SECURITIES AND EXCHANGE COMMISSION
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(Amendment No. )
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TIME: 10:00AMEDT
ACCESS: The Annual Meeting of Shareholders can be accessed virtually at meetnow.global/M2LYYDT.
TO THE SHAREHOLDERS OF LCNB CORP.:
You are cordially invited to attend the annual meeting of the shareholders of LCNB Corp. to be held on April 26,
20162022 at 10:
00 a.m. EDT at00AM EDT. The meeting will be held virtually via the
principal executive officesInternet for the safety of
LCNB Corp. at 2 North Broadway, Lebanon, Ohio 45036,our shareholders, employees and directors in light of the ongoing COVID-19 pandemic. The meeting will be held for the purpose of considering and acting on the following:
1.
Electing Class II directors to serve until the 20192025 annual meeting.
2.
Amending LCNB’s Amended and Restatedthe Articles of Incorporation to increase authorized shareseliminate cumulative voting for director elections.
3. Adopting an advisory, non-binding “say-on-pay” resolution to approve the compensation of
common stock.our named executive officers.
4. Adopting an advisory, non-binding resolution regarding the frequency of our advisory votes on executive compensation.
5. Ratifying the appointment of BKD, LLP as the independent registered public accounting firm for
the Company.LCNB Corp.
6. Transacting such other business as may properly come before the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 1,
20162022 will be entitled to vote at the meeting.
By Order of the Board of Directors
/s/
Steve P. Foster Steve P. Foster
Eric J. Meilstrup
Eric J. Meilstrup
President & Chief Executive Officer
A proxy statement and proxy are submitted herewith. As a shareholder, you are urged to complete and mail the proxy promptly whether or not you plan to attend this annual meeting in person. The proxy is revocable at any time prior to the exercise thereof by written notice to the company, and shareholders who attend the annual meeting may withdraw their proxies and vote their shares personally if they so desire.
| | |
| A proxy statement and proxy are submitted herewith. As a shareholder, you are urged to complete and mail the proxy promptly whether or not you plan to attend this virtual annual meeting in person. Shareholders who attend the annual meeting by following the instructions to join the virtual meeting described on page 35 will be considered to be attending the annual meeting “in person.” Alternatively, refer to the instructions on the proxy card for details about transmitting your voting instructions electronically via the Internet or by telephone. The proxy is revocable at any time prior to the exercise thereof by written notice to the company, and shareholders who attend the annual meeting may withdraw their proxies and vote their shares via the Internet if they so desire. |
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited by the Board of Directors of LCNB Corp. (also referred to as “LCNB”“LCNB” or the “Company”“Company”), in connection with the annual meeting of shareholders to be held on April 26, 20162022 at 10:00 a.m.00AM EDT at the principal executive offices of LCNB located at 2 North Broadway, Lebanon, Ohio 45036,or at any adjournments thereof. In light of the COVID-19 pandemic, for the safety of our directors, employees and shareholders, we have determined that the Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. If you plan to attend the virtual meeting, please see “Information about the 2022 Virtual Annual Meeting” on page 43. Shareholders will be able to attend, vote and submit questions (both before, and for a portion of, the meeting) from any location via the Internet.
The meeting has been called for the following purposes: (i) electing
| | | | | | | | |
| Proposal Number | Description | Board Recommendation |
| 1 | Election of Directors | FOR ALL the Company’s nominees |
| To elect four Class II directors to serve until the 2025 meeting of stockholders and until their successors are duly elected and qualified. | |
| 2 | Approval of the Elimination of Cumulative Voting for Future Director Elections | FOR |
| To approve removing the cumulative voting mechanism from future director elections in line with peers. | |
| 3 | Advisory Vote on the Compensation of our Named Executive Officers | FOR |
| To approve, on an advisory basis, a resolution regarding the compensation of our named executive officers. | |
| 4 | Advisory Vote on the Frequency of the Advisory Votes on the Compensation of our Named Executive Officers | ONE YEAR |
| To approve, on an advisory basis, a resolution regarding the frequency of our advisory votes on executive compensation. | |
| 5 | Ratification of Appointment of Independent Registered Public Accounting firm | FOR |
| To ratify the appointment of BKD, LLP as the independent registered public accounting firm for the Company. | |
In addition, the
2019 annual meeting; (ii) amending LCNB’s Amended and Restated Articles of Incorporation to increase authorized shares of common stock; (iii) ratifying the appointment of BKD, LLP as the independent registered public accounting firm for the Company; and (iv)meeting will include transacting such other business as may properly come before the meeting or any adjournment thereof.
This Proxy Statement and the accompanying notice of meeting are being mailed to shareholders on or about March
___, 2016.__, 2022.
REVOCATION OF PROXIES, DISCRETIONARY
AUTHORITY AND CUMULATIVE VOTING
LCNB
Common Sharescommon shares can be voted at the annual meeting only if the shareholder is represented by proxy or is present in
person at the virtual annual meeting. Shareholders who attend the annual meeting by following the instructions to join the virtual meeting described on page 43 will be considered to be attending the annual meeting “in person.
” Shareholders who execute proxies retain the right to revoke them at any time. Unless so revoked, the shares represented by such proxies will be voted at the meeting and all adjournments thereof. Proxies may be revoked by: (i) written notice to the Secretary of LCNB (addressed to LCNB Corp., P.O. Box 59, Lebanon, Ohio 45036, Attention: Secretary); (ii) by the filing of a later dated proxy prior to a vote being taken on a particular proposal at the meeting; or (iii)
in openduring the virtual meeting at any time before it is voted.
Proxies solicited by the Board of Directors
of LCNB (the
“Board”“Board”) will be voted in accordance with the directions given therein. Where no instructions are indicated, properly executed proxies will be voted
(i)FORin line with the
election ofBoard Recommendations explained in the
nominees for Class II directors, (ii)FOR the amendment to LCNB’s Amended and Restated Articles of Incorporation to increase authorized shares of common stock, and (iii)FOR the ratification of the appointment of BKD, LLP as the independent registered public accounting firm for the Company.Introduction on page 9. The proxy confers discretionary authority on the persons named therein to vote with respect to (i) the election of any person as a director where the nominee is unavailable or unable to serve, (ii) matters incident to the conduct of the meeting and (iii) any other business that may properly come before the meeting or any adjournments thereof. At this time, it is not known whether there will be cumulative voting for the election of directors at the meeting. If any shareholder demands cumulative voting for the election of directors at the meeting, your proxy will give the individuals named on the proxy full discretion and authority to vote cumulatively, and in their sole discretion, to allocate votes among any or all of the nominees, unless authority to vote for any or all of the nominees is withheld.
PERSONPERSONS MAKING THE SOLICITATION
The enclosed proxy is being solicited by
LCNB. LCNB
andwill bear the
entire cost of
solicitingthe Board’s solicitation of proxies,
including the preparation, assembly and mailing of this Proxy Statement, the Proxy Card, the Notice of Annual Meeting of Shareholders and any additional information furnished to shareholders. Copies of solicitation materials will be
bornefurnished to banks, brokerage houses, fiduciaries, and custodians holding shares of our Common Stock in their names that are beneficially owned by
LCNB. In additionothers to
useforward to those beneficial owners. We may reimburse persons representing beneficial owners for their costs of
forwarding the
mails,solicitation materials to the beneficial owners. Original solicitation of proxies may be
solicited personally orsupplemented by telephone,
facsimile, electronic mail or
facsimilepersonal solicitation by
our directors, officers
and employeesor staff members. Other than the persons described in this Proxy Statement, no general class of employee of LCNB
whoor the Bank will
receive no compensationbe employed to solicit shareholders in
addition toconnection with this proxy solicitation. However, in the course of their regular
compensation.duties, employees may be asked to perform clerical or ministerial tasks in furtherance of this solicitation. No additional compensation will be paid to our directors, officers or staff members for such services. We have retained Morrow Sodali to act as a proxy solicitor in conjunction with the 2022 Annual Meeting. We have agreed to pay Morrow Sodali a fee of $15,000, plus reasonable out-of-pocket expenses for proxy solicitation services.
Each of the LCNB common shares (the
“Common Shares”“Common Shares”) outstanding on March 1,
2016,2022, the record date of the meeting, is entitled to one vote on all matters coming before the meeting. As of March 1,
2016,2022, LCNB
had9,926,360had 11,364,403 Common Shares issued and outstanding. Only shareholders of record on the books of the Company on March 1,
20162022 will be entitled to vote at the meeting either in person or by proxy. The presence at the meeting of at least a majority of the
shares,Common Shares, in person or by proxy, will be required to constitute a quorum at the meeting.
Virtual attendance at the annual meeting constitutes presence “in person” for purposes of quorum at the meeting.
Shareholders of LCNB have cumulative voting rights in connection with the election of directors if notice is given to the
president,President, a
vice-presidentVice-President or the
secretarySecretary of LCNB, not less than 48 hours before the time fixed for holding the meeting, that any shareholder desires that the voting be cumulative. Cumulative voting rights enable a shareholder to cumulate his or her voting power to give one candidate as many votes as the number of directors to be elected multiplied by the number of Common Shares owned by that person, or to distribute
histheir votes on the same principal among two or more candidates as the shareholder sees fit. If any shareholder demands cumulative voting for the election of directors at the meeting, your proxy will give the individuals named on the proxy full discretion and authority to vote cumulatively, and in their sole discretion, to allocate votes among any or all of the nominees, unless authority to vote for any or all of the nominees is withheld.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of
December 31, 2015, the wholly-owned subsidiaryMarch 1, 2022, there are no beneficial owners of
LCNB, LCNB National Bank (the “Bank”), beneficially owned 6.93% of LCNB’s Common Shares through the operations of the Bank’s Trust Department. Under Section 13(d) of the Securities Exchange Act of 1934 and the rules promulgated thereunder, a beneficial owner of a security is any person who, directly or indirectly, has or shares voting power or investment power over such security.
The table below further describes the beneficial ownershipmore than 5% of Common Shares known by the Bank and others.
LCNB.
| | | | |
Name and address
of Beneficial
Owner
|
| Number of Common Shares
Beneficially Owned
|
| Percentage of
Common Shares
|
LCNB National Bank
|
| 687,822(1)
|
| 6.93%
|
2 North Broadway
Lebanon, OH 45036
|
|
|
|
|
|
|
|
|
|
Sy Jacobs
Jacobs Asset Management, LLC
11 East 26th Street, Suite 1900
New York, NY 10010
|
| 646,940(2)
|
| 6.52%
|
|
|
|
|
|
FMR, LLC
245 Summer Street
Boston, MA 02210
|
| 815,819(3)
|
| 8.22%
|
-
-
(1)
The Common Shares reflected in this table are held in trust, agency or custodial capacities by LCNB National Bank. In its capacity, LCNB National Bank has sole or shared power to vote and/or dispose of the shares reflected in this table.
(2)
Information is based on an amended Schedule 13G filed by Sy Jacobs and Jacobs Asset Management, LLC (“JAM”) on February 16, 2016 reporting that they are deemed to be the beneficial owners of in excess of 5% of the outstanding Common Shares. Sy Jacobs is the Managing Member of Jacobs Asset Management, LLC. Mr. Jacobs has sole voting and dispositive power with respect to 22,392 shares. Mr. Jacobs and JAM have shared voting and dispositive power with respect to 624,548 shares
(3)
Information is based on a Schedule 13G filed by FMR, LLC (“FMR”) on February 12, 2016 reporting that it is deemed to be the beneficial owner of in excess of 5% of the outstanding Common Shares. FMR reported that it has sole voting power with respect to 120,906 of the indicated shares and sole dispositive power with respect to all 815,819 of the indicated shares, which includes shares beneficially owned by a wholly-owned subsidiary of FMR which acts as investment adviser to various investment companies.
The following table sets forth, as of December 31, 2015,March 1, 2022 (except as otherwise noted), the ownership of Common Shares by management of LCNB, including (i) the Common Shares beneficially owned by each director, nominee for director and named executive officerofficers of LCNB and (ii) the Common Shares beneficially owned by all executive officers directors and nominees for directordirectors as a group.
| | | | | |
Name, Position(s) of Beneficial Owner or Director |
|
Number of Common Shares Beneficially Owned(1) |
|
Percent of Common Shares Outstanding |
|
|
|
|
Stephen P. Wilson Chairman of the Board
|
| 94,549 |
| 0.95% | |
Steve P. Foster Chief Executive Officer, President and Director |
| 33,102 |
| 0.33% | |
Spencer S. Cropper(2) Director
|
| 30,155 |
| 0.30% | |
George L. Leasure(3) Director, Assistant Secretary
|
| 34,590 |
| 0.35% | |
William H. Kaufman(4) Director
|
| 72,505 |
| 0.73% | |
Anne Krehbiel Director, Secretary |
| 4,000 |
| 0.04% | |
John H. Kochensparger III Director
|
| 147,860 |
| 1.49% | |
| | | | | | | | | | | | | | | | | |
Name of Beneficial Owner | |
Number of Common Shares Beneficially Owned(1) | |
Percent of Common Shares Outstanding |
| | | |
Eric J. Meilstrup President, Chief Executive Officer and Director | | 22,816 | | 0. 20% | |
Spencer S. Cropper(2) Chairman of the Board | | 36,736 | | 0.32% | |
Steve P. Foster Director | | 40,262 | | 0.35% | |
Stephen P. Wilson Director | | 63,490 | | 0.56% | |
Mary E. Bradford Director | | 2,697 | | 0.02% | |
William G. Huddle(3) Director | | 171,482 | | 1.51% | |
Craig M. Johnson(4) Director | | 5,697 | | 0.05% | |
Michael J. Johrendt Director | | 150,698 | | 1.33% | |
William H. Kaufman(5) Director | | 77,757 | | 0.68% | |
Anne E. Krehbiel Director, Secretary | | 6,697 | | 0.06% | |
Takeitha W. Lawson Director | | 170 | | 0.00% | |
Robert C. Haines II Executive Vice President, Chief Financial Officer | | 13,147 | | 0.12% | |
| | | | | | | | | | | | | | | | | |
Matthew P. Layer(6) Executive Vice President | | 20,308 | | 0.18% | |
Michael R. Miller Executive Vice President, Trust Officer | | 11,167
| | 0.10% | |
Bradley A. Ruppert Executive Vice President, Trust Officer, Chief Investment Officer | | 9,203 | | 0.08% | |
Lawrence Mulligan Executive Vice President, Chief Operatingl Officer | | 8,874 | | 0.08% | |
All directors and officers as a group (16 persons) | | 641,201 | | 5.64% | |
| | |
-
| | | | | |
Robert C. Haines II Executive Vice President, Chief Financial Officer |
| 9,027 |
| 0.09% | |
Matthew P. Layer(5) Executive Vice President |
| 9,166 |
| 0.09% | |
Leroy F. McKay Executive Vice President
|
| 16,720 |
| 0.17% | |
Eric J. Meilstrup Executive Vice President
|
| 13,565 |
| 0.14% | |
|
|
|
|
| |
All directors and officers as a group (11 persons) |
| 465,239 |
| 4.69% | |
|
|
|
(1)The Securities and Exchange Commission has defined “beneficial owner”“beneficial owner” of a security to include any person who has or shares voting power or investment power with respect to any such security or who has the right to acquire beneficial ownership of any such security within 60 days. The number of shares listed for each person includes shares held in the name of spouses, minor children, certain relatives, trusts or estates whose share ownership under the beneficial ownership rules of the Securities and Exchange Commission is to be aggregated with that of the director or officer whose share ownership is shown. (2)Does not include 44,920105,126 shares held in a Family Limited Partnership in which Mr. Cropper owns 21.365%50% interest. Includes 1,8353,000 shares held by Mr. Cropper’s Spouse.(3)
Cropper’s spouse. Includes 34,59014,700 shares held in trust.
by Mr. Cropper’s children.
(3)Includes 19,930 shares held by Mr. Huddle’s spouse.
(4)Includes 3,000 shares held by Mr. Johnson’s spouse. (5)Includes 33,200 shares held in trust, 16,800shares16,800shares held jointly with Mr. Kaufman’sKaufman’s spouse, and 6,20010,040 shares owned by Mr. KaufmanKaufman’s spouse.
’(6)s spouse.(5)
Includes 323 shares held by Mr. LayerLayer’s spouse.
ITEMS OF BUSINESS TO BE VOTED ON BY SHAREHOLDERS
PROPOSAL 1. ELECTION OF DIRECTORS
’LCNB’s Code of Regulations (s Regulationsi.e. bylaws) provide that its business shall be managed by a Board of Directors of not less than five nor more than fifteen persons. LCNB’sLCNB’s Amended Articles of Incorporation divide such directors into three classes as nearly equal in number as possible and set their terms at three years. The Board of Directors currently has seveneleven members, with Class I having three members, Class II having twofour members, and Class III having twofour members.Assuming that at least a majority of the issued and outstanding
common sharesCommon Shares are present at the meeting so that a quorum exists, the nominees for Class II directors
of LCNB receiving the most votes will be elected as directors.
The Board of Directors has nominated:
Michael J. Johrendt
Anne E. Krehbiel
Valerie S. Krueckeberg
Takeitha W. Lawson
The nominees have been nominated to serve as Class II directors until the 20192025 annual meeting of shareholders and until their respective successors are elected and qualified. Mr. Foster and Ms. KrehbielEach of the nominees are incumbent directors whose present terms will expire at the 20162022 annual meeting. Ms. Krueckeberg was selected by the Nominating Committee and nominated by the Board of Directors to stand for election at this year
’
s annual meeting of shareholders.
Please see the narrative under the heading
“Director“Director and Nominee
Qualifications”Qualifications” beginning on page
1115 of this Proxy Statement for additional discussion of the qualifications of each director nominee and continuing director.
It is intended that Common Shares represented by the accompanying form of proxy will be votedFOR the election of the nominees, unless contrary instructions are indicated as provided on the proxy card. If you do not wish your shares to be voted for particular nominees, please so indicate on the proxy card. If one or more of the nominees should at the time of the meeting be unavailable or unable to serve as a director, the shares represented by the proxies will be voted to elect the remaining nominees and any substitute nominee or nominees designated by the Board of Directors. The Board of Directors knows of no reason why any of the nominees will be unavailable or unable to serve. At this time, it is not known whether there will be cumulative voting for the election of directors at the meeting. If any shareholder properly demands cumulative voting for the election of directors at the meeting, your proxy will give the individuals named on the proxy full discretion and authority to vote cumulatively and in their sole discretion to allocate votes among any or all of the nominees, unless authority to vote for any or all of the nominees is withheld.
The following table sets forth information concerning the nominees for theClasstheClass II directors of LCNB.
| | | | | |
Name |
Age |
Principal Occupation |
Positions Held with LCNB |
Director of LCNB or Bank Since |
Term To Expire |
Steve P. Foster | 63 | Banker, President and CEO of the Bank | Director, President and CEO | 2005 | 2019
|
Anne E. Krehbiel | 60 | Attorney at Law, Krehbiel Law Office | Director, Secretary | 2010 | 2019 |
|
|
|
|
|
|
Valerie S. Krueckeberg | 46 | Certified Public Accountant | None | NA | 2019 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name |
Age |
Principal Occupation | Positions Held with LCNB | Director of LCNB or Bank Since | Term To Expire |
| Steve P. Foster | 69 | Former President and CEO of LCNB | Director | 2005 | 2022 |
| Michael J. Johrendt | 68 | Attorney at Law, Johrendt & Holford | Director | 2018 | 2022 |
| Anne E. Krebiel | 66 | Attorney at Law, Krehbiel Law Office | Director and Secretary | 2010 | 2022 |
| Takeitha W. Lawson | 42 | Operations Director, Cincinnati Bell | Director | 2021 | 2022 |
| | | | | |
The Board of Directors unanimously recommends that shareholders voteFOR the election of each of the director nominees. PROPOSAL 2.
APPROVAL OF AN AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATIONTO INCREASE AUTHORIZED SHARES OF COMMON STOCKELIMINATE CUMULATIVE VOTING
On February 8, 2016, LCNB’s Board approved
We are asking our shareholders to vote to approve the elimination of the cumulative voting mechanism in future director elections through an amendment to the Fifth Article Fourth, Section A of the Amended and Restated Articles of Incorporation of LCNB as amended (the Corp.
“
Articles
”
),
The Board carefully assessed and
approved its submissiondeliberated the decision to
the shareholders for their approval at the annual meeting. The proposed amendment toamend the Articles
increasesto eliminate cumulative voting, which had been included through a default provision under the
number of authorized shares of common stock from 12,000,000 to 19,000,000 shares. The full text of the proposed amendment to Article Fourth, Section A of the Amended and Restated Articles of Incorporation, as amended, is attached as Appendix A to this Proxy Statement.
The proposed amendment to LCNB's Articles would increase the number of shares of common stock which LCNB is authorized to issue from 12,000,000 to 19,000,000. The additional 7,000,000 would be part of the existing class of common stock presently issued and outstanding. At March 1, 2016, 9,926,360 shares of common stock were outstanding, 753,627 were in Treasury, and of the remaining 1,027,579 authorized but unissued shares of common stock, LCNB has reserved approximately 94,749 shares pursuant to LCNB’s outstanding options and 433,962 shares pursuant to the 2015 Incentive Compensation Plan. At March 1, 2016 1,000,000 shares of preferred stock were authorized and 0 shares of preferred stock were outstanding.
Ohio Revised Code. The Board believes itthat each director is desirableaccountable to increaseand should represent the numberinterests of all of the Company's shareholders, and not just a minority shareholder or shareholder group that has cumulatively voted its shares and that may have special interests contrary to those of common stock LCNB is authorizedthe majority of shareholders. Among other things, the election of directors who view themselves as representing a particular minority shareholder could result in partisanship and discord on the Board and may impair the ability of the directors to issue for the reasons set forth below and to provide LCNB with adequate flexibilityact in the future. If this proposalbest interests of LCNB and its shareholders. The Board believes that few public companies have cumulative voting in the election of directors, and that majority voting is adopted by the shareholders, the increased number of authorized shares of common stock willviewed as a best governance practice. The Board, therefore, believes that each candidate in a director election should be available for issuance from time to time for such purposes and consideration as the Board may approve without furtherelected only if he or she receives majority support, which cumulative voting could potentially preclude. Cumulative voting allows a shareholder approval, except as such approval is required by applicable law or regulation. Such purposes may include issuing additional common stock or other securities convertible into common stock in connection with public or private financing transactions, establishing strategic relationships with other companies, acquisitions or other corporate transactions, as
well as issuing stock dividends, warrants, stock options, restricted stock and other stock-based incentive or compensation programs. At this time, there are no current specific plans, understandings or arrangements for the useowning far less than a majority of the additional shares.
LCNB wishesoutstanding shares to be in the position to take advantageelect a director, even if that director was not supported by a majority of any opportunities that might present themselves to the Company, and such opportunities for additional issuance could arise at any time. The availabilityour shareholders.
This description of
additional shares of common stock for issuance, without the delay and expense of obtaining additional shareholder approval, will afford LCNB greater flexibility in acting upon opportunities and transactions, if any, which may arise.
Under Ohio law, the proposed amendment to the Articles will not be effective unless approvedof Incorporation is only a summary and is qualified in its entirety by reference to the shareholders by a two-thirds majority vote. The authorization of additional shares of common stock will not, by itself, have any effect on the rights of present shareholders. To the extent that additional authorized shares are issued in the future, such issuance may decrease our existing shareholders’ percentage equity ownership and, depending on the price at which they are issued, could be dilutive to our existing shareholders. The additional shares to be authorized will be a partactual text of the existingproposed amendments to the Fifth Article. If adopted, the amendment to the Fifth Article of the Articles of Incorporation to eliminate cumulative voting in director elections will become effective upon filing with the Ohio Secretary of State, which is expected to occur promptly following the Annual Meeting.
Currently, the Fifth Article of LCNB’s Articles of Incorporation reads as follows:
“The number of Directors of the Corporation shall be fixed from time to time in accordance with the Corporation’s Regulations and may be increased or decreased as therein provided. The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of Directors constituting the whole Board permits, it not being required that each class of common stock and, if and when issued, would have the same rightsnumber of members if such is mathematically impossible with the term of office of one class expiring each year. At the organizational meeting of shareholders, Directors of the first class shall be elected to hold office for a term expiring at the next succeeding Annual Meeting; Directors of the second class shall be selected to hold office for a term expiring at the second succeeding Annual Meeting and privilegesDirectors of the third class shall be selected to hold office for a term expiring at the third succeeding Annual Meeting. Thereafter, at each Annual Meeting of shareholders, the successors to the class of Directors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding Annual Meeting after such election. In the event of any increase in the number of Directors of the Corporation; the additional Directors shall be so classified that all classes of Directors shall be increased equally as nearly as may be possible. In the event of any decrease in the number of Directors of the Corporation, all classes of Directors shall be decreased equally as nearly as possible.”
If Proposal 2 is approved and the Amendment is implemented, the Fifth Article of LCNB’s Articles of Incorporation shall read as follows:
“The number of Directors of the Corporation shall be fixed from time to time in accordance with the Corporation’s Regulations and may be increased or decreased as therein provided. The Board of Directors shall be divided into three classes, as nearly equal in number as the sharesthen total number of common stock presently issued and outstanding. Shareholders doDirectors constituting the whole Board permits, it not being required that each class have preemptive rights to subscribe for or purchase additional sharesthe same number of common stock. Accordingly,members if such is mathematically impossible with the issuanceterm of additional sharesoffice of common stock for corporate purposes other than a stock split or stock dividend could have a dilutive effect onone class expiring each year. At the ownership and voting rightsorganizational meeting of shareholders, Directors of the first class shall be elected to hold office for a term expiring at the time of issuance such as dilution of ownership percentages, earnings per share amounts, and voting rights of current holders of common stock.
The proposed amendment to Article Fourth, Section A of LCNB’s Articles, if adopted by the required two-thirds majority votenext succeeding Annual Meeting; Directors of the second class shall be selected to hold office for a term expiring at the second succeeding Annual Meeting and Directors of the third class shall be selected to hold office for a term expiring at the third succeeding Annual Meeting. Thereafter, at each Annual Meeting of shareholders, will become effective on the date on whichsuccessors to the Certificateclass of Amendment by ShareholdersDirectors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding Annual Meeting after such election.
No shareholder shall have any cumulative voting rights. In the event of any increase in the number of Directors of the Corporation; the additional Directors shall be so classified that all classes of Directors shall be increased
equally as nearly as may be possible. In the event of any decrease in the number of Directors of the Corporation, all classes of Directors shall be decreased equally as nearly as possible.”
The Board of Directors unanimously recommends that shareholders vote FOR the amendment to the Articles of Incorporation to eliminate the cumulative voting mechanism.
PROPOSAL 3. ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”)
We are asking our shareholders to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers (sometimes referred to as “NEOs”). This non-binding advisory vote, commonly referred to as “Say-on-Pay,” is filednot intended to address any specific item of compensation, but instead relates to the compensation of our “named executive officers” as disclosed in the Compensation Discussion and Analysis and the Summary Compensation Table and related narrative included in this proxy statement.
The Compensation Committee believes we have an effective compensation program that is designed to recruit and keep top quality executive leadership focused on attaining short-term and long-term corporate goals and increasing shareholder value. We believe that our executive compensation program is designed to reasonably and fairly recruit, motivate, retain and reward our executives for achieving our objectives and goals. Through equity grants, each of our executive officers is aligned with the Secretarylong-term interests of Stateshareholders in increasing the value of Ohio, which would occur shortly afterLCNB. Moreover, our performance-based compensation system links executive pay to LCNB’s short- and long-term performance.
As an advisory vote, the
meeting.
At the present time, LCNBSay-on-Pay resolution is not awarebinding. The approval or disapproval of any pending or threatened effortsthis Proposal 3 by any third party to obtain control of LCNB, and this proposal isshareholders will not being made in response to any such efforts. However, the availability for issuance of additional shares of common stock could enable the Board to make more difficult or discourage an attempt to obtain control of LCNB. For example, the issuance of shares of common stock in a public or private sale, merger or similar transaction would increase the number of outstanding shares, thereby diluting the interest of a party attempting to obtain control of LCNB and deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary corporate transaction opposed by LCNB.
As set forth above, such devices may adversely impact shareholders who desire a change in management and/orrequire the Board or the Compensation Committee to participate in a tender offertake any action regarding our executive compensation practices. The final decision on the compensation and benefits of our executive officers and on whether, and if so, how, to address any shareholder approval or disapproval remains with the Board and the Compensation Committee. However, the Board values the opinions of our shareholders as expressed through their votes and other sale transaction involving a change in control of LCNB. While it may be deemed to have potential anti-takeover effects,communications. Accordingly, the proposed amendment to increaseBoard and the authorized common stock is not prompted by any specific effort or takeover threat currently perceived by LCNB’s Board.
The affirmative vote of holders of at least 6,617,574 shares entitled to vote atCompensation Committee will review and consider the Annual Meeting is required to approve the proposed amendment. If the amendment is not approved by the shareholders, LCNB’s Articles of Incorporation, which authorize the issuance of up to 12,000,000 shares of common stock, will continue in effect. Proxies will be voted in favorresults of the following resolution unless otherwise instructed by“Say-on-Pay” vote, the shareholders.
opinions of our shareholders, and other relevant factors in making future decisions regarding our executive compensation program.
We encourage you to read the “Compensation Discussion and Analysis” and the related compensation tables and narrative that follow. These sections describe our executive compensation policies and practices and provide detailed information about the compensation of our named executive officers.
The Board of Directors recommends that shareholders vote FORFOR the approval, on a non-binding advisory basis, of the executive compensation paid by LCNB to its named executive officers and the following resolution:
“RESOLVED,
“RESOLVED, that Article Fourth,the compensation paid to LCNB’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, footnotes and narrative discussion, is hereby APPROVED.”
PROPOSAL 4. ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON EXECUTIVE COMPENSATION
As required by Section A14A of the AmendedSecurities Exchange Act of 1934, we are offering our shareholders an opportunity to cast an advisory vote on whether a non-binding shareholder advisory vote on the compensation of our named executive officers should occur every one, two or three years. Although the vote is non-binding, we value continuing and Restated Articlesconstructive feedback from our stockholders on compensation and other important matters. The Board and the Compensation Committee will take into consideration the voting results when determining how often a non-binding shareholder advisory vote on the compensation of Incorporation, as amended,our named executive officers should occur.
The Board has determined that an advisory vote on executive compensation every year is the best approach for the Company based on a number of considerations, including the vote frequency which the Board believes the majority of our investors prefer.
Shareholders are not voting to approve or disapprove of the Board’s recommendation. Instead, the proxy card provides shareholders with four choices with respect to this proposal: (1) every year, (2) every two years, (3) every three years or (4) abstaining from voting on the proposal. For the reason discussed above, we are asking our shareholders to indicate their support for the non-binding advisory vote on executive compensation to be amendedheld every year.
Generally, approval of any matter presented to increaseshareholders requires the authorizedaffirmative vote of the holders of a majority of the shares of common stock represented at the annual meeting and voting on the matter. However, because this vote is advisory and non-binding, if none of the frequency options receive the vote of a majority of common shares represented at the annual meeting and voting thereon, the option receiving the greatest number of votes will be considered the frequency recommended by 7,000,000 shares.the Company’s shareholders. Even though this vote will neither be binding on the Company or Board, the Board of Directors will take into account the result of the vote when determining the frequency of future say-on-pay votes.
The Board of Directors recommends that shareholders vote to recommend an advisory vote on executive compensation every ONE YEAR.
PROPOSAL
3.5. RATIFICATION OF THE APPOINTMENT OF BKD, LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY
The Audit Committee of the Board of Directors of the Company has selected BKD, LLP
(“BKD”(“BKD”), 312 Walnut Street, Suite 3000, Cincinnati, Ohio, as the
Company’sCompany’s independent registered public accounting firm to perform the audit of the
Company’sCompany’s financial statements and internal controls over financial reporting for the fiscal year ending December 31,
2016.2022. BKD, LLP was the
Company’sCompany’s independent registered public accounting firm for the fiscal year ended December 31,
20152021 and has served the Company in that role since 2014.
Representatives from BKD are expected to attend the
2016virtual annual meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate shareholder questions.
We are asking our shareholders to ratify the selection of BKD as the
Company’sCompany’s independent registered public accounting firm. Although ratification of the appointment is not required by law, the
Company’sCompany’s Regulations, or otherwise, the Board is submitting the selection of BKD to our shareholders for ratification as a matter of good corporate practice. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Company and our shareholders.
It is intended that the common shares represented by the accompanying form of proxy will be votedFOR the resolution ratifying the appointment of BKD as the Company’sCompany’s independent registered public accounting firm, unless contrary instructions are indicated as provided on the proxy card. If you do not wish your shares to be voted for the resolution, please so indicate on the proxy card.
The Board of Directors recommends that shareholders vote FORthe following resolution:
“RESOLVED, that action by the Audit Committee appointingratification of BKD, LLP as the Company’sCompany’s independent registered public accounting firm to conduct the annual audit of the financial statements of the Company and its subsidiaries for the fiscal year ending December 31, 2016 is hereby ratified, confirmed and approved.2022.
DIRECTORS AND EXECUTIVE OFFICERS
Except for the beneficial ownership by the Bank of 6.93% of LCNB’s Common Shares previously discussed in this Proxy Statement, to LCNB’s knowledge, no director, officer or affiliate of LCNB is the owner of record or beneficially of more than 5% of LCNB’s Common Shares, or any associate of any such director, officer, affiliate of LCNB or security holder, is an adverse party to LCNB or any of its subsidiaries or has a material interest that is adverse to LCNB or any of its subsidiaries.
The following table sets forth information concerning the directors, nominees for director and executive officers of LCNB. Included in the table is information regarding each person’sperson’s principal occupation or employment during the past five years.
| | | | | | | |
Name, Age |
Principal Occupation |
Positions Held with LCNB | Director of LCNB or Bank Since | Term to Expire |
Stephen P. Wilson, 65 |
Banker, Chairman of the Board of the Bank |
Director, Chairman of the Board |
1982 |
2018 |
Steve P. Foster, 63 | Banker, President and CEO of the Bank | Director, President and CEO | 2005 | 2016 |
Spencer S. Cropper, 43 |
Certified Public Accountant for Stolle Properties, Inc. |
Director |
2006 |
2018 |
William H. Kaufman, 72 |
Attorney at Law, Kaufman & Florence |
Director |
1982 |
2017 |
John H. Kochensparger III 71 |
Formerly President, CEO and Director of First Capital Bancshares, Inc., and Citizens National Bank of Chillicothe |
Director |
2013 |
2018 |
Anne E. Krehbiel, 60
| Attorney at Law, Krehbiel Law Office | Director, Secretary | 2010 | 2016 |
George L. Leasure, 83 |
Chairman and Director of GMi Companies |
Director, Assistant Secretary |
1994 |
2017 |
Valerie S. Krueckeberg, 46
|
Certified Public Accountant |
None |
NA |
NA |
Robert C. Haines II, 43 | Banker | Executive Vice President, Chief Financial Officer
| NA | NA |
Matthew P. Layer, 53 | Banker | Executive Vice President
| NA | NA |
Leroy F. McKay, 64 | Banker | Executive Vice President, Trust Officer | NA | NA |
Eric J. Meilstrup, 48 | Banker | Executive Vice President, Cashier | NA | NA |
| | | | | | | | | | | | | | |
Name, Age |
Principal Occupation |
Positions Held with LCNB | Director of LCNB or Bank Since | Term to Expire |
| | | | |
Eric J. Meilstrup, 54 | Banker, President and Chief Executive Officer | Director and President | 2018 | 2024 |
| | | | |
Spencer S. Cropper, 49 |
Certified Public Accountant for Stolle Properties, Inc. |
Director, Chairman of the Board |
2006 |
2024 |
| | | | |
Steve P. Foster, 69 | Former President and CEO of LCNB | Director | 2005 | 2022 |
| | | | |
| Mary E. Bradford, 66 | Former IT Executive, GE Aviation | Director | 2018 | 2023 |
| | | | |
Stephen P. Wilson, 71 | Ohio State Senator, Former CEO of LCNB | Director | 1982 | 2024 |
| | | | |
| William (“Rhett”) G. Huddle, 66 | Former Banker | Director | 2018 | 2023 |
| | | | |
| Craig M. Johnson, 66 | Certified Public Accountant | Director | 2019 | 2023 |
| | | | |
| Michael J. Johrendt, 68 | Attorney at Law, Johrendt & Holford | Director | 2018 | 2022 |
| | | | |
William H. Kaufman, 78 | Attorney at Law, Kaufman & Florence | Director | 1982 | 2023 |
| | | | |
Anne E. Krehbiel, 66 | Attorney at Law, Krehbiel Law Office | Director, Secretary | 2010 | 2022 |
| | | | |
Takeitha W. Lawson 42 |
Operations Director, Cincinnati Bell |
Director |
2021 |
2022 |
| | | | |
Robert C. Haines II, 49 | Banker | Executive Vice President, Chief Financial Officer | N/A | N/A |
| | | | |
| | | | | | | | | | | | | | |
Matthew P. Layer, 59 | Banker | Executive Vice President, Chief Lending Officer | N/A | N/A |
| Lawrence P. Mulligan, Jr., 53 | Banker | Executive Vice President, Chief Operating Officer | N/A | N/A |
| | | | |
Michael R. Miller, 64 | Banker | Executive Vice President, Trust Officer | N/A | N/A |
| | | | |
Bradley A. Ruppert, 46 | Banker | Executive Vice President, Trust Officer, Chief Investment Officer | N/A | N/A |
.
-
Director and Nominee Qualifications
The Nominating and Governance Committee (“Nominating Committee”) of our Board of Directors considers candidates to fill new directorships created by expansion and vacancies that may occur and makes recommendations to the Board of Directors with respect to such candidates. There isare currently one Class II vacancy and one Class IIIno vacancies on the Board of Directors. Ms. Krueckeberg has been nominated to fill the Class II vacancy and the Board plans to fill the Class III vacancy in due course following the selection of a suitable candidate.Board. The Board has not adopted a policy with respect to minimum qualifications for directors, rather the Nominating Committee evaluates each individual in the context of the board as a whole and with the objective of recommending a group of persons that can best implement our business plan, perpetuate our business and represent shareholder interests. The committee,Nominating and Governance Committee, in making its nominations, considers all relevant qualifications of candidates for board membership, including, among other things, factors such as an individual’sindividual’s business experience, industry knowledge and experience, financial background, breadth of knowledge about issues affecting the Company, public company experience, regulatory experience, diversity, current employment and other board memberships, and whether the candidate will be independent under the listing standards of the NASDAQ Stock Market.Market (“NASDAQ”). In some cases, the Nominating and Governance Committee may require certain skills or attributes, such as financial or accounting experience, to meet specific Board needs that arise from time to time. In the case of incumbent directors whose terms of office are set to expire, the committee also reviews such director’sdirector’s overall service to the Company during his or her term and any relationships and transactions that might impair such directordirector’s independence.
The following table provides certain information, as of the Company does not havedate of this proxy statement, concerning each of this year’s nominees for election as a formal diversityClass II director of LCNB. Unless otherwise indicated, each individual has had the same principal occupation for more than five years. Each individual also serves as a director of the Bank.
| | | | | | | | |
Steve P. Foster Age: 69 Director Since: 2005 Term Expires: 2022 | | A diverse career within the banking industry provides Steve P. Foster with the ability to provide insight in a breadth of areas to the Board of LCNB Corp.
Mr. Foster is the former Chief Executive Officer of both LCNB Corp. and LCNB National Bank, a position he held from 2015 until retirement in 2019.
He joined LCNB National Bank in 1977 and served as internal auditor, branch manager, and loan officer. He founded the Information Technology Department and served as Chief Financial Officer and President.
Mr. Foster is a former Chair of the Ohio Bankers League, one of the strongest financial trade associations in the country.
He serves on the Trust Committee, the Pension Committee, and the Loan Committee. |
| | |
Anne E. Krehbiel Age: 66 Director Since: 2010 Term Expires: 2022 | | Anne E. Krehbiel’s distinguished career as an attorney and firm principal provides a valuable perspective on legal matters and business management to the Board of LCNB Corp.
Earning a J.D. from the University of Cincinnati in 1980, Ms. Krehbiel worked at US Bank, and practiced law in several capacities, prior to founding Krehbiel Law Offices in 1998. She is OSBA Board Certified in Estate Planning and a Trust and Probate Law Specialist.
Ms. Krehbiel serves on the Warren County Bar Association (past President), the Warren County Foundation Board of Trustees, and Lebanon Rotary International.
Ms. Krehbiel is the Corporate Secretary for LCNB Corp., chairs the Compensation Committee, and serves on the Audit and Nominating & Corporate Governance Committees. |
| | |
Michael J. Johrendt Age: 68 Director Since: 2018 Term Expires: 2022 | | Expertise in law and commercial real estate are among Michael J. Johrendt’s significant contributions to the LCNB Corp. Board.
A graduate of The Ohio State University Moritz College of Law, Mr. Johrendt practices business and tax law as a principal in the law firm of Johrendt & Holford based in Columbus, Ohio. Mr. Johrendt previously owned and operated a commercial real estate investment company.
Mr. Johrendt previously served as a Director of Columbus First Bank from August 2007 until its merger with and into LCNB National Bank in May 2018. Mr. Johrendt has also served as Vice-Chair of the Ohio Board of Tax Appeals.
Mr. Johrendt chairs the Nominating & Corporate Governance Committee and serves on the Compensation Committee. |
| | | | | | | | |
| | |
Takeitha W. Lawson Age: 42 Director Since: 2021 Term Expires: 2022 | | Takeitha (Kei) Lawson brings corporate finance and investor relations expertise to her role on the Board of LCNB Corp.
Ms. Lawson has experience in working in finance and operations for some of the nation’s most well-known companies, including DuPont, Lockheed Martin, and Lexmark. Currently, she holds a director-level role at Cincinnati Bell, and previously guided Investor Relations strategy for the company. She holds a B.S. from Temple University and an MBA from Drexel University and has held Six Sigma Green Belt certifications. Extremely active in the Cincinnati community, Ms. Lawson currently serves on non-profit boards in the treasury capacity, including Women Helping Women and Jack & Jill of America, Inc. (Cincinnati).
Ms. Lawson serves the LCNB Board through her participation on the Audit Committee, Compensation Committee, and the Nominating & Corporate Governance Committee. |
The following table provides certain information, as of the date of this Proxy Statement, concerning the current Class I and Class III directors of LCNB who will continue to serve after the annual meeting. Unless otherwise indicated, each individual has had the same principal occupation for more than five years. Each individual also serves as a director of the Bank.
| | | | | | | | |
| Class I Directors |
| | |
Spencer S. Cropper Age: 49 Director Since: 2006 Term Expires: 2024 | | Spencer S. Cropper’s career in accounting and investment provides a wealth of insight to his role as Chair of the LCNB Corp. Board. The Chairman of LCNB Corp. and LCNB National Bank since 2019, Mr. Cropper is employed by Stolle Properties, Inc., and is a Board Director of the parent Ralph J. Stolle Company. He is an investor in and serves on the Finance Committee of a Private Investment Company that primarily focuses on providing mezzanine financing through investment funds. Mr. Cropper is a Certified Public Accountant, and a member of the Ohio Society of Certified Public Accountants and the AICPA. He serves on the Board of Directors and Board of Trustees for the Ralph J. Stolle Countryside YMCA and is a Trustee for both the Warren County Foundation and the Bethesda Foundation. Mr. Cropper serves on the Audit, Pension, Compensation. and the Nominating & Corporate Governance committees. |
Eric J. Meilstrup Age: 54 Director Since: 2018 Term Expires: 2024 | | Eric J. Meilstrup offers extensive bank management expertise and market-specific knowledge to his seat on the Board of LCNB Corp. Mr. Meilstrup is the President and Chief Executive Officer of LCNB Corp. and LCNB National Bank, and has been with the Bank for 33 years, the last 18 as a member of its Executive team. He has served in several roles over his LCNB career including oversight of Deposit Operations, Branch Operations, Human Resources, Training, and Customer Service functions. Mr. Meilstrup serves on the Countryside YMCA Board (past Chair) and is a Trustee for the same organization. He serves as a Trustee of the Warren County Foundation, the West Side Church of Christ, a member of the Warren County Career Center District Business Advisory Committee and a current and charter member of the Lebanon Optimist Club.
Mr. Meilstrup is a member of the Pension Committee. |
| | |
Stephen P. Wilson Age: 71 Director Since: 1982 Term Expires: 2024 | | As the former CEO and Chairman of LCNB National Bank, Stephen P. Wilson brings both banking industry expertise and institutional knowledge to the LCNB Corp. Board. Mr. Wilson joined the LCNB staff in 1975 and served as Chief Executive Officer of LCNB and the Bank from 1992 through 2015. He is a Past Chairman of the American Bankers Association and a former board member of the Federal Reserve Bank of Cleveland. Mr. Wilson has represented the Ohio 7th District in the Ohio State Senate since 2017. He is a board member and treasurer of AAA Club Alliance, a Trustee of the Ralph J. Stolle Countryside YMCA, a Trustee of the Warren County Foundation, and a member of the Area Progress Council. He is also former Vice Chair of Warren Co. Port Authority and a former trustee of Miami University. Mr. Wilson serves on the Trust and Pension committees. |
| | | | | | | | |
| Class III Directors |
| | |
William H. Kaufman Age: 78 Director Since: 1982 Term Expires: 2023 | | In addition to his perspectives gained as a long-tenured board member of LCNB Corp., William H. Kaufman oversees operational legal matters and real estate closings for LCNB National Bank from his seat on the Board.
Mr. Kaufman is former senior partner of Kaufman & Florence in Lebanon, Ohio, and is presently Of Counsel at the firm. A graduate of the Northern Kentucky University Salmon P. Chase College of Law, he began his career as an attorney with Young and Jones, a legacy firm to Kaufman & Florence. He has extensive litigation experience in insurance cases and commercial disputes.
He is a former Mayor of the City of Lebanon and was elected to two terms as Judge of Lebanon Municipal Court.
Mr. Kaufman is the Assistant Secretary for the Board.
|
Mary E. Bradford Age: 66 Director Since: 2018 Term Expires: 2023 | | Mary E. Bradford provides a unique contribution to the LCNB Corp. Board through her expertise in information technology.
A retired executive who spent 31 years with GE Aviation, Ms. Bradford built her career implementing information technology solutions for the Finance, Engineering, Supply Chain, and Sales teams at GE. She is a Phi Beta Kappa graduate of Miami University in Oxford, Ohio, and holds an MBA with a concentration in Information Systems from Xavier University.
Ms. Bradford co-led the GE Women's Network Cincinnati Hub for a two-year term and represented GE on the Miami University Department of Information Systems & Analytics Advisory Board for many years.
Ms. Bradford serves on the Audit, Compensation, and Nominating & Corporate Governance committees. In addition, she contributes her expertise to the Bank’s Technology Committee. |
| | | | | | | | |
William (“Rhett”) G. Huddle Age: 66 Director Since: 2018 Term Expires: 2023 | | William (“Rhett”) G. Huddle offers expertise in both legal and banking matters to LCNB Corp. as the result of a successful professional career.
Joining the LCNB Corp. board upon the acquisition of Columbus First Bank Corp, Inc., Mr. Huddle was the lead in the formation of Columbus First. He served as Chairman and CEO of the bank from 2007 until June 2018. Mr. Huddle previously served in both executive and governing roles of several banks in the Columbus market. He was also an associate with BakerHostetler law firm for five years.
Mr. Huddle is a graduate of Princeton University and The Ohio State University Moritz College of Law.
Mr. Huddle is a member of the Trust and Loan committees. |
Craig M. Johnson Age: 66 Director Since: 2019 Term Expires: 2023 | | Craig M. Johnson provides financial counsel to the LCNB Corp. Board through his extensive experience in public accounting and banking.
Mr. Johnson is a Certified Public Accountant with nearly 40 years’ experience in both public accounting and private industry. Mr. Johnson retired as Principal from the accounting firm of Clark Schaefer Hackett & Co. Prior, he served as Partner at J.D. Cloud & Co. LLP. He previously held a position at an international public accounting firm and was local market controller for a large regional bank.
Mr. Johnson is a member of the Ohio Society of Certified Public Accountants and the AICPA. He serves the community as Treasurer and Board Member of the Clifton Cultural Arts Center and sits on the Finance Committee of Clifton United Methodist Church and the Audit Committee of Easter Seals TriState.
Mr. Johnson is Chair of the Audit Committee of LCNB Corp., and also sits on the Compensation and Nominating & Corporate Governance Committees. |
Board of Directors Diversity
The Bank has a policy forin place to promote a diverse pool of candidates in its hiring, recruiting, retention, and promotion, as well as the selection to its Board membership, theand leadership. The Board seeks directors who represent a mix of backgrounds and experiences that will enhance the quality of the Board’sBoard’s deliberations and decisions. The Board has directed the Nominating Committee considers,to consider, among other factors and criteria, diversity with respect to viewpoint, skills, experience and community involvement in its evaluation of candidates for Board membership.Such diversity considerations are discussed by the Nominating Committee in connection with the general qualifications of each potential nominee.
Class I Directors (Terms Expire in 2018)
Stephen P. Wilsonis
The following table gives certain information, as of the Chairmandate of LCNB Corp. and LCNB National Bank. He joinedthis Proxy Statement, concerning the LCNB staff in 1975 and the LCNB current directors of LCNB.
| | | | | | | | | | | | | | |
Board Diversity Matrix (as of February 28, 2022) |
| Total Number of Directors | 11 |
| Female | Male | Non-Binary | Did not Disclose Gender |
| Part I: Gender Identity | |
| Directors | 3 | 8 | -- | -- |
| Part II: Demographic Background | |
| African American or Black | 1 | -- | -- | -- |
| Alaskan Native or Native American | -- | -- | -- | -- |
| Asian | -- | -- | -- | -- |
| Hispanic or Latinx | -- | -- | -- | -- |
| Native Hawaiian or Pacific Islander | -- | -- | -- | -- |
| White | 2 | 8 | -- | -- |
| Two or More Races or Ethnicities | -- | -- | -- | -- |
| LGBTQ+ | -- |
| Did Not Disclose Demographic Background | -- |
Board of Directors
in 1982. He previously served as Chief Executive Officer of LCNB and the Bank from 1992-2015. He is a Past Chairman of the American Bankers Association and a former board member of the Federal Reserve Bank of Cleveland. Mr. Wilson serves on the Appraisal Committee, Trust Investment Committee, Bond Committee, Bank Building Committee, Loan Committee, and the Pension Committee.Independence
Mr. Wilson is a board member and treasurer of AAA Cincinnati, Chairman of
Each year, the Board
of Harmon Civic Trust, Vice Chair of Warren Co. Port Authority, a trustee of Miami University, a trustee ofreviews the
Ralph J. Stolle Countryside YMCA, Board member of the Warren County Foundation, and a member of the Area Progress Council. He is an active member of the Otterbein United Methodist Church.
Through his extensive tenure on the Board and as a former executiverelationships that each director has with the Company Mr. Wilsonand with other parties. Only those directors who do not have any of the categorical relationships that preclude them from being independent within the meaning of applicable NASDAQ Rules and who the Board affirmatively determines have no relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director are considered to be independent directors. The Board has developed unique insights intoreviewed a number of factors to evaluate the business activitiesindependence of each of its members. These factors include its members’ current and historic relationships with the Company and its subsidiarycompetitors, suppliers and providescustomers; their relationships with management and other directors; the Boardrelationships their current and former employers have with information as to the operations of each, identifying near and long-term challenges and opportunities for the Company.
Spencer S. Cropperis employed by Stolle Properties, Inc., a subsidiary of the Ralph J. Stolle Company, and currently serves on the company’s Board of Directors. He joined the LCNB Board of Directors in 2006. Mr. Cropper serves on the Audit Committee, the Bond Committee, the Pension Committee, the Loan Committee,Company; and the Nominating and Compensation Committee.
Mr. Cropper is a Certified Public Accountant, a member of the Ohio Society of Certified Public Accountants and a member of the American Institute of Certified Public Accounts. He serves on the Board of Directors for the Ralph J. Stolle Countryside YMCA, as well as the Boards of Trustees for the Ralph J. Stolle Countryside YMCA, the Warren County Foundation, and Bethesda Foundation, Inc.
Mr. Cropper brings to the Board relevant experience in accounting and financial matters.
John H. Kochensparger IIIpreviously servedas a member of the board of directors of First Capital Bancshares Inc. and Citizens National Bank of Chillicothe, Ohio for 22 years, and served as Chairman of the board for 10 years. Mr. Kochensparger was self-employed as an independent manufacturer’s representative for companies relating to the golf industry. He also serves as Vice President of the National Golf Salesmen Association. He brings 27 years of banking and management experience to the Board. Mr. Kochensparger serves on the Compensation Committee, the Nominating Committee, the Trust Committee and the Building Committee.
Class II Directors (Terms Expire in 2016)
Steve P. Fosteris President and Chief Executive Officer of both LCNB Corp. and LCNB National Bank. He joined the LCNB staff in 1977 and has served as internal auditor, branch manager, and loan officer. He started the Information Technology Department and, more recently, served as Chief Financial Officer. He was elected to the LCNB Board of Directors in 2005 and serves on the Trust Investment Committee, the Building Committee, the Bond Committee, the Pension Committee, and the Loan Committee. On December 28, 2015, he was appointed as Chief Executive Officer of LCNB and the Bank.
Through his long management tenure withrelationships between the Company and other companies of which the Bank, Mr. Foster providesCompany’s Board members are directors or executive officers. After evaluating these factors, the Board with information gained from direct managementhas determined that all of the operationsdirectors, with the exception of Steve P. Foster, Eric J. Meilstrup and William H. Kaufman, are independent directors of the Company andwithin the Bank. Further, in his leadership positions in financial areas, he has developed business knowledge and understanding across our operations.
Anne E. Krehbieljoined the Board in 2010. Ms. Krehbiel is an attorney, who received her law degree from the Universitymeaning of Cincinnati in 1980, and has practiced law at her firm, Krehbiel Law Office, in Lebanon, Ohio since 1989. She is certified as an Estate Planning, Trust and Probate Law Specialist. Ms. Krehbiel serves on the Audit Committee, the Building Committee, Bond Committee, Loan Committee, the Nominating Committee and the Compensation Committee.
applicable NASDAQ Rules.
Ms. Krehbiel serves on a number of organizations including: Harmon Civic Trust; the Warren County Bar Association, of which she is a former president; and Lebanon Rotary International. She also volunteers as a swimming official in Southwestern Ohio.
Ms. Krehbiel brings to the Board relevant experience in legal matters, valuable insights and business experience from running her own law firm and an extensive involvement in the communities served by the Company and its subsidiaries.
Valerie S. Krueckebergis a practicing Certified Public Accountant, providing a variety of finance and accounting advisory and consulting services to clients. Prior to starting her own firm, she was a Partner at KPMG LLP. She has previously served as a Board member and Audit Committee chairperson for Kenra, Ltd, Board member and Interim Executive Director of The Children’s Theatre of Cincinnati, Inc., and Interim Controller for Medpace, Inc.
Ms. Krueckeberg is the current chairperson for The Ohio CPA Foundation Board of Trustees and is a member of the Ohio Society of Certified Public Accountants and the American Institute of Certified Public Accountants. She serves on the Miami University Accountancy Advisory Group, and is an active volunteer for Mason City Schools.
If elected, Ms. Krueckeberg will bring to the Board extensive experience in public accounting and financial matters.
Class III Directors (Terms Expire in 2017)
George L. Leasure joined the Board in 1994. He founded GMi Companies (formerly Ghent Mfg., Inc.) in 1976 and now serves as its Chairman and a director. The company manufactures chalkboards, markerboards and related products. Mr. Leasure serves on the Bond Committee, the Loan Committee, the Compensation Committee, the Nominating Committee, and the Trust Investment Committee.
Mr. Leasure is active in many Warren County civic and charitable organizations including serving on the Board of Trustees for the Countryside YMCA and as a member of the Area Progress Council.
Mr. Leasure’s executive and management experience have equipped him to contribute to the Board’s oversight of management and business activities.
William H. Kaufmanis an attorney and senior partner of Kaufman and Florence Law Office located in Lebanon. He began his legal career as an attorney with the law firm of Young and Jones, whose office was located in the Bank building.
Mr. Kaufman joined the LCNB Board of Directors in 1982 and serves on the Bond, Loan, and Bank Building Committee’s. He also oversees all day-to-day legal matters and real estate closings for the Bank.
Mr. Kaufman provides the Board with relevant experience in legal matters and, through his long tenure on the board, an institutional knowledge of the operations of the Company and its subsidiaries.
Board Leadership Structure and Role in Risk Oversight
As of January 1, 2016, the
The Board
has separatedcurrently separates the position of Chairman of the Board from the position of Chief Executive
Officer. Steve P. FosterOfficer (“CEO”). Eric J. Meilstrup serves as our
PresidentCEO and
Chief Executive Officer and Stephen P. WilsonSpencer S. Cropper serves as Chairman of the Board. As the oversight responsibilities of the Board of Directors have expanded over the years, the Board has determined that it is beneficial to have an independent Chairman with the sole job of leading the Board, while allowing the
President/CEO to focus his efforts on the day-to-day management of the Company. The Board believes that it is important to have the
President/CEO as a director. The Company aims to foster an appropriate level of separation between these two distinct levels of leadership of the Company. In addition to the Chairman, leadership is also provided through the respective chairs of the
Board’sBoard’s various committees. However, no single leadership model is right for all companies and at all times. The Board recognizes that, depending on the circumstances, other leadership models, such as a combined
Chief Executive OfficerCEO and Chairman of the Board position, might be appropriate. Accordingly, the Board periodically reviews its leadership structure.
The Board of Directors is responsible for consideration and oversight of risks facing the Company and is responsible for ensuring that material risks are identified and managed appropriately. Several oversight functions are delegated to committees of the Board with such committees regularly reporting to the full Board the results of their respective oversight activities. For example, the Audit Committee meets periodically with management in order to review the
Company’sCompany’s major financial risk exposures and the steps management has taken to monitor and control such exposures. As part of this process, the Audit Committee reviews
management’smanagement’s risk-assessment process and reports its findings to the full Board. Also, the Compensation Committee periodically reviews the most important enterprise risks to ensure that compensation programs do not encourage excessive risk-taking. Additional review or reporting on enterprise risks is conducted as needed or as requested by the Board or Board committees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LCNB has engaged and intends to continue to engage in the lending of money through the LCNB National Bank, its wholly-owned subsidiary, to various directors and officers of the Company. These loans to such persons were made in the ordinary course of business and in compliance with applicable banking laws and regulations, on substantially the same terms, including interest rates and collateral, as prevailing at the time for comparable transactions with other persons and do not involve more than a normal risk of collectability or other unfavorable features.
In addition to those banking transactions conducted in the ordinary course, the Bank was involved in the related transactions described below. Each of these transactions was made on terms similar to those that could have been negotiated with an unaffiliated third party.
The Bank
again retained the law firm of Kaufman & Florence during
20152021 for legal services in connection with various matters arising in the course of the
Bank’sBank’s business. William H. Kaufman, a director of LCNB, is a
partner informer Partner (currently Of Counsel) of Kaufman & Florence. Additionally, customers of the Bank are charged for certain legal services provided by Mr.
Kaufman’sKaufman’s firm in the preparation of various documents. The approximate amount billed by Kaufman & Florence for legal services during
20152021 was
$118,543.$73,000. The Bank contemplates using Mr.
Kaufman’sKaufman’s firm in the future on similar terms, as needed.
The Company does not have a written process of approval and ratification of related party transactions. However, the Company does adhere to an unwritten policy, whereby before the Company or the Bank enters into any transaction for which the value of the transaction is expected to be at least $120,000, and an interested party in the transaction is a director, executive officer, an immediate family member of a director or officer, or a shareholder owning 5% or greater of the Company’sCompany’s outstanding stock, the disinterested Board of Directors must review and approve the transaction. In reviewing the potential transaction, the directors will consider the fairness of the transaction to the Company, whether the transaction would or could compromise the interested party’sparty’s independence and judgment, the best interests of the Company, and such other factors determined advisable by the Board of Directors. In 2015,2021, the Board of Directors reviewed and approved of the related party transaction with Mr. Kaufman’sKaufman’s firm, as described above.
DELINQUENT SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires
LCNB’sLCNB’s officers and directors and persons who own more than 10% of a registered class of
LCNB’sLCNB’s equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required to furnish LCNB with copies of all Section 16(a) forms they file. Based solely on
LCNB’sLCNB’s review of the
sectionSection 16(a) forms received by it and by statements of officers and directors concerning their compliance with the applicable filing requirements, the officers, directors and greater than 10% beneficial owners of LCNB have complied with all applicable filing requirements.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 2015,2021, the Board of Directors met on 6 occasions. Each incumbentNo director attended 85.7% or moreless than 75% of the aggregate of the total number of meetings held byof the Board and the total number of meetings held by all committees of the Board on which he or she served.Theserved.The Company encourages its directors to attend the Annual Meeting of the Shareholders, and in 2015,2021,all of the directors attended the meeting.meeting, virtually or in person. Directors do not receive any compensation from LCNB for their service on the Board of Directors of LCNB. However, each director of LCNB also serves as a director of LCNB National Bank, the banking subsidiary of LCNB, which meets twiceonce per month, for which each director is compensated atwith a rate of$14,000 annually.$30,000 annual retainer with the exception of the Chair who is compensated with a $40,000 annual retainer. In addition to the annual retainer, non-employee directors who serve on committees of the Board of Directors receive $150$440 for each committee meeting attended. Further, the directors participate like the employeesThe Chair of the Companyeach committee receives $880 for each committee meeting attended. In addition, in the Non-Equity Incentive Plan of the Company, and thus receive cash compensation based upon the success of the Company over the previous year. In 2015, the directors2021 each director received compensation under this planan equity grant equal to9.5%to 10 percent of their annual base compensation and committee meeting fees earned during 2015. retainer.
The table below summarizes all compensation paid to the directors of LCNB for their services as directors during fiscal year 2015.
2021.
| | | |
Director Compensation
|
Name |
Fees Earned or Paid in Cash ($)(1) |
Non-Equity Incentive Plan Compensation ($)(2) |
Total ($) |
Stephen P. Wilson | $14,000 | $1,330 | $15,330 |
Steve P. Foster | $14,000 | $1,330 | $15,330 |
Rick L. Blossom(3) | $14,900 | $1,416 | $16,316 |
Spencer S. Cropper | $14,900 | $1,416 | $16,316 |
William H. Kaufman | $14,000 | $1,330 | $15,330 |
Anne E. Krehbiel | $15,050 | $1,430 | $16,480 |
John H. Kochensparger III | $17,150 | $1,629 | $18,779 |
George L. Leasure | $17,150 | $1,629 | $18,779 |
| | | | | | | | | | | |
| Director Compensation |
| Name | Fees Earned or Paid in Cash ($)(1) | Equity Grant ($)(2) | Total ($) |
| Eric J. Meilstrup | $30,000 | $3,000 | $33,000 |
| Spencer S. Cropper | $46,600 | $4,000 | $50,600 |
| Steve P. Foster | $35,280 | $3,000 | $38,280 |
| Stephen P. Wilson | $35,280 | $3,000 | $38,280 |
| Mary E. Bradford | $39,680 | $3,000 | $42,680 |
| William (“Rhett”) G. Huddle | $35,280 | $3,000 | $38,280 |
| Craig M. Johnson | $38,800 | $3,000 | $41,800 |
| Michael J. Johrendt | $36,600 | $3,000 | $39,600 |
| William H. Kaufman | $30,000 | $3,000 | $33,000 |
| Anne E. Krehbiel | $38,800 | $3,000 | $41,800 |
| Takeitha W. Lawson | $ 2,940 | $ 0 | $ 2,940 |
-
(1)
The compensation paid to the directors of LCNB includes committee fees as follows: S. Cropper, $900; G. Leasure, $3,150;$6,600; S. Foster, $5,280; S. Wilson, $5,280; M. Bradford, $9,680; W. Huddle, $5,280; C. Johnson, $8,800; M. Johrendt, $6,600; A. Krehbiel, $1,050; R. Blossom, $900;$8,800; and J. Kochensparger $3,150.T. Lawson, $440. Mr. Wilson, Mr. Kaufman,Meilstrup and Mr. FosterKaufman are not independent directors and do not receive committee fees.
(2)
The directors, in addition to their baseannual retainer and committee fees, receive a cash award that corresponds to the Bank’s Non-Equity Incentive Plan. The percentage awarded to the officers is used to calculate the directors’ cash award that year. The award is paid in the following year. This percentage is multiplied by the directors’ base fee plus the committee fee to arrivean equity retainer grant valued at the award. The percentage used for the award paid in 2015 was9.5%.
(3)
Mr. Blossom passed away in February 2016.
ten percent of their annual retainer.
The Company has an Audit Committee that serves in a dual capacity as the Audit Committee of the Bank. During 2015,2021, the members of the Audit Committee were Craig M. Johnson (Chair), Spencer S. Cropper, (Chair),Mary E. Bradford, Takeitha W. Lawson and Anne E. Krehbiel, and Rick L. Blossom.Krehbiel. The Audit Committee met a total of 5 times in 2015.2021. All of the members of the Audit Committee meet the definition of independent director set forth in NASDAQ Listing Rule 5605(a)(2). Until his passing in February 2016, Mr. BlossomCraig M. Johnson and Spencer Cropper served as the financial expert as defined by the Sarbanes-Oxley Act and NASDAQ Listing Rule 5605(a)(2).If elected to the Board, it is intended that Ms. Krueckeberg will serve as the financial expert on the Audit Committee.The.The Audit Committee is responsible for engaging independent auditors, reviewing with the independent auditors the plans and results of the audit, and reviewing the adequacy of the Bank’sBank’s internal accounting controls. The Board of Directors of the Company has adopted a written charter for the Audit Committee. The Audit Committee Charter is available online at https://www.lcnb.com/ACharter.pdf.www.lcnbcorp.com/corporate-profile/corporate-governance/default.aspx.
The Bank also has a
Building Committee, AppraisalCompensation Committee, Nominating
and Corporate Governance Committee, Trust
Committee, Bond Committee, Pension Committee, and Loan Committee. Each of these committees meet as needed.
The Building Committee reviews the facility needs and repair and improvement issues of the Bank and its branch and other office buildings. The members of the Building Committee are Stephen P. Wilson, Anne E. Krehbiel, Steve P. Foster, John H. Kochensparger III, and William H. Kaufman. The Appraisal Committee reviews the appraisals conducted by the Bank’s real estate appraisers to ensure that the appraisals are consistent and accurate. The members of the Appraisal Committee are
Stephen P. Wilson, Peter Berninger, Matt Layer and Timothy Sheridan. The Trust Committee reviews the various trusts accepted by the Trust Department of the Bank, reviews trust investments and advises the trust officers in department operations. The members of the Trust Committee are Stephen P. Wilson, Steve P. Foster, Leroy F. McKay, George L. Leasure, John H. Kochensparger III, S. Diane Ingram, Melanie K. Crane,Michael R. Miller, William G. Huddle, Bradley A. Ruppert, Rebecca H. Roess, Amy R. Kobes,Josh Shapiro, Kasheen Swango, Traci Hammiel, Michael D. Nusbaum, Myra A. Frame and Jackie Manley. The Bond Committee reviews the adequacy of the Bank’s blanket bond coverage and recommends any changes in coverage to the Board of Directors of the Bank. The Bond Committee consists of the entire Board of Directors of the Bank. The Pension Committee reviews the Bank’sBank’s defined benefit pension plan. The members of the Pension Committee are Stephen P. Wilson, Spencer S. Cropper, Steve P. Foster, Eric J. Meilstrup and Robert C. Haines II. The Board Loan Committee reviews the lending procedures of the Bank and reviews and approves requests for loans in excess of the established lending authority of the officers of the Bank. The Board Loan Committee consists of the entire Board of Directors of the Bank.
Steve P. Foster and William G. Huddle.
During
2015,2021, the Nominating
and Corporate Governance Committee consisted of
all fivesix of the
Company’sCompany’s independent directors (as defined in NASDAQ Listing Rule 5605(a)(2)):
Michael J. Johrendt (Chair), Spencer S. Cropper,
John H. Kochensparger III, George L. Leasure,Mary E. Bradford, Craig M. Johnson, Takeitha W. Lawson, and Anne E.
Krehbiel, and Rick L. Blossom.Krehbiel. The Nominating
and Corporate Governance Committee met
35 times in
2015 and does have a charter.2021. Decisions concerning nominees for the Board of Directors will be made by the
nominating committeeNominating Committee and ratified by the entire Board. The Board has not adopted a policy with respect to minimum qualifications for
boardBoard members. However, in making its nominations, the committee considers, among other things, an
individual’sindividual’s business experience, industry experience, financial background, breadth of knowledge about issues affecting the Company, time available for meetings and consultation regarding Company matters and other particular skills and experience possessed by the individual. Please see the narrative under the heading
“Director“Director and Nominee
Qualifications”Qualifications” beginning on page
1114 of this Proxy Statement for additional discussion of the nomination process. The
Board of Directors has adopted a written charter for the Nominating
and Corporate Governance Committee
Charterand is available online at https://
www.lcnb.com/NCharter.pdf.www.lcnbcorp.com/corporate-profile/corporate-governance/default.aspx.
Historically, the Company has not engaged third parties to assist in identifying and evaluating potential nominees, but would do so in those situations where particular qualifications are required to fill a vacancy and the
Board’sBoard’s contacts are not sufficient to identify an appropriate candidate.
The Company
has not received director candidate recommendations from its shareholders and, as such, does not have a formal policy regarding consideration of
such recommendations. However, anydirector candidate recommendations from its shareholders. Any recommendations received from shareholders
have been and will be evaluated in the same manner that potential nominees suggested by Board members are evaluated. The Company does not intend to treat shareholder recommendations in any manner different from other recommendations. Shareholders may send director nomination recommendations to
Stephen P. WilsonSpencer S. Cropper at P.O. Box 59, Lebanon, Ohio 45036.
The Bank has a designated Compensation Committee, which met3timesmet6 times in 20152021. The Board of Directors of the Company has adopted a written charter for the Compensation Committee and does have a charter.is available online at https://www.lcnbcorp.com/corporate-profile/corporate-governance/default.aspx. During 2015, this committee2021, the Compensation Committee consisted of thesix independent directors of the Bank:directors: Anne E. Krehbiel (Chair), Spencer S. Cropper, George L. Leasure, John H. Kochensparger III, AnneMichael J. Johrendt, Craig M. Johnson, Takeitha W. Lawson, and Mary E. Krehbiel, and Rick L. Blossom.Bradford. The committee makes compensation recommendations to the Board of Directors for consideration, as further described in the “Compensation“Compensation of Executive Officers”Officers” section below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for fiscal year 2021 were Anne E. Krehbiel (Chair), Spencer S. Cropper, Mary E. Bradford, Michael J. Johrendt, Takeitha W. Lawson, and Craig M. Johnson. In
2015,2021, no executive officer of the Company served on the Board of Directors or compensation committee of any entity that compensates any member of the
Company’sCompany’s Compensation Committee.
SHAREHOLDER COMMUNICATION WITH BOARD MEMBERS
The Company maintains contact information, both telephone and email, on its website (https://www.LCNB.com) under the heading “Contact LCNB.“Resource Center” then “Contact.” By following the contact link, https://www.lcnb.com/contact.asp, a shareholder will be given access to the Company’sCompany’s toll-free telephone number and mailing address, as well as a linkform to populate that would then be sent to the Company email address for providing email correspondence.in the form of an email. Communications sent to that Company email address and specifically marked as a communication for the Board will be forwarded to
the Board or specific members of the Board as directed in the shareholder communication. In addition, communications received via telephone for the Board of Directors are forwarded to the Board by an officer of the Company. In addition, shareholders may send communications to the Board or any of its members by sending such communications to the Company, c/o Secretary at P.O. Box 59, Lebanon, Ohio 45036.
The Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all directors, officers, and
employees and aemployees. The Code of
Business Conduct and Ethics
applicable to the Company’s Chief Executive Officer, Chief Financial Officer and Controller. These codes of ethics areis included in the
Company’sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31,
2003.2021, and is available online at https://www.lcnbcorp.com/corporate-profile/corporate-governance/default.aspx.
The Audit Committee of the Board of Directors of the Company is composed of
threefive independent directors. The responsibilities of the Audit Committee are set forth in the
revised charter of the Audit Committee which was adopted by the Board of Directors
of the Company on February 17, 2004.and is available at https://www.lcnbcorp.com/corporate-profile/corporate-governance/default.aspx. The Audit Committee
reviews.reviews, and revises if necessary, the Audit Charter at least annually. Any changes are presented to the Board of Directors for approval. The Audit Committee, among other matters, is responsible for the annual appointment and supervision of the independent public accountants, and reviews the arrangements for and the results of the
auditors’auditors’ examination of the
Company’sCompany’s books and records and
auditors’auditors’ compensation. The Audit Committee reviews the
Company’sCompany’s accounting policies, internal control procedures and systems and compliance activities.
The Audit Committee has reviewed and discussed the audited consolidated financial statements with management. The committee has also reviewed and discussed with BKD, LLP their independence as auditors for the fiscal year ended December 31,
2015,2021, as
required to be discussedcalled for by
SAS 61, as it may be modified or supplemented.
the applicable requirements of the Public Company Accounting Oversight Board and (“PCAOB”). The Audit Committee also has received the written disclosures and the letter from the independent accountants requiredas called for by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committee), as may be modified or supplemented, and, as required, has discussed with BKD, LLP its independence.
the applicable requirements of the PCAOB.
Based on the foregoing discussions, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
2021.
This report has been submitted by the Audit Committee:
Craig M. Johnson (Chair)
Mary E. Bradford
Takeitha W. Lawson
MARKET PRICE OF STOCK AND DIVIDEND DATA
Holders and Market Information
LCNB had approximately 1,015 928registered holders of its Common Shares as ofDecemberofDecember 31, 2015.2021. The number of shareholders includes banks and brokers who act as nominees, each of whom may represent more than one shareholder. ItsLCNB’s Common Shares are currently traded on the NASDAQ Capital MarketMarket® under the symbol “LCNB”“LCNB”. Several market-makers facilitate the trading of the Common Shares. Trade prices for LCNB’sLCNB’s Common Shares, reported through registered securities dealers, are set forth below. Trades have occurred during the periods indicated without the knowledge of LCNB. The trade prices shown below are interdealer without retail markups, markdowns or commissions.
| | | | | | | | | | | | | | |
| 2021 | | High | | Low |
| First Quarter | | $19.96 | | $14.07 |
| Second Quarter | | $18.34 | | $16.25 |
| Third Quarter | | $17.94 | | $16.01 |
| Fourth Quarter | | $20.43 | | $17.05 |
| | | | |
2015 |
| High |
| Low |
First Quarter |
| $16.40 |
| $13.95 |
Second Quarter |
| $17.88 |
| $15.01 |
Third Quarter |
| $16.40 |
| $15.26 |
Fourth Quarter |
| $17.18 |
| $15.07 |
| | | | |
2014 |
| High |
| Low |
First Quarter |
| $18.24 |
| $17.25 |
Second Quarter |
| $18.89 |
| $14.67 |
Third Quarter |
| $17.14 |
| $14.84 |
Fourth Quarter |
| $15.43 |
| $13.83 |
| | | | | | | | | | | | | | |
| 2020 | | High | | Low |
| First Quarter | | $19.43 | | $10.03 |
| Second Quarter | | $16.70 | | $10.53 |
| Third Quarter | | $15.87 | | $12.65 |
| Fourth Quarter | | $15.99 | | $12.51 |
The following table presents cash dividends per share of common stock declared and paid in the periods shown.
| | | |
| 2015 |
| 2014 |
First Quarter | $0.160 |
| $0.160 |
Second Quarter | $0.160 |
| 0.160 |
Third Quarter | $0.160 |
| 0.160 |
Fourth Quarter | $0.160 |
| 0.160 |
Total | $0.640 |
| $0.640 |
|
|
|
|
-
| | | | | | | | | | | |
| 2021 | | 2020 |
| First Quarter | $0.19 | | $0.18 |
| Second Quarter | $0.19 | | $0.18 |
| Third Quarter | $0.19 | | $0.18 |
| Fourth Quarter | $0.20 | | $0.19 |
| Total | $0.77 | | $0.73 |
| | | |
It is expected that LCNB will continue to pay dividends on a similar schedule, to the extent permitted by business and other factors beyond
management’smanagement’s control. LCNB depends on dividends from its subsidiary for the majority of its liquid assets, including the cash needed to pay dividends to its shareholders. Federal banking laws and regulations limit the amount of dividends the Bank may pay to the sum of retained net income, as defined, for the current year plus retained net income for the previous two
calendar years. Prior approval from the Office of the Comptroller of the Currency, the
Bank’sBank’s primary regulator, would be necessary for the Bank to pay dividends in excess of this amount. In addition, dividend payments may not reduce capital levels below minimum regulatory guidelines. Management believes the Bank will be able to pay anticipated dividends to LCNB without needing to request approval.
Equity Compensation Plan Information
The
Company’sCompany’s 2015 Ownership Incentive Plan (the
“Plan”“2015 Plan”) was approved by shareholders at
last year’sthe 2015 annual meeting. The
2015 Plan provides for the grant of ownership incentives to key employees
and directors in the form of stock options, appreciation rights, restricted shares and/or restricted share units. The
2015 Plan is administered
by the Compensation Committee. For additional information on the
2015 Plan, please refer to the
Company’sCompany’s Definitive Proxy Statement, filed with the SEC on March 13, 2015. The
Company’sCompany’s previous equity incentive plan, the 2002 Ownership Incentive Plan (the
“2002 Plan”“2002 Plan”), expired in accordance with its terms in 2012. The Board established the 2002 Plan to provide awards to certain executive officers after reaching specific earnings and asset growth goals set at the beginning of each year.
Options previously granted under the 2002 Plan continue to be exercised in accordance with the terms of the grants.
The following table summarizes share and exercise price information about LCNB’sLCNB’s equity compensation plans as of March 1, 2016.2022.
| | | | | | | | | | | |
Plan Category | (a)
Warrants and Rights | (b)
Weighted-Average Exercise Price of Outstanding Options,Warrants and Rights | (c)
Number of Securities remaining available for future issuance under any equity compensation plans (excluding securities reflected in column (a))
|
security holders | 77,461 shares
N/A | $11.79
N/A | 94,749 shares(1) (2)
328,508(1) |
| NA
N/A | NA
N/A | NA
N/A |
Total | 77,461 shares
N/A | $11.79
N/A | 94,749 shares
328,508 |
(1)
Except for Includes restricted share awards granted under the Plan (which are not required to be reflected in this table), the only equity incentives granted under the 2015 or 2002 Plans have been stock options.
(2)
The 2002 Plan expired in 2012 and the 94,749 shares left in the plan at expiration reverted to Treasury securities, authorized unissued securities of the Company.
Plan.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
The Compensation Discussion and Analysis (“CD&A”) explains our executive compensation program for our named executive officers listed below (the “NEOs”), which include our Chief Executive Officer, Chief Financial Officer and our three other most highly-compensated executive officers who were serving as executive officers at the end of 2021. The NEOs for 2021 were:
•Eric J. Meilstrup, President and Chief Executive Officer
•Robert C. Haines II, Executive Vice President and Chief Financial Officer
•Matthew P. Layer, Executive Vice President and Chief Lending Officer
•Michael R. Miller, Executive Vice President, Trust Officer
•Bradley A. Ruppert, Executive Vice President, Trust Officer, Chief Investment Officer
The CD&A also describes the process followed by the Compensation Committee (the “Committee”) for making pay decisions, as well as its rationale for specific compensation related decisions related to 2021. LCNB has no direct employees. All officers and other employees performing services for LCNB are employees of the Bank. The Compensation Committee is a committee of the Board of Directors, composed solely of independent directors, and is responsible for developing the Bank’sBank’s executive compensation principles, policies and programs and approving the compensation to be paid to the Chief Executive Officer, Chief Financial Officer and each of the other named executive officers (the “named executive officers”) of the Company and the Bank.NEOs. The Compensation Committee consults with Steve P. Foster,Eric J. Meilstrup, President and Chief Executive Officer, concerning executive officer compensation,compensation; however, he does not participate in the deliberations regarding his own compensation.
2021 Executive Compensation Highlights
Our executive compensation as Presidentprograms are designed to align the interests of our NEOs with those of our shareholders. Based on our performance, findings from the 2020 Executive Total Compensation Review (discussed later in the CD&A), and Chiefour commitment to linking pay and performance, the Committee made the following executive compensation decisions for fiscal year 2021. For more detail, please refer to the “2021 Executive Officer.Compensation Components” later in the CD&A:
•Base Salaries: Base salaries were increased approximately 8.2% for each NEO, effective January 2021.
•2021 Short-Term Incentives/Cash Bonuses: Based on our 2021 financial performance and the NEOs’ individual performance, the NEOs earned short-term incentives equal to 12.5% of base salary. The target payout amount was set at 11.5% of base salary with the maximum opportunity set at 20% of base salary.
•2021 Long-Term Incentives: Equity grants were issued at 20 % of base salary for NEOs. The target amount was set at 10 % of base salary with the maximum opportunity set at 20 % of base salary.
Summary of Executive Compensation Practices
Our executive compensation program includes the following practices and policies, which we believe promote sound compensation governance and are in the best interests of our shareholders:
| | |
| What We Do |
•Periodically, compare our NEO compensation levels to the market and take these results into consideration when making compensation related decisions. |
•Provide our NEOs with a performance-based cash incentive plan on an annual basis. |
•Grant full-value equity to each of our NEOs with multi-year vesting provisions. |
•Provide each of our NEOs with deferred compensation programs to encourage retention and promote stability in our executive group. |
•Utilize the assistance of an outside independent compensation consultant to assist our Compensation Committee with gathering market data and best practices information. |
What Guides Our Compensation Programs
The primary objectives of
the Bank’sLCNB’s executive officer compensation programs are to:
•Provide a direct link between executive officer compensation and the interests of LCNB and LCNB’sLCNB’s shareholders by making a portion of executive officer compensation dependent upon the financial performance of the Bank and the consolidated corporation.LCNB.
•Support achieving the Bank’sLCNB’s annual and longtermlong-term goals and objectives as determined by the Bank Board.
Board by linking these goals to the incentive compensation programs for the executive officers.
•Establish base salaries targeted at abetween the 25th and 75th percentiles of market median level for comparable positions within a comparison peer group of companies in the banking industry whenindustry. If an executive officer is meeting performance expectations they’ll likely have a base salary level near market median. If an executive officer is experienced, high performing; performing significant additional duties, or brings a specific knowledge base to the organization, they may have a salary level near the 75th percentile of market. If an executive is innew to a fully functioning role.
position or recently promoted they may have a salary level near the 25
th percentile of the market. •Provide executive officers with incentive (cash and equity) compensation opportunities designed to pay total compensation levels that are abovesomewhere between the median for above median performance.
25
th and 75th percentiles of the market depending on the performance of LCNB and the individual executive officer. •Provide long-term incentives/equity and deferred compensation plans and arrangements that encourage the retention of our proven team of executive officers. The total compensation package for
executive officers of the Company and the Bankour NEOs includes:
(i) base salary,
(ii) annual cash bonuses and
(iii) incentive opportunities, which may consist of equity incentives under the 2015 Ownership Incentive Plan.
Executive officersSome NEOs are also provided with a non-qualified deferred compensation program that strongly supports retention and provides for benefits after retirement. The NEOs also receive other employee benefits generally available to all employees.
Generally, the named executive officers
The NEOs of the Bank are employed
“at will”“at will” without severance agreements or employment contracts.
TheCurrently, the Company believes that its compensation levels and structure, as well as the
Company’sCompany’s culture and intangibles alleviate the need for the Company to utilize employment agreements with its
named executive officers.NEOs.
The Company held its most recent “
Beginning in 2020, the Committee decided to propose a say-on-pay
” advisory shareholder vote
onevery year. Therefore, the
compensation of LCNB’s named executive officers at the April 2014 Annual Meeting. The Compensation Committee noted that the Company’s proposal regarding the “say-on-pay” vote had broad support among its shareholders. The 2014 “say-on-pay” vote results were 97.8% in favor. At the first “say-when-on-pay” advisory vote in 2011, the Company’s shareholders voted to hold an advisory shareholder vote on the
compensation of LCNB’s named executive officers once every three years. The next advisory shareholder vote on the compensation of LCNB’s named executive officersLCNB’s NEOs will occur at the 2022 annual meeting and the advisory vote on the frequency of the say-on-pay vote will occur in 2017.
Based onat the results of the 2014 2022 annual meeting.
“
say-on-pay” vote, no specific component of the executive compensation program was altered for fiscal year 2015.
The
Compensation Committee and the
Company’sCompany’s Board of Directors believe that the
Company’sCompany’s executive compensation has been appropriately tailored to its business strategies, aligns pay with performance, and reflects best practices regarding executive compensation. The
committeeCommittee will continue to consider shareholder sentiments about the
Company’sCompany’s core principles and objectives when determining executive compensation.
Engagement of Independent Compensation Consultant
The Compensation Committee has the sole authority to engage the services of any compensation consultant or advisor.
In lateSince 2013, the
Compensation Committee
has periodically engaged
the services of Blanchard Consulting Group
(“BCG”(“BCG”)
to provide consulting services surrounding executive compensation programs and policies. BCG is, an independent
third-party consulting group that focuses exclusively on providing compensation consulting
to community banks throughoutcompany focused on the
country. During 2014, BCG assisted LCNB with an executive compensation review, a review of the annual cash incentive plan, and assistance with a market-based equity plan review and the development of the 2015 Ownership Incentive Plan (with the assistance of LCNB’s outside legal counsel).banking industry. BCG was hired directly by the Compensation Committee and does not provide any other services to
LCNB.LCNB beyond independent compensation consulting services. The
Compensation Committee considered all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934 in determining that
BCG’sBCG’s work does not raise a conflict of interest.
BCG reports directly to the Committee, and management has not retained its own consultant. BCG periodically attends meetings of the Committee, physically or by phone, and with or without management present. BCG assists the Committee in, among other things, analyzing current compensation conditions in the marketplace generally and among
our peers specifically, and assessing the competitiveness and appropriateness of compensation levels for our NEOs and Directors. For the Committee’s use in 2021, BCG produced a comprehensive review of Board compensation. The 2021 review evaluated LCNB’s Board compensation in comparison to a custom peer group, as well as against regional and national banking surveys and BCG database information. In
early 2014,2020, the Committee engaged BCG
completed work onto conduct an updated executive compensation review that was used to assist with 2021 compensation related decisions. Some general “aging” principles and updated discussions with BCG were utilized to make the information current for 2021. It is the intent of the Committee to continue to alternate the executive
totaland Board compensation review
project. This project focused on
all aspects of total compensation; including base salaries, cash incentives/bonuses, equity incentives and grants,an every other
compensation and perquisites, and executive benefits and retirement programs. As part of this executive total compensation review, BCG utilized a peer group of twenty-one (21) publicly traded banks in Ohio and surrounding states and gathered and reviewed total compensation and performance data for these peer banks. A listing of the specific peer group banks utilized in the 2014 study is provided below. The report of findings from this study was utilized for 2014 decisions, including the recommendation for the adoption at the 2015 Annual Meeting of Shareholders of the 2015 Ownership Incentive Plan. Due to the comprehensive nature of the report, it was also utilized for 2015 compensation decisions.year basis going forward.
In 2014, BCG also reviewed LCNB’s annual/short-term cash incentive plan compared to market best practices. Based on the results of this review, LCNB began to conduct weekly management meetings to assess its current cash bonus program. Significant changes were contemplated but not made for 2015, however, the Compensation Committee determined that changes would be made to the annual/short-term cash incentive plan in 2016 based on internal discussions and recommendations from BCG. A summary of the annual/short-term cash incentive plan for 2015 is provided later in this section.
Peer Group Banks – 2014 2020 Executive & 2021 Director Compensation Study
Studies
The peer group banks utilized in the
2020 executive
and 2021 director total compensation
reviewreviews performed by BCG
in 2014 included the following:
| | | | | |
LNB Bancorp, Inc. (OH)
| Farmers National Banc Corp. (OH) | Level One Bancorp, Inc. (MI) |
Civista Bancshares, Inc. (OH) | Citizens Financial Services, Inc. (PA) |
| Macatawa Bank Corporation (MI) | ChoiceOne Financial Services, Inc. (MI) |
| MVB Financial Corp. (WV) | Finward Bancorp (IN) |
| Codorus Valley Bancorp, Inc. (PA) | Limestone Bancorp, Inc. (KY) |
| Isabella Bank Corporation (MI) | First Citizens Banc Corp. (OH)Savings Financial Group (IN) |
Premier Financial Bancorp, Inc. (WV) | Middlefield Banc Corp. (OH) |
Codorus Valley Bancorp, Inc. (PA)
| ACNB Corporation (PA) | Kentucky Bancshares, Inc. (KY) |
FranklinCitizens & Northern Corporation (PA)
| SB Financial Services (PA) | AmeriServ Financial,Group, Inc. (PA)
(OH) |
HopFed Bancorp, Inc. (KY)
| Farmers & Merchants Bancorp, (OH) |
United Bancorp, Inc. (MI)
(OH) | Penns Woods Bancorp, Inc. (PA)
|
Community Bank Shares of Indiana, Inc. (IN)
| Ohio Valley Banc Corp. (OH) |
Camco Financial Corporation (OH)
| MVB Financial Corp. (WV)
|
Kentucky Bancshares, Inc. (KY)
| Tower Financial Corporation (IN)
|
Middlefield Banc Corp. (OH)
| NB&T Financial Group, Inc. (OH)
|
SB Financial Group, Inc. (OH)
| |
For the 2020 reviews of executive compensation against benchmarking data, the Committee reviewed the following summary by BCG:
•Total Cash Compensation Components= Base Salary + Annual Cash Incentives / Bonus;
•Direct Compensation = Total Cash Compensation + Three-Year Average Equity Awards; and
•Total Compensation = Direct Compensation + Other Compensation + Retirement Benefits / Perquisites
BCG’s 2020 assessments of LCNB’s compensation practices and levels concluded that:
•LCNB’s financial performance was competitive versus peers; comparisons to the peer group/market 50th percentile were appropriate;
•“Total Cash Compensation” of the NEOs was relatively conservative when compared to peer at a level that was near or below the peer group 25th percentile in 2020;
•For “Direct Compensation,” LCNB had provided competitive equity awards but the below market salaries and cash incentives positioned direct compensation below the peer group 50th percentile; and
•“Total Compensation” supports that LCNB has competitive executive benefits as most executive officers comparisons to peer remained similar or increased for total compensation.
In setting annual salaries for the named executive officers, the Compensation Committee historically considered the salaries set forth in theOhio Bankers League Bank Compensation & Benefits Survey. TheOhio Bankers League Bank Compensation & Benefits Survey publishes the median and certain other percentile salaries of over 300 financial institutions that take part in its survey of financial institutions in Ohio, Illinois and Missouri. The survey does not individually identify the financial institutions that participate.
For 2015, in addition to2021, the OBL Survey, the Compensation Committee considered the market data provided in BCG’s 2014BCG’s 2020 executive compensation report. This included salary data from the previously identified peer group along with various banking industry surveys. When setting each named executive officer’sNEOs annual salary, the Compensation Committee starts at the median salary for an equivalent position in the market, and adjusts the salary for each named executive officerNEO based upon such officer’sofficer’s history with the Company, experience overall, and general skill level. Named executive officersNEOs with greater tenure and more experience are generally compensated above the baseline provided by the median salary identified in the market, while named executive officersNEOs with shorter tenures with the Company and less experience are generally compensated below such baseline. The Compensation Committee uses the median salary as the starting point in setting the annual base salary for its named executive officers to help ensure that the Company’s compensation remains competitive and the Company is able to uphold its goal of maintaining stable, effective management. Finally, the Compensation Committee compares the individual performance of the executive measured against the Board of Directors’Directors’ previously determined subjective performance objectives for each executive for the previous year.Taking into consideration all of these factors, the Compensation Committee sets each named executive officer’sNEO’s salary.
Individual Performance Objectives
The Compensation Committee establishes subjective performance objectives fortable below shows a comparison of each executive officer on an annual basis. The performance objectives are tailoredNEOs 2020 and 2021 salaries.
| | | | | | | | | | | |
| Name | 2020 Base Salary | 2021 Base Salary | Percent Increase |
| Eric J. Meilstrup | $315,000 | $340,000 | 7.9% |
| Robert C. Haines II | $211,000 | $228,000 | 8.1% |
| Matthew P. Layer | $211,000 | $228,000 | 8.1% |
| Michael R. Miller | $211,000 | $228,000 | 8.1% |
| Bradley A. Ruppert | $193,000 | $210,000 | 8.8% |
Incentive Compensation
In addition to the particular executive officer’s areapayment of responsibility withinbase salary and the provision of standard employee benefits, the Company’s NEOs have the opportunity to earn additional compensation in the form of annual cash incentives and equity incentives.
Annual Cash Incentives
On January 19, 2021, the Committee recommended to the Board of Directors new performance measures under the annual cash incentive program. The program is designed to reward NEOs for meeting certain goals set annually by the Committee. The goals are weighted with Company performance goals accounting for approximately 50% of the short-term cash incentive and individual performance goals accounting for approximately 50% of the cash incentive. If the Company and individual performance goals are substantially met, each NEO could receive an incentive equal to 11.5% of his 2021 base salary. Substantially exceeding the Bank. Whether theseCompany and individual performance objectives are achieved is onegoals can increase the cash incentive to a maximum of the factors considered by the Compensation Committee when establishing annual20% of base salariessalary. The Company performance goal metric for the following fiscal year. Additionally,2021 annual cash incentive program was Adjusted Return on Average Assets. All annual cash incentives are subject to the Company’s clawback policy as it may be amended from time to time.
The individual performance goals are weighted 50% and are tied to each NEO’s strategic planning goals as defined in the LCNB Strategic Plan.
The individual performance measures are unique to each NEO and consist of quantitative and qualitative measures. The individual objectives were designed to complement LCNB’s corporate goals and strategic plan for 2021, particularly the Board’s goals related to overall growth of LCNB. These individual objectives, which are described below, are designed to grow core earnings while managing risk, which will, in turn, promote the long-term interests of LCNB’s shareholders. The Committee believes that these performancegoals
properly incentivized the NEOs to implement and attain the long-term strategic objectives
are used to determine a small portion of the executive officers’ annual bonuses and incentives. For fiscal year 2015, the named executive officers were evaluated on the performance criteria set forth below:
Stephen P. Wilson–Act as the Chief Executive Officer of LCNB, providing leadershipincluding overall growth and motivation to achieve Board approvedhigh performance of key metrics.
Annual individual performance goals were established for each NEO, the nature of which differed depending upon the NEO’s job responsibilities. The individual performance included:
(i)for Mr. Meilstrup, setting, refining and objectives. Beexecuting the strategic direction of LCNB; hiring and developing the senior management team and building a spokesperson forclient-focused culture; and promoting LCNB externally to shareholders, customers, employees,stock analysts and the media. Ensure the integritypotential acquisition targets;
(ii)for Mr. Haines, developing robust financial reporting, branch profitability, line of corporate recordsbusiness profitability and various regulatory reports while supervising compliance with all applicable lawspricing model accuracy; executing LCNB’s strategic plan, balancing acquisitions and regulations. Ensure that proper internal controls are in placeorganic growth; and followed to protect the integritystrengthening communications among executive management, directors and investors regarding financial performance and future risks and opportunities of financial reporting. Communicate to the Board the progress toward goals and objectives, compliance issues, policy exceptions, and operational issues and risks.
Steve P. FosterLCNB;
–(iii) Act as President of LCNB and the Bank, participating in setting corporate direction and goals while leading and supporting management in achieving those goals. Manage all the Bank’s employees to produce a level of profitability that meets or exceeds budgeted sales and income goals. Ensure compliance with all applicable laws and regulations governing banking operations. Seek profitable opportunities to expand LCNB through internal growth and acquisition.
Matthew P.for Mr. Layer, – Act as the Chief Lending Officer of LCNB, supervising the Bank’s loan department to ensure compliance with all applicable laws and regulations. Maintain high asset quality in the Bank’s loan portfolio by ensuring compliance with the Bank’s loan policy and managing any policy exceptions through the Loan Committee and the Board of Directors. Ensure the proper maintenance and control of customer and bank records to ensure the integrity of those records. Manage the growth of the Bank’s loan departmentportfolio to meetattain or exceed the budgeted goal while continuing to communicate those goals using individual goals, incentives, and marketing. Participateto the lending officers; participating as a member of the Bank’s senior management team to develop directionBank’s loan committee with a goal of help monitor asset quality and goals and to assist in communicating and supporting management’s priorities.
Robert C. Haines II–Act as the Chief Financial Officer of LCNB, assuring the integrity and accuracy of corporate financial records and various regulatory reports. Supervise the internal auditor, manage the relationshipcompliance with the internal and external audit firms and act as a liaison to the Board of Director’s Audit Committee. Supervise and direct the Bank’s data processing and item processing functions. Prepare the budget and advise the executive management team and the Board of Directors on progress toward budget goals. Support shareholder relations by acting as LCNB’s primary contact with LCNB’s transfer agent. Participatecurrent bank regulations; participating as a member of the Bank’s executiveBank’s senior management team to develop directionteam; executing LCNB’s strategic plan and goalspromoting the Bank in the communities that the Bank serves;
(iv)for Mr. Miller, managing the growth of the Bank’s Wealth Management area and tocommunicate and assist in communicating and supporting management’s priorities.
Leroy F. McKay – Actthe trust officers attain or exceed the budgeted goal; participating as a member of the Senior Trust OfficerBank’s trust committee with a goal of LCNB, supervising the Bank’s trust department to ensurehelp monitor compliance with all applicable lawsthe current bank regulations; participating as a member of the Bank’s senior management team; executing LCNB’s strategic plan; and regulations. Promote growthpromoting the Bank in the trust department to ensure its future viabilitycommunities that the Bank serves; and to continue to meet income goals. Supervise
(v)for Mr. Ruppert, supervise and maximize the return on the security portfolios of the holding company, the Bank, and the trust department. Encourage and supervise the Bank’s brokerage operation. Chair the Bank’s Privacy Committee and lead initiatives aimed at protecting customer information and complying with applicable laws and regulations.
Chair the Bank’s CRA Committee and guide the committee in maintaining an outstanding or satisfactory rating. Participatedepartment; participating as a member of the Bank’s executiveBank’s trust committee with a goal of helping monitoring compliance with the current bank regulations; encourage and supervise the Bank’s brokerage operation; support shareholder relations by acting as one of LCNB’s primary contacts with LCNB’s transfer agent; participate as a member of the Bank’s senior management team to develop directionteam; executing LCNB’s strategic plan and goals and to assist in communicating and supporting management’s priorities.
Incentive Compensation
In addition topromoting the payment of base salary and the provision of standard employee benefits, the Bank’s compensation programs provides executive officers the opportunity to earn additional compensation in the form of annual cash bonus incentives and equity incentives.
Annual Cash Bonus Incentives
The 2015 cash bonus program for executive officers was based primarily on the performance of the Company and the performance of the executive officer in meeting assigned goals for both the Company and the officer personally. For named executive officers as well as employees ofcommunities that the Bank generally,serves.
Achievement For 2021
For 2021, the
Compensation Committee believes that it is important to createAdjusted Return on Average Assets was 1.13%, earning a 6.5% cash incentive for each NEO. Additionally, each NEO earned an
additional 6% cash incentive
to focus on the profitability and growth of the Company. As such, the majority of cash bonuses paid to all employees of the Company are based on the Company’s performance. However, realizing thatfor achieving their individual performance
is not always fully recognizable solely in the Company’s performance, the executive officers are also eligible for small cash bonuses based on the achievement of the goals detailed underPerformance Objectivesthat are communicated at the beginning of each year to each executive and are unique to each executive officer’s responsibilities.
In2015, each named executive officer was eligible to receive a cash bonus based partially on the Company’s performance for 2015 as measured by the core return on average assets (ROAA). Each named executive officer was eligible to receive a cash bonus ranging from 1.50%of that officer’s base salary in the event that the Company’s core ROAA was below 0.75% and up to 14.00% of that officer’s base salary in the event that the Company’s core ROAA was 1.50% and above.goals. In 2015, the Company’s Core ROAA was 0.95%, and so the portion oftotal, the cash bonus dependent on the Company’s performance received by the named executive officers was 3.5% of their annual base salary.
The table below sets forth the potential bonus amounts tied to ROAA for 2015.
| |
Range of
Company’s Core
Return on
Average Assets
| Cash Bonus as a
Percentage of the Named
Executive Officer’s Base
Salary in 2015
|
1.5% and above
| 14.0%
|
1.45-1.49%
| 13.0%
|
1.40-1.44%
| 12.0%
|
1.35-1.39%
| 11.0%
|
1.30-1.34%
| 10.0%
|
1.25-1.29%
| 9.0%
|
1.20-1.24%
| 8.0%
|
1.15-1.19%
| 7.0%
|
1.10-1.14%
| 6.5%
|
1.05-1.09%
| 6.0%
|
-
| |
1.00-1.04%
| 5.5%
|
.95-.99%
| 3.5%
|
.90-.94%
| 3.0%
|
.85-.89%
| 2.5%
|
.80-.84%
| 2.0%
|
.75-.79%
| 1.5%
|
Below .75%
| 1.5%
|
The other portion of each named executive officer’s cash bonus was awarded based on the achievement of that individual’s subjective performance objectives. In 2015, each named executive officer could earn up to an additional 6.0% of his base salary for meeting his individual performance objectives. This additional 6.0% of base salary is intended to encourage personal achievement of the individualized performance objectives. Historically, LCNB focused its annual cash bonus/incentive amounts entirely on Company performance. However, in recent years (including 2015) the Company has also utilized personal performance objectives. This small modification was made to encourage balance in the annual cash incentive plan design. Additionally, LCNB determined in recent years that market influences made it appropriate to pay a minimal bonus for ROAA amounts below 1.0%. This shift was based on the external reality in community banking that has impacted profitability capabilities.
Based on the 2015 Company ROAA results, the largest cash bonus that a named executive officer would have been able to achieve in 2015 was 9.5% of his annual base salary. The Company believes that it has set the sliding scale for cash bonus compensation so that modest bonuses are achievable by the named executive officers based on adequate performance of the Company and the individual named executive officers. However, significantly larger bonuses will only be achieved by exceptional performance both by the Company and by an individual named executive officer. The Company believes that a maximum cash bonus/incentive award opportunity level of 20%earned by each NEO was 12.5% of salary for the named executive officers is relatively modest when compared to market data.
The Company continues to implement a “Clawback” provision with respect to the 2015 cash bonus plan. This “Clawback” allows the Company to recoup incentive compensation amounts paid to employees if these amounts were paid based on misstated financials, or if the employee commits significant misconduct.
representing above targeted performance.
At the 2015 Annual Meeting on April 28th,annual meeting of shareholders, the Company’sCompany’s shareholders voted to approve the 2015 Ownership Incentive Plan (the “2015 Plan”“2015 Plan”). The 2015 Plan replaced the previous equity plan that expired in 2012. The 2015 Plan is a result of significant discussions, market analysis, and cost modeling.
At the December 14th, 2015 Board meeting the Compensation Committee recommended that the executive officers be granted restricted share awards based on continued strong financial performance and growth achieved by LCNB since 2012. The awards approved by the Board to the named executive officers are shown in the “Grants of Plan-Based Awards” table on page 29. The value of these awards ranged between 10% and 15% of salary for the named executive officers in 2015. The awards were not tied directly to specific performance metrics in 2015, since the 2015 Plan was not approved by shareholders until the end of April 2015. All of the grants of restricted shares vest annually in five equal installments over a five-year period beginning on the first anniversary of the grant date, subject to certain exceptions as explained in further detail below.
All awards granted under the 2015 Plan are subject to the Company’s “Clawback”Company’s clawback policy as it may be amended from time to time.
Option Awards Under the 2002 Plan
The Company established an During fiscal year 2021, 15,555 equity incentive plan in 2002 that allowed for stock optionsawards were granted to be awarded to executive officers based on a performance matrix. The plan expired in 2012. Therefore, no option awards have been granted since that time. The options previously awarded vest according to the following schedule on each anniversary of the Grant Date:
| |
Years after the Grant Date
| Vested Percentage
|
|
|
Less than 1
| 0%
|
At least 1 but less than 2
| 20%
|
At least 2 but less than 3
| 40%
|
At least 3 but less than 4
| 60%
|
At least 4 but less than 5
| 80%
|
At least 5 but no more than 10
| 100%
|
Any options which are vested and not exercised within 10 years from the date of the grant shall be deemed expired and no longer exercisable by the eligible person.
Other Compensation
The Company also provides other compensation to the named executive officers as it determines is necessary or advisable. Mr. Foster, President and Chief Executive Officer, receives an allowance for an automobile and the named executive officers all receive payments for health insurance and long-term disability, as the Compensation Committee has decided that such small perquisites aid in the retention of the named executive officers.
Further, the Company maintains a Supplemental Income Plan for its former Chief Executive officer, Mr. Wilson. This plan was entered into in 1996, and provides that Mr. Wilson shall receive certain benefits upon his reaching 65 years of age, or a change in control of the Company. The Company adopted the plan in order to create an additional incentive for Mr. Wilson to continue his service with the Company as its Chief Executive Officer and to provide Mr. Wilson with added security for his retirement or in the case that the Company was sold. The Company is currently making paymentsNEOs under this plan.
In addition, the Bank has a nonqualified deferred compensation benefit plan which permits named executive officers to defer all or a portion of their cash bonus, as well as certain defined benefit plans, as further detailed below.
Analysis of Total Mix of Compensation
The Board of Directors feels that the combination of making cash bonus payments based upon specific goals for each named executive officer and separate bonus payments tied to earnings goals for the Company provides the necessary incentives to reach the Company’s objectives. The cash bonus payments and the base salary together can provide the named executive officers a compensation package that is
competitive with peers in the financial industry. Additionally, the 2015 Plan provides the Company with the ability to better balance executive compensation between short-term components (base salary and annual cash bonus incentives) and longer-term components (equity incentives).
Plan.
In 2016, the Company intends to make additional adjustments to the annual cash bonus plan (as discussed previously) to better balance the Company
’
s overall goals and the link to executive compensation.
The
Company will also begin using performance objectives for the 2015 Plan awards (as discussed previously), which will clearly link all incentive-based pay components to performance.
Changes in 2016 Executive Compensation
On February 8th, 2016 the Compensation Committee recommended to the Board of Directors new performance measures under the annual cash bonus program. This program is designed to reward executive officers for meeting certain goals set annually by the Committee. Goals for 2016 include return on average assets, loan growth, deposit growth, efficiency rating, and strategic planning goals. The goals are weighted with Company performance goals accounting for 75% of the short-term cash incentive and individual performance goals accounting for 25% of the cash incentive. If those Company and individual performance goals are substantially met, each named executive officer can receive an award equal to 10% of his 2016 base salary. Substantially exceeding the Company and individual performance goals can increase the cash award to a maximum of 20% of base salary. The Company performance goals for the 2016 annual cash bonus program are:
Return on Average Assets
40%
Total Loan Growth
20%
Total Deposit Growth
5%
Efficiency Ratio
10%
The individual performance goals are weighted 25% and are tied to each named executive officer’s strategic planning goals as defined in the LCNB Strategic Plan.
The Compensation Committee also recommended to the Board of Directors the implementation of specific performance measures with respect to future equity grants under the 2015 Plan. TheIn 2021, the Board of Directors approved the use of earnings per share and total assetassets under management growth as performance measures to rewarddetermine the executive officers.equity awards for the NEOs. Earnings per share and total assetassets under management growth targets will be based on the Board approved budget. The Compensation Committee established a range of awards based on the achievement of those goals. The awards are calculated using a percentage that is applied to each executive officer’sofficer’s salary to arrive at a calculated number of shares. That percentage ranges from 0% of salary to a maximum of 20% of salary for most named executive officers. The CEO’s range is 0% to a maximum of 30% of salary.NEOs. This plan will be effectiveis based on the performance measures achieved in 2016.2021. The dollar amounts that are earned will beare converted to a specific number of shares based on the value of the shares on the date of grant. The shares will be granted from the 2015 Plan that was approved by LCNB’s shareholders.
Equity Grants Based on Achievement For 2021
For 2021, LCNB earned an adjusted $1.66 per share and assets under management growth of over 7.62%. This translated into an equity award of 20% of base compensation for each NEO, which represented maximum performance compared to the plan.
Other Compensation
The Company also provides other compensation to the NEOs as it determines is necessary or advisable. Each NEO receives payments for health insurance and long-term disability, as the Committee has decided that such small perquisites aid in the retention of the NEOs.
In addition, the Bank maintains a non-qualified deferred compensation benefit plan which permits NEOs to defer all or a portion of their cash bonus, as well as certain defined benefit plans, as further detailed below.
Stock Ownership Guidelines and Holding Requirements for Executive Officers
While we do not set strict targets for ownership of our stock, we strongly encourage ownership of the Company’s stock to all employees and expect our NEOs to set positive examples. All equity awards, whether in the form of restricted share awards or stock option awards, carry a vesting period. This requires the executive’s continued employment to fully realize value from such awards, and most equity awards have a 5-year vesting schedule.
Stock Trading Policy: Hedging & Pledging
The Company does not currently have a hedging policy in place to limit or permit employee or director trading in securities.
Clawback
The Company continues to utilize a clawback provision with respect to the 2021 cash incentive plan and equity awards granted under the 2015 Plan. This clawback allows the Company to recoup incentive compensation amounts paid to employees if these amounts were paid based on misstated financials, or if the employee commits significant misconduct.
Analysis of Total Mix of Compensation
The Board of Directors believes that the combination of making annual cash incentive/bonus payments based upon specific goals for each NEO and separate cash incentive/bonus payments tied to earnings goals for the Company provides the necessary incentives to reach the Company’s objectives. The cash bonus payments and the base salary together can provide the NEOs with a compensation package that is competitive with peers. Additionally, the 2015 Plan provides the Company with the ability to better balance executive compensation between short-term components (base salary and annual cash incentives) and longer-term components (equity incentives) by providing the Committee with the ability to grant equity awards with additional vesting requirements. In recent years, equity grants in the form of restricted shares have provided additional variable compensation that promotes retention and ties the NEOs interests to the shareholders of the Company. Another longer-term compensation program that is available to NEOs is the non-qualified deferred compensation benefit plan. We feel that our NEOs have valuable compensation components available at various levels that promote short-term, mid-term, and long-term achievement of goals and financially reward our NEOs for accomplishing the goals of the Company.
Forward Looking Statements
The information discussed in our Compensation Discussion and Analysis contains statements regarding future individual and Company performance measures, targets, and other goals. These goals are disclosed in the limited context of our executive compensation program and should not be understood to be statements of
management’smanagement’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.
Executive Compensation: Compensation Tables
The following summary compensation table summarizes, for the fiscal years indicated, all annual compensation earned by or granted to the
named executive officers.NEOs. The
named executive officersNEOs are employees of the Bank. The Bank is a wholly-owned subsidiary of LCNB.
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position |
Year |
Salary($) |
Restricted Stock Awards ($)(1) |
Option Awards ($)
|
Non-Equity Incentive Plan Compensation($) |
Non-Qualified Deferred Compensation Earnings($) |
($) |
Total ($) |
Stephen P. Wilson,
Chairman of the Board(4)
|
2015
2014
2013
|
$ 271,000
$ 263,000
$ 255,000
|
81,300
N/A
N/A
|
N/A
N/A
N/A
|
$ 25,745
$ 24,985
$ 29,325
|
$264,868(2)
$478,263
$ 97,747
|
$ 23,519(3)
$ 24,162
$ 24,227
|
$ 666,432
$ 790,410
$ 406,299
|
Steve P. Foster,
Eric J. Meilstrup President and Chief Executive Officer(5) | 2021 2020 2019 |
$ 212,000
$ 190,000
$ 184,000
340,000 315,000 275,000 | 94.500 83,000 27,001 |
N/A N/A | 40,950 35,758 21,250 | 97,736(2) 266,356 143,922 |
$202,027(2)
$372,172
$ 65,820
74,218(3) 71,759 54,644 |
$ 22,916(3)
$ 21,675
$ 22,114
|
$ 520,703
$ 601,808
$ 293,094
647,404 769,873 521,816 |
Executive Vice President and Chief Financial Officer
| 2021 2020 2019 |
$ 129,000
$ 114,000
$ 107,000
228,000 211,000 200,000 | 42,800 36,000 27,001 |
N/A N/A | 27,430 26,004 21,250 | 50,209(2) 135,536 85,574 |
$ 2,720(2)
$ 50,766
$(12,075)
31,585(3) 32,326 22,387 |
$ 17,951(3)
$ 17,832
$ 16,427
|
$ 187,735
$ 169,576
$ 124,505
380,024 440,866 356,213 |
| 2021 2020 2019 |
$ 129,000
$ 114,000
$ 110,000
228,000 211,000 200,000 | 42,800 36,000 27,001 |
N/A N/A | 27,430 26,006 21,250 | 217,170(2) 304,461 205,434 |
$ 29,068(2)
$ 97,689
$ (13,822)
9,235(3) 9,341 6,846 |
$ 5,999(3)
$ 5,801
$ 5,484
|
$ 202,122
$ 228,320
$ 114,312
524,635 586,808 460,531 |
Michael R. Miller Executive Vice President and Trust Officer | 2021 2020 2019 |
$ 129,000
$ 118,500
$ 114,000
228,000 211,000 200,000 | 42,800 36,000 27,001 |
N/A N/A | 27,430 26,001 21,250 |
3,262(2) 2,382 943 |
17,348(3) 16,359 14,262 |
318,840 291,742 263,456 |
Bradley A. Ruppert Executive Vice President, Trust Officer, Chief Investment Officer |
2021 2020 2019 |
210,000 193,000 175,500 |
39,200 32,040 21,442 |
N/A | 25,090 22,816 16,625 | 39,372(2)$109,701
$ 18,086
61,292 34,053 | 25,610 16,844 |
$ 247,959
$ 246,158
$ 151,102
339,021 334,758 264,464 |
(1)See “Terms of Restricted Share Grants”below for a description of the terms of the grants of restricted shares shown in the Restricted Stock Awards column. The amounts in the Restricted Stock Awards column are the aggregate grant date fair values computed in accordance with FASB ASC Topic 718. Assumptions used in determining fair value are disclosed in the footnote “Stock Based Compensation”“Stock-Based Compensation” located on pages 89-91of LCNB’sin LCNB’s Annual Report in Form 10-K for the year ended December 31, 2015.
2021.
(2)
Includes above market interest paid on the non-qualified deferred compensation plan as follows: Mr. Wilson, $57,379;Meilstrup, $11,574; Mr. Foster, $34,640; Mr. McKay, $8,947;Haines, $4,930; Mr. Layer, $4,489$13,990; Mr. Miller, $3,292; and Mr. Haines, $1,434.Ruppert, $2,300. The above market interest rate is calculated by subtracting 120% of the federal long-term rate (2.61)(2.28%) from the rate paid by the Bank on the deferred compensation funds (currently 8%). The resulting difference of 4.87%5.26% was used to calculate the above market interest disclosed in the above table. Also includes the change in aggregate increase/decrease in the actuarial present value of the officer’sofficer’s accumulated benefit under the Bank’sBank’s defined benefit plan as follows: Mr. Wilson, $10,511;Meilstrup, $86,162; Mr. Haines, $1,286; Mr. Foster, $2,181; Mr. McKay, $64,321; and$45,279; Mr. Layer, $24,579. Also includes the change in aggregate increase in the actuarial present value of the officer’s accumulated benefit under the Bank’s Non-Qualified benefit plan as follows:$203,180; Mr. Wilson, $-6,187; and Mr. Foster, $165,206. Also includes the change in actuarial present value of Mr. WilsonRuppert $37,072.
’s supplemental income plan of $203,165. The aggregate decrease in actuarial present value, where applicable, was due to a large increase from the previous year in the discount rate used to calculate the present value.
(3)
Includes Bank director fees for: Mr. Wilson, $14,000; and Mr. Foster, $14,000.Meilstrup,$30,000. Includes health and long-term disability payments as follows: Mr. Wilson, $6,510; Meilstrup, $18,338;Mr. Haines, $9,107;$11,997; Mr. Foster, $6,294; Layer, $9,235;Mr. McKay, $7,636;Miller $11,585; and Mr. Layer, $5,999.Ruppert, $7,526. Includes auto allowance for Mr. WilsonMeilstrup of $3,009 and Mr. Foster of $2,622.$4,737. Includes 401(k) contributions for Mr. Meilstrup of $21,143; Mr. Haines of $8,844.
(4)
$19,589; Mr. Foster retired from his role as Chief Executive Officer on December 31, 2015.
(5)
Miller of $5,763 and Mr. Foster became the CompanyRuppert, $17,833.
’
s Chief Executive Officer on January 1, 2016.
Terms of Restricted Share Grants. All of the grants of restricted shares listed in the above table vest annually in five equal installments over a five-year period beginning on the first anniversary of the grant date, provided, however, that: (a) the respective grantee remains employed through the applicable vesting date, and (b) vesting will be accelerated upon the grantee’sgrantee’s death, incapacity or retirement (after attaining the age of 65). Upon a change of control of the Company as defined in the 2015 Plan, 100% of the restricted shares will vest if at any time during the three months prior to the effective date of any change of control to the first anniversary of such change of control: (a) the grantee’sgrantee’s employment is terminated without cause, or (b) the grantee terminates employment for good reason. The grantees are eligible to receive dividends and other distributions declared by the Company on the restricted shares.
Pay Ratio Disclosure
Eric J. Meilstrup, LCNB’s CEO, had an annual total compensation of $647,404 in 2021, as reflected in the Summary Compensation Table above. We estimate that the median annual compensation of all LCNB employees, excluding our CEO, was $39,955 for 2021. Taking this into account, we estimate that Mr. Meilstrup’s annual total compensation was approximately 16.20 times that of the median employee annual compensation.
Plan-Based Awards
The following table summarizes for fiscal year
20152021 each grant of an award under the
Company’sCompany’s non-equity
incentive plan and equity incentive
plansplan to the
named executive officers.NEOs.
GRANTS OF PLAN-BASED AWARDS
| | | | | | | | | |
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Equity Incentive Plan Awards | All other stock awards: Number of shares of stock or units(2) | Grant Date Fair Value of Stock Awards(3) |
|
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
(#) |
($) |
Stephen P. Wilson | 2/16/15 |
| $24,985 | $52,600 |
|
|
|
|
|
Steve P. Foster | 2/16/15 |
| $18,050 | $38,000 |
|
|
|
|
|
Robert C. Haines II | 2/16/15 |
| $10,830 | $22,800 |
|
|
|
|
|
Matthew P. Layer | 2/16/15 |
| $10,830 | $22,800 |
|
|
|
|
|
Leroy F. McKay | 2/16/15 |
| $11,258 | $23,700 |
|
|
|
|
|
Stephen P. Wilson | 12/28/15 |
|
|
|
|
|
| 5,255 | $81,300 |
Steve P. Foster | 12/28/15 |
|
|
|
|
|
| 4,111 | $63,600 |
Robert C. Haines II | 12/28/15 |
|
|
|
|
|
| 1,668 | $25,800 |
Matthew P. Layer | 12/28/15 |
|
|
|
|
|
| 1,668 | $25,800 |
Leroy F. McKay | 12/28/15 |
|
|
|
|
|
| 1,668 | $25,800 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Equity Incentive Plan Awards | All other stock awards: Number of shares of stock or units | Grant Date Fair Value of Stock Awards |
| | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
(#) |
($) |
| Eric J. Meilstrup | 1/19/21 | | 37,400 | 68,000 | | | | | |
| 2/16/21 | | | | | | | 5,608 | 94,500 |
| Robert C. Haines II | 1/19/21 | | 25,080 | 45,600 | | | | | |
| 2/16/21 | | | | | | | 2,540 | 42,800 |
| Matthew P. Layer | 1/19/21 | | 25,080 | 45,600 | | | | | |
| 2/16/21 | | | | | | | 2,540 | 42,800 |
| Michael R. Miller | 1/19/21 | | 25,080 | 45,600 | | | | | |
| 2/16/21 | | | | | | | 2,540 | 42,800 |
| Bradley A. Ruppert | 1/19/21 | | 23,100 | 42,000 | | | | | |
| 2/16/21 | | | | | | | 2,326 | 39,200 |
(1)
Although the Estimated Future Payouts are provided in the table, the awards were granted in 20142021 and are disclosed in the “Summary“Summary Compensation Table.”
”
(2)
The grants of restricted shares shown in this column were made under the 2015 Plan. See
“Outstanding Equity AwardsTerms of Restricted Stock Grants
”
above for a description of the terms of the grants of restricted shares shown in this table.(3)
The amounts in this column are the aggregate grant date fair values computed in accordance with FASB ASC Topic 718. Assumptions used in determining fair value are disclosed in the footnote
“Stock Based Compensation” located on pages 89-91of LCNB’s Annual Report in Form 10-K for the year ended December 31, 2015.
All employees, including the named executive officers, participate in a Non-Equity Incentive Plan. This plan rewards employees based on the financial performance of the Company as described in the Compensation Discussion and Analysis. The estimated future payouts for the named executive officers in the above table are calculated using the ROAA scale established by the Compensation Committee and approved by the Board. Each named executive officer was eligible to receive a cash bonus ranging from 1.50%of that officer’s base salary in the event that the Company’s core ROAA was below .75% and 14.00% of that officer’s base salary in the event that the Company’s core ROAA was 1.5% and above. The appropriate percentage is multiplied by the officer’s base salary to determine the cash award.
The following table summarizes, as of the end of fiscal year 20152021 for each of the named executive officers,NEOs, information concerning unexercised options and unvested stock and equity incentive plan awards.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | | | | | | | | | | | | | | | | | | | |
| Option Awards | Stock Awards |
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Date | Number of Shares or Units of Stock that have not Vested (#) (1) | Market Value of Shares or Units of Stock that have not Vested (#)(9) | Market Value of Shares or Units of Stock that have not
Vested ($)(11)(7) |
Stephen P. Wilson
Eric J. Meilstrup | 2,650(1)
2,644(2)
4,475(3)
6,111(4)
4,729(5)
4,665(6)
2,262(7)
N/A | 0
0
0
0
0
1,166
1,508
N/A | $18.95
$17.88
$12.55
$ 9.00
$11.50
$11.85
$12.60
N/A | 01/30/16
02/05/17
02/19/18
01/26/19
02/21/20
02/14/21
02/13/22
N/A |
5,255(10)
135(2) 612(3) 956(4) 3,841(5) 5,608(6) |
$85,9722,644 $11,960 $18,667 $75,011 $109,524 |
Steve P. Foster
| 1,460(1)
1,510(2)
2,631(3)
3,889(4)
3,130(5)
3,059(6)
1,583(7)
| 0
0
0
0
0
765
1,056
| $18.95
$17.88
$12.55
$ 9.00
$11.50
$11.85
$12.60
| 01/30/16
02/05/17
02/19/18
01/26/19
02/21/20
02/14/21
02/13/22
|
4,111(10)
|
$67,256
|
Robert C. Haines II(8) | N/A | N/A | N/A 1,972(4)
1,586(5)
1,654(6)
823(7)
| N/A N/A
N/A
0
0
414
549
| $18.95
$17.88
$12.55
$ 9.00
$11.50
$11.85
$12.60
135(2) 612(3) 956(4) 1,707(5) 2,540(6) | 01/30/16
02/05/17
02/19/18
01/26/19
02/21/20
02/14/21
02/13/22
|
1,668(10)
|
$27,288 |
-
2,644
$11,960
$18,667
$33,342
$49,606
-
| | | | | | |
Matthew P. Layer(8) | N/A | N/A | N/A 467(4)
743(5)
933(6)
616(7)
| N/A N/A
N/A
0
0
467
615
| $18.95
$17.88
$12.55
$ 9.00
$11.50
$11.85
$12.60
135(2) 612(3) 956(4) 1,707(5) 2,540(6) | 01/30/16
02/05/17
02/19/18
01/26/19
02/21/20
02/14/21
02/13/22
|
1,668(10)
|
$27,2882,644 $11,960 $18,667 $33,342 $49,606 |
Leroy F. McKay(8)
Michael R. Miller | N/A | N/A | N/A 2,694(4)
2,087(5)
2,001(6)
968(7)
| N/A | 612(3) 956(4) 1,707(5) 2,540(6) | $11,960 $18,667 $33,342 $49,606 |
| Bradley A. Ruppert | N/A | N/A 0
0
500
645
| $18.95
$17.88
$12.55
$ 9.00
$11.50
$11.85
$12.60
N/A | 01/30/16
02/05/17
02/19/18
01/26/19
02/21/20
02/14/21
02/13/22
N/A |
1,668(10)
612(3) 759(4) 1,519(5) 2,326(6) |
$27,28811,960 $14,823 $26,670 $45,427 |
(1)
Vested 20% in 2007, 20% in 2008, 20% in 2009, 20% in 2010, and 20% in 2011
(2)
Vested 20% in 2008, 20% in 2009, 20% in 2010, 20% in 2011, and 20% in 2012
(3)
Vested 20% in 2009, 20% in 2010, 20% in 2011, 20% in 2012, and 20% in 2013
(4)
Vested 20% in 2010, 20% in 2011, 20% in 2012, 20% in 2013, and 20% in 2014
(5)
Vested 20% in 2011, 20% in 2012, 20% in 2013, 20% in 2014, and 20% in 2015
(6)
Vested 20% in 2012, 20% in 2013, 20% in 2014, and 20% in 2015
(7)
Vested 20% in 2013, 20% in 2014, and 20% in 2015
(8)
Mr. Haines, Mr. McKay, and Mr. Layer were not eligible to participate in the Equity Incentive Plan until 2008
(9)
Represents the number of restricted share awards that have not vested as of December 31, 2015.
(10)
2021.
(2) Represents restricted shares awarded by the Board of Directors on December 28, 2015February 27, 2017 pursuant to the Plan.
The restricted shares vest annually in five equal installments beginning on
December 28, 2016.(11)
February 27, 2018.
(3) Represents restricted shares awarded by the Board of Directors on February 12, 2018 pursuant to the Plan.
The restricted shares vest annually in five equal installments beginning on February 12, 2019.
(4) Represents restricted shares awarded by the Board of Directors on February 19, 2019 pursuant to the Plan.
The restricted shares vest annually in five equal installments beginning on February 19, 2020.
(5) Represents restricted shares awarded by the Board of Directors on February 18, 2020 pursuant to the Plan.
The restricted shares vest annually in five equal installments beginning on February 18, 2021.
(6) Represents restricted shares awarded by the Board of Directors on February 23, 2021 pursuant to the Plan.
The restricted shares vest annually in five equal installments beginning on February 23, 2022.
(7) Represents the value of the unvested restricted stock awards based on the
Company’sCompany’s closing stock price on December 31,
20152020 of
$16.36.$19.53.
Option Exercises and Stock Vested
The following table summarizes for fiscal year 2021 all exercises of options and vesting of stock awards for each of the
year ended December 31, 2015 no named executive officer exercised options or had a stock award vest.NEOs.
OPTION EXERCISES AND STOCK VESTED
| | | | | | | | | | | | | | |
| Option Awards | Stock Awards |
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
| Eric J. Meilstrup | N/A | N/A | 1,720 | 28,579 |
| Robert C. Haines II | N/A | N/A | 1,187 | 19,826 |
| Matthew P. Layer | N/A | N/A | 1,187 | 19,826 |
| Michael R. Miller | N/A | N/A | 1,052 | 17,563 |
| Bradley A. Ruppert | N/A | N/A | 939 | 15,653 |
Defined Benefit Plan Disclosure
In 1954, the Bank adopted the LCNB National Bank Employees Pension Plan (the
“Pension Plan”“Pension Plan”) a defined benefit plan. Employees hired on or after January 1, 2009 are not eligible to participate in the Pension Plan, however, some employees that were hired before that date continue to participate in the Pension Plan. Effective February 1, 2009, employees whose age plus vesting service equaled 55 to 64 will receive a monthly retirement benefit equal to 40% of the
participant’sparticipant’s average monthly compensation. Employees whose age plus vesting service equaled less than 55 will receive a monthly retirement benefit equal to 30% of the
participant’sparticipant’s average monthly compensation. A
participant’sparticipant’s average monthly compensation is based on the five consecutive years of a
participant’sparticipant’s employment with the Bank that produce the highest monthly average. Benefits are not reduced by Social Security payments or by payments from other sources and are payable in the form of a life annuity (ten years certain).
All employees that are not eligible for the defined benefit plan are eligible to participate in the company’sCompany’s enhanced 401(k) plan. Employees receive a 50% employer match on their contributions into their 401(k) plans, up to a maximum LCNB contribution of 3% of each individual employee’semployee’s annual compensation.
Certain
former highly compensated employees are eligible to participate in a nonqualified defined benefit retirement plan. The nonqualified plan ensures that participants receive the full amount of benefits to which they would have been entitled under the noncontributory defined benefit retirement plan in the absence of limits on benefit levels imposed by certain sections of the Internal Revenue Code.
The following table summarizes, as of the end of fiscal year
20152021 for each of the
Company’s named executive officers,NEOs, information concerning each plan that provides for payments or other benefits at, following, or in connection with retirement.
| | | | |
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) |
Stephen P. Wilson | Defined Benefit Plan Non-Qualified Plan Supplemental Income | 40
19 | 1,331,184 485,545 730,574 | None None None |
Steve P. Foster | Defined Benefit Plan Non-Qualified Plan | 38 | 700,783 718,043 | None |
Robert C. Haines II | Defined Benefit Plan | 21 | 74,457 | None |
Matthew P. Layer | Defined Benefit Plan | 34 | 350,293 | None |
Leroy F. McKay | Defined Benefit Plan | 20 | 660,321 | None |
| | | | | | | | | | | | | | |
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) |
| Eric J. Meilstrup | Defined Benefit Plan | 31 | 766,446 | None |
| Robert C. Haines II | Defined Benefit Plan | 27 | 397,776 | None |
| Matthew P. Layer | Defined Benefit Plan | 40 | 1,260,808 | None |
| Michael R. Miller | N/A | N/A | N/A | None |
| Bradley A. Ruppert | Defined Benefit Plan | 13 | 173,201 | None |
The Defined Benefit
Plan’sPlan’s actuarial assumptions used in
20152021 included a discount rate of
4.34%2.83%, an expected long-term rate of return for Plan assets of
4.34%2.83% and a future compensation rate increase of 3%. The expected long-term rate of return on Plan assets was determined using historic returns on investments, adjusted for expected long-term interest rates.
The Bank also maintains a supplemental income plan for former Chief Executive Officer and current Chairman of the Board, Stephen P. Wilson. This plan began January 1, 1996. Mr. Wilson will receive an estimated annual benefit of $95,074, beginning on July 1, 2016. Monthly benefits were determined by calculating 2.5% of the executive’s highest monthly average compensation and multiplying that sum by the lesser of the executive’s years of service or ten. This benefit is paid in 120 monthly payments.
The following table summarizes, as of the end of fiscal year
2015,2021, for each of the
Company’s named executive officers,NEOs, information concerning each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified.
NON-QUALIFIED DEFERRED COMPENSATION
| | | | | |
Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) |
Stephen P. Wilson | 24,985 | None | 95,646 | None | 1,245,737 |
Steve P. Foster | 18,050 | None | 57,743 | None | 752,252 |
Robert C. Haines II | 4,332 | None | 2,392 | None | 31,387 |
Matthew P. Layer | 9,206 | None | 7,485 | None | 97,946 |
Leroy F McKay | 11,258 | None | 14,916 | None | 194,734 |
| | | | | | | | | | | | | | | | | |
| Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) |
| Eric J. Meilstrup | 32,760 | | None | 17,810 | None | 233,623 |
| Robert C. Haines II | 4,115 | | None | 7,585 | None | 98,912 |
| Matthew P. Layer | 23,316 | | None | 21,525 | None | 281,394 |
| Michael R. Miller | 19,201 | | None | 5,019 | None | 66,438 |
| Bradley A. Ruppert | 12,545 | | None | 3,539 | None | 46,791 |
(1)
The Executive Officers’NEOs contributions are also included in the Summary Compensation Table under Non-Equity Incentive Plan Compensation.
(2)
The portion of the Aggregate Earnings is also included in the Summary Compensation Table under Non-Qualified Deferred Compensation Earnings because the Bank is paying an above market rate on the aggregate balances that the Executive OfficersNEOs have deferred. Those amounts for each officerNEO are: Mr. Wilson, $57,379; Mr. Foster, $34,640;Meilstrup, $11,574; Mr. Haines, $1,434;$4,930; Mr. Layer, $4,489.35;$13,990; Mr. Miller, $3,262 and Mr. McKay, $8,947.
Ruppert, $2,300.
The Bank has a benefit plan which permits
named executive officersNEOs to defer all or a portion of their cash bonus. The deferred compensation balance, which accrues interest at 8% annually, is distributable in cash after retirement or termination of employment either in one lump sum payment or ten equal payments over a period of ten years, in the discretion of the executive officer. Through the Compensation Committee, the LCNB Board of Directors determines the interest rate that will be used to calculate earnings under the plan.
Termination and Change in Control Payments
The Company does not have employment agreements with its
named executive officers. Therefore, these officersNEOs. All NEOs are employees at will and a termination of
these named executive officersany of the NEOs as of December 31,
20152021 would not have triggered any payment obligations of the Company under their employment arrangements. However, under some of the
Company’sCompany’s other benefit plans, the
named executive officersNEOs would have been entitled to receive payments if a termination or change in control happened on December 31,
2015.2021.
The 2015 Ownership Incentive Plan
(the “2015 Plan”) and the 2002 Plan each contain a double-trigger change of control clause that accelerates vesting upon a change of control as follows: the period beginning three months prior to the effective date of any change of control of the Company and ending on the first anniversary of such a change of control, one hundred percent of the ownership incentives granted which have been outstanding for at least six months shall vest and be exercisable by the holder in the event that (a) the
holder’sholder’s status as an employee is involuntarily terminated by the Company for any reason other than cause, or (b) the holder voluntarily terminates his status as an employee as the result of a material reduction in the
option holder’sholder’s duties, title, or compensation from the Company. Thus, if there was a change in control on December 31,
20152021 and the
named executive officersNEOs were terminated or experienced material reductions in their duties, all of the ownership incentives held by the
named executive officersNEOs for longer than six months would vest.
Upon such events, the named executive officersNEOs would have the following amount of restricted shares vest under the 2015 Ownership Incentive Plan:
| | | | | |
Stephen P. Wilson
Eric J. Meilstrup | 5,255
11,152 |
Steve P. Foster
| 4,111
|
Robert C. Haines II | 1,668
5,951 |
Matthew P. Layer | 1,668
5,951 |
Leroy F. McKay
Michael R. Miller | 1,668
|
Upon such events, the named executive officers would have options convertible into the following amount of the Company’s Common Shares vest under the 2002 Plan:
| 5,815 |
Stephen P. Wilson
Bradley A. Ruppert | 30,030
|
Steve P. Foster
| 20,555
|
Robert C. Haines II
| 6,998
|
Matthew P. Layer
| 8,061
|
Leroy F. McKay
| 8,895
5,217 |
The Deferred Compensation Plan provides that in the event of any termination of a named executive officer,NEO, or a change in control of the Company, the named executive officersNEOs affected by the termination or change in control are entitled to receive the entire amount of the deferred compensation in their account as of the next valuation date after such event. The named executive officerNEO may elect whether to receive the deferred compensation in one lump sum, or in annual payments over ten years. In the event that each of the named executive officersNEOs experienced a termination event onDecemberonDecember 31, 2015,2021, each would be entitled to receive the following amounts under the Deferred Compensation Plan:
| | | | | |
Stephen P. Wilson
Eric J. Meilstrup | $ 1,245,728 233,623 |
Steve P. Foster
| $ 752,252
|
Robert C. Haines II | $ 31,387 98,912 |
Matthew P. Layer | $ 97,946 281,394 |
Leroy F. McKay
Michael R. Miller | $ 194,734 66,438 |
| Bradley A. Ruppert | $46,791 |
For
the purposes of the Deferred Compensation Plan, a change in control would be deemed to have occurred if:
•
a person or group obtained control of 50% of the Company’sCompany’s stock,
•
a person or group acquires 35% of the Company’sCompany’s stock within a 12 month period,
•
a majority of the members of the Board of Directors are replaced within a 12 month period without the endorsement of a majority of the members of the board,Board, or
•
any person or group acquires assets from the Company worth at least 40% of the fair market value of all of the assets of the Company.
For purposes of the 2015
Ownership Incentive Plan, a change in control would be deemed to have occurred if:
•
a person or group acquires ownership of the Company’sCompany’s shares representing more than 50% of total fair market value or total voting power,
•
a majority of the members of the Board of Directors are replaced without their approval, or
-
--
•
one person or group acquires assets representing 50% or more of the total gross fair market value of all the assets of the Company.
For purposes of the 2002 Plan, a change in control would be deemed to have occurred if:
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a person or group obtained control of 50% of the Company’sCompany’s stock, or
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a merger or sale of substantially all of the assets, reorganization, or the a majority of the members of the Board of Directors are replaced, without the approval of the Board of Directors.
The Company maintains a Supplemental Income Plan for Stephen P. Wilson. Pursuant to this Supplemental Income Plan, Mr. Wilson or his estate would be entitled to payment of the present value of benefits that he has accrued under the plan in the event that Mr. Wilson died or was disabled on or before December 31, 2015, or a change of control of the Company or the Bank occurred on that date. The present value of the benefits under the plan as of December 31, 2015 was $730,574. In the event that Mr. Wilson left the Company for any other reason (other than for cause) on December 31, 2015, he would not be entitled to receive any acceleration of the payments otherwise due to him under the plan. If Mr. Wilson was terminated for cause on December 31, 2015, the Company would not have to make any future payments to him under the plan.
For the purposes of the Supplemental Income Plan, a change of control means:
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a person or group acquires 30% or more of the Bank’s shares,
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a reorganization of the Bank where persons who were not shareholders of the Bank prior to the reorganization own more than 50% of the Bank’s stock,
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a liquidation of the Bank, or
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a sale of all or substantially all of the Bank’s assets.
Compensation Committee Report on Executive Compensation
The Compensation Committee has reviewed and discussed the Compensation Discussion & Analysis contained in this Proxy Statement with management of the Company and, based on that review and those discussions, has recommended its inclusion in the
Company’sCompany’s annual report on Form 10-K and in this Proxy Statement.
The Compensation Committee of LCNB National Bank is comprised of the following persons:
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Rick L. Blossom
Spencer S. Cropper | Takeitha W. Lawson |
| Anne E. Krehbiel | Mary E. Bradford |
Spencer S Cropper
Craig M. Johnson | John H. Kochensparger III
|
George L. Leasure
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Michael J. Johrendt |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The independent registered public accounting firm selected by the Audit Committee for
the previousfiscal year
20152021 was BKD, LLP. A representative of BKD, LLP will be present at the Annual Shareholders Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.
The aggregate fees billed by BKD, LLP for professional services rendered for the annual audit of the
Company’sCompany’s annual financial statements, the audit of the internal control over financial reporting and the reviews of the unaudited interim consolidated financial statements included in the
Company’sCompany’s Quarterly Reports on Form 10-Q
were $273,728 for fiscal year
20152021 and were
$177,378 and$266,656 for fiscal year
2014 were $172,868.2020.
The aggregate fees billed by BKD, LLP for assurance and related services that are reasonably related to the performance of the audit of the
Company’sCompany’s financial statements and not reported under the paragraph immediately above entitled
“Audit Fees”“Audit Fees” were
$23,700zero for fiscal
year 2015years 2021 and
$33,500 for fiscal year 2014. Audit-related fees consisted of accounting consultation and other matters in 2015, as well as audit in connection with the acquisition of Eaton National Bank & Trust Co. in 2014.2020.
There were no fees billed by BKD, LLP for fiscal year 20152021 or 2020 for professional services rendered for tax services, including any tax compliance, tax advice, andor tax planning,planning.
All Other Fees
There were $19,650. Tax$6,240 in other fees consisted of Federal, state and local income and franchise tax return preparation, tax planning and assistance with a tax examinationBKD, LLP not included in “Audit Fee,” “Audit-Related Fees” or “Tax Fees” for the fiscal year 2015. The aggregate fees billed by BKD, LLP2021 and zero for fiscal year 2014 were $9,200.2020.
As required by the Sarbanes-Oxley Act of 2002, and as required by the Audit Committee Charter, the Audit Committee is responsible for the approval of all audit and permitted non-audit services performed by the independent public accountants for the Company. The entire Audit Committee determines whether to approve such services and, therefore, no other pre-approval policies or procedures are currently in place. TheAccordingly, the Audit Committee approved 100%in advance all services noted above.
INFORMATION ABOUT THE 2022 VIRTUAL ANNUAL MEETING
The annual meeting will be held virtually via the Internet for the safety of our directors, employees and shareholders in light of the auditCOVID-19 pandemic. We are excited to embrace the latest technology for this year’s meeting.
Shareholders as of March 1, 2022, the record date, may attend, vote and permitted non-audit services performedsubmit questions virtually at our annual meeting by BKD, LLP. The Audit Committee has considered and ultimately determined thatlogging in at meetnow.global/M2LYYDT. To login to the provision of anyannual meeting, you will be required to have a control number or can login as a “guest”. For registered shareholders, the control number can be found on your proxy card or notice, or email you previously received. If you were a shareholder as of the non-auditclose of business on the record date and have your control number, you may vote during the annual meeting by following the instructions available on the meeting website during the meeting.
If you hold your shares through an intermediary, such as a bank or other servicesbroker, you must register in advance to attend the virtual annual meeting. To register, shareholders must submit the email from their broker and proof of their proxy power (legal proxy) reflecting their LCNB holdings, along with their name and email address, to Computershare at legalproxy@computershare.com. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 22, 2022. You will receive a confirmation email from Computershare of your registration.
Shareholders as of the record date who attend and participate in our virtual annual meeting will have an opportunity to submit questions live via the Internet during a designated portion of the meeting. Shareholders must have available their control number provided by BKD, LLPon their proxy card or notice.
If you are not a shareholder or do not have a control number, you may still access the meeting as a guest, but you will not be able to vote or submit questions.
If you experience any technical difficulties accessing the annual meeting or during the meeting, please call the toll-free number that will be available on our virtual shareholder login site (at meetnow.global/M2LYYDT) for assistance. We will have technicians ready to assist you with any technical difficulties you may have beginning 15 minutes prior to the Company is compatible with maintaining BKD, LLPstart of the annual meeting.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on April 26,
2016.2022. The proxy statement and annual report to security holders are available at http://www.lcnbcorp.com.
The proxy statement, annual report to security holders and form of proxy are being made publicly available, free of charge, on the aforementioned website, which will remain available through the conclusion of the Annual Meeting of Shareholders to be held on April 26,
20162022 at 10:00 a.m.
at theprincipal executive offices of LCNB Corp. at 2 North Broadway, Lebanon, Ohio 45036. If you need directions to the location of the annual meeting in order to attend the meeting and vote in person, please call 1-800-344-2265.
EDT.
In order for any shareholder proposals for the
20172023 annual meeting of shareholders to be eligible for inclusion in the
Company’sCompany’s proxy statement relating to that meeting to be presented for shareholder action at that meeting, they must be received by the Secretary of the Company at P.O. Box 59, Lebanon, Ohio 45036, prior to November
16, 2016.8, 2022. The form of proxy distributed by the Company with respect to the
20172023 annual meeting of shareholders may include discretionary authority to vote on any matter which is presented to the shareholders at the meeting (other than management) if the Company does not receive notice of that matter at the above address prior to January
30, 2017.20, 2023.
The Board of Directors does not know of any other business to be presented at the meeting and does not intend to bring other matters before the meeting. However, if other matters properly come before the meeting, it is intended that the persons named in the accompanying proxy will vote thereon according to their best judgment in the interests of the Company.
By Order of the Board of
DirectorsDirectors:
/s/Steve P. Foster Steve P. Foster
Eric J. Meilstrup
Eric J. Meilstrup
President & Chief Executive Officer
Appendix A
Article FOURTH (A) of the Amended and Restated Articles of Incorporation of LCNB Corp.
FOURTH:
(A)
The maximum number of Common Stock which the Corporation is authorized to have outstanding is Nineteen Million (19,000,000) shares, all of which shall be without par value.
REVOCABLE PROXY
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ANNUAL MEETING OF SHAREHOLDERS April __, 201626, 2022 |
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1. Proposal 1. Election of Directors. The nominees for the Class II Directors to serve a three-year term and until their successors are elected and qualified are: | | [ ] | [ ] | [ ] |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
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| | Class II – Steve P. Foster
Class II – Anne E. Krehbiel
Class II – Michael J. Johrendt Class II – Takeitha W. Lawson INSTRUCTION: To withhold authority to vote for any individual nominee, mark “For“For All Except”Except” and write that nominee’snominee’s name in the space provided below. ________________________________________________________
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| 2. Proposal 2. Approval of an Amendment to the Articles of Incorporation to eliminate cumulative voting. | | FOR
[ ] | AGAINST
[ ] | ABSTAIN
[ ] |
The undersigned hereby appoints Joseph W. Schwarz, Kathleen Porter Stolle, and BenardBernard H. Wright, Jr., and each of them, with full power of substitutions,substitution, as proxiesproxy to vote, as designated below, for and in the name of the undersigned all shares of stock of LCNB Corp. which the undersigned is entitled to vote at the virtual annual meeting of the shareholders of said Company scheduled to be held at 10:00 a.m. EDT on April 26, 2016 at 2 North Broadway, Lebanon, Ohio2022, or at any adjournments or recesses thereof. |
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2.
Proposal 2. To amend the Amended and Restated Articles of Incorporation to increase the amount of authorized common stock from 12,000,000 to 19,000,000 shares.
| FOR
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Please mark X in the appropriate box. The Board of Directors recommends a FOR vote for each of proposalsthe Directors in Proposal 1 and a FOR vote for Proposals 2, 3, and 3.5. The Board of Directors recommends voting for Every Year for Proposal 4. |
| 3.Proposal 3. Advisory vote approving the compensation of our named executive officers. | | FOR
[ ] | AGAINST
[ ] | ABSTAIN
[ ] |
| 4. Proposal 4. Advisory vote regarding the frequency of our vote on executive compensation. | EVERY YEAR [ ] | EVERY 2 YEARS [ ] | EVERY 3 YEARS [ ] | ABSTAIN [ ] |
| 5. Proposal 5. To ratify the appointment of BKD, LLP as the independent registered accounting firm for the company. | | [ ] | [ ] | [ ] |
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6. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. |
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| This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR the election of Directors and the ratification of the accountants. ALL FORMER PROXIES ARE HEREBY REVOKED |
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Please be sure to sign and date
Date
this Proxy in the box below
_______________________
Shareholder sign above
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
P.O. Box 59, Lebanon, Ohio 45036
(Please sign exactly as your name appears hereon. All joint owners should sign. When signing in a fiduciary capacity or as a corporate officer, please give your full title as such)
Please mark, sign, date and mail this proxy in the envelope provided.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.