Larry J. Helling, CEO of Cedar Rapids Bank & QCR Holdings | (1) | Pursuant to Securities and Exchange Commission reporting requirements, we report the grant date fair value of each award calculated in accordance with FASB ASC Topic 718. For awards of restricted stock and restricted stock units, the fair market value per share is equal to the closing price of our stock on the date of the grant. Performance awards are valued assuming maximum attainment, the probable outcome at the time of grant. | 2023 2022 2021 | $437,739 $416,894 $363,297 | -- -- -- | $303,489 $294,582 $286,937 | $485,263 $515,315 $495,307 | $500,083 $561,512 $725,382 | $72,009 $66,814 $68,218 | $1,798,583 $1,855,117 $1,939,141 | Todd A. Gipple, President and CFO | 2023 2022 2021 | $369,365 $354,307 $337,340 | -- -- -- | $200,063 $238,391 $232,151 | $363,970 $389,291 $408,816 | $237,882 $561,489 $550,161 | $58,224 $52,749 $52,124 | $1,229,504 $1,596,227 $1,580,592 | John H. Anderson, CEO of Quad City Bank | 2023 2022 2021 | $284,783 $272,520 $259,469 | -- -- -- | $131,359 $119,183 $138,745 | $145,320 $179,216 $158,949 | $61,285 $55,374 $49,935 | $57,379 $52,803 $53,276 | $680,126 $679,096 $660,374 | Kurt A. Gibson, President & CEO of Community State Bank (4) | 2023 2022 | $234,077 $224,534 | -- -- | $47,659 $47,890 | $131,543 $134,171 | -- -- | $35,179 $33,829 | $448,458 $440,424 | Monte C. McNew, CEO of Guaranty Bank | 2023 2022 2021 | $265,412 $254,592 $242,400 | -- -- -- | $44,194 $50,315 $100,041 | $122,897 $110,534 $110,168 | -- -- -- | $52,201 $56,857 $39,781 | $484,704 $472,298 $492,390 |
35(1) | Pursuant to Securities and Exchange Commission reporting requirements, we report the grant date fair value of each award calculated in accordance with FASB ASC Topic 718. The assumptions used in calculating these amounts are set forth in Note 17 of our Annual Report on Form 10-K for the year ended December 31, 2023. For awards of restricted stock and restricted stock units, the fair market value per share is equal to the closing price of our stock on the date of the grant. Performance awards are valued assuming maximum attainment, the probable outcome at the time of grant. |
| (2) | The amounts reflected in this column include both an increase in the actuarial present value of the executive’s benefit under his SERP as well as “above market earnings” under the deferred compensation arrangement. The amount of above market earnings is determined in accordance with, and for purposes of, proxy disclosure rules only (generally over 120% of the applicable federal long-term rate). The portion of the amount reflected that is attributable to above market earnings for Mr. Helling is, for 2021 equal to $21,996, for 2020 equal to $19,351 and for 2019 equal to $13,570. Neither Mr. Gipple nor Mr. Anderson had above market(2) | The amounts reflected in this column include both an increase in the actuarial present value of the executive’s benefit under his SERP as well as “above-market earnings” under the deferred compensation arrangement. The amount of above-market earnings is determined in accordance with, and for purposes of, proxy disclosure rules only (generally over 120% of the applicable federal long-term rate). The portion of the amount reflected that is attributable to above-market earnings for Mr. Helling is, for 2023 equal to $28,145, for 2022 equal to $24,996 and for 2021 equal to $21,996. Neither Mr. Gipple nor Mr. Anderson had above-market earnings as determined for purposes of proxy disclosure rules. |
| (3) | “All Other Compensation” for the named executive officers during 2021 | | | (3) | “All Other Compensation” for the named executive officers during 2023 is summarized below. |
| Name | Employer 401(k) Plan Contribution | Tax Planning Reimbursement | Car Allowance | Employer Deferred Compensation Contribution | Life Insurance Benefit | Executive Health Physical | Country Club Membership | | Larry J. Helling | $14,850 | $2,258 | $6,000 | $25,000 | $19,701 | $4,200 | -- | | Todd A. Gipple | $14,850 | $875 | $8,000 | $20,000 | $10,299 | $4,200 | -- | | John H. Anderson | $14,850 | -- | $6,000 | $10,000 | $7,164 | $3,137 | $16,228 | | Kurt A. Gibson | $14,850 | -- | $6,000 | $10,000 | -- | -- | $4,329 | | Monte C. McNew | $14,850 | -- | $6,000 | $10,000 | $18,631 | -- | $2,720 |
(4) | Mr. Gibson was not a named executive officer in 2021. |
Grant of Plan-Based Awards The following table provides information on non-equity incentive plan awards and equity awards made to our named executive officers during 2023. The non-equity incentive plan awards were made under the annual cash incentive bonus program and the equity awards were made under our Equity Incentive Plan, each of which is described in our CD&A. Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: # of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (l) | Larry J. Helling | 1/1/23 3/1/23 | -- -- $196,982 | -- -- $393,965 | -- -- $590,947 | -- -- -- | 1,881 -- -- | -- -- -- | -- 4,296 -- | $74,469 $229,020 -- | Todd A. Gipple | 1/1/23 3/1/23 | -- -- $147,746 | -- -- $295,492 | -- -- $443,238 | -- -- -- | 753 -- -- | -- -- -- | -- 3,194 -- | $29,791 $170,272 -- | John H. Anderson | 1/1/23 3/1/23 | -- -- $71,196 | -- -- $142,392 | -- -- $213,587 | -- -- -- | 602 -- -- | -- -- -- | -- 2,017 -- | $23,833 $107,526 -- | Kurt A. Gibson | 3/1/23 | -- $52,667 | -- $105,335 | -- $158,002 | -- -- | -- -- | -- -- | 894 -- | $47,659 -- | Monte C. McNew | 3/1/23 | -- $59,718 | -- $119,436 | -- $179,153 | -- -- | -- -- | -- -- | 829 -- | $44,194 -- |
Name | Employer 401(k) Plan Contribution | Tax Planning Reimbursement | Car Allowance | Employer Deferred Compensation Contribution | Life Insurance Benefit | Country Club Membership | Larry J. Helling | $13,050 | $4,467 | $6,000 | $25,000 | $19,701 | -- | Todd A. Gipple | $13,050 | $775 | $8,000 | $20,000 | $10,299 | -- | John H. Anderson | $13,050 | -- | $6,000 | $10,000 | $7,164 | $17,062 | Monte C. McNew | $13,050 | -- | -- | -- | $18,631 | $8,100 | Dana L. Nichols | $13,050 | -- | $4,800 | $35,977 | $7,648 | $6,767 |
| (4) | Mr. McNew was not a named executive officer in 2019 or 2020.(1) | The amounts set forth in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns reflect the threshold, target and maximum payouts for performance under the annual cash incentive bonus program as described in the section titled “Annual Cash Incentive Bonus” in the CD&A. The amount earned by each named executive officer for 2023 performance is included in the Summary Compensation Table in the column titled “Non-Equity Incentive Plan Compensation.” | | | (2) | The amounts set forth reflect 2023 tranches of performance awards to Messrs. Helling, Gipple and Anderson in connection with their employment agreements. The awards are described in the CD&A above under the heading Long-Term Stock Incentives, while the employment agreements are described below under the heading Potential Payments upon Termination or Change in Control. |
Grant of Plan-Based
Outstanding Equity Awards at Fiscal Year-End The following table sets forth information on outstanding equity awards held by the individuals named in the Summary Compensation Table on December 31, 2023, including the number of shares underlying exercisable and unexercisable portions of each stock option award as well as the exercise price and the expiration date of each outstanding option. The options expire 10 years from the date of grant and vest in four equal annual portions beginning one year from the date of grant. The stock awards are either restricted stock or restricted stock units. The market value of stock awards is based on our closing stock price on December 29, 2023 (the last trading day of the year), which was $58.39. | The following table provides information on non-equity incentive plan awards and equity awards made to our named executive officers during 2021. The non-equity incentive plan awards were made under the annual cash incentive program and the equity awards were made under our Option Awards
| Stock Awards | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan eachAwards: Number of which is described in our CD&A.Shares, Units, or Other Rights That Have Not Vested (#) Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2)
| All Other Stock Awards: # of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards | Threshold | Target | Maximum | Threshold | Target | Maximum | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (l) | Larry J. Helling | 1/1/21 3/1/21 | -- -- $165,102 | -- -- $330,205 | -- -- $495,307 | -- -- -- | 1,881 -- | -- -- -- | -- 4,872 -- | $74,469 $212,468 -- | Todd A. Gipple | 1/1/21 3/1/21 | -- -- $136,272 | -- -- $272,544 | -- -- $408,816 | -- -- -- | 1,505 -- -- | -- -- -- | -- 3,958 -- | $59,543 $172,608 -- | John H. Anderson | 1/1/21 3/1/21 | -- -- $65,510 | -- -- $131,019 | -- -- $196,529 | -- -- -- | 602 -- -- | -- -- -- | -- 2,635 -- | $23,833 $114,912 -- | Monte C. McNew | 3/1/21 | -- $42,840 | -- $85,680 | -- $128,520 | -- -- | -- -- | -- -- | 2,294 -- | $100,041 -- | Dana L. Nichols | 3/1/21 | -- $55,157 | -- $110,313 | -- $165,470 | -- -- | -- -- | -- -- | 1,566 -- | $68,293 -- |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | (a) | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | Larry J. Helling | 8,112 6,715 8,390 3,072 -- -- -- -- | -- -- -- -- -- -- -- -- | $17.10 $17.49 $22.64 $42.75 -- -- -- -- | 2/3/2024 2/2/2025 2/1/2026 3/9/2027 -- -- -- -- | -- -- -- -- 1,312(2) 2,436(3) 3,064(4) 4,296(5) | -- -- -- -- $76,608 $142,238 $178,907 $250,843 | -- -- -- -- -- -- -- -- | -- -- -- -- -- -- -- -- | Todd A. Gipple | 6,791 8,857 8,590 4,271 -- -- -- -- -- -- | -- -- -- -- -- -- -- -- -- -- | $17.10 $17.49 $22.64 $42.75 -- -- -- -- -- -- | 2/3/2024 2/2/2025 2/1/2026 3/9/2027 -- -- -- -- -- -- | -- -- -- -- 2,256(1) 1,066(2) 1,978(3) 2,490(4) 3,194(5) -- | -- -- -- -- $131,728 $62,244 $115,495 $145,391 $186,498 -- | -- -- -- -- -- -- -- -- -- 752(1) | -- -- -- -- -- -- -- -- -- $37,329 | John H. Anderson | -- -- -- -- -- -- | -- -- -- -- -- -- | -- -- -- -- -- -- | -- -- -- -- -- -- | 601(1) | (1) | The amounts set forth in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns reflect the threshold, target and maximum payouts for performance under the annual cash incentive program as described in the section titled “Annual Cash Incentive Bonus” in the CD&A. The amount earned by each named executive officer for 2021 performance is included in the Summary Compensation Table in the column titled “Non-Equity Incentive Plan Compensation.”703(2) 1,317(3) 1,327(4) 2,017(5) -- | $35,092 $41,048 $76,900 $77,484 $117,773 -- | -- -- -- -- -- 602(1) | -- -- -- -- -- $29,883 |
| Kurt A. Gibson | (2) | The amounts set forth reflect 2021 tranches of performance awards to Messrs. Helling, Gipple and Anderson in connection with their employment agreements. The awards are described in the CD&A above under the heading Long-Term Stock Incentives, while the employment agreements are described below under the heading Potential Payments upon Termination or Change in Control. | -- -- -- -- | -- -- -- -- | -- -- -- -- | -- -- -- -- | 308(2) 578(3) 666(4) 894(5) | $17,984 $33,749 $38,888 $52,201 | -- -- -- -- | -- -- -- -- | Monte C. McNew | -- -- -- | -- -- -- | -- -- -- | -- -- -- | 1,146(3) 700(5) 829(5) | $66,915 $40,873 $48,405 | -- -- -- | -- -- -- |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information on outstanding equity awards held by the individuals named in the Summary Compensation Table on December 31, 2021, including the number of shares underlying exercisable and unexercisable portions of each stock option award as well as the exercise price and the expiration date of each outstanding option. The options expire 10 years from the date of grant and vest in four equal annual portions beginning one year from the date of grant. The stock awards are either restricted stock or restricted stock units. The market value of stock awards is based on our closing stock price on December 31, 2021, which was $56.00.
| Option Awards | Stock Awards | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Shares, Units, or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | (a) | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | Larry J. Helling | 10,002 8,112 6,715 8,390 3,072 -- -- -- -- -- -- | -- -- -- -- -- -- -- -- -- -- -- | $15.65 $17.10 $17.49 $22.64 $42.75 -- -- -- -- -- -- | 5/1/2023 2/3/2024 2/2/2025 2/1/2026 3/9/2027 -- -- -- -- -- -- | -- -- -- -- -- 663(1) 3,761(2) 1,710(3) 3,937(4) 4,872(5) | -- -- -- -- -- $37,128 $210,616 $95,760 $220,472 $272,832 -- | -- -- -- -- -- -- -- -- -- -- 1,881(2) | -- -- -- -- -- -- -- -- -- -- $74,469 | Todd A. Gipple | 7,006 6,791 8,857 8,590 4,271 -- -- -- -- -- -- | -- -- -- -- -- -- -- -- -- -- -- | $15.65 $17.10 $17.49 $22.64 $42.75 -- -- -- -- -- -- | 5/1/2023 2/3/2024 2/2/2025 2/1/2026 3/9/2027 -- -- -- -- -- -- | -- -- -- -- -- 648(1) 4,513(2) 1,509(3) 3,199(4) 3,958(5) -- | -- -- -- -- -- $36,288 $252,728 $84,504 $179,144 $221,648 -- | -- -- -- -- -- -- -- -- -- 1,504(2) | -- -- -- -- -- -- -- -- -- $59,543 | John H. Anderson | 1,389 -- -- -- -- -- -- | -- -- -- -- -- -- -- | $42.75 -- -- -- -- -- -- | 3/9/2027 -- -- -- -- -- -- | -- 303(1) 1,805(2) 631(3) 2,109(4) 2,635(5) | -- $16,968 $101,080 $35,336 $118,104 $147,560 -- | -- -- -- -- -- -- 602(2) | -- -- -- -- -- -- $23,833 | Monte C. McNew | -- -- | -- -- | -- -- | -- -- | 289(6) 2,294(5) | $16,184 $128,464 | -- -- | -- -- | Dana L. Nichols | 1,940 1,500 2,400 1,161 811 -- -- -- -- | -- -- -- -- -- -- -- -- -- | $15.65 $17.10 $17.49 $22.64 $42.75 -- -- -- -- | 5/1/2023 2/3/2024 2/2/2025 2/1/2026 3/9/2027 -- -- -- -- | -- -- -- -- -- 134(1) 314(3) 911(4) 1,566(5) | -- -- -- -- -- $7,504 $17,584 $51,016 $87,696 | -- -- -- -- -- -- -- -- | - -- -- -- -- -- -- -- |
| (1) | Unvested stock units were granted on March 1, 2018 and vest in four equal annual portions beginning March 1, 2019. |
| (2) | Unvested restricted stock and performance units were granted on January 14, 2019. With respect to Mr. Helling, the units vest in four equal annual portions beginning January 1, 2020. With respect to Mr. Gipple, the units vest in three 20% portions beginning January 1, 2020 and four 10% portions beginning on January 1, 2023. With respect to Mr. Anderson, the units vest in five equal annual portions beginning January 1, 2020. |
(2) | Unvested stock units were granted on March 2, 2020 and vest in four equal annual portions beginning March 1, 2021. | | (3) | Unvested stock units were granted on March 1, 2019 and vest in four equal annual portions beginning March 1, 2020. | | (4) | Unvested stock units were granted on March 2, 2020 and vest in four equal annual portions beginning March 1, 2021. | | (5) | Unvested stock units were granted on March 1, 2021 and vest in four equal annual portions beginning March 1, 2022. |
| (6) | Unvested stock awards were granted on August 1, 2018 and vest in four equal annual portions beginning August 1, 2019. | (4) | Unvested stock units were granted on March 1, 2022 and vest in four equal annual portions beginning March 1, 2023. | (5) | Unvested stock units were granted on March 1, 2023 and vest in four equal annual portions beginning March 1, 2024. |
Option Exercises and Stock Vested in 2023 The following table sets forth information for each of the individuals named in the Summary Compensation Table regarding stock option exercises and vesting of stock awards during 2023. | Option Awards | Stock Awards | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | (a) | (b) | (c) | (d) | (e) | Larry J. Helling | 10,002 | $300,692 | 8,168 | $421,331(1) | Todd A. Gipple | 7,006 | $240,937 | 5,146 | $268,561(1) | John H. Anderson | 1,389 | $15,140 | 3,324 | $172,622(1) | Kurt A. Gibson | 0 | $0 | 1,054 | $56,118 | Monte C. McNew | 0 | $0 | 808 | $43,074 |
| (1) | Option Exercises and Stock VestedThe entire value of vested stock realized was paid in 2021cash.
|
Pension Benefits The following table sets forth the present value of accumulated benefits payable to each of the individuals named in the Summary Compensation Table, including the number of years of service credited to each under the SERP determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. Information regarding the SERP can be found under the heading “Non-Qualified Supplemental Executive Retirement Program” on page 26. The following table sets forth information for each of the individuals named in the Summary Compensation Table regarding stock option exercises and vesting of stock awards during 2021.
| Option Awards | Stock Awards | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | (a) | (b) | (c) | (d) | (e) | Larry J. Helling | 16,597 | $740,106 | 6,853 | $283,314(1) | Todd A. Gipple | 0 | $0 | 5,841 | $242,572(1) | John H. Anderson | 0 | $0 | 2,684 | $112,016(1) | Monte C. McNew | 0 | $0 | 290 | $14,236 | Dana L. Nichols | 2,500 | $96,800 | 664 | $28,875 |
| (1) | The entire value of vested stock realized was paid in cash. |
Pension Benefits
The following table sets forth the present value of accumulated benefits payable to each of the individuals named in the Summary Compensation Table, including the number of years of service credited to each under the SERP determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. Information regarding the SERP can be found under the heading “Non-Qualified Supplemental Executive Retirement Program” on page 27 of this proxy statement.
Non-Qualified Supplemental Executive Retirement Plan Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | (a) | (b) | (c) | (d) | (e) | Larry J. Helling | Supplemental Executive Retirement Plan | 20 | $2,084,382 | -- | Todd A. Gipple | Supplemental Executive Retirement Plan | 21 | $2,558,252 | -- | John H. Anderson | Supplemental Executive Retirement Plan | 13 | $203,580 | -- | Monte C. McNew | None | -- | -- | -- | Dana L. Nichols | None | -- | -- | -- |
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | (a) | (b) | (c) | (d) | (e) | Larry J. Helling | Supplemental Executive Retirement Plan | 22 | $3,092,980 | -- | Todd A. Gipple | Supplemental Executive Retirement Plan | 23 | $3,357,623 | -- | John H. Anderson | Supplemental Executive Retirement Plan | 15 | $320,239 | -- | Kurt A. Gibson | None | -- | -- | -- | Monte C. McNew | None | -- | -- | -- |
(1) | Each calendar year, QCR Holdings accrues an expense with respect to the SERP in accordance with generally accepted accounting principles. The assumptions used in determining the present value of the accumulated benefit are explained in the footnotes to our financial statements, which are included in our Annual Report on Form 10-K. During 2023, the following amounts were accrued with respect to each of our named executive officers: Mr. Helling – $471,938; Mr. Gipple – $237,882; and Mr. Anderson - $61,285. |
(1) Each calendar year, QCR Holdings accrues an expense with respect to the SERP in accordance with generally accepted accounting principles. The assumptions used in determining the present value of the accumulated benefit are explained in the footnotes to our financial statements, which are included in our Annual Report on Form 10-K. During 2021, the following amounts were accrued with respect to each of our named executive officers: Mr. Helling – $703,386; Mr. Gipple – $550,161; and Mr. Anderson - $49,935.
The following table sets forth information concerning our non-qualified deferred compensation agreements with each individual named in the Summary Compensation Table. The agreements are discussed in detail beginning on page 2726 of this proxy statement. Non-Qualified Deferred Compensation Name | Executive Contributions in 2021(1) ($) | Registrant Contributions in 2021(2) ($) | Aggregate Earnings in 2021(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance as of 12/31/21(4) ($) | (a) | (b) | (c) | (d) | (e) | (f) | Larry J. Helling | $50,000 | $25,000 | $115,600 | -- | $1,593,689 | Todd A. Gipple | $20,000 | $20,000 | $60,371 | -- | $1,087,463 | John H. Anderson | $25,000 | $10,000 | $16,029 | -- | $408,427 | Dana L. Nichols | $53,964 | $35,977 | $44,352 | -- | $1,122,475 |
(1) All amounts included are reflected in the Summary Compensation Table under the Salary column.
(2) All amounts included are reflected in the Summary Compensation Table under the All Other Compensation column.
(3) Includes the following amounts reflected in the Summary Compensation Table under the Change in Pension Value and Nonqualified Deferred Compensation Earnings column as above-market earnings: Mr. Helling, $21,996; Mr. Gipple, $0; Mr. Anderson, $0; and Mr. Nichols, $0.
(4) Includes the following amounts that were previously reported as compensation to the named executive officers in the Summary Compensation Table for years prior to 2021: Mr. Helling, $812,033; Mr. Gipple, $728,549; Mr. Anderson, $168,854; and Mr. Nichols, $166,882.
Name | Executive Contributions in 2023(1) ($) | Registrant Contributions in 2023(2) ($) | Aggregate Earnings in 2023(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance as of 12/31/23(4) ($) | (a) | (b) | (c) | (d) | (e) | (f) | Larry J. Helling | $50,000 | $25,000 | $156,558 | -- | $2,031,123 | Todd A. Gipple | $20,000 | $20,000 | $103,114 | -- | $1,336,980 | John H. Anderson | $40,000 | $10,000 | $40,383 | -- | $567,355 | Kurt A. Gibson | $10,000 | $10,000 | $8,599 | -- | $119,138 | Monte C. McNew | $24,324 | $10,000 | $3,807 | -- | $61,371 |
(1) | All amounts included are reflected in the Summary Compensation Table under the Salary column. | (2) | All amounts included are reflected in the Summary Compensation Table under the All Other Compensation column. | (3) | Includes the following amounts reflected in the Summary Compensation Table under the Change in Pension Value and Nonqualified Deferred Compensation Earnings column as above-market earnings: Mr. Helling, $28,145; Mr. Gipple, $0; Mr. Anderson, $0; Mr. Gibson; and Mr. McNew, $0. | (4) | Includes the following amounts that were previously reported as compensation to the named executive officers in the Summary Compensation Table for years prior to 2023: Mr. Helling, $1,009,025; Mr. Gipple, $808,549; Mr. Anderson, $248,854; Mr. Gibson, $20,000; and Mr. McNew, $20,000. |
Potential Payments upon Termination or Change in Control The following table sets forth the estimated amount of compensation payable to each of our named executive officers, as provided under the agreements and arrangements described in the CD&A, upon termination of such officer’s employment in the event of (1) termination by QCR Holdings without cause other than in connection with a change in control, (2), termination by QCR Holdings without cause or by the officer, in each case in connection with a change in control, and (3) the officer’s disability. The amounts shown assume that the termination was effective as of the last business day of the fiscal year ended December 31, 20212023 and that the price of QCR Holdings stock as of termination was the closing price of $56.00$58.39 on December 31, 2021.29, 2023 (the last trading day of the year). The actual amounts to be paid can be determined only following the named executive officer'sofficer’s termination. We do not provide any benefits to our named executive officers solely as a result of a change in control. Name | Benefit | Termination without Cause | Termination in Connection with Change in Control | Disability | Larry J. | Salary | $363,297 | $726,594 | $242,210(1) | Helling | Bonus | -- | $990,614 | $321,328 | | Stock award acceleration | -- | $911,277(4) | -- | | Health insurance | $18,981 | $18,981 | -- | | | | | | Todd A. | Salary | $337,340 | $674,680 | $224,905(1) | Gipple | Bonus | -- | $817,632 | $265,220 | | Stock award acceleration | -- | $833,855(4) | -- | | Deferred compensation | -- | $200,537(5) | -- | | Health insurance | $15,211 | $15,211 | -- | | | | | | John H. | Salary | $259,469 | $518,938 | $155,681(2) | Anderson | Bonus | -- | $317,898 | $107,602 | | Stock award acceleration | -- | $442,881(4) | -- | | Health insurance | $10,540 | $10,540 | -- | | | | | | Monte C. | Salary | $484,800 | $484,800 | $159,984(3) | McNew | Bonus | $200,827 | $200,827 | $66,273 | | Stock award acceleration | -- | $144,648(4) | -- | | Health Insurance | -- | $43,471 | -- | | | | | | Dana L. | Salary | $109,232 | $327,695 | $145,649(1) | Nichols | Bonus | -- | -- | $94,743 | | Stock award acceleration | -- | $163,800(4) | -- | | | | | |
Name | Benefit | Involuntary Termination (not in connection with a Change in Control)(1) | Involuntary Termination (in Connection with a Change in Control)(1) | Disability | Larry J. | Salary | $437,739 | $875,478 | $291,841(2) | Helling | Bonus | -- | $970,526 | $332,436 | | Stock award acceleration | -- | $648,896(5) | -- | | Health insurance | $20,115 | $20,115 | -- | | | | | | Todd A. | Salary | $369,365 | $738,730 | $246,256(2) | Gipple | Bonus | -- | $727,940 | $258,252 | | Stock award acceleration | -- | $678,685(5) | -- | | Health insurance | $30,493 | $30,493 | -- | | | | | | John H. | Salary | $284,783 | $569,566 | $170,870(3) | Anderson | Bonus | -- | $290,640 | $96,697 | | Stock award acceleration | -- | $378,180(5) | -- | | Health insurance | $10,486 | $10,486 | -- | | | | | | Kurt A. | Salary | $117,039 | $351,116 | $154,491(4) | Gibson | Bonus | $66,748 | $200,244 | $88,107 | | Stock award acceleration | -- | $142,822(5) | -- | | | | | | Monte C. | Salary | $530,824 | $530,824 | $175,172(4) | McNew | Bonus | $229,066 | $229,066 | $75,592 | | Stock award acceleration | -- | $156,193(5) | -- | | Health insurance | $43,153 | $43,153 | -- | | | | | |
| (1) | Involuntary Termination includes a termination by the Company without Cause or by the named executive officer for Good Reason, as defined in the applicable employment agreements. | | | (2) | In the event of disability during the employment term, payments based upon then current annual salary and the average annual bonus shall continue thereafter through the last day of the one (1) year period beginning on the date of disability, after which time employment shall terminate. Payments made in the event of disability shall be equal to 66-2/3% of salary and the average annual bonus, less any amounts received under short or long-term disability programs, as applicable. The above amounts do not reflect the offset of disability insurance benefits. |
| | (2)(3) | In the event of disability during the employment term, payments based upon then current annual salary and the average annual bonus shall continue thereafter through the last day of the one (1) year period beginning on the date of disability, after which time employment shall terminate. Payments made in the event of disability shall be equal to 60% of salary and the average annual bonus, less any amounts received under short or long-term disability programs, as applicable. The above amounts do not reflect the offset of disability insurance benefits. |
| | (3)(4) | In the event of disability during the employment term, payments based upon then current annual salary and the average annual bonus shall continue thereafter through the last day of the one (1) year period beginning on the date of disability, after which time employment shall terminate. Payments made in the event of disability shall be equal to 66% of salary and the average annual bonus, less any amounts received under short or long-term disability programs, as applicable. The above amounts do not reflect the offset of disability insurance benefits. |
| | (4)(5) | In the event of a change in control, all outstanding restricted stock and restricted stock unit awards shall become immediately and fully vested, exercisable and unrestricted, if they are not assumed by the resulting entity or if the executive is terminated by the resulting entity without cause or resigns for good reason. This represents the value of unvested stock awards on December 31, 2021.2023. This amount also represents the value of unvested stock awards which would vest upon the value of unvested stock awards which would vest upon the Executive’s death. |
| (5) | In the event of a termination of employment in connection with a change in control, the named executive officer is entitled to an enhanced benefit, in excess of his already accrued account balance, under his deferred compensation plan agreement. |
Mr. Larry J. Helling’sHelling’s Employment AgreementsAgreement In November 2018, we entered into a new employment agreement with Mr. Helling, which became effective in 2019. The agreement hashad an initial term through December 31, 2021 and automatically extends for an additional year on January 1, 2022 and each January 1st thereafter, unless either party gives at least 90 days’ prior notice that the employment period will not be extended. The employment agreement provides for annual base salary of $350,000, subject to annual review and increase at the discretion of the boardBoard of directors.Directors. The agreement provides that Mr. Helling is eligible to receive a performance-based annual incentive bonus with a target opportunity of 90% of his annual base salary and an annual equity grant with a target opportunity of 40% of his annual base salary. The agreement also provides Mr. Helling with a one-time grant of restricted stock units with an intended grant date fair market value of $500,000 and vests in approximately equal installments on January 1 in each of years 2020 through 2023. Fifty percent of the award is subject to a performance threshold determined by the boardBoard of directors.Directors. In addition, Mr. Helling is entitled to participate in any other incentive or employee benefit plans. The agreement also provides for severance benefits in the event the executive’s employment is terminated other than for cause and other than as a result of the executive’s death or disability, or if the employment is terminated by the executive for good reason (“Termination”). For a Termination during the term of the employment agreement that is not in connection with a change in control, Mr. Helling would be entitled to receive an amount equal to 100% of his base salary. For a Termination in connection with a change in control, Mr. Helling would be entitled to receive a lump sum equal to 200% of his base salary plus his cash incentive for the most recently completed fiscal year. In the event of a Termination, Mr. Helling and his eligible dependents would also be entitled to continued coverage under the medical and dental plans for up to 18 months. Further, the agreement provides a disability benefit of up to 66% of Mr. Helling’s base salary and average annual bonus for a period of one year following a termination of employment due to disability. All severance benefits are contingent upon the executive’s execution and nonrevocation of a general release and waiver of claims against QCR Holdings. The agreement is subject to certain banking regulatory provisions and provides for an automatic reduction of severance payments if the reduction would result in a better net-after-tax result for the respective executive after taking into account the impact of the golden parachute payment restrictions of Sections 280G and 4999 of the Code. The employment agreement contains restrictive covenants prohibiting the unauthorized disclosure of confidential information of QCR Holdings by him during and after his employment with us, and he is subject to non-compete and non-solicitation provisions for two years following the termination of his employment. Mr. Todd A. Gipple’sGipple’s Employment AgreementsAgreement In November 2018, we entered into a new employment agreement with Mr. Gipple, which became effective in 2019. The agreement hashad an initial term through December 31, 2021 and automatically extends for an additional year on January 1, 2022 and each January 1st thereafter, unless either party gives at least 90 days’ prior notice that the employment period will not be extended. The employment agreement provides for annual base salary of $325,000, subject to annual review and increase at the discretion of the boardBoard of directors.Directors. The agreement provides that Mr. Gipple is eligible to receive a performance-based annual incentive bonus with a target opportunity of 80% of his annual base salary and an annual equity grant with a target opportunity of 35% of his annual base salary. The agreement also provides Mr. Gipple with a one-time grant of restricted stock units with an intended grant date fair market value of $500,000 and vests 20% on January 1 in each of years 2020 through 2022 and an additional 10% on January 1 in each of 2023 through 2026. Fifty percent of the award is subject to a performance threshold determined by the boardBoard of directors.Directors. In addition, Mr. Gipple is entitled to participate in any other incentive or employee benefit plans. The agreement also provides for severance benefits in the event the executive’s employment is terminated other than for cause and other than as a result of the executive’s death or disability, or if the employment is terminated by the executive for good reason (“Termination”).Termination. For a Termination during the term of the employment agreement that is not in connection with a change in control, Mr. Gipple would be entitled to receive an amount equal to 100% of his base salary. For a Termination in connection with a change in control, Mr. Gipple would be entitled to receive a lump sum equal to 200% of his base salary plus his cash incentive for the most recently completed fiscal year. In the event of a Termination, Mr. Gipple and his eligible dependents would also be entitled to continued coverage under the medical and dental plans for up to 18 months. Further, the agreement provides a disability benefit of up to 66% of Mr. Gipple’s base salary and average annual bonus for a period of one year following a termination of employment due to disability. All severance benefits are contingent upon the executive’s execution and nonrevocation of a general release and waiver of claims against QCR Holdings. The agreement is subject to certain banking regulatory provisions and provides for an automatic reduction of severance payments if the reduction would result in a better net-after-tax result for the respective executive after taking into account the impact of the golden parachute payment restrictions of Sections 280G and 4999 of the Code. The employment agreement contains restrictive covenants prohibiting the unauthorized disclosure of confidential information of QCR Holdings by him during and after his employment with us, and he is subject to non-compete and non-solicitation provisions for two years following the termination of his employment. Mr. John H. Anderson’sAnderson’s Employment AgreementsAgreement In January 2019, we entered into a new employment agreement with Mr. Anderson. The agreement hashad an initial term through December 31, 2021 and automatically extends for an additional year on January 1, 2022 and each January 1st thereafter, unless either party gives at least 90 days’ prior notice that the employment period will not be extended. The employment agreement provides for annual base salary of $250,000, subject to annual review and increase at the discretion of the boardBoard of directors.Directors. The agreement provides that Mr. Anderson is eligible to receive a performance-based annual incentive bonus with a target opportunity of 50% of his annual base salary and an annual equity grant with a target opportunity of 30% of his annual base salary. The agreement also provides Mr. Anderson with a one-time grant of restricted stock units with an intended grant date fair market value of $200,000$250,000 and vests in approximately equal installments on January 1 in each of years 2020 through 2024. Fifty percent of the award will further be subject to a performance threshold as will be determined by the boardBoard of directors.Directors. In addition, Mr. Anderson is entitled to participate in any other incentive or employee benefit plans. The agreement also provides for severance benefits in the event the executive’s employment is terminated other than for cause and other than as a result of the executive’s death or disability, or if the employment is terminated by the executive for good reason (“Termination”).Termination. For a Termination during the term of the employment agreement that is not in connection with a change in control, Mr. Anderson would be entitled to receive an amount equal to 100% of his base salary. For a Termination in connection with a change in control, Mr. Anderson would be entitled to receive a lump sum equal to 200% of his base salary plus his cash incentive for the most recently completed fiscal year. In the event of a Termination, Mr. Anderson and his eligible dependents would also be entitled to continued coverage under the medical and dental plans for up to 18 months. Further, the agreement also provides a disability benefit of up to 60% of Mr. Anderson’s base salary and average annual bonus for a period of one year following a termination of employment due to disability. All severance benefits are contingent upon the executive’s execution and nonrevocation of a general release and waiver of claims against QCR Holdings. The agreement is subject to certain banking regulatory provisions and provides for an automatic reduction of severance payments if the reduction would result in a better net-after-tax result for the respective executive after taking into account the impact of the golden parachute payment restrictions of Sections 280G and 4999 of the Code. The employment agreement contains restrictive covenants prohibiting the unauthorized disclosure of confidential information of QCR Holdings by him during and after his employment with us, and he is subject to non-compete and non-solicitation provisions for two years following the termination of his employment. Mr. Kurt A. Gibson’s Employment Agreement In October 2017, we entered into an employment agreement with Mr. Gibson. The agreement had an initial term through December 31, 2018, and, in the absence of notice from either party to the contrary, the employment term extends for one additional year on each anniversary of the agreement. The agreement provides a disability benefit of up to 66% of Mr. Gibson’s base salary and average annual bonus for a period of one year following a termination of employment due to disability. The agreement further provides for severance compensation equal to one-half of his then-current annual salary and average annual bonus in the event Mr. Gibson is terminated without cause; and one and one-half times the sum of his annual salary and average annual bonus if he is terminated within one year following a change in control. Under the agreement, Mr. Gibson is subject to non-compete and non-solicitation provisions for two years following the termination of his employment. Mr. Monte C. McNew’sMcNew’s Employment Agreement In April 2018, we entered into an employment agreement with Mr. McNew. The agreement hashad an initial term through December 31, 2020, and, in the absence of notice from either party to the contrary, the employment term extends for one additional year on each anniversary of the agreement. The agreement provides a disability benefit of up to 66% of Mr. McNew’s base salary and average annual bonus for a period of one year following a termination of employment due to disability. The agreement also provides for severance benefits in the event Mr. McNew’s employment is terminated other than for cause and other than as a result of the executive’s death or disability, or if the employment is terminated by Mr. McNew for good reason. Mr. McNew’s severance benefit is an amount equal to 200% of his base salary and average annual bonus if he is terminated without cause or terminates the agreement for good reason, plus eighteen months of continued health insurance, and he is entitled to the same amount in a lump sum if he is terminated within two years following a change in control. Under the agreement, Mr. McNew is subject to non-compete and non-solicitation provisions for two years following the termination of his employment. Mr. Dana L. Nichol’s Employment Agreement2016 Equity Incentive Plan
In 2004, we entered into an employment agreement with Mr. Nichols. The agreement was amended in 2008. The agreement has a two-year term andQCR Holdings currently maintains the 2016 Equity Incentive Plan. Unless provided otherwise in the absence of notice from either party toagreements setting forth the contrary, the employment term extends for one additional year on each anniversaryterms of the agreement. Mr. Nichols’ agreement provides term life insurance coverageaward, vesting of two times his base salary and average annual bonus asawards under the 2016 Equity Incentive Plan will accelerate upon a “change in control” of the date of the agreement. The agreement provides a disability benefit of up to 66-2/3% of Mr. Nichols’ base salary and average annual bonus for a period of one year following a termination of employment due to disability. The agreement further provides for severance compensation equal to one-half of his then-current annual salaryQCR Holdings (as defined in the event Mr. Nichols2016 Equity Incentive Plan) if the awards are not assumed or otherwise equitably converted into comparable awards by the acquiring company. If the awards are assumed by the acquirer and a participant’s employment is terminated without cause; and one and one-half times“cause” or a participant resigns for “good reason,” the sum of his annual salary if heparticipant’s awards will become vested. This is terminated within one year followingwhat is known as a “double trigger” approach, as compared to a “single trigger” approach which provides for vesting solely upon a change in control or if he voluntarily terminates employment within six months of(without a change in control (the “walk away” right). Under the agreement, Mr. Nichols is subject to a two-year non-compete and non-solicitation provision following the termination of his employment.employment). We use the double trigger approach for our equity awards because we believe it provides adequate employment protection while reducing, for the stockholders’ benefit, potential transaction costs associated with the awards. In addition, the award agreements generally provide that vesting will accelerate upon the participant’s disability or death. As of December 31, 2023, there were 55,554 shares available for issuance under the 2016 Plan.
Compensation Committee Interlocks and Insider Participation During 2021,2023, the Compensation Committee, which sets the salaries and compensation for our executive officers, was comprised solely of independent directors Baird,Field, Griesemer (beginning in August 2023), Jacobs, Kilmer, O’Reilly (until his resignation in July) and Ziegler (beginning in May).Ziegler. None of these individuals was an officer or employee of QCR Holdings in 2021,2023, and none of these individuals is a former officer or employee of QCR Holdings. In addition, during 2021,2023, no executive officer of QCR Holdings served on the boardBoard of directorsDirectors or compensation committee of any other corporation with respect to which any member of the Compensation Committee was engaged as an executive officer. CEO Pay Ratio As required by the Securities and Exchange Commission rule, we are providing information about the relationship of the annual total compensation of Larry J. Helling, our chief executive officer, and the median annual total compensation of our employees. The median employee was identified from all full-time and part-time employees, excluding Mr. Helling, who were employed by QCR Holdings and its subsidiaries on December 31, 2021.2023. All of our employees are located in the United States. A total of 9631,033 employees were included. Compensation was measured over the 12-month period beginning on January 1, 20212023 and ending on December 31, 2021.2023. In identifying the median employee, each employee’s compensation was determined using 20212023 W-2 compensation. Wages were annualized for our employees who did not work the entire calendar year. Mr. Helling had 20212023 annual total compensation of $1,939,141$1,798,583 as reflected in the Summary Compensation Table included in this Proxy Statement.proxy statement. The median employee’s annual total compensation for 20212023 that would be reportable in the Summary Compensation Table, if the employee were a named executive officer, was $52,334.$68,712. As a result, the CEO pay ratio is approximately 37:26:1. Pay Versus Performance In accordance with the rules adopted by the Securities and Exchange Commission, the following tabular disclosure is required to disclose the relationship between executive compensation registrants actually paid and the financial performance of QCR Holdings. The following tables and graphs show the relationship between the compensation actually paid to our named executive officers and our financial performance. | | | | | Value of initial fixed $100 investment based on: | | | Year | Summary Compensation Table Total for CEO(1) | Compensation Actually Paid to CEO(1)(2) | Average Summary Compensation Table Total for Non-CEO NEOs | Average Compensation Actually Paid to Non-CEO NEOs(2) | Total Shareholder Return | Peer Group Total Shareholder Return (6) | Net Income (in thousands) | Adjusted Earnings Per Share (non-GAAP)(7) | 2023 | $1,798,583 | $1,342,391 | $710,698(3) | $682,704 | $136 | $111 | $113,558 | $6.82 | 2022 | $1,855,117 | $1,152,003 | $797,011(3) | $601,280 | $115 | $117 | $99,066 | $6.89 | 2021 | $1,939,141 | $1,458,808 | $810,346(4) | $856,847 | $129 | $117 | $98,905 | $6.37 | 2020 | $2,032,092 | $989,964 | $928,529(5) | $602,915 | $91 | $87 | $60,582 | $4.01 |
(1) | The CEO in 2023, 2022, 2021 and 2020 was Mr. Helling. | (2) | See the table immediately following these footnotes for a reconciliation of the Summary Compensation Table compensation and the Compensation Actually Paid to the CEO and Non-CEO NEOs. | (3) | Non-CEO NEOs in 2023 and 2022 were Messrs. Gipple, Anderson, Gibson, and McNew. | (4) | Non-CEO NEOs in 2021 were Messrs. Gipple, Anderson, McNew, and Dana L. Nichols. | (5) | Non-CEO NEOs in 2020 were Messrs. Gipple, Anderson, Robert C. Fulp, and Nichols. | (6) | Consists of the cumulative total shareholder return of the KBW NASDAQ Bank Index which we also use in the stock performance graph included in our Annual Report on Form 10-K for the year ended December 31, 2023. | (7) | Adjusted Earnings Per Share is a non-GAAP financial measure. For additional information, including a corresponding reconciliation to GAAP financial measures, see Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023. |
The following table reconciles the Summary Compensation Table compensation to the Compensation Actually Paid in the above table. | CEO | Non-CEO NEOs | | 2023 | 2022 | 2021 | 2020 | 2023 | 2022 | 2021 | 2020 | Total Compensation as reported in the Summary Compensation Table (“SCT”) | 1,798,583 | 1,855,117 | 1,939,141 | 2,032,092 | 710,698 | 797,011 | 810,346 | 928,529 | - Grant Date Fair Value of Stock Awards Granted in Fiscal Year | (303,489) | (294,582) | (286,937) | (582,304) | (105,819) | (113,945) | (134,808) | (208,025) | - Pension values as reported in the SCT | (500,083) | (561,512) | (725,382) | (546,391) | (74,792) | (154,216) | (150,024) | (142,089) | Change in Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Awards Granted in Fiscal Year | 251,617 | 203,565 | 274,001 | 208,162 | 101,531 | 114,802 | 195,959 | 105,614 | Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | 77,112 | (61,581) | 177,669 | (105,212) | 40,892 | (38,590) | 96,761 | (69,804) | Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions were Satisfied during Fiscal Year | 6,245 | (10,552) | 61,734 | (31,488) | 7,377 | (8,405) | 34,570 | (14,755) | Pension Benefit Service Cost | 12,406 | 21,548 | 18,582 | 15,105 | 2,817 | 4,623 | 4,043 | 3,445 | Compensation Actually Paid (“CAP”) | 1,342,391 | 1,152,003 | 1,458,808 | 989,964 | 682,704 | 601,280 | 856,847 | 602,915 |
The most important financial performance measures used by the Company in setting compensation for the CEO and all non-CEO NEOs for 2023 are listed in the table below. Net income | Total nonperforming assets to total assets ratio | Adjusted earnings per share (non-GAAP) | Core loan growth | Noninterest income | Return on average equity |
Relationship between Pay and Financial Performance The graphs below show the relationship between the CAP and (i) QCR Holdings total shareholder return and the peer group’s total shareholder return, (ii) QCR Holdings net income and (iii) QCR Holdings’ adjusted earnings per share (non-GAAP). The graph below shows the relationship between CAP and QCR Holdings’ and its peer group’s total shareholder return. The graph below shows the relationship between CAP and QCR Holdings’ net income. The graph below shows the relationship between CAP and QCR Holdings’ adjusted earnings per share (non-GAAP). DIRECTOR COMPENSATION QCR Holdings uses a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the board.Board of Directors. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties as well as the skill level required of members of the board.Board of Directors. Cash Compensation In 2021,2023, members of the boardBoard of Directors who were not employees of QCR Holdings were entitled to receive an annual cash retainer. Pursuant to the QCR Holdings, Inc. 1997 Deferred Income Plan and the 2005 Deferred Income Plan, a director may elect to defer the fees and cash compensation payable by us for the director’s service until either the termination of such director’s service on the boardBoard of Directors or the age specified in the director’s deferral election. During 2021, seven2023, six of the tennine QCR Holdings directors and 2829 of the 4042 subsidiary directors deferred 100% of their director fees pursuant to the plan, and the total expense for the deferred fees with respect to all participating directors was $543,360$626,750 for 2021.2023. The director fees approved for 20222024 and the fees paid for 20212023 for QCR Holdings and our other affiliated boards are shown in the following table. | | 2022 | | 2021 | QCR Holdings, Inc. | | | | | Quarterly Retainer | | $ | 9,000 | | | $ | 6,500 | | Additional Quarterly Retainers | | | | | | | | | - Board Chair | | | 5,000 | | | | 5,000 | | - Board Vice Chair | | | 625 | | | | 625 | | - Audit Committee Chair | | | 1,500 | | | | 1,500 | | - Audit Committee Financial Expert | | | 625 | | | | 625 | | - Compensation Committee Chair | | | 1,250 | | | | 1,250 | | - Nomination and Governance Committee Chair | | | 1,250 | | | | 1,250 | | - Risk Oversight Committee Chair | | | 1,250 | | | | 1,250 | | - Audit Committee Member | | | 625 | | | | 625 | | - Compensation Committee Member | | | 625 | | | | 625 | | - Risk Oversight Committee Member | | | 625 | | | | 625 | | - All other Committee Members | | | 300 | | | | 300 | | | | | | | | | | | Subsidiaries | | | | | | | | | Quarterly Retainer | | | 2,250 | | | | 2,250 | | Additional Quarterly Retainers | | | | | | | | | - Board Chair | | | 1,000 | | | | 1,000 | | - Asset/Liability Management Committee Chair | | | 500 | | | | 500 | | - Loan Committee Chair | | | 500 | | | | 500 | | - Wealth Management Committee Chair | | | 500 | | | | 500 | | - All Committee Members | | | 375 | | | | 375 | | | | | | | | | | | m2 Equipment Finance, LLC | | | | | | | | | Quarterly Retainer | | | 1,000 | | | | 1,000 | |
| | 2024 | | | 2023 | | QCR Holdings, Inc. | | | | | | | | | Quarterly Retainer | | $ | 10,150 | | | $ | 9,750 | | Additional Quarterly Retainers | | | | | | | | | - Board Chair | | | 5,000 | | | | 5,000 | | - Board Vice Chair | | | 625 | | | | 625 | | - Audit Committee Chair | | | 1,500 | | | | 1,500 | | - Audit Committee Financial Expert | | | 625 | | | | 625 | | - Compensation Committee Chair | | | 1,250 | | | | 1,250 | | - Nomination and Governance Committee Chair | | | 1,250 | | | | 1,250 | | - Risk Oversight Committee Chair | | | 1,250 | | | | 1,250 | | - Audit Committee Member | | | 625 | | | | 625 | | - Compensation Committee Member | | | 625 | | | | 625 | | - Risk Oversight Committee Member | | | 625 | | | | 625 | | - All other Committee Members | | | 300 | | | | 300 | | | | | | | | | | | Subsidiaries | | | | | | | | | Quarterly Retainer | | | 2,250 | | | | 2,250 | | Additional Quarterly Retainers | | | | | | | | | - Board Chair | | | 1,000 | | | | 1,000 | | - Asset/Liability Management Committee Chair | | | 500 | | | | 500 | | - Loan Committee Chair | | | 500 | | | | 500 | | - Wealth Management Committee Chair | | | 500 | | | | 500 | | - All Committee Members | | | 375 | | | | 375 | | | | | | | | | | | m2 Equipment Finance, LLC | | | | | | | | | Quarterly Retainer | | | 1,000 | | | | 1,000 | |
Equity Award Compensation On March 2, 2021,1, 2023, each current non-employee QCR Holdings director and each current non-employee subsidiary director received a grant of stock for board service in the amount of $13,500$23,500 for service as a QCR Holdings director and in the amount of $4,000 for service as a subsidiary director. The grant date fair value is based on the market price of QCR Holdings’ stock on March 2, 2021,1, 2023, the date of the grant, which was $43.61.$53.31. The awards vested immediately on the date of grant. The following table discloses the cash and equity awards earned, paid or awarded to each of our directors during the fiscal year ended 2021.2023. Director Compensation Table Name | Fees Earned ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | (a) | (b) | (c) | | (h) | Patrick S. Baird | 39,050 | 13,500 | -- | 52,550 | Mary Kay Bates | 37,200 | 13,500 | -- | 50,700 | John-Paul E. Besong | 29,700 | 13,500 | -- | 43,200 | Brent R. Cobb | 41,500 | 17,500 | -- | 59,000 | James M. Field | 43,744 | 13,500 | -- | 57,244 | Elizabeth S. Jacobs | 41,175 | 17,500 | -- | 58,675 | Mark C. Kilmer | 54,200 | 17,500 | -- | 71,700 | Timothy B. O’Reilly | 21,643 | 17,500 | -- | 39,143 | Donna J. Sorensen | 49,900 | 17,500 | -- | 67,400 | Marie Z. Ziegler | 69,118 | 21,500 | -- | 90,618 | | | | | | (1) Directors may elect to defer the receipt of all or part of their fees and retainers. All of the directors other than Mr. O’Reilly, Ms. Sorensen and Ms. Ziegler have elected to defer the receipt of all their cash fees and retainers, and the deferred compensation is used to purchase additional shares of QCR Holdings common stock at market value through the Deferred Income Plans. | | (2) We report all equity awards at full grant date fair value of each award calculated in accordance with FASB ASC Topic 718. For restricted stock, the fair value per share is equal to the closing price of our stock on the date of the grant. None of the directors held any vested or unvested equity awards as of December 31, 2021. |
Name | Fees Earned ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | (a) | (b) | (c) | | (h) | Mary Kay Bates | 50,200 | 23,500 | -- | 73,700 | John-Paul E. Besong | 42,700 | 23,500 | -- | 66,200 | Brent R. Cobb | 55,000 | 27,500 | -- | 82,500 | James M. Field | 68,200 | 27,500 | -- | 95,700 | John F. Griesemer | 39,713 | 27,500 | -- | 67,213 | Elizabeth S. Jacobs | 53,200 | 27,500 | -- | 80,700 | Mark C. Kilmer | 67,200 | 27,500 | -- | 94,700 | Donna J. Sorensen | 48,150 | 23,500 | -- | 71,650 | Marie Z. Ziegler | 82,400 | 31,500 | -- | 113,900 |
(1) | Directors may elect to defer the receipt of all or part of their fees and retainers. All of the directors other than Mr. Griesemer, Ms. Sorensen and Ms. Ziegler have elected to defer the receipt of all their cash fees and retainers, and the deferred compensation is used to purchase additional shares of QCR Holdings common stock at market value through the Deferred Income Plans. | | | (2) | We report all equity awards at full grant date fair value of each award calculated in accordance with FASB ASC Topic 718. For restricted stock, the fair value per share is equal to the closing price of our stock on the date of the grant. None of the directors held any vested or unvested equity awards as of December 31, 2023. |
PROPOSAL 2:
Advisory (Non-Binding) Vote ADVISORY (NON-BINDING) VOTE TO APPROVE ExecutiveEXECUTIVE OFFICER CompensationCOMPENSATION Section 14A of the Exchange Act, as created by Section 951 of the Dodd–Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and the rules and regulations promulgated thereunder require publicly traded companies, such as QCR Holdings, to conduct a separate stockholder advisory vote to approve the compensation of certain executive officers, as disclosed pursuant to the Securities and Exchange Commission compensation disclosure rules, commonly referred to as a “say-on-pay” vote. In accordance with these requirements, we are providing stockholders with an advisory vote on the compensation of our named executive officers. We currently hold a say-on-pay vote annually. The overall objective of QCR Holdings’ compensation program has been to align executive officer compensation with the success of meeting long-term strategic operating and financial goals. Stockholders are urged to read the “Executive Compensation” section of this proxy statement, including the Summary Compensation Table and other related compensation tables and narrative disclosures that describe the compensation of our named executive officers in 2021.2023. The Compensation Committee and the boardBoard of directorsDirectors believe that the policies and procedures articulated in the “Executive Compensation” section are effective in implementing our compensation philosophy and achieving its goals and that the compensation of our named executive officers in 20212023 reflects and supports these compensation policies and procedures. The following resolution is submitted for stockholder approval: “RESOLVED, that QCR Holdings’ stockholders approve, on an advisory basis, its executive compensation as described in the section captioned ‘Executive Compensation’ contained in the QCR Holdings proxy statement dated April 6, 2022.4, 2024.” Approval of this resolution requires the affirmative vote of a majority of the shares present in person or by proxy and entitled to vote at the meeting. While this say-on-pay vote is required, as provided in Section 14A of the Exchange Act, it is not binding on our boardBoard of directorsDirectors and may not be construed as overruling any decision by the board.Board of Directors. However, the Compensation Committee will consider the outcome of the vote when considering future compensation arrangements. The boardBoard of directors Directorsunanimously recommends that you vote to approve the overall compensation of our named executive officers by voting “FOR”“FOR” this proposal.
PROPOSAL 3: ADVISORY (NON-BINDING) VOTE RELATING TO THE FREQUENCY OF FUTURE STOCKHOLDER VOTES ON THE COMPENSATION OF CERTAIN EXECUTIVE OFFICERS The Dodd-Frank Act also requires a stockholder vote on the frequency with which stockholders shall conduct future advisory say-on-pay votes on executive compensation, such as the proposal above. In accordance with these requirements, we are providing stockholders with an advisory vote on the frequency with which our stockholders will vote on future say-on-pay proposals. The advisory vote on the frequency of future say-on-pay votes is a nonbinding vote as to how often say-on-pay votes should occur: every year, every two years or every three years. In addition to those choices, stockholders may also abstain from voting. We are required to hold an advisory vote on the frequency of future say-on-pay votes at least once every six years. After careful consideration, our Board of Directors recommends that future say-on-pay votes be conducted annually. The Board of Directors values and encourages constructive input from our stockholders regarding QCR Holdings’ compensation philosophy, policies and practices, and believes it is important that such policies and practices are aligned with the best interests of our stockholders. An annual say-on-pay vote frequency will provide the Board of Directors and Compensation Committee with useful information on stockholder sentiment about these important matters on a frequent and consistent basis. Although the Board of Directors recommends a say-on-pay vote every year, stockholders are not voting to approve or disapprove the Board of Directors’ recommendation. Rather, stockholders are being asked to vote on the following resolution: “RESOLVED, that the stockholders of QCR Holdings determine, on an advisory basis, that the frequency with which the stockholders shall have an advisory vote on executive compensation set forth in the Company’s proxy statement for its annual meeting of stockholders, is (i) every year, (ii) every two years, or (iii) every three years.” The choice which receives the highest number of votes will be deemed the choice of the stockholders. While this advisory vote is required, as provided in Section 14A of the Exchange Act, it is not binding on our Compensation Committee or Board of Directors and may not be construed as overruling any decision by the Compensation Committee or the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when determining the frequency of future say-on-pay votes. The Board of Directors unanimously recommends that you vote to conduct future advisory say-on-pay votes on executive compensation EVERY YEAR.
PROPOSAL 4: APPROVAL OF EMPLOYEE STOCK PURCHASETHE 2024 EQUITY INCENTIVE PLAN On February 16, 2022, our board22, 2024, the Board of directorsDirectors approved the QCR Holdings, Inc. 2022 Employee Stock Purchase2024 Equity Incentive Plan (the “Purchase Plan”) for the CompanyQCR Holdings and itsour subsidiaries, effective July 1, 2022, subject to stockholder approval. A summary of the material provisions of the Purchase2024 Equity Incentive Plan is set forth below. A copy of the Purchase2024 Equity Incentive Plan is set forthattached hereto as Appendix A.A. Purpose The purpose of the Purchase2024 Equity Incentive Plan is to provide a means by which our employees may be given an opportunity to purchase shares of our common stock through voluntary payroll deductions, to assist us in retaining the services of our employees and securing and retaining the services of new employees and to provide incentives for our employees to exert maximum efforts for our success. All employees participating in the Purchase Plan will have equal rights and privileges under the plan. Substantially all our approximately 1,000 employees are eligible to participate in the Purchase Plan. We believe that the Purchase Plan will encourage broader stock ownership by our employees and thereby provide an incentive for employees to contribute to our success. We intend for the Purchase Plan to offer a convenient means for employees who might not otherwise purchase and hold our common stock to do so and for the discounted purchase price feature of the Purchase Plan to provide a meaningful inducement to participate. We further believe that our employees’ continuing economic interest, as stockholders, in our performance and success will enhance our entrepreneurial spirit, which we believe will greatly contribute to our long-term success. The rights to purchase common stock granted under the Purchase Plan are intended to qualify as options issued under an “employee stock purchase plan” as that term is defined in Section 423(b) of the Internal Revenue Code of 1986, as amended (the “Code”). Administration
The Compensation Committee was selectedestablished by the Board of Directors to serve aspromote the “Committee”long-term financial success of QCR Holdings, attract, retain and reward persons who can and do contribute to such success, and further align the participants’ interests with those of our stockholders. The 2024 Equity Incentive Plan will be administered by the Compensation Committee of our Board of Directors, which will select award recipients from the eligible participants, determine the types of awards to be granted, and determine the applicable terms, conditions, performance criteria, restrictions and other provisions of such awards, including any vesting or accelerated vesting requirements or conditions applicable to an award or awards.
We are submitting the 2024 Equity Incentive Plan to our stockholders at this time to replace our current equity compensation plan, the 2016 Equity Incentive Plan and comply with NASDAQ listing requirements, which require stockholder approval. If the 2024 Equity Incentive Plan is not approved by our stockholders, it will not be adopted and we will continue to operate under our existing equity compensation plans until their expiration. In the event those plans expire, we believe that higher cash compensation may be required to attract and retain key employees and other individuals. The 2024 Equity Incentive Plan submitted for approval reflects current practices in equity incentive plans that we consider best practices such as: | ● | Multiple Award Types. The 2024 Equity Incentive Plan permits the issuance of restricted stock units, options, restricted stock and other types of equity grants, subject to the share limits of the plan. This breadth of award types will enable the plan administrator to tailor awards in light of the accounting, tax and other standards applicable at the time of grant. Historically, these standards have changed over time. | | | | | ● | No Evergreen Feature. The number of authorized shares under the 2024 Equity Incentive Plan is fixed at 600,000. As of the effective date of the 2024 Equity Incentive Plan, no new grants will be made under our 2016 Equity Incentive Plan. The 2024 Equity Incentive Plan does not include an “evergreen” feature that would cause the number of authorized shares to automatically increase in future years. | | | | | ● | Repricings Prohibited. Repricing of options and stock appreciation rights (“SARs”) generally is prohibited without prior stockholder approval, with customary exceptions for stock dividends or splits, reorganizations, recapitalizations and similar events. | | | | | ● | Discount Stock Options and SARs Prohibited. All options and SARs must have an exercise price equal to or greater than the fair market value of our common stock on the date the option or SAR is granted, with a customary exception for replacement awards granted in connection with the acquisition of another entity. | | | | | ● | Conservative Change in Control Provisions. The 2024 Equity Incentive Plan does not include a special change in control price payable to award holders. The change in control provisions under the 2024 Equity Incentive Plan provide for acceleration of vesting in the event of a change in control only if the 2024 Equity Incentive Plan does not become an obligation of the successor entity or the participant incurs a termination of service without cause or for good reason following the change in control. | | | |
| ● | Clawback Policy Implementation. All awards under the 2024 Equity Incentive Plan will be subject to any applicable clawback policy in effect from time to time, including, but not limited to, the clawback policy that QCR Holdings, Inc. adopted on August 16, 2023. | | | | | ● | Independent Oversight. The 2024 Equity Incentive Plan will be administered by a committee of independent directors. |
General The 2024 Equity Incentive Plan incorporates a broad variety of equity-based incentive compensation elements to provide the Compensation Committee with significant flexibility to address the requirements and limitations of applicable legal, regulatory and financial accounting standards in a manner mutually consistent with the purposes of the 2024 Equity Incentive Plan and the best interests of QCR Holdings. The maximum number of shares of QCR Holdings’ common stock that may be delivered to participants, or their beneficiaries, under the 2024 Equity Incentive Plan is 600,000, with adjustments for certain corporate transactions and for forfeited shares. As of the date of stockholder approval of the 2024 Equity Incentive Plan, no additional awards will be granted under the 2016 Equity Incentive Plan. To the extent that any shares covered by an award under the 2024 Equity Incentive Plan are forfeited or are not delivered for any reason, including because the award is forfeited, cancelled or settled in cash, the shares will not be deemed to have been delivered for purposes of determining the maximum number of shares available for delivery under the 2024 Equity Incentive Plan. For SARs that are settled in stock, only the actual shares delivered will be counted for purposes of these limitations. Tandem awards will not be double-counted for purposes of these limitations. If any option granted under the 2024 Equity Incentive Plan is exercised by tendering shares, the full number of shares covered by such award will be counted for purposes of these limitations. If the withholding tax liabilities arising from an award under the 2024 Equity Incentive Plan are satisfied by the tendering of shares of QCR Holdings common stock to QCR Holdings or by the withholding of shares by QCR Holdings, such shares will be deemed to have been delivered for purposes of determining the maximum number of shares available for delivery under the 2024 Equity Incentive Plan. The 2024 Equity Incentive Plan’s effective date would be the date of its approval by QCR Holdings’ stockholders. If approved, the 2024 Equity Incentive Plan will continue in effect until terminated by the Board of Directors. However, no awards may be granted under the 2024 Equity Incentive Plan after the 10-year anniversary of its effective date. Any awards that are outstanding after the 10th anniversary of the effective date will remain subject to the terms of the Purchase2024 Equity Incentive Plan. The following additional limits apply to awards under the 2024 Equity Incentive Plan: | ● | The maximum number of shares that may be covered by options or stock appreciation rights that are granted to any one director during any calendar year is 5,000 shares; and |
| ● | The maximum number of shares that may be covered by stock awards that are granted to any one director during any calendar year is 2,000 shares. |
The Compensation Committee may use shares available under the 2024 Equity Incentive Plan (the “Committee”).as the form of payment for grants or rights earned or due under any compensation plans or arrangements of QCR Holdings or a subsidiary, including the plans and arrangements of QCR Holdings or a subsidiary assumed in business combinations. In the event of a corporate transaction involving the stock of QCR Holdings (such as a stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization or merger), the foregoing share limitations and all outstanding awards will automatically be adjusted proportionally and uniformly to reflect such event. However, the Compensation Committee may adjust awards, or prevent the automatic adjustment of awards, to preserve the benefits or potential benefits of awards under the 2024 Equity Incentive Plan. Awards granted under the 2024 Equity Incentive Plan generally will not be transferable except as designated by the participant by will or by the laws of descent and distribution or pursuant to a domestic relations order. However, the Compensation Committee has the discretion to permit the transfer of awards under the 2024 Equity Incentive Plan to immediate family members of participants, trusts and other entities established, as long as the transfers are made without value to the participant. In no event may an award granted under the 2024 Equity Incentive Plan be sold, assigned or transferred to any third-party financial institution. Eligibility Selected employees and directors of, and eligible service providers to, QCR Holdings and its subsidiaries are eligible to become participants in the 2024 Equity Incentive Plan. The Compensation Committee will administerdetermine the Purchase Plan and havespecific individuals who will be granted awards under the final power to construe and interpret both the Purchase2024 Equity Incentive Plan and the rights granted under it. type and amount of any such awards. Options The Compensation Committee has the power, subjectmay grant nonqualified stock options to purchase stock at a specified exercise price. Each award must be pursuant to an award agreement setting forth the provisions of the Purchase Plan, to determine when and how rights to purchaseindividual award. Awards of options must expire no later than 10 years from the date of grant. The exercise price for any option may not be less than the fair market value of QCR Holdings’ common stock on the date the option is granted. The exercise price of an option may, however, be higher or lower than the fair market value for an option granted in replacement of an existing award held by an employee or director of, or service provider to, a third party that is acquired by QCR Holdings or one of its subsidiaries. The exercise price of an option may not be decreased after the date of grant nor may an option be surrendered to QCR Holdings as consideration for the grant of a replacement option with a lower exercise price, except as approved by QCR Holdings’ stockholders, as adjusted for corporate transactions described above, or in the case of options granted in replacement of existing awards granted under a predecessor plan. Options awarded under the 2024 Equity Incentive Plan will be grantedexercisable in accordance with the terms established by the Compensation Committee. The full purchase price of each share of stock purchased upon the exercise of any option must be paid at the time of exercise of an option. As determined by the Compensation Committee, the exercise price of an option may be paid in cash, in shares of QCR Holdings’ common stock (valued at fair market value as of the day of exercise), by net exercise, by other property deemed acceptable by the Board of Directors or by irrevocably authorizing a third party to sell shares of QCR Holdings’ common stock and remit a sufficient portion of the proceeds to QCR Holdings to satisfy the exercise price (sometimes referred to as a “cashless exercise”) or in any combination of the foregoing methods deemed acceptable by the Compensation Committee. In a net exercise, the person exercising the option does not pay any cash and the provisionsnet number of each offeringshares received is equal in value to the number of such rights,shares as to which need not be identical. For purposesthe option is being exercised, multiplied by a fraction, the numerator of which is the administrationfair market value less the exercise price, and the denominator of the Purchase Plan, the Committee must be composed solely of not fewer than two non-employee members of the board.which is fair market value. Stock Subject to Purchase PlanAppreciation Rights There are reserved for issuance and purchase underSARs entitle the Purchase Plan an aggregate of 350,000 sharesparticipant to receive cash or our common stock plus that number of shares remaining under the 2002 Amended Employee Stock Purchase Plan priorequal in value to, its termination on July 1, 2022. If rights granted under the Purchase Plan expire, lapse or otherwise terminate without being exercised, the shares of common stock not purchased under such rights will again become available for issuance under the Purchase Plan.
Offerings
The Purchase Plan is implemented by offerings of shares of common stock to all eligible employees from time to time by the Committee. If approved by stockholders, the first offering under the Purchase Plan will begin on July 1, 2022 and will end on December 31, 2022. After December 31, 2022, offerings are planned to begin each January 1st and July 1st. The provisions of separate offerings need not be identical, but each offering will conform to the Purchase Plan.
Eligibility
Each employee will be eligible to participate in the Purchase Plan beginningbased on the plan enrollment date coincident with or next following the date on which the employee has been employed. The Committee retains the right to change the eligibility criteria for any plan year, in advance of such plan year, as long as such criteria are permissible under Code Section 423. However, no employee will be eligible to participate in the Purchase Plan if, immediately after the grant of purchase rights, the employee would own, directly or indirectly, stock possessing 5% or morevalue of, the total combined voting power or value of all classes of stock of QCR Holdings or of any subsidiary of QCR Holdings, including any stock that such employee may purchase under all outstanding rights and options.
Participation in the Plan
All eligible employees may participate in each offering under the Purchase Plan. For a participant to participate in and purchase shares during an offering, the participant must deliver an enrollment form authorizing payroll deductions of up to the maximum setamount by the Committee (which maximum may be no greater than 15%) of such participant’s total compensation during the purchase period. Once a participate submits an enrollment form, unless otherwise specified by such participant, the participant is automatically enrolled in each subsequent offering.
Purchase Price
The purchase price per share at which shares of our common stock are sold in an offering under the Purchase Plan will be determined by the Committee and will be not less than the lesser of 85% of the fair market value of a sharespecified number of our commonshares on the exercise date exceeds an exercise price established by the Compensation Committee. Except as described below, the exercise price for a SAR may not be less than the fair market value of the stock on the offering date the SAR is granted. However, the exercise price may be higher or lower than fair market value for a SAR granted in replacement of an existing award held by an employee, director or service provider of a third party that is acquired by QCR Holdings or one of its subsidiaries, or for SARs granted under a predecessor plan. SARs will be exercisable in accordance with the purchase date.terms established by the Compensation Committee.
Stock Awards PaymentA stock award is a grant of Purchase Price; Payroll Deductionsshares of QCR Holdings’ common stock or a right to receive shares of QCR Holdings’ common stock, an equivalent amount of cash or a combination thereof in the future. Awards may include stock units, deferred stock units, bonus shares, performance shares, performance units, restricted stock or restricted stock units or any other equity-based award as determined by the Compensation Committee. Any specific performance measures, performance objectives or period of service requirements may be set by the Compensation Committee in its discretion.
The purchase priceForfeiture
Unless specifically provided to the contrary in the applicable award agreement, if a participant’s service is terminated for cause, any outstanding award held by the participant will be forfeited immediately and the participant will have no further rights under the award. Further, except as otherwise provided by the Compensation Committee, if a participant breaches a non-competition, non-solicitation, non-disclosure, non-disparagement or other restrictive covenant in any agreement between the participant and QCR Holdings or a subsidiary, whether during or after the participant’s termination of service, the participant will forfeit or pay the following to QCR Holdings: | ● | all outstanding awards granted to the participant under the 2024 Equity Incentive Plan, including awards that have become vested or exercisable; | | | | | ● | any shares held by the participant in connection with the 2024 Equity Incentive Plan that were acquired after the participant’s termination of service and within the 12-month period immediately preceding the participant’s termination of service; | | | | | ● | the profit realized by the participant from the exercise of any stock options and SARs that the participant exercised after the participant’s termination of service and within the 12-month period immediately preceding the participant’s termination of service; and | | | | | ● | the profit realized by the participant from the sale or other disposition of any shares received by the participant in connection with the 2024 Equity Incentive Plan after the participant’s termination of service and within the 12-month period immediately preceding the participant’s termination of service, where such sale or disposition occurs in such similar time period. |
Change In Control Unless otherwise provided in an award agreement, upon the occurrence of a change in control, all stock options and SARs under the 2024 Equity Incentive Plan then held by the participant will become fully exercisable immediately if, and all stock awards will become fully earned and vested immediately, if (i) the 2024 Equity Incentive Plan is not an obligation of the sharessuccessor entity following a change in control or (ii) the 2024 Equity Incentive Plan is accumulated by payroll deductions overan obligation of the successor entity following a change in control and the participant incurs a termination of service without cause or for good reason following the change in control. Notwithstanding the immediately preceding sentence, if the vesting of an award is conditioned upon the achievement of performance measures, then such vesting will be subject to the following: if, at the time of the change in control, the performance measures are less than 50% attained (pro rata based upon the time of the period through the change in control), the award will become vested and exercisable on a fractional basis with the numerator being equal to the percentage of attainment and the denominator being 50%; and if, at the time of the offering. Atchange in control, the performance measures are at least 50% attained (pro rata based upon the time of the period through the change in control), the award will become fully earned and vested immediately upon the change in control. For purposes of the 2024 Equity Incentive Plan, a “change in control” generally will be deemed to occur when (i) any time duringperson acquires the offering,beneficial ownership of 33% or more of the common stock of QCR Holdings, except that the acquisition of an interest by a participant may terminate hisbenefit plan sponsoredby QCR Holdings or her payroll deductions. However, a participant may decrease or increase his or her participation percentage only once each calendar quartercorporate restructuring in which another member of QCR Holdings’ controlled group acquires such an interest generally will not be a change in control for purposes of the 2024 Equity Incentive Plan, (ii) during any offering. Any authorized decrease or increase in12-month period, a participant’s payroll deductions will take effectmajority of the members of the Board of Directors serving as of the beginning2024 Equity Incentive Plan’s effective date, or whose election was approved by a vote of a majority of the next payroll perioddirectors then in that offering. All payroll deductions madeoffice, no longer serves as directors, (iii) QCR Holdings combines or merges with another company and, immediately after the combination, the stockholders of QCR Holdings immediately prior to the combination hold, directly or indirectly, 50% or less of the voting stock of the resulting company or (iv) the consummation of a complete liquidation or dissolution of, or an agreement for a participant are credited to histhe disposition of two-thirds or her accountmore of the consolidated assets of, QCR Holdings occurs. In the event an award under the Purchase2024 Equity Incentive Plan constitutes “deferred compensation” for purposes of Code Section 409A, and deposited with our general funds. A participantthe settlement or distribution of the award is triggered by a change in control, then such settlement or distribution will be subject to the event constituting the change in control also constituting a “change in control event” for purposes of Code Section 409A. Amendment and Termination Our board may at any time amend or terminate the 2024 Equity Incentive Plan or any award granted under the 2024 Equity Incentive Plan, but any amendment or termination generally may not make additional payments into such account unless specifically provided for inimpair the offering and only ifrights of any participant without the participant hasparticipant’s written consent. The Board of Directors may not hadamend any provision of the maximum amount withheld during2024 Equity Incentive Plan to materially increase the purchase period. Purchase of Stock
By authorizing payroll deductions during a purchase period, the employee will be entitled to purchase shares under the Purchase Plan. In connection with offerings made under the Purchase Plan, the Committee specifies the maximum number of shares each participant may purchase and the maximum aggregateoriginal number of shares that may be purchased pursuant toissued under the offering by all participants. If the aggregate number of shares to be purchased upon exercise of rights granted2024 Equity Incentive Plan (other than as provided in the offering will exceed2024 Equity Incentive Plan), materially increase the maximum aggregate number of shares available,benefits accruing to a participant or materially modify the Committee will make a pro rata allocation of available shares in a uniform and equitable manner. In addition, no employee may purchase more than $25,000 worth of such stock, determined at the fair market value of the shares at the time such rights are granted, under all of our employee stock purchase plans in any calendar year.
Withdrawal
Each participant may withdraw from a given offering by delivering to us a new enrollment form. Such withdrawal may be elected at least 10 days prior to the end of the applicable purchase period, except as provided by the Committeerequirements for participation in the offering. Upon2024 Equity Incentive Plan without approval of QCR Holdings’ stockholders. However, the Board of Directors may amend the 2024 Equity Incentive Plan at any withdrawal, we will distributetime, retroactively or otherwise, to ensure that the employee his2024 Equity Incentive Plan complies with current or her accumulated payroll deductions (without interest). The employee will not be entitled to participate again in that offering. However, an employee’s withdrawal from an offering will not havefuture law without stockholder approval, and the Board of Directors may unilaterally amend the 2024 Equity Incentive Plan and any effect upon such employee’s ability to participate in other offerings under the Purchase Plan, but such employee will be required to deliver a new enrollment formoutstanding award, without participant consent, in order to participate in other offeringsavoid the application of, or to comply with, Code Section 409A.
Clawback Policy All awards, amounts and benefits received under the Purchase Plan. Termination of Employment
Rights granted pursuant to any offering under the Purchase Plan terminate immediately upon cessation of an employee’s employment with QCR Holdings and any of our subsidiaries for any reason, and we will distribute to such employee all of his or her accumulated payroll deductions (without interest) upon such termination.
Restrictions on Transfer
Rights granted under the Purchase Plan are not transferable, except by will or laws of descent and distribution, and may be exercised only by the person to whom such rights are granted during such person’s lifetime. Employees will not be permitted to sell or transfer common stock purchased pursuant to the Purchase Plan during the one-year period immediately following the date of purchase.
Change in Capitalization
If there is a change in capitalization of QCR Holdings that increases or decreases the outstanding shares of common stock of QCR Holdings without QCR Holdings receiving consideration, a proportionate adjustment will automatically be made, unless otherwise provided by the Committee, to the number of securities underlying the options offered under the Purchase Plan, such that, to the extent possible, the proportionate interest of each participant following such change in capitalization will not change. Upon a sale of QCR Holdings, if the board does not terminate the Purchase Plan, each outstanding option will be assumed by the purchasing company or an equivalent option substituted by such company. If the purchasing company refuses to assume or substitute an award, the offering period will be shortened to end the day before the effective date of the purchase.
Duration, Termination and Amendment
The Purchase Plan will terminate on the earlier of: (a) the date on which there are no additional shares reserved for issuance under the Purchase Plan; or (b) July 1, 2032. In addition, the Purchase Plan may be terminated at any time in the sole discretion of the board. In the event the Plan is terminated during an offering prior to any purchase date, QCR Holdings will pay to each participant an amount equal to the balance in the participant’s payroll deduction account (without interest) as soon as practicable thereafter.
The Committee may amend the Purchase Plan at any time. To the extent determined necessary and desirable by the Committee, amendments to the Purchase2024 Equity Incentive Plan will be submittedsubject to potential cancellation, recoupment, rescission, payback or other action in accordance with the stockholders for approval. Rights granted before amendmentterms of any applicable clawback policy or any applicable law even if adopted after the Purchase2024 Equity Incentive Plan will not be altered or impaired in any material manner by any amendment, except as necessary to comply with any laws or government regulations or as otherwise specifically provided in the Purchase Plan.becomes effective.
U.S. Federal Income Tax InformationConsiderations The following is a summary of the current U.S. federal income tax consequences that may arise in conjunction with participation in the Purchase2024 Equity Incentive Plan. Rights granted underNonqualified Stock Options. The grant of a nonqualified stock option generally will not result in taxable income to the Purchase Plan are intended to qualify for favorable federal income tax treatment associated with rights granted under an “employee stock purchase plan” that qualifies under provisions of Code Section 423. Aparticipant. Except as described below, the participant generally will be taxed on amounts withheld for the purchase of shares of common stock as if such amounts were actually received. Other than this, as a general matter, norealize ordinary income will be taxable to a participant until disposition of the acquired shares, and the method of taxation will depend upon the holding period of the acquired shares.
If the shares acquired under the Purchase Plan are sold by the participant more than two years after the beginning of the respective offering period and more than one year after the shares are transferred to the participant, then the lesser of (a) the excess of the fair market value of our common stock at the time of such sale over the purchase price or (b)exercise in an amount equal to the excess of the fair market value of the stock as of the beginning of the offering periodshares acquired over the purchaseexercise price determined asfor those shares; and QCR Holdings generally will be entitled to a corresponding deduction. Gains or losses realized by the participant upon disposition of the beginning of the offering period,such shares generally will be treated as ordinary income. Any further gain or any loss generally will be taxed as a long-term capital gain or loss. At present, such capital gains generally are subjectand losses, with the basis in such shares equal to lower tax rates than ordinary income.
If the shares acquired under the Purchase Plan are sold by the participant for more than their fair market value on the purchase date and such sale is before the expiration of either of the holding periods described above, then the excess of the fair market value of the common stock on the purchase date over the purchase price generally will be treated as ordinary incomeshares at the time of such sale.exercise.
Stock Appreciation Rights. The balancegrant of a SAR generally will not result in taxable income to the participant. Upon exercise of a SAR, the fair market value of shares received generally will be taxable to the participant as ordinary income and QCR Holdings will be entitled to a corresponding deduction. Gains and losses realized by the participant upon disposition of any gainsuch shares generally will be treated as capital gain. Ifgains and losses, with the basis in such shares are sold by the participant for less than their fair market value on the purchase date, the same amount of ordinary income generally will be recognized by the participant, and a capital loss will be recognized by the participant equal to the difference between the fair market value of the commonshares at the time of exercise. Stock Awards. A participant who has been granted a stock on such purchase dateaward generally will not realize taxable income at the time of grant, provided that the stock subject to the award is not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for U.S. income tax purposes. Upon the later of delivery or vesting of shares subject to an award, the holder generally will realize ordinary income in an amount equal to the then fair market value of those shares and the sales price. Any capital gain or lossQCR Holdings will be short-termentitled to a corresponding deduction. Gains or long-term, depending on how longlosses realized by the stock has been held. Thereparticipant upon disposition of such shares generally are no federalwill be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder during the restriction period, if so provided, generally will also be compensation income to the participant and QCR Holdings will be entitled to a corresponding deduction. Withholding of Taxes. QCR Holdings may withhold amounts from participants to satisfy withholding tax consequencesrequirements. If permitted by the Compensation Committee, participants may have shares withheld from awards, may tender previously owned shares to QCR Holdings, or may have any compensation or other amounts payable to participant withheld to satisfy tax withholding requirements. The shares withheld from awards may not be used to satisfy more than the maximum individual statutory tax rate for each applicable tax jurisdiction or such lesser amount as may be established by reasonQCR Holdings. Change in Control. Any acceleration of the grantvesting or exercisepayment of purchase rightsawards under the Purchase Plan. However, we are entitled2024 Equity Incentive Plan in the event of a change in control in QCR Holdings may cause part or all of the consideration involved to be treated as an “excess parachute payment” under the Code, which may subject the participant to a 20% excise tax and preclude deduction by QCR Holdings. The foregoing description of the 2024 Equity Incentive Plan is qualified in its entirety by reference to the extent amounts are taxedfull text of the 2024 Equity Incentive Plan, a copy of which is attached to this proxy statement as ordinary income to a participant, subject to the requirement of reasonableness and the satisfaction of tax reporting obligations.Appendix A. No Tax Advice The preceding discussion is based on U.S. federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the U.S. federal income tax aspects of the Purchase2024 Equity Incentive Plan. A participant may also be subject to state and local taxes in connection with the grant of rightsawards under the Purchase2024 Equity Incentive Plan. WeQCR Holdings strongly encourageencourages participants to consult with their individual tax advisors to determine the applicability of the tax rules to the rightsawards granted to them in their personal circumstances. The number and types of awards to be made pursuant to the 2024 Equity Incentive Plan is subject to the discretion of the Compensation Committee and is not determinable at this time. Stockholder Vote Necessary For Approval of the 2024 Equity Incentive Plan ApprovalAdoption of the Purchase Planthis proposal requires the affirmative vote of a majority of the shares present in person or by proxy at the 2024 Annual Meeting and entitled to vote atvote. Abstentions and broker non-votes will have no effect on the meeting.outcome of this proposal.
The boardBoard of directorsDirectors unanimously recommends stockholdersthat you vote to approve the Purchase2024 Equity Incentive Plan by voting “FOR”“FOR” this proposal. Proxies properly signed and returned will be voted “FOR” this proposal unless stockholders specify otherwise. EQUITY COMPENSATION PLAN INFORMATION The table below sets forth the following information as of December 31, 20212023 for (i) all compensation plans previously approved by the Company’sQCR Holdings’ stockholders and (ii) all compensation plans not previously approved by the Company’sQCR Holdings’ stockholders: | (a) | (a) | | the number of securities to be issued upon the exercise of outstanding options, warrants and rights; | | | | | (b) | (b) | | the weighted-average exercise price of such outstanding options, warrants and rights; and | | | | | | (c) | | other than securities to be issued upon the exercise of such outstanding options, warrants and rights, the number of securities remaining available for future issuance under the plans. |
| | EQUITY COMPENSATION PLAN INFORMATION |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
| Weighted-average exercise price of outstanding options, warrants and rights(1) (b)
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) | | (a) | (b) | (c) | Equity compensation plans approved by stockholders | 452,586382,081(2)
| $24.6532.17 | 193,561401,355(3)
| Equity compensation plans not approved by stockholders | ---
| ---
| ---
| Total | 452,586382,081(2)
| $24.6532.17 | 193,561401,355(3)
|
| | (1) | The weighted average exercise price only relates to outstanding option awards. | (2) | Includes 290,149 outstanding option awards and 80,820 outstanding restricted stock units and 2,858 performance share units granted under the QCR Holdings, Inc. 2010 Equity Incentive Plan, QCR Holdings, Inc. 2013 Equity Incentive Plan, and QCR Holdings, Inc. 2016 Equity Incentive Plan. | (3) | | | | Includes 55,554 and 345,801 shares available under the 2016 Equity Incentive Plan and the Employee Stock Purchase Plan, respectively. |
(1) The weighted average exercise price only relates to outstanding option awards.
(2) Includes 367,998 outstanding option awards and 69,476 outstanding restricted stock units and 10,082 performance share units granted under the Equity Plans.
(3) Includes 132,375 and 61,186 shares available
PROPOSAL 4: 5: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM RSM US LLP has served as our independent registered public accounting firm since 1993, and our Audit Committee has selected RSM US LLP to be our independent registered public accounting firm for the fiscal year ending December 31, 2022.2024. Although we are not required to do so,hold a vote of our boardstockholders with respect to this matter, our Board of directorsDirectors recommends that the stockholders ratify this appointment. A representative of RSM US LLP is expected to attend the meeting and will be available to respond to appropriate questions and to make a statement if he or she so desires. If the appointment of our independent registered public accounting firm is not ratified, the Audit Committee of the boardBoard of directorsDirectors will reconsider the matter of the appointment. Our boardBoard of directors Directorsunanimously recommends that you vote to approve the ratification of this appointment by voting “FOR”“FOR” this proposal. Following is a summary of fees for professional services by RSM US LLP. Accountant Fees During the period covering the fiscal years ended December 31, 20212023 and 2020,2022, RSM US LLP performed the following professional services: | 2021 | 2020 | | 2023 | | | 2022 | | | | | Audit fees (1) | $818,022 | $993,535 | | $ | 1,011,842 | | | $ | 1,305,395 | | Audit-related fees (2) | 4,410 | 3,056 | | 0 | | | 15,372 | | Tax fees(3) | 0 | | 0 | | | 0 | | Other fees (4) | 93,184 | 75,260 | | 94,295 | | | 83,726 | | Total | $915,616 | $1,071,851 | | $ | 1,106,137 | | | $ | 1,404,493 | |
| (1) | Audit fees consist of fees for professional services rendered for the integrated audit of QCR Holdings’ annual consolidated financial statements the audit of QCR Holdings’and internal control over financial reporting, various attestations for the other subsidiaries of QCR Holdings, review of financial statements included in QCR Holdings’ quarterly reporting on Form 10-Q, and review and assistance with other Securities and Exchange Commission and other regulatory filings. |
| (2) | | | (2) | Audit-related fees consist of fees for research and consultations concerning financial accounting and reporting matters. |
| (3) | Tax service fees consist of fees for research and consultations concerning | | (3) | No tax reporting matters.services provided. |
| (4) | | | (4) | All other fees includinginclude a SOC 1 audit, SOC 1 readiness assessment and out-of-pocket reimbursement for an electronic subscription to an accounting publication. |
Audit Committee Approval Policy Among other things, the Audit Committee is responsible for appointing, setting compensation for and overseeing the work of the independent auditor. The Audit Committee’s policy is to pre-approve, on a case-by-case basis, all audit and permissible non-audit services provided by any audit, tax consulting or general business consulting firm. All of the fees earned by RSM US LLP described above were attributable to services pre-approved by the Audit Committee. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires that the directors, executive officers and persons who own more than 10% of our common stock file reports of ownership and changes in ownership with the Securities and Exchange Commission. Delinquent Section 16(a) Reports We are not awareBased solely on our review of any failure to comply withthe copies of the Section 16(a) reporting requirements16 reports filed by any ofand written representations from our directors, executive officers orand any persons who own more than 10% shareholdersof our common stock, we are aware of one transaction that was not timely disclosed on Form 4 during 2021.2023 made by Ms. Winter.
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS Our directors, andexecutive officers and their associates were clients of and had transactions with QCR Holdings and our subsidiaries during 2021.2023. Additional transactions are expected to take place in the future. All outstanding loans, commitments to loan and certificates of deposit and depository relationships, in the opinion of management, were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the lenders and did not involve more than the normal risk of collectability or present other unfavorable features. All such loans are approved by the subsidiary banks’Banks’ board of directors in accordance with applicable bank regulatory requirements. Additionally, the Audit Committee considers any other non-lending transactions between us and a director to ensure that such transactions do not affect a director’s independence. AUDIT COMMITTEE REPORT The Audit Committee, comprised solely of independent directors, has the following responsibilities set forth in its charter, which include assisting the boardBoard of directorsDirectors in carrying out its oversight responsibilities for our financial reporting process, audit process and internal controls. The Audit Committee also reviews our audited consolidated financial statements and recommends to the boardBoard of Directors that they be included in our Annual Report on Form 10-K. The Audit Committee reviewed the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 20212023 and met with both management and RSM US LLP, our independent registered public accounting firm, to discuss those financial statements. The Audit Committee discussed with RSM US LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission and received the written disclosures and the letter from RSM US LLP required by applicable requirements of the PCAOB regarding RSM US LLP’s communications with the Audit Committee concerning independence and has discussed with RSM US LLP its independence. Based on the review and discussions noted above, the Audit Committee has recommended to the boardBoard of directorsDirectors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20212023 for filing with the Securities and Exchange Commission. Audit Committee:
Audit Committee: | | | Mary Kay Bates | Brent R. Cobb | | | James M. Field | Mark C. Kilmer |
Appendix A2024 EQUITY INCENTIVE PLAN
QCR HOLDINGS, INC.Article 1 INTRODUCTION
2022 Employee Stock Purchase Plan
Section 1. 1.1Purpose, of the Plan Effective Date and Term.The purpose of this QCR Holdings, Inc. 2022 Employee Stock Purchase 2024 Equity Incentive Plan (the “Plan”) is intended to provide employeespromote the long-term financial success of QCR Holdings, Inc. (the “Company”) and its Related CorporationsSubsidiaries by providing a means to attract, retain and reward individuals who can and do contribute to such success, and to further align their interests with an opportunitythose of the Stockholders. The “Effective Date” of the Plan is May 16, 2024, the date of the approval of the Plan by the Stockholders. The Plan shall remain in effect as long as any Awards are outstanding; provided, however, that no Awards may be granted after the 10-year anniversary of the Effective Date. Section 1.2Participation. Each employee and director of, and service provider (with respect to acquire a proprietary interest inwhich issuances of securities may be registered under Form S-8) to, the Company throughand each Subsidiary who is granted, and currently holds, an Award in accordance with the purchaseprovisions of shares of common stock. The Company intends that the Plan qualify as an “employee stock purchase plan” under Code Section 423 and the Plan shall be administered, interpreted,a “Participant” in the Plan. Award recipients shall be limited to employees and construeddirectors of, and service providers (with respect to which issuances of securities may be registered under Form S-8) to, the Company and its Subsidiaries; provided, however, that an Award may be granted to an individual prior to the date on which he or she first performs services as an employee, director or service provider, provided that such Award does not become vested prior to the date such individual commences such services. Section 1.3Definitions. Capitalized terms in the Plan shall be defined as set forth in the Plan (including the definition provisions of Article 8). Article 2 AWARDS Section 2.1General. Any Award may be granted singularly, in combination with another Award (or Awards), or in tandem whereby the exercise or vesting of one Award held by a Participant cancels another Award held by the Participant. Each Award shall be subject to the provisions of the Plan and such additional provisions as the Committee may provide with respect to such Award and as may be evidenced in the Award Agreement. Subject to the provisions of Section 3.4(b) and Code Section 409A, an Award may be granted as an alternative to or replacement of an existing Award or an award under any other plan of the Company or a Subsidiary, including, but not limited to, the Predecessor Plan, or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or a Subsidiary, including the plan of any entity acquired by the Company or a Subsidiary. The types of Awards that may be granted include the following: (a) Stock Options. A stock option represents the right to purchase Shares at an exercise price established by the Committee. Any stock option granted under the Plan shall be a nonqualified stock option. No stock options that are intended to satisfy the requirements applicable to “incentive stock options” described in Code Section 422(b) shall be granted under the Plan. (b) Stock Appreciation Rights. A stock appreciation right (an “SAR”) is a right to receive, in cash, Shares or a combination of both (as shall be reflected in the respective Award Agreement), an amount equal to or based upon the excess of (i) the Fair Market Value at the time of exercise of the SAR over (ii) an exercise price established by the Committee. (c) Stock Awards. A stock award is a grant of Shares or a right to receive Shares (or their cash equivalent or a combination of both, as shall be reflected in the respective Award Agreement) in the future, excluding Awards designated as stock options or SARs by the Committee, based on the satisfaction of such conditions as may be established by the Committee. Such Awards may include bonus shares, performance shares, stock units, deferred stock units, performance units, restricted stock, restricted stock units or any other equity-based Award as determined by the Committee. Section 2.2Exercise of Stock Options and SARs. A stock option or SAR shall be exercisable in accordance with such intent. All capitalized terms used hereinprovisions as may be established by the Committee; provided, however, that a stock option or SAR shall expire no later than 10 years after its grant date. The exercise price of each stock option and SAR shall be not less than 100% of the Fair Market Value on the grant date (or, if greater, the par value of a Share); provided, however, that to the extent permitted under Code Section 409A, and subject to Section 3.4(b), the exercise price may be higher or lower in the case of stock options and SARs granted in replacement of existing awards held by an employee, director or service provider granted by an acquired entity. The payment of the exercise price of a stock option shall be by cash or, subject to limitations imposed by applicable law, by any of the following means unless otherwise determined by the Committee from time to time: (a) by tendering, either actually or by attestation, Shares acceptable to the Committee and valued at Fair Market Value as of the day of exercise; (b) by irrevocably authorizing a third party, acceptable to the Committee, to sell Shares acquired upon exercise of the stock option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise; (c) by payment through a net exercise such that, without the payment of any funds, the Participant may exercise the option and receive the net number of Shares equal in value to (i) the number of Shares as to which the option is being exercised, multiplied by (ii) a fraction, the numerator of which is the Fair Market Value (on the date of exercise) less the exercise price, and the denominator of which is such Fair Market Value (the number of net Shares to be received shall be rounded down to the nearest whole number of Shares); (d) by personal, certified or cashiers’ check; (e) by other property deemed acceptable by the Committee or (f) by any combination thereof. Section 2.3Dividends and Dividend Equivalents. Any Award (other than stock options or SARs intending to constitute exempt stock rights under Code Section 409A) may provide the Participant with the right to receive dividend payments or dividend equivalent payments with respect to Shares subject to the Award, which payments may be made currently or credited to an account for the Participant, may be settled in cash or Shares and may be subject to terms or provisions similar to the underlying Award or such other terms and conditions as the Committee may deem appropriate; provided that in no event may such payments or deliveries be made unless and until the Award to which they relate vests. Section 2.4Forfeiture of Awards. Unless specifically provided to the contrary in an Award Agreement, upon notification of Termination of Service for Cause, any outstanding Award held by a Participant, whether vested or unvested, shall terminate immediately, such Award shall be forfeited and the Participant shall have no further rights thereunder. Section 2.5Deferred Compensation. The Plan is, and all Awards are, intended to be exempt from (or, in the alternative, to comply with) Code Section 409A, and each shall be construed, interpreted and administered accordingly. The Company does not guarantee that any benefits that may be provided under the Plan will satisfy all applicable provisions of Code Section 409A. If any Award would be considered “deferred compensation” under Code Section 409A (“Deferred Compensation”), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the applicable Award Agreement, without the consent of the Participant, to avoid the application of, or to maintain compliance with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section 2.5 shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A. A Participant’s acceptance of any Award shall be deemed to constitute the Participant’s acknowledgment of, and consent to, the rights of the Committee under this Section 2.5, without further consideration or action. Any discretionary authority retained by the Committee pursuant to the terms of the Plan or pursuant to an Award Agreement shall not be applicable to an Award that is determined to constitute Deferred Compensation, if such discretionary authority would contravene Code Section 409A. Article 3 SHARES SUBJECT TO PLAN Section 3.1Available Shares. The Shares with respect to which Awards may be granted shall be Shares currently authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including Shares purchased in the open market or in private transactions. Section 3.2Share Limitations. (a) Share Reserve. Subject to the following provisions of this Section 3.2, the maximum number of Shares that may be delivered under the Plan shall be 600,000 Shares. The maximum number of Shares available for delivery under the Plan and the number of Shares subject to outstanding Awards shall be subject to adjustment as provided in Section 3.4. For purposes of this Section 3.2, tandem Awards shall not be double-counted and Awards payable solely in cash shall not be counted. As of the Effective Date, no new awards shall be granted under the Predecessor Plan; provided, however, for the avoidance of doubt, that all existing awards granted under such Predecessor Plan prior to the Effective Date will remain in full force and effect and will continue to be governed by the terms of the Predecessor Plan and the award agreements thereunder. (b) Reuse of Shares. (i) To the extent any Shares covered by an Award are not delivered to a Participant or beneficiary for any reason, including because the Award is forfeited, canceled or settled in cash, such Shares shall not be deemed to have been delivered for purposes of determining the maximum number of Shares available for delivery under the Plan and shall again become eligible for delivery under the Plan. (ii) With respect to SARs that are settled in Shares, the full number of covered Shares set forth in the Award Agreement shall be counted for purposes of determining the maximum number of Shares available for delivery under the Plan. (iii) If the exercise price of any stock option granted under the Plan is satisfied by tendering Shares to the Company (whether by actual delivery or by attestation and whether or not such surrendered Shares were acquired pursuant to an Award) or by the net exercise of the Award, the full number of covered Shares set forth in the Award Agreement shall be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan. (iv) If the withholding tax liabilities arising from an Award or, following the Effective Date, an award under the Predecessor Plan, are satisfied by the tendering of Shares to the Company (whether by actual delivery or by attestation and whether or not such tendered Shares were acquired pursuant to an Award) or by the withholding of or reduction of Shares by the Company, such Shares shall be deemed to have been delivered for purposes of determining the maximum number of Shares available for delivery under the Plan. Section 3.3Limitations on Grants to Director Participants. With respect to any Award to a Director Participant: (a) Stock Options and SARs. The maximum number of Shares that may be subject to stock options or SARs granted to any individual Director Participant during any calendar year shall be 30,000. (b) Stock Awards. The maximum number of Shares that may be subject to stock awards that are granted to any one individual Director during any calendar year shall be 5,000. Section 3.4Corporate Transactions; No Repricing. (a) Adjustments. To the extent permitted under Code Section 409A, and to the extent applicable, in the event of a corporate transaction involving the Company or the Shares (including any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, or other similar event which the Committee determines affects the Shares such that an adjustment pursuant to this Section 3.4 is appropriate to the enlargement or dilution of rights), all outstanding Awards, the number of Shares available for delivery under the Plan under Section 3.2 and each of the specified limitations set forth in Section 3.3 shall be adjusted automatically to proportionately and uniformly reflect such transaction; provided, however, that, subject to Section 3.4(b) and Code Section 409A, the Committee may otherwise adjust Awards (or prevent such automatic adjustment) as it deems necessary, in its sole discretion, to preserve the benefits or potential benefits of the Awards and the Plan. Action by the Committee under this Section 3.4(a) may include: (i) adjustment of the number and kind of shares that may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding stock options and SARs; and (iv) any other adjustments that the Committee determines to be equitable (which may include (A) replacement of an Award with another award that the Committee determines has comparable value and that is based on stock of a company resulting from a corporate transaction, and (B) cancellation of an Award in return for cash payment of the current value of the Award, determined as though the Award were fully vested at the time of payment, provided that in the case of a stock option or SAR, the amount of such payment shall be the excess of the value of the stock subject to the option or SAR at the time of the transaction over the exercise price, and provided, further, that no such payment shall be required in consideration for the cancellation of the Award if the exercise price is greater than the value of the stock at the time of such corporate transaction). (b) No Repricing. Notwithstanding any provision of the Plan to the contrary, no adjustment or reduction of the exercise price of any outstanding stock option or SAR in the event of a decline in Stock price shall be permitted without approval by the Stockholders or as otherwise expressly provided under Section 3.4(a). The foregoing prohibition includes (i) reducing the exercise price of outstanding stock options or SARs, (ii) cancelling outstanding stock options or SARs in connection with the granting of stock options or SARs with a lower exercise price to the same individual, (iii) cancelling stock options or SARs with an exercise price in excess of the current Fair Market Value in exchange for a cash or other payment, and (iv) taking any other action that would be treated as a repricing of a stock option or SAR under the rules of the primary securities exchange or similar entity on which the Shares are listed. Section 3.5Delivery of Shares. Delivery of Shares or other amounts under the Plan shall be subject to the following: (a) Compliance with Applicable Laws. Notwithstanding any provision of the Plan to the contrary, the Company shall have no obligation to deliver any Shares or make any other distribution of benefits under the Plan unless such delivery or distribution complies with all applicable laws and the applicable requirements of any securities exchange or similar entity. (b) No Certificates Required. To the extent that the Plan provides for the delivery of Shares, the delivery may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange or similar entity. Article 4 CHANGE IN CONTROL Section 4.1Consequence of a Change in Control. Subject to the provisions of Section 3.4 (relating to the adjustment of shares), and except as otherwise provided in the Plan or in any Award Agreement, at the time of a Change in Control: (a) Subject to any forfeiture and expiration provisions otherwise applicable to the respective Awards, all stock options and SARs under the Plan then held by the Participant shall become fully exercisable immediately if, and all stock awards under the Plan then held by the Participant shall become fully earned and vested immediately if, (i) the Plan and the respective Award Agreements are not the obligations of the entity, whether the Company, a successor thereto or an assignee thereof, that conducts following a Change in Control substantially all of the business conducted by the Company and its Subsidiaries immediately prior to such Change in Control or (ii) the Plan and the respective Award Agreements are the obligations of the entity, whether the Company, a successor thereto or an assignee thereof, that conducts following a Change in Control substantially all of the business conducted by the Company and its Subsidiaries immediately prior to such Change in Control and the Participant incurs a Termination of Service without Cause or by the Participant for Good Reason following such Change in Control. (b) Notwithstanding the foregoing provisions of this Section 4.1, if the vesting of an outstanding Award is conditioned upon the achievement of performance measures, then such such Award shall become fully earned at vested at Target level performance. Section 4.2Definition of Change in Control. (a) For purposes of the Plan, “Change in Control” means the first to occur of the following: (i) The consummation of the acquisition by any “person” (as such term is defined in Section 20. ��
Section 2. Eligibility13(d) or 14(d) of the Exchange Act) of “beneficial ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 33% or more of the combined voting power of the then outstanding Voting Securities of the Company;
(ii) During any 12-month period, the individuals who, as of the Effective Date, are members of the Board cease for any reason to constitute a majority of the Board, unless either the election of or the nomination for election by the Stockholders of any new director was approved by a vote of a majority of the Board, in which case such new director shall for purposes of the Plan be considered as a member of the Board; or (iii) The consummation by the Company of (A) a merger, consolidation or other similar transaction if the Stockholders immediately before such merger, consolidation or other similar transaction do not, as a result of such merger, consolidation or other similar transaction, own, directly or indirectly, more than 50% of the combined voting power of the then outstanding Voting Securities of the entity resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power of the Voting Securities of the Company outstanding immediately before such merger or consolidation or (B) a complete liquidation or dissolution or an agreement for the sale or other disposition of two-thirds or more of the consolidated assets of the Company. (b) Notwithstanding any provision in the foregoing definition of Change in Control to the contrary, a Change in Control shall not be deemed to occur solely because 33% or more of the combined voting power of the then outstanding Voting Securities of the Company are acquired by (A) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained for employees of the entity or (B) any corporation that, immediately prior to such acquisition, is owned directly or indirectly by the Stockholders in the same proportion as their ownership of Stock immediately prior to such acquisition. (c) Further notwithstanding any provision in the foregoing definition of Change in Control to the contrary, in the event that any Award constitutes Deferred Compensation, and the settlement of, or distribution of benefits under such Award is to be triggered by a Change in Control, then such settlement or distribution shall be subject to the event constituting the Change in Control also constituting a “change in control event” under Code Section 409A. Article 5 COMMITTEE Section 5.1Administration. The authority to control and manage the operation and administration of the Plan shall be vested in the Committee in accordance with this Article 5. The Committee shall be selected by the Board, provided that the Committee shall consist of two or more members of the Board, each of whom is a “non-employee director” (within the meaning of Rule 16b-3 promulgated under the Exchange Act) and an “independent director” (within the meaning of the rules of the securities exchange which then constitutes the principal listing for the Stock), in each case to the extent required by the Exchange Act or the applicable rules of the securities exchange which then constitutes the principal listing for the Stock, respectively. Subject to the applicable rules of any securities exchange or similar entity, if the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee. Section 5.2Powers of Committee. The Committee’s administration of the Plan shall be subject to the other provisions of the Plan and the following: (a) The Committee shall have the authority and discretion to select from among the Company’s and the Subsidiary’s employees, directors and service providers those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of Shares covered by the Awards, to establish the terms of Awards, to cancel or suspend Awards and to reduce or eliminate any restrictions or vesting requirements applicable to an Award at any time after the grant of the Award. (b) The Committee shall have the authority and discretion to interpret the Plan and all Award Agreements, to establish, amend and rescind any rules and regulations relating to the Plan and to make all other determinations that may be necessary or advisable for the administration of the Plan. (c) The Committee shall have the authority to define terms not otherwise defined in the Plan. (d) Any interpretation of the Plan by the Committee and any decision made by it under the Plan shall be final and binding on all persons. (e) In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the articles and bylaws of the Company and to all applicable law. (f) Subject to Section 6.1 and as permitted under Code Section 409A, amend any outstanding Award Agreement in any respect, including, without limitation, to: (i) accelerate the time or times at which the Award becomes vested or unrestricted (and, in connection with such acceleration, the Committee may provide that any Shares acquired pursuant to such Award will be restricted shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Participant’s underlying Award); (ii) accelerate the time or times at which Shares are delivered under the Award (and, without limitation on the Committee’s rights, in connection with such acceleration, the Committee may provide that any Shares delivered pursuant to such Award will be restricted shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Participant’s underlying Award); (iii) waive or amend any goals, restrictions, vesting provisions or conditions set forth in such Award Agreement, or impose new goals, restrictions, vesting provisions and conditions; and (iv) reflect a change in the Participant’s circumstances (e.g., a change to part-time employment status or a change in position, duties or responsibilities or changes between employee, director, or service provider status). (g) Determine at any time whether, to what extent and under what circumstances and the method or methods: (i) Awards may be settled in cash, Shares, other securities, other Awards or other property (in which event, the Committee may specify what other effects such settlement will have on the Participant’s Award, including the effect on any repayment provisions under the Plan or Award Agreement); (ii) Shares, other securities, other Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the Participant thereof or of the Committee; (iii) to the extent permitted under applicable law, loans (whether or not secured by Shares) may be extended by the Company with respect to any Awards; and (iv) Awards may be settled by the Company, any of its Subsidiaries or affiliates or any of their designees. (h) Section 5.3Delegation by Committee. Except to the extent prohibited by applicable law, the applicable rules of any securities exchange or similar entity or the Plan or the charter of the Committee, or as necessary to comply with the exemptive provisions of Rule 16b-3 of the Exchange Act, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers under the Plan to any person or persons selected by it. The acts of such delegates shall be treated under the Plan as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any Awards granted. Any such allocation or delegation may be revoked by the Committee at any time. Section 5.4Information to be Furnished to Committee. As may be permitted by applicable law, the Company and each Subsidiary shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties under the Plan. The records of the Company and each Subsidiary as to an employee’s or Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive with respect to all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Plan shall furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan. Section 5.5Expenses and Liabilities. All expenses and liabilities incurred by the Committee in the administration and interpretation of the Plan or any Award Agreement shall be borne by the Company. The Committee may employ attorneys, consultants, accountants or other persons in connection with the administration and interpretation of the Plan, and the Company, and its officers and directors, shall be entitled to rely upon the advice, opinions and valuations of any such persons. Article 6 AMENDMENT AND TERMINATION Section 6.1General.Unless otherwise determined by the CommitteeBoard (or otherwise required by the terms of the Plan), Stockholder approval of any amendment to or termination of the Plan will be obtained only to the extent necessary to comply with any applicable laws, regulations, or rules of a securities exchange on which the Shares are traded or self-regulatory agency, and, subject to the foregoing, the Board may, as permitted by law, at any time, amend or terminate the Plan, and may amend any Award Agreement; provided, however, that no amendment or termination may (except as provided in a mannerSection 2.5, Section 3.4 and Section 6.2 or as otherwise provided herein), in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), impair the rights of any Participant or beneficiary under any Award granted prior to the date such amendment or termination is adopted by the Board; and provided, further, that is consistent with Code no amendment may (a) materially increase the benefits accruing to Participants under the Plan, (b) materially increase the aggregate number of securities that may be delivered under the Plan other than pursuant to Section 423, any individual who is an Employee shall be eligible to participate3.4, or (c) materially modify the requirements for participation in the Plan, beginning onunless the Entry Date coincidentamendment under (a), (b) or (c) immediately above is approved by the Stockholders. Section 6.2Amendment to Conform to Law. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, the Committee may amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or the Award Agreement to any applicable law. By accepting an Award, the Participant shall be deemed to have acknowledged and consented to any amendment to an Award made pursuant to this Section 6.2, Section 2.5 or Section 3.4, or as otherwise provided herein, without further consideration or action. Article 7 GENERAL TERMS Section 7.1No Implied Rights. (a) No Rights to Specific Assets. No person shall by reason of participation in the Plan acquire any right in or title to any assets, funds or property of the Company or any Subsidiary, including any specific funds, assets, or other property that the Company or a Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the Shares or amounts, if any, distributable in accordance with the provisions of the Plan, unsecured by any assets of the Company or next followingany Subsidiary, and nothing contained in the Plan or an Award Agreement shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to provide any benefits to any person. (b) No Contractual Right to Employment or Future Awards. The Plan does not constitute a contract of employment, and selection as a Participant shall not give any person the right to be retained in the service of the Company or a Subsidiary or any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the Plan. No individual shall have the right to be selected to receive an Award, or, having been so selected, to receive a future Award. (c) No Rights as a Stockholder. Except as otherwise provided in the Plan, no Award shall confer upon the holder thereof any rights as a Stockholder prior to the date on which the Employee has been employed. The Committee shall retain the right to change the eligibility criteriaindividual fulfills all conditions for any Plan Year, in advancereceipt of such Plan Year, provided such criteria are permissible under Code Section 423.rights. Section 3. Participation and Payroll Deductions
(a) | | Enrollment. Each Employee may elect to participate in the Plan for an Offering Period by completing an Enrollment Form and returning it to the Company in accordance with the enrollment procedures established by the Company, which procedures may include a specified enrollment period. |
(b) | | Amount of Deduction. By submitting an Enrollment Form, the Employee authorizes payroll deductions from his or her pay in an amount equal to not more than fifteen percent 15% of his or her Compensation on each pay day occurring during an Offering Period (or such other maximum percentage as the Committee may establish from time to time before an Offering Period begins). Payroll deductions shall commence on the first payroll date following the Grant Date and end on the last payroll date on or before the Investment Date. The Committee in its sole discretion may authorize payment in respect of any Option exercised hereunder by personal check, provided the Participant is already enrolled in the Plan. |
(c) | | Payroll Deduction Accounts. Each Participant’s payroll deduction shall be credited, as soon as practicable following the relevant pay date within an applicable Offering Period, to a Payroll Deduction Account, pending the purchase of full Shares in accordance with the provisions of the Plan. The Company shall maintain records of all payroll deductions but shall have no obligation to hold such amounts in trust or in any segregated account. No interest shall accrue or be paid on amounts credited to a Payroll Deduction Account. |
(d) | | Subsequent Offering Periods. Unless otherwise specified prior to the beginning of any Offering Period on an Enrollment Form, a Participant shall be deemed to have elected to participate in each Offering Period within a Plan Year and for each subsequent Plan Year (and subsequent Offering Periods) for which the Participant is eligible to the same extent and in the same manner as at the end of the prior Offering Period based on the most recent Enrollment Form on file with the Company. |
(e) | | Change in Participation. |
(i) | | A Participant may cease participation in an Offering Period under the Plan by completing and filing a new Enrollment Form with the Company at least ten (10) days prior to the end of such Offering Period. Such cessation will become effective as soon as practicable following receipt of such new Enrollment Form by the Company, whereupon no further payroll deductions will be made, and the Company shall pay to such Participant an amount equal to the balance in the Participant’s Payroll Deduction Account as soon as practicable thereafter without interest. To the extent then eligible, any Participant who ceased to participate may elect to participate again prior to any subsequent Entry Date. |
(ii) | | Unless otherwise provided by the Committee, at any time during an Offering Period (but not more than once in any calendar quarter) a Participant may increase or decrease the percentage of Compensation subject to payroll deduction within the limits provided in Section 3(b) and Section 4(e), by filing a new Enrollment Form with the Company. Such increase or decrease shall become effective with the first pay period following receipt of such new Enrollment Form to which it may be practicably applied. |
(iii) | | Notwithstanding anything contained herein to the contrary, if the Committee determines under Section 4 to change the Purchase Price, each Participant shall be advised in advance of the effective date of such change and afforded the opportunity to make a change in participation under Section 3(e)(i) or Section 3(e)(ii) before such change in the Purchase Price takes effect. |
(iv) | | Any Participant who receives a distribution under the Company’s 401(k) plan on account of a financial hardship, as determined under such plan, shall be suspended from participation in the Plan for the same period as such Participant’s participation in the 401(k) plan shall be suspended. |
(f) | | Termination of Employment. Upon termination of a Participant’s employment for any reason, including death, disability or retirement, or a change in the Participant’s employment status following which the Participant is no longer an eligible Employee, which in either case occurs before the Investment Date, the Participant will be deemed to have withdrawn from the Plan, and the payroll deductions in the Participant’s Payroll Deduction Account (that have not been used to purchase full Shares) shall be returned, without interest, to the Participant, or in the case of the Participant’s death, to the Participant’s estate, and the Participant’s Option shall be automatically terminated. Beginning ninety (90) days following a Participant’s termination of employment for any reason, the Participant will assume responsibility for the cost of maintaining the Participant’s account with the Designated Broker. An annual fee, specified by agreement between the Company and the Designated Broker, will be automatically deducted from the Participant’s account. A terminated Participant may close his or her account with the Designated Broker at any time by selling his or her entire share balance or by transferring such balance to a personal broker. |
Section 4. Offerings and Purchase Price
(a) | | Maximum Number of Shares. The Committee will implement the Plan by making offerings of Shares on each Grant Date until the maximum number of Shares available under the Plan have been issued pursuant to the exercise of Options. |
(b) | | Exercise of Options. Subject to Section 4(d), on each Investment Date, each Participant shall be deemed, subject to Section 4(e), without any further action, to have exercised rights under the Plan to purchase the number of full Shares determined by dividing the current balance of the Participant’s Payroll Deduction Account through such date by the Purchase Price (as determined in Section 4(c) below). |
(c) | | Purchase Price. Unless otherwise provided by the Committee, the “Purchase Price” means an amount equal to the lesser of (i) eighty-five percent (85%) (or such greater percentage as designated by the Committee) of the Fair Market Value of a Share on the Grant Date or (ii) eighty-five percent (85%) (or such greater percentage as designated by the Committee) of the Fair Market Value of a Share on the Investment Date; provided, that, the Purchase Price will in no event be less than the par value of the Share. |
(d) | | Oversubscription of Shares. If the total number of Shares for which Options are exercised on any Investment Date exceeds the maximum number of Shares available under the Plan, the Company shall make a proportionate allocation among the Participants of the Shares available for delivery and distribution in as nearly a uniform manner as shall be practicable. |
(e) | | Limitations on Grant and Exercise of Options. |
(i) | | No Option granted under this Plan shall permit a Participant to purchase Shares under all employee stock purchase plans (as described in Code Section 423) of the Company at a rate which, in the aggregate, exceeds $25,000 of the Fair Market Value of such Shares (determined at the time the Option is granted) for each calendar year in which the Option is outstanding at any time. |
(ii) | | No Employee who would own immediately after the Option is granted Shares possessing five percent (5%) or more of the total combined voting power or value of all classes of Shares of the Company (a “5% Owner”) shall be granted an Option. For purposes of determining whether an Employee is a 5% Owner, the rules of Code Section 424(d) shall apply in determining the Share ownership of an individual and Shares which the Employee may purchase under outstanding Options shall be treated as Shares owned by the Employee. |
(iii) | | To comply with the foregoing limitation, the Company unilaterally may decrease a Participant’s payroll deduction at any time during an Offering Period. |
Section 5. Distributions of Shares
As soon as reasonably practicable after each Investment Date, the Company will arrange for the delivery to each Participant of the full Shares purchased upon exercise of his or her Option. The Committee may permit or require that the Shares be deposited directly into a Plan account established in the name of the Participant with a Designated Broker and may require that the Shares be retained with such Designated Broker for a specified period as contemplated pursuant to Section 8(c)7.2 below. Participants will not have any voting, dividend, or other rights of a stockholder with respect toTransferability. Except as otherwise provided by the Shares subject to any Option granted hereunder until such Shares have been delivered pursuant to this Section 5.
Section 6. Rights as a Stockholder
When a Participant purchases Shares pursuant to the Plan, the Participant shall have the rights and privileges of a stockholder of the Company with respect to the Shares so purchased or credited, whether certificates representing such Shares shall have been issued.
Section 7. Options Not Transferable
Options granted under the PlanCommittee, Awards are not transferable except as designated by athe Participant except by will or by the laws of descent and distribution or pursuant to a domestic relations order. The Committee shall have the discretion to permit the transfer of Awards; provided, however, that such transfers shall be limited to immediate family members of Participants, trusts, partnerships, limited liability companies and other entities that are exercisable duringpermitted to exercise rights under Awards in accordance with Form S-8, and in each case, subject to applicable law; and provided, further, that such transfers shall not be made for value to the Participant’s lifetimeParticipant and in no event shall any Award be sold, assigned, or transferred to any third-party financial institution.
Section 7.3Designation of Beneficiaries. A Participant hereunder may file with the Company a designation of a beneficiary or beneficiaries under the Plan and may from time to time revoke or amend any such designation. Any designation of beneficiary under the Plan shall be controlling over any other disposition, testamentary or otherwise; provided, however, that if the Committee is in doubt as to the entitlement of any such beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant in which case the Company, the Committee and the members thereof shall not have any further liability to anyone. Section 7.4Non-Exclusivity. Neither the adoption of the Plan by the Participant.Board nor the submission of the Plan to the Stockholders for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable. Section 8. Common Stock7.5Award Agreement. Each Award shall be evidenced by an Award Agreement. A copy of the Award Agreement, in any medium chosen by the Committee, shall be made available to the Participant, and the Committee may require that the Participant sign a copy of the Award Agreement. (a) | | Reserved Shares. Subject to the provisions of Section 9 relating to adjustments upon changes in the Company’s stock, there shall be reserved for the issuance and purchase under the Plan an aggregate of Three Hundred Fifty Thousand (350,000) Shares, plus that number of Shares remaining under the Prior Plan immediately prior to the Prior Plan’s termination on July 1, 2022. Shares subject to the Plan shall be Shares currently authorized but unissued, or currently held or, to the extent permitted by applicable law, subsequently acquired by the Company as treasury shares, including Shares purchased in the open market or in private transactions. |
Section 7.6Form and Time of Elections. Unless otherwise specified in the Plan, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such terms or conditions, not inconsistent with the provisions of the Plan, as the Committee may require. Section 7.7Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information that the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties. (b) | | Restrictions on Exercise. In its sole discretion, the Committee may require as conditions to the exercise of any Option that Shares reserved for issuance upon the exercise of an Option shall have been duly listed on any recognized national securities exchange, and that either a registration statement under the Securities Act of 1933, as amended, with respect to said Shares shall be effective, or the Participant shall have represented at the time of purchase, in form and substance satisfactory to the Company, that it is the Participant’s intention to purchase the Shares for investment only and not for resale or distribution. |
(c) | | Restriction on Sale. Unless otherwise provided by the Committee, Shares purchased under the Plan shall not be transferable by a Participant for a period equal to the longer of (i) twenty-four (24) months immediately following the Grant Date, or (ii) twelve (12) months immediately following the Investment Date on which such Shares were purchased. |
(d) | | Registration of Shares. Shares to be delivered to a Participant under the Plan will be registered in the name of the Participant, or, if the Participant so directs by written notice to the Treasurer of the Company prior to the Investment Date applicable thereto, in the names of the Participant and one such other person as may be designated by the Participant, as joint tenants with rights of survivorship or as tenants by the entireties, to the extent permitted by applicable law. |
(e) | | Fractional Shares. Unless otherwise provided by the Committee, fractional Shares will not be credited to a Participants’ account if the amount of payroll deductions accumulated during any given Offering Period is not equally divisible by the Purchase Price for that Offering Period. |
Section 9. Adjustment Upon Changes in Capitalization (a) | | Subject to any required action by the Company or its stockholders, and subject to the provisions of applicable corporate law, if during an Offering Period the outstanding Shares increase or decrease or change into or are exchanged for a different number or kind of security or are otherwise affected by reason of any recapitalization, reclassification, stock split, reverse stock split, combination of Shares, exchange of Shares, stock dividend, or other distribution payable in capital stock, or some other increase or decrease in such Shares occurs without the Company’s receiving consideration therefore (any of which being referred to as a “Capitalization Event”), there shall automatically be made, unless otherwise provided by the Committee, a proportionate and appropriate adjustment in the number and kind of securities underlying Options, so that the proportionate interest of each Participant immediately following such event will, to the extent practicable, be the same as immediately before such event. Any such adjustment to Options will not change the total price with respect to Option or other securities underlying the Participant’s election, but will include a corresponding proportionate adjustment in the price of the Share, to the extent consistent with Code Section 424. |
(b) | | Upon the occurrence of a Capitalization Event, there shall automatically be made, unless otherwise determined by the Committee, a commensurate change to the maximum number and kind of Shares provided in Section 8. |
(c) | | Except as expressly provided by this Section 9, no issuance by the Company of any of its securities of any kind, including securities convertible into shares of any class of stock, will affect, and no adjustment by reason thereof will be made with respect to, the number of Shares subject to any Options or the price to be paid for stock under the terms of the Plan. The grant of an Option under the Plan will not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or to consolidate, or to dissolve, liquidate, sell, or transfer all or any part of its business or assets. |
(d) | | Upon a sale of all or substantially all of the assets of the Company, or the consolidation or merger of the Company with or into another corporation, subject to the Board’s right under Section 11 to terminate the Plan, each outstanding Option shall be assumed or an equivalent Option substituted by the successor corporation or a parent or Related Corporation of the successor or purchasing corporation. If the successor or purchasing corporation refuses to assume or substitute options for the Options under the Plan, the Offering Period then in progress shall be shortened by setting a new Investment Date (the “New Investment Date”). The New Investment Date shall be any date occurring before the effective date of the Company’s proposed sale or merger. The Committee shall notify each Participant in writing, at least ten (10) business days prior to the New Investment Date, that the Investment Date for the Participant’s Option has been changed to the New Investment Date and that the Participant’s Option shall be exercised automatically on the New Investment Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 3 hereof. |
Section 10. Administration
(a) | | Appointment. The Plan shall be administered by the Committee provided that the Committee shall be comprised solely of at least two (2) non-employee, disinterested directors appointed by the Board. A disinterested director is any member of the Board who is a “Non-Employee Director” within the meaning of paragraph (b)(3)(i) of Securities and Exchange Commission Rule 16b-3 (“Rule 16b-3”). |
(b) | | Authority. The Committee has full authority and discretion to construe and interpret the Plan, prescribe, amend, and rescind rules relating to the Plan’s administration and take any other actions necessary or desirable for the administration of the Plan (including rules and regulations deemed necessary to comply with the requirements of Code Section 423). The Committee may correct any defect or supply any omission or reconcile any ambiguity in the Plan. The decisions of the Committee shall be final and binding on all persons. The Committee has, without limitation, the authority to: (i) establish and/or change the duration of any Offering Period; (ii) limit or increase the frequency and/or number of changes in the amounts withheld during an Offering Period; (iii) establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of common stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation; (iv) delegate its functions to officers or employees of the Company or other persons; (v) establish additional terms and conditions with respect to the purchase of Shares under the Plan; and (vi) establish such other limitations or procedures as it determines in its sole discretion advisable and consistent with the administration of the Plan. The Committee shall take any of the foregoing actions that are necessary to assure the continued availability of the exemption provided in Rule 16b-3. If and to the extent required by Rule 16b-3 or any successor exemption under which the Committee believes it is appropriate for the Plan to qualify, the Committee may restrict a Participant’s ability to participate in the Plan or sell any Shares received under the Plan for such period as the Committee deems appropriate or may impose such other conditions in connection with participation or7.8Tax Withholding. All distributions under the Plan as the Committee deems appropriate. |
(c) | | Plan Expenses. The Company shall pay the fees and expenses of accountants, counsel, agents and other personnel and all other costs of administration of the Plan. |
(d) | | Indemnification. The Company shall indemnify members of the Committee and any agent of the Committee who is an employee or director of the Company, against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such person’s bad faith, gross negligence, or willful misconduct. |
Section 11. Amendment and Termination
(a) | | Amendment. Subject to the provisions of Code Section 423, the Committee may amend the Plan in any respect; provided, however, that the Plan may not be amended in any manner that will retroactively impair or otherwise adversely affect in any material manner the rights of any Participant to benefits under the Plan which have accrued prior to the date of such action. |
(b) | | Adjustments Due to Financial Accounting. If the Committee determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Committee may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including: |
(i) | | altering the Purchase Price for any Offering Period, including an Offering Period underway at the time of the change in Purchase Price; |
(ii) | | shortening any Offering Period so that the Offering Period ends on any other Investment Date, including an Offering Period underway at the time of the Committee action; and |
Such modifications or amendments shall not require stockholder approval or the consent of any Participant.
(c) | | Termination. The Plan will terminate on the earlier of: (i) the date on which there are no additional Shares reserved under the Plan for issuance to Participants; or (ii) July 1, 2032. In addition, the Plan may be terminated at any time, in the sole discretion of the Board. In the event of Plan termination, the Company shall refund to each Participant the amount of payroll deductions credited to their Payroll Deduction Account as soon as practicable following the effective date of such termination without interest. |
Section 12. Stockholder Approval; Effective Date
The Plan shall be subject to approval by the stockholderswithholding of the Company within twelve (12) months before or after the date the Plan is adopted by the Board. The Plan was adopted by the Board on February 16, 2022, subject to stockholder approval at its annual meeting of stockholders on May 19, 2022, with an effective date of July 1, 2022.
Section 13. Governmental and Other Regulations
The Planall applicable taxes and the grant and exerciseCommittee may condition the delivery of Options to purchase fullany Shares hereunder, and the Company’s obligations to sell and deliver full Shares upon the exercise of Options to purchase such Shares, shall be subject to all applicable federal, state, and foreign laws, rules and regulations, and to such approvals by any regulatory or governmental agency as, in the opinion of counsel to the Company, may be required.
Section 14. No Implied Rights
(a) | | No Rights to Specific Assets. Neither a Participant nor any other person shall by reason of participation in the Plan acquire any right in or title to any assets, funds or property of the Company or any Related Corporation, including any specific funds, assets, or other property which the Company or any Related Corporation, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the stock or amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or any Related Corporation, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Related Corporation shall be sufficient to pay any benefits to any Participant. |
(b) | | No Contractual Right to Employment or Future Awards. The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Related Corporation or any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided in the Plan, no Option under the Plan shall confer upon the holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights. |
Section 15. Withholding
As a condition to receiving full Shares under the Plan in whole or in part, or at the time some or allon satisfaction of the Shares issued under the Plan are disposed of, the Participant must make adequate provision for the Company’s federal, state or other tax withholding obligations, if any, that arise upon the exercise of the Option or the disposition of the Shares. At any time, the Company may, but will not be obligated to, withhold from any compensation otherwise due to the Participant from the Company or a Related Corporation the amount necessary for the Company to meet applicable withholding obligations, including without limitation, any withholding required to make available to the Company any tax deductions or benefits attributable to the sale or early disposition of full Shares purchased by the Participant pursuant to the Plan.
Section 16. Offsets
To the extent permitted by law, the Company shall have the absolute right to withhold any amounts payable to any Participant under the terms of the Plan to the extent of any amount owed for any reason by such Participant to the Company and to set off and apply the amounts so withheld to payment of any such amounts owed to the Company, whether or not such amounts shall then be immediately due and payable and in such order or priorityobligations. Except as among such amounts owed as the Committee, in its sole discretion, shall determine.
Section 17. Notices, Etc.
Unless otherwise provided by the Committee, all written notices and allsuch withholding obligations may be satisfied (a) through cash payment by the Participant; (b) through the surrender of Shares that the Participant already owns or (c) through the surrender of Shares to which the Participant is otherwise entitled under the Plan, or (d) through the withholding of any compensation or any other written communicationsamounts payable to the Company orParticipant; provided, however, that except as otherwise specifically provided by the Committee, providedsuch Shares under clause (c) may not be used to satisfy more than the maximum individual statutory tax rate for ineach applicable tax jurisdiction or such lesser amount as may be established by the Company.
Section 7.9Successors. All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Company. Section 7.10Indemnification. To the fullest extent permitted by law, each person who is or shall have been a member of the Committee or the Board, or an officer of the Company to whom authority was delegated in accordance with Section 5.3, or an employee of the Company shall be indemnified and held harmless by the Company against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys’ fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her (provided that he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf), unless such loss, cost, liability or expense is a result of his or her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. Section 7.11No Fractional Shares. Unless otherwise permitted by the Committee, no fractional Shares shall be delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, Shares or other property shall be delivered or paid in lieu of fractional Shares or whether such formfractional Shares or any rights thereto shall be forfeited or otherwise eliminated. Section 7.12Governing Law. The Plan, all Awards, and all actions taken in connection herewith and therewith shall be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflict of laws, except as superseded by applicable federal law. Section 7.13Benefits Under Other Plans. Except as otherwise provided by the Committee, Awards granted to a Participant (including the grant and the receipt of benefits) shall be disregarded for purposes of determining the Participant’s benefits under, or contributions to, any qualified retirement plan, nonqualified plan and any other benefit plan maintained by the Participant’s employer. Section 7.14Validity. If any provision of the Plan is prescribeddetermined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid provision had never been included in the Plan. Section 7.15Notice. Unless provided otherwise in an Award Agreement or policy adopted from time to time by the Committee, all communications to the Company provided for in the Plan, or any Award Agreement, shall be delivered personally or sent by registered or certified U.S. mail, return receipt requested, postage prepaid (provided(provided that international mail shall be sent via overnight or two-day delivery),or sent by facsimile or prepaid overnight courier to the Company at the address set forth below: QCR Holdings, Inc. Attention: Shellee R. Showalter, SVP
3551 Seventh Street Suite 204, Moline, Illinois 61265 Such notices or other communications shall be deemed given: (a) | | in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery; or |
(a) In the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery; or (b) | | in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S. mail; |
(b) In the case of certified or registered U.S. mail, five days after deposit in the U.S. mail. provided, however, thatSection 7.16Clawback Policy. Any Award, amount or benefit received under the Plan shall be subject to potential cancellation, recoupment, rescission, payback or other similar action in no eventaccordance with any applicable Company clawback policy (the “Policy”) or any applicable law. A Participant’s receipt of an Award shall any such notices or communications be deemed to constitute the Participant’s acknowledgment of and consent to the Company’s application, implementation and enforcement of (i) the Policy and any similar policy established by the Company that may apply to the Participant, whether adopted prior to or following the making of any Award and (ii) any provision of applicable law relating to cancellation, rescission, payback or recoupment of compensation, as well as the Participant’s express agreement that the Company may take such actions as are necessary to effectuate the Policy, any similar policy and applicable law, without further consideration or action.
Section 7.17Breach of Restrictive Covenants. Except as otherwise provided by the Committee, notwithstanding any provision of the Plan to the contrary, if the Participant breaches a confidentiality, non-competition, non-solicitation, non-disclosure, non-disparagement or other restrictive covenant set forth in an Award Agreement or any other agreement between the Participant and the Company or a Subsidiary, whether before or after the Participant’s Termination of Service, in addition to and not in limitation of any other rights, remedies, damages, penalties or restrictions available to the Company under the Plan, an Award Agreement, any other agreement between the Participant and the Company or a Subsidiary, or otherwise at law or in equity, the Participant shall forfeit or pay to the Company: (a) Any and all outstanding Awards granted to the Participant, including Awards that have become vested or exercisable; (b) Any Shares held by the Participant in connection with the Plan that were acquired by the Participant after the Participant’s Termination of Service and within the 12-month period immediately preceding the Participant’s Termination of Service; (c) The profit realized by the Participant from the exercise of any stock options and SARs that the Participant exercised after the Participant’s Termination of Service and within the 12-month period immediately preceding the Participant’s Termination of Service, which profit is the difference between the exercise price of the stock option or SAR and the Fair Market Value of any Shares or cash acquired by the Participant upon exercise of such stock option or SAR; and (d) The profit realized by the Participant from the sale, or other disposition for consideration, of any Shares received by the Participant in connection with the Plan after the Participant’s Termination of Service and within the 12-month period immediately preceding the Participant’s Termination of Service and where such sale or disposition occurs in such similar time period. Unless the applicable Award Agreement expressly displaces or limits the Company’s rights under this Section 7.17 with a reference to the same, any forfeiture provision contained in an Award Agreement shall be given laterconstrued as an additional, non-exclusive remedy in the event of the Participant’s breach of a restrictive covenant. Section 7.18Data Privacy. By accepting an Award, to the extent permitted by applicable law, the Participant shall be deemed to consent to the collection, use and transfer, in electronic or other form, of the Participant’s personal data by and among, as applicable, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in this Plan. The Company and its Subsidiaries may hold certain personal information about Participants, including, but not limited to, a Participant’s name, address, telephone number, birth date, social security, insurance number or other identification numbers, salary, nationality, job title(s), Shares held in the Company or its affiliates and Award details, to implement, manage and administer this Plan and Awards (the “Data”). The Company and its Subsidiaries may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in this Plan, and the Company and its Subsidiaries may transfer the Data to third parties recipients assisting in implementation, administration and management of the Plan. By accepting an Award, the Participant authorizes the recipients of such Data to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in this Plan. Furthermore, the Participant acknowledges and understands that the transfer of Data to the Company or to any third parties is necessary for the Participant’s participation in this Plan. A Participant may view Data, request information about the storage and processing of Data, request any corrections to Data, or withdraw the consents herein (in any case, without cost to the Participant) by providing notice to the Company in writing. The withdrawal of any consent by a Participant may affect the Participant’s participation in the Plan. The Participant may contact the Company for further information about the consequences of any withdrawal of consents herein. Section 7.19Delivery and Execution of Electronic Documents. To the extent permitted by applicable law, the Company may (a) deliver by email or other electronic means (including posting on a website maintained by the Company or by a third party under contract with the Company) all documents relating to this Plan or any Award thereunder (including without limitation, prospectuses and other securities requirements) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements) and (b) permit Participants to electronically execute applicable Plan documents (including, but not limited to, Award Agreements) in a manner prescribed to the Committee. Article 8 DEFINED TERMS; CONSTRUCTION Section 8.1 In addition to the other definitions contained in the Plan, unless otherwise specifically provided in an Award Agreement, the following definitions shall apply: (a)“ Award” means an award under the Plan. (b)“ Award Agreement” means the document that evidences the terms and conditions of an Award. Such document shall be referred to as an agreement regardless of whether a Participant’s signature is required. Each Award Agreement shall be subject to the terms and conditions of the Plan, and, if there is any conflict between the Award Agreement and the Plan, the Plan shall control. (c)“ Board” means the Board of Directors of the Company. (d) If the Participant is subject to an employment agreement (or other similar agreement) with the Company or a Subsidiary that provides a definition of termination for “cause” (or the like), then, for purposes of the Plan, the term “Cause” has the meaning set forth in such agreement; and in the absence of such a definition, “Cause” means (i) any act of (A) fraud or intentional misrepresentation or (B) embezzlement, misappropriation or conversion of assets or opportunities of the Company or a Subsidiary, (ii) willful violation of any law, rule or regulation in connection with the performance of a Participant’s duties to the Company or a Subsidiary (other than traffic violations or similar offenses), (iii) with respect to any employee of the date theyCompany or a Subsidiary, commission of any act of moral turpitude or conviction of a felony or (iv) the willful or negligent failure of the Participant to perform the Participant’s duties to the Company or a Subsidiary in any material respect. Further, the Participant shall be deemed to have terminated for Cause if, after the Participant’s Termination of Service, facts and circumstances arising during the course of the Participant’s employment with the Company are actually received, provided they are actually received. Indiscovered that would have constituted a termination for Cause. Further, all rights a Participant has or may have under the Plan shall be suspended automatically during the pendency of any investigation by the Board or its designee or during any negotiations between the Board or its designee and the Participant regarding any actual or alleged act or omission by the Participant of the type described in the applicable definition of “Cause.” (e)“ Change in Control” has the meaning ascribed to it in Section 4.2. (f)“ Code” means the Internal Revenue Code of 1986. (g)“ Code Section 409A” means the provisions of Section 409A of the Code and any rules, regulations, and guidance promulgated thereunder. (h)“ Committee” means the Committee acting under Article 5, and in the event a notice or communicationCommittee is not received,currently appointed, the Board. (i)“ Company” means QCR Holdings, Inc., a Delaware corporation. (j)“ Deferred Compensation” has the meaning set forth in Section 2.5. (k)“ Director Participant” means a Participant who is a member of the Board or the board of directors of a Subsidiary. (l)“ Disability” means the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering the Company’s or a Subsidiary’s employees. (m)“ Effective Date” has the meaning ascribed to it in Section 1.1. (n)“ Exchange Act” means the Securities Exchange Act of 1934. (o)“ Fair Market Value” means, as of any date, the officially-quoted closing selling price of the Shares on such date on the principal national securities exchange on which Shares are listed or admitted to trading or, if there have been no sales with respect to Shares on such date, such price on the most immediately preceding date on which there have been such sales, or if the Shares are not so listed or admitted to trading, the Fair Market Value shall only be deemed received upon the showingvalue established by the Committee in good faith and, to the extent required, in accordance with Code Section 409A. (p) If the Participant is subject to an employment agreement (or other similar agreement) with the Company or a Subsidiary that provides a definition of an originaltermination for “good reason” (or the like), then, for purposes of the Plan, the term “Good Reason” has the meaning set forth in such agreement; and in the absence of such a definition, “Good Reason” means the occurrence of any one of the following events, unless the Participant agrees in writing that such event shall not constitute Good Reason: (i) A material, adverse change in the nature, scope or status of the Participant’s position, authorities or duties from those in effect immediately prior to the applicable Change in Control; (ii) A material reduction in the Participant’s aggregate compensation or benefits in effect immediately prior to the applicable Change in Control; or (iii) Relocation of the Participant’s primary place of employment of more than 50 miles from the Participant’s primary place of employment immediately prior to the applicable Change in Control, or a requirement that the Participant engage in travel that is materially greater than prior to the applicable Change in Control. Notwithstanding any provision of this definition to the contrary, prior to the Participant’s Termination of Service for Good Reason, the Participant must give the Company written notice of the existence of any condition set forth in clause (i) – (iii) immediately above within 90 days of its initial existence and the Company shall have 30 days from the date of such notice in which to cure the condition giving rise to Good Reason, if curable. If, during such 30-day period, the Company cures the condition giving rise to Good Reason, the condition shall not constitute Good Reason. Further notwithstanding any provision of this definition to the contrary, in order to constitute a termination for Good Reason, such termination must occur within 12 months of the initial existence of the applicable receipt, registrationcondition. (q)“ Form S-8” means a Registration Statement on Form S-8 promulgated by the U.S. Securities and Exchange Commission or confirmationany successor form thereto. (r)“ Participant” has the meaning ascribed to it in Section 1.2. (s)“ Plan” means the QCR Holdings, Inc. 2024 Equity Incentive Plan, as may be amended from time to time. (t)“ Policy” has the meaning ascribed to it in Section 7.16. (u)“ Predecessor Plan” means the QCR Holdings, Inc. 2016 Equity Incentive Plan. (v)“ SAR” has the meaning ascribed to it in Section 2.1(b). (w)“ Securities Act” means the Securities Act of 1933. (x)“ Share” means a share of Stock. (y)“ Stock” means the common stock of the Company, no par value per share. (z)“ Stockholders” means the stockholders of the Company. (aa)“ Subsidiary” means any corporation or other entity that would be a “subsidiary corporation” as defined in Code Section 424(f) with respect to the Company. (bb)“ Termination of Service” means the first day occurring on or after a grant date on which the Participant ceases to be an employee or director of, or service provider to, the Company and each Subsidiary, regardless of the reason for such cessation, subject to the following: (i) The Participant’s cessation as an employee or service provider shall not be deemed to occur by reason of the transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries. (ii) The Participant’s cessation as an employee or service provider shall not be deemed to occur by reason of the Participant’s being on a leave of absence from the applicable delivery service provider.Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant’s services. Section 18. General
(a) | | Equal Rights and Privileges. Notwithstanding any provision of the Plan to the contrary and in accordance with Code Section 423, all eligible Employees who are granted Options under the Plan shall have the same rights and privileges. |
(b) | | Successors and Assigns. The provisions of the Plan shall be binding upon, and inure to the benefit of, all successors of the Company and each Participant, including such Participant’s estate and the executors, administrators, or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Participant. |
(c) | | Entire Plan. As of July 1, 2022, this Plan constitutes the entire plan with respect to the subject matter hereof and supersedes all prior plans, including the Prior Plan, with respect to the subject matter hereof. |
(d) | | 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. |
Section 19. Governing Law(iii) The Participant’s cessation as an employee shall not be deemed to occur if such Participant continues to serve as a service provider to, or a director of, the Company or a Subsidiary immediately following such cessation.
(iv) The Plan, all awards granted hereunder,Participant’s cessation as a director shall not be deemed to occur if such Participant continues to serve as an employee of, or service provider to, the Company or a Subsidiary immediately following such cessation. (v) The Participant’s cessation as a service provider shall not be deemed to occur if such Participant continues to serve as an employee or director of the Company or a Subsidiary immediately following such cessation. (vi) If, as a result of a sale or other transaction, the Subsidiary for whom the Participant is employed (or to whom the Participant is providing services) ceases to be a Subsidiary, and all actions taken in connection herewiththe Participant is not, following the transaction, an employee or director of, or service provider to, the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the Participant’s Termination of Service caused by the Participant being discharged by the entity for whom the Participant is employed or to whom the Participant is providing services. (vii) A service provider, other than an employee or director, whose services to the Company or a Subsidiary are governed by a written agreement with such service provider shall cease to be a service provider at the time the provision of service under such written agreement ends (without renewal); and construed in accordancesuch a service provider whose services to the Company or a Subsidiary are not governed by a written agreement with the laws ofservice provider shall cease to be a service provider on the State of Iowa without reference to principles of conflict of laws, except as supersededdate that is 90 days after the date the service provider last provides services requested by applicable federal law.the Company or a Subsidiary. (viii) Notwithstanding the foregoing, in the event that any Award constitutes Deferred Compensation, the term Termination of Service shall be interpreted by the Committee in a manner consistent with the definition of “separation from service” as defined under Code Section 20. Defined Terms409A. When used herein,(cc)“ Voting Securities” means any securities that ordinarily possess the following terms shall havepower to vote in the following meanings:
(a) | | “Board” means the Board of Directors of the Company. |
(b) | | “Code” means the U.S. Internal Revenue Code of 1986, as amended. Any reference to a section of the Code shall be deemed to include a reference to any regulations promulgated thereunder. |
(c) | | “Committee” means the committee acting under Section 10. |
(d) | | “Compensation” unless otherwise provided by the Committee, means the Employee’s earnings as will be reported in box 1 of the IRS Form W-2 for the applicable year. |
(e) | | “Designated Broker” means the financial services firm or other agent designated by the Company to maintain Share accounts on behalf of Participants who have purchased full Shares under the Plan. |
(f) | | “Effective Date” means July 1, 2022. |
(g) | | “Employee” means any person who renders services to the Employer as an employee pursuant to an employment relationship with the Employer. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on military leave, sick leave or other leave of absence approved by the Employer that meets the requirements of Treasury Regulation Section 1.421-1(h)(2). Where the period of leave exceeds three (3) months, or such other period specified in Treasury Regulation Section 1.421-1(h)(2), and the individual’s right to re-employment is not guaranteed by statute or contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three-month period, or such other period specified in Treasury Regulation Section 1.421-1(h)(2). |
(h) | | “Employer” means the Company or any Related Corporation, unless otherwise determined by the Company. |
(i) | | “Enrollment Form” means an agreement, which may be electronic, pursuant to which an eligible Employee may elect to enroll in the Plan, to authorize a new level of payroll deductions, or to stop payroll deductions and withdraw from an Offering Period. |
(j) | | “Entry Date” means the first day of each Offering Period. |
(k) | | “Fair Market Value” means, on any date, the officially-quoted closing selling price of the Shares on such date on the principal national securities exchange on which such Shares are listed or admitted to trading (including the New York Stock Exchange, Nasdaq Stock Market, Inc. or such other market or exchange in which such prices are regularly quoted) or, if there have been no sales with respect to Shares on such date, the closing selling price on the Trading Day immediately preceding such date. In the absence of an established market for the Shares, the Fair Market Value shall be determined in good faith by the Committee and such determination shall be conclusive and binding on all persons. |
(l) | | “Grant Date” means the first Trading Day of each Offering Period, or such other date as may be determined by the Committee in its sole discretion. |
(m) | | “Investment Date” means the last Trading Day of each Offering Period, or such other date(s) in between as may be determined by the Committee in its sole discretion. Until otherwise provided by the Committee, Investment Dates shall initially be March 31, June 30, September 30, and December 31 of each applicable year. |
(n) | | “Offering Period” means a period of six (6) months beginning each January 1st and July 1st of each year (or such other times as determined by the Committee). The first Offering Period under the Plan shall commence on the Effective Date (July 1, 2022), following stockholder approval of the Plan in accordance with Section 12. The Committee shall have the authority to change the duration, frequency, start and end dates of Offering Periods (subject to a maximum Offering Period of twelve (12) months). |
(o) | | “Participant” means an eligible Employee who has met the requirements of Section 2 and has properly elected to participate in the Plan pursuant to Section 3. |
(p) | | “Payroll Deduction Account” means the bookkeeping account established by the Company pursuant to Section 3 for each Participant. |
(q) | | “Option” means the right of a Participant to acquire Shares pursuant to the terms of the Plan. |
(r) | | “Plan Year” means January 1 through December 31 of each year. |
(s) | | “Prior Plan” means the QCR Holdings, Inc. Amended and Restated Employee Stock Purchase Plan, as amended from time to time. |
(t) | | “Purchase Price” means the price per Share as determined pursuant to Section 4(c). |
(u) | | “Related Corporation” means a corporation which would be a parent or subsidiary corporation with respect to the Company as defined in Code Section 424(e) or (f). |
(v) | | “Share” means a share of the Company’s common stock, par value $1.00 per share. |
(w) | | “Trading Day” means any day on which the national stock exchange upon which the Shares are listed is open for trading or, if the Shares are not listed on an established stock exchange or national market system, a business day, as determined by the Committee in good faith. |
Section 21. Constructionelection of directors without the happening of any precondition or contingency.
Section 8.2In thisthe Plan, unless otherwise stated, or the context otherwise requires, the following uses apply: (a) | | actions permitted under this(a) Actions permitted under the Plan may be taken at any time and from time to time in the actor’s reasonable discretion; |
(b) | | references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor, as in effect at the relevant time; |
(c) | | in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and the like) mean “to, but excluding”; |
(d) | | references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality; |
(e) | | indications of time of day mean Central Standard Time; |
(f) | | “including” means “including, but not limited to”; |
(g) | | all references to sections, schedules and exhibits are to sections, schedules, and exhibits in or to this Plan unless otherwise specified; |
(h) | | all words used in this Plan will be construed to be of such gender or number as the circumstances and context require; |
(i) | | the captions and headings of articles, sections, schedules, and exhibits appearing in or attached to this Plan have been inserted solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its provisions; |
(j) | | any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions, or replacements thereof; and |
(k) | | all accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles as consistently applied in the United States of America. |
(b) References to a statute or law shall refer to the statute or law and any amendments and any successor statutes or laws, and to all regulations promulgated under or implementing the statute or law, as amended, or its successors, as in effect at the relevant time; (c) In computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and the like) mean “to and including”; (d) References to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality; (e) Indications of time of day shall be based upon the time applicable to the location of the principal headquarters of the Company; (f) The words “include,” “includes” and “including” mean “include, without limitation,” “includes, without limitation” and “including, without limitation,” respectively; (g) All references to articles and sections are to articles and sections in the Plan unless otherwise specified; (h) All words used shall be construed to be of such gender or number as the circumstances and context require; (i) The captions and headings of articles and sections appearing in the Plan have been inserted solely for convenience of reference and shall not be considered a part of the Plan, nor shall any of them affect the meaning or interpretation of the Plan or any of its provisions; (j) Any reference to an agreement, plan, policy, form, document or set of documents, and the rights and obligations of the parties under any such agreement, plan, policy, form, document or set of documents, shall mean such agreement, plan, policy, form, document or set of documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and (k) All accounting terms not specifically defined in the Plan shall be construed in accordance with GAAP.
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