The
Company’s Board also monitors whether material new initiatives have been appropriately analyzed and approved, and reviews all regulatory findings directed to the attentionCompensation Committee's evaluation of the
Boardpeer group comparison and
evaluates the adequacyBlanchard's assessment of
management’s response.Nicolet's director compensation practices and levels concluded that director compensation is near median when considering all director fees in total. Director Compensation
In 2017,2018, non-employee directors received $1,500 for each board meeting and $750 for each committee meeting attended. The audit committee chair received aan additional $10,000 cash retainer. Beginning in 2018, an equity retainer in 2017.was introduced as part of the director compensation package. Including an equity retainer as part of the annual director compensation package increases the share ownership of directors. Non-employee directors serving as of July 17, 2018, each received an equity retainer of 270 shares of immediately vesting restricted stock (the number of whole shares closest to $15,000 based upon the $55.47 closing stock price as of the grant date). Non-employee directors also have the option of receivingto elect to receive their cash fee compensation in the form of Company common stock through the Deferred Compensation Plan for Non-Employee Directors (“Directors Plan”) through ana participation election made each year. While we do not set strict targets for ownership of our stock, we strongly encourage all directors to own the Company's stock.
The following table shows information concerning the compensation to non-employee directors of the Company and its subsidiaries for their services as directors for the year ended December 31, 2017. Beginning2018.
Director Compensation for 2018 (5)
|
| | | | | | | | | |
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (4) | Total ($) |
| Robert W. Agnew | $ | 32,250 |
| $ | 14,977 |
| $ | 47,227 |
|
Rachel Campos-Duffy 3 | — |
| — |
| — |
|
| John N. Dykema* | 31,500 |
| 14,977 |
| 46,477 |
|
| Terrence R. Fulwiler* | 25,500 |
| 14,977 |
| 40,477 |
|
| Christopher J. Ghidorzi* | 37,750 |
| 14,977 |
| 52,727 |
|
| Michael J. Gilson | 27,750 |
| 14,977 |
| 42,727 |
|
| Thomas L. Herlache | 29,250 |
| 14,977 |
| 44,227 |
|
Andrew F. Hetzel, Jr.* 2 | 15,000 |
| 14,977 |
| 29,977 |
|
Louis J. "Rick" Jeanquart* 1 | 9,000 |
| — |
| 9,000 |
|
| Donald J. Long, Jr.* | 30,000 |
| 14,977 |
| 44,977 |
|
| Dustin J. McClone* | 24,750 |
| 14,977 |
| 39,727 |
|
| Susan L. Merkatoris | 30,750 |
| 14,977 |
| 45,727 |
|
| Randy J. Rose* | 30,750 |
| 14,977 |
| 45,727 |
|
| Oliver Pierce Smith* | 27,000 |
| 14,977 |
| 41,977 |
|
| Robert J. Weyers* | 22,500 |
| 14,977 |
| 37,477 |
|
| | | | |
| * For the ten directors noted, 100% of their 2018 cash director fees were remitted to the Directors Deferred Compensation Plan and used by the plan quarterly to purchase the Company common stock on behalf of the director, except for Messrs. Ghidorzi, Jeanquart, and McClone who elected to defer 50% of their director compensation. |
| 1 The named director retired from the board in May 2018. |
| 2 The named director became a Nicolet director in May 2018. |
| 3 The named director became a Nicolet director in January 2019. |
| 4 Reflects the grant date fair value of the awards of immediately vesting restricted stock granted during the fiscal year as computed in accordance with applicable accounting guidance. Each director serving as of July 17, 2018, was granted an award of 270 shares of immediately vesting restricted stock (the number of whole shares closest to $15,000 based upon the $55.47 closing stock price as of the grant date). |
| 5 Director compensation did not include Option awards, Non-equity incentive plan compensation, Change in pension value or non-qualified deferred compensation earnings, or Other compensation; hence, the table above excluded these zero-based columns. |
Deferred Compensation Plan for Non-Employee Directors (“Directors Plan”)
The Directors Plan, as revised and restated effective January 1, 2009, is a nonqualified plan. Non-employee directors may elect to defer a portion or all of their board fees, including retainers. The voluntary deferrals are contributed quarterly to a rabbi trust, the trustee of which invests the voluntary deferrals in 2017, neither Messrs.shares of common stock of the Company. Upon termination of service as a board member other than due to death (separation date), a participating director receives payment of their deferral account in whole shares of Nicolet common stock, distributed during the first half of the calendar year following the year of their separation date. If the termination of service is due to death, payment shall be made to the designated beneficiary within 90 days of the date of death.
EXECUTIVE OFFICERS
The Company’s executive officers as of the record date were Robert B. Atwell, norMichael E. Daniels received specific compensationand Ann K. Lawson. Ages are as of December 31, 2018.
Robert B. Atwell, age 61, has served as Chairman, President, and Chief Executive Officer of the Company since its formation in 2002 and beginning April 29, 2016, Chairman of Nicolet Bank. From 2000 to April 29, 2016, Mr. Atwell served as Chairman and Chief Executive Officer of Nicolet Bank.
Michael E. Daniels, age 54, has served as Executive Vice President and Secretary of the Company since its formation in 2002 and, beginning April 29, 2016, President and Chief Executive Officer of Nicolet Bank. From 2007 to April 29, 2016, Mr. Daniels served as President and Chief Operating Officer of Nicolet Bank and served as Executive Vice President and Chief Lending Officer of Nicolet Bank from 2000-2007.
Ann K. Lawson, age 58, has served as Chief Financial Officer of Nicolet Bank and of the Company since February 2, 2009. Ms. Lawson previously served as the Director of Corporate Accounting and Reporting with a large regional bank holding company headquartered in Green Bay, Wisconsin, from September 1998 to January 2009. Prior work experience includes five years as Principal Accounting Officer at a regional community bank in North Carolina and seven years with public accounting firm KPMG LLP.
As of the record date, executive officers of Nicolet Bank, in addition to Mr. Atwell, Mr. Daniels, and Ms. Lawson, include:
Brad V. Hutjens, age 37, serves as Executive Vice President, Chief Credit Officer, and Chief Compliance & Risk Manager of Nicolet Bank and has been with the Bank since September 2, 2003.
Patrick J. Madson, age 38, serves as Senior Vice President - Wealth Management of Nicolet Bank and has been with the Bank since February 4, 2016. Prior to joining Nicolet Bank, Mr. Madson was a principal financial advisor with Navigator Planning Group LLC.
Michael J. Steppe, age 59, serves as Senior Vice President and Chief Investment Officer of Nicolet Bank and has been with the Bank since May 31, 2008. Mr. Steppe also runs the Company’s wholly-owned subsidiary, Brookfield Investment Partners.
Michael J. Vogel, age 50, serves as Senior Vice President and Commercial Banking Manager of Nicolet Bank and has been with the Bank since June 23, 2003.
Eric J. Witczak, age 48, serves as Executive Vice President of Nicolet Bank, responsible for board or board committee attendance. Compensation receivedall of Nicolet's retail and personal banking, mortgage banking, bank innovation, information technology, and marketing. Mr. Witczak has been with the Bank since August 23, 2000.
BOARD AND MANAGEMENT STOCK OWNERSHIP
The following table sets forth information with respect to the beneficial ownership, as of February 28, 2019, of shares of Company common stock by Messrs. Atwell(i) each person known by the Company to be the beneficial owner of more than 5% of the Company’s issued and Daniels in their capacitiesoutstanding common stock; (ii) each of the Company’s current directors and named executive officers; and (iii) all current Company directors and executive officers as directors for 2016 isa group. Unless noted below, management believes that each person listed below has sole investment and voting power with respect to the shares included in the Summary Compensation Tabletable. The address for each person included in the table is 111 North Washington Street, Green Bay, Wisconsin 54301.
Information relating to beneficial ownership of the Company common stock is based upon “beneficial owner” concepts set forth in rules under
“Executive Compensation.”the Exchange Act. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has sole or shared “voting power” or “investment power” over the security. Voting power includes the power to vote or to direct the voting of the security, and investment power includes the power to dispose or to direct the disposition of the security. Under the rules, more than one person may be deemed to be a beneficial owner of the same securities. The rules also deem a person to be a beneficial owner if such person has the right to acquire beneficial ownership within 60 days. |
| | | | |
| Directors, Director Nominees and Named Executive Officers | Number of Shares | | Percentage of Issued and Outstanding Shares 1 |
| Robert W. Agnew | 41,187 |
| 2 | * |
| Robert B. Atwell | 197,839 |
| 3 | 2.0% |
| Rachel Campos-Duffy | — |
| | —% |
| Michael E. Daniels | 258,307 |
| 4 | 2.6% |
| John N. Dykema | 78,817 |
| 5 | * |
| Terrence R. Fulwiler | 17,853 |
| 6 | * |
| Christopher J. Ghidorzi | 5,191 |
| 7 | * |
| Michael J. Gilson | 26,081 |
| 8 | * |
| Thomas L. Herlache | 28,458 |
| 9 | * |
| Andrew F. Hetzel, Jr. | 4,361 |
| 10 | * |
| Brad V. Hutjens | 42,388 |
| 11 | * |
| Ann K. Lawson | 45,091 |
| 12 | * |
| Donald J. Long, Jr. | 103,164 |
| 13 | 1.0% |
| Dustin J. McClone | 1,523 |
| 14 | * |
| Susan L. Merkatoris | 99,470 |
| | 1.0% |
| Randy J. Rose | 42,315 |
| 15 | * |
| Oliver Pierce Smith | 440,630 |
| 16 | 4.4% |
| Robert J. Weyers | 126,201 |
| 17 | 1.3% |
| Eric J. Witczak | 67,558 |
| 18 | * |
| | | | |
| All Current Directors and Executive Officers as a Group (22 persons) | 1,722,918 |
| 19 | 17.4% |
Name | | Fees
for 2017 ($)* | |
Robert W. Agnew | | | 36,000 | |
John N. Dykema* | | | 35,250 | *Represents less than one percent. |
Terrence R. Fulwiler1 | | | 28,500 | *For purposes of this table, percentages shown treat shares subject to exercisable options held by the indicated director or executive officer (including options exercisable within 60 days) as if they were issued and outstanding. All unvested shares of restricted stock are entitled to vote and are therefore included with the issued and outstanding shares reflected in this table. |
Christopher J. Ghidorzi2 | | | 37,750 | *Includes 282 shares held by Mr. Agnew in the Deferred Compensation Plan for Non-Employee Directors. |
Michael J. Gilson3 | | | 18,750 | Includes exercisable options to purchase 146,500 shares of common stock, 12,565 shares Mr. Atwell owns in his Nicolet 401(k) plan, 3,478 shares of unvested restricted stock, and 600 shares in a charitable organization in which Mr. Atwell disclaims any financial interest. |
Thomas L. Herlache4 | | | 29,250 | Includes 9,803 shares held in his spouse’s IRA, exercisable options to purchase 166,500 shares of common stock, 6,252 shares Mr. Daniels owns in his Nicolet 401(k) plan, and 3,478 shares of unvested restricted stock. |
Louis J “Rick” Jeanquart5 | | | 35,250 | *Includes 30,304 shares held in an irrevocable trust, and 7,088 shares held by Mr. Dykema in the Deferred Compensation Plan for Non-Employee Directors. |
Donald J. Long, Jr.6 | | | 34,500 | *Includes 975 shares held by Mr. Fulwiler in the Deferred Compensation Plan for Non-Employee Directors. |
Dustin J. McClone27 | | | 12,750 | *Includes 2,015 shares held by Mr. Ghidorzi in the Deferred Compensation Plan for Non-Employee Directors. |
Susan L. Merkatoris8 | | | 26,250 | Includes 1,072 shares owned by an adult child of Mr. Gilson for whom he serves as agent under a power of attorney. |
William D. Murphy19 | | | 7,500 | *Includes 15,397 shares held by Mr. Herlache in an IRA account and 3,278 shares held in a retirement trust account. |
Randy J. Rose10 | | | 33,750 | *Includes 289 shares held by Mr. Hetzel in the Deferred Compensation Plan for Non-Employee Directors. |
Oliver Pierce Smith211 | | | 15,750 | *Includes exercisable options to purchase 23,800 shares of common stock, 1,818 shares Mr. Hutjens owns in his Nicolet 401(k) plan, and 1,291 shares of unvested restricted stock. Mr. Hutjens is a non-director named executive officer. |
Elyse Mollner Stackhouse112 | | | 9,750 | *Includes exercisable options to purchase 20,235 shares of common stock, 800 shares Ms. Lawson owns in her Nicolet 401(k) plan, and 1,422 shares of unvested restricted stock. Ms. Lawson is a non-director named executive officer. |
Robert J. Weyers13 | | | 33,750 | * |
| * | Directors have the option of receiving their quarterly compensationIncludes 3,373 shares held by Mr. Long in the form ofDeferred Compensation Plan for Non-Employee Directors. |
| 14 | Includes 344 shares of Company common stock throughheld by Mr. McClone in the Deferred Compensation Plan for Non-Employee Directors, through an election made each year. Forand 909 shares held by a limited liability company to which Mr. McClone is a member. |
| 15 | Includes 4,073 shares held by Mr. Rose in the eleven directors noted, 100%Deferred Compensation Plan for Non-Employee Directors. |
| 16 | Includes 786 shares held by Mr. Smith in the Deferred Compensation Plan for Non-Employee Directors. |
| 17 | Includes 7,367 shares held by Mr. Weyers in the Deferred Compensation Plan for Non-Employee Directors, and 36,250 shares held in limited partnerships to which Mr. Weyers is general partner. |
| 18 | Includes exercisable options to purchase 42,300 shares of their 2017 cash director fees were remitted to thecommon stock, 6,783 shares Mr. Witczak owns in his Nicolet 401(k) plan, and used by the plan1,748 shares of unvested restricted stock. Mr. Witczak is a non-director named executive officer. |
| 19 | Includes outstanding common stock, exercisable options to purchase the Company441,435 shares of common stock, on behalfand all shares of the director, except for Mr. Murphy who elected to defer 75% of his director compensation, and Messrs. Fulwiler, Ghidorzi, Jeanquart, and McClone who elected to defer 50% of their director compensation.unvested restricted stock. |
| 1 | The named director was not re-nominated for election to the board in May 2017. |
| 2 | The named director became a Nicolet director on April 28, 2017, corresponding with the First Menasha Bancshares, Inc. merger. |
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The Compensation Committee prepared the following Compensation Discussion and Analysis to provide you with information we believe will be helpful to understand our executive compensation policies and decisions as they relate to the compensation for 2018 of our chief executive officer, chief financial officer, and other executive officers included in the Summary Compensation Table, collectively referred to in this proxy statement as our “named executive officers”.
Our compensation philosophy and the objectives of our compensation decisions and administration are grounded in our values, vision and mission. The following paragraphs summarize this philosophy and these objectives. We also describe actions regarding compensation taken before 2018 when it may enhance the understanding of our executive compensation program, particularly given our belief in the use of equity awards as a meaningful contributor to both performance and compensation.
Executive Compensation PhilosophyThe Company and Summary
Nicolet has a distinctly entrepreneurial approach to its executive compensation philosophy, which has included the use of episodic equity-based incentives at the inception of identified performance periods (typically based on a
five yearfive-year strategic
vision)vision and a five-year vesting period), in addition to competitive base salaries, annual target incentives (typically based on a percentage of salary, a portion to be paid immediately in cash and
for a select group, a portion in equity
awards usuallywhich is generally a restricted stock grant vesting
within three years)one-third immediately and one-third each of the following two anniversaries of the initial grant) and competitive benefits.
This complementThese components of compensation
rewardsreward individual actions and performance;
providesprovide a mix of short-term and long-term compensation;
allowsallow us to attract, retain and motivate high-quality, skilled executives; and
payspay for positive performance over the longer term that is in alignment with
the Company’sour vision, strategic plans, and
shareholders.shareholder interests. The Board of Directors views
these substantialour substantive episodic equity grants as key to alignment with and integral to the stock price performance shareholders have historically realized.
As part
We use executive compensation to drive continued improvement in superior operating and financial performance, and to reward our executives appropriately for contributing to that performance. We believe our compensation program strongly correlates to long-term shareholder value creation. It incentivizes named executive officers to work for the long-term sustained prosperity of the establishmentCompany, and reflects an aligned pay-for-performance philosophy.
The Compensation Committee
The Compensation Committee, comprised of independent directors, believes that our executive compensation program is appropriately designed to achieve our objectives, responsibly aligned with the best interests of our shareholders, and is reasonable when reviewed in 2017context with the executive programs of our peer group companies.
As further described under “INFORMATION ABOUT THE BOARD OF DIRECTORS - Board Committees and Meetings,” the primary purpose of the Compensation Committee (sometimes also referred to within this Compensation Discussion and Analysis section as “the Committee”) is to discharge the responsibilities of Nicolet’s Board related to compensation to be paid to executive officers and directors, as well as to review and administer the Company’s incentive plans, including making grants under those plans. The Committee makes compensation related recommendations to the Board regarding Nicolet’s executive officers while considering actual results versus performance targets.
As shareholders,the Committee is focused on sustaining and improving operational and financial results, which we believe will translate to long-term shareholder value. To support this objective, we design and oversee our executive compensation programs to promote attainment of our annual and longer-term business goals, while appropriately balancing potential rewards for superior performance with minimizing risks to our shareholders. The Committee seeks to compensate our executives in a long termfair, reasonable and competitive manner, and be consistent with the underlying principles that frame our compensation philosophy described throughout this EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS section.
Additionally, the Committee is responsible for making recommendations to the Board for compensation of Board members.
Our Compensation Philosophy is Grounded in our Values, Vision, and Mission
Nicolet was founded upon five core values (Be Real, Be Responsive, Be Personal, Be Memorable, and Be Entrepreneurial) which are embodied within each of our employees and create a distinct competitive positioning in the markets within which we operate. Our mission is to be the leading community bank within the communities we serve, while our vision is to optimize the long-term
return to our customers and communities, employees and shareholders. Collectively, these embed a long-term focus in our leadership and business model.
This long-term focused compensation positioning may contrast with other banks, which is described in more detail below. Our compensation programs are weighted heavily toward long-term option-based equity rewards which result from shareholder value creation rather than those which tie a preponderance of rewards to a few short-term metrics, creating a short-term mentality that may not serve the long-term interests of the Company. As such, awarding our executives with periodic large grants of stock options ties them to our value of "Be Entrepreneurial," as our executives only realize value from these episodic option grants in the event the stock price appreciates. This links their personal compensation levels to the increase in value the shareholders realize over time.
Our History Underlying Executive Compensation
Since its founding in 2000, Nicolet has believed in aligning employees with shareholder interests over the long-term through ownership, and our incentive programs have historically included a larger than conventional ratio of equity-based incentives as a percentage of total compensation, primarily in the form of stock options.
The value to the employee of any stock option granted is maximized only when success is sustained, and reflected through a rising stock price, which aligns with value creation for our shareholders over the long-term.
Opportunities for equity as a component of overall compensation for our executive and leadership groups are not granted on an annual or any preset periodic basis, but rather in an episodic fashion as significant progress is made against our strategic plan objectives and goals, and as we elevate these goals to the next threshold of achievement. Such episodic grants are based on multi-year objectives. As the full initial estimated accounting value of the grant is reflected in the Summary Compensation Table only in the year of grant, a larger grant may appear disproportionate in the year of grant while preceding or subsequent years may show no grant or value. In reality, it is the performance of the subsequent years which will determine the real value of the stock option awarded to the recipient. Stock options are typically awarded with a five-year vesting schedule and ten-year redemption window, while restricted stock, when granted episodically, has typically been awarded with five or ten-year vesting. We also grant restricted stock as a portion of the annual variable incentive bonus program for a limited number of executives.
The following provides a summary of our historical episodic stock option grants.
Startup and Founding Period (2000 to 2005):As a de novo bank which opened in November 2000, Nicolet could not afford to adequately compensate its founders, Robert Atwell and Michael Daniels, or potential employees in salary and/or cash bonuses for their seasoned talent and the personal risk they would take by leaving stable employment with other banks to join a startup company. Therefore, to motivate and incent the founders and early employees, the Board awarded stock options broadly in the formative years (between 2000 and 2004) to hire talent that was required to create and support the significant growth of Nicolet during this period.
Positioning into and out of the Financial Crisis Period (2005 - 2011): The second significant award of stock options came in 2005 when Nicolet’s strategy was refined to shift from startup growth to profitable growth. Strong progress on growth and profitability was made. However, when the financial crisis emerged in 2008, the strategic plan changed to capital preservation and realistic asset quality resolution, so we could emerge from the crisis quickly and as strong as possible. In late 2008, the Board accepted preferred stock issued through a U.S. Treasury program and privately raised additional common equity (primarily from our Board members) to elevate the Company's capital. Between 2008 and 2011, Nicolet still grew its loan portfolio modestly, reaffirming its commitment to the communities we serve, and remained profitable each year, albeit minimally, while dealing proactively with asset quality issues. Executive compensation was severely restricted under the U.S. Treasury program. Our founders received either zero or modest cash and no equity incentive compensation for 2008 through 2011. In 2009, to ensure retention of other key personnel to work through the challenges of the recession, a substantial stock option grant was made to a broad group of leaders excluding the founders.
Accelerating Growth (2011 - 2016): Nicolet emerged from the recession in a much stronger and more stable position than most community banks in the country, and Nicolet's strategy was then further refined to capitalize on opportunistic growth. Nicolet used this period to acquire assets through mergers and acquisitions (“M&A”). Assessments of several M&A candidates were conducted in 2011. From 2012 through 2016, Nicolet announced five acquisitions (four banks and one financial advisors transaction) and redeemed all the Company's preferred stock. During this time, the Company grew from $678 million in assets to over $2.3 billion in assets, listed on NASDAQ, and saw significant increases in net income levels (with return on average assets from 0.23% to 0.95%) and share price (up 189% between year-end 2011 and 2016). These M&A successes, coupled with continued improvement in our operational results and market share growth across our expanded footprint, resulted in strong profitable results
and the foundation to deliver superior sustainable results. In early 2012 (and again in 2014 through 2016 for progress achieved), significant equity awards were granted to the founders and a broad group of key leaders who were driving (and achieving) this period of growth through M&A. Awarding stock options principally on the front end of the long-term goal was motivational and subsequently more rewarding to the recipients, as they participated in the appreciation of the stock price along with shareholders during this high performance period.
Optimization and Succession (2017 and beyond): In late 2016, after the successful integration of the noted acquisitions, the Board reviewed the strategic plan to advance Nicolet’s position into the future. The Board refined its strategic objective to “Be a profitably focused bank doubling in size over 5 years through targeted acquisition growth and smart organic growth across all our revenue lines, while remaining committed to share price return and active supportive capital management.” This review also resulted in heightened focus on succession planning for leadership positions throughout the Company. The Committee met several times to review incentive compensation that would appropriately support our strategic and succession sequencing plans, and which would serve to motivate, retain, and reward leadership to achieve the challenging growth, performance and succession plan targets. As an outcome of those reviews, in May 2017, the Committee granted 0.8 million stock options to a group of nearly 40 leaders (including the founders) to continue to incent leadership actions to drive outstanding results and create additional shareholder value. The 2017 results were exceptional compared to 2016, including the consummation of a bank acquisition previously announced, organic loan and deposit growth, favorable asset quality metrics, growing earnings (with net income 80% higher and diluted earnings per common share 41% higher than 2016), strong returns (with return on average assets of 1.25% and return on average tangible common equity of 15.24% for 2017), and rising stock price (15% over year-end 2016). For 2018 results, see "2018 Summary Financial Results."
Objectives of the Compensation Program
In designing and implementing the compensation program for our executive officers, we primarily intend to:
attract, motivate and retain highly-skilled executives in a competitive environment;
provide appropriate financial incentives for results, which align the financial interests of our executives and shareholders, and inspire and reward behavior that promotes sustainable growth in shareholder value;
balance base compensation with pay-for-performance compensation by ensuring that a significant portion of total compensation is determined by financial operating results and creation of shareholder value; and
motivate our executives to manage the business to generate positive short-term results while striving toward the achievement of long-term objectives without creating unnecessary or excessive risks to the Company.
The design of our compensation program incorporates compensation components that are widely used by companies within our industry, and are applied in combination to achieve the objectives noted above. Within our peer group companies, the mix of components as a percentage of total executive compensation varies, and our program is more heavily weighted toward appreciation-based equity in the form of stock options to reward our executives when they create significant and sustained performance above industry averages, thereby creating shareholder value. We believe that providing high impact leaders, including our named executive officers, with opportunities to share in the Company’s value creation for its shareholders over a longer period through the use of equity awards is not dilutive, but rather accretive in aligning with our stakeholders over the longer term, and in creating a greater shared return for all those who invest in our Company through their patronage, time, effort and/or financial investment.
Pay for Performance Criteria and Process
Paying for performance is the foundation of our incentive compensation philosophy. We believe shareholder value creation, most visible in our stock price trends over time, is driven by sustained business performance in the areas of Growth, Profitability and Soundness, as measured through a number of quantitative and qualitative components. We believe that this approach results in superior long-term value creation compared to an approach that relies on a few selected objective metrics in any single year. Therefore, the following areas are considered when determining incentive awards. However, annual incentive awards are ultimately discretionary and are not made based solely on a formulaic calculation. For additional information see "2018 Summary Financial Results."
Growth - Assets, Loans, Deposits, M&A-based growth, Innovation, Relevance to markets
Profitability - Traditional metrics (such as net income, earnings per share, return on average assets, return on equity or tangible equity); Revenue growth; Expense management; Share management
Soundness - Asset quality, Core deposits, Capital, Risk Management
The Committee and the Board of Directors exercise discretion when awarding incentives, by evaluating Company and individual performance in a holistic fashion, taking into account actual results and achievements in the above three areas against our strategic objectives, expectations and improvements over the prior year; overall industry and marketplace conditions; and readiness for continued and future goal attainment in line with our strategic plans.
In addition to the absolute quantitative measurement of financial results in the above three areas, we also evaluate the qualitative nature (the quality and soundness) of our results. This approach serves to mitigate risks that employees might take to achieve a single numerical goal that would threaten the long-term health and viability of the Company.
Additionally, the Company’s incentive compensation philosophy clearly specifies that any and all cash bonus payments, retention awards, and/or equity incentive compensation which may be paid to executive officers are subject to recovery or “clawback” by the Company if such payments were based on financial statements or other performance metric criteria which are later found to be materially inaccurate. For additional information on this policy, see "Clawback Policy."
Components of our Compensation Program
To achieve the objectives of our compensation program, we use a mix of compensation components evaluated individually and in total, including:
Base salary - competitive fixed pay commensurate with experience and performance (evaluated in context of the industry and our peer group's base salary for equivalent roles);
Annual variable incentive bonus - represented as a target percentage of salary, with a portion in cash and, in addition, a portion in restricted stock (which vests one-third immediate and one-third on the next two anniversary dates), payable for attainment of 100% of plan goals. We may pay beyond target for overperformance (though in practice we cap this at 150% of target) or below target for underperformance against our various metrics and other achievements;
Long-term equity incentives - awarded in the form of stock options (see the previous discussion under "Our History Underlying Executive Compensation" for additional detail) and/or restricted stock awards with multi-year vesting periods (stock options are not granted on an annual or any set periodic basis, but rather typically tied to inception of, or progress on, longer-term strategic plans);
Severance and change in control benefits;
Other benefits or perquisites offered to some or all of our full-time employees.
The Committee determines the level and percentage mix of compensation components it believes is appropriate for each executive, taking into account specific responsibilities within the Company, and similarly situated executive compensation within our peer group companies. We review the talent and expertise necessary to achieve our objectives, and specific expected performance outcomes for the year.
The Committee has a flexible allocation policy for determining the allocation between cash and non-cash compensation for executives in any given year. We utilize target percentages of salary defined for our short-term annual variable incentive program. See "Annual Variable Incentive Bonus" for more detail.
The Committee believes that tying executive rewards to equity in the Company motivates and rewards executives to strive for results that create greater shareholder value over longer term periods, and in addition serves to elevate these organizational dynamics:
promoting growth, soundness, profitability, risk mitigation, and expense control required to accomplish our strategic long-term plans;
encouraging consistent superior results by providing a meaningful incentive; and
supporting elevated collaboration, and teamwork among employees.
Role of Management with our Compensation Committee
The Committee solicits and considers the performance evaluations and compensation recommendations submitted for various senior officers by the Company's Chief Executive Officer, Robert Atwell and the Bank’s Chief Executive Officer, Michael Daniels. In the case of Messrs. Atwell and Daniels, the Compensation Committee evaluates performance and determines compensation to recommend to the Board of Directors.
Human Resources and certain other departments work to design, develop and administer our compensation programs. These departments can make recommendations to the Compensation Committee. This may include changes or adjustments to existing compensation programs, and recommendations of financial and other performance targets to be achieved under those programs. These departments also prepare analyses of financial data or other briefing materials for the Committee to ultimately assist in the implementation of decisions reached by the Committee and the Board of Directors.
Role of our Independent Compensation Consultant to our Compensation Committee
In 2018, the Committee directly engaged the services of the Blanchard Consulting Group (“Blanchard”), an independent compensation consulting company focused on the banking industry. The Committee reviewed the independence of Blanchard and determined that there are no conflicts of interest. Blanchard reports directly to the Committee, and management has not retained its own consultant. Blanchard periodically attends meetings of the Compensation Committee, physically or by phone, and with or without management present.
Blanchard assists the Committee in, among other things, applying our compensation philosophy for our executive officers and non-employee directors, analyzing current compensation conditions in the marketplace generally and among our peers specifically, and assessing the competitiveness and appropriateness of compensation levels for our executive officers. For the Committee’s use in 2018, Blanchard produced comprehensive reviews of both board compensation and executive total compensation, which, among other things, evaluated Nicolet’s board compensation and pay of its named executive officers to that of a custom peer group, as well as against regional and national banking survey and Blanchard database information. To provide supplemental information, Nicolet also participated in several compensation surveys with firms other than Blanchard.
In connection with its benchmarking and peer group comparison work, the Committee used data from the Blanchard banking industry compensation survey, the specific peer group data, and other financial industry focused compensation surveys to assist with its pay decisions. The peer group for 2018 included these nineteen entities:
|
| |
| Lakeland Financial Corporation | First Financial Corporation |
| Great Southern Bancorp, Inc. | First Mid-Illinois Bancshares, Inc. |
| Community Trust Bancorp, Inc. | Independent Bank Corporation |
| QCR Holdings, Inc. | United Community Financial Corp. |
| Horizon Bancorp, Inc. | Old Second Bancorp, Inc. |
| Peoples Bancorp Inc. | Farmers National Banc Corp. |
| Mercantile Bank Corporation | West Bancorporation, Inc. |
| Stock Yards Bancorp, Inc. | Macatawa Bank Corporation |
| MidWestOne Financial Group, Inc. | Southern Missouri Bancorp, Inc. |
| German American Bancorp, Inc. | |
Blanchard assisted us in reviewing and refining our peer group for 2018, which is comprised of banks of similar characteristics (size, regional proximity, publicly traded, and similar business model); the Committee then compared selected financial metrics and other information of the peer group for additional context of company performance and executive pay.
For the review of executive compensation against benchmarking data, the Committee reviewed the following summary by Blanchard:
Total cash compensation = base salary + Annual cash incentives / bonus;
Direct compensation = Total cash compensation + Three-Year average equity awards*; and
Total compensation = Direct compensation + Other compensation + Retirement Benefits / Perquisites
*Note - Blanchard used a three-year average look-back of equity granted in years 2015-2017 by the 19 peer banks and Nicolet in the study. For Nicolet, that three-year period included episodic equity grants (especially in 2017) meant to cover a longer forward period.
The Committee’s evaluation of the peer group comparison and Blanchard’s assessment of Nicolet’s compensation practices and levels concluded:
Nicolet’s financial performance was very strong versus peers.
Nicolet has adequate and appropriate compensation tools available to attract, motivate and retain high-quality, skilled executives and to provide a mix of short- and long-term compensation opportunities.
“Total cash compensation” of the named executive officers was competitive to peers, but not excessive.
For “Direct compensation,” Nicolet was the highest of the peer group, attributable primarily to its entrepreneurial culture and practice of awarding episodic stock option grants to cover longer-term intervals (particularly in 2017), compared to peers who granted less equity or granted equity more ratably over multiple years. The Committee and the Board view these episodic equity incentive grants as a differentiator and a key in aligning interests and outcomes of Company leaders and shareholders.
“Total compensation” supports that Nicolet has competitive executive benefits.
2018 Summary Financial Results
2018 was an exceptional year for our Company, led by solid growth, margin discipline and sterling asset quality. The following table highlights the 2018 results relative to 2017 results for selected Growth, Profitability, and Soundness metrics. These and other performance results and achievements are evaluated in a holistic manner, and met or exceeded 2018 expectations.
|
| | | | | | | | |
| Metric | 2018 Results | 2017 Results | Change 2018 vs 2017 |
| Growth: | | | |
| Average loans (in millions) | $ | 2,127 |
| $ | 1,899 |
| 12 | % |
| Average core deposits (in millions) | $ | 2,418 |
| $ | 2,109 |
| 15 | % |
| Net interest income (in millions) | $ | 106.6 |
| $ | 98.7 |
| 8 | % |
| Profitability: | | | |
| Net income (in thousands) | $ | 41,036 |
| $ | 33,150 |
| 24 | % |
| Diluted earnings per common share | $ | 4.12 |
| $ | 3.33 |
| 24 | % |
| Return on average assets | 1.38 | % | 1.25 | % | 13 bps |
|
| Return on average common equity | 11.04 | % | 9.96 | % | 108 bps |
|
| Return on average tangible common equity | 16.73 | % | 15.24 | % | 149 bps |
|
| Soundness: | | | |
| Nonperforming assets to total assets | 0.19 | % | 0.49 | % | (30) bps |
|
| Net charge-offs to average loans | 0.05 | % | 0.08 | % | (3) bps |
|
| Tangible common equity / Tangible assets | 8.83 | % | 8.41 | % | 42 bps |
|
The 2018 results above were outstanding compared to 2017. Earnings and asset quality were very strong. Capital was managed to support strong returns (including $22 million of common stock repurchases during 2018), maintain readiness for potential acquisition opportunities and cover potential risks. The Company added to its capital flexibility by filing a shelf registration for up to $100 million during 2018. While it was the first year since 2011 without an announced or closed acquisition, we remained proactive in evaluating potential targets. At December 31, 2018, Nicolet had assets of $3.1 billion, loans of $2.2 billion, deposits of $2.6 billion, and equity of $387 million, exceeding 2017 by 6%, 4%, 6%, and 6%, respectively, evidencing solid organic growth. We made notable strides as well in improving individual executive development, overall organizational development, and refinement of succession planning to ensure continued and sustained success over the longer term. We continued to invest in the future, including process improvements, website redesign, branch facility upgrades, and innovation investments. Our stock price was down 11% to $48.80 as of December 31, 2018, which was not in line with our expectations based on 2018 performance. However, for comparison purposes, our price decline was less than that of both the SNL U.S. Bank Index (down 19%) and our peer banks (down 15%) between year-end 2017 and 2018.
2018 Executive Compensation Components and Decisions
Base Salary
When the Committee considers executive base salaries on an annual basis, it considers each executive’s role and level of responsibility, along with base salary levels of similarly situated executives employed by peers or in the industry. An individual’s base salary may vary relative to the market data available, as the Committee also incorporates other factors such as performance review, experience level, business challenges unique to a particular year, and other considerations into the final salary decisions that are made. For 2018, the Committee increased the base salaries over 2017 by 4.9% for Messrs. Atwell and Daniels, and salaries
were increased 10.0% for Ms. Lawson, 10.2% for Mr. Witczak and 11.1% for Mr. Hutjens over 2017. The merit increases were reasonable to the Committee based on each executive's development, 2017 superior results, peer group positioning, and the Company’s growth.
Annual Variable Incentive Bonus
The Board of Directors approved the 2018 performance objectives at the beginning of the year, and the Compensation Committee confirmed that for 2018, the annual incentive bonus targets, expressed as a percentage of salary, for the named executive officers would be 75% (i.e. 50% cash and 25% equity) for Messrs. Atwell and Daniels, and 40% (i.e. 30% cash and 10% equity) for Ms. Lawson and Messrs. Witczak and Hutjens, which is unchanged from the prior year. The Committee judged the targets to be appropriate considering each executive’s experience level and the duties and responsibilities assumed by each executive.
Based on the outstanding results for 2018 (see "2018 Summary Financial Results") and each individual’s performance assessment, the Committee awarded a 150% multiple of target (cash and equity) incentive for each named executive officer. The Committee determined that the significant achievements in 2018 and the progress toward the long-term strategy warranted an assignment of 150% of the targeted incentive bonus for those executives and leaders that were rated as high performers via individual performance review. The restricted stock values reflected in the Summary Compensation Table are the equity portion of the annual variable incentive bonus.
Long-Term Equity Incentives
There were no episodic equity-based stock option incentives awarded to the named executive officers in 2018. As a component of a strategic long-term goal set in 2016, including a succession sequencing plan, objectivesregarding growth, both organic and acquisition, the Board granted episodic options in 2017 to a broaderbroad base of leaders, including the named executive officers, to cement alignment of interestalign interests and outcomes with that of Companyour shareholders. During 2017, 0.9 million options, with five year vesting, were grantedSee the previous discussion under “Our History Underlying Executive Compensation” for additional details.
Perquisites and Other Benefits
We limit the perquisites provided to
nearly 40our named executive officers. We believe that providing excessive perquisites to executive officers is inappropriate and could negatively impact the positive culture we have created over the Company's history. The named executive officers participate in Nicolet’s broad-based employee benefit plans, such as the 401(k) Plan, the Employee Stock Purchase Plan, and medical, dental, disability and life insurance coverage programs, under the same terms as other eligible employees. A few perquisites, such as country club memberships, supplemental health coverage, and company automobiles or auto allowances are provided to a few select employees, which may include some of the named executive officers as well as other selected
leaders, underscoring both the opportunity and responsibility to deliver excellent results on a sustainable basis. This action is consistent with option grants authorized throughout the Company’s history, and the Company’s entrepreneurial culture.Summary of Compensation
The following table provides certain summary information concerning the compensation paid or accrued byofficers. Selected officers participate in our Nonqualified Deferred Compensaton Plan. Under this Plan, the Company, andin its subsidiariesdiscretion, may make nonelective contributions to orthe Plan on behalf of an eligible employee (“employer contribution”). Largely as retention-based compensation, the Committee approved several employer contributions for 2018, including $50,000 for Ms. Lawson (vesting over 4 years) and Messrs. Witczak and Hutjens (vesting over 5 years). The benefits and perquisites provided to the named executive officers are included in the Summary Compensation table, described under the column titled “All Other Compensation.”
We do not provide a defined benefit pension plan, post-retirement health coverage (other than certain COBRA benefits), or similar benefits for our executive officers or other employees.
Stock and Benefit Plan Summaries
The Company’s stock-based compensation plans are described below. The Committee oversees the plans and grants equity awards in accordance with the plan documents to certain officers, employees and directors of the Company.
2002 Stock Incentive Plan. The Company’s 2002 Stock Incentive Plan, as subsequently amended with shareholder approval, reserved a total of 1,175,000 shares of the Company’s common stock for potential stock options. This plan became fully utilized during 2012; no further awards may be granted under this plan. Under this plan at December 31, 2018, approximately 372,000 option grants were outstanding, of which 285,000 were exercisable.
Acquired Equity Incentive Plan. In 2016, Nicolet assumed sponsorship of an equity incentive plan of an acquired company to allow for that company’s already granted awards that became exercisable upon acquisition to be honored. No further awards may be granted under this plan, and at December 31, 2018, approximately 17,000 option grants remain outstanding and exercisable.
2011 Long-Term Incentive Plan (“2011 LTIP”). The Company’s 2011 LTIP, as subsequently amended with shareholder approval, has reserved 1,500,000 shares of the Company’s common stock for potential stock-based awards. This plan provides for certain stock-based awards such as, but not limited to, stock options, stock appreciation rights and restricted common stock, as well as cash performance awards. Under this plan at December 31, 2018, approximately 1.2 million option grants were outstanding, of which 0.3 million were exercisable and approximately 30,000 restricted shares remain unvested. As of December 31, 2018, approximately 127,000 shares were available for grant under the 2011 LTIP. On February 19, 2019, the Board approved, subject to shareholder approval, an amendment to the 2011 LTIP to increase the number of shares of the Company's common stock available for potential stock-based awards from 1,500,000 to 3,000,000. The requested increase is expected to address the equity incentive needs of the Company, which has more than doubled in asset size since the beginning of 2016, for the next three years based upon current growth projections. See "Proposal 3 - APPROVAL OF THE AMENDMENT TO THE NICOLET BANKSHARES, INC. 2011 LONG-TERM INCENTIVE PLAN."
Nonqualified Deferred Compensation Plan. The Company sponsors a deferred compensation plan for certain key management employees. Under this plan, eligible employees designated by the Board of Directors through the actions of the Compensation Committee may elect to defer compensation (up to 75% of base salary and up to 100% of an annual cash bonus) and the Company may, at its discretion, make non-elective contributions on behalf of one or more eligible plan participants. Upon retirement, termination of employment or at their election under a defined fixed period, the employee shall become entitled to receive the deferred amounts plus earnings thereon. Contributions under the deferred compensation plan for the benefit of our named executive officers are reflected in the “All Other Compensation” column of the Summary Compensation Table. Also see the table, Nonqualified Deferred Compensation 2018. The nonqualified deferred compensation plan agreements are “unfunded” general contractual obligations of Nicolet and are subject to the claims of our creditors. If Nicolet were to become insolvent, the participants would be unsecured general creditors of Nicolet. The Committee believes this form of at risk compensation helps align the interests of plan participants with the long-term interests of Nicolet, its debt holders, and its stockholders.
In addition to the compensation plans discussed above, the Company has a number of broad-based employee benefit plans as further described below. The Committee oversees these plans.
Nicolet 401(k) Plan. Nicolet sponsors a tax-qualified 401(k) savings plan under which eligible employees may choose to save up to 100% of salary compensation on either a pre-tax or after-tax basis, subject to certain IRS limits. Under the plan, the Company matches 100% of participating employee contributions up to 6% of the participant’s gross compensation. The Company contribution vests over five years. The Company can make additional annual discretionary profit sharing contributions, as determined by the Board of Directors, with the last such contribution made in 2017 for eligible employees at year-end 2017. There were no discretionary profit sharing contributions made in 2018. Contributions under the 401(k) Plan for the benefit of our named executive officers are reflected in the “All Other Compensation” column of the Summary Compensation Table.
Employee Stock Purchase Plan. The Company sponsors an employee stock purchase plan under which eligible employees may purchase Nicolet common stock at a 10% discount, utilizing payroll deductions that range from a minimum of $20 to a maximum of $400 per payroll, during offering periods (currently quarterly).
Tax Considerations
The accounting and tax treatment of particular forms of compensation do not materially affect our Compensation Committee decisions. However, we are aware of these considerations.
Generally, Section 162(m) of the Internal Revenue Code disallows a federal income tax deduction for public corporations with respect to remuneration in excess of $1 million paid in any fiscal year to certain specified executive officers. For taxable years beginning before January 1, 2018, these executive officers consisted of a public corporation’s chief executive officer and
its two next most highly compensatedup to three other executive officers.
Summary Compensation Table
Name and
Principal Position | | Year | | Salary | | | Bonus1 | | | Stock
Awards2 | | | Option
Awards2 | | | All Other
Compensation | | | Total | |
| | | | | | | | | | | | | | | | | | | | | |
| Robert B. Atwell | | 2017 | | $ | 472,000 | | | $ | 354,000 | | | $ | 177,062 | 6 | | $ | 4,686,368 | 6 | | $ | 45,023 | 3 | | $ | 5,734,453 | |
| Chairman, President, and Chief | | 2016 | | $ | 360,000 | | | $ | 270,000 | | | $ | 267,035 | 6 | | $ | -0- | | | $ | 80,380 | 3 | | $ | 977,415 | |
| Executive Officer, Nicolet Bankshares, Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Michael E. Daniels | | 2017 | | $ | 472,000 | | | $ | 354,000 | | | $ | 177,062 | 6 | | $ | 4,686,368 | 6 | | $ | 54,527 | 4 | | $ | 5,743,957 | |
| President and Chief Executive | | 2016 | | $ | 360,000 | | | $ | 270,000 | | | $ | 267,035 | 6 | | $ | -0- | | | $ | 86,804 | 4 | | $ | 983,839 | |
| Officer, Nicolet National Bank | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Eric J. Witczak | | 2017 | | $ | 245,000 | | | $ | 110,250 | | | $ | 36,729 | 7 | | $ | 833,598 | 7 | | $ | 147,774 | 5 | | $ | 1,373,351 | |
| Executive Vice President, Nicolet National Bank | | * | | | | | | | | | | | | | | | | | | | | | | | | |
*Information Pursuant to the Tax Cuts and Jobs Act of 2017, for Mr. Witczaktaxable years beginning after December 31, 2017, the remuneration of a public corporation’s chief financial officer is shownalso subject to the deduction limit. In addition, the exception to the $1 million deduction limit for 2017 only. He“performance based compensation” is no longer available. Consequently, for fiscal years beginning after January 1, 2018, no remuneration paid to a specified executive in excess of $1 million will be deductible. For 2018, an estimated $200,000 of compensation collectively paid to Messrs. Atwell and Daniels was not onedeductible.
In designing our executive compensation programs and determining the compensation of our executive officers, the Compensation Committee considers a variety of factors, including the potential impact of Section 162(m); however, the Committee will not limit executive compensation to that which is or may be deductible under Section 162(m). The deductibility of some types of compensation depends upon the timing of an executive officer’s vesting or exercise of previously granted rights or awards. Further, interpretations and changes in tax law and other factors beyond the Compensation Committee’s control may also affect the deductibility of compensation.
To maintain flexibility to compensate our executive officers in a manner designed to promote our short-term and longer-term goals, the Committee has not adopted a policy that all compensation must be deductible. The Committee believes that our shareholder’s interests are best served if its discretion and flexibility in awarding compensation is not restricted, even when some compensation awards may result in a nondeductible compensation expense.
Stock Ownership Guidelines and Holding Requirements for Executive Officers
While we do not set strict targets for ownership of our stock, we strongly encourage ownership of the top twoCompany’s stock to all employees and expect our named executive officers to set positive examples. Equity awards, when granted episodically in the form of restricted stock grants or stock option awards, carry a vesting period requiring the executive’s continued employment to fully realize value from such awards, and most typically carry a 5-year vesting schedule.
Clawback Policy
We have a clawback policy applicable to selected officers, which include, among others, all our named executive officers. Pursuant to this policy, the Committee shall in all appropriate circumstances, require reimbursement of any bonus payment (that is, any and all cash bonus payments, retention awards and/or equity incentive compensation) to a selected officer where the payment awarded was based on financial statements or other performance metrics which are later found to be materially inaccurate. We feel this clawback policy is appropriate and assists with risk mitigation throughout our Company.
Short Sale and Hedging Policy
Pursuant to our insider trading policy, Nicolet considers it improper and inappropriate for executive officers and directors to engage in short-term or speculative transactions in Nicolet’s securities or in other transactions in Nicolet’s securities that may lead to inadvertent violations of insider trading laws. Hence, no executive officer or director may at any time sell any securities of Nicolet that are not owned by such person at the time of the sale, buy or sell shares of Nicolet common stock outside of “safe harbor” periods following public disclosure of the Company’s results, or engage in hedging transactions involving securities of Nicolet.
Nicolet Compensation of Named Executive Officers
The following table sets forth all compensation paid for each of the last three fiscal years ended December 31, 2018, to our chief executive officer, chief financial officer, and the next three most highly compensated executive officers
in 2016.serving at the end of 2018, collectively our "Named Executive Officers" or "NEOs".
Summary Compensation Table |
| | | | | | | | | | | | | | | | | | | |
Name and Principal Position | Year | Salary | Bonus 1 | Stock Awards 2 | Option Awards 2 | All Other Compensation 3 | Total |
| Robert B. Atwell | | | | | | | |
| Chairman, President, and Chief Executive Officer, Nicolet Bankshares, Inc. and Chairman of Nicolet National Bank | 2018 | $ | 495,000 |
| $ | 371,250 |
| $ | 185,637 |
| $ | — |
| $ | 48,422 |
| $ | 1,100,309 |
|
| (Principal Executive Officer) | 2017 | $ | 472,000 |
| $ | 354,000 |
| $ | 177,062 |
| $ | 4,686,368 |
| $ | 45,023 |
| $ | 5,734,453 |
|
| | 2016 | $ | 360,000 |
| $ | 270,000 |
| $ | 267,035 |
| $ | — |
| $ | 80,380 |
| $ | 977,415 |
|
| Michael E. Daniels | | |
| |
| |
| |
| |
| |
|
| Executive Vice President and Secretary of Nicolet Bankshares, Inc. and President and Chief Executive Officer, Nicolet National Bank | 2018 | $ | 495,000 |
| $ | 371,250 |
| $ | 185,637 |
| $ | — |
| $ | 57,290 |
| $ | 1,109,177 |
|
| | 2017 | $ | 472,000 |
| $ | 354,000 |
| $ | 177,062 |
| $ | 4,686,368 |
| $ | 54,527 |
| $ | 5,743,957 |
|
| | 2016 | $ | 360,000 |
| $ | 270,000 |
| $ | 267,035 |
| $ | — |
| $ | 86,804 |
| $ | 983,839 |
|
| Ann K. Lawson | | |
| |
| |
| |
| |
| |
|
| Chief Financial Officer, Nicolet Bankshares, Inc. and Nicolet National Bank | 2018 | $ | 275,000 |
| $ | 123,750 |
| $ | 41,269 |
| $ | — |
| $ | 79,922 |
| $ | 519,941 |
|
| (Principal Financial Officer) | 2017 | $ | 250,000 |
| $ | 112,500 |
| $ | 37,422 |
| $ | 833,598 |
| $ | 133,872 |
| $ | 1,367,392 |
|
| | 2016 | $ | 230,000 |
| $ | 75,000 |
| $ | — |
| $ | 111,130 |
| $ | 32,906 |
| $ | 449,036 |
|
| Eric J. Witczak | | | | | | | |
| Executive Vice President, Nicolet National Bank | 2018 | $ | 270,000 |
| $ | 121,500 |
| $ | 40,514 |
| $ | — |
| $ | 96,261 |
| $ | 528,275 |
|
| | 2017 | $ | 245,000 |
| $ | 110,250 |
| $ | 36,729 |
| $ | 833,598 |
| $ | 147,774 |
| $ | 1,373,351 |
|
| | 2016 | $ | 225,000 |
| $ | 101,250 |
| $ | — |
| $ | 166,695 |
| $ | 46,518 |
| $ | 539,463 |
|
| Brad V. Hutjens | | | | | | | |
| Executive Vice President, Chief Credit Officer, and Chief Compliance & Risk Manager, Nicolet National Bank | 2018 | $ | 250,000 |
| $ | 112,500 |
| $ | 37,490 |
| $ | — |
| $ | 66,878 |
| $ | 466,868 |
|
| | 2017 | $ | 225,000 |
| $ | 101,250 |
| $ | 33,784 |
| $ | 833,598 |
| $ | 116,578 |
| $ | 1,310,210 |
|
| | 2016 | $ | 200,000 |
| $ | 90,000 |
| $ | — |
| $ | 111,130 |
| $ | 16,278 |
| $ | 417,408 |
|
|
| | |
| 1 |
| All bonuses are reported in the year earned. |
| 2 | 2
| Reflects the fair value of restricted stock and ofstock options on the date of grant, calculated in each case in accordance with applicable accounting guidance and based on assumptions set forth in Notes 1 and 1311 of the Notes to Consolidated Financial Statements in the Company’s annual report on Form 10-K. |
| 3 | Includes $16,200
| All Other Compensation as reported in this column includes: 401(k) company match contributions, company amounts contributed to employee nonelective retirement subaccounts, supplemental employer health benefit, and $15,900 of 401(k) company-matching contributions for 2017other perquisites and 2016, respectively, and $30,600 of director fees for 2016. Amounts in other compensation also include lifepersonal benefits each less than $10,000 individually (life insurance premiums, auto allowances, supplemental insurance coverage, club memberships, employer health contributions, and group term life insurance.insurance). The Company amounts contributed to the employee nonelective retirement subaccounts in 2018 are subject to a 4-year ratable vesting schedule for Ms. Lawson and a 5-year ratable vesting schedule for Messrs. Witczak and Hutjens. The amounts of All Other Compensation for 2018 are detailed in the table below. |
|
| | | | | | | | | | | | | | | |
| Name | 401(k) Company Match Contribution | Company Amounts Contributed to Nonelective Retirement Subaccount | Supplemental Employer Health Benefit | Other Perquisites and Personal Benefits Less Than $10,000 Individually | Total All Other Compensation |
| Robert B. Atwell | $ | 16,500 |
| $ | — |
| $ | 17,652 |
| $ | 14,270 |
| $ | 48,422 |
|
| | | | | | |
| Michael E. Daniels | $ | 16,500 |
| $ | — |
| $ | 17,928 |
| $ | 22,862 |
| $ | 57,290 |
|
| | | | | | |
| Ann K. Lawson | $ | 16,500 |
| $ | 50,000 |
| $ | 12,132 |
| $ | 1,290 |
| $ | 79,922 |
|
| | | | | | |
| Eric J. Witczak | $ | 16,500 |
| $ | 50,000 |
| $ | 17,652 |
| $ | 12,109 |
| $ | 96,261 |
|
| | | | | | |
| Brad V. Hutjens | $ | 16,500 |
| $ | 50,000 |
| $ | — |
| $ | 378 |
| $ | 66,878 |
|
The following table sets forth grants of plan-based awards to the NEOs during the year ended December 31, 2018.
Grants of Plan-Based Awards
|
| | | | | | | | | | | |
| Name | Grant Date | Estimated future payouts under non-equity incentive plan awards | Estimated future payouts under equity incentive plan awards | All other stock awards: Number of shares of stock or units (#) 1 | All other option awards: Number of securities underlying options (#) | Grant date fair value of stock and option awards 2 |
| Robert B. Atwell | 12/5/2018 | — |
| — |
| 3,684 |
| | $ | 185,637 |
|
| | | | | | | |
| Michael E. Daniels | 12/5/2018 | — |
| — |
| 3,684 |
| | $ | 185,637 |
|
| | | | | | | |
| Ann K. Lawson | 12/5/2018 | — |
| — |
| 819 |
| | $ | 41,269 |
|
| | | | | | | |
| Eric J. Witczak | 12/5/2018 | — |
| — |
| 804 |
| | $ | 40,514 |
|
| | | | | | | |
| Brad V. Hutjens | 12/5/2018 | — |
| — |
| 744 |
| | $ | 37,490 |
|
| | | | | | | |
| 1 Represents a restricted stock grant made on December 5, 2018 at the closing stock price of $50.39, of which one-third vested immediately and one-third on each of the first and second anniversaries of the initial grant related to the annual variable incentive bonus for 2018. |
2 Reflects the fair value of restricted stock on the date of grant, calculated in accordance with applicable accounting guidance and based on assumptions set forth in Notes 1 and 11 of the Notes to Consolidated Financial Statements in the Company's annual report on Form 10-K. |
The following table sets forth the equity awards outstanding for each NEO as of December 31, 2018.
Outstanding Equity Awards at 2018 Fiscal Year End Table
|
| | | | | | | | | | | | | | | |
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | | Market value of shares of restricted stock that have not vested ($) 11 |
| Robert B. Atwell | 54,000 |
| 13,500 |
| 1 | $ | 23.80 |
| 10/28/2024 | |
| | |
|
| | 40,500 |
| 27,000 |
| 2 | $ | 25.90 |
| 1/20/2025 | |
| | |
|
| | 45,000 |
| 180,000 |
| 3 | $ | 48.85 |
| 5/16/2027 | |
| | |
|
| | 13,500 |
| 54,000 |
| 4 | $ | 56.43 |
| 11/1/2027 | |
| | |
|
| | |
| |
| | |
| | 2,456 |
| 8 | $ | 119,853 |
|
| | |
| |
| | |
| | 1,022 |
| 9 | $ | 49,874 |
|
| Michael E. Daniels | 54,000 |
| 13,500 |
| 1 | $ | 23.80 |
| 10/28/2024 | |
| | |
|
| | 40,500 |
| 27,000 |
| 2 | $ | 25.90 |
| 1/20/2025 | |
| | |
|
| | 45,000 |
| 180,000 |
| 3 | $ | 48.85 |
| 5/16/2027 | |
| | |
|
| | 13,500 |
| 54,000 |
| 4 | $ | 56.43 |
| 11/1/2027 | |
| | |
|
| | |
| |
| | |
| | 2,456 |
| 8 | $ | 119,853 |
|
| | |
| |
| | |
| | 1,022 |
| 9 | $ | 49,874 |
|
| Ann K. Lawson | 6,500 |
| — |
| 5 | $ | 16.80 |
| 12/15/2019 | | | |
| | 2,435 |
| 1,500 |
| 6 | $ | 16.50 |
| 4/10/2022 | | | |
| | 2,000 |
| 6,000 |
| 7 | $ | 37.18 |
| 9/20/2026 | | | |
| | 10,800 |
| 43,200 |
| 3 | $ | 48.85 |
| 5/16/2027 | | | |
| | | | | | | 660 |
| 10 | $ | 32,208 |
|
| | | | | | | 546 |
| 8 | $ | 26,645 |
|
| | | | | | | 216 |
| 9 | $ | 10,541 |
|
| Eric J. Witczak | 9,000 |
| — |
| 5 | $ | 16.80 |
| 12/15/2019 | |
| | |
|
| | 5,250 |
| 2,250 |
| 6 | $ | 16.50 |
| 4/10/2022 | |
| | |
|
| | 12,000 |
| 3,000 |
| 1 | $ | 23.80 |
| 10/28/2024 | |
| | |
|
| | 6,000 |
| 9,000 |
| 7 | $ | 37.18 |
| 9/20/2026 | |
| | |
|
| | 10,800 |
| 43,200 |
| 3 | $ | 48.85 |
| 5/16/2027 | |
| | |
|
| | |
| |
| | |
| | 1,000 |
| 10 | $ | 48,800 |
|
| | | | | | | 536 |
| 8 | $ | 26,157 |
|
| | |
| |
| | |
| | 212 |
| 9 | $ | 10,346 |
|
| Brad V. Hutjens | 2,500 |
| — |
| 5 | $ | 16.80 |
| 12/15/2019 | | | |
| | 3,500 |
| 1,500 |
| 6 | $ | 16.50 |
| 4/10/2022 | | | |
| | 6,000 |
| 1,500 |
| 1 | $ | 23.80 |
| 10/28/2024 | | | |
| | 4,000 |
| 6,000 |
| 7 | $ | 37.18 |
| 9/20/2026 | | | |
| | 10,800 |
| 43,200 |
| 3 | $ | 48.85 |
| 5/16/2027 | | | |
| | | | | | | 600 |
| 10 | $ | 29,280 |
|
| | | | | | | 496 |
| 8 | $ | 24,205 |
|
| | | | | | | 195 |
| 9 | $ | 9,516 |
|
|
| |
| 1 | Stock options granted on October 28, 2014 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 2 | Stock options granted on January 20, 2015 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 3 | Stock options granted on May 16, 2017 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 4 | Includes $16,200 and $15,900 of 401(k) company-matching contributions forStock options granted on November 1, 2017 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 5 | Stock options granted on December 1, 2009 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 6 | Stock options granted on April 10, 2012 and vesting in 10 equal increments on the grant date and the next nine anniversaries of the initial grant. |
| 7 | Stock options granted on September 20, 2016 respectively, and $36,600vesting in 5 equal increments over a 5-year period on the anniversaries of director feesthe initial grant. |
| 8 | Represents the unvested remainder of a restricted stock grant made on December 5, 2018, of which one-third vested immediately and one-third on each of the first and second anniversaries of the initial grant related to the annual variable incentive bonus for 2016. Amounts2018. |
| 9 | Represents the unvested remainder of a restricted stock grant made on December 12, 2017, of which one-third vested immediately and one-third on each of the first and second anniversaries of the initial grant related to the annual variable incentive bonus for 2017. |
| 10 | Represents the unvested remainder of a restricted stock grant made on April 10, 2012, which vests in other compensation also include life insurance premiums, auto allowances, supplemental insurance coverage, club memberships, employer health contributions, and group term life insurance.10 equal increments over a 10-year period on the anniversaries of the initial grant. |
| 11 | Utilizes a $48.80 per share market value of the Company’s common stock at December 31, 2018. |
The following table sets forth information relating to the exercise of stock options and vesting of restricted stock during the year ended December 31, 2018 by each NEO.
Option Exercises and Stock Vested 2018
|
| | | | | | | | | | | |
| Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | | Number of shares acquired on vesting (#) | Value realized on vesting ($) |
| Robert B. Atwell | — |
| $ | — |
| | 4,661 |
| $ | 246,440 |
|
| Michael E. Daniels | — |
| $ | — |
| | 4,661 |
| $ | 246,440 |
|
| Ann K. Lawson | 5,000 |
| $ | 136,900 |
| | 654 |
| $ | 33,935 |
|
| Eric J. Witczak | 1,000 |
| $ | 37,720 |
| | 730 |
| $ | 38,136 |
|
| Brad V. Hutjens | 2,500 |
| $ | 94,450 |
| | 593 |
| $ | 30,770 |
|
The following table sets forth information regarding each NEO's account balance at December 31, 2018 under the Company's Nonqualified Deferred Compensation Plan, including contributions and earnings credited to such account.
Nonqualified Deferred Compensation 2018
|
| | | | | | | | | | | | | | | |
| Name | Executive contributions in last fiscal year ($) | Registrant contributions in last fiscal year ($) 1 | Aggregate earnings (loss) in last fiscal year ($) | Aggregate withdrawals / distributions ($) | Aggregate balance at last fiscal year end ($) 2 |
| Robert B. Atwell | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
| Michael E. Daniels | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
| Ann K. Lawson | $ | 54,664 |
| $ | 50,000 |
| $ | (11,891 | ) | $ | — |
| $ | 219,711 |
|
| Eric J. Witczak | $ | 8,269 |
| $ | 50,000 |
| $ | (14,955 | ) | $ | — |
| $ | 143,439 |
|
| Brad V. Hutjens | $ | 25,313 |
| $ | 50,000 |
| $ | (8,814 | ) | $ | — |
| $ | 166,799 |
|
|
5 | Includes $16,200 of 401(k) company-matching |
| 1 | These amounts reflect contributions and a $100,000 contribution made by Nicolet to Mr. Witczak’sthe NEOs nonelective contribution retirement subaccount in December 20172018 at the discretion of the BankCompany under the 2002 Deferred Compensation Plan, as amended, subject to a 4-year ratable vesting schedule for Ms. Lawson and a 5-year ratable vesting schedule. Amountsschedule for Messrs. Witczak and Hutjens. These amounts are reported in other compensation include auto allowance, group term life insurance, club memberships, and employer healththe "All Other Compensation" column for each executive officer in the Summary Compensation Table. |
| 2 | Includes unvested registrant contributions. |
| 6 | Reflects the fair value of 292,500 options and 3,066 restricted shares granted in 2017 and 7,233 restricted shares granted in 2016. |
| 7 | Reflects the fair value of 54,000 options and 636 restricted shares granted in 2017. |
Employment Agreements
Messrs. Atwell and Daniels.On April 29, 2016, Nicolet and Nicolet Bank entered into employment
Employment agreements are in place with each of Robert B. Atwellour named executive officers. We believe employment agreements help us recruit and Michael E. Daniels. Copiesretain executives with the experience, skills, knowledge and background needed to achieve our business goals and strategy. Each of these agreements provides for certain severance and change in control benefits. The material terms of the employment agreements can be found on Form 8-K filed May 2, 2016, as exhibits 10.2are summarized below.
Employment Agreements for Messrs. Atwell and 10.4. Daniels
The
following summary of the key provisions of the employment agreements is qualified by the full text of the agreements.Each of their employment agreements provide for an initial three-year3-year term, to be renewed automatically each day so that the term of the agreement remains three years unless either party gives notice of intent that automatic renewals shall cease.
Each of their employment agreements sets forth the executive’s
Messrs. Atwell and Daniels each receive a base salary, which shall be reviewed for increase at least annually. The base salaries inannually by the employment agreements are $360,000 for each of Mr. Atwell and Mr. Daniels. Board.
Both executives are eligible to receive incentive
cash or cash equivalent compensation
annually as well as discretionary equity incentive awards based on performance measures established by
Nicolet’sthe Board.
Mr. Atwell and Mr. Daniels are eligibleThe incentive compensation is subject to
receive equity incentive awards at the discretion of the Board.clawback under certain circumstances. Mr. Atwell’s and Mr. Daniels’The employment agreements provide for term life insurance in an amount no less than $1,500,000with a death benefit of $1.5 million for each of Mr. Atwell and Mr. Daniels. In addition, they shall receive an automobile allowance,payable to the executive’s designated beneficiary(ies).
Fringe benefits available to each executive include a company car with associated expenses paid by the Company, country club
memberships,annual dues, reimbursement
offor reasonable and necessary business expenses, and certain other benefit programs open to other similarly situated
employees of Nicolet
and Nicolet Bank. Both employment agreements provide for clawback of incentive compensation under certain circumstances.employees.
The employment agreements provide for
12 months of base pay as severance
plus 12 months of health continuation coverage in the event
of certain terminations, including an involuntary terminationthe executive is involuntarily terminated by the Company without Cause or
resignationif the executive resigns for Good Reason. If either
Mr. Atwell or Mr. Daniels experiences an involuntary termination
without Cause or resigns for Good Reason during the term of the his employment agreement, then the executive shall be entitled to receive severance equal to the executive’s base salary for a period of twelve months following such termination. If either Mr. Atwell or Mr. Daniels experiences an involuntary termination without Cause or resigns for Good Reasonevent occurs within
six6 months following a Change of Control,
(as defined in the
employment agreements), such executive shall receive
as liquidated damages in lieu of the twelve months salary continuation described about and all other claims, paymentsseverance equal to
two2 times
histhe base salary and target bonus
opportunity in effect immediately prior to the Change of
Control. If the transaction constituting the Change of Control
results from a person controlling more than 50% of the value or voting power of Nicolet Bank or acquiring more than 40% of the assets of Nicolet Bank, these payments will be made in lump sum within sixty days of termination. For all other Change of Control transactions, the executive will receive this severance in the form of pay continuation. In addition, each of Mr. Atwell and Mr. Daniels is entitled to twelveplus 12 months of health continuation
coverage following an eligible termination after a Change of Control.Messrs. Atwell and Daniels have each agreed not to competecoverage. All severance is conditioned upon the executive signing and not to solicit employees or customersrevoking a general release of Nicolet or Nicolet Bankclaims.
The employment agreements include covenants that restrict the executives, for
a period of 24 months following
their termination
regardlessfor any reason, from (i) disclosing confidential information, (ii) competing within defined markets, and (iii) soliciting any Company customer or employee to which the executive had Material Contact during the last 2 years of
cause, as well as standard provisions requiring non-disclosure of confidential information.Eachemployment.
Employment Agreements for Ms. Lawson, and Messrs. Witczak and Hutjens
The employment
agreement is also subjectagreements provide for an initial 3-year term, to
certain tax and regulatory limitations.Eric J. Witczak.Effective May 31, 2013, Nicolet Bank entered into an employment agreement with Eric J. Witczak, Executive Vice President of Nicolet Bank. Copies ofbe renewed automatically each day so that the employment agreement can be found as Exhibit 10.15 to the Annual Report on Form 10-K filed March 7, 2018. The following summary of the key provisions of the employment agreement is qualified by the full text of the agreement.
Under the termsterm of the agreement Mr. Witczak receivesremains three years unless either party gives notice of intent that automatic renewals shall cease.
Each executive shall receive a fixed annual base salary, ($195,000 in the agreement, which mayshall be and has been reviewed for increase at least annually), plus benefits, andannually.
Each executive is eligible to receive annual bonus compensation (with a defined target bonus of 30%percentage of base salary) pursuant to any incentive compensation program, as may be adopted from time to time by the Board of Directors. Mr. Witczak is eligible to receivewell as equity incentive awards at the discretion of the board. Mr. Witczak’s agreement automatically renewsBoard. The incentive compensation is subject to clawback under certain circumstances, per the terms of a separate agreement.
Each executive is eligible to receive reimbursement for an additional day each day after May 31, 2013, so that it always hasreasonable and necessary business expenses in addition to country club annual dues and certain other benefit programs open to other similarly situated Nicolet employees.
The employment agreements provide for up to 12 months of base pay as severance plus 12 months of health continuation coverage in the event the executive is involuntarily terminated by the Company without Cause or if the executive resigns for Good Reason. If the executive resigns for Good Reason within 6 months following a three-year term, unless anyChange of Control, the partiesexecutive shall receive severance equal to 1.5 times the agreement give notice of intent not to renew the agreement, which will cause the agreement to terminate on the third anniversary of the 30th day following the date of such notice. Nicolet Bank is obligated to pay Mr. Witczak his base salary and reimbursementtarget bonus in effect immediately prior to the Change of Control plus 12 months of health insurance costs under terminating events, ascontinuation coverage.
The employment agreements include covenants that restrict the executives, for a period of 12 months following their termination for any reason, from (i) disclosing confidential information, (ii) competing within defined permarkets, and (iii) soliciting any Company customer or employee to which the agreement, which include: maximum six monthsexecutive had Material Contact during the last 2 years of base salary if Mr. Witczak becomes disabled; maximum twelve months of base salary and reimbursement of health insurance costs if Mr. Witczak is involuntarily terminated without Cause; maximum twelve months of base salary and reimbursement of health insurance costs if employment is terminated by Mr. Witczak for cause; and one and one-half times base salary and bonus and twelve months reimbursement of health insurance costs if Mr. Witczak terminates his employment for cause within six months of aemployment.
Potential Payments Upon Termination or Change of Control. Control
The
agreement also provides various other benefits and subjects Mr. Witczakfollowing table shows the estimated value as of December 31, 2018 of potential payments to
non-compete and other restrictive covenants for a twelve month period following certain employmentthe NEOs upon termination
or Change of Control events.
|
| | | | | | | | | | | | | | | |
| Name | Robert B. Atwell | Michael E. Daniels | Ann K. Lawson | Eric J. Witczak | Brad V. Hutjens |
| Involuntary Termination by Company or Resignation for Good Reason: |
| Base Salary | $ | 495,000 |
| $ | 495,000 |
| $ | 275,000 |
| $ | 270,000 |
| $ | 250,000 |
|
| Health Continuation Coverage | 23,900 |
| 23,700 |
| 16,300 |
| 23,700 |
| 15,400 |
|
| Total | $ | 518,900 |
| $ | 518,700 |
| $ | 291,300 |
| $ | 293,700 |
| $ | 265,400 |
|
| Involuntary Termination by Company or Resignation for Good Reason within 6 Months of Change of Control: |
| Base Salary | $ | 990,000 |
| $ | 990,000 |
| $ | 412,500 |
| $ | 405,000 |
| $ | 375,000 |
|
| Target Annual Variance Incentive Bonus | 742,500 |
| 742,500 |
| 165,000 |
| 162,000 |
| 150,000 |
|
| Health Continuation Coverage | 23,900 |
| 23,700 |
| 16,300 |
| 23,700 |
| 15,400 |
|
Value of Unvested Restricted Stock 1 | 169,726 |
| 169,726 |
| 69,394 |
| 85,302 |
| 63,001 |
|
Value of Unvested Stock Options 2 | 955,800 |
| 955,800 |
| 118,170 |
| 252,255 |
| 155,670 |
|
| Total | $ | 2,881,926 |
| $ | 2,881,726 |
| $ | 781,364 |
| $ | 928,257 |
| $ | 759,071 |
|
Outstanding Equity Awards at 2017 Fiscal Year End Table
| | | No. of
securities
underlying
unexercised
options
exercisable | | | No. of securities
underlying
unexercised
options
unexercisable | | | Option
exercise
price | | | Option
expiration
date | | No. of
shares of
restricted
stock that
have not
vested | | | Market value of
shares of restricted
stock that have not
vested15 | |
| | | (#) | | | (#) | | | ($) | | | | | (#) | | | ($) | |
| Name | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Robert B. Atwell | | | 40,500 | | | | 27,000 | 1 | | $ | 23.80 | | | 10/28/2024 | | | | | | | | |
| | | | 27,000 | | | | 40,500 | 2 | | $ | 25.90 | | | 01/20/2025 | | | | | | | | |
| | | | -0- | | | | 225,000 | 3 | | $ | 48.85 | | | 05/16/2027 | | | | | | | | |
| | | | -0- | | | | 67,500 | 4 | | $ | 56.43 | | | 11/01/2027 | | | | | | | | |
| | | | | | | | | | | | | | | | | | 1,367 | 5 | | $ | 74,830 | |
| | | | | | | | | | | | | | | | | | 1,044 | 6 | | $ | 57,149 | |
| | | | | | | | | | | | | | | | | | 2,044 | 7 | | $ | 111,889 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Michael E. Daniels | | | 40,500 | | | | 27,000 | 1 | | $ | 23.80 | | | 10/28/2024 | | | | | | | | |
| | | | 27,000 | | | | 40,500 | 2 | | $ | 25.90 | | | 01/20/2025 | | | | | | | | |
| | | | -0- | | | | 225,000 | 3 | | $ | 48.85 | | | 05/16/2027 | | | | | | | | |
| | | | -0- | | | | 67,500 | 4 | | $ | 56.43 | | | 11/01/2027 | | | | | | | | |
| | | | | | | | | | | | | | | | | | 1,367 | 5 | | $ | 74,830 | |
| | | | | | | | | | | | | | | | | | 1,044 | 6 | | $ | 57,149 | |
| | | | | | | | | | | | | | | | | | 2,044 | 7 | | $ | 111,889 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Eric J. Witczak | | | 10,000 | | | | -0- | 8 | | $ | 16.80 | | | 12/15/2019 | | | | | | | | |
| | | | 4,500 | | | | 3,000 | 9 | | $ | 16.50 | | | 04/10/2022 | | | | | | | | |
| | | | 9,000 | | | | 6,000 | 10 | | $ | 23.80 | | | 10/28/2024 | | | | | | | | |
| | | | 3,000 | | | | 12,000 | 11 | | $ | 37.18 | | | 09/20/2026 | | | | | | | | |
| | | | -0- | | | | 54,000 | 12 | | $ | 48.85 | | | 05/16/2027 | | | | | | | | |
| | | | | | | | | | | | | | | | | | 1,250 | 13 | | $ | 68,425 | |
| | | | | | | | | | | | | | | | | | 424 | 14 | | $ | 23,210 | |
| |
| 1 | Granted 67,500 options shares on October 28, 2014 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 2 | Granted 67,500 option shares on January 20, 2015 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 3 | Granted 225,000 option shares on May 16, 2017 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 4 | Granted 67,500 option shares on November 1, 2017 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 5 | Represents the unvested remainder of a grant of 4,101 restricted shares made on January 19, 2016, of which one-third vested immediately and one-third on each of the first and second anniversaries of the initial grant. |
| 6 | Represents the unvested remainder of a grant of 3,132 restricted shares made on November 15, 2016, of which one-third vested immediately and one-third on each of the first and second anniversaries of the initial grant. |
| 7 | Represents the unvested remainder of a grant of 3,066 restricted shares made on December 12, 2017, of which one-third vested immediately and one-third on each of the first and second anniversaries of the initial grant. |
| 8 | Granted 10,000 option shares on December 15, 2009 which vested in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 9 | Granted 7,500 option shares on April 10, 2012 and vesting in 10 equal increments on the grant date and the next nine anniversaries of the initial grant. |
| 10 | Granted 15,000 option shares on October 28, 2014 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 11 | Granted 15,000 option shares on September 20, 2016 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 12 | Granted 54,000 option shares on May 16, 2017 and vesting in 5 equal increments over a 5-year period on the anniversaries of the initial grant. |
| 13 | Represents the unvested remainder of a grant of 2,500 restricted shares made on April 10, 2012, of which vests in 10 equal increments over a 10-year period on the anniversaries of the initial grant. |
| 14 | Represents the unvested remainder of a grant of 636 restricted shares made on December 12, 2017, of which one-third vested immediately and one-third on each of the first and second anniversaries of the initial grant. |
| 15 | Utilizes a $54.74 per share marketThe value of the Company’s commonunvested restricted stock atis based upon the closing stock price of $48.80 as of December 31, 2017.2018. |
| 2 | 15 | The value of the unvested stock options is based upon the closing stock price of $48.80 as of December 31, 2018, less the option exercise price for all options in the money. |
Related Party Transactions
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Act and 402(u) of Regulation S-K, we are providing the following information
on the relationship of the annual total compensation of Robert B. Atwell, our Chief Executive Officer, to that annual total compensation of our median compensated employee. The pay ratio is a reasonable estimate calculated in a manner consistent with rules promulgated by the SEC.
Determining our Median Employee Pay: As of December 31, 2018, we employed 573 employees. The SEC rules require that we identify our median employee by use of a consistently applied compensation measure (“CACM”). We chose a CACM that closely approximates the annual total cash compensation of our employees. Specifically, we identified the median employee by aggregating total wages and cash bonuses paid in 2018 and ranking all employees according to this measure, from lowest to highest.
Calculating the Pay Ratio: As required by SEC rules, we then calculated our median employee’s total annual compensation in accordance with the requirements of item 402(c)(2)(x) of Regulation S-K (which is the calculation method for reporting CEO compensation in the Summary Compensation Table).
The compensation of our median employee for 2018 was determined to be $41,629. Our CEO’s compensation as reported in the Summary Compensation Table was $1,100,309. Therefore, our CEO to median employee ratio for 2018 was approximately 26:1. This information is provided solely for compliance purposes. The Compensation Committee does not consider this ratio when evaluating compensation arrangements.
Conclusion
Through the compensation arrangements outlined above, a significant portion of each of our named executives officers’ compensation total is contingent upon the Company’s overall sustained performance.
Therefore, the realization of potential financial benefit by each executive is closely linked to our Company performance and increases in shareholder value over time. We remain committed to this philosophy of paying for performance, recognizing that the competitive market for talented executives and the episodic assignment of multi-year potential rewards tied to our longer term strategic plans may result in highly variable compensation within any particular time period.
The Compensation Committee gives careful consideration to our executive compensation programs, including each element of compensation to each executive. The Compensation Committee believes that the Nicolet compensation program is fair and reasonable in context of the Company’s peer group and our performance compared to the prior year, internal expectations, and peers. Further, the Committee also believes that the compensation program gives each executive appropriate incentive, based upon the executive’s responsibilities, achievements, and ability to contribute to our continued progress and prosperity.
Finally, the Compensation Committee believes that our compensation structure and practices encourage management to work for real innovation, business and operational improvements, and outstanding shareholder value creation over the longer term, without taking unnecessary, undue or excessive risks.
Compensation Committee Report
The Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement and based upon such review and discussion, the Compensation Committee recommended to Nicolet’s Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into Nicolet’s annual report on Form 10-K for the year ended December 31, 2018 as required by Item 402(b) of Regulation S-K.
By the Compensation Committee of the Board of Directors of Nicolet Bankshares, Inc.
Randy J. Rose, Chair
Robert W. Agnew
John N. Dykema
The foregoing report of the Compensation Committee shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent Nicolet specifically incorporates this information by reference and shall not otherwise be deemed filed under such Acts.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s officers and directors subject to Section 16 filing obligations, and owners of more than ten percent of its outstanding shares of common stock to file reports concerning the ownership of the Company equity securities with the SEC and the Company. The Company files the required reports on behalf of persons. During the year ended, December 31, 2018, there were six (6) delinquent Form 4 transactions reported: Michael J. Gilson failed to file four reports on a timely basis regarding the exercise of stock options and for the sale of shares of common stock, Thomas L. Herlache failed to file one report on a timely basis regarding the sale of shares of common stock, and Ann K. Lawson failed to file one report on a timely basis regarding the sale of shares of common stock.
RELATED PARTY TRANSACTIONS
The Audit & Compliance Committee is responsible for reviewing and approving all related party transactions. In addition, they are responsible for reviewing the procedures used to identify related parties and any transactions with related parties.
The Company’s bank subsidiary has loan transactions in the ordinary course of business with directors and executive officers of the Company, including the companies or firms with which they are affiliated and members of their immediate families. These loans have been made on substantially the same terms, including interest rate and collateral, as those prevailing at the same time for comparable loans with unrelated persons and did not involve more than the normal risk of collectability or present other unfavorable features. At December 31, 2018, the aggregate principal amount of loans outstanding to directors, executive officers, or their related interests was approximately $84 million, which represented approximately 4% of the Company’s period end loan portfolio.
Under SEC regulations, the Company is required to disclose any transaction occurring in the last fiscal year, or any transaction that is currently proposed, in which the Company was or is a participant, the amount involved exceeds $120,000, and any related person of the Company had or will have a direct or indirect material interest.
Robert J. Weyers is a director of, and holds a one-third ownership interest in, PBJ Holdings, LLC, a real estate development and investment firm. He is also a director of the Company and Nicolet Bank. In 2004, the Company entered into a joint venture with PBJ Holdings, LLC in connection with the development of the site of the Company’s headquarters facility. Mr. Weyers abstained from discussion or deliberations regarding the transaction in his capacity as a director of the Company and Nicolet Bank. The joint venture involves a 50% investment by the Company on standard commercial terms reached through arms-length negotiation. During
2017,2018, the Bank paid approximately $1.1 million in rent expense to the joint venture. For
2017,2018, the joint venture’s net income was approximately
$567,000$634,000 benefiting the Company and PBJ Holdings, LLC by approximately
$283,000$317,000 each. Management believes that the terms of the joint venture are no less favorable to the Company or the Bank than would have been achieved in a transaction with an unaffiliated third party.
Scot J. Madson, the father of
senior managementexecutive officer team member Patrick J. Madson, is a Financial Advisor for the Company and owns an office building that is leased to the Company as non-branch space, under a five-year lease beginning in 2016. In
2017,2018, Scot Madson received compensation of approximately
$668,000$657,000 for his employment and approximately $138,000 in rental payments. Management believes that the terms of the lease are no less favorable to the Company than would have been achieved with an unaffiliated third party.
Adam M. Madson, the brother of Patrick J. Madson, is a Financial Advisor for the Company. In
2017,2018, Adam Madson received compensation of approximately
$257,000$284,000 for his employment.
In October 2013, Nicolet Bank entered into a lease for a branch location in a facility owned by Christopher J. Ghidorzi, director of the Company and the Bank, paying him less than $120,000 annually in rent expense. For 2018, Mr. Ghidorzi participated in a competitive bid process for and was awarded
the contract as Nicolet Bank’s general contractor
contract for the 2018 reconstruction of a different existing branch location,
which was completed in 2018. Total payments for
this branch reconstruction were $956,000, of which
are estimated but not yet paid.at least 75% of these payments were passed through to various subcontractors. Mr. Ghidorzi did not participate in the discussion or deliberation with respect to approving the contract or with respect to the Audit & Compliance Committee approving the related party transaction. The combined estimated payments and rent payments do not impair Mr. Ghidorzi’s independence
per the Company’s evaluation ofunder the NASDAQ
Stock Market listing rules.
The Company did not engage in any other transactions that require disclosure under the SEC regulations.
The Board of Directors of the Company has determined that each of its directors and director nominee meet the requirements for independence under NASDAQ Stock Market listing rules except for Robert B. Atwell, Michael E. Daniels, Michael J. Gilson, and Robert J. Weyers.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was or is an officer or employee of the Company or any its subsidiaries and all members are considered “independent” as defined in NASDAQ Rule 4200.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s officers and directors subject to Section 16 filing obligations, and owners of more than ten percent of its outstanding shares of common stock to file reports concerning the ownership of the Company equity securities with the SEC and the Company. The Company files the required reports on behalf of persons. During the year ended, December 31, 2017, there were eight (8) delinquent Form 4 transactions reported: John N. Dykema failed to file one report on a timely basis regarding the purchase of shares of common stock, Thomas L. Herlache failed to file one report on a timely basis regarding the sale of shares of common stock, Patrick J. Madson failed to file three reports on a timely basis regarding the sale of shares of common stock, Susan L. Merkatoris failed to file one report on a timely basis regarding the sale of shares of common stock, Ann K. Lawson failed to file one report on the exercise of stock options, and Michael J. Steppe failed to file one report on the grant of stock options.
PROPOSAL 2 – RATIFICATIONof the appointment
of Independent Registered Public Accounting Firm
AUDIT & COMPLIANCE COMMITTEE REPORT
The Audit & Compliance Committee
has selected, and the Board has approved, Porter Keadle Moore, LLC, an independent registered public accounting firm, to serve as the independent registered public accounting firm for the Company for the year ending December 31, 2018, subject to ratification by the shareholders. Porter Keadle Moore, LLC also served as the independent auditors for the Company for the year ended December 31, 2017. Although shareholder ratification of our independent auditors is not required by our Bylaws or otherwise, we are submitting the selection of Porter Keadle Moore, LLC to shareholders for ratification to permit shareholders to participate in this important corporate decision. If Porter Keadle Moore, LLC declines to act or otherwise becomes incapable of acting, or if appointment is otherwise discontinued, the Audit Committee will appoint another independent registered public accounting firm. A representative of Porter Keadle Moore, LLC is expected to be present at the Annual Meeting and will be given an opportunity to make a statement on behalf of the firm or to respond to appropriate questions from shareholders.Audit & Compliance Committee Report
The Audit Committee(the “Audit Committee”) reports as follows with respect to the audit of the Company’s 20172018 audited consolidated financial statements.
The Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions and internal controls. It is currently composed of four directors, each of whom meets the qualifications for independence (including the heightened requirements applicable to audit committee members) and three who meet the qualifications as an audit committee financial expert. See also “INFORMATION ABOUT THE BOARD OF DIRECTORS - Board Committees and Meetings.”
Management is responsible for the Company’s internal controls and financial reporting process. The independent registered public accounting firm, Porter Keadle Moore, LLC is responsible for performing an independent audit of
the Company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and to issue a report thereon, as well as an audit of the effectiveness of our internal control over financial reporting in accordance with the Standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”). The Audit Committee’s responsibility is to monitor and oversee these processes. In connection with these responsibilities, the Audit Committee met with management and the independent registered public accounting firm to review and discuss the December 31,
20172018 consolidated financial statements. The Audit Committee also discussed with the independent registered public accounting firm the matters required by PCAOB Auditing Standards-AS 1301: Communications with Audit Committees. The Audit Committee received written disclosures from the independent registered public accounting firm required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with the independent registered public accounting firm that firm’s independence.
Based on the review and discussions of the Company’s audited consolidated financial statements with management and discussions with the independent
auditors,registered public accounting firm, the Audit Committee recommended to the Board of Directors that the Company’s
20172018 audited consolidated financial statements be included in the Company’s
20172018 Annual Report on Form 10-K, which has been filed with the SEC.
Christopher J. Ghidorzi, Chair
Thomas L. Herlache
Susan L. Merkatoris
Oliver Pierce Smith
March 8, 2019
The foregoing Report of the Audit Committee shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent Nicolet specifically incorporates this information by reference and shall not otherwise be deemed filed under such Acts.
PROPOSAL 1 - ELECTION OF DIRECTORS
Election of Directors
The Board of Directors has nominated each of the thirteen (13) persons named below to stand for election as directors at the Annual Meeting. If elected by the shareholders, each of the nominees will serve a one-year term that will expire at the 2020 Annual Meeting of Shareholders and upon the election and qualification of his or her successor.
Each nominee has consented to serve as a director, if elected. If any of the nominees should be unavailable to serve for any reason (which we do not anticipate), the Board of Directors may (1) designate a substitute nominee or nominees (in which case the persons named as proxies on the enclosed proxy card will vote the shares represented by all valid proxy cards for the election of such substitute nominee or nominees), (2) allow the vacancy or vacancies to remain open pending the nomination of a suitable candidate or candidates, or (3) by resolution provide for a lesser number of directors. All of the nominees listed below will also serve as directors of Nicolet National Bank (“Nicolet Bank”), a wholly-owned subsidiary of the Company.
The table below provides additional commentary unique to each nominee that led the Nominating Committee to recommend his/her nomination to the Board. The ages shown are as of December 31, 2018. Except as otherwise indicated, each of the named persons has been engaged in his or her present principal occupation for more than five years.
|
| | | | |
| Name (Age) | | Director Since | | Positions and Business Experience |
| Robert B. Atwell (61) | | 2000 | | Chairman, President, and Chief Executive Officer of the Company since its formation in 2002 and beginning April 29, 2016, Chairman of Nicolet Bank. From 2000 to April 29, 2016, Chairman and Chief Executive Officer of Nicolet Bank. We believe the board benefits from Mr. Atwell’s extensive and broad experience in the banking industry for over 35 years (including large and small banks), executive leadership, vision, community and regulatory connections, as well as his vested interest as a founder of Nicolet and his level of ownership. |
| Rachel Campos-Duffy (47) | | 2019 | | Author, communications consultant and media personality specializing in political analysis, culture and parenting.
We believe the board benefits from Ms. Campos-Duffy's knowledge of economics and international affairs, which she applies through her media profile, advocacy for women, Latino and Hispanic affairs, and involvement in political commentary and projects. |
| Michael E. Daniels (54) | | 2000 | | Executive Vice President and Secretary of the Company since its formation in 2002 and, beginning April 29, 2016, President and Chief Executive Officer of Nicolet Bank. From 2007 to April 29, 2016, President and Chief Operating Officer of Nicolet Bank; Executive Vice President and Chief Lending Officer of Nicolet Bank from 2000-2007. We believe the board benefits from Mr. Daniels’ extensive commercial lending, operational and compliance experience, straightforward leadership, and his vested interest as a founder of Nicolet and his level of ownership. |
| John N. Dykema (55) | | 2006 | | Owner, President and Chief Executive Officer of Campbell Wrapper Corporation and Circle Packaging Machinery, Inc., manufacturers of custom packaging machinery. We believe the board benefits from Mr. Dykema’s significant experience as a manufacturing business owner and manager, his connections in the bank’s markets, and his long tenure and engagement on a community bank board. |
| Terrence R. Fulwiler (68) | | 2016 | | Chairman of the Board of Bellin Health Systems of Green Bay; board member of the Green Bay Packers; board member of Innovata LLC of Atlanta, GA; board member of EMT International of Green Bay; board member of Northeast Wisconsin Technical College Foundation; member of the Bellin College Board of Trustees; board member of East Shore Industries; board member of the Greater Green Bay Community Foundation; board member of NPS, Inc.; and prior to April 29, 2016, director of Baylake and Baylake Bank since 2010. We believe the board benefits from Mr. Fulwiler’s corporate board membership experiences and from his understanding of and involvement in the bank’s markets. |
Christopher J. Ghidorzi Chair(41) | | 2013 | | Vice President of Property Development, C.A. Ghidorzi, Inc. and Affiliates since 2007; and previously Director of Equity Trading, Robert W. Baird & Co. from 2001-2007. We believe the board benefits from Mr. Ghidorzi’s real estate development experience and related connections, as well as his experience in capital markets and financial expertise. |
|
| Thomas L. Herlache | | | |
| Name (Age) | | Director Since | | Positions and Business Experience |
| Andrew F. Hetzel, Jr. (62) | | 2018 | | President and Chief Executive Officer of NPS Corporation, a marketer and manufacturer of Spill Control Products with customers in 60 countries as well as Towel and Tissue Products sold into the Away From Home Tissue Industry in North America. We believe the board benefits from Mr. Hetzel’s experience with acquisitions and cultural integration (from both his own company’s activity and prior Nicolet transactions), as well as his significant experience as a manufacturing business owner and manager, and his industry and community connections. |
| Donald J. Long, Jr. (61) | | 2000 | | Former Owner and Chief Executive Officer of Century Drill & Tool Co., Inc., an expediter of power tool accessories. We believe the board benefits from Mr. Long’s former business ownership experiences, corporate board membership experiences and community involvement, and his experience as a founding board member of Nicolet and his level of ownership. |
| Dustin J. McClone (36) | | 2017 | | President and Chief Executive Officer of McClone Insurance Group. Director of First Menasha Bancshares, Inc. from 2010 to April 28, 2017. We believe the board benefits from Mr. McClone’s insurance strategy experience and knowledge, and community involvement. |
| Susan L. Merkatoris (55) | | 2003 | | Certified Public Accountant; Owner and Managing Member of Larboard Enterprises, LLC, a packaging and shipping franchise doing business as The UPS Stores; Previous Co-Owner and Vice President of Midwest Stihl Inc., a distributor of Stihl Power Products. We believe the board benefits from Ms. Merkatoris’ experiences as a certified public accountant, internal controls knowledge and audit committee experience, financial expertise as a business owner, and her level of ownership. |
| Randy J. Rose (64) | | 2011 | | Retired President and Chief Executive Officer of Schwabe North America; retired member of the Executive Strategic Committee for Dr. Willmar Schwabe GmbH and Co. KG, parent of Schwabe North America. We believe the board benefits from Mr. Rose’s vast senior management experience in varied public businesses, acquisitions and change management, executive compensation matters, and his innovation. |
| Oliver Pierce Smith (35) |
March 7, 2018
| | 172017 | | Director of Real Estate and Acquisition Collaboration at Menasha Packaging, a division of Menasha Corporation. Director of First Menasha Bancshares, Inc. from 2010 to April 28, 2017. We believe the board benefits from Mr. Smith’s significant ownership level, local community involvement, and operating business experience, as well as his real estate, acquisition integration and IT background. |
| Robert J. Weyers (54) | | 2000 | | Co-Owner of Weyers Group, a private equity investment firm; Commercial Horizons, Inc., a commercial property development company; and PBJ Holdings, LLC, a real estate holding company. We believe the board benefits from Mr. Weyers’ real estate development experience and related connections, community involvement, experience as a founding board member of Nicolet and his level of ownership. |
Director Qualifications
Directors are responsible for overseeing the Company’s business consistent with their fiduciary duty to shareholders. This significant responsibility requires highly skilled individuals with various qualities, attributes and professional experiences. The Board believes that there are certain general requirements for service on Nicolet’s Board that are applicable to all directors, and that there are other skills and experience that should be represented on the Board as a whole but not necessarily by every director. The Board and the Nominating Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and Nicolet’s current and future needs.
In its assessment of each nominee for director, including those recommended by shareholders, the Nominating Committee considers the nominee’s judgment, integrity, experience, independence, and understanding of Nicolet’s mission and business, as well as understanding of other related industries and other factors that the Nominating Committee determines are pertinent in light of the current needs of the Board. The Nominating Committee also takes into account the ability of a director to devote the time, energy and effort necessary to fulfill his or her responsibilities to Nicolet with candor and thoughtful input.
The Board and Nominating Committee require that each director be a person of high integrity with a proven record of success in his or her field. Each director must demonstrate innovative thinking, familiarity and respect for corporate governance requirements and practices, an appreciation of diversity, and a commitment to sustainability. In addition to the qualifications required of all directors, potential director candidates are interviewed to assess intangible qualities including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.
The Board believes that the combination of qualifications, skills and experiences of each of the director nominees will contribute to an effective and well-functioning Board, and that individually and as a whole, the directors possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to Nicolet’s management.
RECOMMENDATION FOR PROPOSAL 1
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE PROPOSAL TO ELECT EACH OF THE DIRECTOR NOMINEES.
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit & Compliance Committee (the “Audit Committee”) has selected, and the Board has approved, Porter Keadle Moore, LLC, an independent registered public accounting firm, to serve as the independent registered public accounting firm for the Company for the year ending December 31, 2019, subject to ratification by the shareholders. Porter Keadle Moore, LLC also served as the independent registered public accounting firm for the Company for the year ended December 31, 2018. Although shareholder ratification of our independent registered public accounting firm is not required by our Bylaws or otherwise, we are submitting the selection of Porter Keadle Moore, LLC to shareholders for ratification to permit shareholders to participate in this important corporate decision.
If Porter Keadle Moore, LLC declines to act or otherwise becomes incapable of acting, or if appointment is otherwise discontinued, the Audit Committee will appoint another independent registered public accounting firm. A representative of Porter Keadle Moore, LLC is expected to be present at the Annual Meeting and will be given an opportunity to make a statement on behalf of the firm or to respond to appropriate questions from shareholders.
The following table sets forth the fees billed for the professional audit and other services rendered by the Company’s auditors, Porter Keadle Moore, LLC, during the years ended December 31,
20172018 and
2016.| Fees | | 2017 | | | 2016 | |
| Audit feesa | | $ | 339,500 | | | $ | 377,000 | |
| Audit-related feesb | | | 15,000 | | | | 15,000 | |
| Tax feesc | | | -0- | | | | -0- | |
| All other feesd | | | -0- | | | | -0- | |
| Total fees | | $ | 354,500 | | | $ | 392,000 | |
|
| | | | | | | | |
| Fees | | 2018 | | 2017 |
Audit fees a | | $ | 350,700 |
| | $ | 339,500 |
|
Audit-related fees b | | 15,000 |
| | 15,000 |
|
Tax fees c | | 21,450 |
| | — |
|
All other fees d | | — |
| | — |
|
| Total fees | | $ | 387,150 |
| | $ | 354,500 |
|
|
| |
| a. | Audit Fees include aggregate fees billed for professional services rendered by Porter Keadle Moore, LLC for the audit of the Company’s annual consolidated financial statements for the years ended December 31, 20172018 and 2016,2017, review of the annual report on Form 10-K, and the limited reviews of quarterly condensed consolidated financial statements included in periodic reports filed with the SEC during 20172018 and 2016,2017, including out of pocket expenses and the work performed in connection with issuing consents in connection with the registration statement filings. |
| b. | Audit-Related Fees includes fees billed for professional services rendered by Porter Keadle Moore, LLC associated with the audit of the Company’s 401(k) plan during the fiscal years ended December 31, 20172018 and 2016,2017, including out of pocket expenses. |
| c. | Tax Fees includes all services performed for tax compliance, tax planning, and tax advice. |
| d. | All Other Fees includes billings for services rendered other than those in the categories defined above. |
The services provided by our independent auditors were approved
in advance by the Audit & Compliance Committee in accordance with the provisions of the committee’s charter.
The Audit Committee considers that the provision of the services above is compatible with maintaining independence by Porter Keadle Moore, LLC.
The ratification of the appointment of Porter Keadle Moore, LLC as
the independent
auditorsregistered public accounting firm of the Company for the fiscal year ending December 31,
20182019 requires that more votes be cast in favor of the proposal than against it.
RECOMMENDATION FOR PROPOSAL 2
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE IN FAVOR OF RATIFYING THE APPOINTMENT OF PORTER KEADLE MOORE, LLC AS
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
2019.PROPOSAL 3 –- APPROVAL OF THE AMENDMENT TO THE
NICOLET BANKSHARES, INC.
EMPLOYEE STOCK PURCHASE 2011 LONG-TERM INCENTIVE PLAN
On December 19, 2017, the
The Board of Directors
adopted,unanimously approved on February 19, 2019, subject to
shareholder approval, and recommends that shareholders approve an amendment to the
approval of shareholders, the Nicolet Bankshares, Inc. Employee Stock PurchaseCompany’s 2011 Long-Term Incentive Plan (the
“ESPP” or the “Plan”). The
following description is a summaryproposed amendment would increase the number of shares of the
ESPPCompany’s common stock authorized and
reserved for issuance under the Plan from 1,500,000 to 3,000,000 shares, subject to future adjustments as explained below, any or all of which may be granted as incentive equity awards. The requested increase is expected to address the equity incentive needs of the Company, which has more than doubled in asset size since the beginning of 2016, for the next three years based upon current growth projections. No other provisions of the Plan would be amended by the proposal. The description of certain key features of the Plan included in this proposal is qualified in its entirety by reference to the
applicable provisions offull plan document, which has been restated to incorporate the
Plan, whichamendment and is attached hereto as
Appendix A.TermsA.
The proposed amendment is important to ensuring the philosophy and objectives of
PlanOverviewNicolet’s executive compensation program will continue to be fulfilled. While equity awards have been and Purpose.remain a key element of aligning pay and shareholder interests, the Compensation Committee also considered the impact of dilution, and other factors, before recommending the increase of shares to the full Board. Specifically, by providing for the issuance of additional shares of common stock under the Plan, Nicolet will be enabled to:
continue to provide a balanced compensation program that rewards individual actions and behaviors that support Nicolet’s mission, core values, business strategies, and performance-based culture, without incentivizing unnecessary or excessive risk-taking;
ensure sufficient shares of common stock are available to provide a balanced mix of short-term and long-term variable compensation to its executive leadership and other key employees; and
continue to attract, retain and motivate highly skilled executive officers and other colleagues.
Please see "EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS" of this Proxy Statement for a detailed discussion of Nicolet's executive officer compensation approach.
Approval to amend the Plan to increase the number of shares of Company common stock authorized for issuance is subject to shareholder approval. The purposeapproval of this amendment to the Plan requires the affirmative vote of the ESPP is to provide eligible employees (as defined in the Plan) an opportunity to share in the growthholders of at least a majority of the Company through a discounted methodoutstanding shares of purchasing voting common stock of the Company. We believe thatCompany present, or represented and entitled to vote, at the ESPP supportsannual meeting.
Terms of the Company’s owner-managed mentalityPlan
General Terms. The Plan allows the Company to grant a variety of equity and shares success by providing participants long-term economic reward tiedcash-based awards to their individual performancecertain officers, employees, and contribution underlying the Company’s performance.Eligibility.Employeesdirectors of the Company and its subsidiariesaffiliates to stimulate their efforts towards the continued success of the Company, to encourage stock ownership by such recipients, and to provide a means for obtaining, rewarding, and retaining such recipients.
The awards that may be granted pursuant to the Plan are
generally eligibleincentive and nonqualified options to
participatepurchase shares of the Company’s common stock, stock appreciation rights, other stock-based awards which are settled in either cash or shares of the Company’s common stock and are determined by reference to shares of stock (such as grants of restricted common stock, grants of rights to receive stock in the
Plan after twelve monthsfuture, or dividend equivalent rights), and cash performance awards, which are settled in cash and are not determined by reference to shares of
employment, provided they customarily are employed at least 20 hours per week and more than five months a year.No employee shallthe Company’s common stock, any or all of which may be granted any optionsas incentive stock options.
The Plan provides for administration by a committee appointed by the Board of Directors or, alternatively if no committee is appointed, by the entire Board of Directors (the “Committee”). All questions of interpretation of the Plan are to be determined by the Committee. Awards granted under the Plan and the terms of the awards, including the number of shares of Company common stock as to which an award is granted and the potential payout of any award not denominated in shares of Company common stock, will be determined by the Committee. The Committee’s decisions relating to the administration of the Plan and grants of awards are final and binding on all persons.
Awards generally are not transferable or assignable except by will or the laws of intestate succession, unless the terms of the individual award (other than incentive stock options) provide otherwise. At the Committee’s discretion, awards may be modified following their grants, to the extent not inconsistent with other provisions of the Plan, and awards may be cancelled, accelerated, paid or continued, subject to the terms of the applicable award agreement and the Plan, upon the holder’s termination of employment. However, incentive stock options will expire no later than three months after the holder’s termination of employment (one year if after giving effecttermination of employment is due to suchthe holder’s death or disability). The Committee may, however, permit an incentive stock option to continue beyond these time limits in which case the option will become a nonqualified stock option.
Options. The Committee determines whether an option is an incentive stock option or a nonqualified stock option at the time the option is granted. The per share exercise price of any option granted under the Plan may not be less than the fair market value of a share of Company common stock on the date of the grant or, in the employee would own 5%case of incentive stock options granted to certain owner-employees, may not be less than 110% of the fair market value of a share of Company common stock on the date of grant. The Committee may permit an option exercise price to be paid in cash, by the delivery of previously-owned shares of Company common stock, through a cashless exercise executed through a broker, or moreby having a number of shares of Company common stock otherwise issuable at the time of exercise withheld.
The term of an incentive stock option may not exceed ten (10) years from the date of grant (five (5) years in the case of incentive stock options granted to certain owner-employees of the Company), and may only be granted under the Plan within ten (10) years from the date the Plan amendment now subject to shareholder approval was adopted by the Board of Directors. Nonqualified stock options have no defined expiration period under the Plan, but an expiration period can be included in the applicable award agreement.
Stock Appreciation Rights. Each stock appreciation right allows the recipient to receive, in cash or stock, the appreciation per share of the Company’s voting power. No employee willcommon stock over a defined price which may not be able to purchase shares toless than the extent that such employee would purchase $25,000 offair market value of a share of the shares (without regard toCompany’s common stock on the discounted purchase price)date the stock appreciation right is granted. Stock appreciation rights have no defined expiration period under the Plan, but an expiration period can be included in any calendar year.Offerings.the applicable award agreement or program.
Other Awards. The Plan shall be implemented byallows the Committee to grant stock-based incentives, other than options and stock appreciation rights, that entitle the recipient to receive payment of an amount equal to either the value of a seriesspecified number or a percentage or multiple of separate consecutive three-month offerings, subject to the righta specified number of shares of the Company in its sole discretion to sooner terminate the Plan or to change the commencement date or term of any offering. The Committee may change the duration of future offerings and/Company’s common stock, or the start and end datesvalue of future offering periods, subject todividends paid on a maximumspecified number of 27 months.Shares Available under the Plan. A total of 150,000 shares of common stock are initially authorizedduring a dividend period. The Committee can also grant cash performance awards that entitle the recipient to receive a cash payment equal to the value of a specified or determinable number of units other than shares of Company common stock.
Reorganizations and reserved for issuance under the Plan.Recapitalizations. The number of shares will be adjustedof common stock reserved for issuance in connection with the grant of awards, the number of shares underlying an award, and the exercise price or settlement price of each award are subject to adjustment in the event of an equity restructuring (i.e., any change in capitalizationnonreciprocal transaction between the Company and the holders of the Company,Company’s capital stock that causes the per share value to change, such as a stock split.Participation. Participation individend, stock split, spinoff, rights offering or recapitalization through a large, nonrecurring cash dividend). In the event of certain other corporate reorganizations, awards may be substituted, cancelled, accelerated, cashed-out, or otherwise adjusted by the Committee, provided that the adjustment is not inconsistent with the terms of the Plan is entirely voluntary. Eligible employees wishingor any agreement reflecting the terms of an award.
Amendment or Termination. The Plan may be amended or terminated by the Board of Directors without stockholder approval, subject to participatethe requirement that, in order to preserve the Plan’s ability to grant incentive stock options, shareholders must approve any amendment that increases the number of shares reserved under the Plan (other than in connection with certain capital events, as described above), materially expands the class of eligible award recipients, or changes the granting corporation or the stock available for grant under the Plan.
Federal Income Tax Consequences
The following discussion outlines generally the federal income tax consequences of participation in Plan. Individual circumstances may vary and each participant should rely on his or her own tax counsel for advice regarding federal income tax treatment under the Plan.
Incentive Stock Options. A participant will not recognize income and will not be taxed upon the grant of an incentive stock option nor upon exercise of all or a portion of the option. Instead, the participant will be requiredtaxed at the time he or she sells the shares of common stock purchased on exercise of the incentive stock option. The participant will be taxed on the difference between the price he or she paid for the common stock and the amount for which he or she sells the common stock. If the participant does not sell the shares of common stock during the two-year period from the date of grant of the incentive stock option and the one-year period from the date the common stock is transferred to submit enrollment materialshim or her, the gain will be capital gain, and the Company will not be entitled to a corresponding deduction. If the Companyparticipant sells the shares of common stock at a gain prior to that time, the difference between the amount the participant paid for the common stock and the lesser of fair market value on the date of exercise or the amount for which the stock is sold will be taxed as ordinary income. If the participant sells the shares of common stock for less than the amount he or she paid for the stock prior to the commencementone- or two-year periods indicated, no amount will be taxed as ordinary income and the loss will be taxed as a capital loss. Exercise of an offering that authorizeincentive stock option may subject a participant to, or increase a participant’s liability for, the Company to deduct from such employee’s payroll.Payroll Deductions. Participating employees may elect to have an amount between $20alternative minimum tax.
Nonqualified Options. A participant will not recognize income and $400 deducted from each paycheck during an offering period.Withdrawal and Suspension.Employees may receivewill not be taxed upon the grant of a refund of all withholdings during an offering period by providing the Company with notice of their withdrawal prior to the first day of the last calendar month in such offering period. Employees may also provide notice of their intent to suspend payroll deductionsnonqualified option or at any time prior to the first dayexercise of the last calendar month in such offering period. Funds previously withheld prior to such suspension will be used to purchase shares.
Re-Enrollment. Participating employees will be automatically re-enrolled in the next offering unless they advise the Company otherwise.
Purchase of Shares. On the last trading day of each offering period, each participant’s accumulated payroll deductions will be used to purchase such whole number of shares of stock calculated by dividing such participant’s accumulated payroll deductions by the purchase price. The purchase price shall be equal to 85% (or such greater percentage as designated by the Company) of the market price of the Company’s common stock on such last trading day of the offering period. Any cash remaining will be added to the participant’s account for the purchase of shares in the next offering.
Shareholder Rights. Participating employees will have no rights as shareholders, including dividendsall or voting rights, with respect to any shares until such shares are actually purchased.
Termination of Employment.Upon an employee’s termination of employment for any reason, the employee’s balance shall be paid to the employee or the employee’s estate.
Amendment.The Compensation Committee and the Board shall have the right to amend the plan at any time so long as such amendment does not adversely affect any employee’s existing rights under any offering already made or increase the number of shares authorized and reserved for issuance without shareholder approval.
Administration of the Plan. The Plan is administered by the Board of Directors, who has delegated its full authority under the Plan to the Compensation Committee, who may further delegate its authority.
Resale Limitations. The purpose of the Plan is to provide common stock to employees for investment purposes and not for resale. However, employees may sell any common stock purchased under the Plan at any time, subject to holding periods imposed by the terms of the Plan, by the Compensation Committee, and by applicable Federal, state or foreign tax or securities laws.
Federal Income Tax Information.The following brief summary of the effect of U.S. federal income taxation upon the participant and the Company with respect to the shares purchased under the Plan does not purport to be complete, and does not discuss the tax consequences of a participant’s death or the income tax laws of any state or foreign country in which the participant may reside.
The Plan is intended to be an employee stock plan within the meaning of Section 423 of the Internal Revenue Code. To the extent any (i) grant of an option to purchase shares, (ii) purchase of shares, or (iii) disposition of shares purchased under the Plan gives rise to any tax withholding obligation, the Committee or its delegate may implement appropriate procedures to ensure that such tax withholding obligations are met. Those procedures may include, without limitation, increased withholding from an employee’s current compensation, cash payments to the Company by an employee, or a sale of a portion of the stock purchased underoption. At the Plan, which sale may be required and initiated bytime the Company. Each participant shall give the Company prompt written noticeexercises all or a portion of any dispositiona nonqualified option, he or other transfer of shares acquired pursuantshe will have compensation taxable as ordinary income in an amount equal to the exerciseexcess of an option acquired under the Plan, if such disposition or transfer is made within two years after date of grant or within one year after the exercise date.
Benefits to Named Executive Officers and Others
Participation in the Plan is voluntary and we cannot presently determine the benefits or amounts that will be received pursuant to the Plan in the future, as such amounts will depend on the amount of contributions eligible employees choose to make, the actual purchase price of shares in future offering periods, and thefair market value of the common stock on various future dates. Non-employee directorsthe date the option is exercised over the price paid for the common stock, and the Company will then be entitled to a corresponding deduction. Depending upon the period shares of common stock are held after exercise, the sale or other taxable disposition of shares acquired through the exercise of a nonqualified option generally will result in a short- or long-term capital gain or loss equal to the difference between the amount realized on the disposition and the fair market value of the shares when the nonqualified option was exercised. Special rules apply to a participant who exercises a nonqualified option by paying the exercise price, in whole or in part, by the transfer of shares of common stock to the Company.
Stock Awards. A recipient will not eligiblebe taxed upon the grant of a stock award if such award is not transferable by the recipient or is subject to participatea “substantial risk of forfeiture,” as defined in the Plan. No rights have been granted and noInternal Revenue Code. However, when the shares of our common stock have been issued with respectthat are subject to the 150,000 sharesstock award are transferable by the recipient and are no longer subject to a substantial risk of forfeiture, the recipient will recognize compensation taxable as ordinary income in an amount equal to the fair market value of the stock subject to the stock award, less any amount paid for such stock, and the Company will then be entitled to a corresponding deduction. If a recipient so elects at the time of receipt of a stock award, he or she may include the fair market value of the stock subject to the stock award, less any amount paid for such stock, in income at that time and the Company also will be entitled to a corresponding deduction at that time.
Other Stock-Based Awards. A participant generally will not recognize income and will not be taxed upon the grant of a stock appreciation right, dividend equivalent right, restricted stock unit, or performance award (collectively, the “Equity Incentives”). Generally, at the time a participant receives payment under any Equity Incentive, he or she will have compensation taxable as ordinary income in an amount equal to the cash or fair market value of the common stock received, and the Company will then be entitled to a corresponding deduction.
Cash Performance Awards. A participant generally will not recognize income and will not be taxed upon the grant of a cash performance award. At the time a participant receives payment under any cash performance award, he or she will have compensation taxable as ordinary income in an amount equal to the cash received, and the Company will then be entitled to a corresponding deduction.
Benefits to Named Executive Officers and Others
The Compensation Committee has not yet made any determination as to which
stockholder approvaleligible participants will be granted Equity Incentives or cash performance awards under the Plan in the future if the amendment is
being sought.Existingapproved. Therefore, the potential benefit to any eligible participant cannot be determined. Information regarding the equity awards held by our Named Executive Officers is provided in “EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS - Outstanding Equity Compensation Plan Information
| | | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (1)
(a) | | | Weighted average
exercise price of
outstanding
options, warrants
and rights (2)
(b) | | | Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
(c) | |
| Plan Category | | | | | | | | | | | | |
| Equity compensation plans approved by security holders | | | 1,674,175 | | | $ | 39.82 | | | | 155,707 | |
| Total at December 31, 2017 | | | 1,674,175 | | | $ | 39.82 | | | | 155,707 | |
Awards at 2018 Fiscal Year End Table.”
|
| | | | | | | |
| | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) (1) | Weighted average exercise price of outstanding options, warrants and rights (b) (2) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
| Plan Category | |
| |
| |
|
| Equity compensation plans approved by security holders | 1,611,211 |
| $ | 40.77 |
| 127,456 |
|
| Equity compensation plans not approved by security holders | — |
| — |
| — |
|
| Total at December 31, 2018 | 1,611,211 |
| $ | 40.77 |
| 127,456 |
|
(1) Includes
30,92029,512 shares potentially issuable upon the vesting of outstanding restricted stock.
(2) The weighted average exercise price relates only to the exercise of outstanding options included in column (a).
Shareholder Approval
Approval of the Nicolet Bankshares, Inc. Employee Stock Purchase Plan requires that more votes be cast in favor of the proposal than against it.
RECOMMENDATION FOR PROPOSAL 3
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDSTHAT SHAREHOLDERS VOTE IN FAVOR OF APPROVING
"FOR" THE AMENDMENT TO THE NICOLET BANKSHARES, INC. EMPLOYEE STOCK PURCHASE PLAN.
2011 LONG-TERM INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE FROM 1,500,000 TO 3,000,000 SHARES
.
PROPOSAL 4 - ADVISORY VOTE TO APPROVE NICOLET BANKSHARES, INC.'S
NAMED EXECUTIVE OFFICER COMPENSATION
Nicolet’s executive compensation program plays a key role in Nicolet’s ability to attract, retain and motivate the highest quality executive team. The principal objectives of Nicolet’s executive compensation program are to target executive compensation within market ranges, reward performance and align executive incentive compensation with long-term shareholder value creation, without incenting unnecessary and excessive risk. As discussed above in the "EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS," the Compensation Committee has designed the program to incorporate a number of features and best practices that support these objectives, including, among others:
Target total compensation for our Named Executive Officers at market-competitive levels while maintaining an overall compensation program that is aligned with and reflects the performance of Nicolet;
A substantial portion of each Named Executive Officer’s target compensation is variable;
Equity awards are granted in the form of stock options or restricted stock and are more heavily weighted toward long-term performance to have a value directly aligned with shareholders;
None of Nicolet’s Named Executive Officers are entitled to receive gross-up payments in connection with any excise tax or other tax liabilities; and
Only a limited number of perquisites is available to Nicolet’s Named Executive Officers.
Shareholders are encouraged to carefully review the “EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS” section of this Proxy Statement in its entirety for a detailed discussion of Nicolet’s executive compensation program.
As required under the Exchange Act, this proposal seeks a shareholder advisory vote to approve the compensation of our Named Executive Officers as disclosed pursuant to Item 402 of Regulation S-K through the following resolution:
“Resolved, that the shareholders approve the compensation of Nicolet’s Named Executive Officers as disclosed pursuant to the compensation rules of the SEC in the Compensation Discussion and Analysis, the compensation tables and narrative discussion.”
Because this is an advisory vote, it will not be binding upon the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
RECOMMENDATION FOR PROPOSAL 4
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADVISORY APPROVAL OF NICOLET'S NAMED EXECUTIVE OFFICER COMPENSATION, AS DISCLOSED PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC (WHICH DISCLOSURE INCLUDES THE COMPENSATION DISCUSSION AND ANALYSIS, THE COMPENSATION TABLES AND ANY RELATED MATERIAL).
PROPOSAL 5 - ADVISORY VOTE ON FREQUENCY OF ADVISORY APPROVAL OF
NICOLET BANKSHARES, INC.'S NAMED EXECUTIVE OFFICER COMPENSATION
As required by Section 14A of the Exchange Act, this proposal provides shareholders with the opportunity to vote on how frequently they would like to cast an advisory vote to approve Nicolet named executive officer compensation, similar to the advisory vote solicited in Proposal 4 above. The requirements allow shareholders to select the option of one, two or three years.
The Board of Directors recommends an annual vote on executive compensation. As described above in "EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS," in making annual executive compensation decisions, management and the Compensation Committee consider the performance of executive officers individually, as well as in context of the current year’s performance and achievement of goals, long-term strategic goals, and peer or industry performance, as well as their achievement of individual goals, leadership and development of others. Nicolet believes in transparency to its shareholders, and therefore believes that an annual advisory vote on executive compensation will allow our shareholders to provide timely, direct input to management and the board on Nicolet’s executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. The Board believes that shareholder sentiment expressed annually should be a factor considered by the Compensation Committee as part of its process.
Shareholders may cast an advisory vote on the preferred voting frequency by selecting the option of every one, two or three years, or may choose to abstain. Nicolet will consider shareholders to have expressed a non-binding preference for the frequency option that receives the largest number of favorable votes. Shareholders are not voting to approve or disapprove the Board’s recommendation.
Because this is an advisory vote, it will not be binding upon the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
RECOMMENDATION FOR PROPOSAL 5
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS SELECT "ONE YEAR" WHEN VOTING ON THE FREQUENCY OF ADVISORY APPROVAL OF NICOLET BANKSHARES, INC.'S NAMED EXECUTIVE OFFICER COMPENSATION.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no matters other than those referred to in the accompanying Notice of Annual Meeting of Shareholders which may properly come before the Annual Meeting. However, if any other matter should be properly presented for consideration and voting at the Annual Meeting or any adjournments thereof, it is the intention of the persons named as proxies on the enclosed form of proxy card to vote the shares represented by all valid proxy cards in accordance with their judgment of what is in the best interest of the Company.
DIRECTOR NOMINATIONS AND SHAREHOLDER COMMUNICATIONS
A shareholder that intends to present business at an annual meeting of shareholders must comply with the requirements set forth in the Company’s Bylaws as described below.
Director Nominations.The Nominating Committee will consider nominations for directors submitted by shareholders in accordance with the Company’s Bylaws. The Nominating Committee has not adopted a formal policy or process for identifying or evaluating nominees, but informally solicits and considers recommendations from a variety of sources, including other directors, members of the community, customers of Nicolet Bank and shareholders of the Company, and professionals in the financial services and other industries. Similarly, the Nominating Committee’s charter does not prescribe any specific qualifications or skills that a nominee must possess, although it evaluates potential director nominees utilizing a number of criteria and considerations, including but not limited to specific qualifications and skills; knowledge of the Company, community banking and the financial services industry; experience in serving as a director or officer of a financial institution or public company generally; wisdom, integrity and analytical ability; familiarity with and participation in the communities the Company serves; commitment to and availability for service as a director, including ownership in the Company.
In accordance with the Company’s Bylaws, shareholder nominations for directors shall be made in writing and delivered to the Company’s Secretary at the Company’s principal office, currently located at 111 North Washington Street, Green Bay, Wisconsin 54301, between 14 and 50 days before a meeting at which directors are to be elected, although if less than 21 days’ notice of the meeting is provided to shareholders, the nomination must be delivered by the close of business on the seventh day after the date on which the notice was mailed. The nomination must state, to the extent known to the nominating shareholder, the following: (i) the nominee’s name, address and occupation; (ii) the total number of shares to be voted for the nominee; and (iii) the notifying shareholder’s name, address and number of shares owned. Nominations not made in accordance with this procedure may be disregarded by the chair of the meeting at which the election is to be held.
Shareholder Proposals.Our Bylaws provide that only such business that is properly brought before the annual meeting of shareholders shall be conducted at such meeting. In order for a shareholder proposal to be properly brought before an annual meeting, our Bylaws require a notice of the shareholder proposal that includes: (i) a description of the proposal and the reason it is being brought before the meeting; (ii) the proponent’s name and address and the number of shares he or she beneficially owns; and (iii) any material interest of the proponent in the proposal. The Company’s Secretary must receive the proposal at the Company’s principal office, currently located at 111 North Washington Street, Green Bay, Wisconsin 54301, at least sixty days prior to the shareholder meeting for it to be considered. In order to be included in the proxy materials to be provided to shareholders in advance of the 20192020 annual meeting, notice of a shareholder proposal must be received on or prior to January 7, 2019;14, 2020; however, if the 20192020 annual meeting is held more than 30 days before or after May 8, 2019,13, 2020, the deadline for receipt of such notice is any date allowing a reasonable time before we provide the proxy materials to our shareholders. The deadline for inclusion of a shareholder proposal in the proxy materials for a special meeting is likewise a date that allows a reasonable time before we provide the proxy materials for such special meeting to our shareholders.The proxies of the Company’s management are permitted to use their discretionary authority with respect to proposals that are not timely submitted in accordance with the Company’s Bylaws and the SEC rules.
Shareholder Communications. Shareholders wishing to communicate with the Board of Directors or with a particular director may do so in writing addressed to the Board, or to the particular director, and sending it to the Secretary of the Company at the Company’s principal office, currently located at 111 North Washington Street, Green Bay, Wisconsin 54301. The Secretary will promptly forward such communications to the applicable director or to the Chairman of the Board for consideration at the next scheduled meeting.
Security Holders Sharing an Address
The Company has filed an Annual Report on Form 10-K with the SEC for the year ended December 31,
2017.2018. Pursuant to the rules of the SEC, services that deliver the Company’s communications to shareholders who hold their shares through a bank, broker, or other holder of record may deliver to multiple shareholders sharing the same address a single copy of the Company’s
20172018 Annual Report on Form 10-K and this proxy statement. Upon written or oral request, the Company will promptly deliver a separate copy of the Company’s
20172018 Annual Report on Form 10-K and/or this proxy statement to any shareholder at a shared address to which a single copy of each document was delivered. Shareholders may notify the Company of their requests to either receive a single copy of each document delivered, if multiple copies are being delivered, or to receive multiple copies of each document, if a single copy is being delivered, upon written or oral request to Nicolet Bankshares, Inc., 111 North Washington Street, Green Bay, Wisconsin 54301.
___________
Green Bay, Wisconsin
March 20, 2019
APPENDIX A
NICOLET BANKSHARES, INC.
2011 LONG-TERM INCENTIVE PLAN
(As amended and restated effective February 19, 2019)
NICOLET BANKSHARES, INC.
2011 LONG-TERM INCENTIVE PLAN
(As amended and restated effective February 19, 2019)
TABLE OF CONTENTS
|
| | |
| | | Page |
| SECTION 1 DEFINITIONS | 1 |
| 1.1 | DEFINITIONS | 1 |
| SECTION 2 THE LONG-TERM INCENTIVE PLAN | 3 |
| 2.1 | PURPOSE OF THE PLAN | 3 |
| 2.2 | STOCK SUBJECT TO THE PLAN | 3 |
| 2.3 | ADMINISTRATION OF THE PLAN | 3 |
| 2.4 | ELIGIBILITY AND LIMITS | 4 |
| SECTION 3 TERMS OF AWARDS | 4 |
| 3.1 | TERMS AND CONDITIONS OF ALL AWARDS | 4 |
| 3.2 | TERMS AND CONDITIONS OF OPTIONS | 4 |
| 3.3 | TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS | 6 |
| 3.4 | TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS | 6 |
| 3.5 | TERMS AND CONDITIONS OF CASH PERFORMANCE AWARDS | 6 |
| 3.6 | TREATMENT OF AWARDS ON TERMINATION OF SERVICE | 7 |
| SECTION 4 RESTRICTIONS ON STOCK | 7 |
| 4.1 | ESCROW OF SHARES | 7 |
| 4.2 | RESTRICTIONS ON TRANSFER | 7 |
| SECTION 5 GENERAL PROVISIONS | 7 |
| 5.1 | WITHHOLDING | 7 |
| 5.2 | CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION | 7 |
| 5.3 | CASH AWARDS | 8 |
| 5.4 | COMPLIANCE WITH CODE | 8 |
| 5.5 | RIGHT TO TERMINATE EMPLOYMENT OR SERVICE | 8 |
| 5.6 | NON-ALIENATION OF BENEFITS | 9 |
| 5.7 | RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS | 9 |
| 5.8 | LISTING AND LEGAL COMPLIANCE | 9 |
| 5.9 | TERMINATION AND AMENDMENT OF THE PLAN | 9 |
| 5.10 | STOCKHOLDER APPROVAL | 9 |
| 5.11 | CHOICE OF LAW | 9 |
| 5.12 | EFFECTIVE DATE OF PLAN | 9 |
NICOLET BANKSHARES, INC.
2011 LONG-TERM INCENTIVE PLAN
(As amended and restated effective February 19, 2019)
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun will be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise, and the following capitalized words and phrases are used herein with the meaning thereafter ascribed:
(a)“Affiliate” means:
(1) Any Subsidiary or Parent;
(2) An entity that directly or through one or more intermediaries controls, is controlled by, or is under common control with the Company, as determined by the Company; or
(3) Any entity in which the Company has such a significant interest that the Company determines it should be deemed an “Affiliate”, as determined in the sole discretion of the Company.
(b)“Award Agreement” means any written agreement, contract, or other instrument or document as may from time to time be designated by the Company as evidencing an Award granted under the Plan.
(c)“Award Program” means a written program established by the Committee, pursuant to which Awards are granted under the Plan under uniform terms, conditions and restrictions set forth in such written program.
(d)“Awards” means, collectively, Cash Performance Awards, Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, and Other Stock-Based Awards.
(e)“Board of Directors” means the board of directors of the Company.
The Company’s 2017 Annual Report
(f)“Cash Performance Award” means an Award described in Section 3.5 that is settled in cash and does not have a value that is derivative of the value of, determined by reference to Shareholders and Annual Reporta number of shares of, or determined by reference to dividends payable on, Form 10-K, which includes audited consolidated financial statements forStock.
(g)“Code” means the Internal Revenue Code of 1986, as amended.
(h)“Committee” means the committee appointed by the Board of Directors to administer the Plan; provided that, if no such committee is appointed, the Board of Directors in its entirety shall constitute the Committee.
(i)“Company” means Nicolet Bankshares, Inc., a bank holding company incorporated under the laws of Wisconsin.
(j)“Disability” unless otherwise defined by the Committee in the applicable Award Agreement or Award Program, has the same meaning as provided in the long-term disability plan or policy maintained or, if applicable, most recently maintained, by the Company or, if applicable, any Affiliate of the Company for the fiscal years ended December 31, 2017Participant. If no long-term disability plan or policy was ever maintained on behalf of the Participant or, if the determination of Disability relates to an Incentive Stock Option, Disability means that condition described in Code Section 22(e)(3), as amended from time to time. In the event of a dispute, the determination of Disability will be made by the Committee and 2016,will be supported by advice of a physician competent in the area to which such Disability relates.
(k)“Exercise Price” means the exercise price per share of Stock purchasable under an Option.
(l)“Fair Market Value” means the value of a share of Stock as filed withof a date, determined as follows:
(1)if the SEC, has also been mailedshares of Stock are readily tradable or reported on an established securities market, Fair Market Value of the Stock may be determined based upon the last sale before or the first sale after such date, the closing price on the trading day before or the trading day of such date, the arithmetic mean of the high and
low prices on the trading day before or the trading day of such date, or any other reasonable method using actual transactions in the Stock as reported by such market or system; or
(2)if the shares of Stock are not readily tradable or reported on an established securities market, Fair Market Value shall mean the fair market value of a share of Stock determined by the reasonable application of a reasonable valuation method, where such valuation method is based on the facts, circumstances, and all other available information that are material to shareholdersthe value of the Company with these proxy materials. Neither forms any partas of the materialvaluation date.
An “established securities market” includes a national securities exchange which is registered under section 6 of the Securities Exchange Act of 1934; a foreign national securities exchange which is officially recognized, sanctioned, or supervised by governmental authority; and any over-the-counter market. For purposes of Clause (1), Fair Market Value of a share of Stock also may be determined using an average selling price during a specified period that is within thirty (30) days before or thirty (30) days after the applicable determination date provided that the process under which the Award is granted irrevocably specifies the commitment to the grant with a price set using such an average selling price before the beginning of the specified period. For purposes of Clause (2), the use of a value previously calculated under a reasonable valuation method is not reasonable as of a later date if such calculation fails to reflect information available after the date of the calculation that may materially affect the value of the Company or if the value was calculated with respect to a date that is more than twelve (12) months earlier than the date for which the valuation is being used. For purposes of granting Nonqualified Stock Options or Stock Appreciation Rights, Fair Market Value of Stock shall be determined in accordance with any other applicable requirements of Code Section 409A. Notwithstanding anything to the contrary in this Section 1.1(l), for purposes of granting Incentive Stock Options, Fair Market Value of Stock shall be determined in accordance with the requirements of Code Section 422.
(m)“Incentive Stock Option” means an incentive stock option within the meaning of Section 422 of the Internal Revenue Code.
(n)“Nonqualified Stock Option” means a stock option that is not an Incentive Stock Option.
(o) “Option” means a Nonqualified Stock Option or an Incentive Stock Option.
(p)“Other Stock-Based Award” means an Award described in Section 3.4 that has a value that is derivative of the value of, determined by reference to a number of shares of, or determined by reference to dividends payable on, Stock and may be settled in cash or in Stock. Other Stock-Based Awards may include, but not be limited to, grants of Stock, grants of rights to receive Stock in the future, or dividend equivalent rights.
(q) “Over 10% Owner” means an individual who at the time an Incentive Stock Option to such individual is granted owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its Parent or Subsidiaries, determined by applying the attribution rules of Code Section 424(d).
(r)“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, with respect to Incentive Stock Options, at the time of the granting of the Option, each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A Parent shall include any entity other than a corporation to the extent permissible under Section 424(f) or regulations and rulings thereunder.
(s)“Participant” means an individual who receives an Award hereunder.
(t)“Plan” means the Nicolet Bankshares, Inc. 2011 Long-Term Incentive Plan.
(u)“Separation from Service” shall mean a termination of a Participant’s employment or other service relationship with the Company, subject to the following requirements:
(1) in the case of a Participant who is an employee of the Company, a termination of the Participant’s employment where either (A) the Participant has ceased to perform any services for the solicitationCompany and all affiliated companies that, together with the Company, constitute the “service recipient” within the meaning of proxies. The Annual Report on Form 10-K is also availableCode Section 409A (collectively, the “Service Recipient”) or (B) the level of bona fide services the Participant performs for the Service Recipient after a given date (whether as an employee or as an independent contractor) permanently decreases (excluding a decrease as a result of military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment with the Service Recipient under an applicable statute or by contract) to no more than
twenty percent (20%) of the average level of bona fide services performed for the Service Recipient (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of service if the Participant has been providing services to the publicService Recipient for less than 36 months); or
(2) in the case of a Participant who is an independent contractor engaged by the Service Recipient, a termination of the Participant’s service relationship with the Service Recipient either (A) upon the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed for the Service Recipient if the expiration constitutes a good-faith and complete termination of the contractual relationship; or (B) if, with respect to amounts payable to the Participant under an Award upon the termination of the independent contractor’s relationship with the Service Recipient, no amount will be paid to the Participant before at least twelve (12) months after the day on which the contract expires under which the Participant performs services for the Service Recipient (or, in the case of more than one contract, all such contracts expire) and no amount payable to the Participant on that date is actually paid to the Participant if, after the expiration of the contract (or contracts) and before that date, the Participant performs services for the Service Recipient as an independent contractor or an employee; or
(3) in any case, as may otherwise be permitted under Code Section 409A.
(v)“Stock” means the Company’s common stock.
(w)“Stock Appreciation Right” means a stock appreciation right described in Section 3.3.
(x)“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the relevant time, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. A “Subsidiary” shall include any entity other than a corporation to the extent permissible under Section 424(f) or regulations or rulings thereunder.
(y)“Termination of Employment” means the termination of the employment relationship between a Participant and the Company and its Affiliates, regardless of whether severance or similar payments are made to the Participant for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or retirement. The Committee will, in its absolute discretion, determine the effect of all matters and questions relating to a Termination of Employment as it affects an Award, including, but not by way of limitation, the question of whether a leave of absence constitutes a Termination of Employment.
SECTION 2 THE LONG-TERM INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentives to certain officers, employees, and directors of the Company and its Affiliates to stimulate their efforts toward the continued success of the Company and to operate and manage the business in a manner that will provide for the long-term growth and profitability of the Company; (b) encourage stock ownership by certain officers, employees, and directors by providing them with a means to acquire a proprietary interest in the Company, acquire shares of Stock, or to receive compensation which is based upon appreciation in the value of Stock; and (c) provide a means of obtaining, rewarding and retaining officers, employees, and directors.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with Section 5.2, Three Million (3,000,000) shares of Stock (the “Maximum Plan Shares”) are hereby reserved exclusively for issuance upon exercise, settlement, or payment pursuant to Awards, all or any of which may be pursuant to any one or more Award, including without limitation, Incentive Stock Options. Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. The shares of Stock attributable to the nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of any Award that is forfeited or cancelled or expires or terminates for any reason without becoming vested, paid, exercised, converted or otherwise settled in full will again be available for purposes of the Plan. For purposes of determining the number of shares of Stock issued upon the exercise, settlement or grant of an Award under this Section, any shares of Stock withheld to satisfy tax withholding obligations or the Exercise Price shall be considered issued under the Plan.
2.3 Administration of the Plan. The Plan is administered by the Committee. The Committee has full authority in its discretion to determine the officers, employees, and directors of the Company or its Affiliates to whom Awards will be granted and the terms and provisions of Awards, subject to the Plan. Subject to the provisions of the Plan, the Committee has full and conclusive authority to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the respective Award Agreements and Award Programs and to make all other determinations necessary
or advisable for the proper administration of the Plan. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). The Committee’s decisions are final and binding on all Participants. Each member of the Committee shall serve at the discretion of the Board of Directors and the Board of Directors may from time to time remove members from or add members to the Committee. Vacancies on the InternetCommittee shall be filled by the Board of Directors.
2.4 Eligibility and Limits. Awards may be granted only to officers, employees, and directors of the Company or any Affiliate of the Company; provided, however, that an Incentive Stock Option may only be granted to an employee of the Company or any Parent or Subsidiary. In the case of Incentive Stock Options, the aggregate Fair Market Value (determined as of the date an Incentive Stock Option is granted) of Stock with respect to which stock options intended to meet the requirements of Code Section 422 become exercisable for the first time by an individual during any calendar year under all plans of the Company and its Parents and Subsidiaries may not exceed $100,000; provided further, that if the limitation is exceeded, the Incentive Stock Option(s) which cause the limitation to be exceeded will be treated as Nonqualified Stock Option(s).
SECTION 3 TERMS OF AWARDS
3.1 Terms and Conditions of All Awards.
(a) The number of shares of Stock as to which an Award may be granted or the amount of an Award will be determined by the Committee in its sole discretion, subject to the provisions of Section 2.2 as to the total number of shares available for grants under the Plan and subject to the limits in Section 2.4.
(b) Each Award will either be evidenced by an Award Agreement in such form and containing such terms, conditions and restrictions as the Committee may determine to be appropriate, including without limitation, performance goals, if any, that must be achieved as a condition to vesting or settlement of the Award, or be made subject to the terms of an Award Program, containing such terms, conditions and restrictions as the Committee may determine to be appropriate, including without limitation, performance goals, if any, that must be achieved as a condition to vesting or settlement of the Award. Each Award Agreement or Award Program is subject to the terms of the Plan and any provisions contained in the Award Agreement or Award Program that are inconsistent with the Plan are null and void.
(c) The date as of which an Award is granted will be the date on which the Committee has approved the terms and conditions of the Award and has determined the recipient of the Award and the number of shares, if any, covered by the Award, and has taken all such other actions necessary to complete the grant of the Award or such later date as may be specified in the approval of such Award.
(d) Awards are not transferable or assignable except by will or by the laws of descent and distribution governing the State in which the Participant was domiciled at the SEC’s websitetime of the Participant’s death, and are exercisable, during the Participant’s lifetime, only by the Participant; or in the event of the Disability of the Participant, by the legal representative of the Participant; or in the event of death of the Participant, by the legal representative of the Participant’s estate or if no legal representative has been appointed within ninety (90) days of the Participant’s death, by the person(s) taking under the laws of descent and distribution governing the State in which the Participant was domiciled at www.sec.govthe time of the Participant’s death; except to the extent that the Committee may provide otherwise as to any Awards other than Incentive Stock Options.
(e) After the date of grant of an Award, the Committee may, in its sole discretion, modify the terms and conditions of an Award, except to the extent that such modification would adversely affect the rights of a Participant under the Award (except as otherwise permitted under the Plan or our website, www.nicoletbank.com/Investor_Relations. This proxy statementAward) or would be inconsistent with other provisions of the Plan.
3.2 Terms and Conditions of Options. Each Option granted under the Plan must be evidenced by an Award Agreement. At the time any Option is granted, the Committee will determine whether the Option is to be an Incentive Stock Option described in Code Section 422 or a Nonqualified Stock Option, and the 2017 Annual ReportOption must be clearly identified as to Shareholders are also available for viewing, printing, and downloading at www.nicoletbank.com.Green Bay, Wisconsin
March 20, 2018
APPENDIX A
NICOLET BANKSHARES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Nicolet Bankshares, inc.
Employeeits status as an Incentive Stock Purchase Plan
| 1. | This Employee Stock Purchase Plan (the “Plan”) is effective June 1, 2018, subjectOption or a Nonqualified Stock Option. Incentive Stock Options may only be granted to prior approval by the Company’s shareholders. |
The purpose of this Employee Stock Purchase Plan (the “Plan”) is to provide eligible employees of the Company or any Subsidiary or Parent. At the Banktime any Incentive Stock Option granted under the Plan is exercised, the Company will be entitled to legend the certificates representing the shares of Stock purchased pursuant to the Option to clearly identify them as representing the shares purchased upon the exercise of an Incentive Stock Option. An Incentive Stock Option may only be granted within ten (10) years from the earlier of the date the Plan is adopted or approved by the Company’s stockholders.
(a) Option Price. Subject to adjustment in accordance with Section 5.2 and the other participating Company subsidiaries (collectively referred toprovisions of this Section 3.2, the Exercise Price must be as “Nicolet”) an opportunity to shareset forth in the growthapplicable Award Agreement, but in no event may it be less than the Fair Market Value on the date the Option is granted.With respect to each grant of Nicoletan Incentive Stock Option to a Participant who is an Over 10% Owner, the Exercise Price may not be less than one hundred and ten percent (110%) of the Fair Market Value on the date the Option is granted.
(b) Option Term. Any Incentive Stock Option granted to a Participant who is not an Over 10% Owner is not exercisable after the expiration of ten (10) years after the date the Option is granted. Any Incentive Stock Option granted to an Over 10% Owner is not exercisable after the expiration of five (5) years after the date the Option is granted. The term of any Nonqualified Stock Option shall be as specified in the applicable Award Agreement.
(c) Payment. Payment for all shares of Stock purchased pursuant to exercise of an Option will be made in any form or manner authorized by the Committee in the Award Agreement or by amendment thereto, including, but not limited to, cash, cash equivalents, or, if the Award Agreement provides, but in any case subject to such procedures or restrictions as the Committee may impose:
(i) by delivery to the Company of a number of shares of Stock owned by the holder having an aggregate Fair Market Value of not less than the product of the Exercise Price multiplied by the number of shares the Participant intends to purchase upon exercise of the Option on the date of delivery;
(ii) in a cashless exercise through a discounted methodbroker, except if and to the extent prohibited by law as to officers and directors, including without limitation, the Sarbanes-Oxley Act of purchasing voting common stock2002, as amended; or
(iii) by having a number of Nicolet Bankshares, Inc. Itshares of Stock withheld, the Fair Market Value of which as of the date of exercise is believedsufficient to satisfy the Exercise Price.
Payment must be made at the time that the Option or any part thereof is exercised, and no shares may be issued or delivered upon exercise of an Option until full payment has been made by the Participant. The holder of an Option, as such, has none of the rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option granted under the Plan is exercisable by whom, at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Award Agreement; provided, however, that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may modify the terms of an Option to the extent not prohibited by the terms of the Plan, including, without limitation, accelerating the time or times at which such Option may be exercised in whole or in part, including, without limitation, upon a change in control and may permit the Participant or any other designated person to exercise the Option, or any portion thereof, for all or part of the remaining Option term, notwithstanding any provision of the Award Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect to an Incentive Stock Option, in the event of Termination of Employment of a Participant, the Option or portion thereof held by the Participant which is unexercised will expire, terminate, and become unexercisable no later than the expiration of three (3) months after the date of Termination of Employment; provided, however, that in the case of a holder whose Termination of Employment is due to death or Disability, one (1) year will be substituted for such three (3) month period; provided further, that such time limits may be exceeded by the Committee under the terms of the grant, in which case, the Incentive Stock Option will be a Nonqualified Option if it is exercised after the time limits that would otherwise apply. For purposes of this Subsection (e), a Termination of Employment of the Participant will not be deemed to have occurred if the Participant is employed by another corporation (or a parent or subsidiary corporation of such other corporation) which has assumed the Incentive Stock Option of the Participant in a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options. Notwithstanding anything to the contrary in this Section 3.2, any Option issued in substitution for an option previously issued by another entity, which substitution occurs in connection with a transaction to which Code Section 424(a) is applicable, may provide for an exercise price computed in accordance with such Code Section and the regulations thereunder and may contain such other terms and conditions as the Committee may prescribe to cause such substitute Option to contain as nearly as possible the same terms and conditions (including the applicable vesting and termination provisions) as those contained in the previously issued option being replaced thereby.
(g) No Reload Grants. Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of shares of Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other option held by a Participant.
(h) No Repricing. Except as provided in Section 5.2, without the approval of the Company’s stockholders the exercise price of an Option may not be reduced after the grant of the Option and an Option may not be surrendered in consideration of, or in exchange for, the grant of a new Option having an exercise price below that of the Option that was surrendered, Stock, cash, or any other Award.
3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock Appreciation Right granted under the Plan must be evidenced by an Award Agreement. A Stock Appreciation Right entitles the Participant to receive the excess of (1) the Fair Market Value of a specified or determinable number of shares of the Stock at the time of payment or exercise over (2) a specified or determinable price, which may not be less than the Fair Market Value on the date of grant.
(a) Settlement. Upon settlement of a Stock Appreciation Right, the Company must pay to the Participant, at the discretion of the Committee, the appreciation in cash or shares of Stock (valued at the aggregate Fair Market Value on the date of payment or exercise) as provided in the Award Agreement or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right granted under the Plan is exercisable or payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Award Agreement; provided, however, that subsequent to the grant of a Stock Appreciation Right, the Committee, at any time before complete termination of such Stock Appreciation Right, may accelerate the time or times at which such Stock Appreciation Right may be exercised or paid in whole or in part.
(c) No Repricing. Except as provided in Section 5.2, without the approval of the Company’s stockholders the price of a Stock Appreciation Right may not be reduced after the grant of the Stock Appreciation Right, and a Stock Appreciation Right may not be surrendered in consideration of, or in exchange for, the grant of a new Stock Appreciation Right having a price below that of the Stock Appreciation Right that was surrendered, Stock, cash, or any other Award.
3.4 Terms and Conditions of Other Stock-Based Awards. An Other Stock-Based Award shall entitle the Participant to receive, at a specified future date, payment of an amount equal to all or a portion of either (i) the value of a specified or determinable number of shares of Stock granted by the Committee, (ii) a percentage or multiple of the value of a specified number of shares of Stock determined by the Committee or (iii) dividend equivalents on a specified or a determinable number, or a percentage or multiple of a specified number, of shares of Stock determined by the Committee. At the time of the grant, the Committee must determine the specified number of shares of Stock or the percentage or multiple of the specified number of shares of Stock, as may be applicable; and the performance goals, if any, applicable to the determination of the ultimate payment value of the Other Stock-Based Award. The Committee may provide for an alternate percentage or multiple under certain specified conditions.
(a) Payment. Payment in respect of Other Stock-Based Awards may be made by the Company in cash or shares of Stock (valued at Fair Market Value as of the date payment is owed) as provided in the applicable Award Agreement or Award Program or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Other Stock-Based Award granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee may specify in the applicable Award Agreement or Award Program; provided, however, that subsequent to the grant of a Other Stock-Based Award, the Committee, at any time before complete termination of such Other Stock-Based Award, may accelerate the time or times at which such Other Stock-Based Award may be paid in whole or in part.
3.5 Terms and Conditions of Cash Performance Awards. A Cash Performance Award shall entitle the Participant to receive, at a specified future date, payment of an amount equal to all or a portion of either (i) the value of a specified or determinable number of units (stated in terms of a designated or determinable dollar amount per unit) granted by the Committee, or (ii) a percentage or multiple of a specified amount determined by the Committee. At the time of the grant, the Committee must determine the base value of each unit; the number of units subject to a Cash Performance Award, the specified amount and the percentage or multiple of the specified amount, as may be applicable; and the performance goals, if any, applicable to the determination of the ultimate payment value of the Cash Performance Award. The Committee may provide for an alternate base value for each unit or an alternate percentage or multiple under certain specified conditions.
(a) Payment. Payment in respect of Cash Performance Awards shall be made by the Company in cash.
(b) Conditions to Payment. Each Cash Performance Award granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee may specify in the applicable Award Agreement or Award Program; provided, however, that subsequent to the grant of a Cash Performance Award, the Committee, at any time before complete termination of such Cash Performance Award, may accelerate the time or times at which such Cash Performance Award may be paid in whole or in part.
3.6 Treatment of Awards on Termination of Service. Except as otherwise provided by Plan Section 3.2(e), any Award under this Plan to a Participant who has experienced a Termination of Employment, Separation from Service, or termination of some other service relationship with the Company and its Affiliates may be cancelled, accelerated, paid or continued, as provided in the applicable Award Agreement or Award Program, or, as the Committee may otherwise determine to the extent not prohibited by the Plan. The portion of any Award exercisable in the event of continuation or the amount of any payment due under a continued Award may be adjusted by the Committee to reflect the Participant’s period of service from the date of grant through the date of the Participant’s Termination of Employment, Separation from Service or termination of some other service relationship or such other factors as the Committee determines are relevant to its decision to continue the Award.
SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of Stock issued under the Plan will advance Nicolet’s interestbe issued in developing strong incentivesthe Participant’s name, but, if the applicable Award Agreement or Award Program so provides, the shares of Stock will be held by a custodian designated by the Committee (the “Custodian”). Each applicable Award Agreement or Award Program providing for transfer of shares of Stock to work toward Nicolet’s continued successthe Custodian may require a Participant to complete an irrevocable stock power appointing the Custodian or the Custodian’s designee as the attorney-in-fact for the Participant for the term specified in the applicable Award Agreement or Award Program, with full power and authority in the Participant’s name, place and stead to transfer, assign and convey to the Company any shares of Stock held by demonstratingthe Custodian for such Participant, if the Participant forfeits the shares under the terms of the applicable Award Agreement or Award Program. During the period that the Custodian holds the shares subject to participants that long-term economic rewards arethis Section, the Participant is entitled to all rights, except as provided in some measurethe applicable Award Agreement or Award Program, applicable to shares of Stock not so held. Any dividends declared on shares of Stock held by the Custodian must, as provided in the applicable Award Agreement or Award Program, be paid directly tied to their individual performance. This owner-managed mentality alsothe Participant or, in the alternative, be retained by the Custodian or by the Company until the expiration of the term specified in the applicable Award Agreement or Award Program and shall then be delivered, together with any proceeds, with the shares of Stock to the Participant or to the Company, as applicable.
4.2 Restrictions on Transfer. The Participant does not have the right to make or permit to exist any disposition of the shares of Stock issued pursuant to the Plan except as provided in the Plan or the applicable Award Agreement or Award Program. Any disposition of the shares of Stock issued under the Plan by the Participant not made in accordance with the Plan or the applicable Award Agreement or Award Program will be void. The Company will not recognize, or have the duty to recognize, any disposition not made in accordance with the Plan and the applicable Award Agreement or Award Program, and the shares so transferred will continue to be bound by the Plan and the applicable Award Agreement or Award Program.
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash distributions under the Plan any taxes required to be withheld by federal, state or local government. Whenever the Company proposes or is required to issue or transfer shares of Stock under the Plan or upon the vesting of any Award, the Company has the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state and local tax withholding requirements prior to the delivery of any certificate or certificates for such shares or the vesting of such Award. A Participant may satisfy the withholding obligation in cash, cash equivalents, or if and to the extent the applicable Award Agreement, Award Program, or Committee procedure so provides, a greater communityParticipant may elect to have the number of interest between Plan participantsshares of Stock he is to receive reduced by, or tender back to the Company, the smallest number of whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock, is sufficient to satisfy federal, state and local, if any, withholding obligation arising from exercise or payment of an Award.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant of Options, Stock Appreciation Rights and Other Stock-Based Awards; the number of shares of Stock reserved for issuance upon the exercise, settlement, vesting, grant or payment, as applicable, of each outstanding Option, Stock Appreciation Right, and Other Stock-Based Award (if any); and the shareholdersExercise Price of each outstanding Option and the threshold price of each outstanding Stock Appreciation Right, shall be proportionately adjusted for any nonreciprocal transaction between the Company and the holders of capital stock
of the Company that causes the per share value of the shares of Stock underlying an Award to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend (each, an “Equity Restructuring”).
(b) In the event of a merger, consolidation, reorganization, extraordinary dividend, sale of substantially all of the Company’s assets, other change in capital structure of the Company, tender offer for shares of Stock, or a change in control of the Company (as defined by the Committee in the applicable Award Agreement or Award Program), that in each case does not constitute an Equity Restructuring, the Committee may make such adjustments with respect to Awards and take such other action as it deems necessary or appropriate, including, without limitation, the substitution of new Awards, the assumption of awards not originally granted under the Plan, or the adjustment of outstanding Awards, the acceleration of Awards, the removal of restrictions on outstanding Awards, or the termination of outstanding Awards in exchange for the cash value determined in good faith by the Committee of the vested and/or unvested portion of the Award, all as may be provided in the applicable Award Agreement or Award Program or, if not expressly addressed therein, as the Committee subsequently may determine in its sole discretion. Any adjustment pursuant to this Section 5.2 may provide, in the Committee’s discretion, for the elimination without payment therefor of any fractional shares that might otherwise become subject to any Award, but except as set forth in this Section may not otherwise diminish the then value of the Award.
(c) Notwithstanding any other provision of this Plan to the contrary, in taking any action pursuant to Subsection (a) or (b) with respect to a Nonqualified Stock Option or a Stock Appreciation Right, the Committee shall consider any provisions of Code Section 409A and the regulations thereunder that are required to be followed as a condition of the Nonqualified Stock Option and the Stock Appreciation Right not being treated as the grant of a new Option or Stock Appreciation Right or a change in the form of payment. Any adjustment described in the preceding sentence may include a substitution in whole or in part of other equity securities of the issuer and the class involved in such Equity Restructuring in lieu of the shares of Stock that are subject to the Award.
(d) The existence of the Plan and the Awards granted pursuant to the Plan shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its discretion, grant to any holder of an Award the right to receive, at such times and in such amounts as determined by the Committee in its discretion, a cash amount which is intended to reimburse such person for all or a portion of the federal, state and local income taxes imposed upon such person as a consequence of the receipt of the Award or the exercise of rights thereunder.
5.4 Compliance with Code.
(a) Code Section 422. All Incentive Stock Options to be granted hereunder are intended to comply with Code Section 422, and all provisions of the Plan and all Incentive Stock Options granted hereunder must be construed in such manner as to effectuate that intent.
(b) Code Section 409A. Except to the extent provided otherwise by the Committee, Awards under the Plan are intended to satisfy the requirements of Section 409A of the Code (and the Treasury Department guidance and regulations issued thereunder) so as to avoid the imposition of any additional taxes or penalties under Code Section 409A. If the Committee determines that an Award, Award Agreement, Award Program, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Code Section 409A, then unless the Committee provides otherwise, such Award, Award Agreement, Award Program, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan, Award Agreement, and / or Award Program will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Code Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant.
5.5 Right to Terminate Employment or Service. Nothing in the Plan or in any Award Agreement confers upon any Participant the right to continue as an officer, employee, or director of the Company or any of its Affiliates or affect the right of the Company or any of its Affiliates to terminate the Participant’s employment or services at any time.
5.6 Non-Alienation of Benefits. Other than as provided herein, no benefit under the Plan may be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; and any attempt to do so shall be void. No such benefit may, prior to receipt by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the Participant.
5.7 Restrictions on Delivery and Sale of Shares; Legends. Each Award is subject to the condition that if at any time the Committee, in its discretion, shall determine that the listing, registration or qualification of the shares covered by such Award upon any securities exchange or under any state or federal law is necessary or desirable as a condition of or in connection with the granting of such Award or the purchase or delivery of shares thereunder, the delivery of any or all shares pursuant to such Award may be withheld unless and until such listing, registration or qualification shall have been effected. If a registration statement is not in effect under the Securities Act of 1933 or any applicable state securities laws with respect to the shares of Stock purchasable or otherwise deliverable under Awards then outstanding, the Committee may require, as a condition of exercise of any Option or as a condition to any other delivery of Stock pursuant to an Award, that the Participant or other recipient of an Award represent, in writing, that the shares received pursuant to the Award are being acquired for investment and not with a view to distribution and agree that the shares will not be disposed of except pursuant to an effective registration statement, unless the Company shall have received an opinion of counsel that such disposition is exempt from such requirement under the Securities Act of 1933 and any applicable state securities laws. The Company may include on certificates representing shares delivered pursuant to an Award such legends referring to the foregoing representations or restrictions or any other applicable restrictions on resale as the Company, in its discretion, shall deem appropriate.
5.8 Listing and Legal Compliance. The Committee may suspend the exercise or payment of any Award so long as it determines that securities exchange listing or registration or qualification under any securities laws is required in connection therewith and has not been completed on terms acceptable to the Committee.
5.9 Termination and Amendment of the Plan. The Board of Directors at any time may amend or terminate the Plan without stockholder approval; provided, however, that the Board of Directors may condition any amendment on the approval of stockholders of the Company if such approval is necessary or advisable with respect to tax, securities or other applicable laws. The Board of Directors shall consider that to preserve the Plan’s ability to grant Incentive Stock Options, stockholder approval is required for any amendment to the Plan that increases the number of shares of Stock available for the grant of Incentive Stock Options under the Plan, changes the employees (or class of employees) eligible to receive Incentive Stock Options under the Plan, or if the Plan is assumed in connection with a corporate transaction which results in a change in either the granting corporation or the stock available for purchase or grant under the Plan; provided, however, if the consolidation agreement fully describes the Plan and such agreement is approved by the stockholders, no further stockholder approval of the Plan shall be required. No such termination or amendment without the consent of the holder of an Award may adversely affect the rights of the Participant under such Award.
5.10 Stockholder Approval. The Plan shall be submitted to the stockholders of the Company for their approval within twelve (12) months after the adoption of the Plan, as amended and restated, by the Board of Directors of the Company. | 3.1. | “Account” means the funds accumulated with respect to an individual employee as a result of deductions from such employee’s paycheck for the purpose of purchasing Stock under this Plan. The funds allocated to an employee’s Account shall remain the property of the employee at all times but may be commingled with the general funds of Nicolet, except to the extent such commingling may be prohibited by the laws of any applicable jurisdiction. |
| 3.2. | “Administrator” means the Committee or the persons or third party entity acting within the scope of their authority to administer the Plan pursuant to a delegation of authority from the Committee or otherwise being retained pursuant to Section 22. |
| 3.3. | “Bank” means Nicolet National Bank. |
| 3.4. | “Board” means the Board of Directors of the Company. |
| 3.5. | “Code” means the Internal Revenue Code of 1986, as amended from time to time. |
| 3.6. | “Committee” means the Compensation Committee of the Board. The Committee may delegate its responsibilities as provided in Section 22. |
| 3.7. | “Company” means Nicolet Bankshares, Inc. |
| 3.8. | “Compensation” means only regular pay and wages and variable compensation pay which is paid to an eligible employee, before deduction for any salary deferral contributions to any tax qualified or nonqualified deferred compensation plan, but excluding, without limitation, bonus payments, fringe benefit payments or reimbursements, income realized as a result of participation in any stock plan, and other incentive payments. |
| 3.9. | “Enrollment Agreement” means an agreement between the Company and an employee, in such form as may be established from time to time, pursuant to which the employee elects to participate in this Plan, or elects changes with respect to such participation as permitted under the Plan. |
| 3.10. | “Fair Market Value” means, as of any date, the closing price (or if no sales were reported, the closing price on the date immediately preceding such date) as reported on the NASDAQ on the day of determination. |
| 3.11. | “Investment Account” means an account created by the Administrator for each Participant to be used for tracking Shares purchased under the Plan. |
| 3.12. | “Issue Price” or “Purchase Price” is the amount equal to eighty-five percent (85%) (or such greater percentage as designated by the Committee) of the Fair Market Value of a Share on the Purchase Date. |
| 3.13. | “Offering Date” as used in this Plan shall be the commencement date of an offering. A different date may be set by the Committee. |
If such approval is not obtained, the Plan, as in effect prior to this amendment and restatement, shall continue in effect but this amendment and restatement shall be rendered null and void. | 3.14. | “Plan” means this Nicolet Bankshares, Inc. Employee Stock Purchase Plan. |
| 3.15. | “Purchase Date” means the last trading day of each offering period. |
| 3.16. | “Shares” or “Stock” means the common stock of Nicolet Bankshares, Inc. |
| 4. | Eligibility.Unless otherwise determined by the Committee in a manner that is consistent with Section 423 of the Code, any employee who has been employed by Nicolet for at least twelve (12) months and is customarily employed for at least twenty (20) hours per week and more than five (5) months in any calendar year is eligible to participate in an offering if such employee is actively employed on the last business day preceding the Offering Date for such offering. Notwithstanding the foregoing, the Committee may exclude from participation in the Plan or any offering employees who are “highly compensated employees” (within the meaning of Section 414(q) of the Code) or a sub-set of such highly compensated employees with compensation above a specified level or who are officers subject to Section 16 of the Securities Exchange Act, to the extent and in a manner consistent with the requirements of Section 423 of the Code. |
| 5. | Offerings.The Plan shall be implemented by a series of offering periods as described below. Subject to the right of the Company in its sole discretion to sooner terminate the Plan or to change the commencement date or term of any offering, commencing July 15, 2018, the Plan will operate with separate consecutive three-month offerings with the following Offering Dates: July 15, October 15, January 15 and April 15. The Committee may change the duration of future offerings and/or the start and end dates of future offering periods, subject to a maximum offering period of twenty seven (27) months. |
| 6. | Number of Shares Offered/Purchase of Shares. The maximum number of Shares that will be offered under the Plan is150,000 Shares, subject to adjustment as permitted under Section 20. The Shares may be newly issued shares, treasury shares or shares acquired on the open market. If the total number of Shares for which options are to be granted on any date in accordance with Section 12 exceeds the number of Shares then available under the Plan, the Company shall make a pro rata allocation of the Shares remaining available in as nearly a uniform manner as it determines is practicable and equitable. In such event, the payroll deductions to be made pursuant to the authorizations shall be reduced accordingly and written notice of the reduction shall be provided to each employee affected. |
| 7.1. | An eligible employee may become a participant by completing and submitting an Enrollment Agreement and such other documents as prescribed by the Company to his or her employer prior to the commencement of the offering to which it relates, in accordance with the enrollment procedures established by the Committee. Participation in the Plan is entirely voluntary. The Enrollment Agreement may be completed at any time after the employee becomes eligible to participate in the Plan and will be effective as of the Offering Date next following the submission of a properly completed Enrollment Agreement. |
| 7.2. | Payroll deductions for a participant shall commence as of the first pay period which ends after the Offering Date as described above and shall automatically continue through subsequent offerings pursuant to Section 10 until the participant’s termination of employment, subject to modification by the employee as provided in Section 8.1, and unless participation is earlier withdrawn or suspended by the employee as provided in Section 9. |
| 8.1. | At the time an employee files an Enrollment Agreement, the employee shall elect to have deductions made from the employee’s after-tax Compensation each pay period during the time he or she is a participant in an offering at any whole dollar amount of Compensation (as provided by the Committee with respect to an offering) with a minimum contribution of twenty dollars ($20.00) and a maximum contribution of four hundred dollars ($400.00) on each pay day occurring during an offering period (or such other minimum and maximum amounts or percentages as the Committee may establish from time to time before an offering period begins). A participant may change his or her payroll deduction election, including changing the payroll deduction amount to zero, effective as of any Offering Date by filing a revised authorization, provided the revised authorization is filed prior to such Offering Date. |
| 8.2. | All payroll deductions made for a participant shall be credited to his or her Account under the Plan. Payroll deduction shall be the sole means of accumulating funds in a participant’s Account and of making payment for Shares. All payroll deductions received or held by Nicolet under the Plan may be used by Nicolet for any corporate purpose to the extent permitted by applicable law, and Nicolet shall not be required to segregate such payroll deductions or contributions. |
| 8.3. | A participant may withdraw from or suspend his or her participation in the Plan as provided in Section 9, but no other change can be made during an offering with respect to that offering. A participant may also make a prospective election, by changing his or her payroll deduction percentage to zero as set forth in Section 8.1, to cease participation in the Plan effective as of the next Offering Date. Other changes permitted under the Plan may only be made with respect to an offering that has not yet commenced. |
| 9. | Withdrawal and Suspension. |
| 9.1. | An employee may withdraw from an offering, in whole but not in part, at any time prior to the first day of the last calendar month of such offering by submitting a withdrawal notice to his or her employer, in which event the entire balance of his or her Account will be refunded as soon as practicable thereafter and the employee’s option shall be automatically terminated. |
| 9.2. | An employee may, at any time prior to the first day of the last calendar month of an offering, reduce to zero the percentage by which he or she has elected to have his or her Compensation reduced, thereby suspending participation in the Plan. The reduction will be effective as soon as administratively feasible after receipt of the participant’s election. Shares shall be purchased in accordance with Section 13 based on the amounts accumulated in the participant’s Account prior to the suspension of payroll deductions. |
| 9.3. | If an employee withdraws or suspends his or her participation pursuant to Sections 9.1 or 9.2, he or she shall not participate in a subsequent offering unless and until he or she re-enters the Plan. To re-enter the Plan, an employee who has previously withdrawn or suspended participation by reducing payroll deductions to zero must file a new Enrollment Agreement in accordance with Section 7.1. The employee’s re-entry into the Plan will not become effective before the beginning of the next offering following his or her withdrawal or suspension. |
| 10. | Automatic Re-Enrollment.At the termination of each offering each participating employee who continues to be eligible to participate pursuant to Section 4 shall be automatically re-enrolled in the next offering, unless the employee has advised his or her employer otherwise. Upon termination of the Plan, any balance in each employee’s Account shall be refunded to the employee. |
| 11. | Interest. No interest will be paid or allowed on any money in the Accounts of participating employees, except to the extent payment of interest is required by the laws of any applicable jurisdiction. |
| 12. | Granting of Option. On each Offering Date, this Plan shall be deemed to have granted to the participant in the applicable offering period an option to purchase on the Purchase Date a number of Shares (which may include a fractional share) determined by dividing the participant’s accumulated payroll deductions by the Purchase Price. |
| 13. | Exercise of Option/Purchase of Shares.Each employee who continues to be a participant in an offering on the last business day of that offering shall have his or her option exercised automatically on the Purchase Date of the offering period. The participant’s accumulated payroll deductions will be used to purchase the maximum number of whole shares that can be purchased with the amounts in the participant’s Account. Any cash remainder in the participant’s account will be added to future payroll deductions for the purchase of shares in the next offering. |
| 14. | Tax.This Plan is intended to be a qualified employee stock purchase plan pursuant to Section 423 of the Code, and any provision of the Plan that is inconsistent with Section 423 of the Code shall be reformed to comply with Section 423 of the Code. To the extent any (i) grant of an option to purchase Shares, (ii) purchase of Shares, or (iii) disposition of Shares purchased under the Plan gives rise to any tax withholding obligation, the Administrator may implement appropriate procedures to ensure that such tax withholding obligations are met. Those procedures may include, without limitation, increased withholding from an employee’s current compensation, cash payments to the Bank by an employee, or a sale of a portion of the stock purchased under the Plan, which sale may be required and initiated by the Bank. Each participant shall give the Bank prompt written notice of any disposition or other transfer of Shares acquired pursuant to the exercise of an option acquired under the Plan, if such disposition or transfer is made within two years after date of grant or within one year after the exercise date. |
| 15. | Employee’s Rights as a Shareholder.No participating employee shall have any right as a shareholder with respect to any Shares, including without limitation, any voting or dividend rights, until the Shares have been purchased in accordance with Section 13 above and the Shares have been issued by the Company. |
5.11 Choice of Law. The laws of the State of Wisconsin shall govern the Plan, to the extent not preempted by federal law, without reference to the principles of conflict of laws. | 16. | Evidence of Stock Ownership. |
| 16.1. | Following the end of each offering, the number of Shares purchased by each participant shall be deposited into the participant’s Investment Account. |
| 16.2. | Unless the Committee otherwise requires that the Shares be retained in the participant’s Investment Account for a specified period of time, including for such period of time required to meet the holding requirement of Section 423(a) of the Code, a participant shall be free to undertake a disposition (as that term is defined in Section 424(c) of the Code) of the Shares in his or her Investment Account at any time, whether by sale, exchange, gift, or other transfer of legal title, but in the absence of such a disposition of the Shares, the Shares must remain in the participant’s Investment Account until the holding period set forth in Section 423(a) of the Code has been satisfied. With respect to Shares for which the Section 423(a) holding period has been satisfied, the participant may move those Shares to another brokerage account of participant’s choosing. |
| 17. | Option Rights Not Transferable.No employee shall be permitted to sell, assign, transfer, pledge, or otherwise dispose of or encumber either the payroll deductions credited to his or her Account or an option or any rights with regard to the exercise of an option or rights to receive Shares under the Plan. If any such action is taken by the employee, or any claim is asserted by any other party in respect of such right and interest whether by garnishment, levy, attachment or otherwise, the action or claim will be treated as an election to withdraw funds in accordance with Section 9. During the employee’s lifetime, only the employee can make decisions regarding the participation in or withdrawal from an offering under the Plan. |
| 18. | Termination of Employment. Upon termination of employment for any reason whatsoever, including but not limited to death or retirement, the balance in the Account of a participating employee shall be paid to the employee or his or her estate. Whether and when employment is deemed terminated for purposes of this Plan shall be determined by the Administrator in its sole discretion. |
| 19. | Amendment or Termination of the Plan. The Committee and the Board shall have the right at any time and without notice to amend, modify or terminate the Plan; provided, that no employee’s existing rights under any offering already made under Section 5 hereof may be adversely affected thereby, and provided further that no such amendment of the Plan shall, except as provided in Section 20, increase the total number of Shares to be offered under the Plan above the limit specified in Section 6 unless shareholder approval is obtained. |
| 20. | Changes in Capitalization. In the event of reorganization, recapitalization, stock split, stock dividend, combination of Shares, merger, consolidation, offerings of rights, or any other change in the structure of the Shares, the Committee may make such adjustment, if any, as it may deem appropriate in the number, kind, and the price of Shares available for purchase under the Plan, and in the number of Shares which an employee is entitled to purchase including, without limitation, closing an offering early and permitting purchase on the last business day of the reduced offering period, or terminating an offering and refunding participants’ Account balances. |
| 21. | Share Ownership. Notwithstanding anything in the Plan to the contrary, no employee shall be granted an option for any Shares under the Plan if the employee, immediately after such grant, owns Shares (including all Shares that may be purchased under outstanding options under the Plan) possessing 5% or more of the total combined voting power or value of all classes of Shares of the Company. For the foregoing purposes the rules of Section 424(d) of the Code shall apply in determining share ownership, and Shares the employee may purchase under outstanding options shall be treated as owned by the employee. In addition, no employee shall be granted an option for any Shares under the Plan that permit his or her rights to purchase Shares under all “employee stock purchase plans” of the Company and its subsidiary corporations in any calendar year to accrue at a total value that exceeds $25,000 of Fair Market Value of such Shares (without application of any Plan discount) at the Offering Date. |
| 22. | Administration and Board Authority. |
| 22.1. | The Plan shall be administered by the Board. The Board has delegated its full authority under the Plan to the Committee, and the Committee may further delegate any or all of its authority under this Plan to such officer(s) of the Company, the Bank, or other Company subsidiary as it may designate. Notwithstanding any such delegation of authority, the Board may itself take any action under the Plan in its discretion at any time, and any reference in this Plan document to the rights and obligations of the Committee shall be construed to apply equally to the Board. |
| 22.2. | The Administrator shall be vested with full authority and discretion to construe the terms of the Plan and make factual determinations under the Plan, and to make, administer, and interpret such rules and regulations as it deems necessary to administer the Plan, and any determination, decision, or action of the Administrator in connection with the construction, interpretation, administration, or application of the Plan shall be final, conclusive, and binding upon all participants and any and all persons claiming under or through any participant. The Administrator may retain outside entities and professionals to assist in the administration of the Plan including, without limitation, a vendor or vendors to perform enrollment and brokerage services. |
| 23. | Notices. All notices or other communications by a participant to the Company or other entity designated for a particular purpose under or in connection with the Plan shall be deemed to have been duly given when received by the Company or other designated entity, or when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. |
| 24. | Limitations on Sale of Stock Purchased Under the Plan.The Plan is intended to provide common stock for investment and not for resale. Neither the Company nor the Bank or any other subsidiary of the Company intends to restrict or influence any employee in the conduct of the employee’s own affairs. An employee may sell stock purchased under the Plan at any time the employee chooses, subject to holding periods imposed consistent with the terms of the Plan and any offering and compliance with any applicable Federal, state or foreign securities laws. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE COMPANY’S STOCK. |
| 25. | Governmental Regulation/Compliance with Applicable Law.The Company’s obligation to sell and deliver Shares under this Plan is subject to all applicable laws and regulations and the approval of any governmental authority required in connection with the authorization, issuance, or sale of such Shares. Shares shall not be issued with respect to an option granted under the Plan unless the exercise of such option and the issuance and delivery of the Shares pursuant thereto shall comply with all applicable provisions of law. In addition, the terms of an offering under this Plan, or the rights of an employee under an offering, may be modified to the extent required by applicable law. |
| 26. | No Employment Rights. Nothing in the Plan shall confer upon any employee the right to continue in employment for any period of specific duration, nor interfere with or otherwise restrict in any way the rights of Nicolet, or of any employee, which rights are hereby expressly reserved by each, to terminate such person’s employment at any time for any reason, with or without cause. |
| 27. | Equal Rights and Privileges. Notwithstanding any provision of the Plan to the contrary and in accordance with Section 423 of the Code, all eligible employees who are granted options under the Plan shall have the same rights and privileges. |
| 28. | Entire Plan. This Plan constitutes the entire plan with respect to the subject matter hereof and supersedes all prior plans with respect to the subject matter hereof. |
| 29. | Term of Plan. The Plan shall become effective as provided herein and, unless terminated earlier as provided herein, shall have a term of ten (10) years. |
| 30. | Severability. If any provision of the Plan shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and the Plan shall be construed as if such invalid or unenforceable provision were omitted. |
| 31. | Headings. The headings of sections herein are included solely for convenience and shall not affect the meaning of any of the provisions of the Plan. |
| 32. | Governing Law. The Plan shall be governed by the laws of the State of Wisconsin. |
5.12 Effective Date of Plan. The Plan, as amended and restated, is to become effective as of February 19, 2019, the date the Plan as so amended and restated was approved by the Board of Directors, subject to shareholder approval. 
IN WITNESS WHEREOF, the undersigned has executed the Plan, as amended and restated, on behalf of the Company as of February 19, 2019. 
NICOLET BANKSHARES, INC.
By:
Title:
