DEF 14A of First Mid Bancshares, Inc.
Filed Mar 15, 2024 · FY20230000950170-24-031929
PROPOSAL 1 - ELECTION OF DIRECTORS
PROPOSAL 1 - ELECTION OF DIRECTORS The directors of the Company are divided into Classes I, II and III having staggered terms of three years. For this year's annual stockholders meeting, upon the recommendation of the Board of Director's Nominating & Governance Committee, the Board of Directors has nominated for re-election as Class II directors, for a term expiring in 2027, Ms. Adams, Mr. Dively, and Mr. Horn. Ms. Adams, Mr. Dively, and Mr. Horn have served as directors of the Company since 2012, 2004, and 2020, respectively. The three individuals receiving the highest number of votes cast will be elected as directors of the Company and will serve as Class II directors for a three-year term. Broker non-votes, because they are not considered votes cast, will not be counted in the vote totals. The Company has no knowledge that any of the nominees will refuse or be unable to serve, but if any of the nominees becomes unavailable for election, the holders of the proxies reserve the right to substitute another person of their choice as a nominee when voting at the meeting. The Board of Directors has adopted a mandatory retirement age for all directors of 70, provided directors are permitted to serve for the full term in which they reach age 70. The following table sets forth as to each nominee and director continuing in office, his or her name, age, principal occupation, and the year he or she first became a director of the Company. Unless otherwise indicated, the principal occupation listed for each person below has been his or her occupation for the past five years.
PROPOSAL 1 - ELECTION OF DIRECTORS
| Name | Age at March 15, 2024 | Principal Occupation | Year First Became Director | Year Term Expires | | DIRECTOR NOMINEES | | | | | | Holly B. Adams | 53 | President of Howell Asphalt Company (since 2008) and Howell Paving, Inc. (since 2013), a road construction company; Executive Vice President of Howell Paving, Inc. (2008-2013); and Vice President of Howell Asphalt Company and Howell Paving (1997-2008); Director of the Company, First Mid Bank, and Insurance Group (since 2012); Director of Wealth Management (since July 2018). | 2012 | 2024 | | Joseph R. Dively | 64 | Chairman, President and Chief Executive Officer of the Company (since January 2014); Senior Executive Vice President of the Company (May 2011-December 2013); President of First Mid Bank (since May 2011); Senior Vice President of Consolidated Communications Holdings, Inc., a telecommunications holding company (2003-2011), and President of Illinois Telephone Operations, a local telecommunications provider (until 2008); Director of the Company and First Mid Bank (since 2004); Director of Insurance Group (since 2009); Director of Wealth Management (since July 2018). | 2004 | 2024 | | Zachary I. Horn | 45 | President and sole owner, Metro Communications Company, Inc., a telecommunications firm (since 2000); Director of the Company, First Mid Bank, Insurance Group and Wealth Management (since January 2020). | 2020 | 2024 |
The Board of Directors recommends a vote "FOR" the election of Directors
The Board of Directors recommends a vote "FOR" the election of Directors Adams, Dively, and Horn for a term of three years.
The Board of Directors recommends a vote "FOR" the election of Directors
| Name | Age at March 15, 2024 | Principal Occupation | Year First Became Director | Year Term Expires | | DIRECTORS CONTINUING IN OFFICE | | | | | | Mary J. Westerhold | 58 | Vice President and Chief Financial Officer (since 1997) and Controller (from 1992-1997), Madison Telephone Company, Madison Communications Company and Madison Network Systems; Director of the Company, First Mid Bank, and Insurance Group (since September 2016); Director of Wealth Management (since July 2018). | 2016 | 2026 | | J. Kyle McCurry | 46 | Chief Operating Officer and General Counsel of Paige Sports Entertainment, a private family office (since 2015); Director of the Company, First Mid Bank, Insurance Group and Wealth Management (since February 2021); Director of LINCO Bancshares, Inc. (2015-2021). | 2021 | 2026 | | Todd J. James | 59 | Self-employed financial consultant (since August 2023); President, Chief Executive Officer and Chairman of Blackhawk Bancorp, Inc. (2019 - 2023); President, Chief Executive Officer and Director of Blackhawk Bancorp, Inc. (2018); Executive Vice President and Chief Financial Officer of Blackhawk Bancorp, Inc. (2003-2018); Senior Vice President and Chief Financial Officer of Blackhawk Bancorp, Inc. (2002); Served in a variety of financial roles at Amcore Financial, Inc. (1993-2001); Public Accounting for Mcladrey & Pullen (1986-1992); Director of the Company, First Mid Bank, Insurance Group and Wealth Management (since August 2023). | 2023 | 2026 | | Robert S. Cook | 41 | Managing Partner of TAR CO Investments LLC, a private investment company (since 2014); Vice President of FIG Partners LLC, an investment banking firm (from 2009-2014); Director of the Company, First Mid Bank, and Insurance Group (since 2014); Director of Wealth Management (since July 2018). | 2014 | 2025 | | Gisele A. Marcus | 56 | Professor of Practice-Diversity, Equity & Inclusion (DEI), Washington University in St. Louis (since 2021); Vice President, Operations & Client Engagement of One Stone Development Company, LLC (since 2020); General Manager, Asset Management Services of Thermo Fisher Scientific (2019-2020); CFO & Executive Vice President, Strategic Initiatives & Operations of St. Louis Regional Chamber (2017-2019); Director of the Company, First Mid Bank, Insurance Group and Wealth Management (since February 2022). | 2022 | 2025 | | James E. Zimmer | 60 | Owner, J. Zimmer Properties, a student housing provider (since 2010); Executive Council Member Granite Creek Capital (since 2021); Director Elemental Enzymes LLC, an agricultural life sciences business focused on innovative enzyme technology for farmers (since 2014); Chief Executive Officer of Channel Bio Corporation (2008-2010); Co-founder, Moraine Farmland Partners (since 2010); Director of the Company, First Mid Bank, and Insurance Group (since 2014); Director of Wealth Management (since 2018). | 2014 | 2025 |
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE The Company’s Board of Directors is committed to maintaining an effective corporate governance framework. Strong governance practices support long-term, sustainable value creation for the Company’s shareholders and provide a foundation for effective Board oversight. In July 2021, the Board of Directors adopted a Nominating & Governance Committee Charter to assist the Board of Directors in fulfilling its responsibilities to shareholders. The Company’s governance framework is discussed in detail below.
BOARD OF DIRECTORS
BOARD OF DIRECTORS A total of 16 regularly scheduled and special meetings were held by the Board of Directors during 2023. During 2023, all directors attended at least 75 percent of the meetings of the Board of Directors and the committees on which they served during the time they served, except for Mr. James who joined the Board in August of 2023.
LEADERSHIP STRUCTURE
LEADERSHIP STRUCTURE Mr. Dively has served as President and Chief Executive Officer and Chairman of the Board of Directors of the Company since January 1, 2014. The Board of Directors believes that having the Chief Executive Officer and Chairman positions held by the same individual allows that individual to have multiple perspectives about the Company and its operations while optimizing the ability of the Board of Directors to communicate with Company management. Also, because the members of the Board of Directors other than Mr. Dively are independent, the knowledge of the Company that Mr. Dively brings to the Board of Directors helps to enhance the Board of Directors' leadership of the Company. The Board of Directors has no fixed policy with respect to combining or separating the roles of the Chief Executive Officer and the Chairman of the Board of Directors and will continue to review the Board of Directors' leadership structure from time to time in order to ensure that the leadership is optimal for the Company at that time. At any time that the Chief Executive Officer and Chairman of the Board positions are held by the same individual, the Board of Directors may, in its discretion, appoint a lead independent director. At its meeting on April 29, 2020, the Board of Directors appointed Ms. Adams as its lead independent director. The responsibilities of the lead independent director include the following: acting as a liaison between the Chairman and the independent members of the Board of Directors; advising the Chairman on the quality, quantity and timeliness of the flow of information from management; serving as a resource to the members of the Board of Directors on corporate governance practices and policies; and coordinating and moderating executive sessions of the independent members of the Board of Directors.
DIRECTOR NOMINATION PROCESS
DIRECTOR NOMINATION PROCESS The Company formed a Nominating & Governance Committee (“the NGC”) in July 2021 to replace the Board’s Director Nomination Policy. The NGC, among other responsibilities, considers and acts on all matters relating to the nomination of individuals for election as directors, including pursuant to the Company’s diversity policy. Pursuant to the NGC Charter, the NGC reviews and makes recommendations regarding the composition and size of the Board of Directors in order to ensure that it has the requisite expertise and that its membership consists of persons with sufficiently diverse backgrounds and satisfies NASDAQ’s listing requirements regarding independent directors. The Company believes the diverse backgrounds and perspectives of its current directors, as described below under “Board Director Qualifications,” are appropriate to the oversight of the Company’s management team and performance. In the consideration of director nominees, the NGC considers, at a minimum, the following factors for new directors, or the continued service of existing directors: (1) the ability of the prospective nominee to represent the interests of the stockholders of the Company; (2) the prospective nominee’s standards of integrity, commitment and independence of thought and judgment; (3) the prospective nominee’s ability to dedicate sufficient time, energy and attention to the diligent performance of his or her duties; (4) the extent to which the prospective nominee contributes to the diversity of talent, skill and expertise appropriate for the Board of Directors; (5) the prospective nominee’s contributions to the Board of Directors as a whole; and (6) the background, including diversity of gender, race and ethnic background, of the prospective nominee. Any stockholder who wishes to recommend a director candidate for consideration by the NGC should submit such recommendation in writing to the Board of Directors at the address set forth below under “Communications with Directors.” A candidate recommended for consideration must be highly qualified and must be willing and able to serve as director. Director candidates recommended by stockholders will receive the same consideration given to other candidates and will be evaluated against the criteria above.
NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS
NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS Any stockholder wishing to nominate an individual for election as a director at the Annual Meeting must comply with certain provisions in the Company's Restated Certificate of Incorporation. The Company's Restated Certificate of Incorporation establishes an advance notice procedure with regard to the nomination, other than by or at the direction of the Board of Directors, of candidates for election as directors. If the notice is not timely and in proper form, the proposed nomination will not be considered at the Annual Meeting. Generally, such notice must be delivered to or mailed to and received by the Secretary of the Company not fewer than 14 days nor more than 60 days before a meeting at which directors are to be elected. To be in proper form, each written nomination must set forth: (1) the name, age business address and, if known, the residence address of the nominee, (2) the principal occupation or employment of the nominee for the past five years, and (3) the number of shares of stock of the Company beneficially owned by the nominee and by the nominating stockholder. The stockholder must also comply with certain other provisions set forth in the Company's Restated Certificate of Incorporation relating to the nomination of an individual for election as a director. For a copy of the Company's Restated Certificate of Incorporation, which includes the provisions relating to the nomination of an individual for election as a director, an interested stockholder should contact the Secretary of the Company at 1421 Charleston Avenue, P.O. Box 499, Mattoon, Illinois 61938. In addition, to comply with Rule 14a-19 under the Securities Exchange Act of 1933 (the “Exchange Act”), the SEC’s universal proxy rule, if a stockholder intends to solicit proxies in support of director nominees submitted under the advance notice provisions of our Restated Certificate of Incorporation for next year’s annual meeting, then such stockholder must provide proper written notice that sets forth all the information required by Rule 14a-19 under the Exchange Act to the Secretary at the address above by February 26, 2024 (or, if next year’s annual meeting is called for a date that is more than 30 days before or more than 30 days after the first anniversary of this year’s annual meeting, then notice must be provided not later than the close of business on the later of the 60th day prior to the date of the 2024 annual meeting of stockholders or the 10th day following the day on which public announcement of the date of such meeting is first made by the Company). The notice requirements under Rule 14a-19 are in addition to the applicable advance notice requirements under our Restated Certificate of Incorporation as described above .
BOARD OF DIRECTOR QUALIFICATIONS
BOARD OF DIRECTOR QUALIFICATIONS The Board of Directors seeks to be composed of a group of persons with a variety of experience, qualifications, attributes, skills and diversity that enable it to meet the governance needs of the Company. The Company has adopted a diversity policy which seeks a potential pool of director and executive officer candidates that include individuals who reflect diverse backgrounds, including diversity of gender, race, ethnic background and professional experience. The Board of Directors consists of a group of individuals who have a mix of skills and knowledge in the areas of banking, finance, accounting and business. All members of the Board of Directors have an understanding of finance and accounting, are able to understand fundamental financial statements and generally accepted accounting principles and their application to the accounting of the Company. In addition, members of the Board of Directors are active in, and knowledgeable about, the local communities in which the Company operates. A number of the members of the Company’s Board of Directors are also among the largest of the Company’s shareholders. Following is a description of each director’s specific experience and qualifications that led the Board of Directors to conclude that the person should serve as a director for the Company. Holly B. Adams has served as a director of the Company since 2012. Ms. Adams has a bachelor’s degree in Economics from DePauw University and an MBA degree from Texas Christian University. She is the President of Howell Asphalt Company, Wabash Asphalt Company, Inc., General Contractors and Prosser Company, which are subsidiaries of Howell Paving, Inc., of which she is also President (since 2013). She served as Executive Vice President of Howell Paving, from 2008-2013 and Vice President of Howell Asphalt Company and Howell Paving from 1997 until 2008. Her leadership experience and the business knowledge gained in her work with these companies and her experiences within the communities served by the Company assist the Board of Directors in various areas of its oversight. Robert S. Cook has served as a director of the Company since August 2014. Mr. Cook has a bachelor's degree in Finance from the University of Missouri. He is currently the managing partner of TAR CO Investments LLC, which primarily invests in community banks. From 2009 to 2014, Mr. Cook was Vice President of FIG Partners, LLC, an investment banking firm, where he led corporate development efforts with community banks and thrifts for the company's Midwest practice. His experience analyzing financial statements and making assessments of community banks in the Midwest assists the Board of Directors in various aspects of oversight and decision making. Joseph R. Dively has served as a director of the Company since 2004. Mr. Dively has a bachelor’s degree in Business from Eastern Illinois University and has also completed a “Finance for Executives” program through the graduate school of business at the University of Chicago. Mr. Dively has held a variety of management positions in diverse business units which included financial statement responsibilities since 1991. He served as Senior Executive Vice President of the Company and President of First Mid Bank from May 2011 to December 2013. On January 1, 2014, Mr. Dively became the Chairman of the Board of Directors and CEO of the Company. He also retained his position as President of First Mid Bank. Mr. Dively provides a wealth of institutional knowledge of the Company. Prior to his employment with the Company, Mr. Dively was Senior Vice President of Consolidated Communications Holdings, Inc., a publicly traded telecommunication holding company headquartered in Mattoon, Illinois. Mr. Dively has also served on the boards of directors of several other organizations where his duties included working with investors, executive teams and other board members. Mr. Dively’s current and previous experiences also assist the Board of Directors in dealing with issues related to the Company’s local communities and the Board of Directors also benefits from his perspective serving as a former executive officer of a publicly traded company. Zachary I. Horn joined the Company's board of directors in January 2020. Mr. Horn has a bachelor’s degree in economics from St. Louis University and a master’s degree in finance from the University of Illinois. He is the founder, president and sole owner of Metro Communications Company, Inc. (since 2000) a regional telecommunications services provider. His leadership experience, the business and financial knowledge gained in developing his company over the past 19 years, and his experiences within the communities served by the Company assist the Board of Directors in various areas of its oversight. Todd J. James joined the Company’s board of directors in August 2023, following the Company’s acquisition of Blackhawk Bancorp, Inc. He is currently self-employed as a financial consultant. Mr. James served as President, Chief Executive Officer, and Chairman of Blackhawk Bancorp, Inc. from 2019-2023 and as President, Chief Executive Officer and Director in 2018. Prior to that, he served as Chief Financial Officer from 2002-2018. Prior to joining Blackhawk, he served in various financial roles with Amcore Financial Inc. for approximately 10 years. From 1986 to 1993, he worked in public accounting. Mr. James is a Certified Public Accountant with a bachelor’s degree in Accounting from Northeast Missouri State University and, he completed the Graduate School of Banking at the University of Wisconsin. Gisele A. Marcus joined the Company’s board of directors in February 2022. Ms. Marcus has a bachelor’s degree in MIS and Transportation Distribution Management from Syracuse University and an MBA degree from Harvard University Graduate School of Business. Ms. Marcus is the Vice President of Operations and Client Engagement at One Stone Development Company, LLC which is a boutique consulting firm that supports clients at the intersection of people and strategy by leading projects to drive change, coaching leaders to inject transformation, and providing strategic guidance on an array of business challenges. Ms. Marcus is all a Professor of Practice-Diversity, Equity & Inclusion (DEI) at Washington University in St. Louis, where she partners with faculty and students to promote the integration of academic scholarship within the field of DEI. Ms. Marcus also held the role of Chief Operating Officer of the St. Louis Regional Chamber making her a strong advocate for one of the Company’s strategic growing markets. Her role as an executive in solving talent and culture focused challenges provides valuable insight toward making the Company a stronger employer and enhancing employee engagement initiatives. J. Kyle McCurry joined the Company’s board of directors in February 2021. Mr. McCurry has a bachelor’s degree in business administration and Juris Doctor Degree from the University of Missouri-Columbia. He is the Chief Operating Officer and General Counsel of Paige Sports Entertainment, a private family office that provides management services to support the activities and investments of its principals (since 2015). Prior to joining Paige Sports, Mr. McCurry was a partner with Stinson, LLP, where his practice focused on mergers and acquisitions, corporate finance, and regulatory and general corporate matters for banks and bank holding companies. He also served on the Board of Directors of Providence Bank since 2015. Mr. McCurry’s experience counseling bank and bank holding companies, including those of our recently acquired bank, Providence Bank, and managing the legal, risk and operational matters of a wide variety of entities will assist the Board of Directors in its various areas of oversight and banking experience.
BOARD OF DIRECTOR QUALIFICATIONS
Mary J. Westerhold has served as a director of the Company since September 2016, following the Company's acquisition of First Clover Leaf Financial Corp. She was as director of First Clover Leaf Financial Corp. from 2011-September 2016. She has been determined by the Board of Directors to be an audit committee financial expert. Ms. Westerhold has a bachelor's degree in Business Administration with a minor in Finance from Stephens College and an MBA degree from St. Louis University. She is the Vice President and Chief Financial Officer (since 1997) and Controller (from 1992 to 1997) of Madison Communications, Inc. and its affiliate telecommunications companies, Madison Telephone Company and Madison Network Systems, Inc. She also served as a Commercial Loan Officer for Mark Twain Bancshares (1989-1991). Ms. Westerhold’s experience in managing the operations of the various companies provides the Board with valuable general business experience. In addition, her financial and accounting experience provides the Board with valuable insight in accounting and strategic transactions involving the Company. Additionally, having served as a director of First Clover Leaf Financial Corp., Ms. Westerhold brings in-depth knowledge of one of the Company's acquired operations and the market in which it operates. James E. Zimmer has served as a director of the Company since August 2014. Mr. Zimmer has an MBA degree from Washington University. From 1992-2010, he held a variety of sales, marketing and executive positions throughout the agricultural industry with Monsanto Corporation. Mr. Zimmer is currently the owner of J. Zimmer Properties, a premier student housing provider and the co-founder of Bio-Enzyme, an agriculture business focused on innovative solutions for farmers (since 2010). Mr. Zimmer is also co-founder and partner of Moraine Farmland Partners (“MFP”). MFP invests in and operates farms in Illinois and Indiana. His experience and knowledge gained from these agriculture-related businesses will assist the Board of Directors in the communities it serves and various areas of its oversight. In 2023, the Nominating & Governance committee identified areas of skill, experience and knowledge important for the Company's long-term success. The following matrix details the background of the members of the Board of Directors in the key areas identified.
BOARD OF DIRECTOR QUALIFICATIONS
| Knowledge, Skills & Experience | Adams | Cook | Dively | James | Horn | Marcus | McCurry | Westerhold | Zimmer | Total # | | Financial Services / Banking | * | * | * | * | | | * | * | * | 7 | | Accounting, Finance, Tax | * | * | * | * | * | | * | * | | 7 | | Executive Leadership | * | | * | * | * | * | * | * | * | 8 | | Strategic Planning, Business Development, Business Operations | * | * | * | * | * | * | * | * | * | 9 | | Mergers & Acquisitions | | * | * | * | | | * | * | * | 6 | | Risk Management | * | * | * | * | | | * | * | | 6 | | Corporate Governance | * | * | * | * | | | * | * | | 6 | | Regulatory & Legal | * | * | * | * | | | * | * | * | 7 | | Human Capital Management | * | | * | * | * | * | * | | * | 7 | | Consumer, Marketing, Digital | | | * | * | | | | | * | 3 | | Community Relations | * | | * | * | * | * | * | | * | 7 | | Information Security, Cybersecurity, Technology | | | * | * | * | * | | * | | 5 | | Agriculture | | * | | | * | | | * | * | 4 | | Entrepreneur | * | * | | | * | | | * | * | 5 | | Real Estate | | | * | | * | * | * | * | * | 6 |
BOARD OF DIRECTOR QUALIFICATIONS
| Board Tenure | Adams | Cook | Dively | James | Horn | Marcus | McCurry | Westerhold | Zimmer | Total # | | Years | 12 | 10 | 20 | 1 | 4 | 2 | 3 | 7 | 8 | 67 |
Setting Executive Compensation
Setting Executive Compensation The compensation committee attempts to meet these objectives by providing a mix of key compensation elements that include base salary, annual cash incentives and equity-based compensation. In setting aggregate compensation for each of the named executive officers, the compensation committee first establishes appropriate levels of base salary for the executives, and then establishes the opportunity for the executives to earn additional compensation through annual cash incentives and longer-term equity compensation. The amount of such additional compensation varies with position and, in the case of annual and long-term incentives, is also conditioned on attainment of corporate or individual performance measures. The Company also provides retirement benefits, severance and change in control benefits, and a limited number of perquisites and other personal benefits in order to ensure a complete and competitive compensation plan. The compensation committee uses the key elements of compensation to meet the objectives of its executive compensation program as follows: Provide incentive to maximize stockholder value by aligning the executives’ interests with those of the stockholders. The compensation committee grants performance awards under its executive long-term incentive plan that consist of restricted stock awards and/or restricted stock units. The compensation committee also bases a significant portion of an executive’s cash incentive on attainment of certain corporate performance metrics, which encourages the executive to work to increase the Company’s profitability and in turn, its stock value. The compensation committee believes that the components of the long-term incentive plan align key executive compensation with the Company’s performance goals. The long-term incentive plan generally includes goals which ensure that the executives are focused on sustainability of earnings and growth of the Company. Enable the Company to attract and retain the best available talent. To achieve this objective, the compensation committee believes it must pay compensation that is competitive. As described below, the compensation committee reviews and monitors the compensation paid by companies that are comparable to the Company to ensure that compensation packages are competitive. Reward individual performance and contributions to the Company. The compensation committee’s evaluation of the individual performance of each executive affects his or her compensation. Individual performance is an important factor in determining base salary, which in turn affects the amount of cash incentive compensation that can be earned and equity compensation that is granted. Individual performance is also a component of the cash incentive compensation and, when awarded, equity compensation. The compensation committee makes all compensation decisions for the CEO and all other executive officers of the Company. The CEO annually reviews the performance of each executive officer (other than himself) and makes recommendations to the compensation committee. The compensation committee considers the CEO’s recommendations when making its final compensation decisions for all executives other than the CEO. Although the compensation committee has the discretion to make all final decisions, the recommendation of the CEO is an important factor. The compensation committee believes that its ability to exercise discretion in setting the elements of compensation for its executives provides flexibility to establish appropriate overall compensation levels and achieve the Company’s objectives.
Key Elements of Compensation
Key Elements of Compensation Each year the compensation committee reviews compensation data of the most highly paid executives of other comparable banking institutions. For 2023, the compensation committee retained the services of Blanchard Consulting to conduct a compensation review for executive management relative to competitive compensation, cash and equity incentives, and executive benefits. The review compared compensation to a peer group of publicly traded bank holding companies in non-urban areas in the Midwest of similar size to the Company. In addition to the third-party analysis, the compensation committee reviewed benchmarking of executive pay based on the Company’s established peer group. This peer group includes 26 publicly traded financial companies with similar asset sizes that provide banking related services in market areas comparable to the Company:
Key Elements of Compensation
| Executive | % of Salary Payable as Cash Incentive | % of Cash Incentive Tied to Net Income | % of Cash Incentive Tied to Asset Quality | % of Cash Incentive Tied to Efficiency | % of Cash Incentive Tied to Lines of Business | % of Cash Incentive Tied to Loan Growth | % of Cash Incentive Tied to WM Profitability | | Mr. Dively | 75% | 70% | 10% | 10% | 10% | | | | Mr. Smith | 40% | 70% | 10% | 10% | 10% | | | | Mr. Taylor | 40% | 70% | 10% | 10% | 10% | | | | Mr. McRae | 40% | 60% | 20% | | | 20% | | | Mr. Beesley | 30% | 70% | | | | | 30% |
Key Elements of Compensation
Tables were established to determine payout for net income achievement between threshold and target, and for achievement that exceeds target. Similar tables were established for corporate asset quality, efficiency, lines of business and wealth management net income with increases and decreases to the opportunity of the CEO and other named executive officers being the same. Operations for 2023 resulted in adjusted net income of $70.8 million which exceeded the threshold level, but was under the target level. Adjusted net income was adjusted for the Blackhawk acquisition and non-recurring expenses. The asset quality metric achieved the maximum payout at 0.90%. Efficiency was 59.95% which was slightly below the target level. Net income for the combined lines of business was $10.8 million which was below the target level and Wealth Management profitability for 2023 was $6.0 million, as adjusted, which was below the target level. The cash incentive awards paid were based on performance achievement as follows:
Key Elements of Compensation
| Executive | Cash Incentive | | Mr. Dively | $346,112 | | Mr. Smith | 106,176 | | Mr. Taylor | 128,928 | | Mr. McRae | 95,600 | | Mr. Beesley | 35,583 |
Key Elements of Compensation
Mr. Beesley maintains ongoing responsibilities for managing a portfolio of brokerage customers that includes providing investment advice and completing investment trades. Pursuant to the terms of his employment agreement, and consistent with standard practice in the brokerage industry, Mr. Beesley is entitled to 30% of net revenues he generates on his individual book of business through First Mid's broker/dealer. Accordingly, the compensation committee approved an additional annual cash incentive for Mr. Beesley for 2023 of $303,692, for a total of $339,275. Equity Compensation The compensation committee grants long-term equity compensation to motivate executives to increase stockholder value over the long term and more closely link the financial interests of the Company’s executives with those of its stockholders. Since 2011, the compensation committee has made awards pursuant to the Executive Long-Term Incentive Program (LTIP), which provides a framework for granting awards of restricted stock and restricted stock units (RSUs) under the Company's Stock Incentive Plan. The compensation committee believes that the components of the LTIP more closely align key executive compensation with the Company’s performance goals than the stock options granted in prior years and ensures that the executives are focused on longer term sustainability of earnings and growth in the value of the Company. In January 2023 the compensation committee made grants of performance based RSUs to the named executive officers. The January 2023 awards were for a target number of units as follows:
Key Elements of Compensation
| | March 2023 | January 2024 | | Executive | RSU Eligible Award | Actual Stock Granted from RSU Award | | Mr. Dively | 10,400 | 6,066 | | Mr. Smith | 3,000 | 1,800 | | Mr. Taylor | 3,000 | 1,800 | | Mr. McRae | 3,000 | 1,800 | | Mr. Beesley | 2,000 | 1,200 |
Pay Versus Performance
Pay Versus Performance The following table shows the total compensation from the Summary Compensation Table to compensation actually paid ("CAP") for the CEO and the average CAP paid to the other non-CEO named executive officers ("NEOs") during 2023. This table also includes, for comparative purposes, the Company's total shareholder return ("TSR"), peer group TSR, and the Company's net income and asset quality ratio.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for CEO | Compensation Actually Paid to CEO (1) | Average Summary Compensation Table Total For Non-CEO NEOs | Average Compensation Actually Paid to Non-CEO NEOs (2) | Total Shareholder Return | Peer Group Total Shareholder Return | Net Income | Asset Quality Ratio | | 2023 | $1,184,106 | $1,177,603 | $554,241 | $554,737 | $109.25 | $100.08 | $68,935,000 | 0.90% | | 2022 | $1,552,237 | $1,304,801 | $671,237 | $611,320 | $97.90 | $98.03 | $72,952,000 | 0.90% | | 2021 | $1,689,377 | $1,975,540 | $778,455 | $859,394 | $127.49 | $113.59 | $51,490,000 | 1.30% | | 2020 | $1,011,661 | $1,002,217 | $489,992 | $488,144 | $98.21 | $85.98 | $45,270,000 | 2.09% |
Pay Versus Performance
(1) The CEO, included in all years above, is Mr. Dively. To calculate the CEO CAP, the following amounts were deducted from and added to Summary Compensation Table total compensation. Since the Company did not report a change in pension value for the CEO for any years reflected in the Summary Compensation Table, a deduction for pension value is not needed. There were no awards that failed to meet the applicable vesting conditions or that were forfeited during 2023.
Pay Versus Performance
| | Summary Compensation Table | | Current Year Stock Awards | | Prior Stock Awards | | | | | Year | Total Compensation | Stock Awards | Year End Fair Value of Awards Outstanding & Unvested | Vest Date Fair Value of Awards Granted & Vested in Current Year | Change in Fair Value of Awards Outstanding & Unvested | Change in Fair Value of Awards Vested in Current Year | Total Dividends Paid on Vested Awards | Compensation Actually Paid (CAP) | | 2023 | $1,184,106 | ($287,456) | $210,248 | $0 | $26,832 | $22,274 | $21,599 | $1,177,603 | | 2022 | $1,552,237 | ($427,960) | $333,632 | $0 | ($92,834) | ($76,529) | $16,256 | $1,304,801 | | 2021 | $1,689,377 | ($357,136) | $445,016 | $0 | $142,437 | $43,368 | $12,478 | $1,975,540 | | 2020 | $1,011,661 | ($179,192) | $175,032 | $0 | ($8,270) | ($5,940) | $8,926 | $1,002,217 |
Pay Versus Performance
(2) The Non-CEO NEOs, included for each of the years above, are: Mr. Smith, Mr. Taylor, Mr. McRae and Mr. Beesley. To calculate the Non-CEO NEOs average CAP, the following amounts were deducted from and added to Summary Compensation Table total summary compensation. Since the Company did not report a change in pension value for any of the non-CEO NEOs for any years reflected in the Summary Compensation Table, a deduction for pension value is not needed. There were no awards that failed to meet the applicable vesting conditions or that were forfeited during 2023.
Pay Versus Performance
| | Summary Compensation Table | | Current Year Stock Awards | | Prior Stock Awards | | | | | Year | Total Compensation | Stock Awards | Year End Fair Value of Awards Outstanding & Unvested | Vest Date Fair Value of Awards Granted & Vested in Current Year | Change in Fair Value of Awards Outstanding & Unvested | Change in Fair Value of Awards Vested in Current Year | Total Dividends Paid on Vested Awards | Compensation Actually Paid (CAP) | | 2023 | $554,241 | ($76,010) | $57,189 | $0 | $7,311 | $6,105 | $5,901 | $554,737 | | 2022 | $671,237 | ($113,163) | $88,220 | $0 | ($20,089) | ($19,317) | $4,432 | $611,320 | | 2021 | $778,455 | ($107,313) | $128,391 | $5,229 | $39,382 | $11,638 | $3,612 | $859,394 | | 2020 | $489,992 | ($49,536) | $46,283 | $2,120 | ($1,988) | ($1,329) | $2,603 | $488,144 |
Pay Versus Performance
The following charts illustrate the relationship between CEO and non-CEO NEO CAP and the Company's Total Shareholder Return ("TSR"), peer group TSR, the Company's net income and asset quality. The CAP for the CEO and non-CEO NEOs is aligned with the Company's TSR. Annual objectives are set for the CEO and non-CEO NEOs with consideration given to general market and shareholder expectations for the Company's performance. Utilizing these objectives is intended to align with TSR. The CEO and non-CEO NEO CAP comparability to TSR is also impacted by the use of equity incentives which are awarded based on earnings performance compared to plan each year and the value will be more or less depending on the value of the Company's stock price. See Equity Compensation above, for additional description of these incentives. The CAP varies from the Company's net income primarily due to the multiple components of CAP such as equity incentives, the value of which is tied to the stock price which does not always correlate to the Company's profitability. The annual cash incentive is determined by multiple components which have some correlation to net income but the correlation varies by component. The annual objectives are set for the CEO and non-CEO NEOs with consideration given to general market and shareholder expectations for the Company's performance. See Annual Cash Incentives above for a full description of these components. The asset quality measure is a ratio of adversely classified assets divided by total loans. A lower ratio is positive and a higher ratio is negative. The utilization and monitoring of this ratio is important to understand the credit risk in the Company's loan portfolio. An increased migration of loans to adversely classified is an early sign of potential problem in the loans that could lead to elevated losses and vice versa. There are multiple components of CAP that can, in the aggregate, have a greater influence on the result than any one metric. However, maintaining a strong asset quality culture is an important strategic objective that is consistently discussed with shareholders of the Company. Beginning in 2022, a maximum level was added for asset quality achievement in the Company's incentive compensation plan. This CAP causes some variation in the relationship of CAP to asset quality because the actual level of asset quality illustrated above is lower than the maximum used in the incentive payment. Also, as stated above, due to multiple components of CAP, there is not a direct correlation to one metric. The Peer TSR is based on the S&P U.S. BMI Banks-Midwest Region Index. The Company monitors its TSR against the Peer TSR on an ongoing basis to identify if its TSR performance is generally aligned or an outlier. Most Important Measures to Determine 2023 CAP The four components listed below represent the most important metrics used to determine 2023 CAP for the CEO and all non-CEO NEOs. These measures are further described in the above Compensation Discussion and Analysis ("CD&A").
Pay Versus Performance
| * Net Income compared to Budgeted Net Income | | * Lines of Business Net Income | | * Asset Quality | | * Efficiency Ratio |
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE This table shows the compensation of the Company’s named executive officers, who consist of the Chief Executive Officer, Chief Financial Officer and the three other most highly-compensated executive officers of the Company during the years ended December 31, 2023, 2022 and 2021.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | Joseph R. Dively | 2023 | 520,000 | 287,456 | 346,112 | 30,538 | 1,184,106 | | Chairman, President & | 2022 | 517,164 | 427,960 | 562,588 | 44,525 | 1,552,237 | | Chief Executive Officer | 2021 | 493,220 | 357,136 | 802,222 | 36,799 | 1,689,377 | | Matthew K. Smith | 2023 | 280,000 | 82,920 | 106,176 | 31,651 | 500,747 | | Executive Vice President | 2022 | 278,400 | 123,450 | 172,928 | 31,045 | 605,823 | | & Chief Financial Officer | 2021 | 263,856 | 120,190 | 294,703 | 29,817 | 708,566 | | Michael L. Taylor | 2023 | 340,000 | 82,920 | 128,928 | 31,090 | 582,938 | | Sr Executive Vice President | 2022 | 338,617 | 123,450 | 209,984 | 32,543 | 704,594 | | & Chief Operating Officer | 2021 | 326,211 | 120,190 | 363,228 | 29,844 | 839,473 | | Eric S. McRae | 2023 | 290,000 | 82,920 | 95,600 | 34,852 | 503,372 | | Executive Vice President & | 2022 | 289,105 | 123,450 | 241,280 | 36,764 | 690,599 | | Chief Lending Officer | 2021 | 281,601 | 120,190 | 442,558 | 37,347 | 881,696 | | Bradley L. Beesley | 2023 | 205,006 | 55,280 | 339,275 | 30,346 | 629,907 | | Executive Vice President & | 2022 | 197,309 | 82,300 | 372,520 | 31,804 | 683,933 | | Chief Wealth Mgmt Officer | 2021 | 191,368 | 68,680 | 393,631 | 30,405 | 684,084 |
SUMMARY COMPENSATION TABLE
(1) Stock Awards. The amounts in this column represent the aggregate grant date fair value of restricted stock and RSU awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, based on the probable outcome of the performance conditions attached to the performance-based awards, which is also the grant date fair value assuming the maximum level of attainment is achieved. See Note 13 to the consolidated financial statements in the Company’s 2023 Form 10-K for a description of the valuation. (2) Non-Equity Incentive Plan Compensation. All amounts in this column are based on performance in 2023, 2022 and 2021 and reflect the amounts actually paid in February 2024, 2023 and 2022, respectively, under the Company’s Annual Cash Incentive Compensation Plan. The amounts for Mr. Beesley also includes payment per his employment agreement of 30% of net revenues generated on his individual book of business through First Mid Bank's broker/dealer. See “Cash Incentives” in the Compensation Discussion and Analysis section of the Proxy Statement for a discussion of the Incentive Compensation Plan. (3) All Other Compensation. For 2023, these amounts include (i) the Company's contributions to its 401(k) Plan on behalf of each named executive officer (Mr. Dively: $15,238; Mr. Smith: $17,591; Mr. Taylor: $19,800; Mr. McRae: $17,620; and Mr. Beesley: $18,294); (ii) country club dues for each named executive officer; (iii) automobile allowances for each named executive officer; and (iv) communication device allowances for each named executive officer. Employment Agreements. The Company is a party to employment agreements with each of the named executive officers that provide for certain compensation and benefits during employment: Mr. Dively: The employment agreement with Mr. Dively was renewed effective December 31, 2023 and has a term through December 31, 2024 that will automatically renew unless employment is terminated during the year and provides for (i) an initial base salary that can be increased but not decreased, (ii) a bonus under the Company's Incentive Compensation Plan with a target value of 75% of base salary in the applicable year, (iii) participation in the Company's Deferred Compensation Plan and Long Term Incentive Plan, (iv) an auto allowance and payment of annual country club membership dues, and (v) other benefits made available to Company executive or management employees. Mr. Smith: The employment agreement with Mr. Smith was renewed effective December 31, 2023 and has a term through December 31, 2024 that will automatically renew unless employment is terminated during the year and provides for (i) an initial base salary that can be increased but not decreased, (ii) a bonus under the Company’s Incentive Compensation Plan with a target value of 40% of base salary in the applicable year, (iii) participation in the Company’s Deferred Compensation Plan, (iv) an auto allowance and payment of annual country club membership dues, and (v) other benefits made available to Company executives or management employees. Mr. Taylor: The employment agreement with Mr. Taylor was renewed effective December 31, 2023 and has a term through December 31, 2024 that will automatically renew unless employment is terminated during the year and provides for (i) an initial base salary that can be increased but not decreased, (ii) a bonus under the Company’s Incentive Compensation Plan with a target value of 40% of base salary in the applicable year, (iii) participation in the Company’s Deferred Compensation Plan, and (iv) other benefits made available to Company executives or management employees. Mr. McRae: The employment agreement with Mr. McRae was renewed effective December 31, 2023 and has a term through December 31, 2024 that will automatically renew unless employment is terminated during the year and provides for (i) an initial base salary that can be increased but not decreased, (ii) a bonus under the Company's Incentive Compensation Plan with a target value of 40% of base salary in the applicable, (iii) participation in the Company's Deferred Compensation Plan and Long Term Incentive Plan, (vi) an auto allowance and payment of annual country club membership dues, and (v) other benefits made available to Company executive or management employees. Mr. Beesley: The employment agreement with Mr. Beesley was renewed effective December 31, 2023 and has a term through December 31, 2024 that will automatically renew unless employment is terminated during the year and provides for (i) an initial base salary that can be increased but not decreased, (ii) a bonus under the Company’s Incentive Compensation Plan with a target value of 30% of base salary in the applicable year, (iii) participation in the Company’s Deferred Compensation Plan and Long Term Incentive Plan, (iv) an auto allowance (and although not specified in the employment agreement, the Company also pays annual country club membership dues), and (v) other benefits made available to Company executives or management employees. In addition, Mr. Beesley will receive 30% of the net revenues generated on his individual book of business through First Mid Bank's broker/dealer. First Retirement and Savings Plan (“401(k) Plan”). The Company has a tax-qualified defined contribution retirement plan that covers all employees generally and provides for a discretionary contribution by the Company, which for 2023 was 2% of compensation, and a matching contribution by the Company of up to 100% of the first 3% and 50% of the next 2% of employee contributions.
2023 GRANTS OF PLAN-BASED AWARDS
2023 GRANTS OF PLAN-BASED AWARDS This table sets forth information for each named executive officer with respect to estimated payouts under incentive plans, award opportunities for 2023 restricted stock and RSU awards granted in 2023.
2023 GRANTS OF PLAN-BASED AWARDS
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | | | All Other Stock Awards: No. of Shares of Stock or Stock | Grant Date Fair Value of Stock | | Name | Grant Date | Threshold ($)(2) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Units (#) | Awards ($)(4) | | Joseph R. Dively | | 195,000 | 390,000 | — | | | | | | | | 03/21/23 | | | | 5,200 | 10,400 | 10,400 | — | $287,456 | | Matthew K. Smith | | 58,240 | 112,000 | — | | | | | | | | 03/21/23 | | | | 1,560 | 3,000 | 3,000 | — | $82,920 | | Michael L. Taylor | | 70,720 | 136,000 | — | | | | | | | | 03/21/23 | | | | 1,560 | 3,000 | 3,000 | — | $82,920 | | Eric S. McRae | | 60,320 | 116,000 | — | | | | | | | | 03/21/23 | | | | 1,560 | 3,000 | 3,000 | — | $82,920 | | Bradley L. Beesley | | 31,981 | 61,502 | — | | | | | | | | 03/21/23 | | | | 1,040 | 2,000 | 2,000 | — | $55,280 |
2023 GRANTS OF PLAN-BASED AWARDS
(1) Estimated Possible Payouts Under Non-Equity Incentive Plan Awards. Payouts under the Company’s Incentive Compensation Plan were based on performance in 2023, which has now occurred. Thus, the information in the “Threshold” and “Target” columns reflect the range of potential payouts when the performance goals were set in January 2023. The amounts actually paid under the Company’s Incentive Compensation Plan for 2023 appear in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. A description of the plan can be found in the “Compensation Discussion and Analysis” section of this Proxy Statement. (2) The Compensation Committee has established tables of potential payouts for all levels of performance. There is no overall maximum cap. (3) Estimated Future Payouts Under Equity Incentive Plan Awards. The target amounts represent the number of RSUs granted on March 21, 2023 under the 2017 Stock Incentive Plan. If the performance is lower than target level but higher than threshold, the award is prorated based on the performance level percentage. Performance for 2023was above threshold, but below target, so payout (in the form of restricted stock) occurred at a prorated level. A description of the 2023 awards can be found in the “Compensation Discussion and Analysis” section of this Proxy Statement. The grant date fair value of performance based RSUs is based on the probable outcome of the performance conditions at the time of the grant. The grant date fair value of restricted stock is based on the actual shares issued.
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END This table sets forth the information for each named executive officer with respect to equity awards outstanding as of December 31, 2023.
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | Restricted Stock Awards | | | Name | Number of Unearned Shares or Units that have not Vested (#)(1) | Market Value of Unearned Shares or Units that have not Vested ($)(2) | | Joseph R. Dively | 16,466 | 570,712 | | Matthew K. Smith | 4,800 | 166,368 | | Michael L. Taylor | 4,967 | 172,156 | | Eric S. McRae | 4,967 | 172,156 | | Bradley L. Beesley | 3,200 | 110,912 |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
(1) This table includes the awards of: (i) RSUs granted on January 26, 2021 that were earned at target based on performance through December 31, 2021 and converted to restricted stock. The remaining restricted stock vests on December 15, 2024; (ii) RSUs granted on January 25, 2022 that were earned at target based on performance through December 31, 2022 and converted to restricted stock. The remaining restricted stock vests on December 15, 2024 and December 15, 2025; and (iii) RSUs granted on March 21, 2023 that were earned below target based on performance through December 31, 2023 and converted to restricted stock. The remaining restricted stock vests on December 15, 2024, December 15, 2025 and December 15, 2026. If an executive’s employment terminates for any reason prior to the end of the RSU’s annual performance period, the RSU award will be forfeited. If an executive’s employment terminates prior to a vesting date that applies to any restricted stock, he will forfeit the award, unless such termination occurs on or after attaining age 65 with 10 years of service or due to death or disability (in which case the executive will vest in the then unvested shares). The market rate is based on the closing price of the Company’s stock on December 31, 2023 ($34.66).
2023 OPTION EXERCISES AND STOCK VESTED
2023 OPTION EXERCISES AND STOCK VESTED This table sets forth information relating to the vesting of restricted stock and RSUs during 2023 by each named executive officer and the amount realized upon such exercise or vesting. The Company had no outstanding stock options in 2023.
2023 OPTION EXERCISES AND STOCK VESTED
| | Stock Awards | | | Name | Number of Shares Vested (#) | Value Realized when Shares Vested ($)(1) | | Joseph R. Dively | 8,667 | 300,312 | | Matthew K. Smith | 2,501 | 86,660 | | Michael L. Taylor | 2,667 | 92,412 | | Eric S. McRae | 2,667 | 92,412 | | Bradley L. Beesley | 1,667 | 57,762 |
2023 OPTION EXERCISES AND STOCK VESTED
Represents the number of shares vested during 2023 multiplied by the closing market price ($34.65) of the underlying shares on the vesting date (December 15, 2023).
2023 NONQUALIFIED DEFERRED COMPENSATION
2023 NONQUALIFIED DEFERRED COMPENSATION This table shows information regarding each named executive officer’s account balance at December 31, 2023 under the Company’s Deferred Compensation Plan (“DCP”), including contributions and earnings credited to such account.
2023 NONQUALIFIED DEFERRED COMPENSATION
| Name | Executive Contributions In Last FY ($)(1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawls/ Distributions ($) | Aggregate Balance at Last FYE ($)(3) | | Joseph R. Dively | 243,647 | — | 261,028 | — | 2,131,048 | | Matthew K. Smith | 14,000 | — | 8,948 | — | 67,137 | | Michael L. Taylor | 654 | — | 18,161 | — | 175,517 | | Eric S. McRae | 14,500 | — | 26,919 | — | 239,940 | | Brad L. Beesley | 20,470 | — | 30,583 | — | 253,524 |
2023 NONQUALIFIED DEFERRED COMPENSATION
(1) The contributions reported in this column are reported in the Summary Compensation Table, in either the Salary or Non-Equity Incentive Compensation Plan columns. (2) The earnings reported in this column are not reported on the Summary Compensation Table. (3) The amounts in this column have previously been reported as compensation on the Summary Compensation Tables for prior years, except for the following amounts of earnings or deferrals included in the account balances: Mr. Dively: $957,342 (includes earnings and deferrals of director fees which were not previously reported on the Summary Compensation Table); Mr. Smith: $5,937; Mr. Taylor: $22,486; Mr. McRae: $80,239; Mr. Beesley: $89,797. Non-Qualified Deferred Compensation. The DCP is a nonqualified defined contribution plan that covers certain eligible employees and directors, including the named executive officers. For each calendar year, the named executive officers can defer up to 75% of their base salary and/or up to 100% of their cash incentive compensation, and non-employee directors can elect to defer their director fees. The deferred amounts are deposited into a rabbi trust and credited to a DCP account established for the participant as soon as practicable after the date they would otherwise have been paid to the participant. The participants have the ability to elect from various investments, including common stock of the Company. If invested in common stock, such amounts are initially invested in the Vanguard Federal Money Market Fund until the next quarterly window trading period established by the Company, at which point each participant’s account balance is invested in shares of common stock of the Company. Dividends paid on common stock are credited to the participant’s DCP account and invested in additional shares. The Vanguard Federal Money Market Fund had an annual return for 2023 of 5.09%. The Company’s common stock had an annual return for 2023 of 8.05%. A participant is 100% vested in his or her DCP account at all times. A participant’s DCP account is paid to him or her beginning on the March 15 following the date the participant terminates employment. For deferral elections in effect with respect to calendar years prior to 2023, such amounts shall be distributed in five annual installments, provided that the Board of Directors in its sole discretion can decide to pay the portion of the DCP account earned that is considered a pre-2005 benefit in a single lump sum payment. Commencing with deferral elections applicable to calendar year 2023 and subsequent years, a participant can elect to receive their distribution in a single lump sum or up to ten annual installments. A participant may also request at any time a distribution from the DCP account of an amount necessary to satisfy an unforeseeable emergency. In the case of the death of a participant, the DCP account will be paid to his or her designated beneficiary in a single payment. Upon a Change in Control of the Company (as defined in the Plan), each participant’s DCP account will be paid in an immediate lump sum.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL OF THE COMPANY
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL OF THE COMPANY The Company provides certain benefits to eligible employees, including the named executive officers, upon certain terminations of employment or a change in control of the Company. These benefits are in addition to the benefits to which the executive would be entitled upon a termination of employment generally (i.e., vested retirement benefits accrued as of the date of termination, stock-based awards that are vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA).
Pay Ratio
Pay Ratio Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has adopted a final rule requiring annual disclosure of the ratio of the median employee’s annual compensation to the annual compensation of the CEO. The median employee was identified from all full-time and part-time employees, excluding the CEO, who were employed by the Company and its consolidated subsidiaries on December 31, 2023. All of the Company’s employees are located in the United States. A total of 1,200 employees were included. Compensation was measured over the 12-month period beginning on January 1, 2023 and ending on December 31, 2023. The median employee compensation was determined using 2023 W-2 (Box 5) compensation. Wages were annualized for employees who did not work the entire calendar year. Mr. Dively had 2023 annual total compensation of $1,184,106 as reflected in the Summary Compensation Table included in this Proxy Statement. The median employee’s annual total compensation for 2023 that would be reportable in the Summary Compensation Table was $40,116. As a result, the CEO pay ratio is 30:1.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Non-employee directors of the Company received a $6,250 quarterly retainer, paid at the start of each calendar quarter, for their services in 2023. The lead independent director received an additional quarterly retainer of $2,500 for her services in 2023. The non-employee directors of the Company were also granted stock-based compensation in 2023, which consisted of 600 fully vested shares of Company stock, except for Mr. James whose shares were prorated for the time he served on the board during 2023. The 600 fully vested shares of common stock were the same the prior year. During 2023: Audit committee members received a $625 quarterly retainer for their audit committee meeting services. The audit committee chairman, who is also designated a financial expert, also received an additional $1,250 quarterly retainer and the audit committee financial expert received an additional $625 quarterly retainer. • Compensation committee members received a $625 quarterly retainer for their compensation committee meeting services and the compensation committee chairman also received an additional $1,000 quarterly retainer. • The Nominating & Governance committee (“NGC”) was formed in July 2021. NGC members received a $500 quarterly retainer for their NGC meeting services and the NGC committee chairman also received an additional $1,000 quarterly retainer. • Non-employee directors who also served on the board of directors of First Mid Bank received a $2,500 quarterly retainer fee for such services. Non-employee directors who also served on the board of directors of Wealth Management, or Insurance Group each received $500 quarterly retainers for such services. Non-employee directors who served on the wealth management committee received a quarterly retainer of $250. This table shows all compensation provided to each non-employee director of the Company for the year ended December 31, 2023. Mr. James joined the Board of Directors in August 2023.
DIRECTOR COMPENSATION
| | Fees Earned or Paid in Cash ($) | Stock Award ($) (9) | Total ($) | | Holly B. Adams | 56,000 | 16,584 | 72,584(1) | | Robert S. Cook | 48,667 | 16,584 | 65,251(2) | | Todd J. James | 12,083 | 6,910 | 18,993(3) | | Zachary I. Horn | 46,000 | 16,584 | 62,584(4) | | Giselle Marcus | 47,000 | 16,584 | 63,584(5) | | J. Kyle McCurry | 50,000 | 16,584 | 66,584(6) | | Mary J. Westerhold | 53,500 | 16,584 | 70,084(7) | | James E. Zimmer | 51,000 | 16,584 | 67,584(8) |
DIRECTOR COMPENSATION
(1) This amount represents the compensation earned for serving as a director of the Company, First Mid Bank, Wealth Management and Insurance Group of $25,000, $10,000, $2,000 and $2,000, respectively, and for serving as a member of the audit committee, the compensation committee, and the NGC of $2,500, $2,500, and $2,000, respectively. Ms. Adams also received $10,000 for serving as the lead director during 2023. (2) This amount represents the compensation earned for serving as a director of the Company, First Mid Bank, Wealth Management and Insurance Group of $25,000, $10,000, $2,000 and $2,000 respectively, and for serving as a member of the audit committee, the compensation committee, the NGC and the wealth management committee of $2,500, $2,500, $2,000, and $1,000, respectively and for serving as the chair of the NGC beginning in August for $1,667. (3) This amount represents the compensation earned for serving as a director of the Company, First Mid Bank, Wealth Management and Insurance Group of $25,000, $10,000, $2,000 and $2,000 respectively. (4) This amount represents the compensation earned for serving as a director of the Company, First Mid Bank, Wealth Management and Insurance Group of $25,000, $10,000, $2,000 and $2,000 respectively, and for serving as a member of the audit committee, the compensation committee, and the NGC of $2,500, $2,500, and $2,000, respectively. This amount represents the compensation earned for serving as a director of the Company, First Mid Bank, Wealth Management and Insurance Group of $25,000, $10,000, $2,000 and $2,000 respectively, and for serving as a member of the audit committee, the compensation committee, the NGC, and the wealth management committee of $2,500, $2,500, $2,000, and $1,000, respectively. This amount represents the compensation earned for serving as a director of the Company, First Mid Bank, Wealth Management and Insurance Group of $25,000, $10,000, $2,000 and $2,000 respectively, and for serving as a member of the audit committee, the compensation committee, and the NGC of $2,500, $2,500, and $2,000, respectively, and for serving as the NGC committee chair through July of $4,000. (7) This amount represents the compensation earned for serving as a director of the Company, First Mid Bank, Wealth Management and Insurance Group of $25,000, $10,000, $2,000 and $2,000 respectively, and for serving as a member of the audit committee, the compensation committee, and the NGC of $2,500, $2,500, and $2,000 respectively, and for serving as an audit committee chair and financial expert of $7,500. (8) This amount represents the compensation earned for serving as a director of the Company, First Mid Bank, Wealth Management and Insurance Group of $25,000, $10,000, $2,000 and $2,000 respectively, and for serving as a member of the audit committee, the compensation committee, the NGC, and the wealth management committee of $2,500, $2,500, $2,000, and $1,000 respectively, and for serving as the compensation committee chair of $4,000. This amount represents the grant date fair value of 600 shares (250 for Mr. James) of Company stock granted to each director, computed in accordance with general accounting standards board accounting standards codification topic 718.