(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
| Fee paid previously with preliminary materials. | |||||
| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||||
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
102 South Clinton St.
Iowa City, Iowa 52240
(319) 356-5800
March 9, 201816, 2021
Dear Shareholder:
On behalf of the board of directors and management of MidWestOneMidWestOne Financial Group, Inc. (the “Company”), we cordially invite you to attend the annual meetingAnnual Meeting of shareholdersthe Shareholders (the “Annual Meeting”) of MidWestOne Financial Group, Inc.the Company to be held at 2:00 p.m. central time on Thursday, April 19, 2018,29, 2021, at the Hotel Vetro,Company’s headquarters, located at 201102 S. Linn Street,Clinton St., Iowa City, Iowa 52240.52240, and by means of remote communication through an online virtual meeting at www.virtualshareholdermeeting.com/MOFG2021. We strongly encourage all shareholders to attend the Annual Meeting through the online virtual meeting webcast rather than in person. When you access the live webcast of the Annual Meeting at www.virtualshareholdermeeting.com/MOFG2021, you will be able to vote your shares electronically and submit your questions during the meeting. You will need to have your 16-digit control number included on your notice (or proxy card if you received paper copies of the proxy materials) to join, ask questions at and vote at the Annual Meeting online via live webcast.
Our Nominating and Corporate Governance Committee has nominated fourfive persons to serve as directors, all of whom are incumbent directors, except for Nathaniel J. Kaeding.directors. We have also included a non-binding advisory proposal to approve the compensation of our named executive officers, or "say-on-pay" proposal, as well as a non-binding advisory proposal regarding the frequency with which shareholders will vote on such say-on-pay proposals in the future.proposal. Finally, our Audit Committee has selected, and we recommend that you ratify the selection of, RSM US LLP to act as ourthe Company’s independent registered public accounting firm for the year ending December 31, 2018.2021. We recommend that you vote your shares for each of the fourfive director nominees, in favor of the compensation arrangements of our named executive officers, for future say-on-pay votes to take place every year, and in favor of the ratification of our independent registered public accounting firm. AtDuring the meeting,Annual Meeting, we will also review our performance in 20172020 and update you on how we are dealing with the current economic environment and our strategic plan as we move forward.
Very truly yours,
Kevin W. Monson
Chair of the meeting.Board
 | ||
102 South Clinton St.
Iowa City, Iowa 52240
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 19, 201829, 2021
To Our Shareholders:
The Annual Meeting of the Shareholders (the “Annual Meeting”) of MidWestOne Financial Group, Inc. (the “Company”) is being held at 2:00 p.m. central time on Thursday, April 19, 2018,29, 2021, at the Hotel Vetro,Company’s headquarters, located at 201102 S. Linn Street,Clinton St., Iowa City, Iowa 52240, and by means of remote communication through an online virtual meeting at www.virtualshareholdermeeting.com/MOFG2021, for the following purposes:
1.to elect five individuals to serve as Class II members of the board of directors for terms expiring at the 2024 annual meeting of shareholders and until their successors are elected and have been qualified;
2.to approve, on a non-binding, advisory basis, the compensation of our named executive officers, as described in the accompanying proxy statement, which is referred to as a “say-on-pay” proposal;
3.to ratify the appointment of RSM US LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and
4.to transact such other business as may properly be brought before the meeting and any adjournments or postponements of the meeting.
We strongly encourage all shareholders to attend the Annual Meeting through the online virtual meeting webcast rather than in person. When you access the live webcast of the Annual Meeting at www.virtualshareholdermeeting.com/MOFG2021, you will be able to vote your shares electronically and submit your questions during the meeting. You will need to have your 16-digit control number included on your notice (or proxy card if you received paper copies of the proxy materials) to join, ask questions at and vote at the Annual Meeting online via live webcast.
Only shareholders of record on our books at the close of business on March 1, 2018,4, 2021, the record date for the annual meeting,Annual Meeting, are entitled to notice of, and to vote at, the annual meetingAnnual Meeting and any adjournments or postponements of the annual meeting.Annual Meeting. In the event there are an insufficient number of votes for a quorum or to approve or ratify any of the foregoing proposals at the time of the annual meeting,Annual Meeting, the meeting may be adjourned or postponed in order to permit us to further solicit proxies. We look forward to seeing you online at the meeting.
By Order of the Board of Directors
| ||
Kevin W. Monson
Chair of the Board
Iowa City, Iowa
March 9, 201816, 2021
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, IN PERSON, PLEASE TAKE THE TIMEWE URGE YOU TO VOTE AND SUBMIT YOUR PROXY IN ADVANCE OF THE MEETING BY FOLLOWING THE INSTRUCTIONS PROVIDED ON THE NOTICE. WE HOPE THAT YOU WILL BE ABLE TO ATTEND THE MEETING THROUGH THE ONLINE VIRTUAL MEETING WEBCAST, AND, IF YOU DO, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH.AT THAT TIME. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on April 29, 2021:
Our proxy statement and 2020 Annual Report on Form 10‑K are available online at www.midwestonefinancial.com.
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MIDWESTONE FINANCIAL GROUP, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 29, 2021
This proxy statement is being furnished to our shareholders in connection with the solicitation by our board of directors of proxies to be used at the annual meetingAnnual Meeting of shareholdersthe Shareholders (the “Annual Meeting”) to be held at 2:00 p.m. central time on Thursday, April 19, 2018,29, 2021, at the Hotel Vetro,Company’s headquarters, located at 201102 S. Linn Street,Clinton St., Iowa City, Iowa 52240, and by means of remote communication through an online virtual meeting at www.virtualshareholdermeeting.com/MOFG2021, or at any adjournments or postponements of the meeting. We strongly encourage all shareholders to attend the Annual Meeting through the online virtual meeting webcast rather than in person. When you access the live webcast of the Annual Meeting at www.virtualshareholdermeeting.com/MOFG2021, you will be able to vote your shares electronically and submit your questions during the meeting. You will need to have your 16-digit control number included on your notice (or proxy card if you received paper copies of the proxy materials) to join, ask questions at and vote at the Annual Meeting online via live webcast. This proxy statement, together withand a copy of our Annual Report on Form 10-K for the year ended December 31, 2017,2020, which we have filed with the Securities and Exchange Commission (the “SEC”), is first being transmitted or deliveredmade available to our shareholders on or about March 9, 2018.16, 2021 and March 11, 2021, respectively.
QUESTIONS AND ANSWERS
The following is information regarding the meeting and the voting process, presented in a question and answer format. As used in this proxy statement, the terms “MidWestOneFinancial Group,” “MidWestOne Financial,” “the Company,the “Company,” “we,” “our,” and “us” all refer to MidWestOne Financial Group, Inc. and its consolidated subsidiaries. The terms “MidWestOne Bank” and “the Bank”the “Bank” refer to the Company’s wholly-owned banking subsidiary, MidWestOne Bank, Iowa City, Iowa.
Q: What is a proxy statement? A.A proxy statement is a document, such as this one, required by the SEC that, among other things, explains the items on which you are asked to vote on at the Annual Meeting. Q: Why did I receive access to the proxy materials? A.We have made the proxy materials available to you over the Internet because on March 4, 2021, the record date for the Annual Meeting, you owned shares of MidWestOne Financial common stock. This proxy statement lists the matters that will be presented for consideration by our shareholders at the Annual Meeting to be held on April 29, 2021. It also gives you information concerning the matters to assist you in making an informed decision. |
If you vote pursuant to the instructions set forth in the notice and herein, you appoint the proxy holders as your representatives at the meeting. The proxy holders will vote your shares as you have instructed, thereby ensuring that your shares will be voted whether or not you attend the meeting. Even if you plan to attend the meeting, we ask that you instruct the proxies how to vote your shares in advance of the meeting just in case your plans change and you are unable to attend in person.person or through the online virtual meeting webcast.
If you have voted over the Internet or by telephone or signed and returned the proxy card and an issue comes up for a vote atduring the meetingAnnual Meeting that is not identified in the proxy materials, the proxy holders will vote your shares, pursuant to your proxy, in accordance with their judgment.
Q: Why did I receive a notice regarding the Internet availability of proxy materials instead of paper copies of the proxy materials?
A.We are using the SEC’s notice and access rule that allows us to furnish our proxy materials over the Internet to our shareholders instead of mailing paper copies of those materials to each shareholder. As a result, beginning on or about March 9, 2018,16, 2021, we sent our shareholders by mail a notice containing instructions on how to access our proxy
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materials over the Internet and vote. This notice is not a proxy card and cannot be used to vote your shares. If you received a notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice.
Q:What matters will be voted on at the meeting?
| A.You are being asked to vote on: (i) |
Q: Why is the Company holding a hybrid virtual and in-person Annual Meeting? A.Due to the ongoing public health impact of the coronavirus pandemic (COVID-19) and to support the health and well-being of our employees and shareholders, our board of directors determined that it would be in the best interests of our shareholders for the Company to hold a hybrid virtual and in-person Annual Meeting. We believe that hosting a hybrid virtual and in-person Annual Meeting will enable more of our shareholders to attend the meeting because it will limit contact with other individuals in light of COVID-19 concerns and it will allow our shareholders to participate from any location around the world with Internet access. Q: How can I attend the Annual Meeting? A.The Annual Meeting will be held both through an online virtual meeting webcast at www.virtualshareholdermeeting.com/MOFG2021, and in person at the Company’s headquarters, located at 102 S. Clinton St., Iowa City, Iowa 52240. We strongly encourage all shareholders to attend the meeting virtually rather than in person. Online access to the webcast will open approximately 15 minutes prior to the start of the Annual Meeting, which will begin promptly at 2:00 p.m. central time on April 29, 2021, to allow time for you to log in and test the computer software. We encourage our shareholders to access the meeting prior to the start time to allow ample time to complete the online check-in process. You will need to have your 16‐digit control number included on your notice (or proxy card if you received paper copies of the proxy materials) to join, ask questions at and vote at the Annual Meeting via the online virtual meeting webcast. You will be able to vote your shares electronically and submit your questions during the meeting online. The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting. A technical support number will be made available on the virtual meeting webpage during check-in for shareholders who experience technical difficulties accessing the virtual Annual Meeting. A complete list of the shareholders entitled to vote at the Annual Meeting will be made available for inspection by clicking the designated shareholder list link that will appear on your screen. The shareholder list may be accessed at any time during the meeting or any adjournment. You are entitled to participate in the Annual Meeting only if you were a shareholder of record as of the record date or if you hold a valid proxy for the Annual Meeting. If you are not a shareholder of record but hold shares as a beneficial owner in street name, you should follow the instructions for attending the Annual Meeting provided by your broker or other fiduciary. If you do not comply with the procedures outlined above, you will not be admitted to the Annual Meeting. Q: How do I ask questions at the Annual Meeting if I attend the online virtual meeting webcast? A.To ask a question through the online virtual meeting webcast at www.virtualshareholdermeeting.com/MOFG2021, you will need to have your 16‐digit control number included on your notice (or proxy card if you received paper copies of the proxy materials). If you would like to submit a question, click on the “Q&A” button at the bottom of the screen, enter your question in the text box and click on “Submit” at any time during the Annual Meeting. 2 Q:How do I vote? A.After reviewing this document, submit your proxy using any of the proxy voting methods indicated on the notice. You may vote by telephone (if you received paper copies of the proxy materials), by Internet, by mail by completing, signing, dating and mailing the proxy card you received in the mail (if you received paper copies of the proxy materials), live in person at the meeting, or through the online virtual meeting webcast. By submitting your proxy, you authorize the individuals named in it to represent you and vote your shares at the Annual Meeting in accordance with your instructions. Your vote is important. Whether or not you plan to attend the Annual Meeting, please vote by following the instructions on the notice. |
If you sign, date, and return your proxy card but do not mark the card to provide voting instructions, the shares represented by your proxy card will be voted “for” all fourfive nominees named in this proxy statement, “for” the say-on-pay proposal, for future say-on-pay proposals to be voted on “every year,” and “for” the ratification of the appointment of RSM US LLP as ourthe Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.2021.
If you are a beneficial owner and a broker or other fiduciary is the record holder (which is usually referred to as “street name” ownership), then you received access to these proxy materials from the record holder of the shares that you beneficially own. The record holder should have given you instructions for directing how the record holder should vote your shares. It will then be the record holder’s responsibility to vote your shares for you in the manner you direct.
To vote during the Annual Meeting, you may go to www.virtualshareholdermeeting.com/MOFG2021 to attend the Annual Meeting via online virtual meeting webcast and vote online. You will need to have your 16-digit control number included on your notice (or proxy card if you received paper copies of the proxy materials) when you access the website and follow the instructions to vote by clicking the “voting” button on your screen. Shares held in your name as the shareholder of record may be voted electronically during the Annual Meeting. Shares held in the name of a broker or other fiduciary also may be voted electronically during the Annual Meeting by following the instructions provided by your broker or other fiduciary. If you want to voteattend the Annual Meeting in person, please come to the meeting. Wewe will distribute written ballots to anyone who wants to vote at the meeting. Please note, however, that if your shares are held in the name of a broker or other fiduciary (i.e., in street name), you will need to arrange to obtain a legal proxy from the record holder in order to vote in person at the meeting. Even if you plan to attend the annualAnnual Meeting through the online virtual meeting webcast or in person, we ask that you complete and return your proxy card, or vote by telephone or Internet, in advance of the annual meetingAnnual Meeting in case your plans change.
Q:If I hold shares in the name of a broker, who votes my shares?
A.Under the rules of various national and regional securities exchanges, brokers and other fiduciaries that hold securities on behalf of beneficial owners generally may vote on routine matters even if they have not received voting instructions from the beneficial owners for whom they hold securities, but are not permitted to vote on non-routine matters unless they have received such voting instructions. The ratification of the appointment of the Company’s independent registered public accounting firm is considered to be a routine matter, and the election of directors and say-on-pay proposal are considered to be non-routine matters. Thus, if you do not provide instructions to your broker as to how it should vote the shares beneficially owned by you, your broker will be able to vote on the ratification of the appointment of RSM US LLP as our independent registered public accounting firm, but generally will not be permitted to vote on any of the other matters described in this proxy statement.
We therefore encourage you to provide directions to your broker as to how you want your shares voted on all matters to be brought before the meeting. You should do this by carefully following the instructions your broker gives you concerning its procedures.
Q: How will my shares of common stock held in the employee stock ownership plan be voted? A.We maintain an employee stock ownership plan ("ESOP") that owns 346,412, or 2.2%, of the current outstanding shares of our common stock. Employees of the Company and the Bank participate in the ESOP. As of the record date, 346,412 shares have been allocated to ESOP participants. Each ESOP participant has the right to instruct the trustee of the plan how to vote the shares of our common stock allocated to his or her account under the ESOP. If an ESOP participant properly executes the voting instruction card, the ESOP trustee will vote the participant's shares in accordance with the participant's instructions. Shares of our common stock held in the ESOP, but not allocated to any participant's account, |
and allocated shares for which no voting instructions are received from participants, will be voted by the trustee in proportion to the results of the votes cast on the issue by the participants and beneficiaries.
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Q:What does it mean if I receive more than one notice card?
A.It means that you have multiple holdings reflected in our stock transfer records and/or in accounts with stockbrokers. To vote all of your shares by proxy, please follow the separate voting instructions that you received for the shares of common stock held in each of your different accounts.
Q:What if I change my mind after I vote?
A.If you hold your shares in your own name, you may revoke your proxy and change your vote at any time before the polls close at the meeting. You may do this by:
•timely submitting another proxy via the telephone or Internet, if that is the method that you originally used to submit your proxy;
•signing another proxy card with a later date and returning that proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717, by mail;
•sending notice to us that you are revoking your proxy; or
•voting in person at the meeting.meeting or through the virtual online meeting webcast.
All written notices of revocation and other written communications with respect to revocation of proxies should be sent to: MidWestOne Financial Group, Inc., 102 South Clinton St., Iowa City, Iowa 52240, Attention: Corporate Secretary. If you hold your shares in the name of your broker or other fiduciary and desire to revoke your proxy, you will need to contact that party to revoke your proxy.
Q:How many votes do we need to hold the annual meeting?
A.The holders of a majority of the votes entitled to be cast as of the record date must be present in person or by proxy at the Annual Meeting in order to hold the meeting and conduct business. Votes are counted as present at the meeting if the shareholder either:
•is present and votes in person at the meeting;meeting or through the virtual online meeting webcast; or
•has properly submitted a signed proxy card or other form of proxy (through the telephone or Internet).
Virtual attendance at the Annual Meeting constitutes “in person” for purposes of determining a quorum at the Annual Meeting. On March 1, 2018,4, 2021, the record date, there were 12,235,24015,981,088 shares of common stock issued and outstanding. Therefore, at least 6,117,6217,990,545 shares need to be present, in person at the meeting, through the virtual online meeting webcast, or by proxy, at the annualAnnual Meeting to hold the meeting and conduct business.
Q:What happens if a nominee is unable to stand for re-election?
A.The board 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 a substitute nominee. Proxies cannot be voted for more than five nominees. We have no reason to believe any nominee will be unable to stand for re-election.
Q:What options do I have in voting on each of the proposals?
A.Except with respect to the election of directors, you may vote “for,” “against” or “abstain” on each proposal properly brought before the meeting. In the election of directors, you may vote “for” or “withhold authority to vote for” each nominee. There is no cumulative voting for the election of directors.
Q:How many votes may I cast?
A.Generally, you are entitled to cast one vote for each share of stock you owned on the record date.
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Q:How many votes are needed for each proposal?
A.Except with respect to the election of directors, each matter that arises at the Annual Meeting will be approved if the votes cast favoring the action exceed the votes cast opposing the action. Directors will be elected by a plurality of the votes cast, and the five individuals receiving the highest number of votes cast “for” their election will be elected as directors of MidWestOne. Please note, however, that because the say-on-pay vote is advisory, the outcome of such vote will not be binding on the board of directors or the Compensation Committee.
Also, please remember that the election of directors and the say-on-pay proposal and the frequency of future say-on-pay votes are allboth considered to be non-routine matters. As a result, if your shares are held by a broker or other fiduciary, it cannot vote your shares on these matters unless it has received voting instructions from you.
Abstentions and broker non-votes, if any, will not be counted as votes cast, but will count for purposes of determining whether or not a quorum is present. Accordingly, so long as a quorum is present, abstentions and broker non-votes will have no effect on any of the matters presented for a vote at the annual meeting.Annual Meeting.
Q:Where do I find the voting results of the meeting?
A.If available, we will announce voting results during the Annual Meeting. The voting results also will be disclosed in a Form 8-K that we expect to file within four business days after the Annual Meeting.
Q:Who bears the cost of soliciting proxies?
A.We will bear the cost of soliciting proxies. In addition to solicitations by mail, our officers, directors or employees may solicit proxies in person, by telephone, or by email. These persons will not receive any special or additional compensation for soliciting proxies. We may reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders.
YOUR VOTE IS IMPORTANT. PLEASE VOTE BY INTERNET OR TELEPHONE OR RETURN YOUR MARKED AND SIGNED PROXY CARD PROMPTLY SO YOUR SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON.PERSON OR THROUGH THE ONLINE VIRTUAL MEETING WEBCAST.
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PROPOSAL 1:
ELECTION OF DIRECTORS
MidWestOne Financial’s board of directors is divided into three classes. At the annual meetingAnnual Meeting to be held on April 19, 2018,29, 2021, you will be entitled to elect fourfive directors for terms expiring in 2021,at the 2024 Annual Meeting and until their successors are elected and have been qualified, as described herein. We have no knowledge that any of the nominees will refuse or be unable to serve as directors, but if any of the nominees becomes unavailable for election, the holders of proxies reserve the right to substitute another person of their choice as a nominee when voting at the meeting.
The Nominating and Corporate Governance Committee of our board of directors has nominated fourfive persons for election at this annual meeting,Annual Meeting, all of whom are incumbent directors, except for Nathaniel J. Kaeding.directors. These nominations were further approved by the full board. We did not receive any shareholder nominations for directors for the 20182021 annual meeting. Set forth below is information concerning the nominees for election and for the other directors whose terms of office will continue after the meeting, including their age, year first elected or appointed as a director, position with MidWestOne Financial, qualifications to serve on the board and business experience. Unless otherwise specified, each position currently held by a nominee or director has been held for at least five years. The fourfive nominees for director, if elected at the annual meeting,Annual Meeting, will serve for terms expiring in 2021.at the 2024 annual meeting of shareholders and until their successors are elected and have been qualified.
Unless authority to vote for the nominees is withheld, the shares represented by the proxies will be voted “for” the election of the nominees proposed by the board of directors.
The board of directors recommends that you vote your shares “for” each of the nominees for director. Proxies properly submitted will be voted “for” each nominee unless shareholders specify otherwise.
INFORMATION ABOUT NOMINEES, CONTINUING DIRECTORS
AND NAMED EXECUTIVE OFFICERS
All directors will hold office for the terms indicated, or until their earlier death, resignation, removal or disqualification, and until their respective successors are duly elected and qualified. There are no arrangements or understandings between any of the nominees, directors or executive officers and any other person pursuant to which any of our nominees, directors or executive officers have been selected for their respective positions, except as described under “EXECUTIVE COMPENSATION-Potential Payments Upon Termination or Changebelow. Messrs. Albert and Weise and Mmes. Hauschildt and Stanoch were appointed to the board as required by certain provisions in Control-Employment Agreements - Messrs. Funk, Cantrell, Kramer,the Company’s former bylaws that were negotiated in connection with the Company’s acquisition of Central Bancshares, Inc. (“Central”), which occurred on May 1, 2015.
In accordance with the Agreement and Jehle” Plan of Merger between the Company and ATBancorp, which merger closed on May 1, 2019, the Company appointed two individuals designated by ATBancorp to the Company’s board of directors, subject to the board’s policies. ATBancorp identified Douglas H. Greeff and Richard J. Hartig to fill these positions, and they were appointed as Class I and Class II directors, respectively.
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NOMINEES
| Class II - Term Expiring 2024 | |||||||||||||||||
| Director | |||||||||||||||||
| Name of Individual | Since | Position with MidWestOne Financial | |||||||||||||||
| Richard R. Donohue | 2008(1) | Director of MidWestOne Financial and the Bank | |||||||||||||||
2019(2) | |||||||||||||||||
Director of MidWestOne Financial and the Bank | |||||||||||||||||
Director of MidWestOne Financial and the Bank | |||||||||||||||||
| Ruth E. Stanoch | 2015 | Director of MidWestOne Financial and the Bank | |||||||||||||||
| Kurt R. Weise | 2015(3) | Director of MidWestOne Financial and the Bank | |||||||||||||||
| (1) | Mr. Donohue became a director of the Company upon completion of the merger with the former MidWestOne Financial Group, Inc. on March 14, 2008. He had been a director of the former MidWestOne Financial since 1999. | ||||||||||||||||
| (2) | Mr. Hartig became a director of the Company upon completion of the merger with ATBancorp on May 1, 2019. He had been a director of ATBancorp since 1991. | ||||||||||||||||
| (3) | Mr. Weise became a director of the Company upon completion of the merger with Central | ||||||||||||||||
Richard R. Donohue.Donohue. Mr. Donohue, 68,71, is the former Managing Partner of TD&T CPAs and Advisors, P.C. in Cedar Rapids, Iowa, a certified public accounting firm in which he was involved in all phases of the practice. Mr. Donohue joined the board of directors of the former MidWestOne Financial in 1999. He became a director of the Company upon completion of our merger with the former MidWestOne Financial in March 2008. Mr. Donohue was appointed to the board of directors of the Bank in 2009. We consider Mr. Donohue to be a qualified candidate for service on the board, the Audit Committee, and the Nominating and Corporate Governance Committee due to his business and financial accounting expertise acquired as the managing partner of a certified public accounting firm, as well as his knowledge of and prominence in our market area.
Richard J. Hartig. Mr. Hartig, 71, is Chairman of Hartig Drug Stores, a regional pharmacy chain, and founder of MedOne Healthcare Systems, a pharmacy benefits firm, both located in Dubuque, Iowa. He became a director of the Company and the Bank upon completion of our merger with ATBancorp in May 2019.He also served as a director of American Trust and Savings Bank since 1991. Mr. Hartig received his Bachelor’s degree in Pharmacy and an MBA, both from Drake University, and is a member of the Iowa Pharmacists Association. We consider Mr. Hartig to be a qualified candidate for service on the board and the Nominating and Corporate Governance Committee due to his experience as an entrepreneur and business owner with a lifelong Midwest presence.
Nathaniel J. Kaeding. Mr. Kaeding, 35,38, is the Director of Business Development and Client Relations for Build to Suit, Inc., a construction management and real estate development firm based in Bettendorf and Coralville, Iowa. Prior to his role with Build to Suit, Inc., Mr. Kaeding served as the Director of Retail Development for the Iowa City Downtown District where he managed economic development and various marketing, branding and place-making initiatives for the District. Mr. Kaeding is an Iowa City native and attended the University of Iowa as an undergraduate where he earned both academic and athletic All-American honors as a member of the University of Iowa football team. Mr. Kaeding was selected as the 65th pick in the 2004 NFL draft by the San Diego Chargers and enjoyed a nine-year career as a place-kicker in the NFL. Upon retirement from the NFL, Mr. Kaeding returned to Iowa City and earned an MBA from the University of Iowa. We consider Mr. Kaeding to be a qualified candidate for service on the board and the Nominating and Corporate Governance Committee due to his experience in the real estate industry and his strong ties within the Iowa City community, and his significant involvement in the Iowa City community.
Ruth E. Stanoch. Ms. Stanoch, 59,62, has been a corporate affairs consultant since 2008. She became a director of the Company upon completion of our merger with Central in May 2015 and a director of the Bank in 2016. Among her prior experiences, in 2010, Ms. Stanoch served as the senior advisor to Minnesota's governor-elect, Mark Dayton, and from 1994 to 2007, was employed with Thomson Legal & Regulatory. Between 2010 and 2012, Ms. Stanoch also served on various committees of the Board of Directors of Archipelago Learning, Inc., a leading subscription-based online education company, which was a public company. She received her Bachelor's degree from the University of Minnesota, and was a policy fellow at the University of Minnesota's Humphrey Institute of Public Affairs. Among other attributes, skills and qualifications, we believe that Ms. Stanoch's extensive corporate experience, leadership at a large corporation and previous service on a public company board provide valuable experience to the Company's board, Compensation Committee, and Nominating and Corporate Governance Committee.
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Kurt R. Weise. Mr. Weise, 61,64, is the retired Executive Vice President of the Company, a position he held from May 2015 upon completion of our merger with Central until December 2016. Mr. Weise joined the board of directors of Central in 1988, and he became a director of the Company and the Bank upon completion of our merger with Central in May 2015. Mr. Weise also served as the Chairman of the Board of Central Bank from 1994 until 2015 and as the President of Central from 1988 until 2015. In addition, Mr. Weise has served in various finance and banking roles with Mr. Morrison and certain of his associates since 1985. Mr. Weise received his Bachelor’s degree from Winona State University, and he is a Certified Public Accountant. Among other attributes, skills and qualifications, we believe that Mr. Weise’s leadership as President of Central, his years of experience in finance and banking, and his status as a CPA enable him to bring valuable insight and knowledge to the Company’s board.
CONTINUING DIRECTORS AND NAMED EXECUTIVE OFFICERS
| Class I - Term Expiring 2023 | |||||||||||||||||
| Director | |||||||||||||||||
| Name of Individual | Since | Position with MidWestOne Financial | |||||||||||||||
2018(1) | Director of MidWestOne Financial and the Bank | ||||||||||||||||
| Charles N. Funk | 2000 | Director | |||||||||||||||
Director of MidWestOneFinancial | |||||||||||||||||
Director of MidWestOne Financial and the Bank | |||||||||||||||||
| Douglas K. True | 2017 | Director of MidWestOne Financial and the Bank | |||||||||||||||
| (1) | Mr. | ||||||||||||||||
| (2) | Ms. Hauschildt became a director of the Company and the Bank upon the resignation of Mr. Michael A. Hatch on January 1, 2019. She became a director of the Bank on January 15, 2019. | ||||||||||||||||
| Class III - Term Expiring 2022 | |||||||||||||||||
| Director | |||||||||||||||||
| Name of Individual | Since | Position with MidWestOne Financial | |||||||||||||||
| Janet E. Godwin | 2019 | Director of MidWestOne Financial and the Bank | |||||||||||||||
| Matthew J. Hayek | 2019 | Director of MidWestOne Financial and the Bank | |||||||||||||||
| Tracy S. McCormick | 2011 | Director of MidWestOne Financial and the Bank | |||||||||||||||
| Kevin W. Monson | 2005 | Chair of MidWestOne Financial and the Bank | |||||||||||||||
Larry D. Albert. Mr. Albert, 70, is the retired Executive Vice President of the Company, a position he held from the May 2015 completion of our merger with Central to his retirement in September 2015. He also served as Chief Executive Officer and as a director of Central Bank from 1996 to 2015. Mr. Albert currently serves as director of the Company and the Bank. He received his Bachelor’s degree from Westmar University and his MBA from the University of St. Thomas. Among other attributes, skills and qualifications, we believe Mr. Albert is qualified to serve as a director of the Company and on the Audit Committee because, as a Director of the Bank and former Chief Executive Officer of Central Bank, he is familiar with the Bank’s business and industry and with Bank strategy.
Charles N. Funk. Mr. Funk, 63,66, is the President and Chief Executive Officer of the Company since March 2008 and the Bank.Bank since November 2000. He joined our organization and served as President of the Company and the Bank in these same roles infrom November 2000.2000 to July 2020. Prior to that, he held positions as President and Central Region Manager and Chief Investment Officer for Brenton Bank-Des Moines. Mr. Funk has taught for the Colorado Graduate School of Banking in Boulder, Colorado, the Iowa School of Banking, and the Stonier Graduate School of Banking at Georgetown University. He haspreviously served on the board of Folience and the American Bankers Association and was the Chairman of the Iowa Bankers Association in 2010 and 2011. Mr. Funk graduated with a Bachelor’s degree from William Jewell College. We consider Mr. Funk to be a qualified candidate for service on the board due to his extensive expertise in the financial services industry, particularly in the state of Iowa, and intimate knowledge of MidWestOne Financial’sMidWestOne Financial Group’s business and operations and because of his role as the President and Chief Executive Officer of MidWestOneMidWestOne Financial and the Bank.
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Douglas H. Greeff. . Mr. Hatch, 69, has been employedGreeff, 65, is the President of Greeff Advisory LLC in New York, New York, a shareholder advising service. He recently served as the Director and Executive Vice President of Omnisure LLC, a trialspecialty finance company and litigation attorney with Blackwell Burke P.A. since 2007.customized payment plan provider for vehicle and home service contracts, and Interim Chief Financial Officer of Microfinancial Inc., a specialized commercial/consumer finance company. He becamealso served as the Chief Financial Officer of Heyman Companies, and of Revlon, Inc., both of New York, New York. Mr. Greeff received his Bachelor’s degree in Economics from Williams College, and completed a directorMaster’s program in Accounting at the NYU School of Business Administration. We consider Mr. Greeff to be a qualified candidate for service on the board and the Compensation Committee due to his extensive finance and corporate experience.
Jennifer L. Hauschildt. Ms. Hauschildt, 51, is the Vice President of Human Resources for Uponor, a leading provider of crosslinked polyethylene (PEX) plumbing, radiant heating/cooling, hydronic piping, pre-insulated piping and fire sprinkler systems for residential and commercial structures worldwide, located in Apple Valley, Minnesota. She is a board member of the Company upon the completion of our merger with Central in May 2015. Among his prior experience, Mr. Hatch served as Minnesota’s Attorney GeneralMinnesota High Tech Association Foundation. Ms. Hauschildt received her Bachelor's degree from 1999 to 2007,Gustavus Adolphus College, and he has served on the boards of a number of insurance companies. He earned his Bachelor’s degreean MBA from the University of Minnesota-DuluthMinnesota. We consider Ms. Hauschildt to be a qualified candidate for service on the board and the Compensation Committee due to her extensive corporate experience, specifically relating to Human Resources and Information Technology.
Douglas K. True. Mr. True, 71, is the retired Senior Vice President for Finance and Operations and University Treasurer for the University of Iowa, positions he held from 1991 to 2016. Mr. True served as the Chief Financial Officer of the University of Iowa and provided operational oversight and management direction for a broad range of non-academic units including human resources, facilities management and utilities. He also oversaw the operating and capital budgets of the University of Iowa with broad responsibility for financial management and controls of all university budgets. Mr. True received an MBA from Drake University. We consider Mr. True to be a qualified candidate for service on the board, Audit Committee and Compensation Committee due to his Juris Doctorateextensive business and financial accounting expertise, as well as his knowledge of and prominence in our market area.
Janet E. Godwin. Ms. Godwin, 55, is the Chief Executive Officer of ACT, Inc, a nonprofit company and national leader in providing educational and career assessments, where she oversees content development, research, assessment delivery, program management, audit, risk and security services. Ms. Godwin received a Bachelor’s degree in English from the University of Minnesota Law School.Oklahoma, a Master’s degree in English from the University of Iowa, and has participated in the Advanced Management Program of the Wharton School at the University of Pennsylvania. She is a member of the Board of Education of the Iowa City Community School District and a board member of the Kirkwood Community College Foundation. Among other attributes, skills and qualifications, we believe that Mr. Hatch’sconsider Ms. Godwin to be a qualified candidate for service as aon the board member of insurance companies and extensive experiencethe Compensation Committee due to her business expertise and her strong ties within and significant involvement in the Minnesota legal arena enable himIowa City community.
Matthew J. Hayek. Mr. Hayek, 51, is an attorney at Hayek, Moreland, Smith & Bergus, LLP, a general service law firm in Iowa City, where his practice focuses on business and real estate law. A fifth generation Iowa Citian, Mr. Hayek received a B.A. with honors in Social Sciences from the University of Michigan and a J.D. from the University of Michigan Law School.Prior to bring valuable insightgraduate school, he served for two years in Bolivia with the United States Peace Corps. He worked at law firms in Atlanta and knowledgeChicago before returning to Iowa City. He served on the Company’sCity Council from 2008 to 2016 and as Mayor of Iowa City from 2010 to 2016. He has held leadership positions in various civic and nonprofit organizations and received the Iowa State Bar Association Pro Bono Award. He currently serves on the board of directors of Oaknoll Retirement Residence. Among other attributes, skills and qualifications, we consider Mr. Hayek to be a qualified candidate for service on the board and Compensation Committee.Nominating and Corporate Governance Committee due to his legal expertise and his significant involvement in the Iowa City community.
Tracy S. McCormick. Ms. McCormick, 57,60, is the Chief Financial Officer and a director of Mill Creek Development Company, an urban planning and development company in Pasadena, California. She currently serves on the board of Folience, a private company based in Cedar Rapids, Iowa. Her prior experience includes a career in investment banking with J.P. Morgan & Co., Incorporated in New York, Chicago, and Los Angeles. Ms. McCormick is the daughter of our former Chairman and current Director Emeritus, W. Richard Summerwill, and became a director of the Company in 2011 following his retirement from the board. She became a director of the Bank upon the completion of our merger with Central in May 2015. Ms. McCormick received a Bachelor’s degree in Economics and Communications from the University of Michigan and a M.Sc. in Economics from the London School of Economics and Political Science. We consider Ms. McCormick to be a qualified candidate for service on the board, the Audit Committee and the Compensation Committee due to her skills and expertise developed in investment banking and subsequent business experience.
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Kevin W. Monson. Mr. Monson, 66,69, is the ChairmanChair of the Board of the Company and ChairmanChair of the Board of the Bank. He served as the President, Managing Partner and the largest shareholder of Neumann Monson, Inc., an architectural services firm headquartered in Iowa City, from 1992 through 2017, and is currently the Chairman of the Board and a shareholder of Neumann Monson, Inc. He became a director of the Company and the Bank in 2005. Mr. Monson is also the majority partner in Tower Partners, a real estate investment partnership, and several other real estate investment corporations. We consider Mr. Monson to be a qualified candidate for service on the board and Nominating and Corporate Governance Committee due to his skills and expertise developed as the head of a successful architectural firm and his knowledge of and prominence in the Iowa City market.
In addition, Mr. W. Richard Summerwill, who had served on our board of directors since our formation in 1983 and served as our long-time Chief Executive Officer prior to our merger with the former MidWestOne Financial in March 2008, and Mr. John S. Koza, who also had served on our board of directors since our formation in 1983 and retired from the board in 2014, both currently serve as non-voting Directors Emeriti.
EXECUTIVE OFFICERS
In addition to Charles N. Funk, who serves as our Chief Executive Officer as described above, the following individuals serve as executive officers of MidWestOne Financial, four of whomand are named in the compensation tables included in this proxy statement:
Len D. Devaisher. Mr. Devaisher, 44, is the President and Chief Operating Officer of the Company and the Bank. Prior to joining the Company in July 2020, he served as the Vice President for Resource Development for the United Way of Dane County.Prior to that, Mr. Devaisher was employed by Old National Bank, serving in a variety of roles between 2001 and 2019.Most recently, he served as Chief Executive Officer, Wisconsin Region, from 2016 to 2019.He also served as Chief Operating Officer of Young Life, Africa from 2010 to 2013.Mr. Devaisher earned a Bachelor of Science degree in Economics from the University of Evansville, completed the American Bankers Association Stonier Graduate School of Banking, and earned a leadership certificate in banking from The Wharton School at the University of Pennsylvania.
Barry S. Ray. Mr. Ray, 49, is the Senior Executive Vice President and Chief Financial Officer of the Company and the Bank. Prior to joining the Company in June 2018, he served in various accounting and finance roles at Columbia State Bank, a subsidiary of Columbia Banking System, Inc., since 2006, most recently as Chief Accounting Officer and Controller. Prior to that, he was employed as a Business Analyst, Investment Operations, with Russell Investment Group from 2005 to 2006, and prior to that, was a Consulting Services Manager with RSM US LLP from 2000 to 2005. Mr. Ray served in the U.S. Navy, and received his Bachelor’s degree from the University of Washington. He is a Certified Public Accountant.
James M. Cantrell. Mr. Cantrell, 58,61, is Senior Executive Vice President, Chief Investment Officer and Treasurer of the Company and Senior Vice President, Chief Investment Officer and Treasurer of the Bank. He has also served as the Interim Chief Financial Officer of both the Company and the Bank sincebetween December 2017.2017 and June 2018. He joined the Company in his current positions, other than InterimJuly 2009 as Senior Vice President and Chief Financial Officer, in July 2009.Risk Officer. Prior to joining the Bank, he had been with Provident Bank in Baltimore, Maryland, since 2008, where he served as Senior Vice President and Director of Treasury Operations. In that capacity, he was responsible for management of asset/liability activities, investment portfolio accounting, and derivative activity and compliance. Prior to that, he was employed as the Senior Vice President and Treasurer of Mercantile-Safe Deposit and Trust Company in Baltimore, Maryland, where he had been employed since 2001. Mr. Cantrell has a Bachelor’s degree in business and economics from Wittenberg University.
David E. Lindstrom. Mr. Lindstrom, 54, is the Executive Vice President-CommercialPresident, Retail Banking of the Bank, a position he has held since 2004. He has beenJanuary 2018. Prior to his employment with the Company andBank, Mr. Lindstrom was employed by BMO Harris Bank, a subsidiary of the Bank of Montreal, since 1986.
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Table of the Agreement and Plan of Merger dated November 20, 2014, by and between Central and the Company (the “Merger Agreement”), as the holder of all of the outstanding shares of the common stock of Central, the John M. Morrison Revocable Trust #4 (the “Trust”) received as merger consideration, upon the closing of the merger on May 1, 2015, $64,000,000 in cash and 2,723,083 shares of MidWestOne Financial common stock, which represented 24.5% of the outstanding shares of MidWestOne Financial common stock at that tme. Mr. Morrison, a director of the Company, is the trustee of the Trust. As described under “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT,” Mr. Morrison beneficially owned 431,393 shares as of February 13, 2018, or 3.5% of our common stock as of such date, which included 245,693 shares, or 2.0% of our common stock, beneficially owned by the Trust as of such date.Contents
CORPORATE GOVERNANCE AND BOARD MATTERS
General
The board has adopted guidelines on significant corporate governance matters that, together with our Code of Business Conduct and Ethics and other policies, creates our corporate governance standards. Generally, the board oversees our business and monitors the performance of our management. In accordance with our corporate governance standards, the board does not involve itself in the day-to-day operations of MidWestOne Financial, which is monitored by our executive officers and management. Our directors fulfill their duties and responsibilities by attending regular meetings of the board, which convene at least on a quarterly basis, and through committee membership, which is discussed below. Our directors also discuss business and other matters with Mr. Funk, our President and Chief Executive Officer, other key executives and our principal external advisers (legal counsel, auditors and other consultants).
With the exception of Messrs.Mr. Funk, Morrison, and Weise, each of our current directors and nominees is “independent,” as defined under The Nasdaq Stock Market LLC’s listing rules, and the board has determined that the independent directors do not have other relationships with us that prevent them from making objective, independent decisions. The board of directors has established an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee, each of which is currently made up solely of independent directors. The current charters of each of these committees are available on our website at www.midwestonefinancial.com. Our Code of Business Conduct and Ethics is also available on our website. Also posted on our website is a general description regarding our companyCompany and links to our filings with the SEC.
Our board of directors held teneight regular and special meetings during 2017.2020. All of the directors attended at least 75% of the board meetings and meetings of committees of which they were members. While we do not have a specific policy regarding attendance at the annual shareholdershareholders’ meeting, all directors are encouraged and expected to attend the meeting. Last year’s annual meeting of shareholders was attended in person or by telephone by all of the directors in office at such time, except for Mr. West.time.
Audit Committee
In 2017,2020, prior to the annual meeting of shareholders, the Audit Committee was comprised of Messrs. Donohue (Chairman)(Chair), Albert, Greeff, Kaeding, and Schwab,True, and Mses. McCormick and Stanoch.Ms. McCormick. Following the 20172020 annual meeting of shareholders, the Audit Committee haswas comprised of Messrs. Donohue (Chairman)(Chair), Schwab,Albert, and True, and Ms. McCormick. It is anticipated that the composition of the Audit Committee will remain the same throughout 2021. Each individual is considered to be “independent” under Nasdaq listing rules and the regulations of the SEC. It is anticipated that the compositionSEC, including Rule 10A-3 of the Audit Committee will remain the same throughout 2018, except that Mr. Kaeding is expected to join the Audit Committee following the 2018 annual meeting of shareholders.Exchange Act. The board of directors has determined that Mr. Donohue qualifies as an “audit committee financial expert” under the regulations of the SEC. The board has based this determination on Mr. Donohue’s education and his professional experience as the former managing partner of a certified public accounting firm.
The functions performed by the Audit Committee include, among other things, the following:
•overseeing our accounting and financial reporting;
•selecting, appointing and overseeing our independent registered public accounting firm;
•reviewing actions byand discussing with management on recommendations ofand the independent registered public accounting firmauditor the annual audited and internal auditors;quarterly unaudited financial statements, including disclosures made in management’s discussion and analysis, earnings press releases and any earnings guidance provided to analysts and rating agencies, prior to the release of quarterly and annual earnings results;
•meeting with management, the internal auditors and the independent registered public accounting firm to review the effectiveness of our system of internal controls and internal audit procedures; and
To promote independence of the audit function, the Audit Committee consults separately and jointly with our independent registered public accounting firm, the internal auditors and management. We have adopted a written charter for the committee,Audit Committee, which sets forth its duties and responsibilities. The current charter is available on our website at www.midwestonefinancial.com.www.midwestonefinancial.com under “Corporate Information - Committee Charting” and by clicking on “Audit Committee.” In 2017,2020, the committeeAudit Committee met fifteenfourteen times.
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Compensation Committee
In 2017,2020, prior to the annual meeting of shareholders, the Compensation Committee of MidWestOne Financial was comprised of Messrs. West (Chairman), Hatch, and Ruud, and Ms. McCormick. Following the 2017 annual meeting of shareholders, the Compensation Committee of MidWestOne Financial has comprised of Ms. McCormick (Chairperson)(Chair), Ms. Godwin, Ms. Hauschildt, and Ms. Stanoch, and Messrs. Hatch, True,Hartig and West.True. Mr. WestGreeff replaced Mr. Hartig on the Compensation Committee following the 2020 annual meeting of shareholders. It is anticipated that the composition of the Compensation Committee will leaveremain the committee upon his retirement from the board of directors in April 2018.same throughout 2021. Each individual served asis considered to be an “independent” director as defined by Nasdaq listing requirements,rules, an “outside” director pursuant to Section 162(m) of the Internal Revenue Code and a “non-employee” director under Section 16 of the Exchange Act.
The Compensation Committee is responsible for the development of MidWestOne Financial’s compensation philosophy and the design, implementation and monitoring of its executive compensation programs. It determines the structure and components of the programs and reviews and approves the compensation of our named executive officers (“NEOs”). The Compensation Committee annually assesses the performance of our Chief Executive Officer, Charles N. Funk, and determines thehis salary, short-term incentive compensation and bonus paid to him.long-term incentive compensation. It also reviews and determines the salaries and bonuses paid toincentive compensation of our other Named Executive Officers (“NEOs”). The Compensation Committee reliesNEOs, based upon Mr. Funk’s assessment of each NEO’s individual performance, which considers, as applicable, each executive’s efforts in achieving his or her individual goals each year and the executive’s overall success in the performance of his or her role in the organization. Individual goals for NEOs are established by Mr. Funk in consultation with each executive officer which consider the strategic and financial objectives of the Company.performance. The Compensation Committee also consults with management and its independent advisors on a variety of matters, including the annual review of MidWestOne Financial’s compensation programs relative to overallits peers and industry best practices. It ensures that its programs do not create inappropriate risk to MidWestOne Financial and uses its best judgment to develop executive compensation programs that are consistent with the Company’s operating principles, strategy and respective performance of our NEOs. No executive officer participates in any recommendation, discussion, or decision with respect to his or her own compensation or benefits. Further, the Compensation Committee administers our overall executive compensation program including equity incentive plans, our long-term incentive plans and our executive incentive bonus plans. As a result, it has ultimate responsibility for interpretation and oversight of those plans.
performance. The Compensation Committee’s duties, responsibilities, and functions are further described in its charter. The committeeCommittee reviews its charter at least annually. It then recommends approval of the charter to the Company’s boardMidWestOne Financial’s Board of directors.Directors. The committee’sCommittee’s charter is available on our website, www.midwestonefinancial.com.www.midwestonefinancial.com under “Corporate Information – Committee Charting” and by clicking on “Compensation Committee.”
The charter gives the Compensation Committee the authority to hire outside consultants and independent advisors to further its objectives and responsibilities. For the last several years, and again in 2017, the Compensation Committee has retained the independent compensation consultant services of F.W. Cook & Co. (“F.W. Cook”), Chicago, Illinois, to provide expertise and serve as a resource with respect to current market activities involving executive compensationmarketplace and best practices relating to competitive pay levels for executives and procedures,board members and also to help review and analyze our executive compensation practices and procedures. F.W. Cook & Co. provides no other services to the Company, and the Compensation Committee believes F.W. Cook & Co. is independent as determined under applicable Nasdaq guidance.
The Compensation Committee met foursix times during 2017, convening in January, February, August, and December.2020. Ms. McCormick also met as needed with internal staff members and members of management, as well as the Committee’s independent advisors, to prepare for committee meetings and to assemble compensation information for this proxy statement.
Nominating and Corporate Governance Committee
In 2017 the members of2020, the Nominating and Corporate Governance Committee of MidWestOne Financial werewas comprised of Messrs. Schwab (Chairman)Monson (Chair), Donohue, Hartig, Hayek, and Zaiser,Kaeding, and Ms. Stanoch, and these individuals currently comprise the Nominating and Corporate Governance Committee. Each individual is considered “independent” under Nasdaq listing rules.Stanoch. It is anticipated that the composition of the Nominating and Corporate Governance Committee will remain the same throughout 2018,2021, except that following the Annual Meeting, Mr. KaedingMonson will step off the committee and Mr. Hayek will be named Chair. Each individual is expected to joinconsidered “independent” under Nasdaq listing rules. The primary purposes of the Nominating and Corporate Governance Committee following the 2018 annual meeting of shareholders. The primary purposes of the committee are to identify and recommend individuals to serve on our board of directors and to review and monitor our policies, procedures and structure as they relate to corporate governance. We have adopted a written charter for the committee,Nominating and Corporate Governance Committee, which sets forth its duties and responsibilities. The current charter is available on our website at www.midwestonefinancial.com.www.midwestonefinancial.com, under “Corporate Information - Committee Charting” and by clicking on Nominating & Corporate Governance Committee.” In 2017,2020, the committeeNominating and Corporate Governance Committee met fivefour times.
Director Nominations and Qualifications
For the 20182021 annual meeting, the Nominating and Corporate Governance Committee nominated for re-election to the board threefive incumbent directors whose current terms are set to expire at the 20182021 annual meeting and one new nominee.meeting. These nominations were further approved by the full board. We did not receive any properly-made shareholder nominations for directorships for the 20182021 annual meeting.
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The Nominating and Corporate Governance Committee evaluates all potential nominees for election, including incumbent directors, board nominees and any shareholder nominees included in the proxy statement, in the same manner. Generally, the committee believesThe Nominating and Corporate Governance Committee reviews qualified candidates for directors and focuses on those who present varied, complementary backgrounds that at a minimum, directors should possess certain qualities, including the highest personalemphasize both business experience and professional ethics and integrity, a sufficient educational and professional background, demonstrated leadership skills, sound judgment, a strong
The committee also evaluates potential nomineesNominating and Corporate Governance Committee has established the following minimum criteria, which it considers necessary for service on the board:
•Each nominee shall meet the minimum requirements for service on the board of directors contained in the Company's bylaws and articles of incorporation;
•Each nominee shall possess the highest personal and professional ethics, integrity and values;
•Each nominee shall have, in the Nominating and Corporate Governance Committee's opinion, a sufficient educational and professional background and have relevant past and current employment affiliations, board affiliations and experience for service on the board;
•Each nominee shall have demonstrated effective leadership and sound judgment in his or her professional life;
•Each nominee shall have a strong appreciation for the community-minded focus of the Company;
•Each nominee shall have exemplary management and communications skills. Most importantly, each nominee must possess the requisite skills and desire to determine if they have anywork well within the board structure;
•Each nominee shall be free of conflicts of interest that maywould prevent him or her from serving on the board;
•Each nominee shall be expected to ensure that other existing and future commitments do not materially interfere with their abilityhis or her service as a director of the Company;
•Each nominee shall review and agree to meet the standards and duties set forth in the Company's Code of Business Conduct and Ethics;
•Each nominee shall be willing to devote sufficient time to carrying out his or her duties and responsibilities effectively, and should be committed to serve as effectiveon the board membersfor an extended period of time; and to determine whether they are “independent” in accordance with Nasdaq listing rules (to ensure
•The "independence" of non-management nominees shall be taken into account so that at least a majority of the board of directors will at all times, be independent). The committee has not, inmade up of directors who satisfy the past, retained any third party to assist it in identifying qualified candidates.independence standards set forth by Nasdaq.
The committee identifies nominees by first evaluating the current members of the board whose term is set to expire at the upcoming annual shareholder meeting and who are willing to continue in service. Current members of the board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of the board does not wish to continue in service or if the committee or the board decides not to re-nominate a member for re-election, the committee would identify the desired skills and experience of a new nominee in light of the criteria above. Mr. Kaeding, the nominee for election at the 2018 annual meeting of shareholders, was nominated to the board of directors by Mr. Schwab.
Board Leadership Structure
The positions of ChairmanChair of the Board and Chief Executive Officer of MidWestOne are currently held by separate individuals. We believe this is the most appropriate structure for our board at this time. The ChairmanChair provides leadership to the board and works with the board to define its structure and activities in the fulfillment of its responsibilities. The ChairmanChair sets the board agendas with board and management input, facilitates communication among directors, works with the Chief Executive Officer to provide an appropriate information flow between management and the board and presides at meetings of the board and shareholders. With the Chairman’sChair’s assumption of these duties, the Chief Executive Officer may place a greater focus on our strategic and operational activities. We also believe our board feels a greater sense of involvement and brings a wider source of perspective as a result of this structure, from which we benefit.
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Independent Director Sessions
The board of directors has created the position of a “lead” independent director, currently filled by Ms. McCormick. The Nominating and Corporate Governance Committee reviews this appointment annually, and the full board has the opportunity to ratify the committee’s selection. It is expected that Ms. McCormick will continue to serve as lead independent director after the 20182021 annual meeting of shareholders. The lead independent director assists the board in assuring effective corporate governance and serves as chairmanchair of the independent director sessions. Consistent with Nasdaq listing rules, the independent directors regularly have the opportunity to meet without the non-independent directors present, and in 20172020 there were two such sessions.
Board’s Role in Risk Oversight
Risk is inherent within every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including general economic risks, credit risks, regulatory risks, audit risks, reputational risks, cyber risks and others, such as risks related to the unintentional effects our compensation plans may have on employee decision-making or the impact of competition. Management is responsible for the day-to-day managementcontrol of risks the Company faces, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
While the full board of directors is charged with ultimate oversight responsibility for risk management, various committees of the board and members of management also have responsibilities with respect to our risk oversight. In particular, the Audit Committee plays a large role in monitoring and assessing our financial, legal, and organizational risks, and receives regular reports from our Chief Risk Officersenior officers regarding comprehensive organizational risk as well as particular areas of concern. The Company’s Enterprise Risk Management Committee also plays an important role in risk management, with oversight of the Company’s overall risk framework, risk appetite, and the identification, measurement, and monitoring of key risks. The Company’s Compensation Committee monitors and assesses the various risks associated with compensation policies and oversees incentive plans to ensure a reasonable and manageable level of risk-taking consistent with our overall strategy. Additionally, our Chief Credit Officer and loan review staff are directly responsible for overseeing our credit risk.
We believe that establishing the right “tone at the top” and providing for full and open communication between management and our board of directors are essential for effective risk management and oversight. Our executive management meets regularly with our other senior officers to discuss strategy and risks facing the Company. Senior officers attend many of the board meetings or, if not in attendance, are available to address any questions or concerns raised by the board on risk management-related and
any other matters. Additionally, each of our board-level committees provides regular reports to the full board and apprises the board of our comprehensive risk profile and any areas of concern.
Code of Ethics
We have a Code of Business Conduct and Ethics in place that applies to all of our directors, officers and employees. The code sets forth the standard of ethics that we expect all of our directors, officers and employees to follow, including our Chief Executive Officer and Chief Financial Officer. The Code of Business Conduct and Ethics is posted on our website at www.midwestonefinancial.com.www.midwestonefinancial.com, under “Corporate Information - Governance Documents.” We intend to satisfy the disclosure requirements under Item 5.05(c) of Form 8-K regarding any amendment to or waiver of the code with respect to our Chief Executive Officer and Chief Financial Officer, and persons performing similar functions, by posting such information on our website.
Anti-Hedging Policy
Our insider trading policy prohibits our directors, officers and employees from entering into any hedging transaction with respect to any of the Company’s securities. This prohibition includes the direct or indirect purchase or use of stock options, prepaid variable forward contracts, equity swaps, collars, exchange funds or any other instruments designed to offset any decrease in the market value of the Company’s securities.
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AUDIT COMMITTEE REPORT
The Audit Committee is comprised of four members of the board of the Company. All the members of the Audit Committee are independent from management and the Company, as independence is currently defined in the Nasdaq listing requirements.rules and Rule 10A-3 of the Exchange Act. The Audit Committee is governed by a charter. A copy of the charter is available on the Company’s website.website at www.midwestonefinancial.com.
The Company’s management has the primary responsibility for the financial statements, for maintaining effective internal control over financial reporting and for assessing the effectiveness of internal control over financial reporting. The Audit Committee discussed with management and the Company’s independent registered accounting firm, which we referreferred to in this report as the external auditor, the Company’s annual and quarterly SEC reports on Forms 10-K and 10-Q including the Company’s financial statements and disclosures prior to their public release. The Audit Committee also reviewed, where appropriate, other selected SEC filings and public disclosures regarding financial matters, such as earnings releases, prior to their public release. The Audit Committee discussed with Company management and the external auditor the changes in accounting rules or standards that could materially impact the Company’s financial statements and the implementation of those rules or standards.
The meetings of the Audit Committee are designed to facilitate and encourage communication among the Audit Committee, the Company, the Company’s internal auditors and the Company’s external auditor. The Audit Committee discussed with the Company’s internal auditors and external auditor the overall scope for their respective audits. The Audit Committee meets with the internal auditors and external auditor, with and without management present, to discuss results of their examinations, their evaluations of the Company’s internal control, and overall quality of the Company’s financial reporting. All audit and non-audit services performed by the external auditor of the Company require approval of the Audit Committee.
As part of its oversight responsibility, the Audit Committee periodically reviewsengages in an annual evaluation of the external auditor’s qualifications, performance and independence, and considers whether continued retention of the Company’s independent registered public accounting firm is in connection with the determination to retainbest interest of the external auditor. In conductingCompany. The Audit Committee is also involved in the review for its 2018 recommendation to retainselection of the lead engagement partner. While RSM US LLP has been retained as the external auditor,Company’s independent registered public accounting firm since 2013, in accordance with SEC rules and RSM US LLP’s policies, the firm’s lead engagement partner rotates every five years. In assessing RSM US LLP’s qualifications, performance and independence in 2020, the Audit Committee considered, factorsamong other things:
•the length of time RSM US LLP has been engaged;
•RSM US LLP’s independence and objectivity;
•RSM US LLP’s industry specific experience;
•historical and recent performance, including the professional qualificationsextent and quality of RSM US LLP’s communications with the Audit Committee, and feedback from management regarding RSM US LLP’s overall performance;
•external auditor, the external auditor’sdata on audit quality and performance, including recent and historical performance related to the Company’s audit, including a review of auditor performance feedback surveys completed by management, results of Public Company Accounting Oversight Board (PCAOB) examinations,(“PCAOB”) inspection reports on the firm; and an evaluation
•the appropriateness of RSM US LLP’s fees, including those related to non-audit services.
The Audit Committee believes that the external auditor’s independence.continued retention of RSM US LLP has beenas our independent registered public accounting firm is in the external auditor forbest interests of the Company since 2013.and our shareholders.
The Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 20172020 with our management and RSM US LLP, the independent registered public accounting firm that audited our financial statements for that period. The committeeAudit Committee has also discussed with RSM US LLP the matters required to be discussed by Auditing Standards No. 1301,the applicable requirements of the PCAOB and the SEC, and has received and discussed the written disclosures and the letter from RSM US LLP required by the applicable requirements of the PCAOB Rule 3526, Communicationregarding RSM US LLP’s communications with the Audit Committees Concerning Independence.Committee concerning independence and has discussed with RSM US LLP its independence. Based on the review and discussions with management and RSM US LLP, the Audit Committee has recommended to the board that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20172020 for filing with the SEC.
Submitted by:
The MidWestOne Financial Group, Inc. Audit Committee
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Richard R. Donohue (Chairman)(Chair)
Larry D. Albert
Tracy S. McCormick
Douglas K. True
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion & Analysis (“CD&A”) section describes MidWestOne Financial Group’s compensation philosophy and policies as applicable to the NEOs listed in the Summary Compensation Table on page 24.26. It explains the structure of each material element of compensation and provides context for the more detailed disclosure tables and specific compensation amounts provided followingwhich follow this CD&A.
MidWestOne Financial Group and MidWestOne Bank share an executive management team. The members of the executive management team, including the NEOs, are compensated by the Bank, not by MidWestOne Financial. The terms of our executives’ total compensation packages of the NEOs are determined and approved by the Compensation Committee (the “Committee”) based on the executives’each executive’s individual performance and roles for both MidWestOne Financial and MidWestOne Bank.
Named Executive Officers
In this CD&A and the executive compensation tables that follow, we are reportingour six “namednamed executive officers” or “NEOs.” Our formerofficers (“NEOs”) in 2020 were:
•Charles N. Funk, Chief Executive Officer
•Len D. Devaisher, President and Chief Operating Officer
•Barry S. Ray, Senior Executive Vice President and Chief Financial Officer Katie A. Lorenson, resigned from the Company effective December 7, 2017. As of that date, the transition process began immediately with the appointment of
•James M. Cantrell, as our interim Chief Financial Officer. As of December 31, 2017, our six NEOs included: Charles N. Funk, our President and ChiefSenior Executive Officer, James M. Cantrell, our Senior Vice President, Chief Investment Officer and Interim Chief Financial Officer, KevinTreasurer
•David E. Kramer, our Chief Operating Officer, KentLindstrom, Executive Vice President, Retail Banking
•Gary L. Jehle, ourSims, Executive Vice President and Chief Credit Officer Mitchell W. Cook,
2020 - A Year of Unprecedented Obstacles
MidWestOne Financial’s business routines shifted significantly in 2020 as our Senior Regional President,senior management team responded to the sudden onset of the global pandemic in early March. COVID-19 briefings were established on a daily basis for several months as bank lobbies closed and Katie A. Lorenson,we transitioned to drive up only and additional virtual service delivery.
As the pandemic environment persisted through the holidays and into 2021, senior leaders at MidWestOne continue to rely on updates from the CDC and our former Senior Vice President & Chief Financial Officer.
respective government officials as the COVID-19 virus presents unprecedented challenges on all fronts. Our Financial & Operational Performance
2020 Business Highlights
•Supported our customers and 5.0%, respectively) and this was reflectedcommunities during the COVID-19 pandemic by funding $348.5 million in a 4.6% increase inSBA Paycheck Protection Program loans.
•Achieved record net interest income between 2016of $153.0 million amid a continued, challenging interest rate environment.
•Home mortgage and 2017. Net charged-off loans in 2017wealth management operations propelled noninterest income to a record $38.6 million.
•Cost control efforts contributed to improved efficiency ratio(1) of 56.92%.
•Total deposits increased 22% to 0.51% of total loans, the largest net$4.55 billion.
•Net charge-off ratio declined to 0.15% from 0.23% in more than ten years. The net charge-offs combined2019.
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•Bolstered regulatory capital levels with the resulting increase in the provision for loan losses had the largest impact on the Company’s decline in net income for 2017 from 2016. At year-end 2017, the allowance for loan loss represented 117.59% of identified non-performing loans, up from 76.76% at prior year-end. The Company’s capital remained well in excess of regulatory guidelines and tangible equity to tangible assets, net of deferred tax on intangibles, was 8.44% at 2017 year-end, up from 7.62% at 2016 year-end. Also noteworthy is the Company’ssuccessful issuance of 750,000 additional shares of common stock$65.0 million in the first half of 2017, which raised $24.4 million (net of fees) in equity capital. Return on average tangible equity, efficiency ration and tangible equity to tangible assets net of deferred tax on intangibles arefixed-to-floating rate subordinated notes.
(1) A non-GAAP financial measures.measure. See pages 3253 through 3455 of the Company’s Form 10-K for the year ended December 31, 2017,2020, for a reconciliation to the most comparable GAAP equivalent measures.equivalent.
The charts below illustrate selected Company financial data over the past five years.
2020 Say-On-Pay
Say-on-pay is a year of both challenges and progress for the Company. Specifically, the challenges were related to increasing credit costs and a large loan charge-off in the fourth quarter. Our credit costs were the primary factor that kept us from earning our budgeted pre-tax income goal for the year. A non-recurring, non-cash charge of $3.2 million related to the loweringmandatory but non-binding advisory shareholder vote on executive compensation as part of the corporate income tax rate also affected fourth quarter and full year numbers for 2017. We anticipate that this loss will be recovered relatively quicklyDodd-Frank Act. Consistent with prior years, MidWestOne’s say-on-pay results in 2020 were again among the future through a lower tax rate paid for federal income taxes.
Compensation Program: Key Updates
The COVID-19 pandemic had a significant impact on MidWestOne Financial’s 2020 financial performance. Throughout the year, the Committee closely monitored the efficacy of its compensation program design given the changing economic circumstances and conducted analyses of executive compensation under various performance scenarios. After careful deliberation, the Committee decided against making any changes to its compensation programs in response to the pandemic. Excluding Mr. Devaisher, who was hired in July 2020 and received a guaranteed cash bonus, incentive compensation payments to our NEOs declined 28% in 2020 from the prior year. NEO compensation for 2020 is described in greater detail in the section entitled “Compensation Components” later in this discussion.
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Compensation Philosophy and Objectives
The Committee believes our executive compensation plans, programs and objectives support MidWestOne Financial’s achievement of sustained, long-term financial success and the overall goal of increasing shareholder value. MidWestOne Financial’s compensation program is designed to attract and retain executive management and key employees, motivate them to achieve desired performance, and reward them for excellent performance. The compensation program is not designed or intended to reward substandard performance. Accordingly, our executive compensation program is intendedstructured to align the interests of executive management and key employees with those of our shareholders without creating undue risk to the Company.MidWestOne Financial.
MidWestOne Financial’s executive compensation program is designed and structured to be consistent with the guiding philosophies, and to achieve the strategic objectives, as follows:to:
•deliver a consistent and competitive return to our shareholders;
•maintain an environment which encourages and promotes stability and a long-term perspective for both the CompanyMidWestOne Financial and our management team;
◦encourage the performance and success of each individual in support of our goals and strategic plan;
◦hire and retain key personnel critical to our long-term success;
◦emphasize goal-based performance objectives, including incentive compensation programs aligned with management’s strategic plan and focused efforts; and
◦mitigate undue risk to MidWestOne Financial with respect to all compensation practices and programs; and
•sustain exemplary management practices which:
◦fulfill appropriate and necessary oversight responsibility |
◦maintain the highest level of ethical standards and conduct according to our stock. Our compensation program provides balanced reward opportunities tiedoverall corporate policies; and
◦avoid any implied or real conflict between management’s responsibilities to performance outcomes that drive shareholder value. MidWestOne Financial and each person’s personal interests.
The Committee continues to be mindful of the importance of an executive compensation program which is designed to include incentives that do not threaten the value of MidWestOne Financial or the investments of our shareholdersshareholders. In its development and review of compensation elements for key executives, the Committee uses as a reference the Guidance on Sound Incentive Compensation Policies jointly issued by the financial institution regulatory agencies in 2010. This document establishes a framework for assessing the soundness of incentive plans, programs, and arrangements maintained by financial institutions, and encourages balanced risk-taking incentives compatible with effective controls and risk management and with general principles of strong corporate governance. The Committee meets with MidWestOne Financial’s Chief Risk Officer annually to review and discuss the management of any risks associated with our compensation program. The Committee has concluded that our compensation program isthe Company’s incentive programs are consistent with the principles set forth in the regulatory guidance and with overall corporate objectives and are reasonably unlikely to have a material adverse effect on the Company.MidWestOne Financial.
Peer Group Benchmarking
The Committee, engaged the services of F. W. Cook & Co., an independent compensation consultant (“F.W. Cook”), to provide expertise and serve as a resource to the Committee. In connection with its work for the Committee during 2017,guidance from F.W. Cook, assistedannually reviews its designated peer group. The Committee uses the Committee with an evaluation of an appropriate peer group to analyze the competitiveness of Midwestern financial institutions.our executive compensation program in terms of pay levels and program design. The peer group companies were identified based onare selected using objective criteria that consider MidWestOne Financial’s asset size, economic factors,business lines, and geographical area,footprint. The annual review resulted in the removal of First Merchants Corporation and are intended to reflectFirst Business Financial Services, and the Company’s asset sizeaddition of Midland States Bancorp, Inc. and geographical footprint.Equity Bancshares, Inc.
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The 20172020 peer group was the same as the 2016 peer group and included:
| Equity Bancshares, Inc., Wichita, KS | Lakeland Financial Corporation, Warsaw, IN | ||||||||||
| Stock Yards Bancorp, Louisville, KY | |||||||||||
| Heartland Financial USA, Inc., Dubuque, IA | West Bancorporation, Inc., West Des Moines, IA | ||||||||||
The Committee’s objective is to offer total target compensation for NEOs that is competitive with MidWestOne Financial’s peers considering the relative performance of the executives and the Company. The Committee strivesdoes not tie the compensation of our executives to maintainspecific market percentiles. Instead, the Committee considers a total compensation position which is competitivenumber of factors to determine the appropriate pay levels and fair with respectplan designs for our executive officers. In addition to our regional peer banks, and, more specifically, aligns our NEOs’ compensation with our financial performance relative to our peer group with a goaldata, these factors include Company, business unit and individual performance, experience and scope of ranking within the top one-third of this group when supported by the Company’s financial performance.responsibility, leadership skills, and internal pay equity. The Committee, with the assistance of F.W. Cook, annually performs a detailed review of the Company’sMidWestOne Financial’s total compensation levels for NEOs by pay elementcomponent and uses the peer group data to thosevalidate the appropriateness of the final compensation packages provided to our executives.
Role of Executive Officers in Compensation Decisions
The Compensation Committee is responsible for all compensation decisions affecting our NEOs. For each officer other than himself, the CEO presents annual evaluations of such officers and makes recommendations to the Committee regarding their compensation. This assessment considers each executive’s efforts in achieving his or her individual goals for the year and the executive’s contribution to the financial performance of MidWestOne Financial. No executive officer, including the CEO, participates in any recommendation, discussion, or decision with respect to his or her own compensation or benefits. The Committee independently reviews Mr. Funk’s annual performance assessment, which is prepared by Ms. McCormick with input from Mr. Monson. As with the reviews of the other NEOs, the assessment considers the CEO’s individual performance and contribution to the overall performance of MidWestOne Financial. Based on the review, the Committee determines the CEO’s compensation for the year. The Committee then reports its peer group.NEO compensation decisions to the full Board of Directors. Performance metrics and goals for the upcoming year are developed in consultation with Mr. Funk, taking into consideration the strategic and financial objectives of MidWestOne Financial.
Compensation Components
General. There are four primary components to our executive officer compensation program: base salary, incentive bonus, equity awards and additional fringe benefits.benefits and other perquisites. In reviewing an executive officer’sNEO compensation, the Committee considers and evaluates all components of the officer’s total compensation with the intention of providing each executive with a competitive compensation package.package that is appropriately performance-based. The Committee gives consideration toconsiders the research and analysis conducted by F.W. Cook to ensure that the total compensation paid to each of our executive officersNEOs remains competitive with the total compensation paid by our peers. Further, the Committee considers any amounts an officer is entitled to receive upon retirement, termination or a change-in-control event.
As described in more detail below, MidWestOne Financial has entered into employment agreements or change in control agreements with each of our NEOs. The Committee believes these agreements serve to attract and retain key executives to MidWestOne Financial and that their terms allow each executive to focus his or her significant individual efforts and attention on matters that are most important to the continued success of the Company.MidWestOne Financial.
Base Salary. The Committee believes thatthe provision of competitive base salary for the NEOs is importantsalaries allows MidWestOne Financial to keep too much emphasis from being placed on short-term performanceattract and short-term incentives.retain executive talent. Base salaries of our NEOs are typically adjusted during the annual performance review process.
In setting annual base salary, the Committee typically considers an executive’s level of responsibility, experience, industry knowledge, individual performance during the prior year, internal pay equity and information concerning the compensation practices of our peer group. The Committee reviews Mr. Funk’s performance during the prior year. Each NEO’s performance is evaluated by reviewing performance appraisal information and recommendations made available by management. This review considers each NEO’s achievement
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Annual Cash Incentive Awards-Bonus.Awards (Bonuses). The Committee also determinesNamed executive officers and other executives have the opportunity to earn annual cash incentive awardsincentives based on the attainment of pre-determined quantitative and qualitative goals deemed important for our NEOs with consideration to the performance results outlined for each executive under the executive bonus plan. Allnear-term financial success of the NEOs, other than Mr. Cook, were eligible to participate in the 2017 executive bonus plan. Mr. Cook participated in a commercial lending incentive compensation plan. Ms. Lorenson, while eligible to participate, did not receive any bonus as a result of her resignation.MidWestOne Financial. The executive bonus plan is designed to incentivize the achievement of both individual and corporate financial goals while considering the mitigation of any risks which may affect the Company’sMidWestOne Financial’s overall financial performance. Generally speaking, thresholdsThe Committee believes these awards motivate executives to collectively produce outstanding results, encourage superior performance, and targets
The executive bonus plan also includes a minimum Company-wide performance threshold. If the minimum threshold is not achieved, then annual cash incentives would not be payable underincentive plan establishes a threshold, target and exceptional level of incentive award opportunity that each NEO is eligible to earn, expressed as a percentage of base salary. For each NEO, the Committee sets quantitative and qualitative performance measures, ranges for each measure and the weight assigned to each measure, all designed to reflect MidWestOne Financial’s strategic objectives for 2020. Target goals are generally set at budget levels and are appropriately challenging for each NEO. The maximum payment an executive bonus plan. Mr. Cook’s commercial lendingcan earn for exceptional performance is 150% of the target opportunity. For performance below the threshold level of any goal, there is no incentive compensation plan includes certain credit quality measurespayment with respect to that must be satisfied in ordergoal. Payout for a bonus to be dueperformance between threshold, target and payable to him thereunder.exceptional levels is determined using linear interpolation. The Committee retains the discretion to increase or decrease the amount of a bonus or any incentive compensation plan payment if it determines that special circumstances existed during the year which warranted adjustment or payment of any bonus amount.
The bonusprocess of setting goals takes place at the beginning of each year. The goals reflect the budget and goal setting process occurs annually.strategic objectives of the upcoming year and are weighted according to the relative importance of each goal. Mr. Funk provides recommendations with respect togoals and performance grids for members of senior management other than himself to Ms. McCormick for her initial review. Ms. McCormick, with input from Mr. Monson, discusses with the members of the Committee Mr. Funk’s recommendations as well as factorsgoals applicable to Mr. Funk’s annual bonus. Ms. McCormick then presents bonus plan recommendations to the Committee for its approval.
An overview of the 20172020 executive bonus plans is presented in the table below. The executive bonus planperformance components, designated by the Committee for each participating NEOrespective weightings, and the percentage of salary that each participating NEO was eligible to earn for 2017target 2020 performance, were as follows:
| Name | Profitability Net Operating Income/EPS | Asset Quality | Efficiency Ratio | Individual Goals Specific to NEO Role | 2020 Target Bonus % Salary | |||||||||||||||||||||||||||
| Charles N. Funk | 40% | 20% | 20% | 20% | 50% | |||||||||||||||||||||||||||
Len D. Devaisher(1) | — | — | — | — | 40% | |||||||||||||||||||||||||||
| Barry S. Ray | 30% | — | 20% | 50% | 33.33% | |||||||||||||||||||||||||||
| James M. Cantrell | 30% | — | — | 70% | 33.33% | |||||||||||||||||||||||||||
| David E. Lindstrom | 30% | — | 10% | 60% | 33.33% | |||||||||||||||||||||||||||
| Gary L. Sims | 30% | 30% | — | 40% | 33.33% | |||||||||||||||||||||||||||
| Name | Profitability Net Operating Income/EPS | Asset Quality | Deposit/Loan Growth Levels | Tangible Common Equity/Efficiency Ratio | Additional Individual Goals - Subjective | Potential 2017 Total Bonus (as % of Base Salary) | ||||||
| Charles N. Funk | 45% | 20% | 10% | 15% | 10% | 50% | ||||||
| James M. Cantrell | 50% | — | 5% | — | 45% | 33.3% | ||||||
| Kevin E. Kramer | 25% | 10% | 10% | — | 55% | 40% | ||||||
| Kent L. Jehle | 45% | 45% | — | — | 10% | 33.3% | ||||||
| Katie A. Lorenson | 55% | — | — | — | 45% | 33.3% | ||||||
Profitability, Net Operating Income and Earnings Per Share Component. The Committee usesA significant portion of each NEO’s incentive compensation is tied to MidWestOne Financial’s net operating income and earnings per share, to evaluate our profitability because they focus onas these metrics require the financial performancecollective efforts of the Company, which in turn reflectssenior management team and drive long-term shareholder value. For 2017, these measures served not only as metrics upon which a portion of an NEO’s bonus would be calculated but also as the minimum threshold for Company performance under the executive bonus plan. The Committee set the minimum thresholds astarget level for net operating income, ofexcluding merger expenses, at least $28,000,000$49,911,000 and fully diluted earnings per share of at least $2.29. For 2017, we$3.12. The threshold level for net operating income, excluding merger expenses, and fully diluted earnings per share was $44,919,900 and $2.80, respectively. MidWestOne Financial did not meet these minimum thresholds; therefore,achieve the threshold level of performance in 2020 and no bonusespay outs were required to be paid under the executive bonus plan.made for this goal.
Asset Quality Performance Component. The Committee believes that favorable asset quality ratios are critical with respectin the form of non-performing assets to non-performing loanstotal assets and net charge-offs to average loans are an important indication of future loan losses and, therefore, future profitability. The Committee uses the regional peer group as a measurementreference to monitor our success in this progress. For 2017, Messers.area. The 2020 bonus plan for Messrs. Funk Kramer, and Jehle were asked to further improveSims included asset quality ratios from year-end 2016 and to improve the Company’s standing in our peer group to the top 50% of net-charge offs and non-performing assets. Our peer groupgoals. Asset quality continued to improve in asset quality in 2017.2020 under difficult circumstances and MidWestOne Financial fellmade progress toward the bottomits target goal of thepeer group as its non-performing assets (“NPAs”) to total loans ratio at 1.04% remained high in comparison to peers.median. The Committee determined that the NEOs did not meetexecutives achieved 75% of target performance for this goal.component.
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56.93%, just shy of the exceptional performance level. The Company’s efficiency ratio in 2017 was 58.64%. With both of these elements a part of Mr. Funk’s bonus plan in 2017, the Committee determined that he earned 100%the executives achieved 131.4% of these two goals.target performance for this goal.
Additional Individual Performance and Discretionary Component. For 2017,In addition to the above components, the Committee also assigned someestablished individual goals for all of our NEOs which reflect objectives specific to Messrs. Funk, Cantrell, Kramer, Jehle, and Lorenson which generally reflectthe executive’s role as well as additional corporate measures that aretargets affected by each executive’s performance. Furthermore, the Committee utilized a discretionary component that allows for consideration of additional quantitative and qualitative factors including risk management, M&A activity, strategic planning, credit quality, talent management, employee engagement, regulatory compliance, community involvement, leadership, and succession planning. The Committee generally assesses overall progress toward each goalof these goals while retaining the discretion to reward other aspects of aan NEO’s performance during the year if it is merited. In particular, the Committee considered the NEOs’ leadership during 2020 under the challenging circumstances created by the COVID-19 pandemic, with an emphasis on their management of the safety and well-being of MidWestOne Financial’s employees and customers.
The executive bonus plan included the following individual goals during 2017:or discretionary component in 2020:
•With respect to Mr. Funk, the Committee considered his leadership induring the development and implementationpandemic, which included the rapid deployment of a refined and improved Strategic Plan, as well as company-wide survey results reflecting positive employee engagement across the MidWestOne geographical footprint.Financial’s business continuity plan as offices closed and employees began to work from home, focus on employee safety, health and well-being, support of customers in the form of Paycheck Protection Program loans and payment deferrals, support of our communities in the form of direct contributions to organizations helping those most in need, and enhanced capital and liquidity through the issuance of subordinated debt and balance sheet management. In addition, Mr. Funk continued the execution of our strategic plan with the addition of Wealth Management in Minneapolis/St. Paul, MN and played an instrumental role in the onboarding and mentorship of our new President & Chief Operating Officer. The Committee awarded Mr. Funk a payout of 150% of target for the discretionary component.
•With respect to Mr. Ray, the Committee considered his leadership on the $65 million subordinated debt issue, improvement in the budget process, his ongoing work on the strategic plan and the increased efficiency of the Finance Department. The Committee also considered Mr. Ray’s contributions to MidWestOne Financial’s pandemic response. The Committee awarded Mr. Ray a payout of 100% of target for his individual goals and 100% of target for the discretionary component.
•With respect to Mr. Cantrell, the Committee considered his successfulcontinued success in the management of the bondinvestment portfolio and interest rate risk positions which manifests itself inrelative to peers, his management of the net interest margin under exceedingly difficult circumstances, and his contributions to MidWestOne Financial’s pandemic response. The Committee awarded Mr. Cantrell a payout of 110% of target for investment portfolio management, 75% of target for asset liability and net interest income,margin management, and partnering with Ms. Lorenson as a resource on balance sheet and budgeting matters.125% of target for the discretionary component.
•With respect to Mr. Kramer,Lindstrom, the Committee considered his leadershipthe superior performance in several Company projects includingcore deposit growth and mortgage operating income, and the development of a retail banking plan with progressive resultscontinued improvement in the former Central Bank footprint, improvements to the management and structure of the Home Mortgage Division, the development, implementation, and effectiveness of revised commercial compensation plans, and positiveretail employee engagement survey results. The Committee also considered retail loan growth, as well as Mr. Lindstrom’s contributions to MidWestOne Financial’s pandemic response. The Committee awarded Mr. Lindstrom a payout of 150% of target for core deposit growth, mortgage operating income and retail employee engagement, and 50% of target for the discretionary component. Mr. Lindstrom did not receive a payout for the retail loan growth component, as it did not meet the threshold level of performance.
•With respect to Mr. Jehle,Sims, the Committee considered his leadership of each of his direct report departmentsthe continued enhancements to attain positivethe credit process, talent development and management in credit administration, and improvement in the credit administration employee engagement survey results which reflect positive employee engagement.
2020 Annual Incentive Summary. Following the close of the calendar year of 2017,2020, the Committee considered the progress of each executive’s achievement toward the above stated performance and individual goals, and although there are not specific measures against which the Committee measures such achievement, it makes a subjective determination with respect to these goals to determine such progress.goals. Based on its evaluation of all executive bonus plan components, the Committee determined that the abovethese NEOs achieved the following:following overall percentage of their target bonus: Mr. Funk met 100%earned a payout of 71.3% of his goal,target bonus, Mr. Ray earned a payout of 76.3% of his target bonus, Mr. Cantrell met 100%earned a payout of 69.5% of his goal,target bonus, Mr. Kramer met 80%Lindstrom earned a payout of 80.6% of his goal,target bonus, and Mr. Jehle met 75%Sims earned a payout of 62.5% of his goal. Ms. Lorenson did not receive any bonus as a resulttarget bonus.
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Long-Term Incentive Awards-Equity Awards.Awards (Equity Awards). The boardBoard of directorsDirectors and the Committee believe in management ownership of our common stock as an effective means to align the interests of management with those of the shareholders. Our current long-term incentive plan (the “2017 Equity Incentive(“LTI Plan”) is intended to promote equity ownership in MidWestOne Financial by the directors and selected officers, to focus the management team on increasing value to the shareholders, to increase the plan participants’ proprietary interest in the success of the Company,MidWestOne Financial, and to encourage the retention of key employees for an extended period of time. TheAwards made pursuant to the LTI Plan are administered through our shareholder-approved 2017 Equity Incentive Plan (“2017 Equity Plan”), which authorizes the issuance of the Company’sMidWestOne Financial’s common stock, including the granting of stock options, andtime-based restricted stock units.units (“RSUs”) and performance-based restricted stock units (“PSUs”).
All equity awardsgrants are awarded at the discretion of the Committee in consideration of the position of the NEO, the officer’s level of influence and the corresponding ability to contribute toward the success of the Company,MidWestOne Financial, individual and corporate performance and whether the respective goals were obtained,achieved, as well as the level of equity awards granted to individuals with similar positions at our peer companies.
Historically, the Committee has granted our NEOs RSUs that vest over time based upon continued employment. In 2019, the Committee approved the use of three-year PSUs beginning in 2020 to reinforce our pay-for-performance and shareholder alignment philosophy. In February 2020, NEOs received an equity grant comprised 50% of RSUs and 50% of PSUs, as measured at the target performance level.
The PSU grants provide for the possibility of awards at a threshold, target and exceptional level based on MidWestOne Financial’s achievement of two financial metrics measured over a three-year performance period. The metrics for the first performance period are cumulative earnings per diluted share and the three-year return on average tangible equity, weighted equally. The Committee believes these are the most relevant measures for alignment with our strategic goals and the creation of shareholder value. The performance levels of each metric were set after giving consideration to results in prior years, the current budget, strategic plan forecasts, local, regional and national economic conditions, and industry performance and outlook. The target goals for each metric are challenging but reasonably attainable. NEOs may receive a maximum payout of 150% of targeted award levels for exceptional performance and a payout beginning at 50% of target for threshold performance, with results between each level calculated using linear interpolation. No payout is received if threshold levels of performance are not met. The PSUs vest three years from the grant date after measurement and certification by the Committee of MidWestOne Financial’s performance from January 1, 2020 to December 31, 2022. The LTI Plan allows the Committee, at its discretion, to adjust performance goals and performance metric results for extraordinary events resulting from situations like significant asset purchases or dispositions or other events not currently contemplated or otherwise considered by the Committee when the performance measures and levels were set. It is anticipated that a new three-year performance period will begin each year with performance metrics and levels set accordingly.
RSUs vest in three equal installments, starting on the first anniversary of the grant date and becoming fully vested on the third anniversary of the grant date. In 2019, the Committee shortened the RSU vesting schedule from four years to three years to reflect peer and industry practice.
NEOs will earn dividend equivalents on their equity grants. These dividend equivalents are accrued during the vesting period and subject to the same vesting, payment and other terms and conditions as the underlying RSUs and PSUs to which they relate. In addition, all equity awards are subject to a clawback provision if financial calculations are later determined to have been based on misrepresented financial results or actions by the participant result in reputational harm to MidWestOne Financial and a termination for cause.
The Committee typically approves equity awards in January of each year with an award grant date in the form of restricted stock units.February. The timing of the equity grants coincides with the completion of annual performance evaluations and development of current-year bonus plans. The Committee reserves the right toalso may grant additional equity awards at other times of the year in connection with the appointment of any new directors or officers or to compensate key employees for other significant or notable achievements. Up to 500,000 shares of MidWestOne Financial’s common stock may be issued under the 2017 Equity Plan. As of December 31, 2020, 328,800 shares were available for issuance. Awards vest, become exercisable, and contain such other terms and conditions as determined by the Committee and set forth in individual agreements with the employees receiving the awards. The Plan also allows for acceleration of vesting and exercise privileges in certain circumstances in connection with a change in control or upon a participant’s death, disability, or retirement. Awards are subject to forfeiture for violation of non-competition, non-solicitation, and other restrictive covenants.
All Other Compensation. We provide fringe benefits to executive officers and other employees, which are intended to serve a different purpose than base salary, bonus and equity awards. While the benefits offered are competitive with the
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marketplace and help to attract and retain executives and employees, these benefitsthey also provide financial security for employees for retirement as well as unforeseenand other unforeseeable life events such as illness, disability, or death, and are generally those offered to other employees. There are someSome additional perquisites that may only be offered to executive officers.officers only. Subject to periodic review and regulatory developments, the CompanyMidWestOne Financial plans to continue to offer fringe benefits, the amount of which shall be determined from time-to-time atin the sole discretion of the Committee.
The following table illustrates benefits and perquisites we provide to employees, including our NEOs:
Executive Officers | Other Officers / Managers | Full-Time Employees | |||||||||||||||
| Health Plans: | |||||||||||||||||
| Life & Disability Insurance | X | X | X | ||||||||||||||
| Medical/Dental/Vision Plans | X | X | X | ||||||||||||||
| Flexible Spending Plans | X | X | X | ||||||||||||||
| Health Savings Accounts | X | X | X | ||||||||||||||
| Retirement Plans: | |||||||||||||||||
| 401(k) Plan/Profit-Sharing | X | X | X | ||||||||||||||
| Executive Deferred Compensation Plan | X | X | Not Offered | ||||||||||||||
| ESOP | X | X | X | ||||||||||||||
| Perquisites: | |||||||||||||||||
| Automobile Allowance | As Duties Require | As Duties Require | Not Offered | ||||||||||||||
| Country Club Membership | As Duties Require | As Duties Require | Not Offered | ||||||||||||||
401(k) Plan. MidWestOne Financial sponsors a tax-qualified, tax-exempt 401(k) retirement plan. The 401(k) plan is considered a defined contribution plan. American Trust & Savings Bank of Dubuque, Iowa administers the plan. American Trust’s services include general compliance advice, required testing, plan design, enrollment and distributions, and overall management of plan assets.
All employees are eligible to participate in this plan after meeting eligibility requirements pertaining to age and service. Eligible employees are permitted to contribute a portion of their own compensation up to a maximum dollar amount permitted by law. Participants, including the executive officers, may choose their own investments for their assets or they may elect a managed plan whereby a plan manager makes investment decisions on behalf of the participant according to the investment risk level the participant has chosen.
We provide a safe harbor matching contribution of a participant’s elective deferrals equal to 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation.
There is also a profit-sharing contribution component to the 401(k) plan, which provides for an additional non-elective employer contribution to the retirement account of each participant. This contribution is discretionary and, if paid, is based on the Company’sMidWestOne Financial profitability in a given year and is allocated to participants perin accordance with plan terms based on their annual compensation. No profit-sharing contribution was made to the plan for 2017.2020.
Employee Stock Ownership Plan. MidWestOne Financial sponsors a tax-qualified employee stock ownership plan also known as the ESOP,(“ESOP”), which is designed primarily to reward eligible employees for their service to the CompanyMidWestOne Financial in the form of a retirement benefit. As with the 401(k) plan, American Trust & Savings Bank of Dubuque, Iowa serves as the plan recordkeeper.
Any benefits payable under the ESOP are based solely upon the statutorily limited amounts contributed by the MidWestOne Financial for the benefit of the participants, along with any changes in the value of those contributions while they are held in the ESOP. The ESOP does not permit or require any contributions by participating employees. Subject to certain exceptions under the law, contributions to the ESOP are fully vested after six years of service with the Company.MidWestOne Financial. MidWestOne Financial makes an annual contribution which is allocated among all eligible employees of the Company,MidWestOne Financial, including executive officers. The ESOP contribution is calculated as a designated percentage of annual compensation each year. This contribution is discretionary in nature and is set and approved by the MidWestOne Financial boardBoard of directorsDirectors each January. At its January 17, 201819, 2021 meeting, the Committee authorized an ESOP contribution for 20172020 of 2.75% of theeach eligible participant’s eligible compensation. This compares to 3.10%4.05% in 20162019 and 3.75%3.15% in 2015.2018.
Supplemental Executive Retirement Agreements (the “SERPs”(“SERPs”). MidWestOne Financial provides certain of our executive officersMr. Funk with a supplemental retirement benefits.benefit. The Committee believes these benefits encouragethis benefit encourages long-term executive retention while focusing our executives’Mr. Funk’s efforts on consistent and sustainable Companycompany performance, asbecause such supplemental benefits are,benefit is, pursuant to applicable tax rules, required to be an unfunded, unsecured promisespromise by MidWestOne Financial to paypay. Therefore, Mr. Funk’s receipt of future payments pursuant to the satisfaction of whichSERP is dependent on the Company’sMidWestOne Financial’s continuing financial success. In the
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case of insolvency of the Company, the executives participating in such arrangementsMidWestOne Financial, Mr. Funk would be treated as a general unsecured creditorscreditor of MidWestOne Financial with respect to the Company.amount of benefit due.
Mr. Funk is currently eligible to retire from employment and Mr. Jehle, have in place with the Company substantially similar supplemental retirement arrangements. Mr. Cook participates in a supplemental arrangement that was originally implemented by Central Bank.
Executive Deferred Compensation Plan. In 2017, the Committee approvedMidWestOne Financial maintains the Executive Deferred Compensation Plan which gives eligible executives, including our NEOs, the opportunity to defer a portion of their base salary. The plan was implemented primarily to afford certain executives whose deferrals under our 401(k) plan are limited due to restrictions under the Internal Revenue Code an additional opportunity to save for their retirements on a tax-deferred basis. If an executive elects to defer a portion of his or her salary under the plan, such deferrals earn interest at a rate equal to the prime rate of interest as published in The Wall Street Journal (U.S. Edition) plus one percent. Account balances under the plan are always fully vested and the executive can elect to receive his or her account balance in a single lump sum or in installments paid over five or ten years. Upon a change in control, all unpaid account balances will be immediately paid in a single lump sum. In 2017, all of our NEOs were eligible to participate in the plan. Mr. Funk elected to defer a portion of his 2017 base salary under the plan.
Other Perquisites. We believe that perquisites for executive officers should be very limited and conservative in nature, both in scope and value. Consistent with this philosophy, MidWestOne Financial has generally provided nominal benefits to executives that are not available to other full-time officers and employees. This approach to perquisites is anticipated to continue in the future. We provide annual country club memberships for all regional and market presidents and certain commercial banking officers in each market up to a maximum amount of $2,500.00 annually.market. The country club benefit is for single memberships only and intended to extend the officer’s external visibility and resulting business opportunities in their home community. An additional perquisite for certain officers includes a company automobile based on the needs of business travel. Messrs. Funk, Jehle,Devaisher, Ray, and CookLindstrom, have company cars assigned to them. We have disclosed the value of all perquisites to NEOs in the Summary Compensation Table even if these fall below the disclosure thresholds under the SEC rules. MidWestOne Financial willplans to continue to offer limited perquisites the amount of which shall beas determined from time-to-time in the sole discretion of the Committee, provided that such perquisites are not considered to be restricted or prohibited by any compensation regulations.
Compensation Decisions
This section describes the decisions made by the Committee with respect to the compensation for NEOs for 20172020 as well as certain decisions with respect to 20182021 compensation.
Base Salary. We review the base salaries of the NEOs annually, as described above. The salaries for 2017,2021, determined by the Compensation Committee at the end of 2016,2020, are set forth in the Summary Compensation Table and the table below:below.
The table below reflects the base salaries of our NEOs whichthat were earned in 20172020 and those base salaries set for 2018:2021:
| Named Executive Officer | 2020 | 2021 | ||||||||||||
| Charles N. Funk | $500,000 | $511,250 | ||||||||||||
Len D. Devaisher(1) | $385,000 | $394,500 | ||||||||||||
| Barry S. Ray | $294,405 | $310,405 | ||||||||||||
| James M. Cantrell | $236,506 | $242,506 | ||||||||||||
| David E. Lindstrom | $235,600 | $242,600 | ||||||||||||
| Gary L. Sims | $242,786 | $254,786 | ||||||||||||
| Named Executive Officer | 2017 | 2018 | ||
| Charles N. Funk | $422,000 | $437,000 | ||
| James M. Cantrell | $214,200 | $222,200 | ||
| Kevin E. Kramer | $320,000 | $330,000 | ||
| Kent L. Jehle | $275,000 | 275,000 | ||
| Mitchell W. Cook | $210,000 | $214,500 | ||
Bonus. As described above, neither Mr. Funk nor Mr. Jehle received a bonus for 2017. Mr. Kramer received a guaranteed bonus as promised in his employment offer and Mr. Cantrell received a discretionary bonus. Mr. Cook received an incentive payment under the 2017 commercial lending incentive plan.
In early 2018,2021, the Compensation Committee agreed on the terms of our 20182021 bonus plan. Pursuant to that plan, Mr. Funk is eligible to receive a target bonus up to a maximum of 50%55% of his base salary, Mr. KramerDevaisher is eligible to receive upa target bonus of 45%, Mr. Ray is eligible to 40%receive a target bonus of his base salary,40%, and Messrs. Cantrell, Cook,Lindstrom, and JehleSims are each eligible to receive up to 33.3%a target bonus of 35% of their respective base salaries.
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Equity Awards. We typically grant equity incentives to our eligible employees, including the NEOs, in JanuaryFebruary of each year. The equity incentives granted to the NEOs historically have vested in equal installments over four years and are typically subject to forfeiture until vested. When the equity awards are granted in the form of restricted stock units, the Company does not credit dividends or dividend equivalents for periods prior to the settlement date of such units.
In January 2017,2021, the Committee approved equity grants for its NEOs comprised solely50% of restricted stock unitstime-based RSUs and 50% of PSU, as shown inmeasured at the “Grants of Plan Based Awards” table below.
•Mr. Funk was awarded 5,000 restricted stock units.$250,000 in RSUs and PSUs.
•Mr. Devaisher was awarded $150,000 in RSUs and PSUs.
•Mr. Ray was awarded $100,000 in RSUs and PSUs.
•Mr. Cantrell was awarded 2,000 restricted stock units.$80,000 in RSUs and PSUs.
•Mr. KramerLindstrom was awarded 3,200 restricted stock units.$75,000 in RSUs and PSUs
•Mr. JehleSims was awarded 2,000 restricted stock units.$80,000 in RSUs and PSUs.
The restricted stock unitsRSUs granted to our NEOs in each of 2017 and 20182021 will vest 25%in three equal installments, starting on eachthe first anniversary of the first four anniversariesgrant date and become fully vested on the third anniversary of the grant date. The PSUs vest three years from the grant date based on achievement of performance goals over the performance period. Awards are typically subject to forfeiture until vested. Vesting of unvested restricted stock unitsequity awards is accelerated upon the death, disability or approved retirement of the executive, or upon a change in control of the CompanyMidWestOne Financial if such awards are not otherwise assumed by the surviving entity or the executive’s employment is terminated in connection with the change in control. The units are typically settled by delivery of the Company’sMidWestOne Financial’s common stock within 30 days of the vesting date. No dividends or dividendDividend equivalents are credited to the executives for the time periods prior to the settlement date of the units.
Equity Ownership Guidelines. The Committee believes it is important for the long-term success of MidWestOne Financial to align the financial interests of the Company’s executives with those of its shareholders. MidWestOne Financial’s stock ownership guidelines articulate the expectation that executives and non-employee directors own an amount of our common stock equal to a multiple of annual base salary for NEOs and the annual cash retainer for non-employee directors, as described in the table below. NEOs and non-employee directors are expected to make continuing progress towards compliance with the guidelines. In the event that an NEO or non-employee director does not hold the required number of shares, a minimum number of shares issued under the LTI Plan must be retained until the guidelines are met. These retention ratios are presented in the table below. In consultation with its compensation consultant and advisor, F.W. Cook, the Compensation Committee regularly reviews these guidelines in 2017 approved the continuationlight of established equity ownership guidelines for our non-executive board memberschanging market practices and our NEOs. The guidelines were designed to more closely align the interestspolicies of our NEOs with those ofpeer banks. Based on the Company and its shareholders andmost recent review, the Committee decided to reflectreplace the commitment of our non-executive board membersmetric for achieving the guideline from a time period to the success of the Company. The guidelines allow each executive the opportunity over three to five years, as described in the table below, to achieve compliance with the recommended equity ownership threshold.a retention ratio.
| Non-Executive Directors | 5 times Annual Cash Retainer | |||||||||||||
| Chief Executive Officer | 5 times Annual Base Salary; includes unvested shares | |||||||||||||
| 3 times Annual Base Salary; includes unvested shares | ||||||||||||||
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the MidWestOne Financial boardBoard of directorsDirectors has submitted the following report for inclusion in this proxy statement:
The Compensation Committee has reviewed and discussed the CD&A contained in this proxy statement with management. Based on the Committee’s review and discussion with management, the Committee recommended that the boardBoard of directorsDirectors approve and include the CD&A in this proxy statement.
Submitted by:
The MidWestOne Financial Group, Inc. Compensation Committee
Tracy S. McCormick (Chairperson)(Chair)
Douglas H. Greeff
Jennifer L. Hauschildt
Ruth E. Stanoch
Douglas K. True
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This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 and shall not otherwise be deemed filed under such acts.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation of our NEOs, which consist of our Chief Executive Officer, Chief Financial Officer, and our threenext four most highly compensated executive officers in 2017.2020. Except as otherwise required pursuant to SEC rules, the table sets forth the following information for the years ended December 31, 2017, 2016,2020, 2019, and 2015:2018: (i) the dollar value of base salary and bonus earned; (ii) the aggregate grant date fair value of stock and option awards granted at any time computed in accordance with FASB ASC Topic 718; (iii) all other compensation; and (iv) the dollar value of total compensation.
| Name and Principal Position | Year(1) | Salary | Bonus(2) | Stock Awards(3) | Option Awards(3) | Non-Equity Incentive Plan Compen-sation | Change in Pension Value and Nonqual-ified Deferred Compen-sation Earnings(4) | All Other Compen-sation(5) | Total Compen-sation | |||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||||||||||||||||||||
| Charles N. Funk | 2020 | $ | 500,000 | $ | — | $ | 250,000 | $ | — | $ | 178,200 | $ | — | $ | 22,934 | $ | 951,134 | |||||||||||||||||||||||||||||||||||||||
| Chief Executive Officer | 2019 | 459,500 | 70,000 | 149,000 | — | 245,065 | 763 | 27,914 | 952,242 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | 437,000 | — | 154,350 | — | 147,488 | 1,711 | 33,068 | 773,617 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Len D. Devaisher | 2020 | $ | 167,820 | $ | 179,000 | $ | 120,000 | $ | — | $ | — | $ | — | $ | 141,283 | $ | 608,103 | |||||||||||||||||||||||||||||||||||||||
| President & Chief Operating | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Barry S. Ray | 2020 | $ | 294,405 | $ | — | $ | 85,000 | $ | — | $ | 74,857 | $ | — | $ | 23,579 | $ | 477,841 | |||||||||||||||||||||||||||||||||||||||
| Senior Executive Vice President | 2019 | 285,000 | 5,000 | 59,600 | — | 107,972 | — | 101,727 | 559,299 | |||||||||||||||||||||||||||||||||||||||||||||||
| & Chief Financial Officer | 2018 | 162,256 | 56,666 | 255,870 | — | — | — | 32,346 | 507,138 | |||||||||||||||||||||||||||||||||||||||||||||||
James M. Cantrell(6) | 2020 | $ | 236,506 | $ | — | $ | 75,000 | $ | — | $ | 54,785 | $ | — | $ | 17,298 | $ | 383,589 | |||||||||||||||||||||||||||||||||||||||
| Senior Executive Vice President, | 2019 | 228,950 | 2,500 | 59,600 | — | 81,715 | — | 21,498 | 394,263 | |||||||||||||||||||||||||||||||||||||||||||||||
| Chief Investment Officer & | 2018 | 222,200 | — | 61,740 | — | 78,993 | — | 17,991 | 380,924 | |||||||||||||||||||||||||||||||||||||||||||||||
| Treasurer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| David E. Lindstrom | 2020 | $ | 235,600 | $ | — | $ | 70,000 | $ | — | $ | 63,276 | $ | — | $ | 21,215 | $ | 390,091 | |||||||||||||||||||||||||||||||||||||||
| Executive Vice President, Retail | 2019 | 226,600 | 2,500 | 59,600 | — | 82,071 | — | 20,000 | 390,771 | |||||||||||||||||||||||||||||||||||||||||||||||
| Banking | 2018 | 215,769 | — | 61,740 | — | 62,510 | — | 8,751 | 348,770 | |||||||||||||||||||||||||||||||||||||||||||||||
| Gary L. Sims | 2020 | $ | 242,785 | $ | — | $ | 75,000 | $ | — | $ | 46,529 | $ | — | $ | 19,238 | $ | 383,552 | |||||||||||||||||||||||||||||||||||||||
| Executive Vice President & | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chief Credit Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Year(1) | Salary | Bonus(2) | Stock Awards(3) | Option Awards(3) | Non-Equity Incentive Plan Compen-sation | Change in Pension Value and Nonqual-ified Deferred Compen-sation Earnings(4) | All Other Compen-sation(5) | Total Compen-sation | |||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||
| Charles N. Funk | 2017 | $ | 422,000 | $ | — | $ | 182,550 | $ | — | $ | — | $ | 1,543 | $ | 32,381 | $ | 638,474 | |||||||||||||||||
| President and Chief | 2016 | 422,000 | — | 132,250 | — | — | 1,386 | 28,144 | 583,780 | |||||||||||||||||||||||||
| Executive Officer | 2015 | 410,000 | 50,000 | 143,750 | — | 176,813 | 1,240 | 28,570 | 810,373 | |||||||||||||||||||||||||
| James M. Cantrell | 2017 | $ | 214,200 | $ | 35,664 | $ | 65,718 | $ | — | $ | — | $ | — | $ | 14,459 | $ | 330,041 | |||||||||||||||||
| Interim Chief Financial Officer, | 2016 | 210,000 | — | 39,675 | — | — | — | 17,575 | 267,250 | |||||||||||||||||||||||||
| Vice President, Chief Investment | 2015 | 205,000 | — | 43,125 | — | 66,959 | — | 18,584 | 333,668 | |||||||||||||||||||||||||
| Officer and Treasurer | ||||||||||||||||||||||||||||||||||
| Kevin E. Kramer | 2017 | $ | 320,000 | $ | 114,000 | $ | 109,530 | $ | — | $ | — | $ | — | $ | 73,963 | $ | 617,493 | |||||||||||||||||
| Chief Operating Officer | ||||||||||||||||||||||||||||||||||
| Kent L. Jehle | 2017 | $ | 275,000 | $ | — | $ | 80,322 | $ | — | $ | — | $ | 851 | $ | 23,476 | $ | 379,649 | |||||||||||||||||
| Executive Vice President and | 2016 | 271,000 | — | 66,125 | — | — | 769 | 25,847 | 363,741 | |||||||||||||||||||||||||
| Chief Credit Officer | 2015 | 250,000 | — | 43,125 | — | 71,660 | 693 | 24,722 | 390,200 | |||||||||||||||||||||||||
| Mitchell W. Cook | 2017 | $ | 210,000 | $ | — | $ | 14,604 | $ | — | $ | 158,348 | $ | — | $ | 21,234 | $ | 404,186 | |||||||||||||||||
| Senior Regional President | 2016 | 204,400 | 25,000 | 13,225 | — | 84,163 | — | 21,465 | 348,253 | |||||||||||||||||||||||||
Katie A. Lorenson(6) | 2017 | $ | 218,620 | $ | — | $ | 65,718 | $ | — | $ | 217 | $ | — | $ | 22,039 | $ | 306,594 | |||||||||||||||||
| (Former) Senior Vice President | 2016 | 206,231 | — | 39,675 | — | 241 | — | 18,964 | 265,111 | |||||||||||||||||||||||||
| and Chief Financial Officer | ||||||||||||||||||||||||||||||||||
| Name | Perquisites(i) | 401(k) Match | Supplemental Retirement Contribution | ESOP Contribution | Relocation Expenses | Total “All Other Compensation” | ||||||||||||||||||||
| Charles N. Funk | $ | 7,429 | $ | 10,800 | $ | 6,727 | $ | 7,425 | $ | — | $ | 32,381 | ||||||||||||||
| James M. Cantrell | — | 8,568 | — | 5,891 | — | 14,459 | ||||||||||||||||||||
| Kevin E. Kramer | 7,726 | 2,133 | — | — | 64,104 | 73,963 | ||||||||||||||||||||
| Kent L. Jehle | 1,334 | 10,800 | 3,917 | 7,425 | — | 23,476 | ||||||||||||||||||||
| Mitchell W. Cook | 3,009 | 10,800 | — | 7,425 | — | 21,234 | ||||||||||||||||||||
| Katie A. Lorenson | 13,349 | 8,690 | — | — | — | 22,039 | ||||||||||||||||||||
(2) The amounts set forth in the Summary"Bonus" column attributable to the year ended December 31, 2020 for Mr. Devaisher reflects a sign-on bonus in the amount of $25,000 and a guaranteed bonus as negotiated in his employment agreement in the amount of $154,000.
(3) The amounts set forth in the “Stock Awards” column and the “Option Awards” column reflect the grant date fair value of awards granted during the years ended December 31, 2020, 2019 and 2018, in accordance with FASB ASC Topic 718. The assumptions used in calculating these amounts are set forth in Note 15, which is located on pages 101 through 102 of our Annual Report on Form 10-K for the year ended December 31, 2020. The amounts included in this column for the performance share awards made during 2020 are calculated based on the probable satisfaction of the performance conditions for such awards. If the highest level of performance is achieved for these PSUs, the maximum value of these awards at the grant date would be as follows: Mr. Funk — $187,500; Mr. Devaisher — $90,000; Mr. Ray — $63,750; Mr. Cantrell — $56,250; Mr. Lindstrom — $52,500; and Mr. Sims — $56,250.
(4) The amounts set forth in the "Change in Pension Value and Nonqualified Deferred Compensation Table above. Our CEO to median employee pay ratioEarnings" column are above-market interest, as determined for 2017 is 14:1. This ratio results from dividing our CEO’s total compensation of $638,199 by totalproxy disclosure purposes only, accrued under the SERP for Mr. Funk during the year.
(5) All other compensation for our median employeethe NEOs attributable to the fiscal year 2020 is summarized below.
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| Name | Perquisites(1) | 401(k) Match | ESOP Contribution | Relocation Expenses | Total “All Other Compensation” | |||||||||||||||||||||||||||||||||
| Charles N. Funk | $ | 3,696 | $ | 11,400 | $ | 7,838 | $ | — | $ | 22,934 | ||||||||||||||||||||||||||||
| Len D. Devaisher | 1,120 | 3,850 | — | 136,313 | 141,283 | |||||||||||||||||||||||||||||||||
| Barry S. Ray | 4,341 | 11,400 | 7,838 | — | 23,579 | |||||||||||||||||||||||||||||||||
| James M. Cantrell | — | 9,460 | 7,838 | — | 17,298 | |||||||||||||||||||||||||||||||||
| David E. Lindstrom | 3,953 | 9,424 | 7,838 | — | 21,215 | |||||||||||||||||||||||||||||||||
| Gary L. Sims | — | 11,400 | 7,838 | — | 19,238 | |||||||||||||||||||||||||||||||||
(1) Includes the incremental cost related to the use of a Company-owned automobile for Messrs. Funk, Devaisher, Ray, and Lindstrom.
Grants of Plan Based Awards
The following table provides information on equity grants awarded to our NEOs during 2017.2020. All such grants were made under our 2017 Equity Incentive Plan, which is described in more detail in the CD&A.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | All Other Stock Awards: # of Shares of Stock or Units | All Other Option Awards: # of Securities Underlying Options | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Charles N. Funk | 2/15/2020 | — | — | — | 1,934 | 3,869 | 5,803 | — | — | $ | — | $ | 125,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/15/2020 | — | — | — | — | — | — | 3,869 | — | — | $ | 125,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 125,000 | $ | 250,000 | $ | 375,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Len D. Devaisher | 8/15/2020 | — | — | — | 1,462 | 2,924 | 4,386 | — | — | $ | — | $ | 60,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/15/2020 | — | — | — | — | — | — | 2,924 | — | — | $ | 60,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Barry S. Ray | 2/15/2020 | — | — | — | 658 | 1,315 | 1,973 | — | — | $ | — | $ | 42,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/15/2020 | — | — | — | — | — | — | 1,315 | — | — | $ | 42,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 49,076 | $ | 98,124 | $ | 147,200 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| James M. Cantrell | 2/15/2020 | — | — | — | 580 | 1,161 | 1,741 | — | — | $ | — | $ | 37,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/15/2020 | — | — | — | — | — | — | 1,161 | — | — | $ | 37,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 39,425 | $ | 78,827 | $ | 118,253 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| David E. Lindstrom | 2/15/2020 | — | — | — | 542 | 1,083 | 1,625 | — | — | $ | — | $ | 35,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/15/2020 | — | — | — | — | — | — | 1,083 | — | — | $ | 35,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 39,275 | $ | 78,525 | $ | 117,800 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gary L. Sims | 2/15/2020 | — | — | — | 580 | 1,161 | 1,741 | — | — | $ | — | $ | 37,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/15/2020 | — | — | — | — | — | — | 1,161 | — | — | $ | 37,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 40,472 | $ | 80,921 | $ | 121,393 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) The amounts set forth in the "Estimated Future Payouts Under Non-Equity Incentive Plan Awards" columns reflect the threshold, target and maximum payouts for performance under the bonus plan as described in the section titled “Cash Incentive Awards-Bonuses” in the CD&A above. The amount earned by each NEO for 2020 performance is included in the Summary Compensation Table in the column titled “Non-Equity Incentive Plan Compensation.”
(2) The amounts set forth in the "Estimated Future Payouts Under Equity Incentive Plan Awards" columns with respect to the 2020 PSUs reflect the threshold, target and maximum number of shares of MidWestOne common stock that may be earned by each individual as a result of the 2020 PSUs granted under the LTI Plan as described in the section titled "Long-Term Incentive Awards-Equity Awards" in the CD&A above. The actual number of shares of MidWestOne common stock to be delivered as a result of these performance shares will be determined by the performance of the Company during the three-year period from 2020 through 2022.
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| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Stock Awards: # of Shares of Stock or Units | All Other Option Awards: # of Securities Underlying Options | �� | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock Unit Awards | |||||||||||||||||||||
| Threshold | Target | Maximum | ||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||
| Charles N. Funk | 2/15/2017 | — | — | $ | — | 5,000 | — | $ | — | $ | 182,550 | |||||||||||||||||
| $ | — | $ | 211,000 | — | — | — | — | — | ||||||||||||||||||||
| James M. Cantrell | 2/15/2017 | — | — | $ | — | 1,800 | — | $ | — | $ | 65,718 | |||||||||||||||||
| $ | — | $ | 71,329 | — | — | — | — | — | ||||||||||||||||||||
| Kevin E. Kramer | 2/15/2017 | — | — | $ | — | 3,000 | — | $ | — | $ | 109,530 | |||||||||||||||||
| $ | — | $ | 128,000 | — | — | — | — | — | ||||||||||||||||||||
| Kent L. Jehle | 2/15/2017 | — | — | $ | — | 2,200 | — | $ | — | $ | 80,322 | |||||||||||||||||
| $ | — | $ | 91,575 | — | — | — | — | — | ||||||||||||||||||||
| Mitchell W. Cook | 2/15/2017 | — | — | $ | — | 400 | — | $ | — | $ | 14,604 | |||||||||||||||||
| $ | — | $ | — | — | — | — | — | — | ||||||||||||||||||||
Katie A. Lorenson(2) | 2/15/2017 | — | — | $ | — | 3,000 | — | $ | — | $ | 65,718 | |||||||||||||||||
| $ | — | $ | — | — | — | — | — | — | ||||||||||||||||||||
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning the exercisable and unexercisable stock options and restricted stock units at December 31, 2017,2020, held by each NEO:
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options | Option Exercise Price ($) | Option Expiration Date | Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||||
| Name | Exercisable | Unexercisable | # of Shares or Units of Stock that Have Not Vested(1) | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) | # of Unearned Shares, Units or Other Rights that Have Not Vested (3) | Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(2) | ||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||||||||||||||||||||
| Charles N. Funk | — | — | $ | — | — | 11,535 | $ | 282,600 | 2,017 | $ | 49,425 | |||||||||||||||||||||||||||||||||||||||
| Len D. Devaisher | — | — | $ | — | — | 2,983 | 73,082 | 1,491 | 36,541 | |||||||||||||||||||||||||||||||||||||||||
| Barry S. Ray | — | — | $ | — | — | 3,872 | 94,859 | 686 | 16,805 | |||||||||||||||||||||||||||||||||||||||||
| James M. Cantrell | — | — | $ | — | — | 4,160 | 101,930 | 605 | 14,828 | |||||||||||||||||||||||||||||||||||||||||
| David E. Lindstrom | — | — | $ | — | — | 3,630 | 88,928 | 565 | 13,839 | |||||||||||||||||||||||||||||||||||||||||
| Gary L. Sims | — | — | $ | — | — | 3,710 | 90,905 | 605 | 14,828 | |||||||||||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||
Number of Securities Underlying Unexercised Options | Option Exercise Price ($) | Option Expiration Date | # of Shares or Units of Stock that Have Not Vested(1) | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) | ||||||||||||||||
| Name | Exercisable | Unexercisable | ||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||
| Charles N. Funk | 3,500 | — | $ | 16.69 | 4/1/2018 | — | $ | — | ||||||||||||
| — | — | — | — | 12,500 | 419,125 | |||||||||||||||
| James M. Cantrell | — | — | — | — | 3,800 | 127,414 | ||||||||||||||
| Kevin E. Kramer | — | — | — | — | 4,500 | 150,885 | ||||||||||||||
| Kent L. Jehle | 3,000 | — | 16.69 | 4/1/2018 | — | — | ||||||||||||||
| 1,500 | — | 9.34 | 1/22/2019 | — | — | |||||||||||||||
| — | — | — | — | 5,450 | 182,739 | |||||||||||||||
| Mitchell W. Cook | — | — | — | — | 1,025 | 34,368 | ||||||||||||||
| Katie A. Lorenson | — | — | — | — | — | — | ||||||||||||||
(1) The total number of shares above includes additional dividend equivalents that will be distributed at the same time the underlying awards are distributed.
(2) The market value of shares is based on a closing stock price of $24.50 on December 31, 2020.
(3) The number of shares includes dividend equivalents that will be distributed at the same time the underlying awards are distributed. The number of shares corresponding to the February 15, 2020 grant date reflects PSUs vesting on the third anniversary of the date of grant provided the established performance threshold is achieved.
The table below shows the remaining vesting schedule for unvested restricted stock units granted on February 15, 2017.
| Name | 2/15/ | ||||||||||||||||||||
| Charles N. Funk | 1,250 | ||||||||||||||||||||
| James M. Cantrell | |||||||||||||||||||||
The table below shows the remaining vesting schedule for unvested restricted stock units granted on February 15, 2015.2018.
| Name | 2/15/2018 | 2/15/2019 | ||||||||
| Charles N. Funk | 1,250 | 1,250 | ||||||||
| James M. Cantrell | 375 | 375 | ||||||||
| Kent L. Jehle | 375 | 375 | ||||||||
| Name | 2/15/2021 | 2/15/2022 | ||||||||||||||||||||||||
| Charles N. Funk | 1,250 | 1,250 | ||||||||||||||||||||||||
| James M. Cantrell | 500 | 500 | ||||||||||||||||||||||||
| David E. Lindstrom | 500 | 500 | ||||||||||||||||||||||||
The table below shows the remaining vesting schedule for unvested restricted stock units granted on MayJune 15, 2015.2018.
| Name | 6/15/2021 | 6/15/2022 | ||||||||||||||||||||||||||||||
| Barry S. Ray | 500 | 500 | ||||||||||||||||||||||||||||||
The table below shows the remaining vesting schedule for unvested restricted stock units granted on November 15, 2018
| Name | 11/15/2021 | 11/15/2022 | ||||||||||||||||||||||||||||||
| Gary L. Sims | 500 | 500 | ||||||||||||||||||||||||||||||
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The table below shows the remaining vesting schedule for unvested restricted stock units granted on February 15, 2016.2019.
| Name | 2/15/2018 | 2/15/2019 | 2/15/2020 | ||||||||||
| Charles N. Funk | 1,250 | 1,250 | 1,250 | ||||||||||
| James M. Cantrell | 375 | 375 | 375 | ||||||||||
| Kent L. Jehle | 625 | 625 | 625 | ||||||||||
| Mitchell W. Cook | 125 | 125 | 125 | ||||||||||
| Name | 11/15/2018 | 11/15/2019 | 11/15/2020 | ||||||||||
| Kevin E. Kramer | 500 | 500 | 500 | ||||||||||
| Name | 2/15/2021 | 2/15/2022 | 2/15/2023 | |||||||||||||||||||||||||||||
| Charles N. Funk | 1,250 | 1,250 | 1,250 | |||||||||||||||||||||||||||||
| Barry S. Ray | 500 | 500 | 500 | |||||||||||||||||||||||||||||
| James M. Cantrell | 500 | 500 | 500 | |||||||||||||||||||||||||||||
| David E. Lindstrom | 500 | 500 | 500 | |||||||||||||||||||||||||||||
| Gary L. Sims | 500 | 500 | 500 | |||||||||||||||||||||||||||||
The table below shows the remaining vesting schedule for unvested restricted stock units granted on February 15, 2017.2020.
| Name | 2/15/2021 | 2/15/2022 | 2/15/2023 | |||||||||||||||||||||||||||||
| Charles N. Funk | 1,289 | 1,290 | 1,290 | |||||||||||||||||||||||||||||
| Barry S. Ray | 438 | 438 | 439 | |||||||||||||||||||||||||||||
| James M. Cantrell | 387 | 387 | 387 | |||||||||||||||||||||||||||||
| David E. Lindstrom | 361 | 361 | 361 | |||||||||||||||||||||||||||||
| Gary L. Sims | 387 | 387 | 387 | |||||||||||||||||||||||||||||
| Name | 2/15/2018 | 2/15/2019 | 2/15/2020 | 2/15/2021 | ||||||||||
| Charles N. Funk | 1,250 | 1,250 | 1,250 | 1,250 | ||||||||||
| James M. Cantrell | 450 | 450 | 450 | 450 | ||||||||||
| Kevin E. Kramer | 750 | 750 | 750 | 750 | ||||||||||
| Kent L. Jehle | 550 | 550 | 550 | 550 | ||||||||||
| Mitchell W. Cook | 100 | 100 | 100 | 100 | ||||||||||
| Name | 8/15/2021 | 8/15/2022 | 8/15/2023 | |||||||||||||||||||||||||||||
| Len D. Devaisher | 974 | 975 | 975 | |||||||||||||||||||||||||||||
Option Exercises and Stock Vested in 20172020
The following table sets forth information concerning the exercise of options and vesting of stock awards in 20172020 by each NEO:
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | # of Shares Acquired on Exercise | Value Realized Upon Exercise ($) | # of Shares Acquired on Vesting | Value Realized on Vesting ($) | ||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | ||||||||||||||||||||||
| Charles N. Funk | — | $ | — | 5,000 | $ | 161,550 | ||||||||||||||||||||
| Len D. Devaisher | — | — | — | — | ||||||||||||||||||||||
| Barry S. Ray | — | — | 4,000 | 91,760 | ||||||||||||||||||||||
| James M. Cantrell | — | — | 1,825 | 58,966 | ||||||||||||||||||||||
| David E. Lindstrom | — | — | 1,000 | 32,310 | ||||||||||||||||||||||
| Gary L. Sims | — | — | 1,000 | 27,830 | ||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||
| Name | # of Shares Acquired on Exercise | Value Realized Upon Exercise ($) | # of Shares Acquired on Vesting | Value Realized on Vesting ($) | ||||||||||
| (a) | (b) | (c) | (d) | (e) | ||||||||||
| Charles N. Funk | — | $ | — | 4,500 | $ | 164,295 | ||||||||
| James M. Cantrell | — | — | 1,000 | 36,510 | ||||||||||
| Kevin E. Kramer | — | — | 500 | 17,100 | ||||||||||
| Kent L. Jehle | — | — | 2,000 | 73,020 | ||||||||||
| Mitchell W. Cook | — | — | — | 13,114 | ||||||||||
| Katie A. Lorenson | — | — | 150 | 19,006 | ||||||||||
Nonqualified Deferred Compensation Table
The following table sets forth information concerning the benefits under the Company’s supplemental retirement agreements at December 31, 2017, to which each NEO is entitled.entitled under MidWestOne Financial’s Executive Deferred Compensation Plan and, with respect to Mr. Funk only, the SERP, as of December 31, 2020.
| Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last FYE(1) ($) | |||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||||||||||||||
| Charles N. Funk | $ | 75,000 | $ | — | $ | 18,779 | $ | — | $ | 616,100 | ||||||||||||||||||||||
| Len D. Devaisher | — | — | — | — | — | |||||||||||||||||||||||||||
| Barry S. Ray | — | — | — | — | — | |||||||||||||||||||||||||||
| James M. Cantrell | 26,016 | — | 5,650 | — | 117,431 | |||||||||||||||||||||||||||
| David E. Lindstrom | — | — | — | — | — | |||||||||||||||||||||||||||
| Gary L. Sims | 7,284 | — | 615 | — | 15,106 | |||||||||||||||||||||||||||
(1) The "Aggregate Balance at Last FYE" column includes above-market interest also reported in the "Change in Pension Value and Nonqualified Deferred Compensation Earnings" column of the Summary Compensation Table for fiscal years 2019 and 2018. The above-market interest amounts for Mr. Funk for fiscal years 2019 and 2018 were $763 and $1,711, respectively.
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| Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY(1) ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last FYE(2) ($) | |||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
| Charles N. Funk | $ | 50,000 | $ | 6,727 | $ | 18,073 | $ | — | $ | 332,296 | ||||||||||
| James M. Cantrell | — | — | 1,528 | — | 33,707 | |||||||||||||||
| Kevin E. Kramer | — | — | — | — | — | |||||||||||||||
| Kent L. Jehle | — | 3,917 | 9,330 | — | 140,537 | |||||||||||||||
| Mitchell W. Cook | — | — | — | — | 60,000 | |||||||||||||||
| Katie A. Lorenson | — | — | — | — | — | |||||||||||||||
Potential Payments Upon Termination or Change in Control
The following table sets forth information concerning potential payments and benefits under our compensation programs and benefit plans, including individual employment agreements, to which the NEOs other than Ms. Lorenson, would be entitled upon a termination of employment as of December 29, 2017.31, 2020. Except for payments and benefits provided by the employment agreements, all payments and benefits provided to any NEO upon termination of employment are the same as the payments and benefits provided to other eligible employees of MidWestOne Financial. For purposes of estimating the value of certain equity awards we have assumed a price per share of our common stock of $33.53,$24.50, which was the closing price of our stock on December 29, 2017,31, 2020, the last trading day of the year.
Equity Incentive Plan Vesting(1) | ||||||||||||||||||||||||||
| Executive | Triggering Event | Cash Severance Payments | Restricted Stock Unit Awards | Performance Stock Unit Awards | ||||||||||||||||||||||
Charles N. Funk(2) | Involuntary Termination(3) | $ | 625,000 | $ | — | $ | — | |||||||||||||||||||
Involuntary Termination in Connection with Change in Control(4) | 1,695,000 | 282,600 | 118,879 | |||||||||||||||||||||||
Change in Control without Termination(4) | — | — | 118,879 | |||||||||||||||||||||||
Retirement(5) | — | 282,600 | — | (6) | ||||||||||||||||||||||
| Disability or Death | — | 282,600 | 125,000 | |||||||||||||||||||||||
| Len D. Devaisher | Involuntary Termination(3) | $ | 385,000 | $ | — | $ | — | |||||||||||||||||||
Involuntary Termination in Connection with Change in Control(4) | 1,078,000 | 73,082 | 57,110 | |||||||||||||||||||||||
Change in Control without Termination(4) | — | — | 57,110 | |||||||||||||||||||||||
Retirement(5) | — | — | — | |||||||||||||||||||||||
| Disability or Death | — | 73,082 | 60,000 | |||||||||||||||||||||||
| Barry S. Ray | Involuntary Termination(3) | $ | 294,405 | $ | — | $ | — | |||||||||||||||||||
Involuntary Termination in Connection with Change in Control(4) | 738,524 | 94,859 | 40,453 | |||||||||||||||||||||||
Change in Control without Termination(4) | — | — | 40,453 | |||||||||||||||||||||||
Retirement(5) | — | — | — | |||||||||||||||||||||||
| Disability or Death | — | 94,859 | 42,500 | |||||||||||||||||||||||
| James M. Cantrell | Involuntary Termination(3) | $ | 236,506 | $ | — | $ | — | |||||||||||||||||||
Involuntary Termination in Connection with Change in Control(4) | 582,582 | 101,930 | 35,694 | |||||||||||||||||||||||
Change in Control without Termination(4) | — | — | 35,694 | |||||||||||||||||||||||
Retirement(5) | — | 101,930 | — | (6) | ||||||||||||||||||||||
| Disability or Death | — | 101,930 | 37,500 | |||||||||||||||||||||||
| David E. Lindstrom | Involuntary Termination(3) | $ | — | $ | — | $ | — | |||||||||||||||||||
Involuntary Termination in Connection with Change in Control(4) | 373,654 | 88,928 | 33,314 | |||||||||||||||||||||||
Change in Control without Termination(4) | — | — | 33,314 | |||||||||||||||||||||||
Retirement(5) | — | — | — | |||||||||||||||||||||||
| Disability or Death | — | 88,928 | 35,000 | |||||||||||||||||||||||
| Gary L. Sims | Involuntary Termination(3) | $ | 242,786 | $ | — | $ | — | |||||||||||||||||||
Involuntary Termination in Connection with Change in Control(4) | 586,722 | 90,905 | 35,694 | |||||||||||||||||||||||
Change in Control without Termination(4) | — | — | 35,694 | |||||||||||||||||||||||
Retirement(5) | — | — | — | |||||||||||||||||||||||
| Disability or Death | — | 90,905 | 37,500 | |||||||||||||||||||||||
30
(2) In addition to amounts described in this table, a supplemental retirement plan entitles Mr. Funk to a monthly benefit of $2,083 for 180 months if his employment terminated by MidWestOne Financial other than for cause (whether or not in connection with a change in control), or on account of his qualifying retirement, death or disability.
(3) “Involuntary Termination” refers to a voluntary resignation by the Company effectiveexecutive for “good reason” or an involuntary termination by MidWestOne Financial other than for “cause,” in each case other than in connection with a change in control.
(4) Notwithstanding the aggregate amount that may be payable to each executive upon a change in control, each employment agreement includes a provision that limits the aggregate payments or benefits received by an NEO in connection with a change in control to $1.00 less than the amount that would result in the application of an excise tax under applicable provisions of sections 280G and 4999 of the Internal Revenue Code. Consequently, actual payments following a change in control may be less than indicated above.
(5) Pursuant to the award agreements under the 2017 Equity Plan, the requirements for a qualifying retirement are determined by the Committee at its sole discretion. Generally, the Committee views an executive’s retirement as a voluntary resignation with five years of service or more on or after attainment of age 60. Only Messrs. Funk and Cantrell would qualify for retirement vesting as of December 7, 2017, did not receive any payments or benefits, other than those she was entitled31, 2020.
(6) Upon a qualifying retirement, each NEO remains eligible to pursuant to applicable law orvest in his unvested performance stock unit awards based upon actual performance during the terms of any tax-qualified retirement plan or other broad-based welfare planperformance period, as if he had continued in active employment with MidWestOne Financial until the end of the Company.performance period. Because payouts remain subject to the attainment of the applicable performance metrics, which is not guaranteed, the awards are not certain to vest upon a qualifying retirement. Accordingly, no amounts are reported for a December 31, 2020 retirement.
| Cash Severance Payments | Equity Incentive Plan (1) | SERP | |||||||||||
| Charles N. Funk | |||||||||||||
Involuntary Termination(2) | $ | 527,500 | $ | — | $ | 1,905 | (3) | ||||||
Involuntary Termination in Connection with Change in Control(4) | 1,055,000 | 419,125 | 1,905 | (3) | |||||||||
Disability, Retirement or Change in Control(4) | — | 419,125 | 1,905 | (3) | |||||||||
| Death | — | 419,125 | 2,083 | (5) | |||||||||
| James M. Cantrell | |||||||||||||
Involuntary Termination(2) | $ | 214,200 | $ | — | $ | — | |||||||
Involuntary Termination in Connection with Change in Control(4) | 428,400 | 127,414 | — | ||||||||||
Death, Disability, Retirement or Change in Control(4) | — | 127,414 | — | ||||||||||
| Kevin E. Kramer | |||||||||||||
Involuntary Termination(2) | $ | 320,000 | $ | — | $ | — | |||||||
Involuntary Termination in Connection with Change in Control(4) | 640,000 | 150,885 | — | ||||||||||
Death, Disability, Retirement or Change in Control(4) | — | 150,885 | — | ||||||||||
| Kent L. Jehle | |||||||||||||
Involuntary Termination(2) | $ | 275,000 | $ | — | $ | 762 | (6) | ||||||
Involuntary Termination in Connection with Change in Control(4) | 550,000 | 182,738 | 762 | (6) | |||||||||
Disability, Retirement or Change in Control(4) | — | 182,738 | 762 | (6) | |||||||||
| Death | — | 182,738 | 2,083 | (7) | |||||||||
| Mitchell W. Cook | |||||||||||||
Involuntary Termination(2) | $ | 105,000 | $ | — | $ | 40,000 | (8) | ||||||
Involuntary Termination in Connection with Change in Control(4) | 159,582 | 34,368 | 40,000 | (8) | |||||||||
Retirement or Change in Control(4) | — | 34,368 | 40,000 | (8) | |||||||||
| Death or Disability | — | 34,368 | 60,000 | (9) | |||||||||
| Katie A. Lorenson | |||||||||||||
| Resignation - December 7, 2017 | — | — | — | ||||||||||
Continued Health, Dental, and Vision Insurance. Pursuant to each applicable agreement, if an NEOexecutive terminated employment on December 31, 2017,2020, he or she would be eligible to participate in our COBRA coverage program at the same monthly cost as would be charged to a continuing employee for comparable coverage. As of December 31, 2017,2020, the incremental monthly cost of the continuing health, dental, and vision coverage, based on each executive’s current coverage elections, was $357.08$430.00 for Mr. Funk, $485.46$285.07 for Mr. Devaisher, $265.78 for Mr. Ray, $574.42 for Mr. Cantrell, $477.38$447.95 for Mr. Kramer, $461.88Lindstrom, and $555.12 for Mr. Jehle, and $380.12 for Mr. Cook.Sims.
Accrued Pay and Regular Retirement Benefits. The NEOs would be eligible to receive certain other payments and benefits to the extent theyupon a termination of employment, most of which are provided to our salaried employees on a non-discriminatory basis, to salaried employees generally uponand all of which do not become vested as the result of the NEO’s termination of employment. These include:
•Accrued salary and PTOpaid time off pay.
•Distributions of plan balances under our 401(k) plan and the executive deferred compensation plan.Executive Deferred Compensation Plan. See “Nonqualified Deferred Compensation Table” on page 2729 for information on current account balances and an overview of the deferred compensationsuch plan.
•All unvested stock options shall become immediately 100% vested and an employeethe participant shall have a period of one (1) year following such termination during which to exercise his or herthe vested stock options.
•Any unvested restricted stock units outstanding at the time of an employee’sthe participant’s termination due to death or disability shall become immediately 100% vested upon such termination. In addition, any unvested performance stock units will become immediately vested at the target level of performance.
Upon a termination of employment due toat retirement, at or after attaining age 65,as approved by the Compensation Committee, all unvested stock options and unvested restricted stock units shall become immediately 100% vested. In addition, participants with PSU awards will remain eligible to vest in a number of performance stock units, if any, to be determined by actual performance through the conclusion of the performance, as if the participant had continued in active employment through such date.
Upon an Involuntary Termination in connection with a change in control of MidWestOne Financial, all unvested restricted stock units shall become immediately 100% vested, and all unvested performance stock units shall become immediately vested, based upon actual performance through the date of the change in control. In the event of a change in control without an Involuntary Termination, unvested PSU awards would continue to vest in the same manner.
31
Employment Agreements - Agreements. Messrs. Funk, Devaisher, Ray, Cantrell, Kramer, and Jehle, andSims have entered into employment agreements with the CompanyMidWestOne Financial that are substantially similar in form.
The current termtwo-year terms of the employment agreements for Messrs. Funk, Devaisher, Ray, Cantrell, Kramer, and Jehle, extendsSims extend through December 31, 2019.2022. Such terms will automatically extend for one additional year on each January 1 unless notice of nonrenewal has been provided by either party to the agreement. Upon the occurrence of a change in control, the agreements will automatically remain in effect for two years following the change in control and will then terminate.
The employment agreements provide for annual base salaries in place as of the execution of the agreements to bethat are reviewed annually and may be adjusted at the discretion of the Board. The agreements provide that the executives will be eligible to receive performance-based annual incentive bonuses, in accordance with MidWestOne Financial’s annual incentive plan, and also to receive employee benefits on as favorable a basis as other similarly situated senior executives of MidWestOne Financial. The executives are also permitted to use a company-provided automobile.
The employment agreements provide for severance benefits in the event the executive is terminated by MidWestOne Financial other than for cause or by the executive resigns for good reason (“Termination”). For a Termination during the employment period that does not occur in connection with a change in control of MidWestOne Financial, Mr. Funk would be entitled to receive an amount equal to 125% of his base salary and Messrs. Devaisher, Ray, Cantrell, Kramer, and Jehle,Sims would be entitled to receive an amount equal to 100% of their base salary. For a Termination that occurs within six months before or within 24 months after a change in control of MidWestOne Financial (“Covered Period”), Mr. Funk would be entitled to receive an amount equal to 250% of his base salary plus bonus (“Base Compensation”), and Messrs. Devaisher, Ray, Cantrell, Kramer, and Jehle,Sims would be entitled to receive an amount equal to 200% of their respective Base Compensation. Any severance paid in connection with a Termination during a Covered Period would be paid in a single lump sum.
Following any Termination, whether or not occurring during a Covered Period, the executives and their eligible dependents would also be entitled to continued coverage under the medical, dental, and vision plans of MidWestOne Financial for so long as each was eligible to and did elect COBRA continuation coverage. Each executive would be required to pay an amount for such coverage that is the same as what an active employee pays for such coverage.
All severance benefits under the employment agreements are contingent upon the executive’s execution and non-revocation of a general release and waiver of claims against MidWestOne Financial. Further, all of the employment agreements contain restrictive covenants prohibiting the unauthorized disclosure of confidential information of MidWestOne Financial by the executives during and after their employment with MidWestOne Financial,and prohibiting the executives from competing with MidWestOne Financial and from soliciting its employees or customers during employment and after termination of employment for any reason. The non-competition and non-solicitation provisions apply for a period of 15 months following any termination of employment.
Change In Control Agreement - Mr. Cook. Lindstrom.Mr. CookLindstrom is a party to an employment agreement with the Company that became effective on May 11, 2017 and extends through December 31, 2018. Beginning on January 1, 2019, the term of the agreement will automatically extend for one-year periods unless either party elects not to renew. Upon the occurrence of a change in control the agreement will automatically remainwith MidWestOne Financial which became effective upon his commencement of employment in effect for two years and will then terminate.
effective date. The employment agreement also provides for the payment of a severance benefit in the event ofif Mr. Cook’s terminationLindstom is terminated by MidWestOne Financial other than for(or a successor) without cause, or by the executiveif he resigns for good reason, (“Termination”). For a Termination that does not occur in connection witheach case within six months prior to or twelve months following a change in control, Mr. Cook would be entitled to receive an amountcontrol. The severance benefit is equal to 50%125% of the sum of the greater of Mr. Lindstrom’s then-current base salary or his annual base salary. For a Termination that occurs within six months before or 24 months after asalary as of one day prior to the change in control, (“Covered Period”), Mr. Cook would be entitled to receive an amount equal to 50% of his base salary plus the incentive bonus paid in a single lump sum.
or payable for the prior year. Mr. Cook’s agreement also provides himLindstrom and his eligible dependents would be permitted to participate in COBRA coverage at the opportunity to receive continued coverage under the medical, dental, and vision plans ofsame cost as if he had remained employed by MidWestOne Financial for so long as each was eligible to and did elect COBRA continuation coverage. LikeFinancial. All severance benefits under the other NEOs, Mr. Cook would be required to pay an amount for such coverage that is the same as what an active employee pays for such coverage.
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Pay Ratio Disclosure. One Financial or from soliciting its employees or customers. The durationAs required by the SEC, our CEO’s annual total compensation in 2020 was compared to that of the restrictive covenants variesmedian employee (excluding the CEO) for the same period. We identified the median employee by examining the 2020 401k-eligible compensation for all employees (whether full-time, part-time, or seasonal), as of December 31, 2020. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2020. We believe the use of 401k-eligible compensation for all employees is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our NEOs as set forth in the Summary Compensation Table in this proxy statement. Our CEO to median employee pay ratio for 2020 is 17.1:1. This ratio results from 45 days to 12 months following a terminationdividing our CEO’s total compensation of employment.$951,134 by total compensation for our median employee of $55,564.63.
DIRECTOR COMPENSATION
The 2017 Director Fee Schedule wasCompensation Committee reviews director compensation annually with the guidance of our compensation consultant using the same peer group as used for the officers. Based on the most recent review, the Compensation Committee decided to eliminate board meeting fees and increase the annual retainer payment, increase the additional retainer paid to our board Chair, increase the additional retainers paid to the Compensation Committee and Nominating and Corporate Governance Committee Chairs to peer median, and eliminate committee meeting fees for committee Chairs. The changes align MidWestOne Financial’s director compensation more closely with peer and industry practice. The 2020 director fees were approved by the Compensation Committee with an effective date of April 1, 2017. Mr. Monson was MidWest2020.
In 2020, non-employee directors received a $27,500 annual retainer, feepayable quarterly. The Chair of $6,250 per quarterthe board received an additional annual retainer of $20,000, payable quarterly. The Chairs of the Audit, Compensation, and $1,250 for each regular board meeting attended in person. Each non-employee director was paid aNominating and Corporate Governance Committees received an additional annual retainer, feepayable quarterly, of $13,400, $7,500 and $5,000, per quarter and $1,250 for each regular board meeting attended in person.respectively. Directors were entitled toreceived $600 for each Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee meeting attended. Committee Chairs did not receive committee meeting fees. The Chair of the Audit Committee was entitled to a retainer of $1,250 per quarter and $600 for each meeting. The Chairs of the Compensation and Nominating and Corporate Governance Committees were entitled to a retainer of $1,000 per quarter and $250 for each meeting. The Committee approved a grant of 400 restricted stock units in 2017valued at $20,000 with a one-year vesting period for all non-executivenon-employee directors.
Non-employee directors who also served on the board of directors of MidWestOne Bank received an annual retainer fee of $10,000, payable quarterly.
None of the directors receives any compensation or payment in connection with his or her service as a director other than compensation received by the CompanyMidWestOne Financial as set forth below.
The following table shows compensation information for MidWestOne Financial’s directors who received director fees in 2017.2020.
Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | Option Awards ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||||||||||||||||
| Larry D. Albert | $ | 36,244 | $ | 20,000 | — | $ | — | 10,631 | $ | 66,875 | ||||||||||||||||||||||||||||
| Richard R. Donohue | 43,944 | 20,000 | — | 8,922 | 11,831 | 84,697 | ||||||||||||||||||||||||||||||||
| Janet E. Godwin | 30,844 | 20,000 | — | — | 9,431 | 60,275 | ||||||||||||||||||||||||||||||||
| Douglas H. Greeff | 31,575 | 20,000 | — | — | — | 51,575 | ||||||||||||||||||||||||||||||||
| Richard J. Hartig | 31,444 | 20,000 | — | — | 9,431 | 60,875 | ||||||||||||||||||||||||||||||||
| Jennifer L. Hauschildt | 30,844 | 20,000 | — | — | 10,431 | 61,275 | ||||||||||||||||||||||||||||||||
| Matthew J. Hayek | 31,444 | 20,000 | — | — | 12,631 | 64,075 | ||||||||||||||||||||||||||||||||
| Nathaniel J. Kaeding | 32,394 | 20,000 | — | — | 8,631 | 61,025 | ||||||||||||||||||||||||||||||||
| Tracy S. McCormick | 50,969 | 20,000 | — | — | 11,231 | 82,200 | ||||||||||||||||||||||||||||||||
| Kevin W. Monson | 50,644 | 20,000 | — | — | 15,181 | 85,825 | ||||||||||||||||||||||||||||||||
| Ruth E. Stanoch | 38,044 | 20,000 | — | — | 9,431 | 67,475 | ||||||||||||||||||||||||||||||||
| Douglas K. True | 44,044 | 20,000 | — | — | 9,431 | 73,475 | ||||||||||||||||||||||||||||||||
| Kurt R. Weise | 27,844 | 20,000 | — | — | 12,031 | 59,875 | ||||||||||||||||||||||||||||||||
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Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | Option Awards ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||
| Richard R. Donohue | $ | 42,800 | $ | 14,172 | $ | — | $ | 7,931 | $ | 10,600 | $ | 75,503 | ||||||||||||
| Michael A. Hatch | 27,200 | 14,172 | — | — | — | 41,372 | ||||||||||||||||||
| Tracy S. McCormick | 38,900 | 14,172 | — | — | 9,250 | 62,322 | ||||||||||||||||||
| Kevin W. Monson | 31,500 | 14,172 | — | — | 11,650 | 57,322 | ||||||||||||||||||
| John M. Morrison | 24,750 | 14,172 | — | — | — | 38,922 | ||||||||||||||||||
William N. Ruud(5) | 9,417 | — | — | — | — | 9,417 | ||||||||||||||||||
| Richard J. Schwab | 39,850 | 14,172 | — | — | 12,050 | 66,072 | ||||||||||||||||||
| Ruth E. Stanoch | 32,450 | 14,172 | — | — | 9,400 | 56,022 | ||||||||||||||||||
Douglas K. True(6) | 22,233 | 14,172 | — | — | 5,850 | 42,255 | ||||||||||||||||||
Kurt R. Weise(7) | — | 14,172 | — | — | — | 14,172 | ||||||||||||||||||
| Stephen L. West | 26,750 | 14,172 | — | — | 8,250 | 49,172 | ||||||||||||||||||
| R. Scott Zaiser | 29,150 | 14,172 | — | 2,209 | 9,850 | 55,381 | ||||||||||||||||||
(2) The amounts set forth in the “Stock Awards” column reflect the grant date fair value of restricted stock units awarded on May 15, 2020 valued in accordance with FASB ASC Topic 718. (3)Amounts reported include above-market interest, as determined for purposes of proxy disclosure rules only, accrued under the Director Deferred Fee Plan during the year. (4)These amounts include fees, if any, for service on the board of directors of MidWestOne Bank. |
The table below summarizes each non-employee director’s outstanding equity awards as of December 31, 2017.
2020.
| Option Awards | ||||||||||||||||||||||||
| Name | Stock Awards(1) | Exercisable | Unexercisable | |||||||||||||||||||||
| Larry D. Albert | 1,258 | — | — | |||||||||||||||||||||
| Richard R. Donohue | — | — | ||||||||||||||||||||||
Janet E. Godwin | 1,258 | — | — | |||||||||||||||||||||
Douglas H. Greeff | 1,258 | — | — | |||||||||||||||||||||
| — | — | |||||||||||||||||||||||
Jennifer L. Hauschildt | 1,258 | — | — | |||||||||||||||||||||
Matthew J. Hayek | 1,258 | — | — | |||||||||||||||||||||
| Nathaniel J. Kaeding | 1,258 | — | — | |||||||||||||||||||||
| Tracy S. McCormick | — | — | ||||||||||||||||||||||
| Kevin W. Monson | — | — | ||||||||||||||||||||||
| Ruth E. Stanoch | — | — | ||||||||||||||||||||||
| Douglas K. True | — | — | ||||||||||||||||||||||
Kurt R. Weise | — | — | ||||||||||||||||||||||
(1) Amounts include dividends paid on MidWestOne restricted stock units credited to a director's stock unit account in the form of additional units.
Compensation Committee Interlocks and Insider Participation
As discussed earlier, during the early part of 2017, the Compensation Committee of MidWestOne Financial through the time of our annual shareholder meeting was comprised of Messrs. West (Chairperson), Hatch, Ruud, and Ms. McCormick. Mr. Ruud separated from board service in April 2017. As of the annual meeting in April 2017, Ms. McCormick was elected Chairperson
.
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PROPOSAL 2:
APPROVAL, ON A NON-BINDING, ADVISORY BASIS, OF EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, MidWestOne Financial is conducting a separate shareholder advisory vote to approve the compensation of the registrant’sits named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules, commonly referred to as a “say-on-pay” vote. MidWestOne Financial currently conducts the “say-on-pay” vote every year.
As described in more detail in the CD&A section of this proxy statement, the overall objectives of MidWestOne Financial’s compensation programs have been to align executive officer compensation with the success of meeting long-term strategic operating and financial goals. Shareholders are urged to read carefully the CD&A section of this proxy statement, as well as the Summary Compensation Table and other related compensation tables and narrative disclosure that describe the compensation of our NEOs in 2017.2020. The Compensation Committee and our board of directors believe that the policies and procedures articulated in the CD&A section are effective in implementing our compensation philosophy and achieving our goals, and that the compensation of our NEOs in 20172020 reflects and supports these compensation policies and procedures.
The following resolution is submitted for shareholder approval:
“RESOLVED, that MidWestOne Financial Group, Inc.’s shareholders approve, on an advisory basis, the compensation of the Company’s named executive officers, as described in the section captioned ‘Compensation Discussion and Analysis’ and the tabular disclosure and narrative discussion regarding named executive officer compensation under ‘Executive Compensation’ contained in the Company’s proxy statement dated March 9, 2018.16, 2021.”
Approval of this resolution requires that the number of votes cast in favor of the resolution at the annual meetingAnnual Meeting exceed the number of votes cast against it. While this say-on-pay vote is required as provided in Section 14A of the Exchange Act, it is not binding on the Compensation Committee or our board of directors and may not be construed as overruling any decision by the Compensation Committee or our board. However, the Compensation Committee will take into account the outcome of the vote when considering future compensation arrangements.
The board of directors recommends shareholders vote to approve the overall compensation of our NEOs, as described in this proxy statement, by voting “for” this proposal. Proxies properly submitted will be voted “for” this proposal unless shareholders specify otherwise.
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PROPOSAL 3:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders are also being asked to adopt a resolution to ratify the appointment of RSM US LLP (formerly McGladrey LLP through October 25, 2015) as our independent registered public accounting firm for the year ending December 31, 2018.2021. If the appointment of RSM US LLP is not ratified by shareholders, the matter of the appointment of an independent registered public accounting firm will be considered by the Audit Committee and our board of directors. A representative from RSM US LLP is expected to be present atattend the annualAnnual Meeting via online virtual meeting webcast and will have an opportunity to make a statement if he or she so desires, as well as to respond to appropriate questions that may be asked by shareholders.
The board of directors recommends that shareholders vote “for” the proposal to ratify the appointment of RSM US LLP as our independent auditors for the year ending December 31, 2018.2021. Proxies properly submitted will be voted “for” this proposal unless shareholders specify otherwise.
Accountant Fees
During the period covering the fiscal years ended December 31, 20172020 and 2016,2019, RSM US LLP performed the following professional services for the Company for which we paid the following amounts.
| 2020 | 2019 | |||||||||||||||||||
Audit Fees(1) | $ | 633,200 | $ | 714,180 | ||||||||||||||||
Audit-Related Fees(2) | 19,425 | 21,577 | ||||||||||||||||||
Tax Fees(3) | 24,612 | 61,438 | ||||||||||||||||||
All Other Fees(4) | 2,500 | 5,800 | ||||||||||||||||||
| Total Fees | $ | 679,737 | $ | 802,995 | ||||||||||||||||
| (1) | Audit fees consist of fees for professional services provided for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, Annual Report on Form 10-K and related proxy statement and services normally provided by the independent auditor in connection with statutory and regulatory filings or engagements. | |||||||||||||||||||
| (2) | Audit-related fees represent assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements. | |||||||||||||||||||
| (3) | Tax fees represent fees for professional services related to tax compliance, preparation of original federal and state tax returns, claims for refunds, tax advice, and tax planning services. | |||||||||||||||||||
| (4) | The aggregate other fees billed to the Company by RSM US LLP for the fiscal year ended December 31, 2020 related to agreed upon procedures. | |||||||||||||||||||
| 2017 | 2016 | ||||||||
Audit Fees(1) | $ | 439,342 | $ | 445,000 | |||||
Audit-Related Fees(2) | 119,251 | 30,853 | |||||||
Tax Fees(3) | 116,099 | 164,304 | |||||||
All Other Fees(4) | 1,500 | 27,255 | |||||||
| Total Fees | $ | 676,192 | $ | 667,412 | |||||
| (1) | Audit fees consist of fees for professional services provided for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, Annual Report on Form 10-K and related proxy statement and services normally provided by the independent auditor in connection with statutory and regulatory filings or engagements. | ||||||||
| (2) | Audit-related fees represent assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements. | ||||||||
| (3) | Tax fees represent fees for professional services related to tax compliance, preparation of original federal and state tax returns, claims for refunds, tax advice, and tax planning services. | ||||||||
| (4) | The aggregate other fees billed to the Company by RSM US LLP for the fiscal year ended December 31, 2017 related to preparation of the Company’s 2016 Form 5500, while the fees billed for the fiscal year ended December 31, 2016 related to preparation of the Company’s 2015 Form 5500 and a cost segregation study. | ||||||||
Audit Committee Pre-Approval Policy
Among other things, the Audit Committee is responsible for appointing, setting compensation for and overseeing the work of the independent registered public accounting firm. The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by its independent auditors, and all such services provided in 20162019 and 20172020 were approved. These services include audit and audit-related services, tax services, and other services. The Audit Committee may also pre-approve particular services on a case-by-case basis that the committeeit had not already specifically approved.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our common stock at February 13, 2018,20, 2021, by each director, and nominee, as of February 13, 2018, by eachand NEO, and by all directors and executive officers of MidWestOne Financial as a group. Beneficial ownership has been determined for this purpose in accordance with Rule 13d-3 under the Exchange Act, under which a person is deemed to be the beneficial owner of securities if he or she has or shares voting power or investment power in respect of such securities or has the right to acquire beneficial ownership of securities within 60 days of February 13, 2018.20, 2021. For purposes of calculating each person’s percentage ownership, common stock issuable pursuant to options exercisable and restricted stock unit awards that are unvested but will settle within 60 days are included as outstanding and beneficially owned for that person or group, but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. The address of each person included in the table is 102 South Clinton Street, Iowa City, Iowa 52240.
Name of Individual or Number of Individuals in Group | Amount and Nature of Beneficial Ownership (1,2) | Percent of Class | Name of Individual or Number of Individuals in Group | Amount and Nature of Beneficial Ownership (1) | Percent of Class(2) | |||||||||||||||
| Directors and Nominees: | Directors and Nominees: | |||||||||||||||||||
| Charles N. Funk | 96,343 | (3) | * | Charles N. Funk | 115,629 | (3) | * | |||||||||||||
| Larry D. Albert | Larry D. Albert | 10,747 | (4) | * | ||||||||||||||||
| Richard R. Donohue | 33,874 | (4) | * | Richard R. Donohue | 36,053 | (5) | * | |||||||||||||
| Michael A. Hatch | 4,292 | (5) | * | |||||||||||||||||
| Janet E. Godwin | Janet E. Godwin | 1,762 | * | |||||||||||||||||
| Douglas H. Greeff | Douglas H. Greeff | 3,940 | (6) | * | ||||||||||||||||
| Richard J. Hartig | Richard J. Hartig | 2,554 | (7) | * | ||||||||||||||||
| Jennifer L. Hauschildt | Jennifer L. Hauschildt | 1,234 | (8) | * | ||||||||||||||||
| Matthew J. Hayek | Matthew J. Hayek | 2,657 | * | |||||||||||||||||
| Nathaniel J. Kaeding | — | * | Nathaniel J. Kaeding | 1,316 | (9) | * | ||||||||||||||
| Tracy S. McCormick | 83,504 | (6) | * | Tracy S. McCormick | 84,784 | * | ||||||||||||||
| Kevin W. Monson | 80,111 | * | Kevin W. Monson | 86,585 | * | |||||||||||||||
| John M. Morrison | 431,393 | (7) | 3.5 | % | ||||||||||||||||
| Richard J. Schwab | 4,717 | (8) | * | |||||||||||||||||
| Ruth E. Stanoch | 2,200 | * | Ruth E. Stanoch | 3,480 | * | |||||||||||||||
| Douglas K. True | 900 | * | Douglas K. True | 4,580 | (10) | * | ||||||||||||||
| Kurt R. Weise | 31,104 | (9) | * | Kurt R. Weise | 26,144 | (11) | * | |||||||||||||
| Stephen L. West | 33,793 | (10) | * | |||||||||||||||||
| R. Scott Zaiser | 11,547 | (11) | * | |||||||||||||||||
| Other Named Executive Officers | Other Named Executive Officers | |||||||||||||||||||
| Len D. Devaisher | Len D. Devaisher | 2,000 | (12) | * | ||||||||||||||||
| Barry S. Ray | Barry S. Ray | 6,053 | (13) | * | ||||||||||||||||
| James M. Cantrell | 9,642 | (12) | * | James M. Cantrell | 14,578 | (14) | * | |||||||||||||
| Kevin E. Kramer | 2,083 | (13) | * | |||||||||||||||||
| Kent L. Jehle | 32,384 | (14) | * | |||||||||||||||||
| Mitchell W. Cook | 20,744 | (15) | * | |||||||||||||||||
| Katie A. Lorenson | 1,063 | (16) | * | |||||||||||||||||
| All directors and executive officers as a group (18 persons) | 879,694 | 7.2 | % | |||||||||||||||||
| David E. Lindstrom | David E. Lindstrom | 2,629 | (15) | * | ||||||||||||||||
| Gary L. Sims | Gary L. Sims | 2,558 | (16) | * | ||||||||||||||||
| All directors, nominees and executive officers as a group (19 persons) | All directors, nominees and executive officers as a group (19 persons) | 409,283 | 2.6 | % | ||||||||||||||||
* Indicates that the individual or entity owns less than one percent of MidWestOne Financial’s common stock.
(1)The information contained in this column is based upon information furnished to us by the persons named above and as shown on our transfer records. The nature of beneficial ownership for shares shown in this column, unless otherwise noted, represents sole voting and investment power.
(2)The total number of shares of common stock issued and outstanding on February 20, 2021, was 15,998,898.
(3)Includes 5,256 shares allocated to his ESOP account. Also includes 110,373 shares for which Mr. Funk shares voting and investment power with his spouse.
(4)Includes 10,747 shares for which Mr. Albert shares voting and investment power with his spouse.
(5)Includes 20,668 shares owned by Mr. Donohue’s spouse and 400 shares held in an IRA for Mr. Donohue.
(6)Includes 3,500 shares held in a brokerage margin account for Mr. Greeff.
(7)Includes 100 shares held in his spouse’s trust and 2,000 shares held in his personal trust.
(8)Includes 785 shares for which Ms. Hauschildt shares voting and investment power with her spouse.
(9)Includes 408 shares held in an IRA for Mr. Kaeding.
(10)Includes 3,300 shares for which Mr. True shares voting and investment power with his spouse.
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(11)Includes 11,500 shares owned by Mr. Weise’s spouse, 11,500 shares held in his revocable trust, and 519 shares allocated to his ESOP account.
(12)Includes 2,000 shares held in his IRA.
(13)Includes 196 shares allocated to his ESOP account.
(14)Includes 500 shares held in his IRA and 2,967 shares allocated to his ESOP account. Also includes 11,111 shares for which Mr. Cantrell shares voting and investment power with his spouse.
(15)Includes 154 shares allocated to his ESOP account.
(16)Includes 155 shares allocated to his ESOP account.
Other Beneficial Owners
The following table sets forth certain information on each person known to the Company to be the beneficial owner of more than 5% of the Company's common stock.
| Name and Address | Amount and Nature of Beneficial Ownership | Percent of Class(1) | ||||||||||||
| John S. Koza 209 Lexington Avenue Iowa City, Iowa 52246 | 822,400 | (2) | 5.1 | % | ||||||||||
| BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 1,090,563 | (3) | 6.8 | % | ||||||||||
(1)Based on the total number of shares of common stock issued and outstanding on February 20, 2021, of 15,998,898.
(2)Based on a Schedule 13G filed with the SEC on February 2, 2018. Excludes 60,325 shares owned by Mr. Koza’s spouse, over which Mr. Koza disclaims beneficial ownership. Includes 202,840 shares owned by Mr. Koza individually, and 619,560 shares held in trusts over which Mr. Koza holds sole investment and voting power. Mr. Koza retired from the Board in April 2014 and now serves as Director Emeritus.
(3)Based on a Schedule 13G filed with the SEC on February 2, 2021.
| Name and Address | Amount and Nature of Beneficial Ownership | Percent of Class(1) | ||||
John S. Koza 209 Lexington Avenue Iowa City, Iowa 52246 | 882,725 | (2) | 7.2 | % | ||
Royce & Associates, LP 745 Fifth Avenue New York, New York 10151 | 654,571 | (3) | 5.4 | % | ||
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Exchange Act requires that our executive officers, directors and persons who own more than 10% of our common stock file reports of ownership and changes in ownership with the SEC. They are also required to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of Section 16(a) forms filed with the copies of such formsSEC and, if appropriate, representations made to us by any reporting person concerning whether a Form 5 was required to be filed for 2017,2020, we are not aware that any of our directors, executive officers or 10% shareholders failed to comply with the filing requirements of Section 16(a) during 2017.2020, except as follows:
| Name | Position Held | Late or Unfiled Report | ||||||||||||
| Charles N. Funk | Director, Chief Executive Officer | One Form 4 filed late regarding one transaction | ||||||||||||
CERTAIN RELATIONSHIPS AND RELATED-PERSON TRANSACTIONS
Our directors and executive officers and their associates were customers of, and had transactions with, MidWestOne Financial and our subsidiaries in the ordinary course of business during 2017.2020. Additional transactions may be expected to take place in the future. All outstanding loans, commitments to loan, transactions in repurchase agreements, certificates of deposit and depository relationships were in the ordinary course of business and were made on substantially the same terms, including interest rates, collateral and repayment terms on the extension of credit, as those prevailing at the time for comparable transactions with other persons not related to MidWestOne Financial or MidWestOne Bank, and did not involve more than the normal risk of collectibility or present other unfavorable features. All such loans are approved by MidWestOne Bank’s board of directors in accordance with bank regulatory requirements. Additionally, the Audit Committee considers other non-lending transactions between a director and MidWestOne Financial, including its subsidiaries, to ensure that such transactions do not affect a director’s independence.
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Additionally, pursuant to the Audit Committee’s written charter, the committee evaluates and pre-approves any non‑lending, material transaction between MidWestOne Financial and any director or officer. The charter does not provide any thresholds as to when a proposed transaction needs to be pre-approved, but the committee evaluates those proposed transactions that may affect a director’s independence (based on independence standards set forth in the Nasdaq listing rules and by the SEC) or create a perception that the transaction was not fair to MidWestOne Financial or not done at arm’s length. Generally, transactions which would not require disclosure in our proxy statement under SEC rules and regulations (without regard to the amount involved) do not require the committee’s pre-approval. A director may not participate
in any discussion or approval by the committee of any related-party transaction with respect to which he or she is a related party, but must provide to the committee all material information reasonably requested concerning the transaction.
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth the following information as of December 31, 20172020 for: (i) all equity compensation plans previously approved by our shareholders; and (ii) all equity compensation plans not previously approved by our shareholders:
(a) the number of securities to be issued upon the exercise of outstanding options, warrants and rights;
(b) the weighted-average exercise price of such outstanding options, warrants and rights; and
(c) other than securities to be issued upon the exercise of such outstanding options, warrants and rights, the number of securities remaining available for future issuance under the plans.
Additional information regarding stock option plans is presented in Note 15 - Stock Compensation Plans in the notes to our consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2017.2020.
Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||||||||||||
| (a) | (b) | (c) | ||||||||||||||||||
| Equity compensation plans approved by securityholders | 124,270 | $ | — | 328,800 | ||||||||||||||||
| Equity compensation plans not approved by securityholders | — | — | — | |||||||||||||||||
| Total | 124,270 | $ | — | 328,800 | ||||||||||||||||
Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||
| (a) | (b) | (c) | ||||||||
| Equity compensation plans approved by securityholders | 77,900 | $ | 13.98 | 492,400 | ||||||
| Equity compensation plans not approved by securityholders | — | — | — | |||||||
| Total | 77,900 | $ | 13.98 | 492,400 | ||||||
SHAREHOLDER COMMUNICATIONS WITH THE BOARD AND
NOMINATION AND PROPOSAL PROCEDURES
General Communications with the Board
Shareholders may contact MidWestOne Financial’s board of directors by contacting the Corporate Secretary at MidWestOne Financial Group, Inc., 102 South Clinton Street, P.O. Box 1700, Iowa City, Iowa 52244-1700 or (319) 356-5800. All communications will be forwarded directly to either the ChairmanChair of the Board, the chairmanChair of the Audit Committee or the Chief Executive Officer, as appropriate, unless they are primarily commercial in nature or related to an improper or irrelevant topic.
Nominations for Director
In accordance with our bylaws, a shareholder may nominate a director for election to the board at an annual meeting of shareholders by delivering written notice of the proposed director nomination to our Corporate Secretary, at the above address, not less than 60 days nor more than 90 days in advance of the first anniversary date (month and day) of the previous year’s annual meeting (which in the case of the 20192022 annual meeting of shareholders, will be no earlier than January 19, 2019,29, 2022, and no later than February 18, 2019)28, 2022). Such nominations must include the following information with respect to each nominee: name; age; business and residential address; principal occupation or employment; the class and number of shares of the Company’s stock which are beneficially owned by him or her; and any other information relating to him or her that would be required to be
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disclosed on Schedule 13D pursuant to regulations under the Exchange Act and pursuant to Regulation 14A under the Exchange Act. In addition, the following information about the shareholder making the nomination must be included: name and address; name and principal address of any other beneficial shareholders known by him or her to support the shareholder’s nominee; and the class and number of shares of MidWestOneMidWestOne Financial’s stock which are beneficially owned by all such persons. Our board of directors may reject any nomination by a shareholder, and the proposed nomination will not be accepted if presented at the shareholder meeting, if such nomination is not timely made in accordance with the foregoing requirements.
Nominations properly made in compliance with this paragraph may be brought before the annual meeting, but will not necessarily be included in our proxy statement.
Other Shareholder Proposals
In accordance with our bylaws, a shareholder may propose other business to be considered at an annual meeting of shareholders by delivering written notice of the proposed business to our Corporate Secretary, at the above address, not less than 60 days nor more than 90 days in advance of the first anniversary date (month and day) of the previous year’s annual meeting (which in the case of the 20192022 annual meeting of shareholders, will be no earlier than January 19, 2019,29, 2022, and no later than February 18, 2019)28, 2022). Such notice to the Corporate Secretary must include: a brief description of the business desired to be brought before the annual meeting; the reasons for conducting such business at the annual meeting; any material interest in such business of such shareholder; and the beneficial owner, if any, on whose behalf the proposal is made. In addition, the following information about the shareholder making the proposal must be included: name and address of the shareholder and any other beneficial owner on whose behalf the proposal is brought; and the class and number of shares of MidWestOneMidWestOne Financial’s capital stock that are owned beneficially and of record by all such persons. Our board of directors may reject any proposal by a shareholder, and the proposal will not be accepted if presented at the shareholder meeting, if such proposal is not timely made in accordance with the foregoing requirements. Proposals properly made in compliance with this paragraph may be brought before the annual meeting, but will not necessarily be included in our proxy statement.
For all other shareholder proposals to be considered for inclusion in our proxy statement and form of proxy relating to our annual meeting of shareholders to be held in 2019,2022, shareholder proposals must be received by our Corporate Secretary, at the above address, no later than 120 calendar days before the first anniversary date that our proxy statement was releasedmade available to shareholders in connection with the 20182021 annual shareholdersshareholders’ meeting (which will be November 9, 2018)16, 2021), and must otherwise comply with the rules and regulations set forth by the SEC.SEC, including Rule 14a-8 adopted under the Exchange Act.
ANNUAL REPORT AND FINANCIAL STATEMENTS; OTHER INFORMATION
A copy of our Annual Report on Form 10-K for the year ended December 31, 2017,2020, which includes our financial statements as of and for the year ended December 31, 2017,2020, preceded or accompanies this proxy statement.
If you would like a copy of our corporate governance guidelines, board committee charters or our Code of Business Conduct and Ethics, we will send you one without charge. Please write to:
Mr. Kenneth R. Urmie
Corporate Secretary
MidWestOne Financial Group, Inc.
102 South Clinton St.
P.O. Box 1700
Iowa City, Iowa 52244-1700
* * * * *
ALL SHAREHOLDERS ARE URGED TO SIGN, DATE AND MAIL THEIR PROXIES, OR VOTE BY TELEPHONE OR VOTE BY INTERNET, AS DESCRIBED IN THE NOTICE, PROMPTLY.
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