* Directors will receive the equity equivalent of the dollar amounts indicated above.

Restricted stock awards are issued under the Company’s Amended and Restated Omnibus Stock and Performance Compensation Plan (the Omnibus Plan). The shares carry voting and dividend rights. Dividends are paid quarterly prior to vesting. Shares vest in full on the first anniversary date of the awards or, if elected by the director, vest at retirement from the Board, as disclosed below. The grant date of awards is typically the day following the Annual Meeting, when the full Board approves the awards. In accordance with the Company’s stock ownership guidelines, directors are expected to retain all shares granted to them during their service as Board members and are encouraged to acquire stock in amounts consistent with their financial resources.

The Company maintains a non-employee director compensation election program to allow non-employee directors to receive their annual board member retainer fees in the form of restricted stock and provide for a separate election to defer the vesting of all restricted stock until the date of termination of service as a director. Elections must be made prior to the calendar year for which the election will apply and made annually, with the exception of the first year in which a director becomes eligible to participate, after which the election must be made within 30 days.

Summary Compensation - Directors

The table below sets forth the following compensation for each non-executive director for the fiscal year ended December 31, 2018:2019: (i) dollar value of fees earned or paid; (ii) aggregate grant date fair value of restricted stock awards; (iii) all other compensation; and (iv) dollar value of total compensation.

*If elected, includes shares received for retainer fees and/or deferred until retirement. Share figures adjusted for the 20% stock dividend that was paid on December 14, 2018.

Certain Relationships and Related Party Transactions

Some of the directors and executive officers of the Company, and members of their immediate families and firms and corporations with which they are associated, have had transactions with the Company’s subsidiary bank, including borrowings and investments in depository accounts. All such loans and investments have been made in the ordinary course of business, on substantially the same terms, including interest rates charged or paid and collateral required, as those prevailing at the same time for comparable transactions with unaffiliated persons, and did not involve more than the normal risk of collectability or present other unfavorable features.

As provided by the Audit Committee’s charter, the Audit Committee must review and approve all transactions between the Company and any related person that are required to be disclosed pursuant to Item 404 of Regulation S-K. “Related person” and “transaction” shall have the meanings given to such terms in Item 404 of Regulation S-K, as amended from time to time. In determining whether to approve or ratify a particular transaction, the Audit Committee will take into account any factors it deems relevant.

Report of the Audit Committee

The Audit Committee assists the Board in providing oversight of the systems and procedures relating to the integrity of the Company’s financial statements, the Company’s financial reporting process, its systems of internal accounting and financial controls, the internal audit process, risk management, the annual independent audit process of the Company’s annual financial statements, the Company’s compliance with legal and regulatory requirements, and the qualification and independence of the Company’s independent registered public accounting firm. The Audit Committee reviews with management the Company’s major financial risk exposures and the steps management has taken to monitor, mitigate, and control such exposures. Management has the responsibility for the implementation of these activities. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019, including a discussion of the quality and the acceptability of the Company’s financial reporting and controls.

The Company’s independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. The Committee reviewed with the independent registered public accounting firm the firm’s judgments as to the quality and the acceptability of the Company’s financial reporting and such other matters as are required to be discussed with the Committee under

auditing standards of the Public Company Accounting Oversight Board (PCAOB) (United States), including the matters required to be discussed by the Statement on Auditing Standards No. 1301 (Communication with Audit Committees). In addition, the Committee has discussed with the independent registered public accounting firm the firm’s independence, including the impact of non-audit-related services provided to the Company, and has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accounting firm’s communications with the audit committee concerning independence.

The Committee also discussed with the Company’s internal auditors and the independent registered public accounting firm in advance the overall scope and plans for their respective audits. The Committee meets regularly with the internal auditor and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.

In reliance on the reviews and discussions referred to above, the Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20182019 for filing with the SEC.

Ralph W. Clermont, Chairman

Robert A. Ebel

Randall L. Schilling

II. ADVISORY VOTE ON EXECUTIVE COMPENSATION - PROPOSAL 2

The Board is committed to excellence in governance and recognizes that executive compensation is an important matter for our shareholders. The core of the Company’s executive compensation philosophy and practice continues to be to pay for performance. The Company’s executive officers are compensated in a manner consistent with the Company’s strategy, competitive practice, sound corporate governance principles, and shareholder interests and concerns. The Company believes its compensation program is strongly aligned with the long-term interests of shareholders, as exhibited in the Compensation Discussion and Analysis section of this Proxy Statement, which provides additional details on executive compensation, compensation philosophy and objectives, and the 20182019 compensation of the named executive officers. Shareholders are asked to vote on the following resolution:

“RESOLVED, that the shareholders approve the compensation paid to the Company’s named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis, compensation tables and any related material contained in this Proxy Statement.”

The above-referenced disclosures are included in this Proxy Statement under the Executive Compensation and Related Information section.

The Board urges shareholders to endorse the compensation program for our executive officers by voting FOR the above resolution. As discussed in the Compensation Discussion and Analysis contained in this Proxy Statement, the Compensation Committee of the Board believes that the Company’s executive compensation is reasonable and appropriate, is justified by the performance of the Company, and is the result of a carefully considered approach.

As an advisory vote, this proposal is non-binding and will not overrule any decision by the Board or require the Board to take any action. However, the Board and the Compensation Committee value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions for the named executive officers.

The Company’s Board recommends a vote FOR the Company’s executive compensation program as described in the Compensation Discussion and Analysis, the compensation tables and otherwise in this Proxy Statement.

III. EXECUTIVE COMPENSATION AND RELATED INFORMATION

Compensation Discussion and Analysis

Overview of Compensation Philosophy and Objectives

The Compensation Committee believes that the skill and dedication of executive officers and other management personnel are critical factors affecting the Company’s long-term success in meeting its objectives and fostering growth and profitability. In support of this, compensation programs have been designed to attract and retain a high level of talented leadership, reward performance in accordance with results, provide an incentive for future performance and align Company executives’ long-term interests with those of the shareholders.

The Compensation Discussion and Analysis (CD&A) describes, in detail, the Company’s executive compensation philosophy and programs provided to named executive officers as they are determined under SEC rules. For 2018,2019, named executive officers, as determined and designated by the Company, included the following individuals:

Mr. Mathias served as President of Cass Commercial Bank until July 2, 2018, when he assumed his current non-executive role as Vice-Chairman of Cass Commercial Bank. Dwight D. Erdbruegger was appointed President of the Bank effective July 2, 2018.

The overall compensation program is designed to result in compensation that is commensurate with Company and individual performance. The Company believes that high levels of performance should yield compensation that is competitive externally and equitable internally. The Compensation Committee periodically assesses the Company’s compensation programs to confirm that incentives are in place to retain key management talent, reward attainment of longer term objectives, and assure that these programs do not encourage risky behavior on the part of individuals or the executive management team.

In order to assure that executive compensation is both competitive and appropriate, the Compensation Committee reviews executive compensation in its entirety before determining any adjustments to specific compensation components. In this process, the Compensation Committee primarily considers the value of cash and incentive equity compensation. Benefits, such as perquisites, and the calculated values of any retirement benefits provided under the Company’s defined benefit, defined contribution and supplemental retirement plans are also considered, though these elements are given less weight. Gains from prior equity incentive awards are also given less weight, as these were awards earned and granted based on prior performance.

The CEO is eligible to participate in all Company benefit programs, including those available to other executive officers, and receives no additional perquisites beyond those available to other executive officers except for a club membership allowance which is also provided to the Vice-Chairman of Cass Commercial Bank. In 2018, the Board recommended and approved a special one-time payment of club initiation dues for the CEO.allowance.

For fiscal 2018,2019, the components of total direct compensation (TDC) for the named executive officers and their purposes were as follows:

The chart that follows shows the percentages of each component of TDC paid to the CEO and the average percentages of each of the TDC components paid to the other named executive officers for fiscal 2018:2019:

Based on the market data provided by Pay Governance, as part of the annual review of executive compensation, the Committee believes that the composition of TDC is in alignment with companies of a similar size and in similar industries as Cass. Over 60% of the CEO’s TDC is in the form of performance-based profit sharing, to emphasize the

importance of annual profitability, and long-term incentive compensation (LTIC), to emphasize the importance of long-term strength, profitability and growth in the value of the Company’s common stock.

In its determination of the level, composition and administration of executive compensation, the Committee understands the importance of aligning executive compensation with the performance of the Company, the long-term interests of its shareholders and in promoting good corporate governance. It therefore employs the following best practices:

All share and per share figures included in this CD&A have been adjusted to give effect to the 10% stock dividend that occurred on December 15, 2017 and the 20% stock dividend that was paid on December 14, 2018. Figures marked with “*” are non-GAAP figures.

Committee Review of Executive Compensation

For the past several years the Committee has retained Pay Governance as part of its annual review of executive compensation. Pay Governance provides the Committee with external market data on the executive compensation of companies of a similar size and in similar industries as Cass. For the review of executive compensation for 2018,2019, Pay Governance provided data that consisted of annual salary, short-term incentives, long-term incentives, and pay mix. Data was obtained from the following sources:

It is the Company’s philosophy that performance, rather than benchmarking, drive executive compensation. Therefore, in reviewing external data, the Committee does not engage in benchmarking to establish compensation levels or make specific compensation decisions. The Committee feels that this is appropriate due to the Company’s unique structure, needs, differences in the size of surveyed companies, and the lack of sufficient appropriate matches to provide statistical relevance. Instead, the Committee reviews survey data only to gain a better understanding of general compensation practices. In establishing executive compensation, the Committee takes into account a number of other considerations, including individual and Company performance, experience, and scope of responsibilities of the executive officers, desire to retain key personnel and the Company’s objective to maintain internal compensation equity. Pay Governance’s overall conclusion confirmed the Committee’s belief that 20182019 compensation levels were appropriate for the Company.

The Compensation Committee determines base salary and incentive compensation adjustments for the CEO and other executive officers, subject to Board approval.  In evaluating compensation adjustments for the executive officers other than the CEO, the Compensation Committee gives consideration to the CEO’s recommendations concerning each executive’s performance and related salary and incentive stock levels. Cash bonuses for the CEO and executive officers are allocated in accordance with the Company’s board-approved profit sharing program, as further described in Profit Sharing Bonus below.   

Finally, in arriving at its decisions on executive compensation for fiscal 2018,2019, the Compensation Committee took into account the shareholder advisory vote approving executive compensation at the 20182019 Annual Meeting of Shareholders and continued to apply the same overall principles in determining the amounts and types of executive compensation.

The Committee has determined that the consultants and advisers retained or consulted by the Committee are well qualified, independent and raise no conflict of interest concerns. Pay Governance does not provide any services to the Company other than those services for which it was retained by the Committee.

Historical CEO Pay and Performance

The Committee believes that earnings per share (EPS) is the primary performance measurement to reflect the success of the Company and the performance of executives. As such, this measure is one of the primary factors in the determination of the performance-based awards granted under the LTIC program. The following graph reflects the change in EPS over the last five fiscal years and how it compares to the TDC paid to the CEO.

Figures marked with “*” are non-GAAP figures.

Adjusted EPS for fiscal 2017 represents EPS of $1.80* and excludes the one-time adjustment to tax expense made in fiscal 2017 as a result of the Tax Cuts and Jobs Act (TCJA) enacted in December 2017. As more fully described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, the passage of TCJA resulted in a one-time, non-cash charge to income taxes of $1.8 million in 2017. Prior to the one-time charge earnings stood at $26.8 million*, or $1.80 per share*, and after the one-time charge. GAAP earnings were $25.0 million, or $1.68 per share.

Prior to 2017, the LTIC awards granted each year to the CEO and other named executive officers were based on a performance look-back period, as explained in the Long-Term Incentive Compensation section below. Therefore, there is a lag on the impact performance had on the LTIC included in the TDC.

In 2017 and 2018,through 2019, in connection with the reworking of the Company’s LTIC program in 2017, the LTIC grants were based on a three-year prospective performance period. The LTIC included in the 2017 and 2018through 2019 TDC in the graph above reflects time-based restricted stock that will cliff vest in three years and performance-based restricted stock that will not be earned until 2020, 2021 and 2021,2022, respectively, depending on the Company’s achievement of EPS and ROE performance targets for the prospective three-year performance period. The performance-based portion of the LTIC may not be earned at all should threshold performance targets not be met.

Executive Summary of Results

The Company posted record revenue of $148.3$157.2 million in fiscal 2018,2019, up 10%6% from the prior year, due primarily to strong growth in fee income. The growth was broad-based, across markets,income from a growing customer base and produced by new clients, increased activity from existing accounts and a strong economy.fee-generating services. There was also strong growth ofin net investment income, which was up 11%7% from the previous year, due to an increase in dollars paidfunding balances generated by processing clients and higher interest rates. Earningsdeposits generated by the Company’s banking subsidiary. Net income stood at $30.3$30.4 million, or $2.03and diluted EPS was $2.07 per share, a 21%2% increase over 2017.

The passage of the TCJA in 2017 impacted the Company in multiple ways. It triggered a $1.8 million non-cash charge to fourth quarter 2017 earnings and resulted in an effective tax rate of 17% in 2018, compared to 23% in 2017. The lower tax rate allowed the Company to invest in staff, systems and infrastructure while also increasing returns to shareholders through increased cash and stock dividends as well as share repurchases. Cash and stock dividends increased 50% over the past 16 months and the Company has returned $38 million to shareholders over the past five years through stock repurchases.2018.

The Company continues to operate profitably, posting a 1.9%1.7% return on average assets and 13.6%12.9% return on average equity notwithstanding the low interest rate environment and strong liquidity and capital positions. For example, year-end Tier 1 capital-to-assets ratio was 13.9%13.2%, which significantly exceeded that of peers and all regulatory requirements.

Management believes that the Company enters 2019 in a strong position to capitalize on the opportunities presented by an improving economy, its expanded customer base and through new and improved product offerings. The Company’s solid financial position combined with the significant amount of cash generated from operations will allow for investment in strategic opportunities when they become available and return of capital to shareholders. The Company continues to invest in the technology, processes and people required to support its multi-national customer base. The Company continues to expand its product offerings with the banking subsidiary now providing equipment lease financing and becoming a member of the VISA credit card network in 2019. In fiscal 2018, the third quarter of 2019, the Company acquired the Gyve on-line generosity platform, which provides churches and non-profit organizations a digital generosity platform to cultivate giving among members and benefactors and not only expands the Company’s customer base, but provides a new and beneficial product to the Bank’s faith-based customers.

The Company continued to expand its international operations in Singapore and Basingstoke, United Kingdom along with existing North American, South American, and European business entities in order to give customersproduce a more complete and comprehensive solutionstrong return for its telecommunication lifecycle management, global freight bill processing, audit, paymentshareholders, delivering more than $23 million in dividend payments and information needs. The technology investments made in 2017 and 2018, which were required to support this global journey, have also positioned the Company to explore the broadening of its target markets in 2019 and beyond.share repurchases.

Based on the Company’s performance and outlook for the future, the Board increased cash dividends nearly 20% in 2018 by raising the quarterly cash dividend to $.26 and declaring a 20% stock dividend.

Elements of Compensation

The key elements of the Company’s executive compensation program include base salary, annual cash bonus awards distributed pursuant to the Company’s profit sharing program, and LTIC equity awards. A description of these elements and the Company’s benefit plans and perquisites is included below.

Base Salary

Salaries are established for executive officers by balancing both internal and external factors. Internal equity is determined through comparison with other executives within the Company, taking into account the scope of responsibilities, performance, skills, and experience. Similarly, the Committee considers external data to validate competitiveness and reasonableness in the marketplace. Considerable weight is given to performance of the individual and his or her associated operating unit, taking into account factors such as revenue growth, cost efficiencies,

technological advancements, and leadership. Specific individualized targets and quantitative performance measurements are not utilized. Base salaries are designed to attract and retain high levels of expertise and talent. The Compensation Committee reviews salaries of the CEO and other executive officers at the beginning of each fiscal year. The Compensation Committee determines any adjustments to the CEO’s salary and gives consideration to the CEO’s recommendation regarding adjustment to executive officer salaries, based on the criteria referenced above.

The Committee believes that base salary increases for 20182019 were reflective of the performance of individuals and individual operating units, increased corporate earnings, overall corporate growth over the past several years, and competitive forces projected by the external market. Base salary levels were adjusted, effective April 2018,2019, for the named executive officers as follows: Mr. Brunngraber, $640,000,$670,000, up from $615,000;$640,000; Mr. Appelbaum, $291,000, up from $282,000; Mr. Langfitt, $265,000, up from $256,000; Mr. Mathias, $301,000, up from $293,000;$291,000; Mr. Campbell $252,000, up from $238,000; Mr. Cavellier, $262,000, up from $250,000; Mr. Erdbruegger, $276,000, up from $270,000; and Mr. Campbell $238,000,Langfitt, $273,000, up from $227,000. In 2018 the Company hired Mr. Cavellier to serve in a newly created position of Executive Vice-President, CIO at a starting base salary of $250,000.$265,000.

Profit Sharing Bonus

The Company is unique in having a company-wide cash-based profit sharing program which has been in existence since 1968. These cash bonuses are paid to all eligible employees of the Company and its subsidiaries, according to the profit sharing program approved by the Board, pursuant to the Company’s Omnibus Plan. The purpose of this program is to facilitate the Company’s continued growth and success by providing rewards that are commensurate with achievement, thereby creating an incentive for superior performance and improved results for shareholders. The profit sharing program is funded and paid semi-annually based on a target of 22.5% of the Company’s profits after taxes. As such, all cash bonuses paid by the Company are capped and are available only when, and to the extent that, the Company is profitable overall. Prior to 2018 the program was funded based on a target of 12.5% of profits before taxes, and in April 2018 the Compensation Committee recommended, and the Board approved, changing the calculation of the funds available for distribution to 22.5% of NIAT.  This change was recommended due to the passage of the TCJA in 2017 and the Company’s decision to retain the level of profits shared with its employees while still providing an increased return to shareholders.

Total profit sharing funds are divided into pools to be distributed among various employee groups, including the CEO, executives, exempt and non-exempt staff.

In January 2018, the Compensation Committee recommended, and the Board approved, revising the percentage of total funds that theThe CEO wasis eligible to receive from a flat 4% of the total profit sharing funds available for distribution during the year to a percentage ranging from 3.5% to 5.5% of the total profit sharing funds available, with the actual amount paid, based on a percentage change in NIAT from the prior year of -20% to +20% or greater, respectively. This revision did not impact therespectively, subject to a maximum allowedallowable distribution provided to the CEO of 70% of his base salary. The Compensation Committee feltbelieves this change better alignedformula aligns compensation received by the CEO and Company performance by providing a higher payout for increased profits, based on both an increase in the total profit sharing pool and an increase in the percentage of the pool received by the CEO, and a much lower payout for decreased profits, based on both a decrease in the total profit sharing pool and a decrease in the percentage of the pool received by the CEO. The Committee believes that the allocation of profit sharing funds to the CEO maintains internal equity and results in a competitive pay package.

The portion of the totalexecutive officer profit sharing pool allocated to payouts to the other named executive officers (Executive Officer Profit Sharing Pool) was also revised in 2018 by the Compensation Committee and approved by the Board. Prior to 2018, the Executive Officer Profit Sharing Pool ranged from 9% to 16% of the total profit sharing funds available to exempt staff based on a change in the NIAT of -20% to +20% or greater, respectively. In 2018 the Executive Officer Profit Sharing Pool rangedranges from 6% to 10% of the total profit sharing funds available for distribution based on a change in NIAT of -20% to +20% from the prior year. The changes made in 2018 also established a means of adjusting the percentage of the Executive Officer Profit Sharing Pool for changes in the composition of executive officers, such as when additions are made to the group. The Compensation Committee felt this change better aligned the profit sharing awards to other named executive officers with the CEO’s and eliminated the impact the distribution between exempt and non-exempt staff had on the funds available to the other executive officers. While the size of the Executive Officer Profit Sharing Poolexecutive officer profit sharing pool is dependent on the overall size of the pool and change in NIAT, the individual distributions have historically been, and for fiscal 20182019 were, based on a subjective assessment of each executive’s performance, taking into consideration factors such as performance of each individual and each executive’s associated operating unit. When conducting his evaluation of an executive’s performance, the CEO considers factors such as revenue growth, cost efficiencies and technological advancements within the executive’s operating unit, and leadership skills and other accomplishments during the fiscal year. Consideration is also given to profit sharing payments that an individual has received in the past as well as those received by other named executive officers, in order to help achieve internal compensation equity.

The percentages of the total profit sharing pool available to the CEO and other named executive officers have been set to result in payments that generally correlate to targeted salary percentages for the CEO and other named executive officers. The target percentage of base salary to be received by the CEO at target change in NIAT was 45% and could range from 0% to a maximum of 70%. The target percentage of salary at target change in NIAT for the other executive

officers was 40%, with a range of 0% to a maximum of 45% in the case of Messrs. Langfitt, Campbell and CampbellCavellier and 0% to a maximum of 50% for Messrs. Appelbaum Mathias and Cavellier.Erdbruegger. The targeted percentage salary ranges for the CEO and other named executive officers have, for the most part, been in place since the Company’s profit sharing program was established. These ranges were established based on the following factors: (i) the goal to maintain internal equity that reflects the responsibilities of the position relative to other positions within the Company; (ii) the objective to provide incentive compensation that is adequate to attract and retain talent,

validated through the Company’s recruitment efforts and periodic review of general marketplace survey data; and (iii) the desire to minimize overly risky compensation practices in line with the Company’s conservative risk profile.

The target salary percentage payouts and the distributions made to the CEO and other named executive officers are regularly reviewed by the Compensation Committee in accordance with the factors noted above. The Compensation Committee has determined that fiscal 20182019 profit sharing payments resulting from the methodology described above fall in line with the Company’s compensation philosophies and objectives and reflect the Company’s emphasis on performance-based compensation.

Fiscal 20182019 bonuses were paid in August 20182019 and February 2019,2020, respectively. The increase in NIAT for 20182019 compared to 20172018 was 21%0.5%, resulting in the CEO receiving the maximuma distribution of 5.5%4.5% of the profit sharing pool for the year, with the payment made in August 20182019 based on the funds available through June 30, 20182019 and the balance paid in February 20192020 based on the funds available for the year ended December 31, 2018.2019. The total profit sharing pool for the year ended December 31, 2018 were $6,810,4002019 was $6,841,200 and resulted in the CEO receiving a total 20182019 profit sharing payment of $374,600.$309,400.  

The total amount of the Executive Officer Profit Sharing Poolexecutive officer profit sharing pool was also based on a 21%0.5% increase in NIAT for the year ended December 31, 20182019 over the year ended December 31, 20172018 and equaled 10%8% of the total profit sharing pool, the maximum distribution amount for the executive officers other than the CEO.pool. A payment was made in August 20182019 based on the results through June 30, 2018,2019, with the balance paid in February 20192020 based on the results for the year ended December 31, 2018.2019. As noted above, the amount of the Executive Officer Profit Sharing Poolexecutive officer profit sharing pool allocated to individual executive officers, other than the CEO, was primarily a result of the change in NIAT, individual distributions were ultimately based on a performance evaluation, conducted by the CEO, considering internal equity among the executive officers and other individual performance factors, including:

Payments made to Messrs. Appelbaum, Campbell and Langfitt and Mathias increaseddecreased an average of 37%20% in 20182019 as compared to 2017,2018, due primarily to the 21% increase in NIAT in 2019 compared to 2018 of 0.5% versus an increase of 21% in 2018 compared to 2017.  This change in NIAT from the corresponding increaseprior year for 2019 versus 2018 also resulted in the total profit sharing pool anda decrease in payments made to the individual performanceCEO of these named executive officers and their contributions to the record profits produced in 2018.17%. Mr. Cavellier joined the company on February 12, 2018 and his payment for 2018 was prorated for the time period he was employed, representsalthough his strong performancepayment in 2019 still decreased slightly from 2018.  Mr. Erdbruegger joined the short period of time he has been with the Company working to streamline technology operationscompany on July 2, 2018 and establishingwas not a strategic plannamed executive officer until 2019.  Profit sharing awards for future strength and growth. Payments made to the CEO increased 61%, also primarily due to the 21% increase in the Company’s profits and corresponding increase in the total profit sharing pool. This award, which2019 represented 59%46% of base pay was abovefor the targetCEO and an average of 45%, but below36% of base pay for the 70% maximum allowed under the program.other named executive officers. 

Long-Term Incentive Compensation

LTIC is awarded to various members of the Company's management team, including all named executive officers, in accordance with the Company’s Omnibus Plan. The objectives of the Omnibus Plan are to provide an incentive which aligns executive officers’ interests with those of shareholders, assist in recruiting, encourage retention, and reward executive officers for the Company’s success.

LTIC awards consist of 40% time-based restricted stock or restricted stock units (RSUs) and 60% performance-based restricted stock. The Committee believes that time-based awards reinforce the Company’s long-term objectives, serve as a retention

incentive and reward the appreciation of the Company’s common stock price. The Committee believes that performance-based restricted shares incentivize the named executive officers to meet or exceed the Company’s long-term ROE and EPS targets. The LTIC program contains a retirement provision, which allows participants age 65 or older, with at least five years of service, to continue to vest in previously awarded grants after retirement. Due to this provision, and to delay the early taxation of the time-based restricted stock, the Company allows participants who are age 62 or older, with five or more years of service, to elect to receive RSUs in lieu of the time-based restricted stock.

The time-based awards cliff vest three years from the date of grant, and the performance-based awards cliff vest three years from the grant date with the amount earned based on EPS and ROE achievements over a three-year performance period to reinforce a longer-term commitment to sustained growth and profitability. The ultimate number of performance-based shares earned will range from 0% to 150% of the target award based on the Company’s achievement of EPS and ROE performance goals.

The value of target LTIC awards was set at 125% of base salary for the CEO and 70% of base salary for the other named executive officers. The target values were based, in part, on market data provided by Pay Governance and also considered historical grant levels, overall TDC targets and the Company’s desire to incentivize performance. The number of shares granted to an executive officer is determined by dividing the officer’s target LTIC award dollar value by the fair market value of the Company’s common stock using the closing stock price as reported on the Nasdaq on the grant date.

The Committee selected growth of EPS and average ROE as the basis for awarding performance-based restricted stock because these are two key measurements used by the Company to measure the long-term growth and strength of the Company. The target levels of performance for each measurement were established based on the on-going performance level that is expected by the Board, with the threshold representing the minimum acceptable level to earn any additional compensation and the maximum as the level of performance that would be considered an exceptional achievement. These pre-established targets are scheduled for a comprehensive review at least every three years and may be reviewed and adjusted earlier if current business conditions dictate a review is needed.

The performance goals for the 20182019 grants are as follows:

The EPS growth goal, as shown in the table above, represents a compounding annual growth rate over a base year EPS, which is the year preceding the beginning of the three-year performance period. The EPS performance goals established for each three-year performance period will be presented as a dollar value based on these EPS growth percentages. The ROE goal presented in the table above will be based on the average ROE over the three-year performance period.

To provide an equal balance between profitability and growth, each factor will be weighted 50% to determine the total percentage of performance-based restricted stock earned. For each factor, target performance would result in 100%

being earned related to that factor, performance at threshold would result in 50% being earned and maximum or higher performance would result in 150% being earned. Any performance below threshold would result in 0% earned related to that performance factor. Vesting percentages for performance that falls between threshold and target or target and maximum will be prorated between the respective vesting percentages. The percentage earned for each factor will then be multiplied by the 50% weighting and added together to determine the total percentage earned. The number of shares ultimately earned will then be determined by multiplying the number of shares granted at the beginning of the performance period by the total percentage earned, rounded to the nearest whole share.

Achievement of performance goals for performance-based restricted stock shall be determined based on generally accepted accounting principles and may be adjusted for extraordinary items as determined by the Company’s Board. Extraordinary items shall mean unusual and/or non-recurring items, including but not limited to: restructuring or restructuring-related

charges, gains or losses attributable to the disposition of a business or major asset, resolution and/or settlement of litigation and other legal proceedings or any other such income or expense related item that the Board has determined to be of an unusual or extraordinary nature and not under the reasonable control of the Company’s management.

The terms of the LTIC awards are set forth in a restricted stock or RSU award agreement entered into with each executive officer at the time of grant. Time-based restricted stock carries voting and dividend rights and cliff vests on the three-year anniversary of the grant date. Time-based RSUs are settled in shares of common stock on the three-year anniversary of the grant date, have no voting rights and dividends accumulate over the restriction period and will be paid upon vesting. In the event of disability or death of the named executive officer, time-based restricted stock and RSU awards vest immediately and performance-based restricted stock awards vest under the original terms of the agreement. In the event of change in control, and subsequent termination of service of the named executive officer, all restricted stock awards vest immediately with performance-based restricted stock awards vesting at the target performance level. LTIC awards are not re-priced, in accordance with the Company’s long-standing practice.

The Company does not allow the grant of awards to be timed with the release of material non-public information such that it would have an effect on the exercise price that would benefit the executive. The dollar value of LTIC awards granted to named executive officers and other eligible participants in 20182019 were approved by independent Board members. Generally, this occurs at the January Board meeting and the grant date is the date the annual financial results are released to the public.

20182019 LTIC Awards

With the exception of Mr. Cavellier, the 2018The 2019 awards were granted on February 1, 2018January 31, 2019 and were valued using the closing stock price as reported on the Nasdaq on the grant date of $48.67. Mr. Cavellier’s grants were made on his date of hire, February 12, 2018, with a grant date value of $48.02.$49.09. The number of target shares or units granted to each named executive officer is as follows:

The following performance targets were established for the three-year performance period from January 1, 20182019 to December 31, 2020:2021:

In January 2018, the Board reviewed the impact resulting from the one-time charge to earnings made for fiscal year-ended December 31, 2017 due to the passing of the TCJA of 2017. The Board decided that this one-time charge to earnings should be considered an extraordinary item and excluded from both the EPS and average ROE calculations for any performance periods that covered the 2017 fiscal year. This one-time charge was therefore excluded when setting the performance targets for EPS, reflected in the table above, and will be excluded when determining the performance results for both EPS and average ROE related to the grants made in 2017 covering the performance period January 1, 2017 to December 31, 2019 and vesting in January 2020.

The LTIC program contains a retirement provision, which allows participants age 65 or older, with at least five years of service, to continue to vest in previously awarded grants after retirement. Due to this provision, and to delay the early taxation of the time-based restricted stock, the Company allows participants who are age 62 or older, with five or more years of service, to elect to receive RSUs in lieu of the time-based restricted stock. Mr. Mathias elected RSU’s in lieu of the time-based restricted shares granted in February 2018.

Clawback Policy

The Company maintains a clawback policy that allows the Compensation Committee to rescind, revoke, adjust, or otherwise modify any awards granted under the Omnibus Plan that would have been lesser if calculated based on the restated results. The rescission, revocation, adjustment or modification of awards is at the sole discretion of the Compensation Committee and will be made consistently for all recipients in the plan for the restatement year, whether or not the recipient participated in conduct which led to the restatement.

Restrictions on Hedging

The Company’s restrictions on hedging common stock of the Company is incorporated within the Insider Trading Policy, which restricts directors, executive officers and other senior level employees who have access to material nonpublic information from engaging in short-term transactions involving the Company’s common stock. This includes short sales, purchasing on margin, or engaging in any transactions to hedge or offset any decrease in the market value of the Company’s common stock at any time.  In addition, pursuant to the Company’s stock ownership guidelines, no executive officer may sell shares of the Company’s common stock without prior approval of the CEO and CFO and in the case of the CEO approval of the Lead Director of the Company’s Board of Directors is required.

401(k) Defined Contribution Plan

The Company provides retirement benefits to eligible employees, including named executive officers, under the Cass Information Systems, Inc. 401(k) Plan. Eligible employees may enter the plan at the first of the month following one month of service. Employees may voluntarily defer the maximum level allowed by the Internal Revenue Service (IRS), which was $18,500$19,000 for 2018,2019, plus an additional $6,000 catch-up contribution for employees age 50 or older. The Company matches 50% of the first 3% of employee contributions, subject to IRS limitations. Beginning January 1, 2017 for all employees that are eligible to participate in the Cass Information Systems, Inc. 401(k) Plan but are not eligible to participate in the Company’s defined benefit retirement plan, as described below, the Company provides a 3% contribution to the employee’s 401(k) and matches 50% of the first 6% of employee contributions, subject to IRS limitations. All employee contributions vest immediately. Company contributions vest for each employee on the employee’s third anniversary of employment with the Company.

Defined Benefit Retirement Plans

Retirement Plan for Employees of Cass Information Systems, Inc.

The Company provides a noncontributory defined benefit retirement plan to eligible employees, including named executive officers, under the Retirement Plan for Employees of Cass Information Systems, Inc. Effective December 31, 2016 this plan was closed to all new participants, including those named executive officers hired in 2018. Upon retirement, participants in this tax qualified defined benefit plan will begin to receive monthly payments equal to 1/12 of the sum of: (i) 0.9% of final average earnings multiplied by the number of years of service, plus (ii) 0.5% of final average earnings in excess of covered compensation multiplied by years of service.

Final average earnings is defined as the average annual total compensation for the five consecutive years of highest earnings during the last 10 years of employment. Covered compensation is defined as the average of the maximum social security taxable wage bases in effect for each calendar year during the 35-year period, ending with the year in which retirement age is attained under the Social Security Act. Earnings covered by the plan equal W-2 earnings, excluding stock based compensation and other excludable fringe benefits and including any amounts deferred under the Company’s 401(k) plan and Section 125 plan, up to the maximum IRS limit of $275,000$280,000 in 2018.2019. Service for

benefit accrual purposes is the period beginning on the date of participation in the plan and ending on the severance date.

Normal retirement age under the plan is 65 with five years of vesting service. Early retirement eligibility is age 55 with five years of vesting service. Benefits for early retirement under the defined benefit pension plan would be calculated under the formula described above based on final average earnings and years of service as of the date of retirement, reduced by (i) 5/9 of 1% for each month by which the early retirement date or the first day of the month coinciding with or next following the 60^th birthday, whichever is later, precedes the normal retirement date, and (ii) 5/18 of 1% for each month, if any, by which the early retirement date precedes the first day of the month coinciding with or next following the 60^th birthday. Postponed retirement benefits are an amount equal to the greater of (i) the normal retirement benefit determined in accordance with the above formula using service and final average earnings through the postponed retirement date, or (ii) the actuarial equivalent of the normal

retirement benefit on the postponed retirement date. The normal form of benefit is a straight-life annuity with 120 months guaranteed.

Supplementary Executive Retirement Program

The Company’s benefits program also provides for the Cass Information Systems, Inc. Supplemental Executive Retirement Plan (the SERP). The SERP was designed to restore retirement benefits to key executives whose benefits are limited by the IRS under the Company’s qualified plan.

Upon retirement, participants in the SERP will receive monthly payments equal to 1/12 of 70% of the final average earnings, reduced proportionately for length of service less than 25 years. Such amount is further reduced by the participant’s: (i) qualified retirement plan benefit; (ii) primary social security benefit; and (iii) 401(k) hypothetical annuity.

Final average earnings, normal and early retirement age, years of service, and normal form of payment are the same as under the Retirement Plan for Employees of Cass Information Systems, Inc., as described above.

Early retirement benefits under the SERP are calculated to be an annual amount equal to 70% of the final average earnings multiplied by the number of full years of service divided by 25% (not to exceed 100%), less the sum of the defined pension plan benefit, primary social security benefit, and 401(k) hypothetical annuity, reduced by 1/180 for each of the first 60 calendar months and 1/360 for each of the next 60 calendar months by which commencement of benefits precedes normal retirement date. Benefits are not increased if payment of benefits commences after the normal retirement date.

Employees are generally not eligible for benefits under the SERP if they leave the Company prior to reaching age 55, and they receive a significant increase in benefits if they remain with the Company until age 65; therefore, the Compensation Committee believes that the SERP is an effective executive retention tool.

Perquisites and Other Benefits

The Company provides certain executive officers with perquisites that the Compensation Committee believes are reasonable and competitive based on the Compensation Committee’s knowledge of other companies with which the Company competes for talent. For executive officers that joined the company prior to 2018, these perquisites included an automobile allowance and where deemed appropriate,for the CEO a club membership allowance. Also, in 2018 the Company paid a one-time club initiation fee for Mr. Brunngraber. Historically, the Company has not benchmarked or set targets for this compensation component. The perquisites’ value to the executive, as well as the incremental cost to the Company, is considered when establishing compensation levels; however, the value of this component of compensation is modest and has not been given significant weight by the Compensation Committee when establishing overall levels of executive compensation. Executive officers are eligible to receive the same health, vision, dental, disability, and life insurance benefits as are available to all other full-time employees of the Company and its subsidiaries.

Post-Employment Payments

Named executive officers do not have employment agreements, nor are there any provisions for payments following or in connection with any termination or change-in-control, other than for provisions that allow for SERP benefits, stock appreciation rights (SARs), and restricted stock or RSU awards to vest and/or become fully exercisable upon a change in control and subsequent termination of service, the continuation of vesting of LTIC awards allowed after retirement for those participants with five or more years of service or in some circumstances, upon disability, in accordance with their respective plans. The equity compensation termination benefits provided to the named executive officers upon retirement do not discriminate in scope, terms or operation in favor of executive officers compared to the benefits offered to all other plan participants.

The value of the SARs, restricted stock or RSU awards that would continue to vest or be exercisable, in the case of SARs, are reflected in the table Outstanding Equity Awards at Fiscal Year-End provided later in this Proxy Statement. These amounts, together with the retirement plan and SERP benefits disclosed in the Pension Benefits table of this Proxy Statement, represent the value of payments a named executive officer would have received if his employment would have terminated on the last day of the fiscal 2018,2019, due to retirement, resignation, death or disability, or following a change in control. Mr Cavellier isand Mr. Erdbruegger are not yet eligible for the vesting of LTIC awards after retirement, as he doesthey have not meetmet the five year service requirement.

Federal Income Tax Deductibility Limitations

While the Compensation Committee takes into consideration the tax consequences to employees and the Company when considering types of awards and other compensation granted to executives and directors, the accounting and tax treatment of compensation generally has not been a factor in determining the amount of compensation for ourthe named executive officers.

The Compensation Committee has historically considered the potential impactCommittee’s primary objective is to provide compensation programs to attract and retain a high level of Section 162(m)talented leadership, reward performance in accordance with results, provide an incentive for future performance and align Company executives’ long-term interests with those of the Internal Revenue Code of 1986, as amended. Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1 million in any taxable year for the CEO and the other senior executive officers, other than compensation that is performance-based under a plan that is approved by the shareholders of the Company and that meets certain other technical requirements. The Compensation Committee has determined that for 2018, Section 162(m) will not prevent the Company from receiving a tax deduction for any of the compensation paid to executive officers. Mr. Brunngraber is the only named executive officer whose compensation exceeds $1 million.

The TCJA enacted in December 2017 eliminated the exclusion of performance-based compensation from the Section 162(m) deductibility limit, and therefore alldesigns programs to achieve those objectives, even if such compensation paidis potentially not deductible to executives covered under Section 162(m) that exceeds $1 million in any taxable year will not be deductiblethe Company for tax purposes. While the impact of this change will continue to be evaluated, the Committee has not made any changes to the compensation programs as a result of the TCJA enactment. Under the transition rule of the TCJA, qualified performance-based compensation provided under a written binding contract prior to November 2, 2017 may still be excluded from the $1 million dollar tax-deductible limit. As such, the Company believes that all performance-based LTIC granted by the Company in 2017 and in prior years is expected to be deductible upon vesting and recognition as compensation to the recipient and that payments made in February 2018 under the Company’s profit sharing plan with performance criteria established in January 2017, for the fiscal year ended December 31, 2018, is also excluded from the $1 million compensation limit established under 162(m).

CEO Pay Ratio

The Compensation Committee believes executive pay must be both internally equitable and externally competitive to attract and retain the talent necessary to produce exceptional financial results and value for shareholders. The Company is committed to internal pay equity and periodically reviews pay data to ensure it is both internally equitable and in line with similar positions in the external market. Due to the nature of Cass’ business, a large portion of the employee population is clerical and administrative with over 20% of employees holding part-time positions and working less than 30 hours per week.

In calculating the CEO Pay Ratio,pay ratio, pursuant to Item 402(u) of Regulation S-K, companies are required to disclose the ratio of the CEO’s compensation to that of the median employee. The Company first provided this disclosure in the proxy statement filed for its 2018 Annual Meeting of Shareholders and used the following methodology to identify the Company’s median employee:employee for 2019:

The SEC permits the Company to identify its median employee once every three years provided that it reasonably believes there has been no change in its employee population or compensation arrangements that would significantly affect the pay ratio disclosure. There have been no changesThe median employee used for compensation paid in the Company’s employee population, employee compensation arrangements or the median employee’s circumstances that2017 and 2018 did not work and was not paid by the Company reasonably believes would resultfor several weeks in 2019. Therefore, the Company determined a significant change in the pay ratio disclosure. As such, thenew median employee remainsfor 2019 using the same methodology as it did for fiscal 2017.compensation paid in 2017 as explained above.

The Company provides the following with respect to the pay ratio for fiscal 2018:2019:

Elements of compensation provided to the CEO that are not included in compensation paid to the median employee include:

Post-Fiscal Year Compensation Actions

Executive Compensation Comparative Data

In 2018,2019, the Compensation Committee performed a review of executive compensation. As part of the review process, the Compensation Committee retained Pay Governance to provide comparative data on cash and total executive compensation. Data reviewed was from the (i) Financial Services sector, including the Banking industry and (ii) Services Sector, including the Business Services industry. Consistent with prior years and the Company’s intent not to engage in benchmarking, the Compensation Committee did not rely solely on comparative data, but did consider such elements when exercising its own judgment in determining 20192020 compensation.

Base Salary

Base salary increases for 20192020 were approved in January 2020 based on the factors discussed herein, including overall performance of individuals, individual operating units, corporate earnings, and overall corporate growth over the past several years. Such base salary increases, effective in April 2019,2020, were approved for the following: Mr. Brunngraber, $640,000$670,000 to $670,000;$720,000; Mr. Appelbaum, $291,000$301,000 to $301,000;$311,000; Mr. Campbell, $238,000$252,000 to $252,000;$264,000; Mr. Cavellier $250,000$262,000 to $262,000;$277,000; Mr. Erdbruegger $276,000 to $288,000; and Mr. Langfitt, $265,000$273,000 to $273,000; and Mr. Mathias, $301,000 to $308,000.$281,000.

Long-Term Incentive Compensation

The LTIC awards made in January 20192020 were in accordance with the practices of the updated LTIC programmade pursuant to the Omnibus Plan and were comprised of 40% time-based restricted shares or RSUs and 60% performance-based restricted shares. Both the time-based restricted shares or RSUs and the performance-based restricted shares are scheduled to cliff vest three years from the grant date, subject to the terms and conditions of the awards. The number of performance-based restricted shares vesting will vary in an amount from 0% to 150% of the amount awarded based on the achievement of pre-established ROE and EPS performance goals over the three-year performance period from January 1, 20192020 to December 31, 2021.2022. The awards were granted on January 31, 20192020 and were valued using the closing stock price as reported on the Nasdaq on the grant date.

The awards granted on January 31, 20192020 to each named executive officer are detailed below.

The LTIC awards granted on February 2, 2017 cliff-vested on January 31, 2020 after the three-year restriction period elapsed. Time-based restricted shares vested in full on January 31, 2020 and performance-based restricted shares vested at 117.4% of the amount granted, based on the Company’s achievement of performance objectives over the three-year performance period from January 1, 2017 to December 31, 2019. The number of shares that vested on January 31, 2020 for each named executive officer, adjusted for stock dividends paid during the performance period, are as follows: