| ☐ | Fee paid previously with preliminary materials. |
☐ | |
Fee computed on table |
Dear Fellow Stockholder:
On behalf of the Board of Directors of BankFinancial Corporation (the “Company”), I cordially invite you to attend our 20162023 Annual Meeting of Stockholders. The meeting will be held at the Drake Hotel Oak Brook, 2301 York Road, Oak Brook,Chicago Marriott Southwest at Burr Ridge, 1200 Burr Ridge Pkwy., Burr Ridge, Illinois, on Tuesday,
At the Annual Meeting, our stockholders will vote on the election of
The Board of Directors, acting on the recommendations of the Corporate Governance and Nominating Committee, has nominated incumbents John M. HausmannF. Morgan Gasior and GlenDebra R. WherfelZukonik to serve as directors of the Company for three-year terms.
The Board of Directors recommends that you vote your shares as follows:
FOR the election of our two directorWe are using the “Notice and Access” method of providing proxy materials to you via the Internet in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). We believe that this process should provide you with a convenient and quick way to access your proxy materials and vote your shares, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials. On or about April 29, 2016,12, 2023, we will mail to our stockholders a Stockholder Meeting Notice (“Meeting(the “Meeting Notice”) containing instructions on how to access our Proxy Statement and 20152022 Annual Report, and how to vote your shares. This noticeThe Meeting Notice will also contain instructions on how you may receive, if you wish, a paper copy of your proxy materials.
By voting your shares promptly, you will help us reduce the time and expense of soliciting proxies, and you will also ensure that your shares are represented at the Annual Meeting.
Thank you in advance for your attention to this important matter. We are most appreciative of your continued interest and support as stockholders of the Company and as valued customers of BankFinancial, F.S.B.NA.
| Very truly yours, | ||
 | ||
F. Morgan Gasior Chairman and Chief Executive Officer |
BANKFINANCIAL CORPORATION
60 North Frontage Road
Burr Ridge, Illinois 60527
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On
To the Stockholders of BankFinancial Corporation:
Notice is hereby given that the Annual Meeting of Stockholders (the “Annual Meeting”) of BankFinancial Corporation a Maryland corporation, will be held at the Drake Hotel Oak Brook, 2301 York Road, Oak Brook,Chicago Marriott Southwest at Burr Ridge, 1200 Burr Ridge Pkwy., Burr Ridge, Illinois, on Tuesday,
The purpose of the Annual Meeting is to consider and act upon the following, as described more fully in the Company’s Proxy Statement:
1. | To elect two |
2. | To ratify the engagement of |
| 2023; | ||
3. | To consider an advisory, non-binding resolution to approve our executive compensation; | |
| 4. | To consider an advisory, non-binding proposal with respect to the frequency of future advisory, non-binding votes on executive compensation; and |
5. | To transact such other business as may properly come before the Annual Meeting, or any adjournments or postponements thereof; the Board of Directors and management are not aware of any such other business. |
The Board of Directors has fixed the close of business on
| By Order of the Board of Directors | ||
 | ||
| James J. Brennan | ||
| Secretary |
Burr Ridge, Illinois
Important Notice Regarding the Availability of Proxy Materials for the 20162023 Annual Meeting
Our Proxy Statement for the
2023 PROXY STATEMENT
PROXY STATEMENT
BankFinancial Corporation
60 North Frontage Road
Burr Ridge, Illinois 60527
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of BankFinancial Corporation of proxies to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”) that will be held at the Drake Hotel Oak Brook, 2301 York Road, Oak Brook,Chicago Marriott Southwest at Burr Ridge, 1200 Burr Ridge Pkwy., Burr Ridge, Illinois, on Tuesday,
This Proxy Statement and the accompanying Notice of Annual Meeting and proxy card are first being made available to the stockholders of BankFinancial Corporation on or about
AprilAn Annual Report for the year ended
December 31,BankFinancial Corporation, a Maryland corporation headquartered in Burr Ridge, Illinois, became the owner of all of the issued and outstanding capital stock of BankFinancial, NA, formerly known as BankFinancial, F.S.B. (the(each referred to herein as the “Bank”) on June 23,in 2005, when it consummated a plan of conversion and reorganization thatof the Bank and its predecessor holding companies, BankFinancial MHC, Inc. (“BankFinancial MHC”) and BankFinancial Corporation, a federal corporation, adopted on August 25, 2004. BankFinancial Corporation, the Maryland corporation, was organized in 2004 to facilitate the mutual-to-stock conversion, and to become the holding company for the Bank upon the completion of the mutual-to-stock conversion.
The following is information regarding the Annual Meeting and the voting process.
Why am I receiving this Proxy Statement?
Our Board of Directors has made these materials available to you on the Internet or has delivered printed versions of these materials to you by mail pursuant to your request in connection with the Board of Directors’ solicitation of proxies for use at our Annual Meeting. As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this Proxy Statement.
You are receiving this Proxy Statement from us because at the close of business on
When you vote your shares, you appoint the proxy holder as your representative at the Annual Meeting. The proxy holder will vote your shares as you have instructed, thereby ensuring that your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, please vote your shares in advance of the Annual Meeting in case your plans change.
If you have voted your shares and an issue comes up for a vote at the Annual Meeting that is not identified on the proxy card, the proxy holder will vote your shares, pursuant to your proxy, in accordance with his or hertheir discretion.
What matters will be voted on at the Annual Meeting?
You are being asked to vote on the election of our
two directorThese matters are more fully described in this Proxy Statement.
How do I vote?
Stockholders who own their shares in their name may vote in person at the Annual Meeting by filling out a ballot or may authorize a proxy to vote on his or hertheir behalf. There are three ways to authorize a proxy:
1. | Internet : You may access the proxy materials on the Internet at www.envisionreports.com/BFIN and follow the instructions on the proxy card or on the Meeting Notice. |
2. | Telephone: You may call, toll-free, 1-800-652-VOTE (8683) and follow the instructions provided by the recorded message. |
3. | Mail: If you received your proxy materials by mail, you may vote by signing, dating and mailing the enclosed proxy card in the postage paid envelope provided. |
You may use the Internet or telephone to submit your proxy until 1:00 a.m.A.M., Chicago, Illinois Time on the morning of the Annual Meeting,
Stockholders who hold shares in “street name,” that is, through a broker, should instruct their broker to vote their shares by following the instructions provided by the broker. Your vote as a stockholder is important. Please vote as soon as possible to ensure that your vote is recorded. See “If I hold shares in the name of a broker, who votes my shares?” below.
What if I sign and date my proxy but do not provide voting instructions?
A proxy that is signed and dated, but which does not contain voting instructions will be voted as follows:
• | “FOR” the two director nominees named in this Proxy Statement; | |
• | “FOR” the ratification of the engagement of RSM US LLP; | |
• | “FOR” the approval of the advisory, non-binding resolution to approve our executive compensation; and | |
| • | “FOR” “1 Year” as the frequency of future advisory, non-binding votes on executive compensation. |
What does it mean if I receive multiple proxy materials?
It means that you have multiple holdings reflected in our stock transfer records and/or in accounts with stockbrokers. Please vote all shares. No proxy cards are duplicated.
If I hold shares in the name of a broker, who votes my shares?
If you received this Proxy Statement from your broker, your broker should have given you instructions for directing how your broker should vote your shares. It will then be your broker’s responsibility to vote your shares for you in the manner you direct.
Under the rules of various national and regional securities exchanges, brokers may generally vote on routine matters, such as the ratification of an independent registered public accounting firm, but cannot vote on non-routine matters such as the election of directors and advisory, non-binding votes on executive compensation unless they have received voting instructions from the person for whom they are holding shares. If your broker does not receive instructions from you on how to vote particular shares on matters on which your broker does not have discretionary authority to vote, your broker will return the proxy card to us, indicating that he or she does not have the authority to vote on these matters. This is generally referred to as a “broker non-vote.” At the Annual Meeting, broker non-votes will not affect the outcome of the voting, as described below under “How many votes are needed for each proposal?” Therefore, weWe encourage you to provide directions to your broker as to how you want your shares voted on the matters to be brought before the Annual Meeting. You should do this by carefully following the instructions your broker gives you concerning its procedures so that your shares will be voted at the Annual Meeting.
What if I change my mind after I vote my shares?
If you hold your shares in your own name, you may revoke your proxy and change your vote by:
• | following the instructions for telephone or Internet voting appearing on your proxy card; | |
• | signing another proxy card with a later date and returning the new proxy card by mail to our stock transfer agent and registrar, Computershare Trust Company, N.A., or by sending it to us to the attention of the Secretary of the Company, provided that the new proxy card is actually received by the Secretary before the polls close at the Annual Meeting; | |
• | sending notice addressed to the attention of the Secretary of the Company that you are revoking your proxy, provided that the notice is actually received by the Secretary before the polls close at the Annual Meeting; or | |
| • | voting in person at the Annual Meeting in accordance with the established voting rules and procedures. |
If you hold your shares in the name of a broker and desire to revoke your proxy, you will need to contact your broker to revoke your proxy.
Please mail any new proxy cards to Proxy Services, in care of Computershare Trust Company, N.A.,Investor Services, at P.O. Box 43101, Providence, Rhode Island 02940-5067.RI 02040-5067. You may send the notice described above or new proxy card to us as follows: BankFinancial Corporation, 15W06060 North Frontage Road, Burr Ridge, Illinois 60527, Attention: James J. Brennan, Secretary.
How are proxy materials delivered?
BankFinancial controls its costs for the Annual Meeting by following SEC rules that allow for the delivery of proxy materials to the Company’s stockholders via Notice and Access, which delivers materials through the Internet. In addition to reducing the amount of paper used in producing these materials, this method lowers the costs associated with mailing the proxy materials to stockholders. Stockholders who own shares directly and not through a broker will have a Meeting Notice delivered directly to their mailing address. Stockholders whose shares are held in the name of a broker willshould have a Meeting Notice forwarded to them by the broker that holds the shares. Stockholders who have requested paper copies of the proxy materials will receive this Proxy Statement, the 20152022 Annual Report and a proxy card.
If you received only a Meeting Notice by mail, you will not receive a printed copy of the proxy material unless you request a copy by following the instructions on the notice. The Meeting Notice also contains instructions for accessing and reviewing the proxy materials over the Internet and provides directions for submitting your vote over the Internet.
How do I request a paper copy of the proxy materials?
You may request a paper copy of the proxy materials by following the instructions below. You will be asked to provide your 15-digit control number located on your Meeting Notice.
1. | Call the toll-free telephone number 1-866-641-4276 and follow the instructions provided, or |
2. | Access the website at www.envisionreports.com/BFIN and follow the instructions provided, or |
3. | Send an email to investorvote@computershare.com with “Proxy Materials BankFinancial Corporation” in the subject line. Include in the message your full name and address, plus the number located in the shaded bar on your Meeting Notice, and state in the email that you want a paper copy of current meeting materials. |
Please make your request for a copy on or before June 8, 2016May 11, 2023 to facilitate timely delivery before the Annual Meeting.
Stockholders who hold shares in “street name”name,” that is, through a broker, should request copies of the proxy materials by following the instructions provided by the broker.
How many votes do we need to hold the Annual Meeting?
A majority of the shares that are outstanding and entitled to vote as of the record date must be present in person or by proxy at the Annual Meeting in order for us to hold the Annual Meeting and conduct business. Abstentions and broker non-votes are considered present at the Annual Meeting and are counted in determining whether or not a quorum is present.
Shares are counted as present at the Annual Meeting if the stockholder either:
• | is present and votes in person at the Annual Meeting; or | |
• | has properly submitted a signed proxy form or other proxy (including a broker non-vote). |
At the close of business on
The Board of Directors may, by resolution, provide for a lesser number of directors or designate a substitute nominee. In the latter case, shares represented by proxies may be voted for the substitute nominee designated by the Board of Directors. Proxies cannot be voted for more than twotwo nominees. We have no reason to believe that any nominee will be unable to stand for election.
What options do I have in voting on each of the proposals?
Election of Directors (Proposal 1).
You may mark the “FOR” box on your proxy card to vote for all director nominees, mark the “FOR ALL EXCEPT” box on your proxy card to vote for all nominees other than any nominee that you specify on your proxy card, or mark the “WITHHOLD” box to withhold your vote for all director nominees.Ratification of Independent Registered Public Accounting Firm (Proposal 2).
You may mark either the “FOR”, “AGAINST”, or “ABSTAIN” box with respect to the ratification of the engagement ofAdvisory, Non-Binding Vote on Executive Compensation (Say-On-Pay) (Proposal 3).
You mayAdvisory, Non-Binding Vote on the Frequency of Future Advisory, Non-Binding Votes on Executive Compensation (Proposal 4). You may cast your advisory, non-binding vote on the frequency of future advisory, non-binding votes on executive compensation as follows: every “1 Year,” every “2 Years,” every “3 Years,” or you may “ABSTAIN” from voting. While this vote is required by law, it will neither be binding on the Company or its Board of Directors, nor will it create or imply any change in the fiduciary duties of or impose any additional fiduciary duties on the Company or its Board of Directors.
Where no instructions are indicated, validly executed proxies will be voted “FOR” the election of the
two director nominees, “FOR” the ratification of the engagement ofHow many votes may I cast?
Generally, you are entitled to cast one vote for each share of stock you owned on the record date. The proxy card included with this Proxy Statement indicates the number of shares owned by an account attributable to you.
Are there any limits on the voting of shares?
As provided in Section F of Article 6 of our Charter, record holders of common stock that is beneficially owned by a person who beneficially owns in excess of 10% of the outstanding shares of our common stock are not entitled to vote any shares held in excess of this 10% limit. Subject to certain exceptions, a person is deemed to beneficially own shares owned by an affiliate of, as well as by persons acting in concert with, such person. Our Board of Directors is authorized to construe and apply the provisions of Section F of Article 6 of the Charter, and to make all determinations it deems necessary or desirable to implement them, including determining the number of shares beneficially owned by any person and whether a person is an affiliate of or has an arrangement or agreement with another person. Further, the Board of Directors is authorized to demand certain information from any person who is reasonably believed to beneficially own stock in excess of the 10% limit and reimbursement for all expenses incurred by us in connection with an investigation conducted by the Board of Directors pursuant to the provisions of Section F of Article 6 of the Charter.
How many votes are needed for each proposal?
The
twoThe ratification of the engagement of Crowe HorwathRSM US LLP as our independent registered public accounting firm for the year ending
The approval of the advisory, non-binding vote on executive compensation will require the affirmative vote of a majority of the votes cast at the Annual Meeting, without regard to either broker non-votes or shares as to which the “ABSTAIN” box has been selected on the proxy card. While this vote is required by law, it will neither be binding on the Company or its Board of Directors, nor will it create or imply any change in the fiduciary duties of or impose any additional fiduciary duties on the Company or its Board of Directors.
The 1 Year, 2 Years or 3 Years option receiving the plurality of votes on the frequency of future advisory, non-binding votes on executive compensation, without regard to other broker non-votes or shares as to which the “Abstain” box has been selected on the proxy card, will be considered the period recommended by the Company’s stockholders.
Shares represented by broker non-votes and abstentions are considered present at the Annual Meeting for the purposes of determining whether or not a quorum is present, but such shares are not considered votes cast and will have no effect on the
Where do I find the voting results of the Annual Meeting?
We intend to announce voting results at the Annual Meeting or at any postponements or adjournments thereof. The voting results will also be disclosed in a Current Report on Form 8-K that we will file with the SEC.
How does the Board recommend that I vote?
The Board of Directors recommends that you vote
“FOR” the election of the two director nominees, “FOR” the ratification of the engagement ofWho do I call if I have any questions?
If you have any questions or need assistance in submitting your proxy, voting your shares or need paper copies of the proxy materials, free of charge, please contact Computershare, toll-free, at (866) 641-4276.
There are sevensix members of the Board of Directors, which is divided into three classes. The bylaws of the Company establish the initial terms of office for each class of directors and provide that directors are elected for a term of office that will expire at the third succeeding Annual Meeting of Stockholders following their election, with each director to hold office until his or hertheir successor is duly elected and qualifies.
At the Annual Meeting, the stockholders of the Company will be requested to elect one class of directors consisting of twotwo directors. The Corporate Governance and Nominating Committee of the Board of Directors has recommended, and the Board of Directors has nominated, John M. HausmannF. Morgan Gasior and GlenDebra R. WherfelZukonik for election as directors in this class of directors for a term of office that will expire at the Annual Meeting of Stockholders in 20192026 and until their successors are duly elected and qualify.
The proxies solicited on behalf of the Board of Directors will be voted at the Annual Meeting “FOR” the election of the above
two director nominees as directors, provided that your proxy will not be voted in favor of any nominee for which your proxy vote has been withheld. If a nominee is unable or unwilling to stand for election at the time of the Annual Meeting, the shares represented by all such proxies will be voted for the election of such replacement nominee as the Board of Directors, acting on the recommendation of the Corporate Governance and Nominating Committee, may designate. At this time, the Board of Directors knows of no reason whyThe following table sets forth certain information regarding the nominees and other members of the Board of Directors, including their years of service and terms of office. Except for the Standstill Agreement or otherwise as indicated herein,elsewhere in the Proxy Statement, there are no arrangements or understandings between any of the directors or the nominees and any other person pursuant to which such directors or the nominees were selected.
| Name | Position(s) Held in the Company | Director Since (1) | Term of Class to Expire | |||
| NOMINEES | ||||||
| John M. Hausmann, C.P.A. | Director | 1990 | 2019 | |||
| Glen R. Wherfel, C.P.A. | Director | 2001 | 2019 | |||
| CONTINUING DIRECTORS | ||||||
| F. Morgan Gasior | Chairman of the Board, Chief Executive Officer and President | 1983 | 2017 | |||
| John W. Palmer | Director | 2014 | 2017 | |||
| Cassandra J. Francis | Director | 2006 | 2018 | |||
| Thomas F. O’Neill | Director | 2012 | 2018 | |||
| Terry R. Wells | Director | 1994 | 2018 | |||
Director | Term of Class | |||||
Name | Position(s) Held in the Company | Since (1) | to Expire | |||
NOMINEES | ||||||
F. Morgan Gasior | Chairman of the Board, Chief Executive Officer and President | 1983 | 2026 | |||
Debra R. Zukonik | Director | 2020 | 2026 | |||
CONTINUING DIRECTORS | ||||||
Cassandra J. Francis | Director | 2006 | 2024 | |||
Terry R. Wells | Director | 1994 | 2024 | |||
John M. Hausmann, C.P.A. | Director | 1990 | 2025 | |||
Glen R. Wherfel, C.P.A. | Director | 2001 | 2025 |
(1) | |
Denotes the earlier of the year the individual became a director of |
Nominees
The business experience for at least the past five years of each nominee for election to the Board of Directors and the qualifications of each nominee to serve as a director areis set forth below, with age information as of December 31, 2015.
F. Morgan Gasior.
AgeMr. Gasior brings to the Board, among other skills and qualifications, a comprehensive understanding of the Bank’s strategies, operations and customers based on his more than 30 years of service as an employee and officer of the Bank. He has led the development and implementation of the Bank’s financial, lending, operational, technology and expansion strategies, and this experience has uniquely positioned him to adjust the Company’s business strategies to respond to changing economic, regulatory and competitive conditions, and to discern and coordinate operational changes to match these strategies. His position on the Board also provides a direct channel of communication from senior management to the Board.
Debra R. Zukonik Age 69. Mr. O’Neill60. Ms. Zukonik is the co-owner and Chief Credit Officer of Dare Capital Partners, LLC, which provides asset-based lending and accounts receivable factoring to selected small and medium-size businesses, and co-investment in asset-based lending or accounts receivable factoring facilities to selected financial institutions. Ms. Zukonik is a foundingco-owner of NN6, LLC, which is a technology company providing specialty report capabilities for factoring software and a co-owner of Horizon ProMed, LP, which is a commercial real estate investment company. Ms. Zukonik is also a co-owner of FactorHelp, Inc., which is a factoring consulting firm, and a co-owner of Factor Solutions, LLC, which provides servicing for factoring transactions. Ms. Zukonik is a member of The Kimberlite Group and is the co-CEO of Kimberlite Advisors, a registered broker-dealer that provides advisory and institutional capital raising services. Prior to forming Kimberlite in 2013, he was the Chairman of Ranieri Partners Financial Services Group, a company formed to acquire and manage financial services companies, including money management and investment management firms. Mr. O’Neill also worked with Ranieri Partners’ investment funds and operating companies. In 2010, Mr. O’Neill retired from Sandler O’Neill & Partners, an investment banking firm he co-founded in 1988 that advises banks, thrifts and other domestic and international financial services firms on a broad range of strategic and transactional matters, including mergers and acquisitions and other strategic transactions, capital formation and financings, asset - liability management and asset purchases and dispositions. Prior to co-founding Sandler O’Neill, Mr. O’Neill was a Managing Director at Bear Stearns and was the Co-Manager of Bear Stearns’ Financial Services Group. Mr. O’Neill began his career at L.F. Rothschild & Co. in 1972, where he served as the Managing Director of the Bank Service Group. Mr. O’Neill currently serves on the BoardsBoard of Directors of the Archer Daniels Midland CompanyAmerican Factoring Association, and is a member of the Compensation/SuccessionAdvisory Board of the International Factoring Association and she previously served on the Executive Committee forof the Archer Daniels Midland Company. Mr. O’NeillCommercial Finance Association Board of Directors. Ms. Zukonik is a member of the Corporate GovernanceCommunity and Nominating and the Human Resources CommitteesEnvironmental Committee of the Company.
Ms. Zukonik brings to the Board, among other skills and qualifications, substantial experience and expertise in a broadthe Commercial Finance Industry with an extensive range of matters that affect publicly-traded bankformal training and thrift holding companies,expertise in commercial credit and collections, underwriting, and financial and credit analysis.
The Board of Directors recommends a vote “FOR” the above nominees.
Continuing Directors
The business experience for at least the past five years of each continuing member of the Board of Directors and each individual’s qualifications to serve as a director are set forth below, with age information as of December 31, 2022.
Cassandra J. Francis. Age 57. Ms. Francis is self-employed as the sole proprietor of KARIATID since 2009, which provides real estate and construction-related strategic planning, management, and program and project advisory services to public, private and non-profit organizations. Ms. Francis is also President of BOCA Enterprises, Inc. and President of Global Properties, Inc., real estate management companies. Ms. Francis previously served as the Chief Real Estate and Development Officer of the South Shore Line Railroad / Northern Indiana Commuter Transportation District and as the President and CEO of Friends of the Parks. She was also an Executive Director of Clayco, Inc., a national design-build construction firm and the Director of Olympic Village Development for Chicago’s bid to host the 2016 Summer Olympic and Paralympic Games. She has also held various management positions, including corporate governance, asset-liability management, investment management, mergersSenior Vice President with U.S. Equities Development, L.L.C. from 1995 to 2008.Ms. Francis is a Fellow of the American Institute of Certified Planners, a Fellow of RICS (The Royal Institution of Chartered Surveyors), a Fellow of the Chartered Institute of Arbitrators, and acquisitions, asset purchasesis an admitted member of the Counselors of Real Estate, the professional consulting arm of the National Association of Realtors. She is certified as both an international commercial arbitrator and dispositionsas a civil commercial mediator. Ms. Francis is a LEED Accredited Professional and corporate finance.
Ms. Francis brings to the Board, among other skills and qualifications, substantial experience in urban planning and commercial real estate development and operations, with particular emphasis in retail development and leasing. She also has extensive experience with commercial real estate finance and valuations, particularly in Midwestern markets.
John M. Hausmann, C.P.A. Age 67. Mr. Palmer formerly served onHausmann has been a self-employed certified public accountant since 1980, until he retired in 2022. Prior to that time, he was an accountant with Arthur Andersen. Mr. Hausmann is a member of the boardIllinois Certified Public Accountant Society. He has been a director of CFS Bancorp, Inc.,
Mr. PalmerHausmann brings to the Board, among other skills and qualifications, a comprehensive understanding of accounting, auditing and taxation principles based on his many years of experience as a directorcertified public accountant. His experience as a member of other banksthe Audit Committee has provided him with a thorough knowledge of the Company’s internal controls and his financial expertise.internal and external audit procedures. His tax and accounting practice and longtime residency in the Bank’s southernmost market territory have also provided him with a unique familiarity with the needs of the Bank’s small business and municipal customers and communities.
Terry R. Wells. Age 57.64. Mr. Wells has served as the Mayor of the Village of Phoenix, Illinois since 1993. Mr. Wells has also taught history1993, and social studies since 1981 athe currently serves as President of the elementary and high school levels, and presently teaches U.S. History at Thornton Township High School in Harvey, Illinois.Southland Regional Mayoral Black Caucus. He is also a member of the Board of Directors of Pace, a Division of the Regional Transportation Authority (Illinois), and the BoardChairman of Trusteesthe Board of South Suburban College. Mr. Wells has served as President of the South Suburban Mayors and Managers Association from 2009 through 2010.Association. Mr. Wells retired in 2019 after 35 years teaching history at the secondary school level. He has been a director of the Company since its formation in 2004, and of the Bank since 1994. He was a director of the Company’s predecessors, BankFinancial MHC and BankFinancial Corporation, a federal corporation, from 1999 to 2005. Mr. Wells is a member of the Executive Committee, the Audit CommitteesCommittee and is the Chairman of the Human Resources and Community and Environmental Committees of the Bank and Company. He is also the Chairman of the Corporate Governance and Nominating Committee, and as such, currently serves as the Lead Director of the Company.
Mr. Wells brings to the Board, among other skills and qualifications, substantial experience in municipal government and finance, community and economic development and serving the needs of low- and moderate-income borrowers and communities. His experience as an educator has also provided him with significant expertise in secondary and post-secondary vocational training applicable to the Bank’s customer service and support personnel.
Glen R. Wherfel, C.P.A. Age 73. Mr. Wherfel has been a principal in the accounting firm of Wherfel & Associates since 1984 and President of Park Data Incorporated since 1980. Mr. Wherfel was a director of Success National Bank from 1993 to 2001, and of Success Bancshares from 1998 to 2001. He was the Chairman of Success National Bank’s Loan Committee and a member of its Asset Liability Management Committee. The Company acquired Success Bancshares and Success National Bank in 2001. Mr. Wherfel is a member of the Corporate Governance and Nominating, the Audit and the Human Resources Committees of the Company.
Mr. Wherfel brings to the Board, among other skills and qualifications, substantial experience in entrepreneurial finance and operations. His tax and accounting practice, longtime residency in the Bank’s northern market territory and service as a director of Success National Bank have also provided him a unique familiarity with the needs of the Bank’s small business and municipal customers and communities.
In accordance with NASDAQ Stock Market board diversity disclosure requirements, below are diversity statistics for our six Board members as of December 31, 2022.
Board Diversity Matrix (As of December 31, 2022) | ||||||||
Total Number of Directors | 6 | |||||||
Female | Male | Non-Binary | Did Not Disclose Gender | |||||
Part I: Gender Identity | ||||||||
Directors | 2 | 4 | ||||||
Part II: Demographic Background | ||||||||
African American or Black | 1 | |||||||
Alaskan Native or Native American | ||||||||
Asian | ||||||||
Hispanic or Latinx | ||||||||
Native Hawaiian or Pacific Islander | ||||||||
White | 2 | 3 | ||||||
Two or More Races or Ethnicities | ||||||||
LGBTQ+ | ||||||||
Did Not Disclose Demographic Background | ||||||||
Director Independence
The Board of Directors has determined that, except for Mr. Gasior, who serves as the Chairman, Chief Executive Officer and President of the Company, each of the Company’s directors is “independent” as defined in Rule 5605(a)(2) of the listing standards of the NASDAQ Stock Market. The Bank made certain secured real estate loans to Ms. Francis and her spouse prior to Ms. Francis’ appointment as a director in 2006, and these loans were considered to be grandfathered from the Bank’s practice of not making loans to directors or executive officers. This extension of credit was made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with persons not related to the Bank, does not involve more than normal risk of collectability or present other unfavorable features, and is not past due or classified as nonaccrual, restructured or a potential problem loan.
Executive Officers Who Are Not Directors
Set forth below is information, with age information as of December 31, 2015,2022, regarding the principal occupations for at least the past five years of the individuals who serve as executive officers of the Company and/or the Bank who are not directors of the Company or the Bank. All executive officers of the Company and the Bank are elected annually by their respective Boards of Directors and serve until their successors are elected and qualify. No executive officer identified below is related to any director or other executive officer of the Company or the Bank. Except as indicated elsewhere in this Proxy Statement, there are no arrangements or understandings between any officer identified below and any other person pursuant to which any such officer was selected as an officer.
Gregg T. Adams, Age 65.63. Mr. BrennanAdams has served as the SecretaryPresident of the Marketing and General CounselSales Division of the Bank since 20002015 and of the Company since its formation in 2004, and held the same positions with BankFinancial MHC and BankFinancial Corporation, a federal corporation, from 2000 to 2005. Mr. Brennan also serves aswas the Executive Vice President of the Corporate AffairsMarketing and Sales Division of the Company and the Bank. Mr. Brennan was a practicing attorneyBank from 1975 until 2000. Prior2001 to joining the Bank
Paul A. Cloutier, C.P.A. Age 52.59. Mr. Cloutier has served as the Chief Financial Officer and Treasurer of the Company since its formation in 2004, of the Bank since 1991, and of BankFinancial MHC and BankFinancial Corporation, a federal corporation, from 1999 to 2005. Mr. Cloutier also serves as the Executive Vice President of the Finance Division of the Company and the Bank. He is a registered certified public accountant in the State of Michigan and is a member of the American Institute of Certified Public Accountants. Prior to joining the Bank and its parent companies, he was a Senior Tax Associate with Coopers & Lybrand.
John G. Manos.
Marci L. Slagle, Age 53. Ms. Slagle has served as the President of the Bank's Equipment Finance Division since February 2020. She manages the corporate and governmental, middle market and small ticket leasing departments. Ms. Slagle is a Certified Lease Finance Professional (“CLFP”) with over 20 years’ experience in the commercial equipment leasing industry. Ms. Slagle is a former member of the Equipment Finance and Lease Association Steering Committee – Middle Market Leasing, and she is also an Executive Committee member and past President of the CLFP Foundation.
The following table sets forth, as of
| Name and Address of Beneficial Owners | Amount of Shares Owned and Nature of Beneficial Ownership(1) | Percent of Shares of Common Stock Outstanding | |||||
| Principal Trust Company 1013 Centre Road Wilmington, Delaware 19805 | |||||||
| As Trustee fbo BankFinancial FSB ESOP Plan | 1,675,915 | (2) | 8.41% | ||||
| As Trustee fbo BankFinancial and Subsidiaries 401(k) Plan | 668,032 | (2) | 3.35% | ||||
| Combined holdings as Trustee | 2,343,947 | (3) | 11.76% | ||||
| Basswood Capital Management, L.L.C. 645 Madison Avenue, 10th Floor New York, New York 10022 | 1,781,913 | (2) | 8.94% | ||||
| Dimensional Fund Advisors LP 6300 Bee Cave Road Building One Austin, Texas 78746 | 1,655,566 | (2) | 8.30% | ||||
| PL Capital, LLC 20 East Jefferson Ave., Suite 22 Naperville, Illinois 60540 | 1,630,170 | (4) | 8.18% | ||||
| Black Rock, Inc. 40 East 52nd Street New York, New York 10022 | 1,266,521 | (2) | 6.35% | ||||
| Directors and Nominees | |||||||
| Cassandra J. Francis | 84,498 | (5) | * | ||||
| F. Morgan Gasior | 477,635 | (6) | 2.38% | ||||
| John M. Hausmann | 124,450 | (7) | * | ||||
| Thomas F. O’Neill | 30,100 | (8) | * | ||||
| John W. Palmer | 1,656,420 | (4), (9) | 8.30% | ||||
| Terry R. Wells | 113,498 | (10) | * | ||||
| Glen R. Wherfel | 128,618 | (11) | * | ||||
| Named Executive Officers (other than Mr. Gasior): | |||||||
| Paul A. Cloutier | 191,087 | (12) | * | ||||
| James J. Brennan | 266,802 | (13) | 1.33% | ||||
| John G. Manos | 164,231 | (14) | * | ||||
| William J. Deutsch, Jr. | 57,029 | (15) | * | ||||
| All Directors, Nominees and Executive Officers (including Named Executive Officers) as a Group (12 persons) | 3,459,172 | (16) | 16.69% | ||||
Name and Address of Beneficial Owners | Amount of Shares Owned and Nature of Beneficial Ownership (1) | Percent of Shares of Common Stock Outstanding | ||
| M3 Funds, LLC | ||||
| 2070 E 2100 S, Suite 250 | ||||
| Salt Lake City, UT 84109 | 1,260,537 | (2) | 9.93% | |
| Dimensional Fund Advisors LP | ||||
| 6300 Bee Cave Road, Building One | ||||
| Austin, Texas 78746 | 1,015,424 | (2) | 8.00% | |
| Voya Institutional Trust Company | ||||
| As Trustee fbo BankFinancial and Subsidiaries 401(k) Plan | 812,533 | (2) | 6.40% | |
| Renaissance Technologies LLC | ||||
| 800 Third Avenue | ||||
| New York, New York 10022 | 759,787 | (2) | 5.99% | |
| Black Rock, Inc. | ||||
| 55 East 52nd Street | ||||
| New York, New York 10022 | 723,530 | (2) | 5.70 % | |
Directors and Nominees | ||||
Cassandra J. Francis | 40,444 | * | ||
F. Morgan Gasior | 319,570 | (3) | 2.52 % | |
John M. Hausmann | 69,049 | * | ||
Terry R. Wells | 56,384 | * | ||
Glen R. Wherfel | 106,085 | (4) | * | |
| Debra R. Zukonik | 3,650 | * | ||
Named Executive Officers (other than Mr. Gasior): | ||||
| John G. Manos | 68,475 | (5) | * | |
| Marci L. Slagle | — | — | ||
All Directors and Executive Officers (including Named Executive Officers) as a Group (12 persons) | 955,725 | 7.53 % |
(1) | |
The information reflected in this column is based upon information furnished to us by the persons named above and the information contained in the records of our stock transfer agent. The nature of beneficial ownership for shares shown in this column, unless otherwise noted, represents sole voting and investment power. |
(2) | Amount of shares owned and reported on the most recent Schedule 13G |
| 2022. | |
| (3) |
Includes |
(4) | Includes |
(5) | Includes |
Delinquent Section 16(a) Beneficial Ownership Reporting Compliance
The Company’s executive officers, directors and any beneficial owners of greater than 10% of the outstanding shares of the Company’s common stock are required to file reports with the SEC disclosing beneficial ownership and changes in beneficial ownership of the Company’s common stock. SEC rules require disclosure if an executive officer, director or 10% beneficial owner fails to file these reports on a timely basis. Based on the Company’s review of ownership reports required to be filed for the year ended
December 31,The Company has adopted a Code of Ethics for Senior Financial Officers that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. A copy of the Company’s Code of Ethics was previously filed as Exhibit 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. Amendments to and waivers from the Code of Ethics for Senior Financial Officers will be disclosed on the Company website, www.bankfinancial.com. The Company has also adopted a Code of Business Conduct, pursuant to the listing standards of the NASDAQ Stock Market that applies generally to the Company’s directors, officers, and employees.
Leadership Structure
. The Company’s Board of Directors has a distributed leadership structure. The Board has established a standing Executive Committee, which currently consists of the Chief Executive Officer and two independentThe Chair of the Corporate Governance and Nominating Committee to provide that the Chair of this committee will serveserves as the Board’s Lead Director. The Lead Director calls and presides at all executive sessions or special meetings of the Board’s outside, independent directors and provides feedback to the Chief Executive Officer regarding the same; works with the Chairs of the other committees of the Board to ensure coordinated coverage of the Board’s duties and responsibilities; serves as a supplemental point of contact for Board members and stockholders; serves as a liaison between the
The Chairman of the Board coordinates the Board’s functions, including the activities of the Board’s committees, with the execution of the Company’s business plan and day-to-day operations. Although the Chairman also presides over Board meetings as provided in the Company’s bylaws, the charter of the Corporate Governance and Nominating Committee was amended in 2010 to formalize the Board’s practice of permittingprovides that any director tomay place any item on the agenda for any Board meeting.
The Board periodically meets outside the presence of the Chief Executive Officer. The independent members of the Board also conduct a periodic review of the Company’s financial condition, results of operation, long-term planning, management structure and internal governance practices. The Board utilizes the findings and recommendations resulting from its review to revise and enhance its oversight, as appropriate.
The Board does not have a policy requiring the separation of the offices of Chairman and Chief Executive Officer, and Mr. Gasior currently serves in both capacities. The Board believes that the selection of its Chairman should be based upon the Board’s assessment of the Company’s current operating needs, the suitability of the individual to effectively discharge the duties of the Chairman and the leadership structure that will best serve the interests of the Company and its stockholders. The Board believes that combining the offices of Chairman and Chief Executive Officer is currently an effective governance structure because it provides an efficient and unified responsibility and mechanism for the coordination of the activities of the Board of Directors and those of management. The Board also believes that the Lead Director position, its policy of universal Board agenda access and its practice of conducting periodic meetings outside the presence of the Chief Executive Officer achieve benefits that are equivalent to those that might result from separating the offices of Chairman and Chief Executive Officer.
Role in Risk Oversight
. The Board is actively involved in the oversight of risks that could affect the Company, through, among other things, its adoption of policies andThis leadership and risk management structure is designed to ensure that financial, risk, internal control reporting and market information are provided directly to the independent directors of the Company and acted upon as necessary. Taken together, the Board believes that it has an effective leadership structure controlled by independent directors, with open meeting agendas and an established mechanism for oversight and evaluation of the Company as well as the Board’s and management’s execution of their respective responsibilities.
Attendance at Annual Meetings of Stockholders
Although the Company does not have a formal written policy regarding director attendance at annual meetings of stockholders, directors are requested to attend these meetings absent unavoidable scheduling conflicts. All of the Company’s current directors except for one attended the 2022 Annual Meeting of Stockholders.
Meetings and Committees of the Board of Directors
Board of Directors and Committees.
The business of the Company is conducted at regular and special meetings of the Board of Directors and its committees. In addition, the “independent” members of the Board of Directors, as defined in Rule 5605(a)(2) of the listing standards of the NASDAQ Stock Market, meet in executive sessions. The standing committees of the Board of Directors of the Company are the Executive, Audit, Corporate Governance and Nominating, and Human Resources Committees. During the year ended December 31,The table below shows current membership for each of the standing Board committees:
| Directors | Executive Committee | Audit Committee | Corporate Governance and Nominating Committee | Human Resources Committee | ||||
| Cassandra J. Francis | ü | ü | ||||||
| F. Morgan Gasior | Chair | |||||||
| John M. Hausmann | ü | Chair | ü | |||||
| Thomas F. O’Neill | ü | ü | ||||||
| John W. Palmer | ü | ü | ||||||
| Terry R. Wells | ü | ü | Chair | Chair | ||||
| Glen R. Wherfel | ü | ü | ||||||
| Meetings held during 2015 | — | 6 | 1 | 3 | ||||
Directors |
| Executive Committee |
| Audit Committee |
| Corporate Governance and Nominating Committee |
| Human Resources Committee | Community & Environmental Committee | |
Cassandra J. Francis |
|
|
|
|
| ✓ |
| ✓ | ✓ | |
F. Morgan Gasior |
| Chair |
|
|
|
|
|
| ||
John M. Hausmann |
| ✓ |
| Chair |
| ✓ |
| ✓ | ||
Terry R. Wells |
| ✓ |
| ✓ |
| Chair |
| Chair | Chair | |
Glen R. Wherfel |
|
|
| ✓ |
| ✓ |
| ✓ | ||
| Debra R. Zukonik | ✓ | |||||||||
Meetings held during 2022 |
| — |
| 4 |
| 1 |
| 1 | — |
Executive Committee.
The Executive Committee is authorized to act with the same authority as the Board of Directors between meetings of the Board of Directors, subject to certain limitations contained in the bylaws of the Company.Audit Committee.
The Board of Directors has adopted a written charter for the Audit Committee, whichCorporate Governance and Nominating Committee.
The Board of Directors has adopted a written charter for the Corporate Governance and Nominating Committee, which was attached as AppendixThe Corporate Governance and Nominating Committee identifies nominees by first evaluating the current members of the Board of Directors who are willing to continue in service. Current members of the Board of Directors with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining a new perspective. If vacancies on the Board of Directors arise, or if a current director is not nominated for re-election, the Corporate Governance and Nominating Committee will determine the skills and experience desired of a new nominee, solicit suggestions for director candidates from all members of the Board of Directors, and may engage in other search activities. During the year ended
Candidates for a directorship should possess specific attributes, including integrity and a devotion to ethical behavior, a primary interest in the well-being of the Company, a capacity for independent judgment, good business acumen, the capacity to protect confidential information, an ability to work as a member of a team and a willingness to evaluate other opinions or points of view. In addition to examining a candidate’s qualifications in light of the above attributes, the Corporate Governance and Nominating Committee would also consider the overall character of the candidate and any existing or potential conflict of interest, the candidate’s willingness to serve and ability to devote the time and effort required, the candidate’s record of leadership, and the ability to develop business for the Company and its subsidiaries.
The Corporate Governance and Nominating Committee and the Board of Directors nominate candidates for election to the Company’s Board of Directors based on the candidate’s experience and expertise applicable to the current and expected future business operations of the Company. There is no formal policy with regard to the consideration of diversity in identifying a
The Corporate Governance and Nominating Committee may consider qualified candidates for a directorship suggested by the stockholders of the Company. Stockholders may suggest a qualified candidate for a directorship by writing to BankFinancial Corporation at 15W06060 North Frontage Road, Burr Ridge, Illinois 60527, Attention: James J. Brennan, Secretary, and providing the information described in the Company’s bylaws concerning the suggested candidate. A suggestion made to the Company’s Secretary concerning a potential candidate for a directorship will not constitute a nomination of the suggested candidate for election as a director. All nominations of candidates for election as a director must strictly comply with the applicable requirements and time limits summarized in “Advance Notice of Business to be Conducted at an Annual Meeting.”
Human Resources Committee.
The Board of Directors has adopted a written charter for the Human Resources Committee of the Company. The Charter of the Human Resources Committee of the CompanyCommunity and Environmental Committee. The Board of Directors has adopted a written charter for the Community and Environmental Committee of the Company. The scope of the Community and Environmental Committee responsibilities shall include monitoring and oversight of the policies, key controls and practices, and results with respect to the community and environmental topics. The Committee shall also conduct and facilitate reviews, meetings, assessments and take such other actions necessary and appropriate to its Scope of Responsibilities.
In accordance with the applicable rules of the SEC, the Audit Committee has prepared the following report for inclusion in this Proxy Statement:
As part of its ongoing activities, the Audit Committee has:
• | reviewed and discussed with management the Company’s audited consolidated financial statements for the year ended December 31, 2022; | |
• | discussed with the Company’s independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Commission; and | |
• | received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm their independence. |
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended
December 31,This report has been provided and is respectfully submitted by the Audit Committee:
John M. Hausmann, C.P.A., Chairman
Terry R. Wells
Glen R. Wherfel, C.P.A.
The Company’s Audit Committee has engaged Crowe HorwathRSM US LLP (“RSM”) to act as the Company’s independent registered public accounting firm for the year ending
The Board of Directors recommends a vote “FOR” the ratification of the engagement of Crowe HorwathRSM US LLP as the Company’s independent registered public accounting firm for the year ending
Accounting Fees and Services
RSM acted as the Company’s independent registered public accounting firm for its fiscal years ended December 31, 2022 and 2021. Set forth below is certain information concerning aggregate fees billed for professional services rendered by Crowe HorwathRSM during the years ended December 31, 20152022 and 2014:
Audit Fees.
The aggregate fees billed to the Company byAudit-Related Fees.
Tax Fees.
The aggregate fees billed to the Company byAll Other Fees.
There were no other fees billed for professional services rendered byAudit Committee Pre-Approval Policy
The Audit Committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by Crowe Horwath,RSM, subject to the
This CompensationNarrative Discussion and Analysisof Executive Compensation describes the Company’s compensation philosophy and policies for 20152022 as applicable to the executive officers named in the Summary Compensation Table.Table (the “Named Executive Officers”). This section explains the structure and rationale associated with each material element of the named executive officers’Named Executive Officers’ compensation, and it provides context for the more detailed disclosure tables and specific compensation amounts provided in the following section. It is important to note that the Company and the Bank share an executive management team, and except for awards made pursuant to the Company’s 2006 Equity Incentive Plan (the “2006 EIP”),team; the members of the executive management team are compensated by the Bank rather than the Company,Company; and the Company reimburses the Bank for its services to the Company through intercompany expense allocations.
Pursuant to its Charter, the Human Resources Committee of the Company is responsible for the execution of the Board of Directors’ responsibilities with respect to equity-based compensation, performance evaluation and succession planning for the Company’s Chief Executive Officer and other named executive officers of the Company. The Human Resources Committee of the CompanyBank is also responsible for the submissionexecution of an annual report on executive compensation tothe responsibilities of the Board of Directors of the Bank with respect to cash-based compensation, employee benefits and perquisites, performance evaluation and succession planning for inclusion in the Company’s Annual Report on Form 10-K.Bank’s Chief Executive Officer, and other senior officers of the Bank. The Human Resources Committee of the Bank communicates its actions and decisions to the Human Resources Committee of the Company. The Human Resources Committee of the Company is comprised of Messrs. Wells (Chairman), Hausmann O’Neill, Palmer, and Wherfel and Ms. Francis, each of whom is expected to serve on the committee through the conclusion of the Company’s Annual Meeting of Stockholders on
The overall objective of the Company’s and the Bank’s compensation programs is to align executive officer compensation with the success of meeting strategic, financial and management objectives and goals. The programs are designed to create meaningful and appropriate incentives to manage the business of the Company and the Bank successfully and to align management interests with those of the stockholders of the Company. The program is structured to accomplish the following:
• | encourage a consistent and competitive return to stockholders over the long-term; |
• | maintain a corporate environment that encourages stability and a long-term focus for the primary constituencies of the Company and the Bank, including employees, stockholders, communities, clients and government regulatory agencies; |
• | maintain a program that: |
◦ | clearly motivates personnel to perform and succeed according to the current goals of the Company and the Bank; |
◦ | provides management with the appropriate empowerment to make decisions that benefit the primary constituents; |
◦ | aligns incentive compensation practices to risk-taking activities; | |
◦ | attracts and retains key personnel critical to the long-term success of the Company and the Bank; |
◦ | provides for management succession planning and related considerations; |
◦ | encourages increased productivity; |
◦ | provides for subjective consideration in determining incentive and compensation components; and | |
◦ | ensures that management: |
▪ |
fulfills its oversight responsibility to its primary constituents; |
▪ | conforms its business conduct to the Company’s and the Bank’s established ethical standards; |
▪ | remains free from any influences that could impair or appear to impair the objectivity and impartiality of its judgments or treatment of the constituents of the Company and the Bank; and |
▪ | avoids any conflict between its responsibilities to the Company and the Bank and each executive officer’s personal interests. |
Mr. Gasior is the only director of the Company and the Bank who is also an executive officer of the Company and/or the Bank. Mr. Gasior does not participate in the decisions of the Boards of Directors of the Company or the Bank or their respective Human Resources Committees concerning his compensation. No executive officer of the Company or the Bank has served on the Board of Directors or on the compensation committee of any other entity that had an executive officer serving on the Company’s Board of Directors or Human Resources Committee.
The Human Resources Committee of the Company engaged Frederic W. Cook & Co., Inc. (“Cook & Co.”) to assist in the preparation of the compensation aspects of reports filed with the SEC and to be available for consultations with outside counsel to the Human Resources Committee of the Company. The Human Resources Committee of the Company has received and reviewed the Cook & Co. consultant independence letter and independence policy addressing factors identified by SEC rules to determine whether certain conflicts of interest disclosures must be made. Cook & Co. believes that there is no conflict of interest in its role as an advisor to the Human Resources Committee of the Company. The following factors were assessed by the committee: Cook & Co.’s provision of services other than the executive and non-employee director compensation matters; the amount of fees received from the Company by Cook & Co. as a percentage of the total revenue of Cook & Co.; the policies and procedures of Cook & Co. that are designed to prevent conflicts of interest; the extent of any business or personal relationships with any member of the committee or any executive officer of the Company or the Bank; and any ownership of the Company’s stock by individuals on the consulting team employed by Cook & Co. After considering these and other factors in their totality, no conflicts of interest with respect to Cook & Co.’s advice were identified by the Board or the Human Resources Committee of the Company.
Business Plan Objectives.
The Boards of Directors of the Company and the Bank periodically conduct a review of current and anticipated business conditions in the context of the Company’s and the Bank’s financial and competitive position. TheThe Human Resources Committees of the Company and the Bank considered the Company’s and the Bank’s performance within the context of the 2015 business planBusiness Plan and management’s overall performance, weighing numerous factors within and outside of management’s control.
Corporate Performance and PeerIndustry Comparison.
For purposes of comparative analysis in assessing corporate performance, the Company generallygenerally considers commercial banks and savings institutions of similar asset size, capital ratios, and/or geography. Given the ever-changing landscape within the banking industry, there is no specifically defined group of companies that is utilized for this analysis. The group of comparative financial institutions used in 20152022 to assess overall performance consisted of local publicly-held financial institutions.financial institutions located in the Chicago MSA, an immediately adjacent MSA or the State of Illinois with assets of $1.0 billion to $6.0 billion. The local financial institutions that were considered in 2015 included First Midwest Bancorp, Inc. (FMBI), MB2022 consisted of Waterstone Financial, Inc. (MBFI)(WSBF), WintrustFinward Bancorp (FNWD), and First Business Financial Corporation (WTFC) and PrivateBancorpServices, Inc. (PVTB)(FBIZ). A broader group consisting of these publicly-held institutions and a number of privately-held local financial institutions was used to evaluate the improvements that occurredis also considered in the Company’s earnings, loan portfolio composition and asset quality performance metrics.
The Boards of Directors of the Company and the Bank believe that peerindustry comparison is a useful tool for assessing business performance, staying competitive in the marketplace and attracting and retaining qualified executives. While the Human Resources Committees believe that it is prudent to consider peeruse industry comparison data in determining compensation practices, they do not establish empirical parameters or benchmarks for using this data. Rather, where necessary, the Human Resources Committee of the Bank uses peerindustry comparison data to confirm that executive compensation is reasonable relative to competing organizations.
Performance Reviews and Role of Executives in Committee Meetings.
Management reports to the Boards of Directors of the Company and the Bank at least annually on its progress in achieving the strategic, financial and management objectives established by the business plan. The Boards of Directors of the Company and the Bank then consider the overall performance of the Company and the Bank and the named executive officers in the context of these objectives, weighing numerous factors and conditions within and outside of management’s control.The Boards of Directors and the Human Resources Committees exclude the Chief Executive Officer and all other named executive officersNamed Executive Officers from their discussions and formal meetings concerning their compensation, except to receive the results of the decisions made and other relevant information.
Information Resources and Role of Compensation Consultants.
In reviewing current and proposed compensation levels forAlignment of Risk and Performance-Based Compensation. The Code of Business Conduct for the Company and the Bank includes provisions for the recovery (also known as “clawback”) of performance-based incentive compensation paid in or after 2022 in certain situations involving a restatement of financial reporting for a period up to three years from the date the restated financial statements are first filed with the SEC. In addition, incentive compensation plans adopted by the Bank that are directly related to the volumes and pricing of extensions of credit provide for the exclusion or deferral of incentive-based compensation based on either the inherent risk of the extension of credit or the risk rating assigned to the credit by a committee independent of the loan origination process.
General.
AllBase Salary.
Generally, base salary levels are established based on job descriptions and responsibilities, either temporary or permanent in nature (including any revisions or proposed revisions thereto), competitive conditions and general economic trends in the context of the Bank’s financial and franchise condition, and performance. A discussion of changes in base salaries for eachThe base salaries of the named executive officersNamed Executive Officers for 20162023 are as follows:
Name | Position | 2023 Base Salary | |||
F. Morgan Gasior | Chairman of the Board, Chief Executive Officer and President | $ | 495,372 | ||
Marci L. Slagle | Equipment Finance President - Bank | $ | 267,115 | ||
John G. Manos | Commercial Real Estate Lending President - Bank | $ | 278,356 | ||
Cash Incentive Plan Compensation.
The Bank maintains numerousDiscretionary Non-EquityCash Bonus.
Prohibited Transactions Involving Shares Issued by BankFinancial Corporation. The awards of discretionary non-equity bonus paymentsInsider Trading Policy for the named executiveCompany and the Bank includes provisions prohibiting directors, officers are discussedand employees from purchasing shares of common stock issued by the Company in “Conclusionsa margin account, or pledging such shares as collateral for a loan. In addition, the Year Ended December 31, 2015.”
401(k) Plan.
The Company has a tax-qualified defined contribution retirement plan covering all of its eligible employees. Employees are eligible to participate in the plan after attainment of age 21 and completion ofAll Other Compensation and Perquisites. To the extent applicable, the Human Resources Committees of the Company and the Bank review and monitor the level of other compensation and perquisites provided by the Company or the Bank, respectively, to the named executive officersNamed Executive Officers in the context of current business operations and general market practices. Excluding the effects of the Bank’s contributions for the health, vacation, and 401(k) and ESOPplan benefits available to all full-time employees and the Bank’s reimbursement of the after-tax premium costs for disability insurance coverages, the Human Resources Committees of the Company and the Bank continue to believe that other compensation and perquisites generally should not exceed 10% of each named executive officer’sNamed Executive Officer’s total annual cash compensation. As of December 31, 2015,2022, the compensation practices of the Company and the Bank with respect to other compensation and perquisites met this standard.
Executive Summary
. The following is a summary of the compensation decisions the Human Resources Committees made with respect to the• | Earned 2022 cash incentive compensation plan payments were paid to the Chief Executive Officer, the Equipment Finance President and the Commercial Real Estate Lending President. | |
| • | In March 2022, the base salaries of the Equipment Finance President and the Commercial Real Estate Lending President increased by 2.0%. The Chief Executive Officer did not receive an increase in base salary in 2022. | |
• | In March 2023, the base salaries of the Chief Executive Officer, the Equipment Finance President and the Commercial Real Estate Lending President increased 3.0%. |
Review of Chief Executive Officer
. The Human Resources Committee of the Bank met outside the presence ofThe Human Resources Committee determined that the Leadership & Planning category weighting should remain at 15%. The Human Resources Committee determined that the Bank's activity and risk-based incentive compensation matrixresults with respect to evaluateinformation technology deployment, expansion of fee-income revenue products in the eligibilityTrust and Treasury Services Departments, the development of management depth and expertise in commercial finance and credit operations, branch office optimization, and responses to pandemic-related challenges met expectations. The Committee further determined that the achievement of the Chief Executive OfficerBank's tenth consecutive "Outstanding" Community Reinvestment Act rating by the Office of the Comptroller of the Currency (the “OCC”) exceeded expectations in the Leadership & Planning category for cash incentive compensation. The2022. Based on the factors noted above, the Board of Directors of the Bank, with Mr. Gasior not participating, ratified the actions of the Human Resources Committee of the Bank with respect to the Chief Executive Officer. Consistent with awards to other executiveOfficer and non-executive officersapproved a $91,620 cash incentive compensation plan payment based on historical participation levels,the achievement of the 2022 Business Plan objectives as set forth in the following matrix. The Human Resources Committee of the Bank also approved a standard base compensation increase of 3.0% for the Chief Executive Officer.
The matrix used by the Human Resources Committee of the Company awarded stock options under the 2006 EIPBank with respect to the Chief Executive Officer in 2015.
Component | Weight | 2022 Performance Results | 2022 Percentage Results | 2022 Percentage Awarded | 2022 Maximum Percentage | ||||||||||||
Earnings Per Share | 40 | % | 80% of Target | 12.00 | % | 12.00 | % | 50 | % | ||||||||
| Net Commercial Loan Growth | 5 | Met | 15.00 | 15.00 | 50 | ||||||||||||
Commercial Loan Originations | 5 | Met | 20.00 | 20.00 | 50 | ||||||||||||
| Securities Portfolio | 5 | Exceeded | 40.00 | 40.00 | 50 | ||||||||||||
Asset Quality | 20 | Met | 15.00 | 15.00 | 50 | ||||||||||||
Internal Controls | 10 | Met | 15.00 | 15.00 | 50 | ||||||||||||
Leadership & Planning | 15 | Exceeded | 40.00 | 40.00 | 50 | ||||||||||||
Composite | 100 | % | Met | 19.05 | % | (1) | 19.05 | % | (2) | 50 | % | (3) | |||||
(1) | Represents the percentage of base salary earned as cash incentive compensation. |
(2) | Represents the percentage of base salary paid as cash incentive compensation. |
(3) | Represents the maximum percentage of base salary available as cash incentive compensation. |
The performance- and risk-based incentive compensation matrix that has historically been used since 2008 to evaluate the eligibility of the Chief Executive Officer for cash incentive compensation or an increase in base compensation encompasses five separately weighted performance areas – core earnings per share (25%), internal controls (25%), asset quality (25%), marketing and business development (15%), and leadership and planning (10%). The predetermined criterion for internal controls was the absence of significant or material deficiencies.
Category | 2022 Performance | 2022 Plan | ||||
Earnings Per Share | $ | 0.80 | $ | 0.59 | ||
| CATEGORY | 2015 Performance | 2015 Plan | ||||||
| Earnings Per Share | ||||||||
| Earnings Per Share | $ | 0.44 | $ | 0.41 | ||||
Core Earnings Per Share(1) | $ | 0.41 | $ | 0.45 | ||||
Review of Equipment Finance President. The Human Resources Committee of the Bank reviewed the performance of the Equipment Finance President. The Human Resources Committee of the Bank noted that the Chief Financial Officer.Executive Officer had assessed the performance of the Equipment Finance President and the applicable cash incentive compensation based on the results of the Bank’s 2022Equipment Finance President Incentive Compensation Plan. The Bank’s Equipment Finance President Incentive Compensation Plan rewards successes in growing the equipment finance and lessor finance portfolios based on Business Plan projections and underwriting standards, asset quality, and cross-selling of other bank products and services. In 2022, the Equipment Finance portfolio balances increased due to higher originations in the Equipment Finance - Corporate and Equipment Finance - Small Ticket categories despite disruptions in marketing outreach and operations due to staff turnover during 2022. Based on 2022 Equipment Finance cash incentive compensation plan related to the 2022 Business Plan, the Human Resources Committee of the Bank approved a $130,222 cash incentive compensation plan payment to the Equipment Finance President for 2022, of which $108,472 related to Equipment Finance and Lessor Finance-related asset production and $21,750 related to cross-selling of other bank products and services (including commercial deposit accounts and Treasury Services paying agency services) and lease portfolio management activities. The Human Resources Committee of the Bank also approved a standard base compensation increase of 3.0% for the Equipment Finance President. The Board of Directors of the Bank ratified the actions of the Human Resources Committee of the Bank with respect to the Equipment Finance President.
Review of Commercial Real Estate Lending President. The Human Resources Committee of the Bank met outside the presence of management to review the performance of the Chief Financial Officer. The Human Resources Committee noted that the Chief Executive Officer had assessed the performance of the Chief Financial Officer to the Human Resource Committee based on the non-equity incentive plan compensation performance matrix that had been previously established. With respect to matters not addressed by the historical matrix approach, the Bank achieved strong results in its regulatory examinations and independent reviews relating to Asset-Liability Management and Allowance for Loan and Lease Reserves adequacy. In addition, the Chief Financial Officer provided core decision support analysis to the Chief Executive Officer and the Company’s Board of Directors for the share dividend policy, share repurchase policy and tracking of corporate and peer performance for Business Plan and strategic planning purposes. Because the members of the Board of Directors have had considerable interaction with the Company’s Chief Financial Officer throughout the year, the Human Resources Committee determined that it had a strong basis to make an evaluation of the Chief Financial Officer independent of the Chief Executive Officer’s conclusions and recommendations. Based on the factors noted above, the Human Resources Committee approved a 14.4% discretionary 2015
| Component | Weight | 2015 Performance Results | 2015 Percentage Results | 2015 Percentage Awarded | 2015 Maximum Percentage | ||||||||||||
Core Earnings Per Share(1) | 5 | % | Below | 2.50 | % | 2.50 | % | 10 | % | ||||||||
| Internal Controls | 25 | Met | 5.00 | 5.00 | 10 | ||||||||||||
Asset Quality (Securities) (2) | 30 | Met | 5.00 | 5.00 | 10 | ||||||||||||
| Liquidity & Interest Rate | 30 | Exceeded | 7.50 | 7.50 | 10 | ||||||||||||
| Leadership & Planning | 10 | Met | 5.00 | 5.00 | 10 | ||||||||||||
| Composite | 100 | % | Met | 5.63 | % | (3) | 5.63 | % | (4) | 10 | % | (5) | |||||
| Component | 2015 Performance Thresholds (1) | 2015 Percentage Results (2) | 2015 Percentage Awarded | 2015 Maximum Percentage (3) | ||||||
| New Lease Loans Funded | $72 million | 142.6 | % | 0.25 | % | (4) | 0.25% | |||
| Average Outstanding Lines of Credit Funded | $4 million | 227.8 | % | 0.30 | % | (4) | 0.30% | |||
| Leadership, Planning & Controls | — | Met | — | % | (5) | 5.00% | ||||
| Component | 2015 Performance Thresholds (1) | 2015 Percentage Results (2) | 2015 Percentage Awarded | 2015 Maximum Percentage (3) | |||||
| Commercial Real Estate Lending | $35.3 million | 69.9 | % | 0.21% | (4) | 0.25% | |||
| Multifamily Lending | $21.8 million | 150.7 | % | 0.12% | (4) | 0.25% | |||
| Leadership, Planning & Controls | — | Met | 5.00% | (5) | 5.00% | ||||
After considering all components of the compensation program for the named executive officers,Named Executive Officers, the Human Resources Committee of the Bank has determined that such compensation is reasonable and appropriate.
The cash incentive compensation programs for the Chief Executive Officer, the Chief Financial Officer, the National Commercial LeasingEquipment Finance President and the Commercial Real Estate Lending President include both asset quality and internal control risk measurements. Similar controls exist within the incentive compensation plans for non-executive officers and employees, of the Company, as applicable. In addition, the measurement and review of the asset quality and internal controls performance are separated from the applicable business operations, including audits by the Company’s Internal Audit Division, the Company’s independent external audit firm and other third-party independent reviews. Finally, the overall system of internal controls is robust and provides multiple levels of controls to reasonably detect and prevent instances of excessive risk taking within the organization.
The Human Resources Committees of the Company and the Bank believe that, as compensation structures become more complex, the effects of the alternative minimum tax and other taxation issues could affect the net intended effect of the Company’s and the Bank’s compensation plans. Although no specific action is warranted at this time, the Human Resources Committees of the Company and the Bank intendsintend to monitor the effects of the alternative minimum tax and other taxation issues on the Company and its directors, officers and associates when evaluating various compensation principles, practices and plans.
The following table sets forth information concerning the compensation of the Company’s Chief Executive Officer Chief Financial Officer and the Company’s other threetwo most highly compensated executive officers who served in such capacities during 2015:
| Name and Principal Position | Year | Salary | Bonus | Non-Equity Incentive Plan Compen-sation | Stock Awards (1) | Option Awards (1) | All Other Compen -sation (4) | Total Compensation | ||||||||||||||||||||||
F. Morgan Gasior Chairman of the Board, Chief Executive Officer and President (2) | 2015 | $ | 410,846 | $ | — | $ | — | $ | — | $ | 264,000 | $ | 55,928 | $ | 730,774 | |||||||||||||||
| 2014 | 405,804 | — | — | — | — | 50,742 | 456,546 | |||||||||||||||||||||||
| 2013 | 405,804 | — | — | — | — | 45,046 | 450,850 | |||||||||||||||||||||||
Paul A. Cloutier Executive Vice President and Chief Financial Officer | 2015 | $ | 275,377 | $ | 39,764 | $ | 15,560 | $ | — | $ | 133,820 | $ | 54,098 | $ | 518,619 | |||||||||||||||
| 2014 | 271,998 | — | — | — | — | 50,514 | 322,512 | |||||||||||||||||||||||
| 2013 | 271,998 | — | — | — | — | 44,778 | 316,776 | |||||||||||||||||||||||
| James J. Brennan Executive Vice President, Corporate Secretary and General Counsel | 2015 | $ | 329,511 | $ | 49,650 | $ | — | $ | — | $ | 142,474 | $ | 55,348 | $ | 576,983 | |||||||||||||||
| 2014 | 325,468 | 48,820 | — | — | — | 51,975 | 426,263 | |||||||||||||||||||||||
| 2013 | 325,468 | — | — | — | — | 45,716 | 371,184 | |||||||||||||||||||||||
John G. Manos Commercial Real Estate Lending President (3) | 2015 | $ | 237,920 | $ | 11,950 | $ | 77,556 | $ | — | $ | 85,167 | $ | 36,200 | $ | 448,793 | |||||||||||||||
| 2014 | 231,131 | 7,050 | 82,448 | — | — | 30,958 | 351,587 | |||||||||||||||||||||||
| William J. Deutsch, Jr. National Commercial Leasing President | 2015 | $ | 207,547 | $ | — | $ | 160,000 | $ | — | $ | 8,600 | $ | 37,270 | $ | 413,417 | |||||||||||||||
| 2014 | 205,000 | — | 102,500 | — | — | 33,563 | 341,063 | |||||||||||||||||||||||
| 2013 | 205,000 | — | 102,500 | 118,030 | — | 25,305 | 450,835 | |||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Non-Equity Incentive Plan Compensation | All Other Compensation (1) | Total Compensation | |||||||||||||||||
F. Morgan Gasior | 2022 | $ | 480,944 | $ | — | $ | 91,620 | (2) | $ | 61,352 | $ | 633,916 | |||||||||||
Chairman of the Board, Chief Executive Officer | 2021 | 478,780 | — | 80,558 | (2) | 72,935 | 632,273 | ||||||||||||||||
Marci L. Slagle | 2022 | $ | 257,966 | $ | — | $ | 130,222 | (3) | $ | 24,101 | $ | 412,289 | |||||||||||
Equipment Finance President | 2021 | 253,105 | — | 75,000 | (3) | 22,836 | 350,941 | ||||||||||||||||
John G. Manos | 2022 | $ | 268,822 | $ | — | $ | 120,765 | (4) | $ | 19,997 | $ | 409,584 | |||||||||||
Commercial Real Estate Lending President | 2021 | 263,758 | — | 38,000 | (4) | 27,831 | 329,589 | ||||||||||||||||
| (1) |
| All other compensation for the |
| Name | Perquisites(i) | Insurance(ii) | Tax Reimbursement(iii) | 401(k) Match | ESOP Contribution(iv) | Total | Perquisites(i) | Insurance(ii) | Tax Reimbursement(iii) | 401(k) Match | Other (iv) | Total “All Other Compensation” | ||||||||||||||||||||||||||||||
| F. Morgan Gasior | $ | 19,200 | $ | 2,358 | $ | 1,536 | $ | 7,950 | $ | 24,884 | $ | 55,928 | $ | 17,281 | $ | 3,446 | $ | 1,505 | $ | 8,830 | $ | 30,290 | $ | 61,352 | ||||||||||||||||||
| Paul A. Cloutier | $ | 18,600 | $ | 1,613 | $ | 1,051 | $ | 7,950 | $ | 24,884 | $ | 54,098 | ||||||||||||||||||||||||||||||
| James J. Brennan | $ | 19,358 | $ | 1,911 | $ | 1,245 | $ | 7,950 | $ | 24,884 | $ | 55,348 | ||||||||||||||||||||||||||||||
Marci L. Slagle | $ | 8,400 | $ | 2,262 | $ | 988 | $ | 3,723 | $ | 8,728 | $ | 24,101 | ||||||||||||||||||||||||||||||
| John G. Manos | $ | 2,074 | $ | 1,407 | $ | 917 | $ | 6,905 | $ | 24,897 | $ | 36,200 | $ | 3,440 | $ | 2,358 | $ | 1,030 | $ | 9,011 | $ | 4,158 | $ | 19,997 | ||||||||||||||||||
| William J. Deutsch, Jr. | $ | 6,000 | $ | 1,240 | $ | 808 | $ | 4,311 | $ | 24,911 | $ | 37,270 | ||||||||||||||||||||||||||||||
(i) | Includes use of |
(ii) | Consists of premiums paid by the Company during the fiscal year with respect to additional short- and long-term disability insurance for each |
(iii) | Reflects reimbursement for income and employment taxes incurred by the executive as a result of the insurance premiums paid by the executive and reimbursed by the Company. See note (ii) above and discussion below for additional information. | |
| (iv) | Reflects payout of accrued Paid Time Off (“PTO”). Prior to 2021, executives could accrue up to 150% of the standard accrual (i.e., supplemental accrual feature). In 2021, the PTO accrual carry over was limited and the supplemental accrual feature was eliminated. The excess accrued PTO hours were paid out in 2022 and 2021. |
(2) | |
| Estimated Future/Possible Payouts Under Non-Equity Incentive Plan Awards | All Other Option Awards: # of Securities Underlying Options | Exercise/ Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | ||||||||||||||||||||
| Name | Grant Date | Threshold | Target | Maximum | |||||||||||||||||||
| F. Morgan Gasior | 8/10/2015 | 200,000 | $ | 11.99 | $ | 184,000 | |||||||||||||||||
| 12/23/2015 | 100,000 | $ | 12.99 | $ | 80,000 | ||||||||||||||||||
| Paul A. Cloutier | 8/10/2015 | 108,500 | $ | 11.99 | $ | 99,820 | |||||||||||||||||
| 12/23/2015 | 42,500 | $ | 12.99 | $ | 34,000 | ||||||||||||||||||
| James J. Brennan | 8/10/2015 | 82,834 | $ | 11.99 | $ | 76,207 | |||||||||||||||||
| 12/23/2015 | 82,834 | $ | 12.99 | $ | 66,267 | ||||||||||||||||||
| John G. Manos | (1) | $ | 119,498 | $ | 119,498 | ||||||||||||||||||
| 8/10/2015 | 70,834 | $ | 11.99 | $ | 65,167 | ||||||||||||||||||
| 12/23/2015 | 25,000 | $ | 12.99 | $ | 20,000 | ||||||||||||||||||
| William J. Deutsch, Jr. | (2) | $ | 160,000 | $ | 160,000 | ||||||||||||||||||
| 8/10/2015 | 5,000 | $ | 11.99 | $ | 4,600 | ||||||||||||||||||
| 12/23/2015 | 5,000 | $ | 12.99 | $ | 4,000 | ||||||||||||||||||
Mr. | |
(3) | Ms. Slagle is eligible to receive an incentive under the Equipment Finance President Incentive Compensation Plan. Maximum payout is not limited if certain business plan objectives were achieved during 2022. |
(4) | Mr. Manos is eligible to receive an incentive under the Commercial Real Estate Lending |
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (as defined by SEC rules) and certain financial performance of the Company. The followingHuman Resources Committee did not consider the pay versus performance disclosure when making its incentive compensation decisions. For further information about how we align executive compensation with the Company’s performance, see “Narrative Discussion of Executive Compensation” on page 13.
Pay versus Performance Table. The table sets forth information concerningbelow reflects Compensation Actually Paid to the exercisableCompany’s Principal Executive Officer (”PEO”) and unexercisable stock optionsaverage Compensation Actually Paid to Non-PEO Named Executive Officers during 2022 and unvested shares2021. In addition, the table discloses our Total Shareholder Return calculation that assumes reinvestment of restricted stock at
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | # of Securities Underlying Unexercised Options Exercisable | # of Securities Underlying Unexercised Options Unexer- cisable (1) | Options Exercise Price ($) | Option Expiration Date | # of Shares or Units of Stock That Have Not Vested(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Vested(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(3) | ||||||||||||||||||
| F. Morgan Gasior | 100,000 | 100,000 | $ | 11.99 | 6/26/2017 | |||||||||||||||||||||
| 100,000 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| Paul A. Cloutier | 54,250 | 54,250 | 11.99 | 6/26/2017 | ||||||||||||||||||||||
| 42,500 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| James J. Brennan | 41,416 | 41,418 | 11.99 | 6/26/2017 | ||||||||||||||||||||||
| 82,834 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| John G. Manos | 35,416 | 35,418 | 11.99 | 6/26/2017 | ||||||||||||||||||||||
| 25,000 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| William J. Deutsch, Jr. | 2,500 | 2,500 | 11.99 | 6/26/2017 | 1,125 | $ | 14,209 | 2,680 | $ | 33,848 | ||||||||||||||||
| 5,000 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs (1) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (2) | Net Income (in thousands) (3) | Earnings Per Share | |||||||||||||||||||||
2022 | $ | 633,916 | $ | 633,916 | $ | 410,937 | $ | 410,937 | $ | 130 | $ | 10,494 | $ | 0.80 | ||||||||||||||
2021 | 632,273 | 632,273 | 356,066 | 356,066 | 126 | 7,410 | 0.53 | |||||||||||||||||||||
The PEO for 2022 is F. Morgan Gasior and the non-PEO NEOs are Marci L. Slagle and John G. Manos. | |
The PEO for 2021 is F. Morgan Gasior and the non-PEO NEOs are Paul A. Cloutier and Marci L. Slagle. | |
| (1) |
| Name | March 31, 2016 | June 30, 2016 | ||||||
| F. Morgan Gasior | 50,000 | 50,000 | ||||||
| Paul. A. Cloutier | 27,125 | 27,125 | ||||||
| James J. Brennan | 20,708 | 20,710 | ||||||
| John G. Manos | 17,708 | 17,710 | ||||||
| William J. Deutsch, Jr. | 1,250 | 1,250 | ||||||
| Name | March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||
| F. Morgan Gasior | 25,000 | 25,000 | 25,000 | 25,000 | ||||||||||
| Paul. A. Cloutier | 10,625 | 10,625 | 10,625 | 10,625 | ||||||||||
| James J. Brennan | 20,708 | 20,708 | 20,708 | 20,710 | ||||||||||
| John G. Manos | 6,250 | 6,250 | 6,250 | 6,250 | ||||||||||
| William J. Deutsch, Jr. | 1,250 | 1,250 | 1,250 | 1,250 | ||||||||||
| our PEO and NEOs during the period. | |
| (2) |
| company’s share price since the initial investment date of December 31, 2020. | |
| (3) |
Relationship Between Compensation Actually Paid to our PEO and the Average of the Compensation Actually Paid to our Other Non-PEO NEOs and the Company's Cumulative Total Shareholder Return (TSR). For 2021 to 2022, the compensation actually paid to our PEO and the average of the compensation actually paid to the other Non-PEO NEOs increased by 0.26% and 15.41%, respectively, compared to a 3.17% increase in our TSR over the same time horizon.
Relationship Between Compensation Actually Paid to our PEO and the Average of the Compensation Actually Paid to our Other Non-PEO NEOs and the Company's Net Income. For 2021 to 2022, the compensation actually paid to our PEO and the average of the compensation actually paid to the other Non-PEO NEOs decreased by 0.26% and 15.41%, respectively, compared to a 41.62% increase in our net income over the same time horizon.
| Option Awards | Stock Awards | |||||||||||||
| Name | # of Shares Acquired on Exercise | Value Realized Upon Exercise ($) | # of Shares Acquired on Vesting | Value Realized on Vesting ($)(1) | ||||||||||
| F. Morgan Gasior | — | $ | — | — | $ | — | ||||||||
| Paul A. Cloutier | — | $ | — | — | $ | — | ||||||||
| James J. Brennan | — | $ | — | — | $ | — | ||||||||
| John G. Manos | — | $ | — | — | $ | — | ||||||||
| William J. Deutsch, Jr. | — | $ | — | 4,765 | $ | 61,386 | ||||||||
The following table sets forth information concerning potential payments and benefits under the Company’s compensation programs and benefit plans to which the named executive officersNamed Executive Officers would be entitled upon a termination of employment as of
| Executive | Potential Payments Upon Termination or Change of Control | Termination by the Bank | Other Types of Termination | Change of Control (3) | ||||||||||||||||||||||||||
For Cause | For Disability (1) | Without Cause (2) | By Resignation | For Good Reason (2) | Upon Death (1) | |||||||||||||||||||||||||
| F. Morgan Gasior | Cash payments | $ | — | $ | 936,532 | $ | 1,230,404 | $ | — | $ | 1,230,404 | $ | 936,532 | $ | 1,230,404 | |||||||||||||||
| Accelerated Equity Awards | — | — | — | — | — | — | 64,000 | |||||||||||||||||||||||
| Continued Benefits | — | 15,176 | 20,235 | — | 20,235 | 15,176 | 20,235 | |||||||||||||||||||||||
| Paul A. Cloutier | Cash payments | $ | — | $ | 630,350 | $ | 882,647 | $ | — | $ | 882,647 | $ | 630,350 | $ | 882,647 | |||||||||||||||
| Accelerated Equity Awards | — | — | — | — | — | — | 34,720 | |||||||||||||||||||||||
| Continued Benefits | — | 25,124 | 33,499 | — | 33,499 | 25,124 | 33,499 | |||||||||||||||||||||||
| James J. Brennan | Cash payments | $ | — | $ | 777,112 | $ | 1,111,277 | $ | — | $ | 1,111,277 | $ | 777,112 | $ | 1,111,277 | |||||||||||||||
| Accelerated Equity Awards | — | — | — | — | — | — | 26,508 | |||||||||||||||||||||||
| Continued Benefits | — | 15,176 | 20,235 | — | 20,235 | 15,176 | 20,235 | |||||||||||||||||||||||
| John G. Manos | Cash payments | $ | — | $ | 589,392 | $ | 943,074 | $ | — | $ | 943,074 | $ | 589,392 | $ | 943,074 | |||||||||||||||
| Accelerated Equity Awards | — | — | — | — | — | — | 22,668 | |||||||||||||||||||||||
| Continued Benefits | — | 25,213 | 33,617 | — | 33,617 | 25,213 | 33,617 | |||||||||||||||||||||||
| William J. Deutsch, Jr. | Cash payments | $ | — | $ | 633,402 | $ | 633,402 | $ | — | $ | 633,402 | $ | 633,402 | $ | 633,402 | |||||||||||||||
| Accelerated Equity Awards | — | 48,057 | 48,057 | — | 48,057 | 48,057 | 49,657 | |||||||||||||||||||||||
| Continued Benefits | — | 11,400 | 11,400 | — | 11,400 | 11,400 | 11,400 | |||||||||||||||||||||||
Potential Payments | Termination by the Bank (1) | Other Types of Termination | ||||||||||||||||||||||||||||
Executive | Upon Termination or Change of Control | For Cause | For Disability (2) | Without Cause (3) | By Resignation | For Good Reason (3) | Upon Death (2) | Change of Control (4) | ||||||||||||||||||||||
F. Morgan Gasior | Cash payments | $ | — | $ | 1,217,122 | $ | 1,749,921 | $ | — | $ | 1,749,921 | $ | 1,217,122 | $ | 1,749,921 | |||||||||||||||
Continued Benefits | — | 23,997 | 30,853 | — | 30,853 | 23,997 | 30,853 | |||||||||||||||||||||||
Marci L. Slagle (5) | Cash payments | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Continued Benefits | — | — | — | — | — | — | — | |||||||||||||||||||||||
John G. Manos | Cash payments | $ | — | $ | 718,975 | $ | 1,060,642 | $ | — | $ | 1,060,642 | $ | 718,975 | $ | 975,620 | |||||||||||||||
Continued Benefits | — | 23,477 | 30,185 | — | 30,185 | 23,477 | 30,185 | |||||||||||||||||||||||
(1) | The payments reflected in these columns assume that the Bank continues to pay 100% of all compensation and benefits due to Mr. Gasior under his employment agreements with the Bank and the Company, and the Company continues to reimburse the Bank for a percentage of those expenses pursuant to an agreed-upon allocation under an Expense Sharing Agreement between the Bank and the Company. The allocation is based on the amount of time that Mr. Gasior devotes exclusively to the Company’s affairs. Since its inception and continuing through April 12, 2023, the Company has not separately or directly paid any base salary, cash incentive compensation, bonus or other cash compensation to Mr. Gasior, and the Company currently has no equity-based compensation plans in effect. In the event of a qualifying Change in Control of the Bank, Mr. Gasior would be entitled to certain payments under his employment agreement with the Bank, subject to any reduction pursuant to Internal Revenue Code Section 280G as set forth therein. Pursuant to Mr. Gasior’s employment agreement with the Company, if the Bank were to fail to pay any amount due to Mr. Gasior under his employment agreement with the Bank, the Company would be responsible for paying Mr. Gasior such amount. The Company is not otherwise obligated to pay any separate or direct compensation to Mr. Gasior. The Company is not prohibited from separately or directly compensating Mr. Gasior, including upon the occurrence of a qualifying Change in Control, but this has not been the Company’s practice. If this practice were to change, the amount of the separate payments made by the Company to Mr. Gasior would be governed by the terms of his employment agreement with the Company and would not be limited or reduced by the terms of his employment agreement with the Bank or by Internal Revenue Code 280G. |
(3) | The |
| actual cost for 2022. | |
(4) | The payments reflected in this column assume the executive terminated for good reason in connection with a change of control. For |
| (5) | During 2022, Ms. Slagle was not entitled to receive any payments or benefits upon termination or a change in control. Ms. Slagle entered into an Employment Agreement in 2023, which includes payments and benefits upon a termination of her employment or a material diminution of her duties and responsibilities following a change in control of the Company or the Bank as defined by the laws or regulations of the Federal Deposit Insurance Corporation, the OCC or the Board of Governors of the Federal Reserve System, as applicable. |
Accrued Pay and Regular Retirement Benefits. The amounts shown in the table on the previous page do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include:
• | Accrued but unpaid salary and vacation pay. | |
• | Distributions of plan balances under the Bank’s 401(k) plan. See “401(k) Plan” for an overview of the 401(k). |
Amended and vacation pay.
Compensation & Employee Benefits.Under the employment agreements, the Bank will pay the executive officersexecutives the base salary as reflected in the Bank’s payroll records, subject to discretionary increaseswhich may be increased by the Board of Directors. The 2016 base salaries for Messrs. Gasior, Cloutier, Brennan, Manos and Deutsch are $412,703, $280,771, $335,966, $242,580, and $225,000, respectively.Directors, but may not be decreased without the executive’s prior written consent. The employment agreements provide that the base salary may be increased but not decreased.executive is entitled to participate in cash incentive compensation plans and discretionary cash bonuses, if approved by the Board. The employment agreements also provide that the executive officer will receive the use of an automobile or an automobile allowance, and in the case of Messrs.Mr. Gasior, Cloutier and Brennan, the payment of designated club dues, provided that, in a given year, the aggregate amount of these allowances and payments may not in the aggregate, exceed ten percent10% of the executive officer’sexecutive's cash compensation. The employment agreements further provide that the executive officer is entitled to participate with other executive officers in non-equity short-term incentive compensation and discretionary non-equity bonuses declared by the Board. In addition, to base salary and bonus, the employment agreements provide for, among other things, participation in aany Section 125 cafeteria plan, group medical, dental, and vision (referred to as the “Core Plans”), disability and life insurance plans, referred to as the core plans,Bank’s 401(k) plan, the ESOP and other employee and fringe benefits applicable to executive personnel.
Termination for Disability or Death. During the term of the employment period,agreement, each executive officer is provided with a supplementalshort-term and long-term disability insurance policy that payspolicies which will provide the executive with disability insurance payments in an amount equal to 60% of the executive’s base salary for the remaining term of the agreement in the event the executive officer is generally terminated due to disability. If an executive officer becomes disabled, his base salary will be reduced proportionately by the disability payments made under the disability policy and under the federal social security system. Each executive officer is responsible for paying the payment of the disability insurance premiums but receives an annual allowance in an amount sufficient, on an after-tax basis, to equal the premium payments.
In the event of the executive's termination of employment due to death or a disability determination (as defined in the employment agreements), the executive, officeror in the event of the executive’s death, the executive’s estate or trust, as applicable, will be entitled to hiscertain benefits, including the executive's earned salary through the effective date of the termination of the executive's employment, an amount equal to the annual average of any cash incentive compensation and bonus that the executive received during the preceding two fiscal years, prorated based on the number of days during the calendar year that elapsed prior to the effective date of the termination of the executive's employment an amount equal to the executive's base salary for the remaining term of the executive's employment agreement, reduced on a dollar-for-dollar basis by the disability insurance and federal social security disability benefits received by the executive, and certain health benefits.
Termination Without Cause. In the event the executive’s employment is terminated without cause during the term of the employment agreement, the executive will receive certain benefits, including the executive's earned salary, an amount equal to the annual average of any cash incentive compensation and bonus that the executive officer received during the immediately preceding two fiscal years, except for Mr. Deutsch who wouldprorated based on the number of days during the calendar year that elapsed prior to the effective date of the termination of the executive's employment. In the case of Messrs. Gasior and Manos, the executive will also receive an amount equal to the executive's average annual compensation (base salary, cash incentive compensation, he would receive duringand other compensation) based on the current year. Themost recent three taxable years and in the case of Ms. Slagle, the executive officer will receive an amount equal to her base salary for a period of 24 months, and certain health benefits. A termination without cause also includes a decision by the prorated employer matching 401(k) plan contribution thatBoard, including a failure to elect or re-elect, or to appoint or re-appoint, the executive officerthe title to which the executive was appointed or elected as of the date of the employment agreement. In a change in control-related termination of employment by the Bank, the severance payments and benefits under employment agreements would be entitledreduced, if necessary, to receive foravoid an “excess parachute payment” under Section 280G of the current year. In addition, the executive officer will be entitled to the base salary the executive officer would have been paid through the date the employment period would have expired if the executive officer’s
Termination of Employment by the disability insurance and federal social security disability payments referenced above, and continued coverage under the core plans through the date the employment period would have expired, subject to the executive officer’s continued payment of the costs and contributionsExecutive for which he is responsible. After their continued coverage under the core plans expires, Messrs. Gasior, Cloutier, Brennan, Manos and Deutsch may elect to continue their health care coverage at their sole expense and without any cost to the Bank until they become eligible for Medicare coverage or for coverage under another employer’s group health plan.
Termination of Employment by Executive. An executive officer who terminates his employment by resignation other than due to Good Reason will only be entitled to histhe executive's earned salary and vacation through the date of termination.
Continuation of Health Insurance Benefits. In the event the executive's employment terminates involuntarily due to disability, death, without cause, or voluntarily for good reason, the executive and any qualified dependents (including the executive's spouse) are eligible for continued health insurance benefits. The period of continued health coverage ends upon the earlier of the executive's eligibility for comparable coverage under another group health insurance plan with no pre-existing condition limitation or exclusion, or the date on which the insured becomes eligible for Medicare coverage, or, for Ms. Slagle, age 65. The executive's cost for continued health insurance benefits is equal to the amount paid by the executive for health insurance coverage immediately prior to the executive's termination.
General Release; Non-Solicitation. The executive officer is required under the employment agreement to execute a general release in consideration for any severance amounts. The executive officer also agrees not to compete with the Bank or its affiliates for six months after termination or during the period that severance amounts are paid, if longer. In addition, the executive officer agrees not to solicit the Bank’s customers, their business or the Bank’s employees for eighteenthe greater of twelve months which may be reducedor the period of time in certain circumstances. Payment of amounts duewhich the executive officers under the employment agreements will generally be made in a single lump sum,receives any severance payments or in the case of Mr. Deutsch, in equal installments as described above.
Directors’ Fees.
All directors of the Company, other thanMs. Zukonik was compensated for their service as directorsa director of the Company because they areshe is not directorsa director of the Bank. The Company paid Messrs. O’Neill and PalmerMs. Zukonik received a Board fee of $1,000$1,500 per month and alsomonth. Ms. Zukonik was reimbursed Mr. O’Neill for hisher travel expenses for attending meetings of the Board of Directors of the Company.
The table below provides information on 20152022 compensation for directors who served in 2015.
| Name | Fees Earned or Paid in Cash ($) | Option Awards (1) | Total ($) | |||||||||
| Cassandra J. Francis | $ | 24,000 | $ | 72,371 | $ | 96,371 | ||||||
| John M. Hausmann, C.P.A. | $ | 28,000 | $ | 81,571 | $ | 109,571 | ||||||
| Thomas F. O’Neill | $ | 12,000 | $ | 36,800 | $ | 48,800 | ||||||
| John W. Palmer | $ | 12,000 | $ | 32,200 | $ | 44,200 | ||||||
| Terry R. Wells | $ | 27,200 | $ | 81,571 | $ | 108,771 | ||||||
| Glen R. Wherfel, C.P.A. | $ | 27,200 | $ | 81,571 | $ | 108,771 | ||||||
Name | Fees Earned or Paid in Cash ($) (1) | All Other Compensation | Total ($) | |||||||||
Cassandra J. Francis | $ | 54,000 | $ | — | $ | 54,000 | ||||||
John M. Hausmann, C.P.A. | $ | 60,000 | $ | — | $ | 60,000 | ||||||
Terry R. Wells | $ | 58,800 | $ | — | $ | 58,800 | ||||||
Glen R. Wherfel, C.P.A. | $ | 58,800 | $ | — | $ | 58,800 | ||||||
Debra R. Zukonik | $ | 18,000 | $ | — | $ | 18,000 | ||||||
(1) | |
Fees for Ms. Francis and Messrs. Hausmann, Wells, and Wherfel include fees for service on the Board of Directors of the Bank in the |
| Name | Exercisable | Unexercisable | ||||||
| Cassandra J. Francis | 39,332 | 39,332 | ||||||
| John M. Hausmann, C.P.A. | 44,332 | 44,332 | ||||||
| Thomas F. O’Neill | 20,000 | 20,000 | ||||||
| John W. Palmer | 17,500 | 17,500 | ||||||
| Terry R. Wells | 44,332 | 44,332 | ||||||
| Glen R. Wherfel, C.P.A. | 44,332 | 44,332 | ||||||
Proposal 3 - Advisory Vote on Executive Compensation.Pursuant to the rules and regulations of the SEC, the compensation of the Chief Executive Officer Chief Financial Officer and the three other two most highly compensated executive officers of the Company and Bank (collectively, the “Named Executive Officers”) is described in detail in the “Compensation“Narrative Discussion and Analysis”of Executive Compensation” and “Executive Compensation” sections of this Proxy Statement, including the compensation tables and the accompanying narrative discussions.
At our 20112017 Annual Meeting, we provided stockholders with the opportunity to vote on an advisory, (non-binding)non-binding basis as to the frequency that stockholders would vote on a “say-on-pay” proposal, which gives stockholders the opportunity to endorse or not endorse, on an advisory, non-binding basis, the compensation paid to our Named Executive Officers. In light of the advisory vote of stockholders at our 20112017 Annual Meeting, we determined to hold the “say-on-pay” advisory vote on an annual
We are asking you to indicate your support for the compensation of our Named Executive Officers as described in this Proxy Statement. This vote is not intended to address any specific item of executive compensation, but rather the overall compensation of our Named Executive Officers and the compensation policies and practices described in this Proxy Statement.
The “say-on-pay” proposal will be presented at the Annual Meeting in the form of the following resolution:
“RESOLVED
, that the compensation paid to the Company’s Named Executive Officers, as disclosed in this Proxy Statement pursuant to Item 402 of Securities and Exchange Commission Regulation S-K, including theThe Board of Directors recommends that the stockholders of the Company vote “FOR” this resolution.
The Board of Directors believes that the Company’s compensation policies and procedures appropriately encourage a culture of pay for performance, serve to attract and retain experienced, highly qualified executives who are critical to the Company’s long termlong-term success, and align the compensation of the Named Executive Officers with the long termlong-term interests of the Company and its stockholders. Consistent with these objectives, and as discussed more fully in the “Compensation“Narrative Discussion and Analysis”of Executive Compensation” section of this Proxy Statement.
• | The Chief Executive Officer, the Equipment Finance President and the Commercial Real Estate Lending President received cash incentive plan payments for the year ended December 31, 2022. | |
| • | Base compensation increased 2.0% for the Equipment Finance President and the Commercial Real Estate Lending President in 2022. The base compensation for the Chief Executive Officer remained the same. | |
• | Base compensation increased 3.0% for the Chief Executive Officer, the Equipment Finance President and the Commercial Real Estate Lending President in 2023. |
The approval of this resolution requires the affirmative vote of a majority of the votes cast at the Annual Meeting, without regard to either broker non-votes or shares as to which the “ABSTAIN” box has been selected on the proxy card. At our 20152022 Annual Meeting of Stockholders, over 97%93% of the advisory votes cast were for the approval of the compensation paid to the Company’s Named Executive Officers.
Where no instructions are indicated, validly executed proxies will be voted “FOR” this resolution.
The advisory vote on this resolution will not be binding on the Board of Directors or the Compensation Committee and will not overrule their prior decisions with respect to the compensation that was paid or awarded to any Named Executive Officer or create or imply any additional fiduciary duty on the Board of Directors or the Human Resources Committee.
Proposal 4 - Advisory Vote on the Frequency of Future “Say-On-Pay” Advisory Votes.In accordance with Section 14A of the Exchange Act, the Company’s stockholders will also have an opportunity to vote, on an advisory and non-binding basis, on how frequently they would like to cast future advisory, non-binding votes on the compensation of the Company’s Named Executive Officers. In casting their votes, the Company’s stockholders will have an opportunity to indicate whether they prefer to hold an advisory, non-binding vote on the compensation of the Company’s Named Executive Officers every “1 Year,” every “2 Years,” or every “3 Years” or “ABSTAIN” from voting.
The Board of Directors recommends that an advisory, non-binding stockholder vote to approve the compensation of the Company’s Named Executive Officers be conducted every “1 Year.”
The Board of Directors believes that conducting a “say-on-pay” vote every year will provide the Company’s stockholders with a reasonable period of time to evaluate the Company’s longer term initiatives such as its merger, acquisition and loan purchase activities, and the effectiveness of the Company’s longer term operating and compensation strategies. A one-year voting cycle will also not place undue emphasis on short-term operating results and will provide stockholders with a broader perspective on the Company’s operating results as economic conditions change. Finally, the Board of Directors believes that a one-year voting cycle will provide it with an appropriate period of time to evaluate and implement any changes that it may deem to be appropriate in response to the voting results. Although it is the current intention of the Board of Directors to hold this advisory vote every year, the Board of Directors may determine that a different voting frequency is appropriate, either in response to the vote of the stockholders on this proposal or for other reasons.
This proposal provides the stockholders of the Company with an opportunity to cast advisory votes on whether the advisory, non-binding vote on the approval of the Company’s Named Executive Officer compensation should be held every one, two or three years. The option among those choices that obtains a plurality of votes cast at the Annual Meeting will be deemed to have received the advisory approval of our stockholders.
Where no instructions are indicated, validly executed proxies will be voted for “1 Year.”
ETHICS AND BUSINESS CONDUCT MATTERS
The Company conducts no business activities other than activities relating to capital management, stockholder relations, and acting as a source of financial strength for its subsidiary, BankFinancial, NA (the “Bank”). The Company and the Bank maintain comprehensive policies, procedures, internal controls and practices with respect to ethics and business conduct matters, including:
• | Codes of Ethics & Business Conduct: The Company has adopted a Code of Ethics for Senior Financial Officers that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. A copy of the Company’s Code of Ethics was previously filed as Exhibit 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. Any amendments to and waivers of the requirements of the Code of Ethics for Senior Financial Officers will be disclosed on the Company website, www.bankfinancial.com. The Company has also adopted a Code of Business Conduct, pursuant to the listing standards of the NASDAQ Stock Market that applies generally to the Company’s directors, officers, and employees. The Company and the Bank conduct training with respect to these matters at least annually. The Company and the Bank maintain appropriate independent, anonymous channels of communication available on a continuous basis to the Internal Audit Division for notification of potential or actual violations of the Bank’s systems of internal controls, applicable laws, regulations or Bank policies. |
| • | Anti-Money Laundering Policy and Risk Management: The Bank maintains a Bank Secrecy Act / Anti-Money Laundering Policy that is reviewed at least annually by its Board of Directors. The Bank Secrecy Act / Anti-Money Laundering Policy includes a Know-Your-Customer (KYC) customer due diligence compliance program requirement. The Bank conducts compliance training programs, from entry-level to executive-level (including the Board of Directors of the Bank), focused on Bank Secrecy Act / Anti-Money Laundering, at least annually. |
| • | Anti-Money Laundering PolicyExternal Review: The Audit Committee of the Board of Directors of the Bank reviews an annual independent external compliance review of the Bank Secrecy Act / Anti-Money Laundering Policy and its related compliance programs in accordance with the standards of the Federal Financial Institutions Examination Council (“FFIEC”). The Bank Secrecy Act / Anti-Money Laundering Policy external review includes a review of the Know-Your-Customer (KYC) customer due diligence program. |
| • | Anti-Bribery Policy: The Bank maintains a Professional Responsibility Policy requiring compliance with the Bank Bribery Amendments Act of 1985. The Bank conducts compliance training program with respect to its anti-bribery policy on a periodic basis. The Bank maintains appropriate independent, anonymous channels of communication available on a continuous basis to the Internal Audit Division for notification of potential or actual violations of the Bank’s systems of internal controls, applicable laws, regulations or Bank policies. |
| • | Political Activities:The Bank maintains a Professional Responsibility Policy requiring compliance with the Federal Election Campaign Act of 1971, which prohibits contributions of any kind to any federal, state or local primary or general election campaign or candidate by the Bank, or reimbursement of any such contributions by employees. The Bank maintains controls and conducts external and internal audit testing for compliance with its Professional Responsibility Policy. The Bank maintains appropriate independent, anonymous channels of communication available on a continuous basis to the Internal Audit Division for notification of potential or actual violations of the Bank’s systems of internal controls, applicable laws, regulations or Bank policies. |
| • | Stakeholder Engagement Activities: The Company conducts quarterly conference calls for investors and other interested parties. The Company also periodically participates in investor conferences conducted by investment banking firms. The Company maintains telephone and electronic mail access for media, investor and stakeholder communications which is monitored by senior officers of the Company. |
The Company conducts no business activities other than activities relating to capital management, stockholder relations, and acting as a source of financial strength for its subsidiary, the Bank. The Bank maintains comprehensive policies, procedures, internal controls and practices with respect to information security, including:
• | Information Security Policy and Risk Management: The Bank maintains an Information Security Policy reviewed and updated as needed, and at least annually by its Board of Directors. The Boards of Directors of the Company and the Bank also review a formal Information Security Report at least annually. The Bank conducts an extensive training program, from entry-level to executive-level, focused on information security and customer data privacy. As part of its Enterprise Risk Management protocols, the Company and the Bank maintain insurance policies appropriate for the scope of its operations, and there is coverage for risks related to information security and customer data privacy. |
• | Information Technology & Information Security Audits: The Bank conducts independent external and internal audits of internal controls relating to information technology and information security in accordance with standards established by the Federal Financial Institutions Examination Council (FFIEC). Pursuant to their respective Charters, the Audit Committees of the Company and the Bank review the effectiveness of the Bank’s internal controls, including those controls related to information security, based on independent external audit and internal audit reports. |
• | Customer Data Privacy: The Bank maintains and publishes its Customer Data Privacy Policy on its official website. The Policy includes disclosures of the use and sharing of certain customer information, as well as the significant restrictions the Bank places on such activities. In addition, the Bank maintains policies restricting the knowing use or collection of information about children under 13 by the Bank, other than to provide parental notice or consent. The Bank also maintains policies and controls over the use of electronic mail solicitations, including a customer’s ability to “opt-out” of electronic solicitations at any time. The Bank maintains policies, controls and training programs concerning customer information security, including transaction processing. The Bank requires multi-factor authentication for internal network access and on-line banking access by Bank customers, as well as additional controls for transaction processing. The Bank also has policies and controls to identify, classify and limit access to non-public customer information, including a comprehensive vendor management program. |
• | Customer Data Privacy Reviews: The Bank conducts independent external and internal reviews of internal controls relating to customer data privacy and data security in accordance with the requirements of the Graham-Leach-Bliley Act, the Right to Financial Privacy Act, and standards established by the FFIEC. Pursuant to their respective Charters, the Audit Committees of the Company and the Bank review the effectiveness of the Bank’s internal controls, including those controls related to customer data privacy based on independent external audit and internal audit reports. |
• | Customer Data Accuracy: The Bank maintains multiple channels for customer engagement and feedback, including formal policies and controls governing responses to official customer complaints or reports of inaccurate consumer financial data. When applicable and practicable, the Bank’s Marketing & Sales Division incorporates customer responses into the Bank’s product and service development and delivery. |
• | Information Security Incident Response: The Bank maintains information security incident response plans for various information security/data breach scenarios. The Bank tests its incident response plans at least annually. Pursuant to applicable federal and state laws, regulations and FFIEC standards, the Bank maintains incident response notification procedures for affected customers, including notification of federal regulatory authorities and law enforcement. For the preservation of all possible avenues for law enforcement, the Bank does not disclose information security incidents to the general public unless required by law or directed by applicable lawful authority. |
The Bank maintains certain policies and practices with respect to environmental matters, including:
• | Environmental Protection and Sustainability: The Bank maintains policies to detect and prevent adverse environmental conditions with respect to the business operations of its borrowers; in addition, the Bank provides specialized financing for remediation of environmentally-contaminated real property to restore the property to a condition in compliance with federal and state environmental protection laws and regulations. |
With respect to the Bank’s facilities and operations, the Bank’s operations and branch office density present an inherently low profile in terms of carbon emissions. To the extent supported by local municipalities, the Bank participates in plastic and metal recycling programs. The Bank’s migration to digital transaction execution and information delivery significantly reduces the Bank’s consumption of paper and road delivery services. The Bank’s capital investment program continues to invest in energy-efficient lighting and HVAC systems, which can produce reductions of up to 60% compared to historical energy usage and non-recyclable materials replacement. | |
| • | Environmental Supply-Chain Management: Over 95% of the direct supply-chain for the Company and the Bank is based in the United States. Due to the absence of a material international component to the direct supply chain, the Company and the Bank do not maintain global vendor codes of conduct with respect to environmental matters. |
The Company or the Bank maintains several activities with respect to community and social matters:
• | Community Investment, Participation and Support: The Bank is a leader in community investment, with ten consecutive “Outstanding” Community Reinvestment Act ratings since 1998 as determined by agencies of the U.S. Treasury Department. The Bank maintains a leadership position in lending to providers of affordable multi-family residential housing in its primary market, and in providing financing to providers of healthcare and community support services to low-income individuals and families, developmentally disabled persons, and the elderly. The Bank provides financial and in-kind support by its associates to approximately 100 charitable organizations within its communities. |
| • | Workforce: With minorities and women equal to 75% of the Bank’s workforce and 60% of the Bank’s management leadership, the Bank maintains workforce diversity broadly consistent with its communities. With respect to the composition of the Company’s Board of Directors continuing in office, women and minorities constitute 50% of the total Board membership. |
| • | Human Rights Policy: 100% of the workforce of the Company and the Bank is based in the United States, and is therefore subject to federal, state and local civil rights, minimum/living wage, employment benefits, and labor laws and regulations. The Company and the Bank maintains appropriate equal opportunity, anti-discrimination, anti-harassment and workplace safety policies and practices, including anti-discrimination policies with respect to sexual orientation and gender identity/expression, including independent, anonymous channels of communication available every day to the Human Resources Division and Internal Audit Division for notification of potential or actual violations of the Bank’s Human Rights policies and practices. |
| • | Human Rights Convention: The Board of Directors of the Company has affirmed the Company’s agreement with and support for the International Covenant for Civil and Political Rights (ICCPR) as ratified by the United States Senate in 1992. |
| • | Human Rights & Supply-Chain Management: Over 95% of the direct supply-chain for the Company and the Bank is based in the United States, and is therefore subject to federal, state and local civil rights and labor laws and regulations. The Bank maintains a Vendor Management Policy which includes local community inclusion, civil rights, and labor compliance standards in vendor selection. |
Any stockholder who wishes to contact the Board of Directors or an individual director may do so by writing to the Board of Directors or the individual director care of, BankFinancial Corporation, 15W06060 North Frontage Road, Burr Ridge, Illinois 60527, Attention: James J. Brennan, Secretary. Each communication received will be reviewed by the Secretary and distributed to the Board of Directors or the individual director, as appropriate, depending on the facts and circumstances outlined in the communication. The Secretary may attempt to handle an inquiry directly or forward a communication to another employee of the Company for response. The Secretary also has the authority not to forward a communication to the Board of Directors or an individual director if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.
Neither the Bank nor the Company had any outstanding extensions of credit as of
December 31,The Company’s bylaws provide an advance notice procedure for certain business, or nominations to the Board of Directors, to be brought before an annual meeting of stockholders. In order for a stockholder to properly bring business before an annual meeting, or to propose a nominee for election to the Board of Directors, the stockholder must give written notice to the Secretary of the Company not earlier than the 150th day nor later than 5:00
As to each individual whom the stockholder proposes to nominate for election or re-election as a director,
◦ | the name, age, business address and residence address of such individual; |
◦ | the class, series and number of any shares of stock of BankFinancial Corporation that are beneficially owned by such individual; |
◦ | the date such shares were acquired and the investment intent of such acquisition; and |
◦ | all other information relating to such individual that is required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules thereunder (including such individual’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected); |
• | As to any other business that the stockholder proposes to bring before the meeting, a description of such business, the reasons for proposing such business at the meeting and any material interest in such business of such stockholder and any “Stockholder Associated Person” (as defined in the Company’s bylaws), individually or in the aggregate, including any anticipated benefit to the stockholder and the Stockholder Associated Person therefrom; |
• | As to the stockholder giving the notice and any Stockholder Associated Person, the class, series and number of all shares of stock of the Company which are owned by such stockholder and by such Stockholder Associated Person, if any, and the nominee holder for, and number of shares owned beneficially but not of record by such stockholder and by any such Stockholder Associated Person; |
• | As to the stockholder giving the notice and any Stockholder Associated Person described above, the name and address of such stockholder, as they appear on the Company’s stock ledger and current name and address, if different, and of such Stockholder Associated Person; and |
• | To the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or re-election as a director or the proposal of other business on the date of such stockholder’s notice. |
Nothing in this Proxy Statement shall be deemed to require the Company to include in its Proxy Statement and proxy relating to an annual meeting any stockholder proposal or nomination that does not meet all of the requirements for inclusion established by the SEC in effect at the time such proposal or nomination is received.
Advance written notice for certain business, or nominations to the Board of Directors, to be brought before the 20172024 Annual Meeting of Stockholders must be given to the Company no earlier than November 30, 201613, 2023 and no later than 5:00
In order to be eligible for inclusion in the proxy materials for next year’s annual meeting of stockholders, any stockholder proposal to take action at such meeting must be received at BankFinancial Corporation’s executive office, 60 North Frontage Road, Burr Ridge, Illinois 60527, no later than 5:00 P.M., Chicago, Illinois Time, on December 13, 2023. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934, as amended, and the Company’s bylaws.
NOTICE OF ASOLICITATIONOF PROXIES IN SUPPORT OF DIRECTOR NOMINEES OTHER THAN THECOMPANY’S NOMINEES
In order to solicit proxies in support of director nominees other than the Company’s nominees for our 2024 Annual Meeting of Stockholders, a person must provide notice postmarked or transmitted electronically to our executive office, 60 North Frontage Road, Burr Ridge, Illinois 60527, or BFIN@bankfinancial.com, no later than March 25, 2024. Any such notice and solicitation shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934.
The Board of Directors is not aware of any business to come before the Annual Meeting other than the matters described above in the Proxy Statement. However, if any other matters should properly come before the Annual Meeting, it is intended that the holders of the proxies will act as determined by a majority vote of those present and voting.
A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBERDecember 31, 20152022 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO BANKFINANCIAL CORPORATION, 15W06060 NORTH FRONTAGE ROAD, BURR RIDGE, ILLINOIS 60527, ATTN: JAMES J. BRENNAN, SECRETARY.
| BY ORDER OF THE BOARD OF DIRECTORS | ||
 | ||
James J. Brennan | ||
| Secretary |
Burr Ridge, Illinois
APPENDIX A
BANKFINANCIAL CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
COMMITTEE CHARTER
I. | PURPOSE OF THE AUDIT COMMITTEE |
The Audit Committee shall be directly responsible for the appointment and dismissal, compensation, and oversight of the Company’s Internal Auditor and independent auditor, and may not delegate any of such responsibilities to others. The Committee shall assist the Board in its oversight of:
The integrity, accuracy and completeness of the Company’s financial statements and other significant written financial information provided by the Company to any regulatory organization or the public in compliance with all applicable laws and regulations;
The Company’s auditing, accounting and financial reporting processes;
The Company’s systems of internal controls regarding asset/liability management, lending, finance, deposit services and other risk exposures;
The Company’s compliance with legal and regulatory requirements;
The retention and dismissal of the independent auditor as well as the review of the independent auditor’s qualifications, engagements, compensation and performance;
The performance of the Company’s internal audit function;
The adequacy of this charter and recommend any changes to the Board based on the advice of outside counsel concerning the current standards applicable to publicly-held corporate Audit Committees; and,
The assessment of the Committee’s operational performance on an annual basis, with the assistance of its outside counsel, the independent auditor or other consultants as it deems appropriate. The Committee will provide its self-assessment and recommendations for any changes to the Board. The Committee shall also recommend any changes to its allocation of resources resulting from its performance self-assessment.
Provide an open avenue of communication among management, the Internal Auditor, the independent auditors, senior management and the Board of Directors.
The Committee does not prepare financial statements on behalf of the Company or perform the Company’s audits, and its members are not the Company’s auditors and do not certify the Company’s financial statements. These functions are performed by the Company’s management and independent auditor.
II. | MEMBERSHIP |
All members of the Audit Committee shall be independent of the Company management and free of any relationship that would compromise their exercise of independent judgment as Committee members. Each member of the Committee must satisfy all applicable qualification and independence requirements set forth in the rules and regulations of applicable regulatory organizations. The Committee shall monitor its continuing compliance with all membership requirements.
The Committee must consist of at least three directors. The responsibilities of a member of the Committee are in addition to responsibilities as a member of the Board and, accordingly, members receive additional compensation for Committee service.
The Company may assist the Committee in maintaining the appropriate financial literacy, and is responsible for providing the Committee with educational resources related to accounting principles and procedures, current accounting topics pertinent to the Company, and other matters as may be requested. The Company may also provide new members with educational opportunities and appropriate orientation briefings.
III. | FREQUENCY OF MEETINGS |
The Committee shall meet as frequently as necessary but no less than four times annually. The Committee shall also meet at the request of the Chief Executive Officer, the Chief Financial Officer, the Internal Auditor or the independent auditor. The Board of Directors shall designate a Chairperson of the Committee. The Committee Chairperson shall approve an agenda in advance of each meeting. A majority of the members of the Committee shall constitute a quorum. The Committee shall maintain minutes or other records of its meetings and activities.
The Committee shall, through its Chairperson, report regularly to the Board following the meetings of the Committee, addressing the matters designated by this Charter and such other related matters as the Committee may deem appropriate.
IV. | AUTHORITY |
The Audit Committee may conduct or authorize investigations into any matters within the scope of this Charter. The Committee may also take any other action permitted by applicable laws, rules and regulations necessary to accomplish any action authorized by this charter.
The Committee may conduct meetings in executive session, with or without management, the Internal Auditor or the independent auditor (in each case, either individually or jointly) to effect the appropriate environment of communication and coordination for the Committee’s purposes and responsibilities pursuant to this Charter.
The Committee may request reports from the Chief Executive Officer or Chief Financial Officer. The Committee may also retain (and has the sole discretion to determine the funding for) experts to advise or assist it, including outside counsel, accountants, financial analysts or others.
V. | SCOPE OF COMMITTEE RESPONSIBILITIES |
The scope of Committee responsibilities is as follows:
A. | Financial Reporting Processes |
In consultation with the Internal Auditor and the independent auditors, review the accuracy and completeness of the Company’s financial reporting processes, both internal and external, in compliance with all applicable laws and regulations. The review should include the adequacy and effectiveness of the accounting and financial controls of the Company and any recommendations by the independent or internal auditor for improvements or particular areas where new or more detailed controls or procedures are desirable;
Establish regular and separate systems of reporting to the Committee by management, the Internal Auditor and the independent auditor regarding any significant judgments or assumptions made in management’s preparation of the financial statements and the appropriateness of such judgments;
Inquire of management, Internal Auditor and the independent auditors about significant risks or exposures involving accounting policies, internal controls or compliance matters and assess the steps management has taken to minimize such risks;
Periodically consult with the Internal Auditor and the independent auditors without the presence of management about the system of internal controls and the completeness and accuracy of the Company’s financial statements;
Receive written representations from management as to the integrity of the Company’s internal controls and financial reporting systems and the conformity of the Company’s financial statements with generally accepted accounting principles and applicable regulatory accounting principles;
Review any significant disagreement among management, the Internal Auditor and the independent auditors in connection with the preparation of the financial statements;
Consider and approve, if appropriate, material changes to the Company’s accounting and auditing principles and practices as needed or as recommended by management, the Internal Auditor or the independent auditors.
B. | Conduct of Internal Auditing |
Review the internal audit function of the Company, including the annual audit plan as revised to incorporate adjustments due to changes in the business of the Company or arising from the cycle of internal controls review;
Review with the Internal Auditor and the independent auditors the coordination of audit efforts to assure completeness of coverage, reduction of redundant efforts and the effective use of audit resources;
Review the appointment, replacement, reassignment or dismissal of the Internal Auditor, the sufficiency of resources dedicated to the internal audit function and the independence of the Internal Auditor and internal audit function;
Review internal audit reports and management’s responses thereto;
Receive written representation from the Internal Auditor that there were no significant difficulties encountered during the course of internal audits, including any restrictions on the scope of their work or access to required information;
Review the Internal Audit Division’s compliance with the Institute of Internal Auditors’ Standards for the Professional Practice of Internal Auditing.
C. | Conduct of Independent Auditing |
Subject to ratification by shareholders, the Audit Committee shall have the sole authority to appoint or replace the independent auditors. The Audit Committee shall be directly responsible for the compensation of the independent auditors (for both the independent audit and approved non-audit services). The independent auditors shall report directly to the Audit Committee;
• | Subject to the prohibitions in Exhibit A, approve all audit and non-audit services to be performed by the independent auditors prior to the performance of that work (including all fees and expenses), either directly by the Audit Committee or in accordance with any pre-approval policy that may be adopted by the Audit Committee, provided that pre-approval shall not be required for any services that are exempt as de minimis under federal regulations or applicable listing requirements; |
Review the qualifications and experience of senior members of the independent audit team and the independent auditor’s performance and fees;
Review and discuss with the independent auditors all significant relationships the independent auditors have with the Company to confirm independence. The Audit Committee shall also approve the hiring of employees or former employees of the independent auditor;
Review with the independent auditor any problems or difficulties in connection with the independent audit and management’s response, review the independent auditor’s attestation and report on management internal control report, and hold timely discussions with the independent auditors regarding the following: (1) all critical accounting policies and practices; (2) all alternative treatments of financial information within generally accepted accounting principles or regulatory accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatment, and the treatment preferred by the independent auditor; (3) other material written communications between the independent auditor and management, including, but not limited to, the management letter and schedule of unadjusted differences; and (4) an analysis of the auditor’s judgment as to the quality of the Company’s accounting principles, discussing significant reporting issues and judgments made in connection with the preparation of the Company’s financial statements;
Obtain and review annually a report by the independent auditor describing (1) the auditing firm’s internal quality control procedures and (2) any material issues raised by its most recent quality control review or investigation within the preceding five years and steps taken to resolve those issues.
D. | Conduct of Information Technology & Information Security Auditing |
Review of the minutes of the Audit Committee of the Bank with respect to the effectiveness of the Bank’s internal controls concerning Information Technology, including those controls related to information security, based on independent external audit and internal audit reports, and the presence or absence of any information security breaches or incidents;
Participate in continuing education with respect to emerging issues and trends in information technology auditing and information security;
Review of the minutes of the Audit Committee of the Bank with respect to the effectiveness of the Bank’s internal controls concerning Third-Party Vendor Management.
E. | Conduct of Legal & Regulatory Compliance Management |
Review the Company’s Code of Ethics & Business Conduct and recommend any changes or additions thereto;
Establish procedures whereby (1) officers and associates can confidentially and anonymously submit to the Committee concerns or issues regarding the Company’s accounting or auditing principles and practices and (2) the tracking of the receipt, retention and treatment of such complaints is effected by the Internal Audit Division for direct reporting to the Committee;
Review the effectiveness of the Company’s regulatory compliance program, including any changes to policies or practices recommended by management, the Internal Auditor, the independent auditors or outside counsel;
Review all regulatory examination reports, management responses and any matters concerning resolution activities that the Internal Auditor believes appropriate for the Committee’s attention;
Review with the Company’s outside legal counsel any legal matters that may materially affect the Company’s financial statements or public filings and reports;
Review related party transactions consistent with all regulatory requirements, including the procedures with respect to expense account management and use of corporate assets by directors, officers and associates;
At least annually, assess any emerging accounting or regulatory issues that may have a material effect on the Company’s financial statements or public filings and reports in the future.
F. | Public Filings & Reports |
Review the Company’s quarterly and annual SEC filings, including the financial statements, Management Discussion & Analysis information and management certifications with the Chief Executive Officer, Chief Financial Officer, the Internal Auditor and the independent auditors;
Review earnings press releases and information provided to analysts and rating agencies;
Review reports or other financial information, as deemed necessary and appropriate, prior to submission to the applicable regulatory organization or to the public;
Submit an annual report of the Committee to shareholders in the Company’s Proxy Statement as required by the U.S. Securities and Exchange Commission.
VI. | CONCLUSION |
The Committee is to serve as an independent and objective party to monitor the Company’s financial reporting process and system of internal controls on behalf of the Board and shareholders. While maintaining its independence and integrity at all times, the Committee must also provide an open avenue of communication among management, the Internal Auditor, the independent auditors and the Board of Directors to properly fulfill its mission.
EXHIBIT A - PROHIBITED NON-AUDIT SERVICES
The following services may not be provided by the independent auditor contemporaneously with the audit:
Bookkeeping or other services related to the accounting records or financial statements of the Company;
Financial information systems design and implementation;
Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;
Actuarial services;
Internal audit outsourcing services;
Management functions or human resources;
Broker or dealer, investment advisor, or investment banking services;
Legal services and expert services unrelated to the audit;
Any other service that the Public Company Accounting Oversight Board determines is impermissible.
APPENDIX B
BANKFINANCIAL CORPORATION
HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS
COMMITTEE CHARTER
I. | PURPOSE OF THE COMMITTEE |
The Human Resources Committee shall be directly responsible for the execution of the Board’s responsibilities with respect to compensation, performance evaluation and succession planning for the Company’s Chief Executive Officer and principal executive officers. (The term “principal executive officers” are those individuals covered by Section 16 of the Securities and Exchange Act of 1934.) The Committee is also responsible for the submission of the annual report on executive compensation to the Board of Directors for inclusion into the Company’s Annual Proxy Statement.
II. | MEMBERSHIP |
The Board shall appoint the members of the Committee annually. All members of the Committee shall be independent of the company management and free of any relationship that would compromise their exercise of independent judgment as Committee members. Each member of the Committee must satisfy all applicable qualification and independence requirements set forth in the rules and regulations of applicable regulatory organizations.
III. | FREQUENCY OF MEETINGS |
The Committee shall meet as frequently as necessary but no less than annually. The Committee shall also meet at the request of the Chief Executive Officer or a majority of the Board of Directors. The Board of Directors shall designate a Chairperson of the Committee. The Committee Chairperson shall approve an agenda in advance of each meeting. A majority of the members of the Committee shall constitute a quorum. The Committee shall maintain minutes or other records of its meetings and activities.
The Committee shall, through its Chairperson, report regularly to the Board following the meetings of the Committee, addressing the matters designated by this Charter and such other related matters as the Committee may deem appropriate.
IV. | AUTHORITY |
The Committee may conduct or authorize investigations into any matters within its scope of this Charter. The Committee may also take any other action permitted by applicable laws, rules and regulations necessary to accomplish any action authorized by this Charter.
The Committee may conduct meetings in executive session with members of the Board of Directors or the principal executive officers (in each case, either individually or jointly) to effect the appropriate environment of communication and coordination for the Company’s control environment.
The Committee may request reports from the Chief Executive Officer, Chief Financial Officer, General Counsel and Executive Vice President - Human Resources.
In its sole discretion, the Committee may retain, obtain the advice of or terminate any compensation consultant, legal counsel or other adviser used to assist the Committee in fulfilling its responsibilities. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any such consultant, legal counsel or other adviser retained by the compensation committee. The Company shall provide adequate resources to support the Committee’s activities, including appropriate funding, as determined by the Committee, in its capacity as a committee of the Board of Directors, for payment of reasonable compensation to a compensation consultant, legal counsel or other adviser.
Prior to the selection of, or receiving advice from, a compensation consultant, legal counsel or other adviser, the Committee must consider the following factors, as well as any other factors identified by the stock exchange on which the Company’s shares are listed:
The provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser;
The amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;
Any stock of the Company owned by the compensation consultant, legal counsel or other adviser; and
Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the Company.
V. | SCOPE OF COMMITTEE RESPONSIBILITIES |
The scope of Human Resources Committee responsibilities is as follows:
A.Executive Compensation
Review and approve base compensation, cash incentive compensation, equity incentive compensation, non-standard employment benefits / perquisites, and employment or severance agreements for the Chief Executive Officer and principal executive officers. The Chief Executive Officer may not be present during voting or deliberations on his or her compensation.
B.Management Sufficiency
Review annually the current state of management sufficiency and succession planning within the Company for key risk areas and report any recommended changes to the Board of Directors.
C.Reporting
Submit a report to the Board on executive compensation for inclusion in the Company’s Annual Proxy Statement as required by all applicable laws and regulations of regulatory organizations;
Review the suitability of this Charter and recommend any changes to the Board of Directors;
At least annually, assess any emerging accounting, legal or regulatory issues that may have a material effect on the Company’s executive compensation practices or reports in the future.
VI. | CONCLUSION |
The Committee is to serve as an independent and objective party to monitor the Company’s corporate governance practices relating to human resources matters and facilitate the effective oversight of executive compensation, management sufficiency and succession planning of the Company. The Committee will meet periodically throughout the year to execute its responsibilities and issue reports of its activities for use by the Board of Directors and Shareholders.
