MainSource Financial Group,Inc. (NASDAQ:MSFG) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

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MainSource Financial Group,Inc. (NASDAQ:MSFG) 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 Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

2017 Short Term Incentive Plan Awards

On February26, 2018, the Executive Compensation Committee (the “Committee”) of the Board of Directors of MainSource Financial Group,Inc. (the “Company”) awarded incentive compensation to certain named executive officers (“NEOs”) to the Company’s Short Term Incentive Plan (“STIP”) for services performed during 2017.

to the STIP, each of the NEOs is eligible to receive cash payouts when the Company’s actual performance as compared to its annual budget and annual goals exceeds certain thresholds established annually by the Committee.

A STIP payout is available if the Company’s actual performance (“Actual Performance”) exceeds the pre-established threshold (thus, no payout occurs if the Actual Performance is equal to or below the threshold). Each NEO’s target payout is achieved if the Actual Performance equals the target level and the maximum payout is achieved if the Actual Performance equals the superior level, each of which was set by the Committee.

Performance

Payout

Threshold

%

Target

%

Superior

%

For Actual Performance at levels in between the threshold level and 150% of the target level, the payout percentage is interpolated. For example Actual Performance equal to 60% of the target equates to a payout of 60% of the target. Each NEO’s target payout is equal to a percentage of his or her base salary as set forth below:

NameandTitle

TargetPayout

Archie M. Brown,Jr. President and Chief Executive Officer

50% of base salary

James M. Anderson Chief Financial Officer

40% of base salary

Chris M. Harrison Chief Consumer Banking Officer

40% of base salary

The Committee previously established the following performance measures and performance goals, and determined that the Company achieved the following performance for the fiscal year ended December31, 2017:

PerformanceGoals

Threshold

Target

Superior

Actual2017Performance

Measure

Weight

0%

50%

150%

Metric

Score

EPS (operating)

%

$

1.75

$

1.95

$

2.05

$

2.12

%

ROA (operating)

%

1.04

%

1.16

%

1.22

%

1.23

%

%

NPA/Assets

%

1.00

%

0.75

%

0.50

%

0.45

%

%

Loan Growth

%

18.0

%

22.0

%

26.0

%

15.3

%

%

%

%

Based upon the foregoing, the Committee determined that the incentive compensation under the STIP to be paid to the Company’s NEOs for services performed during 2017 is as follows:

Total

Name

STIPAwardfor2017

Archie M. Brown,Jr.

$

361,125

James M. Anderson

$

151,200

Chris M. Harrison

$

140,400

The STIP includes a mandatory deferral feature, to which two-thirds of the STIP compensation is paid in the year it is awarded, and one-third is paid on the first anniversary of the initial payment, provided the employee remains employed by the Company on such date. STIP awards are also subject to claw-back to the extent required by federal laws or regulations, including those required under The Sarbanes-Oxley Act of 2002 and The Dodd-Frank Wall Street Reform Act. Because of the Company’s pending merger with First Financial Bancorp, which is anticipated to close on April1, 2018, the Committee determined not to require deferral of any portion of the 2017 awards.

Vesting of 2015 Performance Share Unit Awards

On March16, 2015, the Committee granted performance share units (the “2015 PSUs”) to certain NEOs to the Company’s Long Term Incentive Plan for the three year period beginning January1, 2015 and ending December31, 2017. At the time of grant, the Committee established performance measures, goals and payout calibration for the 2015 PSUs. The payout of shares is available upon the Company exceeding the pre-established threshold (thus, no payout will occur if the Company’s performance is equal to or below the threshold). Each NEO’s target payout is available once the Company’s performance equals the target level, and the maximum payout is available once the performance equals the superior level (with interpolation between discrete points).

Performance

Payout

Threshold

%

Target

%

Superior

%

On February26, 2018, the Committee certified the results of the Company performance measures for 2015-2017 compared to goals for the 2015 PSUs. The following are the performance measures and goals and the Company’s actual performance compared to the goals:

PerformanceGoals

Threshold

Target

Superior

ActualPerformance

Measure

Weight

Evaluatedvs.

0%

50%

150%

Metric

Score

ROAA

%

Peers

%

%

%

64.6

%

129.2

%

EPS

%

Strategic Plan

$

4.59

$

5.10

$

5.61

$

5.70

150.0

%

rTSR

%

Peers

%

%

%

%

150.0

%

%

140.0

%

Based on the Company’s performance at 140% of the goals, the 2015 PSUs originally granted and actually paid to the NEOs on February26, 2018 are as follows:

2015 Grant

Shares Earned

Archie M. Brown,Jr.

4,343

6,080

James M. Anderson

1,801

2,521

Chris M. Harrison

1,309

1,833


About MainSource Financial Group,Inc. (NASDAQ:MSFG)

MainSource Financial Group, Inc. is a bank holding company. The Company operates a banking subsidiary: MainSource Bank (the Bank), an Indiana state-chartered bank. Through the Bank, the Company offers a range of financial services, including accepting time and transaction deposits; making consumer, commercial, agribusiness and real estate mortgage loans; renting safe deposit facilities; providing personal and corporate trust services, and providing other corporate services, such as letters of credit and repurchase agreements. The Company operates approximately 80 branch banking offices in Indiana, Illinois, Ohio and Kentucky. Its non-banking subsidiaries include MainSource Insurance, LLC; Insurance Services Marketing, LLC; MainSource Title, LLC; MainSource Risk Management, Inc., and New American Real Estate, LLC. Through its non-bank affiliates, the Company provides services incidental to the business of banking.