The shares represented by a properly executed and returned proxy card will be voted according to your instructions. If no instructions are provided on a signed proxy card, the persons named as proxies on your proxy card will vote in accordance with the above recommendations of the Board.
Q:What if other matters come up during the meeting?
If any matters other than those referred to in the Notice of Annual Meeting of Shareholders properly come before the meeting, the individuals named in the accompanying proxy card will vote the proxies held by them as recommended by the Board or, if no recommendation is given, in accordance with their best judgment. We are not aware of any business other than the items referred to in the Notice of Annual Meeting of Shareholders that may be considered at the meeting.
In the unlikely event that any of the director nominees becomes unable or is unwilling to serve at the time of the meeting, the persons named as proxies in the accompanying proxy card will have discretionary authority to vote for a substitute nominee named by the Governance and Nominating Committee if the Board decides to fill that nominee’s position.
Q:Who can attend the meeting?
All shareholders as of the record date, or their duly appointed proxies, may attend the meeting. Admission to the meeting will be on a first-come, first-admitted basis.
Q:What constitutes a quorum?
Holders of a majority of the voting power of the outstanding shares of common stock of the Corporation, represented in person or by proxy, constitutesconstitute a quorum for the annual meeting. As of the record date, 12,679,09812,290,212 shares of common stock were outstanding. Proxies received but marked as abstentions and “broker non-votes” (as described below) will be included in the calculation of the number of shares considered to be present at the meeting for purposes of establishing a quorum.
Q:How do I vote?
If you hold your shares in your own name, you may submit a proxy by telephone, by mail or via the Internet.
Submitting a Proxy by Telephone: You can submit a proxy for your shares by telephone until 11:59 p.m. Eastern Daylight Time on April 19, 201616, 2019 by calling the toll-free telephone number on the enclosed proxy card, (800) 690-6903. Telephone proxy submission is available 24 hours a day. Easy-to-follow voice prompts allow you to submit a proxy for your shares and confirm that your instructions have been properly recorded. Our telephone proxy submission procedures are designed to authenticate shareholders by using individual control numbers.
Submitting a Proxy by Mail: If you choose to submit a proxy by mail, simply mark the appropriate proxy card, date and sign it, and return it in the postage paid envelope provided or to the address shown on the proxy card.
Submitting a Proxy via the Internet: You can submit a proxy for your shares via the Internet until 11:59 p.m. Eastern Daylight Time on April 19, 201616, 2019 by visiting the website on the enclosed proxy card, www.proxyvote.com. Internet proxy submission is available 24 hours a day. Our Internet proxy submission procedures are designed to authenticate shareholders by using individual control numbers.
By casting your vote in any of the ways listed above, you are authorizing the individuals listed on the proxy card to vote your shares in accordance with your instructions.
You may also attend the annual meeting and vote in person.
If your shares are held in the name of a bank, broker or other nominee, you will receive instructions from the holder of record that you must follow for your shares to be voted. The availability of telephonic or Internet voting will depend on the bank’s or broker’s voting process. Please check with your bank or broker and follow the voting procedures your bank or broker provides to vote your shares. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the annual meeting, you must request a legal proxy from your bank, broker or other nominee that holds your shares and present that proxy and proof of identification at the annual meeting.
If you are a participant in the First Financial Corporation Employee Stock Ownership Plan (the “ESOP”), you will receive a voting instruction card to use to provide voting instructions to First Financial Bank, N.A. (the trustee of the ESOP) for the shares allocated to your account under the ESOP. Your voting instruction to the trustee should be submitted by
telephone, via the Internet at www.proxyvote.com or completed, dated, signed and returned in the envelope provided by
April 13, 201610, 2019. In order to maintain confidentiality, your voting instruction will be received by Broadridge Financial Solutions, Inc., who will tabulate the voting instruction results and provide them to the ESOP trustee on an aggregate basis. Please do not return your voting instructions to the Corporation. Your voting instructions will be kept confidential by the ESOP trustee and will not be disclosed to any of our directors, officers or employees. Unless the terms of the ESOP or the fiduciary duties of the ESOP trustee require otherwise, the ESOP trustee will vote your ESOP shares in accordance with your instructions. If you do not submit your voting instructions in a timely manner or if you return the voting instruction card unsigned or without indicating how you desire to vote the shares allocated to your ESOP account, the Compensation and Employee Benefits Committee will direct the ESOP trustee to vote the shares allocated to your account in the same proportion and in the same manner as the shares with respect to which timely and proper instructions by participants were received. The Compensation and Employee Benefits Committee consists of Anton H. George, William R. Krieble, Ronald K. Rich and William J. Voges. The Compensation and Employee Benefits Committee is appointed by the Board and may be changed by the Board at any time.
Q:If I am the beneficial owner of shares held in “street name” by my broker, will my broker automatically vote my shares for me? If the shares you own are held in “street name”, the bank, broker or other nominee will |
Q:What is an “abstention” or a broker “non-vote” and how do they affect the vote?
An “abstention” occurs when a shareholder sends in a proxy with explicit instructions to decline to vote on a particular matter. Abstentions are counted as present for purposes of determining a quorum, but are not counted as votes cast and, therefore, will have no effect on the outcome of any proposal to be voted on at the vote on the election of directors or any other proposal.
annual meeting.
A broker “non-vote” occurs when a broker or other nominee who holds shares for the beneficial owner is unablebarred from voting those shares with respect to vote those sharesa proposal because the broker or other nominee does not have discretionary voting power for the proposal and has not received voting instructions from the beneficial owner of the shares. Brokers will have discretionary voting power to vote shares for which no voting instructions have been provided by the beneficial owner only with respect to the ratification of Crowe Horwath LLP as our independent registered public accounting firm. Brokers will not have such discretionary voting power to vote shares with respect to the election of directors or approval on an advisory basis of the compensation of our named executive officers.any other proposal described in this proxy statement. Shares that are the subject of a broker non-vote aremay be included for quorum purposes, but a broker non-vote with respect to a proposal will not be counted as a vote represented at the meeting and, entitled to vote and, consequently, as a general matter, will have no effect on the outcome of the vote.
Q:Can I change my vote after I return my proxy card?
Yes. You may revoke your proxy or change your voting instructions at any time prior to the vote at the annual meeting by:
providing written notice to the Secretary of the Corporation;
delivering a valid, later-dated proxy; or
attending the annual meeting and voting in person.
Please note that your attendance at the annual meeting in person will not cause your previously granted proxy to be revoked unless you specifically so request.
Q:What vote is required to approve each proposal?
Directors will be elected by a plurality of the votes cast at the meeting. Consequently, the director nominees receiving the most votes of the holders of our common stock will be elected as directors. Only votes cast FOR a nominee will be counted. A properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more
directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether a quorum is present.
The proposal for approval, on a non-binding advisory basis, of the compensation of our named executive officers will be approved if the votes cast for the proposal exceed those cast against the proposal.
The proposal for the ratification of the appointment of Crowe Horwath LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20162019 will be approved if the votes cast for the proposal exceed those cast against the proposal. Abstentions will not be counted as votes cast either for or against these proposals.
Q: Who pays to prepare, mail, and solicit the proxies?
The Corporation pays all costs of preparing, mailing and soliciting proxies. The Corporation asks brokers, banks, voting trustees and other nominees and fiduciaries to forward proxy materials to the beneficial owners and to obtain authority to execute proxies. The Corporation will reimburse the brokers, banks, voting trustees and other nominees and fiduciaries upon request for their reasonable, out-of-pocket costs for forwarding proxy and solicitation materials to beneficial owners of common stock. In addition, proxies may be solicited by mail, in person or by telephone by certain of the Corporation’s officers, directors and employees who will not be separately compensated for such activity.
Q: Whom should I call with other questions?
If you have additional questions about this Proxy Statementproxy statement or the annual meeting or would like additional copies of this document or our 20152018 Annual Report on Form 10-K, please contact: Rodger A. McHargue, Secretary, First Financial Corporation, One First Financial Plaza, P.O. Box 540, Terre Haute, Indiana 47808, (812) 238-6000.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board as of the 20162019 annual meeting of shareholders will consist of ten members, divided into three classes of approximately equal size that are elected for staggered three-year terms. The Board believes this structure helps to maintain continuity and stability and ensures we have directors serving on the Board who have substantial knowledge of the Corporation, all of which the Board believes facilitates long-term value for our shareholders.
Three directors are to be elected. W. Curtis Brighton, William R. Krieble, and Ronald K. Rich have each been nominated for a term of three years and until their respective successors have been elected and qualified. They are all members of the present Board. If, at the time of this annual meeting, any nominee is unable or declines to serve, the discretionary authority provided in the proxy may be exercised to vote for a substitute or substitutes. Each of the nominees has consented to being named as a nominee in this proxy statement, and is expected to serve if elected. The Board has no reason to believe that any substitute nominee or nominees will be required.
Name, Age, Principal Occupation(s) and Business Experience
Nominated for a term expiring in 2019:
2022:
W. Curtis Brighton, Age 6265
Mr. Brighton joined the Board in 2004 and is a current member of the Corporation’s Audit, Enterprise Risk Management, Loan Review, and Loan Policy and Procedures Committees as well as the Bank’s Loan Committee. Mr. Brighton is the president of Templeton Coal Company, Inc. Prior to this, Mr. Brighton held the positions of president and general counsel for Hulman & Company. Mr. Brighton has been the general manager of Lynch Coal Operators Reciprocal Corporation since 1985 and was a private practice attorney for 12 years. He serves on the boards of Templeton Coal Company, Inc., Union Hospital, Inc. and Lynch Coal Operators Reciprocal Corporation. Mr. Brighton earned a B.S. degree in Business Administration from Indiana State University and a J.D. degree from Drake University.
William R. Krieble, Age 6871
Mr. Krieble joined the Board in 2009 and serves on the Bank’s Loan and Community Reinvestment Act Committees. Mr. Krieble also serves on the Corporation’s Compensation and Employee Benefits, Enterprise Risk Management, Affirmative Action and Cyber Security Committees. Mr. Krieble retired after 41 years of service to the State of Indiana where he most
recently served as the program director for the Division of Disability and Rehabilitative Services of the State of Indiana. He received his B.S. and M.S. degrees from Indiana State University.
Ronald K. Rich, Age 7780
Mr. Rich joined the Board in 2005 and serves as the Chairman of the Governance and Nominating Committee. He is a member of the Corporation’s Compensation and Employee Benefits and Enterprise Risk Management Committees. Mr. Rich also is a member of the Bank’s Loan Committee. Mr. Rich also serves as the Lead Independent Director. Mr. Rich has beenformerly served as a financial representative for Northwestern Mutual Financial Network since 1963.Network. He holds Chartered Life Underwriter and Chartered Financial Consultant designations from The American College of Financial Services.
Directors whose term expires in 2017
Thomas T. Dinkel, Age 6568
Mr. Dinkel joined the Board in 1989, and is the Chairman of the Corporation’s Audit Committee and serves on the Loan Review and Cyber Security Committees. He also serves on the Bank’s Community Reinvestment Act, Investment Services, Operations and Loan Committees. Mr. Dinkel has been the president and chief executive officer of Sycamore Engineering,
Inc., Dinkel Associates Inc., Sycamore Building Corporation and Dinkel Telekom, Inc. since 1986 and has held various positions at Sycamore Engineering, Inc. since 1966. Mr. Dinkel serves on the board of trustees of Rose-Hulman Institute of Technology, and is chairman of its business administration, facilities and compensation committees. Additionally, he serves on the investment management (endowment), president evaluation, executive board of affairs and student affairs committees of the board of Rose-Hulman Institute of Technology. He earned his B.S. degree from Rose HulmanRose-Hulman Institute of Technology.
Norman L. Lowery, Age 6972
Mr. Lowery joined the Board in 1989 and has served as its Vice Chairman since 1996. He serves on the Corporation’s Acquisition, Affirmative Action, Disaster Recovery, Disclosure, Executive, Enterprise Risk Management, Loan Policy and Procedures, Loan Review, Strategic Planning and Cyber Security Committees. Mr. Lowery also serves on the Bank’s Asset Liability, Community Reinvestment Act and Loan Committees. Mr. Lowery is the Chief Executive Officer and President of the Corporation, serving in those positions since 2004 and 2013, respectively, and the Vice Chairman, President and Chief Executive Officer of the Bank, serving since 1996. Prior to joining the Corporation, Mr. Lowery was a partner in the law firm of Wright, Shagley & Lowery, P.C., where he practiced for 19 years. Mr. Lowery serves on the boards of Princeton Mining Company, Inc., Deep Vein Coal Company, Inc., Lynch Coal Operators Reciprocal Corporation, and the Terre Haute Area Economic Development Corporation and The Terre Haute Area Chamber of Commerce Inc.Corporation. He is the brother-in-law of Virginia L. Smith, a current director, and father of Norman D. Lowery, the Chief Operating Officer of the Corporation and the Bank.Bank and the brother-in-law of Virginia L. Smith, who retired as a director of the Corporation on December 18, 2018. He received a B.S. degree in Political Science from Indiana State University and a J.D. degree from Indiana University.
William J. Voges, Age 6164
Mr. Voges joined the Board in 2008 and is the Chairman of the Corporation’s Compensation and Employee Benefits Committee, and serves on the Governance and Nominating Committee as well as the Bank’s Loan Committee. Mr. Voges has served as chairman of the board and head of trust administration of the Root Company, a private investment company, since 2016. Prior to this, Mr. Voges served as chief executive officer and chairman of the Root Company a private investment company, since 1996 and as general counsel since 1990. Prior to joining the Root Company, he was a partner in the law firm of Fink, Loucks, Sweet & Voges for nine years. Mr. Voges also served on the board for Consolidated-Tomoka Land Co., a publicly traded diversified real-estate operating company (NYSE MKT: CTO), from 2001 to 2012, where he served as Chairman from 2009 to 2011 and on the audit, executive and corporate governance committees. He also has prior experience on the boards of several financial institutions. Mr. Voges received his B.S. in Business Administration from Stetson University and his J.D. degree from Stetson University College of Law.
Directors whose term expires in 2020:
B. Guille Cox, Jr., Age 73
Mr. Cox has served on the Board since 1987 and serves as the Chairman of the Boards of Directors of the Corporation and the Bank. He also is the Chairman of the Bank’s Trust and Asset Management Committee and serves on the Bank’s Investment and Loan Committees as well as the Corporation’s Governance and Nominating Committee. Mr. Cox has been a senior partner in the law firm of Cox, Zwerner, Gambill & Sullivan, LLP since 1980. He also serves on the boards of Hendrich Title Company and Katzenbach, Inc. As a Rose-Hulman Institute of Technology board member, Mr. Cox serves on the executive committee. Mr. Cox received a B.S. degree in Physics from the Massachusetts Institute of Technology and a J.D. degree from Harvard Law School.
Anton H. George, Age 59
Mr. George joined the Board in 1987 and serves on the Corporation’s Audit, Compensation and Employee Benefits, and Executive Committees. He also serves on the Bank’s Loan Committee. Mr. George is the president of Vision Investments, LLC, an import sales and distribution company. Mr. George is the past president and chief executive officer of the Indianapolis Motor Speedway and its parent Hulman & Company for which he currently serves as a director. He served on the board of directors at Vectren Corporation, an energy holding company, from 2000 until February 2019 and was a member of its Nominating and Corporate Governance and Compensation and Benefits Committees. He also served on the boards of Princeton Mining Company, Inc. and Deep Vein Coal Company, Inc. until April 2016 and currently serves on the board of R.J. Oil Co., Inc. Mr. George earned a B.S. degree in Business Administration from Indiana State University.
Gregory L. Gibson, Age 56
Mr. Gibson joined the Board in 1994 and serves on the Corporation’s Loan Review Committee and the Governance and Nominating Committee as well as the Bank’s Investment, Trust and Asset Management, and Loan Committees. Mr. Gibson is the president of ReTec Corporation, a waste management consulting business, and is involved in other business ventures. Mr. Gibson also serves on the board of trustees of Rose-Hulman Institute of Technology. Mr. Gibson has also served on the Indiana Judicial Nominating Commission and is currently serving as vice chairman of the Ports of Indiana Commission as well as the board of directors for the Methodist Health Foundation Inc. in Indianapolis. He holds a B.S. degree from Rose-Hulman Institute of Technology.
Recommendation of the Board of Directors
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” W.“FOR” W, CURTIS BRIGHTON, WILLIAM R. KRIEBLE, AND RONALD K. RICH, THE PERSONS NOMINATED BY THE GOVERNANCE AND NOMINATING COMMITTEE TO BE ELECTED AS DIRECTORS.
The Governance and Nominating Committee believes that well-functioning boards consist of a diverse collection of individuals that bring a variety of complementary skills. Although the Board does not have a formal policy with regard to the consideration of diversity in identifying directors, diversity is one of the factors that the Governance and Nominating Committee may, pursuant to its committee charter, take into account in identifying director candidates. The Governance and Nominating Committee generally considers each director eligible for nomination in the broad context of the overall composition of our Board with a view toward constituting a Board that, as a body, possesses the demonstrated senior leadership and management experience to oversee our business. The Committee has historically sought directors that bring broad and varied skills and knowledge from retail and wholesale businesses, legal, financial and government. The experience, qualifications, attributes, or skills that led the Governance and Nominating Committee to conclude that each of the members of the Board nominated by the Governance and Nominating Committee should serve on the Board are generally described below:
W. Curtis Brighton
Mr. Brighton’s history as a private practice attorney provides the Board with an enhanced legal and regulatory perspective.
B. Guille Cox, Jr.
Mr. Cox’s long-standing tenure provides the Board with a historical perspective of both the Corporation and the industry. His legal practice provides the Board with insight on legal issues as well as issues in our markets.
Thomas T. Dinkel
As a business owner and an entrepreneur, Mr. Dinkel provides an understanding of small business which makes up much of our lending base. His vast experience as a contractor also provides us with key insights concerning our facilities and facility maintenance.
Anton H. George
Mr. George’s experience on various boards of directors provides valuable advice on governance issues. As an established Midwest entrepreneur, Mr. George has significant knowledge of the markets in which we operate.
Gregory L. Gibson
As a businessman and entrepreneur involved in a variety of business ventures, Mr. Gibson provides the Board with invaluable insight into industries and markets in which we and our clients do business. As a developer, Mr. Gibson provides counsel on market expansion. His service on various commissions and boards also provides valuable political and governance perspectives.
William R. Krieble
Mr. Krieble’s long service to the State of Indiana provides the Board with valuable political and governmental perspectives.
Norman L. Lowery
As President and Chief Executive Officer, Mr. Lowery is intimately familiar with our business, our customers and our employees, and he provides the Board with valuable leadership, particularly through his keen insight into the industry and the markets we serve. His legal background also provides a critical element with respect to governance and regulatory issues affecting the Corporation and the Bank. Mr. Lowery also provides valuable counsel to the Board with respect to our strategic initiatives.
Ronald K. Rich
Mr. Rich’s long service in the financial and insurance industries brings specific knowledge of matters affecting the Corporation’s insurance subsidiary and its insurance matters. Mr. Rich also possesses valuable insight regarding our markets and our various client bases.
William J. Voges
Mr. Voges’ past service on the boards of financial institutions provides additional perspectives of the issues facing our Board. His legal background, coupled with his past experience, provides tremendous value on legal, governance and regulatory matters. Mr. Voges also complements the Board with his keen strategic insight.
ADDITIONAL INFORMATION ABOUT THE BOARD OF DIRECTORS
Meetings and Attendance
During the year ended December 31, 2015,2018, the Board met 18-times.20 times. Each director attended more than 75% of the aggregate of (i) all meetings of the Board held while he or she was a director and (ii) all meetings of committees on which he or she served during the period that he or she served on the committee. Although the Corporation has no formal policy on director attendance at annual meetings of shareholders, they are encouraged to attend such meetings. All directors attended the 20152018 Annual Meeting of Shareholders.Shareholders except William J. Voges.
Committees
The Board has established a number of committees that facilitate the administration and oversight of the Corporation. Among these committees are the Governance and Nominating, Audit, and Compensation and Employee Benefits Committees.
Governance and Nominating Committee Members consist of B. Guille Cox, Jr., Gregory L. Gibson, Ronald K. Rich (Chairman) and William J. Voges. The Board has determined that Messrs. Cox, Gibson, Rich and Voges are independent under the rules of the NASDAQ Global Select Market. The Governance and Nominating Committee met twicetwo times during 2015.2018.
The primary objectives of the Governance and Nominating Committee are to assist the Board in developing and recommending corporate governance policies and guidelines for the Corporation and identifying, evaluating and nominating persons for election to the Board and appointment to the committees of the Board. A copy of the Governance and Nominating Committee Charter is available on the Corporation’s web site at www.first-online.com on the “Investor Relations” page of the “About Us” section of the website under the link “Governance Documents.”
The Governance and Nominating Committee identifies director nominees through referrals, including referrals from management, existing Board members and shareholders. Other than the director qualifications and independence standards established in our Corporate Governance Guidelines, the Governance and Nominating Committee currently does not maintain any formal criteria for selecting directors and will take into consideration a variety of factors and criteria it deems appropriate, with a view toward constituting a Board that possesses the demonstrated senior leadership and management experience to oversee our business. However, in reviewing qualifications for prospective nominees to the Board, the Governance and Nominating Committee generally will take into consideration, among other matters, a candidate’s experiences, skills, expertise, diversity, personal and professional integrity, character, business judgment, time available to serve, dedication, conflicts of interest and ability to oversee the Corporation’s business and affairs. The Governance and Nominating Committee does not evaluate nominees proposed by shareholders any differently than other nominees to the Board.
Audit Committee Members consist of W. Curtis Brighton, Thomas T. Dinkel (Chairman) and Anton H. George. The Board has determined that Messrs. Brighton, Dinkel and George are independent under Securities and Exchange Commission ("SEC"(“SEC”) Rule 10A-3 and the rules of the NASDAQ Global Select Market. The Audit Committee met four times during 2015.2018.
The primary objectives of the Audit Committee are to assist the Board in its oversight of the following matters:
The integrity of our financial statements;
The qualifications and independence of our independent registered public accounting firm;
The performance of our internal audit function and independent registered public accountants;
Our compliance with certain applicable legal and regulatory requirements; and
Our system of disclosure controls and system of internal controls regarding finance, accounting and legal compliance.
In addition, among other responsibilities, the Audit Committee reviews the Corporation’s accounting functions, the adequacy and effectiveness of the internal controls and internal auditing methods and procedures. A copy of the Audit Committee charter is available on the Corporation’s website at www.first-online.com on the “Investor Relations” page of the “About Us” section of the website under the link “Governance Documents.”
The Board has determined that each member of the Audit Committee is financially sophisticated under the applicable NASDAQ rules. The Board selected the members of the Audit Committee based on the Board’s determination that they are fully qualified to monitor the performance of management, the public disclosures by the Corporation of its financial condition and performance, our internal accounting operations and our independent registered public accountants. In addition, the Audit Committee has the ability on its own to retain independent accountants or other advisors whenever it deems appropriate.
The Board has determined that none of its members currently meets the definition of an “audit committee financial expert” under federal securities laws. To be considered an “audit committee financial expert,” an individual’s past experience generally should include experience in the preparation or audit of comparable public company financial statements, or the supervision of someone in the preparation or audit of comparable public company financial statements. The Board has determined that in order to best fulfill the functions of our Board and our Audit Committee, each member of the Board and the Audit Committee should ideally understand community banking and the local markets in which the Corporation and the Bank
do business. Accordingly, potential candidates who have such attributes in addition to having the experience the Board believes is necessary to qualify as “audit committee financial experts” are limited. Further, the Board believes that the addition of an “audit committee financial expert” is not necessary at this time given the level of financial knowledge and experience the current members of the Audit Committee possess.
Compensation and Employee Benefits Committee Members consist of Anton H. George, William R. Krieble, Ronald K. Rich and William J. Voges (Chairman). The Board has determined that Messrs. George, Krieble, Rich and Voges are independent under the rules of the NASDAQ Global Select Market. The Compensation and Employee Benefits Committee met five times during 2015.2018.
The primary objective of the Compensation and Employee Benefits Committee is to review and approve the Corporation’s compensation strategy and the compensation of our executive officers and senior management. In addition, among other responsibilities, the Compensation and Employee Benefits Committee establishes guidelines and oversees the administration of executive compensation plans and arrangements, as well as certain employee benefit plans. A copy of the charter of the Compensation and Employee Benefits Committee is available on the Corporation’s website at www.first-online.com on the “Investor Relations” page of the “About Us” section of the website under the link “Governance Documents.”
Compensation of Directors
The goal of our director compensation package is to attract and retain qualified candidates to serve on the Board. In setting compensation, the Board considers compensation levels of directors of other financial institutions of similar size. Each director of the Corporation is also a director of First Financial Bank, N.A. (the “Bank”), the lead subsidiary bank of the Corporation. The non-employee directors receive director fees from both the Corporation and the Bank. During 2015,2018, nonemployee directors received a $40,000 retainer from the Corporation and a $5,000 retainer from the Bank. During 2015,2018, each non-employee director of the Corporation and the Bank received a fee of $750 for each board meeting attended for the Corporation or the Bank. In addition, Mr. Cox received a fee of $5,000 in connection with his services as Chairman of the Board.
Non-employee directors also receive a fee for each meeting attended of the Audit Committee of $1,000, the Compensation and Employee Benefits Committee of $1,000, the Governance and Nominating Committee of $500 and the Loan Committee of the Bank of $500. No non-employee director served as a director of any other subsidiary of the Corporation.
Employee directors receive no compensation for their service on the boards or board committees of the Corporation and the Bank.
The table below summarizes the compensation paid by the Corporation to each non-employee director for the fiscal year ended December 31, 2015.2018.
| Fees Earned or | Fees Earned or | |||||||||||||||||||
| Name | Paid in Cash | Total | Paid in Cash | Total | ||||||||||||||||
| W. Curtis Brighton | $ | 82,500 | $ | 82,500 | $ | 82,750 | $ | 82,750 | ||||||||||||
| B. Guille Cox | 84,000 | 84,000 | 84,750 | 84,750 | ||||||||||||||||
| Thomas Dinkel | 83,000 | 83,000 | 80,500 | 80,500 | ||||||||||||||||
| Anton H. George | 84,000 | 84,000 | 87,250 | 87,250 | ||||||||||||||||
| Gregory L. Gibson | 77,500 | 77,500 | 77,750 | 77,750 | ||||||||||||||||
| William H. Krieble | 81,000 | 81,000 | 83,750 | 83,750 | ||||||||||||||||
| Ronald K. Rich | 82,000 | 82,000 | 84,250 | 84,250 | ||||||||||||||||
| Virginia L. Smith | 77,500 | 77,500 | ||||||||||||||||||
| Virginia L. Smith* | 74,250 | 74,250 | ||||||||||||||||||
| William J. Voges | 82,000 | 82,000 | 82,250 | 82,250 | ||||||||||||||||
*Retired from the Board effective December 18, 2018
First Financial Corporation Directors’ Deferred Compensation Plan. Prior to 2011, directors of the Corporation and the Bank were permitted to participate in a directors’ deferred compensation plan. Under the plan, a director could elect to defer up to $6,000 of his or her director’s fees each year over a five-year period. The amount of deferred fees was used to
purchase an insurance product, of which the Corporation is the beneficiary, that funds benefit payments. An amount equal to the face amount of the policy, in addition to an amount equal to the tax savings the Corporation will receive by obtaining the proceeds from the policy on a tax-free basis, will be paid to the director or his or her beneficiary. Payment will be made to the director or his or her beneficiary in 120 monthly installments beginning on the first day of the month after the earlier of the director’s 65th birthday or death. Each year from the initial date of deferral until payments begin, the Corporation accrues a non-cash expense, which will equal, in the aggregate, the amount of the payments to be made to the director over the ten-year period. For 2015,2018, the allocated cost of the deferred directors’ fees was $142,416.$97,981. This plan was closed to new participants in 2011. During 2015,2018, no directors deferred amounts under this plan, and those directors who have attained age 65 received payments attributable to previously-deferred amounts under the plan in the following amounts: Mr. Dinkel - $27,000,$54,000, Mr. Krieble - $10,363, Mr. Norman L. Lowery - $118,930$142,414 and Ms. Smith - $74,914.
Director Stock Ownership Guidelines
The Board believes that directors more effectively represent the Corporation’s shareholders if they are shareholders themselves. Therefore, the Board has adopted stock ownership guidelines applicable to all directors, other than Norman L. Lowery, who is subject to the stock ownership guidelines for executive officers discussed under “Compensation Discussion and Analysis.” Under the guidelines, directors must own a number of shares of the Corporation’s common stock equal in value to three times their annual Corporation retainer for services as a director. Additionally, directors may not dispose of shares of Corporation stock until they have satisfied the guidelines. Directors are expected to be in compliance with the stock ownership guidelines not later than five years after the date of their initial election or appointment as a director of the Corporation. In the case of individuals who were directors when the current guidelines became effective, compliance iswas required by February 21, 2017. Presently,All eight of our nine non-employee directors have met their stock ownership levels under these guidelines.
Anti-Hedging Policy
Hedging and similar monetization transactions by a director or an executive officer can lead to a misalignment between the objectives of that director or executive officer and the objectives of our shareholders. Accordingly, all directors, officers and employees are prohibited from engaging in hedging or monetization transactions with respect to the securities of the Corporation.
Compensation Committee Interlocks and Insider Participation
During 20152018, none of the members of the Compensation and Employee Benefits Committee was or is an officer or employee of the Corporation, and no executive officer of the Corporation served or serves on the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors)
or on the board of directors of any company that employed or employs any member of the Corporation’s Compensation and Employee Benefits Committee. In addition, no executive officer of the Corporation served or serves on the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any company one of whose executive officers serves on our Board, except forBoard.
W. Curtis Brighton and Norman D.L. Lowery the Chief Operating Officer, who is a member ofserve on the board of directors of Princeton Mining Company, Inc., forLynch Coal Operators Reciprocal Corporation, an inactive mutual workers compensation insurance company which Virginia Smith, oneis in the process of our directors,winding down. Mr. Brighton serves as President.
the general manager of the corporation and receives less than $20,000 annually in compensation for such service. Mr. Lowery does not participate in the determination of such compensation paid to Mr. Brighton, and Mr. Brighton does not serve on the Corporation’s Compensation and Employee Benefits Committee.
Certain Relationships and Related Transactions
Certain family relationships exist among the directors and executive officers of the Corporation. Norman L. Lowery (the Vice Chairman, President, and Chief Executive Officer of the Corporation and the Bank) is the father of Norman D. Lowery (the Chief Operating Officer of the Corporation and the Bank) and the brother-in-law of Virginia L. Smith, (a directora member of the Corporation and the Bank).Board until her retirement on December 18, 2018. There are no arrangements or understandings between any of the directors and executive officers pursuant to which any of them have been selected for their respective positions.
The Audit Committee is responsible for approving any transactions between the Corporation or its subsidiaries and any related party, including loans or extensions of credit and any sale of assets or other financial transactions. Directors and executive officers of the Corporation and their associates were customers of, and have had transactions with, the Corporation and its subsidiaries in the ordinary course of business during 2015.2018. Comparable transactions may be expected to take place in the future. During 2015,2018, various directors and executive officers of the Corporation and their respective associates were indebted to the subsidiary banks from time to time. These loans were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for similar transactions with other persons not related to the Corporation and did not involve more than the normal risk of collectability or present other unfavorable
features. Loans made to directors and executive officers that are subject to federal banking regulations are exempt from the insider loan prohibitions included in the Sarbanes-Oxley Act of 2002.
Related party transactions are evaluated on a case-by-case basis in accordance with the applicable provisions of the Articles of Incorporation and the Code of Business Conduct and Ethics of the Corporation (the “Code of Ethics”).
The provisions of the Articles of Incorporation apply to contracts or transactions between the Corporation and (i) any director; or (ii) any corporation, unincorporated association, business trust, estate, partnership, trust, joint venture, individual or other legal entity in which any director has a material financial interest or of which any director is a director, officer or trustee. The provisions of the Code of Ethics apply to the directors, officers and employees of the Corporation.
The Articles of Incorporation provide that a contract or transaction between the Corporation and any of the persons described above is valid for all purposes if the material facts of the contract or transaction and the director’s interest were disclosed or known to the Board, a committee of the Board with authority to act thereon, or the shareholders entitled to vote thereon, and the Board, such committee or such shareholders authorized, approved or ratified the contract or transaction.
The Code of Ethics provides that directors, officers and employees of the Corporation must make business decisions for the Corporation free of conflicting influences. Such persons are expected to avoid situations that may lead to real or apparent material conflicts between such person’s self-interest and such person’s duties or responsibilities as a director, officer or employee of the Corporation. The senior compliance officer is responsible for annually reaffirming compliance with the Code of Ethics by the directors, officers and employees of the Corporation.
INFORMATION ABOUT THE NAMED EXECUTIVE OFFICERS
The name, age, position and business experience of each named executive officer who is not a member of the Board is described below:
Rodger A. McHargue, Age 5457
Mr. McHargue is the Chief Financial Officer of the Corporation and the Bank and also the Secretary and Treasurer of the Corporation, serving since 2010. He joined the Corporation in 1994. Prior to that, Mr. McHargue was employed at Bank One Indianapolis for over six years.Indianapolis. He received a B.S. degree in Economics and Finance from Indiana State University and an M.B.A. from Indiana State University. He is also a graduate of the ABA Stonier Graduate School of Banking.
Steven H. Holliday, Age 5558
Mr. Holliday is the Chief Credit Officer of the Corporation and the Bank, serving since 2012. Prior to joining the Corporation, Mr. Holliday was a Senior Vice President and Commercial Lending Executive at Old National Bancorp. Mr. Holliday received his B.S. in Business from Indiana State University and an M.B.A. from the University of Illinois. He holds a Credit Risk Certification designation through The Risk Management Association and is a graduate of Southern Illinois University School of Banking.
Norman D. Lowery, Age 4851
Mr. Lowery is the Chief Operations Officer of the Corporation and the Bank, serving since 2010. He joined the Corporation in 1990 and has held a management position in Private Banking, as well as having been a Trust Investment Officer. Mr. Lowery received his B.A. degree from Indiana University and M.B.A. from Indiana Wesleyan University. Mr. Lowery holdsformerly held several professional accreditations, including, a Financial Industry Regulatory Authority Series 7 license; Uniform Securities Agent Series 63 license; and a Uniform Investment Adviser Series 65 license. He is also an Accreditedaccredited Fiduciary Investment Fiduciary andManager. Mr. Lowery is a licensed life insurance agent ingraduate of the State of Indiana.Cannon Financial Institute Trust Investment School and Private Banking School. Mr. Lowery also graduated from the ABA Stonier Graduate School of Banking.
Karen L. Milienu, Age 5558
Ms. Milienu is the Director ofChief Branch Banking Officer for the Bank, serving since 2011. She joined the Corporation in 1997 and served as the Human Resources Director. Prior to joining the Corporation Ms. Milienu held positions as an Assistant Manager and various human resources positions at Fort Wayne National Corporation. Ms. Milienu received her B.A. degree from Purdue University and M.S. degree from Indiana University. Ms. Milienu holds several professional accreditations including, Senior Professional in Human Resources, Certified Compensation Professional, Certified Sales/Management Development Trainer, and Certified Sales Trainer.
CORPORATE GOVERNANCE
General
The Corporation aspires to the highest ethical standards for its employees, officers and directors and remains committed to the interests of its shareholders. The Corporation believes it can achieve these objectives with a plan for corporate governance that clearly defines responsibilities, sets high standards of conduct and promotes compliance with the law. The Board has adopted policies and procedures designed to foster the appropriate level of corporate governance. Certain of these policies and procedures are discussed below.
Consideration of Director Candidates
The Board seeks directors who represent a variety of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions. When searching for new candidates, the Governance and Nominating Committee considers the evolving needs of the Board and searches for candidates who will fill any current or anticipated gaps. The Governance and Nominating Committee generally considers, among other matters, a candidate’s experience, skills, expertise, diversity, personal and professional integrity, character, business judgment, time available to serve, dedication, conflicts of interest and ability to oversee the Corporation’s business and affairs. The Governance and Nominating Committee does not have a formal diversity policy; however, both the Board and the Governance and Nominating Committee believe it essential that Board members represent diverse experiences and viewpoints. As a result of the unanticipated retirement of Virginia L. Smith from the Board on December 18, 2018, our Board does not currently have a woman member. The Board and the
Governance and Nominating Committee will be particularly mindful of this when searching for new candidates. The Governance and Nominating Committee considers the entirety of each candidate’s credentials. With respect to directors who are nominated for re-election, the Governance and Nominating Committee also considers such director’s previous contributions to the Board.
Board Leadership Structure and Lead Independent Director
Our Board regularly reviews and assesses the effectiveness of our leadership structure and will implement any changes as it deems appropriate. In FebruarySince 2013 the Board established the size of the Board has been set at ten effective as ofand there is currently one vacancy on the 2013 annual meeting of shareholders.Board.
We have determined our Chairman of the Board to be independent. Our President and Chief Executive Officer is also a director. The Board has separated the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. The Chief Executive Officer is responsible for setting the strategic direction for the Corporation and the day-to-day leadership and performance of the Corporation, while the Chairman provides guidance to the Chief Executive Officer and sets the agenda for and presides over Board meetings.
We believe that the separate responsibilities of, and coordination between, our Chairman, Chief Executive Officer and our Lead Independent Director enhances our Board'sBoard’s oversight of communications with our shareholders and is an effective leadership structure for our circumstances. Our Board also believes that the separately defined roles of the Chairman, Chief Executive Officer and Lead Independent Director provide for effective corporate governance and enable the Chief Executive Officer to focus his time and energy on operating and managing the Corporation while leveraging the experiences and perspectives of the Chairman and Lead Independent Director.
Risk Oversight
Our Board has an active role, as a whole and also at the committee level, in overseeing management of the Corporation’s risks. The Board regularly reviews information regarding the Corporation’s financial results, operations and liquidity, as well as the risks associated with each.
The Audit Committee oversees management of the Corporation’s financial risks, including the oversight of our internal audit function and potential conflicts of interest. The Compensation and Employee Benefits Committee is responsible for overseeing the management of risks relating to the Corporation’s executive compensation plans and arrangements. The Governance and Nominating Committee manages risks associated with the independence of the Board.
The Director’s Enterprise Risk Management Committee and the Enterprise Risk Management Committee advise and assist the Board in its oversight and management of enterprise risk. The Enterprise Risk Management Committee is composed of Board members W. Curtis Brighton, William R. Krieble and Ronald K. Rich, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the Chief Credit Officer, Chief Risk Officer, the Chief Compliance Officer, the Director ofChief Branch Banking Officer, the heads of Operations, Human Resources, Loan Review, Auditing, Information Technology, a Senior Attorney,General Counsel, the Security Officer, the Chief Information Security Officer, an IT Cyber Security Analyst, and representativesa representative from our subsidiariessubsidiary The Morris Plan Company of Terre Haute and Forrest Sherer Inc.Haute. The Director’s Enterprise Risk Management Committee is composed of Board members W. Curtis Brighton (Chairman), William R. Krieble, and Ronald K. Rich, who are responsible for, among other matters, coordinating risk management issues with other Board and management level committees as well as establishing and maintaining effective policies, procedures and practices for identifying, measuring and mitigating enterprise risk. The Enterprise Risk Management Committee and the Director’s Enterprise Risk Management Committee receive regular reports from management and meet no less frequently than quarterly to discuss matters relating to the management of the various components of enterprise risk, including credit, interest rate, liquidity, compliance, technology, transaction, reputation and strategic risks.
The Corporation’s and the Bank’s Cyber Security Committees evaluate and oversee the management of risks relating to our information technology infrastructure. The Corporation’s and the Bank’s CRA Committees evaluate and oversee the management of risks relating to our compliance with the Community Reinvestment Act. The Bank’s Fair Lending Committee evaluates and oversees the management of risks relating to our lending policies and practices.
While each committee is responsible for evaluating certain risks and overseeing the management of these risks, the entire Board is regularly informed about such risks through committee reports.
Director Independence
The Board has determined that a majority of theall current members of the Board including Messrs. Cox, Krieble, Rich, George, Dinkel, Voges, Brighton and Gibson,except Norman L. Lowery are independent. During 2018 Virginia L. Smith was not independent, as independence is defined under revisedthe listing standards of the NASDAQ Global Select Market applicable to the Corporation.
Ms. Smith retired from the board on December 18, 2018. The Independent Directors met four times during 2018.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines containing general principles regarding the functions of the Board and its committees. The Governance and Nominating Committee periodically reviews the Corporate Governance Guidelines and will recommend changes to the Board as it deems appropriate. A copy of the Corporate Governance Guidelines is available on the Corporation’s web sitewebsite at www.first-online.com on the “Investor Relations” page of the “About Us” section of the website under the link “Governance Documents”.
Documents.”
Code of Ethics
The Board has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of the Corporation’s directors, officers and employees, including its principal executive officer, principal financial officer, principal accounting officer and controller. The Corporation intends to disclosediscloses any amendments to the Code of Ethics by posting such amendments on its website. In addition, any waivers of the Code of Ethics for directors or executive officers of the Corporation will be disclosed in a report on Form 8-K filed with the SEC. A copy of the Code of Ethics is available on the Corporation’s web site at www.first-online.com on the “Investor Relations” page of the “About Us” section of the website under the link “Governance Documents”.
Documents.”
Communications with Directors
Any shareholder who desires to contact the Chairman of the Board, the Lead Independent Director or the other members of the Board, or who desires to make a recommendation of a director candidate for consideration by the Governance and Nominating Committee, may do so electronically by sending an email to the following address: directors@ffc-in.com. Alternatively, a shareholder can contact the Chairman of the Board, Lead Independent Director, Chairman of the Governance and Nominating Committee or the other members of the Board by writing to: First Financial Corporation, One First Financial Plaza, P.O. Box 540, Terre Haute, Indiana 47808. Communications received electronically or in writing are distributed to the Chairman of the Board, Lead Independent Director, Chairman of the Governance and Nominating Committee or the other members of the Board as appropriate depending on the facts and circumstances outlined in the communication received. For example, if any complaints regarding accounting, internal accounting controls and auditing matters are received, then they will be forwarded by the Secretary to the Chairman of the Audit Committee for review.
Governance Documents
For further information, including electronic versions of our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation and Employee Benefits Committee Charter, and Governance and Nominating Committee Charter, please contact the Secretary of the Corporation, Rodger A. McHargue, First Financial Corporation, One First Financial Plaza, P.O. Box 540, Terre Haute, Indiana 47808, (812) 238-6000, or visit our website at www.first-online.com on the “Investor Relations” page of the “About Us” section of the website under the link “Governance Documents.”
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board, the Audit Committee of the Board assisted the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Corporation. During 2015,2018, the Audit Committee met four times, and the Audit Committee chair, as representative of the Audit Committee, discussed the interim financial information contained in each quarterly earnings announcement with management and the independent public accounting firm prior to public release.
In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the independent public accounting firm a formal written statement describing all relationships between the independent public accounting firm and the Corporation that might bear on the independent public accounting firm’s independence consistent with applicable
requirements of the Public Company Accounting Oversight Board (United States) regarding the independent public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent public accounting firm any relationships that may impact the independent public accounting firm'sfirm’s objectivity and independence and satisfied itself as to the independent public accounting firm’s independence. The Audit Committee also discussed with management, the internal auditors and the independent public accounting firm the quality and adequacy of the Corporation’s internal controls and the internal audit function’s organization, responsibilities, budget and staffing. The Audit Committee reviewed both with the independent and internal auditors their audit plans, audit scope and identification of audit risks.
The Audit Committee discussed and reviewed with the independent public accounting firm all communications required by standards of the Public Company Accounting Oversight Board, including the matters required to be discussed by Auditing Standard No. 16, “Communication“Communication with Audit Committees,” as amended (AICPA, Professional Standards, Vol. 1. AU Section 380) and, with and without management present, discussed and reviewed the results of the independent public accounting firm’s examination of the financial statements. The Audit Committee also discussed the results of the internal audit examinations.
The Audit Committee reviewed and discussed the audited financial statements of the Corporation as of and for the year ended December 31, 2015,2018, with management and the independent public accounting firm. Management represented to the Audit Committee that the Corporation’s financial statements as of and for the year ended December 31, 20152018 were prepared in accordance with accounting principles generally accepted in the United States. Management has the primary responsibility for the preparation of the Corporation’s internal controls and financial statements and the independent public accounting firm has the responsibility for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board.
Based on the above-mentioned review and discussions with management and the independent public accounting firm, the Audit Committee recommended to the Board that the Corporation’s audited financial statements be included in its 20152018 Annual Report on Form 10-K for filing with the SEC.
| Members of the Audit Committee | |
| Thomas T. Dinkel, Chairman | |
| Anton H. George | |
| W. Curtis Brighton | |
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
| NEO | Position |
| Norman L. Lowery | Chief Executive Officer and President (our “CEO”) |
| Rodger A. McHargue | Chief Financial Officer (our “CFO”) |
| Norman D. Lowery | Chief Operations Officer (our “COO”) |
| Steven H. Holliday | Chief Credit Officer |
| Karen L. Milienu | Chief Branch Banking Officer |
EXECUTIVE SUMMARY
Our 2018 Performance
Fiscal 2018 was a very strong year for the Corporation, with record operating and net income results. Financial highlights included:
Record net income of $46.6 million versus $29.1 million for fiscal 2017. The increase in 2018 net income includes the recovery of a security previously written down for other-than temporary impairment, which contributed $2.4 million pre-tax to interest income and $4.5 million pre-tax to other income.
Diluted net income per common share was $3.80 versus $2.38 for fiscal 2017.
Return on assets for the twelve months ended December 31, 2018 was 1.57% compared to 0.98% for the twelve months ended December 31, 2017.
Total loans outstanding increased $47.2 million, or 2.48%, to $1.95 billion as of December 31, 2018, from $1.91 billion as of December 31, 2017.
Total deposits were $2.44 billion for 2018, compared to $2.46 billion as of December 31, 2017.
Return on equity for the twelve months ended December 31, 2018 was 10.98% compared to 6.69% for the twelve months ended December 31, 2017.
The net interest margin for 2018 increased to 4.32% compared to 4.11% for fiscal 2017.
The ratio of nonperforming loans to total loans and leases was 0.85% as of December 31, 2018 versus 1.14% as of December 31, 2017.
Book value per share was $36.06 at December 31, 2018 compared to $33.77 at December 31, 2017.
Shareholders’ equity was $442.7 million at December 31, 2018 compared to $413.6 million on December 31, 2017.
Best Compensation Pay Policies & Practices
Our executive compensation program is grounded in the following decisionspolicies and practices, which promote sound compensation governance, enhance our pay-for-performance philosophy and further align our executives’ interests with those of our shareholders:
| WHAT WE DO | WHAT WE DO NOT DO | ||
| P | Significant emphasis on performance-based, “at-risk” compensation | x | No non-performance based incentive awards |
| P | Incentive award metrics that are objective and tied to key company performance metrics. | x | No hedging transactions by executive officers or directors |
| P | Equity awards granted based on performance and which vest over three years to promote retention | x | No excise tax gross-ups in our employment agreements |
| P | Incentive plans with threshold performance and associated payout levels, below which no incentive awards are paid. Threshold payouts for both the STIP and LTIP are 80% of target. | x | No automatic renewal (“evergreen”) provisions in our employment agreements. |
| P | Incentive plans with capped maximum payouts (125% of target for the STIP for the CEO, 120% of target for the STIP for other NEOs and 150% of target for the LTIP) | x | No “single trigger” change in control severance |
| P | Compensation recoupment “claw-back” policy. | ||
| P | Share ownership guidelines (for executives and directors) | ||
| P | Maintain target total cash compensation and target total direct compensation for our Named Executive Officers which, in aggregate, is aligned with market-competitive levels. | ||
2018 Compensation Actions
In 2018 the Compensation Committee took the following actions concerning the compensation of our CEO and other named executive officers.NEOs.
Base SalariesSalaries..We made modest base salary increases in 2015,2018 based on individual performance and experience considerations for each executive and for our NEOs other than the CEO, in linecontinuation of our multi-year steps to better align the base salaries of those NEOs with our company-wide salary increase budget of approximately 3%. However, as he did in 2014, our CEO again recommended that his salary increase be limitedpeer banks and other competitors. Prior to free up part ofthese adjustments, those executives, were paid base salaries below the salary increase budget for merit raises elsewhere inmarket median identified by the organization. As a result, our CEO received a base salary increase of less than 2%.Committee’s independent compensation consultant.
Short-Term Incentive CompensationCompensation.. Under our short-term incentive compensation plan (“STIP”), we used sixtwo Corporation-wide performance measures - net income and efficiency ratio non-performing loans, delinquencies, loan growth, and deposit growth - to assess the performance of our CEO. For our other NEOs, bankBank-level net income and efficiency ratio, controllable Bank departmental and additional Bank measures were used in place of the loan quality measures where appropriate.used. As shown in the tabletables on pages 21-22,23-24, the combination of belowabove target performance on each of theCorporation and Bank net income, expense, loanefficiency ratio, and deposit metrics, and above targetdepartmental controllable expenses, combined with varying performance results in the asset qualityon other Bank measures resulted in belowa STIP payout at 108.11% of target STIPfor our CEO, and payouts ranging from 87.64% to 109.95% of target for the other NEOs.
Long-Term Incentive Compensation. We make awards to our CEO and other NEOs exceptunder our chief credit officer, Mr. Holliday.
2018 CEO Compensation At-A-Glance
The total direct compensation (base salary, STIP and LTIP) of our CEO for 20152018 was lessapproximately 2.4% higher than his total direct compensation in 2014 and his 2014 total direct compensation was less than his 2013 total direct compensation. This trend in our CEO’s total direct compensation aligns with our overall flat to slightly down financial performance in those years as measured against our goals.for 2017 based on the following:
Our 2018 performance was better than 2017, resulting in a higher STIP payment for 2018 (108.11% of target) versus 2017 (105.95% of target).
The 2018 LTIP payout percentage of 108.83% for 2018, which was greater than the total compensation reportedpayout percentage of 105.76% for 2013. The higher amount is due entirely to the reporting of the year-to-year increase in the actuarial value of accumulated retirement benefits under our long-standing pension plans. The increase is primarily attributable to our CEO’s continued service and the impact of changes in interest rates and mortality assumptions. The reported change in present value is not a current cash payment, nor does it represent incremental compensation awarded to our CEO by the Committee in either of those years.
WHAT GUIDES OUR EXECUTIVE COMPENSATION PHILOSOPHYPROGRAM
Our goal is to maintain a competitive, balanced compensation program that rewards our named executive officersNEOs for current year performance and for the creation of long-term shareholder value, without exposing the Corporation to unreasonable risk, including credit, interest rate, liquidity, reputation, compliance, and transaction risk. We seek to:Our executive compensation philosophy is grounded on three fundamental principles:
| Principle | Goal | How It Is Accomplished |
| Pay for Performance | Drive performance relative to our financial goals, balancing short-term operational objectives with long-term strategic goals. | Establish corporate, departmental, and individual goals consistent with our strategic plan and budget that provide the basis for the short and long-term metrics used to measure our success and the value that we create for shareholders. |
| Competitiveness | Pay at levels that will attract, motivate, and retain highly-qualified, talented executives who are focused on the long-term best interests of our shareholders. | Reward our executives for Corporation, Bank and individual performance. Align compensation and variable incentives with measurable, objective, business results and appropriate risk management. |
| Shareholder Alignment | Reinforce a culture of ownership and long-term commitment to shareholder value creation. | NEOs are required to be shareholders and own a minimum level of Company stock throughout their employment. The size of LTIP awards are based entirely on performance and vest over a three-year period. |
Total Direct Compensation and Its Components
To encourage our NEOs to execute our business plan and create shareholder value, we seek to align each executive’s compensation with our short-term and long-term financial goals. We focus on total direct compensation, which is the sum of base salary, short-term incentives, and long-term equity-based incentives. Our total direct compensation is weighted heavily toward results, with a substantial portion of direct total compensation “at risk.”
The following table shows the principal components of total direct compensation, each one contributing to the accomplishment of our shareholders;compensation program goals:
| Component | Role |
| Base Salary | Fixed cash compensation based on competitive pay levels, the executive’s performance, level of responsibility, experience and tenure to facilitate the acquisition and retention of talented, experienced management. |
| Short-Term Incentive (“STIP”) | Annual variable compensation, payable in cash, based on the achievement of pre-determined objective, corporate or bank performance goals to reward execution and performance which support and drive shareholder value. |
| Long-Term Incentive (“LTIP”) | Equity compensation awarded in February of each year based on the achievement of pre-established, long-term, objective, performance goals over a three-year period to align the executive’s compensation with the prudent management of the Corporation’s assets and earnings growth objectives. |
The Compensation Committee believes our executivecharts below show the target total direct compensation program has achieved its intended results. The Committee believes we have provided, and continue to provide, levels of compensation appropriately linked to the short and long-term contributions made by our CEO and our other NEOs for fiscal 2018. These charts illustrate that a large portion of NEO total direct compensation is variable (52% for our CEO and the financial results achieved. We also believe that while we have been competitive with the pay practicesan average of 41% for our other financial institutions of comparable size, and able to attract and retain executives who make substantial contributions to our success, the compensation levels of some of our NEOs are below market median. We expect to make market-based adjustments going forward. Finally, our program aligns our executives’ interests with those of our shareholders through a strong link between higher compensation and the attainment of pre-established objective performance goals.NEOs).
THE PROCESS FOR SETTING EXECUTIVE COMPENSATION
Role of the Compensation and Employee Benefits Committee
The Compensation Committee is responsible for determining our executive compensation philosophy and the establishment, implementation, and monitoring of our executive compensation program. The Committee is composed entirely of independent Directors as determined under the rules of the NASDAQ Global Select market. Each year, the Compensation Committee reviews our executive compensation program to assure that the program and the compensation for each NEO are consistent with our compensation philosophy and, specifically, that a substantial portion of our NEOs’ compensation is paid only if pre-established objective performance goals are met or exceeded. In exercising its duties, the Compensation Committee considers all elements of our executive compensation program, as well as individual performance, Corporation and Bank performance, and market compensation considerations.
The Compensation Committee determines the appropriate allocation of each NEO’s potential compensation among base salary, short-term incentive compensation, long-term incentive compensation, and other components. Based on our strategic plan and budget, the Compensation Committee sets the appropriate goals and measures under the short-termSTIP and long-term incentive components of the programLTIP and communicates those goals and measures to covered NEOs in February.
Each year, the Compensation Committee also reviews our performance compared to short-term and long-term objectives, reviews
our executive officer pay practices, evaluates risks associated with our executive compensation program, and approves all awards under our short-term and long-term incentive plans. The Compensation Committee reports its decisions to the Board.
Setting Performance Goals In analyzing financial measures and determining the performance goals for the year, the Compensation Committee spends significant time reviewing the Corporation’s annual strategic plan and budget, which were approved by the Board in November and December of the preceding year. The Committee establishes a target performance goal for performance measures determined to be important to the Corporation’s, the Bank’s or a department’s overall performance for the coming year. The performance goal for each of the performance measures is intended to be a stretch goal achievable through sustained execution of the strategic plan, with certain target goals set at 105% of plan. The Committee assigns weights to each of performance measures, with areas of focus for achieving greater overall performance assigned higher weightings. To focus management on sustaining its continued, disciplined execution and continuing earnings growth, more weight was assigned to income and expense-related measures. |
Role of Company PersonnelManagement
Each year, prior to any adjustments in compensation, our Chief Executive OfficerCEO provides the Compensation Committee with a review of our strategic and financial performance and the compensation and performance of all executive officersNEOs other than himself. He also developsThe CEO
may make recommendations regarding the compensation of those executive officers and presents his recommendationsNEOs to the Compensation Committee for review and approval. The Compensation Committee generally requests information relevant to its determinations from Corporation personnel, including our Chief Financial Officer. However, no executive officerNEO other than our CEO attends Compensation Committee meetings. The Compensation Committee invites our CEO to attend Committeeits meetings at which it discusses the compensation of executive officers other than himself. OurNEOs, however, our CEO does not attend the portion of Compensation Committee meetings at which his compensation is discussed, nor does he make recommendations regarding his own compensation.discussed. The Corporation’s Human Resources Management provides information and other support to our CEO and the Compensation Committee in connection with the Compensation Committee’s deliberations.
Role of Outside Consultants
The Compensation Committee is authorized to retain its own advisors. From time to time during the period from April 2010 through 2014 the Compensation Committee used the services of Grant Thornton LLP as its independent compensation consultant. Grant Thornton did not perform any other services for the Corporation or Bank, except for certain services related to information technology security testing. In connection with its retention of Grant Thornton, the Compensation Committee determined that no conflict of interest existed that would impair the ability of Grant Thornton to serve as a compensation consultant to the Compensation Committee.
The Role of the Compensation Peer Group
For purposes of helping the Compensation Committee make decisions about setting compensation levels, Pearl Meyer, with input from management, developed the following peer group of regional banks for purposes of its review:2018:
| 1st Source Corporation | ||
| Great Southern Bancorp Inc. | ||
| Horizon Bancorp | ||
| CNB Financial Corp. | Independent Bank Corporation | |
| Community Trust Bancorp, Inc. | Lakeland Financial Corp. | |
| First Busey Corporation | ||
| MidWest One Financial | ||
| Peoples Bancorp, Inc. | ||
The Compensation Committee, Pearl Meyer and management believe these companies represent a good cross-section of similarly-sized financial institutions which, like us, operate significant branch networks outside of metropolitan areas. These companies range in asset size from $2.0 billion to $6.5 billion, comparable to our approximately $3.0 billion asset size.
In its review, Pearl Meyer reported the results of its review to the Committee during the fourth quarter of 2015. In its report, Pearl Meyeralso found the design of the Corporation’s executive compensation program to be generally consistent with market best practices and the design of the peers. Pearl Meyer noted that while the total direct compensation (base salary, STIP and LTIP) of our CEO was at market median levels, the total direct compensation of our other named executive officers was at or belowNEOs approximates market median levels. The market median levels developed by Pearl Meyer reflected data from the peer group, as well as published compensation data.
2018 NEO COMPENSATION
Elements of Compensation
Base SalarySalary..Base salary is thea fixed component of total cash compensation. The Compensation Committee attempts to set base salaries for a particular executive position at a level that recognizes the executive’s contributions and importance to the organization and will facilitate the attraction and retention of a skilled management team. The Compensation Committee reviews market data in establishing base salaries, but it does not tie its determinations to a particular benchmark. Historically, the third-party compensation surveys that the Compensation Committee reviewed have been the Crowe Horwath Financial Institutions Compensation Survey (consisting of a survey for Indiana, Illinois, and the Midwest), the American Bankers Association Compensation and Benefits Survey and other compensation data surveys for the banking and finance industries.
The starting point for determining any adjustments to a NEO’s base salary is the annual increase in the Corporation’s annual salary pool approved by the full Board. Individual base salary increases for all employees, including the NEOs, are awarded as allocations from that salary pool. In establishing the amount of the pool, the Compensation Committee and the Board consider general economic conditions (such as inflation and recessionary factors), the performance of the Corporation and the Bank, and other sources of information, such as surveys referred to in the preceding paragraph.information.
The Compensation Committee adjusts the base salary of a NEO only after reviewing his or her performance over the past fiscal year. The Compensation Committee’s review focuses on the NEO’s attainment of pre-determined, objective performance goals, established by the Compensation Committee, supervisory skills, dependability, initiative, skill level, and overall value to the Corporation. The Compensation Committee considers all of these factors as a whole, without giving a pre-established weighting to any particular factor, and determines any adjustment to the NEO’s base salary.
The table below shows the base salary increases for 2018, which were higher than the salary pool increasepercentage for all NEOs except the CEO and Mr. Holliday, due primarily to the continuation of 3%. Our CEO’sstaged increases in response to below market base salary was increased $12,000positioning prior to $642,300, a less than 2% increase from 2014, reflecting our CEO’s desire to free up part of the pool for merit raises elsewhere in the organization. The base salaries for Messrs. McHargue, Norman D. Lowery and Holliday and Ms. Milienu were set at $206,000, $210,000, $210,000 and $156,000 respectively, reflecting increases ranging from 4% to 5% over 2014.adjustments.
| NEO | 2017 Base Salary | 2018 Base Salary | % Change |
| Norman L. Lowery | 673,000 | 679,730 | 1% |
| Rodger A. McHargue | 247,300 | 272,503 | 10% |
| Norman D. Lowery | 270,120 | 297,132 | 10% |
| Steven H. Holliday | 231,147 | 238,313 | 3% |
| Karen L. Milienu | 194,743 | 214,217 | 10% |
Short-Term Incentive Compensation. The Compensation Committee makes annual incentive awards to namedthe NEOs and other management employees pursuant to the STIP. Each year, the Compensation Committee establishes and approves an objectivethe target award levels for each NEO, performance goalgoals for a number ofvarious Corporation, Bank or departmental performance measures, the relative weight accorded to each performance goal, and agoal.
Target Award Levels. The target award amounts for each executive officer.2018 are set forth in the following table. The amount earned under the STIP will depend on the NEO’s target award which is statedamounts, as a percentage of base salary, andare slightly below the extent of the Corporation’s, Bank’s or department’s achievement against the goals established for the year. Target awards for 2015 were 46.4% of base salary for our CEO, 35% for Messrs. McHargue, Norman D. Lowery and Holliday, and 25% for Ms. Milienu.benchmarked market median.
| NEO | 2018 Target Award Level (% of base salary) | 2018 Target Award Level ($) |
| Norman L. Lowery | 46.4% | 315,395 |
| Rodger A. McHargue | 35% | 97,231 |
| Norman D. Lowery | 35% | 103,996 |
| Steven H. Holliday | 35% | 83,410 |
| Karen L. Milienu | 25% | 53,554 |
Performance Goals, Measures, and determining the performance goals for the year, the Compensation Committee spends significant time reviewing the Corporation’s annual strategic plan and budget, which were approved by the Board in November and December of the preceding year.Scorecard Results. The Compensation Committee establishesSTIP uses a target performance goal for performance measures determined by the Committee to be important to the Corporation’s, the Bank’s or a department’s overall performance for the coming year. The performance goal for each of performance measure is intended to be a stretch goal, achievable through sustained execution of the strategic plan. The Committee assigns weights to each of performance measures, with areas of focus for achieving greater overall performance assigned higher weightings. To focus management on sustaining its continued, disciplined execution and continuing earnings growth, more weight was assigned to income and expense-related measures.
The amount of the STIP award earned is determined based on thean overall score achieved. score.
The overall score is the sum of the weighted scores achieved for each of the performance measures.
The weighted score is based on the score for the particular performance measure multiplied by the weight assigned to that measure.
A score of 100% is earned for a performance measure by achieving the target performance goal for that measure. A score above or below 100% is earned for performance above or below the goal, although, for 2015, the score for any income-related measure was capped at 100% in connection with the decision to adjust the goal and the performance results for the pension-related expenses. goal.
The amount of the STIP earned is determined by multiplying the overall score (the sum of the performance scores for the performance measures) times the executive’s target bonus amount.
No STIP award is earned if the overall score is less than 80%. The maximum overall score is 125% for the CEO and 120% for the other NEOs.
For our CEO, Mr. Norman L. Lowery, the performance measures relaterelated to Corporation-wide performance;performance, and both targets were set at 105% above the 2018 business plan to incorporate additional stretch to achieve a target level payout.
The table below provides an overview of Mr. Lowery’s performance measures and their respective, target performance goals, the results, and levels of achievement against the goals, weightings and resulting scores.
Mr. Norman L. Lowery: 2018 Scorecard
Performance Measure | Target Goal ($000) | Result, as adjusted ($000) | Level of Achievement (% of Goal) | Weighting | Resulting Score |
| Net Income | $41,715 | $46,583 | 111.67% | 60% | 67.00% |
| Efficiency Ratio | 60.62% | 58.98% | 102.78% | 40% | 41.11% |
| Overall Score | 108.11% | ||||
The performance measures for the other NEOs are tied to Bank and/or departmental performance. The amountFor each of STIP earned in 2015 by each executive officer reflectsthese NEOs, the overall score multiplied by his or her target bonusnet income and is set forth in the Non-Equity Incentive Plan columnefficiency ratio targets reflected 105% of the SCT.Bank’s business plan. The tables below provide an overview of the performance measures and their respective, target performance goals, results (adjusted to eliminate the effect of the TCJA-charge), and levels of achievement against the goals, weightings and resulting scores for the other NEOs.
Mr. Rodger McHargue: 2018 Scorecard
| Measure | Level | N.L. Lowery | McHargue | N.D. Lowery | Holliday | Milienu | ||||||||||||||||
| Operating Income | Goal | $ | 31,007 | $ | 27,279 | $ | 27,279 | $ | 27,279 | $ | 27,279 | |||||||||||
| Actual | $ | 30,196 | $ | 26,757 | $ | 26,757 | $ | 26,757 | $ | 26,757 | ||||||||||||
| % of Goal | 97.38 | % | 98.09 | % | 98.09 | % | 98.09 | % | 98.09 | % | ||||||||||||
| Weight | 50.00 | % | 40.00 | % | 40.00 | % | 20.00 | % | 20.00 | % | ||||||||||||
| Composite | 48.69 | % | 39.23 | % | 39.23 | % | 19.62 | % | 19.62 | % | ||||||||||||
| Efficiency Ratio | Goal | 64.70 | % | 68.12 | % | 68.12 | % | — | — | |||||||||||||
| Actual | 65.50 | % | 69.58 | % | 69.58 | % | — | — | ||||||||||||||
| % of Goal | 98.70 | % | 97.90 | % | 97.90 | % | — | — | ||||||||||||||
| Weight | 25.00 | % | 20.00 | % | 20.00 | % | — | — | ||||||||||||||
| Composite | 24.68 | % | 19.58 | % | 19.58 | % | — | — | ||||||||||||||
| Non-Performing Loans | Goal | 2.25 | % | — | — | 2.25 | % | — | ||||||||||||||
| Actual | 1.84 | % | — | — | 1.82 | % | — | |||||||||||||||
| % of Goal | 122.28 | % | — | — | 123.63 | % | — | |||||||||||||||
| Weight | 7.50 | % | — | — | 10.00 | % | — | |||||||||||||||
| Composite | 9.17 | % | — | — | 12.36 | % | — | |||||||||||||||
| Delinquency | Goal | 1.36 | % | — | — | 1.27 | % | — | ||||||||||||||
| Actual | 1.00 | % | — | — | 0.80 | % | — | |||||||||||||||
| % of Goal | 136.00 | % | — | — | 158.75 | % | — | |||||||||||||||
| Weight | 7.50 | % | — | — | 10.00 | % | — | |||||||||||||||
| Composite | 10.20 | % | — | — | 15.88 | % | — | |||||||||||||||
| Loan Growth | Goal | 5.97 | % | 6.05 | % | 6.05 | % | 6.05 | % | — | ||||||||||||
| Actual | (1.86 | )% | (2.07 | )% | (2.07 | )% | (2.07 | )% | — | |||||||||||||
| % of Goal | — | % | — | % | — | % | — | % | — | |||||||||||||
| Weight | 5.00 | % | 5.00 | % | 5.00 | % | 20.00 | % | — | |||||||||||||
| Composite | — | % | — | % | — | % | — | % | — | |||||||||||||
| Deposit Growth | Goal | 3.19 | % | 3.10 | % | 3.10 | % | — | 3.10 | % | ||||||||||||
| Actual | (0.62 | )% | (0.65 | )% | (0.65 | )% | — | (0.65 | )% | |||||||||||||
| % of Goal | — | % | — | % | — | % | — | — | % | |||||||||||||
| Weight | 5.00 | % | 5.00 | % | 5.00 | % | — | 20.00 | % | |||||||||||||
| Composite | — | % | — | % | — | % | — | % | ||||||||||||||
Performance Measure | Target Goal ($000) | Result, as adjusted ($000) | Level of Achievement (% of Goal) | Weighting | Resulting Score |
| Net Income | $38,063 | $43,742 | 114.92% | 50% | 57.46% |
| Efficiency Ratio | 62.53% | 60.57% | 103.24% | 25% | 25.81% |
| Dept. Controllable | $580 | $554 | 104.70% | 25% | 26.18% |
| Overall Score | 109.45% | ||||
Mr. Norman D. Lowery: 2018 Scorecard
| Direct Controllable | Goal | — | $ | 29,006 | $ | (3,714 | ) | $ | 41,332 | $ | (50,427 | ) | ||||||||||
| Actual | — | $ | 31,315 | $ | (3,381 | ) | $ | 40,237 | $ | (49,256 | ) | |||||||||||
| % of Goal | — | 107.96 | % | 109.85 | % | 97.35 | % | 102.38 | % | |||||||||||||
| Weight | — | 30.00 | % | 30.00 | % | 15.00 | % | 20.00 | % | |||||||||||||
| Composite | — | 32.39 | % | 32.95 | % | 14.60 | % | 20.48 | % | |||||||||||||
| Net Charge-Offs | Goal | — | — | — | 0.24 | % | — | % | ||||||||||||||
| Actual | — | — | — | 0.10 | % | — | % | |||||||||||||||
| % of Goal | — | — | — | 240.00 | % | — | % | |||||||||||||||
| Weight | — | — | — | 10.00 | % | — | % | |||||||||||||||
| Composite | — | — | — | 24.00 | % | — | % | |||||||||||||||
| Loan Spread | Goal | — | — | — | 3.02 | % | — | % | ||||||||||||||
| Actual | — | — | — | 3.02 | % | — | % | |||||||||||||||
| % of Goal | — | — | — | 100.00 | % | — | % | |||||||||||||||
| Weight | — | — | — | 15.00 | % | — | % | |||||||||||||||
| Composite | — | — | — | 15.00 | % | — | % | |||||||||||||||
| Return on Assets | Goal | — | — | — | — | % | 0.92 | % | ||||||||||||||
| Actual | — | — | — | — | % | 0.93 | % | |||||||||||||||
| % of Goal | — | — | — | — | % | 100.09 | % | |||||||||||||||
| Weight | — | — | — | — | % | 20.00 | % | |||||||||||||||
| Composite | — | — | — | — | % | 20.22 | % | |||||||||||||||
| Return on Equity | Goal | — | — | — | — | % | 7.27 | % | ||||||||||||||
| Actual | — | — | — | — | % | 7.22 | % | |||||||||||||||
| % of Goal | — | — | — | — | % | 99.31 | % | |||||||||||||||
| Weight | — | — | — | — | % | 20.00 | % | |||||||||||||||
| Composite | — | — | — | — | % | 19.86 | % | |||||||||||||||
| Total Composite | 92.74 | % | 91.20 | % | 91.77 | % | 101.46 | % | 80.17 | % | ||||||||||||
Performance Measure | Target Goal ($000) | Result, as adjusted ($000) | Level of Achievement (% of Goal) | Weighting | Resulting Score |
| Net Income | $38,063 | $43,742 | 114.92% | 50% | 57.46% |
| Efficiency Ratio | 62.53% | 60.57% | 103.24% | 25% | 25.81% |
| Dept. Controllable | $5,228 | $5,217 | 100.22% | 25% | 25.05% |
| Overall Score | 108.33% | ||||
Mr. Steve Holliday: 2018 Scorecard
Performance Measure | Target Goal ($000) | Result, as adjusted ($000) | Level of Achievement (% of Goal) | Weighting | Resulting Score |
| Net Income | $38,063 | $43,742 | 114.92% | 40% | 45.97% |
| Efficiency Ratio | 62.53% | 60.57% | 103.24% | 20% | 20.65% |
| Non-Performing Loans | 1.45% | 0.85% | 170.59% | 2.5% | 4.26% |
| Delinquency | 0.90% | 0.79% | 113.92% | 2.5% | 2.85% |
| Total Loan Controllable | $66,912 | $65,761 | 98.28% | 10% | 9.83% |
| Total Loan Growth | 5.00% | 3.70% | 74.02% | 15% | 11.10% |
| Net Charge-Offs/Loans | 0.15% | 0.14% | 107.14% | 5% | 5.36% |
| Total Loan NIM | 2.75% | 2.71% | 98.55% | 5% | 4.93% |
| Overall Score | 104.95% | ||||
Ms. Karen Milienu: 2018 Scorecard
Performance Measure | Target Goal ($000) | Result, as adjusted ($000) | Level of Achievement (% of Goal) | Weighting | Resulting Score |
| Net Income | $38,063 | $43,742 | 114.92% | 20% | 22.98% |
| Return on Assets | 1.33% | 1.51% | 113.53% | 20% | 22.71% |
| Return on Equity | 9.77% | 11.12% | 113.82% | 20% | 22.76% |
| Product Controllable | $33,283 | $33,213 | 99.79% | 10% | 9.98% |
| IL Growth | 5.00% | 4.60% | 92.02% | 10% | 9.2% |
| Deposit Growth | 5.02% | (3.52)% | (70.11)% | 20% | —% |
| Overall Score | 87.64% | ||||
2018 STIP Payouts. The NEOs were awarded the following STIP awards based on their overall scorecard results as follows:
| NEO | 2017 Target Award Level (% of base salary) | 2017 Target Award Level ($) | Overall Scorecard Result | Actual STIP Earned ($) |
| Norman L. Lowery | 46.4% | $315,395 | 108.11% | $340,988 |
| Rodger A. McHargue | 35% | $97,231 | 109.45% | $106,416 |
| Norman D. Lowery | 35% | $103,996 | 108.33% | $112,654 |
| Steven H. Holliday | 35% | $83,410 | 104.95% | $87,534 |
| Karen L. Milienu | 25% | $53,554 | 87.64% | $46,932 |
Note: Figures may not calculate exactly due to rounding of scorecard results in the table to two decimal points.
Long-Term Incentive Compensation.We use long-term incentive compensation to strengthen the alignment between the interests of our executive officers and our shareholders. Our LTIP is an essential tool for attracting, retaining, and motivating talented executive officers. We makeNEOs are eligible receive LTIP awards under our shareholder-approved First Financial Corporation 2011 Equity Incentive Plan. The size of each LTIP award made to an executive officer will dependdepends on two key factors: 1) the NEO’s target award level, which is stated as a percentage of base salary,salary; and 2) the Corporation’s or Bank’s performance during the preceding three years measured against the goals established by the Compensation Committee. The LTIP award target for awards made in February 2015 based on performance through 2014, and in February 2016 based on performance through 2015, were 60.0% for our CEO, 40% for Messrs. McHargue, Norman D. Lowery and Holliday, and 20.0% for Ms. Milienu.
The performance measures chosen by the Committee are those where strong, steady performance should equate to long-term shareholder value. Since 2013, the Committee has used four performance measures on which to base LTIP awards: return on assets, return on equity, tangible book value and EPS. The Committee establishes a performance goal for each of these measures based on the Corporation’s strategic plan and budgets, and weights the goals based on the Committee’s assessment of the relative importance of the measure to overall shareholder value. The amount of an executive officer’s LTIP award is based on the overall score achieved and the officer’s LTIP award target.performance-based LTIP awards are made in restricted stock having value equal to the LTIP award earned. The restricted stock vests in three equal installments beginning on December 31 of the year of the grant and the following two years. The Compensation Committee believes the use of performance criteria for determining the size of the LTIP award, followed by a three-year vesting schedule, reinforces both the long-term incentive and retention purposepurposes of the LTIP award while establishing an appropriate balance of risk and incentive compensation in accordance with the Guidance on Sound Incentive Compensation Policies issued by the Federal Reserve, the FDIC, the OCC, and OTC in 2010.incentive.
Target Award Levels. The table below reports the performance measures (“Measure”),LTIP award target performance goal (“Goal”), our results (“Actual”), the level of achievement against the goal (% of Goal), the weightings (“Weight”), and the resulting score for the CEO and other NEOs (“Score”) for the LTIP awards madegranted in February 20162019 based on performance through 2018 are set forth in the endtable below. In aggregate, these target award amounts, as a percentage of 2015.base salary, are aligned with the market median, but vary above or below median on an individual basis.
| NEO | 2017 Target Award Level |
| Norman L. Lowery | 60% |
| Rodger A. McHargue | 40% |
| Norman D. Lowery | 40% |
| Steven H. Holliday | 40% |
| Karen L. Milienu | 20% |
Performance Measures. For our CEO, Mr. Norman L. Lowery, the
three-year performance period ending December 31, 2018 (“2016-2018 performance period”), the Compensation Committee approved the following performance measures relateon which to Corporation-wide performance. For the other NEOs, the performance measures, other than EPS andbase LTIP awards: return on average assets, return on average equity, tangible book value are tiedand Earnings Per Share (“EPS”).
The Compensation Committee establishes a performance goal for each of these measures based on the Corporation’s and Bank’s strategic plan and budgets, and weights the goals based on the Committee’s assessment of the relative importance of the measure to Bank performance. overall shareholder value. The amount of an NEO’s LTIP award is based on the overall score achieved and the NEO’s LTIP award target.
The amount of LTIP earned in 2014for the 2016 - 2018 performance period by each executive officerNEO reflects both the target award opportunity for each NEO and the overall score multiplied by his or her target LTIP award.performance result. In accordance with SEC disclosure rules, the LTIP award based on 2015 performance through December 31, 2018 and granted in February 2019 will be reported in 2016the 2020 proxy statement.
For our CEO, Mr. Norman L. Lowery, the performance measures relate to Corporation-wide performance. The amounttable below provides an overview of Mr. Lowery’s performance measures and their respective, target performance goals, results, and levels of achievement against the goals, weightings and resulting scores for the LTIP awardedawards granted in February 2015,2019 based on 2014 performance is set forth inthrough the Stock Awards column in the SCT.end of 2018.
Mr. Norman L. Lowery: 2016 - 2018 Scorecard
| Measure | Level | N.L. Lowery | McHargue | N.D. Lowery | Holliday | Milienu | |||||||||||
| Goal | 1.04 | % | 0.94 | % | 0.94 | % | 0.94 | % | 0.94 | % | |||||||
| 3 year | Actual | 1.06 | % | 0.98 | % | 0.98 | % | 0.98 | % | 0.98 | % | ||||||
| Return on | % of Goal | 101.92 | % | 104.26 | % | 104.26 | % | 104.26 | % | 104.26 | % | ||||||
| Assets | Weight | 20.00 | % | 20.00 | % | 20.00 | % | 20.00 | % | 20.00 | % | ||||||
| Composite | 20.38 | % | 20.85 | % | 20.85 | % | 20.85 | % | 20.85 | % | |||||||
| Goal | 8.00 | % | 7.70 | % | 7.70 | % | 7.70 | % | 7.70 | % | |||||||
| 3 year | Actual | 8.06 | % | 7.84 | % | 7.84 | % | 7.84 | % | 7.84 | % | ||||||
| Return on | % of Goal | 100.75 | % | 101.82 | % | 101.82 | % | 101.82 | % | 101.82 | % | ||||||
| Equity | Weight | 15.00 | % | 15.00 | % | 15.00 | % | 15.00 | % | 15.00 | % | ||||||
| Composite | 15.11 | % | 15.27 | % | 15.27 | % | 15.27 | % | 15.27 | % | |||||||
| Goal | $29.66 | $29.66 | $29.66 | $29.66 | $29.66 | ||||||||||||
| Tangible | Actual | $29.72 | $29.72 | $29.72 | $29.72 | $29.72 | |||||||||||
| Book | % of Goal | 100.20 | % | 100.20 | % | 100.20 | % | 100.20 | % | 100.20 | % | ||||||
| Value | Weight | 30.00 | % | 30.00 | % | 30.00 | % | 30.00 | % | 30.00 | % | ||||||
| Composite | 30.06 | % | 30.06 | % | 30.06 | % | 30.06 | % | 30.06 | % | |||||||
| Goal | $2.39 | $2.39 | $2.39 | $2.39 | $2.39 | ||||||||||||
| Earnings | Actual | $2.42 | $2.42 | $2.42 | $2.42 | $2.42 | |||||||||||
| Per Share | % of Goal | 101.26 | % | 101.26 | % | 101.26 | % | 101.26 | % | 101.26 | % | ||||||
| Weight | 35.00 | % | 35.00 | % | 35.00 | % | 35.00 | % | 35.00 | % | |||||||
| Composite | 35.44 | % | 35.44 | % | 35.44 | % | 35.44 | % | 35.44 | % | |||||||
| Total Composite | 101.00 | % | 101.62 | % | 101.62 | % | 101.62 | % | 101.62 | % | |||||||
Performance Measure | Target Goal | Result (as adjusted) | Level of Achievement (% of Goal) | Weighting | Resulting Score |
| Return on Assets | 1.18% | 1.35% | 114.41% | 20% | 22.88% |
| Return on Equity | 8.36% | 9.47% | 113.28% | 15% | 16.99% |
| Tangible Book Value | $33.23 | $33.05 | 99.46% | 30% | 29.84% |
| EPS | $3.40 | $3.80 | 111.76% | 35% | 39.12% |
| Overall Score | 108.83% | ||||
The performance measures for the other NEOs, other than tangible book value and EPS, are tied to Bank performance. The table below provides a summary of the performance measures and their respective, target performance goals, actual results, and levels of achievement against the goals, weightings and resulting scores for the LTIP awards granted in February 2019 to all the NEOs (other than the CEO) based on performance through the end of 2018.
2016-2018 LTIP Scorecard for Mr. McHargue, Mr. Norman D. Lowery, Mr. Holliday, and Ms. Milienu.
Performance Measure | Target Goal | Result (as adjusted) | Level of Achievement (% of Goal) | Weighting | Resulting Score |
| Return on Assets | 1.09% | 1.22% | 111.93% | 20% | 22.39% |
| Return on Equity | 8.13% | 9.00% | 110.70% | 15% | 16.61% |
| Tangible Book Value | $33.23 | $33.05 | 99.46% | 30% | 29.84% |
| EPS | $3.40 | $3.80 | 111.76% | 35% | 39.12% |
| Overall Score | 107.95% | ||||
2016-2018 LTIP Grants. The NEOs earned the following LTIP awards based on their overall scorecard results as follows:
| NEO | Target Award Level (% of base salary) | Target Award Level ($) | Overall Scorecard Result | Actual LTIP Awarded ($) |
| Norman L. Lowery | 60% | $407,838 | 108.83% | $443,842 |
| Rodger A. McHargue | 40% | $111,112 | 107.95% | $119,950 |
| Norman D. Lowery | 40% | $118,853 | 107.95% | $128,296 |
| Steven H. Holliday | 40% | $95,325 | 107.95% | $102,899 |
| Karen L. Milienu | 20% | $42,843 | 107.95% | $46,248 |
Note: Figures may not calculate exactly due to rounding of scorecard results in the table to two decimal points.
OTHER PRACTICES, POLICIES & GUIDELINES
Retirement Benefits.
We believe retirement and other post-employment benefits can be a powerful motivational tool for attracting and retaining key executives.executives, including the NEOs.
Our three qualified retirement plans are the First Financial Corporation 401(k) Savings Plan (“Savings Plan”), the First Financial Corporation Stock Ownership Plan (“ESOP”), and the First Financial Corporation Employees’ Pension Plan (“Pension Plan”).
Pension Plan. The Pension Plan is a defined benefit plan that provides each participant with a benefit based on the participant’s compensation and service, which is then offset by the value of the participant’s benefit under the ESOP. This type of arrangement is commonly referred to as a floor-offset arrangement. Future accruals under the Pension Plan were frozen for participants at the end of 2012, except for certain long-service, retirement-eligible or other employees who were grandfathered at that time. Each of our CEO and other named executive officers,NEOs, other than Mr. Holliday, continue to accrue benefits under the Pension Plan.
Internal Revenue Code limits on the amount of benefits that may be earned under qualified plans can result in highly paid individuals, such as our executive officers, including the NEOs, receiving a substantially lower benefit (as a percentage of compensation) than other participating employees. We have adopted nonqualified retirement plans to make-up for these benefit
reductions. Information relating to qualified and nonqualified plans accompanies the “Pension Benefits” table and the “Nonqualified Deferred Compensation” table on pages 27-28.page 31.
Perquisites.
The Corporation provides very limited perquisites to executive officers; however, it does sponsor a life insurance program for the named executive officersNEOs of the Bank. Under the life insurance program, the Bank purchased a whole life insurance policy on behalf of, and pays the premiums on behalf of, each executive officer of the Bank. The policy is owned by the individual and is intended to be fully paid at age 65 for those who were 55 or older, and at age 60 for those who were less than 55 years of age at the time the individual joined the Bank.
Assessment of Incentives for Excessive Risk-Taking
Each year, the Compensation Committee evaluates the material operational risks to the Corporation, which include credit, interest rate, liquidity, reputation, compliance, and transaction risk as well as the added potential for loss that could result from any of our compensation programs. The Committee also charges the Corporation’s General Auditor with performing a risk assessment of the incentive compensation program. Based on a review of these risks and the report of the General Auditor, the Committee has determined that the Corporation’s compensation arrangements and policies do not encourage excessive risk-taking.
Share Ownership and Retention Guidelines and Prohibition on Hedging
Share ownership and retention guidelines help to foster a focus on long-term growth. The Board has adopted stock ownership guidelines applicable to our named executive officers.NEOs. Under those guidelines, our CEO is required to own a number of shares of the Corporation’s common stock equal in value to $500,000, and other NEOs are required to own a number of shares equal in value to $150,000. Except for purposes of exercising statutory diversification rights under the ESOP, our covered executives may not dispose of shares until they have satisfied the guidelines. Covered executives are expected to comply with the guidelines as soon as practicable, and in no event later than five years after the date they become a covered executive. In the case of individuals who were covered executives when the guidelines became effective, compliance is required within five years of the effective date. Messrs. Norman L. Lowery, McHargue, Norman D. Lowery, Holliday and Ms. Milienu currently meet the guidelines.
Prohibition on Hedging
Our NEOs and directors are prohibited from engaging in hedging or monetization transactions with respect to the securities of the Corporation.
Executive Compensation Recovery Policy
We can recover or “claw back” all or a portion of an incentive compensation payment which was based on erroneous data due to our material noncompliance with any financial reporting requirement under securities laws which resulted in an accounting restatement. The claw back applies to incentive compensation described above which was paid within three years preceding the date of the accounting restatement. In that instance, the participant is required to repay the excess amount which would not have been paid to the participant but for the accounting restatement.
Tax Deductibility Cap on Executive Compensation
The Committee believes that tax deductibility is only one of several relevant considerations in setting compensation, and that the tax deduction limitation should not be permitted to compromise the Compensation Committee's ability to structure its compensation to provide benefits to the Company that outweigh the potential benefit of the tax deduction. Accordingly, the Committee has and will continue to approve compensation that is not deductible for federal income tax purposes.
Compensation Committee Report
The Compensation and Employee Benefits Committee of the Corporation has reviewed and discussed this Compensation Discussion and Analysis with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Members of the Compensation and Employee Benefits Committee: | |||
| William J. Voges, Chairman | |||
| Anton H. George | |||
| William R. Krieble | |||
| Ronald K. Rich | |||
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation awarded to, earned by, or paid to the chief executive officer, the chief financial officer and the three most highly compensated executive officers other than the chief executive officer and the chief financial officer (collectively, the “Named Executive Officers”) during the years ended December 31, 2015, 20142018, 2017 and 2013.2016.
| Salary | Stock Awards (1) | Non-Equity Incentive Plan Compensation (2) | Change in Pension Value And Nonqualified Deferred Compensation Earnings (3) | All Other Compensation (4) | Total | |||||||||||||||||||||||||||||||||
| Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | Year | Salary ($) | Stock Awards(1) ($) | Non-Equity Incentive Plan Compensation(2) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) ($) | All Other Compensation(4) ($) | Total ($) | ||||||||||||||||||||||||
| Norman L. Lowery, | 2015 | 642,300 | 388,587 | 276,286 | 656,290 | 79,307 | 2,042,770 | 2,018 | 679,730 | 427,031 | 340,988 | 353,300 | 122,230 | 1,923,279 | ||||||||||||||||||||||||
| Chief Executive Officer, | 2014 | 630,297 | 417,894 | 292,417 | 1,233,378 | 83,428 | 2,657,414 | 2,017 | 673,000 | 431,983 | 330,853 | 897,221 | 181,897 | 2,514,954 | ||||||||||||||||||||||||
| First Financial Bank, N.A. and | 2013 | 626,097 | 459,532 | 282,017 | — | 75,862 | 1,443,508 | 2,016 | 654,300 | 389,223 | 329,717 | — | 136,177 | 1,509,417 | ||||||||||||||||||||||||
| First Financial Corporation | ||||||||||||||||||||||||||||||||||||||
| Rodger A. McHargue, | 2015 | 211,300 | (5) | 82,750 | 67,447 | 107,839 | 9,049 | 478,385 | 2,018 | 277,803 | (5) | 105,494 | 106,416 | 111,876 | 25,806 | 627,395 | ||||||||||||||||||||||
| Chief Financial Officer, | 2014 | 201,209 | 87,332 | 67,005 | 324,486 | 8,403 | 688,435 | 2,017 | 253,030 | 101,572 | 94,180 | 226,257 | 31,713 | 706,752 | ||||||||||||||||||||||||
| First Financial Bank, N.A. and | 2013 | 196,191 | 94,913 | 68,823 | 34,472 | 11,278 | 405,677 | 2,016 | 232,500 | 85,892 | 80,482 | 54,872 | 25,082 | 478,828 | ||||||||||||||||||||||||
| First Financial Corporation | ||||||||||||||||||||||||||||||||||||||
| Steven H. Holliday, | 2015 | 210,200 | (6) | 82,253 | 74,571 | — | 15,566 | 382,590 | 2,018 | 238,513 | (6) | 97,978 | 87,534 | — | 35,802 | 459,827 | ||||||||||||||||||||||
| Chief Credit Officer, | 2014 | 200,200 | 85,173 | 61,472 | — | 14,022 | 360,867 | |||||||||||||||||||||||||||||||
| First Financial Bank, N.A. | 2013 | 190,565 | — | 54,578 | — | 13,281 | 258,424 | |||||||||||||||||||||||||||||||
| First Financial Corporation | ||||||||||||||||||||||||||||||||||||||
| Norman D. Lowery, | 2015 | 210,000 | 82,253 | 67,263 | 70,195 | 13,169 | 442,880 | |||||||||||||||||||||||||||||||
| Chief Operations Officer, | 2014 | 200,000 | 85,463 | 69,079 | 207,812 | 14,028 | 576,382 | |||||||||||||||||||||||||||||||
| Chief Credit Officer | 2,017 | 231,347 | 96,622 | 90,277 | — | 43,325 | 461,571 | |||||||||||||||||||||||||||||||
| First Financial Bank, N.A. and | 2013 | 191,014 | 92,816 | 67,351 | 3,442 | 16,349 | 370,972 | 2,016 | 221,400 | 85,364 | 84,259 | — | 40,246 | 431,269 | ||||||||||||||||||||||||
| First Financial Corporation | ||||||||||||||||||||||||||||||||||||||
| Norman D. Lowery, | 2,018 | 297,132 | 112,600 | 112,654 | 97,975 | 29,644 | 650,005 | |||||||||||||||||||||||||||||||
| Chief Operating Officer, | 2,017 | 270,120 | 105,028 | 102,767 | 150,959 | 35,472 | 664,346 | |||||||||||||||||||||||||||||||
| First Financial Bank, N.A. and | 2,016 | 240,400 | 85,364 | 83,833 | — | 25,579 | 435,176 | |||||||||||||||||||||||||||||||
| First Financial Corporation | ||||||||||||||||||||||||||||||||||||||
| Karen L. Milienu, | 2015 | 156,000 | 30,845 | 31,254 | 89,464 | 4,256 | 311,819 | 2,018 | 214,217 | 41,268 | 46,932 | 95,088 | 16,462 | 413,967 | ||||||||||||||||||||||||
| Director of Branch Banking, | 2014 | 150,000 | 32,570 | 34,368 | 195,604 | 3,810 | 416,352 | 2,017 | 194,743 | 38,247 | 40,726 | 173,488 | 18,807 | 466,011 | ||||||||||||||||||||||||
| First Financial Bank, N.A | 2013 | 145,590 | 31,127 | 37,811 | 17,717 | 3,245 | 235,490 | 2,016 | 175,200 | 31,707 | 35,339 | 53,696 | 15,313 | 311,255 | ||||||||||||||||||||||||
| (1) | The amounts in this column represent the aggregate grant date fair values of the restricted stock awarded in |
| (2) | The amounts in this column reflect amounts earned under the STIP. |
| (3) | The amounts in this column do not reflect amounts paid. The amounts reflect the actuarial increase in the present value of the named executive officers’ benefits under the Pension Plan and our nonqualified defined benefit plans (“ESRP” and “2005 ESRP”), determined using interest rate and mortality rate assumptions consistent with those used in the Corporation’s financial statements. |
| (4) | For |
| (5) | Includes $4,800 for service as a director of Portfolio Management Specialist A (a subsidiary of the Bank), Portfolio Management Specialist B (an indirect subsidiary of the Bank) and Global Portfolio Limited Partnership (an indirect subsidiary of the Bank), and $500 for service as a director of FFB Risk Management Company, Inc. (a subsidiary of the Corporation). |
| (6) | Includes $200 for service as a manager of First Financial Real Estate LLP (a real estate investment trust of the Bank). |
Grants of Plan-Based Awards
The following table sets forth the plan-based grants during the fiscal year ended December 31, 2015,2018, consisting of opportunities for cash awards under the 2011 Short-Term Incentive Compensation Plan (the “2011 STIP”) and equity grants under the 2011 Omnibus Equity Incentive Plan (the “2011 EIP”), which are discussed in more detail in the “Compensation Discussion and Analysis” section of this Proxy Statement.
All Other Stock Awards: Number of Shares of Stock or Units(2) | Mean Market Price on Grant Date ($/Sh) | Grant Date Fair Value of Stock Awards(3) ($) | ||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock or Units (2) | Closing Market Price on Grant Date ($/sh) | Grant Date Fair Value of Stock Awards (3) ($) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | ||||||||||||||||||||
| Name | Grant Date | Plan Name | Threshold ($) | Target ($) | Maximum ($) | Grant Date | Plan Name | Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||
| Norman L. Lowery | 2011 STIP | 238,293 | 298,027 | 372,534 | 2011 STIP | 252,316 | 315,395 | 394,244 | ||||||||||||||||
| 2/3/2015 | 2011 EIP | 11,474 | 33.865 | 388,587 | 2/3/2018 | 2011 EIP | 9,375 | 45.55 | 427,031 | |||||||||||||||
| Rodger A. McHargue | 2011 STIP | 59,164 | 73,955 | 88,746 | 2011 STIP | 77,785 | 97,231 | 116,677 | ||||||||||||||||
| 2/3/2015 | 2011 EIP | 2,443 | 33.865 | 82,750 | 2/3/2018 | 2011 EIP | 2,316 | 45.55 | 105,494 | |||||||||||||||
| Steven H. Holliday | 2011 STIP | 58,800 | 73,500 | 88,200 | 2011 STIP | 66,728 | 83,410 | 100,092 | ||||||||||||||||
| 2/3/2015 | 2011 EIP | 2,428 | 33.865 | 82,253 | 2/3/2018 | 2011 EIP | 2,151 | 45.55 | 97,978 | |||||||||||||||
| Norman D. Lowery | 2011 STIP | 58,800 | 73,500 | 88,200 | 2011 STIP | 83,197 | 103,996 | 124,795 | ||||||||||||||||
| 2/3/2015 | 2011 EIP | 2,428 | 33.865 | 82,253 | 2/3/2018 | 2011 EIP | 2,472 | 45.55 | 112,600 | |||||||||||||||
| Karen L. Milienu | 2011 STIP | 35,100 | 39,000 | 42,900 | 2011 STIP | 42,843 | 53,554 | 58,909 | ||||||||||||||||
| 2/3/2015 | 2011 EIP | 910 | 33.865 | 30,845 | 2/3/2018 | 2011 EIP | 906 | 45.55 | 41,268 | |||||||||||||||
| (1) | The amounts in these columns represent the threshold, target and maximum fiscal year |
| (2) | The amounts in this column represent restricted stock awards granted in |
| (3) | The grant date fair value of the restricted stock awards reported in this column is the grant date value of the awards as determined under FASB ASC Topic 718. |
Outstanding Equity Awards at Fiscal Year-End
| Stock Awards | Stock Awards | ||||||||||
| Name | Number of Shares of Stock That Have Not Vested (1) | Market Value of Shares of Stock That Have Not Vested | Number of Shares of Stock That Have Not Vested(1) | Market Value of Shares of Stock That Have Not Vested(2) | |||||||
| Norman L. Lowery | 11,980 | $ | 406,961 | 9,333 | $374,720 | ||||||
| Rodger A. McHargue | 2,534 | 86,080 | 2,269 | 91,100 | |||||||
| Norman D. Lowery | 2,505 | 85,095 | 2,397 | 96,240 | |||||||
| Steven H. Holliday | 2,502 | 84,993 | 2,123 | 85,238 | |||||||
| Karen L. Milienu | 945 | 32,102 | 877 | 35,212 | |||||||
| (1) | These shares represent restricted stock awards that vest in installments on December 31, |
| (2) | The market value is based on |
Option Exercises and Stock Vested in 2015
2018
| Stock Awards | Stock Awards | ||||||||||
| Name | Number of Shares Acquired on Vesting | Value Realized on Vesting | Number of Shares Acquired on Vesting | Value Realized on Vesting | |||||||
| Norman L. Lowery | 13,168 | $ | 447,317 | 10,218 | $410,253 | ||||||
| Rodger A. McHargue | 2,755 | 93,587 | 2,382 | 95,637 | |||||||
| Norman D. Lowery | 2,707 | 91,957 | 2,453 | 98,488 | |||||||
| Steven H. Holliday | 1,691 | 57,443 | 2,286 | 91,783 | |||||||
| Karen L. Milienu | 980 | 33,291 | 901 | 36,175 | |||||||
