UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO.
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section 240.14a-12 |
BANKFINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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| May 9, 2024 | ||
Dear Fellow Stockholder:
On behalf of the Board of Directors of BankFinancial Corporation (the “Company”), I cordially invite you to attend our 20162024 Annual Meeting of Stockholders. The meeting will be held at the Drake Hotel Oak Brook, 2301 York Road, Oak Brook,Chicago Marriott Southwest at Burr Ridge, 1200 Burr Ridge Pkwy., Burr Ridge, Illinois, on Tuesday,
At the Annual Meeting, our stockholders will vote on the election of
The Board of Directors, acting on the recommendations of the Corporate Governance and Nominating Committee, has nominated incumbents John M. HausmannCassandra J. Francis and GlenTerry R. WherfelWells to serve as directors of the Company for three-year terms.
The Board of Directors recommends that you vote your shares as follows:
FOR the election of our two director nominees; FOR the ratification of the appointment ofWe are using the “Notice and Access” method of providing proxy materials to you via the Internet in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). We believe that this process should provide you with a convenient and quick way to access your proxy materials and vote your shares, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials. On or about April 29, 2016,May 9, 2024, we will mail to our stockholders a Stockholder Meeting Notice (“Meeting(the “Meeting Notice”) containing instructions on how to access our Proxy Statement and 20152023 Annual Report, and how to vote your shares. This noticeThe Meeting Notice will also contain instructions on how you may receive, if you wish, a paper copy of your proxy materials.
By voting your shares promptly, you will help us reduce the time and expense of soliciting proxies, and you will also ensure that your shares are represented at the Annual Meeting.
Thank you in advance for your attention to this important matter. We are most appreciative of your continued interest and support as stockholders of the Company and as valued customers of BankFinancial, F.S.B.NA.
| Very truly yours, | ||
 | ||
F. Morgan Gasior Chairman and Chief Executive Officer |
BANKFINANCIAL CORPORATION
60 North Frontage Road
Burr Ridge, Illinois 60527
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On
Friday, JuneTo the Stockholders of BankFinancial Corporation:
Notice is hereby given that the Annual Meeting of Stockholders (the “Annual Meeting”) of BankFinancial Corporation a Maryland corporation, will be held at the Drake Hotel Oak Brook, 2301 York Road, Oak Brook,Chicago Marriott Southwest at Burr Ridge, 1200 Burr Ridge Pkwy., Burr Ridge, Illinois, on Tuesday,
The purpose of the Annual Meeting is to consider and act upon the following, as described more fully in the Company’s Proxy Statement:
1. | To elect two directors for a three-year term and until their successors are duly elected and qualify; |
2. | To ratify the engagement of |
| 2024; | ||
3. | An advisory, non-binding resolution to approve our executive compensation; |
| 4. | A stockholder proposal, if properly presented at the annual meeting. | |
5. | To transact such other business as may properly come before the Annual Meeting, or any adjournments or postponements |
The Board of Directors has fixed the close of business on
| By Order of the Board of Directors | ||
 | ||
| James J. Brennan | ||
| Secretary |
Burr Ridge, Illinois
May 9, 2024
Important Notice Regarding the Availability of Proxy Materials for the 20162024 Annual Meeting
Our Proxy Statement for the
2024 PROXY STATEMENT
PROXY STATEMENT
BankFinancial Corporation
60 North Frontage Road
Burr Ridge, Illinois 60527
ANNUAL MEETING OF STOCKHOLDERS
Friday, June 28, 2016
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of BankFinancial Corporation of proxies to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”) that will be held at the Drake Hotel Oak Brook, 2301 York Road, Oak Brook,Chicago Marriott Southwest at Burr Ridge, 1200 Burr Ridge Pkwy., Burr Ridge, Illinois, on Tuesday,
This Proxy Statement and the accompanying Notice of Annual Meeting and proxy card are first being made available to the stockholders of BankFinancial Corporation on or about
An Annual Report for the year ended
December 31,BankFinancial Corporation, a Maryland corporation headquartered in Burr Ridge, Illinois, became the owner of all of the issued and outstanding capital stock of BankFinancial, NA, formerly known as BankFinancial, F.S.B. (the(each referred to herein as the “Bank”) on June 23,in 2005, when it consummated a plan of conversion and reorganization thatof the Bank and its predecessor holding companies, BankFinancial MHC, Inc. (“BankFinancial MHC”) and BankFinancial Corporation, a federal corporation, adopted on August 25, 2004. BankFinancial Corporation, the Maryland corporation, was organized in 2004 to facilitate the mutual-to-stock conversion, and to become the holding company for the Bank upon the completion of the mutual-to-stock conversion.
The following is information regarding the Annual Meeting and the voting process.
Why am I receiving this Proxy Statement?
Our Board of Directors has made these materials available to you on the Internet or has delivered printed versions of these materials to you by mail pursuant to your request in connection with the Board of Directors’ solicitation of proxies for use at our Annual Meeting. As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this Proxy Statement.
You are receiving this Proxy Statement from us because at the close of business on
When you vote your shares, you appoint the proxy holder as your representative at the Annual Meeting. The proxy holder will vote your shares as you have instructed, thereby ensuring that your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, please vote your shares in advance of the Annual Meeting in case your plans change.
If you have voted your shares and an issue comes up for a vote at the Annual Meeting that is not identified on the proxy card, the proxy holder will vote your shares, pursuant to your proxy, in accordance with his or hertheir discretion.
What matters will be voted on at the Annual Meeting?
You are being asked to vote on the election of our
two director nominees; the ratification of the engagement ofThese matters are more fully described in this Proxy Statement.
How do I vote?
Stockholders who own their shares in their name may vote in person at the Annual Meeting by filling out a ballot or may authorize a proxy to vote on his or hertheir behalf. There are three ways to authorize a proxy:
1. | Internet : You may access the proxy materials on the Internet at www.envisionreports.com/BFIN and follow the instructions on the proxy card or on the Meeting Notice. |
2. | Telephone: You may call, toll-free, 1-800-652-VOTE (8683) and follow the instructions provided by the recorded message. |
3. | Mail: If you received your proxy materials by mail, you may vote by signing, dating and mailing the enclosed proxy card in the postage paid envelope provided. |
You may use the Internet or telephone to submit your proxy until 1:00 a.m.A.M., Chicago, Illinois Time on the morning of the Annual Meeting,
Stockholders who hold shares in “street name,” that is, through a broker, should instruct their broker to vote their shares by following the instructions provided by the broker. Your vote as a stockholder is important. Please vote as soon as possible to ensure that your vote is recorded. See “If I hold shares in the name of a broker, who votes my shares?” below.
What if I sign and date my proxy but do not provide voting instructions?
A proxy that is signed and dated, but which does not contain voting instructions will be voted as follows:
• | “FOR” the two director nominees named in this Proxy Statement; | |
• | “FOR” the ratification of the engagement of RSM US LLP; | |
• | “FOR” the approval of the advisory, non-binding resolution to approve our executive compensation; and | |
| • | “AGAINST” the stockholder proposal. |
What does it mean if I receive multiple proxy materials?
It means that you have multiple holdings reflected in our stock transfer records and/or in accounts with stockbrokers. Please vote all shares. No proxy cards are duplicated.
If I hold shares in the name of a broker, who votes my shares?
If you received this Proxy Statement from your broker, your broker should have given you instructions for directing how your broker should vote your shares. It will then be your broker’s responsibility to vote your shares for you in the manner you direct.
Under the rules of various national and regional securities exchanges, brokers may generally vote on routine matters, such as the ratification of an independent registered public accounting firm, but cannot vote on non-routine matters such as the election of directors and advisory, non-binding votes on executive compensation unless they have received voting instructions from the person for whom they are holding shares. If your broker does not receive instructions from you on how to vote particular shares on matters on which your broker does not have discretionary authority to vote, your broker will return the proxy card to us, indicating that he or she does not have the authority to vote on these matters. This is generally referred to as a “broker non-vote.” At the Annual Meeting, broker non-votes will not affect the outcome of the voting, as described below under “How many votes are needed for each proposal?” Therefore, weWe encourage you to provide directions to your broker as to how you want your shares voted on the matters to be brought before the Annual Meeting. You should do this by carefully following the instructions your broker gives you concerning its procedures so that your shares will be voted at the Annual Meeting.
What if I change my mind after I vote my shares?
If you hold your shares in your own name, you may revoke your proxy and change your vote by:
• | following the instructions for telephone or Internet voting appearing on your proxy card; |
• | signing another proxy card with the later date and returning the new proxy card by mail to our stock transfer agent and registrar, Computershare Trust Company, N.A., or by sending it to us to the attention of the Secretary of the Company, provided that the new proxy card is actually received by the Secretary before the polls close at the Annual Meeting; |
• | sending notice addressed to the attention of the Secretary of the Company that you are revoking your proxy, provided that the notice is actually received by the Secretary before the polls close at the Annual Meeting; or |
• | voting in person at the Annual Meeting in accordance with the established voting rules and procedures. |
If you hold your shares in the name of a broker and desire to revoke your proxy, you will need to contact your broker to revoke your proxy.
Please mail any new proxy cards to Proxy Services, in care of Computershare Trust Company, N.A.,Investor Services, at P.O. Box 43101, Providence, Rhode Island 02940-5067. YouRI 02040-5067 or you may send the notice described above or new proxy card to us as follows: BankFinancial Corporation, 15W06060 North Frontage Road, Burr Ridge, Illinois 60527, Attention: James J. Brennan, Secretary.
How are proxy materials delivered?
BankFinancial controls its costs for the Annual Meeting by following SEC rules that allow for the delivery of proxy materials to the Company’s stockholders via Notice and Access, which delivers materials through the Internet. In addition to reducing the amount of paper used in producing these materials, this method lowers the costs associated with mailing the proxy materials to stockholders. Stockholders who own shares directly and not through a broker will have a Meeting Notice delivered directly to their mailing address. Stockholders whose shares are held in the name of a broker willshould have a Meeting Notice forwarded to them by the broker that holds the shares. Stockholders who have requested paper copies of the proxy materials will receive this Proxy Statement, the 20152023 Annual Report and a proxy card.
If you received only a Meeting Notice by mail, you will not receive a printed copy of the proxy material unless you request a copy by following the instructions on the notice. The Meeting Notice also contains instructions for accessing and reviewing the proxy materials over the Internet and provides directions for submittingauthorizing your voteproxy over the Internet.
How do I request a paper copy of the proxy materials?
You may request a paper copy of the proxy materials by following the instructions below. You will be asked to provide your 15-digit control number located on your Meeting Notice.
1. | Call the toll-free telephone number 1-866-641-4276 and follow the instructions provided, or |
2. | Access the website at www.envisionreports.com/BFIN and follow the instructions provided, or |
3. | Send an email to investorvote@computershare.com with “Proxy Materials BankFinancial Corporation” in the subject line. Include in the message your full name and address, plus the number located in the shaded bar on your Meeting Notice, and state in the email that you want a paper copy of current meeting materials. |
Please make your request for a copy on or before June 8, 20167, 2024 to facilitate timely delivery before the Annual Meeting.
Stockholders who hold shares in “street name”name,” that is, through a broker, should request copies of the proxy materials by following the instructions provided by the broker.
How many votes do we need to hold the Annual Meeting?
A majority of the shares that are outstanding and entitled to vote as of the record date must be present in person or by proxy at the Annual Meeting in order for us to hold the Annual Meeting and conduct business. Abstentions and broker non-votes are considered present at the Annual Meeting and are counted in determining whether or not a quorum is present.
Shares are counted as present at the Annual Meeting if the stockholder either:
• | is present and votes in person at the Annual Meeting; or | |
• | has properly submitted a signed proxy form or other proxy (including a broker non-vote). |
At the close of business on
The Board of Directors may, by resolution, provide for a lesser number of directors or designate a substitute nominee. In the latter case, shares represented by proxies may be voted for the substitute nominee designated by the Board of Directors. Proxies cannot be voted for more than
two nominees. We have no reason to believe that any nominee will be unable to stand for election.What options do I have in voting on each of the proposals?
Election of Directors (Proposal 1).
You may mark the “FOR” box on your proxy card to vote for all director nominees, mark the “FOR ALL EXCEPT” box on your proxy card to vote for all nominees other than any nominee that you specify on your proxy card, or mark the “WITHHOLD” box to withhold your vote for all director nominees.Ratification of Independent Registered Public Accounting Firm (Proposal 2).
You may mark either the “FOR”, “AGAINST”, or “ABSTAIN” box with respect to the ratification of the engagement ofAdvisory, Non-Binding Vote on Executive Compensation (Say-On-Pay) (Proposal 3).
You mayStockholder Proposal (Proposal 4). You may mark either the “FOR”, “AGAINST”, or “ABSTAIN” box with respect to the stockholder proposal.
Where no instructions are indicated, validly executed proxies will be voted “FOR” the election of the
two director nominees, “FOR” the ratification of the engagement ofHow many votes may I cast?
Generally, you are entitled to cast one vote for each share of stock you owned on the record date. The proxy card included with this Proxy Statement indicates the number of shares owned by an account attributable to you.
Are there any limits on the voting of shares?
As provided in Section F of Article 6 of our Charter, record holders of common stock that is beneficially owned by a person who beneficially owns in excess of 10% of the outstanding shares of our common stock are not entitled to vote any shares held in excess of this 10% limit. Subject to certain exceptions, a person is deemed to beneficially own shares owned by an affiliate of, as well as by persons acting in concert with, such person. Our Board of Directors is authorized to construe and apply the provisions of Section F of Article 6 of the Charter, and to make all determinations it deems necessary or desirable to implement them, including determining the number of shares beneficially owned by any person and whether a person is an affiliate of or has an arrangement or agreement with another person. Further, the Board of Directors is authorized to demand certain information from any person who is reasonably believed to beneficially own stock in excess of the 10% limit and reimbursement for all expenses incurred by us in connection with an investigation conducted by the Board of Directors pursuant to the provisions of Section F of Article 6 of the Charter.
How many votes are needed for each proposal?
The
twoThe ratification of the engagement of Crowe HorwathRSM US LLP as our independent registered public accounting firm for the year ending
The approval of the advisory, non-binding voteresolution on executive compensation will require the affirmative vote of a majority of the votes cast at the Annual Meeting, without regard to either broker non-votes or shares as to which the “ABSTAIN” box has been selected on the proxy card. While this vote is required by law, it will neither be binding on the Company or its Board of Directors, nor will it create or imply any change in the fiduciary duties of or impose any additional fiduciary duties on the Company or its Board of Directors.
The approval of the stockholder proposal recommending that the Board engage an investment banking firm will require the affirmative vote of a majority of the votes cast at the Annual Meeting, electronically or by proxy, without regard to either broker non-votes or shares as to which the “ABSTAIN” box has been selected on the proxy card.
Shares represented by broker non-votes and abstentions are considered present at the Annual Meeting for the purposes of determining whether or not a quorum is present, but such shares are not considered votes cast and will have no effect on the
Where do I find the voting results of the Annual Meeting?
We intend to announce voting results at the Annual Meeting or at any postponements or adjournments thereof. The voting results will also be disclosed in a Current Report on Form 8-K that we will file with the SEC.
How does the Board recommend that I vote?
The Board of Directors recommends that you vote
“FOR” the election of the two directorWho do I call if I have any questions?
If you have any questions or need assistance in submitting your proxy, voting your shares or need paper copies of the proxy materials, free of charge, please contact Computershare, toll-free, at (866) 641-4276.
On February 7, 2024, the Board of Directors expanded its size to eight members from six members, and elected Aaron J. O’Connor and Benjamin Mackovak to the Company’s Board of Directors to fill the vacancies created by the increase in the size of the Board of Directors, whicheffective immediately. The Board of Directors is divided into three classes. The bylaws of the Company establish the initial terms of office for each class of directors and provide that directors are elected for a term of office that will expire at the third succeeding Annual Meeting of Stockholders following their election, with each director to hold office until his or hertheir successor is duly elected and qualifies.
At the Annual Meeting, the stockholders of the Company will be requested to elect one class of directors consisting of
two directors. The Corporate Governance and Nominating Committee of the Board of Directors has recommended, and the Board of Directors has nominated,The proxies solicited on behalf of the Board of Directors will be voted at the Annual Meeting “FOR” the election of the above
two director nominees as directors, provided that your proxy will not be voted in favor of any nominee for which your proxy vote has been withheld. If a nominee is unable or unwilling to stand for election at the time of the Annual Meeting, the shares represented by all such proxies will be voted for the election of such replacement nominee as the Board of Directors, acting on the recommendation of the Corporate Governance and Nominating Committee, may designate. At this time, the Board of Directors knows of no reason whyAs described in a Current Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 2013,February 7, 2024, the Company has entered into a Standstill Agreement with John W. PalmerStrategic Value Bank Partners, LLC, Strategic Value Investors LP and PL Capital, LLCBenjamin Mackovak. Under the Standstill Agreement and certain of its affiliated parties (collectively,subject to the “PL Capital Parties”), pursuant to whichterms and conditions set forth therein, the Company agreed, among other things, that the Board of Directors of the Company and its Corporate Governance and Nominating Committee agreed, among other things,would appoint Mr. Mackovak to nominate and recommend Mr. Palmer for electionserve as a director of the Company in the class of directors with a term expiring at the 2014Company’s 2026 Annual Meeting of Stockholders. The PL Capital Parties agreed, among other things, that during the “Standstill Period” provided for in the Standstill Agreement, and as long as a designee of the PL Capital parties is a member of the Company’s Board of Directors, they will vote all Company shares that they beneficially own in favor of the director nominees selected by the Corporate Governance and Nominating Committee and will otherwise support such director candidates, and with respect to any other proposal submitted by any stockholder, they will vote all shares that they beneficially own in accordance with the recommendation of the Board of Directors.
The following table sets forth certain information regarding the nominees and other members of the Board of Directors, including their years of service and terms of office. Except for the Standstill Agreement or otherwise as indicated herein,elsewhere in the Proxy Statement, there are no arrangements or understandings between any of the directors or the nominees and any other person pursuant to which such directors or the nominees were selected.
| Name | Position(s) Held in the Company | Director Since (1) | Term of Class to Expire | |||
| NOMINEES | ||||||
| John M. Hausmann, C.P.A. | Director | 1990 | 2019 | |||
| Glen R. Wherfel, C.P.A. | Director | 2001 | 2019 | |||
| CONTINUING DIRECTORS | ||||||
| F. Morgan Gasior | Chairman of the Board, Chief Executive Officer and President | 1983 | 2017 | |||
| John W. Palmer | Director | 2014 | 2017 | |||
| Cassandra J. Francis | Director | 2006 | 2018 | |||
| Thomas F. O’Neill | Director | 2012 | 2018 | |||
| Terry R. Wells | Director | 1994 | 2018 | |||
Director | Term of Class | |||||
Name | Position(s) Held in the Company | Since (1) | to Expire | |||
NOMINEES | ||||||
Cassandra J. Francis | Director | 2006 | 2027 | |||
Terry R. Wells | Director | 1994 | 2027 | |||
CONTINUING DIRECTORS | ||||||
John M. Hausmann, C.P.A. | Director | 1990 | 2025 | |||
| Aaron J. O'Connor | Director | 2024 | 2025 | |||
Glen R. Wherfel, C.P.A. | Director | 2001 | 2025 | |||
F. Morgan Gasior | Chairman of the Board, Chief Executive Officer and President | 1983 | 2026 | |||
| Benjamin Mackovak | Director | 2024 | 2026 | |||
Debra R. Zukonik | Director | 2020 | 2026 |
(1) | |
Denotes the earlier of the year the individual became a director of |
Nominees
The business experience for at least the past five years of each nominee for election to the Board of Directors and the qualifications of each nominee to serve as a director areis set forth below, with age information as of December 31, 2015.
Cassandra J. Francis
. AgeMs. Francis brings to the Board, among other skills and qualifications, substantial experience in urban planning and commercial real estate development and operations, with particular emphasis in retail development and leasing. She also has extensive experience with commercial real estate finance and valuations, particularly in Midwestern markets.
Terry R. Wells. Age 65. Mr. Wells has served as the Mayor of the Village of Phoenix, Illinois since 1993, and he currently serves as President of the Southland Regional Mayoral Black Caucus. He is also a member of the Board of Directors of Pace, a Division of the Regional Transportation Authority (Illinois), and the Chairman of the Board of South Suburban College. Mr. Wells has served as President of the South Suburban Mayors and Managers Association. Mr. Wells retired in 2019 after 35 years teaching history at the secondary school level. He has been a director of the Company since its formation in 2004, and of the Bank since 1994. He was a director of the Company’s predecessors, BankFinancial MHC and BankFinancial Corporation, a federal corporation, from 1999 to 2005. Mr. Wells is a member of the Executive Committee, the Audit Committee, the Human Resources Committee and the Chairman of the Community and Environmental Committee of the Company.
Mr. Wells brings to the Board, among other skills and qualifications, substantial experience in municipal government and finance, community and economic development and serving the needs of low- and moderate-income borrowers and communities. His experience as an educator has also provided him with significant expertise in secondary and post-secondary vocational training applicable to the Bank’s customer service and support personnel.
The Board of Directors recommends a vote “FOR” the above nominees.
Continuing Directors
The business experience for at least the past five years of each continuing member of the Board of Directors and each individual’s qualifications to serve as a director are set forth below, with age information as of December 31, 2023.
F. Morgan Gasior.
AgeMr. Gasior brings to the Board, among other skills and qualifications, a comprehensive understanding of the Bank’s strategies, operations and customers based on his more than 30 years of service as an employee and officer of the Bank. He has led the development and implementation of the Bank’s financial, lending, operational, technology and expansion strategies, and this experience has uniquely positioned him to adjust the Company’s business strategies to respond to changing economic, regulatory and competitive conditions, and to discern and coordinate operational changes to match these strategies. His position on the Board also provides a direct channel of communication from senior management to the Board.
John M. Hausmann, C.P.A. Age 69.68. Mr. O’Neill isHausmann has been a founding member of The Kimberlite Group and is the co-CEO of Kimberlite Advisors, a registered broker-dealer that provides advisory and institutional capital raising services.self-employed certified public accountant since 1980, until he retired in 2022. Prior to forming Kimberlite in 2013,that time, he was the Chairman of Ranieri Partners Financial Services Group, a company formed to acquire and manage financial services companies, including money management and investment management firms.an accountant with Arthur Andersen. Mr. O’Neill also worked with Ranieri Partners’ investment funds and operating companies. In 2010, Mr. O’Neill retired from Sandler O’Neill & Partners, an investment banking firm he co-founded in 1988 that advises banks, thrifts and other domestic and international financial services firms on a broad range of strategic and transactional matters, including mergers and acquisitions and other strategic transactions, capital formation and financings, asset - liability management and asset purchases and dispositions. Prior to co-founding Sandler O’Neill, Mr. O’Neill was a Managing Director at Bear Stearns and was the Co-Manager of Bear Stearns’ Financial Services Group. Mr. O’Neill began his career at L.F. Rothschild & Co. in 1972, where he served as the Managing Director of the Bank Service Group. Mr. O’Neill currently serves on the Boards of Directors of the Archer Daniels Midland Company andHausmann is a member of the Compensation/Succession Committee for the Archer Daniels Midland Company. Mr. O’Neill is a member of the Corporate Governance and Nominating and the Human Resources Committees of the Company.
Mr. Hausmann brings to the Board, among other skills and qualifications, a comprehensive understanding of accounting, auditing and taxation principles based on his many years of experience as a certified public accountant. His experience as a member of the Audit CommitteesCommittee has provided him with a thorough knowledge of the Company’s internal controls and internal and external audit procedures. His tax and accounting practice and longtime residency in the Bank’s southernmost market territory have also provided him with a unique familiarity with the needs of the Bank’s small business and municipal customers and communities.
Benjamin Mackovak. Age 42. Mr. Mackovak is the Co-Founder and Managing Member of Strategic Value Bank Partners, an investment partnership specializing in community banks, since 2015. Prior to Strategic Value Bank Partners, Mr. Mackovak was the Founder and Portfolio Manager of Cavalier Capital, an investment firm based in Cleveland, Ohio, from 2012 to 2015. Mr. Mackovak was the Senior Analyst at Rivanna Capital, an investment firm based in Charlottesville, Virginia from 2006 to 2012. Mr. Mackovak worked at First American Trust as an Associate Portfolio Manager, an investment firm based in Newport Beach, California from 2004 to 2005. Mr. Mackovak began his career at Merrill Lynch.
Mr. Mackovak currently serves on the Board of Directors for People’s Bank of Commerce, Community Bank of the Bay, and Keystone Bank. Previously, he served on the Board of United Security Bancshares, First South Bancorp, Peak Bancorp, Foothills Community Bank, and First State Bank of Colorado. In his experience as a bank director, Mr. Mackovak has served on the Compensation Committee, Loan Committee, Corporate Governance Committee, Nominating Committee, ALCO Committee, Strategic Committee, IT Committee, M&A Committee, and Audit Committee of various community banks. In addition to serving on bank boards, Mr. Mackovak also serves on the Board of Directors for the Great Lakes Science Center.
Mr. Mackovak brings to the Board his experience as a director of other banks and his financial expertise.
Aaron J. O'Connor, C.P.A. Age 49. Mr. O'Connor is a partner and founder of the accounting firm Bridge CPA LLC, a full-service CPA firm providing audit, tax and business advisory services. Mr. O'Connor has over 25 years of public accounting experience, mainly providing audit/attestation and business consulting services. During this time, he has worked with clients of all sizes, from start-ups to helping take companies public on the NASDAQ and TSX. Mr. O'Connor's clients have been in financial services, manufacturing, distribution, and professional services. Mr. O'Connor's public accounting experience includes audit partner responsibilities with PKF Mueller from 2020 to 2023, and Crowe LLP from 2004 to 2019. Mr. O’Connor has been a member of the Board of Directors of the Bank since 2023.
Mr. O'Connor brings to the Board, among other skills and qualifications, a comprehensive understanding of accounting, auditing and taxation principles based on his many years of experience as a certified public accountant.
Glen R. Wherfel, C.P.A. Age 74. Mr. Wherfel has been a principal in the accounting firm of Wherfel & Associates since 1984 and President of Park Data Incorporated since 1980. Mr. Wherfel was a director of Success National Bank from 1993 to 2001, and of Success Bancshares from 1998 to 2001. He was the Chairman of Success National Bank’s Loan Committee and a member of its Asset Liability Management Committee. The Company acquired Success Bancshares and Success National Bank in 2001. Mr. Wherfel is a member of the Audit Committee and the Chairman of the Human Resources CommitteesCommittee of the Bank and Company. He is also the Chairman of the Corporate Governance and Nominating Committee, and as such, currently serves as the Lead Director of the Company.
Mr. WellsWherfel brings to the Board, among other skills and qualifications, substantial experience in municipal governmententrepreneurial finance and finance, communityoperations. His tax and economic developmentaccounting practice, longtime residency in the Bank’s northern market territory and servingservice as a director of Success National Bank have also provided him a unique familiarity with the needs of low-the Bank’s small business and moderate-income borrowersmunicipal customers and communities. His
Debra R. Zukonik. Age 61. Ms. Zukonik is the co-owner and Chief Credit Officer of Dare Capital Partners, LLC, which provides asset-based lending and accounts receivable factoring to selected small and medium-size businesses, and co-investment in asset-based lending or accounts receivable factoring facilities to selected financial institutions. Ms. Zukonik is a co-owner of NN6, LLC, which is a technology company providing specialty report capabilities for factoring software and a co-owner of Horizon ProMed, LP, which is a commercial real estate investment company. Ms. Zukonik is also a co-owner of FactorHelp, Inc., which is a factoring consulting firm, and a co-owner of Factor Solutions, LLC, which provides servicing for factoring transactions. Ms. Zukonik is a member of the Board of Directors of the American Factoring Association, and is a former member of the Advisory Board of the International Factoring Association, having served four times in the last 20 years, and she previously served on the Executive Committee of the Commercial Finance Association Board of Directors. Ms. Zukonik is a member of the Community and Environmental Committee of the Company.
Ms. Zukonik brings to the Board, among other skills and qualifications, substantial experience as an educator has also provided him with significantand expertise in secondarythe Commercial Finance industry with an extensive range of formal training and post-secondary vocational training applicable to the Bank’s customer serviceexpertise in commercial credit and support personnel.collections, underwriting, and financial and credit analysis.
In accordance with NASDAQ Stock Market board diversity disclosure requirements, below are diversity statistics for our eight Board members as of February 29, 2024.
Board Diversity Matrix (As of February 29, 2024) | |||||||
Total Number of Directors | 8 | ||||||
Female | Male | Non-Binary | Did Not Disclose Gender | ||||
Part I: Gender Identity | |||||||
Directors | 2 | 5 | 1 | ||||
Part II: Demographic Background | |||||||
African American or Black | 1 | ||||||
Alaskan Native or Native American | |||||||
Asian | |||||||
Hispanic or Latinx | |||||||
Native Hawaiian or Pacific Islander | |||||||
White | 2 | 4 | |||||
Two or More Races or Ethnicities | |||||||
LGBTQ+ | |||||||
| Did Not Disclose Demographic Background | 1 | ||||||
Director Independence
The Board of Directors has determined that, except for Mr. Gasior, who serves as the Chairman, Chief Executive Officer and President of the Company, each of the Company’s directors is “independent” as defined in Rule 5605(a)(2) of the listing standards of the NASDAQ Stock Market. The Bank made certain secured real estate loans to Ms. Francis and her spouse prior to Ms. Francis’ appointment as a director in 2006, and these loans were considered to be grandfathered from the Bank’s practice of not making loans to directors or executive officers. This extension of credit was made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with persons not related to the Bank, does not involve more than normal risk of collectability or present other unfavorable features, and is not past due or classified as nonaccrual, restructured or a potential problem loan.
Executive Officers Who Are Not Directors
Set forth below is information, with age information as of December 31, 2015,2023, regarding the principal occupations for at least the past five years of the individuals who serve as executive officers of the Company and/or the Bank who are not directors of the Company or the Bank. All executive officers of the Company and the Bank are elected annually by their respective Boards of Directors and serve until their successors are elected and qualify. No executive officer identified below is related to any director or other executive officer of the Company or the Bank. Except as indicated elsewhere in this Proxy Statement, there are no arrangements or understandings between any officer identified below and any other person pursuant to which any such officer was selected as an officer.
Gregg T. Adams. Age 65.64. Mr. BrennanAdams has served as the SecretaryPresident of the Marketing and General CounselSales Division of the Bank since 20002015 and of the Company since its formation in 2004, and held the same positions with BankFinancial MHC and BankFinancial Corporation, a federal corporation, from 2000 to 2005. Mr. Brennan also serves aswas the Executive Vice President of the Corporate AffairsMarketing and Sales Division of the Company and the Bank. Mr. Brennan was a practicing attorneyBank from 1975 until 2000. Prior2001 to joining the Bank
Paul A. Cloutier,Cloutier. C.P.A.
John G. Manos.
AgeMarci L. Slagle. Age 54. Ms. Slagle has served as the President of the Bank's Equipment Finance Division since February 2020. She manages the corporate and governmental, middle market and small ticket equipment finance and leasing departments. Ms. Slagle is a Certified Lease Finance Professional (“CLFP”) with over 25 years’ experience in the commercial equipment leasing/finance industry. Ms. Slagle is a current member of the Equipment Finance and Lease Association Steering Committee – Middle Market Leasing, and she is also an Executive Committee member and past President of the CLFP Foundation.
The following table sets forth, as of
| Name and Address of Beneficial Owners | Amount of Shares Owned and Nature of Beneficial Ownership(1) | Percent of Shares of Common Stock Outstanding | |||||
| Principal Trust Company 1013 Centre Road Wilmington, Delaware 19805 | |||||||
| As Trustee fbo BankFinancial FSB ESOP Plan | 1,675,915 | (2) | 8.41% | ||||
| As Trustee fbo BankFinancial and Subsidiaries 401(k) Plan | 668,032 | (2) | 3.35% | ||||
| Combined holdings as Trustee | 2,343,947 | (3) | 11.76% | ||||
| Basswood Capital Management, L.L.C. 645 Madison Avenue, 10th Floor New York, New York 10022 | 1,781,913 | (2) | 8.94% | ||||
| Dimensional Fund Advisors LP 6300 Bee Cave Road Building One Austin, Texas 78746 | 1,655,566 | (2) | 8.30% | ||||
| PL Capital, LLC 20 East Jefferson Ave., Suite 22 Naperville, Illinois 60540 | 1,630,170 | (4) | 8.18% | ||||
| Black Rock, Inc. 40 East 52nd Street New York, New York 10022 | 1,266,521 | (2) | 6.35% | ||||
| Directors and Nominees | |||||||
| Cassandra J. Francis | 84,498 | (5) | * | ||||
| F. Morgan Gasior | 477,635 | (6) | 2.38% | ||||
| John M. Hausmann | 124,450 | (7) | * | ||||
| Thomas F. O’Neill | 30,100 | (8) | * | ||||
| John W. Palmer | 1,656,420 | (4), (9) | 8.30% | ||||
| Terry R. Wells | 113,498 | (10) | * | ||||
| Glen R. Wherfel | 128,618 | (11) | * | ||||
| Named Executive Officers (other than Mr. Gasior): | |||||||
| Paul A. Cloutier | 191,087 | (12) | * | ||||
| James J. Brennan | 266,802 | (13) | 1.33% | ||||
| John G. Manos | 164,231 | (14) | * | ||||
| William J. Deutsch, Jr. | 57,029 | (15) | * | ||||
| All Directors, Nominees and Executive Officers (including Named Executive Officers) as a Group (12 persons) | 3,459,172 | (16) | 16.69% | ||||
Name and Address of Beneficial Owners | Amount of Shares Owned and Nature of Beneficial Ownership (1) | Percent of Shares of Common Stock Outstanding | ||
M3 Funds, LLC 2070 E 2100 S, Suite 250 Salt Lake City, Utah 84109 | 1,155,303 | (2) | 9.27% | |
Dimensional Fund Advisors LP 6300 Bee Cave Road, Building One Austin, Texas 78746 | 868,839 | (2) | 6.97% | |
Voya Institutional Trust Company As Trustee fbo BankFinancial and Subsidiaries 401(k) Plan | 858,372 |
| 6.89% | |
Alliance Bernstein L.P. 501 Commerce Street Nashville, Tennessee 37203 | 718,811 | (2) | 5.77% | |
Renaissance Technologies LLC 800 Third Avenue New York, New York 10022 | 699,115 | (2) | 5.61 % | |
Black Rock, Inc. 50 Hudson Yards New York, New York 10001 | 678,311 | (2) | 5.44 % | |
Strategic Value Investors, LP 127 Public Square, Suite 1510 Cleveland, Ohio 44114 | 645,000 | (3) | 5.18 % | |
Directors and Nominees | ||||
Cassandra J. Francis | 40,444 | * | ||
F. Morgan Gasior | 327,696 | (4) | 2.63 % | |
John M. Hausmann | 69,049 | * | ||
| Aaron J. O'Connor | 4,184 | * | ||
Benjamin Mackovak | 645,000 | (3) | 5.18 % | |
Terry R. Wells | 56,384 | * | ||
Glen R. Wherfel | 106,085 | (5) | * | |
Debra R. Zukonik | 3,650 | * | ||
Named Executive Officers (other than Mr. Gasior): | ||||
Paul A. Cloutier | 89,373 | (6) | * | |
Gregg T. Adams | 96,275 | (7) | * | |
All Directors and Executive Officers (including Named Executive Officers) as a Group (12 persons) | 1,618,636 | 12.99 % |
(1) | |
The information reflected in this column is based upon information furnished to us by the persons named above and the information contained in the records of our stock transfer agent. The nature of beneficial ownership for shares shown in this column, unless otherwise noted, represents sole voting and investment power. |
(2) | Amount of shares owned and reported on the most recent Schedule 13G filing with the SEC, reporting ownership as of December 31, 2023. |
| (3) | Amount of shares owned and reported on the most recent Schedule |
| (4) | |
Includes |
(5) | Includes |
(6) | Includes |
| Includes |
Securities Authorized for Issuance
The Company has no securities authorized for issuance under any equity compensation plan.
Delinquent Section 16(a) Beneficial Ownership Reporting Compliance
The Company’s executive officers, directors and any beneficial owners of greater than 10% of the outstanding shares of the Company’s common stock are required to file reports with the SEC disclosing beneficial ownership and changes in beneficial ownership of the Company’s common stock. SEC rules require disclosure if an executive officer, director or 10% beneficial owner fails to file these reports on a timely basis. Based on the Company’s review of ownership reports required to be filed for the year ended
December 31,The Company has adopted a Code of Ethics for Senior Financial Officers that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. A copy of the Company’s Code of Ethics was previously filed as Exhibit 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. Amendments to and waivers from the Code of Ethics for Senior Financial Officers will be disclosed on the Company website, www.bankfinancial.com. The Company has also adopted a Code of Business Conduct, pursuant to the listing standards of the NASDAQ Stock Market that applies generally to the Company’s directors, officers, and employees.
Leadership Structure
. The Company’s Board of Directors has a distributed leadership structure. The Board has established a standing Executive Committee, which currently consists of the Chief Executive Officer and two independentThe Chair of the Corporate Governance and Nominating Committee to provide that the Chair of this committee will serveserves as the Board’s Lead Director. The Lead Director calls and presides at all executive sessions or special meetings of the Board’s outside, independent directors and provides feedback to the Chief Executive Officer regarding the same; works with the Chairs of the other committees of the Board to ensure coordinated coverage of the Board’s duties and responsibilities; serves as a supplemental point of contact for Board members and stockholders; serves as a liaison between the
The Chairman of the Board coordinates the Board’s functions, including the activities of the Board’s committees, with the execution of the Company’s business plan and day-to-day operations. Although the Chairman also presides over Board meetings as provided in the Company’s bylaws, the charter of the Corporate Governance and Nominating Committee was amended in 2010 to formalize the Board’s practice of permittingprovides that any director tomay place any item on the agenda for any Board meeting.
The Board periodically meets outside the presence of the Chief Executive Officer. The independent members of the Board also conduct a periodic review of the Company’s financial condition, results of operation, long-term planning, management structure and internal governance practices. The Board utilizes the findings and recommendations resulting from its review to revise and enhance its oversight, as appropriate.
The Board does not have a policy requiring the separation of the offices of Chairman and Chief Executive Officer, and Mr. Gasior currently serves in both capacities. The Board believes that the selection of its Chairman should be based upon the Board’s assessment of the Company’s current operating needs, the suitability of the individual to effectively discharge the duties of the Chairman and the leadership structure that will best serve the interests of the Company and its stockholders. The Board believes that combining the offices of Chairman and Chief Executive Officer is currently an effective governance structure because it provides an efficient and unified responsibility and mechanism for the coordination of the activities of the Board of Directors and those of management. The Board also believes that the Lead Director position, its policy of universal Board agenda access and its practice of conducting periodic meetings outside the presence of the Chief Executive Officer achieve benefits that are equivalent to those that might result from separating the offices of Chairman and Chief Executive Officer.
Role in Risk Oversight
. The Board is actively involved in the oversight of risks that could affect the Company, through, among other things, its adoption of policies andThis leadership and risk management structure is designed to ensure that financial, risk, internal control reporting and market information are provided directly to the independent directors of the Company and acted upon as necessary. Taken together, the Board believes that it has an effective leadership structure controlled by independent directors, with open meeting agendas and an established mechanism for oversight and evaluation of the Company as well as the Board’s and management’s execution of their respective responsibilities.
Attendance at Annual Meetings of Stockholders
Although the Company does not have a formal written policy regarding director attendance at annual meetings of stockholders, directors are requested to attend these meetings absent unavoidable scheduling conflicts. All of the Company’s then existing directors attended the 2023 Annual Meeting of Stockholders.
Meetings and Committees of the Board of Directors
Board of Directors and Committees.
The business of the Company is conducted at regular and special meetings of the Board of Directors and its committees. In addition, the “independent” members of the Board of Directors, as defined in Rule 5605(a)(2) of the listing standards of the NASDAQ Stock Market, meet in executive sessions. The standing committees of the Board of Directors of the Company are the Executive, Audit, Corporate Governance and Nominating, and Human Resources Committees. During the year ended December 31,The table below shows current membership for each of the standing Board committees:
| Directors | Executive Committee | Audit Committee | Corporate Governance and Nominating Committee | Human Resources Committee | ||||
| Cassandra J. Francis | ü | ü | ||||||
| F. Morgan Gasior | Chair | |||||||
| John M. Hausmann | ü | Chair | ü | |||||
| Thomas F. O’Neill | ü | ü | ||||||
| John W. Palmer | ü | ü | ||||||
| Terry R. Wells | ü | ü | Chair | Chair | ||||
| Glen R. Wherfel | ü | ü | ||||||
| Meetings held during 2015 | — | 6 | 1 | 3 | ||||
Directors |
| Executive Committee |
| Audit Committee |
| Corporate Governance and Nominating Committee |
| Human Resources Committee | Community & Environmental Committee | |
Cassandra J. Francis |
|
|
|
|
|
| ✓ | ✓ | ||
F. Morgan Gasior |
| Chair |
|
|
|
|
|
| ||
John M. Hausmann |
| ✓ |
| Chair |
| ✓ |
| ✓ | ||
Terry R. Wells |
| ✓ |
| ✓ |
|
|
| ✓ | Chair | |
Glen R. Wherfel |
|
|
| ✓ |
| Chair |
| Chair | ||
| Debra R. Zukonik | ✓ | |||||||||
Meetings held during 2023 |
| 1 |
| 4 |
| 1 |
| 1 | 1 |
Executive Committee.
The Executive Committee is authorized to act with the same authority as the Board of Directors between meetings of the Board of Directors, subject to certain limitations contained in the bylaws of the Company.Audit Committee.
The Board of Directors has adopted a written charter for the Audit Committee, which was attached as Appendix A to the 2023 ProxyCorporate Governance and Nominating Committee.
The Board of Directors has adopted a written charter for the Corporate Governance and Nominating Committee, whichThe Corporate Governance and Nominating Committee identifies nominees by first evaluating the current members of the Board of Directors who are willing to continue in service. Current members of the Board of Directors with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining a new perspective. If vacancies on the Board of Directors arise, or if a current director is not nominated for re-election, the Corporate Governance and Nominating Committee will determine the skills and experience desired of a new nominee, solicit suggestions for director candidates from all members of the Board of Directors, and may engage in other search activities. During the year ended
Candidates for a directorship should possess specific attributes, including integrity and a devotion to ethical behavior, a primary interest in the well-being of the Company, a capacity for independent judgment, good business acumen, the capacity to protect confidential information, an ability to work as a member of a team and a willingness to evaluate other opinions or points of view. In addition to examining a candidate’s qualifications in light of the above attributes, the Corporate Governance and Nominating Committee would also consider the overall character of the candidate and any existing or potential conflict of interest, the candidate’s willingness to serve and ability to devote the time and effort required, the candidate’s record of leadership, and the ability to develop business for the Company and its subsidiaries.
The Corporate Governance and Nominating Committee and the Board of Directors nominate candidates for election to the Company’s Board of Directors based on the candidate’s experience and expertise applicable to the current and expected future business operations of the Company. There is no formal policy with regard to the consideration of diversity in identifying a
The Corporate Governance and Nominating Committee may consider qualified candidates for a directorship suggested by the stockholders of the Company. Stockholders may suggest a qualified candidate for a directorship by writing to BankFinancial Corporation at 15W06060 North Frontage Road, Burr Ridge, Illinois 60527, Attention: James J. Brennan, Secretary, and providing the information described in the Company’s bylaws concerning the suggested candidate. A suggestion made to the Company’s Secretary concerning a potential candidate for a directorship will not constitute a nomination of the suggested candidate for election as a director. All nominations of candidates for election as a director must strictly comply with the applicable requirements and time limits summarized in “Advance Notice of Business to be Conducted at an Annual Meeting.”
Human Resources Committee.
The Board of Directors has adopted a written charter for the Human Resources Committee of the Company. The Charter of the Human Resources Committee of the Company was attached as Appendix B to the 2023 ProxyCommunity and Environmental Committee. The Board of Directors has adopted a written charter for the Community and Environmental Committee of the Company. The scope of the Community and Environmental Committee responsibilities shall include monitoring and oversight of the policies, key controls and practices, and results with respect to the community and environmental topics. The Committee shall also conduct and facilitate reviews, meetings, assessments and take such other actions necessary and appropriate to its Scope of Responsibilities.
In accordance with the applicable rules of the SEC, the Audit Committee has prepared the following report for inclusion in this Proxy Statement:
As part of its ongoing activities, the Audit Committee has:
• | reviewed and discussed with management the Company’s audited consolidated financial statements for the year ended December 31, 2023; |
• | discussed with the Company’s independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Commission; and |
• | received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm their independence. |
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended
December 31,This report has been provided and is respectfully submitted by the Audit Committee:
John M. Hausmann, C.P.A., Chairman
Terry R. Wells
Glen R. Wherfel, C.P.A.
The Company’s Audit Committee has engaged Crowe HorwathRSM US LLP (“RSM”) to act as the Company’s independent registered public accounting firm for the year ending
The Board of Directors recommends a vote “FOR” the ratification of the engagement of Crowe HorwathRSM US LLP as the Company’s independent registered public accounting firm for the year ending
Accounting Fees and Services
RSM acted as the Company’s independent registered public accounting firm for its fiscal years ended December 31, 2023 and 2022. Set forth below is certain information concerning aggregate fees billed for professional services rendered by Crowe HorwathRSM during the years ended December 31, 20152023 and 2014:
Audit Fees.
The aggregate fees billed to the Company byAudit-Related Fees.
Tax Fees.
The aggregate fees billed to the Company byAll Other Fees.
There were no other fees billed for professional services rendered byAudit Committee Pre-Approval Policy
The Audit Committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by Crowe Horwath,RSM, subject to the
This CompensationNarrative Discussion and Analysisof Executive Compensation describes the Company’s compensation philosophy and policies for 20152023 as applicable to the executive officers named in the Summary Compensation Table.Table (the “Named Executive Officers”). This section explains the structure and rationale associated with each material element of the named executive officers’Named Executive Officers’ compensation, and it provides context for the more detailed disclosure tables and specific compensation amounts provided in the following section. It is important to note that the Company and the Bank share an executive management team, and except for awards made pursuant to the Company’s 2006 Equity Incentive Plan (the “2006 EIP”), the members of the executive management team are compensated by the Bank rather than the Company and the Company reimburses the Bank for its services to the Company through intercompany expense allocations.
Pursuant to its Charter, the Human Resources Committee of the Company is responsible for the execution of the Board of Directors’ responsibilities with respect to equity-based compensation, performance evaluation and succession planning for the Company’s Chief Executive Officer and other named executive officers of the Company. The Human Resources Committee of the CompanyBank is also responsible for the submissionexecution of an annual report on executive compensation tothe responsibilities of the Board of Directors of the Bank with respect to cash-based compensation, employee benefits and perquisites, performance evaluation and succession planning for inclusion in the Company’s Annual Report on Form 10-K.Bank’s Chief Executive Officer, and other senior officers of the Bank. The Human Resources Committee of the Bank communicates its actions and decisions to the Human Resources Committee of the Company. The Human Resources Committee of the Company is comprised of Messrs. WellsWherfel (Chairman), Hausmann O’Neill, Palmer, and Wherfel,Wells and Ms. Francis, each of whom is expected to serve on the committee through the conclusion of the Company’s Annual Meeting of Stockholders on
The overall objective of the Company’s and the Bank’s compensation programs is to align executive officer compensation with the success of meeting strategic, financial and management objectives and goals. The programs are designed to create meaningful and appropriate incentives to manage the business of the Company and the Bank successfully and to align management interests with those of the stockholders of the Company. The program is structured to accomplish the following:
| • | encourage a consistent and competitive return to stockholders over the long-term; | |
| • | maintain a corporate environment that encourages stability and a long-term focus for the primary constituencies of the Company and the Bank, including employees, stockholders, communities, clients and government regulatory agencies; | |
| • | maintain a program that: |
◦ | clearly motivates personnel to perform and succeed according to the current goals of the Company and the Bank; |
◦ | provides management with the appropriate empowerment to make decisions that benefit the primary constituents; |
◦ | aligns incentive compensation practices to risk-taking activities; | |
◦ | attracts and retains key personnel critical to the long-term success of the Company and the Bank; |
◦ | provides for management succession planning and related considerations; |
◦ | encourages increased productivity; |
◦ | provides for subjective consideration in determining incentive and compensation components; and |
◦ | ensures that management: |
▪ | fulfills its oversight responsibility to its primary constituents; |
▪ | conforms its business conduct to the Company’s and the Bank’s established ethical standards; |
▪ | remains free from any influences that could impair or appear to impair the objectivity and impartiality of its judgments or treatment of the constituents of the Company and the Bank; and |
▪ | avoids any conflict between its responsibilities to the Company and the Bank and each executive officer’s personal interests. |
Mr. Gasior is the only director of the Company and the Bank who is also an executive officer of the Company and/or the Bank. Mr. Gasior does not participate in the decisions of the Boards of Directors of the Company or the Bank or their respective Human Resources Committees concerning his compensation. No executive officer of the Company or the Bank has served on the Board of Directors or on the compensation committee of any other entity that had an executive officer serving on the Company’s Board of Directors or Human Resources Committee.
The Human Resources Committee of the Company engaged Frederic W. Cook & Co., Inc. (“Cook & Co.”) to assist in the preparation of the compensation aspects of reports filed with the SEC and to be available for consultations with outside counsel to the Human Resources Committee of the Company. The Human Resources Committee of the Company has received and reviewed the Cook & Co. consultant independence letter and independence policy addressing factors identified by SEC rules to determine whether certain conflicts of interest disclosures must be made. Cook & Co. believes that there is no conflict of interest in its role as an advisor to the Human Resources Committee of the Company. The following factors were assessed by the committee: Cook & Co.’s provision of services other than the executive and non-employee director compensation matters; the amount of fees received from the Company by Cook & Co. as a percentage of the total revenue of Cook & Co.; the policies and procedures of Cook & Co. that are designed to prevent conflicts of interest; the extent of any business or personal relationships with any member of the committee or any executive officer of the Company or the Bank; and any ownership of the Company’s stock by individuals on the consulting team employed by Cook & Co. After considering these and other factors in their totality, no conflicts of interest with respect to Cook & Co.’s advice were identified by the Board or the Human Resources Committee of the Company.
Business Plan Objectives.
The Boards of Directors of the Company and the Bank periodically conduct a review of current and anticipated business conditions in the context of the Company’s and the Bank’s financial and competitive position. TheThe Human Resources Committees of the Company and the Bank considered the Company’s and the Bank’s performance within the context of the 2015 business planBusiness Plan and management’s overall performance, weighing numerous factors within and outside of management’s control.
Corporate Performance and PeerIndustry Comparison.
For purposes of comparative analysis in assessing corporate performance, the Company generallygenerally considers commercial banks and savings institutions of similar asset size, capital ratios, and/or geography. Given the ever-changing landscape within the banking industry, there is no specifically defined group of companies that is utilized for this analysis. The group of comparative financial institutions used in 2015for 2023 to assess overall performance consisted of local publicly-held financial institutions.financial institutions located in the Chicago MSA, an immediately adjacent MSA or the State of Illinois with assets of $1.0 billion to $6.0 billion. The local financial institutions that were considered in 2015 included First Midwest Bancorp, Inc. (FMBI), MBfor 2023 consisted of Waterstone Financial, Inc. (MBFI)(WSBF), WintrustFinward Bancorp (FNWD), and First Business Financial Corporation (WTFC) and PrivateBancorpServices, Inc. (PVTB)(FBIZ). A broader group consisting of these publicly-held institutions and a number of privately-held local financial institutions was used to evaluate the improvements that occurredis also considered in the Company’s earnings, loan portfolio composition and asset quality performance metrics.
The Boards of Directors of the Company and the Bank believe that peerindustry comparison is a useful tool for assessing business performance, staying competitive in the marketplace and attracting and retaining qualified executives. While the Human Resources Committees believe that it is prudent to consider peeruse industry comparison data in determining compensation practices, they do not establish empirical parameters or benchmarks for using this data. Rather, where necessary, the Human Resources Committee of the Bank uses peerindustry comparison data to confirm that executive compensation is reasonable relative to competing organizations.
Performance Reviews and Role of Executives in Committee Meetings.
Management reports to the Boards of Directors of the Company and the Bank at least annually on its progress in achieving the strategic, financial and management objectives established by the business plan. The Boards of Directors of the Company and the Bank then consider the overall performance of the Company and the Bank and the named executive officers in the context of these objectives, weighing numerous factors and conditions within and outside of management’s control.The Boards of Directors and the Human Resources Committees exclude the Chief Executive Officer and all other named executive officersNamed Executive Officers from their discussions and formal meetings concerning their compensation, except to receive the results of the decisions made and other relevant information.
Information Resources and Role of Compensation Consultants.
In reviewing current and proposed compensation levels forAlignment of Risk and Performance-Based Compensation. The Code of Business Conduct for the Company and the Bank incorporates a NASDAQ Clawback Policy for the Executive Officers of the Company and the Bank that provides for the recovery of Erroneously Awarded Compensation in the event the Company is required to prepare an Accounting Restatement. For those not covered by the NASDAQ Clawback Policy, the Code of Business Conduct for the Company and the Bank includes provisions for the recovery (also known as “clawback”) of performance-based incentive compensation paid in or after 2023 in certain situations involving a restatement of financial reporting for a period up to three years from the date the restated financial statements are first filed with the SEC. In addition, incentive compensation plans adopted by the Bank that are directly related to the volumes and pricing of extensions of credit provide for the exclusion or deferral of incentive-based compensation based on either the inherent risk of the extension of credit or the risk rating assigned to the credit by a committee independent of the loan origination process.
General.
AllBase Salary.
Generally, base salary levels are established based on job descriptions and responsibilities, either temporary or permanent in nature (including any revisions or proposed revisions thereto), competitive conditions and general economic trends in the context of the Bank’s financial and franchise condition, and performance. A discussion of changes in base salaries for eachThe base salaries of the named executive officersNamed Executive Officers for 20162024 are as follows:
Name | Position | 2024 Base Salary | |||
F. Morgan Gasior | Chairman of the Board, Chief Executive Officer and President | $ | 507,756 | ||
Paul A. Cloutier | Executive Vice President and Chief Financial Officer | $ | 333,125 | ||
Gregg T. Adams | Marketing & Sales President - Bank | $ | 279,269 | ||
Cash Incentive Plan Compensation.
The Bank maintains numerousDiscretionary Non-EquityCash Bonus.
Prohibited Transactions Involving Shares Issued by BankFinancial Corporation. The awards of discretionary non-equity bonus paymentsInsider Trading Policy for the named executiveCompany and the Bank includes provisions prohibiting directors, officers are discussedand employees from purchasing shares of common stock issued by the Company in “Conclusionsa margin account, or pledging such shares as collateral for a loan. In addition, the Year Ended December 31, 2015.”
401(k) Plan.
The Company has a tax-qualified defined contribution retirement plan covering all of its eligible employees. Employees are eligible to participate in the plan after attainment of age 21 and completion ofAll Other Compensation and Perquisites.
To the extent applicable, the Human Resources Committees of the Company and the Bank review and monitor the level of other compensation and perquisites provided by the Company or the Bank, respectively, to theExecutive Summary
. The following is a summary of the compensation decisions the Human Resources Committees made with respect to the• | Earned 2023 cash incentive compensation plan payments were paid to the Chief Executive Officer, the Chief Financial Officer and the Marketing and Sales President. | |
| • | In March 2023, the base salaries of the Chief Executive Officer and the Marketing and Sales President increased by 3.0%. The Chief Financial Officer received a 4.4% increase in base salary in 2023. | |
• | In March 2024, the base salaries of the Chief Executive Officer, the Chief Financial Officer and the Marketing and Sales President increased 2.5%. |
Review of Chief Executive Officer
. The Human Resources Committee of the Bank met outside the presence ofEarnings Per Share. The Human Resources Committee determined that the Earnings Per Share weighting for the Chief Executive Officer should remain constant at 40% of the total plan weighting. The goal of the Company has been to achieve a consistent earnings result of $1.00 per year Earnings Per Share. The Business Plan and the extentBankFinancial Corporation share repurchase plan are coordinated as feasible to achieve the targeted results. Based on the full-year 2023 results, the Human Resources Committee determined that Earnings Per Share were 74% of the target Earnings Per Share objective for 2023.
The Company’s share price decreased from $10.53 to $10.26 (2.6%) in 2023, with a one-year total shareholder return of 2.05% and three-year total shareholder return of 32.14%. The ABAQ Community Bank stock index decreased by 5.3% for the one-year period and increased by 13.6% for the three-year period.
Net Commercial Loan Growth & Loan Originations. The failures of Silicon Valley Bank, Signature Bank and First Republic in the first half of 2023 required the Bank to immediately emphasize on-balance sheet liquidity. At the beginning of 2023, the Bank’s liquidity in 2023 primarily resulted from scheduled repayments of equipment finance exposures and scheduled maturities of investment securities, which establishedwere weighted to the second half of 2023. Accordingly, the Bank decided to conserve liquidity by materially reducing term-structured loan originations through the third quarter of 2023. Due to the change in the Business Plan to emphasize on-balance sheet, the Bank’s loan portfolio declined by $176 million (14.3%), primarily due to receipt of $201 million in total principal payments within the equipment finance portfolio, which were not replaced by new originations in 2023. Notwithstanding the change in Business Plan strategy, the Bank earned a higher interest rate on its cash and short-term investments compared to the weighted-average interest rate earned on the scheduled repayments and matured securities during 2023. The Human Resources Committee determined that each of the Net Commercial Loan Growth & Loan Originations category weightings should remain constant at 5% of the total plan weighting for 2023 to retain the continued long-term focus on loan portfolio composition and growth to achieve Earnings Per Share and franchise objectives. Based on the short-term changes in the Business Plan strategy for 2023, the Human Resources Committee determined that Net Commercial Loan Growth and Loan Originations met expectations for 2023.
Securities Portfolio. The Human Resources Committee determined that the Securities Portfolio category weighting should remain constant at 5% of the total plan weighting for 2023. The Bank’s securities portfolio maintained a relatively short duration and laddered maturities, which enabled the Bank to improve liquidity and earnings through re-deployment of matured securities and the eight month earn-back of the $335,000 (after-tax) loss on the sale of $44 million in investment securities incurred in the first quarter of 2023. The Bank also improved its Community Reinvestment Act investment portfolio from $3.6 million as of December 31, 2022 (54% of target CRA investment level) to $7.5 million as of December 31, 2023 (117% of target CRA investment level). As of December 31, 2023, the Accumulated Other Comprehensive Income (AOCI) adjustment for the securities portfolio was (1.6%) of Bank tangible capital. The Human Resources Committee determined that the Securities Portfolio met expectations for 2023.
Asset Quality. The Human Resources Committee determined that the Asset Quality category should remain constant at 20% of the total plan weighting for 2023. The overall metrics for Asset Quality declined principally due to the two U.S. Government equipment finance transactions and one Middle Market equipment finance transaction placed on non-accrual status in the first half of 2023. Excluding the two U.S. Government equipment finance transactions, the Bank’s Asset Quality was consistent with the Bank’s historical asset quality results, with positive trends and action taken with respect to other classified, criticized and watch list credit exposures. Notwithstanding the foregoing, the Human Resources Committee determined that Asset Quality was below expectations due to the balances of non-accrual loans and non-performing assets as of December 31, 2023.
Internal Controls. The Human Resources Committee determined that the Internal Controls category weighting should remain constant at 10% of the total plan weighting for 2023. The Human Resources Committee determined that the results of the Bank's operations and audits with respect to information security, regulatory compliance and the system of internal controls met expectations for 2023.
Leadership & Planning. The Human Resources Committee determined that the Leadership & Planning category weighting should remain at 15% of the total plan weighting for 2023. The Chief Executive Officer responded to the banking industry developments which occurred in the first quarter of 2023 with changes to the Bank’s liquidity posture, while improving earnings due to the pricing of scheduled loan payments and maturing securities. Notwithstanding the $113 million decline in deposits in 2023, the Bank’s liquidity improved to 12% of Cash to Total Assets as of December 31, 2023 from 4% Cash to Total Assets as of December 31, 2022. The improved liquidity also further supported growth in interest income given the increases in short-term interest rates due to Federal Reserve monetary policy actions. The Bank maintained a balanced interest rate risk position in 2022 to 2023, with the additional liquidity generated during 2023 creating more earnings exposure to a future material decline in short-term interest rates as of December 31, 2023 but stable to rising earnings should interest rates remain constant or increase in future periods.
The Bank’s deposit portfolio declined primarily due to the utilization of available funds by retail borrowers in an inflationary environment and the use of low-yielding cash deposits in lieu of commercial line utilization by commercial borrowers. The Bank’s change in the cost of funds was consistent with the 2023 Business Plan. Consolidated insured deposits were 86% of total deposits as of December 31, 2023, due in part to the Bank’s rapid deployment of reciprocal insured deposit products and customer outreach for “FDIC Insurance Coverage Reviews” for depositors with greater than $250,000 held at the Bank.
The Chief Executive Officer completed the credit policy, pricing and loan documentation development for the Bank’s hybrid and universal commercial finance products, the Bank’s Business LifeLine small business micro-credit products, the initial deployment of the Business Banking Department focused on small business customers, the Treasury Services supply-chain and wire transfer drawdown products and the Bank’s new Digital Privacy Policy. The Chief Executive Officer maintained oversight over all legal matters for the Bank, including certain other litigation matters arising from the loan portfolio, the Trust Department, contract / vendor management reviews and various regulatory and state law compliance matters.
Based on the foregoing, the Human Resources Committee determined that the Chief Executive Officer's performance in the Leadership and Planning category met expectations for 2023.
Conclusions. Based on the factors noted above, the Human Resources Committee of the Bank, with Mr. Gasior not participating, approved a 13.00% cash incentive compensation plan objectives were realized during
The matrix used by the Human Resources Committee of the Company awarded stock options under the 2006 EIPBank with respect to the Chief Executive Officer in 2015.
Component | Weight | 2023 Performance Results | 2023 Percentage Results | 2023 Percentage Awarded | 2023 Maximum Percentage | ||||||||||||
| Earnings Per Share | 40 | % | 74% of Target | 7.50 | % | 7.50 | % | 50 | % | ||||||||
| Net Commercial Loan Growth | 5 | Met | 10.00 | 10.00 | 50 | ||||||||||||
| Commercial Loan Originations | 5 | Met | 10.00 | 10.00 | 50 | ||||||||||||
Securities Portfolio | 5 | Met | 20.00 | 20.00 | 50 | ||||||||||||
Asset Quality | 20 | Below | 10.00 | 10.00 | 50 | ||||||||||||
Internal Controls | 10 | Met | 15.00 | 15.00 | 50 | ||||||||||||
Leadership & Planning | 15 | Met | 30.00 | 30.00 | 50 | ||||||||||||
Composite | 100 | % | Met | 13.00 | % | (1) | 13.00 | % | (2) | 50 | % | (3) | |||||
(1) | Represents the percentage of base salary earned as cash incentive compensation. |
(2) | Represents the percentage of base salary paid as cash incentive compensation. |
(3) | Represents the maximum percentage of base salary available as cash incentive compensation. |
The performance- and risk-based incentive compensation matrix that has historically been used since 2008 to evaluate the eligibility of the Chief Executive Officer for cash incentive compensation or an increase in base compensation encompasses five separately weightedEarnings Per Share target performance areas – core earnings per share (25%), internal controls (25%), asset quality (25%), marketing and business development (15%), and leadership and planning (10%). The predetermined criterion for internal controls was the absence of significant or material deficiencies.
| CATEGORY | 2015 Performance | 2015 Plan | ||||||
| Earnings Per Share | ||||||||
| Earnings Per Share | $ | 0.44 | $ | 0.41 | ||||
Core Earnings Per Share(1) | $ | 0.41 | $ | 0.45 | ||||
Category | 2023 Results | Target Performance | ||||
Earnings Per Share | $0.74 | $1.00 | ||||
Review of the Chief Financial Officer.
Earnings Per Share. The Human Resources Committee determined that the Bank achieved strong results in its regulatory examinations and independent reviews relating to Asset-Liability Management and AllowanceEarnings Per Share category weighting for Loan and Lease Reserves adequacy. In addition, the Chief Financial Officer provided core decision support analysisshould remain constant at 25% of the total plan weighting for 2023. The goal of the Company has been to the Chief Executive Officer and the Company’s Boardachieve a consistent earnings result of Directors for the share dividend policy, share repurchase policy and tracking of corporate and peer performance for$1.00 per year Earnings Per Share. The Business Plan and strategic planning purposes. Because the members ofBankFinancial Corporation share repurchase plan are coordinated as feasible to achieve the Board of Directors have had considerable interaction withtargeted results. Based on the Company’s Chief Financial Officer throughout the year,full-year 2023 results, the Human Resources Committee determined that it hadEarnings Per Share were 74% of the target Earnings Per Share objective.
Internal Controls. The Human Resources Committee determined that the Internal Controls category weighting for the Chief Financial Officer should remain constant at 25% of the total plan weighting. The Human Resources Committee determined that the results of the Bank's operations and audits with respect to the system of internal controls for financial and regulatory reporting met expectations.
Asset Quality (Securities). The Human Resources Committee determined that the Asset Quality (Securities) category weighting for the Chief Financial Officer should remain constant at 30% of the total plan weighting for 2023. The Bank’s securities portfolio consists of U.S. Treasury securities, bank Certificates of Deposits fully-insured by the FDIC, U.S. Government Agency mortgage-backed securities and local municipal bond securities. There were no impairments of any securities in the securities portfolio in 2023. The Human Resources Committee determined that the results within the securities portfolio with respect to asset quality exceeded expectations.
Liquidity & Interest Rate Risk. The Human Resources Committee determined that the Liquidity & Interest Rate Risk category weighting should remain constant at 15% of the total plan weighting for 2023. The Bank’s securities portfolio maintained a strong basisrelatively short duration and laddered maturities, which enabled the Bank to make an evaluationimprove liquidity and earnings through re-deployment of matured securities and the eight month earn-back of the $335,000 (after-tax) loss on the sale of $44 million in investment securities incurred in the first quarter of 2023. The Bank also improved its Community Reinvestment Act investment portfolio from $3.6 million in 2022 (54% of target CRA investment level) to $7.5 million (117% of target CRA investment level). As of December 31, 2023, the Accumulated Other Comprehensive Income (AOCI) adjustment for the securities portfolio was (1.6%) of Bank tangible capital. The Bank maintained a balanced interest rate risk position in 2022 to 2023, with the additional liquidity generated during 2023 creating more exposure to a future decline in short-term interest rates as of December 31, 2023; however, continued deployment of short-term investments with laddered maturities can mitigate the risks of a sudden decline in short-term interest rates while maintaining sufficient on-balance sheet liquidity. The Human Resources Committee determined that the results with respect to liquidity and interest rate risk significantly exceeded expectations for 2023.
Leadership & Planning. The Human Resources Committee determined that the Leadership & Planning category weighting should remain constant at 5% of the total plan weighting for 2023. This category reflects the advance planning elements of the Chief Financial Officer independent ofrole on emerging financial accounting and taxation issues. The Chief Financial Officer also managed the Chief Executive Officer’s conclusionsBank’s corporate insurance program and recommendations.coordinates fixed asset investment / management functions for the Bank. The Human Resources Committee determined that the results with respect to leadership and planning met expectations for 2023.
Conclusions. Based on the factors noted above, the Human Resources Committee of the Bank approved a 14.4% discretionary 2015
The matrix utilized by the Human Resources Committee of the Bank with respect to the Chief Financial Officer is as follows:
| Component | Weight | 2015 Performance Results | 2015 Percentage Results | 2015 Percentage Awarded | 2015 Maximum Percentage | ||||||||||||
Core Earnings Per Share(1) | 5 | % | Below | 2.50 | % | 2.50 | % | 10 | % | ||||||||
| Internal Controls | 25 | Met | 5.00 | 5.00 | 10 | ||||||||||||
Asset Quality (Securities) (2) | 30 | Met | 5.00 | 5.00 | 10 | ||||||||||||
| Liquidity & Interest Rate | 30 | Exceeded | 7.50 | 7.50 | 10 | ||||||||||||
| Leadership & Planning | 10 | Met | 5.00 | 5.00 | 10 | ||||||||||||
| Composite | 100 | % | Met | 5.63 | % | (3) | 5.63 | % | (4) | 10 | % | (5) | |||||
Component | Weight | 2023 Performance Results | 2023 Percentage Results | 2023 Percentage Awarded | 2023 Maximum Percentage | ||||||||||||
Earnings Per Share | 25 | % | 74% of Target | 7.50 | % | 7.50 | % | 20 | % | ||||||||
Internal Controls | 25 | Met | 14.00 | 14.00 | 20 | ||||||||||||
Asset Quality (Securities) | 30 | Exceeded | 18.00 | 18.00 | 20 | ||||||||||||
Liquidity & Interest Rate Risk | 15 | Significantly Exceeded | 20.00 | 20.00 | 20 | ||||||||||||
Leadership & Planning | 5 | Met | 14.00 | 14.00 | 20 | ||||||||||||
Composite | 100 | % | Met | 14.48 | % | (1) | 14.48 | % | (2) | 20 | % | (3) | |||||
(1) | |
Represents the percentage of base salary earned as cash incentive compensation. |
(2) | Represents the percentage of base salary paid as cash incentive compensation. |
(3) | Represents the maximum percentage of base salary available as cash incentive compensation. |
The Earnings target and the actual results for the year ended December 31, 2023, are set forth in the table in the Review of National Commercial Leasingthe Chief Executive Officer.
Review of Marketing and Sales President.
The Human Resources Committee of the BankDeposit Portfolio Composition & Cost of Funds. The Bank’s National Commercial Leasingdeposit portfolio declined primarily due to the utilization of available funds by retail borrowers in an inflationary environment and the use of low-yielding cash deposits in lieu of commercial line utilization by commercial borrowers. The proportion of commercial deposits to total deposits remained stable in 2023. The Bank’s change in the cost of funds was consistent with the 2023 Business Plan. Consolidated insured deposits were 86% of total deposits as of December 31, 2023, due in part to the Bank’s rapid deployment of reciprocal insured deposit products and customer outreach for “FDIC Insurance Coverage Reviews” for depositors with greater than $250,000 held at the Bank. The Marketing & Sales Division President oversaw the customer outreach program for reciprocal deposits, implemented the revised pricing and practices for the Bank’s customer retention programs with personal outreach to specific large-balance commercial deposit customers and managed the day-to-day decisions with respect to customer requests for deposit pricing adjustments.
Trust Department & Treasury Services Department. Trust Department assets under management increased by 17% during 2023 as new products released in 2022 and 2023 met with favorable responses in the market, together with increased marketing outreach achieving growth in net new trust customers in 2023. The Treasury Service Department revenues increased to $146,000 in 2023 as a result of initial development and marketing for the Bank’s paying agency products. Pursuant to the Treasury Services Department Incentive Compensation Plan, rewards successes in growing the leasing portfolio beyond business plan projections. The National Commercial LeasingMarketing and Sales Division President with concurrence of the Chief Executive Officer, projected the expected volume based on numerous items including the prior year’s volume funded and average outstanding, the asset quality of the portfolio, current economic and projected market conditions, lease and loan repayments and other factors. The National Commercial Leasing Division experienced significant growth in Discounted Lease Purchase volumes and continued strong asset quality. In addition, the Bank’s relationships with independent leasing companies (known as the Bank’s “Direct Lessor” exposures) also increased as measured by the quantity of total loan originations for 2015. Accordingly, the 2015 results indicate an increase in cash incentive compensation for National Commercial Leasing President above the 2015 Business Plan Performance thresholds. These changes are supportedearned $2,229 based on the 38% increase in Discounted Lease portfolio balances, 18% increase in loan and lease origination volumes and continued strong portfolio Asset Quality.
Product Development & Marketing. In addition to the deployment of Directorsreciprocal deposit products related to FDIC deposit insurance, the Marketing & Sales Division President coordinated the review and development of updated consumer overdraft programs with upgraded risk management analytical capabilities, revised pricing and improved customer communication capabilities consistent with current regulatory guidance. The Marketing & Sales Division President also oversaw significant revisions to the Bank’s commercial credit and commercial deposit marketing initiatives to improve campaign effectiveness monitoring and utilize new marketing channels, with an emphasis on digital marketing techniques to better reach small business and commercial credit/deposit prospects.
Leadership & Planning. The Marketing & Sales Division President participates in risk management functions related to regulatory compliance/audit, information technology coordination and oversees all branch operations functions. The Marketing & Sales Division President achieved significant customer and balance retention related to the development of the Bank have had interaction withBank’s Flossmoor branch and participated in the subsequent closure and sale of the Bank’s National Commercial Leasing President throughoutNaperville and Hazel Crest branch offices to achieve greater operating efficiencies.
Conclusions. Based on the year,factors noted above, the Human Resources Committee of the Bank determined that it hadapproved a strong basis$33,771 discretionary cash bonus payment and a $2,229 Treasury Services Department cash incentive compensation plan payment to make an evaluation of the National Commercial LeasingMarketing and Sales Division President independent of the Chief Executive Officer’s conclusions and recommendations. Based on the 2015 National Commercial Leasing Division growth, thefor 2023. The Human Resources Committee of the Bank also approved a standard base compensation increase of 7.9%2.5% for the Bank’s National Commercial LeasingMarketing and Sales President. The Board of Directors of the Bank with Mr. Gasior not participating, ratified the actions of the Human Resources Committee of the Bank with respect to the National Commercial LeasingMarketing and Sales President.
| Component | 2015 Performance Thresholds (1) | 2015 Percentage Results (2) | 2015 Percentage Awarded | 2015 Maximum Percentage (3) | ||||||
| New Lease Loans Funded | $72 million | 142.6 | % | 0.25 | % | (4) | 0.25% | |||
| Average Outstanding Lines of Credit Funded | $4 million | 227.8 | % | 0.30 | % | (4) | 0.30% | |||
| Leadership, Planning & Controls | — | Met | — | % | (5) | 5.00% | ||||
| Component | 2015 Performance Thresholds (1) | 2015 Percentage Results (2) | 2015 Percentage Awarded | 2015 Maximum Percentage (3) | |||||
| Commercial Real Estate Lending | $35.3 million | 69.9 | % | 0.21% | (4) | 0.25% | |||
| Multifamily Lending | $21.8 million | 150.7 | % | 0.12% | (4) | 0.25% | |||
| Leadership, Planning & Controls | — | Met | 5.00% | (5) | 5.00% | ||||
After considering all components of the compensation program for the named executive officers,Named Executive Officers, the Human Resources Committee of the Bank has determined that such compensation is reasonable and appropriate.
The cash incentive compensation programs for the Chief Executive Officer and the Chief Financial Officer the National Commercial Leasing President,include asset quality measurements and the Commercial Real Estate LendingChief Executive Officer and the Chief Financial Officer and Marketing and Sales President include both asset quality and internal control risk measurements. Similar controls exist within the incentive compensation plans for non-executive officers and employees, of the Company, as applicable. In addition, the measurement and review of the asset quality and internal controls performance are separated from the applicable business operations, including audits by the Company’s Internal Audit Division, the Company’s independent external audit firm and other third-party independent reviews. Finally, the overall system of internal controls is robust and provides multiple levels of controls to reasonably detect and prevent instances of excessive risk taking within the organization.
The Human Resources Committees of the Company and the Bank believe that, as compensation structures become more complex, the effects of the alternative minimum tax and other taxation issues could affect the net intended effect of the Company’s and the Bank’s compensation plans. Although no specific action is warranted at this time, the Human Resources Committees of the Company and the Bank intendsintend to monitor the effects of the alternative minimum tax and other taxation issues on the Company and its directors, officers and associates when evaluating various compensation principles, practices and plans.
The following table sets forth information concerning the compensation of the Company’s Chief Executive Officer Chief Financial Officer and the Company’s other threetwo most highly compensated executive officers who served in such capacities during 2015:
| Name and Principal Position | Year | Salary | Bonus | Non-Equity Incentive Plan Compen-sation | Stock Awards (1) | Option Awards (1) | All Other Compen -sation (4) | Total Compensation | ||||||||||||||||||||||
F. Morgan Gasior Chairman of the Board, Chief Executive Officer and President (2) | 2015 | $ | 410,846 | $ | — | $ | — | $ | — | $ | 264,000 | $ | 55,928 | $ | 730,774 | |||||||||||||||
| 2014 | 405,804 | — | — | — | — | 50,742 | 456,546 | |||||||||||||||||||||||
| 2013 | 405,804 | — | — | — | — | 45,046 | 450,850 | |||||||||||||||||||||||
Paul A. Cloutier Executive Vice President and Chief Financial Officer | 2015 | $ | 275,377 | $ | 39,764 | $ | 15,560 | $ | — | $ | 133,820 | $ | 54,098 | $ | 518,619 | |||||||||||||||
| 2014 | 271,998 | — | — | — | — | 50,514 | 322,512 | |||||||||||||||||||||||
| 2013 | 271,998 | — | — | — | — | 44,778 | 316,776 | |||||||||||||||||||||||
| James J. Brennan Executive Vice President, Corporate Secretary and General Counsel | 2015 | $ | 329,511 | $ | 49,650 | $ | — | $ | — | $ | 142,474 | $ | 55,348 | $ | 576,983 | |||||||||||||||
| 2014 | 325,468 | 48,820 | — | — | — | 51,975 | 426,263 | |||||||||||||||||||||||
| 2013 | 325,468 | — | — | — | — | 45,716 | 371,184 | |||||||||||||||||||||||
John G. Manos Commercial Real Estate Lending President (3) | 2015 | $ | 237,920 | $ | 11,950 | $ | 77,556 | $ | — | $ | 85,167 | $ | 36,200 | $ | 448,793 | |||||||||||||||
| 2014 | 231,131 | 7,050 | 82,448 | — | — | 30,958 | 351,587 | |||||||||||||||||||||||
| William J. Deutsch, Jr. National Commercial Leasing President | 2015 | $ | 207,547 | $ | — | $ | 160,000 | $ | — | $ | 8,600 | $ | 37,270 | $ | 413,417 | |||||||||||||||
| 2014 | 205,000 | — | 102,500 | — | — | 33,563 | 341,063 | |||||||||||||||||||||||
| 2013 | 205,000 | — | 102,500 | 118,030 | — | 25,305 | 450,835 | |||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Non-Equity Incentive Plan Compensation | All Other Compensation (2) | Total Compensation | ||||||||||||||||
F. Morgan Gasior | 2023 | $ | 491,488 | $ | — | $ | 64,398 | (3) | $ | 57,560 | $ | 613,446 | ||||||||||
Chairman of the Board, Chief Executive Officer | 2022 | 480,944 | — | 91,620 | 61,352 | 633,916 | ||||||||||||||||
Paul A. Cloutier | 2023 | $ | 321,275 | $ | — | $ | 47,044 | (4) | $ | 32,521 | $ | 400,840 | ||||||||||
Executive Vice President and Chief Financial Officer | 2022 | 309,522 | — | 46,675 | 31,391 | 387,588 | ||||||||||||||||
Gregg T. Adams (1) | 2023 | $ | 270,321 | $ | 33,771 | $ | 2,229 | (5) | $ | 20,695 | $ | 327,016 | ||||||||||
Marketing & Sales President | ||||||||||||||||||||||
| (1) |
| in 2022. | |
| All other compensation for the |
| Name | Perquisites(i) | Insurance(ii) | Tax Reimbursement(iii) | 401(k) Match | ESOP Contribution(iv) | Total | Perquisites(i) | Insurance(ii) | Tax Reimbursement(iii) | 401(k) Match | Other (iv) | Total “All Other Compensation” | ||||||||||||||||||||||||||||||
| F. Morgan Gasior | $ | 19,200 | $ | 2,358 | $ | 1,536 | $ | 7,950 | $ | 24,884 | $ | 55,928 | $ | 17,737 | $ | 3,666 | $ | 1,601 | $ | 9,668 | $ | 24,888 | $ | 57,560 | ||||||||||||||||||
| Paul A. Cloutier | $ | 18,600 | $ | 1,613 | $ | 1,051 | $ | 7,950 | $ | 24,884 | $ | 54,098 | $ | 18,600 | $ | 2,992 | $ | 1,307 | $ | 9,622 | $ | — | $ | 32,521 | ||||||||||||||||||
| James J. Brennan | $ | 19,358 | $ | 1,911 | $ | 1,245 | $ | 7,950 | $ | 24,884 | $ | 55,348 | ||||||||||||||||||||||||||||||
| John G. Manos | $ | 2,074 | $ | 1,407 | $ | 917 | $ | 6,905 | $ | 24,897 | $ | 36,200 | ||||||||||||||||||||||||||||||
| William J. Deutsch, Jr. | $ | 6,000 | $ | 1,240 | $ | 808 | $ | 4,311 | $ | 24,911 | $ | 37,270 | ||||||||||||||||||||||||||||||
Gregg T. Adams | $ | 6,600 | $ | 2,516 | $ | 1,099 | $ | 7,598 | $ | 2,882 | $ | 20,695 | ||||||||||||||||||||||||||||||
(i) | Includes use of |
(ii) | Consists of premiums paid by the Company during the fiscal year with respect to additional short- and long-term disability insurance for each |
(iii) | Reflects reimbursement for income and employment taxes incurred by the executive as a result of the insurance premiums paid by the executive and reimbursed by the Company. See note (ii) above and discussion below for additional information. |
| (iv) |
| Estimated Future/Possible Payouts Under Non-Equity Incentive Plan Awards | All Other Option Awards: # of Securities Underlying Options | Exercise/ Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | ||||||||||||||||||||
| Name | Grant Date | Threshold | Target | Maximum | |||||||||||||||||||
| F. Morgan Gasior | 8/10/2015 | 200,000 | $ | 11.99 | $ | 184,000 | |||||||||||||||||
| 12/23/2015 | 100,000 | $ | 12.99 | $ | 80,000 | ||||||||||||||||||
| Paul A. Cloutier | 8/10/2015 | 108,500 | $ | 11.99 | $ | 99,820 | |||||||||||||||||
| 12/23/2015 | 42,500 | $ | 12.99 | $ | 34,000 | ||||||||||||||||||
| James J. Brennan | 8/10/2015 | 82,834 | $ | 11.99 | $ | 76,207 | |||||||||||||||||
| 12/23/2015 | 82,834 | $ | 12.99 | $ | 66,267 | ||||||||||||||||||
| John G. Manos | (1) | $ | 119,498 | $ | 119,498 | ||||||||||||||||||
| 8/10/2015 | 70,834 | $ | 11.99 | $ | 65,167 | ||||||||||||||||||
| 12/23/2015 | 25,000 | $ | 12.99 | $ | 20,000 | ||||||||||||||||||
| William J. Deutsch, Jr. | (2) | $ | 160,000 | $ | 160,000 | ||||||||||||||||||
| 8/10/2015 | 5,000 | $ | 11.99 | $ | 4,600 | ||||||||||||||||||
| 12/23/2015 | 5,000 | $ | 12.99 | $ | 4,000 | ||||||||||||||||||
(3) | |
Mr. |
| weighted performance goals. | |
(4) | Mr. |
| (5) | Mr. Adams is eligible to receive an incentive under the |
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (as defined by SEC rules) and certain financial performance of the Company. The following table sets forthHuman Resources Committee reviewed the total shareholder return for a one-year and a three-year periods but the Committee did not specifically incorporate Item 402(v) pay versus performance disclosure when making its incentive compensation decisions. For further information concerningabout how we align executive compensation with the exercisable and unexercisable stock options and unvested sharesCompany’s performance, see “Narrative Discussion of restricted stock at
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | # of Securities Underlying Unexercised Options Exercisable | # of Securities Underlying Unexercised Options Unexer- cisable (1) | Options Exercise Price ($) | Option Expiration Date | # of Shares or Units of Stock That Have Not Vested(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Vested(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(3) | ||||||||||||||||||
| F. Morgan Gasior | 100,000 | 100,000 | $ | 11.99 | 6/26/2017 | |||||||||||||||||||||
| 100,000 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| Paul A. Cloutier | 54,250 | 54,250 | 11.99 | 6/26/2017 | ||||||||||||||||||||||
| 42,500 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| James J. Brennan | 41,416 | 41,418 | 11.99 | 6/26/2017 | ||||||||||||||||||||||
| 82,834 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| John G. Manos | 35,416 | 35,418 | 11.99 | 6/26/2017 | ||||||||||||||||||||||
| 25,000 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| William J. Deutsch, Jr. | 2,500 | 2,500 | 11.99 | 6/26/2017 | 1,125 | $ | 14,209 | 2,680 | $ | 33,848 | ||||||||||||||||
| 5,000 | 12.99 | 6/26/2017 | ||||||||||||||||||||||||
| Name | March 31, 2016 | June 30, 2016 | ||||||
| F. Morgan Gasior | 50,000 | 50,000 | ||||||
| Paul. A. Cloutier | 27,125 | 27,125 | ||||||
| James J. Brennan | 20,708 | 20,710 | ||||||
| John G. Manos | 17,708 | 17,710 | ||||||
| William J. Deutsch, Jr. | 1,250 | 1,250 | ||||||
Pay versus Performance Table. The table below showsreflects Compensation Actually Paid to the remaining vesting schedule forCompany’s Principal Executive Officer (”PEO”) and average Compensation Actually Paid to Non-PEO Named Executive Officers during 2023, 2022 and 2021. In addition, the table discloses our Total Shareholder Return calculation that assumes reinvestment of all unexercisable options granted ondividends and reflects changes in the company’s share price since the initial investment date of December 23, 2015 with an exercise price of $12.99.31, 2020.
Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs(1) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (2) | Net Income (in thousands) (3) | Earnings Per Share | |||||||||||||||||||||
2023 | $ | 613,446 | $ | 613,446 | $ | 363,928 | $ | 363,928 | $ | 132 | $ | 9,393 | $ | 0.74 | ||||||||||||||
2022 | 633,916 | 633,916 | 410,937 | 410,937 | 130 | 10,494 | 0.80 | |||||||||||||||||||||
2021 | 632,273 | 632,273 | 356,066 | 356,066 | 126 | 7,410 | 0.53 | |||||||||||||||||||||
| Name | March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||
| F. Morgan Gasior | 25,000 | 25,000 | 25,000 | 25,000 | ||||||||||
| Paul. A. Cloutier | 10,625 | 10,625 | 10,625 | 10,625 | ||||||||||
| James J. Brennan | 20,708 | 20,708 | 20,708 | 20,710 | ||||||||||
| John G. Manos | 6,250 | 6,250 | 6,250 | 6,250 | ||||||||||
| William J. Deutsch, Jr. | 1,250 | 1,250 | 1,250 | 1,250 | ||||||||||
| (1) | No adjustments were made to the SCT total to determine Compensation Actually Paid; the Company does not provide employees with pension benefits and no equity compensation was granted to or outstanding for our PEO and NEOs during the period. |
| (2) |
| Company’s share price since the initial investment date of December 31, 2020. | |
| (3) |
| As reported in our audited financial statements for the applicable year. | |
| The |
| Paul A. Cloutier and Gregg T. Adams. | ||
| The PEO for 2022 is F. Morgan Gasior and the non-PEO NEOs are Marci L. Slagle and John G. Manos. | ||
Relationship Between Compensation Actually Paid to our PEO and the Average of the Compensation Actually Paid to our Other Non-PEO NEOs and the Company's Cumulative Total Shareholder Return (TSR). For 2022 to 2023, the compensation actually paid to our PEO and the average of the compensation actually paid to the other Non-PEO NEOs decreased by 3.23% and 11.44%, respectively, compared to a 1.54% increase in our TSR over the same time horizon.
Relationship Between Compensation Actually Paid to our PEO and the Average of the Compensation Actually Paid to our Other Non-PEO NEOs and the Company's Net Income. For 2022 to 2023, the compensation actually paid to our PEO and the average of the compensation actually paid to the other Non-PEO NEOs decreased by 3.23% and 11.44%, respectively, compared to a 10.49% decrease in our net income over the same time horizon. The cash incentive compensation paid to our PEO declined by 29.7% from 2022 to 2023, compared to a 10.5% decrease in our net income over the same time horizon.
| Option Awards | Stock Awards | |||||||||||||
| Name | # of Shares Acquired on Exercise | Value Realized Upon Exercise ($) | # of Shares Acquired on Vesting | Value Realized on Vesting ($)(1) | ||||||||||
| F. Morgan Gasior | — | $ | — | — | $ | — | ||||||||
| Paul A. Cloutier | — | $ | — | — | $ | — | ||||||||
| James J. Brennan | — | $ | — | — | $ | — | ||||||||
| John G. Manos | — | $ | — | — | $ | — | ||||||||
| William J. Deutsch, Jr. | — | $ | — | 4,765 | $ | 61,386 | ||||||||
The following table sets forth information concerning potential payments and benefits under the Company’s compensation programs and benefit plans to which the named executive officersNamed Executive Officers would be entitled upon a termination of employment as of
| Executive | Potential Payments Upon Termination or Change of Control | Termination by the Bank | Other Types of Termination | Change of Control (3) | ||||||||||||||||||||||||||
For Cause | For Disability (1) | Without Cause (2) | By Resignation | For Good Reason (2) | Upon Death (1) | |||||||||||||||||||||||||
| F. Morgan Gasior | Cash payments | $ | — | $ | 936,532 | $ | 1,230,404 | $ | — | $ | 1,230,404 | $ | 936,532 | $ | 1,230,404 | |||||||||||||||
| Accelerated Equity Awards | — | — | — | — | — | — | 64,000 | |||||||||||||||||||||||
| Continued Benefits | — | 15,176 | 20,235 | — | 20,235 | 15,176 | 20,235 | |||||||||||||||||||||||
| Paul A. Cloutier | Cash payments | $ | — | $ | 630,350 | $ | 882,647 | $ | — | $ | 882,647 | $ | 630,350 | $ | 882,647 | |||||||||||||||
| Accelerated Equity Awards | — | — | — | — | — | — | 34,720 | |||||||||||||||||||||||
| Continued Benefits | — | 25,124 | 33,499 | — | 33,499 | 25,124 | 33,499 | |||||||||||||||||||||||
| James J. Brennan | Cash payments | $ | — | $ | 777,112 | $ | 1,111,277 | $ | — | $ | 1,111,277 | $ | 777,112 | $ | 1,111,277 | |||||||||||||||
| Accelerated Equity Awards | — | — | — | — | — | — | 26,508 | |||||||||||||||||||||||
| Continued Benefits | — | 15,176 | 20,235 | — | 20,235 | 15,176 | 20,235 | |||||||||||||||||||||||
| John G. Manos | Cash payments | $ | — | $ | 589,392 | $ | 943,074 | $ | — | $ | 943,074 | $ | 589,392 | $ | 943,074 | |||||||||||||||
| Accelerated Equity Awards | — | — | — | — | — | — | 22,668 | |||||||||||||||||||||||
| Continued Benefits | — | 25,213 | 33,617 | — | 33,617 | 25,213 | 33,617 | |||||||||||||||||||||||
| William J. Deutsch, Jr. | Cash payments | $ | — | $ | 633,402 | $ | 633,402 | $ | — | $ | 633,402 | $ | 633,402 | $ | 633,402 | |||||||||||||||
| Accelerated Equity Awards | — | 48,057 | 48,057 | — | 48,057 | 48,057 | 49,657 | |||||||||||||||||||||||
| Continued Benefits | — | 11,400 | 11,400 | — | 11,400 | 11,400 | 11,400 | |||||||||||||||||||||||
Potential Payments | Termination by the Bank (1) | Other Types of Termination | ||||||||||||||||||||||||||||
Executive | Upon Termination or Change of Control | For Cause | For Disability (2) | Without Cause (3) | By Resignation | For Good Reason (3) | Upon Death (2) | Change of Control (4) | ||||||||||||||||||||||
F. Morgan Gasior | Cash payments | $ | — | $ | 1,243,545 | $ | 1,775,465 | $ | — | $ | 1,775,465 | $ | 1,243,545 | $ | 1,775,465 | |||||||||||||||
Continued Benefits | — | 24,680 | 31,732 | — | 31,732 | 24,680 | 31,732 | |||||||||||||||||||||||
Paul A. Cloutier | Cash payments | $ | — | $ | 814,815 | $ | 1,111,382 | $ | — | $ | 1,111,382 | $ | 814,815 | $ | 1,111,382 | |||||||||||||||
Continued Benefits | — | 40,028 | 51,464 | — | 51,464 | 40,028 | 51,464 | |||||||||||||||||||||||
Gregg T. Adams | Cash payments | $ | — | $ | 316,056 | $ | 316,056 | $ | — | $ | 316,056 | $ | 316,056 | $ | 452,285 | |||||||||||||||
Continued Benefits | — | 10,357 | 10,357 | — | 10,357 | 10,357 | 10,357 | |||||||||||||||||||||||
(1) | For Messrs. Gasior and Cloutier, the payments reflected in these columns assume that the Bank continues to pay 100% of all compensation and benefits under their employment agreements with the Bank and the Company, and the Company continues to reimburse the Bank for a percentage of those expenses pursuant to an agreed-upon allocation under an Expense Sharing Agreement between the Bank and the Company. The allocation is based on the amount of time that Messrs. Gasior and Cloutier devote exclusively to the Company’s affairs. Since its inception and continuing through April 16, 2024, the Company has not separately or directly paid any base salary, cash incentive compensation, bonus or other cash compensation to Messrs. Gasior and Cloutier, and the Company currently has no equity-based compensation plans in effect. In the event of a qualifying Change in Control of the Bank, Messrs. Gasior and Cloutier would be entitled to certain payments under their employment agreements with the Bank, subject to any reduction pursuant to Internal Revenue Code Section 280G as set forth therein. Pursuant to Messrs. Gasior and Cloutier’s employment agreements with the Company, if the Bank were to fail to pay any amount due to Messrs. Gasior and Cloutier under their employment agreements with the Bank, the Company would be responsible for paying Messrs. Gasior and Cloutier such amount. The Company is not otherwise obligated to pay any separate or direct compensation to Messrs. Gasior and Cloutier. The Company is not prohibited from separately or directly compensating Messrs. Gasior and Cloutier, including upon the occurrence of a qualifying Change in Control, but this has not been the Company’s practice. If this practice were to change, the amount of the separate payments made by the Company to Messrs. Gasior and Cloutier would be governed by the terms of their employment agreements with the Company and would not be limited or reduced by the terms of their employment agreements with the Bank or by Internal Revenue Code 280G. For Mr. Adams, the payments reflected in these columns assume that the Bank continues to pay 100% of all compensation and benefits under his agreement with the Bank. |
(3) | For Messrs. Gasior and Cloutier, the payments |
| actual cost for 2023. | |
(4) | The payments reflected in this column assume the executive terminated for good reason in connection with a change of control. For |
Accrued Pay and Regular Retirement Benefits. The amounts shown in the table on the previous page do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include:
• | Accrued but unpaid salary and vacation pay. | |
• | Distributions of plan balances under the Bank’s 401(k) plan. See “401(k) Plan” for an overview of the 401(k). |
Amended and vacation pay.
Compensation & Employee Benefits.Under the employment agreements, the Bank will pay the executive officersexecutives the base salary as reflected in the Bank’s payroll records, subject to discretionary increaseswhich may be increased by the Board of Directors. The 2016 base salaries for Messrs. Gasior, Cloutier, Brennan, Manos and Deutsch are $412,703, $280,771, $335,966, $242,580, and $225,000, respectively.Directors, but may not be decreased without the executive’s prior written consent. The employment agreements provide that the base salary may be increased but not decreased.executive is entitled to participate in cash incentive compensation plans and discretionary cash bonuses, if approved by the Board. The employment agreements also provide that the executive officer will receive the use of an automobile or an automobile allowance, and in the case of Messrs. Gasior Cloutier and Brennan,Cloutier, the payment of designated club dues, provided that, in a given year, the aggregate amount of these allowances and payments may not in the aggregate, exceed ten percent10% of the executive officer’sexecutive's cash compensation. The employment agreements further provide that the executive officer is entitled to participate with other executive officers in non-equity short-term incentive compensation and discretionary non-equity bonuses declared by the Board. In addition, to base salary and bonus, the employment agreements provide for, among other things, participation in aany Section 125 cafeteria plan, group medical, dental, and vision (referred to as the “Core Plans”), disability and life insurance plans, referred to as the core plans,Bank’s 401(k) plan, the ESOP and other employee and fringe benefits applicable to executive personnel.
Termination for Disability or Death. During the term of the employment period,agreement, each executive officer is provided with a supplementalshort-term and long-term disability insurance policy that payspolicies which will provide the executive with disability insurance payments in an amount equal to 60% of the executive’s base salary for the remaining term of the agreement in the event the executive officer is generally terminated due to disability. If an executive officer becomes disabled, his base salary will be reduced proportionately by the disability payments made under the disability policy and under the federal social security system. Each executive officer is responsible for paying the payment of the disability insurance premiums but receives an annual allowance in an amount sufficient, on an after-tax basis, to equal the premium payments.
In the event of the executive's termination of employment due to death or a disability determination (as defined in the employment agreements), the executive, officeror in the event of the executive’s death, the executive’s estate or trust, as applicable, will be entitled to hiscertain benefits, including the executive's earned salary through the effective date of the termination of the executive's employment, an amount equal to the annual average of any cash incentive compensation and bonus that the executive received during the preceding two fiscal years, prorated based on the number of days during the calendar year that elapsed prior to the effective date of the termination of the executive's employment an amount equal to the executive's base salary for the remaining term of the executive's employment agreement, reduced on a dollar-for-dollar basis by the disability insurance and federal social security disability benefits received by the executive, and certain health benefits.
Termination Without Cause. In the event the executive’s employment is terminated without cause during the term of the employment agreement, the executive will receive certain benefits, including the executive's earned salary, an amount equal to the annual average of any cash incentive compensation and bonus that the executive officer received during the immediately preceding two fiscal years, except for Mr. Deutsch who wouldprorated based on the number of days during the calendar year that elapsed prior to the effective date of the termination of the executive's employment. In the case of Messrs. Gasior and Cloutier, the executive will also receive an amount equal to the executive's average annual compensation (base salary, cash incentive compensation, he would receive duringand other compensation) based on the current year. Themost recent three taxable years and in the case of Mr. Adams, the executive officer will receive an amount equal to his base salary for the prorated employer matching 401(k) plan contribution thatgreater of 18 months or from the date of termination through the end of their employment period, whichever period is longer, and certain health benefits. A termination without cause also includes a decision by the Board, including a failure to elect or re-elect, or to appoint or re-appoint, the executive officerthe title to which the executive was appointed or elected as of the date of the employment agreement. In a change in control-related termination of employment by the Bank, the severance payments and benefits under employment agreements would be entitledreduced, if necessary, to receive foravoid an “excess parachute payment” under Section 280G of the current year. In addition, the executive officer will be entitled to the base salary the executive officer would have been paid through the date the employment period would have expired if the executive officer’s
Termination of Employment by the disability insurance and federal social security disability payments referenced above, and continued coverage under the core plans through the date the employment period would have expired, subject to the executive officer’s continued payment of the costs and contributionsExecutive for which he is responsible. After their continued coverage under the core plans expires, Messrs. Gasior, Cloutier, Brennan, Manos and Deutsch may elect to continue their health care coverage at their sole expense and without any cost to the Bank until they become eligible for Medicare coverage or for coverage under another employer’s group health plan.
Termination of Employment by Executive. An executive officer who terminates his employment by resignation other than due to Good Reason will only be entitled to histhe executive's earned salary and vacation through the date of termination.
Continuation of Health Insurance Benefits. In the event the executive's employment terminates involuntarily due to disability, death, without cause, or voluntarily for good reason, the executive and any qualified dependents (including the executive's spouse) are eligible for continued health insurance benefits. The period of continued health coverage ends upon the earlier of the executive's eligibility for comparable coverage under another group health insurance plan with no pre-existing condition limitation or exclusion, or the date on which the insured becomes eligible for Medicare coverage, or, for Mr. Adams, age 65. The executive's cost for continued health insurance benefits is equal to the amount paid by the executive for health insurance coverage immediately prior to the executive's termination.
General Release; Non-Solicitation. The executive officer is required under the employment agreement to execute a general release in consideration for any severance amounts. The executive officer also agrees not to compete with the Bank or its affiliates for six months after termination or during the period that severance amounts are paid, if longer. In addition, the executive officer agrees not to solicit the Bank’s customers, their business or the Bank’s employees for eighteenthe greater of twelve months which may be reducedor the period of time in certain circumstances. Payment of amounts duewhich the executive officers under the employment agreements will generally be made in a single lump sum,receives any severance payments or in the case of Mr. Deutsch, in equal installments as described above.
Directors’ Fees.
All directors of the Company who served in 2023, other thanMs. Zukonik was compensated for service as a mechanism by which awards of restricted stock or stock options could further align the financial interests of the directorsdirector of the Company and the Bank with stockholders and, in the future, provide an additional means to attract, retain and reward individuals who can and do contribute to the successbecause she is not a director of the Company. On August 10, 2015,Bank. Ms. Zukonik received a Board fee of $1,500 per month. Ms. Zukonik was reimbursed for her travel expenses for attending meetings of the Board of Directors granted equity-based compensation awards of stock options to its members. The
The table below provides information on 20152023 compensation for directors who served in 2015.
| Name | Fees Earned or Paid in Cash ($) | Option Awards (1) | Total ($) | |||||||||
| Cassandra J. Francis | $ | 24,000 | $ | 72,371 | $ | 96,371 | ||||||
| John M. Hausmann, C.P.A. | $ | 28,000 | $ | 81,571 | $ | 109,571 | ||||||
| Thomas F. O’Neill | $ | 12,000 | $ | 36,800 | $ | 48,800 | ||||||
| John W. Palmer | $ | 12,000 | $ | 32,200 | $ | 44,200 | ||||||
| Terry R. Wells | $ | 27,200 | $ | 81,571 | $ | 108,771 | ||||||
| Glen R. Wherfel, C.P.A. | $ | 27,200 | $ | 81,571 | $ | 108,771 | ||||||
Name | Fees Earned or Paid in Cash ($) (1) | All Other Compensation | Total ($) | |||||||||
Cassandra J. Francis | $ | 54,000 | $ | — | $ | 54,000 | ||||||
John M. Hausmann, C.P.A. | $ | 60,000 | $ | — | $ | 60,000 | ||||||
Aaron J. O'Connor (2) | $ | 36,000 | $ | — | $ | 36,000 | ||||||
Terry R. Wells | $ | 58,800 | $ | — | $ | 58,800 | ||||||
Glen R. Wherfel, C.P.A. | $ | 58,800 | $ | — | $ | 58,800 | ||||||
Debra R. Zukonik | $ | 18,000 | $ | — | $ | 18,000 | ||||||
(1) | Fees for Ms. Francis and Messrs. Hausmann, Wells, and Wherfel include fees for service on the Board of Directors of the Bank in the amount of $36,000. |
| Name | Exercisable | Unexercisable | ||||||
| Cassandra J. Francis | 39,332 | 39,332 | ||||||
| John M. Hausmann, C.P.A. | 44,332 | 44,332 | ||||||
| Thomas F. O’Neill | 20,000 | 20,000 | ||||||
| John W. Palmer | 17,500 | 17,500 | ||||||
| Terry R. Wells | 44,332 | 44,332 | ||||||
| Glen R. Wherfel, C.P.A. | 44,332 | 44,332 | ||||||
Pursuant to the rules and regulations of the SEC, the compensation of the Chief Executive Officer Chief Financial Officer and the three other two most highly compensated executive officers of the Company and Bank (collectively, the “Named Executive Officers”) is described in detail in the “Compensation“Narrative Discussion and Analysis”of Executive Compensation” and “Executive Compensation” sections of this Proxy Statement, including the compensation tables and the accompanying narrative discussions.
At our 20112023 Annual Meeting, we provided stockholders with the opportunity to vote on an advisory, (non-binding)non-binding basis as to the frequency that stockholders would vote on a “say-on-pay” proposal, which gives stockholders the opportunity to endorse or not endorse, on an advisory, non-binding basis, the compensation paid to our Named Executive Officers. In light of the advisory vote of stockholders at our 20112023 Annual Meeting, we determined to hold the “say-on-pay” advisory vote on an annual
We are asking you to indicate your support for the compensation of our Named Executive Officers as described in this Proxy Statement. This vote is not intended to address any specific item of executive compensation, but rather the overall compensation of our Named Executive Officers and the compensation policies and practices described in this Proxy Statement.
The “say-on-pay” proposal will be presented at the Annual Meeting in the form of the following resolution:
“RESOLVED
, that the compensation paid to the Company’s Named Executive Officers, as disclosed in this Proxy Statement pursuant to Item 402 of Securities and Exchange Commission Regulation S-K, including theThe Board of Directors recommends that the stockholders of the Company vote “FOR” this resolution.
The Board of Directors believes that the Company’s compensation policies and procedures appropriately encourage a culture of pay for performance, serve to attract and retain experienced, highly qualified executives who are critical to the Company’s long termlong-term success, and align the compensation of the Named Executive Officers with the long termlong-term interests of the Company and its stockholders. Consistent with these objectives, and as discussed more fully in the “Compensation“Narrative Discussion and Analysis”of Executive Compensation” section of this Proxy Statement.
• | The Chief Executive Officer, the Chief Financial Officer and the Marketing and Sales President received cash incentive plan payments for the year ended December 31, 2023. | |
| • | Base compensation increased 3.0% for the Chief Executive Officer and the Marketing and Sales President in 2023. The base compensation for the Chief Financial Officer increased 4.4% in 2023. | |
• | Base compensation increased 2.5% for the Chief Executive Officer, the Chief Financial Officer and the Marketing and Sales President in 2024. |
The approval of this resolution requires the affirmative vote of a majority of the votes cast at the Annual Meeting, without regard to either broker non-votes or shares as to which the “ABSTAIN” box has been selected on the proxy card. At our 20152023 Annual Meeting of Stockholders, over 97%93% of the advisory votes cast were for the approval of the compensation paid to the Company’s Named Executive Officers.
Where no instructions are indicated, validly executed proxies will be voted “FOR” this resolution.
The advisory vote on this resolution will not be binding on the Board of Directors or the Compensation Committee and will not overrule their prior decisions with respect to the compensation that was paid or awarded to any Named Executive Officer or create or imply any additional fiduciary duty on the Board of Directors or the Human Resources Committee.
In accordance with SEC rules, we have set forth below a non-binding stockholder proposal, along with the supporting statement of the stockholder proponent, Henryk F. Walczak. As explained below in our statement of opposition, our Board unanimously recommends that you vote AGAINST the stockholder proposal.
Henryk F. Walczak, has advised us that he is the beneficial owner of 133,480 shares of our common stock. Mr. Walczak has advised us that he plans to attend the annual meeting and present the below proposal. Mr. Walczak's address will be provided promptly upon written or oral request to the Corporate Secretary of the Company. All statements in the following stockholder proposal are the sole responsibility of Mr. Walczak.
Stockholder Proposal
RESOLVED, that the Stockholders of BankFinancial Corp. recommend that the Board of Directors immediately engage an investment banking firm experienced in community bank mergers and acquisitions to guide the Company in promptly taking steps to merge or sell BankFinancial on terms that will maximize stockholder value.
Supporting Statement
BankFinancial is a small institution competing for customers and talented employees in a rapidly changing industry requiring size and scale for efficient profitably. Since completion in June 2005 of its conversion to public ownership, BankFinancial has failed to earn a satisfactory return on stockholders' invested capital. I think it unlikely BankFinancial stockholders will receive an acceptable return on their investment in the foreseeable future through the Company's continued independent operation. In contrast, the sale or merger of the Company with a larger financial institution likely will provide stockholders a substantial premium over present market value. BankFinancial should take advantage of the rapid consolidation in the banking industry by selling or merging the Company.
BankFinancial's Book Value per Share declined from $13.16, on June 30, 2005, first report after the IPO, to $12.00 on March 31, 2023. Much of the decline the book value (BV) is due to the Company purchasing its shares at large premiums to BV, including from an activist investor at approximately $15.00 per Share. Poor acquisitions and a bloated expense base have also contributed.
BankFinancial's earnings have improved recently but remain well below a satisfactory return commensurate with the risk of stockholders' invested equity capital. The Company historically has earned far less than its cost of capital. Risk-free investment returns of over 5% per annum now are available on certificates of deposit.
BankFinancial's disappointing performance is evidenced in the price of its stock. The Company's shares closed at $8.58 on July 20, 2023 (the day on which this Stockholder Proposal was submitted to the Company), a little over half of what it traded for on day one following the June 2005 IPO.
The Company's unsatisfactory financial performance is especially distressing in the context of the risks associated with an equity investment in BankFinancial. These risks include volatile interest rates, changing real estate values, expensive compliance with regulations and laws, technology developments, expensive cyber security, and intense competition from traditional and non-traditional financial institutions. Many non-traditional competitors enjoy advantages of less regulation and lower tax burdens than BankFinancial.
Banks similar to BankFinancial have merged with larger financial institutions, and stockholders of the acquired banks have received significant premiums over the pre-merger market price of their shares. Cost efficiencies associated with scalable technology reward larger institutions disproportionately, incenting banks to grow larger, faster.
The greatest long-term value for BankFinancial stockholders will be realized through the prompt sale or merger of the Company.
PLEASE PLEASE vote FOR this proposal.
Board of Directors Statement in Opposition
The Board of Directors (the “Board”) believes that the stockholder proposal is not in the best interests of the Company and its stockholders for the reasons discussed below.
The proposal requests the Board to do two things - engage an investment banking firm and “promptly” take steps to sell or merge the Company on terms that will maximize stockholder value.
The Board has long believed that the continued receipt of information and advice from investment bankers is an important part of the strategic planning process. As such, the Board has periodically met with investment bankers, including within the past year, to receive presentations on such matters as current economic and market conditions, other factors impacting the market price of the Company’s common stock and financial institution stocks generally, potential business strategies that should be considered or avoided, empirical data on recent business combinations, the state of the market for business combinations involving financial institutions in the Chicago market, acquisition pricing metrics and mark-to-market accounting adjustments in the current interest rate environment, the impact of the current regulatory environment on the approvability of business combinations and timing considerations concerning the pursuit of potential strategic alternatives. Consistent with its public statements over many years, the Board remains open to considering, and if appropriate pursuing, potential business combinations.
The Board believes that approving the second portion of the proposal - that the Board “promptly” take steps to merge or sell the Company - will not place the Board in the best position to achieve optimal terms with any potential acquirors that may have an interest in the Company. Moreover, the proponent’s desire for immediacy fails to recognize that timing is a critical strategic decision that must be based on a thoughtful evaluation of market conditions and other factors such as those delineated above. The Board will continue to receive investment banking advice and information on such factors and will evaluate any potential strategic opportunities that may become available to the Company consistently with the requirements of the Maryland General Corporation Law. The Board will also continue to conduct its oversight of the Company’s operational execution and capacity for continued performance improvement.
The Board notes that some of the proponent’s assertions in the proposal are oversimplified generalizations that omit critical facts. Since the date of the Company’s initial public offering, the Company has paid $86.1 million in total dividends to its stockholders and returned $169.2 million in cash to stockholders through the Company’s repurchase of 12,324,712 shares of its common stock (which represents more than half of the shares the Company issued in the initial public offering) as part of its capital management program. As of the date this Supporting Statement was prepared, the closing price of the Company’s common stock was $10.29, not the mid-2023 price noted in the proposal that occurred when bank stocks sharply declined due to circumstances involving Silicon Valley Bank and Signature Bank. As of December 31, 2023, the Company’s 1-Year Total Shareholder Return was 2.05% and its 3-Year Total Shareholder Return was 32.14%.
The Board values and carefully considers constructive stockholder input. The Board recently added two new independent directors, including a representative of a significant institutional stockholder, to include the perspectives and views of institutional stockholders in its deliberations and evaluations concerning the Company’s future strategic direction. In addition to the 5.2% ownership position of the Company’s new institutional investor director, the Company’s directors, officers and associates collectively own 13% of the Company’s outstanding shares, thus substantially aligning their long-term interests with the interests of stockholders.
As of December 31, 2023, the Company has strong liquidity with 12% cash and short-term investments to total assets, is well-capitalized with an 11% tangible capital ratio and has a demonstrated ability to improve earnings, all of which continue to provide meaningful prospects for future improvements in its market share price and in its ultimate franchise value in a business combination.
The Board of Directors recommends that the stockholders of the Company vote “AGAINST” this proposal.
ETHICS AND BUSINESS CONDUCT MATTERS
The Company conducts no business activities other than activities relating to capital management, stockholder relations, and acting as a source of financial strength for its subsidiary, BankFinancial, NA (the “Bank”). The Company and the Bank maintain comprehensive policies, procedures, internal controls and practices with respect to ethics and business conduct matters, including:
• | Codes of Ethics & Business Conduct. The Company has adopted a Code of Ethics for Senior Financial Officers that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. A copy of the Company’s Code of Ethics was previously filed as Exhibit 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. Any amendments to and waivers of the requirements of the Code of Ethics for Senior Financial Officers will be disclosed on the Company website, www.bankfinancial.com. The Company has also adopted a Code of Business Conduct, pursuant to the listing standards of the NASDAQ Stock Market that applies generally to the Company’s directors, officers, and employees. The Company and the Bank conduct training with respect to these matters at least annually. The Company and the Bank maintain appropriate independent, anonymous channels of communication available on a continuous basis to the Internal Audit Division for notification of potential or actual violations of the Bank’s systems of internal controls, applicable laws, regulations or Bank policies. | |
| • | Anti-Money Laundering Policy and Risk Management. The Bank maintains a Bank Secrecy Act / Anti-Money Laundering / Countering the Financing of Terrorism Policy that is reviewed at least annually by its Board of Directors. The Bank Secrecy Act / Anti-Money Laundering / Countering the Financing of Terrorism Policy includes a Know-Your-Customer (KYC) customer due diligence compliance program requirement. The Bank conducts compliance training programs, from entry-level to executive-level (including the Board of Directors of the Bank), focused on Bank Secrecy Act / Anti-Money Laundering, at least annually. | |
| • | Anti-Money Laundering PolicyExternal Review. The Audit Committee of the Board of Directors of the Bank reviews an annual independent external compliance review of the Bank Secrecy Act / Anti-Money Laundering / Countering the Financing of Terrorism Policy and its related compliance programs in accordance with the standards of the Federal Financial Institutions Examination Council (“FFIEC”). The Bank Secrecy Act / Anti-Money Laundering / Countering the Financing of Terrorism Policy external review includes a review of the Know-Your-Customer (KYC) customer due diligence program. | |
| • | Anti-Bribery Policy. The Bank maintains a Professional Responsibility Policy requiring compliance with the Bank Bribery Amendments Act of 1985. The Bank conducts compliance training program with respect to its anti-bribery policy on a periodic basis. The Bank maintains appropriate independent, anonymous channels of communication available on a continuous basis to the Internal Audit Division for notification of potential or actual violations of the Bank’s systems of internal controls, applicable laws, regulations or Bank policies. | |
| • | Political Activities.The Bank maintains a Professional Responsibility Policy requiring compliance with the Federal Election Campaign Act of 1971, which prohibits contributions of any kind to any federal, state or local primary or general election campaign or candidate by the Bank, or reimbursement of any such contributions by employees. The Bank maintains controls and conducts external and internal audit testing for compliance with its Professional Responsibility Policy. The Bank maintains appropriate independent, anonymous channels of communication available on a continuous basis to the Internal Audit Division for notification of potential or actual violations of the Bank’s systems of internal controls, applicable laws, regulations or Bank policies. | |
| • | Stakeholder Engagement Activities. The Company periodically participates in investor conferences conducted by investment banking firms. The Company maintains telephone and electronic mail access for media, investor and stakeholder communications which is monitored by senior officers of the Company and meets with shareholders as appropriate to discuss relevant topics of interest. |
The Company conducts no business activities other than activities relating to capital management, stockholder relations, and acting as a source of financial strength for its subsidiary, the Bank. Cyber/information security is a significant and integrated component of the Company’s risk management strategy. As an insured depository institution, threats to information security are present and growing, and the potential exists for a cybersecurity incident to occur, which could disrupt business operations or compromise sensitive data. To date, the Company has not, to its knowledge, experienced an incident materially affecting or reasonably likely to materially affect the Company. The Bank maintains comprehensive policies, procedures, internal controls and practices with respect to cyber/information security, including:
| • | Information Security Policy and Risk Management. The Bank maintains an Information Security Policy reviewed and updated as needed, and at least annually by its Board of Directors. The Boards of Directors of the Company and the Bank review a formal Information Security Report at least annually and also receive periodic reports on cyber/information security topics and matters.
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• | Information Technology & Information Security Audits. The Bank conducts independent external and internal audits of internal controls relating to information technology and information security in accordance with standards established by the Federal Financial Institutions Examination Council (“FFIEC”). Pursuant to their respective Charters, the Audit Committees of the Company and the Bank review and monitor the effectiveness of the Bank’s internal controls, including those controls related to information security, based on independent external audit and internal audit reports. The Chief Audit Officer, who is also a Certified Information Systems Auditor, coordinates the external and internal audit plan and reporting functions for the Bank. | |
| • | Information Security Management. To prepare and respond to incidents, the Bank maintains implemented multi-layered cybersecurity protocols, integrating people, technology, and processes as part of the Bank’s Information Security Program. The Information Security Program is governed by various information security and cybersecurity, systems development, change control, disaster recovery/business continuity, third-party vendor management and physical asset classification and control policies. The Information Security Program identifies data sources, threats and vulnerabilities, deploys current information security technologies and ensures awareness, accountability, and oversight for data protection throughout the Bank and with trusted third parties to ensure that data is protected and able to be recovered in the event of a breach or failure (technical or other disaster). The Company engages qualified third-party vendors, consultants and independent auditors to, among other things, conduct network penetration tests and perform cyber/information security audits. | |
The Information Services Division of the Bank is primarily responsible for identifying, assessing and managing material risks from cyber/information security threats. Information security management is conducted by the Chief Information Officer (“CIO”) and Chief Information Security Officer (“CISO”) of the Bank. The CIO has ten years’ experience with the Bank, including information security technology deployment and previous information technology audit experience. The CISO has more than 15 years of experience with the Bank, with expertise in large-scale systems information security and customer data privacy management. | ||
The CIO monitors, evaluates and adjusts the Bank’s Information Security Program, considering any relevant changes in technology, the sensitivity of its customer information, internal or external threats to information, and changing business arrangements, such as mergers and acquisitions, technology development initiatives, alliances and joint ventures, outsourcing arrangements, and changes to customer information systems. The Management Audit/Compliance Committee reviews and coordinates the status and results of information security controls, network penetration, business continuity/disaster recovery testing, and incident response plan testing. The CIO is a member of various management committees, chairs the Technology Coordinating Committee of the Bank, and presents cyber/information security updates on a periodic basis to the Chief Executive Officer and the Bank’s Board of Directors. | ||
Our employees are the first line of defense with respect to cyber/information security protection. Each employee is responsible for protecting Bank and customer information. Employees are provided training at initial onboarding and thereafter regarding information security and cybersecurity-related policies and procedures applicable to their respective roles within the organization. In addition, employees are subjected to regular simulated phishing assessments, designed to sharpen threat detection and reporting capabilities. In addition to training, employees are supported with solutions designed to identify, prevent, detect, respond to, and recover from cyber/information security threats and activities intended to compromise cyber/information security. | ||
• | Customer Data Privacy. The Bank maintains and publishes its Customer Data Privacy Policy on its official website. The Principles include disclosures of the use and sharing of certain customer information, as well as the significant restrictions the Bank places on such activities. In addition, the Bank maintains policies restricting the knowing use or collection of information about children under 13 by the Bank, other than to provide parental notice or consent. The Bank also maintains policies and controls over the use of electronic mail solicitations, including a customer’s ability to “opt-out” of electronic solicitations at any time. The Bank maintains policies, controls and training programs concerning customer information security, including transaction processing. The Bank deploys universal conditional access policies, requires multi-factor authentication for external network access and on-line banking access by Bank customers, and maintains additional access controls for network security and transaction processing. The Bank also has policies and controls to identify, classify and limit access to non-public customer information, including a comprehensive third-party vendor management cyber/information security risk program. |
• | Customer Data Privacy Reviews. The Bank conducts independent external and internal reviews of internal controls relating to customer data privacy and data security in accordance with the requirements of the Gramm-Leach-Bliley Act, the Right to Financial Privacy Act, and standards established by the FFIEC. Pursuant to their respective Charters, the Audit Committees of the Company and the Bank review the effectiveness of the Bank’s internal controls, including those controls related to customer data privacy based on independent external audit and internal audit reports. | |
• | Information Security Incident Response. The Bank maintains information security incident response plans for various information security/data breach scenarios. The Bank tests its incident response plans at least annually. Pursuant to applicable federal and state laws, regulations and FFIEC standards, the Bank maintains incident response notification procedures for affected customers, including notification of federal regulatory authorities and law enforcement. For the preservation of all possible avenues for law enforcement, the Bank does not disclose information security incidents to the general public unless required by law or as directed by applicable lawful authority. |
The Bank maintains certain policies and practices with respect to environmental matters, including:
• | Environmental Protection and Sustainability. The Bank maintains policies to detect and prevent adverse environmental conditions with respect to the business operations of its borrowers; in addition, the Bank provides specialized financing for remediation of environmentally-contaminated real property to restore the property to a condition in compliance with federal and state environmental protection laws and regulations. | |
With respect to the Bank’s facilities and operations, the Bank’s operations and branch office density present an inherently low profile in terms of carbon emissions. To the extent supported by local municipalities, the Bank participates in plastic and metal recycling programs. The Bank’s migration to digital transaction execution and information delivery significantly reduces the Bank’s consumption of paper and road delivery services. The Bank’s capital investment program continues to invest in energy-efficient lighting and HVAC systems, which can produce reductions of up to 60% compared to historical energy usage and non-recyclable materials replacement. | ||
| • | Environmental Supply-Chain Management. Over 95% of the direct supply-chain for the Company and the Bank is based in the United States. Due to the absence of a material international component to the direct supply chain, the Company and the Bank do not maintain global vendor codes of conduct with respect to environmental matters. |
The Company or the Bank maintains several activities with respect to community and social matters:
• | Community Investment, Participation and Support. The Bank is a leader in community investment, with ten consecutive “Outstanding” Community Reinvestment Act ratings since 1998 as determined by agencies of the U.S. Treasury Department. The Bank maintains a leadership position in lending to providers of affordable multi-family residential housing in its primary market, and in providing financing to providers of healthcare and community support services to low-income individuals and families, developmentally disabled persons, and the elderly. The Bank provides financial and in-kind support by its associates to approximately 100 charitable organizations within its communities. | |
| • | Workforce. With minorities and women equal to 76% of the Bank’s workforce and 60% of the Bank’s management leadership, the Bank maintains workforce diversity broadly consistent with its communities. With respect to the composition of the Company’s Board of Directors continuing in office, women and minorities constitute 38% of the total Board membership. | |
| • | Human Rights Policy. 100% of the workforce of the Company and the Bank is based in the United States, and is therefore subject to federal, state and local civil rights, minimum/living wage, employment benefits, and labor laws and regulations. The Company and the Bank maintains appropriate equal opportunity, anti-discrimination, anti-harassment and workplace safety policies and practices, including anti-discrimination policies with respect to sexual orientation and gender identity/expression, including independent, anonymous channels of communication available every day to the Human Resources Division and Internal Audit Division for notification of potential or actual violations of the Bank’s Human Rights policies and practices. | |
| • | Human Rights Convention. The Board of Directors of the Company has affirmed the Company’s agreement with and support for the International Covenant for Civil and Political Rights (ICCPR) as ratified by the United States Senate in 1992. | |
| • | Human Rights & Supply-Chain Management. Over 95% of the direct supply-chain for the Company and the Bank is based in the United States, and is therefore subject to federal, state and local civil rights and labor laws and regulations. The Bank maintains a Vendor Management Policy which includes local community inclusion, civil rights, and labor compliance standards in vendor selection. |
Any stockholder who wishes to contact the Board of Directors or an individual director may do so by writing to the Board of Directors or the individual director care of, BankFinancial Corporation, 15W06060 North Frontage Road, Burr Ridge, Illinois 60527, Attention: James J. Brennan, Secretary. Each communication received will be reviewed by the Secretary and distributed to the Board of Directors or the individual director, as appropriate, depending on the facts and circumstances outlined in the communication. The Secretary may attempt to handle an inquiry directly or forward a communication to another employee of the Company for response. The Secretary also has the authority not to forward a communication to the Board of Directors or an individual director if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.
Neither the Bank nor the Company had any outstanding extensions of credit as of
December 31,The Company’s bylaws provide an advance notice procedure for certain business, or nominations to the Board of Directors, to be brought before an annual meeting of stockholders. In order for a stockholder to properly bring business before an annual meeting, or to propose a nominee for election to the Board of Directors, the stockholder must give written notice to the Secretary of the Company not earlier than the 150th day nor later than 5:00
| • | As to each individual whom the stockholder proposes to nominate for election or re-election as a director, |
◦ | the name, age, business address and residence address of such individual; |
◦ | the class, series and number of any shares of stock of BankFinancial Corporation that are beneficially owned by such individual; |
◦ | the date such shares were acquired and the investment intent of such acquisition; and |
◦ | all other information relating to such individual that is required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules thereunder (including such individual’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected); |
| • | As to any other business that the stockholder proposes to bring before the meeting, a description of such business, the reasons for proposing such business at the meeting and any material interest in such business of such stockholder and any “Stockholder Associated Person” (as defined in the Company’s bylaws), individually or in the aggregate, including any anticipated benefit to the stockholder and the Stockholder Associated Person therefrom; | |
| • | As to the stockholder giving the notice and any Stockholder Associated Person, the class, series and number of all shares of stock of the Company which are owned by such stockholder and by such Stockholder Associated Person, if any, and the nominee holder for, and number of shares owned beneficially but not of record by such stockholder and by any such Stockholder Associated Person; | |
| • | As to the stockholder giving the notice and any Stockholder Associated Person described above, the name and address of such stockholder, as they appear on the Company’s stock ledger and current name and address, if different, and of such Stockholder Associated Person; and | |
| • | To the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or re-election as a director or the proposal of other business on the date of such stockholder’s notice. |
Nothing in this Proxy Statement shall be deemed to require the Company to include in its Proxy Statement and proxy relating to an annual meeting any stockholder proposal or nomination that does not meet all of the requirements for inclusion established by the SEC in effect at the time such proposal or nomination is received.
Advance written notice for certain business, or nominations to the Board of Directors, to be brought before the 20172025 Annual Meeting of Stockholders must be given to the Company no earlier than November 30, 2016December 10, 2024 and no later than 5:00
In order to be eligible for inclusion in the proxy materials for next year’s annual meeting of stockholders, any stockholder proposal to take action at such meeting must be received at BankFinancial Corporation’s executive office, 60 North Frontage Road, Burr Ridge, Illinois 60527, no later than 5:00 P.M., Chicago, Illinois Time, on January 9, 2025. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934, as amended, and the Company’s bylaws.
NOTICE OF ASOLICITATIONOF PROXIES IN SUPPORT OF DIRECTOR NOMINEES OTHER THAN THECOMPANY’S NOMINEES
In order to solicit proxies in support of director nominees other than the Company’s nominees for our 2025 Annual Meeting of Stockholders, a person must provide notice postmarked or transmitted electronically to our executive office, 60 North Frontage Road, Burr Ridge, Illinois 60527, or BFIN@bankfinancial.com, no later than March 25, 2025. Any such notice and solicitation shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934.
The Board of Directors is not aware of any business to come before the Annual Meeting other than the matters described above in the Proxy Statement. However, if any other matters should properly come before the Annual Meeting, it is intended that the holders of the proxies will act in their discretion.
We will bear the cost of solicitation of proxies, and will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of BankFinancial’s common stock. In addition to solicitations via the Internet and by mail, our directors, officers and regular employees may solicit proxies personally or by telecopier or telephone without additional compensation. We have retained Alliance Advisors, LLC to act as determineda proxy solicitor in conjunction with the Annual Meeting. For proxy solicitation services, we have agreed to pay Alliance Advisors a fee of $10,000, plus (i) itemized charges based on the number of calls made and votes received by a majority vote of those presentAlliance Advisors, and voting.
A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
| BY ORDER OF THE BOARD OF DIRECTORS | ||
 | ||
James J. Brennan | ||
| Secretary |
Burr Ridge, Illinois
May 9, 2024
APPENDIX A
BANKFINANCIAL CORPORATION
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
OF THE BOARD OF DIRECTORS
COMMITTEE CHARTER
I. | PURPOSE OF THE COMMITTEE |
The Corporate Governance and Nominating Committee shall be directly responsible for recruitment and evaluation of incumbent and new candidates for election to the Board of Directors.
II. | MEMBERSHIP |
The Board shall appoint the members of the Corporate Governance and Nominating Committee annually. All members of the Committee shall be independent of the Company’s management and free of any relationship that would compromise their exercise of independent judgment as Committee members. Directors eligible for re-nomination during the current calendar year are not eligible for appointment as members of the Committee for the current year. Each member of the Committee must satisfy all applicable qualification and independence requirements set forth in the rules and regulations of applicable regulatory organizations.
III. | FREQUENCY OF MEETINGS |
The Committee shall meet as frequently as necessary but no less than annually. The Committee shall also meet at the request of the Chief Executive Officer or a majority of the Board of Directors. The Board of Directors shall designate a Chairperson of the Committee. The Committee Chairperson shall approve an agenda in advance of each meeting. A majority of the members of the Committee shall constitute a quorum. The Committee shall maintain minutes or other records of its meetings and activities.
The Committee shall, through its Chairperson, report regularly to the Board following the meetings of the Committee, addressing the matters designated by this Charter and such other related matters as the Committee may deem appropriate.
IV. | AUTHORITY |
The Committee may conduct or authorize investigations into any matters within its scope of this Charter. The Committee may also take any other action permitted by applicable laws, rules and regulations necessary to accomplish any action authorized by this charter. The Committee may conduct meetings in executive session with members of the Board of Directors or new candidates (in each case, either individually or jointly) to effect the appropriate environment of communication and coordination for the Company’s control environment.
The Committee may request reports from the Chief Executive Officer or General Counsel. The Committee may also retain (and determine the funding for) experts to advise or assist it, including outside counsel, search firms or other advisors, and the Company must provide sufficient funding for any such assistance.
V. | SCOPE OF COMMITTEE RESPONSIBILITIES |
The scope of Corporate Governance and Nominating Committee responsibilities is as follows:
A. | Board of Directors Candidate Evaluation |
• | Determine whether candidates meet the minimum qualifications for election pursuant to the Company’s Charter, Section 1.09 of the Company’s Bylaws and all applicable laws and regulations to which the Company is subject, including the determination whether an existing or proposed Board member meets all standards of independence established by applicable regulatory organizations; |
• | Determine whether the background, experience and expertise of any candidate to the Board of Directors is in the long-term interests of stockholders. In its sole discretion, the Committee may consider the current composition of the Board of Directors and its Committees, the number of directors meeting all “independence” standards imposed by applicable regulatory organizations, present and future business activities and plans, the representation of the diverse communities and geographies served by the Company and any other factors the Committee deems appropriate. |
B. | Corporate Governance Compliance |
• | Facilitate and coordinate all meetings of independent directors required by all regulatory organizations. The Committee may appoint one or more independent directors as liaisons to non-independent directors, management or stockholders as it deems appropriate; |
• | Coordinate and report to the Board of Directors an annual evaluation of the Board’s performance; |
• | Review director compensation and recommend any changes to the Board of Directors; |
• | Review the suitability of this Charter and the Company’s corporate governance practices and recommend any changes to the Board of Directors; |
• | At least annually, assess any emerging legal or regulatory issues that may have a material effect on the Company’s corporate governance policies, practices or reports in the future. |
VI. | LEAD DIRECTOR |
The Chairperson of the Committee shall serve as the Lead Director of the Board of Directors. The Lead Director will call and preside at all executive sessions or special meetings of the Board’s outside, independent directors and provide feedback to the Chief Executive Officer regarding the same; work with the Chairpersons of the other Committees of the Board to ensure coordinated coverage of Board’s duties and responsibilities; serve as a supplemental point of contact for Board members and stockholders; serve as a liaison between the Board’s outside, independent Directors who are not considered independent under applicable legal standards; coordinate the implementation of this Charter, including the annual Board performance evaluation for herein; and execute such other duties and responsibilities as the Board may establish.
VII. | UNIVERSAL AGENDA ACCESS |
Any member of the Board of Directors may place an item on the Agenda for any regular or special meeting of the Board of Directors by notifying the Chief Executive Officer or the Secretary of the same at least three business days before the scheduled date of the meeting.
VIII. | CONCLUSION |
The Committee is to serve as an independent and objective party to monitor the Company’s corporate governance practices and facilitate the effective governance of the Company based on its evaluation of the composition and conduct of the Board of Directors.
