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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY
We are pleased to notify you that we will hold the 20192020 annual meeting of our shareholders on Thursday, May 16, 2019,21, 2020, at 6:30 P.M., Eastern Time, at the Klub Haus 61, 2031 Newton Street, Jasper, Indiana,Indiana*, for the following purposes:
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Our Board of Directors has established the close of business on March 11, 201912, 2020 as the “record date”"record date" for this annual meeting. This means that you are entitled to vote at this meeting (in person or by legally-appointed proxy) if our stock records show that you owned our Common Shares at that time.
We invite you to attend this annual meeting in person. Even if you plan to attend,please complete, sign and date the accompanying proxy and return it to our agent promptly in the enclosed postage-paid envelope - envelope—or, vote by Internet or by telephone by following the instructions in the accompanying Proxy Statement.
* As a precautionary measure related to the coronavirus, or COVID-19, it is possible that we may hold the annual meeting solely by means of remote communication. If we determine to do so, we will announce the decision in advance, and details on how to participate in the annual meeting will be available at www.germanamerican.com/annualmeeting. We recommend that you visit the website to confirm the status of the annual meeting before planning to attend in person.
GERMAN AMERICAN BANCORP, INC. | ||
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 CLAY W. EWING Secretary |
April 1, 20196, 2020
Jasper, Indiana
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PROXY STATEMENT
TABLE OF CONTENTS
INTRODUCTION | 1 | |||
INFORMATION ABOUT THE MEETING AND VOTING | 1 | |||
Purposes of the Meeting | 1 | |||
Shareholders Entitled to Vote at the Meeting | 1 | |||
Voting Shares By Proxy That You Hold In Your Name | 2 | |||
Voting Shares That You Hold in Brokerage or Similar Accounts | 2 | |||
Your Voting Options on Each of the Proposals | 2 | |||
Our Board's Voting Recommendations | 3 | |||
Required Votes to Elect Directors | 3 | |||
Required Vote to Approve Proposals | 4 | |||
Quorum | 4 | |||
Voting on Possible Other Matters | 4 | |||
Revocation of Proxies or Voting Instructions | 4 | |||
Solicitation of Proxies | 5 | |||
PROPOSAL 1—ELECTION OF DIRECTORS | 6 | |||
CORPORATE GOVERNANCE | 11 | |||
Board Leadership Structure | 11 | |||
Director Independence | 11 | |||
Subsidiary Board Memberships | 12 | |||
Risk Oversight | 12 | |||
Committees and Attendance | 12 | |||
Code of Business Conduct | 13 | |||
Corporate Governance Guidelines | 13 | |||
Director Nominations Process | 14 | |||
Communication with Directors and Director Attendance at Annual Meetings | 15 | |||
OUR EXECUTIVE OFFICERS | 16 | |||
OWNERSHIP OF OUR COMMON SHARES BY OUR DIRECTORS AND EXECUTIVE OFFICERS | 17 | |||
PRINCIPAL OWNERS OF COMMON SHARES | 18 | |||
PRINCIPAL ACCOUNTANT FEES AND SERVICES | 19 | |||
REPORT OF THE AUDIT COMMITTEE | 20 | |||
EXECUTIVE COMPENSATION | 21 | |||
Compensation Discussion and Analysis | 21 | |||
Our Compensation Objectives | 21 | |||
How We Set Executive Compensation | 21 | |||
Peer Group Selection and Analysis | 22 | |||
Independent Compensation Consultant | 22 | |||
Executive Pay Versus Peer Performance Analysis | 23 | |||
Compensation Components | 23 | |||
Vesting and Retention Provisions Applicable to LTI Awards | 31 | |||
Clawback Policy | 31 | |||
Repricing and Underwater Grant Buyback Prohibitions | 32 | |||
Insider Trading Policy and Anti-Hedging Provision | 32 | |||
Executive Stock Ownership/Holding Requirements | 32 | |||
Other 2019 LTI Plan Governance Features | 32 | |||
Retirement/Deferred Compensation Benefits | 33 | |||
Other Compensation | 34 | |||
CEO Pay Ratio | 34 | |||
Compensation Committee Interlocks and Insider Participation | 35 | |||
Compensation Committee Report | 35 | |||
Risk Assessment | 36 |
Executive Compensation | 37 | |||
Summary Compensation Table | 37 | |||
Grants of Plan-Based Awards | 39 | |||
Option Exercises and Stock Vested | 40 | |||
Outstanding Equity Awards at Fiscal Year-End | 41 | |||
Nonqualified Deferred Compensation | 41 | |||
Pension Benefits | 42 | |||
Potential Payments upon Termination or Change in Control | 43 | |||
DIRECTOR COMPENSATION | 45 | |||
TRANSACTIONS WITH RELATED PERSONS | 47 | |||
PROPOSAL 2—APPROVAL OF AMENDED AND RESTATED ARTICLES OF INCORPORATION (GRANTING SHAREHOLDERS THE RIGHT TO AMEND BYLAWS) | 49 | |||
PROPOSAL 3—APPROVAL OF THE GERMAN AMERICAN BANCORP, INC. AMENDED AND RESTATED 2019 EMPLOYEE STOCK PURCHASE PLAN | 51 | |||
PROPOSAL 4—ADVISORY VOTE ON EXECUTIVE COMPENSATION | 57 | |||
PROPOSAL 5—ADVISORY VOTE ON THE APPROVAL OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 58 | |||
SECTION 16(A): BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 59 | |||
SHAREHOLDER PROPOSALS FOR 2021 ANNUAL MEETING | 59 | |||
APPENDIX A—AMENDED AND RESTATED ARTICLES OF INCORPORATION OF GERMAN AMERICAN BANCORP, INC. | A-1 | |||
APPENDIX B—GERMAN AMERICAN BANCORP, INC. AMENDED AND RESTATED 2019 EMPLOYEE STOCK PURCHASE PLAN | B-1 |
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
GERMAN AMERICAN BANCORP, INC.
to be held May 16, 2019
The Board of Directors of German American Bancorp, Inc. is soliciting proxies from shareholders for its use at the 20192020 annual meeting of shareholders, and at any adjournment or adjournments of that meeting. The annual meeting is scheduled to be held on Thursday, May 16, 2019,21, 2020, at 6:30 P.M., Eastern Time, at the Klub Haus 61, 2031 Newton Street, Jasper, Indiana.
To improve readability, German American Bancorp, Inc., which has prepared this proxy statement, will sometimes speak in this document in the first-person (using words such as “we”"we" or “our”"our" or “us”"us") and will address its shareholders using second-person words (such as “you”"you" or “your”"your"). We will also sometimes refer to German American Bancorp, Inc., as “the"the Company.”" References to the Board of Directors of the Company in this proxy statement will usually be shortened to “our"our Board.”" References to our “Proxy Committee”"Proxy Committee" will refer to U. Butch KlemThomas W. Seger and Christina M. Darren Root,Ernst, who are designated by the proxy cards that accompany this proxy statement as being the persons who are authorized to vote at the annual meeting those shares that are owned of record by shareholders that sign and return such proxy cards.
We are mailing this proxy statement, together with our 20182019 annual report (Form 10-K) and summary annual report, a proxy card and an invitation to attend our annual meeting, to our shareholders on or about April 1, 2019.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 16, 2019:
This proxy statement and the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019, are available free of charge at www.edocumentview.com/GABC.
The purposes of the annual meeting are:
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Our Board has established the close of business on March 11, 201912, 2020 as the “record date”"record date" for this annual meeting. This means that you are entitled to vote at this meeting (and any adjournments) if our records show that you owned our Common Shares at that time. As of this record date, 24,967,45826,671,368 of our common shares were issued and outstanding, held by approximately 3,6843,726 registered shareholders
of record. Each issued and outstanding Common Share as of the record date is entitled to one vote on each matter properly to come before the annual meeting and can be voted only if the record owner of that share, determined as of the record date, is present in person at the meeting or represented by proxy.
As a precautionary measure related to the coronavirus, or COVID-19, it is possible that we may hold the annual meeting solely by means of remote communication. If we determine to do so, we will announce the decision in advance, and details on how to participate in the annual meeting will be available at www.germanamerican.com/annualmeeting. We recommend that you monitor this website for updated information, including to confirm the status of the annual meeting before planning to attend in person.
You have three choices:
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- VOTE BY
INTERNET -INTERNET—www.envisionreports.com/GABC.GABC. Use the Internet to transmit your voting instructions up until 1:00 A.M. Central Time on May16, 2019.21, 2020. Have your proxy card in hand when you access the web site. Follow the steps outlined on the secured website.
Many shareholders hold their shares through a stockbroker, bank, or other nominee rather than directly in their own name. If you hold your shares in one of these ways, you are considered a beneficial owner, not a record owner, and you therefore have no direct vote on any matter to come before the annual meeting. Your broker, bank, or nominee will send you voting instructions for you to use in directing the broker, bank or nominee in how to vote your shares. Your broker, bank or nominee may allow you to deliver your voting instructions via the telephone or the Internet.
If you hold your shares through a broker and you do not timely provide your broker with specific instructions on how to vote your shares, your broker will not be authorized to cast a vote on your behalf on Proposals 1 2 or 3,through 4, but will be authorized to cast a vote on your behalf, in its discretion, on Proposal 4.5. In such cases, a “broker non-vote”"broker non-vote" may be entered with respect to your shares on ProposalProposals 1 2 and 3through 4 to reflect that your broker was present with respect to your shares at the meeting but was not exercising voting rights on your behalf with respect to those shares.
You may vote “for”"for" or “withhold”"withhold" (meaning you choose to withhold from our Proxy Committee your authority to vote) with respect to the election of each nominee for director (Proposal 1 on the proxy card).
You may vote “for,” “against”"for," "against" or “abstain”"abstain" with respect to:
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- the approval of the Company's Amended and Restated Articles of Incorporation, providing shareholders the right to amend the Company's Bylaws (Proposal 2 on the proxy card);
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- the adoption of the German American Bancorp, Inc. Amended and Restated 2019 Employee Stock Purchase
Plan (Proposal 2 on the proxy card);
If any other matter is properly brought before the meeting and you have returned a proxy card (thereby appointing our Proxy Committee, or their designees, to vote your shares), your shares will be voted on that matter in accordance with the discretion and judgment of the Proxy Committee. You will have no opportunity on the proxy card to direct the Proxy Committee as to such matters due to their presently unknown nature.
Our Board recommends that you vote:
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- FOR the election as directors of the four (4) individuals named as its nominees in this proxy statement (Proposal 1 on the proxy card);
As noted above, if any other matter is properly brought before the annual meeting, the Company - Company—through the individuals named on the enclosed proxy card acting as our Proxy Committee, or their designees, and pursuant to the authorization granted under the proxy card - card—will vote your shares on that matter in accordance with the discretion and judgment of the Proxy Committee.
Four (4) positions on our Board are scheduled to be filled by vote of the shareholders at the annual meeting. As a shareholder, you are entitled to cast one vote per share for each of up to four (4) nominees for election as directors at the annual meeting, but you may not cumulate your votes (in other words, you may not cast votes representing four (4) times the number of your shares entitled to vote in favor of a single nominee). Directors are elected from among the nominees by a plurality of the votes that are cast among all nominees; this means the individuals whose names are validly placed into nomination at the meeting who receive the four (4) highest number of votes cast “for”"for" their election will be elected as directors of the Company. A properly returned proxy indicating “withhold”"withhold" with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. “Broker non-votes”"Broker non-votes" will not be counted as votes cast on the proposal and will have no effect on the election of directors.
A majority of the votes cast at the Annual Meeting, provided a majoritymeeting will approve: (i) the proposal to approve the Company's Amended and Restated Articles of Incorporation; (ii) the outstanding common shares is representedproposal to approve and entitledadopt the German American Bancorp, Inc. Amended and Restated 2019 Employee Stock Purchase Plan; (iii) the proposal to voteapprove on an advisory basis the compensation of our Executive Officers; (iv) the proposal to approve the appointment of Crowe LLP; and (v) all other matters that arise at the Annual Meeting.annual meeting. Shares voted “for”"for" proposals and shares represented by returned proxies that do not contain instructions to vote against the proposal or to abstain from voting will be counted as shares cast for the approval of the proposal. Abstentions and broker non-votes will not be treated as votes cast “for”"for" or “against”"against" the proposal but shall be included for purposes of determining whether a quorum is present. While a majority of
Please note, however, that because the votes cast aton the meeting
Indiana law provides that any shareholder action at a meeting requires that a quorum exist with respect to that meeting. Once a share is represented for any purpose at a meeting, it is deemed by Indiana law to be present for quorum purposes for the remainder of the meeting and (unless a new record date is or must be set for any such adjournment) any adjournment of that meeting.
A majority of the common shares entitled to vote at this meeting, present either in person or by proxy, will constitute a quorum for all purposes at the meeting. If a quorum should not be present, the annual meeting may be adjourned from time to time until a quorum is obtained.
Shares held of record by shareholders who (in person or by proxy) abstain from voting on any or all proposals (and shares represented by “broker"broker non-votes,”" described above under “Voting"Voting Shares That You Hold in Brokerage or Similar Accounts”Accounts") will be included in the number of shares present at the meeting for purposes of determining the presence of a quorum. However, abstentions and broker non-votes as to any proposal will not be considered to be votes that have been “cast”"cast" on that proposal and therefore will not affect the outcome of the vote on any proposals described by this proxy statement.
We are not aware that any person intends to propose that any matter, other than the four (4)five (5) numbered proposals specifically described by this proxy statement, be presented for consideration or action by our shareholders at our annual meeting. If any such other matter should properly come before the meeting, however, favorable action on such matter would generally require the affirmative vote of a majority of the votes cast, unless our articles of incorporation or bylaws or applicable law require otherwise. If you vote by proxy, you will be granting our Proxy Committee authority to vote your shares on any such other matter in accordance with their discretion and judgment.
A shareholder of record who has delivered a proxy card in response to this solicitation may revoke it before it is exercised at the annual meeting by executing and delivering a timely and valid later-dated proxy, by voting by ballot at the meeting or by giving written notice to the Secretary. If a shareholder of record has voted via the Internet or by telephone, such shareholder may also change that vote with a timely and valid later Internet or telephone vote, as the case may be, or by voting by ballot at the meeting. Attendance at the meeting will not have the effect of revoking a proxy unless a shareholder gives proper written notice of revocation to the Secretary before the proxy is exercised or the
shareholder votes by ballot at the meeting. Beneficial owners who have directed their broker, bank or nominee as to how to vote their shares should contact their broker, bank or nominee for instructions as to how they may revoke or change those voting directions.
Our Board is making this solicitation of proxies for our annual meeting. Our Company will bear all costs of such solicitation, including the cost of preparing and mailing this proxy statement and the enclosed form of proxy. After the initial mailing of this proxy statement, proxies may be solicited by mail, telephone, facsimile transmission or personally by directors, officers, employees or agents of the Company. Brokerage houses and other custodians, nominees and fiduciaries will be requested to forward soliciting materials to beneficial owners of shares held by them for the accounts of beneficial owners, and we will pay their reasonable out-of-pocket expenses.
ELECTION OF DIRECTORS
Our full Board currently consists of thirteen (13)fifteen (15) directors, after having increased its size from the ten (10)twelve (12) directors who were members of our Board at the time of the conclusion of the 20182019 annual meeting of the Company’sCompany's shareholders. Two new directors, Zachary W. BawelChristina M. Ryan and Jason M. Kelly,Tyson J. Wagler, were appointed to our Board, after having been identified and recruited by the Governance/Nominating Committee of the Board in order to return the number of directors to at least (12) twelve. Lee A. MitchellBoard. Jack W. Sheidler was appointed to our Board as a result of the Company’sCompany's merger with Citizens First Security, Inc.
Our Board is divided into three classes, and directors in each class generally serve a three-year term. The terms of each class expire at successive annual meetings so that the shareholders elect one class of directors at each annual meeting. The current classification of our Board is:
Terms expiring at this annual meeting: |
| Christina M. Ernst, Chris A. Ramsey, M. Darren Root, |
| and Jack W. Sheidler | ||
Terms expiring at the 2021 annual meeting: | Marc D. Fine, Jason M. Kelly, U. Butch Klem, Raymond W. Snowden, and Tyson J. Wagler | |
Terms expiring at the 2022 annual meeting: | Zachary W. Bawel, J. David Lett, Lee A. Mitchell, Christina M. Ryan, and |
Ms. Ernst, however, is not eligible to stand for re-election at this year’syear's annual meeting because heshe has attained the mandatory retirement age specified by our Company’sCompany's Bylaws (which provide that a director may not be elected after reaching the age of 69 years). In light of the vacancy that will result from Mr. Collins’Ms. Ernst's retirement and in accordance with our Company’sCompany's Bylaws, our Board has elected to reduce the number of directors from thirteen (13)fifteen (15) to twelve (12)fourteen (14) effective as of the date of this year’syear's annual meeting. In addition, in order that the number of directors in each of our Board’s three (3) classes are as nearly equal as possible, effective as of the date of this year’s annual meeting, Mr. Mitchell will be moved to the class standing for election at this year’s annual meeting.
Taking into consideration the anticipated vacancy and reclassification,these changes, our Board, on the recommendation of the Governance/Nominating Committee, has nominated Messrs. Bawel, Lett, MitchellRamsey, Root, Schroeder and SegerSheidler for re-election at this year’syear's annual meeting. If re-elected, each of these four (4) nominees will serve on our Board until the 20222023 annual meeting, or until his successor is duly elected and qualified in accordance with the Company’sCompany's Bylaws. If any of these nominees should become unable to accept election, our Proxy Committee may vote for other person(s) selected by our Board. Our Board has no reason to believe that any of the nominees will be unable to accept election.
We present below present certain information concerning our Board’sBoard's nominees for election at this year’syear's annual meeting, followed by information concerning those Board members who are not standing for election this year and whose term of office will continue after the annual meeting. This information includes their present principal occupations, which have been the same for the last five years, unless otherwise noted. The biographies of each of the nominees and continuing directors below contain information regarding the experiences, qualifications, attributes or skills that caused the Governance/Nominating Committee and our Board to determine that the person should be re-elected (or should continue to serve even if not standing for re-election) as a director for the Company in 2019.
Following these tablesthe director biographies is information concerning our corporate governance and committee structures. We have noted in the tablesbiographies the Committeecommittee memberships of those directors who serve on those standing committees
document, namely our Compensation/Human Resources, Audit, and Governance/Nominating Committees. Our directors also serve on other committees of our Board and the board of directors of the Company’sCompany's banking subsidiary that are not required to be described by this proxy statement and which are therefore not identified in these listings.
Elsewhere in this proxy statement you will find information concerning the numbersamount of our common shares that are beneficially owned by each of our directors (see “OWNERSHIP"OWNERSHIP OF OUR COMMON SHARES BY OUR DIRECTORS AND EXECUTIVE OFFICERS”OFFICERS") and information regarding the compensation of our directors (see “EXECUTIVE AND DIRECTOR COMPENSATION”"DIRECTOR COMPENSATION"). We urge you to review all of this information when deciding how to vote on Proposal 1.
Our Board recommends that you vote FOR all four (4) of the nominees named below.
Nominees for Election at this Annual Meeting (with Terms to Expire at the 2023 Annual Meeting)
Chris A. Ramsey
Chris A. Ramsey, 63, has served as a director of the Company since his election to a newly-created board seat, effective January 1, 2011. Mr. Ramsey is president of Ramsey Enterprises, LLC (a real estate company based in Tell City, Indiana) and the owner of several businesses in the construction and real estate industry with over 39 years' experience in real estate. Mr. Ramsey has served on the boards of directors of the former Bank of Evansville, the former Tell City National Bank (Tell City, Indiana) and former First National Bank (Cannelton, Indiana). Mr. Ramsey therefore brings valuable bank director experience, as well as, real estate experience to our Board.
M. Darren Root
M. Darren Root, 59, was appointed to the Board effective January 1, 2013. Mr. Root serves as the Chairman of the Audit Committee of our Board. Mr. Root is President and founding member of RootAdvisors LLC, a Bloomington, Indiana-based accounting firm, and CEO of Rootworks LLC, a membership-based consulting firm dedicated to educating small and mid-size accounting firms on technology, practice management, marketing, branding and more. Mr. Root holds CPA, CITP (Certified Information Technology Professional), and CGMA (Chartered Global Management Accountant) credentials. Mr. Root is the author of "The Intentional Accountant" and co-authored the books "The E-Myth Accountant" and "Youtility for Accountants." He is the former Executive Editor of CPA Practice Advisor. Our Board believes that Mr. Root's knowledge base in the areas of accounting, audit, finance, and technology enhances Board and Audit Committee decision-making, and that he brings a depth of knowledge of the Bloomington, Indiana market area to the Board.
Mark A. Schroeder
Mark A. Schroeder, 66, has served as a director of the Company since 1991, as its Chief Executive Officer since 1999 and as its Chairman since 2009. Mr. Schroeder, who was licensed as a certified public accountant in Indiana in 1995, has over 40 years of day-to-day banking experience, including experience as the Company's chief lending officer and as the Company's chief financial officer and chief operating officer. Mr. Schroeder is active in Indiana and national industry organizations, including the boards of directors of leading state and national community banking industry associations, and since 2007 has served as Vice Chairman of the Board of Members of the Indiana Department of Financial Institutions, an official agency of the State of Indiana that oversees the banking and finance industry.
Our Board believes that Mr. Schroeder's banking industry knowledge and experience, and his insights as CEO, are invaluable.
Jack W. Sheidler
Jack W. Sheidler, 63, was appointed to our Board effective October 15, 2019, as a result of the merger with Citizens First Corporation ("Citizens"). Mr. Sheidler, who was the Chairman of the Board of Citizens since 2009, has been an active real estate investor/developer for over 30 years. He is the CEO and principal of various real estate development and investment companies, based in Bowling Green, Kentucky. His companies primarily focus on multi-family, retail, and office acquisition or development throughout the Southeast. Our Board believes that Mr. Sheidler's knowledge of the markets in which Citizens has operated and his familiarity with Citizens' personnel and history make his service as a director valuable to the Company.
Continuing Directors of the Class with Terms Expiring at the 2021 Annual Meeting
Marc D. Fine
Marc D. Fine, 60, has served as a director of the Company since his election in 2011. Mr. Fine was a director of the former Bank of Evansville, having been among its founding director group in 2001. Mr. Fine has practiced business law in Evansville, Indiana since 1984 and was a founding partner of the law firm of Rudolph, Fine, Porter & Johnson, LLP, in Evansville. Rudolph, Fine, Porter & Johnson, LLP merged in 2014 with Jackson Kelly PLLC. Mr. Fine is currently a member of the Executive Committee of Jackson Kelly PLLC. He is also active in many civic and community organizations and is a Commissioner of the Indiana Gaming Commission (since 2008), an official agency of the State of Indiana that oversees the state's gaming industry. Our Board believes that Mr. Fine's experience in business (including the banking business), state government, and law, in addition to his involvement in the Evansville business and civic communities, is of significant benefit to it.
Jason M. Kelly
Jason M. Kelly, 45, was appointed to our Board effective January 1, 2019, after having been identified and recruited by the Governance/Nominating Committee of our Board. He presently serves on the Audit Committee of the Board. Mr. Kelly is the President and Chief Financial Officer for TrueScripts, a fast-growing and transparent Pharmacy Benefit Management (PBM) company based in Washington, Indiana with clients in 42 states. There he is responsible for all areas of Accounting, Finance, Compliance, and Human Resources. Immediately prior to joining TrueScripts, Mr. Kelly was the President and CEO of a large family owned multi-concept franchised restaurant company based in Jasper for 12 years. Additionally, his background has deep roots in real estate, banking, and finance having been the CFO of a mid-size commercial construction and development company in Central Indiana and regional CFO for one of the largest homebuilding companies in North America. Prior to joining the Board of Directors, Mr. Kelly had served on German American Bank's South Central regional advisory board for the counties of Dubois, Perry, and Spencer. Mr. Kelly's experience in real estate, operating successful and growing businesses within our markets and his solid base of banking experience and understanding of the Company's business model and culture bring value to our Board and the Company.
U. Butch Klem
U. Butch Klem, 70, has served as a director of the Company since 2004, is Chairman of the Governance/Nominating Committee of our Board and is a member of its Compensation/Human Resources Committee. He has been our Board's "lead independent director" since 2009 and now serves
as a "co-lead independent director," along with Mr. Seger. Mr. Klem is currently acting as an advisor to the new owners of the U. B. Klem Furniture Company, a furniture manufacturer based in Jasper, Indiana, that he founded in 1973. Prior to selling the company in 2018, Mr. Klem served as its President and CEO. With his track record as a successful entrepreneur and his deep understanding of sales, human resources, accounting and finance, Mr. Klem provides our Board with leadership and invaluable business insight.
Raymond W. Snowden
Raymond W. Snowden, 70, was appointed to our Board effective February 1, 2014, to fill a newly-created Board seat. He is also serving as a member of our Board's Audit Committee. Mr. Snowden is the Board Chairperson of Jasper, Indiana-based Memorial Hospital and Health Care Center. He also was the Center's President and Chief Executive Officer from 1999 to April 2015, and has over 35 years of management experience in the health care industry. He is a past Board member of the Vincennes University-Jasper Foundation, Genesis Health Alliance, Indiana Hospital Association, Patoka Valley Healthcare Cooperative, Welborn Baptist Foundation in Evansville, and of Dubois Strong (formerly Dubois County Area Development Corporation). Mr. Snowden therefore brings health care industry knowledge to our Board, as well as insights into economic development initiatives in our heritage banking markets.
Tyson J. Wagler
Tyson J. Wagler, 40, was appointed to our Board effective October 15, 2019. He currently serves on the Audit Committee of our Board. Mr. Wagler is a partner in Frette & Wagler LLC, a Washington, Indiana-based CPA firm, which offers a wide range of tax and accounting services for individuals and a variety of businesses. Mr. Wagler has over sixteen years of experience in the accounting profession. He serves on the board of the Daviess County Community Hospital and has prior banking experience having previously served on German American Bank's advisory board for its West Region, consisting of the Indiana counties of Daviess, Knox, Martin, Pike and Gibson, since 2013. Mr. Wagler's extensive experience providing tax and accounting services, as well as his service on our Bank's advisory board, enable him to be a significant contributor to our Board.
Continuing Directors of the Class with Terms Expiring at the 2022 Annual Meeting
Zachary W. Bawel
Zachary W. Bawel, 55, was appointed to our Board effective July 1, 2018, after having been identified and recruited by the Governance/Nominating Committee of our Board. He is also a member and serves as a Co-Chairman of the Compensation/Human Resources Committee of our Board (along with Mr. Seger). Mr. Bawel is President & COO of Jasper Engines & Transmissions, a 100% Associate-Owned, 77 year-old Jasper, Indiana based company with over 3,200 employees nationwide. He has over 30 years of sales, distribution and management experience with the company, having served as President since 2011. Mr. Bawel currently also serves on the executive committee and on the board of directors of Jasper Engines, is a member of the advisory board of WireCrafters LLC, the nation's leading manufacturer of woven and welded wire partitions and other related material handling products, and is a board member of Brake Supply, based in Evansville, Indiana. He also has prior banking experience having previously served on the Company's advisory board for its South Central Region, consisting of the Indiana counties of Dubois, Perry and Spencer, since 2013. The Board believes that Mr. Bawel's strong business acumen, solid base of banking experience and understanding of the Company's business model and culture are valuable resources to our Board and the Company.
J. David Lett
J. David Lett, 67, a director of the Company since 2000 and a member of its Governance/Nominating Committee, has practiced law for over 36 years with Lett & Jones, a law firm in Martin County, Indiana (part of the Company's southern Indiana market area) that provides legal services to a wide range of individual, governmental and organizational clientèle in Martin, Daviess and Dubois Counties. Mr. Lett's professional and civic relationships and stature within these communities position him well to offer valuable insight and perspective on a variety of matters relating to the Company's banking, insurance, investment, and trust services.
Lee A. Mitchell
Lee A. Mitchell, 55, was appointed to our Board effective October 29, 2018, as a result of the merger with First Security, Inc. ("First Security"). Mr. Mitchell, who had served as a director of First Security since 1998, has owned and operated the L. Mitchell Farms since 1984. He is also President and Chief Executive Officer of Amino Health, Inc., a position he has held since January, 2018. Our Board believes that Mr. Mitchell's knowledge of the markets in which First Security has operated and his familiarity with First Security's personnel and history make his service as a director valuable to the Company.
Christina M. Ryan
Christina M. Ryan, 61, was appointed to our Board effective October 15, 2019. Ms. Ryan is the Chief Executive Officer and Chief Nursing Officer at the Women's Hospital in Newburgh, Indiana, which is part of the Deaconess Health System. She was appointed to serve on the Board of Trustees for the University of Southern Indiana. She also serves on various health care industries boards throughout Indiana. She has prior banking experience as she currently serves on the Company's advisory board for its Southwest Region, consisting of the Indiana counties of Vanderburgh and Warrick since 2013. Ms. Ryan, therefore, brings health care industry knowledge to our Board, as well as insights into economic development initiatives in our growth banking markets.
Thomas W. Seger
Thomas W. Seger, 62, has served as a director of the Company since his election to a newly-created board seat, effective August 16, 2011. He serves as a "co-lead independent director" (along with Mr. Klem) of our Board, is Co-Chairman of our Board's Compensation/Human Resources Committee (along with Mr. Bawel), and is a member of our Governance/Nominating Committee. Mr. Seger is President of Wabash Valley Produce, Inc., a large poultry producer, headquartered in Dubois, Indiana, an officer of Simple Transport, Inc., which is also located in Dubois, Indiana, and an owner of Farbest Foods. As a result of his almost 40 years of experience in poultry and agriculture, Mr. Seger brings to our Board unique perspectives based on his knowledge of the agricultural industry on a local, regional, and national level. In addition, Mr. Seger's many years of experience in human resource management with Wabash Valley enhance his effectiveness as Chairman of our Compensation/Human Resources Committee.
Our Board is currently led by a leadtwo co-lead independent directordirectors and by a Chairman of the Board. The lead independent director assistsdirectors assist our Board in assuring effective corporate governance and serveseach may serve as a chairperson of meetings of the independent directors that are held without the presence of any directors who may at that time be deemed not to be independent. The lead independent directordirectors may also chairseach chair meetings of our Board during any meetings or portions of meetings if the Chairman of the Board is absent. The Chairman of the Board chairs meetings of our Board (other than the separate sessions only of the Board’sBoard's independent directors) and of our shareholders. Mr. Klem isand Mr. Seger are our Board’s leadBoard's co-lead independent directordirectors and Mr. Schroeder (our Chief Executive Officer) is our Chairman of the Board.
In anticipation of Mr. Klem's scheduled retirement from our Board effective as of the Company's 2021 annual meeting of shareholders (as a result of reaching the mandatory retirement age specified by our Bylaws), the Board determined it is in the best interests of the Company and its shareholders to move to a two director, "co-lead" model in an effort to transition the lead independent director role to Mr. Klem's successor. With Mr. Seger's vast business experience, as well as substantial experience on our Board, including strong and effective leadership as Chairman of our Board's Compensation/Human Resources Committee, the Board concluded that Mr. Seger was well-positioned for an expanded leadership role with our Board. As such, Mr. Seger was appointed as a co-lead independent (serving along with Mr. Klem) as a transition step in becoming the Board's sole, lead independent director upon Mr. Klem's retirement in 2021. Similar to the steps being taken to transition the lead independent director role to Mr. Seger, our Board initiated steps to transition Mr. Seger's role as Chairman of our Board's Compensation/Human Resources Committee to Mr. Bawel by appointing Messrs. Seger and Bawel as Co-Chairman of that Committee effective as of July 1, 2019. Having served as a member the Compensation/Human Resources Committee since his appointment to our Board, Mr. Bawel has demonstrated to the Board his ability to lead this important function.
Our Board believes that this leadership structure is the most appropriate for our Company. Our Board believes that it benefits by the efficiencies achieved in having the role of CEO and Chairman combined in the same individual (Mr. Schroeder), and that the detailed knowledge of our day-to-day operations and business possessed by our Chairman of the Board as a result of his also acting as our CEO greatly enhances the decision-making processes of our Board as a whole. The independence of the Board as a whole is not compromised, however, as a result of the active involvement of Mr.Messrs. Klem and Seger as the designated leadco-lead independent director,directors, who isare in a position to ensure that the powers and duties of the Chairman are being handled responsibly despite the dual role held by the Chairman as CEO. Furthermore, consistent with NASDAQNasdaq listing requirements, the independent directors regularly meet in independent sessions without Mr. Schroeder in attendance.
In accordance with rules of The NASDAQNasdaq Stock Market, our Board affirmatively determines the independence of each Director and nominee for election as a Director. Our Board has determined that each of the Directors of the Company (identified above) is independent under the definitions and interpretations of NASDAQNasdaq because none of them have any relationship with the Company that, in the opinion of our Board, would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director, except that Mark A. Schroeder is not independent because he is the Chairman and Chief Executive Officer of the Company.
Our Board has not established its own definitions (different from the definitions and interpretations of NASDAQ)Nasdaq) for determining whether its members are independent, but rather reviews such independence determinations on the basis of the total mix of information available to our Board
at the time of the making of each such determination. Included in this information are any relationships (such as the ordinary course loan transactions by the Company’sCompany's bank subsidiary with members of our Board and their related persons, or the membership of directors in law firms that may provide legal services to the Company and its subsidiaries) that the Company has or may have with its directors that are disclosed in the Company’sCompany's most recent proxy statement or that become known to our Board from time to time after the issuance of that proxy statement.
All members of our Board also serve on the board of directors of German American Bank, our wholly-owned bank subsidiary, and, if applicable, upon the same committees of the bank subsidiary board of directors as they serve on our Board. In addition:
- •
- several of our directors participate in selected meetings of the separate advisory boards of certain banking regions of our bank subsidiary, as follows: Mr. Bawel, South Central Region; Mr. Lett, West Region; Mr. Fine and Ms. Ryan, Southwest Region; Mr. Root, North Region;
Mr. Collins, East Regionand Mr. Klem, floats betweenRegions.
All members of our Board oversee the management of our Company’sCompany's affairs directly and through its committees. In doing so, our Board acts at all times with a view to the best interests of our Company and our shareholders. In fulfilling its mandate, our Board, among other matters, is responsible for reviewing the principal risks of our Company’sCompany's business to ensure the appropriate systems are in place to manage these risks. The Audit Committee of our Board is charged with the responsibility to assist our Board in monitoring our principal financial risks and the processes employed to manage such risks. In discharging its mandate, the Audit Committee of our Board discusses with management our major financial risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management practices. The Company’sCompany's management also keeps our Board informed of cybersecurity developments by providing periodic reports on cybersecurity metrics and updates on preventive measures being taken to avoid attacks. As the Company reviews and updates it cybersecurity plans and policies, it will continue to take the steps necessary to ensure effective Board oversight of this area and will provide disclosures relating to such oversight that are consistent with the SEC’s recent “Statement"Statement and Guidance on Public Company Cybersecurity Disclosures.”
Our Board held twelve (12)ten (10) meetings during 2018.2019. All of the directors who acted as such at any time during 20182019 attended at least 75% of the aggregate number of meetings of our Board and the committees on which he or she served that were held during 2018.
Our Board has standing committees that address issues relating to audit, executive compensation, corporate governance and director nominations:
- •
- The Audit Committee, presently consisting of Directors Ernst, Kelly, Root (Chairman), Snowden and
Snowden,Wagler, met five (5) times in2018.2019. The Audit Committee oversees theCompany’sCompany's accounting and financial reporting processes and the audits of theCompany’sCompany's consolidated financial statements and internal control over financial reporting.
- •
- The Compensation/Human Resources Committee, presently consisting of Directors Bawel (Co-Chairman), Ernst, Klem, and Seger
(Chairman)(Co-Chairman), mettwo (2)five (5) times during2018.2019. The Compensation/Human Resources Committee reviews compensation for the executives and officers, other than our Executive Officers that are covered in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, and makes recommendations to our Board with respect to the compensation of such Executive Officers.
Each of the members of the Audit Committee, Compensation/Human Resources Committee and the Governance/Nominating Committee is an independent director, as that term is defined by the listing standards of NASDAQ.Nasdaq. In addition, each member of the Audit Committee and of the Compensation/Human Resources Committee satisfies the additional independence requirements specified by those listing standards for audit committee members and compensation committees, respectively.
The Board has adopted a Code of Business Conduct, which constitutes a "code of ethics" as that term is defined by SEC rules adopted under the Sarbanes-Oxley Act of 2002. The Company has posted a copy of the Code of Business Conduct on its Internet website (www.germanamerican.com). The Company intends to satisfy its disclosure requirements under Item 5.05 of Form 8-K regarding certain amendments to, or waivers of, the Code of Business Conduct, by posting such information on its Internet website, except that waivers that must under Nasdaq rules be filed with the SEC on Form 8-K will be so filed.
The Board’sBoard's Corporate Governance Guidelines are available for review by shareholders in the Corporate Profile - Profile—Governance Documents section of the Investor Relations portion of the Company’sCompany's web site, www.germanamerican.com).www.germanamerican.com. These Guidelines address (among other matters):
- •
- the composition and structure of the board, including the independence of directors and board leadership, each of which are discussed above;
In addition, the Corporate Governance Guidelines establish expectations for ownership of our common stock by our non-employee directors and our Chief Executive Officer. Under these guidelines, non-employee directors are expected to attain an investment position in shares of our common stock (measured by the same rules as are used for determining the number of shares beneficially owned in
our annual meeting proxy statement) equal to a multiple of three times their current annual cash retainer and the Chief Executive Officer is expected to attain an investment position in our common shares equal to three times his or her base salary. Exceptions to these ownership guidelines may be approved by the lead independent DirectorDirector(s) for good reason.
Our Board adopted a charter for the Governance/Nominating Committee in 2013 and reviewed and confirmed the charter’scharter's continued adequacy and effectiveness at its annual reorganization meeting in June 2018.2019. The charter directs the Governance/Nominating Committee to evaluate candidates for nomination by our Board for election to our Board, and specifies that our Board will consider for nomination for election to our Board only those candidates who are recommended for nomination by the Governance/Nominating Committee. A current copy of the charter is available for review by shareholders in the Corporate Profile - Profile—Governance Documents section of the Investor Relations portion of the Company’sCompany's web site, www.germanamerican.com.
In evaluating candidates for membership on our Board, the Governance/Nominating Committee is required by the charter to consider favorably those candidates who, in the Governance/Nominating Committee’sCommittee's judgment, (a) possess demonstrated business and financial judgment, strategic thinking, general management experience or perspective, leadership, experience in industry with comparable complexities, general knowledge of financial services industry, and familiarity with local, state, regional and national issues affecting business; (b) have a background that serves our Board’sBoard's interest in a membership comprised of individuals with varied occupational experience and perspective; (c) have sufficient time to devote to the Company’sCompany's business; (d) possess the highest moral and ethical character and agree to uphold and assure compliance of the Company’sCompany's Code of Business Conduct; (e) have a history of community involvement and civic-mindedness; (f) are not engaged (directly or indirectly) in any activity adverse to, and do not serve on the board of directors of (or have any material ownership interest in), any other company whose interests are adverse to, or in conflict with, the Company’sCompany's interests; and (g) possess the ability to oversee, as a director, the business and affairs of the Company for the benefit of all constituencies of the Company.
The charter further specifies that, in connection with each annual meeting of shareholders, the Governance/Nominating Committee will consider candidates (based on individual qualifications and the needs of our Board as determined from time to time by the Governance/Nominating Committee) that have been recommended by shareholders for nomination at the annual meeting, if the recommendations are submitted by letter addressed to the attention of the Chairman of the Governance/Nominating Committee in care of the Secretary of the Company, mailed by registered or certified mail (return receipt requested), and received by the Secretary at the Company’sCompany's principal executive offices on or before December 1st of the year preceding the annual meeting for which the recommendation is made.
In addition to considering candidates who are recommended by shareholders, the Governance/Nominating Committee will meet from time to time with members of our Board, including the Chief Executive Officer and other officers who may be members of our Board, and with other Executive Officers of the Company with a view to identifying persons who may be qualified to serve on our Board. The Governance/Nominating Committee may also, in its discretion as granted by the charter, engage a third-party search firm to assist in identifying and evaluating potential candidates. All candidates (regardless of whether identified through shareholder recommendations) shall be evaluated according to the same standards, except that (a) incumbent directors who are standing for re-election may receive preference on account of their prior experience with the business and affairs of the Company, and (b) candidates who may be considered for election to our Board pursuant to any understanding or agreement negotiated by the Company with any third party may receive preference in accordance with the special terms of such understanding or agreement.
The charter provides that the Governance/Nominating Committee shall not recommend any candidate to our Board as a nominee for election as director unless such candidate (a) will be at least 25 years of age at the time of election (our Bylaws also provide that no person 69 years of age or older at time of election shall be elected to our Board, unless waived by our Board); (b) will not serve, at the time of election, as a director of more than two other companies that file reports with the Securities and Exchange Commission (“SEC”)SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, (c) in the judgment of the members of the Governance/Nominating Committee, has the ability to read and understand fundamental financial statements, including a balance sheet, income statement, and cash flow statement, (d) has not been involved in any legal proceedings of the type described by Item 401(f) of Regulation S-K of the SEC, which legal proceedings would be disclosable in the Company’sCompany's next proxy statement, and (e) will satisfy the director qualification requirements established from time to time by the Company’sCompany's Bylaws, unless the Governance/Nominating Committee has determined that it would be in the best interests of the Company for our Board to waive such Bylaws qualification requirements in respect of that particular candidate. In addition, the charter provides that the Governance/Nominating Committee shall consider candidates with a view to ensuring that at least two thirds of the members of our Board (assuming that all candidates recommended by the Governance/Nominating Committee are elected to our Board) will, as a result of prior service on our Board or otherwise, have business experience in the banking, insurance, or securities industries.
While the Company hopes and intends that the application of the above criteria will result in a board of directors that is comprised of individuals from different walks of life and experiences and will in that sense be a diverse group, the Governance/Nominating Committee has not adopted a diversity policy and does not consider race, gender, national origin or other traditional classifications in considering qualifications or desirability of a candidate for service on our Board of the Company. The Company desires the Board to be adequately diverse in order to ensure consideration of a variety of different perspectives. As such, the Board has committed to discussing and assessing the topic of diversity when determining who will fill the Board’sBoard's next vacancy.
The Governance/Nominating Committee recommended to our Board that the four (4) nominees named in this proxy statement, each an incumbent director, be nominated for election at this year’syear's annual meeting.
Our Board has adopted a procedure by which shareholders may send communications to our Board as part of the Corporate Governance Guidelines. These Guidelines are available for review by shareholders in the Corporate Profile - Profile—Governance Documents section of the Investor Relations portion of the Company’sCompany's web site,
Our Executive Officers are:
Name | Principal Positions | Age | |||||||
|---|---|---|---|---|---|---|---|---|---|
Mark A. Schroeder | Chairman and Chief Executive Officer of the Company and its bank subsidiary; Director of the Company and its principal subsidiaries. | 66 | |||||||
Clay W. Ewing | President and Secretary of the Company and President of its bank subsidiary. | 64 | |||||||
Bradley M. Rust | Executive Vice President and Chief Financial Officer of the Company and its bank subsidiary. | 53 | |||||||
Randall L. Braun | Executive Vice President and Chief | 60 | |||||||
Keith A. Leinenbach | Executive Vice President and Chief Credit Officer of the Company and its bank subsidiary. | 61 | |||||||
D. Neil Dauby | Executive Vice President and Chief Commercial Banking Officer of the Company and its bank subsidiary. | 56 | |||||||
Mr. Schroeder has been our Chief Executive Officer, and each of Messrs. Ewing, Rust, Braun and Leinenbach has held Executive Officer positions with management responsibilities in his current functional area of responsibility for the Company and its subsidiaries, for the last five years. Mr. Dauby was designated as an Executive Officer of the Company for certain securities law purposes at the annual reorganization meeting of our Board of Directors held in 2016. Mr. Dauby, who holds a certified public accountant designation, joined German American in 2001, following a 15-year career in public accounting. He previously served as president of one of German American’sAmerican's community banking subsidiaries.
The following table presents certain information as of March 11, 201912, 2020 regarding the beneficial ownership of our common shares by our directors and Executive Officers.
Name | Common Shares Beneficially Owned(1) | Percentage of Outstanding Shares | |||||
|---|---|---|---|---|---|---|---|
Zachary W. Bawel | 6,789 | * | |||||
Christina M. Ernst | 52,699 | (2) | * | ||||
Marc D. Fine | 38,473 | * | |||||
Jason M. Kelly | 2,450 | * | |||||
U. Butch Klem | 334,214 | (3) | 1.25 | % | |||
J. David Lett | 85,222 | (4) | * | ||||
Lee A. Mitchell | 85,305 | (5) | * | ||||
Chris A. Ramsey | 303,646 | (6) | 1.14 | % | |||
M. Darren Root | 12,955 | * | |||||
Christina M. Ryan | 2,930 | * | |||||
Mark A. Schroeder | 158,604 | (7) | * | ||||
Thomas W. Seger | 568,407 | (8) | 2.01 | % | |||
Jack W. Sheidler | 51,276 | * | |||||
Raymond W. Snowden | 32,931 | (9) | * | ||||
Tyson J. Wagler | 2,587 | * | |||||
Clay W. Ewing | 90,888 | * | |||||
Bradley M. Rust | 46,277 | (10) | * | ||||
Randall L. Braun | 16,013 | * | |||||
Keith A. Leinenbach | 38,792 | * | |||||
D. Neil Dauby | 16,939 | * | |||||
All directors and Executive Officers as a group (20 persons) | 2,116,562 | (11)(12) | 7.81 | % | |||
| Name | Common Shares Beneficially Owned1 | Percentage of Outstanding Shares | |||
| Zachary W. Bawel | 3,231 | * | |||
| Lonnie D. Collins | 73,805 | 2 | * | ||
| Christina M. Ernst | 55,786 | 3 | * | ||
| Marc D. Fine | 37,592 | * | |||
| Jason M. Kelly | 451 | * | |||
| U. Butch Klem | 320,989 | 4 | 1.29% | ||
| J. David Lett | 84,486 | 5 | * | ||
| Lee A. Mitchell | 86,600 | 6 | * | ||
| Chris A. Ramsey | 298,259 | 7 | 1.19% | ||
| M. Darren Root | 12,242 | * | |||
| Mark A. Schroeder | 158,089 | 8 | * | ||
| Thomas W. Seger | 525,234 | 9 | 2.10% | ||
| Raymond W. Snowden | 30,029 | 10 | * | ||
| Clay W. Ewing | 87,888 | * | |||
| Bradley M. Rust | 44,645 | 11 | * | ||
| Randall L. Braun | 14,729 | * | |||
| Keith A. Leinenbach | 37,370 | * | |||
| D. Neil Dauby | 16,219 | * | |||
| All directors and Executive Officers as a group (18 persons) | 1,975,653 | 12, 13 | 7.91% | ||
- *
- Represents less than one percent.
- (8)
- Includes
329,495371,955 held jointly by Mr. Seger and his spouse, 67,203 shares held in a Foundation of which Mr. Seger is administrator, and 125,826 shares owned by companies of which Mr. Seger is an officer.
Listed below are the only individuals and entities known by the Company to beneficially own more than 5% of the outstanding common shares of the Company as of March BlackRock, Inc.(1) Audit Fees.The Company has paid, or expects to pay, audit fees (including cost reimbursements) to Crowe LLP Audit-Related Fees.The Company has paid, or expects to pay, fees (including cost reimbursements) to Crowe for audit-related services rendered during 2019 of $19,500 and during 2018 of Tax Fees. The Company has paid, or expects to pay, fees (including cost reimbursements) to Crowe for tax services rendered during 2019 of $106,505 and during 2018 of Pre-Approval by Audit Committee of Principal Accountant Our Board adopted an amended and restated charter for the Audit Committee in 2013 and reviewed and confirmed the The Audit Committee is currently comprised of Management is responsible for the In this context, the Audit Committee has met and held discussions with management and with Crowe, the independent registered public accounting firm for the Company, with respect to the The independent registered public accounting firm also provided to the Audit Committee the written disclosures required by Public Company Accounting Oversight Board (PCAOB) Rule 3520, and the Audit Committee discussed with the independent registered public accounting firm that Based upon the discussions and reviews referred to above, the Audit Committee has recommended to our Board that the consolidated financial statements referred to above be included in the SUBMITTED BY THE MEMBERS OF THE AUDIT COMMITTEE: The Compensation Discussion and Analysis Our Compensation/Human Resources Committee has the responsibility for establishing and reviewing our compensation philosophy objectives. The Committee also is charged with making recommendations to our Board regarding the compensation of the officers of the Company that are covered by Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, including the Executive Officers. In these roles, the Committee has sought to compensate our Executives Officers in a fair, reasonable, and competitive manner. In designing and implementing our compensation program for our Executive Officers, we primarily intend to: The The Company does not have employment agreements with the Executive Officers.As a result, the Committee has flexibility in recommending to the Board the annual compensation of the Executive Officers. We believe that not having employee agreements provides us with more flexibility and adaptability when making annual compensation decisions. It is the The Company has a Compensation Philosophy that provides guidance to the Committee when making decisions surrounding the compensation of the Executive Officers.Our philosophy generally targets near the market median (peer 50th percentile) for Executive Officer base salaries. We also place a strong emphasis on incentive compensation programs that provide an alignment between pay and performance. The Company believes in rewarding the Executive Officers with significant incentive compensation awards if Company performance is high versus peer (above The Company conducts triennial Compensation/Human Resources Committee did not implement any significant changes to our executive compensation programs as a result of the 2017 shareholder advisory vote. The Compensation/Human Resources Committee intends to continue to monitor the results of our triennial Since 2012, the Committee has engaged Blanchard Consulting Group Since 2012, the Committee has worked with BCG to determine and utilize a peer group of publicly traded banks which is evaluated annually and updated as needed. In As noted, the peer companies for During The ultimate decisions made by the Committee and management were a balance between internal views and strategy along with the outside perspective of our independent consultant. The Compensation/Human Resources Committee engages BCG The 2019 pay-for-performance peer analysis conducted by Based upon this review, the Compensation/Human Resources Committee concluded that the The Company continues to evaluate the alignment between compensation and performance for the The executive compensation program consists of three basic elements: The In In addition, we offer a 401(k) retirement plan and certain Executive Officers are also eligible for nonqualified deferred compensation plans. Messrs. Rust and Leinenbach are also each party to a supplemental executive retirement agreement with the Base Salary The Company attempts to provide the Executive Officers with a base salary that is market competitive with the salaries offered by other bank holding companies of comparable size in Indiana and the surrounding states. The Compensation Philosophy targets the median (50th percentile) of the competitive market for base salaries. The Committee determined the salary increases for the Executive Officers for Executive Management Incentive Plan For performance during Short-Term Cash Incentive Awards The Plan provides each officer with a During the first quarter of level, or for that portion of performance that exceeds the maximum level. Specifically, the opportunities (as a percentage By way of example, the scorecard of Mark A. Schroeder, Chairman and Chief Executive Officer of the Company (the The Board Cash incentive award criteria for services during Corporate Operating Results: Formula assessments of Judgmental/Individual Criteria: Formula and/or judgmental assessments of personal or area of responsibility performance during Total Short-term Cash Incentive Corporate Performance Scorecard Metrics Corporate Operating Measures (80% weighting) For the Company believes they are still appropriate measures of short-term performance per our business strategy. Therefore, for Income/revenue measures (applied to all Executive Officers): Fully-diluted earnings per common share growth Efficiency ratio Consolidated balance sheet measures (applied to all Executive Officers): Growth in core organic taxable loans Growth in core organic deposits and repurchase agreements Non-performing assets to total assets ratio Total Judgmental/Individual Measures (20% weighting) For Similar to prior years, the Committee established the annual target levels of achievement to be challenging yet reasonably attainable, with threshold awards set at expected levels of attainment, and maximum awards set at an extremely difficult level of attainment to achieve. This was assessed using a combination of budget, our historical performance, In the first quarter of Net income "trigger" Income/revenue measures: Fully-diluted earnings per common share growth Efficiency ratio Consolidated balance sheet measures: Growth in core organic taxable loans Growth in core organic deposits and repurchase agreements Non-performing assets to total assets ratio Discretionary Cash Awards Discretionary cash awards were made to the Executive Officers in Long-Term Incentive Awards The The LTI performance awards Scorecard threshold, target, and maximum award opportunity amounts for LTI Awards are established upon recommendation of the Committee based upon the Executive During the first quarter of By way of example, the scorecard of the CEO specified a target award of 50% of his base salary for LTI period ending December 31, Return on equity Return on assets Fully-diluted earnings per common share growth Total Similar to the short-term cash incentive awards, the Committee establishes target LTI criteria to be very challenging, but reasonably attainable, with threshold awards set at expected levels of attainment, and maximum awards set at an extremely difficult level of attainment. The LTI metrics and Executive Officer award opportunity levels are similar to those used in prior years. In In addition, the LTI Awards are further subject to a minimum net income trigger that is the same as the short-term cash incentive award trigger. If For purposes of the above, our peer group for 2019 is the group of publicly traded banks shown previously. For 2018 and 2017, the peer group used was the group of publicly traded banks disclosed in the applicable year's proxy disclosure. For more information on our LTI plan metrics, see the Company's Current Report on Form 8-K filed with the SEC on May 3, 2019. During the first quarter of Net income "trigger" Return on equity Return on assets Fully-diluted earnings per common share growth Overall long-term incentive performance As a result, the Board approved the grant of a combination of Restricted Stock Awards and long-term cash payments to the Executive Officers at Holders of the common stock issued as part of the Restricted Stock Award (which were issued effective March 15, The LTI Awards earned in As a matter of policy, we have implemented been extended to instances where the Executive Officers have engaged in intentional misconduct in the performance of their duties to the Company or otherwise violated the Our 2019 LTI Plan does not allow repricing or cash buybacks of We maintain a policy for securities transactions applicable to all officers, directors and employees of the Company which prohibits engaging in short sales, transactions in puts, calls or other derivative instruments, hedging transactions and other short-term or speculative transactions with respect to our stock at any time. As part of this prohibition on short-term transactions, any Common Shares purchased by a person subject to our insider trading policy must be held by the purchaser for a minimum of six months. In addition, our insider trading policy prohibits our Executive Officers and directors from trading during quarterly and special blackout periods. The Chief Executive Officer is expected to attain/maintain an investment position in our common shares equal to three times his or her base salary. Currently, we encourage, but do not require our other Executive Officers to attain/maintain a certain level of investment position. Currently, our CEO has met this requirement. Even if the Executive Officers have met these stock ownership expectations or recommendations, the Company requires that any common shares received by such Executive Officers in connection with any equity awards are subject to an additional one year holding period before any sale or transfer of the shares may take place, other than with respect to any shares withheld by the Company to satisfy a Additionally, we require ownership of our common stock by our non-employee directors, as described previously. Other 2019 LTI Plan Governance Features The Company desires to promote best practices by reinforcing the alignment between equity compensation arrangements with the interests of our shareholders. To this end, important governance features were incorporated into the 2019 LTI Plan, including, but not limited to the items below: German American Bancorp 401(k) Savings German American Bancorp Nonqualified Savings We make matching contributions under the Nonqualified Savings Plan according to following formula: In no event, however, may the aggregate employer matching contributions on behalf of any participant in any plan year, considering both the matching contribution under the Nonqualified Savings Plan and any employer matching contribution under the 401(k) Plan, exceed 4% of such As elected by the participant, each participant (or his or her beneficiary) will receive a lump sum distribution or series of installment distributions from the Nonqualified Savings Plan, beginning upon termination of employment, retirement or early Supplemental Executive Retirement Agreements.Mr. Rust is party to an Executive Supplemental Retirement Income Agreement with the "Cause" as described in the agreement. Except in cases of death or disability, the benefit will commence on the first day of the month following his 65th birthday. If he terminates employment prior to age 65 but after age 60, he may elect to commence benefits prior to age 65 but a reduction will be applied equal to 6% per year for each year in which benefits are commenced prior to age 65. Death benefits, including a $10,000 burial benefit, are payable to Mr. As part of the German American Deferred Director Compensation Plan.The Deferred Director Compensation Plan allowed members of the Board of Directors of the Detailed information regarding other compensation is provided in note As a result of rules adopted under the Dodd-Frank Act, the SEC requires us to disclose the CEO to median employee pay ratio. Specifically, the CEO pay ratio is determined by calculating: (i) the median of the annual total compensation of all employees other than the CEO; (ii) the annual total compensation of the CEO; and (iii) the ratio of these amounts. The purpose of the disclosure is to provide a measure of the equitability of pay within the organization. The Company believes, through its compensation philosophy, that our CEO pay ratio yields an equitable result. Table of Because our employee population has changed as a result of our acquisition of (i) Citizens First Corporation in July 2019, (ii) First Security, Inc. in October 2018, and Our CEO, Mr. Schroeder, had No member of the Compensation/Human Resources Committee was an officer or employee of the Company or any of its subsidiaries during The Compensation/Human Resources Committee has reviewed and discussed with management the above We believe that our compensatory plans or programs provide appropriate incentives for all of our employees, including but not limited to our employees engaged in marketing and selling particular types of banking, insurance, securities or other financial products or services, and our Executive Officers. We also believe that those plans and programs, considered individually and as a whole, neither encourage excessive or unnecessary risk that would adversely affect the long-term value or performance of our Company nor encourage employees to manipulate earnings in order to enhance the benefits payable under such plans or programs. We believe that our annually-reconstituted Management Incentive Plan, including that of our Executive Officers (described above under the heading Similarly, we believe that the compensation programs available to our employees generally, and in our investments and insurance areas in particular (such as permitted payments for referrals, account opening incentives, and insurance, mortgage loan, and brokerage commissions and other payments based on products and services sold or provided or business developed or produced) are appropriately aligned with our The following tabular and other information describes the compensation of our Chief Executive Officer, our Chief Financial Officer, and our four other Executive Officers employed at the end of The following table provides a summary of compensation for Mark A. Schroeder, Chairman and Chief Executive Officer Clay W. Ewing, President and Secretary Bradley M. Rust, Executive Vice President and Chief Financial Officer Randall L. Braun, Executive Vice President and Chief Development Officer Keith A. Leinenbach, Executive Vice President and Chief Credit Officer D. Neil Dauby, Executive Vice President and Chief Commercial Banking Officer report on Form 10-K. The cash portion of the LTI Award amounts has been reported as part of To be Paid/Vested on or before 12/5/2022 (grants related to 2019) Short-Term Cash ($)(a) Long-Term Cash ($)(b) Long-Term Stock ($)(b) Director Restricted Stock Award ($)(c) To be Paid/Vested on or before 12/5/2021 (grants related to 2018) Short-Term Cash ($)(a) Long-Term Cash ($)(b) Long-Term Stock ($)(b) Director Restricted Stock Award ($)(c) To be Paid/Vested on or before 12/5/2020 (grants related to 2017) Short-Term Cash ($)(a) Long-Term Cash ($)(b) Long-Term Stock ($)(b) Director Restricted Stock Award ($)(c) Mark A. Schroeder Clay W. Ewing Bradley M. Rust Randall L. Braun Keith A. Leinenbach D. Neil Dauby As noted above under the The following table provides additional information regarding grants of plan-based awards for the three-year performance period ending December 31, GRANTS OF PLAN-BASED AWARDS Mark A. Schroeder Clay W. Ewing Bradley M. Rust Randall L. Braun Keith A. Leinenbach D. Neil Dauby The following table provides information on stock relating to grants becoming vested in OPTION EXERCISES AND STOCK VESTED The following table includes information regarding the outstanding equity awards of our Executive Officers at December 31, As noted under supplemental retirement benefits (which, as defined benefits, are disclosed in the The following table provides information regarding nonqualified deferred contribution and earnings credits for Mark A. Schroeder(1) (2) Clay W. Ewing(4) Bradley M. Rust(4) Randall L. Braun(4) Keith A. Leinenbach(4) D. Neil Dauby(4) Mr. Rust is party to an Executive Supplemental Retirement Income Agreement that provides for a supplemental retirement benefit in the fixed amount Mr. Leinenbach is party to a Supplemental Executive Retirement Agreement with the The following table provides information regarding benefits and distributions under these pension benefit arrangements with respect to the Executive Officers. Mark A. Schroeder Clay W. Ewing Bradley M. Rust Randall L. Braun Keith A. Leinenbach D. Neil Dauby We are not party to any severance or other employment agreements with Executive Officers. In addition, we have not entered into any change in control agreements with any of the Executive Officers. The only potential termination/change in control benefits are as follows (determined as if the change in control occurred on December 31, The Company compensates its directors for their service to the Company and the For services of directors during the current annual period that commenced July 1, Members of the Board (other than the CEO) who serve on the board of directors (including any regional advisory board) of at least one of the subsidiaries receives additional compensation for his or her service to such subsidiaries in the form of director/advisory fees for meetings actually attended of (i) Members of the Board who attend sessions of the Board of the Company, or of the On December common stock of the Company (restricted as to transferability and vesting under the terms of the Board resolutions granting the awards) were issued to each of the In the case of We feel director equity grants are an important part of our director compensation program as they truly tie the directors to the shareholders they represent. Non-employee directors are expected to attain an investment position in shares of our common stock The table below shows all compensation paid during Zachary W. Bawel Christina M. Ernst Marc D. Fine Jason M. Kelly U. Butch Klem J. David Lett Lee A. Mitchell Chris A. Ramsey M. Darren Root Christina M. Ryan * Thomas W. Seger Jack W. Sheidler * Raymond W Snowden Tyson J. Wagler * Since January 1, The As required by the listing standards of relationships, in which any of our directors, Executive Officers or members of their immediate families have a direct or indirect material interest (as determined in accordance with the SEC rules) and involve an amount in excess of $120,000. Certain types of transactions are not reportable in our annual meeting proxy statements under the SEC related person transaction disclosure rules, however, and therefore do not require Audit Committee review, including: Neither our Board nor its Audit Committee has adopted any written statement of policies and procedures to be applied in reviewing any such related person transactions, other than the provision in the Audit Committee charter described above that defines the types of transactions requiring review and approval. The Audit Committee, however, in reviewing and approving any such related person transaction, would be bound to abide by the standards of loyalty and care established by the Indiana Business Corporation Law for directors of corporations (like the Company) that are incorporated under Indiana law. These standards require that the directors on the Audit Committee, based on the facts then known to them, discharge their duties as members of the Audit Committee in good faith; with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and in a manner that they reasonably believe to be in the best interests of the Company. PROPOSAL 2 On March 2, 2020, our Board, upon the recommendation of its Governance/Nominating Committee, authorized and approved, and recommended that the Company's shareholders approve, an amendment and restatement of the Company's Articles of Incorporation (the "Articles") in order to provide shareholders with the right to amend the Company's Bylaws. Specifically, our Board has proposed that Section 9.01 of the Articles should be amended to read as follows (with the changes contemplated by this proposal marked): Section 9.01.Bylaws. A copy of the Amended and Restated Articles of Incorporation of German American Bancorp, Inc. proposed Purchase Plan, reflecting the proposed changes above, is included as Appendix A to this Proxy Statement (the "Amended Articles"). This summary of the proposed amendment to the Articles is qualified in its entirety by reference to Appendix A. The proposed amendment to the Articles makes changes designed to grant shareholders an additional right that has not been provided for in the Indiana Business Corporation Law ("IBCL"), specifically, the right to amend the Company's Bylaws. The IBCL provides that, unless otherwise specified by the articles of incorporation, only a corporation's board of directors may amend or repeal the bylaws. Our Articles currently provide our Board with the exclusive power to make, alter, amend or repeal, or to waive the provisions of, our Bylaws. The Board's Governance/Nominating Committee regularly reviews and considers best practices in corporate governance and is committed to implementing practices that are advantageous to the Company and its shareholders. The ability of shareholders to amend bylaws is increasingly considered by some shareholders an important aspect of good corporate governance. As such, after careful consideration, the Board has concluded that amending the Articles to allow shareholders to amend the Bylaws will enhance the Company's corporate governance practices, while establishing appropriate limits on this ability, which provides the Company's management with the stability necessary to produce long-term shareholder value. In order to approve the Amended Articles, more votes must be cast in favor of this Proposal 2 than are cast against it at the Annual Meeting, provided a majority of the outstanding Common Shares is represented and entitled to vote at the Annual Meeting. Shares voted "for" the approval of the Amended Articles and shares represented by returned proxies that do not contain instructions to vote against the approval or to abstain from voting will be counted as shares cast for the approval of the Amended Articles. Abstentions and broker non-votes will not be treated as votes cast "for" or "against" approval of the Amended Articles but will be included for purposes of determining whether a quorum is present. If the shareholders approve the Amended Articles, then the Amended Articles will become effective on the date upon which they are approved for filing by the Indiana Secretary of State, after an initial review by the Indiana Department of Financial Institutions. If this proposal is not approved, the proposed amendment to our Articles will not be made and all existing provisions, including the default position under the IBCL reserving authority to amend our Bylaws solely to our Board, will remain in effect. We are asking our shareholders to approve the German American Bancorp, Inc. Amended and Restated 2019 Our Board has approved an amendment to the Prior Purchase Plan modifying the purchase price of common stock under such plan by eliminating the provision requiring the purchase price to be no less than eighty-five percent (85%) of the fair market value of a common share on the offering date. Specifically, the proposed amendment reflects a deletion of the last sentence of paragraph F of Section VI of the Prior Purchase Agreement, as shown below: F. Determination of Purchase Price. The Committee shall determine the purchase price of a Common Share for purposes of each offering, which price shall be an amount in the range from ninety-five percent (95%) and one hundred percent (100%) of the Fair Market Value of a Common Share on the Purchase Date. If the Committee for any reason should fail to determine the price for any offering within the percentage range specified by the The The Prior Purchase Plan and the Purchase Plan are each intended to qualify as an "employee stock purchase plan" under Internal Revenue Code Section 423. Section 423, among other things, requires that the purchase price under the plans not be less than the lesser of (a) an amount equal to 85 percent (85%) of the fair market value of the stock at the time the right to purchase the stock is granted, and (b) an amount not less than 85 percent (85%) of the fair market value of the stock at the time the stock is purchased. Because the purchase price under the Prior Purchase Plan cannot be less than ninety-five percent (95%) of the fair market value on the purchase date, the Prior Purchase Plan will be at all times in compliance with the 85% limitation set forth in the Code. However, the effect of the provision proposed to be deleted is that, in the event of a significant reduction in the Company's stock price between the date an offering period commences and the date of purchase (i.e., a reduction of over approximately 10.53%), participants would be required to purchase shares at a loss on the purchase date. While the inclusion of the proposed deleted sentence was intended to assure compliance with Section 423 (which is not needed for such purpose), it instead has an unintended negative impact on participants. If approved by our shareholders, the Purchase Plan will go into effect for the offering period commencing on July 1, 2020 and ending on September 30, 2020. The Board recommends approval of the Purchase Plan. A copy of the proposed Purchase Plan is included as Appendix B to this Proxy Statement. The following summary of the key features of the Purchase Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Plan, which is set forth in Appendix Effective Date: Tax Code Qualification: The Purchase Plan is intended to qualify as an Purchase Price Limitation: The purchase price will be determined by the Compensation/Human Resources Committee in an amount that is not less than 95% of the fair market value of the Common Shares on the last trading day of the offering period (the option exercise date). Offering Periods and Limitations: The Purchase Plan provides for a series of quarterly offering periods. While the Compensation/Human Resources Committee has the authority to change the duration and/or frequency of offering periods, in no event may any option granted under the Purchase Plan be exercisable more than twenty-seven (27) months from its grant date. Shares Authorized: 750,000 shares Annual Investment Limitation: No participant will be allowed to purchase more than $25,000 in fair market value of the Company common stock as of the grant date under the Purchase Plan (together with purchases under any other similar stock purchase plans maintained by the Company or its affiliates) for any one calendar year. Plan Termination: September 30, 2029, unless terminated earlier by the Board. Options to Purchase Shares in Purchase Plan. If the Purchase Plan had been in effect as of March Purchase of The following is a brief summary of federal income tax consequences to participants and the Company relative to the Purchase Plan. The summary is not intended to be exhaustive and does not discuss the income tax laws of a state, local or other jurisdiction which may be applicable to a participant. The consequences of transactions depend on a variety of factors, including a The Purchase Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). Amounts withheld for the purchase of stock under the Purchase Plan will be taxed as if the amounts were paid directly to the participants. However, neither the grant nor the exercise of purchase rights on behalf of a participant under the Purchase Plan will cause any federal income tax consequences to the participant or the Company. Taxable income is not recognized until the participant sells or otherwise disposes of the shares acquired under the Purchase Plan. If the participant holds the shares purchased pursuant to the Plan for more than one year after the exercise date and two years after the grant date (the The Purchase Plan will not become effective until directors as a group and the Mark A. Schroeder, Chairman and Chief Executive Officer Clay W. Ewing, President and Secretary Bradley M. Rust, Executive Vice President and Chief Financial Officer Randall L. Braun, Executive Vice President and Chief Development Officer Keith A. Leinenbach, Executive Vice President and Chief Credit Officer D. Neil Dauby, Executive Vice President and Chief Commercial Banking Officer Executive Group (6 persons) Non-Executive Director Group Non-Executive Officer Employee Group Note: The above determination of benefits reflects the compensation deductions relating to options exercised during The following table presents information as of December 31, Equity compensation plans approved by shareholders Equity compensation plans not approved by shareholders Total exercises in January 2020 with shares purchased on the open market. The issuance of such reacquired shares will result in a 5,815 share reduction in the amount remaining available for future issuance. The Purchase Plan will be adopted if it is approved by a majority of the votes cast at the Annual Meeting, provided a majority of the outstanding Common Shares is represented and entitled to vote at the Annual Meeting. Shares voted If the Purchase Plan is not approved by our shareholders, it will not become effective, the Prior Purchase Plan will continue in effect, and we may continue to offer employees the right to purchase shares under the Prior Purchase Plan, subject to its terms, conditions and limitations thereunder. Our Board recommends that you vote FOR the proposal to approve PROPOSAL 4 Our Board is committed to excellence in governance and is aware of the significant interest in executive compensation matters by investors and the general public. The Company has designed its executive compensation program to attract, motivate, reward and retain the senior management talent required to achieve our corporate objectives and increase shareholder value. We believe that our compensation policies and procedures are centered on pay-for-performance principles and are strongly aligned with the long-term interests of our shareholders. See "EXECUTIVE COMPENSATION—Compensation Discussion and Analysis" above. The Securities and Exchange Commission has adopted requirements commonly referred to as the "Say-on-Pay" rules. As required by those rules, the Company is presenting the following proposal, which "RESOLVED, that the shareholders approve the compensation of the The Our Board recommends that you vote In accordance with its charter, the Audit Committee of our Board has selected the firm of Crowe LLP Before selecting Crowe, the Audit Committee carefully considered that Crowe served as independent registered public accounting firm for the Company with respect to the audits of the Our Board recommends that shareholders vote The affirmative vote of a majority of the votes cast by holders of common shares who are present in person or by proxy at a meeting at which a quorum is present is required (on a non-binding advisory basis) to approve the appointment of Crowe. Our Board recommends that you vote FOR the proposal to approve Crowe as the Company's registered independent public accounting firm for 2020 (Proposal 5 on the proxy card). Section 16(a) of the Securities Exchange Act of 1934 requires the A shareholder desiring to submit a proposal for inclusion in the If notice of any other shareholder proposal intended to be presented at the Any proposals or notices should be mailed to the Chairman of the Governance/Nominating Committee of the Board of Directors, in care of the Corporate Secretary, at German American Bancorp, Inc., 711 Main Street, P. O. Box 810, Jasper, Indiana 47547-0810, by certified mail, return-receipt requested. AMENDED AND RESTATED ARTICLES OF INCORPORATION OF The name of the Corporation is German American Bancorp, Inc. Section 2.01Purposes of the Corporation. The purposes for which the Corporation is formed are to transact any or all lawful business permitted by applicable law and for which corporations may now or hereafter be incorporated under the Corporation Law. Section 2.02Powers of the Corporation. The Corporation shall have (a) all powers now or hereafter authorized by or vested in corporations pursuant to the provisions of the Corporation Law, (b) all powers now or hereafter vested in corporations by common law or any other statute or act, and (c) all powers authorized by or vested in the Corporation by the provisions of these Articles of Incorporation or by the provisions of its Bylaws as from time to time in effect. The period during which the Corporation shall continue is perpetual. The street address of the Corporation's registered office is 711 Main Street, P.O. Box 810, Jasper, Indiana 47546. The total number of shares of capital stock the Corporation has authority to issue shall be 45,750,000 shares consisting of 45,000,000 common shares (the "Common Shares") and 750,000 preferred shares (the "Preferred Shares"). The Corporation's shares shall have no par value. Solely for the purpose of any statute or regulation imposing any tax or fee based upon the capitalization of the Corporation, however, all of the shares shall be deemed to have a stated value of $1.00 per share. Section 6.01.General Terms of All Shares. The Corporation shall have the power to acquire (by purchase, redemption, or otherwise), hold, own, pledge, sell, transfer, assign, reissue, cancel, or otherwise dispose of the shares of the Corporation in the manner and to the extent now or hereafter permitted by the laws of the State of Indiana. The power to purchase, redeem, or otherwise acquire the Corporation's own shares, directly or indirectly, may be exercised without pro rata treatment of the owners or holders of any class or series of shares. The Corporation may not purchase, redeem or otherwise acquire the Corporation's own shares if, after giving effect thereto, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation's total assets would be less than its total liabilities (without regard to any amounts that would be needed, if the Corporation were to be dissolved at the time of the purchase, redemption, or other acquisition, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those of the holders of the shares of the Corporation being purchased, redeemed, or otherwise acquired, unless otherwise expressly provided with respect to a series of Preferred Shares in the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of this Article VI describing the terms of such series). Shares of the Corporation purchased, redeemed, or otherwise acquired by it shall constitute authorized but unissued shares, unless the Board of Directors shall at any time adopt a resolution providing that such shares constitute authorized and issued but not outstanding shares. The Board of Directors of the Corporation may dispose of, issue, and sell shares in accordance with, and in such amounts as may be permitted by, the laws of the State of Indiana and the provisions of these Articles of Incorporation and for such consideration, at such price or prices, at such time or times and upon such terms and conditions (including the privilege of selectively repurchasing the same) as the Board of Directors of the Corporation shall determine, without the authorization or approval by any shareholders of the Corporation. Shares may be disposed of, issued, and sold to such persons, firms, or corporations as the Board of Directors may determine, without any preemptive or other right on the part of the owners or holders of other shares of the Corporation of any class or kind to acquire such shares by reason of their ownership of such other shares. The Corporation shall have the power to declare and pay dividends or other distributions upon the issued and outstanding shares of the Corporation, subject to the limitation that a dividend or other distribution may not be made if, after giving it effect, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation's total assets would be less than its total liabilities (without regard to any amounts that would be needed, if the Corporation were to be dissolved at the time of the dividend or other distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those of the holders of shares receiving the dividend or other distribution, unless otherwise expressly provided with respect to a series of Preferred Shares in the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of this Article VI describing the terms of such series). The Corporation shall have the power to issue shares of one class or series as a share dividend or other distribution in respect of that class or series or one or more other classes or series, except as may be otherwise provided with respect to a series of Preferred Shares in the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of this Article VI describing the terms of such series. Section 6.02.Terms of Common Shares. The Common Shares shall be equal in every respect insofar as their relationship to the Corporation is concerned, but such equality of rights shall not imply equality of treatment as to redemption or other acquisition of shares by the Corporation. Subject to the rights of the holders of any issued and outstanding Preferred Shares under this Article VI, the holders of Common Shares shall be entitled to share ratably in such dividends or other distributions (other than purchases, redemptions, or other acquisitions of Common Shares of the Corporation), if any, as are declared and paid from time to time on the Common Shares at the discretion of the Board of Directors. In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, after payment shall have been made to the holders of the Preferred Shares of the full amount to which they shall be entitled under this Article VI, the holders of Common Shares shall be entitled, to the exclusion of the holders of the Preferred Shares of any and all series, to share, ratably according to the number of Common Shares held by them, in all remaining assets of the Corporation available for distribution to its shareholders. Section 6.03.Terms of Preferred Shares. (a) Preferred Shares may be issued from time to time in one or more series, each such series to have such distinctive designation and such preferences, limitations, and relative voting and other rights as shall be set forth in these Articles of Incorporation. Subject to the requirements of the Corporation Law and subject to all other provisions of these Articles of Incorporation, the Board of Directors of the Corporation may create one or more series of Preferred Shares and may determine the preferences, limitations, and relative voting and other rights of one or more series of Preferred Shares before the issuance of any shares of that series by the adoption of an amendment to these Articles of Incorporation that specifies the terms of that series of Preferred Shares. All shares of a series of Preferred Shares must have preferences, limitations, and relative voting and other rights identical to those of other shares of the same series. No series of Preferred Shares need have preferences, limitations, or relative voting or other rights identical with those of any other series of Preferred Shares. Before issuing any shares of a series of Preferred Shares, the Board of Directors shall adopt an amendment to these Articles of Incorporation, which shall be effective without any shareholder approval or other action, that fixes and sets forth the distinctive designation of such series; the number of shares that shall constitute such series, which number may be increased or decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of Directors; and the preferences, limitations, and relative voting and other rights of the series. Authority is hereby expressly vested in the Board of Directors, by such amendment, to fix all of the preferences or rights, and any qualifications, limitations, or restrictions of such preferences or rights, of such series to the full extent permitted by the Corporation Law; provided, however, that no such preferences, rights, qualifications, limitations, or restrictions shall be in conflict with these Articles of Incorporation or any amendment hereof. (b) Preferred Shares of any series that have been redeemed (whether through the operation of a sinking fund or otherwise) or purchased by the Corporation, or that, if convertible, have been converted into shares of the Corporation of any other class or series, may be reissued as a part of such series or of any other series of Preferred Shares, subject to such limitations (if any) as may be fixed by the Board of Directors with respect to such series of Preferred Shares in accordance with Section 6.03(a) of this Article VI. Section 7.01.Common Shares. Except as otherwise provided by the Corporation Law or by the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of Article VI hereof describing the Preferred Shares or a series thereof, and subject to such shareholder disclosure and recognition procedures (which may include sanctions for noncompliance therewith to the fullest extent permitted by the Corporation Law) as the Corporation may by action of the Board of Directors establish, the Common Shares have unlimited voting rights. At every meeting of the shareholders of the Corporation every holder of Common Shares shall be entitled to one vote in person or by proxy for each Common Share standing in such holder's name on the share transfer records of the Corporation. Section 7.02.Preferred Shares. Except as required by the Corporation Law or by the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of Article VI hereof describing the terms of Preferred Shares or a series thereof, the holders of Preferred Shares shall have no voting rights or powers. Preferred Shares shall, when validly issued by the Corporation, entitle the record holder thereof to vote on such matters, but only on such matters, as the holders thereof are entitled to vote under the Corporation Law or under these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of Article VI hereof describing the terms of Preferred Shares or a series thereof (which provisions may provide for special, conditional, limited, or unlimited voting rights, including multiple or fractional votes per share, or for no right to vote, except to the extent required by the Corporation Law) and subject to such shareholder disclosure and recognition procedures (which may include sanctions for noncompliance therewith to the fullest extent permitted by the Corporation Law) as the Corporation may by action of the Board of Directors establish. Section 8.01.Number. The number of Directors shall be fixed by, or fixed in accordance with, the Bylaws. Whenever there are nine or more Directors, the Bylaws may also provide for staggering the terms of the members of the Board of Directors by dividing the total number of Directors into two or three groups (with each group containing one-half or one-third of the total, as near as may be) whose terms of office expire at different times. Section 8.02.Election of Directors by Holders of Preferred Shares. The holders of one or more series of Preferred Shares may be entitled to elect all or a specified number of Directors, but only to the extent and subject to limitations as may be set forth in the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of Article VI hereof describing the terms of the series of Preferred Shares. Section 8.03.Vacancies. Vacancies occurring in the Board of Directors shall be filled in the manner provided in the Bylaws or, if the Bylaws do not provide for the filling of vacancies, in the manner provided by the Corporation Law. Section 8.04.Removal of Directors. Any or all of the members of the Board of Directors may be removed, with or without cause, at a meeting of the shareholders called expressly for that purpose, by the affirmative vote of the holders of at least 80 percent of the outstanding shares then entitled to vote at an election of Directors. However, a Director elected by the holders of a series of Preferred Shares as authorized by Section 8.02 of this Article VIII may be removed only by the affirmative vote of the holders of at least 80 percent of the outstanding shares of that series then entitled to vote at an election of Directors. Directors may not be removed by the Board of Directors. Section 8.05.Liability of Directors. A Director's responsibility to the Corporation shall be limited to discharging his duties as a Director, including his duties as a member of any committee of the Board of Directors upon which he may serve, in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the Director reasonably believes to be in the best interests of the Corporation, all based on the facts then known to the Director. In discharging his duties, a Director is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, if prepared or presented by: (a) one or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent in the matters presented (b) Legal counsel, public accountants, or other persons as to matters the Director reasonably believes are within such person's professional or expert competence; or (c) A committee of the Board of which the Director is not a member if the Director reasonably believes the committee merits confidence; but a Director is not acting in good faith if the Director has knowledge concerning the matter in question that makes reliance otherwise permitted by this Section 8.05 unwarranted. A Director may, in considering the best interests of the Corporation, consider the effects of any action on shareholders, employees, suppliers, and customers of the Corporation, and communities in which offices or other facilities of the Corporation are located, and any other factors the Director considers pertinent. Directors shall be immune from personal liability for any action taken as a Director, or any failure to take any action, to the fullest extent permitted by the applicable provisions of the Corporation Law from time to time in effect and by general principles of corporate law. Section 9.01.Bylaws. Except as otherwise expressly provided in these Articles of Incorporation or by the Corporation Law, the Bylaws of the Corporation may be altered, amended or repealed by either (a) the Board of Directors by the affirmative vote of a majority of the number of Directors then in office, or (b) the affirmative vote, at a meeting of the shareholders of the Corporation, by the holders of at least a majority of the outstanding shares of all classes of Voting Shares of the Corporation (considered for purposes of this Section 9.01 as a single class and as defined in Article X); provided, however, that no Bylaw may be adopted that is inconsistent with the Corporation Law. All provisions for the regulation of the business and management of the affairs of the Corporation not stated in these Articles of Incorporation shall be stated in the Bylaws. The Board of Directors may also adopt Emergency Bylaws of the Corporation and shall have the exclusive power (except as may otherwise be provided therein) to make, alter, amend, or repeal, or to waive provisions of, the Emergency Bylaws by the affirmative vote of a majority of the entire number of Directors at the time. Section 9.02.Amendment or Repeal. (a) Any amendment, change or repeal of Section 8.04 of Article VIII, Sections 9.02 or 9.03 of Article IX, or Article X of these Articles of Incorporation, or any other amendment of these Articles of Incorporation which would have the effect of modifying or permitting circumvention of those provisions, shall require the affirmative vote, at a meeting of shareholders of the Corporation, by the holders of at least 80 percent of the outstanding shares of all classes of Voting Shares of the Corporation (considered for purposes of this Section 9.02(a) as a single class and as defined in Article X) and, if the amendment, change or repeal shall be proposed by or on behalf of a Related Person (as that term is defined in Article X), by an Independent Majority of Shareholders (as defined in Article X); provided, however, that this Section 9.02(a) shall not apply to, and such vote shall not be required for, any such amendment, change or repeal recommended to shareholders by the favorable vote of not less than two-thirds of the Board of Directors and, if the amendment, change or repeal shall be proposed by or on behalf of a Related Person, by the favorable vote of not less than two-thirds of the Continuing Directors (as defined in Article X and computed with reference to the Related Person who shall propose such amendment, change or repeal), and any such amendment, change or repeal so recommended shall require only the shareholder vote required under the applicable provisions of the Corporation Law. (b) Except as otherwise expressly provided in Section 9.02(a) above, the Corporation shall be deemed, for all purposes, to have reserved the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation to the extent and in the manner now or hereafter permitted or prescribed by statute, and all rights herein conferred upon shareholders are granted subject to such reservation. Section 9.03.Removal of Chairman of the Board and President. The Chairman of the Board and the President, and each of them, may be removed from office at any time, with or without cause, at a meeting of the Board of Directors called expressly for that purpose, but only by the affirmative vote of two-thirds of all other members of the entire Board of Directors. Any vacancy created by the removal of the chairman or the President may be filled only by the affirmative vote of two-thirds of all remaining members of the Board. Section 10.01.Supermajority Vote. Except as provided in Sections 10.02 and 10.03 of this Article X, neither the Corporation nor any of its Subsidiaries shall become party to any Business Combination with a Related Person without the prior affirmative vote at a meeting of the Corporation's shareholders: (a) By the holders of not less than 80 percent of the outstanding shares of all classes of Voting Shares of the Corporation considered for purposes of this Article X as a single class, and (b) By an Independent Majority of Shareholders. Such favorable votes shall be in addition to any shareholder vote that would be required without reference to this Section 10.01 and shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified by law or in other Articles of these Articles of Incorporation or the Bylaws of the Corporation or otherwise. Section 10.02.Reduced Supermajority Vote for Fair Pricing. The provisions of Section 10.01 shall apply to a Business Combination, except that the percentage vote required by Section 10.01(a) shall be reduced from not less than 80 percent to not less than two-thirds, if all of the conditions set forth in subsections (a) through (d) of this Section 10.02 are satisfied. (a) The fair market value of the property, securities or other consideration to be received per share by holders of each class or series of capital shares of the Corporation in the Business Combination is not less, as of the date of the consummation of the Business Combination (the "Consummation Date"), than the higher of the following: (i) the highest per share price (with appropriate adjustments for recapitalizations and for share splits, share dividends and like distributions) including brokerage commissions and solicitation fees paid by the Related Person in acquiring any of its holdings of such class or series of capital shares within the two-year period immediately prior to the first public announcement of the proposed Business Combination ("Announcement Date") or in the transaction in which it became a Related Person, whichever is higher, plus interest compounded annually, from the later of the date that the Related Person became a Related Person (the "Determination Date"), or the date two years before the consummation Date, through the consummation Date, at the rate publicly announced as the "prime rate" of interest of Citibank, N.A. (or of such other major bank headquartered in New York as may be selected by a majority of the Continuing Directors) from time to time in effect, less the aggregate amount of any cash dividends paid and the fair market value of any dividends paid in other than cash on each such share from the date from which interest accrues under the preceding clause through the Consummation Date up to but not exceeding the amount of interest so payable per share; or (ii) if such class or series is then traded on an exchange or is the subject of regularly published quotations from three or more broker/dealers who make a market in such class or series for their own accounts, the fair market value per share of such class or series on the Announcement Date, as determined by the highest closing sales price on such exchange or the highest closing bid quotation with respect to such shares during the 30-day period immediately preceding the Announcement Date. In the event of a Business Combination upon consummation of which the Corporation would be the surviving corporation or company or would continue to exist (unless it is provided, contemplated or intended that as part of such Business Combination or within one year after consummation thereof a plan of liquidation or dissolution of the Corporation will be effected), the term "other consideration to be received" shall include (without limitation) Common Shares and/or the shares of any other class of shares retained by shareholders of the Corporation other than Related Persons who are parties to such Business Combination; (b) The consideration to be received in such Business Combination by holders of each class or series of capital shares other than the Related Person involved shall, except to the extent that a shareholder agrees otherwise as to all or part of the shares which he or she owns, be in the same form and of the same kind as the consideration paid by the Related Person in acquiring the majority of the capital shares of such class or Series already Beneficially owned by it within the two-year period ending on the Determination Date; (c) After such Related Person became a Related Person and prior to the consummation of such Business Combination: (i) such Related Person shall have taken steps to insure that the Board of Directors of the Corporation included at all times representation by Continuing Directors proportionate to the ratio that the number of Voting Shares of the Corporation from time to time not Beneficially Owned by the Related Person bears to all Voting Shares of the Corporation outstanding at the time in question (with a Continuing Director to occupy any resulting fractional position among the Directors); (ii) such Related Person shall not have acquired from the Corporation, directly or indirectly, any shares of the Corporation (except upon conversion of convertible securities acquired by it prior to becoming a Related Person or as a result of a pro rata share dividend, share split or division of shares or in a transaction that satisfied all applicable requirements of this Article X); (iii) such Related Person shall not have acquired any additional Voting Shares of the Corporation or securities convertible into or exchangeable for Voting Shares except as a part of the transaction which resulted in such Related Person's becoming a Related Person; and (iv) such Related Person shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance or tax credits provided by the Corporation or any Subsidiary, or made any major change in the Corporation's business or equity capital structure or entered into any contract, arrangement or understanding with the Corporation except any such change, contract, arrangement or understanding as may have been approved by the favorable vote of not less than a majority of the continuing Directors of the Corporation; and (d) A proxy statement complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission thereunder, as then in force for corporations subject to the requirements of Section 14 of such Act (even if the Corporation is not otherwise subject to Section 14 of such Act), shall have been mailed to all holders of Voting Shares for the purpose of soliciting shareholder approval of such Business Combination. Such proxy statement shall contain on the face page thereof, in a prominent place, any recommendations as to the advisability (or inadvisability) of the Business Combination which the Continuing Directors, or any of them, may have furnished in writing and, if deemed advisable by a majority of the Continuing Directors, a fair summary of an opinion of a reputable investment banking firm addressed to the Corporation as to the fairness (or lack of fairness of the terms of such Business Combination from the point of view of the holders of Voting Shares other than any Related Person (such investment banking firm to be selected by a majority of the Continuing Directors, to be furnished with all information it reasonably requests, and to be paid a reasonable fee for its services upon receipt by the Corporation of such opinion). Section 10.03.Director Approval Exception. The provisions of Sections 10.01 and 10.02 of this Article X shall not apply to, and such votes shall not be required, if: (a) The Continuing Directors of the Corporation by a two-thirds vote (i) have expressly approved a memorandum of understanding with the Related Person with respect to the Business Combination prior to the time the Related Person became a Related Person, or (ii) have otherwise approved the Business Combination (this provision is incapable of satisfaction unless there is at least one Continuing Director); or (b) The Business Combination is solely between the Corporation and another corporation, 100 percent of the Voting Shares of which are owned directly or indirectly by the Corporation. Section 10.04.Definitions. For the purpose of this Article X: (a) A "Business Combination" means: (i) the sale, exchange, lease, transfer or other disposition to or with a Related Person or any Affiliate or Associate of such Related Person by the Corporation or any of its Subsidiaries (in a single transaction or a series of Related Transactions) of all or substantially all, or any substantial Part, of its or their assets or businesses (including, without limitation, any securities issued by a Subsidiary); (ii) The purchase, exchange, lease or other acquisition by the Corporation or any of its Subsidiaries (in a single transaction or a series of Related Transactions) of all or substantially all, or any Substantial Part, of the assets or business of a Related Person or any Affiliate or Associate of such Related Person; (iii) Any merger or consolidation of the Corporation or any Subsidiary thereof into or with a Related Person or any Affiliate or Associate of such Related Person or into or with another Person which, after such merger or consolidation, would be an Affiliate or an Associate of a Related Person, in each case irrespective of which Person is the surviving entity in such merger or consolidation; (iv) Any reclassification of securities, recapitalization or other transaction (other than a redemption in accordance with the terms of the security redeemed) which has the effect, directly or indirectly, of increasing the proportionate amount of Voting Shares of the Corporation or any Subsidiary thereof which are Beneficially Owned by a Related Person, or any partial or complete liquidation, spin-off, split-off or split-up of the Corporation or any Subsidiary thereof; provided, however, that this Section 10.04(a)(iv) shall not relate to any transaction of the types specified in this Article X that has been approved by a majority of the Continuing Directors; or (v) The acquisition upon the issuance thereof of Beneficial Ownership by a Related Person of Voting Shares or securities convertible into Voting Shares or any voting securities or securities convertible into voting securities of any Subsidiary of the Corporation, or the acquisition upon the issuance thereof of Beneficial Ownership by a Related Person of any rights, warrants or options to acquire any of the foregoing or any combination of the foregoing Voting Shares or voting securities of the Subsidiary. (b) A "Series of Related Transactions" shall be deemed to include not only a series of transactions with the same Related Person but also a series of separate transactions with a Related Person or any Affiliate or Associate of such Related Person. (c) A "Person" shall mean any individual, firm, corporation or other entity and any partnership, syndicate or other group. (d) "Related Person" shall mean any Person (other than the Corporation or any of the Corporation's Subsidiaries) who or that: (i) is the Beneficial Owner, directly or indirectly, of more than ten percent of the voting power of the outstanding Voting Shares; (ii) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the Beneficial Owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of Voting Shares; or (iii) is an assignee of or has otherwise succeeded to any Voting Shares which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Related Person, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. A Related Person shall be deemed to have acquired a share of the Corporation at the time when such Related Person became the Beneficial Owner thereof. For the purposes of determining whether a Person is the Beneficial Owner of ten percent or more of the voting power of the then outstanding Voting Shares, the outstanding Voting Shares shall be deemed to include any Voting Shares that may be issuable to such Person pursuant to a right to acquire such Voting Shares and that is therefore deemed to be Beneficially Owned by such Person pursuant to Section 10.04(e)(ii)(a). A Person who is a Related Person at (i) the time any definitive agreement relating to a Business Combination is entered into, (ii) the record date for the determination of shareholders entitled to notice of and to vote on a Business Combination, or (iii) the time immediately prior to the consummation of a Business Combination, shall be deemed a Related Person. (e) A Person shall be a "Beneficial Owner" of any Voting Shares: (i) which such Person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or (ii) which such Person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; or (iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any Voting Shares. (f) An "Affiliate" of, or a person Affiliated with, a specific Person, means a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Person specified. (g) The term "Associate" used to indicate a relationship with any Person, means (i) any corporation or organization (other than this Corporation or a majority-owned Subsidiary of this Corporation) of which such Person is an officer or partner or is, directly or indirectly, the Beneficial Owner of five percent or more of any class of equity securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person, or (iv) any investment company registered under the Investment Company Act of 1940, for which such Person or any Affiliate of such Person serves as investment advisor. (h) "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Related Person set forth in paragraph (d) of this Section 10.04, the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (i) "Continuing Director" means any member of the Board of Directors of the Corporation (the "Board"), other than the Related Person who proposes the Business Combination in question and his Affiliates and Associates, who (i) is a member of the Board at the time this Article X first became effective or (ii) was a member of the Board prior to the time that the Related Person who proposes the Business Combination in question became a Related Person or (iii) is a successor of a Continuing Director who was recommended to succeed the Continuing Director by a majority of Continuing Directors then on the Board. (j) "Independent Majority of Shareholders" shall mean the holders of a majority of the outstanding Voting Shares that are not Beneficially Owned or controlled, directly or indirectly, by the Related Person who proposes the Business Combination in question. (k) "Voting Shares" shall mean all outstanding capital shares of the Corporation or another corporation entitled to vote generally in the election of Directors, and each reference to a proportion of shares of Voting Shares shall refer to such proportion of the votes entitled to be cast by such shares. (l) "Substantial Part" means properties and assets involved in any single transaction or a series of Related Transactions having an aggregate fair market value of more than ten percent of the total consolidated assets of the Person in question as determined immediately prior to such transaction or series of Related Transactions. Section 10.05.Director Determinations. A majority of the Continuing Directors shall have the power to determine for the purposes of this Article X, on the bases of information known to them: (i) the number of Voting Shares of which any Person is the Beneficial Owner, (ii) whether a Person is an Affiliate or Associate of another, (iii) whether a Person has an agreement, arrangement or understanding with another as to the matters referred to in the definition of "Beneficial Owner," (iv) whether the assets subject to any Business Combination constitute a Substantial Part, (v) whether two or more transactions constitute a series of Related Transactions, and (vi) such other matters with respect to which a determination is required under this Article X. In connection with the exercise of its judgment in determining what is in the best interests of the Corporation and its shareholders when evaluating a business combination or a proposal by another Person or Persons to make a business combination or a tender or exchange offer (regardless of whether such proposal is otherwise subject to this Article X), the Board of Directors of the Corporation shall, in addition to considering the adequacy of the consideration to be paid in connection with any such transaction, consider all of the following factors and any other factors that it deems relevant: (i) the social and economic effects of the transaction on the Corporation and its Subsidiaries, employees, depositors, loan and other customers, creditors and other elements of the communities in which the Corporation and its Subsidiaries operate or are located; (ii) the business and financial condition and earnings prospects of the acquiring Person or Persons, including, but not limited to, debt service and other existing or likely financial obligations of the acquiring Person or Persons and their Affiliates and Associates, and the possible effect of such conditions upon the Corporation and its Subsidiaries and the other elements of the communities in which the Corporation and its Subsidiaries operate or are located; and (iii) the competence, experience, and integrity of the acquiring Person or Persons and its or their management and Affiliates and Associates. Section 10.06.Fiduciary Obligations Unaffected. Nothing in this Article X shall be construed to relieve any Related Person from any fiduciary duty imposed by law. GERMAN AMERICAN BANCORP, INC. I. INTRODUCTION The German American Bancorp, Inc. Amended and Restated 2019 Employee Stock Purchase Plan (the The Plan may continue until all the stock allocated to it has been purchased or until September 30, 2029, whichever is earlier. The Board may terminate the Plan at any time, or make such amendment of the Plan as it may deem advisable, but no amendment may be made without the approval of the The Plan is not qualified under Section 401(a) of the Code and is not subject to any provisions of the Employee Retirement Income Security Act of 1974 (ERISA). It is the II. ADMINISTRATION The Plan shall be administered by a committee of the Board of Directors which shall consist of two or more members of the Board, none of whom is eligible to participate in the Plan and all of whom are III. STOCK SUBJECT TO THE PLAN An aggregate of 750,000 shares of common stock, without par value, of the Company (each a Plan may be obtained by the Company by authorized purchases on the open market or from private sources, or by issuing authorized but unissued Common Shares. In the event of any change in the Common Shares through recapitalization, merger, consolidation, stock dividend or split, combination or exchanges of shares or otherwise, the Committee shall make such equitable adjustments in the Plan and the then outstanding offering as it deems necessary and appropriate including, but not limited to, changing the number of Common Shares reserved under the Plan and the price of the current offering. If the number of Common Shares that participating employees become IV. ELIGIBILITY All employees of the Company and its subsidiaries will be eligible to participate in the Plan. No employee shall be eligible to participate in an offering unless he or she has been continuously employed by the Company or subsidiary for at least six months as of the first day of such offering. No employee shall be eligible to participate in the Plan if, immediately after an option is granted under the Plan, the employee owns more than five percent (5%) of the total combined voting power or value of all classes of shares of the Company or of any parent or subsidiary of the Company. V. OFFERINGS, PARTICIPATION AND DEDUCTIONS A.Offerings and Offering Periods. The Plan shall be implemented by a series of consecutive three-month offering periods, with each new offering period commencing on the first day of each calendar quarter (beginning October 1, 2019), or at such other time or times as may be determined by the Committee (the B.Participation and Payroll Deduction Accounts. An eligible employee may participate in an offering by authorizing, on or before the tenth (10th) business day preceding the Offering Date for such offering, a payroll deduction for such purpose, The Company will maintain or cause to be maintained a payroll deduction account for each participating employee (a C.Changes, Suspension and D.Retirement, Death and Termination of E.Continued VI. PURCHASE, LIMITATIONS AND PRICE A.Option Grant and Exercise; Purchase of B.Share Accounts; Book-Entry; Dividend C.Title of D.Rights as a E.Account F.Determination of Purchase "Fair Market VII. TRANSFER OF INTERESTS No option, right or benefit under the Plan may be transferred by a participating employee other than by will or the laws of descent and distribution, and all options, rights and benefits under the Plan may be exercised during the participating Certain officers of the Company are subject to restrictions under Section 16(b) of the 1934 Act. With respect to such officers, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void if permitted by law and deemed advisable by the Committee. MMMMMMMMMMMM MMMMMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 received by 1:00 am, (Central Time), on May 21, 2020. Online GIof ntoo welwewct.reonnviicsivoontrienpgo, rts.com/GABC delete QR code and control # or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/GABC Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + 1. Election of Directors: 01 - Chris A Ramsey For Withhold For Withhold For Withhold 02 - M Darren Root 03 - Mark A Schroeder 04 - Jack W Sheidler For Against Abstain ForAgainst Abstain 2. To approve the Amended and Restated Articles of Incorporation of German American Bancorp, Inc., providing shareholders the right to amend the Bylaws of German American Bancorp, Inc. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.envisionreports.com/GABC q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Proxy Solicited by11, 201912, 2020 (assuming that their holdings have not changed from such other date as may be shown below): Common
Shares
Beneficially
Owned Percentage of
Outstanding
Shares 1,813,358 (1) 6.8% (2) NameCommon SharesBeneficially OwnedPercentage ofOutstanding SharesBlackRock, Inc.11,562,34416.3%21 ’s's statement on Schedule 13G (Amendment No. 9)10) of beneficial ownership as of December 31, 2018,2019, which was filed on February 4, 2019,5, 2020, with the SEC. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.224,967,45826,671,368 common shares outstanding as of March 11, 2019.formerly known as Crowe Horwath LLP (“Crowe”("Crowe") for services including the audit of the Company’sCompany's consolidated financial statements for the calendar years ended 20182019 and 2017,2018, the integrated audit over internal controls as required under Section 404 of the Sarbanes-Oxley Act for such years, the review of the interim consolidated financial statements included in quarterly reports during such years, the audit of HUD for 20182019 and 2017,2018, and the review of registration statements and providing related consents in the amount of $596,878 for 2019 and $421,000 for 2018 and $270,000 for 2017.2018.$18,500 and during 2017 of $17,500.$18,500. These services included audit-related consulting and the audit of the Captive Insurance Agency for 20182019 and 2017.2018.$92,770 and during 2017 of $121,000.$92,770. These services included tax return preparation for the Company, the Captive Insurance Agency, an acquired entity, and the REIT, as well as assistance with tax reporting matters and consulting.ServicesServices.. The Audit Committee of our Board (or a member of the Audit Committee acting under authority delegated to him or her by the Audit Committee) approves in advance all services proposed to be performed for the Company or its subsidiaries by any independent registered public accounting firm that performs (or proposes to perform) audit, review or attest services for the Company or its subsidiaries. Under these SEC rules, the requirement for advance Audit Committee approval of services (other than audit, review or attest services) is waived if they were not recognized to be non-audit services at the time that the independent registered public accounting firm was engaged to provide those services, and certain other conditions are satisfied. None of the services of Crowe that were covered by the fees described above were performed without the prior approval of the Audit Committee (or the prior approval of a member of the Audit Committee acting under delegated authority) in reliance upon this waiver provision of the SEC rules.charter’scharter's continued adequacy and effectiveness at its annual reorganization meeting in 2018.June 2019. The Audit Committee charter is available in the Corporate Profile - Profile—Governance Documents section of the Investor Relations portion of the Company’sCompany's web site,www.germanamerican.com. The charter states that the purpose of the Audit Committee is to oversee the Company’sCompany's accounting and financial reporting processes and the audits of the Company’sCompany's consolidated financial statements and internal control over financial reporting. It is not, however, the Audit Committee’sCommittee's responsibility under the charter to prepare and certify the Company’sCompany's financial statements, to guarantee the independent registered public accounting firm’sfirm's report, or to guarantee other disclosures by the Company. Audit Committee members are not employees of the Company and are not performing the functions of auditors or accountants. The Board has designated each of Mr. Root and Mr. Wagler as an “Audit"Audit Committee Financial Expert.”"three (3)five (5) members of our Board, whose names appear below this Report of Audit Committee. All of the members of the Audit Committee are independent, as that term is defined by NASDAQNasdaq listing requirements that are applicable to the members of the Company’sCompany's Audit Committee.Company’sCompany's internal controls and its accounting and financial reporting processes. The independent registered public accounting firm is responsible for performing audits of the Company’sCompany's consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue a report thereon. The Audit Committee’sCommittee's responsibility is to oversee these processes.Company’sCompany's consolidated financial statements for the calendar year 2018.2019. Management represented to the Audit Committee that the Company’sCompany's consolidated financial statements as of and for the year ended December 31, 20182019 were prepared in accordance with U.S. generally accepted accounting principles, and the Audit Committee reviewed and discussed these consolidated financial statements with management. The Audit Committee discussed with the independent registered public accounting firm matters required to be discussed by the Public Company Accounting Oversight Board’sBoard's Auditing Standard No. 16 (Communication with Audit Committees).firm’sfirm's independence. The Audit Committee also considered whether the independent registered public accounting firm’sfirm's provision of non-audit services to the Company is compatible with maintaining that firm’sfirm's independence.Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2018. M. Darren Root, Chairman
Christina M. Ernst
Jason M. Kelly
Raymond W. SnowdenChristina M. Ernst
Tyson J. Wagler(“("CD&A”&A") explains our compensation program for the executive officers of the Company identified in the Executive Compensation section of this proxy statement (each, an “Executive Officer”"Executive Officer" and, collectively, the “Executive Officers”"Executive Officers"). The CD&A also describes the process followed by the Compensation/Human Resources Committee (the “Committee”"Committee") for making pay decisions, as well as its rationale for specific compensation related decisions related to 2018.Officers’Officers' interests with those of our shareholders; andCompany’sCompany's compensation philosophy seeks to reward “upside”"upside" via the short and long-term incentive plans when strong performance warrants such payouts.Company’sCompany's preference to not be bound by terms in an agreement for multiple years.75th75th percentile).This is a critical piece in the compensation plan design at the Company and is realized through the ability of the Executive Officers to annually earn both short-term and long-term incentive payouts when performance justifies such awards.“say"say on pay”pay" proposal advisory votes. At our annual meeting of shareholders held in 2017, and as required by the “say-on-pay”"say-on-pay" rules of the SEC, we sought the approval, on an advisory basis, of our shareholders, concerning our executive compensation program as described in the proxy statement for that meeting. A vast majority (approximately 98%) of our shareholders whose shares were present at the 2017 annual meeting and who voted (or affirmatively abstained from voting (excluding broker non-votes)) on the say-on-pay proposal voted to approve such compensation. Recognizing the shareholder support for current programs and policies, the“say-on-pay”"say-on-pay" proposal votes (the next shareholder advisory vote will be requested in 2020) and to incorporate such results as one of many factors considered in connection with the discharge of its responsibilities, although no such factor will likely be assigned a quantitative weighting.In As described in Proposal 4 of this proxy statement, the Company is conducting a triennial advisory vote at this 2020 annual meeting of shareholders.(“BCG”("BCG") (an independent third-party banking compensation consultant) to assist with executive compensation decisions. In 2016,2019, BCG provided several reports to evaluate our executive and board compensation programs and assess the Company’sCompany's pay compared to peers and industry best practices. The Committee continuesintends to continue to work with BCG on compensation matters, but no detailed studies were performedmatters. For more detail on projects completed in 2017 or 2018.2018,2019, the Company reviewed and assessed whether the 20172018 peer group needed modifications for 2018.2019. It was determined that the 20172018 peer group remained appropriate for 2018,2019, with the exception of two banks that were merged out of existence.one bank which was acquired (MBT Financial Corp). The peer group was initially developed using banks with approximate assets between $1 billion and $5 billion and located in Indiana and surrounding states. In 2019, the peer group asset size parameters were expanded to $8 billion to account for the Company's asset size growth. The year-end 2018 median asset size of our 2019 peer group for year-end 2018 was $3.916$3.9 billion, with the Company’sCompany's assets also at $3.929$3.9 billion for the same time period (the same timeframe as the peer executive and board compensation reported and analyzed in BCG's 2019 projects as applicable). Currently, the Company's assets are approximately $4.4 billion.20182019 remained the same as the 20172018 peer group (with the exceptionsexception of MainSourceMBT Financial Group, Inc. and Farmers Capital Bank Corporation,Corp., which werewas acquired and subsequently replaced with Park National Corporation and Republic Bancorp,Civista Bancshares, Inc.). The two new peers wereCivista was chosen based on similar criteria as noted above (asset size and geographical location). TheOur current peer group for 2018 includes the following 20 financial institutions:Horizon Bancorp S.Y. Bancorp, Inc. Republic Bancorp, Inc. MBT Financial Corp.Civista Bancshares, Inc. Park National Corporation Peoples Bancorp Inc. LCNB Corp. First Financial Corporation 1st Source Corporation Mercantile Bank Corporation Farmers National Banc Corp. Lakeland Financial Corporation Community Trust Bancorp, Inc. First Busey Corporation MutualFirst Financial Inc. First Mid-Illinois Bancshares, Inc. Midland States QCR Holdings, Inc. Macatawa Bank CorpCorp.2018,2019, the Compensation/Human Resources Committee continued to utilize Blanchard Consulting GroupBCG as its independent third-party compensation consultant. BCG is a national firm with an exclusive focus on the banking and financial services industry. BCG does not provide any services to the Company besides compensation consulting services. BCG reports directly to the Compensation/Human Resources Committee. The Committee continued to work with BCG in 2018, however, as mentioned previously, no detailed studies were performed. In 2018, BCG’s services consistedscope of 2019 consulting projects included the following: a long-term incentive plan performance metric analysis, a total compensation review for the top six executive officers (the "Executive Officers"), a board of director compensation review, a salary compensation review for other employee positions, including a review of the Company's current salary structure, proxy writing assistance.assistance, and a pay versus performance executive compensation analysis report, which detailed the Company's link between Executive Officer pay and performance against that of the peer group. The Compensation/Human Resources Committee and executive management utilized BCG’s historical and 2016BCG's 2019 reports to assist with executive and board compensation decisions during 2018,2019, but did not solely rely on them. The Committee will again engage BCG to conduct a detailed executive compensation review and pay versus performance analysis in 2019.everyperiodically (every two to three yearsyears) to conduct a detailed pay versus performance analysis in order to measure the Company’sCompany's financial performance and evaluate its link to top executiveExecutive Officer pay compared to that of the peer group. The lastgroup executives. This analysis was conducted by BCG in 2019, and was used in 2016. In 2017 and 2018, the Committee conducted its own review of performance versus the peer group and included this analysis in its decision-makingdecision making process for determining executive pay.pay and evaluating the executives' incentive pay design. The analysis evaluates 1-year1 and 3-year performance, and 1-year1 and 3-year executive compensation as compared to our current peer group.group executives. For each time period, the analysis reviewed alignment of the executive compensation of the Company’sCompany's and peers’peer named executive officers (using Summary Compensation Table pay) compared to financial performance. The analysis continues to focusfocuses on multiple performance criteria as the Company and its independent consultant feel it is important to review performance from a well-balanced perspective. The analysis evaluates six financial measures: return on average equity (ROAE), core earnings per share (EPS) growth, 1-year totaldividedto total assets ratio (NPA ratio).assets (NPAs).FollowingBCG found that for 2018 year-end (which was the same processtimeframe as last year, the Company again reviewedpeer executive and board compensation reported and analyzed in BCG's 2019 projects as applicable), GABC's overall average of the six financial metrics described above. The Companypreviously were above peer median. Evaluating GABC's three-year average (2016Y-2018Y) of the six performance metrics versus peer resulted in the peer group for 2018 was varied - some metrics ranked aboveCompany's performance near the median and others were below. However, based75th percentile compared to peer.Company’sCompany's overall performance was in line withabove the peer group median.top Executive Officers. This annual reviewThe pay-for-performance analysis as described above ensures thatevaluates whether the Company has a compensation program design for Executive Officers that is working in accordance with the Company’sCompany's compensation philosophy. Again, it is our goal to only provide incentive rewards when strong performance warrants such payments. It also allows us to easily compare our 20182019 performance to historical performance.2009Inc. 2019 Long-Term Equity Incentive Plan (the “2009"2019 LTI Plan”Plan") for performance over a longer period (typically three years).Company’sCompany's short and long-term incentive plans are designed to create a pay for performance structure that links executive pay to long-term shareholder value and strong financial performance. The 20162019 compensation studies conducted by BCG verified consistency in driving the Bank’sCompany's strategy and performance through prospective incentive plans that mitigate risk and appropriately balance profitability, strategic, and quality related metrics. The BCG study re-confirmed we have adequate and appropriate compensation tools available to attract, motivate and retain high-quality, skilled executives which provide a mix of short and long-term compensation opportunities. As stated previously, we desire to align pay with performance and require strong financial performance for our Executive Officers to receive payment under our short and long-term incentive plans. Our incentive plan designs were generally found to be consistent with industry best practices.2018,2019, the incentive plan alignment with company goals was similar to the alignment of prior years. We evaluate thisour pay-for-performance alignment annually in order to support our pay for performance objectives. Weand we believe our incentive plans for 20182019 continue to remain appropriately aligned with company goals and our pay-for-performance philosophy. However, there seems to be a slight misalignment between our pay forand performance philosophy.Company’sCompany's bank subsidiary. See the Retirement/"Retirement/Deferred Compensation Benefits Benefits" section below for additional information on these agreements.20182019 base salaries for the Executive Officers by reviewing market and peer comparisons provided by BCG’s 2016BCG's 2019 report, as well as the Company's review of the 2018which provided peer group median salaries and salary survey data from the banking and financial industry. Overall, the report showed our Executive Officer salaries were below market median, when our philosophy is to target the median of market for base salaries by rank.salary. This was the primary reason salary increases were slightly higher in 2019 versus our 2018 salary increases. We also relied on recommendations from the CEO for each of the other Executive Officers (except the CEO). Base salary decisions surrounding the CEO also incorporated such items as his tenure and the Company's financial performance of the Bank.performance. We also take into consideration experience of the individual, performance of the individual, and desired market positioning considering the incentive compensation program designsdesign at the Company. The Committee then recommended to the Board that the CEO and each Executive Officer’s 2018Officer's 2019 base salary be the value disclosed in the Summary Compensation Table (shown later in this document)document as well as in the table below), and the Board accepted this recommendation. The base20182019 (as compared to their base salaries in 2017)2018) were as follows:Executive 2018 Base Salary 2017 Base Salary % Increase 2019
Base Salary 2018
Base Salary % Increase Mr. Schroeder $390,000 $375,000 4.0% $ 430,000 $ 390,000 10.3 % Mr. Ewing $285,000 $275,000 3.6% $ 305,000 $ 285,000 7.0 % Mr. Rust $250,000 $240,000 4.2% $ 270,000 $ 250,000 8.0 % Mr. Braun $220,000 $210,000 4.8% $ 235,000 $ 220,000 6.8 % Mr. Leinenbach $225,000 $215,000 4.7% $ 242,000 $ 225,000 7.6 % Mr. Dauby $220,000 $210,000 4.8% $ 235,000 $ 220,000 6.8 % 2018,2019, the Company continued to maintain an Executive Management Incentive Plan (a “Plan”(the "Plan") for certain key officers, including the Executive Officers. Under this Plan, the Company pays additional compensation in the form of annual cash incentive awards that are contingent upon the achievement of certain annual goals (described in this subsection), and long-term incentive awards that are contingent upon the achievement of certain long-term goals (described in the next subsection).“balanced scorecard”"balanced scorecard" for the short-term cash incentive award portion of the Plan. The “balanced scorecard”"balanced scorecard" establishes specific corporate and shareholder-related performance goals balanced by goals from the officer’sofficer's individual area of responsibility and his or her expected level of contribution to the Company’sCompany's achievement of its corporate goals. The alignment with company goals were similar to past years. The balanced scorecard approach is designed to encourage a consistent, long-term management approach to enhancing shareholder value. Cash incentive payments that are authorized to be paid to eligible officers under the Executive Management Incentive Plan are payable in quarterly installments during the year following the year in which the services were performed and are contingent only upon such Executive Officer’sOfficer's continued employment with the Company through the date of payment of each quarterly installment. The Plan also has a “clawback”"clawback" provision which allows the Company to recoup awards under certain circumstances such as a material misstatement of financial performance.2018,2019, the Board (by the vote of the members of the Board who are not “interested directors”"interested directors" within the meaning of NASDAQ’sNasdaq's independence rules, and at the recommendation of the Committee) established target short-term cash incentive awards for the Executive Officers as percentages of their 20182019 base salary (which ranged from 30% to 50% of base salary, depending upon the Executive Officer), with maximum awards (payable only if performance and other criteria were substantially exceeded on all the established goals) ranging from 60% to 100% of base salary (depending upon the Executive Officer). Credit is given proportionally for performance falling between the threshold and maximum levels, but is not given for performance that is not at least at the thresholdopportunitiesof base salary) for the 20182019 short-term cash incentive awards were as follows: Potential 2019 Short-Term
Award as Percentage of 2019
Base Salary at the Following
Performance Levels Executive Potential 2018 Short-Term Award as Percentage of 2018 Base Salary at the Following Performance Levels Threshold Target Maximum Threshold Target Maximum Mr. Schroeder 25.0% 50.0% 100.0% 25.0 % 50.0 % 100.0 % Mr. Ewing 20.0% 40.0% 80.0% 20.0 % 40.0 % 80.0 % Mr. Rust 17.5% 35.0% 70.0% 17.5 % 35.0 % 70.0 % Mr. Braun 15.0% 30.0% 60.0% 15.0 % 30.0 % 60.0 % Mr. Leinenbach 15.0% 30.0% 60.0% 15.0 % 30.0 % 60.0 % Mr. Dauby 15.0% 30.0% 60.0% 15.0 % 30.0 % 60.0 % “CEO”"CEO"), specified a target award of 50% of his base salary for 2018.2019. As a result, if all targeted corporate and individual performance criteria were deemed to have been substantially exceeded by the requisite amount with respect to the CEO’sCEO's scorecard during 2018,2019, and the net income trigger was met (see paragraph below), the CEO could have earned a maximum cash incentive award for his servicesperformance during 20182019 equal to 100% of his 20182019 base salary. also requires that a minimum net income trigger be met before the Plan is “turned"turned on.”" Net income was chosen as the trigger because it is the most appropriate measure of bank profitability, and a prevalent metric in which to measure financial stability. If this minimum net income trigger is not achieved for the calendar year performance period, then the entire plan is not funded and no payouts are made to any participants under the Plan. For 2019, the minimum net income trigger was set at $46,000,000. The Company’sCompany's goal for the short-term incentive plan design is to allow for incentive “upside”pay "upside" when strong performance warrants such payouts (as stated in our compensation philosophy).20182019 under the scorecards were based on the following weightings for the Executive Officers:Percentage of
Potential
Award20182019 corporate performance, which assists in measuring the alignment of executive and shareholder interests.80%80 % 2018.2019. 20%20 % Total100% 100 % 2018,2019, the corporate performance metrics listed below were used. When selecting the five performance measures, the Company’sCompany's goals, strategic plan, and industry standards were taken into consideration. The Company strongly believes in a balanced scorecard approach, which takes into consideration increasing shareholder value, quality vs. cost ratios, loan growth, deposit growth, etc. We use a balance of profitability/growth related metrics along with quality measures to best measure overall financial performance. While total shareholder return (“TSR”) is a commonly recommended performance metric, the Company believes TSR does not provide a complete picture of overall financial performance. The five short-term corporate performance criteria for 20182019 (summarized in the table below) have remained unchanged since 2015. The performance criteria are reviewed annually, and2018,2019, they continued to be the most relevant performance measures for alignment with our strategic goals.Percentage
Weighting25%25 % Efficiency Ratio10%10 % 20%20 % 15%15 % Non-Performing Assets to Total Assets Ratio10%10 % Total80% 80 % 2018,2019, judgmental/individual measures (20% weight for Executive Officers) were based on overall performance of the executive, including business unit or department performance. The criteria relating to business unit performance or departmental performance (if such performance was applicable to a particular ExecutiveOfficer’s Officer's scorecard) were focused on performance of the business unit or department headed by each particular executive. Criteria are determined annually based on the strategic goals of the executive’sexecutive's respective business unit or department. Consistent with prior years, these criteria were assigned a weighting percentage based on the executive’sexecutive's position and authority. Final performance was based on the Board’sBoard's assessment for the CEO, the CEO’sCEO's assessment for Mr. Ewing’sEwing's and Mr. Rust’sRust's performance, and the CEO's assessment, with input from the President (Mr. Ewing), for the performance of Mr. Leinenbach, Mr. Braun, and Mr. Dauby.and peer group performance, and the Company's best estimates for 2019 performance. When setting the target level for each corporate measure, however, the Company did not necessarily attempt to tie that level to the Company's expectations for 2019; 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 weighing 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. The annual cash incentive metrics and Executive Officer opportunity levels for 20182019 remained unchanged from 2017.2018. In selecting the 20182019 performance measures the Committee noted the following:20182019 as compared to our average balances of our consolidated core organic loans in December 2017.20182019 as compared to our average balances of our consolidated core organic deposits and repurchase agreements in December 2017.2019,2020, the Board, upon the recommendation of the Committee, determined the short-term cash incentive award amounts payable in 20192020 to the Executive Officers, including the CEO, for their services during 2018.2019. The incentive amounts are included in the 20182019 information in the Summary Compensation Table. The Committee’sCommittee's recommendations were based on the Committee’sCommittee's assessment of the degree to which the corporate and personal goals established by the 20182019 scorecards of the Executive Officers were achieved. The Executive Officers received awards that were determined in accordance with the formulas relating to the short-term corporate performance criteria and judgment of job performance established by the respective 20182019 scorecards. The 20182019 actual short-term cash incentive payouts that were earned ranged from 36%34% to 60%58% of salary for the Executive Officers. These awards were based on the following performance levels:2019 Result 2018 ResultExceeded Net income “trigger”ExceededIncome/revenue measures:Between threshold and target Efficiency RatioBetween target and maximum Between target and maximum TargetBelow threshold BetweenBelow threshold and targetNon-Performing Assets to Total Assets RatioMaximum No discretionary2018.20092019 LTI Plan provides for the potential award of incentive and non-qualified stock options and other equity-based awards, including restricted stock (“("LTI Awards”Awards"). In recent years, restricted stock awards have been awarded as the equity portion under the LTI Plan. The use of Restricted Stock, or full-value equity grants, is very prevalent within the banking industry based on our independent compensation consulting studies and regulatory best practices. As such, we felt it was appropriate from a market competitive standpoint to again utilize this type of equity award in 2018.pay(for 2019 performance) paid out 67% in equity and 33% in cash. This was a slight change from previous years when the awards paid out 60% in equity and 40% in cash. The cash portion is intended to cover the taxes on the equity portion.portion and the Committee felt a slight shift to a higher percentage in equity was appropriate for 2019. The purpose of granting LTI Awards is to provide long-term incentive compensation to complement the short-term focus of annual cash incentive awards. The Company believes the LTI plan encourages prudent long-term business planning decisions and serves as a valuable retention tool to motivate and reward Executive Officers’Officers' long-term behavior. The Company continues to utilize a Management Long-Term Incentive Plan Balanced Scorecard approach for the Executive Officers.Officer’sOfficer's level of responsibility. The awards are earned in proportion to the extent to which the Company has achieved certain corporate financial performance metrics versus peer on a three-year average period ending in the year for which the scorecard is established. The Committee maintains a “clawback”"clawback" provision in the Plan, where all LTI Awards earned are subject to “clawback” if the calculations are later determined to have been based on misrepresented"clawback" under certain circumstances, such as a material misstatement of financial results.performance. Also, as an additional executive retention tool and in support of the “clawback”"clawback" provision, the LTI Award grants are subject to a three-year vesting schedule. As such, 1/3The cash portion of anythe 2019 LTI award that is granted vests 1/3 per100% in the first year, following50% of the dateequity portion of grant.2018,2019, the Board (by the vote of the members of the Board who are not “interested directors”"interested directors" within the meaning of the rules of the NASDAQNasdaq Stock Market, Inc., and at the recommendation of the Committee) established target long-term incentive awards for Executive Officers as percentages of their 20182019 base salary (which ranged from 30% to 50% of base salary, depending upon the Executive Officer), with maximum awards (payable only if the stated corporate criteria were substantially exceeded) of as much as two times the target awards. Similar to the short-term cash incentive program, credit is given proportionally 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. Specifically, the opportunities (as a percentage opportunitiesof base salary) for the 20182019 long-term equity incentive awards were as follows: Potential 2019 Long-Term
Incentive Award as Percentage
of 2019 Base Salary at
the Following Performance Levels Executive Potential 2018 Long-Term Incentive Award as Percentage of 2018 Base Salary at the Following Performance Levels Threshold Target Maximum Threshold Target Maximum Mr. Schroeder 25.0% 50.0% 100.0% 25.0 % 50.0 % 100.0 % Mr. Ewing 20.0% 40.0% 80.0% 20.0 % 40.0 % 80.0 % Mr. Rust 17.5% 35.0% 70.0% 17.5 % 35.0 % 70.0 % Mr. Braun 15.0% 30.0% 60.0% 15.0 % 30.0 % 60.0 % Mr. Leinenbach 15.0% 30.0% 60.0% 15.0 % 30.0 % 60.0 % Mr. Dauby 15.0% 30.0% 60.0% 15.0 % 30.0 % 60.0 % 2018.2019. If the corporate performance criteria (on a three-year average) ranked exceptionally high versus peer (as a three-year average) with respect to the CEO’sCEO's scorecard during 2018,2019, and the net income trigger was met, the CEO could have earned an LTI Award for his services during 20182019 equal to 100% of his 20182019 base salary. Our goal is to provide competitive levels of long-term/equity awards when performance warrants it, as detailed by our compensation philosophy.Award targetsawards for services during 2018the three-year period of 2017-2019 under the scorecards were based on the long-term corporate performance criteria set forth in the table below. The performance criteria which were unchanged from 2017, are reviewed annually. In 2019, the Company included an additional metric of return on assets in the LTI Plan. The additional metric was included in part after an analysis was conducted in 2019 of our peer group's long-term incentive plan metrics by BCG, which showed return on assets as the most commonly used metric among our peers disclosing their long-term incentive plan metrics. Additionally, we feel return on assets adds a more complete picture of our overall financial performance. The Company believes that the criteria are stillreturn on equity and EPS continue to be appropriate measures in 2018 ofto evaluate long-term performance against our business strategy and remain the most relevant measures for alignment with our strategic goals. Each metric is measured as an average of annual performance over the three-year20182019 and benchmarked against aour custom peer group as described previously (the “Long-Term"Long-Term Corporate Performance Criteria”Criteria"):Percentage of
Potential Award50%331/3 % 331/3 % 50%331/3 % Total100% 100 % selecting and calculatingmeasuring performance for each of the performance measures,above metrics, the Committee notes the following:determinedmeasured the extent to which the Company achieved the return on equity in 2016, 2017, and 2018metric for the three-year period of 2017-2019 by determining thean annual percentile rankingsranking of the Company for the measure comparedCompany's return on equity in comparison to our publicly-held peer group of banks for each respective year. The peer groupof the three years. We then averaged the Company's annual percentile ranking for 2018 was shown previously. For 2017 and 2016,each year to determine a three-year average result.respective peer group that was used was disclosed in our prior year proxy disclosures. To determineextent to which the Company achieved the return on assets metric for the three-year average result, we averaged theperiod of 2017-2019 by determining an annual percentile ranking of the Company's return on assets in comparison to our Company performance versus the 2018, 2017, and 2016publicly-held peer group of banks for each of the three years. We then averaged the Company's annual percentile rankings, respectively.ranking for each year to determine a three-year average result.determinedmeasured the extent to which the Company achieved the fully-diluted earnings per common share growth, measureor EPS growth rate, metric by determining thean annual percentile ranking of the Company for fully-diluted earnings per common shareCompany's EPS growth comparedrate in comparison to our publicly-held peer group of banks for each respective year. The analysis usedof the three years. We then averaged the Company's annual percentile ranking for each year to determine the Company performance versus peer is described above.a three-year average result.thisthe minimum net income trigger of $46,000,000 was not achieved for 2018,2019, then no LTI awards would have been granted under the Plan.2019,2020, the Board determined that the corporate goals established by the scorecards for the LTI Awards resulted in the following for 2016 - 20182017-2019 performance:2017 - 2019 Result 2016-2018 ResultExceeded Net income “trigger”ExceededBetween targetthreshold and maximumtargetTarget Below threshold Between threshold and target 55%65% of their respective target levels in satisfaction of their 20182019 earned LTI Awards. The LTI Awards that were earned in 2018,2019, based on the three-year average percentile rankings values, ranged from 16.5%20% to 27.5%33% of salary for the Executive Officers. Each Restricted Stock Award consisted of:60%two-thirds (2/3) of each Executive Officer’sOfficer's total LTI Award earned in 20182019 (rounded up to the nearest 30-share block)even number of shares); and40%one-third (1/3) of the dollar value of the previous mentioned LTI Award (which cash rights are subject to similar forfeiture conditions).2019,2020, by dividing the dollar value of that portion of the award by the fair market value of the Company stock as of the close of trading on March 14, 2019,13, 2020, rounded up to the nearest 30 share block)even number of shares) are entitled to dividends on such shares unless and until the shares are forfeited in accordance with the terms of the Restricted Stock Awards. Restricted Stock awards are rounded up to the nearest 30-share block for easeeven number of administrative tracking purposes.2018 (and consisting2019 (consisting of the Restricted Stock Awards and the related right to receive the cash payments) will vest and be paid, assuming the continued service of each of the holders through such vesting date, as follows: 1/3 on December 5, 2019,2020 (100% of cash award), 1/3 on December 5, 20202021 (50% of the Restricted Stock Award), and 1/3 on December 5, 2021.2022 (50% of the Restricted Stock Award). Vesting of such LTI Awards will be accelerated in the event of the holder’sholder's death or disability while in the service of the Company or upon such other event as determined by the Committee in its sole discretion. Vesting will also be accelerated upon certain extraordinary events (such as a change in control). Unvested shares issued as Restricted Stock Awards must be retained by the Executive Officer subject to the “clawback”"clawback" and forfeiture provisions applicable to such shares, and therefore may not be sold, pledged or otherwise transferred or hedged during the vesting periods. As part of the new 2019 Long-Term Equity Incentive Plan discussed below, atAt least 95 percent of the shares underlying awards granted under the new plan2019 LTI Plan will be required to have a one-year minimum vesting period, subject to the Compensation/Human Resources Committee’sCommittee's authority under the 2019 Long-Term Equity IncentiveLTI Plan to vest awards earlier, as thatthe Committee deems appropriate (see “PROPOSAL 3 - APPROVAL OF THE GERMAN AMERICAN BANCORP, INC. 2019 LONG-TERM EQUITY INCENTIVE PLAN” for additional information).New 2019 Long-Term Incentive PlanOn March 4, 2019, the Board adopted the new German American Bancorp, Inc. 2019 Long-Term Equity Incentive Plan. The new plan is intended to replace the German American Bancorp 2009 Long Term Equity Incentive Plan. In developing the 2019 Long-Term Equity Incentive Plan, the Compensation/Human Resources Committee and the Board of Directors included numerous provisions that they believe promote best practices by reinforcing the alignment between equity compensation arrangements for officers and employees with the interests of shareholders. The new plan is being presented for approval by shareholders at the Annual Meeting. See “PROPOSAL 3 - APPROVAL OF THE GERMAN AMERICAN BANCORP, INC. 2019 LONG-TERM EQUITY INCENTIVE PLAN” for additional information, including a discussion of the important governance features and practices of the 2019 Long-Term Equity Incentive Plan.“clawback”"clawback" provisions for incentive awards that are provided to Executive Officers and based on Company financial metrics. These “clawback”"clawback" provisions allow the Company to recoup awards that have been previously paid/awarded under certain circumstances such as a material misstatement of financial performance. The clawback right has alsoCompany’sCompany's Code of Business Conduct in any material respect. As previously disclosed, awards under our incentive plans (both cash and equity) in recent years have beenand in 2019 are subject to these “clawback”"clawback" provisions. In addition, similar clawback provisions have been included in our 2019 Long-Term Equity Incentive Plan.Eachour long-term equity incentive plans contain prohibitions against repricingstock options or stock appreciation rights ("SAR"), without shareholder approval. Specifically, without shareholder approval, no stock option or SAR award may be (i) amended to decrease the exercise price, (ii) cancelled in exchange for a replacement option or SAR with a lower exercise price, or (iii) purchased or cancelled in exchange for cash, other equity awards,property or grant of a restricted stock award at a time when the per share exercise price of the option or SAR award is greater than the fair market value of which derives from the valuea share of our common shares, on account of declines in our stock price. We also prohibit buying back for cash “underwater” stock options from those who hold them. Similar repricing prohibitions have been included in our 2019 Long-Term Equity Incentive Plan.participant’sparticipant's withholding tax obligation in connection with an award.PlanPlan.. The 401(k) Plan is a tax-qualified defined contribution plan that enables eligible employees to defer income taxation on up to 60% of their compensation (not to exceed $18,500$19,000 for 20182019 or $24,500$25,000 for employees age 50 or older). We currently provide fully vested matching contributions equal to 100% of each employee’semployee's pre-tax contributions up to the first 3% of compensation plus 50% of the employee’semployee's pre-tax contributions up to the next 2% of compensation. Participants in the plan direct the investment of their account balances and are eligible for loans, certain in-service withdrawals, and distributions upon termination of employment. All six Executive Officers participate in the 401(k) Plan.PlanPlan.. Under the German American Bancorp Nonqualified Savings Plan, established in 2004 (the “Nonqualified"Nonqualified Savings Plan”Plan"), highly compensated or management employees of the Company and its subsidiaries who are specifically designated from time to time by the Committee as eligible to participate in the Plan may, through payroll deduction, make employee deferral contributions between 1% and 60% of their regular earnings. Participants in the plan direct the investment of their account balances. The Plan was amended in 2008 to bring it into technical compliance with the requirements of section 409A of the Internal Revenue Code of 1986, as amended.participant’sparticipant's eligible compensation contributed to the Nonqualified Savings Plan and the German American Bancorp 401(k) Savings Plan (“("401(k) Plan”Plan") as “Deferral Contributions”"Deferral Contributions" (as defined under the respective plans) for the plan year, plusparticipant’sparticipant's eligible compensation contributed to the Nonqualified Savings Plan and the 401(k) Plan as “Deferral Contributions”"Deferral Contributions" (as defined under the respective plans) for the plan year.participant’sparticipant's eligible compensation.retirement, or disability.retirement. The Nonqualified Savings Plan contains certain provisions that may accelerate the timing of distributions that would be triggered byin the event of death, disability or certain changes in control of the Company. During 2018,2019, Messrs. Schroeder, Ewing, Rust, Braun, Leinenbach and LeinenbachDauby each had an account under the Nonqualified Savings Plan.Company’sCompany's bank subsidiary that provides for a supplemental retirement benefit in the fixed amount of $26,340 per year for fifteen years and an additional death benefit of $10,000. Mr. Rust is 100% vested in the benefit and amounts become payable upon his death, disability, termination of employment, or retirement. The arrangement constitutes a non-qualified deferred compensation plan. The benefit is forfeited in the event he is terminated for “Cause”Rust’sRust's beneficiary under the plan. This plan was amended in December 2008 to bring the arrangement into technical compliance with requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”"Code").Company’sCompany's succession planning for Executive Officers, in August 2017, the Company’sCompany's bank subsidiary entered into a Supplemental Executive Retirement Agreement with Mr. Leinenbach. The agreement provides that, so long as Mr. Leinenbach remains employed by the bank subsidiary through December 31, 2023 (the “Retention Date”"Retention Date"), which date represents the last day of the month in which his 65th 65th birthday occurs, he will receive a supplemental retirement benefit in the amount of $500,000, plus interest. The retirement benefit would be paid in monthly installments, over a ten-year period that would commence on January 1, 2025. The arrangement constitutes a non-qualified deferred compensation plan. If Mr. Leinenbach leaves employment voluntarily or is terminated by the bank subsidiary for “Just Cause”"Just Cause" (as described in the agreement) prior to the Retention Date, he will not receive any payments under the agreement. If Mr. Leinenbach dies or becomes disabled prior to the Retention Date, he or his beneficiaries will receive a proportionate amount of the payments based on his months of service prior to his death or disability. It is intended that any amounts payable under this agreement shall either be exempt from, or comply with, Section 409A of the Code so as not to subject Mr. Leinenbach to the payment of any interest, penalties or additional tax imposed under Section 409A.Company’sCompany's bank subsidiary to elect to defer the receipt and taxation on a portion of their director fees while serving on that board of directors. The Plan was frozen as of December 31, 1996, and no additional fees have been deferred into the Plan since then. Of the Executive Officers, only Mr. Schroeder is a participant in this frozen Deferred Director Compensation Plan.56 to the Summary Compensation Table later in this document. In general, we believe that perquisites should not constitute a significant portion of any Executive Officer’sOfficer's compensation. However, certain perquisites provided to Executive Officers also provide a benefit to us. For example, we reimburse certain club dues to encourage our Executive Officers to have a presence in the community to promote the business of the Company. Additionally, a 5% “retirement allowance”"retirement allowance" contribution is provided to the Executive Officer and is intended to help defray the cost of saving for retirement following the 2004 elimination of a“All"All Other Compensation”Compensation" table later in this disclosure.In accordance with the SEC rules, for 2018, we are using the same median employee identified in the proxy statement for last year’s annual meetingshareholders. WhileContentsour acquisition of(iii) five branch locations of First Financial Bancorp in May 2018, the rules allow us to exclude employees acquired in the past fiscal year. Aswe have identified a result, those acquired employees (approximately 106 in aggregate) will be included in the 2019 determinationnew median employee for purposes of thecalculating our CEO pay ratio, which may require us to re-identify the median employee. Aside from those acquisitions, there has been no other changes in our employee population or our employee compensation arrangements that resulted in a significant change of the pay distribution to our employee population, or would significantly impact the pay ratio disclosure.in 2017,for 2019, a listing was prepared of all employees. We started with gross earnings for all individuals within our three companies: German American Bank, German American Investment Services, Inc. and German American Insurance, Inc. We omitted employees terminated during 2017.2019. For employees hired during the year, we annualized their salaries based on their month of hire. With our CEO omitted from the list, there were 686889 employees remaining. We then selected the 344444th person on the list as our most comparative median employee in the organization.20182019 annual total compensation of $922,226 as$1,024,207as reflected in the Summary Compensation Table included in this Proxy Statement. Our median employee’semployee's annual total compensation for 20182019 was $39,416. $40,875.As a result, we calculated that Mr. Schroeder’s 2018Schroeder's 2019 annual total compensation was approximately 23.425 times that of our median employee.2018,2019, nor has any member of the Committee ever been an officer or employee of the Company or any of its subsidiaries. No current member of the Committee or Executive Officer of the Company had a relationship during 20182019 requiring disclosure in this proxy statement under Item 404 or Item 407(e)(4) of SEC Regulation S-K.“Compensation"Compensation Discussion and Analysis,”" and, based on such review and discussion, the Committee recommended to the Board that the “Compensation"Compensation Discussion and Analysis”Analysis" be included in this proxy statement, from which it will be incorporated by reference into the Company’sCompany's Annual Report on Form 10-K. Thomas W. Seger, Chairman Zachary W. Bawel, Co-Chairman
Thomas W. Seger, Co-Chairman
Christina M. Ernst
U. Butch Klem“Compensation"Compensation Discussion and Analysis,”" and considering both the short-term and long-term award structures created by that Plan), is well designed to align our strategic objectives with short-term and long-term shareholder value and to not encourage risky employee behavior, because:Company’sCompany's strategy and objectives for long-term value creation for shareholders, and properly reward various performance outcomes.20182019 (such six officers being referred to herein, individually, as an “Executive Officer”"Executive Officer" and, collectively, as the “Executive Officers”"Executive Officers"), for their services to the Company and its subsidiaries during 20182019 and certain prior years. The Company’s “NamedCompany's "Named Executive Officers”Officers" (or “NEOs”"NEOs") for the 20182019 fiscal year, as defined in Item 402(a)(3) of SEC Regulation S-K, were Messrs. Schroeder, Ewing, Rust, Braun, and Leinenbach.20162017 through 20182019 with respect to our Executive Officers. Year Salary
($) Bonus(1)
($) Stock
Awards(2)
($) Option
Awards(3)
($) Non-Equity
Incentive Plan
Compensation(4)
($) Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings(5)
($) All Other
Compensation(6)
($) Total
($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) 2019 430,000 35,000 119,083 — 293,553 18,314 128,257 1,024,207 2018 390,000 — 165,263 — 275,222 46,160 126,010 922,226 2017 375,000 — — 334,209 52,711 134,156 1,061,338
2019
305,000
30,000
53,393
—
166,207
—
61,721
616,321 2018 285,000 — 38,367 — 160,107 — 59,145 542,619 2017 275,000 — 88,103 — 195,808 — 61,123 620,033
2019
270,000
25,000
41,392
—
128,709
11,761
58,608
535,470 2018 250,000 — 29,232 — 123,106 11,162 55,620 469,120 2017 240,000 — 67,373 — 149,432 10,725 47,931 515,460
2019
235,000
20,000
30,884
—
96,017
—
52,016
433,917 2018 220,000 — 21,924 — 92,982 — 46,148 381,054 2017 210,000 — 50,789 — 109,925 — 47,341 418,054
2019
242,000
20,000
31,791
—
98,889
—
41,613
434,293 2018 225,000 — 22,838 — 94,681 — 39,526 382,045 2017 215,000 — 51,825 — 114,650 — 40,361 421,836
2019
235,000
20,000
30,884
—
96,017
—
39,987
421,888 2018 220,000 — 21,924 — 92,982 — 37,742 372,648 2017 210,000 — 50,789 — 109,925 — 36,844 407,557 Name and Principal PositionYearSalary ($)Bonus ($)StockAwards (1)($)OptionAwards (2)($)Non-EquityIncentive PlanCompensation (3) ($)Change inPensionValue and Non-qualifiedDeferredCompensationEarnings (4) ($)All Other Compen-sation (5) ($)Total($)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)Mark A. Schroeder, Chairman and Chief Executive Officer201820172016390,000375,000360,000――15,000 84,834165,263156,389―――275,222334,209374,80046,16052,71143,792126,010134,156120,497 922,2261,061,3381,070,478Clay W. Ewing, President201820172016285,000275,000265,000―――38,36788,10384,024―――160,107195,808222,846―――59,14561,12356,351542,619620,033628,221Bradley M. Rust, Executive Vice President and Chief Financial Officer201820172016250,000240,000225,000―――29,23267,37361,618―――123,106149,432164,00111,16210,72510,30555,62047,93141,734469,120515,460502,658Randall L. Braun, Executive Vice President and Chief Retail Banking and Development Officer201820172016220,000210,000195,000―――21,92450,78940,213――― 92,982109,925119,693―――46,14847,34140,565381,054418,054395,471Keith A. Leinenbach, Executive Vice President and Chief Credit Officer201820172016225,000215,000195,000―――22,83851,82540,213――― 94,681114,650123,145―――39,52640,36133,747382,045421,836392,105D. Neil Dauby, Executive Vice President and Chief Commercial Banking Officer201820172016220,000210,000195,000―――21,92450,78940,213――― 92,982109,925119,693―――37,74236,84428,419372,648407,557383,325(1) 2018, and 2017,2018, as applicable, based on performance criteria established for the three-year periods ending December 31, 2018,2019, December 31, 2017,2018, and December 31, 2016,2017, respectively, and (ii) with respect to Mr. Schroeder, additional restricted stock awards in the amounts of $24,991, $19,975 $14,970 and $14,949,$14,970, respectively, that were granted to each of the Board members in December of each of the years 2019, 2018, 2017, and 2016,2017, respectively (such awards, which vested or will vest onin December 5 of the following year, are also disclosed in the Director Compensation table, as shown later in this document). The restricted stock awards granted as part of the LTI Awards in this column vest as follows: (a) for the grant related to 2016, such shares became vested or will become vested as follows: 1/3 on December 5, 2017, 1/3 on December 5, 2018 and 1/3 on December 5, 2019, (b) for the grant related to 2017, such shares became vested or will become vested as follows: 1/3 on December 5, 2018, 1/3 on December 5, 2019 and 1/3 on December 5, 2020, and (c)(b) for the grant related to 2018, such shares became vested or will become vested as follows: 1/3 on December 5, 2019, 1/3 on December 5, 2020 and 1/3 on December 5, 2021.2021, and (c) for the grant related to 2019, such shares will become vested as follows: 50% on December 5, 2021 and 50% on December 5, 2022. In accordance with our interpretation of SEC guidance on this subject, we report these awards for purposes of our Summary Compensation Table as being awarded in the final year of the related three-year performance period, even though we accrue the related expense in different time periods for financial reporting purposes. The amounts are reported with respect to the year in which they were ultimately earned. For a discussion of the assumptions used in the calculation of the stock awards reported in this column, please see Note [8]8 of the Notes to Consolidated Financial Statements in the Company’s 2018Company's 2019 annual“Non-Equity"Non-Equity Incentive Plan Compensation”Compensation" (column (g)).(2) (3) 2016, 2017, 2018, and 2018,2019, respectively and as applicable, under the Company’sCompany's Management Incentive Plan plus the cash portion of the LTI Awards that were based on performance for the three-year periods ending December 31 of 2016, 2017, 2018, and 2018,2019, respectively. The “Compensation"Compensation Discussion and Analysis”Analysis" section on “Short-Term"Short-Term Cash Incentive Awards”Awards" provides additional details. These short-term cash incentive awards are generally paid (subject to the executive’sexecutive's continued employment) to the executive in quarterly installments during the year following the year in which they were earned (for instance, 20182019 amounts will be paid in 2019)2020). The cash portion of the LTI Award amounts became or will become payable and vested as follows: (a) for the grant related to 2016, such amounts vested and became payable, or will (subject to continued employment) become vested and payable according to the following schedule: 1/3 on December 5, 2017, 1/3 on December 5, 2018 and 1/3 on December 5, 2019, (b) for the grant related to 2017, such amounts vested and became payable, or will (subject to continued employment) become vested and payable according to the following schedule: 1/3 on December 5, 2018, 1/3 on December 5, 2019 and 1/3 on December 5, 2020, and (c)(b) for the grant related to 2018, such amounts vested and became payable, or will (subject to continued employment) become vested and payable according to the following schedule: 1/3 on December 5, 2019, 1/3 on December 5, 2020 and 1/3 on December 5, 2021.2021, and (c) for the grant related to 2019, such amounts will (subject to continued employment) become vested and payable 100% on December 5, 2020. The “Compensation"Compensation Discussion and Analysis”Analysis" section on “Long-Term"Long-Term Incentive Awards”Awards" provides additional details. The table below sets forth the amounts of each award based on performance for the years ended December 31, 2016, 2017, 2018 and 2018,2019, respectively. Schroeder Ewing Rust Braun Leinenbach Dauby To be Paid/Vested on or before 12/5/2021 (grants related to 2018) Short-Term Cash ($) (a) 232,830 135,774 104,213 78,606 80,393 78,606 Long-Term Cash ($) (b) 42,392 24,333 18,893 14,376 14,288 14,376 Long-Term Stock ($) (b) 64,859 38,367 29,232 21,924 22,838 21,924 Director Restricted Stock Award ($)(c) 19,975 ― ― ― ― ― To be Paid/Vested on or before 12/5/2020 (grants related to 2017) Short-Term Cash ($) (a) 234,563 137,280 104,832 76,734 80,496 76,734 Long-Term Cash ($) (b) 99,646 58,528 44,600 33,191 34,154 33,191 Long-Term Stock ($) (b) 150,293 88,103 67,373 50,789 51,825 50,789 Director Restricted Stock Award ($)(c) 14,970 ― ― ― ― ― To be Paid/Vested on or before 12/5/2019 (grants related to 2016) Short-Term Cash ($) (a) 282,240 169,070 123,244 89,856 93,308 89,856 Long-Term Cash ($) (b) 92,560 53,776 40,757 29,837 29,837 29,837 Long-Term Stock ($) (b) 141,440 84,024 61,618 46,213 46,213 46,213 Director Restricted Stock Award ($)(c) 14,949 ― ― ― ― ― Schroeder Ewing Rust Braun Leinenbach Dauby 247,250 139,934 108,392 80,864 83,272 ,80,864 46,303 26,273 20,317 15,153 15,617 15,153 94,092 53,393 41,392 30,884 31,791 30,884 24,991 — — — — — 232,830 135,774 104,213 78,606 80,393 78,606 42,392 24,333 18,893 14,376 14,288 14,376 64,859 38,367 29,232 21,924 22,838 21,924 19,975 — — — — — 234,563 137,280 104,832 76,734 80,496 76,734 99,646 58,528 44,600 33,191 34,154 33,191 150,293 88,103 67,373 50,789 51,825 50,789 14,970 — — — — — 20182019 are being paid in quarterly installments (subject to continued service) throughout 2019.2020. The short-term cash awards for 20172018 were paid in quarterly installments throughout 20182019 and the awards for 20162017 were paid quarterly throughout 2017.2017,2018, March 15, 20182019 and March 15, 2019,2020, the respective dates on which such LTI Awards were formally granted with respect to service that was performed in the prior year. Each portion of the LTI Awards related to 2016, 2017 and 2018 performance vests in 1/3 increments on each December 5 (or closest business date) following the year in which the LTI Award was earned (subject to continued service).(421 common shares of the Company on December 19, 2016, 408(408 common shares of the Company on December 18, 2017, and 696 common shares of the Company on December 17, 2018)2018, and 713 common shares of the Company on December 16, 2019), for service on the Company’sCompany's board of directors, and each of such grants of restricted stock vested (or will vest) in a single installment, subject to his continued service on the Board and certain attendance requirements, on December 5 (or December 31, in the case of the 2019 grant) of the year following the year of the grant.(4) $43,792 for 2016, $52,711 for 2017, and $46,160 for 2018.2018, and $18,314 for 2019. With respect to Mr. Rust, the amounts specified in Column (h) reflect the increase in the present value of his accrued benefit under an Executive Supplemental Retirement Income Agreement of $10,305 for 2016, $10,725 for 2017, and $11,162 for 2018.2018, and $11,761 for 2019.(5) Year Mark A. Schroeder 2018 83,186 ― ― 36,660 5,054 1,109 2017 86,654 ― ― 41,248 5,144 1,109 2016 78,009 ― ― 36,239 5,526 722 Clay W. Ewing 2018 31,210 ― ― 23,851 2,975 1,109 2017 33,718 ― ― 23,282 3,014 1,109 2016 30,194 ― ― 22,241 3,195 722 Bradley M. Rust 2018 33,872 ― ― 19,224 2,138 386 2017 25,948 ― ― 19,594 2,004 386 2016 22,153 ― ― 17,313 2,016 252 Randall L. Braun 2018 28,173 ― ― 15,655 1,598 722 2017 28,922 ― ― 16,227 1,470 722 2016 25,070 ― ― 13,663 1,451 380 Keith A. Leinenbach 2018 20,766 ― ― 16,040 1,611 1,109 2017 21,561 ― ― 16,608 1,470 722 2016 18,028 ― ― 13,888 1,451 380 D. Neil Dauby 2018 19,873 ― ― 15,576 1,571 722 2017 19,279 ― ― 15,833 1,346 386 2016 16,254 ― ― 10,600 1,193 372 Year Perquisites &
Other
Personal
Benefits(a)
($) Relocation
Expense
Reimbursement
($) Payments/
Accruals on
Termination
Plans
($) Company
Contributions to
Defined
Contribution
Plans
($) Cash
Dividends on
Restricted
Stock
($) Life
Insurance
Premiums(b)
($) 2019 85,024 — — 37,939 4,089 1,205 2018 83,186 — — 36,660 5,054 1,109 2017 86,654 — — 41,248 5,144 1,109
2019
33,359
—
—
24,842
2,411
1,109 2018 31,210 — — 23,851 2,975 1,109 2017 33,718 — — 23,282 3,014 1,109
2019
35,802
—
—
20,598
1,822
386 2018 33,872 — — 19,224 2,138 386 2017 25,948 — — 19,594 2,004 386
2019
32,660
—
—
16,877
1,370
1,109 2018 28,173 — — 15,655 1,598 722 2017 28,922 — — 16,227 1,470 722
2019
21,817
—
—
17,288
1,399
1,109 2018 20,766 — — 16,040 1,611 1,109 2017 21,561 — — 16,608 1,470 722
2019
21,018
—
—
16,877
1,370
722 2018 19,873 — — 15,576 1,571 722 2017 19,279 — — 15,833 1,346 386 Company’sCompany's Employee Stock Purchase Plan, (iv) a cash “retirement allowance”"retirement allowance" (intended to help salaried employees defray the cost of saving for retirement following the elimination in 2004 of a Company-funded retirement contribution to the Profit Sharing Plan) for each year (and which, for 2019, was provided in the following amounts: $45,165 (Schroeder), $29,581 (Ewing), $24,521 (Rust), $20,092 (Braun), $20,581 (Leinenbach) and $20,092 (Dauby); for 2018, was provided in the following amounts: $43,643 (Schroeder), $28,394 (Ewing), $22,892 (Rust), $18,626 (Braun), $19,095 (Leinenbach) and $18,543 (Dauby),; and for 2017, was provided in the following amounts: $49,105 (Schroeder), $31,231 (Ewing), $24,141 (Rust), $19,318 (Braun), $19,740 (Leinenbach) and $18,849 (Dauby), and for 2016, was provided in the following amounts: $43,206 (Schroeder), $28,056 (Ewing), $20,611 (Rust), $16,266 (Braun), $16,502 (Leinenbach) and $15,328 (Dauby), and are included in the Executive Officers’Officers' paychecks throughout the year,year), (v) a “longevity"longevity payment,”" paid in November of each year, and (vi) with respect to Mr. Schroeder, cash director fees of $32,450 in 2019, $33,400 in 2018, and $32,700 in 2017 and $32,100 in 2016.Officers’Officers' coverage.“Compensation"Compensation Discussion and Analysis”Analysis" section on “Compensation"Compensation Components,”" our Board, at a specialits April 29, 2019 board meeting, held in the first quarter of 2018 adopted “balanced scorecards”"balanced scorecards" that substantially established, for each of our then-current Executive Officers, the Board’sBoard's targeted performances during the one- and three-year periods ending December 31, 2018,2019, by which they would be considered for short-term and long-term incentive awards after the conclusion of 2018.2019. At a meeting held March 4, 2019,2, 2020, and based on the extent to which the Board deemed the performance criteria to be satisfied, the Board authorized (a) the payment of short-term incentive awards (payable quarterly in 20192020 in cash) to the Executive Officers for 20182019 performance, and (b) the issuance of restricted shares and a cash portion as LTI Awards (to be issued on March 15, 2019,2020, based on Company stock prices at the close of trading on March 14, 2019)13, 2020) based upon performance for the three-year performance period ending December 31, 2018.20182019 (based on the threshold, target and maximum award levels as they existed as of December 31, 20182019 under the balanced scorecards) to the Executive Officers. All Other
Awards:
Number
of
Securities
Under-
lying
Options
(#) Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
(1) Estimated Future Payouts
Under Equity Incentive Plan
Awards
(2) All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#) Exercise or
Base Price
of Option
Awards
($/Share) Grant
Date* Threshold
($) Target
($) Maximum
($) Threshold
(#) Target
(#) Maximum
(#) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) 04-29-19 142,975 285,950 571,900 2,022 4,044 8,088 — — — 12-16-19 — — — — — — 713 (3) — — 04-29-19 81,130 162,260 324,520 1,148 2,296 4,590 — — — 04-29-19 62,843 125,685 251,370 890 1,778 3,556 — — — 04-29-19 46,883 93,765 187,530 664 1,326 2,652 — — — 04-29-19 48,279 96,558 193,116 684 1,366 2,732 — — — 04-29-19 46,883 93,765 187,530 664 1,326 2,652 — — — Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) Mark A. Schroeder 273,000― 546,000
―2,130
―4,230
―8,430
―Clay W. Ewing 79,800 159,600 319,200 1,260 2,490 4,950 ― ― ― Bradley M. Rust 2-26-18 61,250 122,500 245,000 960 1,920 3,810 ― ― ― Randall L. Braun 2-26-18 46,200 92,400 184,800 720 1,440 2,880 ― ― ― Keith A. Leinenbach 2-26-18 47,250 94,500 189,000 750 1,470 2,940 ― ― ― D. Neil Dauby 2-26-18 46,200 92,400 184,800 720 1,440 2,880 ― ― ― 20182019 performance were approved March 4, 2019,2, 2020, but such 20182019 grants were awarded with reference to performance goals that were substantially established at a meeting of the Board held on February 26, 2018.April 29, 2019. Solely for purposes of this presentation, the “grant date”"grant date" is considered to be the date of the substantial establishment of the balanced scorecard performance goals at the February 26, 2018April 29, 2019 meeting of the Board.February 26, 2018)April 29, 2019). The actual amounts of the awards (as fixed by action of the Board on February 26, 2018)April 29, 2019) have been reported in the Summary Compensation Table, above, and details of these actual amounts are set forth in the table included in footnote 34 to the Summary Compensation Table.February 26, 2018)April 29, 2019). The estimated number of restricted shares was determined by taking 60%67% of the projected long-term incentive award and dividing this amount by the market price of the Company’sCompany's common shares at the end of the Fiscal Year (based on the NASDAQNasdaq Official Closing Price of $27.77$35.62 for the Company’sCompany's common shares on December 31, 20182019), then rounded up to the nearest whole number 30-share block that is divisible by three).696713 common shares of the Company on December 17, 2018.16, 2019. Subject to his continued service on the Board and satisfaction of certain attendance requirements, the shares will vest in their entirety on December 5, 2019.31, 2020.20182019 with respect to the Executive Officers. The stock grants reported below consists of the one-third part of the restricted stock portion of the LTI Awards granted on March 15, 2016, based2017 (based on performance for the three-year period ending December 31, 2015, the one-third part of the restricted stock portion of the LTI Awards granted on March 15, 2017, based on performance for the three-year period ending December 31, 2016, and2016), the one-third part of the restricted stock portion of the LTI Awards granted on March 15, 2018 (based on performance for the three-year period ending December 31, 2017), and the one-third part of the restricted stock portion of the LTI Awards granted on March 15, 2019 (based on performance for the three-year period ending December 31, 2018), all of which vested effective December 5, 2018. Option Awards Stock Awards Name Option Awards Stock Awards Number of
Shares
Acquired
on
Exercise
(#) Value Realized
on Exercise
($) Number of
Shares
Acquired on
Vesting
(#) Value Realized
on Vesting
($) (a) (b) (c) (d) (e) (b) (c) (d) (e) Mark A. Schroeder ― 5,095 141,488 — — 3,675 123,186 Clay W. Ewing ― 2,995 83,171 — — 2,170 72,738 Bradley M. Rust ― 2,090 58,039 — — 1,630 54,638 Randall L. Braun ― 1,555 43,182 — — 1,225 41,062 Keith A. Leinenbach ― 1,565 43,460 — — 1,245 41,732 D. Neil Dauby ― 1,510 41,933 — — 1,225 41,062 2018.2019. For this purpose, the number of Stock Awards reported in column (g) represents (a) the unvested portions of the restricted shares granted in 2017 (with respect to corporate performance during the three-year period ended December 31, 2016), (b) the unvested portions of the restricted shares granted in 2018 (with respect to corporate performance during the three-year period ended December 31, 2017), and (c) all(b) the unvested portions of the restricted shares issuedgranted in March 2019 (with respect to corporate performance during the three-year period ended December 31, 2018), and (c) all of the restricted shares issued in March 2020 (with respect to corporate performance during the three-year period ended December 31, 2019). The long-term corporate performance scorecards for the three-year period ended December 31, 2018,2019, were established by Board action on February 26, 2018.April 29, 2019. The dollar values of the 20182019 scorecard performance targets were determinable as of December 31, 20182019 and, therefore, the number of shares actually issued March 15, 2019,2020, in satisfaction of those dollar values (based on the March 14, 201913, 2020 fair market value of our common shares) are included in the column (g) figures as if they had been awarded effective December 31, 2018. Option Awards Option Awards Stock Awards Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) Option
Exercise
Price
($) Option
Expiration
Date Number of
Shares or
Units of
Stock
That Have
Not Vested
(#) Market Value
of Shares or
Units of Stock
That Have Not
Vested ($) Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#) Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (b) (c) (d) (e) (f) (g) (h) (i) (j) Mark A. Schroeder ― 6,545 181,755 — — — — — 6,398 227,897 — — Clay W. Ewing ― 3,860 107,192 — — — — — 3,692 131,509 — — Bradley M. Rust ― 2,920 81,088 — — — — — 2,842 101,232 — — Randall L. Braun ― 2,195 60,955 — — — — — 2,128 75,799 — — Keith A. Leinenbach ― 2,245 62,344 — — — — — 2,192 78,079 — — D. Neil Dauby ― 2,195 60,955 — — — — — 2,128 75,799 — — “Compensation"Compensation Discussion and Analysis”Analysis" above under the section entitled “Retirement/"Retirement/ Deferred Compensation Benefits,”" the Executive Officers participated in the Nonqualified Savings Plan in 2018.2019. In addition, Messrs. Rust and Leinenbach are also each party to a supplemental executive retirement agreement with the Company’sCompany's bank subsidiary that provides for certain“Pension Benefits”"Pension Benefits" section below).20182019 with respect to the Executive Officers.
NONQUALIFIED DEFERRED COMPENSATION Executive
Contributions in
Last FY ($) Registrant
Contributions in
Last FY ($)(3) Aggregate
Earnings in
Last FY ($) Aggregate
Withdrawals/
Distributions ($) Aggregate Balance
at last FYE ($)(5) (a) (b) (c) (d) (e) (f) 36,136 26,739 140,224 — 887,394 — — 18,314 — 569,166 9,611 13,642 63,554 — 241,446 2,836 9,938 811 — 47,631 — 5,677 2,144 — 17,636 — 6,088 288 — 16,672 — 5,677 72 — 4,648 Name Executive Contributions in Last FY ($) Registrant Contributions in Last FY ($) (3) Aggregate Earnings in Last FY ($) Aggregate Balance at last FYE ($) (5) (a) (b) (c) (d) (e) (f) Clay W. Ewing (4) 8,982 12,850 (9,267) ― 155,430 Bradley M. Rust (4) 2,626 8,224 495 ― 35,760 Randall L. Braun (4) ― 4,646 (384) ― 10,846 Keith A. Leinenbach (4) ― 5,040 160 ― 11,344 D. Neil Dauby ― 4,576 ― ― ― CEO’sCEO's participation in the Nonqualified Savings Plan. Earnings reported in line (1), column (d), represent the change in market value of the investments in which Mr. Schroeder directs the investment of his account.CEO’sCEO's participation in the Deferred Director Compensation Plan, which has been frozen since December 31, 1996. Earnings reported in line (2), column (d) represent earnings under the Plan.20182019 that will be contributed in 2019,2020, such amounts are also included in “All"All Other Compensation”Compensation" (column (i)) of the Summary Compensation Table.LeinenbachDauby direct the investment of their accounts.$215,376, $76,084, $32,507, $10,418$241,036, $88,935, $40,731, $15,064, $16,202 and $11,162,$4,576, of compensation for Messrs. Schroeder, Ewing, Rust, Braun, Leinenbach and Leinenbach,Dauby, respectively, that was included in the Summary Compensation Table for years prior to 2018.2019.(i.e.(i.e., the benefit does not further increase based on either the age or the service of Mr. Rust) of $26,340 per year for fifteen years and an additional $10,000 death benefit. Mr. Rust is 100% vested in the benefit and amounts become payable upon his death, disability, termination of employment or retirement. Except in cases of death or disability, the benefit will commence on the first day of the month following his 65th birthday. If he terminates employment prior to age 65 but after age 60, he may elect to commence benefits prior to age 65 but a reduction will be applied equal to 6% per year for each year in which benefits are commenced prior to age 65. Death benefits, including a $10,000 burial benefit, are payable to Mr. Rust’sRust's beneficiary under the plan.Company’sCompany's bank subsidiary that provides for a supplemental retirement benefit in the amount of $500,000, plus interest. So long as he remains employed by the bank subsidiary through his Retention Date (i.e.(i.e., December 31, 2023, which represents the last day of the month in which his 65th birthday occurs), Mr. Leinenbach will receive the retirement benefit, in monthly installments, over a ten-year period that commences January 1, 2025. Plan Name Number of Years
Credited Service (#) Present Value of
Accumulated
Benefit ($) Payments During
Last Fiscal Year ($)(a) (b) (c) (d) (e) — — — — — — — — Executive Supplemental
Retirement Income
Agreement N/A (1) 114,156 (2) None — — — — Supplemental Executive
Retirement Agreement N/A (1) 0 None — — — — NamePlan NameNumber of Years Credited Service (#)Present Value of AccumulatedBenefit ($)Payments During Last Fiscal Year ($)(a)(b)(c)(d)(e)Mark A. Schroeder――――Clay W. Ewing――――Bradley M. RustExecutive Supplemental Retirement Income AgreementN/A (1)102,395 (2)NoneRandall L. Braun――――Keith A. LeinenbachSupplemental Executive Retirement AgreementN/A (1)0NoneD. Neil Dauby――――Leinenbach’sLeinenbach's right to retirement benefits is contingent upon his continuing employment by the bank subsidiary through December 31, 2023.Rust’sRust's accumulated benefit reflects the payment of the retirement benefit in one hundred eighty (180) equal monthly installments commencing at normal retirement age and a discount rate equal to 4.0%.2018)2019):20092019 LTI Plan and its predecessor, the German American Bancorp, Inc. 2009 Long-Term Equity Incentive Plan (the "2009 LTI Plan"), each provides that upon a change in control, and unless otherwise determined by the Board, all unvested awards become vested and all related restrictions lapse. No stock options have been issued under the 2019 LTI Plan or 2009 LTI Plan to the Executive Officers; however:2018,2019, there was a total of 16,4658,790 shares of restricted stock outstanding that were issued to the Executive Officers pursuant to previously granted LTI Awards, 12,035 of which shares will not become vested until December 5, 2019 and 4,430 of which shares will not become vested until December 5, 2020;2020, and 4,360 of which shares will not become vested until December 5, 2021; accordingly, had a change in control occurred as of December 31, 2018,2019, each of the Executive Officers would have been entitled to vesting of their then-unvested restricted shares, which would have had the following values (based on the closing price of $27.77$35.62 per share on December 31, 2018)2019) as of such date: Mr. Schroeder, $122,605,$102,229, Mr. Ewing, $97,195,$60,198, Mr. Rust, $72,757,$45,950, Mr. Braun, $54,707,$34,551, Mr. Leinenbach, $55,262,$35,620, and Mr. Dauby, $54,707;$34,551; and696713 restricted shares granted to Mr. Schroeder as director of the Company on December 17, 2018,16, 2019, such shares were not vested as of December 31, 20182019 and had a change in control occurred as of such date, Mr. Schroeder would have been entitled to vesting of such shares which would have had a value of $19,328$25,397 (based on a closing price of $27.77$35.62 per share on December 31, 2018)2019).“Compensation"Compensation Discussion and Analysis”Analysis" above, under the section entitled “Retirement/"Retirement/Deferred Compensation Benefits,”" Messrs. Schroeder, Ewing and Rust, Braun, Leinenbach and Dauby were participants in the Nonqualified Savings Plan as of December 31, 2018.2019. If elected by the participant, he (or his beneficiary) will receive a lump sum or installment distribution of his deferrals and matching contributions from the Nonqualified Savings Plan, beginning upon termination of employment, retirement or early retirement or disability. Inretirement. If elected by the Executive Officers, distribution of payments under the Nonqualified Savings Plan may be accelerated in the event of death, disability or a change in control of the Company, any unvested amounts allocated to a participant’sCompany. The account shall become fully vested (the Executive Officers have elected to receive their account balances under the Nonqualified Savings Plan (account balances as of December 31, 20182019 are disclosed in column (f) of the Nonqualified Deferred Compensation table, above) as follows: inabove.single lump sum payment upon the attainment of normalreduced early retirement age asbenefit. If Mr. Rust is terminated without "Cause" (as defined under the Nonqualified Savings Plan (Messrs. Schroeder, Ewing and Rust). In addition,agreement) prior to age 60, the benefit will commence, without reduction, on the first day of the month following his 65th birthday. However, if his termination of employment before age 60 is voluntary, Mr. Rust has electedshall only be entitled to receive his benefits in a single lump sum payment upon a change in control ofvested accrued benefit existing at the Company).•As noted under the Pension Benefit disclosure above, Mr. Rust’s accrued benefit under his Executive Supplemental Retirement Income Agreement will become payable at age 65, unless he terminates after attaining age 60 and elects to commence a reduced early retirement benefit. If Mr. Rust is terminated without “Cause” (as defined under the agreement) prior to age 60, the benefit will commence, without reduction, on the first day of the month following his 65th birthday. However, if his termination of employment before age 60 is voluntary, Mr. Rust shall only be entitled to his vested accrued benefit existing at the termination date. Should Mr. Rust’s employment be terminated for Cause prior to age 65, his retirement benefit will be forfeited.Leinenbach’sLeinenbach's employment terminates prior to the Retention Date due to the death, disability or termination by the bank subsidiary for a reason other than for breach of the agreement or “Just Cause”"Just Cause" (as defined under the agreement), a proportionate amount of the retirement benefit would be paid to Mr. Leinenbach (or his beneficiaries) as provided above. The proportionate amount will be calculated by multiplying the retirement benefit by the number of full calendar months he was employed by the bank subsidiary after the date of the agreement divided by 76. Should Mr. Leinenbach resign voluntarily or his employment be terminated for Just Cause prior to the Retention Date, his retirement benefit will be forfeited.Director CompensationCompany’sCompany's subsidiaries based on a twelve-month period commencing July 1 and ending on June 30 of the following year. The Board’s Governance/Nominating Committee made a recommendation with respect toCompany evaluates director pay using an analysis of its peer group's reported director compensation for the new twelve-month service period to the Board and the Board approved such recommendation at its annual reorganization meeting on June 25, 2018. The changes incorporated in 2018 were to increase the additional lead director fee from $10,000 to $15,000, and to increase the additional fees paid to the Audit Committee Chair from $6,500 to $8,500. The adjustments were the result of the Committee's internal review and analysis of peer group survey comparisons, and thein light of its desire to remain competitive to attractin attracting and retainretaining qualified directors.2018,2019, the Company compensates its directors, including the CEO, through an annual retainer of $25,00020182019 in a lump sum (which was earned regardless of the number of meetings held or attended, and regardless of committee membership or attendance) and an additional attendance fee of $700$850 for each meeting of the Board that is attended during this period and $700$850 for each committee meeting that is attended during this period (with the exclusion of the CEO who does not receive attendance fees for meetings of committees for which he is an ex officio member). ForThe Company also paid, for services of directors during 2018,2019, supplemental cash retainers to the Company also paid a lead director fee of $15,000 (a portion of which was related to such lead director’s chairmanship of the Board’s Governance/Nominating Committee)Board's two co-lead independent directors (Messrs. Klem and annual committee chairman fees of (i) $5,000 for the Compensation/Human Resources and Credit Risk Management Committees and (ii) $8,500 for the Audit Committee. For services of directors during the period that commenced July 1, 2017 and ended June 30, 2018, the Company compensated its directors, including the CEO, through annual retainers paid in cash in a lump sum during 2017Seger) in the amount of $25,000. The Company also paid an additional $700 attendance fee for$15,000 each, meetingand to its committee chairs, as follows: (i) $8,500 to Mr. Root, as Chairman of the Board that was attended during the entirety of that period and $700 for each committee meeting that was attended during the entirety of that period (with the exclusionBoard's Audit Committee; (ii) $5,000 to Mr. Klem, as Chairman of the CEO who does not receive attendance fees for meetingsBoard's Governance/Nominating Committee; (iii) $5,000 to each of committees for which he is an ex officio member).$700$850 per meeting of the board of directors of German American Bank (the Company’sCompany's bank subsidiary), (ii) $700$850 for any meeting of a committee of the board of directors of our bank subsidiary or for any meeting of any regional advisory board of the bank subsidiary, (iii) $850 per meeting of the board of directors of German American Insurance, Inc., and (iii)(iv) an aggregate of $700$850 for the meetings of (A) the boardsboard of directors of German American Investment Services, Inc. and German American Insurance, Inc. and (B) the Wealth Advisory (Trust) Oversight Committee (which meetings occur sequentially on a quarterly basis). Additionally, those directors who travel from their primary residence or principal place of business, which is located outside of Dubois County, Indiana or the Indiana counties immediately adjacent to Dubois County, to meetings held at the Company’sCompany's headquarter offices, will be paid a $50 daily travel allowance in connection with his/her in-person attendance at board or assigned committee meetings.Board’sBoard's committees that are held concurrently with sessions of the board of directors of the bank subsidiary (German American Bank) or of committees of that subsidiary’ssubsidiary's board of directors receive a single meeting fee of $700$850 for the combination of the two concurrent meetings.17, 2018,16, 2019, the Board granted 696713 shares of restricted common stock of the Company as an additional retainer to the current members of the Board of Directors, including Mark A. Schroeder, the Company’sCompany's Chief Executive Officer, under the 20092019 LTI Plan. Accordingly, 696713 shares ofCompany’s twelve (12)Company's fifteen (15) directors (including Mr. Schroeder) effective as of the close of business on December 17, 2018,16, 2019, or an aggregate of 8,352 shares.10,695. Under the terms of the award resolutions (except with respect to Mr. Collins)Ms. Ernst), none of the grants of restricted stock will be transferable prior to December 5, 2019,31, 2020, and each award will be (i) fully forfeited and all shares issued under the award will be canceled should the holder of the award not continue in service as a director of the Company through December 5, 201931, 2020 for any reason other than death or disability, and (ii) subject to a 50% forfeiture (for any reason other than disability) should a director fail to attend in2019,2020, through December 5, 2019,31, 2020, or fail to attend (other than by reason of disability or illness or bona fide emergency) the Company’sCompany's annual meeting of shareholders held in 2019.Mr. CollinsMs. Ernst (whom, as discussed above, is leaving our Board following this year’syear's annual meeting), the award resolutions specified that, in lieu of the December 5, 201931, 2020 measurement date specified above, the date of May 16, 201921, 2020 be used as the date for measuring vesting of hisher restricted stock awards.equal to a multiple of three times their current annual cash retainer of $25,000. Non-employee directors are expected to attain an investment position in shares of our common stock (measured by the same rules as are used for determining the number of shares beneficially owned in our annual meeting proxy statement).20182019 to our directors who served during 20182019 and who were not also Executive Officers in 2018.2019. Please note that Mr. Schroeder is the only Executive Officer who is also a director. Mr. Schroeder’sSchroeder's cash director fees of $33,400$32,450 in 20182019 are reported in the “All"All Other Compensation”Compensation" column of the Summary Compensation Table, shown previously, while his restricted stock grant of 696713 shares on December 17, 201816, 2019 (which represented a market value of $19,975$24,991 on such date) is reflected in the Stock Awards column of the Summary Compensation Table, shown previously. Fees
Earned or
Paid in
Cash ($) Stock
Awards ($)(1) Option
Awards Non-Equity
Incentive
Compensation Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings ($) All Other
Compensation Total ($) 46,600 24,991 — — — — 74,591 46,150 24,991 — — — — 71,141 53,900 24,991 — — — — 78,891 49.050 24,991 — — — — 74,041 74,550 24,991 — — — — 99,541 48,800 24,991 — — — — 73,791 35,350 24,991 — — — — 60,341 41,800 24,991 — — — — 66,791 37,900 24,991 — — — — 62,891 25,814 24,991 — — — — 50,805 72,300 24,991 — — — — 97,291 20,204 24,991 — — — — 45,195 46,250 24,991 — — — — 71,241 22,454 24,991 — — — — 47,445 Name Fees Earned or Paid in Cash ($) Stock Awards ($) (1) Option Awards Non-Equity Incentive Compensation All Other Compensation Zachary W. Bawel 31,400 19,975 ― ― ― ― 51,375 Lonnie D. Collins 39,050 19,975 ― ― ― ― 59,025 Christina M. Ernst 42,650 19,975 ― ― ― ― 62,625 Marc D. Fine 54,250 19,975 ― ― ― ― 74,225 U. Butch Klem 62,450 19,975 ― ― ― ― 82,425 J. David Lett 43,250 19,975 ― ― ― ― 63,225 Lee A. Mitchell 20,250 19,975 40,225 Chris A. Ramsey 39,750 19,975 ― ― ― ― 59,725 M. Darren Root 50,200 19,975 ― ― ― ― 70,175 Thomas W. Seger 50,350 19,975 ― ― ― ― 70,325 Raymond W Snowden 47,450 19,975 ― ― ― ― 67,425 17, 201816, 2019 of 696713 restricted shares to each of the directors (including Mr. Schroeder). The market value of the restricted shares was computed based on the closing market price of the Company’sCompany's Common Shares on December 17, 201816, 2019 of $28.70.$35.05. Subject to the continued service and attendance obligations described above, such restricted shares will vest on December 5, 201931, 2020 (except with respect to Mr. CollinsMs. Ernst whose shares will vest on May 16, 2019)21, 2020).2018,2019, we have not participated in any transaction or series of related transactions (and there is no currently proposed transaction as of the date of this proxy statement) that involved (or is proposed to involve) an amount greater than $120,000 in which any of our directors, Executive Officers or members of their immediate families had (or would have) a direct or indirect material interest.Company’sCompany's bank subsidiary has (and expects to continue to have in the future) loan transactions in the ordinary course of business with directors and officers of the Company and their associates and members of their immediate families. These loans have been made on substantially the same terms, including interest rates, collateral and repayment terms on extensions of credit, as those prevailing at the same time for comparable loans with persons not related to the lender and did not involve more than the normal risk of collectability or present other unfavorable features, and none of them are disclosable by us as nonaccrual, past due, restructured or potential problems (as those terms are defined by an SEC industry guide applicable to disclosures by bank holding companies).NASDAQ,Nasdaq, the Audit Committee of our Board has the authority and responsibility for reviewing and approving all related party transactions of a type and size that would be required to be reported to shareholders and the SEC under the rules of the SEC for disclosure of related person transactions. Accordingly, transactions in which we participate (or are proposed to participate) that are covered by this review and approval requirement include but are not limited to most types of financial transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements, orCompany’sCompany's bank subsidiary in which our directors, Executive Officers or members of their immediate families may have a direct or indirect material interest, if such loans satisfy the standards (described by the preceding paragraph) for non-disclosure under the SEC rules;
APPROVAL OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
(GRANTING SHAREHOLDERS THE RIGHT TO AMEND BYLAWS)The Board of Directors shall have the exclusive power to make, alter, amend, or repeal, or to waive provisions ofExcept as otherwise expressly provided in these Articles of Incorporation or by the Corporation Law, the Bylaws of the Corporation may be altered, amended or repealed by either (a) the Board of Directors by the affirmative vote of a majority of the number of Directors then in office, except as provided byor (b) the affirmative vote, at a meeting of the shareholders of the Corporation, by the holders of at least a majority of the outstanding shares of all classes of Voting Shares of the Corporation (considered for purposes of this Section 9.01 as a single class and as defined in Article X); provided, however, that no Bylaw may be adopted that is inconsistent with the Corporation Law. All provisions for the regulation of the business and management of the affairs of the Corporation not stated in these Articles of Incorporation shall be stated in the Bylaws. The Board of Directors may also adopt Emergency Bylaws of the Corporation and shall have the exclusive power (except as may otherwise be provided therein) to make, alter, amend, or repeal, or to waive provisions of, the Emergency Bylaws by the affirmative vote of a majority of the entire number of Directors at the time.
APPROVAL OF THE GERMAN AMERICAN BANCORP, INC. AMENDED AND RESTATED 2019 EMPLOYEE STOCKOn March 4,the Board of Directors adoptedEmployee Stock Purchase Plan (the "Purchase Plan"), reflecting an amendment to a certain term under the German American Bancorp, Inc. 2019 Employee Stock Purchase Plan (the “Purchase Plan”"Prior Purchase Plan"). The Board’s adoption ofPurchase Plan amends and restates in its entirety the Prior Purchase Plan. If the Purchase Plan is not approved by our shareholders, it will not become effective, the Prior Purchase Plan will continue in effect, and we may continue to offer employees the right to purchase shares under the Prior Purchase Plan, subject to approvalits terms, conditions and limitations thereunder.shareholders atpreceding sentence for any offering, the Annual Meeting.percentage shall be ninety-five percent (95%).Notwithstanding the foregoing, in no event shall the purchase price be less than eighty-five percent (85%) of the Fair Market Value of a Common Share on the Offering Date.Purchase Plan replaces the 2009 Employee Stock Purchase Plan (the “2009 ESPP”), which expires by its own terms on August 16, 2019.The effective datepurpose of both the Purchase Plan will be October 1, 2019, if it is approved byand the shareholders. The Board of Directors of the Company will determine the effective date of the first offering, if any, under the Purchase Plan. The purpose of thePrior Purchase Plan is to provide subject to the determination of Board of Directors in its sole discretion to implement the Plan, eligible employees of the Company and its subsidiaries with a convenient opportunity to purchase the Company’sCompany's common shares financed by payroll deductions. Our shareholders approved adoption of the Prior Purchase Plan in May 2019, with 750,000 shares authorized for issuance. As of March 12, 2020, a total of 5,815 shares have been purchased under the Prior Purchase Plan, since its initial offering period commencing October 1, 2019.AB to this Proxy Statement.OctoberJuly 1, 2019,2020, subject to approval at the 20192020 annual meeting by the shareholders of the Company.“employee"employee stock purchase plan”plan" under Internal Revenue Code Section 423.(approximately 3.0%(inclusive of outstanding shares) over ten (10) years,all shares issued under the Prior Purchase Plan prior to the Purchase Plan's effective date) through September 30, 2029, subject to automatic adjustment in the event of a stock split, stock dividend, recapitalization or similar event.OfferingsOfferings..The Purchase Plan provides a series of 3-month offering periods, commencing on the first day and ending on the last trading day of each calendar quarter, for the purchase of the Company’sCompany's common stock by participating employees. A total of 750,000 common shares will be reserved for issuance under the Purchase Plan.Plan (inclusive of the shares issued under the Prior Purchase Plan prior to the effective date of the Purchase Plan). The Purchase Plan will continue until September 30, 2029, or, if earlier, until all of the shares of common stock allocated to the Purchase Plan have been purchased. The Compensation/Human Resources Committee (the “Committee”"Committee") has the authority to change the duration and/or frequency of the offering periods. However, in no event shall any option granted under the Purchase Plan be exercisable more than twenty-seven (27) months from its grant date. If the market value of the 750,000744,185 shares available for grant on the date of this proxy statement were based on the closing price of a common share as reported on NASDAQNasdaq on March 1, 2019,2, 2020 (i.e. $31.08 per share), the common shares available for the grant of awards under the Purchase Plan would have an aggregate market value of $2,325,000.$23,129,270.Eligibility Eligibility..All employees of the Company and its participating subsidiaries who have been employed for at least six months as of the first day of the offering are eligible to participate in the1, 2019,2, 2020, approximately 729808 employees would have been eligible to participate.SharesShares.. Prior to each offering period, eligible employees would be entitled to elect to have a specified percentage of their eligible cash compensation deducted from their pay. The Committee will establish the maximum percentage that any one employee may have deducted. No participant may be granted an option under the Purchase Plan if such option would entitle the participant to purchase common shares having a market value in excess of the amount specified by the Committee or if, immediately after an option is granted under the Purchase Plan, the employee owns more than 5% of the total combined voting power or value of all classes of shares of the Company or of any parent or subsidiary of the Company. In no event will a participant be allowed to purchase more than $25,000 in Fair Market Value (as defined below under “Price”"Price" and based upon the grant date) of the Company’sCompany's Common Shares under the Purchase Plan, and any other stock purchase plan maintained by the Company or a parent or subsidiary of the Company that is qualified under Internal Revenue Code Section 423, for any one calendar year. Participants may increase, decrease or suspend their payroll deductions one time each offering period and may withdraw the balance of their payroll deduction account at any time during each offering period. At the end of each offering period, the balance of each participant’sparticipant's payroll deduction account will be applied towards the purchase of common shares. All shares purchased will be credited in book-entry form to a separate share account for each participant.Price Price.. The price at which the shares will be deemed to have been purchased under each offering (the “option price”"option price") will be determined by the Committee, and will be an amount in the range from ninety five percent (95%) and one hundred percent (100%) of the Fair Market Value of the Common Shares on the last trading day of the offering period. If the Committee for any reason should fail to determine the price for any offering within the percentage range specified by the preceding sentence for any offering, the percentage shall be ninety-five percent (95%). “Fair"Fair Market Value”Value" of a share of Common Shares on a given date means the NASDAQNasdaq Official Closing Price (or similar closing price information if The NASDAQNasdaq Stock Market LLC (NASDAQ)(Nasdaq) no longer makes available a figure called the NASDAQNasdaq Official Closing Price) on such date (“NOCP”("NOCP"), or if no NOCP is furnished by NASDAQNasdaq for the Common Shares on such date, the NOCP of a Common Share on the most recent day on which NASDAQNasdaq has furnished an NOCP for the Common Shares. If the Common Shares are not listed on any given date on the NASDAQNasdaq Global Select Market or similar market for which an NOCP (or similar closing price) is furnished by NASDAQ,Nasdaq, then “Fair"Fair Market Value”Value" is defined as the fair market value of a share on such date as determined in good faith by the Committee.Administration Administration.. The Board of Directors has delegated administration of the Purchase Plan to the Committee. The Committee has the authority, subject to the terms of the Purchase Plan, to (i) adopt, alter, and repeal administrative rules and practices governing the Purchase Plan; (ii) interpret the terms and provisions of the Purchase Plan; and (iii) otherwise supervise the administration of the Purchase Plan.participant’sparticipant's tax status.“holding period”"holding period"), upon selling the shares the participant will recognize ordinary income equal to the lesser of (i) the actual gain (the amount by which the fair market value of the shares on the date of disposition exceeds the purchase price), or (ii) the amount, if any, by which the fair market value as of the date of grant exceeded the purchase price. Any additional gain on the disposition of stock is treated as a long-term capital gain. The Company will not receive an income tax deduction in the event the participant disposes of the shares after completion of the holding period. If the participant sells the shares before the expiration of the holding period, however, the participant will have made a “disqualifying disposition”"disqualifying disposition" and will realize ordinary income on the date of sale equal to the difference between the option price and the fair market value of the shares on the exercise date. Upon the subsequent sale of any such shares, any appreciation or depreciation in the value of the shares after the date the option was exercised is treated as a capital gain or loss. The Company will receive an income tax deduction in the same amount and at the same time as the participant realizes ordinary income, but not as to any amount which is subject to capital gains treatment. The ability of the Company to receive an income tax deduction related to compensation paid to certain executive officers may be limited by Code Section 162(m) if such compensation exceeds $1 million.Octoberthe purchase period commencing July 1, 2019,2020, and then only if it is approved by the Company’sCompany's shareholders. Therefore, no purchase rights have been granted or shares of common stock issued under the Purchase Plan. As of March 1, 2019,2, 2020, the closing price of the Company common stock was $31.00.$31.08. Since benefits under the Purchase Plan are dependent on the fair market value of the Company common stock as of various future dates and individual participants’participants' elections, it is not possible to determine the benefits that will be received by participants under the Purchase Plan, including Executive Officers who elect to participate. The Company expects, however, that, if the first year of quarterly offering periods under the Purchase Plan had concludedbeen in effect during 2018,fiscal 2019, the benefits and amounts received by the Executive Officers, individually and as a group, as well as the Company’sCompany's non-executiveCompany’sCompany's non-executive employees as a group (with respect to the quarterly offering periods ending during that year) would have been as follows: Shares
Purchased Aggregate
Purchase
Price ($) FMV of
Purchased
Shares
($) Benefit of
Participation
($) 661 19,906 20,954 1,048 — — — — 661 19,906 20,954 1,048 552 16,626 17,502 876 661 19,906 20,954 1,048 — — — — 2,537 76,344 80,364 4,020 — — — — 27,480 827,035 870,569 43,534 Name and Position Shares Purchased Aggregate Purchase Price ($) FMV of Purchased Shares ($) Benefit of Participation ($) Mark Schroeder, President and Chief Executive Officer 680 21,380 22,505 1,125 Clay Ewing, President and Secretary ¯ ¯ ¯ ¯ Bradley M. Rust, Executive Vice President and Chief Financial Officer 680 21,380 22,505 1,125 Randall L. Braun, Executive Vice President and Chief Retail Banking and Development Officer 267 8,392 8,833 441 Keith A. Leinenbach, Executive Vice President and Chief Credit Officer 680 21,380 22,505 1,125 D. Neil Dauby, Executive Vice President and Chief Commercial Banking Officer ¯ ¯ ¯ ¯ Executive Group (6 persons) 2,307 72,532 76,348 3,816 Non-Executive Director Group ¯ ¯ ¯ ¯ Non-Executive Officer Employee Group 15,952 501,528 527,913 26,385 20182019 under the Prior Purchase Plan and its predecessor plan, the German American Bancorp, Inc. 2009 ESPPLong Term Equity Incentive Plan, for the indicated participants and the number of shares of common stock that would have been purchased by the participants during 2018,2019, assuming such amounts were evenly split among the four calendar quarters, and the options for each quarterly period were exercised at the NOCP on the last trading day of the offering period. The aggregate purchase price reflects the participants purchasing the shares at a five percent discount from the NOCP.20182019 with respect to compensation plans under which equity securities of the Company are authorized for issuance. It does not include information concerning equity securities that may be authorized for issuance under the Purchase Plan or the German American Bancorp, Inc. 2019 Long-Term Equity Incentive Plan (see description on pages []-[]), which plan is also being presented for approval at the 2019 annual meeting by the shareholders of the Company.Number of securities to
be issued upon exercise
of outstanding options,
warrants and rightsWeighted-average
exercise price of
outstanding options,
warrants and rightsNumber of securities
remaining available for future
issuance under equity
compensation plans ¯— (a) $ — (a) ¯1,734,824306,404(b) ¯— ¯— ¯— ¯— ¯$— 306,4041,734,824 Shareholder Approval“for”"for" the Purchase Plan and shares represented by returnreturned proxies that do not contain instructions to vote against the Purchase Plan or to abstain from voting will be counted as shares cast for the approval of the Purchase Plan. Abstentions and broker non-votes will not be treated as votes cast “for”"for" or “against”"against" the Purchase Plan but will be included for purposes of determining whether a quorum is present. the German American Bancorp, Inc. 2019 Employee Stock Purchase Plan (Proposal 2 on the proxy).PROPOSAL 3APPROVAL OF THE GERMAN AMERICAN BANCORP, INC. 2019LONG-TERM EQUITY INCENTIVE PLANOn March 4, 2019, the Board of Directors adopted the German American Bancorp, Inc. 2019 Long-Term Equity Incentive Plan (the “Incentive Plan”). The Board’s adoption of the Incentive Plan is effective May 16, 2019,Amended and is subject to approval by the shareholders at the Annual Meeting.The Incentive Plan is intended to replace German American Bancorp 2009 Long Term Equity Incentive Plan (the “2009 LTI Plan”) and is designed to promote the interests of the Company and its shareholders by providing a means by which the Board of Directors can award stock-based incentives to employees and directors of the Company or any subsidiary. The Incentive Plan permits the Board to grant incentive stock options, non-qualified stock options, restricted stock, and stock appreciation rights (“SAR”).The purpose of the Incentive Plan is to further the growth, development, and financial success of the Company by providing for stock-based incentives to participants that align their interests more closely with those of the Company’s shareholders. The Company also believes that the Plan will assist it in its efforts to attract and retain quality employees and directors, providing discretion and flexibility in designing incentives to attract, reward and retain employees (including Executive Officers) and directors and to ensure the continued close alignment of their interests with the interests of shareholders generally. The Incentive Plan provides for a number of different types of stock-based awards in addition to stock options.The following summary of the material features of the Incentive Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Incentive Plan, which is set forth in Appendix B to this Proxy Statement.Important Governance Features and PracticesThe Incentive Plan includes numerous provisions that the Compensation/Human Resources Committee and the Board of Directors believe promote best practices by reinforcing the alignment between equity compensation arrangements for officers and employees with the interests of shareholders. Those provisions include, but are not limited to, the following:Feature/PracticeDescriptionNo Repricing or Cash Buyouts Without Shareholder ApprovalWithout shareholder approval, no stock option or SAR award may be (i) amended to decrease the exercise price, (ii) cancelled in exchange for a replacement option or SAR with a lower exercise price, or (iii) purchased or cancelled in exchange for cash, other property or grant of a restricted stock award at a time when the per share exercise price of the option or SAR award is greater than the fair market value of a share of our common stock.No Liberal Share RecyclingWe do not allow shares of common stock to be added back to the Incentive Plan reserve for future grants in the following circumstances: (i) shares tendered as payment for a stock option exercise price; (ii) shares withheld to cover taxes; (iii) shares that have been repurchased by the Company using stock option exercise proceeds; and (iv) stock-settled awards where only the actual shares delivered with respect to an award are counted against the Incentive Plan reserve.Minimum Vesting RequirementThe Incentive Plan will require that at least 95 percent of the shares underlying awards granted under the Incentive Plan be scheduled to vest on or after the first anniversary of the grant date, regardless of award type, subject to the Committee’s authority under the Incentive Plan to vest awards earlier, as the Committee deems appropriateMinimum Holding Periods for Named Executive OfficersOptions and SAR awards granted to any Named Executive Officer must provide that any shares received in connection with the exercise or vesting of the option or right will be subject to an additional one-year holding period.Feature/PracticeDescriptionClawbackAwards will be subject to recovery or clawback if the Compensation Committee later determines either (i) that financial results used to determine the amount of that award must be materially restated and that the participant engaged in fraud or intentional misconduct related to the restatement or (ii) that recovery or repayment of the award is required by the Sarbanes-Oxley Act or other applicable law.No Tax Gross-UpsThe Incentive Plan does not provide for any tax gross-ups.Material Amendments Require Shareholder ApprovalWe must obtain shareholder approval for material plan changes, including increasing the number of shares authorized for issuance, materially modifying participation requirements, and changing the restrictions on repricing.Independent AdministrationThe Incentive Plan is administered by our Compensation and Human Resources Committee, which is composed entirely of “independent directors” within the meaning of NASDAQ requirements and “non-employee directors” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended.No Evergreen ProvisionThe Incentive Plan does not contain an “evergreen” feature that automatically replenishes the shares available for future grants under the Incentive Plan.No Automatic Grants or Reload GrantsThe Incentive Plan does not provide for “reload” or other automatic grants to any participant.Key Data Relating to Outstanding Equity Awards and Shares AvailableThe following table includes information relating to outstanding equity awards and shares available for future awards under the 2009 LTI Plan as of March 1, 2019 (and without giving effect to approval of the Incentive Plan under this Proposal):2009 LTI PlanTotal shares underlying outstanding unvested full value awards (RSAs)44,682Weighted-average grant date fair value of outstanding unvested full value awards (RSAs)$32.47Total shares currently available for grant306,404Summary of the Incentive PlanAdministration. In accordance with the terms of the Incentive Plan, our Board of Directors, or a compensation committee of our Board, administers the Incentive Plan. Our Board of Directors has delegated administration of the Incentive Plan to the Compensation/Human Resources Committee (the “Committee”). The Committee may delegate to ministerial non-discretionary functions to one or more officers or employees of the Company. Subject to any limitations in the Incentive Plan, the Committee has the power to determine the terms of the awards, including the employees and directors who will receive awards, the exercise price of options, the fair market value of the shares subject to each award, the number of shares subject to each award, the vesting schedule and exercisability of awards and the form of consideration payable upon exercise or purchase, as applicable.Eligibility.The Committee may designate those persons eligible to receive awards under the Incentive Plan from among the employees and directors of the Company or any subsidiary. While the total number of employees and directors who will be eligible to receive awards under the Incentive Plan is not determinable, the Committee made awards under the existing long-term equity incentive plan, which the Incentive Plan is intended to replace, to (a) 78 employees of the Company and its subsidiaries (including each of the Executive Officers) on March 15, 2019, and (b) 12 directors of the Company on December 17, 2018.Shares Available under the Plan. The aggregate number of our common shares with respect to which awards may be granted under the Incentive Plan may not exceed 1,000,000.Share Counting; Limitations on Recycling. Subject to the application of the “Adjustments” paragraph below, shares that: (a) are subject to issuance upon exercise of an option but cease to be subject to the option for any reason other than the option being exercised; (b) are subject to an award granted under the Incentive Plan but are forfeited or are repurchased by the Company at the original issue price; or (c) are subject to an award that otherwise terminates without shares being issued will again be available for grant and issuance in connection with future awards under the Incentive Plan. However, the following shares may not again be made available for future grant and issuance as awards under the Incentive Plan: (x) shares that are withheld to pay the exercise price of an award or to satisfy any tax withholding obligations in connection with an award; (y) shares not issued or delivered as a result of the net settlement of an outstanding option or stock appreciation right; or (z) shares of the Company’s Common Stock repurchased on the open market with the proceeds of an exercised option. In the case of stock appreciation rights, only shares delivered in connection with the settlement of the right will be deducted from the aggregate share limit set forth above.Adjustments. If the outstanding Shares are changed into, or exchanged for, a different number or kind of shares or securities of the Company through any capital reorganization or reclassification, or if the number of outstanding Shares is changed through a stock split or stock dividend, an appropriate adjustment will be made by the Committee in the number, kind, and/or exercise price with respect to Shares as to which awards may be granted under the Incentive Plan. A corresponding adjustment will also be made in the number, kind, and/or exercise price for Shares with respect to which there are unexercised outstanding Awards. Any such adjustment in an outstanding Award, however, shall be made without change in the total price applicable to the unexercised portion of the Award but with a corresponding adjustment in the price for each Share covered by the awardTypes of Awards. The Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. Our employees and directors, and any subsidiary corporation’s employees and directors, are eligible to receive awards under the Incentive Plan. However, incentive stock options may only be granted to our employees or any subsidiary corporation’s employees.With respect to all stock options granted under the Incentive Plan, the exercise price must at least be equal to the fair market value of our common shares on the date of grant. For this purpose (and for so long as our shares are traded on a national securities exchange or are readily tradeable on an established securities market), fair market value means, on any date, the closing price of our common shares on such date, or if there was no trading in the shares on such date, then on the next preceding date on which there was trading in the shares. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns 10% or more of the voting power of all classes of our outstanding shares as of the grant date, the term of an incentive stock option must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. The Committee determines the terms of all other options.Minimum Vesting Requirements. Vesting periods under the 2019 Incentive Plan will be established by the Committee. However, except in connection with Awards that may be settled only in cash, the minimum vesting period of each award must be one (1) year (subject to the accelerated vesting described below or as otherwise permitted by the Committee). With respect to up to five percent (5%) of the maximum number of shares available under the Incentive Plan, the Company may grant awards or otherwise accelerate vesting without regard to the one-year minimum vesting period.Minimum Holding Periods for Named Executive Officers. Options and stock appreciation rights granted to any Named Executive Officer must provide that any shares received in connection with the exercise or vesting of the option or right will be subject to an additional one year holding period before any sale or transfer of the shares may take place, other than with respect to any shares withheld by the Company to satisfy a participant’s withholding tax obligation in connection with an award.Rights as a Shareholder. Unless otherwise provided by the Board or the Committee, a participant will have rights as a shareholder with respect to shares covered by an award, including voting rights or rights to dividends, only upon the date of issuance of a certificate to him/her and, if payment is required, only after payment in full has been made for such Shares.Limitations on Exercise and Transfer. Unless otherwise provided by law or the applicable award agreement, the Incentive Plan generally does not allow for the sale or transfer of awards under the Incentive Plan or exercise of awards by any person other than the participant. However, the Incentive Plan permits transfers to the Company, designation of beneficiaries and transfers or exercises by beneficiaries in the event of the participant’s death, transfers by will or the laws of descent and distribution or transfers or exercises by an authorized legal representative on behalf of a participant who has suffered a disability.Amendments to the Incentive Plan and Awards. The Committee has the authority to amend the Incentive Plan if the amendment does not materially adversely affect any award without the written consent of the affected participant. Stockholder approval is required only to the extent required under applicable law or if the board of directors determines that it is necessary or advisable. Subject to the prohibition of repricing discussed below, the Committee may unilaterally amend the terms of any award agreement evidencing an award previously granted, except that no such amendment may materially impair the rights of any participant under the applicable award without the participant’s consent, unless such amendment is necessary to comply with applicable law or stock exchange rules or the “clawback” policy described below.Prohibition on Repricing. Except in connection with equity restructurings and other situations in which share adjustments are specifically authorized, the Incentive Plan prohibits the Committee from repricing any outstanding option or stock appreciation right (“SAR”) awards without the prior approval of our shareholders. For these purposes, a “repricing” includes amending the terms of an option or SAR award to lower the exercise price, canceling an option or SAR award in conjunction with granting a replacement option or SAR award with a lower exercise price, canceling an option or SAR award in exchange for cash, other property or grant of a restricted stock award at a time when the per share exercise price of the option or SAR award is greater than the fair market value of a share of our Common Stock, or otherwise making an option or SAR award subject to any action that would be treated under accounting rules as a “repricing.”Clawback of Awards. Awards granted to an Executive Officer of the Company under the Incentive Plan will be subject to recovery or clawback if the Committee later determines either (i) that financial results used to determine the amount of that award must be materially restated and that the Executive Officer engaged in fraud or intentional misconduct related thereto, or (ii) that recovery or repayment of the award is required by the Sarbanes-Oxley Act or other applicable law. In addition, the Compensation Committee may provide that any award, including any shares subject to or issued under an award, is subject to any other recovery, recoupment, clawback and/or other forfeiture policy maintained by the Company from time to time.Separation from Service. The Committee has the authority to establish the effect of a separation from service on the rights and benefits under any award, however, a director’s separation from service will not accelerate or otherwise increase the number of shares subject to an award unless the committee expressly determines that it will. Participants may exercise awards after a separation from service only in accordance with the terms of the award agreement and, unless otherwise expressly provided by the committee, only with respect to the number of shares as to which the award could have been exercised on the date of the separation from service.Termination. Our Incentive Plan provides that, upon the occurrence of any of the events described below, the Incentive Plan and each outstanding award will terminate, subject to any provision made by the Committee for the continuation of awards. If awards are to terminate, each participant will have the right, by giving notice at least ten days before the effective date of the event in question, to exercise all or any part of an unexpired award to the extent then exercisable. Events triggering termination of the Incentive Plan and each award granted under the plan include the following:dissolution, liquidation or sale of all or substantially all of the business, properties and assets of the company,any reorganization, merger, consolidation, sale or exchange of securities in which the company does not survive,any sale, reorganization, merger, consolidation or exchange of securities in which the company survives and any of the company’s stockholders have the opportunity to receive cash, securities of another entity or other property in exchange for their shares of the company’s common shares, orany acquisition by any person or group of beneficial ownership of more than 50% of our outstanding shares.Acceleration. The Committee has the authority to accelerate the vesting and exercisability of all or any portion of any award at any time in its sole discretion, regardless of any provision in the relevant award agreement. The committee may determine the terms and conditions of any acceleration so long as the terms and conditions do not materially adversely affect the rights of any participant without the consent of the participant. The committee may rescind the effect of any acceleration if it was done in anticipation of an event and the committee or the board of directors later determines that the event will not occur.Certain U.S. Federal Income Tax Consequences under the Incentive PlanThe following is a brief summary of federal income tax consequences to participants and the Company relative to the Incentive Plan. The summary is not intended to be exhaustive and does not discuss the income tax laws of a state, local or other jurisdiction which may be applicable to a participant. The consequences of transactions depend on a variety of factors, including a participant’s tax status.In general, there are no federal income tax consequences to the recipient or to the Company upon the grant or exercise of an incentive stock option. If the recipient holds the shares purchased through the exercise of an incentive stock option for more than one (1) year after the exercise date and two (2) years after the option was granted (the “holding period”), the recipient will be eligible upon selling the shares for long-term capital gain treatment on any excess in the amount of the sale price over the option price. The Company will not receive an income tax deduction in the event the recipient disposes of the shares after completion of the holding period. However, if the recipient sells the shares before the expiration of the holding period, the recipient will have made a “disqualifying disposition” and will realize ordinary income on the date of sale equal to the difference between the option price and the fair market value of the shares on the exercise date. The balance of the recipient’s gain, if any, on the sale of the shares is subject to capital gains treatment. The Company will receive an income tax deduction in the same amount and at the same time as the recipient realizes ordinary income.The recipient of a non-qualified stock option will realize ordinary income upon exercising the option, equal to the difference between the option price and the fair market value on the exercise date of the shares purchased. The Company will receive an income tax deduction in the same amount and at the same time as the recipient realizes ordinary income. Upon the subsequent sale of any such shares by the recipient, any appreciation or depreciation in the value of the shares after the exercise date will be treated as a capital gain or loss.In general, a recipient will not realize income on the date of an award of restricted stock, nor will the Company be entitled to a deduction at that time. The recipient will realize ordinary income in an amount equal to the fair market value of the awarded shares at the time the restrictions lapse on such shares, and the Company will be entitled to a corresponding income tax deduction. Amounts paid as dividends to recipients prior to the lapse of restrictions will be treated as compensation, which is taxed as ordinary income to the recipient and is deductible as such by the Company.The ability of the Company to receive an income tax deduction related to compensation paid to certain executive officers may be limited by Code Section 162(m) if such compensation exceeds $1 million.New Plan BenefitsThe Incentive Plan gives the Compensation/Human Resources Committee discretion to determine which Executive Officers and employees of the Company and its subsidiaries will receive awards under the Incentive Plan. Because of this discretion element, it is not possible at present to specify the persons to whom awards will be granted in the future or the amounts and types of individual grants. However, it is anticipated that, among others, all of the Company’s Executive Officers will receive restricted stock awards under the Incentive Plan. While the benefits or amounts that would have been received by, or allocated to, those persons for the last completed fiscal year if the Incentive Plan had been in effect cannot be determined, see the “Grants of Plan-Based Awards” table on page 37 for a description of the equity awards made to our Executive Officers during the year ended December 31, 2018 under our existing incentive plans.Equity Compensation Plan InformationThe table on page 39 presents information as of December 31, 2018 with respect to compensation plans under which equity securities of the Company are authorized for issuance. It does not include information concerning equity securities that may be authorized for issuance under the Incentive Plan or the German American Bancorp, Inc.Restated 2019 Employee Stock Purchase Plan (see description(Proposal 3 on pages 45-48),the proxy).
ADVISORY VOTE ON EXECUTIVE COMPENSATIONplangives you as a shareholder the opportunity to endorse or not endorse our pay program for our Executive Officers identified in the Executive Compensation section of this proxy statement by voting for or against the following resolution (a "say-on-pay" vote). While the vote on the resolution is also being presented for approval atadvisory in nature and therefore will not bind us to take any particular action, our Board intends to carefully consider the 2019 annual meeting byshareholder vote resulting from the proposal in making future decisions regarding our compensation program.Company.Shareholder ApprovalIncentive Plan will be adopted if it is approved byaffirmative vote of a majority of the votes cast by holders of common shares who are present in person or by proxy at a meeting at which a quorum is present is required (on a non-binding advisory basis) to endorse the Annual Meeting, provided a majoritycompensation of the outstanding Common Shares is represented and entitledCompany's Executive Officers pursuant to Proposal 4.at the Annual Meeting. Shares voted “for” the Incentive Plan and shares represented by return proxies that do not contain instructions to vote against the Incentive Plan or to abstain from voting will be counted as shares cast for theFOR approval of the Incentive Plan. Abstentions and broker non-votes will not be treated as votes cast “for” or “against”resolution approving the Incentive Plan but shall be included for purposescompensation of determining whether a quorum is present.
our Executive Officers (Proposal 4 on the proxy card).Our Board recommends that you vote FOR the proposal to approve the German American Bancorp, Inc. 2019 Long-Term Equity Incentive Plan (Proposal 3 on the proxy). The Board of Directors has a conflict of interest in connection with this recommendation, however, because all of the members of the Board of Directors are eligible to receive grants under this Plan.
ADVISORY VOTE ON THE APPROVAL OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM(“Crowe”("Crowe"), an independent registered public accounting firm, to be the Company’sCompany's auditors for the fiscal year ending December 31, 2019,2020, and our Board is asking shareholders (on a non-binding advisory basis) to approve that appointment. We are not required to have the shareholders approve the selection of Crowe as our independent auditor. We nonetheless are doing so because we believe it is a matter of good corporate practice. If the shareholders do not approve the selection, the Audit Committee will reconsider the retention of Crowe, but ultimately may decide to retain Crowe as the Company’sCompany's independent auditor. Even if the selection is approved, the Audit Committee, in its discretion, may change the appointment at any time if it determines that such a change would be in the best interests of the Company and its shareholders.firm’sfirm's qualifications as an independent registered public accounting firm for the Company. This included a review of its performance in prior years, including the firm’sfirm's efficiency, integrity and competence in the fields of accounting and auditing. The Audit Committee has expressed its satisfaction with Crowe in all of these respects. The Company has been advised by Crowe that neither it nor any of its associates has any direct or material indirect financial interest in the Company.Company’sCompany's consolidated financial statements and internal control over financial reporting for 20182019 and has been engaged by the Company’sCompany's Audit Committee to serve as independent registered public accounting firm for the Company with respect to the audits of the Company’sCompany's consolidated financial statements and internal control over financial reporting for 2019.2020. Representatives of Crowe will be present at the annual meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.“FOR”"FOR" approval of the appointment of Crowe as the Company’sCompany's independent registered public accounting firm for fiscal 2019.Our Board recommends that you vote FOR the proposal to approve Crowe as the Company’s registered independent public accounting firm for 2019 (Proposal 4 on the proxy card).Company’sCompany's directors and Executive Officers and persons who beneficially own more than ten percent of the Company’sCompany's Common Shares to file with the Securities and Exchange Commission reports showing ownership of and changes in ownership of the Company’sCompany's Common Shares and other equity securities. We prepare and file these reports on behalf of our directors and Executive Officers. During 2018, the initial statement of beneficial ownership of securities on Form 3 for Zachary W. Bawel was filed after its due date. To our knowledge, all other Section 16(a) reporting requirements applicable to our directors and Executive Officers were satisfied in a timely manner.Company’sCompany's proxy statement for the annual meeting of shareholders to be held in the year 20202021 must deliver the proposal so that it is received by the Company no later than December 3, 2019.20202021 annual meeting is not received by the Company on or before February 16, 2020,March 2, 2021, the proxy solicited by our Board for use in connection with that meeting may confer authority on the proxies to vote in their discretion on such proposal, without any discussion in the Company’sCompany's proxy statement for that meeting of either the proposal or how such proxies intend to exercise their voting discretion.A: A
GERMAN AMERICAN BANCORP, INC.
ARTICLE IX
PROVISIONS FOR REGULATION OF BUSINESS
AND CONDUCT OF AFFAIRS OF CORPORATION
ARTICLE X
APPROVAL OF BUSINESS COMBINATIONS
AMENDED AND RESTATED 2019 EMPLOYEE STOCK PURCHASE PLANI.INTRODUCTION“Plan”"Plan") was adopted by the Board of Directors (the “Board”"Board") of German American Bancorp, Inc. (the “Company”"Company") on March 4, 2019,2, 2020, subject to approval of the Company’sCompany's shareholders at their annual meeting scheduled to be held on May 16, 2019. The Board of Directors of the Company shall determine the effective date of the first offering, if any, under the Plan.21, 2020. The purpose of the Plan is to provide eligible employees of the Company and its subsidiaries the opportunity to invest in the Company through convenient payroll contributions. These contributions are used quarterly to purchase shares of common stock of the Company at a discount from the current market price. As used in this Plan, “subsidiary”"subsidiary" means any “subsidiary corporation”"subsidiary corporation" as that term is defined in Section 424 of the Internal Revenue Code of 1986 (the “Code”"Code").Company’sCompany's shareholders if it would materially: (i) increase the benefits accruing to participants under the Plan; (ii) modify the requirements as to eligibility for participation in the Plan; (iii) increase the number of shares which may be issued under the Plan (except as permitted under Section III); (iv) increase the cost of the Plan to the Company; or (v) alter the allocation of Plan benefits among participating employees.Company’sCompany's intention to have the Plan qualify as an “employee"employee stock purchase plan”plan" under Section 423 of the Code, and the provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of that Section of the Code.II.ADMINISTRATION“Non-Employee"Non-Employee Directors,”" as such term is defined in Rule 16b-3(b)(3) of the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended (the “1934 Act”"1934 Act"), or as required by any successor rule (the “Committee”"Committee"). The Compensation/Human Resources Committee appointed by the Company’sCompany's Board of Directors shall act as the Committee under the Plan unless the Board of Directors otherwise directs. The Committee shall prescribe rules and regulations for the administration of the Plan and interpret its provisions. The Committee may correct any defect, reconcile any inconsistency or resolve any ambiguity in the Plan. The actions and determinations of the Committee on matters relating to the Plan are conclusive. The Committee and its members may be addressed in care of the Company at its principal office. The members of the Committee do not serve for fixed periods but may be appointed or removed at any time by the Board.III.STOCK SUBJECT TO THE PLAN“Common Share”"Common Share" and, collectively, the “Common Shares”"Common Shares") are available for purchase under the Plan, inclusive of all shares issued under the Prior Plan. Common Shares which are to be delivered under theIV.ELIGIBILITYV.OFFERINGS, PARTICIPATION AND DEDUCTIONS“Offering Date”"Offering Date"), and ending on the last trading day of each calendar quarter, or at such other time or times as may be determined by the Committee (the “Purchase Date”"Purchase Date"). The Plan shall continue until terminated in accordance with Section I. Subject to the provisions concerning termination in Section I, the Committee shall have the power to change the duration and/or frequency of offering periods with respect to future offerings and shall use reasonable efforts to notify employees of any such change at least five (5) days prior to the scheduled beginning of the first offering period to be affected. In no event shall any option granted hereunder be exercisable more than twenty-seven (27) months from its Offering Date., expressed as a percentage of Eligible Compensation, which is within the minimum and maximum rates established by the Committee. “Eligible Compensation”"Eligible Compensation" for purposes of determining the amount of a participant’sparticipant's contributions for any option period shall be the gross (before taxes are withheld) total of all base wages and salaries, commissions, overtime and bonuses received during the option period. Eligible Compensation shall not include any compensation not included in the previous sentence. Notwithstanding the foregoing, the Committee shall have discretion to determine the application of this definition to the participants of an offering on a uniform and nondiscriminatory basis. In addition, the Committee may at any time suspend an offering or change the terms of the offering, subject to the provisions of this Plan and Section 423 of the Code, if required by law or if determined by the Committee to be in the best interests of the Company.“Payroll"Payroll Deduction Account”Account"). All funds received or held by the Company or its subsidiaries under the Plan may be, but need not be, segregated from other corporate funds. Any balance remaining in any employee’semployee's Payroll Deduction Account at the end of an offering period will be refunded to the employee.WithdrawalWithdrawal.. Subject to rules, procedures and forms adopted by the Committee, a participating employee may, at any time during the offering period, prospectively increase, decrease or suspend his or her rate of payroll deductions or discontinue payroll deductions and withdraw the entire balance of his or her Payroll Deduction Account without interest and thereby withdraw from participation in an offering. Under the initial rules established by the Committee, payroll deductions may be increased or decreased only as of a quarterly Offering Date, by filing a new payroll deduction authorization with Human Resources at least ten (10) business days prior to the Offering Date. Under such initial rules, in order to be effective for an offering, any request to withdraw therefrom must be received by the Company on or before the tenth (10th) business day prior to the Purchase Date for such offering.EmploymentEmployment.. In the event of a participating employee’semployee's retirement, death or termination of employment, his or her participation in any offering under the Plan shall cease, no further amounts shall be deducted pursuant to the Plan, and the balance in the employee’semployee's account shall be paid to the employee, or, in the event of the employee’semployee's death, to the employee’semployee's beneficiary designated on a form approved by the Committee (or, if the employee has not designated a beneficiary, to his or her estate), and in either case, without interest.ParticipationParticipation.. If a participating employee has not suspended or discontinued his or her payroll deductions or has not otherwise elected to cease participation in a future offering in accordance with the rules and procedures set forth in paragraph C above, his or her payroll deductions shall continue at the rate currently in effect throughout the offering period and for future offering periods unless reduced to reflect a change by the Committee in the maximum permissible rate. Such employee shall be deemed to have accepted each new offer and to have authorized payroll deductions in respect thereof during each such future offering period.VI.PURCHASE, LIMITATIONS AND PRICESharesShares.. Each employee participating in any offering under the Plan shall be granted an option, on the Offering Date for such offering, for as many Common Shares (which may include a fractional Common Share) as the amount of his or her Payroll Deduction Account at the end of such offering period can purchase. No employee may be granted an option under the Plan which permits his or her rights to purchase Common Shares under the Plan, and any other stock purchase plan of the Company or a parent or subsidiary of the Company qualified under Section 423 of the Code, to accrue at a rate which exceeds the maximum amount established by the Committee, but which maximum amount may in no event exceed $25,000 of Fair Market Value of such Common Shares (based on the value of the stock on their grant/enrollment date) for each calendar year in which any option is outstanding at any time. As of the Purchase Date for each offering period, each employee who continues to be a participant in the offering shall be deemed to have exercised his or her option to purchase the number of Common Shares (which may include a fractional Common Share) as the balance of his or her Payroll Deduction Account on such date may pay for at the purchase price. Such employee’semployee's Payroll Deduction Account will be charged for the amount of the purchase and a book-entry credit representing such shares shall recorded in the share account described below.ReinvestmentReinvestment.. All Common Shares purchased shall be credited in book-entry form to a separate share account for participating employees (a “Share Account”"Share Account"). Any cash dividends paid with respect to the Common Shares in a participant’sparticipant's Share Account shall be distributed to the participant or the participant may choose to apply cash dividends to the purchase of additional shares by enrolling in the Company’sCompany's Dividend Reinvestment Plan. Any non-cash dividends paid with respect to the shares in a participant’sparticipant's Share Account shall be added to the shares held for a participant in his or her Share Account.AccountsAccounts.. Each Share Account will be registered only in the name of the participating employee.ShareholderShareholder.. After a participant’sparticipant's Payroll Deduction Account has been charged with the amount of the purchase price, the participating employee shall have all of the rights and privileges of a shareholder of the Company with respect to the Common Shares purchased under the Plan and held in the Share Account. A participant may withdraw or sell the shares in his or her Share Account at any time by providing written notice to the Company’sCompany's transfer agent.StatementsStatements.. Not less than annually, each participating employee will receive a statement as to the amounts held in their Payroll Deduction Account and Share Account.PricePrice.. The Committee shall determine the purchase price of a Common Share for purposes of each offering, which price shall be an amount in the range from ninety-five percent (95%) and one hundred percent (100%) of the Fair Market Value of a Common Share on the Purchase Date. If the Committee for any reason should fail to determine the price for any offering within the percentage range specified by the preceding sentence for any offering, the percentage shall be ninety-five percent (95%). Notwithstanding the foregoing, in noevent shall the purchase price be less than eighty-five percent (85%) of the FairValue of a Common Share on the Offering Date.“Fair Market Value”Value" of a Common Share on a given date means the NASDAQ Official Closing Price (or similar closing price information if The NASDAQ Stock Market LLC (NASDAQ) no longer makes available a figure called the NASDAQ Official Closing Price) on such date (“NOCP”("NOCP"), or if no NOCP is furnished by NASDAQ for the Common Shares on such date, the NOCP of a Common Share on the most recent day on which NASDAQ has furnished an NOCP for the Common Shares. If the Common Shares are not listed on any given date on the NASDAQ Global Select Market or similar market for which an NOCP (or similar closing price) is furnished by NASDAQ or other applicable exchange, then “Fair"Fair Market Value”Value" is defined as the fair market value of a share on such date as determined in good faith by the Committee.VII.TRANSFER OF INTERESTSemployee’semployee's lifetime only by such employee or the employee’semployee's guardian or legal representative. There are no restrictions imposed by or under the Plan upon the resale of Common Shares issued under the Plan.APPENDIX B: GERMAN AMERICAN BANCORP, INC.2019 Long-Term Equity Incentive Plan(“Company”) hereby establishes3. To approve and adopt the German American Bancorp, Inc. Amended and Restated 2019 Long-Term Equity IncentiveEmployee Stock Purchase Plan, (“Plan”), effective May ____, 2019.ARTICLE IAPPROVALamending certain of its terms 4. To approve, on an advisory basis, the compensation of our Executive Officers who are named in the compensation disclosures in the accompanying Proxy Statement 5. To approve, on an advisory basis, the appointment of Crowe LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2020 Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. MMMMMMM C 1234567890 J N T 5 1 0 5 6 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND PURPOSESection 1.01 Approval of Plan.MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 U P X 4 0372DB MMMMMMMMM B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. A Proposals — The Company’s Board of Directors approved this Plan on March 4, 2019, contingent on approvalrecommends a vote FOR all the nominees listed and FOR Proposals 2 - 5. 2020 Annual Meeting Proxy Card1234 5678 9012 345
the Company’s shareholders within 12 months following its adoption by the Board.Section 1.02 Description of Plan. The Plan is designed to promote the interests of the Company and its shareholders by providing a means by which the Board can award stock-based incentives to employees and directors of the Company or any Subsidiary (“Participants”). The Plan permits the Board to grant Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock, and Stock Appreciation Rights, all as provided herein.Section 1.03 Purpose of Plan. The purpose of the Plan is to further the growth, development, and financial success of the Company by providing for stock-based incentives to Participants that align their interests more closely with those of the Company’s shareholders. The Company also believes that the Plan will assist it in its efforts to attract and retain quality employees and directors.ARTICLE IIDEFINITIONS AND RULES OF CONSTRUCTIONSection 2.01 Definitions. When capitalized in this Plan, the following terms shall have the meanings specified below, unless the context otherwise requires:(a)“Award” means a grant made to a Participant pursuant to Article VI.(b)“Award Agreement” means a written instrument between the Company and a Participant evidencing an Award and prescribing the terms, conditions, and restrictions applicable to the Award.(c)“Board of Directors” or “Board” means the Company’s Board of Directors as constituted from time to time.(d)“Cause” means, with respect to a Participant, that, in the Board’s reasonable good faith judgment, the Participant (i) has materially breached the termsfor Annual Meeting of any employment AgreementShareholders — May 21, 2020 Christina M. Ernst and Thomas W. Seger, or either of them, each with the Employerpower of substitution, are hereby authorized to represent and failed to correctvote the breach within ten (10) days after receiving the Board’s written notice of such cure; (ii) has committed gross negligence or willful misconduct in the performance or intentional non-performance of any material duty of his employment; and/or (iii) has engaged in dishonesty, fraud, or intentional misconduct with respect to the business or affairsshares of the Employer (monetarily or otherwise).(e)“Code” meansundersigned, with all the Internal Revenue Code of 1986, as amended from time to time.(f)“Committee” means the committee described in Section 3.01; provided however, to the extent that the Board has not designated a Committee, “Committee” means the “Board.”(g)“Company” means German American Bancorp, Inc.(h)“Director” means a director of the Company or a Subsidiary who is not also an Employee.(i)“Employee” means any individual employed by the Company or a Subsidiary, including an employee who is a member of the Board or the board of directors of a Subsidiary.(j)“Employer” means the Company and/or a Subsidiary.(k)“Exercise Price” means the price, if any, required to be paid to the Company upon the exercise of an Award.(l)“Fair Market Value” means, with respect to a Share on any date, as follows:(1)if the Shares are listed or admitted to trade and are readily tradable on a national securities exchange, the closing price of a Share on the principal national securities exchange onpowers which the Shares are listed or admitted to trade on such date, or,undersigned would possess if there is no trading of the Shares on such date, the closing price of a Share as quoted on the next preceding date on which there was trading in Shares;(2)if the Shares are not subject to paragraph (1) above, but are readily tradable on an established securities market, the closing price of a Share on such date on such market, or if there is no trading of the Shares on such date, the closing price of a Share on the next preceding date on which there was trading in Shares; and(3)if the Shares are not subject to paragraph (1) or (2) above, the fair market value of the Shares on such date, as determined by the Committee in a manner that satisfies the requirements of Code Section 409A and the guidance thereunder for exempt equity-based compensation.(m)“Grant Date” means the date on which the Committee approves the grant.(n)“Incentive Stock Option” means an option for Shares granted pursuant to the Plan that satisfies the requirements of Code Section 422.(o)“Named Executive Officer” means,personally present, at the timeAnnual Meeting of receiving an Award under the Plan, an individual who is (i) serving as the Company’s principal executive officer or acting in a similar capacity, regardlessShareholders of compensation level, (ii) serving as the Company’s principal financial officer or acting in a similar capacity, regardless of compensation level, or (iii) one of the Company’s three most highly compensated executive officers other than the aforementioned principal executive officer and principal financial officer, or any such similar officer set forth under Item 402 of Regulation S-K under the Securities Act of 1933, as amended, or under any successor rule or regulation.(p)“Non-Qualified Stock Option” means an option for Shares granted pursuant to the Plan that that is not an Incentive Stock Option.(q)“Option” means an Incentive Stock Option or a Non-Qualified Stock Option.(r)“Participant” means a person to whom an Award has been granted under the Plan, provided, however, a Participant shall cease to be such at such time as all Awards granted to him under the Plan have been exercised and/or forfeited.(s)“Performance-Based Compensation” means compensation described in Code Section 162(m)(4)(C) that is excluded from “applicable employee remuneration” under Code Section 162(m).(t)“Performance-Based Restricted Stock” means Restricted Stock that is subject to forfeiture unless specified Performance Targets are satisfied during the Performance Period.(u)“Performance Measures” means, with respect to Performance-Based Restricted Stock, the objective factors used to determine whether the restrictions on the Restricted Stock have lapsed. “Performance Measures” shall be based on any of the factors listed below, alone or in combination, as determined by the Committee. Such factors may be applied (i) on a corporate-wide or business-unit basis, (ii) including or excluding one or more Subsidiaries, (iii) in comparison with plan, budget, or prior performance, and/or (iv) on an absolute basis or in comparison with peer-group performance. The factors that may be used as Performance Measures are: (i) return on assets; (ii) return onequity; (iii) total shareholder return; (iv) operating income; (v) net income; (vi) earnings per share; and (vii) income before interest and taxes. Performance Measures may differ from Participant to Participant and Award to Award.(v)“Performance Period”means the period of time during which Performance Targets must be achieved with respect to an Award of Restricted Stock, as established by the Committee.(w)“Performance Targets” means, with respect to an Award of Performance-Based Restricted Stock, the objective performance under the Performance Measures for that Performance Period that will result in payments under the Award. Performance Targets may differ from Participant to Participant and Award to Award.(x)“Period of Restriction”means the period during which a Share of Restricted Stock is subject to restrictions and a substantial risk of forfeiture.(y)“Plan” means the German American Bancorp, Inc. 2019 Long-Term Equity Incentive Plan,to be held on May 21, 2020 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as set out in this document, as amended from time to time.(z)“Restricted Stock” means Shares awarded pursuant to the Plan that, at the time of grant, are nontransferable and are subject to a substantial risk of forfeiture.(aa) “Rule 16b-3” means Rule 16b-3 under the Securities Exchange Act of 1934, as amended.(bb) “Separation from Service,” “Separates from Service,” or any variation of such term means, (i) in the case of an Employee, a complete termination of the employment relationship between the Employee and all Employers and, (ii) in the case of a Director, termination of the Director’s service as a Director.(cc) “Service-Based Restricted Stock” means Restricted Stock with restrictions based solelydirected on the Participant’s continued service withreverse side. If no such directions are indicated, the Company or an Affiliate.(dd) “Share” means one ofProxies will have authority to vote FOR all nominees and FOR Proposals 2 - 5. In their discretion, the Company’s common shares, no par value.(ee) “Stock Appreciation Right” or “SAR” has the meaning given to it in Section 6.02(a).(ff) “Subsidiary” means any company (other than the Company) that is a “subsidiary corporation” within the meaning of Code Section 424.(gg) “Termination Date” has the meaning given to it in Section 9.02.Section 2.02 Rules of Construction. The following rules shall apply in construing the Plan and any Award Agreement:(a) Except as expressly provided below, this Plan, the Awards, all documents evidencing Awards and all other related documents shall be governed by, and construed in accordance with, the laws of the State of Indiana without regard to conflict of law principles.(b) Words used in the masculine shall be construed to include the feminine gender, where appropriate, and words used in the singular or plural shall be construed as being in the plural or singular, where appropriate.(c) Provisions of the Plan applicable to Incentive Stock Options shall be construed to effect compliance with Code Section 422.(d) Captions and headingsProxies are for convenience only, and they shall not affect the construction of the Plan or any Award Agreement.(e) Reference to any provision of the Code or other law shall be deemed to include a reference to the successor of such provision.(f) The Plan and the Awards are intended to comply with and shall be construed to effect compliance with, the exemptions under Rule 16b-3, in the case of Participants who are subject to Section 16 of the Securities Exchange Act of 1934; provided, however, the Company shall have no liability to any Participant for Section 16 consequences of an Award.(g) It is intended that Awards granted with an Exercise Price not less than Fair Market Value on the date of grant shall qualify as performance-based compensation or otherwise be exempt from deductibility limitations under Code Section 162(m), and the Plan and the Awards shall be construed accordingly.(h) It is intended that all Awards shall be exempt from the provisions of Code Section 409A, and the provisions of the Plan and any Agreement applicable to an Award shall be construed in accordance with such intent.(i) If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of the Plan shall continue in effect, provided that the essential economic terms of the Plan and any Award can still be enforced.ARTICLE IIIADMINISTRATIONSection 3.01 Committee. Except as otherwise provided herein, the Plan shall be administered by the Board or, at the Board’s option, by a compensation committee thereof to which the Board has duly delegated the administration of the Plan. The Committee shall consist solely of two or more non-employee directors (within the meaning of Rule 16b-3) who are “outside directors” for purposes of Code Section 162(m) and the regulations thereunder. Any action of the Committee with respect to administration of the Plan shall be taken by a majority vote or written consent of its members.Section 3.02 Powers of Committee. Subject to the express provisions of the Plan and any express limitations on its delegated authority, the Committee is authorized and empowered to administer the Plan and to (i) designate those persons who are Participants; (ii) grant Awards; (iii) determine the effective date of each Award, the number of Shares subject to the Award, and the other terms and conditions of the Award, which terms and conditions need not be the same for each Award; (iv) interpret the Plan; (v) determine the Fair Market Value of the Shares; (vi) accelerate the time during which an Award may be exercised, either in accordance with Section 6.09 or otherwise, in each case notwithstanding the provisions of the Award Agreement stating the time during which the Award may be exercised; (vii) prescribe, amend, and rescind rules relating to the Plan; (viii) authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Award previously granted by the Committee; (ix) determine the rights and obligations of Participants under the Plan; and (x) make all other determinations deemed necessary or advisable for the administration of the Plan. Notwithstanding the preceding provisions, the Committee is not authorized to take any action that would cause an Award hereunder to become subject to the provisions of Code Section 409A.Section 3.03 Binding Determinations. Any action taken by, or inaction of, the Company, the Board, or the Committee relating or pursuant to the Plan (including, without limitation, any determination of Fair Market Value) shall be within the sole discretion of that entity or body and shall be conclusive and binding upon all persons. Subject only to compliance with the express provisions hereof, the Board and Committee may act in their sole discretion in matters within their authority related to the Plan.Section 3.04 Reliance on Experts. In making any determination or in taking or not taking any action under the Plan, the Committee or the Board, as the case may be, may obtain and rely upon the advice of experts, including employees of and professional advisors to the Company.Section 3.05 Delegation. The Committee may delegate ministerial non-discretionary functions to one or more Company officers or employees. Subject to applicable law, the Committee may delegate to the Company’s Chief Executive Officer all or part of its authority and duties with respect to the granting of Awards to individuals who are not (i) subject to the reporting and other provisions of Section 16 of the Securities Exchange Act of 1934 or (ii) covered employees within the meaning of Code Section 162(m)(3). Any delegation pursuant to this Section shall specify the duration of the delegation and limit the amount of Awards that may be granted pursuant thereto.Section 3.06 Limitations on Liability. No director, officer, or agent of the Company shall be liable for any action, omission, or decision under the Plan that is taken, made, or omitted in good faith.ARTICLE IVELIGIBILITYThe Committee shall, from time to time, designate those persons eligible to receive Awards under the Plan from among employees and directors of the Company or any Subsidiary. The Committee may grant more than one Award to any Participant.ARTICLE VSHARES SUBJECT TO AWARDSSection 5.01 Aggregate Share Limit. Subject to adjustment as provided in Sections 5.02 and 5.04 and any limitations specified elsewhere in the Plan, the maximum number of Shares cumulatively available for issuance under the Plan shall not exceed 1,000,000 Shares. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under the Plan.Section 5.02 Share Counting, Shares Returned to the Plan and Limitations. Subject to the application of Section 5.04, Shares that: (a) are subject to issuance upon exercise of an Option but cease to be subject to such Option for any reason other than exercise of such Option; (b) are subject to an Award granted hereunder but are forfeited or are repurchased by the Company at the original issue price; or (c) are subject to an Award that otherwise terminates without Shares being issued will again be available for grant and issuance in connection with future Awards under the Plan. The following Shares may not again be made available for future grant and issuance as Awards under the Plan: (x) Shares that are withheld to pay the Exercise Price of an Award or to satisfy any tax withholding obligations in connection with an Award; (y) Shares not issued or delivered as a result of the net settlement of an outstanding Option or SAR; or (z) shares of the Company’s Common Stock repurchased on the open market with the proceeds of an exercised Option. In the case of Stock Appreciation Rights, only Shares delivered in connection with the settlement thereof shall be deducted from the aggregate Share limit set forth in Section 5.01.Section 5.03 Limitation Applicable to Specific Awards. The maximum number of Shares that may be delivered pursuant to Incentive Stock Options granted under the Plan is 1,000,000 Shares. The only limitation on the number of Shares available for Non-Qualified Stock Options, Stock Appreciation Rights, and Restricted Stock Awards shall be that specified in Sections 5.01.Section 5.04 Adjustments Upon Recapitalization or Reorganization. If the outstanding Shares are changed into, or exchanged for, a different number or kind of shares or securities of the Company through any capital reorganization or reclassification, or if the number of outstanding Shares is changed through a stock split or stock dividend, an appropriate adjustment shall be made by the Committee in the number, kind, and/or Exercise Price with respect to Shares as to which Awards may be granted under the Plan. A corresponding adjustment shall likewise be made in the number, kind, and/or Exercise Price for Shares with respect to which there are unexercised outstanding Awards. Any such adjustment in an outstanding Award, however, shall be made without change in the total price applicable to the unexercised portion of the Award but with a corresponding adjustment in the price for each Share covered by the Award. In making such adjustments, or in determining that no such adjustments are necessary, the Committee may rely upon the advice of counsel and accountants to the Company, and the good faith determination of the Committee shall be final, conclusive, and binding. No fractional shares of stock shall be issued or issuable underthe Plan on account of any such adjustment. No adjustment shall be made pursuant to this Section, if it would cause an Award to become subject to Code Section 409A.ARTICLE VIAWARDSSection 6.01 Grant of Awards. Awards authorized under this Article VI may be granted pursuant to another incentive program that incorporates by reference the terms and conditions of this Plan. Awards may be granted singly or in combination or tandem with other Awards. Awards may also be granted in replacement of, or as substitution for, other awards granted by the Company, whether or not such other awards were granted under this Plan. Without limiting the foregoing, if a Participant pays all or part of the Exercise Price or taxes associated with an Award by the transfer of Shares or the surrender of all or part of an Award (including the Award being exercised), the Committee may, in its discretion, grant a new Award to replace the Shares that were transferred or the Award that was surrendered. The Company may assume awards granted by an organization acquired by the Company or may grant Awards in replacement of, or in substitution for, any such awards.Section 6.02 Types of Awards. Awards under the Plan shall consist of the following:(a) Stock Appreciation Rights. A right to receive a payment, in cash or Shares, equal to the excess of (i) the Fair Market Value of a specified number of Shares on the date the right is exercised over (ii) the Fair Market Value of the same number of Shares on the date the right is granted, all as determined by the Committee (“Stock Appreciation Right” or “SAR”). The right may be conditioned upon the occurrence of certain events, such as a change in control, or may be unconditional, as determined by the Committee. No Stock Appreciation Right shall be exercisable after the tenth (10th) anniversary of its grant.(b) Restricted Stock Award. An Award that is made in Restricted Stock. All or part of any Restricted Stock Award may be subject to conditions, restrictions, and risks of forfeiture, as and to the extent established by the Committee. Such Shares may be either Performance-Based Restricted Stock or Service-Based Restricted Stock.(c) Option. A right to purchase a specified number of Shares during a specified period and at a specified exercise price, all as determined by the Committee. An Option may be an Incentive Stock Option or a Non-Qualified Stock Option. In addition to the terms, conditions, vesting periods, and restrictions established by the Committee in the Award Agreement, Incentive Stock Options must comply with the requirements of Code Section 422, Section 6.04, and this Article VI.Section 6.03 Terms and Conditions of Awards; Agreements. Awards granted under the Plan shall be evidenced by an Award Agreement executed by the Company and the Participant, which shall contain such terms and be in such form as the Committee may from time to time approve, subject to the following limitations and conditions:(a) Grant and Notice of Award. The date of an Award grant shall, for all purposes, be the date on which the Board makes the determination granting such an Award. Notice of the determination shall be given to each Participant to whom an Award is granted within a reasonable time after the date of grant. The grant of an Award shall not obligate the Participant to exercise it.(b) Number of Shares. The Award Agreement shall state, as appropriate, the type and total number of Shares (i) granted as Restricted Stock, (ii) with respect to which Stock Appreciation Rights are granted, and/or (iii) with respect to which Options are granted.(c) Exercise Price. The Award Agreement shall state, as applicable, the Exercise Price per share of the Shares with respect to which Options are issued, the Fair Market Value of Shares with respect to which Stock Appreciation Rights are issued, and the purchase price for any Restricted Stock. The Exercise Price for an Option shall not be less than its Fair Market Value on the Grant Date. For Incentive Stock Options, the Exercise Price shall satisfy the requirements of Section 6.04 and the provisions of the Code applicable to incentive stock options.(d) Exercise and Payment of Exercise Price. A Participant may exercise a vested Option by (i) giving written notice to the Company specifying the number of Shares to be purchased and accompanied by payment of the full Exercise Price therefor in cash, by check, or in such other form of lawful consideration as the Committee may approve, including without limitation and in the sole discretion of the Committee, the transfer by the Participant to the Company of outstanding Shares held by the Participant in a manner intended to comply with the provisions of Rule 16b-3, if applicable, and (ii) satisfying any other requirements set forth herein (including, without limitation, the tax withholding requirements of Article VII) or in the applicable Award Agreements. Any Shares delivered by the Participant in connection with the exercise of an Award must have been owned by the Participant for at least six months as of the date of delivery. Shares used to satisfy the Exercise Price of an Award shall be valued at their Fair Market Value on the date of exercise.(e) Restrictions on Grants. Notwithstanding any other provisions set forth herein or in an Award Agreement, no Award may be granted under the Plan after the Termination Date.(f) Vesting of Awards.(i)General Requirement. Awards shall vest based on longevity of service and/or other schedules established by the Committee, as set forth in each Award Agreement.(ii)Minimum Vesting Requirements. Notwithstanding any other provision of the Plan, except in connection with Awards that may be settled only in cash, no portion of an Award may vest before the first anniversary of the date of grant, subject to accelerated vesting as contemplated under Section 6.09 and clause (vi) of Section 3.02; provided, however, that with respect to up to five percent (5%) of the maximum number of Shares reserved under Section 5.01, the Company may grant Awards or otherwise accelerate vesting without regard to the minimum vesting period set forth in this clause (ii).(g) Issuance of Shares and Compliance with Securities Laws. The Company may postpone the issuance and delivery of certificates representing Shares until (i) the admission of such Shares to listing on any stock exchange on which Shares are then listed and (ii) the completion of such registration or other qualification of Shares under any state or federal law, rule, or regulation as the Company shall determine to be necessary or advisable, which registration or other qualification the Company shall use its best efforts to complete; provided, however, a person purchasing or otherwise receiving Shares pursuant to the Plan has no right to require the Company to register the Shares under federal or state securities laws at any time. Any person purchasing or otherwise receiving Shares pursuant to the Plan may be required to make such representations and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company, in light of the existence or non-existence with respect to such Shares of an effective registration under the Securities Act of 1933, as amended, or any similar state statute, to issue the Shares in compliance with the provisions of those or any comparable acts.(h) Named Executive Officer Grants and Minimum Holding Period. Option and SAR Awards made or granted to any Named Executive Officer shall provide that any Shares received in connection with the exercise or vesting thereof shall be subject to an additional one year holding period before any sale or transfer of such Shares may take place, other than with respect to any Shares withheld by the Company to satisfy a Participant’s withholding tax obligation in connection with an Award.Section 6.04 Additional Limitations Applicable to Incentive Stock Options.(a) General. To the extent that any Award granted pursuant to this Plan contains an Incentive Stock Option, the limitations and conditions of this Section shall apply to such Incentive Stock Option and the Award Agreement relating thereto in addition to the terms and conditions otherwise specified by the Plan and the Award Agreement.(b) Price. The price of an Incentive Stock Option shall be an amount per share not less than the Fair Market Value per share of the Shares on the Grant Date. In the case of Incentive Stock Options granted to an employeeof the Company who is a 10% shareholder, the option price shall be an amount per share not less than one hundred ten percent (110%) of the Fair Market Value per share of the Shares on the Grant Date.(c)Exercise Period. Unless terminated earlier pursuant to other terms and provisions of the Award Agreement, the term of each Incentive Stock Option shall expire within the period prescribed in the Agreement relating thereto, which shall not be more than five years from the Grant Date, if the Participant is a 10% shareholder (as defined in Code Section 422(b)(6)), and not more than ten years from the Grant Date, if the Participant is not a 10% shareholder (as defined in Code Section 422(b)(6)).(d) Limitation on Grants. No Incentive Stock Option shall be granted under this Plan after Termination Date.(e) Limitation on Transferability. No Incentive Stock Option shall be assignable or transferable except by will or under the laws of descent and distribution. During the lifetime of a Participant, an Incentive Stock Option shall be exercisable only by the Participant and may not be transferred or assigned.(f) Maximum Exercise Rule. The aggregate Fair Market Value (determined as of the Grant Date) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year under this Plan and any other incentive stock option plan (within the meaning of Code Section 422) of the Company or any parent or subsidiary corporation of the Company shall not exceed $100,000.(g) Other Code Limits. Incentive Stock Options may be granted only to employees of the Company (or a Subsidiary) that satisfy the other eligibility requirements of the Code. There shall be imposed in any Award Agreement relating to Incentive Stock Options such other terms and conditions as from time to time are required for the Option be an “incentive stock option” within the meaning of Code Section 422.Section 6.05 Additional Provisions Related to Restricted Stock.(a) The Committee may impose restrictions on Restricted Stock based upon any one or more of the following criteria: (i) the achievement of specific Performance Targets, (ii) vesting based on period of service with the Company and any of its Subsidiaries, (iii) applicable federal or state securities laws, or (iv) any other basis determined by the Committee, in its sole discretion.(b) Notwithstanding any other provision of this Section to the contrary, for purposes of qualifying grants of Restricted Stock as Performance-Based Compensation, the Committee shall establish restrictions based upon the achievement of pre-established Performance Targets. The specific Performance Targets that must be satisfied for the Period of Restriction to lapse or terminate shall be established the Committee on or before the latest date permissible to enable the Restricted Stock to qualify as Performance-Based Compensation. In granting Restricted Stock that is intended to qualify as Performance-Based Compensation, the Committee shall follow any procedures that it determines to be necessary, advisable, or appropriate to ensure such qualification.Section 6.06 Termination of Awards.(a) Each Award granted under the Plan shall set forth a termination date, which shall be not later than ten years from the Grant Date, subject to earlier termination as set forth in this Plan or the Award Agreement.(b) The Committee shall establish the effect of a Separation from Service on the rights and benefits under each Award and in so doing may make distinctions based upon, among other factors, the cause of termination and type of Award. A Participant’s Separation from Service as a Director shall not, unless otherwise expressly provided by the Committee, accelerate or otherwise increase the number of Shares subject to an Award. Following Separation from Service, an Award may be exercised only in accordance with the applicable Award Agreement and, unless otherwise expressly provided by the Committee, only with respect to that number of Shares for which the Award could have been exercised by the Participant on the date of Severance from Service.(c) The Committee may cancel any unexpired or unpaid Awards at any time, if the Participant is not in compliance with all applicable provisions of this Plan or with any Award Agreement, or if the Participant, whether or not he is currently employed by an Employer, engages in any of the following activities without the prior written consent of the Employer:(1) directly or indirectly renders services to or for an organization, or engages in a business, that is, in the judgment of the Committee, in competition with the Employer; or(2) discloses to anyone outside of the Employer, or uses for any purpose other than the Employer’s business, any confidential or proprietary information or material relating to the Employer, whether acquired by the Participant during or after employment with the Employer.The Committee may, in its discretion and as a condition to the exercise of an Award, require a Participant to acknowledge in writing that he is in compliance with all applicable provisions of the Plan and of any Award Agreement and has not engaged in any activities referred to in clauses (1) and (2) above.(d) Subject to Section 6.09, (i) upon the dissolution, liquidation, or sale of all or substantially all of the business, properties, and assets of the Company, (ii) upon any reorganization, merger, consolidation, sale, or exchange of securities in which the Company does not survive, (iii) upon any sale, reorganization, merger, consolidation, or exchange of securities in which the Company does survive and any of the Company’s shareholders have the opportunity to receive cash, securities of another corporation, partnership, or limited liability company and/or other property in exchange for their capital stock of the Company, or (iv) upon any acquisition by any person or group (as defined in Section 13d of the Exchange Act) of beneficial ownership of more than 50% of the then outstanding Shares (each of the events described in clauses (i), (ii), (iii) or (iv) is referred to herein as an “Extraordinary Event”), the Plan and each outstanding Award shall terminate, subject to any provision that has been made by the Committee through a plan of reorganization or otherwise for the substitution, assumption, settlement, or other continuation of the Awards. If Awards are to terminate (with no substitution, assumption, settlement, or other continuation) in such circumstances, each Participant shall have the right, by giving notice at least ten days before the effective date of the Extraordinary Event (“Effective Date”), to exercise on or before the Effective Date, in whole or in part, any unexpired Award issued to the Participant, to the extent that the Award is vested and exercisable as of the Effective Date.Section 6.07 Rights as a Shareholder. Unless otherwise provided by the Board or the Committee, a Participant shall have rights as a shareholder with respect to Shares covered by an Award, including voting rights or rights to dividends, only upon the date of issuance of a certificate to him and, if payment is required, only after payment if full has been made for such Shares.Section 6.08 Limits on Exercise and Transfer.(a) Except as expressly provided in (or pursuant to) Subsection (b), by applicable law, or by the Award Agreement, as the same may be amended:(1) all Awards are non-transferable and shall not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance, or charge;(2) Awards must be exercised only by the Participant; and(3) amounts payable or shares issuable pursuant to an Award must be delivered only to (or for the account of) the Participant.In addition, the Shares shall be subject to the restrictions, if any, imposed in the applicable Award Agreement.(b) The exercise and transfer restrictions in Subsection (a) shall not apply to:(1) transfers to the Company;(2) the designation of a beneficiary to receive benefits if the Participant dies or, if the Participant has died, transfers to or exercises by the Participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution; or(3) if the Participant has suffered a disability, transfers or exercises on behalf of the Participant by the Participant’s duly authorized legal representative in accordance with the applicable Award Agreement.Section 6.09 Acceleration of Awards.(a) Notwithstanding the provisions of Article VI or any provision to the contrary contained in a particular Award Agreement, the Committee, in its sole discretion, may accelerate the vesting and exercisability of all or any portion of any Award then outstanding. The decision by the Committee to accelerate an Award or to decline to accelerate an Award shall be final. In the event of the acceleration of the exercisability of Awards as the result of a decision by the Committee pursuant to this Section, each outstanding Award so accelerated shall be exercisable for a period from and after the date of such acceleration andvote upon such other terms and conditionsbusiness as may properly come before the Committee may determine in its sole discretion, provided that such terms and conditions (other than terms and conditions relating solelymeeting. (Items to be voted appear on reverse side) Change of Address — Please print new address below. Comments — Please print your comments below. + C Non-Voting Items PROXY — GERMAN AMERICAN BANCORP, INC. Small steps make an impact. Help the acceleration of exercisability and the related termination of an Award) may not materially adversely affect the rights of any Participant without the consent of that Participant. Any outstanding Award that has not been exercisedenvironment by the holder at the end of such period shall terminate automatically at that time.(b) If the vesting of an Award has been accelerated in anticipation of an event, and the Committee or the Board later determines that the event will not occur, the Committee may rescind the effect of the acceleration as to any then outstanding and unexercised or otherwise unvested Awards.Section 6.10 Substitute Awards. If the Company at any time should succeed to the business of another entity through a merger, consolidation, corporate reorganization or exchange, or through the acquisition of stock or assets of such entity or its subsidiaries or otherwise, Awards may be granted under the Plan to option holders of such entity or its subsidiaries, in substitution for options to purchase shares in such entity held by them at the time of succession. The Committee, in its sole and absolute discretion, shall determine the extent to which such substitute Awards shall be granted (if at all), the person or personsconsenting to receive such substitute Awards (who need not be all option holders of such entity), the number of Awards to be received by each such person, the exercise price of such Award, and the other terms and conditions of such substitute Awards.ARTICLE VIIWITHHOLDING OF TAXESThe Company (or a Subsidiary) may deduct and withhold from the wages, salary, bonus, and other income paid by the Company (or Subsidiary) to the Participant the requisite tax upon the amount of taxable income, if any, recognized by the Participant in connection with the exercise in whole or in part of any Award, the lapse of restrictions with respect to Restricted Stock, or the sale of the Shares issued to the Participant upon the exercise of an Award, as may be required from time to time under any federal or state tax laws and regulations. This withholding of tax shall be made from the Company’s (or Subsidiary’s) concurrent or next payment of wages, salary, bonus, or other income to the Participant or by payment to the Company by the Participant of the required withholding tax, as the Committee may determine; provided, however, that, in the sole discretion of the Committee, the Participant may pay such tax by reducing the number of Shares or amount of cash issued upon exercise of an Award (for which purpose such Shares shall be valuedelectronic delivery, sign up at Fair Market Value at the time of exercise). Notwithstanding the foregoing, the Company shall not be obligated to issue certificates representing the Shares to be acquired through the exercise of an Award, if the Participant fails to provide the Company with adequate assurance that the Participant will pay such amounts to the Company as required herein. Participants shall notify the Company in writing of any amounts included as income in the Participants’ federal income tax returns in connection with an Award. Any Shares or cash withheld by the Company to satisfy a Participant’s withholding tax obligation in connection with an Award shall not exceed the number of Shares or amount of cash necessary to satisfy the minimum required levels of withholding under applicable law.ARTICLE VIIICOMPLIANCE WITH LAWSSection 8.01 General
. The Plan, the granting and vesting of Awards under the Plan, the offer, issuance, and delivery of the Shares, and the payment of money under the Plan or under Awards are subject to compliance with all applicable federal and state laws, rules, and regulations (including but not limited to state and federal securities laws and federal margin requirements) and to such approvals by any listing, regulatory, or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. A person acquiring any securities under the Plan shall, if requested by the Company, provide such assurances and representations to the Company as the Committee may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.Section 8.02 Compliance with Securities Laws. No Participant shall sell, pledge, or otherwise transfer Shares acquired pursuant to an Award or any interest in such Shares except in accordance with the express terms of the Plan and the applicable Award Agreement. Any attempted transfer in violation of this Section shall be void and of no effect. Without in any way limiting the provisions set forth above, no Participant shall make any disposition of all or any portion of Shares acquired or to be acquired pursuant to an Award, except in compliance with all applicable federal and state securities laws. Notwithstanding anything else herein to the contrary, the Company has no obligation to register the Shares or file any registration statement under either federal or state securities laws.ARTICLE IXEFFECTIVENESS, TERMINATION AND AMENDMENTSSection 9.01 Effective Date. The Plan shall become effective on the date it is approved by the Company’s shareholders, which shall be considered the date of its adoption for purposes of Treasury Regulation §1.422-2(b)(2)(i). No Awards shall be made under the Plan prior to its effective date. If the Company’s shareholders fail to approve the Plan within 12 months following its adoption by the Board, the Plan will be of no further force or effect.Section 9.02 Duration of the Plan. The Plan shall remain in effect until all Shares subject to it are distributed, all Awards have expired or terminated, the Plan is terminated pursuant to Section 9.03, or the tenth (10th) anniversary of the effective date of the Plan, whichever occurs first (the “Termination Date”). Awards made before the Termination Date shall continue to be outstanding in accordance with their terms and the terms of the Plan unless otherwise provided in the applicable Agreements.Section 9.03 Amendment and Termination of the Plan. The Board may at any time terminate, suspend or amend the Plan. Adjustments contemplated by Section 5.04 shall not be deemed to be amendments for purposes of the foregoing. The Company shall submit any amendment of the Plan to its shareholders for approval only to the extent required by applicable laws or regulations or the rules of any securities exchange on which the Shares may then be listed. Subject to Sections 6.06 and 6.09, no termination, suspension, or amendment of the Plan may materially impair the rights of any Participant under a previously granted Award without the Participant’s consent, unless such action is necessary to comply with applicable law or stock exchange rules.Section 9.04 Amendment of Awards. Subject to Section 9.05, the Committee may unilaterally amend the terms of any Award Agreement evidencing an Award previously granted, except that no such amendment may materially impair the rights of any Participant under the applicable Award without the Participant’s consent, unless such amendment is necessary to comply with applicable law or stock exchange rules or any compensation recovery policy as provided in Article X.Section 9.05 No Option or SAR Repricing. Except as provided in Section 5.04, no Option or Stock Appreciation Right Award granted under the Plan may be (a) amended to decrease the exercise price thereof, (b) cancelled in conjunction with the grant of any new Option or Stock Appreciation Right Award with a lower exercise price, (c) cancelled in exchange for cash, other property or the grant of any Restricted Stock Award at a time when the per share exercise price of the Option or Stock Appreciation Right Award is greater than the current Fair Market Valueof a Share, or (d) otherwise subject to any action that would be treated under accounting rules as a “repricing” of such Option or Stock Appreciation Right Award, unless such action is first approved by the Company’s shareholders.ARTICLE XCLAWBACK OF AWARDSSection 10.01 Forfeiture under Sarbanes-Oxley Act. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, then any Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, to the extent required by such Section 304, shall reimburse the Company for (a) the amount of any Award received by such individual under the Plan during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission, as the case may be, of the financial document embodying such financial reporting requirement, and (b) any profits received from the sale of securities of the Company during that 12-month period.Section 10.02 Repayment as a Result of Improper Conduct. If an Award has been paid to an executive officer of the Company or to his or her spouse or beneficiary, and the Committee later determines either (a) that financial results used to determine the amount of that Award must be materially restated and that the executive officer engaged in fraud or intentional misconduct related thereto, or (b) that recovery or repayment of the Award is required by applicable law, the Company will seek repayment or recovery, as appropriate, of the Award to the extent overpaid notwithstanding any contrary provision of the Plan. In addition, the Committee may provide that any Award, including any Shares subject to or issued under an Award, is subject to any other recovery, recoupment, clawback and/or other forfeiture policy maintained by the Company from time to time.ARTICLE XIINDEMNIFICATIONIn addition to such other rights of indemnification as they may have as members of the Board, the members of the Committee shall be indemnified by the Company to the fullest extent permitted by law against reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit, or proceeding, or in connection with any appeal thereof, to which they or any of them may be a party by reason of any act or failure to act under or in connection with the Plan or any Award, and against all amounts paid by them in satisfaction of a judgment in any such action, suit, or proceeding except in relation to matters as to which it shall be adjudged in such action, suit, or proceeding that such Committee member is not entitled to indemnification under applicable law; provided, however, within 60 days after institution of any such action, suit, or proceeding, such Committee member shall in writing offer the Company the opportunity, at the Company’s expense, to handle and defend the same, and such Committee member shall cooperate with and assist the Company in the defense of any such action, suit, or proceeding. The Company shall not be obligated to indemnify any Committee member with regard to the settlement of any action, suit, or proceeding to which the Company did not give its prior written consent.ARTICLE XIINOT AN EMPLOYMENT OR CONSULTING AGREEMENTNothing contained in the Plan or in any Award Agreement shall confer, intend to confer, or imply any right of employment or right to continued employment by, or rights to a continued relationship with, the Company (or any affiliate) in favor of any Participant or limit the ability of the Company (or any affiliate) to terminate, with or without cause, in its sole and absolute discretion, the employment of any Participant, subject to the terms of any written employment to which a Participant is a party. In addition, nothing contained in the Plan or in any Award Agreement shall preclude any lawful action by the Company or the Board. Status as an eligible person under the Plan shall not be construed as a commitment that any Award will be granted to the eligible person.ARTICLE XIIIMISCELLANEOUSSection 13.01 Non-Exclusivity of Plan. Nothing in the Plan shall limit or be deemed to limit the authority of the Board or the Committee to grant awards or authorize any other compensation, with or without reference to the Shares, under any other plan or independent authority.Section 13.02 No Restriction on Corporate Powers. The existence of the Plan and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Company’s capital stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding.Section 13.03 No Fiduciary Duties. Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Company and any Participant or other person.
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