DEF 14A of First Capital Inc
Filed Apr 11, 2024 · FY20230001104659-24-046310
DIRECTORS’ COMPENSATION
| Name | Fees Earned or Paid in Cash | Stock Awards (1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (2) | All Other Compensation (3) | Total | | Christopher L. Byrd | $18,768 | $2,100 | $— | $2,564 | $23,432 | | Kathryn W. Ernstberger | 18,768 | 2,100 | — | 2,564 | 23,432 | | Robert C. Guilfoyle | 18,768 | 2,100 | — | 2,564 | 23,432 | | William W. Harrod (4) | 18,768 | 2,100 | — | 1,909 | 22,777 | | Dana L. Huber | 18,768 | 2,100 | — | 2,564 | 23,432 | | Pamela G. Kraft | 18,768 | 2,100 | — | 2,564 | 23,432 | | Lou Ann Moore | 18,768 | 2,100 | — | 2,564 | 23,432 | | William I. Orwick, Sr | 18,768 | 2,100 | — | 2,564 | 23,432 | | Jill S. Saegesser | 18,768 | 2,100 | — | 2,564 | 23,432 | | Mark D. Shireman | 18,768 | 2,100 | 8,276 | 2,564 | 31,708 | | Michael L. Shireman | 18,768 | 2,100 | — | 2,564 | 23,432 | | Carolyn E. Wallace | 18,768 | 2,100 | — | 2,564 | 23,432 |
Item 1 — Election of Directors
Item 1 — Election of Directors The Board is divided into three (3) classes with three-year staggered terms, with approximately one-third of the directors elected each year. Four (4) directors will be elected at the annual meeting to serve for a three-year term or until their respective successors have been elected and qualified, or their earlier resignation, removal, or death. The nominees are Kathryn W. Ernstberger, William I. Orwick, Sr., Jill S. Saegesser, and Carolyn E. Wallace, each of whom are currently directors of the Company and the Bank. The Board intends to vote the proxies solicited by it in favor of the election of the nominees named above. If any nominee is unable to serve, the persons named in the proxy card will vote your shares to approve the election of any substitute proposed by the Board. Alternatively, the Board may adopt a resolution to reduce the size of the Board. At this time, the Board does not know of any reason why any nominee might be unable to serve. The Board of Directors recommends a vote “FOR” the election of Kathryn W. Ernstberger, William I. Orwick, Sr., Jill S. Saegesser, and Carolyn E. Wallace. Information regarding the Board’s nominees and the directors continuing in office is provided below. Unless otherwise stated, each individual has held his or her current occupation for the last five years. The age indicated in each individual’s biography is as of the date of the 2024 annual meeting. The indicated period for service as a director includes service as a director of First Harrison.
Director Nominees for Terms Ending in 2027
Director Nominees for Terms Ending in 2027 Kathryn W. Ernstberger is a professor of Decision Sciences at Indiana University Southeast in New Albany, Indiana. Age 61. Director since 2003. Ms. Ernstberger’s expertise provides the Board with quantitative business analysis skills, specifically in the areas of statistics and mathematical modeling. William I. Orwick, Sr. is a retired Director from the accounting firm of D.M.L.O. CPA’s in New Albany, Indiana. Mr. Orwick was previously a partner in the accounting firm of Rodefer Moss & Co., PLLC prior to such firm’s acquisition by D.M.L.O. CPA’s in October 2020. Age 67. Director since 2010. As a former partner in a certified public accounting firm, Mr. Orwick provides the Board with significant experience regarding accounting and compliance matters. Mr. Orwick’s experience also offers the Board substantial small and local company operations and management experience, specifically within the region in which the Bank conducts its business, and provides the Board with valuable insight regarding the local business and consumer environment. In addition, Mr. Orwick offers the Board significant business experience individually and from his network of professionals and organizations both familiar with matters outside and inside of the financial services industry. Jill S. Saegesser is the Vice President of Redevelopment and Grant Services for the Wheatley Group, LLC in New Albany, Indiana. Age 52. Director since 2020. Ms. Saegesser works as an Economic Development Consultant in her position with the Wheatley Group, LLC. She has been there since 2019. Prior to that Ms. Saegesser was employed by River Hills Economic Development Regional Planning Group, where she provided technical assistance to local governmental units. Ms. Saegesser’s work in this area provides opportunities for lending and community support for the Bank. Carolyn E. Wallace is the Director of Business Operations for the South Harrison Community School Corporation in Corydon, Indiana. Age 55. Director since 2010. Ms. Wallace’s training as a certified public accountant and accounting background provide the Board with experience regarding accounting and financial matters.
Directors Continuing in Office with Terms Ending in 2025
Directors Continuing in Office with Terms Ending in 2025 Christopher L. Byrd is the manager and owner of Hoosier Hollywood Development, LLC (d/b/a Corydon Cinemas) in Corydon, Indiana, and is also a licensed certified public accountant and attorney. Age 56. Director since 2010. Mr. Byrd’s background offers the Board significant small company management experience, specifically within the community in which the Bank conducts its business, and provides the Board with valuable insight regarding the local business and consumer environment. In addition, Mr. Byrd offers the Board significant business experience from a setting outside of the financial services industry. Pamela G. Kraft is a Vice President and the Treasurer of the Funeral Consumer Guardian Society and also serves as the President of JPK Services, Inc. in New Albany, Indiana. Age 65. Director since 2010. Ms. Kraft’s involvement with the Funeral Consumer Guardian Society has allowed her to develop strong ties to the community and has provided the Board with valuable insight regarding the local business environment. Mark D. Shireman is past Chairperson of the Board of James L. Shireman, Inc. in Corydon, Indiana. Age 72. Director since 1989. Mr. Shireman’s substantial small company management experience, specifically within the region in which the Bank conducts its business, provides the Board with valuable insight regarding the local business and consumer environment. In addition, Mr. Shireman offers the Board significant business experience from a setting outside of the financial services industry through his involvement in business and civic organizations in the communities in which the Bank serves. Michael L. Shireman is past Chairperson of the Board of Uhl Truck Sales, Inc., a medium and heavy truck dealer in Louisville, Kentucky and Palmyra, Indiana. Mr. Shireman is a former director of HCB Bancorp, Inc. Age 75. Director since 2000. Mr. Shireman’s background offers the Board significant small company management experience, specifically within the community in which the Bank conducts its business, and provides the Board with valuable insight regarding the local business and consumer environment. In addition, Mr. Shireman offers the Board significant business experience from a setting outside of the financial services industry.
Directors Continuing in Office with Terms Ending in 2026
Directors Continuing in Office with Terms Ending in 2026 William W. Harrod is the former President and Chief Executive Officer of First Capital and First Harrison and retired from those positions in 2023. Prior to that, Mr. Harrod previously served as President and Chief Executive Officer of HCB Bancorp, Inc. and Harrison County Bank. Mr. Harrod is a former director of HCB Bancorp, Inc. Age 67. Director since 2000. Mr. Harrod’s extensive experience in the local banking industry and involvement in business and civic organizations in the communities in which the Bank serves affords the Board valuable insight regarding the business and operations of the Company and Bank. In addition, Mr. Harrod’s knowledge of all aspects of the Company’s and Bank’s business and history, combined with his success and strategic vision, position him well to continue to serve as a Director. Michael C. Frederick is currently the President and Chief Executive Officer of the Bank and the Company. Age 56. Director since 2020. Mr. Frederick previously served as Chief Financial Officer of the Company and Bank from 1997 until 2023. Mr. Frederick provides extensive experience in the local banking industry, and knowledge of all aspects of the Company’s and Bank’s business and financial history, all of which will provide the Board with valuable insights. Lou Ann Moore is currently an Owner and real estate broker for Century 21 Advantage Plus. She also serves on the Board of Directors of the Jefferson County Technical College, Bullitt County YMCA and Bullitt County Chamber of Commerce and serves on the Board of Trustees for the Bernheim Arboretum and Research Forest. Age 67. Director since 2018. Ms. Moore’s expertise in real estate affords the Board valuable insight regarding particular real estate markets and offers the Board a unique perspective on operations of the Company and the Bank. Robert C. Guilfoyle is the founder and past Chief Executive Officer of Abe AI, Inc. Mr Guilfoyle now serves as the CEO of PinSeeker, FP where he works with golf simulation companies providing payment platforms for the indoor golf industry. He holds a Bachelor of Science in Informatics with a focus on Information Security and Computer Science from Indiana University. Age 35. Director since 2018. Mr. Guilfoyle’s financial and technology background provides the Board with valuable insights into how the Bank can leverage vendors to create better experiences. Dana L. Huber is currently the Vice President, Distribution and Public Relations at Huber’s Orchard, Winery, & Vineyards. Prior to joining Huber’s Orchard, Winery, & Vineyards in 2003, Ms. Huber worked for Humana, Citicorp, and Kindred Healthcare. She currently sits on the Agribusiness Council at the Federal Reserve Bank of St. Louis. Age 56. Director since 2015. Ms. Huber’s experience managing a sixth generation family owned business offers the Board substantial small company management experience. She is also very familiar with the region in which the Bank conducts its business and provides the Board with insight regarding the local business and consumer environment.
Summary Compensation Table
Summary Compensation Table The following table sets forth information regarding the compensation paid, awarded to, or earned for the fiscal years ended December 31, 2023, and 2022 by each of the Company’s executive officers.
Summary Compensation Table
| Name and Principal Position | Year | Salary (1) | Stock Awards (2) | Non-Equity Incentive Compensation (3) | All Other Compensation (4) | Total | | Michael C. Frederick (5) | 2023 | $262,518 | $8,400 | $27,063 | $32,336 | $330,317 | | President, Chief Executive Officer | 2022 | 203,449 | — | 24,819 | 23,535 | 251,803 | | Joshua P. Stevens (6) | 2023 | 150,000 | 8,400 | 17,738 | 18,405 | 194,543 | | Chief Financial Officer | 2022 | | | | | | | Joseph D. Mahuron | 2023 | 131,607 | 8,400 | 19,196 | 28,891 | 188,094 | | Chief Credit Officer | 2022 | 113,567 | — | 16,357 | 23,421 | 153,345 | | William W. Harrod (7) | 2023 | 169,941 | 2,100 | 9,472 | 19,866 | 201,379 | | | 2022 | 275,125 | — | 30,707 | 35,841 | 341,673 |
Summary Compensation Table
| (1) For Mr. Frederick, includes directors’ fees for service as an employee director of $18,050 and $18,768 for 2022 and 2023, respectively. For Mr. Harrod, includes directors’ fees for service as an employee director of $18,050 and $18,768 for 2022 and 2023, respectively. | | (2) Represents a stock award of 300 shares of restricted common stock to Mr. Frederick, Mr. Stevens and Mr. Mahuron and a stock award of 75 shares of restricted common stock to Mr. Harrod awarded on February 20, 2024. The value of such stock award is based on a closing price of $28.00 on February 20, 2024. Each stock award vests over a five (5) year period, with one-fifth (1/5) vesting on each July 1st, beginning July 1, 2025. | | (3) The Board adopted a supplemental bonus plan under which executive officers and directors are eligible to receive cash incentives when the Bank’s performance exceeds certain profitability and efficiency performance goals and thresholds (the “Bonus Plan”). Under the Bonus Plan, bonus amounts earned in 2023 were paid in the first quarter of 2024. | | (4) Details of the amounts reported in the “All Other Compensation” column for 2023 are provided in the table below: |
Summary Compensation Table
| | Frederick | Stevens | Mahuron | Harrod | | Employer contributions to 401(k) plan | $17,073 | $10,500 | $9,212 | $9,473 | | Health insurance | 12,513 | 5,713 | 17,402 | 8,698 | | Disability insurance | 1,065 | 799 | 1,065 | 862 | | Life insurance | 235 | 176 | 165 | 172 | | Dental insurance | 253 | 184 | — | 134 | | Vision insurance | 47 | 33 | 47 | 27 | | Employer contributions to health savings account | 1,000 | 1,000 | 1,000 | 500 | | Wellness Incentive | 150 | — | — | — |
Summary Compensation Table
| (5) Michael C. Frederick served as Chief Financial Officer of the Company and Bank during the entirety of 2022 and became President and Chief Executive Officer of the Bank on March 31, 2023, and of the Company on July 1, 2023. | | (6) Joshua P. Stevens became Chief Financial Officer of the Company and Bank on March 31, 2023. | | (7) William W. Harrod served as President and CEO of the Bank until March 31, 2023 and as CEO and President of the Company until June 30, 2023. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth information concerning outstanding stock awards at December 31, 2023 held by our executive officers. At December 31, 2023 there were no outstanding stock options. Market values for outstanding stock awards are based on the closing price of our common stock on December 29, 2023 (the last trading day of the year) of $27.90.
Outstanding Equity Awards at Fiscal Year-End
| | Number of Shares of Stock That Have Not Vested | Market Value of Shares of Stock That Have Not Vested | | Michael C. Frederick (1) | 600 | $16,740 | | Joseph D. Mahuron (2) | 400 | 11,160 |
Outstanding Equity Awards at Fiscal Year-End
| (1) For Mr. Frederick, 375 on July 1, 2024; and 225 shares of common stock will vest on July 1, 2025. |
Outstanding Equity Awards at Fiscal Year-End
| (2) For Mr. Mahuron, 250 on July 1, 2024; and 150 shares of common stock will vest on July 1, 2025. |
Stock Vested in 2023
Stock Vested in 2023 The following table sets forth information concerning the exercise of options and the vesting of stock awards in 2023 by our named executive officers.
Stock Vested in 2023
| | Number of Shares Acquired on Vesting | Value Realized on Vesting | | Michael C. Frederick (1) | 675 | $20,790 | | Joseph D. Mahuron (2) | 450 | 13,860 |
Stock Vested in 2023
| (1) Based on a closing price of $30.80 on July 1, 2023, the date on which 675 shares vested. | | (2) Based on a closing price of $30.80 on July 1, 2023, the date on which 450 shares vested. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control None of our executive officers are subject to any employment agreement which would entitle them to any payment upon termination of employment, absent a change in control. As is more fully described below, all of the named executive officers were subject to change in control agreements with us that were in effect on December 31, 2023, unless otherwise noted below (each, a “Change in Control Agreement”), which provide for payments and benefits to our executive officers following a change in control of First Capital, Inc. and termination of the executive officer’s employment within twelve (12) months (a “Change in Control Termination”). The following table sets forth information concerning potential payments and benefits to which our executive officers would be entitled as of December 31, 2023 in the event of a Change in Control Termination. For purposes of estimating the value of certain equity awards, we have assumed a price per share of our common stock of $27.90, 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
| | Frederick | Stevens | Mahuron | | Salary | $731,250 | $585,000 | $394,820 | | Bonus (1) | 158,607 | 128,837 | 111,424 | | Benefits (2) | 14,113 | 9,244 | 18,678 | | Stock Awards (3) | 16,740 | - | 11,160 | | Total | 920,710 | 723,081 | 536,082 |
Potential Payments Upon Termination or Change in Control
| (1) Includes cash payments and stock awards for 2023 under the Bonus Plan and amounts contributed to the executive’s 401(k) and health savings account by the Company in 2023. | | (2) Consists of life, medical, dental, and disability insurance benefits. The value is based upon the type of insurance coverage the Company carried for each executive officer as of December 31, 2023, and is valued at the premiums in effect on December 31, 2023. | | (3) Represents shares of common stock that would vest under the terms of the award agreements therefore. Does not include shares awarded on February 20, 2024 for 2023 performance. |
Pay vs. Performance
Pay vs. Performance The Company believes that executive compensation should be structured in a way that aligns with long-term shareholder value. The following table illustrates compensation actually paid to our principal executive officer (“PEO”) and other NEOs and our financial performance. The following table sets forth information required by Item 402(v) of Regulation S-K for each of the last two recently completed years, including: (i) the total compensation earned by our PEO (as reported in the Summary Compensation Table above); (ii) the compensation “actually paid” to our PEO (calculated in accordance with Regulation S-K); (iii) the average of the total compensation earned by our other NEOs (calculated based upon our Summary Compensation Table above); (iv) the average compensation actually paid” to our other NEOs (calculated in accordance with Regulation S-K); (v) our total shareholder return (“TSR”); and (iv) our net income:
Pay vs. Performance
| Year | Summary Compensation Table Total for PEO ($) (1) | Compensation Actually Paid to PEO ($) (2) | Average Summary Compensation Table Total for non-PEO NEOs ($) (3) | Average Compensation Actually Paid to non-PEO NEOs ($) (4) | Value of Initial Fixed $100 Investment Based On: TSR ($) (5) | Net Income ($) (6) | | 2023 | $375,698 | $376,763 | $239,392 | $234,847 | $51.13 | $12,790,000 | | 2022 | 341,673 | 314,068 | 202,574 | 174,283 | 43.93 | 11,902,000 | | 2021 | 335,123 | 285,098 | 189,522 | 134,632 | 68.59 | 11,424,000 |
Pay vs. Performance
| (1) William W. Harrod was our PEO for the entirety of 2022 and from January 1, 2023 through June 30, 2023 and Michael C. Frederick was our PEO from July 1, 2023 through December 31, 2023. Figures above have been prorated accordingly. |
Pay vs. Performance
| | 2023 | 2022 | 2021 | | Total Compensation as Reported in SCT | $375,698 | $341,673 | $335,123 | | Fair value of equity awards granted during fiscal year | (10,500) | - | - | | Fair value of equity compensation granted in current year at year end | - | - | - | | Change in fair value from end of prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | 3,600 | (19,890) | (39,117) | | Change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | 7,965 | (7,715) | (10,908) | | Fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | - | - | - | | Compensation Actually Paid to PEO | $376,763 | $314,068 | $285,098 |
Pay vs. Performance
| (3) For 2021, the non-PEO NEOs consisted of Michael C. Frederick, Jill R. Keinsley, and Dennis L. Thomas. For 2022, our non-PEO NEOs consisted of Michael C. Frederick and Joseph Mahuron. For 2023, our non-PEO NEOs consisted of Joseph Mahuron for the entirety of 2023, Michael C. Frederick from January 1, 2023 through June 30, 2023 and Joshua Stevens from April 1, 2023 through December 31, 2023. Figures above have been prorated accordingly. |
Pay vs. Performance
| | 2023 | 2022 | 2021 | | Total Compensation as Reported in SCT | $239,392 | $202,574 | $189,522 | | Fair value of equity awards granted during fiscal year | (8,400) | - | - | | Fair value of equity compensation granted in current year at year end | - | - | - | | Change in fair value from end of prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | 1,200 | (16,575) | (34,771) | | Change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | 2,655 | (11,716) | (20,120) | | Fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | | | | | Average Compensation Actually Paid to Non-PEOs | $234,847 | $174,283 | $134,632 |
Pay vs. Performance
As discussed above in the Executive Compensation section of this Proxy Statement, the compensation payable to the PEO and Other NEOs consists primarily of base salary and incentive compensation in the form of performance awards as determined under the Bonus Plan. Incentive compensation under the Bonus Plan is largely determined by the pre-tax income performance of the Bank but there are provisions for the award of stock compensation if certain performance thresholds are met. Management attributes the majority of the decline in TSR to the Company’s stock being removed from the Russell 2000 Index (the “Index”) in June 2021. Inclusion in the Index is determined each year based on a company’s market capitalization and is subject to a variety of factors outside of management’s control. However, as demonstrated by the figures in the table above, there is a general degree of correlation between compensation and net income during the three-year period, in that compensation to our PEO 12.1%, in 2023 from 2021 while net income increased 12.0% during the same period. The increase in the compensation of our NEOs is partially skewed due to the oversized impacts of the decline in the fair value of restricted stock awards in 2022 and 2021. In addition, during 2023 there was a partial overlap in NEOs for the transition of Mr. Stevens to CFO and Mr. Frederick to CEO and President.
OTHER INFORMATION RELATING TO DIRECTORS AND EXECUTIVE OFFICERS
OTHER INFORMATION RELATING TO DIRECTORS AND EXECUTIVE OFFICERS