GERMAN AMERICAN BANCORP, INC. (NASDAQ:GABC) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02. Departure of Directors or Principal Officers; Election
of Directors; Appointment of Principal Officers
(e) On March 6, 2017, the Board of Directors (the Board) of German
American Bancorp, Inc. (the “Company”), by the vote of the
members of the Board who are not interested directors within the
meaning of NASDAQ rules, established the balanced scorecards for
each of the executive officers of the Company who will be
individually named in the Companys compensation disclosures in its
upcoming annual meeting proxy statement (the Participating
Officers) that, taken together, constitute the Company’s
Management Incentive Plan as extended for 2017 for such executive
officers, all as recommended by the Compensation/Human Resources
Committee of the Board (the “Committee). The officers who will
participate in the Management Incentive Plan for 2017, are Mark A.
Schroeder (Chairman and Chief Executive Officer), Clay W. Ewing
(President), Bradley M. Rust (Executive Vice President and Chief
Financial Officer), Randall L. Braun (Executive Vice President and
Chief Retail Banking and Development Officer), D. Neil Dauby
(Executive Vice President and Chief Commercial Banking Officer) and
Keith A. Leinenbach (Executive Vice President and Chief Credit
Officer).
American Bancorp, Inc. (the “Company”), by the vote of the
members of the Board who are not interested directors within the
meaning of NASDAQ rules, established the balanced scorecards for
each of the executive officers of the Company who will be
individually named in the Companys compensation disclosures in its
upcoming annual meeting proxy statement (the Participating
Officers) that, taken together, constitute the Company’s
Management Incentive Plan as extended for 2017 for such executive
officers, all as recommended by the Compensation/Human Resources
Committee of the Board (the “Committee). The officers who will
participate in the Management Incentive Plan for 2017, are Mark A.
Schroeder (Chairman and Chief Executive Officer), Clay W. Ewing
(President), Bradley M. Rust (Executive Vice President and Chief
Financial Officer), Randall L. Braun (Executive Vice President and
Chief Retail Banking and Development Officer), D. Neil Dauby
(Executive Vice President and Chief Commercial Banking Officer) and
Keith A. Leinenbach (Executive Vice President and Chief Credit
Officer).
Each “balanced scorecard” establishes specific corporate and
shareholder-related performance goals balanced by the officer’s
area of responsibility and his expected individual level of
contribution to the Company’s achievement of its corporate goals.
These balanced scorecards describe potential awards based on
performance for 2017 only (“short-term awards”) and on
performance for the three-years ending December 31, 2017
(“long-term awards”), as follows:
shareholder-related performance goals balanced by the officer’s
area of responsibility and his expected individual level of
contribution to the Company’s achievement of its corporate goals.
These balanced scorecards describe potential awards based on
performance for 2017 only (“short-term awards”) and on
performance for the three-years ending December 31, 2017
(“long-term awards”), as follows:
Potential Short-Term Cash Incentive Awards
Under the Management Incentive Plan, the Company pays additional
compensation in the form of annual cash incentive awards to its
Participating Officers rewarding annual performance, contingent
upon the achievement of certain goals that are established by the
short-term balanced scorecards. At the March 6th meeting, the Board
established the criteria for the award of short-term cash incentive
payments for the six Participating Officers. In the case of each
performance criterion, credit is awarded at 50% if the performance
criterion is met at the target level, and at half that if achieved
at the 50% level (threshold), and at twice the target award level
if achieved at the 200% level (maximum). Credit is given
proportionately for performance falling between the threshold and
maximum levels, but is not given for performance that is not at
least at the threshold level, or for that portion of performance
that exceeds the maximum level.
compensation in the form of annual cash incentive awards to its
Participating Officers rewarding annual performance, contingent
upon the achievement of certain goals that are established by the
short-term balanced scorecards. At the March 6th meeting, the Board
established the criteria for the award of short-term cash incentive
payments for the six Participating Officers. In the case of each
performance criterion, credit is awarded at 50% if the performance
criterion is met at the target level, and at half that if achieved
at the 50% level (threshold), and at twice the target award level
if achieved at the 200% level (maximum). Credit is given
proportionately for performance falling between the threshold and
maximum levels, but is not given for performance that is not at
least at the threshold level, or for that portion of performance
that exceeds the maximum level.
Potential short-term cash incentive awards for the Participating
Officers will be determined by their individual scorecards as
percentages of their 2017 base salaries, based on the extent to
which targeted levels of 2017 performance are met or exceeded, as
follows:
Officers will be determined by their individual scorecards as
percentages of their 2017 base salaries, based on the extent to
which targeted levels of 2017 performance are met or exceeded, as
follows:
|
Name of Executive
|
Potential Dollar Amount of 2017 Short-Term Award as
Percentage of 2017 Base Salary at the Following Performance Levels |
||
|
Threshold
|
Target
|
Maximum
|
|
|
Mr. Schroeder
|
25%
|
50%
|
50%
|
|
Mr. Ewing
|
20%
|
40%
|
80%
|
|
Mr. Rust
|
17.5%
|
35%
|
70%
|
|
Mr. Braun
|
15%
|
30%
|
60%
|
|
Mr. Leinenbach
|
15%
|
30%
|
60%
|
|
Mr. Dauby
|
15%
|
30%
|
60%
|
Cash incentive award entitlements, if any, for services during
2017 under the scorecards will be earned by each of the
Participating Officers based on the extent to which targeted
levels of performance are met or exceeded with respect to the
following components:
2017 under the scorecards will be earned by each of the
Participating Officers based on the extent to which targeted
levels of performance are met or exceeded with respect to the
following components:
|
|
formula assessments of 2017 corporate performance, and
|
|
|
judgmental assessments of individual performance during
2017. |
Corporate Performance Component
For 2017, the short-term corporate performance criteria specified
by the scorecards of each of the six Participating Officers are
the following measures of income, revenue, balance sheet growth,
and asset quality, weighted as a percentage of each of their
total short-term performance measures, as follows:
by the scorecards of each of the six Participating Officers are
the following measures of income, revenue, balance sheet growth,
and asset quality, weighted as a percentage of each of their
total short-term performance measures, as follows:
|
Fully-diluted earnings per share (EPS) growth
|
25%
|
|
Efficiency ratio
|
10%
|
|
Growth in core organic deposits and repurchase
agreements |
15%
|
|
Growth in core organic taxable loans
|
20%
|
|
Average ratio of non-performing assets to total
assets |
10%
|
Individual Performance Component
For 2017, the individual performance criteria for each
Participating Officer (weighted as 20% of their respective total
short-term performance measures) will be satisfied through the
judgmental assessment of his respective overall job performance
during 2017 (threshold achievement being good, target achievement
being very good, and maximum achievement being outstanding).
Participating Officer (weighted as 20% of their respective total
short-term performance measures) will be satisfied through the
judgmental assessment of his respective overall job performance
during 2017 (threshold achievement being good, target achievement
being very good, and maximum achievement being outstanding).
Expected Degree of Difficulty, on Balance, of Achieving Targeted
Performance Levels
Performance Levels
The targeted levels of achievement for the corporate financial
metrics described above were established at levels that the
Committee and Board believed were reasonable levels of corporate
performance, considering factors that included the past
performance and the Companys best estimates for 2017. When
setting the target level for each corporate measure, however, the
Company did not necessarily attempt to tie that level to the
Companys expectations for 2017; therefore, some of the measures
require the achievement of greater-than-expected corporate
performance at the targeted level, and some will reward
achievement of lesser-than-expected corporate performance at the
targeted level. Overall, however, and on a balanced approach when
weighting all of the formula and judgmental performance factors
(income statement, balance sheet, and personal) in accordance
with the scorecard weights, the Company believes that the target
levels are appropriately challenging yet reasonable attainable by
each of its executives participating in the 2017 Management
Incentive Plan. Each target level discussed above (with the
exception of average ratio of non-performing assets to total
assets) will be calculated by excluding the impact of any one
time acquisition-related metrics such as transaction expenses,
loan growth and deposit growth. However, the calculation of
metrics described above were established at levels that the
Committee and Board believed were reasonable levels of corporate
performance, considering factors that included the past
performance and the Companys best estimates for 2017. When
setting the target level for each corporate measure, however, the
Company did not necessarily attempt to tie that level to the
Companys expectations for 2017; therefore, some of the measures
require the achievement of greater-than-expected corporate
performance at the targeted level, and some will reward
achievement of lesser-than-expected corporate performance at the
targeted level. Overall, however, and on a balanced approach when
weighting all of the formula and judgmental performance factors
(income statement, balance sheet, and personal) in accordance
with the scorecard weights, the Company believes that the target
levels are appropriately challenging yet reasonable attainable by
each of its executives participating in the 2017 Management
Incentive Plan. Each target level discussed above (with the
exception of average ratio of non-performing assets to total
assets) will be calculated by excluding the impact of any one
time acquisition-related metrics such as transaction expenses,
loan growth and deposit growth. However, the calculation of
the consolidated net income trigger discussed below will
include the impact of any acquisition-related income and
expense items.
include the impact of any acquisition-related income and
expense items.
Vesting and Clawback Potential
Amounts payable in respect of 2017 short-term cash incentive
awards will vest in periodic installments throughout 2018, if
the recipient has continued to be employed by the Company as of
each installment vesting date (subject to certain exceptions),
and may be recouped by the Company in the event of certain
material financial restatements of its performance metrics or
other circumstances, in the Committees discretion.
awards will vest in periodic installments throughout 2018, if
the recipient has continued to be employed by the Company as of
each installment vesting date (subject to certain exceptions),
and may be recouped by the Company in the event of certain
material financial restatements of its performance metrics or
other circumstances, in the Committees discretion.
2017 Net Income Trigger
Notwithstanding the satisfaction of one or all of the other
performance measures outlined above, no short-term cash
incentive award will be payable by the Company unless the
Companys consolidated net income for 2017 is at least
$30,000,000.
performance measures outlined above, no short-term cash
incentive award will be payable by the Company unless the
Companys consolidated net income for 2017 is at least
$30,000,000.
Potential Long-Term Incentive Awards
Long-term incentive (LTI) Awards are established by the
Management Incentive Plan upon recommendation of the Committee
based upon the executive officer’s level of responsibility,
and are earned in proportion to the extent to which the Company
has met or exceeded certain corporate financial targets on an
average basis over the three-year period ending in the year for
which the scorecard is established. At the March 6th meeting,
the Board established potential long-term incentive awards for
its Participating Officers as percentages of their 2017 base
salary based on the extent to which targeted levels of
three-year performance are met or exceeded, as follows:
Management Incentive Plan upon recommendation of the Committee
based upon the executive officer’s level of responsibility,
and are earned in proportion to the extent to which the Company
has met or exceeded certain corporate financial targets on an
average basis over the three-year period ending in the year for
which the scorecard is established. At the March 6th meeting,
the Board established potential long-term incentive awards for
its Participating Officers as percentages of their 2017 base
salary based on the extent to which targeted levels of
three-year performance are met or exceeded, as follows:
|
Name of Executive
|
Potential Dollar Amount of 2017 Long-Term Award as
Percentage of 2017 Base Salary at the Following Performance Levels |
||
|
Threshold
|
Target
|
Maximum
|
|
|
Mr. Schroeder
|
25%
|
50%
|
50%
|
|
Mr. Ewing
|
20%
|
40%
|
80%
|
|
Mr. Rust
|
17.5%
|
35%
|
70%
|
|
Mr. Braun
|
15%
|
30%
|
60%
|
|
Mr. Leinenbach
|
15%
|
30%
|
60%
|
|
Mr. Dauby
|
15%
|
30%
|
60%
|
LTI award targets for services during the three-year period
ending December 31, 2017 under the scorecards are based on the
following selected long-term corporate performance criteria,
each as benchmarked against the Company’s average of its
percentile rankings for such criteria over each of the three
years ending December 31, 2017, with each year’s percentile
ranking computed against that year’s custom Midwest
publicly-held banking company peer group:
ending December 31, 2017 under the scorecards are based on the
following selected long-term corporate performance criteria,
each as benchmarked against the Company’s average of its
percentile rankings for such criteria over each of the three
years ending December 31, 2017, with each year’s percentile
ranking computed against that year’s custom Midwest
publicly-held banking company peer group:
|
|
return on equity (50% weight), and
|
|
|
fully-diluted earnings per common share growth (50%
weight). |
For purposes of benchmarking the Companys three-year average of
its percentile rankings for the above criteria:
its percentile rankings for the above criteria:
|
|
For the return on equity component, the threshold average
percentile ranking was fixed at the 70th>percentile, the target was at the 80th>percentile, and the maximum was at the 90th>percentile (the Companys actual percentile rankings with respect to this component for 2015 and 2016 were the 95th and 90th (as adjusted, as described below) percentiles, respectively). |
|
|
For the fully-diluted earnings per common share growth
component, the threshold average percentile ranking was fixed at the 50th>percentile, the target was at the 65th>percentile, and the maximum was at the 75th>percentile (the Companys actual percentile rankings with respect to this component for 2015 and 2016 were the 57th and 47th (as adjusted, as described below) percentiles, respectively). |
In the case of each of the two LTI award performance
criteria, credit is awarded at 50% if the performance
criterion is met at the target level, and at half that if
achieved at the 50% level (threshold), and at twice the
target award level if achieved at the 200% level (maximum).
Credit is given proportionately for performance falling
between the threshold and maximum levels, but is not given
for performance that is not at least at the threshold level,
or for that portion of performance that exceeds the maximum
level.
criteria, credit is awarded at 50% if the performance
criterion is met at the target level, and at half that if
achieved at the 50% level (threshold), and at twice the
target award level if achieved at the 200% level (maximum).
Credit is given proportionately for performance falling
between the threshold and maximum levels, but is not given
for performance that is not at least at the threshold level,
or for that portion of performance that exceeds the maximum
level.
The Company intends to satisfy any LTI award that is deemed
earned for 2017 by (a) issuing common shares of the Company
(the transferability of which will be restricted pending
satisfaction of a continuing employment vesting requirement)
that have a market value (based on the market value of
unrestricted Company common shares as of the stock issuance
date in 2018) of approximately 60% of the dollar amount of
the LTI award (rounded up to the nearest 30-share block) and
(b) granting the award recipient the right to receive cash
payments (vesting over the same continuing employment period)
equal in total amount to approximately 40% of the dollar
amount of the LTI award.
earned for 2017 by (a) issuing common shares of the Company
(the transferability of which will be restricted pending
satisfaction of a continuing employment vesting requirement)
that have a market value (based on the market value of
unrestricted Company common shares as of the stock issuance
date in 2018) of approximately 60% of the dollar amount of
the LTI award (rounded up to the nearest 30-share block) and
(b) granting the award recipient the right to receive cash
payments (vesting over the same continuing employment period)
equal in total amount to approximately 40% of the dollar
amount of the LTI award.
Vesting and Clawback Potential
Amounts of Company stock and cash payable in respect of LTI
awards for the three-year period ended December 31, 2017 will
vest in one-third installments on December 5 of each of the
years 2018, 2019 and 2020, if the recipient has continued to
be employed by the Company as of each such vesting date
(subject to certain exceptions). Any such amounts may be
recouped by the Company in the event of certain material
financial restatements of its performance metrics or other
circumstances, in the Committees discretion.
awards for the three-year period ended December 31, 2017 will
vest in one-third installments on December 5 of each of the
years 2018, 2019 and 2020, if the recipient has continued to
be employed by the Company as of each such vesting date
(subject to certain exceptions). Any such amounts may be
recouped by the Company in the event of certain material
financial restatements of its performance metrics or other
circumstances, in the Committees discretion.
2017 Net Income Trigger
Notwithstanding the satisfaction of one or both of the LTI
award targets outlined above, no LTI award will be payable by
the Company unless the Companys consolidated net income for
2017 is at least $30,000,000.
award targets outlined above, no LTI award will be payable by
the Company unless the Companys consolidated net income for
2017 is at least $30,000,000.
Merger Related Adjustments
At the March 6th meeting, the Board by vote of the
non-interested directors also determined, for purposes of
assessing the performance of each Participating Officer for
the 2016 Management Incentive Plan, that the merger related
expenses of the Company resulting from the Companys March 31,
2016 merger with River Valley Bancorp should be eliminated
from the calculation of the Companys earnings-based measures
included in both the short-term and long-term components of
each such Participating Officers balanced scorecard.
Similarly, for purposes of comparing the Company to its
previously established peer group of Midwest publicly-traded
banks, such non-interested directors determined that each
peer group member who also completed a similar whole bank
merger transaction during 2016 should be removed from the
group when benchmarking the Companys relative performance
against such peers in the determination of long-term
incentive awards (the criteria for which is earnings per
share growth and return on equity). Specifically, it was
determined that five financial institutions in the peer group
experienced such a transaction in 2016 and were removed from
the peer group for purposes assessing the Companys
performance for 2016. The Board believes that failure to make
these adjustments would inappropriately penalize the affected
Participating Officers for expenses that were not indicative
of actual performance. In addition, the Board believes that
making these adjustments more effectively aligns management
incentives with the Companys strategy to continue the
expansion of its business through acquisitions.
non-interested directors also determined, for purposes of
assessing the performance of each Participating Officer for
the 2016 Management Incentive Plan, that the merger related
expenses of the Company resulting from the Companys March 31,
2016 merger with River Valley Bancorp should be eliminated
from the calculation of the Companys earnings-based measures
included in both the short-term and long-term components of
each such Participating Officers balanced scorecard.
Similarly, for purposes of comparing the Company to its
previously established peer group of Midwest publicly-traded
banks, such non-interested directors determined that each
peer group member who also completed a similar whole bank
merger transaction during 2016 should be removed from the
group when benchmarking the Companys relative performance
against such peers in the determination of long-term
incentive awards (the criteria for which is earnings per
share growth and return on equity). Specifically, it was
determined that five financial institutions in the peer group
experienced such a transaction in 2016 and were removed from
the peer group for purposes assessing the Companys
performance for 2016. The Board believes that failure to make
these adjustments would inappropriately penalize the affected
Participating Officers for expenses that were not indicative
of actual performance. In addition, the Board believes that
making these adjustments more effectively aligns management
incentives with the Companys strategy to continue the
expansion of its business through acquisitions.
Consistent with the Companys past practice, it is expected
that the Board will approve the grant of a combination of
restricted stock awards and long-term cash payments to the
Participating Officers for 2016, which grant would reflect
the expense allocation and peer group changes referenced
above when assessing the threshold levels achieved in
connection with the earnings per share growth criteria and
the return on equity criteria. If the
that the Board will approve the grant of a combination of
restricted stock awards and long-term cash payments to the
Participating Officers for 2016, which grant would reflect
the expense allocation and peer group changes referenced
above when assessing the threshold levels achieved in
connection with the earnings per share growth criteria and
the return on equity criteria. If the
Company were to consummate a whole bank acquisition in
2017, it is expected that similar adjustments would be made
for purposes of the 2017 Management Incentive Plan. It is
also expected that similar adjustments to both the Companys
earnings-based measures and the comparison peer group will
be made for future years in which the Company consummates a
whole bank acquisition.
2017, it is expected that similar adjustments would be made
for purposes of the 2017 Management Incentive Plan. It is
also expected that similar adjustments to both the Companys
earnings-based measures and the comparison peer group will
be made for future years in which the Company consummates a
whole bank acquisition.
About GERMAN AMERICAN BANCORP, INC. (NASDAQ:GABC)
German American Bancorp, Inc. is a bank holding company. The Company’s operating segments include core banking, trust and investment advisory services, and insurance operations. The core banking segment involves attracting deposits from the general public and using such funds to originate consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, primarily in the Company’s local markets. Its core banking segment also involves the sale of residential mortgage loans in the secondary market. The trust and investment advisory services segment involves providing trust, investment advisory and brokerage services to customers. The insurance segment offers a range of personal and corporate property and casualty insurance products in its banking subsidiary’s local markets. Its lines of business include retail and commercial banking, financial planning, service brokerage and trust administration, and personal and corporate insurance products. GERMAN AMERICAN BANCORP, INC. (NASDAQ:GABC) Recent Trading Information
GERMAN AMERICAN BANCORP, INC. (NASDAQ:GABC) closed its last trading session up +0.18 at 46.96 with 28,368 shares trading hands.
