UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.)

 

 

Check the appropriate box:

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

To the Shareholders of Nicolet Bankshares, Inc.:

 

The 20212022 Annual Meeting of Shareholders (the “Annual Meeting”) of Nicolet Bankshares, Inc. (“Nicolet” or the “Company”) will be held at the Meyer Theatre, 117 South Washington Street, Green Bay, Wisconsin on Monday, May 10, 20219, 2022 at 5:00 p.m. local time. The items of business include:

The Board of Directors has set March 1, 2021February 28, 2022 as the record date for the determination of the shareholders entitled to notice of and to vote at the Annual Meeting.

 

We hope that you will be able to attend the Annual Meeting. You may vote by proxy card, internet or telephone. If you plan to attend the meeting, please respond as such when voting your proxy so that we can make proper arrangements for the anticipated number of guests. Whether or not you plan to attend the Annual Meeting, please complete, date, sign and return the enclosed proxy card or vote your proxy by internet or telephone as soon as possible. Doing so will help ensure that a quorum exists in order to conduct the meeting and that the greatest number of shareholders and votes are represented at the Annual Meeting. If you attend the Annual Meeting and wish to vote your shares in person, you may do so at any time before the vote takes place.

 

 

Green Bay, Wisconsin

March 17, 20213, 2022

 

YOUR VOTE IS IMPORTANT. Please read the attached Proxy Statement and then either: (i) promptly complete, date, sign and return the enclosed proxy card in the postage-paid envelope, or (ii) vote using the internet or by telephone by following the instructions printed on the proxy card. You can spare the Company the expense of further proxy solicitation by returning your vote promptly by signed proxy or by voting via the internet or telephone.

NICOLET BANKSHARES, INC.

 

 

PROXY STATEMENT

FOR ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 10, 20219, 2022

 

 

INTRODUCTION

 

Time and Place of the Meeting

 

The Company’s Board of Directors (the “Board”) of Nicolet Bankshares, Inc. (“we”, “our”, “Nicolet” or the “Company”) is furnishing this Proxy Statement (the “Proxy Statement”) to solicit proxies for use at the 20212022 Annual Meeting of Shareholders of the Company to be held on Monday, May 10, 20219, 2022 at 5:00 p.m. local time (the “Annual Meeting”) at the Meyer Theatre, 117 South Washington Street, Green Bay, Wisconsin and at any adjournment of the meeting.

 

Record Date and Mailing Date of Materials

 

The close of business on March 1, 2021February 28, 2022 is the record date for the determination of shareholders entitled to notice of and to vote at the meeting. We first mailedcommenced mailing this Proxy Statement and accompanying proxy card to shareholders on or about March 17, 2021.10, 2022.

 

Number of Shares of Capital Stock Outstanding and Quorum

 

As of the close of business on the record date, the Company had 30,000,000 shares of common stock, $0.01 par value, authorized, of which 10,004,51313,558,427 shares were issued and 9,989,48813,533,126 shares were outstanding. Each issued and outstanding share of common stock is entitled to one vote on all matters to be presented at the meeting, including one vote for each of the director nominees as further described in “VOTING AT THE ANNUAL MEETING - Requirements for Shareholder Approval.” Nicolet had approximately 2,2003,800 shareholders of record.

The presence, in person or by proxy, of the majority of the outstanding shares entitled to vote at the Annual Meeting is required to constitute a quorum for the transaction of business at the Annual Meeting. In determining whether a quorum exists, we will count abstentions and broker non‑votes, which are described below under “VOTING AT THE ANNUAL MEETING - Abstentions,” and “ - Broker Non-Votes.”

VOTING AT THE ANNUAL MEETING

 

Proposals to be Considered

 

Procedures for Voting by Proxy

 

You should specify your voting instructions with regard to each of the proposals set forth on the proxy card.

If any nominee for election to the Board of Directors named in this Proxy Statement becomes unavailable for election for any reason, the proxy may be voted for a substitute nominee selected by the Nominating Committee of the Board of Directors.Board. Alternatively, the Board of Directors may operate with a vacancy or reduce the size of the Board after the Annual Meeting. If any other matters properly come before the Annual Meeting, the persons named as proxies will vote upon the matters according to their judgment. The Board of Directors is not aware of any other business to be presented for a vote of the shareholders at the Annual Meeting.

 

Revoking Your Proxy

 

 

Proposal 1 - Election of Directors: In the election of directors, you will have as many votes as the number of shares you own, multiplied by the number of directors (13)(15) to be elected. When voting by proxy or in person at the Annual Meeting, you may do one of the following:

To be elected, a director nominee must receive more votes than any other nominee for the same seat on our Board of Directors.Board. As a result, if you withhold your vote as to one or more nominees, it will have no effect on the outcome of the election unless you cast that vote for a competing nominee. As of the date of this proxy statement, we do not know of any competing nominees.

Other Proposals - The affirmative vote of a majority of the votes cast is required to approve each of the other proposals.

Solicitation of Proxies

 

The Company will pay the cost of proxy solicitation. Our directors, officers and employees may, without additional compensation, solicit proxies by personal interview, telephone, fax, or otherwise. We will direct brokerage firms or other custodians, nominees or fiduciaries to forward our proxy solicitation material to the beneficial owners of common stock held of record by these institutions and will reimburse them for the reasonable out-of-pocket expenses they incur in connection with this process.

INFORMATION ABOUT THE BOARD OF DIRECTORS

The Company's Board of Directors as of the date of this proxy statement include the following twelve (12)sixteen (16) individuals:

Ms. Campos-Duffy and Mr. Fulwiler are retiring from the Board effective upon the 2022 Annual Meeting. Nicolet is grateful to each of these directors for their dedicated service to Nicolet and its shareholders. For additional biographical information on the thirteen (13)fifteen (15) director nominees, see PROPOSAL 1 - Election of Directors.

Board Role in Risk Oversight and Leadership Structure

The Company’s Board of Directors coordinates, with the various Board committees, to provide enterprise-wide oversight of its management and handling of risk. These committees report regularly to the entire Board of Directors on risk-related matters and provide the Board of Directors with integrated insight about the Company’s management of strategic, credit, interest rate, financial reporting, technology, cyber, liquidity, compliance, operational, market, fiduciary, and reputation risks. The Company’s Board also monitors whether material new initiatives have been appropriately analyzed and approved, and reviews all regulatory findings directed to the attention of the Board and evaluates the adequacy of management’s response.

All the directors serve on the Board of Nicolet National Bank, the Company’s wholly owned bankingbank subsidiary (sometimes referred to herein as “Nicolet Bank”). The Board believes that a single governing body to advise and determine strategy for the organization provides the Board with a comprehensive picture of the level and trends in operational and compliance risk exposure for the entire organization and ensures comprehensive oversight of regulatory matters.

The Company is committed to a strong board structure, which includes maintaining the culture of a community bank and ensuring alignment of the Board with interests of shareholders, such as through ownership in the Company. Since the Company’s inception in 2000, Mr. Atwell, one of the Company’s founding executives has served as chairman. Until April 2021, Mr. Atwell served as chairman and chief executive officer. Starting in April 2021, the Company’s other founding executive, Mr. Daniels, was named chief executive officer. Accordingly, the roles of chairman and chief executive officer roles have been servedare now split, although held by the same individual, particularly by oneinsiders of the two founding executives.Company. We believe a fully vested, experienced owner, with thorough knowledge of and expertise in banking financial statements, regulatory environment, and the community banking mission, can better ensure thorough and knowledgeable oversight from the entire board and alignment with shareholders. The integrity of any such one individual is important, and the Board consists of many independent, knowledgeable, and vested directors to round out the Board leadership structure. The decision to separate the title and functions of chairman and chief executive officer between two persons is a result of the long-term succession planning process in place. This should not be understood as a change in the Board’s willingness to vest both titles in one person in the future. Each year, the Board has periodic executive sessions without management present, and while no independent lead director is formally identified, the Compensation Committee Chair generally presides when this occurs. As of the date of this proxy statement, nine (9)twelve (12) of the twelve (12)sixteen (16) individuals currently serving as directors qualify as “independent” per NASDAQNasdaq rules. Following the Annual Meeting, if all of the director nominees are approved by the shareholders, nine (9)eleven (11) of the thirteen (13)fifteen (15) individuals serving as directors will qualify as “independent.”

Nicolet’s Board has considered the independence of the nominees for election at the Annual Meeting and all individuals who served as directors during any portion of 2020.2021. The Board has determined that all directors and director nominees are independent or were independent at the time they served as directors, under NASDAQNasdaq rules, except for Robert B. Atwell, Michael E. Daniels, Ann K. Lawson, and Robert J. Weyers.

Board Diversity

Diversity is one of the many factors taken into account when considering potential candidates to serve on the Board of Directors, as stated in the Nominating Committee Charter, though the Company does not have a standalone policy regarding diversity requirements. The Company generally views and values diversity from the perspective of professional and life experiences, as well as geographic location, representative of the markets in which we do business. The Company recognizes that diversity in professional and life experiences may include consideration of gender, race, cultural background or national origin, in identifying individuals who possess the qualifications that the Nominating Committee believes are important to be represented on the Board. The Company believes that the inclusion of diversity as one of many factors considered in selecting director nominees is consistent with the Company'sCompany’s goal of creating a board of directors that best serves our needs and those of our shareholders. Statistics for our director nominees are presented below.

During 2020,2021, the Board of Directors held thirteen (13)fourteen (14) meetings. Each member of the Board of Directors attended at least 92%75% of the total number of meetings of the Board of Director and Committee meetingscommittees on which each directorthey served that were held in 2021 during 2020.such director’s term. Nicolet has a

The following table lists the members and committee chair of each of the noted standing committees as of the date of this proxy statement. Thestatement and the number of meetings held by each committee during calendar 2020.2021.

Company, community banking and the financial services industry; experience in serving as a director or officer of a financial institution or public company generally; wisdom, integrity and analytical ability; familiarity with and participation in the communities the Company serves; diversity in professional and life experiences; commitment to and availability for service as a director, including ownership in the Company. The Nominating Committee assesses the performance of individual directors, including use of a periodic director evaluation process, most recently completed in late 2020. The Nominating Committee ensures that at least a majority of board members meet the independence requirements.

Each member of this Committee attended 100% of the 2020 meetings. Each Nominating Committee member qualifies as “independent” as defined under NASDAQNasdaq rules.

The Audit & Compliance Committee is also responsible for assisting the Board in monitoring our principal financial risks, cyber risks, internal policies and processes employed to manage such risks, and compliance with policies, procedures and regulation. Toward this oversight objective, the Audit & Compliance Committee reviews, evaluates and discusses with management various annual policy updates; reviews audit reports (internal or third party) on operational areas, selected financial areas, internal loan reviews, and compliance audits of regulations and other internal controls; and receives reports from various internal committees such as IT Steering Committee and Corporate Risk Committee.

    

Each member of this Committee attended 100% of the 2020 meetings. Each Audit & Compliance Committee member qualifies as “independent” under NASDAQNasdaq rules, including the heightened independence requirements applicable to members of audit committees contained in the NASDAQNasdaq rules and as set forth in Rule 10A3-(b)(1) of the Securities and Exchange Act of 1934, as amendedCommission (the “Exchange Act”“SEC”). Each member of the Audit & Compliance Committee has the financial knowledge, business experience and independent judgment to serve as an effective member of this Committee and as required by NASDAQNasdaq rules.

Each member of this Committee attended 100% of the 2020 meetings. Each Compensation Committee member qualifies as “independent” as defined under NASDAQNasdaq rules, including the heightened independence requirements applicable to members of compensation committees contained in the NASDAQNasdaq rules.

meetings. As of the date of this proxy statement, the directors on ALCO were Messrs. Atwell, Colón, Daniels, Fulwiler, McClone, and Weyers and Ms. Campos-Duffy.Lawson.

 

No member of the Compensation Committee was or is an officer or employee of the Company or any of its subsidiaries, and no member of the Compensation Committee had or has any relationship requiring disclosure under SEC regulations. None of the Company'sCompany’s executive officers has served on the board of directors or the compensation committee of any other entity that has an executive officer serving on the Company's Board of Directors or on the Company'sCompany’s Compensation Committee.

The Board’s philosophy for director compensation is to provide the Company with the best opportunity to compete for, attract and retain qualified board members; compensate board members fairly and in alignment with shareholder’s interests; and be fiscally responsible for the long-term success and viability of the Company. The director compensation philosophy also identifies the goal of balancing fees paid with the number of directors to ensure director compensation is both reasonable and competitive in total.

The Compensation Committee evaluates the competitiveness of director compensation on an ongoing basis with the assistance of peer group benchmarking studies and makes pay recommendations to the full Board for approval at least annually, utilizing compensation studies, banking industry surveys, and proxy disclosures of public bank peer companies, among other

information. While board compensation is reported below on a calendar year basis, board compensation is generally established by the Committee on a fiscal year period,for May to April, to coincide with the annual meeting director election and reassignment of committees.

Generally, the director compensation package has included a per-meeting fee component, a cash retainer for the audit chair, and (since 2018)since 2018 an equity retainer of a determined value, provided in whole shares of immediately vesting restricted stock based upon the closing stock price as of the grant date, with eachdate. Each director compensation component is meant to support compensation for service provided and improve director share ownership and alignment, and the total combineddirector pay is meant to be competitive and attractive in procuring and maintaining a strong, engaged board. We believe immediate vesting is appropriate for the equity shares granted to directors as they are part of the annual director compensation package. Non-employee directors also have the option each year to elect to receive their cash fee compensation (if any) in the form of Company common stock through the Deferred Compensation Plan for Non-Employee Directors throughDirectors. During 2021, the Company established a participation election made each year. While we do not set strict targets forminimum director ownership requirement of our2,000 shares of Company common stock beyond regulatory requirementsto be held by non-employee directors by the third anniversary of a national bank, we strongly encourage all directors to own the Company's stock.their director appointment.

Following the 2019 Annual Meeting of Shareholders (covering board service from May 2019 to April 2020), non-employee directors received cash meeting fees of $1,500 for each board meeting and $750 for each committee meeting attended, and the audit committee chair received an additional $10,000 cash retainer, both unchanged from the 2018 fiscal period, as well as each received an equity retainer of 387 shares of immediately vested restricted valued at approximately $24,000 value (based on the closing stock price as of that grant date). With the onset of the pandemic, the impacts of the market disruption, and changing conditions on the Company's financial goals, employees and customers were discussed at length by the Compensation Committee at its March 2020 meeting. The Committee supported various management actions for safety, remote work, temporary branch changes, on-site bonus pay, and a temporary 10% reduction to bi-weekly pay of the senior management team, among other actions. Following the 2020 Annual Meeting of Shareholders, until the potentially far-reaching effects of the pandemic could be determined, the Compensation Committee met in May and approved (for board service from May 2020 to April 2021) board pay as a $40,000 equity retainer (roughly 80% of the average total pay per director during 2019), a $10,000 annual cash retainer to the Audit Chair, and halted all cash per-meeting fees, with the expectation that meetings should be as frequent as needed in the unusual year. The Committee felt this was in sync with recent actions on management compensation and appropriately weighted the current pandemic-related conditions as most significant in establishing fiscal 2020 board compensation. The $40,000 May 2020 equity retainer resulted in 795 shares being granted and immediately vested to each director (based on the $50.34 closing stock price as of the grant date). The Committee indicated at its May 2020 meeting that it may re-assess board compensation in January 2021 once 2020 financial results were known. At its January 2021 meeting, the Compensation Committee approved to keep per-meeting fees at zero and approved an addition to the annual equity retainer through a grant of 150 shares of immediately vested restricted stock to each director (valued at an additional $10,836 per director given the $72.24 closing stock price on the grant date). The Compensation Committee made this decision after robust discussion of the successful 2020 year in a very turbulent environment, as well as management's request to bring total director pay closer to the average compensation per director last year.

The following table shows information concerning the compensation to non-employee directors of the Company and its subsidiaries for their services as directors for the 20202021 calendar year. EmployeeIn general, employee directors do not receive any additional compensation for their services as a director.director; however, an exception was made in 2021 for Ms. Lawson given the close timing of the director equity grant date (May 18, 2021) and her retirement date (June 4, 2021). See the Summary Compensation Table within EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS for information on the compensation paid to Ms. Lawson during 2021.

The Directors Plan, as revised and restated effective January 1, 2009, is a nonqualified plan. Non-employee directors may elect to defer a portion or all of their cash board fees, including retainers. The voluntary deferrals are contributed quarterly to a rabbi trust, the trustee of which invests the voluntary deferrals in shares of common stock of the Company. Upon termination of service as a board member other than due to death (separation date), a participating director receives payment of their deferral account in whole shares of Nicolet common stock, distributed during the first half of the calendar year following the year of their separation date. If the termination of service is due to death, payment shall be made to the designated beneficiary within 90 days of the date of death.

EXECUTIVE OFFICERS

The Company’s executive officers as of the record date were Robert B. Atwell, Michael E. Daniels, H. Phillip Moore, Jr., and Ann K. Lawson.Eric J. Witczak. Ages are as of December 31, 2020.2021.

As of the record date, executive officers of Nicolet Bank, in addition to Mr. Atwell, Mr. Daniels, Mr. Moore, and Ms. Lawson,Mr. Witczak, include:

STOCK OWNERSHIP

The following table sets forth information with respect to the beneficial ownership, as of January 31, 2021,2022, of shares of Company common stock by (i) each of the Company’s current directors, director nominees, and executive officers; and (ii) all current Company directors and executive officers as a group. The address for each person included in the table is 111 North Washington Street, Green Bay, Wisconsin 54301.

For purposes of this table, a person “beneficially owns” a security if that person has or shares voting or investment power or has the right to acquire beneficial ownership within 60 days. Unless noted below, management believes that each person listed below has sole investment and voting power with respect to the shares included in the table. The address for each person included in the table is 111 North Washington Street, Green Bay, Wisconsin 54301.

The following table sets forth information with respect to the beneficial ownership, as of January 31, 2021,2022, of shares of Company common stock by each person known by the Company to be the beneficial owner of more than 5% of the Company’s issued and outstanding common stock. The information below is from Schedule 13G/A filings reporting holdings as of December 31, 2020.2021.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Overview 

The Compensation Committee prepared the following Compensation Discussion and Analysis to provide you with information we believe will be helpful to understand our executive compensation policies and decisions as they relate to the compensation for 20202021 of our chief executive officer, chief financial officer, and other executive officers included in the Summary Compensation Table, collectively referred to in this proxy statement as our “named executive officers.”

Our compensation philosophy and the objectives of our compensation decisions and administration are grounded in our values, vision and mission. The following paragraphs summarize this philosophy and these objectives.

Executive Compensation Philosophy and Summary

Nicolet has a distinctly entrepreneurial approach to its executive compensation philosophy, which has included the use of episodic equity-based incentives at the inception of identified performance periods (typically based on a five-year strategic vision and a five-year vesting period), in addition to competitive base salaries, annual target incentives (typically based on a percentage of salary, a portion to be paid immediately in cash and a portion in equity which is generally a restricted stock grant vesting one-third immediately and one-third each of the following two anniversaries of the initial grant) and competitive benefits. More recently, the use of discretionary company contributions (“Company Contributions”) under its nonqualified deferred compensation (“NQDC”) plan have become meaningful to more seasoned management members and in support of retention or succession objectives of the Company. All these components of compensation reward individual actions and performance; provide a mix of short-term and long-term compensation; allow us to attract, retain and motivate high-quality, skilled executives; and pay for performance over the longer term that is in alignment with our vision, strategic plans, and shareholder interests. The Board of Directors views our substantive episodic equity grants as integral to aligning compensation with theexpected future stock price performance, shareholders have historically realized, and the Company Contributions under the NQDC plan as an important longer-term compensation tool for other strategic goals, such as retention and succession.

We use executive compensation to drive continued improvement in superior operating andreinforce the owner-managed culture at the heart of the Company’s conceptual long-term market impact, financial performance and to reward our executives appropriately for contributing tostock price performance. In particular, the Board believes that performance.a strong employee equity interest in future stock price appreciation has consistently driven the exceptional shareholder returns. This long-term performance supports the Board’s position that option equity is both a correlated and strong driver of shareholder return. We believe our compensation program strongly correlates to long-term shareholder value creation. It incentivizes named executive officers to work for the long-term sustained prosperity of the Company, and reflects an aligned pay-for-performance philosophy.

The Compensation Committee

The Compensation Committee, comprised of independent directors, believes that our executive compensation program is appropriately designed to achieve our objectives, responsibly aligned with the best interests of our shareholders, and is reasonable when reviewed in context with the executive compensation programs and relative performance of our peer group companies, and does not create incentive for unreasonable risk taking.

As further described under “INFORMATION ABOUT THE BOARD OF DIRECTORS - Board Committees and Meetings,” the primary purpose of the Compensation Committee (sometimes also referred to within this Compensation Discussion and Analysis section as “the Committee”) is to discharge the responsibilities of Nicolet’s Board related to compensation to be paid to executive officers and directors, as well as to review and administer the Company’s incentive plans, including making grants under those plans. The Committee makes compensation related recommendations to the Board regarding Nicolet’s executive officers while considering actual results versus performance targets. The Committee is also responsible for making recommendations to the Board for compensation of Board members.

The Committee is focused on sustainable and improving operational and financial results, which we believe translates to long-term shareholder value. Therefore, we design and oversee our executive compensation programs to promote attainment of our annual and longer-term business goals, while appropriately balancing potential rewards for superior performance with minimizing risks to our shareholders.  The Committee seeks to compensate our executives in a fair, reasonable and competitive manner, and be consistent with the underlying principles that frame our compensation philosophy described throughout this EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS section.

Nicolet was founded upon five core values (Be Real, Be Responsive, Be Personal, Be Memorable, and Be Entrepreneurial) which are embodied within each of our employees and create a distinct competitive positioning in the markets within which we operate. Our mission is to be the leadinglead community bank within the communities we serve, while our vision is to optimize the long-term return to our customers and communities, employees and shareholders.shareholders (the “3 Circles”). Collectively, these embed a long-term focus in our leadership and business model.

This long-term focusedOur longer-term compensation positioningphilosophy, which may contrast with that of other banks, which is described in more detail below. Our compensation programs have historically been weighted heavily toward long-term option-based equity rewards whose value results from shareholder value creation, rather than those which tie a preponderance of rewards to a few short-term metrics, creating a short-term mentality that may not serve the long-term interests of the Company.Company and its shareholders. As such, awarding our executives with periodic large grants of stock options ties them to our value of “Be Entrepreneurial,” as our executives only realize value from these episodic option grants in the event the stock price appreciates. This aligns our executives'executives’ personal compensation goals and levels with the increase in value the shareholders realize over time. As the Company has matured, the long-term incentive compensation mix evolved to include restricted stock grants (beginning in 2012) and Company Contributions under the NQDC plan (beginning in 2017) to better align a portion of compensation to shareholder interests as well as retention or succession-related goals.

Since its founding in 2000, Nicolet has believed in aligning employees and their compensation with shareholder interests over the long-term through ownership.ownership in the Company. Our incentive programs have historically included a larger than conventional ratio of equity-based incentives as a percentage of total compensation, primarily in the form of stock options. The value to the employee of any stock option grantedgrant is realized only when success is sustained, and reflected through a rising stock price, which aligns with value creation for our shareholders over the long-term. If the stock price does not increase over the strike price at grant, executives will realize no value from the option awards.

Opportunities for equity as a component of overall compensation for our executive and leadership groups are not granted on an annual or any preset periodic basis, but rather in an episodic fashion as significant progress is made against our strategic plan objectives andnew financial goals and as we elevate these goals to the next threshold of achievement.targets are established for future periods. Such episodic grants are based on multi-year objectives. As the full initial estimated accounting value of the grant is reflected in the Summary Compensation Table only in the year of grant, a larger grant may appear disproportionate in the year of grant while preceding or subsequent years may show no grant or value. In reality, it is the performance of the subsequent years which will determine the real value of the stock option awarded to the recipient. Stock options are typically awarded with a five-year vesting schedule and ten-year redemption window, while restricted stock, when granted episodically, has typically been awarded with five or ten-year vesting. We also grant restricted stock as a portion of the annual variable incentive bonus program for a limited number of executives.executives, which vests one-third immediately and one-third on the next two anniversary dates. Finally, Company Contributions under the NQDC plan have been used (with or without vesting periods and with or in lieu of equity-based awards) to allow the mix of incentive compensation to be meaningful to recipients and to achieve retention or succession-related goals.

The following provides a summary of our historical episodic stock option grants.

contributed to record 2020 earnings, in a turbulent, pandemic-based environment, continuingspite of the pandemic, and continued our trendobjective of optimizing performance since 2016. Other than for the two founders who were awarded stock options in January 2020 (prior to any pandemic indications) described under “Long-Term Equity Incentives,”, the Compensation Committee concentrated its 2020 long-term awards in Company Contributions under the NQDC plan. See “2020As a result of this level of performance, we ended 2021 at $7.7 billion in assets, more than triple from the start of this strategic period, and corroborating the incentive compensation decisions to reward management’s efforts. Also during this strategic period of 2017 to 2021, our share price increased 80% versus 44% for the KBW Nasdaq Bank Index, as reflected in the table below.

Objectives of the Compensation Program

In designing and implementing the compensation program for our executive officers, we primarily intend to:

The design of our compensation program incorporates compensation components that are widely used by companies within our industry, and are applied in combination to achieve the objectives noted above. Within our peer group companies, the mix of components as a percentage of total executive compensation varies, and our program is more heavily weighted toward appreciation-based equity in the form of stock options to reward our executives when they create significant and sustained performance above industry averages, thereby creating shareholder value. We believe that providing high impact leaders, including our named executive officers, with opportunities to share in the Company’s value creation for its shareholders over a longer period through the use of equity awards is not dilutive, but rather accretive in aligning with our shareholders over the

Pay for Performance Criteria and Process

Paying for performance is the foundation of our incentive compensation philosophy. We believe shareholder value creation, most visible in our stock price trendsperformance over time, is driven by sustained business performance in the areas of Growth, Profitability and Soundness, as measured through a number of quantitative and qualitative components. We believe that this approach results in superior long-term value creation compared to an approach that relies on a few selected objective metrics in any single year. The following areas, measured by many supportive metrics, are considered when determining incentive awards; however, annual incentive awards are ultimately discretionary and are not made based solely on a formulaic calculation that weights individual metrics. For additional information see “2020“2021 Summary Financial Results.”

The Committee and the Board of Directors exercise discretion when awarding incentives, by evaluating Company and individual performance in a holistic fashion, taking into account actual results and achievements in the above three areas against our strategic objectives, expectations and improvements over the prior year; overall industry and marketplace conditions; and readiness for continued and future goal attainment in line with our strategic plans.

In addition to the absolute quantitative measurement of financial results in the above three areas, we also evaluate the qualitative nature (the quality and soundness) of our results. This approach serves to mitigate risks that employees might take to achieve a single numerical goal that would threaten the long-term health and viability of the Company.

Components of our Compensation Program

To achieve the objectives of our compensation program, we use a mix of compensation components evaluated individually and in combination, including the following.

The Committee determines the level and percentage mix of compensation components it believes is appropriate for each executive, taking into account specific responsibilities within the Company, and similarly situated executive compensation

levels within our peer group companies. We review the talent and expertise necessary to achieve our objectives, and specific expected performance outcomes for the year.

The Committee has a flexible allocation policy for determining the allocation between cash and non-cash compensation for executives in any given year. We utilize target percentages of salary defined for our short-term annual variable incentive program. See Executive Compensation Components and Decisions - “Annual Variable Incentive Bonus” for more detail.

The Committee believes that tying executive rewards to equity in the Company and other long-term compensation motivates and rewards executives to strive for results that create greater shareholder value over longer term periods, and in addition serves to elevate these organizational dynamics:

Role of Management with our Compensation Committee

The Committee solicits and considers the performance evaluations and compensation recommendations submitted for various senior officers by the Company's ChiefCompany’s Executive Officer,Chairman, Robert Atwell, and the Bank’sCompany’s Chief Executive Officer, Michael Daniels. In the case of Messrs. Atwell and Daniels, the Compensation Committee evaluates performance and determinesrecommends compensation to recommend to the Board of Directors.Board.

Human Resources and certain other departments work to design, develop and administer our compensation programs. These departments can make recommendations to the Compensation Committee. This may include changes or adjustments to existing compensation programs, and recommendations of financial and other performance targets to be achieved under those programs. These departments also prepare analyses of financial data or other briefing materials for the Committee to ultimately assist in the implementation of decisions reached by the Committee and the Board of Directors.Board.

Use of Independent Compensation Consultant and Peer Group Benchmarking

The Committee has authority to retain outside counsel, experts, compensation consultants and other advisors, as needed.

Since 2018, the Committee has used the services of Blanchard as its independent compensation consulting company. The Committee reviewed the independence of Blanchard and determined that there are no conflicts of interest. Blanchard reports directly to the Committee, and management has not retained its own consultant. Blanchard may periodically attend meetings of the Compensation Committee, physically or by phone, and with or without management present.

Blanchard assists the Committee in, among other things, applying our compensation philosophy for our executive officers and non-employee directors, analyzing current compensation conditions in the marketplace generally and among our peers specifically, and assessing the competitiveness and appropriateness of compensation levels for our executive officers. For 2020 and 2019, the services provided byCommittee’s use in 2021, Blanchard focused on a review of Proxy disclosures and our peer group. In 2018, the Committeewas engaged Blanchard to provide comprehensive reports of both board compensation and executive total compensation. To assist withThese reports evaluated Nicolet’s board compensation and the pay of its named executive compensation decisions in 2020, the Committee utilized Blanchard’s current and historical compensation surveys, currentofficers to that of a custom peer group, as well as against regional and national banking survey data and Blanchard database information. To provide supplemental information, Nicolet also participated in and evaluated several financial industry compensation surveys with firms other than Blanchard. The Compensation Committee anticipates engaging consulting servicesWhile Nicolet considers the external market information supplied in 2021 for a comprehensive review of both director and executive compensation.these reports from Blanchard, it does not exclusively rely upon them to make compensation decisions.

Blanchard assisted us in reviewing changes to our peer group for 2021 given our larger asset size from the recent acquisitions (as detailed further in “2021 Summary Financial Results”). The peer group is evaluated annually and is comprised of banks with similar characteristics (size, regional proximity, publicly traded, and similar business model). With the assistance of Blanchard, the Committee determined the 2019The peer group was still appropriate without change for 2020.parameters included banks with Midwest based headquarters and an asset size between $5 billion and $13 billion as of September 30, 2021. Thus, the peer group for 20202021 included these eighteen entities:

2020 earnings were record-breaking despite the very unusual year. We entered 2020 with a strategic plan that turned quickly into tactical change management, focusing on how to best serve and be present forAs our customers during a pandemic. Executing on2021 results reflect, our core business during a very unsettling but busy period required flexibility, adaptability, being fully back on-site in June,financial and operating safely to help our customers move forward. For commercial customers, we guided many through the Paycheck Protection Program (“PPP”) and we provided $1.25 million as grants to expedite funds to smaller businesses who would have otherwise waited for small PPP loans. For our retail customers, their mortgages were the biggest banking action they could control (through a refinanced rate or new purchase to accommodate changing needs), so we adapted resources and automated workflows to originate over $1 billion in mortgages under atypical conditions. Since the start of the pandemic, we also provided loan payment modifications on nearly 1,000 loans, with only a small percentage of those remaining in modified terms at year end 2020. For wealth clients, our advisors were proactive and communicative during volatile market conditions. Tough decisions were made to be responsible in the short term (incurring costs for on-site bonuses, COVID testing, protective supplies, service charge waivers, and a liquidity build for defensive purposes) and for the long term (with upfront costs related to eight branch closures, automation and other efficiencies), as well as providing larger provisions for potential loan lossesperformance was strong in a periodyear of uncertaintydramatic growth. We completed the acquisition of Mackinac Financial Corporation (“Mackinac”) on September 3, 2021, for a total purchase price of $229 million, including the issuance of 2.3 million shares of Nicolet common stock valued at $180 million and limited forward visibility. Pricing discipline supported net interest income following$49 million in cash. Upon consummation, Mackinac added assets of $1.6 billion, loans of $0.9 billion, and deposits of $1.4 billion. We also completed the significant, unexpected declineacquisition of County Bancorp, Inc. (“County”) on December 3, 2021, for a total purchase price of $224 million, including the issuance of 2.4 million shares of Nicolet common stock valued at $176 million and $48 million in the rate environmentcash. Upon consummation, County added assets of 150 bps in March 2020.$1.4 billion, loans of $1.0 billion, and deposits of $1.0 billion. Our finalfinancial results met or exceeded 2020 expectations.are summarized below.

The culminationsuccessful integration of these actionstwo acquisitions demonstrated the adeptness of all business lines to work together to produce strong results. Net income for the year ended December 31, 2021 was $61 million and teamwork producedearnings per diluted common share was $5.44, compared to net income of $60.1$60 million (10% higher than 2019), mainly on increasedand diluted earnings per common share of $5.70 in 2020. However, 2021 net interest income (up 11%), record net mortgage income (at $30was also impacted by non-core items related to the acquisitions, including $14 million versus $12of Day 2 CECL credit provisions, $6 million in 2019)merger-related expense, and strong wealth revenues (up 13%), which more than covered a $10 million negative swing in net asset gains/losses (at $2 million net losses for 2020 versus $8 million net gains for 2019), an elevated credit provision (at $10 million versus $1 million in 2019) andof impairment charges for our branch optimization strategy, on a $4 million or 4% increase in overall expenses (with costs for pandemic-related actions and branch closure decisions partly offset by diligent expense management and efficiency efforts). Diluted earnings per share were $5.70 for 2020 (3% higher than 2019), benefiting from stronger net income, while covering a 6% increase in average diluted shares (mainly from timing of the 1.2 million shares issued in the November 2019 acquisition, net of 0.6 million shares repurchased during 2020). For 2020, returns were strong, with return on average assets of 1.41% (impacted by very elevated cash assets), return on average equity of 11.40%, return on average tangible common equity of 16.76% and efficiency ratio of 51.72%.pre-tax basis.

December 31, 20202021 assets were $4.6$7.7 billion (27%(69% over year end 2019)2020), including over $800largely due to the acquisitions of Mackinac and County. Total loans increased $1.8 billion and total deposits increased $2.6 billion from December 31, 2020, also largely due to the acquisitions of Mackinac and County. Total capital was $892 million at December 31, 2021, an increase of $353 million since December 31, 2020, mostly due to the stock issued in cash, whichthe Mackinac and County acquisitions. For the year ended December 31, 2021, Nicolet repurchased approximately 793,000 shares at a total cost of $61 million, or an average per share cost of $77.50. Asset quality remained sound. Nonperforming assets were $56 million at December 31, 2021, comprised of $44 million of nonaccrual loans (largely comprised of County’s previously identified nonaccrual agricultural loans) and $12 million of other real estate owned (primarily closed bank branch properties yet to be sold), and represented 18%0.73% of total assets, compared to 5%$13 million or 0.29% at year-end 2019. Deposits were $3.9 billion, up 32% over year end 2019. Total loans were $2.8 billion, up 8% over prior year end. The complexion of our balance sheet mirrored changes in customer needs, with growing liquidity from rising core deposits, and PPP loans replacing draws on conventional lines of credit. Asset quality remained sound (with year end nonperforming assets to assets of 0.29% for 2020 versus 0.42% for 2019), as the borrowing base largely remained resilient, profitable and liquid in the uncertain times.December 31, 2020. The allowance for credit losses-loans grew to $50 million (1.07% of loans), compared to $32 million (1.15% of loans, or 1.24% of loans excluding PPP loans), compared to $14 million or 0.54% of loans at December 31, 2019. The large increase in the allowance resulted from the $10 million provision exceeding only $1 million of net charge-offs, plus $9 million added upon adoption of the current expected credit losses model. During 2020, we executed on our acquisition strategy. The all-cash acquisition of Advantage Community Bancshares, Inc., a $0.2 billion bank (at approximately 4% of pre-merger assets) was completed in August 2020. While we announced an agreement to acquire a $0.7 billion bank in February 2020 priorlargely due to the widespread onset of the pandemic, we exercised discipline, mutually terminating the deal in May 2020, (given pricing in the significantly depressed market), to enable both banks to focus more on addressing the impacts of the pandemic on their business and customers instead of using resources to plan for a transaction that was unlikely to close.Day 2 CECL credit provisions noted above.

20202021 Executive Compensation Components and Decisions

Base Salary

When the Committee considers executive base salaries on an annual basis, it considers each executive’s role and level of responsibility, along with base salary levels of similarly situated executives employed by peers or in the industry. An individual’s base salary may vary relative to the market data available, as the Committee also incorporates other factors such as

Annual Variable Incentive Bonus

The Board of Directors approved the 20202021 performance objectives at the beginning of the year, and the Compensation Committee confirmed that for 20202021 the annual incentive bonus targets, expressed as a percentage of salary, for the named executive officers would be 75% (i.e., 50% cash and 25% equity) for Messrs. Atwell and Daniels (unchanged from the prior several years) and 50%, 60% (i.e., 35%40% cash and 15%20% equity) for Ms. Lawson and Messrs. Witczak and Hutjens, compared to 50% (35% cash and 15% equity) last year for each, and 40% (30%(i.e., 30% cash and 10% equity) last year for each.Mr. Madson (unchanged from the prior year). The 2021 annual incentive bonus targets for Mr. Moore upon his employment was also 60% (i.e., 40% cash and 20% equity). The Committee judged the targets to be appropriate considering each executive’s experience level, duties and responsibilities, with the increases noted above due to added responsibilities of a larger, more complex company, overall compensation objectives, and to remain competitive with peer compensation practices.

Based on the sustained exceptional results for 20202021 (see “2020“2021 Summary Financial Results”), each individual’s performance assessment, and perspective of the total compensation package for each executive, the Committee awarded a 130%150% multiple of target incentive (cash and equity) for each named executive officer, applied to the original 20202021 salary base (ignoring the pandemic-based adjustment), and utilized Company Contributions under the NQDC plan (see below).  The Committee further approved that the pandemic-based salary adjustment be added back through the cash incentive component for the senior management team members, with Mr. Daniels and Ms. Lawson electing their adjustment be awarded instead through the NQDC plan.  The Committee determined that the assigned multiple of target incentive bonus plus the Company Contributions under the NQDC plan were warranted mainly due to a) the significant achievements in 20202021 (as discussed previously and delivered as part of the Optimization trend over 2017-2020)2017-2021), b) the successful leadership in closing and adaptability exhibited in a pandemic-based environment,integrating two acquisitions, c) the quality of earnings, in light of atypical conditions,and d) responsible decision-making to forego even higher short-term profits to address current issues and benefit future periods, and e) the progress toward long-term strategies. The restricted stock values reflected in the Summary Compensation Table are the equity portion of the annual variable incentive bonus at the 130%150% of salary multiple, except for Ms. Lawson whoseand Mr. Moore. Ms. Lawson’s restricted stock value was awarded instead throughin the NQDC plan.Summary Compensation Table represents the director equity grant in May 2021, while Mr. Moore’s restricted stock value in the Summary Compensation Table also includes a grant made upon his hire in June 2021. For perspective, a 150% multiple of target incentive is a self-imposed cap on the annual variable incentive bonus practiced by the Committee.

Long-Term Equity Incentives

In January 2020, priorDuring 2021, on the front end of our next strategic period, 450,000 stock options were awarded to any pandemic indications,emerging leaders, including 50,000 options granted to each of Messrs. Moore, Hutjens, and Witczak, and 20,000 options granted to Mr. Madson. Messrs. Atwell and Daniels were each awarded 13,500 stockdid not receive any options with $71.57 strike price and 5-year ratable vesting.as part of the 2021 episodic grant. The award followed the continued discussion of excellent 2019 results, and more particularly was to reward and further incent Messrs. Atwell and Daniels for their very proactive efforts in cultivating acquisition activity for the near- and long-term growth objectives. No further2021 equity incentives were used in 2020 outside ofalso included the restricted stock that is a component of the annual variable incentive bonus noted above, given the large option awards made in 2017 and the smaller supplemental awards made in 2019.above. In addition, Mr. Moore received a 10,000 restricted stock award effective with his start date of June 7, 2021. See the previous discussion under “Our History Underlying Executive Compensation - Optimization and Succession (2017 and beyond)- 2021)” for additional details.

Nonqualified Deferred Compensation

Company Contributions underNicolet developed the NQDC plan have been made annually since 2017in 2016 initially to various eligible officers,accommodate voluntary contributions from employees wishing to defer income for post-retirement. The plan was developed to also accommodate the type of discretionary contributions from the Company to key executives that are common in the industry. These Company contributions were not a meaningful part of the Company’s compensation practices during the years from formation through the emergence of the Company as an established premium performer and as the region’s most effective and potent acquirer. As we looked to sustain the founders since 2019. extraordinary impact on customers, employees and shareholders, we recognized that discretionary contributions should become an increasing component of long-term compensation and succession planning.

For 2020,2021, the Committee approved Company Contributions to the NQDC plan to 1319 individuals, totaling $1.4$5.4 million, which included $375,000$2.25 million each to Messrs. Atwell and Daniels, $175,000$220,000 to Ms. Lawson and $75,000Mr. Moore, $100,000 each to Messrs. Witczak and

Hutjens, and $50,000 to Mr. Madson, all with immediate vesting. The Committee approved these awards as reasonable in light of the exceptional 2020 results, a 130% multiple applied to the annual variable incentive bonus (less than the self-imposed cap), and the strong individual contributions to succession plan progress. The Committee was intentional about the mix of the total incentives used in 2020 for each executive. As noted above under “Annual Variable Incentive Bonus,”In addition, the Committee approved that thea Company Contribution be increased for Mr. Daniels byto the add backNQDC plan, with immediate vesting, of his pandemic-based salary adjustment and$300,000 for Ms. Lawson byin May 2021. The discretionary contributions to the add backNQDC plan in 2021 for Messrs. Atwell and Daniels represent a component of her pandemic-based salary adjustmentthe succession sequencing plan developed in the 2017 year period. Messrs. Atwell and restricted stock award value,Daniels recommended to support the formBoard that Mr. Daniels become Chief Executive Officer in 2021 and that it was essential to develop the leadership team for the future beyond the founding leadership. The Board reviewed the results from the first 17 years of the organization and the platform established for the future. The Committee noted the absence of a deferred compensation requested bycomponent to compensation for the founding executives and concluded that this would be an important tool to both reward the existing leadership and to facilitate the transitions essential to sustaining and building the talent for the future. With Mr. Atwell’s transition to Executive Chairman, it was determined that a more substantial contribution to the NQDC plan in the 2021 year was necessary and appropriate for both Mr. Atwell and Mr. Daniels. As the organization matures into the current period of sustained high performance, the Board sees discretionary contributions under the NQDC plan as a more meaningfulnormal and regular component of leadership executive compensation. As the emerging leadership group beyond Mr. Daniels demonstrates the capacity to them. perform at exceptional levels, the Committee anticipates discretionary contributions on a more regular basis, consistent with industry practice.

The Company Contributions under the NQDC plan provided to the named executive officers are included in the Summary Compensation table, described under the column titled “All Other Compensation.”

We limitprovide executive officers with perquisites and other personal benefits that the Company and our Compensation Committee believe are reasonable and consistent with its overall compensation program. These perquisites include car allowances and payment of club dues for certain of our executive officers. Our Compensation Committee periodically reviews the levels and appropriateness of perquisites and other personal benefits provided to executive officers. The Committee believes that the perquisites providedand other personal benefits further the goals of the Company and are not material with respect to the overall compensation of our named executive officers. We believe that providing excessive perquisites to executive officers is inappropriate and could negatively impact the positive culture we have created over the Company's history. The named executive officers participate in Nicolet’s broad-based employee benefit plans, such as the 401(k) Plan, the Employee Stock Purchase Plan, and medical, dental, disability and life insurance coverage programs, under the same terms as other eligible employees. The Committee approved discretionary profit sharing contributions to the 401k Plan of $0.5 million in 2020,both 2021 and $1.05 million in 2019,2020, and the named executive officers, among others, were excluded from these contributions. A few perquisites, such as country club memberships, supplemental health coverage, and company automobiles or auto allowances are provided to a few select employees, which may include some of the named executive officers as well as other selected officers. We do not provide a defined benefit pension plan, post-retirement health coverage (other than certain COBRA benefits), or similar benefits for our executive officers or other employees. The benefits and perquisites provided to the named executive officers are included in the Summary Compensation table, described under the column titled “All Other Compensation.”

The Company’s stock-based compensation plans are described below. The Committee oversees the plans and grants equity awards in accordance with the plan documents to certain officers, employees and directors of the Company.

In addition to the compensation plans discussed above, the Company has a number of broad-based employee benefit plans as further described below. The Committee oversees these plans.

Generally, Section 162(m) of the Internal Revenue Code disallows aof 1986, as amended, limits the U.S. federal income tax deduction for public corporations with respectcompensation paid to remuneration in excessour Chief Executive Officer, Chief Financial Officer and certain other highly compensated executive officers (including, among others, our next three other most highly compensated executive officers as of $1 millionthe end of the calendar year) to a maximum U.S. federal income tax deduction that we may receive for annual compensation paid to any officer covered by Code Section 162(m) to $1,000,000 per officer. To the extent that the aggregate amount of any covered officer’s salary, bonus, amounts realized from option exercises and vesting of restricted stock units or other equity awards and certain other compensation amounts that are recognized as taxable income by the officer exceeds $1,000,000 in any fiscal year, we are not entitled to certain specified executive officers. For 2020, an estimated $1.5 million of compensation collectively paid to Messrs. Atwell and Daniels was not deductible due toa U.S. federal income tax deduction for the tax limitations on compensationamount over $1,000,000 in Section 162(m).that year.

In designing our executiveAlthough the Compensation Committee has not adopted a formal policy regarding tax deductibility of compensation programs and determining the compensation ofpaid to our executive officers, it continues to view the Compensation Committee considers a varietytax deductibility of factors, including the potential impact of Section 162(m); however, the Committee will not limit executive compensation as one of many factors to that which is or may be deductible under Section 162(m).considered in the context of its overall compensation philosophy. The deductibility of some types of compensation depends upon the timing of an executive officer’s vesting or exercise of previously granted rights or awards. Further, interpretations and changes in tax law and other factors beyond the Compensation Committee’s control may also affect the deductibility of compensation.

Stock Ownership Guidelines and Holding Requirements for Executive Officers

While we do not set strict targets for ownership of our stock by executive officers, we strongly encourage ownership of the Company’s stock to all employees and expect our named executive officers to set positive examples. Equity awards, when granted episodically in the form of restricted stock grants or stock option awards, carry a vesting period requiring the executive’s continued employment to fully realize value from such awards, and most typically carry a 5-year vesting schedule. Equity awards, when granted as part of the annual variable incentive bonus, typically carry a 2-year vesting schedule.

Clawback Policy

We have a clawback policy applicable to selected officers, which include, among others, all our named executive officers. Pursuant to this policy, the Committee shall in all appropriate circumstances, require reimbursement of any bonus payment (that is, any and all cash bonus payments, retention awards and/or equity incentive compensation) to a selected officer where the payment awarded was based on financial statements or other performance metrics which are later found to be materially inaccurate. We feel this clawback policy is appropriate and assists with risk mitigation throughout our Company.

Short Sale and Hedging Policy

Pursuant to our insider trading policy, Nicolet considers it improper and inappropriate for its directors, officers, employees, and consultants to engage in short-term or speculative transactions in Nicolet’s securities or in other transactions in Nicolet’s securities that may lead to inadvertent violations of insider trading laws. Hence, no director, officer, employee, or consultant is permitted to sellTherefore, directors, officers, employees, and consultants are prohibited from selling any securities of Nicolet that are not owned by such person at the time of the sale, including forward sale on purchase contracts, equity swap, collars or exchange funds, or engage in hedging transactions involving securities of Nicolet. Directors, executive officers, and specific employees are also subject to blackout periods during which they may not buy or sell shares of Nicolet common stock.

Nicolet Compensation of Named Executive Officers

The following table sets forth all compensation paid for each of the last three fiscal years ended December 31, 2020,2021, to each individual who served as our chief executive officer during 2021, each individual who served as our chief financial officer during 2021, and the next three most highly compensated executive officers serving at the end of 2020,2021, collectively our “Named Executive Officers” or “NEOs”.

The following table sets forth grants of plan-based awards to the NEOs during the year ended December 31, 2020.2021.

The following table sets forth the equity awards outstanding for each NEO as of December 31, 2020.2021.

The following table sets forth information relating to the exercise of stock options and vesting of restricted stock during the year ended December 31, 20202021 by each NEO.

The following table sets forth information regarding each NEO's account balance at December 31, 20202021 under the Company's Nonqualified Deferred Compensation Plan, including contributions and earnings credited to such account.

Employment Agreements

Employment agreements are in place with each of our named executive officers. We believe employment agreements help us recruit and retain executives with the experience, skills, knowledge and background needed to achieve our business goals and strategy.  Each of these agreements provides for certain severance and change in control benefits. The material terms of the employment agreements are summarized below.

Potential Payments Upon Termination or Change of Control

The following table shows the estimated value as of December 31, 20202021 of potential payments to the NEOs upon termination or Change of Control events.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Act and 402(u) of Regulation S-K, we are providing the following information on the relationship of the annual total compensation of Robert B. Atwell,Michael E. Daniels, our Chief Executive Officer, to that annual total compensation of our median compensated employee. The pay ratio is a reasonable estimate calculated in a manner consistent with rules promulgated by the SEC.

The compensation of our median employee for 20202021 was calculated to be $47,884.$45,240. Our CEO’s compensation, as reported in the Summary Compensation Table, was $1,782,872.$3,529,055. Therefore, our CEO to median employee ratio for 20202021 was approximately 37:78:1. This is the third year of reporting this ratio. The simple average of the reported ratios for this year plus the prior two years is a 44:1 ratio. This information is provided solely for compliance purposes. The Compensation Committee does not consider this ratio when evaluating compensation arrangements.

Environmental, Social and Governance Matters

Conclusion

Through the compensation arrangements outlined above, a significant portion of each of our named executives officers’ compensation is contingent upon the Company’s overall sustained performance.

Therefore, the realization of potential financial benefit by each executive is closely linked to our Company performance and increases in shareholder value over time. We remain committed to this philosophy of paying for performance, recognizing that the competitive market for talented executives and the episodic assignment of multi-year potential rewards tied to our longer term strategic plans may result in highly variable compensation within any particular time period.

The Compensation Committee gives careful consideration to our executive compensation programs, including each element of compensation to each executive. The Compensation Committee believes that the Nicolet compensation program is fair and reasonable in context of the Company’s peer group and our performance compared to the prior year, internal expectations, and peers. Further, the Committee also believes that the compensation program gives each executive appropriate incentive, based upon the executive’s responsibilities, achievements, and ability to contribute to our continued progress and prosperity.

Finally, the Compensation Committee believes that our compensation structure and practices encourage management to work for real innovation, business and operational improvements, and outstanding shareholder value creation over the longer term, without taking unnecessary, undue or excessive risks.

Compensation Committee Report

The Committee reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement and based upon such review and discussion, the Compensation Committee recommended to Nicolet’s Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into Nicolet’s annual report on Form 10-K for the year ended December 31, 20202021 as required by Item 402(b) of Regulation S-K.

ByThis report has been furnished by the Compensation Committee of the Board of Directors of Nicolet Bankshares, Inc.Board:

                        

                        John N. Dykema, Chair

                        Susan L. Merkatoris

                        Donald J. Long, Jr.

DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Exchange Act requires the Company’s officers and directors subject to Section 16 filing obligations, and owners of more than ten percent of its outstanding shares of common stock to file reports concerning the ownership of the Company equity securities with the SEC and the Company. The Company files the required reports on behalf of persons. During the year ended, December 31, 2020,2021, there were two (2)twenty-two (22) delinquent Form 4 transactions reported: Donald J. Long, Jr. failed to file two reportsten Form 4 filings for our non-employee directors were not reported on a timely basis regarding their board equity grant issued of 150 shares each; three Form 4 filings were not reported on a timely basis for stock option grants to three named executive officers; nine Form 4 filings for our non-employee directors were not reported on a timely basis regarding deferred compensation for the sale of shares of common stock.directors that participate in the Deferred Compensation Plan for Non-Employee Directors.

RELATED PARTY TRANSACTIONS

Nicolet has a written related party transaction policy that governs the review, approval and ratification of any transaction that would be required to be disclosed pursuant to Item 404 of the SEC’s Regulation S-K. The Audit &and Compliance Committee must approve all such transactions under the policy.

Prior to entering into such a related party transaction or an amendment thereof, the Audit and Compliance Committee must consider all of the available relevant facts and circumstances including, if applicable, benefits to Nicolet, the impact of a transaction on a director’s independence, the availability of other sources for comparable products or services, the terms of the transaction and the terms available to or from unrelated third parties or employees generally, as the case may be. No member of the Board or Audit and Compliance Committee is responsible for reviewing and approving allpermitted to participate in any review, consideration or approval of any related party transactions. In addition, they are responsible for reviewing the procedures usedtransaction with respect to identifywhich such member or any of his or her immediate family members is a related parties and anyparty.

There were no related party transactions with related parties.in 2021 except as follows:

The Company’s bank subsidiary has loan transactions in the ordinary course of business with directors and executive officers of the Company, including the companies or firms with which they are affiliated and members of their immediate families. These loans have been made on substantially the same terms, including interest rate and collateral, as those prevailing at the same time for comparable loans with unrelated persons and did not involve more than the normal risk of collectability or present other unfavorable features. At December 31, 2020,2021, the aggregate principal amount of loans outstanding to directors, executive officers, or their related interests was approximately $89$113 million, which represented 3%2% of the Company’s period end loan portfolio.