NOTICE OF 20162021 ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
FIRST BUSINESS FINANCIAL SERVICES, INC.
401 Charmany Drive
Madison, WI 53719
March 9, 2021
Dear Fellow Shareholder:
You are cordially invited to attend the 2016 annual meeting2021 Annual Meeting of shareholdersShareholders (“Annual Meeting”) of First Business Financial Services, Inc. (the “Company”), which on Friday, April 30, 2021 at 10:00 a.m. CDT.To provide expanded access, improved communication, and cost savings for our shareholders and the Company, we are holding the Annual Meeting via a virtual meeting format. We believe that hosting a virtual meeting will enable greater shareholder attendance and participation from any geographic location.There is no physical location for the meeting, but you will be held at 4:00 P.M.able to attend and participate in the Annual Meeting online, vote your shares electronically, and submit your questions prior to and during the meeting by visiting www.meetingcenter.io/269930206, local time, on Monday, May 16, 2016 atentering your control number and the Monona Terrace Community and Convention Center located at One John Nolen Drive, Madison, Wisconsin. Atpassword, FBIZ2021.
Although 2020 presented unprecedented challenges related to the annual meeting, we will reviewCOVID-19 pandemic, the Company’s activities during the past yearemployees dedicated themselves to supporting each other and shareholders will be given an opportunityour clients in exceptional ways to address questionsdeliver for our clients, our communities, and our shareholders.We encourage you to the Company’s management.
COVID-19 pandemic.
The Board of Directors of the Company recommends that you vote your shares “FOR”“FOR” all the nominees listed in proposalone, and “FOR” proposals two, three, and three.four.
Your continued support is appreciated and we hope you will attend the annual meeting.Annual Meeting. Whether or not you are personally present,attend, it is very important that your shares are represented at the meeting. Accordingly, please vote your shares by following the instructions on the Notice. Notice of Annual Meeting of Shareholders. Your vote is important. Please join us and the Board of Directors in supporting these proposals.
Sincerely,
 |  | ||||
| Jerry Kilcoyne | Corey Chambas | ||||
| Board Chair | President and Chief Executive Officer | ||||
FIRST BUSINESS FINANCIAL SERVICES, INC.
NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS
 | Date and Time |  | Place | ||||||||
| Friday, April 30, 2021 | Virtual Meeting | ||||||||||
| 10:00 a.m. CDT | www.meetingcenter.io/269930206 | ||||||||||
| Password: FBIZ2021 | |||||||||||
NOTICE IS HEREBY GIVENthat the annual meetingAnnual Meeting of shareholders of First Business Financial Services, Inc. (the “Company”Shareholders (“Annual Meeting”) will be held at 10:00 a.m., Central Daylight Saving Time (“CDT”) on Monday, May 16, 2016, at 4:00 P.M., local time, atFriday, April 30, 2021. There is no physical location for this meeting, but shareholders may participate in the Monona Terrace Communityvirtual meeting by logging in using the information included above. Additional instructions on how to attend the Annual Meeting follow this notice. Shareholders as of the record date, can participate online, vote shares electronically, and Convention Center located at One John Nolen Drive, Madison, Wisconsin 53703, forsubmit questions prior to and during the following purposes:meeting.
Matters to be Voted on:
1.To elect threethe four Class III directorsII director nominees named in the proxy statement, each to hold office until the 2019 annual meeting2024 Annual Meeting of shareholdersShareholders and until their successors are duly elected and qualified.
2.To act upon a proposal to approve an amendment to the First Business Financial Services, Inc. 2019 Equity Incentive Plan.
If you were a shareholder at the close of business on March 16, 2016 has been fixed as the record date for the determination of shareholders entitled to notice of, andFebruary 26, 2021, you are eligible to vote at the meeting. In the event there2021 Annual Meeting.
Your vote is an insufficient number of votes for a quorumimportant, no matter how large or to approve any of the proposalssmall your holdings may be:
To assure your representation at the time of the annual meeting, the meeting may be adjourned or postponed in order to permit the further solicitation of proxies.
You may vote your shares by following the instructions included within this proxy statement and on the Notice of Internet Availability of Proxy Materials or in person atyou may vote online during the 2016 annual meeting of shareholders. On or about April 15, 2016, we will also mail a proxy card to all registered shareholders, but not the proxy materials, that will allow voting of shares by completing and returning the proxy card. Annual Meeting.You may revoke your proxy and vote your shares in person at the meetingonline or by using any of the voting options provided in accordance with the instructions provided. Please review the Notice of Internet Availability of Proxy Materials and follow the directions carefully in exercising your vote.
By Order of the Board of Directors
Important Information About Voting and Annual Meeting Participation
Voting Your vote is important, no matter how largeShares
REGISTERED Shareholders:
If you are a registered holder, meaning that you hold your shares directly through our transfer agent, Computershare (not through a bank, broker, or small your holdingsother nominee), you may be. To assure your representation at the meeting, please vote by submitting your proxy:
| Online Going to www.envisionreports.com/FBIZ and following the online instructions. You will need information from your Notice of Internet Availability or proxy card, as applicable, to submit your proxy | ||||
 | By Phone Calling the phone number located on the top of your proxy card and following the voice prompts. You will need information from your proxy card to submit your proxy | ||||
 | Mail(if you received your proxy materials by mail) Marking your vote on your proxy card, signing your name exactly as it appears on your proxy card, dating your proxy card, and returning it in the envelope provided | ||||
BENEFICIAL Shareholders:
If you are a Beneficial shareholder, meaning that you hold shares through an intermediary, such as a bank or broker (commonly referred to as holding shares in “street name”), you should have received these proxy materials from your bank or broker by mail or email with information on how to submit your voting instructions.
ANNUAL MEETING REGISTRATION AND PARTICIPATION
Registering to Attend the Annual Meeting
REGISTERED Shareholders (if your shares are held directly through our transfer agent, Computershare): As a registered shareholder, you do not need to register to attend the Annual Meeting virtually on the Internet. Please follow the instructions on the Notice or Proxy Card that you received.
BENEFICIAL Shareholders(ADVANCE MEETING REGISTRATION REQUIREDno later than 5:00 p.m. CDT on Monday, April 26, 2021):If you hold shares through an intermediary, such as a bank or broker, and want to attend the Annual Meeting online with the ability to ask a question and/or vote, you have two options to submit proof of Internet Availabilityyour proxy power (“Legal Proxy”) from your broker or bank reflecting your First Business Financial Services, Inc. holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. CDT on Monday, April 26, 2021. Requests for registration should be directed to Computershare at the following:
| By email: Forward the email from your broker, or attach an image of your Legal Proxy, to: legalproxy@computershare.com | ||||
| By mail (must be received no later than Monday, April 26, 2021): Computershare First Business Financial Services, Inc. Legal Proxy P.O. Box 43001 Providence, RI 02940-3001 | ||||
You will receive a confirmation of Proxy Materials.your registration by email after Computershare receives your registration materials.
Attending the Annual Meeting
To participate in the Annual Meeting, you will need to review the information included on your Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders, on your proxy card or on the instructions that accompanied your proxy materials. Beneficial shareholders that have pre-registered in advance and Registered shareholders will be able to Be Heldattend the Annual Meeting online by visiting www.meetingcenter.io/269930206, vote their shares, and submit questions during the Annual Meeting.
The online meeting will begin promptly at 10:00 a.m. CDT on May 16, 2016: CopiesFriday, April 30, 2021.
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 up-to-date version of this Notice, Proxy Statementapplicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. If you encounter technical difficulties with the virtual meeting platform on the day of the Annual Meeting, a link on the meeting page will provide further assistance should you need it or you may call 1-888-724-2416.
Submitting Questions Prior to and During the Annual Meeting
Beginning on March 9, 2021, Beneficial shareholders that have pre-registered in advance of the Annual Meeting and Registered shareholders may submit questions by going to the virtual meeting site at www.meetingcenter.io/269930206, entering your control number and the Company’s Annual Reportpassword, FBIZ2021. Once logged in, click on Form 10-K for the fiscal year ended December 31, 2015messages icon at the top of the screen to type in your question, then click the arrow icon on the right to submit.
Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. The meeting is not to be used as a forum to present personal matters, or general economic, political or other views that are not directly related to the business of First Business Financial Services, Inc. and the matters properly before the meeting, and therefore questions on such matters will not be answered. Any questions pertinent to the meeting matters that cannot be answered during the meeting due to time constraints will be answered and posted online at ir.firstbusiness.bank/presentations. The questions and answers will be available at www.envisionreports.com/FBIZ.as soon as practical after the meeting and will remain available until one week after posting.
Assessment of Compensation Risk | |||||
COMPENSATION COMMITTEE REPORT | |||||
Compensation Committee Interlocks and Insider Participation | |||||
EXECUTIVE COMPENSATION | |||||
Summary Compensation Table | |||||
Grant of Plan-Based Awards | |||||
Outstanding Equity Awards at | |||||
Corey A. Chambas | |||||
Other Named Executive Officers | |||||
Tax Deductibility of Compensation | |||||
RELATED PARTY TRANSACTIONS | |||||
REPORT OF THE AUDIT COMMITTEE | |||||
MISCELLANEOUS | |||||
Independent Registered Public Accounting Firm | |||||
Audit Committee Pre-Approval Policy | |||||
OTHER MATTERS | |||||
FIRST BUSINESS FINANCIAL SERVICES, INC.
401 Charmany Drive
Madison, Wisconsin 53719
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 16, 2016April 30, 2021
SOLICITATION OF PROXY, REVOCABILITY AND VOTING OF PROXIES
This proxy statement is being furnished to shareholders by the Board of Directors (the “Board”) of First Business Financial Services, Inc. (the “Company”) beginning on or about April 1, 2016March 9, 2021 in connection with a solicitation of proxies by the Board for use at the annual meetingAnnual Meeting of shareholdersShareholders to be held on Monday, May 16, 2016,Friday, April 30, 2021, at 4:10:00 P.M.A.M., local time, at the Monona Terrace Community and Convention Center at One John Nolen Drive, Madison, Wisconsin 53703,CDT , via a virtual online meeting format, and all adjournments or postponements thereof (the “Annual Meeting”) for the purposes set forth in the Notice of Annual Meeting of Shareholders. InstructionsIn accordance with rules and regulations of the Securities and Exchange Commission (the “SEC”), we furnish proxy materials, which include this proxy statement, the Notice of Annual Meeting and our Annual Report on Form 10-K for voting your shares are includedfiscal year ended December 31, 2020, to our shareholders by making such materials available on the Internet unless otherwise instructed by the shareholder. The Notice of Internet Availability of Proxy Materials (the “Notice”).
Voting your shares pursuant toin advance of the instructions contained on the NoticeAnnual Meeting will not affect a shareholder’syour right to attend and cast your vote online during the Annual Meeting and to vote in person.Meeting. However, when you vote pursuant to the proxy card or one of the methods set forth in the Notice, you appoint the proxy holder as your representative at the Annual Meeting. The proxy holder will vote your shares as you instruct, thereby ensuring that your shares will be voted whether or not you attend the Annual Meeting. PresenceAttendance at the Annual Meeting of a shareholder who has appointed a proxy does not in itself revoke a proxy. Any shareholder appointing a proxy may revoke that appointment at any time before it is exercised by: (i) giving notice thereof to the Company in writing or atduring the Annual Meeting; (ii) signing another proxy, if you voted by mailing in a proxy card, with a later date and returning it to the Company; (iii) timely submitting another proxy via the telephone or Internet, if that is the method you used to submit your original proxy; or (iv) voting in person atonline during the Annual Meeting. Even if you plan to attend the Annual Meeting online, we ask that you instruct the proxies how to vote your shares in advance of the Annual Meeting in case your plans change.
If you appointed the proxies to vote your shares and an issue comes up for a vote at the Annual Meeting that is not identified in the proxy materials, the proxy holder will vote your shares, pursuant to your proxy, in accordance with his or her judgment.
If you sign and return a proxy card or vote over the Internet or by telephone without giving specific voting instructions, the shares represented by your proxy will be voted “FOR” the threefour persons nominated for election as
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directors referred to in this proxy statement, "FOR" the approval of the proposed amendment to the 2019 Equity Incentive Plan, “FOR” the approval of the non-binding, advisory proposal on the compensation of named executive officers, which is referred to as a “say-on-pay” proposal, “FOR” the ratification of the appointment of KPMGCrowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016,2021, and on such other business matters which may properly come before the Annual Meeting in accordance with the best judgment of the persons named as proxies. Other than the above proposals, the Board has no knowledge of any matters to be presented for action by the shareholders at the Annual Meeting.
Only holders of record of the Company’s common stock,Common Stock, par value $0.01 per share (the “Common Stock”), at the close of business on March 16, 2016February 26, 2021 are entitled to vote at the Annual Meeting. On that date, the Company had outstanding and entitled to vote 8,700,1728,640,143 shares of Common Stock, each of which is entitled to one vote.
CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
The Company is committed to good corporate governance, which promotes the long-term interests of the shareholders and provides a strong foundation for business operations. All Company directors serve as directors of both the Company and its wholly-owned subsidiary, First Business Bank (“FBB” or the "Bank"), which eliminates redundancies, simplifies and streamlines governance processes and enhances the Board’s oversight of the Company’s strategic initiatives. The Corporate Governance and Nominating Committee regularly reviews governance best practices and considers and evaluates these practices in the context of maximizing long-term shareholder value when making recommendations to the Board and shareholders.
Director Selection, Qualifications and Nominations
In making recommendations to the Company’s Board with respect to nominees to serve as directors, the Corporate Governance and Nominating Committee will examine each director nominee on a case-by-case basis, regardless of who recommended the nominee, and take into account all factors it considers appropriate, which may include strength of character, mature judgment, career specialization, relevant technical skills or financial acumen and industry knowledge. In evaluating director nominees, the Board, with the assistance of the Corporate Governance and Nominating Committee, considers diversity of viewpoint, backgrounds, technical skills, industry knowledge and experience and local or community ties as well as diversity of personal characteristics such as race, gender, age, ethnicity and geographic representation as outlined in the Company's Director Diversity, Equity, and Inclusion Policy to ensure a balanced, diverse Board, with each director contributing talents, skills and experiences needed for the Board as a whole. The Board and the Committee intend to assess the effectiveness of the Director Diversity, Equity and Inclusion Policy, which was adopted in 2021, on a periodic basis.
In 2021, the Board adopted a Director Resignation Policy ("DR Policy"). The DR Policy requires that any director receiving a greater number of votes "withheld" or "against" their election than votes "for" will tender their resignation to the Board Chair. The Board, in its discretion, may accept or reject the tendered resignation in accordance with the DR Policy, which is as outlined in the Corporate Governance Guidelines on the Company’s website located at ir.firstbusiness.bank/govdocs.
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The Board also believes the following minimum qualifications must be met by a director nominee to be recommended by the Corporate Governance and Nominating Committee:
•Strong personal and professional ethics, integrity and values.
•The ability to exercise sound business judgment.
•Accomplished in their respective field as an active or former executive officer of a public or private organization, with broad experience at the administrative and/or policy-making level in business, government, education, technology or public interest.
•Relevant expertise and experience and the ability to offer advice and guidance based on that expertise and experience.
•Independence from any particular constituency, the ability to represent all shareholders of the Company and a commitment to enhancing long-term shareholder value.
•Sufficient time available to devote to activities of the Board and to enhance their knowledge of the Company’s business.
Using a defined director succession planning process as a component of Board succession planning, the Corporate Governance and Nominating Committee works with the Board to evaluate:
•Board composition and assess whether directors should be added in view of director departures,
•the number of directors needed to fulfill the Board’s responsibilities under the Company’s Corporate Governance Guidelines and committee charters, and
•the skills and capabilities that are relevant to the Board’s work and the Company’s strategy.
In making recommendations to the Board, the Corporate Governance and Nominating Committee considers the mix of different tenures of directors, taking into account the benefits of directors with longer tenures including greater Board stability, continuity of organizational knowledge and the critical importance of expertise and understanding of the commercial banking industry as well as the benefits of directors with shorter tenures who help to foster new ideas and examination of the status quo. As part of its on-going responsibility to identify prospective directors to provide an appropriate balance of knowledge, experience, background and capability on the Board, the Corporate Governance and Nominating Committee regularly evaluates director candidates to recommend for the Board’s consideration and possible appointment to the Board.
The following table summarizes key qualifications, skills and attributes relevant to the decision to nominate candidates to serve on the Board and possessed by current directors. A mark indicates this particular qualification, skill or attribute was identified as one of the director’s top five strongest qualifications, skills or attributes, but the absence of a mark does not mean the director does not possess that qualification, skill or attribute. Detailed director biographies are included on pages 6 through 12 of this proxy statement.
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The Corporate Governance and Nominating Committee will consider persons recommended by shareholders to become nominees for election as directors. Recommendations for consideration by the Corporate Governance and Nominating Committee should be sent to the Corporate Secretary of the Company in writing together with appropriate biographical information concerning each proposed nominee. The Company’s Amended and Restated By-Laws also set forth certain requirements for shareholders wishing to nominate director candidates directly for consideration by the shareholders. With respect to an election of directors to be held at an annual meeting, a shareholder must, among other things, give notice of an intent to make such a nomination to the Corporate Secretary of the Company not less than 60 days or more than 90 days prior to the date of the previous year’s annual meeting (subject to certain exceptions if the annual meeting is advanced or delayed a certain number of days). Under the Amended and Restated By-Laws, if the Company does not receive notice of an intent to make such a nomination on or after January 30, 2022 and on or prior to March 1, 2022, then the notice will be considered untimely and the Company will not be required to present such nomination at the 2022 annual meeting.
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Director Refreshment: Evaluation Process, Development and Education
The Board recognizes that a constructive evaluation process is an essential component of director refreshment and annually conducts a robust peer and self-evaluation in conjunction with its annual Board and committee evaluation process. The Corporate Governance and Nominating Committee oversees the evaluation process and reviews the format of the evaluation to ensure that actionable feedback is solicited related to the operation of the Board, its committees and director performance. In addition to evaluating the Board and committees, the peer and self-evaluation process serves as a mechanism to measure clear performance standards, both objective and subjective, and the Board Chair meets annually with each director to review their evaluation results. The chart below outlines the evaluation process.
The Board is committed to continuing director education and development and solicits director feedback on education topics. This feedback was utilized to develop educational opportunities in 2020 including internally developed presentations as well as programs presented by third parties on topics such as: strategic planning; executive compensation best practices and trends; human capital management; diversity, equity, and inclusion ("DEI"); cybersecurity; governance best practices, and emerging issues in the financial services sector. The Company provides financial support for director education and the Corporate Governance and Nominating Committee reviews the Director Education Report at each quarterly committee meeting. All directors are in compliance with the Board’s director education guidelines.
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ITEM 1 – ELECTION OF DIRECTORS
The Company’s Amended and Restated BylawsBy-Laws provide that the directors shall be divided into three classes, with staggered terms of three years each. At the Annual Meeting, the shareholders will elect threefour directors to hold office until the 2019 annual meeting2024 Annual Meeting of shareholdersShareholders and until their successors are duly elected and qualified. Unless shareholders otherwise specify, the shares represented by the proxies received will be voted in favor of the election as directors of the threefour persons named as nominees by the Board herein. The Board has no reason to believe that the listed nominees will be unable or unwilling to serve as directors if elected, except for Mr. Voeks who is expected to retire in 2018 in accordance with the Board’s Director Retirement Policy. However, inelected. In the event that any nominee should be unable or unwilling to serve, the shares represented by proxies received will be voted for another nominee selected by the Board. Each director will be elected by a plurality of the votes cast at the Annual Meeting (assuming a quorum is present). Consequently, any shares not voted at the Annual Meeting, whether due to abstentions, broker non-votes or otherwise, will have no impact on the election of the directors. As previously discussed, any nominee for election as a director who receives a greater number of votes "withheld" or "against" their election than votes "for" their election will tender their resignation to the Board in accordance with the Company's DR Policy as outlined in the Corporate Governance Guidelines on the Company’s website located at ir.firstbusiness.bank/govdocs. Votes will be tabulated by an inspector of elections appointed by the Board.
The following sets forth certain information, as of January 11, 2016, about the Board’s nominees for election at the Annual Meeting and each director of the Company whose term will continue after the Annual Meeting.
Nominees for Election at the Annual Meeting
Terms expiring at the 20192024 Annual Meeting
 | Laurie S. Benson, age 67, has served as a director of the Company since December 2018, is the Chair of the Corporate Governance and Nominating Committee, and a member of the Compensation Committee. She has served as director on the FBB Board since July 2009 and as a member of the FBB Northeast Wisconsin Advisory Board since August 2012. Ms. Benson has served as the Executive Director of Nurses on Boards Coalition since 2016. Ms. Benson is the CEO of LSB Unlimited, which provides consulting services to businesses on complex issues and opportunities. Ms. Benson co-founded and served as CEO of Inacom Information Services from its inception in 1984 | ||||
| until its sale to CORE BTS in 2009. She currently serves on the boards of several privately held companies. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Ms. StephensBenson is qualified to serve on the Board, as well as the Compensation Committee, include executive level experience in human resources with a public company, over 20 years of general human resources experience including executive compensation and benefits oversight and a strong background in leadership development and succession planning.
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 | Mark D. Bugher, age 72, has served as a director of the Company since July 2005, is Compensation Committee Chair and a member of the Corporate Governance and Nominating Committee. Mr. Bugher joined the FBB Board in November 2018. Mr. Bugher served as the Director of University Research Park in Madison, Wisconsin from 1999 until his retirement in November 2013. Prior to this role, Mr. Bugher served as Secretary of the State of Wisconsin Department of Revenue and Secretary of the State of Wisconsin Department of Administration.Mr. Bugher serves on the board of directors of MGE Energy, Inc., a publicly traded utility company, and its affiliate, Madison Gas and Electric Company and has been elected as lead director and chair of | ||||
| the corporate governance committee of MGE Energy, Inc. effective May 18, 2021. He currently serves on the audit committee and the executive committee and previously served as a member and as chair of the compensation committee of MGE Energy, Inc. Mr. Bugher additionally serves on the board of directors and as Chair of the Marshfield Clinic Health System and has served in leadership positions as chair or board member for many organizations promoting economic development in Wisconsin. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Mr. Bugher is qualified to serve on the Board, as well as the Compensation Committee and Corporate Governance and Nominating Committee, include the items referenced on the Director Skills, Attributes and Compensation Committee, includeQualifications Matrix as well as his executive levelexecutive-level experience in strategy development and implementation, governance experience through service on boards including another public company board and other board committees, economic development expertise, and a strong background in the commercial real estate, government and health care sectors.
 | Corey A. Chambas, age 58, has served as a director of the Company since July 2002, as Chief Executive Officer (“CEO”) of the Company since December 2006 and as President of the Company since February 2005. He served as Chief Operating Officer of the Company from February 2005 to September 2006 and as Executive Vice President of the Company from July 2002 to February 2005. Mr. Chambas joined the FBB Board in November 2018. He served as CEO of FBB from July 1999 to September 2006 and as President of FBB from July 1999 to February 2005. He currently serves as a director of First Madison Investment Corp., a wholly-owned subsidiary of FBB. Mr. Chambas also | ||||
| serves as chair of the board of directors and as a member of the management development & compensation committee of M3 Insurance Solutions, Inc., a privately held insurance agency, and has served on the boards of other privately held companies and non-profit organizations. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Mr. Chambas is qualified to serve on the Board include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as the depth and breadth of his experience as Chief Executive OfficerCEO of the Company and his over 30 years of financial services industry experience with specific focus in the commercial banking sector, his CEO-level experience in core management disciplines including strategy development and implementation, human resources, financial management and sales and marketing and his governance experience through service on the boards of other privately held companies and non-profit organizations.
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 | John J. Harris, age 68, has served as a director of the Company since January 2012 and is a member of the Audit Committee and Operational Risk Committee. Mr. Harris joined the FBB Board in November 2018. Mr. Harris served as a professional in the investment banking industry for most of his career, most recently as Managing Director of the Investment Banking Financial Institutions Group of Stifel Nicolaus Weisel. Mr. Harris retired from this position in 2010. Prior to this role, Mr. Harris was Managing Director of the Investment Banking Financial Institutions Group of Piper Jaffray & Co. from 2005 to 2007 and a Principal in the Investment Banking Financial Institutions Group of William Blair & Co., LLC from 2000 to 2005. | ||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Mr. Harris is qualified to serve on the Board, as well as on the Audit Committee and Operational Risk Committee, include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as over 25 years of experience providing financial advisory services to senior management, boards and special committees of publicly traded and privately held companies; hiscompanies, extensive experience in the financial services sector and with mergers and acquisitions;acquisitions, and his significant work advising clients on capital formation and execution of public and private capital raises.
THE BOARD RECOMMENDS EACH OF THE FOREGOING NOMINEES FOR ELECTION AS DIRECTOR AND URGES EACH SHAREHOLDER TO VOTE “FOR” EACH OF THE NOMINEES.
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Directors Continuing in Office
Terms expiring at the 2022 Annual Meeting
 | Jan A. Eddy, age 71, has served as a director of the Company since October 2003 and serves on the Corporate Governance and Nominating Committee and the Compensation Committee. Ms. Eddy joined the FBB Board in November 2018. She previously served as a director of FBB from April 1990 to May 2010 and served as FBB Board Chair from January 2004 to May 2010. Ms. Eddy founded Wingra Technologies, a designer and distributor of software, and served as President and Chief Executive Officer of Wingra Technologies from October 1991 to January 2005, when Quest Software purchased Wingra Technologies. Ms. Eddy held the position of Business Development Executive | ||||
| at Quest Software from January 2005 until her retirement in October 2005. Ms. Eddy serves or has served on the boards of other privately held companies and non-profit organizations. As previously disclosed in the Company's Form 8-K filed with the SEC on February 1, 2021, Ms. Eddy will retire from the Company's Board following the completion of her term expiring at the 2022 Annual Meeting. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Ms. Eddy is qualified to serve on the Board, as well as on the Corporate Governance and Nominating Committee and the Compensation Committee, include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as her financial services industry expertise as an FBB director, CEO-level experience as founder and chief executive officer of her own company in strategy development and implementation, mergers and acquisitions and enterprise risk management, her significant governance experience from service on other boards and her strong background in information technology.
 | Timothy J. Keane, age 74, has served as a director of the Company since December 2018 and serves on the Operational Risk Committee. He has served as a director of FBB since August 2017. He previously served on the FBB-Milwaukee Board from January 2004 until the Bank charter consolidation in June 2017 at which time he became a member of the FBB Southeast Wisconsin Advisory Board. Mr. Keane has served on the FBB Kansas City Metro Advisory Board since August 2017. Mr. Keane is the Managing Investor and Director of Golden Angels Investors, LLC, President of Keane Consultants, is a limited partner in several venture and private equity funds, and provides data | ||||
| analytics strategy consulting services to a small group of companies. He was the founder and CEO of Retail Target Marketing Systems (RTMS), now a unit of Fidelity Information Services. Mr. Keane serves on the boards of other privately held companies. As previously disclosed in the Company's Form 8-K filed with the SEC on February 1, 2021, Mr. Keane will retire from the Company's Board in accordance with the Director Retirement Policy following the completion of his term expiring at the 2022 Annual Meeting. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Mr. Keane is qualified to serve on the Board, as well as the Operational Risk Committee, include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as his financial services industry expertise as an
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FBB director, his CEO-level experience as founder of multiple companies, 15 years of leading entrepreneurship programs, and his experience in enterprise risk management, data analytics, and mergers and acquisitions.
 | W. Kent Lorenz, age 58, has served as a director of the Company since June 2018 and serves on the Audit Committee and Operational Risk Committee. He has served as a director of FBB since August 2017. He previously served on the FBB-Milwaukee Board from January 2010 until the Bank charter consolidation in June 2017 at which time he became a member of the FBB Southeast Wisconsin Advisory Board. Mr. Lorenz is the retired Chairman and CEO of Acieta LLC, a provider of advanced industrial robotic automation systems to North American manufacturers and their global affiliates. He is the Owner and Managing Director of Lakeside Consulting, LLC, a manufacturing and | ||||
| industrial automation consulting firm. Mr. Lorenz served on the Wisconsin Technical College System Board of Directors from June 2014 until March 2020. He also serves on the boards of other private and non-profit organizations. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Mr. Lorenz is qualified to serve on the Board, as well as the Audit Committee and Operational Risk Committee, include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as his financial services industry expertise as an FBB director, his CEO-level experience in core management disciplines, strategy development and implementation, human resources, financial management, mergers and acquisitions, and his governance experience through service on other boards.
 | Carol P. Sanders, age 54, has served as a director of the Company since September 2016 and is the Audit Committee Chair. Ms. Sanders joined the FBB Board in November 2018. Ms. Sanders has been the President of Carol P. Sanders Consulting LLC, a consulting firm providing executive-level consulting services to the insurance and technology industries, since July 2015. Ms. Sanders has over 25 years of experience in the insurance industry, including serving as the Executive Vice President, Chief Financial Officer and Treasurer of Sentry Insurance from July 2013 to June 2015 and as Executive Vice President and Chief Operating Officer of Jewelers Mutual Insurance Company from November 2012 to June | ||||
| 2013 where she previously served in other executive capacities from September 2004 to November 2012. Ms. Sanders has served on the board of directors of Alliant Energy Corporation (“Alliant”), a publicly traded Wisconsin-based public utility holding company, and its two utility subsidiaries since December 2005. She currently serves as Alliant’s lead independent director, chair of Alliant’s nominating and governance committee and previously served as a member and chair of Alliant’s audit committee and compensation and personnel committee. Ms. Sanders has served on the board of directors of RenaissanceRe Holdings Ltd. (“RenaissanceRe”), a publicly traded global provider of reinsurance and insurance, since 2016 and is a member of that company’s audit committee. Ms. Sanders also serves on the board of a privately held company. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Ms. Sanders is qualified to serve on the Board, as well as the Audit Committee, include the items referenced on the
10
Director Skills, Attributes and Qualifications Matrix as well as over 25 years of experience as an executive in the insurance industry, her board and committee service with other public companies and her executive-level background in finance, operations, strategic planning, enterprise risk management and human resources.
Terms expiring at the 2023 Annual Meeting
 | Carla C. Chavarria, age 55, has served as a director of the Company since June 2017 and is a member of the Corporate Governance and Nominating Committee and Compensation Committee. Ms. Chavarria joined the FBB Board in November 2018. Ms. Chavarria is Senior Vice President of Human Resources and Chief Human Resources Officer and a member of the executive committee for AMC Entertainment Inc., a publicly traded company. In this role she is responsible for the strategic development and implementation of total rewards, associate engagement, diversity, equity and inclusion, community relations, employment practices, human resource systems, talent acquisition and training and development. Ms. Chavarria has served on the boards of several community and non-profit organizations. | ||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Ms. Chavarria is qualified to serve on the Board, as well as the Corporate Governance and Nominating Committee and Compensation Committee, include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as her background as an executive in human resources, recruitment, and strategic development of human resources systems and services for over 20 years as well as her executive-level experience in enterprise risk management and strategic planning.
 | Ralph R. Kauten, age 69, has served as a director of the Company since December 2018 and is a member of the Audit Committee and Operational Risk Committee. He has served on the FBB Board since July 2004 and served as FBB Board Chair from June 2018 until November 2018. Mr. Kauten is the co-owner of Mirus Bio and owner of Air-Lec Industries, both private companies. Mr. Kauten served as an executive for a number of Wisconsin biotechnology companies, including Promega Corporation, PanVera Corporation, Quintessence Biosciences, Inc. and Lucigen Corporation. His prior positions include being a Faculty Member at the University of Wisconsin-Whitewater, Plant | ||||
| Controller of the Ortega taco plant for Heublein, Inc., and Senior Auditor for Grant Thornton, CPAs. Mr. Kauten is a member of the board of SSM Healthcare of Wisconsin, Inc. and two of its subsidiaries and serves or has served on the boards of other privately held companies and non-profit organizations. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Mr. Kauten is qualified to serve on the Board, as well as the Audit Committee and Operational Risk Committee, include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as his financial services industry expertise as an FBB director, being a co-founder and serving as the CEO and chairman of the board for numerous companies in the biotechnology industry, his role in shaping the purpose, vision and strategy of those companies, and his experience in mergers and acquisitions.
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 | Gerald L. (Jerry) Kilcoyne, age 61, has served as a director of the Company since November 2011 and Board Chair since October 2018. Mr. Kilcoyne joined the FBB Board and was elected FBB Board Chair in November 2018. He previously served as a director of FBB from August 2005 through July 2018 and served as FBB Board Chair from May 2010 until June 2018. He served as a director of First Business Equipment Finance, LLC, now known as First Business Specialty Finance, LLC, a wholly-owned subsidiary of FBB, from January 2006 until August 2017 and as a director of Alterra Bank from May 2016 until June 2017 at which time Alterra Bank was consolidated into FBB. He served as a director of First Business Capital Corp., now known as First Business Specialty | ||||
| Finance, LLC, from January 2006 to December 2013. Mr. Kilcoyne has been Managing Partner of Pinnacle Enterprises, LLC, a private investment holding company since February 1997. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Mr. Kilcoyne is qualified to serve on the Board include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as his financial services industry expertise as an FBB director, CEO-level experience in strategic planning and financial management, and over 25 years involvement in mergers and acquisitions.
 | Daniel P. Olszewski, age 55, has served as a director of the Company since December 2018 and is Chair of the Operational Risk Committee. He has served as a director of FBB since August 2010 and he served as a director of First Business Capital Corp., now known as First Business Specialty Finance, LLC, a wholly-owned subsidiary of FBB, from January 2011 to November 2018. Mr. Olszewski is the Director of the Weinert Center for Entrepreneurship, a campus-wide Entrepreneurship Program, at the UW-Madison School of Business. He previously served as the COO, CEO and chair of the board of PNA Holdings, LLC/Parts Now!, and was CEO of Katun Corporation. He began his career with | ||||
| strategic management consulting firm, McKinsey & Company. Mr. Olszewski currently serves on the board of the National Guardian Life Insurance Company, a private company, and has served on the boards of other privately held companies and non-profit organizations. | |||||
The particular and specific experience, qualifications, attributes or skills that led the Board to conclude Mr. Olszewski is qualified to serve on the Board and the Operational Risk Committee include the items referenced on the Director Skills, Attributes and Qualifications Matrix as well as his financial services industry expertise as an FBB director, background as an executive with responsibility for strategic development in international agribusiness and biotechnology industries as well as his CEO-level experience in acquisition and strategic planning and growth.
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Director Disclosures
None of the above-named directors or director nominees held a directorship at any public company or any company registered as an investment company under the Investment Company Act during the past five years, except for (i) Mr. Bugher, who serves on the board of directors, as lead independent director, and chair of the governance committee and as a member of the audit and executive committees of MGE Energy, Inc., (ii) Ms. Sanders, who serves on the board of directors, as lead independent director, and chair of the nominating and governance committee of Alliant, and is on the board of directors and a member of the audit committee of MGE Energy, Inc., a public company,
RenaissanceRe, and (iii) Mr. Chambas, who, servesuntil February 26, 2018, served on the board of directors of Three Lakes Securities, LLC, which iswas a registered investment advisor. None of the directors, executive officers or nominees is related to one another and there are no arrangements or understandings between any of the directors, executive officers or any other person pursuant to which any of ourthe Company’s directors or executive officers have been selected for their respective positions. None of the above-named directors or director nominees was a party to any SEC enforcement actions or any legal proceedings that are material to an evaluation of their ability or integrity in the past ten years.
Independent Directors and Meeting Attendance
Of the ninetwelve directors currently serving on the Board, the Board has determined that Mark D. Bugher, Jan A. Eddy, John J. Harris, Gerald L. Kilcoyne, John M. Silseth, Jerome J. Smith, Barbara H. Stephensall except for Mr. Chambas, the Company’s President and Dean W. VoeksChief Executive Officer, are “independent directors” for purposes of applicable NASDAQNasdaq rules.
Directors are expected to attend the Company’s annual meeting of shareholders each year. All twelve directors attended the Company’s 20152020 annual meeting.
The Board held seveneight meetings in 2015.2020. Each director attended at least 75% of the aggregate of (1)(i) the total number of meetings of the Board during 20152020 while they were a director and (2)(ii) the total number of meetings held by all committees of the Board on which such director served during 2015.2020 while they were a member of such committees.
Board Leadership Structure
The roles of Board Chair of the Board and Chief Executive OfficerCEO are held separately. Mr. SmithKilcoyne serves as Board Chair and Mr. Chambas serves as Chief Executive Officer.CEO. The Board believes that at this time, separation of these roles is in the best interests of the Company and its shareholders because separation:
•allows for additional talents, perspectives and skills on the Board;
•preserves the distinction between the Chief Executive Officer’sCEO’s leadership of management and the Board Chair’s leadership of the Board;
•promotes a balance of power and an avoidance of conflict of interest;
•provides an effective channel for the Board to express its views on management; and
•allows the Chief Executive OfficerCEO to focus on leading the Company and the Board Chair to focus on leading the Board, monitoring corporate governance and shareholder issues.
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Committees
The Board conducts its business through meetings of the Board and the following standing Committees:committees: Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee and Operational Risk Committee. Each of these committees has the responsibilities set forth in a formal written charters adoptedcharter approved by the Board. The Board has also adopted guidelines on significant corporate governance matters that, together with the Company’s Code of Conduct and other policies, create the Board’s corporate governance standards. Copies of these charters and the Corporate Governance Guidelines are available free of charge on the Company’s website located at www.firstbusiness.com.ir.firstbusiness.bank/govdocs. The following table reflects the current membership of each standing Board Committee:committee:
Name(1) | Audit | Compensation | Corporate Governance and Nominating | Operational Risk | ||||||||||
| Laurie S. Benson | ● | ● Chair | ||||||||||||
| Mark D. Bugher | ● Chair | ● | ||||||||||||
| Carla C. Chavarria | ● | ● | ||||||||||||
| Jan A. Eddy | ● | ● | ||||||||||||
| John J. Harris | ● | ● | ||||||||||||
| Ralph R. Kauten | ● | ● | ||||||||||||
| Timothy J. Keane | ● | |||||||||||||
| W. Kent Lorenz | ● | ● | ||||||||||||
| Daniel P. Olszewski | ● Chair | |||||||||||||
Carol P. Sanders(2) | ● Chair | |||||||||||||
| Number of Meetings in 2020 | 5 | 5 | 4 | 4 | ||||||||||
| Name | Audit | Compensation | Corporate Governance & Nominating |
| Mark D. Bugher | X | X | |
| Jan A. Eddy | X | Chair | |
| John J. Harris | X | ||
| Gerald L. Kilcoyne | X | X | |
| John M. Silseth | X | X | |
| Jerome J. Smith | X | X | |
| Barbara H. Stephens | Chair | ||
| Dean W. Voeks | Chair | X | |
| Number of Meetings in 2015 | 9 | 4 | 3 |
| (1) | Mr. Chambas and Mr. Kilcoyne are not members of a standing committee. | |||||||||||||
| (2) | Ms. Sanders qualifies as an “audit committee financial expert”. | |||||||||||||
Audit Committee
The Audit Committee’s primary function is to assist the Board in fulfilling its oversight responsibilities by overseeing the Company’s accounting and financial reporting processes and the audits of the financial statements of the Company. The Audit Committee presently consists of Dean W. VoeksCarol P. Sanders (Chair), John J. Harris, Gerald L. KilcoyneRalph R. Kauten, and John M. Silseth,W. Kent Lorenz, each of whom meets the requirements set forth in NASDAQNasdaq Listing Rule 5605(c)(2)(A) and the independence standards set forth in Rule 10A-3(b)(1) promulgated by the SEC under the Securities Exchange Act of 1934, as amended (The(the “Exchange Act”). The Board has thus determined that each of the Audit Committee’s current members is qualified to serve in such capacity. The Board has determined that John M. SilsethCarol P. Sanders qualifies as an “audit committee financial expert,”expert” for purposes of applicable SEC regulations, and has the financial sophistication required by applicable NASDAQNasdaq rules because heshe has the requisite attributes through, among other things, hisher education and experience as the president of a private investment firm, a certified public accountant and an auditor.financial executive in the insurance industry and her service on the audit committee of other public companies.
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Compensation Committee
The Compensation Committee reviewsCommittee's primary functions are to review and recommendsrecommend to the Board the compensation structure for the Company’s directors and executive officers, including salary rates, participation in incentive compensation and benefit plans, fringe benefits, non-cash perquisites and other forms of compensation, and administers the Company’s equitylong-term incentive plans. Barbara H. Stephens (Chair),plan and employee stock purchase plan. Mark D. Bugher (Chair), Laurie S. Benson, Carla C. Chavarria, and Jan A. Eddy Gerald L. Kilcoyne and Jerome J. Smith are the current members of the Compensation Committee, each of whom is considered to be “independent” and meets the requirements set forth in applicable NASDAQNasdaq rules and the independence standards set forth in applicableRule 10C-1(b)(1) promulgated by the SEC regulations.under the Exchange Act. The
Board has determined that none of the aforementioned directors has a relationship to the Company which is material to his or hertheir ability to be independent from management in connection with the duties of a Compensation Committee member and has further determined that each of the Compensation Committee’s current members is qualified to serve in such capacity.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee’s primary functions are to recommend persons to be selected by the Board as nominees for election as directors; recommend persons to be elected to fill any vacancies on the Board; lead the Board in its annual review of Board performance,performance; Board and committee structure and director independence; develop and recommend to the Board corporate governance principles, policies and procedures and oversee execution of the Company’s enterprise risk managementsuccession planning program and advise the Board on the effectiveness of thatthe program. The Board has additionally delegated assessment and monitoring of the Company's environmental, social and governance ("ESG") and DEI practices to the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee presently consists of Jan A. EddyLaurie S. Benson (Chair), Mark D. Bugher, John M. Silseth, Jerome J. SmithCarla C. Chavarria and Dean W. Voeks.Jan A. Eddy. The Board has determined that each of the Corporate Governance and Nominating Committee members is considered to be “independent” according to applicable NASDAQNasdaq rules and has further determined that each current member is qualified to serve in such capacity.
The Operational Risk Committee's primary function is to assess and manage certain of Directors
15
Board Role in Risk Oversight
| Oversight of Risk | ||
•The Board has an active and ongoing role in the management of the risks of the Company. It is responsible for general oversight of risk management; •The Operational Risk Committee was established in 2018 to evaluate and monitor the Company’s strategic risk and its key operational risks, including overseeing management's execution of the ERM Program and periodically evaluating the Board’s risk management structure and processes to ensure appropriate Board-level risk reporting; •Company management is responsible for assessing and managing risk through robust internal processes and effective internal controls and for providing appropriate reporting to the Board and its committees. | ||
The Company believes that establishing the right “tone at the top” and providing for full and open communication between management and the Board is essential for effective risk management and oversight. The Board, acting as a whole and through its committees, is responsible for oversight of the Company’s enterprise wide risk management including, but not limited to, strategic, risk, financial, reporting risk, credit, risk, liquidity, risk, compensation, risk, cyber riskinformation security, regulatory, reputational, and operational risk.risks. Given the critical link between strategy and risk, the Board is also responsible for developing strategies based on an assessment of the Company’s overall risk tolerance, the related opportunities and the capacity to manage the resulting risk. AtAs part of its annualongoing planning, session, the Board meetsdiscusses with executive management to discuss the strategies, key challenges, risks and opportunities facing the Company.
Under the ERM Program, a Risk Dashboard has been developed, the Company’s most significant risks along with related metrics/key risk indicators (“KRIs”) have been identified, and risk tolerance thresholds established. ERM is a standing agenda item for each of the Board’s regular quarterly meetings. At these meetings the Board reviews the Risk Dashboard, the status of each KRI relative to the designated tolerance threshold and the related remediation plans. The Board additionally delegateshas delegated oversight of each of these specificthe key risks to either the Audit, Compensation, or Corporate Governance and Nominating or Operational Risk Committee in accordance with the committee charters. These charters which are reviewed annually to reflect the changing risk environment. Each committee monitors the assigned specific key risks, ensures that appropriate risk mitigation strategiesplans are in place, identifies emerging risks, reports back to the Board with recommendations and updates and apprises the Board of any areas of concern. The following table summarizes each committee’s role in the risk oversight function:
| Committee | Risk Oversight Focus | ||||
| Audit Committee | •Monitors the integrity of the financial statements, effectiveness of internal control over financial reporting, compliance with applicable legal and regulatory requirements, and the performance of the Company’s internal independent auditors. | ||||
| Compensation Committee | •Oversees the Company’s executive compensation program, evaluates risks presented by all compensation programs and confirms that the programs do not encourage risk-taking to a degree that is likely to have a materially adverse impact on the Company, do not encourage the management team to take unnecessary and excessive risks that threaten the value of the Company and do not encourage the manipulation of reported earnings of the Company. | ||||
| Corporate Governance and Nominating Committee | •Monitors key risks including risks relating to corporate governance structure, director independence, and succession. •Assesses and monitors the Company's ESG and director DEI practices. | ||||
| Operational Risk Committee | •Assures the ERM Program is operating effectively. •Monitors the strategic risk based on an assessment of the Company’s strategies in the context of the Company’s overall risk tolerance, related opportunities and capacity to manage the resulting risk. •Evaluates, monitors and advises the Board on all matters relating to maintaining the right tone at the top. •Evaluates, monitors and assesses key risks via quarterly updates from senior management related to credit risk; information security/cyber risk; regulatory, compliance and legal risk; operational risk and liquidity and market risk. | ||||
Management is responsible for the day to dayday-to-day management of the Company’s key risks and operates through a Senior Management Risk Committee (“SMRC”) which monitors key risks, develops and executes mitigation or remediation plans as appropriate, identifies emerging risks, evaluates the effectiveness of the Company’s risk management processes and reports such to the Board or its committees on a regular basis.
CEO and Evaluation ProcessExecutive Officer Succession Planning
management. Because of the significance of the CEO’s leadership, the full Board retains primary responsibility for oversight of CEO succession planning.planning as well as overall executive leadership development and succession planning practices and strategies. The Board has delegated certain responsibility for the ongoing development and monitoring of CEO and executive officer succession planning to the Corporate Governance and Nominating Committee, and at least annually, that committee reviews the policies and principles of selecting a successor to the CEO, both in an emergency situation as well asCEO. The Board participates in the ordinary courseannual review of business. This reviewthe CEO succession plan, which includes an assessment of potential internal and external successors andCEO candidates, contingency plans in the event of a sudden termination (including death or disability) as well as a review, development plans that are being utilized to strengthen the skills and qualifications of candidates and the Company CEO’s recommendations for contingency and longer term succession planning for the CEO position. Annually, theand executive officer positions. The Corporate Governance and Nominating Committee in accordance with its charter also reviews succession plans for the status of the CEO succession plan with the full Board.other executive officers.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial ownership of Common Stock as of March 16, 2016February 26, 2021 by: (i) each director and director nominee; (ii) each of the executive officers named in the Summary Compensation Table on page 37 (the “Named Executive Officers”); (iii) all of the directors, director nominees and executive officers (including the Named Executive Officers) as a group; and (iv) persons known to the Company to be the beneficial owner of more than five percent of the Company’s Common Stock. Except as otherwise indicated in the footnotes, each of the holders listed below has sole voting and investment power over the shares beneficially owned by such holder. AsThe percentage of March 16, 2016, there were 8,700,172beneficial ownership shown in the following table is based on 8,640,143 shares of Common Stock outstanding.outstanding as of February 26, 2021. For purposes of calculating each person’s or group’s percentage ownership, shares of Common Stock issuable pursuant to the terms of restricted stock awards vesting within 60 days after February 26, 2021 are included as outstanding and beneficially owned for that person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group.
| Name of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percent of Common Stock Beneficially Owned | ||||||
Laurie S. Benson(1) | 4,316 | * | ||||||
Mark D. Bugher(2) | 9,923 | * | ||||||
Corey A. Chambas(3) | 143,036 | 1.7% | ||||||
Carla C. Chavarria(4) | 1,513 | * | ||||||
Jan A. Eddy(5) | 17,446 | * | ||||||
John J. Harris(6) | 10,390 | * | ||||||
Ralph R. Kauten(7) | 29,288 | * | ||||||
Timothy J. Keane(8) | 8,285 | * | ||||||
Gerald L. Kilcoyne(9) | 51,826 | * | ||||||
W. Kent Lorenz(10) | 17,559 | * | ||||||
Mark J. Meloy(11) | 49,939 | * | ||||||
Daniel P. Olszewski(12) | 21,970 | * | ||||||
Brad A. Quade(13) | 7,263 | * | ||||||
Carol P. Sanders(14) | 6,489 | * | ||||||
David R. Seiler(15) | 16,026 | * | ||||||
Edward G. Sloane, Jr(16) | 14,937 | * | ||||||
All directors, nominees and executive officers as a group (19 persons)(17) | 465,684 | 5.4% | ||||||
| 5% Holders | ||||||||
The Banc Funds Company, LLC(18) | 772,628 | 9.1% | ||||||
BlackRock, Inc.(19) | 478,350 | 5.6% | ||||||
Dimensional Fund Advisors LP(20) | 438,980 | 5.2% | ||||||
| *Denotes less than 1% | ||||||||
18
| Name of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percent of Common Stock Beneficially Owned | |||||
| Corey A. Chambas....................................................... | 172,563 | 2.0% | |||||
| John M. Silseth............................................................ | 70,000 | * | |||||
| James F. Ropella (1).................................................... | 62,924 | (2) | * | ||||
| Jerome J. Smith........................................................... | 51,937 | (3) | * | ||||
| Charles H. Batson…………………………………… | 44,980 | * | |||||
| Michael J. Losenegger................................................. | 41,450 | (4) | * | ||||
| Gerald L. Kilcoyne...................................................... | 29,136 | (5) | * | ||||
| Pamela R. Berneking................................................... | 21,694 | * | |||||
| Jan A. Eddy.................................................................. | 16,056 | (6) | * | ||||
| Dean W. Voeks............................................................. | 11,192 | * | |||||
| Barbara H. Stephens.................................................... | 9,000 | (7) | * | ||||
| Mark D. Bugher........................................................... | 8,680 | (8) | * | ||||
| John J. Harris............................................................... | 6,000 | (9) | * | ||||
| David R. Papritz (10)……………………………….. | |||||||
All directors, nominees and executive officers as a group (20 persons)................................... | 725,731 | (11) | 8.3% | ||||
| 5% Holders | |||||||
| The Banc Funds Company, L.L.C (12)………........... | 660,728 | 7.6% | |||||
| Wellington Management Group LLP (13)………….. | 478,550 | 5.5% | |||||
| (1) | Includes 390 restricted shares over which Ms. Benson has voting power but does not have investment power, and | ||||
| 3,926 shares held through a sole IRA. | |||||
| (2) | Includes | ||||
| (3) | Includes 13,134 restricted shares over which Mr. Chambas has voting power but does not have investment power, and 16,992 shares held through a 401(k) Plan. | ||||
| (4) | Includes 390 restricted shares over which Ms. Chavarria has voting power but does not have investment power, and 1,123 shares held via a sole trust. | ||||
| Includes | |||||
| (6) | Includes 390 restricted shares over which Mr. Harris has voting power but does not have investment power, and 10,000 shares held jointly with his spouse. | ||||
| (7) | Includes 390 restricted shares over which Mr. Kauten has voting power but does not have investment power, 3,300 shares held by a sole IRA, and 12,687 shares held by a family-owned LLC. | ||||
| (8) | Includes 390 restricted shares over which Mr. Keane has voting power but does not have investment power, and 2,637 shares held in a joint trust with his spouse. | ||||
| (9) | Includes 390 restricted shares over which Mr. Kilcoyne has voting power but does not have investment power, 6,800 shares held by a sole IRA, and 44,636 shares held in a joint trust with his spouse. | ||||
| (10) | Includes 390 restricted shares over which Mr. | ||||
| Lorenz has voting power but does not have investment power, and 2,520 shares held by a sole IRA, 6,471 shares held in a joint trust with his spouse, and 8,178 shares held solely by his spouse through an IRA. | |||||
| (11) | Includes | ||||
| (12) | Includes 390 restricted shares over which Mr. Olszewski has voting power but does not have investment power, and 21,580 shares held in a joint trust with his spouse. | ||||
| (13) | Includes 5,799 restricted shares over which Mr. Quade has voting power but does not have investment power. | ||||
| (14) | Includes 390 restricted shares over which Ms. Sanders has voting power but does not have investment power, and 670 shares held in a joint trust with her spouse and 5,429 shares held by a SEP IRA. | ||||
| (15) | Includes 4,900 restricted shares over which Mr. Seiler has voting power but does not have investment power, and 4,000 shares held in a joint trust with his spouse. | ||||
| (16) | Includes 4,617 restricted shares over which Mr. Sloane has voting power but does not have investment power, and 4,122 shares held jointly with his spouse. | ||||
| (17) | Includes 44,384 restricted shares over which the individuals have voting power but do not have investment power, 10,678 shares held by spouses of the group members, | ||||
| members. | |||||
| (18) | |||||
| Information based on Schedule 13G/A filed with the SEC on February | |||||
| Information based on Schedule 13G, filed with the SEC on January 29, 2021 by BlackRock, Inc. According to the Schedule 13G, Blackrock, Inc. had sole voting power with respect to 468,735 shares, and sole dispositive power with respect to 478,350 shares. According to the Schedule 13G, their principal business office is 55 East 52nd Street New York, NY 10055. | |||||
| (20) | Information based on Schedule 13G, filed with the SEC on February | ||||
19
DIRECTOR COMPENSATION
In 2015,2020, each non-employee director of the Company, who was not an executive officer of the Company received an annual retainer of $24,000. TheAs the Company’s Board Chair, Mr. Kilcoyne received an additional annual retainer comprisedcash compensation of $50,000 in cash and $59,900 in Company stock.$60,250. The Chair of the Compensation Committee and the Chair, of the Corporate Governance and Nominating Committee Chair, and the Operational Risk Committee Chair received additional annual retainers of $5,000, while the Chair of the Audit Committee Chair received an additional annual retainer of $10,000. All Board and committee members, except those serving as executive officers of the Company, were paid $750 for each Board and committee meeting attended in person or via teleconference. Allattended. Except for the annual restricted stock awards described below, director retainer and committeemeeting attendance fees were paid in cash except forquarterly.
In 2019, the stock issuedCompensation Committee engaged McLagan, its outside independent compensation consultant, to Smith.
Fees earned or paid in cash (1) | Stock awards (2) | All other compensation (3) | Total | |
| Mark D. Bugher | $35,250 | — | — | $35,250 |
| Jan A. Eddy | $40,250 | — | — | $40,250 |
| John J. Harris | $38,250 | — | — | $38,250 |
| Gerald L. Kilcoyne | $67,950 | — | — | $67,950 |
| John M. Silseth | $57,800 | — | — | $57,800 |
| Jerome J. Smith | $81,500 | $59,900 | $47,373 | $188,773 |
| Barbara H. Stephens | $39,500 | — | — | $39,500 |
| Dean W. Voeks | $49,000 | — | — | $49,000 |
Fees earned or paid in cash (1) | Stock awards(2) | Total | |||||||||
| Laurie S. Benson | $40,100 | $6,306 | $46,406 | ||||||||
| Mark D. Bugher | $39,500 | $6,306 | $45,806 | ||||||||
| Carla C. Chavarria | $31,500 | $6,306 | $37,806 | ||||||||
| Jan A. Eddy | $39,500 | $6,306 | $45,806 | ||||||||
| John J. Harris | $34,500 | $6,306 | $40,806 | ||||||||
| Ralph R. Kauten | $33,750 | $6,306 | $40,056 | ||||||||
| Timothy J. Keane | $38,250 | $6,306 | $44,556 | ||||||||
| Gerald L. Kilcoyne | $96,750 | $6,306 | $103,056 | ||||||||
| W. Kent Lorenz | $40,850 | $6,306 | $47,156 | ||||||||
| Daniel P. Olszewski | $31,500 | $6,306 | $37,806 | ||||||||
| Carol P. Sanders | $41,500 | $6,306 | $47,806 | ||||||||
| (1) | Includes FBFS Board retainer and FBFS and FBB Board and committee meeting attendance fees paid in cash. | ||||
| (2) | On May 18, 2020 each non-employee director received a restricted stock award. The number of shares granted was equal to $10,000 based on the share value used in granting executive officer and employee restricted stock in February 2020. Each director received 390 shares and the stock award amounts are the grant date value based on $16.17 which was the closing share price on May 18, 2020. | ||||
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THE COMPANY'S APPROACH TO SOCIAL RESPONSIBILITY AND HUMAN CAPITAL MANAGEMENT
The COVID-19 Pandemic
Although 2020 presented unprecedented challenges as a result of the COVID-19 pandemic, the Company's employees dedicated themselves to supporting each other and our clients in exceptional ways to deliver for our clients, our communities and our shareholders.
How the Company supported employees during the COVID-19 pandemic
•Implemented the COVID-19 pandemic preparedness plan previously developed as part of the Company's business continuity plan. Prior to the COVID-19 pandemic, 16% of the Company's workforce was working remotely. By March 16, 2020, 95% of the Company's workforce was working remotely.
•Suspended restrictions in remote work policy to allow employees flexibility to care for their children and family members during work hours.
•Required strict adherence to all Department of Health, state and local health and safety protocols and personal protective equipment guidelines while working onsite.
•Developed an automated tracking system to monitor onsite capacity limits to facilitate employees' ability to return to office as necessary to perform their job functions and/or for their overall well-being.
•Hosted virtual wellness sessions supporting employees’ and their families’ well-being.
•Expanded the Employee Assistance Program offering and provided national access and resources via the web, mobile apps and texting.
•No furloughs or layoffs were made related to the COVID-19 pandemic.
How the employees responded on behalf of the Company during the COVID-19 pandemic
•Essential frontline employees kept the Bank lobbies open to provide uninterrupted service to our clients.
•Modified existing proprietary technology which was leveraged to efficiently process Paycheck Protection Program ("PPP") loans.
•Interviewed, onboarded, and welcomed new employees completely virtually.
•Launched a new floorplan financing business line.
•Held a virtual annual shareholder meeting which enabled all shareholders to participate regardless of geographic location.
•Maintained strong performance in spite of challenging circumstances, as evidenced by record loan growth, expansion of assets under management by the Bank's Private Wealth team to over $2 billion, and refreshing and aligning the Company's branding and logo.
How the Company culture was strengthened during the COVID-19 pandemic
•Held frequent live CEO question and answer ("Q&A") forums via videoconference with regular participation of 85% or more employees.
•Achieved the highest ever level of employee engagement with a score of 91% and an 87% survey participation rate.
•Employees collaborated and connected with each other in new and innovative ways as a result of the remote work environment.
•Achieved an employee retention rate of over 90%.
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Social Responsibility
The Company is committed to the communities we serve, our employees and shareholders. The Company believes that visionary, determined entrepreneurs and investors create a thriving economy and when these businesses succeed, they create social and economic advancement for their employees, investors, families and communities at large. This commitment is reflected in activities completed in conjunction with local businesses, the public sector and not-for-profit organizations. This commitment and investment in the communities we serve is a foundation to the Company’s long-term success for the benefit of our shareholders.
•Processed more than 700 PPP loan applications which provided funding for small- and medium-sized businesses employing more than 26,000 people in the markets we serve.
•Invested in our communities via Community Reinvestment Act lending activities and sound loan administration to promote sustainable growth.
•Announced a $1 million commitment to the Dane Workforce Housing Fund, which is addressing the lack of affordable housing in the local community.
•Facilitated approximately $500,000 in sponsorship and contributions in 2020, including a $25,000 donation to the United Way specifically designated for COVID-19 relief efforts.
•Awarded "Outstanding Business" on the 2020 National Philanthropy Day by the Association for Financial Professionals - Greater Madison.
•Offered employees a full day off with pay to support volunteer efforts of their choosing. In 2020, 125 employees spent more than 7,700 hours volunteering which impacted nearly 215 not-for-profit organizations.
•Launched an Employee Stock Purchase Program to provide our employees with an opportunity to purchase Common Stock, providing a personal stake in the continued success of the Company.
Human Capital Management
The consulting arrangement between Mr. SmithCompany believes that achieving strong financial results begins with our employees. In 2020, the workforce grew to over 300 employees. While the majority of employees are located in our primary banking markets, we now have employees in over 20 states. This expansion has allowed the Company to diversify the workforce and add business development officers and specialists to support business line growth.
The Company's employees embody ambition, experience and client focus. The work environment fosters innovation, continuous improvement and embracing change. In 2020, the employees delivered an unmatched client experience and the Company was terminatedachieved a 96% client satisfaction rating.
The Company recognizes the value of different perspectives and cultures. In 2020, the Company partnered with a DEI professional to facilitate an assessment process, obtain feedback from all employees, prioritize new action plans and initiatives, and deepen our practice of prioritizing people. The Company is committed to ensuring all voices are heard, creating an environment where everyone has a sense of belonging and where all employees can show up every day as their true and authentic selves. Eighty-eight percent (88%) of August 1, 2015.employees participated in a DEI survey, over one-third (1/3) of the employees provided feedback through a one-on-one conversation or participation in a focus group and 100% of the Board members participated in a focus group discussion.
The Company pays its employees fairly and equitably based on market rates for their roles, experience and how they perform. To ensure pay is competitive, the Company regularly benchmarks against other companies both within and outside the banking industry. The Company is committed to paying a living wage to employees and to supporting employees’ and their families’ well-being by offering a very competitive benefits package. The Company's Wellness Committee assists in prioritizing how to best support employees’ physical, emotional and financial wellness.
The Company recognizes how important it is for employees to develop and progress in their careers. To support this development, the Company provides a variety of resources to help employees grow in their current roles and build new skills, including a learning management system, tuition reimbursement, commercial banking development program, and manager effectiveness programs. The Company has an interactive talent management system that supports regular one-on-one meetings, tracking and measuring progress on performance goals, and prompts regular check-ins on strategic initiatives and cultural competencies. In 2020, 100% of the workforce established performance goals and over 13% of the workforce was promoted into new roles at the Company.
The Company values employee feedback and regularly conducts employee engagement surveys, pulse surveys, CEO videoconference and Q&A forums open to all employees as well as CEO small group chats. The CEO and Chief Operating Officer ("COO") personally reach out to employees on their birthdays and milestone anniversaries. In 2020, the Company achieved a record high employee engagement score of 91% and low turnover across the Company of 9.8%.
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Company Overview and Strategy
The Company is a registered bank holding company engaged in business banking, private wealth, and bank consulting services through First Business Bank, headquartered in Madison, Wisconsin. All the commercial bankingCompany’s operations are conducted through the Bank and subsidiaries of the Bank. First Business Bank operates as a business through three wholly-owned bank subsidiaries. The Banks operate as business banks focusing on delivering a full line of commercial banking products including commercial loans and commercial real estate loans, and services tailored to meet the specific needs of small-small and medium-sizedmedium sized businesses, business owners, executives, professionals and high net worth individuals. First Business Bank's full-service banking locations operate in Wisconsin, Kansas, and Missouri while its Specialty Finance and Bank Consulting services are offered nationwide. First Business Bank specializes in business banking, including commercial lending and specialty finance, private wealth management solutions, and bank consulting services.
Long-Term Strategic Plan
In 2019, the Company continuedfinalized the development of its long-term strategic plan and began implementation of strategies and initiatives that will drive successful execution over the next five years. The Company’s vision statement or objective over this five-year period is to develop into a scalable franchise. excel by building the best team that works together to impact the Company’s clients’ success more than any other financial partner. To meet this objective, the Company identified four key strategies which are linked to corporate financial goals and to all business units to ensure communication and execution are consistent at all levels. These four strategies are:
1.The Company alsowill identify, attract, develop and retain a diverse, high performing team to positively impact the overall performance and efficiency of the Company.
2.The Company will increase internal efficiencies, deliver a differentiated client experience and drive client experience utilizing technology where possible.
3.The Company will diversify and grow its deposit base.
4.The Company will optimize its business lines for diversification and performance.
While the Company has made significant strides in expanding its Small Business Administration (“SBA”) lending platform across the entire Company footprint.
| Index | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |||||||||||||||||
| First Business Financial Services, Inc. | $ | 100.00 | $ | 125.37 | $ | 176.61 | $ | 294.90 | $ | 382.80 | $ | 407.41 | |||||||||||
| NASDAQ Composite | 100.00 | 99.21 | 116.82 | 163.75 | 188.03 | 201.40 | |||||||||||||||||
| SNL Bank NASDAQ | 100.00 | 88.73 | 105.75 | 152.00 | 157.42 | 169.94 | |||||||||||||||||
| 2020 Key Performance Measures | ||
| The Compensation Committee has identified the following as important financial metrics for the Company. These metrics are indicators of the effectiveness of the Company’s execution of its long-term strategy and accordingly, have been selected as the performance measures for the executive compensation program. | ||
Top Line Revenue •Top line revenue, defined as net interest income plus non-interest income, was $104.0 million for the year ended December 31, 2020, an 11.5% increase over the prior year. This was superior-level performance despite the impact of the COVID-19 pandemic and a near-zero interest rate environment, due to growth in loan and lease balances, loan fees, gains on sale of SBA loans, and fees associated with the execution of commercial loan interest rate swap activity. •The Company participated in the PPP program originating $328 million in PPP loans at a rate of 1% and recognized $2.2 million in interest and $5.3 million in PPP SBA processing fees during 2020. The PPP interest and processing fees were included in net interest income, a component of top line revenue. •The Company benefited from growth in loan and lease balances, excluding PPP loans, of $206.0 million, or 12.0%, as of December 31, 2020 compared to December 31, 2019. | ||
Efficiency Ratio •The efficiency ratio was 63.09% for the year ended December 31, 2020, an improvement over the prior year. The ratio improved to superior-level performance primarily due to top line revenue growth of 11.50% outpacing operating expense growth of 5.6%. The impact of the COVID-19 pandemic slowed expense growth as the Company transitioned most of its workforce to a virtual environment. These expense reductions were partially offset by the Company's continued investment in production staff. On the revenue side of this ratio, as discussed above, the Company achieved exceptional revenue growth despite the impact of the COVID-19 pandemic, driven by strong loan and fee income growth. •Efficiency is one of four key strategies within the long-term strategic plan. The Company expects to improve efficiency over time through sharp focus on proactive expense management and revenue growth opportunities. These efforts include increasing commercial banking market share, bringing to scale our less mature markets and business lines, and becoming more efficient in our back office operations through effective use of technology to improve processes and automation. | ||
Return on Average Assets •Return on average assets (“ROAA”) was 0.70% for the year ended December 31, 2020, which fell below threshold. The decrease in return on assets was attributable to an increase in the loan loss provision resulting from the uncertain economic conditions during the COVID-19 pandemic. Management was proactive in addressing its borrower needs during this time of uncertainty through its participation in the PPP program and by providing loan modifications which deferred payments up to six months to certain borrowers impacted by the COVID-19 pandemic. Management is encouraged by progress made during the year toward improving asset quality and the outlook on credit moving forward. The Company is confident the significant investments made in its franchise, including business banking, specialty finance and private wealth management, have built a foundation for sustainable growth in 2021 and beyond. | ||
Additional information on the Company’s business results, including a discussion of the key performance measures described above, can be found in the Company’s 20152020 Annual Report on Form 10-K under the Management’s Discussion and Analysis of Financial Condition and Results of Operations section.
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Executive Compensation Highlights
Pay-for-Performance Compensation Philosophy
The Company’s executive compensation program is designed to bealign with the Company’s business strategy and with creating long-term shareholder value. The executive compensation program is heavily weighted toward compensating itsthe Company's executives based on Company performance. To that end, the Company has implemented executive compensation policies and practices that reinforce its pay for performancepay-for-performance philosophy and align with commonly viewed best practices and sound governance principles. Highlights include:
Linking Pay with Performance
The following highlights someexecutive compensation program is rigorous in linking pay and performance and the program provides for the Compensation Committee’s and the Board’s use of judgment as appropriate to ensure alignment. The Long-Term Incentive Plan (“LTI Plan”) provides for grants of equity ownership thereby aligning the interests of the Company’s executive compensation policies and practices:
In 2020, the Company issued a combination of Performance Restricted Stock Units (“PRSU”) and Restricted Stock Awards (“RSA”) to its executive officers. The Company believes PRSUs incentivize executive officers to drive long-term Company performance, thereby aligning the executive officers’ interests with the long-term interests of shareholders. The PRSUs are measured 50% on Total Shareholder Return (“TSR”) and 50% on Return on Equity (“ROE”) and will cliff-vest after a three-year measurement period based on the Company’s performance relative to a custom peer group. The executive officers’ grants are weighted approximately 60% in PRSUs and 40% in RSAs.
The Annual Cash Bonus Plan (“Annual Bonus Plan” or “Bonus Plan”) is designed to link pay and performance and uses a variety of key performance metrics (Adjusted Top Line Revenue, ROAA, Efficiency Ratio) which drive shareholder value and the Company’s business strategy.
Compensation Overview
•The Company’s compensation program utilizes a compensation mix of fixed and variable pay and includes the Named Executive Officers;base salary, annual cash bonuses under the Bonus Plan is formulaic with clear disclosureand long-term equity awards under the LTI Plan; this mix provides a variety of business drivers; the 2015 review determined that the Bonus Plan is operating as intendedtime horizons to balance near-term and is providing appropriate incentives for the management team;long-term strategic goals.
•The Compensation Committee did not resetCompany has Stock Ownership Guidelines; the strike priceCEO and all Named Executive Officers (“NEOs”) are in compliance.
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•The Company has no-hedging and no-pledging policies which prohibit all executive officers, Section 16 officers and Company directors from hedging or expired as of February 2015.pledging Company shares; the CEO, all executive officers, Section 16 officers and all Company directors are in compliance.
Consideration of 20152020 Say on Pay
At the Company’s 2015 annual meeting2020 Annual Meeting of shareholders,Shareholders, approximately 79%93% of voting shareholders approved the non-binding advisory proposal on the compensation of the Named Executive Officers. Approximately 97% and 96% of shareholders supported the Company’s say-on-pay vote (“SOP”) in 2014 and 2013 respectively. NEOs, (commonly referred to as a “say-on-pay” vote).
The Board and the Compensation Committee pay careful attention to communications received from shareholders regarding executive compensation, including the non-binding advisory vote. The Company carefully consideredconsiders the result of the 2015 advisory vote on executive compensation but not for specific 2015annually as one indicator of the overall soundness of the Board’s and Compensation Committee’s compensation decisions. After reviewing all available information, the Company feels the decline in the SOP for 2015 was a result of one of the proxy advisory firms recommending against SOP because of an amendment to the CEO employment agreement, which contained a preexisting single-trigger provision. The amendment made to the agreement was unrelated to the single-trigger provision and unrelated to any compensation provisions, and this provision has been in the CEO’s agreement since 2005. This is the only executive agreement that contains a single-trigger and agreements going forward will contain a double trigger. Based on this consideration and the other factors described in this
Executive Compensation Discussion and
This Compensation Discussion and Analysis describes the Company’s compensation philosophy and policies for 20152020 as applicable to the Named Executive OfficersNEOs in the Summary Compensation Table on page 28 (“Named Executive Officers”).37. This section explains the structure and rationale associated with each material elementcomponent of the Named Executive Officers’NEOs’ compensation, and it provides important context for the more detailed disclosure tables and specific compensation amounts provided following the section. For 2020, the Compensation Committee engaged McLagan, a part of the Rewards Solutions practice at Aon plc, as its outside independent compensation consultant. The Compensation Committee’s consultant regularly attends committee meetings and attends executive sessions as requested by the Compensation Committee’s Chair.
In 2020, McLagan conducted a review of the Company’s executive compensation programs. The Compensation Committee hasused data developed by McLagan in its determination of overall responsibilitycompetitive pay practices. In addition, McLagan aided in establishing measures for evaluating the PRSUs and recommended the Company's peer group for the Compensation Committee's consideration and approval.
The NEOs include the Company’s principal executive officer (i.e. CEO), principal financial officer (i.e. Chief Financial Officer) and the three other executive officers of the Company having the highest total compensation plans, policiesfor executive officers serving in that capacity at the end of 2020. These five individuals, identified below, and programs relating tothroughout the Named Executive Officers. proxy statement are the NEOs.
| Named Executive Officer | Title | ||||
| Corey A. Chambas | President and Chief Executive Officer of First Business Financial Services, Inc. | ||||
| Edward G. Sloane, Jr. | Chief Financial Officer of First Business Financial Services, Inc. | ||||
| David R. Seiler | Chief Operating Officer of First Business Financial Services, Inc. | ||||
| Mark J. Meloy | Chief Executive Officer of First Business Bank | ||||
| Bradley A. Quade | Chief Credit Officer of First Business Financial Services, Inc. | ||||
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The Compensation Committee reviews the performance of the Chief Executive Officer, Mr. Chambas,CEO and determines and recommends to the Board for approval the salary, bonus and bonusother compensation paid to him.
The Compensation Committee relies upon Mr. Chambas’the CEO’s assessment of each Named Executive Officer’sNEO’s individual performance, which considers the Named Executive Officer’sNEO’s efforts in achieving his or hertheir individual goals each year, managing and developing employees and the enhancement of long-term relationships with clients, if applicable to his or hertheir position. Individual goals for Named Executive Officers are established by Mr. Chambas in consultation with each Named Executive Officer. No Named Executive Officer participates in any recommendation or decision with respect to his or her own compensation or benefits.
Compensation Factors
General
The Compensation Committee’s decisions regarding each Named Executive OfficerNEO are based, in part, on the Compensation Committee’s subjective judgment, and also take into account qualitative and quantitative factors, as will be set forth in the discussion below. In reviewing a Named Executive Officer’san NEO’s compensation, the Compensation Committee considers and evaluates all components of the Named Executive Officer’sNEO’s total compensation package.
Company Performance
In establishing Named Executive OfficerNEO compensation, the Compensation Committee measures the Company’s performance compared to management’s and the Board’s goals and objectives, and also compares Company performance to that of the Company’s peer group of financial institutions. The Compensation Committee believes that using the Company’s performance as a factor in determining a Named Executive Officer’san NEO’s compensation is effective in helping to align the Named Executive Officer’sNEO’s interests with those of the Company’s shareholders. With that in mind, the Compensation Committee focuses on key financial performance criteria such as revenue growth goals, operating profitability goals and goals related to strategic objectives, as determined by the Board. As part of the evaluation and review of these criteria, the Compensation Committee will also take into account various subjective issues, such as general economic conditions including the interest rate environment and its impact on performance, and how they may affect the Company’s performance. The Compensation Committee did not make any discretionary adjustments to any performance criteria in 2020 due to the extenuating circumstances relating to the COVID-19 pandemic.
Peer Group Analysis.Companies and Analysis
The Compensation Committee reviews compensation levels and design at peer companies as part of its decision-making process so it can set total compensation levels that it believes are competitive and aligned with the Company and level of performance. The Compensation Committee generally strives to establish compensation for its executive officers that is competitive with that of our peer companies, while also taking into consideration other factors such as additional competitive market data, the scope of particular job responsibilities, individual performance of the executive officer, internal pay equity and other factors. The Compensation Committee’s determinations for executive officers are based on its review of such factors. Determinations are also informed by the experiences of the members of the Compensation Committee as well as input from, and peer group data provided by, the Compensation Committee’s independent compensation consultant, McLagan.
For purposes of peer analysis in assessing performance, the Company utilizes a peer group that includes commercial banks of similar asset size. Given the ever-changing landscape within the banking industry, the
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Compensation Committee regularly reviews and validatesrecalibrates the group of banks used for this analysis. analysis as recommended by McLagan.
In 2015, in connection with its analysis of2019, the Company’s executive compensation programs, PM&PCompany compiled an updated market reference group of publicly-tradedhigh performing publicly traded bank holding companies with an asset sizetotal assets between $800 million$1.0 billion and $3.5$4.0 billion which isat the time was approximately one-half to two times the Company’s size, a commercial lending concentration of at least 70%65%, headquarters in the continental United States (excluding some specific states due to different market and compensation conditions), similar product offerings, listed on a national exchange and a strong performance history. Eight banks were dropped due to not meetingminimum of 0.50% ROAA for the foregoing criteriacurrent year and seven new banks were added that meet all the criteria; thereby maintaining the
The peer group used for purposes of 20152020 compensation decisions andis reflected below (“Peer Group”).below. The companies included in this Peer Grouppeer group are as follows:
| Codorus Valley Bancorp, Inc. | ||
| Community Bankers Trust Corporation | ||
| Community Financial Corporation | ||
| First Guaranty Bancshares, Inc. | ||
| FVCBankcorp, Inc. | ||
| Investar Holding Corporation | ||
| Level One Bancorp, Inc. | ||
| Macatawa Bank Corporation | ||
| Mackinac Financial Corporation | ||
| Malvern Bancorp, Inc. | ||
| Mercantile Bank Corporation | ||
| Mid Penn Bancorp, Inc. | ||
| Nicolet Bankshares, Inc. | ||
| Old Line Bancshares, Inc.* | ||
| Old Second | ||
| Stock Yards Bancorp, Inc. | ||
| West Bancorporation, Inc. | ||
*Old Line Bancshares, Inc. was acquired in November 2019
In addition,2020, the Compensation Committee reviewed compensation survey data that is readily availableengaged McLagan to evaluate the Company from industry sources suchmeasures used to determine the Company's peer group. Given the Company's significant non-interest income business lines, McLagan recommended replacing total asset size with total revenue as PM&P, McLagana more accurate and the American Bankers Association.
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million which at the time (June 2020) was approximately one-half to two times the Company’s size, a commercial lending concentration of at least 75%, headquarters in the continental United States (excluding some specific states and large metropolitan areas due to different market data regardingand compensation conditions), similar product offerings, listed on a national exchange and a minimum of 0.50% ROAA for the compensation practicescurrent year and prior two years. This updated reference group had median revenue of other financial institutions$91 million at the time of a similar asset size and complexity. In some cases, however, the analysis. The Compensation Committee will consider data from outsideuse the new peer comparisongroup when reviewingmaking compensation practices if that comparison identifies similarities, such as business-line focus and geography. The Compensation Committee believes that such comparisons are usefuldecisions in creating an overall compensation program to stay competitive in the marketplace and for attracting and retaining qualified Named Executive Officers. While the Compensation Committee believes that it is prudent to consider such comparative information in determining compensation practices, it does not set strict parameters using this data. Rather, the Compensation Committee uses comparative data to ensure that Named Executive Officer compensation is not inconsistent with appropriately defined peer organizations. Generally, the Compensation Committee believes that the Company’s current Named Executive Officers have established a sound track record of long-term performance that warrants compensation at or around the median level of compensation among similar financial institutions.2021.
Compensation Program Components
The Compensation Committee strives to provide an appropriate mix of compensation components, including finding a balance between current and long-term compensation and between cash and equity incentive compensation. Cash payments primarily are aligned with and reward more recent performance, while equity awards encourage the Company’s executives to continue to deliver results over a longer period of time and also serve as a retention tool. Compensation for 2015 for the Named Executive OfficersNEOs was allocated between base salary, annual incentive compensation and longer-term awards as follows.
Base Salary
The Company annuallyCompensation Committee generally reviews the base salaries of the Named Executive Officers to determine whetherNEOs on an annual basis and also makes periodic adjustments in connection with promotions, market conditions or not they will be adjusted.changes in position. The salaries for 2015,2020, determined by the Compensation Committee at the end of 2014,2019 as described in our 2019 Proxy Statement, are set forth in the Summary Compensation Table on page 28. In determining these salary levels,37. For each fiscal year, the Company considered the followingCompensation Committee considers various factors with no specific weighting applied to any single factor:
including the base salary paid to the Named Executive OfficersNEO in comparable positions at companies in the Peer Group, generally using the median as its point of reference if the Named Executive Officer’s overall performance and experience warrants such consideration;
peer group, the overall professional experience and background and the industry knowledge of the Named Executive Officers andNEO, the quality and effectiveness of their leadership at the Company;
base salaries.
At the end of 2015,2020 in establishing NEO base salaries for 2021, the Compensation Committee determinedconsidered the factors discussed above as well as the Company’s 2020 financial performance, the results of the McLagan 2020 executive compensation study and each NEO's individual performance and increased base salaries of the Named Executive Officers for 2016. The Compensation Committee approved raises for all of the Named Executive Officers for 2016 based on the factors described above. The base salaries for 2015 and 2016 are as follows:shown below:
| Name | Position | 2015 Base Salary | 2016 Base Salary |
| Corey A. Chambas | President and Chief Executive Officer | $416,000 | $432,640 |
James F. Ropella(1) | Senior Vice President & Chief Financial Officer | $260,000 | $267,800 |
David R. Papritz(2) | Chief Financial Officer and Senior Vice President - Corporate Development | $260,000 | N/A |
| Charles H. Batson | President & CEO - First Business Capital Corp. | $242,927 | $250,000 |
| Michael J. Losenegger | Chief Credit Officer | $221,950 | $230,828 |
| Pamela J. Berneking | President & CEO – Alterra Bank | $208,000 | $240,000 |
| Name | Position | 2019 Base Salary | 2020 Base Salary | 2021 Base Salary | ||||||||||
| Corey A. Chambas | President and Chief Executive Officer | $466,000 | $490,000 | $510,000 | ||||||||||
| Edward G. Sloane, Jr. | Chief Financial Officer | $270,375 | $281,190 | $286,814 | ||||||||||
| David R. Seiler | Chief Operating Officer | $291,200 | $302,848 | $313,448 | ||||||||||
| Mark J. Meloy | CEO - First Business Bank | $231,001 | $234,466 | $239,155 | ||||||||||
| Bradley A. Quade | Chief Credit Officer | $240,000 (1) | $240,000 | $247,200 | ||||||||||
| (1) | |||||
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Annual Bonus.Bonus Plan
The Compensation Committee typically determines eligibility for annual bonus payments using the parameters defined in the Company’s Bonus Plan, which is a performance-based bonus plan for eligible officers and employees of the Company, including the Named Executive Officers.NEOs. The plan is formulaic and has clear disclosure of the business drivers. As established, the Compensation Committee retains the right to modify the Bonus Plan or withhold payment at any time.
| Measurement | Threshold | Target | Superior | Actual | Weighting | |||||||
| Company | Top Line Revenue | 73,000,000 | 74,000,000 | 75,000,000 | 75,651,418 | 33.33 | % | |||||
| Analyzed Service Charges | 3,454,000 | 3,541,000 | 3,627,000 | 3,379,385 | 33.33 | % | ||||||
| Adjusted Pre-tax Return on Assets | 1.59 | % | 1.65 | % | 1.71 | % | 1.59 | % | 33.33 | % | ||
| Alterra Bank | Adjusted Top Line Revenue | 15,000,000 | 15,300,000 | 15,750,000 | 15,879,304 | 33.33 | % | |||||
| Analyzed Service Charges | 307,710 | 322,710 | 352,710 | 342,242 | 33.33 | % | ||||||
| Adjusted Pre-tax Return on Assets | 2.00 | % | 2.15 | % | 2.50 | % | 1.80 | % | 33.33 | % | ||
| FBCC Division | Top line Revenue | 9,950,000 | 10,100,000 | 10,325,000 | 10,489,955 | 33.33 | % | |||||
| Adjusted Pre-tax Income | 4,350,000 | 4,500,000 | 4,800,000 | 4,892,708 | 33.33 | % | ||||||
| Adjusted Pre-tax Return on Assets | 2.54 | % | 2.61 | % | 2.74 | % | 3.06 | % | 33.33 | % | ||
Bonus payments under the Bonus Plan are determined by the formulas described below, although the Board reserves the right to modify downward the payouts in its sole discretion.judgment. The Bonus Plan has a safeguard of requiring that the Company must meet one-half of the return on asset threshold before any bonus payment can be made based on performance on any criteria.
The following chart outlines the Company's performance measures that were used in the NEOs’ bonus calculations. The bonus calculations for all NEOs were based 100% on the performance of the Company.
| Measure | Threshold | Target | Superior | Actual | Weighting | ||||||||||||
Top Line Revenue(1) | $96,000,000 | $99,500,000 | $103,000,000 | $104,011,000 | 33.33% | ||||||||||||
Efficiency Ratio(2) | 66.50% | 65.50% | 64.50% | 63.09% | 33.33% | ||||||||||||
Return on Average Assets(3) | 0.90% | 1.00% | 1.15% | 0.70% | 33.33% | ||||||||||||
| (1) | Top Line Revenue is defined as net interest income ($77.1 million) plus non-interest income ($26.9 million). | ||||
| (2) | Efficiency Ratio is defined as non-interest expense excluding the effects of the SBA recourse provision, impairment of tax credit investments, losses or gains on foreclosed properties, amortization of other intangible assets, loss on early extinguishment of debt, and other non-operating items, if any. | ||||
| (3) | Return on Average Assets is defined as net income divided by average assets. | ||||
The specific performance metrics established with respect to the Company’s 2020 performance include the following non-GAAP financial measures, which management believes are relevant measures to align employees’ performance with the Company’s profitability, growth and achievement of the Company’s strategic objectives:
•Top line revenue is a key measure of growth and income diversification.
•The efficiency ratio measures operating expenses in relation to top line revenue. Certain non-operating and discrete items were excluded to remove volatility from the measure.
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With respect to the bonus formula, bonuses under the Bonus Plan provide for bonus payments of 0% to 85%95% of eligible salary. The target annual incentive opportunities for each position did not change in 2020. In 2015,2020, the Bonus Plan provided that ourthe President and Chief Executive Officer would receive up
0% to 85%95% of his salary with a target payment of 40%45%, the President & Chief ExecutiveFinancial Officer of FBCCand the Chief Operating Officer would each receive up0% to 75% of his salary with a target payment of 35%, and the other NamedChief Credit Officer and the Chief Executive OfficersOfficer of FBB would each receive up0% to 60% of their salarieshis salary with a target payment of 30%.
Named Executive Officer | Payout on Company Performance | Payout on Division/ Bank | Consolidated Payout | Bonus Payout | |||||
| % of Target | ($) | ||||||||
| Corey A. Chambas | 32.10 | % | NA | 32.10 | % | 80.25 | % | 133,536 | |
| James F. Ropella | 23.62 | % | NA | 23.62 | % | 78.73 | % | 61,412 | |
| David Papritz | NA | NA | NA | NA | NA | ||||
| Charles H. Batson | 7.17 | % | 54.42 | % | 61.59 | % | 175.97 | % | 149,618 |
| Michael J. Losenegger | 23.62 | % | NA | 23.62 | % | 78.73 | % | 52,425 | |
| Pamela J. Berneking | 5.91 | % | 27.38 | % | 33.29 | % | 110.96 | % | 69,243 |
| Named Executive Officer | Targeted Payout as % of Base Salary | Actual Payout as % of Base Salary | Bonus Payout ($) | ||||||||
| Corey A. Chambas | 45.00% | 63.33% | $310,333 | ||||||||
| Edward G. Sloane, Jr. | 35.00% | 50.00% | $140,595 | ||||||||
| David R. Seiler | 35.00% | 50.00% | $151,424 | ||||||||
| Mark J. Meloy | 30.00% | 40.00% | $93,786 | ||||||||
| Bradley A. Quade | 30.00% | 40.00% | $96,000 | ||||||||
Long-Term Incentive Plan. Plan
The LTI Plan was established to advance the interests of the Company’s shareholders by enhancing the Company’s ability to attract, retain and motivate personsemployees who make or are expected to make important contributions to the Company by providing equity ownership opportunities and equity-based incentives, thereby aligning the interests of such persons with those of the shareholders. The LTI Plan is administered by the Compensation Committee of the Board and provides for the grant of equity ownership opportunities through incentive stock options and nonqualifiednon-qualified stock options, restricted stock, restricted stock units, dividend equivalentperformance restricted stock units and any other type of award permitted by the LTI Plan.
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| 2020 PRSU Program Features | ||
Vehicle Value of units is measured on a relative basis over the performance period; units are settled in shares at vesting. | ||
Performance Period Awards made in 2020 have a three (3) year performance measurement period of 2020 - 2022 and will cliff vest at the end of the measurement period. | ||
Performance Measures Relative Total Shareholder Return and Relative Return on Average Equity; each measure is weighted 50%. | ||
Payout Payout under the program is calculated at the end of the three-year performance period and is based on the relative performance for each measure against the custom peer group. Payout at the 25th percentile of the peer group will result in an award of 50% of the target value, payout at the 50th percentile of the peer group will result in an award of 100% of the target value, and payout at the 75th percentile or above of the peer group will result in an award of 200% of the target value. Achievement of each performance measure is determined by straight-line interpolation for actual performance falling between threshold and target or target and maximum levels. If achievement with respect to a particular performance measure does not reach threshold level, then no portion of the award will vest with respect to such performance goal. | ||
Peer Group Performance A peer group is established for each grant to measure relative performance. The peer groups consist of publicly traded banks, headquartered in the US, with assets between one-half and two times the asset size of the Company. For the 2020 grant, the peer group is comprised of approximately 140 banks and the peer group will remain static for each grant throughout the measurement period. | ||
Shares certified as earned by the Compensation Committee believes that making annual awards is incentivizingat the Named Executive Officers to focus on consistent and sustainableend of the performance overperiod will be distributed within 60 days of the long term.year following the performance period.
The targeted amount of the LTIlong-term incentive awarded for each of the Named Executive OfficersNEOs is determined utilizing market data for similar positions within the industry as well as relative roles and responsibilities within the Company. Awards made in 2015 include restricted stock awardsThe targeted value of the grant is determined as a percentage of their base salary and ranges from 30% to Named Executive Officers which generally vest in equal increments over a four year period.50%. The following chart outlinessummarizes the number of restricted shares awardedequity awards made to each of the Named Executive OfficersNEOs in 2015.2020.
| Name | Position | PRSU # Granted at Target | PRSU Grant Date Fair Value | RSA # Granted | RSA Grant Date Fair Value | ||||||||||||
| Corey A. Chambas | President and Chief Executive Officer | 5,700 | $178,496 | 3,800 | $98,116 | ||||||||||||
| Edward G. Sloane, Jr. | Chief Financial Officer | 2,455 | $76,884 | 1,365 | $35,244 | ||||||||||||
| David R. Seiler | Chief Operating Officer | 2,640 | $82,672 | 1,470 | $37,955 | ||||||||||||
| Mark J. Meloy | CEO - First Business Bank | 1,590 | $49,791 | 1,135 | $29,306 | ||||||||||||
| Bradley A. Quade | Chief Credit Officer | 1,630 | $51,043 | 1,165 | $30,080 | ||||||||||||
These restricted stockequity awards are also listed in the Outstanding Equity Awards at Fiscal Year End table on page 31.40.
All Other Compensation and Perquisites. While the Compensation Committee reviews and monitors the level of other compensation offered to the Named Executive Officers,NEOs, it typically does not adjust the level of benefits offered on an annual basis. The Compensation Committee does consider the benefits and perquisites offered to the Named Executive OfficersNEOs in its
33
evaluation of the total compensation received by each. It is the Company’s belief that perquisites for Named Executive OfficersNEOs should be very limited in scope and value and reflective of similar perquisites from competitive employers both in the industry and the region. Due to this philosophy, the Company has generally provided nominal benefits to Named Executive OfficersNEOs that are not available to other employees and plans to continue this approach in the future. The benefits offered in 20152020 to the Named Executive OfficersNEOs will continue for 2016.2021. The perquisites received by the Named Executive OfficersNEOs in 20152020 are reported in the Summary Compensation Table on page 28.37.
Director and Named Executive Officer Stock Ownership Guidelines
The Board has established director and NEO stock ownership guidelines as another means by which to align their decisions with creating shareholder value. The guidelines are based on a multiple of base salary for the CEO and NEOs and a multiple of the annual cash and equity retainer for the directors as follows:
| Position | Baseline | Minimum Ownership as a multiple of the Baseline | ||||||
| Director | Annual Cash and Equity Retainer | 3x | ||||||
| CEO | Base Salary | 3x | ||||||
| NEOs | Base Salary | 1x | ||||||
NEOs and directors are allowed five years from the later of the adoption of the guidelines or their appointment to accumulate the minimum number of shares to satisfy these guidelines. All NEOs and directors who are subject to these guidelines are currently in compliance. The complete details of the ownership guidelines are available in the Company’s Corporate Governance Guidelines posted on its website located at ir.firstbusiness.bank/govdocs.
Clawback Policy
The Company’s Clawback policy applies to all current and former executive officers. In the event of a material restatement of the Company’s financial results, other than a restatement due to changes in accounting principles or applicable law or interpretations thereof, the Board will review the facts and circumstances that led to the requirement for the restatement and will take such actions, including clawback, as it deems necessary or appropriate. The Board will consider whether any executive officer received cash and/or equity incentive compensation based on the original financial statements because it appeared they achieved financial performance targets which in fact were not achieved based on the restatement. The Board will also consider the accountability of any executive officer whose acts or omissions were responsible in whole or in part for the events that led to the restatement and whether such acts or omissions constituted improper conduct.
No-Hedging and No-Pledging Policies
The Company has an Insider Trading Policy that prohibits executive officers, Section 16 officers and directors from hedging Company stock, from holding Company stock in a margin account and from pledging Company stock as collateral for a loan. All Section 16 officers, including all executive officers, and directors are currently in compliance with these policies.
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Assessment of Compensation Risk
As a publicly-tradedpublicly traded financial institution, the Company must comply with several often overlapping layers of regulations when considering and implementing compensation-related decisions. These regulations do not set specific parameters within which compensation decisions must be made, but do require the Company and the Compensation Committee to be mindful of the risks that often go hand-in-hand with compensation programs designed to incentivize the achievement of better than average performance.
The Compensation Committee believes that a sensible approach to balancing risk-taking and rewarding reasonable, but not necessarily easily attainable, goals has always been a component of its overall assessment of the compensation plans, programs and arrangements it has established for the Named Executive Officers.NEOs.
In 2015,addition to our cultural competencies, the Company engages in the following practices to ensure its executive compensation program is aligned with shareholders’ interests and protects the Company against excessive risk taking:
•Variable compensation based on a variety of performance goals,
•Board discretion to lower incentive award amounts,
•Balanced mix of short-term and long-term incentives with emphasis on performance,
•Stock ownership guidelines,
•No-hedging and no-pledging provisions, and
•Clawback provisions.
In 2020, the Compensation Committee completed its thorough annual review of all compensation programs offered at the Company including those described in this Compensation Discussion and Analysis, to determine whether any aspect of the plans or programs encourages excessive or unnecessary risk that would adversely affect the long-term value or performance of the Company. Based on the risk assessment process and the practices listed above, the Compensation Committee concluded that the compensation plans and programs, considered individually and as a whole, do not encourage excessive risk takingrisk-taking by Named Executive OfficersNEOs or other employees.
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COMPENSATION COMMITTEE REPORT
Based on review and discussion with management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statementproxy statement and in the Company’s Annual reportReport on Form 10-K for the year ended December 31, 2015.2020.
Submitted by:by the members of the Compensation Committee:
Mark D. Bugher, Compensation Committee Chair
Carla C. Chavarria
Jan A. Eddy
Compensation Committee Interlocks and Insider Participation
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation of the Named Executive OfficersNEOs for the years ended December 31, 2015, 20142020, 2019, and 2013:2018:
| Change in pension value and nonqualified deferred compensation earnings | ||||||||
| Stock awards | Non-equity incentive plan compensation | All other compensation | ||||||
| Name and Principal | Year | Salary | Bonus | Total | ||||
| Position | ($) | ($) (1) | ($) | ($) (2) | ($) (3) | ($) | ||
| Corey A. Chambas Chief Executive Officer | 2015 | $416,000 | $171,590 | — | $133,536 | $115,995 | $31,218 | $868,339 |
| 2014 | $400,000 | $162,498 | — | $231,280 | $100,871 | $36,714 | $931,363 | |
| 2013 | $350,000 | $141,900 | — | $184,625 | $80,552 | $34,046 | $791,123 | |
| James F. Ropella Senior Vice President & Chief Financial Officer | 2015 | $260,000 | $67,066 | — | $61,412 | — | $20,641 | $409,119 |
| 2014 | $220,360 | $56,095 | — | $92,287 | — | $25,829 | $394,571 | |
| 2013 | $195,009 | $98,835 | — | $62,403 | — | $23,930 | $380,177 | |
| David R. Papritz Chief Financial Officer & Senior Vice President of Corporate Development | 2015 | $21,667 | — | — | — | — | $3,778 | $25,445 |
| 2014 | $69,635 | — | — | — | — | $11,513 | $81,148 | |
| 2013 | — | — | — | — | — | — | — | |
| Charles H. Batson President & Chief Executive Officer of First Business Capital Corp. | 2015 | $242,927 | $62,580 | — | $149,618 | — | $24,103 | $479,228 |
| 2014 | $233,583 | $59,434 | — | $123,752 | — | $29,422 | $446,191 | |
| 2013 | $229,003 | $58,080 | — | $35,175 | — | $28,240 | $350,498 | |
Michael J. Losenegger Chief Credit Officer | 2015 | $221,950 | $57,197 | — | $52,425 | — | $26,605 | $358,177 |
| 2014 | $215,485 | $54,760 | — | $90,245 | — | $32,159 | $392,649 | |
| 2013 | $209,209 | $52,965 | — | $66,947 | — | $32,211 | $361,332 | |
| Pamela R. Berneking President & Chief Executive Officer of Alterra Bank | 2015 | $208,000 | $53,608 | $20,800 | $48,443 | — | $32,478 | $363,329 |
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-equity incentive plan compensation ($)(2) | Change in pension value and nonqualified deferred compensation earnings(3) | All other compensation ($)(4) | Total ($) | ||||||||||||||||||
| Corey A. Chambas | 2020 | $490,000 | $276,612 | $310,333 | $269,817 | $28,250 | $1,375,012 | |||||||||||||||||||
| President & Chief Executive Officer | 2019 | $466,000 | $276,879 | $307,549 | $153,014 | $28,304 | $1,231,746 | |||||||||||||||||||
| 2018 | $443,456 | $93,061 | $179,132 | $0 | $31,474 | $747,123 | ||||||||||||||||||||
| Edward G. Sloane, Jr. | 2020 | $281,190 | $112,128 | $140,595 | $21,745 | $555,658 | ||||||||||||||||||||
| Chief Financial Officer | 2019 | $270,375 | $113,246 | $142,199 | $22,260 | $548,080 | ||||||||||||||||||||
| 2018 | $257,500 | $29,980 | $85,333 | $19,415 | $392,228 | |||||||||||||||||||||
| David R. Seiler | 2020 | $302,848 | $120,627 | $151,424 | $26,059 | $600,958 | ||||||||||||||||||||
| Chief Operating Officer | 2019 | $291,200 | $122,039 | $153,151 | $26,460 | $592,850 | ||||||||||||||||||||
| 2018 | $267,969 | $30,203 | $88,802 | $23,615 | $410,589 | |||||||||||||||||||||
| Mark J. Meloy | 2020 | $234,466 | $79,097 | $93,786 | $37,849 | $445,198 | ||||||||||||||||||||
| CEO - First Business Bank | 2019 | $231,001 | $82,192 | $89,114 | $38,208 | $440,515 | ||||||||||||||||||||
| 2018 | $220,001 | $25,634 | $61,258 | $34,647 | $341,540 | |||||||||||||||||||||
| Bradley A. Quade | 2020 | $240,000 | $81,124 | $96,000 | $18,812 | $435,936 | ||||||||||||||||||||
| Chief Credit Officer | ||||||||||||||||||||||||||
| (1) | |||||
| each NEO is as follows: Chambas $455,107; Sloane $189,012; Seiler $203,299; Meloy $128,887; and Quade $132,167. | |||||
| (2) | The amounts reported in the “Non-equity incentive plan compensation” column were earned under the Annual | ||||
| (3) | These amounts reflect the aggregate change in the actuarial present value of Mr. Chambas' normal retirement benefit set forth in his employment agreement. | ||||
| The amounts for | |||||
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| Mr. Chambas | Mr. Ropella | Mr. Papritz | Mr. Batson | Mr. Losenegger | Ms. Berneking | |
| 401(k) match | $7,950 | $7,950 | — | $7,950 | $7,950 | $7,950 |
| Auto use/ reimbursement | $6,109 | — | — | $3,900 | $6,694 | $11,736 |
| Profit sharing | $8,745 | $8,745 | — | $8,745 | $8,745 | $8,745 |
| Dividends on restricted stock | $8,414 | $3,946 | — | $3,508 | $3,216 | $4,047 |
| Housing allowance | — | — | $3,778 | — | — | — |
| Total | $31,218 | $20,641 | $3,778 | $24,103 | $26,605 | $32,478 |
All Other Compensation:
| Name | 401(k) match | Auto use/ reimbursement | Profit Sharing | Country Club Membership | Total | ||||||||||||
| Corey A. Chambas | $8,550 | $6,391 | $13,309 | $0 | $28,250 | ||||||||||||
| Edward G. Sloane, Jr. | $8,436 | $0 | $13,309 | $0 | $21,745 | ||||||||||||
| David R. Seiler | $8,550 | $4,200 | $13,309 | $0 | $26,059 | ||||||||||||
| Mark J. Meloy | $8,550 | $4,200 | $13,309 | $11,790 | $37,849 | ||||||||||||
| Bradley Quade | $4,800 | $0 | $1,868 | $12,144 | $18,812 | ||||||||||||
CEO Pay Ratio
In August of Plan-Based Awards2015 the SEC adopted a rule requiring disclosure of the ratio of the CEO’s annual total compensation to the total annual compensation of the Median Employee.
In determining the Median Employee, a list of all full-time and part-time employees, exclusive of the Company’s CEO, Mr. Chambas, was prepared based on active employees included in the Company’s payroll system as of October 1, 2020. Salaries and wages were annualized for those employees that were not employed for the full year of 2020. Salaries and wages were ranked from lowest to highest and the salary of the Median Employee was selected from the list. The total annual compensation of the Median Employee was then calculated in the same manner as the total compensation disclosed for Mr. Chambas in the Summary Compensation Table shown on page 37.
The SEC rule for Pay Ratio permits companies to make the Median Employee determination only once every three years if there has been no change in the Company’s employee population or employee compensation arrangement that the Company reasonably believes would result in a significant change to its pay ratio disclosure.
The following table provides information on annual cash bonuses underratio of compensation of the Company’s Bonus Plan and on long-term equity performance awards under the LTI Plan. These plans are described in more detail in the Compensation Discussion and Analysis section. The estimated amounts set forth in the table are subjectCEO to the terms of the respective plan and Company and individual performance,Median Employee’s compensation is as described in the Compensation Discussion and Analysis section.
| Name | Grant date | Estimated future payouts under non-equity incentive plan awards | Estimated future payouts under equity incentive plan awards | Grant date fair value of stock and option awards | |||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold (shares) | Target (shares) | Maximum (shares) | ||||
| Corey A. Chambas | |||||||||
| Bonus Program | $41,600 | $166,400 | $353,600 | ||||||
| LTI Plan | 8/31/2015 | 7,650 | $171,590 | ||||||
| James F. Ropella | |||||||||
| Bonus Program | $26,000 | $78,000 | $156,000 | ||||||
| LTI Plan | 8/31/2015 | 2,990 | $67,066 | ||||||
| David R. Papritz | |||||||||
Bonus Program(1) | — | — | — | ||||||
| LTI Plan | — | — | |||||||
| Charles H. Batson | |||||||||
| Bonus Program | $24,293 | $85,024 | $182,195 | ||||||
| LTI Plan | 8/31/2015 | 2,790 | $62,580 | ||||||
| Michael J. Losenegger | |||||||||
| Bonus Program | $22,195 | $66,585 | $133,170 | ||||||
| LTI Plan | 8/31/2015 | 2,550 | $57,197 | ||||||
| Pamela J. Berneking | |||||||||
| Bonus Program | $20,800 | $62,400 | $124,800 | ||||||
| LTI Plan | 8/31/2015 | 2,390 | $53,608 | ||||||
follows:
Annual total compensation of Mr. Chambas, CEO(1): | $1,375,012 | ||||
Annual total compensation of the Median Employee(2): | $104,725 | ||||
| Ratio of CEO to Median Employee compensation: | 13:1 | ||||
| (1) | |||||
| (2) | Annual total compensation of the Median Employee consisted of salary, annual bonus, and Company | ||||
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