WE URGE SHAREHOLDERS TO VOTE AS SOON AS POSSIBLE

Stock Yards Bancorp, Inc.

1040 East Main Street
Louisville, Kentucky 40206

PROXY STATEMENT
FOR THE 20192020 ANNUAL MEETING OF SHAREHOLDERS

General Information about the Annual Meeting

Why have I received these materials?

We are mailing this Proxy Statement and the accompanying proxy to shareholders on or about March 18, 2019.13, 2020. The proxy is solicited by the Board of Directors of Stock Yards Bancorp, Inc. (referred to throughout this Proxy Statement as “Stock Yards Bancorp”, “Bancorp”, “the Company” or “we”, “us” or “our”) in connection with our Annual Meeting of Shareholders that will take place on Thursday, April 25, 2019.23, 2020. We invite you to attend the Annual Meeting and request you to vote on the proposals described in this Proxy Statement.

What am I voting on?

Where can I find more information about these voting matters?

What is the relationship of Stock Yards Bancorp and Stock Yards Bank & Trust Company?

Stock Yards Bancorp is the holding company for Stock Yards Bank & Trust Company (referred to throughout this Proxy Statement as “the Bank”). Stock Yards Bancorp owns 100% of Stock Yards Bank & Trust Company. Because Stock Yards Bancorp has no significant operations of its own, its business and that of Stock Yards Bank & Trust Company are essentially the same.

Who is entitled to vote at the Annual Meeting?

Holders of record of Common Stock (“Common Stock”) of Stock Yards Bancorp as of the close of business on March 4, 2019February 28, 2020 will be entitled to vote at the Annual Meeting. On March 4, 2019,February 28, 2020, there were 22,791,30522,637,670 shares of Common Stock outstanding and entitled to one vote on all matters presented for vote at the Annual Meeting.

How do I vote my shares?

If you are a “record” shareholder of Common Stock (that is, if you hold Common Stock in your own name in Stock Yards Bancorp’s stock records maintained by our transfer agent), you may vote your shares by using one of the following three options:

If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the beneficial owner of those shares. This Notice of Annual Meeting and Proxy Statement and any accompanying documents have been forwarded to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record how to vote your shares by using the voting instruction card provided by them or by following their instructions for voting by telephone or over the Internet. Beneficial owners who wish to vote at the Annual Meeting will need to obtain a proxy form from the institution that holds your shares and to follow the voting instructions on such form.

If you are a participant in the Stock Yards Bank & Trust Company 401(k) and Employee Stock Ownership Plan (“KSOP”), you have the option of receiving your voting information either electronically or by regular postal mail. Plan participants who have elected to receive their voting information electronically should follow the instructions contained in the electronic communication. If you have not affirmatively elected to receive voting information for your KSOP shares electronically, you will receive a paper version of the proxy card via postal mail that will include the shares you own through that savings plan.your KSOP account. That proxy card will serve as a voting instruction card for the trustee of the plan. If you own shares through the plan and do not vote electronically or by mail, the plan trustee will be instructed by the plan’s administrative committee to vote the plan shares as the Board of Directors recommend.

What if I return my proxy card but do not provide voting instructions?

If you vote by proxy card, your shares will be voted as you instruct. If you return your proxy card but do not mark your voting instructions on your signed card, James A. Hillebrand, Chief Executive Officer, and Philip S. Poindexter, President, as proxies named on the proxy card, will vote your shares FOR the election of the eleven director nominees, FOR the ratification of BKD, LLP and FOR the approval of the compensation of the named executive officers.

Can I change my vote after I have voted?

Yes. You may change your vote at any time before the polls close at the Annual Meeting. You may do this by:

Your attendance at the Annual Meeting will not have the effect of revoking a proxy unless you notify our Corporate Secretary in writing before the polls close that you wish to revoke a previouspreviously submitted proxy.

What is a broker non-vote?

If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have the discretionary authority to vote. This is called a “broker non-vote.” In these cases the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (“NYSE”) that govern brokers.

If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority to vote your shares on the ratification of BKD, LLP (Item 2) even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority to vote on the election of directors (Item 1) or the approval of executive compensation (Item 3) without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on these matters.

What constitutes a quorum for purposes of the Annual Meeting?

The presence at the Annual Meeting in person or by proxy of the holders of more than 50 percent of the voting power of all outstanding shares of Common Stock entitled to vote shall constitute a quorum for the transaction of business. Proxies marked as abstaining (including proxies containing broker non-votes) on any matter to be acted upon by shareholders will be treated as present at the meeting for purposes of determining a quorum but will not be counted as votes cast on such matters.

What vote is required to approve each item? 

You may vote “FOR” each nominee for director or “AGAINST” each nominee, or “ABSTAIN” from voting on one or more nominees. Unless you mark “AGAINST” or “ABSTAIN” with respect to a particular nominee or nominees or for all nominees, your proxy will be voted “FOR” each of the director nominees named in this Proxy Statement. A nominee will be elected as a director if the number of “FOR” votes exceeds the number of “AGAINST” votes.

The selection of the independent registered public accounting firm will be ratified if the votes cast for it exceed the votes cast against it.

The proposal to approve the compensation of our named executive officers disclosed in this Proxy Statement will pass if votes cast for it exceed votes cast against it. Because this vote is advisory, it will not be binding upon Bancorp or the Board of Directors.

Any other item to be voted upon at the Annual Meeting will pass if votes cast for it exceed votes cast against it.

Who counts the votes?

Broadridge Financial Solutions will count votes cast by proxy at the Annual Meeting. They will also certify the results of the voting and will also determine whether a quorum is present at the meeting. Any votes cast in person at the Annual Meeting will be included in the final voting tally.

How are abstentions and broker non-votes treated?

You may abstain from voting on one or more nominees for director. You may also abstain from voting on any or all other proposals. Abstentions will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum, but will not be counted in the number of votes cast for or against any nominee or with respect to any other matter. If a broker does not receive voting instructions from the beneficial owner of shares on a particular matter and indicates on the proxy that it does not have discretionary authority to vote on that matter, we will treat these shares as present at the meeting for purposes of determining a quorum but the shares will not count as votes cast on the matter. Abstentions and broker non-votes will not affect the outcome of any matters to be voted on at the Annual Meeting.

What information do I need to attend the Annual Meeting?

We do not userequire tickets for admission to the Annual Meeting. If you are voting in person, we may request photo identification.

How does the Board recommend that I vote my shares?

The Board recommends a vote FOR each of the nominees for director set forth in this document, FOR the ratification of the selection of the independent registered accounting firm and FOR the approval of the compensation of the named executive officers.

With respect to any other matter that properly comes before the Annual Meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion in the best interests of Stock Yards Bancorp. At the date this Proxy Statement went to press, the Board of Directors had no knowledge of any business other than that described herein that would be presented for consideration at the Annual Meeting.

Who will bear the expense of soliciting proxies?

Stock Yards Bancorp will bear the cost of soliciting proxies in the form enclosed. In addition to the solicitation by mail, proxies may be solicited personally or by telephone, facsimile or electronic transmission by our employees. We reimburse brokers holding Common Stock in their names or in the names of their nominees for their expenses in sending proxy materials to the beneficial owners of such Common Stock. The Company has engaged the services of Laurel Hill Advisory Group, LLC., a professional proxy solicitation firm, to aid in the solicitation of proxies from certain brokers, bank nominees and other institutional owners. The Company’s costs for such services will not exceed $7,500 plus reasonable out of pocket expenses.

Is there any information that I should know about future annual meetings?

Any shareholder who intends to present a proposal at the 20202021 Annual Meeting of Shareholders must deliver the proposal to the Corporate Secretary at 1040 East Main Street, Louisville, Kentucky 40206 no later than November 29, 2019,13, 2020, if the proposal is submitted for inclusion in our proxy materials for that meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934. In addition, our Bylaws impose certain advance notice requirements on a shareholder nominating a director or submitting a proposal to an Annual Meeting. Such notice must be submitted to the Secretary of Stock Yards Bancorp no later than January 31, 2020.23, 2021. The notice must contain information prescribed by the Bylaws, copies of which are available from the Secretary. These requirements apply even if the shareholder does not desire to have his or her nomination or proposal included in our Proxy Statement.

CORPORATE GOVERNANCE AND RELATED MATTERS

Role of the Board and Governance Principles

The Stock Yards Bancorp’s Board of Directors represents shareholders’ interests in perpetuating a successful business including optimizing shareholder returns. The Directors are responsible for determining that the Company is managed to ensure this result. This is an active responsibility, and the Board monitors the effectiveness of policies and decisions including the execution of the Company’s business strategies. Strong corporate governance guidelines form the foundation for Board practices. As a part of this foundation, the Board believes that high ethical standards in all Company matters are essential to earning the confidence of investors, customers, employees and vendors. Accordingly, Stock Yards Bancorp has established a framework that exercises appropriate measures of oversight at all levels of the Company and clearly communicates that the Board expects all actions be consistent with its fundamental principles of business ethics and other corporate governance guidelines. The Company’s governance guidelines and other related matters are published on the Company’s website: www.syb.com under the Investor Relations section.

Board Leadership Structure

The Board of Directors modified the Company’s leadership structure during 2018 in connection with the retirement of David P. Heintzman as Chief Executive Officer. Mr. Heintzman had historicallypreviously held the positions of Chairman of the Board and Chief Executive Officer. He retired as Chief Executive Officer effective September 30, 2018, and James A. Hillebrand, previously President of the Company, was appointed to succeed Mr. Heintzman as Chief Executive Officer. Mr. Heintzman remained employed in the role of Executive Chairman until his retirement from the Company at the end of 2018. The Company entered into an Executive Transition Agreement with Mr. Heintzman which provides that he willwould serve as a non-executive Chairman of the Board for the remainder of his currentthen-current Board term and thereafter as a member of the Board if nominated and elected by the Company’s shareholders.

The Board of Directors believes that the most effective leadership structure for the Company at the present time is to separate the roles of Chairman of the Board and Chief executiveExecutive Officer. With his deep knowledge of the Company’s business and the banking industry generally, the Board believes that Mr. Heintzman is the best person to lead and advise the Board in its consideration of important strategic and operational matters affecting the Company and the Bank. Additionally, Mr. Heintzman has been and will continue to be a significant resource for Mr. Hillebrand in his new role as Chief Executive Officer.

In connection with this new leadership structure, the Board of Directors revised the Company’s corporate governance documents to address the separation of the roles of Chairman of the Board and Chief Executive Officer. The Board will annually elect one of its members to serve as Chairman of the Board. The Chairman will preside at all meetings of the shareholders and of the Board of Directors, and generally consult with the Board on matters pertaining to the Company’s business and affairs. Both positions may, but need not, be held by the same person. The decision as to whether the offices of Chairman of the Board and Chief Executive Officer should be combined or separated will be made from time to time by the Board of Directors at its discretion. The Board’s decision will be made in its business judgment and based upon its consideration of all relevant factors and circumstances at the time, including the specific needs of the Company’s business and the current composition of the Board.

If the individual elected as Chairman of the Board is also the Chief Executive Officer, or if the Chairman of the Board is not an independent director, the Board will elect a lead independent director to help ensure a strong independent leadership on the Board.

In addition to an independent lead director, three committees of the Board provide independent oversight of management – the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each is composed entirely of independent directors.

If a lead independent director is called for under the Company’s governance documents, the Chair of the Nominating and Corporate Governance Committee acts in that role. Stephen M. Priebe currently serves as lead director because Mr. Heintzman, as a former executive officer of the Company, does not qualify as an independent director under the Board’s independence standards. The lead director presides at executive sessions of the Board which consist of independent and non-management directors and are held at least two times annually. He has authority to call special meetings of the independent directors and committees of the Board, serves as liaison between the Chief Executive Officer and board members and is available to discuss with any director concerns he or she may have regarding the Board, the Company or the management team. The lead independent director is responsible for providing advice and consultation to the Chief Executive Officer and informing him of decisions reached and suggestions made during executive sessions of the Board of Directors. The lead director reviews and approves matters such as agendas and schedules for Board meetings and executive sessions, and information distributed to board members. The lead director will be available to consult and communicate with shareholders where appropriate.

Board Evaluation Process

The Board conducts an annual self-assessment to enhance its effectiveness. Through regular evaluation of its policies, practices and procedures, the Board identifies areas for further consideration and improvement. The evaluation process is led by the Nominating and Corporate Governance Committee. Each year, that Committee discusses and decides upon the process to be followed for the upcoming year. Each director ismay be requested to complete a questionnaire and provide feedback on a range of issues, including his or her assessment of the Board’s overall effectiveness and performance; its committee structure; priorities for future Board discussion and attention; the composition of the Board and the background and skills of its members; the quality, timing and relevance of information received from management; the nature and scope of agenda items; and his or her individual contributions to the Board. The lead director then meets with each director individually either to discuss his or her questionnaire responses and any otheror, if directors were not requested to complete a questionnaire, to discuss thoughts orand suggestions the director may have regarding the Board’s overall effectiveness or specific Board practices or policies. The lead director prepares a summary of findings drawn from the questionnaire responses and director interviews for presentation to the full Board of Directors. Each of the Committees also conducts their own self-assessments led by the respective committee chairs.

Board Oversight of Risk Management

The Board of Directors has a significant role in the oversight of risk management. The Board receives information regarding risks facing the Company, their relative magnitude and management’s plan for mitigating these risks. Primary risks facing the Company are credit, operational, interest rate, liquidity, compliance/legal, strategic and reputational risks. After assessment by management, reports are made to committees of the Board. Credit risk is addressed by the Bank’s Risk Committee.Committee of Bancorp. Operational and compliance/legal risks are addressed by the Audit Committee of Bancorp and the Bank’s Risk Committee.Committee of Bancorp. Interest rate and liquidity risks are addressed by the Asset/Liability Committee comprised of Bank management and reports are made monthly to the Board.Board at each of its regular meetings. Strategic and reputational risk is addressed by the above committees in addition to the Compensation Committee of Bancorp along with other executive compensation matters. Oversight of the trust department is addressed by the Trust Committee of the Bank. Corporate governance matters are addressed by the Nominating and Corporate Governance Committee of Bancorp. The full Board receives reports from each of these committees at the Board meeting immediately following the Committee meeting. The Bank’s Director of Internal Audit has a direct reporting line to the Audit Committee of the Board. The Chief Risk Officer, Information Security Officer and Compliance Officer make regular reports to the Audit and Risk Committees and the full Board when appropriate.

Shareholder Communications with the Board of Directors

Shareholders may communicate directly to the Board of Directors in writing by sending a letter to the Board at: Stock Yards Bancorp Board of Directors, P.O. Box 32890, Louisville, KY 40232-2890.  Communications directed to the Board of Directors will be received by the Chairman and processed by the Nominating and Corporate Governance Committee when the communications concern matters related to the duties and responsibilities of the Board of Directors.

BOARD OF DIRECTORS’ MEETINGS AND COMMITTEES

During 2018,2019, the Board of Directors of Stock Yards Bancorp held nine regularly scheduled meetings and two special meetings. All directors of Stock Yards Bancorp are also directors of the Bank. During 2018,2019, the Bank’s Board of Directors also held nine regularly scheduled meetings.

All directors attended at least 75% of the number of meetings of the Board and committees of the Board on which they served that were held during the period he or she served as a director. All directors are encouraged to attend annual meetings of shareholders, and eleven of twelveall attended the 20182019 Annual Meeting.

Stock Yards Bancorp hasmaintains an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee and a Risk Committee of the Board of Directors. The Bank has a Risk Committee andmaintains a Trust Committee of the Board of Directors.

Audit Committee

The Board of Directors of Stock Yards Bancorp maintains an Audit Committee comprised of directors who are not officers of Stock Yards Bancorp. For 2018,2019, the Audit Committee was comprised of Messrs. Herde (Chairman), Lechleiter and Schutte.   Ms. Heitzman also served as a member of the Audit Committee for a portion of 2018. Each of these individuals meets the Securities and Exchange Commission (“SEC”) and NASDAQ independence requirements for membership on an audit committee and each is financially literate within the meaning of the NASDAQ listing rules. The Board of Directors has adopted a written charter for the Audit Committee, and this charter is available on Stock Yards Bancorp’s website: www.syb.com.

The Audit Committee oversees Stock Yards Bancorp’s financial reporting process on behalf of the Board of Directors. Management has primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Committee, among other things,matters, considers the appointment of the external auditors for Stock Yards Bancorp, reviews with the auditors the plan and scope of the audit and audit fees, monitors the adequacy of reporting and internal controls, meets regularly with internal and external auditors, reviews the independence of the external auditors, reviews Stock Yards Bancorp’s financial results as reported in SEC filings, and approves all audit and permitted non-audit services performed by its external auditors. The Committee reviews and evaluates identified related party transactions and discusses with management the Company’s major financial risk exposures and the steps management has taken to monitor and control those exposures. The Audit Committee meets with our management at least quarterly to consider the adequacy of our internal controls and the objectivity of our financial reporting. This Committee also meets with the external auditors and with our internal auditors regarding these matters. Both the independent auditors and the internal auditors regularly meet privately with this Committee and have unrestricted access to this Committee. The Audit Committee held fivesix meetings during 2018.2019.

The Board of Directors has determined that Messrs. Herde and Lechleiter are audit committee financial experts for Stock Yards Bancorp and are independent as described in the paragraph above. See “REPORT OF THE AUDIT COMMITTEE” for more information.

Nominating and Corporate Governance Committee

The Board of Directors of Stock Yards Bancorp maintains a Nominating and Corporate Governance Committee. Members of this Committee are Messrs. Priebe (Chairman), Brown Edinger,and Herde, and Northern, all of whom are non-employee directors meeting the NASDAQ independence requirements for membership on a nominating and governance committee. Responsibilities of the Committee are set forth in a written charter satisfying the NASDAQ’s corporate governance standards, requirements of federal securities law and incorporating other best practices.  The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, and this charter is available on Stock Yards Bancorp’s website: www.syb.com.

Among the Committee’s duties are identifying and evaluating candidates for election to the Board of Directors, including consideration of candidates suggested by shareholders. To submit a candidate for consideration by the Committee, a shareholder must provide written communication to the Committee. The Committee would apply the same board membership criteria to shareholder-nominated candidates as it would to Committee-nominated candidates. The Committee also assists the Board in determining the composition of Board committees, assessing the Board’s effectiveness and developing and implementing the Company’s corporate governance guidelines. This Committee held fourthree meetings during 2018.2019.

Compensation Committee

The Board of Directors of Stock Yards Bancorp maintains a Compensation Committee. Members of this Committee are Messrs. Lechleiter (Chairman), Priebe, Schutte and Tasman, all of whom meet the NASDAQ independence requirements for membership on the Compensation Committee. The Board of Directors has adopted a written charter for the Compensation Committee, and this charter is available on Stock Yards Bancorp’s website: www.syb.com. The responsibilities of this Committee include oversight of executive and Board compensation and related programs. The Compensation Committee held seven meetings during 2018.2019. See “EXECUTIVE COMPENSATION AND OTHER INFORMATION - REPORT“REPORT ON EXECUTIVE COMPENSATION” for more information.

Risk Committee

The Board of Directors of Stock Yards BankBancorp maintains a Risk Committee. This Committee is responsible for monitoring the Bank’s commercial and consumer loan portfolio and the related credit risk. The Committee reviews and discusses with management its assessment of asset quality and trends in asset quality, credit quality administration and underwriting standards and the effectiveness of portfolio risk management systems. The Committee is also responsible for reviewing and approving significant lending and credit policies and compliance with those policies. During 2016,Additionally, the Risk Committee significantly expanded its duties to includehas oversight responsibility for a widerwide range of enterprise-related risks within the Bank, including regulatory compliance, information security, cybersecurity, insurance and physical security. Members of this Committee are Messrs. Tasman (Chairman), Bickel, Edinger, Heintzman and Northern and Ms. Heitzman. The Risk Committee held six regular meetings and one special meeting in 2018.2019.

Trust Committee

The Board of Directors of Stock Yards Bank maintains a Trust Committee. The members of the Bank’s Trust Committee are Ms. Heitzman (Chair) and Messrs. Bickel, Brown and Heintzman and Ms. Heitzman. This Committee held six meetings in 2018.Heintzman. The Trust Committee oversees the operations of the wealth management and trust department of the Bank to help ensure it operates in accordance with sound fiduciary principles and is in compliance with pertinent laws and regulations. This Committee held six meetings in 2019.

ITEM 1. ELECTION OF ELEVEN DIRECTORS

The Board of Directors presently consists of thirteeneleven members. Two current directors, Charles R. Edinger III and Richard Northern, have reached their mandatory retirement ages and will not stand for re-election at the 2019 Annual Meeting. Directors serve a one-year term and hold office until the Annual Meeting following the year of their election and until his or her successor is elected and qualified, subject to his or her death, resignation, retirement, removal or disqualification.

The eleven directors nominated by the Nominating and Corporate Governance Committee of the Board of Directors for election this year to hold office until the 20202021 Annual Meeting and until their respective successors are elected and qualified are:

Our Board of Directors, through a process managed by the Nominating and Corporate Governance Committee, conducts an annual review of director independence. During this review, the Nominating and Corporate Governance Committee considers transactions and relationships between each director or any member of his or her immediate family and the Company. The purpose of this review is to determine whether any such relationships or transactions are inconsistent with a determination that the director is independent.

As a result of this review, and based upon the advice and recommendations of the Nominating and Corporate Governance Committee, the Board of Directors has affirmatively determined that Messrs. Bickel, Brown, Herde, Lechleiter, Priebe, Schutte and Tasman and Ms. Heitzman satisfy the independence requirements of the NASDAQ Stock Market. Mr. Heintzman served as an executive officer of the Bank until December 31, 2018 and does not satisfy these requirements. As current employees of the Bank, Mr. Hillebrand and Ms. Thompson also do not satisfy these requirements. The Board of Directors also previously determined that Messrs. Edinger and Northern each satisfied the NASDAQ independence requirements during their most recent year of service as directors prior to retirement.

In performing its independence review, the Nominating and Corporate Governance Committee noted that the Bank and Mr. Heintzman have in the past made charitable donations to the Catholic Education Foundation of Louisville, of which Mr. Lechleiter is the President. However, the Committee determined that these relationships were not material to the director or his affiliated organization.

Our Articles of Incorporation and Bylaws require majority voting for the election of directors in uncontested elections. This means that the director nominees in an uncontested election for directors must receive a number of votes cast “for” his or her election that exceeds the number of votes cast “against.” The Company’s corporate governance guidelines further provide that any incumbent director who does not receive a majority of “for” votes in an uncontested election must, within five days following the certification of the election results, tender to the Chairman of the Board his or her resignation from the Board. The resignation will specify that it is effective upon the Board’s acceptance of the resignation. The Board will, through a process managed by the Nominating and Corporate Governance Committee and excluding the nominee in question, accept or reject the resignation within 90 days after certification of the shareholder vote. The Board will promptly communicate any action taken on the resignation.

Additional Information Regarding the Background and Qualifications of Director Nominees

The Nominating and Corporate Governance Committee considers the particular experience, qualifications, attributes and expertise of each nominee for election to the Board. Having directors with different points of view, professional experience, education and skills provides broader perspectives and more diverse considerations valuable to the directors as they fulfill their leadership roles. Potential Board candidates are evaluated based upon various criteria, including:

Directors must have time available to devote to Board activities and to enhance their knowledge of Stock Yards Bancorp Inc. and the banking industry.

All non-management directors are required to own stock equal in value to at least $200,000 within three years of joining the Board and to maintain that minimum ownership level for the remainder of their service as a director. The Nominating and Corporate Governance Committee may exercise its discretion in enforcing the guidelines when the accumulation of Common Stock is affected by the price of Bancorp stock or changes in director compensation. Management directors also have ownership targets as set forth elsewhere in this Proxy Statement. All directors’ ownership positions exceed the requirement, and some of the more tenured directors are among the Company’s largest shareholders.

The Nominating and Corporate Governance Committee of the Board of Directors has presented a slate of eleven nominees for election as directors at the 20192020 Annual Meeting. If elected, we expect that all of the aforementioned nominees will serve as directors and hold office until the 20202021 annual meeting of shareholders and until their respective successors have been elected and qualified. However, if for any reason a nominee should become unable or unwilling to serve, proxies may be voted for another person nominated as a substitute by the Board of Directors, or the Board may reduce the number of directors to be elected.

All eleven nominees are standing for re-election and were last elected to the Board of Directors by shareholders at the 20182019 Annual Meeting except Mr. Schutte, who was first appointed in June 2018 and will be standing for election by shareholders for the first time.Meeting. Below is a summary of the Committee’s consideration and evaluation of each director nominee.

Mr. Bickel is founder and President of U.S. Specialties, a commercial building supply company. He has served as the managing member of several real estate development organizations in the Louisville area over the past 30 years. Outside of commercial endeavors, Mr. Bickel has been very active in the Louisville community, serving in a leadership capacity on numerous area non-profit boards. Mr. Bickel serves on the Bank’s Risk Committee of Bancorp and the Bank’s Trust Committee.

Mr. Brown retired as a Vice President of Brown-Forman Corporation, a Fortune 1,000 company, in 2015. His extensive experience in business, management and accounting, and his deep ties to the Louisville community, bring valuable local and global perspectives to our Board. Additionally, his widespread commitment to community organizations in Louisville and beyond gives him a strong sense of the needs, prospects and potential of our region. Mr. Brown serves on the Nominating and Corporate Governance Committee of Bancorp and the Bank’s Trust Committee.

Mr. Heintzman retired as Chief Executive Officer of Bancorp and the Bank as of September 30, 2018. From October 1, 2018 through December 31, 2018, he held the position of Executive Chairman. Mr. Heintzman holds an accounting degree, and prior to joining the Bank, worked as a certified public accountant for an international accounting firm. He joined the Bank in 1985 and, prior to his appointment as Chief Executive Officer, held a series of executive positions, including Chief Financial Officer, Executive Vice President and President. In January 2005 he assumed the position of Chairman and Chief Executive Officer. Mr. Heintzman has beenwas instrumental in the Bank’s growth strategies and profitable execution. His commitment to ethical standards setsset the example for the Bank and its employees, and his tenure and experience in all areas of the business provide a unique perspective of the business and strategic direction of the Company. Mr. Heintzman serves on the Bank’s Risk Committee of Bancorp and the Bank’s Trust Committee.

Ms. Heitzman, Certified Public Accountant, Chartered Financial Analyst, with expertise in the institutional credit markets and experience with investment strategies, provides our Board with a deep knowledge and understanding of capital markets, finance and accounting. Ms. Heitzman retired in 2016 as a portfolio manager for New York City based KKR Prisma Capital. She joined that company in 2004 to help construct and manage customized portfolios. Before joining KKR Prisma, Ms. Heitzman served in various capacities at AEGON USA, previously Providian Capital. As a portfolio manager in capital market strategies, she facilitated significant growth and broad diversification of a $1 billion fund portfolio. Ms. Heitzman serves on the Bank’s Risk Committee of Bancorp and chairs the Bank’s Trust Committee.

Mr. Herde holds an accounting degree, is a certified public accountantCertified Public Accountant and joined Baptist Healthcare System, Inc., one of the largest not-for-profit health care systems in Kentucky, in 1984 as controller.  He served as the Chief Financial Officer from 1993 until his retirement from Baptist in September 2016.  He now serves as the Vice President of FinancePresident/Financial Policy for the Kentucky Hospital Association.  He has extensive experience in financial reporting and corporate finance.  Mr. Herde chairs the Audit Committee of Bancorp and has been designated by the Board of Directors as an audit committee financial expert. He also serves on the Nominating and Corporate Governance Committee of Bancorp.

Mr. Hillebrand was appointed Chief Executive Officer of Bancorp and the Bank effective October 1, 2018. He joined Stock Yards Bank in 1996 as director and developer of the private banking group. Prior to joining the Bank, he was with a regional bank and a community bank where he specialized in private banking. He has directed the expansion of the Bank into the Indianapolis and Cincinnati markets and was named President in 2008.

Mr. Lechleiter is the President of the Catholic Education Foundation of Louisville. From February 2002 until his retirement in January 2014, he served as the Executive Vice President and Chief Financial Officer of Kindred Healthcare, Inc., a Fortune 500 healthcare services company based in Louisville. Mr. Lechleiter also served in senior financial positions at other large publicly held healthcare services companies such as Humana Inc. and HCA, Inc. during his professional financial career spanning nearly 35 years. His extensive experience in business leadership, financial reporting, corporate finance, investor relations, mergers and acquisitions and corporate governance is valuable to the Board. Mr. Lechleiter serves on the Audit Committee of Bancorp and has been designated by the Board of Directors as an audit committee financial expert. He also chairs the Compensation Committee of Bancorp. 

Mr. Priebe is President of Hall Contracting of Kentucky, which provides construction services in the areas of heavy construction, asphalt, civil, pipeline, and highway and bridge construction. A registered professional civil engineer, he began his career at Hall in 1986. Mr. Priebe has had extensive involvement with many civic organizations throughout his career. He has worked with the Kentucky Transportation Cabinet Disadvantaged Business Enterprise Training Program and is actively mentoring a local electric contractor. Mr. Priebe’s business acumen and familiarity with the local and regional economic climate bring valuable perspective to the Board. Mr. Priebe serves on the Compensation Committee and chairs the Nominating and Corporate Governance Committee of Bancorp.

Mr. Schutte is Chief Executive Officer of GeriMed, Inc., a nationwide group purchasing organization specializing in long-term care pharmacy services for independent pharmacies that serve long-term care providers, such as nursing homes, assisted living facilities, and hospice, as well as prison populations. In February 2017, he founded MainPointe Pharmaceuticals, a national company that markets and distributes pharmaceuticals as well as over-the-counter products and supplements. He also previously served as Chairman of the Board of VistaPharm, for which he was the largest shareholder, until it was sold in December 2015. Mr. Schutte is also involved in numerous commercial real estate development projects in the Louisville area and elsewhere. His entrepreneurial skills and insights and strong reputation in the Louisville business community are beneficial to the Board. He serves on the Audit Committee and Compensation Committee of Bancorp.

Mr. Tasman is President of Tasman Industries, Inc. and Tasman Hide Processing headquartered in Louisville. This family-owned business was founded in 1947 and operates 14 locations in North America with offices in Europe and Asia. The company produces leather and finished products used by the military and general population. Mr. Tasman’s extensive knowledge of consumer demands and global business trends brings a unique perspective to the Board. He serves on the Compensation Committee of Bancorp and chairs the Bank’s Risk Committee.Committee of Bancorp.

Ms. Thompson joined the Bank in 1992 as Manager of the Wealth Management and Trust Department, at which time the trust department had $200 million in assets under management. Under her leadership, the department has grown to $2.8$3.3 billion in assets under management and is one of the most profitable bank-owned trust companies in the country. Prior to joining the Company, Ms. Thompson practiced estate planning law and worked in a regional bank’s trust department where she specialized in investment management and estate and personal financial planning.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THESE NOMINEES

ITEM 2. RATIFICATION OF THE SELECTION OF THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected BKD, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 20192020 and has directed that management submit the selection of the independent registered public accounting firm to shareholders for ratification at the Annual Meeting. The firm of BKD, LLP has served as the Company’s auditors since June 7, 2018. Representatives of BKD, LLP are expected to be present at the meeting, will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Shareholder ratification of the selection of BKD, LLP as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. However, we are submitting the selection of BKD, LLP to the shareholders for ratification as a matter of sound corporate practice. If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain BKD, LLP. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such a change would be in the best interests of the Company and its shareholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE SELECTION OF BKD, LLP

ITEM 3. ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are asking our shareholders to provide an advisory vote on the compensation of the named executive officers disclosed in the REPORT ON EXECUTIVE COMPENSATION section of this Proxy Statement. We have included this proposal among the items to be considered at the Annual Meeting pursuant to the requirements of Section 14A of the Securities Exchange Act of 1934. While this vote is non-binding on our Company and the Board of Directors, it will provide the Compensation Committee with information regarding investor sentiment regarding our executive compensation philosophy, policies and practices which the Committee will be able to consider when determining future executive compensation arrangements. Our current policy is to hold an advisory vote on executive compensation each year. We expect to hold the next advisory vote at our 2020 annual meeting2021 Annual Meeting of shareholders.Shareholders. Following is a summary of some of the key points of our 20182019 executive compensation program. See the REPORT ON EXECUTIVE COMPENSATION section of this Proxy Statement for more information.

The pay-for-performance compensation philosophy of the Compensation Committee supports Stock Yards Bancorp’s primary objective of creating value for its shareholders.  The Committee strives to ensure that compensation of Stock Yards Bancorp’s executive officers is market-competitive to attract and retain talented individuals to lead Stock Yards Bancorp and the Bank to growth and higher profitability while maintaining stability and capital strength.  Our executive compensation program has been designed to align managements’ interests with those of our shareholders. In addition, the program seeks to mitigate risks related to compensation. In designing the 20182019 compensation program, the Compensation Committee used key performance measurements to motivate our executive officers to achieve short-term and long-term business goals after reviewing peer and market data and the Company’s business expectations for 2018.2019.

We believe that the information provided regarding executive compensation in this Proxy Statement demonstrates that our executive compensation program was designed appropriately and is working to maximize shareholder return while mitigating risk and aligning managements’ interests with our shareholders. Accordingly, the Board of Directors recommends that shareholders approve the following advisory resolution:

RESOLVED, that the shareholders of Stock Yards Bancorp, Inc. approve, on an advisory basis, the compensation paid to the Company’s named executive officers as disclosed in the Stock Yards Bancorp, Inc. Proxy Statement pursuant to the executive compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other executive compensation tables and related narratives.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THIS PROXY STATEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Set forth in the following table is the beneficial ownership of our Common Stock as of December 31, 20182019 for each person or entity known by us to beneficially own more than five percent of the outstanding shares of our Common Stock; all our directors and executive officers as a group; and directors, executive officers and employees as a group. “Executive officer” means the chairman, president, any vice president in charge of a principal business unit, division or function, or other officer who performs a policy making function or any other person who performs similar policy making functions and is so designated by the Board of Directors. For a description of the voting and investment power with respect to the shares beneficially owned by the current directors, nominees for election as directors and named executive officers of Stock Yards Bancorp, see the following tables.

The following table shows the beneficial ownership of Stock Yards Bancorp, Inc.’s Common Stock as of December 31, 20182019 by each current director, each nominee for election as director and each named executive officer. Messrs. Edinger and Northern have reached the mandatory retirement age for directors and are not standing for re-election at the Annual Meeting.

DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, our directors and persons who own more than 10% of a registered class of Stock Yards Bancorp’s Common Stock to file initial reports of ownership and changes in ownership with the SEC and the NASDAQ. Such executive officers, directors and shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to usownership reports filed electronically with the SEC during 2019 and written representations from the applicable executive officers and our directors, all persons subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis for the year ended December 31, 2018.2019, with the exception of Mr. Tasman, who filed one late report in connection with a single transaction. He purchased approximately 145 shares on March 22, 2019 and reported the transaction on March 27, 2019. The purchase was a recurring monthly investment of his director fees and the required report was not filed on a timely basis due to an administrative error.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

REPORT ON EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis

This compensation discussion and analysis (“CD&A”) reflectsdescribes the philosophy, objectives, process, components and additional aspects of our 20182019 executive compensation programprogram. This CD&A is intended to be read in conjunction with respect to the tables and related narrative disclosure that immediately follow this section, which provide further historical compensation information for the following named executive officers (“NEOs”) whose compensation is detailed in the compensation tables that follow the CD&A. In this discussion, we explain our compensation philosophy and program, factors considered by the Compensation Committee (the “Committee”) in making compensation decisions and additional details of our practices.

Our 2018 NEOs are::

Executive Summary

2018Business HighlightsCD&A Reference Guide

The Company’s 2018 ROAA continued our long term trend of significantly outperforming the community bank market as a whole, as measured by our compensation peer group (see page 23 for a listing of the compensation peer group). The following chart illustrates the Company ROAA compared to that of its compensation peer group.

The Company’s performance in 2018 represents a premium on earnings measured against the peer median.

Additionally, the graphs below illustrate superior long-term performance of the Company.

Mix of Pay2019 Select Business Results

We believe that our executive compensation program strikes an appropriate balance between fixed2019 was a very strong year for us, the continuation of a notable streak, with record operating and variable pay as well as short and long-term pay. The charts below represent the mix of 2018 direct compensation at Target and Maximum performance.net income results. 

2018Target Compensation (1)We continued our track record of performing at the top of our peer group on key profitability measures such as return on average assets (“ROAA”) and return on average equity (“ROAE”). The following charts demonstrate the positioning of our ROAA and ROAE compared to the peer group described on page 25 over each of the last five years. As shown below, we ranked in the top 10% of our peer group in every one of the last five years. In addition, our average ROAA and ROAE over that five-year period were both higher than that of any of our peers.

201Financial Results8Maximum Compensation (1)

As demonstrated above, variable pay at Target for the CEO represents 52%

Operating Results

2019 Shareholder Return

Performance Orientation of direct compensation. However, when the Bank performs at Maximum, payouts for variable pay significantly increase commensurate with that outperformance. Short-term cash compensation can maximize at 100% of base salary, and long-term equity awards maximize at 130% of base salary for the CEO. At Maximum, base salary, or fixed pay, represents 31% of direct compensation for the CEO, while variable, or at-risk pay, represents 69% of direct compensation, clearly rewarding superior performance.2019 Compensation

Say On Pay ResultsCEO Compensation Majority Performance-Based (Equity and Total). The Compensation Committee (the “Committee”) of our Board of Directors is responsible for the design and administration of our executive compensation program. The Committee’s philosophy is to place at risk a significant portion of executive officers’ total compensation, making it contingent on Company performance while remaining consistent with our risk management policies. As such, the Committee has structured the majority of the compensation of the CEO as variable, at-risk and subject to the achievement of performance goals in order to be earned. Approximately 52% of the CEO’s total grant date target direct compensation, consisting of base salary, target short-term incentive opportunity and target long-term incentive opportunity, was variable, at-risk and performance-based. 75% of the long-term incentive equity grants were performance-based and were in the form of performance share units (“PSUs”). These PSUs are subject to three-year performance metrics tied to our key operating goals, and will vest at the end of a three-year performance period, subject to a mandatory one-year post-vesting holding period. The other 25% were in the form of time-based stock appreciation rights (“SARs”) that vest over five years.

Long-Term Incentives: 75% PSUs, 25% SARs; Three-Year Performance Period; High Threshold Performance Level. For the long-term incentive equity grants to executive officers, the Committee used PSUs to motivate operational achievement and link pay to performance, and SARs to motivate stock price appreciation over the long term, because they deliver value only if the stock price increases. For the grants in the form of PSUs, the Committee established three-year goals at the outset of the performance period for relative ROAA (80^th percentile is target performance, a rigorous and challenging level of achievement) and cumulative EPS, the target for which reflects a solid growth rate.

Assessed Criteria and Updated Peer Group. The Committee evaluates annually the group of peer companies used as a reference point for evaluating executive compensation. In connection with determining 2019 executive compensation, the Committee reviewed its criteria, in part as a result of the Company’s having fallen to the 30^th percentile by revenue of the existing peer group. As a result of this review, the Committee determined to maintain its key criteria, which led to the removal of nine companies and the addition of four. As a result, the Company moved closer to the median for revenue and assets.

AtKey 2019 Executive Compensation Decisions and Outcomes

Base Salaries. In 2019, both the CEO and the President continued to transition into their new roles that began on October 1, 2018, and the base salaries for these two executive officers were set in 2018 in light of their new responsibilities and were not increased in 2019. The CFO was newly-appointed as well, and his base salary was set in light of his new role and based on various factors, including the salaries of executives in similar positions at peer companies.    

Annual MeetingCash Incentives. There was a rigorous process to set the performance targets, and they were set above prior-year levels. Annual cash incentive opportunities for four of Shareholders, 91.83%our NEOs, Messrs. Hillebrand, Poindexter, Stinnett and Dishman, are tied exclusively to corporate profitability. Ms. Thompson’s short-term incentive plan incorporates goals related to her line of business responsibilities as well as Company-wide profitability. Ms. Davis retired from the Company as CFO on April 30, 2019, and in accordance with her retirement agreement was not eligible to receive a cash bonus payment for 2019.

Messrs. Hillebrand, Poindexter, Stinnett and Dishman

The primary performance metric utilized for Messrs. Hillebrand, Poindexter, Stinnett and Dishman was earnings per share. The challenging target that was set for EPS represented 4.1% growth over actual EPS for 2018.

The EPS metric had a performance threshold of 96% of target and a performance maximum of 105% of target. The Committee uses EPS because it believes EPS drives long-term shareholder return, as it represents the culmination of executive officers’ efforts regarding profitability, revenue growth, expense control, risk profile and other elements.

The target annual incentive plan opportunities of each of Messrs. Hillebrand, Poindexter, Stinnett and Dishman were denominated as a percentage of base salary based on external and internal factors applicable to the positions held by these individuals, among other things, and ranged from 30% to 50% of base salary. Payouts were capped at 200% of the votes were cast in favortarget payout.

Company-wide performance accounted for 100% of the advisory voteannual incentive plan opportunity for Messrs. Hillebrand, Poindexter, Stinnett and Dishman; there was no allocation to approve executive compensation, commonly known as “Say on Pay.” This vote is consistent with the 2017 result. The Committee believes its compensations practices are properly aligned with the interests of shareholders, and that the high level of shareholder supportindividual performance goals. All of our 2018 Sayeligible executive officers participate in the annual incentive plan on Pay proposal indicatesthe same terms, other than the target percentage of base salary and Ms. Thompson has additional components relating to her area of responsibility.

As described above, EPS increased 19% to a record $2.89 per diluted share driven by a sustained net interest margin, strong non-interest income growth and two Kentucky state tax law changes that most shareholders sharereduced the Committee’s view.Company’s effective tax rate. In addition, record loan production, strong organic loan growth, non-interest expense control and the KSB acquisition all served to highlight the year, which drove short-term incentive payouts to Messrs. Hillebrand, Poindexter, Stinnett and Dishman at 200% of target.

Ms. Thompson

Ms. Thompson’s short-term incentive includes three components: departmental gross revenues, income before overhead allocations and taxes, and consolidated EPS of the Company. Ms. Thompson’s incentive is weighted 75% for her line of business and 25% for overall Company performance, and the Committee considers her line of business goals to be appropriately challenging to attain.

Recently Adopted Governance Best PracticesLong-Term Incentive Equity. The Company’s 2019 long-term incentives consisted of 75% PSUs by grant date value that vest based on performance over a three-year measurement period, and 25% SARs that vest over five years.

The performance metrics for the PSUs, which are weighted 50% each, are three-year relative ROAA, with the target set at the 80^th percentile and the threshold set at the 70^th percentile of the peer group, a challenging relative level of performance; and three-year cumulative EPS, a true long-term performance period using a metric viewed as central to increasing long-term shareholder value.

Connecting Pay and Performance

The Committee continually reviews its policies and procedures to ensure they are consistent with strong corporate governance guidelines. This also includes education around governance best practices and their bearing on the Company.

In 2018, the Company asked shareholders to approve an annual vote for “Say on Pay”, which was approved by the shareholders at its April Annual Shareholders meeting.

In 2018, the Committee raised the share ownership guidelines for executive officers. The CEO moved from three (3) times base salary to four (4) times base salary and all executives moved from two (2) times base salary to three (3) times base salary. Newly promoted or hired executives will have five (5) years to reach their goals.

In 2018, the Committee approved an amendment to the 2015 Omnibus Equity Compensation Plan to allow dividends to accrue but prohibit payment of dividends on nonvested equity awards. Also in 2018, the Nominating and Corporate Governance Committee amended the provisions of the Company’s corporate governance guidelines regarding independent director common stock ownership requirements. The revised guidelines require new directors to join the Board with the greater of 1,000 shares or $50,000 of Company stock and own Company stock valued at $200,000 or more within three years of joining.

Beginning with grants made in 2015, all of our performance share grant agreements were modified to require all NEOs to hold any shares earned after the three year performance period for a period of 12 months (net of shares withheld for taxes). We instituted this policy to further encourage an ownership culture among our executive team, and to enhance long-term alignment between executives and shareholders.

Connecting Pay and Performance

As shown throughout this document,2019, Stock Yards Bancorp continuescontinued to generate performance superior to a substantial majority of its peer companies as measured by key metrics. Our record of consistently higher financial performance has in turn driven our long-term shareholder returns to impressive levels relative to our peers. Consistent with our pay-for-performance philosophy, a substantial portion of annual target total direct compensation is variable, at-risk pay. We consider compensation to be one“at risk” and performance-based if it is subject to operating performance or if its value depends on stock price appreciation. The following chart compares our five-year total shareholder return to the median TSR of the top-performing banks in the country with regard to generating corporate profits for shareholders. In conjunction, our shareholders have been rewarded with strong results over the long term. Historically, Stock Yards has traded at a premium to its peers on price to tangible book value basis. As the Bank has growncompensation peer group and more institutional ownership has occurred, the Bank is trading more in line with peers on this basis despite superior financial performance.two additional industry peer groups.

^{Source: S&P Global Market Intelligence.Intelligence and FactSet. Market pricing data as of 12/29/18.}December 31, 2019.

The Committee believes stock price closely mirrors earnings growth over the long term,long-term, and management should be incented with respect to performance measures related to the operations of the Company. Over the short term, stock price is not controllable by management and should not be a tool to judge management’s performance. Often, price-to-earnings and price-to-book ratios expand or contract based on economic and broad market conditions, and the entire financial services sector is impacted to some degree. We believe our earnings per shareEPS growth aligns management’s interests with shareholders and drives total return over the long term, and feedback provided by our investors and analysts indicates that they share this philosophy.term.

Additionally, the Committee believes that it uses appropriately challenging targets in setting goals for both short-term and long-term incentives, and that the Company’s financial results must significantly exceed peer median performance in order to achieve Target-leveltarget-level awards. For example, under the Company’s performance share goals, executives do not achieve Targettarget award vesting unless our ROAA exceeds the 7580^th percentile of our comparator group (which is comprised of all publicpublicly-traded banks with $1.5 to $7.0 billion in assets), and no awards are earned if our ROAA does not exceed the 5070^th percentile of our comparator group.

Say-on-Pay Results

At the 2019 Annual Meeting of Shareholders, 96.8% of the votes were cast in favor of the advisory vote to approve executive compensation, commonly known as “say-on-pay.” This vote is consistent with the 2018 result. The Committee believes its compensation practices are properly aligned with the interests of shareholders, and that the high level of shareholder support of our 2019 say-on-pay proposal indicates that most shareholders share the Committee’s view.

Compensation PhilosophyProgram Governance

The Committee continually reviews its policies and Processprocedures to ensure they are consistent with strong corporate governance guidelines. This also includes education around governance best practices and their bearing on the Company and its executive compensation program.

Objective of the Company’s Compensation Program

Our compensation philosophy guides the design and decisions of our compensation program is designed to achieve the following objectives:

The Committee believes that Bancorp’s pay policies and practices do not create risks reasonably likely to have a material adverse effect on the Company.

Role of the Compensation Committee

The Compensation Committee assists our Board in establishing our compensation philosophy and the compensation of our executive officers. The CompensationCommittee is also responsible for determining the structure and components of our programs, and reviewing and approving the compensation of the NEOs, or recommending it for approval by the Board of Directors. The Committee is responsible for annually assessing the performance of the eight executive officers, including the NEOs, and for determining their annual salary, incentive (short- and long-term) compensation goals and payout/grant levels. Each of the four members of our Compensation Committee is independent as is defined under NASDAQ listing standards.

The Committee held seven meetings during 2019, and its actions included finalizing all aspects of 2019 executive compensation. These actions included:

Ultimately, the Committee’s decisions are based on a variety of factors, including short- and long-term Company performance, the officer’s level of responsibility, an assessment of individual performance, and competitive market data.

Role of Executives in Compensation Committee retainsDeliberations

The Committee works closely with the CEO, and the CEO attends Committee meetings to discuss the Company’s compensation and performance matters, particularly as it relates to the other executive officers. For each executive officer other than himself, the CEO presents annual evaluations of such officers and makes recommendations to the Committee regarding their compensation. This assessment considers such factors as our achievement of goals related to corporate, division, function individual performance. Our CEO does not play any role with respect to any matter affecting his own compensation and is not present when the Committee discusses and formulates its compensation recommendation for the CEO. The Committee reviews recommendations made by its CEO and information from the executive compensation consultant review. The Committee sets the compensation for our CEO and each of our NEOs at its meetings in the first quarter of each year and subsequently reports its compensation decisions to the full Board of Directors.

The general counsel of Bancorp works with the Committee Chair to provide administrative support and, along with other executives, provide pertinent financial, tax, accounting, or operational information. Other executives, such as those from human resources or finance, may attend meetings from time-to-time to provide their insights and suggestions on pertinent topics. Only Committee members may vote on decisions regarding executive compensation. The Committee regularly conducts a portion of its business in executive session.

Role of the Compensation Consultant

The Committee views it as important to obtain objective, independent expertise and advice in carrying out its responsibilities, and has the power to retain an independent compensation consultant to assist it in the performance of its duties and responsibilities. The Committee has retained an independent executive compensation consultant to assist in evaluating the compensation practices at the Company and to provide advice and ongoing recommendations regarding executive compensation consistent with our business goals and pay philosophy.

In 2017,2019, the Compensation Committee engagedcontinued to engage McLagan to provide executive compensation consulting services regarding our 2018 compensation programs and pay levels. The scope of McLagan’s executive compensation consulting assignment included the ongoing evaluation of the appropriateness of our peer group of banks as well as a comparison of management’s base salaries, annual cash incentive awards and equity-based compensation to those paid by the banks in the peer bank group (see page 23)25). The Compensation Committee used data developed by McLagan in itsamong the various factors that informed their determination of overall competitive pay practices.executive officer pay. While the Committee takes into consideration the review and recommendations of McLagan when making decisions about our executive compensation program, ultimately, the Committee makes its own independent decisions about compensation matters.

McLagan reports directly to and performed services solely on behalf of the Compensation Committee and has no other relationship with Bancorp or its management. The Compensation Committee has assessed the independence of McLagan consistent with SEC rules and NASDAQ listing standards and has concluded that McLagan’s work did not involve any conflicts of interest.

Compensation Committee Actions

The Compensation Committee held seven meetings during 2018, and its actions included finalizing all aspects of 2018 executive compensation based on recommendations made by McLagan. In addition, the Committee reviewed its compensation philosophy with McLagan, reviewed the Committee charter, reviewed the company-wide retirement plan programs, reviewed the 2019 Bancorp operating budget and its effect on incentive compensation programs for 2019 (including setting the EPS benchmarks for short-term compensation payouts), discussed executive succession planning, and received education on compensation trends, compliance issues and best practices.

Role of Executives in Compensation Committee Deliberations

The Compensation Committee works closely with the CEO, who provides administrative support to the Compensation Committee. The CEO attends Compensation Committee meetings to discuss Bancorp’s compensation and performance matters. The general counsel of Bancorp works with the Committee Chair to provide administrative support and, along with other executives, provide pertinent financial, tax, accounting, or operational information. Executives in attendance may provide their insights and suggestions, but only Compensation Committee members may vote on decisions regarding executive compensation. The Committee regularly conducts a portion of its business in executive session.

For each executive officer other than himself, the CEO makes recommendations to the Compensation Committee regarding base salary. The Compensation Committee reviews recommendations made by the CEO and information from the executive compensation consultant review. The Committee’s decisions are based on a variety of factors, including short- and long-term Company performance, the officer’s level of responsibility, an assessment of individual performance, and competitive market data.

Peer Selection Process

Each year the Compensation Committee re-evaluates and updates the peer group, with the consultant’s guidance, to ensure ongoing relevance. The Compensation Committee uses this information for making compensation decisions, such as changes to base salaries, annual cash incentive awards, and long-term equity awards.

For 20182019 compensation, the Committee worked with the consultant in 20172018 to select peer banks using the following criteria:criteria, which were essentially consistent with the prior year:

Based on these criteria, nine companies were removed from the peer group: CenterState Bank Corp., First Busey Corp., Sandy Spring Bancorp Inc., State Bank Financial Corp., National Bank Holdings Corp., CoBiz Financial Inc., Guaranty Bancorp, National Commerce Corp. and Atlantic Capital Bancshares Inc. Four companies met the criteria and were added to the peer group: Great Southern Bancorp Inc., Independent Bank Corp. Access National Corp. and Old Second Bancorp Inc.

The table below lists the peer banks approved by the Compensation Committee for 2018.2019:

Peer Bank		Total Revenue (1)				Total Assets (1)				Net Income (1)				Market Capitalization (1)
Bank Name, Ticker Symbol, State		As of year end 2018				As of year end 2018				For year ended 2018				As of year end 2018
Atlantic Capital Bancshares, Inc. (ACBI) GA		$	86			$	2,955			$	28.5			$	414.0
Bryn Mawr Bank Corporation (BMTC) PA			225				4,653				63.8				693.6
Carolina Financial Corporation (CARO) SC			174				3,791				49.7				662.4
CenterState Bank Corporation (CSFL) FL			518				12,338				156.4				2013.1
City Holding Company (CHCO) WV			199				4,901				70.0				1119.0
Enterprise Financial Services Corp. (EFSC) MO			230				5,646				89.2				858.4
Farmers National Banc Corp. (FMNB) OH			104				2,329				32.6				354.1
First Busey Corporation (BUSE) IL			331				7,702				98.9				1,199.4
Heritage Financial Corporation (HFWA) WA			219				5,318				53.1				1,095.9
National Bank Holdings Corporation (NBHC) CO			268				5,677				61.5				949.8
National Commerce Corporation (NCOM) AL			170				4,211				44.9				747.4
Nicolet Bankshares, Inc. (NCBS) WI			146				3,097				41.4				463.4
Peapack-Gladstone Financial Corporation (PGC) NJ			159				4,618				44.2				486.9
People’s Utah Bancorp (PUB) UT			123				2,184				40.6				564.7
QCR Holdings, Inc. (QCRH) IL			184				4,950				43.1				504.4
Sandy Spring Bancorp, Inc. (SASR) MD			322				8,243				100.9				1,113.5
Seacoast Banking Corp. of Florida (SBCF) FL			262				6,748				67.3				1,336.4
Southside Bancshares, Inc. (SBSI) TX			213				6,124				74.1				1,070.8
United Community Financial Corporation (UCFC) OH			111				2,811				37.2				434.8
Univest Corporation of Pennsylvania (UVSP) PA			218				4,984				50.5				631.4
Washington Trust Bancorp, Inc. (WASH) RI			194				5,011				68.4				822.4
Median		$	199			$	4,950			$	53.1			$	747.4
Stock Yards Bancorp, Inc.		$	160			$	3,303			$	55.5			$	746.2

^{Source: S&P Global Market Intelligence}

Peer Bank Name, Ticker, State		Total Revenue			Total Assets			Net Income			Market Capitalization
		Dollars in millions
Bryn Mawr Bank Corporation (BMTC) PA		$ 230			$ 5,263			$ 59.2			$ 830.0
City Holding Company (CHCO) WV		230			5,019			89.4			1,336.0
Enterprise Financial Services Corp. (EFSC) MO		288			7,334			92.7			1,279.6
Farmers National Banc Corp. (FMNB) OH		111			2,449			35.8			451.6
Great Southern Bancorp Inc. (GSBC) MO		211			5,015			73.6			903.0
Heritage Financial Corporation (HFWA) WA		232			5,553			67.6			1,036.3
Independent Bank Corp. (IBCP) MI		170			3,565			46.4			509.2
Nicolet Bankshares, Inc. (NCBS) WI		169			3,577			55.0			781.9
Old Second Bancorp Inc. (OSBC) IL		133			2,636			39.5			403.2
Peapack-Gladstone Financial Corporation (PGC) NJ		175			5,183			47.4			584.8
People’s Utah Bancorp (PUB) UT		125			2,406			44.3			568.4
QCR Holdings, Inc. (QCRH) IL		234			4,909			57.4			694.2
Seacoast Banking Corp. of Florida (SBCF) FL		300			7,109			98.7			1,574.8
Southside Bancshares, Inc. (SBSI) TX		212			6,749			74.6			1,256.2
Univest Corporation of Pennsylvania (UVSP) PA		235			5,376			65.7			785.6
Washington Trust Bancorp, Inc. (WASH) RI		200			5,293			69.1			934.0
Median		$ 212			$ 5,101			$ 62.5			$ 807.8
Stock Yards Bancorp, Inc.		$ 175			$ 3,724			$ 66.1			$ 928.1

 

 

On a total asset basis, Bancorp is smaller than the median of the peer group; however, on annual revenue, net income and market capitalization the Company approximates the median. As shown below Bancorp ranksfor 2019, we ranked well above the 90^th percentile of the compensation peer group on a ROAA and ROAE basis. For 20182019 and consistently for many years, Bancorp has consistentlywe have performed above the 90^thth percentile of not only this peer group but a broader peer groupgroups of similar sized banks.banks as well.

 

		ROAA			ROAE
25th percentile		1.26	%		10.07	%
50th percentile		1.35	%		12.11	%
75th percentile		1.51	%		13.73	%
90th percentile		1.76	%		14.14	%
Stock Yards Bancorp		1.90	%		17.09	%

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		Total Assets (1) 2012Y (in millions)				ROAA 2012Y (%)				ROAE 2012Y (%)
25th percentile		$	3,791				1.10	%			9.28	%
50th percentile		$	4,950				1.28	%			10.13	%
75th percentile		$	5,677				1.46	%			12.10	%
Stock Yards Bancorp		$	3,303				1.76	%			16.00	%

(1)	Dollars in millions

Benchmarking 2018 Referencing the Competitive Market in Determining 2019 Compensation

 

The Compensation Committee considers a number of factors in determining appropriate pay levels and plan designs for our executive officers.NEOs. These factors include competitive compensation data from peer companies and the banking market in general. The Compensation Committee does not view competitive market prescriptively or tie the compensation levels of our executives to specific market percentiles. Instead, the Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as company, business unit and individual performance, scope of responsibility, internal pay equity, skill sets, leadership potential and succession planning.

 

Mix of Pay

We believe that our executive compensation program strikes an appropriate balance between fixed and variable pay as well as between short and long-term pay. The charts below for our CEO and our other NEOs illustrate the target compensation established for 2019, consisting of base salary, annual incentive awards, and long-term equity-based compensation granted in 2019.

Name		Salary			Target Bonus %			Bonus			PSUs			SARs			Total
Hillebrand		$ 540,000			50%			$ 270,000			$ 243,000			$ 81,000			$ 1,134,000
Poindexter		385,000			40%			154,000			138,600			46,200			723,800
Thompson		364,000			35%			127,400			114,660			38,220			644,280
Stinnett		301,000			30%			90,304			81,274			27,091			499,682
Dishman		286,000			30%			85,800			77,220			25,740			474,760

As demonstrated above, variable pay at target for the CEO represents 52% of direct compensation. However, when the Bank performs at maximum, payouts for variable pay significantly increase commensurate with that outperformance.

Each compensation element is discussed in more detail below and outlined in more detail in the 2019 Summary Compensation ComponentsTable and 2019 Grants of Plan-Based Awards Table appearing on pages 36 and 38 of this proxy statement.

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IV.

Components of Our Compensation Program

 

Compensation Component		Purpose		Link to Performance		Fixed or Performance Based		Short or Long-term
Base salary		AttractProvide stable compensation and attract and retain executives through market competitive payments		Based on each executive's performance and responsibilities. Used as a basis for short and long-term incentive award goals.goals		Fixed		Short-term
Cash incentives		RewardIncentivize and reward executives for achievement of certain annual financial goals		Incentives are 100% quantitative to goals important for near term financial success. Includes a measurement of our corporate performance for all executives, as well as business line performance for certain executives.executives		Performance		Short-term
Performance stock units		Reward executives for sustained long-term performance while aligning the value of awards with the success of our shareholders		Awards vest based on achievement of three-year goals on EPS growth and ReturnROAA versus peers. Three-year performance period plus an additional one-year mandatory holding period on Assets versus peers.vested awards		Performance		Long-term
Stock appreciation rights		Align interests of executives with shareholders by rewarding increases in our stock price.price		Awards only have value if stock price increases. Awards vest over five years		Performance		Long-term
Other executive compensation		Primarily Company-matching retirement contributions		Success of Company allows it to approve benefit plan matching levels.		Linked to performance		Short and long-term