief Executive Officer from 2014-2023, President and Chief Financial Officer from 2010-2014 and Chief Financial Officer from 2000-2010. •Served as the Chief Financial Officer of Quality Dining, Inc., then a publicly traded company with its headquarters in South Bend, Indiana, prior to joining Lakeland Financial in September 2000. •Served in various capacities with The Northern Trust Company in Chicago, Illinois prior to joining Quality Dining, Inc. Director Qualifications We consider Mr. Findlay to be qualified to serve on the Board due to his familiarity with Lakeland Financial’s operations he has acquired as its President and Chief Financial Officer, his experience in the financial services industry and his prior experience as the Chief Financial Officer of a publicly traded company. | | | | | | | | | | | | | | | | | | Industry | Brand | Board | Finance | Human Capital Management | Risk Management | Corporate Governance & Ethics |
David M. Findlay
| 28 | |
Emily E. Pichon
Emily E. Pichon
Emily E. Pichon
| Age 60 Director Since 2002 Committees Compensation (Chair), Nominating and Corporate Governance | | | | | | | | | Background •Chairman of ETP Asset Holdings, Inc., formerly known as ExTech Plastics Inc. & ETP Inc., a former extruder of plastic sheet. •Officer and director of the Olive B. Cole Foundation, the M E Raker Foundation Inc. and the Howard P. Arnold Foundation, Inc., each a private charitable foundation focused on northeast Indiana education, economic development and/or conservation based in Fort Wayne, Indiana. Director Qualifications We consider Ms. Pichon to be qualified to serve on the Board as well as the Nominating and Corporate Governance Committee and the Compensation Committee due to her experience with several prominent charitable foundations located in Fort Wayne and her education and training as an attorney. | | | | | | | | | | | | | | | | Industry | Brand | Board | Finance | Human Capital Management | Corporate Governance & Ethics |
Kristin L. Pruitt
Kristin L. Pruitt
Kristin L. Pruitt
| Age 52 Director Since 2023 Committees Corporate Risk | | | | | | | | | Background •Presently serves as President of Lakeland Financial and Lake City Bank. •Served as Executive Vice President, Chief Administrative Officer, 2019-2023, Executive Vice President and General Counsel, 2014-2019, and Senior Vice President and General Counsel, 2008-2014. •Served as Assistant General Counsel and Chief Compliance Officer at 1st Source Bank in South Bend, Indiana prior to joining Lakeland Financial in 2008. •Previously practiced law with Skadden, Arps, Slate, Meagher & Flom in Washington DC and with Baker and Daniels in South Bend, Indiana. Director Qualifications We consider Ms. Pruitt to be qualified to serve on the Board due to her experience with Lakeland Financial’s operations acquired as its Chief Administrative Officer and her experience in the financial services industry. | | | | | | | | | | | | | | | | Industry | Brand | Board | Human Capital Management | Risk Management | Corporate Governance & Ethics |
Kristin L. Pruitt
| 2024 PROXY STATEMENT | 29 |
Steven D. Ross
Steven D. Ross
Steven D. Ross
| Age 69 Director Since 2000 Committees Audit, Corporate Risk (Vice Chair) | | | | | | | Background •Former owner of Ross and Associates, a real estate management company. •Former President of Heartland Coffee Company, a regional coffee and beverage service company, based in Warsaw, Indiana. •Former President of Bertsch Services, Inc., a regional food service and vending company, which was based in Warsaw, Indiana prior to its sale. Director Qualifications We consider Mr. Ross to be a qualified candidate for service on the Board as well as the Audit Committee and the Corporate Risk Committee due to his skills and expertise acquired as president of a successful business in Kosciusko County and his knowledge of the business community in this region. | | | | | | | | | | | | Board | Finance | Human Capital Management | Corporate Governance & Ethics |
Brian J. Smith
Brian J. Smith
Brian J. Smith
| Age 59 Director Since 2011 Committees Audit (Vice Chair), Corporate Risk | | | | | | | | | Background •Co-Chief Executive Officer of Heritage Financial Group, Inc., a real estate investment and management and consumer finance company, based in Elkhart, Indiana. Director Qualifications We consider Mr. Smith to be a qualified candidate for service on the Board as well as the Audit Committee and the Corporate Risk Committee due to his expertise in the manufactured housing and consumer finance industries, which is a significant industry in northern Indiana, and his knowledge of the Elkhart, Indiana market as a prominent member of the business community. Additionally, Mr. Smith has a strong financial background as a certified public accountant, which adds meaningful expertise to the Audit Committee. | | | | | | | | | | | | | | | | Industry | Board | Finance | Human Capital Management | Risk Management | Corporate Governance & Ethics |
Brian J. Smith
| 30 | |
Bradley J. Toothaker
Bradley J. Toothaker
Bradley J. Toothaker
| Age 55 Director Since 2011 Committees Audit (Chair), Corporate Risk | | | | | | | | | | Background •Executive Chairman and former Chief Executive Officer of Bradley Company, a large Midwest-based, full-service real estate company. Director Qualifications We consider Mr. Toothaker to be a qualified candidate for service on the Board as well as the Audit Committee and the Corporate Risk Committee due to his extensive knowledge of the real estate sector in our region and his knowledge of the Northern Indiana market. | | | | | | | | | | | | | | | | | | Industry | Brand | Board | Finance | Human Capital Management | Risk Management | Corporate Governance & Ethics |
M. Scott Welch
M. Scott Welch
M. Scott Welch
| Age 63 Director Since 1998 Committees Compensation, Nominating and Corporate Governance | | | | | | | | | Background •Chief Executive Officer of Welch Packaging Group, Inc., which is primarily engaged in producing industrial and point of purchase packaging and is headquartered in Elkhart, Indiana. •Lead Director of the board of Patrick Industries, Inc. Director Qualifications We consider Mr. Welch to be a qualified candidate for service on the Board as well as the Nominating and Corporate Governance Committee and the Compensation Committee due to his skills and expertise in the manufacturing industry and his past experience with growing and leading organizations. | | | | | | | | | | | | | | | | Industry | Board | Finance | Human Capital Management | Risk Management | Corporate Governance & Ethics |
M. Scott Welch
| 2024 PROXY STATEMENT | 31 |
Comparison to Peer Group
Comparison to Peer Group In establishing compensation of the named executive officers, the Compensation Committee utilizes market data regarding the compensation practices of other financial institutions of a similar asset size and complexity. Such institutions include, but are not limited to, the members of the peer group prepared by Pearl Meyer & Partners. For the 2023 compensation survey, the peer group generally included financial institutions with total assets of $4.9 billion to $18.0 billion with a focus on institutions located in the central region of the United States. In some cases the Compensation Committee will consider data from additional financial institutions when warranted by relevant similarities such as business-line focus and long-term operating and financial stability. For example, institutions with a similar focus on complex commercial lending may be considered by the Compensation Committee even if they fall outside of the general asset size of our other peers. The Compensation Committee believes this comprehensive practice is useful in creating an overall compensation program that is competitive in the marketplace and attracts and retains qualified, talented executives. While the Compensation Committee believes that it is prudent to consider such comparative information in determining compensation practices, it does not set strict parameters for using this data. Rather, the Compensation Committee uses comparative data to ensure that executive compensation is not inconsistent with appropriately defined peer organizations. The Compensation Committee believes that the current executive officers of the Company have established a sound track record of long-term performance that warrants compensation at or around the median level of compensation among similarly situated financial institutions. For purposes of peer analysis in assessing performance, Lakeland Financial generally considers a peer group that includes commercial banks of similar asset size, financial performance and organizational structure as well as those that are key competitors for executive talent. Given the ever-changing landscape within the banking industry, the group of banks appropriate for comparative analysis is continually evolving. In connection with its 2023 analysis of the Company’s executive compensation programs, Pearl Meyer & Partners compiled a market reference group of 20 other publicly traded bank holding companies headquartered in the central United States, with median assets of $7.1 billion and stable-to-strong performance history. The Compensation Committee believes this peer group is appropriate for comparative analysis. The companies included in this peer group are listed below:
Comparison to Peer Group
| Park National Corporation – Newark, Ohio Old Second Bancorp, Inc – Aurora, Illinois Community Trust Bancorp – Pikeville, Kentucky First Merchants Corporation – Muncie, Indiana City Holding Company – Charleston, West Virginia Independent Bank Corporation – Ionia, Michigan Midland States Bancorp – Effingham, Illinois CNB Financial Corporation – Clearfield, Pennsylvania Horizon Bancorp – Michigan City, Indiana QCR Holdings, Inc – Moline, Illinois | First Commonwealth Financial Corp. – Indiana, Pennsylvania 1st Source Corporation – South Bend, Indiana First Busey – Champaign, Illinois Peoples Bancorp – Marietta, Ohio Republic Bancorp – Louisville, Kentucky Stock Yards Bancorp – Louisville, Kentucky German American – Jasper, Indiana First Financial Corporation – Terre Haute, Indiana MidWestOne Financial – Iowa City, Iowa Mercantile Bank Corporation – Grand Rapids, Michigan |
Comparison to Peer Group
| 2024 PROXY STATEMENT | 37 |
Payouts for 2023 Performance
Payouts for 2023 Performance The Compensation Committee determined that it was in the best interest of the shareholders to allow the established performance thresholds and targets to stand in determining payouts under the LTI Plan for 2023. The Compensation Committee continues to believe that the plans are well designed to fairly compensate employees and create appropriate alignment with shareholders. The Compensation Committee determined that it was in the best interest of shareholders to allow the established performance threshold to stand in determining payouts under the EIB Plan for 2023 for Mr. Findlay, Ms. Pruitt and Ms. O’Neill, based upon actual Company performance taking into account the impact of the wire fraud reported in the second quarter of 2023. The Compensation Committee approved payouts for all other participants in the EIB Plan for 2023 based on Company performance excluding the impact of the wire fraud event.
Payouts for 2023 Performance
| 38 | |
Executive Summary
| Element | Key Characteristics | Why We Pay this Element | How We Determine the Amount | 2023 Decisions | | Base Salary | Fixed compensation component payable in cash. Reviewed annually and adjusted when appropriate. | Provide a base level of competitive cash compensation to attract and retain executive talent. | Experience, industry knowledge, peer data, company performance and individual performance. | Base salary increases ranged from 4.0% to 9.7%. | | Annual Bonus | Variable compensation component payable in cash. Target bonuses are established as a percentage of annual salary, and payment is capped at 150% of target. | Motivate and reward executives for performance on key operational, financial and individual objectives met during the course of the year. | Market practices with payout based on level of achievement of company and individual performance goals. | Annual bonus paid out at 79% of target for Mr. Findlay, Ms. Pruitt and Ms. O’Neill and at 85% of target for all other participants based on net income performance. Individual payouts based on performance goals were each at 100%. | | Long-Term Incentives | Variable compensation component payable in performance-based restricted stock units. Payments are capped at 150% of target. Executive officers receive 75% performance-based restricted stock units and 25% time-based restricted stock units. | Motivate executives to collectively produce outstanding results, encourage superior performance, increase productivity and aid in attracting and retaining key employees. | Market practices with payouts based on company performance. | 2021-2023 LTI Plan paid out at 118% of target based on performance against three-year compound annual growth rate in revenue, earnings per share and return on beginning equity performance goals. 2023 LTI Plan grants were 75% performance-based restricted stock units and 25% time-based restricted stock units. | | Other Compensation and Perquisites | Compensation component to provide basic competitive benefits. | Provide a base level of competitive compensation to attract and retain executive talent. | Periodic assessment of competitive offerings. | No substantive change from prior years. |
Annual Bonus
Annual Bonus The Compensation Committee typically determines eligibility for annual bonus payments using the parameters defined in the Company’s Executive Incentive Bonus Plan, as may be amended from time to time (the “EIB Plan”), which is a performance-based bonus plan for selected Lake City Bank corporate officers and includes the named executive officers. The Compensation Committee retains the right to modify the program or withhold payment at any time. Since the EIB Plan’s inception in 2002, Lakeland Financial’s performance has warranted some level of annual payments. Eligible participants in the EIB Plan, including the named executive officers, may earn an annual performance-based bonus based on Lakeland Financial’s overall performance (“Company performance”) as well as the individual participant’s performance (“individual performance”). The total target bonus opportunity is a percentage of average rate of salary during the year. As set forth in the EIB Plan, 50% of the bonus earned is determined by Company performance and 50% is determined by individual performance. Generally, a participant must be employed through the date of payment to earn a bonus, but participants may earn a pro rata bonus at the actual level of performance upon the date of a qualifying retirement or if terminated in connection with a change in control. No unearned bonuses are payable in the event of a participant’s death or disability. The payout for Company performance is based on our actual net income for that year compared to the targeted net income. We calculate this by using our net income after the 401(k) match and incentive compensation costs. The Compensation Committee approves a targeted net income amount after reviewing the previous year’s actual net income in conjunction with the Board’s and management’s expectations for that particular year. The target net income amount is generally reviewed and adjusted each year in order to provide a proper level of incentive to the officers and, in the Compensation Committee’s view, is not set at a level that makes it substantially certain that the target will be obtained. The Company performance payout percentage is determined based upon achieving certain performance levels of net income as defined in the table below. The payout percentage is the actual percentage of target net income attained when actual net income equals or exceeds 70% of target, up to the maximum of 150%.
Annual Bonus
| Performance Level | Target Net Income Percentage | 2023 Net Income | Company Performance Payout Percentage | | Maximum Performance | 150% | $178,482,000 | 150% | | Target Performance | 100% | 118,988,000 | 100% | | Threshold Performance | 70% | 83,292,000 | 50% | | <Threshold Performance | <70% | <83,292,000 | 0% |
Annual Bonus
The actual net income used for bonus calculations for Mr. Findlay, Ms. Pruitt and Ms. O’Neill for 2023 was $93,767,000, or 79% of the targeted amount, and bonus payouts for Company performance were paid out based on that level to those three executive officers. The actual net income used for bonus calculations for all other participants in the EIB Plan was $101,575,000, or 85% of the targeted amount, which excluded the impact of the wire transfer fraud that was reported in the second quarter of 2023. Individual performance payouts under the EIB Plan are determined by the formulas described below, although the Compensation Committee reserves the right to modify the payouts in its sole discretion. The payout for individual performance is determined by the participant’s achievement of individual performance goals that are established for the year. The Compensation Committee also has the discretion to reward achievements that are not the subject of any pre-established goals. In 2023, the Compensation Committee determined that the named executive officers performed well in achieving their respective individual performance goals. The percent of eligible salary and individual performance payout percentages for each named executive officer are listed in the table below.
Annual Bonus
| Name | Percent of Eligible Salary | Individual Performance Payout Percentage | | David M. Findlay | 50% | 100% | | Kristin L. Pruitt(1) | 40/45% | 100% | | Lisa M. O’Neill | 40% | 100% | | Eric H. Ottinger | 40% | 100% | | J. Rickard Donovan | 30% | 100% |
Annual Bonus
(1)Ms. Pruitt was promoted in May of 2023. Her target bonus eligibility was increased in connection with such promotion.
Annual Bonus
| 2024 PROXY STATEMENT | 41 |
Annual Bonus
The 2023 individual goals are set forth below:
Annual Bonus
| David M. Findlay •Work with the Management Committee to complete the strategic initiatives in the 2023 Strategic Plan, achieve financial performance targets contained in the 2023 budget, ensure that succession planning is in place bankwide and ensure the bank is prepared as it approaches $10 billion asset size. •Provide effective leadership of the Company’s Management Team. •Focus on ensuring personal connectivity to each member of Senior Leadership Council. •Play a significant role in key vendor relationships. •Effectively coordinate senior management's involvement with the Board of Directors. •Represent Lake City Bank in the external community. | | Kristin L. Pruitt •Strategically manage the ESG program and the road to $10 billion asset size. •Develop and implement the Business Development Program. •Actively monitor and plan the bank's CRE exposure relative to regulatory guidelines. •Transition branch development and property management responsibilities. •Oversee evolution of Lake City University and the Diversity and Inclusion program. | | Lisa M. O’Neill •Develop a Cloud management plan and continue to develop a data management strategy plan. •Manage active engagement of Fintech opportunities. •Develop comprehensive technology services system and process documentation program. •Collaborate with Chief Retail Officer on redomiciling project. •Assume responsibility for Properties Management team. | | Eric H. Ottinger •Fill vacant Commercial relationship roles. •Develop and implement the Business Development Program. •Actively monitor and plan the bank's CRE exposure relative to regulatory guidelines. •Develop an effective partnership with the new Chief Credit Officer. •Focus on Commercial Banking regional growth strategies. | | J. Rickard Donovan •Lead the integration of legal and compliance with other risk areas within the bank. •Manage the IOI matter, outside counsel, insurers, and bank-related parties through the litigation process. •Assist compliance group as they manage the impact and implementation of the bank's efforts to comply with Rule 1071. •Build relationships among the Indianapolis team. •Manage and support efforts of the disclosure task force. |
Annual Bonus
| 42 | |
Annual Bonus
For 2023, our overall performance and achievement of individual goals resulted in aggregate bonus payments of approximately $3.0 million paid to 278 employees and ranged from 3% to 40% of base salary. The bonuses paid to our named executive officers in 2024 and 2023 are included in the table below.
Annual Bonus
| Name | Bonus Paid in 2023 for 2022 Performance | Bonus Paid in 2024 for 2023 Performance | Percentage Change | | David M. Findlay | $353,100 | $271,365 | (23.1)% | | Kristin L. Pruitt | 144,664 | 137,340 | (5.1)% | | Lisa M. O’Neill | 123,692 | 97,960 | (20.8)% | | Eric H. Ottinger | 145,306 | 120,190 | (17.3)% | | J. Rickard Donovan | 66,929 | 55,335 | (17.3)% |
Long-Term Incentive Plan – Performance-Based Awards
Long-Term Incentive Plan – Performance-Based Awards The Company maintains an Amended and Restated Long-Term Incentive Plan, as may be further amended from time to time (“LTI Plan”). The plan is designed to provide for performance-based payouts based upon key financial criteria over rolling three-year periods, which are recommended by Mr. Findlay and approved by the Compensation Committee. The Compensation Committee has made grants under the LTI Plan each year since the plan was implemented in 2006. At the discretion of the Compensation Committee, awards under the LTI Plan consist of performance-based restricted stock units rather than cash to provide for additional alignment with shareholders and stock price performance over the performance period. The purpose of the LTI Plan is to motivate select officers, including our named executive officers, to collectively produce outstanding results, encourage superior performance, increase productivity and aid in attracting and retaining key employees. Mr. Findlay recommends, subject to the Compensation Committee’s approval, the performance measures and performance targets to be used for each performance period and the LTI bonus to be paid if certain required conditions are met. The Compensation Committee currently utilizes three key financial measures: revenue growth rate, diluted earnings per share growth rate and average return on beginning equity. Performance targets can be based on a combination of Lakeland Financial’s goals, business unit and/or individual goals and other such factors as determined and approved by the Compensation Committee. Different performance targets may be established for different participants for any performance period, although currently all executives have the same performance targets. Unless the Compensation Committee determines otherwise, a new three-year performance period will begin each year under the LTI Plan. Thus, the maximum number of performance periods open to measurement at any time is three. Our named executive officers and other select officers receive earned LTI Plan payouts on a yearly basis at the conclusion of each successive three-year performance period. The Compensation Committee believes that, by making annual awards that consider Company performance over rolling three-year periods, the Compensation Committee is incentivizing our named executive officers to focus on consistent and sustainable performance rather than taking outsized risks in any one particular year. The amount of the LTI bonus awarded for each performance period is based upon achieving certain performance levels for each of the three measurement criteria as defined in the tables below. The Company employs linear interpolation to determine the payout in the event a measurement criterion falls between the threshold and target or target and maximum performance levels.
3 YEAR REVENUE GROWTH
| | Performance Level | | | | | Performance Period | < Threshold Performance | Threshold Performance | Target Performance | Maximum Performance | | | | | | | | 2024-2026 | <2.00% | 2.00% | 4.75% | 8.25% | | 2023-2025 | <3.00% | 3.00% | 7.00% | 12.10% | | 2022-2024 | <3.00% | 3.00% | 7.00% | 12.10% | | Vesting | 0% of target award | 16.67% of target award | 33.33% of target award | 50% of target award |
3 YEAR DILUTED EARNINGS PER SHARE GROWTH
| | Performance Level | | | | | Performance Period | < Threshold Performance | Threshold Performance | Target Performance | Maximum Performance | | | | | | | | 2024-2026 | <2.00% | 2.00% | 5.00% | 9.00% | | 2023-2025 | <2.50% | 2.50% | 6.25% | 11.10% | | 2022-2024 | <2.50% | 2.50% | 6.25% | 11.10% | | Vesting | 0% of target award | 16.67% of target award | 33.33% of target award | 50% of target award |
3 YEAR AVERAGE RETURN ON BEGINNING EQUITY GROWTH
| | Performance Level | | | | | Performance Period | < Threshold Performance | Threshold Performance | Target Performance | Maximum Performance | | | | | | | | 2024-2026 | <10.50% | 10.50% | 14.00% | 17.00% | | 2023-2025 | <13.25% | 13.25% | 17.75% | 21.50% | | 2022-2024 | <10.50% | 10.50% | 14.00% | 17.00% | | Vesting | 0% of target award | 16.67% of target award | 33.33% of target award | 50% of target award |
3 YEAR AVERAGE RETURN ON BEGINNING EQUITY GROWTH
| | 2021-2023 | | Weighted Payout | | Performance Metric | Target Performance | Actual Performance | Percentage | | 3 Year Revenue Growth | 3.75% | 5.57% | 44.35% | | 3 Year Diluted Earnings Per Share Growth | 4.50% | 3.42% | 26.65% | | 3 Year Average Return on Beginning Equity Growth | 13.00% | 15.26% | 47.02% | | Payout Percentage | | | 118.02% |
3 YEAR AVERAGE RETURN ON BEGINNING EQUITY GROWTH
| Name | Performance Period 2020-2022 Payout Shares | Performance Period 2021-2023 Payout Shares | | David M. Findlay | 18,880 | 18,880 | | Kristin L. Pruitt | 7,670 | 7,670 | | Lisa M. O’Neill | 6,372 | 7,080 | | Eric H. Ottinger | 7,670 | 7,670 | | J. Rickard Donovan | 4,779 | 4,779 |
3 YEAR AVERAGE RETURN ON BEGINNING EQUITY GROWTH
Shares delivered pursuant to the LTI Plan, as described above, are currently granted under the shareholder-approved 2017 Equity Incentive Plan, as may be amended from time to time (the “2017 Equity Incentive Plan”). Pursuant to the terms of the 2017 Equity Incentive Plan and restricted stock unit award agreements governing the terms of the LTI Plan awards, unvested awards are forfeited upon termination of employment, other than a termination in connection with a change in control or due to the participant’s death, disability or retirement. Generally, awards granted in and after 2023 will vest at the target level of performance, prorated for the portion of the performance period during which the executive was employed, upon a participant’s death, disability, or qualifying retirement. In the event of a change in control, such awards will fully vest based upon actual performance through the date of the change in control if the participant incurs a qualifying termination of employment. For awards granted prior to 2023, awards will fully vest at the target level of performance in the event of a termination of employment due to death, disability, or in connection with a change in control of the Company.
Long-Term Incentive Plan – Time-Based Awards
Long-Term Incentive Plan – Time-Based Awards The Compensation Committee determined that beginning with the LTI Plan awards for 2022, it would make 75% of the awards in the form of performance-based restricted stock units and 25% in the form of time-based restricted stock units, vesting over the same three performance periods as the performance-based restricted stock units. The Compensation Committee believes that this change will strengthen the LTI Plan as a retention tool, by moderately raising the floor during difficult years and lowering the ceiling during high-performing years. This change is consistent with the recommendations made by Pearl Meyer & Partners during the 2021 compensation review process. In 2022, 2023 and 2024, each named executive officer was granted the following time-based restricted stock units:
Long-Term Incentive Plan – Time-Based Awards
| Name | Performance Period 2022-2024 Number of Share Awards Payable in 2025 | Performance Period 2023-2025 Number of Share Awards Payable in 2026 | Performance Period 2024-2026 Number of Share Awards Payable in 2027 | | David M. Findlay | 4,000 | 4,000 | 4,000 | | Kristin L. Pruitt | 1,625 | 1,625 | 2,500 | | Lisa M. O’Neill | 1,500 | 1,625 | 1,625 | | Eric H. Ottinger | 1,625 | 1,625 | 1,625 | | J. Rickard Donovan | 1,013 | 1,013 | 1,013 |
Long-Term Incentive Plan – Time-Based Awards
In May 2023, Ms. Pruitt received a time-based restricted stock award of 2,000 shares in connection with her promotion to President. No other stock-based awards were issued in 2023 to the named executive officers under our 2017 Equity Incentive Plan, as set forth on the 2023 Outstanding Equity Awards at Fiscal Year End Table.
Change in Control and Employment Agreements
Change in Control and Employment Agreements The Company has change in control agreements with each of Mr. Findlay, Ms. Pruitt, Ms. O'Neill and Mr. Ottinger. The change in control agreements are discussed more fully in the Potential Payments upon Termination or Change in Control section below.
Assessment of Compensation Risk
Assessment of Compensation Risk The Compensation Committee has reviewed and discussed this CD&A with executive management. In 2023, the Compensation Committee completed its thorough annual review of all compensation programs offered at Lakeland Financial and Lake City Bank, including those described in this CD&A, to determine whether any aspect of the plans or programs encourages excessive or unnecessary risk taking that would adversely affect the long-term value or performance of Lakeland Financial. Based on the risk assessment process, which is more fully described below, the Compensation Committee concluded that the compensation plans and programs, considered individually and as a whole, do not encourage excessive risk taking and are designed to encourage and reward decisions that create long-term shareholder value in a manner consistent with the Company’s core values. The Chief Human Resources Officer compiled an inventory of the design features of all incentive compensation plans and programs for purposes of assessing the potential for encouraging excessive or unnecessary risk taking that could threaten the value of the enterprise and presented this inventory to the Compensation Committee. The Compensation Committee then considered how the structure of each plan or program impacted risk taking of plan participants. In analyzing the risks inherent in the Company’s annual bonus plan, as described under the Annual Bonus section above, the Compensation Committee determined as follows: •Bonus amounts are tied to financial performance and personal performance against individualized goals, including non-financial goals. •Threshold goals are reasonably achievable with good performance and are sufficiently challenging but not overly difficult. •Payouts are interpolated based on the percentage of net income achieved. •Reasonable bonus maximums exist as part of an overall balanced pay mix. With respect to the LTI Plan as described under the Long-Term Incentive Plan section above, the Compensation Committee concluded that the plan was well designed to align the Company’s strategic objectives with long-term value creation for the following reasons: •Performance metrics factor in risk of capital and measures that take into consideration balance sheet, income statement and equity factors. •Threshold goals are reasonably achievable with good performance and are sufficiently challenging but not overly difficult. The LTI Plan includes neither steep cliffs for not achieving goals nor exponential upside for achieving them. Reasonable leverage exists above threshold goals to achieve maximum payouts. •Incentives are capped at reasonable levels. •Maximum awards are an appropriate portion of total pay. •The three-year performance period discourages measures that do not benefit the Company over the long term. •Denomination in Company stock gives incentive to focus on sustained value creation and further alignment with shareholder interests. The Compensation Committee completed similar analyses for the other compensation programs available to employees, and concluded that the amounts provided under such programs are reasonable as part of a balanced pay mix and appropriately incentivize performance without encouraging the manipulation of earnings or other performance metrics, or other improper behavior in order to enhance the benefits payable under such programs.
Assessment of Compensation Risk
The Compensation Committee then reviewed the overall executive compensation structure and reached the following conclusions, based on the following key risk categories: •Strategic Risk: The Compensation Committee determined that, overall, the performance metrics align with the Company’s strategy and objectives for long-term value creation for our shareholders, properly reward various performance outcomes and account for risk over a longer-term time horizon. •Cultural Risk: Lakeland Financial has strong corporate values that emphasize ethical behavior, actions that contribute to building long-term value rather than short-term performance, teamwork and investment in people and infrastructure. Our senior executives have little incentive to be overly focused on short-term stock price performance. •Governance Risk: The Compensation Committee is independent, has access to consultants and other advisers independent of management, has an appropriate level of expertise and is fully educated on all material incentive plans and programs. •Pay-Mix Risk: Lakeland Financial has market-competitive salaries, which reduces the pressure to focus on short-term performance in order to achieve reasonable annual compensation. The Compensation Committee believes the mix between short-term and longer-term incentives is appropriately balanced. •Performance Measurement Risk: The Compensation Committee has a disciplined process of establishing goals for and evaluating the performance of Mr. Findlay in executive sessions at which he is not present. The Compensation Committee also reviews and approves Mr. Findlay’s goals for and performance assessments of the other named executive officers. Financial performance measures consider the income statement, balance sheet and statement of cash flows so that management is accountable for all aspects of Lakeland Financial’s financial health. The Company considers both financial and non-financial performance outcomes in assessing executives’ performance and compensation. •Annual Incentive Risk: Executives’ annual bonuses are earned based on both financial and non-financial performance. Target bonuses are reasonably achievable with good performance. The Compensation Committee believes the goals are challenging but not overly difficult. The bonus payout curves do not use steep cliffs to determine target bonus payouts or offer exponential upside for maximum payouts. •Long-Term Incentive Risk: The LTI Plan uses different performance metrics and measurement periods than annual incentives so that short-term performance is not overemphasized. Restricted stock units under the LTI Plan do not use overly stretched goals or accelerated payout curves. The target and maximum payouts under the LTI Plan are reasonable in light of our overall pay mix. Long-term incentives focus on measures of sustainable value creation for long-term investors. After considering all components of the compensation paid to the named executive officers, the Compensation Committee has determined that the compensation is reasonable and not excessive and does not encourage imprudent risk-taking or other improper behavior. In making this determination, the Compensation Committee considered many factors, including: •Management has positioned Lakeland Financial for future success through the planning and execution of Lakeland Financial’s strategic plan. •Management has consistently led Lakeland Financial to strong levels of performance in recent years. •The shareholder return performance of Lakeland Financial over the past five years has outpaced the performance of companies in Lakeland Financial’s peer group. •Lakeland Financial is well positioned in the communities it serves as a result of the direction that this management team has taken the Company.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table sets forth information concerning the compensation of our Chief Executive Officer, Chief Financial Officer and our other three most highly compensated executive officers in 2023, 2022 and 2021.
2023 Summary Compensation Table
| Name and Principal Position (a) | Year (b) | Salary(1) (c) | Stock Awards(2)(3) (d) | Non-Equity Incentive Plan Compensation (e) | All Other Compensation(4) (g) | Total (h) | | David M. Findlay Chairman and Chief Executive Officer | 2023 | $684,923 | $1,066,080 | $271,365 | $28,258 | $2,050,626 | | | 2022 | 658,515 | 1,221,280 | 353,100 | 26,498 | 2,259,393 | | | 2021 | 638,204 | 905,600 | 348,800 | 27,305 | 1,919,909 | | Kristin L. Pruitt President | 2023 | 396,692 | 521,035 | 137,340 | 25,450 | 1,080,517 | | | 2022 | 337,154 | 496,145 | 144,664 | 27,295 | 1,005,258 | | | 2021 | 325,231 | 367,900 | 142,572 | 26,885 | 862,588 | | Lisa M. O’Neill Executive Vice President, Chief Financial Officer | 2023 | 308,385 | 433,095 | 97,960 | 18,639 | 858,079 | | | 2022 | 288,308 | 457,980 | 123,692 | 21,390 | 891,370 | | | 2021 | 279,077 | 339,600 | 122,080 | 20,775 | 761,532 | | Eric H. Ottinger Executive Vice President, Chief Commercial Banking Officer | 2023 | 352,423 | 433,095 | 120,190 | 29,621 | 935,329 | | | 2022 | 338,693 | 496,145 | 145,306 | 31,318 | 1,011,462 | | | 2021 | 328,281 | 367,900 | 143,444 | 30,810 | 870,435 | | J. Rickard Donovan(5) Senior Vice President, General Counsel | 2023 | 216,346 | 269,852 | 55,335 | 60,683 | 602,216 | | | — | — | — | — | — | — | | | — | — | — | — | — | — |
2023 Summary Compensation Table
(1)Salary reported includes amounts deferred at the officer’s election pursuant to the Company’s deferred compensation plans. Salary amounts deferred in 2023 are included in the Nonqualified Deferred Compensation table, below. (2)For 2023, the amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718 for performance-based restricted stock unit awards granted under our LTI Plan for the 2023-2025 performance period. For 2022 and subsequent years, LTI plans are split to include 25% time based and 75% performance based shares. For 2022 and 2021, the amounts represent such grant date fair value for performance-based restricted stock unit awards granted under our LTI Plan for the 2022-2024 and 2021-2023 performance periods. Because the currently outstanding restricted stock units do not pay or accumulate dividend equivalents during the applicable three-year vesting periods, these amounts were calculated based on the Company’s closing share price on the date of grant discounted by the present value of the dividends expected to be paid on the underlying shares during the vesting period. Expected dividends are calculated using the most recent dividend rate declared by the Board on the grant date. The Company uses a discount rate equal to the three year Treasury rate on the grant date. See the discussion of equity awards in Note 14 of the Notes to Consolidated Financial Statements for Lakeland Financial’s financial statements for the year ended December 31, 2023 for further information regarding these awards. (3)The values above are based on the probable outcome of performance conditions at the time of grant. The maximum value that could be paid out based on time and performance for each individual under the respective performance-based restricted stock unit award is as follows:
2023 Summary Compensation Table
| Name | 2021 | 2022 | 2023 | | David M. Findlay | $1,358,400 | $1,679,260 | $1,465,860 | | Kristin L. Pruitt | 551,850 | 682,199 | 683,446 | | Lisa M. O’Neill | 509,400 | 629,723 | 595,506 | | Eric H. Ottinger | 551,850 | 682,199 | 595,506 | | J. Rickard Donovan | — | — | 371,029 |
2023 Summary Compensation Table
(4)The amounts for 2023 set forth in column (g) as “all other compensation” include 401(k) plan matching contributions, country club memberships and cell phone stipends we paid as follows:
2023 Summary Compensation Table
| Name | 401(k) Match | Cell Phone Stipend | Country Club Membership | Total | | David M. Findlay | $16,830 | $1,809 | $9,619 | $28,258 | | Kristin L. Pruitt | 16,830 | 1,809 | 6,811 | 25,450 | | Lisa M. O’Neill | 16,830 | 1,809 | — | 18,639 | | Eric H. Ottinger | 16,830 | 1,809 | 10,982 | 29,621 | | J. Rickard Donovan | 14,539 | 1,809 | 44,335 | 60,683 |
2023 Summary Compensation Table
(5)Mr. Donovan was not a named executive officer prior to 2023.
2023 Summary Compensation Table
| 2024 PROXY STATEMENT | 49 |
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table The following table provides information on annual cash bonuses under our EIB Plan and on long-term equity performance awards under our LTI Plan. These plans are described in more detail in the Compensation Discussion and Analysis section. The estimated amounts set forth in the table are subject to the terms of the respective plan and Company and individual performance, as described in the Compensation Discussion and Analysis section.
2023 Grants of Plan-Based Awards Table
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards(4) | | | All Other Stock Awards | Grant Date Fair Value of Stock and Option Awards (j) | | Name (a) | Grant Date (b) | Threshold ($) (c) | Target ($) (d) | Maximum ($) (e) | Threshold (shares) (f) | Target (shares) (g) | Maximum (shares) (h) | Number of Shares (i) | | | David M. Findlay | | | | | | | | | | | LTI Plan - Performance Based | 2/7/2023(1) | | | | 6,000 | 12,000 | 18,000 | | $799,560 | | LTI Plan - Time Based | 2/7/2023(2) | | | | | | | 4,000 | 266,520 | | EIB Plan | —(3) | $171,750 | $343,500 | $515,250 | | | | | | | Kristin L. Pruitt | | | | | | | | | | | LTI Plan - Performance Based | 2/7/2023(1) | | | | 2,438 | 4,875 | 7,313 | | 324,821 | | LTI Plan - Time Based | 2/7/2023(2) | | | | | | | 1,625 | 108,274 | | 2017 Equity Incentive Plan | 5/9/2023(5) | | | | | | | 2,000 | 87,940 | | EIB Plan | —(3) | 86,924 | 173,848 | 260,772 | | | | | | | Lisa M. O’Neill | | | | | | | | | | | LTI Plan - Performance Based | 2/7/2023(1) | | | | 2,438 | 4,875 | 7,313 | | 324,821 | | LTI Plan - Time Based | 2/7/2023(2) | | | | | | | 1,625 | 108,274 | | EIB Plan | —(3) | 62,000 | 124,000 | 186,000 | | | | | | | Eric H. Ottinger | | | | | | | | | | | LTI Plan - Performance Based | 2/7/2023(1) | | | | 2,438 | 4,875 | 7,313 | | 324,821 | | LTI Plan - Time Based | 2/7/2023(2) | | | | | | | 1,625 | 108,274 | | EIB Plan | —(3) | 70,700 | 141,400 | 212,100 | | | | | | | J. Rickard Donovan | | | | | | | | | | | LTI Plan - Performance Based | 2/7/2023(1) | | | | 1,519 | 3,037 | 4,556 | | 202,355 | | LTI Plan - Time Based | 2/7/2023(2) | | | | | | | 1,013 | 67,496 | | EIB Plan | —(3) | 32,550 | 65,100 | 97,560 | | | | | |
2023 Grants of Plan-Based Awards Table
(1)This row represents possible payments pursuant to the LTI Plan for the performance period running from 2023-2025. The LTI plan is described in the section entitled “Long-Term Incentive Plan” in the Compensation Discussion and Analysis section. (2)This row represents time-based restricted stock unit grants that vest over a 3 year period from 2023-2025. (3)This row represents possible payments pursuant to the EIB Plan for 2023 performance. The plan is described in the section entitled “Annual Bonus” in the Compensation Discussion and Analysis section. The bonus payout for 2023 performance is shown in the column entitled “Non Equity Incentive Plan Compensation” in the Summary Compensation Table above. (4)The Compensation Discussion and Analysis describes the performance conditions applicable to these grants under Compensation Decisions – Long-Term Incentive Plan. (5)This row represents time-based restricted stock units granted in connection with Ms. Pruitt's promotion to President, that vests over a 1 year period. The 2017 Equity Incentive Plan is described in the section entitled "Long-Term Incentive" in the Compensation Discussion and Analysis section.
2023 Grants of Plan-Based Awards Table
| 50 | |
2023 Outstanding Equity Awards at Fiscal Year-End Table
2023 Outstanding Equity Awards at Fiscal Year-End Table The following table sets forth information concerning outstanding option awards and stock awards held by the individuals named in the Summary Compensation Table as of December 31, 2023. Market values for outstanding stock awards are based on the closing price of Lakeland Financial stock on December 29, 2023 (the last trading day of the year) of $65.16.
2023 Outstanding Equity Awards at Fiscal Year-End Table
| Name (a) | Grant Date (b) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (c)(1) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (d)(1) | | David M. Findlay | 2/7/2023 | 6,000 | $390,960 | | | 2/7/2023(2) | 4,000 | 260,640 | | | 2/1/2022 | 12,000 | 781,920 | | | 2/1/2022(3) | 4,000 | 260,460 | | | 2/2/2021 | 24,000 | 1,563,840 | | Kristin L. Pruitt | 2/7/2023 | 2,438 | 158,860 | | | 2/7/2023(2) | 1,625 | 105,885 | | | 5/9/2023(4) | 2,000 | 130,320 | | | 2/1/2022 | 4,875 | 317,655 | | | 2/1/2022(3) | 1,625 | 105,885 | | | 2/2/2021 | 9,750 | 635,310 | | Lisa M. O’Neill | 2/7/2023 | 2,438 | 158,860 | | | 2/7/2023(2) | 1,625 | 105,885 | | | 2/1/2022 | 4,500 | 293,220 | | | 2/1/2022(3) | 1,500 | 97,740 | | | 2/2/2021 | 9,000 | 586,440 | | Eric H. Ottinger | 2/7/2023 | 2,438 | 158,860 | | | 2/7/2023(2) | 1,625 | 105,885 | | | 2/1/2022 | 4,875 | 317,655 | | | 2/1/2022(3) | 1,625 | 105,885 | | | 2/2/2021 | 9,750 | 635,310 | | J.Rickard Donovan | 2/7/2023 | 1,519 | 98,978 | | | 2/7/2023(2) | 1,013 | 66,007 | | | 2/1/2022 | 3,037 | 197,891 | | | 2/1/2022(3) | 1,013 | 66,007 | | | 2/2/2021 | 6,075 | 395,847 |
2023 Outstanding Equity Awards at Fiscal Year-End Table
(1)The awards vest based upon the achievement of certain performance thresholds over a three-year period, as described in the section entitled “Long-Term Incentive Plan” in the Compensation Discussion and Analysis section above. Restricted stock units subject to awards made in 2023, 2022, and 2021 vest, if at all, on January 1 of 2026, 2025 and 2024, respectively. Additionally, as the vesting is based on actual performance during the performance periods through December 31, 2023, the 2021 awards are reported at maximum performance, the 2022 awards are reported at target performance and the 2023 awards are reported at threshold performance. (2)This row represents time-based restricted stock unit grants that vest over a 3 year period from 2023-2025. (4)This row represents time-based restricted stock units granted in connection with Ms. Pruitt's promotion to President, that vests over a 1 year period. The 2017 Equity Incentive Plan is described in the section entitled "Long-Term Incentive" in the Compensation Discussion and Analysis section.
2023 Outstanding Equity Awards at Fiscal Year-End Table
| 2024 PROXY STATEMENT | 51 |
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table The following table sets forth information concerning the exercise of options and the vesting of stock awards in 2023 by the individuals named in the Summary Compensation Table.
2023 Option Exercises and Stock Vested Table
| | Stock Awards | | | Name (a) | Stock Awards Number of Shares Acquired on Vesting(1) (b) | Value Realized on Vesting(2) (c) | | David M. Findlay | 18,880 | $1,226,634 | | Kristin L. Pruitt | 7,670 | 498,320 | | Lisa M. O’Neill | 6,372 | 413,989 | | Eric H. Ottinger | 7,670 | 498,320 | | J. Rickard Donovan | 4,779 | 310,492 |
2023 Option Exercises and Stock Vested Table
(1)Shares include restricted stock units under the LTI Plan that vested in 2023 for the 2020 –2022 performance period. In determining the attainment of performance measures under the LTI Plan that vested in 2023 for the 2020–2022 performance period. (2)The amounts reflect the value realized upon the vesting of restricted stock units based on a closing price of Lakeland Financial stock of $64.97 on January 2, 2024, the next trading day following the date of vesting.
2023 Option Exercises and Stock Vested Table
| 52 | |
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation Effective January 1, 2004, we adopted the Lake City Bank Deferred Compensation Plan (the “Deferred Compensation Plan”). The purpose of the Deferred Compensation Plan is to provide an option for salary deferrals at the participant’s voluntary election for certain individuals without regard to statutory limitations under tax qualified plans. The Deferred Compensation Plan is available to all of our executive officers. The plan is funded solely by participant contributions and does not receive a Company match. Participants may defer a portion of their salary or bonus under the Deferred Compensation Plan. Deferred amounts are tracked by the Company in a deferral account. The Company will credit earnings and losses to the participant’s deferred account based on the performance of one or more measurements funds selected by the participant from a pool of measurement funds selected by the Compensation Committee. The participant’s deferred account balance will be distributed in a lump sum following the participant’s termination of employment or death. Participants may elect to receive the funds in a lump sum or in annual installments for up to 10 years following retirement on or after the participant’s attainment of age 55 and five years of service. Withdrawals are not allowed during their employment, except in the event of a financial hardship as approved by the Compensation Committee or if the participant makes an in service distribution election prior to the time of the deferral in accordance with the terms of the Deferred Compensation Plan. All deferral elections and associated distribution schedules are irrevocable. Earnings or losses on deferrals are the result of market performance of the selected investments.
Nonqualified Deferred Compensation
| Name (a) | Executive Contributions in Last FY (b) | Registrant Contributions in Last FY (c) | Aggregate Earnings in Last FY (d) | Aggregate Withdrawals/ Distributions (e) | Aggregate Balance at Last FYE (f) | | David M. Findlay(1) | $— | $— | $640,726 | $2,154,652 | $2,443,413 | | Kristin L. Pruitt(2) | 21,700 | — | 38,767 | 109,216 | 259,718 | | Lisa M. O’Neill(3) | 13,500 | — | 5,512 | — | 40,816 | | Eric H. Ottinger(4) | 99,908 | — | 52,012 | — | 365,903 | | J. Rickard Donovan(5) | — | — | — | — | — |
Nonqualified Deferred Compensation
(1)With respect to Mr. Findlay, the 2023 aggregate earnings were not considered above market interest, and as such, were not reported in the Summary Compensation Table. $2,036,217 of the aggregate balance as of December 31, 2023 has been reported as compensation to the executive in the Summary Compensation Table in previous years. (2)With respect to Ms. Pruitt, $21,700 of the 2023 contributions were reported in the Summary Compensation Table as non-equity incentive compensation. The 2023 aggregate earnings were not considered above market interest, and as such, were not reported in the Summary Compensation Table. $265,617 of the aggregate balance as of December 31, 2023 has been reported as compensation to the executive in the Summary Compensation Table in previous years. (3)With respect to Ms. O’Neill, $6,000 and $7,500 of the 2023 contributions were reported in the Summary Compensation Table as salary and non-equity incentive compensation, respectively. The 2023 aggregate earnings were not considered above market interest, and as such, were not reported in the Summary Compensation Table. $15,000 of the aggregate balance as of December 31, 2023 has been reported as compensation to the executive in the Summary Compensation Table in previous years. (4)With respect to Mr. Ottinger, $70,847 and $29,061 of the 2023 contributions were reported in the Summary Compensation Table as salary and non-equity incentive compensation, respectively. The 2023 aggregate earnings were not considered above market interest, and as such, were not reported in the Summary Compensation Table. $150,782 of the aggregate balance as of December 31, 2023 has been reported as compensation to the executive in the Summary Compensation Table in previous years. (5)Mr. Donovan was not a named executive officer prior to 2023. As noted above, all contributions to the plan are funded solely by voluntary participant contributions, which represent a deferral of annual salary or non-equity incentive compensation, and there are no Company matching contributions. All aggregate earnings shown above represent investment and interest return on participant contributions.
Nonqualified Deferred Compensation
| 2024 PROXY STATEMENT | 53 |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The following table sets forth information concerning potential payments and benefits under our compensation programs and benefit plans to which the named executive officers would be entitled upon a hypothetical termination of employment as of December 31, 2023. As is more fully described below, all of the named executive officers, except for Mr. Donovan, were subject to change in control agreements with Lakeland Financial that were in effect on December 31, 2023 (each, a “Change in Control Agreement”). These agreements provide payments and benefits to executives terminated in connection with a change in control of Lakeland Financial. Except for the payments and benefits provided by the Change in Control Agreements, all other payments and benefits provided to any named executive officer upon termination of employment are the same as the payments and benefits provided to other eligible executives of Lakeland Financial. For purposes of estimating the value of certain equity awards, we have assumed a price per share of our common stock of $65.16 which was the closing price of our stock on December 29, 2023, the last trading day of the year.
Potential Payments Upon Termination or Change in Control
| Name | Type of Payment | Voluntary Retirement | Termination- Death or Disability | Termination, by the Company Other than for Cause, or by the Executive for Good Reason, in Connection with Change in Control(1) | | | David M. Findlay | Cash Severance Payment | $— | $— | | $2,061,000 | | | LTI Plan(2) | 1,042,560 | 1,042,560 | | 1,279,742 | | | EIB Plan(3) | 271,365 | — | | 271,365 | | | Continuation of Medical/Dental Benefits(4) | — | — | | 12,370 | | | Total Termination Benefits | 1,313,925 | 1,042,560 | | 3,624,477 | | Kristin L. Pruitt | Cash Severance Payment | — | — | | 1,223,800 | | | LTI Plan(2) | — | 423,540 | | 519,895 | | | EIB Plan(3) | — | — | | 137,340 | | | Continuation of Medical/Dental Benefits(4) | — | — | | 529 | | | Total Termination Benefits | — | 423,540 | | 1,881,564 | | Lisa M. O’Neill | Cash Severance Payment | — | — | | 868,000 | | | LTI Plan(2) | 401,820 | 401,820 | | 495,135 | | | EIB Plan(3) | 97,960 | — | | 97,960 | | | Continuation of Medical/Dental Benefits(4) | — | — | | 38,461 | | | Total Termination Benefits | 499,780 | 401,820 | | 1,499,556 | | Eric H. Ottinger | Cash Severance Payment | — | — | | 989,800 | | | LTI Plan(2) | — | 423,540 | | 519,895 | | | EIB Plan(3) | — | — | | 120,190 | | | Continuation of Medical/Dental Benefits(4) | — | — | | 38,461 | | | Total Termination Benefits | — | 423,540 | | 1,668,346 | | J. Rickard Donovan | Cash Severance Payment | — | — | | — | | | LTI Plan(2) | 263,898 | 263,898 | | — | | | EIB Plan(3) | 55,335 | — | | — | | | Continuation of Medical/Dental Benefits(4) | — | — | | — | | | Total Termination Benefits | 319,233 | 263,898 | | — |
Potential Payments Upon Termination or Change in Control
(1)The amounts set forth are gross amounts payable upon a termination without cause or a resignation by the executive for good reason (a “Termination”) in connection with a change in control and are subject to a modified 280G cutback provision, which may result in a reduced payment. (2)Under the LTI Plan a prorated portion of outstanding awards will vest upon a qualifying retirement, with such number determined based upon target performance for the portion of the performance period during which the retiring executive was employed. Only Mr. Findlay, Ms. O'Neill and Mr. Donovan would qualify for such treatment upon a retirement as of December 31, 2023. LTI Plan awards will be prorated based upon the period during which the executive was employed. LTI plan awards made in 2022 and after are split to include 25% time based and 75% performance based shares. Upon a termination in connection with a change in control, outstanding LTI Plan awards will vest based upon actual performance though the date of the change in control. (3)Under the EIB Plan, a participant forfeits his or her bonus eligibility upon terminating employment prior to the date of payment. However, a prorated bonus is payable to a participant upon a qualifying retirement, based upon actual performance under relevant performance metrics through the date of such retirement. Only Mr. Findlay, Ms. O'Neill and Mr. Donovan would qualify for such treatment upon a retirement as of December 31, 2023. The calculations above assume a level of individual and Company performance of 100% and 85%, respectively, for Mr. Ottinger and Mr. Donovan and 100% and 79%, respectively, for Mr. Findlay, Ms. Pruitt and Ms. O'Neill. In addition, in the event of a termination in connection with a change in control of the Company, bonuses for any completed performance periods are payable. For purposes of the table above, it is assumed that each executive’s employment terminated on December 31, 2023 and, therefore, the table includes the full 2023 bonus amounts. (4)We have estimated the amounts due for 18 months of medical, dental and vision benefits based on our monthly COBRA continuation rates.
Potential Payments Upon Termination or Change in Control
| 54 | |
CEO Pay Ratio
CEO Pay Ratio For our 2023 CEO Pay Ratio disclosure, we calculated our median employee as of the December 31, 2022 payroll using our entire employee population. The compensation data we used to determine our median employee was the same as that used in the summary compensation table for our named executive officers, including our CEO. We annualized the salary of full-time employees hired during the year and the salary of part-time permanent employees hired during the year was annualized at their part-time rate. For 2024, we used the same median employee as used for 2023 as there have been no material changes in our employee population or employee compensation arrangements that we believe would result in a significant change to the pay ratio. There were no material changes to this employee's compensation that would significantly affect the pay ratio. Based on this methodology, the total compensation of our median employee was $53,635. The total compensation of our CEO was $2,050,626 and the ratio of this to our median employee total compensation was approximately 38:1.
CEO Pay Ratio
| 56 | |
Pay Versus Performance
Pay Versus Performance
2023 Pay Versus Performance Table
2023 Pay Versus Performance Table
2023 Pay Versus Performance Table
| Year | Summary Compensation Table Total for CEO(6) | Compensation Actually Paid to CEO | Average Summary Compensation Table Total for Non-CEO Named Executive Officers(7) | Average Compensation Actually Paid to Non-CEO Named Executive Officers | Value of Initial Fixed $100 Investment Based on: | | Net Income | 3 Year Diluted Earnings Per Share Growth | | | | | | | | Total Shareholder Return | Peer Group Total Shareholder Return(8) | | | | | 2023(1) | $2,050,626 | $(854,147) | $869,035 | $(158,823) | $184.29 | $131.57 | $93,766,695 | | 3.42% | | 2022(2)(3) | 2,259,393 | 1,409,519 | 931,885 | 622,052 | 199.83 | 132.75 | 103,817,138 | | 6.13% | | 2021(4) | 1,919,909 | 3,544,175 | 798,633 | 1,413,929 | 214.86 | 168.88 | 95,732,847 | | 6.11% | | 2020(5) | 1,658,750 | (95,717) | 688,981 | 82,264 | 140.68 | 122.09 | 84,337,021 | | 13.96% |
2023 Pay Versus Performance Table
(1)The LTI Plan for the 2023-2025 performance period has an estimated payout at 29%. The LTI Plan for the 2022-2024 performance period has an estimated payout at 68%. The LTI Plan for the 2021-2023 performance period paid out at 118%. (2)The LTI Plan for the 2022-2024 performance period and subsequent periods will be 75% performance-based and 25% time-based. (3)The LTI Plan for the 2022-2024 performance period has an estimated payout at 120%. The LTI Plan for the 2021-2023 performance period has an estimated payout at 143%. The LTI Plan for the 2020-2022 performance period paid out at 118%. (4)The LTI Plan for the 2021-2023 performance period has an estimated payout at 141%. The LTI Plan for the 2020-2022 performance period has an estimated payout at 106%. The LTI Plan for the 2019-2021 performance period paid out at 66%. (5)The LTI Plan for the 2020-2022 performance period has an estimated payout at 64%. The LTI Plan for the 2019-2021 performance period has an estimated payout at 25%. The LTI Plan for the 2018-2020 performance period paid out at 78%. (6)The CEO in 2023, 2022, 2021 and 2020 was Mr. Findlay. (7)The Non-CEO NEOs in 2023 were Ms. Pruitt, Ms. O'Neill, Mr. Ottinger and Mr. Donovan. The Non-CEO NEOs in 2022, 2021 and 2020 were Ms. Pruitt, Ms. O'Neill, Mr. Ottinger and Mr. Gavin. (8)The peer group used is the KBW NASDAQ Bank Index. The following table reconciles the Summary Compensation Table to the Pay Versus Performance Table above.
2023 Pay Versus Performance Table
| | CEO | | | | Non-CEO Named Executive Officers | | | | | Year | 2020 | 2021 | 2022 | 2023 | 2020 | 2021 | 2022 | 2023 | | Summary Compensation Table Total Compensation | $1,658,750 | $1,919,909 | $2,259,393 | $2,050,626 | $688,981 | $798,633 | $931,885 | $869,035 | | Less Grant Date Fair Value of Stock Awards in Fiscal Year | (711,040) | (905,600) | (1,221,280) | (1,066,080) | (264,418) | (345,260) | (465,613) | (414,269) | | Add Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Years and Fiscal Year | (1,043,427) | 2,529,866 | 371,406 | (1,838,693) | (342,299) | 960,556 | 155,780 | (613,589) | | Compensation Actually Paid | (95,717) | 3,544,175 | 1,409,519 | (854,147) | 82,264 | 1,413,929 | 622,052 | (158,823) |
2023 Pay Versus Performance Table
| 2024 PROXY STATEMENT | 57 |