Like Horizon’s prior plans, the
Tax Cuts and Jobs Act of 2017), certain types of compensation, including “performance-based compensation,” which were previously exempt from the limitations, are no longer excluded from the Section 162(m) deduction limit.The Compensation Committee administers the 20132021 Omnibus Plan and may grant the following types of awards:
Incentiveawards under the 2013 Omnibus Plan and nonqualified stock options
Stock appreciation rights
Performance units andthe 2021 Omnibus Plan, which may vest on a time basis or pursuant to performance shares
metrics set by the Compensation Committee from time to time: | | |
•Incentive and nonqualified stock options |
|
•Stock appreciation rights |
|
•Restricted stock |
|
•Restricted stock units |
|
•Other stock–based awards |
|
•Any combination of the above |
The effects on awards granted under the 2021 Omnibus Plan in the event of a change in control of Horizon are discussed below under Potential Payments Upon Termination or Change in Control - Other stock-based awardsBenefits Upon Termination or Change in Control.
Any combination of the above
Horizon’s long-term incentive program was historically based on the grant of stock options and restricted stock, but, in 2014, Horizon began awarding performance-based (not time-based) performance shares as its preferred form of long-term performance-based equity compensation. Long-term equity incentives are granted to encourage and facilitate personal stock ownership by executive officers. Horizon believes this strengthens their personal commitment to Horizon and provides them with a longer-term perspective in their managerial responsibilities. This component of an executive officer’s compensation directly aligns the officer’s interests with those of Horizon’s shareholders. Horizon also recognizes that equity compensation is an important element of a competitive compensation program. The program utilizes vesting periods and/or long-term performance goals to encourage key employees to continue in the employ of Horizon and thereby acts as a retention device for key employees.
With respect to stock ownership, as discussed above, all of the named executive officers must comply with the Ownership Guidelines adopted by the Board of Directors. The Chief Executive Officer must maintain ownership of Horizon common shares having a value equal to at least three times the base salary, and each of the other named executive officers must maintain ownership of common shares having a value equal to at least twice the applicable executive officer’s base salary. For additional details about the Ownership Guidelines, see the “Stock Ownership Guidelines” section above under the “Corporate Governance” heading.
In determining a reasonable level of long-term compensation to be granted executive officers, the Compensation Committee considers data it deems relevant, including the data in the independent reports prepared by FW Cook and other peer data.
The stock options that have been granted to executive officers are service based and vest in equal annual installments over a three- or five-year period. Awards of restricted stock vest on the third anniversary of the date of grant if the executive officer remains employed by Horizon, Horizon Bank, or any of their affiliates.
The performance shares or units that are awarded become earned and vested based on the achievement of certain performance goals during a performance period as established by the Compensation Committee at the time of each grant (generally three years). The performance goals are based on a comparison of Horizon’s average performance over the performance period for the return on common equity, compounded annual growth rate of total assets, and return on average assets, all relative to the30
average performance for publicly traded banks with total assets between $1$5 billion and $5$10 billion on the SNL Bank Index for the same measures. Each of the three performance goals is weighted roughly equally (34% for return on common equity; 33% for compounded annual growth rate of total assets; and 33% for return on average assets). The payout received by the recipient is determined by whether Horizon achieves the performance goal at a threshold level (50th to 74th percentile relative to the comparative SNL group), a target level (75th to 84th percentile relative to the comparative SNL group), or a maximum level (greater than 84th percentile relative to the comparative SNL group). A performance share award recipient can receive 50% of the award if Horizon achieves the threshold, 100% of the award if Horizon achieves the target, and 125% of the award if Horizon achieves the maximum.
Qualified Retirement Plans
Horizon maintains
two one tax-qualified retirement
plans, an Employee Stock Ownership Plan (“ESOP”) and anplan, the Employees’ Thrift Plan (“
Thrift Plan”Plan”).
Nearly all Horizon employees are eligible to participate in the ESOP. Horizon’s Board of Directors, in its discretion, determines Horizon’s contributions to the ESOP. The contributions may be made in the form of cash or common shares. Shares are allocated among participants each December 31 on the basis of each participant’s eligible compensation to total eligible compensation (a maximum of $285,000 per participant). Dividends on shares held by the plan, at the discretion of each participant, are either distributed to the participant or retained in the plan for the purchase of additional shares.The Thrift Plan is a 401(k) plan in which all employees with the requisite hours of service are eligible to participate. The Thrift Plan permits voluntary employee contributions, and Horizon may make discretionary matching and profit sharing contributions. Each eligible employee is vested according to a schedule based upon years of service. Voluntary employee contributions are vested at all times, and Horizon’s discretionary contributions vest over a six-year period. Participants are eligible to receive matching contributions once they have attained age 21 and completed one year of service. Horizon, at its discretion, provides for matching contributions as follows: 100% for the first 2% of a participant’s deferral contribution and 50% for each additional percentage deferred up to a total deferral of 6% (a maximum of 4% matching contribution).
Post-Termination
Post–Termination Compensation and Benefits
Upon termination of either Mr. Dwight or Mr. NeffPrame from employment in certain situations not related to a change in control of Horizon, Mr. Dwight and Mr. NeffPrame (but no other named executive officers) will be entitled to certain post-termination compensation and benefits, as provided in their respective employment agreements. Specifically, if Horizon terminates them without “cause” or either executive resigns for “good reason,” then the terminated executive is entitled to additional compensation and benefits, as more fully described below in “Potential Payments Upon Termination or Change in Control.”Effective January 1, 2020, all named executive officers (including Mr. Dwight and Mr. Neff)
Horizon Bank entered into new or amended Change in Control Agreements with Mr. Dwight, Mr. Secor, and Ms. DeRuiter, each effective January 1, 2020, and Ms. Kerber, effective October 1, 2020, Horizon Bank.Bank entered into amendments to the Change in Control Agreements with Mses. DeRuiter and Kerber effective December 1, 2022. Pursuant to the Change in Control Agreements, the named executive officers become entitled to post-termination compensation and benefits, as discussed in more detail below in “Potential Payments Upon Termination or Change in Control.”The Board of Directors proposed these new employment and change in control agreements to advance Horizon’s commitment to use only double trigger mechanisms for change-in-control compensation. As a result of the new or amended Change in Control Agreements, and the amended and restated employment agreements for Mr. Dwight and Mr. Neff, also effective January 1, 2020, Horizon no longer has any single-trigger or modified single-trigger change in control compensation obligations.
Horizon believes its post-termination compensation and benefits arrangements are necessary in order to attract and retain experienced and talented executive officers in Horizon’s industry, are comparable to arrangements offered by its industry peers, and are consistent with Horizon’s philosophy and compensation objectives.
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The Horizon Bancorp Supplemental Executive Retirement Plan (“
Frozen SERP”SERP”), a nonqualified deferred compensation plan, was originally effective January 1, 1993, and was frozen effective December 31, 2004. The Frozen SERP provides certain management or highly compensated employees of Horizon and its affiliates with supplemental retirement benefits to help recompense those employees for benefits reduced under the Thrift Plan due to benefit limits imposed by the Code and to permit the deferral of additional compensation. The Frozen SERP is designed and administered to comply with Title I of the Employee Retirement Income Security Act of 1974 and to be exempt from the requirements of Internal Revenue Code Section 409A. The Frozen SERP is administered by the Compensation Committee. Prior to January 1, 2005, a participant in the Frozen SERP could elect each year to defer a percentage of the participant’s total cash compensation. Each year, the Compensation Committee, in its discretion, could elect to have Horizon match the amounts deferred by each participant under the Frozen SERP up to a maximum match of $25,000. The Compensation Committee could also make supplemental contributions in any amount determined by the Compensation Committee in its discretion.
Interest is credited on a participant’s deferred account balance in the Frozen SERP at the five-year U.S. Treasury Bond rate published in The Wall Street Journal and in effect as of the first business day of each calendar month, plus 200 basis points, but not to exceed 120% of the Applicable Federal Long-Term Rate for monthly compounding. Amounts deferred by participants vest immediately. The Compensation Committee can require forfeiture of matching and supplemental contributions if the participant has not completed the number of years of service specified by the Compensation Committee, except when the participant dies while still employed, is determined to be disabled or retires after reaching age sixty-five. Participants or their designated beneficiaries will begin to receive payments under the Frozen SERP within thirty days after the participant’s separation from service. Participants may elect lump sum or installment payments, or a combination of the two, subject to the provisions of the Frozen SERP.
The Frozen SERP was amended effective January 1, 2010, to permit a participant’s account assets to be invested in Horizon common shares, and amended effective December 19, 2017, to allow distributions under the Frozen SERP to be made in cash, Horizon common shares, or a combination of both. Participants in the Frozen SERP may change their investment election option once a year.
No additional amounts, except earnings, accrued to the named executive officers under the Frozen SERP for 2019.
Horizon adopted the Horizon Bancorp 2005 Supplemental Executive Retirement Plan (“2005 SERP”SERP”) to replace the Frozen SERP effective January 1, 2005. As with its predecessor, the 2005 SERP provides certain management or highly compensated employees of Horizon and its affiliates with supplemental retirement benefits to help recompense those employees for benefits reduced under the Thrift Plan due to benefit limits imposed by the Code and to permit the deferral of additional compensation. The 2005 SERP is also designed and administered to comply with Title I of the Employee Retirement Income Security Act of 1974 and Code Section 409A, and the 2005 SERP is administered by the Compensation Committee. A participant in the 2005 SERP may
elect to defer a percentage of the participant’s total cash compensation each year. The 2005 SERP maximum deferral percentage is limited to 25%.
Each year, the Compensation Committee, in its discretion, may elect to have Horizon match the amounts deferred by each participant under the 2005 SERP up to a maximum match of $25,000 for years prior to 2017 and $35,000 for 2017 and beyond. The Compensation Committee may change the match limit prior to the beginning of any year. The Compensation Committee may also make supplemental contributions in any amount it determines in its discretion.
Interest is credited on a participant’s deferred account balance in the 2005 SERP at the five-year U.S. Treasury Bond rate published in The Wall Street Journal and in effect as of the first business day of32
each calendar month, plus 200 basis points, but not to exceed 120% of the Applicable Federal Long-Term Rate for monthly compounding. Amounts deferred by participants vest immediately. The Compensation Committee may require forfeiture of matching and supplemental contributions if the participant has not completed the number of years of service specified by the Compensation Committee, except when the participant dies while still employed, is determined to be disabled or retires after reaching age sixty-five. Participants may specify the date or event upon which they or their designated beneficiaries will begin to receive payment under the 2005 SERP and may elect lump sum or installment payments, or a combination of the two, subject to the provisions of the 2005 SERP.
In December 2009, the Board of Directors approved a second SERP investment alternative in the form of Horizon common shares. In December 2017, the 2005 SERP was amended to confirm that distributions can be made in cash, Horizon common shares, or a combination of both.
Participants in the 2005 SERP may change their investment election option once a year.
Horizon’s contributions allocated to the named executive officers under the 2005 SERP are included in the All Other Compensation column of the Summary Compensation Table appearing below.
Perquisites and Other Personal Benefits
Horizon provides minimal perquisites and other personal benefits to its executive officers. Mr. Dwight
isand Mr. Prame are provided with
social country club
membership.memberships. The cost of the
membershipmemberships is less than $10,000.
Horizon has determined the relationship of the annual total compensation of our employees and the annual total compensation of Craig M. Dwight, Horizon’s Chair of the Board and Chief Executive Officer. For
2020,2022, our last completed fiscal year, (i) the median of the annual total compensation of all employees (other than Mr. Dwight) was
$45,112.84;$44,695; and (ii) the annual total compensation of Mr. Dwight, as reported in the Summary Compensation Table, included elsewhere in this Proxy Statement, was
$1,281,359.$1,328,910.
Based on this information, for
2020,2022, the ratio of the annual total compensation of Mr. Dwight to the median of the annual total compensation of all employees was
28.429.7 to 1, or, in other words, Mr. Dwight’s annual total compensation was
28.429.7 times that of the median of the annual total compensation of all employees.
To identify the “median employee” of Horizon this year (and as we have done each year in the past), we identified all full-time and part-time employees of Horizon as of December 31,
2020,2022, excluding Mr. Dwight, leased employees, or independent contractors. We then used the employees’ base salary (or wages and overtime for
non-salaried employees) plus bonus, on a
non-annualized basis for those employed for less than all of
2020,2022, in order to determine annual cash compensation on a consistent basis, and then we ranked all the employees by compensation amount in order to identify the median employee. We believe the use of total cash compensation for all employees is a reasonable and consistently applied compensation measure because we do not widely distribute annual equity awards to employees and all employees participate in Horizon’s Thrift Plan
and ESOP on an equal basis.
Once we identified the median employee, we computed the median employee’s annual total compensation for
20202022 in accordance with the requirements of Item 402(c)(2)(x) of Regulation
S-K, which is the same methodology we use for our named executive officers as set forth in the Summary Compensation Table included in this Proxy Statement.
To determine Mr. Dwight’s annual total compensation, we used the amount reported in the “Total” column of the Summary Compensation Table included in this Proxy Statement.
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This information is being provided for compliance purposes and is a reasonable estimate calculated in a manner consistent with SEC rules. The SEC rules for identifying the median employee and in calculating the pay ratio allow companies to adopt a variety of methodologies, exclusions and assumptions that reflect their employee populations and compensation practices. As such, the pay ratio reported by other companies, including companies in our peer group, may not be comparable to the pay ratio reported above.
This information is provided for compliance purposes. Neither the Compensation Committee nor management of the company used the pay ratio measure in making compensation decisions.
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of Horizon. For further information concerning how Horizon aligns executive compensation with Horizon’s performance, see “Compensation Discussion and Analysis.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) |
| | | | | | | | | | Value of Initial Fixed $100 Investment Based on | | | | Company Selected Measure (CSM): |
| Year | | Summary Compensation Table Total for Principal Executive Officer (PEO) (1) | | Compensation Actually Paid (CAP) to PEO (2) | | Average Summary Compensation Table Total for Non-PEO NEOs (3) | | Average Compensation Actually Paid to Non-PEO NEOs (4) | | Company Total Shareholder Return (TSR) (5) | | Peer Group TSR (6) | | Net Income (in Millions) (7) | | Return on Average Assets (8) |
| 2022 | | $ | 1,328,910 | | | $ | 991,735 | | | $ | 672,157 | | | $ | 534,656 | | | 87.32 | | | 112.01 | | | $ | 93.41 | | | 1.24 | % |
| 2021 | | 1,402,359 | | | 1,697,391 | | | 660,875 | | | 793,996 | | | 119.35 | | | 127.67 | | | 87.09 | | | 1.34 | % |
| 2020 | | 1,281,359 | | | 1,170,072 | | | 597,220 | | | 584,447 | | | 86.18 | | | 90.39 | | | 68.50 | | | 1.22 | % |
| | | | | |
| (1) | The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Dwight, our Chief Executive Officer, for each corresponding year in the “Total” column of the Summary Compensation Table (“SCT”). See “Executive Compensation – Executive Compensation Tables – Summary Compensation Table for 2022.” |
| (2) | The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Dwight, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Dwight during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Dwight’s total compensation for each year to determine the compensation actually paid: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Compensation Actually Paid to PEO |
| Year | | Salary
(A) | | Stock Awards
(B) | | Non–Equity Incentive Plan Compensation
(C) | | All Other Compensation
(D) | | SCT Total
(E) | | Deductions from SCT Total
(F) | | Additions to SCT Total
(G) | | CAP |
| 2022 | | $ | 635,000 | | | $ | 419,969 | | | $ | 190,500 | | | $ | 83,441 | | | $ | 1,328,910 | | | $ | (419,969) | | | $ | 82,794 | | | $ | 991,735 | |
| 2021 | | 605,000 | | | 284,980 | | | 438,625 | | | 73,754 | | | 1,402,359 | | | (284,980) | | | 580,012 | | | 1,697,391 | |
| 2020 | | 585,000 | | | 260,000 | | | 365,625 | | | 70,734 | | | 1,281,359 | | | (260,000) | | | 148,713 | | | 1,170,072 | |
| | | | | |
| (A) | The dollar amounts in the “Salary” column are the amounts reported for Mr. Dwight for each corresponding year in the “Salary” column of the Summary Compensation Table. |
| (B) | The dollar amounts in the “Stock Awards” column are the amounts reported for Mr. Dwight for each corresponding year in the “Stock Awards” column of the SCT. |
| (C) | The dollar amounts in the “Non-Equity Incentive Plan Compensation” column are the amounts reported for Mr. Dwight for each corresponding year in the “Non-Equity Incentive Plan Compensation” column of the SCT. |
| | | | | |
| (D) | The dollar amounts in the “All Other Compensation” column are the amounts reported for Mr. Dwight for each corresponding year in the “All Other Compensation” column of the SCT. |
| (E) | The dollar amounts in the “SCT Total” column are the amounts reported for Mr. Dwight for each corresponding year in the “Total” column of the SCT. |
| (F) | The dollar amounts in the “Deductions from SCT Total” column are the total of the amounts reported for Mr. Dwight in the “Stock Awards” and “Option Awards” columns in the SCT for the applicable year. |
| (G) | The dollar amount in the “Additions to SCT Total” column reflects the addition (or subtraction, as applicable) of the following equity award adjustments for Mr. Dwight for the applicable year: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. |
| | | | | |
| (3) | The dollar amounts reported in column (d) represent the average of the amounts reported for Horizon’s named executive officers (NEOs) as a group (excluding Mr. Dwight) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Dwight) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Mark E. Secor, Thomas M. Prame, Kathie A. DeRuiter, and Lynn M. Kerber (ii) for 2021, James D. Neff, Mark E. Secor, Dennis J. Kuhn, and Kathie A. DeRuiter; and (iii) for 2020, James D. Neff, Mark E. Secor, Dennis J. Kuhn, and Kathie A. DeRuiter. |
| (4) | The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Dwight), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Dwight) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Dwight) for each year to determine the compensation actually paid, using the same methodology described above in footnote (2) above: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Compensation Actually Paid to Non–PEO |
| Year | | Salary | | Stock Awards | | Non–Equity Incentive Plan Compensation | | All Other Compensation | | SCT Total | | Deductions from SCT Total | | Additions to SCT Total | | CAP |
| 2022 | | $ | 283,549 | | | $ | 253,466 | | | $ | 92,942 | | | $ | 42,200 | | | $ | 672,157 | | | $ | (253,466) | | | $ | 115,965 | | | $ | 534,656 | |
| 2021 | | 322,072 | | | 128,829 | | | 154,413 | | | 55,561 | | | 660,875 | | | (128,829) | | | 261,950 | | | 793,996 | |
| 2020 | | 310,733 | | | 124,293 | | | 104,143 | | | 58,051 | | | 597,220 | | | (124,293) | | | 111,520 | | | 584,447 | |
| | | | | |
| (5) | TSR for Horizon Bancorp, Inc. cumulative total TSR returns on common share from S&P Global Market Intelligence, respectively for each period. |
| (6) | Peer Group TSR the SNL Micro Cap Bank Index is illustrated. |
| (7) | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
| (8) | The percentages reported represent the amount of net income reflected in the Company’s audited financial statements divided by the reported average assets for the applicable year. |
Financial Performance Measures
As described in greater detail in “Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short- term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our shareholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s
performance are as follows:
| | |
•Revenue |
|
•Return on Average Assets |
|
•Relative TSR (the Company’s TSR as compared to a peer group established by the Compensation Committee) |
Analysis of the Information Presented in the Pay versus Performance Table
In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay Versus Performance table.
Compensation Actually Paid and Total Shareholder Return
The amount of compensation actually paid to Mr. Dwight and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Dwight) are aligned with the Company’s cumulative TSR over the three years presented in the table. The alignment of compensation actually paid with the Company’s cumulative TSR over the period presented is because a significant portion of the compensation actually paid to Mr. Dwight and to the other NEOs is comprised of equity awards. As described in more detail in the section “Compensation Discussion and Analysis,” the Company targets approximately 35 to 60% of the NEO’s base salary to determine the award value of the NEO’s equity awards, including time-based restricted stock and performance-shares.
Compensation Actually Paid and Net Income
The amount of compensation actually paid to Mr. Dwight and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Dwight) are generally aligned with the Company’s net income between 2020 and 2021 as presented in the table, but net income increased between 2021 and 2022 while the amount of compensation actually paid to Mr. Dwight and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Dwight) decreased. This was primarily the result of the Company’s stock price decreasing during 2022,which is the primary factor in the decreased Additions to SCT Total for 2022 in the tables above.
Compensation Actually Paid and Return on Average Assets
The amount of compensation actually paid to Mr. Dwight and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Dwight) are generally aligned with the Company’s net income between 2020 and 2021 as presented in the table, but net income increased between 2021 and 2022 while the amount of compensation actually paid to Mr. Dwight and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Dwight) decreased. This was primarily the result of the Company’s stock price decreasing during 2022,which is the primary factor in the decreased Additions to SCT Total for 2022 in the tables above.
Total Shareholder Return of Horizon and Total Shareholder Return of Peer Group
The Company’s TSR over the three year period presented in the table is aligned with compensation actually paid when comparing the TSR of the peer group presented over the three years presented in the table. The Company’s TSR during the three years presented in the table, representing the Company’s financial performance, industry performance and market conditions as compared to the companies comprising the peer group were directionally consistent. For more information regarding the Company’s performance and the companies that the Compensation Committee considers when determining compensation, refer to “Compensation Discussion and Analysis.”
Other Compensation and Compensation-Related Policies
Clawbacks: Recovery of Incentive Compensation under the Dodd-FrankDodd–Frank Act
Under the Dodd-FrankDodd–Frank Act, the SEC was required to adopt a rule directing national securities exchanges to establish listing standards which provide that companies listed on a national securities exchange must adopt a policy providing for the recovery of incentive-basedincentive–based compensation in the event of an accounting restatement based on erroneous data. Under such a policy, compensation would be recovered, or “clawed back,” from any current or former executive officer of the company who received the incentive-basedincentive–based compensation during the three fiscal years preceding the date on which the company is required to prepare the restatement. The amount to be recovered would be the excess of the amount that would have been paid to the executive officer under the restatement. Horizon Bank adopted a compensation “claw back” policy in 2009, which covers each exempt employee with the title of Vice President or above or who is a commission-basedcommission–based employee. This
On October 26, 2022, the SEC adopted the final Dodd-Frank Act compensation recoupment rules. Accordingly, we will review and amend our compensation clawback policy will be revised as necessaryafter finalization of the Nasdaq listing standards relating to the recovery of incentive–based compensation.
Anti–Hedging and appropriate in the future to conform to any additional SEC or NASDAQ requirements for such policies.Anti-Hedging and Anti-Pledging
Anti
–Pledging
Horizon’s insider trading policy has historically identified many prohibited transactions for its directors, officers, employees, family members, and controlled entities, including hedging and monetization transactions and pledging Horizon’s common shares, for which transactions special
pre-clearance with a compliance officer was required. In December 2017, the Board of Directors adopted an even more aggressive stance with respect to these transactions, believing that hedging and pledging transactions could have the effect of diluting the risks and rewards of stock ownership in Horizon and could cause a director or executive officer to have different objectives from Horizon’s other shareholders.
First, the Board of Directors adopted a stand-alone anti-hedging policy (separate from the insider trading policy) that applies to all directors, executive officers, their family members and controlled entities, prohibiting them from purchasing financial instruments or engaging in activities that could reasonably be expected to have the effect of hedging or offsetting a decrease in the market value of any Horizon securities. There are no exceptions.
Also, the Board of Directors adopted a stand-alone anti-pledging policy (separate from the insider trading policy) that applies to the same group as the anti-hedging policy. All pledging, hypothecating or encumbering of Horizon securities as collateral for any indebtedness is prohibited, including pledging securities as collateral for margin accounts. However, the Corporate Governance and Nominating Committee of the Board of Directors may grant prior approval for a pledge of securities in limited circumstances for loans with a clear purpose for use of the proceeds and a well-defined and identifiable source of repayment. Horizon’s directors and executive officers have not requested any pledging of Horizon securities at this time.
As previously discussed, all of the named executive officers must comply with the Ownership Guidelines for stock ownership adopted by the Board of Directors. For additional details about the Ownership Guidelines, see the “Stock Ownership Guidelines” section above under the “Corporate Governance” heading.
In general, under Section 162(m) of the Internal Revenue Code, as modified by The Tax Cuts and Jobs Act passed in December, 2017, public companies are subject to a $1 million deductibility limit on compensation paid to certain executive officers, including their performance-based compensation which was excluded before tax reform. Awards that were made and subject to binding written contracts in effect on November 2, 2017 are
“grandfathered”“legacied” under prior law and can still qualify as deductible performance-based compensation even if paid in future years.
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Horizon will continue to analyze the effects of Section 162(m) on its compensation programs, and will continue to monitor the regulations and any additional guidance that may be issued by the IRS. In this regard, while the Board and Compensation Committee are mindful of the benefits of the full deductibility of our executive
officer’s compensation, the Board and/or Compensation Committee may, in their judgment, authorize compensation payments that are not fully tax deductible to the extent they exceed $1 million, if such payments are appropriate to attract and retain executive talent or to meet other business objectives, in the best interests of Horizon and its shareholders.
EXECUTIVE COMPENSATION TABLES
EXECUTIVE COMPENSATION TABLES
The following tables provide information on the
20202022 compensation for Horizon’s Chief Executive Officer, Chief Financial Officer, and the other three most highly compensated executive officers of Horizon and Horizon Bank. These five individuals are referred to as the “named executive officers.”
Summary Compensation Table for
20202022
The table below provides information with respect to the total compensation earned by or paid to the named executive officers for
2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary
($)(1) | | | Bonus
($)(2) | | | Stock Awards
($)(3) | | | Option Awards
($)(3) | | | Non-Equity
Incentive Plan
Compensation
($)(4) | | | All Other
Compensation
($)(5) | | | Total ($) | |
Craig M. Dwight | | | 2020 | | | | 585,000 | | | | N/A | | | | 260,000 | | | | - | | | | 365,625 | | | | 70,734 | (6) | | | 1,281,359 | |
Chief Executive Officer | | | 2019 | | | | 558,900 | | | | N/A | | | | 200,000 | | | | 50,000 | | | | 363,285 | | | | 66,071 | | | | 1,238,256 | |
| | | 2018 | | | | 540,000 | | | | N/A | | | | 200,000 | | | | 50,000 | | | | 310,500 | | | | 62,995 | | | | 1,163,495 | |
| | | | | | | | |
Mark E. Secor | | | 2020 | | | | 303,021 | | | | N/A | | | | 121,208 | | | | - | | | | 121,208 | | | | 58,100 | (7) | | | 603,537 | |
Chief Financial Officer | | | 2019 | | | | 291,366 | | | | N/A | | | | 81,582 | | | | 20,396 | | | | 123,831 | | | | 56,240 | | | | 573,415 | |
| | | 2018 | | | | 282,880 | | | | N/A | | | | 56,576 | | | | 14,144 | | | | 106,080 | | | | 55,495 | | | | 515,175 | |
| | | | | | | | |
James. D. Neff | | | 2020 | | | | 401,709 | | | | N/A | | | | 160,684 | | | | - | | | | 160,684 | | | | 61,427 | (S) | | | 784,504 | |
President | | | 2019 | | | | 388,125 | | | | N/A | | | | 108,675 | | | | 27,169 | | | | 184,359 | | | | 58,913 | | | | 767,241 | |
| | | 2018 | | | | 375,000 | | | | N/A | | | | 105,000 | | | | 26,250 | | | | 159,375 | | | | 56,530 | | | | 722,155 | |
| | | | | | | | |
Kathie A. DeRuiter | | | 2020 | | | | 270,400 | | | | N/A | | | | 108,160 | | | | - | | | | 81,120 | | | | 56,720 | (9) | | | 516,400 | |
Executive Vice President | | | 2019 | | | | 260,000 | | | | N/A | | | | 62,400 | | | | 15,600 | | | | 104,000 | | | | 50,454 | | | | 492,454 | |
| | | 2018 | | | | 250,000 | | | | N/A | | | | 50,000 | | | | 12,500 | | | | 93,750 | | | | 44,905 | | | | 451,155 | |
| | | | | | | | |
Dennis .J. Kuhn | | | 2020 | | | | 267,800 | | | | N/A | | | | 107,120 | | | | - | | | | 53,560 | | | | 55,957 | (10) | | | 484,437 | |
Executive Vice President | | | 2019 | | | | 257,500 | | | | N/A | | | | 61,800 | | | | 15,450 | | | | 83,688 | | | | 53,258 | | | | 471,696 | |
| | | 2018 | | | | 250,000 | | | | N/A | | | | 50,000 | | | | 12,500 | | | | 68,750 | | | | 48,432 | | | | 429,682 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and
Principal Position | | Year | | Salary ($)(1) | | Bonus ($)(2) | | Stock Awards ($)(3) | | Non-Equity Incentive Plan Compensation ($)(4) | | All Other Compensation ($)(5) | | Total
($) |
Craig M. Dwight (6) | | 2022 | | 635,000 | | | N/A | | 419,969 | | | 190,500 | | | 83,441 | | (8) | 1,328,910 | |
| Chief Executive Officer | | 2021 | | 605,000 | | | N/A | | 284,980 | | | 438,625 | | | 73,754 | | | 1,402,359 | |
| | 2020 | | 585,000 | | | N/A | | 260,000 | | | 362,625 | | | 70,734 | | | 1,278,359 | |
| | | | | | | | | | | | | | |
| Mark E. Secor | | 2022 | | 337,000 | | | N/A | | 372,272 | | | 33,700 | | | 64,769 | | (9) | 807,741 | |
| Chief Financial Officer | | 2021 | | 318,172 | | | N/A | | 127,269 | | | 167,040 | | | 56,756 | | | 669,237 | |
| | 2020 | | 303,021 | | | N/A | | 121,208 | | | 121,208 | | | 58,100 | | | 603,537 | |
| | | | | | | | | | | | | | |
Thomas M. Prame(7) | | 2022 | | 200,961 | | | 50,000 | | | 203,800 | | | — | | | 1,600 | | (10) | 456,361 | |
| President | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Kathie A. DeRuiter | | 2022 | | 312,000 | | | N/A | | 124,787 | | | 117,000 | | | 60,687 | | (11) | 614,474 | |
| Executive Vice President | | 2021 | | 278,512 | | | N/A | | 111,405 | | | 132,293 | | | 53,022 | | | 575,232 | |
| Senior Operations Officer | | 2020 | | 270,400 | | | N/A | | 108,160 | | | 81,120 | | | 56,720 | | | 516,400 | |
| | | | | | | | | | | | | | |
| Lynn M. Kerber | | 2022 | | 284,233 | | | N/A | | 313,004 | | | 128,127 | | | 41,744 | | (12) | 767,108 | |
| Executive Vice President | | | | | | | | | | | | | | |
| Chief Commercial Banking Officer | | | | | | | | | | | | | | |
| 1. | | | | |
| (1) | Includes salary amounts paid and salary amounts deferred by the individual named pursuant to Horizon’s Thrift Plan and the 2005 Supplemental Executive Retirement Plan (“SERP”SERP”). |
| (2) | 2. | Messrs. Dwight and Secor Neff and KuhnMses. DeRuiter and Ms. DeRuiterKerber are eligible to receive annual bonuses under the Executive Officer Bonus Plan, and if such bonuses are received for a given year, the SEC rules provide that they are to be reported in the Non-Equity Incentive Plan Compensation column of this table. Pursuant to Mr. Prame’s employment agreement, he received a lump sum of $50,000 in 2022 to assist with any interim expenses in transitioning to his new position and relocating. |
| (3) | 3. | The amounts in this column reflect the aggregate grant date fair value of option awards during the last three fiscal years in accordance with FASB ASC Topic 718. For a discussion of the assumptions used in the calculation of the option awards reported in this column, please see Note 2421 of the Notes to Consolidated Financial Statements in Horizon’s 20202022 Annual Report on Form 10-K filed with the Securities and Exchange Commission. |
35
| (4) | 4. | Messrs. Dwight and Secor Neff and KuhnMses. DeRuiter and Ms. DeRuiterKerber received payments under Horizon’s Executive Officer Bonus Plan. (For more information about the Bonus Plan and these payments see the discussion above in the Compensation Discussion and Analysis.Analysis - Annual Performance-Based Cash Incentive Compensation.) |
| (5) | 5. | The individuals named in the table also received certain perquisites, but the incremental costs of providing the perquisites did not exceed the $10,000 disclosure threshold. |
| (6) | Mr. Dwight will continue to serve as CEO until June 1, 2023 and will continue to serve as Chairman of Horizon and Horizon Bank thereafter. Mr. Dwight will retire as an employee of the Company effective as of July 3, 2023. |
| 6. | | | | |
| (7) | Mr. Prame began serving as President of Horizon and Horizon Bank on August 15, 2022. On January 17, 2023, the Board approved the appointment of Mr. Prame to serve as the Chief Executive Officer of both Horizon and Horizon Bank, effective as of June 1, 2023. |
| (8) | Includes Horizon’s contribution of $3,454 under Horizon’s Employee Stock Ownership Plan and its matching contributions of $11,400$12,200 under the Thrift Plan, $35,000 under the SERP and $20,880$36,241 in dividends on performance and restricted stock. |
| (9) | 7. | Includes Horizon’s contribution of $3,454 under Horizon’s Employee Stock Ownership Plan and its matching contributions of $11,400$12,200 under the Thrift Plan, $35,000 under the SERP and $8,246$17,569 in dividends on performance and restricted stock. |
| (10) | 8. | Includes Horizon’s contribution of $3,454 under$1,600 in dividends on restricted stock. |
| (11) | Includes Horizon’s Employee Stock Ownership Plan and its matching contributions of $11,400$12,200 under the Thrift Plan, $35,000 under the SERP and $11,573$13,487 in dividends on performance and restricted stock. |
| (12) | 9. | Includes Horizon’s contribution of $3,454 under Horizon’s Employee Stock Ownership Plan and its matching contributions of $11,232$10,229 under the Thrift Plan, $35,000$17,500 under the SERP and $7,034$14,014 in dividends on performance and restricted stock. |
| 10. | Includes Horizon’s contribution of $3,454 under Horizon’s Employee Stock Ownership Plan and its matching contributions of $10,545 under the Thrift Plan, $35,000 under the SERP and $6,958 in dividends on performance and restricted stock.
|
During
2020, both2022, Mr. Dwight and,
beginning on August 15, 2022, Mr.
NeffPrame had written employment agreements with Horizon providing for them to receive, among other things, base salary, to participate in all other incentive compensation and benefit programs offered to executive officers of Horizon and Horizon Bank, and to receive additional post-termination compensation upon termination or a change in control. No amounts are included in the Summary Compensation Table that reflect amounts paid or accrued to Mr. Dwight or Mr.
NeffPrame pursuant to these employment agreements as a result of any termination or change in control.
For a more detailed discussion of the employment agreements, both of which were amended and restated effective as of January 1, 2020, see “Potential Payments Upon Termination or Change in Control” below.36
As discussed above, Mr. Dwight intends to retire as an employee of Horizon and Horizon Bank, effective as of July 3, 2023, which will trigger the retirement provisions of his employment agreement.
Grants of Plan-BasedPlan–Based Awards
The following table presents additional information about non-equity incentive awards and long-term equity incentive awards granted to our named executive officers during 2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | |
| | | Threshold ($) | | | Target ($) | | | Maximum ($) | |
Name | | Short Term
Goals | | | Long Term
Goals | | | Total | | | Short Term
Goals | | | Long Term
Goals | | | Total | | | Short Term
Goals | | | Long Term
Goals | | | Total | |
Craig M. Dwight | | $ | 43,875 | | | $ | 43,875 | | | $ | 87,750 | | | $ | 175,500 | | | $ | 175,500 | | | $ | 351,000 | | | $ | 234,000 | | | $ | 234,000 | | | $ | 468,000 | |
Mark E. Secor | | | 15,151 | | | | 15,151 | | | | 30,302 | | | | 60,604 | | | | 60,604 | | | | 121,208 | | | | 90,906 | | | | 90,906 | | | | 181,812 | |
James D. Neff | | | 20,085 | | | | 20,085 | | | | 40,170 | | | | 80,342 | | | | 80,342 | | | | 160,684 | | | | 120,513 | | | | 120,513 | | | | 241,026 | |
Kathie A. DeRuiter | | | 6,760 | | | | 6,760 | | | | 13,520 | | | | 40,560 | | | | 40,560 | | | | 81,120 | | | | 74,360 | | | | 74,360 | | | | 148,720 | |
Dennis J. Kuhn | | | 6,695 | | | | 6,695 | | | | 13,390 | | | | 40,170 | | | | 40,170 | | | | 80,340 | | | | 73,645 | | | | 73,645 | | | | 147,290 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Grant Date | | | Estimated Future Payouts Under Equity
Incentive Plan Award (2) | | | All Other Option
Awards: Number
of Securities
Underlying Option
(#)(3) | | | Exercise or
Base Price of
Options Awards
($/sh) | | | Grant Date Fair
Value of
StocK and
Options Awards
($)(4) | |
| | Threshold
50% Payout
(#) | | | Target
100% Payout
(#) | | | Maximum
125% Payout
(#) | |
Craig M. Dwight | | | March 17, 2020 | | | | 9,933 | | | | 19,866 | | | | 24,833 | | | | | | | | | | | $ | 207,997 | |
| | | March 17, 2020 | | | | | | | | 4,967 | | | | | | | | — | | | $ | — | | | | 52,004 | |
Mark E. Secor | | | March 17, 2020 | | | | 4,631 | | | | 9,261 | | | | 11,576 | | | | | | | | | | | | 96,963 | |
| | | March 17, 2020 | | | | | | | | 2,315 | | | | | | | | — | | | | — | | | | 24,238 | |
James D. Neff | | | March 17, 2020 | | | | 6,139 | | | | 12,277 | | | | 15,346 | | | | | | | | | | | | 128,540 | |
| | | March 17, 2020 | | | | | | | | 3,069 | | | | | | | | — | | | | — | | | | 32,132 | |
Kathie A. DeRuiter | | | March 17, 2020 | | | | 4,132 | | | | 8,264 | | | | 10,330 | | | | | | | | | | | | 86,524 | |
| | | March 17, 2020 | | | | | | | | 2,066 | | | | | | | | — | | | | — | | | | 21,631 | |
Dennis J. Kuhn | | | March 17, 2020 | | | | 4,092 | | | | 8,184 | | | | 10,230 | | | | | | | | | | | | 85,686 | |
| | | March 17, 2020 | | | | | | | | 2,046 | | | | | | | | — | | | | — | | | | 21,422 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Estimated Possible Payouts Under Non–Equity Incentive Plan Awards(1) |
| | Threshold ($) | | Target ($) | | Maximum ($) |
| Name | | Short
Term
Goals | | Long
Term
Goals | | Total | | Short
Term
Goals | | Long
Term
Goals | | Total | | Short
Term
Goals | | Long
Term
Goals | | Total |
| Craig M. Dwight | | $ | 47,625 | | | $ | 47,625 | | | $ | 95,250 | | | $ | 190,500 | | | $ | 190,500 | | | $ | 381,000 | | | $ | 254,000 | | | $ | 254,000 | | | $ | 508,000 | |
| Mark E. Secor | | 16,850 | | | 16,850 | | | 33,700 | | | 67,400 | | | 67,400 | | | 134,800 | | | 101,100 | | | 101,100 | | | 202,200 | |
| Thomas M. Prame | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Kathie A. DeRuiter | | 15,600 | | | 15,600 | | | 31,200 | | | 54,600 | | | 54,600 | | | 109,200 | | | 85,800 | | | 85,800 | | | 171,600 | |
| Lynn M. Kerber | | 12,457 | | | 12,457 | | | 24,914 | | | 49,827 | | | 49,827 | | | 99,654 | | | 78,300 | | | 78,300 | | | 156,600 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Estimated Future Payouts Under Equity Incentive Plan Award(2) | | | | | | All Other Option Awards: |
| Name | | Grant Date | | Threshold
25% Payout
(#) | | Target
100% Payout
(#) | | Maximum 150% Payout
(#) | | | | | | Grant Date Fair Value of Stock Options and Awards ($)(4) |
| Craig M. Dwight | | March 15, 2022 | | 4,194 | | | 16,774 | | | 25,161 | | | | | | | $ | 335,983 | |
| | March 15, 2022 | | | | 4,193 | | | | | | | | | 83,986 | |
| Mark E. Secor | | March 15, 2022 | | 1,682 | | | 6,729 | | | 10,094 | | | | | | | 134,782 | |
| | March 15, 2022 | | | | 1,682 | | | | | | | | | 33,690 | |
| | August 15, 2022 | | | | 10,000 | | | | | | | | | 203,800 | |
| Thomas M. Prame | | August 15, 2022 | | | | 10,000 | | | | | | | | | 203,800 | |
| Kathie A. DeRuiter | | March 15, 2022 | | 1,246 | | | 4,984 | | | 7,476 | | | | | | | 99,830 | |
| | March 15, 2022 | | | | 1,246 | | | | | | | | | 24,957 | |
| Lynn M. Kerber | | March 15, 2022 | | 1,091 | | | 4,362 | | | 6,543 | | | | | | | 87,371 | |
| | March 15, 2022 | | | | 1,090 | | | | | | | | | 21,833 | |
| | August 15, 2022 | | | | 10,000 | | | | | | | | | 203,800 | |
1 | | | | | |
| (1) | The amounts represent the threshold, target and maximum annual incentive award estimated payouts for the January 1, 20202022 – December 31, 20202022 performance period. The actual 20202022 payout is reported in the 20202022 Summary Compensation Table under the “Non-Equity“Non-Equity Incentive Plan Compensation” column. |
2(2) | The amounts represent the threshold, target, and maximum share payouts under performance share awards for the January 1, 20202022 – December 31, 20222024 performance period. The performance share awards are designed to reward the achievement over a three-year performance period of certain performance goals, as described in the Compensation Discussion and Analysis above, under the caption “Long-Term“Long-Term Performance-Based Equity and/or Cash Incentive Program.” The target amount shown represents a 100% payout of the number of shares awarded when the target performance levels are achieved. The amounts shown only at the Target level (without threshold or maximum levels) relate to restricted stock awards that vest on the third anniversary of the date of grant, provided that the employee continues to be employed and in good standing. |
3(3) | The amounts in this column represent options awarded under the 2013 Omnibus Plan during 2020.
|
4 | The grant date fair value of stock and option awards has been computed in accordance with FASB ASC Topic 718. |
The
non-equity incentive awards were made to the named executive officers under the Executive Officer Bonus Plan. The long-term equity incentive awards were made under the
20132021 Omnibus Plan and are described in more detail in the Compensation Discussion and Analysis above. The restricted shares that have been granted in
20202022 to executive officers are service based and become earned and vested at the end of a three-year period.
The performance shares that were awarded in 20202022 become earned and vested based on the achievement of certain performance goals during a three-year performance period from January 1, 20202022 to December 31, 2022,2024, established by the Compensation Committee at the time of the grant. The performance goals are based on a comparison of Horizon’s average performance over the performance period for the37
return on common equity, compounded annual growth rate of total assets, and return on average assets, all relative to the average performance for publicly traded banks with total assets between $1$5 billion and $5$10 billion on the SNL Bank Index for the same measures. Only banks that have reported year-end results by March 1st will be considered for comparison purposes. Each of the three performance goals is weighted roughly equally (34% for return on common equity; 33% for compounded annual growth rate of total assets; and 33% for return on average assets). The payout received by the recipient is determined by whether Horizon achieves the performance goal at a threshold level (50th to 74th percentile relative to the comparative SNL group), a target level (75th to 84th percentile relative to the comparative SNL group), or a maximum level (greater than 84th percentile relative to the comparative SNL group). A performance share award recipient can receive 50% of the award if Horizon achieves the threshold, 100% of the award if Horizon achieves the target, and 125% of the award if Horizon achieves the maximum.
The Compensation Committee has the discretion to make adjustments to the calculations when it deems it warranted due to
non-core, non-recurring events and charges, such as those associated with acquisitions and acquisition-related accounting adjustments. In
2020,2022, the Compensation Committee adjusted earnings for acquisition-related
costs.costs and other one-time events.
Unless the Compensation Committee determines otherwise, the executive officers are entitled to receive all cash dividends which would have been paid with respect to the performance shares as if they had been actual shares.
Outstanding Equity Awards at Fiscal
Year-End for 2020Year–End 2022
The following table presents information on stock options, restricted stock, and performance shares held by the named executive officers on December 31,
2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)(1) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(2) | | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) | | | Option
Exercise
Price
($) | | | Option
Expiration Date | | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(3) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($) | | | Equity Incentive
Plan: Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#) | | | Equity Incentive
Plan Awards
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) | |
Craig M. Dwight | | | 10,291 | | | | — | | | | N/A | | | | 10.38 | | | | March 15, 2026 | | | | 46,726 | | | $ | 741,074 | | | | N/A | | | | N/A | |
| | | 10,330 | | | | — | | | | N/A | | | | 16.76 | | | | March 21, 2027 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 5,753 | | | | 2,876 | | | | N/A | | | | 20.11 | | | | March 20, 2028 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 3,754 | | | | 7,507 | | | | N/A | | | | 16.74 | | | | March 19, 2029 | | | | | | | | | | | | N/A | | | | N/A | |
Mark E. Secor | | | 6,389 | | | | — | | | | N/A | | | | 10.38 | | | | March 15, 2026 | | | | 19,261 | | | | 305,479 | | | | N/A | | | | N/A | |
| | | 2,809 | | | | — | | | | N/A | | | | 16.76 | | | | March 21, 2027 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 1,627 | | | | 813 | | | | N/A | | | | 20.11 | | | | March 20, 2028 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 1,531 | | | | 3,062 | | | | N/A | | | | 16.74 | | | | March 19, 2029 | | | | | | | | | | | | N/A | | | | N/A | |
James D. Neff | | | 4,627 | | | | — | | | | N/A | | | | 10.38 | | | | March 15, 2026 | | | | 27,058 | | | | 429,140 | | | | N/A | | | | N/A | |
| | | 3,076 | | | | — | | | | N/A | | | | 16.76 | | | | March 21, 2027 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 3,020 | | | | 1,510 | | | | N/A | | | | 20.11 | | | | March 20, 2028 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 2,040 | | | | 4,079 | | | | N/A | | | | 16.74 | | | | March 19, 2029 | | | | | | | | | | | | N/A | | | | N/A | |
Kathie A. DeRuiter | | | 4,416 | | | | — | | | | N/A | | | | 8.99 | | | | June 18, 2023 | | | | 16,542 | | | | 262,356 | | | | N/A | | | | N/A | |
| | | 3,894 | | | | — | | | | N/A | | | | 9.87 | | | | March 18, 2024 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 5,356 | | | | — | | | | N/A | | | | 10.59 | | | | March 17, 2025 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 10,347 | | | | — | | | | N/A | | | | 10.38 | | | | March 15, 2026 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 2,407 | | | | — | | | | N/A | | | | 16.76 | | | | March 21, 2027 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 1,438 | | | | 719 | | | | N/A | | | | 20.11 | | | | March 20, 2028 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 1,171 | | | | 2,342 | | | | N/A | | | | 16.74 | | | | March 19, 2029 | | | | | | | | | | | | N/A | | | | N/A | |
Dennis J. Kuhn | | | 5,454 | | | | — | | | | N/A | | | | 8.99 | | | | June 18, 2023 | | | | 16,406 | | | | 260,199 | | | | N/A | | | | N/A | |
| | | 4,807 | | | | — | | | | N/A | | | | 9.87 | | | | March 18, 2024 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 5,599 | | | | — | | | | N/A | | | | 10.59 | | | | March 17, 2025 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 10,179 | | | | — | | | | N/A | | | | 10.38 | | | | March 15, 2026 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 2,239 | | | | — | | | | N/A | | | | 16.76 | | | | March 21, 2027 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 1,438 | | | | 719 | | | | N/A | | | | 20.11 | | | | March 20, 2028 | | | | | | | | | | | | N/A | | | | N/A | |
| | | 1,160 | | | | 2,319 | | | | N/A | | | | 16.74 | | | | March 19, 2029 | | | | | | | | | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards |
| Name | | Number of Securities Underlying Unexercised Options Exercisable (#)(1) | | Number of Securities Underlying Unexercised Options Unexercisable (#)(2) | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#) | | Option Exercise Price
($) | | Option Expiration Date |
| Craig M. Dwight | | 10,330 | | | — | | | N/A | | $ | 16.76 | | | March 21, 2027 |
| | 8,629 | | | — | | | N/A | | 20.11 | | | March 20, 2028 |
| | 11,261 | | | — | | | N/A | | 16.74 | | | March 19, 2029 |
| Mark E. Secor | | 2,809 | | | — | | | N/A | | 16.76 | | | March 21, 2027 |
| | 2,440 | | | — | | | N/A | | 20.11 | | | March 20, 2028 |
| | 4,593 | | | — | | | N/A | | 16.74 | | | March 19, 2029 |
| Thomas M. Prame | | N/A | | N/A | | N/A | | N/A | | N/A |
| Kathie A. DeRuiter | | 2,407 | | | — | | | N/A | | 16.76 | | | March 21, 2027 |
| | 2,157 | | | — | | | N/A | | 20.11 | | | March 20, 2028 |
| | 3,513 | | | — | | | N/A | | 16.74 | | | March 19, 2029 |
| Lynn M. Kerber | | N/A | | N/A | | N/A | | N/A | | N/A |
1. | | | | | |
| (1) | All options have a ten-year life with pro-rata vesting over a three- or five-year period from the grant date. |
2.(2) | The shares represented could not be acquired by the named executive officers as of December 31, 2020. 2022. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Stock Awards |
| Name | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | Market Value of Shares or Units of Stock That Have Not Vested
($) | | Equity Incentive Plan Awards: Number Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested
($) |
| Craig M. Dwight | | 12,127 | | | $ | 182,875 | | | 48,508 | | | $ | 731,501 | |
| Mark E. Secor | | 15,322 | | | 231,056 | | | 21,290 | | | 321,053 | |
| Thomas M. Prame | | 10,000 | | | 150,800 | | | — | | | — | |
| Kathie A. DeRuiter | | 4,471 | | | 67,423 | | | 17,887 | | | 269,736 | |
| Lynn M. Kerber | | 22,777 | | | 343,477 | | | 8,209 | | | 123,792 | |
3. | | | | | |
| (1) | Consists of awards of time-based restricted stock. |
| (2) | Consists of awards of performance and restricted shares. |
38
Option Exercises and Stock Vested for
20202022
The following table presents information on the exercise by named executive officers of stock options during
20202022 and the shares of restricted stock and performance share awards held by named executive officers that vested during
2020. At2022. On December 31,
2020,2022, performance share awards were not yet determinable for the performance period ended December 31,
2020.2022. A detailed description of how performance shares are earned and vested appears above in the Compensation Discussion and Analysis.
| | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
Name | | Number of
Shares
Acquired on
Exercise (#) | | | Value Realized
on Exercise
($)(1) | | | Number of
Shares
Acquired on
Vesting (#) | | | Value Realized
on Vesting ($) | |
Craig M. Dwight | | | — | | | $ | — | | | | 15,392 | | | $ | 161,154 | |
Mark E. Secor | | | — | | | | — | | | | 4,187 | | | | 43,838 | |
James D. Neff | | | — | | | | — | | | | 4,583 | | | | 47,984 | |
Kathie A. DeRuiter | | | — | | | | — | | | | 3,587 | | | | 37,556 | |
Dennis J. Kuhn | | | 8,625 | | | | 98,498 | | | | 3,337 | | | | 34,938 | |
1 Amounts reflecting value realized upon exercise of options are based on the difference between the closing price for a share on the date of exercise and the exercise price for a share.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number of
Shares Acquired
on Exercise
(#) | | Value Realized on Exercise ($)(1) | | Number of
Shares Acquired
on Vesting
(#) | | Value Realized
on Vesting
($) |
| Craig M. Dwight | | — | | | $ | — | | | 15,292 | | | $ | 306,299 | |
| Mark E. Secor | | — | | | — | | | 6,237 | | | 124,927 | |
| Thomas M. Prame | | — | | | — | | | — | | | — | |
| Kathie A. DeRuiter | | — | | | — | | | 4,770 | | | 95,543 | |
| Lynn M. Kerber | | — | | | — | | | 1,473 | | | 30,123 | |
| | | | | |
| (1) | Amounts reflecting value realized upon exercise of options are based on the difference between the closing price for a share on the date of exercise and the exercise price for a share. No options were exercised in 2022. |
Nonqualified Deferred Compensation for
20202022
The following table presents information on compensation deferred by and matching contributions for each of the named executive officers under either or both the Frozen SERP and 2005 SERP, which plans are discussed above in the Compensation Discussion and Analysis.
| | | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions
in Last Fiscal
Year ($)(1) | | | Registrant
Contributions
in Last Fiscal
Year ($)(1) | | | Aggregate
Earnings in
Last Fiscal
Year ($) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate
Balance at
Last Fiscal
Year End ($) | |
Craig M. Dwight | | $ | 70,000 | | | $ | 35,000 | | | $ | 37,531 | | | $ | — | | | $ | 2,287,554 | |
Mark E. Secor | | | 72,565 | | | | 35,000 | | | | (4,238 | ) | | | — | | | | 968,871 | |
James D. Neff | | | 105,492 | | | | 35,000 | | | | (203,703 | ) | | | — | | | | 1,737,637 | |
Kathie A. DeRuiter | | | 93,600 | | | | 35,000 | | | | (41,096 | ) | | | — | | | | 740,121 | |
Dennis J. Kuhn | | | 87,872 | | | | 35,000 | | | | (42,794 | ) | | | — | | | | 637,951 | |
1 Executive contributions are included in the “Salary” column of the Summary Compensation Table and Registrant Contributions are included in the “All Other Compensation” column of the Summary Compensation Table.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Executive Contributions in Last Fiscal Year ($)(1) | | Registrant Contributions in Last Fiscal Year ($)(1) | | Aggregate Earnings in Last Fiscal Year
($) | | Aggregate Withdrawals/Distributions ($) | | Aggregate Balance at Last Fiscal Year End ($) |
| Craig M. Dwight | | $ | 70,000 | | | $ | 35,000 | | | $ | 89,250 | | | $ | — | | | $ | 2,637,452 | |
| Mark E. Secor | | 75,606 | | | 35,000 | | | (289,884) | | | — | | | 1,215,720 | |
| Thomas M. Prame | | — | | | — | | | — | | | — | | | — | |
| Kathie A. DeRuiter | | 70,000 | | | 35,000 | | | (169,132) | | | — | | | 977,077 | |
| Lynn M. Kerber | | 35,000 | | | 17,500 | | | (7,309) | | | — | | | 97,538 | |
| | | | | |
| (1) | Executive contributions are included in the “Salary” column of the Summary Compensation Table and registrant contributions are included in the “All Other Compensation” column of the Summary Compensation Table. |
Potential Payments Upon Termination or Change in Control
Horizon and Horizon Bank have agreements with the named executive officers and plans in which the named executive officers participate that provide for benefits upon the resignation, severance, retirement or other termination of the named executive officers.
Employment Agreements
On January 17, 2023, the Board approved the appointment of Thomas M. Prame to serve as the Chief Executive Officer of both Horizon and Horizon Bank, effective as of June 1, 2023. Mr. Prame currently serves as the President of both Horizon and Horizon Bank and on the Board of Directors of Horizon Bank and will continue to serve in all of those positions in addition to his new role as Chief Executive Officer. Mr. Prame will succeed Craig M. Dwight as the long-time CEO of both Horizon and Horizon Bank. Mr. Dwight will continue to serve as CEO until June 1, 2023 and will continue to serve as Chairman of both Horizon and Horizon Bank thereafter. Mr. Neff haveDwight will retire as an employee of the Company effective as of July 3, 2023, which will trigger the retirement provisions of his employment agreement. The section below entitled “Employment Agreements” includes a description of the provisions of Mr. Dwight’s employment agreement applicable with respect to a termination of employment.
Employment Agreements
Mr. Dwight has been employed by Horizon under
a written employment
agreementsagreement since
2006 and 2011, respectively.2006. On December 31, 2019, Horizon and Horizon Bank entered into
an amended and restated employment
agreementsagreement with
both Mr. Dwight,
and Mr. Neff, with each agreement becoming effective on January 1, 2020,
(the “which was in effect until December 31, 2022, and, in connection with his appointment as President, on August 2, 2022, Horizon and Horizon Bank entered into an Employment Agreements”Agreement with Mr. Prame, effective as of August 15, 2022 (collectively, the “Employment Agreements”).
On September 20, 2022, Mr. Dwight entered into a second amended and restated employment agreement, effective January 1, 2023, which is separately described following the table below since it was not in effect at any time during 2022.
The table below includes a brief description of the key operative provisions of the Employment Agreements relating to potential payments upon termination of employment. The comparable termination39
provisions under the prior employment agreements in effect during 2019 provided for essentially the same severance benefits as provided in the Employment Agreements presently in effect with the following differences. Under the prior employment agreement, Mr. Dwight’s entitlement to cash reimbursement equivalent to the cost of continued participation in group health and life insurance programs was unlimited but is now limited to 110% of the cost. Also, Mr. Dwight will no longer be entitled to reimbursement of the expense of job placement services.
2022. Neither of the Employment Agreements provides for any payments to Mr. Dwight or Mr. NeffPrame upon a change in control, because any payments or benefits payable to them upon a change in control are addressed in new Change in Control Agreements for Mr. Dwight and Mr. Neff,Prame, as more fully described below in “Change in Control Agreements.”
The table below also notes circumstances in which the rights and benefits of Mr. Dwight and Mr.
NeffPrame may
differ.have differed.
| | | | | | | | |
Key Terms and
Conditions
| | Description |
| Term | | Dwight/Prame Differences
• Three-yearDwight term beginswas a three-year term beginning January 1, 2020Dwight/Neff Differences
• Dwight term ends and ending January 1, 2023
• NeffPrame term is a rolling 3-year1-year term beginning August 15, 2022 that will be extended annually for another year unless Horizon delivers notice to NeffPrame that it will not be extended • On January 1, 2025, Neff becomesNotwithstanding the foregoing, Dwight’s agreement was amended and restated on September 20, 2022, as described below. Dwight will retire as an employee-at-will,employee, effective as of July 3, 2023, which will trigger the retirement provisions of the second amended and either Horizon or Neff can terminate the relationship for any reason, or no reason, and without noticerestated employment agreement |
| |
| Salary & Benefits | | •Entitled to a base salary to be reviewed and potentially increased annually (but not decreased) by the Compensation Committee of the Board of Directors •Entitled to participate in all incentive compensation and benefit programs generally available to executive officers |
| | | | | | | | |
| Termination Provisions | | •Horizon can terminate the executive for “Cause,” which includes any of the following actions by the executive:o
◦Intentional acts of fraud, embezzlement, dishonestyo
◦Intentional damage causing material harm to Horizono
◦Material breach of the employment agreement or the Change in Control Agreemento
◦Gross negligence or insubordinationo
◦Violation of certain banking laws resulting in the loss of right to work for a depository institution ◦Prame: willful and material violation of Horizon’s written policies or codes of conduct or laws, including related to discrimination, harassment, or illegal or unethical conduct ◦Prame: conduct that causes (or is reasonably likely to cause) negative publicity, disgrace, embarrassment or disrepute ◦Prame: a conviction for a felony or a misdemeanor involving dishonesty, breach of trust or moral turpitude
•Both Dwight and NeffPrame have the right to terminate the employment relationship for “Good Reason,” which includes, among other reasons, the following:o
◦Office move more than 30 miles from homeo (
Prame: except if in connection with a move of Horizon’s headquarters to a new location) ◦Reductions of 10% or more in salary or total compensation, including benefit plan rights (unless institution-wideinstitution–wide reductions and proportionate to other executive officers)o
◦Assignment of materially different duties, reduced responsibilities, or removal from current position or title |
40
| | |
Key Terms and
Conditions
| | Description
|
| |
•Both Dwight and NeffPrame are required to provide a 60-day written notice before terminating the relationship without “Good Reason”
•Horizon can terminate the executive and the agreement for reasons related to the federal and state banking regulations, including situations in which the executive might be prohibited from engaging in banking under the Federal Deposit Insurance Act, or the Bank is found in default or in financial trouble under the Federal Deposit Insurance Act |
| |
| Special Compensation Rights Upon Certain Terminations | | •In the event Horizon terminates the executive without “Cause” or the executive resigns for “Good Reason,” the executive is entitled to the following payments:o
◦Base salary through date of terminationo
◦An amount equal to the then-currentthen–current annual base salary (Dwight receives this amount multiplied by two)o
◦Dwight: An amount equal to cash bonuses for the prior two calendar yearsNeff:
Prame:An amount equal to the average of cash bonuses for the prior two calendar yearso years. However, during 2022, the bonus calculation will be two times $275,000 (pro-rated to the actual number of days worked by Prame in 2022), and during 2023, the bonus calculation will be two times the average of any 2022 bonus plus the 2023 target bonus
◦Continued participation in group health and life insurance programs for a year (Dwight receives two years), or cash reimbursement in equivalent amount (subject to a ceiling of 110% of Horizon’s standard cost for providing the benefits)o
◦Vested and accrued incentive and benefit plan compensation and matching contributions ◦Prame: Cash reimbursement for reasonable expenses (as determined by the Board) actually incurred by Prame in searching for new employment during the one-year period following termination, up to $20,000
•In the event Horizon terminates the executive with “Cause” or the executive resigns without “Good Reason,” or the executive dies or is disabled, the executive is entitled to the following payments:o
◦Base salary through date of terminationo
◦Vested and accrued incentive and benefit plan compensation and matching contributions |
| | | | | | | | |
| Limitations on Payments | | •All payments to the executives are subject to FDIC restrictions on golden parachutes and indemnification, as well as subject to Internal Revenue Code Section 409A requirements and the deductibility limits of Internal Revenue Code Section 280G |
| |
| Conditions to Payments | | •Executives must sign a release of claims in favor of Horizon within 60 days following termination. The release must remain unrevoked during all revocation right periods. |
If Mr. Dwight’s or Mr.
Neff’sPrame’s employment had been terminated by Horizon without cause, or by the executive with good reason as of December 31,
2020,2022, each would have been entitled to a severance amount and other benefits under his employment agreement in the following amounts: Mr. Dwight $1,918,000 and Mr.
Neff $593,000.Prame $632,000.
If Mr. Dwight’s or Mr. Neff’sPrame’s employment had been terminated by Horizon with cause, by the executive without good reason or due to the executive’s death or disability, each executive, or his estate in the event of death, would have been entitled to base salary through the date of termination and to the41
payment of vested or accrued amounts under incentive compensation and employee benefits plans and life insurance proceeds. Neither Mr. Dwight nor Mr. NeffPrame was entitled to any benefits other than pursuant to life insurance policies as of December 31, 2020.2022. Therefore, if Mr. Dwight’s or Mr. Neff’sPrame’s employment had terminated on December 31, 2020,2022, the only amounts payable would have been life insurance and salary continuation proceeds in the amount of $800,000$500,000 for Mr. Dwight and $800,000$500,000 for Mr. Neff,Prame, or to each of their estates. These amounts exclude stock options and other equity plan awards that vest upon a change in control (and, in the case of stock options and time-based restricted stock, upon retirement, disability or death), which are discussed below in “Other Benefits Upon Termination or Change in Control.”
On September 20, 2022, Horizon and Horizon Bank entered into entered into a second amended and restated employment agreement with Mr. Dwight, effective January 1, 2023 (the “Amended Employment Agreement”). The Amended Employment Agreement provides for, among other things: (i) an annual base salary of $654,050, which reflects a 3% increase from Mr. Dwight’s prior employment agreement; (ii) a target bonus equal to $392,430 (the “Target Bonus”), which reflects a 3% increase from his prior employment agreement; (iii) long-term incentive compensation awards of $420,000 under the Horizon Bancorp, Inc. 2021 Omnibus Equity Incentive Plan, to be granted in March 2023, which awards will be split into 50% time based restricted stock and 50% restricted stock with performance based vesting; (iv) all other employee benefit plans and programs and all other incentive compensation plans and programs generally available to executive officers, including the Horizon Bancorp Employees’ Thrift Plan (a 401(k) plan) and the Horizon Bancorp 2005 Supplemental Executive Retirement Plan, as amended; and (v) if Mr. Dwight is still employed by the Company on January 1, 2024, a retention bonus of $850,000 (the “Retention Bonus”), which shall be comprised of a $425,000 cash bonus that shall vest and be paid on January 1, 2024 (or as soon as practicable thereafter) and a grant of restricted stock having a grant date value of $425,000, to be granted in March 2023 and to vest on the one year anniversary of the grant date.
The Amended Employment Agreement provides that if Horizon terminates Mr. Dwight’s employment without “Cause” (as defined in the Amended Employment Agreement), or if Mr. Dwight terminates his employment with “Good Reason” (as defined in the Amended Employment Agreement), Mr. Dwight will be entitled to the following: (i) that portion of his annual base salary earned through the date of termination; (ii) an amount equal to his remaining annual base salary through January 1, 2024 (instead of 2x his annual salary as provided in his prior employment agreement); (iii) an amount equal to the Target Bonus (instead of an amount equal to his prior two years bonuses as provided in his prior employment agreement); (iv) continued participation in group health and life insurance programs through January 1, 2024 (instead of two years as provided in his prior employment agreement), or cash reimbursement in an equivalent amount (subject to a ceiling of 110% of Horizon’s standard cost for providing the benefits); (v) the Retention Bonus will immediately vest and be payable on the first payday of 2024; and (vi) all other amounts that have vested and accrued prior to the termination under any incentive compensation or other qualified and non-qualified employee benefit plans, including any Horizon matching contributions. All options and other equity incentive awards held by Mr. Dwight at such time shall be treated in accordance with the applicable plan and award agreement(s) governing such awards. As a condition to receipt of certain of these payments and benefits from the Company, Mr. Dwight will be required to sign a release of claims in favor of Horizon.
In the event Horizon terminates Mr. Dwight’s employment for “Cause” (as defined in the Amended Employment Agreement) or Mr. Dwight terminates his employment without “Good Reason” (as defined in the Amended Employment Agreement), Mr. Dwight will only be entitled to receive the following: (i) that portion of his annual base salary earned through the date of termination; and (ii) all amounts that have vested and accrued prior to the termination under any incentive compensation or other qualified and non-qualified employee benefit plans. The Retention Bonus will automatically be forfeited. In addition, all options and other equity incentive awards held by Mr. Dwight at such time shall be treated in accordance with the applicable plan and award agreement(s) governing such awards.
There has been no change to the definition of “Cause” from Mr. Dwight’s current employment agreement, but the definition of “Good Reason” has been revised to allow Horizon to change Mr. Dwight’s titles and duties in connection with the appointment of a new Chief Executive Officer.
The Amended Employment Agreement further provides that, upon the termination of Mr. Dwight’s employment due to retirement, Mr. Dwight will be entitled to receive the same compensation and benefits payable to him for a termination without Cause or termination for Good Reason, except that (i) the cash portion of the Retention Bonus will immediately vest and be payable in accordance with its terms on the first payday of 2024, the restricted stock portion of the Retention Bonus shall continue to vest in accordance with its terms, and the requirement that Mr. Dwight be employed as of January 1, 2024 will be waived, and (ii) his participation in the group health and life insurance programs will not continue following his retirement. As a condition to receipt of certain of these payments and benefits from the Company, Mr. Dwight will be required to sign a release of claims in favor of the Company.
As previously disclosed, Mr. Dwight will continue to serve as Chief Executive Officer until June 1, 2023 and will continue to serve as Chairman of both Horizon and Horizon Bank thereafter. Mr. Dwight will retire as an employee of Horizon and Horizon Bank, effective as of July 3, 2023, which will trigger the retirement provisions of the Amended Employment Agreement.
All amounts payable to Mr. Dwight under the Amended Employment Agreement are subject to FDIC restrictions on golden parachutes and indemnification, as well as subject to Internal Revenue Code Section 409A requirements and the deductibility limits of Internal Revenue Code Section 280G.
Change in Control Agreements
On December 31, 2019,
Horizon Bank entered into new or amended Change in Control Agreements with each of its named executive officers, including Mr. Dwight, Mr. Secor, and Mr. Neff, withMs. DeRuiter, each agreement effective on January 1, 2020, (the “and Ms. Kerber, effective October 1, 2020. In connection with his appointment as President, on August 2, 2022, Horizon Bank entered into a Change in Control Agreements”Agreement with Mr. Prame, effective as of August 15, 2022 (collectively, the “Change in Control Agreements”). PriorThe Change in Control Agreement with Mr. Dwight will terminate upon his retirement as an employee of Horizon and Horizon Bank, effective as of July 3, 2023.
On December 1, 2022, Horizon Bank entered into an Amendment to Change in Control Agreement with Ms. DeRuiter (the “DeRuiter Amendment”). The DeRuiter Amendment amended Ms. DeRuiter’s existing Change in Control Agreement to modify the following two severance benefits that time, all of the named executive officers wereshe is entitled to receive if she experiences a qualifying termination during the 6 months before or during the year after a change in control severance(provided all other conditions are met): (i) an amount equal to the average of her total cash bonuses in the 2 years preceding termination multiplied by 2 (which has been increased from a multiple of 1) and (ii) continued participation in group health and life insurance benefits under eitherfor a period of 24 months (which has been increased from 12 months). All other material terms and conditions of Ms. DeRuiter’s existing employment agreementsChange in Control Agreement as in effect immediately prior to the DeRuiter Amendment remain in effect without change.
On December 1, 2022, Horizon Bank entered into an Amendment to Change in Control Agreement with Ms. Kerber (the “Kerber Amendment”). The Kerber Amendment amended Ms. Kerber’s existing Change in Control Agreement to (i) modify the base salary multiple, if she experiences a qualifying termination during the 6 months before or
existingduring the year after a change in control
agreements.(provided all other conditions are met), to a lump sum amount equal to two times her then-current base salary (which has been increased from a multiple of 1) and (ii) provide that Ms. Kerber must be and remain in compliance with restrictive covenants relating to non–solicitation of certain of the Bank’s customers and employees for a duration of 2 years (which has been increased from 1 year). All other material terms and conditions of Ms. Kerber’s existing Change in Control Agreement as in effect immediately prior to the Kerber Amendment remain in effect without change.
The table below includes a brief description of the key operative provisions of the Change in Control Agreements relating to potential payments upon termination of employment. The table below also notes circumstances in which the rights and benefits of each of the respective named executive officers
who have entered into Change in Control Agreements with Horizon Bank may differ.
| | | | | | | | | | | | | | |
Key Terms and Conditions | | Description | | Application to Executives |
| Term | | •Terminates immediately upon executive’s termination for any reason before a change in control •Upon a change in control, the term is fixed at 1 year | | •Same for all, except Kerber term begins October 1, 2020 and Prame term begins August 15, 2022 |
| | |
| Effect of a Change in Control | | •If a change in control occurs, and if executive experiences a “Qualifying Termination” during the 6 months before or the year after a change in control, then executive is entitled to certain severance benefits (provided all other conditions are met) | | •Same general right for all (see Severance Benefits below for specific severance benefit differences) |
| | |
| Two Types of “Qualifying Termination” | | •Bank terminates executive for any reason except for “cause”; Cause generally means breach and wrongdoing by executive, in which case executive does not receive severance benefits •Executive resigns for “good reason”; Good reason generally means that the executive’s quality of work life and/or compensation has been impaired by required relocations or reductions in position, responsibility, benefits, andor salary | | •Same for all |
| | |
| Additional Conditions to Receipt of the Severance Benefits | | •Executive must sign and deliver a release •Executive must be and remain in compliance with restrictive covenants relating to non-disclosure of confidential information, return of property, non-solicitation of certain of Bank’s customers and employees, and non-competition with Bank in certain areas | | •Same general condition for all (variations exist among executives with respect to duration of restrictive covenants based on executive’s position and responsibilities) |
42
| | | | |
Key Terms and
Conditions
| | Description
| | Application to Executives
|
| | | | |
Double Trigger Change in Control Severance Benefits (Change in control is first trigger; Qualifying Termination is second trigger) | | •Normal payroll. Base salary earned through the date of termination | |
• ��� Same for all |
| • Base salary multiple. A lump sum amount equal to the executive’s then-current base salary multiplied by the executive’s individual multiple
| |
•Multipleso Dwight 2.99
o Neff 2.99
o Secor 2.00
o DeRuiter 2.00
o Kuhn 2.0
|
| • Cash bonus multiple. An amount equal to the average of executive’s total cash bonuses in the 2 years preceding termination multiplied by the executive’s individual multiple
| |
•Multipleso Dwight 2.99
o Neff 2.00
o Secor 2.00
o DeRuiter 1.00
o Kuhn 1.00
|
| • Continued participation in group health and life insurance benefits.benefits. Subject to certain conditions, continued coverage for the executive’s individual benefit continuation term
| |
•Benefit continuation termo Dwight 35 months
o Neff 24 months
o Secor 24 months
o DeRuiter 12 months
o Kuhn 12 months
|
| • Vested incentive and benefit plan compensation. All amounts vested or accrued prior to termination under incentive compensation plans in accordance with their terms
| |
• Same for all |
| • Partial year bonus. An amount equal to the partial year bonus executive would have earned under an existing bonus plan in the year of a change in control, based on then-current financial results
| | •Same for all
•Multiples ◦Dwight 2.99 ◦Secor 2.00 ◦Prame 2.00 ◦DeRuiter 2.00 ◦Kerber 2.00
•Multiples ◦Dwight 2.99 ◦Secor 2.00 ◦Prame 2.00 ◦DeRuiter 2.00 ◦Kerber 1.00
•Benefit continuation term ◦Dwight 35 months ◦Secor 24 months ◦Prame 24 months ◦DeRuiter 24 months ◦Kuhn 12 months
•Same for all
•Same for all |
| | |
| Successors and Assigns | | •Bank will require any successor to assume the Change in Control Agreement | | •Same for all |
If Horizon had terminated the named executive officer’s employment without Cause or if the named executive officer had terminated his or her employment without Good Reason immediately after a change in control, then as of December 31, 2020,2022, the named executive officers would have been paid the amounts set forth in the table below (applied as if the Change in Control Agreements were then in effect). These amounts exclude stock options and other equity plan awards that vest upon a change in control (and, in the case of stock options and time-based restricted stock, upon retirement, disability or death), which are discussed below in “Other Benefits Upon Termination or Change in Control.”43
| | | | | | | | |
Named Executive Officer | | Salary, Bonus and
Other Severance Benefits | | | Life Insurance and
Salary Continuation Proceeds | |
Craig M. Dwight | | $ | 2,894,000 | | | $ | 800,000 | |
James D. Neff | | $ | 1,584,000 | | | $ | 800,000 | |
Mark E. Secor | | $ | 889,000 | | | $ | 800,000 | |
Kathie A. DeRuiter | | $ | 652,000 | | | $ | 770,000 | |
Dennis J. Kuhn | | $ | 623,000 | | | $ | 768,000 | |
| | | | | | | | | | | | | | |
| Named Executive Officer | | Salary, Bonus and Other Severance Benefits | | Life Insurance |
| Craig M. Dwight | | $ | 2,894,000 | | | $ | 500,000 | |
| Mark E. Secor | | 913,000 | | | 500,000 | |
| Thomas M. Prame | | 1,348,000 | | | 500,000 | |
| Kathie A. DeRuiter | | 915,000 | | | 500,000 | |
| Lynn M. Kerber | | 717,000 | | | 500,000 | |
If any of the named executive officers qualifies as a “key employee” under Internal Revenue Code Section 409A at the time of their separation from service, Horizon may not make certain payments of nonqualified deferred compensation to them earlier than six months following the date of their separation from service (or, if earlier, the date of their death). Each of the named executive officers currently is considered to be a “key employee.”
Other Benefits Upon Termination or Change in Control
A primary reason behind Horizon’s proposed
new omnibus equity incentive plan (see Proposal 2 in this Proxy Statement)2021 Omnibus Equity Incentive Plan is to alter the effect of a change in control on future equity incentive awards, in order to adopt double trigger vesting and/or acceleration of awards as the applicable circumstances occur.
In the event of a Change in Control of Horizon (as defined in the 2021 Omnibus Plan), the surviving or successor company may continue to employ participants and may continue or assume the participant’s awards under the 2021 Omnibus Plan in their original or modified form or may replace some or all of such awards with substitute awards. In any such case, the change in control itself will not accelerate the vesting of any awards. However, if within two years after the change in control, the participant experiences an involuntary termination other than for cause, then (i) outstanding stock options and SARs that are not yet fully exercisable shall immediately become exercisable and remain exercisable in accordance with their terms, and (ii) all other unvested awards, whether service or performance-based, shall immediately become fully vested and non-forfeitable, with performance goals deemed to have been satisfied at the target levels.
The definition of “Change in Control” in the 2021 Omnibus Plan is materially the same as the definition in the 2013 Omnibus Plan and includes:
i.Merger or Consolidation. Any merger, consolidation or similar transaction which involves Horizon or the Bank and in which persons who are the stockholders of Horizon or the Bank immediately prior to the transaction own, immediately after the transaction, shares of the surviving or combined entity which possess voting rights equal to or less than 50% of the voting rights of all stockholders of such entity, determined on a fully-diluted basis;
ii.Asset Sale or Lease. Any sale, lease, exchange, transfer or other disposition of all or substantially all of the consolidated assets of Horizon or the Bank;
iii.Stock Sale and Tender Offers. Any tender, exchange, sale or other disposition (other than disposition of the stock of Horizon or the Bank in connection with bankruptcy, insolvency, foreclosure, receivership or other similar transactions) or purchase (other than purchases by a Horizon or Bank-sponsored employee benefit plan, or purchases by members of the Board of Directors of Horizon or the Bank) of shares of stock which represent more than 25% of the voting power of Horizon or the Bank; or
iv.Reconstitution of Board. During any period of two consecutive years, individuals who at the date of the adoption of the 2021 Omnibus Plan constitute the Board, cease for any reason to constitute at least a majority thereof, unless the election of each director at the beginning of the period has been approved by directors representing at least a majority of the directors then in office.
Notwithstanding the foregoing, a Change in Control will not be deemed to have occurred (i) as a result of the issuance of stock by Horizon in a public offering; or (ii) due to stock ownership by any employee benefit plan sponsored by Horizon.
Existing awards remain subject to the provisions of the two plans currently in effect, as described in this section.
In the event of a
changeChange in
controlControl of Horizon, the recipient of stock options, shares of restricted stock, and performance share awards granted to executive officers under the 2003 Omnibus Plan or the 2013 Omnibus Plan (collectively,
“Omnibus Plans”“Omnibus Plans”) that are then outstanding and that either are not then exercisable or are subject to any restrictions will become immediately exercisable, and all restrictions will be removed, as of the first date that the change in control has been deemed to have occurred. Any performance criteria will be deemed to have been satisfied at the target level specified in the award. In addition, stock options and any time-based restricted stock granted to executive officers will be vested and fully exercisable as of the date of death, disability, or retirement of the executive officer.
The Omnibus Plans provide that a “change in control” will be deemed to have occurred if any of the following conditions or events occurs: (i) any merger, consolidation or similar transaction which involves Horizon and in which persons who are the shareholders of Horizon immediately prior to the transaction own, immediately after the transaction, shares of the surviving or combined entity which possess voting rights equal to or less than 50% of the voting rights of all shareholders of such entity, determined on a fully diluted basis; (ii) any sale, lease, exchange, transfer or other disposition of all or any substantial part of the consolidated assets of Horizon; (iii) any tender, exchange, sale or other disposition (other than disposition of the stock of Horizon or Horizon Bank in connection with bankruptcy, insolvency, foreclosure, receivership or other similar transactions) or purchase (other than purchases by Horizon or any Horizon sponsored employee benefit plan, or purchases by members of the Board of Directors of Horizon or any subsidiary) of shares which represent more than 25% of the voting power of Horizon or Horizon Bank; or (iv) during any period of two consecutive years, individuals who at the dates of the adoption of
Under the Omnibus Plans,
constitute the Board cease for any reason to constitute at least a majority of the Board, unless the election of each director at the beginning of the period has been approved by directors representing at least a majority of the directors then in office.44
The Omnibus Plans provide, however, that a change in control will not be deemed to have occurred (i) as a result of the issuance of stock by Horizon in connection with any public offering of its stock; (ii) with respect to any transaction unless such transaction has been approved or shares have been tendered by a majority of the shareholders who are not persons subject to liability under Section 16(b) of the Securities Exchange Act of 1934; or (iii) due to stock ownership by the Horizon Bancorp Employees’ Stock Ownership Plan Trust, which forms a part of the Horizon Bancorp Employees’ Stock Ownership Plan, the Horizon Bancorp Employee’s Thrift Plan Trust Agreement, which forms a part of the Horizon Bancorp Employee’s Thrift Plan, or any other employee benefit plan.
Ifif a change in control had occurred as of December 31, 2020,2022, the stock options, restricted stock and performance share awards granted to executive officers that were not previously vested would have become fully vested as of that date. The Omnibus Plans are discussed in more detail above in the Compensation Discussion and Analysis.
The outstanding stock options and performance share awards for the executive officers are discussed in more detail in the discussion of Outstanding Equity Awards at Fiscal
Year-End for
2020. The Omnibus Plans are discussed in more detail above in the Compensation Discussion and Analysis.COMPENSATION2022.
COMPENSATION OF
DIRECTORS DIRECTORS
The following table presents information about our compensation of members of the Board of Directors. Information on the compensation received by Mr. Dwight, who is a named executive officer, is included in the Summary Compensation Table above. Mr. Dwight does not receive any additional compensation for service on the Board of Directors.
Director Compensation for
2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned
or Paid in
Cash ($) | | | Stock
Awards
($) | | | Option
Awards
($) | | | Non-Equity
Incentive Plan
Compensation
($) | | | Change in Pension
Value and Nonqualified
Deferred Compensation
Earnings ($) | | | All Other
Compensation
($) | | | Total ($) | |
Susan D. Aaron | | $ | 38,266 | | | $ | 29,984 | | | | N/A | | | | N/A | | | $ | — | | | $ | — | | | $ | 68,250 | |
Eric P. Blackhurst | | | 36,183 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 66,167 | |
Lawrence E. Burnell | | | 36,683 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 66,667 | |
James B. Dworkin | | | 35,849 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 65,833 | |
Daniel F. Hopp | | | 45,016 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 75,000 | |
Michele M. Magnuson | | | 37,349 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 67,333 | |
Peter L. Pairitz | | | 38,766 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 68,750 | |
Steven W. Reed | | | 43,016 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 73,000 | |
Julie Scheck Freigang | | | 35,016 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 65,000 | |
Spero W. Valavanis | | | 37,016 | | | | 29,984 | | | | N/A | | | | N/A | | | | — | | | | — | | | | 67,000 | |
2022
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash
($) | | Stock Awards ($) | | | | | | | | | | Total
($) |
| Susan D. Aaron | | $ | 50,009 | | | $ | 29,991 | | | | | | | | | | | $ | 80,000 | |
| Eric P. Blackhurst | | 55,009 | | | 29,991 | | | | | | | | | | | 85,000 | |
| Lawrence E. Burnell | | 45,009 | | | 29,991 | | | | | | | | | | | 75,000 | |
| James B. Dworkin | | 50,009 | | | 29,991 | | | | | | | | | | | 80,000 | |
Daniel F. Hopp(1) | | 55,009 | | | 29,991 | | | | | | | | | | | 85,000 | |
| Michele M. Magnuson | | 57,509 | | | 29,991 | | | | | | | | | | | 87,500 | |
| Peter L. Pairitz | | 57,509 | | | 29,991 | | | | | | | | | | | 87,500 | |
| Steven W. Reed | | 55,009 | | | 29,991 | | | | | | | | | | | 85,000 | |
| Julie S. Freigang | | 50,009 | | | 29,991 | | | | | | | | | | | 80,000 | |
| Spero W. Valavanis | | 50,009 | | | 29,991 | | | | | | | | | | | 80,000 | |
| | | | | |
| (1) | Daniel F. Hopp retired from the Board, effective as of December 31, 2022, in accordance with the mandatory retirement age contained in Horizon’s Bylaws at that time. On December 20, 2022, the Board appointed Vanessa P. Williams to serve on the Board, effective as of January 1, 2023, to fill the vacancy resulting from Mr. Hopp’s retirement. |
Horizon
planned to paypaid each of its
non-employee directors a cash retainer of
$35,000$45,000 and a retainer in common shares equal in value to $30,000 for their services in
2020.2022. Active employees of Horizon
and/or Horizon Bank receive no separate compensation for their services as directors, including Mr.
NeffPrame who serves on the Board of Directors of Horizon Bank.
Due to the pandemic in 2020, the Directors waived their cash retainers. The Chair of the Compensation Committee receives an additional
$5,000,$7,500, the Chair of the Corporate Governance and Nominating Committee receives an additional
$2,000,$5,000, the Chair of the Enterprise Risk Management and Credit Policy Committee receives an additional
$4,000,$7,500, the Chair of the Audit Committee receives an additional
$8,000$10,000 and the Chairs of the Asset Liability Committee and Trust Committee receive an additional
$2,000.$5,000. The Lead Director receives an additional fee of $10,000.
In 2022, the members of the President Search Committee received an additional $5,000 each.
Directors do not receive additional compensation for attending meetings of committees of the Board or for special assignments or meetings.
In April 2012, the Board adopted Ownership Guidelines that require each independent director to maintain ownership of common shares having a value equal to at least three times their annual retainer. The Ownership Guidelines are discussed above in the “Stock Ownership Guidelines” section under “Corporate Governance.” All of the members of the Horizon Board of Directors also serve as directors of Horizon Bank, which is an Indiana state bank. All of the directors satisfy the Ownership Guidelines.45
Horizon sponsors a Directors’ Deferred Compensation Plan, which allows
non-employee directors of Horizon and Horizon Bank to elect to defer the receipt of fees for their services. Earnings on fees deferred under the plan are based on the five-year Treasury rate plus 200 basis points but not to exceed 120% of the Applicable Federal Long-Term Rate for monthly compounding. The deferred fees may be invested in Horizon common shares. Distributions of deferred fees are made to participants or their beneficiaries in a lump sum or annual installments, or in Horizon common shares, upon death or disability of the participants or as designated by participants. Participants have no rights to amounts deferred other than rights as general creditors of Horizon.
REPORT
REPORT OF
THE AUDIT COMMITTEE AUDIT COMMITTEE
This report is being provided to inform shareholders of the Audit Committee’s oversight with respect to Horizon’s financial reporting.
Review with Management and Independent Auditors
The Audit Committee has reviewed and discussed with management the audited financial statements for the year ended December 31,
2020.2022. In addition, the Audit Committee has discussed with
BKD,FORVIS, LLP all communications required by generally accepted auditing standards, including the matters required to be discussed by the Statement of Auditing Standards No. 16, “Communications with Audit Committees” issued by the Public Company Accounting Oversight Board.
The Audit Committee has received the written disclosures and the letter from
BKD,FORVIS, LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding
BKD,FORVIS, LLP’s communications with the Audit Committee concerning independence, and has discussed with
BKD,FORVIS, LLP their independence.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31,
2020,2022, to be filed with the Securities and Exchange Commission.
Julie
ScheckS. Freigang
46
COMMON SHARE OWNERSHIP OF
MANAGEMENT MANAGEMENT AND CERTAIN BENEFICIAL OWNERS CERTAIN BENEFICIAL OWNERS
Security Ownership of Management
The following table sets forth the number and percent of common shares beneficially owned by the directors, the executive officers named in the Summary Compensation Table, and all directors and executive officers as a group as of
January 1, 2021.March 3, 2023. On that date,
43,880,56243,941,427 Horizon common shares were issued and outstanding. Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o Horizon Bancorp, Inc.
, 515 Franklin Street, Michigan City, Indiana 46360.
| | | | | | | | |
Name | | Shares Beneficially Owned(1) | | | Percentage | |
Directors: | | | | | | | | |
Susan D. Aaron | | | 55,954 | (2) | | | * | |
Eric P. Blackhurst | | | 12,415 | (3) | | | * | |
Lawrence E. Burnell | | | 34,861 | (4) | | | * | |
Craig M. Dwight | | | 470,296 | (5) | | | * | |
James B. Dworkin | | | 39,755 | (6) | | | * | |
Julie Scheck Freigang | | | 3,312 | (7) | | | | |
Daniel F. Hopp | | | 68,389 | (8) | | | * | |
Michele M. Magnuson | | | 39,714 | (9) | | | * | |
Peter L. Pairitz | | | 218,155 | (10) | | | * | |
Steven W. Reed | | | 25,509 | (11) | | | * | |
Spero W. Valavanis | | | 70,741 | (12) | | | * | |
| | |
Named Executive Officers: | | | | | | | | |
| | |
Kathie A. DeRuiter | | | 104,843 | (13) | | | * | |
Dennis J. Kuhn | | | 50,109 | (14) | | | * | |
James D. Neff | | | 347,812 | (15) | | | * | |
Mark E. Secor | | | 65,511 | (16) | | | * | |
All Directors and Executive Officers as a Group (16 Persons): | | | 1,618,042 | (17) | | | 3.47 | % |
*Beneficial ownership is less than one percent.
| | | | | | | | | | | | | | | | | |
| Name | | Shares Beneficially Owned(1) | | Percentage |
| Directors: | | | | | |
| | | | | |
| Susan D. Aaron | | 53,410 | | (2) | | * |
| Eric P. Blackhurst | | 16,206 | | (3) | | * |
| Lawrence E. Burnell | | 36,599 | | (4) | | * |
| Craig M. Dwight | | 486,444 | | (5) | | 1.12% |
| James B. Dworkin | | 45,375 | | (6) | | * |
| Julie Scheck Freigang | | 6,460 | | (7) | | * |
| Michele M. Magnuson | | 36,461 | | (8) | | * |
| Peter L. Pairitz | | 221,682 | | (9) | | * |
| Steven W. Reed | | 26,790 | | (10) | | * |
| Spero W. Valavanis | | 75,797 | | (11) | | * |
| Vanessa P. Williams | | 1,608 | | (12) | | |
| | | | | |
| Named Executive Officers: | | | | | |
| | | | | |
| Kathie A. DeRuiter | | 89,457 | | (13) | | * |
| Lynn M. Kerber | | 26,565 | | (14) | | * |
| Thomas M. Prame | | 17,050 | | (15) | | * |
| Mark E. Secor | | 76,900 | | (16) | | * |
| | | | | |
| All Directors and Executive Officers as a Group (17 Persons): | | 1,310,044 | | (17) | | 3.01% |
| | | | | |
| *Beneficial ownership is less than one percent. |
| 1. | | | | |
| (1) | The information shown regarding shares beneficially owned is based upon information furnished to Horizon by the individuals listed. The nature of beneficial ownership, unless otherwise noted, represents sole voting or investment power. Stock options that vested on or before March 1, 2021,3, 2023, or that will become exercisable within 60 days after that date are included in the number of shares beneficially owned. |
| (2) | 2. | All of the shares are owned directly by Ms. Aaron and held in her revocable living trust. |
| (3) | 3. | All of the shares are owned directly by Mr. Blackhurst. |
| (4) | 4. | Consists of 9,1689,280 shares owned directly by Mr. Burnell and 25,69327,319 shares held by a trust for which Mr. Burnell is the grantor and serves as trustee. |
| (5) | 5. | Consists of 30,12830,220 vested stock options, 17,27326,433 shares owned directly by Mr. Dwight, 223,339 shares owned jointly by Mr. Dwight and his spouse, 153,887 shares held by the ESOP, and 45,66948,629 shares held by the Thrift Plan. Plan, and 157,823 shares held in Mr. Dwight’s individual retirement account as to which Mr. Dwight has dispositive and voting power. |
| (6) | 6. | Consists of 3,4263,473 shares owned directly by Mr. Dworkin and 36,32941,902 shares owned jointly by Mr. Dworkin and his spouse. |
| (7) | 7. | Consists of 9697 shares owned directly by Ms. Freigang and 3,2166,363 shares owned jointly by Ms. Freigang and her spouse. |
| (8) | 8. | Consists of 33,066 shares owned directly by Mr. Hopp and 35,323 shares held by a trust for which Mr. Hopp is the grantor and serves as trustee. |
| 9. | Consists of 39,71436,461 shares held by a trust for which Ms. Magnuson is the grantor and serves as trustee.
|
| (9) | 10. | All of the shares are owned directly by Mr. Pairitz. |
| (10) | 11. | All of the shares are owned directly by Mr. Reed. |
| (11) | 12. | All of the shares are owned directly by Mr. Valavanis. |
| (12) | All of the shares are owned directly by Ms. Williams. |
47
| 13. | | | | |
| (13) | Consists of 5,2107,615 shares owned directly by Ms. DeRuiter, 32,436 shares held by the ESOP; 23,26125,277 shares held by the Thrift Plan, 29,0298,077 vested stock options, and 14,90714,908 shares held in the 2005 SERP.SERP and 33,580 shares held in Ms. DeRuiter’s individual retirement account as to which Ms. DeRuiter has dispositive and voting power. |
| (14) | 14. | Consists of 9,06523,689 shares owned directly by Mr. Kuhn, 4,365 shares held by the ESOP; 3,250Ms. Kerber, 1,244 shares held by the Thrift Plan, 30,876 vested stock options and 2,5531,244 shares held in the 2005 SERP. |
| (15) | 15. | Consists of 259,86416,750 shares owned directly by Mr. Neff, 11,894Prame and 300 shares held in Mr. Prame’s individual retirement account as to which Mr. Prame has dispositive and voting power. |
| (16) | Consists of 19,493 shares owned directly by the ESOP, 18,227Mr. Secor, 18,568 shares held by the Thrift Plan, 12,7639,842 vested stock options, and 45,064 shares held in the 2005 SERP. |
| 16. | Consists of 7,486 shares owned directly by Mr. Secor, 9,111 shares held by the ESOP, 17,119 shares held by the Thrift Plan, 12,356 vested stock options and 19,439 shares held in the 2005 SERP.
SERP, and 9,558 shares held in Mr. Secor’s individual retirement account as to which Mr. Secor has dispositive and voting power. |
| (17) | 17. | Includes 115,15248,139 shares covered by stock options and 363,614271,604 shares as to which voting and investment powers are shared by members of the group with their spouses or other family members or held by trusts. |
Security Ownership of Certain Beneficial Owners
The following table and accompanying footnotes set forth information concerning the beneficial ownership of Horizon’s common shares by each person or entity known by us to own beneficially more than 5% of our common shares as of
December 31, 2020. | | | | | | | | |
Name and Address of Beneficial Owner | | Number of Shares
Beneficially Owned | | | Percent of
Common Shares | |
BlackRock, Inc.1
55 East 52nd Street
New York, NY 10055 | | | 2,964,727 | | | | 6.8 | % |
William Nathan Salin Family Irrevocable Trust #12
10587 Coppergate Drive
Carmel, IN 46032 | | | 3,251,420 | | | | 7.2 | % |
1 Ownership based on the Schedule 13G/A filed on January 29, 2021.
2 Ownership based solely on the Schedule 13G/A filed on February 14, 2020.
CERTAIN BUSINESS RELATIONSHIPSMarch 3, 2023.
| | | | | | | | | | | | | | |
| Name and Address of Beneficial Owner | | Number of Shares Beneficially Owned | | Percent of Common Shares |
BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | | 4,169,864 | | | 9.5% |
Dimensional Fund Advisors LP(2) 6300 Bee Cave Road, Building One Austin, TX 78746 | | 2,486,153 | | | 5.7% |
The Vanguard Group(3) 100 Vanguard Blvd. Malvern, PA 19355 | | 2,251,969 | | | 5.3% |
| | | | | |
| (1) | Ownership based on the Schedule 13G filed on January 24, 2023. |
| (2) | Ownership based solely on the Schedule 13G filed on February 10, 2023. |
| (3) | Ownership based solely on the Schedule 13G/A filed on February 9, 2023. |
CERTAIN BUSINESS RELATIONSHIPS AND
TRANSACTIONS TRANSACTIONS
In accordance with our Corporate Governance and Nominating Committee Charter and NASDAQ requirements, during 20202022 the Corporate Governance and Nominating Committee was responsible for reviewing and approving the terms and conditions of all related person transactions. Pursuant to the Corporate Governance and Nominating Committee Charter, the Corporate Governance and Nominating Committee will review any non-loan transaction in which Horizon is a party and the amount involved exceeds $120,000, and in which any of Horizon’s directors, nominees for director, executive officers or 5% or greater shareholders has a direct or indirect material interest. After its review, the Corporate Governance and Nominating Committee will only approve those transactions that are in, or are not inconsistent with, the best interests of Horizon and its shareholders.
Horizon’s Amended and Restated Articles of Incorporation provided the procedures for the Board to follow in approving or ratifying transactions with Horizon in which a director has a direct or indirect interest. The Articles provide that such transactions will be approved or ratified upon the affirmative vote of a majority of the directors on the Board or a Board committee who do not have a direct or indirect interest in the transaction or by a vote of the shareholders.
Horizon’s Code of Ethics for Executive Officers and Directors and the Advisor Code of Conduct for Horizon and Horizon Bank provide the policies and procedures for the review and approval or ratification of conflict of interest transactions. Any situations involving potential conflicts of interest involving an executive officer, director, or member of his or her family, if material, are to be reported and discussed with the Code of Ethics contact person. For executive officers, the contact person is the Chief Executive Officer, or if the executive officer believes it more appropriate, the Chair of the Corporate Governance and Nominating Committee or the Lead Director. For the Chief Executive Officer and
directors,Directors, the contact person is the Chair of the Corporate Governance and Nominating Committee or the Lead Director.
Directors and executive officers of Horizon and their associates were customers of, and had transactions with, Horizon Bank in the ordinary course of business during
2020.2022. Horizon expects that comparable transactions will occur in the future. These transactions were made in the ordinary course of business on substantially the same terms, including interest rates, collateral and repayment terms, as those prevailing at the time for comparable transactions with unrelated third parties. In the opinion of Horizon’s management, these transactions did not involve more than normal risk of collectability or present other unfavorable features. Loans made to directors and executive officers are in compliance with federal banking regulations and are thereby exempt from insider loan prohibitions included in the Sarbanes-Oxley Act of 2002.
48
PROPOSAL 2
Approval of Horizon Bancorp, Inc. 2021 Omnibus Equity Incentive Plan
Our Board of Directors has approved the Horizon Bancorp, Inc. 2021 Omnibus Equity Incentive Plan (the “2021 Plan”) and is submitting it to our shareholders for approval. The principal features of the 2021 Plan are summarized below. The complete text of the 2021 Plan is attached as Appendix A.
The purposes of the 2021 Plan are to further the growth and financial success of Horizon by (i) aligning the interests of the participants with the interests of Horizon’s shareholders, through the ownership of shares of common stock and through other incentives; (ii) providing participants with an incentive for excellence in individual performance; and (iii) promoting teamwork among participants. The 2021 Plan is also intended to provide flexibility to Horizon in its ability to motivate, attract and retain the services of officers, employees and consultants who make significant contributions to the company’s success and to allow participants to share in the success of Horizon. Outside consultants and non-employee members of our Board of Directors may also receive awards under the 2021 Plan.
A primary reason for adopting the 2021 Plan is to replace the Horizon Bancorp, Inc. Amended and Restated 2013 Omnibus Equity Incentive Plan (the “2013 Plan”), which will expire on February 1, 2023, and which contains certain single trigger change-in-control provisions and certain liberal share recycling provisions that Horizon desires to eliminate. Awards under the 2013 Plan remain outstanding but assuming the shareholders approve the 2021 Plan, no new awards may be granted under the 2013 Plan.
We are reserving 1,787,548 shares of our common stock for future awards under the 2021 Plan, which includes 1,400,000 new shares of common stock plus 387,548 shares of common stock remaining and unused in the 2013 Plan that will be rolled over into the 2021 Plan.
We are asking our shareholders to approve the 2021 Plan, which will become effective immediately upon shareholder approval.
Summary of the 2021 Plan
This summary does not purport to be a complete description of all the provisions of the 2021 Plan and is qualified in its entirety by the terms of the 2021 Plan, a copy of which is included in this Proxy Statement as Appendix A.
Administration
The 2021 Plan will be administered by the Compensation Committee of Horizon’s Board of Directors, or any other committee that the Board designates from time to time (the “Committee”). The Committee must consist of at least three disinterested and independent Board members.
The Committee has the authority, subject to the terms of the 2021 Plan, to take the following actions:
Select recipients of awards from among employees, affiliate’s employees, outside consultants and non-employee directors
Determine the sizes and types of awards
Determine the terms and conditions of awards, including performance goals and vesting
Interpret the 2021 Plan, hold meetings and make administrative rules and regulations relating to the 2021 Plan
49
